Summary of Accounts for First Two Quarters of Fiscal Year Ending December 2020
(Japanese GAAP) (Consolidated)
July 30, 2020
Listing exchange: Tokyo Stock Exchange
URL: https://www.es-conjapan.co.jp
President & Representative Director
Senior Managing Director TEL: 06 (6223) 8055
July 30, 2020－
No
Yes (for analysts)

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 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 2020
(from January 1, 2020 to June 30, 2020)(1) Consolidated operating results(% figures show the rate of increase (decrease) compared with the same period of the previous year)

Net sales

Operating income

million yen%

million yen%

million yen%

million yen%

10,59556.1

10,070

62.5

6,990

62.8

6,788

84.2

6,197

95.0

4,293

99.9

First two quarters of fiscal
54,96881.8
year ending Dec. 2020
First two quarters of fiscal
30,22822.7
year ended Dec. 2019
Note:
Comprehensive income
First two quarters of fiscal
year ending Dec. 2020:
6,774 million yen[55.6%]

Dilutedearnings per share

yen

yen

102.14101.99

62.75

62.61

(2) Consolidated financial position
Total assets

Net assets

million yen

First two quarters of fiscal
135,744year ending Dec. 2020
Fiscal year ended Dec.
132,6962019
Reference: Equity
First two quarters of fiscal
year ending Dec. 2020:
37,802 million yen
2.

First two quarters of fiscal
year ended Dec. 2019:
4,355 million yen [103.5%]

Basicearnings per shareFirst two quarters of fiscal
year ending Dec. 2020
First two quarters of fiscal
year ended Dec. 2019

Profit attributable toowners of parent

Ordinary income

Equity ratio

Book value per share

million yen%

yen

37,80427.8

552.5633,54625.3

490.08

Fiscal year ended Dec.
2019:

33,544 million yen

Dividends
End ofsecond quarter

Annual dividend
End ofthird quarter

yen

yen

yen

yen

yen

Fiscal year ended Dec. 2019－－
Fiscal year ending Dec. 2020
Fiscal year ending Dec. 2020
(Forecast)(Note) Revisions from latest dividends forecast: None

0.00
0.00

－

36.00

36.00

－

38.00

38.00

End offirst quarter

3.

Year-end

Total

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 period.)

Net sales
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

86,00019.3

13,3003.0

12,300

4.1

8,500

4.2

124.22(Note) Revisions from latest earnings forecast: None* 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: － companies (Company name) －－ companies (Company name) －Excluded:None(2) Application of accounting treatments specific to preparation of quarterly consolidated financial statements:(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:

None

None
None
None
None

(4) Number of shares issued and outstanding (common shares)
First two quarters
1) Number of shares issued and outstanding
71,841,887 Fiscal year ended 71,841,887
of fiscal year(including treasury shares) at end of period
shares Dec. 2019
sharesending Dec. 2020
First two quarters
3,428,500 Fiscal year ended
3,394,700
2) Number of treasury shares at end of period of fiscal year
shares Dec. 2019
sharesending Dec. 2020
First two quarters
First two quarters
3) Average number of shares during period
68,439,758
68,435,343
of fiscal yearof fiscal year
(cumulative total of first two quarters)
sharessharesending Dec. 2020
ended Dec. 2019
Note: The number of treasury shares at end of period includes shares of ES-CON JAPAN held in a share-based
payment benefits trust for directors and a share-based payment benefits-type ESOP trust (first two quartersof fiscal year ending December 2020: 851,000 shares in the share-based payment benefits trust for directors
and 233,100 shares in the share-based payment benefits-type ESOP trust). In the calculation of the average
number of shares during period (cumulative total of first two quarters), the treasury shares to be subtracted inthat calculation includes shares of ES-CON JAPAN held in the share-based payment benefits trust for directors
and the share-based payment benefits-type ESOP trust (first two quarters of fiscal year ending December
2020: 814,762 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 theassumptions on which earnings forecasts are based and explanatory notes for use of earnings forecasts, etc., pleasesee “Attachment; 1. Qualitative Information on Quarterly Results; (4) Explanation of Consolidated Earnings Forecast
and Other Forward-Looking Information” on page 6.

