1. Qualitative Information Concerning Consolidated Business Results(1) Information about operating results
During the three months ended June 30, 2017(April 1 to June 30, 2017), theJapanese economy has been recovered gradually based on the improvement ofemployment environments and corporate earnings. Regarding employmentenvironments, ratio of job offers to seekers (seasonally adjusted annual rate) thatindicates supply and demand in the labor market rose for the 4 consecutive
months, and in June 2017, it recorded 1.51 times which was well above theeconomic bubble. Moreover, corporate earnings were in the rise thanks to theexchange rate, increases in public investments and recovery of the world economy.
In the housing industry, our core operating domain, the number of housing starts ismoving at a million house (seasonally adjusted annual rate) per year because of low
interest home loans, the improvement of employment environments and aninheritance tax strategy.
On the other hand, in the retail and services industries, personal consumption isimproved due to the improvement of employment environments and consumer
sentiment.
Against this backdrop, the Nac Group aggressively worked on developments andpromotions of new products, improvement of customer services, encouragements
and expansion of business areas.
As a result, consolidated results for the first quarter ended June 30, 2017 included
sales of 15,865 million yen (up 9.1% year on year), operating loss of 1,760 million
yen (compared with a loss of 1,858 million yen in the first quarter of fiscal 2016)
and ordinary loss of 1,756 million yen (compared with a loss of 1,872 million yen ayear earlier). Loss attributable to owners of parent was 1,461 million yen(compared with a loss of 1,406 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
296 million yen as corporate expenses not attributable to any particular segment.

[CreCla Business (Bottled Water)]In the three months ended June 30, 2017, although the market is continuously
growing, the rush to enter the market by companies such as major soft drink
manufacturers have slowed down. Overall, extension rate of the market havestabilized. On the other hand, industry reorganization is advanced more and more.

Hence, we expect that less companies like small and medium-sized companies will goout of business in the future. In relation to this, there are worries that price hike indelivery charge affects providers of one-way bottles.
Under the circumstances, CreCla business carried out sales promotions nationwide
to increase the number of customers before the summer peak demand season.
Our direct managed stores tried to win new customers and increase the bottle
consumption per customer to improve sales per customer by the use of additionalproducts. As a result, sales rose year on year.
In our affiliated stores, we continuously worked on customer services and support
programs in order to increase the number of customers and sales per customer.
However, sales declined year on year due to decreases in sales of the water cooler toaffiliates and bottles to customers.
Operating income increased year on year due to revisions to management costs.
Consequently, during the three months ended June 30, 2017, the CreCla Businesssegment posted sales of 3,182 million yen (down 1.9% year on year), and operating
loss of 104 million yen (compared with a loss of 186 million yen in the first quarterof fiscal 2016).
In June, 2017, CreCla Business established a cooperative corporation named ACC
Co., Ltd. with Aquaclara Co., Ltd. so as to supply quality products and services
through sharing of experiences and know-how. In addition, we try to reduce theprime costs and improve distribution of goods as a whole in terms of the market.

[Rental Business]
Based on the stable customer base, the mainstay dust control products businessfocused on existing customers and improved sales per customer. Consequently, thenumber of customers and contract termination rates held steady. Moreover, we
supply total care services (i.e. the housekeeping service, exterminator and gardener)
and expand business areas to increase customer base, so sales increased year on year.

With-branded pest-control devices business strengthened sales promotions before
the summer peak demand season in both our directly managed stores and affiliatedstores, so sales rose year on year.
Earnest Co., Ltd. that provides regular cleaning plan for business also grew sales
since there are increases in referrals of new customers by existing customers.
Operating income decreased year on year owing to sales increases in all sections.
Consequently, during the three months ended June 30, 2017, the Rental Businesssegment posted sales of 3,341 million yen, up 5.4% year on year, and operating
income of 437 million yen up 19.2% year on year.

[Construction Consulting Business]
The local construction market remains stagnant because of several reasons such as thelack of craftspeople and postponement of consumption tax hike. Under theseconditions, the construction know-how systems actively reinforced support programsfor small and midsize building contractors (e.g. upgrade of products, developments of
new goods and the provision of financial instruments). However, small and midsize
building contractors tented to reduce investments resulting from uncertainty aboutmarket prospects. Thus, sales declined year on year.
The construction materials business, which is focused on solar energy systems,
concentrated the new housing market by the use of “Net Zero Energy House (ZEH)”.
Therefore, the number of orders regarding solar powered house is growing.
Additionally, we started offering construction materials for subdivided housing unit
and renovation in the adjacent market from last year, so it gradually produces positive
results. Overall, in the construction materials business, sales increased significantly

year on year.
Eco & Eco Co., Ltd. has begun to serious efforts to change its business model in orderto generate stable profits through improvements of income structure.

