2019 Full-Year Results
From June 1, 2019 to May 31, 2020
ERI Holdings Co., Ltd.
July 14, 2020

Evaluation,Rating,Inspection

Holdings
1

Action against coronavirus (COVID-19)
Following the state of emergency declaration on April 7, 2020, we have set up
Emergency Response Team which works together with other ERI group firms.
We have been acting prudently in accordance with requests from Governmentand other public agencies, also blessed with our customers’ understanding andcooperation.
PolicyWe will make every effort to ensure the safety of employees, their family and customers;
and continue our business as a corporate group playing an important role andresponsibility in supporting social infrastructure.
Emergency response (ongoing)
We promote infection prevention such as face masks, face shields, and droplet guards; andwe effort to keep “three Cs” from overlapping such as reducing business trip and face-toface operations by work from home, online meeting, staggered working hours andshortened opening hours.
Medium-to-long term measures
We promote a reduction of nonessential cost and maintain liquidity with commitment line,
in preparation for unforeseen lingering epidemic of COVID-19. Responding to new life/workstyle trends, we promote a digital transformation which should enhance productivity by aremote business operation.
Copyright © 2019 ERI holdings. All rights reserved2Impact of coronavirus (COVID-19)
Year-on-year changes of the number of main services
Number of Building Confirmation by ERI group
Number of Housing Design Performance Evaluation of detached houses of ERI group
Number of building confirmations nationwide
Number of Housing Design Performance Evaluation of detached houses nationwide
20%
consumption tax expansion（8%→10％）

15%
10%

emergency
declaration

COVID-19

5%
0%
-5%
-10%
-15%
-20%
-25%

Jun.
2019

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May.

Jun.

2020
Copyright © 2019 ERI holdings. All rights reserved3Summary
Decrease in revenue and earnings year-on-year








An business impact of consumption tax hike on October 2019 was within therange of our assumption. Under the state of emergency declaration against
COVID-19, however, large restraint on our clients’ sales activity and on-site
work, especially in the housing sector, made our business has slowed down
significantly from April through May.
Good condition of housing sales market until March and the acquisition of
Kozo Sogo Research and Development Inc. grew Housing Performance
Evaluation and Solution services revenue respectively. But shrink of Building
Confirmation and Inspection and Other services was large enough todecrease revenue in total.
Operating profit reached to the initial forecast by reductions in director
remuneration, labor and other costs.
We decided to cut 10% of annual dividend from ¥30 to ¥27 per share (by ¥12
year-end dividend), due to 10% shortage of net income to the initial target andmaintaining sufficient liquidity in preparation for the uncertainty by COVID-19.
Copyright © 2019 ERI holdings. All rights reserved4Consolidated financial results
Previous
fiscal year

Reportingfiscal year

(Jun. 2018 –May 2019)(Jun. 2019–
May 2020)

15,076

14,842

▲234

▲1.6%

Operating Profit

820

517

▲303

▲37.0%

Operating Profit Ratio

5.4％

3.5%

-

-

Ordinary Profit

845

598

▲247

▲29.3%

Ordinary Profit Ratio

5.6％

4.0%

-

-

Profit Attributable to
Owners of Parent

523

258

▲264

▲50.6%

Profit per Share (Yen)

68.94

33.69

▲35.25▲51.1%(Millions of yen)

Net Sales

ChangeAmounts

Ratio

Copyright © 2019 ERI holdings. All rights reserved5Change in net sales and operating profit
Net Sales（Millions of Yen）

16,000（Millions of Yen）

1,000

EnergyConservation
Services

Breakdown of
the growth describedin the left figure.

OthersSolution
Services51

15,500
Housing
Performance
Evaluation

Operating Profit

Building
Confirmation

14
285

256

Cost of sales
Accumulated
depreciation +49
Rent expenses +42
etc.

800

SG&A expenses
Commission
expenses -35
Travel andtransportation
expenses -19
etc.

