Summary of Accounts for Fiscal Year Ended December 2021 (Japanese GAAP)(Consolidated)
Name of listed company: ES-CON JAPAN Ltd.
Code:
8892
Representative:(Name) Takatoshi Ito(Position)
Contact for inquiries:(Name) Minoru Nakanishi(Position)
Scheduled date for next regular general meeting of shareholders:
Scheduled date for submission of periodic securities report:
Scheduled date for start of dividend payment:
Supplementary explanatory materials created for accounts? Yes/No:
Accounts briefing meeting held?
Yes/No:January 27, 2022
Listing exchange: Tokyo Stock Exchange
URL:
https://www.es-conjapan.co.jp
President & Representative Director
Senior Managing Director TEL: 06 (6223) 8055
March 25, 2022
March 28, 2022
March 28, 2022
No
Yes (for institutional investors and analysts)(Amounts are rounded down to the nearest million yen)

1.

Consolidated results for fiscal year ended December 2021 (from January 1, 2021 to December 31, 2021)(1)(% figures for the full fiscal year show the rate of increase (decrease)
compared with the previous period)

Consolidated operating results
Net sales

Operating income

Profit attributable toowners of parent

Ordinary income

million yen%
million yen%
million yen%
million yen%
Fiscal year ended
79,017
2.2
10,381(14.9)
9,099(18.5)
5,961(22.2)
Dec. 2021
Fiscal year ended
77,308
7.2
12,202(5.5)
11,164
(5.5)
7,663
(6.0)
Dec. 2020
Note: Comprehensive income
Fiscal year ended Dec. 2021: 5,970 million yen (-20.7%) Fiscal year ended Dec. 2020: 7,533 million yen (-10.4%)
Basic earnings per Diluted earnings per
Return on equity Return on assets Operating margin
share
share
yen

yen

%

%

%

Fiscal year ended
67.48
67.30
11.8
4.5
13.1
Dec. 2021
Fiscal year ended
111.94111.37
21.2
7.9
15.8
Dec. 2020
Reference: Share of profit (loss) of entities accounted for using equity method
Fiscal year ended Dec. 2021: 54 million yen
Fiscal year ended Dec. 2020: -109 million yen(2)
Consolidated financial position
Total assets
Net assets
Equity ratio
Book value per share
million yen

million yen

Fiscal year ended
252,771
62,628Dec. 2021
Fiscal year ended
149,423
38,627
Dec. 2020
Reference: Equity
Fiscal year ended Dec. 2021: 62,780 million yen(3)Consolidated cash flows
Net cash provided
Net cash provided byby (used in)(used in) investing
operating activities
activities
Fiscal year ended
Dec. 2021
Fiscal year ended
Dec. 2020
2. Dividends

yen

24.8

657.5025.8

563.07

Fiscal year ended Dec. 2020: 38,589 million yen
Net cash provided by(used in) financing
activities

Cash and cash
equivalents at end of
periodmillion yen

million yen

million yen

million yen(10,810)(29,721)50,29333,559119(9,732)

11,007

23,798Annual dividend
End of first End of second End of third
Year-endquarterquarterquarter
yen
yen
yen
yen

Fiscal year ended
Dec. 2020
Fiscal year ended
Dec. 2021
Fiscal year ending
Dec. 2022(Forecast)

%

Total

Total dividend
Dividend
Dividend on
amountpayout ratio
equity(Total)(Consolidated) (Consolidated)yenmillion yen

%

%

－

0.00

－

38.00

38.00

2,645

33.9

7.2

－

0.00

－

38.00

38.00

3,669

56.3

6.2

－

0.00

－

38.00

38.00

- 1 -

－

3.

Consolidated earnings forecast for fiscal year ending December 2022 (from January 1, 2022 to December 31, 2022)
Profit attributable to Basic earnings
Net sales
Operating income Ordinary income
owners of parent
per shareFirst two quarters
Full fiscal year*

million yen%

million yen%

million yen%

million yen%

yen

36,300100,000

45.3
26.6

4,700
14,000

83.5
34.9

3,800
12,200

96.5
34.1

2,600
8,300

87.3
39.2

29.43
93.95

Explanatory notes(1) Changes in significant subsidiaries during fiscal year
(Changes in specified subsidiaries resulting in change in scope of consolidation):
Newly included: － companies (Company name) 、－ companies (Company name)
Excluded:None(2) Changes in accounting policies, changes in accounting estimates, and restatement
1) Changes in accounting policies due to amendment of accounting standards, etc.:
2) Changes in accounting policies other than 1):
3) Changes in accounting estimates:
4) Restatement:

None
None
None
None

(3) Number of shares issued and outstanding (common shares)
1) Number of shares issued and outstanding
Fiscal year
Fiscal year
98,580,887
71,961,887(including treasury shares) at end of fiscal
ended Dec.
ended Dec.
sharesshares
year
2021
2020
Fiscal year
Fiscal year
2) Number of treasury shares at end of fiscal
3,096,900
3,428,400
ended Dec.
ended Dec.
year
sharesshares2021
2020
Fiscal year
Fiscal year
88,346,828
68,459,909
3) Average number of shares during fiscal year ended Dec.
ended Dec.
sharesshares2021
2020(Note) The number of treasury shares at end of fiscal year includes ES-CON JAPAN shares held in a share-based
payment benefits trust for directors and a share-based payment benefits type ESOP trust (fiscal year ended
December 2021: 851,000 shares in the share-based payment benefits trust for directors and 225,700
shares in the share-based payment benefits type ESOP trust). In the calculation of the average number ofshares during fiscal year, the treasury shares to be subtracted in that calculation includes ES-CON JAPAN
shares held in the share-based payment benefits trust for directors and the share-based payment benefits
type ESOP trust (fiscal year ended December 2021: 1,078,783 shares).
(Reference) Non-consolidated results
1. Non-consolidated results for fiscal year ended December 2021 (from January 1, 2021 to December 31, 2021)(1) Non-consolidated operating results(% figures show the rate of increase (decrease) compared with the previous fiscal year)
Net sales
Operating income
Ordinary income
ProfitFiscal year ended
Dec. 2021
Fiscal year ended
Dec. 2020

million yen%

million yen%

million yen%

million yen%

73,407(0.7)

10,213(14.7)

9,312(16.3)

6,434(16.6)

73,903

5.4

11,980(5.3)

11,121

(4.1)

7,718

(4.2)

Basic earnings per share
Fiscal year ended
Dec. 2021
Fiscal year ended
Dec. 2020(2)

Non-consolidated financial position
Total assets
million yen

Diluted earnings per share
yen

yen

72.83

72.64

112.75112.18

Net assets
million yen

Fiscal year ended
233,860
63,206
Dec. 2021
Fiscal year ended
139,940
38,527
Dec. 2020
Reference: Equity
Fiscal year ended Dec. 2021: 63,205 million yen- 2 -Equity ratio

Book value per share
%

yen

27.0

661.9527.5

562.15

Fiscal year ended Dec. 2020: 38,526 million yen

*Presentation regarding implementation of audit proceduresThis summary of accounts is not subject to the audit procedures pursuant to the Financial Instruments and Exchange
Act.

*

Explanation regarding appropriate use of earnings forecasts, and other notes
The earnings outlook and other forward-looking statements contained in this document are based on information
currently available to and certain assumptions that are thought to be reasonable by ES-CON JAPAN. Accordingly,
actual business performance and other results may differ materially due to various reasons. For the conditions
forming the assumptions on which earnings forecasts are based and explanatory notes for use of earnings forecasts,
etc., please see “Attachment 1; 1. Overview of Operating Results, Etc.; (1) Analysis of Operating Results” on page 5.

- 3 -○ Contents of Attachment
1. Overview of Operating Results, Etc. ................................................................................................................................. 5(1) Analysis of Operating Results ..................................................................................................................................... 5(2) Analysis of Financial Position .................................................................................................................................... 14(3) Basic Policy on Distribution of Profit, and Dividend for the Fiscal Year Under Review and Next Fiscal Year ........... 15(4) Business Risks .......................................................................................................................................................... 15
2. Management Policy ........................................................................................................................................................ 18(1) Basic Policy on Corporate Management ................................................................................................................... 18(2) Medium- to Long-Term Corporate Management Strategy and Management Indicator Targets ................................ 18(3) Business and Financial Issues to Be Addressed on a Priority Basis ........................................................................ 18
3. Basic Policy on Selection of Accounting Standard.......................................................................................................... 20
4. Consolidated Financial Statements ................................................................................................................................ 21(1) Consolidated Balance Sheet ..................................................................................................................................... 21(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income .................................. 23(Consolidated Statement of Income) ............................................................................................................................. 23(Consolidated Statement of Comprehensive Income) ................................................................................................... 24(3) Consolidated Statement of Changes in Equity .......................................................................................................... 25(4) Consolidated Statement of Cash Flows .................................................................................................................... 27(5) Notes to Consolidated Financial Statements ............................................................................................................ 29(Notes on Going Concern Assumption) ......................................................................................................................... 29(Changes in Accounting Policies) .................................................................................................................................. 29(Additional Information) ................................................................................................................................................. 29(Segment Information, Etc.) .......................................................................................................................................... 30
5. Other ............................................................................................................................................................................... 33(1) Status of Contracts and Sales ................................................................................................................................... 33- 4 -Attachment 1
1. Overview of Operating Results, Etc.
(1)

