Hitachi Koki, contributing to creating new communities · Hitachi Koki Co., Ltd. and certain Group companies Publication September 2015 Editorial Policy Hitachi Koki Co., Ltd. (the

Corporate Profile / CSR Report

Hitachi Koki, contributing to creating new communities

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02 Top Message

03 Corporate Data

05 Feature – Hitachi Koki, responding to societal

needs and continuing to evolve

07 CSR in Hitachi Koki

CSR Management

09 Corporate Governance

11 Compliance

Social Responsibility

12 For Customers

14 For Business Partners

15 For Shareholders and Investors

16 For Employees

17 For Local Communities

Environmental Responsibility

18 Environmental Policy Initiatives

19 Environmental Management

20 Waste Reduction

21 Environmentally Friendly Factories and Offices

22 To Make a Sustainable Society Come True

Hitachi Koki, moving forward with you

~Together for Vision~

CONTENTS

We aspire to be a company where all customers are happy to do business with us, and all employees worldwide

are proud to be a part of Hitachi Koki, with our Corporate Vision of “Hitachi Koki, moving forward with you

~Together for Vision~.”

Purpose of Publication

■ Reference Guideline• ISO 26000• “Environmental Reporting Guidelines

(Fiscal Year 2012 Version)” by Ministry of the Environment

■ PeriodFiscal 2014 (April 1, 2014 to March 31, 2015)Some information of other periods also included.

■ OrganizationHitachi Koki Co., Ltd. and certain Group companies

■ PublicationSeptember 2015

■ Editorial PolicyHitachi Koki Co., Ltd. (the Company) had issued Environmental Sustainability Reports in the past, and this year, we have published our Corporate Profile / CSR Report for 2015, aiming to convey the full range of our CSR activities to stakeholders and communicate with stakeholders in more depth. This year, the Company has set the “KOKI Way” that systematizes the Hitachi Koki Group’s Corporate Philosophy, Corporate Vision, Conduct Guidelines and Codes of Conduct with the aim of enabling all employees to share the same spirit and achieve interactive communication with all our stakeholders. In this report, we have included the details of “KOKI Way.” Going forward, we will further improve the Company Profile / CSR Report, regarding it as one of the important tools of communication with stakeholders.

01 Hitachi Koki Co., Ltd. Corporate Profile / CSR Report 2015

Introduct ion

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Aspiring to be a socially trusted enterprise that contributes to society

Osami MaeharaPresident & Representative Executive Officer

Hitachi Koki Co., Ltd.

We first would like to express our sincere gratitude for your ongoing support to the Hitachi Koki Group.

The Company is working to implement its Corporate Vision of “Hitachi Koki, moving forward with you ~Together for Vision~” based on the Corporate Philosophy of “contributing to our society through outstanding technologies, products and services.” We aspire to be a company where all customers are happy to do business with us, and all employees worldwide are proud to be a part of Hitachi Koki.

To realize our Corporate Philosophy and Corporate Vision, not only is it vital to improve performance by further strengthening sales and development capabilities, but also to gain the trust of society and continue to maintain the trust gained. This year, the Company established “KOKI Way” that systematizes the Corporate Philosophy and Corporate Vision, and disseminated it as basics of daily work among employees. We believe that we can achieve a further leap as a truly global enterprise trusted all over the world by making all employees’ activities linked to “KOKI Way.”

For medium- to long-term, we will aggressively promote a variety of management initiatives, including measures to strengthen sales, product development and cost competitiveness, with the aim of improving performance in order to build a strong corporate structure that will prevail amid intensifying global competition. Moreover, we will emphasize eco-management and strive to enhance integrated eco-management of manufacturing and sales, with efforts including forcefully promoting energy conservation in its business activities, proactive development of environmentally sound products (Eco-Products) and thorough reduction of waste and other matters.

The Company had issued Environmental Sustainability Reports to mainly present environmental activities of the Company. We have published Corporate Profile / CSR Report to widely report to stakeholders the activities for fulfilling social responsibility of the Company. We hope this report will help you understand our Group’s attitude and help us facilitate communication with you.

02Hitachi Koki Co., Ltd. Corporate Profile / CSR Report 2015

Top Message

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Corporate Profile

Trends of Performance (Consolidated Basis)

Lines of Business

Corporate name:

Founded:

Headquarters:

Representative:

Capital:

Employees:

Main Products of Each Segment


December 18, 1948

Shinagawa Intercity Tower A, 20th Floor, 15-1, Konan 2-chome, Minato-ku, Tokyo 108-6020, JapanTel: +81-3-5783-0601

Osami Maehara, President & Representative Executive Officer

¥17,800 million (as of March 31, 2015)

Consolidated basis: 4,855 Non-consolidated basis: 1,453 (as of March 31, 2015)Employees including temporary employees, etc.:Consolidated basis: 6,354 Non-consolidated basis: 1,897

Revenues (Millions of yen)

FY2011/3 FY2012/3 FY2013/3 FY2014/3 FY2015/3

118,558 115,463 115,645

131,778 135,849

Revenue by Segment (Millions of yen)

FY2015/3

Powertools

135,849

97%

Life-scienceinstruments

3%

131,731

4,118

Income before income taxes (Millions of yen)

FY2011/3 FY2012/3 FY2013/3 FY2014/3 FY2015/3

3,630

6,288 6,331

3,947

6,272

Revenue by Region (Millions of yen)

Japan

30%Asia

9%

Other

6%

Europe

32%

NorthAmerica

23%

8,11812,896

31,820

42,894

40,121FY2015/3

135,849

Production Volume by Region (Thousands of units / month)

Japan

11%Asia

7%

Europe

3%

China

79%

1646

508

71

FY2015/3

641

Segment Main Products

Power Tools

Metalworking power tools, woodworking power tools, cordless power tools, construction power tools, pneumatic tools (nailers, screwdrivers and compressors for nailers), woodworking machines, engine tools, gardening tools, household power tools, dust collectors, laser measuring instruments (line lasers, range finders), accessories (diamond tools and consumable parts)

Life-Science Instruments Ultracentrifuges, refrigerated centrifuges, micro centrifuges and large-scale continuous flow ultracentrifuges

Hitachi Koki Co., Ltd. Headquarters

Rotary Hammer DH52MEY

Cordless High-pressure Washer

AW18DBL

Cordless Circular Saw

C18DBAL

High Capacity Centrifuge CR7N

Figures for the fiscal year ended March 31, 2013 and prior are based on Japanese GAAP, and those for the fiscal year ended March 31, 2014 or later are based on International Financial Reporting Standards (IFRS).


Corporate Data

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Europe

Asia Oceania

Japan

Americas

Overseas Affiliated Companies

As of July 1, 2015

Manufacturing Company

ASIA/OCEANIA 13 sites

Hitachi Koki (Malaysia) Sdn. Bhd. Hitachi Koki (Singapore) Gulf Branch

Hitachi Koki India Private Limited Hitachi Koki Asia Co., Ltd.

Guang Dong Hitachi Koki Co., Ltd. Hitachi Koki (China) Co., Ltd.

Fujian Hitachi Koki Co., Ltd. Hitachi Power Tools (Malaysia) Sdn. Bhd.

Guangzhou Hitachi Koki Co., Ltd. Hitachi Power Tools (Thailand) Co., Ltd.

Hitachi Koki Taiwan Co., Ltd. Hitachi Power Tools Australia Pty. Ltd.

Hitachi Koki (Singapore) Pte. Ltd.

THE AMERICAS 4 sites

Hitachi Koki U.S.A., Ltd. Hitachi Power Tools de Mexico S.A. de C.V.

Hitachi Koki U.S.A., Ltd. Canada Branch Hitachi Koki do Brasil Ltda.

EUROPE 20 sites

Hitachi Koki Europe Ltd. Hitachi Power Tools Hungary Kft.

Hitachi Power Tools (U.K.) Ltd. Hitachi Power Tools Czech s.r.o.

Hitachi Power Tools Belgium N.V./S.A. Hitachi Power Tools Romania S.R.L.

