Notice of Convocation
The 58th Ordinary General Meeting of Shareholders

The following is an English translation of the Notice of Convocation of the58th Ordinary General Meeting of Shareholders of SECOM CO., LTD. to beheld on June 26, 2019, except for the translation of the INSTRUCTION ON
ONLINE VOTING and the ACCESS MAP FOR THE PLACE OF THE
MEETING in the Notice. The Company provides this translation for yourreference and convenience only and without any warranty as to its accuracy
or otherwise.

[English Translation]
1

Table of Contents
Notice of Convocation of The 58th Ordinary General Meeting of Shareholders ·····
Reference Document Concerning the General Meeting of Shareholders ··············

4
8[Attached Documents]
Business Report ····················································································I.
Outline of the Group’s Business ·····················································
1. The Current Business Development and Results of Operations ···············
2. Issues the Group Has to Cope with ··················································
3. Capital Expenditures ···································································
4. Fund Raising ·············································································
5. Trends in Earnings and Assets of the Group ······································
6. Trends in Earnings and Assets of the Company···································
7. Matters Concerning Principal Subsidiaries ·······································
8. Principal Business of the Group ·····················································
9. Principal Offices of the Group ·······················································
10. Matters Concerning Employees of the Group and the Company ·············
11. Principal Lenders ·······································································
12. Other Important Matters Concerning the Group ································

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II.
1.
2.
3.
4.
5.

Matters Concerning the Company’s Shares and Shareholders ···············
Total Number of Shares to be Issued ···············································
Total Number of Issued Shares ······················································
Number of Shareholders at the End of the Fiscal Year ·························
Number of Shares Constituting a Unit of Shares ·································
Major Shareholders ····································································

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III.
1.
2.
3.
4.

Directors and Audit & Supervisory Board Members ···························
Names and Titles of Directors and Audit & Supervisory Board Members ·Description of the Agreement Limiting Liabilities ································
Remuneration of Directors and Audit & Supervisory Board Members ·····
Policy for Determining the Amount of Remuneration of Directors
and Audit & Supervisory Board Members ········································
Outside Directors and Outside Audit & Supervisory Board
Members ··················································································

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Accounting Auditor ····································································Name of Accounting Auditor ·························································
Remuneration of Accounting Auditor ··············································
Consent for the Amount of Remuneration for Accounting Auditor···········
Non-Audit Duties ········································································

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5.

IV.
1.
2.
3.
4.

[English Translation]
2

39

5.

Policy for Decision for Dismissal or Non-reappointment ·······················

41

V.

System under which the Company’s Business is Ensured to be Properly
Executed ··················································································
Basic Policy Regarding Internal Control System ·································
Outline of Status of Operation of Internal Control System ····················
Result of Evaluation of the Board of Directors ···································

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1.
2.
3.

Consolidated Financial Statements
Consolidated Balance Sheet ···································································
Consolidated Statement of Income ··························································
Consolidated Statement of Changes in Net Assets ········································
Non-Consolidated Financial Statements
Non-Consolidated Balance Sheet ·····························································
Non-Consolidated Statement of Income ····················································
Non-Consolidated Statement of Changes in Net Assets ·································
Auditors’ Reports
Certified Copy of the Accounting Auditor’s Report (Consolidated) ··················
Certified Copy of the Accounting Auditor’s Report (Non-Consolidated) ···········
Certified Copy of the Audit & Supervisory Board’s Report ···························(Note) This Table of Contents is for this abridged English translation only, and not the same asthat in the original Japanese documents.

[English Translation]
3

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Stock Exchange Code: 9735
June 4, 2019

Notice of Convocation of
The 58th Ordinary General Meeting of Shareholders
Dear Shareholders:
You are cordially invited to attend the 58th Ordinary General Meetingof Shareholders of SECOM CO., LTD. (the “Company”).
If you are unable to attend the aforesaid meeting, you can exercise
your voting rights through either of the methods stated below. The
Company respectfully requests you to study the “Reference Document
Concerning the General Meeting of Shareholders” below and exercise yourvoting rights on or before 6:00 p.m. (JST) June 25, 2019 (Tuesday):[In case of exercising voting rights by mail]Please indicate on the Voting Rights Exercise Form enclosed herewith
your approval or disapproval to the proposals on the agenda, andreturn the form to the Company by mail on or before the time limit
stated above.
[In case of exercising voting rights via the Internet]
Please access the website for the exercise of voting rights(https://www.evote.tr.mufg.jp/). Please indicate whether you approveor disapprove the items on the agenda by following the instructions on
the display screen by the time limit stated above.
Yours very truly,
SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo, Japan
By: YASUO NAKAYAMA
President and Representative Director[English Translation]
4

(Note) Please note that shareholders with addresses outside Japan may notthemselves use these voting procedures. For these shareholders please consult
their custodian in Japan as to the exercise of voting rights.

[English Translation]
5

PARTICULARS
1.

Date and Time of the Meeting:
Wednesday, June 26, 2019 at 10:00 a.m.

2.

Place of the Meeting:Bersarle Hanzomon, Sumitomo Fudosan Hanzomon-Ekimae Building 2F,
6-4, Kojimachi 1-chome, Chiyoda-ku, Tokyo

3.

Matters to be dealt with at the Meeting:
Matters to be Reported:
1. Report on the Business Report, the Consolidated Financial
Statements for the 58th Fiscal Year (from April 1, 2018 to March
31, 2019) and the Results on the Audits of Consolidated
Financial Statements by the Accounting Auditor and the Audit &Supervisory Board.
2. Report on the Non-Consolidated Financial Statements for the
58th Fiscal Year (from April 1, 2018 to March 31, 2019).
Matters to be Resolved upon:First Item of Business:
Second Item of Business:
Third Item of Business:

4.

Proposed Distribution of Surplus
Election of Ten (10) Directors
Election of Five (5) Audit &Supervisory Board Members

Matters related to Exercise of Voting Rights:
1) In the event that a shareholder wants to exercise non-uniform
voting, he/she shall notify the Company to make non-uniform
voting and the reason thereof in writing three (3) days prior to thedate of the General Meeting of Shareholders.
2) In the event that a shareholder exercises voting rights both via
return mail (Voting Rights Exercise Form) and the Internet, theCompany will consider the exercise of voting rights via theInternet to be valid.
3) In the event that a shareholder exercises voting rights via theInternet more than once, the Company will consider the last
exercise of voting rights to be valid.

[English Translation]
6

(Internet disclosure)
Following matters are made available on the Company’s website
pursuant to the relevant laws and ordinances, and Article 16 of the
Articles of Incorporation of the Company and are not included in the
Attached Documents.
1) “Notes to Consolidated Financial Statements” in theConsolidated Financial Statements2) “Notes to Non-Consolidated Financial Statements” in
the Non-Consolidated Financial Statements
The Company’s Website: https://www.secom.co.jp/english/ir/(on the “Investor Relations: Stocks and Bonds” section)

The Consolidated Financial Statements and Non-Consolidated
Financial Statements audited by the Accounting Auditor and the
Audit & Supervisory Board consist of each document attached to the
Notice of Convocation of the Ordinary General Meeting of
Shareholders, as well as the Notes to Consolidated Financial
Statements and the Notes to Non-Consolidated Financial Statements
available on the Company’s Website.
(Note)
If you plan to attend the Meeting, please submit the enclosed Voting
Rights Exercise Form to the receptionist at the Meeting.
(Notice)
If there are any amendments to the contents of the Reference
Document Concerning the General Meeting of Shareholders, theBusiness Report, the Consolidated Financial Statements and theNon-Consolidated Financial Statements, the Company will announce
such amendments on the “Investor Relations: Stocks and Bonds”
section of the Company’s website :(https://www.secom.co.jp/english/ir/).

[English Translation]
7

Reference Document Concerning the General Meeting of Shareholders
Proposal and Reference Items
First Item of Business: Proposed Distribution of Surplus
The Company considers the return of profit to shareholders as one of
the important managerial issues, and the Company has determined a dividend
payout ratio on a consolidated basis and the level of internal reserves after
making an overall judgment on the expansion of the Company’s business andtrends of future revenues and profits of the Company on a consolidated basis
while considering the Company’s basic policy that ensures the payment ofcontinual and steady dividends. The Company has made it a basic rule to
distribute a dividend twice a year, as the interim dividend whose record date is
September 30 each year, and the year-end dividend whose record date is March
31 each year. The interim dividend is determined by the Board of Directors andthe year-end dividend is determined by the General Meeting of Shareholders.
Furthermore, the Company will utilize internal reserves for investments
required for increased new customers, research and development andinvestments and the like for strategic businesses so that the Company will exert
its efforts to reinforce the corporate structure and to expand its business.
Based on the aforesaid basic policy for cash dividends and to reward
shareholders’ continued support, it is proposed that the year-end dividend for the
fiscal year under review is YEN 85 per share. A total amount of dividend pershare, together with the interim dividend of YEN 80 per share, will be YEN 165,
an increase of YEN 10 per share from the previous fiscal year in which dividend
was YEN 155 per share.
Matters related to the year-end dividend:(1)
Kind of assets distributed:
Cash(2)Matter related to distribution of cash and total amount:
YEN 85 per share of common stock of the Company
The total amount:
YEN 18,552,129,920(3)Effective date for distribution of surplus:
June 27, 2019[English Translation]
8

Second Item of Business:

Election of Ten (10) Directors

The term of office of all of the ten (10) Directors will expire at theclose of this Meeting. In connection therewith, we would like to ask
shareholders to elect ten (10) Directors.
The candidates are as follows:
No.

Name

Current
Position at theCompany
SupremeAdvisor andDirector
President andRepresentative
Director
SeniorExecutive
Director

1

Re-election

Makoto Iida

2

Re-election

Yasuo Nakayama

3

Re-election

Yasuyuki Yoshida

4

Re-election

Ichiro Ozeki

Executive
Director

5

Re-election

Tatsuro Fuse

Executive
Director

6

Re-election

Tatsuya Izumida

Director

7

Re-election

Tatsushi Kurihara

Director

8

Re-election

Takaharu Hirose

OutsideDirector

Independent
Officer

Outside Director

9

Re-election

Hirobumi Kawano

OutsideDirector

Independent
Officer

Outside Director

10

Re-election

Hajime Watanabe

OutsideDirector

Independent
Officer

Outside Director[English Translation]
9

Candidate
Number1

Makoto Iida

Re-election(Date of birth: April 1, 1933)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Jul 1962
President and Representative Director (Founder)
Feb 1976 Chairman and Representative Director
Jun 1997 Supreme Advisor and Director (currently)
Reasons for Election
Mr. Makoto Iida established the current SECOM group as the founder of the Company,and gives guidance and advice on overall management from the long-term and wide
range of viewpoints. In the light of continuous enhancement of corporate value, wewould like to ask shareholders to elect him as Director.

