Hulic Co., Ltd. CSR REPORT 2016

Integrated Report on Sustainability

Editorial Policy

Corporate Philosophy and Basic Stance
Corporate Philosophy

Total commitment to our customers and the community.

Creating productive environments. Creating amenity. Promoting peace of mind.
Basic Stance

Hulic publishes various forms of communication tools to help investors
and other stakeholders gain an understanding of and objectively viewits initiatives that seamlessly fuse business strategies with CSR. The
GRI Sustainability Reporting Guidelines Ver. 4 (G4) were referenced
during the editing of this report to carry out a materiality analysis anddisclose priority items. Information that could not be included in thispublication, such as the G4 comparison table, can be found on our
corporate website. Details of various investor relations activities canalso be found on our corporate website ("Investor Relations").

● Reporting Boundary
T he boundar y of this repor t is the Hulic Group. Figures for "power
consumption," "Gas consumption," "CO₂ emissions" and "Water consumption"
are those for the following 51 buildings, and a figure for "waste disposal" isthat for buildings in which Hulic Group companies reside.

Environmental Performance Data/Boundary

Ideal Company

Toyosu Prime Square

42,483

Hulic Kabutocho Building

6,579

Corporate Culture

Hulic Osaka Building

30,353

Hulic Kyobashi Building

6,323

Hulic Kudan Building

26,027We always conduct business from a new viewpoint in an effort to increase our corporate value.
Stance to Customers
We are committed to providing optimal products and services to customers, placing customer satisfaction as our top priority.
Ideal Employees
Each of Hulic's employees strives to provide high quality value as a professional.

CSR Vision
By putting our corporate philosophy into practice we're contributing to the betterment of society.
We take an honest approach to all our stakeholders. To this end:

1

2

3

We take complianceseriously, respect humanrights, and transparently
conduct business activities
based on high ethicalstandards.

We strive to protect
the local environment while
contributing to local
revitalization through ourbusinesses.

By providing highvalue-added products andservices, we are giving ourcustomers security andlaying the foundation
for the future.

Materiality forstakeholders(Published edition
and PDF)
Reporting on initiatives
considered to be ofparticular importance

6,245

Hulic Mita Building

6,228

Hulic Asakusabashi Building 19,636

Hulic Kawasaki Building

6,004

Hulic Kobunacho Building

17,172

Hulic Torigoe Building

5,954

Ginza Wall Building

16,950

Hulic Higashi Nihonbashi Building

5,632

Takagicho Center Building 16,839

Hulic Hamamatsu Building

5,538

Hulic Sapporo Building

14,254

Hulic Nishikicho Building

5,451

Hulic Shinbashi Building 13,983

Hulic Nishi Ginza Building

5,172

Hulic Fukuoka Building

12,646

Hulic Hachioji Building

5,152

Hulic Ginza Sukiyabashi Building 11,570

Hulic Shibuya Building

5,090

Hulic Sapporo NORTH33 Building

SIA Aoyama Building

4,946

11,017

5

Message from the Management

7

Financial Indicators andNon-financial Indicators/Highlights

9

Hulic's Vision and Strategy

11

Creating Shared Value

13

Material CSR Issues

15

Initiatives for Material Issues Targets and Performance17

Special Feature
Initiatives for Our Tourism Business

Hulic Nihonbashi Honcho 1-Chome Building 10,286

Hulic Ginza 1 Chome Building

4,771

Hulic Shinjuku Building

9,781

Asakusa Park Hall Building

4,598

Hulic Nanba Building

9,147

Hulic Ueno Building

4,419

Hulic Kojimachi Building

8,926

Hulic Nakano Building

4,319

Hulic Aoyama Building

8,790

Tokaido Shibuya Building

4,300

Hulic Ginza Building

8,579

Hulic Nihonbashi Muromachi Building

4,117

Hulic Kobe Building

8,354

Hulic Hatchobori Building

3,506

Hulic Kaminarimon Building

7,779

Hulic Hirakawacho Building

3,421

Hulic Head Ofﬁce Building

7,688

Hulic Sakurashinmachi Building

3,321● Reducing Waste through Longer Life Service

Hulic Ryogoku Building

7,442

Hulic Yaesu No.2 Building

3,184● Biodiversity/Encouraging Greening

KSK East Building

7,383

Shinbashi Yamaguchi Building

3,127

Hulic Setagaya (ofﬁce areas only)

7,163

Hulic Edobashi Building

3,032

Hulic Asakusabashi Edo-dori (ofﬁce areas only)

6,851

19

● Environmental Policy● Medium to Long-term Goal and Road Map● Situation of Greenhouse Gas Emissions● Promotion of Energy-saving● Effective Use of Renewable Energy

27

Social Initiatives● Initiatives for Our Customers● Reporting Period● Initiatives in the Local Community● Diversity Initiatives● Work-life Balance-Creating an Employee-friendly Work Environment-● Time of Issuance● Initiatives for Our Business Partners

August 2016 (Previous issue: July 2015, Next issue: August 2017 (scheduled))● Initiatives for Our Shareholders and Investors

37

Corporate Governance● Corporate Governance●

Headquarters: 7-3 Nihonbashi Odenmacho, Chuo-ku, Tokyo, 103-0011●

Established: March 1957●

Business Outline: Real estate holding, leasing, sales and brokerage●

Paid-in Capital: 62,641 million yen (as of the end of December 31, 2015)●

Memberships: Japan Business Federation● Risk Management● Compliance41

Directors

42

CSR Promotion Systems

43

Consolidated Financial Statements

46

Third-party Assurance

The Association for Real Estate Securitization
Japan Building Owners and Managers Association
Japanese Association of Real Estate Appraisal

Comprehensive reporting on
Hulic’s overall CSR initiatives

Materiality for Hulic

Environmental Initiatives

Our environmental accounting information is displayed on our website.

The Real Estate Companies Association of Japan

Website1

Hulic Gotanda Building

Hulic Ginza 7 Chome Building 20,392

Head Office
Hulic Co., Ltd.

CSR reportIR

Overview of Our Businesses

Fiscal year 2015 (from January 1, 2015 to December 31, 2015)
Regarding a portion of the priority items, the activity report
before and after the 2015 fiscal year is included.

Reporting MediaCSR http://www.hulic.co.jp/en/csr/

3(Total floor area: ㎡)

We aim to be a company that grows each day by utilizing stable corporate infrastructures.

● WebsiteC O N T E N T S

Major Group Companies (As of December 2015)●CSR Report 2016

Hulic Build Co., Ltd.

Hulic Office Service Co., Ltd.

Hulic Building Management Co., Ltd.

Hulic Reit Management Co., Ltd.

Hulic Insurance Service Co., Ltd.

Hulic Proserve Co., Ltd.

Hulic Hotel Management Co., Ltd.

Avanti Staff Corporation

http://www.hulic.co.jp/en/ir/

Corporate Social Responsibility Report2Overview of Our Businesses
As a corporation with a social presence,
we aim to practice management that is linked toour business strategy and ESG initiatives,
and to contribute to the realization of a sustainable society.

Hulic’
s strength ‒ A stable leasing businessApproximately 90% in the Tokyo metropolitan area

Distribution of distance from the nearest station

Vacancy rate

Hulic currently owns 202 buildings. 90% of these properties areconcentrated in the Tokyo metropolitan area, which experiences acontinuous population inﬂux as well as demand for buildings.
There is a particularly strong concentration of properties in theheart of Tokyo (the ﬁve main wards).

Good accessibility is an important strength of Hulic’s properties. Of all the ofﬁces and commercial buildings owned by theCompany, about 90% are within a walking distance of 5
minutes from the nearest station.

The vacancy rate of Hulic’s ofﬁce buildings in Tokyo’s 23
wards is below 1%, ensuring a stable income for the Company.

●Distribution of regions thatofﬁce buildings
are located inConcentratedTokyo
metropolitan area

Keihanshin
metropolian area

4%

Over 5 mins

12%in the heart of Tokyo
Tokyo’s
23 wards

14%
4-5 mins

79%※Based on no. of properties(as of the end of Dec. 2015)

14%

Within 1 min

39%

33%

4.0%

5 min walking
distance fromthe nearest
station86%

2-3 mins(as of the end of Dec. 2015)※Excluding real estate held for resale

Market averagevacancy rate

Hulic’s growth strategy ‒ Initiatives in the leasing business aimed at fulﬁlling

Owns 12 properties in the priority areas ofGinza and Yurakucho, which are leading
luxury commercial districts in Japan

Hulic(As of the end of December 2015)

vacancy rate
HULIC空室率0.9%（as of the endof December
2015）※Source: Miki Shoji’s Ofﬁce Data by Region (Scope: Ofﬁce buildings withstandard ﬂoor area of 100 tsubo or above, in the Tokyo business district)

Hulic Yurakucho 2 Chome Development
Project (provisional name)
Hulic Ginza Sukiyabashi Building

the needs of society

Selection and concentration

Reconstruction business

Investment business3K businesses

We are continuously achieving signiﬁcant growth by predicting
future changes, and selecting and concentrating on our management resources.

We increase the leasing area by actively reconstructing ourproperties, thereby improving income.

We are working to strengthen our asset portfolio with afocus on the central part of Tokyo through active
investments in properties with excellent locations.

We are exploring and strengthening new business domains in our 3K
businesses (Koreisha (seniors), Kanko (tourism), and Kankyo (environment)), with the aim of responding to various changes in the environmentthat Japan is faced with.

Medium-scale ofﬁce buildings

Tokyo

Little competition
Targeted at a wide rangeof tenants

Population inﬂux
into the Tokyo
metropolitan area

Unusedﬂoor area●Examples of investment properties in recent years《 Koreisha 》(seniors)

Old
properties

BeforeReconstruction

Afterreconstruction《 Kanko 》(tourism)《 Kankyo 》(environment)

VALUE
UP!!

After

●Increase in leasing area ●Rise in rent due to building renewal

Low vacancy risk

3

Corporate Social Responsibility ReportHigh demand

Expectation of signiﬁcant income
growth simply from rebuilding costs

Hulic New Kawasaki Building

Hulic Shibuya
Udagawacho Building

Granda Omori Sannou

Hakone Suishoen

4Message from the Management
We also succeeded in expanding and strengthening our portfolio by purchasing shares and acquiring
Simplex Investment Advisors Inc. In order to strengthen the 3K businesses, we continued to develop
and acquire senior housing properties and established a joint venture to develop the next-generation
healthcare centers. In the “tourism” business, we kept acquiring luxury Japanese-style inns and tested a
new growth strategy by establishing a joint company to manage our hotel real estate. As a result of these
efforts, compared to previous year, our ordinary income grew by 8.2 billion to 42.5 billion yen, enabling us
to meet the goal set in the medium-term management plan (2014-2015) one year ahead of schedule.

New Medium-term Management Plan and CSR Strategy

In 2016 we formulated a new medium-term management plan (2016-2018) oriented toward the further
growth of our company. With the focus on the leasing business, we are going to further develop Hulic's
unique business style and grow the company by bringing innovation that will meet arising needs ofsociety. Taking into consideration strong societal demand for commercial facilities and hotels, we willfurther expand our leasing portfolio, explore new domains of the real estate business with the focus on
the 3K businesses, and foster our business foundation. At the same time, we will keep enhancing ESG
initiatives that underpin our business activities.

In the Aftermath of the 2016 Kumamoto Earthquake

We would like to use the occasion of publishing our CSR Report 2016 to express our most heartfelt
sympathies to all victims of the 2016 Kumamoto Earthquake and to wish a speedy recovery of theaffected regions. Hulic will expend even greater effort to prevent damage caused to buildings and criticalinfrastructure by natural disasters, and, being a disaster-resilient real estate company, will strive to deliver
the feeling of safety and peace of mind to our building tenants and local communities.

Our Strengths and CSR Management

For more than half a century, Hulic has been operating a real estate leasing business with a focus on thebuilding portfolios of offices in central Tokyo. Over this time we have developed strong relationships withmany of our customers. Ever since our listing debut in 2008, our solid business foundation, based on theprime locations of properties, has allowed us to maintain a continued growth of profits and dividends evenin the face of adversity, including the Lehman Brothers' bankruptcy and the Great East Japan Earthquake.
This has been possible due to our management, which incorporates a prediction of social demands andthe needs of our customers in a mid- to long-term perspective, and a strategic approach to businesssegmentation that allowed our greater differentiation.
Another element that has supported Hulic's sustainable growth is our Corporate Social Responsibility(CSR) management, integrated with our Environmental, Social, and Governance (ESG) initiatives. In
our corporate philosophy, we uphold the following values: “Total commitment to our customers and thecommunity. Creating productive environments. Creating amenity. Creating peace of mind.” Based on thisphilosophy, we strive to contribute to a sustainable society by maintaining a constructive dialogue with
our stakeholders and by aligning our management strategy with ESG initiatives.

Our Performance in 2015

In accordance with our medium-term management plan (2014-2016), we have been focusing on afurther growth of earnings in the leasing business and on fostering the real estate development business.
Furthermore, anticipating changes in Japanese society in the next decade, we have started to develop new
projects in the 3K businesses, i.e. Kōreisha (senior citizens), Kankō (tourism) and Kankyō (environment),
which are expected to support our business foundation in the future. In 2015, we completed some ofour property development and renovation projects, including the Hulic Toranomon building and Hulic
Asakusa Edo-dōri building, as well as one PPP project - the Shinagawa Season Terrace (Shibaura Water
Recycling Center rebuilding project). These projects have contributed to the growth of earnings in ourleasing business segment.

5

Corporate Social Responsibility Report

Material CSR Issues and Our Progress

Hulic believes that well-developed CSR management and strong social raison d'être of the company,
as well as its contribution to sustainable development of the society, directly relate to its corporate
value. Therefore, in regard to the environment, we have identified CO₂ emissions reduction as one ofour material CSR issues and have established a long-term goal to cut CO₂ emissions generated by ourbuilding portfolio. Specifically, we apply design standards in accordance with the Hulic Guideline forLonger Life Service to ensure that building frames can last at least 100 years. Furthermore, we takemeasures to minimize the volume of generated waste and CO₂ emissions. We establish and monitor social
KPIs, including earthquake-resilience measures for our buildings, the ratio of employees using childcare
leave, the ratio of employees with disabilities, and indicators related to our social contribution activities.
In particular, we actively support the participation of women in the workforce and have formulated theAction Plan with the goal to increase the ratio of women in management positions to 20% of the total
workforce. To this end, we have set up Hulic’s onsite childcare facilities and started to implement otherchildcare assistance measures that are recognized as one of the most advanced in Japan. Furthermore, wehave built a corporate governance system with fully adequate functions in risk management, compliance,
and internal controls. In line with our newly formulated Corporate Governance Guidelines, we arecommitted to being fully accountable for our business conduct. We will continue to set goals that reflectchanges in the surrounding business environment and come up with initiatives that enable us to meetarising societal needs.

To Our Stakeholders

We believe that the source of our growth lies in our responsiveness to the needs of society and in theharmonious integration of business activities and CSR strategy. All employees of Hulic will continue tomaintain and strengthen communication with our stakeholders and will ceaselessly work to meet yourexpectations. We sincerely appreciate your continued support.

Saburo Nishiura

Chairman, Representative Director

Manabu Yoshidome
President, Representative Director

6Financial Indicators and Non-financial Indicators/ Highlights

Unit

FY12/11

FY12/12FY12/13

FY12/14

FY12/15(Million Yen)

74,73894,319108,444

212,791

169,956

Real estate business(Million Yen)

68,096

84,346

95,726

199,910

137,544

Insurance agency business(Million Yen)

2,388

2,417

2,631

2,886

3,260

Other

(Million Yen)

4,253

7,555

10,087

9,994

10,057

Operating Income(Million Yen)

19,841

22,571

29,11436,03242,002

Ordinary Income(Million Yen)

16,896

20,03325,98334,31442,534

Operating Revenue (Net Sales)
Segment Earnings

Net Income(Million Yen)

9,336

11,487

15,97022,352

33,628

Total Assets(Million Yen)

476,244

637,919

720,344773,401

1,091,266

Net Assets(Million Yen)

104,356

149,895

177,280

205,421317,045

Net cash provided by (used in) operating activities (Million Yen)

20,4598,472

11,114

84,12336,272

Net cash provided by (used in) investing activities (Million Yen)

(23,667)(30,554)(49,548)(83,815)(284,580)

Net cash provided by (used in) ﬁnancing activities (Million Yen)

7,511

20,85442,841

4,192

257,934

Cash and cash equivalents at end of period (Million Yen)

11,733

12,164

16,60021,12930,997

Consolidated Cash Flow

Equity Ratio

(％)

21.6

23.2

24.4

26.1

28.6

EBITDA ※2(Million Yen)

26,49330,09237,80944,87054,678Interest-Bearing Debt to EBITDA Ratio ※3(Times)

11.7

13.8

12.2

10.5

12.0

Net D/E Ratio ※4(Times)

3.0

2.8

2.8

2.6

2.2

(Times)

4.6

1.7

2.0

18.5

8.2

Return on Equity ※6

(％)

9.3

9.1

9.8

11.8

13.0

Net Income per Share

(Yen)

54.6

22.3

27.0

37.7

52.7

Dividend per Share(Yen) （※1Interest Coverage Ratio※5※7

Changes in Real Estate Business
Related Index

Adjusted
post merger）3.6 （Adjusted
post merger

6.5

）4.5

10.5

15.5

Unit

※8

Vacancy Rate ※9

FY12/13

FY12/14

0.3

0.6

0.4

0.7

0.9

20,024

19,817

20,75920,451(Yen)

26,75324,42023,71425,147

24,510(Building)

131

163

161

167

202

Tokyo metropolitan area

(Building)

113

143

141

148

182

Other

(Building)

18

20

20

19

20

(㎡)

492,422723,924

679,672774,615

931,229

Tokyo metropolitan area(㎡)

393,191

553,333

537,582

633,918

771,049

Other

(㎡)

99,231

170,591

142,090

140,696

160,179

Total

On July 1, 2012, Hulic completed a consolidated merger (reverse acquisition) with Shoei Co., Ltd. The numerics in this book before the consolidation refer to ex-Hulic's numerics. Figures inparentheses indecate negative amounts. ※1 Equity Ratio=Equity/Total Assets ※2 EBITDA=Ordinary Income - Equity in Earnings (Losses) of Afﬁliates + Interest Expenses + Depreciation andamortization ※3 Interest-Bearing Debt to EBITDA Ratio＝Interest-Bearing Debt/EBITDA ※4 Net D/E Ratio=Net Interest - Bearing Debt/Shareholders' Equity ※5 Interest Coverage Ratio=Operating
Cash Flows/Interest Expenses Paid ※6 ROE=Net Income/Average Equity ※7 On July 1, 2012, three ex-Shoei shares were allocated for every ex-Hulic share, and data for 2010 to 2012 has beenadjusted for this share allocation. ※8 Excluding real estate held for resale ※9 Excluding the unsigned ﬂoor space which was reserved due to the tenant's demands and reconstruction（¥100 million）

2,500

Operating Income

1,699

1,000

747

943

1,084

FY12/ FY12/ FY12/ FY12/ FY12/
11
12
13
14
15

336
300
200

159
93

EBITDAEBITDA ratio

15.5

300,000
15.0
10.0
5.0

15.0

250,000
200,000

10.0

150,000
100,000

5.0

50,0000FY12/ FY12/ FY12/ FY12/ FY12/
14
11
12
13
15

0

0

FY12/ FY12/ FY12/ FY12/ FY12/
14
11
12
13
15

30,000(Average rent: Yen/Tsubo)(Vacancy rate: %)25,0000FY12/ FY12/ FY12/ FY12/ FY12/
11
12
13
15
14

All Hulic properties

6.0

Hulic's ofﬁce buildingsin Tokyo's 23 wards

3.0
2.0

5,000
0

7.0

Market average forTokyo's 23 wards

4.0

10,000

4.5

Market average forthe ﬁve wards ofdowntown Tokyo

9.0

5.0

15,0006.5

1.0
FY12/11

FY12/12FY12/13

FY12/14

FY12/150

Hulic's ofﬁce buildingsin the ﬁve wards ofdowntown Tokyo
8.0

20,000

10.5

3.6

（%）
20.0

Vacancy Rate※9 /Average Rent
(yen)

15

Return on Equity（Times）（Million Yen）
20.0 350,000

10,00020

FY12/ FY12/ FY12/ FY12/ FY12/
11
12
13
15
14

Equity（Million Yen）
60,00020,000FY12/ FY12/ FY12/ FY12/ FY12/
11
12
13
14
15

168

Shareholders’Equity/
Return on Equity (ROE)

30,000114

10

0FY12/ FY12/ FY12/ FY12/ FY12/
11
12
13
15
14

40,000

Dividend per Share ※7

5200

50,000

223

259
200

100

0

（¥100 million）

400

100

300

EBITDA/EBITDA Ratio

Net Income

343

225

100

500
0

291

200

425

400

360

198

（¥100 million）

500

420

400
300

1,500

Ordinary Income（¥100 million）

500

2,127
2,000

FY12/15

20,571

Total

Rentable Area

FY12/12(％)
Tokyo central 5 wards

Number of Properties

FY12/11(Yen)

Entire country

Average Rent

Operating Revenue (Net Sales)

0▲

Target: Real estate for rented possessions of this company

Main Financial Indicators▲▲

Changes in Major Consolidated
Management Index, etc.