234

Structural
Evaluations

600

76

134

318

15,000400

14,500820

15,076
14,842

65

517
200

-37.0%-1.6%
14,0000FY 5/2019

FY 5/2020

FY 5/2019

FY 5/2020
Copyright © 2019 ERI holdings. All rights reserved

6Consolidated financial results by segment
Previous
fiscal year

Reportingfiscal year

(Jun. 2018 –May 2019)(Jun. 2019–
May 2020)

Amounts

Ratio

Building Confirmation
and Inspection

7,898[52.4%]

7,613[51.3%]▲285

Housing Performance
Evaluation and its
related services

3,695[24.5%]

3,772[25.4%]

Solution Services

1,205[8.0%]

1,462[9.9%]

Others2,276[15.1%]Net Sales Total

15,076[100.0%](Millions of yen)

ChangeSegment
ProfitChange

▲3.6%

469

▲253

76

2.1%

211

116

256

21.3%

144

61

1,994
[13.4%]▲281 ▲12.4%

▲245

▲228

14,842[100.0%]

▲234

580

▲303

▲1.6%

Copyright © 2019 ERI holdings. All rights reserved

7

Sales breakdown | Consolidated
FY 5/2019

Others15％
Existingbuilding
9％

Solution
services
8％

Newly built
Non-houses
30％

Housing
Performance
Evaluation andits related
services25％

Building
Confirmation
and Inspection
52％

Newly built
houses61％

FY 5/2020
Others14％
Existingbuilding
11％

Solution
services
10％

Newly built
Non-houses
26％

Housing
Performance
Evaluation andits related
services25％

Building
Confirmation
and Inspection
51％

Newly built
houses63％

Copyright © 2019 ERI holdings. All rights reserved

8Market trend
Changes in Housing/Non-housing starts (year-on-year rate)
New housing starts

Newly built houses floor space

New non-housing starts

Newly built non-houses floor space

20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%

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

2018

2019

2020

Copyright © 2019 ERI holdings. All rights reserved

9Market trend
Changes in new housing starts by categories of housing(year-on-year rate)
Housings for Owner-Occupation

Housings for rent

Housings for sales (condominiums)

Housings for sales (single-detached)

80%

60%

Changesin the cumulative total(from June to May)
New housing
starts▲8.1%

Housings for
OwnerOccupation▲6.0%

Housings forrent▲13.6%

Housings forsales (condominiums)▲2.9%

Housings forsales (singledetached)

▲1.1%

40%

20%

0%

-20%

-40%

-60%

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

2018

2019

2020
Copyright © 2019 ERI holdings. All rights reserved

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

A

B

C

D

E

F

60%

40%

20%

0%

-20%

-40%

-60%
Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May

2018

2019

2020

* 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.
Copyright © 2019 ERI holdings. All rights reserved

11Market trend
Stats of new construction starts in FY 5/2020（June 2019 ～ May 2020）
Housing sector
Detached
HousesTerrace Houses

Collective
HousesTotal

New Housing Starts

422,134

81,641

360,786

864,561

Year-on-Year▲4.5%▲16.4%▲10.1%▲8.1%

Proportion

48.8%

9.4%

41.7%

100.0%

Newly Built Floor Spaceof Construction Starts

47,928

4,311

19,103

71,341Year-on-Year▲5.0%▲16.0%

▲7.1%

▲6.3%

Proportion

67.2%

6.0%

26.8%

100.0%(Unit)(Thousand sqm)

Copyright © 2019 ERI holdings. All rights reserved

12Market trend
Stats of new construction starts in FY 5/2020（June 2019 ～ May 2020）
Non-housing sector
Offices

Stores

Factories

Warehouses

Medical andWelfareNew Housing
Starts10,800

5,817

7,094

13,853Year-on-Year

7.2%▲18.2%▲12.7%

Proportion

15.8%

8.5%

Newly Built
Floor Space ofConstruction
Starts5,411Year-on-Year
Proportion(Unit)

Others(educational,
lodging and
etc.)

