Summary of Accounts for First Three Quarters of Fiscal Year Ending December 2022
(Japanese GAAP) (Consolidated)
Name of listed company: ES-CON JAPAN Ltd.
Code:
8892
Representative:(Name) Takatoshi Ito(Position)
Contact for inquiries:(Name) Minoru Nakanishi(Position)
Scheduled date for 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:October 26, 2022
Listing exchange: Tokyo Stock Exchange
URL:
https://www.es-conjapan.co.jp/english/
President & Representative Director
Senior Managing Director TEL: 06 (6223) 8055
October 26, 2022－
No
No
(Amounts are rounded down to the nearest million yen)

1.

Consolidated results for first three quarters of fiscal year ending December 2022
(from January 1, 2022 to September 30, 2022)(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%

First three quarters of
50,58216.0
fiscal year ending Dec. 2022
First three quarters of
43,620(32.8)
fiscal year ended Dec. 2021
Note: Comprehensive income
First three quarters offiscal year ending Dec. 2022: 3,112 million yen

Profit attributable toowners of parent

Ordinary income

million yen%

million yen%

million yen

%

6,212

28.1

5,319

32.5

3,393

16.7

4,849

(57.0)

4,015(61.7)

2,907(59.9)[16.1%]First three quarters offiscal year ended Dec. 2021: 2,680 million yen [-62.0%]

Basicearnings per share

Dilutedearnings per share

yen

yen

First three quarters of
35.56
35.50
fiscal year ending Dec. 2022
First three quarters of
33.80
33.71
fiscal year ended Dec. 2021
(Note) “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29; March 31, 2020), etc. have been applied
from the beginning of the first quarter of the fiscal year ending December 2022, and the figures for the first threequarters of the fiscal year ending December 2022 are the figures after applying the accounting standard, etc.
(2) Consolidated financial position
Total assets
million yen

Net assets
million yen

Equity ratio

Book value per share%yenFirst three quarters of
275,806
61,78922.5
651.14fiscal year ending Dec. 2022
Fiscal year ended
252,771
62,62824.8
657.50Dec. 2021
Reference: Equity
First three quarters offiscal year ending Dec. 2022: 61,955 million yen
Fiscal year ended Dec. 2021: 62,780 million yen(Note) “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29; March 31, 2020), etc. have been applied
from the beginning of the first quarter of the fiscal year ending December 2022, and the figures for the first threequarters of the fiscal year ending December 2022 are the figures after applying the accounting standard, etc.

2.

Dividends
End of second
quarter

Annual dividend
End of third
quarter

yen

yen

yen

yen

yen

－
－

0.00
0.00

－
－

38.00

38.00

38.00

38.00

End of firstquarter
Fiscal year ended Dec. 2021
Fiscal year ending Dec. 2022
Fiscal year ending Dec. 2022 (Forecast)Year-end

Total(Note) Revisions from the latest dividends forecast: None3.

Consolidated earnings forecast for fiscal year ending December 2022 (from January 1, 2022 to December 31, 2022)(% 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 Basic earnings
owners of parent
per share

million yen%

million yen%

million yen%

million yen%

yen

100,000

26.6

14,00034.9

12,200

34.1

8,300

39.2

86.99

(Note) Revisions from the latest dividends forecast: None
* Explanatory notes(1) Changes in significant subsidiaries during the first three quarters(Changes in specified subsidiaries resulting in change in scope of consolidation): None
－ companies (Company name) －Newly included－ companies (Company name) －Excluded:(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.:

Yes

2)

Changes in accounting policies other than 1):

None

3)

Changes in accounting estimates:

None

None
4) Restatement:(Note) For details, please see “Attachment; 2. Quarterly Consolidated Financial Statements and Key Notes; (3)Notes to Quarterly Consolidated Financial Statements (Changes in Accounting Policies)” on page 20.
(4) Number of shares issued and outstanding (common shares)
1) Number of shares issued andFirst three quarters of
98,580,887 Fiscal year ended
98,580,887
outstanding (including treasury shares) fiscal year ending
shares Dec. 2021
sharesat end of period
Dec. 2022
First three quarters of2) Number of treasury shares at end of
3,431,700 Fiscal year ended
3,096,900
fiscal year ending
periodshares Dec. 2021
sharesDec. 2022
First three quarters ofFirst three quarters
3) Average number of shares during
95,416,293
86,001,808
fiscal year endingof fiscal year ended
periodsharessharesDec. 2022
Dec. 2021(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 executives and a share-based payment benefits-type ESOP trust (first threequarters of fiscal year ending December 2022: 851,000 shares in the share-based payment benefits trust for
executives and 574,000 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 three quarters), the treasury shares tobe subtracted in that calculation includes shares of ES-CON JAPAN held in the share-based payment benefits
trust for executives and the share-based payment benefits-type ESOP trust (first three quarters of fiscal year
ending December 2022: 1,153,032 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 15.

○ Contents of Attachment
1. Qualitative Information on Quarterly Results..................................................................................................................... 2(1) Business Risks .......................................................................................................................................................... 2(2) Explanation of Operating Results .............................................................................................................................. 3(3) Explanation of Financial Position ............................................................................................................................. 14(4) Explanation of Consolidated Earnings Forecast and Other Forward-Looking Information....................................... 15
2. Quarterly Consolidated Financial Statements and Key Notes ....................................................................................... 16(1) Quarterly Consolidated Balance Sheet .................................................................................................................... 16(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income .. 18(Quarterly Consolidated Statement of Income) ............................................................................................................ 18(Quarterly Consolidated Statement of Comprehensive Income) .................................................................................. 19(3) Notes to Quarterly Consolidated Financial Statements ........................................................................................... 20(Notes on Going Concern Assumption)........................................................................................................................ 20(Notes on Substantial Changes in the Amount of Shareholders’ Equity) ..................................................................... 20(Changes in Accounting Policies) ................................................................................................................................ 20(Additional Information) ................................................................................................................................................ 20(Segment Information, Etc.) ......................................................................................................................................... 22(Significant Subsequent Events) .................................................................................................................................. 23
3. Other ............................................................................................................................................................................. 24
Status of Contracts and Sales ....................................................................................................................................... 24-1-

Attachment
1. Qualitative Information on Quarterly Results(1)

