1. Qualitative Information Concerning Consolidated Business Results(1) Information about operating results
During the three months ended June 30, 2018(April 1 to June 30, 2018), theJapanese economy has been recovered gradually (i.e. export, production, capital
investment and personal consumption are improving). Moreover, corporate profits
is growing even though personnel expenses and material costs are on the increase.
On the other hand, there are the uncertainty of politics and economy, trade friction
between the United State of America and China and a sharp rise in the price of
crude oil. Under these circumstances, global economy might put pressure on theJapanese economy.
The housing industry, our core operating domain, remains stagnant because of thewait-and-see mood before consumption tax hike and the decrease in demand for
inheritance tax strategy. Regarding the number of housing starts, single-family
houses decreased for the 5 consecutive month and rental houses declined for the 13
consecutive month year on year. What is more, there was an upward trend in thenumber of housing starts regarding subdivided housing unit, but it dropped at
18.8% year on year in June.
In the retail and services industries, the latest trend in consumer sentiment levels
off due to sluggish growth in real income and influence of unseasonable weather
even though employment environments is improved.
Against this backdrop, the Nac Group aggressively worked on developments of newproducts, promotion of new services, improvement of customer satisfaction andexpansion of business areas.
As a result, consolidated results for the first quarter ended June 30, 2018 included
sales of 15,581 million yen (down 1.8% year on year), operating loss of 1,497 million
yen (compared with a loss of 1,760 million yen in the first quarter of fiscal 2017)and ordinary loss of 1,508 million yen (compared with a loss of 1,756 million yen ayear earlier). Loss attributable to owners of parent was 1,106 million yen(compared with a loss of 1,461 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 posted
249 million yen as corporate expenses not attributable to any particular segment.

[CreCla Business (Bottled Water)]During the three months ended June 30, 2018, the condition of market remained
harsh since a price hike in delivery charge affected providers of one-way bottles
and competition became more intense.
Under the circumstances, the CreCla business carried out sales promotions
nationwide to increase the number of customers before the summer peak demandseason, and it produced some positive results. In addition, we initiated productionof new products by the use of “hypochlorous acid water”.
In our direct managed stores, a participation rate of the new service called “CreClaSecurity Support” has been growing steadily from September, 2017. Thus, salesrose year on year.
In our affiliated stores, sales of the water cooler increased, but the number ofcustomers in affiliated stores and sales of bottles to customers declined.
Consequently, sales decreased year on year.
Operating income increased significantly year on year thanks to sales increases inour direct managed stores.
As a result, during the three months ended June 30, 2018, the CreCla Businesssegment posted sales of 3,273 million yen (up 2.8% year on year), and operating
income of 87 million yen (compared with a loss of 104 million yen in the firstquarter of fiscal 2017).

[Rental Business]
Based on the society of the aged, the Rental business worked on expansion of thesales network and reinforcement of customer services to respond a variety ofcustomer demand.
The mainstay dust control products business opened a new store and focused on
existing customers, so the number of customers and sales per customer rose
gradually. In relation to this, we supply total care services (i.e. the housekeepingservice, exterminator and gardener) that are intended for elderly people andexpand business areas to increase customer base. Taken together, the mainstay
dust control products business increased sales year on year.
With-branded pest-control devices business also opened a new store andstrengthened sales promotions before the summer peak demand season, so salesrose year on year.
Earnest Co., Ltd. that provides regular cleaning plan for business also grew sales

since there were increases in referrals of new customers by existing customers.
Although sales increased in all sections, operating income decreased year on year
owing to increases in labor costs and an allowance for the consumer service point.
Consequently, during the three months ended June 30, 2018, the Rental Businesssegment posted sales of 3,541 million yen, up 6.0% year on year, and operating
income of 431 million yen down 1.2% year on year.
During the three months ended June 30, 2018, we opened a new store in themainstay dust control products business and With-branded pest control devices
business, respectively.

