Q2 FY2014 Consolidated Financial Results...Consolidated Results For First Half Fiscal Year 2014 1...

Copyright © 2014 EPCO CO., LTD. ALL RIGHTSs Reserved.

Q2 FY2014 Consolidated Financial Results

(Six months ended June 30,2014)

EPCO CO., LTD.


Contents【Part 1】

Consolidated Results For First Half Fiscal Year 2014 1

Forecast For Fiscal Year 2014 9

【Part 2】

Introduction of EPCO 13

Reasons for EPCO’s Involvement in Energy 17

Status of Liberalization of Electricity Retailing for General Consumers

in the United Kingdom20

About the “Enechange” Electricity Charge Plan Comparison Site for Japan 22

EPCO’s Smart Energy Business 24

About the METI Large-Scale HEMS Information Infrastructure Project 30

＜Notes of Caution Regarding Future Forecasts, Etc.＞The forecasts included within this material is based on currently available information. Forecasts may change due to future trends in the Japanese economy and the construction equipment industry, as well as the development of new services and technology. Therefore, EPCO provides no guarantee to their accuracy.

Contact for IR-Related Inquiries

EPCO CO., LTD.Business Management GroupTel :03-5244-6387Mail : [email protected]


Consolidated Results For First Half Fiscal Year 2014 1

Consolidated

Financial Results

FY2013 1H

result

FY2014 1H

forecast result

Vs. forecast Vs. FY2013 1H

ChangePercent Changed

ChangePercent Changed

Net Sales 1,538 1,602 1,524 ▲77 ▲4.8% ▲14 ▲0.9%

Operating Income 343 383 243 ▲139 ▲36.5% ▲99 ▲29.0%

Ordinary Income 360 372 221 ▲150 ▲40.5% ▲138 ▲38.5%

Net Income 189 234 132 ▲102 ▲43.5% ▲56 ▲30.0%

Operating Margin 22.3% 24.0% 16.0% ▲8.0P - ▲6.3 -

(Units: Million JPY)

There were two primary factors for the decrease in profits compared to FY2013 1H and the failure to meet forecast goals for operating income.①External Factors: Decreased new construction due to a rebound after the spike in demand

that occurred before the increase of the consumption tax.⇒ Decreased sales for the design consulting business

②Internal Factors: Prior Investments into the Smart Energy Business in Anticipation of Selection for the Large-Scale HEMS Information Infrastructure Project

⇒ Increased HR Costs・System Development Costs, Etc.

■ Profit from Existing businesses increased, while profit from new businesses decreased due to prior investment

Outlook for First Half of FY14 Financial Result


SegmentFY2013 1H

result

FY2014 1H

resultVs. FY2013 1H

FY2014 1H forecast

Vs. forecastFY2013

result

Design Consulting 990 1,008 ＋1.8% 1,114 ▲9.5% 2,168

Waterworks Equipment Design

786 753 ▲4.2% 835 ▲9.8% 1,715

Electrical Equipment Design

116 94 ▲18.6% 117 ▲19.4% 255

Others 86 159 ＋83.9% 160 ▲0.5% 197

Customer Support 290 363 ＋25.2% 339 ＋6.9% 636

Smart Energy 91 98 ＋7.0% 85 ＋15.2% 199

Others 166 55 ▲67.0% 63 ▲12.7% 294

Total Sales 1,538 1,524 ▲0.9% 1,602 ▲4.8% 3,299

■ Increased income in customer businesses lead to securing overallsales equivalent to those of FY2013 1H.

Change in Sales by Segment


２

(Design Consulting Business) ・ (Not Achieved) Decreased sales in waterworks/electrical equipment design due to a rebound after the spike in demand that occurred before the increase of the consumption tax.(Vs. Last Quarter ▲55M JPY Vs. forecast ▲105M JPY)

・Other sales (construction design support, commissioned system development, etc) increased, securing an increase in income.(Other Businesses) ・Decreased income due to a policy to shrink the application supervision business after a review of existing businesses.

Outlook for Sales by Segment

(*) The business segments were changed from this fiscal year. The comparison and analysis of this report are based on new classifications.


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

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

Jul 2012‐Jun 2013 Jul 2013‐Jun 2014

Changes in New Home Construction and Design Commissions ３

(*2 The number of commissioned is the number of homes for which waterworks equipment designs were commissioned.)

