Summary of Accounts for First Two 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:July 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
July 26, 2022－
No
Yes (for analysts)(Amounts are rounded down to the nearest million yen)

1.

Consolidated results for first two quarters of fiscal year ending December 2022 (from January 1, 2022 to June 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%

million yen%

Profit attributable toowners of parent

Ordinary income
million yen%

million yen%

First two quarters of
40,876
63.6
5,641
120.2
5,136
165.6
3,296
137.4
fiscal year ending Dec. 2022
First two quarters of
24,980(54.6)
2,561(75.8)
1,934(80.8)
1,388(80.1)
fiscal year ended Dec. 2021
Note: Comprehensive income
First two quarters ofFirst two quarters offiscal year ending Dec. 2022: 3,090 million yen [126.9%] fiscal year ended Dec. 2021: 1,361 million yen [-79.9%]
Basicearnings per share

Dilutedearnings per share

yen

yen

First two quarters of fiscal
34.52
34.46
year ending Dec. 2022
First two quarters of fiscal
17.07
17.02
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 twoquarters of the fiscal year ending December 2022 are the figures after applying the accounting standard, etc.
(2) Consolidated financial position
Total assets

Net assets

million yen

Equity ratio

million yen

Book value per share%yenFirst two quarters of
275,945
62,05922.6
651.54fiscal year ending Dec. 2022
Fiscal year ended Dec. 2021
252,771
62,62824.8
657.50
Reference: Equity
First two quarters offiscal year ending Dec. 2022: 62,226 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 twoquarters of the fiscal year ending December 2022 are the figures after applying the accounting standard, etc.
2.

Dividends
End of firstquarter

Fiscal year ended Dec. 2021
Fiscal year ending Dec. 2022

Annual dividend
End of second End of third
quarterquarterYear-end

Total

yen

yen

yen

yen

yen

－
－

0.00
0.00

－

38.00

38.00

－

38.00

38.00

Fiscal year ending Dec. 2022 (Forecast)(Note) Revisions from the latest dividends forecast: None

3.

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

86.92

(Note) Revisions from the 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):－ companies (Company name) －Newly included:－ 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.:

None

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; (4)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 two 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 two quarters of2) Number of treasury shares at end of
3,074,800 Fiscal year ended
3,096,900
fiscal year ending
periodshares Dec. 2021
sharesDec. 2022
First two quarters ofFirst two quarters of3) Average number of shares during
95,494,503
81,333,676
fiscal year ending
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 board benefit
trust for executives and a share-based payment benefits-type ESOP trust (first two quarters of fiscal year
ending December 2022: 851,000 shares in the board benefit trust for executives and 214,100 shares in theshare-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 in that calculation includes
shares of ES-CON JAPAN held in the board benefit trust for executives and the share-based payment benefitstype ESOP trust (first two quarters of fiscal year ending December 2022: 1,073,860 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 14.

○ 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 .............................................................................................................................. 13(4) Explanation of Consolidated Earnings Forecast and Other Forward-Looking Information ....................................... 14
2. Quarterly Consolidated Financial Statements and Key Notes ........................................................................................ 15(1) Quarterly Consolidated Balance Sheet ..................................................................................................................... 15(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income .. 17(Quarterly Consolidated Statement of Income) ............................................................................................................. 17(Quarterly Consolidated Statement of Comprehensive Income) ................................................................................... 18(3) Quarterly Consolidated Statement of Cash Flows .................................................................................................... 19(4) 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) ................................................................................................................................................. 21(Segment Information, Etc.) .......................................................................................................................................... 23(Significant Subsequent Events) ................................................................................................................................... 24
3. Other ............................................................................................................................................................................... 25
Status of Contracts and Sales ......................................................................................................................................... 25-1-

Attachment
1. Qualitative Information on Quarterly Results(1) Business Risks
In the first two quarters of the fiscal year ending December 2022, business risks that newly arose or changed fromthose described in “2. Business Conditions; 2. Business Risks” in the previous 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 current quarterly consolidated accounting period.
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 the
securities report for the previous fiscal year was 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.)
Name of approval, Governing Details of approval,
license, etc.
agency, etc.
license, etc.
Financial
Instruments
Business(Type 2 Financial
Instruments
Business)

