C S R R E P O R T 2 O15
Hulic Co., Ltd. CSR REPORT 2015

Corporate Philosophy and Basic Stance

Editorial Policy

CONTENTS

Hulic publishes various forms of communication tools to help
investors and other stakeholders gain an understanding andobjectively view its initiatives that seamlessly fuse strategy with
CSR. The GRI Sustainability Reporting Guidelines Ver. 4 (G4)
were referenced during the editing of this report to carry out
a materiality analysis and disclose priority items. Informationthat could not be included in this publication, such as the G4

3

Top Message

5

Highlights

comparison table, can be found on our corporate website. Details● Main Management Indicatorsof various investor relations activities can also be found on our
corporate website “( Investor Relations”).

7● Time of Issuance● Medium- and Long-Term Management Plan

June 2015 (Previous issue: June 2014, Next issue: June 2016(scheduled))

9● Reporting Period
Fiscal year 2014 (from January 1, 2014 to December 31, 2014)11● Reporting Organization
environmental performance data was provided primarily by the

CSR Vision“waste emissions,”and“water consumption”of the main 20

13

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

1

2

3

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

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

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

Reporting Media

Environmental Performance Data/Scope
Total ﬂoor area (㎡)15

Total ﬂoor area (㎡)9,780

Hulic Nakano Building

4,318

Toranomon First Garden

10,154

Hulic Kawasaki Building

6,003

Hulic Head Ofﬁce Building

7,687

Hulic Aoyama Building

8,789

Hulic Shinbashi Building

13,982

Hulic Mita Building

6,228

Hulic Ginza Building

8,579

Hulic Osaka Building

30,353● Taking Steps toward Enhanced

Higashi Ote Building

7,207

Hulic Nanba Building

9,147

Hulic Kabutocho Building

6,578

Hulic Kobe Building

8,354

Environmental Management

Hulic Kobunacho Building

17,172

Hulic Sapporo Building

14,254

Hulic Kakigaracho Building

4,696

Hulic Hamamatsu Building

5,537

Hulic Torigoe Building

5,954

Hulic Fukuoka Building

12,64616

Conserving Energy● Providing Eco-Friendly Products*The scope of environmental performance data on properties we own *The
ﬂoor space of buildings listed here does not necessarily match the ﬂoor spacecorresponding to our share of ownership. *These include properties that were
sold, retired and completed during ﬁscal year 2014. Environmental performancedata for properties that were sold or retired during ﬁscal year 2014 has beentabulated up to the point in time when the proper t y was sold or retired.
Environmental performance data for properties that were completed duringﬁscal year 2014 has been tabulated after completion.

Materiality forstakeholders●

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

Established: March 1957●

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

Paid-in Capital: 22,290 million yen (as of end of December 31, 2014)●

Memberships: Japan Federation of Economic Organizations

and Technologies/Reducing Waste● Biodiversity/Encouraging Greening● Environmental Accounting

and Safety/Improving Customer Satisfaction● Worker Diversity and Equal Opportunities/

Non-discrimination● Creating an Employee-Friendly Work Environment● Initiatives in the Local Community

The Association for Real Estate Securitization
Japanese Association of Real Estate Appraisal

WebsiteMajor Group Companies (As of June 2014)

Comprehensive reporting on
Hulic’
s overall CSR initiatives

Hulic Build Co., Ltd.

33
38

Hulic Building Management Co., Ltd.
Hulic Insurance Service Co., Ltd.

● Website
CSR http://www.hulic.co.jp/en/csr/
IR

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

Materiality for Hulic● CSR Report 2015

Hulic Hotel Management Co., Ltd.
Hulic Office Service Co., Ltd.

Social Initiatives● Safeguarding Customer Health

The Real Estate Companies Association of Japan
Japan Building Owners and Managers Association

Environmental Initiatives● Curbing GHG Emissions/

Head Office
Hulic Co., Ltd.
(Published edition
and PDF)
Reporting on initiatives
considered to be ofparticular importance

Stakeholders
and Material Issues

Hulic Shinjuku Building25

CSR report

Progress of Priority Items● Progress of Targets and Resultsbuildings.

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

Special Feature● Business Initiatives for Seniors

The scope of this report is the Hulic Group. The tally of“power consumption,”“gas consumption,”“CO₂ emissions,”

Hulic's Value Creation● Toward a "Society Full of Security and Trust"

Regarding a portion of the priority items, the activity report
before and after the 2014 fiscal year is included.

Strategy42

Corporate GovernanceConsolidated Financial
Statements
Third-Party Opinion

Hulic Reit Management Co., Ltd.
Hulic Proserve Co., Ltd.
Avanti Staff Corporation

1

Corporate Social Responsibility Report2Top Message

Results for Fiscal Year 2014
In fiscal year 2014, based on the aforementioned new medium-term management plan, we focused onachieving the improvement of corporate value with our motto of “Changes and Speed” as the keywords. As
part of our measures in line with this strategy, we secure stable profits in the real estate business, which is ourcore business, by utilizing leased properties in good locations near stations. From the perspective of further
increasing leasing revenue, we are also investing in new properties and rebuilding properties in ways that takeadvantage of the characteristics of their locations. We have also developed a new growth strategy through theimplementation of various measures, including the asset management business related to Hulic Reit, Inc., whichbecame a listed company in 2014, new development projects in Toranomon, Yurakucho, and other locations, aswell as hospital development in Sapporo. As a result of these activities, ordinary income increased by 8.3 billion
yen year-on-year to 34.3 billion yen. In fiscal year 2015, we will remain committed to changes and speed, andwill work toward maintaining and developing our business foundation with a view to achieving the goals laidout in the medium-term management plan as soon as possible.

Key CSR Challenges and Their Progress
Hulic believes that developing our CSR management and becoming a company with a strong social presence,as well as contributing to the sustainable development of society, will lead to the improvement of our corporate
value. With regard to our efforts in the aspect of the environment, our long-term vision sets the reduction of

Further strengthening businessdevelopment as a corporation
with a social presence,and contributing to the sustainable
development of society.
Hulic’s corporate philosophy is “Total commitment to our customers and the community. Creating productive
environments. Creating amenity. Promoting peace of mind,” and the Company aims to contribute to society by
putting this philosophy into practice. To that end, we constantly approach our business from new perspectives
while harnessing the Company’s stable business foundation, and by doing so, strive to achieve sustained

total CO₂ emissions generated from buildings owned by the Company by 25% by 2020, against 1990 levels. In
addition, we have established KPI targets that include the number of investments in renewable energy facilities
and the reduction in the volume of waste generated. As examples of measures to achieve these targets, theCompany is promoting measures to construct “buildings that do not fall in value even after 100 years,” andhas employed the designs in accordance with the Hulic Guidelines for Longer Life Service as the Company’s
standard design, and has been working to reduce the volume of waste generated and CO₂ emissions. We havealso launched a large-scale solar power project in Fukushima Prefecture, and started an initiative that aims tocreate an offsite ZEB with net zero energy consumption, by allocating the electricity generated for consumption
at the Head Office Building. Furthermore, with regard to KPIs in social aspects, we have established targets inareas such as quake-resistant measures for buildings owned by the Company, rates of taking childcare leaveamong employees, employment rates for disabled persons, and social contribution items. Hulic also takes aproactive stance toward career development for women, and has declared the goal of increasing the ratio of
female managers to 20% of all employees by 2020. We also aim to reach the top level in Japan for providing
support, including childcare assistance.
We also put effort into securing outstanding human resources by developing an environment where employees
can work while raising their children, such as by establishing an in-house childcare nursery within the Head

improvements in corporate value as well as gain the trust of all our stakeholders.

Office Building in 2014. With respect to the employment of disabled persons, we have achieved an employment

New Medium-Term Management Plan and CSR Strategy

donate every month to children who were orphaned in the Great East Japan Earthquake, through the “Ashinaga,”

In fiscal year 2014, we launched a new long-term management plan and a new medium-term management plan(2014 – 2016). The main contents of the medium-term management plan position the expansion of rentable areas
for buildings in the heart of Tokyo, which is Hulic’s strength, as the core of the plan. In addition, it establishes
the goal of accelerating the speed of growth through means such as developing new business domains including
newly developed businesses and the J-REIT business, and the implementation of the CRE project, which
proposes and executes the effective utilization of real estate owned by the Company. Furthermore, with aview to Japan in the next decade, it also lays out the goal of strengthening efforts to develop projects with 3K
business (Koreisha (seniors), Kanko (tourism), and Kankyo (environment)) in mind. The plan also establishes
the Company’s aim to promote the value creation that focuses on CSR beliefs, and to improve corporate value

rate of more than 2% of all group employees. The Company and executive officers are also keeping up efforts towhich is a foundation providing educational support to children worldwide who have lost their parent(s).
Going forward, with the goal of reflecting changes in Hulic’s business environment, we will continue to take up
challenges that will enable us to meet the demands of society.

To All Our Stakeholders
We believe that the source of our growth lies in meeting the various demands of society and working
collectively to advance our business activities and CSR. Going forward, all Hulic employees will continue towork as one to strengthen communication with our stakeholders, and will work steadily to sustain our efforts.
We sincerely appreciate your continued support and cooperation.

while responding to the needs of society as a company with social presence. As a result of these efforts, we aim
to achieve ordinary income of 38–40 billion yen by 2016, and ordinary income of 85 billion yen 10 years laterin 2023.

3

Corporate Social Responsibility Report

President, Representative Director and Chief Executive Officer

4

Highlights

Unit

FY12/10

FY12/11

FY12/12FY12/13

FY12/14Main Financial Indicators▲▲

Changes in Major Consolidated
Management Index, etc.

Operating Revenue (Net Sales)(Million Yen)

33,61674,73894,319108,444

212,791

Real estate business(Million Yen)

30,42868,096

84,346

95,726

199,910

Insurance agency business(Million Yen)

2,186

2,388

2,417

2,631

2,886

Other

(Million Yen)

1,001

4,253

7,555

10,087

9,994

Operating Income(Million Yen)

15,28919,841

22,571

29,11436,032

Ordinary Income(Million Yen)

12,396

16,896

20,03325,98334,314Net Income(Million Yen)

11,562

9,336

11,487

15,97022,352

Total Assets(Million Yen)

455,903476,244

637,919

720,344773,401

Net Assets(Million Yen)

98,644

104,356

149,895

177,280

205,421

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

5,537

20,4598,472

11,114

84,123

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

(30,380)(23,667)(30,554)(49,548)(83,815)

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

19,707

7,511

20,85442,841

4,192

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

7,430

11,733

12,164

16,60021,129

(%)

21.3

21.6

23.2

24.4

26.1

EBITDA *2(Million Yen)

20,771

26,49330,09237,80944,870Interest-Bearing Debt to EBITDA Ratio *3(Times)

14.5

11.7

13.8

12.2

10.5

Net D/E Ratio *4(Times)

3.0

3.0

2.8

2.8

2.6

250

Interest Coverage Ratio *5(Times)

1.1

4.6

1.7

2.0

18.5

200

(%)

13.9

9.3

9.1

9.8

11.8

150

Net Income per Share

(Yen)

73.0

54.6

22.3

27.0

37.7

Dividend per Share(Yen)

Operating Revenue (Net Sales)
Segment Earnings

Consolidated Cash Flow

Equity Ratio *1

Return on Equity*6*7

Changes in Real Estate Business
Related Index

Adjusted
post merger

3.0

Adjusted
post merger

3.6

Adjusted
post merger

4.5

10.5

6.5

▲

Unit

Vacancy Rate *9
Average Rent

FY12/12FY12/13

1.0

0.3

0.6

0.4

0.7

19,933

20,571

20,024

19,817

20,759(Yen)

24,89526,75324,42023,71425,147(Building)

129

131

163

161

167

Tokyo area

(Building)

111

113

143

141

148

Other

(Building)

18

18

20

20

19

(㎡)

452,474

492,422723,924

679,672774,615

Tokyo area(㎡)

353,122393,191

553,333

537,582

633,918

Other

(㎡)

99,352

99,231

170,591

142,090

140,696

Total

500
0

Total

747

943

FY12/ FY12/ FY12/ FY12/ FY12/
10
11
12
13
14

On July 1, 2012, Hulic completed a consolidated merger (reverse acquisition) with Shoei Co., Ltd. The numerics in this book before the consolidation refer to ex-Hulic's numerics. Triangles
before ﬁgures 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 ex-Shoei shares were allocated for every ex-Hulic share, and data for 2010 to 2012 has beenadjusted for this share allocation. *8 Excluding real estate held for resale *9 Excluding the unsigned ﬂoor space which was reserved due to the tenant's demands and reconstruction

200
100
0

FY12/ FY12/ FY12/ FY12/ FY12/
10
11
12
13
14

EBITDA（¥100 million）
50,000168

EBITDA ratio

123

FY12/ FY12/ FY12/ FY12/ FY12/
10
11
12
13
14

Equity(Million Yen)

(Times)20.0 250,000

Return on Equity(Million Yen)

（%）
20.0

223
40,000

159
115

93

15.0

30,000114

200,000

15.0

150,000
10.0

20,00050
FY12/ FY12/ FY12/ FY12/ FY12/
10
11
12
13
14

5.0

0

FY12/ FY12/ FY12/ FY12/ FY12/
14
10
11
12
13

10.5

10

5.0

50,00000FY12/ FY12/ FY12/ FY12/ FY12/
14
10
11
12
13

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

6.5
5

3.0

3.6

Market average forthe ﬁve wards ofdowntown Tokyo

8.0
7.0

25,000All Hulic properties

6.0
20,000

3.0
2.0

5,000
0

Market average forTokyo’
s 23 wards

4.0

10,000FY12/ FY12/ FY12/ FY12/ FY12/
14
10
11
12
13

Market average forTokyo’
s 23 wards

5.0

15,0004.5

1.0
FY12/10

FY12/11

FY12/120

Hulic’
s ofﬁce buildingsin the ﬁve wards ofdowntown Tokyo

Vacancy Rate *9/Average Rent
（Yen）

15

10.0
100,000

10,000

Dividend per Share *7

0200

Shareholders’Equity/
Return on Equity (ROE)

EBITDA/EBITDA Ratio

300

259

225

152

0

343

300

100

336

Net Income

100

198

200

1,084

FY12/14(%)
Tokyo central 5 wards

Rentable Area

FY12/11(Yen)

Entire country

Number of Properties

FY12/10

291

1,500

（¥100 million）

400

360

300

1,000

Ordinary Income（¥100 million）

400

2,127

2,000

0

Target: Real estate for rented possessions of this company *8（¥100 million）

2,500

Operating Income

FY12/13

FY12/140*Market averagevacancy rate: CBRE’s
Japan Ofﬁce Market View
*Market average rent:
Miki Shoji’s Ofﬁce Data
by Region▲

Main Non-financial Indicators
Power Consumption

Gas Consumption（MWh）30,00020,00030,37027,095 26,028（㎥）

800,000

683,318
25,63322,060600,000

Basic Unit of CO₂ Emissions

561,116

612,235 588,551

80

453,012400

5200,000

FY12/ FY12/ FY12/ FY12/ FY12/
10
14
11
12
13

Corporate Social Responsibility Report

0

FY12/ FY12/ FY12/ FY12/ FY12/
10
14
11
12
13

68

66

77

74

60

400,000

10,000（kg-CO₂/㎡）

100

Acquisition Rate ofPaid Holiday

Waste Emissions
1,500
1,200

（t）

1,307

1,179

1,145

1,102

1,027

Employment Ratio of
Persons with Disabilities
（％）

80
60

64

70

71

71

71

900

56

Non-consolidated basis 6.92

6.00

5.26

0

0

20

FY12/ FY12/ FY12/ FY12/ FY12/
14
10
11
12
13

0

5.30
2.14

2.00

FY12/ FY12/ FY12/ FY12/ FY12/
10
14
11
12
13

0

8.56

5.66

4.00

500
300

FY12/ FY12/ FY12/ FY12/ FY12/
14
10
11
12
13

8.00

40

20

（％）

10.00

2.46

Consolidated basis
Jun/
10

Jun/
11

Jun/
12

Jun/
13

Jun/
14

6

Strategy

Toward Further Growth

New Long-Term PlanーHulic a Decade Later (2014 to 2023)

The Hulic Group achieved the targets of its medium-term management plan from 2012 through 2015 a full two years
ahead of schedule in fiscal year 2013. As a result, in fiscal year 2014, we newly formulated a long-term plan called "Hulica Decade Later (2014 – 2023)" and a new medium-term management plan for 2014 to 2016 as the first step in thisvision. Under this plan, we will continue to expand and evolve our business model centered on our real estate leasing
business as well as seeking to boost everlasting corporate value.
The long-term plan "Hulic a Decade Later" is planningon reaching ¥85 billion of ordinary income

900
800

400

Development

300

CRE

Basic Policy

Management

100

J-REIT
2012

2013

2014

2015

❶ We will establish a business structure whereby the leasing business secures stable proﬁts and balances proﬁt
growth with consistent and stable earnings, while growing earnings in segments related to the leasing business.
This includes expanding the development business, management business and CRE business. Furthermore, wewill develop and expand our business domain in growing ﬁelds tied to current needs, with a primary focus on
businesses for seniors, businesses for tourism and businesses for the environment (the 3K businesses).

