Summary of Accounts for First Two Quarters of Fiscal Year Ending December
2023 (Japanese GAAP) (Consolidated)
July 25, 2023
Listing exchange: Tokyo Stock Exchange
URL:
https://www.es-conjapan.co.jp/english/
President & Representative Director
Director
TEL: +81-3-6230-9303
July 25, 2023
No
Yes (for analysts)

Name of listed company: ES-CON JAPAN Ltd.
Code:
8892
Representative:(Name) Takatoshi Ito(Position)
Contact for inquiries:(Name) Kenji Fujita(Position)
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:(Amounts are rounded down to the nearest million yen)

1.

Consolidated results for first two quarters of fiscal year ending December 2023 (from January 1, 2023 to June 30, 2023)(1) Consolidated operating results (cumulative)(% figures show the rate of increase (decrease) compared with the same period of the previous year)

Net sales

Operating income

Profit attributable toowners of parent
million yen%

Ordinary income

million yen% million yen% million yen%
First two quarters of fiscal
47,939
17.3
6,842
21.3
6,317
23.0
4,209
27.7
year ending December 2023
First two quarters of fiscal
40,876
63.6
5,641
120.2
5,136
165.6
3,296
137.4
year ended December 2022
(Note) Comprehensive income
First two quarters of fiscal year ending December 2023: First two quarters of fiscal year ended December 2022:
4,253 million yen [37.7 %]3,090 million yen [126.9%]

Diluted earnings per share

Basic earnings per shareFirst two quarters of fiscal
year ending December 2023
First two quarters of fiscal
year ended December 2022
(2) Consolidated financial position
Total assets

yen

yen

44.18

44.10

34.52

34.46

Net assets

Equity ratio

Book value per share

million yen

million yen%

yenFirst two quarters of fiscal
year ending December 2023

292,194

64,73622.8

697.73Fiscal year ended Dec. 2022

263,729

64,14425.0

691.87

Reference: Equity
First two quarters of fiscal year ending December 2023:
66,487 million yen
2.

Fiscal year ended Dec. 2022:
65,906 million yen

Dividends
End of firstquarter

End of second
quarter

Annual dividend
End of third
quarterYear-end

Total

yen

yen

yen

yen

yen

Fiscal year ended Dec. 2022

－

0.00

－

38.00

38.00

Fiscal year ending Dec. 2023

－

0.00

Fiscal year ending Dec. 2023
(Forecast)

－

－

38.00

38.00

(Note) Revisions from latest dividends forecast: None

-1-

3.

Consolidated earnings forecast for fiscal year ending December 2023 (from January 1, 2023 to December 31, 2023)(% figures show the rate of increase (decrease) compared with the previous period)

Operating income

Ordinary income

Profit attributable to Basic earnings
owners of parent
per share

million yen%

million yen%

million yen%

yen

Full fiscal year
110,000
10.6
16,200(Note) Revisions from latest earnings forecast: None

4.6

14,200

1.3

9,400

29.6

98.65

Net sales
million yen%*Explanatory notes(1) Changes in significant subsidiaries during the first two quarters(Changes in specified subsidiaries resulting in change in scope of consolidation):
Newly included:– (Company name)
Excluded:– (Company name)

None(2) Application of accounting treatments specific to preparation of quarterly consolidated financial statements: None
(3) 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:(4) Number of shares issued and outstanding (common shares)
1) Number of shares issued and outstanding
First two quarters(including treasury shares) at end of fiscal year of fiscal year
ending Dec. 2023
2) Number of treasury shares at end of period
First two quartersof fiscal year
ending Dec. 2023
3) Average number of shares during period
First two quartersof fiscal year
(cumulative)ending Dec. 2023

None
None
None
None

98,580,887 Fiscal year ended 98,580,887
shares Dec. 2022
shares3,290,350 Fiscal year ended
shares Dec. 2022

3,322,800
sharesFirst two quarters
95,281,979
95,494,503
of fiscal year
shares ended Dec. 2022
shares(Note) The number of treasury shares at end of period includes shares of ES-CON JAPAN held in a board benefit
trust for executives and a share-based payment benefits-type ESOP trust (first two quarters of fiscal year
ending December 2023: 851,000 shares in the board benefit trust for executives and 548,900 shares in theshare-based payment benefits-type ESOP trust). In the calculation of the average number of shares during
the 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 (first two quarters of the fiscal year ending December 2023: 1,403,782 shares).
*This quarterly summary of accounts is not subject to quarterly review of certified public accountant or audit
corporation.
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. Qualitative Information on Quarterly Results; (4) Explanation of Consolidated Earnings
Forecast and Other Forward-Looking Information” on page 13.

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○ Contents of Attachment
1. Qualitative Information on Quarterly Results ................................................................................................................ 4(1) Business Risks ....................................................................................................................................................... 4(2) Explanation of Operating Results ........................................................................................................................... 4(3) Explanation of Financial Position .......................................................................................................................... 13(4) Explanation of Consolidated Earnings Forecast and Other Forward-Looking Information.................................... 13
2. Quarterly Consolidated Financial Statements and Key Notes .................................................................................... 14(1) Quarterly Consolidated Balance Sheet ................................................................................................................. 14(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income ... 16(Quarterly Consolidated Statement of Income) ..................................................................................................... 16(First two quarters of fiscal year ending December 2023) ................................................................................. 16(Quarterly Consolidated Statement of Comprehensive Income) ........................................................................... 17(First two quarters of fiscal year ending December 2023) ................................................................................. 17(3) Quarterly Consolidated Statement of Cash Flows ................................................................................................ 18(4) Notes to Quarterly Consolidated Financial Statements ........................................................................................ 19(Notes on Going Concern Assumption) ................................................................................................................. 19(Notes on Substantial Changes in the Amount of Shareholders’ Equity) .............................................................. 19(Additional Information) ......................................................................................................................................... 19(Segment Information, Etc.) .................................................................................................................................. 22(Significant Subsequent Events) ........................................................................................................................... 23
3. Other .......................................................................................................................................................................... 24
Status of Contracts and Sales .................................................................................................................................... 24-3-

Attachment
1.

Qualitative Information on Quarterly Results(1)

Business Risks
There are no business risks that newly arose in the first two quarters of the fiscal year ending December 2023.
In addition, there are no significant changes in the business risks stated in the previous fiscal year’s securities
report.

(2)

Explanation of Operating Results
In the first two quarters of the fiscal year under review (fiscal year ending December 2023), the Japanese economy
continued to see improvement in business sentiment centered on domestic demand as the normalization of domestic
economic activities and the recovery of inbound demand have progressed with the lifting of behavioral restrictions
and immigration restrictions due to the change in the classification of COVID-19 under the Infectious Diseases
Control Law in May while the spread of the virus was curbed.
In the real estate industry in which the ES-CON JAPAN Group operates, as work-style reform and new ways ofliving, including teleworking, become widespread, the real market remained robust thanks to the stable housing
demand due to the outlook of the continuation of monetary easing measures.
On the other hand, the outlook remains less optimistic overseas due to concerns over the impact on the Japanese
economy of the downturn in overseas economies caused by such factors as global monetary tightening, in addition
to raw material and energy prices driven upward by the prolonged situation in Ukraine. Furthermore, prices are risingat an accelerating pace domestically. And, in the real estate industry, there are concerns about soaring construction
costs and labor shortage, as well as the possibility of a medium- to long-term increase in interest rates.
Amid these highly unpredictable business circumstances, we aim for sustainable growth by building a firmmanagement base capable of withstanding any economic environment to maximize corporate value under the fourth
medium-term management plan “IDEAL to REAL 2023” (the three-year period from the fiscal year ended December
2021 through the fiscal year ending December 2023) formulated in February 2021 with the theme of “Transformation
and Rapid Progress.”
In FY2023, the final fiscal year of the fourth medium-term management plan, ES-CON JAPAN will push forward
toward “Rapid Progress” through concerted efforts.

