Financial Results for the Second Quarter
From June 1, 2019 to November 30, 2019
ERI Holdings Co., Ltd.
January 15, 2020

This release contains forward-looking statements about ERI Holdings Co., Ltd.’s future plans,strategies, beliefs and performance that are not historical facts. Such statements are based on thecompany’s assumptions and risks, uncertainties and assumptions 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 this release and ERI Holdings Co., Ltd. bear no
responsibility for any negative impact caused by the use of this release.

Evaluation,Rating,Inspection

Holdings
1

Summary
Increase in revenue anddecrease in earnings year-on-yearSecond quarter results was on track to the consolidated financial forecast
disclosed July 2019
New housing starts decreased mostly due to continuing slowdown in new
housing starts for rent
In Building Confirmation and Inspection services, revenue decreased largely
due to continued shrinking of new housing starts for rent
In Housing Performance Evaluation and its related services, revenue increased
due to steady new housing starts for owner-occupation and sale

Brisk due diligence service drove a revenue of Solution Services

In other segments, revenue was almost flatIncrease in upfront investment and head office relocation put pressure on
operating profit
Copyright © 2020 ERI holdings. All rights reserved2Consolidated financial results
ChangeFY2018 2Q

FY2019 2Q(Jun. 2018 –Nov. 2018)(Jun. 2019–Nov. 2019)

Net Sales

7,241

7,438

196

2.7%

Operating Profit348

167

▲180

▲51.9%

Operating Profit Ratio

4.8%

2.3%--Ordinary Profit

364

226

▲138

▲37.9%

Ordinary Profit Ratio

5.0%

3.0%

--

Profit Attributable toOwners of Parent

232

125

▲106

▲45.9%

Profit per Share (Yen)

30.53

16.47

▲14.06▲46.1%(Millions of yen)Amounts

Ratio

Copyright © 2020 ERI holdings. All rights reserved3Changes of quarterly results | Consolidated

Net sales

Ordinary profit(Millions of yen)

4,500

380

4,000

300

3,000

227
180

163

2,000

123

111

1,000
500
2Q

3Q

FY2015

4Q

161

177

200
138

108

1Q

101

105

120

150
100

53

4632

1Q

250

225

2,500

0350

310

3,500

1,500400502Q

3Q

FY2016

4Q

1Q

2Q

3Q

FY2017

4Q

1Q

2Q

3Q

FY2018

4Q

1Q

2Q

0

FY2019Copyright © 2020 ERI holdings. All rights reserved

4Consolidated financial results by segment
ChangeFY2018 2Q

FY2019 2Q(Jun. 2018 –Nov. 2018)(Jun. 2019–Nov. 2019)

Building Confirmation
and Inspection

3,899[53.9%]

3,843[51.7%]▲56

Housing Performance
Evaluation and its
related services

1,800[24.9%]

1,926[25.9%]

Solution Services

517[7.1%]

OthersNet Sales Total(Millions of yen)Segment
ProfitChange

▲1.4%

156

▲207

126

7.0%7829647[8.7%]

12925.1%7455

1,023[14.1%]

1,020[13.7%]

▲2

▲0.3%

▲109

▲587,241[100.0%]

7,438[100.0%]

196

2.7%

199

▲180

Amounts

Ratio

Copyright © 2020 ERI holdings. All rights reserved

5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%

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

20182019

Copyright © 2019 ERI holdings. All rights reserved

6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 (condo-minimums)

Housings for sales (single-detached)

Accumulated changes in
the first half(from Jun. to Nov.)
New housingstarts▲6.0%

Housings for
OwnerOccupation▲0.3%

Housings forrent▲16.0%

Housings forsales (condominimums)

6.1%

Housings forsales (singledetached)

3.9%

80%

60%

40%20%0%-20%-40%-60%

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

2018

2019
Copyright © 2019 ERI holdings. All rights reserved

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

A

B

CDE

F

50%
40%
30%20%10%0%-10%-20%-30%-40%
Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov.

