Summary of Accounts for Fiscal Year Ended December 2019 (Japanese GAAP)(Consolidated)
Name of listed company: ES-CON JAPAN Ltd.
Code:
8892
Representative:(Name) Takatoshi Ito(Position)
Contact for inquiries:(Name) Minoru Nakanishi(Position)
Scheduled date for next regular general meeting of shareholders:
Scheduled date for submission of periodic securities report:
Scheduled date for start of dividend payment:
Supplementary explanatory materials created for accounts? Yes/No:
Accounts briefing meeting held?
Yes/No:January 30, 2020
Listing exchange: Tokyo Stock Exchange
URL: https://www.es-conjapan.co.jp
President & Representative Director
Senior Managing Director TEL: 06 (6223) 8055
March 26, 2020
March 27, 2020
March 27, 2020
No
Yes(for institutional investors and analysts)(Amounts are rounded down to the nearest million yen)

1.

Consolidated results for fiscal year ended December 2019 (from January 1, 2019 to December 31, 2019)(% figures show the rate of increase (decrease) compared with the previous fiscal year)(1) Consolidated operating results
Profit attributable to
Net sales
Operating income
Ordinary income
owners of parent
million yen%

million yen%

million yen%

million yen%

Fiscal year ended
72,106
32.7
12,912
11.7
11,810
12.5
8,155
12.9
Dec. 2019
Fiscal year ended
54,325
21.5
11,561
64.2
10,498
75.3
7,226
32.4
Dec. 2018
Note: Comprehensive income
Fiscal year ended Dec. 2019: 8,405 million yen [16.6%] Fiscal year ended Dec. 2018: 7,211 million yen [32.2%]
Basic earnings
Diluted earnings
Return on
Return on
Operating margin
per shareper share
equityassets
yen

yen

%

%

%

Fiscal year ended
119.17118.93
26.8
9.7
17.9
Dec. 2019
Fiscal year ended
105.98105.48
29.6
10.7
21.3
Dec. 2018
Reference: Share of profit (loss) of entities accounted for using equity method
Fiscal year ended Dec. 2018: －million yen
Fiscal year ended Dec. 2019: -33 million yen(2) Consolidated financial position
Total assets
Net assets
Equity ratio
Book value per share
million yen

million yen

Fiscal year ended
132,696
33,546
Dec. 2019
Fiscal year ended
109,747
27,359Dec. 2018
Reference: Equity
Fiscal year ended Dec. 2019: 33,544 million yen(3) Consolidated cash flows
Net cash
Net cashprovided by (used in) provided by (used in)operating activities
investing activities

yen

25.3

490.0824.9

400.47

Fiscal year ended Dec. 2018: 27,358 million yen
Net cashprovided by (used in)financing activities

Cash andcash equivalents
at end of period

million yen

million yen

million yen

million yen

122(4,770)10,501

22,413(7,123)223

12,81816,563Fiscal year ended
Dec. 2019
Fiscal year ended
Dec. 20182.

%

Dividends
Annual dividend
End offirst quarter

Fiscal year ended
Dec. 2018
Fiscal year ended
Dec. 2019
Fiscal year ending
Dec. 2020

Total dividend
amountDividend
payout ratio

Dividend on
equityyen(Total)million yen(Consolidated)%(Consolidated)
%

32.00

32.00

2,209

30.2

8.9

－

36.00

36.00

2,490

30.2

8.1

－

38.00

38.00

End ofsecond quarterEnd ofthird quarter

Year-end

yen

yen

yen

yen

－

0.00

－

－

0.00

－

0.00

(Forecast)

－ 1 －

Total

30.6

3.

Consolidated earnings forecast for fiscal year ending December 2020 (from January 1, 2020 to December 31, 2020)(% figures for the full fiscal year show the rate of increase (decrease) compared with the previous fiscal year, and% figures for the first two quarters show the rate of increase (decrease) compared with the same period of the previous year)

Net salesFirst two quarters
Full fiscal year*

Operating income

Ordinary income

Profit attributable to
Basicowners of parent earnings per share

million yen%

million yen%

million yen%

million yen%

yen

54,00086,000

78.6
19.3

9,500
13,300

39.9
3.0

9,000
12,300

45.2
4.1

6,200
8,500

44.4
4.2

90.58
124.18

Explanatory notes(1) Changes in significant subsidiaries during fiscal year
(Changes in specified subsidiaries resulting in change in scope of consolidation):
Newly included: － companies (Company name) －－ companies (Company name) －Excluded:(2) Changes in accounting policies, changes in accounting estimates, and restatement
1) Changes in accounting policies due to amendment of accounting standards, etc.:
2) Changes in accounting policies other than 1):
3) Changes in accounting estimates:
4) Restatement:

None

None
None
None
None

(3) Number of shares issued and outstanding (common shares)
1) Number of shares issued and outstanding
Fiscal year
Fiscal year
71,841,887
71,649,387(including treasury shares) at end of fiscal
ended Dec.
ended Dec.
sharesshares
year
2019
2018
Fiscal year
Fiscal year
2) Number of treasury shares at end of fiscal
3,394,700
3,334,900
ended Dec.
ended Dec.
year
sharesshares2019
2018
Fiscal year
Fiscal year
68,433,365
68,185,053
3) Average number of shares during fiscal year ended Dec.
ended Dec.
sharesshares2019
2018
Note: The number of treasury shares at end of fiscal year includes ES-CON JAPAN shares held in a share-based
payment benefits trust for directors and a share-based payment benefits type ESOP trust (fiscal year ended
December 2019: 487,200 shares in the share-based payment benefits trust for directors and 233,100 sharesin the share-based payment benefits type ESOP trust). In the calculation of the average number of shares
during fiscal year, the treasury shares to be subtracted in that calculation includes ES-CON JAPAN shares
held in the share-based payment benefits trust for directors and the share-based payment benefits type
ESOP trust (fiscal year ended December 2019: 721,142 shares).
*

Presentation regarding implementation of audit proceduresThis summary of accounts is not subject to the audit procedures pursuant to the Financial Instruments and ExchangeAct, and audit procedures have not been completed for consolidated financial statements at the time of disclosure ofthis summary of accounts.

