1. Qualitative Information Concerning Consolidated Business Results(1) Information about operating results
During the fiscal year ended March 31, 2018 (fiscal 2017), the Japanese economy has
been recovered gradually based on the improvement of employment environments andstability of domestic demand and external demand. In addition, personal consumption
showed signs of recovery backed by the trend of durable goods and stable demand ofentertainment business at the end of year even though there were some risks likeunseasonable weather and price rise.

In the housing industry, our core operating domain, low interest loans and an
inheritance tax strategy are underway; however, according to the Ministry of Land,
Transport and Tourism, the number of housing starts decreased year on year. Whatis more, a decline of the number of housing starts, especially condominium, affects
the housing industry largely. Overall, the housing industry has settled down.
On the other hand, in the retail and services industries, personal consumption isstable, and it seems likely to become a steadily recovery.
Against this backdrop, the Nac Group aggressively worked on developments andpromotion of new products, improvement of customer services, encouragements
and expansion of business areas.
As a result, consolidated results for the fiscal year under review included net sales of
89,818 million yen, up 4.6% year on year, an operating income of 1,637 million yen, up
116.3% year on year, an ordinary income of 1,574 million yen, up 98.4% year on year,
and an loss attributable to owners of parent was 994 million yen (compared with anincome of 415 million yen in the fiscal year ended March 31, 2017).
As for non-consolidated operating results, the NAC recorded net sales of 30,521 million
yen, up 0.9% year on year, an operating income of 2,126 million yen, up 34.0% year onyear, an ordinary income of 2,260 million yen, up 38.1% year on year, and a net incomeof 1,330 million yen, up 27.6% year on year.
Operating results by business segment were as follows.
In addition to the operating income or loss of each segment, the Nac Group posted
1,166 million yen as corporate expenses not attributable to any particular segment.

[CreCla Business (Bottled Water)]
The market is growing gradually; on the other hand, industry reorganization isadvanced and the competition crossing over the boundaries among industries is

becoming more intense. Furthermore, there are worries that price hike in delivery
charge affects providers of one-way bottles.

Under the circumstances, the CreCla business took a variety of measures in orderto build a solid customer base (e.g. sales of the new product and effective sales
promotions). At the same time, the CreCla business takes Corporate Social
Responsibility into account earnestly (e.g. we provided CreCla free of charge tosupport disaster victims who were damaged by the downpour in the Kyushu area).
Our direct managed stores kept up sales efforts using advantages of two-way
business, so sales increased slightly. Additionally, the bottle consumption per
customer and sales per customer were improved by the use of CreCla point systems
and additional products.
In our affiliated stores, sales declined due to decreases in sales of bottles eventhough we tried to improve customer services and support programs so as toincrease the number of customers and sales per customer
Operating income rose year on year due to stable sales in our direct managed
stores and revisions to management costs.
Consequently, during the fiscal year ended March 31, 2018, the CreCla Businesssegment posted sales of 13,158 million yen (down 1.0% year on year), and operating
income of 596 million yen (up 117.3% year on year).

In June, 2017, the CreCla business established a cooperative corporation named
ACC Co., Ltd. with Aquaclara Co., Ltd. so as to supply quality products andservices through sharing of experiences and know-how (In the third quarter, we donot consolidate Aquaclara Co., Ltd.). In relation to this, we try to reduce the prime
costs and improve distribution of goods as a whole in terms of the market.

[Rental Business]
The mainstay dust control products business focused on existing customers toenhance customer satisfaction. Moreover, we utilised M&A strategy to expand
business areas. Consequently, the number of customers and contract termination
rates held steady. Furthermore, we strengthened total care services (e.g. thehousekeeping service, exterminator and gardener) to increase customers. As aresult, sales increased year on year.
The With-branded pest-control devices business started sales of the newest productcalled “With” from July, 2017. What is more, the number of loyal customers rose
thanks to sales promotions before the summer peak demand season in both ourdirectly managed stores and affiliated stores. Overall, sales rose year on year.
Earnest Co., Ltd. that provides regular cleaning plan for business also grew salesbecause there were increases in referrals of new customers by existing customers.
Operating income increased year on year owing to sales increases in all sections. Inaddition, new stores that opened over the past 3 years made operating income in
the With-branded pest-control devices business.
As a result, during the fiscal year ended March 31, 2018, the Rental Businesssegment posted sales of 13,727 million yen, up 4.5% year on year, and operating
income of 2,021 million yen including goodwill amortization costs of 2 million yen
related to AI LIFE Co., Ltd., up 9.0% year on year.