Financial
Services
AgencyDirector-Generalof the Kanto
Local Finance
Bureau(Financial
Instruments
Business)
No. 2123

Legal violation requirements andmain reasons for revocation of
approval and license
Obtained on January In case of registration by
26, 2009.
unauthorized means, capital
No provision for the
shortage, or potential insolvency
period of validity
in the context of business or asset
conditions, the registration may be
revoked (Article 52 of the
Financial Instruments andExchange Act).
Term of validity(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.
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.
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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, the 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 encourage 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 two quarters of the fiscal year ending December 2022, the number of COVID-19 cases surged but subsided
after March 2022 and normalization of economic and social activities and economic recovery progressed due to theeasing 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, regarding prospects, downside risks to the economy have increased as prices of materials are
surging on the back of the deteriorating situation in Ukraine, inflation is accelerating due to the yen’s sharp
depreciation, many countries, including the U.S., have switched over to a tight monetary policy, and an upward trend
for interest rates is gaining force. The future trend of the real estate market remains uncertain and we need to develop
the real estate business prudently.
Amid these highly unpredictable business circumstances, ES-CON JAPAN strives to post a record profit this year,
the second year of the fourth medium-term management plan “IDEAL to REAL 2023” (the 3-year period from fiscal
year ended December 2021 to fiscal year ending December 2023) formulated in February 2021, with the basic policy:“Transformation and Rapid Progress.”
Regarding the Group’s business performance in the first two quarters of fiscal year ending December 2022, salesof condominiums in the real estate sales business grew steadily and both sales and profit surpassed the initial
estimates.

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1)

Progress of the Fourth Medium-term Management Plan “IDEAL to REAL 2023”
Fiscal 2022, the second year of the fourth medium-term management plan, is performing well as the year of “Rapid
Progress.”
In fiscal 2021, the first year of the fourth medium-term management plan, ES-CON JAPAN acquired all shares ofPicasso Co., Ltd., which owns numerous prime revenue-generating properties, and its seven group companies(hereinafter “Picasso and seven Group companies”), making all these companies its subsidiaries. This helped ESCON JAPAN’s investment plan progress at a pace exceeding that of the initial plan, thereby “transforming” therevenue structure with a single stroke by ensuring stable rental revenues. Consequently, ES-CON JAPAN modified
part of management index for the final year of the medium-term management plan, fiscal year ending December
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 record profit during this fiscal year and next
fiscal year, thereby aiming for further “Rapid Progress.”
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 structure of sustainable and stable profit
・ 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 with 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
ActualFiscal year ending
Dec. 2022
First two quarters
Full fiscal year Plan
Actual(Unit: million yen)
Fiscal year ending
Dec. 2023
Plan

Net sales

79,01740,876

100,000

110,000

Operatingincome10,381

5,641

14,00016,000-4-

5. 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
*1
*2
*3
*4

62.6 billion yen 67.3 billion yen 72.0 billion yen 72.0 billion yen－

Share of profits for leasing: Leasing segment profits / Total segment profits (excluding adjustments)
Return on invested capital (ROIC): After-tax operating income / (Shareholders' equity + Interest-bearing
liabilities)
Share of long-term earnings from real estate: Real estate generating leasing revenues recorded as noncurrent assets / Total assets
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 longterm earnings from real estate” for the fiscal year ending December 2023 were revised on March 25, 2022.

6. Investment Plan

Investment in revenuegenerating real estate
Investment in otherdevelopment
Gross investment
2)

Fiscal year ended
Dec. 2021

Fiscal year ending
Dec. 2022

Fiscal year ending
Dec. 2023

ActualPlan

Plan(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 Co., Inc. (hereinafter“Chubu Electric Power”), and a variety of synergies have been created, such as the proactive conducting of businessin 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 February 2022, a consortium of businesses led by Chubu Electric Power of which ES-CON JAPAN is a member
concluded a basic agreement on a project organized by Aichi Prefecture and the city of Nagoya concerning
utilization of the site of the 20th Asian Games Aichi-Nagoya 2026 Athletes’ Village after the games as a joint projectwith Chubu Electric Power.
Furthermore, we established TSUNAGU Community Farm LLC with Chubu Electric Power and Spread Co., Ltd.
(hereinafter “Spread”) to build 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
strive to produce “safe and clean” lettuce efficiently and stably with the aim of commencing production in January
2024.