Business Risks
In the first three quarters of the fiscal year ending Dec. 2022, business risks that newly arose or changed from thosedescribed in “2. Business Conditions; 2. Business Risks” in the previous fiscal year’s securities report are as follows:
Statements concerning future matters are based on the judgments of the Group (ES-CON JAPAN and its
consolidated subsidiaries) as of the end of the third quarter of the fiscal year ending December 2022.
The following item numbers attached to each heading correspond to those described in “2. Business Conditions;
2. Business Risks” in the previous year’s securities report. Regarding “(8) Legal Violation Risks,” they arose after thefinancial statements for the previous fiscal year were submitted.
(2) Legal Restrictions, Etc.
In addition to the restrictions of the Companies Act and the Financial Instruments and Exchange Act, the realestate industry to which the ES-CON Japan Group belongs is subject to the restrictions of the National Land
Use Planning Act, Real Estate Brokerage Act, Building Standards Act, Act on Maintenance of Sanitation in
Buildings, Act on Specified Joint Real Estate Ventures, Act on Securitization of Assets, Trust Business Act, andMoney Lending Business Act, etc.
In addition, the ES-CON Japan Group conducts real estate sales and related business as a real estatecompany licensed under the Real Estate Brokerage Act and the Act on Advancement of Proper Condominium
Management, etc., but the abolition of these or creation of new legal restrictions could affect the Group’sbusiness performance.
In January 2022, ES-CON JAPAN acquired shares of FUEL Inc. (hereinafter “FUEL”), which manages online
funds and provides systems to specified joint real estate venture-type crowdfunding businesses, to make it asubsidiary. The details of approval and licenses obtained by FUEL are as follows.
(FUEL Inc.)
Details of
Legal violation requirements andGoverningapproval, license, Period of validity
main reasons for revocation of
agency, etc.
etc.
approvals and licenses
Tokyo
Governor of
Building Lots andFrom July 16, 2022, In case of license by unauthorized
Metropolitan Tokyo (1) No.
means, or violation of
Building Transactions
to July 15, 2027
Government 108078
disqualification clause for officers,
Business
etc., the license may be revoked(Article 66 of the Building Lots andBuildings Transaction Business Act)
Financial Instruments Financial
Director-General Obtained on
In case of registration by
Business
Servicesof the Kanto
January 26, 2009. unauthorized means, capital(Type 2 Financial
AgencyLocal FinanceNo provision for the shortage, or potential insolvency inInstruments
Bureauperiod of validity
the context of business or asset
Business)(Financial
conditions, the registration may be
Instruments
revoked (Article 52 of the Financial
Business)
Instruments and Exchange Act).
No. 2123
Name of approval,
license, etc.

(5) Personal Information Leakage and Information System Risks
As a business operator handling personal information under the Act on the Protection of Personal Information,
the Group receives personal information of customers and clients in each of its businesses when developing ina multidimensional way. This includes customers who purchase or consider purchasing condominiums ordetached houses through the condominium sales business or reside in rental apartments as well as customers
who purchase or consider purchasing permanent use rights in the columbarium business or are looking for jobs
in the employment placement business. The Group has set rules for the handling of personal information (basic
policy, regulations, and manual) to establish a system and keeps files containing personal information understrict safekeeping with monitoring software and restricts access authority on the system in a bid to enhance thesystem as a whole and also manage information other than personal information.

-2-

ES-CON JAPAN outsources part of the sale of condominiums to sales companies and these companies are
required to use part of ES-CON JAPAN’s management system to prevent customer information from being
leaked to third parties and handle customer information within the scope to ensure confidentiality.
As malware (Emotet)(*1) infection spreads rapidly in Japan, the Group’s information system has been exposedto cybersecurity threats, including cyberattacks or fraudulent access, in recent months. To minimize system risk,
ES-CON JAPAN has revamped its security environment, including enhancing employee training and conducting
security training programs periodically.
Should personal information be leaked due to unforeseen circumstances, however, the Group’s sales could
fall due to its ruined credibility or compensation for damages may arise, and such may affect the Group’sbusiness performance.
*1 Malware is a general term for malicious software, combining these two words. Emotet is malware that downloads a variety ofmalicious software in addition to stealing information. It is found to be attached to suspicious emails by malicious people, which
accelerates the spread of infection.

(7) Climate Change Risks
A society where there is increasing climate damage is assumed for the future, and the increasing risk on
business continuity caused by climate change may have an impact on ES-CON JAPAN’s management results
and financial position.
In June 2022, ES-CON JAPAN endorsed the recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD) which assess the financial impact of risks and opportunities from climate change
on management and encourages companies to issue relevant disclosures. We disclose information on theimpact of climate change on our business based on the TCFD framework.
For details, please see (2) Explanation of Operating Results; 8) Endorsement of TCFD recommendations
and information disclosure.
(8) Legal Violation Risks
Should an employee or officer of the Group or ES-CON JAPAN violate any relevant laws as the Group conducts
business (including the Companies Act, Real Estate Brokerage Act, Construction Industry Act, Licensed
Architect Act, Financial Instruments and Exchange Act, Act on the Protection of Personal Information, Money
Lending Business Act, Act on Advancement of Proper Condominium Management, Labor Standards Act, andEmployment Security Act), administrative discipline may be imposed by the authorities concerned. In this case,due to the Group’s ruined social credibility and compensation for damages, its financial position, businessperformance, and reputation in the market may be affected.
(2)

Explanation of Operating Results
In the first three quarters of the fiscal year ending December 2022, despite the remaining effect of COVID-19
infections, economic and social activities invigorated and returned to normal increasingly and mild economic recovery
continued due to the easing of movement restrictions, etc.
In the real estate industry to which the ES-CON JAPAN Group belongs, the real estate market remained robust
and investors’ appetite for investment remained strong both domestically and abroad with housing demand being
pushed up by work-style reform and new lifestyles such as working from home, partly due to the supportive effect of
the continuation of monetary easing measures. On the other hand, we continue to clearly see rising construction
costs due to soaring raw material prices, delivery delays of materials due to the shortage of components, theintensifying competition over property acquisition and increasing acquisition prices and the like, and the situation stillrequires close attention to the effect of these on the market.
Regarding prospects, there exist many downside factors to the economy, including the supply shortage ofresources and other materials on the back of the deteriorated situation in Ukraine, the surging prices due to theweaker yen, the lockdown of major Chinese cities due to the country’s the zero-COVID policy, and the upward trendof interest rates with the U.S. and many countries pursuing a tight monetary policy. The future trend of the real estatemarket remains uncertain and we need to continue developing the real estate business prudently.
Amid these highly unpredictable business circumstances, ES-CON JAPAN aims for sustainable growth by building
a firm management base that can withstand any economic environment to maximize its corporate value under the
fourth medium-term management plan “IDEAL to REAL 2023” (the 3-year period from fiscal year ended Dec. 2021
to fiscal year ending December 2023) formulated in February 2021, with the basic policy: “Transformation and Rapid
Progress.”-3-