0※Market average：
Miki Shoji's Ofﬁce
Data by Region※Market average rent:
Miki Shoji's Ofﬁce
Data by Region▲

Main Non-Financial Indicators

Power/gas consumption, CO₂ emissions intensity, and waste disposal for 2015 concerned a significantly different number of properties reported up until 2014. With regard to the detailed boundary of these indicators, pleaserefer to page 15,“Initiatives for Material Issues.”Power/gas consumption and CO₂ emissions intensity: 20 properties (2011-2014), 51 properties (2015); waste disposal: 16 properties (2011-2014), 7 properties (2015).

Power Consumption

Gas Consumption

65,973*60,00051
blds

40,00027,095 26,028 25,633
20,000
0

7

（㎥）

（MWh）

80,000

20
blds

20
blds

20
blds

22,06020
blds

FY12/ FY12/ FY12/ FY12/ FY12/
11
12
13
14
15

Corporate Social Responsibility Report

CO₂ Emissions Intensity

800,000

762,552*

600,000

561,116400,00020
blds

612,235
20
blds

51
blds

588,55120
blds

453,012
20
blds

80

68

77

74

78*

60
40

200,000

20

00FY12/ FY12/ FY12/ FY12/ FY12/
11
12
13
14
15

（kg-CO₂/㎡）

100

1,200

600
300

FY12/ FY12/ FY12/ FY12/ FY12/
14
15
11
12
13

（t）

1,500

900

56

Usage Rates of Paid Leave

Waste Disposal

0

1,179
16
blds

1,145
16
blds

1,102
16
blds

60

1,027
16
blds

（％）

80

70

71

71

71

71*

Employment Ratio of the Disabled
（％）

10.00
8.00
6.00

Non-consolidated basis
5.66

4.00

5.30

40

407
7
blds
FY12/ FY12/ FY12/ FY12/ FY12/
11
12
13
15
14

20
0

2.14

2.00

FY12/ FY12/ FY12/ FY12/ FY12/
11
14
15
12
13

0

6.92

8.56

7.36*

2.46 2.31*

Consolidated basis
Jun/
11

Jun/
12

Jun/
13

Jun/
14

Jun/
15

8

Hulic’s Vision and Strategy
Further evolve Hulic’s distinctive business model to achieve a high rate of growth
Hulic achieved the goal set out in our medium-term management plan (2014-2016), launched in fiscal year
2014, one year ahead of schedule. As a result, we newly formulated a long-term plan called "Hulic 10 Yearsfrom Now (2014-2023)" and a new medium-term management plan for 2016 to 2018 as the second step inthis vision. In fiscal year 2016 as well, we will inject thorough efforts to innovate and accelerate our initiatives,and strive to maintain and develop our business foundation for the early attainment of the goals set out in the
new medium-term plan (2016-2018).

New Long-term Plan“Hulic 10 Years from Now (2014-2023)”90

61.064.0+18.5‒21.5

Business Strategy

60
50

42.5

+22.5

❶ Building of Solid Lease Portfolio● Steady progress with reconstruction to improve portfolio quality● Strategic sourcing of corporate real estate (CRE) and other assets for steady portfolio expansion

Leasing business
Development

40

CRE

●

3K Businesses (Koreisha (seniors),
Kankyo (environment) and Kanko (tourism))30

New Medium-Term Plan

20.0

●

10

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023 (Year)

Numerical Target
We will aim to reach ordinary income of 85 billion yen by 2023.

Basic Policy on Business Expansion❶ We will establish a business structure whereby the leasing business secures stable proﬁts and balances proﬁt
growth with consistent and stable earnings, while growing earnings in segments related to the leasing business.
This includes expanding the development business, management business and CRE business. Furthermore, wewill develop and expand our business domain in growing ﬁelds tied to current needs, with a primary focus on
businesses for seniors, businesses for tourism and businesses for the environment (the 3K businesses).
❷ We will earn highly positive trust from the markets by carefully monitoring ﬁnancial stability and business risk.
❸ We will further expand our CSR management and become a company with a solid presence in society.
We will strive to be acompany where female workers can thrive professionally and where females make up 20% ofmanagement positions by 2020.

9Corporate Social Responsibility Report●●

J-REIT

2009

Strategic and plan-based asset management operations to maximize earnings opportunities❷ Promotion of Value-added Real Estate Businesses● Promote development business based on high-quality properties in prime locations of appropriate scale for the Hulic business modelManagement business

200(Billionsof yen)

The new medium-term management plan is thesecond phase of the long-term plan“Hulic 10 Yearsfrom Now,”and will smooth the way for its early
fulﬁlment.

❹ Enter into alliances with external players to expand earning opportunities❺ Control appropriately the various risks accompanying expansion of business domains❻ Ensure balanced management for sustained growth8070

While retaining leasing as its main business focus,
the Group will pursue innovation that anticipates
today’s needs to achieve high rates of productivity
and growth.

❶ Expand portfolio of assets under management in leasing business including REITs❷ Link with value-added real estate businesses to combine growth with capital efﬁciency❸ Consolidate 3 main future growth businesses as basis for opening up new real estate-related business domains

85.0+21.0‒24.0

Target ProﬁleBasic Policies

100

Ordinary Income

New Medium-term Management Plan (2016-2018)

Respond to diverse needs with projects based on acquisition, value enhancement, and resale (e.g. property repackaging)
Strengthen support to Hulic REIT in line with sponsor support agreement
Reinforce leasing operations to develop strengths in commercial as well as ofﬁce property❸ Consolidation of 3 Main Future Growth Businesses and Opening Up of New Business Domains● Open up new real estate-related business domains(Billions of yen)in r e sp o n s e t o c h a n gin g s o c i a l s t r u c t ur e s e . g .
FY ended
FY endingcombination businesses, seed businesses● Proﬁt plan
Dec. 2015
Dec. 2018 Target❹ Synergies from Combined Group Strength● Increase Group synergies and enter ﬂexibly
into alliances and merger and acquisition deals
with external players❺ Comprehensive Risk Management
Ensure sound ﬁnancial prac tice throughﬁnancial control and subject Group businesses
to comprehensive risk management●❻ Implementation of Balanced Management for
Sustained Growth● Promote balanced management by addressing
environment, social, and gover nance (E SG)
issues and taking other initiatives to create value
responsive to social needs

Operating Income

42.0

67.0-70.0

Ordinary Income

42.5

61.0-64.0

Net Income

33.6

39.0-41.0

EBITDA

54.7

82.0-85.0

Interest-Bearing Debt to EBITDA Ratio

12.0 times

12.0 times or less

Net D/E Ratio

2.2 times

3.0 times or less

13.0%

10% or more

30.5%

30% or more

● Financial restraints● Capital efﬁciency
ROE● Shareholder return
Dividend payout ratio (simpliﬁed
calculation at ﬁscal year end)10

Creating Shared Value
Realizing a Society Filled with Peace of Mind and Trust《 Corporate Philosophy 》
Contributing towardrealizing a society with total
peace of mind and trust

The Hulic Group provides buildings with excellent safety, environmental performance, and convenience thatmatch the needs of society today (opportunities and risk) through a fusion of management and CSR, creating
new added value in the process.

Reconstruction from theGreat East Japan Earthquake

Received the real estate industry's
first highest rating of DBJ BCM

Proactively expand
businesses targeting seniors

Use of natural ventilation and natural lighting
systems, and standardization of long-life buildings

for Social Issues

Contribute to disasterreconstruction

Measures to prepare
for natural disasters

Measures to address
aging in Japan

Promote environmentallyfriendly businesses

Prevention of
global warming

Hulic's Contributions to Solutions

Provide disaster resistantbuildings

Social Issues Requiring Solutions《 Group's motto 》
Creating amenity.
Promoting peace of mind.

Creating shared values
with society andsustainably developing

Creating Shared Value with Society

Value for Society● Improve the conditions of global environment● Realize a society where seniors live in peace● Help achieve safe and comfortable lifestyles

Development and investment in senior,nursing care and medical facilities● Help revitalize disaster-hit economies, etc.

Value for the Hulic Group● Enhance earnings power● Fortify financial soundness

Investment in mega solar projects inFukushima● Capture market share● Enhance brand value● Enhance building technologies

Opportunities and Risks in Social Issues

Responding to Opportunities and Risks

Business
Opportunities

Initiatives for Opportunities(Business Development)

Preparations for Risks(Infrastructure Reinforcements)● Standardize long-life building designs● Prioritizing business domains based on changes in● Demands from society for
eco-friendly buildings● Rising demand for renewableenergy● Growing market for seniors
following advancements inaging societies● Boost demand for safe andsecure buildings● Spurring on the real estatemarket through the 2020
Tokyo Summer Olympics, theincrease in the number oftourists to Japan, and urban
revitalization

11

Corporate Social Responsibility Report

Business Risks● Market changes caused bychanges in social structure● Risk of earthquake occurringin Tokyo where our portfolio isconcentrated● Risk of deteriorating realestate market conditions due
to a prolonged downturn inJapanese economy● Risk of rising financing costs
caused by turbulent financial
markets● Upgrade equipment at existing buildings to highly
energy efficient equipment● Adopt environmentally friendly technologies● Make efforts in developing senior housing in step withthe growing senior population● Develop, hold and invest in hospitals and long-termcare facilities● Proactively adopt seismically-isolated structures andearthquake-damping structures● Introduce the latest technologies and equipment at
newly constructed buildings● Increase earnings of existing properties throughrebuild projects● Launch publicly offered J-REITs and improve asset
management business● Engage in tourism business centered on hotels

social structure● Establishing a business continuity plan (BCP) andconducting BCP training● Establishing BCP based on collaborative structureswith outside organizations and developing andcommercializing building and facility earthquake
resistance services● Improving the earthquake resistance of companyowned buildings● Rebuilding with a focus on seismically-isolated andearthquake-damping structures● Liquefaction countermeasures and measures against
flood damage● Real estate portfolio centered on downtown Tokyo● Promoting long-term lease agreements with tenants● Primarily long-term, fixed rate financing● Secure stable profits● Enhance expertise of personnel● Improve employee motivation● Co-exist with local communities● Achieve business continuity, etc.

12Material CSR Issues

Hulic identifies material CSR issues that we should continue to focus on, in order to meet the needs andexpectations of our stakeholders, and contribute to society while achieving sustainable growth. In fiscal year
2015, we reviewed the material CSR issues that we have uncovered to date and further identified four new
themes as material issues.
Amidst the diversification of social issues and matters of concern for stakeholders, we will continue to focus
our efforts on such priority issues and ensure the effective promotion of CSR activities.

Process to Identify Material Issues▲

Based on the matters of concern for stakeholders, we identified thematerial issues that we should continue to put effort into in order tocontinue achieving sustainable growth.

STEP

1
STEP

2

Communication with stakeholders
The Hulic Group is committed to realizing a sustainable society by delivering environmental, social andeconomic value through interactive communication with all of its stakeholders.

STEP

3

Customers

We strive to provide services to meet the detailed needs ofcustomers and deliver buildings that are secure, safe,
comfortable and highly convenient in order to improve thelevel of customer satisfaction.

Employees

We value teamwork and work to makeour workplaces
open and employee-friendly.

4

We are working on promoting Public
Private Partnerships (PPP) that meet theneeds of local governments.

Based on international CSR guidelines including the GRI’s (Global
Reporting Initiative) G4 Sustainability Reporting Guidelines andISO26000, 60 CSR issues that should be reviewed were identiﬁed.

Evaluation ofmateriality fromthe perspectiveof stakeholders

The materiality of the issues identiﬁed in Step 1 was evaluated separately for Hulic’s
seven stakeholders. In conducting the evaluation, scores were allocated based on
feedback from external experts, obtained through sources such as the behavioral
guidelines of our major customers, OECD Guidelines for Multinational Enterprises, ESG
surveys from institutional investors and NGOs, various survey reports, press reports, theEnvironmental Advisory Council, and third-party opinions in the CSR Report.

Evaluation ofmateriality from
Hulic’s perspective

The materiality of the issues identiﬁed in Step 1 was evaluated from theperspective of their impact on Hulic’s management. In conducting theevaluation, scores were allocated based on factors such as the businessstrategy, signiﬁcant risks and management issues, and strengths identiﬁed
and set forth in the new 3-year medium-term management plan.

Combining the evaluationof materiality fromthe two perspectives andﬁnalizing the material issues

The 17 issues with a high level of materiality for both stakeholders andHulic’s management were identiﬁed, and organized into four candidate
material issues. After interviews and coordination with the relevantinternal departments, and approval from the directors in charge of CSR,
these four material issues were ﬁnalized.

Going forward, we will continue to review, as necessary, the material CSR issues that have been identified,and ensure the effective promotion of CSR activities.

Government

We are committed to a broad range ofmutual communication
with shareholders, through timely andappropriate disclosures as wellas participation in earnings
brieﬁngs and various investor
relations (IR) fairs.

Identified Material CSR Issues
High

Environment● Energy

Environment
Nikkei Environmental Management Survey: Ranked 1st
Top ranking for the sixth consecutive year in the warehouse,real estate, and other categories

19th Environment Communication Awards
Prize of Greatness
25th Grand Prize for the Global Environment Award
Minister of Land, Infrastructure, Transport and Tourism Prize

Local Communities

We emphasize communication with local
communities and constantly work to build
positive relationships with them.

SocialGovernance● Products and services (environment)

Corporate Social Responsibility Report● Overall environment

Society● Marketing communication● Business partnership/collaboration● Advanced technology/● Provision of safe andresearch and development secure products and services● Compliance (society)● Labor-management environment● Local communities● Diversity and equal opportunities, etc.

Governance● Risk evaluation/
Risk management● Anti-competitive practices● Corruption prevention

High

Materiality for Hulic

Material Issues ❶Material Issues ❷Material Issues ❸Material Issues ❹Environmental
measures

Strengthening the3K businesses toward
resolving social issues

Diversity andwork-life balanceStrengthening corporate
governance andrisk management

P.17

P.31

P.19

13

● Renewable energy● Emissions into the atmosphere (GHG) ● Compliance (environment)

Materiality for stakeholders

Global Environment

We are mindful of the environment andactively work to utilize natural energy andconserve biodiversity.

We were highly
appraised by various
external institutions
as a result of theproactive efforts
that we put into the
ESG (Environment,
Society, andGovernance) issues
that stakeholders
place emphasis on.

STEP

We build relationships that mutually enhance thecorporate value of both parties assuming long-lasting
business transactions through close, mutualcommunication.

Shareholders

INFORMATION：
External
evaluation

Suppliers

Issue
identiﬁcation

P.37

14

Initiatives for Material Issues - Targets and Performance
We have established key performance indicators (KPI) and targets for eachissue for the effective promotion of CSR management.

In order to improve while objectively assessing CSR activities, we have established key performance indicators (KPI) and target for each material CSR
issue. For non-priority issues, we have adopted an assessment indicator that helps us monitor the results of the implementation of initiatives. Thisfiscal year, we received assurance from an independent assurance provider concerning the following six items: power and gas consumption, CO₂
emissions and CO₂ emissions intensity (Scope 1, Scope 2), number of greening projects, usage rate of paid leave, employment ratio of the disabled,and percentage of employees who received medical checkups.
We will make efforts for constant improvement using the PDCA Cycle, while disclosing data on the progress of our CSR activities to the stakeholders.

Items marked with "★" are items with target values set as KPI, while figures marked with "* " are those that have been assured by anindependent assurance provider. Items in blue have been newly established as material issues for this fiscal year.
Material issues

Items

Measures against
global warming at
Hulic’
s buildings ★

Environmental
measures

Strengthening the 3K
businesses toward
resolving social issues

Other - Initiatives forcustomers andthe local community -※4
Gas consumption（㎥）

CO₂ emissions intensity（ kg-CO₂/㎡）※1※2

Boundaries

Reduction by 5% for ﬁve years from 2011
to 2015 compared with 68.42, an averageduring period from 2005 to 2007.
(per unit ﬂoor area)

51 existing primary ofﬁce
buildings ※3

FY2011FY2012FY2013

FY2014FY201527,09526,02825,63322,06065,973＊561,116

612,235

588,551

453,012762,552＊

56

68

77

74

78＊

Major Achievements in FY2015

Evaluation

Reference● Environmental consideration for new buildings (natural lighting/natural ventilation system, adoption of LED lighting
system, advanced heat shield/insulating multilayered glass, and highly efﬁcient air conditioning system)● Renovation works on existing buildings for energy saving (upgrading to highly efﬁcient lighting equipment andair conditioning systems)● Initiatives toward reduction of power consumption in collaboration with management companies and tenants(setting higher temperature of air conditioners, decreasing the number of lights on, adjusting brightness)

○

P21

◎

P23-24◎P26

3 investments or more per ﬁscal year

All Hulic’s buildings

3

7

5

6

6

Promotion of greening ★

Number of greening
projects※5

1 project or more per ﬁscal year

All Hulic’s buildings

3

8

6

5

9＊

Reduction of waste at
Hulic’
s buildings ★

Amount of waste（t）

Reduction by 15% for 4 years from2012 to 2015 compared with averageduring period from 2005 to 2007.
(per unit ﬂoor area) ※6

Seven buildings occupied by
the Hulic Group ※7

1,179

1,145

1,102

1,027

407

●

22% reduction◎ーReduction in water consumptionat Hulic’s buildings ★

Water consumption（㎥）Reduction by 15% for 4 years from2012 to 2015 compared with averageduring period from 2005 to 2007.
(per unit ﬂoor area) ※6

51 existing primary ofﬁce
buildings ※3

169,768

164,037

148,508

127,745

381,553●

27% reduction◎ーReduction of waste
in new buildings ★

Number of technological measures (PC construction
method/extension of life span) implemented toreduce the amount of waste in reconstruction projects

1 case or more per ﬁscal year

All Hulic’s buildings

3

5

8

7

8

●

Actively adopted long-life structure speciﬁcations for completed projects.

◎

P25

Tourism business projects

Accommodation facilities(number of properties owned)

No target (follow-up item)

All Hulic’s buildings(As of the end of December 2015)

－

－

－

－

8

● The number of properties owned as of December 31 2015 is eight. In 2016, we acquired/completed threeproperties including ATAMI Kai-Ho-Rou, and four properties are scheduled to be completed in 2017/2018.

ーP17-18

Senior business projects

Senior facilities(number of properties owned)

No target (follow-up item)

All Hulic’s buildings(As of the end of December 2015)

－

－

－

－

16

The number of properties owned as of December 31 2015 is 16. In 2016,
we newly acquired/completed three properties including Hospitalment Itabashi
Tokiwadai, and four properties are scheduled to be completed in 2017/2018.

ーー

Ratio of female managers

20% by 2020

Hulic

ー

ー

ー

ー

10.40%

Number of seminars organized by
the women's career promotion project teamOnce a year

Hulic

ー

ー

ー

ー

1

Employment ratio of the disabled

Maintaining the statutory
employment rate of 2% or more

Hulic Group (As of June 1, 2015) ※10

ー

ー

2.14%

2.46%

2.31%＊(Reference) Hulic (As of June 1, 2015)

5.66％

5.30％

6.92％

8.56%

7.36％＊

Promoting the use of
the next generation
nurturing support
system ★

Usage rate of childcare
leaves (Number of people)

70% of eligible women or
more on average and one
man or more per ﬁscal year

Hulic (Women)

100％

100％

100％

100％

100％

1

1

No eligible person

22

Ratio of employees who returned
to work after childcare leave

100%

Hulic

100%

100%

100%

100%

100%

Promoting the planned use of paid leaves ★

Usage rate of paid leave ※860% or higher per ﬁscal year

Hulic

70％

71％

71％

71％

71％＊

Promoting health care ★

Percentage of employees who
received medical checkups
（％）

100%

Hulic ※9

100％

100％

100％

100％

100％＊

Promoting employmentof the disabled ★

Hulic (Men)●●

Usage of natural ventilation, natural lighting
Photovoltaic generation system installation● Acquired through the Shinagawa Season Terrace, Hulic Toranomon Building, Shin-Sapporo Howakai
Hospital, Hulic Asakusabashi Edo-dori, Gracia Chofu, Itabashi-honcho Building (provisional name),
Charm Suite Shinjuku Toyama, Hulic Residence Shinjuku Toyama, Hulic Shimura-sakaue.