1)

Progress of Fourth Medium-term Management Plan “IDEAL to REAL 2023”
With the capital increase through third-party allotment with Chubu Electric Power Co., Inc. (hereinafter “Chubu
Electric Power”) as the allottee conducted in 2021, our creditworthiness was significantly enhanced. ES-CON
JAPAN made Picasso Co., Ltd. and its seven group companies (the “Picasso Group”) its subsidiaries and secured
stable rental income, resulting in the steady progress in our “Transformation,” a basic policy of our medium-term
management plan.
The fiscal year under review, the final fiscal year of the medium-term management plan, is the final stage of thetransition from “Transformation” to “Rapid Progress.” We are striving to achieve our plan, which calls for record-highperformance, and develop synergies within the Chubu Electric Power Group. The condominium business is on trackto achieve over 80% of the planned sales of 61.9 billion yen on a contract basis. The joint project with the Chubu
Electric Power Group described below is also building a record of accomplishment. Furthermore, the acquisition of
Shijo Omiya Building Co., Ltd. (following corporate separation; announced in February 2023), which engages inbusinesses such as real estate leasing (share transfer scheduled for July 31, 2023), should contribute to the further
enhancement of stock earnings.
The details of the fourth medium-term management plan are as follows.
(a) Basic Management Strategy Policies
・ Establish business foundations able to withstand unexpected changes in economic conditions
Establish a solid business and financial standing that can maintain fund-raising ability under any economic
environment.
・ Simultaneously change the revenue structure and expand business domains
Transform the revenue structure from one based on flows to one based on stock by strengthening the realestate leasing business while simultaneously realizing business diversification and expanding businessterritories-4-

(b) Basic Policy: Transformation and Rapid ProgressTransformation
・ Proactive investment in long-term revenue-generating real estate and improvement of balance sheet structure
・ Transform the focus of management from flows to stock
Rapid Progress・ Demonstrating synergies within the Chubu Electric Power Group・ Achieving net sales of 110 billion yen and operating income of 16 billion yen (in the final fiscal year of themedium-term management plan)(c) Management Strategies
・ Transformation to a structure of sustained and stable revenues
・ Stable growth in existing core businesses through business diversification and area strategies
・ Growing new businesses into core businesses through business diversification and area strategies
・ Taking on the challenges of new business domains
・ Enhancing synergies within the ES-CON JAPAN Group・ Expanding business bases, primarily in the five major urban areas
・ Enhancing synergies with the Chubu Electric Power Group・ Promoting ESG initiatives(d) Performance Plan
Fiscal year ended
Dec. 2021
Actual(Unit: million yen)
Fiscal year ending
Dec. 2023

Fiscal year ended Dec. 2022
ActualInitial plan

Difference
from initial
plan

Increase/decrease

Initial plan

Net sales

79,01799,431

100,000(568)(0.6%)

110,000

Operating income

10,381

15,492

14,000

1,492

10.7%

16,200(e) Management Targets
Fiscal year ended
Dec. 2021
ActualShare of profits fromleasing*1
Return on equity(ROE)
Return on invested
capital(ROIC)*2

Fiscal year ending
Dec. 2023

Fiscal year ended Dec. 2022
ActualPercentagechange from
plan

Plan

Plan*4

21.2%

21.5%

26.0%

(4.5%)

30.0%

11.8%

11.3%

13.0%

(1.7%)

13.0%

3.2%

4.6%

4.0%

0.6%

4.0%

Equity ratio

24.8%

25.0%

23.0%

2.0%

21.0%

Share of long-term
earnings from realestate*3

20.6%

19.5%

21.0%

(1.5%)

23.0%

62.6 billion yen 64.1 billion yen 67.3 billion yen (3.1 billion yen)

72.0 billion yen

Net assets(Note)

1 Share of profits for leasing: Leasing segment profits / Total segment profits (excluding adjustments)
2 Return on invested capital (ROIC): After-tax operating income / (Shareholders’ equity + Interestbearing liabilities)
3 Share of long-term earnings from real estate: Real estate generating leasing revenues recorded
as non-current assets / Total assets-5-4 In the first fiscal year of the fourth medium-term management plan, ES-CON JAPAN rapidly
realized “transformation” of the revenue structure by accelerating progress on investment plansahead of schedule and securing stable leasing income. “Share of profits from leasing,” “equity
ratio,” and “share of long-term earnings from real estate” for the fiscal year ending December 2023
were also revised on March 25, 2022.
(f) Investment Plan
(Unit: million yen)
Fiscal year Fiscal year
Three-year
Fiscal year ending
ended
ended
Cumulative total for 2021 and 2022
cumulative
Dec. 2023
Dec. 2021 Dec. 2022
total
Increase/ Semiannual
ActualActualActual
Plan
Plan
Plan
decrease
results
Investment inrevenue
generating realestateInvestment inotherdevelopment
Gross
investment
2)

76,79910,80887,60770,000

25.2%

7,635

65,700130,000

19,191

26,10345,29455,000(17.6%)

21,23722,30090,00095,99036,911

132,902125,000

6.3%

28,87288,000220,000

Status of Demonstration of Synergy Effect with the Chubu Electric Power Group
ES-CON Japan is currently engaged its fifth project, the development of TSUNAGU GARDEN SENRIFUJISHIRODAI (Fujishirodai, Suita City, Osaka Prefecture), as a joint project with Chuden Real Estate Co., Inc., awholly owned subsidiary of Chubu Electric Power. The project aims to create an appealing community in harmony
with the surrounding living environment on a site of approximately 20,000 tsubos. It is the first mixed-use
development project jointly with Chuden Real Estate which is engaged in the integrated residential and commercial
facility development.
Two projects are currently underway as joint projects with Chubu Electric Power. In August 2022, a consortium ofbusinesses led by Chubu Electric Power, of which ES-CON Japan is a member (hereinafter the “Consortium”),
entered into a basic planning agreement for the development project at the former site of Nagoya Horse Racing
Track. In addition, the Consortium submitted a plan to utilize wood produced in Aichi Prefecture for “Ideas for
Projects/Plans for the Realization of Carbon Neutrality” solicited by Aichi Prefecture and entered into an “Agreementon the Promotion of the Utilization of Wood in Public Buildings” with Aichi Prefecture, the first of its kind in theprefecture, in September 2022.
Furthermore, we established TSUNAGU Community Farm LLC with Chubu Electric Power and Spread Co., Ltd.
(hereinafter “Spread”), and started construction of Techno Farm Fukuroi, which will be the world’s largest verticalfarm utilizing fully artificial light and capable of producing 10 tons of lettuce per day. By combining Chubu ElectricPower’s know-how in energy management, ES-CON JAPAN’s real estate development capabilities, and Spread’s
cultivation technology, we are working on the efficient and stable production of “safe and secure” lettuce with theaim of launching production in January 2024.
We will continue to strengthen our partnership with the Chubu Electric Power Group and actively work to achieve
large-scale urban development and realize a “new form of community.”