*

Explanation regarding appropriate use of earnings forecasts, and other notes
The earnings outlook and other forward-looking statements contained in this document are based on information
currently available to and certain assumptions that are thought to be reasonable by ES-CON JAPAN. Accordingly,
actual business performance and other results may differ materially due to various reasons. For the conditions
forming the assumptions on which earnings forecasts are based and explanatory notes for use of earnings forecasts,
etc., please see “Attachment 1; 1. Overview of Operating Results, etc.; (1) Analysis of Operating Results” on page 3.

－ 2 －Attachment 1
1. Overview of Operating Results, etc.
(1) Analysis of Operating Results
In the consolidated fiscal year under review (fiscal year ended December 2019), the outlook of Japanese economy
remains clouded as the situation calls for attention to the impact of the U.S.-China trade friction on the world economy
as well as uncertainties in overseas economies, including the downside risk in the Chinese economy and the issue of
Brexit, in addition to the effects of fluctuation in the financial and capital markets, among other factors.
The real estate industry in which the ES-CON JAPAN Group operates held firm due in part to low interest rates
from monetary easing policies, yet the situation warrants no optimism because of such factors as a rise in land prices,intensified competition in acquiring land and construction costs remaining high.
In the business environment described above, we have proactively developed multifaceted businesses in thecurrent fiscal year as the final fiscal year of the second medium-term management plan “IDEAL to REAL 2019” set forthe period of three years from the fiscal year ended December 2017 to the fiscal year ended December 2019. Our
efforts resulted in performance that accompanied figures substantially higher than the initially planned targets andmanagement that is generally in line with the plans.
1) Status of Implementation of Growth Strategy of ESCON JAPAN REIT Investment Corporationa. Support Agreement with Chuden Real Estate Co., Inc.
Investment units issued by ESCON JAPAN REIT Investment Corporation (hereinafter the “EJR”), of whichasset management is entrusted to ES-CON Asset Management Ltd. (hereinafter the “EAM”), a consolidated
subsidiary of ES-CON JAPAN, were listed on the Tokyo Stock Exchange Real Estate Investment Trust Securities
Market in February 2019. EJR is a diversified J-REIT that mainly invests in “everyday life-based” commercial
facilities closely associated with the local community and in land with leasehold interest for such commercial
facilities.
ES-CON JAPAN Group fully supports enhancement of earnings and stable growth of EJR as a sponsor andaims for further growth.
As one of the growth strategies of EJR, a support agreement was concluded among three companies namely
Chuden Real Estate Co., Inc. (hereinafter “Chuden Real Estate”), EJR and EAM.
The support agreement covers a wide range of support including warehousing function, and ES-CON JAPAN
believes that the growth of EJR as well as a synergy effect with Chubu Electric Power Group in real estatebusiness can be achieved also by ES-CON JAPAN, the sponsor, by utilizing the creditworthiness of Chuden Real
Estate and its know-how in real estate business. A sale and purchase agreement was concluded in November
2019 for the transfer of real estate for sale (Tonarie Yamatotakada (50% quasi-co-ownership interest), tonarie
Toga-Mikita (50% quasi-co-ownership interest) commercial leasehold land in Omihachiman City, Shiga,
commercial leasehold land in Muko City, Kyoto, commercial leasehold land in Ikoma-gun, Nara) owned by ESCON JAPAN to Chuden Real Estate utilizing temporary warehousing function with a precondition to transfer thereal estate to EJR, based on the support agreement.
EJR expects that the addition of the support from Chuden Real Estate to that from ES-CON JAPAN, which isthe sponsor support company that has already concluded the agreement, and Chubu Electric Power Co., Inc.
(hereinafter “Chubu Electric Power”), which is the support company, will significantly contribute to the further
growth of EJR.
b. Acquisition of External Credit Rating of “A-“EJR acquired a credit rating of “A-“ (rating outlook: stable) from Rating and Investment Information, Inc. (R&I) in
November 2019. As a sponsor of EJR, ES-CON JAPAN will continue to aim for mutual growth by supporting theexternal growth of EJR both qualitatively and quantitatively through continuous and stable provision of properties.
2) Business Development in the Chubu Region
ES-CON JAPAN concluded a capital and business partnership agreement with Chubu Electric Power in August
2018 to position the Chubu region as a core business area comparable to the Tokyo metropolitan area and theKansai region, and established a Nagoya branch in March 2019. ES-CON JAPAN acquired a site for a condominium
in Higashi Ward, Nagoya City in June 2019, the first such case in the Chubu region, and also a site of its second
condominium in Higashi Ward, Nagoya City in September 2019. ES-CON JAPAN is planning to launch a joint project－ 3 －with Chuden Real Estate with regard to the first site, and is steadily implementing business development in the
Chubu region as such.
ES-CON JAPAN intends to develop the business to contribute to regional revitalization in the Chubu region while
continuing to strengthen the partnership with each group company of Chubu Electric Power.
3) Development of Community-based Shopping Center under “tonarie” Brand and Revitalization of Communities“tonarie Toga-Mikita,” a community-based commercial facility developed by ES-CON JAPAN in Minami Ward,
Sakai City, Osaka, opened in April 2019. Serving as a terminal of “bustle and interaction” for the residents of theToga-Mikita area, it provides a place where a wide range of generations, from small children to the elderly, can enjoy
themselves, and supports their everyday life.
Furthermore, ES-CON JAPAN plans to acquire “LaLasquare Utsunomiya,” a commercial facility located a 1-minute
walk from the west exit of JR Utsunomiya Station, and open it as “tonarie Utsunomiya” in February 2020. The facility
will be the first commercial facility operated by ES-CON JAPAN in the Kanto area under its community-based
shopping center brand “tonarie.”
ES-CON JAPAN will continue to develop community-based commercial facilities such as this and contribute tosociety through regional revitalization and community development.
4) Acquisition of Shares of Two Detached House Business Companies
In July 2019, ES-CON JAPAN acquired shares of two companies operating mainly in Saitama Prefecture - One's
Own House Co., Ltd., which sells detached houses, and Rise Home Co., Ltd., which builds detached houses making them fully-owned subsidiaries. Saitama is an attractive market in the metropolitan area where steadydevelopment is expected as a commuter region for central Tokyo and is believed to contribute to greater businessexpansion in the metropolitan area.
5) Overseas Investment Business
In March 2019, ES-CON JAPAN made a commitment to invest in a Hawaii-focused closed-end real estate
investment fund as its new overseas business. In July 2019, ES-CON JAPAN established its subsidiary ESCON
JAPAN (Thailand) CO., LTD. in Thailand, and participated in a joint development project for a condominium (total of
474 units) in excellent location close to central Bangkok. As such, ESCON JAPAN has embarked on development of
its overseas business.
6) Status of ESG Initiatives
ES-CON JAPAN has set the “Creation of New Value and Realization of Sustainable Growth through ESG
Promotion” as one of the growth strategies in its second medium-term management plan “IDEAL to REAL 2019.” Aspart of such activity, it participated in the Global Real Estate Sustainability Benchmark (hereinafter “GRESB”) Real
Estate “Developer Assessment,” which is an annual benchmark assessment measuring ESG consideration in thereal estate sector, and acquired “Green Star” rating receiving high marks in both“Management & Policy” and“Implementation & Measurement” for its efforts on environmental consideration and sustainability. Moreover, ESCON JAPAN received “2 Stars” in GRESB Rating, which is a five-grade evaluation system that reflects applicant’s
relative evaluation based on total GRESB Score. ES-CON JAPAN was the first Japanese business company toreceive “Green Star” and “2 Stars” in GRESB Real Estate “Developer Assessment.”
ES-CON JAPAN has thus far involved in the development of condominiums supporting environmentally-friendly
Net Zero Energy House (ZEH) as well as in the joint research regarding environmental designing standards, etc. withProfessor Inoue’s research lab at Tokyo University of Science. In addition, “Le JADE Okurayama,” which is a newly
built condominium handled by ES-CON JAPAN in Yokohama City, Kanagawa Prefecture, was adopted in the “Fiscal
2019 High-rise ZEH-M Support Project” of the Ministry of the Environment for the first time among ES-CON JAPAN’s
projects in September 2019.
Furthermore, as part of the ESG activities, ES-CON JAPAN donated a 10 million yen grant to support
dissemination of “WT1 cancer vaccine” and development of “WT1 cancer prevention vaccine” pressed ahead byProfessor Haruo Sugiyama (a specially appointed professor at Osaka University Graduate School of Medicine).
Going forward, ES-CON JAPAN will continue to steadily promote ESG as its important management strategy andproactively implement measures to realize sustainable growth of the company.

