Financial Results
for the Second Quarter
From June 1, 2015 to November 30, 2015

ERI Holdings Co., Ltd.
January 14, 2016
Listed on Tokyo Stock Exchange (Code 6083)
http://www.h-eri.co.jp
1Summary

Increase in first half net-sales and profit in 3-years
Revised up full-year earnings forecasts


New Housing starts mildly recovered. Sales progressed in housing related
business such as Eco-Point System for Energy-Saving Housings, Long-Life
Quality Housings, Housing Energy-Saving Labels, etc.
Revision of Building Standard Law created new services of Route-2
Structural Examination and Pre-completion Tentative ApprovalMedium to large size buildings related business remains steady

Existing building related business grows steadilyExpansion of subsidy program promotes BELS* certification

Structural evaluations service for high-rise buildings struggles with marketshrink* Building Energy-efficiency Labeling System

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2

Fiscal Results for the Second Quarter Ended November 30, 2015

Consolidated results(Millions of yen)

ChangeFY2014 1H

FY2015 1H(Jun. 2014 – Nov. 2014)(Jun. 2015 – Nov. 2015)

5,877(5,321)

5,923(5,809)

45(488)0.8%(9.2%)

Operating Income

14327313-

Operating Income Ratio

0.2%

5.5%

--

Ordinary Income

46338

292

626.3%

Ordinary Income Ratio

0.8%

5.7%

--

Profit attributable toOwners of Parent

6205

199

-

Net Income per Share(Yen)

0.90

26.36

25.46

-

Gross Sales(Net Sales *)Amounts

Ratio* Net sales is subtracted peer check fee, which is paid to the other bodies through ERI group, from gross sales. Due to the revision of Building Standard Law in June
2015, applicants directly apply to structural calculation review body and, from FY 2016, our group sales result in the same number that was previously net sales.
Although in this 2Q, pre-revision orders from 1Q are still included, and both gross- and net-sales are described. Tokyo Bldg-Tech Center Co., Ltd (TBTC), consolidated
subsidiary, changes account closing date from end of March to end of May and its 8-months results is consolidated. In above consolidated results, TBTC’s net-sales iscounted and this net-sales doesn’t match with it disclosed last year.
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3

Fiscal Results for the Second Quarter Ended November 30, 2015

Consolidated results by segment(Millions of yen)

FY2014
1H

FY2015
1H

ChangeAmounts

Ratio

Operating
IncomeChangeBuilding Confirmation
and Inspection(Net Sales*1)

3,536(3,000)［56.4%］

3,120(3,012)［51.8%］▲415(11)▲11.8%(0.4%)

150208

Housing Performance
Evaluation and its
related services

1,315［24.7%］

1,550［26.7%］

234

17.8%

8175

Others(Net Sales*1)

1,025(1,005)［18.9%］

1,252(1,247)［21.5%］

226(242)22.1%(24.1%)

95295,877［100.0%］※2

5,923［100.0%］※2

450.8%

327313Gross Sales Total*1 Net sales is subtracted peer check fee, which is paid to the other bodies through ERI group, from gross sales. Due to the revision of Building Standard Law in June
2015, applicants directly apply to structural calculation review body and, from FY 2016, our group sales result in the same number that was previously net sales.
Although in this 2Q, pre-revision orders from 1Q are still included, and both gross- and net-sales are described. Tokyo Bldg-Tech Center Co., Ltd (TBTC), consolidated
subsidiary, changes account closing date from end of March to end of May and its 8-months results is consolidated. In above consolidated results, TBTC’s net-sales iscounted and this net-sales doesn’t match with it disclosed last year.
*2 Structural ratio [ ] is calculated using Net sales. (FY2014 ¥5,321million, FY2015 ¥5,809million)
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4

Fiscal Results for the Second Quarter Ended November 30, 2015

Main operating figures | Consolidated(Cases)

FY2014 1HFY2015 1H(Jun. 2014 – Nov. 2014)（Jun. 2015 – Nov. 2015）

ChangeAmounts

Ratio

Building
confirmations

29,75330,043290

1.0%

Final inspections

23,99622,986▲1,010▲4.2%

Housing design
performance
evaluations ofdetached house

9,304

10,132828

8.9%

Housing design
performance
evaluations ofcollective house

11,544

10,421▲1,123▲9.7%

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5

Fiscal Results for the Second Quarter Ended November 30, 2015

Key service figures | Consolidated
FY2015 1H

ChangeAmounts

Cases（Millions of Yen）

Amounts

Cases（Millions of Yen）

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

2,781

697

165

14

Housing performance evaluations ofdetached houses*1

10,13239282828

Technical assessments for Long-Life Quality
Housings*2

11,949

191

892

10

Inspections for housing defect liability
insurance*3

12,4791499651

Evaluations of seismic capacity andseismic retrofitting plans

157

55

57

Structural evaluations of high-rise buildings( Skyscraper and/or Base isolation)