○ Contents of Attachment
1. Qualitative Information on Quarterly Results ................................................................................................................... 2(1) Business Risks .......................................................................................................................................................... 2(2) Explanation of Operating Results .............................................................................................................................. 2(3) Explanation of Financial Position ............................................................................................................................... 5(4) Explanation of Consolidated Earnings Forecast and Other Forward-Looking Information......................................... 6
2. Quarterly Consolidated Financial Statements and Key Notes ......................................................................................... 7(1) Quarterly Consolidated Balance Sheet ...................................................................................................................... 7(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income .... 9(Quarterly Consolidated Statement of Income) .............................................................................................................. 9(Quarterly Consolidated Statement of Comprehensive Income) .................................................................................. 10(3) Quarterly Consolidated Statement of Cash Flows ................................................................................................... 11(4) Notes to Quarterly Consolidated Financial Statements ........................................................................................... 12(Notes on Going Concern Assumption)........................................................................................................................ 12(Notes on Substantial Changes in the Amount of Shareholders’ Equity) ..................................................................... 12(Additional Information) ................................................................................................................................................ 12(Segment Information, etc.) ......................................................................................................................................... 14(Significant Subsequent Events) .................................................................................................................................. 14
3. Other ............................................................................................................................................................................. 15
Status of Contracts and Sales ....................................................................................................................................... 15- 1 -Attachment
1. Qualitative Information on Quarterly Results(1) Business Risks
The following is the business risks that newly arose in the first two quarters. The statements concerning future matters
are the judgement of ES-CON JAPAN Group (ES-CON JAPAN and its consolidated subsidiaries) as of the end of thefirst two quarters of the fiscal year ending December 2020.
The impact of the novel coronavirus (COVID-19) pandemic is extremely difficult to predict as there are many factors of
uncertainty. However, if the pandemic continues over a long term, the economy is likely to further deteriorate. In sucha case, the operating results, financial position, and status of cash flow of ES-CON JAPAN Group may be materially
impacted due to posting of appraisal loss of inventories and impairment loss, etc.
Possible risks in business segments are as follows.
1)

Condominium sales
In the condominium sales business, while we did not completely close showrooms, we switched from face-to-facesales activities and having customers visit showrooms to online sales activities at an early stage, and have achieved
certain results. Although the number of visitors fell by around 70% during the state of emergency and led to a
slowdown of sales, the figure has picked up after the state of emergency was lifted, leading to a gradual increasein the number of contracted cases. However, with concerns over possible second and third waves, it is difficult toproject the impact on properties currently being sold as well as the future sales forecast and construction schedule.
Therefore, it is possible that review of construction starts of new condominiums may become necessary going
forward.

2)

Real estate (other) sales business
There is a risk of possible decrease in real estate prices due to a reduced appetite for investment among investors,
the worsening of the financing environment resulting from financial contraction, and other factors.

3)

Retail properties
ES-CON JAPAN Group owns and manages retail properties centering on community-based shopping centers withsupermarkets as the core tenant. Supermarkets, drug stores, etc. selling daily essentials continued operations
during the state of emergency and have posted sales exceeding 100% year on year. However, other tenants, suchas restaurants, apparel shops and sports clubs, have been forced to refrain from operating. As such, there is a riskof possible decrease in planned real estate leasing income due to rent reduction requests from severely affected
tenants, uncollected rents of bankrupted tenants, difficulty in soliciting new tenants, etc.

4)

HotelsES-CON JAPAN has been promoting hotel development projects in recent years, and has completed sales for 15
out of its 17 projects. As to the 2 projects underway (Fukuoka City Project opened in March 2020 and Osaka City
Project to open in January 2021), there is a risk of possible delay in the sales period or decrease in sales prices
due to the sluggish occupancy rate and difficulty in predicting the time needed for recovery.
ES-CON JAPAN Group has adopted telework and off-peak commuting as measures to prevent the spread of
COVID-19 while also taking measures such as refraining from business trips and gatherings, wearing masks, andimplementing thorough hand-washing and gargling.