－ 4 －7) Business Development by Segmenta. In the real estate sales business, which is our core business, we conducted income-generating real estate
sales, etc., and made steady progress in condominium sales, too.
In the real estate sales business, sales of new projects “Grand Le JADE Shukugawa Residence(Nishinomiya City, Hyogo Prefecture; 13 units in total),” “Le JADE Ikeda Masumicho (Ikeda City, Osaka
Prefecture; 35 units in total),” “Le JADE Morinomiya (Higashinari Ward, Osaka City; 45 units in total),” “LeJADE Okurayama (Kohoku Ward, Yokohama City; 25 units in total),” etc. started while “Le JADE Sumakaihin
Koen (Suma Ward, Kobe City; 30 units in total),” “Grand Le JADE Takatsuki Tenjin (Takatsuki City, Osaka
Prefecture; 28 units in total),” “Le JADE Takatsuki Kosobe (Takatsuki City, Osaka Prefecture; 181 units intotal),” “Le JADE Shinkanaoka Park Fields (Kita Ward, Sakai City; 204 units in total)” and “Le JADE Otsu
LUXE (Otsu City, Shiga Prefecture; 35 units in total)” were sold out upon completion and “Le JADE Kuzuha(Hirakata City, Osaka Prefecture; 78 units in total),” “Le JADE Higashisumiyoshi Imagawa Ryokudo(Higashisumiyoshi Ward, Osaka City; 41 units in total)” and “Le JADE Kotoen (Nishinomiya City, Hyogo
Prefecture; 49 units in total),” which are scheduled for completion in the next fiscal year, are contracted to sellout.
Furthermore, for the hotel development projects incorporating inbound tourism needs, sales of 3 projects
developed in Chuo Ward, Osaka City have completed.
In the commercial development business, ES-CON JAPAN acquired “Tsukuba Q’t” and “Tsukuba MOG” in
December 2018 and “Tsukuba Creo” in March 2019, which are commercial facilities in Tsukuba City, Ibaraki
Prefecture. Utilizing multifaceted real estate development expertise accumulated to date, ES-CON JAPANwill promote Tsukuba Station-front development through utilizing the three facilities that can contribute to the
local area in an integrated manner. In addition, ES-CON JAPAN acquired “Oh!Me OTSU TERRACE,” acommercial facility in Otsu City, Shiga Prefecture, in October 2019, and has proactively worked on valueenhancement of commercial facilities under operation and redevelopment projects.
In the logistics development business, ES-CON JAPAN launched a new logistics facility brand “LOGITRES”
and completed the first facility “LOGITRES Tojo (Kato City, Hyogo Prefecture)” in September 2019. In theoffice development business, ES-CON JAPAN acquired land for business in Chiyoda Ward, Tokyo, etc. and issteadily promoting diversification of its business through measures such as development of new businessfields with an eye on the next era and globalization.
b. In the real estate leasing business, efforts are being made to secure stable rental income from retail properties
held by ES-CON JAPAN and to enhance their asset value.
c. In the real estate planning agency and consulting business, focus is placed on being a business achieving
high profit margins through subcontracting, planning agency and consulting and other non-assets byleveraging the planning and other strengths of ES-CON JAPAN.
As a result, business performance for the fiscal year ended December 2019 was net sales of 72,106 million yen (up32.7% compared with the previous fiscal year), operating income of 12,912 million yen (up 11.7% compared with theprevious fiscal year), ordinary income of 11,810 million yen (up 12.5% compared with the previous fiscal year) andprofit attributable to owners of parent of 8,155 million yen (up 12.9% compared with the previous fiscal year).
The following is the business performance by segment.
1)