5165▲18▲27

Sales of “Technical assessments for Long-Life Quality Housings” in Financial Results for the First Quarter (released September 30, 2015) was incorrect number.
The number is corrected from 65 to 94 million yen and recalculated number is described in this table.
*1 Cases and amounts by housing design performance evaluation.
*2 The number of cases which the certification of Long-Life Quality Housing were issued.
*3 Jutaku Anshin Hosyo’s cases and amounts.
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6Fiscal Results for the Second Quarter Ended November 30, 2015

Trends in housing market
Changes in new housing starts by category of housings The total number ofnew housing starts
firmed up gradually
until summer and thenlost its momentum.

 Housings for owner-

occupation andHousings for rent
were generally
steady.

 Housings for sale

(an average of the past two months, including present month)80%

Housings for owner-occupation
Housings for sale (condominiums)

60%

40%

20%(condominiums)
went up and down
sharply.

0% Housings for sales-20%(single-detached)remained roughly flat.

New housing starts
Housings for rent
Housings for sale (single-detached)-40%

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Sep

Oct

Nov

Dec

Jan2015

7FebMar

AprMayJunJulAug

Sep

Oct

Nov

Fiscal Results for the Second Quarter Ended November 30, 2015

Trends in housing market (continued)
Changes in new orders of detached housesby Major house builders

 New orders ofdetached houses bymajor house builders
showed volatileswings in monthly
basis and also
showed considerable
difference company
by company.

New housing starts

ABC

D(Year-on-year)

EF

60%

40%20%0%-20%-40%-60%
Sep

Oct

Nov

Dec

Jan Feb2015

MarAprMayJunJulAug

SepOctNovNew housing starts : An averages of the past two months, including present month
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8Fiscal Results for the Second Quarter Ended November 30, 2015

Trends in housing market (continued)
 The housing market, which had shrunk from January 2014 after the reaction of the consumption tax

increase, started to recover gradually from early last year.

 ERI group’s year-on-year change numbers exceed market result throughout all periods in the chart.
 ERI group’s market share had been steady and expanded to 7.7% at the moment.

Number of building confirmation and market share by ERI group(Cases)Number of building confirmations
Market share of ERI group
Change of the number of ERI group (year-on-year)

Number of building confirmations by ERI group
Change of the whole market (year-on-year)

175,000
150,000

15%
7.4%

7.6%

7.8%

7.6%

125,000

3.5%

100,000
75,000-0.5%-12.6%-11.9%

50,00025,000-15.5%-15.0%

7.7%

7.7%

10%

5.2%

1.6%

5%

0.7%

0.8%

0%
-5%
-10%

-15.0%-15%-21.5%-20%

0-25%
Apr-Jun2014

July-Sept

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Oct-DecJan-Mar2015
9Apr-Jun

July-Sept

Fiscal Results for the Second Quarter Ended November 30, 2015

Breakdown of building confirmation
FY2015 1H Japan ERI’s results of building confirmation by category of buildings.
(exc. plan change cases)(Cases, Millions of yen）

TotalOthers(Educations, Lodgings and more）

Hospitals, Welfares

Factories, Warehouses

Offices, StoresCollective Houses

Detached Houses
Number of Building Confirmation

14,957

3,474

1,766

1,100602

627

22,526Year-on-Year

7.4%-1.7%

-6.4%

12.9%

-16.0%

8.7%

4.2%

Proportion

66.4%

15.4%

7.8%

4.9%

2.7%

2.8%

100.0%Net Sales

334.8

300.9

229.3

235.3

95.2

107.9

1,303.3

Year-on-Year

4.5%

4.7%

-4.1%

22.6%

-28.1%

14.5%

3.0%

Proportion

25.7%

23.1%

17.6%

18.1%

7.3%

8.3%

100.0%（June 2015 - November 2015）
Growth rate of national
newly built floor space(construction starts)

3.2%

-3.6%

3.1%

-27.1%

-2.4%

-0.1%

Proportion

63.9%

9.9%

13.3%

5.1%

7.8%

100.0%

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10Fiscal Results for the Second Quarter Ended November 30, 2015

Sales breakdown | Consolidated
The composition of existing building related sales made a great progress to 9%,
which was 4% and 6% at the end of FY 2014 and FY 2015 respectively.