Analysis of Operating Results

In the fiscal year under review (fiscal year ended December 2021), despite concerns over the sixth wave of COVID19, the Japanese economy saw progress towards the normalization of social and economic activities such as therecovery trend of consumer spending. Due to concerns over the spread of COVID-19 variants in Japan and abroad,careful attention should be paid to the fluctuation of the Japanese economy and overseas economies through supply
chains as well as the financial and capital markets and the impact of currency movement.
In the real estate industry in which the ES-CON JAPAN Group operates, the real estate market remained strong as
the policies and measures related to tackling COVID-19 and monetary easing measures continued. However,depending on the status of the spread of infection by COVID-19 variants, it is extremely difficult to forecast the future
trend of real estate market when assuming that corporate performance and consumer spending trends will change,
and it is necessary to carefully develop real estate business.
Despite such business environment in which the future outlook is extremely uncertain, we formulated “IDEAL to
REAL 2023,” the fourth medium-term management plan, for the three-year period from the fiscal year ended
December 2021 through the fiscal year ending December 2023, and will promote businesses by setting “Establishingbusiness foundations able to withstand unexpected changes in economic conditions” and “Simultaneously changing
the revenue structure and expanding business domains” as management strategies based on the theme of“Transformation and Rapid Progress.”
We implemented a capital increase through third-party allotment with Chubu Electric Power Co., Inc. (hereinafter“Chubu Electric Power”) as the allotee on April 5, 2021, and ES-CON JAPAN became a consolidated subsidiary of
Chubu Electric Power. As a result, we dramatically increased our corporate credit standing, acquired credit ratings of“A-” (stable) from Rating and Investment Information, Inc. and “A” (stable) from Japan Credit Rating Agency, Ltd., andestablished a stable fundraising base.
Against the backdrop of such creditworthiness, we acquired all shares of Picasso Co., Ltd., which owns numerous
outstanding revenue-generating properties, and its seven group companies in October 2021 in order to rapidly moveahead with the strategy of “changing the revenue structure” = “securing stable leasing income.” Furthermore, wesought to strengthen the asset management business in the ES-CON JAPAN Group as well as concluded a contract
on the acquisition of the entire share of FUEL Inc., whose businesses include managing online funds and providing
computer systems to crowdfunding businesses in accordance with the Act on Specified Joint Real Estate Ventures ofJapan, and made it a subsidiary on January 21, 2022, with an aim to significantly contribute to the expansion of the
ES-CON JAPAN Group’s business domain as preparation for future participation in real estate financial business.
As for the business performance for the fiscal year under review, although sales increased and profits decreased
year on year, the above “change in revenue structure” was realized. In the next fiscal year and the fiscal year ending
December 2023, we will proactively implement business development with the intent to improve performance andwith an aim to achieve record-high profits, as a period of “Rapid Progress.”
The purchase of sites scheduled to be sold in fiscal 2022 and fiscal 2023 are in progress at a pace exceeding theplan.
The business performance for the fiscal year under review, which is the first fiscal year of the fourth medium-term
management plan, was generally as planned with net sales standing at 79,017 million yen (down 1.2% from initialplan) and operating income at 10,381 million yen (down 3.9% from initial plan), but ordinary income was 9,099 million
yen (down 3.2% from initial plan) as a result of the recording of 516 million yen of segment loss in the real estateplanning agency and consulting business due to the burden of prior expenditure of advertising expenses in thecolumbarium sales business. Management targets were almost as planned with ROE standing at 11.8%, ROIC at
3.2%, equity ratio at 24.8%, net assets at 62.6 billion yen, share of profits from leasing at 21.2%, and share of longterm earnings from real estate at 20.6%.
In addition, due to the acquisition of many outstanding revenue-generating properties after making Picasso Co.,
Ltd. and its seven group companies subsidiaries, investment plans in the medium-term management plan are in
progress at a pace exceeding the plan.

- 5 -Concerning the transition to the new market segments scheduled for April 4, 2022, at Tokyo Stock Exchange, Inc.,
we have decided to make a transition to the Prime Market.
The details of the aforementioned fourth medium-term management plan are as follows.
1)

Overview of the Fourth Medium-Term Management Plan
1. Basic Management Strategy Policies
1) Establish business foundations able to withstand unexpected changes in economic conditions
Establish a sound business and financial standing that can maintain its fund-raising abilities under any economic
environment.
2) Simultaneously change the revenue structure and expand business domains
Transform the revenue structure from one based on flows to one based on stock by strengthening the realestate leasing business while the same time realizing business diversification and expanding businessterritories.
2. Basic Policy: Transformation and Rapid ProgressTransformation
・ Proactive investment in long-term revenue-generating real estate and improvement of balance sheet structure
・ Transform the focus of management from flows to stock
Rapid Progress・ Demonstrating synergies within the Chubu Electric Power Group・ Achieving net sales of 110 billion yen and operating income of 16 billion yen (in the final fiscal year of themedium-term management plan)
3. Management Strategies
1) Transformation to a structure of sustained and stable profit revenues2) Stable growth in existing core businesses through business diversification and area strategies3) Growing new businesses into core businesses through area strategies
4) Taking on the challenge of new business domains
5) Enhancing synergies with the ES-CON JAPAN Group6) Expanding business bases, primarily in the five major urban areas
7) Enhancing synergies with the Chubu Electric Power Group8) Promoting ESG initiatives
4. Performance Plan
Fiscal
year
ended
Dec.
2020

Fiscal year ended Dec. 2021

Difference Increase/from plan decrease(Unit: million yen)
Fiscalyear
Fiscal year ending Dec. 2022
ended
Dec.
2023
Difference
InitialIncrease/
Planfrom initial
Plan
plan
decrease
plan

ActualActual

Plan

Net
sales

77,30879,01780,000(982)(1.2%)

100,000

98,000

2,000

2.0%

110,000

Operatingincome12,202

10,381

10,800(418)(3.9%)

14,00014,000－－16,000- 6 -5. Management Targets
Fiscal year
ended Dec.
2020
ActualFiscal year
ended Dec. 2021
ActualFiscal year
ending Dec. 2022

Plan

Plan

Initial plan

Fiscal year
ending Dec.
2023
Plan

Share of profits from leasing*1

14.2%

21.2%

23.0%

26.0%

24.0%

26.0%

Return on equity (ROE)

21.2%

11.8%

12.0%

13.0%

13.0%

13.0%

Return on invested capital(ROIC)*2

6.6%

3.2%

4.0%

4.0%

4.0%

4.0%

Equity ratio

25.8%

24.8%

29.0%

23.0%

26.0%

23.0%

Share of long-term earnings
from real estate*3

9.5%

20.6%

12.0%

21.0%

14.0%

18.0%

Net assets
Notes: 1
2
3

38.6 billion yen 62.6 billion yen

61.0 billion yen 67.3 billion yen 66.0 billion yen 72.0 billion yen

Share of profits from 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

6. Investment Plan
Fiscalyear
endingDec. 2022

Fiscal year ended Dec. 2021

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

Difference Increase/from plan decrease

ActualPlan

76,79930,00046,79919,191

25,00095,99055,000(Unit: million yen)
FiscalThree-year
year
cumulative
endingtotal
Dec. 2023

Plan

Plan

Plan

156.0%

40,00060,000130,000(5,809)(23.2%)

30,00035,00090,00040,99074.5%

70,00095,000220,000

Status of Demonstration of Synergy Effect with the Chubu Electric Power GroupAs previously mentioned, we became a consolidated subsidiary of Chubu Electric Power Co., Inc. in April 2021,
and we are aggressively developing our business in the Chubu area.
In a joint venture with Chuden Real Estate Co., Inc. (hereinafter “Chuden Real Estate”), we are undertaking thedevelopment of condominiums and commercial facilities in Shirakabe, Higashi Ward, Nagoya City, Ichinomiya
City, Aichi Prefecture, Kakegawa City, Shizuoka Prefecture, and Suita City, Osaka Prefecture. In Higashi Ward,
Nagoya City, the Company is promoting sales of "Grand Le JADE Shirakabe Getsuronotei” (24 units in total) and“Grand Le JADE Shirakabe Rinzennotei” (34 units in total) in the Shirakabe area, which is a particularly rare andvaluable area. Synergistic effects are being stably generated, as evidenced by having sold out the contract for "Le
JADE Kakegawa Ekimae” (Kakegawa City, Shizuoka Prefecture; 83 units in total) within four months of the start ofsales.
In June 2021, a consortium of businesses led by Chubu Electric Power of which ES-CON JAPAN is a member
was selected as the preferred candidate contractor in bidding organized by Aichi Prefecture and the city of
Nagoya. The winning bidder will operate the site of the 20th Asian Games Aichi-Nagoya 2026 Athletes’ Village
after the games. In this project, we aim to create a next-generation community which connects diverse people
who help each other to solve various issues facing society and foster happiness together. Plans call for ES-CON
JAPAN to develop retail complexes as part of this community development project.

- 7 -In addition, in July 2021, Chubu Electric Power and Spread Co., Ltd. (hereinafter "Spread") established
TSUNAGU Community Farm LLC (hereinafter "new company"), which will construct and operate completely
artificial vertical farms. In October 2021, the new company started construction of Techno Farm Fukuroi, which willbe the world’s largest vertical farm utilizing fully artificial light and capable of producing 10 tons of lettuce per day,in Fukuroi City, Shizuoka Prefecture. The aim is to launch production in January 2024. By combining Chubu
Electric Power's capital power and knowledge in energy management with our development know-how, we will
make efforts toward decarbonization and cost reduction and contribute to the production of cheaper vegetables atplants. At the same time, in collaboration with Spread - which has a track record in cultivation and logistics - wewill strive to produce "safe and clean” lettuce efficiently and stably.
We will continue to strengthen our partnership with the Chubu Electric Power Group and actively work toachieve large-scale urban development and realize a “new form of community" not only in the Chubu area, butacross Japan.
3)

Efforts to Establish a Flexible Fundraising System
Based on our having received a certain level of recognition from external agencies and financial institutions since
we became a consolidated subsidiary of Chubu Electric Power, we are now in a position to flexibly and stably
procure funds necessary for the future growth of our group.
Specifically, as previously mentioned, the Company received a rating of "A-" (stable) from Rating andInvestment Information, Inc. and "A" (stable) from Japan Credit Rating Agency, Ltd. in July 2021, and was newly
selected as a constituent of the JPX-Nikkei Index 400 for FY2021 (August 31, 2021 to August 30, 2022).
Given the recognition and other factors, the Company concluded a commitment line agreement with The NishiNippon City Bank, Ltd. in September 2021 with a maximum borrowing amount of 10 billion yen, and a syndicationtype commitment line agreement in November 2021 for a maximum borrowing amount of 5.5 billion yen with The
Shiga Bank, Ltd. serving as the arranger.
Furthermore, in December 2021, we submitted a shelf registration statement for issuance of corporate bonds tosecure a more flexible means of fundraising in addition to indirect financing from financial institutions. The
Company has the capacity to issue 50 billion yen in bonds and will continue to do so in a flexible and agile
manner while considering the market environment.
By establishing these flexible fundraising systems, we will proactively consider various investment opportunities
to further raise our corporate value.