Real estate sales businessIn the real estate sales business, activities including sales of condominiums and revenue-generating real estate

resulted in net sales of 66,710 million yen (up 32.1% compared with the previous fiscal year) and segment income of
13,802 million yen (up 11.8% compared with the previous fiscal year).
2)

Real estate leasing businessIn the real estate leasing business, focus was placed on leasing activities and the property management businessin view of enhancement of asset value, including increase in rental income of owned revenue-generating real estate,
resulting in net sales of 5,022 million yen (up 47.7%) and segment income of 3,001 million yen (up 41.0%).
3)

Real estate planning agency and consulting businessIn the real estate planning agency and consulting business, proactive efforts were made in such aspects as－ 5 －entrustment with planning, consulting and other services by making the best use of planning and multifacetedbusiness building abilities, resulting in net sales of 372 million yen (down 8.2% compared with the previous fiscal
year) and segment income of 286 million yen (down 22.2% compared with the previous fiscal year).
(Earnings Outlook for the Next Fiscal Year and Progress of Medium-Term Management Plan)
ES-CON JAPAN has established the third medium-term management plan “IDEAL to REAL 2022” for the three-year
period from the fiscal year ending December 2020 to the fiscal year ending December 2022, in order to further advancein the next stage and realize stable growth. For an outline of the second medium-term management plan, please see“Attachment 2; Management Policy; (2) Medium- to Long-Term Corporate Management Strategy and Management
Indicator Targets” on page 20.
In light of the above, the consolidated earnings forecasts for the fiscal year ending December 2020, the fiscal year
ending December 2021 and the fiscal year ending December 2022 are net sales of 86,000 million yen, 100,000 million
yen, and 110,000 million yen, as well as operating income of 13,300 million yen, 14,000 million yen and 15,200 million
yen, respectively.
Please note that the earnings forecast or outlook and other forward-looking statements contained in this document
are an analysis or judgment based on information available as of the date of this document. Accordingly, actual
business performance and other results may differ materially due to changes in the management environment and othervarious reasons.

－ 6 －(2) Analysis of Financial Position
1)

Assets, liabilities and net assets
Assets at the end of the fiscal year ended December 2019 increased by 22,949 million yen compared with the endof the previous fiscal year to 132,696 million yen. This was mainly attributable to cash and deposits increasing by
5,912 million yen, inventories increasing by 11,066 million yen and land increasing by 2,092 million yen while part ofreal estate for sale in process (8,410 million yen) was transferred to buildings and structures (504 million yen) andland (7,905 million yen) due to a change in the purpose of holding the real estate.
Liabilities increased by 16,762 million yen in comparison with the end of the previous fiscal year to 99,149 million
yen. This was mainly attributable to long-term loans payable, short-term loans payable and bonds increasing by
14,392 million yen.
Net assets increased by 6,187 million yen in comparison with the end of the previous fiscal year to 33,546 million
yen. This was attributable to recording profit attributable to owners of parent of 8,155 million yen against dividends ofsurplus paid of 2,209 million yen and purchase of treasury shares of 40 million yen. As a result, the equity ratio was
25.3% (24.9% at the end of the previous fiscal year).
2)

Cash flows
Cash and cash equivalents (“net cash”) in the fiscal year ended December 2019 increased by 5,849 million yen

compared with the end of the previous fiscal year to 22,413 million yen (16,563 million yen at the end of the previous
fiscal year). The following outlines the cash flows and the factors of changes in cash flows in the fiscal year ended
December 2019.
(Cash flows from operating activities)
Cash flows from operating activities in the fiscal year ended December 2019 amounted to net cash provided byoperating activities of 122 million yen (net cash used in operating activities of 7,123 million yen in the previous fiscal
year). This was mainly attributable to recording profit before income taxes of 11,803 million yen and increase ininventories of 10,179 million yen.
(Cash flows from investing activities)
Cash flows from investing activities in the fiscal year ended December 2019 amounted to net cash used ininvesting activities of 4,770 million yen (net cash provided by investing activities of 223 million yen in the previous
fiscal year). This was mainly attributable to purchase of investment securities of 1,641 million yen and purchase ofnon-current assets of 3,295 million yen.
(Cash flows from financing activities)
Cash flows from financing activities in the fiscal year ended December 2019 amounted to net cash provided byfinancing activities of 10,501 million yen (net cash provided by financing activities of 12,818 million yen in the previous
fiscal year). This was mainly attributable to proceeds from and repayments of long-term loans payable and short-termloans payable amounting to net proceeds of 12,793 million yen, cash dividends paid of 2,207 million yen andpayments due to purchase of treasury shares of 40 million yen.