In fiscal 2021, the first year of the fourth medium-term management plan, ES-CON JAPAN implemented a capitalincrease through third-party allotment with Chubu Electric Power Co., Inc. (hereinafter “Chubu Electric Power”) as
the allotee and became a consolidated subsidiary of Chubu Electric Power. This has realized various synergistic
effects, such as the progress of cooperation and collaboration with Chubu Electric Power Group companies indevelopment of condominiums and vertical farms. In October 2021, ES-CON JAPAN made Picasso Co., Ltd., whichowns numerous prime revenue-generating properties, and its seven group companies (hereinafter “Picasso Group”),
its subsidiaries. Through this and other initiatives, we steadily promoted the enhancement of our financial base andtransformation to a sustainable and stable revenue structure.
As a result of these, we received credit ratings of “A-” (stable) from Rating and Investment Information, Inc. in July
2021, and “A+” (stable) from Japan Credit Rating Agency, Ltd. in September 2022, which is an upgrade from “A”(stable) in July 2021. We were also selected as a constituent of JPX-Nikkei Index 400 for FY2022 (August 31, 2022
to August 30, 2023) continuing from FY2021. Against the backdrop of obtaining this evaluation, we are establishinga system enabling active and flexible consideration of a variety of investment opportunities, such as entering into
commitment line agreements with financial institutions and registering the issuance of bonds.
Through these measures, in the fiscal year under review, the second year of the fourth medium-term management
plan, ES-CON JAPAN is performing well for the achievement of the plan to post a record profit.
We are also continuing to work on initiatives in which we can contribute to regional revitalization through business,while also focusing on the enhancement of our organizational strength.
“ES CON FIELD HOKKAIDO,” the new stadium for the Hokkaido Nippon-Ham Fighters under construction in
Kitahiroshima City, Hokkaido, will be completed in December 2022, and is scheduled to commence operation in
March 2023. ES-CON JAPAN is participating in the urban development scheme for Hokkaido Ballpark F Village (total
development area: approx. 36.7 ha; hereinafter “F VILLAGE”) centered on the stadium, and has been working on
the development of a condominium for sale “Le JADE Hokkaido Ballpark” (Kitahiroshima City, Hokkaido Prefecture;
118 units in total) and senior residences. Furthermore, as a project partner for the JR Kitahiroshima Station “Train
Station West Exit Area Revitalization Project,” we are also conducting development around the station which isgarnering further attention as an important point of access to F VILLAGE. We will continue working on the project tocreate bustle throughout Kitahiroshima City.
Recognizing the importance of further enhancement of human capital—that is, our employees and their knowledge,
skills, talents, and the like—for the realization of sustainable growth and improved corporate value, we haveestablished a policy on human resource development and started preparation for disclosure on human capital-related
matters. At the same time, we will focus on improving our essential corporate value that cannot be measured solely
by financial information through the production of effects of our initiatives such as the general business operator
action plan under the Act on the Promotion of Female Participation and Career Advancement in the Workplaceformulated in December 2021 (target period: January 1, 2022 to December 31, 2024) and the establishment of the
Health & Culture Fostering Team for further promotion of health management.
We will continue making efforts with everyone united as one aiming for “Rapid Progress” in the fiscal year underreview and fiscal 2023, the final year of the fourth medium-term management plan, and will strive for achieving further
growth in fiscal 2024 and beyond.
1)

Progress of the Fourth Medium-term Management Plan “IDEAL to REAL 2023”
As mentioned above, in fiscal 2021, the first year of the fourth medium-term management plan, ES-CON JAPAN
made the Picasso Group its subsidiaries. This helped the ES-CON JAPAN’s investment plan make progress at apace exceeding that in the initial plan, thereby “transforming” the revenue structure with a single stroke by ensuring
stable rental revenues. Consequently, ES-CON JAPAN modified part of management index for the final year of themedium-term management plan, fiscal year ending Dec. 2023, including the share of profits from leasing. The
details of the modification are described in the following “5. Management Targets.”
By achieving this “Transformation,” ES-CON JAPAN hopes to post a record profit during the current and next
fiscal years, thereby aiming for further “Rapid Progress.”-4-

The details of the fourth medium-term management plan are as follows.
1. Basic Management Strategy Policies
・ Establishing business foundations able to withstand unexpected changes in economic conditions
Establish a solid business and financial base that can maintain its 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. At the same time, diversify the business and expand the regions of operation.
2. Basic Policy: Transformation and Rapid ProgressTransformation
・ Proactive investment in long-term revenue-generating real estate and improvement of balance sheet structure
・ Transforming the focus of management from flows to stock
Rapid Progress・ Demonstrating synergies in 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)
3. Management Strategies
・ Transformation to a stable and sustainable revenue structure
・ Stable growth of existing core businesses through business diversification and area strategies
・ Growing new businesses into core businesses through business diversification and area strategies
・ Take on the challenge 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
4. Performance Plan
Fiscal year ended
Dec. 2021
Actual(Unit: million yen)
Fiscal year ending
Dec. 2023

Fiscal year ending
Dec. 2022
First three quarters
Full fiscal year
ActualPlan

Plan

Net sales

79,01750,582100,000

110,000

Operatingincome10,381

6,212

14,00016,0005. Management Targets
Fiscal year
ended Dec.
2021

Fiscal year
ending Dec.
2022

ActualPlan

Fiscal year
ending Dec.
2023
Revised plan*4

Initial plan

Percentagechange frominitial plan

Share of profits from leasing*1

21.2%

26.0%

30.0%

26.0%

4.0%

Return on equity (ROE)

11.8%

13.0%

13.0%

13.0%

－

Return on invested capital(ROIC)*2

3.2%

4.0%

4.0%

4.0%

－

Equity ratio

24.8%

23.0%

21.0%

23.0%

(2.0%)

Share of long-term earnings
from real estate*3

20.6%

21.0%

23.0%

18.0%

5.0%

Net assets

62.6 billion yen 67.3 billion yen 72.0 billion yen 72.0 billion yen-5-－*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 + Interest-bearing
liabilities)*3. Share of long-term earnings from real estate: Real estate generating leasing revenues recorded as noncurrent assets / Total assets*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 plans ahead of scheduleand securing stable leasing income, and “share of profits from leasing,” “equity ratio,” and “share of long-term
earnings from real estate” for the fiscal year ending December 2023 were revised on March 25, 2022.
6. Investment Plan
Fiscal year ended
Dec. 2021

Fiscal year ending
Dec. 2022

Fiscal year ending
Dec. 2023

ActualPlan

Plan

Investment in revenuegenerating real estate
Investment in otherdevelopment
Gross investment
2)(Unit: million yen)Three-year
cumulative total
Plan

76,79940,00060,000130,000

19,191

30,00035,00090,00095,99070,00095,000220,000

Status of Demonstration of Synergy Effect with Chubu Electric Power GroupIn April 2021, ES-CON JAPAN became a consolidated subsidiary of Chubu Electric Power, and a variety ofsynergies have been created, such as the proactive conducting of business in the Chubu area.
As joint projects with Chuden Real Estate Co., Inc., we are engaged in condominium/commercial facility
development projects in Shirakabe, Higashi Ward, Nagoya City; Ichinomiya City, Aichi Prefecture; Kakegawa City,
Shizuoka Prefecture; and Suita City, Osaka Prefecture.
In August 2022, a consortium of businesses led by Chubu Electric Power of which ES-CON JAPAN is a member(hereinafter “Consortium”) concluded a basic plan agreement on a project organized by Aichi Prefecture and thecity of Nagoya concerning utilization of the site of the 20th Asian Games Aichi-Nagoya 2026 Athletes’ Village after
the games as a joint project with Chubu Electric Power. 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” sought by Aichi
Prefecture and concluded an agreement on the promotion of the utilization of wood in public buildings with Aichi
Prefecture, the first of its kind in the prefecture, in September 2022.
Furthermore, we established TSUNAGU Community Farm LLC with Chubu Electric Power and Spread Co., Ltd.
(hereinafter “Spread”), and are building 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. By combining Chubu Electric Power’s
knowledge in energy management with our real estate development capabilities and Spread’s cultivation technology,
we will efficiently and stably strive to produce “safe and secure” lettuce with the aim of commencing 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 a “new form of community.”

3)

Progress of Projects in Hokkaido
As mentioned above, ES-CON JAPAN is participating in the urban development scheme for Hokkaido Ballpark F
Village centered on “ES CON FIELD HOKKAIDO,” the new stadium for the Hokkaido Nippon-Ham Fightersscheduled to commence operation in March 2023 and has entered into a naming rights agreement for the newstadium.

