ES CON JAPAN : 【SUMMARY】Accounts for Fiscal Year Ended December 2021 (Japanese GAAP) (Consolidated)

Summary of Accounts for Fiscal Year Ended December 2021 (Japanese GAAP)

(Consolidated)

					January 27, 2022
Name of listed company:	ES-CON JAPAN Ltd.		Listing exchange: Tokyo Stock Exchange
Code:	8892			URL:	https://www.es-conjapan.co.jp
Representative:	(Name)	Takatoshi Ito	(Position)	President & Representative Director
Contact for inquiries:	(Name)	Minoru Nakanishi	(Position)	Senior Managing Director TEL: [phone]
Scheduled date for next regular general meeting of shareholders:	March 25, 2022
Scheduled date for submission of periodic securities report:	March 28, 2022
Scheduled date for start of dividend payment:		March 28, 2022
Supplementary explanatory materials created for accounts? Yes/No:	No
Accounts briefing meeting held?		Yes/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)	Consolidated operating results			(% figures for the full fiscal year show the rate of increase (decrease)
					compared with the previous period)
		Net sales	Operating income	Ordinary income	Profit attributable to
		owners of parent
		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		111.94	111.37		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

1. Consolidated financial position

		Total assets	Net assets	Equity ratio	Book value per share
		million yen	million yen	%	yen
Fiscal year ended		252,771	62,628	24.8	657.50
Dec. 2021
Fiscal year ended		149,423	38,627	25.8	563.07
Dec. 2020
Reference: Equity
Fiscal year ended Dec. 2021: 62,780 million yen	Fiscal year ended Dec. 2020: 38,589 million yen

1. Consolidated cash flows

Net cash provided

Net cash provided by

Net cash provided by

Cash and cash

by (used in)

(used in) investing

(used in) financing

equivalents at end of

operating activities

activities

activities

period

million yen

million yen

million yen

million yen

Fiscal year ended

(10,810)

(29,721)

50,293

33,559

Dec. 2021

Fiscal year ended

119

(9,732)

11,007

23,798

Dec. 2020

2. Dividends

Annual dividend

Total dividend

Dividend

Dividend on

End of first

End of second

End of third

Year-end

Total

amount

payout ratio

equity

quarter

quarter

quarter

(Total)

(Consolidated)

(Consolidated)

yen

yen

yen

yen

yen

million yen

%

%

Fiscal year ended

－

0.00

－

38.00

38.00

2,645

33.9

7.2

Dec. 2020

Fiscal year ended

－

0.00

－

38.00

38.00

3,669

56.3

6.2

Dec. 2021

Fiscal year ending

Dec. 2022

－

0.00

－

38.00

38.00

－

(Forecast)

-

1 -

3. Consolidated earnings forecast for fiscal year ending December 2022 (from January 1, 2022 to December 31, 2022)

	Net sales		Operating income	Ordinary income	Profit attributable to	Basic earnings
		owners of parent	per share
	million yen		%	million yen	%	million yen	%	million yen	%	yen
First two quarters	36,300		45.3	4,700	83.5	3,800	96.5	2,600	87.3	29.43
Full fiscal year	100,000		26.6	14,000	34.9	12,200	34.1	8,300	39.2	93.95

• Explanatory notes
• 1. Changes in significant subsidiaries during fiscal year

(Changes in specified subsidiaries resulting in change in scope of consolidation):		None
	Newly included:	－ companies (Company name) 、
	Excluded:	－ companies (Company name)
(2) Changes in accounting policies, changes in accounting estimates, and restatement
1)	Changes in accounting policies due to amendment of accounting standards, etc.:	None
2)	Changes in accounting policies other than 1):					None
3)	Changes in accounting estimates:					None
4)	Restatement:						None
(3) Number of shares issued and outstanding (common shares)
1)	Number of shares issued and outstanding	Fiscal year	98,580,887		Fiscal year	71,961,887
	(including treasury shares) at end of fiscal	ended Dec.		ended Dec.
	shares		shares
	year		2021		2020
2)	Number of treasury shares at end of fiscal	Fiscal year	3,096,900		Fiscal year	3,428,400
ended Dec.		ended Dec.
	year		shares		shares
		2021		2020
			Fiscal year	88,346,828		Fiscal year	68,459,909
3)	Average number of shares during fiscal year	ended Dec.		ended Dec.
shares		shares
			2021		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 of 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 (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-consolidatedoperating results

(% figures show the rate of increase (decrease) compared with the previous fiscal year)

	Net sales		Operating income	Ordinary income	Profit
	million yen		%	million yen	%	million yen	%	million yen		%
Fiscal year ended	73,407		(0.7)	10,213	(14.7)	9,312	(16.3)	6,434		(16.6)
Dec. 2021
Fiscal year ended	73,903		5.4	11,980	(5.3)	11,121	(4.1)	7,718		(4.2)
Dec. 2020
	Basic earnings per share	Diluted earnings per share
				yen			yen
Fiscal year ended				72.83			72.64
Dec. 2021
Fiscal year ended				112.75			112.18
Dec. 2020

1. Non-consolidatedfinancial position

		Total assets	Net assets	Equity ratio	Book value per share
		million yen	million yen	%	yen
Fiscal year ended		233,860	63,206	27.0	661.95
Dec. 2021
Fiscal year ended		139,940	38,527	27.5	562.15
Dec. 2020
Reference: Equity
Fiscal year ended Dec. 2021: 63,205 million yen	Fiscal year ended Dec. 2020: 38,526 million yen

- 2 -

• Presentation regarding implementation of audit procedures
  This 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 COVID- 19, the Japanese economy saw progress towards the normalization of social and economic activities such as the recovery 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 "Establishing business 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., and established 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 move ahead with the strategy of "changing the revenue structure" = "securing stable leasing income." Furthermore, we sought 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 of Japan, 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 and with 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 the plan.

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 initial plan) 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 estate planning agency and consulting business due to the burden of prior expenditure of advertising expenses in the columbarium 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 long- term 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 -