3)

Progress of Projects in Hokkaido
ES CON FIELD HOKKAIDO, with which ES-CON JAPAN has concluded a naming rights agreement, the new
Hokkaido Nippon Ham Fighters stadium in Kitahiroshima City, Hokkaido, opened in March 2023. ES-CON JAPAN
has participated in the urban development concept of HOKKAIDO BALLPARK F VILLAGE (total development area:
approx. 36.7 ha; hereinafter “F VILLAGE”) centered on the new stadium. The condominium “Le JADE Hokkaido
Ballpark” (118 units in total) situated in a rare location 80 meters in a straight line from the stadium was immensely
popular and sold out. Furthermore, MASTERS VARUS HOKKAIDO BALLPARK was decided as the name of theresidence for active seniors with a medical mall being developed in the southeast corner of F VILLAGE. Moreover,
informal agreements with six tenants for the medical mall F VILLAGE MEDICAL SQUARE have been reached. The
building is scheduled for completion in spring 2024, with tenants taking occupancy in June 2024.

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In addition, we are advancing development of the JR Kitahiroshima Station “Train Station West Exit Area
Revitalization Project” in Kitahiroshima City as a partner of the project. The train station is garnering further attention
as an important point of access to F VILLAGE. Continuing from November 2021, we acquired part of thedevelopment site for the project in March 2023. We are in the process of developing a station square in front of JR
Kitahiroshima Station, an exchange center complex comprising commercial facilities and a hotel, a threedimensional indoor/outdoor plaza and park, and residential exchange facilities. Of the development projects on thesite, we aim to complete the commercial facilities in fiscal 2024 and are steadily conducting development in front of
the station.
Beyond Kitahiroshima City, we sold out “Le JADE Sapporo Motomachi” (Higashi Ward, Sapporo City; 39 units intotal), our first condominium in Sapporo City, in November 2022 and have also been making steady progress withprojects in Hokkaido, such as condominium development for Le JADE Sapporo Naebo (Higashi Ward, Sapporo
City; 42 units in total; scheduled for completion in February 2024).
We will continue to cooperate in the promotion of sports and culture and contribute to the revitalization anddevelopment of the entire Hokkaido region for the happiness of its residents.
4)

Initiatives Aimed at Regional and Area Revitalization through Real Estate Development
In February 2022, we conducted redevelopment to create a bustling atmosphere around the station through the“Namiki no Mori City” development project, a mixed-use facility of residential, commercial and parking lot buildings
in Iwaki City, Fukushima Prefecture, together with the Iwaki Station Namiki-dori District Urban Redevelopment
Association and Hoosiers Corporation. In November 2022, we commenced unit sales for the residential building
MID TOWER IWAKI, the tallest barrier-free seismic isolation structure tower condominium in the city.
With regard to a development project in the vicinity of Shin-Omura Station on the Nishi-Kyushu Shinkansen line
in Nagasaki Prefecture, we concluded a basic agreement with Omura City together with Daiwa House Industry Co.,
Ltd. and Izumi Co., Ltd. as a member of a business group composed of the three companies in March 2022 andacquired the project site in March 2023. In line with the opening of Shin-Omura Station in September 2022, theproject, named “SAKURA MIRAI SHIN OMURA,” entails developing condominiums, commercial facilities, etc.
where residents and visitors from outside the city can interact with each other in line with the town development
policy of Omura City. ES-CON JAPAN is engaged in the development of two condominiums (two blocks; 191 units
in total), “Le JADE SHIN-OMURA STATION FRONT” and “Le JADE SHIN-OMURA PARK SIDE.”
Furthermore, in February 2023, “tonarie Utsunomiya (Utsunomiya City, Tochigi Prefecture)” was redesigned intoa facility that can contribute to further revitalization of the region. In March 2023, “tonarie Hoshida (Katano City,
Osaka Prefecture),” a community-based shopping center, opened in the area of the “Hoshida Station North Land
Readjustment Project” (total area: approximately 26.4 ha). The development began as a joint project with MIRARTH
Holdings, Inc. In the surrounding area, development of industrial facilities, such as condominiums, detached houses,and business offices, is planned, with future development anticipated. The facility is the tenth facility in ourcommercial facility brand “tonarie” series.

5)

Promotion of Development of Various Condominiums in Rare Locations
We are not only expanding the number of units but also providing a diverse range centered on product plans thatdraw out the full value of sites purchased.
In January 2023, we acquired a project site in Karuizawa-cho, Kitasaku-gun, Nagano Prefecture. The property issituated in a location surrounded by the abundant nature of Karuizawa, where it will be our second building
development. The first building, Ost Residence Karuizawa (33 units in total, sold out in 2021), was recognized for
its high-quality product planning and awarded the Good Design Award for the fiscal year 2022.
In addition, we have acquired two project sites in Hayama Town, Miura District, Kanagawa Prefecture, and areworking to develop condominiums that fully utilize the abundant natural environment, such as Morito Beach. ESCON JAPAN is also promoting high-value-added product planning, such as early selling out ahead of schedule in
December 2022 of “Le JADE Cross Chiyoda Jimbocho (50 units in total; scheduled for completion in October 2023),”a new condominium for sale with fixed-term land lease rights currently under development in a site adjacent to the“Toho Gakkai Main Building,” a historical building designated as an important building for the scenic developmentof Chiyoda Ward, Tokyo.

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Furthermore, as a company creating “lifelong items” in the form of housing, we formulated the IDEAL CONPASS
quality management guideline and provide the Escon Premium After Support long-term after-sales service
supporting the lifestyles of people living in condominiums. We will continue to provide housing that makes ourcustomers feel safer, more secure, and more comfortable.
6)

Implementation of Strategic M&As
As previously mentioned, following the Picasso Group in October 2021, ES-CON JAPAN decided to make Shijo
Omiya Building Co., Ltd. which is involved in the real estate leasing and other businesses, a subsidiary in February
2023 (scheduled execution date of share transfer: July 31, 2023). The company was founded in 2010 in Kyoto Cityand has developed its real estate leasing business mainly in the city, owning a number of prime revenue-generating
assets, such as rental condominiums and commercial facilities.
We will continue to actively pursue strategic M&A projects to enhance the Group’s businesses and expand its
domain.

7)

Taking on the Challenges of New Business Domains
We are promoting efforts to diversify business content with the next generation in view by stating “growing new
businesses into core businesses” and “taking on the challenges of new business domains” in the fourth mediumterm management plan.
ES-CON JAPAN began selling permanent use rights of Ryomon, an urban-type columbarium in Minato Ward,
Tokyo, in March 2021 in an effort to solve a problem facing modern society, namely the difficulty of obtaining graves
particularly in the city center, while aiming for developing a new area of the real estate business.
Furthermore, in November 2022, we completed the construction of ESCON Kudan Kita Building, our first officebuilding in the Tokyo metropolitan area, and in December 2022 invested and participated in a project promoted by
Britania Public Company Limited, a subsidiary of Thai real estate developer Origin Property Public Company Limited,as our first overseas project to develop detached houses.
In January 2023, we established the Overseas Business Department in the Strategic Business Division and began
full-scale overseas business development.
We will continue to focus on initiatives in new business fields with a view to the next era and implement a
multifaceted real estate business.