[Construction Consulting Business]
Although consumption tax hike is going to revitalize the local construction market,
the market remains stagnant because of several reasons such as the lack ofcraftspeople, decreases in the number of household and problems of vacant house.
Under these conditions, the construction know-how systems actively reinforced
support programs for small and midsize building contractors and promoted newproducts; however, sales declined year on year.
The construction materials business, which focused on solar energy systems,
reinforced sales promotions regarding solar powered house (e.g. new-built house) in
the housing market by the use of “Net Zero Energy House (ZEH)”. Additionally, we
have started selling storage battery to meet the demand for the end of FIT-basedpurchasing period. Nevertheless, sales decreased year on year owning to the delay
in delivery of commodities, which was affected by Revised-FIT.
Eco & Eco Co., Ltd. have conducted an overhaul of income structure, sales
promotions and process management in fiscal 2017, so sales improved year on year.
Operating income increased year on year thanks to increases in sales of Eco & EcoCo., Ltd. and revisions to management costs.
As a result, during the three months ended June 30, 2018, the Consulting Businesssegment posted sales of 1,080 million yen, down 18.6% year on year, and operating
income of 49 million yen, up 7.6% year on year.

[Housing Sales Business]
During the three months ended June 30, 2018, the number of housing starts
decreased due to the wait-and-see mood before consumption tax hike, uncertainty
about the Japanese economy and a rise in property prices. In relation to this, thenumber of housing starts regarding single-family houses was not glowing as muchas expected.
Against this backdrop, Leohouse Co., Ltd. rebuilt a solid sales system for
consumption tax hike with new president, and we reduced fixed costs through theclosure of unprofitable branches and managed business resources appropriately.
Additionally, based on the revitalization of the market, we made serious efforts totackle many measures to win potential customers such as attractive sales
promotions and remodeling of the branches nationwide.
As a result, during the three months ended June 30, 2018, the number of ordersreceived and orders in hand are 470 homes (compared with 439 a year earlier) and
1,233 (compared with 1,245 a year earlier), respectively. In addition, sales declined
year on year owing to the delay of the construction and delivery caused by the lackof manufacturers and craftspeople. Operating income also decreased year on year
due to decreases in sales and the rise in construction costs that was affected byTokyo Olympics and redevelopment in the metropolitan area.
J-wood Co., Ltd. made use of the popular customer attraction model with “Housingcafes” to get new customers, and we held “Osawa marche” in housing cafes Sendai.
Although the number of orders received increased, that of handover dropped year
on year. Hence, sales decreased year on year.
KDI Co., Ltd. increased sales significantly year on year thanks to new stores thatwas opened in September, 2017 and reinforcements of information collection
methods regarding purchase and human resource development.
KUNIMOKU HOUSE Co., Ltd. worked on purchase of housing sites andreinforcements of sending out information through the social network service.
To sum up, during the three months ended June 30, 2018, the Housing Sales
Business posted sales of 5,419 million yen (down 1.2% year on year), and operating
loss of 1,765 million yen (compared with a loss of 1,640 million yen a year earlier,including goodwill amortization costs at 26 million yen related to J-wood Co., Ltd.,KDI Co., Ltd. and KUNIMOKU HOUSE Co., Ltd.).
Regarding store openings, during the first quarter, Co., Ltd. and suzukuri Co., Ltd.
opened a new sales base, respectively.

[Beauty and Health Business]
At JIMOS Co., Ltd., the mainstay MACCHIA LABEL brand increased newcustomers through the new cosmetic series called “CLEAR ESTHE LINE”, but
sales decreased year on year resulting from decreases in sales per customers.
The Coyori brand of skin and hair care products that is made from naturalingredients declined sales year on year because of the slowdown in the repeat rate
and acquisition of new customers.
Operating income improved year on year because of the proper operation ofinvestments in advertising and promotion to maintain stable profits.
BELAIR Co., Ltd. develops comprehensive services by the use of management
resources for an aging society and expands sales network.
As a result, during the three months ended June 30, 2018, the Beauty and HealthBusiness posted sales of 2,277 million yen (down 10.6% year on year), andoperating loss of 50 million yen (compared with a loss of 202 million yen a year
earlier, including goodwill amortization costs at 141 million yen related to JIMOS
Co., Ltd. and BELAIR Co., Ltd.).