Operating income decreased year on year because the construction know-how
systems dropped sales and Eco & Eco Co., Ltd. declined sales significantly.
Consequently, during the three months ended June 30, 2017, the Consulting
Business segment posted sales of 1,327 million yen, up 8.8% year on year, andoperating income of 45 million yen including goodwill amortization costs of 4
million yen related to Eco & Eco, down 56.0% year on year.

[Housing Sales Business]
During the three months ended June 30, 2017, the growth of housing starts
regarding rental housing have slowed down, and the number of housing starts
regarding subdivided housing unit in June, 2017 dropped 3.4% year on year. Taken
together, the housing market has leveled off.
Against this backdrop, Leohouse, Ltd. offered diverse value-added products such as“CoCo as a lineup of Dai-ninki no ie” so as to provide a wide range of customers withmany selections. Meanwhile, we performed effective sales promotion aggressively by
the use of trademarks that we won customer’s satisfaction. Furthermore, we develop
original vibration control system called “L-SAV”. On the other hand, in order to meet awide variety of needs and improve productivity, Leohouse Co., Ltd. changed its brandin 5 bases to “Matrix Concept” that presented by suzukuri Co., Ltd.. In comparison
with Leohouse’s brand, “Matrix Concept” produced semi-custom, fashionable and lowpriced houses.

Nevertheless, sales declined slightly year on year owing to the delay of theconstruction and delivery caused by the lack of manufacturers and craftspeople.

During the three months ended June 30, 2017, the number of orders received andorders in hand are 439 homes (compared with 457 a year earlier) and 1,245 (comparedwith 1,114 a year earlier), respectively.
Operating income declined year on year due to the rise in construction costs and costs
related to new store openings.

J-wood Co., Ltd., sales rose year on year because orders in hand were increased asof the end of the previous fiscal year. Operating income increased year on year
thanks to sales growth.
KDI Co., Ltd. that we acquired in May, 2016 continuously focuses on reinforcement of
information collection methods regarding purchase and human resource development
so as to increase the number of orders received and secure real estate properties forstable sales.

As a result, during the three months ended June 30, 2017, the Housing Sales
Business posted sales of 5,485 million yen (up 25.3% year on year), and operating
loss of 1,640 million yen (compared with a loss of 1,543 million yen a year earlier,including goodwill amortization costs at 23 million yen related to J-wood Co., Ltd.
and KDI Co., Ltd.).
Additionally, in order to enlarge business area and gain construction know-how, weacquired KUNIMOKU HOUSE Co., Ltd. in June, 2017 that expands the housingbusiness in Hokkaido (in the financial report, a day as regarded as the acquisition dateis June 30, 2017). Their original concept is “Strong wooden houses that stress kindness
and environmental friendliness”.

Regarding store openings, during the three months ended June 30, 2017, Leohouse
Co., Ltd. opened 5 sales bases and changed its brand to suzukuri Co., Ltd. in 5 bases,and suzukuri Co., Ltd., newly opened 3 sales bases.

[Mail-order Business]
At JIMOS Co., Ltd., the mainstay Macchia Label brand increased in the number of new
customers resulting from the aggressive investment in advertising and promotions
ahead of the spending plan, but sales decreased year on year due to a decrease in therepeat rate.
On the other hand, sales of the Coyori brand of skin and hair care products made fromnatural ingredients grew year on year as a result of a steady increase in the number of
new customers.

In addition, sales dropped year on year in the wholesaling business.
Operating income improved year on year because of the proper operation of investments inadvertising and promotion.

In December, 2016, we acquired BELAIR Co., Ltd. to gain both production and sales
know-how regarding supplements. In relation to this, we would develop
comprehensive services using their resources for an aging society (in the financial
report, a day as regarded as the acquisition date is March 31, 2017).

As a result, during the three months ended June 30, 2017, the Mail-order Businessposted sales of 2,547 million yen (up 0.7% year on year), and operating loss of 202
million yen (compared with a loss of 266 million yen a year earlier, including
goodwill amortization costs at 141 million yen related to JIMOS Co., Ltd. and
BELAIR Co., Ltd.).