Candidate
Number2

Yasuo Nakayama*

Number of Sharesof the Company
Owned
4,241,371
sharesRe-election(Date of birth: November 1, 1952)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Jul 2003
Branch Manager, Nagoya Branch, The Bank of Japan
Jul 2005
Director-General, Secretariat of the Policy Board, The Bank of JapanMay 2007 Advisor, SECOM Co., Ltd.
Jun 2007
Executive Director
May 2016 President and Representative Director (currently)
May 2017 Chairman, Tokyo Security Service Association
Reasons for Election
Mr. Yasuo Nakayama has assumed the office of Representative Director of theCompany since May 2016 on the basis of a long term period of career at The Bank ofJapan and engagement as Director in the general affairs division of the Company.
Following the assumption of the office of Representative Director, he has achieved
steady growth for the Company with his strong leadership and management ability. He
also has carried out steadily management renovation from a viewpoint of mid- and longterm targets. In the light of continuous enhancement of corporate value, we would like to
ask shareholders to elect him as Director.

[English Translation]
10

Number of Sharesof the Company
Owned
4,864 shares

Candidate
Number3

Yasuyuki Yoshida*

Re-election(Date of birth: March 28, 1958)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Mar 1980 Joined SECOM Co., Ltd.
Feb 1997 Associate General Manager, Strategic Planning DivisionSep 1998 Director, Toyo Fire and Marine Insurance Co., Ltd. (presently Secom
General Insurance Co., Ltd.)Jun 2002
President and Representative Director, Secom General Insurance Co., Ltd.
Apr 2010 Executive Officer
Jun 2010 Group Companies Supervisor (currently)
Jun 2012
Director
Jun 2016
Executive Director
Jun 2017
Senior Executive Director (currently)

Number of Sharesof the Company
Owned
3,135 shares

Reasons for Election
Mr. Yasuyuki Yoshida served in charge of overall business planning including security
service business, and overall management planning of the group including supervisinggroup companies as Director. He holds a high level of knowledge and experience inoverall management including management control and strategic planning areas basedon affluent management experience at SECOM group. In the light of continuous
enhancement of the corporate value, we would like to ask shareholders to elect him as
Director.
Candidate
Number4

Ichiro Ozeki*

Re-election(Date of birth: March 1, 1961)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Apr 1983 Joined Sumitomo Bank, Ltd. (presently Sumitomo Mitsui Banking
Corporation)
Apr 1992 Joined Tokyo Steel Manufacturing Co., Ltd.
Jan 2001
Advisor, Secom General Insurance Co., Ltd.
Director, Secom General Insurance Co., Ltd.
Jun 2001
Apr 2010 President and Representative Director, Secom General Insurance Co., Ltd.
Apr 2015 Executive Officer, SECOM Co., Ltd.
Jun 2016
Chairman and Director, Secom General Insurance Co., Ltd.
Jun 2016
Director
Jun 2017
Chairman and Representative Director, Secom General Insurance Co.,Ltd.
Jun 2017
Executive Director (currently)
Reasons for Election
Mr. Ichiro Ozeki, in addition to many years leading a Group Company as
Representative Director, following the assumption of office as Director of SECOM
Co., Ltd., has led nationwide sales as head of the sales division and has promoted
stronger and more efficient field operations as head of the operation division. He holds
a high level of knowledge and experience in overall management of the security
service business. In the light of continuous enhancement of the corporate value, wewould like to ask shareholders to elect him as Director.

[English Translation]
11

Number of Sharesof the Company
Owned
300,282 shares

Candidate
Number5

Tatsuro Fuse*

Re-election(Date of birth: September 9, 1957)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Mar 1982 Joined SECOM Co., Ltd.
Mar 2002 Director, Secom Medical System Co., Ltd.
Jun 2009 President and Representative Director, Secom Medical System Co., Ltd.
Apr 2010 Executive Officer
Jun 2013 Director (retired in Jun 2016)
Apr 2016 Chairman and Representative Director, Secom Medical System Co., Ltd.
Jun 2016 Managing Executive Officer
Jun 2017 Chairman and Director, Secom Medical System Co., Ltd. (currently)
Jun 2017 Executive Director (currently)

Number of Sharesof the Company
Owned
3,282 shares<Important Position of Other Organizations Concurrently Assumed>
Chairman and Director, Secom Medical System Co., Ltd.
Reasons for Election
Mr. Tatsuro Fuse has been engaged in medical service business as well as corporate
communication & marketing division as Director of the Company. He holds affluent
management experience at SECOM group and a high level of knowledge andexperience in external business activities such as corporate communication &marketing, and in overall management including medical service business. In the lightof continuous enhancement of the corporate value, we would like to ask shareholders
to elect him as Director.
Candidate
Number6

Tatsuya Izumida*

Re-election(Date of birth: November 3, 1960)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Mar 1986 Joined SECOM Co., Ltd.
Jun 2003
Executive Director, Secom Information System Co., Ltd. (presently
Secom Trust Systems Co., Ltd.)Jul 2009
General Manager, Training Department
May 2010 General Manager, Human Resource Department
Oct 2012 Executive Officer
Jun 2014
President and Representative Director, Secom Trust Systems Co., Ltd.
Dec 2015 Managing Executive Officer
Jun 2016 Director (currently)
Reasons for Election
Mr. Tatsuya Izumida, as Director of the Company, has engaged for many years in the
BPO and ICT business and has served as General Manager of the training department
and head of the human resource division. Thus he possesses an abundance ofexperience and a high level of knowledge in overall operations in the security service
business. In the light of continuous enhancement of the corporate value, we would liketo ask shareholders to elect him as Director.

[English Translation]
12

Number of Sharesof the Company
Owned
1,258 shares

Candidate
Number7

Tatsushi Kurihara*

Re-election(Date of birth: June 5, 1961)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Jul 2008
Branch Manager, Niigata Branch, The Bank of Japan
Jul 2010
Deputy Director-General, Financial System and Bank Examination
Department, The Bank of JapanJun 2014
Director-General and Internal Auditor, Internal Auditors’ Office, The
Bank of JapanMay 2016 Advisor, SECOM Co., Ltd.
Jun 2016
Director (currently)

Number of Sharesof the Company
Owned
558 shares

Reasons for Election
Mr. Tatsushi Kurihara holds affluent experience through a long period at The Bank ofJapan and the general affairs and human resource divisions of the Company serving as
Director. He holds affluent experience in overall administrative business and overallmanagement, and a high level of knowledge. In the light of continuous enhancement of
the corporate value, we would like to ask shareholders to elect him as Director.

Candidate
Number8

Re-election

Takaharu Hirose

Candidate for Outside Director(Date of birth: October 25, 1944)

Candidate for Independent Officer

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Sep 1965 Founded Fuji Vending Co., Ltd., and assumed Representative Director
Apr 1972 Founded Food & Beverage Vending Association, and assumed Chairman
Apr 1987 Founded Japan Automatic Merchandising Association, and assumed
ChairmanApr 2003 Advisor and Director, GAIN Inc. (presently Monitas, Inc.)
May 2008 President and Representative Director, GAIN Inc.
May 2011 Chairman and Representative Director, GAIN Inc. (currently)
Jun 2013 Director, SECOM Co., Ltd. (currently)<Important Position of Other Organizations Concurrently Assumed>
Chairman and Representative Director, Monitas, Inc.
Reasons for Election
Mr. Takaharu Hirose established and managed venture business and made efforts toestablish and operate industry groups so that he contributed to development of businessand industry. He holds affluent experience and a high level of knowledge in IT
enterprises. In the light of continuous enhancement of corporate value, we would liketo ask shareholders to elect him as Outside Director.

[English Translation]
13

Number of Sharesof the Company
Owned
0 sharesCandidate
Number9

Re-election

Hirobumi Kawano

Candidate for Outside Director(Date of birth: January 1, 1946)

Candidate for Independent Officer

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Joined Ministry of International Trade and Industry (MITI) (presently
Jul 1969
Ministry of Economy, Trade and Industry (METI))
Director-General, Petroleum Department, Agency for Natural Resources
Jun 1995
and Energy, MITI
Aug 1996 Deputy Director-General, Machinery Information Industries Bureau, MITI
Jun 1998
Director-General, Basic Industries Bureau, MITI
Sep 1999
Commissioner, Agency for Natural Resources and Energy, MITI
Jul 2002
Retired from Agency for Natural Resources and Energy, METI
Sep 2002
Advisor, The Tokio Marine and Fire Insurance Co., Ltd. (presently Tokio
Marine & Nichido Fire Insurance Co., Ltd.)Jun 2003
Outside Director, Sony Corporation
Aug 2004 Senior Managing Executive Officer, JFE Steel Corporation
Apr 2008 President, Japan Oil, Gas and Metals National Corporation
Feb 2016
Special Advisor, Japan Oil, Gas and Metals National Corporation
Jun 2016
Director, SECOM Co., Ltd. (currently)
Jun 2018
Outside Audit & Supervisory Board Member, San-Ai Oil Co., Ltd.
(currently)

Number of Sharesof the Company
Owned
0 shares<Important Position of Other Organizations Concurrently Assumed>
Outside Audit & Supervisory Board Member, San-Ai Oil Co., Ltd.
Reasons for Election
Mr. Hirobumi Kawano has a career in important positions at the government offices
such as the Ministry of International Trade and Industry (presently Ministry of
Economy, Trade and Industry) and Japan Oil, Gas and Metals National Corporation.
He holds affluent experience accumulated through his career and a high level ofknowledge. In the light of continuous enhancement of the corporate value, we would
like to ask shareholders to elect him as Outside Director.
Candidate
Number10

Re-election

Hajime Watanabe

Candidate for Outside Director(Date of birth: November 18, 1951)

Candidate for Independent Officer

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Mar 1975 Joined Watanabe Pipe Co., Ltd.
Apr 1978 Executive Director, Watanabe Pipe Co., Ltd.
Apr 1983 Senior Executive Director, Watanabe Pipe Co., Ltd.
Jun 1985
Vice President and Representative Director, Watanabe Pipe Co., Ltd.
Nov 1991 President and Representative Director, Watanabe Pipe Co., Ltd.
(currently)
Jun 2016
Director, SECOM Co., Ltd. (currently)<Important Position of Other Organizations Concurrently Assumed>
President and Representative Director, Watanabe Pipe Co., Ltd.
Reasons for Election
Mr. Hajime Watanabe has engaged in management of Watanabe Pipe Co., Ltd. formany years. He holds rich experience accumulated through his career on corporate
management and a high level of knowledge. In the light of continuous enhancement ofcorporate value, we would like to ask shareholders to elect him as Outside Director.

