CSRREPORT
201 7
Hulic Co., Ltd.

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

Integrated
Report on
Sustainability

CONTENTS

Corporate Philosophy and Basic Stance

Editorial Policy
Hulic publishes various forms of communication tools to help investors and otherstakeholders gain an understanding of and objectively view its initiatives thatseamlessly fuse business strategies with CSR.
Information that could not be included in this publication, such as the GRI
content index, can be found on our corporate website.

Corporate Philosophy

Total commitment to our customers and the community.
Creating productive environments. Creating amenity.

Reporting Boundary

The boundary of this report is the Hulic Group. Figures for "power consumption,""gas consumption," "CO2 emissions" and "water consumption" are those for thefollowing 51 buildings, and a figure for "waste disposal" is that for buildings inwhich Hulic Group companies reside.

Promoting peace of mind.
Basic Stance

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

CSR Vision

Toyosu Prime Square

42,483

Hulic Kyobashi Building

Hulic Osaka Building

30,353

Hulic Gotanda Building

6,323
6,245

Yamato Haneda Building

29,226

Hulic Mita Building

6,228

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

Special Feature
CO2 Emissions Reduction Plan
and Road Map for 2030

17

CSR Promotion Systems

19

Environmental Initiatives

20

Hulic Kudan Building

26,027

Hulic Kawasaki Building

6,004

Hulic Ginza 7 Chome Building

20,392

Hulic Torigoe Building

5,954

Hulic Asakusabashi Building

19,636

Hulic Hamamatsu Building

5,538

Hulic Kobunacho Building

17,172

Hulic Nishikicho Building

5,451

Hulic Ginza Wall Building

16,950

Hulic Ginza 3-chome Building

5,356

Hulic Sapporo Building

14,254

Hulic Nishi Ginza Building

5,172

Hulic Shinbashi Building

13,983

Hulic Hachioji Building

5,152

Hulic Fukuoka Building

12,646

Hulic Shibuya Building

5,090

Hulic Ginza Sukiyabashi Building

11,570SIA Aoyama Building

4,946- Building a Resource-recycling Society

Hulic Sapporo NORTH33 Building

11,017

Hulic Ginza 1 Chome Building

4,771

Hulic Shinjuku Building

9,781

Asakusa Park Hall Building

4,598- Biodiversity/Encouraging Greening

Hulic Nanba Building

9,147

Hulic Ueno Building

4,419

By putting our corporate philosophy into practice we're contributing to the betterment of society.

Hulic Kojimachi Building

8,926

Hulic Nakano Building

4,319

8,790

Hulic Nihonbashi Muromachi Building

We take an honest approach to all our stakeholders. To this end:

Hulic Ginza Building

8,579

Hulic Nakaokachimachi Building

3,704

Hulic Kobe Building

8,354

Hulic Hatchobori Building

3,506

Hulic Kaminarimon Building

7,779

Hulic Hirakawacho Building

3,421

Hulic Head Office Building

7,688

Hulic Sakurashinmachi Building

3,321

Hulic Ryogoku Building

7,442

Hulic Yaesu No.2 Building

3,184

1
We take compliance seriously,
respect human rights, andtransparently conduct businessactivities based on high ethicalstandards.

Hulic Aoyama Building

2

3

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

By providing high value-added
products and services, we aregiving our customers security
and laying the foundation for the
future.

Reporting Media

Hulic Hatchobori No.1 Building

7,383

Daiwa Yoyogi No.2 Building

3,166

Hulic Setagaya

7,163

Shinbashi Yamaguchi Building

3,127

Hulic Asakusabashi Edo-dori

6,851

Hulic Edobashi Building

3,032

Hulic Kabutocho Building

6,579

Materiality forstakeholders

CSR report(Published edition and PDF)
Reporting on initiatives
considered to be ofparticular importanceWebsiteMateriality for Hulic

CSR Report 2017

- Environmental Management- Climate Change Countermeasures

Social Initiatives

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

Reporting Period
Fiscal year 2016 (from January 1, 2016
to December 31, 2016)
Regarding a portion of the priority
items, the activity report before andafter the 2016 fiscal year is included.

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

August 2017 (Previous issue: August 2016, Next issue: August 2018 (scheduled))

Comprehensive reporting on
Hulic’s overall CSR initiatives

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

4,117Time of IssuanceWebsite1

3

Environmental Performance Data/Boundary (Total floor area : m2)

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

CSR http://www.hulic.co.jp/en/csr/

Overview of Our Businesses

Head Office

Major Group Companies

Hulic Co., Ltd.

Hulic Build Co., Ltd.

• Headquarters: 7-3 Nihonbashi Odenmacho, Chuo-ku, Tokyo,
103-0011• Established: March 1957
• Business Outline: Real estate holding, leasing, sales andbrokerage• Paid-in Capital: ¥62.695 billion (as of December 31, 2016)• Memberships: Japan Business Federation, The Real Estate
Companies Association of Japan, The Association for Real
Estate Securitization, Japan Building Owners and Managers
Association, Japanese Association of Real Estate Appraisal(As of December 2016)

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.

Corporate Governance

38-Corporate Governance-Risk Management-Compliance

Consolidated Financial
Statements

43

External Evaluation

46

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

Smart Life Management Co., Ltd.
Avanti Staff Corporation

2

Overview of Our Businesses

As a corporation with a social presence,
we aim to practice management that is linked toour business strategy and ESG* initiatives, and tocontribute to the realization of a sustainable society.
* ESG stands for Environment, Social and Governance

Hulic’s Real Estate BusinessLeasing business
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.

Development business
We operate the development business drawing on our accumulated expertise. In recent years, we havelaunched new business projects in this sector, such as public-private partnership (PPP)*1 projects to support

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

Distribution of distancefrom the nearest station

Hulic currently owns 212 buildings. 90% of these properties areconcentrated in the Tokyo metropolitan area, which experiences
demand for buildings.

Good accessibility is an
important strength ofOver 5 mins
Hulic’s properties. Of all
the offices and%commercial buildings
4-5 mins
owned by the Company,
about 80% are within a%walking distance of 5
minutes from the nearest
station.
5 min walkingdistance from

Distribution of regions that
office buildings are located inTokyo’s 23
wards

75%

Tokyo
metropolitan
area

Keihanshin
metropolian
area

4%

Vacancy rate
The vacancy rate of Hulic’s
office buildings in Tokyo’s 23
wards is below 1%, ensuring astable income for theCompany.

15%(as of the end of Dec. 2016)* Excluding real estate for resale

Market averagevacancy rate

Hulicvacancy rate

3.6% 0.3%*Source: Miki Shoji’s Office Data by Region(Boundary: Office buildings withstandard floor area of 100 tsubo or
above, in the Tokyo business district)(as of the end of December 2016)

efficient utilization and operation of public assets; and corporate real estate (CRE)*2 projects to support

Within 1 min

18

38%

15

the nearest station* Based on no. of properties(as of the end of Dec. 2016)

82%

29%
2-3 mins

Safe and secure buildings
We are accelerating the efforts to make our properties resistantto earthquake by introducing the latest technologies ofGeneralEarthquake-absorbing
earthquake-absorbing,
Building
Structureearthquake-damping andShaking
Slow andviolently
parallel shaking
earthquake-resistance into newbuildings based on theirlocations, and by ensuring
implementation of aseismic
retrofits that exceed the newearthquake-resistanceDeforming laminated rubber
standards for all of our existingbuildings.

effective utilization of assets owned by private-sector enterprises. These development businesses are growth
drivers following our reconstruction business.
*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 C
 RE: Corporate real estate (CRE) projects are designed to support strategies for increasing corporate value utilizing real estate owned by private-sector
enterprises and specified corporations (educational corporations and medical corporations, etc.).

Reconstruction businessWe carry out reconstruction projects that are appropriate for the location and designed to harmonize withcustomer needs and the environment in a planned manner. Our portfolio includes many properties with
unexploited capacity in floor area, which we can recreate as more spacious and convenient facilities throughHulic’s growth strategy - Initiatives in the leasing business aimed at fulfilling the needs of society
Selection and concentration

Promoting reconstruction

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

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

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
UP!!

Rise in rent due tobuilding renewal

reconstruction. The reconstruction business is the pillar of our growth strategy.

Investment business
We undertake investments in real estate to strengthen our asset portfolio concentrated in central districts of
the Tokyo metropolitan area.

Reconstruction

Low vacancy risk

High demand

BeforeAfter

Expectation ofsignificant
profit increase
simply fromrebuilding costs

Environmentally friendly buildings

3K businesses

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

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

Aristage Kyodo

3

Increasein leasing area

Kanko
(Tourism)

Kankyo(Environment)

Hakone Suishoen

4Message from the Management

The origin of Hulic's CSR Management is"Total commitment to our customers
and the community. 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 businessfoundation, based on the prime locations of properties, has allowed us to maintain continued
growth of profits and dividends without being affected by market conditions even in the faceof adversity, including difficulties associated with the Lehman Brothers’ bankruptcy and theGreat 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 ourcustomers and the community. Creating productive environments. Creating amenity. Creating
peace of mind.” As part of our management strategy, we consider that taking initiatives toaddress social issues will create business opportunities. We will strive to remain a missiondriven company with a strong social responsibility by implementing CSR management.

5

Our Performance in 2016

Material CSR Issues and Our ProgressIn fiscal year 2016, Hulic achieved its highest profits
since going public, with operating revenue of 215.7
billion yen, operating income of 53.3 billion yen, andordinary income of 51.4 billion yen. The primary factors
contributing to these achievements are the growthof earnings of our mainstay leasing business, increasein sales of real estate for sale, and our focus on the 3K
businesses, i.e. Koreisha (seniors), Kanko (tourism), andKankyo (environment), for which demand is expected
to grow further in the future. In the tourism business, we
acquired Grand Nikko Tokyo Daiba (land), the largest
hotel acquisition deal in Japan in fiscal year 2016, andATAMI Kai-Ho-Rou, a luxury Japanese-style inn. In thebusiness for seniors, we are working on developing andacquiring residences for seniors, as well as developing anext-generation healthcare clinic mall, and we will focus
on the seniors-related business to become a leading
company in this field in the future. In keeping with theconcept of innovation and a sense of speed, we aim
to further strengthen the real estate leasing businesswith the 3K businesses as one of the approaches, andreinforce our efforts for new businesses to develop ourbusiness foundation.

Following adoption of Sus tainable Development
Goals (SDGs) by the UN General Assembly in 2015,
active involvement of companies, as well countries,
is required toward realizing a sustainable society.
Accordingly, we regard the challenges presented by
SDGs as our own issues to tackle with. As a real estatecompany that develops and owns many buildings, weconsider that our businesses have large impacts on theenvironment. Based on this idea, we have identified
reducing CO₂ emissions, water consumption, andwaste, etc. as material issues in environmental fields tobe addressed. Specifically, we promote to proactively
adopt environmentally friendly technologies in order
to construct buildings with low environmental impacts
when we develop or reconstruct proper ties. With
regard to social issues to work on, we have set targets
for the employment rate of persons with disabilities,
the ratio of women in managerial positions, and theusage rate of paid leave, etc. As measures aimed
at developing the careers of female employees, weformulated the Action Plan with the goal of increasing
the ratio of women in managerial positions to 20% by
2020. As measures to promote women’s participation
and advancement in the workplace, including childcare
support, we have established a top-class domestic
support system with nursery facilities located in offices.
In addition, we have created a comfortable working
environment by facilitating well-balanced work-life
style through setting a “No Overtime Day” once aweek and encouraging use of paid leave on Fridays
under the “My Friday” system. As measures to improve
corporate governance, we established the Nominating
Committee and the Remuneration Committee, eachconsisting of a majority of external directors, andendeavor to increase management transparency
and objectivity. Hulic will continue to set targets that
capture changes of the times and environment, andcarry out initiatives that can meet the needs of society
across the Company.

Striving to Become an
Environmentally Advanced Company
Hulic has positioned the environment business as oneof the 3K businesses (Kanko (tourism), Koreisha (seniors),
and Kankyo (environment)), which are priority sectors,
and is stepping up its initiatives in environmentallyconscious management. In line with this, we have
newly developed a CO2 emissions reduction plan for2030 as part of our long-term environmental vision,in order to respond to society’s needs to address
escalating environmental issues. Under this plan, we
aim to reduce total CO2 emissions by 45% from 2013 to2030. We will work to achieve the target by carryingout facility renovations of our existing buildings andnewly acquired buildings, and positively implementing
energy-saving measures, such as introducing naturallighting systems in new buildings. In fiscal year 2016,
Hulic obtained patents for a natural lighting system,
co-developed with the Massachusetts Institute ofTechnology (MIT), and photovoltaic panels, developed
jointly with Taiyo Kogyo Corporation and Gifu Plastic
Industry Co., Ltd. This will be our first step in launching
revenue-generating businesses in the environmental
field. We consider the initiatives aimed at reducing
environmental impacts as business oppor tunities,
and will continue to work proactively to addressenvironmental issues.

To Our Stakeholders
All employees of Hulic will continue to make united
ef for ts bearing in mind our relationships with all
stakeholders, as an advanced company leading thedevelopment of a sustainable society. We sincerely
appreciate your continued support.

