Summary of Accounts for First Quarter of Fiscal Year Ending December 2023
(Japanese GAAP) (Consolidated).

April 27, 2023
Listing exchange: Tokyo Stock Exchange
URL:
https://www.es-conjapan.co.jp/english/
President & Representative Director
Director
TEL: +81-3-6230-9303
April 27, 2023
Yes/No: No
Yes/No: No

Name of listed company: ES-CON JAPAN Ltd.
Code:
8892
Representative:(Name) Takatoshi Ito(Position)
Contact for inquiries:(Name) Kenji Fujita(Position)
Scheduled date for submission of periodic securities report:
Scheduled date for start of dividend payment:
Supplementary explanatory materials created for accounts?
Accounts briefing meeting held?

(Amounts are rounded down to the nearest million yen)

1.

Consolidated results for first quarter of fiscal year ending December 2023 (from January 1, 2023 to March 31, 2023)(1) Consolidated operating results (cumulative)(% figures show the rate of increase (decrease) compared with the same period of the previous year)

Net sales

Operating income

million yen%
First quarter of
28,541
124.6
fiscal year ending Dec. 2023:
First quarter of
12,7062.2
fiscal year ended Dec. 2022:(Note) Comprehensive income
First quarter of fiscal year ending Dec. 2023:
2,850 million yen [- %]Ordinary income

Profit attributable toowners of parent
million yen%

million yen%

million yen

%

4,879

465.1

4,497

671.7

3,006

－

863

(28.5)

582(36.7)

235(63.6)

Fiscal year ended Dec. 2022:
135 million yen [-80.3%]

Basic earnings per shareFirst quarter offiscal year ending Dec. 2023:
First quarter offiscal year ended Dec. 2022:(2) Consolidated financial position
Total assets

million yen

Diluted earnings per share
yen

yen

31.56

31.51

2.47

2.46

Net assets

Equity ratio

million yen%

Book value per shareyenFirst quarter offiscal year ending Dec. 2023:

283,118

63,32623.0

683.05

Fiscal year ended Dec. 2022

263,729

64,14425.0

691.87

Reference: Equity
First quarter of fiscal year ending Dec. 2023:
65,082 million yen
2.

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

Dividends
End of firstquarter

End of second
quarter

Annual dividend
End of third
quarter

yen

yen

yen

yen

0.00

－

38.00

38.00

38.00

38.00

yen

Fiscal year ended Dec. 2022－

Fiscal year ending Dec. 2023－

Fiscal year ending Dec. 2023
(Forecast)－Year-end

Total

－
0.00

(Note) Revisions from latest dividends forecast: None

-1-

－

3.

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

Net sales
million yen%

Operating income

Ordinary income

Profit attributable to Basic earnings
owners of parent
per share

million yen%

million yen%

million yen

%

yen

6.4

5,200

1.2

3,400

3.1

35.69

4.6

14,200

1.3

9,400

29.6

98.66

First two quarters
46,00012.5
6,000(cumulative)
Full fiscal year
110,000
10.6
16,200(Note) Revisions from the latest dividends forecast:None* Explanatory notes(1) Changes in significant subsidiaries during the first quarter(Changes in specified subsidiaries resulting in change in scope of consolidation):
Newly included:－ (Company name)－ (Company name)
Excluded:None(2) Application of accounting treatments specific to preparation of quarterly consolidated financial statements:(3) Changes in accounting policies, changes in accounting estimates, and restatement
1) Changes in accounting policies due to amendment of accounting standards, etc.:
2) Changes in accounting policies other than 1):
3) Changes in accounting estimates:
4) Restatement:(4) Number of shares issued and outstanding (common shares)
1) Number of shares issued and outstanding
First quarter of(including treasury shares) at end of fiscal year fiscal year ending
Dec. 2023
2) Number of treasury shares at end of period
First quarter offiscal year ending
Dec. 2023
3) Average number of shares during period
First quarter offiscal year ending(cumulative)
Dec. 2023

None

None
None
None
None

98,580,887 Fiscal year ended 98,580,887
shares Dec. 2022
shares3,299,600 Fiscal year ended
shares Dec. 2022

3,322,800
sharesFirst quarter of
95,274,955
fiscal year ended 95,489,887
shares Dec. 2022
shares(Note) The number of treasury shares at end of period includes shares of ES-CON JAPAN held in a board
benefit trust for executives and a share-based payment benefits-type ESOP trust (first quarter of fiscal
year ending December 2023: 851,000 shares in the board benefit trust for executives and 550,200
shares in the share-based payment benefits-type ESOP trust). In the calculation of the average numberof shares 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 (first quarter of the fiscal year ending December 2023: 1,407,531
shares).
*This quarterly summary of accounts is not subject to quarterly review of certified public accountant or audit
corporation.

*

Explanation regarding appropriate use of earnings forecasts, and other notes
The earnings outlook and other forward-looking statements contained in this document are based on information
currently available to and certain assumptions that are thought to be reasonable by ES-CON JAPAN. Accordingly,
actual business performance and other results may differ materially due to various reasons. For the conditions
forming the assumptions on which earnings forecasts are based and explanatory notes for use of earnings
forecasts, etc., please see “Attachment; 1. Qualitative Information on Quarterly Results; (4) Explanation ofConsolidated Earnings Forecast and Other Forward-Looking Information” on page 13.