New Medium-Term Management Plan (2014-2016)

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

First step tosustainhigh growth

200

2011

Basic Policy on Business Expansion❸ 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% of management positions by 2020.

Leasing business

0（Unit: 100
Million Yen）

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

❷ We will earn highly positive trust from the markets by carefully monitoring ﬁnancial stability and business risk.

New Medium-Term
Management Plan
¥38 to ¥40 billion

500

Quantitative Target

2016

2017

2018

2019

2020

2021

2022

2023
（Year）

Maintain our unique business model focusedon the leasing business while also expanding
into new areas such as asset management andproperty development to sustain high growth.

FY2014
Results

FY2015
Forecast

FY2016
Plan－

Operating Revenue (¥100 million)

2,127

2,150

Operating Income (¥100 million)

360

420

420-450

Ordinary Income (¥100 million)

343

390

380-400

Net Income (¥100 million)

223

230

230-250

EBITDA (¥100 million)

449

523

520-540

Interest-Bearing Debt to EBITDA Ratio (Times)

10.5

11.2

Under 12x2.9

Under 3.0x

Real Estate96％

2.6❶ Further increase earnings
from the leasing business● Enhance portfolio quality by steadily promoting reconstruction projects● Expand portfolio and increase investments in conveniently located properties● Maintain high portfolio utilization rates by further increasing the leasing

Operating
Income❷ Generate earnings streams by reinforcing the development business● Promote high quality Hulic-sized development projects situated in ideal locations

Basic Strategy

CSR activities, which are underpinning the success of corporate planning

Net D/E Ratio (Times)▲

Hulic’s Business Domains
Hulic is a real estate company focusing
on leasing ofﬁce buildings and otherasset classes mainly located inTokyo’
s 23 wards. We own more than
160 buildings nationwide that welease to tenants. We have achieved
growth by rebuilding our real estate
properties as they age and acquiring
new properties to increase the totallease area of our portfolio.

Others 5％

Real Estate
94％

Insurance 1％

Others 2％
Insurance 2％

Operating
Revenue¥212.7billion¥36.0
billion❹ Promote a broadly focused CRE strategy that ﬂexibly considers alliances with various sectors and companies● Collaborate and partner with various sectors and companies to expand the scale of our business and business domains● Focus on M&A that fulﬁlls the intended purpose▲

Portfolio Distribution（As of December 2014）
About 124 ofﬁce buildings (including commercial buildings) out of the 167 properties in total

Ofﬁce building portfolio distribution basedon distance from the nearest railway station
13％
39％

14％
34％

7

Nearly 90%
located within
a 5-minute walk■ Less than
1-minute walk■ 2- to 3-minute walk■ 4- to 5-minute walk
■ Over 5-minute walk

Corporate Social Responsibility Report

Ofﬁce building portfolio
distribution by leasable area
Nearly 80%
located in Tokyo

10％
9％
22％

❸ Launch a J-REIT and establish the asset management business after increasing its scale● Aspire to increase the scale of Hulic Reit leveraging strong support

59％■ Tokyo’s 23 wards: 347,000㎡■ Other Tokyo/Greater Tokyo
Metropolitan Area: 129,000㎡■ Kyoto/Osaka/Kobe: 56,000㎡■ Other: 61,000㎡

Portfolio distribution
6％

Nearly 90%
located in Tokyo

6％

16％
72％

■ Tokyo’s 23 wards: 90■ Other Tokyo/Greater
Tokyo Metropolitan
Area: 20
■ Kyoto/Osaka/Kobe: 7■ Other: 7❺ Develop new business domains● Establish organizations for 3K businesses (businesses for seniors, businesses for tourism and businesses forthe environment). Always be half a step ahead in growth markets❻ Secure ﬁnancial soundness and rigorously manage risk
● Secure ﬁnancial soundness through ﬁnancial controls and thoroughly manage business risks❼ Further strengthen business expansion as a company with a solid presence in society● Promote value creation focused on CSR beliefs while addressing the needs of society

8Hulic's Value Creation

Helping Realize 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.

Hulic’s Contributions to Solutions for Social Issues● Promoteenvironmentally friendly
businesses● Proactively expand

businesses targeting
seniors

Use of naturalventilation and naturallighting systems, andstandardization of longlife buildings● Measures to address

warming

aging in Japan● Measures to prepare

for natural disasters● Reconstruction fromthe Great East Japan
Earthquake

Business Opportunities● Demands from society for eco-friendly buildings● Rising demand for renewable energy● Growing market for seniors following

advancements in aging societies● Boost demand for safe and secure buildings● Spurring on the real estate market throughthe 2020 Tokyo Summer Olympics, the increasein the number of tourists to Japan, and urban
revitalization● Market changes caused by changes in social

structure● Risk of earthquake occurring in Tokyo where ourportfolio is concentrated

9

disasterreconstruction

Investment in mega
solar projects inFukushima

Received the realestate industry's firsthighest rating of
DBJ BCM

Capitalizing on Business Opportunities (Business Development)● Standardize long-life building designs● Proactively adopt seismically-isolated

highly energy efficient equipment● Adopt environmentally friendly building methods● Make efforts in developing senior housing instep with the growing senior population● Develop, hold and invest in hospitals andlong-term care facilities● Introduce the latest technologies and equipment● Upgrade equipment at existing buildings tostructures and earthquake-damping structuresat newly constructed buildings● Increase earnings of existing properties throughrebuild projects● Launch publicly offered J-REITs and improveasset management business● Engage in tourism businesses centered on hotels

Preparations for Business Risk (Infrastructure Reinforcements with a Long-Term Perspective)

Business Risks

In fo rmation● Contribute to

Development andinvestment in senior,nursing care andmedical facilities

Social Issues Requiring Solutions● Prevention of global● Provide
disaster resistantbuildings● 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

Enhancing Corporate Value through Proactive Info Disclosure

Participation in the GRESB Survey

Inclusion in SRI Indexes

Hulic participated in the Global Real Estate Sustainability Benchmark(GRESB) Survey for the first time in 2014. The GRESB is a benchmark
to measure the sustainability performance of the real estate sector
established by a group of major
European pension funds in 2009. Hulic
received particularly high marks for its
management and policies with regards
to its initiatives for environmental
consideration and sustainability, andearned the“Green Talk”status.

In recognition of its CSR
initiatives and information
disclosure transparency,
Hulic's stock was selected forinclusion in the FTSE4Good
Index Series in March 2012
and the Morningstar Socially
Responsible Investment (MSSRI) Index in January 2014.

Corporate Social Responsibility Report● Prioritizing business domains based on changes in social structure● Rebuilding with a focus on seismically-isolated● Establishing collaborative structures with outside● Liquefaction countermeasures and measures against flood damage● Establishing a business continuity plan (BCP)

and earthquake-damping structuresorganizations and conducting BCP training● Real estate portfolio centered on downtown Tokyo

company-owned buildings● Primarily long-term, fixed rate financing● Improving the earthquake resistance of● Promoting long-term lease agreements with tenants

Realizing Our Corporate Philosophy through the Creation of Shared Value with Society
Shared Value for Society

Shared Value for the Hulic Group● Improve the conditions of global● Enhance earnings power● Enhance expertise ofsoundness● Capture market share● Enhance brand value● Enhance building
technologies● Secure stable profits● Improve employee motivation

environment● Realize a society where seniors
peacefully● Help achieve safe and comfortable lifestyles● Revitalize local economies● Help revitalize disaster-hit
economies, etc.

● Fortify financial

personnel● Co-exist with local

communities● Achieve business

continuity, etc.

10Business Initiatives
for Seniors

SpecialFeatureExample ❶Hulic proactively works to meet the needs of society and solve issues as part of its commitment to create social and economic value.

Charm Suite Shakujiikoen

Under the medium- and longterm management plan andlong-term plan drawn up in
fiscal year 2014, Hulic is focusing
on the 3K businesses*. Amongthese, in terms of businesses forseniors, Hulic has mainly invested
in and developed long-term
homes. In 2014, we established the
Senior Business Development
Department to examine andpromote senior businesses in
new areas and to ensure ourbusiness development activities
are a half step ahead of our peers.

Charm Suite Shakujiikoen’s courtyard

Sunny Life Tokyo Shinjuku’s lobby*3K businesses refer to the Koreisha (seniors),
Kanko (tourism), and Kankyo (environment)
businesses, and “3K” represents the first lettersin these three words. Engaging in 3K businesses
means that Hulic, as a real estate company, will
anticipate changes in the external environmentand review as well as practice our business, which
is a half step ahead from its peers, peers, in orderto respond to the progress of the aging of society
going forward, the rising number of tourists, andthe growing seriousness of environmental issues.

Sunny Life Tokyo Shinjuku

45
40
35
30
25

Ratio of Senior Population(Aged 65 and older)

Actual(national census, etc.)

Source: Ministry of Internal Aﬀairs and Communications’National Census and Population Statistics (until 2010)
and the National Institution of Population and Social
Security Research’s Estimates of Japan’s Future
Population (January 2012 estimates) (2015 and later)

29.1

20
17.4

15
10
5
(%) 0

4.9

5.7

7.1

1950

1960

1970

9.1
1980

23.0

1990

2000

2010

To respond to the continuing aging of Japan Hulic will leverage its
unique traits as a real estate company to focus efforts on the following
businesses.
● Invest in and develop senior facilities centered on private nursing homes● Rebuild, invest in and develop hospitals as CRE* for healthcare corporations● Propose other real estate solutions related to new businesses forseniors and for inheritance purposes.
*CRE business: CRE stands for Corporate Real Estate, which is a business to support a strategy aimed
at enhancing corporate value, using real estate owned by private sector companies in Japan.

Corporate Social Responsibility Report

36.1

38.8

39.9

31.6

The ratio of the senior population(65 and older) is expected to rise sharply
from 23% in 2010 to about 40% in 2060.

12.1

Growth Strategy

11

Estimates for FY2012(Estimates of Japan’s
Future Population)

2020

2030

2040

2050

2060

Direction of the Healthcare andNursing Care Sectors
With growing needs for moving into the facilities forseniors, it is anticipated that the demand will continue
to grow for these facilities, which include private
nursing homes. From the market's perspective,
healthcare assets* such as private nursing homes andhospitals are a promising asset for investment, andthey will likely form a large market going forward.
*Healthcare: A collective term for health, nursing care and medical treatment.
*Healthcare assets: Nursing homes, hospital real estate, etc.

Development Project for Howakai Sapporo Hospital

The number of medical institutions looking at reconstruction
projects is expected to increase heading toward 2025 because of
the rising number of hospitals facing aging facilities as well as the
progress in healthcare and nursing care legislative reform andderegulation. As a result, Hulic teamed up with Capital Medica
Co., Ltd. as part of its CRE business for healthcare corporations todevelop and own a hospital in Oyachi, Atsubetsu-ku in Sapporo.
In January 2015, Hulic concluded a capital and business tie-up
agreement with Capital Medica (CEO: Atsushi Furukawa), Atsushi
Furukawa), which excels in management consulting for hospitals
and other healthcare related businesses, in order to examine
investments and development projects for medical institutions
as part of its senior business, and acquired an approximately 3%
equity stake in Capital Medica.
Under this project, Hulic will develop and own a new hospitalbuilding for a medical institution supported by Capital Medica,and once the hospital achieves stable operations three to five
years after completion, it will be sold off (Capital Medica will
become the lessee after the completion of this project andprovide management support to the healthcare corporation,
which is the sublessee). By entering the real estate businessfor medical institutions through this project ahead of ourcompetitors, Hulic will gain experience and skills in investing inand developing hospitals, opening up the door to new business
opportunities and business growth for its CRE business forhealthcare corporations (e.g., reconstruction solutions for older
hospitals).

Example ❷Exterior view of Howakai Sapporo HospitalInterior view of Howakai Sapporo Hospital

Project Leveraging the Former Site of Nippon Sport
Science University’s Fukasawa Women’s Dormitory

This project involves leasing the former site of Nippon
Sport Science University's Fukasawa Women's Dormitory
for a period of 60 years to build and operate a facility thatwill be used for the university's educational research andthat will also contribute to the local community.
The site is located in the Fukasawa neighborhood of
Setagaya Ward in a quiet residential area. Given strong
future demand for nursing care and in-home medical carebecause of the aging population, this project will constructa private nursing home and outpatient medical clinic.
In addition, a daycare for the university will also behoused there, a facility that more and more universities
are adopting, to assist university faculty and research
students and contribute to the further enhancement of
the university's value. Plans call for the developmentof a facility that will link the local community with theuniversity through its environmental design, greenery,disaster preparedness functions, and interactive spaces.

Architectural rendering*As for the development schedule, plans call for construction to be completed in2017 after discussions are held with Nippon Sport Science University and a basic
agreement is reached.

Conceptual image of lawn garden

12

Progress of Priority Items

Implementing CSR Management Basedon Quantitative Indicators/KPI

In order to improve while objectively assessing CSR activities,“Priority Items”which are especially important in light of business
contents are established, and we set Key Performance Indicators (KPI) and targets. Items other than the priority items are also
positioned as“Promoted Items.”In this way, we can now follow the results of our activities. While reflecting matters required bysociety after referencing the GRI Guidelines, targets were set in the context of our business reality and direction through surveys,
hearings, and discussions. Furthermore, in fiscal year 2014, the KPIs were enhanced in accordance with the priority items.
We will make efforts for constant improvement using the PDCA Cycle, while disclosing data on the progress of our CSR activities
to the stakeholders.

FieldsPriority Items/
Promoted Items（★attached to priority items）

Measures against global
warming at Hulic’sbuildings ★

Reduction ofwaste/
Conservation of
resources

Customers

Environment

Prevention of
global warming

Measuresagainstdisasters
Improvement incustomer satisfaction

Employees

SocietyLocal
communities

Diversity andhuman rights

Contribution
to society

Power consumption (MWh)Gas consumption（㎥）
Basic unit of CO₂ emission *1（ kg-CO₂/㎡）

Targets

ScopesReducing 5% for ﬁve years from2010 to 2014 compared with
68.42, an average during
period from 2005 to 2007.
(per unit ﬂoor area)

20 existing primary ofﬁce
buildings

Results
FY2010FY2011FY2012FY2013

FY201430,37027,09526,02825,63322,060683,318

561,116

612,235

588,551

453,012

66

56

68

77

74

Major Achievements in FY2014

Evaluation Reference*4

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

○

P18

●

Using renewable energy
and developing
new technology ★

Number of capital
investments forrenewable energy

3 investments or more perﬁscal year

All Hulic’s buildings

3

3

7

5

6

●

Acquisition of Solar Power Plant in Hirono Town, Fukushima Prefecture
Usage of natural ventilation, natural lighting● Photovoltaic generation system installation◎

P20

Promotion of greening ★

Number of greening projects

1 project or more perﬁscal year

All Hulic’s buildings

3

3

8

6

5

● Certiﬁed JHEP A+ Rank awarded to Hulic Residence Chofu Shibasaki and JHEP
A Rank awarded to Shinokubo Kateiryo, Charm Suite Shakujiikoen, and Hulic
Setagaya● Certiﬁcation of SEGES Urban Development awarded to Shinagawa Season Terrace◎

P23

Reduction of waste at
Hulic’
s buildings ★

Amount of waste (t)Reducing 10% for 3 years from 2012
to 2014 compared with averageduring period from 2005 to 2007.