[English Translation]
14

Number of Sharesof the Company
Owned
700 shares

(Notes)
1.
2.
3.

4.

5.

6.

7.

8.

There is no particular interest between the Company and each of the said candidates.
Candidates with * are Executive Officers currently in office.
Based on the nomination policy that the Board of Directors established, thenomination of candidates for Directors are decided after discussion at the Boardof Directors. The Board of Directors decided the candidates for Directors after the
discussion process of the Nomination and Compensation Committee comprising amajority of Outside Directors.
Messrs. Takaharu Hirose, Hirobumi Kawano and Hajime Watanabe are
candidates for Outside Directors. The designation of Messrs. Takaharu Hirose,
Hirobumi Kawano and Hajime Watanabe as Independent Officers has been filedwith Tokyo Stock Exchange, Inc.
On February 16, 2017 Watanabe Pipe Co., Ltd. of which Mr. Hajime Watanabe isRepresentative Director received a cease and desist order and a surcharge
payment order from the Japan Fair Trade Commission for violating the Act
Concerning Prohibition of Private Monopolization and Maintenance of Fair
Trade (Antimonopoly Act) in connection with a construction work related tohorticultural facility placed order by local public body and the like in thedesignated areas of Miyagi prefecture or Fukushima prefecture as construction
sites.
The number of years during which Mr. Takaharu Hirose is in the office ofOutside Director of the Company will have been for six (6) years at the close ofthis General Meeting of Shareholders.
The number of years during which Messrs. Hirobumi Kawano and Hajime
Watanabe are in the office of Outside Director of the Company will have been forthree (3) years at the close of this General Meeting of Shareholders.
Pursuant to Article 427, Paragraph 1 of the Companies Act, the Company hasentered into a liability limit agreement limiting a compensation liability provided
for in Article 423, Paragraph 1 of the Companies Act with each of Messrs.
Takaharu Hirose, Hirobumi Kawano and Hajime Watanabe. In case each of themis re-elected, it is scheduled that the liability limit agreement will continuously be
made.
Furthermore, the limited amount of compensation liability is the minimum liability
limit provided for in Article 425, Paragraph 1 of the Companies Act.

[English Translation]
15

Third Item of Business:

Election of Five (5) Audit & Supervisory Board
Members

The term of office of all of the five (5) Audit & Supervisory Board Members
will expire at the close of this Meeting. Accordingly we would like to ask
shareholders to re-elect four (4) Audit & Supervisory Board Members and toelect one (1) new Audit & Supervisory Board Member.
With respect to this item of business, the Audit & Supervisory Board
has given consent.
The candidates for Audit & Supervisory Board Members are as
follows:
Candidate
Number1

Takayuki Ito

Re-election(Date of birth: January 2, 1954)

Brief History, Position, and Important Position of Other Organizations Concurrently
Assumed , if any
Jul 2002
Branch Manager and General Manager, Corporate Sales Department,
Muromachi Branch, UFJ Bank, Ltd. (presently MUFG Bank, Ltd.)Jun 2005 Advisor, SECOM Co., Ltd.
Jun 2006 Executive Officer
Jun 2007 Director (retired in Jun 2012)
Jul 2010
Vice President and Representative Director, Secom Home Life Co., Ltd.
Sep 2010 President and Representative Director, Secom Home Life Co., Ltd.
Jun 2015 Audit & Supervisory Board Member (currently)
Reasons for Election
Mr. Takayuki Ito has served in key positions at a bank, and for many years as a
Director at the Company primarily in management and control. He has also served as
President and Representative Director of a Group Company. He possesses affluent
experience and a high level of knowledge in financial and legal affairs, acquired
through these positions. The Company expects he will supervise overall management,
and give effective advice from his wide insight. We would like to ask shareholders toelect him as Full-time Audit & Supervisory Board Member.

[English Translation]
16

Number of Sharesof the Company
Owned
1,800 shares

Candidate
Number2

Koji Kato

Re-election(Date of birth: August 19, 1953)

Brief History, Position, and Important Position of Other Organizations Concurrently
Assumed , if any
Mar 1977 Joined SECOM Co., Ltd.
Oct 1990 General Manager, Management and Control Department
May 2000 Audit & Supervisory Board Member, Secom General Insurance Co., Ltd.
Jun 2001 Audit & Supervisory Board Member, Pasco Corporation
Jun 2007 Director, Toyo Tec Co., Ltd.
Jun 2010 Audit & Supervisory Board Member, Toyo Tec Co., Ltd.
Sep 2017 Deputy Head, Corporate Communication & Marketing DivisionJun 2018 Audit & Supervisory Board Member (currently)
Reasons for Election
Mr. Koji Kato has served for fund-raising, M&A deals, IR activities, etc. of theCompany for many years, as well as for management and control duties in the area offinancial and legal affairs of SECOM group companies. He holds affluent experiencein management and a high level of knowledge acquired through these positions. The
Company expects he will supervise overall management, and give effective advice
from his wide insight. We would like to ask shareholders to elect him as Full-time
Audit & Supervisory Board Member.

[English Translation]
17

Number of Sharesof the Company
Owned
5,600 shares

Candidate
Number3

Re-election
Candidate for Outside Audit &Supervisory Board Member

Hideki Kato
(Date of birth: January 5, 1950)

Candidate for Independent Officer

Brief History, Position, and Important Position of Other Organizations Concurrently
Assumed , if any
Apr 1973 Joined the Ministry of FinanceJul 1990
Director, Planning Office, Secretariat, the Fair Trade Commission
Sep 1996 Retired from the Ministry of FinanceApr 1997 Professor, Faculty of Policy Management, Keio University
Apr 1997 Founded Japan Initiative, a policy think tank, (presently a generalincorporated association) and assumed Representative (currently)
Apr 2006 Chairman, the Tokyo Foundation, an incorporated foundation (presently apublic interest incorporated foundation)Oct 2009 Member and Director-General, Government Revitalization Unit, Cabinet
OfficeJun 2012 Audit & Supervisory Board Member, SECOM Co., Ltd. (currently)
Oct 2014 Member of Administrative Council, National University Corporation,
Kyoto University (currently)
Apr 2015 Specially Appointed Professor, Graduate School of Economics, National
University Corporation, Kyoto University (currently)
Jun 2016 Outside Director, SMBC Nikko Securities Inc. (currently)<Important Position of Other Organizations Concurrently Assumed>
Outside Director, SMBC Nikko Securities Inc.
Reasons for Election
Mr. Hideki Kato has served for many years in key positions at the Ministry of Finance,
the Japan Fair Trade Commission, a national university corporation and at various
public interest incorporated associations and foundations. He holds affluent experienceand a high level of knowledge based on the implementation of national policy andnumerous achievements at policy think tanks. The Company expects he will supervise
overall management, and give effective advice from his wide insight. We would like to
ask shareholders to elect him as Outside Audit & Supervisory Board Member.

[English Translation]
18

Number of Sharesof the Company
Owned
0 sharesCandidate
Number4

Re-election
Candidate for Outside Audit &Supervisory Board Member

Makoto Yasuda(Date of birth: November 7, 1937)

Candidate for Independent Officer

Brief History, Position, and Important Position of Other Organizations Concurrently
Assumed , if any
Apr 1960 Joined Yamatake Corporation (presently Azbil Corporation)
Aug 1968 Resigned from Yamatake Corporation
Feb 1969 Joined Private Investment Company for Asia (PICA) S.A.
Feb 1977 Executive Vice President and Director, PICA S.A.
May 1987 President and Representative Director, Elders and Yasuda (presently
Yasuda Makoto & Co., Ltd.) (currently)
Jun 2000 Audit & Supervisory Board Member, Azbil Corporation
May 2001 Director, Li & Fung Ltd.
Jun 2006 Director, Azbil Corporation
Jun 2014 Outside Director, Sanwa Holdings Corporation (currently)
Jun 2015 Audit & Supervisory Board Member, SECOM Co., Ltd. (currently)<Important Position of Other Organizations Concurrently Assumed>
President and Representative Director, Yasuda Makoto & Co., Ltd.
Outside Director, Sanwa Holdings Corporation
Reasons for Election
Mr. Makoto Yasuda, in addition to managing global companies for many years, hasserved as Director and Audit & Supervisory Board Member of numerous companies.
He possesses affluent experience and a high level of knowledge acquired in these
positions. The Company expects he will supervise overall management, and giveeffective advice from his wide insight. We would like to ask shareholders to elect him
as Outside Audit & Supervisory Board Member.

[English Translation]
19

Number of Sharesof the Company
Owned
500 shares

Candidate
Number5

New Candidate
Candidate for Outside Audit &Supervisory Board Member

Setsuo Tanaka(Date of birth: April 29, 1943)

Candidate for Independent Officer

Brief History, Position, and Important Position of Other Organizations Concurrently
Assumed , if any
Apr 1966 Joined National Police Agency
Aug 1991 Chief, Miyagi Prefectural Police
Aug 1993 Director of Traffic Bureau, National Police Agency
Jan 2000
Commissioner General, National Police Agency
Aug 2002 Retired from National Police Agency
Sep 2002 Non-regular Staff, Dai-ichi Mutual Life Insurance Company (presently
Dai-ichi Life Holdings, Inc.)Jun 2006 President, Japan Automobile Federation
Jun 2007 Outside Audit & Supervisory Board Member, NGK Insulators, Ltd.
Jun 2011 Outside Audit & Supervisory Board Member, KONAMICORPORATION (presently KONAMI HOLDINGS COPORATION)
Jun 2013 President & Representative Director, Japan Federation of Authorized
Drivers School Associations
May 2018 President & Representative Director, Public Interest Incorporated
Foundation, Japan Police Scholarship Association (currently)
May 2018 President & Representative Director, Public Interest Incorporated
Foundation, Japan Police Support Association (currently)
Reasons for Election
Mr. Setsuo Tanaka, in addition to serving in key positions at the National Police
Agency for many years, has served as Audit & Supervisory Board Member and Board
Director at various companies and general / public interest incorporated associations.
He possesses affluent experience and a high level of knowledge acquired in these
positions. The Company expects he will supervise overall management, and giveeffective advice from his wide insight. We would like to ask shareholders to elect him
as Outside Audit & Supervisory Board Member.

[English Translation]
20

Number of Sharesof the Company
Owned
0 shares(Note)1.

The Company pays a membership fee (under 10 million YEN) to forums that are held by Japan
Initiative (a general incorporated association), a non-profit independent policy think tank, thepresident of which is Mr. Hideki Kato. In addition, the Company makes a donation (each under
10 million YEN) to the Public Interest Incorporated Foundation, Japan Police Scholarship
Association and to the Public Interest Incorporated Foundation, Japan Police Support Association,
each of which Mr. Tanaka is President & Representative Director. There is no particular interest
between the Company and the other candidates.

2.