－ 7 －Reference: Changes in cash flow indicators
Fiscal year Fiscal year Fiscal year Fiscal year Fiscal year
ended Dec. ended Dec. ended Dec. ended Dec. ended Dec.
2015
2016
2017
2018
2019
Equity ratio (%)

24.1

23.6

24.8

24.9

25.3

Equity ratio on market capitalization basis (%)

31.7

41.9

54.0

42.2

50.7

Ratio of interest-bearing liabilities to cash flows (%)

－

－

－

－

－

Interest coverage ratio (times)

－

－

－

－

0.1

Equity ratio: Equity ÷ Total assets
Equity ratio on market capitalization basis: Market capitalization ÷ Total assets
Ratio of interest-bearing liabilities to cash flows: Interest-bearing liabilities ÷ Operating cash flows
Interest coverage ratio: Operating cash flows ÷ Interest paid
Notes: 1. Each is calculated using consolidated financial figures.
2. Market capitalization is calculated by multiplying the closing share price at end of fiscal year by the
number of shares issued and outstanding at end of fiscal year.
3. Operating cash flows are the cash flows from operating activities on the consolidated statement of cash
flows.
4. Interest-bearing liabilities are all of those liabilities recorded on the consolidated balance sheet of which
are liabilities on which interest is payable.
5. Interest paid is the interest expenses paid on the consolidated statement of cash flows.
6. Ratio of interest-bearing liabilities to cash flows and interest coverage ratio are not stated for fiscal years
that have negative operating cash flows.
(3) Basic Policy on Distribution of Profit, and Dividend for the Current Fiscal Year and Next Fiscal Year
Positioning the return of profit to shareholders as a key management task, ES-CON JAPAN makes it a basic policy
to strive for uninterrupted and stable return of profit in line with corporate growth potential based on decisions thattake into account the status of business performance, availability of internal reserves, dividend payout ratio and otherfactors in a comprehensive manner.
ES-CON JAPAN has introduced a progressive dividend policy to “not decrease the dividend amount, but rather only
maintain or increase the dividend amount” in principle with DPS of the previous fiscal year as the minimum amount,for the period of the second medium-term management plan. ES-CON JAPAN intends to continue adopting the
progressive dividend policy in the third medium-term management plan and work to improve transparency of the
future dividend level, further increase return of profit to shareholders and enhance corporate value continuously while
realizing stable distribution.
For the year-end dividend for the fiscal year ended December 2019, which is the final fiscal year of the second
medium-term management plan, ES-CON JAPAN plans to pay dividend of 36 yen per share with an increase of 1 yenfrom the initial forecast of 35 yen per share. The dividend payout ratio is 30.2%.
For the fiscal year ending December 2020, the dividend forecast is 38 yen per share.

－ 8 －2. Consolidated Financial Statements(1) Consolidated Balance Sheet
Fiscal year
ended Dec. 2018(as of Dec. 31, 2018)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Real estate for sale
Deferred tax assets
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
VehiclesAccumulated depreciation
Vehicles, net
Land
Leased assets
Accumulated depreciation
Leased assets, net
Construction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets－ 9 －(Unit: million yen)
Fiscal year
ended Dec. 2019(as of Dec. 31, 2019)16,598491
15,30865,8906,353
104,642

22,511
598
24,234
59,6197,173
114,137

1,459
(462)
997
－
－
－
623
9
(6)
2
－
142
(107)
35
1,658

3,216
(566)
2,649
7
(6)
1
10,621
4
(3)
1
0
281
(122)
159
13,433

－
30
30

436
56
492

2,077
359
1,016
(37)
3,415
5,104
109,747

2,711
662
1,296
(37)
4,632
18,558132,696

Fiscal year
ended Dec. 2018(as of Dec. 31, 2018)
Liabilities
Current liabilities
Short-term loans payable
Current portion of long-term loans payable
Current portion of bonds
Lease obligations
Accounts payable - other
Income taxes payable
Advances received
Deposits received
Asset retirement obligations
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Lease obligations
Deferred tax liabilities
Provision for directors’ share-based benefits
Provision for share-based benefits
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets－ 10 －(Unit: million yen)
Fiscal year
ended Dec. 2019(as of Dec. 31, 2019)

1,720
23,993
40
0
1,731
1,448
3,051
4,933
33
255
37,2104,580
32,415
40
1
2,097
3,396
2,809
4,733
－
126
50,199270
44,568
1
－
97
30
77
130
45,17682,387230
47,720
0
2
114
35
249
597
48,95099,1496,259
1,988
20,310(1,207)27,3526,275
2,004
26,256(1,247)33,288

6
－
6
1
－

256
(0)
256
1
0
33,546132,696

27,359109,747

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income(Consolidated Statement of Income)Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Advertising expenses
Sales commission
Directors’ compensations
Salaries and allowances
Provision for directors’ share-based benefits
Provision for share-based benefits
Commission fee
Taxes and dues
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Cancellation income
Reversal of allowance for doubtful accounts
Other
Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity method
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on reversal of subscription rights to shares
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Impairment loss
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to owners of parent－ 11 －

Fiscal year
ended Dec. 2018(from Jan. 1, 2018
to Dec. 31, 2018)
54,32537,397
16,927(Unit: million yen)
Fiscal year
ended Dec. 2019(from Jan. 1, 2019
to Dec. 31, 2019)72,10652,33919,767