Total

7,160

23,66968,393

1.3%

▲6.2%

▲7.3%

▲5.2%

10.4%

20.3%

10.5%

34.6%

100.0%

3,834

7,403

10,493

5,031

10,58242,7543.9%▲27.1%▲21.7%

19.4%

3.4%

▲12.5%

▲6.4%

12.7%

9.0%

17.3%

24.5%

11.8%

24.8%

100.0%(Thousand sqm)

Copyright © 2019 ERI holdings. All rights reserved

13

Main operating figures | Consolidated
Previous
fiscal year

(Jun. 2018 – May 2019)

Cases

Amounts(Millions of Yen)

Reportingfiscal year

Change(Jun. 2019 – May 2020)

Cases

Amounts(Millions of Yen)

Cases

Amounts(Millions of Yen)

Building Confirmations

78,797

3,542

75,1833,241▲3,614▲301

Final Inspections

72,713

3,082

73,938

3,075

1,225

▲7

Detached
Houses35,757997

36,464

966

707

▲31

Collective
Houses

20,497240

25,350

259

4,853

19

Detached
Houses28,9591,707

32,752

1,828

3,793

121

Collective
Houses

22,231

339

19,531295▲2,700▲44

Housing Design
Performance
Evaluations

Housing
Construction
Performance
Evaluations

Copyright © 2019 ERI holdings. All rights reserved

14Number of Building Confirmationand market share
Number of Building Confirmation (Categories Ⅰ-Ⅲ)
Total market share
80,000Market share of buildings in categories Ⅰ-Ⅲ

Market share of buildings in category Ⅳ
17.2%

70,000

17.0%

17.1%

17.7%

17.5%

17.4%

17.9%

18.2%

20%
17.7%

15.6%
14.3%

60,000

Cases

Number of Building Confirmation (Category Ⅳ)

15%
12.1%

11.7%

50,000

12.5%

12.7%

10.2%
40,00030,00020,000

6.2%
4.6%

0

7.3%

7.3%

7.6%

7.7%

7.8%

10.1%

11.2%

10%

5.0%
5%

10,000
2.1%

6.7%

7.4%

10.7%

2.2%

3.2%

3.3%

3.7%

3.8%

3.7%

4.0%

4.2%

4.3%

FY3/2008 FY3/2009 FY3/2010 FY3/2011 FY3/2012 FY3/2013 FY3/2014 FY3/2015 FY3/2016 FY3/2017 FY3/2018 FY3/2019 FY3/2020* Jyutaku Seinou Hyouka Center Co., Ltd. consolidated in Nov. 2017 is fully included from FY 3/2018 data.
* Data of FY 3/2020 is included only 9 months calculated based on the latest data up to Dec. 2019, which MLIT announced.

0%

9 months

Copyright © 2019 ERI holdings. All rights reserved

15Number of Housing Design Performanceand market share
Housing Design Performance Evaluation of detached houses of ERI group
Housing Construction Performance Evaluation of detached houses of ERI groupMarket share of Housing Design Performance Evaluation of detached houses
Market share of Housing Construction Performance Evaluation of detached houses

45,00033.1%

40,000

40%

32.5%

Cases

35,00026.4%

30,00025,00020,000

21.1%

19.4%

26.7%

26.4%

25.8%

22.8%
23.9%
20.8%

23.7%

24.5%

24.1%

23.8%

21.7%

20.9%

21.4%

28.6%

28.7%

25%
20%

19.1%

18.7%
15%

15,00010%

10,000

5%

5,000
0

35%
30%

28.1%

24.8%
22.8%

31.4%

FY3/2008 FY3/2009 FY3/2010 FY3/2011 FY3/2012 FY3/2013 FY3/2014 FY3/2015 FY3/2016 FY3/2017 FY3/2018 FY3/2019 FY3/2020

0%* Jyutaku Seinou Hyouka Center Co., Ltd. consolidated in Nov. 2017 is fully included from FY 3/2018 data.