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Furthermore, ES-CON JAPAN received a rating of "A-" (stable) from Rating and Investment Information, Inc. and"A" (stable) from Japan Credit Rating Agency, Ltd. in July 2021, and was selected as a constituent of the JPX-Nikkei
Index 400 for FY2021 (August 31, 2021 to August 30, 2022). Against the backdrop of obtaining this evaluation, weare establishing a system enabling it to consider a variety of investment opportunities flexibly and actively, such asentering into commitment line agreements with financial institutions and registering the issuance of bonds.
We will continue to strengthen our partnership with the Chubu Electric Power Group and actively work to achieve
large-scale urban development and realize a “new form of community" while utilizing our real estate developmentknow-how and conducting investment to raise our enterprise value.
3)

Progress of Projects in Hokkaido“ES CON FIELD HOKKAIDO,” the new baseball stadium of the Hokkaido Nippon-Ham Fighters under constructionin Kitahiroshima City, Hokkaido, will be completed in December 2022, and just over half a year remains until its
scheduled commencement of operation in March 2023. ES-CON JAPAN is participating in the urban development
scheme for Hokkaido Ballpark F Village (total development are: 36.7 ha; hereinafter “F VILLAGE”) centered on thestadium, and has entered into a naming rights agreement for the new stadium.
In February 2022, as the first project in the F VILLAGE urban development concept, we commenced sales of a
new condominium for sale in Hokkaido, "Le JADE Hokkaido Ballpark.” The property is a project in a rare location
approximately 80 meters from the outfield stands of the new stadium and also allows enjoyment of Hokkaido’s richnature. The number of visits to the condominium gallery exceeds 700, and both the first and second phases of sales
sold out immediately, with contracts progressing for 108 of the 118 units, indicating a high level of interest fromwithin and outside Hokkaido.
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. The train station is garnering further attention
as an important point of access to F VILLAGE. We acquired part of the development site for the project in November
2021, and it will be 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 are steadily 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
In February 2022, we launched construction of the “Namiki no Mori City” development project, a mixed-use facilityof 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, the plan 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. As Shin-Omura
Station on the Nishi-Kyushu Shinkansen line is scheduled to open in September 2022, the project is to develop
condominiums, commercial facilities, etc. where residents and visitors from outside the city can interact with eachother in line with the town development policy of Omura City. ES CON JAPAN is scheduled to be engaged indevelopment of condominiums in two blocks.
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We are opening "tonarie CREO" at "tonarie Tsukuba Square," a redevelopment project consisting of commercial
facilities and offices in front of Tsukuba Station in Ibaraki Prefecture, in phases, and proceeding with tenant leasing
activities, etc. On the adjacent land, we developed the condominium “Le JADE Tsukuba Station Front (218 units intotal),” promoting development that integrates “retail, office, and residential” in front of the station, and sold all units
with delivery scheduled for November 2022.
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. The construction site is within the “Hoshida Station
North Land Readjustment Project” (implementation area of approx. 26.4 ha) area where development ofcondominiums, detached houses, and industrial facilities such as business establishments is planned nearby,
leading to the expectation for future prosperity. This facility is scheduled to open in the spring of 2023 as the tenthfacility in our commercial facility brand “tonarie” series.
In June 2022, we acquired a project site on the Itoshima Peninsular in the western part of Fukuoka Prefecturewith LANDIC Hotel & Resort Co., Ltd. and commenced development of our first resort hotel. The project site is in a
tourist area surrounded by nature and enjoys access to a variety of activities such as swimming and surfing. Throughthe development, we will work to contribute to stimulating the region in cooperation with local governments andsurrounding business operators.
5)