-2-

○ Contents of Attachment
1. Qualitative Information on Quarterly Results ................................................................................................................ 4(1) Business Risks ....................................................................................................................................................... 4(2) Explanation of Operating Results ........................................................................................................................... 4(3) Explanation of Financial Position .......................................................................................................................... 13(4) Explanation of Consolidated Earnings Forecast and Other Forward-Looking Information.................................... 13
2. Quarterly Consolidated Financial Statements and Key Notes .................................................................................... 14(1) Quarterly Consolidated Balance Sheet ................................................................................................................. 14(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income .. 16(Quarterly Consolidated Statement of Income) ..................................................................................................... 16
First quarter of fiscal year ending December 2023 ............................................................................................ 16(Quarterly Consolidated Statement of Comprehensive Income) ........................................................................... 17
First quarter of fiscal year ending December 2023 ............................................................................................ 17(3) Notes to Quarterly Consolidated Financial Statements ........................................................................................ 18(Notes on Going Concern Assumption)................................................................................................................. 18(Notes on Substantial Changes in the Amount of Shareholders’ Equity) .............................................................. 18(Changes in Accounting Policies).......................................................................................................................... 18(Additional Information) ......................................................................................................................................... 18(Segment Information, Etc.) .................................................................................................................................. 21(Significant Subsequent Events) ........................................................................................................................... 22
3. Other .......................................................................................................................................................................... 23
Status of Contracts and Sales .................................................................................................................................... 23-3-

Attachment 1
1. Qualitative Information on Quarterly Results(1)

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

(2)

Explanation of Operating Results
In the first quarter of the fiscal year under review (fiscal year ending December 2023), the Japanese economy
continued to see a moderate recovery trend centered on domestic demand as the normalization of economic
and social activities have steadily progressed due to the easing of behavioral restrictions and immigration
restrictions while the spread of COVID-19 was curbed.
In the real estate industry in which the ES-CON JAPAN Group operates, as work-style reform and new waysof living, including teleworking, become widespread, the market remains robust thanks to stable housing
demand as well as the effect of underlying support, including the continuation of monetary easing policy.
At the same time, however, the outlook is becoming somewhat more uncertain as the downturn in overseas
economies, as evidenced by bank failures in the United States, is manifesting itself as a risk that could put
downward pressure on the Japanese economy. In addition, the impact of the recent price hikes on consumer
sentiment is another concern.
Amid these highly unpredictable business circumstances, we aim for sustainable growth by building a firmmanagement base that can withstand any economic environment to maximize corporate value under the fourth
medium-term management plan “IDEAL to REAL 2023” (the three-year period from the fiscal year ended
December 2021 through the fiscal year ending December 2023) formulated in February 2021 with the themeof “Transformation and Rapid Progress.”
In FY2023, the final fiscal year of the fourth medium-term management plan, ES-CON JAPAN will pushforward toward “Rapid Progress” through concerted efforts.

1)

Progress of Fourth Medium-term Management Plan “IDEAL to REAL 2023”
In fiscal 2021, the first fiscal year of the fourth medium-term management plan, we strengthened our financialbase by capital increase through third-party allotment with Chubu Electric Power Co., Inc. (hereinafter “Chubu
Electric Power”) as the allottee and improved our creditworthiness by becoming a consolidated subsidiary of
Chubu Electric Power. Furthermore, ES-CON JAPAN made Picasso Co., Ltd. and its seven group companies(hereinafter “Picasso Group”) its subsidiaries, resulting in the “transformation” of the revenue structure by
securing stable rental income with a single stroke. Accordingly, ES-CON JAPAN modified part of the
management index, including the share of profits from leasing for the fiscal year ending December 31, 2023,
the final fiscal year of its medium-term management plan. The details of the modification are described in thefollowing “(e) Management Targets.”
In the fiscal year under review, the final fiscal year of the medium-term management plan, the condominium
business is on track to achieve approximately 75% of the planned sales of 61,900 million yen on a contract
basis. Moreover, in February 2023 ES-CON JAPAN decided to make Shijo-Omiya Building Co., Ltd (after
implementation of the company split), which is involved in the real estate leasing and other businesses, asubsidiary (scheduled execution date of share transfer: July 31, 2023). The “transformation” of the revenue
structure is expected to further progress.
The details and progress of the fourth medium-term management plan are as follows.
(a) Basic Management Strategy Policies• Establish business foundations able to withstand unexpected changes in economic conditions
Establish a solid business and financial standing that can maintain fund-raising ability under any
economic environment.

-4-• 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 thereal estate leasing business while simultaneously realizing business diversification and expanding
business territories(b) Basic Policy: Transformation and Rapid ProgressTransformation• Proactive investment in long-term revenue-generating real estate and improvement of balance sheet
structure• Transform the focus of management from flows to stock
Rapid Progress• Demonstrating synergies within the Chubu Electric Power Group• Achieving net sales of 110 billion yen and operating income of 16 billion yen (in the final fiscal year of
the medium-term management plan)(c) Management Strategies• Transformation to a structure of sustained and stable revenues• Stable growth in existing core businesses through business diversification and area strategies• Growing new businesses into core businesses through business diversification and area strategies• Taking on the challenges of new business domains• Enhancing synergies within the ES-CON JAPAN Group• Expanding business bases, primarily in the five major urban areas• Enhancing synergies with the Chubu Electric Power Group• Promoting ESG initiatives(d) Performance Plan
(Unit: million yen)
Fiscal year
ended Dec.
2021
ActualFiscal year ended Dec. 2022
ActualFiscal year ending Dec. 2023

Difference
Difference
Increase/
Increase/
Initial plan from initial
Initial plan Initial plan from initial
decreasedecrease
plan
plan

Net sales

79,01799,431

100,000(568)(0.6%)

110,000

110,000－－

Operatingincome10,381

15,492

14,000

1,492

10.7%

16,20016,000

200

1.3%

-5-

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

Fiscal year ended Dec. 2022
ActualPlan

Percentagechange fromplan

Fiscal year ending Dec. 2023
Revisedplan*4

Percentage
Initial plan change frominitial plan

21.2%

21.5%

26.0%

(4.5%)

30.0%

26.0%

4.0%

11.8%

11.3%

13.0%

(1.7%)

13.0%

13.0%

-

3.2%

4.6%

4.0%

0.6%

4.0%

4.0%

-

Equity ratio

24.8%

25.0%

23.0%

2.0%

21.0%

23.0%

(2.0%)

Share of long-term
earnings from realestate*3

20.6%

19.5%

21.0%

(1.5%)