Copyright © 2019 ERI holdings. All rights reserved

16Key service figures | Consolidated
Previous
fiscal year

(Jun. 2018 – May 2019)

Cases

Amounts(Millions of Yen)

Reportingfiscal year

Change(Jun. 2019 – May 2020)

Cases

Amounts(Millions of Yen)

Cases

Amounts(Millions of Yen)

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

5,504

1,624

5,000

1,471

▲504

▲153

Technical Assessments forLong-life Quality Housings

28,922414

27,727381▲1,195▲33

Inspections for Housing
Defect Liability Insurance

40,493388

38,722362▲1,771▲26

Evaluation for Compliancewith Energy Consumption
Performance of Buildings

1,528

246

1,650

269

122

23

Nonhousings

180

35

173

35

▲7

0

Housings

4,417

86

5,613

105

1,196

19

BELS
Certifications* “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 and renovation. The numbers ofplan change is included.
* Counting rules of “Inspections for Housing Defect Liability Insurance” is as follows. 1) Including Defect Insurance but excluding inspection for insurance firm and Housing Performance Certification, 2) Including
insurance brokerage, and 3) Including the data of all housing defect liability insurance companies.
* “Evaluation for Compliance with Energy Consumption Performance of Buildings” includes the numbers of plan change from this time.

Copyright © 2019 ERI holdings. All rights reserved

17Forecasts for FY 5/2021










In June, right after the state of emergency declaration was lifted, numbers of Building
Confirmation and Housing Performance Evaluation decreased 11.7% and 12.6%,
respectively.
It’s still uncertain when we can get back to normal from COVID-19 epidemic. So we madeFY 5/2021 forecast based on the assumption that market will hit the bottom in 1Q andgradually start to recover in 2Q and then largely return to normal in 4Q.
Over the coming several months, we review COVID-19 situation and the market trend indetail, and we will revise the forecast as necessary.
Because of a large uncertainty of such business condition, dividend forecast is not yet
determined. It will be decided in accordance with the revise of the above forecast.
Toward the end year of the medium term business plan (2019-2021), we pursue the goalof the plan materializing earnings growth by energy conservation service expansion due
to the scheduled enhancement of regulations, under the assumption that businessconditions will get back in normal by the end of FY 5/2021.

Copyright © 2019 ERI holdings. All rights reserved18Forecasts for FY 5/2021
ChangeFY 5/2020

FY 5/2021(Jun. 2019 –May 2020)(Jun. 2020 –May 2021)

14,842

14,546

▲296

▲2.0%

Operating Profit

517

273

▲244

▲47.2%

Operating Profit Ratio

3.5%

1.9%

-

-

Ordinary Profit

598

300

▲297

▲49.7%

Ordinary Profit Ratio

4.0%

2.1%

-

-

Profit Attributable to
Owners of Parent

258

157

▲101

▲39.2%

Profit per Share (Yen)

33.69

20.31

▲13.38▲39.7%(Millions of yen)

Net Sales

Amounts

Ratio

Copyright © 2019 ERI holdings. All rights reserved

19Topics
Toward the Enhancement of Mandatory Energy Efficiency
Standards
Current regulatory requirements

New requirements （Apr. 2021～）

Non-housing

Non-housing

Housing

MandatorycomplianceFilingrequiredLarge scale
floor area
≥ 2,000 sqm

Medium scale

floor area
2,000 sqm - 300 sqm

MandatorycomplianceFiling required

Housing
Large scale
Filingrequired

floor area
≥ 2,000 sqm

Medium scale

floor area
2,000 sqm - 300 sqm

Apr. 2021 ～Estimated volume of bldg. subject
to mandatory energy efficiency
standards
Medium scale 2,000 sqm - 300 sqm
Large scale ≥ 2,000 sqm

Apr. 2021～
Estimated volume ofunit required filing

Easing of filing requirements subject toHousing Performance Evaluation/BELS
and tightening of supervision

Large scale ≥ 2,000 sqm＋ Medium scale 2,000 sqm - 300 sqm

Most of mid/large scale housingsare collective housings
Penetration rate of Housing
Performance Evaluation in
Collective houses is 20～25％

14,144 bldgs.