8)

Declaration of Support for TCFD Recommendations and Disclosures
Based on the goal of achieving a carbon-neutral society by 2050, we are seeking to create new value for theenvironment through next-generation urban development and related efforts.
As a key management strategy to address climate change, we have selected members from management andeach department to create the ESG Promotion Group, which has worked on disclosing information based on theframework of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations calling foranalyzing risks and opportunities presented by climate change and promoting disclosure on them. The ES-CON
JAPAN Group declared its support for the TCFD recommendations in June 2022.
Please visit our website (https://www.es-conjapan.co.jp/english/about_us/environment.php) for details of
disclosures based on the TCFD recommendations (governance, strategies, risk management, indicators and targets
on climate change risks and opportunities).

9)

Status of ESG Initiatives
One of our key management strategies is addressing social issues through ESG promotion. Centered on the “ESG
Promotion Group” and the “Health & Culture Fostering Team” designed to promote health management further, we
will promote company-wide efforts and focus on enhancing essential company value that cannot be measured byfinancial information alone.

-8-

The contents of the most recent major initiatives are as follows.
(a) Environment (E)・Acquisition of Various Certifications
In May 2020, ES-CON JAPAN acquired EcoAction 21 Certification, a Japanese environmental management
system (EMS) established by the Ministry of the Environment. Furthermore, “tonarie Fujimino,” a commercial
facility owned by ES-CON JAPAN, obtained “Rank S,” the highest rank of the Certification for CASBEE(*1) forReal Estate from a CASBEE accreditation body authorized by the Institute for Building Environment and Energy
Conservation. Also, “tonarie Yamato-Takada,” “tonarie Toga-Mikita,” “tonarie Minamisenri,” “tonarie Seiwadai,”and “Asumigaoka Brand New Mall,” which are commercial facilities owned by ESCON JAPAN REIT Investment
Corporation (hereinafter “EJR”), obtained DBJ Green Building Certification from Development Bank of Japan
Inc. Our group as a whole is working to improve the value of the facilities, and the above six properties are being
operated and managed by our subsidiary ES-CON PROPERTY Ltd.
*1

CASBEE (Comprehensive Assessment System for Built Environment Efficiency) is a system to comprehensively assess thequality of a building, which evaluates and ranks the environmental performance of the building by taking into account not only
environmental considerations such as energy savings and use of environmentally friendly materials but also comfort in the building
and its visual impact on the area.

・Continuous and Proactive Development of Environmentally Friendly ZEH-compatible Housing
In August 2022, ES-CON JAPAN obtained ZEH(*2)-M Oriented certification for its condominium “Le JADE
Honkawagoe” (Kawagoe City, Saitama Prefecture; 102 units in total), as the property features excellent heatinsulation performance and helps reduce annual primary energy consumption. This is our third ZEH
condominium following “Le JADE Okurayama” (Kohoku Ward, Yokohama City; 25 units in total), which won theGood Design Award for the fiscal year 2021, and Le JADE Yao Sakuragaoka (Yao City, Osaka Prefecture; 72
units in total), and was contracted to sell out early in June 2022.
We will continue to make the most of the development know-how of a general developer and proactively workon the development of environmentally friendly ZEH condominiums that are appreciated by our customers.
Moreover, in November 2020, ES-CON Home Co., Ltd. and ES-CON Craft Co., Ltd., consolidated subsidiaries
of ES-CON JAPAN which sell detached houses mainly in Saitama Prefecture, were registered for ZEH Builder
Certification.
*2

ZEH (Net Zero Energy House) is a house aiming to make the annual primary energy consumption zero by introducing renewableenergy after realizing significant conservation of energy while maintaining the quality of the indoor environment with significant
improvement in the thermal insulation performance of the outer building skin as well as the introduction of a highly efficientequipment system.

・Construction and Operation of “Techno Farm Fukuroi,” a Vertical Farm Utilizing Fully Artificial LightAs previously mentioned, we are collaborating with Chubu Electric Power and Spread to develop Techno Farm
Fukuroi, which will be the world’s largest vertical farm utilizing fully artificial light and capable of producing 10
tons of lettuce per day. The three companies including ES-CON JAPAN will solve issues in food and agricultural
fields through the plant factory business while also contributing to the realization of a sustainable and livable
society and the achievement of SDGs by making efforts towards decarbonization such as the proactive use ofgreen energy and effective use of CO2 in the process of cultivation.
・ Efforts to Promote the Use of Wood in the Development Project of the Former Site of Nagoya Horse Racing
Track
The consortium has entered into the “Agreement on the Promotion of the Utilization of Wood in Public Buildings”
with Aichi Prefecture. We will make efforts to contribute to decarbonization through the project, such as active
utilization of wood produced in Aichi Prefecture.
(b) Social (S)・ Formulating General Employer Action Plans
In December 2022, ES-CON JAPAN formulated and published general employer action plans (action period:
January 1, 2023 to December 31, 2024) in accordance with the Act on Advancement of Measures to Support
Raising Next-Generation Children and the Act on the Promotion of Women’s Active Engagement in ProfessionalLife in order to help employees juggle career and family and create a workplace where human resources,
including women, can continue to be in employment and succeed.

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・Received Certification as an “Excellent Health Management Corporation 2023”
We are promoting health management, believing that the health of our employees is the cornerstone of ourbusiness activities and an essential element for our sustainable growth. As a result, in March 2023, ES-CON
JAPAN was certified as an “Excellent Health Management Corporation 2023” mainly for its efforts to promoteand enhance employee health, improve work comfort, and diversity.
・Support for Kitahiroshima City, Hokkaido Prefecture, by Utilizing “Corporate Version of Hometown Tax”
ES-CON JAPAN donated 300 million yen to Kitahiroshima City, Hokkaido Prefecture, as in last year, in March2023 by utilizing the “Corporate Version of Hometown Tax” under the hope that further progress in urban
development and its spread to various fields such as transportation, tourism, sports and education, etc. willcontribute to the further development of the city. The funds will be utilized to maintain a vibrant city into the future.
・Contributing to Healthcare
Since 2020, we have been donating to the Kyoto University “iPS Cell Research Fund” to support activities
realizing provision of early and inexpensive treatment using iPS cells for people suffering from diseases andinjuries.
We have also been providing monetary donations to Osaka University’s Graduate School of Medicine since2019 to support clinical trials for cancer vaccines showing promise for the treatment of cancer. In May 2022, we
donated funds for the establishment of an endowed cancer immunology course the school is developing, for the
purpose of research of cancer immune therapy.
In November 2022, we co-sponsored the Osaka Great Santa Run 2022 charity running event (hosted by theGreat Santa Organization in Osaka Akaru Club). The event is designed to give a part of participation fees tochildren who are battling disease as presents.
・Contribution to Sports Promotion
In April 2021, we invested in Ryukyu Football Club Co., Ltd., which operates FC Ryukyu, a professional soccer
team. With this investment, we will contribute to the local community through sports promotion by securing afoothold for the creation of business opportunities in Okinawa while at the same time supporting FC Ryukyu’s
regional revitalization activities deeply rooted in Okinawa Prefecture.
・Human Resources Development
To achieve sustainable growth, recognizing the further enhancement of organizational power, human capital—
that is, our employees or their knowledge, skills, talents, and the like— is our top priority, we have established a
Human Resources Strategy Department in the Corporate Planning Division and formulated the “Basic Policy for
Human Resources Development (Basic Human Resources Requirements)” as guidelines to accelerate “humanresources development and employee growth.” We have formulated a human resources development program
to ensure that all employees understand and adhere to these guidelines, and launched the program in the fiscal
year under review. In addition, in order to cope with the impact of recent high prices and to maintain and improve
employee engagement, as well as to secure talented human resources, ES-CON JAPAN has raised base wages
effective April 2023.
(c) Governance (G)・ Establishment of Voluntary Committee on Nomination and Remuneration of Directors
In January 2020, we established the “Nomination and Remuneration Advisory Committee” for the purpose ofstrengthening the independence and objectivity of functions as well as the accountability of the Board of Directors
with regard to nomination and remuneration of directors and other matters. Effective March 2023, three of thefour committee members have been replaced by independent outside directors from the Board of Directors, who
are members of the Audit and Supervisory Committee. In addition to ensuring fairness and transparency in theselection of directors and their compensation, ES-CON JAPAN strives to improve corporate governance byclarifying the right of Audit and Supervisory Committee members to express their opinions concerning director
election and remuneration.
・ Nurturing Successors
We also launched initiatives for a succession plan called the candidate successor system. We appointed a totalof seven employed executive officers in January 2023.

