Financial Results
for the Second Quarter
From June 1, 2016 to November 30, 2016

ERI Holdings Co., Ltd.
January 13, 2017
Listed on Tokyo Stock Exchange (Code 6083)
http://www.h-eri.co.jp
1Summary
Decrease in revenue and earnings year-on year
Revised down full-year earnings forecasts
 In Building Confirmation and Inspection services, the number of Building Confirmations weresolid. While at the same time, due to sluggishness of mid to large size Building Confirmations
and increase in delayed Final Inspection, the target was not achieved.

 In Housing Performance Evaluation and its related services, the number of Housing DesignPerformance Evaluations were steady but Housing Construction Performance Evaluation ofcollective houses were lower than the plan. All in all, it did not fully compensate for the revenue
decrease by the expiration of the Point System for the Energy-Saving Homes last year.

 In Solution Services, voluntary inspection of large size buildings deals decreased.
 Among energy conservation related services, the number of BELS certification increased

significantly. While at the same time, an anticipatory expenses regarding service start-up for theimplementation of Evaluation for Compliance with Energy Consumption Performance ofBuildings increased.

 Structural Evaluations of High-rise Buildings recovered from the slump a year ago.

Copyright © 2017 ERI holdings Co., Ltd. All rights reserved.

2Financial Results for the Second Quarter Ended November 30, 2016

Consolidated results(Millions of yen)

FY2015 2Q

ChangeFY2016 2Q(Jun. 2015 – Nov. 2015) (Jun. 2016 – Nov. 2016)

Amounts

Ratio

5,923(5,809)

5,605(5,605)▲318(▲204)▲5.4%(▲3.5%)

Operating Income327135▲192▲58.7%

Operating Income Ratio

5.5%2.4%--

Ordinary Income338

140▲198▲58.5%

Ordinary Income Ratio

5.7%

2.5%

--Profit Attributable toOwners of Parent

20580▲125▲60.7%Net Income per Share (Yen)

26.36

10.32

▲16.04-Gross Sales(Net Sales *)* Net sales is gross sales minus peer check fee, which was paid to a structural calculation review body through ERI group. After the revision of Building Standard Law inJune 2015, the procedure of confirmation was changed and applicants directly apply to a structural calculation review body separately from Building Confirmation
procedure. Both gross and net sales are described in FY 2015 disclosure, from FY 2016, however, these two sales results in one same sales, which has been previously
described as net sales. In addition, as the consolidated subsidiary TBTC changed its fiscal year-end from March to May in the previous year, we have consolidated thecompany's settlement of accounts for the eight months from April to November 2015.
Copyright © 2017 ERI holdings Co., Ltd. All rights reserved.

3Financial Results for the Second Quarter Ended November 30, 2016

Sales breakdown | Consolidated
Changes in reporting segments

FY2016 2Q

As an independent segment, “Solution Services” split off from
“Others” responding to its growing importance in 1Q FY2016.
In addition, TBTC’s services, solely included in “Others”
previously, divided into each segment.
Previous Segments

Current Segments

Building Confirmation
and Inspection

Building Confirmation
and Inspection
TBTC Building Confirmation

Housing Performance
Evaluation and its related
services
OthersERIS Solution Services
TBTC Building Confirmation
and Inspection

TBTC Housing Performance
Evaluation and its related
services

TBTC Solution Services
TBTC Others

Others
13%Solution
Services
7%

Existingbuildings,
8%

and Inspection

Housing Performance
Evaluation and its related
services
TBTC Housing Performance

HousingPerformance
Evaluation andits related
services
25%

Evaluation and its related
services

Solution Services
ERIS Solution Services

Newly built
non-houses,
33%

Newly built
houses,59%

Building
Confirmation
and Inspection
55%

TBTC Solution Services
OthersTBTC Others*TBTC : Tokyo Bldg-Tech Center Co.,Ltd.
Copyright © 2017 ERI holdings Co., Ltd. All rights reserved.