-6-

In February 2022, as the first project in the F VILLAGE urban development concept, and the only condominium
development project in the F VILLAGE, we commenced sales of “Le JADE Hokkaido Ballpark” (Kitahiroshima City,
Hokkaido Prefecture; 118 units in total). The property is a project in a rare location approximately 80 meters fromthe outfield stands of the new stadium and also allows enjoyment of Hokkaido’s rich nature, while bringing the idealof “living in a ballpark” into reality. The number of visits to the condominium gallery exceeds 700, and both the firstand second phases of sales sold out immediately, with contracts progressing for 108 of the 118 units, indicating ahigh level of interest from within and outside Hokkaido. The property has attracted attention from media within andoutside Hokkaido and received many information requests and visits from around Japan. It was contracted to sellout early in September 2022.
Furthermore, in February 2022, we began development of a senior residence in the southeastern corner of F
VILLAGE. It is scheduled for completion in spring of 2024 as a residence for active seniors constructed alongside
a medical mall. This initiative is part of sustainable urban development to create places for multigenerational
interaction, and will create housing that is blessed with nature and enables full enjoyment of sports and activities,
contributing to the health maintenance of people of all ages from the young to the elderly, and to regional healthcare.
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, which is gaining increased attention as animportant access point for F VILLAGE. We acquired part of the development site for the project in November 2021,
and it is used for three development projects: a station square in front of JR Kitahiroshima Station, an exchange
center complex comprising commercial facilities and a hotel, and a three-dimensional indoor/outdoor plaza and park.
Of the development projects on the site, we aim to complete the commercial facilities, etc. in FY2024, and aresteadily conducting development in front of the station.
Beyond Kitahiroshima City, in January 2022, we began sales of “Le JADE Sapporo Motomachi” (Higashi Ward,
Sapporo City; 39 units in total), our first condominium within Sapporo City, and are also making steady progresswith projects in Hokkaido, such as condominium development, etc. in Higashi Ward, Sapporo City.
We will continue to cooperate in the promotion of sports and culture and contribute to the revitalization anddevelopment of Kitahiroshima City and by extension the entire Hokkaido region for the happiness of its residents.
4)

Initiatives Aimed at Regional Revitalization through Real Estate Development
Setting a goal of development that integrates “retail, office, and residential” in front of the station, we opened “tonarie
CREO” at “tonarie Tsukuba Square,” a redevelopment project consisting of commercial facilities and offices in frontof Tsukuba Station in Ibaraki Prefecture, in phases. On the land adjacent to it, we have developed the condominium“Le JADE Tsukuba Station Front (Tsukuba City, Ibaraki Prefecture; 218 units in total),” and sold all units with delivery
scheduled for November 2022.
In February 2022, we also launched construction of 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. This project will
carry out redevelopment to create a further bustling atmosphere around the station. For the residential building, theplan is to develop a next-generation condominium that anticipates multi-generation residences under measures
such as establishing residential units with barrier-free specifications (55 units), as the highest seismic isolation
structure tower condominium in Iwaki City named “MID TOWER IWAKI.”In March 2022, we entered into a basic agreement with Omura City regarding the “Shin-Omura Ekimae City
Owned Land Development Project” in Omura City, Nagasaki Prefecture, together with Daiwa House Industry Co.,
Ltd., and Izumi Co., Ltd., as a member of a business group composed of the three companies. With Shin-Omura
Station on the Nishi-Kyushu Shinkansen line opening in September 2022, the project is to develop condominiums,
commercial facilities, etc. where residents and visitors from outside the city can interact with each other in line withthe town development policy of Omura City. ES CON JAPAN is scheduled to be engaged in development ofcondominiums in two blocks.
In March 2022, we started development of a community-based shopping center “tonarie Hoshida (tentative name)”(Katano City, Osaka Prefecture) with Takara Leben Co., Ltd. (present MIRARTH HOLDINGS, Inc.). This facility isscheduled to open in the spring of 2023 as the tenth facility in our commercial facility brand “tonarie” series.
In June 2022, at a project site on the Itoshima Peninsula in the western part of Fukuoka Prefecture, which issurrounded by nature and enjoys access to a variety of activities such as swimming and surfing, we commenced
the first hotel development in the area with LANDIC Hotel & Resort Co., Ltd.
-7-

Also in August 2022, we started the development of a clinic mall including seven medical treatment subjects(scheduled) at a location in Himeji City, Hyogo Prefecture, where the development of welfare facilities centered ona new hospital, which is scheduled be opened in early 2023, is planned as a “medical/nursing care zone.” As
represented by this example, as a general developer we are working on development of diverse real estate
properties that are closely associated with their local communities.
5)

Efforts to Promote Diverse Condominium Development and Provide Secure Housing
We are not simply expanding the number of units, but also providing a diverse range centered on product plans thatdraw out the full value of sites purchased.
In October 2022, “Ost Residence Karuizawa” (Karuizawa-machi, Kitasaku-gun, Nagano Prefecture; 33 units intotal), which we developed on a location surrounded by the abundant nature of Karuizawa, won the Good DesignAward for fiscal year 2022 for the recognition of its high-quality product planning. As another example, we haveacquired two project sites in Hayama-machi, Miura-gun, Kanagawa in an effort to develop condominiums that fully
utilize the abundant natural environment such as the Morito Coast. In this way, we have been promoting productplanning with high added value leveraging locational characteristics.
Furthermore, we are engaged in diverse projects in rare locations in central Tokyo such as the acquisition of a
project site (Minato Ward, Tokyo, “Repro Shimbashi Project” (tentative name)) located near JR Shimbashi Stationin August 2021, development of “Le JADE Cross Chiyoda Jimbocho” (Chiyoda Ward, Tokyo; 50 units in total)
adjacent to the Toho Gakkai Building designated as an historic building as an important building for the scenic
development of Chiyoda-ku, Tokyo, and promotion of a condominium project (with partial ordinary leasehold rights)
at a project site (“Minato-ku Nishiazabu 2-chome Project (tentative name)”) located in Nishiazabu, Minato-ku, Tokyo.
In addition, in December 2021, we formulated the IDEAL CONPASS quality management guideline clarifying our
uncompromising attitude to improving quality related to condominium development to date as a company creating“lifelong items” in the form of housing. Furthermore, in May 2022, we began providing the Escon Premium After
Support long-term after-sales service supporting the lifestyles of people living in condominiums, and will continue
to provide housing that makes our customers feel safer, more secure and more comfortable.

6)

Implementation of Strategic M&As
As mentioned above, ES-CON JAPAN made the Picasso Group engaged in the real estate leasing and otherbusinesses its subsidiaries in October 2021. Picasso Co., Ltd. was founded in 1991 in Osaka City, and along with
its group companies, it is engaged in the real estate leasing business mainly in the Kansai region. It owns numerous
high-quality revenue-generating assets such as rental apartments and office buildings. The acquisition ofsubsidiaries will rapidly progress the “transformation” of the revenue structure in the fourth medium-term
management plan by enhancing the real estate leasing business and securing stable revenues, and thus we believe
it will contribute dramatically to the sustained growth of the ES-CON JAPAN Group.
In January 2022, ES-CON JAPAN acquired shares of FUEL Inc., which manages online funds and provides
computer systems to specified joint real estate venture-type crowdfunding businesses, to make it a subsidiary. ESCON JAPAN will expand its business domain, and also make possible the rapid establishment of a system that will
enable it to take on the challenge of new real estate digital transformation (DX) businesses (such as ST and CF(*2))
5 to 10 years in the future.
We will continue to discuss positively with companies, etc. that are thinking of business succession, and willcontinue to actively consider M&A projects that do not appear in the market, with an aim to enhance the Group’sbusinesses and expand its domain.
*2 ST (Security Token) refers to investment management through the issuance of digital securities using blockchain technology.
CF (Crowdfunding) is a method of calling for funding from a large number of unspecified people via the Internet and raising funds
from those who agree with the purpose.