●●

43 male managers, ﬁve female managers

ーIn addition to convening meetings of the women's career promotion project team,seminars and exchanges of opinions for all female employees were also held.

◎

Increased requests received from group companies andoperating steadily

◎
◎

●

●

P31

◎

●

Continued to conduct a campaign to boost the usage rate of paid leave◎●

Implemented a Health Committee through cooperation with industrial physicians

◎

ー

ー

P40

Number of internal audits implemented for Hulic and Hulic's group companies.

ーP37

The Board of Directors' Meeting was convened eighteen times in 2015.
Participation rate covers all internal and external Directors and Auditors.

ー

P38

◎

P27

◎

P39

A survey on the satisfaction of tenants was conducted with Hulic Building
Management acting as the point of contact

◎

P28

◎
◎

No target (follow-up item)

Hulic

ー

ー

ー

ー

5

Number of internal audits conducted(number of times)

No target (follow-up item)

Hulic

ー

ー

ー

ー

8

Corporate GovernanceParticipation rate in the Boardof Directors' Meeting (%)

No target (follow-up item)

Hulic

ー

ー

ー

ー

98%

Earthquake countermeasuresfor Hulic’s buildings ★

Percentage of properties with earthquake-absorbing
structure, earthquake-damping structure, and earthquake
resistance over 1.25 times stronger than the standard (%)

100%

All new ofﬁce buildings completed

Business Continuity Plan (BCP) ★

Number of inspections for BCP drills,
stockpiled food and goods

Once or more per ﬁscal year

Hulic Group

1

1

1

1

1

●

Improvement in customer satisfaction ★

Number of surveys on customer satisfaction

Once or more per ﬁscal year

Hulic Group

0

1

1

1

1

●

Corporate social contribution ★

Number of social action programs

4 programs or more per ﬁscal year

Hulic Group

7

7

8

9

12

● Held students' idea competition, hosted summer festivals, donated to NPO organizations, donatedto Ashinaga Scholarship Society, opened the Company's daycare nurseries to the local community, etc.

◎

Supporting employees to conductsocial contribution activities ★

Number of social contribution
activities by employees

3 activities or more per ﬁscal year

Hulic Group

4

5

6

6

6

● Participated in Satoyama conservation activities, donated to the Ashinaga Scholarship Society, participated in gift-matching program,and supported community cleaning activities, ﬂowerbed maintenance activities, as well as assistance activities for disaster-hit areas.

◎

Corporate Social Responsibility Report

P32

Expanded in-house programs receiving subsidies for extended
hours daycare, daycare for ill children, and Kids' Clubs● Introduced the internet-based“Childcare wiwiw Program”forsupporting employees from prior to maternity leave up to theirreturn to work
● Opened a company daycare nursery inside the Hulic headquarters●

Number of compliance seminars
attended (number of times)※ 1 The unit calorific value and CO₂ emissions factor for city gas are based on values from the“Manual for Calculations and Reports of GHG Emissions”issued by the Ministry of the Environment and the Ministryof Economy, Trade and Industry, while the CO₂ emissions factor for power is based on the actual emissions factor of electric utility companies used by the target building. ※ 2 CO₂ emissions intensity is the sum
obtained through calculations that take the total floor area of the offices that use power and city gas, respectively as the denominator for each emission volume. ※ 3 The 51 target properties are office buildings
with floor area of 3,000㎡ or above and hotels managed by the Company, and exclude buildings in which a bank branch is the sole tenant, real estate for sale, and condominium ownership/shared ownership. ※ 4
City gas consumption is aggregated based on the Company's direct contracts or consumption the Company is required to report on in accordance with Tokyo Metropolitan Government ordinances.

15

Results

Number of capital investments
for renewable energy

Compliance

Strengthening
corporate
governanceand riskmanagement

Power consumption（MWh）Targets

Using renewable energy anddeveloping new technology ★

Improvement of systems todevelop women’s careers ★

Diversity andwork-life
balance

Key Performance
Indicators (KPI)

Conducted training on an overview of the "My Number" system, humanrights issues, Act on Prevention of Transfer of Criminal Proceeds, etc.

●

●

●

● Adopted earthquake-absorbing structures or earthquake damping
100％
100％
100％
100％
100％
（2 buildings）（3 buildings）（2 buildings） （1 building）（9 buildings） structures at ofﬁce buildings●

Implementation of company-wide disaster training and training of moving to buildings managed by Hulic in the event of a disaster
Conducted ﬁrst-aid training

P33-34

P29-30※ 5 The number of properties, among buildings completed between January - December, 2015, for which greening projects have been completed. As properties that have acquired JHEP certification during July June were counted until 2014, three properties overlap with the number of properties for 2014. ※ 6 Since the target properties have been changed, the reduction implementation rate is calculated by calculating
the intensity of consumption and disposal per floor area (square meter) of the target properties. ※ 7 Data for 2011 - 2014 covers the 16 primary office buildings; however, the seven buildings occupied by Hulic's
Group companies, which are actively implementing measures to reduce the volume of waste, have been covered in data for 2015. ※ 8 Usage rate of paid leave is calculated by dividing the "number of days of
paid leave used" by the "number of days granted excluding leave carried over." ※ 9 Of the executive directors, employees (including temporarily transferred staff) and full-time contract staff, with the exclusionof employees on leave, those who belonged to the Company both as of the point of registration for medical checkups and as of December 31 are included in the calculation. ※ 10 The target subsidiaries arecompanies that have been certified as affiliated subsidiary companies under the Act on Employment Promotion etc. of Persons with Disabilities.

16

Special
FeatureInitiatives for
Our Tourism Business

Case study❶

THE GATE HOTEL KAMINARIMON by HULIC / THE GATEHOTEL TOKYO by HULIC Plan (provisional name)

Hulic takes the lead in capturing the needs of the times and promotes the creation of social and economic value

THE GATE HOTEL KAMINARIMON by HULIC

Atami Fufu

80,000Source: Japan National Tourism Organization (JNTO)
Japan Revitalization Strategy (Revised in 2014) – Japan’s challenge for the future – (24 June 2014)
Statistical data: Number of foreign visitors to Japan by nationality and month (2003 – 2015)

40,000（1,000 0
people）

THE GATE HOTEL KAMINARIMON by HULICTHE GATE HOTEL TOKYO by HULIC Plan (provisional name)❷Investment in and development of other hotels
Tokyo Bay Maihama Hotel Club Resort
Mercure Tokyo Ginza(Hulic Ginza 2 Chome Building)❸Financing other hotels
NIPPON VIEW HOTEL❹Acquisition and development of luxury hot spring inns
Hakone Suishoen, Atami Fufu, ATAMI Kai-Ho-Rou

Corporate Social Responsibility ReportGoal
40,000Great East Japan
Earthquake

2010

2011

2012

2013

2014

2015

THE GATE HOTEL KAMINARIMON by HULIC, which opened in August 2012, wasthe first hotel to be directly operated by Hulic. The hotel is located right in front of
Kaminarimon in Asakusa, an area that is well frequented by many foreign tourists.
From the planning stages for this hotel, we have paid attention to providing a
comfortable space for both hotel guests and all people in the local community,in line with our thematic concept of“Intimate.”In the management aspects, wehave taken care to provide not only comfort in the hotel but also a wonderfuljourney to our customers. As a part of this commitment, the Asakusa Concierge,
which comprises staff members with exhaustive knowledge of Asakusa, provides
information about the local Asakusa area. Based on the principle of diversity
among hotel employees, we have recruited a richly international team that is able
to provide multilingual support for customers from different countries. For these
initiatives and efforts, we have been rated with one pavilion in the Michelin Guidefor four consecutive years since 2013 and placed 10th in the best hotel category as
well as 8th in the service category in TripAdvisor's Travelers' Choice Award 2016.
We also took a proactive stance in prolonging the lifespan of the building andensuring its environmental performance and were selected as a CO₂ Reduction
Leading Project by the Ministry of Land, Infrastructure, Transport and Tourism.
THE GATE HOTEL TOKYO by HULIC Plan (provisional name), which we are currently
working on, is the second hotel in Hulic's proprietary hotel business. The area that
we are developing is within the Ginza/Yurakucho districts, positioned as a priority
area by Hulic, and close to the Sukiyabashi intersection. This is an excellent location
facing Harumi-dori. Taking advantage of the potential of this development, wehave positioned this hotel as a“flagship development”of the Company’s tourism
business. In the aspects of management and building, we aim to create a hotel thatis highly appraised by everyone, as THE GATE HOTEL KAMINARIMON by HULIC is,and hope to provide a solution to what is perceived as a growing problem in Japan.

Case study❷

THE GATE HOTEL TOKYO by HULIC Plan (provisional name)

THE GATE HOTEL KAMINARIMON by HULIC (balcony area)

Acquiring and developing luxury hot spring inns

Hakone Suishoen, Atami Fufu, ATAMI Kai-Ho-Rou/
Lake Kawaguchi Fufu Plan (provisional name)19,73720,000❶Developing THE GATE HOTEL brand,a business directly managed by Hulic
Resolution of issues

Provision of a wide range of accommodation facilities

SocialissuesGoal
60,00060,000In March 2016, the Government of Japan held the“Council for theDevelopment of a Tourism Vision to Support the Future of Japan,”which represents its new vision for the sector. During this meeting,it established the goals of welcoming 40 million foreign visitors toJapan by 2020 and 60 million foreign visitors to Japan by 2030.

Inadequate accommodation facilities※3K businesses refer to the Koreisha (seniors), Kanko(tourism), and Kankyo (environment) businesses, and“3K”represents the first letters in these three words.
Engaging in 3K businesses means that Hulic, as areal estate company, will anticipate changes in theexternal environment and review as well as practiceour business, which is a half step ahead from its peers,in order to respond to the progress of the aging ofsociety going forward, the rising number of tourists,
and the growing seriousness of environmental issues.

ATAMI Kai-Ho-Rou

Trends in the Tourism Sector, and Our
Growth Strategy

17

In the Medium-Term Management
Plans formulated in 2014 and2016, the Company establishedthe 3K businesses (Koreisha(seniors), Kanko (tourism),
and Kankyo (environment)) ※as priority sectors. In 2014, weestablished a specialized tourism
department, the Tourism Business
Development Department, aspart of our efforts for the various
problems confronting the
tourism sector in Japan, promotebusinesses that meet the needs ofcustomers, and explore new areas.

THE GATE HOTEL KAMINARIMON by HULIC

Developing THE GATE HOTEL brand

2020

2030

Efforts, including easing visa regulations in Japan and the nationwide campaign
to draw visitors to Japan, have been successful, resulting in a rapid increase in thenumber of foreign tourists visiting Japan today. In 2015, the number of foreign visitors
to Japan reached 19.73 million, close to the goal of 20 million people established by
the government for 2020. At the same time, in March 2016, the Government of Japanannounced its target of welcoming 60 million visitors to Japan by 2030. In tandemwith this growth in the number of foreign tourists, there has also been rising demandin travel needs among the new consumption leaders in Japan, which comprise thewealthy class, senior citizens, and baby-boomers. This has brought about a shortage inaccommodation facilities in Japan, and there is a need to address this problem as soon as
possible. Furthermore, there are also calls for a wider range of accommodation facilities
to match the needs of diverse travelers from Japan and overseas. Based on these social
trends, Hulic recognizes that the tourism industry, and particularly the area of tourist
accommodations, is a rapidly growing sector. In order to contribute to the resolution ofvarious social issues, and at the same time, anticipate business growth for Hulic, we haveestablished the four pillars shown on the left in order to focus our efforts on developing
our business in the tourism sector (particularly the accommodations sector).

Foreign tourists to Japan have traditionally traveled in group tours. However,there is now growing demand for independent travel to match personal
interests and preferences. Moreover, travel has been ranked as the top needamong senior citizens in Japan, who are the new leaders of consumption,and trends show that they prefer traveling at high unit costs. In light of such
trends among domestic and foreign travelers, one of the issues that confronts
the country is the provision of accommodation facilities that can match theincreasingly diversifying needs.
By acquiring and developing luxury Japanese-style inns, Hulic seeks tocontribute to tackling this issue. We acquired Hakone Suishoen and Atami
Fufu in April 2015, and ATAMI Kai-Ho-Rou in February 2016. We have also
begun work on the Lake Kawaguchi Fufu Plan (provisional name), for whichconstruction is scheduled to be completed in 2018. Going forward, our policy
is to develop/acquire about 10 luxury hot spring inns in hot spring resortareas located about two hours away from the heart of the Tokyo.
In 2015, we formed a partnership with Kato Pleasure Group (hereafter,“KPG”)
and established a joint venture company to manage Japanese-style inns. By
fusing Hulic’s knowhow in acquiring and developing real estate, and KPG’s
knowhow in the hospitality business, we aim to achieve the highest levels ofcustomer satisfaction in the management of luxury hot spring inns.

ATAMI Kai-Ho-Rou

Hakone Suishoen

18Medium to Long-term Goal
and Road Map

Environmental Policy
We have formulated an environmental policy that embodies our CSR vision,and practice management that gives consideration to the environment.

Medium to long-term goal
for CO₂ emissions reduction▲

Hulic Environmental Policy

1

Environmental Compliance4

We strive to create a sustainable society
while conforming to environmental laws
and regulations.

2

Environmental
Management System5

We work on environmental education and awarenessactivities in order to enable each employee to voluntarily act
toward the improvement of environmental performance.

6

We reduce as much of our environmental load as possible byintroducing eco-friendly design from the planning stage ofdevelopment in order to increase environmental efﬁciency.

Consideration for Sustainability in Real
Estate Development and Investment

Environmental Advisory Council
We have an Environmental Advisory Council in place toassess Hulic's environmental activities. Frank opinions
and advice provided by external experts with knowledge
concerning environmental issues and objective viewpoints
are reflected in medium- and long-term environmental
plans.

19

Corporate Social Responsibility Report

In 2010, we formulated the mediumand long-term plan aiming to reduce
total CO₂ emissions from all the buildings
Hulic owns by 25% relative to the figure
in 1990 by 2020. In terms of this plan'svalidity and the accuracy of its figures,
we obtained a third-party certificate fromJapan Smart Energy Co., Ltd., a third-party
review organization.

Total CO₂ emissions

Promoting reconstruction projects
with energy-saving design

2020

25

2019～

%
decrease

2019

2015

Energy-saving renovation of
Hulic’s buildings● Task ambient lighting system

Approx.

rechargeable battery

Promoting reconstruction projects
with energy-saving design

2017

2016～

21

2016

%
decrease

2015

Approx.

● Improving heatinsulation capacity withhigher-performance outer coats(external insulation method)

80,000 ㎡

Energy-saving renovation of
Hulic’s buildings
Approx.

120,000 ㎡

Measures from 2013 to 2015

2014

2013～
2013

Corporate Planning
Department● Challenging ZEB(Net Zero Energy Building)

Promoting reconstruction projects
with energy-saving design
Approx.

Energy-saving renovation of
Hulic’s buildings
Approx.

Hulic Building
Management Co., Ltd.

External assessment
Environmental
Advisory Council

DO

2010～

Technology and Environment
Development Department
Real Estate Planning
Department

2011● Full-scale introduction of LED lighting system● Effective use of water resource with use of rainwater and water-saving devices, etc.

CHECK

Risk Management
Committee

2010● Solar power generation, wind power generation● Completion of period of joint research with MIT →Commercialization of natural ventilation and lighting● Greening of rooftop and walls

ACT

CSR Committee● Highly efﬁcient air conditioning equipment●Outline of Reduction(total amount)

120,000 ㎡
35,000 ㎡

2012
Hulic Build Co., Ltd.

50,000 ㎡

Measures from 2016 to 2018

Comparison with 1990

Environmental Project Team

25,000 ㎡

Approx.

● Introduction of● Task ambient air conditioning system

2018

Total CO₂ emissions

President

PLAN

Measures from 2019 to 2020

Comparison with 1990

Environmental Management System (EMS)

Environmental
Management
System

We have used the natural energy
system (natural ventilation andnatural lighting) jointly researchedwith the Massachusetts Institute ofTechnology (MIT) to fundamentally
improve the energy efficiency oflighting and air conditioning andreduce CO₂ emissions by curbing theenergy consumption of buildings.

We have actively pushed ahead
with reconstruction projects.
Being able to incorporate various
energy-saving technologies at thestage of design, new buildings
ca n s i g n i fi ca n t l y r e d u ce C O₂
emissions with overwhelmingly
excellent energy efficiency.

2020

We widely disclose information on Hulic’s environmental contribution
activities, and communicate with stakeholders including local communities
in order to expand the circle of global environmental conservation.

Hulic Group is smoothly executing the PDCA Cycle with
its unique Environment Management System (EMS)
built based on the“Hulic Environmental Policy.” Thissystem is operated cooperatively with Group Companies,
according to targets set by the environmental project teamheaded directly by the President. In order to monitor the
progress in environmental activities of Hulic Group, we
use evaluations by the“Risk Management Committee”
for internal matters and by the“Environmental Advisory
Council”for external ones. The result is reported to the CSR
Committee and reflected in reviewing the environmental
promotion system and setting targets.

Energy-saving renovations

Road Map toward Reduction

Environmental Communication▲

Hulic is committed not only to sustainable real estate
investment in accordance with the Basic Principles ofCorporate Conduct and our Code of Conduct, but has
also formulated separate regulations on managing realestate purchases and development. When conducting an
investigation of the acquisition of real estate, Hulic always
carries out statutory investigations and conducts studies onnatural environment, specified hazardous substances, andthe presence of underground obstacles. In negotiations
with communities, we are fully mindful of impacts that ourbusiness will have on the surrounding living environmentand strive to maintain a positive relationship with thecommunity, especially with regards to sunlight issues,noise, safety, wind damage, privacy, interference withradio waves and view. When outsourcing design or project
management, in principle, we only hire design offices withthe right technologies, credibility, and track record. As forconstruction work, depending on the use, scale, and thedegree of difficulty of the construction, in principle, we
outsource the construction to companies that meet thesame conditions as above.

Environmental Awareness andEducation for Employees

Promoting reconstruction
with energy-saving designs▲

Environmental Performance

Recycling Society
We contribute to the creation of a recycling society,promoting 3R,“Reduce, Reuse, Recycle,”through a life cycle of building.

With environmental targets set, we make continuous
efforts for improving them while contributing to
the conservation of the global environment.

3

We aim to reduce total CO₂ emissions by 25% from 1990 to 2020.

（t）
40,000Comparison
with 1990－21%

Comparison
with 1990－25%

30,000Measures from 2010 to 2012
Promoting reconstruction projects
with energy-saving design
Approx.

40,000 ㎡

Energy-saving renovation of
Hulic’s buildings
Approx.

45,000 ㎡

20,00038,15029,78328,275

10,0000

20082015 2020(FY)

20

Situation of Greenhouse Gas Emissions
Energy Consumption and Greenhouse
Gas Emissions at Hulic's Buildings

Indirect Greenhouse Gas Emissions
Related to Business Activities (Scope 3)

In tandem with our business expansion, the number oftarget properties reported in this report for fiscal year 2015
increased from 20 to 51. With the increase in the number oftarget properties, we aim to further promote energy-saving
activities across all our businesses going forward. Alongsidewith the increase in the number of target buildings includedin the report for this fiscal year, an increase was recordedin the figures of intensity that included properties withcommercial and hotel tenants. We will continue to work
actively toward our medium to long-term goal of reducing
total CO₂ emissions from all office buildings owned by theCompany by 25% from 1990 to 2020.