(2) Explanation of Operating Results
In the first two quarters, the Japanese economy faced an extremely harsh situation due to the COVID-19 pandemic.
While the economy is anticipated to recover upon the gradual restart of socioeconomic activities with measures in place
to prevent the spread of infection, possible second and third waves have also been of concern. The outlook is extremely
clouded as it is necessary to keep a close watch on the trend of the pandemic in Japan and abroad as well as impacts
such as fluctuation in the financial and capital markets.
In the real estate industry in which the ES-CON JAPAN Group operates, the future impact of COVID-19 on the realestate market is extremely difficult to predict.
- 2 -Given the business environment described above, we have decided to review the third medium-term management plan
“IDEAL to REAL 2022” with a period of three years from the fiscal year ending December 2020 to the fiscal year ending
December 2022. Despite being in an environment with an unforeseeable future, we will assuredly make strategic moves
towards expansion of new business fields and sustainable growth by taking the current situation as an opportunity todevelop our business.
1)

Status of Implementation of Growth Strategy of ESCON JAPAN REIT Investment Corporation
As one of the growth strategies of 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, a support agreement was concluded among three companies, namely Chuden Real
Estate Co., Inc. (hereinafter “Chuden Real Estate”), EJR and EAM, in September 2019. ES-CON JAPAN transferred
real estate for sale (tonarie Yamatotakada (50% interest), tonarie Toga-Mikita (50% interest), commercial leasehold
land in Omihachiman City, Shiga, commercial leasehold land in Muko City, Kyoto, and commercial leasehold land
in Ikoma-gun, Nara) to Chuden Real Estate in February 2020, utilizing temporary warehousing functions, under aprecondition to transfer the real estate to EJR based on the support agreement.
In addition, real estate for sale (tonarie Yamatotakada (50% interest), tonarie Toga-Mikita (50% interest) andcommercial leasehold land in Sakai City, Osaka) owned by ES-CON JAPAN, a sponsor support company, weretransferred to EJR.
In February 2020, EJR conducted its first public offering after listing, and its asset size increased from 41.6 billion
yen upon listing to 51.9 billion yen after the public offering.
ES-CON JAPAN Group fully supports enhancement of earnings and stable growth of EJR as its sponsor and aims
for further growth.

2)

Status of Demonstration of Synergy Effect with Chubu Electric Power Group
ES-CON JAPAN concluded a capital and business partnership agreement with Chubu Electric Power Co., Inc. inAugust 2018 to position the Chubu region as a core business area comparable to the Tokyo metropolitan area andthe Kansai region, and established a Nagoya branch in March 2019. Following the establishment, ES-CON JAPAN
has acquired new land for business use for four projects in the Chubu Region. As a joint project with Chuden Real
Estate, ES-CON JAPAN acquired a site for a condominium in Higashi Ward, Nagoya City, in June 2019, the firstsuch 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 steadily implementing business development in the Chubu region together
with its first and second projects.
In addition, as for the land for business use which it acquired in Suita City, Osaka, in March 2020, ES-CON JAPANlaunched a joint project with Chuden Real Estate with regard to condominium development and commercial
development, which will be the third project.
ES-CON JAPAN intends to develop businesses that can satisfy local residents by demonstrating synergy while
continuing to strengthen its partnership with each group company of Chubu Electric Power.

3)

Participation in Hokkaido Ballpark Project and Acquisition of Naming Rights for New Ballpark
With regard to the naming rights for the new ballpark of the Hokkaido Nippon-Ham Fighters planned to beestablished and opened in 2023 in Kitahiroshima City, Hokkaido, ES-CON JAPAN concluded a ballpark namingrights agreement with Hokkaido Nippon-Ham Fighters Baseball Club Co., Ltd. and Fighters Sports & Entertainment
Co., Ltd., which manages the entire HOKKAIDO BALLPARK F VILLAGE and owns/operates the ballpark, in January
2020.
The name of the new ballpark will be “ES CON FIELD HOKKAIDO.” The area surrounding the ballpark is an
important base as a planned site for a sports park in Kitahiroshima City and is part of a large-scale development
area for HOKKAIDO BALLPARK F VILLAGE (total development area: approx. 36.7 ha) with construction of a newstation also planned. ES-CON JAPAN is scheduled to participate in the development of various real estate in thearea such as a hotel on the land of approximately 9,400 m 2 adjoining the ballpark as well as urban development.
ES-CON JAPAN will seize this opportunity to also start supporting sports, cultural promotion, etc. for the happinessof the residents of Hokkaido and contribute to revitalization and development of the entire community.
Although ES-CON JAPAN had planned to open its Hokkaido branch in July 2020, it has decided to postpone thestart of operations to the fall of 2020 in light of the spread of COVID-19.
- 3 -