- 10 -

・ Diversity of the Board of Directors
At the 28th Annual General Meeting of Shareholders held on March 24, 2023, one outside director and one
director who is a member of the Audit and Supervisory Committee were newly elected, bringing the Board of
Directors to a total of 10 members: three executive directors, three outside directors, and four directors who arealso members of the Audit and Supervisory Committee. By appointing five independent directors (including one
woman), which is half of the Board of Directors, ES-CON JAPAN has expanded the diversity of the Board of
Directors and created a more effective governance structure.
・ Promotion of Compliance Management
In October 2022 ES-CON JAPAN established the Compliance Office directly under the President, taking theadministrative disposition on ES-CON ASSET MANAGEMENT Ltd. (hereinafter “EAM”), its consolidated
subsidiary, with utmost seriousness. The purpose of the Compliance Office is to strengthen legal complianceand internal control systems and to monitor every aspect of transactions with the parties in question, as well as
establish a framework for managing any conflicts of interest that arise in order to prevent the recurrence of such
incidents.
In March 2023, we also reviewed our Compliance Code of Conduct and issued a compliance declaration.
Through these efforts, we will thoroughly strengthen the promotion of compliance management throughout theCompany and the Group.
(d) Other
We have been participating in the Global ESG Benchmark for Real Assets (GRESB), which is an annual
benchmark assessment measuring ESG consideration in the real estate sector, every year since 2018 with an
aim to continuously improve the assessment results. In October 2022, we acquired “2 Stars” in the GRESB
Rating, a five-grade evaluation system that reflects the applicant’s relative evaluation based on the overall
score, for efforts on environmental consideration and sustainability in the “Development Benchmark” (reporting
period: January 1, 2021 to December 31, 2021). In addition, we acquired the “Green Star” (*3) rating for the
fourth consecutive year.
*3

The “Green Star” in the “Development Benchmark” is awarded to participants who score 50% or higher in the absoluteassessment based on the two main points, “Management Component” and “Development Component.”

10) Administrative Disposition against EAM
On July 15, 2022, the commissioner of the Financial Services Agency implemented an administrative disposition,
which consists of injunctions to suspend business operations and institute improved practices targeting ourconsolidated subsidiary EAM. In response, EAM formulated a business improvement report, which was submitted
to and accepted by the commissioner of the Financial Services Agency on August 15, 2022. Moreover, in connection
with this administrative disposition, EAM was disciplined by The Investment Trusts Association, Japan on June 8,
2023, in connection with this administrative disposition. There was, however, no new undue encouragement to
impair the independence of real estate appraisers, impropriety in the real estate appraiser selection process, or
breach of any other fiduciary duties. ES-CON JAPAN, the parent company of EAM and main sponsor of ESCON
JAPAN REIT Investment Corporation (“EJR”), for which EAM is entrusted with asset management, took thisadministrative disposition on EAM with utmost seriousness and recognized the prevention of recurrence as a priority
issue for our group as a whole. In order to build a system for managing conflicts of interest as mentioned above, weestablished the Compliance Office.
Moreover, EAM made a fresh start in January 2023 after reviewing its management structure, including a changeof representative and the termination of its concurrent position with ES-CON JAPAN. Understanding the backgroundto and root causes of this matter, we will continue to exert every effort to prevent the recurrence of such events
based on thorough enhancement of our approaches to compliance and internal control of all members of the ESCON JAPAN Group, not just at EAM, as well as the steadfast implementation of improvements.

- 11 -

11) Business Development by Segment
In the real estate sales business, our core business, we are selling revenue-generating real estate and otherproperties, in addition to achieving steady progress in condominium sales.
In the condominium sales business, ES-CON JAPAN has commenced sales of new projects: “Le JADE Abeno
Harimacho (Abeno Ward, Osaka City; 48 units in total),” “Le JADE City Hashimoto I & II (Midori Ward, Sagamihara
City; 69 units in total for I and 87 units in total for II),” “Le JADE Sapporo Naebo (Higashi Ward, Sapporo City; 42units in total),” “Le JADE Chigasaki Higashikaigan Minami (Chigasaki City, Kanagawa Prefecture; 31 units in total),”“Le JADE Shinyokohama (Kohoku Ward, Yokohama City; 190 units in total),” “Le JADE Fukuroi Ekimae (Fukuroi
City, Shizuoka Prefecture; 48 units in total),” and “Le JADE Tanimachi 5-chome (Chuo Ward, Osaka City; 42 units
in total).” As for sales progress, among properties completed in this period, five properties, including “Le JADE
Hokkaido Ball Park (Kitahiroshima City, Hokkaido; 118 units in total),” all units are delivered, and at six properties
including “Le JADE Matsudo Station Front (Matsudo City, Chiba Prefecture; 44 units in total)” among thosescheduled for delivery in this and the subsequent period, all units are contracted to sell out.
In addition, we are expanding our business area by steadily progressing the condominium business in Hokkaido.
We also have begun development in Nagasaki following Fukuoka and Kumamoto in Kyushu. On top of these, we
are making a foray into Okinawa.
In the real estate leasing business, as mentioned above, we made Shijo Omiya Building Co., Ltd. (after
implementation of the company split) our subsidiary in addition to the Picasso Group and thereby expect to securestable earnings by further strengthening the leasing business. Furthermore, we have launched a new brand of rental
residences, “TOPAZ,” which we will actively develop down the road.
In addition, we are striving to secure stable rental income from commercial facilities and increase asset value,such as the acquisition of new commercial land with leasehold interest in Kurashiki City, Okayama Prefecture, andthe opening of the aforementioned community-based shopping center “tonarie Hoshida” in March 2023.
In the real estate planning agency and consulting business, we have started sales of the permanent use rights toour urban columbarium. Leveraging our strength in planning, we are focusing on non-asset, high-margin business,such as the commissioning business and the planning agency and consulting business.
As a result, ES-CON JAPAN achieved net sales of 47,939 million yen (up 17.3%), operating income of 6,842
million yen (up 21.3%), ordinary income of 6,317 million yen (up 23.0%), and profit attributable to owners of parentof 4,209 million yen (up 27.7%), for the first two quarters of the fiscal year under review, all compared with the same
period of the previous fiscal year.
The following describes the operating results per segment (comparisons are with the same period of the previous
fiscal year).
(i) Real estate sales businessIn the real estate sales business, ES-CON JAPAN achieved net sales of 41,314 million yen (up 17.9%), andsegment income of 7,836 million yen (up 19.3%).
(ii) 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 realestate, resulting in net sales of 6,296 million yen (up 14.2%) and segment income of 2,505 million yen (up 17.4%).