The Hulic Group calculates not only its own emissions(Scope 1 and Scope 2), but also indirect emissions related
to its business activities (Scope 3) to broadly understandand lower greenhouse gas emissions from across theentire value chain. For this reason, we have calculated
the greenhouse gas emissions including the entire value
chain based on the Basic Guidelines on Accounting forGreenhouse Gas Emissions Throughout the Supply Chain
Ver. 2.2 published by the Ministry of the Environment.
The scope of this calculation includes carbon dioxide (CO₂)
produced and emitted from business activities at the Hulic
Head Office Building.

▲

Energy Consumption/Intensity
Intensity of energy consumption（GJ/㎡）

700,000

33,021600,000

657,751 1.75

500,000

1.49

1.44

1.42

1.50

1.21

400,000
300,000
200,000
100,000
024,410270,142

26,632

2011

25,611

257,109 255,565

20
blds

2.00

20
blds

20
blds

2012

1.00

19,7122014

Gas consumption

Power consumption

Note 1: As the target buildings for calculation increased from 20 to 51 buildings from 2015,
energy consumption is on the rise. As it is difﬁcult to capture past data, recalculation of
actual values for the past is not carried out. Note 2: 0.00997GJ/kWh and 44.8GJ/thousandN㎥ are used as the unit caloriﬁc value for power and that for city gas, respectively.

▲

CO₂ Emissions/Intensity

CO2 emissions（t-CO₂）

CO2 emissions intensity（kg-CO₂/㎡）
100.0040,0001,648*
77.30

30,00074.70

77.58*

68.34
20,00010,000033,848* 80.00

56.14

60.00

1,277

1,217

1,328

12,897

12,676

20
blds

20
blds

20
blds

20
blds

51
blds

2011

2012

2013

2014

2015

14,611CO2 emissions intensity
Scope 1 emissions (gas)983
12,221

40.00

20.00
(FY)

Scope 2 emissions (power)

Note 1: Figures marked with "*" have been assured by an independent assurance provider. Note 2:
As the target buildings for calculation increased from 20 to 51 buildings from 2015, CO2 emissions
are on the rise. As it is difﬁcult to capture past data, recalculation of actual values for the past is not
carried out. Note 3: CO2 emissions intensity is the sum obtained through calculations that take thetotal ﬂoor area of the ofﬁces that use power and city gas, respectively as the denominator for each
emission volume. Note 4: 0.0136tC/GJ is used as the emissions factor for city gas.

CO2
emissions

FY2014FY2015

13,204t‐CO₂(20 properties)

35,496t‐CO₂(51 properties)

Corporate Social Responsibility Report

333.7

2,162.8

2,335.4

25.1

6.8

Consumables, ofﬁce goods,
water and sewerage

Calculations for fuel and energy-related
activities outside of Scope 1 and Scope 2

Electricity use andgas use

Upstream transportationand distribution

Shipping parcels
and letters

Waste generated fromoperations

Waste generated fromprimary buildings

Business travel

Travel by train, busor airplane, etc.

74.8

52.3

Employee commuting

Commute by train,bus or personal car

37.7

39.0

Scope 3 total emissions

0.25
2015
(FY)

17.3

Purchased goods andservices

0.50

51
blds

2015
emissions(51 properties)

Main target forcalculation

0.75

219,943
20
blds

2013

Intensity of energy consumption

1.43 1.25

2014
emissions(20 properties)

Category

2.1

2,455.7

26.9

2,794.2

Note 1: The target buildings for calculation increased to 51 key buildings fromﬁscal year 2015. Note 2: Calculations for fuel and energy-related activities
outside of Scope 1 and Scope 2 began from 2015.

Activities to Promote Energy-saving Cooperation
with Building Management Companies

Hulic has created an energy management indicator that it shares with the property
management companies in charge of its properties in order to rigorously manage
the progress of its energy conservation efforts. This indicator has been created inorder to promote more efficient energy conservation activities at our companyowned lease properties and it serves as a guideline for the management,
measurement, recording, maintenance, and inspections related to the rationalizationof energy usage based on building type and size. This indicator is applied to all
forms of energy, including electricity, gas, and water, used at our company-owned
lease properties and the Hulic Head Office Building. Under the supervision of theReal Estate Planning Department, this indicator is used to manage facility operations,
measurements and recordings, and maintenance inspections through the property
management companies and building maintenance companies for our companyowned lease properties in order to rationalize energy use.

Energy Conservation Promotion Facilities
Management Organizational Diagram▲

Energy consumption（GJ）

21

Promotion of Energy-saving《 Building owner》
President of Hulic

PM《 PM management company》
outsourcing
agreement
President of Hulic Building

The "Environmental Management Survey," which is a surveythat has been annually conducted by Nikkei Inc. since1997, announces rankings of companies excellent in theirapproach to environmental management based on eachcompany's answers to a questionnaire. Hulic has ranked
first in the category of warehouse, real estate and othersfor six consecutive years since the 14th Environmental
Management Survey in 2010. Given that we were able toachieve another high score, we stand more committed
than ever before to combining global environmental
conservation with corporate growth through heightenedawareness of environmentally-conscious management.
Score[Total]399

Measuresagainstglobalwarming

Systems to
Measures
Resource
promoteagainstrecycling environmental pollution/
management biodiversity

100 100 100 99

Use of LED lighting, which is brighter than incandescent lamps andfluorescents and uses less electricity, helps to significantly reduce
power consumption and CO₂ emissions. Furthermore, as LED
lighting is long lasting, it is possible to not only save the troubleof maintenance such as changing bulbs, but also reduce waste
and effectively use resources. Some office buildings such as the
Hulic Head Office Building, Hulic Ginza Sukiyabashi Building, Hulic
Asakusabashi Building, and Nagatacho Hokkaido Square, and all
development projects use LED lighting exclusively. We are also
switching over to high-efficiency lighting and LED lighting at ourexisting buildings as part of energy efficiency renovation work.

Introduction of High-efficiency Lighting
and Illumination Control Devices
Hulic has realized a significant level of reduction in CO₂ emissions byintroducing lighting systems with high energy-saving performancesuch as high efficiency lighting and LED lighting, as well as illumination
control devices including sensors to detect people and daylight.

Management

Equipment with a brightness sensor
Corporate Planning
Department supervises,
Technology and Environment
Development Department carries out
management and planning

Reviews
measures

Liaison/Consulting

Real Estate Planning Department

General Manager of Hulic
Building Management’s Building
Management Department

Each Building Ofﬁce Manager
from the outsourced building
management company

Reporting/Discussions

Instructions/Orders
Reporting/Discussions

Ranked 1st in the Real Estate/ Warehouse
TOPICS
Industry for the Sixth Consecutive Year in
the "Environmental Management Survey"

Introduction of LED Lighting

Each Building Facilities Supervisor
from the outsourced building
management company(Person in Charge of Energy)

Outside lightreﬂecting on thesurface of desk

Reﬂected light fromthe equipment withbrightness sensor
Reﬂected light fromother equipment

Outside light
Outside light reﬂecting
on the surface of ﬂoor

Desk
Floor

Detection range of thebrightness sensor※Decreasing light intensity
when there is outside lightto keep brightness
maintained appropriately

Operating principle of a daylight sensor

Electrical/Mechanical staff

Energy-saving Operations in Cooperation with Tenants
We have conducted an inspection to see if the facilities in ourbuildings are operating efficiently. For those found to haveinefficient facilities, we have launched an initiative in cooperation
with tenants to reduce utilities costs by reducing use of air
conditioning and lighting. We monitor over 100 buildings andoutsource energy conservation solution consulting. Adjustments
are then made with each tenant based on the results, andreviewing of equipment settings, utility cost reduction throughmore efficient operations, and small-scale renovations forenhancing energy efficiency will be conducted as needed.

Conversion to a New Air Conditioning System
Desiccant Air Conditioning System
The Hulic Head Office Building uses a desiccant air conditioning
system (humidity controlled air cooling system), which provides amore comfortable indoor environment compared to temperature
controlled air cooling systems, even when the temperature
setting is high. Using a hybrid control of this air conditioning
system and natural ventilation system, we have been able toreduce our annual CO₂ emissions by about 100 tons.

Decreasing light intensity
while nobody is there.

Keeping brightness appropriate
when someone is there.

Operating principle of human-detecting sensor

Use of Systems that Make it Easier for
Tenants to Conserve Energy
The Hulic Group has begun rolling out a visualization systemthat freely controls air conditioning use in order to provide
a better understanding ofa building's use of energy.
This system enables tenants
to set the optimal working
environment temperature
for their business and makes
it easier to implement energy
conservation measures.
Visualization system(Hulic Asakusabashi Building)22Effective Use of Renewable Energy
Natural Ventilation and Natural Lighting System Developed through Joint Researchwith the Massachusetts Institute of Technology (MIT)Natural Ventilation System

Natural Lighting System

If the load from air conditioning can be lessened by making the
maximum use of natural energy to curb energy consumption,
CO₂ emissions can be reduced significantly. To introduce a naturalventilation system, joint research with MIT was conducted, in which
the flow of air and other factors were meticulously simulated.
The natural ventilation used in the Hulic Head Office Building is
not simply an auxiliary system for mechanical air conditioning. It
was actually used to successfully cool the entire building duringseasonal intervals. A silencer chamber is also used for the intake
opening, which worked to realize the use of a natural ventilation
system in a dense urban area with high-level noise.

Our natural lighting system uses specially shaped naturallighting anidolic louvers co-developed with MIT to capture
constantly changing sunlight on the ceiling of rooms duringchanging seasons and times (elevation and orientation)
without the use of power. Highly reflective metal panels
are used for interior ceilings, which supply a consistentamount of pleasant natural light to the top of office desks.
This system has been installed at the Hulic Head Office
Building as well as at the Hulic Shinjuku Building and otherbuildings. We currently have a patent pending for thisnatural lighting system.

Cross-Sectional View of Natural Ventilation

Solar elevation andorientation change
dependingon times andseasons.

Sound absorbing chamber
Naturalventilation

Natural ventilation air outlet

Balancednaturalventilation
window

Image ofnatural lighting

Controlling temperatureof air blown out when air
conditioners are operating

Photovoltaic Generation System

With environmental issues becoming more serious, in November
2014, Hulic decided to invest and become involved in a mega solar
power plant project located in Hirono Town, Fukushima Prefecture,in order to address society's need for such facilities and to strengthen
its efforts toward environmental management, which represents
one aspect of its 3K businesses. The other goal of our involvement
is to provide assistance to the rebuilding effort in the aftermathof the Great East Japan Earthquake. We expanded the initiative to
Ogoyama Town in Kasama City, Ibaraki Prefecture in 2015, and to
Yokoshibahikari Town in Sanbu District, Chiba Prefecture in 2016.
Using the solar power plants in the three locations mentioned
above, we are also working toward the achievement of offsite ZEB.
ZEB is an acronym for zero energy building. ZEB means thata building uses zero net primary energy annually thanks to
improvements made in the energy efficiency of the building and its
facilities as well as the use of renewable energy.

When a photovoltaic cell module is installed on the rooftop ofa building, the power generation status and the amount of CO₂
reduced are indicated on a "power generation display panel." Thedisplay panel is installed at a place where building users can easily
see it to practically visualize CO₂ emissions. On the rooftop of
Hulic Shimura-sakaue, completed in 2015, a 10 kW photovoltaic
generation system with a capacity to generate upwards of 10,000
kWh of electricity every year has been installed.

Effects of Mega Solar Power ProjectLightreflecting
surface on
the ceiling

Effect ❶ Reduce GHG through the Use of Renewable Energy
Effect ❷ Electricity Sales Income and Acquisition of Maintenance Business Know-How
Effect ❸ Contribution to the Great East Japan Earthquake Recovery Effort

Lighting louver unit

Automatically stopped whennatural ventilation is working

Mega Solar Power Project

Wooden blind
Exterior

Light reaches thesurface of ceilingeven if solar
elevation changes.
OfficeReceived the Minister of Land, Infrastructure, Transport
and Tourism Award for the Global Environment Award
We successfully produced a natural ventilation and naturallighting system in city tenant buildings through three years of
joint research and development with MIT, and introduced thesystem into actual properties. The initiativewas commended with the Minister ofLand, Infrastructure, Transport and Tourism
Award for the Global Environment Award.

Effects of CO₂ Reduction＜Calculations at the Hulic Head Office Building＞
CO₂ can be effectively reduced by introducing such top-level environmental
technologies. In CASBEE (Comprehensive Assessment System for Built
Environment Efficiency), BEE scored 3.3, corresponding to rank S.
● PAL※＝ 225 MJ/year ㎡ … Standard value of office buildings minus 25%● ERR※＝ 35% … The highest class in the energy-saving
performance standard of Tokyo metropolitan government● CO₂ emissions reduction＝ 40% reduction compared to an average office building in the Tokyo
Metropolitan Government's energy efficiency performance standards.
＝ CO₂ emissions throughout the building's entire life cycle were reduced by 30％※PAL=An assessment indicator for the energy efficiency of building plans andenvelope (exterior walls and roof, etc.) ※ERR= Shows the percentage by whichprimary energy consumption has been reduced in facilities and systems

Hirono Town Solar Power Plant

Ogoyama Town Solar Power Plant

Installation of Solar Heat Panels
Anidolic louvers

Simulation of light reflection

40% Reduction of CO₂ Emissions● Improvement inouter coat -11％（-79 t-CO₂）

Planned building
Primar y energy
consumption:
1,352 MJ/㎡ per year
CO₂ emissions:
59 kg-CO2/㎡ per year
(432 t-CO2 per year)

Hulic's hotels, multi-unit apartments and buildings that
require large amounts of hot water adopt a solar water
heating system, which uses solar panels to collect the
sun's heat. Water created using this system is supplied toresidential units, dormitories and kitchens, among otherfacilities inside a building.
Hulic Setagaya's solar water heating system was partially
funded by the grant to support measures for speedingup the use of renewable heat sources and the grant toprojects to promote the introduction of solar heating for
multi-unit buildings in Tokyo in fiscal year 2014.

Photovoltaic generation system panels (Hulic Shimura-sakaue)

Installation of Photovoltaic Panels
on an Exterior Wall
The Hulic Ogikubo Building is
open to a major arterial roadon its south side, providing
ideal conditions for sunlight
exposure. Capitalizing on this,we used a unique and extremely
thin photovoltaic panel thatis sandwiched between glass
panes to create a building
material for the facade (front of
the building). The panels form
part of a 3.5 kW system capableof generating upwards of 3,500
Facade (Hulic Ogikubo Building)
kWh of electricity annually.

Amount of Electricity Generated by Solar Power(designed value)

Hulic Head Ofﬁce Building: Approx. 9,400 kWh per year
Hulic Asakusabashi Building (PPP project): Approx. 15,890 kWh per year
Hulic Osaka Building: Approx. 10,000 kWh per year

● Natural lighting -12％（-86 t-CO2）

Hulic Ginza Building: Approx. 6,500 kWh per year

● Natural ventilation -8％（-58 t-CO2）

Hulic Aoyama Building: Approx. 4,000 kWh per year

Hulic Kyobashi Building: Approx. 4,700 kWh per year

Hulic Court Yukigaya: Approx. 28,900 kWh per year

● High ef ﬁciency air
conditioning -6％（-36 t-CO2）

Hulic Residence Nishi Oi: Approx. 23,100 kWh per year
Sunny Life Funabashi: Approx. 16,800 kWh per year

● High ef ﬁciency
lighting -4％（-29 t-CO2）

Sunny Life Tokyo Shinjuku: Approx. 5,000 kWh per year
Charm Suite Shakujiikoen: Approx. 5,800 kWh per year
Hulic Residensce Chofu Shibasaki: Approx. 5,200 kWh per year
Solar heat collection panels (Hulic Setagaya)

23

Corporate Social Responsibility Report24Reducing Waste through Longer Life Service
We are approaching a turning point from "the flow type consumption in which buildings areconstructed and demolished one after another" to "the stock type consumption in which highquality buildings are constructed, meticulously maintained in a timely manner, and carefully
used for a long period of time." In this context, having considered longer life building
construction to be essential, we formulated the "Hulic Guideline for Longer Life Service."Fundamental
Approach《Results in FY2015》●Hulic's Longer Life Buildings
Buildings completed based on
the standards established in the“Hulic Guideline for Longer Life
Service”: 8 buildings《Results in FY2015》
Fundamental
Approach

Hulic is carrying out initiatives that increase biodiversity in order to create
urban spaces that are in harmony with the environment.

● Number ofgreening projects:

9 projects*

Creating a New Standard of Buildingsthat Last 100 Years

Hulic Guideline for Longer Life Service

Biodiversity Guideline

Greening Initiatives❶ High quake resistance and high durability"Hulic Guideline for Longer Life Service" is composed of threeideas, 1) high earthquake resistance and high durability; 2)smoother updating and renewal; and 3) ease of maintenance.
High-grade building frames are ensured so as to continue tobe used for over 100 years in safety, and on the other hand
we have created the possibility to reform a building's exterior
to be up-to-date through a flexibly modified layout.

Structural frames shall be robust so they can be safely usedover 100 years.
● Ensure the grade of quake resistance as high as hospitals
and disaster prevention bases● Thoroughly control the quality of works by designating detailsof design conditions for concrete and construction materials

Hulic is carrying out initiatives that increase biodiversity
in order to create urban spaces that are in harmony withthe environment. Hulic recognizes the importance of
biodiversity's impact for the living environment, and inorder to contribute to biodiversity, we have created the
Declaration of Biodiversity Conservation and made thisknown to all of our organizations.

We have put emphasis on greening which can effectively ease theheat-island phenomenon as a part of our measures against global
warming. Proactively planting trees and plants on premises, we
provide places where people living in the town can relax, forexample, in the shade of a tree providing comfort in the summer.
Our greening project aims to create lush green urban spaces andto harmonize with nature while considering biodiversity.

▲

Hulic Guideline for Longer Life Service
earthquake resistance1 Highand high durability
updating
2 Smootherand renovation

Longer life
buildingsof
3 Easemaintenance

Adoption of the PC Method
From the standpoint of a business owner, we proactively adopt
the PC method(※) which can significantly reduce the amountof waste. This method, which can shorten a construction period
and minimize impacts on surrounding environments during aperiod of construction, is highly appreciated in terms of longer
service life. In recent years, the PC method was used for Hulic
Residensce Chofu Shibasaki.
※ PC (Precast Concrete) method: Precast panels produced at a plant underconsistent quality control are carried to a worksite and assemb led.

We adopt a design capable of responding flexibly tofuture needs, and establish plans of updating and renewal
without the need to make tenants move out.
● Flexibly respond to future changes in use purposes andlayout, with spare ceiling height room and floor loading
capacity, as well as a flexible partition wall and a system ceiling.
● Ensure the space to install spare pipes and equipment andprepare backup facilities, etc. so as to continue businesseven during the period of works for updating and renewal.
● Especially in commercial buildings, adopt theinterchangeable facade system capable to meet needs, inorder to avoid the building exterior to become obsolete.

❸ Ease of maintenanceWe formulate plans enabling timely and meticulous
maintenance in order to keep sophisticated building
specifications and optimal building functions constantly.
● Use gondola for maintenance, including the cleaning of
window glass and inspections of the building exterior.
● Install an elevator reaching the rooftop to carry inmaterials there.

▲■

Standard
proposal

85

New
construction■■

Standard
proposal

263.26

Longer life
building
proposalAmount of
Resources Input
Reduced by 52%

41

0

20

40

60

Repair■Renovation

12.7

Amount of Waste
Generated
Reduced by 56%

5.7

0

2

4

6

Corporate Social Responsibility Report

8

10

12
14
(kg/㎡ per year)

100

Target for comparison

150

200

■

Renovation

■

LCCO2
Reducedby 6%

Maintenance■

Energy■Standard proposal: The case of reconstruction once in 40 years
Longer life building proposal: The comparison of a longer life building
which can be renovated without the need to move tenants out■

Effects

New
construction
Reconstruction

Longer life
building
proposalRepair247.950
50(kg-CO₂/year ㎡)■

Standard
proposal■Longer life
building
proposal

80
100(kg/㎡ per year)

Amount of Waste Generated

New
construction■

Reconstruction

Reconstruction■

Repair■Renovation■

Demolition

Biodiversity Guideline
Strongly recognizing the rapidly vanishingbiodiversity worldwide, Hulic strives toconserve biodiversity through activities inharmony with business activities with thegoal of handing over a rich nature to
future generations.