Messrs. Hideki Kato, Makoto Yasuda and Setsuo Tanaka are candidates for Outside Audit &Supervisory Board Member. The designation of Messrs. Hideki Kato, Makoto Yasuda and Setsuo
Tanaka as Independent Officers has been filed with Tokyo Stock Exchange, Inc.

3.

Reasons to Expect Candidates for Outside Audit & Supervisory Board Member will
Appropriately Execute their Duties:
Mr. Hideki Kato has no direct experience of corporate management, but in addition to his
experience in finance from his time in office at the Ministry of Finance, Mr. Kato possesses
expertise in finance and accounting from policy presentations made in regard to the public
accounting system, which reviewed public administrative services from the viewpoint of theirbalance sheets, one of the activities of the above think tank. The Company expects that he willappropriately execute his duties as Outside Audit & Supervisory Board Member.
Mr. Setsuo Tanaka has no direct experience of corporate management, but possesses affluent
experience and achievements, having served as Commissioner of the National Police Agency andas Outside Audit & Supervisory Board Member of numerous companies. The Company expects
that he will appropriately exercise his duties as Outside Audit & Supervisory Board Member.

4.

When Mr. Setsuo Tanaka was in office as Outside Audit & Supervisory Board Member at NGK
Insulators, Ltd., the company entered into a plea agreement in September 2015 with the UnitedStates Department of Justice, agreeing to pay a fine in regard to violations of the United States
Anti-Trust Laws in connection with some of its transactions related to ceramic substrates forcatalytic converters. Mr. Setsuo Tanaka spoke regularly from the viewpoint of legal complianceat meetings of the Board of Directors and following this incident, played an active role throughthe activities of the independent committee, in the strengthening of the compliance structure of
the company, including compliance in regard to competition laws. Furthermore, in January 2018,
NGK Insulators Ltd. confirmed instances where delivery tests were not appropriately conducted
as required by customer agreements in regard to insulators and related products shipped by thecompany. Although Mr. Tanaka was not aware of this fact until its discovery, he regularly spokeat meetings of the Board of Directors from the viewpoint of compliance and following thisincident, made proposals requiring investigation of the facts, analysis of the cause, andestablishment of remedial measures to prevent reoccurrence.

5.

Mr. Hideki Kato will have been in office of Outside Audit & Supervisory Board Member forseven (7) years at the close of this General Meeting of Shareholders.
Mr. Makoto Yasuda will have been in office of Outside Audit & Supervisory Board Member for
four (4) years at the close of this General Meeting of Shareholders.

6.

The Company has entered into, with each of Mr. Hideki Kato and Mr. Makoto Yasuda, an
agreement limiting their liabilities as prescribed by Article 423, Paragraph 1 of the Companies
Act, pursuant to the provisions of Article 427, Paragraph 1 of the Companies Act. If they are reelected and assume office as Audit & Supervisory Board Member, the Company is scheduled tocontinue their agreements for limitation of liability with them. If Mr. Setsuo Tanaka is elected
and assumes office as Audit & Supervisory Board Member, the Company is scheduled to enter
into the same agreement as those for Mr. Hideki Kato and Mr. Makoto Yasuda. The maximum
amount of the liabilities under this agreement which they incur is equal to the lowest amount ofliabilities stipulated in Article 425, Paragraph 1 of the Companies Act.

[English Translation]
21

[Attached Documents]

Business Report (Fiscal Year Ended March 31, 2019)
I. Outline of the Group’s Business1. The Current Business Development and Results of Operations

During the fiscal year ended March 31, 2019 (“the current fiscal year”),
Japanese economy has been in a moderate upward trend as shown in corporate
earnings on high level and improvements in employment environment. On theother hand, continual attentions to the effects of uncertainties in overseas
economies related to the international trade issues, the trends of the emerging
economies in Asia, including China, as well as the U.K. exiting the E.U.
(BREXIT), and the fluctuations in the financial and capital markets, have beenrequired.
In this environment, we have been continuously pushing forward with efforts toestablish “Social System Industry” which delivers safety and peace of mind, as
well as makes life more comfortable and convenient, whenever and wherevernecessary for everyone. In May 2017, we formulated the SECOM Group’s
Vision for 2030. Guided by this vision, we have been promoting the “ALLSECOM” concept, which emphasizes cooperation among our various
businesses to strengthen the bond of the group. In addition, we are working torealize the ANSHIN Platform, a service infrastructure designed to provide peaceof mind to people in their everyday lives, as well as to society as a whole. To
create the ANSHIN Platform, we are advancing collaborative initiatives withpartners having the same philosophy. In May 2018, we announced the SECOM
Group Road Map 2022, in which we clarified what we should do to achieve our
Vision for 2030. During the current fiscal year, we have been actively
addressing the two priority issues, technological advances and a declining labor
force, in order to realize the Road Map. Responding to the increasing demand
for security in a connected society arising from technological advances, we havebeen pushing forward initiatives utilizing advanced technologies such as drones
and robots, proactive entry into the field of cyber security, and valueenhancement of our home security service. Regarding the demand for relying on
someone, arising from a declining labor force, we have been strengthening
capabilities for facility management, building management and supply chain
management solutions. Furthermore, we have designated the current and thenext fiscal years as an investment phase to establish infrastructure forsustainable growth. We made investments in human resources such as hiring IT
specialists and individuals with global business skills, promoting workstylereforms, and enhancing various training programs to increase employee
motivation. As for the investments in systems, we upgraded core systems withfunctional advancements, improved operational quality and efficiency, andpromoted R&D on new products and services.

[English Translation]22

As a result, consolidated revenue for the current fiscal year increased by 4.5%
to YEN 1,013.8 billion compared with the previous fiscal year. Consolidated
operating profit decreased by 3.9% to YEN 130.2 billion, mainly attributable tothe effect of the investment targeting creation of a stronger foundation for futuresustainable growth. Consolidated ordinary profit increased by 0.4% to YEN
144.8 billion, mainly due to the recognition of net gains on private equity
investment in the U.S. etc. of YEN 8.3 billion. Consolidated net income
attributable to owners of the parent increased by 5.8% to YEN 92.0 billion.
Revenue exceeded YEN 1 trillion and reached a record-high along with net
income attributable to owners of the parent.
（Millions of Yen）
Revenue

Operating profit

Ordinary profit

Net income
attributable toowners of theparentCurrent fiscal
year (FY2018)

1,013,823

130,213

144,889

92,009Previous fiscal
year (FY2017)

970,624

135,448

144,318

86,993

Pasco Corporation, the principal company in the Geographic Information
Services, released “Pasco Group’s Medium-Term Management Plan 20182022” on May 9, 2018, expressing its aim to become a comprehensive company
in geospatial information industry pursuing the business model that capitalizes
positional information including various related events. Accordingly, thesegment name was changed from Geographic Information Services toGeospatial Information Services from the current fiscal year. Reportablesegments are not reclassified by this change.
By business segment, in the security services segment, we provided customers
chiefly with commercial and residential security services (on-line security
systems), as well as static guard services, armored car services andmerchandises.
For our commercial security services, we have made continuous efforts tomarket high value added on-line security systems, such as those with imaging
technology, access control function and facility control function. In April 2018,
we launched collaborative initiatives with a major distribution group to realize
labor-saving / unmanned management / operation for large-sized facilities, aswell as one-stop service for those of small- and medium-sized. Also, in June
2018, we marketed SECOM Supply Chain Security Select, a service designed tosupport client to obtain a security certification related to supply chain, and in
December 2018, we established a support service to acquire the SGS
certification for physical prevention of malicious food product contamination byforeign material. We strengthened our proposition in regard to facility[English Translation]23

management, building management and supply chain management solutions. As
for the services for large-scale events, we supported to run the events withsafety and peace of mind by providing the latest security systems utilizing
advanced technologies, such as the AI image recognition system and SECOM
Aerostat (overhead venue surveillance). Furthermore, we acquired 80.1% of theoutstanding shares of Secom Tosec Co., Ltd. (formerly Toshiba Security Guard
Corporation), a provider of static guard services mainly for facilities of the
Toshiba Group, in the end of August 2018.
For our residential security services, the demand for services which deliversafety and peace of mind as well as comfort and convenience has been solid. In
this circumstance, we have made continuous efforts to market SECOM Home
Security NEO, a new flexible system suited to modern lifestyles that can belinked with devices on the IoT etc., facilitating expansion of services. We have
expanded optional services which can be connected to SECOM Home Security,
such as SECOM My Doctor Watch, an emergency medical alert and healthmanagement service centered on a wearable wristband tracker, and SECOM
Anshin Home Delivery Box, which enables recipients to receive parcels
securely at any time. In October 2018, we also began to offer a new type of
security service by connecting SECOM Home Security and a communication
robot, which allows seamless provision of safety in our customers’ everyday
life, in response to the growing needs by residential customers for various
services that deliver safety and peace of mind. In addition, we launched
SECOM My AED in December 2018, Japan’s first leased home-use AED(Automated External Defibrillator) combined with on-line service.
Outside Japan, we promoted our “SECOM-style” security services, which has
specialty in emergency response services, especially in economicallydeveloping areas, such as People’s Republic of China and Southeast Asia. In
February 2019, we expanded our presence into Turkey, the 13th overseas
market for our security services, and established SECOM Aktif Guvenlik
Yatirim A.S., a joint venture company with the major Turkish financial group.
As a result, revenue increased by 2.3% to YEN 558.3 billion, mainly due to thebrisk sales of on-line security systems for commercial and residential use, as
well as the increases in revenue in static guard services chiefly owing to thecontribution of Secom Tosec Co., Ltd., a newly consolidated subsidiary, and in
Asahi Security Co., Ltd., a provider of cash collection and delivery services.
Operating profit decreased by 1.3% to YEN 114.1 billion, mainly attributable tothe effect of the investment targeting creation of a stronger foundation for futuresustainable growth.
In the fire protection services segment, we provided a broad range of fire
protection systems such as high-quality fire alarm systems and fire
extinguishing systems along with customers’ needs to a wide variety offacilities such as office buildings, production facilities, tunnels, culturalproperties, ships and residences. In the current fiscal year, two major fire[English Translation]
24

