CSR REPORT 2018
Integrated Report on Sustainability
Hulic Co., Ltd.

Hulic Co., Ltd.
TEL +81-3-5623-8101 FAX +81-3-5623-8125
https://www.hulic.co.jp/en
7-3 Nihonbashi Odenmacho, Chuo-ku, Tokyo, Japan 103-0011

CONTENTS

Editorial Policy

Corporate Philosophy and Basic Stance

Hulic publishes various forms of communication tools to help investors and otherTotal commitment to our customers and the community.
Corporate
Philosophy

Creating productive environments. Creating amenity.

Basic
StanceInformation that could not be included in this publication, such as the GRI
content index, can be found on our corporate website.

Ideal Company: W e aim to be a company that grows each day by utilizing stable corporate
infrastructures.

"gas consumption," "CO2 emissions" and "water consumption" are those for the

Corporate Culture: We always conduct business from a new viewpoint in an effort to increase ourcorporate value.

which the head office of Hulic Group companies reside.

The boundary of this report is the Hulic Group. Figures for "power consumption,"

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

seamlessly fuse business strategies with CSR.

Reporting Boundary

Ideal Employees: Each of Hulic's employees strives to provide high quality value as a professional.

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

2

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

3

By providing high valueadded products andservices, we are giving ourcustomers security andlaying the foundation for the
future.

Reporting Media
Financial information

Non-financial information

following 55 buildings, and a figure for "waste disposal" is that for buildings inEnvironmental Performance Data/ Boundary (Total floor area: m2)
Hulic Shinkawasaki Building
Toyosu Prime Square
Hulic Osaka Building
Yamato Haneda Building
Hulic Kudan Building
Hulic Asakusabashi Building
Hulic Kobunacho Building
Hulic Ginza Wall Building
Hulic Shinsaibashi Building
Hulic Sapporo Building
Hulic Shinbashi Building
Hulic Fukuoka Building
Hulic Ginza Sukiyabashi Building
Hulic Sapporo NORTH33 Building
Hulic Head Office Building
Hulic Shinjuku Building
Hulic Nanba Building
Hulic Kojimachi Building
Hulic Aoyama Building
Hulic Ginza Building
Hulic Kobe Building
Hulic Kaminarimon Building
Hulic Minamiaoyama Building
Hulic Ryogoku Building
Hulic Setagaya
Hulic Asakusabashi Edo-dori
Hulic Kabutocho Building
Hulic Kyobashi Building

49,863
42,48330,35329,22626,027
19,636
1 7, 1 7 2
16,95016,65914,254
13,983
12,646
11,57011,017
10,472
9,7 8 19,1 4 7
8,926
8,790
8,579
8,354
7,7 7 97,483
7,442
7,1 6 3
6,851
6,579
6,323

Hulic Gotanda Building
Hulic Mita Building
Hulic Kawasaki Building
Hulic Torigoe Building
Hulic Hamamatsu Building
Hulic Nishikicho Building
Hulic Ginza 3-chome Building
Hulic Nishi Ginza Building
Hulic Hachioji Building
Hulic Shibuya Building
SIA Aoyama Building
Hulic Ginza 1 Chome Building
Hulic Kyobashi East Building
Asakusa Park Hall Building
Hulic Kamata Building
Hulic Ueno Building
Hulic Koishikawa Building
Hulic Nakano Building
Hulic Nihonbashi Muromachi Building
Hulic Nakaokachimachi Building
Hulic Hatchobori Building
Hulic Hirakawacho Building
Hulic Sakurashinmachi Building
Hulic Yaesu No.2 Building
Daiwa Yoyogi No.2 Building
Shinbashi Yamaguchi Building
Hulic Edobashi Building

6,245
6,228
6,004
5,954
5,538
5 , 4 51
5,356
5 ,1 7 2
5 ,1 5 2
5,090
4,946
4,771
4,765
4,598
4,446
4, 41 94,408
4, 3 1 9
4 ,1 1 7
3,704
3,506
3,421
3,321
3 ,1 8 4
3 ,1 6 6
3 ,1 2 7
3,032

Reporting Period

Reference Guidelines

Fiscal year 2017(from January 1, 2017 to December 31, 2017)
Regarding a portion of the priority items,
the activity report before and after the2017 fiscal year is included.

The Japanese Ministry of the Environment"The Environmental Reporting Guidelines (2012)"
GRI (Global Reporting Initiative)"The GRI Standards"

WEB

Initiatives for CSR

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

https://www.hulic.co.jp/en/csr/

Head Office
Hulic Co., Ltd.

AnnualReportOthers1

Financial statements

CSR Report

Fact book

Japanese/ English

Annual reports “For our stakeholders”
Summary and note on financial statements

News release

Corporate
Governance Report

Message from the Management

５

Financial and Non-financial
Highlights

７

Hulic's Vision and Strategy

９Creating Shared Value

１１

Material CSR Issues

１３

Initiatives for Material Issues- Targets and Performance

１５• Headquarters: 7-3 Nihonbashi Odenmacho, Chuo-ku,
Tokyo, 103-0011• Established: March 1957
• Business Outline: Real estate holding, leasing, sales andbrokerage• Paid-in Capital: ¥62.718 billion (as of December 31, 2017)• Memberships: Japan Business Federation, The Real Estate
Companies Association of Japan, The Association forReal Estate Securitization, Japan Building Owners andManagers Association, Japanese Association of Real
Estate Appraisal, Japan Council of Shopping Centers

SpecialFeature ong-term Vision forL
the Environment

17

CSR Promotion Systems

19

Environmental Initiatives

20- Environmental Management- Climate Change Countermeasures- Building a Resource-recycling Society- Biodiversity/Encouraging Greening

Social Initiatives

28- Initiatives for Our Customers- Initiatives for Our Business Partners- Initiatives for Our Employees- Initiatives in the Local Community- Initiatives for Our Shareholders andInvestors

Corporate Governance

38-Corporate Governance-Risk Management

Time of IssuanceAugust 2018 (Previous issue: August 2017, Next issue: August 2019 (scheduled))
IR information

３

stakeholders gain an understanding of and objectively view its initiatives that

Promoting peace of mind.

Stance to Customers: We are committed to providing optimal products and services to customers,
placing customer satisfaction as our top priority.

Overview of Our Businesses-Compliance

Major Group Companies(As of December 2017)

Hulic Build Co., Ltd.
Hulic Building Management Co., Ltd.
Hulic Insurance Service Co., Ltd.
Hulic Hotel Management Co., Ltd.
Hulic Office Service Co., Ltd.
Hulic Reit Management Co., Ltd.
Hulic Proserve Co., Ltd.
Hulic Private Reit Management Co., Ltd.
Hulic Property Solution Co., Ltd.
Smart Life Management Co., Ltd.
Avanti Staff Corporation

Consolidated Financial
Statements

43

External Evaluation

46

Inquiries :Hulic Co., Ltd.
Business Planning andManagement Department
TEL:+81-3-5623-8101
FAX:+81-3-5623-8125
2

Overview of Our Businesses

As a corporation with a social presence, we aim topractice management that is linked to our businessstrategy and ESG* initiatives, and to contribute to
the realization of a sustainable society.
* ESG stands for Environment, Social and Governance

Hulic's Real Estate Business

Hulic's strength - A stable leasing businessApproximately 90%
in the Tokyo metropolitan area

Distribution of distance fromthe nearest station
Over 5 mins

Hulic currently owns 236 buildings. Around
90% of these properties are concentrated in
the Tokyo metropolitan area and Tokyo's 23
wards, which experience
demand for buildings.
Distribution of regionsthat office buildings
are located inTokyo
metropolitan
area

15%

Tokyo’s 23
wards

Hulic owns a large number of properties, including high-security office buildings and condominium buildings
with the latest earthquake resistant structures to obtain absorbing or damping at prime and accessible
locations close to stations mainly in Tokyo's 23 wards.
The leasing business is our core business.

Reconstruction and Development Businesses

38

29

74%

from the nearest station

The vacancy rate of Hulic's
office buildings andcommercial buildings inTokyo's 23 wards is below 1%,
ensuring a stable income for
the Company.

81%(as of the end of Dec. 2017)* Based on no. of properties, excluding residential properties, etc.

(as of the end of Dec. 2017)* Excluding real estate for resale and residential properties, etc.

Vacancy rate

Leasing business

Good accessibility is an
Within 1 min
19%
important strength of
4-5 mins
Hulic's properties. Of all%
the offices and14%
commercial buildings
owned by the Company,%
about 80% are within awalking distance of 5
2-3 mins
minutes from the nearest
5 mins walking distancestation.

Safe and secure buildings
Marketaveragevacancy rate*1

Hulicvacancyrate*2

3.1% 0.7%*1 Source: Miki Shoji's Office Data by Region(Boundary: Office buildings withstandard floor area of 100 tsubo or
above, in the Tokyo business district)*2 Hulic vacancy rate is calculated using
data for Hulic's office and commercial
buildings in Tokyo's 23 wards.
(as of the end of Dec. 2017)

We are accelerating the efforts to make our properties
resistant to earthquake by introducing the latest
technologies of earthquake-absorbing,earthquake-damping andEarthquakeGeneralabsorbing
Building
earthquake-resistance into
Structure
Slow and parallel
Shaking
new buildings based on theirshakingviolently
locations, and by ensuring
implementation of aseismic
retrofits that exceed the
new earthquake-resistancestandards for all of ourexisting buildings.
Deforming laminated rubber

Our portfolio of assets includes many properties with unexploited floor area capacity. We actively work on
the systematic reconstruction of those properties because we believe maximizing the use of floor space byrecreating properties as more spacious and convenient facilities that are appropriate for individual locations

Hulic's growth strategy - Initiatives in the leasing business aimed at fulfilling the needs of society

will serve as a major growth driver of business. We also promote the development business, drawing on our
expertise accumulated in the reconstruction business, and engage in public-private partnership (PPP)*1

Selection and concentration

Promoting reconstruction

projects and corporate real estate (CRE)*2 projects to maximize asset values.

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

We increase the leasing area by actively reconstructing
our properties, thereby improving income. 43% of ourproperties are relatively new properties built within 10
years (as of the end of December 2017).
VALUE*1 PPP: In public-private partnership (PPP) projects, the public and private sectors join forces and cooperate with the aim of efficiently utilizing
and operating real estate owned by central and local governments (public assets).
*2 CRE: Corporate real estate (CRE) projects are designed to support strategies for increasing corporate value utilizing real estate owned byprivate-sector enterprises and specified corporations (educational corporations and medical corporations, etc.).

Medium-scale
office buildings

Tokyo

Little competition targeted
at a wide range of tenants

Population influx into
the Tokyo metropolitan area

After
reconstruction

Old properties
Unusedfloor area

Value-added Real Estate BusinessWe carry out renovations and improve the compliance, etc. of our portfolio properties and newly acquired andinvested real estate to maximize the value of properties, in order to create added value for properties, withthe aim of facilitating the recycling of real estate. We aim to grow the value-added real estate business as abusiness that supports our sustainable growth strategy.

Investment BusinessWe proactively undertake investments in the operation and development of real estate assets tostrengthen our asset portfolio concentrated in central districts of the Tokyo metropolitan area. Our

UP!!

Increasein leasing area
Rise in rent due tobuilding renewal

Low vacancy risk

High demand

Reconstruction

BeforeAfter

Expectation ofsignificant
profit increase
simply fromrebuilding costs

Environmentally friendly buildings

3K businesses

We promote installation of photovoltaic panels, greening
and introduction of natural lighting systems and naturalventilation technologies developed jointly with
Massachusetts Institute of Technology (MIT). We are also
moving ahead with our 100 Year Office Plan (creation of
longer life buildings), which will lead to waste reduction.

We are exploring and strengthening new businessdomains in our 3K businesses (Koreisha (seniors), Kanko(tourism), and Kankyo (environment)), with the aim of
responding to various changes in the environment, suchas an aging population, increase in foreign tourists visiting
Japan, and escalation of environmental issues.
Koreisha(Seniors)

Kanko(Tourism)

Kankyo(Environment)

investment targets are office buildings, as well as hotels and commercial buildings.

Hulic Fukasawa

3

Atami Fufu

4

Message from the Management

Our Performance in 2017

The origin of Hulic's CSR Management is"Total commitment to our customers and thecommunity. Creating productive environments.
Creating amenity. Creating peace of mind."
For more than half a century, Hulic has been operating a real estate leasing business focusing on
a portfolio of office buildings in central Tokyo. Our strength of owning a solid business foundation,
based on the prime locations of properties, has allowed us to maintain continued growth of profitsand dividends without being affected by market conditions even in the face of adversity, including
difficulties associated with the Lehman Brothers' bankruptcy and the Great East Japan Earthquake.
Hulic's sustainable growth is supported by CSR management, which incorporates Environment,
Social, and Governance (ESG) factors into decision making.
In our corporate philosophy, we uphold the following values: “Total commitment to our customers
and the community. Creating productive environments. Creating amenity. Creating peace of mind.”
As part of our management strategy, we consider that taking initiatives to address social issues will5

In fiscal year 2017, Hulic achieved its highest profits sincelisted, with operating revenue of 289.6 billion yen, operating
income of 64.2 billion yen, and ordinary income (recurringincome) of 61.8 billion yen. In addition, we achieved the goalsof the Medium-term Management Plan (2016-2018) one year
ahead of schedule. The primary factors contributing to theseachievements are the growth of earnings of our core leasing
business, an increase in rent revenue from newly acquired largescale commercial properties in the Shinsaibashi area (Osaka)and the Minatomirai area (Yokohama), as well as an increase
in revenue from property sales with the establishment of Hulic
Private Reit Management Co., Ltd. In fiscal 2017, we opened
the HULIC & New, a series of the first Hulic brand of commercial
complexes in Shibuya and Shinbashi, and established Hulic
Property Solution Co., Ltd., with the aim of strengthening thevalue-added real estate business that pursues creating added
value for properties. In addition, we continue to focus on the 3
future growth businesses (3K businesses), i.e., Koreisha (seniors),
Kanko (tourism), and Kankyo (environment). In the Koreisha(seniors) business, Hulic's private nursing homes with assisted
living care, such as “Hulic Chofu” and “Hulic Fukasawa” werecompleted successively. In the public-private partnership(PPP) business, we reached agreements to carry out threedevelopment projects to construct hotels and Japanesestyle luxury hotels, etc. using real estate owned by local
governments, namely, “Redevelopment of the site of the former
Rissei Elementary School” in Kyoto City, “Project to preserve,
manage, and utilize the site of the former Takabatakecho Court” in Nara Prefecture, and “Ryogoku river center
development project” in Sumida-ku, Tokyo. In the environmentrelated business, we proactively adopted environmental
technologies in our reconstruction and development projects,
etc. Hulic is committed to achieving the sustainable growth ofcorporate value by promoting new businesses, while focusing
on the existing real estate leasing business as its core business.

New Medium-term Management
Plan and CSR Strategy
In fiscal year 2018, Hulic launched a new medium-term
management plan (2018-2020), which represents the final
phase of the current long-term management plan, aiming
to reach the plan's goal of achieving ordinary income of 85.0
billion yen (in 2023) three years ahead of schedule.
While maintaining Hulic's distinctive business model, theGroup will endeavor to sustain its steady growth throughevolution by responding to changing times and changes inthe environment. In addition to making efforts to expand
and improve the quality of the portfolio of assets undermanagement in the leasing business, the Group aims to
evolve its business model into one designed to expand stableearnings by strengthening the development business andthe value-added real estate business, and through the asset
management business, etc. We will also continue to promote
ESG-conscious business operations and create value as acompany that is a member of a sustainable society.

create business opportunities. We will strive to remain a mission driven company with a strong social

Material CSR Issues and Our Progress

responsibility by implementing CSR management.

Following the adoption of the Sustainable Development

Goals (SDGs) by the UN General Assembly in 2015, Hulic
has considered what it can do as a real estate company
toward realizing a sustainable society. We have identified
our material CSR issues and are carrying out various
initiatives to address those issues. We consider that reducing
CO2 emissions, waste, and water consumption at manybuildings owned by Hulic, mainly in central Tokyo, will reduce
environmental impacts, and have set their reduction targets
from the standpoint of promoting environmentally conscious
management. In particular, we have established the longterm target of reducing CO2 emissions by 45%, relative to the2013 level, by 2030. With the aim of achieving the target, wehave introduced natural lighting systems, natural ventilation
systems, and high-efficiency lighting and air-conditioning
systems in new buildings. In addition, we actively carry out
energy-saving renovations, etc. of our existing buildings. We
have also created a long-term environmental vision, underwhich “low-carbon society” and “recycling society” aredesignated as our ideal forms of society by 2050, and haveclarified our stance on environmental initiatives. We will work
to continually achieve various targets, such as the number ofcapital investments for renewable energy and the numberof greening projects for new buildings. In fiscal year 2017, weformulated the “Hulic Health Management Declaration”
based on the idea that promoting health management,
whereby the Company makes strategic efforts to maintainand promote the health of its employees, is essential for theCompany to achieve the corporate philosophy of having a“Total commitment to our customers and the community.
Creating productive environments. Creating amenity.
Creating peace of mind.”
Based on this declaration, in addition to continuing withongoing initiatives such as increasing the usage rate ofpaid leave and the percentage of employees who received
medical checkups, Hulic has set a new target, taking a
step beyond just encouraging employees to participate intraining programs and receive medical checkups, to achieve
100% participation by employees in reexaminations if
required as a result of medical checkups, and raise employee
awareness toward achieving this target.
With the focus on strengthening corporate governance, wehave worked continuously to enhance the functions of “riskmanagement,” “compliance,” and “internal controls.” Hulic
will continue to take various initiatives to meet the needs ofsociety and realize a sustainable society.

To Our Stakeholders
In the future, our employees and officers will remain
united in our efforts to continue contributing to society
as a progressive business enterprise that cultivates good
relations with all stakeholder groups. In these activities,
we look forward to enjoying the continued support of ourshareholders and other stakeholders.