Approaches to JHEP Certification
Hulic carries out efforts to conserve and restore local
vegetation as part of its reconstruction projects forcompany-owned properties from thestandpoint of safeguarding biodiversity.
Our approach to biodiversity and many
projects have received high praise within the
JHEP certification scheme operated by the
Ecosystem Conservation Society.

● Case Study/ Hulic Setagaya Construction Project

LCCO₂（Life-Cycle CO₂）

Amount of Resources Input

Greening on Rooftops and Premises❷ Smoother updating and renovation

Environmental Advantages of Longer Life Buildings（comparison over a 100-year span）

25

Biodiversity/Encouraging Greening

As 3/4 of LCCO2 or more is CO2 that accompanies energy consumption, the effect of areduction in CO2 emissions thanks to extended service life is underestimated. However,
the amounts of resources injected and waste generated are reduced 50% or more.
※Calculated with the LCA tool of the Architectural Institute of Japan

This initiative was a reconstruction project for
approximately 7,200m² (total floor area) that was carriedout at Taishido, Setagaya Ward in Tokyo from 2013. In linewith the concept of achieving harmonious design between
a residential facility and a banking branch, native species
such as oak trees, Japanese privet shrubs, rhododendron,and lily turf were planted all over the building. In order forthis project to fulfill the accreditation criteria, the shortfall inpoints was complemented by the Granda Gakugeidaigaku
project that was accredited in May 2013. As a result,
this project was successfully
accredited. While the property is
located in the commercial areain front of a station, greening
initiatives have been adopted
on the rooftop and walls of thebuilding as a part of efforts toimprove biodiversity.
Setagaya JHEP

It is possible to achieve energy-saving effects such as
reducing air conditioning loads and improving heat insulation
performance by blocking sunlight with roof greening toprevent heat accumulation in●Nagatacho Hokkaido Squareconcrete. As for greening of
office buildings, we take theimprovement of scenery, thecondition of the location, easeof repairs, and vegetation thatcan withstand strong winds as
our main considerations whenselecting a plant.
Roof greening

Green Wall

●Hulic Shinjuku Building

Covering a building exterior
with plants, wall greening can
be a countermeasure against theheat-island effect by utilizing thetranspiration effect. In addition, as it
improves the amenities of the building,soothing effects for people walking on
the street are also expected.

Green wall

Initiatives at Shinagawa Season Terrace (Joint Project)
Shinagawa Season Terrace is a joint project involving Hulic, NTT
Urban Development Corporation, Taisei Construction Corporation,
and Tokyo City Development Co., Ltd. The creation of extensive
green space spreading to the approximately 3.5 hectare site forgenerating communication and an active community has earned agreat deal of praise. It received certification in fiscal year 2014 from theOrganization for Landscape and Urban Green Infrastructure's Socialand Environmental Green Evaluation System (SEGES) as a development
project that contributes to society and the environment throughgreenery conservation and creation (SEGES urban development).

Conceptual image of Shinagawa Season Terrace

26

Initiatives for Our Customers
Providing a Comprehensive Package of Business Continuity Consulting《Results in FY2015》●Customer
satisfaction:

95 %Thorough Implementation of an Earthquake
Resistance Diagnosis and Seismic Reinforcement

Proactive Adoption of Earthquake-absorbing
and Earthquake-damping Structures

As Japan is one of the countries where earthquakes mostfrequently occur, Hulic, a real estate business operator,
regards earthquake countermeasures as one of the
top priorities in its CSR initiatives. We believe it is our
responsibility to strive to ensure earthquake-proof building
safety, in order to enable tenants to conduct social
activities with ease.

In order to protect human life and functions of facilities
from large scale earthquakes, we have imposed highseismic capacity on newly constructed buildings. With
the aim of protecting customers' lives and contributing
to business continuity, we have proactively adopted anearthquake-absorbing or earthquake-damping structure
which is effective at ensuring a high seismic capacity, in
addition to other methods to improve the seismic capacity.

Earthquake Resistance Diagnosis, Reinforcement Works,
and Confirmation of Validity of Structural Calculation
We diagnosed the earthquake resistance of all Hulic's properties
that were built before the new earthquake resistance standards
were established ※1, and almost all buildings that did not meet theearthquake resistance standards underwent seismic reinforcement.
In relation to the office buildings which were determined to requirereconfirmation ※ 2 although constructed after the new earthquake
resistance standards, we also rechecked their structural calculations
to confirm the validity of their structural design.
※1 Excludes buildings with box frame type concrete construction and buildings that will bedemolished ※2 Includes office buildings for which appropriate structural calculations could
not be reconfirmed. For example, if the architectural firm that implemented the structural
calculation had already discontinued its business.

Earthquake-absorbing Structures
By separating the building from the ground with a mechanism
called an isolator, seismic energy is absorbed to reduce theintensity of shaking to 10%-50% compared to other generalearthquake-resistant structures. It is also a characteristic that thereis hardly a difference in shaking between upper floors and lower
floors. Sendai First Tower, a jointly developed building completed
in Sendai where earthquakes frequently occur, is one of the few
buildings with this earthquake-absorbing structure. This stancetoward security has been highly admired.
General Building

Earthquake-absorbing Structure

Slow andparallelshaking

Shakingviolently[Deforming laminated rubber]

Liquefaction Countermeasures
After the Great East Japan Earthquake, extensive regions including
coastal areas suffered from the occurrence of liquefaction
phenomena which caused leaning and sinking of buildings.
According to the liquefaction map, it was found that 11 buildings
owned by Hulic are located on the ground with a possibilityof liquefaction. When designing those buildings, we carefully
checked the possibility of liquefaction, and implementedendurance tests as needed. As they were also constructed on apile foundation resistant to liquefaction, it can be considered that
Hulic's buildings would not be influenced by liquefaction.

Earthquake-damping Structures
With earthquake-damping materials (earthquake damper) installedinside the building, internal seismic energy is absorbed to reducethe intensity of shaking from half to one thirds compared with othergeneral earthquake-resistant structures. In addition to the case ofincreasing the safety further by combining this with a earthquakeabsorbing structure, we preferentially employ the earthquakedamping structure in the case that the earthquake-absorbing structureis physically unavailable due to constraints including land contours.
Hulic has incorporated this method in many properties.
General Building

Building with Earthquake-damping Structure

Measures against Water Damage
When electric facilities, etc. are damaged by flood in a basement,
the supply of power which is essential for the use of buildings
may stop. We investigate the status of buildings with powerreceiving and transforming facilities and private power
generators installed in the basement, and implement necessary
flood control measures, in preparation for unexpected tsunamis.

27

Corporate Social Responsibility Report

ShakingviolentlyLightshaking

Hulic and Sompo Japan Nipponkoa Risk Management Inc. have concluded a businesstieup agreement to develop and commercialize a service for jointly supporting thebusiness continuity planning of companies that own office buildings and other businessfacilities and for providing consultations regarding building and facility earthquake
resistance measures. This service will be provided in a comprehensive package ofbusiness continuity consulting solutions. This arrangement fully leverages the strengths ofboth Hulic and Sompo Japan Nipponkoa Risk Management to provide business continuity
planning support to customers that must maintain a high degree of business continuity.

Tangible Countermeasures
Hulic● Seismic reinforcement of building and facilities● Measures against lifeline dependence
through use of natural, renewable energy● Countermeasures against Tsunami, etc.

Intangible Countermeasures
Sompo Japan Nipponkoa Risk
Management● Preparation of risk scenarios● BCP formulation● BCP training

Service Implementation Steps▲

Fundamental
Approach

We are constantly working to generate new added value by offering properties
that are superior in terms of safety, environmental performance, andconvenience. We have established various emergency and disaster scenarios
for which we have created measures to improve the structural performance ofour buildings as well as operational and management aspects.

Preparation❶ Phase● Determine policy● Specify which disasters areapplicable

Analysis❷ Phase● Assess impacts● Forecast damages● Identify bottlenecks● Carry out earthquake resistance diagnosis

Drafting❸ Phase● Formulate Basic BusinessContinuity Plan

● Propose countermeasures

Implementation● Execute measures

Operations● Carry out countermeasures❹ Phase❺ Phase● Carry out work

● Make revisions to countermeasures

Quality Control of Office Buildings

Customer Satisfaction Survey

While property management companies conduct management
work for the buildings owned by Hulic, personnel from the
Hulic Group responsible for buildings conduct visits to each ofthese property management companies once a year to inspect
their management conditions. Items to be evaluated include
legal compliance, inspection of building and facilities, risk
management, cleanup situation, and security. By providing
feedback to the property management company about
improvement plans, when needed, we are taking steps in allbuildings to maintain high quality.
Additionally, we systematically carry out maintenance and repair
work in an effort to ensure preventative maintenance. However,when we receive complaints from customers due to a temporary
breakdown in equipment and other troubles, not only personnel
from the relevant property management company but also Hulic
Group engineers with expertise quickly head to the customer'ssite. Through our early response capabilities, we provide a full
support for the comfortable life of customers.
In relation to reconstruction projects, we are working on
enhanced design standards and rules in order to ensure superior
quality in terms of the environment, longer service life, disaster
response, and design. A check sheet or regular discussions areused to check the progress, which enables us to better manage
quality, including designs, structures, and facilities.

We conduct a customer satisfaction survey once a year
to ensure tenants of Hulic's office buildings (corporate
tenants) are able to utilize the buildings comfortably.
Survey items include matters concerning building
hardware and software, and customer views on theireveryday life. We check the responses of customers andthen take steps to identify latent customer needs andmake improvements.
As a result of the survey in fiscal year 2015, some 95% ofcorporate tenants were satisfied overall. This has helped
us earn a highly positive reputation for our quick responseto troubles and facility reinforcement for resolving issues,
such as eliminating odors, as well as our systematic
approach to facilities improvement (upgrading of airconditioning and parking
Dissatisﬁed Satisﬁed
facilities), which leads to even
0.4％
49.3％
greater overall satisfaction for Moderately
dissatisﬁed
the building.
4.7％
Furthermore, responsible staff
Results
explained individually aboutof Survey in
FY2015or responded to mattersrequested by customers in
relation to the survey items.
Moderately satisﬁed
45.7％

TOPICS: Hulic Uchikanda Building Receives Good Design Award 2015
Hulic Uchikanda Building, a property ownedby the Company, received the Good DesignAward 2015 presented by the Japan Institute of
Design Promotion. This Good Design Award is acomprehensive recommendation program fordesign. The Hulic Uchikanda Building, originally a
53-year old office building, was given a new leaseof life as a shared complex facility that combines
three functions, comprising 54 rooms of sharedapartments (shared lease housing), shared offices,and shared spaces. With the exception of thestores on the first floor, the part of the buildingthat serves as a shared complex facility has beenleased collectively to ReBITA Inc. (Facility name:the C). This facility became a project that sought tocarve out a new residential project, transforming
an office district in Tokyo from a work location to aliving location. The problem of evacuation routes,
which arises when converting offices to residences,
was resolved through the use of“inner balconies.”
This method is expected to be increasingly utilized
in older office buildings in the future.

28

Initiatives in the Local Community

Fundamental
Approach

To fulfill our social responsibilities we work to resolve social problems,
leading to the sustained development of the entire society. Further, we
proactively support each employee to participate in social contribution
activities.

《Results in FY2015》● Social contribution by the company:

12 items

Matching Gift Program● Social contribution by employees:

Launching the matching gift program in June 2008, Hulic
established the“Hulic Fureai Fund,”which deducts 100 yen
every month from the salary of employees who want to takepart in the program (300 yen for directors), and donates thecollected money to organizations selected by majority vote of
all employees. Hulic, Hulic Insurance Service, Hulic Building
Management, and Hulic Proserve have worked together
on this activity. We will continue the donation activities,
providing opportunities of social contribution to employees
who cannot make the first step despite being interested in it.

6 items▲

Policy for Social Contribution Activities

Basic
Philosophy

As a good corporate citizen, Hulic
proactively and widely pushes ahead
with social contribution activities
both inside and outside of its
business fields. We contribute to thesustained development of the entire
society through each activity.

Activity
Guidelines

Social Contribution as a Company
The 3rd Hulic Student Design Competition
Held with the Theme of "Visit Yokohama"
As a real estate company, this contest was initially planned toprovide an opportunity for students to propose urban planningand architectural ideas. With the theme of“Visit Yokohama”
architecture, which creates a sense of anticipation for the futureof the tourism city of Yokohama, the 3rd Hulic Student Design
Competition invited free and innovative ideas. A total of 118
submissions were received and during the secondary screening
session, which was open to the public, students made passionate
presentations of their ideas and had a Q&A session with thecontest judges. In the end, after much debate, the judges selected
one grand prize, three first prizes and six honorable mentions.

● Actively work in the three main fields of“local
environmental protection,”“co-existence with local
communities,”and“responses to social needs.”● Actively support social contribution activities conducted byeach employee.
● Place an emphasis on securing transparency in implementing
activities and promote dialogue and cooperation with society.

The 3rd Hulic Odenma Summer Festival
In October 2012, Hulic moved its head office to Nihonbashi
Odenma-cho. In July 2013, we held the "Hulic Odenma Summer
Festival" at the Hulic Head Office Building, partly intending to
introduce ourselves to the people in the community. Thanks to
the overwhelmingly positive feedback, we decided to continue
to hold the 3rd Odenma Summer Festival in July 2015.
Various people came to the festival, including local children andworkers in the neighboring area, thanks to the cooperation of
the community association of Odenma-cho-Ninobu. We hope
to be able to deepen ties among people in the communities
through such activities. In addition, we donated proceedsof 225,700 yen from sales at the festival to a volunteer
organization, in addition to the money collected through theseventh matching gift program.

29

Corporate Social Responsibility Report

In 2015, the total amount of donations collected from
employees during the year reached 489,600 yen. Combining
this amount with donations from the Company and theproceeds from the 3rd Hulic Odenma Summer Festival heldin July 2015, a total of 1.3 million yen was donated to Civic
Force, an incorporated NPO. Civic Force is a coordinatingorganization that links up NPO/NGOs, corporations,administrative bodies, and the government. It aims toprovide swift and effective support in times of large-scaledisasters in Japan as well as in
the Asia region. The organizationis engaged in various activities indisaster-struck areas, includingin the aftermath of the Great East
Japan Earthquake in 2011.

Community Cleanup Activities/
Flowerbed Maintenance Activities
Hulic, Hulic Building Management and Hulic Proserve participate
in the monthly Machikado Cleanup Day organized by Chuo Ward.
Additionally, Hulic Office Service as well as these three othercompanies take part in Garbage Zero Emission Day, a cleanup activity
which is also organized by Chuo Ward. In fiscal year 2015, we also
participated in the“Hana Saku Machikado”activity organized by
Chuo Ward, where we carried out flowerbed maintenance activities.
These activities are gradually establishing themselves as a new spacefor communication with the local community and other employees
while advancing the beautification of the town.

Donation to Ashinaga Scholarship Society
The Hulic Group has been making a monthly donation of 500,000
yen to the Ashinaga Scholarship Society since June 2011, and acertain amount of money has also been donated every month to
this Scholarship Society for four years from the Company's directors
and employees who wish to participate in this initiative in an effort
to provide continuous support for the living and schooling of thechildren who will forge the future of this country by supportingchildren left as orphans following the Great East Japan Earthquake.
May 2015 represents the initially agreed upon end of the donations,but we have decided to continue making these donations foranother four years given the fact that continuous support for mental
healthcare and other areas is still needed in the disaster-hit areas.
Since the outset, 40,052,500 yen in total has been donated by theCompany and individuals as of December 2015. In order to keep
donators interested after donation, the "Ashinaga Family Tsushin"sent by the Society is posted on the Company's intranet.

Supporting Employees to Conduct Social Contribution Activities

Support for the Shogi (Japanese Chess) Festival
Hulic sponsored the Japan Shogi Association Shogi Festival(an event supporting reconstruction from the Great East Japan
Earthquake) that was held in Miyagi, Iwate, and Fukushimafrom September to October 2015 in the view of supporting
disaster area reconstruction and Mécénat (artistic andcultural support). This activity is an event started in 2012 byprofessional Shogi players of the Japan Shogi Association.
Hulic has supported the openingof the festival each year since
fiscal year 2013. We hope that
this event will be encouraging
for the hearts of people affectedby the disaster, and also spreadthe Shogi culture.

VOICE

Koichi Yamashita
Real Estate Planning
Department
Hulic Co., Ltd.

Paid Leave for Employees Involved in
Volunteer Activities
The Hulic Group has established paid leave for employees
involved in volunteer activities in order to support and nurture
their efforts to give back to the community and help tofoster an attitude of wanting to address issues facing society.
Employees are eligible to take up to 20 consecutive days of
paid leave (considered a special leave of absence) to takepart in philanthropic activities that give back to society. To
encourage employees to use this leave, we provide not only
information on social contribution activities, but also increaseinterest by sharing the volunteer experiences of employeeswith the entire Company through our in-house intranet system.
In fiscal year 2015, we continued Satoyama conservation
activities, which we had been conducting annually since fiscal
year 2009 as a participatory volunteer activity involving our
employees. A total of 20 employees from Hulic, Hulic Building
Management and Hulic Insurance Service took part.

●Social contribution by employees❶ Satoyama conservation activities❷ Donation to Ashinaga
Scholarship Society❸ Matching gift program❹ Monthly community cleanup activities❺ Flowerbed maintenance activities❻ Assistance for support activities indisaster-struck areas●Social contribution by the company❶ Held students’idea competition❷ Hosted summer festivals❸ Donation of used postal stamps❹ Donation to Civic Force❺ Sponsorship to support Mainichi
Shimbun in Fukushima relief efforts❻ Sponsorship for the Kishikai
Fukushima Shogi Festival❼ Donation to Red Cross❽ Donation to Akaihane❾ Donation to Ashinaga Scholarship Society
Opened the company daycare nursery
to local community members
Sponsorship to the Kyoto
Kensetsu Center
Support for Nezu Foundation

My Experience Participating in a Reconstruction Assistance Volunteer Program in Disaster-Hit Areas

After the earthquake disaster struck on 11 March 2011, we
have continued to visit Kamaishi City in Iwate Prefecture
every year. For this volunteer activity, we provided
assistance to the victims in moving from temporary sheltersto their rebuilt homes. Due to limited space at the temporary
shelters, the disaster victims only had the minimal daily
necessities required for everyday life, so all their belongings
could be moved to their new residences quickly. The
scattered pieces of belongings in each room reflected thereality of life in the temporary shelters. After the movewas completed, the homeowner thanked us and offered

us tea. I was happy to have come as a volunteer to help
them in starting their new lives. Progress has been made in
infrastructural development, and there are now fewer places
where marks of the tsunami still remain. However, I strongly
felt that the local residents still have a long way to go toward
rebuilding their lives. Even though the earthquake disasterhas passed, the disaster has not ended. Regardless of theform that it takes, efforts to sustain the ties with the disasterstruck areas contribute to preventing the earthquake disasterfrom becoming a forgotten part of history. I would like tocontinue with these support activities going forward.

30

Diversity Initiatives

Fundamental
Approach

We respect human rights and proactively take advantage of diversity inour business. We aim to foster a workplace in which all employees canmake the best use of their abilities.

