Seven Questions for President Masahiro Sugino Developing the Domestic Housing Stock Market A6: We are constructing a business model to address the increase in home renovation demand. Q6: Please tell us about your development of the housing stock market in Japan. n 2009, the government put in place significant tax breaks for home renovations. This was  followed by the launch of an eco-point system for housing. These two measures have com- bined to breathe life into the home renovation market. Aiming to turn this buoyant activity into solid  growth, the JS Group is working to create a business model to meet the needs of this housing stock  market. I For starters, we will continue to take advantage of the existing  LIXIL renovation network.  To cap- ture home renovation demand, which comes in small orders and is geographically scattered, we will  leverage nationwide sales channels to carry out sales activities which are geared towards local pref- erences and needs, thereby stimulating demand. Furthermore, we will utilize existing routes by  adding more sales staff and developing eco-friendly products. As a new development, we will expand demand in new sales routes, such as utilizing condominium  management companies under Jyu-Seikatsu Realty Corporation. We have extremely high expectations  for the renovation demand that we can capture from the home center sales network, including Ken  Depot and Viva Home. In the year ending March 31, 2011, we plan to open 43 new Ken Depot out- lets, and increase this number to 300 outlets in the next 3 years from the year ending March 31, 2011.  We look for this business to serve as a one-stop shop for sub-contractors working with home builders.  There has not been anything like this in Japan before. We will also search for other means to further  boost sales such as the Internet, where we have seen a dramatic jump in access to our web site. LIXIL renovation network Tostem HomeWell, LIFA,  Reform Magic, Inax Reform  Network, TOEX Shizenyoku  de Kurasu network, and Sun  Wave Reform Shop R&B Notes: 1. Renovation sales refers to specialized renovation products, renovation  channel, Tostem Online Corporation, Tostem Viva’s renovation division,  TOEX renovation products, and sales of the building remodeling business. 2. Renovation sales exclude sales of Ken Depot. 3. Renovation sales ratio represents renovation sales as a percentage of  total sales in Japan. Notes:1. Non-new construction sales include renovation sales as well as sales  from installation and maintenance, solutions services for builders, home  fire alarms, real estate-related business, Tostem Viva’s retail business  (other than renovation), performance evaluations, land improvement work  and land guarantee operations. 2. Non-new construction sales ratio represents sales in the non-new  construction market as a percentage of total sales in Japan. JS Group Corporation Annual Report 2010 19 Renovation Sales/  Renovation Sales Ratio ■ Renovation sales ratio  (¥ billion)  (%) 203.3 203.8 255.5 0 19 2010 2009 2011 (Forecast) 300 200 100 19.6 20.7 21.3 22 21 20 Non-new Construction Sales/  Non-new Construction Sales Ratio ■ Non-new construction sales ratio  (¥ billion)  (%) 391.7 386.5 446.6 0 2010 2009 2011 (Forecast) 500 400 300 200 100 37.8 39.7 37.7 20 50 40 30 ■  Tostem ■  Inax ■  Sun Wave ■  Tostem Viva ■  Other