【Changes in New Low-Rise Home Construction (*1)】

FY2013

1H

FY2014

1H

Change

(%)

Ref. New Low-Rise Home constructions Epcocommissioned(calculated on the basis of buildings)

24,310 22,402 ▲7.8

New Low-Rise Home constructions Epcocommissioned (calculated on the basis of households) (1) (※2)

35,902 37,367 +4.1

Total of New Low-Rise Home construction(calculated on the basis of households) (2)

305,337 294,330 ▲3.6

Epco’s market share((1)/(2)) 11.8% 12.7% +0.9

【Changes in Design Commissions and Market Share】

Starting in March, the effects of the rebound that occurred after the spike in demand before the increase of the consumption tax resulted in a ▲3.6% reduction of new home construction for FY2014 1H (Jan~Jun) compared to FY2013 1H.

The number of New Low-Rise Home constructions we were commissioned for 1H with increased by ＋4.1% compared to FY2013 1H due to an increase in commissions for housing complexes. （Though, calculated on the basis of buildings, the number of total commissions decreased by ▲7.8%, as a result of decreased commissions for individual homes ）As a result, our market share in New Low-Rise Home construction increased from 11.8% to 12.7%.

Outlook for the Number of New Home Construction and Home Design Commissions

By Period

By Quarter

Jul 2012~

Jun 2013

Jul 2013~

Jun 2014Change

Jul~ Sep 159,086 177,591 ＋11.6%

Oct~Dec 168,586 196,477 ＋16.5%

Jan~ Mar 139,960 144,546 ＋3.3%

Apr~ Jun 165,377 149,784 ▲9.4%

Total 633,009 668,398 ＋5.6%

【 Changes in New Low-Rise Home Construction By Quarter】 (Unit: Homes)

(*1 Created from MLIT Announced Number of Homes by Use Number of New Low-Rise Home Construction calculated on the basis of household = Wooden Construction + Reinforced Concrete / Steel Frame Construction (Prefab) Homes

(Unit: Homes)

Decreasing trend after March 2014

By Period

By Quarter


1,1141,008

463

352

0

50

100

150

200

250

300

350

400

450

500

0

200

400

600

800

1,000

1,200

990 1,008

391352

0

50

100

150

200

250

300

350

400

450

0

200

400

600

800

1,000

1,200

Sales

FY2014 1H Results by Segment ①~ Design Consulting ~ ４【Vs. FY2013 1H】

【Vs. forecast】

Sales Operating Income

Operating Income

Sales+17M+1.8%

Operating Income▲38M▲9.7%

Sales▲105M▲9.5%

Operating Income▲110M▲23.8%

Sales

Waterworks Equip. Design ▲33MElectrical Equip. Design ▲21MOther ＋72M(*)(*Increased Construction Design, Commissioned System Development, Etc.)

OperatingIncome

Although increased sales of unprofitableCommissioned System Development projects made up for reduced equipment design sales, a lowered Operating Profit Margin decreased profits.

Sales

Waterworks Design ▲82MElectrical Design ▲22M(Insufficient factoring in of the effect of decreased new home construction)Other ±０M (As forecast)

Operating Income

forecast Operating Income goals not met due to sales goals not being met(No unexpected increases in expenses)

ExternalEnvironment

・New Home Construction is Declining(See P.3 Material)

・Exchange Rate: Chinese Yuan, Vs. FY20131H(FY2014 1H:16.56 JPY/CNY (＋6.6%)(FY2013 1H:15.53 JPY/CNY)

Future Forecast

・The effects of the rebound after the spike in demand that occurred before the increase of the consumption tax will be felt in the new home construction market in earnest in 3Q and 4Q.・Made up for the decrease in current sales with increased commissions for new services such as elderly housing with supportive services and structural/architectural design, etc.



FY2014 1H Result

FY2014 1H ResultFY2014 1H forecast

FY2013 1H Result


339363

104

131

0

20

40

60

80

100

120

140

0

50

100

150

200

250

300

350

400

290

363

67

131

0

20

40

60

80

100

120

140

0

50

100

150

200

250

300

350

400

FY2014 1H Results by Segment ②~ Customer Support ~ ５【Vs. FY2013 1H】

【Vs. forecast】



Sales+73M

+25.2%

OperatingIncome+64M

+96.5%

Sales+23M+6.9%

Operating Income+26M

+25.6%

Sales

・ Inbound call from existing customersIncreased service usage ratio

・ Outbound call to existing customersIncreased service commissions

Sales

Inbound inquires from existing customers exceeded expectations, achieving a ＋6.9% increase over forecast goals

Operating Income

In addition to the effect of increased sales, efforts to control costs through increases of business efficiency and operation ratios led to achieving a +96.5% increase of profits.