16 existing primary ofﬁce
buildings *2

1,307

1,179

1,145

1,102

1,027

●

Achieved a reduction by 17%◎ーReduction in water consumptionat Hulic’s buildings

Water consumption（㎥）

Reducing 15% for 3 years from 2012
to 2014 compared with averageduring period from 2005 to 2007.

20 existing primary ofﬁce
buildings

176,715

169,768

164,037

148,508

127,745●

Achieved a reduction by 26%◎

ーReduction of waste in
new buildings ★

Number of technological measures(PC construction method/extension oflife span) implemented to reduce theamount of waste in reconstruction projects

1 case or more per ﬁscal year

All Hulic’s buildings

6

3

5

8

7

◎

P22

Reduction of paper material’s
volume in the ofﬁce

Paper consumption per person(10 thousand)

20,000 pieces or less per ﬁscal year

Hulic Head Ofﬁce Building－－

0.4 *3

1.6

1.5

◎

ー

Earthquake countermeasuresfor Hulic’s buildings ★

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

100%

All new ofﬁce buildings
completed◎

P25

Business Continuity Plan
(BCP) ★

Number of inspections for BCP
drills, stockpiled food and goods

Once or more per ﬁscal year

Hulic Group

1

1

1

1

1

◎

P35

Improvement in customer
satisfaction ★

Number of surveys on customer
satisfaction

Once or more per ﬁscal year

Hulic Group

1

0

1

1

1

◎

P26

Usage rate ofchildcare leaves(Number of people)

70% of eligible women or
more on average and one
man or more for four years
from 2012 to 2015

All eligible female employees of
Hulic (As of the end of December)100％（1 eligible
employee）

100％（1 eligible
employee）

100％（1 eligible
employee）

100％（2 eligible
employees）

100％（3 eligible
employees）

All eligible male employees of
Hulic

0人

1人

1人

0人

2人

Percentage of those who use theChildcare Center Subsidy System.

60% or higher per ﬁscal year

All eligible employees of Hulic(As of the end of December)100%（5 eligible
employees）

100%（6 eligible
employees）

100%（7 eligible
employees）

100%（8 eligible
employees）

100%（11 eligible
employees）

Promoting the planned useof paid leaves ★

Usage rate of paid leaves

60% or higher per ﬁscal year

All employees of Hulic

64％

70％

71％

71％

71％

Restraining overtime work

Annual total number of employees
who worked overtime for 45 hours or
longer for three months on average

No target

All employees of Hulic

3

1

2

4

4

Promoting mental health care

Percentage of employees who
received medical checkups (%)

100%

All employees of Hulic (As of theend of December)

100％

100％

100％

100％

100％

ー

ー

ー

2.14%

2.46%

5.26％

5.66％

5.30％

6.92％

8.56%

Promoting the use of
the next generation
nurturing support system ★
Work-life
balance

Key Performance
Indicators (KPI)●

Adopted long-life structure for Hulic Residence Chiba Chuo, Hulic
Residence Chofu Shibasaki, Charm Suite Shakujiikoen, Sunny Life
Tokyo Shinjuku, Hulic Shinjuku Building, and Hulic Setagaya● Adopted PC (Precast Concrete) method for Hulic Residence Chofu
Shibasaki●

All employees of Hulic Group(As of June 1)

100％
100％
100％
100％
100％
（3 buildings）（2 buildings）（3 buildings）（2 buildings） （1 building）●

Paper consumption reduction implemented at ofﬁces● Adopted earthquake-absorbing structures and earthquakedamping structures at ofﬁce buildings●

Total disaster training and implementation of management articles for movement practice●

Conducted ﬁrst-aid training● Surveys on satisfaction of tenants were conducted with

Hulic Building Management acting as the point of contact●

Expanded in-house programs receiving subsidies for extended

hours daycare, daycare for ill children, and Kids' Clubs● Introduced the internet-based“Childcare wiwiw Program”forsupporting employees from prior to maternity leave up to theirreturn to work
● Opened a company daycare nursery inside the Hulic
headquar ters◎◎

P29-30

◎
◎

P29

－

P29

◎

ー

● Increased requests received from group companies andoperating steadily◎

P27● In addition to meetings by the women’s career promotion project team, seminars and networking sessions
were held for female employees in general, inviting Hulic’s External Director Atsuko Fukushima.

－

P28

●

Continued to conduct a campaign to boost the leave usage rate●

Implemented inspections toward full-scale execution of No

Overtime Day●

Implemented a Health Committee through cooperation with industrial physicians

Promoting employmentof the disabled ★

Employment rate of the disabled

Maintaining the statutory
employment rate of 2% or more

Improvement of systems todevelop women’s careers ★

Number of women’s career promotion
project team meetings held

No target

Hulic

1

7

4

5

7

Corporate social contribution ★

Number of social action
programs

4 programs or more per ﬁscal year

Hulic Group

3

7

7

8

9

Held students’idea competition, hosted summer festivals, and donated used postal stamps and various
donations (Kid's Door, Keidanren Committee on Nature Conservation, Kishikai Fukushima Shogi Festival, Red
Cross, Ashinaga Scholarship Society, and opened the company daycare nursery to local community members)◎

P31

Supporting employees to conductsocial contribution activities ★

Number of social contribution
activities by employees

3 programs or more per ﬁscal year

Hulic Group

2

4

5

6

6

● Satoyama conser vation activities, donation to Ashinaga Scholarship Society,matching gif ts, monthly community cleaning activities, donation of usedbooks, assistance for activities to suppor t disaster-hit areas◎

P32(Reference) Hulic (As of June 1)●*1 For city gas, CO₂ emissions coefficient of the“Manual for Calculations and Reports of GHG Emissions”issued by the Ministry of the Environment and the Ministry of Economy, Trade and Industry
is used. For electric power, an actual emissions coefficient of the power supplier the relevant building uses is used. The basic unit of CO₂ emissions increased because the CO₂ emissions coefficientincreased. *2 16 primary office buildings are included in the scope of waste emissions, of which accurate data can be obtained. *3 Paper consumption per person in fiscal year 2012 is only disclosed
from October to December 2012 when accurate data could be obtained. *4 Key: ◎ denotes full achievement; ○ denotes mostly achieved but partly not achieved; and × denotes no achievement

13

Corporate Social Responsibility Report

14

Taking Steps toward Enhanced
Environmental Management

Stakeholders and Material Issues

Stakeholder Engagement

Hulic Environmental Policy

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

1

Employees

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

Shareholders

In the selection of material CSR issues, crucial issues
are determined by assessing them from both external
stakeholder perspectives and internal Hulic perspectives,and analyzing the importance of each of them. In addition,issues identified as material will be revised as needed to
improve our approach to CSR.

3

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

Global Environment

Local Communities

Perspective of
stakeholders

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 of Corporate Conductand our Code of Conduct, but has also formulated separate
regulations on managing real estate purchases and development.
When conducting an investigation of the acquisition of realestate, Hulic always carries out statutory investigations andconducts studies on natural environment, specified hazardous
substances, and the presence of underground obstacles.
In negotiations with communities, we are fully mindful of
impacts that our business will have on the surrounding living
environment and strive to maintain a positive relationship withthe community, especially with regards to sunlight issues, noise,safety, wind damage, privacy, interference with radio waves
and view. When outsourcing design or project management, inprinciple, we only hire design offices with the right technologies,
credibility, and track record. As for construction work, dependingon the use, scale, and the degree of difficulty of the construction,in principle, we outsource the construction to companies thatmeet the same conditions as above.

Details● Views and recommendations from external

experts via third-party review orthe Environmental Advisory Council, etc.
● Feedback of various SRI surveys● CSR survey, etc.

Perspective of
Hulic● Corporate value, policies, management strategy● Concerns of stakeholders that highly dependon the organization● Material risks and strengths, etc.

Issue identiﬁcation (stakeholder feedback and various surveys)

Material CSR Issues Identified
Evaluation of importance from the perspective of stakeholders

High

Evaluation of importance from the perspective of Hulic’s management

Analysis of material of issues

Finalization of material issues

Materiality for stakeholders● Curbing GHG Emissions● Biodiversity● Conserving Energy● Encouraging Greening● Providing Eco-Friendly

Products and Technologies● Reducing Waste● Initiatives in the Local

Community

Environmental Management System (EMS)● Worker Diversity and Equal

Opportunities● Strengthning BCP● Safeguarding Customer

Health and Safety● Improving Customer

Satisfaction● Non-discrimination● Work-Life BalanceHigh
Materiality for Hulic

15

Corporate Social Responsibility Report

Environmental Performance
We reduce as much of our environmental load as
possible by introducing eco-friendly design fromthe planning stage of development in order toincrease environmental efﬁciency.

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

Perspective

Environmental
Management System

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

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

5

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

Government

We are committed to a broad range of mutualcommunication with shareholders, throughtimely and appropriate disclosures as well as
participation in earnings brieﬁngs and various
investor relations (IR) fairs.

Process to Identify Material CSR Issues

2

Suppliers

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

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

4

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

Customers

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

Environmental Compliance

Environmental Awareness andEducation for Employees
We work on environmental education andawareness activities in order 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 withstakeholders including local communities in order toexpand the circle of global environmental conservation.

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

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

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

16

Curbing GHG Emissions/Conserving Energy

Toward the Prevention of Global Warming

Situation of Greenhouse Gas Emissions

Road Map toward theReduction of CO₂ Emissions

Energy Consumption and Greenhouse
Gas Emissions at Hulic's Buildings

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

In fiscal year 2014, Hulic's buildings consumed 239,655
GJ of energy. In 2014, we actively worked to make ourbuildings and operations more efficient, including
improving our building management methods throughenergy conservation promotion activities, carrying out
energy conservation renovations, and implementing ourvoluntary action plan on reducing electricity usage. As aresult, we expect that these activities led to the reduction
in total energy consumption. CO₂ emissions per unit floorarea were 74.7 kg-CO₂/㎡ , decreasing by approximately
3% compared with the previous year. Meanwhile, CO₂
emissions fell 2,095 t- CO₂ year over year to 13,065 t- CO₂.

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

We have actively pushed ahead
with reconstruction projects.
Being able to incorporate various
energy-saving technologies
a t t h e stage of design, newbuildings can significantly
reduce CO₂ emissions withoverwhelmingly excellent energy
efficiency.

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

Energy Consumption▲

Road Map toward Reduction (as of the end of December 2014)2020

Measures from 2019 to 2020

Comparison with 1990

2019～

%
decrease

2019

2015

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

Approx.

rechargeable battery

2016～
2016

2015

Approx.

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

2014

2013～

● Challenging ZEB(Net Zero Energy Building)Approx.

35,000 ㎡

2012

2010～
2011

2010

17

● Full-scale introduction of LED lighting system● Effective use of water resource with use of rainwater and water-saving devices, etc.
● Solar power generation, wind power generation● Completion of period of joint research with MIT →Commercialization of natural ventilation and lighting● Greening of rooftop and walls● Highly efﬁcient air conditioning equipment

Corporate Social Responsibility Report（t）
40,000100,000

Comparison
with 1990－25%

Measures from 2010 to 2012

Approx.

40,000 ㎡

Energy-saving renovation of
Hulic’s buildings
Approx.

45,000 ㎡

20,0002010

255,565

219,94320.00

028,275

2008

2012

2013

2014

0.00
(FY)

CO₂ emissions coefﬁcientElectricity consumption

City gas usage

KPI: 5% reduction over the ﬁve-year period from 2009 to 2013(benchmark: average value between 2005 and 2007 of 68.4)

29,783
10,0002011*Energy consumption and CO₂ emissions were calculated respectively based on
the Ordinance for Enforcement of Rationalization in Energy Use Act (revised in
November 2007) and the Enforcement Order of Law Concerning the Promotionof the Measures to Cope with Global Warming (revised in June 2008).

38,1502015 2020(FY)

CO2Emissions

Emissions（t‐CO₂）

Purchased goods and services

Consumables, ofﬁce goods,
water and sewerage

17.3

Upstream transportationand distribution

Shipping parcels and letters

25.1

Waste generated from operations

Waste generated fromthe Head Ofﬁce Building

2.1

Business travel

Travel by train, bus or airplane, etc.

74.8

Employee commuting

Commute by train, bus or personal car

37.7

TOPICS(total amount)

30,000

Promoting reconstruction projects
with energy-saving design

19,712

257,109200,000

Comparison
with 1990－21%

Main Emissions Activities

40.00

25,611●Outline of Reduction

120,000 ㎡

Energy-saving renovation of
Hulic’s buildings
Approx.

270,142

120,000 ㎡

Promoting reconstruction projects
with energy-saving design

26,632

302,791

80,000 ㎡

Measures from 2013 to 2015

24,410

Scope/Category*The speciﬁc unit of emissions is in accordance with the the Basic Guidelines on Accounting forGreenhouse Gas Emissions Throughout the Supply Chain Ver. 2.2 published by the Ministry of theEnvironment. *We are currently examining the calculation methods and scope of other emissions
that should be calculated, or these ﬁgures are not published because they are not available.

29,726300,000

Energy-saving renovation of
Hulic’s buildings
Approx.

60.00

56.14

Promoting reconstruction projects
with energy-saving design

2017

Comparison with 1990

68.34

77.30 74.70

400,000

50,000 ㎡

Measures from 2016 to 2018

Total CO₂ emissions

2013

25,000 ㎡

Approx.

● Task ambient air conditioning system

2018

65.54

Promoting reconstruction projects
with energy-saving design

2020

25

%
decrease（kg-CO₂/㎡）
80.00

500,000

Total CO₂ emissions

21

CO₂ Emissions Coefﬁcient（GJ）

Scope 3▲

In 2010, we formulated the medium- and longterm plan aiming to reduce total CO₂ emissions
from all the buildings Hulic owns by 25%
relative to the figure in 1990 by 2020. In termsof this plan’s validity and the accuracy of its
figures, we obtained a third-party certificate
from Smart Energy Co., Ltd., a third-party review
organization.

Plan 2:▲

Plan 1:FY2013

FY2014

15,160 t‐CO₂

13,065 t‐CO₂

Ranked First in the Real Estate/Warehouse
Industry for the Fifth Consecutive Year in
an "Environmental Management Survey"

The "Environmental Management Survey," which is a surveythat has been annually conducted by Nikkei Inc. since 1997,
announces rankings of companies excellent in their approachto environmental management based on each company's
answers to a questionnaire. Hulic has ranked first in the
category of warehouse, real estate and others for fiveconsecutive years since the 14th Environmental Management
Survey in 2010, and this year we received our second perfectscore, following our first last year. Given that we were able
to achieve another perfect score, we stand more committed
than ever before to combining global environmental
conservation with corporate growth through heightenedawareness of environmentally-conscious management.
Score[Total]Measuresagainstglobalwarming

400

100 100 100 100

Systems to
Measures
Resource
promoteagainstrecycling environmental pollution/
management biodiversity

18

Curbing GHG Emissions/Conserving Energy

Energy Conservation Promotion Activities
for Our Leased Buildings● Controlling Energy Using the Hulic Energy Management Indicator

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

▲

Energy Conservation Promotion Facilities
Management Organizational Diagram《 Building owner》
President of Hulic

Corporate Planning
Department supervises,
Technology and Environment
Development Department carries out
management and planningPM《 PM management company》
outsourcing
agreement

President of Hulic Building
Management

Reviews
measures

General Manager of Hulic
Building Management’s Building
Management Department

Reporting/Discussions

Each Building Ofﬁce Manager
from the outsourced building
management company

Updating to Equipment with High Energy Efficiency
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.

