Financial Results
for the Second Quarter
From June 1, 2018 to November 30, 2018

ERI Holdings Co., Ltd.
January 11, 2019
Listed on Tokyo Stock Exchange (Code 6083)
http://www.h-eri.co.jp

Contents
1. Results for the second quarter of the fiscal year ending May 2019
2. Forecasts for the fiscal year ending May 2019
3. Progress in medium-term management plan
4. Topics

Copyright © 2019 ERI holdings. All rights reserved.

2

Financial Results for the Second Quarter Ended November 30, 2018

1. Results for the second quarter of the fiscal year ending May 2019

Summary
Increase in revenue and earnings year-on-yearNew housing starts and non-residential building starts slightly decreased.



Revenue increased continuously in all four segments.










In Building Confirmation and Housing Performance Evaluation and its related services,
revenue increased largely due to inclusion of revenue of Jyutaku Seinou Hyouka Center Co.,Ltd.
Large building related Building Confirmation and detached house related Housing
Performance Evaluation and its related services were in good sales shape.
Frequent natural disasters delayed on-site inspections for Building Inspection andConstruction Performance Evaluation services.
In Solution Services, Due Diligence services was in good shape.
In other segments, Evaluation for Compliance with Energy Consumption Performance of
Buildings kept good sales but cost increase shrank the earnings.

Copyright © 2019 ERI holdings. All rights reserved.

3

Financial Results for the Second Quarter Ended November 30, 2018

1. Results for the second quarter of the fiscal year ending May 2019

Consolidated results(Millions of yen)

FY2017 2Q

FY2018 2Q(Jun. 2017 – Nov. 2017) (Jun. 2018 – Nov. 2018)

ChangeAmounts

Ratio

Net Sales

5,818

7,241

1,422

24.5%

Operating Profit

206

348

141

68.2%

Operating Profit Ratio

3.6%

4.8%

-

-

Ordinary Profit

214

364

149

69.6%

Ordinary Profit Ratio

3.7%

5.0%

-

-

Profit Attributable to
Owners of Parent

120

232

111

92.2%

Profit per Share (Yen)

15.42

30.53

15.11

-

* In FY2018 2Q results, data of Jyutaku Seinou Hyouka Center Co., Ltd. is the results of Apr. - Sep. 2018 period.

Copyright © 2019 ERI holdings. All rights reserved.

4

Financial Results for the Second Quarter Ended November 30, 2018

1. Results for the second quarter of the fiscal year ending May 2019

Consolidated results by segment(Millions of yen)

ChangeSegment
ProfitChange

24.1%

363

111

379

26.7%

48

84

517
[7.1%]

78

17.8%

18

0

815
［14.0%］

1,023[14.1%]

208

25.6%

▲51

▲23

5,818
［100.0%］7,241[100.0%]

1,422

24.5%

380

173

FY20172Q

FY20182Q

Building Confirmation
and Inspection

3,143［54.0%］

3,899[53.9%]

756

Housing Performance
Evaluation and its
related services

1,420［24.4%］

1,800[24.9%]

Solution Services

439［7.6%］

OthersNet Sales Total

Amounts

Ratio* In FY2018 2Q results, data of Jyutaku Seinou Hyouka Center Co., Ltd. is the results of Apr. - Sep. 2018 period.

Copyright © 2019 ERI holdings. All rights reserved.

5

Financial Results for the Second Quarter Ended November 30, 2018

1. Results for the second quarter of the fiscal year ending May 2019

Trends in housing market
Changes in new housing starts by category of housings New housing starts
rebounds only graduallyfrom downtrend.
 Accumulated changes in
the first half stats are as
follows.

( an average of the past two months, including present month )New housing starts

Housings for Owner-Occupation

Housings for rent

Housings for sales(Condominiums)

Housings for sales(Single-detached)
40%
30%

New housing
starts-1.4%

Housings for
OwnerOccupation

+0.7%

10%

Housings for rent

-3.9%

0%

Housings forsales(condominimums)

-3.9%

20%

Housings for sales(single-detached) +2.9%*Cumulative contrast of our first halfof fiscal year (from Jun. to Nov.)

-10%
-20%
-30%
-40%
-50%
Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov.

2017

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2018

6

Financial Results for the Second Quarter Ended November 30, 2018

1. Results for the second quarter of the fiscal year ending May 2019

Trends in housing market
 Major house builders
maintained solid neworders received for aperiod of our first half of
FY2018 (Jun. to Nov.)

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

A

B

C

D

E

F

40%
30%

 For all six builders, eachcumulative new orders
in their fiscal period
through Nov. end was
better than theirprevious period ones.