4)

Progress of Projects under Hokkaido Ballpark Concept
In January 2020, we concluded a ballpark naming rights agreement with Hokkaido Nippon-Ham Fighters BaseballClub Co., Ltd. and Fighters Sports & Entertainment Co., Ltd. for the new Hokkaido Nippon Ham Fighters stadium,“ES CON FIELD HOKKAIDO,” scheduled to open in March 2023 in Kitahiroshima City, Hokkaido.
The area surrounding the new stadium is a large-scale development area called HOKKAIDO BALLPARK F
VILLAGE (total development area: approx. 36.7 ha; hereinafter "F VILLAGE") with construction of a new station
also planned. We are involved in various real estate development projects in this area on approximately 9,400 m2of land adjoining the ballpark. We are involved in urban development of which the new stadium will serve as thecenterpiece.
In August 2021, as part of the F VILLAGE urban development concept, we opened to the public our first new
condominium in Hokkaido, "Le JADE Hokkaido Ballpark.” The project is located in a rare location in close
proximity to the new baseball stadium, about 80 meters from the outfield stands of the new stadium. This will allow
enjoyment of the rich nature of Hokkaido. The concept of the project is to provide a new lifestyle (“living in aballpark”). Media reporting on the project has been extensive - including newspapers and TV programs - and has
attracted a great deal of attention. Sales activities are progressing smoothly, with the number of requests for
information exceeding 4,600 as of January 7, 2022.
In addition, in March 2021, we concluded a partnership agreement with the city of Kitahiroshima for the JR
Kitahiroshima Station “Train Station West Exit Area Revitalization Project.” In November 2021, we acquired a
portion of the development site for the project. The site will be used for three development projects: a stationsquare 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 this site, thecommercial facilities are scheduled for completion in 2024.

- 8 -JR Kitahiroshima Station is conveniently situated between JR Sapporo Station and New Chitose Airport Station– approximately 20 minutes from the airport and approximately 16 minutes from Sapporo by train - and is
expected to become a key access point to the ballpark. In addition to the development of the ballpark area, we will
also develop the area around JR Kitahiroshima Station, the gateway to the ball park, to promote communitybased urban development that will create a bustling atmosphere throughout Kitahiroshima.
We will continue to cooperate in the promotion of sports and culture and contribute to the revitalization anddevelopment of the entire Hokkaido region for the happiness of its residents.
5)

Status of Implementation of Growth Strategy of ESCON JAPAN REIT Investment Corporation
In August 2021, ESCON JAPAN REIT Investment Corporation (hereinafter “EJR”) conducted the second public
offering, following the first in February 2020, with ESCON Asset Management Ltd. (hereinafter “EAM”), a
consolidated subsidiary, as the Company entrusted with asset management. Asset size steadily expanded, from
41.6 billion yen at the time of listing to 69.6 billion yen after the capital increase. As the sponsor of EJR, the ESCON JAPAN Group transferred the following seven properties and has supported the enhancement of EJR’s
income and stable growth.
The details of the assets in the second transfer from the Company to EJR are as follows, with a total transfer
price of 11,947 million yen.
Location(1) Kumamoto City,
Kumamoto Prefecture(Suroy Mall Nagamine)(2) Hatsukaichi City,
Hiroshima Prefecture(Fuji Grand Natalie)(3) Sapporo City, Hokkaido
Prefecture(4) Neyagawa City, Osaka
Prefecture(5) Amagasaki City, Hyogo
Prefecture(6) Kobe City, Hyogo
Prefecture(7) Hikone City, Shiga
Prefecture

Type

Site area (total floor area) Transfer price (million yen)
28,546.00 m²

Commercial facility(land, building)(13,130.23 m²)
21,083.66 m²

Commercial facility(land, building)(28,543.96 m²)

3,950Commercial facility (land)

8,154.00 m²

1,300

Commercial facility (land)

2,743.65 m²

702

Commercial facility (land)

1,491.47 m²

565

Commercial facility (land)

2,634.83 m²

530

Commercial facility (land)

2,012.30 m²

300

Total

6)

4,600

11,947

Initiatives for Formation of Private REIT
In addition to the public REIT business of EJR, we plan to form and commence operation of a private real estate
investment trust, with EAM as the Company entrusted with asset management. Starting with rental apartments in
Higashiyamato City, Tokyo, and Fujisawa City, Kanagawa Prefecture, in 2020, we have formed private funds
operating a total of 10 buildings in metropolitan areas of Tokyo, Kanagawa, and Saitama, respectively.
The market for rental apartments has been strong even amidst the COVID-19 pandemic, and stable needs are
expected in the future. As such, we will be preparing for the formation of a private REIT by leveraging the Group's
expertise in condominium development.

7)

Acquisition of Shares of Picasso Co., Ltd. and Seven Group Companies (Making Them Our Subsidiaries)
On October 29, 2021, ES-CON JAPAN acquired all shares of Picasso Co., Ltd. (“Picasso”), a company engaged
in the real estate leasing business, and seven of its group companies (“Group Companies”), and made themsubsidiaries.
Picasso, founded in 1991 in Osaka City, along with its group companies is engaged in the real estate leasing
business mainly in the Kansai region. It owns numerous outstanding revenue-generating assets such as rental
apartments and office buildings.
This acquisition of subsidiaries will rapidly progress the abovementioned basic management strategic policy of“Transforming the focus from flows to stock” in the fourth medium-term management plan by enhancing theleasing business and securing stable revenues, and thus we believe it will contribute dramatically to the sustained
growth of the ES-CON JAPAN Group.
- 9 -

8)

Acquisition of Shares of FUEL Inc. (Making It Our Subsidiary)
On January 21, 2022, the Company acquired all shares of FUEL Inc. (hereinafter "FUEL") and made it asubsidiary, with the aim of strengthening and expanding the Group's asset management business and paving theway for future participation in the real estate finance business.
FUEL is engaged in the operation of online funds that provide opportunities for retail investors to easily invest inreal estate or real estate businesses in small units over the Internet, as well as the provision of systems forcrowdfunding businesses based on the Real Estate Specified Joint Enterprise Act.
Making FUEL a subsidiary will enable the Group 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 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*1) 5 to 10 years in the future.
*1

ST (Security Token) refers to investment management through the issuance of digital securities using blockchain technology.
CF (Crowdfunding) refers to a crowdfunding business.

9)

Take on the Challenges of New Business Domains
In October 2020, with an eye toward resolving issues facing modern society such as the shortage of burial
grounds in a society with a large number of deaths due to the aging of the population, the current situation where
there is no one to look after graves due to small families with the declining birthrate, and the considerable difficultyin obtaining graves - particularly in urban areas - we acquired shares of Ryomon Co., Ltd., a company engaged in
the management of an urban columbarium in Minato Ward, Tokyo. We began selling permanent use rights for the
Ryomon columbarium in March 2021.
We are also active in business overseas while carefully assessing the impact of the spread of COVID-19. In
August 2021, the Company, through its subsidiary ESCON USA III LLC, invested and participated in Waikiki
Galleria Tower, a retail and office complex value-add project located in Honolulu, Hawaii. The project is primarily
being carried out by BlackSand Capital, LLC, a real estate investment advisory company. Furthermore, in October
2021, we invested in Crow Holdings Realty Partners IX, L.P., a real estate investment fund formed by Crow
Holdings Capital, a real estate company in Texas, U.S.A., through our subsidiary ESCON USA II LLC.
In December 2021, we also entered into a basic agreement on the world’s most advanced housingdevelopment with Serendix Inc. (hereinafter "Serendix"), a company that aims to develop housing using 3D
printers. We also invested in the firm. Serendix aims to develop "Sphere,” the world's most advanced house using
3D printing technology originating from Japan. We will cooperate in the research toward the development of
Sphere and, in the future, apply the Sphere technology to other fields such as stores, offices, and warehouses.
We will continue to focus on initiatives in new business fields with a view to the next era and globally implement
a multifaceted real estate business that can contribute to society.

10) Status of ESG Initiatives
One of our key management strategies is addressing social issues through promotion of ESG initiatives. The“ESG Promotion Group,” comprising members selected from each department and headed by the director in
charge of the President's Office, leads ESG initiatives. In July 2021, we established the Health & Culture
Fostering Team for further promotion of health management.
1. Environment (E)・ EcoAction 21 Certification
In May 2020, ES-CON JAPAN acquired EcoAction 21 Certification, a Japanese environmental management
system (EMS) established by the Ministry of the Environment. By continuing to conduct environmentally friendly
management through EcoAction 21 initiatives, companies are expected to fulfill their social responsibilities toreduce their environmental burden. This is also expected to provide management benefits such as cost
reduction and improved productivity, as well as enhancement of corporate value.

