2017 Full-Year Results
From June 1, 2017 to May 31, 2018

ERI Holdings Co., Ltd.
July 13, 2018

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

Contents
1. Results in fiscal year Ended May 2018
2. Forecasts for the fiscal year Ending May 2019
3. Progress in medium-term management plan

Copyright © 2018 ERI holdings. All rights reserved.

22017 Full-Year Results Ended May 31, 2018

1. Results in fiscal year Ended May 2018

Summary
Increase in revenue and earnings year-on year,
M&A has boosted up the results successfully










New housing starts decreased -2.8% but non-residential building starts solidly increased+3.7%.
Net sales was 13,097 million yen (+15.3%) and operating profit was 690 million yen(+138.3%).
Acquisition of Share of Jyutaku Seinou Hyouka Center Co., Ltd. in November 2017 leads tolarge revenue increase in Building Confirmation and Housing Performance Evaluation
services.
In Energy Saving related services, Evaluation for Compliance with Energy Consumption
Performance of Buildings and BELS service contributed to the results.
In Solution Services, Due Diligence and Inspection services were in good shape.

Copyright © 2018 ERI holdings. All rights reserved.

32017 Full-Year Results Ended May 31, 2018

1. Results in fiscal year Ended May 2018

Consolidated results(Millions of yen)

FY2016

ChangeFY2017(Jun. 2016 – May 2017) (Jun. 2017 – May 2018)

Amounts

Ratio

11,357

13,097

1,740

15.3%

Operating Profit

289

690

400

138.3%

Operating Profit Ratio

2.6%

5.3%

‐

‐

Ordinary Profit

367

702

334

90.9%

Ordinary Profit Ratio

3.2%

5.4%

‐

‐

Profit Attributable to
Owners of Parent

212

429

217

102.0%

Profit per Share (Yen)

27.17

55.37

28.20

‐

Net Sales* Consolidated result of the fiscal year ended May 2018 includes FY2017 3Q-4Q (Oct.2017-Mar.2018) data of Jyutaku Seinou Hyouka Center Co., Ltd.

Copyright © 2018 ERI holdings. All rights reserved.

42017 Full-Year Results Ended May 31, 2018

1. Results in fiscal year Ended May 2018

Consolidated results by segment(Millions of yen)

FY2016FY2017

ChangeAmounts

Ratio

Segment
ProfitChangeBuilding Confirmation
and Inspection

6,199［54.6%］

7,059[53.9%]

859

13.9%

678

327

Housing Performance
Evaluation and its
related services

2,877［25.3%］

3,199[24.4%]

322

11.2%

▲18

▲19

Solution Services

898［7.9%］

1,012[7.7%]

144

12.8%

122

83

Others1,382［12.2%］

1,826[14.0%]

443

32.1%

▲58

41

Net Sales Total

11,357［100.0%］13,097[100.0%]

1,740

15.3%

722

432

* Consolidated result of the fiscal year ended May 2018 includes FY2017 3Q-4Q (Oct.2017-Mar.2018) data of Jyutaku Seinou Hyouka Center Co., Ltd.

Copyright © 2018 ERI holdings. All rights reserved.

52017 Full-Year Results Ended May 31, 2018

1. Results in fiscal year Ended May 2018

Change in Net Sales and Operating Profit
Operating profit

Net Sales
Inspection for
Housing DefectLiability
Insurance(Millions of Yen)

13,500Evaluation for Compliancewith Energy Consumption
Performance of Buildings(Millions of Yen)

2500

Others13,000

Housing
Performance
Evaluation

Solution
Services

Building
Confirmation

109
163

Cost of sales
Labor cost +794
Outsourcing fee +166
etc.

Breakdown of thegrowth described in
the left figure.

2000

13,097173
114

12,5001500

322‐1,148

SG&A expenses
Labor cost +126
Amortization of
goodwill +43
etc.

1,740

12,000859

11,50011,357

1000

Acquisition of Jyutaku Seinou
Hyouka Center Co., Ltd.
contribute 1,200 mln out of
1,740 mln in sales growth.