Hitachi Power Tools Europe GmbH Hitachi Power Tools Norway AS

Hitachi Power Tools France S.A.S. Hitachi Power Tools Sweden AB

Hitachi Power Tools Iberica, S.A. Hitachi Power Tools Denmark A/S

Hitachi Power Tools Netherlands B.V. Hitachi Power Tools Finland Oy

Hitachi Power Tools Netherlands B.V. Moscow Branch Hitachi Power Tools RUS L.L.C.

Hitachi Power Tools Oesterreich GmbH Hitachi Fercad Power Tools Italia S.p.A.

Hitachi Power Tools Polska Sp.z.o.o. Carat International B.V.

Domestic and Overseas Network

Domestic Affiliated Companies 3 sites

Hitachi Koki Manufacturing & Service Co., Ltd. Sankyo Diamond Industrial Co., Ltd. Hitachi Koki Sales Co., Ltd.

Domestic Plants and Branches 12 sites

Katsuta Plant Sawa Plant Tokyo Branch Kanto Branch Kansai Branch Chubu Branch Hokuriku Branch Kyushu Branch Hokkaido Branch Tohoku Branch Chugoku Branch Shikoku Branch


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Feature

Hitachi Koki’s products are used not only in Japan but also all around the world. Based on technological expertise accumulated over the years, the Company will further promote product development, while responding to societal needs.

An abundant lineup of power tools that meet diverse needsUsing power tools, with various types depending on application and performance, reduces burden of work to accelerate work and improve accuracy of work. The Company offers a wide range of products, and the lineup of power tools enables high-performance depending on application, which leads to meeting customer needs.

Fastening Grinding Cutting

Drilling Nailing Trimming

Hitachi Koki, responding to societal needs and continuing to evolve

1948 Founded with capital of ¥30 million Produced coal mining tools and power tools (*)1949 Listed on the Tokyo Stock Exchange and Osaka

Securities Exchange

1954 Production begun for Chemical Instruments products (currently Life-Science Instruments)

1963 Production begun for printers (line printers for large-frame computers)

1978 The first overseas sales subsidiary established in Germany

1979 The first overseas manufacturing subsidiary established in Singapore

History of Company and Products

1940’s 1950’s 1960’s 1970’s

* Production begun after transfer of Hitachi power tools and coal picks (coal mining tools), which have a long history beginning with the domestic production of electric drills in 1918, from Hitachi, Ltd. Totsuka Plant.

Drill LU (1948)

Circular Saw DS-10 (1948)

Bench GrinderGBT (1948)

Coal Pick HCA-8 (1948)

The first domestically produced centrifuge 40P (1955)

Disc GrinderPUS-BRH (1957)

Super Home KitKL-11 (1957)

Engine Brush-cutter KB-25 (1965)

NailerNH-65 (1966)

PlanerBUF (1958)

Automatic Planing MachineF-500 (1969)

Impact DrillBUV-DN (1966)

HammerPH-40 (1969)

Enriched the lineup of metalworking tools for factories and shipbuilding

Enriched the lineup of woodworking tools for increase in housing construction

For DIY and gardening

Introduction of Cordless

Enriched the lineup of special tools for buildings and steel construction work


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Strength of Hitachi Koki

Original Ideas and Assured Technological Expertise

Expanding Sales in Key Regions Worldwide Life-science Instruments with the World Highest Level

Power tools made by Hitachi Koki are popular in more than 50 countries worldwide. Amid growing demand for energy-efficient motors, the Company is enhancing its lineup of tools equipped with brushless motors developed by its own technology. Products with these high-efficiency, energy-saving long-life motors help to reduce CO2 emissions. In addition to its commitment to the creation of higher-capacity lithium-ion batteries and battery safety and interchangeability, The Company continues to offer products that contribute to improvement of customer convenience, including promoting expansion of its lineup of products that meet international standards for dust and water resistance.

Hitachi Koki is a company with global operations manufacturing power tools and life-science instruments, and is proud of its track record and reputation for reliability over many years. Hitachi Koki’s power tools fulfill a wide range of needs from professional users to DIY users. With strength in outstanding technological expertise and development with emphasis on “monozukuri” (craftsmanship), Hitachi Koki is focusing on development of products that match user needs.

While accurately determining region-specific economic trends and country risk around the world, the Company will expand the scale of its business by conducting aggressive and timely measures, including developing and deepening new sales channels. Its enhanced after-service network ensures safety after purchase.

Hitachi Koki’s centrifuges with the world highest level of high-speed rotation technology, including ultracentrifuges indispensable for production of influenza vaccines, contribute to medical and pharmaceutical development.

An abundant lineup

Outstanding development capabilities

Enhanced system for sales

and services

Track record and reputation for reliability

over many years

1978 The first overseas sales subsidiary established in Germany

1979 The first overseas manufacturing subsidiary established in Singapore

1980 Overseas sales subsidiary established in the U.S.

1985 Overseas manufacturing subsidiary established in China

1994 Received Promotion Foundation for Electrical Science and Engineering Award (former OHM Technology Award) for the development of quick charge control technology

1997 Received Japan Society for the Promotion of Machine Industry Award for the development of a small-sized centrifuge for particle separation, the highest speed machine of its kind in the world

2002 Printer business transferred to Hitachi, Ltd.2009 Hitachi, Ltd. becomes the parent company of


1970’s 1980’s 1990’s 2000’s, 2010’s

Automatic Planing MachineF-500 (1969)

Impact Wrench EW-22 (1972)

Microprocessor-controlled Impact Drill DV20VA (1982)

Slide Compound Miter SawC8FB (1985)

Automatic Screw Driver WF4AH (1998)

Lithium-ion Battery-operated Impact Driver WH14DL (2005)

AC Brushless Motor Impact Driver WH12VE (2011)

Engine Chain Saw ECV345 (2007)

Brushless + high capacityCordless Circular Saw C14DBL (2014), with 3 times more runtime

iF design Award / Low-vibration Rotary Hammer DH40MR/Y

(2002/2006)

Micro Ultracentrifuge CS150GX (1996) with the world’s highest speed of 150,000 min-1

Large-Scale Continuous Flow Ultracentrifuge for vaccine purification CC40NX (2011)

Cordless Driver Drill DRC-6 (1979)

Cordless Impact Driver WH8DA (1986)

Enriched the lineup of woodworking tools for increase in housing construction Introduction of Cordless Full-scale Launch of Engine Tools

Enriched the lineup of special tools for buildings and steel construction work Improved weight, speed, handling Continue to evolve (brushless motor + lithium-ion battery)

Aluminum Body Housing (high durability, double-

insulation) Rotary Hammer DH40MEY (2014)

AC Brushless Motor Disc Grinder G10VE (2015)


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The mission thatHitachi aspires tofulfill in society

The values crucial tothe Hitachi Group inaccomplishing itsmission

What the HitachiGroup aims tobecome in thefuture

Hitachi delivers innovations that answer society’s challenges. With

our talented team and proven experience in global markets, we

can inspire the world.

Hitachi Founding Spirit:

Harmony, Sincerity, Pioneering Spirit

Contribute to society through the development of superior, original technology and products

Hitachi Group Identity

Corporate PhilosophyMission: The purpose of the existence of the Hitachi Koki Group

Corporate VisionKey Goals: Values to be pursued forachieving our Corporate Philosophy

Conduct Guidelines / Codes of ConductPrinciples of required conducts for allexecutives and employees of theHitachi Koki Group“Basics and Ethics”

Based on the Hitachi Group Identity, which is the Mission, Values and Vision shared by the Hitachi Group as “One Hitachi,” the “KOKI Way” shows the fundamental principles of how all executives and employees of the Hitachi Koki Group should think and act in their day-to-day business activities, through the structure of “Corporate Philosophy,” “Corporate Vision” and “Conduct Guidelines/Codes of Conduct” of the Hitachi Koki Group.

The basic values presented by the “KOKI Way” are universal values which, we believe, are to be shared in every country and region and in all ages.