4

Financial Results for the Second Quarter Ended November 30, 2016

Consolidated results by segment(Millions of yen)

FY20152Q

FY2016
2Q

ChangeAmounts

Ratio

Operating
IncomeChangeBuilding Confirmation
and Inspection(Net Sales)

3,195(3,082)［53.0%］

3,073(3,073)［54.8%］▲122(▲8)▲3.8%(▲0.3%)

150▲37

Housing Performance
Evaluation and its
related services

1,564［26.9%］

1,424［25.4%］

▲140

▲9.0%

▲6▲97

Solution Services*1

485［8.4%］

398［7.1%］▲87▲18.0%

10▲39Others

677［11.7%］

709［12.7%］

324.7%▲19▲17Gross Sales Total

5,923［100.0%］*25,605［100.0%］*2▲318▲5.4%

135▲192*1 “Solution Services” split off from “Others” as an independent segment due to its growing importance in 1Q FY2016. In addition, TBTC’s services, solely included in“Others” previously, divided into each segment. 2Q FY2015 data in this table are also revised based on new segment recognition.
*2 Structural ratio [ ] is calculated using Net sales. (FY2015 5,809 million yen, FY2016 5,605 million yen)

Copyright © 2017 ERI holdings Co., Ltd. All rights reserved.

5Financial Results for the Second Quarter Ended November 30, 2016

Trends in housing market
Changes in new housing starts by category of housings The total number of( an average of the past two months, including present month )new housing starts
increased gradually.

New housing starts
Housings for rent
Housings for sales(Single-detached) Changes in the firsthalf cumulative total
is as follows.

80%

New housing
starts+6.2%

60%

Housings for
OwnerOccupation

+3.4%

40%

Housings for rent

+12.3%

20%

Housings forsales(condominimums)

-9.5%

0%

Housings forsales(singledetached)+7.4%*Cumulative contrast of our first halfof fiscal year (from Jun. to Nov.)

Housings for Owner-Occupation
Housings for sales(Condominiums)

-20%

-40%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

2015

Copyright © 2017 ERI holdings Co., Ltd. All rights reserved.

2016

6

Financial Results for the Second Quarter Ended November 30, 2016

Trends in housing market
New orders ofdetached houses(order amount basis)in major housebuilders showedvolatile swings andalso showed
considerable
difference by thebuilders.
All the new orders ofdetached houses bymajor house builders
turned negativechanges in November.

Changes in new orders of detached housesby Major house builders
New housing starts

ABC

D( Year-on-Year )E

F40%30%20%10%0%-10%-20%-30%-40%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
2016
2015
*New housing starts are on the basis of the number of houses , and the results of major house builders

are on the basis of amounts of money which was disclose on each company’s website.

*Only the chart of new housing starts is an average of the past two months, including present month.

Copyright © 2017 ERI holdings Co., Ltd. All rights reserved.

7Financial Results for the Second Quarter Ended November 30, 2016

Trends in housing market
 The whole market number of Building Confirmation increased 5.8%(Apr.-Sep.)
 The number of Building Confirmation by ERI group increased 5.3%(Apr.-Sep.)

 As a results, the updated market share of ERI group slightly down by 0.1% to 7.6%.

Number of building confirmation and market share by ERI group
Number of Building Confirmation (Category Ⅳ)

Number of Building Confirmation (Categories I – III)

Total Market Share

Market share of buildings in categories Ⅰ-Ⅲ

Market share of buildings in category Ⅳ

25%
20%

10,000

cases

18.1%

17.5%

17.8%

16.7%

17.8%

17.1%

15%
10%

5,000

7.7%

7.7%

7.7%

7.5%

7.7%

7.6%

4.0%

4.2%

4.1%

4.3%

4.2%

4.3%

05%
0%

Apr-Jun2015

Jul-Sep

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Oct-Dec

Jan-Mar2016
8Apr-Jun

Jul-SepFinancial Results for the Second Quarter Ended November 30, 2016

Breakdown of Building Confirmation
FY2016 2Q Japan ERI’s results of Building Confirmation by category of buildings.
(exc. plan change cases)(Cases, Millions of Yen）
Housing