Reporting/Discussions

Reﬂected light fromthe equipment withbrightness sensor
Reﬂected light fromother equipment

Floor

19

Corporate Social Responsibility Report

When a photovoltaic cell module is installed on therooftop of a building, the power generation status andthe amount of CO₂ reduced are indicated on a "power
generation display panel." The display panel is installed at
a place where building users can easily see it to practicallyvisualize CO₂ emissions. On the rooftop of Sunny Life
Tokyo Shinjuku, completed in 2014, a 5 kW photovoltaic
generation system with a capacity to generate upwards of
5,000 kWh of electricity every year has been installed.

Natural Ventilation System
The Hulic Shinjuku Building introduces a natural ventilation
system supplying outside air from the top of window sashes on
the fifth floor and higher, and emitting the air from the rooftop
via a natural ventilation shaft on each floor (solar chimney). Heatstorage material is installed inside the solar chimney to promotenatural ventilation by taking advantage of the sun's heat storage
effect. Natural ventilation is not simply an auxiliary system formechanical air conditioning. It was actually used to successfully
cool the entire building during seasonal intervals.

Photovoltaic generation system panels (Sunny Life Tokyo Shinjuku)(designed value)● Hulic Head Office Building: Approx. 9,400 kWh per year

Outside light● Hulic Asakusabashi Building (PPP project): Approx. 15,890 kWh per year
● Hulic Osaka Building: Approx. 10,000 kWh per year

Outside light reﬂecting
on the surface of ﬂoor

Desk

Photovoltaic Generation System

Amount of Electricity Generated by Solar Power● Hulic Ginza Building: Approx. 6,500 kWh per year

*Decreasing light intensity
when there is outside lightto keep brightness
maintained appropriately● Hulic Kyobashi Building: Approx. 4,700 kWh per year
● Hulic Aoyama Building: Approx. 4,000 kWh per year
● Hulic Court Yukigaya: Approx. 28,900 kWh per year

Operating principle of a daylight sensor● Hulic Residence Nishi Oi: Approx. 23,100 kWh per year

Rooftop solar chimney (Hulic Shinjuku Building)● Sunny Life Funabashi: Approx. 16,800 kWh per year
● Sunny Life Tokyo Shinjuku: Approx. 5,000 kWh per year

Decreasing light intensity
while nobody is there.

Keeping brightness appropriate
when someone is there.

Operating principle of human-detecting sensor

We have conducted an inspection to see if the facilities inour buildings are operating efficiently. For those found tohave inefficient facilities, we have launched an initiativein cooperation with tenants to reduce utilities costs by
reducing use of air conditioning and lighting. We monitor
over 100 buildings and outsource energy conservation
solution consulting. Adjustments are then made with eachtenant based on the results, and reviewing of equipment
settings, utility cost reduction through more efficient
operations, and small-scale renovations for enhancing
energy efficiency will be conducted as needed.

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

Outside lightreﬂecting on thesurface of desk

Electrical/Mechanical staff

Initiatives to Reduce Utilities Cost andCO₂ Emissions at Our Buildings

Desiccant Air Conditioning System

Equipment with a brightness sensor

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

Conversion to a New Air Conditioning System

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. Our new office building development
projects, including Hulic Head Office Building, Hulic
Ginza Sukiyabashi Building, Hulic Asakusabashi Building,and Nagatacho Hokkaido Square, all use LED lighting
exclusively. We are also switching over to high-efficiency
lighting and LED lighting at our existing buildings as partof energy efficiency renovation work.

Detection range of thebrightness sensor

Liaison/Consulting

Real Estate Planning Department

Introduction of LED Lighting

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

Installation of Solar Heat Panels
Hulic's hotels, multi-unit apartments and buildings that require large
amounts of hot water adopt a solar water heating system, whichuses solar panels to collect the sun's heat. Water created using thissystem is supplied to residential units, dormitories and kitchens,
among other facilities inside a building.
Hulic Setagaya's solar water heating system was partially funded by
the grant to support measures for speeding up the use of renewable
heat sources and the grant to projects to promote the introduction ofsolar heating for multi-unit buildings in Tokyo in fiscal year 2014.

The Hulic Group has begun rolling out a visualization system that
freely controls air conditioning use in order to provide a better
understanding of a building's useof energy. This system enables
tenants to set the optimal working
environment temperature for theirbusiness and makes it easier toimplement energy conservation
measures.

Visualization system(Hulic Asakusabashi Building)● Charm Suite Shakujiikoen: Approx. 5,800 kWh per year
● Hulic Residensce Chofu Shibasaki: Approx. 5,200 kWh per year

Installation of Photovoltaic
Panels on an Exterior Wall
The Hulic Ogikubo Building
is open to a major arterial
road on its south side,
providing ideal conditions
for sunlight exposure.
Capitalizing on this, we useda unique and extremely thinphotovoltaic panel that is
sandwiched between glass
panes to create a building
material for the facade (frontof the building). The panels
form part of a 3.5 kW systemcapable of generating
upwards of 3,500 kWh ofelectricity annually.
Facade (Hulic Ogikubo Building)Solar heat collection panels (Hulic Setagaya)

20

Providing Eco-Friendly Products and Technologies/Reducing Waste

Working to Enhance Environmental Technologies
Natural Ventilation and Natural Lighting
System Developed through Joint Researchwith the Massachusetts Institute ofTechnology (MIT)Natural Ventilation System

From the standpoint of a business owner, we proactively adopt
the PC method* which can significantly reduce the amount ofwaste. This method, which can shorten a construction period
and minimize impacts on surrounding environments during aperiod of construction, is highly appreciated in terms of longer
service life. In fiscal year 2014, the PC method was used for Hulic
Residensce Chofu Shibasaki

Hulic Guidelines for Longer Life Service

Image ofnatural lighting

Solar elevation andorientation change
depending on times
and seasons.

Wooden blindSound absorbing chamber

Exterior

Natural ventilation air outlet

Smoother
updating andrenovation

Balancednaturalventilation
window
Automatically stopped whennatural ventilation is working

Controlling temperatureof air blown out when air
conditioners are operating

Reduction in Construction Trafﬁc(Number of raw concrete mixers and pumper trucks decreased by half)21%
decrease

Wall-typePC methodRaw concrete mixer/Pumper truck
Large truck

Concreteplacement
at worksite

Small truck
Commuter’s car

Reduction in Industrial Waste(Waste reduction with effective use of valuable resources)37%
decrease

Wall-typePC method

Concrete/Mortar/Patterned tile
Cut pieces of wood and plywood
Pieces of reinforcing bars forbuilding base and frame
Heat insulating materials,
Vinyl sheets, Cushioned ﬂooring● Reduce plywood formworks for mold making.

3● Reduce loss of concrete and use of mortar.

● Reduce industrial waste by 37% compared to the conventional

reinforced concrete (RC) method, in general.

Ease ofmaintenance

CO₂ Reduction(Helpful for curbing global warming)
25%
decrease

Wall-typePC method

Simulation of light reflection

Materials
Construction
Renovation

Concreteplacement
at worksite

Anidolic louvers

Heavy machinery/Dump truck

Concreteplacement
at worksite

LongerLife
Buildings

2

OfficeEffect of the PC Method

concrete to be casted at the worksite decreased, loads on the surrounding
environment such as noise and exhaust gas during idle time was reduced.

High earthquake
resistance andhigh durability

Light reaches thesurface of ceilingeven if solar
elevation changes.

*PC (Precast Concrete) method: Precast panels produced at a plant underconsistent quality control are carried to a worksite and assembled.

● As the number of vehicles used to carry temporary materials and1

Lightreflecting
surface on
the ceilingLighting louver unit

Cross-Sectional View of Natural Ventilation
Naturalventilation

We are approaching a turning point from "the flow
type consumption in which buildings are constructed
and demolished one after another" to "the stock typeconsumption in which high quality buildings are constructed,
meticulously maintained in a timely manner, and carefully
used for a long period of time." In this context, having
considered longer life building construction to be essential,
we formulated the "Hulic Guideline for Longer Life Service."This guideline is composed of three ideas, 1) high earthquake
resistance and high durability; 2) smoother updating andrenewal; and 3) ease of maintenance.
High-grade building frames are ensured so as to continue tobe used for over 100 years in safety, and on the other hand
we have created the possibility to reform a building's exterior
to be up-to-date through a flexibly modified layout.

▲

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 researchwith MIT was conducted, in which the flow of air and otherfactors 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 in a dense
urban area with high-level noise.

Our natural lighting system uses specially shaped natural lighting
anidolic louvers co-developed with MIT to capture constantly
changing sunlight on the ceiling of rooms during changing
seasons and times (elevation and orientation) without the useof power. Highly reflective metal panels are used for interiorceilings, 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 at the Hulic Shinjuku
Building and other buildings. We currently have a patent pending
for this natural lighting system. We are currently in the process ofapplying for a patent for this natural lighting system.

Adoption of the PC Method▲＜Initiatives at the Hulic Head Office Building＞

Natural Lighting System

Longer Life Buildings

Disposal● Reduce CO₂ derived from construction and demolition works by 25%

Source: Taisei U-LEC Corporation

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

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

Effects of CO₂ Reduction＜Calculations at the Hulic Head Office Building＞

40% Reduction of CO₂ Emissions● Improvement inouter coat -11％（-79 t-CO₂）● Natural lighting -12％（-86 t-CO2）

Planned building
Primar y energy
consumption:
1,352 MJ/㎡ per year
CO₂ emissions:
59 kg-CO2/㎡ per year
(432 t-CO2 per year)● Natural ventilation -8％（-58 t-CO2）● High ef ﬁciency air
conditioning -6％（-36 t-CO2）● High ef ﬁciency
lighting -4％（-29 t-CO2）■Standard
proposal

85

Corporate Social Responsibility ReportNew
construction■■

Standard
proposal

263.26

Longer life
building
proposalAmount of
Resources Input
Reduced by 52%

41

0

20

40

60

Repair■Renovation

■

5.7

2

4

6

8

10

12
14
(kg/㎡ per year)

100

Target for comparison

150

200

■

Renovation

■

LCCO2
Reducedby 6%

Maintenance■

Energy■■Effects

Reconstruction

Amount of Waste
Generated
Reduced by 56%

247.95

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

New

12.7 construction

Longer life
building
proposalRepairLonger life
building
proposal

80
100(kg/㎡ per year)

Standard
proposal■■

050(kg-CO₂/year ㎡)

Amount of Waste Generated

New
construction
Reconstruction

Reconstruction

■

0

21

LCCO₂（Life-Cycle CO₂）

Amount of Resources Input

Repair■Renovation■

Demolition

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

22

Biodiversity/ Encouraging Greening

Environmental Accounting

Creating Urban Spaces in Harmony with the Environment
Greening at Our Office Buildings

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

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

biodiversity worldwide, Hulic strives toconserve biodiversity through activities inharmony with business activities with the
future generations.

Approaches to JHEP Certification
Hulic carries out efforts to conserve and restore local
vegetation as part of its reconstruction projects forcompany-owned properties from the standpointof safeguarding biodiversity. Our approach tobiodiversity and many projects have received
high praise within the JHEP certification scheme*
operated by the Ecosystem Conservation Society.
Name of ProjectFebruary 2013

Construction of Granda Gakugeidaigaku

A

May 2013

Construction of Aria YoyogiueharaA

June 2013

Construction of Hospitalment Musashino

AA

August 2013

Construction of Hulic Residence Chofu Shibasaki

A+

March 2014

Shin Okubo ProjectA

March 2014

Construction of Charm Suite Shakujiikoen

A

September 2014

Construction of Hulic Setagaya

A

November 2014

*JHEP (Japan Habitat Evaluation and Certiﬁcation Program): This is a program to evaluate andcertify activities that contribute to conservation and restoration of biodiversity, which wasestablished and is operated by Ecosystem Conservation Society-Japan. http://www.ecosys.or.jp/

66 buildings owned by Hulic Co., Ltd. and Fukushima Mega Solar Power Plant

Calculation method

Calculated based on“Environmental Accounting Guidelines 2005 (the Ministry of Environment)”

Standards forcalculation

Company expenditures on depreciable assets for the purpose of environmental conservation.
“Cost amounts”are portions of the Company's overall expenses and are the amounts used forthe purpose of environmental conservation. Cost amounts do not include depreciation costs.

Green WallCovering a building exterior withplants, wall greening can be acountermeasure against the heat-islandeffect by utilizing the transpiration
effect. In addition, as it improves theamenities of the building, soothing
effects for people walking on the street
are also expected.

●Hulic Shinjuku Building

Green wall

Environmental Conservation Cost
Environmental
Conservation Cost
Categories（1）Business area cost

Investment Amounts
FY2013

FY2014FY2013671,984

633,680

2,799

2,467

0

0

0

0

（1）-1 Pollution prevention cost

●Charm Suite Shakujiikoen

23

Corporate Social Responsibility Report

Styrax japonica

Contents of Major Activities (in FY2014)*2（1）-2 Global environmental
conservation cost *3

671,984

625,558

1,543

1,360

Energy saving design introduced with reconstruction of Hulic's buildings/Renovation of
Hulic's buildings for energy conservation/Investment in mega solar power plant projects（1）-3 Resource recycling cost

0

8,122

1,256

1,107

Recycling conﬁdential documents
Cost for recycling toner cartridges（2）Upstream/downstream cost

0

0

215

242

0

0

6,605

5,458

（4）R&D cost

0

0

3,028

16,402Development costs for thin layered green wall（5）Social activity cost

0

0

7,781

6,978

Activities to conserve secondary forests/Cost for JHEP certiﬁcation（6）Environmental remediation cost

0

0

0

0

671,984

633,680

20,43031,548

Total

Plant/vegetation maintenance costs/Preparation of CSR Report /Ads related to Hulic's environmental efforts*1 Costs of residential buildings are included. *2 Pursuant to relevant laws and regulations, appropriate efﬂuent treatment and measurement of gas emission were conducted, but costs were notcalculated. *3 Large investments in the Fukushima Mega Solar Power Plant were made in ﬁscal year 2014. Therefore, ﬁgures for ﬁscal year 2014 increased compared to ﬁscal year 2013.

Effects of Environmental
Conservation
Contents of Effects
Power consumption per unit ﬂoor area (kWh/㎡)
Gas consumption per unit ﬂoor area (㎥/㎡)
CO₂ emissions (electricity + gas) per unit ﬂoor area (kg-CO₂/㎡)

Environmental Load Index
FY2013

FY2014FY2013

Base year(FY2006)

132.2

135.0

‒ 2.8

161.0

Details of Effects

1.6

1.9

‒ 0.3

3.7

Electricity charge (yen/㎡) *1

75.0

76.0

‒ 1.0

68.4

0.7

0.7

0.0

1.0

Waste generated per unit ﬂoor area (kg/㎡)

8.0

6.8

1.2

7.5

70,58758,707

11,880

－

8

9

‒1

－

No. of kinds of biodiversity certiﬁcation obtained (kinds)

Economic Effects ofEnvironmental Conservation
Counter-Plan
Results in FY2014

FY2014

Water consumption per unit ﬂoor area (㎥/㎡)
Solar power generation amount (kWh)Acer palmatum(Unit: Thousand Yen)

Cost Amounts

FY2014（3）Administration cost

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

*1▲

Date of Certiﬁcation

AA

Scope

▲

Rank of Certiﬁcation

Construction of Hulic Residence Nishi Oi

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

From January 1, 2014 to December 31, 2014▲

goal of handing over a rich nature to

Greening on Rooftops and Premises*As the number of buildings is different from the one in "Progress of Priority Items," the CO2 emissions basic unit is different. *Occupancy rate is nottaken into account in the calculation of basic unit per ﬂoor area. *The scope of waste generated per unit ﬂoor area includes only the Hulic Head
Ofﬁce Building. The base year is ﬁscal year 2008. The amount of waste generated in ﬁscal year 2014 increased compared to ﬁscal year 2013 due to anincrease in the number of staff at the Head Ofﬁce Building and other factors. *The amount of electricity generated by the mega solar project inFutaba County, Fukushima Prefecture, which commenced operations in October 2014, was not included in the above tabulation. *For city gas, theCO2 emissions coefﬁcient of the "Manual for Calculations and Reports of GHG Emissions" issued by the Ministry of the Environment and the Ministryof Economy, Trade and Industry is used. For electric power, an actual emissions coefﬁcient used by the power supplier of the relevant building is used.