23.0%

18.0%

5.0%

62.6
64.1
67.3
(3.1
72.0
72.0
billion yen billion yen billion yen billion yen)billion yen billion yen
1 Share of profits for leasing: Leasing segment profits / Total segment profits (excluding adjustments)
2 Return on invested capital (ROIC): After-tax operating income / (Shareholders’ equity + Interest-

Net assets(Note)-

bearing liabilities)
3 Share of long-term earnings from real estate: Real estate generating leasing revenues recorded
as non-current assets / Total assets
4 In the first fiscal year of the fourth medium-term management plan, ES-CON JAPAN rapidly realized“transformation” of the revenue structure by accelerating progress on investment plans ahead ofschedule and securing stable leasing income, and “share of profits from leasing,” “equity ratio,” and“share of long-term earnings from real estate” for the fiscal year ending December 2023 wererevised on March 25, 2022.
(f) Investment Plan

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

Fiscal year
ended Dec.
2021

Fiscal year
ended Dec.
2022

ActualActualCumulative total
for 2021 and 2022
ActualPlan

Difference
from plan(Unit: million yen)Three-year
Fiscal year ending
cumulative
Dec. 2023
total
Increase/ Revised InitialPlandecrease plan
plan

76,79910,80887,60770,00017,60725.2% 65,700 60,000

130,000

19,191

26,10345,29455,000(9,705)(17.6%) 22,300 35,000

90,00095,99036,911 132,902 125,000

7,902

6.3% 88,000 95,000

220,000

Status of Demonstration of Synergy Effect with the Chubu Electric Power Group
Two projects are currently underway as joint projects with Chubu Electric Power. In August 2022, a consortiumof businesses led by Chubu Electric Power, of which ES-CON Japan is a member (hereinafter the“Consortium”), entered into a basic planning agreement for the development project at the former site of
Nagoya Horse Racing Track. In addition, the Consortium submitted a plan to utilize wood produced in Aichi
Prefecture for “Ideas for Projects/Plans for the Realization of Carbon Neutrality” solicited by Aichi Prefectureand entered into an “Agreement on the Promotion of the Utilization of Wood in Public Buildings” with Aichi
Prefecture, the first of its kind in the prefecture, in September 2022.

-6-

Furthermore, we established TSUNAGU Community Farm LLC with Chubu Electric Power and Spread Co.,
Ltd. (hereinafter “Spread”), and started construction of Techno Farm Fukuroi, which will be the world’s largest
vertical farm utilizing fully artificial light and capable of producing 10 tons of lettuce per day. By combining
Chubu Electric Power’s know-how in energy management, ES-CON JAPAN’s real estate development
capabilities, and Spread’s cultivation technology, we are working on the efficient and stable production of “safeand secure” lettuce with the aim of launching production in January 2024.
We have also undertaken a joint project with Chuden Real Estate Co., a wholly owned subsidiary of Chubu
Electric Power, to develop condominiums and commercial facilities centered on the Chubu area. All the unitsof the four projects, including “Grand Le JADE Shirakabe Getsuronotei” (24 units in total) and “Grand Le JADE
Shirakabe Rinzennotei” (34 units in total), the first and second joint projects in Shirakabe, Higashi Ward,
Nagoya City, were sold out in November 2022.
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.”
3)

Progress of Projects in Hokkaido
ES CON FIELD HOKKAIDO, with which ES-CON JAPAN has concluded a naming rights agreement, the new
Hokkaido Nippon Ham Fighters stadium in Kitahiroshima City, Hokkaido, opened in March 2023. ES-CON
JAPAN has participated in the urban development concept of HOKKAIDO BALLPARK F VILLAGE (total
development area: approx. 36.7 ha; hereinafter “F VILLAGE”) centered on the new stadium, and “Le JADE
Hokkaido Ballpark” condominium (118 units in total) situated in a rare location 80 meters in a straight line fromthe stadium, was sold out thanks to its popularity. Furthermore, we have been developing a senior residence
in the southeastern corner of F VILLAGE since February 2022.It is scheduled for completion in spring of 2024
as a residence for active seniors constructed alongside a medical mall.
In addition, we are advancing development of the JR Kitahiroshima Station “Train Station West Exit Area
Revitalization Project” in Kitahiroshima City as a partner of the project. The train station is garnering further
attention as an important point of access to F VILLAGE. Continuing from November 2021, we acquired part ofthe development site for the project in March 2023. We are in the process of developing a station square in
front of JR Kitahiroshima Station, an exchange center complex comprising commercial facilities and a hotel, athree-dimensional indoor/outdoor plaza and park, and residential exchange facilities. Of the development
projects on the site, we aim to complete the commercial facilities, etc. in FY2024 and are steadily conducting
development in front of the station.
Beyond Kitahiroshima City, in November 2022, we sold out “Le JADE Sapporo Motomachi” (Higashi Ward,
Sapporo City; 39 units in total), our first condominium in Sapporo City, and are also making steady progresswith projects in Hokkaido, such as condominium development for Le JADE Sapporo Naebo (Higashi Ward,
Sapporo City; 42 units in total; scheduled for completion in February 2024).
We will continue to cooperate in the promotion of sports and culture and contribute to the revitalization anddevelopment of the entire Hokkaido region for the happiness of its residents.

4)

Initiatives Aimed at Regional and Area Revitalization through Real Estate Development
In February 2022, we also conducted redevelopment to create a bustling atmosphere around the station
through the “Namiki no Mori City” development project, a mixed-use facility of residential, commercial andparking lot buildings in Iwaki City, Fukushima Prefecture, together with the Iwaki Station Namiki-dori District
Urban Redevelopment Association and Hoosiers Corporation. For the residential building, in November 2022,
we commenced unit sales for MID TOWER IWAKI, the tallest barrier-free seismic isolation structure tower
condominium in the city.
In addition, we concluded a basic agreement with Omura City regarding the “Shin-Omura Ekimae City
Owned Land Development Project” in Omura City, Nagasaki Prefecture, together with Daiwa House Industry
Co., Ltd., and Izumi Co., Ltd., as a member of a business group composed of the three companies in March2022 and acquired the project site in March 2023. With Shin-Omura Station on the Nishi-Kyushu Shinkansenline opening in September 2022, the project entails developing condominiums, commercial facilities, etc.
where residents and visitors from outside the city can interact with each other in line with the town development
policy of Omura City. ES-CON JAPAN is scheduled to be engaged in development of condominiums in two
blocks.