4)

Status of Initiatives for New Businesses
Under the circumstances in which the Amended Immigration Control Act, which newly accepts the status ofresidence in some business types, was enforced in April 2019 and improvement in the working environment forforeign workers has progressed against the backdrop of a serious labor shortage, ES-CON JAPAN established, aspart of its ESG management, “ES-CON Global Works Ltd.,” a consolidated subsidiary engaged in the employment
placement business, to help solve such social issues and launched employment placement services for foreigners
specializing in the restaurant industry, accommodation industry, and building-cleaning as well as an overseas
expansion consulting business in March 2020.
In addition, in April 2020, ES-CON JAPAN invested in SQUEEZE Inc., which develops systems for hotel operationand conducts a hotel operation business. ES-CON JAPAN aims to strengthen its real estate operation businesswhile diversifying its other businesses by participating in the hotel operation business.
ES-CON JAPAN will continue to challenge new business fields, and aim for sustainable growth of the entire group.

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 condominium joint development project in Bangkok.
ESCON JAPAN is steadily developing its overseas business through efforts such as committing to new investment
in a California-focused, closed-end real estate investment fund in March 2020.

6)

Status of ESG Initiatives
ES-CON JAPAN has set “Address social issues through promotion of ESG initiatives” as one of its corporate
strategies. As part of such activities, ES-CON JAPAN is providing a monetary donation to Kyoto University’s “iPS
Cell Research Fund” to support activities realizing early and inexpensive treatment using iPS cells for those sufferingfrom diseases and accidents, in addition to initiatives in new businesses which will contribute to regional
revitalization and help solve social issues.
In addition, in March 2020, ES-CON JAPAN realized fund procurement through an “ESG/SDGs assessment-basedloan” provided by Sumitomo Mitsui Banking Corporation. Of the project funds of the syndicate loan arranged by
Sumitomo Mitsui Banking Corporation to fund the Fujishirodai 5-Chome project (joint project with Chuden Real
Estate) whose site was acquired in March 2020, three billion yen was procured through the “ESG/SDGs
assessment-based loan” upon earning a rank of A*, the third-best ranking among the seven rankings, indicating that
“good ESG/SDG initiatives and information disclosure have been conducted.”
In May 2020, ES-CON JAPAN acquired EcoAction 21 Certification, a Japanese environmental management system(EMS) established by the Ministry of the Environment. EcoAction 21 is an EMS for proactive, effective environmental
management including reduction of CO2 emissions, and EMS activities aim for continuous efforts based on the
PDCA cycle. By continuing to conduct environmentally friendly management through EcoAction 21 initiatives,companies are expected to fulfill their social responsibility to reduce environmental burden while such activities also
bring benefits to management, such as cost reduction and improved productivity, and contribute to the enhancementof corporate value.
Furthermore, in terms of governance, ES-CON JAPAN established the “Nomination and Remuneration Advisory
Committee” in January 2020 with an aim to strengthen the independence and objectivity of functions as well as theaccountability of the board of directors with regard to nomination and remuneration of directors. ES-CON JAPANalso launched initiatives for a succession plan called the candidate successor system.
ES-CON JAPAN will continue with steady implementation of ESG management as an important management
strategy, and make proactive efforts with an aim to achieve sustainable growth of ES-CON JAPAN Group.

7)

Business Development by Segment
In the real estate sales business, our core business, we conducted revenue-generating real estate sales, etc., inaddition to achieving progress in condominium sales.