Saburo Nishiura
Chairman, Representative Director

Manabu Yoshidome

President, Representative Director

6Financial and Non-financial Highlights

Main Financial Indicators

Main Non-Financial Indicators

Operating Revenue (Net Sales)

Operating Income

Ordinary Income(¥100 milion)(¥100 milion)(¥100 milion)

2,896

3,000

2,157

2,127

2,000

400
1,084

360

500
FY
12/13

FY
12/14

FY
12/15

FY
12/16

FY
12/17

200

100

100
FY
12/13

FY
12/14

Net profit attributable to shareholdersof parent company

EBITDA*1 /EBITDA Ratio*2(¥100 milion)(Milion Yen)

500

80,000

424
400
336

348

FY
12/15

FY
12/16

259

FY
12/13

FY
12/14

FY
12/15

FY
12/16

FY
12/17

(Times)(m3)(kg-CO2/m2)

1,000,000

100.0

25,63320.0

EquityReturn on Equity

15.0

300,000

15.0

40,00010.0

200,000

10.0

20,0005.0

100,000

5.0

0
223

FY
12/13

FY
12/14

FY
12/15

FY
12/16

0

FY
12/17

FY
FY
FY
FY
FY
12/13 12/14 12/15 12/16 12/17

Dividend per Share

Vacancy Rate*4 / Average Rent

(Yen)

(Average rent: Yen/Tsubo)

25

0

0

0

FY
FY
FY
FY
FY
12/13 12/14 12/15 12/16 12/17(Vacancy rate: %)30,000

21.0
20
15.5

15

17.0

9.0
8.0

25,000

7.0

20,0006.0
5.0

15,000

10.5

10

4.0

10,000

6.5
5

3.0
2.0

5,000

FY
12/13

FY
12/14

FY
12/15

FY
12/16

FY
12/17

0

1.0
FY
12/13

FY
12/14

Changes in Real Estate Business Related Index
Target: Real estate owned by Hulic*5
Vacancy Rate *4
Average Rent
Number of
Properties

Rentable Area

Office and commercial buildings owned by Hulic in Tokyo's 23 wards
All the office and commercial buildings owned by Hulic *6
Office and commercial buildings in Tokyo central 5 wards *6
Tokyo metropolitan area

FY
12/15

Unit

0

FY
12/17

FY
12/16

FY12/13

FY12/14

Hulic's office andcommercial buildings in thefive wards of downtown
Tokyo(For reference) The market
average for Tokyo's business
districts

588,551
20
blds

55
blds

74.7

77.6

77.7

FY
12/13

FY
12/14

FY
12/15

FY
12/16

80.7★

60.0

40.0

20
blds

22,060

FY
12/14

20.0

200,000

20
blds

FY
12/13

51
blds

77.3

80.0

453,012

FY
12/15

FY
12/16

0

FY
12/17

0

FY
FY
FY
FY
FY
12/13 12/14 12/15 12/16 12/17

Usage Rate of Paid Leave

(t)

(%)

1,500

80.0

FY
12/17

FY12/15

FY12/16

0.3

0.7

1.5

0.4

0.7

19,817

20,75920,451

20,07320,077(Yen)

23,71425,147

24,51024,97025,242(Building)

141

148

182

190

206

Total

(Building)

20

19

20

22

FY
12/13

70.9

71.4

1,027

8.56

30

161

167

202

212

236

Tokyo metropolitan area

m2

537,582

633,918

771,049

894,179

912,249

Other

m2

142,090

140,696

160,179

135,517

162,789

Total

m2

679,672774,615

931,229

1,029,696

1,075,037

Hulic has been achieving earnings growth every year since going public in 2008. In the fiscal year ended December 2017, Hulic achieved record highs
for operating revenue (net sales), operating income, ordinary income, net income, and EBITDA, due to increases in rent revenue from new investments
and proceeds from the sale of properties to REITs. In addition, we carried out expeditious capital increases (in 2012 and 2015) and have steadily
accumulated profits, which have allowed us to maintain a robust financial base. As a result, our dividend per share was the highest ever at 21.0 yen.
Most of Hulic's properties are in prime locations close to stations in Tokyo. Accordingly, the vacancy rate of Hulic's properties has been significantly
lower than the market average vacancy rate and the average rent of Hulic's properties has been above the market average rent.

7.36

8.00

16
blds

FY
12/14

(%)

10.00

71.6

6.92
Non-consolidated basis

6.00

525

524

7
blds

7
blds

611★

FY
12/15

FY
12/16

6.30

6.16★

40.0
4.00

8
blds

2.46
20.0

0

FY
12/17

2.00

FY
12/13

FY
12/14

FY
12/15

FY
12/16

Ratio of Female Managers

Rate of Voluntary Job Turnover

(%)

(%)

20.0

10.00

0

FY
12/17

2.14

FY
12/13

2.31

2.11★

Consolidated basis

FY
12/14

FY
12/15

2.21

FY
12/16

FY
12/17

Number of Social Contribution
Activities as a Company(Activities)

FY12/17%(Building)

78.3

60.0

300

0

*Market average: Miki Shoji's
Office Data by Region

16
blds

600

(For reference) The market
average for Tokyo's business
districts

(Yen)

Other

900

1,102

Employment Ratio of the Disabled★

71.0

Hulic's office andcommercial buildings inTokyo's 23 wards*1 EBITDA=Ordinary Income - Equity in Earnings (Losses) of Affiliates + Interest Expenses + Depreciation and amortization *2 Interest-Bearing Debt to EBITDA
Ratio=Interest-Bearing Debt/EBITDA *3 ROE=Net Income/Average Equity *4 Excluding the unsigned floor space which was reserved due to the tenant's demands andreconstruction *5 Excluding real estate held for sale *6 Calculated by dividing rent revenue in the account closing month by rented area at the end of the period

7600,000

Waste Disposal＊

1,200

0

51
blds

★

159

100
0

20
blds

20,00060,000727,497
762,552
731,360

800,000

400,000(%)

400,000

55
blds

51
blds

51
blds

60,000300
200

80,525★

40,000(Milion Yen)

20.0

EBITDAEBITDA ratio(MWh)65,973 66,326

Shareholders' Equity/
Return on Equity (ROE)*3

CO2 Emissions Intensity＊

100,000

80,000

0

FY
12/17

Gas Consumption＊

Power Consumption

343

300

200

0

425

400

291

300

514

500

420

Items marked with "★" have been assured by an independent assurance provider. For items marked with “＊”, some prior-year figures have been adjusted. For details,
please refer to page 16.

618

600

533

500

1,699

700

642

600

1,500

0

800

700

2,500

1,000

800

Since 2015, amounts of power/gas consumption, CO2 emissions intensity and waste disposal have substantially differed from the results until
2014 due to a significantly different number of target properties. With regard to the detailed boundary of these indicators, please refer to page15, “Initiatives for Material Issues.”

20

15.6
15.0

8.00

16
15

10.4
10.0

6.00

12.3

8.5
4.00

7.0

0

8

2.34

5.0

1.72

2.00

FY
12/13

FY
12/14

FY
12/15

FY
12/16

FY
12/17

0

12

10

1.28

9

5

1.34

0.80
FY
12/13

13

FY
12/14

FY
12/15

FY
12/16

FY
12/17

0

FY
12/13

FY
12/14

FY
12/15

FY
12/16

FY
12/17

Hulic works to reduce CO2 emissions from electricity and gas, as well as reduce waste from the standpoint of environment-conscious management,
and we set reduction targets and identify the status of progress.
In 2017, we endeavored to further increase the usage rate of paid leave as a measure to improve work-life balance and promoted implementation of
the “My Friday” system, through which employees are encouraged to take a half day off on a Friday afternoon once a month. As a result, the usage
rate of paid leave reached the highest ever. We have continued to take initiatives to promote diversity, which resulted in an increase in the ratio of
female managers from the previous year. In addition, we have steadily expanded the areas of social contribution activities.

8

Hulic’s Vision and Strategy

Develop and evolve Hulic's distinctive businessmodel with the aim of further enhancing sustainablecorporate value

Medium-term Management Plan: 2018-2020
Target Profile

Hulic achieved the goal set out in our medium-term management plan (2016-2018), launched in 2016, one year
ahead of schedule. Accordingly, we newly formulated the current medium-term management plan for 2018
through 2020 as the final phase in the vision set out under the long-term plan titled “Hulic 10 Years from Now(2014-2023).” In 2018, in keeping with the concept of innovation and sense of speed, we will strive to maintain anddevelop our business foundation for the early attainment of the goals set in the current medium-term plan.

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

1. Bolstering and enhancing the quality of the lease portfolio

2. Strengthening the development business

Ordinary Income (recurring income)

85.0

90

85.0

• Systematically promote long-term development projects which are limited to properties in prime locations andreconstruction of Hulic's properties.
• Actively develop the “&New” series of medium-sized urban commercial facilities• Firmly establish a recycling business model for the Group's assets, including assets owned by REIT companies

80

61.8

70

3. Expansion of the value-added real estate business

60
50

30

• Achieve value added in both building software and hardware by leveraging the Group's technological expertise andleasing capabilities• Diversify exit strategies using various sourcing channels and networks to get the value-added real estate business on a
growth track

New Medium-Term Plan

+10.4

34.3
34.3

40

+8.9
+8.2

4. Cultivation of new business domains and enhancement of overall the Group strengths

20
Current Long-Term Plan

10
0
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023 (Year)• Strengthen efforts in new business areas to cultivate new profit-making businesses• Strengthen earning capabilities of the Group's individual companies and leverage collaboration within the Group to
capture earning opportunities• Actively enter into merger and acquisition and alliance deals as means to get new businesses off the ground and increase
the Group's overall strengths at an early stage

5. Balanced business management and Risk management

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

• Practice balanced management whereby “growth,” “safety,” and “productivity (efficiency)” are achieved at a high level
and in a well-balanced manner• Maintain a robust financial base and ensure diverse forms of financing• Strengthen risk management in response to the diversification of business and ensure balance sheet control in times of

Basic Policy

market changes

6. Promote management by placing importance on sustainability based on our CSR Vision

While retaining leasing as our main business focus, the Group will further strengthen the development
business, the value-added real estate business, asset management and other businesses.

Profit plan

Environment(E)

Social(S)•I mprove Hulic's presence as an environmentallyconscious company by developing new technologies
and introducing those technologies to our properties•Utilize diverse human resources and further increase
opportunities for promoting women's careers withthe focus on diversity management•Take initiatives for health management and workstyle reforms, etc. to improve labor productivity andsecure and develop excellent human resources

FY 2017

FY 2020 Target

Operating Income

64.2

88.0

Ordinary Income (recurring income)

61.8

85.0

Net Income

42.4

55.0

EBITDA

77.7

105.0

Interest-Bearing Debt to EBITDA Ratio

10.6 times

12＊ times or less

Net D/E Ratio

2.3 times

3.0＊ times or less

11.9%

10% or more

32.6%

Approx. one third

Financial restraints

Capital efficiency
ROE

Governance(G)•C ontinuously monitor the corporate governancesystem whereby risk management, compliance, andinternal controls function effectively in accordancewith the corporate governance code

• Operate businesses and create value by taking ESG into account in a bid as a company that is a member of asustainable society(Billions of yen)

Initiatives for ESG

9

Basic Strategy• Expand asset portfolios that reflect the needs of the times by incorporating office buildings, as well as commercial
buildings and 3K businesses-related facilities (hotels and senior facilities, etc.) in a well-balanced manner• Strengthen asset management functions to increase the asset value of individual properties(Billions of yen)

100

While maintaining the Hulic business model, the Group will continue to achieve steady growth through evolution
by responding to changes in the environment.

Shareholder return
Dividend payout ratio＊ 50% (75 billion yen) of Hybrid finance issued in 2018 (150 billion yen) is
calculated as equity.

Balanced management
Environment-friendly
business development
Shareholders
Investors

E (Environment)
Enhancedstakeholder relations

S (Social)
Robust governancesystemEnvironmentfriendly
businessdevelopment

Suppliers

Environment

Enhanced
relations

Local
communities

Customers

RobustgovernancesystemValue
Creation

Employees

G (Governance)

10Creating Shared Value

Realizing a Society Filled with Peace of Mind and Trust
The Hulic Group provides buildings with excellent safety, environmental performance,

Corporate
Philosophy

and convenience that match the needs of society today (opportunities and risk)

Contributing towardrealizing a society
with total peace ofmind and trustGroup's
Motto

Creating amenity.
Promoting peaceof mind.

Creating shared values
with society andsustainably developing

through a fusion of management and CSR, creating new added value in the process.

Social Issues Requiring Solutions

Hulic's Contributions to Solutionsfor Social Issues

Creating Shared Value with Society

Value for Society
Prevention of global
warming

Measures to address
aging in Japan

Improve the conditions of global environment

Promote environmentally friendly businesses

Proactively expand businesses targeting seniors

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

Development and investment in senior, nursing care andmedical facilities

Realize a society where seniors live in peace
Help achieve safe and comfortable lifestyles
Help revitalize disaster-hit economies, etc.

Measures to prepare
for natural disasters

Reconstruction fromthe Great East
Japan Earthquake

Opportunities and Risks in Social Issues

Business Opportunities

Provide disaster resistant buildings

Contribute to disaster reconstruction

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

Investment in mega solar projects in Fukushima

Responding to Opportunities and Risks

Value for the Hulic Group- Demands from society for eco-friendly buildings- Rising demand for renewable energy- Growing market for seniors following advancements inaging societies- Boost demand for safe and secure buildings

Initiatives for Opportunities

Preparations for Risks(Business Development)(Infrastructure Reinforcements)- Spurring on the real estate market through the 2020
Tokyo Summer Olympics, the increase in the number of- Standardize long-life building designs

tourists to Japan, and urban revitalization- Upgrade equipment at existing buildings to highly energy
efficient equipment- Adopt environmentally friendly technologies- Make efforts in developing senior housing in step with thegrowing senior population- Develop, hold and invest in hospitals and long-term careBusiness Risks

facilities- Proactively adopt seismically-isolated structures andearthquake-damping structures- Market changes caused by changes in social structure- Risk of earthquake occurring in Tokyo where our portfolio
is concentrated- Risk of deteriorating real estate market conditions due toa prolonged downturn in Japanese economy- Risk of rising financing costs caused by turbulent financial
markets

11- Introduce the latest technologies and equipment at newly
constructed buildings- Increase earnings of existing properties through rebuild
projects- Launch publicly offered J-REITs and improve asset
management business- Engage in tourism business centered on hotels- Prioritizing business dzomains based on changes insocial structure- Establishing a business continuity plan (BCP) andconducting BCP drills

Enhance earnings power
Fortify financial soundness
Capture market share
Enhance brand value- Establishing BCP based on collaborative structures withoutside organizations and developing andcommercializing building and facility earthquake
resistance services- Improving the earthquake resistance ofcompanyowned 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

Enhance building technologies
Secure stable profits
Enhance expertise of personnel
Secure talented human resources
Co-exist with local communities
Achieve business continuity, etc.

- Primarily long-term, fixed rate financing

12Material CSR Issues

Hulic identifies material CSR issues upon which we should continue to focus, in order to meet the needs and expectationsof our stakeholders, and contribute to society while achieving sustainable growth. In fiscal year 2016, we examined the
direction in which we should steer our businesses based on the Sustainable Development Goals (SDGs) adopted by the UN
summit, with the aim of further deepening our business activities that will lead to resolving social issues.
Amidst diversifying social issues and matters concerning stakeholders, we will continue to focus our efforts on such priority
issues and ensure the effective promotion of CSR activities by considering opportunities and risks in Hulic's businesses.

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

Identified Material CSR Issues
High

Environment
Materiality for our stakeholders

We identify the material issues in order to continue
achieving sustainable growth.

Society- Energy- Emissions into theatmosphere (GHG)- Products and services(environment)- Renewable energy- Compliance(environment)- Overall environment- Marketing communication- Advanced
technology/research anddevelopment- Compliance (society)- Local communities- Business
partnership/collaboration- Provision of safe and secure
products and services- Labor-management
environment- Diversity and equal
opportunities, etc.

High
Materiality for Hulic

Material Issues Identified
Employees

Customers

Examples of Dialogues

Suppliers

We value teamwork andwork to make our workplaces open andemployee-friendly.

We strive to provide services tomeet the detailed needs ofcustomers and deliver buildingsthat are secure, safe,
comfortable and highly
convenient in order to improve
the level of customer satisfaction.

Conducted surveys on
customer satisfactionlevels, implemented
disaster prevention drills,
and established acustomer contact
center, etc.

We build relationships thatmutually enhance the corporate value of bothparties assuming long-lasting business
transactions through close, mutualcommunication.

Examples of Dialogues
Conducted the president’s questionnaire for
employees, conducted interviews between
employees and their supervisors, held crossdepartmental discussions on work-life balance anddiversity, etc.

Examples of Dialogues

Governance- Risk evaluation/Riskmanagement- Anti-competitive
practices- Corruption
prevention

Material Issues | 1

Material Issues | 2

Material Issues | 3

Material Issues | 4

Environmental measures

Strengthening the 3K
businesses toward resolvingsocial issues

Diversity andwork-life balanceStrengthening corporate
governance andrisk management

P.20

Held property management status reporting meetingwith management companies, facilitated close andmutual communication and maintained
long-standing good business relationships withgeneral contractors, etc.

P.30

P.32

P.38

Relevant SDGs

Shareholders, Investors
We are committed to a broad range of mutualcommunication with shareholders, through timely andappropriate disclosures as well as participation inearnings briefings and various investor relations (IR) fairs.

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

Examples of Dialogues
Participation in various investor relations (IR) fairs andevents, held financial results briefing, andimplemented timely and appropriate information
disclosure on the Company’s website, etc.

Examples of Dialogues
Promoted Public Private Partnership (PPP) projects,
consulted with various contact centers ofgovernment agencies, appropriately paid taxes, etc.

Global Environment

Examples of Dialogues

Local Communities

Examples of Dialogues

We are mindful of theenvironment and actively work toutilize natural energy andconserve biodiversity.

Held the Environmental Advisory
Council and participated insatoyama conservation activities,etc.

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

Hosted summer festivals for local communities, conductedcleaning activities and voluntary activities for flowerbed
maintenance, participated proactively in events organized byneighborhood associations, etc.

Issue identification

STEP2

Evaluation of materiality from the perspective of our
stakeholders

The materiality of the issues identified in Step 1 was evaluated separately
for Hulic's seven stakeholders. In conducting the evaluation, scores were
Based on international CSR guidelines including the GRI's (Global Reporting

allocated based on feedback from external experts, obtained throughInitiative) G4 Sustainability Reporting Guidelines and ISO26000, 60 CSR

sources such as the behavioral guidelines of our major customers, OECDissues that should be reviewed were identified.

Guidelines for Multinational Enterprises, ESG surveys from institutional
investors and NGOs, various survey reports, press reports, the Environmental
Advisory Council, and third-party opinions in the CSR Report.

STEP3

Evaluation of materiality from Hulic's perspectivewith the aim of clarifying its medium- and long-term CSR promotion activities.

Medium-term CSR Vision

Environmental
measures

Process to Identify Material Issues
STEP1

Based on the identified material issues, Hulic formulated the Medium-term CSR Vision (goals for 2020)

STEP4

Combining the evaluation of materiality from the two
perspectives and finalizing the material issues

The materiality of the issues identified in Step 1 was evaluated from theIssues with a high level of materiality for both our stakeholders andperspective of their impact on Hulic's management. In conducting the

Hulic's management were identified, and organized into four candidate

evaluation, scores were allocated based on factors such as the businessmaterial issues. After interviews and coordination with the relevant internal

strategy, significant risks and management issues, and strengths identified

departments, and approval from the directors in charge of CSR, these fourand set forth in the new 3-year medium-term management plan.

material issues were finalized.