Non-housing

Others

Total(Educations, Lodgings and more）

Hospitals, Welfares

Factories, Warehouses

Offices, StoresCollective Houses

Detached Houses
15,493
3.6%

3,694
6.3%

1,974
11.8%

1,104
0.4%

677
12.5%

653
4.1%

23,595
4.7%

65.7%

15.7%

8.4%

4.7%

2.9%

2.8%

100.0%

333.9
-0.3%
-0.2%

300.6
-0.1%

234.3
2.2%

234.6
-0.3%
5.1%

113.4
19.1%

119.2
10.6%

1,336.1

25.0%
22.5%
Proportion（Reference; June 2016 - November 2016)
Growth rate of national
3.8%
newly built floor space(construction starts)
63.8%
Proportion

17.5%

17.6%

8.5%

8.9%

100.0%

-3.6%

-0.9%

13.4%

15.9%

3.9%

9.2%

12.7%

5.6%

8.7%

100.0%

Number of Building Confirmation

Year-on-Year
Proportion
Net Sales
Year-on-Year

Copyright © 2017 ERI holdings Co., Ltd. All rights reserved.

92.5%

Financial Results for the Second Quarter Ended November 30, 2016

Trends in housing market
 The whole market and ERI group, number of Housing Design Performance Evaluation of detachedhouses increased 14.2% and 7.6% respectively. ERI group’s market share decreased slightly.
 The whole market and ERI group, number of Housing Design Performance Evaluation of collective
houses increased 24.6% and 33.5% respectively. ERI group’s market share increased slightly.
Number of Housing Design Performance and market share by ERI group
Number of Housing Design Performance Evaluationof detached houses
Market share of detached houses

Number of Housing Design Performance Evaluationof collective houses
Market share of collective houses
35.0%

9,000
8,000

30.0%

7,000

Cases

6,000

20.2%

22.8%

5,000
4,000

19.1%

19.6%

25.0%

26.7%

20.1%

22.3%

19.1%

17.7%

18.8%

19.3%
18.7%

3,000

20.0%
15.0%
10.0%

2,000

5.0%

1,000
00.0%
Apr-Jun2015

Jul-Sep

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Oct-Dec

Jan-Mar2016
10

Apr-Jun

Jul-Sep

Financial Results for the Second Quarter Ended November 30, 2016

Main operating figures | Consolidated(Cases)ChangeFY2015 2Q

FY2016 2Q(Jun. 2015 – Nov. 2015)(Jun. 2016 – Nov. 2016)

Building
confirmations

30,043

31,235

1,192

4.0%

Final inspections

22,98623,289303

1.3%

Housing design
performance
evaluations ofdetached house

10,132

10,602

470

4.6%

Housing design
performance
evaluations ofcollective house

10,421

13,154

2,733

26.2%

Copyright © 2017 ERI holdings Co., Ltd. All rights reserved.

11Amounts

Ratio

Financial Results for the Second Quarter Ended November 30, 2016

Key service figures | Consolidated
FY2016 2Q

ChangeAmountsCases（Millions of Yen,Tax Excluded）

Amounts

Cases（Millions of Yen,Tax Excluded）

Building Confirmations for medium to large
size buildings (over 500 sqm)

2,792

704

11

7

Housing Performance Evaluations ofdetached houses*1

10,602

375

470

12

Technical Assessments for Long-life Quality
Housings*2

12,374

192

425

1

Inspections for Housing Defect Liability
Insurance*3

12,732

155

253

6

Evaluations of Seismic Capacity andSeismic Retrofitting Plans

7625

▲81

▲30

Structural Evaluations of High-rise Buildings(Skyscraper and/or Base isolation)

79

105

28

40

*1 Since the first quarter financial results explanation material (announced on September 30, 2016), the amount of Housing Performance Evaluations of detachedhouses is indicated by tax excluded amount. Along with that, the figures for the change from previous year is calculated by the tax excluded amount.
*2 The number of cases which the certification of Long-Life Quality Housing were issued.
*3 Jutaku Anshin Hosyo’s cases and amounts.
Copyright © 2017 ERI holdings Co., Ltd. All rights reserved.