We relate all our activities to the KOKI Way. When we have doubts or concerns regarding our daily activities or the conducts of those around us, we return to the “KOKI Way,” which is the fundamental principles for both actions and attitudes. At the same time, we reflect once again on its meaning and ensure that such principles are spread, shared and practiced throughout the Company.

Corporate Philosophy Conduct Guidelines/Codes of Conduct and “5 Principles of Action”

Corporate Vision

A C

B

As our Corporate Philosophy of management, the Hitachi Koki Group is committed to contributing to society through the supply of innovative, high performance, high quality and high customer satisfaction products and services which are suited to the users’ needs, and is developing power tools and life science equipment businesses etc. worldwide as a global company.

The “Hitachi Koki Group Conduct Guidelines/Codes of Conduct” show the attitude that every employee of the Hitachi Koki Group should possess and the actions that he or she should take in order to achieve the Group’s philosophy and vision.

The “5 Principles of Action” are an easy-to-understand expression of the Conduct Guidelines and Codes of Conduct, and are grounded in the spirit of “Basics and Ethics.”

Interacting with society and stakeholders with common sense and sincerity at all times is of the highest importance for a “going concern.”

We aspire to be a company where all customers are happy to do business with us, and all of our world-wide employees are proud to be a part of Hitachi Koki.

In addition to thinking and acting from the customers’ standpoint and fully implementing “the operation ABC” (“Do All the things that go without saying, don’t Brush them off as if they don’t matter, and do them Completely”), every employee who works in the Hitachi Koki Group achieves self-improvement through challenging work, and grows together with Hitachi Koki.

Contribute to our society through outstanding technologies, products and services

1. A Member of Society with Common Sense (Compliance)”Employees of the Hitachi Koki Group will be aware that each of us is a member of society, even before we are members of a company, and observe all laws and social rules properly as individuals with social common sense. Employees of the Group will also adopt good manners (for example, greetings and politeness) and will act sincerely and fairly at all times.

2. Respect for Human RightsEmployees of the Hitachi Koki Group will respect the human rights of every individual, and will not discriminate on the basis of gender, age, nationality, race, ethnicity, philosophy, religion, position in society, family status or lineage, illness or disability, etc.

In addition, employees of the Group will not act in any way that harms the dignity of individuals, such as any types of workplace harassment (sexual harassment, abusive behaviors at the hands of superiors etc.), violence, invasion of privacy or the like.

3. Customer SatisfactionThinking and acting from the customers’ standpoint, and earning the trust of the customers, are of the utmost importance.

The Hitachi Koki Group is committed to supplying products and services that fully satisfy our customers, and to conducting all corporate activities with our business partners and members of the supply chain with a high sense of ethics.

4. ChallengeIn today’s rapidly changing business environment, the Hitachi Koki Group will create new value and be growing by taking on new challenges continuously.

We will also strive to create a workplace where each individual employee can work with satisfaction in his or her work.

5. Environment and Safety/SecurityAs a good corporate citizen in global society, the Hitachi Koki Group will continue to strive to achieve harmony with the environment and ensure safety and security.

“Safety and security” includes product safety, human safety, information security and the security of society.

Hitachi Koki, moving forward with you~Together for Vision~

The Hitachi Group Identity articulates the MISSION, VALUES and VISION that are shared by the Hitachi Group worldwide. Originally set by Hitachi founder Namihei Odaira, the Mission has been carefully passed on to generations of employees and stakeholders throughout the Company’s 100-year history. The Values reflect the Hitachi Founding Spirit, which was shaped by the achievements of our Company predecessors as they worked hard to fulfill Hitachi’s Mission. The Vision has been created based on the Mission and Values. It is an expression of what the Hitachi Group aims to become in the future as it advances to its next stage of growth.

Hitachi Group Identity

What is the “KOKI Way”?


CSR in Hi tachi Koki

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Structure of CSR Promotion

The company-wide CSR policies and activities are developed by CSR and Environment Policy Promotion Division (established in October 2014).

In addition to the conventional control, audit, education and enlightenment of the overall environment and promotion of public relation activities, we will globally promote activities such as creation of an ideal workplace, respect of corporate ethics and human rights, promotion of social contribution activities, and disclosure of information and communication with society throughout our business activities, in cooperation with each division and domestic and overseas affiliates. Corporate Liaison Meeting

Executive Committee

CSR and EnvironmentPolicy Promotion Division

Divisions

Domestic af�liated companies

Overseas af�liated companies

Structure of CSR Promotion

President & RepresentativeExecutive Officer of


We will respect the human rights of individual

employees, and manage personnel records strictly with

close attention to protecting personal information and privacy rights. We will absolutely refrain from any sort of workplace

harassment that violates human rights.

We will carry out social contribution

activities, centered on activities to foster personnel who

will lead the reforms of the next era, to realize a vibrant society by making the greatest possible use of our resources. By implementing social contribution activities, we

aim to be a respected and trusted global enterprise

of the 21st century.

We recognize the roles we should play and will carry

out each of them to conduct monozukuri aimed at reducing the

environmental burden of a product throughout its life cycle - from procurement of materials to manufacture, inspection, shipment, distribution, use, and disposal - in

order to realize a sustainable society in harmony with the

environment.

We will place importance on the process

of dialogue with a wide range of stakeholders regarding information

required by society, listen to various opinions and negative information about the Company and Hitachi Koki Group companies, respond to them sincerely on our own initiative,

and promote two-way communication with

society.

We will strive to build good

partnerships with suppliers, and to maintain and improve long-term relationships of mutual

understanding and trust.

We will satisfy customer needs and

specifications. We will not only obey quality, safety and environmental laws and standards, but also set our own voluntary standards when necessary to ensure the

quality of our products and services.

Customers Employees

Local residentsPartners

Shareholders,Investors

Society,Environment

Hitachi Koki Group

Local residents

Employees

Customers

Partners

Shareholders,Investors

Society,Environment

Based on the Corporate Philosophy “Contribute to our society through outstanding technologies, products and services,” Hitachi Koki Group aims to become a global enterprise which shares values with society by integrating management and business strategies with CSR.

Hitachi Koki Group CSR


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Corporate Governance

Corporate Governance

Hitachi Koki transitioned to a Company with Three Committees as of the close of the 93rd Annual General Shareholders’ Meeting held on June 29, 2015, in order to “actualize corporate management with high transparency” and achieve “acceleration of business execution and improvement of management mobi l i ty.” W ith th is transformation, Hitachi Koki will strive to further increase corporate value and strengthen the structure of corporate governance.

The Board of Directors is made up of six Board

Directors, including three Outside Board Directors, makes decisions regarding basic management policy, and monitors and supervises the status of the execution of business, while delegating in principle authority of business execution to Executive Officers.

The Company has nine Executive Officers. They decide the execution of operations of the Company and the Hitachi Koki Group, and execute such operations in accordance with the assignment of duties decided by resolution of the Board of Directors.

Board Directors (six members, including three Outside Board Directors)

Shareholders’ Meeting

Corporate Lawyer

Accounting Auditors

Audit Committee

Secretariat of the Board of Directors

Nominating Committee Compensation Committee

Election/removal

Election/removalDelegation of authority toexecute operationsSupervision of executionof operations

Reporting

Reporting

Auditing

Reporting Questions and Replies

Control

Auditing

Election/removal

Coordination

Coordination

Assistance

Advice,

Consultation

Advice,

Consultation

Internal AuditDepartment

Compliance DepartmentCorporate ExportRegulation DepartmentInternal ControlDepartment, etc.

Risk ManagementCommittee

Affiliated companies, etc.

Guidance

Representative Executive OfficerPresident & Representative Executive Officer

Executive Committee

Executive Officers (nine members)

Control andSupervision

Headquarters and Divisions

Auditing

Direction andInstruction

Aiming to establish a framework for rapid and accurate management decision making and operational performance, as well as enhance the function for supervision of management, Hitachi Koki, as one of the most important management issues, is working to strengthen the structure of corporate governance.