• Carry out initiatives to reduce
CO2 emissions and waste,
and use limited resources
such as energy and water
efficiently• Use renewable energy
proactively• Give consideration tobiodiversity and promote
greening• Carry out environmentallyconscious management
based on awareness of value
chainsStrengthening the 3K
businesses toward resolvingsocial issues

Diversity andwork-life balance•P romote the provision ofsenior facilities in accordancewith the aging populationand the provision ofaccommodations in responseto an increasing numberof tourists, with the aim ofresolving social issues.

• While respecting
fundamental human rights,
work toward creating anenvironment where each
employee can play anactive role in the workplace,
regardless of gender, age, ordisabilities.
• Improve work-life balance
and implement measures toencourage the use of paid
leave and to prevent long
working hours, in order tofoster a workplace in which
employees stay healthy andcan make the best use of
their abilities.

Strengthening corporate
governance and risk
management• Implement timely andappropriate risk evaluation/
management with the aimof complying with laws andregulations, and respond tovarious risks in our businesses.
• Work to prevent violations ofantitrust laws, bribery, andcorruption, and conduct
corporate activities with astrong sense of ethics.
• Proactively adopt structureswith high seismic capacity
to provide buildings thatare secure, safe, andcomfortable.

• Encourage employees toobtain qualifications andparticipate in training withthe aim of enhancing theirprofessional skills.

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.

13

14

Initiatives for Material Issues - Targets and Performance

We have established key performance indicators (KPI)
and targets for each issue for the effective promotionof CSR management.
Material issues

Medium-Term CSR Vision(Goals for 2020)- Carry out initiatives to reduce CO2
emissions and waste and use limited
resources such as energy and water
efficiently

Environmental
measures- Give consideration to biodiversity andpromote greening- Promote the provision of senior facilities
in accordance with an aging populationand the provision of accommodations in
response to increasing number of tourists,
with the aim of resolving social issues.

- With respect of fundamental humanrights, work toward creating anenvironment where each employee canplay an active role in the workplace
regardless of gender, age, or disabilities.

Diversity and worklife balance- Improve a work-life balance andimplement measures to encourage
the use of paid leave and to prevent
long working hours in order to foster
a workplace in which employees stayhealthy and can make the best use of
their abilities.
- Encourage employees to obtain
qualifications and participate intrainings with the aim of enhancing
their professional skills.

Strengthening
corporate
governance andrisk management- Implement timely and appropriate risk
evaluation/management with the aimof complying with laws and regulations,and respond to various risks in ourbusinesses.
- Work to prevent violations of antitrust
laws, bribery, and corruption, andconduct corporate activities with astrong sense of ethics.
- Proactively adopt structures with highseismic capacity to provide buildingsthat are secure, safe, and comfortable.

Other Initiatives- We will place emphasis on dialogues
with stakeholders and aim to become
a company that is trusted by society.

KPIs/Targets*11

Boundaries

have been assured by an independent assurance provider. This year, we received assurance from an independent assurance provider concerning the following eightitems: power and gas consumption, CO2 emissions and CO2 emissions intensity (Scope 1, Scope 2), number of greening projects, waste disposal, water usage, employment
ratio of the disabled, usage rate of paid leave, 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.
For items marked with “＊”, some prior-year figures have been adjusted. For details, please refer to notes at the bottom of this page.
Results
FY 2013

FY 2014

FY 2015

FY 2016

Major Achievements in FY2017

FY 2017★

Power consumption(MWh)25,63322,06065,973

66,32680,525

Gas consumption(m³)*4 ＊

588,551

453,012762,552

731,360

727,497★

77.3

74.7

77.6

77.7

80.7★

Using renewable energy anddeveloping new technology

Number of capital investments for renewable energy: 3
investments or more per fiscal year

All Hulic’s buildings

5

6

6

3

Promotion of greening

Number of greening projects*5: 1 project or more per
fiscal year

All Hulic’s buildings

6

5

9

Reduction of waste at Hulic’s
buildings

Reduction in the average amount of waste (t) by 15%
during the period from 2017 to 2019 compared withaverage during period from 2005 through 2007. (per unit
floor area)＊

Eight buildings occupied by the head
offices of Hulic's Group companies*6

1,102

1,027

Reduction in water consumption at
Hulic’s buildings

Reduction in average water consumption (m³) by 26%
during the period from 2017 through 2019 compared tothe average during the period from 2005 through 2007.
(per unit floor area)

55 existing primary buildings *3

148,508

Reduction of waste in new buildings

Number of technological measures (Precast Concrete(PC) construction method/extension of life span)
implemented to reduce the amount of waste inreconstruction business: 1 case or more per fiscal year

All Hulic’s buildings

Tourism business projects

Accommodation facilities (number of properties owned):
No target (follow-up item)

Senior business projects

Improvement of systems to develop
women’s careers

Promoting employment of thedisabled

Promoting the use of the next
generation nurturing support system

Evaluation Reference- Environmental consideration for new buildings (adoption of natural lighting/natural ventilation
system, highly efficient lighting equipment, and highly efficient air conditioning system)- Renovation works on existing buildings for energy saving- Initiatives toward reduction of power consumption in collaboration with managementcompanies and tenants (adjusting temperature setting of air conditioners, decreasing thenumber of lights on, adjusting brightness)-

P.21-25

4- Installed photovoltaic generation systems in new buildings.
- Worked toward achieving offsite ZEB using photovoltaic generation systems.

◎

P.23

1

5★

- Implemented greening of walls and rooftops to new buildings in consideration of biodiversity

◎

P.27

525

524

611★

- Promoted 3R (Recycle, Reuse, Reduce) activities

-

P.26

127,745

381,553401,272

436,882★

- Used rain water and installed various water-saving devices

-

P.25

8

7

8

4

6

- Proactively adopted long-life structure specifications for new buildings

◎

P.26

All Hulic’s buildings (As of the end of
December 2017)

-

-

8blds

11blds11blds- The number of properties owned as of December 31, 2017
- We completed construction of the Hulic Roppongi 3-chome Building (hotel) in 2017.

-

P.30

Senior facilities (number of properties owned): No target(follow-up item)

All Hulic’s buildings (As of the end of
December 2017)--16blds20blds21blds- The number of properties owned as of December 31, 2017
- We newly acquired Medical Home Granda Okamoto and completed construction of Hulic
Chofu and Hulic Fukasawa in 2017.

-

P.30

Ratio of female managers: 20% by 2020

Hulic

7.0%

8.5%

10.4%

12.3%

15.6%

Reduction in CO2 emissions intensity (kg-CO2/m2) by 17%
during the period from 2017 through 2020, relative to 2013
level (per unit floor area) *1 *2 ＊Number of seminars organized by the women's career
promotion project team: Once a year

55 existing primary buildings *3

Hulic

-

-

1

1

1

Employment ratio of the disabled: Maintaining thestatutory employment rate of 2% or more

Hulic Group (As of June 1, 2017) *9

2.14%

2.46%

2.31%

2.21%

2.11%★

(Reference) Hulic (As of June 1, 2017)

6.92%

8.56%

7.36%

6.30%

6.16%★

Usage rate of childcare leaves/Number of people: 70% of
eligible female employees or more on average / 1 male
employee or more per fiscal year

Hulic (Women)

No eligible
person

100%

100%

100%

100%

1

1

2

6

0

Hulic (Men)- 65 male managers, 12 female managers

-

P.32

- In addition to meetings of the women's career promotion project team, we held seminars andconferences for exchanging opinions for all female employees.

◎

P.33

- Business requests from group companies incerased and we are operating steadily.

◎

P.32

- Received the Grand Prix for the Ikumen Company Award 2017
- Continued operation of daycare nursery inside Hulic's head office building.

○

P.34

Ratio of employees who returned to work after childcare
leaves: 100%

Hulic

100%

100%

100%

100%

100%

Promoting the planned use of paid
leavesUsage rate of paid leaves*7: 70% or higher per fiscal year

Hulic

71.0%

70.9%

71.4%

71.6%

78.3%★

- Promoted the use of the My Friday system, plus-one paid leave, and consecutive paid leaves

◎

P.34

Promoting health and productivity
management

Percentage of employees who took medical checkup:
100%

Hulic*8

100%

100%

100%

100%

100%★

- Provided thorough medical checkups and stress check tests

◎

P.34

Human resource development

Number of newly obtained qualifications*10: No target(follow-up item)

Hulic

-

-

-

10

32

- Obtained qualifications of registered real estate broker, ARES Certified Master, Certified
Building Administrator, etc.

-

P.34

-

P.42

Number of compliance seminars attended: No target(follow-up item)

Hulic

-

-

5

5

5

- Ensured compliance with rules for handling information according to information classificationand conducted training on human rights issues.

Number of internal audits conducted: No target (followup item)

Hulic

-

-

8

9

11

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

-

P.39

Corporate GovernanceParticipation rate in the Board of Directors' Meeting: No
target (follow-up item)

Hulic

-

-

98%

96%

97%

- 15 Board of Directors' meetings were convened in fiscal year 2017. Participation rate covers all
Directors and Auditors.

-

P.38-40

Earthquake countermeasures for
Hulic’s buildings

Percentage of buildings that conform to new earthquake
resistance standards: 100%

All new office buildings completed

100%(2 buildings)

100%(1 buildings)

100%(9 buildings)

100%(2 buildings)

100%(6 buildings)- Adopted building structures that conform to new earthquake resistance standards in all newbuildings◎

P.29

Business Continuity Plan (BCP)

Number of inspections for BCP drills, stockpiled food andgoods: Once or more per fiscal year

Hulic Group

1

1

1

1

1

- Conducted disaster training, training on evacuating properties managed by Hulic in the eventof a disaster, and first-aid training, etc.

◎

P.41

Improvement in customer
satisfaction

Number of surveys on customer satisfaction: Once ormore per fiscal year

Hulic Group

1

1

1

1

1

- A survey on the customer satisfaction of tenants was conducted through Hulic Building
Management acting as the contact point.

◎

P.28, 30

Corporate social contribution

Number of social action programs: 4 programs or more
per fiscal year

Hulic Group

8

9

12

13

16

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

◎

P.36

Supporting employees to conductsocial contribution activities

Number of social contribution activities by employees: 3
activities or more per fiscal year

Hulic Group

6

6

6

6

6

- Participated in satoyama conservation activities, cleaning activities in local communities,
flowerbed maintenance activities, participated in gift-matching program, donated to the
Ashinaga Scholarship Society, and conducted activities to support disaster-hit areas, etc.

◎

P.35

Compliance*1 The unit calorific value and CO2 emissions factor for city gas are based on values from the “the greenhouse gas emissions accounting and reporting manual” issued by the Ministry of the Environment
and the Ministry of 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 CO2emissions 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
Since 2015, we have targeted the properties for office buildings with floor area of 3,000m² or above and hotels managed by the Company, and excluded buildings in which a bank branch is the soletenant, real estate for sale, and condominium ownership/shared ownership. The number of target properties in 2015 and 2016 was 51, and that in 2017 was 55. *4 Since 2016, we have aggregated city
gas consumption of the companies with direct contracts with our group companies. *5 The number of buildings for which construction was completed between January and December 2017, andwhich are the targets of greening projects. (excludes real estate for sale) *6 Data for 2012-2014 covers 16 primary office buildings; since 2015, however, seven buildings occupied by the head offices of
Hulic’s Group companies, which are actively implementing measures to reduce the volume of waste, are covered in the data. Since 2017, the number of buildings occupied by the head offices of Hulic’s
Group companies and covered in the data has increased by one to eight buildings. *7 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."15

priority issues, we have adopted an assessment indicator that helps us monitor the results of the implementation of initiatives. Figures marked with “★” are those that

Measures for global warming acrossthe entire value chain of Hulic's
buildings- Use renewable energy proactively- Carry out environmentally conscious
management based on an awareness ofvalue chains

Strengthening
the 3K businesses
toward resolvingsocial issues

Items

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-

*8 Of the executive directors, employees (including temporarily transferred staff) and full-time contract staff, with the exclusion of employees on leave, those who belonged to the Company bothas of the point of registration for medical checkups and as of December 31 are included in the calculation. *9 The target subsidiaries are companies that have been certified as affiliated subsidiarycompanies under the Act on Employment Promotion etc. of Persons with Disabilities. *10 The target qualifications are those which the Company recommends employees to acquire. *11 Targets for 2018
are now being developed. ＊Gas consumption in 2016 was revised from 999,426 m³ to 731,360 m³. Following this change, energy consumption, intensity of energy consumption, and CO2 emissions fromgas use were revised from 43,296GJ to 31,684GJ, from 1.4GJ/m² to 1.5GJ/m², and from 2,160t-CO2 to 1,581t-CO2, respectively; and CO2 emissions intensity from gas use and electricity use was revised
from 78.0t-CO2/m² to 77.7t-CO2/m². In addition, the amount of waste generated was revised from 437t to 524t. Following this change, CO2 emissions from disposal of waste generated from operations,
included in Scope 3 emissions, was revised from 31.3t-CO2 to 42.7t-CO2. The amount of waste generated in 2015 was revised from 434t to 525t. Following this change, CO2 emissions from disposal ofwaste generated from operations, included in Scope 3 emissions, was revised from 29.2t-CO2 to 44.0t-CO2. Following the revision of the amounts of waste generated in 2015 and 2016, the percentageof reduction in waste generation over the four-year period from 2013 to 2016 was revised from 21% to 12% (percentage reductions calculated per total floor area compared between the average of thefour years from 2013 to 2016 and the average of the three years from 2005 to 2007).

16

SPECIAL FEATURE
LONG-TERM VISION
FOR THE ENVIRONMENTWith the aim of contributing to the formation of a sustainable society by achieving the reductionof greenhouse gas emissions and the improvement of energy-saving through our businessactivities, and achieving sustainable growth by mitigating or avoiding the effect of climatechange, we have formulated a long-term vision for the environment with 2050 as the target year.

Hulic promotes environmentally friendly management to realize a low-carbon society and a recycling
society in 2050, which Hulic considers to be ideal.

Current Recognition of Climate Change
We consider that climate change, including global warming, will provide our business with the following risks andRisks

Opportunities* If the amount of CO2 emissions exceeds the amount required to be
reduced, building owners are required to purchase emission rights.

CO2 emissions reduction plan

Formulation of a plan and goal for reductionof amount of CO2 emissions, waste and water
consumption
Control of progress for achieving goals

Introduction of environmental
technologies to buildings owned

2050
Society that Hulic
considers to be ideal
Realization ofa sustainable society

By 2030, we will reduce CO2 emissions by
45% (compared with CO2 emissions in2013)

Low-carbon
society

Promotion of energy savings andutilization of renewable energy
Continuous promotion of development of
new technologies and introduction
thereof to owned buildings&
Recycling society

Medium and long term (2030 and thereafter)

Combination of business activities and environmental initiatives• Damage to buildings due to natural disasters such as largescale typhoons, tornadoes and heavy snow arising fromclimate change• Procurement risk due to environmental changes• An increase in demand for energy-saving products andservices• Development of new technologies for efficient utilizationof natural energy• A n increase in demand for renewable energy andproceeds of sale of electric power under the feed-in tariff
scheme• A n increase of opportunities for cooperative projects
with the government, local governments or privateorganizations, etc. to realize a low-carbon society

We hold up a “low-carbon society” and a “recycling society” as an ideal society based on our belief that effect of the risks listed above canbe mitigated or avoided by promoting efforts such as promotion of energy savings and utilization of renewable energy, and the reutilizationof resources.
In light of opportunities that have been brought due to climate change, we have worked on the reduction of energy use and theimprovement of efficiency in business activities in advance of other companies. In order to more effectively work on these issues, we will
promote environmentally conscious management while keeping up on trends of the industry over all through activities such as participating
in meetings of the environmental committee of the Real Estate Companies Association of Japan.

17

Setting of reduction goals ofenvironmental index andunderstanding of the progress

Application of "Guideline for Longer
Life Service" for reconstructedbuildings

opportunities in the short and long term.

• Risk of implementing CO2 emissions trading system*

2030

Present

Long-term Vision for the Environment

Short term (until 2030)

Road Map for Realization of Vision

Promotion of ZEB

Example of Specific Initiatives for Achieving Vision
Natural ventilation and natural lighting systems developed
through cooperative research with MIT

Installation of photovoltaic
panels on rooftop andexterior walls

Introduction of LED lighting,high-efficiency lighting andillumination control devices

Rooftop solar chimney(Hulic Head Office Building)

Photovoltaic panels(Hospitalment Itabashi Tokiwadai)Space with LED lighting system(Hulic Asakusabashi Building)Natural lighting louvers(Hulic Head Office Building)18

CSR Promotion Systems
Hulic contributes to achieving a sustainable society bypromoting environmentally friendly management andproactively addressing global environmental issues.
FUNDAMENTAL

Hulic develops the CSR promotion system that functions effectively to promote CSR management.

Social Background Surrounding Hulic

APPROACH
Results in
FY2017

In 2015, the 21st session of the Conference of the Parties to the United
Nations Framework Convention on Climate Change (COP21) was
held and the Paris Agreement was adopted as a new internationalframework for reducing greenhouse gas emissions during the period
after 2020. In Japan, the government formulated the “Plan for
Global Warming Countermeasures” amid increasing social needs forsolutions to environmental issues.

Held the CSR Committee and the CSR Supporter meetings

Establishment of the CSR Committee
Hulic has established a CSR Committee in order toneeded. Company-wide CSR activities are performed

combine and align its CSR-related initiatives within accordance with the basic policy decided by theits business activities. It is essential for management

CSR Committee. To be more specific, the Committee

personnel to be involved in boosting the level of CSR

formulates various kinds of policies concerning

initiatives in the medium and long-term while striking a

Company-wide CSR activities and an annual CSR

balance between CSR-related measures and businessschedule, sets concrete numerical targets, and considers

activities. Therefore, the CSR Committee is chaired byand deliberates diverse proposals made by employees,

the President, consists of Senior Executive Managing

etc. Like this, in the Committee as a place to practically

Officers, the General Manager of the Business Planning

implement CSR management, there are a lot of activeand Management Department, the General Manager ofdiscussions.

the Real Estate Planning Department and the General

Activities of the CSR Committee are reported to Board

Manager of the Property Development Department.

of Directors on a regular basis.