Promoting Diversity
Respect for Human Rights
Hulic's “Our Code of Conduct,” the standard that must be
followed at all times to practice a set of corporate principles,
contains “Respect for Human Rights and Prohibition ofDiscrimination and Sexual Harassment,”and clearly states thathuman rights are to be respected and discrimination basedon creed, religion, age, sex, birthplace or physical or mental
disability will not be allowed or tolerated. Respect for humanrights encompasses all fundamental human rights found in theConstitution, Labor Standards Act, and Universal Declarationof Human Rights as well as human rights related to equal
employment, the prohibition of forced labor and child labor, thefreedom of association, and the guarantee to labor negotiations
stipulated in the ILO’s international labor standards.
To foster a workplace that respects human rights, in fiscal year
2015, Hulic made postings on its in-house intranet on the themes“Thinking About Power Harassment,”“Thinking About Maternity
Harassment,” and“Thinking About Human Rights – Human
Rights Issues Concerning Persons with Disabilities.”Opinion
exchange sessions were also held at each department for all
employees on the theme of“Thinking About Human Rights.”《Results in FY2015》●Ratio of female
managers:

10.4 %

Employment of the Disabled
The Hulic Suginami Office marked its 8th anniversary, andas of June 2015, Hulic's employment rate of persons withdisabilities was 2.31%* on a consolidated basis and 7.36%*
on a non-consolidated basis. Currently, eleven employeeswith disabilities, instructors with experience in coaching,
and a chief administrator are working at the Hulic Suginami
Office, where they carry out operations, such as thedispatch of direct mail. A monthly meeting with the Human
Resources and General Affairs Department is held to ensure
operations integrated with the head office are being put
into practice.
In recognition of our activities to play a leading role inemploying persons with disabilities and proactively develop
their abilities, in September 2010 Hulic was certified as
an excellent corporation in employment of the disabledin Tokyo. Additionally, in 2013 we were recognized
as an excellent corporation in the employment of thedisabled (Chairman's Prize) by the Japan Organization for
Employment of the Elderly, Persons
with Disabilities and Job Seekers(JEED), administered by the Ministryof Health, Labour and Welfare. We
will make efforts for improving theworkplace so people with disabilities
can feel worth in their work.
※The target subsidiaries are companies
Logo of excellencein a corporationthat have been certified as affiliatedemploying thesubsidiary companies.
disabled in Tokyo

Promoting Communication between
Various Employees
Employment of Diverse Human Resources
Participating in the joint declaration on the charter of corporate
ethics concerning employment made by Keidanren (Japan
Business Federation), we have proactively employed new
graduates in accordance with the purpose of the charter.
When hiring new graduates, we make efforts for widely
ensuring diverse human resources based on their ability,
regardless of backgrounds and gender.The ratio of female
managers has increased as a result of active efforts for adopting
female employees with the enhanced system to support
the development of the next generation. One of our goals
under the new long-term plan "Hulic 10 Years from Now (20142023)" is to become a company where female employees canthrive professionally and have females account for 20% of
our managerial positions by the year 2020.Going forward, in
addition to our previous efforts, we will also focus on hiring more
professionals, such as first-class architects, real-estate appraisers,
lawyers, certified public accountants, and tax accountants.

31

Corporate Social Responsibility Report

Hulic is run by a small workforce, which enables a close
distance between employees, as well as between top
management and foremen. The company-wide trends arecommunicated to all employees through the "Message
from the President" every month. As it is possible to knowwhat other departments are doing through the message,
the horizontal communication beyond the borders of
departments can be made.
In addition, the Top Seminar is held once a month, while
the President Questionnaire is conducted half-yearly. The
Top Seminar is targeted at employees below the age of40, and is an informal gathering between the President
and about 10 employees of different demographics eachmonth, such as by division or generation.
When the “President Questionnaire” is conducted,
employees write down their views and opinions on theprescribed form and submit it to a post box, and thenthe President responds to each in writing. It provides anopportunity for all employees to communicate directlywith the President.

Promoting Female Empowerment
Hulic's basic approach is for the work of each employee to be alignedwith their abilities, aptitude, and personality. For this reason it isimperative to provide opportunities and assignments irrespective ofgender, and in particular we are strengthening initiatives for women's
career development.The women's career promotion project teamwas established with the aim of enhancing the environment in which
women can comfortably work. The team members meet together tohold discussions in line with different themes for each meeting.
In fiscal year 2015, the Company was selected for the Diversity
Management Selection 100 and applied for and was selected asa Nadeshiko Brand, both organized by the Ministry of Economy,
Trade and Industry. We also engaged in activities with a focus onorganizing the“Science and Engineering Challenge (RICOCHALLE)”
in cooperation with the Cabinet Office and Keidanren. In November,
Director Hajime Kobayashi delivered a lecture on the theme“Future
Prospects for the Promotion of Diversity and Career Advancement.”
This was attended by many female employees, as well as male
employees, and an exchange of opinions was held. The annual
meeting between the project team, and senior management isheld to create an opportunity for female employees to share theirthoughts and concerns with senior management.

Formulation of Action Plan Based on the Act on Promotion of
Women’s Participation and Advancement in the Workplace
This Action Plan was formulated in order to enable female
employees to strike a balance between their careers andchild-raising, and to allow them to exert their capabilities anddevelop their careers in various divisions of the company.

Action Plan Based on the Act on Promotion of Women’sParticipation and Advancement in the Workplace《 Duration of the Plan 》
April 1, 2016-December 31, 2020
《 Quantitative Goals 》
To achieve a ratio of female managers of 20%
or higher by 2020
《 Initiatives 》● Fostering awareness toward careerdevelopment, and training skills to enable theappointment of women as managers.
● Developing an environment that facilitates
the easy use of the work-life balance support
system, and spreading awareness about it.
● Educating managers on diversity management.

As a result of the formulation of the Action Plan based on the
Act on Promotion of Women’s Participation and Advancementin the Workplace, Hulic attained the highest
rank in the“Eruboshi”certification presented
by the Minister of Health, Labor and Welfare, inrecognition of the Company as an outstanding
company in the implementation of initiatives topromote female empowerment at the workplace.

Human Resource Development
Stance on Human Resource Development
Hulic's ordinary income per employee is approximately 300 million
yen. This puts us in the top class among listed companies. We could
say that this was made possible by the fact that we are a group
comprising a small number of elite professionals. Currently, manyof our employees are qualified professionals such as lawyers,certified public accountants, real estate appraisers, and qualified
architects of the first class. Furthermore, with the aim of enhancing
their specialized skills, employees are recommended to obtain two
qualifications by the time they reach the age of 30. The costs forthese personnel upgrading efforts are fully covered by the Company.

Newcomer(up to around 30 years old)Mid-career(up to around 40 years old)

Veteran/Manager(50 years old or older)

System to support acquisition of qualiﬁcations

The Company bears costs for registration and renewal of qualiﬁcations (such as ﬁrst-class architecture, real-estateappraiser, etc.) and, in principle bears costs for external seminars on the premise of passing an exam.

System to encourage
early acquisition● Obtaining multiple
qualiﬁcations by 30 years of age● Well-planned setting of target

Dispatch to graduate school
Dispatch to outsidecompany

Overseas visit program/Study abroad program
Human resource development program

Project review, project by theme, etc. (incorporated in works)

Period of educational
assignment
Newcomertraining

Assigned
to 2
Enhancement departmentsof fundamental in 4 years,
abilities inin principle
ﬁnance andaccounting

Training for newly
appointed deputy
general managers
Managerial training

Top seminar

Get-together for President and young employees (monthly in principle)

English conversation class（held by the Company at meeting rooms in the Company)

Self-development seminar

Recognized for Inclusion in Diversity Management
Selection 100 and Nadeshiko Brand 2016
From the standpoint of empowering female employees and helping
employees improve their career skills, we are working to transform
our organizational structure, develop an employee-friendly work
environment, and further enhance our benefit programs. In
particular, we have put effort into establishing a top-class system for
fostering the future generations (childcare support system/nursery
facilities in the offices, etc.), with the aim of ensuring that female
employees will be able to continue playing
an active role in the company after childbirthand while caring for their children. These
efforts have been highly appraised throughrecognition in the Diversity Management
Selection 100 and the Nadeshiko Brand 2016.

32

Work-life Balance -Creating an Employee-friendly Work Environment-

Age of child

71% *Average of discretionary andovertime work hours per person

Usage rates of paid leave

80
71.5

71.0

34.1

34.7

70.9
34.4

Usage Rate of Paid Leave (%)

60

71.4*

20

14.2

20

10

2011

2012

2013

2014

0
2015 (FY)

Implementation of No Overtime Day
Every Wednesday has been set aside as No Overtime Day, with theaim of preventing health issues arising from excessive work. Each
Wednesday we remind employees about leaving work on time withineach division. The status of implementation is inspected and analyzed
every month. In fiscal year 2015, the rate of implementation decreased
7% year on year to 66% on average.
Going forward, we will continue to review the way of working, forexample, by making operations well-modulated and more efficient, andby further increasing the implementation rate of No Overtime Days. We
will also issue more proactive reminders to employees of departmentswith a low implementation rate. We also introduced the“Summer
Lifestyle Transformation”campaign, which allows employees to stagger
the times they commute to work during the summer season.

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Corporate Social Responsibility Report

MotherRules of employment

1 yearold

8 weeks after

Leave after childbirthChildcaretime

2 yearsold

4 yearsold

5 years after
retirement

After entering
elementary school

At the end of the third yearof elementary school

Rules on support for development of the next generation

Special childcare
leave (one month)Childcare leave
Reduced working hours

Rules on support
for developmentof the next
generation

Restraint of overtime work

Parents

Special payment for childbirthFirst child: 100,000 yen
Second child: 200,000 yen
Third child and thereafter:
1,000,000 yen

Babysitter promotion program/Subsidy for costs associated with caring for a sick childChild vacation (10 days)

Rules of employment
leave for childbirthof spouse (paid)

Rules on support for development of the next generation
Special childcare leave (one month)

FatherSubsidy forthe cost of Kids’Club

Subsidy system for daycare nursery fees/Subsidy for extended daycare nursery hours

Childcare leave
Reduced working hours
Restraint of overtime work

Summaries of the Systems for Supporting the Combination of Work and Nursing Care
SystemReducedworking hours

Days off forfamily care

Restriction of work in
excess of statutory
working hours

Non-Eligible Employees

Allowable Days and Frequency

Employees are allowed to take days off for nursing care. (※During thefamily care leave period, a regular salary is paid to the employee for theﬁrst one month (which is a special family care leave period), part of theregular salar y is paid to the employee for the following two months(which are also a special family care leave period), and the social insurance
premium is borne by our company for the remaining nine months.)

Summary

Employees such as those who havewor ked f or our comp any f or le ss
than one year or those whose
predeﬁned weekly working days are
two days or less per week

For a family member who is currently in need of care, employees
are allowed to take family care leave once and the period is up to
one year. (※However, if the employee has remaining days offamily care leave, when the employee applies for the use of ther e m a i n i n g d a y s , a n d w h e n o u r c o m p a ny a p p r o v e s t h eapplication, the employee is allowed to have days off again.)

For nursing care, employees are allowed to reduce their daily regular
working hours by up to two hours with a unit of 30 minutes.

Employees such as those who havewor ked f or our comp any f or le ss
than one year

For a family member who is in need of care, the employee isallowed to reduce his/her working hours for up to one year.
(The reduced working hours are determined based on theremaining days of his/her family care leave.)

Employees are allowed to take a paid half day off or a paid full day
off to take care of a family member who is in need of care.

－

Employees are allowed to take 10 days off for family care,regardless of the number of family members who are inneed of care. Out of the 10 days, ﬁve days can be used as
half days off (equating to 10 half days off).

Overtime hours of more than 24 hours in a month and 150 hours in ayear are exempted.

Employees who have worked for ourcompany for less than one year or
whose predeﬁned weekly working
days are two days or less per week

The frequency of applying for this system is not restricted.

※A family member who is in need of care is defined as an employee's spouse, or the employee's or employee spouse's father, mother, child, grandfather, grandmother, brother, sister, or grandchild. The family
member must require constant nursing care for over two weeks due to a reason such as an injury, disease, or physical or mental disorder. The family member must live with and be supported by the employee.

Personnel Performance Data▲

0Child vacation

Family care
leave

30

40

Outpatientleave

6 weeks after

Use of job-return system

40

36.4

Childbirth

Leave before
childbirth

In order to boost the usage rate of paid leave by employees and be
further conscious about their health, we have conducted a campaign
to improve the usage rate of paid leave. The goals of the campaign
include making all employees take a three-day vacation once a year
and making all employees take a one-week vacation once a year.
Individual departments discuss plans to take vacations in considerationof the planned use of leave. In fiscal year 2015, the usage rate of paid
leave was 71%*, the average of discretionary and overtime work hours
per person was 36.4 hours (including overtime hours as defined in the
Labor Standards Act). We will strive to allow employees to take morepaid leave and reduce overtime hours through improved managementof indicators related to working hours by the Risk Management
Committee, guidance and advice provided by the Health Committee,
an appeal from a member of the Health Committee to each employee,
and taking care of each other within each division.

70.8

Pregnancy 6 weeks before● Number of employees who returned towork after childcare leave:100 %Planned Use of Leaves and Restraint ofLong-periods of Overtime Work

Establishment of Hulic’s OnsiteChildcare Nursery Facility
In October 2014, we opened the Odenma Fureai Childcare
Nursery inside the Hulic Head Office Building in order topromote a more employee-friendly work environment forour employees to raise children while working. In addition,
to make this childcare nursery more accessible, employees
using this service are allowed to drive their car to work andpark it in the Head Office Building's lot free of charge. This
childcare nursery is also be open to some children ※ in thelocal community, hoping that this will be of some help in
reducing the number of children on nursery waiting lists.
In July 2015, Hulic’s onsite nursery facility was presented
with the Kids Design Award 2015 (Organizer: Kids Design
Association. Sponsors: Ministry of Economy, Trade andIndustry and Consumer Affairs Agency).
Odenma Fureai Childcare Nursery website:
http://www.hulic.co.jp/csr/employee/nursery/( ※ Conditions for use differ from those of employees)● Usage rate of paid leave:▲

The falling birth rate, aging population, and women's social
advancement are important issues for Japan's economy. In relation
to the support for development of the next generation, Hulic
aims at a higher level than the legal standard and has establishedvarious systems. Additionally, we have established an action
plan to encourage more male employees to take childcare leaveand become a company offering a work-life balance where male
employees can also actively take part in childcare. Under thisaction plan, we are providing economic support to employeesthat take childcare leave, as well as working to develop a work
environment in which male employees can take this leave moreeasily. In recognition of our efforts, Hulic has received certification
as a“first-grade business owner conforming
to the standard” based on the Act on
Advancement of Measures to Support
Raising Next-Generation Children by the
Tokyo Labor Bureau. This recognition also
earned us the right to use the“Kurumin”
next-generation accreditation logo.

《Results in FY2015》

Average Discretionary andOvertime Work Hours per Person (h)Work-life Balance

Relation between Age of Child and the System to Support Employees to the Next Generation▲

Fundamental
Approach

Hulic is aiming to be a professional team consisting of a
selected few who sincerely work on all issues with a sense ofownership. In order to attract excellent employees and provide
them an environment in which they can make the best use of
their abilities, efforts to strike a work-life balance are essential.

※Data of Hulic Co., Ltd. only (excluding the number of employees (consolidated) and the employment ratio of the disabled (consolidated))※ Excluding employees who transfer within the group company. ※ The number of employees who took childbirth leave, the number of
employees who took childcare leave, and the number of employees who took days off for nursing care, include loan employees.

Item

Number of employees (non-consolidated)Unit

F Y2011 F Y2012 F Y2013 F Y2014 F Y2015

Men/Women

Person

77／29

96／33

90／35

85／31

Total

Person

106

129

125

116

128

Person

375

429

461

753

784

Ten thousand yen
PersonPerson％％PersonPerson％PersonPersonDay
PersonPerson

1,023

1,086

1,120

1,268

1,295

1

1

2

1

2

37／4

56／5

53／4

43／4

43／5

5.66

5.30

6.92

8.56

2.31＊

ー

ー

2.14

2.46

7.36 ＊

Number of employees (consolidated)
Average annual salary
Number of employees who left their job
Number of employees in managerial positions (excluding executive ofﬁcers) Men/Women
Employment ratio of the disabled (non-consolidated)
Employment ratio of the disabled (consolidated)
Number of employees who took childbirth leave
Men/Women
Number of employees who took childcare leave
Number of employees who returned to work after childcare leave
Number of employees who took day off for family care
Number of employees who took family care leave
Number of employees who took day off for nursing care (absorbed previous nursing care leave)
Number of users of the subsidy system for daycare nursery fees
Number of employees who took leave to take part in volunteer activities

93／35

1

1

1

3

6

1／1

1／1

0／2

2／3

2／3

100

100

100

100

100

0

2

2

0

3

0

0

0

0

0

17

15

17

31

34

6

7

8

11

14

39

3

21

18

14

Figures marked with "*" have been assured by an independent assurance provider.

34

Initiatives for our business partners

Fundamental
Approach

We aim for close mutual communication with our business partners,
and build relationships that mutually enhance the corporate valueof both parties. Additionally, Hulic strives to create shared value
with stakeholders by resolving various social issues through PPP
businesses.

Initiatives for Our Shareholders
and Investors《Results in FY2015》● Completion of
Shinagawa Season Terrace(Shibaura Water Recycling
Center rebuilding project)

Fundamental
Approach

We strive to ensure the appropriate disclosure of information
whenever necessary, and actively conduct briefing sessions
on our business results as well as information sessions for
personal investors. These represent our efforts to achieve
diverse forms of mutual communication.

●Number of information sessions for
personal investors held: 10 (including
sessions for sales personnel of securities
companies, IR fairs, and events)

CSR Procurement Policy

Cooperation with Building Management Companies

Information Disclosure Policy

Dividend Policy

Hulic actively engages in CSR activities as a company
involved in the real estate industry. We have formulated apolicy on procurement and purchasing to further develop
our CSR initiatives. In addition, we promote CSR activities
across the entire value chain by asking business partners tocooperate with this policy.

In accordance with the rules for real estate outsourcing management, Hulic's
personnel in charge of buildings visit management companies and buildings
once a year to inspect the management conditions and evaluate managementcompanies. The evaluation of management companies is composed of
two evaluation categories; management by a management company andmanagement conditions of each building. We try to select an outsourcing
contractor for building management in a fair and open way by using theresults of such objective evaluations as a reference for the future selection.

On the basis of the disclosure policy, we are aiming
at fair, timely and accurate information disclosure
benefitting shareholders and investors to make a decision
on investment. In compliance with relevant laws andregulations, we proactively disclose management
strategies and financial data, etc. in order to have themunderstand our business activities. Information, to which
the rules of timely disclosure and relevant laws andregulations, etc. are inapplicable, but which are consideredhelpful for investment decisions, is disclosed promptly
through the Company's website, etc.

Our basic policy is to continue providing the stablepayment of dividends as based on the trends of ourbusiness performance, as a way of returning profits to ourshareholders. The dividends have continued to increase
every fiscal year so far.
To thank our shareholders for their continued support,
we annually present a gift of gourmet catalog equivalent
to 3,000 yen to shareholders with 300 shares or more.
Furthermore, we have been sending out two sets of 3,000
yen gourmet catalogue gifts (worth 6,000 yen in all) to
shareholders holding more than 300 shares for more than
three consecutive years.

CSR Procurement Policy❶We will comply with laws, regulations and social
norms, and undertake business activities based on aset of corporate ethics.
❷We will respect the fundamental human rights of all people.
❸We will take consideration of environmental conservation
and will strive to promote green procurement.
❹We will build an information management system
and manage information appropriately.
❺We will carry out fair and equitable business transactions
and build a trust relationship with business partners.
❻We will strive to maintain peace of mind, safety andhigh quality.

Fair trades with Outsourced Contractors
As for outsourcing by the real estate business division, we havemade fair trades based on the "rules for real estate outsourcing
management," respecting relevant laws and regulations
including the Act against Delay in Payment of Subcontract
Proceeds, etc. to Subcontractors, as well as the instructionsof administrative organizations. We select an outsourcing
contractor which is most appropriate to the project by confirming
the past performance and abilities to execute duties, and clarity
of procedures to execute operations. Taking into account longterm business relationships with outsourcing contractors, we try
to make fair trades with them as a partner on an equal footing.

Items to evaluate management bymanagement companies● Whether all matters stipulated in laws and regulations havebeen performed in a building subject to outsourcing management.
● Whether the management policy been thoroughly
has familiarized to homogenize management services.
● Whether the safety and health education has been conducted.
Whether necessary tools including a first aid kit have been placed.
● Whether staff have given care to appearance and manner.
Whether they have kept favorable communication with tenants.
● Whether education and training systems are in place
for personnel responsible for building management.

Items to evaluate management conditions of buildings

Enhancement of Various IR Tools
In addition to correspondences to shareholders issued
semiannually, we transmit the latest topics through the
IR page on our website in a timely manner. E-mails arealso sent to allow shareholders to receive more timely
information. Every time news about Hulic is released,
we inform registrants by E-mail. (Registration is available
on our website.) In the financial results briefing session,
we make efforts for easy-to-understand explanations byusing image materials produced with PowerPoint. On thewebsite, materials for briefing sessions (in Japanese andEnglish) and videos are distributed.

● Whether rules in the building have been
established and thoroughly familiarized.
● Whether keys and cards have been appropriately managed.
● Whether disaster prevention drills are implemented on a regular basis inpreparation for occurrence of emergencies such as earthquakes and fires.
● Whether an appropriate system to communicate
with a building owner has been in place.
● Whether security and cleaning services have been appropriately executed.
● Whether staff visit the building and inspect devices
and facilities of building on a regular basis.