CSR Management 01

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Internal Control Information Security

Business Continuity Plan (BCP)

The Hitachi Koki Group has implemented an internal control system to perform evaluation in accordance with the requirements of Japan’s Financial Instruments and Exchange Act, and files the internal control report to the Financial Services Agency every year. In particular, to ensure the reliability of Group-wide financial reporting, the Group has established a department dedicated to the promotion of internal control, based on decision of policy by the Internal Control Committee, where activities from company-wide control to operation control are documented, in cooperation with related departments.

As for the evaluation, Auditing Office, as a department for monitoring, regularly conducts independent evaluation on the result of assessment test on the status of maintenance and operation of internal control, which is regularly conducted by internal departments and affiliated companies, thereby verifying the effectiveness of internal control on a consolidated basis.

1. Protecting Personal Information

The Company regards protection and management of personal information acquired as obligation under laws and regulations and important responsibilities directly connected to the trust of the Company.

Specifically, we established “Personal Information Protection Policy” and “Regulations concerning Personal Information Management”, and are working on the appropriate management of personal information by conducting various information security measures and continuous education by the related department.2. Preventing Information Leaks

The Company recognizes that avoidance and prevention of information leaks are extremely important for the continuation and development of business, and also a company’s social responsibility.

In particular, we are actively working on information security activities for protection of personal and corporate information, including prevention measures for cyber-attacks, in cooperation with the parent company, Hitachi, Ltd.

The Company has formulated “Conduct Standards for Earthquake and Disaster Prevention” in order to prevent disaster, fire and pollution from occurring and minimize damage in times of large earthquakes.

We always collect information from overseas Group companies and Hitachi, Ltd., the parent company, and take measures such as issuance of warnings within the Hitachi Koki Group as needed.

In the event that natural disasters, conflicts or terrorist attacks occur, we take measures to minimize the impact on business operation in cooperation with parties concerned including overseas Group companies and Hitachi, Ltd.

Security Export Control

For thorough appropriate export control Group-wide, we have established company regulations and specific operational standards in accordance with “Standards for Exporters, etc. to Meet” provided in the Foreign Exchange and Foreign Trade Act, and disseminate the export-related information among the related departments and Corporate Export Regulation Committee, while holding education. Moreover, an export manager is appointed in each department to control compliance with laws and regulations.

Nine Executive Officers of the Company (as of July 1, 2015)

Masato Yoshinari, Executive Officer

Kazuo Tashiro, Executive Officer

Mutsuo Harada, Executive Officer

Yasushi Fukui, Executive Officer

Akira Yoshida,Senior Vice-President &

Executive Officer

Yoichiro Tanaka,Vice-President &Executive Officer

Osami Maehara,President & Representative

Executive Officer

Yoshihito Kitamatsu, Senior Vice-President &

Executive Officer

Chikai Yoshimizu,Vice-President &Executive Officer


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Compliance Reporting System (Whistleblowing System)Compliance Concept

Compliance

Recognizing compliance as one of the management’s top priority, in corporate regulations “Hitachi Koki Corporate Code of Conduct” and “Hitachi Koki Group Codes of Conduct,” we pledged to conduct business activities based on legal compliance and corporate ethics.

We have established the Compliance Division dedicated to conducting promotion, audit, guidance, education and enlightenment of compliance for the Company and affiliated companies, and appointed Chief Compliance Officer (CCO) who is responsible for overall compliance on a global basis, and Compliance Managers (CM) as assistants to the CCO, in order to strengthen the compliance system of the companies within and outside Japan.

Furthermore, as an internal committee, the Company has also established Compliance Management Committee to enhance and comprehensively implement compliance by evaluating the effectiveness of the system of preventing misconducts, etc. as well as making examinations and proposals on the system.

In addition, the Company has instituted the Compliance Reporting System, a whistleblowing system, where reports go directly to the Compliance Division or outside lawyer in the event that illegal or improper activities are discovered. Through this system, the Company is making efforts to prevent illegal or improper activities, to promptly address infractions, and to enhance our ability to self-regulate, thereby conducting corporate activities with a high ethical viewpoint.

The Company set up the “Compliance Reporting System” in April 2005. All employees of the Hitachi Koki Group are informed on the objectives of the system and method of reporting in both Japanese and English.

Aiming at ensuring effectiveness of the system, contact points include an outside lawyer in addition to the internal department (Compliance Division), and reports can be sent by post, email, etc.

In case of affiliated companies, reporting can be made by email, etc. directly to Outside Directors dispatched by the Company.

Reporting Route

Whistle-blower

MailE-mail

Outside lawyerCompliance Division

MailInternal mail

E-mail

Compliance System

President & Representative Executive Officer Hitachi Koki Co., Ltd.

Chief Compliance Officer (COO)Responsible person for overall compliance on a global basis

Compliance Manager (CM)Assistance to Chief Compliance Of�cer

Compliance DivisionPromotion, audit, guidance, education and enlightenment of compliance for the Company and af�liated companies

Compliance Management CommitteeEvaluation of effectiveness of system of preventing misconducts, etc., as well as examinations and proposals on the system

Compliance Management Committee

Aiming to prevent wrongdoing and scandals from occurring, the Company has the Compliance Management Committee in place as an internal committee (established on September 12, 2011).

The Compliance Management Committee is made up of one Chairman, two Vice-Chairmen, nine committee members and three secretaries, and holds a semiannual committee meeting, where they discuss (1) raising awareness of wrongdoing and scandals inside the Company, (2) evaluating the effectiveness of system of preventing misconducts, etc., (3) measures for preventing recurrence of scandals in the event that scandals occur, in order to enhance and ensure compliance.

The Hitachi Koki Group is working to strengthen compliance and steadfastly uphold corporate ethics throughout Group businesses, based on its corporate creed of “Basics and Ethics,” with the goal of being a socially trusted enterprise.


CSR Management 02

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Product Safety Action Guidelines Initiative to Acquire ISO Certification

The Hitachi Koki Group upholds the concepts of “respecting customers” and “ensuring product safety” as part of their basic management policy and shall endeavor to ensure the safety of the products that the Group Companies manufacture and sell based on the action guidelines prescribed below.

1. Compliance to relevant laws and regulations The Hitachi Koki Group shall endeavor to comply with laws and regulations, company rules relating to product safety, and these action guidelines and to ensure the safety of the products that the Group Companies manufacture and sell.

2. Endeavors to ensure product safety The Group shall endeavor to make continuous improvements in product safety by identifying and assessing risks throughout all the stages from product development/design to the procurement of raw materials and parts, manufacture, inspection, shipment, distribution, use and disposal of the product, and by feeding back the results of such efforts to the products, parts, warning labels, instruction manuals, etc. Where an incident involving our product has occurred or is likely to occur, the Group Companies shall, in good faith, respond promptly, while making efforts to thoroughly examine the cause, to prevent the reoccurrence of such an incident and to ensure the safety of the customers.

3. Collection and disclosure of information on product incidents, etc.

The Group shall endeavor to proactively collect information on incidents involving our products, etc. (product defects and malfunctions, product complaints, incidents of similar product, etc.) from their customers and business partners, and to disclose such information in a prompt, timely fashion.

4. Educating employees regarding relevant laws and regulations

The Group, in order to educate the employees regarding the importance of ensuring product safety, shall conduct appropriate education on the laws and regulations, company rules and systems relating to product safety and other necessary matters.

5. MonitoringThe Group shall endeavor to conduct monitoring through internal audits and other means on the compliance with laws and regulations, company rules relating to product safety and these action guidelines and to maintain and improve the system to ensure product safety.

Starting with acquisition of the certification of international standard for quality management system by Katsuta Plant and Sawa Plant in 1995, all Hitachi Koki Group production sites including overseas plants have acquired ISO 9001 certification, and have been working to improve quality management throughout the Group.

For CustomersWith regard to product quality assurance, based on our basic policy of “manufacturing products trusted by customers,” the Company is promoting the activities for improvement of customer satisfaction. We have compiled the Action Guidelines regarding product safety, and strive to assure safety of products that the Hitachi Koki Group manufactures and sells by conducting activities in line with the Action Guidelines.

I am responsible for inspection of parts.The Company performs rigorous tests

of products under various conditions in order to manufacture products which fulfill customer satisfaction. We inspect all parts of the products, utilizing high-precision measurement equipment.