Saburo Nishiura
Chairman, Representative Director

Manabu Yoshidome
President, Representative Director

6Financial and Non-financial Highlights

Changes in Major Consolidated Management Index, etc.
Operating Revenue (Net Sales)

FY12/12FY12/13

FY12/14

FY12/15

FY12/16(Million Yen)

94,319108,444

212,791

169,956

215,780(Million Yen)

22,571

29,11436,03242,00253,377

Real estate(Million Yen)

25,116

31,44838,51944,18557,353

Insurance/Human resources/Others(Million Yen)

949

1,289

1,443

2,324

2,162

Corporate/Eliminations

Operating Income

Segment Profit

Unit(Million Yen)

Δ 3,494

Δ 3,620

Δ 3,929

Δ 4,507

Δ 6,140

Operating Income(Million Yen)

20,03325,98334,31442,53451,432

Net profit attributable toshareholders of parent company(Million Yen)

11,487

15,97022,352

33,62834,897

Total Assets(Million Yen)

637,919

720,344773,401

1,091,266

1,133,994

Net Assets(Million Yen)

149,895

177,280

205,421317,045

341,087

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

8,472

11,114

84,12336,272

108,407

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

Δ 30,554

Δ 49,548

Δ 83,815 Δ 284,580

Δ 111,018

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

20,85442,841

4,192

257,934

Δ 5,715

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

12,164

16,60021,12930,99722,671

%

23.2

24.4

26.1

28.6

29.7

(Million Yen)

30,09237,80944,87054,67866,403

Consolidated Cash Flow

Equity Ratio*1
EBITDA*2
Interest-Bearing Debt to EBITDA
Ratio*3(Times)Net D/E Ratio*4(Times)Interest Coverage Ratio*5(Times)%Net Income per Share(Yen)

Dividend per Share*7(Yen)

Return on Equity*6

13.8

12.2

2.8

10.5

2.8

2.6

1.7

2.0

9.1

9.8

22.3
4.5

12.0

Main Financial Indicators
Operating Revenue (Net Sales)(¥100 milion)

2,500

2.1

18.5

8.2

23.7

11.8

13.0

10.7

27.0

37.7

52.7

53.0

6.5

10.5

15.5

17.0

2,157

2,127
2,000

1,699

1,000

FY
12/12

FY
12/13

FY
12/14

FY
12/15

(¥100 milion)

400

336

0

FY
12/16

348

300

420

223

291

100
FY
12/12

FY
12/13

FY
12/14

FY
12/15

0

FY
12/16

EBITDA/EBITDA Ratio（Million Yen）
70,000(Times)

Unit

Target: Real estate owned by Hulic*8

FY12/12%

Number of Properties

Rentable Area

FY12/14

FY12/15

FY12/16

0.6

0.4

0.7

0.9

0.3

Entire country(Yen)

20,024

19,817

20,75920,451

20,073

Tokyo central 5 wards(Yen)

24,42023,71425,147

24,51024,970Vacancy Rate *9
Average Rent

FY12/13

Total(Building)

163

161

167

202

212

Tokyo metropolitan area

(Building)

143

141

148

182

190

Other

(Building)

20

20

19

20

22

Total

m²

723,924

679,672774,615

931,229

1,029,696

Tokyo metropolitan aream²

553,333

537,582

633,918

771,049

894,179

Otherm²

170,591

142,090

140,696

160,179

135,517On July 1, 2012, Hulic completed a consolidated merger (reverse acquisition) with Shoei Co., Ltd. The numerics in this book before the consolidation refer toformer Hulic's numerics. Figures in parentheses indicate negative amounts. *1 Equity Ratio=Equity/Total Assets *2 EBITDA=Ordinary Income - Equity in Earnings(Losses) of Affiliates + Interest Expenses + Depreciation andamortization *3 Interest-Bearing Debt to EBITDA Ratio=Interest-Bearing Debt/EBITDA *4 Net D/E
Ratio=Net Interest - Bearing Debt/Shareholders' Equity *5 Interest Coverage Ratio=Operating Cash Flows/Interest Expenses Paid *6 ROE=Net Income/Average
Equity *7 On July 1, 2012, three former Shoei shares were allocated for every former Hulic share, and data for 2012 has been adjusted for this share allocation. *8
Excluding real estate held for sale *9 Excluding the unsigned floor space which was reserved due to the tenant's demands and reconstruction

0

FY
12/12

FY
12/14

FY
12/15

Dividend per Share*7
(yen)

15.5

15

17.0

10.5

200,000

100,000

5.0

6.5

5.0

50,000
FY
12/12

FY
12/13

FY
12/14

FY
12/15

FY
12/16

0

0

FY
12/12

30,000(Average rent: Yen/Tsubo)(Vacancy rate: %)

FY
12/13

FY
12/14

FY
12/15

FY
12/16

0

7.0
6.0

FY
12/15

0

FY
12/16

Market average for thefive wards of downtown
Tokyo

3.0

All Hulic properties

2.0
1.0
FY
12/12

FY
12/13

FY
12/14

FY
12/15

FY
12/16

Hulic's office buildings in
the five wards ofdowntown Tokyo

4.0

5.0

5,000
FY
12/14

9.0
8.0

25,00010,000

4.5

FY
12/13

20.0

10.0

150,000

15,000

FY
12/12

(%)

15.0

20,000

10

0

FY
12/16

Vacancy Rate※*9 /Average Rent

20

5

FY
12/15

250,000

10.0

0

FY
12/16

FY
12/14

EquityReturn on Equity

300,000
15.0

20,000

FY
12/13

FY
12/13

（Million Yen）
350,000

20.0

EBITDAEBITDA ratio

60,000FY
12/12

Shareholders’ Equity/Return on Equity (ROE)

10,000Changes in Real Estate Business Related Index

259
200

200

30,000

114

343

300

225

40,000

159

425

400

360

50,000

200

514

500

100

Net profit attributable to shareholders ofparent company

100

500

(¥100 milion)

600

533

200

500
0

(¥100 milion)

600

300

1,084

943

Ordinary Income

400

1,500

10.0

2.2

Operating Income

0Market average for thefive wards of downtown
Tokyo*Market average: Miki Shoji's
Office Data by Region

Main Non-Financial Indicators
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

Power Consumption

Gas Consumption（MWh）80,00065,97351
blds

60,00066,326*51
blds

20,000
0

7

20
blds

FY
12/12

20
blds

FY
12/13

762,552

20
blds

51
blds

612,235 588,551
20
blds

400,000

22,060

FY
12/14

51
blds

800,000

40,00025,633

999,426*

1,000,000

600,000
26,028

（m³）

20
blds

453,01220
blds

200,000
FY
12/15

FY
12/16

0

FY
12/12

FY
12/13

FY
12/14

FY
12/15

FY
12/16

CO2 Emissions Intensity

80

Waste Disposal（kg-CO2/m²）

100
68.3

77.3

74.7

regard to the detailed boundary of these indicators, please refer to page 15, “Initiatives for Material Issues.” Items marked with "*" have been assured by an independent assurance provider.

77.6

78.0*

1,200
900

40

600

20

300
FY
12/12

FY
12/13

FY
12/14

FY
12/15

FY
12/16

（t）

1,500

60

0

Usage Rate of Paid Leave

0

1,145
16
blds

1,102
16
blds

1,027
16
blds

FY
12/14

71.0

70.9

71.4

71.6*

FY
12/15

7
blds

FY
12/16

8.56

8.00

40

437*

(%)

10.00

6.00

7
blds

FY
12/13

(%)

71.5

60

434

FY
12/12

80

Employment Ratio of the Disabled

4.00
20

6.92

7.36

6.30*

5.30
Non-consolidated basis
2.14

2.00

2.46

2.31

2.21*

Consolidated basis

0

FY
12/12

FY
12/13

FY
12/14

FY
12/15

FY
12/16

0

FY
6/12

FY
6/13

FY
6/14

FY
6/15

FY
6/16

8

Hulic’s Vision and Strategy

Further evolve Hulic’s distinctive business model toachieve a high rate of growth
Hulic achieved the goal set out in our medium-term management plan (2014-2016), launched in fiscal year 2014, one
year ahead of schedule. Accordingly, we newly formulated the current medium-term management plan for 2016
through 2018 as the second step in the vision set out under the long-term plan titled “Hulic 10 Years from Now (20142023).” In fiscal year 2017, in keeping with the concept of innovation and a sense of speed, we will strive to maintainand develop our business foundation for the early attainment of the goals set in the current medium-term plan.

3-Year Medium-Term Management Plan (2016-2018)
Target Profile

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

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

Long-term Plan “Hulic 10 Years from Now (2014-2023)”
100

Basic Policies

Ordinary Income

85.0

90

Long-Term Plan

61.0-64.0

70+18.5-21.5

60
50

2. Link with value-added real estate businesses to combine growth with capital efficiency

51.4- Promote development business based on high-quality properties in prime locations of appropriate scale for the Hulic business model- Respond to diverse needs with projects based on acquisition, value enhancement, and resale (e.g. property repackaging)- Strengthen support to Hulic REIT in line with sponsor support agreement- Reinforce leasing operations to develop strengths in commercial as well as office property

Leasing business

42.5

Development

+22.5

40
30

- Steady progress with reconstruction to improve portfolio quality- Strategic sourcing of corporate real estate (CRE) and other assets for steady portfolio expansion- Strategic and plan-based asset management operations to maximize earnings opportunities+21.0-24.0

80(Billions of yen)

3. Consolidate 3 main future growth businesses as basis for
opening up new real estate-related business domains

CRE

Medium-Term Plan

4. Enter into alliances with external players to expand earning
opportunities

20.0- Increase Group synergies and enter flexibly into alliances and merger
and acquisition deals with external players

Management business
J-REIT

5. Control appropriately the various risks accompanying
expansion of business domains

10(Billions of yen) 2010

Profit plan

- Open up new real estate-related business domains in response tochanging social structures e.g. combination businesses, seed businesses

3K Businesses
Koreisha(seniors)
Kankyo(enviroment)
and Kanko(tourism)

200

1. Expand portfolio of assets under management in leasing business including REITs

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023 (year)

Numerical Target

FY 2018 Target

Operating Income

53.3

67.0-70.0

Ordinary Income

51.4

61.0-64.0

Net Income

34.8

39.0-41.0

EBITDA

66.4

82.0-85.0

10.0 times

12 times or less

2.1 times

3.0 times or less

10.7%

10% or more

32.0%

30% or moreFinancial restraints

Interest-Bearing Debt
toEBITDA Ratio
Net D/E Ratio- Ensure sound financial practice through financial control and subject
Group businesses to comprehensive risk management

2011

FY 2016

Capital efficiency

ROE
Shareholder return

6. Ensure balanced management for sustained growth- Promote balanced management by addressing Environment, Social,and Governance (ESG) issues and taking other initiatives to create value
responsive to social needs

Dividend payout ratio(simplified calculation at
fiscal year end)

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

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

9Environment-friendly
business development

Shareholders
Investors

E

Environment(Environment)

Enhancedstakeholder relations

S(Social)Robust governancesystemG(Governance)

Environmentfriendly
businessdevelopment

Suppliers

Enhanced
relations

Local
communities

Customers

RobustgovernancesystemValue
Creation

Employees

10Creating Shared Value

Realizing a Society Filled with Peace of Mind and Trust
The Hulic Group provides buildings with excellent safety, environmental performance, and convenience that matchthe needs of society today (opportunities and risk) through a fusion of management and CSR, creating new added
value in the process.

Social Issues Requiring Solutions

Corporate Philosophy

Group's motto

Contributing toward realizing
a society with total peaceof mind and trust

Creating amenity.
Promoting peace of mind.

Hulic's Contributions to Solutionsfor Social Issues
Promote environmentally friendly businesses

Creating shared values with society
and sustainably developing

Creating Shared Value with Society
Proactively expand businesses targeting seniors

Value for Society

Improve the conditions of global environment

Prevention of
global warming

Measures to address
aging in Japan

Realize a society where seniors live in peace
Use of natural ventilation and natural lighting systems, andstandardization of long-life buildings

Provide disaster resistant buildings

Measures to prepare
for natural disasters

Reconstruction fromthe Great East
Japan Earthquake

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

Development and investment in senior, nursing care andmedical facilities

Contribute to disaster reconstruction

Investment in mega solar projects in Fukushima

Opportunities and Risks in Social Issues- 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- Spurring on the real estate market through the 2020
Tokyo Summer Olympics, the increase in the number oftourists to Japan, and urban revitalization

Business Risks- Market changes caused by changes in social structure- Risk of earthquake occurring in Tokyo where ourportfolio is concentrated- Risk of deteriorating real estate market conditions due
to a prolonged downturn in Japanese economy- Risk of rising financing costs caused by turbulent
financial markets

11

Help revitalize disaster-hit economies, etc.

Value for the Hulic Group

Enhance earnings power

Responding to Opportunities and Risks
Business Opportunities

Help achieve safe and comfortable lifestyles

Fortify financial soundness

Initiatives for Opportunities

Preparations for Risks- Standardize long-life building designs- Upgrade equipment at existing buildings to highly
energy efficient equipment- Adopt environmentally friendly technologies- Make efforts in developing senior housing in step withthe growing senior population- Develop, hold and invest in hospitals and long-termcare facilities- Proactively adopt seismically-isolated structures andearthquake-damping structures- Introduce the latest technologies and equipment at
newly constructed buildings- Increase earnings of existing properties throughrebuild projects- Launch publicly offered J-REITs and improve asset
management business- Engage in tourism business centered on hotels- Prioritizing business domains based on changes insocial structure- Establishing a business continuity plan (BCP) andconducting BCP drills- Establishing BCP based on collaborative structureswith outside 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- Primarily long-term, fixed rate financing(Business Development)(Infrastructure Reinforcements)

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

12Material CSR Issues

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

Process to Identify Material Issues
STEP

1

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.

Issue identification

Based on international CSR guidelines including the GRI’s (Global Reporting Initiative) G4 Sustainability
Reporting Guidelines and ISO26000, 60 CSR issues that should be reviewed were identified.

Evaluation of materiality
from the perspective of
stakeholders

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

3

Evaluation of materiality
from Hulic’s perspective

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

STEP

Combining the evaluationof materiality from the two
perspectives and finalizing
the material issues

The 18 issues with a high level of materiality for both stakeholders and Hulic’s management were identified,and organized into four candidate material issues. After interviews and coordination with the relevant internal
departments, and approval from the directors in charge of CSR, these four material issues were finalized.

STEP

2
STEP

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

4

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

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

Identified Material CSR Issues
Suppliers

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

We build relationships thatmutually enhance the corporate
value of both parties assuming
long-lasting business
transactions through close,mutual communication.

Shareholders, Investors
We are committed to a broad
range of mutual communication
with shareholders, through timely
and appropriate disclosures aswell as participation in earnings
briefings and various investor
relations (IR) fairs.

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

Global Environment

Local Communities

We are mindful of the environment and actively work toutilize natural energy and conserve biodiversity.

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

High

Environment

Materiality for stakeholders

Employees

Society

Governance

13

Examples of Dialogues

Global Environment

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

Shareholders, Investors

Participated in various investor relations (IR) fairs and events, held financial results briefing, and implemented timely and appropriate
information disclosure on the Company’s website, etc.

Customers

Conducted surveys on customer satisfaction levels, implemented disaster prevention drills, and established a customer contact center,etc.

Suppliers

Held property management status reporting meeting with management companies, facilitated close and mutual communication andmaintained long-standing good business relationships with general contractors, etc.

Government

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

Local Communities

Hosted summer festivals for local communities, conducted cleaning activities and voluntary activities for flowerbed maintenance,
participated proactively in events organized by neighborhood associations, etc.

Employees

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

- Marketing communication- Advanced technology/research anddevelopment- Compliance (society)- Local communities- Business partnership/collaboration- Provision of safe and secure products andservices- Labor-management environment- Diversity and equal opportunities, etc.
- Risk evaluation/Risk management- Anti-competitive practices- Corruption prevention

High

Materiality for Hulic

Stakeholders- Energy- Emissions into the atmosphere (GHG)- Products and services (environment)- Renewable energy- Compliance (environment)- Overall environment

Material Issues 1

Material Issues 2

Material Issues 3

Material Issues 4

Environmental measures

Strengthening the 3K
businesses toward
resolving social issues

Diversity andwork-life balanceStrengthening corporate
governance andrisk management

P.20 »

P.30 »

P.32 »

P.38 »

Relevant SDGs

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)

Items

Measures for global warming acrossthe entire value chain of Hulic's
buildings- Carry out initiatives to reduce CO2
emissions and waste and use limited
resources such as energy and water
efficiently

Environmental
measures- Carry out environmentally conscious
management based on an awareness ofvalue chains

Strengthening
the 3K businesses
toward resolvingsocial issues- 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.