- 4 -In the real estate sales business, sales of new projects “Le JADE Okurayama (Kohoku Ward, Yokohama City; 25units in total),” “Le JADE Morinomiya (Higashinari Ward, Osaka City; 45 units in total),” “Le JADE Yamatotakada
Ekimae (Yamatotakada City, Nara Prefecture; 205 units in total),” “Le JADE Suma Myohoji Ekimae (Suma Ward,
Kobe City; 40 units in total),” etc. commenced, while “Le JADE Kuzuha (Hirakata City, Osaka Prefecture; 78 units
in total),” “Le JADE Kotoen (Nishinomiya City, Hyogo Prefecture; 49 units in total)” and “Le JADE Higashisumiyoshi
Imagawa Ryokudo (Higashisumiyoshi Ward, Osaka City; 41 units in total)” sold out upon completion.
Furthermore, “LOGITRES Tojo (Kato City, Hyogo Prefecture),” a logistics development project, sales of revenuegenerating real estate in Honjo, Kita Ward, Osaka City, and Matsubara, Setagaya Ward, and transfer of commercial
facilities and commercial leasehold lands to EJR and Chuden Real Estate have been completed.
In the real estate leasing business, efforts are being made to secure stable rental income from and enhance asset
value of retail properties held by ES-CON JAPAN.
In the real estate planning agency and consulting business, focus is being placed on the segment as a businessachieving high profit margins through subcontracting, planning agency and consulting, and other non-asset
businesses by leveraging the planning and other strengths of ES-CON JAPAN.
As a result, ES-CON JAPAN achieved net sales of 54,968 million yen (up 81.8%), operating income of 10,595
million yen (up 56.1%), ordinary income of 10,070 million yen (up 62.5%) and profit attributable to owners of parentof 6,990 million yen (up 62.8%) for the first two quarters, all compared with the same period of the previous year.
The following describes the operating results by segment, with figures compared with the same period of the previous
year.
1)

Real estate sales businessIn the real estate sales business, activities included selling condominiums and revenue-generating real estate, andresulted in net sales of 52,275 million yen (up 88.3%) and segment income of 11,880 million yen (up 69.9%), despite
the ongoing spread of COVID-19.

2)

Real estate leasing businessIn the real estate leasing business, although focus was placed on leasing activities and the property managementbusiness in view of enhancement of asset value, including increase in rental income of owned revenue-generating
real estate, such efforts resulted in net sales of 2,541 million yen (up 6.2%) and segment income of 1,021 million
yen (down 33.5%).

3)

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 capabilities, resulting in net sales of 151 million yen (up 109.8%) and segment income of 85
million yen (up 41.4%).

(3)
1)

Explanation of Financial Position
Financial position
Assets at the end of the first two quarters increased by 3,047 million yen compared with the end of the previous
fiscal year to 135,744 million yen. This was mainly attributable to cash and deposits and property, plant andequipment increasing by 2,069 million yen and 1,491 million yen, respectively, and inventories decreasing by 1,381
million yen.
Liabilities decreased by 1,210 million yen compared with the end of the previous fiscal year to 97,939 million yen.
This was mainly attributable to long-term loans payable, short-term loans payable and bonds payable decreasing
by 863 million yen.
Net assets increased by 4,257 million yen compared with the end of the previous fiscal year to 37,804 million yen.
This was attributable to cash dividends paid of 2,490 million yen, while recording profit attributable to owners ofparent of 6,990 million yen. As a result, the equity ratio was 27.8% (25.3% at the end of the previous fiscal year).

- 5 -

2)