Some large parts require measurement at more than 1,000 points per part.

Though the work requires endless patience, I am working with responsibility, recognizing that the parts which have passed our inspection are embedded in products, which are delivered to customers.

CS Promotion & Quality Assurance Department, CS Promotion & Quality Assurance DivisionHitachi Koki Co., Ltd.

Message from employee

Junpei Saito

Certified sites

Hitachi Koki Co., Ltd.: Katsuta Plant, Sawa PlantSankyo Diamond Industrial Co., Ltd.

Hitachi Koki (Malaysia) Sdn. Bhd.Fujian Hitachi Koki Co., Ltd.Guang Dong Hitachi Koki Co., Ltd.Guangzhou Hitachi Koki Co., Ltd.Hitachi Koki Europe Ltd.Hitachi Koki Taiwan Co., Ltd.

ISO 9001 acquisition status

Japan

Overseas

ISO 9001 Certification granted to Katsuta Plant


Socia l Responsib i l i ty 01

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Quality Assurance Action Guideline Response to Product Accidents

Communication through the Company’s Publications

Basis PolicyCreate products trusted by customers

Mindset(1) Think and act from customer viewpoint(2) Build and assure quality by ourselves (3) Adhere to promises and decisions made by

ourselves

The Company puts “Hitachi Koki Corporate Code of Conduct” and “Hitachi Koki Group Codes of Conduct” into practice as basis of all activities. In particular, the Company has established “Hitachi Koki Quality Assurance Action Guideline” for thorough quality assurance.

Under the spirit of acting from the customer’s viewpoint as the basic idea, the Guideline clarifies the basic policies and mindset that all officers and employees of the Company must adhere to.

The Company conducts corporate activities in accordance with law and regulations, and makes necessary reporting promptly in case of occurrence of accidents relating to the products of the Company.

Keeping in mind the reporting to executives of the Company as well as the reporting to Japan’s Consumer Affairs Agency within ten days after occurrence of the accident in case of human accidents or fire, etc., we have implemented an internal system where the information is conveyed in an appropriate manner without making improvident self-judgment depending on the status of the accident.

Aiming to enhance close communication with customers, we publish “KOKI PRESS” four times a year, and provide interview articles to introduce retailers dealing with the power tools of the Company, information on new products, columns, and other timely topics.

Furthermore, “Koki News” is published once every three months for employees of the overseas Group companies in both Japanese and English to introduce the overseas Group companies, and to provide local topics such as football World Cup, etc., with the aim to foster a sense of unity globally.

Hitachi Koki’s power tools, which are equipped with strong power of motor, possess the manufacturer’s brand strength and provide sense of trust. Users can enjoy good maintenance and after-sales services, and we, retailers, can recommend the products with confidence. In particular, lithium-ion battery used for cordless tools is popular among customers, as it is compatible with conventional products and therefore does not require a check of applicability depending on products, and it has long life.

Mr. Shoshin Hosaka

K.K. HosakayaRepresentative Director

Hosakaya website: http://www.hosakaya.co.jp/

Obtaining information on accidentby employees of the Company

Obtaining information on accidentby employees of affiliated company

Conveying information to salesdepartments of the Company

Conveying information to quality assurancedepartment of affiliated company

Conveying information to quality assurance department of the Company

Making judgment on necessary measures in cooperation with related departments

Reporting to management executives

Filing report to Japan’s Consumer Affairs Agency

Same day

Reporting deadline (within ten days)

Same day

Same day Same day

Within five days after obtainingthe information on accident

Within ten days after obtainingthe information on accident

User’s Voice

Quality Assurance Action Guideline (excerpt of major parts)


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Enhancement of Transparency of the Supply Chain

Response to the Conflict Minerals Issue

Guidelines on Conduct Concerning Procurement

To deliver environmentally sound products to our customers, Hitachi Koki is asking suppliers for understanding and collaboration in actively carrying out environmental protection activities and supplying materials and components having reduced environmental burden.

We are pursuing environmental improvement in stronger cooperation with “green suppliers,” Hitachi Koki’s classification of suppliers who have voluntarily acquired environmental certification. Furthermore, we will try to improve the quality of procured items, aiming to save resources and reduce environmental burden.

For instance, as for cadmium-contact switches that are not currently subject to restriction, we are proactively proceeding with elimination of cadmium usage from a viewpoint of reducing environmental burden.

We are promoting green procurement of office supplies used within the Company, and aiming to achieve green procurement rate (*) of more than 90%, utilizing “E-sourcing” provided by Hitachi, Ltd.

In a budget plan conference held for suppliers every year, we communicate information, requests, etc. on green and CSR procurement. Furthermore, every term, we select six to ten companies inside and outside Japan, and conduct suppliers’ self-audit through CSR questionnaire. Based on the result of the self-audit, onsite audit is also conducted by independent third-party auditors.

* Green procurement rate = procurement amount of environment-friendly products / procurement amount by E-sourcing

In August 2012, the U.S. Securities and Exchange Commission (SEC) adopted and issued a final rule obliging companies with securities registered in the United States that use any conflict minerals in their products to report this to the SEC from 2014 pursuant to Article 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law in July 2010. Conflict minerals include gold, tantalum, tin, and tungsten, the four minerals determined to be financing armed groups that are produced in the Democratic Republic of Congo ("DRC") and adjoining countries (together the "DRC countries"). The goal of this law is to cut off revenues from armed groups that use violence and significantly violate human rights in the conflict-ridden DRC countries.

The Hitachi Koki Group has no obligation to report under the said Act. However, we strive to ensure that we do not, directly or indirectly, abet the human rights violations identified in the DRC countries. To continue our responsible procurement practices, we are working with Group companies, suppliers, and Hitachi, Ltd. to strengthen supply chain transparency and to ensure that the minerals we procure do not finance or benefit armed groups committing human rights violations.

In fiscal 2015, we conducted the conflict minerals survey targeting around 1,000 suppliers and confirmed that conflict minerals were not contained in the products of the Company.

The Company has formulated “Hitachi Koki Guidelines on Conduct Concerning Procurement” that stipulates behavior guidelines for officers and employees of the Company in procurement of materials, products, services and information required for business operation of the Company from outside suppliers. All officers and employees of the Company will adhere to the “Hitachi Koki Corporate Code of Conduct” and “Hitachi Koki Group Codes of Conduct,” as a basis of all activities.

For Business Partners

Budget plan conference for suppliers

Regarding suppliers as equal partners, we are working to strengthen competitiveness from a long-term perspective, and pursuing fairness in business transactions with an open-door policy.



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Information Disclosure in a Timely Manner

General Shareholders’ Meeting

Communication with Shareholders

We disclose information in a timely, accurate and fair manner, and strive to obtain and maintain appropriate appraisal in market.

While our website always provides the latest information such as news releases and timely disclosure information in an easy-to-understand manner, we will continue to make improvement in our website including enhancement of accessibility by accessible page configuration, with the aim of a more user-friendly website.

We held the 93rd Annual General Shareholders’ Meeting on June 29, 2015, and held an exhibition to introduce our products and topics in order to enable better understanding of our business.

The Company holds IR meetings and financial results briefings with domestic and overseas institutional investors, as well as briefing session for individual investors, publishes annual reports, timely posts various information including business results on its website, and disseminates information on new products, etc. by newspapers, magazines, etc.

Last year, briefing session for individual investors was held eight times, with 401 participants in total. It was held not only in Tokyo and Osaka, but also in other locations such as Wakayama prefecture and Fukushima prefecture.

In addition, we are actively conducting IR activities for overseas investors. To our IR activity held in London last year in December, we received overwhelming response from local people.

For Shareholders and InvestorsBy way of disclosing and disseminating business policy, business activities based on such policy, business performance, etc. through our active public relations and investor relation activities in an appropriate and timely manner, we will endeavor to promote communication with shareholders and investors and enhance corporate value.