-7-

Furthermore, in February 2023, “tonarie Utsunomiya (Utsunomiya City, Tochigi Prefecture)" was redesigned
into a facility that can contribute to further revitalization of the region. In March 2023, "tonarie Hoshida (Katano
City, Osaka Prefecture)” opened, a community-based shopping center that began development as a joint
project with MIRARTH Holdings, Inc. in the area of the “Hoshida Station North Land Readjustment Project”(total area: approximately 26.4 ha). In the surrounding area, development of industrial facilities, such as
condominiums, detached houses, and business offices, is planned; future development is anticipated. Thisfacility is the tenth facility in our commercial facility brand “tonarie” series.
5)

Promotion of Development of Various Condominiums in Rare Locations
We are not only expanding the number of units but also providing a diverse range centered on product plansthat draw out the full value of sites purchased.
In January 2023, we acquired a project site in Karuizawa-cho, Kitasaku-gun, Nagano Prefecture. The
property is situated in a location surrounded by the abundant nature of Karuizawa, and is the second property
to be developed in the area. The first building, Ost Residence Karuizawa (33 units in total, sold out in 2021),
won the Good Design Award for the fiscal year 2022 for recognition of its high-quality product planning.
In addition, we have acquired two project sites in Hayama Town, Miura District, Kanagawa Prefecture, andare working to develop condominiums that fully utilize the abundant natural environment, such as Morito
Beach.The Company is also promoting high-value-added product planning, such as early selling out ahead ofschedule in December 2022 of “Le JADE Cross Chiyoda Jimbocho (50 units in total; scheduled for completionin October 2023),” a new condominium for sale with fixed-term land lease rights currently under development
in a site adjacent to the “Toho Gakkai Main Building,” a historical building designated as an important building
for the scenic development of Chiyoda Ward, Tokyo.
Furthermore, as a company creating “lifelong items” in the form of housing, we formulated the IDEALCONPASS quality management guideline and provide the Escon Premium After Support long-term after-sales
service supporting the lifestyles of people living in condominiums. We will continue to provide housing thatmakes our customers feel safer, more secure and more comfortable.

6)

Implementation of Strategic M&As
As mentioned above, following the Picasso Group in October 2021, ES-CON JAPAN decided to make ShijoOmiya Building Co., Ltd (after implementation of the company split), which is involved in the real estate leasing
and other businesses, a subsidiary in February 2023 (scheduled execution date of share transfer: July 31,2023). The company was founded in 2010 in Kyoto City and has developed its real estate leasing businessmainly in the city, owning a number of prime revenue-generating assets, such as rental condominiums andcommercial facilities.
We will continue to discuss positively with companies, etc. that have issues such as the absence of
successors and are thinking of business succession, and actively consider M&A projects that do not appear in
the market, with an aim to enhance the Group’s businesses and expand its domain.

7)

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

-8-

We will continue to focus on initiatives in new business fields with a view to the next era and implement a
multifaceted real estate business.
8)

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

9)

Status of ESG Initiatives
One of our key management strategies is addressing social issues through ESG promotion. Centered on the“ESG Promotion Group” and the “Health & Culture Fostering Team” designed to promote healthy management
further, we will promote company-wide efforts and focus on enhancing essential company value that cannot
be measured by financial information alone.
The contents of the most recent major initiatives are as follows.
(a) Environment (E)• Acquisition of Various Certifications
In May 2020, ES-CON JAPAN acquired EcoAction 21 Certification, a Japanese environmental
management system (EMS) established by the Ministry of the Environment. Furthermore, “tonarie
Fujimino,” a commercial facility owned by ES-CON JAPAN, obtained “Rank S,” the highest rank of theCertification for CASBEE(*1) for Real Estate from a CASBEE accreditation body authorized by theInstitute for Building Environment and Energy Conservation. Also, “tonarie Yamato-Takada,” “tonarie
Toga-Mikita,” “tonarie Minamisenri,” “tonarie Seiwadai,” and “Asumigaoka Brand New Mall,” which arecommercial facilities owned by ESCON JAPAN REIT Investment Corporation (hereinafter “EJR”),
obtained DBJ Green Building Certification from Development Bank of Japan Inc. Our group as a wholeis working to improve the value of the facilities, and the above six properties are being operated andmanaged by our subsidiary ES-CON PROPERTY Ltd.
*1

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

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

ZEH (Net Zero Energy House) is a house aiming to make the annual primary energy consumption zero by introducing
renewable energy 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 efficient equipment system.