The purpose of PPP (public private partnership) projects is
to contribute to local economies. Public and private sectors
cooperatively aim to improve new added values throughexchanging information with local communities by using knowhow concerning office buildings and rental apartments inorder to resolve problems on land policies of national or local
governments, as well as financial issues.
Taking into account what the national or local government wants
through the project, we build a mechanism to increase the value
through private business as in the PPP project.
(Left) Hulic Asakusabashi Building, (Right) Shinagawa Season Terrace(Shibaura Water Recycling Center rebuilding project)

Corporate Social Responsibility Report

Briefing Session for Private Investors
We are proactively working on IR activities to makeourselves further understood by private investors.
Having participated every year in seminars and fairs
for private investors
hosted by Tokyo Stock
Exchange and Nikkei
Inc. since listed, we haveachieved many people's
understanding of Hulic.
We will promote such IR
activities in which we candirectly talk with private
investors.

Brief Sessions for Organizational
Investors and Analysts

Public-private partnerships via PPP projects

35《Results in FY2015》

Outside Evaluation of IR
Activities
Hulic's website discloses timely anddetailed information on various activities
of Hulic. In fiscal year 2015, our website
was selected as an“excellent website”
and an“excellent website, ranked byindustry”in the Nikko IR 2015 All Listed
Company Website Ranking. Additionally,
our website also won the bronze prize in
the Gomez IR Site Ranking.

Briefing sessions on financial results (at the end of the 2nd
quarter and fiscal year) are semiannually held by Hulic's
top management mainly for organizational investors. We
also implement "One on One Meeting" over 100 times inJapan, in which we visit individual organizational investors
to explain about Hulic. Furthermore, we have proactively
developed IR activities overseas, visiting organizational
investors in Europe, U.S., Asia, etc. Through those activities,
we make efforts for making ourselves deeply understoodby organizational investors.

SRI (Socially Responsible Investment)
indices in which we have been adopted

36

Corporate GovernanceFundamental
Approach

Hulic Group recognizes that it is an important business issue tobuild a corporate governance system with fully functioning“riskmanagement,”“compliance,”and“internal control.”We intend tosincerely execute business, fulfilling accountability to stakeholders.

《Results in FY2015》● Number of internal audits
conducted: 8 times● Participation rate in the Boardof Directors' Meeting: 98 %Corporate Governance Guidelines

Audit Structure

At a Board Meeting in August 2015, it
was decided that Hulic will abide by all
Corporate Governance Codes stipulatedby the Tokyo Stock Exchange, Inc.,and that the company would establish
Corporate Governance Guidelines
as a framework for the realization of
appropriate corporate governance.

We have adopted the Audit & Supervisory Board system. Of
Hulic's five Audit & Supervisory Board members (two are full-time
auditors), three are external auditors as stipulated in the Companies
Act and the Ordinance for Enforcement of the Companies Act (as ofJune 2016). In accordance with the audit basic policy and the audit
basic plan formulated by the Board of Auditors, Audit & Supervisory
Board members execute duties through attendance at Board of
Directors meetings, (full-time auditors) attend the management
conference, hold hearings about status of execution of duties, andreview important documents. Additionally, they receive reports ofaudit results regularly from the accounting auditor (Ernst & Young
Shin Nihon LLC) and the Corporate Audit Department charged withinternal audits, as well as sharing and exchanging information
as needed to heighten the effectiveness and efficiency of audits
conducted by these three parties.

Management System
The Board of Directors meets once a month in principle, andholds further meetings as needed. The Board of Directors iscomprised of 10 directors, of which four are designated andreported as independent directors based on the stipulationsof the Tokyo Stock Exchange (as of June 2016). Directors
determine important matters concerning Hulic's businessactivities, including CSR, and supervise the execution ofduties. In March 2012, Hulic appointed its first female external
director, and since then we have been promoting multifacetedbusiness management based on diversity. As an advisoryorganization of the President, the Executive Management
Committee is held once a week in principle, which deliberates
especially important matters related to business execution.

Internal Audit StructureInternal audits are carried out independently from otherbusiness lines by the Corporate Audit Department, whichis placed under the direct control of the President. Theinternal audit basic plan is finalized by the Board of
Directors based on Corporate Audit Regulations and theinternal audit is systematically carried out by the Corporate
Audit Department. The results of the internal audit will bereported to the President and feedback to departments
subject to the audit will also be provided. Internal audits
are carried out by four employees (as of June 2016).

Management Advisory Committee
The Management Advisory Committee comprises of five(as of June 2016) selected from legal professionals, public
accountants, academics, and business professionals. The
Management Advisory Committee provides advice andrecommendations to the Board of Directors on all aspectsof management, including matters discussed by the
Board of Directors, in order to ensure the independenceof the Company and the interests of stakeholder are notdamaged.

External Evaluation of Internal Audit
The results of an external quality evaluation of the internal
audits showed that Hulic's internal audit functions generally
conform (GC) to the international standards for internal
auditing defined by the Institute of Internal Auditors (IIA).
We will continue to strive to further improve the quality of
our internal audit functions.

▲

Corporate Governance System Chart (As of June 2016)
Audit & Supervisory Board
Audit

GeneralＭeeting of
Shareholders

Audit & Supervisory Board Department

Accounting Auditor

Board ofDirectors

Recommendation/Advice

CSR Committee

President
Corporate Audit
Department
Executive Management Committee

Management Advisory Committee/Nominating Committee/Remuneration Committee

37

Corporate Social Responsibility Report

Scope of Internal Control
Internal Control Functions of Head Ofﬁceand Afﬁliated Companies

Corporate GovernanceCompliance

Compliance Committee
Risk Management Committee

Risk Management
Internal
Control

Disclosure Control

Fund ALM Committee
Operations Management

Basic Rules, etc.

Business Management
Internal Control Related
to Financial Reporting

Business Process
Control Documents

Disclosure Working Group

Real EstateBusiness
Division
Planning and
Administration
Division
Afﬁliated
Companies

Policy for the Selection of Directors andExternal Directors
The Company has four External Directors and three External Auditors. The
External Directors and External Auditors comment appropriately at themeetings of the Board of Directors from a position that is independent
from that of the business and affairs of the corporation and fulfill thefunctions of monitoring and checks on the management.
In selecting External Directors and External Auditors, the independent
External Directors are selected based on the“Criteria for assessing theindependence of independent external directors”set forth in Hulic’s Corporate Governance Guidelines, which take reference from theguidelines on the independence of independent executive officer(s) set
forth in Article 436-2 of the Securities Listing Regulations of the Tokyo
Stock Exchange. These are considered to be appropriate in light of theimportant roles that the External Directors and External Auditors fulfill
within Hulic's corporate governance system.

Expertise of the Directors (External Directors)
The following independent External Directors, who havefulfilled Hulic's criteria for assessing the independence ofindependent external directors (disclosed in the company’s Corporate Governance Guidelines) in accordance with the
Securities Listing Regulations of the Tokyo Stock Exchange,
have been selected. The expertise and reasons for theselection of these External Directors are listed as follows.

Policy for Determining Director Compensation● Compensation, etc. of directors and Audit &Supervisory Board members
Compensation of directors consists of basic fixed compensation,
which is determined based on job position and giving
consideration to the weight of duties, and performancebased compensation, which is determined based on corporate
performance and degree of contribution to corporate performance.
A portion of performance-based compensation is allocated toa share-based payment scheme designed to give incentives
for performance of tasks to achieve sustainable growth of theCompany and to enhance corporate value from the perspective ofshareholders. Specific amounts of compensation are determinedfollowing a deliberation by the Nominating Committee, themajority of which comprises independent External Directors andis chaired by an independent Outside Director, within the limits
approved at a general meeting of shareholders. Compensation of
Audit & Supervisory Board members has a different structure and isdetermined through deliberations by the Audit & Supervisory Board
within the limits determined at a general shareholder meeting.
Compensation of external directors and Audit & Supervisory Board
members is comprised solely of basic fixed compensation in lightof their roles and responsibilities.

Amount of Remuneration for Executive Officers
Total amount of remuneration by the classification of executive officers, total
amount by the type of remuneration, and number of target executive officers

Name

Profession/Afﬁliation, etc.

Reasons for selection

Tsukasa
Miyajima

Professor Emeritus of Keio University,
lawyer, professor of Asahi University

Highly discerning and insightful
as a university professor

Hideo
YamadaLawyer of Yamada Ozaki Law Oﬃce,
member of Daini Tokyo Bar Association

Highly discerning andinsightful as a lawyer

AtsukoFukushima

Journalist, management council
member of Shimane University

Highly discerning andinsightful as a journalist

Directors(excluding
External Directors)

333

246

ー

86

6

Kaoru
Takahashi

Representative Director, President of Sompo
Japan Nipponkoa Himawari Life Insurance, Inc.

Highly discerning and insightful
as a business operator

Auditors(excluding
External Auditors)

45

45

ー

ー

2

External
executiveofﬁcers

91

91

ー

ー

8

Nominating Committee andRemuneration Committee
The following“discretionary committees”were newly
established alongside with the enactment of the Corporate
Governance Code, enforced on June 1 2015.
● Nominating Committee
The Nominating Committee serves the function of reporting to
the Board of Directors on the nomination of executive officers,
and deliberates on the following matters:（1）Selection of Director and Auditor candidates（2）Changes to Directors (promotion, etc.)（3）Other items concerning succession plans and theabovementioned items, as deemed necessary by the Boardof Directors● Remuneration Committee
The Remuneration Committee is appointed by the Boardof Directors, and deliberates on the following matters:（1）Remuneration standards and other matters pertaining
to the remuneration of Directors（2）Other matters concerning the remuneration of
Directors, as deemed necessary by the Board of Directors(FY2015)Classiﬁcationof executiveofﬁcers

Total amount by the type of
Total
number of
remuneration (million yen)amount oftargetremuneration,
executive
Basic
Stock
etc.
ofﬁcers
Bonuses(million yen) remuneration options(No. of people)

Adoption of the Stock Remuneration System
The Company's Board of Directors has adopted a stock
remuneration system with the aim of raising awarenessabout improving the medium-term business performanceand contributing to the enhancement of corporate value.
In addition to further clarifying the linkages between the
remuneration of Directors, etc. with the Company's businessperformance and stock values, this system also allows
Directors, etc. to share in the merits when stock prices increase
as well as the risks when stock prices fall.
Under this system, stocks in the Company are acquired throughtrusts, funded by monetary contributions from the Company. It
is a stock remuneration system that is tied in with the businessperformance, whereby actual stocks in the Company, as well
as money equivalent to the market value of the Company's
stocks, are paid out to the Directors, etc. through the trust,corresponding with the business performance, and in line withthe regulations on the payment of stocks to executive officers
set forth by the Board of Directors.

38

Risk Management

Fundamental
ApproachCompliancePursuant to basic rules of risk management, we manage various
risks related to the Hulic Group's businesses, which include
operational risk, market risk, liquidity risk, and credit risk, among
others.

《Results in FY2015》●Number of total disastertraining and first-aid
training conducted:1time《Results in FY2015》●Compliance seminars for all employees
No. of seminars conducted: 5 times
Transmission of information: 12 times

Risk Management Structure

Facilities and Stockpiles for Sustaining Business Operations

Compliance Promotion System

Compliance Seminar

We regularly hold committee meetings related to risk management,such as the Risk Management Committee and Capital ALM Committee,
and supplement changes in risk through collecting and analyzing risk
monitoring indices, which ensures a system is in place to control risk.
Through this PDCA cycle, we carry out risk management continuously
to stabilize our business. In addition, internal audits are carried out on
all departments and operations in order to verify the appropriatenessof risk management practices. With regard to real estate, the greatest
asset of Hulic, we regularly obtain appraisal to comprehend themarket risk of real estate, and we have also formulated a business
continuity basic plan to prepare for large-scale disasters, under which
we are working hard to reinforce our risk management structure byimplementing company-wide training drills and other measures.
Based on the experiences of the Great East Japan Earthquake, wehave reviewed the business continuity basic plan, and also checkedseismic performance, liquefaction countermeasures, and flood control
measures at each building.

We are proactively carrying out measures to strengthen the business
continuity capabilities of our core head office functions during an emergency.
The following measures have been taken at the Hulic Head Office Building.
● Employs seismically isolated design that enables building functions tooperate even during an earthquake with a seismic intensity of seven● Features emergency generators that can operate continuously for up to
six days● Has food and drinking water stores to last more than seven days
● Uses wireless equipment for communications between the
management offices of other company-owned properties, etc.
The Hulic Head Office Building, which will serve as a hub during a disaster,has received the highest rating of DBJ BCM from the Development Bank ofJapan for its preparations. In addition to our Head Office Building we arestockpiling water resources and establishing a drainage system, as well as
installing emergency back-up generators, which will provide power up to
three days, in order at the buildings planned to be rebuilt by Hulic.

In accordance with the compliance rules, we havebuilt a company-wide system composed of the Boardof Directors at the top, the Compliance Committee,
executive managing directors in charge of legal affairs andcompliance, and compliance officers of each department.
The status of activities following the compliance programis regularly reported to the Board of Directors through theCompliance Committee. The Compliance Manual requiresthat employees immediately report compliance issues or
possible issues to the Compliance Office, who will theninvestigate the matter as necessary, identify the cause,
and implement the necessary measures to prevent futurereoccurrences.

Themes are regularly decided on and implemented by
Hulic, and all employees are provided with complianceseminars. So far, seminars on how to handle anti-social
forces, power harassment, and insider trading regulations
have been conducted, seminars were also conducted in2015 on the overview of the My Number system, humanrights issues, and the Act on the Prevention of Transfer of
Criminal Proceeds. In addition to these overall themes,in consideration of compliance issues to the real estatebusiness, we conduct“seminars by theme”concerning
important themes, and place news and Q&A related tocompliance on the Company's intranet once a month.
In addition, we hold discussions within departments on
CSR related themes as needed. We compile commentson compliance seminars as feedback, and use them for
subsequent seminars.

Internal Control Functions of Head Ofﬁceand Afﬁliated Companies

Fund ALM Committee
Basic Rules, etc.

Business Management

Disclosure Control

Business Process
Control Documents

8F: Server Room,Operations
Rooms, andrestrooms havebackup power,
lighting and air
conditioning

Natural lighting

B1F: Water pump andoil tank operations,and disaster
preparedness storage

Vertical damp-proof
barrier H=1m

Telecommunications
entrance facility: 2 routes
Electrical entrance
facility: 2 lines

Telecommunications
entrance facility: 2 routes
Seismic isolation pit
Emergency shutoff
valve［Hybrid Structure Model］ ［Seismic Isolation Installation Layout］

Real estate management company (Company A)
Real estate management company (Company B)
Real estate management company (Company C)● Response Aimed at Recovery of Operations

Emergency repair agreements (21 companies)

HULIC

Companies that constructed each building (general contractors)

Corporate Social Responsibility ReportCompliance ofﬁcers of each department●Application/
Reporting as
neededCompliance managers of each department

Compliance Manual❶ Respect for Human Rights andProhibition of Discrimination and
Sexual Harassment❷ Compliance with Laws and
Rules❸ Carry Out Duties in an Honest
and Fair Manner❹ Proper Handling ofInformation❺ Insider Trading Regulations❻ Avoid Relationships with AntiSocial Forces❼ Consideration toward
Environmental Conservation❽ Maintain and Encourage theBest Communication Possible❾ Respect Intellectual
Property Rights❿ Business Entertainment/Gift
Giving and Prohibition of Bribery

Diagram of Hybrid Structure Model● Immediate Conﬁrmation of Damages
Emergency notiﬁcation system using wireless communications (agreement with three companies)

HULIC

Afﬂiates●Annualreporting inprinciple▲▲

Cooperative Structure with Business Partners

1F: Central Control
Room, MDF Roomand restrooms
have backup
power, lighting
and air
conditioning

once for executive officers) transmission of information 12 times● No. of participants: All employees (including temporary staff)▲

Business Continuity Initiatives for Disasters
Hulic is a real estate company that engages in the development,
reconstruction, and operation of office buildings and condominiums
primarily in Tokyo's 23 wards. We are constantly working to generate
new added value by offering properties that are superior in termsof safety, environmental performance, and convenience. We haveestablished various emergency and disaster scenarios for which wehave created measures to improve the structural performance of ourbuildings as well as operational and management aspects.

Legal & Compliance Department

1 elevator inoperation
2F: Disaster
Response Roomand restrooms
have backup
power, lighting
and air
conditioning● Frequency: 5 seminars implemented (four times for all employees,

Executive managing directors in charge ofLegal & Compliance Department

RF: Electricity
receiving andtransformer
equipment/air
conditioner

Natural ventilation

Disclosure Working GroupLightning strike

PCa

Multilayer rubber isolator

SRC

Isolator with tin plug

S

Cross-linear bearing

Compliance Seminars in FY2015▲

Compliance Committee

Internal Control Related
to Financial Reporting▲

Photovoltaic panels

Operations Management

Internal
ControlReportingCompliance Committee（held quarterly, in principle）（Hulic Head Office Building）

Risk Management Committee

Risk Management

Board of Directors

Maintaining Functions during a DisasterScope of Internal Control
Compliance

Compliance Promotion System Chart▲▲

Risk Management Structure Chart

39

Fundamental
Approach

Each and every employee will strive to fulfill the trust of every
stakeholder and fulfill Hulic's corporate social responsibilities byfully complying with laws and company rules as well as engaging
in business activities based on a high standard of ethics.

Compliance Hotline
When it is expected not to take appropriate corrective
actions after consulting with a compliance officer of thedepartment the person belongs to, or when the person
feels resistance in consulting because of the nature of the
problem, direct reporting to the Compliance Hotline isavailable. The Compliance Hotline investigates the issue,
and promptly carries out countermeasures, carefully taking
into account the informer's privacy.

Compliance through Outsourcing Contractors
As for outsourcing by the real estate business division, we havemade fair trades based on“rules for real estate outsourcing
management,”respecting relevant laws and regulations as wellas instructions by administrative organizations. When selecting an
outsourcing contractor, we carefully check their past performanceand abilities to execute operations, the appropriateness in theirbusiness execution system and the clarity of the procedures, theappropriateness of the operation management system, and othernecessary matters. After selecting an outsourcing contractor
through this confirmation, the Legal & Compliance Department
checks the relationship for anti-social forces.

Information Security Management
In an attempt to prevent information leaks, one of the critical risks
in relation to the performance of business, we have established an
information security management system, and enhanced operation
management in accordance with the information management
rules included in the information security policy. We more strictly
check the right of access to the shared server, regulate the useof storage media, and regulate instances where information
assets can be taken off-site. In our themed compliance seminars
held on a regular basis, we thoroughly teach the significance of
information management and information security measures interms of systems in order to increase each employee's awareness.
Additionally, we carry out internal audits to check compliance withcompany rules on information management. In fiscal year 2015,
there was no case or accident related to information leaks.