Briefing session for individual investors

Exhibition of products (left: power tools, right: life-science instruments)

Exhibition of topics of the Company

http://www.hitachi-koki.com/about/ir/index.html

Hitachi Koki Co., Ltd. website“Information for Shareholders and Investors”



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Human Rights Policy

Fostering Human Resources

Creating the Ideal Workplace

The Hitachi Koki Group will support realization of society where human rights are respected, while responding with innovation to social issues faced, and contributing to our society through outstanding technologies, products and services. We will strive to fulfill our responsibilities to respect human rights as a foundation for such endeavors.

In October 2013, we have established Hitachi Koki Human Rights Policy that supplements Hitachi Koki Group Codes of Conduct and the Hitachi Group’s CSR Policy, and have pledged to fulfill responsibility of respecting human rights through implementation of the UN Guiding Principles on Business and Human Rights.

The Company aims to foster human resources, focusing on (1) fostering human resources capable of responding to globalization, (2) enhancing education of the core (technology, skills, and sales) as a manufacturer, and (3) fostering the managerial awareness of heads of departments or divisions and career-track employees (stratified education).

System for training in overseas operations

The Company is systematically fostering persons in charge who are capable of leading global business. Specifically, we transfer the employees, who are expected to be assigned overseas in the future, to overseas companies in principle for one year to provide them with training in operations, aiming to offer motivation and chance to grow.

The Company set “Safety Day” in April, on which the entire Group carries out safety check and 5S check (Sort, Set in order, Shine, Standardize, Sustain). Furthermore, we are enhancing systems to enable the employees to continue working in safety and with peace of mind without worrying and to demonstrate their fullest potential.

Support system for childcare and nursing careThe Company has been expanding and enhancing systems such as short-time working system for childcare and nursing care, and nursing leave for family members to enable employees working with peace of mind when they pass through life stages that require them to render childcare and nursing care.

Promoting utilization of paid leave, shortening working hoursWe help employees to raise their level of motivation by providing a system where employees are granted refreshment leave when they complete certain years of employment (10, 15, 20, 25, 30 and 35 full years). As for working hours, we have set Wednesday and Friday as day of leaving work on time, and introduced “No overtime day”, etc. and are working to promote our business efficiency by enabling employees to work in a well-balanced manner.

Mental health careTo enhance mental health of employees, in Katsuta Plant, regular medical care (once a month) and counseling (once a month) are offered by industrial physicians specialized in mental health and clinical psychologists, respectively. In addition, for employees working at Shinagawa office and sales branches, we have established a health counselling room to provide health counseling (once a month) by industrial physicians, and offer health counseling by e-mail at any time.

Sakura ClubAs part of welfare for employees, the Company has a facility “Sakura Club” at Katsuta Plant which can be used by all employees. The facility is used for social gathering after work and other purposes such as providing original beer and wine with “KOKI” label, thereby contributing to fostering a sense of unity among employees.

With EmployeesAll Hitachi Koki employees continue to pursue self-improvement through challenges to grow with Hitachi Koki.

Hitachi Koki (Singapore) Pte. Ltd. Gulf Branch

I have been taking training in the sales department of Gulf Branch since April 2015. As the branch has relatively small scale of operation, I can experience not only sales but also works of various areas, which makes me feel strongly that my knowledge is improving every day. I am often puzzled by the difference in language, culture and commercial practices, but would like to gain diverse skills and knowledge to utilize them for overseas business in future.

After I gave birth to my second child, I utilized the childcare support program, thinking, from my past experience, that I want to have more time to be with my children in their childhood, to take care of children growing up, and to reduce the burden on my children. When I took the program, I worried about the burden on my colleagues at work due to my shortened work hours, but, thanks to strong support from the colleagues, I could balance childcare and work with peace of mind. I am very appreciative of working in such environment.

Asia, Middle East and Africa Department, Overseas Sales DivisionHitachi Koki Co., Ltd.

Accounting Control and Finance Department, Corporate Management DivisionHitachi Koki Co., Ltd.

Message from employee Message from employee

Jun Naito Ikuko Kurosawa



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Employees brought sweets and toys, and donated them to local disadvantaged children through an NGO.

We are also actively making other efforts to contribute to society, such as purchasing from an NGO paper towels we use daily in the offices, and donate certain percentage of purchase price to a pediatric cancer center.

We provide vocational schools in the City of Perth with the latest power tools free of charge and contribute to creation of employment opportunities and development of skills. In vocational training, our staff members give guidance about the proper use of power tools, and support career starts of the participants.

For the Indian Red Cross Society, we held in-house blood donation drives. Total 32 employees gave blood and received a letter of appreciation from the Indian Red Cross Society.

Cleaning Activity in Local Communities

Spain

Australia

IndiaOverseas Cases

Bamboo Grove Maintenance Volunteer

Monozukuri (craftsmanship) Experience Learning Program

At our plants (Katsuta Plant, Sawa Plant, etc.), cleaning around the plant is carried out as part of global environment beautification activities. We also join a beach clean campaign (Ajigaura beach, etc.) held by the local municipality.

The forest of the City of Hitachinaka brings us a peace of mind and blessings from this precious greenery. However, the maintenance of forest with many hillsides is not easy, and the propagation of Japanese wisteria and bamboo are destroying other kinds of trees that grow there. Every year, we join the activity led by a local NPO to maintain and thin the bamboo grove and contribute to the conservation of greenery.

We provide monozukuri experience learning program to local junior and senior high school students (five times a year). The students experience assembling power tools at the production floor of a plant first-hand. In fiscal 2014, total 22 junior and senior high school students participated in the program.

From senior high school students who joined the program, we received many comments such as “I entered a technical high school to learn monozukuri. In the program, I enjoyed manufacturing and convinced myself that the path I chose is not wrong” and “I understood the difficulties of work. I now want to thank my parents who are raising me.”

For Local CommunitiesThe Hitachi Koki Group is committed to various activities, aiming at contribution to local communities where our offices are located.

By implementing social contribution activities, the Group will aim to be a respected and trusted global enterprise of the 21st century.

Improved path in bamboo grove Senior high school student earnestly machining parts A scene of activity



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Certified sites

Hitachi Koki Co., Ltd.: Headquarters, Katsuta Plant, Sawa Plant, Distribution Department (Yamazaki), Hokkaido / Tohoku / Kanto / Chubu / Hokuriku / Kansai / Chugoku / Shikoku /Kyushu Branches, Hitachi Koki Power Tool Centers (62 sites)

Hitachi Koki Manufacturing & Service Co., Ltd.Hitachi Koki Sales Co., Ltd., Sankyo Diamond Industrial Co., Ltd.

Hitachi Koki Europe Ltd.Hitachi Koki (Malaysia) Sdn. Bhd.Guang Dong Hitachi Koki Co., Ltd., Hitachi Koki Taiwan Co., Ltd.Fujian Hitachi Koki Co., Ltd., Guangzhou Hitachi Koki Co., Ltd.

Environmental Policy

FY2014 Environmental Action Plan: Target and Performance result

Promotion of ISO 14001 Certification

The Hitachi Koki Group established the following environmental policies, and continuously engages in the activities, aiming to promote pro-environmental behavior.

ISO 14001 acquisition status

Performance result and assessment of FY2014 Environmental Action Plan are as follows:Assessment = no achievement, slight achievement, good achievement

Regarding the ISO 14001 Environmental Management System, the Hitachi Koki Group manages it by a single system within Japan, and separately at the respective sites outside Japan. Since we acquired ISO 14001 in 1996 in Japan, we have promoted expanding application and integration of the certification among domestic Group companies, while our overseas plants successfully acquired the certification one after another.

Environmental Policy Initiatives Putting harmony with the environment as one of the high-priority tasks of management, the Company has been engaging in unison

with Group companies and supplier companies in environmental protection activities.

More specifically, we have formulated “Environmental Action Plan” and are working to develop and produce environmentally

sound products.