-9-• Construction and Operation of “Techno Farm Fukuroi,” a Vertical Farm Utilizing Fully Artificial LightAs previously mentioned, we are collaborating with Chubu Electric Power and Spread to develop Techno
Farm Fukuroi, which will be the world’s largest vertical farm utilizing fully artificial light and capable ofproducing 10 tons of lettuce per day. The three companies including ES-CON JAPAN will solve issues
in food and agricultural fields through the plant factory business while also contributing to the realizationof a sustainable and livable society and the achievement of SDGs by making efforts towards
decarbonization such as the proactive use of green energy and effective use of CO2 in the process ofcultivation.
• Efforts to Promote the Use of Wood in the Development Project of the Former Site of Nagoya Horse
Racing Track
The consortium has entered into the “Agreement on the Promotion of the Utilization of Wood in Public
Buildings” with Aichi Prefecture. We will make efforts to contribute to decarbonization through the project,such as active utilization of wood produced in Aichi Prefecture.
• Awarded Osaka Eco-Friendly Construction Award, Residential Section
In January 2022, the condominium “Le JADE Senri Aoyamadai (Suita City, Osaka Prefecture; 152 units
in total)” won the Osaka Eco-Friendly Construction Award, Residential Section for the fiscal year 2021
(hosted by Osaka Prefecture and Osaka City).This was the first time we won the award, which
recognizes clients and designers of construction projects that are exemplary in terms of environmental
consideration of buildings under the aim of promoting the spread of environmentally friendly buildings
and raising awareness among residents of Osaka Prefecture.
(b) Social (S)• Formulating General Employer Action Plans
In December 2022, ES-CON JAPAN formulated and published general employer action plans (action
period: January 1, 2023 to December 31, 2024) in accordance with the Act on Advancement of Measures
to Support Raising Next-Generation Children and the Act on the Promotion of Women’s Active
Engagement in Professional Life in order to help employees juggle career and family and create aworkplace where human resources, including women, can continue to be in employment and succeed.
• Received Certification as an “Excellent Health Management Corporation 2023”
We are promoting health management, believing that the health of our employees is the cornerstone ofour business activities and an essential element for our sustainable growth. As a result, in March 2023,
ES-CON JAPAN was certified as an “Excellent Health Management Corporation 2023” mainly for its
efforts to promote and enhance employee health, improve work comfort, and diversity.
• Support for Kitahiroshima City, Hokkaido Prefecture, by Utilizing “Corporate Version of Hometown Tax”
ES-CON JAPAN donated 300 million yen to Kitahiroshima City, Hokkaido Prefecture, as in last year, inMarch 2023 by utilizing the “Corporate Version of Hometown Tax” under the hope that further progressin urban development and its spread to various fields such as transportation, tourism, sports andeducation, etc. will contribute to the further development of the city. The funds will be utilized to maintaina vibrant city into the future.
• Contributing to Healthcare
Since 2020, we have been donating to the Kyoto University “iPS Cell Research Fund” to support
activities realizing provision of early and inexpensive treatment using iPS cells for people suffering from
diseases and injuries.
We have also been providing monetary donations to Osaka University’s Graduate School of Medicine
since 2019 to support clinical trials for cancer vaccines showing promise for the treatment of cancer. In
May 2022, we donated funds for the establishment of an endowed cancer immunology course the school
is developing, for the purpose of research of cancer immune therapy.
In November 2022, we co-sponsored the Osaka Great Santa Run 2022 charity running event (hosted
by the Great Santa Organization in Osaka Akaru Club). The event is designed to give a part ofparticipation fees to children who are battling disease as presents.

- 10 -

• Contribution to Sports Promotion
In April 2021, we invested in Ryukyu Football Club Co., Ltd., which operates FC Ryukyu, a professionalsoccer team. With this investment, we will contribute to the local community through sports promotion
by securing a foothold for the creation of business opportunities in Okinawa while at the same time
supporting FC Ryukyu’s regional revitalization activities deeply rooted in Okinawa Prefecture.
• Human Resources Development
To achieve sustainable growth, recognizing the further enhancement of organizational power, humancapital—that is, our employees or their knowledge, skills, talents, and the like— is our top priority, we
have started preparations to formulate our policy on human resources development, build an educational
and training system, and disclose information on matters related to human capital. In addition, in order
to cope with the impact of recent high prices and to maintain and improve employee engagement, as
well as to secure talented human resources, ES-CON JAPAN has raised base wages effective April
2023.
(c) Governance (G)• Establishment of Voluntary Committee on Nomination and Remuneration of Directors
In January 2020, we established the “Nomination and Remuneration Advisory Committee” for the
purpose of strengthening the independence and objectivity of functions as well as the accountability ofthe board of directors with regard to nomination and remuneration of directors and other matters.
Effective March 2023, three of the four committee members have been replaced by independent outside
directors from the Board of Directors, who are members of the Audit and Supervisory Committee. In
addition to ensuring fairness and transparency in the selection of directors and their compensation, theCompany strives to improve corporate governance by clarifying the right of Audit and Supervisory
Committee members to express their opinions concerning director election and remuneration.
• Nurturing Successors
We also launched initiatives for a succession plan called the candidate successor system. We appointed
a total of seven employed executive officers in January 2023.
• Diversity of the Board of Directors
At the 28th Ordinary General Meeting of Shareholders held on March 24, 2023, one outside director and
one director who is a member of the Audit and Supervisory Committee were newly elected, bringing theboard of directors to a total of 10 members: three executive directors, three outside directors, and four
directors who are also members of the Audit and Supervisory Committee. By appointing five independent
directors (including one woman), which is half of the Board of Directors, ES-CON JAPAN has expanded
the diversity of the Board of Directors and created a more effective governance structure.
• Promotion of Compliance Management
In October 2022 ES-CON JAPAN established the Compliance Office directly under the President, taking
the administrative disposition on ES-CON ASSET MANAGEMENT Ltd. (hereinafter “EAM”), itsconsolidated subsidiary, with utmost seriousness. The purpose of the Compliance Office is to strengthen
legal compliance and internal control systems and to monitor every aspect of transactions with theparties in question, as well as establish a framework for managing any conflicts of interest that arise inorder to prevent the recurrence of such incidents.
In March 2023, we also reviewed our Compliance Code of Conduct and issued a compliancedeclaration. Through these efforts, we will thoroughly strengthen the promotion of compliancemanagement throughout the Company and the Group.
(d) Other
We have been participating in the Global ESG Benchmark for Real Assets (GRESB), which is an annual
benchmark assessment measuring ESG consideration in the real estate sector, every year since 2018 withan aim to continuously improve the assessment results. In October 2022, we acquired “2 Stars” in the GRESB
Rating, a five-grade evaluation system that reflects the applicant’s relative evaluation based on the overall
score, for efforts on environmental consideration and sustainability in the “Development Benchmark”(reporting period: January 1, 2021 to December 31, 2021). In addition, we acquired the “Green Star”(*3) rating
for the fourth consecutive year.
*3“Green Star” in the “Development Benchmark” is given to participants whose score is 50% or higher in the absoluteassessment based on the two main points “Management Component” and “Development Component.”- 11 -