Cash flows
Cash and cash equivalents (“net cash”) at the end of the first two quarters increased by 2,085 million yen comparedwith the beginning of the fiscal year to 24,499 million yen (18,156 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)
Cash flows from operating activities increased by 9,275 million yen (net cash used in operating activities decreased
by 3,650 million yen in the same period of the previous fiscal year). This was mainly attributable to profit before
income taxes of 10,070 million yen, decrease in inventories of 1,987 million yen and income taxes paid of 3,245
million yen.
(Cash flows from investing activities)
Cash flows from investing activities decreased by 3,815 million yen (net cash used in investing activities decreased
by 839 million yen in the same period of the previous fiscal year). This was mainly attributable to purchase of noncurrent assets of 2,283 million yen and purchase of investment securities of 1,614 million yen.
(Cash flows from financing activities)
Cash flows from financing activities decreased by 3,374 million yen (net cash used in financing activities increased
by 6,083 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 expenditure of 822
million yen and payment of cash dividends of 2,487 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 30, 2020.
However, the impact of COVID-19 on the real estate market in the future is extremely difficult to predict. While
progress mostly in line with the forecast was seen for the first two quarters, we will be discussing the forecast
alongside carefully watching the business environment, business progress, and such going forward. When revisionof the forecast becomes necessary as a result, we will promptly make an announcement.
As mentioned above, we will review the current third medium-term management plan “IDEAL to REAL 2022” since
there is a significant difference between the initial assumptions and the current economic conditions. The revisedplan will be announced promptly once resetting of the assumptions becomes possible.
In addition, under the circumstances where making predictions for the future is extremely difficult, we have decided
to review the progressive dividend policy in order to prioritize accumulation of internal reserve.

- 6 -2. Quarterly Consolidated Financial Statements and Key Notes(1) Quarterly Consolidated Balance Sheet

Fiscal year ended
Dec. 2019(as of Dec. 31, 2019)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Real estate for sale
Real estate for sale in process
Other
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
Total assets- 7 -(Unit: million yen)
Second quarter offiscal year ending
Dec. 2020(as of Jun. 30, 2020)

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

24,580618
9,399
73,073
6,284
113,958

3,216
(566)
2,649
10,621
295
(132)
163
13,433

4,218
(723)
3,495
11,262
328
(160)
168
14,925

436
56
492

388
73
461

4,670
(37)
4,632
18,558132,696

6,437
(37)
6,399
21,786
135,744

Fiscal year ended
Dec. 2019(as of Dec. 31, 2019)
Liabilities
Current liabilities
Short-term loans payable
Current portion of long-term loans payable
Current portion of bonds
Income taxes payable
Other
Total current liabilities
Non-current liabilities
Bonds payable
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-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- 8 -(Unit: million yen)
Second quarter offiscal year ending
Dec. 2020(as of Jun. 30, 2020)

4,580
32,415
40
3,396
9,768
50,1995,249
25,129
240
3,086
9,060
42,766230
47,720
114
35
249
600
48,95099,14910
53,491
135
41
249
1,243
55,172
97,9396,275
2,004
26,256(1,247)33,2886,275
2,078
30,756(1,348)37,762

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

72
(31)
40
1
0
37,804
135,744(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income(Quarterly Consolidated Statement of Income)Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Penalty income
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 sales of non-current assets
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
ProfitProfit attributable to owners of parent- 9 -First two quarters offiscal year ended
Dec. 2019(from Jan. 1, 2019
to Jun. 30, 2019)30,22820,896
9,331
2,543
6,788

(Unit: million yen)First two quarters offiscal year ending
Dec. 2020(from Jan. 1, 2020
to Jun. 30, 2020)
54,96840,141
14,827
4,231
10,595

0
2
6
0
9

8
46
22
3
81

596
－
3
600
6,197

523
61
21
606
10,070

－
0
0

0
0
0

－
－

0
0
10,070
2,947
132
3,080
6,990
6,990

6,197
1,912
(8)
1,903
4,293
4,293

(Quarterly Consolidated Statement of Comprehensive Income)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Share of other comprehensive income of entities accounted forusing equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests- 10 -First two quarters offiscal year ended
Dec. 2019(from Jan. 1, 2019
to Jun. 30, 2019)
4,293(Unit: million yen)First two quarters offiscal year ending
Dec. 2020(from Jan. 1, 2020
to Jun. 30, 2020)
6,990

40
－

(184)
(13)

20

(17)

61
4,355

(215)
6,774

4,355
－

6,774
－

(3) Quarterly Consolidated Statement of Cash Flows(Unit: million yen)First two quarters offiscal year ended
Dec. 2019(from Jan. 1, 2019
to Jun. 30, 2019)
Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of goodwill
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 method
Loss (gain) on sales of non-current assets
Loss 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 of loans receivableCollection of loans receivable
Proceeds from guarantee deposits received
Repayments of guarantee deposits received
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
Redemption of bonds
Repayments of lease obligations
Repayments of installment payables
Proceeds from issuance of common shares
Purchase of treasury shares
Proceeds from disposal of treasury shares
Cash dividends paid
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 11 -First two quarters offiscal year ending
Dec. 2020(from Jan. 1, 2020
to Jun. 30, 2020)