For more detailed data:

Activity TargetFY2014 Final fiscal year Performance

resultAssessment

Target value Target value Fiscal year

Global Environmental Management

Improvement of Activity Level ● Increase of the Green Point (GPs) in “GREEN21-2015” Activities 576GP 640GP FY2015 598GP

Enhancement of

Environmental Education

● Promote participation in the Hitachi Group’s shared education

courses: participation rate of environmental e-learning98% Continued Continued 98%

Eco-products

Expansion of Environment-

friendly Products

● Expansion of environment-friendly products

• Sales ratio of eco-products (global) 89% 90% FY2015 98%

Environmentally Friendly Factories and Offices

Prevention of

Global Warming

● Reduction of CO2 emissions

• Reduction of (electric power / production) (Domestic manufacturing div.) (based on FY2009 levels) Reduced by 5% Reduced by 5% FY2014 Reduced by 11%

• Reduction of (electric power / production) (Overseas plants) (based on FY2009 levels) Reduced by 5% Reduced by 5% FY2014 Reduced by 35%

• Reduction of (CO2 emissions / sales during product transport) (Japan) (based on FY2006 levels) Reduced by 14.5% Reduced by 15% FY2015 Reduced by 15.6%

Waste Reduction

● Reduction of final disposal ratio of waste (Domestic plants) 0.22% or less 0.2% or less FY2015 0.12%

● Reduction of waste

• Reduction of (Discharge / production) (Domestic plants) (based on FY2010 levels) Reduced by 23% Reduced by 24% FY2015 Reduced by 26%

• Reduction of (Discharge / production) (Overseas plants) (based on FY2009 levels) Reduced by 18% Reduced by 18% FY2014 Reduced by 25%

● Promotion of recycling of batteries

• Increase in amount of waste batteries collected (Japan) (based on FY2009 levels) 110% 110% FY2014 112%

Japan

Overseas

The Hitachi Koki Group promotes pro-environmental behavior, which is a major issue shared by all humankind, in every aspect of corporate activities under the slogan of “Green, Pleasant Lands of the Earth for Future Generations.”

On the basis of the fact that we design, manufacture, sell and service power tools, engine power tools, life-science instruments, diamond tools, etc., we conduct the activities related to environmental maintenance and improvement.

Environmental Policy (excerpt)

http://www.hitachi-koki.com/about/environment/index.html

Hitachi Koki Co., Ltd. website “Environmental Protection Activities”


Environmental Responsibility 01

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Eco-management

Eco-products

EnvironmentalBusiness

StakeholderCollaboration

SupplyChain

ResourceRecycling

Prevention ofGlobal Warming

Eco-minds

“GREEN21-2015” Activities

Economic Aspect (Environmental Accounting)

The Hitachi Group has been using “GREEN 21-2015” to evaluate environmental activities collectively since fiscal 2011 to improve and enhance the level of activities. This “GREEN 21-2015” divides environmental activities into eight categories and evaluates achievement of the targets set in the Environmental Action Plan and activities themselves with 53 evaluation items.

Full points of each category are 100 GPs (Green Points), and five-level rating is used for each item.

The evaluation points achieved in fiscal 2014 were 598 GPs while the target points were 576 GPs. We will continue to make efforts for further improvement in environmental activities, aiming at the target 640 GPs in fiscal 2015.

The Hitachi Koki Group calculates the environmental conservation costs and effects based on “Environmental Accounting Guidelines” of the Ministry of the Environment. Cost effectiveness is understood quantitatively to make effective environmental investment and reduce environmental burden continuously.

Evaluation Criteria (eight categories) and Evaluation Points for FY2014

Environmental Conservation Cost Economic Effects with Environmental Conservation Measures

Power-saving Effects with Environmental Conservation Measures

Category Principal performance indicators

Eco-management Environmental management, environmental accounting, compliance with laws and regulations

Environmental Business Restraint of CO2 emissions of 0.1 billion tons, environmental business strategies

Supply Chain Collection and communication of environment information through the supply chain

Eco-minds Environmental education, cultivation of experts on environment

Eco-products Assessment of products, services, etc.

Prevention of Global Warming

Reduction of CO2 emissions, efforts for saving energy, energy saving in transportation

Resource Recycling Resource circulation, chemical substance management

Stakeholder Collaboration Information disclosure, communication, global citizen activities and conservation of ecosystem

Contents of effectsCost (Millions of yen)

FY2012 FY2013 FY2014

Net income effect (Profit on sales and electric power selling, resulting from separation and recycling of wastes)

85.3 94.6 122.6

Cost reduction effect (Reduction of energy cost resulting from energy saving, reduction of disposal cost resulting from waste reduction)

10.4 5.6 7.5

Total 95.7 100.2 130.1

ItemReduced amount

OverviewFY2012 FY2013 FY2014

Reduction of electric power consumption when manufacturing products (Thousand kWh)

1,234 414 399 Energy-saving by air leakage prevention measure, and use of LEDs for illumination, etc.

Reduction of electric power consumption when using products (Thousand kWh)

128,702 132,488 139,756Reduction of electric power consumption when using products by employing power tools with energy-saving motors

*The table below shows typical power-saving effects.

Environmental ManagementAiming at formulating a systematic environmental management system, and in order to maintain and improve the ongoing

environmental activities, we are continuously working on improvement of the management systems in and outside Japan and

promotion of environmental accounting.

CategoryCost (Millions of yen)

OverviewFY2012 FY2013 FY2014

Office area 152.9 159.2 199.9Costs of maintenance of equipment with low environmental burden, depreciation

Upstream/downstream

15.5 13.7 16.3Recycling of products and packaging, recycling expenses

Management activities

194.6 191.1 197.1Labor costs of environmental management, implementation and maintenance of environmental management system

Research and development

60.2 57.7 59.5R&D for the reduction of environmental burden caused, product design expenses

Social activity 2.0 1.2 1.6Planting, beautification, and other environmental improvement expenses, PR and publicity expenses

Environmental damage

3.7 0.9 0.9Environmental mitigation costs, assessments, etc.

Total 428.9 423.8 475.3 —

Total investment 16.0 203.7 14.3Installation of solar power generation system, and investment in energy-saving equipment and equipment for reduced environmental burden

Cost

2014 Result

598 GPs

2014 Target

576 GPs

2015 Target

640 GPs



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Purchase of Resources and Discharge into the Environment (Material Balance)

Minimization of Final Disposal Rate of Waste

Hitachi Koki Group’s environmental performance result in fiscal 2014 is as follows.

In Japan, we aim to reduce the final disposal rate of waste (final disposal volume/discharge) to 0.2% or less by fiscal 2015.

The final disposal rate was 0.12% in fiscal 2014 and we achieved the goal (0.22% or less) successfully.

We will continuously commit to further reduction to reach the goal.

Total Volume of Wastes Generated within Japan, Final Disposal Rate

Waste ReductionThrough production without wasting resources, we are striving to reduce industrial waste.

We are also promoting reuse and recycling to effectively utilize industrial waste as new resources, and striving to reach the

Hitachi Koki Group’s target of zero-emissions activity (i.e., final disposal rate of 0.2% or less).

Hitachi Koki Group Production Process

1623

—

EnergyElectricity

(TJ)

Fuel oilLPG, LNG

2623817

Japan Outside Japan

7832

WaterSurface water

(km3)

Industrial water85—

Japan Outside Japan

1,323822184

Raw materialsMetal

(t)

PlasticChemical substances

2,442300

702,35416Others

Japan Outside Japan

Purchase o

f Reso

urces

12.346

Atmospheric airCO2 (kt)Chemical substances (VOC) (t)

13.417

Japan Outside Japan

6836

6

WastewaterSewerage system

(km3)

Public waterwaysUnderground in�ltration

7780

Japan Outside Japan

1,362——

WasteDrainage

(t)

RecyclingWaste reduction

2,9172,879

34—4Final disposal

Japan Outside Japan

Amount Discharged as Environm

ental Burden

2010 2011 2012 2013 2014

2.8(7)

3.0(7)

3.3(9) 2.8

(6)2.9(4)

2015

10(kt/year) (%)

1.00.80.60.40.20

8

6

4

2

0

Em

issions

Final disposal rate

0.26 0.24 0.26 0.210.12

0.20

( ): Final disposal volume (t/year)

Reduced volume Recycled volume Final disposal volume

Example of activity

Promotion of resource recycling: producing valuables by separating waste

We separate expanded polystyrene discharged from plants at each site and sell it as

valuables after processing it into a recyclable shape at the dedicated facility in a plant.