‐191

500

+15.3%

289

11,000+138.3%690

0FY2016
Copyright © 2018 ERI holdings. All rights reserved.

FY2017FY20166FY20172017 Full-Year Results Ended May 31, 2018

1. Results in fiscal year Ended May 2018

Trends in housing market
Changes in new housing starts by category of housings( an average of the past two months, including present month ) New housing starts stayon a downward trend.
 Changes in the
cumulative total is asfollows.
New housing
starts‐2.8%

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‐3.8%

Housings for rent

‐4.8%

0%

Housings forsales(condo‐
minimums)

‐0.5%

‐10%

Housings forsales(single‐
detached)

+2.6%

10%

‐20%

*Cumulative contrast of our fiscal

year (from Jun. to May)

‐30%
‐40%
‐50%
Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May
2017
2018
2016

Copyright © 2018 ERI holdings. All rights reserved.

7

2017 Full-Year Results Ended May 31, 2018

1. Results in fiscal year Ended May 2018

Trends in housing market
 Some major housebuilders’ sales reboundbut it varied frombuilder to builder.
 New housing starts has
been decreasing andgrowing builders
probably shifted tohigh grade housing
successfully.

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%
Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May
2016

2017

2018

* 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 © 2018 ERI holdings. All rights reserved.

82017 Full-Year Results Ended May 31, 2018

1. Results in fiscal year Ended May 2018

Main operating figures | Consolidated(Cases)

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

ChangeAmounts

Ratio

Building Confirmations

53,141

63,461

10,320

19.4%

Final Inspections

49,65661,437

11,781

23.7%

Housing Design Performance
Evaluations of Detached House

19,98425,034

5,050

25.3%

Housing Design Performance
Evaluations of Collective House

29,272

24,240▲5,032▲17.2%* Consolidated result of the fiscal year ended May 2018 includes FY2017 3Q-4Q (Oct.2017-Mar.2018) data of Jyutaku Seinou Hyouka Center Co., Ltd.
* All data represents the number of issuance.
* 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”.

Copyright © 2018 ERI holdings. All rights reserved.

92017 Full-Year Results Ended May 31, 2018

1. Results in fiscal year Ended May 2018

Breakdown of Building Confirmation
FY2017 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
27,677
‐4.3%

6,442
‐6.7%

3,575
‐6.2%

2,026
‐1.7%

1,020
‐16.2%

1,671
33.3%

42,411
‐4.0%

65.3%

15.2%

8.4%

4.8%

2.4%

3.9%

100.0%

601.0
‐2.1%
1.3%

608.4
5.0%

508.1
7.8%

510.4
176.5
14.3%
‐14.1%
8.6%

274.8
19.2%

2,679.1

22.4%
22.7%
Proportion（Reference; June 2017 ‐ May 2018)
Growth rate of national‐4.0%
newly built floor space(construction starts)
61.6%
Proportion

19.0%

19.1%

6.6%

10.3%

100.0%

‐1.4%

12.2%

‐15.3%

7.1%

‐1.2%

9.0%

15.3%

4.5%

9.6%

100.0%

Number of Building Confirmation

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

Copyright © 2018 ERI holdings. All rights reserved.

10

5.2%

2017 Full-Year Results Ended May 31, 2018

1. Results in fiscal year Ended May 2018

Key service figures | Consolidated
FY2016
Cases

Change inprevious year

FY2017

Amounts（Millions of Yen）

Cases

Amounts（Millions of Yen）

Cases

Amounts（Millions of Yen）

Building Confirmations for medium to large sizebuildings (over 500 sqm)