OperatingIncome

Operating Income also exceeded forecast goals due to sales goals being exceeded

External Environment

・The Customer Support Business is a service for established homes, and therefore changes of new home construction have no effect ・There is high interest in the home renovation market, with an increase in inquiries

Future Forecast

・Inbound and outbound services for existing customers both forecast as becoming stronger・Focusing on improvement of outbound service (Analyzing and leveraging customer information)



FY2014 1H resultFY2013 １H result

FY2014 1H resultFY2014 1H forecast


85 98

▲ 76

▲ 130▲ 150

▲ 100

▲ 50

0

50

100

150

14/12期２Q 計画 14/12期２Q 実績

売上高営業利益

91 98

▲ 19

▲ 130▲ 150

▲ 100

▲ 50

0

50

100

150

13/12期２Q 実績 14/12期２Q 実績

売上高営業利益

FY2014 1H Results by Segment ③~ Smart Energy ~ ６【Vs. FY2013 1H】

【Vs. forecast】

Sales＋6M

＋7.0%

Operating Income▲111M

－

Sales+12M

+15.2%

Operating Income▲53M

－


SalesSolar Power Equipment Design Commissions

▲27MSales for ONE Ene ＋36MOther (P&E, Etc.) ▲ ３M

OperatingIncome

Prior investments into the Smart Energy Business in anticipation of selection for the Large-Scale HEMS Information Infrastructure Project decreasedprofits(Hiring personnel, system development costs, etc)Employees: 34⇒64 (Compared to end of Q2)

SalesSales for ONE Ene ＋17M(Due to occurrence of spot sales (HEMS Equipment))

OperatingIncome

Larger than forecast prior investment into the Smart Energy Business in anticipation of selection for the Large-Scale HEMS Information Infrastructure Project(Hiring personnel, advertisement, system development) lead to a deficit from forecast goals.

External Environment

Due to the of electricity retailing for general consumers in 2016 (7.5 trillion JPY worth of market opening), many private-sector businesses and municipalities have announced that they will enter the general consumer electricity market (birth of a new market)

Future Forecast

ONE Ene, P&E-related sales expected to increase from 3Q (forecast 2H Sales ONE Ene 26M

P&E 6M )

FY2014 1H resultFY2013 1H result

FY2014 1H resultFY2014 1H forecast

Operating IncomeSales



343

243

＋64

▲38

▲111▲15

0

50

100

150

200

250

300

350

400

FY2013 1H Customer SupportSegment

EnergySegment

Other FY2014 1HDesign ConsultingSegment

FY2014 1H Operating Income Change Analysis (Vs. FY2013 1H)■ Prior Investment into the Smart Energy Business in Anticipation of Selection

for the Large-Scale HEMS Information Infrastructure Project


７

Increased Profits in Existing

Businesses＋26M

Decreased Profits in New

Businesses▲111M

【Factors in Decreased Profits】Increased Sales ＋18MIncreased Costs ▲55M(System development cost ▲54M)System Development Sales＋45M(Gross Profits▲9M)Breakdown: Design Sales Decrease (Existing Customers) ▲67MDesign Sales Increase (New Customers) ＋39M

Design Consulting

CustomerEnergy

Other

(*)Rough breakdown of prior investments・HR Costs ＋40 M JPY・Management Costs ＋77 M JPY(HEMS Equipment Costs, System

Development Costs, Etc.)


383

243

＋27

▲110

▲53 ▲4

0

50

100

150

200

250

300

350

400

450

FY2014 1Hforecast

Design ConsultingDecreased Profit

CustomerIncreased Profit

EnergyDecreased Profit

Other FY2014 1Hresult

FY2014 1H Operating Income Change Analysis (Vs. forecast)■ Operating Income Not Achieved Due to the Following Two Factors


８

Factors for Profits Not Being Achieved・Sales Not Achieved ▲106M

Sales Not Achieved ▲10M(PV Design)Excessive Costs ▲43M

Prior Investments into the Smart Energy Business in Anticipation of Selection for the Large-Scale HEMS Information Infrastructure Project

Factor ②:Internal Business Environment

Design Consulting

CustomerEnergy Other

Decreased new construction due to a rebound after the spike in demand that occurred before the increase of the consumption tax.