10) Administrative Disposition against EAM
On July 15, 2022, the commissioner of the Financial Services Agency implemented an administrative
disposition, which consists of injunctions to suspend business operations and institute improved practices
targeting our consolidated subsidiary EAM. In response, EAM formulated a business improvement report,
which was submitted to and accepted by the commissioner of the Financial Services Agency on August 15,
2022. ES-CON JAPAN, the parent company of EAM and main sponsor of ESCON JAPAN REIT Investment
Corporation (“EJR”), for which EAM is entrusted with asset management, took this administrative disposition
on EAM with utmost seriousness and recognized the prevention of recurrence as a priority issue for our groupas a whole. In order to build a system for managing conflicts of interest as mentioned above, we established
the Compliance Office.
Moreover, EAM made a fresh start in January 2023 after reviewing its management structure, including achange of representative and the termination of its concurrent position with ES-CON JAPAN. Understanding
the background to and root causes of this matter, we will continue to exert every effort to prevent the recurrenceof such events based on thorough enhancement of our approaches to compliance and internal control of all
members of the ES-CON JAPAN Group, not just at EAM, as well as the steadfast implementation of
improvements.
11) Business Development by Segment
In the real estate sales business, our core business, we are selling revenue-generating real estate and otherproperties, in addition to achieving steady progress in condominium sales.
In the condominium sales business, ES-CON JAPAN has commenced sales of new projects: “Le JADE
Abeno Harimacho” (Abeno Ward, Osaka City; 48 units in total) and “Le JADE City Hashimoto I & II” (Midori
Ward, Sagamihara City: 69 units in total for I and 87 units in total for II). As for sales progress, eight properties,
including “Le JADE Hokkaido Ball Park (Kitahiroshima City, Hokkaido; 118 units in total),” sold out and at fiveproperties, including “Le JADE Matsudo Station Front (Matsudo City, Chiba; 44 units in total),” all units arecontracted to sell out.
In addition, we are expanding our business area by steadily progressing the condominium business in
Hokkaido, and we have begun development in Nagasaki following Fukuoka and Kumamoto in Kyushu. On topof these, we are making a foray into Okinawa.
In the real estate leasing business, as mentioned above, we made Shijo-Omiya Building Co., Ltd (after
implementation of the company split) our subsidiary in addition to the Picasso Group and thereby expect tosecure stable earnings by further strengthening the leasing business. Furthermore, we have launched a new
brand of rental residences, “TOPAZ,” which we will actively develop down the road.
In addition, we are striving to secure stable rental income from commercial facilities and increase asset value,such as the acquisition of new commercial land with leasehold interest in Kurashiki City, Okayama Prefecture,and the opening of the aforementioned community-based shopping center “tonarie Hoshida” in March 2023.
In the real estate planning agency and consulting business, we have started sales of the permanent use rights
to our urban columbarium. Leveraging our strength in planning, we are focusing on non-asset, high-margin
business, such as the commissioning business and the planning agency and consulting business.
As a result, ES-CON JAPAN achieved net sales of 28,541 million yen (up 124.6%), operating income of 4,879
million yen (up 465.1%), ordinary income of 4,497 million yen (up 671.7%) and profit attributable to owners ofparent of 3,006 million yen (up 1,175.6%), for the first quarter of the fiscal year under review, all comparedwith the same period of the previous year.
The following describes the operating results per segment (comparisons are with the same period of theprevious fiscal year).
(i) Real estate sales businessIn the real estate sales business, activities including selling condominiums and revenue-generating realestate resulted in net sales of 25,258 million yen (up 156.3%) and segment income of 5,277 million yen(up 310.3%), all compared with the same period of the previous year.

- 12 -

(ii) Real estate leasing businessIn the real estate leasing business, focus was placed on leasing activities and the property managementbusiness in view of enhancement of asset value, including increase in rental income of owned revenuegenerating real estate, resulting in net sales of 3,118 million yen (up 16.8%) and segment income of 1,248
million yen (up 18.2%).
(iii) Real estate planning agency and consulting businessIn the real estate planning agency and consulting business, proactive efforts were made in such aspects
as entrustment with planning, consulting and other services by making the best use of planning andmultifaceted business-building abilities, resulting in net sales of 165 million yen (down 9.0% from thesame period of the previous fiscal year) and segment income of 120 million yen (segment loss of 4 million
yen in the same period of the previous year).
(3)

Explanation of Financial Position
Assets at the end of the first quarter increased by 19,389 million yen compared with the end of the previous
fiscal year to 283,118 million yen. This was mainly attributable to cash and deposits, inventories and non-current
assets increasing by 2,160 million yen and 15,374 million yen, respectively.
Liabilities increased by 20,207 million yen compared with the end of the previous fiscal year to 219,792 million
yen. This was mainly attributable to long-term loans payable and short-term loans payable increasing by 24,909
million yen.
Net assets decreased by 818 million yen compared with the end of the previous fiscal year to 63,326 million
yen. This was mainly attributable to cash dividends paid of 3,673 million yen, while recording profit attributableto owners of parent of 3,006 million yen. As a result, the equity ratio was 23.0% (25.0% at the end of theprevious fiscal year).

(4)

Explanation of Consolidated Earnings Forecast and Other Forward-Looking Information
The consolidated earnings forecast remains unchanged from the forecast announced on January 27, 2023.
In addition, we are promoting our business under the fourth medium-term management plan, “IDEAL to REAL
2023,” which is for the three-year period from the fiscal year ended December 2021 through the fiscal year
ending December 2023.