Environmental
Initiatives

Initiatives for Solving Social Issues› Formulation of the long-term vision for the environment for 2050
› Formulation and implementation of the CO2 emissions reduction
plan with 2030 as the target year
› Effective use of renewable energy› Waste reductions through proactive adoption of longer life
building designs› Development and introduction of energy-saving technologies› Initiatives for conserving biodiversity and greening

Environmental Management

The Committee is held annually in principle, and as
Summary of CSR Committee Meeting

The 11th Meeting (September 2017) - Fiscal year
2016 performance/CSR plan for 2018/Areas of
improvement

FUNDAMENTAL

The CSR Committee discussed the change in CO2 emissions

APPROACH

Hulic will implement environmentally friendly management based on the Hulic Environmental Policy
and contribute to conserving the global environment.
Results in
FY2017i n te n s i t y, a n d e x te r n a l C S R eva l u a t i o n , etc. B a s e d o n
the discussions, the committee decided properties to be

Developed the long-term vision for the environment for 2050

monitored by KPI and the CSR Policy for 2018
Flowerbed maintenance activities carried out by CSR supporters

CSR Promotion Systems

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

Board of Directors
Proposal on measures to improve
KPI-related status reports

Making a decision on allocation of
resources (personnel, materials, money)
after receiving a report

Report to Board of Directors

CSR Committee

Hulic Environmental Policy

Chairperson: President Members: Senior Executive Managing Officers, General Manager of the Business Planning andManagement Department, General Manager of the Real Estate Planning Department and General Manager of the Property Development Department

1

Business Planning and Management Department
CSR Supporter
Environment TeamInternal Environmental Improvement Team
Concerned material issues/KPI

Concerned material issues/KPI• Measures against global warming• Conservation of resources and reduction of waste atexisting buildings• Reduction of waste in new construction andreconstruction works• Earthquake countermeasures for Hulic's buildings• Extending the life span of Hulic's buildings• Using renewable energy and developing newtechnologies• Greening buildings to prevent warming• Promoting use of supportive systems to raise children
while working• Matching gifts

Real Estate Business Division• Work-life balance• Promoting employment of the disabled• Collecting stamps and used books, etc.

• Survey of customer satisfaction• Mental health• Taking into account communities in real estatedevelopment• Activating the reemployment program• Contributions• Reduction in power and paper consumption in officeInformation disclosure

19

Employees

Customers

2

Government andPublic Administration

continuous efforts for improving them while

5

Local Communities

Global Environment

We reduce as much of our environmental load as
possible by introducing eco-friendly design from

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

Environmental Performance3

promoting 3R, “Reduce, Reuse, Recycle,” through a life

Environmental Awareness andEducation for Employees

environment.

Communication

Business Partners

With environmental targets set, we makeWe contribute to the creation of a recycling society,cycle of building.

contributing to the conservation of the global

Social Contribution Review Committee

Stakeholders
Shareholders,
Investors

4

Environmental Management System

Matching Gift Council• Volunteer activities• Preventing crushing labor

We strive to create a sustainable society while

Recycling Society

conforming to environmental laws and regulations.

Social Contribution Team

Concerned material issues/KPI

Environmental Compliance

Environmental Communication

6

We widely disclose information on Hulic's environmental
contribution activities, and communicate withthe planning stage of development in order tostakeholders including local communities in order toincrease environmental efficiency.

expand the circle of global environmental conservation.

20

Environmental Management

Climate Change Countermeasures

Environmental Management
System(EMS)

Corporate Conduct” and “Our Code of Conduct”, but
re a l e s ta te p u rc h a s e s a n d d eve l o p m e nt . W h e n

FUNDAMENTAL

Hulic Group is smoothly executing the PDCA Cycle with

conducting an investigation of the acquisition of real

APPROACH

its unique Environment Management System (EMS) built

estate, Hulic always carries out statutory investigations

based on the “Hulic Environmental Policy." This systemand conduct studies on natural environment, specified

is operated cooperatively with Group Companies,

hazardous substances, and the presence of undergroundaccording to targets set by the ESG project teamobstacles. In negotiations with communities, we are fully

headed directly by the President.

mindful of impacts that our business will have on the

To monitor the progress of environmental activities ofsurrounding living environment and strive to maintain a

Hulic Group, we adopt evaluations by the “Board of

positive relationship with the community, especially with

Directors” for internal matters and by the “Environmental

regards to sunlight issues, noise, safety, wind damage,

Advisory Council” for external matters. The results

privacy, interference with radio waves and view.

are reported to the CSR Committee and the ESG

By 2030, we aim to reduce CO2 emissions by 45%

When outsourcing design and project management orleasing*.

Project Team, and are reflected when reviewing theordering construction work, we generally hire companies

All buildings

environmental promotion system and setting targets.

with the solid technologies, credibility, and track records.

• W e aim to reduce total CO2 emissions, inprinciple, from fiscal year 2013.
• Along with total CO2 emissions, we will identify
CO2 emissions from individual buildings with theaim of verifying the CO2 reduction effects froma single building.

Environmental Management System
President
ESG (Environment, Social,
and Corporate Governance) Project Team
PLAN

In addition, when reconstructing and developing realestate, we issue instructions on environmentally friendly
designs and check whether environmentally friendly

developed in 2017 (target year: 2030).
Results in
FY2017CO2 emissions intensity: 80.7kg-CO2/m2

Number of capital investments for renewable energy: 4 investments

CO2 Emissions Reduction Plan for 2030
and the use and operational arrangement of green

designs are adopted at the basic designing stage,
implemental designing stage, and completion stage.

Business Planning and Management
Department

Actions on Climate Change

Endeavor to reduce energy consumption withcooperation from tenants by taking measures such as
visualizing the energy consumption of each building.
*Under green leasing, building owners collaborate with tenants andmake voluntary arrangements on reducing environmental impacts
through energy-saving measures for real estate and improving thework environment by specifying in a contract or memorandum of
understanding, etc., and implement the agreements.

With the aim of thoroughly complying with laws andthe United Nations Framework Convention on Climate

Adoption of Energy-saving
Technologies, etc.

regulations related to the environment, including waste

Change (COP21), held in December 2015 in Paris,
adopted the Paris Agreement as a new international

1. B uildings: Improve building envelope performanceand soil pollution, the Hulic Group conveys to all employees
information on the latest trends in environmental laws andframework for reducing greenhouse gas emissions

insulation capacity, etc.), introduce natural ventilation/

regulations and legal systems through the intranet, andafter 2020. In Japan, discussions on specific measures

lighting systems, and adopt greening of rooftops/walls,

Environmental Advisory Council

provides environmental compliance training as needed.

to address climate change are picking up momentum
with the formulation by the government of the “Plan

We have an Environmental Advisory Council in place to

We use opinions raised during the compliance training inthe subsequent formulation of environmental policies.

for Global Warming Countermeasures,” which sets the

There were no violations of environmental laws in fiscal year

target for reducing greenhouse gas emissions of 26% byefficiency devices, total heat exchangers, motion

2017.

FY2030 from the level in FY2013. In addition, companies

detectors/light control sensors, and CO2 sensors, andin the “commercial and other sectors” are required touse cogeneration/fuel cells, untapped energy, andHulic Build Co., Ltd.
Hulic Building
Management Co., Ltd.

CHECK

ReportExternal assessment
Environmental Advisory
CouncilDO

Technology and Environment
Development Department
Real Estate Planning Department

CHECK

Board of Directors
ReportACTCSR Committee

assess Hulic's environmental activities, including response
to climate change to receive advice and opinions fromexternal experts.
External experts and the Chairman, President, Senior

Environmental Compliance

The 21st session of the Conference of the Parties toEnvironmental Education

reduce emissions by 40%.

real estate, and environment-related departments

The Hulic Group participates every year in the Tokyo

environment, Hulic reviewed the existing plan to reduce

attend Environmental Advisory Councils. The results of

G re e n S h i p A c t i o n , o rg a n i ze d by t h e B u re a u of

CO2 emissions with the year 2020 as the target year, andthe councils are reported at meetings of the Board ofEnvironment of the Tokyo Metropolitan Government, toformulated a new CO2 emissions reduction plan in 2017

Directors presided over by the President, Representativeraise environmental awareness, and engages in volunteer

with the year 2030 as the target year.

Director of Hulic on a regular basis.

activities such as rice harvesting and trimming weeds

Regarding the current progress of the existing CO2

At the Ninth Environmental Advisory Council, theand shrubs at the foots of mountains. These activities,

emissions reduction plan (target year: 2020), we haveprogress of the CO2 emissions reduction plan formulatedwith participation by many employees every year, provide

achieved the target on the basis of our consumption of

in 2016 was reported and we received advice from thethem good opportunities to learn about biodiversity.

primary energy.

council members on methods to reduce CO2 emissions.

T h e Te c h n o l o g y a n d E nv i ro n m e nt D eve l o p m e nt

In addition, the council discussed how to work on the

Depar tment, which promotes the environmental

SDGs adopted at the United Nations General Assemblybusinesses of the Group,in 2015.

provides training on

Properties for reconstructionenergy-saving designs

Reduce energy consumption by an average of 25%

and biodiversity, etc. forby implementing various energy-saving measures.

new employees yearly.

Properties requiring maintenance/renovation

Executive Managing Officers, General Managers ofConsideration for Sustainability in Real
Estate Development and Investment
Hulic is committed not only to sustainable real estate
investment in accordance with the “Basic Principles of21

Hulic implements climate change countermeasures to achieve its CO2 emissions reduction plan

has also formulated separate regulations on managing

In accordance with these changes in the external

Basic Plan to Achieve the Goal

(improve window specifications and enhance heatetc.
2. H igh-efficiency devices/systems: Work to reduce
the outdoor air load by adopting LED lighting, high-heat interchange systems, etc.
3. Others: Work to introduce renewable energy, promote
onsite/offsite photovoltaic power generation, andvisualize energy consumption, etc.

Road Map for 2030

45% 2030

reduction

CO2 emissions : 149,113 t-CO2 (estimate)
Various measures forenergy-saving and reduction of
CO2 emissions intensity of
power sources

Improve the performance of energy-saving technologies anddevelop new technologies, while promoting the adoption ofrenewable energy, etc.

2013

CO2 emissions: 259,330 t-CO2 (estimate)properties to be newly purchasedWEB

Environmental Management
https://www.hulic.co.jp/en/csr/ecology/management/

Reduce energy consumption by an average of 5% byimplementing facility renovation (increasing value),22

Climate Change Countermeasures

be achieved.

energy-saving performance which has been introduced

Based on the building's electricity consumption for one

energy-saving technologies such as natural lighting

year, adjustments will be made with each tenant, thenand natural ventilation systems, it has been able towe examine equipment settings and propose utility cost

The Hulic Group promotes environmentally friendly

Initiatives for Utilizing Renewable
Energyreduce the amount of energy consumption by about

reduction measures through more efficient operations, andprocesses across the entire value chain which covers from

40% compared to the amount of energy consumption in

implement small-scale renovations as needed.

acquisition, development, reconstruction, and leasing to

The Hulic Group promotes the eco-business as one aspectsourced by renewable energy. Therefore, the Hulic Headof our 3K businesses (Koreisha (seniors), Kanko (tourism),

Office Building is close to being a ZEB.

Effective Use of Renewable Energy

number of capital investments on renewable energy atthree investments or more in each year.

Photovoltaic Generation System
We have been making efforts to reduce CO2 emissions
through photovoltaic power generation by installinga photovoltaic cell module on the rooftop of buildings. On
the rooftop of Hulic Fukasawa, completed in 2017, a 10.0 kW
photovoltaic generation systemwith a capacity to generateu p w a rd s o f 1 0 , 0 0 0 k W h o felectricity every year has been
installed.
Photovoltaic panels installed on the rooftop of Hulic Fukasawa

Initiatives for Achieving ZEB throughMega Solar Power Project

Promotion of Energy-saving
Adoption of Energy-saving
Technologies
Hulic has actively worked on the promotion of energy

involved in a mega solar power plant project located in
Hirono Town, Futaba District, Fukushima Prefecture, inorder to address society's needs to strengthen our efforts

Use of Systems that Make it Easier for
Tenants to Conserve Energy

In addition, the Hulic Group calculates not only its own

The Hulic Group has begun rolling out a visualization

understand and lower greenhouse gas emissions acrosssystem that freely controls air conditioning use in order

the entire value chain.

energy. This system enables tenants to set the optimal

2015

2016

2017

business and makes it easier to implement

Purchased goods andservices

333.7

351.0

385.1

energy conservation measures.

Consumables, office goods(Hulic Co., Ltd.), water andsewerage (55 key buildings)

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

Electricity use (55 keybuildings)

2,335.4

2,348.02,850.6

Upstream transportation anddistribution

Shipping parcels and letters(Hulic Co., Ltd.)

6.8

30.8

32.3

Waste generated fromoperations

Waste generated from 8 keybuildings

44.0

42.7

46.9

Business travel

Travel by train, bus or airplane,
etc. (Hulic Co., Ltd.)

52.3

58.4

71.3

Employee commuting

Employee commuting by train
or bus, etc. (Hulic Co., Ltd.)

39.0

40.8

45.3

2,811.2

2,871.7

3,431.5

Visualization system (Hulic Asakusabashi Building)Situation of Greenhouse
Gas Emissions

air conditioning systems, total heat exchangers, andScope 3 total emissions

i nt ro d u c e n ew e n e rg y-s a v i n g te c h n o l o g i es an dEnergy Consumption and CO2
Emissions at Hulic's Buildings

improvements of existing performance. In addition, Hulic

In tandem with our business expansion, we increased thewill conduct its own research and development on energy-

number of properties to be included in this report sincesaving technologies.

2015. With the increasing target properties, we aim to

the features of properties. In addition, we will proactively

Activities to Promote Energysaving Cooperation with Building
Management Companies

the initiative to Ogoyama Town in Kasama City, Ibaraki

it shares with property management companies in charge

Prefecture in 2015, and to Yokoshibahikari Town in Sanbu

of its properties, in order to rigorously manage the progressproactively toward our goal of reducing CO2 emissions by
45% from 2013 by 2030.

Energy Consumption(GJ)of energy conservation activities. The energy management

400,000

standard was created to promote more efficient energy

200,000

saving activities at buildings, and it serves as a guideline

ZEB is an acronym for Zero Energy Building. ZEB means

for management, measurement, recording, maintenance,that a building uses zero net primary energy annuallyand inspections related to the rationalization of energy use

thanks to improvements made in the energy efficiency

based on building type and size. This standard applies to allof the building and its facilities as well as the use offorms of energy, including electricity, gas, and water (water

renewable energy.

and sewerage).

Effect2

Electricity sales income, etc. (Hulic Building Management Co., Ltd.)

3

Contribution to Great East Japan Earthquake recovery efforts throughthe operation of the solar business in Fukushima Prefecture

EffectGeneral
Building

Primaryenergyusage

Hulic Head Office
Building

40%
100%
60%

Renewableenergyusage

Improvement of energy efficiency• Improve building envelope performance• Use natural lighting• Use natural ventilation• High efficiency air conditioning• High efficiency lighting
Utilization of renewable energy

30%• Utilize renewable energy to reduce the net
use of primary energy to as close to zero as
possible

Intensity of energy consumption (GJ/m2)
31,5161.4

031,684652,433

33,021
657,751

600,000
1.2

25,611

794,50251 blds

2013

2014

2015

Gas consumption (GJ)

51 blds

55 blds

2016

2017

on a trial basis to examine measures for saving energy at

0usage in one building for a year on a trial basis, and will
expand the target buildings for which energy savings can

(FY)

0

Power consumption (GJ)

CO2 emissions intensity(kg-CO2/m2)

74.7

77.6

14,61120 blds
2013

CO2 emissions intensity

1,573★

77.7
1,648

33,84830,0001,277

5. To make efforts to save resources and reduce the amount of waste.

1,581

100.0

80.7★
39,76280.0★

33,647

60.0
40.0

983
20.0

12,22120 blds

51 blds

51 blds

55 blds

2014

2015

2016

2017

Scope 1 emissions (gas)

TOPICS

0.5

20 blds

CO2 emissions(t-CO2)

We have introduced an energy usage visualization system

entire building. We have started by monitoring electricity

4. To fully prevent environmental pollution; andCO2 Emissions/Intensity＊

10,000tenants and for reducing the electricity consumption of an

3. To carry out a biodiversity-friendly business;

2.0

Note 1: As the target buildings for calculation increased from 2015, energy consumption is on
the rise.
Note 2: 0.00997 GJ/kWh and 0.00928 GJ/kWh are used as the unit calorific value for day-time
power and night-time power, respectively, and 44.8 GJ/thousand N m3 for city gas.

20,0002. To reduce the amount of water consumption as much as possible;

1.0

219,943

20 blds

77.3

such as suppliers to cooperate in the following green

19,712

255,565

Intensity of energy consumption

40,000through our entire operation, we ask our business partners

2.5

1.5

1.6

1.5

1.4

50,000Introduction of Energy-saving
Measures in Cooperation with Tenants

In order to work on the reduction of environmental impacts

procurement policy:

1,000,000
800,000

Green Procurement Initiatives

1. To engage in energy-saving activities and reduce GHG emissions;

Energy Consumption/Intensity＊

plants at these three locations, we are working towardachieving offsite ZEB at the Hulic Head Office Building.

Note: We have calculated greenhouse gas emissions, including those fromthe entire value chain, based on the Basic Guidelines on Accounting
for Greenhouse Gas Emissions Throughout the Supply Chain Ver. 2.3
published by the Ministry of the Environment.

further promote energy-saving activities. We will work

District, Chiba Prefecture in 2016. Using the solar power

Initiative for achieving offsite ZEB through the use of renewable energy

Category

Unit : t-CO2

Main target for calculation

by Hulic. Specifically, we use high-efficiency equipment,
cogeneration systems/storage batteries depending on

Scope 3 Emissions＊working environment temperature for theirdevelopment and managing existing buildings owned

Hulic has created an energy management standard, which1related to its business activities (Scope 3) to broadly

to provide a better understanding of a building's use of

etc. as measures for climate change in engaging in new

toward environmental management. We expanded

Effectemissions (Scope 1 and Scope 2), but also indirect emissions

savings, use of renewable energy, and greening promotion,

With environmental issues becoming more serious, inNovember 2014, Hulic decided to invest and become

management and maintenance of properties.

other general buildings. As for the remaining 60%, 30% is

and Kankyo (environment)), and has set the target for the23

Promoting Initiatives Across the Entire
Value Chain

As the Hulic Head Office Building is a building with high

(FY)

0

Scope 2 emissions (power)

Note 1: F igures marked with “★” have been assured by an independent assurance provider.
Note 2: As the target buildings for calculation increased from 2015, CO2 emissions are on
the rise.
Note 3: C O2 emissions intensity is the sum obtained through calculations that take thetotal floor area of the offices that use power and city gas, respectively as thedenominator for each emission volume.
Note 4: 0.0136tC/GJ is used as the emissions factor for city gas.

Ranked 1st in the Real Estate/ Warehouse
Industry for the Eighth Consecutive Year in the“Environmental Management Survey”
The "Environmental Management Survey," which is asurvey that has been annually conducted by Nikkei Inc.
since 1997, announces rankings of companies excellent intheir approach to environmental management based oneach company's answers to a questionnaire.
Hulic has ranked first in the category of warehouse, realestate and others for eight consecutive years since the14th Environmental Management Survey in 2010. Given
that we were able to achieve another high score, wewill continuously promote environmentally-conscious
management and be committed to combining global
environmental conservation with corporate growth.
WEB

Climate Change Countermeasures
https://www.hulic.co.jp/en/csr/ecology/warming/* For items marked with “＊”, some prior-year figures have been adjusted.
For details, please refer to page 16.