Boundaries

FY 2013

FY 2014

FY 2015

Major Achievements in FY2016

FY 2016

Power consumption(MWh)26,02825,63322,06065,973

66,326*

Gas consumption(m³)*4

612,235

588,551

453,012762,552

999,426*

68.3

77.3

74.7

77.6

78.0*

Reduction in average CO2 emissions intensity (kg- CO2/m²) by 5% during the period from 2012 through 2016
compared to the average during the period from 2005
through 2007. (per unit floor area)*1*2

51 existing primary office buildings *3

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.17-18
P.21-25

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

All Hulic’s buildings

7

5

6

6

3

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

◎

P.17-18
P.23-24

Promotion of greening

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

All Hulic’s buildings

8

6

5

9

1*

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

◎

P.27

Reduction of waste at Hulic’s
buildings

Reduction in the average amount of waste (t) by 15%
during the period from 2013 to 2016 compared withaverage during period from 2005 through 2007. (per unit
floor area)

Seven buildings occupied by
the Hulic Group *6

1,145

1,102

1,027

434

437*

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

◎

P.26

Reduction in water consumption at
Hulic’s buildings

Reduction in average water consumption (m³) by 15%
during the period from 2013 through 2016 compared tothe average during the period from 2005 through 2007.
(per unit floor area)

51 existing primary officebuildings *3

164,037

148,508

127,745

381,553401,272*- Used rain water and installed various water-saving devices

◎

P.26

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

5

8

7

8

4

- Proactively adopted long-life structure specifications for new buildings

◎

P.26

Tourism business projects

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

All Hulic’s buildings (As of the end of
December 2016)

-

-

-

8blds

11blds- The number of properties owned as of December 31, 2016 - We newly acquired ATAMI Kai-HoRou and Grand Nikko Tokyo Daiba (land) in fiscal year 2016 .

-

P.30

Senior business projects

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

All Hulic’s buildings (As of the end of
December 2016)

-

-

-

16blds20blds- The number of properties owned as of December 31, 2016
- We newly acquired three properties including Life Commune Hayama and completed
construction of Hospitalment Itabashi Tokiwadai.

-

P.30

Ratio of female managers: 20% by 2020

Hulic

8.2%

7.0%

8.5%

10.4%

12.3%

Improvement of systems to develop
women’s careers
Promoting employment of thedisabled

Promoting the use of the next
generation nurturing support system

Number of seminars organized by the women's career
promotion project team: Once a year
Employment ratio of the disabled: Maintaining thestatutory employment rate of 2% or more
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
Hulic Group (As of June 1, 2016) *9(Reference) Hulic (As of June 1, 2016)
Hulic (Women)
Hulic (Men)

-

-

-

1

1

-

2.14%

2.46%

2.31%

2.21%*

5.30%

6.92%

8.56%

7.36%

6.30%*

100%

No eligible
person

100%

100%

100%

1

1

1

2

6

- 57 male managers, 8 female managers-- In addition to meetings of the women's career promotion project team, we held seminars andconferences for exchanging opinions for all female employees.

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

◎

P.32

- Published parents' guide to childcare- Continued operation of daycare nursery inside Hulic's head office building.

◎

P.34

P.32-33

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: 60% or higher per fiscal year

Hulic

71.5%

71.0%

70.9%

71.4%

71.6%*- Promoted the use of plus-one paid leaves/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

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

-

P.33

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

Hulic

-

-

-

5

5

- Conducted training on insider trading regulations and rules for responding to antisocial forces,
etc.

-

P.42

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

Hulic

-

-

-

8

9

- 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%

- 17 Board of Directors' meetings were convened in fiscal year 2016. 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%(3 buildings)

100%(2 buildings)

100%(1 building)100%(9 buildings)

100%(2 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

7

8

9

12

13

- 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.35-36

Supporting employees to conductsocial contribution activities

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

Hulic Group

5

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.35-36

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 sole tenant,real estate for sale, and condominium ownership/shared ownership. *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 2016, and which are the targets of greening projects. (excludes real estate for sale)

15

Results
FY 2012Using renewable energy anddeveloping new technology- Use renewable energy proactively- Give consideration to biodiversity andpromote greening

KPIs/Targets*11

In order to improve while objectively assessing CSR activities, we have established key performance indicators (KPI) and target for eachmaterial CSR issue. For non-priority issues, we have adopted an assessment indicator that helps us monitor the results of the implementationof initiatives. Figures marked with "*" are those that have been assured by an independent assurance provider. This fiscal year, we received
assurance from an independent assurance provider concerning the following eight items: 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 rateof 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.

*6 Data for 2012 - 2014 covers the 16 primary office buildings; however, the seven buildings occupied by Hulic's Group companies, which are actively implementing measures to reduce the volume ofwaste, have been covered in data for 2015 and afterwards. *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." *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 both as 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 asaffiliated subsidiary companies 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 2017 are now being developed.

16

Special Feature

CO2 Emissions
Reduction Plan andRoad Map for 2030
Hulic will seriously consider and implement
what it can do to resolve global warming
issues as a company engaged in the realestate business.

Actions on Climate Change
The 21st session of the Conference of the Parties tothe United Nations Framework Convention on Climate
Change (COP21), held in December 2015 in Paris, adopted
the Paris Agreement as a new international framework forreducing greenhouse gas emissions after 2020. In Japan,
discussions on specific measures to address climatechange are picking up momentum with the formulationby the government of the “Plan for Global WarmingCountermeasures,” which sets the target for reducing
greenhouse gas emissions of 26% by FY2030 from thelevel in FY2013. In addition, companies in the “commercial
and other sectors” are required to reduce emissions by
40%. In accordance with these changes in the external
environment, Hulic has reviewed the existing plan toreduce CO2 emissions with the year 2020 as the target
year, and has formulated a new CO2 emissions reduction
plan with the year 2030 as the target year.
Regarding the current progress of the existing CO2
emissions reduction plan (target year: 2020), we haveachieved the target on the basis of our consumption ofprimary energy.

Opportunities and Risks Presented by
Responses to Climate Change
Risks

Opportunities

17• Deterioration of credibility for failing tomeet the needs of society• Reinforcement of regulations related tobusiness activities•D ifferentiation from other companies bytaking the lead in addressing environmental
issues• Improved image as a pioneering company

Long-term Goal for 2030
By 2030, we aim to reduce CO2
emissions by 45%· We aim to reduce total CO2 emissions, in principle,

from fiscal year 2013.
· A long with total CO2 emissions, we will identify CO2emissions from individual buildings with the aim ofverif ying the CO2 reduction effects from a single
building.

Basic Plan to Achieve the Goal
1. P r o p e r t i e s f o r r e c o n s t r u c t i o n : R e d u c e e n e r g y
consumption by an average of 25% by implementing
various energy-saving measures. At the same time,endeavor to improve energy-saving performance byworking toward achieving ZEB*1 and using labelingsystems, such as BELS*2 and CASBEE*3.
2. Properties requiring maintenance/renovation, properties
to be newly purchased: Reduce energy consumption by
an average of 5% by implementing facility renovation(i n c re a s i n g va l u e), a n d t h e u s e a n d o p e ra t i o n a larrangement of green leasing*4.
3. E ndeavor to reduce energy consumption across allbuildings with cooperation from tenants by taking
measures such as visualizing the energy consumption ofeach building.
*1 ZEB is a term used to describe a building with zero or approximately zero net primaryenergy consumption annually.
*2 BELS is a system for evaluating/indicating the energy-saving performance of housing
by a registered body of the general incorporated association for housing performance
evaluation and labeling.
*3 C ASBEE is a method for evaluating and rating the environmental performance ofbuildings.
*4 U nder green leasing, building owners collaborate with tenants and make voluntaryarrangements on reducing environmental impacts through energy-saving measures
for real estate and improving the work environment by specifying in a contract ormemorandum of understanding, etc., and implement the agreements.

Adoption of Energy-saving
Technologies, etc.
1. B uildings: Improve building envelope performance (improvewindow specifications and enhance heat insulation capacity,etc.), introduce natural ventilation/lighting systems, and adopt
greening of rooftops/walls, etc.
2. High-efficiency devices/systems: Work to reduce the outdoor
air load by adopting LED lighting, high-efficiency devices, totalheat exchangers, motion detectors/light control sensors, andCO2 sensors, and use cogeneration/fuel cells, untapped energy,
and heat interchange systems, etc.
3. O thers: Work to introduce renewable energy, promote onsite/
offsite photovoltaic power generation, and visualize energy
consumption, etc.

Road Map for 2030

2030

45%
reduction

CO2 emissions : 149,113 t-CO2 (estimate)

Various measures for energy-saving andreduction of CO2 emissions intensity of
power sources

2013
CO2 emissions: 259,330 t-CO2 (estimate)

Improve the performance ofenergy-saving technologies and develop
new technologies, while promoting the
adoption of renewable energy, etc.

* CO2 emissions in 2030 are forecasted to decrease by 42.5% from 2013 with the implementation of various measures for energy-saving and reduction of the CO2 emissions intensity of powersources. Meanwhile, we will set a CO2 emissions reduction target of 45% taking into account of improving the performance of energy-saving technologies and developing new technologies,
while promoting the adoption of renewable energy, etc. going forward. *Allowing for a change in CO2 emissions factor.

18CSR Promotion Systems

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

Social Background Surrounding Hulic
FUNDAMENTAL
APPROACH

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

Results in FY2016

Held the CSR Committee and the CSR Supporter meetings

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

Environmental
Initiatives

Initiatives for Solving Social Issues

Establishment of the CSR Committee
Hulic has established a CSR Committee in order tocombine and align its CSR-related initiatives with its
business activities.
It is essential for management personnel to be involvedin boosting the level of CSR initiatives in the mediumand long-term while striking a balance between CSRrelated measures and business activities. Therefore, the
CSR Committee is chaired by the President, consists ofSenior Executive Managing Officers, the Chief of the
Human Resources and General Affairs Department,
the Chief of the Real Estate Planning Department,
the Chief of the Property Development Department,
and the Chief of the Corporate Planning Department.

> 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

The Committee is held annually in principle, and asneeded. Company-wide CSR activities are performedin accordance with the basic policy decided by the
CSR Committee. To be more specific, the Committee
fo r m u l a te s var io us k in d s of p o l ic ie s co n ce r n in g
Company-wide CSR activities and an annual CSRs c h e d u l e , s et s co n c rete n u m e r ical targ et s , an dconsiders and deliberates diverse proposals made byemployees, etc. Like this, in the Committee as a place
to practically implement CSR management, there area lot of active discussions.
Activities of the CSR Committee are reported to Boardof Directors on a regular basis.

Environmental Management

Summary of CSR Committee Meeting

10th Meeting (September 2016)
Fiscal year 2015 performance/CSR
plan for 2017/Areas of improvement

FUNDAMENTAL
APPROACH

The CSR Committee discussed the performance results ofproperties monitored by KPI, CO2 emissions, and external CSR
evaluation, etc. Based on the discussions, the committee decided
properties to be monitored by KPI and the CSR Policy for 2017.

Results in FY2016

Flowerbed maintenance activities carried out by CSR supporters

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

1

Corporate Planning Department
CSR Supporter
Internal Environmental
Improvement TeamSocial Contribution Team

Concerned material issues/KPI

Concerned material issues/KPI

Concerned material issues/KPI• Measures against global warming• Conservation of resources and reduction of waste at existing buildings• Reduction of waste in new construction
and reconstruction works• Earthquake countermeasures for Hulic’s buildings• Extending the life span of Hulic's buildings• Using renewable energy and developing new technologies• Greening buildings to prevent warming• Promoting use of supportive systems toraise children while working• Work-life balance• Promoting employment of the disabled• Preventing crushing labor• Survey of customer satisfaction• Mental health• Activating the reemployment program• Reduction in power and paper
consumption in office• Matching gifts

Environment Team

Real Estate Business Division

Information disclosure

Matching Gift Council• Volunteer activities• Collecting stamps and used books, etc.
• Taking into account communities in realestate development• Contributions
Social Contribution Review Committee

Communication

Stakeholders

19

Customers

Business Partners

Government andPublic Administration

Local Communities

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

Hulic Environmental Policy

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

Employees

Developed the CO2 emissions reduction plan and the road map targeted for 2030

Environmental Policy

CSR Promotion Systems

Shareholders,
Investors

Hulic will implement environmentally friendly management based on the Hulic Environmental Policy andcontribute to conserving the global environment.

Global Environment

Environmental Compliance

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

2

Environmental Management System

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

3

Environmental Performance

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

4

Recycling Society

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

5

Environmental Awareness andEducation for Employees

We work on environmental education and awareness activities inorder to enable each employee to voluntarily act toward theimprovement of environmental performance.

6

Environmental Communication

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

20

Environmental Management

Environmental Management System(EMS)
Hulic Group is smoothly executing the PDCA Cycle with
its unique Environment Management System (EMS) built
based on the “Hulic Environmental Policy.” This systemis operated cooperatively with Group Companies,
according to targets set by the environmental project
team headed directly by the President.
To monitor the progress of environmental activities
of Hulic Group, we adopt evaluations by the “Boardof Directors” for internal mat ters and by the“Environmental Advisory Council” for external matters.
The results are reported to the CSR Committee and theEnvironmental Project Team, and are reflected whenreviewing the environmental promotion system andsetting targets.

Environmental Management System
President
Environmental Project Team
PLAN
Corporate Planning Department
Hulic Build Co., Ltd.
Hulic Building
Management
Co., Ltd.

CHECK
External assessment
Environmental
Advisory Council

DO
Technology and Environment
Development Department
Real Estate Planning
Department
CHECK
ACT

Board of Directors
CSR Committee

Environmental Advisory Council
We have an Environmental Advisory Council in place toassess Hulic's environmental activities.
The Eighth Environmental Advisory Council discussed
Hulic’s new plan for reducing CO2 emissions (target year:2030) based on COP21 and the “Plan for Global WarmingCountermeasures” released by the Ministr y of theEnvironment, etc. The council members provided opinions
on methods to set reduction target of CO2 emissions andto manage numerical data. In consideration of those
opinions, Hulic developed a new plan to reduce CO2
emissions with 2030 as the target year.

Consideration for Sustainability in Real
Estate Development and Investment
Hulic is committed not only to sustainable real estate
investment in accordance with the “Basic Principles ofCorporate Conduct” and our “Code of Conduct”, but
has also formulated separate regulations on managing
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

21

Climate Change Countermeasuresconducting an investigation of the acquisition of realestate, Hulic always carries out statutory investigationsa n d c o n d u c t s s t u d i e s o n n a t u ra l e nv i ro n m e n t ,specified hazardous substances, and the presenceof u n d e rg ro u n d o bs ta c l e s . In n e g ot ia t io ns w it hcommunities, we are fully mindful of impacts that ourbusiness will have on the surrounding living environmentand strive to maintain a positive relationship with thecommunity, especially with regards to sunlight issues,noise, safety, wind damage, privacy, interference withradio waves and view.
When outsourcing design and project management
or ordering construction work , we generally hirecompanies with the solid technologies, credibility,
and track records. In addition, when reconstructing
and developing real estate, we issue instructions onenvironmentally friendly designs and check whether
environmentally friendly designs are adopted at thebasic designing stage, implemental designing stage,
and completion stage.

