1. Qualitative Information Concerning Consolidated Business Results(1) Information about operating results
During the nine months ended December 31, 2020(April 1 to December 31, 2020), theJapanese economy was still in a severe situation due to the by the Coronavirus disease2019 (COVID-19).
In the retail and service industries, our core operating domain, personal consumption
continued to decline sharply, but recovered slightly after Japanese government lifted
the state of emergency.
In the housing industries, the market remained weak affected by COVID-19. Ministryof Land, Infrastructure, Transport and Tourism announced increase for the first time in
14 months in new construction starts in owned dwellings. However, the new
construction starts in total including rented and built for sale dwellings decreased 18
months in a row since July 2019.
Under the circumstance, the NAC Group of companies aggressively worked on
development of new products, promotion of new services, improvement of customer
satisfaction, expansion of business areas and business restructuring.
Consequently, consolidated results for the nine months ended December 31, 2020(April
1 to December 31, 2020) included sales of 40,935 million yen (down 34.3% year onyear), operating income of 1,697 million yen (compared with an income of 297 million
yen a year earlier) and ordinary income of 1,548 million yen (compared with an incomeof 234 million yen a year earlier). Profit attributable to owners of parent company was
1,412 million yen (compared with a loss of 564 million yen a year earlier).
Operating results by business segments were as follows.
In addition to the operating income or loss of each segment, the NAC Group ofcompanies posted 872 million yen as corporate expenses not attributable to any
particular segment.
[CreCla Business (Bottled Water)]
We have improved the unit price per customer through increasing the price of thebottled water since January 2020. While aggressive face-to-face sales are sluggish dueto the effects of COVID-19, we worked to reduce the churn rate and increase thenumber of customers by strengthening sales promotion through the Web, improving
service quality and establishing a customer referral system.
In our direct managed stores, while the demand for corporate customers decreased, thedemand for household customers increased due to the increase in time spent at home,
therefore sales increased year on year.

In our affiliated stores, sales increased year on year due to the rise in water server
sales and the bottle price hike.
In addition, sales of ZiACO increased in response to the recent increasing demand forsterilization in both our direct managed stores and our affiliated stores.
Operating income increased year on year thanks to increased sales.
As a result, during the nine months ended December 31, 2020(April 1 to December 31,2020), the CreCla Business segment posted sales of 11,320 million yen (up 13.7% yearon year), and operating income of 1,305 million yen (compared with an income of 587
million yen a year earlier).
[Rental Business]
In the mainstay Duskin business, rental sales decreased at dust control products
department. However, we made up for the decrease in the sales through increasing
product sales and increasing sales at care services department (e.g. the housekeeping
service, exterminator and gardener). As a result, the Duskin business increased sales.
In the With-branded pest-control devices business, the main customer, restaurants,
were temporary closed due to COVID-19. Thus, we saw plunge in sales at thisbusiness.
Earnest Co., Ltd., which provides regular cleaning plan for business clients, decreased
sales year on year due to COVID-19.
Operating income decreased year on year, due to a decrease in sales of the highly
profitable With-branded pest-control devices business.
Consequently, during the nine months ended December 31, 2020(April 1 to December
31, 2020), the Rental Business segment posted sales of 11,084 million yen (down 0.7%
year on year), and operating income of 1,042 million yen (down 29.4% year on year).
[Construction Consulting Business]
In the construction know-how systems department, we refrained from holding sales
seminar during state of emergency. On the other hand, sales of online packaged
products, which are in demand for sales activities of construction shops, were strong.
Thus, we maintained sales on a par with the same period a year earlier.
Nac Smart Energy Co., Ltd. (name changed from Eco & Eco Co., Ltd. from the firstquarter of the current consolidated cumulative period), which handles the constructionof materials related to energy saving, decreased sales year on year since constructions
have partially delayed due to COVID-19.
From the first quarter of the current consolidated cumulative period, Suzukuri Co.,

Ltd. and ACEHOME Co., Ltd. have been added to this business segment.
Consequently, sales increased from the same period of the previous year. Additionally,NAC CO., LTD. completed an absorption-type merger of Suzukuri Co., Ltd. onSeptember 1, 2020.
Operating income declined since Suzukuri Co., Ltd and Nac Smart Energy Co., Ltd.
posted operating loss.
In total, during the nine months ended December 31, 2020(April 1 to December 31,2020), the Construction Consulting Business segment posted sales of 5,795 million yen(up 50.8% year on year) and operating income of 300 million yen (down 24.8% year onyear, including goodwill amortization costs at 30 million yen related to ACEHOME Co.,Ltd.).
[Housing Sales Business]
In this business segment, we sold all of our shareholding in Leohouse Co., Ltd. toYAMADA DENKI CO., LTD. (currently YAMADA HOLDINGS CO., LTD.) on May 14.
Consequently, Leohouse Co., Ltd. was excluded from our consolidated subsidiaries fromthe first quarter of this fiscal year.
KDI Co., Ltd. maintained sales at the same level as in the same period of the previous
fiscal year. However, increased operating income year on year. This is attributable tothe better gross profit.
J-wood Co., Ltd. decreased sales year on year, owing to the number of houses completedand delivered decreased. Operating loss decreased year on year due to reducing SG & Aexpenses.
Although KUNIMOKU-HOUSE Co., Ltd. decreased sales year on year, it increased
operating income year on year by improving the gross profit.
To sum up, during the nine months ended December 31, 2020(April 1 to December 31,2020), the Housing Sales Business posted sales of 7,283 million yen (down 76.2% yearon year), and operating loss of 88 million yen (compared with a loss of 1,439 million yen
a year earlier, including goodwill amortization costs at 33 million yen related to KDI
Co., Ltd. and KUNIMOKU-HOUSE Co., Ltd.).
[Beauty and Health Business]
JIMOS Co., Ltd., decreased sales year on year. The main factor is decline in thenumber of customers. Unauthorized access to the server used at the company’s EC sitefor online-shopping of cosmetics took place July, 2019. As a countermeasure, we
suspended use of EC site for four months. Therefore, the number of customersdecreased. Operating loss increased as a result of decline in sales.
BELAIR Co., Ltd., whose flagship merchandise is nutritional supplement, decreased
sales year on year. Operating loss decreased year on year due to reducing SG & Aexpenses.
In total, during the nine months ended December 31, 2020(April 1 to December 31,2020), the Beauty and Health Business posted sales of 5,482 million yen (down 18.9%year on year), and operating income of 10 million yen (down 87.0% year on year,including goodwill amortization costs at 226 million yen related to JIMOS Co., Ltd. andBELAIR Co., Ltd.).