Efforts to Promote Diverse Condominium Development and Provide Secure Housing
We are not simply expanding the number of units but providing a diverse range centered on product plans that drawout the full value of sites purchased.
Recently, we have been promoting product planning with high added value in resort areas such as developmentof “Ost Residence Karuizawa” (Karuizawa Town, Kitasaku District, Nagano Prefecture; 33 units in total) surroundedby the abundant nature of Karuizawa, and acquisition of two project sites in Hayamamachi, Miura-gun, Kanagawa
Prefecture, in an effort to develop condominiums that fully utilize the abundant natural environment such as theMorito Coast.
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 a 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 we 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 Picasso and seven companies engaged in the real estate leasing andother businesses its subsidiaries in October 2021. Picasso Co., Ltd., was founded in 1991 in Osaka City, and alongwith 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 acquisitionof subsidiaries 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 addition, in January 2022, we made FUEL, whose businesses include managing online funds and providing
computer systems to crowdfunding businesses in accordance with the Act on Specified Joint Real Estate Venturesof Japan, a subsidiary for the purpose of strengthening and enhancing the ES-CON JAPAN Group’s asset
management business and also initiating participation in future real estate financing business. Taking thisopportunity, the Group will be able to enhance the quality and quantity of its existing businesses and expand its
domain in terms of human resources, functions, and systems. It will also make possible the rapid establishment ofa system that will enable it to take on the challenge of new real estate digital transformation (DX) businesses (suchas ST and CF (*2)) 5 to 10 years in the future.

-7-

We will continue to discuss positively with companies, etc. that have issues such as the absence of successors
and are thinking of business succession, and will continue to actively consider M&A projects that do not appear in
the market, with an aim to enhance the Group's businesses 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)

Take on the Challenges of New Business Domains
We are promoting diversification of business content 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 January 2022,
we established the Strategic Business Division, and through 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 problems facing modern society such as the fact thatobtaining graves is considerably difficult, particularly in inner-city areas.
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 toaddress climate change, we have selected members from management and each department to create the ESG
Promotion Group, which has worked on disclosing information based on the TCFD framework recommendations.
The ES-CON JAPAN Group announced its endorsement of the TCFD in June 2022.
Please visit our website for more information disclosures based on the TCFD recommendations (related to climate
risks/opportunities under the themes of Governance, Strategy, Risk Management, and Metrics and Targets)(https://www.es-conjapan.co.jp/esg/environment.html).
Risks and opportunities of the 1.5°C and 3°C scenarios, financial implications looking toward 2030, and strategies
based on each scenario are detailed below.

-8-

-Risks and opportunities under the 1.5°C and 3°C scenarios and implications looking toward 2030
Category

Policy andRegulations

Transition
Risks
MarketReputation

Physical
Risks

UrgentProducts/
Services

MarketOpportunities

Resilience

Risks/Opportunities relating to
ES-CON JAPAN
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 no longer
chosen by customers, resulting inhigher 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 to theneed for repair costs and reduced
property reputation that may result inincreased vacancy rates. In addition,
ES-CON JAPAN may be held liable
for human casualties attributable todisasters 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 and expand
opportunities for mixed-use urban
area development, allowing energy
to be produced locally for local
consumption and a wide range ofgenerations to coexist and enjoy ahigh 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.

-9-

Financial Impact- Increase in procurement
costs for materials- Increase in costs related
to CO2 emissions

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

Low

Moderate- Increase in costs forcapital investment andrenovations, etc.

Low

High

- Decrease in sales due tolower rents and sales
pricesLow

Moderate

Low

High

- Increase in financing
costs- Increase in construction
costs

High

- Repair costs required- Decrease in sales due tohigher vacancy rates- Compensation
obligations
High- Increase in sales due toimproved
competitiveness ofproperties- Increase in sales due toincreased opportunities
for mixed-use
development

Low

Moderate

Low

High

Low

High

- Lower financing costs- Increase in sales due toexpanded property sales
opportunities and lower
tenant vacancy 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 onl yenvironmental 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 November 2021, ES-CON JAPAN acquired ZEH (*5)-M Oriented certification for its new condominium, “LeJADE Yao Sakuragaoka” (Yao City, Osaka Prefecture; 72 units in total). The property features excellent heatinsulation performance and helps reduce annual primary energy consumption. This is our second ZEH
condominium following "Le JADE Okurayama” (Kohoku Ward, Yokohama City; 25 units in total), which won theGood Design Award for fiscal year 2021, and was contracted early 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.