- 10 -

・ Green Building
In April 2011, “tonarie Yamato-Takada,” “tonarie Toga-Mikita,” “tonarie Minamisenri,” “tonarie Seiwadai,” and“Asumigaoka Brand New Mall,” which are commercial facilities owned by EJR, obtained DBJ Green Building
Certification (a certification system created by Development Bank of Japan Inc. (hereinafter “DBJ”) to support
environmentally and socially conscious real estate (Green Building)). Our group as a whole is working to
improve the value of the facilities, and the five properties that have obtained the certification are being operated
and managed by our subsidiary ES-CON PROPERTY Ltd.
・ “Rank S” Certification for CASBEE for Real Estate
In July 2020, “tonarie Fujimino,” a commercial facility owned by ES-CON JAPAN, obtained “Rank S,” thehighest rank of the Certification for CASBEE(*2) for Real Estate from a CASBEE accreditation body authorized
by the Institute for Building Environment and Energy Conservation.
*2 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.

・ Efforts to Promote Environmentally Friendly ZEH-compatible Housing
In November 2021, ES-CON JAPAN obtained ZEH(*3)-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.
We will continue to develop ZEH condominiums with the goal of building one per year.
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.
*3 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.

・ Received Award for Excellence in the Environmental Human Resource Development Corporate Awards
In March 2021, we received the Award for Excellence in the Environmental Human Resource Development
Corporate Awards 2020 (recognizing companies leading the way in developing environment-related humanresources) hosted by the Ministry of the Environment and the Environmental Consortium for Leadership
Development (EcoLeaD).
・ Construction and Operation of “Techno Farm Fukuroi,” a Vertical Farm Utilizing Fully Artificial LightAs mentioned above, 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 will solve issues in food and agricultural fields through the plantfactory business while also contributing to the realization of a sustainable and livable society and theachievement of SDGs by making efforts towards decarbonization such as the proactive use of green energy
and effective use of CO2 in the process of cultivation.
2. Social (S)・ Contributing to Healthcare
Since 2020, we have been providing monetary donations to the Kyoto University "iPS Cell Research Fund" tosupport activities realizing provision of early and inexpensive treatment using iPS cells for people suffering from
diseases and accidents.
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.
・ 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 as well as
supporting Ryukyu FC‘s regional revitalization activities in Okinawa Prefecture.

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3. Governance (G)・ Establishment of Voluntary Committee on Nomination and Remuneration of Directors
In January 2020, we established the “Nomination and Remuneration Advisory Committee” with the aim tostrengthen 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 election and remuneration of directors.
・ Nurturing Successors
We also launched initiatives for a succession plan called the candidate successor system. We appointed a totalof eight employed executive officers; seven in January 2021 and one in September 2021.
・ Diversity of the Board of Directors
In order to secure diversity of the board of directors, two independent directors were appointed at the 26th
Regular General Meeting of Shareholders held on March 26, 2021, and the number of independent directors
was increased to four. In addition to the traditional certified public accountant, tax accountant and attorney, adirector experienced in corporate management and a female independent director who is also a securities
analyst have been newly added for a diverse board composition.
・ New Disclosure Items in Accordance with the Revised Corporate Governance CodeIn June 2021, Tokyo Stock Exchange, Inc. revised its Corporate Governance Code. This code requires
companies, especially those transitioning to the Prime Market, to be more proactive in disclosing information on
items such as fulfillment of the functions of the board of directors, ensuring diversity in core corporate
personnel, and addressing sustainability-related issues. ES-CON JAPAN revised its corporate governancereport in December 2021. The report newly discloses the proportion of female employees in its workforce, theresults of appointing female employees to managerial and executive positions, and the Company’s efforts tocultivate human resources and comprehensively manage intellectual property. This includes efforts fordisclosure based on the framework of the Task Force on Climate-related Financial Information Disclosure(TCFD).
4.

Other
We have been participating in Global ESG, 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. As aresult, in October 2021, we acquired “2 Stars” in the GRESB Rating, a five-grade evaluation system thatreflects the applicant’s relative evaluation based on the overall score, for efforts on environmental considerationand sustainability in the “Development Benchmark.” (applicable period: January 1, 2020 to December 31, 2020)
In addition, we acquired the “Green Star(*4)” rating upon receiving high marks in both “Management
Component” and “Development Component” for three consecutive years.
*4 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) 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 bio
Makuhari Hongo" (Hanamigawa Ward, Chiba City; 70 units in total), "Le JADE Kyoto Shijo Omiya" (Shimogyo
Ward, Kyoto City; 43 units in total), "Le JADE Yao Sakuragaoka" (Yao City, Osaka Prefecture; 72 units in total),“Le JADE Kamishinjo” (Higashiyodogawa Ward, Osaka City; 60 units in total), “Le JADE Takatsuki Minami
Matsubara The Front” (Takatsuki City, Osaka Prefecture; 74 units in total), “Le JADE Times Core Kawagoe”(Kawagoe City, Saitama Prefecture; 56 units in total), and “Le JADE Kawagoe The Residence” (Kawagoe City,
Saitama Prefecture; 23 units in total).

- 12 -

As for the progress of sales, "Le JADE Nagaikoendori” (Sumiyoshi Ward, Osaka City; 108 units in total)," "Le
JADE Neyagawa Koen” (Neyagawa City, Osaka Prefecture; 60 units in total)," "Le JADE Mukonosohonmachi”(Amagasaki City, Hyogo Prefecture; 33 units in total), "Le JADE Yamato-Takada Ekimae” (Yamato-Takada City,
Nara Prefecture; 205 units in total), “Ost Residence Karuizawa” (Karuizawa Town, Kitasaku District, Nagano
Prefecture; 33 units in total), were sold after completion in the fiscal year under review. “Le JADE Hirano (Hirano
Ward, Osaka City; 58 units in total), “Le JADE Tsukuba Station Front (Tsukuba City, Ibaraki Prefecture; 218 units
in total), “Le JADE Kakegawa Ekimae” (Kakegawa City, Shizuoka Prefecture; 83 units in total), “Le JADE Urawa”(Urawa Ward, Saitama City; 44 units in total), “Le JADE Takatsuki Bessho” (Takatsuki City, Osaka Prefecture; 49
units in total), which are scheduled for completion in the following fiscal year, and “Park Le JADE Residence
Shirokane” (Minato Ward, Tokyo; 55 units in total), which is scheduled to be completed in 2023, have been soldout.
In addition to acquiring its first new land for sale in the Kyushu and Hokkaido areas (Minami Ward, Fukuoka Cityand Higashi Ward, Sapporo City), ES-CON JAPAN also started development of its first logistics facility sites in the
Kanto area, including “Chiba Research Park” (Wakaba Ward, Chiba City), “LOGITRES Narashino Shibazono”(tentative name) (Narashino City, Chiba Prefecture), and “LOGITRES Sano” (tentative name) (Sano City, Tochigi
Prefecture). Furthermore, we are expanding and diversifying our business areas by acquiring land for businessuse ("Repro Shimbashi Project” (tentative name) in Minato Ward, Tokyo), which is located near JR Shimbashi
Station, eyeing rental and development business over the medium to long term.
In the real estate leasing business, we acquired shares of Picasso and seven other group companies (making
them our subsidiaries) that own numerous outstanding revenue-generating assets such as rental apartments andoffice buildings, thereby securing stable earnings by strengthening the leasing business.
In other areas, we acquired a new community-based shopping center, "tonarie Yokkaichi" (Yokkaichi City, Mie
Prefecture), opened "tonarie Fujimino" (former name: Soyoca Fujimino, Fujimino City, Saitama Prefecture), andopened "tonarie CREO" at "tonarie Tsukuba Square" (Tsukuba City, Ibaraki Prefecture), a redevelopment projectin front of Tsukuba Station, Ibaraki Prefecture, in phases. We also reopened "tonarie Minami Senri Annex," acommercial facility in Suita City, Osaka Prefecture, where only the upper floors had been open due to the closureof the AEON Minami Senri Store. We are working to secure stable rent income and improve the asset value of ourcommercial facilities.
Furthermore, the ES-CON JAPAN Group is actively pursuing the acquisition of outstanding revenue-generating
assets as evidenced by the acquisition of three rental apartment properties: “Sol Plaza Sakai” (Sakai Ward, Sakai
City; 168 units in total), “Tomei Apartments Esaka” (Suita City, Osaka Prefecture; 66 units in total), and “Amity
Tsukaguchi” (Amagasaki City, Hyogo Prefecture; 60 units in total).
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
the commissioning business and the planning agency and consulting business.
As a result, for the consolidated fiscal year under review, ES-CON JAPAN achieved net sales of 79,017 million
yen (up 2.2% from the previous consolidated fiscal year), operating income of 10,381 million yen (down 14.9%),
ordinary income of 9,099 million yen (down 18.5%), and profit attributable to owners of parent of 5,961 million yen(down 22.2%).
Operating results by segment are as follows.
1. Real Estate Sales BusinessIn the real estate sales business, activities including selling of condominiums and revenue-generating realestate, resulting in net sales of 70,334 million yen (down 1.6% from the previous fiscal year) and segment
income of 13,039 million yen (down 8.5%).
2. Real Estate Leasing BusinessIn the real estate leasing business, we secured rental income of revenue-generating real estate by making
Picasso and seven other group companies our subsidiaries and focused on leasing activities and the property
management business in view of enhancement of asset value of owned revenue-generating real estate. As aresult, net sales were 8,090 million yen (up 46.4%) and segment income was 3,372 million yen (up 41.6%).