24

Building a Resource-recycling Society

FUNDAMENTAL
APPROACH

We are proactively working to reduce waste and water consumption in cooperation with tenants andbuilding management companies toward the realization of recycling society. For reconstructing buildings,
we endeavor to reduce environmental impacts by promoting the 3R (reduce, reuse, and reycle) throughthe adoption of Longer Life Building designs that enable to reduce waste significantly and effectively
utilizing resources.
Hulic's Longer Life Buildings completed based on the standards established

Results in
FY2017in the “Hulic Guideline for Longer Life Service”: 6 buildings

Creating a New Standard of Buildingsthat Last 100 Years

Efforts for Resource-saving andReduction of Waste"Hulic Guideline for Longer Life Service" is composed

Resource-saving and Reduction ofWaste in Buildings Owned by Hulicand Reconstruction of Buildingsof three ideas, 1) high earthquake resistance and highAs a result of our steady efforts to realize a recycling

years in safety, and on the other hand we have createddurability; 2) smoother updating and renewal; and 3)
advanced maintenance. High-grade building frames
are ensured so as to continue to be used for over 100＊

society, we have reduced the amount of waste by 12%

Prevention of Pollution and Preservation of Water(the reduction rate calculated based on the total floorarea in comparison with the average amount during

Prevention of Pollution

in the plumbing of existing buildings owned by Hulic.

The Company considers that the minimization oftap. In addition, we are introducing water-saving toilet

environmental pollution due to business activities isbowls and sinks into the existing buildings owned by Hulic

indispensable to realize a recycling society. Thus, weas the standard type.

Installing a water-saving device can save about 40% perhave worked on the reduction of emission of pollutants,
including CFCs and PCBs with the cooperation ofdesign companies and construction companies, as well

Efforts toward Recycling of Water

during the period from 2005 to 2007). From the viewpointof a business operator, we have also adopted the PC
method,* which can substantially reduce the amount of
resources used and waste at the time of construction

method to construct Hulic Residence Chofu Shibasaki.

consumption, but also the recycling of water in buildings

In addition, we have collected data of SOx, NOx,

owned by Hulic. In Hulic Setagaya, completed in 2014, we

VOC and toxic waste generated from reconstruction

made efforts toward effective utilization of limited water

activities in the past and identified the amount of thoseresources by reutilizing rain water for sprinkling andWaste Disposal＊

substances generated.

washing for toilets.

1,500* PC (precast concrete) method: The method of assembling precast
wall panels, which are manufactured at a factory under consistentquality control, after carrying them to a construction site.

1,200

1,102

900

16 blds

600

8

62

42

NOx emissions (kg)

1,106

418

281

VOC emissions (kg)

-

-

51

* Figures are only for reconstructed buildings completed in each year
and for which data were collected.
Rain water reutilization equipment at Hulic Setagaya

TOPICS

Receiving of Prize of Excellence for the “21stEnvironmental Communication Awards”

Water Consumption

In recognition of our efforts for the improvement ofenvironmental management and theCO2 emissions reduction plan for 2030,
our CSR REPORT 2017 received the prizeof excellence for the environment reportsection of the “21st Environmental
Communication Awards” hosted by
Ministry of the Environment and Global
Environmental Forum.

500,000

Effective Utilization of Water in
Buildings Owned by Hulic
In order to reduce the amount of water consumption inbuildings owned by Hulic, we have taken the initiativeof putting water-saving devices on water taps installed(m3)

436,882★
381,553

400,00051
blds

401,27251
blds

200,000

100,000

0524

7 blds7 blds

8 blds

20
blds

2013

127,745

2015

2016

2017

2014

(FY)

2014

2015

2016

2017

(FY)

Longer life
building
proposal

41

Figures marked with “★” have been assured by an independent assurance
provider.
* Since fiscal year 2015, we have been targeting buildings owned by Hulic. Thesebuildings include Hulic Group companies' head offices as tenants which areproactively working to reduce waste generation.

Amount of Waste Generated

Waste that Can and Cannot Be Recycled

Standard
proposal（t）

Number of target buildings
Paper
Waste thatcan beBottles, cans, plastic bottles
recycled
Total
Other general waste
Waste that
Industrial waste
cannot berecycled
Total

2015
7blds
249
27
276
192
56
249

2016
7blds
240
28
268
195
61
256

2017
8blds
296
29
325
218
68
286

525

524

611★

Reconstruction

Batten cleats purchased volume (m3)Plywood purchased volume (m3)
Lumber purchased volume (m3)

0

20

40

Renovation

Amount of resources
input reduced by

52%
60

80

100

(kg/m2 per year)

New construction

12

Reconstruction
RepairRenovation

Longer life
building
proposalAmount of Waste
Generated Reduced by

5
0

2

4

56%

6

8

LCCO2 (Life-Cycle CO2)

10

Demolition

12

14

LCCO2
Reduced by

6%Standard
proposal(kg/m2 per year)

New construction

263

Reconstruction
RepairRenovation

Longer life
building
proposal

2015
5,506

2016
688

2017
2,315

2015
207
688
895

2016
33
60
93

2017
91
91
182

* Figures are only for reconstructed buildings completed in each year and for whichdata were collected.

Maintenance247
0* Figures are only for reconstructed buildings completed in each year and for whichdata were collected.

* Since fiscal year 2015, we have been targeting key buildings with total
floor area of 3 thousand m2 or more. In 2017, the number of target
properties was 55.

New construction

85

Repair2013

Steel materials purchase volume (t)

20
blds

3 | Advanced maintenanceStandard
proposalRaw Materials Purchase Volume148,508

2 | Smoother updating and renovation

Amount of Resources Input

611★

525

* Since fiscal year 2015, we have been targeting buildings owned by Hulic. Thesebuildings include Hulic Group companies' head offices as tenants which areproactively working to reduce waste generation.

300,000

designs for all reconstructed buildings completed in 2017

Environmental Advantagesof Longer Life Buildings

Total of waste that can be recycled and wastethat cannot be recycled

55
blds

before (standard plans). We have adopted longer life

Longer life buildings

1,027
16 blds

300
0

SOx emissions (kg)in which buildings are reconstructed every 40 years as

1 | High earthquake resistance and high durability

(t)

2017

reconstruction by 50% or more compared to the cases

Hulic Guideline for Longer Life Service

reduce pollutant discharge as much as possible.

2016

can reduce waste generation and resources used for

impact on limited resources both from input and output

We are engaged in not only the reduction of water2015

Longer life buildings that can be used for over 100 years

or for which the construction was started in 2017.

as endeavoring to adopt construction methods that

カテゴリー

date through a flexibly modified layout.

of buildings, including reconstruction. We have reduced
perspectives. In recent years, we adopted the PC

Amount of emission of SOx, NOx and VOC in
the past three years

25

the period from 2013 to 2016 and the average amountthe possibility to reform a building's exterior to be up-to-

50

100

150

200

250

Energy300(kg-CO2/m2 per year)

Target forcomparison

Standard proposal : The case of reconstruction every 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

As 3/4 of LCCO2 or more is CO2 that accompanies energy
consumption, the effect of a reduction in CO2 emissions fromextending service life is underestimated. However, the amounts ofresources injected and waste generated are reduced 50% or more.

*Calculated with the LCA tool of the Architectural Institute of JapanWEB

Waste Countermeasures
https://www.hulic.co.jp/en/csr/ecology/waste/* For items marked with “＊”, some prior-year figures have been adjusted.
For details, please refer to page 16.

26

Biodiversity/Encouraging Greening

Hulic places emphasis on dialogues with our
stakeholders and aims to achieve a society where
people live safely, securely, and comfortably.
Social Background Surrounding Hulic

Hulic is carrying out initiatives that increase biodiversity in order to create urban spaces that are in

In 2015, the UN summit adopted the Sustainable Development Goals(SDGs), setting goals such as securing health for all and eliminating
gender discrimination, which indicates that interests in addressing
social issues have been gathering momentum.
In Japan, society's needs are growing in response to various social
issues, such as measures to prepare for natural disasters, measures
for an aging population, and initiatives for work-style reforms
including the reduction of long working hours.

harmony with the environment.

FUNDAMENTAL
APPROACH

Results in
FY2017

Number of greening projects: 5 projects (Target: properties completed in 2017)

Biodiversity Guideline

Greening Initiatives

Hulic is carrying out initiatives that increase biodiversity

We h a ve p u t e m p h a s i s o n g re e n i n g w h i c h c a n

in order to create urban spaces that are in harmony witheffectively ease the heat-island phenomenon as

the environment. Hulic recognizes the importance ofa par t of our measures against global warming.

biodiversity's impact for the living environment, and in

Proactively planting trees and plants on premises, weorder to contribute to biodiversity, we have created theprovide places where people living in the town can

Declaration of Biodiversity Conservation and made thisrelax. Our greening projects aim to create lush green

known to all of our organizations.

urban spaces and to harmonize with nature whileconsidering biodiversity. In addition, we have jointly
developed with other companies and commercialized

Biodiversity Guideline

Social Initiatives

Initiatives for Solving Social Issues

Initiatives for Our Customers

thin-layered wall greening system that can be easily
introduced to the existing buildings.

Strongly recognizing the rapidly vanishingbiodiversity worldwide, Hulic strives to conserve biodiversity
through activities in harmony with business activities
with the goal of handing overa rich nature to future generations.

› Proactively adopt earthquake-absorbing and earthquakedamping structures, and conduct disaster training› Promote women's active participation and advancement in theworkplace and employment of persons with disabilities› Promote the use of paid leave and implement measures to prevent
long working hours› Cooperation/collaboration with NPOs and local governments, etc.

Greening on Rooftops and Premises/Greening on Walls
It is possible to achieve energy-saving effects by reducing air
conditioning loads and improving heat insulation performanceby blocking sunlight with roof greening to prevent heat

FUNDAMENTAL
APPROACH

We are constantly working to generate new added value by offering properties that are superior interms of safety, environmental performance, and convenience. In addition, we have established various
emergency and disaster scenarios, for which we have created measures to improve the structural
performance of our buildings, as well as operational and management aspects of buildings.
Results in
FY2017

Customer satisfaction: 100%

accumulation in concrete. As for greening of office buildings, weApproaches to JHEP Certification
Hulic carries out efforts to conserve and restore local
vegetation as part of its reconstruction projects forcompany-owned properties from the standpoint oftake the improvement of scenery, the condition of the location,ease of repairs, and vegetation that can withstand strong winds
as our main considerations when selecting a plant.
Covering a building exterior with plants, wall greening can bea c o u n t e r m e a s u re a g a i n s t t h eheat-island effect by utilizing thesafeguarding biodiversity.

transpiration effect.

Our approach to biodiversity and many projects haveI n a d d i t i o n , a s i t i m p rove s t h ereceived high praise within the JHEP certification
program operated by the Ecosystem Conservation
Society - Japan.

street are also expected.

Hulic Fukasawa (Completed in July 2017)

Rank ofCertification

Date of Certification

This property has been leased to a fee-based assisted living
nursing home operated by Charm Care Corporation. ThisA

January 2017 (Initial certification:
January 2012)

Hulic Residence Tsudanuma
and Hulic Garden Tsudanuma

AA

December 2016 (Initial certification:
December 2011)

Hulic Residence Senriyama

A

December 2016 (Initial certification:
December 2011)

Hulic Court Yukigaya

A

October 2016 (Initial certification:
October 2011)

Granda Omori Sannou

A

October 2016 (Initial certification:
October 2011)

Construction of Hulic Setagaya

A

November 2014

Aristage Kyodo

effects for people walking on theCase Study

Primary Certified Properties
Name of Project

amenities of the building, soothingproperty is located in a quiet residential area with a row of cherrytrees and lush greenery and planned to harmonize with thesurrounding relaxed atmosphere.
A l o n g t h e e x te r i o r of t h e b u i l d i n g , we h a ve g i ve n d u econsideration to biodiversity and proactively introduced wall
greening and rooftop greening so that the lush greenery of treesof various heights and seasonal
plants can be enjoyed from many
places in the building. In addition, asidewalk open space with plants has
been developed on the site facing
the road, which contributes to thecommunity.
WEB

27

Biodiversity/Encouraging Greening
https://www.hulic.co.jp/en/csr/ecology/communication/communication.html

Efforts toward the Improvement inCustomer Satisfaction
As office buildings, stores, and residences owned by Hulic
serve as the infrastructure for customer's social activities,
we are aiming to constantly improve their quality under
the philosophy of providing customers security andconvenience.
In order to satisfy all customers using buildings including
tenants and visitors to the buildings, we thoroughly stick
to meticulous quality control, careful maintenance, andsecurity to protect assets.

Maintenance and Improvement of
Quality and Ensuring Uniformity in
Quality of Hulic's Buildings
Holding regular management status reporting meetings
with property management companies
Hulic regularly holds property management status
reporting meetings with property management companies
to check the implementation status of management work,
including complying with laws and regulations, and receive
reports on various problems related to buildings, including
the results of measures to fix defects that have occurred inbuildings. In this way, we are promoting the maintenanceand improvement of quality, as well as unifying the qualityof overall property management and operation services.
Quality evaluation for management companies
Each year, Hulic evaluates the implementation status ofmanagement work and provides property managementcompanies with feedback to improve and unify the qualityof their work.
We use the results of evaluations as information to decide
whether to continue to entrust management work with thecurrent property management companies in accordancewith the rules for real estate outsourcing management.
Specific primary evaluation items- Confirm to check if maintenance work for buildings andfacilities, including complying with legal requirementsa p p l i c a b l e t o b u i l d i n g s , h a s b e e n p e r fo r m e dsystematically and thoroughly without omissions as
stipulated in the contract.
- Confirm the status of legal compliance, including thestatus of renewing the verification due date of measuring
instruments, etc. and submission of mandatory inspection
results reports to the competent regulatory authorities.
- Confirm that defects occurring unexpectedly, including
those pointed out during the legal inspection, have been
fixed without delay.

Continuous Provision of a Safe, Secure,
and Comfortable Work Environment
Systematic implementation of preventive maintenanceof buildings and facilities
We systematically renovate and upgrade buildings andfacilities every year, including statutory improvements tobuildings and facilities, proactive renovations to ensure
energy-saving/up-to-date facilities, and implementing
extensive preventative maintenance work before defects
occur in buildings and facilities, with the aim of providing asafe, secure, and confortable work environment for tenants.

28

Initiatives for Our Customers

Thorough Implementation of an
Earthquake Resistance Diagnosis andSeismic Reinforcement

Proactive Adoption of Earthquakeabsorbing and Earthquake-damping
Structures

As Japan is one of the countries where earthquakes mostIn order to protect human life and facility functions fromfrequently occur, Hulic, a real estate business operator,

large scale earthquakes, we have imposed high seismic

regards countermeasures for earthquake as one of the top

capacity on newly constructed buildings. With the aim ofpriorities. We believe it is our responsibility to strive to ensure

protecting customers' lives and contributing to businessearth quake-proof building safety, in order to enable

continuity, we have proactively adopted an earthquake-tenants to conduct social activities with ease.

absorbing or earthquake-damping structure which is

Earthquake resistance diagnosis, reinforcement works,

effective at ensuring a high seismic capacity, in addition toand confirmation of validity of structural calculation

other methods to improve the seismic capacity.

We diagnosed the earthquake resistance of all Hulic's

Earthquake-absorbing structuresproperties that were built before the new earthquake

By isolating the building from the ground with a mechanism

resistance standards were established *1, and almost all

called an isolator, seismic energy is absorbed to reducebuildings that did not meet the earthquake resistancethe intensity of shaking to 10%-50% compared to otherstandards underwent seismic reinforcement. In relation

general earthquake-resistant structures. Another feature

to the office buildings which were determined to requireof this structure is that how a building shakes during an

reconfirmation *2 although constructed after the newearthquake does not differ significantly between upper

earthquake resistance standards,

floors and lower floors of the building. Sendai First Tower,

we also rechecked their structurala jointly developed building completed in Sendai where

calculations to confirm theearthquakes occur frequently, is one of the few buildings

validity of their structural design.

with this earthquake-absorbing structure. Our stance

Earthquake-absorbing equipment*1 Excludes buildings with box frame type concrete construction
and buildings that will be demolished.
*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 Structure

Shakingviolently

faithfully and kindly, listening to their requests with

We conduct a customer satisfaction survey once a

quality services” in the Basic Principles of Corporateyear to ensure tenants of Hulic's properties (corporate
tenants) are able to use the buildings comfortably. Survey
items include matters concerning building hardware andsoftware, and things customers have noticed while using
our buildings on a daily basis. We check the responsesof customers, and then take steps to identify latentcustomer needs and make improvements accordingly.
In the survey conducted in 2017, we consistently received
high ratings. This mainly reflects our systematic facility
reinforcement and quick response to problems. In

toward ensuring safety is highly evaluated.
General Building

Customer Satisfaction Survey

Slow andparallelshaking

Liquefaction Countermeasures

addition, responsible staff individually explained mattersrequested by customers in relation to the survey items or
responded to them.

Deforming
laminated rubber

including coastal areas suffered from the occurrence ofliquefaction phenomena which caused leaning and sinking

Conduct and endeavors to build positive relationships
with customers. In addition, we obtain the necessary
permits and licenses for conducting business operations
and comply with matters stipulated by various businesslaws and regulations.
With regard to important company information, we aim
to disclose information with accuracy based on the facts,
and in a way that is easy to understand in accordancewith the rules for disclosure control. Furthermore, we
disseminate information through various media bycreating a company website, publishing press releases
in a timely manner, and setting up signboards at train
stations, with the aim of fostering a feeling of familiarity
with our company widely among the public.

Responsible Marketing
Hulic has set out the principle of “treating customers

WEB

Initiatives for Our Customers
https://www.hulic.co.jp/en/csr/customers/

Promoting 3 future growth businesses (3K Businesses) toward Resolving Social Issues

Initiatives for Tourism BusinessInitiatives for the Senior Business

The number of accommodation facilities
owned by Hulic as of December 31, 2017: 11

The number of senior facilities owned by Hulic
as of December 31, 2017: 21

Case study

Hulic is striving to respond to an aging population by

1

Developing THE GATE HOTEL brand

After the Great East Japan Earthquake, extensive regions

sincerity and providing sophisticated, efficient and high-developing and making investments in senior facilities
centering on senior residences, and expanding our business

THE GATE HOTEL KAMINARIMON by HULIC, which opened in

to hospital development for warehousing and the medical

2012 and is directly operated by Hulic group, has been

sector through CRE. In 2017, Hulic Fukasawa (seniorawarded one star in the Michelin Guide for six consecutive

residence) which we developed as a project of the effective

years since 2013, and thus stable operation has beenuse of the former site of Nippon Sport Science University'sof buildings. According to the liquefaction map, it was

Earthquake-damping structures

secured. In addition to THE GATE HOTEL

Fukasawa Women's Dormitory and Hulic Chofu (senior

found that 11 buildings owned by Hulic are located on theWith earthquake-damping materials (earthquake

TOKYO which will open in December 2018residence) were completed.

ground with a possibility of liquefaction. When designingdamper) installed inside the building, internal seismic

in the Ginza/Yurakucho district, we are

Hulic Fukasawa is a facility that involves the leasing of thethose buildings, we carefully checked the possibility ofenergy is absorbed to reduce the intensity of shaking

currently promoting development projects

former site of Fukasawa Women's Dormitory owned byliquefaction, and implemented endurance tests as needed.

from half to one thirds compared with other generalof GATE HOTEL, the redevelopment of the

Nippon Sport Science University for a period of 60 years andthe contribution to the community as a CRE project. In 2018,

As they were also constructed on a pile foundation

earthquake-resistant structures. In addition to the casesite of the former Rissei Elementary Schoolin Kyoto City and Ryogoku River Centerwe acquired Sompo-no-ie Komae and As Heim

resistant to liquefaction, it can be considered that Hulic'sof increasing the safety further by combining this with a

Development Project.

