1. Qualitative Information Concerning Consolidated Business Results(1) Information about operating results
During the first quarter of the current fiscal year (Apr. 1, 2021 to Jun. 30, 2021), theJapanese economy showed signs of a gradual recovery, but conditions remained severe
due to the impact of the new Corona Virus infectious disease.
In the Group's business domains of retail and services, consumer spending has been
weak, mainly in service spending. Against the backdrop of consumption trends,
although real gross employee income showed signs of picking up, consumer sentimenthas paused to pick up, mainly reflecting the issuance of the Declaration of an
Emergency Situation and the implementation of priority measures such as measures toprevent spreading.
Against this backdrop, the Group has been actively engaged in sales of products tocombat infectious diseases, improvement of customer services, sales promotion
activities, expansion of commercial areas, and business reorganization in each businessfield.
Consequently, in the first quarter of the fiscal year under review, the Group'sconsolidated results included sales of 11,984 million yen (down 5.8% year on year),
operating income of 185 million yen (down 12.6% year on year), ordinary income of 175
million yen (up 30.5% year on year), and profit attributable to owners of parent was 69
million yen (down 86.9% year on year).
Operating results by business segment were as follows.
In addition to operating income (loss) of each segment, there were 427 million yen incorporate expenses, etc. not attributable to each segment.
[CreCla Business (Bottled Water)]In the water delivery market, in addition to an increase in the consumption of water forindividuals accompanying an increase in home hours due to infectious diseases,
demand for value-added water dispensers to enhance home hours was on the rise.
In CreCla Business, in order to acquire new customers, in addition to sales promotions
utilizing the Internet and SNS, we worked to strengthen sales activities by expanding
sales at events such as commercial facilities. We also focused on campaign activities
that could not be implemented due to the impact of infectious diseases in the same
period of the previous fiscal year, and the number of new customers acquired increased
31.8% year on year.
In the company's directly managed stores division, as in the previous fiscal year, weworked to improve service quality. As a result, sales of CreCla bottles remained at thesame level as the same period of the previous fiscal year. However, due to thereactionary decline following the sharp increase in sales volume of ZiACO, ahypochlorous acid aqueous solution, in the same period of the previous fiscal year, thecompany's directly managed stores division as a whole recorded a slight decrease
compared with the same period of the previous fiscal year.
In the affiliated stores division, sales volume of CreCla Fit design water dispenser,
which was launched in Jan. 2020, increased, but sales fell below the results for thecorresponding period of the previous fiscal year due to a decline in sales volume ofZiACO,a hypochlorous acid aqueous solution, in the same manner as the company'sdirectly managed division.
In addition to the decline in sales in both divisions, operating income decreased due toan increase in SG&A expenses as a result of focusing on securing sales personnel asupfront investments to prepare for future growth in client numbers.
As a result, sales amounted to 3,582 million yen (down 6.8% year on year) andoperating income amounted to 169 million yen (down 65.5%).
[Rental Business]
In the rental business, we worked to expand our sales network and strengthen ourservice structure in anticipation of an increase in demand in each business for the 100year life era.
In the mainstay Duskin business, amidst the impact of infectious diseases, there werea decrease in rental sales due to the discontinuation of sales promotion activities(personnel recruitment, etc.) in the dust control products division and a reactionary
decline in products related to infectious diseases, for which demand increased in thesame period of the previous fiscal year. On the other hand, in the care services division,
which provides comprehensive services such as housekeeping services, pest control,
and floral and garden management, sales increased significantly due to sales activities
expanded at bases added to the business under a capital and business allianceagreement with Duskin Co., Ltd. concluded in Aug. 2018, and an increase in demandfor cleaning services attributable to an increase in home hours. Sales of the total
Duskin Business increased year on year.
In the With-branded pest-control devices business, which is centered on “with” brand,
the number of customers declined year-on-year due to the impact of the restaurant
industry's shutdown and short-time operations that continue from the previous fiscal
year, and sales decreased year-on-year.
At Earnest Co., Ltd., a provider of regular cleaning services to corporations, sales

increased year on year due to a gradual recovery in demand for commercial facilities
and offices, which declined sharply in the same period of the previous fiscal year.
Operating income increased year on year, as higher sales in the care services divisionin Duskin business offset lower sales in the high-margin With-branded pest-control
devices business and higher SG&A expenses due to strengthened sales promotion
activities.
As a result, sales was 3,652 million yen (up 4.1% year-on-year) and operating income
was 290 million yen (up 8.8% year-on-year).
With regard to store openings, during the first quarter of the current fiscal year, weopened the HealthRent Ichikawa Station and the HealthRent Odawara Station in theDuskin Business.