protection companies, Nohmi Bosai Ltd. and Nittan Co., Ltd., promoted various
fire protection systems based on each company’s business infrastructure andproduct development expertise.
Despite revenue increased by 2.7% to YEN 140.2 billion, mainly attributable tothe active marketing efforts, operating profit decreased by 9.6% to YEN 14.1
billion, chiefly owing to the concentration of projects with high cost ratio
compared to the previous fiscal year and the increase in selling, general andadministrative expenses.
In the medical services segment, we provided various medical services such as
our core home medical services, including home nursing services andpharmaceutical dispensing and home delivery services, operation of residences
for seniors, sales of electronic medical report systems, sales of medical
equipment and pharmaceutical products, personal care services, and the leasingof real estate for medical institutions. In the current fiscal year, we started
provision of SECOM Vitalook, a remote medical assistance platform, whichallows doctors and nurses to remotely monitor home care patients’ vital datasuch as electrocardiogram and blood pressure.
Revenue increased by 1.8% to YEN 72.2 billion, mainly due to the increase insales of residences for seniors and medical equipment, despite the decrease inrevenue affected by the drug price revision. Operating profit decreased by 5.5%
to YEN 5.1 billion, chiefly owing to the increase in cost ratio.
In the insurance services segment, we expanded marketing efforts for our
unique non-life insurance offerings, including Security Discount Fire Policy forcommercial facilities that offers discounts on premiums to customers who haveinstalled on-line security systems, recognizing such systems as a risk-mitigating
factor; SECOM Anshin My Home, the comprehensive fire insurance policy forresidences that offers a variety of compensation plans and discount policies;
MEDCOM, an unrestricted cancer treatment policy that offers compensation of
actual cost of medical treatment; and SECOM Anshin My Car, a comprehensive
automobile insurance policy that offers on-site support services provided by our
emergency response personnel in the event of an accident.
Revenue increased by 3.6% to YEN 44.8 billion, mainly due to the firm
increase in sales of MEDCOM, unrestricted cancer treatment policy, and fire
insurance policy provided by Secom General Insurance Co., Ltd. Operating loss
was YEN 0.3 billion, from an operating profit of YEN 1.3 billion in theprevious fiscal year, chiefly owing to the increase in provision of policy reserve
regarding natural disasters, etc.
In the geospatial information services segment, we collected geographic datafrom aerial photography, vehicle/ground surveying systems and satellite images,
and provided the geospatial data services, by integrating, processing, andanalyzing the geographic data, to domestic national and local governmental[English Translation]25

agencies, private sectors, and foreign governmental agencies including
emerging and developing countries. Pasco Corporation, the principal company
in this segment, released “Pasco Group’s Medium-Term Management Plan
2018-2022” in May 2018 and engaged in various measures.
Revenue increased by 1.3% to YEN 51.5 billion, owing to the increase inrevenue in domestic division, despite the decrease in revenue in international
division. Operating profit increased by 31.8% to YEN 2.7 billion, mainly
attributable to the improvement in cost ratio in domestic division and thedecrease in selling, general and administrative expenses.
In the BPO and ICT services segment, our distinctive portfolio includes
business continuity planning (BCP) support, information security services and avariety of cloud-based services centering on the data centers as well as BPO
related services including operation of call center services. In the current fiscal
year, in response to the rising demand for cyber security, we established
Cryptocurrency Wallet Service, which facilitates safe operation with strict
control by holding digital keys entrusted from cryptocurrency exchanges. We
also launched SECOM Anshin Browser-b, a cyber security package service thatoffers entrance and exit protections and insurance against the threats of targetedcyber-attacks. In addition, we introduced SECOM Shift Scheduler, anautomated shift management service, which is expected to contribute to theimprovements in productivity among the restaurant and retail industries.
Revenue increased by 32.1% to YEN 92.1 billion, chiefly owing to thecontribution of TMJ, Inc., a consolidated subsidiary from October 2017, and theincrease in revenue in data center. Operating profit increased by 12.1% to YEN
8.1 billion.
Real estate and other services segment comprises developing and selling
condominiums equipped with advanced security and disaster prevention
systems, real estate leasing, and construction and installation services.
Revenue increased by 1.8% to YEN 54.3 billion, mainly due to the increase inrevenue in construction and installation services. Operating profit was down by
12.2% to YEN 4.4 billion, mainly attributable to the increases in cost ratio andin selling, general and administrative expenses.

[English Translation]
26

Results by Business Segment (58th Fiscal Year – current fiscal year)(Millions of Yen)
OperatingprofitCustomers

Revenue
Intersegment

Security services

558,388

13,512571,901

114,183

Fire protection services

140,257

3,942

144,200

14,131

Medical services

72,276

168

72,4455,129

Insurance services

44,811

3,120

47,931(377)

Geospatial information
services

51,591

385

51,977

2,716

BPO and ICT services

92,12013,023

105,144

8,130

Real estate and otherservices

54,376

1,786

56,163

4,445

1,013,823

35,9401,049,763

148,360-(35,940)(35,940)(18,146)

1,013,823-

1,013,823

130,213

Business segment

Total
Eliminations andcorporate items
Consolidated revenue

Total

With respect to the results by geographical segments, in Japan, revenue
increased by 4.7% to YEN 965.4 billion. Overseas revenue decreased by 0.4%
to YEN 48.3 billion.

[English Translation]27

2. Issues the Group Has to Cope with

While working to realize its Social System Industry vision, operating in anenvironment characterized by drastic change and increasing uncertainty, theGroup has formulated the SECOM Group’s Vision for 2030 which set the year
2030 as a milestone. Under this Vision, the Group is taking various measures torealize the ANSHIN Platform concept. In May 2018, the Group has formulated
SECOM Group Road Map 2022, which further defines our direction going
forward and ensures our growth towards the year 2030.
The ANSHIN Platform is a service platform anchored in the relationship of trustthat SECOM has cultivated with society. Created in collaboration, sharing andexchanging various technologies and knowledge with partners who share
SECOM’s philosophy, this platform is designed to provide peace of mind topeople in their everyday lives, as well as to society as a whole. Through thisANSHIN Platform, we will provide refined and seamless services centered onpeace of mind. For that purpose, we continue promoting "ALL SECOM"(Rallying Group strengths), further enhance cooperation between various
businesses that the Group operates and improve the environment so that each
SECOM employee can make the best use of the Group’s comprehensive
strength. In addition, we seek to establish a society with more safety, peace ofmind, comfort and convenience through provision of comfortable andconvenient services for daily lives with greater value as well as responding tolatent customer needs by using cutting-edge technologies and analyzing Big
Data.
In response to the increasing needs of customers overseas, SECOM willleverage its know-how cultivated in Japan, a front runner in addressing criticalchallenges with global relevance, to offer services on overseas markets that are
customized to reflect local needs and sensibilities.
SECOM will continue striving to keep abreast of, or where possible toanticipate, social change, thereby ensuring its ability to provide enduring peaceof mind. To this end, SECOM remains committed to evolving and improving.
By realizing the ANSHIN Platform concept, SECOM will reinforce
relationships with society, and by solving various social issues, SECOM willcontinue to grow together with society and strive for the improvement ofsustainable corporate value.
Furthermore, based on the business strategies described above, we will deal
with various issues related to ESG (Environment, Social and Governance) in aproper manner, including the realization of effective corporate governance.
We look forward to the support from our shareholders in these and all of ourendeavors.

[English Translation]28

3. Capital Expenditures

Capital expenditures for the current fiscal year totaled YEN 65.8 billion (abreakdown is given below). A major portion was for system investments(including those for security equipment and control stations) etc. in the security
services segment, which totaled to YEN 42.6 billion.
(Millions of Yen)
Businesssegment

AmountSecurity services

42,695Fire protection services

2,173

Medical services

1,759

Insurance services

3,238

Geospatial information services

2,403

BPO and ICT services

8,918

Real estate and other services

4,544
Subtotal

Eliminations and corporate items

65,73385

Total

65,8194. Fund Raising

During the current fiscal year, no funds were raised by the Group in capital
markets through the issuance of corporate bonds or new shares.

[English Translation]29

5. Trends in Earnings and Assets of the Group(Millions of Yen except for net income per share)
58th fiscal year
Fiscal years 55th fiscal year 56th fiscal year 57th fiscal year
(current fiscal year)(4/1/2015–(4/1/2016–(4/1/2017–
Category(4/1/2018–
3/31/2016)
3/31/2017)
3/31/2018)
3/31/2019)
Revenue
881,028
928,098
970,624
1,013,823
Operating profit
128,582
131,050
135,448130,213
Ordinary profit
134,826
147,033
144,318
144,889
Net income
attributable to92,00977,03984,17086,993owners of theparent
Net income per421.56385.64398.58352.97
share (Yen)
Return on Equity
Total assets
Net assets

9.4%
1,568,052
943,1449.8％
1,650,176
1,013,253

9.4％
1,715,123
1,081,213

9.4%
1,765,105
1,125,954(Note)
From the beginning of the current fiscal year, we have applied “Partial Amendments to Accounting Standard for Tax
Effect Accounting” (ASBJ Statement No.28, February 16, 2018). Total assets shown for the 57th fiscal year are after
retroactive application of this Standard.

[English Translation]30

6. Trends in Earnings and Assets of the Company(Millions of Yen except for net income per share)
58th fiscal year
Fiscal years 55th fiscal year 56th fiscal year 57th fiscal year
(current fiscal year)(4/1/2015–(4/1/2016–(4/1/2017–(4/1/2018–
Category
3/31/2016)
3/31/2017)
3/31/2018)
3/31/2019)
Revenue
376,044
382,476
387,881394,181
Operating profit
75,66476,28378,16876,833
Ordinary profit
86,61286,54391,083
88,972
Net income
58,442
63,26067,69274,016
Net income per267.76289.84310.15399.12share (Yen)
Return on Equity
8.8%
9.1%
9.3%
9.6%
Total assets
826,124
850,851
884,045921,472
Net assets
678,355
713,263
748,988785,801(Note)
From the beginning of the current fiscal year, we have applied “Partial Amendments to Accounting Standard for Tax
Effect Accounting” (ASBJ Statement No.28, February 16, 2018). Total assets shown for the 57th fiscal year are after
retroactive application of this Standard.

[English Translation]31

7. Matters Concerning Principal Subsidiaries
Company name

Issued capital(Millions of Yen)

Secom Joshinetsu Co., Ltd.

Asahi Security Co., Ltd.

3,530
(Millions of Yen)

100
Nohmi Bosai Ltd.

(Millions of Yen)

13,302Nittan Co., Ltd.

(Millions of Yen)

2,302
Secom Medical System Co.,Ltd.
Secom General InsuranceCo., Ltd.
Pasco Corporation(Millions of Yen)

100
(Millions of Yen)

16,808(Millions of Yen)

8,758
Secom Trust Systems Co.,Ltd.

(Millions of Yen)

1,468(Millions of Yen)

At Tokyo Corporation

TMJ, Inc.

13,378(Millions of Yen)

100
Secom Home Life Co., Ltd.

(Millions of Yen)

3,700
(US$)
The Westec Security Group,
Inc.