Oizumigakuen (both senior residences).

buildings would not be influenced by liquefaction.

earthquake-absorbing structure, we preferentially employ

THE GATE HOTEL Tokyo by HULIC

the earthquake-damping structure in the case that theCase study

Measures against Water Damage

earthquake-absorbing structure is physically unavailable

Developing Japanese style luxury hotels“Fufu Series”

When electric facilities, etc. are damaged by flood in aincorporated this method in many properties.

due to constraints including land contours. Hulic has

basement, the supply of power which is essential for theuse of buildings may stop. We investigate the status ofbuildings with power receiving and transforming facilities
and private power generators installed in the basement,

General Building

Building with Earthquakedamping Structure

Shaking violently

Light shaking

2

Amid growing demand for personal travel, Hulic is promoting
the acquisition and development of luxury hot spring hotels.
We acquired Hakone Suishoen, Atami Fufu, and ATAMI
Kai-Ho-Rou in 2015. In October
2018, Lake Kawaguchi Fufu willopen. We plan to develop

and implement necessary flood control measures, inaround ten hotels of the Fufu

preparation for unexpected tsunamis.

Series in Nikko, Kyoto, Gora andIn addition, as measures to deal with recently increasing
torrential downpour, etc., a rainwater storage tank has

Nara in the future.
Atami Fufu

Hulic Fukasawa

Hulic Chofu

been installed in Hulic Fukasawa completed in 2017.

29

30

Initiatives for Our Business Partners

Initiatives for Our Employees

We aim for close mutual communication with our business partners, and build relationships that mutually

FUNDAMENTAL
APPROACH

enhance the corporate value of both parties. Additionally, Hulic strives to create shared value withstakeholders by resolving various social issues through PPP businesses.
Results in
FY2017

Evaluated the status of work implementation by outsourced property management companies

CSR Procurement Policy
Hulic actively engages in CSR activities as a company
involved in the real estate industry. We have formulated
a policy 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 to cooperate with this policy.

CSR Procurement Policy
1. We will comply with laws, regulations and social norms, andundertake business activities based on a set of corporate ethics.
2. We will respect the fundamental human rights of all people.
1 Prohibition of discrimination
We prohibit any discrimination against any person on the
ground of his or her belief, religion, age, sex, sexual orientation,
race, nationality, origin, physical or mental disability, etc.
2 Prohibition of harassment
We prohibit any act, including sexual harassment or abuse of
authority, to inflict emotional distress on any person by language
or behavior that damages his or her character or dignity.
3 Prohibition of child labor
We prohibit any child labor.
4 Prohibition of forced laborWe prohibit any forced labor carried out through violent acts or
intimidation.
5 Respect for the right of freedom of association and right ofcollective bargainingIn line with international labor standards, we respect the rightof freedom of association and right of collective bargaining.
6 Reduction of excessive working hours
In addition to ensuring compliance with labor-managementagreements, including the 36 Agreement and laws andregulations of relevant countries and regions, we adopt basic
policies to reduce overtime work and limit excessive work.
7 Securing of health and safety of workers
In accordance with laws and regulations of relevant countries
and regions, including the Labor Standards Act, we endeavor tooffer a workplace where workers can work healthily and safely.
8 Payment of wages over minimum wage
We pay wages over minimum wages prescribed in various local
laws and regulations as well as the Minimum Wage Act.
3. We will take consideration of environmental conservation andwill strive to promote green procurement.
We will endeavor to conduct procurement in accordancewith the Hulic Green Procurement Policy in order to realize asustainable society.
4. We will build an information management system andmanage information appropriately.
5. We will carry out fair and equitable business transactions andbuild a trust relationship with business partners.
6. We will strive to maintain peace of mind, safety and high quality.

Cooperation with Building
Management Companies
In accordance with the rules for real estate outsourcing
management, Hulic Building Management Co., Ltd.
personnel in charge of buildings visit managementcompanies and buildings randomly selected once a year
to inspect the management conditions and evaluate
management companies. (Please refer to page 28,“Maintenance and Improvement of Quality and Ensuring
Uniformity in Quality of Hulic's Buildings.”)

outsourced contractors, we work to ensure fair tradewith them as a partner on an equal footing. Regarding
outsourcing by the real estate business division, we
ensure fair trade based on the “rules for real estateoutsourcing management,” respecting related laws andregulations as well as guidances from administrative
organizations. We select an outsourcing contractor thatis most appropriate for each project by checking trackrecords and abilities to execute operations.

Public Private Partnerships
PPP (Public Private Partnership) projects intend to efficiently
utilize and operate real estate owned by national or local
governments (public real estate) through collaboration andcooperation between the public and private sectors. We
are actively engaged in PPP projects by utilizing abundantdevelopment results and a stable business base as oneof the leading companies of PPP projects. Taking into
account the issues and needs of administrative agencies
and communities through exchanges of information withthem, we aim to contribute to the regional economy
by settling the issues of the communities and realizing
business to improve the value of public real estate throughcollaboration between the public and private sectors.
TOPICS

PPP Projects
1. Former Rissei Elementary Schoolin Kyoto City Project
In March 2017, we were selected as a candidate
contractor and we are currently engaged in its
development. We will give consideration to the beautiful
scenery by the Takase River, and develop buildings withfacilities for accommodation and community activities
that blend the valuable existing school buildings withmodern architecture as a “complex facility that serves
as a cultural center where people meet, generatingenergy and excitement among people which will
spread to the local community.”
2. Project of Preservation, Management, and Utilization
Former Site of Court in Takabatake-cho, Nara Prefecture
In March 2017, we were selected as a contractor having
first refusal rights, and are currently engaged in thedevelopment. We will create a new attraction in Nara Parkby developing high-quality accommodation facilities thatblend with the existing trees and the remains of a garden,
as well as restaurants that offer Japanese dishes using
ingredients produced in Nara Prefecture.
3. Ryogoku River Center Project in Sumida-ku, Tokyo
In Secptember 2017, we were selected as a proposed
contractor and we are currently engaged in thedevelopment. We will develop complex facilities consistingof administrative facilities and accommodation facilities
that present various local attractive features. Thesefacilities, connecting the waterfront area and the city,
continuously generate energy and excitement amongpeople as a base for excursions.

Fair Trades with Outsourced Contractors
Considering long-term business relationships with

31

WEB

Initiatives for Our Business Partners
https://www.hulic.co.jp/en/csr/dealings/

We respect human rights and proactively take advantage of diversity in our business. We aim to foster a

FUNDAMENTAL

workplace in which all employees can make the best use of their abilities.

APPROACH
Results in
FY2017

Ratio of female managers: 15.6%

Promoting Human Rights
and Diversity
Respect for Human Rights
The Company has established the Hulic Human Rights
Policy, which proclaims respect for human rights so that
all employees can maximize their abilities and contributeto the realization of a “society full of peace of mind andtrust.” In our Human Rights Policy, we declare that we
prohibit any acts of discrimination and harassment, as
well as any discrimination against any person on the
ground of his or her beliefs, religion, age, sex, sexual
orientation, race, nationality, origin, physical or mental
disorder, etc. We also prohibit any act, including sexual
harassment or abuse of authority, to inflict emotional
distress on any person through language or behavior
that damages his or her character or dignity. Respectfor human rights encompasses all fundamental humanrights found in the Constitution, Labor Standards Act,and Universal Declaration of Human Rights, as well as
human rights related to equal employment, prohibitionof forced labor and child labor, freedom of association,and collective bargaining stipulated in the ILO's
international labor standards.
In 2017, Hulic posted on its intranet regarding the themesof “changes in work style” and “pregnancy discrimination(parternity discrimination),” etc. In addition, we held aseminar on LGBT* as part of compliance training for our
directors and general managers.
* LGBT is a collective acronym for lesbian, gay, bisexual, and transgender.

Employment of Diverse Human
Resources
Participating in the joint declaration on the charter ofcorporate ethics concerning employment issued by
Keidanren (Japan Business Federation), we proactively
employ new graduates in accordance with the purposeof the charter. When performing pre-employment
screening, we respect the basic human rights of applicants
and make efforts to secure diverse human resources basedon their aptitudes and abilities, regardless of backgrounds
and gender. The total number of employees newly hired
in 2017 (the total of the number of new graduates andexperienced individuals) is 26 (male: 20, female: 6); theproportion of women is 23.1%. The ratio of female managers
has increased as a result of active efforts to promote
the active participation and advancement of female
employees in the workplace, with an enhanced system
to support the development of the next generation. Hulic
aims to become a company where female employees canthrive professionally with the target of increasing the ratioof female managers to 20% by the year 2020.

Promoting Employment of the Disabled
The Hulic Suginami Office marked its 10th anniversary,and as of June 2017, Hulic's employment rate of persons
with disabilities was 2.11% ★ on a consolidated basis
and 6.16% ★ on a non-consolidated basis. Currently,
seven employees with disabilities, instructors withexperience in coaching, and a chief administrator are
working at the Hulic Suginami Office, where they carryout operations, such as the dispatch of direct mail.
A monthly meeting with the human resources teamof the Head Office is held to ensure that operations
integrated with the head office are being put into
practice. In recognition of our activities to play aleading role in employing persons with disabilities
and proactively develop their abilities, Hulic has beencertified as an excellent corporation in employing thedisabled in Tokyo since September 2010. We will makeefforts to improve the workplace so that people withdisabilities can feel a sense of worth in their work.

Personnel Performance Data
Number of employees (person) (non-consolidated)

Men/Women
Total

Number of employees (person) (consolidated)
Average annual salary (ten thousand yen)
Number of voluntarily resigned employees (person)
Ratio of voluntarily resigned employees (%)
Number of employees in managerial positions (person) (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 (person)
Number of employees who took childcare leave (person)
Men/Women
Ratio of employees who returned to work after childcare leave (%)
Number of employees with shorter working hours (person)
Number of employees who took day off for family care (person)
Number of employees who took family care leave (person)
Number of employees who took day off for nursing care (day) (absorbed previous nursing care leave)
Number of users of the subsidy system for daycare nursery fees (person)
Number of employees who took leave to take part in volunteer activities (person)

2013
90／35
125
461
1,120
1
0.80
53／4
6.92
2.14
1
1／0
100
2
2
0
17
8
21

2014
85／31
116
753
1,268
2
1.72
43／4
8.56
2.46
3
1／3
100
3
０
0
31
11
18

2015
93／35
128
784
1,295
3
2.34
43／5
7.36
2.31
6
2／3
100
5
3
0
34
14
14

2016
109／40
149
836
1,418
2
1.34
57／8
6.30
2.21
0
6／3
100
7
1
0
60
22
18

2017
112／44
156
862
1,530
2
1.28
65／12
6.16★
2.11★
2
0／2
100
6
1
0
114
31
13

* Figures marked with “★” are those that have been assured by an independent assurance provider.
* Data of Hulic Co., Ltd. only (excluding the number of employees (consolidated) and the employment ratio of the disabled (consolidated))* Excludes employees who have been transferred within the group. Includes loan employees in the number of employees who took childbirth leave, the number of employees who took childcare leave, and thenumber of employees who took day off for nursing care.

32

Initiatives for Our Employees

We endeavor to prevent violation of laws related tolabor and occurrence of accidents. Although risks ofchild labor and forced labor are low at Hulic as we havedeveloped a highly specialized business mainly in Tokyo,
we declare that we do not permit any form of childlabor or forced labor. In order to prevent such labor, we
regularly audit compliance with laws in employment
management and also provide compliance education,
including regarding the prevention of child labor andforced labor, to employees.

Occupational Safety and Health
In promoting the creation of comfortable workplaces,
we give first priority to the securing of safety and healthand endeavor to secure employees' health and safety
by engaging in various efforts. While we have notobtained certifications such as OHSAS18001, we secure
occupational safety under our own system by regularly
conducting risk assessment and improving issues. The
number of accidents occurred in 2017 was zero (zero in2016) and no accidents that require time off from workor fatal accidents occurred in the past three years (rateof occurrence was 0%).
We will continuously promote the improvement of thelevel of occupational safety and health in the workplace.

External Evaluation

Establishing Good Labormanagement Relations
Hulic's “Our Code of Conduct” and Hulic Human Rights
Policy stipulate respect for human rights in association withequal employment opportunities, freedom of association,and collective bargaining.In addition, we conduct
interviews between employees and their supervisors whennecessary and carry out the “President Questionnaire
Survey,” through which employees can share their views andopinions directly with the President, in an effort to establish
good labor management relations.

Efforts Regarding Salaries
The Hulic Human Rights Policy prescribes that we pay
wages over minimum wage prescribed in various local
laws and regulations as well as the Minimum Wage Act.

Providing Internship Program
We p rov i d e a n i nte r n s h i p p ro g ra m i nte n d e dfo r u n d e rs ta n d i n g of t h e i n d u s t r y a n d wo r k fo r
undergraduate and graduate students at the Hulic
Head Office Building. We offer a program where theparticipants can learn about the real estate businessand Hulic's identity through acquiring knowledge of realestate affairs and verifying projects. In fiscal year 2017, 83
students participated.

33

In order for employees to be healthy and fully exercise their abilities, we will promote a work-life balance

FUNDAMENTAL

and take measures to promote acquisition of paid holidays and to prevent long work hours.

APPROACH
Results in
FY2017

Usage rate of paid leave: 78.3%

Work-life Balance/
Human Resource Development
Work-life Balance
The falling birthrate, aging population, and women's social
advancement are important issues for Japan's economy.
With regard to support for the next generation, Hulic aims
to achieve a higher level than the legal standard and has
established various systems in this regard. In addition, we
are working to create employee-friendly environments
where all employees can make the most of their abilities.
Accordingly, we have established an action plan inaccordance with the Act on Advancement of Measures
to Support Raising Next-Generation Children, set targets
for the development and thorough notification, etc. of
the work-life balance support system, and are conducting
activities to these ends.

Establishment of Hulic's OnsiteChildcare Nursery Facility
In 2014, we opened the Odenma Fureai Childcare
Nursery inside the Hulic Head Office Building to promote

Received the 29th "Commendation for
Leading Companies Where Women
Shine"In 2017, we received Minister of State for Gender Equality
Award of the 2017's “Commendation for Leading
Companies Where Women Shine" hosted by the Cabinet
Office for advanced companies which have excellent
policies, initiatives, and actual results of appointment of
women and made excellent disclosure thereof.
TOPICS

Received Grand Prize of “Ikumen Award 2017”
While we had previously focused mainly on thedevelopment of the careers of women, we have promoted
the improvement of systems such as a child care leavesystem that both men and women can use. This is basedon our belief that the sharing by a couple of the burdensof child rearing and housekeeping which tend to beshouldered by women will promote women's willingness
to raise children and continue working. In recognition of
the higher rate of acquisition of child care leave by malemanagers and the ensuring of distribution of the “Child Care
Support Guide for Mothers and Fathers” prepared by Hulic,
we received the grand prize. We will promote the creationof comfortable workplaces for all employees, and promote
male employees' balancing of work and childrearing.

discuss the status of use of paid leave and work hoursof employees and implement mental health care to
perform stress check tests.

Planned Use of Leave and Reductionof Overtime Work
We promote work-style reforms to boost the usage rateof paid leave by employees and reduce long working
hours. The key initiatives are as follows.
• P romoting the use of ”Plus-one” paid leave andconsecutive paid leave• Implementation of No Overtime Day• Implementation of “My Friday”• Improving the efficiency of business processes andpromoting outsourcing
100
80
60

addition, to make this childcare nursery more accessible,
employees using this service are allowed to drive their

71.0
34.7

70.9
34.6

71.4
36.6

71.6
37.6

78.3

36.8

40
30

40

20

20

10

0

a more employee-friendly work environment in which
our employees can raise children while working. In

50
★

2013

2014

Usage rates of paid leave

2015

2016

2017

0

Average of discretionary and overtime
work hours in a month per person

Hulic's basic approach is for the work of individual
relations employees to be aligned with their abilities,
aptitudes, and personalities, enabling individual
employees to make the most of their abilities and theCompany to operate a high value-added business withless manpower. For this reason we see it as essential toprovide opportunities to all employees irrespective ofgender and, in particular, we are strengthening initiatives
for the career development of women. The women's
career promotion project team has been conducting
activities regularly since 2010 with themes such as
improving work-life balance and career development.
In 2016, we received the highest certification as an“Eruboshi” company under the Act on Promotionof Women's Participation and Advancement in the
Workplace, and was selected as a “Nadeshiko” Brand.
In 2017, we also engaged in activities with a focus onorganizing the “Science and Engineering Challenge(Riko-challe)” events in cooperation with the Cabinet
Office, Keidanren and the Ministr y of Education,
Culture, Sports, Science and Technology. In November
2017, we organized an in-house seminar on the topic
of unconscious bias. Furthermore, an annual meeting
between the women's participation promotion project
team and President as the manager is being held tocreate oppor tunities forfemale employees to share
their thoughts and concernswith the President of theCompany.

Management of Risks regarding Laborand Human Rights Issues

Usage rates of paid leave (%)

Promoting Female Empowerment

Average of discretionary and overtime
work hours in a month per person* Figures marked with “★” are those that have been assured by an independent
assurance provider.

cars to work and park them in the Head Office Building's
parking lot free of charge. This childcare nursery is not
only available for the employees but also for certain
children* of neighboring residents, with the intentionof contributing to reducing the number of children on
nursery waiting lists in the local community.
* Conditions for use applied to neighboring children differ
from those applied to employees.