- 13 -

2.
(1)

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

First quarter of fiscal year
ending Dec. 2023
(as of Mar. 31, 2023)

35,72137,882

1,096

977

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

3,769
155,379
13,191(1)
211,198

22,734(2,353)
20,38031,535
517
(293)
223
52,13922,813(2,643)
20,16931,535
419
(299)
119
51,824

7,696
77
7,774

7,566
77
7,643

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

13,937(1,521)
12,41571,88445
45
263,72936
36
283,118

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade andcontract assets
Real estate for sale
Real estate for sale in process
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Land
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Deferred assets
Share issuance cost
Total deferred assets
Total assets- 14 -

(Unit: million yen)
Fiscal year ended Dec. 2022
(as of Dec. 31, 2022)

First quarter of fiscal year
ending Dec. 2023
(as of Mar. 31, 2023)

10,061
26,193
3,258
16,17755,69012,52331,2201,538
13,14258,425

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

150,230
186
94
272
10,583
161,366
219,792

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

16,51912,42437,659(1,451)
65,151

79

(57)

13

(12)

93

(69)

0
(1,761)64,144
263,7290(1,756)63,326283,118

Liabilities
Current liabilities
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Provision for directors’ share-based benefits
Provision for share-based benefits
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Total accumulated other comprehensive
incomeSubscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets- 15 -

(2)Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income(Quarterly Consolidated Statement of Income)First quarter of fiscal year ending December 2023

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Penalty income
Foreign exchange gains
Share of profit of entities accounted for using
equity method
Other
Total non-operating income
Non-operating expenses
Interest expenses
Amortization of share issuance cost
Share of loss of entities accounted for using
equity method
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on reversal of subscription rights to shares
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit
Net income (loss) attributable to noncontrollinginterests
Profit attributable to owners of parent

First quarter of fiscal year
ended Dec. 2022
(from Jan. 1, 2022
to Mar. 31, 2022)
12,706
9,428
3,277
2,414
863

- 16 -(Unit: million yen)First quarter of fiscal year
ending Dec. 2023
(from Jan. 1, 2023
to Mar. 31, 2023)
28,541
20,859
7,682
2,802
4,879

0
0
23
129

0
0
14
38

5

－

2
162

2
56

433
9

420
9

－

5

0
442
582

3
438
4,497

0
0

0
0

－
－
582
186
172
358
224

0
0
4,497
1,454
30
1,485
3,012

(11)

5

235

3,006

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

ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Comprehensive income attributable to owners ofparentComprehensive income attributable to noncontrolling interests

First quarter of fiscal year
ended Dec. 2022
(from Jan. 1, 2022
to Mar. 31, 2022)
224(Unit: million yen)First quarter of fiscal year
ending Dec. 2023
(from Jan. 1, 2023
to Mar. 31, 2023)
3,012

(85)

(136)

(24)

(26)

21

－

(88)
135

(162)
2,850

146

2,844

(11)

5

- 17 -

(3)Notes to Quarterly Consolidated Financial Statements(Notes on Going Concern Assumption)
Not applicable.
(Notes on Substantial Changes in the Amount of Shareholders’ Equity)
Not applicable.
(Changes in Accounting Policies)(Application of accounting standard for fair value measurement, etc.)
The “Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, June 17, 2021;
hereinafter referred to as the “Guidance on the Accounting Standard for Fair Value Measurement”) is applied
from the beginning of the first quarter of the current fiscal year, and in accordance with the transitional
treatment prescribed in Section 27-2 of the Guidance on the Accounting Standard for Fair Value Measurement,
the new accounting policy prescribed by said Guidance will be applied in the future. There is no impact on thequarterly consolidated financial statements.
(Additional Information)(Accounting estimates in line with the spread of COVID-19)
There are no significant changes in the assumptions concerning the impact of the COVID-19 pandemic statedin the previous fiscal year’s securities report.
However, there are many factors of uncertainty concerning the impact of the COVID-19 pandemic, and thus if
the real estate market deteriorates further, the operating results, financial position, and status of cash flow of ESCON 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 Annual General Meeting of
Shareholders held on March 20, 2015, with an aim to further clarify the relationship between remuneration
for ES-CON JAPAN’s directors (excluding directors who are Audit and Supervisory Committee Members,
external directors and nonexecutive directors) and (authorized) executive managing officers (the“Directors, etc.”; hereinafter referred to as the same unless otherwise specified) and ES-CON JAPAN’s
operating results and share price, with the Directors, etc. not only benefiting from a rise in share price but
also sharing the same risks as shareholders in relation to a fall in share price, thereby increasingawareness of contribution to the medium- to long-term improvement of operating results and enhancementof corporate value. Furthermore, ES-CON JAPAN passed a resolution for continuation and partial revisionof the System for the Directors, etc. at the Annual General Meetings of Shareholders held on March 26,
2020, and March 26, 2021.
The System after the revision is an incentive system by which ES-CON JAPAN contributes money to atrust with the trust acquiring shares of ES-CON JAPAN with said money as capital, and shares of ESCON JAPAN and the fair market value of shares of ES-CON JAPAN are granted to ES-CON JAPAN’s
Directors, etc. through the trust in accordance with the operating results achievement rate, etc. pursuant
to the officer stock ownership regulations set by ES-CON JAPAN. The shares of ES-CON JAPAN will be
granted to the Director, etc. of ES-CON JAPAN when said Director, etc. retires from all positions such as
director in principle.
Under the System, for a set period of three fiscal years from the fiscal year ended December 2021 to
the fiscal year ending December 2023 as well as each subsequent period of three fiscal years, ES-CON
JAPAN will contribute money up to 330 million yen (110 million yen per fiscal year multiplied by the numberof target fiscal years) to the trust.