Sales of Existing Buildings

FY2015 1H(Millions of yen)

1200

Others21%

Existingbuildings

9%

Newly built
non-houses
Housing
performance
evaluation andits related
services

1000

32%

Newly built
houses59%

800

Building
confirmationand inspection

600

52%

400
200

27%

0FY2013

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11FY2014

FY2015 1H& Forecast

Fiscal Results for the Second Quarter Ended November 30, 2015

Changes of quarterly results | Consolidated
Quarterly net sales and ordinary income
Net sales(Millions of yen)

Ordinary income(Millions of yen)
400

4000
Ordinary income

350

Net sales

3500

300
3000
250
2500

200
150

2000

100

1500

50
1000
0500

-50-1000
FY2011
3Q

FY20114Q

FY2012
1Q

FY20122Q

FY20123Q

FY20124Q

FY2013
1Q

FY20132Q

FY20133Q

FY20134Q

FY20141Q

FY20142Q

FY20143Q

FY20144Q

FY20151Q

FY2015
2Q

Until third quarter 2013, data is financial results announced by JAPAN ERI CO.,LTD.

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12

Fiscal Results for the Second Quarter Ended November 30, 2015

Forecasts for FY2015(Millions of yen)

FY2014FY2015FY2015

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

11,94911,741

11,866124

Operating Income

292649741

92

Vs. Gross Sales

2.4%

5.5%

6.2%

－Ordinary Income

331643754

110

Vs. Gross Sales

2.8%

5.5%

6.4%

－Profit attributable toOwners of Parent

18378507

129

Net Income per Share (Yen)

2.37

48.39

64.93

16.54

Dividend per Share (Yen)30

30300Gross Sales

We announced “Notice on Revision of Earnings Forecast for the Fiscal Year Ending May 2016” on December 8, 2015.

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13

Fiscal Results for the Second Quarter Ended November 30, 2015

Medium to long-term vision
From reactive to proactive business transformation
Aging and scarcity of industry workforce⇒ Seizing M&A opportunity in inevitable industry reorganization

Market development by leveraging independence and expertiseadvantage⇒ Stimulating actions by new business project team

Improvement of operational efficiency by digitization ofapplication data, review of inspection procedure, etc.

Next medium-term management plan (June 2016 – May 2019)will be released in June.
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14

Fiscal Results for the Second Quarter Ended November 30, 2015

Topics
Social roles of third-party certification bodies should enlarge
After the revelation of using forged data for piling works, there was a flood ofoffers to ERI group asking documentary-based inspections on piling records.
We reaffirmed there are strong demands for utilizing third-party certification
bodies to secure transparency.
(Peta-Joule)Adoption of the Paris Agreement at the Paris
Climate Change Conference(COP21).

1990-2013+2.4%
Transportation Sector

Japan targets 26% Co2 emission reduction by 2030
(compare to 2013).
In Houses and Non-houses sector, there is muchroom for Co2 emission reduction.
ERI group will accelerate to develop energy
conservation related business.

Total of 3 sectors

Houses and Non-houses Sector

34.5%
1990-2013+33.5%(Houses +20.0%)(Non-houses +44.6%)

Industrial Sector（FY）

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15

Fiscal Results for the Second Quarter Ended November 30, 2015

Topics – Mandatory energy saving standards
Summary of Energy Conservation Act
EffectivedateApril
2016

Rules to be introduced

Our services

Best-effort obligations to indicateenergy saving performance(third-party certification orself-evaluation)

BELS(Third-partycertification)

Approving of plan for energy
saving performance
improvement

Approving or Indication ofcompliance with energy saving
standardApril
2017

Technical assessment
for approval fromadministrativeagencies

Technical assessment
for approval fromadministrativeagencies

Obligation to conform energy
saving standard
Obligation to conform energy
saving standard review

Conformity review forenergy saving standard

Approving of building withspecial structure or equipment

Performance
evaluation forministerial certification

Objective
buildings

Types ofbuildings

Newly built

Non-houses

Existing

HousesRelated organization

Registered Building Energy-Efficiency Labeling
System evaluation organization

Newly built

Non-houses*Energysavingrenovation

Registered building survey agency (until March2017) (from April 2017, Registered building
energy saving performance evaluationorganization)

HousesRegistered housing performance evaluation
organization / Registered building survey agency(until March 2017)

Non-Houses

Registered building survey agency (until March2017) (from April 2017, Registered building
energy saving performance evaluation
organization)

HousesRegistered housing performance evaluation
organization / Registered building survey agency(until March 2017)

Non-houses

Registered building energy saving performance
evaluation organization

Existing

Newly built
Renovation
Newly built

Non-houses

Renovation

HousesRegistered building energy saving performanceevaluation organization*Energy saving renovation ： expansions・renovations, repairs・remodeling, install or modify air conditioning systems
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Fiscal Results for the Second Quarter Ended November 30, 201516