Health and Productivity Management
Based on the idea that employees' good health isessential for improving productivity and growth of thecompany and that promoting health and productivity
management contributes to our corporate philosophy" To t a l c o m m i t m e n t t o o u r c u s t o m e r s a n d t h ecommunity. Creating productive environments. Creating
amenity. Creating peace of mind," Hulic is promoting
various initiatives.
For instance, we provide employees with a full healthcheckup, hold meetings of the Health Committee toStance on Human Resource
Development
Hulic's ordinary income per employee is over 400 million
yen. This is the highest level among listed companies. We
assume that this figure has been accomplished because
we are a small group of elite professionals. Currently,
many of our employees are licensed professionalss u c h a s l a w ye r s , c e r t i f i e d p u b l i c a c c o u n t a n t s ,real estate appraisers, and first-class registeredarchitects. Furthermore, with the aim of enhancing
their professional skills, employees are recommended
to obtain two or more qualifications by the time theyreach the age of 30. In 2017, we clarified a road map
to obtain qualifications so that employees can obtainthe same more systematically. The costs for obtaining
qualifications are fully covered by the Company. Training
cost per employee in 2017 was 186,632 yen.
WEB

Initiatives for our employees
https://www.hulic.co.jp/en/csr/employee/

34

Initiatives in the Local Community

To fulfill our social responsibilities we work to resolve social problems, leading to the sustained

FUNDAMENTAL
APPROACH

Social Contribution as a Company

development of the entire society. Further, we proactively support each employee to participate in social
contribution activities.
Results in
FY2017

Social contribution by the company: 16 items
Social contribution by employees: 6 items

Policy for Social Contribution Activities
Basic Philosophy

Activity Guidelines

Activity | １

Activity | 3

Expansion of Support for Japan ParaBadminton Federation

Establishment of Hulic Scholarship Program
for Training of Welfare Caretakers

As part of its social contribution activities, Hulic has

For the purpose of supporting students aiming to bewelfare caretakers, developing human resources engaging
in nursing care and contributing to resolution of social
issues related to the advancement of an aging society,
we have established the Hulic Scholarship Program forTraining of Welfare Caretakers, under which we provide
non-repayable scholarships. We aim to provide support
to address the current status of labor shortages at nursing
care sites for the senior business which we promote as oneof our focused 3 future growth businesses(3K businesses) (Koreisha (seniors), Kanko(tourism), and Kankyo(environment))
from the CSR point of view.

concluded an Official Gold Partner Agreement with
the Japan Para-Badminton Federation and provided

As a good corporate citizen, Hulic proactively• Actively work in the three main fields of “local environmental protection,” “co-and widely pushes ahead with social contribution

existence with local communities,” and “responses to social needs.”

activities both inside and outside of its business• Actively support social contribution activities conducted by each employee.

of supporting the stable operations of the federation,

fields. We contribute to the sustained development• P lace an emphasis on securing transparency in implementing activities andsince September 2017, we have lent the gym of Nishi

of the entire society through each activity.

promote dialogue and cooperation with society.

Kasai Center Building owned by Hulic (Hulic Nishikasai

support for para-badminton since 2016. For the purpose

Gym) to the federation at no charge as a practice gym

Supporting Employees to Conduct Social Contribution Activities

dedicated for players from the Japan Para-Badminton
Federation. We have conducted improvement work suchas installation of slopes and plumbing so that the players
can use the gym more comfortably. We will further expand

Matching Gift Programsupport for handicapped persons and support the success

Launching the matching gift program in June 2008,

Paid Leave for Employees Involved in
Volunteer Activities

Hulic established the “Hulic Fureai Fund,” which deducts

The Hulic Group has established paid leave for employees

rights and promoting diversity

involved in volunteer activities, in order to support andmanagement in which wenurture their efforts to give back to the community andactively practice diversity.

100 yen every month from the salary of employees whowant to take part in the program (300 yen for directors),
and donates the collected money to organizations
selected by majority vote of all employees. Hulic, Hulic
Insurance Service, Hulic Building Management, Hulic
Reit Management, Hulic Proserve and Hulic Private Reit
Management 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.

of para-badminton players
as well as respecting human

help to foster an attitude of wanting to address issues
facing society. The volunteer paid leave program isdesigned to support employees who participate in social
contribution activities. Employees are eligible to take up to
20 consecutive days of special paid leave (employees whotake part in volunteer activities in disaster-hit areas cantake paid leave more than once within 20 days) under thevolunteer paid leave program to take part in philanthropic

Activities conducted in 2017activities that give back to society. To encourage employees

In 2017, we donated a total of 1.3 million yen to Second

only information on social contribution activities, but also

Harvest Japan. Second Harvest Japan is an organization

raise awareness about such activities among employees bythat receives donations of food of good quality before

disseminating the volunteer experiences of employees withthe best before date that will be disposed of for various

the entire Company through our intranet system. In 2017,

reasons, in large quantities

we continued Satoyama conservation activities, which wefrom suppor ters such as

have conducted annually since 2009 as a participatorycompanies. It then transfers

volunteer activity involving our employees, and a total ofs u c h fo o d t o N P O s a n d

23 employees from Hulic, Hulic Insurance Service, Hulic

welfare facilities, etc.

Building Management, Hulic Reitw h i l e c o o rd i n a t i n g t h eManagement and Hulic Proservetransferees' needs.

have participated in this activity.

to use the volunteer paid leave program, we provide notPractical training

Activity | 4

Holding the Fifth Hulic Student
Ideas Competition on the
Theme of “THE OMOTESANDO”
Competition

Announcement of the opening of
Hulic Nishikasai Gym in August 2017

Activity | 2

Assistance for Research at Kyoto
University and Support for Scholarship
Program of Kyoto University
We provided assistance for Environmental Studies at
Kyoto University and made a donation to a scholarshipprogram for students.
We support development of the next generation throughthe donation to a scholarship programfor students of Kyoto University as
well as suppor ting environmental
protection through assisting research

posterWe planned this competition as a realestate company with the aim of providing students
with opportunities to propose urban development andconstruction ideas. For this year's fifth Student Ideas
Competition, we solicited free and unconventional ideas
as proposals for “THE OMOTESANDO,” a building that
represents Omotesando - a building that symbolizes theages that Omotesando has gone through and people
who have gathered in Omotesando — at the corner ofthe crossing of Omotesando and Aoyama-dori; i.e., theplace that can be called the face of Omotesando.
We received 188 entries. At the open second screening,
students presented their ideas, followed by a question
and answer session with judges. After consultations
among judges, one winner of the grand prize, threewinners of the excellence award, and six winners of thehonorable mention award were selected.

at Kyoto University.
The site observation conducted as part ofassistance for research in February 2018

VOICE

WEB

Initiatives in the Local Community
https://www.hulic.co.jp/en/csr/social/

Support for Para-Badminton

Since September 2016, we, the Japan Para-Badminton Federation, have received support from Hulic Co., Ltd.

35

Social contribution by employees

Social Contribution as a Company

1. Satoyama conservation activities
2. Donation to Ashinaga Scholarship Society
3. Matching gift program
4. Monthly community cleanup activities
5. Flowerbed maintenance activities
6. Assistance for support activities in disasterstruck areas

1. Support for Japan Para-Badminton
Federation
2. Held students' idea competition
3. Hosted summer festivals
4. Donation of used postal stamps
5. Donation to Second Harvest Japan
6. Sponsorship to support Mainichi Shimbun inFukushima relief efforts

as a gold official partner, and moreover, since September 2017, we have borrowed Hulic Nishikasai Gym at
no charge. Before that, it was difficult to reserve gyms for practice and our players practiced in very difficult
7. S
 upport for Japan Shogi Association (Kisei
Match, Minister of Education, Culture,
Sports, Science and Technology Cup, etc.)
8. Donation to Red Cross
9. Donation to Akaihane
10. Donation to Ashinaga Scholarship Society
11. O pened the company daycare nursery to
local community members

12. Sponsorship to the Kyoto Kenchiku Center
13. Support for Nezu Foundation
14. E
 stablishment of Hulic Scholarship
Program for Training of Welfare Caretakers
15. Assistance for Environmental Studies at
Kyoto University
16. D onation to a scholarship program of
Kyoto University

conditions. Since Hulic started to lend us the gym for free, we have been able to carry out training projects for

Kazumi Hirano, Chief Director
Japan Para-Badminton Federation

our players such as a training camp. The gym is also used by our players freely as a daily practice gym. The gym is equipped with bathrooms, a shower
room, lockers, and slopes of universal design so that handicapped persons can use them easily. The players are pleased to use the gym. In addition, weare very grateful to Hulic for their decision on another ten-year, long-term period of support from this fiscal year to March 2028. We will first aim for the
success of players at the Tokyo 2020 Olympic and Paralympic Games and make efforts for stable activities of the organization.

36

Initiatives for Our Shareholders and Investors
Hulic works to strengthen corporate governance withthe aim of improving the transparency and efficiencyof management and continue to be trusted bysociety.

We strive to ensure the appropriate disclosure of information whenever necessary, and actively conduct

FUNDAMENTAL
APPROACH

briefing sessions on financial results as well as company information sessions for individual investors. These
represent our efforts to achieve diverse forms of mutual communication.
Results in
FY2017

Number of information sessions for personal investors held: 8 times(including sessions for sales personnel of securities companies, IR fairs, and events)

Information Disclosure Policy

Dividend Policy

On the basis of the disclosure policy, we are aiming

We regard returning profits appropriately to ourat fair, timely and accurate information disclosure

shareholders as a management issues and adopt a

benefiting shareholders and investors to make a decision

basic policy to continue providing the stable payment

on investment. In compliance with relevant laws andof dividends as based on the trends of our businessregulations, we proactively disclose management

performance.

Social Background Surrounding Hulic

Corporate
Governance

The Corporate Governance Code was introduced in June 2015. It
requires companies to work toward achieving sustainable growth
based on sound corporate governance.

Initiatives for Solving Social Issues› Establishing and implementing the corporate governanceguidelines› Selecting external directors and external auditors with high levels of
expertise› Establishing a business continuity plan (BCP) and conducting BCP
training› Conducting risk evaluation/risk management by the Risk
Management Committee

strategies and financial data, etc. in order to havethem understand our business activities. Information,
to which the rules of timely disclosure and relevant laws
and regulations, etc. are inapplicable, but which areconsidered helpful for investment decisions, is disclosed
promptly through the Company's website, etc.

Shareholder Incentives
To thank our shareholders for their continued support, weannually present a gift of gourmet catalog equivalent
to 3,000 yen to shareholders with 300 shares or more.

Enhancement of Various IR Tools

yen gourmet catalogue gifts (worth 6,000 yen in all) to

In addition to correspondences to shareholders issued

than three consecutive years.

shareholders holding more than 300 shares for moresemiannually, 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 the website, materials
fo r b r i e f i n g s e s s i o n s ( i nJapanese and English) andvideos are available.

Briefing Session for Private Investors

on our various activities.
In 2017, our website was selected as the “excellent
website in overall ranking” in Nikko IR's All Listed
Company Website Ranking 2017. In addition, our website
won the bronze prize in Gómez IR's Site Ranking.

FUNDAMENTAL
APPROACH

fully functioning “risk management,” “compliance,” and “internal control.” We intend to sincerely executebusiness, fulfilling accountability to stakeholders.
Results in
FY2017ourselves better understood by individual investors.
We participate in seminars and fairs, etc. for individual

Number of internal audits conducted: 11 times

Participation rate in the Board of Directors' Meeting: 97 %investors to create opportunities for more individual

Corporate Governance System

investors to learn

T h e B o a rd of D i re c to rs m e et s o n c e a m o nt h i n

Supervisory Board Members designated and reported

principle, and holds further meetings as needed.

as independent auditors as specified above (as of

The Board of Directors is comprised of 10 directors,

April 2018). Directors determine important mattersof which four are independent External Directors

concerning Hulic's business activities, including CSR,

designated and reported as independent directors

and supervise the execution of duties. In March 2012,

based on the stipulations of the Tokyo Stock Exchange

Hulic appointed its first female external director, and(as of March 2018). Three out of five Audit & Supervisory

since then we have been promoting multifaceted

Board Members are independent External Audit &business management based on diversity.

a b o u t u s . We w i l lpromote IR activities
that provide us with
opportunities tocommunicate directly
investors.

Hulic's website discloses timely and detailed information

Hulic Group recognizes that it is an important business issue to build a corporate governance system withWe are proactively working on IR activities to makewith individualOutside Evaluation of IR Activities

Corporate GovernanceFurthermore, we have been sending out two sets of 3,000

Brief Sessions for Organizational
Investors and Analysts

Corporate Governance System Chart (As of March 2018)
Corporate Governance

Briefing sessions on financial results (at the end of the

Audit & Supervisory
Board

2nd quarter and fiscal year) are held semiannually by
Hulic's top management mainly for institutional investors.

Audit

We also conduct many “One on One Meetings” in Japan,

Accounting Auditor

have proactively rolled out IR activities overseas, visiting

GeneralMeeting of
Shareholders

Board ofDirectors

Through these activities, we endeavor to foster a deep

Recommendation/Advice

understanding of Hulic among institutional investors.
WEB

37

Initiatives for Our Shareholders and Investors
https://www.hulic.co.jp/en/csr/investors/

Management Advisory Committee/Nominating Committee/
Remuneration Committee

Compliance Committee

Risk Management Committee

Internal Control
Functions of
Head Officeand AffiliatedCompanies

President

institutional investors in Europe, the U.S., and Asia, etc.

Compliance

CSR Committee

through which we visit individual institutional investors
to explain Hulic's business activities. Furthermore, we

Scope of Internal Control

Audit & Supervisory
Board Department

Risk
Management

Fund ALM Committee
Operations
Management

Internal
Control

Corporate Audit
Department

Basic
Rules, etc.

Planning and
Administration
Division

Business Management
Internal Control
Related to
Financial Reporting

Disclosure
Control

Real EstateBusiness
Division

Business
Process Control
Documents

AffiliatedCompanies

Disclosure Working Group38

Corporate GovernanceInternal 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 andthe internal audit is systematically carried out by the
Corporate Audit Department. The results of the internal
audit will be reported to the President and feedback to
departments subject to the audit will also be provided.
Internal audits are carried out by four employees (as ofMarch 2018). In 2017, we implemented internal audits
eleven times. Regarding matters for which significant
risk management deficiencies were identified, we haveprovided feedback and appropriately confirmed thestatus of improvements. Meanwhile, the results of an
external quality evaluation of the internal audits showedthat Hulic's internal audit functions generally conform(GC) to the international standards for internal auditing
defined by the Institute of Internal Auditors (IIA). Basedon the evaluation results, we will continue to strive tofurther improve the quality of our internal audit functions.

Policy for the Selection of Directors
and External Directors
The Company has four External Directors and three External
Auditors. The External Directors and External Auditorscomment appropriately at the meetings of the Board of
Directors from a position that is independent from that of thebusiness and affairs of the corporation and fulfill the functionsof monitoring and checks on the management.
External Directors and External Auditors are selected basedon the guidelines on the independence of independent
executive officer(s) set forth in Article 436-2 of the Securities
Listing Regulations of the Tokyo Stock Exchange and the“Criteria for assessing the independence of independent
external directors” set forth in Hulic's Corporate Governance
Guidelines. These are considered to be appropriate in light of
the important roles that the External Directors and External
Auditors fulfill within Hulic's corporate governance system
Expertise of External Directors and External Audit &Supervisory Board Members
We appointed the independent External Directors
and independent External Audit & Supervisory Board
Members, who have fulfilled Hulic's criteria for assessing theindependence of independent external directors (disclosed
in the company's Corporate Governance Guidelines) inaccordance with the Securities Listing Regulations of theTokyo Stock Exchange. The expertise and reasons for selectionof the External Directors and External Audit & Supervisory
Board Members are as follows.
External Directors
NameProfession/Affiliation, etc.

Reasons for selection

Tsukasa Miyajima

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

Highly discerning and insightful as a personwith relevant knowledge and experience

Hideo Yamada

Lawyer of Yamada Ozaki Law OfficeHighly discerning and insightful as a lawyer

Atsuko Fukushima

Journalist, management council memberof Shimane University

Highly discerning and insightful as ajournalist

Kaoru Takahashi

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

Highly discerning and insightful as abusiness operator

External Audit & Supervisory Board Members
Name

39

Profession/Affiliation, etc.

Reasons for selection

Koichi Nezu

Chairman Emeritus, Tobu Department
Store Co., Ltd.

Highly discerning and insightful as abusiness operator

Nobuyuki
Kobayashi

President, Kobayashi Certified Public
Accountants OfficeHighly discerning and insightful as anaccounting specialist

Kenichi Sekiguchi

Special Advisor, Meiji Yasuda Life Insurance
Company

Highly discerning and insightful as abusiness operator

Directors (as of May 2018)

Policy for Determining Director
Compensation
Compensation of directors consists of basic fixedcompensation, which is based on job position and theweight of duties, and performance-based compensation,
which is based on corporate performance and contribution
to corporate performance.
A portion of performance-based compensation isallocated to a share-based payment scheme designed togive incentives for performing duties, in order to achieve
the sustainable growth of the Company and to enhance
corporate value from the perspective of shareholders.
Amounts of compensation are determined throughdiscussions by the Nominating Committee, the majority ofwhich is comprised of independent External Directors andis chaired by an independent External Director, within thelimit approved at a general meeting of shareholders.
Compensation of Audit & Supervisory Board members isdetermined through discussions by the Audit & Supervisory
Board within the limit determined at a general meetingof shareholders. Compensation of External Directors andAudit & Supervisory Board members solely consists of basic
compensation (fixed amount) in the light of their roles andresponsibilities.

Amount of remuneration, etc. by classificationof Executive Officers（2017）
Numberof target
executive
officers(No. ofpeople)Totalamount of
remuneration,etc.
(million yen)Basicremuneration

Stockbased
rewards

Directors(excluding External
Directors)

649

374

137

-

137

6

Auditors (excluding
External Auditors)

72

72

-

-

-

2

External executive
officers

88

88

-

-

-

7

Classification of
executive officers

Total amount by the type of remuneration (million yen)Stockoptions

Bonuses

8

10

7
9

6

14

13

15

12

11

3

4
1

5

2

Nominating Committee andRemuneration Committee
The following new “discretionary committees” were
established with the enactment of the Corporate
Governance Code, enforced on June 1, 2015. Eachcommittee is chaired by an independent External Director,
with the majority composed of independent External
Directors.
Nominating Committee
The Nominating Committee serves the function ofreporting to the Board of Directors on the nominationof executive officers, and deliberates on the following
matters:
1. S election of Director and Auditor candidates andpersonnel changes of Directors (promotion, etc.)
2. O ther items concerning succession plans and theabovementioned items, as deemed necessary by the
Board of 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. Matters concerning the remuneration of Directors, as
deemed necessary by the Board of Directors

WEB

Corporate Governancehttps://www.hulic.co.jp/en/csr/governance/
governance.html

Board of Directors
1

2

Audit & Supervisory Board Members

Chairman, Representative Director

7

Saburo Nishiura

Tsukasa Miyajima

President, Representative Director

Professor Emeritus of Keio University
Professor of School of Law and Graduate
School of Law of Asahi University

Manabu Yoshidome
3

Representative Director(Senior Executive Managing Officer)

8Director(Senior Executive Managing Officer)

Lawyer of Yamada Ozaki Law Office9Director(Senior Executive Managing Officer)

Hajime Kobayashi

General Manager of the Corporate Planning Department
6Director (Executive Managing Officer)

12

10

13

E xternal Auditor

Koichi Nezu
Board Chairman and Curator of Nezu Museum
Chairman Emeritus of Tobu Department Store Co., Ltd.