- 10 -

・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 ES-CON JAPAN 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.
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 2021, 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”(applicable period: January 1, 2020 to December 31, 2020). In addition, we acquired the “Green Star” (*6)
rating for three consecutive years.
*6 The "Green Star" in the “Development Benchmark” is awarded to participants who score 50% or more in the absoluteassessment based on the two main points, “Management Component” and “Development Component.”- 11 -

10) Administrative Discipline for ES-CON Asset Management Ltd.
As a result of inspection by the Securities and Exchange Surveillance Commission from the middle of January 2022,
ES-CON Asset Management Ltd. (hereinafter “EAM”), ES-CON JAPAN’s consolidates subsidiary, was issued
administrative discipline by the Financial Services Agency on July 15, 2022, as the commission recommended that
the Prime Minister and the Commissioner of the Agency adopt administrative measures.
At EAM, ES-CON JAPAN regards the strengthening of the system to comply with laws and regulations and theinternal control system as a top priority and has already made organizational changes, including to the board
structure, improved personnel, set standards for property acquisition, and prepared a business manual for property
acquisition. It will formulate specific measures further and carry them out steadily.
ES-CON JAPAN, which is EAM’s parent company and the main sponsor of ESCON JAPAN REIT Investment
Corporation, for which EAM is entrusted with asset management, took this incident seriously, and based on theessence of the findings and the root cause, not only EAM but the entire Group will strive to enhance the system forcompliance.
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 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 Hokkaido Ballpark" (Kitahiroshima
City, Hokkaido Prefecture; 118 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). 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 intotal), "Le JADE Takatsuki Nishimakami" (Takatsuki City, Osaka Prefecture; 43 units in total), "Mirakita City Himeji"(Himeji City, Hyogo Prefecture; 143 units in total) and "Le JADE Senri Aoyamadai" (Suita City, Osaka Prefecture;
152 units in total) were sold out. "Le JADE Yao Sakuragaoka" (Yao City, Osaka Prefecture; 72 units in total) was
contracted to sell out. The number of units sold is larger than the initial plan, and sales have been smoothly
progressing.
In addition, we are steadily expanding our business area, including the progress of the condominium business in
Hokkaido, the development of our first condominium in Kyushu “Le JIAS Ohashi” (Minami Ward, Fukuoka City; 140
units in total), and the acquisition of land for business use located in Chuo Ward, Kumamoto City (“Kumamoto-shi
Chuo-ku Minamitsuboimachi Project (tentative name).”In the real estate leasing business, we made Picasso and seven companies 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 and became
the store boasting the largest sales floor area in the Kansai region in April 2022, and development of theaforementioned community-based shopping center “tonarie Hoshida (tentative name)” launched. We also acquired“Aisai Plaza” (Aisai City, Aichi Prefecture). As such, we are working to develop and acquire commercial facilities andsecure stable rent income from and improve the asset value of our commercial facilities.
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 business, such as thecommissioning business and the planning agency and consulting business.
As a result, ES-CON JAPAN achieved net sales of 40,876 million yen (up 63.6%), operating income of 5,641
million yen (up 120.2%), ordinary income of 5,136 million yen (up 165.6%) and profit attributable to owners of parentof 3,296 million yen (up 137.4%) for the first two quarters, all compared with the same period of the previous year.

- 12 -

The following describes the operating results by each segment (comparisons are with the same period of theprevious year).
1)

2)

3)

(3)

Real estate sales businessIn the real estate sales business, activities included selling condominiums and revenue-generating real estate
resulted in net sales of 35,056 million yen (up 64.9%) and segment income of 6,570 million yen (up 71.8%).
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 5,515 million yen (up 60.9%) and segment income of 2,132
million yen (up 41.7%).
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 304 million yen (up 2.8%) and segment incomeof 19 million yen (segment loss of 309 million yen in the same period of the previous year).

Explanation of Financial Position
1)

Financial position
Assets at the end of the second quarter increased by 23,174 million yen compared with the end of the previous
fiscal year to 275,945 million yen. This was mainly attributable to cash and deposits, property, plant andequipment, and inventories increasing by 1,158 million yen, 1,090 million yen and 21,761 million yen,respectively.
Liabilities increased by 23,743 million yen compared with the end of the previous fiscal year to 213,886
million yen. This was mainly attributable to long-term loans payable and short-term loans payable increasingby 22,526 million yen.
Net assets decreased by 569 million yen compared with the end of the previous fiscal year to 62,059 million
yen. This was mainly attributable to cash dividends paid of 3,669 million yen, while recording profit attributableto owners of parent of 3,296 million yen. As a result, the equity ratio was 22.6% (24.8% at the end of theprevious fiscal year).