6,197
43
－

10,070
192
48

11

21

－
(2)
596
－
－
－
－
(33)
(8,229)
(616)
(418)
(182)
229
(2)
656
59
(1,690)2(583)(1,379)(3,650)

5
(54)
523
17
61
(0)
0
(20)
1,987
374
484
588
(1,263)
194
(147)
(39)
13,04447(571)(3,245)
9,275

(9)
－
(1,073)
513
(75)
17
－
0
617
(830)
(839)

(9)
1
(1,614)
5(2,283)
75
(530)
500
882
(841)
(3,815)

3,270(2,981)
24,879(16,866)
(20)
(0)
(16)
24
－
－
(2,205)
6,083
－
1,593
16,56318,156

7,070(6,400)24,433(25,925)
(20)
(0)
(17)
－
(233)
207
(2,487)(3,374)(0)
2,085
22,41324,499(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)
Although it is difficult to accurately predict the future spread or end of the impact of COVID-19, accounting estimates are
made assuming the impact on ES-CON JAPAN Group’s businesses is minimal since the impact on ES-CON JAPANGroup’s businesses at this point in time is limited.
However, there are many factors of uncertainty concerning the impact of the COVID-19 pandemic, and thus if the realestate market deteriorates further, the operating results, financial position, and status of cash flow of ES-CON JAPANGroup may be materially impacted due to posting of appraisal loss of inventories and impairment loss, etc.
(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 isreferred to as “board benefit trust for executives”) at the Regular General Meeting of Shareholders held on March
20, 2015, with an aim to further clarify remuneration for company directors (excluding outside directors, auditorsand non-executive directors) (the “Directors”; Hereinafter referred to as the same unless otherwise specified)
and the relationship between ES-CON JAPAN’s performance and share price, with the Directors not only
benefiting from a rise in share price but also sharing the same risks as shareholders in relation to a fall in shareprice, thereby increasing awareness of contribution to the medium- to long-term improvement of performanceand enhancement of corporate value. Furthermore, ES-CON JAPAN passed a resolution for continuation andpartial revision of the System for the Directors at the Regular General Meeting of Shareholders held on March
26, 2020.
The System after the revision is an incentive system by which ES-CON JAPAN contributes money to a trust withthe trust acquiring shares of ES-CON JAPAN with the said money as capital, and shares of ES-CON JAPAN andthe fair market value of shares of ES-CON JAPAN are granted to ES-CON JAPAN’s Directors through the trustin accordance with the performance 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 of ES-CON JAPAN when
the said Director retires from the position of director in principle.
Under the System, for a set period of three fiscal years from the fiscal year ending December 2020 to the fiscal
year ending December 2022, which is the target period of ES-CON JAPAN’s third medium-term management
plan “IDEAL to REAL 2022,” as well as each subsequent period of three fiscal years, ES-CON JAPAN willcontribute money up to 330 million yen (110 million yen per fiscal year multiplied by the number of target fiscal
years) to the trust.
2)

Total number of shares to be granted to the Directors･ Resolution passed at the Regular 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 Regular 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 ending December
2020 to the fiscal year ending December 2022, 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 of ES-CON JAPAN who have acquired the right to receive shares based on the officer stock
ownership regulations.

- 12 -

(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 bookvalue in the trust (excluding the amount of incidental expenses). The book value of the treasury shares and thenumber of shares is 114 million yen and 487,200 shares for the previous fiscal year, and 347 million yen and 851,000
shares for the second quarter of the fiscal year under review.
(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 trust (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 ESOP”) at the Regular General Meeting of Shareholders held on March 20, 2015, withan aim to further enhance the benefit program for its employees and raise their motivation and morale for improving
the share price and performance.
The System is a system by which ES-CON JAPAN contributes money to a trust with the trust acquiring shares of
ES-CON JAPAN with the said money as capital, and shares of ES-CON JAPAN are granted to ES-CON JAPANGroup’s employees who have satisfied certain requirements through the trust, pursuant to the stock ownershipregulations 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 bookvalue in the trust (excluding the amount of incidental expenses). The book value of the treasury shares and thenumber of shares is 59 million yen and 233,100 shares for the previous fiscal year, and 59 million yen and 233,100
shares for the second quarter of the fiscal year under review.