301

[English Translation]
32

Percentage ofownership(Percentage ofvoting rights)
(%)
50.87
(54.44)(%)
100.00(100.00)(%)
50.36(50.71)(%)
100.00(100.00)(%)
100.00(100.00)(%)
97.11(97.82)(%)
69.84(72.20)(%)
100.00(100.00)(%)
50.88(50.88)(%)
100.00(100.00)(%)
99.99(100.00)(%)
100.00(100.00)

Principal business activities

Security and safety services
Cash collection anddelivery services
Comprehensive fire
protection services
Comprehensive fire
protection services
Home medical services andremote image diagnosis
support services
Non-life insurance
Surveying, measuring andgeospatial information systemservices
Information security services
and software development
Data center business
BPO business including
contact center business
Development and sales ofreal estate
Holding company in the U.S.

Company nameSecom Plc

Issued capital

Percentage ofownership(Percentage ofvoting rights)(Thousands of UK
Pounds)44,126(%)
100.00(100.00)

Principal business activities

Security business in the U.K.

(Notes)1. The percentages of ownership (percentages of voting rights) are truncated to two decimal
places.
2. The percentages of ownership (percentages of voting rights) for Secom Joshinetsu Co.,
Ltd. and Nohmi Bosai Ltd. include those owned by the Company’s subsidiaries.

8. Principal Business of the GroupThe Group consists of the Company, 178 consolidated subsidiaries and 16
affiliated companies accounted for under the equity method. The principal
business activities of the Group are as follows: Security Services centering oncontracted security services; Fire Protection Services centering oncomprehensive fire protection services; Medical Services focusing on home
medical services and management of residences for seniors; Insurance Services
consisting mainly of non-life insurance; Geospatial Information Services thatmainly entails the provision of surveying and measuring operations; BPO andICT Services centering on information security services, large-scale antidisaster operations, datacenter and BPO business; and Real Estate and Other
Services centering on development and sales of condominiums and otherservices.
9. Principal Offices of the Group(i) Headquarters of the Company:
5-1, Jingumae 1-chome, Shibuya-ku, Tokyo(ii) Regional Headquarters:
Hokkaido (Sapporo City), Tohoku (Sendai City), West Kanto (Saitama
City), East Kanto (Chiba City), Tokyo (Minato-ku, Tokyo), Metropolitan
Static Guard Service (Shibuya-ku, Tokyo), Metropolitan Armored Car
Service (Shibuya-ku, Tokyo), Kanagawa (Yokohama City), Shizuoka(Shizuoka City), Chubu (Nagoya City), Kinki (Kyoto City), Osaka (Osaka
City), Kansai Static Guard Service (Osaka City), Hyogo (Kobe City),
Chugoku (Hiroshima City), Shikoku (Takamatsu City), Kyushu (Fukuoka
City).
(iii) Domestic Subsidiaries:
Secom Joshinetsu Co., Ltd. (Niigata City), Asahi Security Co., Ltd.
(Minato-ku, Tokyo), Nohmi Bosai Ltd. (Chiyoda-ku, Tokyo), Nittan Co.,
Ltd. (Shibuya-ku, Tokyo), Secom Medical System Co., Ltd. (Shibuya-ku,
Tokyo), Secom General Insurance Co., Ltd. (Chiyoda-ku, Tokyo), Pasco
Corporation (Meguro-ku, Tokyo), Secom Trust Systems Co., Ltd. (Shibuyaku, Tokyo), At Tokyo Corporation (Koto-ku, Tokyo), TMJ, Inc. (Shinjuku-[English Translation]33

ku, Tokyo), Secom Home Life Co., Ltd. (Shibuya-ku, Tokyo), Arai & Co.,
Ltd. (Shibuya-ku, Tokyo).
(iv) Overseas Subsidiaries:
The Westec Security Group, Inc. (Dover, Delaware, USA), Secom Plc(Kenley, Surrey, UK), Secom (China) Co., Ltd. (Beijing, China).
10. Matters Concerning Employees of the Group and the Company(1) Matters Concerning Employees of the Group
Number of employees

Increase from the end of
the previous fiscal year

56,9232,275(2) Matters Concerning Employees of the Company
Number of
employees

Increase from the end of
the previous fiscal year

Average age

Average years of service

15,986
309
42.8
16.3
(Note)The number of employees refers to the number of full-time employees.

11. Principal Lenders(Millions of Yen)

Lenders

Balance

MUFG Bank, Ltd.

13,724

Mizuho Bank, Ltd.

9,258

Sumitomo Mitsui Banking Corp.

5,356

12. Other Important Matters Concerning the Group

There is no matter applicable.

[English Translation]34

II. Matters Concerning the Company’s Shares and Shareholders
1. Total Number of Shares to be Issued:

900,000,000

2. Total Number of Issued Shares:

233,292,219(including 15,031,867 shares of treasury stock held by the Company)

3. Number of Shareholders at the End of the Fiscal Year:
4. Number of Shares Constituting a Unit of Shares:

24,023100 shares

5. Major Shareholders (Top 10)
Name of Shareholders

Number of shares held(Thousands of Shares)

Percentageof ownership(%)

The Master Trust Bank of Japan,
Ltd. (Trust Account)

31,453

14.41

Japan Trustee Services Bank, Ltd.
(Trust Account)

15,606

7.15

JP MORGAN CHASE BANK 380055

9,553

4.37

STATE STREET BANK AND
TRUST COMPANY 505223

5,265

2.41

Makoto Iida

4,241

1.94

STATE STREET BANK WEST
CLIENT-TREATY 505234

4,196

1.92

The Nomura Trust and Banking Co.,
Ltd. (Trust Account 2052088)

4,148

1.90

Secom Science and Technology
Foundation

4,025

1.84

Japan Trustee Services Bank, Ltd.
(Trust Account 5)

3,979

1.82

Trust & Custody Services Bank, Ltd.
3,632
1.66
(Investment Trust Account)(Note)
Although the Company holds treasury stock of 15,031,867 shares, it is not includedin the table above. The percentage of ownership is calculated on the basis of the total
number of shares outstanding excluding treasury stock. The percentage of ownershipis truncated to two decimal places.

[English Translation]
35

III. Directors and Audit & Supervisory Board Members
1.

Names and Titles of Directors and Audit & Supervisory Board Members
Position(As of March 31, 2019)
Field of responsibility andimportant position of otherorganization
concurrently assumed

Name

Director

Makoto Iida

Supreme Advisor

President andRepresentative Director

Yasuo Nakayama

Executive Officer
Chairman of Tokyo Security Service
Association

Yasuyuki Yoshida

Executive Officer (in charge ofplanning administration, strategicplanning office, group companies
supervisor and risk control)

Senior Executive
Director

Executive Director

Ichiro Ozeki

Executive Director

Tatsuro Fuse

Director

Tatsuya Izumida

Director

Tatsushi Kurihara

Director

Takaharu Hirose

Director

Hirobumi Kawano

Director

Hajime Watanabe[English Translation]
36

Executive Officer (head of operation
division and in charge of insurance
business)
Chairman and Representative
Director of Secom General InsuranceCo., Ltd.
Executive Officer (head of corporate
communication & marketing
division)
Chairman and Director of Secom
Medical System Co., Ltd.
Executive Officer (in charge of BPO
and ICT businesses)
Executive Officer (head of generalaffairs division and head of humanresource division)
Chairman and Representative
Director of Monitas, Inc.
Outside Audit & Supervisory Board
Member, San-Ai Oil Co., Ltd.
President and Representative Directorof Watanabe Pipe Co., Ltd.

Position

Field of responsibility and important
position of other organization
concurrently assumed

Name

Audit & Supervisory
Board Member

Takayuki Ito

Full-time Audit & Supervisory Board
MemberAudit & Supervisory
Board Member

Koji Kato

Full-time Audit & Supervisory Board
MemberAudit & Supervisory
Board Member

Hideki Kato

Outside Director of SMBC Nikko
Securities Inc.

Makoto Yasuda

President and Representative Directorof Yasuda Makoto & Co., Ltd.,
Outside Director of Sanwa Holdings
Corp.

Audit & Supervisory
Board Member

Audit & Supervisory
Masao Yokomizo
Board Member(Notes)1. Messrs. Takaharu Hirose, Hirobumi Kawano and Hajime Watanabe are Outside
Directors as stipulated in Article 2, Item 15 of the Companies Act.
2. Messrs. Hideki Kato, Makoto Yasuda and Masao Yokomizo are Outside Audit &Supervisory Board Members as stipulated in Article 2, Item 16 of the Companies
Act.
3. The Audit & Supervisory Board Member, Mr. Takayuki Ito has long-term
experience working at a financial institution and has considerable knowledge offinance and accounting matters.
4. There are no particular interests between the Company and other corporations
employing Outside Director, Messrs. Takaharu Hirose, Hirobumi Kawano andHajime Watanabe.
5. There are no particular interests between the Company and other corporations
employing Outside Audit & Supervisory Board Member, Messrs. Hideki Kato and
Makoto Yasuda.
6. The notice of Outside Directors, Messrs. Takaharu Hirose, Hirobumi Kawano andHajime Watanabe being independent officers was submitted to Tokyo Stock
Exchange, Inc.
7. The notice of Outside Audit & Supervisory Board Members, Messrs. Hideki Kato,
Makoto Yasuda and Masao Yokomizo being independent officers was submitted
to Tokyo Stock Exchange, Inc.
8. Changes in post of Directors and Audit & Supervisory Board Members during thecurrent fiscal year
1) Audit & Supervisory Board Member, Mr. Ryohei Komatsu resigned from Audit& Supervisory Board Member at the close of the 57th Ordinary General Meetingof the Shareholders held on June 26, 2018.
2) Mr. Koji Kato was elected as Audit & Supervisory Board Member at the 57th
Ordinary General Meeting of Shareholders held on June 26, 2018 and assumed theoffice.
3) Mr. Junzo Nakayama vacated the office of Executive Director when he passed
away on October 29, 2018. He was Executive Officer (head of Finance Division)at the time of his passing.

[English Translation]37

〈Reference〉
Executive Officers who are not Directors are as follows:
Title(As of May 1, 2019)

Name

Managing Executive
Officer

Kenichi Furukawa, Masahiro Takeda, Toshiaki Mizuno,
Shokichi Ishimura, Keitaro Arai
Yoichi Sugimoto, Sumiyuki Fukumitsu, Kensuke Shindo,
Yasufumi Kuwahara, Noriyuki Fukuoka, Takeshi Akagi,
Sadahiro Sato, Osamu Ueda, Yoshinori Yamanaka, Seiya
Nagao, Noriyuki Uematsu, Osamu Nagai, Atsushi Komatsu,
Kazuhiro Mitomo, Takehiko Senda, Takashi Nakada,Michiyoshi Morita, Makoto Inaba

Executive Officer(Notes)1. Messrs. Teruhisa Yoshimura and Hideo Morishita resigned from Managing Executive
Officer on May 31, 2018.
2. Messrs. Michiyoshi Morita and Makoto Inaba were appointed to Executive Officer
as of June 1, 2018.

