2016 Full-Year Results
From June 1, 2016 to May 31, 2017

ERI Holdings Co., Ltd.

July 13, 2017

Listed on Tokyo Stock Exchange (Code 6083)
http://www.h-eri.co.jp
1

Contents
1. Results in fiscal year Ended May 2017
2. Topics
3. Forecasts for the fiscal year Ending May 2018
4. Progress in medium-term management plan

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

22016 Full-Year Results Ended May 31, 2017

1. Results in fiscal year Ended May 2017

Summary
Net sales was flat, but large prior investment
decreased profit.
 Housing for rent boost new housing starts (+4.4%) and non-residential market is also solid(+3.8%).

 Net sales was 11,357 million yen (+0.0%) and operating profit was 289 million yen (▲49.2%).
 Number of Building Confirmation increased but per deal sales decreased – smaller sizebuilding increased -, and Final Inspection was stagnant.

 In Housing Performance Evaluation service, Housing Construction Performance Evaluation

sales shrank and decreased sales due to expiration of Point System for Energy-efficient
Homes wasn’t compensated.

 In Solution Service, Inspection and Diagnosis of large size bldg. decreased.
 In Other Service, BELS and other new services are booming but large prior investment

decreased profit.

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

3

2016 Full-Year Results Ended May 31, 2017

1. Results in fiscal year Ended May 2017

Consolidated results(Millions of yen)

FY2015

ChangeFY2016(Jun. 2015 – May 2016) (Jun. 2016 – May 2017)

Ratio

11,470(11,356)

11,357(11,357)

▲113
(0)

▲1.0%
(▲0.0%)

Operating Profit

569

289

▲280

▲49.2%

Operating Profit Ratio

5.0%

2.6%

‐

‐

Ordinary Profit

625

367

▲258

▲41.3%

Ordinary Profit Ratio

5.5%

3.2%

‐

‐

Profit Attributable to
Owners of Parent

414

212

▲201

▲48.6%Net Profit per Share (Yen)

52.96

27.17

▲25.79‐Gross Sales(Net Sales *)•Amounts

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 in June 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 the company's settlement of accounts for the fourteen months from April 2015 to May 2016.

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

42016 Full-Year Results Ended May 31, 2017

1. Results in fiscal year Ended May 2017

Consolidated results by segment(Millions of yen)

FY2015FY2016

ChangeAmounts

Ratio

Operating
ProfitChangeBuilding Confirmation
and Inspection(Net Sales)

6,233(6,109)［53.8%］

6,199(6,199)［54.6%］

▲23
(90)

▲0.4%
(▲1.5%)

350▲17

Housing Performance
Evaluation and its
related services

2,939［25.9%］

2,877［25.3%］

▲62

▲2.1%

0

▲81

Solution Services*1993［8.7%］

898［7.9%］

▲95

▲9.6%

38

▲97

Others1,314［11.6%］

1,382［12.2%］

68

5.2%

▲99

▲83

Gross Sales Total

11,470［100.0%］*2

11,357［100.0%］*2

▲113

▲1.0%

289

▲280

*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. FY2015 data in this table are also revised based on new segment recognition.
*2 Structural ratio [ ] is calculated using Net sales. (FY2015 11,356 million yen, FY2016 11,357 million yen)
Copyright © 2017 ERI holdings Co., Ltd. All rights reserved.

52016 Full-Year Results Ended May 31, 2017

1. Results in fiscal year Ended May 2017

Change in Net Sales and Operating Profit
Net Sales

Operating Profit(Millions of yen)

（Millions of yen）
Consumer
Point System forEnergy‐Saving Homes

BELS

11,600
Building Confirmation +90
Housing Performance
Evaluation +34

SG&A expenses
Labor cost +91
Commission fee +61
Depreciation cost +18
Construction contribution
money ‐36
etc.

‐110

ER
TBTC ‐57
Others ‐22

‐40
124

11,400

Cost of sales
Labor cost +96
Outsourcing fee +23
Work in process ‐51
etc.

600

38
68

700

‐79

569

400
11,357

11,356500

11,200

‐91

‐189

300
200

+0.0%

▲49.2%

100

289

0

11,000FY2015

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

FY2016FY2015FY20162016 Full-Year Results Ended May 31, 2017

1. Results in fiscal year Ended May 2017

Main operating figures | Consolidated(Cases)

FY2015FY2016(Jun. 2015 – May 2016) (Jun. 2016 – May 2017)

ChangeAmounts

Ratio

Building confirmations

56,68459,048

2,364

4.2%

Final inspections

48,32149,656

1,335

2.8%

Housing design performance
evaluations of detached house

18,69019,984

1,294

6.9%

Housing design performance
evaluations of collective house

24,672

29,272

4,600

18.6%

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

7

2016 Full-Year Results Ended May 31, 2017

1. Results in fiscal year Ended May 2017

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
gradually increased.