2018

2019

* 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

8Market Trend
Stats of new construction starts in FY2019 2Q（Jun. 2019 ～ Nov. 2019）
Housing sector
Detached
HousesTerrace Houses

CollectiveHouses

Total

New Housing Starts

229,553

46,027

189,788465,368

Year-on-Year

0.9%▲15.8%▲10.9%▲6.0%

Proportion

49.3%

9.9%

40.8%

100.0%

Newly Built Floor Spaceof Construction Starts

26,152

2,422

10,16338,736Year-on-Year

0.6%▲15.9%

▲4.2%

▲1.9%

Proportion

67.5%

6.3%

26.2%

100.0%(Unit)(Thousand sqm)

Copyright © 2019 ERI holdings. All rights reserved

9Market Trend
Stats of new construction starts in FY2019 2Q（Jun. 2019 ～ Nov. 2019）Non-housing sector
Offices

Stores

Factories

Warehouses

Medical andWelfare

New Housing
Starts

5,443

3,336

4,011

7,439

Year-on-Year

2.4%▲13.5%▲9.9%

Proportion

14.4%

8.9%

Newly Built
Floor Space ofConstruction
Starts2,482Year-on-Year
Proportion(Unit)

Others(educational,lodging andetc.)

Total

4,161

13,28037,670

1.7%

1.7%

▲2.1%

▲2.4%

10.6%

19.7%

11.0%

35.3%

100.0%

2,019

4,438

4,685

2,675

5,853

22,152▲7.3%▲29.0%▲16.9%

5.3%

11.4%

▲9.5%

▲8.4%

11.2%

9.1%

20.0%

21.1%

12.1%

26.4%

100.0%(Thousand sqm)

Copyright © 2019 ERI holdings. All rights reserved

10Main operating figures | Consolidated
FY2018 2Q(Jun. 2018 – Nov. 2018)

Cases

Amounts(Millions of Yen)FY2019 2Q(Jun. 2019 – Nov. 2019)

Cases

Amounts(Millions of Yen)

ChangeCases

Amounts(Millions of Yen)

Building Confirmations

40,068

1,831

39,852

1,673

▲216

▲158

Final Inspections

34,573

1,426

36,248

1,464

1,675

38

Detached
Houses17,626500

18,972

511

1,346

11

Collective
Houses11,082

129

12,659

130

1,577

1

Detached
Houses13,531816

16,273

923

2,742

107

Collective
Houses

7,946

130

9,323

137

1,377

7

Housing Design
Performance
Evaluations

Housing
Construction
Performance
Evaluations

Copyright © 2020 ERI holdings. All rights reserved

11Key service figures | Consolidated
FY2018 2Q(Jun. 2018 – Nov. 2018)

Cases

Amounts(Millions of Yen)FY2019 2Q(Jun. 2019 – Nov. 2019)

Cases

Amounts(Millions of Yen)

ChangeCases

Amounts(Millions of Yen)

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

2,911

841

2,591749

▲320

▲92

Technical Assessments forLong-life Quality Housings

15,262

225

15,010

210

▲252

▲15

Inspections for Housing
Defect Liability Insurance

21,014

203

21,034192

20▲11Evaluation for Compliancewith Energy Consumption
Performance of Buildings

5439847790▲66▲8Nonhousings

871510▲26▲5Housings

3,217

5656550BELSCertifications

613,272* “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” excludes the numbers of plan change.

Copyright © 2020 ERI holdings. All rights reserved

12

Sales breakdown | Consolidated
FY2018Others15％
Existingbuilding
9％

Solution
services
8％

Newly built
Non-houses
30％

Housing
Performance
Evaluation andits related
services
25％

FY2019 2Q

Building
Confirmation
and Inspection
52％

Newly built
houses61％

Others14％
Existingbuilding
8％

Solutionservices
9％

Newly built
Non-houses
27％

Housing
Performance
Evaluation andits related
services
26％

Building
Confirmation
and Inspection
52％

Newly builthouses
65％

Copyright © 2019 ERI holdings. All rights reserved

13Consolidated financial statements | Assets
FY2018(Millions of yen)