2)

Cash flows
Cash and cash equivalents (“net cash”) at the end of the first two quarters increased by 1,117 million yen
compared with the beginning of the fiscal year to 34,677 million yen (37,220 million yen at the end of the same
period of the previous fiscal year).
The following outlines the cash flows and the factors of change in cash flows in the first two quarters.

(Cash flows from operating activities)
Net cash used in operating activities was 16,204 million yen (net cash used in operating activities was 15,119
million yen in the same period of the previous fiscal year). This was mainly attributable to profit before income taxesof 5,135 million yen, increase in inventories of 20,995 million yen and income taxes paid of 1,219 million yen.
(Cash flows from investing activities)
Net cash used in investing activities was 1,556 million yen (net cash used in investing activities was 2,008 million
yen in the same period of the previous fiscal year). This was mainly attributable to purchase of non-current assetsof 1,818 million yen.
(Cash flows from financing activities)
Net cash provided by financing activities was 18,866 million yen (net cash provided by financing activities was
30,549 million yen in the same period of the previous fiscal year). This was mainly attributable to expenditure fromand repayments of long-term loans payable and short-term loans payable amounting to net proceeds of 22,526
million yen and payment of cash dividends of 3,666 million yen.

- 13 -

(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.
Regarding the Group’s business performance in the first two quarters of fiscal year ending December 2022, salesof condominiums in the real estate sales business grew steadily and both sales and profit surpassed the initial
estimates.
Overview of results for the first two quarters of fiscal year ending December 2022
First two quarters of fiscal year ending December 2022
ActualNet sales(million yen)
Operating income(million yen)
Ordinary income(million yen)
Profit attributable toowners of parent(million yen)
Basic earnings per
share
(yen)

Initial plan

Percentage change
from initial plan

Increase/decrease(%)

40,87636,300

4,576

12.6

5,641

4,700

941

20.0

5,136

3,800

1,336

35.2

3,296

2,600

696

26.8

34.52

29.43

5.1

17.3

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, have been partially revised, and details such as the contents of the plan are as presented
earlier in this document.

- 14 -

2.

Quarterly Consolidated Financial Statements and Key Notes(1) Quarterly Consolidated Balance Sheet(Unit: million yen)
Second quarter offiscal year ending
Dec. 2022(as of Jun. 30, 2022)

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- 15 -

33,667835

34,826
－

－

882

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

6,283
146,438
10,322(0)
198,753

23,312(1,516)
21,79530,840
387
(244)
142
52,77823,682(2,099)21,58232,157
395
(266)
129
53,869

8,217
57
8,275

7,957
86
8,043

14,814(37)
14,77675,83015,253(37)
15,215
77,128

81
81
252,771

63
63
275,945

(Unit: million yen)
Second quarter offiscal year ending
Dec. 2022(as of Jun. 30, 2022)

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- 16 -

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

4,340
88,892
1,787
15,379110,400

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

92,328167
54271
10,664103,486
213,886

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

16,51912,39934,372(1,209)62,082

371

138

(36)

5

334

143

0
(152)
62,628
252,7710(168)
62,059275,945

(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income(Quarterly Consolidated Statement of Income)(Unit: million yen)First two quarters ofFirst two quarters offiscal year ended
fiscal year ending
Dec. 2021
Dec. 2022(from Jan. 1, 2021
(from Jan. 1, 2022
to Jun. 30, 2022)
to Jun. 30, 2021)
Net sales
24,98040,876
Cost of sales
17,86029,979Gross profit
7,119
10,896
Selling, general and administrative expenses
4,557
5,255
Operating income
2,561
5,641
Non-operating income
Interest income
70Dividend income
52
68
Penalty income
1327
Foreign exchange gains
29
348
Other
7
7
Total non-operating income
110452
Non-operating expenses
Interest expenses
641
925
Amortization of share issuance cost
9
18
Share of loss of entities accounted for using
45
11
equity method
Other
41
2
Total non-operating expenses
738
957
Ordinary income
1,934
5,136
Extraordinary income
Gain on reversal of subscription rights to shares
00
Total extraordinary income
00Extraordinary losses
Loss on retirement of non-current assets
00
Total extraordinary losses
00Profit before income taxes
1,933
5,135
Income taxes - current
746
1,665
Income taxes - deferred
79
188
Total income taxes
826
1,854
Profit1,106
3,281
Loss attributable to non-controlling interests
(281)
(15)
Profit attributable to owners of parent
1,388
3,296

