2018 Full-Year Results
From June 1, 2018 to May 31, 2019

ERI Holdings Co., Ltd.
July 11, 2019

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

Contents
1. Results in fiscal year Ended May 2019
2. Forecasts for the fiscal year Ending May 2020
3. Our new medium-term management plan
4. Topics

Copyright © 2019 ERI holdings. All rights reserved.

22018 Full-Year Results Ended May 31, 2019

1. Results in fiscal year Ended May 2019

Summary
Increase in revenue and earnings year-on year
for two consecutive years









New housing starts decreased 0.7% largely due to steeply shrinking housing for rent, while
housings for owner-occupation and for sale rebounded partly boosted by a rush demand of
consumption tax expansion.
Revenue increased in all four segments.
Full year revenue and profit of share of Jyutaku Seinou Hyouka Center Co., Ltd. enhanced
Building Confirmation and Housing Performance Evaluation Services result.
In Solution Services, revenue was largely in good shape but upfront investment for new
service put pressure on profit.
In other segments, temporary and intensive request for structural verification largely
contributed to good growth in revenue and improvement in earning.

Copyright © 2019 ERI holdings. All rights reserved.

32018 Full-Year Results Ended May 31, 2019

1. Results in fiscal year Ended May 2019

Consolidated results(Millions of yen)

FY2017

ChangeFY2018(Jun. 2017 – May 2018) (Jun. 2018 – May 2019)

Amounts

Ratio

13,097

15,076

1,979

15.1%

Operating Profit

690

820

130

18.9%

Operating Profit Ratio

5.3%

5.4%

‐

‐

Ordinary Profit

702

845

143

20.5%

Ordinary Profit Ratio

5.4%

5.6%

‐

‐

Profit Attributable to
Owners of Parent

429

523

93

21.7%

Profit per Share (Yen)

55.37

68.94

13.57

‐

Net Sales* FY2017 includes data in Oct. 2017 - Mar. 2018 of Jyutaku Seinou Hyouka Center Co., Ltd. that was consolidated in Nov. 2017.

Copyright © 2019 ERI holdings. All rights reserved.

42018 Full-Year Results Ended May 31, 2019

1. Results in fiscal year Ended May 2019

Consolidated results by segment(Millions of yen)

FY2017FY2018ChangeAmounts

Ratio

Segment
ProfitChangeBuilding Confirmation
and Inspection

7,059[53.9%]

7,898[52.4%]

839

11.9%

723

45

Housing Performance
Evaluation and its
related services

3,199[24.4%]

3,695[24.5%]

496

15.5%

95

113

Solution Services

1,012[7.7%]

1,205[8.0%]

192

19.0%

83

▲38

Others1,826[14.0%]

2,276[15.1%]

450

24.7%

▲17

41

Net Sales Total

13,097[100.0%]15,076[100.0%]

1,979

15.1%

884

161

* FY2017 includes data in Oct. 2017 - Mar. 2018 of Jyutaku Seinou Hyouka Center Co., Ltd. that was consolidated in Nov. 2017.

Copyright © 2019 ERI holdings. All rights reserved.

52018 Full-Year Results Ended May 31, 2019

1. Results in fiscal year Ended May 2019

Change in Net Sales and Operating Profit
Operating profit

Net Sales(Millions of Yen)
Structural
Evaluations

16,000(Millions of Yen)

Evaluation for Compliancewith Energy Consumption
Performance of Buildings

Breakdown of thegrowth described in
the left figure.

3,000

Others15,500

Housing
Performance
Evaluation

15,000

Solution
Services

Building
Confirmation

2,500
322

74

56
15,076

1,304

2,000

192

14,500

Cost of sales
Labor cost +639
Outsourcing fee +224
etc.

1,979

496

14,0001,500

13,500

839

544

1,000
13,000

SG&A expenses
Labor cost +248
Commission
expenses +93
etc.