14

E xternal Auditor

Nobuyuki Kobayashi
Director of Kobayashi Certified Public
Accountants OfficeDirector (External Director)

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

Full-time Auditor

Takuya Asai

Director (External Director)
Journalist
Management Council Member of Shimane University

Full-time Auditor

Shigeo Nakane

Atsuko Fukushima

Shinji Furuichi
511Director (External Director)

Hideo Yamada

Hidehiro Shiga4

Director (External Director)

15

E xternal Auditor

Kenichi Sekiguchi
Special Advisor of Meiji Yasuda Life Insurance Company

Takaya Maeda
General Manager of Real Estate Development Department 1*For details of the profiles of Directors, please see the “Directors” page on the Company's website (https://www.hulic.co.jp/en/corporate/officer.html).

40

Risk Management

Compliance

Each and every employee will strive to fulfill the trust of every stakeholder and fulfill Hulic's corporate

Pursuant to basic rules of risk management, we manage various risks related to the Hulic Group's

FUNDAMENTAL

businesses, which include operational risk, market risk, liquidity risk, and credit risk, among others.

APPROACH

APPROACH
Results in
FY2017

Number of total disaster training and first-aid training conducted:

Risk Management Structure
We hold regular meetings of committees related to risk
management, such as the Risk Management Committee

We are proactively carrying out measures to strengthen

and Fund ALM Committee, and control risks by grasping

the business continuity capabilities of our core head officechanges in risk by collecting and analyzing monitoring

functions during an emergency. The following measuresindices. Through this PDCA cycle, we carry out risk

have been taken at the Hulic Head Office Building.

management continuously to stabilize our business- A d o pt s q u a ke -a b s o r b i n g a n d q u a ke -d a m p in g

operations. In addition, internal audits are carried out

structures that enable building functions to operateon all departments and operations, in order to verify theeven during an earthquake with a seismic intensity of

appropriateness of risk management practices. Withseven

regard to real estate, the greatest asset of Hulic, we obtainregular appraisals to comprehend the market risk of realestate, and we have also formulated a business continuity
basic plan to prepare for large-scale disasters, under which- F eatures emergency generators that can operatecontinuously for up to six days
- S ecures food and drinking water to last more thanseven days

we are working hard to reinforce our risk management- Uses wireless equipment for communications between

structure by implementing company-wide training drills

the management offices of other company-owned

and other measures. Based on experiences from the Great

properties, etc.

East Japan Earthquake, we have also checked seismic

Re g a rd i n g b u i l d i n g s fo r w h i c h Hu l i c u n d e r takes

performance, liquefaction countermeasures, and floodreconstruction projects, we also stockpile water

control measures at each building.

resources and establish a drainage system and install

Business Continuity Initiatives for
Disasters
Hulic is a real estate company that engages in thedevelopment, reconstruction, and operation of officeemergency back-up generators that can generate
power continuously three days.

Maintaining Functions during a Disaster(Hulic Head Office Building)

Photovoltaic panels

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 terms of safety,
environmental performance, and convenience. We have

8F: Server Room, Operations Rooms,
and restrooms have backup power,
lighting and air conditioning

RF: Electricity receiving andtransformer equipment/air
conditioner

Lightning strikeestablished various emergency and disaster scenarios forwhich we have created measures to improve the structural
performance of our buildings as well as operational andNaturalventilation

management aspects.

Collaborative and Cooperative
Structure with Business Partners
Employees undergoing disaster training

Immediate Confirmation of Damages Emergency notification
system using wireless communications (agreement with three companies)
Real estate management company(Company A)
Real estate management company(Company B)
Real estate management company(Company C)

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

Vertical damp-proof
barrier H=1m
Telecommunications
entrance facility: 2 routes
Seismic isolation pit
Emergency shutoff valve

Response Aimed at Recovery of Operations Emergency
repair agreements (22 companies)

HULIC

41

Companies that constructed each building(general contractors)WEB

social responsibilities by fully complying with laws and company rules as well as engaging in businessactivities based on a high standard of ethics.
Results in
FY2017

1 times

Facilities and Stockpiles for Sustaining
Business Operations

HULIC

FUNDAMENTAL

1 elevator in operation
2F: Disaster Response
Room and restrooms havebackup power, lighting andair conditioning
B1F: Water pump and oiltank operations, anddisaster preparedness
storage
Telecommunications
entrance facility: 2
routesElectrical entrance
facility: 2 lines

Risk Management
https://www.hulic.co.jp/en/csr/governance/risk_
management.html

Compliance seminars for all employees and directors No. of seminars conducted: 5 times
Transmission of information: 12 times

Compliance Promotion System
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 based on the compliance programis regularly reported to the Board of Directors through theCompliance Committee.
The Compliance Manual requires that employees
immediately report compliance issues or possible issues
to the Compliance Officer, who will then investigate thematter as necessary, identify the cause, and implement thenecessary measures to prevent future re-occurrences.
In 2017, Hulic had no compliance violations.

Initiatives for Preventing Corruption
Hulic prohibits any act or suspicious act that leads
to corruption with business partners, including publicagencies such as the government and local government.
We also strictly prohibit any bribery and clearly defineprohibited activities specifically that lead to corruption
and bribery in the section “Business Entertainment/Gift
Giving and Prohibition of Bribery” of the Compliance
Manual. In addition, we conduct compliance seminars forall employees as appropriate to build their awareness on
prohibited activities such as giving gifts to public officials
and excessive entertainment as well as disseminating
Hulic's policy on prohibition of corruption and bribery
through the Compliance Manual. Moreover, twice a year,
our Legal & Compliance Department checks whether
each department is appropriately managing the issues
related to business entertainment of interested parties
and the acceptance or offering of gifts and bribery, andidentifies and assesses risks. Furthermore, employeesof Hulic and our business partners are encouraged toreport any matters involving compliance issues, including
suspected corruption, directly to the Compliance
Hotline on an anonymous basis. We made no politicalcontributions in 2017.

Initiatives for Fair Competition
Hulic's Compliance Manual sets out our principles
of “Compliance with the Antitrust Laws and Other
Relevant Laws and Regulations.” In addition, we
introduce necessary trainings at compliance seminars tocommunicate the principles to employees.

Compliance Hotline
Our employees are encouraged to report directly to theinternal or external Complaint Hotline when they consider
it unlikely that appropriate corrective actions will be

implemented after they consult with the complianceofficers of their departments on matters involving
compliance issues, or when they are uncomfortableconsulting with compliance officers due to the nature of
the issues involved.
The Compliance Hotline investigates issues reported andpromptly implements corrective actions by paying due
consideration to the privacy of whistleblowers. In 2017, theCompliance Hotline did not receive any report.

Compliance Seminar
We regularly provide compliance seminars covering set
themes to instill awareness of compliance among all
employees. In 2017, we held seminars on the ensuring ofrules of handling of information based on categories of
information and issues related to human rights, etc. In
addition to seminars on these overall themes, we holdtheme-based seminars on important themes including
Building Lots and Buildings Transaction Business Act
and Act on Prevention of Transfer of Criminal Proceeds,in consideration of compliance specific to real estatebusinesses. Furthermore, we hold discussions in eachdepartment if appropriate.
We also post compliance-related news and Q&As to
the Company's intranet once a month. We compile
comments on compliance seminnars, obtained throughquestionnaires, as feedback and reflect them insubsequent seminars.
Compliance Seminars in 2017
Frequency: 5 seminars implemented (four times for all employees,
once for executive officers), transmission of information 12 times
No. of participants: All employees (including temporary staff)

Information Security Management
In an attempt to prevent information leaks, one of thecritical risks in relation to the performance of business, wehave established an information security management
system, and enhanced operation management inaccordance 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 use of 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 andinformation security measures in terms 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 2017, there
was no case or accident related to information leaks.
WEB

Compliancehttps://www.hulic.co.jp/en/csr/governance/compliance.html

42

Consolidated Financial Statements

Consolidated Balance Sheets

Consolidated Statements of Income(Unit: Million Yen)

Assets
2016

2017

2016

Current assets
Cash and deposits
Notes and operating accounts
receivable(Unit: Million Yen)

Liabilities(Unit: Million Yen)
2016

2017

Current liabilities
22,89828,217

Short-term loans payable

28,00030,066

4,297

5,244

Current portion of long-termloans Payable

85,54469,957(Unit: Million Yen)

2017

2016

Operating revenue

215,780

289,618

Operating cost

145,509

204,970

Operating gross profit

70,271

84,647

Selling. general and administrative expenses

16,893

20,39853,37764,249Profit before income taxes

50,19961,148Depreciation

11,29911,736

Impairment loss

193

11

Gain on bargain purchase

-−

△24

Increase (decrease) in allowance for doubtful
accounts

0△2

Increase (decrease) in provision for bonuses

42

36

Increase (decrease) in provision for directors'
bonuses

19

32

0

0

Short-term bonds payable−

11,999Operating profit

63,510111,458

Current portion of bonds−

15,000Non-operating income

Real estate for sale in process

32,20515,037

Accrued expenses

3,363

3,994

Interest income

119Income taxes payable

6,904

15,667

Dividend income

1,545

1,761

Advances received

5,395

5,655

844

289

Provision for bonuses

367

403

Share of profit of entities accounted for using
equity method

Increase (decrease) in provision for directors'
retirement benefits
Increase (decrease) in provision for stocks
payment

Provision for directors' bonuses

164

196

Income arising from cancellation of leasing
contracts281

32

Increase (decrease) in net defined benefit
asset and liability

Other

250

317

Interest and dividend income

Total non-operating income

2,933

2,411

4,516

4,468

Costs on uncompleted
construction contracts
Supplies
Operational investment securities
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets

91

111

39

44

1,032

442

961

1,139

2,975

3,221

△5

△1

128,007

164,913

Non-current assets
Property, plant and equipment
Buildings and structures

264,169

280,085

Other
Total current liabilities

9,248

7,095

138,987

160,036

Non-operating expenses

Non-current liabilities

Interest expenses

Bonds payable

38,00023,000

Other

362

321

Long-term loans payable

513,831676,674

Total non-operating expenses

4,878

4,790

Deferred tax liabilities

42,66945,464

Ordinary profit

51,432

61,870

Accumulated depreciation△70,404△80,150

Provision for directors' retirement
benefits

Buildings and structures. net

193,765

199,935

Provision for stocks payment

454

741

Machinery, equipment andvehicles

4,017

4,132

Net defined benefit liability

1,092

1,265

Accumulated depreciation△1,163△1,432

Machinery. equipment andvehicles. net
Land

2,853

2,700

71

91

Long-term guarantee deposited

55,33264,039

Other

2,466

1,968

Total non-current liabilities

653,919

813,245

Total liabilities

792,906

973,281

Extraordinary income
Gain on sales of non-current assets

247

211

Gain on sales of investment securities

837

0

Gain on investments in silent partnership and
Other

94

-

Gain on bargain purchase

-

Other
Total extraordinary income

638,078

792,489

Construction in progress

6,503

9,010

Loss on sales of non-current assets

Other

1,789

2,154

Loss on retirement of non-current assets

Accumulated depreciation
Other. net
Total property. plant andequipment△1,030△1,126758

1,028

841,959

1,005,164

Intangible assets(Unit: Million Yen)
2016

2017

Capital stock

62,69562,718

Capital surplus

78,76078,783

Goodwill

4,088

4,055

Retained earnings

163,206

193,697

Leasehold right

21,51021,994

Treasury shares△1,140△1,126475

569

Total shareholders' equity

303,523

334,072

26,074

26,619

Other
Total intangible non-current
assetsInvestments and other assets

33,449Deferred gains or losses onhedges△50△40

Remeasurements of defined
benefit plans

△19

△9

Investment securities

121,136

136,047

9,367

13,257

Deferred tax assets

755

818

Net defined benefit asset

37

66

6,376

5,184

△0

△0

4,184

3,450

137,673

155,373

Total net assets

341,087

378,855

1,005,707

1,187,157

Total liabilities and net assets

1,133,994

1,352,137

Other
Allowance for doubtful accounts
Total investments and otherassetsTotal non-current assets
Deferred assets
Business commencement
expenses6-

Share issuance cost

272

66

Total deferred assets

279

66

Total assets

1,133,994

1,352,137

Total accumulated othercomprehensive income

33,38041,332

4,468

△844

△289

Loss on retirement of non-current assets

1,578

370

Loss (gain) on sales of property, plant andequipment

△180

△209

Loss (gain) on sales of intangible assets△66-

Loss (gain) on sales of investment securities

△837

△0

Loss (gain) on investments in silent
partnership and other△88-

Decrease (increase) in notes and accounts
receivable - trade

△426

△946

Decrease (increase) in inventories

39,974△20,334590△3,88924

Increase (decrease) in guarantee deposits
received

4,295

8,706

35

5

Decrease (increase) in other assets

1,326

△406

1,215

241

Increase (decrease) in other liabilities
Interest and dividends income received

0

1

1,578

370

Loss arising from building reconstruction

667

483

Impairment loss

193

11

8

97

Total extraordinary losses

2,448

963

Profit before income taxes

50,19961,148

Income taxes - current

8,763

19,195Interest expenses paid
Proceeds from compensation

4,398

△530

113,434

59,140

1,662

1,866

△4,566△4,343

1,127-

Income taxes paid

△3,250△10,937

Net cash provided by (used in) operating
activities

108,40745,724Purchase of property, plant and equipment△106,729△196,128

Proceeds from sales of property, plant andequipment

1,679

11,458△2,427△1,003

Cash flows from investing activities

Purchase of intangible assets

Income taxes - deferred

6,274

△748

Proceeds from sales of intangible assets

Total income taxes

15,03818,446

Purchase of investment securities

Profit35,16142,701

Proceeds from sales of investment securities

888

1

Purchase of newly consolidated subsidiaries

−

0

263

299

34,89742,402

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

Consolidated Statements ofComprehensive Income(Unit: Million Yen)

2016
Profit2017

35,16142,701Other comprehensive income

Non-controlling interests

4,516

Share of (profit) loss of entities accounted forusing equity method

1,224

41,382

Guarantee deposits

126△1,771

Interest expenses

Subtotal

Profit attributable to owners of parent

Valuation difference on
available-for-sale securities

106△1,556△2,201

Profit attributable to non-controlling interests

Accumulated other comprehensive income

19300

Decrease (increase) in guarantee deposits

Other

Shareholders' equity

7454

Decrease (increase) in investment securities
for sale

Extraordinary losses

Net assets

2017

Cash flows from operating activities

Real property for sale

Merchandise

Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges

1,749

7,572

23

10

Remeasurements of defined benefit plans.
net of tax

78

△12

Share of other comprehensive income ofentities accounted for using equity method

△39

382

Total other comprehensive income

1,811

7,953

36,97250,655Comprehensive income(Comprehensive income attributable to)Comprehensive income attributable toowners of parent
Comprehensive income attributable to noncontrolling interests

43

Consolidated Statement of Cash Flows

36,70950,354

263

300

408

-

△5,396△4,104

−

500

△143

△125

702

312

△111,018△189,088

Cash flows from financing activities
Net increase (decrease) in short-term loans
payable△77,000

2,065

Net increase (decrease) in short-term bonds
payable△2

11,997

Proceeds from long-term loans payable

225,400

232,800

Repayments of long-term loans payable△141,137△85,544

Payments on redemption of bonds
Proceeds from exercise of share options
Purchase of treasury shares
Cash dividends paid
Proceeds from payment from minority
shareholders
Cash dividends paid to minority shareholders

△100

−

108

45

△947

△0

△11,904△11,911

−

100

△117

△130

△14

△938

Net cash provided by (used in) financing
activities△5,715

148,483

Net increase/decrease in cash and cash
equivalents△8,326

5,119

Cash and cash equivalents at beginning of
period30,99722,671Other

Net increase/decrease in cash and cash
equivalent with new consolidated subsidiaries
Cash and cash equivalents at end of period−

200

22,671

27,991

44

Consolidated Financial Statements

External Evaluation

Third-party Assurance

Consolidated Statements of Changes in Net Assets
2016(Unit: Million Yen)
Balance at the beginning of the current period

Shareholders' equity
Capital stock

Capital surplus

With the aim of enhancing the credibility of our CSR Report, a set of selected environmental and social performance

Retained earnings

62,64178,706

54

54

Treasury shares

Total shareholders' equity△193

140,214281,368

Changes of items during the current period
Issuance of new shares

108△11,904

Dividends of surplus
Profit attributable to owners of parent

indicators for fiscal 2017 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 our sustainability report going forward.

△11,904

34,89734,897△947

Purchase of treasury shares△947

Disposal of treasury shares-

Net changes of items other than shareholders' equity
54

54

22,992△947

22,15462,69578,760163,206△1,140303,523

Minority
interests

Total changes of items during the current period
Balance at the end of the current period

Accumulated other comprehensive income

Balance at the beginning of the current period

Valuationdifference on
available-for-salesecurities

Deferred
gains or losses
on hedges

Adjustments
for cumulative
retirement
benefits

Consolidated
statements ofchanges in net
assets

31,708△73△66

31,568Total
net assets

4,108

317,045

Changes of items during the current period
Issuance of new shares

108△11,904

Dividends of surplus
Profit attributable to owners of parent

34,897Purchase of treasury shares△947

Disposal of treasury shares
Net changes of items other than shareholders' equity
Total changes of items during the current period
Balance at the end of the current period

1,741

23

46

Balance at the beginning of the current period

76

1,888

1,741

23

46

1,812

76

24,04233,449△50△1933,3804,184

341,087

2017(Unit: Million Yen)

1,812

Shareholders' equity
Capital stock

Capital surplus

Retained earnings

62,69578,76022

22Treasury shares

Total shareholders' equity△1,140163,206

303,523

Changes of items during the current period
Issuance of new shares

45

Dividends of surplus△11,911

Profit attributable to owners of parent

42,402△11,911
42,402

Purchase of treasury shares△0

Disposal of treasury shares

13△0Change of scope of consolidation

△0
13
△0

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

22

22

30,49013

30,54962,71878,783

193,697△1,126

334,072

External Evaluation
We were highly appraised by various external institutions as a result of the proactive efforts that we put into the ESG

Accumulated other comprehensive income

Balance at the beginning of the current period

Valuationdifference on
available-for-salesecurities

Deferred
gains or losses
on hedges

Adjustments
for cumulative
retirement
benefits

Consolidated
statements ofchanges in net
assets33,449△50△1933,380Minority
interests

4,184(Environment, Social, and Governance) issues that our stakeholders place emphasis on.

Total
net assets

341,087

Changes of items during the current period
Issuance of new shares

45

Dividends of surplus△11,911

Profit attributable to owners of parent

42,402

Disposal of treasury shares

G overnanceNikkei Environmental Management
Survey/Ranked 1st Top ranking for theeighth consecutive year in the warehouse,real estate, and other categories

13△0Change of scope of consolidation

45

S ocial△0

Purchase of treasury shares

Net changes of items other than shareholders' equity

E nvironment

7,932

10

9

7,952

△734

7,218

Total changes of items during the current period

7,932

10

9

7,952

△734

37,767

Balance at the end of the current period

41,382△40△941,3323,450

378,85546