Cost Reduction

Strongly recognizing the rapidly vanishing

Environmental Accounting Report for FY2014

Reporting Period

Breakdown

Biodiversity Guideline

We have introduced environmental accounting since 2011, and publicized the result in our CSR Report, in order
to conduct efficient and effective environmental conservation activities by understanding the costs to protect theenvironment in business activities, as well as the effects of these activities. Hulic has established the target to reduce
total CO₂ emissions from all of its office buildings by 25% compared to 1990 levels by the year 2020, and to that end,
we have actively implemented a number of environmental measures. By linking this CO₂ reduction plan and ourenvironmental measures, we expect to achieve even more effective investments in energy conservation. Managing
figures to understand what kinds of effects could be obtained from which investment makes it possible to effectively
allocate budgets for environmental investments in subsequent years.

▲

Approaches to Biodiversity

Promoting More Effective Environmental Conservation(comparison
with FY2013)‒ 191

Gas charge (yen/㎡) *1

7

Water charge (yen/㎡) *1‒9Solar power generation(Thousand yen) *2

1,694*1 Electricity/Gas/ Water charges per unit ﬂoor
area in ﬁscal year 2013 - Electricit y/Gas/ Water
charges per unit ﬂoor area in ﬁscal year 2014. The
economic effect associated with environmental
conservation measures was negative due to anincrease in electricity costs. *2 This is an amountreduced thank s to solar power generation inﬁscal year 2014, which is calculated on the basisof 24 yen per 1kWh.

Conceptual image of Shinagawa Season Terrace

24Safeguarding Customer Health and Safety/Improving Customer Satisfaction

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

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

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

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

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

Service Implementation Steps▲

Aiming for Value Creation Filled with Peace of Mind and Trust

Preparation● Determine policy

AnalysisPhase● Assess impacts❶ Phase● Specify which disasters areapplicable❷● Forecast damages● Identify bottlenecks● Carry out earthquake resistance diagnosis

Drafting❸ Phase● Formulate Basic BusinessContinuity Plan

● Propose countermeasures

Implementation● Execute measures

Operations● Carry out countermeasures❹ Phase❺ Phase● Carry out work

● Make revisions to countermeasures

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

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

Slow andparallelshaking

Shakingviolently

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

[Deforming laminated rubber]

Earthquake-damping StructureWith earthquake-damping materials (earthquake damper)
installed inside the building, internal seismic energy is absorbed
to reduce the intensity of shaking from half to one thirds
compared with other general earthquake-resistant structures. In
addition to the case of increasing the safety further by combining
this with a earthquakeabsorbing structure, we preferentiallyemploy the earthquakedamping structure in the case that theearthquake-absorbing structure is physically unavailable due toconstraints including land contours. Hulic has incorporated thismethod in many properties.

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

25

Corporate Social Responsibility Report

Earthquake-absorbing Structure

General Building

Shakingviolently

Building with Earthquake-damping StructureLightshaking

Quality Control of Office Buildings

Customer Satisfaction Survey

While property management companies conduct management work forthe buildings owned by Hulic, personnel from the Hulic Group responsible
for buildings conduct visits each of these property management companies
once a year to inspect their management conditions. Items to be evaluatedinclude legal compliance, inspection of building and facilities, risk
management, cleanup situation, and security. By providing feedback to theproperty management company about improvement plans, when needed,
we are taking steps in all buildings to maintain high quality.
Additionally, we systematically carry out maintenance and repair work in
an effort to ensure preventative maintenance. However, when we receive
complaints from customers due to a temporary breakdown in equipment
and other troubles, not only personnel from the relevant property
management company but also Hulic Group engineers with expertisequickly head to the customer's site. Through our early response capabilities,
we provide a full support for the comfortable life of customers.
In terms of safety, persons from the Hulic Group in charge of each building
travel to these buildings each year to take part in disaster training anddisaster preparedness training, in order to ensure visitors are able to use thebuilding with added peace of mind.
In relation to ongoing reconstruction projects, we are working on enhanced
design standards and rules in order to ensure superior quality in terms of
the environment, longer service life, disaster response, and design. A checksheet or regular discussions are used to check the progress, which enables
us to better management quality, including designs, structures, and facilities.

We conduct a customer satisfaction survey once a year
to ensure tenants of Hulic's office buildings (corporate
tenants) are able to utilize the buildings comfortably.
Survey items include matters concerning building
hardware and software, and customer views on theireveryday life. We check the responses of customers andthen take steps to identify latent customer needs andmake improvements.
As a result of the survey in fiscal year 2014, some 95%
of corporate tenants or more were satisfied overall. Thishas helped us earn a highly positive reputation for ourquick response to troubles and facility reinforcement forresolving issues, such as eliminating odors, as well as our
systematic approach to facilities
Other
Satisﬁed
improvement (upgrading of
5.0％
45.4％
air-conditioning and parking
facilities), which leads to evengreater overall satisfaction for the
Resultsbuilding.
of Survey inFurthermore, responsible staff
FY2014
explained individually about or
responded to matters requested
by customers in relation to theModerately satisﬁed
survey items.
49.6％

Hospitalment Musashino Wins 2014 Good Design Award
Hulic-owned building Hospitalment Musashino
received a 2014 Good Design Award from theJapan Institute of Design Promotion. The Good
Design Award is a comprehensive commendation
program for design run by the Japan Instituteof Design Promotion. Hospitalment Musashino,which was completed in August 2013 as a private
nursing home, features a three-story high atrium
and open space in the middle of the building
with rooms allocated around this space, creatinga unique structure, which connects people sothat the residents in the nursing home do not
feel isolated. The building's layout was also
designed with the changing of the seasons inmind so that residents can experience greenery,light, and wind in every space. The concrete used
for the building's frame is JASS5 compliant witha lifespan of 100 years. The building also has anequivalent seismic rating of Grade A (importancefactor: 1.25 times), (importance factor: 1.25
times) and considers the peace and safety andsafety of residents.

26

Worker Diversity and Equal Opportunities/Non-discrimination

Hulic’sApproach to Diversity, Equal Opportunities and Non-discrimination
We aim to create an environment in which employees with a variety of backgrounds, such as first-classarchitects, real-estate appraisers, engineers, lawyers, certified public accountants, and tax accountants, can work
enthusiastically. It is possible to differentiate us from competitors because we proactively take advantage of diversity
in our business, which leads us to the sustainable growth of the Company.

Respect for Human Rights

Employment of the Disabled

Hulic’
s“Our Code of Conduct,” the standard that must be
followed at all times to practice a set of corporate principles,
contains“Respect for Human Rights and Prohibition ofDiscrimination and Sexual Harassment,”and clearly states thathuman rights are to be respected and discrimination basedon creed, religion, age, sex, birthplace or physical or mental
disability will not be allowed or tolerated. Respect for humanrights encompasses all fundamental human rights found in theConstitution, Labor Standards Act, and Universal Declarationof Human Rights as well as human rights related to equal
employment, the prohibition of forced labor and child labor, thefreedom of association, and the guarantee to labor negotiations
stipulated in the ILO’s international labor standards.
To foster a workplace that respects human rights, in fiscal year
2014 Hulic made postings on its in-house intranet on the themeof power harassment that extends beyond physical violenceor verbal abuse. Opinion exchange sessions were also heldat each department for all employees on the theme of sexual
harassment and changes in the Equal Employment Opportunity
Act for Men and Women.

The Hulic Suginami Office marked its 7th anniversary, and as ofJune 2014, the Hulic Suginami Office's employment rate of persons
with disabilities was 2.5% on a consolidated basis and 8.6% on a
non-consolidated basis. Currently, six employees with disabilities,
instructors with experience in coaching, and a chief administrator are
working at the Hulic Suginami Office, where they carry out operations
such as the dispatch of direct mail for Hulic Group companies. A
monthly meeting with the Human Resources Department is held
to ensure operations integrated with the head office are being put
into practice. In recognition of our activities to play a leading rolein employing persons with disabilities and proactively develop
their abilities, in September 2010 Hulic was certified as an excellent
corporation in employment of the disabled in Tokyo. Additionally,in 2013 we were recognized as an excellent
corporation in the employment of the disabled
for the fiscal year 2013 Tokyo district (Chairman's
Prize) by the Japan Organization for Employmentof the Elderly, Persons with Disabilities and Job
Seekers (JEED), administered by the Ministry of
Health, Labour and Welfare. We will make efforts Logo of excellencein a corporation
for improving the workplace so people with
employing
the disabled in Tokyo
disabilities can feel worth in their work.

Reemployment System for Seniors

Employment of Diverse Human Resources

27

Corporate Social Responsibility Report

Enhancement of the Training Systems

Hulic's basic approach is for the work of each employee to be alignedwith their abilities, aptitude, and personality. For this reason it isimperative to provide opportunities and assignments irrespective ofgender, and in particular we are strengthening initiatives for women's
career development.
The women's career promotion project team was established with theaim of enhancing the environment in which women can comfortably
work. The team members meet together roughly once every two months
to hold discussions in line with different themes for each meeting.
In fiscal year 2014, the project team carried out various activities witha focus on submitting an application to be considered for the Diversity
Management Selection 100 run by the Ministry of Economy, Tradeand Industry. The aim of these activities is to promote to the generalpublic Hulic's proactive support for the professional careers of women.
In November 2014, a seminar and networking session for female
employees was held, inviting Atsuko Fukushima, External Director of
Hulic, as a lecturer. The seminar and network session received positive
feedback, which included an opinion that participants were able to sharewith one another their anxieties and troubles concerning their careers.
The annual lunch meeting between the project team, the President of
Hulic and the Chief of the Human
Resources and General Affairs
Department is held to create an
opportunity for female employees
to share their thoughts and concernswith senior management.

As it is important to focus on human resource development
when aiming to be a professional team with a selected few,
in addition to strengthening each employee's ability in orderto take advantage of diversity, Hulic has put in place training
systems. At Hulic, employees with various specialties are active,
such as first-class architects, real-estate appraisers, engineers,
lawyers, certified public accountants, and tax accountants. We
put emphasis on acquisition of qualifications which support
such specialties, and subsidize their costs. Aiming to obtain
multiple qualifications by 30 years of age, young employees
formulate a plan to obtain qualifications under the instructionof their boss. In addition, we offer a variety of options, such asdispatching them to graduate schools, English conversation
classes in the early morning, and encouragement of reading,etc. in order to help employees enlighten themselves.
Newcomer(up to around 30 years old)Mid-career(up to around 40 years old)

Veteran/Manager(50 years old or older)

System to support acquisition of qualiﬁcations

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

System to encourage
early acquisition

Dispatch to graduate school● Obtaining multiple
qualiﬁcations by 30 years of age● Well-planned setting of target

Dispatch to outsidecompany

Overseas visit program/Study abroad program
Human resource development program

Promoting Communication between
Various Employees

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

Hulic is run by a small workforce, which enables a close distance
between employees, as well as between top management andforemen. The company-wide trends are communicated to all
employees through the "Message from the President" every
month. As it is possible to know what other departments are doing
through the message, the horizontal communication beyond theborders of departments can be made.
In order to promote vertical communication, employees share
their opinions directly with the President through the“President
Questionnaire”conducted twice a year in consideration of theinteractive communication with the President. Employees write
down their views and opinions on the prescribed form and submit
it to a post box, and then the President responds to each in writing.
Additionally, an environment has been established at the head
office cafeteria that enables wide-ranging interaction between
executives and employees as a means of promoting open
communication that transcends management and departments.

Period of educational
assignment

Training for newly
appointed deputy
general managers

Newcomertraining

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

Managerial training

Top seminar

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

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

Self-development seminar

Trends in Average Training Cost per Person (Non-consolidated)▲

Participating in the joint declaration on the charter of corporate
ethics concerning employment made by KEIDANREN (Japan
Business Federation), we have proactively employed new
graduates in accordance with the purpose of the charter. Whenhiring new graduates, we make efforts for widely ensuring
diverse human resources based on their ability, regardless ofbackgrounds and gender.
The rate of female managers has increased as a result of active
efforts for adopting female employees with the enhanced system
to support the development of the next generation. One of ourgoals under the new long-term plan Hulic a Decade Later (2014to 2023) is to become a company where female employees canthrive professionally and have females account for 20% of ourmanagerial positions by the year 2020.
Going forward, in addition to our previous efforts, we will also
focus on hiring more professionals, such as first-class architects,
real-estate appraisers, lawyers, certified public accountants, andtax accountants.

We have introduced a reemployment system for seniors inaccordance with the revised Act on Stabilization of Employment ofElderly Persons. Under this system we rehire any employee that hasreached the mandatory retirement age but who wishes to continue
working until the age of 65.
In 2010, we made changes to our reemployment system to make theworking environment more comfortable for seniors. For example,
systems of staggered commuting and a half-day leave were introduced
for rehired employees. Full-time rehired employees can use leave andabsence systems almost equal to the ones for active employees.
We expect a variety of knowledge and expertise to be inherited
through communication beyond generations between employees with
abundant knowledge and experience and younger employees.

Enhancement of Systems to Develop Women's Careers

FY

2011

Total Amount 213,690 yen

Job Return System

Recognized for Inclusion in Diversity Management Selection 100

Hulic has instituted a job return system that allows employees
who left the Company due to marriage, giving birth, childcare,
caring for a family member, or other unavoidable reasons, toreturn to their same job within a five year period with the same
compensation and benefits as before. The purpose of this system
is to support a balance between work and childcare as advocatedin the Act on Advancement of Measures to Support Raising the
Next Generation and to secure human resources that have wideranging experience and a depth of professional knowledge.

Diversity Management Selection 100 is a commendation
system run by the Ministry of Economy, Trade and Industry
since 2012 to recognize companies of various sizes andfrom different sectors for their proactive initiatives towards
diversity management as a contributing factor behindthe economic growth of Japan. Holding the motto of“Change and Speed,”Hulic aims to achieve growth as ahigh profit company where its small workforce one after

2012
227,108 yen

2013

2014

217,788 yen 282,484 yen

another implements new business ventures. From thestandpoint of empowering female employees and helping
employees improve their career skills, we are working
to transform our organizational structure, develop an
employee-friendly work environment, and further enhance
our benefit programs. We believe that Hulic's inclusion in
Diversity Management Selection 100 was the result of acomprehensive recognition given to these initiatives.