5,343

1,396

5,187

1,509

▲156

113

Housing Performance Evaluations of detachedhouses19,984707

25,034

785

5,050

78

Technical Assessments for Long‐life Quality
Housings

24,177366

25,653

380

1,476

14

Inspections for Housing Defect Liability Insurance

27,090330

26,272

328

▲818

▲2

Evaluations of Seismic Capacity and Seismic
Retrofitting Plans

175

58

208

67

33

9

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

128

175

104

133

▲24

▲42

* “Building Confirmations for medium to large size buildings (over 500 sqm)” includes the numbers of plan change and excludes the data of Jyutaku Seinou Hyouka Center Co., Ltd.
* “Housing Performance Evaluations of detached houses” represents the cases and amounts of issuance of Housing Design Performance Evaluation, which includes FY2017 3Q-4Q(Oct.2017-Mar.2018) data of Jyutaku Seinou Hyouka Center Co., Ltd.
* “Technical Assessments for Long-life Quality Housings” represents the numbers and amounts of conformance certificate, which includes the numbers and amounts of extension andrenovation. It includes FY2017 3Q-4Q (Oct.2017-Mar.2018) data of Jyutaku Seinou Hyouka Center Co., Ltd. From this report, number of plan change is included.
* From FY2017 3Q report, 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
insurance companies. The data of Jyutaku Seinou Hyouka Center Co., Ltd. is excluded.
* Data of “Inspections for Housing Defect Liability Insurance” in FY2017 3Q report was incorrect; both numbers and amounts in FY2016 and FY2017 are corrected, respectively.
* From FY2017 3Q report, the numbers and amounts of plan change by Tokyo Bldg-Tech Center Co., Ltd. exclude from “Structural Evaluations of High-rise Buildings (Skyscraper
and/or Base isolation)”.

Copyright © 2018 ERI holdings. All rights reserved.

112017 Full-Year Results Ended May 31, 2018

1. Results in fiscal year Ended May 2018

New services operating figures | Consolidated(Cases)

FY2016

ChangeFY2017

Amounts

Ratio

Route‐2 Structural Examination

822

832

10

1.2％

Pre‐completion Tentative Approval

148

159

11

7.4％

Assessment of Compliance with the BuildingStandard Law services

82

91

9

11.0％

BELS certification (Non‐housings)

175

198

23

13.1％

BELS certification (Housings)

3,252

4,834

1,582

48.6％

Energy Pass certification

242

120

▲122

▲50.4％* Consolidated result of the fiscal year ended May 2018 includes FY2017 3Q-4Q (Oct.2017-Mar.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 “Pre-completion Tentative Approval”.
* “Route-2 Structural Examination”, “Pre-completion Tentative Approval” and “Assessment of Compliance with the Building Standard Law services” exclude the numbers of plan change.

Copyright © 2018 ERI holdings. All rights reserved.

122017 Full-Year Results Ended May 31, 2018

1. Results in fiscal year Ended May 2018

Sales breakdown | Consolidated
FY2017FY2016
Others,14%

Others,12%

Solution
Services,8%

Housing
Performance
Evaluation andits related
services,
25%

Existingbuildings,
8%

Existingbuildings,
8%

Newly built
non‐houses,
33%

Newly built
houses,59%

Copyright © 2018 ERI holdings. All rights reserved.

Solution
Services,
8%

Building
Confirmation
and Inspection,
55%

Housing
Performance
Evaluation andits related
services,
24%

13

Newly built
non‐houses,
32%

Newly built
houses,60%

Building
Confirmation
and Inspection,
54%

2017 Full-Year Results Ended May 31, 2018

1. Results in fiscal year Ended May 2018

Consolidated financial statements | Assets(Millions of yen)

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

4,109

6,346

2,237(2,071*)

Total current assets

3,256

4,454

1,198(1,038*)

Cash and deposits

2,104

2,804

699

Accounts receivable ‐ trade

500

713

213

Work in process

352

446

93

Total non‐current assets

853

1,891

1,038(1,032*)

Total Property, plant and equipment

153

397

243

Total intangible assets

220

944

723

goodwill

58

648

590

478

550

72

Total assets

Total investments and other assets

Change* Accompanying Jyutaku Seinou Hyouka Center.,Ltd. becoming a subsidiary.

Copyright © 2018 ERI holdings. All rights reserved.