 Changes in the

cumulative total is asfollows.
New housing
starts+4.4%

New housing starts

Housings for Owner‐Occupation

Housings for rent

Housings for sales(Condominiums)

Housings for sales(Single‐detached)
40%
30%
20%

Housings for
Owner‐
Occupation+2.3%

Housings for rent

+9.1%

10%

Housings forsales(condo‐
minimums)‐6.8%

Housings forsales(single‐
detached)

+5.3%

0%
‐10%
‐20%
‐30%

*Cumulative contrast of our fiscal

year (from Jun. to May)

‐40%
Dec

Jan

Feb Mar Apr May Jun

2016

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

Jul

Aug

Sep

Oct

Nov DecJan

Feb Mar Apr May

2017

8

2016 Full-Year Results Ended May 31, 2017

1. Results in fiscal year Ended May 2017

Trends in housing market
New orders ofdetached houses(order amount basis)in major housebuilders continued
weak trend.
Given the trend
shifting to the higher
price zone, thenumber of new
housing orders werelikely to be moresluggish.

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

A

B

C

D

E

F

40%
30%
20%
10%
0%
‐10%
‐20%
‐30%
Dec

Jan

Feb Mar Apr May Jun

Jul

Aug Sep

Oct Nov Dec

Jan

Feb Mar Apr May

2017

2016

*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.

92016 Full-Year Results Ended May 31, 2017

1. Results in fiscal year Ended May 2017

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

Non‐housing

Others

Total(Educations, Lodgings and more）

Hospitals, Welfares

Factories, Warehouses

Offices, StoresCollective Houses

Detached Houses
28,918
3.6%

6,904
5.4%

3,813
11.1%

2,061
4.6%

1,217
5.8%

1,254
5.9%

44,167
4.7%

65.5%

15.6%

8.6%

4.7%

2.8%

2.8%

100.0%

614.0

579.3

471.2

446.5

205.5

230.4

2,547.3

‐0.5%
‐0.3%

‐0.1%

6.5%

5.5%
6.5%

7.8%

7.4%

24.1%
22.7%
Proportion（Reference; June 2016 ‐ May 2017)
Growth rate of national
3.1%
newly built floor space(construction starts)
63.4%
Proportion

18.5%

17.5%

8.1%

9.0%

100.0%

0.1%

0.3%

6.3%

12.5%

3.4%

9.1%

13.5%

5.2%

8.9%

100.0%

Number of Building Confirmation

Year‐on‐Year
Proportion
Net Sales
Year‐on‐Year

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

10

3.2%

2016 Full-Year Results Ended May 31, 2017

1. Results in fiscal year Ended May 2017

Trends in housing market
 The whole market number of Building Confirmation increased 4.1%(Apr-Dec 2016) The number of Building Confirmation by ERI group increased 4.7%(Apr-Dec 2016)
 As a results, the market share of ERI group slightly up to 7.8%.

(Categories I – III unchanged and Category Ⅳ increased 0.1%)

Number of building confirmation and market share by ERI group*1
Number of Building Confirmation (Category Ⅳ)
Total Market Share

Number of Building Confirmation (Categories I – III)
Market share of buildings in categories Ⅰ‐Ⅲ

Cases

Market share of buildings in category Ⅳ

50,00025%

40,00020%

30,000

17.0%

17.1%

17.7%

17.5%

17.5%

20,00010,000

15%
10%

7.3%

7.3%

7.6%

7.7%

7.8%

3.8%

3.7%

4.0%

4.2%

4.3%

0

5%
0%

FY2012FY2013

FY2014FY2015FY2016*2*1 Fiscal year end of this chart is March*2 The market share data of ERI group in FY2016 were added up until the end of 3Q, because 4Q’s data was not available as of July 11, 2017.
Copyright © 2017 ERI holdings Co., Ltd. All rights reserved.

11

2016 Full-Year Results Ended May 31, 2017

1. Results in fiscal year Ended May 2017

Trends in housing market
 The whole market number of Housing Design Performance Evaluation of detached houseincreased 9.3%. ERI group’s number increased 6.6% and market share decreased 0.4%.
 The whole market number of Housing Design Performance Evaluation of collective houseincreased 17.1%. ERI group’s number increased 13.2% and market share decreased 0.7.
Number of Housing Design Performance and market share by ERI group

Cases

Housing design performance evaluationof detached houses by ERI groupMarket share of detached houses

Housing design performance evaluationof collective houses by ERI groupMarket share of collective houses

35,00035%

30,00030%

25,00020,000

24.8%

24.0%
22.8%

20.5%

20.2%

22.4%

25%

22.1%
21.4%

21.7%

20.9%
19.1%

15,000

20%

18.7%

15%

10,000

10%

5,000

5%

0

0%
FY2011FY2012FY2013

FY2014FY2015FY2016* Fiscal year end of this chart is March
Copyright © 2017 ERI holdings Co., Ltd. All rights reserved.