So

ld

Collected expanded polystyrene

Crush → heat and melt → cool and solidify by expanded polystyrene volume reduction machine

A block of expanded polystyrene reduced to one-hundredth of its volume (approx. 10kg/block)

Reduce the volume and solidify expanded polystyrene by an expanded polystyrene volume reduction machine to sell it as resin material (valuable).

Katsuta Plant,Hitachinaka, Ibaraki, Japan

When I became in charge of environment, I had difficulty in separating waste. I tried a number of methods from the standpoint of discharging to find how to separate waste properly, and learned that with a few simple changes in labels, we can separate and discharge waste correctly.

My customers are the Company staff members who discharge waste. I will further strengthen environment management while thinking and acting from the standpoint of the Company staff.

Sawa Production Center, Production and Procurement Division Hitachi Koki Co., Ltd.


Kazuhiko Horie



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Environmentally Friendly Factories and OfficesIn order to promote prevention of global warming, waste reduction, water conservation and appropriate control of chemical

substances, we are working on reducing the environmental burden in our factories and offices.

Prevention of Global Warming (Improvement in CO2 emission per unit of production)

Implementation of Solar Power Generation System

By fiscal 2014, we had reduced our CO2 emissions intensity to 70% of fiscal 1990 at plants in Japan, and to 64% of fiscal 2009 at overseas plants. We are striving to improve the efficiency by introducing high efficiency lighting and air-conditioning equipment, and changing and repairing aging pipes, targeting mainly the overseas plants where

production is expanding year by year. Moreover, we are globally expanding Group-wide activities such as “Light Down Campaign” and various environmental events. We will endeavor to further reduce CO2 emissions and improve the index per unit of production with continuous efforts.

Hitachi Koki completed the construction of “Hitachi Koki Solar Power Generation System” at Sawa Plant (Hitachinaka, Ibaraki, Japan) in October 2013 and started the full-scale operation to contribute to society as a measure to increase the self-sufficiency of domestic energy and prevent global warming, aiming to fulfill CSR (corporate social responsibility).

A total of 2,088 solar panels were installed in the area of 7,700 m2, and all the generated electricity is sold to an electric power company according to “Feed-in Tariff Scheme for renewable Energy.” The annual electricity generation for fiscal 2014 is approximately 672,000 kWh which is comparable to the electricity required by approximately 140 ordinary households.

We will promote the use of renewable energy by implementing measures such as installation of solar panels within plants and offices for the future.

CO2 emissions at domestic plants and index per unit of production CO2 emissions at overseas plants and index per unit of production

1990 20102009 2011 2012 2013 2014

30(kt-CO2/year) (%)

100

80

60

40

20

0

20

10

0

CO

2 emissions

Index per unit of production

91

10096

8276 75

70

Headquarters, branches, etc. Hitachi Koki Manufacturing & Service Co., Ltd. Haramachi Manufacturing Center

Katsuta Plant Sawa Plant Shirako Plant Sankyo Diamond Industrial Co., Ltd.

Performance of index per unit of CO2 emissions*Excluding headquarters, branches, etc.

14.2(47)

14.1(46)

14.2(47)

13.8(45)

13.4(44) 12.3

(40)

Values in ( ) are in comparison with FY1990

30.5(100)

20102009 2011 2012 2013

10.6(100)

11.7(110)

13.9(131) 13.2

(124) 12.3(115) 13.1

(124)

2014

20(kt-CO2/year) (%)

100

80

60

40

20

0

15

10

5

0

CO

2 emissions

Index per unit of production

100

9182

7470

64

Ireland India

China (Fujian) Malaysia

China (Guang Dong) China (Guangzhou) Taiwan

Performance of index per unit of CO2 emissions*Excluding India and Ireland for unit of production

Entire view of solar power generation facility (Sawa Plant)

Major improvements (Katsuta Plant)Activities Before the change After the change

Appearance Mercury lamp (310 W) LED light (28 W)

Appearance Fluorescent lamp (25 W) LED light (9 W)

Mercury lam

p typeSecurity lam

p type

Changing to high efficiency lighting equipment (Domestic plants)The Hitachi Koki Group is actively promoting changing to high efficiency lighting equipment as energy conservation activity.

In fiscal 2014, 733 lighting equipment was changed to high efficiency lighting equipment such as LED light, and, with this activity, we achieved total reduced electricity of 34.8 (MWh/year) and total reduced cost of 731.3 (Thousands of yen/year).



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Rotary Hammer DH40MEY

Ultracentrifuges CP100NX/90NX/80NX

To Make a Sustainable Society Come TrueTo make a sustainable society come true, we provide products of less environmental burden and are actively working on activities to

contribute to the local community.

Electricity prices have been increasing every year, and energy saving is one of the important issues of environmental management.

It is also one of the most important issues at Malaysia Plant, and we continue to carry out electricity saving activities every year systematically. In particular, fluorescent lamps in the plant have been replaced with LED lights, air conditioners have been changed to fan-type cooling systems, and drying furnaces have been improved in heat retention.

Going forward, we will continue electricity saving activities, while receiving guidance from Hitachi Koki.

① Reduced electricity consumption during use by 9% with a high efficiency AC brushless motor.(A comparison with our previous model DH40MRY)

② Reduced vibration during use by approximately 15%. (A comparison with our previous model DH40MRY)

③ Realized the highest* demolition performance and fastest* drilling speed in its class, by adopting the high efficiency brushless motor and optimized hammering mechanism.* As of November 2014. Among 40mm class rotary hammers made by domestic power tool

manufacturers, surveyed by Hitachi Koki.

① Compliant with European RoHS regulation, including lead-free substrate.

② Enhanced energy saving function and reduced the stand-by electricity consumption by approximately 50%.

③ Reduced operating sound by more than 2dB(A) with improved sound release.

Hitachi Koki (Malaysia) Sdn. Bhd.


Joswari Bin Mohamed

Examples of Eco-products

A scene from experience learning program at Sawa Plant

A scene from cleaning around Katsuta Plant

Eco-products (Increase in the production ratio of eco-products) Local Community Collaboration

Responding to exhaust emission regulations on enginesWe have developed the low emission “New Pure Fire,” which complies with Japan’s second and third voluntary exhaust emission regulations implemented by Japan Land Engine Manufacturers Association since 2011 and 2014, respectively.

We revised the conventional engine structures, and developed the low emission “New Pure Fire” which ensures the same or higher performance than the conventional models while significantly reducing emission by combining use of catalysts.

This engine is also compliant with U.S. and European emission standards (EPA Phase 3, CARB Tier 3 and EC Stage 2) in addition to Japan’s third voluntary exhaust emission regulation.

For contribution to local communities, we continuously and actively participate in local activities and provide support for education in schools, in addition to cleaning around our plants.

We set up the “Five-year Plan for Environmental Social Action Program” in fiscal 2011 and the entire Group companies are promoting activities.

At Sawa Plant, we welcome local primary as well as junior and senior high school students in their “social studies field trip” and “monozukuri experience learning program.” We explain to the students how our products are made and provide them with opportunities to practical exercise. In fiscal 2014, total 385 students from three primary schools and total 22 students from five junior and senior high schools participated in the social studies field trip and in the monozukuri experience learning program, respectively.

(For details of monozukuri experience learning program, please refer to “Social Responsibility 05” (page 17), “For Local Communities”.)

CP100NX

DH40MEY



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Corporate Profile / CSR Report

Hitachi Koki, contributing to creating new communities

http://www.hitachi-koki.com/

Shinagawa Intercity Tower A, 20th Floor, 15-1, Konan 2-chome, Minato-ku, Tokyo 108-6020, Japan

Tel: +81-3-5783-0601 Fax: +81-3- 5783-0709

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Documents

Hitachi Koki, contributing to creating new communities · Hitachi Koki Co., Ltd. and certain Group companies Publication September 2015 Editorial Policy Hitachi Koki Co., Ltd. (the