14

2017 Full-Year Results Ended May 31, 2018

1. Results in fiscal year Ended May 2018

Consolidated financial statements | Liabilities(Millions of yen)

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

1,811

4,050

2,239(665*)

Total current liabilities

1,621

2,622

1,000

Accrued expenses

598

819

220

Advances received

656

827

170

Total non‐current liabilities

189

1,427

1,238

2,298

2,296

▲1

Total shareholders’ equity

2,293

2,267

▲25

Retained earnings

1,274

1,469

194

Total liabilities and net assets

4,109

6,346

2,237(1,469*)

Total liabilities

Total net assets

Change* Accompanying Jyutaku Seinou Hyouka Center.,Ltd. becoming a subsidiary.

Copyright © 2018 ERI holdings. All rights reserved.

15

2017 Full-Year Results Ended May 31, 2018

2. Forecasts for the fiscal year Ending May 2019

Forecasts for FY2018(Millions of yen)

FY2017FY2018(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

Copyright © 2018 ERI holdings. All rights reserved.

16

Net Sales

Change2017 Full-Year Results Ended May 31, 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 education‐
related 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.

‐

Copyright © 2018 ERI holdings. All rights reserved.

172017 Full-Year Results Ended May 31, 2018

3. Progress in medium-term management plan

Time-series topics

FY2016Jun.

■ ERI Solution forms a business alliance with SKYROBOT Inc. and starts inspection service
with UAVs.

Sep.

■ ERI Academy starts “E‐learning”.

Nov.

■ ERI Academy starts “ERI Design Competition for Students”.

Dec.

■ TBTC moves to Ministry Designated Confirmation and Inspection Bodies.

Mar.

■ Acquisition of EPA SYSTEM (100%) enhances system development capability.

Apr.

■ Japan ERI and TBTC start Evaluation for Compliance with Energy Consumption
Performance of Buildings.
■ Japan ERI fully revises fee schedule for Building Confirmations and Inspection Services.

FY2017FY2018Jun.

■ ERI Solution forms a business alliance with Aerosense Inc. to start development ofautonomous flight system for UAVs and also gets first UAV’s assignment from local
government.

Nov.

■ Acquisition of Jyutaku Seinou Hyouka Center (97%) enhances core business.

Mar.

■ ERI Solution forms a business alliance with Iemamori Holdings Co., Ltd. and collaborate
for home inspection services.

Jun.

■ ERI Solution finishes Construction Consultant registration and newly entered into
infrastructure inspection business.
■ Japan ERI renews HP design and functions for improving customer services; the first
Building Confirmation is issued by utilizing BIM software.

Copyright © 2018 ERI holdings. All rights reserved.

18

2017 Full-Year Results Ended May 31, 2018

3. Progress in medium-term management plan

Strengthen profitability ofexisting core business ①●Share●up in Building Confirmation and Inspection services
Number of Building Confirmation and market share by ERI group
Number of Building Confirmation (Categories Ⅰ‐Ⅲ)
Total market share

Number of Building Confirmation (Category Ⅳ)
Market share of buildings in categories Ⅰ‐Ⅲ

Market share of buildings in category Ⅳ
70,00017.2%
60,000

17.0%

17.1%

17.7%

17.5%

17.4%

14.3%

15%
12.1%

Cases

11.7%
10.2%

10.0%

30,00020,00010,00020%

15.6%

50,00040,000

18.0%

4.6%
2.1%

6.2%

6.7%

3.2%

3.3%

7.4%

7.3%

7.3%

3.7%

3.8%

3.7%

7.6%

7.7%

7.8%

4.0%

4.2%

4.3%

5.0%

10%

5%

2.2%

0

0%
FY2007

FY2008FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017* 12-month data of Jyutaku Seinou Hyouka Center Co., Ltd. is fully included in FY2017.
* The market share data of ERI group in FY2017 were added up until the end of 3Q, because 4Q’s data by MLIT was not available as of July 13, 2018.
* Fiscal year end of this chart is March.

Copyright © 2018 ERI holdings. All rights reserved.