40

Directors

CSR Promotion Systems

Directors (as of June 2016)
Board of Directors

Audit & Supervisory Board Member

Corporate Officers● Chairman, Representative Director
Saburo Nishiura● Auditor
Shigeo Nakane
Full-time Auditor● Executive Managing Officer
Hiroshi Kitano
General Manager of the Finance Department---------------------------------------------------------------------------------------------------------------------● Auditor● Executive Managing Officer
Yasuki Yakabi
General Manager of the Asset Solutions
Department 1 & the Asset Solutions
Department 2-------------------------------------------------------------------● President, Representative Director
Manabu Yoshidome-------------------------------------------------------------------● Representative Director (Senior Executive

Managing Officer)
Hidehiro Shiga-------------------------------------------------------------------● Director (Senior Executive Managing Officer)

Shinji Furuichi-------------------------------------------------------------------● Director (Senior Executive Managing Officer)
Hajime Kobayashi
General Manager of the Corporate Planning
Department-------------------------------------------------------------------● Director (Executive Managing Officer)

Takaya Maeda
General Manager of Real Estate Development
Department 1-------------------------------------------------------------------● External Director (part time)---------------------------------------------------------● External Auditor (part time)
Koichi Nezu
Chairman Emeritus of Tobu Department
Store Co., Ltd.
Board Chairman of Musashi Academy of
the Nezu Foundation
Board Chairman and Curator of Nezu
Museum---------------------------------------------------------● External Auditor (part time)
Nobuyuki Kobayashi
Certified public accountant/Tax
accountant
Representative member of the tax
accountant’s corporation, ResearchInstitute for Accounting Practices
Professor at the graduate school of
the Nagoya University of Commerce& Business----------------------------------------------------------● Executive Managing Officer
Takeshi Uratani
General Manager of the Property
Development Department----------------------------------------------------------● Executive Managing Officer
Noritaka Takahashi
General Manager of the Real Estate Planning
Department & Tourism Business
Development Department----------------------------------------------------------● Executive Managing Officer
Shin Ito
General Manager of the Corporate
Communications & Investor Relations
Department---------------------------------------------------------------------------------------------------------------------● Managing Officer● External Audit (part time)
Kenichi Sekiguchi
Special Advisor of Meiji Yasuda Life
Insurance Company

Taichi Nakamura
General Manager of the Real Estate
Development Department 2-------------------------------------------------------------------● External Director (part time)
Hideo Yamada
Lawyer of Yamada Ozaki Law Office
External Auditor of Taiyo Chemical Industry Co., Ltd.
External Director of Lion Corporation
External Director of Sato Holdings Corporation
Board Chairman of Akiko Tachibana Ballet School

Activities of CSR Supporters

Hulic has established a CSR Committee in order to combine andalign its CSR-related initiatives with its business activities. It isessential for management personnel to be involved in boosting thelevel of CSR initiatives in the medium- and long-term while striking
a balance between CSR-related measures and business activities.
Therefore, the CSR Committee is chaired by the President, consistsof Senior Executive Managing Officers, the Chief of the Human
Resources and General Affairs Department, the Chief of the Real
Estate Planning Department, the Chief of the Property Development
Department, and the Chief of the Corporate Planning Department.
The Committee is held annually in principle, and as needed.
Company-wide CSR activities are performed in accordance with thebasic policy decided by the CSR Committee. To be more specific,
the Committee formulates various kinds of policies concerning
Company-wide CSR activities and an annual CSR schedule, sets
concrete numerical targets, and considers and deliberates diverse
proposals made by employees, etc. Like this, in the Committee as aplace to practically implement CSR management, there are a lot of
active discussions. Activities of the CSR Committee are reported to
Board of Directors on a regular basis.

Previously, the CSR Task Team was in charge of promoting
CSR activities at workplaces, including improving the internal
environment and social action programs. In 2009, however, withan eye to raising all employees' awareness of promoting CSR
activities, CSR supporters started to conduct them in place of the
CSR Task Team. One person is appointed as a CSR supporter froma unit composed of about ten people, and is relieved by anothermember of the unit after completing a one-year term of office.
Since 2011, CSR supporters have also been appointed from Hulic
Group companies, and made efforts for establishing CSR activities
in all employees of Hulic Group. The CSR Supporter Committee,
where CSR supporters meet, discusses mainly CSR-related mattersfor the entire Company and determines the policy and details of
CSR activities. Particularly in the environmental field, as relevant
to Hulic's real estate business, mainly the Real Estate Division,
including the Technology and Environment Development
Department, discusses environment-related measures.

● 9th Meeting (August 2015)

Fiscal year 2014 performance/CSR plan for 2016/Areas of improvement

CSR Promotion Systems

Board of Directors----------------------------------------------------------● Managing Officer
Yoshito Nishikawa
General Manager of the Real Estate
Investment Department----------------------------------------------------------● Managing Officer
Yoshikazu Nagatsuka
General Manager of the Real Estate
Marketing Department 2

Flowerbed maintenanceactivities carried out by
CSR supporters

Summary of CSR Committee Meeting▲

Tsukasa Miyajima
Professor of Asahi University
Professor Emeritus of Keio University
External Director of Mitsui Sumitomo
Insurance Company, Limited
External Auditor of Mikuni Corporation
External Director of Dai Nippon Printing Co., Ltd.
Councillor of Meiji Yasuda Life Insurance Company
Asset Disposal Committee Chairman of Japan Railway
Construction, Transport and Technology Agency

Takuya Asai
Full-time Auditor

Establishment of the CSR Committee

Report to Board of Directors

CSR Committee

Proposal on measures
to improve KPI-related
status reports

Chairperson: President
Members: Senior Executive Managing Ofﬁcers/General Manager of Human
Resources and General Affairs Department/General Manager of Real Estate
Planning Department/General Manager of Property Development
Department/General Manager of Corporate Planning Department

Making a decision on
allocation of resources(personnel, materials, money)
after receiving a report----------------------------------------------------------● Managing Officer
Takeshi Ozawa
General Manager of the Human Resourceand General Affairs Department & Legal& Compliance Department-------------------------------------------------------------------● External Director (part time)

Atsuko Fukushima
Journalist
External Director of Calbee, Inc.
External Director of Nagoya Railroad Co., Ltd.
Management Council Member of Shimane
University----------------------------------------------------------● Managing Officer

Nobuyoshi Tanaka
General Manager of the Technology andEnvironment Development Department-------------------------------------------------------------------● External Director (part time)

Kaoru Takahashi
Representative Director, President of Sompo
Japan Nipponkoa Himawari Life Insurance, Inc.
Director of Sompo Japan Nipponkoa Insurance
Holdings, Inc.

CSR Supporter
Environment Team<Concerned material issues/KPI>● Measures against global warming● Conservation of resources and reductionof waste at existing buildings● Reduction of waste in new construction
and reconstruction works● Earthquake countermeasures for Hulic’s buildings● Extending the life span of Hulic's buildings● Using renewable energy and developingnew technologies● Greening buildings to prevent warming
Real Estate Business DivisionInternal Environmental Improvement TeamSocial Contribution Team<Concerned material issues/KPI>● Promoting use of supportive systems
to raise children while working● Work-life balance● Promoting employment of the disabled● Preventing crushing labor● Survey of customer satisfaction● Mental health● Activating the reemployment program● Reduction in power and paper
consumption in ofﬁce<Concerned material issues/KPI>● Matching gifts

Information disclosure

Matching Gift Council● Volunteer activities● Collection of stamps and meterstamps, etc.

● Taking into account communities

in real estate development● Contributions

Social Contribution Review Committee

Communication

Stakeholders
Hulic Head Office Building

41

Corporate Social Responsibility Report

Shareholders

Employees

Customers

Business Partners

Government andPublic Administration

Local Communities Global Environment42

Consolidated Financial Statements(Unit: Million Yen)
Current consolidated
accounting period(ended December 2015)

Current assets(Unit: Million Yen)
Current consolidated
accounting period(ended December 2015)

Current liabilities

Cash and deposits
Notes and operating accounts receivable
Merchandise

22,12931,224

Short-term loans payable

29,000105,000

4,383

3,870

Current portion of long-term loans payable

121,559

135,687

00

Short-term bonds payable

3,999

－

12,000100

Accrued expenses

2,166

3,104

45

Income taxes payable

5,033

933

36

38

Advances received

3,946

4,959

Operational investment securities

3,031

2,256

Deferred tax liabilities

12－

Deferred tax assets

1,685

9,024

Provision for bonuses

300

324

Other

6,438

6,215

Provision for directors' bonuses

128

145

(4)

(4)

7,401

7,522

86,188160,261

185,549

257,778

Real estate for sale37,12486,587

Current portion of bonds

Real estate for sale in process

11,351

21,001

Costs on uncompleted construction contracts

11

Supplies

Allowance for doubtful accounts
Total current assets

Other
Total current liabilities
Non-current liabilities

Non-current assets

38,10038,000

Buildings and structures

207,228

250,981Long-term loans payable

268,638

379,425

Accumulated depreciation(55,489)(61,095)

Deferred tax liabilities

28,30744,60564

Bonds payable

Property, plant and equipment

Buildings and structures, net

151,738

189,885

Provision for directors' retirement beneﬁts

53

Machinery, equipment and vehicles

2,170

3,859

Net deﬁned beneﬁt liability

1,121

1,075

Accumulated depreciation

(673)

(886)

Long-term guarantee deposited

44,16551,036

Machinery, equipment and vehicles, net

1,497

2,972

Other

2,044

2,235

Land

386,015580,352

Total non-current liabilities 382,429

516,442

567,979

774,221

Construction in progress

13,773

2,517

Other

1,451

1,644

Accumulated depreciation

(777)

(881)

673

762

553,698

776,490

Other, net
Total property, plant and equipment
Intangible assets

543,063●Net assets
Shareholders' equity(Unit: Million Yen)
Current consolidated
accounting period(ended December 2015)

Operating revenue

212,791

169,956

Operating cost

166,331

114,021

Operating gross proﬁt

46,45955,935

Selling, general and administrative expenses

10,42613.932

Operating income

36,03242,002Non-operating income
Interest income

327

Dividend income

1,264

1,421

Share of proﬁt entities accounted for using equity method

1,203

999

Income arising from cancellation of leasing contracts

169

497

0

1,712

168

341

2,808

Gain on foreign exchange
Other

0

Ordinary income

34,31442,534(168)(3)

Compensation income

Extraordinary income
Gain on sales of non-current assets

54

421

Gain on sales of investment securities

2

3,712

Gain on investments in silent partnership and other168

3

Compensation income

937－

Gain on step acquisitions

684

－

12

21

1,859

4,159

Other
Total extraordinary income
Extraordinary losses
Loss on sales of non-current assets

32

46

Loss on retirement of non-current assets

762

351

Loss arising from building reconstruction

153

1,708

Loss on sales of investment securities

54

4

Loss on valuation of investment securities

1080

Loss on redemption of investment securities

289

0

Impairment loss

587

－

0

0

113

6

Income before income taxes and minority interests

Increase (decrease) in guarantee deposits received

1,075

4,619

958

1,423

Decrease (increase) in other assets
Increase (decrease) in other liabilities
SubtotalInterest and dividends income received
Interest expenses paid
Proceeds from compensation(291)(1,015)92,92848,586

1,322

1,485

(4,526)(4,387)937－

Income taxes paid

(6,539)(9,411)

Net cash provided by (used in) operating activities

84,12336,272(1,000)(1,226)

Cash ﬂows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits

1,000

3,400

Purchase of property, plant and equipment(90,589)(164,060)

Proceeds from sales of property, plant and equipment

1,263

5,259

Purchase of intangible assets(394)(4,064)

Proceeds from sales of intangible assets
Purchase of investment securities

123

173

(15,520)(24,744)

11,645

10,649Proceeds from purchase of additional newly consolidated subsidiaries

652－

Income before minority interests

22,42733,925

ー

(308)

74

296

22,352

33,628

Minority interests in income
Net income

Payments on loans
Collection of loans receivable
Other, net
Net cash provided by (used in) investing activities

0－20,29960(83,815)(284,580)

Cash ﬂows from ﬁnancing activities

Minority interests

Other comprehensive income

Total net assets

205,421317,045

Total liabilities and net assets

773,401

Consolidated Statements ofconsolidated
Comprehensive Income Previous
accounting period▲

Corporate Social Responsibility Report

388

Total income taxes

Income before minority interests

1,091,266(4,076)36,304

4,108

773,401

774

Decrease (increase) in guarantee deposits(135,374)

31,568

Total assets(9,058)(1,744)

ー

3,083

497

53,878Decrease (increase) in investment securities for sale348

27,56929

Decrease (increase) in inventories

Purchase of newly consolidated subsidiaries

Total accumulated other comprehensive income

Total deferred assets

1,422

Proceeds from sales of investment securities

12

479

－

(377)

4,357

8

ー

(684)

Decrease (increase) in notes and accounts receivable - trade

6,292

(66)

Stock issuance expenses

Loss (gain) on step acquisitions

8,356

(121)

18

(1,712)

3,289

Remeasurements of deﬁned beneﬁt plans

29

2,118
44,575－ー

Income taxes - deferred

724

Business commencement expenses

2,101
34,072(937)

Loss (gain) on foreign exchange

Income taxes - current

711

Deferred assets(999)

Loss (gain) on investments in silent partnership and other

Deferred tax assets

930,507

4,214(1,203)

4,468－

687,182

4,348

Share of (proﬁt) loss of entities accounted for using equity method

4,526

1,321

Total non-current assets

Interest expenses

Total non-operating expenses

281,368

1,091,266

11(1,449)0Foreign currency translation adjustment

126,873－(1,267)

Interest and dividend income

108

7,165

121,240

Increase (decrease) in provision for directors' retirement beneﬁts

279

7,509

Total investments and other assets

156

Loss (gain) on redemption of investment securities

Guarantee deposits

(0)

921

Loss (gain) on valuation of investment securities

(73)

4,608

－

Increase (decrease) in net deﬁned beneﬁt asset and liability

253

(179)

(0)

(825)

178

Other

Deferred gains or losses on hedges

3,779

16

Increase (decrease) in provision for retirement beneﬁts(31)

114,362

Allowance for doubtful accounts

24

25(3,707)109,231

Other

46

Increase (decrease) in provision for directors' bonuses

51

Investment securities

Retirement beneﬁt assets

Increase (decrease) in provision for bonuses(15)

174,767

31,708(0)

Loss (gain) on sales of investment securities(193)

26,549(0)

Loss (gain) on sales of intangible assets(191)

Valuation difference on available-for-sale securities－

Increase (decrease) in allowance for doubtful accounts

4,214Interest expenses

Provision of allowance for doubtful accounts

Accumulated other comprehensive income

587

4,348

Non-operating expenses

140,214

27,1438,929

Impairment loss

351

114,314

12,24344,575

7,411

(343)

Total extraordinary losses

Total shareholders' equity

34,072(5)

78,706442

Depreciation

Loss (gain) on sales of property, plant and equipment

38,355378

Cash ﬂows from operating activities
Income before income taxes and minority interests

5,000

Total non-operating income

Capital surplus
Treasury shares(Unit: Million Yen)
Current consolidated
accounting period(ended December 2014) (ended December 2015)

762

Other

21,758

Consolidated Statement
Previous consolidatedof Cash Flows
accounting period

Loss on retirement of non-current assets

62,641

11,092

Investments and other assets

Previous consolidated
accounting period(ended December 2014)

22,290Retained earnings

Other

Consolidated Statements of Income

Capital stock

4,942

Leasehold right
Total intangible assets

Total liabilities

773

Goodwill

43● Liabilities

Previous consolidated
accounting period(ended December 2014)▲● Assets

Previous consolidated
accounting period(ended December 2014)▲▲

Consolidated Balance Sheets(ended December 2014)(Unit: Million Yen)
Current consolidated
accounting period(ended December 2015)

22,42733,925

Unrealized holding gains on securities

7,687

5,324

Unrealized gains on hedging instruments

110

105

Foreign currency translation adjustments467
ー(1,319)55

Adjustments for retirement beneﬁts
Share of other comprehensive income of
afﬁliates accounted for by the equity method

126

(167)

Total other comprehensive income

8,392

3,998

Comprehensive income

30,81937,923(Breakdown)Comprehensive income attributable toshareholders of Hulic Co., Ltd.
Comprehensive income attributable to minority interests

30,74437,62674

296

Net increase (decrease) in short-term loans payable

22,70076,000Net increase (decrease) in short-term bonds payable(54,020)(4,026)

Proceeds from long-term loans payable

98,000249,000

Repayments of long-term loans payable(76,023)(124,084)

Proceeds from issuance of bonds
Payments on redemption of bonds
Proceeds from issuance of stocks

17,903－ー(12,000)

ー

79,997

Proceeds from exercise of share options

169

87

Proceeds from sales of treasury shares

0

0

(2)

(1)

(4,460)(7,802)

Purchase of treasury shares
Cash dividends paid
Proceeds from payment from minority shareholders

ー889

Cash dividends paid to minority shareholders

(73)

(124)

Other, net
Net cash provided by (used in) ﬁnancing activities

(1)

(1)

4,192

257,934

Effect of exchange rate change on cash and cash equivalents

28

242

Net increase (decrease) in cash and cash equivalents

4,528

9,868

Cash and cash equivalents at beginning of period

16,60021,129Cash and cash equivalents at end of period

21,12930,99744

Consolidated Financial Statements

Third-party Assurance▲

Consolidated Statements of Changes in Net Assets(Unit: Million Yen)
Previous consolidated accounting period(ended December 2014)

Balance at the beginning of the current period

Shareholders' equity
Capital stock

Capital surplus

Retained earnings

Treasury shares

Total shareholders' equity

22,20538,27096,422(189)

156,708

22,20538,27096,422(189)

156,708

84

84

Cumulative effect of changes in accounting policy
Balance at the beginning of the ﬁscal year
reﬂecting changes in accounting policy

With the aim of enhancing the credibility of our CSR Report, a set of selected environmental and social performance indicators forfiscal 2015 that are disclosed in this Report have been assured by the third-party assurance provider, KPMG AZSA Sustainability Co.,
Ltd. (Indicators that have been assured are marked with“*”.) We will continue to put our best efforts into improving the quality of oursustainability report going forward.

ーChanges of items during the current period
Issuance of new sharesーIssuance of new shares - exercise of subscription rights to shares

169

Dividends of surplus(4,460)Net income

22,352(4,460)22,352

Purchase of treasury shares
Disposal of treasury shares

0

(2)

(2)

0

0

Net changes of items other than shareholders' equity
Total changes of items during the current period

84

85

17,892(2)

18,059Balance at the end of the current period

22,29038,355

114,314(191)

174,767(Unit: Million Yen)
Previous consolidated accounting period(ended December 2014)

Balance at the beginning of the current period

Accumulated other comprehensive income
Valuation difference on Deferred gains or
Foreign currency
Adjustments for cumulative Consolidated statements
Minority interests
available-for-sale securities losses on hedges translation adjustment
retirement beneﬁts
of changes in net assets
18,736

(289)

853

ー

19,2991,273

177,280

18,736

(289)

853

ー

19,2991,273

177,280

Cumulative effect of changes in accounting policy
Balance at the beginning of the ﬁscal year
reﬂecting changes in accounting policy

Total net assetsーChanges of items during the current period
Issuance of new sharesーIssuance of new shares - exercise of subscription rights to shares

169

Dividends of surplus(4,460)Net income

22,352

Purchase of treasury shares(2)

Disposal of treasury shares
Net changes of items other than shareholders' equity

0
7,813

110

468

8,270

(121)

1,810

Total changes of items during the current period

7,813

110

468

(121)

8,270

1,810

Balance at the end of the current period

26,549

(179)

1,321

(121)

27,5693,083(Unit: Million Yen)
Current consolidated accounting period(ended December 2015)

Balance at the beginning of the current period

28,140205,421

Shareholders' equity
Capital stock

Capital surplus

22,29038,355Retained earnings

Treasury shares

Total shareholders' equity

114,314(191)

174,767(191)

174,841

Cumulative effect of changes in accounting policy
Balance at the beginning of the ﬁscal year
reﬂecting changes in accounting policy

10,08173
22,29038,35540,30740,30743

43

73

114,387

Changes of items during the current period
Issuance of new shares
Issuance of new shares - exercise of subscription rights to shares

80,615
87

Dividends of surplus(7,802)

Net income

33,628(7,802)
33,628Purchase of treasury shares
Disposal of treasury shares

0

(1)

(1)

0

0

Net changes of items other than shareholders' equity
Total changes of items during the current period

40,35140,351

25,826(1)

106,527

Balance at the end of the current period

62,64178,706140,214(193)

281,368(Unit: Million Yen)
Current consolidated accounting period(ended December 2015)

Balance at the beginning of the current period

Accumulated other comprehensive income
Valuation difference on Deferred gains or
Foreign currency
Adjustments for cumulative Consolidated statements
Minority interests
available-for-sale securities losses on hedges translation adjustment
retirement beneﬁts
of changes in net assets
26,549

(179)

1,321

(121)

27,5693,083

205,421

26,549

(179)

1,321

(121)

27,5693,083

205,495

73

Cumulative effect of changes in accounting policy
Balance at the beginning of the ﬁscal year
reﬂecting changes in accounting policy

Total net assets

Changes of items during the current period
80,615Issuance of new shares

87

Issuance of new shares - exercise of subscription rights to shares
Dividends of surplus(7,802)

Net income

33,628(1)

Purchase of treasury shares

0

Disposal of treasury shares
Net changes of items other than shareholders' equity

45

5,158

105

(1,321)

55

3,998

1,024

5,022

Total changes of items during the current period

5,158

105

(1,321)

55

3,998

1,024

111,550

Balance at the end of the current period

31,708

(73)

ー

(66)

31,5684,108

317,045

Corporate Social Responsibility Report46