7)

Taking on the Challenges of New Business Domains
We are promoting diversification of business contents by stating “growing new businesses into core businesses”
and “taking on the challenges of new business domains” in the fourth medium-term management plan. In January2022, we established the Strategic Business Division, and by this, we are accelerating efforts for future generations.
ES-CON JAPAN has been promoting sales of permanent use rights of Ryomon, an urban-type columbarium in
Minato Ward, Tokyo, since March 2021 in an effort to solve a problem facing modern society, namely the difficultyin obtaining graves particularly in inner-city areas, while aiming for developing into a new area of real estate business.

-8-

In December 2021, we entered into a basic agreement on the world’s most advanced housing development with
Serendix Inc., a company that aims to develop “Sphere,” the world’s most advanced house using 3D printing
technology originating from Japan, and invested in the company. We will cooperate in research toward thedevelopment of Sphere and, in the future, apply the Sphere technology to fields other than housing such as stores,
offices, and warehouses.
In addition, we are also engaged in multiple businesses overseas while carefully assessing the impact of the
spread of COVID-19. Most recently, in March 2022, we invested in Agya Ventures Fund L.P., a fund that makes
specialized investment in real estate-related venture companies and managed by Agya Ventures Fund (GP) LLC of
the U.S. Through this investment, we will strengthen information collection of promising real estate tech(*3)
companies overseas, and strive to build partnerships and develop joint ventures with promising overseas real estatecompanies that have not yet entered Japan. The purpose is to lead these into the further expansion of the Group’sbusiness domain and the creation of innovation.
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.
*3 Real estate tech indicates efforts to use technology to solve problems in the real estate industry and change traditional businesspractices.

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 the
TCFD framework recommendations calling for analyzing risks and opportunities presented by climate change andpromoting disclosure on them. The ES-CON JAPAN Group declared its endorsement of the TCFD in June 2022.
Please visit our website (https://www.es-conjapan.co.jp/esg/environment.html) for more information disclosures
based on the TCFD Recommendations (governance, strategies, risk management, indicators and targets on climatechange risks and opportunities).
Risks and opportunities of the 1.5°C scenario (in which decarbonization will advance further) and the 3°C scenario(in which decarbonization will not progress from the current level), financial implications looking toward 2030, andan overview of strategies based on each scenario are detailed below.

-9-- Risks and opportunities in the 1.5°C and 3°C scenarios, and the financial implications looking toward 2030
Classification

Policy andRegulations

Transition
Risks
MarketReputation

Physical
Risks

UrgentProducts/
Services

MarketOpportunities

Resilience

Risks/Opportunities relating to
ES-CON JAPANFinancial impact

Procurement prices for steel,cement, and other highly carbonintensive construction materials rise;costs increase due to taxing of CO2
emissions from property
construction and owned properties.

-

Costs increase for low-carbon
measures such as investments inenergy-saving equipment.
Operational and renovation costs forowned properties also rise.
Properties that do not comply with
ZEH or ZEB standards are nolonger chosen by customers,
resulting in higher vacancy rates,
lower closing rates, rents, and sales
prices.
Lack of decarbonization efforts atreal estate held and real estate forsale increases finance costs. Failure
to meet investor expectations withregard to decarbonization activities
affects ES-CON JAPAN’s shareprice.
On-site construction of properties
under development is disrupted;
construction schedules are delayed.
Owned properties located indisaster-prone areas may see
property damage, equipment failure,and other functional issues resulting
from disasters. This could lead tothe need for repair costs andreduced property reputation that
may result in increased vacancy
rates. In addition, ES-CON JAPANmay be held liable for humancasualties attributable to disasters at
commercial facilities.
Competitiveness of properties with
low CO2 emissions grows. The
reputation of buildings withenvironmental certification
increases.
Compact cities contribute to
reduced travel distances andexpand opportunities for mixed-use
urban area development, allowing
energy to be produced locally for
local consumption and a wide range
of generations to coexist and enjoya high quality of life.
Decarbonization efforts arerecognized by financial institutions;the acquisition of environmentallyfriendly loans reduces financing
costs. The improved reputation of
ES-CON JAPAN for decarbonization
boosts share prices.
Sales opportunities for disasterresistant properties expand indisaster-prone areas. The ability toserve as a local recovery center inthe event of disasters helps gain the
support of local residents andcustomers, leading to lower vacancy
rates.

-- 10 -

-

-

-

-

-

-

-

-

-

-

Increase inprocurement
costs formaterials
Increase in costs
related to CO2emissions
Increase in costs
for capital
investment andrenovations, etc.
Decrease insales due tolower rents andsales prices

Assessment of
Financial Impact
3°C
1.5°C
Scenario
Scenario

Low

Moderate

Low

High

Low

Moderate

Low

High

Increase infinancing costs

Increase inconstruction
costs
Repair costs
required
Decrease insales due tohigher vacancy
rates
Compensation
obligations

Increase in sales
due to improved
competitivenessof properties
Increase in sales
due to increased
opportunities formixed-usedevelopment

High

High

Low

Moderate

Low

High

Low

High

Lower financing
costs

Increase in sales
due to expanded
property sales
opportunities
and lower tenantvacancy rates

Moderate- Strategies based on scenario analysis
We plan to further consider measures for risks/opportunities that pose especially significant impact on ourbusiness based on the results of scenario analysis and financial impact assessments.
<Examples of response measures>
・ Increase percentage of electricity use from renewable energy sources.
・ Promote installation of LED lighting and other energy-saving equipment/devices among commercial facilities.
・ Further promote ZEH-M development.
・ Promote improvement of environmental performance evaluation by acquiring DBJ Green Building certification
and CASBEE for Real Estate Certification.
9)

Status of ESG Initiatives
One of our key management strategies is addressing social issues through ESG promotion. The “ESG Promotion
Group,” and the “Health & Culture Fostering Team” for further promotion of health management, lead ESG initiatives.
The contents of the most recent major initiatives are as follows.
1. 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(*4) 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, obtained DBJ Green Building Certification from Development Bank of Japan Inc. Our group as awhole is working to improve the value of the facilities, and the above six properties are being operated andmanaged by our subsidiary ES-CON PROPERTY Ltd.
*4

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 thebuilding and its visual impact on the area.

