December 2, 2019
Company name:

ES-CON JAPAN Ltd.

Representative:

Takatoshi Ito, President &Representative Director(TSE 1st Section, code: 8892)

Inquiries:

Minoru Nakanishi,
Senior Managing DirectorTel:+81-3-6230-9308

Notice on Formulation of Third Medium-Term Management Plan “IDEAL to REAL 2022”
ES-CON JAPAN Ltd. (ES-CON JAPAN) announces that it has formulated a new medium-term
management plan “IDEAL to REAL 2022” for the period from the fiscal year ending December 2020 tothe fiscal year ending December 2022 as follows.
1. Background to and Purpose of Formulation of New Medium-Term Management Plan
ES-CON JAPAN is currently making steady progress with the second medium-term management plan
“IDEAL to REAL 2019” that is underway for the period from the fiscal year ended December 2017 to thefiscal year ending December 2019. ES-CON JAPAN has formulated the third medium-term
management plan “IDEAL to REAL 2022” for the three-year period from the fiscal year ending
December 2020 (next fiscal year) to the fiscal year ending December 2022 aiming for further leaps andstable growth in the next stage.
2. Basic Policy
Aim to maximize corporate value by setting on track “management stability and sustainable growth”
and also accurately addressing the diversifying social issues through promotion of ESG initiatives.
3. Corporate Strategy(1) Management stability and sustainable growth
1) Diversify businesses
2) Stabilize revenue structure by securing stock revenue bases3) Exert synergistic effects with the Chubu Electric Power Group4) External growth of ESCON JAPAN REIT Investment Corporation (EJR)(2) Address social issues through promotion of ESG initiatives(3) Return to shareholders
4. Performance Plan
(Unit: Million yen)

FY2019Projection
IDEAL to REAL 2019

FY2020Plan

FY2021Plan

FY2022Plan
IDEAL to REAL 2022

Net sales

72,00086,000100,000

110,000

Operatingincome12,90013,30014,00015,2001

5. Management Targets
FY2019Projection
IDEAL to REAL 2019

FY2022Plan
IDEAL to REAL 2022

Return on equity (ROE)

26.4%

20.0%

Return on invested capital (ROIC)

7.4%

5.5%

Equity ratio

24.3%

25.0%

Dividend payout ratio

30.4%

30% or higher

With the plan focused on enhancement of stability, equity ratio is set higher under the plan. On the other
hand, ROE and ROIC are lower, but both indicators are set to still maintain a high level.
6. Dividend Policy and Capital Policy
ES-CON JAPAN introduced a progressive dividend policy, starting from the second medium-term
management plan. This is a dividend policy for the dividend amount per share to not fall below theprevious fiscal year’s dividend per share (DPS), making it a policy to “not decrease the dividend amount,but rather only maintain or increase the dividend amount” in principle. In continuing to adopt thisprogressive dividend policy in the third medium-term management plan, we will make efforts to realize
stable dividends and raise the transparency of future dividend levels to strengthen return toshareholders increasingly and for sustainable corporate value enhancement.
Third medium-term management plan
IDEAL to REAL 2022

Dividend payout ratio

30% or higher

Dividend per share (DPS)

Keep “progressive dividend policy”
ongoing

Purchase of treasury shares

Consider in an agile mannerwith total return ratio in mind

7. Review of Second Medium-Term Management Plan “IDEAL to REAL 2019”
As for our second medium-term management plan, we will proactively promote businesses as described
below, and our performance goal is expected to exceed the initial plan by a significant margin. In
addition, our management goal is expected to be generally achieved, and although the equity ratio is notexpected to be achieved, we are proactively purchasing properties with the effect of our capital andbusiness partnership with the Chubu Electric Power.
(1) Growth Action Plan -Growth Strategy1) Further strengthening of core businessIn the condominium sales business, we have secured sites that can be supplied as described in
the table below (actual results until 2018). We’re making steady progress in expanding our sales
force, which currently numbers 32.
Fiscal 2017

Fiscal 2018

Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

Actual results (units)
Estimated number isindicated for 2019
onwards476

539

Approx.
650

Approx.
760

Approx.
1,200

Approx.
450

Sales (billion yen)