FY2019 2Q

ChangeTotal assets

6,896

6,888

▲7

Total current assets

4,501

4,379

▲1212,989

2,769

▲220

Accounts receivable – trade

790

802

12

Work in process

500

520

20

Total non-current assets

2,395

2,509

114

Property, plant andequipment

501611

109

Total intangible assets

914876▲37Goodwill

573534▲399791,021

41

Cash and deposits

Total investments and otherassets

Copyright © 2019 ERI holdings. All rights reserved

14Consolidated financial statements | Liabilities(Millions of yen)

FY2018FY2019 2Q

Change

4,334

4,246

▲882,664

2,678

13

Accrued expenses

842758▲83Advances received

90893526

Total non-current liabilities

1,670

1,567

▲102

2,561

2,642

80

2,530

2,607

77

1,760

1,768

8

6,896

6,888

▲7Total liabilities
Total current liabilitiesTotal net assets
Total shareholders’ equity
Retained earnings
Total liabilities and net assets

Copyright © 2019 ERI holdings. All rights reserved

15Forecasts for FY2019
ChangeFY2018

FY2019(Jun. 2018 –May 2019)(Jun. 2019 –May 2020)

15,07615,119420.3%

Operating Profit

820

495

▲324

▲39.6%

Operating Profit Ratio

5.4%

3.3%

--Ordinary Profit

845

530

▲314

▲37.2%

Ordinary Profit Ratio

5.6%

3.5%

--Profit Attributable toOwners of Parent523286▲236▲45.2%

Profit per Share (Yen)

68.94

37.72

▲31.22▲45.3%(Millions of yen)

Net Sales

Amounts

Ratio

Copyright © 2020 ERI holdings. All rights reserved16Topics
Action for New Growth Business (stock related service)
Changes in Sales/Profit of Solution Services

May. 2017: Building wall inspection by UAVs
(First inspection by UAVs for local government’s property)
Apr. 2018: Revision in Building Lots and Buildings Transaction Business Act(New regulation for brokerage of existing house)
Jun. 2018: Registered as Construction Consultancy (MLIT)(Entered into inspection business of infrastructure stock)
May. 2019: Acquisition of Kozo Sogo Research and Development Inc.
(Enhance non-destructive inspection service)
Copyright © 2020 ERI holdings. All rights reserved

17Topics
Expanding ESG Investment and Green Certifications• Green Bond issue by J-REITs accelerated (18 REITs, total 156.1 billion yen)
• Increasing GRESB* applicant from Japan (70 entries including 44 REITs in 2019 survey)• CASBEE and BELS are utilized for the requirements of GRESB/Green Bond framework* GRESB : Global Real Estate Sustainability Benchmark

Domestic volume of Green Bond issue andJREITs related BELS sales (Japan ERI)

Change in number of GRESB applicants(Thousands of yen)(100 millions of yen)

15,0008,000

80applicants (JREITs)

GB (JREITs issuers/L)
GB (other issuers/L)
BELS (R)

6,000

applicants (others)

12,50060

10,000

7,500

4,000

40

5,000
2,000

20

2,50002016

2017

2018

2019

002016

2017

2018

2019

Copyright © 2020 ERI holdings. All rights reserved

18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

366,267 units

Expectation for expansion ofHousing Performance
Evaluation/BELS needs

3,246 bldgs.
*source: Number of bldgs. is FY2017
data from MLIT 2019 publication

Penetration rate of BELS in
Collective houses is roughly 1％*source: Number of units is FY2015
data from MLIT 2018 publication

Copyright © 2019 ERI holdings. All rights reserved

19Topics
Promotion of BIM utilization for Building Confirmation
FY2019FY2020

FY2021

FY2022～FY2025

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 ofBuilding
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

Forecasts

Results and forecasts of Building
Confirmation by BIM in ERI Group

Results
2001000FY2018results

FY2019 1st half resultsand 2nd half forecast

FY2020forecast

20