・Continuous and Proactive Development of Environmentally Friendly ZEH-compatible Housing
In August 2022, ES-CON JAPAN acquired ZEH(*5)-M Oriented certification for its condominium, “Le JADE
Honkawagoe Koedo Terrace” (Kawagoe City, Saitama Prefecture; 102 units in total). The property features
excellent heat insulation 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
the Good Design Award for fiscal year 2021, and “Le JADE Yao Sakuragaoka” (Yao City, Osaka Prefecture; 72
units in total) which was contracted to sell out 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., which are consolidated
subsidiaries of ES-CON JAPAN, were registered for ZEH Builder Certification.
*5

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 Use of Wood in the Project Concerning Utilization of the Site of the 20th Asian Games AichiNagoya 2026 Athletes’ Village
As mentioned above, the Consortium has entered into the “agreement on the promotion of the utilization of woodin 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.
- 11 -

・Awarded Osaka Eco-Friendly Construction Award, Residential Section
In January 2022, the condominium “Le JADE Senri Aoyamadai (Suita City, Osaka Prefecture; 152 units in total)”
won the Osaka Eco-Friendly Construction Award, Residential Section for the fiscal year 2021 (hosted by Osaka
Prefecture and Osaka City). This was the first time for the Company to win the award which recognizes clientsand designers of construction projects that are exemplary in terms of environmental consideration of buildings
under the aim of promoting the spread of environmentally friendly buildings and raising awareness amongresidents of Osaka Prefecture.
2. Social (S)・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, in March 2022 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. will contribute to the further
development of the city. In July, we received a letter of gratitude from the city. The funds will be utilized to maintaina 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 andaccidents.
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, on which the school has beenworking, for the purpose of research of cancer immune therapy.
・Contribution to Sports Promotion
In April 2021, we invested in Ryukyu Football Club Co., Ltd. (hereinafter “Ryukyu FC”) which operates FC
Ryukyu, a professional soccer team. With this investment, we will contribute to the local community throughsports promotion by securing a foothold for the creation of business opportunities in Okinawa while at the sametime supporting Ryukyu FC’s regional revitalization activities in Okinawa Prefecture.
3. 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. We have secured impartiality andtransparency concerning director election and remuneration.
・Nurturing Successors
We also launched initiatives for a succession plan called the candidate successor system. We appointed a totalof eight employed executive officers in January 2022.
・Diversity of the Board of Directors
In order to secure diversity of the board of directors, four independent directors (of which, one is female), whichis half of the number of directors, are appointed. In addition, we have created a diverse board composition of acertified public accountant, tax accountant and attorney, a director experienced in corporate management and asecurities analyst.
・Establishment of Compliance Office
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”) with utmost seriousness.
The purpose of the Compliance Office is to strengthen legal compliance and internal control systems and tomonitor every aspect of transactions with related parties, as well as establish a framework for managing any
conflicts of interest that arise, in order to prevent the recurrence of such incidents. The newly establishedCompliance Office is led by a Compliance Officer (Kenji Fujita, Director and Head of President’s Office), and will
work to clarify management’s stance on legal compliance at ES-CON JAPAN and the ES-CON JAPAN Group
as a whole and to strengthen awareness of compliance management issues.

- 12 -

4. 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”(*6) rating for the
fourth consecutive year.
*6 “Green Star” in the “Development Benchmark” is given to participants whose score is 50% or more in the absolute assessment
based on the two main points, which are “Management Component” and “Development Component.”

10) Administrative Disposition for ES-CON Asset Management Ltd.
On July 15, 2022, the Commissioner of the Financial Services Agency implemented an administrative disposition,
which consists of injunctions to suspend business operations and to institute improved practices targeting ourconsolidated subsidiary EAM. In response, EAM formulated a report on improved practices, which was submitted
to and accepted by the Commissioner of the Financial Services Agency on August 15, 2022. For more informationon the report on improved practices, please refer to the press release “Notice Concerning Submission of Business
Improvement Plan by ES-CON ASSET MANAGEMENT Ltd.” announced on August 15, 2022.
ES-CON JAPAN, which is EAM’s parent company and the main sponsor of ES-CON JAPAN REIT Investment
Corporation, for which EAM serves as asset manager, took this administrative disposition on EAM seriously andrecognized it as an important issue for our group as a whole, and established the Compliance Office as mentioned
above. In addition, we also plan to formulate “regulations on purchase and sale with stakeholders” to rectify theinadequacies of the system for managing conflicts of interest. Understanding the background to and root causes ofthis matter, we will continue to exert every effort to prevent the recurrence of such events based on thoroughenhancement of our approaches to compliance and internal control of all members of the ES-CON JAPAN Group,
not just at EAM, as well as the steadfast implementation of improvements as the parent company of EAM and themain sponsor of ESCON JAPAN REIT.
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, we have commenced selling of new sales projects including “Le JADE
Sapporo Motomachi” (Higashi Ward, Sapporo City; 39 units in total), “Le JADE Shitennoji Yuhigaoka” (Tennoji Ward,
Osaka City; 52 units in total), “Le JIAS Ohashi” (Minami Ward, Fukuoka City; 140 units in total), “Le JADE Takatsuki
Minami Matsubara Bright” (Takatsuki City, Osaka Prefecture; 81 units in total), “Le JADE Matsudo Station Front”(Matsudo City, Chiba Prefecture; 44 units in total), “Le JADE Fushimi Momoyama” (Fushimi Ward, Kyoto City; 73
units in total), “Le JADE Cross Chiyoda Jimbocho” (Chiyoda Ward, Tokyo; 50 units in total), “Le JADE Midoribashi
Ekimae” (Higashinari Ward, Osaka City; 48 units in total), “Le JADE Kanayama” (Naka Ward, Nagoya City; 43 units
in total), “Le JADE Nagai Park Avenue” (Sumiyoshi Ward, Osaka City; 52 units in total), “Le JADE Kyoto
Higashinotoin” (Shimogyo Ward, Kyoto City; 42 units in total), “Le JADE Honkawagoe Koedo Terrace” (Kawagoe
City, Saitama Prefecture; 102 units in total) and “Le JADE Itabashi Honcho” (Itabashi Ward, Tokyo; 55 units in total).
Regarding the progress of sales, nine properties, namely “Le JADE Uehonmachi” (Tennoji Ward, Osaka City; 56
units in total), “Le JADE Nishinomiya Kitaguchi Hinokuchicho” (Nishinomiya City, Hyogo Prefecture; 94 units in total),“Le JADE Tennoji Katsuyama” (Tennoji Ward, Osaka City; 39 units in total), “Le JADE Senri Furuedai” (Suita City,
Osaka Prefecture; 71 units in total), “Le JADE Suma Myohoji Ekimae” (Suma Ward, Kobe City; 40 units in total),“Le JADE bio Makuhari Hongo” (Hanamigawa Ward, Chiba City; 70 units in total), “Le JADE Takatsuki Nishimakami”(Takatsuki City, Osaka Prefecture; 43 units in total), “Mirakita City Himeji” (Himeji City, Hyogo Prefecture; 143 units
in total), “Le JADE Senri Aoyamadai” (Suita City, Osaka Prefecture; 152 units in total) were sold out and “Le JADEYao Sakuragaoka” (Yao City, Osaka Prefecture; 72 units in total) and “Le JADE Hokkaido Ballpark” (Kitahiroshima
City, Hokkaido Prefecture; 118 units in total) were contracted to sell out, and sales and delivery have been smoothly
progressing.
In addition, we are expanding our business area by steadily establishing business foundations in the five majorurban areas of Kanto, Kansai, Chubu, Kyushu, and Hokkaido, including the progress of the condominium businessin Hokkaido, and the sales of our first condominium in Kyushu “Le JIAS Ohashi” (Minami Ward, Fukuoka City; 140
units in total).
- 13 -