28

Creating an Employee-Friendly Work Environment

Our Approach to Work-Life Balance▲

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

Age of child

Pregnancy 6 weeks before Childbirth

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

Opening of Hulic’s Onsite Daycare Nursery

Rate of paid leave taken

In October 2014, we opened the Odenma Fureai
Daycare Nursery inside the Hulic Head Office
Building in order to promote a more employeefriendly work environment for our employees toraise children while working. In addition, to makethis daycare nursery more accessible, employees
using this service are allowed to drive their car towork and park it in the Head Office Building's lot freeof charge. This daycare nursery is also be open tosome children* in the local community, hoping that
this will be of some help in reducing the number ofchildren on nursery waiting lists. (*Conditions for use
differ from those of employees)
Odenma Fureai Daycare Nursery website
http://www.hulic.co.jp/csr/employee/nursery/

80

Corporate Social Responsibility Report

64.7

70.8

71.5
34.1

60

71.0
34.7

40
20
0

70.9
34.4

40
30
20

11.9
2010

14.2

2011

10

2012

2013

0
2014 (FY)The Average of Discretionary andOvertime Work Hours per Person (h)The Rate ofPaid Leave Taken (%)

Average of discretionary and overtime work hours per person

Implementation of No Overtime Day
Every Wednesday has been set aside as No Overtime Day,
with the aim of preventing health issues arising fromexcessive work. Each Wednesday we use our intranet system
to remind employees about leaving work on time. The statusof implementation is inspected and analyzed every month.
In fiscal year 2014, the rate of implementation increased 14%
year on year to 73% on average. This can be attributed toheightened awareness of employees to leave work on time
thanks to weekly appeals and other efforts. Going forward,
we will continue to review the way of working, for example,
by making operations well-modulated and more efficient,and by further increasing the implementation rate of No
Overtime Day. We will also issue more proactive reminders to
employees of departments with a low implementation rate.

Mother

1 yearoldChildcaretime

2 yearsold

4 yearsold

5 years after
retirement

After entering
elementary school

At the end of the third yearof elementary school

Rules on support for development of the next generation

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

Rules on support
for developmentof the next
generation

Restraint of overtime work
Use of job-return system

Parents

In order to boost the rate of leave taken by employees and be further
conscious about their health, we have conducted a campaign toimprove the rate of leave taken. The goals of the campaign include
making all employees take a three-day vacation once a year andmaking all employees take a one-week vacation once a year.
Individual departments discuss plans to take vacations in considerationof the planned use of leave. In fiscal year 2014, the rate of paid leave
taken was 70.9%, the average of discretionary and overtime work
hours per person was 34.4 hours (including overtime hours as definedin the Labor Standards Act), and four employees worked over 45
overtime hours on average over three months. This was caused by
special factors such as projects and competition. In fiscal year 2014,
we launched a new initiative to reduce overtime hours in which
employee surveys were conducted and hearings held to review theways in which meetings are run, simplify meeting handouts andrevise the administrative process. We will strive to allow employees totake more paid leave and reduce overtime hours through improved
management of indicators related to working hours by the Risk
Management Committee, guidance and advice provided by the HealthCommittee, an appeal from a member of the Health Committee toeach employee, and taking care of each other within each division.

Child vacation

Leave after childbirth

Rules of employment

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

Subsidy forthe cost of Kids’Club

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

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

Rules of employment
leave for childbirthof spouse (paid)

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

FatherPlanned Use of Leaves and Restraint of Overtime Work

The falling birth rate, aging population, and women's social
advancement are important issues for Japan's economy. In
relation to the support for development of the next generation,
Hulic aims at a higher level than the legal standard and has
established various systems. Additionally, we have establishedan action plan to encourage more male employees to takechildcare leave and become a company offering a work-lifebalance where male employees can also actively take part inchildcare. Under this action plan, we are providing economic
support to employees that take childcare leave, as well asworking to develop a work environment in which male
employees can take this leave more easily.
In recognition of our efforts, Hulic has received certification as a“first-grade business owner conforming to the standard”basedon the Act on Advancement of Measures
to Support the Next Generation by the
Tokyo Labor Bureau for five consecutive
years. This recognition also earned us theright to use the“Kurumin”next-generation
accreditation logo.

Outpatientleave

8 weeks afterChildcare leave
Reduced working hours
Restraint of overtime work

Personnel Performance Data

*Data of Hulic Co., Ltd. only (excluding the number of employees (consolidated)
and the employment rate of persons with disabilities (consolidated))▲

29

Efforts to Foster the Next Generation

Leave before
childbirth

6 weeks after

Item

Number of employees (non-consolidated)
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
Total

Men
Women

Employment rate of the disabled (non-consolidated)
Employment rate of the disabled (consolidated)

Number of employees who took childbirth leave
Men
Women
Number of employees who returned to work after childcare leave
Number of employees who took day off for family care
Number of employees who took family care leave
Number of employees who took day off for nursing care (absorbed previous nursing care leave)
Number of users of the subsidy system for daycare nursery fees
Number of employees who took leave to take part in volunteer activities
Number of employees who took childcare leave

VOICE

Yasuko Iwasaki
Property
Development
Department
Hulic Co., Ltd.

Unit

F Y2010

F Y2011

F Y2012

F Y2013

F Y2014

Person

83

77

96

90

85

Person

31

29

33

35

31

Person

114

106

129

125

116

Person

298

375

429

461

753

Ten thousand yen
PersonPersonPerson％％PersonPersonPerson％PersonPersonPersonPersonPerson

908

1,023

1,086

1,120

1,268

1

1

1

2

1

38

37

56

53

43

3

4

5

4

4

5.26

5.66

5.30

6.92

8.56

ー

ー

ー

2.14

2.46

1

1

1

1

3

0

1

1

0

2

1

1

1

2

3

100

100

100

100

100

0

0

2

2

0

0

0

0

0

0

20

17

15

17

31

ー

6

7

8

11

22

39

3

21

18

Using Hulic’s Onsite Daycare Nursery

Last year, I returned to work from childcare leave
arranging the schedule to correspond to the opening of
Hulic's onsite daycare nursery, and since then I have beencommuting every morning with my son to the nursery.
I was concerned whether I could return to work when
I was pregnant due to many reports on the problem ofchildren being waitlisted for daycare nurseries. Onceit was announced that Hulic would be establishing an
onsite daycare nursery, I was very relieved and was able
to spend my childcare leave without having any worry
about this issue. The great thing about having an onsite

daycare is the peace of mind knowing that my child is
looked after in the same building and the warmth I feelfrom other employees watching over the growth ofthe children in the nursery. At first, it was somewhat ofa challenge riding the train to work with my son every
morning, but he seems to have become quite used toit and now the time we spend on the train is a valuable
time for me to communicate with him. I look forward
to devoting even greater efforts to work and childcare
thanks to the work environment at Hulic, which provides
support for both work and childcare.

30

Initiatives in the Local Community

Social Contribution Activities

Supporting Employees to Conduct
Social Contribution Activities
Matching Gift Program

Hulic’s Policy for Social Contribution
Activities has been established as abasic policy of Hulic's social contribution
activities. In 2014, we formulated a Policy
on Social Contribution Activities that
more clearly lays out our basic philosophy
on social contributions and activity
guidelines, given changes taking place inour business environment.
The policy expresses our determination
to resolve social problems throughindividual efforts, leading to the sustained
development of society.

Policy for Social Contribution Activities
Basic
Philosophy

Activity
Guidelines

Social Contribution as a Company
The 2nd Hulic Student Design Competition Heldwith the Theme of "Shibuya-Style" Architecture
As a real estate company, this contest was initially planned toprovide an opportunity for students to propose urban planning andarchitectural ideas. With the theme of Shibuya-style architecture,
which refers to utilizing land to its fullest in unique ways as seen inTokyo's Shibuya district, the 2nd Hulic Student Design Competition
invited free and innovative ideas. A total of 163 submissions werereceived and during the secondary screening session, which was
open to the public, students made passionate presentations of
their ideas and had a Q&A session with the contest judges. In theend, after much debate, the judges selected one grand prize, three
first prizes and six honorable mentions.

Donation to Ashinaga Scholarship Society
The Hulic Group has been making a monthly donation of 500,000 yen to
the Ashinaga Scholarship Society since June 2011, and a certain amountof money has also been donated every month to this Scholarship
Society for four years from the Company's directors and employees whowish to participate in this initiative in an effort to provide continuous
support for the living and schooling of the children who will forge thefuture of this country by supporting children left as orphans following
the Great East Japan Earthquake. May 2015 represents the initiallyagreed upon end of the donations, but we have decided to continue
making these donations for another four years given the fact that
continuous support for mental healthcare and other areas is still neededin the disaster-hit areas. Since the outset, 31,115,000 yen in total has
been donated by the Company and individuals as of December 2014. In
order to keep donators interested after donation, the "Ashinaga Family
Tsushin" sent by the Society is posted on the Company's intranet.

31

Corporate Social Responsibility Report

As a good corporate citizen, Hulic proactively and widely
pushes ahead with social contribution activities both inside andoutside of its business fields. We contribute to the sustained
development of the entire society through each activity.
● Actively work in the three main fields of“protection,”“co-existencewith local communities,”and“responses to social needs."● Actively support social contribution activities conducted by

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

each employee.
● Place an emphasis on securing transparency in implementing

activities and promote dialogue and cooperation with society.

2nd Hulic Odenma Summer Festival
In October 2012, Hulic moved its head office to Nihonbashi
Odenma-cho. In July 2013, we held the "Hulic Odenma Summer
Festival" at the Hulic Head Office Building, partly intending to
introduce ourselves to the people in the community. Thanks
to the overwhelmingly positive feedback, we decided to holdthe 2nd Odenma Summer Festival in July 2014. Various peoplecame to the festival, including local children and workers in theneighboring area, thanks
to the cooperation of thecommunity association of
Odenma-cho-Ninobu.
We hope to be able todeepen ties among people
in the communities
through such activities.
In addition, we donatedproceeds of 158,400 yen
from sales at the festival toa volunteer organization,in addition to the money
collected through the sixth
matching gift program.

In 2014, the total amount of donations collected from employees
during the year reached 461,000 yen. Combining this amountwith donations from the Company and the proceeds from the
2nd Hulic Odenma Summer Festival held in July 2014, a totalof 1.2 million yen was donated to Kid's Door, an incorporated
NPO. Kid's Door is a group that conducts various activities suchas free study sessions for children in financial need due tovarious hardships, providing educational and learning support
to enable these children to open up their educational path. Kid's
Door was selected as a recipient of these donations because its
mission aligns with Hulic's commitment to actively support thenext generation, and the decision
was made based on the consensus
of employees that donations bepart of the driving force behind theorganization's ongoing activities.

Community Cleanup Activities
Hulic, Hulic Building Management and Hulic Proserve
participate in the monthly Machikado Cleanup Day
organized by Chuo Ward. Additionally, Hulic Office Service
as well as these three other companies take part in
Garbage Zero Emission Day, a cleanup activity held on May
30, which is also organized by Chuo Ward. These activities
are gradually establishing themselves as a new spacefor communication with the local community and other
employees while advancing the beautification of the town.

The Great East Japan Earthquake Reconstruction AssistanceSponsorship of the Fukushima Products Fair
Hulic partnered with the Mizuho Financial Group to assist with
the Fukushima Products Fair held in June and October of 2014
and again in February 2015 at the Mizuho Bank Otemachi Head
Office Building in order to support the reconstruction effort inFukushima Prefecture after the Great East Japan Earthquake.
Hulic Office Service
was responsible for theoverall operation of theevent, from sales support
and product displays tomarketing. In the end, theevent was a huge success.

VOICE

Kazuo Tamura
Deputy General
Manager
Medical Insurance
Sales Department
Hulic Insurance
Service Co., Ltd.

Paid Leave for Employees Involved in
Volunteer Activities
The Hulic Group has established paid leave for employees
involved in volunteer activities in order to support and nurture
their efforts to give back to the community and help to foster anattitude of wanting to address issues facing society. Employees are
eligible to take up to 20 consecutive days of paid leave (considereda special leave of absence) to take part in philanthropic activities
that give back to society. To encourage employees to use thisleave, we provide not only information on social contribution
activities, but also increase interest by sharing the volunteer
experiences of employees with the entire Company throughour in-house intranet system. In fiscal year 2014, we continued
Satoyama conservation activities, which we had been conducting
annually since fiscal year 2009 as a participatory volunteer activity
involving our employees. A total of 25 employees from Hulic,
Hulic Building Management and Hulic Insurance Service took part.

Stipend Program for Participating in
Activities that Benefit the Disaster-Hit Areas
The Hulic Group established a program in which a stipend of up
to 40,000 yen is provided to its employees to be used for the costof participating in volunteer activities in support of the Great East
Japan Earthquake's reconstruction assistance effort. The numberof employees who used this program was 15 in fiscal year 2011,
two in fiscal year 2012, one in fiscal year 2013 and two in fiscal
year 2014. We hope that this program will be an opportunity formore employees to learn about the local situations and become
interested in making a difference. To enable us to take prompt
responses to various disasters that might occur going forward, in
fiscal year 2014 the scope of this program was expanded from theGreat East Japan Earthquake reconstruction assistance to volunteer
activities in any disaster-hit areas. In addition, we will continue toencourage participation in these activities by sharing information
about the results of volunteer activities and impressions, thesituation in disaster-hit areas, and reconstruction assistance tours
to all employees through the Company's intranet.

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

I volunteered to serve as event management staff fora festival bringing together old and new residents ina district of Miyako City that was relocated to higher
ground. Nearly 1,000 people, from children to theelderly, attended the festival held at an elementary
school, where various events took place. One of thescenes etched in my mind was that of children playing
on the inflatable trampoline. At first, they were notexcited at all, but after they tried out the trampoline a
couple of times, they really got into it and they all began

to smile. The needs of these disaster-hit areas of course
include the improvement of infrastructure, but this event
taught me that local needs are further broken down
into tangible and intangible forms, and in particular,
I strongly felt the need to care for children. Damage
continues even after the earthquake and tsunami havegone. I believe that connecting us with the disasterhit areas in some form or another is leading to theprevention of this disaster from becoming forgotten. I
hope to continue more assistance activities in the future.

32

Corporate GovernanceConcept of Corporate Governance
Hulic Group recognizes that it is an important business issue to build a corporate governance system with fully functioning“risk management,”“compliance,”and“internal control.”We intend to sincerely execute business, fulfilling accountability
to stakeholders, such as shareholders, customers, business partners, local communities, and employees.

Management Decision-Making

Policy for Determining the Amount ofCompensation and its Calculation Method

The Board of Directors meets once a month in principle, and holds
further meetings as needed. The Board of Directors is comprisedof 10 directors, of which four are designated and reported as
independent directors based on the stipulations of the Tokyo Stock
Exchange (as of June 2015). Directors determine important mattersconcerning Hulic's business activities, including CSR, and supervise
the execution of duties. In March 2012, Hulic appointed its firstfemale external director, and since then we have been promoting
multifaceted business management based on diversity. As anadvisory organization of the President, the Executive Management
Committee is held once a week in principle, which deliberates
especially important matters related to business execution.

Based on the approval given at the general meeting of shareholders
held in March 2012, Hulic set a compensation limit of 4.5 million
yen for directors per business year and 1 million yen for Audit &Supervisory Board members (as of December 2014).
Director compensation consists of a fixed component determinedbased on the importance of their duties and a variable component
that fluctuates based on corporate performance and their contribution
to the Company's performance for the applicable business year.
Director Compensation for the Fiscal Year Ended December 2014
● 5 Directors (excluding External Directors):
Total amount of 279 million yen for compensation, etc.
(base pay of 201 million yen and bonus of 78 million yen)
● 9 External Directors:
Total amount of 125 million yen for compensation, etc.
(base pay of 112 million yen and bonus of 12 million yen)Management Advisory Committee

Internal Audit StructureInternal audits are carried out independently from other business lines
by the Corporate Audit Department, which is placed under the directcontrol of the President. The internal audit basic plan is finalized by the
Board of Directors based on Corporate Audit Regulations and the internal
audit is systematically carried out by the Corporate Audit Department.
The results of the internal audit will be reported to the President andfeedback to departments subject to the audit will also be provided.
Internal audits are carried out by four employees (as of June 2015).
External Evaluation of Internal Audit
Audit In fiscal year 2014, Hulic contracted with Pricewaterhouse
Coopers Aarata to perform an external quality evaluation of theinternal audits carried out by the Corporate Audit Department in orderto enhance the quality of these audits. The results of this evaluation
showed that Hulic's internal audit functions generally conform (GC) to
the international standards for internal auditing defined by the Instituteof Internal Auditors (IIA). Based on these results, we will continue to
strive to further improve the quality of our internal audit functions.