[Construction Consulting Business]
The local construction market remains stagnant due to some reasons such as thepostponement of consumption tax hike and the lack of manufacturers. Moreover,the market fear decreases in the number of household and problems of vacanthouse.
Under these conditions, the construction know-how systems business developed
new products continuously and upgraded products to recover sales. Nevertheless,small and midsize building contractors tented to reduce investments resulting fromuncertainty about market prospects. Thus, sales declined year on year.
On the other hand, the construction materials business, which is focused on solar
energy systems, increased the number of orders 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 offering construction materials for subdivided
housing unit and renovation in the adjacent market, so it produced positive results.
Overall, sales increased year on year.
Eco & Eco Co., Ltd., have conducted an overhaul of income structure, sales
promotions and process management to generate stable profits in the future, sosales declined temporarily.
Although we tried to reduce costs in all sections, operating income downed year onyear resulting from sales decreases in the construction know-how systems
business.
Consequently, during the fiscal year ended March 31, 2018, the Construction
Consulting Business segment posted sales of 5,383 million yen, down 11.6% year onyear, and operating income of 775 million yen including goodwill amortization costsof 18 million yen related to Eco & Eco, down 19.0% year on year.

[Housing Sales Business]
In the housing market, the growth of housing starts regarding the rental house andsubdivided housing unit slowed down (e.g. the number of housing starts dropped
for the 9 consecutive months year on year). Additionally, an upward tendency about
construction costs, unseasonable weather and the delay of the construction causedby the lack of manufacturers and craftspeople affects the market significantly.
Against this backdrop, Leohouse Co., Ltd. offered diverse value-added products
such as “CoCo as a lineup of Dai-ninki no ie”; meanwhile, we performed effective
sales promotions aggressively using trademarks that we won customer’ssatisfaction about selling price for 3 straight years. Nevertheless, because of
intense competition for new customers in the market, the number of orders
received and orders in hand regarding Leohouse Co., Ltd., were 1,889 homes(compared with 2,081 a year earlier) and 944 (compared with 1,016 a year earlier),
respectively.
Sales increased year on year since the number of handover was 1,895 that exceeded
previous year (1,850). On the other hand, the number of handover was far below
initial budget largely, so we could not make up for increases in construction costs
and management costs. As a result, Leohouse Co., Ltd., appropriated operating loss
for the 3 consecutive years. In relation to this, we decided phased withdrawal from
unprofitable 20 stores to get rid of operating loss and improve profitability. Then,Leohouse Co., Ltd., appropriated impairment loss at 579 million yen and costs
regarding the closure of stores at 265 million yen, and we dipped into deferred tax
assets around 498 million yen.
J-wood Co., Ltd., enhanced the popular customer attraction model with “Housingcafes” to increase the number of orders. Furthermore, the number of handover waswell above previous year. As a consequence, sales rose year on year.
KDI Co., Ltd., continuously focuses on reinforcement of information collection
methods regarding purchase and human resource development so as to increase
the number of orders received and real estate properties. In relation, we newly
opened sales bases in Tokyo to strengthen sales of ready-built house in themetropolitan area. Moreover, the consolidated period increased compared withprevious year.
The Housing sales business acquired KUNIMOKU HOUSE Co., Ltd., which
original concept is “Strong wooden houses which stress kindness andenvironmental friendliness” in June, 2017. KUNIMOKU HOUSE Co., Ltd., runs
the housing business in Hokkaido (in the financial report, a day as regarded as theacquisition date is June 30, 2017).
Suzukuri Co., Ltd., which produces semi-custom, fashionable and low-priced
houses shifted into high gear. For example, Leohouse Co., Ltd., changed its brandin 5 bases to suzukuri Co., Ltd. Nonetheless, we posted operating loss resulting
from initial costs.
Taken together, during the fiscal year ended March 31, 2018, the Housing Sales
Business posted sales of 47,492 million yen (up 10.6% year on year), and operating lossof 736 million yen (compared with loss of 622 million yen a year earlier, including
goodwill amortization costs at 103 million yen related to J-wood Co., Ltd.,, KDI Co.,

Ltd., and KUNIMOKU HOUSE Co., Ltd.,).

[Mail-order Business]
At JIMOS Co., Ltd., the mainstay Macchia Label brand and the Coyori brand ofskin and hair care products made from natural ingredients increased the numberof new customers by the use of web service. However, sales decreased year on year
due to a slowdown in the repeat rate and the decrease in sales per 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 using management resources
for an aging society and expands sales network keeping in mind the synergy effect.
Additionally, the consolidated period increased compared with previous year.
As a result, during the fiscal year ended March 31, 2018, the Mail-order Businessposted sales of 10,115 million yen (down 3.3% year on year), and operating income of
147 million yen (compared with a loss of 457 million yen a year earlier, including
goodwill amortization costs at 566 million yen related to JIMOS Co., Ltd., andBELAIR Co., Ltd.,).