[Construction Consulting Business]
The local construction industry and the market continued to face a challenging
external environment due to chronic shortages of workers and soaring logistics costs,
as well as delays in the delivery of housing equipment caused by a shortage ofsemiconductor supplies.
In the Know-how Sales Division, sales of know-how products increased significantly
due to price revisions stemming from product content renovations. However, due to aworldwide shortage of semiconductors, delivery deadlines related to housing facilities
for members were delayed, and sales, including sales of department materials, fellbelow the results for the corresponding period of the previous fiscal year.
In addition, sales decreased slightly year-on-year at suzukuri Div, which conducts
housing sales and content-based businesses, due to a decline in the order backlog at theend of the previous fiscal year, affected by the cancellation of sales promotion eventsplanned for the previous fiscal year due to the impact of infectious diseases.
Nac Smart Energy Co., Ltd., which is involved in the installation and sales of theconstruction of materials related to energy saving, reduced unit prices per customer
due to a change in measures to strengthen sales from the industrial market to theresidential market. As a result, sales declined year on year.
ACE HOME Co., Ltd. saw year-on-year growth in sales thanks to strong sales related
to jointly developed products with us launched in Oct. 2020.
In terms of profit and loss, operating income increased year on year due to the revisionof prices by revamping the product content in the Know-how Sales Division andimproved operating income and loss at Nac Smart Energy Co., Ltd. and ACE HOMECo., Ltd.

Consequently, for the 1Q of the current fiscal year, the Company recorded sales of 1,732
million yen (down 11.1% year on year) and operating income of 84 million yen (anoperating loss of 25 million yen in the same period of the previous fiscal year)(including amortization of goodwill of 10 million yen for ACE HOME Co., Ltd.).
With regard to store openings, the Matsuyama Sales Office was opened in the Knowhow Sales Division in the 1Q of the current fiscal year.
[Housing Sales Business]
In the housing industry, the number of new housing starts in Jun. announced by theMinistry of Land, Infrastructure, Transport and Tourism increased for the eighthconsecutive month, and overall, including rental housing and housing for sale,increased for the fourth consecutive month.
Sales decreased slightly at KDI CORPORATION due to a decline in sales inventories
as a result of sluggish land-purchasing due to constraints in sales activities caused byinfectious diseases.
At J-wood Co., Ltd., sales increased year on year due to an increase in the number ofhouses sold with land and an improvement in unit prices.
In terms of profit and loss, KDI CORPORATION. achieved an improvement in its grossprofit margin by securing land with high profit margins, and operating income
increased year on year due to cost reductions resulting from operational improvements.
J-wood Co., Ltd. improved its operating income compared with the same period of theprevious fiscal year due to an increase in sales and a reduction in SG&A expenses
resulting from the consolidation and relocation of stores implemented in the previous
fiscal year.
J-wood Co., Ltd. has merged with KUNIMOKUHOUSE Co., Ltd. on Apr. 1, 2021. Thisbusiness continues as a KUNIMOKUHOUSE brand at J-wood Co., Ltd.
As a consequence of the above, for the 1Q of the current fiscal year, the Company
posted an operating loss of 1,631 million yen (down 2.4% year on year), and an
operating loss of 114 million yen (an operating loss of 156 million yen in the same
period of the previous fiscal year) (including amortization of goodwill of KDI Co., Ltdand J-wood Co., Ltd of 11 million yen).
[Beauty and Health Business]
In the cosmetics industry, the market environment remained challenging due to thedisappearance of purchasing by inbound tourists due to the impact of infectious
diseases and a decline in demand for cosmetics, particularly makeup due to voluntaryrestraints on outings.
At JIMOS Co., Ltd., sales declined year on year due to a decline in the number ofcustomers stemming from unauthorized access to e-commerce websites discovered inJul. 2019, as well as a decline in the number of makeup products due to the prolonged
impact of infectious diseases and a decline in makeup opportunities stemming fromvoluntary exits.
At BELAIR Co., Ltd., amid a downtrend in the number of customers for its mainstay
nutritional supplement products, sales increased year on year as a result of major
efforts to expand sales of beauty and healthcare goods.
On the earnings front, JIMOS Co., Ltd. worked to reduce SG&A expenses, mainly
advertising expenses and outsourcing expenses. As a result, BELAIR Co., Ltd. alsoachieved a return to profitability, with operating income increasing year on year, as
strong sales of beauty and healthcare goods compensated for the decline in sales ofhigh-margin nutritional supplements.
As a result, sales amounted to 1,419 million yen (down 19.5% year on year), operating
income amounted to 183 million yen (67 million yen in operating losses in the same
period of the previous fiscal year) (including 42 million yen in goodwill amortization ofJIMOS Co., Ltd. and BELAIR Co., Ltd.).