2. Description of the Agreement Limiting Liabilities
The Company has entered into with each of the Outside Directors and eachof the Outside Audit & Supervisory Board Members an agreement limiting
their liabilities as prescribed by Article 423, Paragraph 1 of the Companies
Act, pursuant to the provisions of Article 427, Paragraph 1 of the Companies
Act. The maximum amount of the liabilities under this agreement which eachof the Outside Directors and each of the Outside Audit & Supervisory Board
Members incurs is equal to the lowest amount of liabilities stipulated in
Article 425, Paragraph 1 of the Companies Act.
3. Remuneration of Directors and Audit & Supervisory Board Members
Total amount of
remuneration etc.
(Millions of Yen)

Breakdown of total amount of
remuneration etc.
(Millions of Yen)

No.of
entitled
officers

Basic

Stock
option

327

265

-

46

14

8

45

45

-

-

-

3

Outside Directors

28

28

-

-

-

3

Outside Audit &Supervisory Board
Members

25

25

-

-

-

3

Total

426

365

-

46

14

17

Directors (excluding
Outside Directors)
Audit & Supervisory
Board Members(excluding Outside Audit& Supervisory
Board Members)*Shares with limited transfer.

[English Translation]
38

Bonus Restricted
stock*

4. Policy for Determining the Amount of Remuneration of Directors andAudit & Supervisory Board Members(1) Remuneration of Directors
The remuneration for the directors of the Company consists of pecuniary
remuneration and share-based remuneration (by means of share with limited
transfer). Outside directors receive only pecuniary remuneration.
The pecuniary remuneration of Directors is determined by the consultation of
the Nomination and Compensation Committee, which is authorized by the
Board of Directors meeting, within the limit of the amount of remuneration
resolved at the General Meeting of Shareholders. The share-based
remuneration is determined by the Board of Directors meeting, after
considering the deliberations made by the Nomination and Compensation
Committee with respect, within the limit of the amount of remuneration
resolved at the General Meeting of Shareholders, which is separately set fromthe one of the pecuniary remuneration.
(2) Remuneration of Audit & Supervisory Board Members
The remuneration for Audit & Supervisory Board Members of the Company
consists of pecuniary remuneration. The remuneration of Audit & Supervisory
Board Members is determined by the discussion among Audit & Supervisory
Board Members, the amount of which is commensurate with the duties of
Audit & Supervisory Board Members on an individual basis, within the limitof the amount of remuneration resolved at the General Meeting of
Shareholders.
5. Outside Directors and Outside Audit & Supervisory Board Members

Activities of Outside Directors and Outside Audit & Supervisory Board
Members during the current fiscal year

Category

OutsideDirector

Name

Takaharu
HiroseAttendanceof theMeetings ofthe Board of
Directors

12(out of 12)[English Translation]
39

Attendance ofthe Meetingsof the Audit &Supervisory
Board

Main Activities-

He offered advice and suggestions
at the meetings of the Board of
Directors by making use of his
experience and insight gained
through the foundation and the
management of many enterprises
and organizations. He also asked
questions and stated opinions inorder to clarify unclear issues.

Category

Name

Attendance of the
Attendance ofMeetings of thethe Meetings of
Audit &
the Board ofSupervisory
Directors
Board

OutsideDirector

Hirobumi
Kawano12(out of 12)-

OutsideDirector

HajimeWatanabe

12(out of 12)-

OutsideAudit &
Supervisory
Board
Member

Hideki Kato

12
(out of 12)

13(out of 13)

OutsideAudit &
Supervisory
Board
MemberMakotoYasuda12(out of 12)

13(out of 13)

OutsideAudit &
Supervisory
Board
Member

Masao
Yokomizo

12(out of 12)

13(out of 13)[English Translation]
40

Main Activities

He offered advice and suggestions
at the meetings of the Board of
Directors by making use of his
experience and insight gained
through the important positions ingovernment. He also asked
questions and stated opinions inorder to clarify unclear issues.
He offered advice and suggestions
at the meetings of the Board of
Directors by making use of his
experience and insight gained
through corporate management for
many years as a corporate
executive. He also asked questions
and stated opinions in order toclarify unclear issues.
He offered advice and suggestions
at the meetings of the Board of
Directors by making use of his
experience in the execution ofnational policies and insight gained
through many accomplishments at apolicy think tank. He also asked
questions and stated opinions inorder to clarify unclear issues.
He offered advice and suggestions
at the meetings of the Board of
Directors by making use of his
experience and insight gained
through serving as a management of
global enterprise. He also asked
questions and stated opinions inorder to clarify unclear issues.
He offered advice and suggestions
at the meetings of the Board of
Directors by making use of his
experience and insight gained
through the important positions ingovernment. He also asked
questions and stated opinions inorder to clarify unclear issues.

IV. Accounting Auditor
1. Name of Accounting Auditor

KPMG AZSA LLC
2. Remuneration of Accounting Auditor
Previous Fiscal Year
Category(Millions of Yen)
Current Fiscal Year

Audit certificationwork

Non-audit work

Audit certificationwork

Non-audit work

Company

225

32

211

28

Consolidated
Subsidiaries

390

27

381

42

Total

616

60

592

71

(Notes)1. Based on the audit contract between the Company and the Accounting Auditor, theremuneration paid to the auditor is not distinguished between that which relates tothe audits under the Companies Act and that which relates to the audits under
Financial Instruments and Exchange Act as they cannot be distinguished. Therefore,
the amount given in the Company shown above is the combined total of theseamounts.
2. Of the major subsidiaries of the Company, the Westec Security Group Inc. is audited
by WEAVER AND TIDWELL LLP and Secom Plc by KPMG LLP.

3. Consent for the Amount of Remunerations for Accounting Auditor
Audit & Supervisory Board consents under Article 399, Paragraph 1 of theCompanies Act for the amount of remunerations for Accounting Auditors uponverifying the basis for calculation of remunerations of Accounting Auditors,
including contents of audit plan prepared by the Accounting Auditors, the statusof implementation of accounting audits, etc.
4. Non-Audit Duties
The Company pays consideration to the Accounting Auditor for services as
non-audit duties, including work for financial due diligence.
5. Policy for Decision for Dismissal or Non-reappointment
Whenever there occurs any material event which could be a substantial hazard
to the performance of audit duties of the Company, such as a case when it isdeemed that the Accounting Auditor has come to fall within the purview of
Article 340, Paragraph 1 of the Companies Act or the Accounting Auditor or thefirm of the Accounting Auditor is subjected to the disposition of suspension ofbusiness by the supervisory authorities, the Audit & Supervisory Board willhold Meeting of Audit & Supervisory Board Members, and, when all Audit &Supervisory Board Members have consented thereto, the Audit & Supervisory
Board Member will take action for the dismissal of the subject Accounting
Auditor or the subject firm of the Accounting Auditor. In such case, theAudit & Supervisory Board will make decision on appointment of a[English Translation]
41

temporary Accounting Auditor or a substitute Accounting Auditor and willsubmit a proposal of the appointment of a substitute Accounting Auditor to thegeneral meeting of shareholders convened for the first time after such decision.
The Audit & Supervisory Board Member selected by the Audit & Supervisory
Board will also report the reasons for the dismissal at the general meeting ofshareholders.
Aside from the above, when there exists any situations from the view point ofexecution of duties and audit system, etc. where it is acknowledged that the
Accounting Auditor is not fit to act as Accounting Auditor, the Audit &Supervisory Board will make decision on non-reappointment of the subject
Accounting Auditor and appointment of a substitute Accounting Auditor, with amajority approval, and will submit a proposal to the general meeting ofshareholders.
V. System under which the Company’s Business is Ensured to be Properly
Executed
1. Basic Policy Regarding Internal Control System

Outline of the “system under which the execution of duties by Directors is
ensured to comply with laws and regulations and the Articles of Incorporation,and the system under which the Company’s business and the group ofenterprises consisting of the Company and subsidiaries is ensured to properly
execute its business” (so-called the basic policy regarding the internal control
system) of the Company, which the Board of Directors’ Meeting resolved, is asfollows. (The latest revision was made on April 4, 2019.)(1)

GeneralThis resolution manifests the basic policy regarding the internal control
system of the Company to be specifically established by the President andRepresentative Director based on Article 362, Paragraph 5 of theCompanies Act.
The internal control system based on this resolution shall be establishedurgently by Executive Officers in charge, and shall be constantly reviewed
and improved.

(2)

System under which the execution of duties by Directors and employees is
ensured to comply with laws and regulations and the Articles ofIncorporation
Directors and employees are required to act in accordance with the
SECOM Group Code of Employee Conduct, which sets behavioral
standards for the execution of duties, including compliance with laws andregulations, and the Article of Incorporation. The SECOM Group Code of
Employee Conduct is based on the philosophy of SECOM, which we havefollowed since the establishment of the business. These ethical guidelines
prescribe ideals covering the official and private affairs of all executives
and employees and action standards (including the blocking relationships
with anti-social forces) to be followed in the execution of specific daily
duties. As such, these guidelines provide the basis of all actions. The[English Translation]
42

compliance management system is as follows:(i) From the start, compliance with laws and regulations and the Articles
of Incorporation has been an indispensable requirement of our business,
and we have always sought to operate in strict adherence to this spirit.
Therefore, compliance is a part of the Company’s daily routines, whichshould not require a system in which a specific section or manager is
responsible for implementation. Each and every employee is at thefront line of promoting the code of conduct, including legal
compliance. The implementation of guidelines is carried out by the line
managers of the organization. Further control is provided by the
Executive Officers in charge of departments under their control, with
the President and Representative Director providing companywide
control.
(ii) The Executive Officers in charge of each area are responsible forhaving thorough knowledge particularly of regulations related to theirduties and the relationships of such regulations with their own
operations. They are responsible for proposing responses to any
revisions of laws to the President and Representative Director. The
Legal Affairs Department and other relevant departments and sections
support them, providing cross-organization coordination.
(iii) Following the orders of the President and Representative Director, theAudit and Compliance Department provides cross-organizational
inspection in a timely manner over the execution of duties, indicating
how to improve morale through the observance of laws and regulations
and the Company’s rules and at the same time pointing out matters thatneed correction. The Audit and Compliance Department will promptly
report the findings of the inspection to the President and Representative
Director.
(iv) When executives and employees of the Company become aware ofunethical actions, they have the obligation to report such actions to theproper superior without hesitation. A “Hot Helpline” is established tofacilitate direct contact with the Audit and Compliance Department if
corrective actions are not taken even after reporting to superiors or it isdifficult to report. Pursuant to the “Basic Policy of the SECOM Group
for Compliance,” the Company will keep the reported mattersconfidential, and promptly take necessary investigation and appropriate
measures. The reporter will suffer no disadvantage on the grounds ofsuch report.
(v) The Company establishes a standing Organizational Culture
Committee, chaired by the President and Representative Director. The
Organizational Culture Committee examines important organizational
culture-related issues (including compliance-related matters), which are
the cornerstone of developing and maintaining the corporate
organization, and determines important official commendations andpunishments.
(vi) Revisions of the SECOM Group Code of Employee Conduct and/or[English Translation]
43

critical compliance-related matters are undertaken after discussion with
the Organizational Culture Committee and subject to the approval of
the Board of Directors after obtaining the opinions of the Audit &Supervisory Board Members.
(vii) Basic plans and policies concerning internal controls related tofinancial reporting are determined and evaluated in accordance with thestandards of the Business Accounting Council.
(3)

System under which information regarding execution of business byDirectors shall be maintained and controlled
Information regarding the execution of duties of Directors (minutes ofthe Meetings of the Board of Directors and decision-making
documents), etc. shall be properly maintained, administered (including
destruction) pursuant to the rules of the Company, which will beamended upon reviewing the operating conditions if necessary.