- 13 -

3. Real estate planning agency and consulting businessIn the real estate planning agency and consulting business, we took full advantage of our planning andmultifaceted business development capabilities to actively engage in planning, consulting, and other services
on consignment. However, due to the delay in the sales plan mainly caused by the impact of the spread of
COVID-19 in the columbarium business and upfront advertising expenditures, net sales were 592 million yen(up 100.6%) and segment loss was 516 million yen (segment income of 152 million yen in the previous fiscal
year).
(Earnings outlook for the next fiscal year and progress of the medium-term management plan)
Based on the fourth medium-term management plan, "IDEAL to REAL 2023," ES-CON JAPAN is promoting its
business toward achieving the plan under the management strategies of "Establishing business foundations
able to withstand unexpected changes in economic conditions" and "Simultaneously changing the revenue
structure and expanding business domains.”
For details on the results for the fiscal year under review and the plan for the next fiscal year and beyond,please see "1. Overview of Operating Results, (1) Analysis of Operating Results, 1) Overview of Fourth
Medium-Term Management Plan.”(Dividend for the next fiscal year)
For the next fiscal year, the dividend forecast is 38 yen per share.
(2) Analysis of Financial Position
1) Assets, Liabilities and Net Assets
Assets at the end of the fiscal year under review increased by 103,348 million yen compared with the end of theprevious fiscal year to 252,771 million yen. This was mainly attributable to cash and deposits, inventories andnon-current assets increasing by 9,796 million yen, 42,381 million yen and 48,523 million yen, respectively.
Liabilities increased by 79,347 million yen compared with the end of the previous fiscal year to 190,143 million
yen. This was mainly attributable to long-term loans payable, short-term loans payable and bonds increasing by
64,529 million yen.
Net assets increased by 24,000 million yen compared with the end of the previous fiscal year to 62,628 million
yen. This was attributable to cash dividends paid of 2,645 million yen, while recording profit attributable to ownersof parent of 5,961 million yen as well as the increase in capital and capital reserve by 10,235 million yen each withthe capital increase through third-party allotment. As a result, the equity ratio was 24.8% (25.8% at the end of theprevious fiscal year).
2)

Cash Flows
Cash and cash equivalents (“net cash”) in the fiscal year under review increased by 9,760 million yen comparedwith the end of the previous fiscal year to 33,559 million yen (23,798 million yen at the end of the previous fiscal
year). The following outlines the cash flows and the factors of changes in cash flows in the fiscal year underreview.

(Cash flows from operating activities)
Cash flows from operating activities in the fiscal year under review amounted to net cash used in operating activitiesof 10,810 million yen (net cash provided by operating activities of 119 million yen in the previous fiscal year). This was
mainly attributable to the increase in inventories of 19,306 million yen and income taxes paid of 3,419 million yen,despite the recording of profit before income taxes of 9,099 million yen, increase in advanced received of 3,419
million yen.
(Cash flows from investing activities)
Cash flows from investing activities in the fiscal year under review amounted to net cash used in investing activities of
29,721 million yen (net cash used in investing activities of 9,732 million yen in the previous fiscal year). This was
mainly attributable to purchase of investment securities of 2,265 million yen, purchase of non-current assets of 4,763
million yen and purchase of shares of subsidiaries resulting in change in scope of consolidation of 24,070 million yen.

- 14 -(Cash flows from financing activities)
Cash flows from financing activities in the fiscal year under review amounted to net cash provided by financing
activities of 50,293 million yen (net cash provided by financing activities of 11,007 million yen in the previous fiscal
year). This was mainly attributable to proceeds from and repayments of long-term loans payable and short-term loans
payable amounting to net proceeds of 32,611 million yen, proceeds from issuance of shares of 20,361 million yen andpayment of cash dividends of 2,645 million yen.
Reference: Changes in cash flow indicators
Fiscal year
ended Dec.
2017

Fiscal year
ended Dec.
2018

Fiscal year
ended Dec.
2019

Fiscal year
ended Dec.
2020

Fiscal year
ended Dec.
2021

Equity ratio (%)

24.8

24.9

25.3

25.8

24.8

Equity ratio on market capitalization basis
(%)

54.0

42.2

50.7

39.3

30.5

Equity ratio: Equity / Total assets
Equity ratio on market capitalization basis: Market capitalization / Total assets
Notes: 1 Each is calculated using consolidated financial figures.
2 Market capitalization is calculated by multiplying the closing share price at end of fiscal year by the
number of shares issued and outstanding at end of fiscal year.
(3) Basic Policy on Distribution of Profit, and Dividend for the Fiscal Year Under Review and Next Fiscal Year
Positioning the return of profit to shareholders as a key management task, ES-CON JAPAN makes it a basic policy to
strive for uninterrupted and stable return of profit in line with corporate growth potential based on decisions that take
into account the status of business performance, availability of internal reserves, dividend payout ratio and otherfactors in a comprehensive manner.
ES-CON JAPAN has introduced a progressive dividend policy to “not decrease the dividend amount, but rather only
maintain or increase the dividend amount” in principle with DPS of the previous fiscal year as the lower limit, from thesecond medium-term management plan, and continues to implement the progressive dividend policy in the fourth
medium-term management plan.
For the fiscal year under review, the year-end dividend forecast will remain unchanged at 38 yen per share as
initially scheduled. The dividend payout ratio is 56.3%.
For the fiscal year ending December 2022, the dividend forecast is 38 yen per share.
(4) Business Risks
The main risks that could impact the ES-CON JAPAN Group’s operating results, share prices, financial status, etc.,
are listed below. Statements concerning future matters are based on the judgements of the ES-CON JAPAN Groupas of the end of the fiscal year under review.
1)

Impact of Change in Business Environment Including the Spread of COVID-19
There are concerns over the resurgence of COVID-19 caused by variants, and careful attention should continue
to be paid to the future real estate market trend. If the pandemic resurges or continues over a long term, theeconomy is expected to deteriorate from a recovery trend. In such a case, the operating results, financial position,and status of cash flow of the ES-CON JAPAN Group may be materially impacted due to posting of appraisal lossof inventories and impairment loss, etc.

a. Condominium sales
In the condominium sales business, the actual demand for housing is high and remains strong even amid the
spread of infection. However, sales may become stagnant due to the decline in consumer sentiment on purchaseresulting from concerns over the resurgence of infection by variants as well as the reduction of borrowing limit anddeduction rate of housing loan caused by the amendment of tax system for fiscal 2022.
b. Real estate (other) sales business
There is a risk of possible decrease in real estate prices due to a reduced appetite for investment among
investors, the worsening of the financing environment resulting from financial contraction, and other factors.

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c. Retail properties
The ES-CON JAPAN Group owns and manages retail properties centering on community-based shopping centerswith supermarkets as the core tenant. Retail properties continue to be operated even amid the COVID-19
pandemic as facilities supporting daily lives, and supermarkets, drug stores, etc. maintain strong sales while thecustomers of tenants including restaurants, apparel stores, sports clubs, etc. which had struggled are gradually
returning. On the other hand, depending on the situation of the resurgence of variants, there may be a risk of
decease in the planned real estate leasing income such as the difficulty in soliciting new tenants.
d. Hotels
ES-CON JAPAN has been promoting hotel development projects in recent years, and has completed sales for 15
out of its 17 projects. As to the 2 properties owned (Fukuoka City Project opened in March 2020 and Osaka City
Project opened in January 2021), there is a risk of possible delay in the sales period or decrease in sales prices
due to the sluggish occupancy rate and difficulty in predicting the time needed for recovery.
e. Columbarium Business
ES-CON JAPAN has started to sell permanent use rights of Ryomon, a columbarium, in March 2021 in an effort tosolve problems facing modern society such as the fact that it is particularly difficult to obtain graves in central
Tokyo. There are delay in the sales plan with purchasers refraining from going outside and other factors anddepending on the situation of the spread of COVID-19 variants, there is a possibility that the sales to slow down.
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, and Money
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 ES-CON JAPANGroup's business performance.

3)

Dependence on Interest-Bearing Liabilities
The Group procures funds for land acquisition, etc. related to its real estate business primarily through borrowings
from financial institutions involved in project finance. In our condominium sale business, it takes time to get fromland acquisition to commercialization or sale, so the ratio of interest-bearing liabilities to total assets is relatively
high. We are committed to building and maintaining good business relationships with financial institutions
including the main banks and strengthening and stabilizing our financial foundation, but raising insufficient or
unreliable capital due to increased interest rates or a significant deterioration of the financial environment could
affect the Group's business performance and financial condition.

4)

Human Resources
Rather than vertical integration, the Group seeks to build an organizational structure that is closely linked
horizontally, oriented toward efficiency and agile management, able to flexibly promote business and manifest thegreatest value and performance with the smallest number of people. Our real estate-related business requires
diverse expertise, making personnel an extremely important business resource. In order to conduct reliablebusiness and grow as a Group, it is indispensable that we strive to share expertise and information and continue
to improve employees' abilities as well as secure highly specialized personnel and employ, nurture and educate
executives and young employees who will be the leaders of the next generation. However, failing to secure or
nurture the human resources sought by the Group or losing outstanding personnel could affect the Group'sbusiness performance and future business development.

- 16 -

5)

Management of Personal Information
In the course of the Group's business, we receive the personal information of customers and clients in eachbusiness when developing businesses in a multidimensional way, including customers who have purchased
condominiums or detached houses, have considered doing so, or reside in rental apartments as well as
customers who have purchased permanent use rights in the columbarium business, have considered doing so, or
those who are looking for jobs in the employment placement business, as a business operator handling personal
information under the Act on the Protection of Personal Information. We have established rules (a basic policy,
regulations and a manual) on the handling of personal information to improve the process and, regarding thesystem, we have implemented strict storage of personal information, introduced an OA system monitoring
software, and restricted access in order to refine our handling of both personal and non-personal information.
In addition, upon the sale of condominiums, we are partially entrusting the sale of such condominiums toreliable distributors, and intend to maintain confidentiality through efforts such as letting those distributors use partof ES-CON JAPAN’s management system and handling customer information within such scope in order to avoid
the leakage of the personal information of customers.
However, in the event of unforeseen circumstances causing personal information to be leaked, sales could fall
due to a loss of trust in the Group or costs could be incurred due to compensation for damages, which in turn
could affect the Group's business performance.

6)

Important Litigation
Regarding the risk of becoming subject to litigation, the Risk Management Committee consisting of directors andrisk management members from each division monitors risks and shares information across the Group. Important
litigation could affect the Group's business performance and financial condition.