Environmental ComplianceWith the aim of thoroughly complying with laws andregulations related to the environment, including
waste and soil pollution, the Hulic Group conveys
to all employees information on the latest trends inenvironmental laws and regulations and legal systems
through the intranet, and provides environmental
compliance training as needed.
We use opinions raised during the compliance training
in the subsequent formulation of environmental
policies.
There were no violations of environmental laws in fiscal
year 2016.

Environmental Education
The Hulic Group participates every year in the Tokyo
G re e n S h i p Ac t i o n , o rg a n ize d by t h e B u re a u ofEnvironment of the Tokyo Metropolitan Government,
to raise environmental awarenes s , and engages
in volunteer activities such as rice har vesting andtrimming weeds and shrubs at the foots of mountains.
These activities, with participation by many employees
every year, provide them good opportunities to learn
about biodiversity.
T h e Te c h n o l o g y a n d Env iro n m e nt D eve l o p m e nt
Department, which
promotes the environmentalb u s i n e s s e s of t h e G ro u p,
provides training onenergy-saving designs andb i o d i ve r s i t y, e t c . t o n e w
employees yearly.
Environmental Management
http://www.hulic.co.jp/en/csr/ecology/management/

FUNDAMENTAL
APPROACH

Hulic implements climate change countermeasures to achieve its newly developed plan to reduce CO2
emissions (target year: 2030).

Results in FY2016

CO2 emissions intensity:

78.0kg-CO2/m2 Number of capital investments for renewable energy: 3 investments

Situation of Greenhouse Gas Emissions

Energy Consumption and CO2
Emissions at Hulic’s Buildings

Promoting Initiatives Across the Entire
Value Chain

In tandem with our business expansion, we increased
the number of properties to be included in this reportsince f iscal year 2015. With the increasing target
properties, we aim to further promote energy-saving
activities. We will work proactively toward our goal of
reducing CO2 emissions by 45% from the fiscal year 2013by 2030.

The Hulic Group promotes environmentally friendly
processes across the entire value chain which covers fromacquisition, development, reconstruction, and leasing tomanagement and maintenance of properties.
In addition, the Hulic Group calculates not only its
own emissions (Scope 1 and Scope 2), but also indirectemissions related to its business activities (Scope 3) tobroadly understand and lower greenhouse gas emissions
across the entire value chain.

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

700,000

33,021

43,2962.00

600,000

657,751

652,433

1.75

500,000

1.4

1.4

1.4

1.4

26,632

25,611200,000

257,109

255,565

100,000

20
blds

20
blds

20
blds

51
blds

51
blds

2012

2013

2014

2015

2016

0

(FY)

Intensity of energy consumption
Power consumption (GJ)
Gas consumption (GJ)

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

Electricity use and gas use (51 keybuildings)

2,335.4

2,348.0

0.50

Upstream transportationand distribution

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

6.8

30.8

0.25

Waste generated fromoperations

Waste generated from 7 keybuildings

29.2

31.3

Business travel

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

52.3

58.4

Employee commuting

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

39.0

40.8

2,796.5

2,860.3

Note 1: As the target buildings for calculation increased from 20 to 51 buildings
from 2015, energy consumption is on the rise. As it is difficult to capture past data,
recalculation of actual values for the past is not carried out.
Note 2: 0.00997 GJ/kWh and 0.00928 GJ/kWh are used as the unit calorific value forday-time power and night-time power, respectively, and 44.8 GJ/thousand N m3 forcity gas.

CO2 Emissions/Intensity
CO₂ emissions(t-CO₂)

CO₂ emissions intensity(kg-CO₂/m² )77.3

20,000
1,328
10,00002,160*

100.0033,84833,647*

77.6

80.00

78.0*

1,648

68.3

12,676

1,277
14,611

74.7

60.00

983
12,221

40.00

20
blds

20
blds

20
blds

51
blds

51
blds

2012

2013

2014

2015

2016

CO₂ emissions intensity
Scope 1 emissions (gas)

Scope 3 total emissions

Note: We have calculated greenhouse gas emissions, including those from the entire
value chain, based on the Basic Guidelines on Accounting for Greenhouse Gas Emissions
Throughout the Supply Chain Ver. 2.2 published by the Ministry of the Environment.

TOPICS

40,00030,000FY2016351.0

0.75

219,943

FY2015333.7

1.00

19,712Main target for calculation

Purchased goods andservices

1.25

300,000

Category

Unit : t-CO2

Consumables, office goods (Hulic
Co., Ltd.), water and sewerage (51key buildings)

1.50

1.2

400,000

Scope 3 emissions

20.00

(FY)

Scope 2 emissions (power)

Note 1: F igures marked with "*" have been assured by an independent assurance
provider.
Note 2: A s the target buildings for calculation increased from 20 to 51 buildings from2015, CO2 emissions are on the rise. As it is difficult to capture past data,
recalculation of actual values for the past is not carried out.
Note 3: 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 Seventh 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
in their approach to environmental management basedon each company's answers to a questionnaire.
Hulic has ranked first in the category of warehouse,real estate and others for seven consecutive years
since the 14th Environmental Management Survey in2010. Given that we were able to achieve another highscore, we stand more committed than ever before to
combining global environmental conservation withcorporate growth through heightened awareness ofenvironmentally-conscious management.

22

Climate Change Countermeasures

Natural Ventilation and Natural Lighting System Developed through Joint Research with
the Massachusetts Institute of Technology (MIT)

Effective Use of Renewable Energy

Initiatives for Utilizing Renewable Energy
The Hulic Group promotes the eco-business as one
aspect of our 3K businesses (Koreisha (seniors), Kanko(tourism), and Kankyo (environment)), and has set
the target for the number of capital investments on
renewable energy at three investments or more in eachfiscal year.

Photovoltaic Generation System
When a photovoltaic cell module is installed on therooftop of a building, the power generation status
and the amount of CO2 reduced are indicated on a"power generation display panel." The display panel isinstalled at a place where building users can easily see
it to practically visualize CO2 emissions. On the rooftop
of Hospitalment Itabashi Tokiwadai, completed in2016, a 10.5 kW photovoltaic generation system witha capacity to generate upwards of 10,500 kWh ofelectricity every year has been installed.

Initiatives for Achieving ZEB through theMega Solar Power ProjectWith environmental issues becoming more serious, inNovember 2014, Hulic decided to invest and become
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
toward environmental management. We expanded
the initiative to Ogoyama Town in Kasama City, Ibaraki
Prefecture in 2015, and to Yokoshibahikari Town in Sanbu
District, Chiba Prefecture in 2016. Using the solar power
plants at these three locations, we are working towardachieving offsite ZEB at the Hulic Head Office Building.
ZEB is an acronym for Zero Energy Building. ZEB meansthat a building uses zero net primary energy annually
thanks to improvements made in the energy efficiencyof the building and its facilities as well as the use ofrenewable energy.

1Initiative for achieving offsite ZEB through the use ofrenewable energy

Effect2

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

Effect3

Contribution to Great East Japan Earthquake recovery
efforts through the operation of the solar business inFukushima Prefecture

EffectInstallation of Photovoltaic Panels on
an Exterior Wall

Amount of Electricity Generated by Solar
Power (designed value for key properties)

23

Hulic Head Office Building

Approx. 9,400 kWh per year

Hulic Asakusabashi Building (PPP project)

Approx. 15,890 kWh per year

Hulic Osaka Building

Approx. 10,000 kWh per year

Hulic Ginza Building

Approx. 6,500 kWh per year

Hulic Court Yukigaya

Approx. 28,900 kWh per year

Hulic Residence Nishi Oi

Approx. 23,100 kWh per year

Sunny Life Funabashi

Approx. 16,800 kWh per year

Hospitalment Itabashi Tokiwadai

Approx. 10,500 kWh per year

Hulic Shimura-sakaue

Approx. 10,000 kWh per year

> Natural Lighting System
Our natural lighting system uses specially shaped
natural lighting anidolic louvers co-developed with MIT
to capture constantly changing sunlight on the ceilingof rooms during changing seasons and times (elevationand orientation) without the use of power. Highlyreflective metal panels are used for interior ceilings,
which supply a consistent amount of pleasant naturallight to the top of office desks. This system has been
installed at the Hulic Head Office Building as well as atthe Hulic Shinjuku Building and other buildings.

Image of natural lighting

Cross-Sectional View of Natural Ventilation
Balanced natural ventilation window
Sound absorbing chamber
Natural ventilation air outlet

Solar elevation andorientation change
depending on times
and seasons.

Lightreflecting
surfaceon the ceilingLighting louver unit
Naturalventilation

Wooden blindLight reaches thesurface of ceilingeven if solar
elevation changes.

Hulic HeadGeneral
Building Office Building

Photovoltaic panels (Hospitalment Itabashi Tokiwadai)

The Hulic Ogikubo Building is open to a major arterial
road on its south side, providing ideal conditions forsunlight exposure. Capitalizing on this, we used a unique
an d ex t re m e ly t hin p h otovo ltaic
panel that is sandwiched between
glas s panes to cre ate a building
material for the facade (front of thebuilding). The panels form part of a
3.5 kW system capable of generating
upwards of 3,500 kWh of electricity
annually.
Facade (Hulic Ogikubo Building)> Natural Ventilation System
If the load from air conditioning can be lessened bymaking the maximum use of natural energy to curb
energy consumption, CO₂ emissions can be reduced
significantly. To introduce a natural ventilation system,
joint research with MIT was conducted, in which the flowof air and other factors were meticulously simulated.
The natural ventilation used in the Hulic Head Office
Building is not simply an auxiliary system for mechanicalair conditioning. It was actually used to successfully cool
the entire building during seasonal intervals. A silencer
chamber is also used for the intake opening, which
worked to realize the use of a natural ventilation system ina dense urban area with high-level noise.

40%

Automatically stopped whennatural ventilation is working

Controlling temperature of air blown out
when air conditioners are operating

Exterior

Office• Improve building envelope
performance

100%
Primaryenergy usage

Improvement ofenergy efficiency• Use natural lighting

60%• Use natural ventilation• High efficiency air conditioning• High efficiency lighting

Renewableenergy usage

Utilization of renewable energy

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

The Hulic head office is a very energy efficient buildingthat employs natural lighting, natural ventilation andother energy saving technologies, which helps it use
around 40% less energy than general buildings. Of theremaining 60%, 30% is sourced from renewable energy,
bringing it close to a ZEB.

Rooftop solar chimney (Hulic Shinjuku Building)Anidolic louvers

Simulation of light reflection

TOPICS

Obtainining Patents for Natural Lighting System and Photovoltaic Panel
1. Natural lighting system

2. Photovoltaic panels

The natural lighting system was developed as a result of a threeyear research/development project that Hulic engaged in with
the Massachusetts Institute of Technology. With a speciallydesigned natural lighting louver, it can take in a certain amount ofsunlight to the ceiling surface of a room without using electricity inaccordance with different seasons and times of day. The greatest
features of this system are that it realizes a comfortable level ofilluminance with natural light, which was previously unattainable,
and also that it has a simple, maintenance-free structure eventhough it comes with a fixed type.

The special feature of Hulic’s photovoltaic panels co-developedwith Taiyo Kogyo Corporation and Gifu Plastic Industry Co., Ltd.
is that they are lightweight, freely designable, and easy to install.
We realized a lightweight photovoltaic panel with high strengthby using aluminum board and plastic-based honeycombpanel material. It is about half the weight of conventional solar
panel. The panel can be freely designed through customizationand can be made in various shapes. Equipped with a sliding
mechanism using a special metal fitting, it can be relatively
easily installed. Thus, it can be installed even in a building withstrict loading conditions such as in repairing works.

[ Patent registration date: October 14, 2016 ][ Patent registration date: October 7, 2016 ]Ogoyama Town Solar Power Plant

24

Climate Change Countermeasures

Building a Resource-recycling Society

Promotion of Energy-saving

Activities to Promote Energysaving Cooperation with Building
Management Companies

Introduction of High-efficiency
Lighting and Illumination Control
Devices

Hulic has created an energy management standard,
which it shares with property management companies
in charge of its properties, in order to rigorously manage
the progress of energy conservation activities. This
standard was created to promote more efficient energy
conservation activities at our company-owned leaseproperties, and it serves as a guideline for management,
measurement, recording, maintenance, and inspections
related to the rationalization of energy use based onbuilding type and size. This standard is applied to all formsof energy, including electricity, gas, and water (water andsewerage), used at our company-owned lease properties
and the Hulic Head Office Building.

Hulic has realized a significant level of reduction in CO₂emissions by introducing lighting systems with highenergy-saving performance such as high efficiency
lighting and LED lighting, as well as illumination control
devices including sensors to detect people and daylight.
Equipment witha brightness sensor
Reflected
light fromotherequipment

Outside light
Outside light reflecting
on the surface of desk

Decreasing light intensity
while nobody is there.

Reflected light fromthe equipment withbrightness sensor

Hulic actively adopts energy-saving technologies for its
development projects and existing properties to promoteenergy savings. Specifically, we use high-efficiency
equipment, high-efficiency air conditioning systems,
total heat exchangers, and cogeneration systems/
storage batteries according to the features of properties.
Besides, we will proactively introduce new energy-saving
technologies when performance improvements areachieved. In addition, Hulic is conducting its own researchand development on energy-saving technologies.
Hulic, jointly with other companies, has been developinga thin-layer wall greening system,
which is easy to be introduced toexisting buildings, and we haverecently begun advance sales.
Hulic and two other companies
jointly own a pending patent forthis system.

Introduction of LED Lighting
Use of LED lighting, which is brighter than incandescentlamps and fluorescents and uses less electricity, helps
to significantly reduce power consumption and CO₂
emissions. Furthermore, as LED lighting is long lasting, it ispossible to not only save the trouble of maintenance suchas changing bulbs, but also reduce waste and effectively
use resources. In princple, all Hulic’s development projects
use LED lighting. We are also sequentially switching overto high-efficiency lighting and LED
lighting at our existing buildings as partof energy efficiency renovation work.
Space with LED lighting system (Hulic Ginza Sukiyabashi Building)25

Outside lightreflecting on
the surfaceof floor

Detection rangeof the brightness sensor

Floor*Decreasing light intensity when there is outside
light to keep brightness maintained appropriately

Operating principle ofa daylight sensor

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 promote the 3Rs (reduce, reuse, and reycle) by adopting Longer Life Building designs that enable toreduce waste significantly.
Results in FY2016

Hulic’s Longer Life Buildings completed based on the standards established in the “Hulic Guideline for Longer Life Service”:

Creating a New Standard of Buildingsthat Last 100 Years"Hulic Guideline for Longer Life Service" is composedof three ideas, 1) high earthquake resistance and highdurability; 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
years in safety, and on the other hand we have createdthe possibility to reform a building's exterior to be upto-date through a flexibly modified layout.