- 18 -

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

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

(2) Residual Shares of ES-CON JAPAN in the Trust
Residual shares of ES-CON JAPAN in the trust are recorded as treasury shares under net assets using thebook value in the trust (excluding the amount of incidental expenses). The book value of the treasury sharesand the number of shares is 347 million yen and 851,000 shares for the fiscal year ended December 2022,
and 347 million yen and 851,000 shares for the first quarter of the fiscal year ending December 2023.
(Share-Based Payment Benefits-Type ESOP Trust)(1) Overview of the transaction
ES-CON JAPAN passed a resolution to introduce a share-based payment benefits-type ESOP (the “System”;
the trust established based on the trust agreement concluded with Resona Bank, Limited for the System isreferred to as “share-based payment benefits-type ESOP trust”) at the board of directors meeting held on
March 20, 2015, with an aim to further enhance the benefit program for its employees and raise theirmotivation and morale for improving the share price and operating results. Furthermore, ES-CON JAPAN
passed a resolution for continuation and partial revision of the share-based payment benefits-type ESOP
trust for employees at the board of directors’ meeting held on June 30, 2022.
The System after the revision is a system by which ES-CON JAPAN contributes money to a trust for a new
period of seven fiscal years from the fiscal year ended December 2022 to the fiscal year ending December
2028 and the period of the seven fiscal years after the elapse of the period, with the trust acquiring sharesof ES-CON JAPAN with said money as capital, and shares of ES-CON JAPAN are granted to ES-CON
JAPAN Group’s employees who have satisfied certain requirements through the trust, pursuant to the stock
ownership regulations set by ES-CON JAPAN.
(2) Residual Shares of ES-CON JAPAN in the Trust
Residual shares of ES-CON JAPAN in the trust are recorded as treasury shares under net assets using thebook value in the trust (excluding the amount of incidental expenses). The book value of the treasury sharesand the number of shares is 347 million yen and 573,400 shares for the fiscal year ended December 2022,
and 341 million yen and 550,200 shares for the first quarter of the fiscal year ending December 2023.
(Business combination through acquisition)
At a meeting of the Board of Directors held on February 28, 2023, the Company resolved to acquire all theshares of Shijo Omiya Building Co., Ltd. and signed a share transfer agreement as of the same date. Based on
this agreement, the Company plans to acquire all such shares with July 31, 2023, as the execution date of theshare transfer.

- 19 -

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

Shijo Omiya Building Co., Ltd.

Description of business

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

30,000 million yen (scheduled)

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

- 20 -

(Segment Information, Etc.)[Segment Information]
I. First quarter of fiscal year ended December 2022 (from January 1, 2022 to March 31, 2022)
1.

Information on Net Sales and Income or Loss Amounts by Reporting Segment and Information on
Breakdown of Revenue(Unit: million yen)Amount onquarterly
Reconciliati
consolidatedonstatement of(Note 1)income(Note 2)

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

Total

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

9,854

228

181

10,265－

10,265

－

2,441

－

2,441

－

2,441

9,854

2,670

181

12,706－

12,706

－

－

－

－

－

－

Total

9,854

2,670

181

12,706－

12,706

Segment income(loss)

1,286

1,056

(4)

2,338

(1,474)863(Notes) 1 The reconciliation of segment income or segment loss of -1,474 million yen is corporate expenses
not attributable to any reporting segment. Corporate expenses are general and administrative
expenses not attributable to reporting segments.
2 Segment income or segment loss is reconciled with operating income on the quarterly consolidated
statement of income.
3 “Other revenue” is rental income, etc. based on “Accounting Standard for Lease Transactions.”
2. Information on Impairment Loss on Non-Current Assets or Goodwill, Etc. by Reporting Segment
Not applicable.

- 21 -

II. First quarter of fiscal year ending December 2023 (from January 1, 2023 to March 31, 2023)
1. Information on Net Sales and Income or Loss Amounts by Reporting Segment and Information on Breakdown
of Revenue(Unit: million yen)Amount onquarterly
Reconciliati
consolidatedonstatement of(Note 1)income(Note 2)

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

Total

Net sales
Revenue fromcontracts withcustomers
Otherrevenue(Note 3)
Net sales toexternalcustomers
Intersegment
net sales ortransfers

25,258290

165

25,714－25,714

－

2,827

－

2,827

－

2,827

25,2583,118

165

28,541－

28,541

－

－

－

－

－

－

Total

25,2583,118

165

28,541－

28,541

Segment income

5,277

1,248

120

6,646

(1,766)

4,879(Notes) 1 The reconciliation of segment income of -1,766 million yen is corporate expenses not attributable
to any reporting segment. Corporate expenses are general and administrative expenses not
attributable to reporting segments.
2 Segment income is adjusted with operating income in the quarterly consolidated statements ofincome.
3 “Other revenue” is rental income, etc. based on “Accounting Standard for Lease Transactions.”
2. Information on Impairment Loss on Non-Current Assets or Goodwill, Etc. by Reporting Segment
Not applicable.
(Significant Subsequent Events)
Not applicable.

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3.

Other
Status of Contracts and Sales
The performance of contracts in the real estate sales business for the first quarter is as follows:First quarter of fiscal year ending Dec. 2023
(from Jan. 1, 2023 to Mar. 31, 2023)
Category

Mid- to high-risehousing, etc.

Contract amount during the period
Number of units(units)

Other
Total

Balance of contracts at the end of the period

Amount(million yen)

Number of units(units)Amount(million yen)

174

8,651

731

37,668

－

2,348

－

12,420174

10,999731

50,089The main performance of sales by segment for the first quarter is as follows:First quarter of fiscal year ending Dec. 2023
(from Jan. 1, 2023 to Mar. 31, 2023)
Name of segment
Number of units
AmountProperty name(units)(million yen)
Condominiums

Real estate sales business

Logistics facilities in Hashima-shi,
Gifu Prefecture
5-chome Fujishirodai, Suita-shi(land for a healthcare facility for theelderly)
Other
Subtotal

186

15,852

－

8,380

－

308

－

717

186

25,258

Real estate leasing business

3,118

Real estate planning agency
and consulting business

165
Total

(Note)

There are no transactions between segments.

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28,541