- 17 -

(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 two quarters offiscal year ended
Dec. 2021(from Jan. 1, 2021
to Jun. 30, 2021)
1,106(Unit: million yen)First two quarters offiscal year ending
Dec. 2022(from Jan. 1, 2022
to Jun. 30, 2022)
3,281

215

(233)

13

(17)

26

59

254
1,361

(191)
3,090

1,643

3,105

(281)

(15)

- 18 -

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

First two quarters offiscal year ended
Dec. 2021(from Jan. 1, 2021
to Jun. 30, 2021)
Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of goodwill
Amortization of long-term prepaid expenses
Amortization of share issuance cost
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for directors’share-based benefits
Increase (decrease) in provision for share-based
benefits
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)Share of loss (profit) of entities accounted forusing equity method
Loss on retirement of non-current assets
Decrease (increase) in notes and accounts
receivable - trade
Decrease (increase) in notes and accounts
receivable - trade and contract assets
Decrease (increase) in inventories
Decrease (increase) in prepaid expenses
Increase (decrease) in accounts payable - other
Decrease/increase in consumption taxes
receivable/payable
Increase (decrease) in advances received
Increase (decrease) in deposits received
Decrease (increase) in other assets
Increase (decrease) in other liabilities
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes (paid) refund
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Purchase of investment securities
Proceeds from withdrawal of investment securities
Purchase of non-current assets
Proceeds from sales of non-current assets
Proceeds from purchase of shares of subsidiaries
resulting in change in scope of consolidation
Payments of loans receivableCollection of loans receivable
Repayments of guarantee deposits received
Proceeds from guarantee deposits received
Payments for investments in capital
Proceeds from divestments
Net cash provided by (used in) investing activities
Cash flows from financing activities
Increase in short-term loans payable
Decrease in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Redemption of bonds
Repayments of lease obligations
Proceeds from issuance of common 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- 19 -

1,933
238
48
18
9

5,135
629
262
16
18

0

0

－

31

3

(2)

(60)
641
(29)

(69)
925
(348)

45

11

0

0

(127)

－

－

(46)

(14,918)(697)
766(20,995)
(44)
752

(311)

476

1,811
(328)
(2,267)
88(13,133)52(656)(1,383)(15,119)

(67)
(611)
(95)
(121)
(14,144)69(910)(1,219)(16,204)

(9)
(776)
0
(2,290)
107

(1)
(368)
2
(1,818)
(30)

－

316

－
0
(90)
1,050
(0)
－
(2,008)

(0)
0
(423)
767
－
0
(1,556)

3,872(2,475)24,385(12,738)(220)(0)
20,3618(2,643)30,5492,666(1,803)40,186(18,523)－(0)－
6(3,666)
18,8660

12

13,422
23,79837,2201,117
33,55934,677

(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.
(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 as recognize 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, the cumulative
effects of retrospective application of the new accounting policy, assuming it has been applied to periods prior to thebeginning 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 beginningof the first quarter of the fiscal year ending December 2022. Furthermore, the impact of the application of theaccounting 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 quarterof the fiscal year ending December 2022. In accordance with the transitional treatment stipulated in paragraph 89-2of the Revenue Recognition Accounting Standard, figures for the previous fiscal year have not been reclassified inaccordance with the new approach to presentation. Furthermore, in accordance with the 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 with customers for the first twoquarters 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.

