I would like to start this message by expressing our sincere appreciation to each of our valued investors and customers for their continued support.

In November 2008, Hulic became a public company listed on the First Section of the Tokyo Stock Exchange. In each fiscal year since, our business results have improved, and in the fiscal year ended December 2010, our revenue from operations and ordinary income reached a new record. This achievement would not have been possible without the contribution of shareholders, customers, business partners, and other stakeholders, for which we are deeply grateful.

In the year 2010, the real estate business continued to face a difficult environment, with the office market subject to persistently high vacancy rates and strong downward pressure on rents. There were, however, some signs of recovery, including improved fund availability for J-REITs (Japanese Real Estate Investment Trusts).

We are pleased to report that, even amid these weak market conditions, we not only maintained relatively favorable vacancy rates and rent levels compared to the market average, but also continued according to plan with the reconstruction of existing buildings to increase rentable floor space. This value-adding project to utilize unexploited potential is the central pillar of our corporate growth strategy.

Moreover, as a result of the merger on July 1, 2010, of two property leasing companies, Senshu Shoji Co., Ltd. and Fuyo General Development and Finance Co., Ltd., total rentable floor space increased, boosting revenues. Revenue from operations thus reached ¥33,616 million, an increase of ¥2,387 million from the previous year, operating income grew by ¥898 million to ¥15,289 million, and ordinary income rose by ¥1,457 million to ¥12,396 million. Net income, meanwhile, fell by ¥10,480 million to ¥11,562 million.

The increase in operating revenue compared to the previous fiscal year was due to an increase in rentable floor space resulting from company merger and the completion of new buildings, which outweighed the decrease in rental revenue caused by property sales and loss of rentable floor space during reconstruction projects.

The growth in operating income and ordinary income was achieved thanks to increased revenue from the increased rentable floor space provided by newly completed buildings, which outweighed the associated rise in depreciation and amortization expenses and other negative factors.

The decrease in net income from the previous fiscal year was smaller than originally forecast. This was because the absence of extraordinary gains from large-scale property sales, which had boosted net income in the previous year, was compensated to some extent by an extraordinary gain on negative goodwill from the merger.

In fiscal year 2010, Hulic launched a three-year medium-term business plan called Step-Up 2012, under which we are further strengthening our real estate business, with focus on the property reconstruction program, and expanding into new sectors such as public-private partnerships (PPP) and the hotel business to act as additional growth drivers.

Meanwhile, it has been decided that, effective July 1, 2011, Senshu Office Service will be incorporated as a wholly owned subsidiary and further divisions of subsidiaries will be undertaken to reorganize our group structure along function-based lines. This reorganization is designed to strengthen the business operations of individual group members and to increase revenues for the group as a whole.

Going forward, the Hulic board of directors and the rest of the team will work in unison to achieve sustained increase in our corporate value. In these efforts, we look forward to enjoying the consistent support of our shareholders and other stakeholders.

President and Chief Executive Officer
Saburo Nishiura