13,097

12,500500+15.1%

690

12,000+18.9%

820

0

FY2017
Copyright © 2019 ERI holdings. All rights reserved.

FY2018FY20176FY20182018 Full-Year Results Ended May 31, 2019

1. Results in fiscal year Ended May 2019

Trends in housing market
Changes in new housing starts by category of housings( an average of the past two months, including present month ) Upward trend of New
housing starts reversed
into negative.
 Changes in the
cumulative total is asfollows.
New housing
starts‐0.7%

Housings for
Owner‐
Occupation+3.6%

Housings for rent

‐7.0%

Housings forsales(Condo‐
miniums)+4.1%

Housings forsales(Single‐
detached)+4.2%

New housing starts

Housings for Owner‐Occupation

Housings for rent

Housings for sales(Condominiums)

Housings for sales(Single‐detached)
50%
40%
30%
20%
10%
0%
‐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
2018
2019
2017

Copyright © 2019 ERI holdings. All rights reserved.

7

2018 Full-Year Results Ended May 31, 2019

1. Results in fiscal year Ended May 2019

Trends in housing market
 Major house builders’sales have been in good
shape since last June.
 However builder turned
into negative growth all
together in this April andMay.

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

A

B

C

D

E

F

50%
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
2017

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.
* 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.

82018 Full-Year Results Ended May 31, 2019

1. Results in fiscal year Ended May 2019

Main operating figures | Consolidated
FY2017FY2018(Jun. 2017 – May 2018)(Jun. 2018 – May 2019)

Cases

Amounts（Millions of Yen）

Cases

Amounts（Millions of Yen）

ChangeCases

Amounts（Millions of Yen）

Building Confirmations

63,461

3,184

78,797

3,542

15,336358

Final Inspections

61,437

2,776

72,713

3,082

11,276306

Detached
Houses25,034795

35,757997

10,723202

Collective
Houses

24,240264

20,497240 ▲3,743▲24

Detached
Houses

22,253

1,427

28,959

1,707

6,706

280

Collective
Houses21,398324

22,231

339

833

15

Housing Design
Performance
Evaluations
Housing
Construction
Performance
Evaluations* FY2018 includes Jun. 2018 - May 2019 data of Japan ERI Co., Ltd. and Tokyo Bldg-Tech Center Co., Ltd., and Apr. 2018 - Mar. 2019 data of
Jyutaku Seinou Hyouka Center Co., Ltd.
* FY2017 includes Jun. 2017 - May 2018 data of Japan ERI Co., Ltd. and Tokyo Bldg-Tech Center Co., Ltd., and Oct. 2017 - Mar. 2018 data of
Jyutaku Seinou Hyouka Center Co., Ltd.

Copyright © 2019 ERI holdings. All rights reserved.

92018 Full-Year Results Ended May 31, 2019

1. Results in fiscal year Ended May 2019

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

Non‐housing(Educations, Lodgings and more）

OthersTotal

Hospitals, Welfares

Factories, Warehouses

Offices, StoresCollective Houses

Detached Houses
Number of Building Confirmation

27,977

5,809

3,337

2,143

921

1,897

42,084Year‐on‐Year
Proportion
Net Sales

1.1%

‐9.8%

‐6.7%

5.8%

‐9.7%

13.5%

‐0.8%

66.5%

13.8%

7.9%

5.1%

2.2%

4.5%

100.0%

613.9
2.1%
0.4%

599.7
‐1.4%

508.5
0.1%

526.7
3.2%
2.5%

173.5
‐1.7%

296.8
8.1%

2,719.4

22.6%
22.1%
Proportion（Reference; June 2018 ‐ May 2019)
Growth rate of national
0.6%
newly built floor space(construction starts)
62.5%
Proportion

18.7%

19.4%

6.4%

10.9%

100%

‐5.8%

‐3.1%

‐11.4%

2.6%

‐0.9%

8.6%

15.0%

4.0%

9.9%

100.0%

Year‐on‐Year

Copyright © 2019 ERI holdings. All rights reserved.