19.5

25.0

Approx.
29.0

Approx.
36.0

Approx.
55.0

Approx.
24.022) Improving company value through diversification of multiple core businessWe expanded our business domain in the commercial development business and hotel
development business as well as in the condominium sales business. We also launched as new
business domains a logistics development business, land readjustment business and overseas
business.
3) Securing stable long-term stock revenue through active development of real estate leasing
business
In the commercial development business, we strengthened NSC development efforts throughstrong ties to local communities. We will make efforts to revitalize the city by opening tonarie
Yamato-Takada and tonarie Toga-Mikita and newly acquiring Tsukuba Q't, Mog, Tsukuba Creoand Oh! Me OTSU TERRACE. In addition, we enhanced the value of commercial facilities inoperation and proactively developed our redevelopment business.
4) Expansion of real estate sales business through stable supply of high-quality real estate as amain sponsor of the listed REIT formation
ESCON JAPAN REIT Investment Corporation (EJR) was listed on the J-REIT market in February
2019. We concluded a support agreement with Chubu Electric Power and Chuden Real Estate,and strengthened collaboration with Chubu Electric Power Group for the external growth of EJR.
In addition, EJR received a rating of “A-” (stable) from Rating and Investment Information, Inc.
(R&I) in November 2019.
5) Expanding the breadth and depth of real estate development capabilities through enhancementof real estate operation businessWe also launched a renovation business in addition to businesses for asset management (AM),property management (PM) of commercial facilities, operation of food and beverage
establishments such as cafés, and apartment building management.
6) Improving corporate brand power
We aired new TV commercials for the “Grand Le JADE” brand and have continued to act as asponsor of a popular TV program. We remain focused on strengthening our corporate brand.
7) ESG initiatives to create new value and achieve sustainable growth“Le JADE Okurayama” became ES-CON JAPAN’s first business adopted in the Ministry of theEnvironment’s “Fiscal 2019 High-Rise ZEH-M Support Projects.” ES-CON JAPAN became thefirst Japanese business company to receive the ratings of “Green Star” and “2 Star” in the
GRESB Real Estate “Developer Assessment” conducted in 2019.

3

(2) Performance Targets(Unit: Million yen)
FY2017
ActualNet sales
Real estatesales
business
Real estateleasingbusiness
Real estateplanning
agency andconsulting
business

44,724

41,1683,459

96

Operating income

7,042

Ordinary income

5,988

FY2018Initial plan

FY2019ActualBetween 57,000
and 58,000
Between 54,900
and 55,800
Between 1,900
and 2,000

200

Between 7,500
and 8,500
Between 6,500
and 7,500

Comparedwith plan

54,325-2,67550,519-4,381

3,400+1,500405+205

11,561+4,061

10,498+3,998Initial plan
Between 60,000
and 62,000
Between 57,800
and 59,700
Between 2,000
and 2,100

Projection

Comparedwith plan

72,000+12,000

66,700+8,9005,000+3,000300+100

12,900+4,70011,700+4,500200

Between 8,200
and 9,500
Between 7,200
and 8,500(3) Management Targets
FY2017FY2018ActualActual

FY2019Initial plan

Equity ratio

24.8%

24.9%

Return on equity (ROE)

28.1%

29.6%

Return on assets (ROA)

6.8%

7.4%

Return on invested capital (ROIC)

8.4%

10.2%

81.77 yen105.98 yen

Earnings per share (EPS)

Between 33.0%
and 35.0%
Between 18.0%
and 21.0%
Between 6.0%
and 7.0%
Between 7.0%
and 9.0%
Between 75 yen
and 85 yen

Projection

Comparedwith plan

24.3%

-8.7

26.4%

+8.4

6.5%

+0.5

7.4%

+0.4

116.9 yen

+41.9

(Note) Return on invested capital (ROIC): After-tax operating income ÷ (Shareholders’ equity + Interest-bearing liabilities)

Link to press release on the third medium-term management plan on ES-CON JAPAN’s website

https://www.es-conjapan.co.jp/english/ir/index.php

4

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