122016 Full-Year Results Ended May 31, 2017

1. Results in fiscal year Ended May 2017

Sales breakdown | Consolidated
FY2016FY2015

Solution
Services,
9%

Housing
performance
evaluation andits related
services,
26%

Others,11%

Others,12%

Existingbuildings,
9%

Existingbuildings,
8%

Newly built
non‐houses,
32%

Solution
Services,
8%

Newly built
houses,59%

Building
confirmationand inspection,
54%

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

Housing
performance
evaluation andits related
services,
25%

13

Newly built
non‐houses,
33%

Newly built
houses,59%

Building
confirmationand inspection,
55%

2016 Full-Year Results Ended May 31, 2017

1. Results in fiscal year Ended May 2017

Key service figures | Consolidated
FY2016

ChangeAmounts

Cases（Millions of Yen,Tax Excluded）

Amounts

Cases（Millions of Yen,Tax Excluded）

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

5,343

1,396

116

46

Housing Performance Evaluations ofdetached houses*1

19,984

707

1,294

40

Technical Assessments for Long‐life Quality
Housings*2

23,085

355

1,084

10

Inspections for Housing Defect Liability
Insurance*3

24,226

290

334

4

Evaluations of Seismic Capacity andSeismic Retrofitting Plans

175

58

▲116

▲40

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

140

178

47

66

*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.

14

2016 Full-Year Results Ended May 31, 2017

1. Results in fiscal year Ended May 2017

Consolidated financial statements | Assets(Millions of yen)

FY2015FY2016(Jun. 2015 ‐ May 2016)(Jun. 2016 – May 2017)

4,110

4,109

▲1(242*)

Total current assets

3,355

3,256

▲99(172*)

Cash and deposits

2,337

2,104

▲233

Accounts receivable ‐ trade

453

500

47

Work in process

298

352

53

Total non‐current assets

754

853

98(69*)

Total Property, plant and equipment

112

153

41

Total intangible assets

175

220

45

1

58

57（58*）

466

478

11

Total assets*goodwill

Total investments and other assets

Change* Accompanying EPA SYSTEM Inc. becoming a subsidiary.

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15

2016 Full-Year Results Ended May 31, 2017

1. Results in fiscal year Ended May 2017

Consolidated financial statements | Liabilities(Millions of yen)

FY2015FY2016(Jun. 2015 ‐ May 2016)(Jun. 2016 – May 2017)

1,790

1,811

20(46*)

Total current liabilities

1,629

1,621

▲8(10*)

Accrued expenses

578

598

20

Advances received

572

656

84

Total non‐current liabilities

160

189

29（35*）

‐

30

30

2,320

2,298

▲22

Total shareholders’ equity

2,315

2,293

▲22

Retained earnings

1,296

1,274

▲22

Total liabilities and net assets

4,110

4,109

▲1（46*)

Total liabilities

Other
Total net assets

Change* Accompanying EPA SYSTEM Inc. becoming a subsidiary.

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

16

2016 Full-Year Results Ended May 31, 2017

1. Results in fiscal year Ended May 2017

New services operating figures | Consolidated(Cases)ChangeFY2015FY2016
Amounts

Ratio

Route‐2 Structural Examination*1

641

822

181

28.2%

Pre‐completion Tentative Approval*1

132

202

70

53.0%

Assessment of Compliance with the BuildingStandard Law services*2

79

82

3

3.8%

BELS certification (Non‐housings) *3

119

175

56

47.1%

BELS certification (housings) *3

147

3,252

3,105

2,112.2%

Energy Pass certification*4

87

242

155

178.2%*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.

172016 Full-Year Results Ended May 31, 2017

2. Topics

TopicsJun. 2016

Inspection of deterioration on existing bldg. by UAVs
-Start Business alliance with SKYROBOT Inc.

Sep. 2016

Tokyo Bldg-Tech Center Co.,Ltd. opened Structural Calculation Center in
Okinawa.

Nov. 2016“ERI Students Design Competition 2016 final Selection”

Feb. 2017

The court confirmed Japan ERI’s overall lawsuit victory on the case concernedwith the breach of seismic standards.
- All the cases reported in Annual Securities Report were finished.

Mar. 2017

Acquisition of EPA SYSTEM Inc.
- Enhance IT development and operating efficiency.

Apr. 2017

Full revision of fee schedule for Building Confirmations and inspection
services for the first time in 10 years. - Price adjustment for increased
evaluative workloads.
Evaluation for Compliance with Energy Consumption Performance of
Buildings service start.