10

1.5%

2018 Full-Year Results Ended May 31, 2019

1. Results in fiscal year Ended May 2019

Key service figures | Consolidated
FY2017FY2018(Jun. 2017 – May 2018)(Jun. 2018 – May 2019)

Cases

Amounts（Millions of Yen）

Cases

Amounts（Millions of Yen）

ChangeCases

Amounts（Millions of Yen）

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

5,288

1,519

5,504

1,624

216

105

Technical Assessments forLong‐life Quality Housings

25,653380

28,922

414

3,269

34

Inspections for Housing DefectLiability Insurance

32,196402

40,493

388

8,297

▲14

893

166

1,079

200

186

34

198
4,820

30
78

180
4,417

35
86

▲18
▲403

5
8

Evaluation for Compliance with
Energy Consumption Performanceof Buildings
BELS
certifications

Non‐housings
Housings* FY2018 includes Jun. 2018 - May 2019 data of Japan ERI Co., Ltd. and Tokyo Bldg-Tech Center Co., Ltd., and Apr. 2018 - Mar. 2019 data of
Jyutaku Seinou Hyouka Center Co., Ltd.
* FY2017 includes Jun. 2017 - May 2018 data of Japan ERI Co., Ltd. and Tokyo Bldg-Tech Center Co., Ltd., and Oct. 2017 - Mar. 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. The numbers of plan 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 © 2019 ERI holdings. All rights reserved.

112018 Full-Year Results Ended May 31, 2019

1. Results in fiscal year Ended May 2019

Sales breakdown | Consolidated
FY2017FY2018Others,15%

Others,14%
Existingbuildings,
8%

Existingbuildings,
9%

Solution
Services,8%

Housing
Performance
Evaluation andits related
services,
24%

Newly built
non‐houses,
32%

Newly built
houses,60%

Copyright © 2019 ERI holdings. All rights reserved.

Solution
Services,
8%

Building
Confirmation
and Inspection,
54%

Housing
Performance
Evaluation andits related
services,
25%

12

Newly built
non‐houses,
30%

Newly built
houses,61%

Building
Confirmation
and Inspection,
52%

2018 Full-Year Results Ended May 31, 2019

1. Results in fiscal year Ended May 2019

Number of Building Confirmationand market share
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
80,00017.2%

70,000

17.1%

17.7%

17.5%

17.4%

14.3%

15%
12.1%

11.7%

50,000
10.2%

10.1%

40,00010%

30,00020,00010,00020%

15.6%

60,000

Cases

17.0%

17.9%

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%

5%

2.2%

0

0%
FY2007

FY2008FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017* 12-month data of Jyutaku Seinou Hyouka Center Co., Ltd. consolidated in Nov. 2017 is fully included from FY2017.
* Plots of FY2017 market share are updated based on the latest market data, up to Mar. 2018, which MLIT announced on Jan. 2019.
* Fiscal year end of this chart is March.

Copyright © 2019 ERI holdings. All rights reserved.

13

2018 Full-Year Results Ended May 31, 2019

1. Results in fiscal year Ended May 2019

Number of Housing Design Performanceand market share
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
45,00040%

40,00033.1%

35,000
26.4%

Cases

30,00025,00020,000

21.1%
19.4%

26.7%

26.4%

25.8%

22.8%
23.9%

23.7%

24.8%

20.8%

24.5%

24.1%

32.5%

35%

28.1%

30%

28.6%

23.8%

25%

21.4%
22.8%

21.7%

20.9%

20%
19.1%

18.7%
15%

15,00010%

10,000
5,000

5%

0

0%
FY2007

FY2008FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018* 12-month data of Jyutaku Seinou Hyouka Center Co., Ltd. consolidated in Nov. 2017 is fully included from FY2017.
* Fiscal year end of this chart is March.