12Financial Results for the Second Quarter Ended November 30, 2016

New services operating figures | Consolidated(Cases)

FY2015
2Q

ChangeFY2016
2Q

AmountsRatio

Route-2 Structural Examination*1307464

15751.1%

Pre-completion Tentative Approval*135121

86245.7%

Assessment of Compliance with the BuildingStandard Law services*24442

▲2

▲4.5%

151,339

1,324

8,826.7%50188

138276.0%

BELS certification*3(Assessment of Compliance with the Building
Energy-efficiency Labeling System)

Energy Pass certification*4*1 The service started responding to the revision of Building Standard Law in June 2015.
*2 The service started responding to the release of “Guideline for conformity inspection of Building Standard Law on existing buildings
with no Inspection Certificate by utilizing Designated Confirmation and Inspection Bodies” (MLIT) in July 2014.
*3 The service started responding to the release of ”Guideline for the Building Energy-efficiency Labeling (2013)” (MLIT) in October 2013.
Coverage of BELS system expanded to housings in April 2016.
*4 The service, evaluation on insulating performance and HVAC efficiency of housings promoted by Japan Energy Pass Association,
started to add third-party certification system in January 2014.
Copyright © 2017 ERI holdings Co., Ltd. All rights reserved.

13Financial Results for the Second Quarter Ended November 30, 2016

Forecasts for FY2016
Revised down full-year consolidated earnings forecasts*
Net Sales： 11,492 million yen (▲386 million yen)

Operating Income： 421 million yen (▲210 million yen)Profit Attributable to Owners of parent ： 256 million yen (▲143 million yen)

Dividend per Share (unchanged)Anticipating continuing moderate increase in Building Confirmation services.

： Fiscal year end 15 yen (Annual 30 yen)

Anticipating recovery in Interim Inspection, Final Inspection and Housing
Construction Performance Evaluation services in the second half.
Evaluation for Compliance with Energy Consumption Performance ofBuildings will start up in April 2017.

*We announced “Notice on Revision of Earnings Forecast for the Fiscal Year Ending May 2017” on December 20, 2016.

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14

Financial Results for the Second Quarter Ended November 30, 2016

Forecasts for FY2016(Millions of yen)

FY2015FY2016FY2016

ChangePrevious Forecast (B)New Forecast (A)*(A-B)

11,470(11,356)

11,879(11,879)

11,492(11,492)▲386

Operating Income

569632421▲210

Vs. Gross Sales

5.0%

5.3%

3.7%

－Ordinary Income

625628425▲203

Vs. Gross Sales

5.5%

5.3%

3.7%

－Profit Attributable toOwners of Parent

414400256▲143

Net Income per Share (Yen)

52.96

51.15

32.78

－Dividend per Share (Yen)

3030300

Gross Sales(Net Sales)*We announced “Notice on Revision of Earnings Forecast for the Fiscal Year Ending May 2017” on December 20, 2016.

Copyright © 2017 ERI holdings Co., Ltd. All rights reserved.

15

Financial Results for the Second Quarter Ended November 30, 2016Topics in FY2016
Acquisition of shares of EPA SYSTEM Inc.
Entering into an memorandum of understandings with respect to theacquisition of all stocks in November 2016

Company Outline
Company name

EPA SYSTEM Inc.

Genbaeye Inc.

Head office

Shibuya-ku, Tokyo

Shibuya-ku, Tokyo

Main business contents

Development of Building
Integration CAD

Design, development, sales andmaintenance of software

Establishment

June 1989

April 2007

Capital10 million yen

5 million yen

Net sales

144 million yen(FY ended March 2016)

36 million yen(FY ended September 2015)

Purpose of stock acquisition
The company has competitive advantages on the software development in the housing industry.
⇒Accelerating in-house system development in ERI Group (to improve operational efficiency and preparefor new business)

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16

Financial Results for the Second Quarter Ended November 30, 2016

Topics in FY2016
From April 2017, compliance with Energy Efficiency Standards
become mandatory for newly constructed non-houses of
2,000m2 and overJapan ERI Co,.Ltd. occupies a large share in the regulated zone, large-sized non-houses.