- 12 -

(iii) Real estate planning agency and consulting businessIn the real estate planning agency and consulting business, proactive efforts were made in such aspects as
entrustment with planning, consulting and other services by making the best use of planning and multifacetedbusiness-building abilities, resulting in net sales of 327 million yen (up 7.5%) and segment income of 177 million
yen (up 832.3%).
(3)

Explanation of Financial Position
1) Financial position
Assets at the end of the second quarter increased by 28,465 million yen from the end of the previous fiscal year to292,194 million yen. This was mainly attributable to inventories increasing by 28,333 million yen and cash anddeposits and property, plant and equipment decreasing by 1,424 million yen and 593 million yen, respectively.
Liabilities increased by 27,873 million yen compared with the end of the previous fiscal year to 227,458 million
yen. This was mainly attributable to long-term loans payable and short-term loans payable increasing by 33,224
million yen.
Net assets increased by 591 million yen compared with the end of the previous fiscal year to 64,736 million yen.
This was mainly attributable to cash dividends paid of 3,673 million yen and recording of profit attributable to ownersof parent of 4,209 million yen. As a result, the equity ratio was 22.8% (25.0% at the end of the previous fiscal year).
2) Cash flows
Cash and cash equivalents (“net cash”) at the end of the first two quarters decreased by 1,614 million yen comparedwith the beginning of the fiscal year to 33,990 million yen (34,677 million yen at the end of the same period of theprevious fiscal year).
The following outlines the cash flows and the factors of change in cash flows in the first two quarters.
(Cash flows from operating activities)
Net cash used in operating activities was 31,224 million yen (net cash used in operating activities was 16,204
million yen in the same period of the previous fiscal year). This was mainly attributable to profit before income taxesof 6,317 million yen, increase in inventories of 28,685 million yen and income taxes paid of 3,080 million yen.
(Cash flows from investing activities)
Net cash used in investing activities was 39 million yen (net cash used in investing activities was 1,556 million yen
in the same period of the previous fiscal year). This was mainly attributable to purchase of investment securities of
234 million yen, purchase of non-current assets of 147 million yen and proceeds from guarantee deposits receivedof 517 million yen.
(Cash flows from financing activities)
Net cash provided by financing activities was 29,558 million yen (net cash provided by financing activities was
18,866 million yen in the same period of the previous fiscal year). This was mainly attributable to expenditure fromand repayments of long-term loans payable and short-term loans payable amounting to net proceeds of 33,224
million yen and payment of cash dividends of 3,670 million yen.

(4)

Explanation of Consolidated Earnings Forecast and Other Forward-Looking Information
The consolidated earnings forecast remains unchanged from the forecast announced on January 27, 2023.
Overview of results for the first two quarters of fiscal year ending December 2023
First two quarters of fiscal year ending December 2023

47,939Percentage change
from initial plan
46,000
1,939

6,842

6,000

842

14.0

6,317

5,200

1,117

21.5

4,209

3,400

809

23.8

44.18

35.69

8.49

23.8

ActualNet sales (million yen)
Operating income(million yen)
Ordinary income(million yen)
Profit attributable toowners of parent(million yen)
Basic earnings per share(yen)

Initial plan

- 13 -

Increase/decrease
(%)
4.2

2.
(1)

Quarterly Consolidated Financial Statements and Key Notes
Quarterly Consolidated Balance Sheet
Fiscal year ended Dec. 2022
(as of Dec. 31, 2022)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade andcontract assets
Real estate for sale
Real estate for sale in process
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Land
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Deferred assets
Share issuance cost
Total deferred assets
Total assets- 14 -(Unit: million yen)
Second quarter of fiscal year
ending Dec. 2023
(as of Jun. 30, 2023)

35,721

34,297

1,096

1,034

4,804
138,968
10,766(1)
191,357

4,202
167,904
12,894(1)
220,331

22,734(2,353)
20,38031,535
517
(293)
223
52,13922,833(2,933)19,89931,535
420
(309)
111
51,546

7,696
77
7,774

7,436
71
7,508

13,935(1,521)
12,41372,327

14,302(1,521)
12,781
71,83545
45263,72927
27
292,194

Fiscal year ended Dec. 2022
(as of Dec. 31, 2022)
Liabilities
Current liabilities
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
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-salesecurities
Foreign currency translation adjustment
Total accumulated other comprehensive
incomeSubscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets- 15 -(Unit: million yen)
Second quarter of fiscal year
ending Dec. 2023
(as of Jun. 30, 2023)

10,061
26,193
3,258
16,17755,69011,99228,647
2,114
11,93854,692

132,810186
109
271
10,516
143,894
199,585

161,649
211
98
272
10,534
172,765
227,458

16,51912,42438,326(1,457)65,813

16,51912,42638,862(1,448)66,359

79

126

13

1

93

127

0
(1,761)64,144
263,7290(1,751)64,736292,194

(2)Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income(Quarterly Consolidated Statement of Income)(First two quarters of fiscal year ending December 2023)(Unit: million yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Penalty income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Amortization of share issuance cost
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
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit
Net income (loss) attributable to noncontrollinginterests
Profit attributable to owners of parent

First two quarters
First two quarters of fiscal year
ending Dec. 2023
of fiscal year ended Dec. 2022
(from Jan. 1, 2023
(from Jan. 1, 2022
to Jun. 30, 2023)
to Jun. 30, 2022)
40,87647,93929,97935,092
10,896
12,846
5,255
6,003
5,641
6,842

- 16 -

0
68
27
348
7
452

1
97
48
240
9
398

925
18

880
18

11

21

2
957
5,136

3
923
6,317

0
0

0
0

0
0
5,135
1,665
188
1,854
3,281

0
0
6,317
1,985
113
2,098
4,219

(15)

10

3,296

4,209

(Quarterly Consolidated Statement of Comprehensive Income)(First two quarters of fiscal year ending December 2023)

ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Comprehensive income attributable to owners ofparentComprehensive income attributable to noncontrolling interests(Unit: million yen)First two quarters of fiscal year First two quarters of fiscal year
ended Dec. 2022
ending Dec. 2023
(from Jan. 1, 2022
(from Jan. 1, 2023
to Jun. 30, 2022)
to Jun. 30, 2023)
3,281
4,219

- 17 -

(233)

47

(17)

(30)

59

18

(191)
3,090

34
4,253

3,105

4,243

(15)

10

(3)

Quarterly Consolidated Statement of Cash Flows(Unit: million yen)First two quarters of fiscal year First two quarters of fiscal year
ended Dec. 2022
ending Dec. 2023
(from Jan. 1, 2022
(from Jan. 1, 2023
to Jun. 30, 2022)
to Jun. 30, 2023)

Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of goodwill
Amortization of long-term prepaid expenses
Amortization of share issuance cost
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 forusing equity method
Loss on retirement of non-current assets
Decrease (increase) in notes and accounts
receivable - trade and contract assets
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
Proceeds from purchase of shares of subsidiaries
resulting in change in scope of consolidation
Payments of loans receivableCollection of loans receivable
Repayments of guarantee deposits received
Proceeds from guarantee deposits received
Proceeds from divestments
Net cash provided by (used in) investing activities
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
Repayments of lease obligations
Purchase of treasury shares
Proceeds from disposal of treasury shares
Cash dividends paid