Copyright © 2019 ERI holdings. All rights reserved.

142018 Full-Year Results Ended May 31, 2019

1. Results in fiscal year Ended May 2019

Consolidated financial statements | Assets(Millions of yen)

FY2017FY2018(Jun. 2017 ‐ May 2018)(Jun. 2018 ‐ May 2019)

Total assets

6,346

6,896

549

Total current assets

4,139

4,501

361

2,804

2,989

185

Accounts receivable ‐ trade

713

790

77

Work in process

446

500

54

Total non‐current assets

2,206

2,395

188

Total Property, plant and equipment

397

501

104

Total intangible assets

944

914

▲29

648

573

▲75

865

979

113

Cash and deposits

Goodwill
Total investments and other assets

Copyright © 2019 ERI holdings. All rights reserved.

15

Change2018 Full-Year Results Ended May 31, 2019

1. Results in fiscal year Ended May 2019

Consolidated financial statements | Liabilities(Millions of yen)

FY2017FY2018(Jun. 2017 ‐ May 2018)(Jun. 2018 ‐ May 2019)

4,050

4,334

284

Total current liabilities

2,622

2,664

42

Accrued expenses

819

842

22

Advances received

827

908

81

Total non‐current liabilities

1,427

1,670

242

2,296

2,561

265

Total shareholders’ equity

2,267

2,530

262

Retained earnings

1,469

1,760

291

Total liabilities and net assets

6,346

6,896

549

Total liabilities

Total net assets

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16

Change2018 Full-Year Results Ended May 31, 2019

2. Forecasts for the fiscal year Ending May 2020

Forecasts for FY2019(Millions of yen)

FY2018FY2019(Jun. 2018 – May 2019)(Jun. 2019 – May 2020)

15,07615,11942

Operating Profit

820

495

▲324

Vs. Net Sales

5.4%

3.3%

‐

Ordinary Profit

845

530

▲314

Vs. Net Sales

5.6%

3.5%

‐

Profit Attributable to
Owners of Parent

523

286

▲236

Profit per Share (Yen)

68.94

37.72

▲31.22

Dividends per Share (Yen)

30

30

‐

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17

Net Sales

Change2018 Full-Year Results Ended May 31, 2019

2. Forecasts for the fiscal year Ending May 2020

Forecasts for FY2019
Backgrounds of depressed earning forecast










Due to consumption tax hike, tough business condition undergoing shrinking of new
housing starts is anticipated.
In addition, temporary and intensive request for extra structural verification in the previous
period have run out. The acquisition of Kozo Sogo Research and Development Inc. will partly
compensate these impact but revenue is expected to remain flat.
ICT investment such as intensive replacement of OS (Windows10) / PC and up-to-date BIM
platform building is necessary.
Implementation of Work Style Reform and intensified recruiting difficulties due to growing
shortage of workers in construction sector will increase burden.
Increase in upfront investment in staff education and other platform enhancement inadvanced to forthcoming expansion of scope that enforce Energy Efficiency Standards isessential.

Copyright © 2019 ERI holdings. All rights reserved.

18

2018 Full-Year Results Ended May 31, 2019

3. Our new medium-term management plan

Concept
Getting over depressing new-build market upon consumption
tax hike, seek a sustainable business growth by energy savingand stock related business expansion and aggressive M&A.
Consumption tax hike
PC/OS replacement
Staff cost growthJune 2019

Energy saving business
Stock business
Promoting efficiency

May 2020

FY 2019

Copyright © 2019 ERI holdings. All rights reserved.

May 2021

FY 2020

19

May 2022

FY 20212018 Full-Year Results Ended May 31, 2019

3. Our new medium-term management plan

Medium-term management plan
(FY2019 - FY2021)
Businessstrategy

Business field

Existing core business<Strengthen
profitability> Building
Confirmation andInspection
 Housing
Performance
Evaluation
 Structural
Calculation Review
 Structural Evaluation
etc.