In the real estate leasing business, we made the Picasso Group our subsidiaries as mentioned above, thereby
securing stable earnings by strengthening the leasing business.
In other areas, a pop-up store of “MUJI” in “tonarie Minami-Senri Annex” opened in November 2021 became thestore boasting the largest sales floor area in the Kansai region in April 2022. We also acquired “Aisai Plaza” (Aisai
City, Aichi Prefecture), “Selection Aobadai” (Kashiwa City, Chiba Prefecture), and a commercial leasehold land
located in Tochigi City, Tochigi Prefecture. As such, we are making steady progress in strengthening our leasing
business. In addition, aiming to transform to a stable and sustainable revenue structure, we are also working todevelop and acquire commercial facilities and secure stable rent income from and improve the asset value of ourcommercial facilities, as represented by the promotion of renewal in “tonarie Utsunomiya” (Utsunomiya City, Tochigi
Prefecture) through tenant replacement and the development of the aforementioned “tonarie Hoshida (tentativename).”In the real estate planning agency and consulting business, we have started selling permanent use rights forcolumbaria. Leveraging our strength in planning, we are focusing on non-asset, high-margin businesses, such as
the commissioning business and the planning agency and consulting business.
As a result, ES-CON JAPAN achieved net sales of 50,582 million yen (up 16.0%), operating income of 6,212
million yen (up 28.1%), ordinary income of 5,319 million yen (up 32.5%) and profit attributable to owners of parentof 3,393 million yen (up 16.7%) for the first three quarters, all compared with the same period of the previous fiscal
year.
The following describes the operating results by each segment (comparisons are with the same period of theprevious fiscal year).
1)

Real estate sales businessIn the real estate sales business, activities included selling condominiums and revenue-generating real estate
resulted in net sales of 41,719 million yen (up 9.3%) and segment income of 7,560 million yen (up 8.6%).

2)

Real estate leasing businessIn the real estate leasing business, focus was placed on leasing activities and the property managementbusiness in view of enhancement of asset value, including increase in rental income of owned revenuegenerating real estate, resulting in net sales of 8,489 million yen (up 65.6%) and segment income of 3,250

3)million yen (up 52.9%).
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 abilities in
multifaceted business development, resulting in net sales of 372 million yen (up 10.0%) and segment incomeof 31 million yen (segment loss of 446 million yen in the same period of the previous fiscal year).

(3)

Explanation of Financial Position
Assets at the end of the third quarter increased by 23,035 million yen compared with the end of the previous fiscal
year to 275,806 million yen. This was mainly attributable to cash and deposits and property, plant and equipment
decreasing by 2,001 million yen and 542 million yen, respectively, and inventories increasing by 25,130 million yen.
In the third quarter of the fiscal year ending December 2022, a part of property, plant and equipment amounting to
1,405 million yen (buildings and structures and land) was transferred to real estate for sale in process due to thechange in the purpose of holding.
Liabilities increased by 23,873 million yen compared with the end of the previous fiscal year to 214,016 million
yen. This was mainly attributable to long-term loans payable and short-term loans payable increasing by 23,284
million yen.
Net assets decreased by 838 million yen compared with the end of the previous fiscal year to 61,789 million yen.
This was mainly attributable to cash dividends paid of 3,669 million yen, while recording profit attributable to ownersof parent of 3,393 million yen. As a result, the equity ratio was 22.5% (24.8% at the end of the previous fiscal year).

- 14 -

(4)Explanation of Consolidated Earnings Forecast and Other Forward-Looking Information
The consolidated earnings forecast remains unchanged from the forecast announced on January 27, 2022.
In addition, we are promoting our business under the fourth medium-term management plan, which is for the threeyear period from the fiscal year ended December 2021 through the fiscal year ending December 2023. The
management targets for the fiscal year ending December 2023, which is the final fiscal year of the fourth mediumterm management plan, was partially revised in March 2022, and details such as the contents of the plan are aspresented earlier in this document.

- 15 -

2.

Quarterly Consolidated Financial Statements and Key Notes(1) Quarterly Consolidated Balance Sheet
Fiscal year ended Dec. 2021
(as of Dec. 31, 2021)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
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- 16 -(Unit: million yen)
Third quarter of fiscal year
ending Dec. 2022
(as of Sept. 30, 2022)

33,667835

31,665
－

－

913

7,541
123,419
11,396(0)
176,859

3,734
152,355
11,601(0)200,271

23,312(1,516)
21,79530,840
387
(244)
142
52,77822,617(2,067)
20,55031,535
430
(279)
150
52,236

8,217
57
8,275

7,827
84
7,911

14,814(37)
14,77675,83015,371(38)
15,33375,48081
81
252,77154
54
275,806

Fiscal year ended Dec. 2021
(as of Dec. 31, 2021)
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- 17 -(Unit: million yen)
Third quarter of fiscal year
ending Dec. 2022
(as of Sept. 30, 2022)

3,589
82,912
1,653
14,368102,523

3,380
82,476361
16,275
102,494

76,533135
57
270
10,622
87,619190,143

100,461
167
98
271
10,522
111,522
214,016

16,51912,39634,745(1,216)62,445

16,51912,39934,469(1,501)
61,887

371

19

(36)

48

334

68

0
(152)
62,628
252,771

0(166)
61,789275,806

(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
Foreign exchange gains
Share of profit of entities accounted for using
equity method
Other
Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of entities accounted for using
equity method
Amortization of share issuance cost
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
ProfitLoss attributable to non-controlling interests
Profit attributable to owners of parent

First three quarters of fiscal
year ended Dec. 2021
(from Jan. 1, 2021,
to Sept. 30, 2021)
43,62032,414
11,206
6,357
4,849(Unit: million yen)First three quarters of fiscal
year ending Dec. 2022
(from Jan. 1, 2022,
to Sept. 30, 2022)
50,582
37,11813,463
7,251
6,212

10
52
17
15

0
68
37
451

106

－

13
215

8
567

989

1,396

－

28

18
41
1,049
4,015

27
8
1,460
5,319

0
0

0
0

0
0
4,015
1,333
180
1,513
2,501
(405)
2,907

0
0
5,318
1,766
172
1,939
3,379
(13)
3,393

- 18 -

(Quarterly Consolidated Statement of Comprehensive Income)

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

First three quarters of fiscal
year ended Dec. 2021
(from Jan. 1, 2021,
to Sept. 30, 2021)
2,501(Unit: million yen)First three quarters of fiscal
year ending Dec. 2022
(from Jan. 1, 2022,
to Sept. 30, 2022)
3,379

148

(352)

17

(0)

12

85

178
2,680

(266)
3,112

3,085

3,126

(405)

(13)