7)

Risks Related to Climate Change
A society with increasing climate damage is assumed to be seen in 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.
Therefore, we are proceeding with the initiatives according to the following schedule to disclose the impact of
the risks and opportunities related to climate change on the Company’s business activities and revenue, etc.
based on the framework of TCFD.
・ December 2021 Implement capacity building with an aim to improve the knowledge related to TCFD・ March 2022
Assess the importance of business risks and opportunities, select external scenarios and・ June 2022

set ES-CON JAPAN’s scenario
Consider disclosing the assessment of the financial impact of important risks andopportunities on climate change on ES-CON JAPAN’s business- 17 -

Attachment 2
2. Management Policy(1)

Basic Policy on Corporate Management
How should we live each day and participate in society, how can we contribute to society, and how can we achieve
the happiness we seek as individual human beings through the benefits that our contribution brings to society? The
ES-CON JAPAN Group strives to answer these questions by continually providing meaningful opportunities to its
employees to help and encourage each other in the achievement of their full potential as individuals while
experiencing the joy of contribution to society through their work. This is the management philosophy of the ESCON JAPAN Group, the realization of which is pursued by setting and striving to realize the following management
policy.
1) To create new value that will truly satisfy customers by unleashing the infinite possibilities of real estate throughinformation, planning and product development abilities.
2) To constantly strive to remain ahead of the competition through aggressive management combined with strong
defensive strategies centering on in-depth control of ROA, cash flows and risk.
3) To aim to be small teams of highly skilled professionals in order to maintain the ability to adapt quickly andflexibly in today’s rapidly changing social environment.
4) To build and maintain good cooperative relationships, both internally and externally, based on respect for andgratitude to colleagues and those in other organizations.
5) To form an open organizational structure in which ideas can flow freely from front-line staff to senior
management, while also enhancing the internal audit system, with compliance and governance in mind.

(Corporate Branding Concept)
IDEAL to REAL ~Making the ideal real, and creating a new future~
Our aim as a life developer is to develop tangible properties as well as imagine and develop happy living for thepeople who will live there. With new unprecedented and think-outside-the-box approaches, we aim to create new
wealth and connect people, communities and the future. We will strive to make the ideal real by exploring theinfinite possibilities of real estate.
(2)

Medium- to Long-Term Corporate Management Strategy and Management Indicator Targets
We formulated “IDEAL to REAL 2023,” the fourth medium-term management plan, in February 2021. The new
medium-term management plan sets “Establishing business foundations able to withstand unexpected changes in
economic conditions” and “Simultaneously changing the revenue structure and expanding business domains” asmanagement strategies, and we are promoting businesses towards the achievement of the plan.
For an outline of the fourth medium-term management plan, “IDEAL to REAL 2023,” please see “1. Overview ofOperating Results, Etc. (1) Analysis of Operating Results 1) Overview of Fourth Medium-Term Management Plan”.

(3)

Business and Financial Issues to Be Addressed on a Priority BasisOur business environment is causing a serious impact on the Japanese economy and overseas economies due tothe rapid spread of COVID-19 since 2020. Although the situation settled down from October 2021 due to theprogress of vaccination and measures taken by countries, there are concerns over the resurgence of COVID-19
with the appearance of new variants, and it will still be difficult to make forecasts in the future. Therefore, COVID19 infection prevention measures as well as countermeasures eyeing post-COVID-19 and with-COVID-19 societies
under the development and spread of effective medicine have become an urgent issue. In addition to various
social issues including global warming, the declining birthrate and aging population, decrease in population, genderissues and issues of disparity, DX is being pursued in various fields with progress in digital technology such as IoT
and AI, and we are in a business environment in which competition is further intensifying and sustainable growth ofcompanies is constantly questioned with competition intensifying such as cross-industry competition, change incustomer behavior, and change in values.

- 18 -

In order to sustainably improve corporate value and contribute to society under this environment of rapid
diversification and change, we, as the ES-CON JAPAN Group, need to adopt a new flexible idea not bound by
precedent and established concepts, implementing a policy of consistently supplying excellent products,
maintaining a firm financial base, conducting stable management, growing surely and steadily through thesatisfaction of our customers, and aiming to be a “life developer” bringing the ideal into reality and creating alifestyle with the happiness of those living it as our top priority.
Through a multifaceted real estate business that includes residential development, commercial development,
logistics development, leasing

business, office development,

hotel development,

overseas business,planning/consulting, facility operation management, asset management, columbarium business, and real estate
crowdfunding, our goal is to become a one-of-a-kind company that always strikes the optimal balance ofbusinesses in its operations, builds a firm management base that can withstand any economic environment,
maximizes its corporate value, and increases shareholder returns.
Our specific endeavors are the following:(1) Business Management Structure
Naturally, there is a limit to land prices that can fetch certain profit, so purchasing at appropriate prices is one of ourmost important tasks. In order to purchase good-quality land, we must secure and nurture talented personnel,
constantly expand information channels, seek alliance with other companies and make quick, bold but also careful
decisions.
Based on the industry characteristic of a tendency toward larger balances of borrowings, we expect a disparity withplanned income to arise amid increased interest rates, so we need to reduce procurement costs, diversify
procurement methods, improve cashflow and continue building a stronger financial standing. We will continue to focus
on strengthening our financial standing to ensure steady management in any economic environment.
(2) Internal Organizational Reinforcement
We are working to become a "life developer" that shapes the very lives of residents. In our condominiums, ourstrength is taking the perspective of the customer, especially families, and embarking on projects that not only meettheir needs in the present but also conduct layout and design matching the location and environment, creating
customer needs, in pursuit of livability for the future.
As for commercial development, we are mainly developing everyday life-based retail facilities that are closely
associated with their local communities.
In the most recent period, we are also focusing on the development of rental apartments as well as planning anddevelopment of luxury apartments in resorts by utilizing the planning ability and know-how cultivated in the planningand development of condominiums.
No two properties are alike in form or location. Our mission is to propose and provide not only forms and locations
but also the ideal housing, ideal areas and ideal living environments in the eyes of those who live in the area as wellas in our residences, etc. and those who use facilities, etc., so to us, we do not merely create spaces in which we live
and spaces for facilities, propose and live richer lives. The ES-CON JAPAN Group aims to become a “life developer”
that proposes better, richer living.
Our development concept is to not only provide specifications and designs that can easily be customized but also
constantly ask ourselves, "What is the best plan for this project?" instead of focusing on the size of the project or
number of units at the land acquisition stage or even the basic planning stage.
For this reason, when promoting condominium development projects, our system unites those in charge ofpurchasing, planning and sale as one in a project from start to finish. This system is our strength and we will preservea sense of crisis in order to maintain and enhance the system so that it can retain dominance in any businessenvironment.
(3) New Initiatives
We have set and comply with NOI standards that enable possession of our acquisitions and developments regardlessof economic changes.

- 19 -

Our real estate development business is not limited to development of condominiums and commercial facilities. In
recent years, we are working on logistics facility development in light of the growth of the e-commerce market, officedevelopment and land planning business that revitalizes communities as well as rental apartment business which
remains strong even amid the COVID-19 pandemic, overseas investment business, columbarium business and realestate crowdfunding business. We will aim for the diversification of business eyeing the next generation.
In our real estate securitization business, our consolidated subsidiary ES-CON Asset Management is managing apublic REIT (EJR) whose main assets are land with leasehold rights and everyday life-based retail facilities. In themost recent period, we formed multiple private funds whose main assets are rental apartments, and are also
conducting initiatives with the intent to form private REITs.
In the real estate leasing business, focus will continue to be placed on the stabilization of rent structure, including
the implementation of M&As of companies positioning leasing business as the main business, to prioritize leasing
business for “Transforming the focus from flows to stock,” which is the basic management strategy policy in the fourth
medium-term management plan.
Furthermore, after becoming a consolidated subsidiary of Chubu Electric Power in April 2021, our creditworthiness
improved and the diversification of financing method and reduction of financing cost became possible. We are
steadily demonstrating synergy effects, such as further business expansion in the Chubu region and thecommencement of multiple joint businesses with the Chubu Electric Power Group. We aim to realize a “new form ofcommunity” by combining our know-how on urban development and Chubu Electric Power Group’s knowledge onenergy management, and will also be engaged in large-scale redevelopments in central Tokyo and near stations andlarge-scale urban developments.
In addition to developing real estate, ES-CON PROPERTY, a consolidated subsidiary, focuses on property
management business to further add value to real estate, and, in order to solidify our position as the only generaldeveloper with the operational capability suited to the function of the real estate, our consolidated subsidiary ES-CON
Living Service will expand the breadth and depth of our development capabilities by enhancing real estate operation.
As an initiative eyeing the next generation, we promoted overseas investment business and sales business of thepermanent use rights of urban columbarium as well as implemented M&A of companies engaged in real estate
crowdfunding business in the most recent period.
(4) Medium- to Long-Term Initiatives
We will strengthen “Promotion of ESG” which is one of the management strategies in “IDEAL to REAL 2023,” thefourth medium-term management plan that is currently being promoted. We believe that nation-wide initiatives on
climate change, such as the new target for greenhouse gas emission reduction for 2030 and carbon neutrality in
2050, are important issues in terms of management also for the ES-CON JAPAN Group. In addition, we aim toenhance management transparency and fairness and become a company performing reliable governance as well as
contribute also to society through efforts such as regional revitalization.
We will also implement initiatives on SDGs, which are sustainable development targets, with a strong will.
The ES-CON JAPAN Group, which provides cities, residences and space where people live, promotes a vibrantenvironment where various people can select many kinds of lifestyles, work styles and way of living and safely live a
lively life as well as sustainable urban development with high environmental performance. We will also create aworking environment respecting human rights and where various personnel can succeed as well as strengthen healthmanagement, fulfill the social responsibilities of companies, and aim to realize a sustainable society.