Keeping brightness appropriate
when someone i s there.
Operating principle ofhuman-detecting sensor

Introduction of Energy-saving
Measures in Cooperation with Tenants
We have introduced an energy usage visualization
system on a trial basis to examine measures for savingenergy at tenants and for reducing the electricity
consumption of an entire building. We have started bymonitoring electricity usage in one building for a year
on a trial basis, and will expand the target buildings forwhich energy savings can be achieved.
Based on the building’s electricity consumption for one
year, adjustments will be made with each tenant, thenwe examine equipment settings and propose utility cost
reduction measures through more efficient operations,and implement small-scale renovations as needed.

Use of Systems that Make it Easier for
Tenants to Conserve Energy
The Hulic Group has begun rolling out a visualization
system that freely controls air conditioning use in orderto provide a better understanding of a building's use ofenergy. This system enables tenants to set the optimal
working environment temperature for theirbusiness and makes it easier to implement
energy conservation measures.

1

High earthquake resistance and high durability

2

Smoother updating and renovation

3

Advanced maintenance

URL• Waste Disposal

http://www.hulic.co.jp/en/csr/ecology/warming/

(t)

1,500
1,200
900

1,145

1,102

16
blds

16
blds

1,027
16
blds

600
300
0
2012

2013

2014

434

437*

7
blds

7
blds

2015

2016 (FY)*Since fiscal year 2015, we have been targeting seven buildings owned by Hulic.
These buildings include Hulic Group companies as tenants which areproactively working to reduce waste generation.

• Water Consumption(m³)

500,000
381,553

400,000

Longer life
buildings
http://www.hulic.co.jp/en/csr/ecology/waste/long_life.html

200,000

164,037

148,508

100,000

20
blds

20
blds

2012

2013

0

Amount of Waste Disposal and Water
Usage at Hulic's buildings

401,272*
51
blds

51
blds

300,000
127,745
20
blds
2014

2015

2016 (FY)*Since fiscal year 2015, we have been targeting key buildings with total floorarea of 3 thousand m2 or more. In fiscal year 2016, the number of target
properties was 51.

As a result of our steady efforts to create a resourcecirculating society, we managed to reduce waste
generation by 21% and water usage by 25%. (Percentage

Building a resource-circulating society
http://www.hulic.co.jp/en/csr/ecology/waste/circulatory.html

Environmental Advantages of Longer Life Buildings （comparison over a 100-year span）• Amount of Resources Input• LCCO2(Life-Cycle CO2)
New construction

Standard
proposal

New construction

85

Reconstruction

Standard
proposal

263

RepairLonger life
building
proposal

41

0

20

40

80

100

0

(kg/m² per year)

New construction
Reconstruction

12

RepairRenovation

2

4

6

Demolition

Amount of Waste
Generated
Reduced by

5
0

50

100

150

200

250

300

LCCO2
Reduced by

6%• Target for comparison

Standard
proposalLonger life
building
proposal

Energy247(kg-CO₂/year m²)• Amount of Waste Generated

Repair
MaintenanceLonger life
building
proposal

52%

60

Reconstruction
Renovation

Renovation

Amount of
Resources Input
Reduced by

56%

Visualization system (Hulic Asakusabashi Building)

Climate Change Countermeasures

4 buildings

reductions calculated per total floor area compared
between the average of four years from 2013 to 2016
and the average of three years from 2005 to 2007)

Hulic Guideline for Longer Life Service

Desk

Introduction of Energy-saving
Technologies

FUNDAMENTAL
APPROACH

8

10

12

14

(kg/m² per year)

Standard proposal : The case of reconstruction twice in 40 years
Longer life building proposal : The comparison of a longer life building which can berenovated 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 thanks toextended 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 Japan26

Hulic places emphasis on dialogues with stakeholders and aims to achieve asociety where people live safely, securely, and comfortably.

Biodiversity/Encouraging Greening

Social Background Surrounding Hulic

FUNDAMENTAL
APPROACH

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

Results in FY2016

Number of greening projects:

1 project (Target: properties completed in 2016)

Biodiversity Guideline

Greening Initiatives

Hulic is carrying out initiatives that increase biodiversity
in order to create urban spaces that are in harmony
with the environment. Hulic recognizes the importanceof biodiversity's impact for the living environment, andin order to contribute to biodiversity, we have createdthe Declaration of Biodiversity Conservation and madethis known to all of our organizations.

We h a ve p u t e m p h a s i s o n g r e e n i n g w h i c h c a neffectively ease the heat-island phenomenon as a partof our measures against global warming. Proactively
planting trees and plants on premises, we provide
places where people living in the town can relax. Our
greening project aims to create lush green urban
spaces and to harmonize with nature while considering
biodiversity.

Biodiversity Guideline
Strongly recognizing the rapidly vanishing biodiversity
worldwide, Hulic strives to conserve biodiversity throughactivities in harmony with business activities with the goal of
handing over a rich nature to future generations.

Approaches to JHEP Certification
Hulic carries out efforts to conserve and restore local
vegetation as part of its reconstruction projects forcompany-ownedproperties from the standpoint ofsafeguarding biodiversity.
Our approach to biodiversity and many projects havereceived high praise within the JHEP certification program
operated by the Ecosystem Conservation Society - Japan.

Primary Certified Properties
Date of Certification

Aristage Kyodo

A

January 2017
(Initial certification: January 2012)

Hulic Residence Tsudanuma andHulic 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

A

November 2014

It is possible to achieve energy-saving effects such as
reducing air conditioning loads and improving heatinsulation performance by blocking sunlight with roof
greening to prevent heat accumulation in concrete. As
for greening of office buildings, we take the improvementof 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 be a countermeasure against the heat-island effectby utilizing the transpiration effect.
In addition, as it improves theamenities of the building, soothing
effects for people walking on thestreet are also expected.
Hospitalment Itabashi Tokiwadai(Completed in March 2016)

This property has been collectively leased to a feebased assisted living nursing home of which operatingcompany is Sakurajyuji Corporation. As this property is
located in a commercial and residential area with uniqueregional characteristics, we developed a comfortableliving environment for its residents. At the same time,
we created a space that provides both openness to thestreets and privacy for residents.
Along the exterior of the building, we planted trees ofvarious heights and species that offer lush greeneryand a variety of scenery from season to season withdue consideration to enhancing
biodiversity. This property also has
rooftop gardening on the upper
floor to enable residents to enjoy
greenery nearby.
Biodiversity/Encouraging Greening
http://www.hulic.co.jp/en/csr/ecology/
communication/communication.html

27

Initiatives for Solving Social Issues> Proactively adopt earthquake-absorbing and earthquake-damping structures, and conductdisaster training> Promote women’s active participation and advancement in the workplace 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.

Initiatives for Our Customers

Greening
on Rooftops and Premises/
Greening on Walls

Case Study

Rank ofCertification

Name of Project

SocialInitiatives

In 2015, the UN summit adopted the Sustainable Development Goals (SDGs), setting goals of 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.

FUNDAMENTAL
APPROACH

We are constantly working to generate new added value by offering properties that are superior in terms of safety,
environmental performance, and convenience.
In addition, we have established various emergency and disaster scenarios, for which we have created measures toimprove the structural performance of our buildings, as well as operational and management aspects of buildings.
Results in FY2016

Customer satisfaction:

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 and convenience.
In order to satisf y all cus tomers using buildings
including tenants and visitors to the buildings, we
thoroughly stick to meticulous quality control, careful
maintenance, and security 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 outsourced property management companies
to check the implementation status of management work,
including conformity to 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 quality ofoverall property management and operation services.

96%
Quality evaluation for management companies
Each year, Hulic evaluates the implementation status ofmanagement work and provides management companies
with feedback to improve and unify the quality of 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 and facilities, including conformity
to legal requirements applicable to buildings, has been performed systematically andthoroughly without omissions as stipulated in the contract.
- C onfirm the status of legal compliance, including the status of renewing theverification 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 thelegal 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 tobuilidings 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 mostfrequently occur, Hulic, a real estate business operator,
regards earthquake countermeasures as one of the
top priorities. We believe it is our responsibility to strive
to ensure earth quake-proof building safety, in order toenable tenants to conduct social activities with ease.

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

Earth quake Resistance Diagnosis, Reinforcement
Works, and Confirmation of Validity of Structural
Calculation
We diagnosed the earthquake resistance of all Hulic's
properties that were built before the new earthquake
resistance standards were established *1, and almost allbuildings that did not meet the earthquake resistancestandards underwent seismic reinforcement. In relation
to the of f ice buildings which were determined torequire reconf irmation*2 although constructed
after the new earthquake
re s i s t a n c e s t a n d a rd s ,we also rechecked theirstructural calculations
to confirm the validity of
their structural design.

Earthquake-absorbing Structures
By isolating the building from the ground with a mechanism called
an isolator, seismic energy is absorbed to reduce the intensityof shaking to 10%-50% compared to other general earthquakeresistant structures. Another feature of this structure is that how abuilding shakes during an earthquake does not differ significantly
between upper floors and lower floors of the building. Sendai First
Tower, a jointly developed building completed in Sendai where
earthquakes occur frequently, is one of the few buildings with thisearthquake-absorbing structure. Our stance toward ensuringsafety is highly evaluated.

General Building
Shaking violently

Slow and parallel shaking*1 E xcludes buildings with box frame type concrete construction and buildings that will
be demolished*2 Includes office buildings for which appropriate structural calculations could not bereconfirmed. For example, if the architectural firm that implemented the structural
calculation had already discontinued its business.

29

Hulic has set out the principle of “treating clients faithfully
and kindly, listening to their requests with sincerity andproviding sophisticated, efficient, and high-quality
services” in the Basic Principles of Corporate Conduct
and endeavors to build positive relationships withclients. In addition, we obtain the necessary permits andlicenses for conducting business operations and comply
with matters stipulated by various business laws andregulations.
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.
Initiatives for Our Customers
http://www.hulic.co.jp/en/csr/customers/

Initiatives for Tourism BusinessInitiatives for the Senior Business

Accommodation facilities (number of properties owned) as ofDecember 31, 2016: 11

Number of senior facilities owned by Hulic) as of December 31,
2016: 20

We have positioned the tourism business as a growth
sector, and are working to promote and develop the

Hulic is striving to respond to an aging population by
developing and making investments in senior facilities
centering on senior residences, and expanding ourbusiness to hospital development for warehousing andthe medical sector through CRE.
In 2016, we completed construction of Hospitalment
Itabashi Tokiwadai (senior residence) and acquired Life
Commune Tsutsujigaoka, Life Commune Hayama, andAsakusa Care Park Soyokaze (all are senior residences). In
2017, we acquired Medical Home Granda Okamoto (seniorresidence) and completed construction of Hulic Chofu(senior residence), and are scheduled to complete the
Nippon Sport Science Univ. annex PJ (tentative name). Thisdevelopment project for the effective use of real estate
involves leasing the former site of Educational Foundationof Nippon Sport Science University Group’s Fukasawa
Women’s Dormitory for a period of 60 years to build andoperate facilities that will be used for the university’s
educational research and to contribute to the local
community. Under this project, a senior residence, a daycare center, and an outpatient clinic will be constructed.

Case study
Deforming laminated rubber

When electric facilities, etc. are damaged by flood ina basement, the supply of power which is essential forthe use of buildings may stop. We investigate the statusof buildings with power receiving and transforming
facilities and private power generators installed in thebasement, and implement necessary flood control
measures, in preparation for unexpected tsunamis.

We conduct a customer satisfaction survey once a year
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 buidings on a daily basis. We check the responsesof customers, and then take steps to identify latentcustomer needs and make improvements accordingly.
The survey conducted in fiscal year 2016 showed thatapproximately 96% of corporate tenants were satisfied
with our buildings overall. The high levels of tenantsatisfaction of the overall building and facilities reflects
our systematic facility reinforcement and quick responses
to problems. In addition, responsible staff individually
explained matters requested by customers in relation to
the survey items or responded to them.

business to meet various needs.

Liquefaction Countermeasures

Measures against Water Damage

Responsible Marketing

Promoting 3K Businesses toward Resolving Social Issues
Earthquake-absorbing
Structure

Earthquake-absorbing equipment

Af ter the Great East Japan Ear thquake, extensive
regions including coastal areas suf fered from theoccurrence of liquefaction phenomena which caused
leaning and sinking of buildings. According to theliquefaction map, it was found that 11 buildings owned
by Hulic are located on the ground with a possibilityof liquefaction. When designing those buildings, we
carefully checked the possibility of liquefaction, andimplemented endurance tests as needed. As they
were also constructed on a pile foundation resistant toliquefaction, it can be considered that Hulic's buildings
would not be influenced by liquefaction.

Customer Satisfaction Survey

Earthquake-damping Structures
With ear thquake-damping materials (ear thquake damper)
installed inside the building, internal seismic energy is absorbed toreducethe intensity of shaking from half to one thirds comparedwith othergeneral earthquake-resistant structures. In addition to
the case of increasing the safety further by combining this witha earthquake-absorbing structure, we preferentially employ theearthquake-damping structure in the case that the earthquakeabsorbing structureis physically unavailable due to constraints
including land contours. Hulic has incorporated this method inmany properties.

General Building

Building with Earthquakedamping Structure

Shaking Violently

Light shaking

1 Developing THE GATE HOTEL brand

THE GATE HOTEL KAMINARIMON by HULIC, which
opened in 2012 and is directly operated by Hulic, hasbeen awarded one star in the Michelin Guide forfive consecutive years since 2013
and thus stable operation has
been secured. We are currently
d e v e l o p i n g T H E G AT E H O T E LTOKYO in the Ginza/Yurakucho
district; a Hulic’s priority area. We
aim to create a hotel that is highly
evaluated by everyone.
THE GATE HOTEL KAMINARIMON by HULIC
Case study

2 Acquiring and developing luxury hot spring inns

Amid growing demand for personal travel, Hulic is
promoting the acquisition and development of luxury
hot spring inns. We acquired Hakone Suishoen andAtami Fufu in 2015, and ATAMI Kai-Ho-Rou in 2016. We
have also begun to work on adevelopment plan for the Lake
Ka wa g u c h i Fu f u ( t e n t a t i ve
name) (with completion
Hakone Suishoenscheduled in 2018).

Hospitalment Itabashi Nippon Sport Science Univ. annex PJ
Tokiwadai(Tentative name)30Initiatives for Our Business Partners

FUNDAMENTAL
APPROACH

Initiatives for Our Employees

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

Results in FY2016

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• We will comply with laws, regulations and social norms,
and undertake business activities based on a set ofcorporate ethics.
• We will respect the fundamental human rights of all
people.
• We will take consideration of environmental conservation
and will strive to promote green procurement.
• We will build an information management system andmanage information appropriately.
• We will carry out fair and equitable business transactions
and build a trust relationship with business partners.
• We will strive to maintain peace of mind, safety and highquality.