Jun. 2017

Business alliance with Aerosense Inc.
- UAVs autonomous flight system development start.

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18

2016 Full-Year Results Ended May 31, 2017

2. Topics

Evaluation for Compliance with Energy
Consumption Performance of Buildings service
Number of applications/issues and market share In April, Mandatorycompliance withenergy efficiency
standards on large‐
sized non‐residential
bldg. is in effect.
 It started up

moderately due totransitional measures
which exempt the
projects submitted
energy saving plan inadvance to theenforcement of theAct.

Number of all applications

Number of all issues

Number of applications by ERI groupMarket share of applications

Number of issues by ERI groupMarket share of issues

80
70

30%

26.1%
25%

60

21.9%

50

20.6%

40

20%
15%

16.7%

30

10%

20
5%

10
0

 Anticipated 100 deals

0%

April

May

June

per month, i.e.
roughly 30% share.
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19

2016 Full-Year Results Ended May 31, 2017

3. Forecasts for the fiscal year Ending May 2018

Forecasts for FY2017(Millions of yen)

FY2016FY2017(Jun. 2016 – May 2017)(Jun. 2017 – May 2018)

Change11,35712.187829

Operating Profit

289

635

345

Vs. Net Sales

2.6%

5.2%

‐

Ordinary Profit

367

643

275

Vs. Net Sales

3.2%

5.3%

‐

212

410

197

Profit per Share (Yen)

27.17

52.45

25.28

Dividend per Share (Yen)

30

30

0

Net Sales

Profit Attributable toof Parent

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

20

2016 Full-Year Results Ended May 31, 2017

4. Progress in medium-term management plan

Medium-term management plan (released Jun. 2016)
Business strategy

Existing core business<Strengthen profitability>

New growth businesses<Increase in investments>

Business in new fields<Expand business sphere>

Business fieldBasic policy Building Confirmation andInspection
 Housing Performance
Evaluation（Japan ERI ）Improve profitability by optimizing the allocation of management
resources and promoting the efficiency of operations.
Accurately identify reorganization opportunities in the industry andexpand market share through M&As.

 Structural Calculation
Review （TBTC）

Establish systems and reach top of industry.

 Structural Evaluation

Use technical strengths to maintain high share of market.

 Services related to energy
conservation

View energy conservation requirements as an opportunity and expand
energy conservation‐related services to drive a growing share ofexisting core business.

 Building stock（ERI Solution）

Actively invest management resources to create third core business.
Utilize M&As, including securing human resources (full‐scale entry into
non‐destructive inspections).

 Information and education‐
related services

Establishment of stable revenue foundation for ERI Academy

 Infrastructure stock

Utilize M&As, expanding business sphere from buildings to
Infrastructures.

 Overseas

Continue to collect information to accurately identify opportunities forbusiness expansion.

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21

2016 Full-Year Results Ended May 31, 2017

4. Progress in medium-term management plan

Numerical targets of medium-term management plan

Results of
FY2016

Forecasts of
FY2017

Targets of
FY2018Net sales

11.35 billion yen

12.18 billion yen

More than 16 billion yen(incl. M&A’s contribution
about 3 billion yen)

Operating profit

0.28 billion yen

0.63 billion yen

More than 1.2 billion yen

Operating Profit /Net Sales

2.6%

5.2%

More than 7.5%

ROE

9.2%

17.3%

More than 20%

Dividend

30.00 yen

30.00 yen

Keep up stable dividend

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

22(More than 30% dividend payout ratio)

2016 Full-Year Results Ended May 31, 2017

4. Progress in medium-term management plan

Progress in medium-term management plan
Business challenges

Achievement in FY 2016

Existing core business<Strengthen profitability>‐ Drastic revise of fee schedule‐ IOT investment for operational efficiency（acquisition of EPA system）

New growth businesses<Increase in investments>‐ Secured sufficient staff for starting‐up Evaluation for Compliance with Energy
Consumption Performance of Buildings service and Building stock business‐ Started‐up inspection of existing building deterioration by UAVs

Business in new fields<Expand business sphere>‐ Developing next M&A seeds

Sales

Opaerating Profit/Operating Profit Ratio

20,0001,400

16,000

About 3 billion 1,200
yen of M&A
1,000
contribution

12,000

12.0%
9.2%
10.0%
8.0%

800

5.2%

6.0%

600

8,000

400

4,000
0
FY2016
Results

FY2017
Forecasts

FY2018Targets

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

200

2.0%

0

0.0%
FY2016
Results

23

4.0%

2.6%

FY2017
Forecasts

FY2018Targets

2016 Full-Year Results Ended May 31, 2017

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

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

24

2016 Full-Year Results Ended May 31, 2017