- 18 -

5,135
629
262
16
18

6,317
611
260
10
18

0

0

31

25

(2)

(11)

(69)
925
(348)

(99)
880
(240)

11

21

0

0

(46)

61

(20,995)(44)752(28,685)(482)(1,286)

476

(388)

(67)
(611)
(95)
(121)
(14,144)69(910)(1,219)(16,204)(570)(2,453)(1,385)
15(27,380)98(862)(3,080)(31,224)

(1)
－
(368)

(0)
2
(234)

2

15

(1,818)
(30)

(147)
19

316

－

(0)
0
(423)
767
0
(1,556)

(64)
1
(69)
517
1
39

2,666
(1,803)40,186(18,523)(0)－
6(3,666)

4,506(2,683)46,815(15,413)(0)(0)
5(3,670)(Unit: million yen)First two quarters of fiscal year First two quarters of fiscal year
ended Dec. 2022
ending Dec. 2023
(from Jan. 1, 2022
(from Jan. 1, 2023
to Jun. 30, 2022)
to Jun. 30, 2023)
Net cash provided by (used in) financing activities
18,86629,558Translation differences on cash and cash equivalents
1212
Net increase (decrease) in cash and cash
1,117
(1,614)equivalents
Cash and cash equivalents at beginning of period
33,55935,604
Cash and cash equivalents at end of period
34,67733,990(4)

Notes to Quarterly Consolidated Financial Statements(Notes on Going Concern Assumption)
Not applicable.
(Notes on Substantial Changes in the Amount of Shareholders’ Equity)
Not applicable.
(Additional Information)(Accounting estimates in line with the spread of COVID-19)
There are no significant changes in the assumptions concerning the impact of the COVID-19 pandemic statedin the previous fiscal year’s securities report.
However, there are many factors of uncertainty concerning the impact of the COVID-19 pandemic, and thus if
the real estate market deteriorates further, the operating results, financial position, and status of cash flow of the
ES-CON JAPAN Group may be materially impacted due to posting of appraisal loss of inventories andimpairment loss, etc. for owned properties.
(Board Benefit Trust for Executives)(1) Overview of the transaction
1) ES-CON JAPAN passed a resolution to introduce the performance-based stock reward system (the“System”; The trust established based on the trust agreement concluded with Resona Bank, Limited for
the System is referred to as “board benefit trust for executives”) at the Annual General Meeting of
Shareholders held on March 20, 2015, with an aim to further clarify the relationship between remuneration
for ES-CON JAPAN’s directors (excluding directors who are Audit and Supervisory Committee Members,
external directors and nonexecutive directors) and (authorized) executive managing officers (the“Directors, etc.”; hereinafter referred to as the same unless otherwise specified) and ES-CON JAPAN’s
operating results and share price, with the Directors, etc. not only benefiting from a rise in share price but
also sharing the same risks as shareholders in relation to a fall in share price, thereby increasingawareness of contribution to the medium- to long-term improvement of operating results andenhancement of corporate value. Furthermore, ES-CON JAPAN passed a resolution for continuation andpartial revision of the System for the Directors, etc. at the Annual General Meetings of Shareholders heldon March 26, 2020, and March 26, 2021.
The System after the revision is an incentive system by which ES-CON JAPAN contributes money to atrust with the trust acquiring shares of ES-CON JAPAN with said money as capital, and shares of ESCON JAPAN and the fair market value of shares of ES-CON JAPAN are granted to ES-CON JAPAN’s
Directors, etc. through the trust in accordance with the operating results achievement rate, etc. pursuant
to the officer stock ownership regulations set by ES-CON JAPAN. The shares of ES-CON JAPAN will be
granted to the Director, etc. of ES-CON JAPAN when said Director, etc. retires from all positions such as
director in principle.
Under the System, for a set period of three fiscal years from the fiscal year ended December 2021 to
the fiscal year ending December 2023 as well as each subsequent period of three fiscal years, ES-CON
JAPAN will contribute money up to 330 million yen (110 million yen per fiscal year multiplied by the numberof target fiscal years) to the trust.

- 19 -

2) Total number of shares to be granted to the Directors, etc.
・Resolution passed at the Annual General Meeting of Shareholders held on March 20, 2015
Upper limit of funds for acquisition of shares (for the five fiscal years from the fiscal year ended
December 2015 to the fiscal year ended December 2019): 240 million yen
・Resolution passed at the Annual General Meeting of Shareholders held on March 26, 2020
Upper limit of funds for acquisition of shares (for the three fiscal years from the fiscal year ended
December 2020 to the fiscal year ended December 2022, and each subsequent period of three fiscal
years): 330 million yen
・Resolution passed at the Annual General Meeting of Shareholders held on March 26, 2021
Upper limit of funds for acquisition of shares (for the three fiscal years from the fiscal year ended
December 2021 to the fiscal year ending December 2023, and each subsequent period of three fiscal
years): 330 million yen
3)

Scope of persons who are eligible to receive beneficiary rights and other rights under the System
The Directors, etc. of ES-CON JAPAN who have acquired the right to receive shares based on the officer
stock ownership regulations.

(2) Residual Shares of ES-CON JAPAN in the Trust
Residual shares of ES-CON JAPAN in the trust are recorded as treasury shares under net assets using thebook value in the trust (excluding the amount of incidental expenses). The book value of the treasury sharesand the number of shares is 347 million yen and 851,000 shares for the fiscal year ended December 2022,
and 347 million yen and 851,000 shares for the second quarter of the fiscal year ending December 2023.
(Share-Based Payment Benefits-Type ESOP Trust)(1) Overview of the transaction
ES-CON JAPAN passed a resolution to introduce a share-based payment benefits-type ESOP (the“System”; the trust established based on the trust agreement concluded with Resona Bank, Limited for
the System is referred to as “share-based payment benefits-type ESOP trust”) at the Board of Directors’
meeting held on March 20, 2015, with an aim to further enhance the benefit program for its employees
and raise their motivation and morale for improving the share price and operating results. Furthermore,
ES-CON JAPAN passed a resolution for continuation and partial revision of the share-based payment
benefits-type ESOP trust for employees at the Board of Directors’ meeting held on June 30, 2022.
The System after the revision is a system by which ES-CON JAPAN contributes money to a trust for a
new period of seven fiscal years from the fiscal year ended December 2022 to the fiscal year ending
December 2028 and the period of the seven fiscal years after the elapse of the period, with the trust
acquiring shares of ES-CON JAPAN with said money as capital, and shares of ES-CON JAPAN are
granted to the ES-CON JAPAN Group’s employees who have satisfied certain requirements through thetrust, pursuant to the stock ownership regulations set by ES-CON JAPAN.
(2) Residual Shares of ES-CON JAPAN in the Trust
Residual shares of ES-CON JAPAN in the trust are recorded as treasury shares under net assets using
the book value in the trust (excluding the amount of incidental expenses). The book value of the treasury
shares and the number of shares is 347 million yen and 573,400 shares for the fiscal year ended
December 2022, and 341 million yen and 548,900 shares for the second quarter of the fiscal year ending
December 2023.
(Business combination through acquisition)
At the Board of Directors’ meeting held on February 28, 2023, the Company resolved to acquire all the sharesof Shijo Omiya Building Co., Ltd. and signed a share transfer agreement as of the same date. Based on thisagreement, the Company plans to acquire all such shares with July 31, 2023, as the execution date of the sharetransfer.