Providers, Basic policy
Japan ERI, Tokyo Bldg‐Tech Center,
Jyutaku Seinou Hyouka Center
Overcome a shortage of workers and enhance productivity
by worker education for multi‐skilling and promotion ofdigital transformation including BIM.
Enhance a market share of core business, Building Confirmation
and Inspection and Housing Performance Evaluation, utilizing M&A
in a forthcoming industrial shakeout and reorganization.

ERI Solution, Kozo Sogo Research and Development

New growthbusinesses<Business expansion> Services related toenergy conservation
 Building/infrastructure stock Overseas

Copyright © 2019 ERI holdings. All rights reserved.

Going forward into the Building Energy Saving regulation tightening
in 2021, invest in engineer training and operational systemenhancement for energy saving service growth, which is also benefit
to share up of core business.
Actively invest management resources in a building stock business tostep up to new core business and expand to an infrastructure stockbusiness.
Continue to collect information to accurately identify opportunities
for development of oversea business.
20

2018 Full-Year Results Ended May 31, 2019

3. Our new medium-term management plan

Numerical targets of
medium-term management plan
Results of
FY2018Targets of
FY2021

Net sales

15.08 billion yen

More than 18.5 billion yen

Operating profit

0.82 billion yen

More than 1.2 billion yen

Operating Profit /Net Sales

5.4%

More than 6.5%

ROE

21.8%

More than 20%

Dividend

30.00 yen

Keep up stable dividend

Copyright © 2019 ERI holdings. All rights reserved.

21(incl. M&A’s contribution about 2 billion yen)(More than 30% dividend payout ratio)2018 Full-Year Results Ended May 31, 2019

4. Topics

Acquisition of
Kozo Sogo Research and Development Inc.
 May 2019, ERI holdings acquired 100% outstanding shares.

 Collaboratively working with ERI Solution, accelerate business growthin building and infrastructure stock inspection.

Company Outline
Company name

Kozo Sogo Research and Development Inc.

Head office

Higashi Osaka‐shi, Osaka

Main business contents

Nondestructive inspection,
Diagnosis of existing houses and structures

Establishment

January 1986

Capital30 million yen

Net sales

184 million yen (FY ended December 2018)

Copyright © 2019 ERI holdings. All rights reserved.

222018 Full-Year Results Ended May 31, 2019

4. Topics

Selected as IT oriented management company
Selected as one of the excellent IT oriented management company
by METI* at “Competitive IT Strategy Company for 2019”* Ministry of Economy, Trade and Industry
 Promotion activity of digital transformation, such as

BIM utilization in Building Confirmation and UAVs
utilization in building inspection, was highly evaluated.

BIM utilization in Building
Confirmation

External wall inspection with
UAVs

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23

2018 Full-Year Results Ended May 31, 2019

4. Topics

Tightening limits on energy efficiency standards
Feb. 2019, the cabinet decided to enhance mandatory compliancewith energy efficiency standards down to ≧300sqm non-housing.
Planned to be enforced in Apr. 2021
National new building starts by floor area (2017 official estimate)Less than 300 sqm

New non‐housing starts(Total 56,676)

300 sqm ‐2,000 sqm

39,286(69.3%)

over 2,000 sqm

3,246 （5.7%）
Floor area ≥2,000 sqm non-housing
Obligated to energy efficiency standards
since April 2017.

14,144(25.0%)
23,417(5.2%)New housing
starts(Total 454,260)

2,000 sqm > Floor area ≥300 sqm non-housing
Newly obligated to energy efficiency standards(cabinet decision).

429,098(94.5%)

0%

20%

40%

Copyright © 2019 ERI holdings. All rights reserved.

60%

1,745
(0.4%)
80%
24

100%
2018 Full-Year Results Ended May 31, 2019