Factor ①:External Business Environment


Forecast for fiscal year 2014

①External Factors : Decreased new construction due to a rebound after the spike in demand that occurred before the increase of the consumption tax.⇒ Decreased Design Consulting Business Sales (172M JPY Sales Decrease Expected)

②Internal Factor-１ : Acceleration of Prior Investment Due to Selection for the Large-Scale HEMS Information Infrastructure Project⇒ Increased HR Costs and System Development Costs, Etc. (132M JPY Cost Increase

Expected)③Internal Factor-２ : Scheduled Relocation of Tokyo head office in November 2014.

⇒ Moving Costs Incurred in Current 2H (67M JPY Moving Costs Expected)

Consolidated

Financial Results

(Units: Million JPY, %)

FY2014

Forecast

In Feb.

FY2014

Forecast

In Aug.

Change1H 2H 1H 2H

Net Sales 1,602 1,703 3,305 1,514 1,579 3,093 ▲6.4%

Operating Income 383 460 844 232 225 458 ▲45.7%

Ordinary Income 372 449 821 221 213 435 ▲47.0%

Net Income 234 282 517 134 132 267 ▲48.2%

Operating Margin 24.0 27.0 25.6 15.4 14.3 14.8 ▲10.8P

Income Per Share (JPY) 52.47 63.28 115.75 30.18 29.75 59.93 ▲48.2%

■ Forecast for FY2014 was revised in consideration of the external andinternal environment.

９

Factors in the Revision of the Forecast for FY2014


Segment


FY2014 Forecast

In Feb.

FY2014 Forecast

In Aug.Change

1H 2H 1H 2H

Design Consulting 1,114 1,066 2,180 999 1,010 2,009 (▲7.8%)

Waterworks Equipment Design

835 797 1,633 756 750 1,506 (▲7.8%)

Electrical Equipment Design

117 109 227 94 95 189 (▲16.7%)

Others 160 159 320 149 165 314 (▲1.9%)

Customer Support 339 378 717 361 378 739 (＋3.1%)

Smart Energy 85 241 327 97 175 272 (▲16.8%)

Others 63 16 79 57 16 74 (▲6.3%)

Total Sales 1,602 1,703 3,305 1,514 1,579 3,093 (▲6.4%)

Sales Forecast by Segment (Revised)

【Design Consulting Business】 Waterworks and Electrical Equipment Design Sales Revised Lower, Primarily for Existing Customers

【Customer Support Business】 No Change

【Smart Energy Business】 ONE Ene and P&E Related Sales Revised Lower

【Other Businesses】 No Change

Outlook for 2H Sales Forecast

10


844

458

＋31

▲216

▲187 ▲14

0

100

200

300

400

500

600

700

800

900

FY2014Forecast in Feb.

Design ConsultingSegment

Customer Support Energy Other FY2014

Forecast in Aug.

FY2014/12 Analysis of Fluctuations in Operating Income (Vs. forecast)

■ Revision of Performance By Acceleration of Prior Investments in Order to Speed Up Growth


11

Sales Not Achieved ▲172MExcessive Costs ＋44MBreakdown:Home Office Moving Costs +13M

Sales Not Achieved ▲55MExcessive Costs ▲132MBreakdown:HR Costs ＋20MVarious Costs ＋86MHome Office Moving Costs ＋25M

Decreased new construction due to a rebound after the spike in demand that occurred before the increase of the consumption tax

Factor①:External Business Environment

Stimulate Growth by Accelerating Prior Investment Due to Selection for the Large-Scale HEMS Information Infrastructure Project

Factor②:Internal Business Environment

Relocation of Head Office In November 2014

Factor③:Internal Business Environment

Home Office Moving Costs+29M

Design Consulting

CustomerEnergy

Other

Segment Segment

Dividend Payments to Shareholders 12

■ No Change to Predicted Dividends for FY2014(Unit: JPY/Share)

06/1 07/1 08/1 09/1 10/1 11/1 12/1 12/12 13/12 14/12

Dividend 22.5 30.0 30.0 30.0 35.0 50.0 55.0 55.0 55.0 55.0Dividend payout ratio 32.4 37.3 49.4 50.9 43.8 46.8 47.8 69.3 52.4 91.8

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Sufficient cash on hand for business has been accumulated⇒ Maintaining Dividend Level of FY2013 (Predicted Dividend Payout Ratio 91.8%) Sufficient cash on hand for business has been accumulated⇒ Maintaining Dividend Level of FY2013 (Predicted Dividend Payout Ratio 91.8%)

(Unit: %)

Introduction of EPCO

©2014 EPCO Co., Ltd. ALL RIGHTS RESERVED.

13

Performance of Platform Company


Design Service Solution

14

Our prowess in residential solar power design and generation forecasts is measured in terms of 200MW/Year in 43,000Homes/Year.