19

2017 Full-Year Results Ended May 31, 2018

3. Progress in medium-term management plan

Strengthen profitability ofexisting core business ②●Share up in Housing Performance Evaluation services
Number of Housing Performance Evaluation and market share by ERI group
Housing Design Performance Evaluation of detached houses by ERI group
Housing Construction Performance Evaluation of detached houses by ERI groupMarket share of Housing Design Performance Evaluation of detached houses
Market share of Housing Construction Performance Evaluation of detached houses
35%

40,00033.1%
35,000

30%
26.4%

26.7%

26.4%

30,000

25.8%

24.5%

22.8%
Cases

25,00020,000

21.1%
19.4%

23.9%

23.7%

24.1%

28.6%

23.8%

25%

21.4%

24.8%
22.8%

20.8%

21.7%

20%

20.9%
19.1%

18.7%
15%

15,00010%

10,000
5,000

5%

0

0%
FY2007

FY2008FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017* 12-month data of Jyutaku Seinou Hyouka Center Co., Ltd. is fully included in FY2017.
* Fiscal year end of this chart is March.

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20

2017 Full-Year Results Ended May 31, 2018

3. Progress in medium-term management plan

Strengthen profitability ofexisting core business ③●Advance investment in ICT -- BIM software utilization for Building Confirmation
Flowchart of Building Confirmation with BIM
Designated Confirmation and Inspection Bodies(ERI group company)

Applicant (Designers)
BIM data+
Application documents for
Building Confirmation, etc.

①e‐submission

Preliminary
counseling

PDF drawings
generated fromBIM data+Other Documents②uploadWeb system fore‐submission③e‐stamp④downloade‐signature

Receipt ofApplication

Full Review
Certification(paper)+Confirmed drawings(PDF)

Copyright © 2018 ERI holdings. All rights reserved.

⑤download⑤upload⑤Certification(paper)Courier
21

Certification(paper)2017 Full-Year Results Ended May 31, 2018

3. Progress in medium-term management plan

Enhance investment in new growth business ①●Evaluation for Compliance with Energy Consumption Performance of Building-- track record after service started(Mandatory only for non-houses buildings over 2000m2 or more)
Number of Evaluation for Compliance with Energy Consumption Performance of
Building and market share by ERI group
Number of all issues

Number of all issues by ERI groupMarket share of issues

400

40%
33.0%

350

32.0% 32.9%

31.0% 31.4% 31.3%

300

29.6%

33.1%

35%
30%

28.3%

250
Cases

31.0%

25%

26.4%
23.7%

200
150

20%

20.6%
16.7%

15%

100

10%

50

5%

0

0%
Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Jan.

Feb.

Mar.

Apr.

May

2018

2017
Copyright © 2018 ERI holdings. All rights reserved.

Dec.

22

2017 Full-Year Results Ended May 31, 2018

3. Progress in medium-term management plan

Enhance investment in new growth business ②●Services for building stock – track record of Home Inspection

After the revision in Building Lots and Buildings Transaction Business Act(effective on April. 1, 2018) – steep rise in sales
Number of Home Inspection and year‐on‐year sales by ERI Solution
Cases

Year on year (Sales)

350

250%

300
250
200
Cases

200%

194%

144%

150%

111%

150
81%
100

73%

72%

78%

69%

81%

85%

84%

89%

100%

91%

70%
50%

50
0

0%
Apr.
2017

May

Jun.

Jul.

Copyright © 2018 ERI holdings. All rights reserved.

Aug.

Sep.

Oct.

Nov.
23

Dec.

Jan.
2018

Feb.

Mar.

Apr.

May

2017 Full-Year Results Ended May 31, 2018

3. Progress in medium-term management plan

Expand business sphere in new business fields●ERI Solution Co., Ltd. newly entered into infrastructure inspection business Inspection service for infrastructures started.
 Infrastructure and Environmental Inspection Dept. was established.
 Registered as a construction consultant as following.

Summary of construction consultant registration and services
Company name

ERI Solution Co., Ltd.

Date of registration

May 23, 2018

Registration number

建30第10556号

Territory of registration

Infrastructure and Environment

Date of service startJune 1, 2018

LocationsERI Solution Co., Ltd. Head office (Tokyo),
Osaka, Nagoya, Fukuoka

Copyright © 2018 ERI holdings. All rights reserved.

24

2017 Full-Year Results Ended May 31, 2018