Potential formarketexpansion
3,246 bldgs.
*source: Number of bldgs. is FY 3/2018
data from MLIT 2019 publication

Penetration rate of BELS in
Collective houses is roughly 1％

366,267 units

Expectation for expansion of
Housing Performance
Evaluation/BELS needs*source: Number of units is FY 3/2016
data from MLIT 2018 publication

Copyright © 2019 ERI holdings. All rights reserved20Topics
Promotion of BIM utilization for Building Confirmation
FY 3/2020

FY 3/2021

FY 3/2022

FY 3/2023～FY 3/2026

Action plan of the 2019 innovative business activities (the Cabinet Office)Supporting electronic application procedures of Building Confirmation by
Building Confirmation Bodies and related administrative agencies

Promotion of
Building
Confirmation by BIM

Roadmap by Building BIM Promotion Committee (MLIT)
Study in “Consultative Body of BIM Promotion for Building Confirmation”- Setting up standard descriptions on drawings for Building Confirmation- Setting up specifications for viewer software of BIM etc.
cases

300

Forecast
Results

Results and forecasts of Building
Confirmation by BIM in ERI Group

200

100

0

FY 5/2019
results

FY 5/2020
FY 5/2021
results
forecast
Copyright © 2019 ERI holdings. All rights reserved21

Consolidated financial statements | Assets
Previous
fiscal year

(Millions of yen)

Reportingfiscal year

Change(Jun. 2018 – May 2019) (Jun. 2019 – May 2020)

Total assets

6,896

6,762

▲133

Total current assets

4,501

4,289

▲211

2,989

2,725

▲264

Accounts receivable – trade

790

786

▲3

Work in process

500

439

▲60

Total non-current assets

2,395

2,473

78

Property, plant andequipment

501

570

69

Total intangible assets

914

859

▲55

Goodwill

573

496

▲76

979

1,043

64

Cash and deposits

Total investments and otherassetsCopyright © 2019 ERI holdings. All rights reserved

22Consolidated financial statements | Liabilities(Millions of yen)Previous
fiscal year

Reportingfiscal year

Change(Jun. 2018 – May 2019) (Jun. 2019 – May 2020)

4,334

4,015

▲318

2,664

2,524

▲140

Accrued expenses

842

646

▲195

Advances received

908

869

▲38

Total non-current liabilities

1,670

1,491

▲178

2,561

2,746

184

2,530

2,706

176

1,760

1,783

23

6,896

6,762

▲133

Total liabilities
Total current liabilities

Total net assets
Total shareholders’ equity
Retained earnings
Total liabilities and net assets

Copyright © 2019 ERI holdings. All rights reserved

23Changes of quarterly results | Consolidated

Net sales(Millions of yen)

Ordinary profit(Millions of yen)

380

4,500

400

4,000

350

310

3,500

300

3,000

225

2,500

180

161

2,000

101

105

156

120

1Q

46

2Q

3Q

FY 5/2017

150
100

53
32

250
200

108

1,000

0

177
138

1,500

500

215

50
4Q

1Q

2Q

3Q

FY 5/2018

4Q

1Q

2Q

3Q

FY 5/2019

4Q

1Q

2Q

3Q

4Q

0

FY 5/2020

Copyright © 2019 ERI holdings. All rights reserved

24

Contact
ERI Holdings Co., Ltd.
Investor Relations and Public Relations Group
E－Mail ｜ info@h-eri.co.jp
https://www.h-eri.co.jp/
This release contains forward-looking statements
about ERI Holdings Co., Ltd.’s future plans,
strategies, beliefs and performance that are nothistorical facts. Such statements are based on thecompany’s assumptions and risks, uncertainties andassumptions that, without limitation, relate toeconomic conditions. Accordingly, ERI Holdings Co.,
Ltd. wishes to caution readers that actual results
may differ materially from those projected in thisrelease and ERI Holdings Co., Ltd. bear no
responsibility for any negative impact caused by theuse of this release.

Copyright © 2019 ERI holdings. All rights reserved25