20%
10%
0%
-10%
-20%
-30%
Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov.
2018

2017

* 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 © 2019 ERI holdings. All rights reserved.

7

Financial Results for the Second Quarter Ended November 30, 2018

1. Results for the second quarter of the fiscal year ending May 2019

Breakdown of Building Confirmation
FY2018 2Q Japan ERI’s results of Building Confirmation by category of buildings.
(exc. plan change cases)(Cases, Millions of Yen）

Non-housing

Housing

Others

Total(Educations, Lodgings and more）

Hospitals, Welfares

Factories, Warehouses

Offices, StoresCollective Houses

Detached Houses
15,022
2.0%

3,237
-9.7%

1,780
-5.1%

1,062
-1.2%

477
-13.6%

1,028
27.2%

22,606
-0.1%

66.5%

14.3%

7.9%

4.7%

2.1%

4.5%

100.0%

330.3

317.1

260.0

267.0

89.6

157.9

1,422.1

4.4%
1.9%

-0.5%

1.7%

5.8%
4.4%

-4.5%

12.7%

23.2%
22.3%
Proportion（Reference; June 2018 - November 2018)
Growth rate of national-1.5%
newly built floor space(construction starts)
62.0%
Proportion

18.3%

18.8%

6.3%

11.1%

100%

-7.3%

5.7%

-22.7%

0.4%

-1.8%

8.7%

15.4%

3.8%

10.2%

100.0%

Number of Building Confirmation

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

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8

3.3%

Financial Results for the Second Quarter Ended November 30, 2018

1. Results for the second quarter of the fiscal year ending May 2019

Sales breakdown | Consolidated
FY2017FY2018 2Q
Others,14%

Others,14%
Existingbuildings,
8%

Existingbuildings,
8%

Solution
Services,
8%
Newly built
non-houses,
32%

Housing
Performance
Evaluation andits related
services,
24%

Newly built
houses,60%

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Solution
Services,
7%

Building
Confirmation
and Inspection,
54%

Newly built
non-houses,
29%
Housing
Performance
Evaluation andits related
services,
25%

9Newly built
houses,63%

Building
Confirmation
and Inspection,
54%

Financial Results for the Second Quarter Ended November 30, 2018

1. Results for the second quarter of the fiscal year ending May 2019

Number of Building Confirmationand market share
Number of Building Confirmation and market share by ERI group20,000Cases

15,000

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

17.5%

16.5%

10,000

7.8%

7.6%

5,000

25%

18.4%

17.8%

20%

12.3%

12.1%

15%
10%

10.1%

10.1%

5%

4.5%

4.4%

0

0%
Apr-Jun2017

Jul-Sep

Oct-Dec

Jan-Mar2018

Apr-Jun

Jul-Sep* As of January 9, 2019, market data by MLIT was updated until March 2018, so share data of ERI group is not available after April 2018.
* From the data period of Oct. - Dec. 2017, Jyutaku Seinou Hyouka Center Co., Ltd. consolidated in Nov. 2017 is included in the chart.

Copyright © 2019 ERI holdings. All rights reserved.

10

Financial Results for the Second Quarter Ended November 30, 2018

1. Results for the second quarter of the fiscal year ending May 2019

Number of Housing Design Performanceand market share
Number of Housing Design Performance and market share by ERI group
Number of Housing Design Performance Evaluationof collective houses
Market share of detached houses

Number of Housing Design Performance Evaluationof detached houses
Market share of collective houses
35%

20,000

30.0%

30%

Cases

16,00012,000

29.2%
18.9%

29.2%

19.7%
17.2%

8,000

28.1%

19.8%

18.9%

21.6%

27.0%
16.2%

25%
20%
15%
10%

4,000

5%

0

0%
Apr-Jun2017

Jul-Sep

Oct-Dec

Jan-Mar2018

Apr-Jun

Jul-Sep* From the data period of Oct. - Dec. 2017, Jyutaku Seinou Hyouka Center Co., Ltd. consolidated in Nov. 2017 is included in the chart.