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1. Summary of business combination(1) Name of the acquired company and its business
Name of the acquired company

Shijo Omiya Building Co., Ltd.

Description of business

Real estate leasing business(2) Reason for business combination
With the aim of securing stable earnings from rental revenue-generating real estate, the Company decided
to acquire 100% of the shares of Shijo Omiya Building Co., Ltd., which is engaged in the real estate leasing
business mainly in Kyoto City, following the company’s implementation of the incorporation-type split, andmake the company a subsidiary.
Shijo Omiya Building Co., Ltd. operates a real estate leasing business mainly in Kyoto City and owns anumber of prime revenue-generating properties, such as rental condominiums and commercial facilities.
Under our fourth medium-term management plan called “IDEAL to REAL 2023” (covering the three-year
period from the fiscal year ended December 31, 2021, to the fiscal year ending December 31, 2023), weare currently promoting our business under the basic policy of “Transformation and Leap Forward” fromflow-oriented management to the stock-oriented counterpart and a sustainable and stable revenue
structure.
In October 2021, the Company made Picasso Co., Ltd. and its group companies, which operate a realestate leasing business mainly in the Kansai region and own a number of prime revenue-generating
properties, its subsidiaries, thereby steadily promoting a shift to a stable revenue structure. We believe thatthe recent acquisition of Shijo Omiya Building Co., Ltd. will further promote the transformation of ourrevenue structure and contribute to the sustainable growth and enhancement of corporate value of ourgroup in the future.
(3) Date of business combination
July 31, 2023 (scheduled)(4) Legal form of business combination
Acquisition of shares for cash(5) Name of company after combination
There is no change in the name of the combined company.
(6) Percentage of voting rights to be acquired
100%(7) Main basis for determining the acquiring company
The acquisition of shares by the Company in exchange for cash
2. Acquisition cost of the acquired company and breakdown by type of consideration
Consideration for acquisitionCash
30,000 million yen (scheduled)
Acquisition cost

30,000 million yen (scheduled)

3. Description and amount of major acquisition-related expenses
Due diligence costs, etc. (estimated amount): 71 million yen
4. Amount of goodwill to be accrued, reason for accrual, amortization method, and amortization period
Not confirmed at this time
5. Amount of assets and liabilities to be accepted on the date of business combination and their major
breakdownNot confirmed at this time
6. Acquisition fund
The funds for this acquisition will be allocated from cash on hand and loans from banks.

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(Segment Information, Etc.)[Segment Information]
I.
1.

First two quarters of fiscal year ended December 2022 (from January 1, 2022 to June 30, 2022)
Information on Net Sales and Income or Loss Amounts by Reporting Segment and Information on
Breakdown of Revenue(Unit: million yen)Amount onquarterly
Reconciliati
consolidatedonstatement of(Note 1)income(Note 2)

Reporting segment
Real estate
Real estate sales
Real estateplanning agency
businessleasing business and consulting
business

Total

Net sales
Revenue fromcontracts withcustomers
Other revenue(Note 3)
Net sales toexternalcustomers

35,056519

304

35,880－35,880

－

4,996

－

4,996

－

4,996

35,056

5,515

304

40,876－40,876

－

－

－

－

－

－

Total

35,056

5,515

304

40,876－40,876

Segment income

6,570

2,132

19

8,722

(3,081)

5,641

Intersegment
net sales ortransfers(Note)

1 The reconciliation of segment income of -3,081 million yen is corporate expenses not attributable
to any reporting segment. Corporate expenses are general and administrative expenses not
attributable to reporting segments.
2 Segment income is reconciled with operating income on the quarterly consolidated statements ofincome.
3 “Other revenue” is rental income, etc. based on “Accounting Standard for Lease Transactions.”

2.

Information on Impairment Loss on Non-Current Assets or Goodwill, Etc. by Reporting Segment
Not applicable.

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II. First two quarters of fiscal year ending December 2023 (from January 1, 2023 to June 30, 2023)
1. Information on Net Sales and Income or Loss Amounts by Reporting Segment and Information on
Breakdown of Revenue(Unit: million yen)Amount onquarterly
Reconciliati
consolidatedonstatement of(Note 1)income(Note 2)

Reporting segment
Real estate
Real estate sales
Real estateplanning agency
businessleasing business and consulting
business

Total

Net sales
Revenue fromcontracts withcustomers
Other revenue(Note 3)
Net sales toexternalcustomers

41,314595

327

42,237－42,237

－

5,701

－

5,701

－

5,701

41,3146,296

327

47,939－47,939

－

－

－

－

－

－

Total

41,3146,296

327

47,939－47,939Segment income

7,836

2,505

177

10,519(3,676)

6,842Intersegment
net sales ortransfers(Note)

1 The reconciliation of segment income of -3,676 million yen is corporate expenses not attributable
to any reporting segment. Corporate expenses are general and administrative expenses not
attributable to reporting segments.
2 Segment income is reconciled with operating income on the quarterly consolidated statements ofincome.
3 “Other revenue” is rental income, etc. based on “Accounting Standard for Lease Transactions.”

2.

Information on Impairment Loss on Non-Current Assets or Goodwill, Etc. by Reporting Segment
Not applicable.

(Significant Subsequent Events)(Borrowing of a large amount of funds)
The Company resolved at the Board of Directors’ meeting held on July 25, 2023, to conduct the following
borrowing of funds for the purpose of procuring funds for share acquisition and refinancing of existing borrowings,
etc. upon acquisition of all shares of Shijo Omiya Building Co., Ltd. and making it its subsidiary. The Company
is scheduled to conclude a loan agreement of 37,300 million yen in total on July 31, 2023. Said borrowing isscheduled to be converted into a syndicated loan of the same amount by the maturity date.
Overview of borrowing of funds(1) Lender

Sumitomo Mitsui Banking Corporation(2) Borrowing amount37,300 million yen(3) Drawdown dateJuly 31, 2023

(4) Maturity dateAugust 31, 2023

(5) Interest rate

Base rate +0.7%- 23 -

3.

Other
Status of Contracts and Sales
The performance of contracts in the real estate sales business for the second quarter is as follows:
Second quarter of fiscal year ending Dec. 2023
(from Apr. 1, 2023 to Jun. 30, 2023)
Category

Contract amount during the period
Number of units(units)Mid- to high-risehousing, etc.
Other
Total

Amount(million yen)

Balance of contracts at the end of theperiodNumber of units
Amount(units)(million yen)

358

19,527785

41,980

－

1,184

－

12,764358

20,711785

54,745The main performance of sales by segment for the first two quarters is as follows:First two quarters of fiscal year ending Dec. 2023
(from Jan. 1, 2023 to Jun. 30, 2023)

Name of segment

Number of units(units)Property nameCondominiums

490

31,068－

8,380(land for a healthcare facility for theelderly)

－

308

Other

－

1,558

490

41,314

Logistics facilities in Hashima-shi,
Gifu Prefecture
5-chome Fujishirodai, Suita-shi
Real estate sales business

Subtotal
Real estate leasing business

6,296Real estate planning agency

327

and consulting business
Total(Note)

Amount(million yen)

There are no transactions between segments.

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47,939