3. Basic Policy on Selection of Accounting Standard
The ES-CON JAPAN Group uses Japanese GAAP for the preparation of its consolidated financial statements in viewof comparability for the period covered by the consolidated financial statements and inter-company comparability.
The Group’s policy is to respond to the application of IFRS in an appropriate manner, taking into account a varietyof circumstances inside and outside Japan.

- 20 -

Attachment 3
4. Consolidated Financial Statements(1)

Consolidated Balance Sheet(Unit: million yen)
Fiscal year ended Dec. 2020(as of Dec. 31, 2020)

Fiscal year ended Dec. 2021
(as of Dec. 31, 2021)

23,870927
6,262
82,3168,739(0)122,11733,667835
7,541
123,419
11,396(0)
176,859

4,359
(889)
3,470
6
(6)
0
11,262
4
(4)
0
1
321
(180)
141
14,87623,312(1,516)
21,7956(6)
030,840
2
(0)
2
－
377
(238)
139
52,778

339
63
403

8,217
57
8,275

3,556
2,468
406
5,633
(37)
12,02627,306

6,186
2,467
227
5,932
(37)
14,77675,830－－149,423

81
81
252,771

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
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
VehiclesAccumulated depreciation
Vehicles, net
Land
Leased assets
Accumulated depreciation
Leased assets, net
Construction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax 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- 21 -

(Unit: million yen)
Fiscal year ended Dec. 2020(as of Dec. 31, 2020)

Fiscal year ended Dec. 2021
(as of Dec. 31, 2021)

2,907
26,093
230
0
1,590
1,460
2,233
4,583
713
39,813

3,589
82,912
－
0
2,468
1,653
6,058
5,634
205
102,523

69,274
－
2
135
46
260
1,262
70,982
110,795

76,533
2
8,056
135
57
270
2,564
87,619190,143

6,284
2,088
31,429(1,348)38,454

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

153

371

(18)

(36)

134

334

1
37
38,627
149,4230(152)
62,628
252,771

Liabilities
Current liabilities
Short-term loans payable
Current portion of long-term loans payable
Current portion of bonds
Lease obligations
Accounts payable - other
Income taxes payable
Advances received
Deposits received
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Deferred tax liabilities
Provision for directors’ share-based benefits
Provision for share-based benefits
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Total accumulated other comprehensive
incomeSubscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets- 22 -

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income(Consolidated Statement of Income)(Unit: million yen)
Fiscal year ended Dec. 2020
(from Jan. 1, 2020
to Dec. 31, 2020)

Fiscal year ended Dec. 2021
(from Jan. 1, 2021
to Dec. 31, 2021)

77,30857,62819,67979,01758,42920,588

2,524
502
308
1,723
21
10
333
559
1,492
7,477
12,202

3,498
1,091
271
2,146
－
12
540
801
1,843
10,206
10,381

16
93
19
－

10
101
37
73

－

54

26
155

25
303

1,047
－

1,463
27

109

－

37
1,194
11,164

95
1,585
9,099

0
0
0

0
0
0

0
0
11,164
3,212
297
3,509
7,654
(8)
7,663

0
0
9,099
3,147
180
3,328
5,770
(190)
5,961

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Advertising expenses
Sales commission
Directors’ compensations
Salaries and allowances
Provision for directors’ share-based benefits
Provision for share-based benefits
Commission fee
Taxes and dues
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Cancellation income
Foreign exchange gains
Share of profit of entities accounted for using
equity method
Other
Total non-operating income
Non-operating expenses
Interest expenses
Amortization of share issuance cost
Share of loss of entities accounted for using
equity method
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on reversal of subscription rights to shares
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitLoss attributable to non-controlling interests
Profit attributable to owners of parent- 23 -

(Consolidated Statement of Comprehensive Income)(Unit: million yen)
Fiscal year ended Dec. 2020
(from Jan. 1, 2020
to Dec. 31, 2020)

Fiscal year ended Dec. 2021
(from Jan. 1, 2021
to Dec. 31, 2021)

7,654

5,770

(103)

218

0

(8)

(18)

(9)

(121)
7,533

199
5,970

7,541

6,161

(8)

(190)

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- 24 -

(3)Consolidated Statement of Changes in Equity
Fiscal year ended December 2020 (from January 1, 2020 to December 31, 2020)(Unit: million yen)
Shareholders’ equity
Capital stock

Balance at beginning ofcurrent period
Changes of items during
periodCapital surplus

6,275

2,004

9

9

Issuance of new shares

26,256(1,247)33,28818

Dividends of surplus
Profit attributable toowners of parent
Disposal of treasury
sharesPurchase of treasury
shares by the sharebased payment
benefits trust for
directors
Net changes of items
other thanshareholders’ equity
Total changes of items
during period
Balance at end of current
periodTotal
shareholders’equityRetained earnings Treasury shares(2,490)(2,490)

7,663

7,663

74

132

207

(233)

(233)

9

84

5,173

(101)

5,165

6,284

2,088

31,429(1,348)38,454

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning ofcurrent period
Changes of items during
period256

Total
accumulated Subscription Non-controllingrights to sharesinterests
othercomprehensive
incomeForeigncurrencytranslation
adjustment
(0)

256

1

0

Issuance of new shares

33,546

18

Dividends of surplus
Profit attributable toowners of parent
Disposal of treasury
sharesPurchase of treasury
shares by the sharebased payment
benefits trust for
directors
Net changes of items
other thanshareholders’ equity
Total changes of items
during period
Balance at end of current
periodTotal net
assets(2,490)
7,663
207

(233)

(103)

(17)

(121)

(0)

36

(84)

(103)

(17)

(121)

(0)

36

5,080

153

(18)

134

1

37

38,627- 25 -

Fiscal year ended December 2021 (from January 1, 2021 to December 31, 2021)(Unit: million yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Changes of items during
periodIssuance of new shares

Capital surplus

6,284

2,088

10,235

10,23531,429(1,348)38,454

20,470

Dividends of surplus
Profit attributable toowners of parent
Disposal of treasury
sharesNet changes of items
other thanshareholders’ equity
Total changes of items
during period
Balance at end of current
periodTotal
shareholders’equityRetained earnings Treasury shares(2,645)(2,645)

5,961

5,961

73

132

205

10,235

10,3083,316

132

23,991

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

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning ofcurrent period
Changes of items during
period153

Total
accumulated Subscription Non-controllingrights to sharesinterests
othercomprehensive
incomeForeigncurrencytranslation
adjustment
(18)

134

1

37

Total net
assets38,627Issuance of new shares

20,470

Dividends of surplus(2,645)

Profit attributable toowners of parent
Disposal of treasury
sharesNet changes of items
other thanshareholders’ equity
Total changes of items
during period
Balance at end of current
period

5,961
205
218

(18)

199

(0)

(190)

9

218

(18)

199

(0)

(190)

24,000

371

(36)

334

0

(152)

62,628- 26 -

(4)Consolidated Statement of Cash Flows(Unit: million yen)
Fiscal year ended Dec. 2020
(from Jan. 1, 2020
to Dec. 31, 2020)

Fiscal year ended Dec. 2021
(from Jan. 1, 2021
to Dec. 31, 2021)

11,164
399
100
4
－

9,099
706
237
27
27

0

(0)

21

－

10

10

(109)
1,047
31

(111)
1,463
(73)

109

(54)

(0)
0

(0)
0

(329)

107

(4,370)
(381)
(358)

(19,306)
(894)
366

192

(416)

(576)
187
(805)
(45)
6,291
95
(1,195)(5,072)
119

3,575
439
(1,221)169(5,848)181(1,723)(3,419)(10,810)(18)
19(1,913)9(15)
18(2,265)－717

0(6,555)86(4,763)
121

91

－

－

(24,070)(2,930)
500
(983)
1,244
(2)
(9,732)(8)
647(1,120)
1,732－(29,721)

Net cash provided by (used in) 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 (gain) on sales of non-current assets
Loss on retirement of non-current assets
Decrease (increase) in notes and accounts
receivable - trade
Decrease (increase) in inventories
Decrease (increase) in prepaid expenses
Increase (decrease) in accounts payable - other
Decrease/increase in consumption taxes
receivable/payable
Increase (decrease) in advances received
Increase (decrease) in deposits received
Decrease (increase) in other assets
Increase (decrease) in other liabilities
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes (paid) refund
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of investment securities
Proceeds from sales 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
Purchase of shares of subsidiaries resulting inchange 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
Net cash provided by (used in) investing activities- 27 -

(Unit: million yen)
Fiscal year ended Dec. 2020
(from Jan. 1, 2020
to Dec. 31, 2020)

Fiscal year ended Dec. 2021
(from Jan. 1, 2021
to Dec. 31, 2021)

8,018(9,690)62,166(46,917)
(40)
(1)
(31)
18
207
(233)
(2,488)11,007(8)

6,539(5,857)111,250(79,320)
(230)
(1)
(5)
20,361203－(2,645)50,293
(1)

1,385

9,760

22,413
23,79823,79833,559Net cash provided by (used in) financing activities
Increase in short-term loans payable
Decrease in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Redemption of bonds
Repayments of lease obligations
Repayments of installment payables
Proceeds from issuance of common shares
Proceeds from disposal of treasury shares
Purchase of treasury shares
Cash dividends paid
Net cash provided by (used in) financing activities
Translation differences 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- 28 -

(5) Notes to Consolidated Financial Statements(Notes on Going Concern Assumption)
Not applicable.
(Changes in Accounting Policies)
Not applicable.
(Additional Information)(Accounting estimates in line with the spread of COVID-19)
Due to the recent spread of COVID-19 infections and strong uncertainty about the timing of the end of thepandemic, the impact is assumed to continue for a certain period of time in 2022 onward albeit limited. Accounting
estimates for appraisal of inventories, impairment loss on non-current assets, appraisal of investment securities,
etc. are made based on such assumption.
However, there are many factors of uncertainty concerning the impact of the COVID-19 pandemic, and thus if
the real estate market deteriorates, the operating results, financial position, and status of cash flow of ES-CON
JAPAN Group may be materially impacted due to posting of appraisal loss of inventories and impairment loss, etc.
(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 company directors (excluding outside directors, auditors and non-executive directors) and (authorized)
executive managing officers (the “Directors, etc.”; Hereinafter referred to as the same unless otherwise
specified) and ES-CON JAPAN’s operating results and share price, with the Directors, etc. not only
benefiting from a rise in share price but also sharing the same risks as shareholders in relation to a fall inshare price, thereby increasing awareness of contribution to the medium- to long-term improvement ofoperating 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 the Regular General Meetings ofShareholders 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 the said money as capital, and shares of ESCON JAPAN and the fair market value of shares of ES-CON JAPAN are granted to ES-CON JAPAN’s
Directors, etc. through the trust in accordance with the operating results achievement rate, etc. pursuant to
the officer stock ownership regulations set by ES-CON JAPAN. The shares of ES-CON JAPAN will be
granted to the Director, etc. of ES-CON JAPAN when the said Director, etc. retires from all positions suchas director in principle.
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
JAPAN will contribute money up to 330 million yen (110 million yen per fiscal year multiplied by the numberof target fiscal years) to the trust.
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- 29 -

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
shares and 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 fiscal year under review.