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11

Financial Results for the Second Quarter Ended November 30, 2018

1. Results for the second quarter of the fiscal year ending May 2019

Main operating figures | Consolidated
FY2017 2Q(Jun. 2017 – Nov. 2017)

Cases

FY2018 2Q(Jun. 2018 – Nov. 2018)

Amounts

Cases（Millions of Yen）

ChangeAmounts

Cases（Millions of Yen）

Amounts（Millions of Yen）

Building Confirmations

27,263

1,513

40,068

1,831

12,805318

Final Inspections

23,261

1,135

34,573

1,426

11,312291

Detached
Houses9,954

356

17,626

500

7,672

144

Collective
Houses10,805

128

11,082

129

277

1

Detached
Houses

8,418

600

13,531

816

5,113

216

Collective
Houses

9,354

140

7,946

130 ▲1,408▲10

Housing Design
Performance
Evaluations
Housing
Construction
Performance
Evaluations* FY2018 2Q includes FY2018 2Q (Jun. 2018 - Nov. 2018) data of Japan ERI Co., Ltd. and Tokyo Bldg-Tech Center Co., Ltd., and FY2018 2Q (Apr. 2018 - Sep. 2018) data of Jyutaku
Seinou Hyouka Center Co., Ltd.
* From FY2017 3Q report, the numbers of plan change by Japan ERI Co., Ltd. exclude from “Building Confirmations” and “Final Inspections”.
* From FY2017 3Q report, the number of auxiliary structures and elevators by Japan ERI Co., Ltd. includes in “Building Confirmations” and “Final Inspections”.

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12

Financial Results for the Second Quarter Ended November 30, 2018

1. Results for the second quarter of the fiscal year ending May 2019

Key service figures | Consolidated
FY2017 2Q(Jun. 2017 – Nov. 2017)

Cases

Amounts（Millions of Yen）

FY2018 2Q(Jun. 2018 – Nov. 2018)

Cases

Amounts（Millions of Yen）

ChangeCases

Amounts（Millions of Yen）

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

2,680

751

2,911

841

231

90

Technical Assessments forLong-life Quality Housings

12,330192

15,262

225

2,932

33

Inspections for Housing DefectLiability Insurance

13,430157

21,014

203

7,584

46

368

67

543

98

175

31

60
3,146

8
49

87
3,217

15
56

27
71

7
7

Evaluation for Compliance with
Energy Consumption Performanceof Buildings
BELS
certifications

Non-housings
Housings* FY2018 2Q includes FY2018 2Q (Jun. 2018 - Nov. 2018) data of Japan ERI Co., Ltd. and Tokyo Bldg-Tech Center Co., Ltd., and FY2018 2Q (Apr. 2018 - Sep. 2018) data of Jyutaku
Seinou Hyouka Center Co., Ltd.
* “Building Confirmations for medium to large size buildings (over 500 sqm)” includes the numbers of plan change.
* “Technical Assessments for Long-life Quality Housings” represents the numbers and amounts of conformance certificate, which includes the numbers and amounts of extension andrenovation. From FY2017 4Q report, the numbers of plan change is included.
* From FY2018 3Q, counting rules of “Inspections for Housing Defect Liability Insurance” is changed. New rules are the following: 1) Including Defect Insurance but excluding inspection
for insurance firm and Housing Performance Certification, 2) Including insurance brokerage numbers and amounts, and 3) Including the data of all housing defect liability insurancecompanies.
* “Inspections for Housing Defect Liability Insurance“ data in the Financial Results for FY2018 1Q(released on Sep. 28, 2018) was corrected as follows.
Amounts: Error 80, Correct 99* “Evaluation for Compliance with Energy Consumption Performance of Buildings” excludes the numbers of plan change.

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13

Financial Results for the Second Quarter Ended November 30, 2018

1. Results for the second quarter of the fiscal year ending May 2019

Consolidated financial statements | Assets(Millions of yen)

FY2017FY2018 2Q(Jun. 2017 – May 2018)(Jun. 2018 – Nov. 2018)

6,346

6,459

112

Total current assets

4,139

4,179

39

Cash and deposits

2,804

2,684

▲120

Accounts receivable - trade

713

756

43

Work in process

446

492

46

Total non-current assets

2,206

2,280

73

Total Property, plant and equipment

397

443

46

Total intangible assets

944

919

▲24

goodwill

648

611

▲37

865

917

51

Total assets

Total investments and other assets

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14

ChangeFinancial Results for the Second Quarter Ended November 30, 2018

1. Results for the second quarter of the fiscal year ending May 2019

Consolidated financial statements | Liabilities(Millions of yen)

FY2017FY2018 2Q(Jun. 2017 – May 2018)(Jun. 2018 – Nov. 2018)

4,050

4,145

95

Total current liabilities

2,622

2,425

▲197

Accrued expenses

819

789

▲30

Advances received

827

934

107

Total non-current liabilities

1,427

1,720

292

2,296

2,314

17

Total shareholders’ equity

2,267

2,287

19

Retained earnings

1,469

1,586

117

Total liabilities and net assets

6,346

6,459

112

Total liabilities

Total net assets

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15

ChangeFinancial Results for the Second Quarter Ended November 30, 2018

2. Forecasts for the fiscal year Ending May 2019

Forecasts for FY2018(Millions of yen)