Energy-consumption (new building flow)[estimated]

Number of construction put-in-placeby building size

Japan ERI’s
share 20.6%

Japan ERI’s
share 32.8%

Estimated by multiplying floor
areas by house/non-house
specific energy consumption
respectively
Source: MLIT “houses/buildings energy-saving policies in the future (initial report)”, January 2015

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17

Financial Results for the Second Quarter Ended November 30, 2016

Topics in FY2016
Start of Evaluation for Compliance with Energy Consumption Performanceof Buildings<Administrative agency with
<Building official orDesignated Confirmation
and Inspection Body><Building owner>
Application forBuilding
Confirmation

Submission of energy
efficiency performance
securing plan

Receiving / submitting ofCertification (energyefficiency standards)

Building
Confirmation

Receiving Certification(building standards)
Construction begins
Procedure for plan change (as necessary)

Final Inspection

Application for Final Inspection
Receiving Certification (inspection)
Use of building begins

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18

jurisdiction or Registered Building
Energy Efficiency Performance
Evaluation Organization>

Evaluation of Compliancewith Energy Consumption
Performance of BuildingsJAPAN ERI Co.,Ltd and Tokyo
Bldg-Tech Center Co.,Ltd arescheduled to start operations
on April 1, 2017 as a Registered
Building Energy Saving
Performance Evaluation
Organization.

Source: MLIT Housing Bureau Housing
Production Division Building Environment Office“Overview of Building Energy Efficiency Act(Detailed Information Briefing Session)"(December 2016)

Financial Results for the Second Quarter Ended November 30, 2016

Appendix : Outline of Building Energy Efficiency Act
Specified buildings

Non-residential buildings at or over a certain size
（Government ordinance：2,000m2）

Regulatory Measures

Mandatory compliance with energy
efficiency standards /Mandatory certification
1.Mandatory compliance with energy efficiency
performance standards (energy efficiencystandards) for newly-constructed buildings.
2. Mandatory evaluation for compliance withenergy efficiency performance standards byadministrative agency with jurisdiction orRegistered Building Energy Efficiency
Performance Evaluation Organization (founded).
3. Ensuring regulatory effectiveness incorporated
in building confirmation procedures based on
Building Standards Law.

Other buildings
notifications

Any building at or over a certain size (Government
ordinance：300m2）*Excludes buildings obligated tocomply with energy efficiency standards

Mandatory notifications to administrative agencies with jurisdiction of plan for
new construction/extension/renovations.
<Instructions/orders issued by administrative agencies with jurisdiction when
deemed necessary without compliance with energy efficiency standards.>

New detached houses by residential construction*A builder who performs the construction ofcompanies*
Housing Top-Runner Program

houses as a business.

To define standards for energy efficiency performance related to houses to besupplied (Housing Top-Runner Program) to the residential construction
companies and induce improvement in energy efficiency performance.
<Recommends/announces/orders issued by the Minister of MLIT toresidential construction companies that build specified number of new houses(Government ordinance:150 units per year), when deemed necessary withoutcompliance with Housing Top-Runner Program.>

Incentive Measures

Labeling System for Energy Efficiency

Receiving certification of conformity with energy efficiency standards from the administrative agency with jurisdiction in their area, theowner of building is allowed to indicate the legally-sanctioned Compliance Label.

Performance Improvement Planning Certification System / exception of floor-area ratio regulation

When plans for new construction of buildings, or extensions, renovations etc. are compliant with certification standards, the plans may
receive certification from the administrative agency with jurisdiction. By acquiring certification for the performance improvement plan,
construction clients are eligible to receive benefits, such as exception of floor-area ratio regulation (the portion exceeds the normal
floor space of a building for equipment meant to improve energy efficiency performance is not calculated [upper limit of 10%]).

Source: This summary is based on the document "Overview of Building Energy Efficiency Act (Detailed Information Briefing Session)" (December 2016) distributed by
MLIT Housing Bureau Housing Production Division Building Environment Planning.
Financial Results for the Second Quarter Ended November 30, 2016
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19

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

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20

Financial Results for the Second Quarter Ended November 30, 2016