14%, 100,000 home market share in equipment design for new homes. (Water, Electricity, Gas Design, Etc.)

Customer Management for Residential Management1M Homes, Performance of 500K Calls/Year

Customer Support Solution

EPCOʼs Strength: The high ability of Our Business Services!

The trust that major housing companies and housing equipment makers put in us is proof of our excellent performance in the field of homes and housing.


Overview of the Smart Energy Company 15

We Provide the Residential Smart Energy Service,Leveraging Our IT x Design x Customer Management

Know-how Cultivated in the Housing/Home Field.

Big Data ServiceHEMS Service

EPCO is Collaborating With Domestic and International Companies and Universities in Its Smart Energy Business.

Energy Management Service

Guangdong Liansu EPCO Residential Equipment Design Services Co., Ltd.

Business Bases


16

With anticipated further expansion of the Smart Energy Company due to the deregulation of electricity retailing, the Tokyo base will be moved and expanded in November.

Expansion and Moving

EPCO(Hong Kong ) Co., Ltd. EPCO(Shenzhen) Ltd.Eco Building Industrialization Technology Co.,Ltd.

TokyoEach Company/Head Office

Okinawa Design ・Customer Management Center

Hong Kong Global/HQ

ShenzhenEquipment CAD Center

GuangzhouChina Business Base

UKCambridge University ・R&D

Reasons for EPCO’s Involvement in Energy


17

Acceleration of Growth with the Deregulation of Waterworks Construction! Equipment Design in the Housing /Home Field and After‐Maintenance Customer Management are Our Strength

EPCO‘s Growth Strategy: Ride the wave of the deregulation of electricity retailing to accelerate growth

EPCO Co., Ltd. Founded

1990 2002 2013 2014

Revision of the Water Supply Law

(Deregulation)

1998

18

2013

Listing on JASDAQM

arket

Performance

ON

E Energy FoundedStorage Battery Rental Service

Panasonic-EPCOFounded

Solar Aggregate Service

Collaboration with Cam

bridge U

niversityElectricity Big Data Analysis Research

Participation in Large-Scale HEM

S Inform

ation Infrastructure Project

With M

unicipalities2016

Complete Deregulation of Electricity

RetailingExplosive Growth With the Deregulation of General Consumer Electricity Retailing !We will enter the electricity business, leveraging our housing/home field IT/design/customer management business infrastructure!

Currently Expanding Various Energy Businesses Before Liberalization


Housing Design Share 14%

Collaboration with U

niv. of Tokyo Electricity Dem

and Prediction Collaborative Research


Equipment Design (Electricity, Gas, Waterworks)

Electric and gas companies will add energy-efficient home renovation proposals to electricity retailing.Strengthen the collaboration with EPCO's Design Service.

Solar Panel Design and Generation Prediction

Customer Management/Call Center Performance Management Know-how

EPCOʼs Strength in the Energy Business 19Levering EPCO's Strength of Design, Customer Management , and Performance Management Know-how in the Housing/Home field, which is its specialty, We aim to expand businesses with collaborations with electricity retailers.

By adding a Surplus Solar Power Buying Service to our Solar Panel Design Service, we will expand our service line.

Customer management work, such as electricity retail contract changes, etc., will Increase. Customer management service aimed at housing company is provided to retail companies.

The different application forms used at the 3,700 waterworks bureaus nationwide are a barrier to entry.All databased due to the liberalization of waterworks construction→ Applied to electricity retailers.

When Selling to EnerGia (Chugoku Electric) Meter belongs to the Power Generator When Selling to PPS Meter belongs to EnerGia

【Electricity Selling MetersOwnership Change 】

Status of Liberalization of Electricity Retailing for

General Consumers

in the United Kingdom


20

Below chart indicates・Percentage that changed their electricity/gas retailer as of 2013 (0.7~0.8% per month)・ Every year, about 10% of families (~2.5M families) change their electricity/gas supplier・The primary reason for the change was lower electricity prices, while others included strong customer support and the purchase of green energy, etc.

・There are 11 UK Government‐Certified Electricity/Gas Charge Plan Comparison Switching Sites ・The UK government checks that charge plan comparisons are accurate・Electricity coupons are issued by some supermarket companies, but there is no complex model, such as coordination with demand response

Changes to Electricity Retailers and Charge Plans in the UK 21


【Electricity/Gas Charge Plan Comparison Switching Site】【Contract Changes of Electricity/Gas Retailers】

About the “Enechange” Electricity Charge Plan Comparison Site for

Japan


22

The Electricity Charge Plan Comparison Site Offered in Japan (Enechange) 23

・ Cambridge Energy Data Lab, Ltd (Cam) has partnered with EPCO to develop a Beta‐version of the Enechange site that it developed/operates for Japan.