1,965
459
190
1,126
28
12
373
328
881
5,366
11,561

2,218
726
210
1,375
16
5
388
639
1,273
6,854
12,912

0
2
12
－
2
17

5
35
30
8
4
84

1,020
－
60
1,080
10,498

1,143
33
9
1,186
11,810

0
0

0
0

5
47
52
10,445
1,604
1,615
3,219
7,226
7,226

7
－
7
11,803
4,057
(409)
3,648
8,155
8,155

(Consolidated Statement of Comprehensive Income)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests－ 12 －

Fiscal year
ended Dec. 2018(from Jan. 1, 2018
to Dec. 31, 2018)
7,226(Unit: million yen)
Fiscal year
ended Dec. 2019(from Jan. 1, 2019
to Dec. 31, 2019)
8,155

(14)
－
(14)
7,211

250
(0)
250
8,405

7,211
－

8,405
－

(3) Consolidated Statement of Changes in Equity
Fiscal year ended December 2018 (from January 1, 2018 to December 31, 2018)(Unit: million yen)
Shareholders’ equity
Capital stock
Balance at beginning of current period

Capital surplus

Retained earnings

6,224

1,953

35

35

Treasury shares

14,322(1,089)Total
shareholders’ equity
21,411

Changes of items during period
Issuance of new shares

70

Dividends of surplus(1,238)(1,238)

Profit attributable to owners of parent

7,226

7,226

Purchase of treasury shares

(131)

(131)

Disposal of treasury shares

13

13

Net changes of items other thanshareholders’ equity
Total changes of items during period
Balance at end of current period

35

35

5,987

(117)

5,940

6,259

1,988

20,310(1,207)27,352(Unit: million yen)
Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning of current period

Totalaccumulated
othercomprehensive
incomeForeigncurrencytranslation
adjustment－

20

Subscription
rights to shares

20

1

Total
net assets

21,433

Changes of items during period
Issuance of new shares

70

Dividends of surplus(1,238)

Profit attributable to owners of parent

7,226

Purchase of treasury shares(131)

Disposal of treasury shares

13

Net changes of items other thanshareholders’ equity

(14)

－

(14)

0

(14)

Total changes of items during period

(14)

－

(14)

0

5,926

6

－

6

1

27,359Balance at end of current period－ 13 －

Fiscal year ended December 2019 (from January 1, 2019 to December 31, 2019)(Unit: million yen)
Shareholders’ equity
Capital stock
Balance at beginning of current period

Capital surplus

6,259

1,988

15

15

Retained earnings

Treasury shares

20,310Total
shareholders’ equity(1,207)27,352

Changes of items during period
Issuance of new shares

30

Dividends of surplus(2,209)(2,209)Profit attributable to owners of parent

8,155

8,155

Purchase of treasury shares

(40)

(40)

Disposal of treasury shares

00

Net changes of items other thanshareholders’ equity
Total changes of items during period
Balance at end of current period

15

15

5,945

(40)

5,936

6,275

2,004

26,256(1,247)33,288(Unit: million yen)
Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning of current period

Totalaccumulated
othercomprehensiv
e income

Foreigncurrencytranslation
adjustment
6－

6

Subscription
rights toshares

Noncontrollinginterests

Total
net assets

1－

27,359Changes of items during period
Issuance of new shares

30

Dividends of surplus(2,209)Profit attributable to owners of parent

8,155

Purchase of treasury shares(40)

Disposal of treasury shares0

Net changes of items other thanshareholders’ equity

250

(0)

250

(0)

0

250

Total changes of items during period

250

(0)

250

(0)

0

6,187

Balance at end of current period

256

(0)

256

1

0

33,546－ 14 －

(4) Consolidated Statement of Cash Flows(Unit: million yen)
Fiscal year
ended Dec. 2019(from Jan. 1, 2019
to Dec. 31, 2019)

Fiscal year
ended Dec. 2018(from Jan. 1, 2018
to Dec. 31, 2018)
Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment loss
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for directors’ share-based benefits
Increase (decrease) in provision for share-based benefits
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)Share of loss (profit) of entities accounted for using equity
methodLoss on retirement of non-current assets
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Decrease (increase) in prepaid expenses
Increase (decrease) in accounts payable - other
Decrease/increase in consumption taxes receivable/payable
Increase (decrease) in advances received
Increase (decrease) in deposits received
Decrease (increase) in other assets
Increase (decrease) in other liabilities
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes (paid) refund
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of investment securities
Proceeds from withdrawal of investment securities
Purchase of non-current assets
Proceeds from sales of non-current assets
Payments for asset retirement obligations
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Payments of loans receivableCollection of loans receivable
Proceeds from guarantee deposits received
Repayments of guarantee deposits received
Payments for investments in capital
Net cash provided by (used in) investing activities－ 15 －

10,445
80
47
－
33
15
12
(2)
1,020
－

11,803
176
－
48
－
16
5
(40)
1,143
(8)

－

33

5
5
(16,489)
(475)
111
(45)
1,584
(220)
(1,548)(1)(5,421)2(1,085)(619)(7,123)

7(84)(10,179)
55
135
(239)
(246)
95
638
75
3,436
40
(1,109)(2,245)
122

(18)
18
(180)
21
(443)
83
－

(18)
18
(1,641)516(3,295)
61
(3)

－

(310)

(37)
0
1,578
(782)
(17)
223

(300)
0
1,130
(927)
－
(4,770)Fiscal year
ended Dec. 2018(from Jan. 1, 2018
to Dec. 31, 2018)
Cash flows from financing activities
Increase in short-term loans payable
Decrease in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Repayments of lease obligations
Repayments of installment payables

7,581(7,814)38,884(24,659)
200
(40)
(1)
(33)
70
－
(131)
(1,237)
12,818－
5,918
10,644
16,563