Supervision and Audit of Management
We have adopted the Audit & Supervisory Board system. Of Hulic's five
Audit & Supervisory Board members (two are full-time auditors), three areexternal auditors as stipulated in the Companies Act and the Ordinance for
Enforcement of the Companies Act (as of June 2015). In accordance withthe audit basic policy and the audit basic plan formulated by the Board
of Auditors, Audit & Supervisory Board members execute duties throughattendance at Board of Directors meetings, (full-time auditors) attend the
management conference, hold hearings about status of execution of duties,
and review important documents. Additionally, they receive reports of audit
results regularly from the accounting auditor (Ernst & Young Shin Nihon
LLC) and the Corporate Audit Department charged with internal audits, aswell as sharing and exchanging information as needed to heighten theeffectiveness and efficiency of audits conducted by these three parties.

▲

Corporate Governance System Chart（As of June 2015）
Audit & Supervisory Board
Audit

GeneralＭeeting of
Shareholders

Accounting Auditor

Board ofDirectors

Recommendation/Advice
Management Advisory Committee

33

Audit & Supervisory Board Department

Corporate Social Responsibility Report

CSR Committee

President

Corporate Audit Department
Executive Management Committee

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

Corporate GovernanceCompliance

Compliance Committee
Risk Management Committee

Risk Management
Internal
Control

Disclosure Control

Fund ALM Committee
Operations Management

Basic Rules, etc.

Business Management
Internal Control Related
to Financial Reporting

Business Process
Control Documents

Disclosure Working Group

Real EstateBusiness
Division

Activities of CSR Supporters

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

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

Summary of CSR Committee Meeting● 8th Meeting (August 2014)

Fiscal year 2013 performance/CSR plan for 2014/Areas of improvement

CSR Promotion Systems▲

The Management Advisory Committee comprises of five (as ofJune 2015) selected from legal professionals, public accountants,
academics, and business professionals. The Management Advisory
Committee provides advice and recommendations to the Board of
Directors on all aspects of management, including matters discussed
by the Board of Directors, in order to ensure the independence of theCompany and the interests of stakeholder are not damaged.

Establishment of the CSR Committee

Board of Directors
Report to Board of Directors

CSR Committee

Proposal on measures
to improve KPI-related
status reports

Chairperson: President
Members: Senior Executive Managing Ofﬁcers/Chief of Human Resourcesand General Affairs Department/Chief of Real Estate Planning
Department/Chief of Property Development Department/Chief ofCorporate Planning Department

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

CSR Supporter
Environment Team<Concerned material issues/KPI>● Measures against global warming● Conservation of resources and reductionof waste at existing buildings● Reduction of waste in new construction
and reconstruction works● Earthquake countermeasures for Hulic’s buildings● Extending the life span of Hulic's buildings● Using renewable energy and developingnew technologies● Greening buildings to prevent warming
Real Estate Business Division

Planning and
Administration
DivisionInternal Environmental Improvement TeamSocial Contribution Team<Concerned material issues/KPI>● Promoting use of supportive systems
to raise children while working● Work-life balance● Promoting employment of the disabled● Preventing crushing labor● Survey of customer satisfaction● Mental health● Activating the reemployment program● Reduction in power and paper
consumption in ofﬁce<Concerned material issues/KPI>● Matching gifts

Information disclosure

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

● Taking into account communities

in real estate development

Social Contribution Review Committee

Communication

Stakeholders
Afﬁliated
Companies

Shareholders

Employees

Customers

Business Partners

Government andPublic Administration

Local Communities

Global Environment

34

Corporate GovernanceRisk Management

Approach to Compliance

Risk Management Structure and Approach

Facilities and Stockpiles for Sustaining Business Operations

Pursuant to basic rules of risk management, we manage various risks
related to the Hulic Group's businesses, which include operationalrisk, market risk, liquidity risk, and credit risk, among others. We
regularly hold committee meetings related to risk management, suchas the Risk Management Committee and Capital ALM Committee,
and supplement changes in risk through collecting and analyzing risk
monitoring indices, which ensures a system is in place to control risk.
Through this PDCA cycle, we carry out risk management continuously
to stabilize our business. In addition, internal audits are carried out on
all departments and operations in order to verify the appropriatenessof risk management practices. With regard to real estate, the greatest
asset of Hulic, we regularly obtain appraisal for real estate supplements'
market risk, 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 by implementing
company-wide training drills and other measures,
Based on the experiences of the Great East Japan Earthquake, wehave reviewed the business continuity basic plan, and also checkedseismic performance, liquefaction countermeasures, and flood control
measures at each building.

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

BCP Training and Cooperative Structure

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

Lightning strike

RF: Electricity
receiving andtransformer
equipment/air
conditioner
1 elevator inoperation

Natural ventilation

2F: Disaster
Response Roomand restrooms
have backup
power, lighting
and air
conditioning

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

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

Vertical damp-proof
barrier H=1m

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

Telecommunications
entrance facility: 2 routes
Seismic isolation pit
Emergency shutoff
valve

Diagram of Hybrid Structure Model▲

We have established an inclusive cooperative structure with outsideorganizations such as design companies, construction companies,
property management companies and elevator companies to carry out
highly effective efforts in continuing the operation of our real estatebusiness during an emergency situation by conducting joint disaster
preparedness training.
There is only so much that Hulic can do during an emergency situation.
This is why collaboration with construction companies, building
management companies and other relevant companies is essential. As
such, during actual training, different themes are set to check whether
we can take swift and appropriate actions.

Photovoltaic panels［Hybrid Structure Model］ ［Seismic Isolation Installation Layout］〈Cooperative Structure with Business Partners〉● Immediate Conﬁrmation of Damages

Emergency notiﬁcation system using wireless communications (agreement with three companies)

HULIC

Real estate management company (Company A)
Real estate management company (Company B)
Real estate management company (Company C)● Response Aimed at Recovery of Operations
Emergency repair agreements (21 companies)/Companies that constructed each building (general contractors)

HULIC

35

Companies that constructed each building (general contractors)

Corporate Social Responsibility Report

PCa

Multilayer rubber isolator

SRC

Isolator with tin plug

S

Cross-linear bearing

Compliance Promotion and Implementation

Compliance Seminar

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

Themes are regularly decided on and implemented by Hulic, andall employees are provided with compliance seminars. So far,seminars on how to handle anti-social forces, power harassment,
and insider trading regulations have been conducted. In addition
to these overall themes, in consideration of compliance issues
to the real estate business, we conduct“seminars by theme”
concerning important themes, and place news and Q&A related
to compliance on the Company's intranet once a month. In
addition, we hold discussions within departments on CSRrelated themes as needed. We compile comments on complianceseminars as feedback, and use them for subsequent seminars.
Compliance Seminars in FY2014● Frequency: 4 seminars implemented, transmission of
information 12 times● No. of participants: All employees (including temporary staff)❶ Respect for Human Rights and Prohibition ofDiscrimination and Sexual Harassment❷ Compliance with Laws and Rules❸ Carry Out Duties in an Honest and Fair Manner❹ Proper Handling of Information❺ Insider Trading Regulations❻ Avoid Relationships with Anti-Social Forces❼ Consideration toward
Environmental Conservation❽ Maintain and Encourage
the Best Communication Possible❾ Respect Intellectual
Property Rights
Business Entertainment/Gift
Compliance Manual
Giving and Prohibition of Bribery

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

Hulic is a real estate company that engages in the development,
reconstruction, and operation of office buildings and condominiums
primarily in Tokyo's 23 wards. We are constantly working to generate
new added value by offering properties that are superior in termsof safety, environmental performance, and convenience. We haveestablished various emergency and disaster scenarios for which we havecreated measures to improve the structural performance of our buildings
as well as operational and management aspects (See page 25 formeasures taken to improve the structural performance of our buildings).

▲

Hulic's Approach

Maintaining Functions during a Disaster（Hulic Head Office Building）

Hulic has established a Basic Stance outlining its approach for achieving its corporate philosophy and the“Basic Principles
of Corporate Conduct," which clarifies the Basic Stance. Additionally, the“Compliance Manual,”which reflects changes inbusiness environment and social trends, is used for common actions that must be followed in the daily execution of duties
within the Hulic Group. We understand that ensuring these actions are followed and practiced represents Hulic's basic stancetoward compliance, and we are promoting the activities to educate all employees about the importance of complying withlaws and regulations, social ethics, and company rules.
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.

Compliance through Outsourcing Contractors
As for outsourcing by the real estate business division, we havemade fair trades based on“rules for real estate outsourcing
management,”respecting relevant laws and regulations as wellas instructions by administrative organizations.
When selecting an outsourcing contractor, we carefully checktheir past performance and abilities to execute operations, theclarity of appropriate procedures in their business execution
system, the appropriateness of the operation management
system, and other necessary matters.
After selecting an outsourcing contractor through thisconfirmation, the Legal & Compliance Department checks therelationship for anti-social forces.

Information Security Management
In an attempt to prevent information leaks, one of the criticalrisks in relation to the performance of business, we haveestablished an information security management system, andenhanced operation management in accordance with theinformation management rules included in the information
security policy. We more strictly check the right of access to theshared 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
and information security measures in terms of systems in order
to increase each employee's awareness. Additionally, we carryout internal audits to check compliance with company rules on
information management. In fiscal year 2014, there was no caseor accident related to information leaks.

36

Corporate GovernanceConsolidated Financial Statements

Directors (as of June 2015)▲

Consolidated Balance Sheets(Unit: Million Yen)

●Assets

Previous consolidated
accounting period(ended December 2013)

Current consolidated
accounting period(ended December 2014)

Current assets
Cash and deposits

17,60022,129

Short-term loans payable

6,300

29,000Notes and operating accounts receivable

2,096

4,383

Current portion of long-term loans payable

70,883

121,559

0

0

Short-term bonds payable

57,994

3,999

Real estate for sale

90,11637,124Current portion of bonds－

12,000Real estate for sale in process

8,160

11,351

Accrued expenses

1,600

2,166

Costs on uncompleted construction contracts

55

11

Income taxes payable

3,018

5,033

Supplies

41

36

Advances received

3,773

3,946

1,286

3,031

Deferred tax liabilities－

12

Operational investment securities
Deferred tax assets

2,552

1,685

Provision for bonuses

68

300

Other

1,463

6,438

Provision for directors' bonuses

103

128

(4)

(4)

123,371

86,188

Allowance for doubtful accounts
Total current assets

Audit & Supervisory
Board Member

Corporate Officers● President, Representative Director and Chief Executive Officer

Saburo Nishiura● Full-Time Auditor----------------------------------------------------------------------------------------------

Shigeo Nakane

Hiroshi Kitano
Chief of Finance Department● Representative Director and Executive Vice President● Executive Managing Officer------------------------------------------------------------------------------------------------------------------

Manabu Yoshidome● Full-Time Auditor----------------------------------------------------------------------------------------------

Takuya Asai

● Executive Managing Officer
Yasuki Yakabi
Chief of Asset Solutions Department● Representative Director (Senior Executive Managing Officer)

Hidehiro Shiga---------------------------------------------------------● Director (Executive Managing Officer)
Takaya Maeda
Chief of Real Estate Development Department 1● External Auditor
Koichi Nezu
Honorary President of Tobu
Department Store Co., Ltd.
Board Chairman of Tobu Utsunomiya
Department Store Co., Ltd.
Board Chairman and Director of The
Nezu Museum
President of Musashi Academy of the
Nezu Foundation
Member of Management Advisory
Committee, Hulic Co., Ltd.

-------------------------------------------------------------------------------------------------------------------------------------------------------● External Director● External Auditor---------------------------------------------------------------------------------------------● Director (Senior Executive Managing Officer)

Shinji Furuichi---------------------------------------------------------------------------------------------● Director (Senior Executive Managing Officer)

Hajime Kobayashi
Chief of Corporate Planning Department----------------------------------------------------------------------------------------------

Tsukasa Miyajima
Professor of Keio University, Faculty of Law, Doctor of Law
External Director of Dai Nippon Printing Co., Ltd.
External Auditor of Mikuni Corporation
Trustee of Meiji Yasuda Life Insurance Company
Board Chairman of Japan Railway Construction, Transport andTechnology Agency
Member of Management Advisory Committee, Hulic Co., Ltd.
---------------------------------------------------------------------------------------------● External Director

Hideo Yamada
Daini Tokyo Bar Association
External Auditor of Taiyo Chemical Industry Co., Ltd.
External Director of Lion Corporation
Member of Management Advisory Committee, Hulic Co., Ltd.
---------------------------------------------------------------------------------------------● External Director
Atsuko Fukushima
Journalist
Member of Management Council at Shimane University
External Director of Nagoya Railroad Co., Ltd.
Member of Management Advisory Committee, Hulic Co., Ltd.
---------------------------------------------------------------------------------------------● External Director

Masatoshi SatouCounselor of Sompo Japan Nipponkoa Insurance Inc.

Nobuyuki Kobayashi
Certified public accountant/Tax
accountant
Auditor of the Japan Arts Council
Member of Management Advisory
Committee, Hulic Co., Ltd.
--------------------------------------------------------● External Auditor
Kenichi Sekiguchi
Special Adviser of Meiji Yasuda Life
Insurance Company--------------------------------------------------------● Executive Managing Officer
Takeshi Uratani
Chief of Property Development
Department--------------------------------------------------------● Executive Managing Officer
Noritaka Takahashi
Chief of Real Estate Planning
Department & Tourism Business
Development Department--------------------------------------------------------● Executive Managing Officer

Shin Ito
Chief of Corporate Communications &Investor Relations Department--------------------------------------------------------● Managing Officer
Taichi Nakamura
Chief of Real Estate Development
Department 2--------------------------------------------------------● Managing Officer
Yoshito Nishikawa
Chief of Real Estate Investment
Department--------------------------------------------------------● Managing Officer
Yoshikazu Nagatsuka
Chief of Real Estate Marketing
Department--------------------------------------------------------● Managing Officer

Takeshi Ozawa
Chief of Human Resources andGeneral Affairs Department &Legal & Compliance Department

Corporate Social Responsibility Report

Other
Total current liabilities

5,521

7,401

149,264

185,549

Non-current liabilities

Non-current assets

Bonds payable

Property, plant and equipment

32,10038,100294,657

268,638

21,81428,307

Buildings and structures

179,950

207,228

Long-term loans payable

Accumulated depreciation(50,186)(55,489)

Deferred tax liabilities

Buildings and structures, net

129,764

151,738

Provision for retirement beneﬁts

456－

Machinery, equipment and vehicles

1,420

2,170

Provision for directors' retirement beneﬁts

953

Accumulated depreciation

(533)

(673)

Net deﬁned beneﬁt liability

－

1,121

Machinery, equipment and vehicles, net

887

1,497

Long-term guarantee deposited

42,862

44,165335,364

386,015

Other

1,897

2,044

Construction in progress

7,287

13,773

Total non-current liabilities 393,798

382,429

Other

1,417

1,451

Total liabilities

543,063

567,979

Accumulated depreciation

(743)

(777)

Land

674

673

Total property, plant and equipment 473,978553,698

Other, net
Intangible assets
Goodwill
Leasehold right
Other
Total intangible assets

916

773

12,451

11,092396

378

13,764

12,243543,063●Net assets
Shareholders' equity
Capital stock

22,20522,290Capital surplus

38,27038,355Retained earnings

96,422

114,314

Treasury shares
Total shareholders' equity

(189)

(191)

156,708

174,767

Accumulated other comprehensive income

Investments and other assets
Investment securities

101,601

109,231

Valuation difference on available-for-sale securities

18,736

26,549

Guarantee deposits

3,324

7,509

Deferred gains or losses on hedges

(289)

(179)

Deferred tax assets

539

711

Foreign currency translation adjustment

853

1,321

－

8

Remeasurements of deﬁned beneﬁt plans

－

(121)

3,722

3,779

Total accumulated other comprehensive income

19,29927,569Net deﬁned beneﬁt asset
Other
Allowance for doubtful accounts

(0)

(0)

Minority interests

1,273

3,083

Total investments and other assets

109,188

121,240

Total net assets

177,280

205,421

Total non-current assets

596,931

687,182

Total liabilities and net assets 720,344

773,401

41

29

Deferred assets
Business commencement expenses
Total deferred assets
Total assets

37●Liabilities

Current consolidated
accounting period(ended December 2014)

Current liabilities

Merchandise

Board of Directors(Unit: Million Yen)
Previous consolidated
accounting period(ended December 2013)41

29

720,344773,40138

Consolidated Financial Statements

Previous consolidated
accounting period(ended December 2013)

Current consolidated
accounting period(ended December 2014)(Unit: Million Yen)

(Unit: Million Yen)
Previous consolidated
accounting period(ended December 2013)

Current consolidated
accounting period(ended December 2014)

108,444

212,791

Operating cost

69,732

166,331

Income before minority interests

Operating gross proﬁt

38,71146,459Other comprehensive income

Selling, general and administrative expenses

9,597

10,426

Unrealized holding gains on securities

12,471

7,687

Operating income

29,11436,032

Unrealized gains on hedging instruments

221

110

Operating revenue

Non-operating income
Interest income

53

16,04322,427

Foreign currency translation adjustments

749

467

492

126

1,487

1,264

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

Share of proﬁt entities accounted for using equity method

－

1,203

Total other comprehensive income 13,934

8,392

Income arising from cancellation of leasing contracts

422

169

Comprehensive income

29,97830,819

Other

158

168

(Breakdown)

2,074

2,808

Comprehensive income attributable
29,905to shareholders of Hulic Co., Ltd.