・ The full version of Enechange has a charge plan analysis function, and is scheduled to be released soon ・ The charge plan analysis function is compatible with every charge plan of ten electric companies ・ Calculating every electricity charge plan of those companies with a few simple inputs, the site displays concrete steps for changing a contract to the recommended plan

・ By displaying every company with the same format, it is also useful for people moving to areas with different electric companies


General Consumers

Enechange(Comparison

Site)

EPCO(Contract

Work)

Electricity Retailer

(Existing)

Electricity Retailer(New)

①Use of Comparison Site

②Change of Charge Plan③Change of Electric Company

④ Contract Change Paperwork Proxy

⑦Electricity Retailing

⑧Contract Fee

⑤ Contract Paperwork Proxy

⑥ Stoppageof Service

【Business Model of Electricity/Gas Charge Plan Comparison Switching Sites 】

EPCO’s Smart Energy Business


24

EPCO Medium-Term Vision: Smart Energy Business

Creating New Business Through Alliances with Multiple Companies, Explosive Growth Will be Achieved


2014 From Services Possible Before

Liberalization

2016Deregulation of Electricity Retailing

Around 2018(Scheduled) Separation of Generation

and Transmission of Electricity

・Storage Battery Rental Service for Households. ・PV Generation Aggregate Service for Household/Cambridge University Provision

・Large-Scale HEMS Consortium

Market Share :20%Goal of 15M Contracts

The General Consumer Field is Scattered Around the Country (~77M Contracts), Meaning That Developing the Business Alone Takes Time

EPCOʼs Know-How Cultivated in the General Consumer Housing Field Will Become Its Strength in

the General Consumer Electricity Retailing

EPCO Provides Application Platform, and Enters the Electricity Retailing Market in Collaboration With Each

Company

25

Local Municipalities Communications Carriers

Gas Company Electric Company

Energy Service Electricity Retailing

EPCO Provides Application Platform

After Deregulation

【Entering the General Consumer Electricity Retailing Market】

ONE Energy, Co. Ltd. Developed Japanʼs First * Storage Battery Rental Service

*As of April 2013 Research by SVP Japan Corp.

26

Japanʼs First* Storage Battery Rental Service EPCO Provides Storage Battery Control Technology and the “Pipipa!” Service. EPCO Acquired a Patent for Its “Pipipa!” HEMS Application in June, 2014.

Solar Power Generation

(Storage Battery )

Controller

Distribution Board

HEMS Router

Cloud

HEMS ServerSmartphone, PC

Concept of Smartphone Screen


Concept of Web Screen

Solar Generation Prediction

Visualization of Power-Saving

Goals

Power-Saving Advice

Consumption Prediction

Weather Prediction

Electricity Selling

Prediction

AlgorithmStorage Battery

Control

Overview of HEMS Application “Pipipa!”


Our HEMS Application “Pipipa!” Is the First Patented Integrated System in JapanLeveraging this Basic Patent, We Will Aim to Collaborate with Businesses

Providing HEMS Applications

27


Solar Power System Owner

Panasonic-EPCOEnergy Service

(Co., Ltd.)

Electric Power

￥Normal Price

+1 JPY On Top＝Payment of a Premium Price

Electric Power Prediction Through Eneberg

This system supports the transaction of electric power in 30-minute units by predicting the surplus solar energy (whole amount) produced by general consumers through weather prediction and a certain algorithm.

Power-Saving Support Through “Pipipa!”

Provides power-saving advice for increasing the amount of surplus solar power, and a visualization service that shows power selling prices, weather forecasts, etc.

Provision of “Pipipa!” HEMS Service

EPCO Provides the Surplus (Whole Amount) Solar Electric Power Prediction System “Eneberg“ and the “Pipipa!” HEMS Application

Service

Panasonic–EPCO Energy Service (Co., Ltd.)ʼsSolar Power Aggregation Service

28

EPCO is continuing to develop the prediction system for Surplus (Whole Amount) Solar Electric Power generated by household, named "Eneberg" , alongside the Cambridge University Smart City Research Lab, which is engaged in world-leading smart energy technology.