Proceeds from issuance of common shares
Purchase of treasury shares
Cash dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period－ 16 －(Unit: million yen)
Fiscal year
ended Dec. 2019(from Jan. 1, 2019
to Dec. 31, 2019)
6,714(5,220)44,231(32,930)
－
(40)
(0)
(34)
30
0
(40)
(2,207)
10,501(3)
5,849
16,563
22,413

(5) Notes to Consolidated Financial Statements(Notes on Going Concern Assumption)
Not applicable.
(Segment Information, etc.)
I. Fiscal Year Ended December 2018 (from January 1, 2018 to December 31, 2018)
1. Information on Net Sales, Income or Loss, Assets and Other Item Amounts by Reporting Segment(Unit: million yen)
Reporting segment

Amount on
consolidated
Reconciliation
financial(Note 1)statements(Note 2)

Real estatesales
business

Real estateleasingbusiness

Real estateplanning agency
and consulting
business

50,5193,400

405

54,325－54,325

－

－

－

－

－

－

50,5193,400

405

54,325－54,325

Segment income

12,341

2,128

369

14,839(3,277)

11,561

Segment assets

85,6416,265

1791,924

17,822

109,747

－

36

－

36

43

80

－

1,039

－

1,039

－

1,039

－

5

－

5

43

49

Total

Net sales
Net sales toexternal customers
Intersegment net
sales or transfers
Total

Other items
Depreciation
Amount ofinvestment inentities accounted
for using equity
methodIncrease inproperty, plant andequipment andintangible assets(Note 1) Reconciliations are as follows:(1) The reconciliation of segment income of -3,277 million yen is corporate expenses not attributable to any
reporting segment. Corporate expenses are general and administrative expenses not attributable to reporting
segments.
(2) The reconciliation of segment assets of 17,822 million yen is mainly surplus operating funds (cash anddeposits), administrative assets, etc. not attributable to reporting segments.
(3) The reconciliation of depreciation of 43 million yen is depreciation on corporate assets not attributable toreporting segments.
(4) The reconciliation of increase in property, plant and equipment and intangible assets of 43 million yen isincrease in corporate assets not attributable to reporting segments.
(Note 2) Segment income is reconciled with operating income on the consolidated statement of income.
2. Information on Impairment Loss on Non-Current Assets by Reporting Segment

Impairment loss

Real estatesales
business

Real estateleasingbusiness

Real estateplanning agency and consulting
business－－－－ 17 －(Unit: million yen)
Elimination
and/orTotal
corporate47

47

II. Fiscal Year Ended December 2019 (from January 1, 2019 to December 31, 2019)
1. Information on Net Sales, Income or Loss, Assets and Other Item Amounts by Reporting Segment(Unit: million yen)
Reporting segment

Amount on
consolidated
Reconciliation
financial(Note 1)statements(Note 2)

Real estatesales
business

Real estateleasingbusiness

Real estateplanning agency
and consulting
business

66,7105,022

372

72,106－

72,106

－

－

－

－

－

－

66,7105,022

372

72,106－

72,106

Segment income

13,802

3,001

286

17,091(4,178)12,912

Segment assets

90,633

17,216

2

107,852

24,843

132,696

Depreciation

－

105

－

105

71

176

Amortization of
goodwill

48

－

－

48

－

48

417

－

－

417

－

417

485

2,824

－

3,309

577

3,886

Total

Net sales
Net sales toexternal customers
Intersegment net
sales or transfers
Total

Other items

Amount ofinvestment inentities accounted
for using equity
methodIncrease inproperty, plant andequipment andintangible assets(Note 1) Reconciliations are as follows:(1) The reconciliation of segment income of -4,178 million yen is corporate expenses not attributable to any
reporting segment. Corporate expenses are general and administrative expenses not attributable to reporting
segments.
(2) The reconciliation of segment assets of 24,843 million yen is mainly surplus operating funds (cash anddeposits), administrative assets, etc. not attributable to reporting segments.
(3) The reconciliation of depreciation of 71 million yen is depreciation on corporate assets not attributable toreporting segments.
(4) The reconciliation of increase in property, plant and equipment and intangible assets of 577 million yen isincrease in corporate assets not attributable to reporting segments.
(Note 2) Segment income is reconciled with operating income on the consolidated statement of income.
2. Information on Impairment Loss on Non-Current Assets by Reporting Segment
Not applicable.

－ 18 －

3. Other
Results of Contracts and Sales
The performance of contracts in the real estate sales business for the fiscal year ended December 2019 is as follows:
Fiscal year ended Dec. 2019(from Jan. 1, 2019
to Dec. 31, 2019)
Classification
Contract amount during the period
Balance of contracts at the end of the period
Number of units(units)Amount(million yen)

Number of units(units)Amount(million yen)

Mid- to high-risehousing, etc.

618

27,481

415

17,533

Other－

33,215－25,792618

60,696415

43,325

Total(Note)

The above amounts do not include consumption tax, etc.