Cooperation with Building
Management Companies
In accordance with the rules for real estate outsourcing
management, Hulic's personnel in charge of buildings
visit management companies and buildings oncea year to inspect the management conditions andevaluate management companies. (Please refer toPage 28, “Maintenance and Improvement of Quality
and Ensuring Uniformity in Quality of Hulic’s Buildings.”)

Fair trades with Outsourced
Contractors
Considering long-term business relationships withoutsourced 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
that is most appropriate for each project by checking
track records and abilities to execute operations.

Public-private partnerships via PPP
projects
The purpose of PPP ( public pr ivate par t nership)projects isto contribute to local economies. Public
and private sectors cooperatively aim to improve new
added values through exchanging information withlocal communities by using know-how concerningof fice buildings and rental apar tments inorder toresolve problems on land policies of national or local
governments, as well as financial issues.
Ta k i n g i nto a c c o u nt w h a t t h e n a t io n a l o r l o c a lgovernment wants through the project, we build amechanism to increase the value through private
business as in the PPP project.

In the public solicitation of proposals for using the former Rissei
Elementary School site, solicited by the Kyoto City government
in March 2017, a group comprising mainly of Hulic, Takenaka
Corporation, and Furuse-gumi Corporation was selected as
candidate contractors, and we signed a basic agreement with
Kyoto City in May. This is a PPP project, in which a private business
operator leases the former Rissei Elementary School site, owned by
Kyoto City, and constructs and operates facilities proposed by theprivate sector, including municipality-designated facilities (space forcommunity activities, etc.), with the aim of “reviving their dynamism
and sense of community with a cultural hub at the center.”

We respect human rights and proactively take advantage of diversity in our business. We aim to foster aworkplace in which all employees can make the best use of their abilities.

Results in FY2016

Ratio of female managers:

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

Our group will give consideration to the beautiful scenery by the
Takase River, and develop buildings that blend with the modern
architecture of valuable existing school buildings as a “complex
facility that serves as a cultural center where people meet,generating energy and excitement among people which will
spread to the local community.” The first floor of the facility willcontain space for community activities, space for cultural projects,
and commercial facilities, and the upper floors will house The GATEHOTEL Rissei Kyoto (tentive name), developed by the Hulic Group.
We will move forward with thisproject in consultation with the
Kyoto City government, thelocal community, and relatedorganizations.

12.3%

Promoting Diversity

Respect for Human Rights
Hulic’s “Our Code of Conduct,” a standard that mustbe followed at all times to practice a set of corporate
principles, contains “Respect for Human Rights andProhibition of Discrimination and Sexual Harassment,”
and clearly states that human rights are to be respected
and that discrimination based on creed, religion, age,gender, birthplace, or physical or mental disability will
not be allowed. Respect for human rights emcompasses
all fundamental human rights found in the Constitution,
Labor Standards Act, and Universal Declaration of
Human Rights, as well as human rights related to equal
employment, the prohibition of forced labor and childlabor, the freedom of association, and the guarantee oflabor negotiations stipulated in the ILO’s international
labor s tandards . In f iscal ye ar 20 16, Hulic madepostings on its intranet regarding the themes of “Act on
Employment Promotion, etc. of Persons with Disabilities,”“Act on Promotion of Women’s Par ticipation andAdvancement in the Workplace,” and“power harassment.” In addition, we
held a seminar on LGBT* as part ofcompliance training for our directors
and general managers.
* LGBT is a collective acronym for lesbian, gay, bisexual, and transgender.

Employment of Diverse Human Resources

TOPICS

Signing a Basic Agreement for the Former Rissei
Elementary School in Kyoto City PJ (PPP project)

FUNDAMENTAL
APPROACH

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 right s of

Personnel Performance Data
Number of employees (non-consolidated)

Men/Women
Total

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

applicants and make efforts to secure diverse humanresources based on their aptitudes and abilities,
regardless of backgrounds and gender.
The ratio of female managers has increased as a resultof active efforts to promote the active participation andadvancement of female employees in the workplace,with an enhanced system to support the developmentof the next generation. Hulic aims to become a company
where female employees can thrive professionally withthe target of increasing the ratio of female managers to
20% by the year 2020.

Promoting Employment of the Disabled
The Hulic Suginami Office marked its 9th anniversary, andas of June 2016, Hulic's employment rate of persons withdisabilities was 2.21%* on a consolidated basis and 6.30%*
on a non-consolidated basis. Currently, six employeeswith disabilities, instructors with experience in coaching,
and a chief administrator are working at the Hulic
Suginami Office, where they carry out operations, suchas the dispatch of direct mail. A monthly meeting withthe human resources team of the Head Office is held toensure that operations integrated with the head office
are being put into practice. In recognition of our activities
to play a leading role in employing persons with disabilities
and proactively develop their abilities, Hulic has beencertified as an excellent corporationin employing the disabled in Tokyo
since September 2010. We will makeefforts to improve the workplace sothat people with disabilities can feel asense of worth in their work.
*T he target subsidiaries are companies thathave been certified as affiliated subsidiarycompanies.

Unit
PersonPersonPersonTen thousand yen
PersonPerson%%PersonPerson%PersonPersonPersonDay
PersonPersonFY2012
96/33
129
429
1,086
1
56/5
5.30
1
1/2
100
1
2
0
15
7
3

FY2013
90/35
125
461
1,120
1
53/4
6.92
2.14
1
1/0
100
2
2
0
17
8
21

Logo of excellence in a corporation
employing the disabled in Tokyo

FY2014
85/31
116
753
1,268
2
43/4
8.56
2.46
3
1/3
100
3
0
0
31
11
18

FY2015
93/35
128
784
1,295
3
43/5
7.36
2.31
6
2/3
100
5
3
0
34
14
14

FY2016
109/40
149
836
1,418
2
57/8
6.30*
2.21*
0
6/3
100
7
1
0
60
22
18

*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 theemployment ratio of the disabled (consolidated)) *Excludes employees who have been transferred within the group. Includes loan employees in the number of employees who took childbirthleave, the number of employees who took childcare leave, and the number of employees who took day off for nursing care.

31

32

Initiatives for Our Employees

Introduction of external evaluation

In fiscal year 2016, Hulic affirmed the “Declarationon action by a group of male leaders who will createa Society in which women shine” and received thehighest-level “Eruboshi” certification from the Ministerof H e a l t h , La b o u r a n d We l fa re a s a n
excellent company taking initiatives top r o m o t e w o m e n’s p a r t i c i p a t i o n a n dadvancement in the workplace.

Hulic’s “Our Code of Conduct” stipulates respect forhuman rights in association with equal employment
oppor tunities, freedom of association, and aguarantee to engage in fair labor negotiations. In
addition, we conduct interviews between employees
and their supervisors when necessary and carry out
the “President Questionnaire Survey,” through which
employees can share their views and opinions directlywith the President, in an effort to establish good labormanagement relations.

Human Resource Development

Stance on Human Resource
Development
Hulic’s ordinary income per employee is over 300 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 professionals
such as lawyers, certified public accountants, realestate appraisers, and first-class registered architects.
Furthermore, with the aim of enhancing their professional
skills, employees are recommended to obtain two or morequalifications by the time they reach the age of 30. The
costs for these personnel upgrading activities are fully
covered by the Company.
Newcomer(up to around 30
years old)

33

Managers or higher(generally 30 years old
or older)(generally 50 years old
or older)System to support acquisition of qualifications• Improving the efficiency of business processes and promoting
outsourcing
We check the usage status of paid leave and implementation

Work-life Balance

status of No Overtime Day as appropriate, and hold discussions

The falling birthrate, aging population, and women’ssocial advancement are important issues for Japan’se c o n o my. W i t h r e g a rd t o s u p p o r t f o r t h e n e x t
generation, Hulic aims to achieve a higher level thanthe 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 in accordance with
the Act on Advancement of Measures to Suppor t
Raising Next-Generation Children, set targets for thedevelopment and thorough notification, etc. of thework-life balance support system, and are conducting
activities to these ends.

reduce long working hours and promote the systematic use of

Establishment of Hulic’s OnsiteChildcare Nursery Facility
In 2014, we opened the Odenma Fureai Childcare Nursery
inside the Hulic Head Office Building to promote a
more employee-friendly work environment in which our
employees can raise children while working. In addition, tomake this childcare nursery more accessible, employees
using this service are allowed to drive their cars to workand 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* ofneighboring residents, with the intention of contributing
to reducing the number ofchildren on nursery waiting lists inthe local community.

on working style at each department. In addition, we work to
paid leave by monitoring working hours, etc. through the Risk
Management Committee and guidance and advice through the
Health Committee.
In fiscal year 2016, the usage rate of paid leave increased
from the previous year, while the average overtime per person
increased from the previous year. Accordingly, we have steppedup our efforts to further reduce overtime work in fiscal year 2017.

Usage rates of paid leave

100

Average of discretionary andovertime work hours per person

50

80

71.5

71.0

70.9

71.4

71.6* 40

60

34.1

34.7

34.6

36.6

37.6

30

40

20

20

10

0

2012

2013

2014

2015

2016

0

(FY)

Promoting Health and Productivity
Management
Based on the idea that employees’ good health is essential for
improving productivity and growth of the company, Hulic is
promoting the creation of employee-friendly work environments
in which employees can continue to work with enthusiasm andenergy in good health.
• Health checkup
We implement an annual health checkup that is equivalent
to a comprehensive medical examination, with a wide lineupof optional examinations such as neck ultrasonography,
colonoscopies, and gynecological checkups.

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

*C o n d i t i o n s f o r u s e a p p l i e d t o n e i g h b o r i n gchildren differ from those applied to employees.

• Health Committee

System to encourage
early acquisition

Dispatch tograduate school
Dispatch tooutside company

Planned Use of Leave and Reductionof Overtime Work

among employees every year, holds monthly meetings. Our- Obtaining multiple
qualifications by 30 yearsof age- Well-planned setting oftargetOverseas visit program/Study abroad program

Selected as “Nadeshiko” Brand 2016
From the standpoint of empowering female employees
and helping employees improve their career skills, we
are working to transform our organizational structure,develop an employee-friendly work environment, andfurther enhance our benefit programs. In particular, wehave put efforts into estabishing a top-class system for
fostering future generations, with the aim of ensuring thatfemale employees are able to continue to play activeroles in the company while raising their children afterchildbirth. In recognition of these activities, Hulic wasnamed the Nadeshiko Brand for thesecond year in a row and selected as
the Nadeshiko Brand 2016.

Mid-career

Work-life Balance

Average Discretionary an Overtime
Work Hours per Person (h)Hulic’s basic approach is for the work of individual
employees to be aligned with their abilities, aptitudes,
and personalities, enabling individual employees tomake the most of their abilities and the Company
to operate a high value-added business with lessmanpower. For this reason we see it as essential toprovide opportunities to all employees irrespectiveof gender and, in particular, we are strenghtening
initiatives for the career development of women.
The women’s career promotion project team has
been conducting activities regularly since 2010 withthemes such as improving work-life balance and careerdevelopment. In fiscal year 2016, we received thehighest certification as an “Eruboshi” company underthe Act on Promotion of Women’s Participation andAdvancement in the Workplace, and was selected as a“Nadeshiko” Brand. We also engaged in activities withthe focus on organizing the “Science and Engineering
Challenge (RIKOCHALLENGE)” events in cooperation
with the Cabinet Office, Keidanren and the Ministry of
Education, Culture, Sports, Science and Technology.
In November, we organized the in-house lectures on
the topic of “Find working styles of your own Work-lifebalance for women” Furthermore, an annual meeting
between the project team and senior management isbeing held to create opportunities
for female employees to share
their thoughts and concernswith senior management of theCompany.

Establishing good labor-management
relations

Usage Rate of Paid Leave (%)

Promoting Female Empowerment

Human resource development program
Project review,project by theme,
etc. (incorporated in works)

We promote work-style reforms to boost the usage rate of paid
leave by employees and reduce long working hours. The key
initiatives are as follows.
• Promoting the use of ”Plus-one” paid leave and consecutive
paid leave
Promoting the use of paid leave before and/or after Saturdays,

Period of educational
assignment
Newcomertraining

Assigned tomultiple
departments
Enhancement through job
of fundamental
rotation
abilities infinance andaccounting

Training for
newlyappointed
deputygeneralmanagers

Sundays, or holidays, and the use of a three-day vacation and aManagerial training

We have designated Wednesday as a No Overtime Day. On eachTraining as-needed (as required)

Top seminar

one-week vacation once a year respectively.
• Implementation of No Overtime Day
Wednesday, we encourage employees to leave work on time.

The Health Committee, whose members are elected fromindustrial doctor attends all Committee meetings to provide
advice and guidance on healthcare. The Health Committee
members discuss the status of use of paid leave and overtime
work of employees, and matters discussed by the Committee arecommunicated across the Company by individual committee
members.
• Mental Healthcare
We implement mental health care in cooperation with medical
institutions. We help employees, who are diagnozed as requiring
special medical examinations and treatment, find specialists
or specialized medical institution partners. In 2016, we started
to perform stress check tests on all employees to prevent themfrom suffering from mental disorders.

In addition, we adopt morning-oriented work arrangements insummer.

Get-together for President and young employees(monthly in principle)• Implementation of “My Friday”

English conversation class（held by the Company at meeting rooms in the Company)
Self-development seminar

We encourage employees to take a half day off on Friday
afternoon once a month.

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

34

Initiatives in the Local Community

Results in FY2016

Social contribution by the company:

13 items Social contribution by employees: 6 items


Policyfor Social Contribution Activities

Basic Philosophy

Activity Guidelines

As a good corporate citizen, Hulic proactively• Actively work in the three main fields of “local environmental protection,” “co-existence

and widely pushes ahead with social contribution

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.

fields. We contribute to the sustained development• Place an emphasis on securing transparency in implementing activities and promoteof the entire society through each activity.

dialogue and cooperation with society.

Social Contribution as a Company

Support for Japan ParaBadminton Federation

Hulic has been sponsoring the Japan Para-Badminton
Federation as an Official Gold Partner since September
2016. Our main activities are to sponsor tournaments
and send our employees to cheer for players at
tournament games, etc. We support para-badminton
players to help them make progress towards the 2020
Tokyo Paralympics.

Supporting Employees to Conduct Social Contribution Activities

Launching the matching gift program in June 2008, Hulic
established the “Hulic Fureai Fund,” which deducts 100
yen every month from the salary of employees who wantto take part in the program (300 yen for directors), anddonates the collected money to organizations selectedby majority vote of all employees. Hulic, Hulic Insurance
Service, Hulic Building Management, and Hulic Proserve
have worked together on this activity. We will continue
the donation activities, providing opportunities of social
contribution to employees who cannot make the firststep despite being interested in it.
Activities
conducted in fiscal year 2016

In fiscal year 2016, we donated a total of 1.2 million yen to
After School, a non-profit organization (NPO) providing
after-school programs that offer safe places for children
to get a broad range of experiences.