EPCO Demonstration Room

Overview of “Eneberg” that is the Prediction System for Surplus (Whole Amount) Solar Electric Power

29


About the METI Large-Scale HEMS Information Infrastructure

Project


30

① Construction of Large-Scale HEMS Information Infrastructure・Introduce HEMS in 14,000 Homes Nationwide・Construction of Information Infrastructure System to Manage Cloud・EPCO Introduces HEMS into about 2,000 homes in the Kyushu Electric Company region in collaboration with Miyama City, Fukuoka Prefecture

② Consideration of Standardization of Large-Scale HEMS Information Infrastructure・Standardization of API(Application Programming Interface)・Realization of Smooth Transfer of Information Between Multiple HEMS Management Vendors and Businesses Using HEMS

③ Study of Environment for Utilizing Electric Power Usage DataWith Considerations for Privacy・Building of a Electric Power Data Utilization Environment That Allows Peace of Mind For Consumers

④ Construction of Sustainable System Model・Pursuit of Ideal Low-Cost Construction/Operation of Infrastructure・Verifying Whether Each Service can be Appreciated by Many

Consumers with Profitability or not.

２Overview of the Large-Scale HEMS Information Infrastructure Project 31

Electric Power Data

Service

HEMS Installed in 14,000Homes Nationwide

Constructed by the Three Major

Communications Carriers

EPCO Will Handle Big Data on Electricity, and Provide Municipalities and Companies Entering the Electricity Retailing Market With Hardware and Operational Systems

Large-Scale HEMS Information Infrastructure

Kyushu Area

Tokyo Area

Tohoku Area

Provision of Energy Management Service,

Living Support Service


Chubu Area

16

©2014EPCO Co., Ltd. ALL RIGHTS RESERVED.

⑤ HEMS Data Utilization Vendors

③ Information Management Vendors

④ HEMS Management Vendors

②Executive Companies■NTT East Corporation■KDDI Corporation■SoftBank BB Corporation■Panasonic Corporation

① Consortium• NTT East Corporation • KDDI Corporation• Yahoo Japan Corporation• Panasonic Corporation

• EPCO Co., Ltd.(Smart Energy Company)/Miyama City, Fukuoka Prefecture

• Tokyo Gas Corporation ・Toppan Printing Co., • ONE Energy Co., Ltd. ・Tokyu Corporation• NTT Facility Corp. ・ENNET Corporation• NTT Corp. Purara ・Seven & i Net Media Co., Ltd• Daiwa Institute of Research Business Innovation Ltd. • NTT SOLCO CORPORATION• Kozo Keikaku Engineering Inc. ・Panasonic Corporation

• EPCO Co., Ltd.(Smart Energy Company)/Miyama City, Fukuoka Prefecture• Tokyu Corporation ・NTT East Corporation • KDDI Corporation• TOKAI Holdings Corp. ・Green Hatsuden Aizu Co., Ltd.

Large-Scale HEMS Information Infrastructure Project Consortium Members 32

【EPCOʼs Role】

① Install HEMS Equipment in 2,000Homes② Collect Bulk Electric Power Data from HEMS ③ Send HEMS Data From Each Home to the

HEMS Information Infrastructure Built by Communications Carriers

④ Collaborate with Municipalities to Provide Energy Management Services and Living Support Service That Utilizes HEMS Data to General Consumers

⑤ Construct a Sustainable System Model in Anticipation of the Deregulation of Electricity Retailing

【EPCOʼs Goals】① Gain Know-How About Energy Service Through the Large-Scale HEMS Project ② Enter the Electricity Retailing Market In Collaboration With Consortium Members

1．Role as HEMS Management Vendor ① EPCO and municipalities install HEMS in the homes of citizens (Smart Meters and HEMS will see widespread use as a set)② Electric Power Data From HEMS is Collected in Bulk On EPCO Servers and Sent to the HEMS Information Infrastructure2．Role as HEMS Data Utilization Vendor ① Provide a energy service utilizing the electric power data processed by the HEMS information infrastructure. ② Imagining a future electricity retailing business in Miyama City, EPCO provides simulated electricity charge plans and electricity coupons. EPCO will verify the services, and the surplus solar power buying service, etc., and consider their efficacy.

*Provided Free-of-ChargeDuring This Project


Utilize HEMS Data in Services

HEMSVisualization/

Control

HEMS Data (C Route)

Large-Scale HEMS InformationInfrastructure

(Constructed by the Three MajorCommunications Carriers)

Provision of Services Utilizing Electric Power Data

HEMS Data Utilization Vendor

HEMS Management Vendor

Handling ~2,000 Monitor Homes in Miyama City, Fukuoka Prefecture

Collect/Process HEMS Data Smart

Meter

Large-Scale HEMS Information Infrastructure Project-Related Services That EPCO and Municipalities are Involved In 33

A Route

B Route

Patented HEMS App Pipipa!

