Financial Results
for the Second Quarter
From June 1, 2014 to November 30, 2014

ERI Holdings Co., Ltd.
January 9, 2015
Listed on Tokyo Stock Exchange
Code 6083

Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

1

Financial Results for the Second Quarter Ended November 30, 2014

SummaryFirst half cumulative profits returned to profitability,
but both in year-on-year sales and profits decreased steeply.
 After the hike in consumption tax rate, slump in New Housing starts isserious and year-on-year number marks a 9-month consecutive drop.
Housing-related sales decreased substantially.
 Regarding non-houses segment, sales in offices/stores andfactories/warehouses exceed the previous year but inhospitals/schools decreased substantially.
 In building confirmation and inspection, housing performance
evaluation and its related services and others, all segments decreased
both in sales and profits.
 Sales in legal compliance inspection for existing buildings grows to
2.6 times higher than that in the same period of the previous year.
Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

2Financial Results for the Second Quarter Ended November 30, 2014

Consolidated results(Millions of Yen)

ChangeFY2013 1HFY2014 1H(Jun. 2013 ‐ Nov. 2013)(Jun. 2014 ‐ Nov. 2014)

6,431（5,834）

5,877（5,352）

Operating Income

474

14▲460▲97.0%

Operating Income
Ratio

7.4%

0.2%

‐

‐

Ordinary Income

487

46▲440▲90.4%

Ordinary Income
Ratio

7.6%

0.8%

‐

‐

Net Income▲1946201‐Net Income per Share(Yen)▲24.91

0.90

25.81

‐

Gross Sales(Net Sales *)AmountsRatio▲553▲8.6%（▲481） （▲8.3%）* Net sales is subtracted peer check fee from gross sales. （Peer check fee is paid to the other bodies through ERI group.)
Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

3

Financial Results for the Second Quarter Ended November 30, 2014

Consolidated results by segment(Millions of Yen)FY2013
1H
Building Confirmation
and Inspection(Net Sales*1)
Housing Performance
Evaluation and its
related services
OthersGross Sales Total

ChangeFY20141H

3,810(3,213)

3,536(3,011)［55.1%］［56.2%］

1,560

1,315

［26.7%］［24.6%］

1,060

1,025

［18.2%］［19.2%］

6,4315,877［100.0%］*2［100.0%］*2

Operating
IncomeChangeAmountsRatio▲274(▲202)▲7.2%(▲6. 3%)▲57▲276▲244▲15.7%

6▲172▲34▲3.3%

65▲11▲553▲8.6%

14▲460*1 Net sales is subtracted peer check fee from gross sales. （Peer check fee is paid to the other bodies through ERI group.)*2 Structural ratio［ ］ is calculated using Net sales. （FY2013 ¥5,834 million, FY2014 ¥5,352 million）
Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

4Financial Results for the Second Quarter Ended November 30, 2014

Trends in housing market
Changes in new housing starts by category of housings（an average of the past two months, including present month ） New housing starts( Year-on-Year )has been decreasing
during this period.

 Relatively well

performed housingsfor rent finallyturned to negativein July.

New housing stats
Housings for rent
Housings for sale (single‐detached)

Housings for owner‐occupation
Housings for sale (condominiums)

30%
20%
10%

 Housings for owner-0%

 Condominiums hit‐20%

occupation was‐10%
considerably sluggish.
the bottom in Jun
and rebounded topositive fromOctober.

‐30%
‐40%
Sept Oct Nov Dec Jan Feb Mar Apr May Jun July Aug Sept Oct Nov
2013
2014

Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

5Financial Results for the Second Quarter Ended November 30, 2014

Trends in housing market
Changes in the new orders of detached housesby Major house builders( Year-on-Year ) After peaked in Sep.

2013, the new ordersof detached housesby major housebuilders had beenslowdown.

 Although a sign ofrecovery was finallyseen in lastSeptember, housingmarket still remains
in volatile situation.

New housing starts

ABCDE

F60%

40%20%0%‐20%‐40%‐60%

Sept Oct Nov Dec Jan Feb Mar Apr May Jun July Aug Sept Oct Nov2013
2014

Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

6Financial Results for the Second Quarter Ended November 30, 2014

Trends in housing market
The growth rates of the building confirmations by ERI group from October toDecember 2013 (+9.7%) was less than the market increase (+15.9%).
On the other hand, after January 2014 when a market shrank from the influences ofconsumption tax rate increase, decrease rates were better than the market decline.
The market share of ERI group increased to 7.6%.