- 13 -

(Segment Information, etc.)[Segment Information]
I. First Two Quarters of Fiscal Year Ended December 2019 (from January 1, 2019 to June 30, 2019)
1. Information on Net Sales and Income or Loss Amounts by Reporting Segment(Unit: million yen)Amount onquarterly
Reconciliation consolidated(Note 1)statement ofincome(Note 2)

Reporting segment
Real estatesales
business

Real estateleasingbusiness

Real estateplanning agency
and consulting
business

27,7632,392

72

30,228－30,228

－

－

－

－

－

－

27,7632,392

72

30,228－30,228

6,992

1,536

60

8,589

(1,801)

6,788

Total

Net sales
Net sales toexternal customers
Intersegment net
sales or transfers
Total
Segment income(Note 1) The reconciliation of segment income of -1,801 million yen is corporate expenses not attributable to any reporting
segment. Corporate expenses are general and administrative expenses not attributable to reporting segments.
(Note 2) Segment income is reconciled with operating income on the quarterly consolidated statement of income.
2. Information on Impairment Loss on Non-Current Assets or Goodwill, etc. by Reporting Segment
Not applicable.
II. First Two Quarters of Fiscal Year Ending December 2020 (from January 1, 2020 to June 30, 2020)
1. Information on Net Sales and Income or Loss Amounts by Reporting Segment(Unit: million yen)Amount on
Reporting segment
quarterly
Reconciliation consolidated
Real estate
Total
Real estate
Real estateplanning agency(Note 1)statement ofsales
leasingand consulting
incomebusinessbusinessbusiness(Note 2)
Net sales
Net sales toexternal customers

52,2752,541

151

54,968－54,968

－

－

－

－

－

－

52,2752,541

151

54,968－54,968

11,8801,021

85

12,987(2,391)

10,595Intersegment net
sales or transfers
Total
Segment income(Note 1) The reconciliation of segment income of -2,391 million yen is corporate expenses not attributable to any reporting
segment. Corporate expenses are general and administrative expenses not attributable to reporting segments.
(Note 2) Segment income is reconciled with operating income on the quarterly consolidated statement of income.
2. Information on Impairment Loss on Non-Current Assets or Goodwill, etc. by Reporting Segment
Not applicable.
(Significant Subsequent Events)
Not applicable.

- 14 -

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. 2020
(from Apr. 1, 2020
to Jun. 30, 2020)
Classification

Contract amount during the period
Number of units(units)Amount(million yen)

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

Mid- to high-risehousing, etc.

163

7,324

256

11,653

Other

－

1,463

－

6,629

163

8,788

256

18,282

Total(Note)

The above amounts do not include consumption tax, etc.

The main performance of sales by segment for the first two quarters is as follows:First two quarters of fiscal year ending Dec. 2020
(from Jan. 1, 2020
to Jun. 30, 2020)

Name of segment

Number of units(units)Property nameReal estate sales businessAmount(million yen)

Condominiums

437

18,682

tonarie Yamatotakada

－

8,175

LOGITRES Tojo

－

8,120

tonarie Toga-Mikita

－

6,875

Commercial leasehold land in
Sakai-shi

－

2,733

Matsubara, Setagaya-ku

－

2,167

Honjo-Nishi, Kita-ku

－

1,967

－

970

－

765

－

445

Genboen, Koga-shi

－

393

Other

－

980

437

52,275

Commercial leasehold land in
Omihachiman-shi
Commercial leasehold land in
Ikoma-gunCommercial leasehold land in
Muko-shi

Subtotal
Real estate leasing business

2,541

Real estate planning agency
and consulting business

151
Total

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

- 15 -

54,968