EPCO Builds Business Know-How in Both Aspects of Electric Power Data Acquisition and Services that Leverage This Data

Kyushu Electric

PV Electric Power Buying


Monitoring of the Wellbeing of the Elderly

Electricity CouponsSimulated Charge Plans

Pipipa! Pipipa!Eneberg Big Data Analysis

Electricity/Gas Diagnosis

Enechange


Smart Meter

Large-Scale HEMS Information Infrastructure

Verification Application API Database

Miyama City Homes (Example)

HEMS App (Visualization/ Control)

HEMS Router (B Route )

Electricity Big Data Analysis

14

Home Electronics

Storage Battery

Solar Power

HEMS App Pipipa!

Services Provided to Miyama City

Homes (Example)

Electric Power Data

EPCO-ProvidedSmart Energy Technologies

8Services Leveraging the Large-Scale HEMS That EPCO Provides to Companies and Municipalities 34

©2014 EPCO Co., Ltd. ALL RIGHTSRESERVED.

HEMS Server(EPCO)




【Miyama City, Fukuoka Prefecture Aims for a Concept Local Production and Consumption of Energy】・By promoting the spread of renewable energy, it will increase the consumption rate of its own electric power ・It will be its own unique electric network grid for consuming energy produced in the region within the region・EPCO provides Energy Management Systems and business systems for supporting the electricity retailing businesses

run by municipalities

We are aiming at energy self-sufficiency after the liberalization of electricity retailing in 2016.

Miyama Cityʼs New Electric

Power BusinessMegasolar Generation

Surplus Solar Power from

General Consumers

Existing Electric Power(Kyushu Electric)

PV-Equipped City Facilities

PV-Equipped Schools

Business FacilitiesHomes Without PV

PV-Equipped Housing

PV-Equipped Stores

Supply

Supply

Supply

Sale of PV Generation Deficit

SaleSale

0Example of Business Models for Municipalities Entering ElectricityRetailing as New Electricity Suppliers 35

Economic Revitalization Strategies for Municipalities

The liberalization of electricity is a big chance for solving the energy policy

problems of municipalities

Water Supply

Transportation

Public Energy Service by Municipalities

Reutilization of local business resources through municipal involvement

Local jobs created by municipality involvement

RegionalPublic

EnergyService


(Unique to Region)

GasSewage

Local Revitalization Through Big

Data

Electric Power


Over 20% of Germany’s electric power is supplied for by 900 regional public benefit corporations.

EPCOSupport


Summary of Entry Into the Electricity Retailing Market Using the Opportunityof the Large-Scale HEMS Information Infrastructure Project 36

【Design Strength】Energy-Efficient

Home Renovation

【Customer Management】

Contract Procedure Proxy

【Call Center】Charge Inquiries,

Etc.

【Performance Management 】Performance

Policy Database

Housing/Home Field Core/Know-how

ＸHousing/Home Field Energy Applications

【Pipipa!】HEMS App (Patented)

【Enechange】Charge Plan Comparison

【Eneberg】PV Electric

Power Buying

【Big Data 】Monitoring/Coup

ons

ＸHousing/Home Field Energy Business Development

【ONE Ene】Storage Battery

Rental

【Cam・UoT】Electric Power Data Research

【Pana-EPCO】PV Electric

Power Buying

【Large-Scale HEMS】Energy

Management Service with Municipalities

【Providing EPCOʼs Strengths as Packages】【Groups Looking to Enter the Electricity Retailing Market】

Insufficient SystemsCan Be Provided For ByCollaborating With Major System Companies

【Communications Carriers】

Electric Power Sold Together With

Communications

【Gas/PG Companies】Selling Electric Power with Gas

【Municipalities】Selling Electric

Power with Water and Sewage

【Electric Company】Across-border selling Energy-efficient home renovations

【Supermarkets, Etc.】Electric Power Loyalty Service

【Portal Site】Paying ChargesLoyalty Service

【PPS】Electric Power

Selling

【Real Estate Sites】Comparison of

Electricity ChargesContract Proxy

Leveraging EPCOʼs System and Business Strengths

【PV Makers】PV Electric Power

Buying

【Cable TV】Selling Electric Power

with Cable TV

Q2 FY2014 Consolidated Financial Results...Consolidated Results For First Half Fiscal Year 2014 1...

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