（cases）

number of building confirmations
market share of ERI groupchange of the number of ERI group (year‐on‐year)

number of building confirmations by ERI groupchange of the whole market (year‐on‐year)

200,000

25%

150,000
125,000

20%

15.9%

175,000
13.0%

12.8%

11.5%

10.5%
7.3%

7.1%

15%

9.7%

10%
7.3%

7.2%

100,000

7.4%

7.6%

0%

‐2.8%

75,000‐5%‐4.4%

50,00025,0005%‐12.6%‐11.9%‐15.5%‐15.0%‐10%‐15%‐20%‐25%0
Apr‐Jun2013

July‐Sept

Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

Oct‐Dec

Jan‐Mar2014
7Apr‐Jun

July‐Sept

Financial Results for the Second Quarter Ended November 30, 2014

Breakdown of Building confirmation and inspection
FY2014 1H Results of Japan ERI Co., Ltd. （Except a number of plan change cases.）(Cases, Millions of Yen）
(Educations, Lodgings and more）

Collective Houses

Offices, Stores

OthersTotal

Hospitals, Welfares

Factories, Warehouses

Detached Houses
Number of Building Confirmation

13,925

3,535

1,887

974

717

577

21,615

Year‐on‐Year‐19.0%

‐4.0%

0.0%

16.8%

‐16.9%‐8.7%‐13.8%

Proportion

64.4%

16.4%

8.7%

4.5%

3.3%

2.7%

100.0%Net Sales

320.3

287.3

239.0

191.8

132.5

94.2

1,265.5

Year‐on‐Year‐16.7%‐15.4%

0.2%

8.8%‐14.9%

‐8.0%

‐9.5%

Proportion

25.3%

22.7%

18.9%

15.2%

10.5%

7.4%

100.0%

Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

8

Financial Results for the Second Quarter Ended November 30, 2014Sales breakdown | Consolidated
FY2014 1H

Sales of Existing Buildings

Existingbuildings（Millions of Yen）
800

5%
Others

19%

700
600

Housing
Newly built
performance non‐houses
evaluationand its
relatedservices

36%

Newly built
houses59%

Building
confirmation
andinspection

500

56%

300

400

200

25%

100
0
FY2012

Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

9FY2013

FY2014
Forecast
Forecast

Financial Results for the Second Quarter Ended November 30, 2014

Consolidated Financial Statements | Assets(Millions of Yen)FY2013

FY2014 1H(Jun. 2013 ‐ May. 2014)(Jun. 2014 – Nov. 2014)

4,382

4,234

▲147

Total current assets

3,3723,367▲5Cash and deposits

1,851

2,105253

Accounts receivable

48654861

Work in process

33935616

Total noncurrent assets

1,009867▲141

Total property, plant andequipment

123121▲2Total intangible assets

110101▲8Total investments and otherassets

775644▲131

Statutory deposit *1351350

Total assets

Change* Because of the judgment (approximately ¥148 million) in acknowledgment of part of our responsibility was announced from
Osaka High Court on April 22, 2014, we deposited ¥135 million and filed a final appeal and the final appeal acceptance for theSupreme Court. The case is pending in the court now.
Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

10Financial Results for the Second Quarter Ended November 30, 2014

Consolidated Financial Statements | Liabilities(Millions of Yen)FY2013

FY2014 1H(Jun. 2013 ‐ May. 2014)(Jun. 2014 – Nov. 2014)

2,182

2,102

▲79

1,768

1,738

▲30

413364▲48185135▲502,199

2,131▲68Total shareholders’ equity

2,194

2,126

▲68Retained earnings

1,3491,222▲126

Treasury stock *▲173▲11558

Total liabilities and net assets

4,3824,234▲147

Total liabilities
Total current liabilities
Total noncurrent liabilities
Long‐term loans payable *Total net assets

Change* Having introduced “Japanese version Trust-Type Employee Stocks Ownership Plan i.e. J- ESOP", the account book value(¥115 million) of borrowing (¥135 million) for the acquisition of 88,500 treasury stock is included.

Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

11Financial Results for the Second Quarter Ended November 30, 2014

Main operating figures | Consolidated(Cases)ChangeFY2013 1H *FY2014 1H(Jun. 2013 ‐ Nov. 2013)（Jun. 2014 ‐ Nov, 2014）

Building
confirmations（except antennas）

33,868（32,905）

29,753（29,135）

Final inspections（except antennas）

26,089（24,231）

23,996（23,280）▲2,093（▲951）▲8.0％（▲3.9％）

Housing design
performance
evaluations of
Detached house

12,0079,304▲2,703▲22.5％

Housing design
performance
evaluations ofCollective house

13,867

11,544▲2,323▲16.8％

Amounts

Ratio▲4,115▲12.2％（▲3,770） （▲11.5％）* The figures in FY 2013 1H do not include the results of Tokyo Bldg-Tech Center Co., Ltd.

Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

12

Financial Results for the Second Quarter Ended November 30, 2014

Key operating figures | Consolidated
Change*1

FY2014 1H
Cases

Amounts（Millions of Yen）

Cases

Amounts（Millions of Yen）

Building confirmations for medium to large
size buildings (over 500㎡)

2,616

683

▲161

▲27

Housing design performance evaluations ofdetached houses

9,304364 ▲2,704▲90

Technical assessments for Long‐Life Quality
Housings*2

11,057181 ▲3,093▲38Inspections for housing defect liability
insurance

11,514148 ▲1,661▲53Evaluations of seismic capacity and seismic
retrofitting plans

15248▲9▲8Structural evaluations of high‐rise buildings( Skyscraper and/or Base isolation)6992▲9▲8*1 The figures in FY 2013 1H do not include the results of Tokyo Bldg-Tech Center Co., Ltd.
*2 The number of houses which the identifications of conformity for Long-Life Quality Housing were issued.

Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

13Financial Results for the Second Quarter Ended November 30, 2014

FY2014 Earnings Forecast
Revising down previously announced consolidated earnings
forecast for the fiscal year Net sales forecasts:
 Ordinary income forecasts:

12,395 million yen (▲742 million yen)
501 million yen (▲411 million yen)

Excluding expectations of large recovery in new housing markets
Cost-savings (Personnel, outsourcing and other expenses)
Focus on energy conservation, seismic retrofitting and assessmentof compliance with the Building Standard Law services
 Revised dividend forecasts
Cutting forecast of fiscal year-end dividend by 4 yen per share(17 yen/share → 13 yen/share, total 30 yen/share for the year)

Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

14

Financial Results for the Second Quarter Ended November 30, 2014

Forecasts for FY2014(Millions of Yen)FY2013

FY2014FY2014

ChangeNew Forecast (A)Previous Forecast (B)(A‐B)

12,509（11,395）

12,395（11,305）

13,138（12,005）▲742（▲699）

Operating Income

635465902▲436

Vs. Gross Sales

5.1%

3.8%

6.9%

－Ordinary Income

651501913▲411

Vs. Gross Sales

5.2%

4.0%

6.9%

－Net Income▲41 *2

278541▲262

Net Income per Share (Yen)▲5.33 *2

36.00

70.01

▲34.01Dividend per Share (Yen)

34.0

30.0

34.0

▲4.0

Gross Sales(Net Sales *1)*1 Net sales is subtracted peer check fee from gross sales. （Peer check fee is paid to the other bodies through ERI group.)*2 This included the extraordinary losses of ¥722 million by a settlement of a lawsuit in September 9, 2013.
Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

15Financial Results for the Second Quarter Ended November 30, 2014

Topics in FY2014 | Trends in Housing Policy
Robust growth in inspection service for legal compliance ofexisting buildings
July 2014, the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) announced“Guideline for inspection of existing housings which haven't got inspection certificate by utilizing
designated confirmation and inspection bodies.”⇒ JAPAN ERI CO., LTD., the first service provider registered by the MLIT, has launchedinspection service based on the MLIT’s guideline.
Changes in monthly sales of inspection service for legal compliance of existing buildings(Including newly launched service based on the MLIT’s guideline)
20,000（Thousands of Yen）

18,00016,00014,00012,00010,000
8,000
6,000
4,000
2,000
0

JunJulyAugCopyright © 2014 ERI holdings Co., Ltd. All rights reserved.

Sept

Oct
16

Nov

Dec

Financial Results for the Second Quarter Ended November 30, 2014

Topics in FY2014 | Trends in Housing Policy
Re-launching of Eco-Point system for housing
Dec. 27, 2014, implementation of point system for energy-saving homes was endorsed by the Cabinet.
・New construction of environmental-friendly eco housing: grant some points to new housing that meetthe energy saving standards
・Environmental-friendly retrofit: grant some points based on energy saving performance and others* Eco-Point will be available for the projects contracted after the date of Cabinet approval and completed after the date ofpassing supplementary budget.

Seismic qualification service

Seismic retrofit qualifications tend to increase as it approaches deadline of subsidy program.
（Cases）
300
250（Millions of Yen）

Amounts

140

Cases

120

200

100
80

150

60
100
40
50

20001ＱFY2013

2Ｑ

3Ｑ

4Ｑ

Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

171Ｑ
FY2014

2Ｑ

3Ｑ
Forecast

Financial Results for the Second Quarter Ended November 30, 2014

Topics in FY2014
In 2014, 47 employees passed a licensing examination forQualified Building Regulation Conformity Inspector*- account for 12% of 391 total successful applicants* A licensing examination for Qualified Building Regulation Conformity Inspector is a MLIT- administrated
national examination to which 1st-class Architects with 2-years or more specific work experience can apply.

Changes in a Number of Qualified Building Regulation Conformity Inspector in ERI Group
600540493500462420381

400329338

FY2008FY2009300
2001000
FY2010

Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

FY201118

FY2012FY2013

FY2014
Forecast

Financial Results for the Second Quarter Ended November 30, 2014

Topics in FY2014
Nikkei newspaper, Jan. 6, 2015, ecology feature article on p.28
“Japanese houses, why it’s cold? - Low insulating performanceof windows and others”
Japanese houses are colder than one in Western countries. Popularization of “thermal insulation”
for healthy life depends on consumers’ recognition.

 Energy Pass certification

It’s a labeling system of energy
amount required to keep
indoor temperatures
comfortable and promoted by
Japan Energy Pass Association.

 Jan. 2014, JAPAN ERI CO., LTD.

launched Energy Passcertification service as the one
and only third-party
certification body.

Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

19

Financial Results for the Second Quarter Ended November 30, 2014

IR Contact
ERI Holdings Co., Ltd.
Investor Relations and Public Relations Dept.
info@j-eri.co.jp

Copyright © 2014 ERI holdings Co., Ltd. All rights reserved.

20

Financial Results for the Second Quarter Ended November 30, 2014