FY2017FY2018Change(Jun. 2017 – May 2018)(Jun. 2018 – May 2019)13,097

14,916

1,818

Operating Profit

690

757

66

Vs. Net Sales

5.3%

5.1%

-

Ordinary Profit

702

765

63

Vs. Net Sales

5.4%

5.1%

-

Profit Attributable to
Owners of Parent

429

488

58

Profit per Share (Yen)

55.37

64.01

8.64

Dividends per Share (Yen)

30

30

0

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16

Net Sales

Financial Results for the Second Quarter Ended November 30, 2018

3. Progress in medium-term management plan

Medium-term management plan
(FY2016 - FY2018)
Businessstrategy

Existing corebusiness<Strengthen
profitability>

New growthbusinesses<Increase ininvestments>

Business in new
fields<Expand businesssphere>ProvidersBusiness fieldBasic policy

Japan ERI
SHC
TBTC

 Building Confirmation andInspection
 Housing Performance Evaluation

Improve profitability by optimizing the allocation ofmanagement resources and promoting the efficiency ofoperations.
Accurately identify reorganization opportunities in theindustry and expand market share through M&As.

TBTC

 Structural Calculation Review

Establish systems and reach top of industry.

Japan ERI
TBTC Structural Evaluation

Use technical strengths to maintain high share of market.

Japan ERISHC
TBTC Services related to energy
conservation

View energy conservation requirements as an opportunityand expand energy conservation-related services to drivea growing share of existing core business.

ERI
Solution Building stock

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

ERI
Academy Information and educationrelated services

Establishment of stable revenue foundation.

ERI
Solution Infrastructure stock

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

 Overseas

Continue to collect information to accurately identify
opportunities for business expansion.

-

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17

Financial Results for the Second Quarter Ended November 30, 2018

3. Progress in medium-term management plan

New growth business- Growth in the energy conservation related service
Month-to-month comparison chart in sales of Conformity Review
for Energy Saving Standard service (ERI group’s total)(Thousands of yen)
25,00020,00015,00010,0005,000

02017 20182017 20182017 20182017 20182017 20182017 2018

June

July

AugustSeptember

OctoberNovember

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18

Financial Results for the Second Quarter Ended November 30, 2018

3. Progress in medium-term management plan

New growth business- Growth in building stock related services
Month-to-month comparison chart of solution services(New orders received in ERI group’s total)(Thousands of yen)

160,000
Building Inspection
140,000

Home Inspection

120,000
100,000
80,00060,00040,00020,00002017 20182017 20182017 20182017 20182017 20182017 2018

June

July

AugustSeptember

OctoberNovember

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19

Financial Results for the Second Quarter Ended November 30, 2018

4. Topics

Operational improvement by IoT Investments●Japan ERI Co., Ltd. is expanding an operation of web meeting system bothinternally and externally- Technical Q&A with clients by the web system in Building Confirmation service (Testing started)- Both drawings and BIM model available- Introducing the system to Japan ERI’s nationwide branches in 2019Japan ERI H.Q.

Drawings
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ERI’s nationwide 33
branches

ERI’s nationwide 12
sub-branches

Nationwide
clients

BIM models

20

Financial Results for the Second Quarter Ended November 30, 2018

4. Topics

Expanding Global Sustainable Investment●Expanding ESG Investment and Green Certifications- Green Bonds issued by JREIT activated (7 REITs, total 43.5 billion yen)
- BELS and CASBEE are used for eligible green assets requirement- Expanding ESG investment would enhance green certification needs
Domestic volume of Green Bond issue and
JREITs related BELS sales (Japan ERI)PRI signatories andamount of assets under management(Trillions of dollars)(Thousands of yen)(100 million yen)

20

6,000
GB (L)
GB (JREIT) (L)BELS sales (JAPAN ERI) (R)

400
Assets under management (L)Number of PRI signatories (R)

7,500
15

300

10

200

5

100

0

0

4,000
5,000

2,000
2,500

0

0
2016

2017

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2018

2006

21

2008

2010

2012

2014

2016

2018

Financial Results for the Second Quarter Ended November 30, 2018

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

This release contains forward-looking statements about ERI Holdings Co., Ltd.’s future plans, strategies, beliefs and performance thatare not historical facts. Such statements are based on the company’s assumptions and risks, uncertainties and assumptions that,without limitation, relate to economic conditions. Accordingly, ERI Holdings Co., Ltd. wishes to caution readers that actual results may
differ materially from those projected in this release and ERI Holdings Co., Ltd. bear no responsibility for any negative impact causedby the use of this release.

Copyright © 2019 ERI holdings. All rights reserved.

22

Financial Results for the Second Quarter Ended November 30, 2018