Social contribution by employees
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 indisaster-struck areas

35

Paid Leave for Employees Involved in
Volunteer Activities
The Hulic Group has established paid leave for employees
involved in volunteer activities, in order to support andnurture their efforts to give back to the communityand help to foster an attitude of wanting to address
issues facing society. The volunteer paid leave programis designed to support employees who participate insocial contribution activities. Employees are eligible totake up to 20 consecutive days of special paid leave(employees who take part in volunteer activities indisaster-hit areas can take paid leave more than once
within 20 days) under the volunteer paid leave program
to take part in philanthropic activities that give back tosociety. To encourage employees to use the volunteer
paid leave program, we provide not only information onsocial contribution activities, but also raise awarenessabout such activities among employees by disseminating
the volunteer experiences of employees with the entire
Company through our intranet system. In fiscal year
2016, we continued Satoyama conservation activities,
which we have conducted annnually since fiscal year
2009 as a participatory volunteer activity involving our
employees, and a total of 28
employees from Hulic, Hulic
Building Management, andHulic Reit Management haveparticipated in this activity.

Social Contribution as a Company
1. Support for Japan Para-Badminton Federation
2. Held students’ idea competition
3. Hosted summer festivals
4. Donation of used postal stamps
5. Donated to NPO After School
6. Sponsorship to support Mainichi Shimbun inFukushima relief efforts
7. Sponsorship for the Kishikai Fukushima Shogi Festival

8. Donation to Red Cross
9. Donation to Akaihane
10. Donation to Ashinaga Scholarship Society
11. Opened the company daycare nursery to local
community members
12. Sponsorship to the Kyoto Kenchiku Center
13. Support for Nezu Foundation—

Matching Gift Program

Activity 2

Donating a Portable Shrine

In May 2017, to contribute to the local community, we
donated a portable shrine to Odenma Ninobe Town
Association, of which Hulic is a member. We hope thatcarrying the portable shrine in festivals will contributeto making the community thrive and revitalize it further.

Holding a Summer Festival—


Activity 1

Activity 3

In O c tob e r 20 12, Hulic move d it s he ad of f ice to
Nihonbashi Odenma-cho. In July 2013, we held the "Hulic
Odenma Summer Festival" at the Hulic Head Office
Building, partly intending to introduce ourselves to thepeople in the community. Thanks to the overwhelmingly
positive feedback, we decided to continue to hold the
4th Odenma Summer Festival in July 2016. Various peoplecame to the festival, including local children and workers
in the neighboring area, thanks to the cooperation of
the community association of Odenma-cho-Ninobu.
We hope to be able to deepen ties among people inthe communities through such activities. In addition, we
donated proceeds of 147,600
yen from sales at the festival
to a volunteer organization,in addition to the money
collected through the eighth
matching gift program.

Holding the Fourth Hulic Student
Ideas Competition on the
Theme of “Asakusa Nouveau”—


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

—

FUNDAMENTAL
APPROACH

Activity 4

We planned this competition as a real estate company
with the aim of providing students with opportunities
to propose urban development and construction ideas.
For this year’s fourth Student Ideas Competition, we
solicited free and unconventional ideas as proposals
for “Asakusa Nouveau” to revive Asakusa, once thebirthplace of contemporary culture, as “edgy Asakusa.”
We received 118 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.
Initiatives in the Local Community
http://www.hulic.co.jp/en/csr/social/

VOICE

My Experience of Participating in the Student Ideas Competition
This competition has given me a very stimulating experience,in which each participating team has set a theme for reviving

having received comments on my idea from leading professionals

Asakusa and exchanging ideas created from their own themesin various fields such as design, real estate, and the media. I thinkwith other teams, has ser ved as a

the purport of this competition of trying to become proactively

good touchstone for exploring the

involved in the real society without being restricted by the job

possibilities of using architecturalfunctions of architects or designers is very meaningful. I also

design to solve various complex social

learned a lot from other teams’ presentations and comments.

issues from different perspectives.

Asakusa is a place where both traditional culture and avantgarde culture are viable. In that sense, I believe this competition,

Graduate School of University of California, Los Angeles Taira Tsukioka

36

Initiatives for Our Shareholders and Investors
Hulic works to strengthen corporate governance withthe aim of improving the transparency and efficiency ofmanagement and continue to be trusted by society.

Social Background Surrounding Hulic
FUNDAMENTAL
APPROACH

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

Results in FY2016

8

Number of information sessions for personal investors held:(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
at fair, timely and accurate information disclosure
benefitting shareholders and investors to make adecision on investment. In compliance with relevantlaws and regulations, we proactively disclose
management strategies and f inancial data, etc.
i n o rd e r to h a ve t h e m u n d e r s ta n d o u r b u s i n e s sactivities. Information, to which the rules of timely
disclosure and relevant laws and regulations, etc. areinapplicable, but which are considered helpful forinvestment decisions, is disclosed promptly throughthe Company's website, etc.

Our basic policy is to continue providing the stablepayment of dividends as based on the trends of ourbusiness performance, as a way of returning profits
to our shareholders. The dividends have continued toincrease every fiscal year so far.
To thank our shareholders for their continued support,
we a n n u a l l y p re s e nt a g if t of g o u r m et c a ta l o gequivalent to 3,000 yen to shareholders with 300
shares or more.
Furthermore, we have been sending out two sets of
3,000 yen gourmet catalogue gifts (worth 6,000 yen
in all) to shareholders holding more than 300 sharesfor more than three consecutive years.

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

Outside Evaluation of IR Activities
H u l i c ’s w e b s i t e d i s c l o s e s t i m e l y a n d d e t a i l e dinformation on our various activities. In fiscal year 2016,
our website was selected as the “best website in overall
ranking” and the “excellent website in industry ranking”
in Nikko IR’s All Listed Company Website Ranking 2016.
In addition, our website won the bronze prize in Gomez
IR’s Site Ranking and the Internet IR Excellence Award
from Daiwa Investor Relations.

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

Corporate
GovernanceInitiatives for Solving Social Issues> Establishing and implementing the corporate governance guidelines> 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

Corporate Governance

Briefing Session for Private Investors
We are proactively working on IR activities to makeourselves better understood by individual investors.
We participate in seminars and fairs, etc. for individual
investors to create opportunities for more individual
investors to learn about us. We will promote IR activities
that provide us with opportunities to communicate
directly with individual investors.

Hulic Group recognizes that it is an important business issue to build a corporate governance system withfully functioning “risk management,” “compliance,” and “internal control.” We intend to sincerely executebusiness, fulfilling accountability to stakeholders.

FUNDAMENTAL
APPROACH

Results in FY2016

9 times Participation rate in the Board of Directors' Meeting: 96 %Corporate Governance System

Brief Sessions for Organizational
Investors and Analysts
Briefing sessions on financial results (at the end of the
2nd quarter and fiscal year) are held semiannuallyby Hulic’s top management mainly for institutional
i nve s to r s . We a l s o c o n d u c t m a ny “ O n e o n O n e
Meetings” in Japan, through which we visit individual
institutional investors to explain Hulic. Furthermore, wehave proactively rolled out IR activities overseas, visiting
institutional investors in Europe, the U.S., and Asia, etc.
Through these activities, we endeavor to foster a deep
understanding of Hulic among institutional investors.

The Board of Directors meets once a month in principle,
and holds further meetings as needed. The Board of
Directors is comprised of 10 directors, of which four aredesignated and reported as independent directors
based on the stipulations of the Tokyo Stock Exchange(as of March 2017). Directors determine importantmatters concerning Hulic's business activities, including
CSR, and supervise the execution of duties. In March

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

2012, Hulic appointed its first female external director,
and since then we have been promoting multifacetedbusiness management based on diversity.

Corporate Governance System Chart (As of March 2017)
Corporate Governance
Audit & Supervisory
Board

Scope of Internal Control

Audit & Supervisory
Board Department

Compliance

Audit
Accounting Auditor

GeneralＭeeting of
Shareholders

Board ofDirectors

CSR Committee

President
Corporate Audit
Department
Executive Management Committee

Recommendation/Advice

37

Number of internal audits conducted:

Internal Control
Functions of
Head Officeand AffiliatedCompanies

Compliance
Committee

Real EstateBusiness Division

Risk Management
Committee

Risk
Management

Fund ALM
Committee
Operations
Management

Internal
Control

Disclosure
Control

Basic Rules, etc.

Business
Management
Internal Control
Related to
Financial Reporting
Disclosure
Working Group

Planning and
Administration
Division

Business
Process Control
Documents
AffiliatedCompanies

Management Advisory Committee/Nominating Committee/
Remuneration Committee

38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 2017). In fiscal year 2016, we implemented internal
audits nine 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). Based on
the evaluation results, we will continue to strive to further
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
the business and affairs of the corporation and fulfill thefunctions of monitoring and checks on the management.
In selecting External Directors and External Auditors, theindependent External Directors are selected based on the“Criteria for assessing the independence of independent
external directors” set forth in Hulic’s Corporate Governance
Guidelines, which take reference from the guidelines on
the independence of independent executive officer(s) set
forth in Article 436-2 of the Securities Listing Regulationsof the Tokyo Stock Exchange. These are considered to beappropriate in light of the important roles that the External
Directors and External Auditors fulfill within Hulic's corporate
governance system.
Expertise of the Directors (External Directors)
We appointed the independent External Directors, who have fulfilled
Hulic's criteria for assessing the independence of independent
external directors (disclosed in the company’s Corporate
Governance Guidelines) in accordance with the Securities Listing
Regulations of the Tokyo Stock Exchange. The expertise and reasonsfor selection of the External Directors as follows.
Name

39

Profession/Affiliation, etc.

Reasons for selection

Tsukasa
Miyajima

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

Highly discerning and insightful as auniversity professor

Hideo
YamadaLawyer of Yamada Ozaki Law Office,Highly discerning and insightful as alawyerAtsukoFukushima

Journalist, management council member of
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

Policy for Determining Director
Compensation

Directors (as of March 2017)

Compensation of directors consists of basic fixedcompensation, which is based on job position and theweight of duties, and performance-based compensation,w h i c h i s b a s e d o n c o r p o ra te p e r fo r m a n c e a n dcontribution 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 majorityof which is comprised of independent External Directors
and is chaired by an independent Outside Director, within
the limit 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 ofbasic compensation (fixed amount) in the light of theirroles and responsibilities.
Amount of remuneration, etc.by classification of Executive Officers(FY2016)Classification of
executive officers

Total
amount of
remuneration,etc.
(million yen)

Directors (excluding
External Directors)

552

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

Stockbased
rewards

Stock
options

BonusesNumber of target
executive officers(No. of people)

330

111

-

111

6

Auditors (excluding
External Auditors)

72

72

-

-

-

2

External executive
officers

85

85

-

-

-

7

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 External Director, with the
majority composed of Exernal Directors.
Nominating Committee
The Nominating Committee serves the function of reporting to
the Board of Directors on the nomination of executive officers,
and deliberates on the following matters:( 1 ) Selection of Director and Auditor candidates and personnel
changes of Directors (promotion, etc.)( 2 ) O t h e r i t e m s c o n c e r n i n g s u c c e s s i o n p l a n s a n d t h eabovementioned items, as deemed necessar y by the
Board of Directors.
Remuneration Committee
The Remuneration Committee is appointed by the Board of
Directors, and deliberates on the following matters:( 1 ) Remuneration standards and other matters pertaining to
the remuneration of Directors( 2 ) M atters concerning the remuneration of Directors, as
deemed necessary by the Board of Directors

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

Board of Directors
1

2

Board of Directors

Chairman, Representative Director

7

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)

Takaya Maeda

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
OfficeProfessor at the Graduate School of the Nagoya
University of Commerce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)

Saburo Nishiura15E xternal Auditor

Kenichi Sekiguchi
Special Advisor of Meiji Yasuda Life Insurance Company

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 (http://www.hulic.co.jp/en/corporat/officer.html).

40

Risk Management

FUNDAMENTAL
APPROACH

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

Results in FY2016

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

Risk Management Structure
We hold regular meetings of commit tees related
to risk management, such as the Risk Management
Committee and Capital ALM Committee, and control
risks by grasping changes in risk by collecting andanalyzing monitoring indices. Through this PDCA cycle,
we carry out risk management continuously to stabilize
our business operations. In addition, internal audits arecarried out on all departments and operations, in orderto verify the appropriateness of risk management
practices. With regard to real estate, the greatest assetof Hulic, we obtain regular appraisals to comprehend
the market risk of real es tate, and we have also
formulated a business continuity basic plan to prepare
for large-scale disasters, under which we are working
hard to reinforce our risk management structure byimplementing company-wide training drills and othermeasures. Based on experiences from the Great East
Japan Ear thquake, we have also checked seismic
performance, liquefaction countermeasures, and flood
control measures at each building.

Business Continuity Initiatives for
Disasters
Hulic is a real estate company that engages in thedevelopment, reconstruction, and operation of officebuildings 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 haveestablished various emergency and disaster scenarios
for which we have created measures to improve thestructural performance of our buildings as well as
operational and management aspects.

Collaborative andCooperative Structurewith 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)

HULIC

Real estate management company (Company B)

1

We are proactively carrying out measures to strengthen
the businesscontinuity capabilities of our core head office
functions during an emergency. The following measures
have been taken at the Hulic Head Office Building.
• A dopts quake-absorbing and quake-damping structuresthat enable building functions to operate even during anearthquake with a seismic intensity of seven• Features emergency generators that can operate continuously
for up to six days
• Secures food and drinking water to last more than seven days
• Uses wireless equipment for communications between the
management offices of other company-owned properties, etc.

Re g a rd in g b u il d in g s fo r w h ic h H u l ic u n d e r take s
reconstruction project s, we also stockpile water
resources and establish a drainage system and installemergency back-up generators that can generate
power continuously three days. The business continuity
capabilities of our core head office functions during an
emergency. The following measures have been taken at
the Hulic Head Office Building.

Maintaining Functions during a Disaster(Hulic Head Office Building)

Photovoltaic panels
RF: Electricity receiving andtransformer equipment/air
conditioner
落雷Lightning strike

Naturalventilation
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

HULIC

41

Companies that constructed each building(general contractors)

Risk Management

Compliance seminars for all employees and directors No. of seminars conducted:

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
and compliance, and compliance officers of eachdepartment. The status of activities based on thecompliance program is regularly reported to the Boardof Directors through the Compliance 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
the necessary measures to prevent future reoccurrences.
In fiscal year 2016, Hulic had no compliance violations.