30,744

Dividend income

Total non-operating income
Non-operating expenses

4,933Interest expenses
Share of loss entitles accounted for using equity method
Other
Ordinary income

4,348

19

－

252

178

5,205

4,526

25,98334,314

Total non-operating expenses
Extraordinary income

Comprehensive income
attributable to minority interests

72

74

Previous consolidated
accounting period(ended December 2013)

Balance at beginning of current period

Shareholders' equity

Capital stock

Capital surplus

Retained earnings

Treasury shares

Total shareholders' equity

21,95138,016

83,418(127)

143,258

253

253

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

507

Dividends of surplus(2,966)(2,966)

Net income

15,97015,970Purchase of treasury shares
Disposal of treasury shares

0Change in treasury shares arising from change inequity in entities accounted for using equity method

(105)

(105)

0

0

43

43

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

253

253

13,003(61)

13,449Balance at the end of current period

22,20538,27096,422(189)

156,708

Previous consolidated
accounting period(ended December 2013)

Balance at beginning of current period(Unit: Million Yen)

Accumulated other comprehensive income
Valuation difference
on available-for-salesecurities

Deferred gains
or losseson hedges

Foreign currencytranslation
adjustment

Remeasurementsof deﬁned
beneﬁt plans

Consolidated
statements of changes
in net assets

5,773

(511)

102

ー

5,364

Minority
interests

Total net
assets

1,272

149,895

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

507

Dividends of surplus(2,966)

Net income

15,970Gain on sales of non-current assets

1,759

54

Purchase of treasury shares

Gain on sales of investment securities

829

2

Disposal of treasury shares

0Change in treasury shares arising from change inequity in entities accounted for using equity method

43

1,584

168

Compensation income

144

937

Gain on step acquisitions－

684

Gain on investments in silent partnership and other

Other
Total extraordinary income

180

12

4,498

1,859

(105)

Net changes of items other than shareholders' equity

12,962

221

750

ー

13,9340

13,935

Total changes of items during period

12,962

221

750

ー

13,934027,385

Balance at the end of current period

18,736

(289)

853

ー

19,2991,273

177,280(Unit: Million Yen)

Extraordinary losses
319

Loss on sales of non-current assets

32

Current consolidated
accounting period(ended December 2014)

Loss on retirement of non-current assets

2,246

762

Loss arising from building reconstruction

899

153

Loss on sales of investment securities

054

Loss on valuation of investment securities

2

108

Loss on redemption of investment securities

3

289

907

587

Provision of allowance for doubtful accounts

－

0

Other

73

113

Net changes of items other than shareholders' equity

Impairment loss

Balance at beginning of current period

Shareholders' equity

Capital stock

Capital surplus

Retained earnings

Treasury shares

Total shareholders' equity

22,20538,27096,422(189)

156,708

84

84

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

169

Dividends of surplus(4,460)Net income

22,352

Purchase of treasury shares
Disposal of treasury shares

0(4,460)22,352
(2)

(2)

0

0

Total extraordinary losses

4,451

2,101

Total changes of items during period

84

85

17,892(2)

18,059

Income before income taxes and minority interests

26,03034,072

Balance at the end of current period

22,29038,355

114,314(191)

174,767

7,088

8,356

Income taxes - current
Income taxes - deferred

2,898

3,289

Total income taxes

9,986

11,645

Income before minority interests

16,04322,427

Minority interests in income

72

74

15,97022,352

Net income

39

Consolidated Statements of Changes in Net Assets▲(Unit: Million Yen)

Consolidated Statements ofComprehensive Income▲▲

Consolidated Statements of Income

Corporate Social Responsibility Report40Consolidated Financial Statements

Third-Party Opinion(Unit: Million Yen)

Accumulated other comprehensive income

Current consolidated
accounting period(ended December 2014)

Valuation difference
on available-for-salesecurities

Deferred gains
or losseson hedges

Foreign currencytranslation
adjustment

Remeasurementsof deﬁned
beneﬁt plans

Consolidated
statements of changes
in net assets

18,736

(289)

853

ー

19,299Balance at beginning of current period

Minority
interests(Certificated Public Accountant)Total net
assets

1,273

Adjunct Instructor of Toyo University

177,280

Changes of items during period
169

Issuance of new shares - exercise of subscription rights to shares
Dividends of surplus(4,460)Net income

22,352

Purchase of treasury shares(2)

Disposal of treasury shares0

Net changes of items other than shareholders' equity

7,813

110

468

(121)

8,270

1,810

Total changes of items during the period

7,813

110

468

(121)

8,270

1,810

28,140

Balance at the end of current period

26,549

(179)

1,321

(121)

27,5693,083

205,421

10,081▲

Consolidated Statement of Cash Flows(Unit: Million Yen)
Previous consolidated
accounting period(ended December 2013)

Cash ﬂows from operating activities

Previous consolidated
accounting period(ended December 2013)

Current consolidated
accounting period(ended December 2014)

Cash ﬂows from investing activities

Income before income taxes and minority interests

26,03034,072

Depreciation

6,873

7,411

Proceeds from withdrawal of time deposits

1,000

1,000

907

587

Purchase of property, plant and equipment(66,725)(90,589)0(0)Proceeds from sales of property, plant and equipment

9,500

1,263

Increase (decrease) in provision for bonuses

15

46

Purchase of intangible assets

(171)

(394)

Increase (decrease) in provision for directors' bonuses

20

25

Proceeds from sales of intangible assets

753

123

Increase (decrease) in provision for retirement beneﬁts

48

(825)

Purchase of investment securities(1,149)(15,520)

Increase (decrease) in net deﬁned beneﬁt asset and liability－

921

Proceeds from sales of investment securities

3,426

348

Increase (decrease) in provision for directors' retirement beneﬁts(4)－

Proceeds from purchase of additional newly consolidated subsidiaries－

652(1,493)(1,267)

Collection of loans receivable

4,933

4,348

Other, net

19(1,203)

Net cash provided by (used in) investing activities

Loss on retirement of non-current assets

2,246

762

Cash ﬂows from ﬁnancing activities

Loss (gain) on sales of property, plant and equipment(1,053)(5)

Net increase (decrease) in short-term loans payable

6,300

22,700Loss (gain) on sales of intangible assets

(386)

(15)

Net increase (decrease) in short-term bonds payable

44,959(54,020)

Loss (gain) on sales of investment securities

(828)

51

Proceeds from long-term loans payable

84,30098,000(110,082)(76,023)

19,901

17,903

Impairment loss
Increase (decrease) in allowance for doubtful accounts

Interest and dividend income
Interest expenses
Share of (proﬁt) loss of entities accounted for using equity method

Payments into time deposits(1,000)(1,000)

0

0

4,815

20,299(49,548)(83,815)

Loss (gain) on valuation of investment securities

2

108

Repayments of long-term loans payable

Loss (gain) on redemption of investment securities－

279

Proceeds from issuance of bonds

Loss (gain) on investments in silent partnership and other(1,584)(168)

Proceeds from sales of treasury shares

0

0

(144)

(937)

Proceeds from exercise of share options

507

169

Compensation income
Loss (gain) on step acquisitions
Decrease (increase) in notes and accounts receivable - trade

－

(684)

Purchase of treasury shares

(301)

(377)

Cash dividends paid

(2)

(2)

(2,966)(4,460)(73)(14,080)

53,878Cash dividends paid to minority shareholders(72)

Decrease (increase) in investment securities for sale

(5,154)(1,744)

Other, net

(2)

(1)

Decrease (increase) in guarantee deposits(354)(4,076)

Net cash provided by (used in) ﬁnancing activities

42,841

4,192

Increase (decrease) in guarantee deposits received

3,231

1,075

Effect of exchange rate change on cash and cash equivalents

28

28

50

958

Net increase (decrease) in cash and cash equivalents

4,436

4,528

2,355

(291)

Cash and cash equivalents at beginning of period

12,164

16,60021,35092,928Cash and cash equivalents at end of period

16,60021,129Decrease (increase) in inventories

Decrease (increase) in other assets
Increase (decrease) in other liabilities
SubtotalInterest and dividends income received
Interest expenses paid

2,975

1,322

(5,382)(4,526)

144

937

Income taxes paid

(7,972)(6,539)Net cash provided by (used in) operating activities

11,114

84,123

Proceeds from compensation

41(Unit: Million Yen)

Current consolidated
accounting period(ended December 2014)

Corporate Social Responsibility Report

Yoshito Nakamura
Adjunct Instructor of the Open University of Japan
Auditor of Foundation for Accounting Research ofConstruction Industry
Auditor of the Supporting Organization of JOCV
Auditor of the Kawasaki City Council of Social Welfare
I will make third party comments about the“CSR Report 2015”(hereinafter referred to as the“Report”) of Hulic Co., Ltd. “( Hulic”),
as I did so in the previous year, receiving explanations about Hulic's
CSR initiatives from a CSR manager.

1. Value creation strategy throughcollective efforts with society
The Company's corporate philosophy is to create shared value
with society by drawing out the needs of society through its realestate business. As indicated in the subtitle of the report, thiscomprehensive report, aimed at achieving sustainable development,
introduces the financial and non-financial information that forms thefoundations of its business operations at the beginning of the report,
and provides detailed explanations about the Company's growthpotential. While the concept of social responsibility of corporations
has become widely recognized by the general public today, that
responsibility is meant to be fulfilled through the business, andcannot be captured independently on its own. Reading the reportprovides an understanding of the company's basic stance toward
the responsibility held by management. This responsibility is
generally not mandated; in a healthy economic society, guidance isprovided toward a fixed goal by an invisible hand. I get a sense thata framework toward the realization of this state is gradually being
established. Furthermore, the report explains the development of
the business by drawing a link between social issues and business
opportunities, with the aim of responding accurately to socialchanges and needs. This approach, for example, enables readersof this report to see the inevitability of expanding the scope ofbusiness, such as business targeting the elderly or tourism, and tounderstand the effects and relationship of this business expansion
on increasing the shared values with society. Contents pertaining tofinancial information have also been enhanced, but going further,
I hope to observe detailed quantitative explanations on how these
are related to increasing the Company's shared values with society.

2. Progress status for key items
This report clarifies the processes for identifying key challenges in
the Company's CSR activities, establishes quantitative indicators (KPI)
for key issues pertaining to the environment and society, and laysout contents, targets, results, and evaluations. According to this data,
we can see that electricity consumption, specific CO₂ emissions,volume of waste generated, and water consumption in buildings
owned by the Company are decreasing with each fiscal period. In
particular, the Company has established a goal of reducing total CO₂
emissions from buildings owned by the Company by 25% by 2020,
against 1990 figures. This figure has been certified by a third-party,
and may be highly appraised. It would also be desirable to disclose
the results of the third-party certification. In addition, the report not
only provides information about total CO₂ emissions in the business,but also discloses data on indirect emissions in the supply chain.
This is commendable, and at the same time I hope that the contents
will be further enhanced in the future. Furthermore, I also hopethat the report will provide an easy-to-understand comparison overtime on information relating to customers, who form the core of theCompany's operating revenue. This information includes customer
satisfaction and customer feedback. I look forward to seeing theCompany take on CSR activities in collective efforts with its tenants.

3. Hand-in-hand with employees
Employees play a central role in putting the corporate philosophy
into practice and improving corporate value. Hence, it is vital tocreate a working environment that is easy to work in, and whichmatches the respective lives and attitudes of all employees. The
Company has put into practice the concept of work-life balance aspart of its efforts to create an environment that can fully maximize
the capabilities of employees, with the objective of establishinga team of professionals that comprises an elite minority. During
this fiscal year in particular, the Company established an inhouse childcare nursery at its Head Office Building, developing
an environment where parents can work with peace of mind. It ishighly commendable that this facility is also open to residents of
the neighboring vicinity. While the report discloses much data on
personnel performance, I hope that this data can be presented not
simply in the form of lists, but in a functional way that connects it tocorporate value; for example, labor productivity, health measures/
costs and effects, and employee value (expertise equipment ratio).
Although the report provides information on employees’working
hours and paid leave taken, it concerns me that the situation does
not seem to have improved significantly in the past few years.
In conclusion, at present day, management holds a social
responsibility for building a sustainable society, and the CSR
report provides a report on that responsibility and the relevant
actions taken by the Company. Objectivity and verifiability are
required for the contents of this report. Hence, I believe that amethod for gaining greater trust from society would be to enhance
the information, such as the prerequisite conditions, scope of
aggregation, and computation methods for the contents of thereport, and to improve the usefulness of this content.
(This review does not represent an opinion of the accuracy and coverage, etc., of
the content of the report.)

Hulic's Responses toThird-Party Review
Hajime Kobayashi

Director (Senior Executive Managing Officer),
Chief of Corporate Planning Department(responsible for CSR)
Continuing from last year, we have asked Mr. Yoshito Nakamura toshare his objective and accurate observations from a professional
perspective, so that we can put effort into further improving our
CSR activities based on his suggestions. Hulic recognizes CSR as
issues which have to do with the foundation of management, andis striving to put these into practice. More than anything, in orderfor the Company to continue surviving and growing enduringly, we
consider that it is important to build relationships with stakeholders
in many areas from a medium- to long-term perspective, and tocreate values that correspond with social issues and needs. To
communicate these concepts in a way that is easy to understand,the report provides an enhanced presentation of the Company's
financial performance since last year, and puts effort into explaining,in a compact manner, the relationship between Hulic's value
creation and society over past, present, and future. If the readers of
this report can imagine Hulic's stance in capturing and pursuing its
financial indicators and CSR KPIs in a comprehensive and organic
manner, I believe that the objectives of drawing up this report
have been achieved. Moving downward to look at the individual
performance items, while the establishment of an in-house childcare
nursery that is also available for use to residents in the vicinity has
been highly appraised, there are also points that we have to takenote of, including the degree of improvement on working hours,
which was pointed out in third-party comments. Hence, we aim tocontinue putting in our best efforts to proceed with the initiatives.
Going forward, we will put CSR management into practice based on
the observations we have received, and work hard in order to meetthe expectations of all our stakeholders.

42