(Share-Based Payment Benefits Type ESOP Trust)(1)

Overview of the transaction
ES-CON JAPAN passed a resolution to introduce a share-based payment benefits-type ESOP trust (the“System”; The trust established based on the trust agreement concluded with Resona Bank, Limited for the
System is referred to as “Share-Based Payment ESOP” ) at the Regular General Meeting of Shareholders
held on March 20, 2015, 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.
The System is a system by which ES-CON JAPAN contributes money to a trust with the trust acquiring
shares of ES-CON JAPAN with the said money as capital, and shares of ES-CON JAPAN are granted to
ES-CON JAPAN Group’s employees who have satisfied certain requirements through the trust, pursuant tothe 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
shares and the number of shares is 59 million yen and 233,000 shares for the previous fiscal year, and 57
million yen and 225,700 shares for the fiscal year under review.

(Segment Information, Etc.)[Segment Information]
1. Overview of the Reporting Segments
The reporting segments of the ES-CON JAPAN Group are, among the units constituting the ES-CON
JAPAN Group, segments that have available separate financial information and are subject to periodical
review for determining allocation of management resources and evaluation of performance by the board of
directors and other meetings.
The ES-CON JAPAN Group has consolidated independent projects that have similar products, services,
etc. and formed three reporting segments of “real estate sales business,” “real estate leasing business” and“real estate planning agency and consulting business.”
The following are the main descriptions of each reporting segment.
Real estate sales business:
Real estate leasing business:
Real estate planning agency
and consulting business:
2.

Development/sale of condominiums, commercial facilities, etc., sale ofland and such
Leasing of real estate and such
Subcontracting of real estate-related businesses, brokerage, sales agency
and suchCalculation Method of Net Sales, Income or Loss, Assets and Other Item Amounts by Reporting Segment
The method of accounting treatments of the reported business segments is the same as that described in“Important Matters Serving as the Base for Preparation of Consolidated Financial Statements.”- 30 -

3.

Information on Net Sales, Income or Loss, Assets and Other Item Amounts by Reporting Segment
Fiscal year ended December 2020 (from January 1, 2020 to December 31, 2020)(Unit: million yen)
Reporting segment
Real estateplanning agency
Real estate sales
Real estateandbusinessleasing businessconsulting
businessAmount on
consolidated
Reconciliation
financial(Note 1)statements(Note 2)Total

Net sales
Net sales to externalcustomers

71,485

5,527

295

77,308－77,308

－

－

－

－

－

－

71,485

5,527

295

77,308－77,308Segment income

14,2572,381

152

16,791(4,588)

12,202

Segment assets

95,146

20,521

6,598

122,266

27,156

149,423

－

283

4

287

116

403

97

－

3

100

－

100

455

－

－

455

－

455

－

1,761

4,003

5,765

79

5,845

Intersegment net
sales or transfers
Total

Other items
Depreciation(Note 3)
Amortization of
goodwill
Amount ofinvestment inentities accounted
for using equity
methodIncrease in property,
plant and equipment
and intangible
assets (Note 3)(Note 1)

Reconciliations are as follows:(1) The reconciliation of segment income of -4,588 million yen is corporate expenses not attributable to any
reporting segment. Corporate expenses are general and administrative expenses not attributable toreporting segments.
(2) The reconciliation of segment assets of 27,156 million yen is mainly surplus operating funds (cash anddeposits), administrative assets, etc. not attributable to reporting segments.
(3) The reconciliation of depreciation of 116 million yen is depreciation on corporate assets not attributable toreporting segments.
(4) The reconciliation of increase in property, plant and equipment and intangible assets of 79 million yen isincrease in corporate assets not attributable to reporting segments.
(Note 2) Segment income is reconciled with operating income on the consolidated statement of income.
(Note 3) Increase in depreciation, property, plant and equipment and intangible assets includes long-term prepaid
expenses and the amortization amount of such expenses.

- 31 -

Fiscal year ended December 2021 (from January 1, 2021 to December 31, 2021)(Unit: million yen)
Reporting segment
Real estateplanning agency
Real estate sales
Real estateandbusinessleasing businessconsulting
businessAmount on
consolidated
Reconciliation
financial(Note 1)statements(Note 2)Total

Net sales
Net sales to externalcustomers

70,334

8,090

592

79,017－79,017

－

－

－

－

－

－

Total

70,334

8,090

592

79,017－79,017

Segment income (loss)

13,039

3,372

(516)

15,895(5,514)

10,381

Segment assets

139,31068,8087,320

215,439

37,332

252,771

－

584

35

619

114

733

97

140

－

237

－

237

536

－

710

1,247

－

1,247

－

46,652

15

46,66742

46,710Intersegment net
sales or transfers

Other items
Depreciation(Note 3)
Amortization of
goodwill
Amount ofinvestment inentities accounted
for using equity
methodIncrease in property,
plant and equipment
and intangible
assets (Note 3)(Note 1) Reconciliations are as follows:(1) The reconciliation of segment income (loss) of -5,514 million yen is corporate expenses not attributable toany reporting segment. Corporate expenses are general and administrative expenses not attributable toreporting segments.
(2) The reconciliation of segment assets of 37,332 million yen is mainly surplus operating funds (cash anddeposits), administrative assets, etc. not attributable to reporting segments.
(3) The reconciliation of depreciation of 114 million yen is depreciation on corporate assets not attributable toreporting segments.
(4) The reconciliation of increase in property, plant and equipment and intangible assets of 42 million yen isincrease in corporate assets not attributable to reporting segments.
(Note 2) Segment income (loss) is reconciled with operating income on the consolidated statement of income.
(Note 3)

Increase in depreciation, property, plant and equipment and intangible assets includes long-term prepaid
expenses and the amortization amount of such expenses.

- 32 -

5.

Other

(1)

Status of Contracts and Sales
The performance of contracts in the real estate sales business for the fiscal year ended December 2021 is asfollows:
Fiscal year ended Dec. 2021
(from Jan. 1, 2021 to Dec. 31, 2021)
Classification

Contract amount during the period

Number of units(units)Number of units (units)

Amount (million yen)

1,338

70,925834

48,067－36,276－

16,8601,338

107,202834

64,927Mid- to high-risehousing, etc.
Other
Total
(Note)

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

The above amounts do not include consumption tax, etc.

The main performance of sales for the most recent two fiscal years is as follows:
Fiscal year ended Dec. 2020
(from Jan. 1, 2020 to Dec. 31, 2020)
Name of segment

Number ofunits(units)Amount(millionyen)

Number ofunits(units)Amount(millionyen)

Condominiums

652

30,677

Condominiums

1,020

45,050

tonarie Yamatotakada

－

8,175

－

4,600

－

4,039

6,875

Suroy Mall Nagamine
Genboen, Koga-shi,
Fukuoka Prefecture
Fuji Grand Natalie

LOGITRES Tojo

－

8,120

tonarie Toga-Mikita
Toshima-ku
Minamiotsuka
Commercial leasehold
land in Sakai-shi
Daikyocho, Shinjukuku

－

－

3,950

－

2,900

KoLuTeNa I

－

3,500

－

2,733

Detached house

－

2,784

－

2,562

－

1,442

Detached house

－

2,316

－

1,300

Matsubara, Setagayaku

－

2,167

－

1,090

Honjo-Nishi, Kita-ku

－

1,967

Fukuroi-shi, Shizuoka
Prefecture
Commercial leasehold
land in Sapporo-shi
Kandacho,
Higashiosaka-shi
Commercial leasehold
land in Neyagawa-shi

－

702

－

970

Commercial leasehold
land in Amagasaki-shi

－

565

－

765

－

530

－

445

－

300

－

392

－

226

－

417

Commercial leasehold
land in Kobe-shi
Commercial leasehold
land in Hikone-shi
3-chome, Aoyamadai,
Suita-shi
Uchiagetakatsukacho,
Neyagawa-shi
Other

－

52

－

201

1,020

70,334

Property nameReal estate
sales business

Commercial leasehold
land in Omihachimanshi
Commercial leasehold
land in Ikoma-gun
Commercial leasehold
land in Muko-shi
Genboen, Koga-shi,
Fukuoka Prefecture
Other

Subtotal

652

Real estateleasing business
Real estateplanning agency
and consulting
business
Total(Note 1)
(Note 2)

Fiscal year ended Dec. 2021
(from Jan. 1, 2021 to Dec. 31, 2021)
Property name71,485
5,527

8,090

295

592

77,308There are no transactions between segments.
The above amounts do not include consumption tax, etc.
- 33 -

Subtotal

Total

79,017