The main performance of sales for the most recent two fiscal years is as follows:
Fiscal year ended Dec. 2018
Fiscal year ended Dec. 2019(from Jan. 1, 2018(from Jan. 1, 2019
to Dec. 31, 2018)
to Dec. 31, 2019)
Name of segment
Numb
Numb
AmountAmounter of
er of
Property name(million
Property name(million
units
units
yen)
yen)
(units)(units)Condominiums

539

25,089 Condominiums

648

28,529Chiyoda-ku Hayabusa-cho－

4,600 Chuo-ku Minamisenba I

－

6,580

Kitakyuhojimachi, Chuo-ku

－

3,450

North Nagoya PareMarche
Nishiharu

－

4,610

Chuo-ku Awajicho I

－

3,420

Genboen, Koga-shi,
Fukuoka Prefecture

－

4,273

Chuo-ku Awajicho II－

3,420 Chuo-ku Awajicho III

－

4,000

－

2,910 Suginami-ku Shimotakaido

－

3,800

－

2,030

－

3,200

－

1,968 K’s Denki Oyumino

－

2,710

－

1,850 Nagahoribashi Station-front

－

2,100

－

1,317 Chiyoda-ku Sanbancho

－

2,034

Tsurunocho, Kita-ku,
Osaka-shiHorikawashinmachi,
Real estate sales Kanazawa-shi
business
Wakamatsucho 31,
Real estateleasing business Shinjuku-ku
Chuo-ku Minamisenba III
5-chome, Sendagaya,
Shibuya-ku
Fukuoka Kasuga
Other

Subtotal

Asumigaoka Brand New
Mall－

413 Detached house

－

1,468

－

50 Mitani, Nishi-ku, Kobe-shi

－

1,430

Sakai-shi Daisen Nishi II－

946

Nishishiroi Ekimae－

451

Fukuoka Kasuga

－

401

Other

－

175

648

66,710539

Real estateplanning agency
and consulting
business
Real estate sales
business
Total

50,519Subtotal

3,400

5,022

405

372

54,325(Note 1) There are no transactions between segments.
(Note 2) The above amounts do not include consumption tax, etc.
－ 19 －

Total

72,106

Attachment 2
Management Policy(1) Basic Policy on Corporate Management
How should we live each day and participate in society, how can we contribute to society, and how can we achieve
the happiness we seek as individual human beings through the benefits that our contribution brings to society? The
ES-CON JAPAN Group strives to answer these questions by continually providing meaningful opportunities to its
employees to help and encourage each other in the achievement of their full potential as individuals while
experiencing the joy of contribution to society through their work. This is the management philosophy of the
ES-CON JAPAN Group, the realization of which is pursued by setting and striving to realize the following
management policy.
1)

To create new value that will truly satisfy customers by unleashing the infinite possibilities of real estate throughinformation, planning and product development abilities.

2)

To constantly strive to remain ahead of the competition through aggressive management combined with strong
defensive strategies centering on in-depth control of ROA, cash flows and risk.

3)

To aim to be small teams of highly skilled professionals in order to maintain the ability to adapt quickly andflexibly in today’s rapidly changing social environment.

4)

To build and maintain good cooperative relationships, both internally and externally, based on respect for andgratitude to colleagues and those in other organizations.

5)

To form an open organizational structure in which ideas can flow freely from front-line staff to senior
management, while also enhancing the internal audit system, with compliance and governance in mind.

(Corporate Branding Concept)
IDEAL to REAL ~Making the ideal real, and creating a new future~
Our aim as a life developer is to develop tangible properties as well as imagine and develop happy living for thepeople who will live there. With new unprecedented and think-outside-the-box approaches, we aim to create new
wealth and connect people, communities and the future. We will strive to make the ideal real by exploring theinfinite possibilities of real estate.
(2) Medium- to Long-Term Corporate Management Strategy and Management Indicator Targets
Under the second medium-term management plan “IDEAL to REAL 2019,” ES-CON JAPAN proactively pressed
ahead with projects and achieved results that significantly surpassed the initial plans. Management targets havebeen mostly met, and although the equity ratio target has not been achieved, ES-CON JAPAN has been proactively
purchasing properties against the backdrop of credibility gained through the business partnership with Chubu
Electric Power.
In order to further advance in the next stage and realize stable growth, ES-CON Japan Group established thethird medium-term management plan “IDEAL to REAL 2022” for the three-year period from the fiscal year ending
December 2020 to the fiscal year ending December 2022.
1. Basic Policy of “IDEAL to REAL 2022”
Aim to maximize corporate value by setting on track “management stability and sustainable growth” and also
accurately addressing the diversifying social issues through promotion of ESG initiatives.
2. Corporate Strategy(1) Management stability and sustainable growth(i) Diversify businesses(ii) Stabilize revenue structure by securing stock revenue bases(iii) Exert synergistic effects with the Chubu Electric Power Group(iv) External growth of ESCON JAPAN REIT Investment Corporation (EJR)(2) Address social issues through promotion of ESG initiatives(3) Return to shareholders－ 20 －

3. Performance Targets(Unit: million yen)
Fiscal year ended Dec. 2019

Fiscal year
ended

Fiscal year
ended

Dec. 2017

Dec. 2018

44,72454,32574,80072,106-2,693

41,16850,51970,25066,710-3,539

3,459

3,400

4,300

5,022

+722

96

405

250

372

+122

Operating income

7,042

11,561

12,50012,912+412

Ordinary income

5,988

10,498

11,20011,810+610

Fiscal year
ended Dec.

Fiscal year
ended Dec.

2017

2018

Plan

ActualEquity ratio

24.8%

24.9%

22.6%

25.3%

+2.7%

Return on equity
(ROE)

28.1%

29.6%

25.9%

26.8%

+0.9%

6.8%

7.4%

6.1%

6.7%

+0.6%

8.4%

10.2%

6.9%

7.5%

+0.6%

81.77 yen105.98 yen

115.10 yen

119.17 yen+4.07 yen

Net sales
Real estate sales
business
Real estate leasing
business
Real estate planning
agency and

Plan

ActualCompared with
plan

consulting business

4. Management Targets

Return on assets(ROA)
Return on invested
capital (ROIC) (Note)
Earnings per share(EPS)

Fiscal year ended Dec. 2019
Compared withplan

(Note) Return on invested capital (ROIC): After-tax operating income ÷ (Shareholders’ equity + Interest-bearing
liabilities)－ 21 －