Initiatives for Preventing Corruption
Hulic’s Compliance Manual sets out our principles regarding“Business Entertainment/Gift Giving and Prohibition ofBribery.” 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. Moreover, twice a year, ourLegal & Compliance Department checks whether eachdepartment is appropriately managing the issues related
to business entertainment of interested parties and theacceptance or offering of gifts. Furthermore, employees of
Hulic and our business partners are encouraged to report
any matters involving compliance issues directly to theCompliance Hotline.

Initiatives for Fair Competition
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

Real estate management company (Company C)

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

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

Results in FY2016

Facilities and Stockpiles for Sustaining
Business Operations

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

FUNDAMENTAL
APPROACH

http://www.hulic.co.jp/en/csr/governance/risk_
management.html

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.

5 times Transmission of information: 12 times

The Compliance Hotline investigates issues reported andpromptly implements corrective actions by paying due
consideration to the privacy of whistleblowers. In fiscal
year 2016, the Compliance Hotline received one report,
for which corrective actions were implemented and thiscase has already been resolved properly.

Compliance Seminar
We regularly provide compliance seminars covering set
themes to instill awareness of compliance among all
employees. The themes we have selected include responses
to anti-social forces, power harassment, and insider trading
regulations. In 2016, we held seminars on how to handle
anti-social forces, insider trading regulations and businessentertainment/gift-giving for business partners. In addition
to seminars on these overall themes, we hold theme-based
seminars on important themes including Building Lots
and Buildings Transaction Business Act, in consideration ofcompliance specific to real estate businesses. Furthermore,
we hold discussions in each department if appropriate.
We also post compliance-related news and Q&As to theCompany’s intranet once a month. We compile commentson compliance seminnars, obtained through questionnaires,as feedback and reflect them in subsequent seminars.
Compliance Seminars in FY2016
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 toincrease each employee's awareness. Additionally, we carryout internal audits to check compliance with company rules
on information management. In fiscal year 2016, there wasno case or accident related to information leaks.
Compliance
http://www.hulic.co.jp/en/csr/governance/compliance.html
42

Consolidated Financial Statements

Consolidated Balance Sheets
AssetsConsolidated Statements of Income

Previous
consolidated
accounting period(ended December
2015)

Current
consolidated
accounting period(ended December
2016)

Current assets
Cash and deposits
Notes and operating accounts
receivable
Merchandise
Real estate for sale
Real estate for sale in process

31,22422,898

3,870

4,297

0

0

86,58763,51021,001

32,20545

91

Supplies

38

39

Operational investment securities

2,256

1,032

Deferred tax assets

9,024

961

Other

6,215

2,975

Δ4

Δ5

160,261

128,007

Total current assets
Non-current assets
Property, plant and equipment

Current
consolidated
accounting period(ended December
2016)

Short-term loans payable
Current portion of long-term loans
payable105,000

28,000135,687

85,544Current portion of bonds

100-

Accrued expenses

3,104

3,363

Income taxes payable

933

6,904

Advances received

4,959

5,395

Provision for bonuses

324

367

Provision for directors' bonuses

145

164

7,522

9,248

Other
Total current liabilities

257,778

138,987

Non-current liabilities

454

Buildings and structures, net

189,885

193,765

Net defined benefit liability

1,075

1,092

Machinery, equipment and vehicles

3,859

4,017

Long-term guarantee deposited

51,03655,332

Accumulated depreciation

Δ886

Δ1,163

Other

6,503

Other

1,644

1,789

Accumulated depreciation

Δ881

Δ1,030

Other, net
Total property, plant and equipment

762
776,490

Intangible assets
Goodwill

4,942

4,088

Leasehold right

21,75821,510

Other
Total intangible assets

442

475

27,14326,074272

Total deferred assets

497

279

Total assets

1,091,266

1,133,994

7

-

454

Share of profit entities accounted for using
equity method

999

844

Income arising from cancellation of leasing
contracts

497

281

Increase (decrease) in net defined benefit asset andliability

Other

2,054

250

Interest and dividend income

Total non-operating income

5,000

2,933

Non-operating expenses
Interest expenses

4,214

Other

253

362

Total non-operating expenses

4,468

4,878

42,53451,432Gain on sales of non-current assets

421

247

Gain on sales of investment securities

3,712

837

Gain on investments in silent partnership and
other

3

94

Other

21

35

4,159

1,215

Total extraordinary income

4,516

Loss on sales of non-current assets

46

0Loss on retirement of non-current assets

351

1,578

Loss arising from building reconstruction

1,708

667

106
Δ1,556

Interest expenses

4,214

4,516

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

Δ999

Δ844

Loss on retirement of non-current assets
Loss (gain) on sales of property, plant and equipment
Loss (gain) on sales of intangible assets

351

1,578

Δ343

Δ180

Δ31

Δ66

Δ3,707

Δ837

Loss (gain) on valuation of investment securities

0-

Loss (gain) on redemption of investment securities

0-

Loss (gain) on investments in silent partnership and
other

Δ3

Δ88

Loss (gain) on sales of investment securities

Loss (gain) on foreign exchange

Δ1,712-

Decrease (increase) in notes and accounts receivable- trade

1,422

Δ426

Δ9,05839,974

Decrease (increase) in inventories

Extraordinary losses

156
Δ1,449Decrease (increase) in investment securities for sale

774

1,224

Decrease (increase) in guarantee deposits

388

Δ2,201

Increase (decrease) in guarantee deposits received

4,619

4,295

Decrease (increase) in other assets

1,423

1,326

-

Subtotal

48,586

113,4340-Interest and dividends income received

Impairment loss-

193

Provision of allowance for doubtful accounts

0-Proceeds from compensation

-

1,127

Other

6

8

Income taxes paid

Δ9,411

Δ3,250

2,118

2,448

Net cash provided by (used in) operating activities

36,272

108,407-

Net assets

Total extraordinary losses

Shareholders' equity
Capital stock

62,641

62,695

Capital surplus

78,70678,760Retained earnings
Treasury shares
Total shareholders' equity

6,376

479

11

Increase (decrease) in provision for retirement benefits

1,545

0

4,608

Stock issuance expenses

19

11

1,421

Loss on redemption of investment securities

37

6

16

Increase (decrease) in provision for directors'
retirement benefits

27

Dividend income

Loss on valuation of investment securities

1218

Increase (decrease) in provision for directors' bonuses

Interest income

792,906

Retirement benefit assets

Business commencement expenses

42774,221755

Deferred assets

24

Total liabilities

724

1,005,707

0Increase (decrease) in provision for bonuses

Non-operating income

4,398

Deferred tax assets

930,507Δ0

Δ1,015

Deferred gains or losses on hedges

Total non-current assets

Increase (decrease) in allowance for doubtful
accounts

Increase (decrease) in other liabilities

9,367

137,673

53,377-

7,165

126,873

42,002

4

Guarantee deposits

Total investments and other assets

193

Operating income

Loss on sales of investment securities

Valuation difference on available-forsale securities

Δ0

-

2,466

121,136

Δ0

Impairment loss

653,919

114,362

Allowance for doubtful accounts

16,8932,235

Investment securities

Other

13,932516,442

140,214163,206

Δ193

Δ1,140281,368

303,523

Accumulated other comprehensive income

Investments and other assets

11,299Selling, general and administrative expenses

Total non-current liabilities

758
841,959

8,929

Extraordinary income

-

2,517

Depreciation

42,669Provision for share distribution

Construction in progress

50,19970,271

513,831

Δ70,404

638,078

44,57555,93544,605

Δ61,095

580,352

Income before income taxes and minority interests

Operating gross profit

379,425

Accumulated depreciation

Land

Cash flows from operating activities

145,509

Deferred tax liabilities

71

2,853

215,780

114,021Long-term loans payable

64

Previous
Current
consolidated
consolidated
accounting period accounting period(ended December (ended December
2015)
2016)

169,956

Ordinary income

Provision for directors' retirement
benefits(Unit: Million Yen)

Current
consolidated
accounting period(ended December
2016)

Operating cost

38,000264,169(Unit: Million Yen)

Operating revenue

38,000250,9812,972

Previous
consolidated
accounting period(ended December
2015)

Bonds payable

Buildings and structures

Machinery, equipment and vehicles,net

43(Unit: Million Yen)
Previous
consolidated
accounting period(ended December
2015)

Current liabilities

Costs on uncompleted construction
contracts

Allowance for doubtful accounts

Liabilities

Consolidated Statement of Cash Flows

31,70833,449Δ73Δ50Retirement benefits liability
adjustments

Δ66

Total accumulated othercomprehensive income

31,56833,380Non-controlling interests

4,108

4,184

Total net assets
Total liabilities and net assets

341,087
1,133,994

Δ4,566

Cash flows from investing activities

44,57550,199Payments into time deposits

Δ1,226

Income taxes - current

4,357

8,763

Proceeds from withdrawal of time deposits

3,400

-

Income taxes - deferred

6,292

6,274

Purchase of property, plant and equipment

Δ164,060

Δ106,729

Total income taxes

10,64915,038Net income

33,92535,161

P ro c e e d s f ro m s a l e s of p ro p e r t y, p l a nt a n dequipment

Profit attributable to non-controlling interests
Profit attributable to owners of parent

296

263

33,62834,897

Consolidated Statements ofComprehensive Income

Current
consolidated
accounting period(ended December
2016)
35,161

5,324

1,749

Unrealized gains on hedging instruments

105

23

Foreign currency translation adjustments

Δ1,319-55

78

Share of other comprehensive income ofaffiliates accounted for by the equity method

Δ167

Δ39

Total other comprehensive income

3,998

1,811

Comprehensive income

37,92336,972

Total comprehensive income attributable toowners of parent

37,62636,709Total comprehensive income attributable toNon-controlling interests

296

263

Other comprehensive income

Adjustments for retirement benefits

Proceeds from sales of intangible assets(Breakdown)

5,259

1,679

Δ4,064

Δ2,427

173

408

Δ24,744

Δ5,396

Proceeds from sales of investment securities

36,304888

Purchase of newly consolidated subsidiaries

Δ135,374

-

Δ308

Δ143

Purchase of investment securities

Other, net(Unit: Million Yen)

33,925

Unrealized holding gains on securities

Purchase of intangible assets

Payments on loans

Previous
consolidated
accounting period(ended December
2015)
Profit317,045

1,662

Δ4,387

Income before income taxes and minority
interests

Δ19

1,091,266

Interest expenses paid

1,485

60

702

Δ284,580

Δ111,018

Net increase (decrease) in short-term loans payable

76,000

Δ77,000

Net increase (decrease) in short-term bonds
payableΔ4,026Δ2

Proceeds from long-term loans payable

249,000

225,400

Repayments of long-term loans payable

Δ124,084

Δ141,137

Payments on redemption of bonds

Δ12,000

Δ100

Proceeds from issuance of stocks

79,997-87

108

Net cash provided by (used in) investing activities
Cash flows from financing activities

Proceeds from exercise of share options
Proceeds from sales of treasury shares

0-

Purchase of treasury shares

Δ1

Δ947

Δ7,802

Δ11,904

Cash dividends paid
Proceeds from payment from minority shareholders

889-

Cash dividends paid to minority shareholders

Δ124

Δ117

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

Δ1

Δ14

257,934

Δ5,715

Effect of exchange rate change on cash and cash
equivalents

242-

Net increase (decrease) in cash and cash equivalents

9,868

Δ8,326

Cash and cash equivalents at beginning of period

21,12930,997

Cash and cash equivalents at end of period

30,99722,671

44

Consolidated Financial Statements

External Evaluation

Third-party Assurance

Consolidated Statements of Changes in Net Assets
Previous consolidated accounting period(ended December 2015) (Unit: Million Yen)

Shareholders' equity
Capital stock

Balance at the beginning of the current period

Capital surplus

22,290Retained earnings

38,355

Treasury shares

114,314

Cumulative effect of changes in accounting policy

Total shareholders' equity

Δ191

174,767

Δ191

174,84173

Balance at the beginning of the fiscal year reflectingchanges in counting policy

73

22,29038,355

114,387

40,30740,30780,61543

43

87With the aim of enhancing the credibility of our CSR Report, a set of selected environmental and social performanceindicators for fiscal 2016 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.

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

Δ7,802

Profit attributable to owners of parent

33,628

Δ7,802
33,628Purchase of treasury shares
Disposal of treasury shares

0

Δ1

Δ1

0

0

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

40,35140,351

25,826Δ1

106,527

Balance at the end of the current period

62,64178,706140,214Δ193

281,368

Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities
Balance at the beginning of the current period

Deferred
gains or losses
on hedges

Foreign currencytranslation
adjustment

Adjustments
for cumulative
retirement
benefits

Consolidated
statements ofchanges in net
assetsMinority
interests

Total
net assets

26,549

Δ179

1,321

Δ121

27,5693,083

205,421

26,549

Δ179

1,321

Δ121

27,5693,083

205,495

Cumulative effect of changes in accounting policy

73

Balance at the beginning of the fiscal year reflecting changes inaccounting policy
Changes of items during the current period
Issuance of new shares

80,615Issuance of new shares - exercise of subscription rights to shares

87

Dividends of surplus

Δ7,802

Profit attributable to owners of parent

33,628Purchase of treasury shares

Δ1

Disposal of treasury shares0

Net changes of items other than shareholders' equity

5,158

105

Δ1,321

55

3,998

1,024

5,022

Total changes of items during the current period

5,158

105

Δ1,321

55

3,998

1,024

111,550

Balance at the end of the current period

31,708

Δ73

-

Δ66

31,5684,108

317,045

Current consolidated accounting period(ended December 2016) (Unit: Million Yen)

Shareholders' equity
Capital stock

Balance at the beginning of the current period

Capital surplus

62,641Retained earnings

78,706

Treasury shares

140,214

Total shareholders' equity

Δ193

281,368

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

62,64178,70654

54

140,214Δ193

281,368

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

108

Dividends of surplus

Δ11,904

Profit attributable to owners of parent

34,897

Δ11,904
34,897Purchase of treasury shares

Δ947

Δ947

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

54

54

22,992Δ947

22,15462,69578,760163,206

Δ1,140303,523

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

Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities
Balance at the beginning of the current period

31,708Deferred
gains or losses
on hedges
Δ73

Foreign currencytranslation
adjustment-

Adjustments
for cumulative
retirement
benefits

Consolidated
statements ofchanges in net
assetsΔ66

31,568

Minority
interests

Total
net assets

4,108

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

317,045-

31,708

Δ73

-

Δ66

31,5684,108

317,045

Changes of items during the current period
Issuance of new shares-

Issuance of new shares - exercise of subscription rights to shares

108

Dividends of surplus

Δ11,904

Profit attributable to owners of parent

34,897Purchase of treasury shares

Δ947

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

45

External Evaluation

E nvironment

S ocialG overnanceNikkei Environmental Management
Survey/Ranked 1st Top ranking for theseven th consecutive year in thewarehouse, real estate, and othercategories

1,741

23

-

46

1,812

76

1,888

1,741

23

-

46

1,812

76

24,04233,449

Δ50

-

Δ19

33,3804,184

341,08746