- 20 -

(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
on real estate owned, 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 the relationship between remuneration for directors (excluding directors
who are Audit and Supervisory Committee Members, external directors and non-executive directors) and(authorized) executive managing officers (the “Directors, etc.”; hereinafter referred to as the same unlessotherwise specified) and ES-CON JAPAN’s operating results and share price, with the Directors, etc. not only
benefiting from a rise in share price but also sharing the same risks as shareholders in relation to a fall in shareprice, thereby increasing awareness of contribution to the medium- to long-term improvement of operating results
and enhancement of corporate value. Furthermore, ES-CON JAPAN passed a resolution for continuation andpartial revision of the System for the Directors, etc. at the Regular 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 a trustwith the trust acquiring shares of ES-CON JAPAN with said money as capital, and shares of ES-CON JAPANand the fair market value of shares of ES-CON JAPAN are granted to ES-CON JAPAN’s Directors, etc. throughthe trust in accordance with the operating results achievement rate, etc. pursuant to the officer stock ownershipregulations set by ES-CON JAPAN. The shares of ES-CON JAPAN will be granted to the Director, etc. of ESCON JAPAN when said Director, etc. retires from all positions such as director in principle.
Under the System, for a set period of three fiscal years from the fiscal year ended December 2021 to the fiscal
year ending December 2023 as well as each subsequent period of three fiscal years, ES-CON JAPAN 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, 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 tothe 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.

- 21 -

(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 are 347 million yen and 851,000 shares for the fiscal year ended December 2021, and 347
million yen and 851,000 shares for the second quarter of the fiscal year ending December 2022.
(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”; thetrust established based on the trust agreement concluded with Resona Bank, Limited for the System is referred toas “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 continuationand 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 periodof seven fiscal years from the fiscal year ending December 2022 to the fiscal year ending December 2028 and theperiod of the seven fiscal years after the elapse of the period, with the trust acquiring shares of ES-CON JAPANwith 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 ESCON 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 are 57 million yen and 225,700 shares for the fiscal year ended December 2021, and 54 million
yen and 214,100 shares for the second quarter of the fiscal year ending December 2022.

- 22 -

(Segment Information, Etc.)[Segment Information]
I. First Two Quarters of Fiscal Year Ended December 2021 (from January 1, 2021 to June 30, 2021)
1. Information on Net Sales and Income or Loss Amounts by Reporting Segment
Reporting segment
Real estate
Real estate
Real estateplanning agency
sales business leasing business and consulting
business
Net sales
Net sales to externalcustomers
Intersegment net sales
or transfers
Total
Segment income (loss)

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

21,256

3,427

296

24,980－24,980

－

－

－

－

－

－

21,256
3,824

3,427
1,504

296
(309)

24,9805,019－(2,457)24,9802,561(Note 1) The reconciliation of segment income (loss) of -2,457 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 or segment loss is reconciled with operating income on the quarterly consolidated statement ofincome.
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 2022 (from January 1, 2022 to June 30, 2022)
1. Information on Net Sales and Income or Loss Amounts by Reporting Segment and Information on Breakdown of
Revenue(Unit: million yen)
Reporting segment
Amount onquarterly
Real estate
Reconciliation consolidated
Total
Real estate
Real estateplanning agency(Note 1)statement ofsales business leasing business and consulting
incomebusiness(Note 2)
Net sales
Revenue from contracts
35,056519
304 35,880－
35,880with customers
Other items
－
4,996
－
4,996
－
4,996
(Note 3)
Net sales to external
35,056
5,515
304 40,876－
40,876customers
Intersegment net sales
－
－
－
－
－
－
or transfers
Total
35,056
5,515
304 40,876－
40,876
Segment income
6,570
2,132
19
8,722
(3,081)
5,641(Note 1) The reconciliation of segment income of -3,081 million yen is corporate expenses not attributable to any reporting
segment. Corporate expenses are general and administrative expenses not attributable to reporting segments.
(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.

- 23 -

(Significant Subsequent Events)
Not applicable.

- 24 -

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. 2022
(from Apr. 1, 2022 to Jun. 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.

245

11,457852

49,648Other－

10,972－

18,818245

22,430852

68,467Total

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

Name of segment

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

Condominiums

517

24,312

Genboen Block 6, Koga-shi

－

5,479

Chiba Research Park

－

3,001

Tsuruma Station Front

－

323

Other

－

1,940

517

35,056

Subtotal
Real estate leasing business

5,515Real estate planning agency
and consulting business

304
Total

(Note)

There are no transactions between segments.

- 25 -

40,876