- 19 -

(3) 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.
(Changes in Accounting Policies)(Application of accounting standard for revenue recognition, etc.)“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020; hereinafter “Revenue
Recognition Accounting Standard”), etc. have been applied from the beginning of the first quarter of the fiscal year
ending December 2022, and we decided to recognize as the amount expected to be received in exchange for goods
or services at the time when control of promised goods or services is transferred to customers. As a result, although
the total amount of consideration received from customers was previously recognized as revenue in sometransactions, we decided to recognize the net amount arrived at by subtracting the amount paid to the supplier fromthe amount received from the customer as revenue for transactions in which the company or its domestic
consolidated subsidiaries play the role of agents in provision of goods or services to customers.
Regarding the application of Revenue Recognition Accounting Standard, etc., in accordance with the transitional
treatment stipulated in the proviso of paragraph 84 of the Revenue Recognition Accounting Standard, thecumulative effects of retrospective application of the new accounting policy, assuming it has been applied to periods
prior to the beginning of the first quarter of the fiscal year ending December 2022, has been added to or subtracted
from retained earnings at the beginning of the first quarter of the fiscal year ending December 2022, and the new
accounting policy is applied from said balance. As a result, there was no impact on the balance of retained earnings
at the beginning of the first quarter of the fiscal year ending December 2022. Furthermore, the impact of theapplication of the accounting standard on the quarterly consolidated financial statements is minimal.
Due to the application of Revenue Recognition Accounting Standard, etc., “Notes and accounts receivable trade” indicated under “Current assets” in the consolidated balance sheet for the previous fiscal year ended
December 2021 have been decided to be included in “Notes and accounts receivable - trade and contract assets”
from the first quarter of the fiscal year ending December 2022. In accordance with the transitional treatment
stipulated in paragraph 89-2 of the Revenue Recognition Accounting Standard, figures for the previous fiscal year
have not been reclassified in accordance with the new approach to presentation. Furthermore, in accordance withthe transitional treatment stipulated in paragraph 28-15 of “Accounting Standard for Quarterly Financial Reporting”(ASBJ Statement No. 12, March 31, 2020), information on the breakdown of revenue generated from contracts withcustomers for the first three quarters of the fiscal year ended December 2021 is not shown.
(Application of accounting standard for fair value measurement, etc.)“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019; hereinafter “Fair Value
Measurement Accounting Standard”), etc., have been applied since the beginning of the first quarter of the fiscal
year ending December 2022. In accordance with the transitional treatment stipulated in paragraph 19 of the Fair
Value Measurement Accounting Standard and paragraph 44-2 of “Accounting Standard for Financial Instruments”(ASBJ Statement No. 10, July 4, 2019), we decided to apply the new accounting policies set forth by the Fair Value
Measurement Accounting Standard, etc. in the future. There was no impact on the quarterly consolidated financial
statements.
(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 stated in
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 ESCON JAPAN Group may be materially impacted due to posting of appraisal loss of inventories and impairment loss,etc.

- 20 -

(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 Regular General Meeting of Shareholders
held on March 20, 2015, with an aim to further clarify the relationship between remuneration for 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 asshareholders in relation to a fall in share price, thereby increasing awareness of contribution to the mediumto long-term improvement of operating results and enhancement of corporate value. Furthermore, ES-CON
JAPAN passed a resolution for continuation and partial revision of the System for the Directors, etc. at theRegular General Meetings of Shareholders held on 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 ES-CON
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 inprinciple.
Under the System, for a set period of three fiscal years from the fiscal year ended December 2021 to thefiscal year ending December 2023 as well as each subsequent period of three fiscal years, ES-CON JAPANwill contribute 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, etc.
・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 ended
December 2020 to the fiscal year ending December 2022, and each subsequent period of three fiscal
years): 330 million yen
・Resolution passed at the Regular 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 previous fiscal year, and 347 million
yen and 851,000 shares for the third quarter of the fiscal year ending December 2022.

- 21 -

(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 ending 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 the said money as capital, and shares of ES-CON JAPAN are
granted to ES-CON JAPAN Group’s employees who have satisfied certain requirements through the trust,
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 thebook value in the trust (excluding the amount of incidental expenses). The book value of the treasury sharesand the number of shares is 57 million yen and 225,700 shares for the previous fiscal year ended December
2021, and 347 million yen and 574,000 shares for the third quarter of the fiscal year ending December 2022 .

(Changes in purpose of holding)In the third quarter of the fiscal year ending December 2022, a part of property, plant and equipment amounting to
1,405 million yen (782 million yen in buildings and structures and 623 million yen in land) has been transferred toreal estate for sale in process due to the change in the purpose of holding.
(Segment Information, Etc.)[Segment Information]
I. First Three Quarters of Fiscal Year Ended December 2021 (from January 1, 2021 to September 30, 2021)
1. Information on Net Sales and Income or Loss Amounts by Reporting Segment
Reporting segment
Real estate
Real estate sales
Real estateplanning agency
businessleasing business and consulting
business

Total(Unit: million yen)Amount onquarterly
Reconciliation consolidated(Note 1)statement ofincome(Note 2)

Net sales
Net sales toexternalcustomers

38,156

5,125

338

43,620－43,620Intersegment
net sales ortransfers

－

－

－

－

－

－

38,156

5,125

338

43,620－43,620

Total

Segment income
6,959
2,125
(446)
8,638
(3,788)4,849(loss)(Note 1) The reconciliation of segment income (loss) of -3,788 million yen is corporate expenses not attributable toany reporting segment. Corporate expenses are general and administrative expenses not attributable toreporting segments.
(Note 2) Segment income (loss) is reconciled with operating income on the quarterly consolidated statement ofincome.

- 22 -

2. Information on Impairment Loss on Non-Current Assets or Goodwill, Etc. by Reporting Segment
Not applicable.
II. First Three Quarters of Fiscal Year Ending December 2022 (from January 1, 2022 to September 30, 2022)
1. Information on Net Sales and Income or Loss Amounts by Reporting Segment and Information on Breakdown of
Revenue(Unit: million yen)Amount onquarterly
Reconciliation consolidated
Reporting segment
Total(Note 1)statement ofincome(Note 2)
Real estate
Real estate sales
Real estateplanning agency
businessleasing business and consulting
business
Net sales
Revenue fromcontracts withcustomers

41,719786

372

42,879－42,879Other items(Note 3)

－

7,702

－

7,702

－

7,702

Net sales toexternalcustomers

41,7198,489

372

50,582－50,582

Intersegment
net sales ortransfers

－

－

－

－

－

－

Total

41,7198,489

372

50,582－50,582

Segment income

7,560

3,250

31

10,841(4,629)6,212(Note 1) The reconciliation of segment income of -4,629 million yen is corporate expenses not attributable to any
reporting segment. Corporate expenses are general and administrative expenses not attributable toreporting segments.
(Note 2) Segment income is reconciled with operating income on the quarterly consolidated statement of income.
(Note 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)
Not applicable.

- 23 -

3.

Other
Status of Contracts and Sales
The performance of contracts in the real estate sales business for the third quarter is as follows:
Third quarter of fiscal year ending Dec. 2022
(from Jul. 1, 2022 to Sept. 30, 2022)
Classification

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

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

Mid- to high-risehousing, etc.

292

15,545

1,031

59,828

Other

－

1,260

－

18,781292

16,806

1,031

78,610Total

The main performance of sales by segment for the first three quarters is as follows:First three quarters of fiscal year ending Dec. 2022
(from Jan. 1, 2022 to Sept. 30, 2022)

Name of segment

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

Condominiums

630

29,678

Genboen Block 6, Koga-shi

－

5,479

Chiba Research Park

－

3,001

Nishi-Kunitachi－

373

Tsuruma Station Front－

323

Nishi-Tokorozawa

－

268

Other

－

2,597

630

41,719Subtotal
Real estate leasing business

8,489

Real estate planning agency
and consulting business

372
Total

(Note)

50,582

There are no transactions between segments.

Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event ofany discrepancy between this translated document and the Japanese original, the original shall prevail.

- 24 -