(4)

System regarding control of risk of loss and other system(i) The Company’s approach to risk management is embedded in dayto-day business activities, with acknowledgement that risk
management itself is the Company’s business. Executive Officers incharge, under the direction of the President and Representative
Director, analyze and assess business risk and fraud risk in theoperational areas for which they are responsible, and revise
established rules and manuals as conditions change. Rules andmanuals are based on risk analysis and assessment, and stipulate
preventive measures, prompt and appropriate communication andemergency preparedness when incidents occur, daily risk
monitoring and other systems.
(ii) The Executive Officer in charge shall report to the President andRepresentative Director and the Audit & Supervisory Board on the
results of risk analysis and assessment.
(iii) In order to grasp company wide risks and consider necessary
measures, a Risk Committee, which is chaired by the Director
responsible for risk management, shall be convened and report asnecessary to the President and Representative Director.
(iv) Any important changes of the Company’s risk control system shallbe subject to the approval of the Board of Directors after obtaining
the opinions of the Audit & Supervisory Board Members.

[English Translation]
44

The risks at times of large scale calamities and at ordinary times are as
follows.
Risk Category
Large scalecalamity(1) Large scalecalamity risk

Earthquake, wind, flood, volcanic
disasters, radiation leakage, etc.

(2) Compliance risk

Ordinary times(3) System risk

(4) Service providing risk

(5) Administrative
work andaccounting risk

Noncompliance with “Constitution of
SECOM’s Business and Operation,”“SECOM Group Code of Employee
Conduct,” other internal rules andguidelines, etc., risk accompanied byestablishmentorchangesinregulations (in the area of tax system,
medical system, etc.), breach of law,etc.
Information system shut down,
electronic data extinguishment, large
scale blackout, wide area circuit
disturbance, ICT (information andcommunication technology) relatedrisk, etc.
Risk incurred when providing services(Accidents related to security, fire
alarm or equipment maintenancebusinesses, etc.)
Input error or input omission inadministrative or account processing,estimation error for allowance, etc.
Offence from outsiders (groundlessrumor, calumniation, theft, terror,etc.), risk related to M&A, risk related
to new system development, other risk
related to business infrastructure (fireontheCompany’s
premises,pandemic influenza, disease epidemic,etc.), etc.

(6) Others(5)

ExampleSystem by which efficient execution of duties of Directors shall beensured(i) All Directors shall carry out the operation and execution of business on
the basis of the “Constitution of SECOM’s Business and Operation” sothat they may share the ideas essential to the execution of the duties
such as decision making for management by the Board of Directors
and decision making for the execution of duties by the Directors.
(ii) On the basis of the preceding item, the Company, aiming to implement
the execution of duties efficiently, introduces the system of Executive
Officers so that decision making and the execution of business shall befurther facilitated.

[English Translation]
45

(iii) The Company develops the IT system for dissemination of notices,
etc., and decision making by managerial decision requests, andmaintains the system for swiftly enabling full introduction andimplementation.
(iv) The Company will share the medium and long-term business vision,and for the purpose of the accomplishment thereof, the Board of
Directors will design an annual business plan and deliberate theprogress of the plan.
(6)

System under which the group of enterprises consisting of the Company
and subsidiaries is ensured to properly execute its business(6-1) System under which the execution of duties by Directors, etc. andemployees of subsidiaries is ensured to comply with laws and regulations
and the Articles of Incorporation(i) Abiding by the “Constitution of SECOM’s Business and Operation,”each of the subsidiaries shares the SECOM Group Code of Employee
Conduct, which applies to all executives and employees. United bythese guidelines, the executives and employees work to accomplish thecorporate goals in an appropriate manner.
(ii) Each of the subsidiaries carries out IT controls in conformance withthe “Basic Policy of the SECOM Group for Information Security.” The
Company’s IT Executive Officers conduct timely inspections covering
the IT management of major subsidiaries.
(iii) The “SECOM Group Management Committee,” which is chaired by
the Company’s President and Representative Director and whose
members are composed of the presidents of major subsidiaries andother parties appointed by the chairperson, works to ensure thatappropriate operations are carried out. It accomplishes this goal by
conducting discussions of issues related to the Group’s internal
controls in an effort to share Group information and operating
philosophy. Where necessary, the President and Representative
Director reports the results to the Board of Directors and the Audit &Supervisory Board.
(iv) The President and Representative Director of the Company issues
orders to the internal audit departments (Audit and ComplianceDepartment and Group Governance Department) to inspectsubsidiaries, if necessary. The subsidiaries accept the inspection by theCompany, and at the same time promote the understanding andimprovement of compliance-related issues by exchanging information
with the Company. Furthermore, the Company establishes the whistleblowing system “Group Head Office Helpline” which enables
executives and employees of subsidiaries to directly report to theCompany’s Group Governance Department, whenever they becomeaware of any non-compliance. Pursuant to the “Basic Policy of the
SECOM Group for Compliance,” the Company will keep the reported
matters confidential, and promptly take necessary investigation andappropriate measures. The reporter will suffer no disadvantage on the[English Translation]46

grounds of such report.
(v) The Audit & Supervisory Board Members of the Company visit
major subsidiaries and conduct audits regarding internal controls.
(vi) The Company establishes a liaison meeting with Group Audit &Supervisory Board Members after discussion with its Audit &Supervisory Board in an attempt to share information.
(6-2) System under which the matters related to the execution of duties byDirectors, etc., of subsidiaries are reported to the Company
In order to enhance Group synergy leading to the achievement of thebusiness vision by the entire SECOM Group, the Company establishes andimplements the “Basic Rules for SECOM Group Corporate Management,”
which clarify the guidelines for the reporting of the important items, theitems to be coordinated in advance with the Company and the items to beapproved by the Company.
(6-3) Rules and other systems for controlling risks of loss of subsidiaries
Pursuant to the “Meaning of the Risk Control and Risk Control Basic
Policy for SECOM and SECOM Group,” the subsidiaries develop risk
control systems. Furthermore, upon the occurrence of important events,
the subsidiaries will take appropriate measures under the Company’scontrol.
(6-4) System which ensures that Directors, etc., of the subsidiaries execute theirduties efficiently(i) All Directors of the subsidiaries will efficiently carry out the operationand execution of business on the basis of the “Constitution of
SECOM’s Business and Operation.”(ii) The Company and the subsidiaries will formulate the business plans forthe next year based on the business vision by the entire SECOM Group,and confirm the progress of the plans.
(7)

Matters related to employees to assist duties of Audit & Supervisory
Board Members when Audit & Supervisory Board Members requests to
do so(i) The Company establishes the system to assist audit duties, by
establishing the Office of Audit & Supervisory Board manned by atleast two employees who are fully familiarized with the exclusive
duties and internal situations.
(ii) The assistants for the Audit & Supervisory Board Members may
conduct investigations necessary for the audit by the Audit &Supervisory Board Members, following the instructions of the Audit &Supervisory Board Members.

[English Translation]
47

(8)

Matters related to the independence of the employees in item (7) from
Directors and ensuring the effectiveness of the instructions of the Audit &Supervisory Board Members
Transfer and evaluation of the assistants for the Audit & Supervisory
Board Members shall be subject to the approval of the Audit &Supervisory Board. The assistants who received necessary instruction on
audit duties by Audit & Supervisory Board Members shall not be subject
to any instruction or order from Directors and Executive Officers andemployees with respect to the subject audit duties, nor be obligated toreport to them.

(9)

The following systems and other systems under which any report is madeto Audit & Supervisory Board Members(9-1) System under which Directors and Accounting Advisors and employees
make any reports to the Audit & Supervisory Board Members(i) Upon discussion with the Audit & Supervisory Board, the following
matters shall be considered as the matters to be reported by Directors to
the Audit & Supervisory Board Members.
(1) matters resolved by the Organization Culture Committee andother committees;(2) matters likely to be materially harming the Company;(3) important matters relating to monthly business conditions;(4) important matters relating to internal audit and risk management;(5) material violation of laws and regulations or the Articles ofIncorporation; and(6) important matters from viewpoint of compliance.
(ii) Notwithstanding (i) above, the Audit & Supervisory Board Members
may, where necessary and in a timely manner, request that Directors
and employees make a report.
(iii) The matters reported to the “Hot Helpline” will be reported to the
Audit & Supervisory Board Members from the Audit and ComplianceDepartment.
(9-2) System under which persons executing duties as the subsidiary’s
Directors, Accounting Advisors, Audit & Supervisory Board Members,
Executive Officers, members who execute the business, etc., otherpersons equivalent to such persons, and employees, or any persons
receiving reports from these persons, make reports to the Audit &Supervisory Board Members
The matters reported to the “Group Head Office Helpline” will bereported to the Audit & Supervisory Board Members from the Group
Governance Department.
(10) System which ensures that the persons who made the reports under (9)above will not be treated disadvantageously on the grounds of suchreports

Pursuant to the “Basic Policy of the SECOM Group for Compliance,”[English Translation]48

the Company will keep the reported matters confidential, and promptly
take necessary investigation and appropriate measures, while the reporter
will suffer no disadvantage on the grounds of such report.
(11) Matters regarding the policies for the procedures of the advance payment
or reimbursement of expenses incurred for the execution of duties by the
Audit & Supervisory Board Members and other processing of expenses ordebts incurred for the execution of such duties.

The Company bears the expenses incurred for the execution of duties by
the Audit & Supervisory Board Members.
(12) System under which audit by Audit & Supervisory Board Members is
ensured to be performed efficiently(i) The Company establishes the system under which the Audit &Supervisory Board shall regularly hold meetings with the President
and Representative Director and the Accounting Auditor, to exchange
opinions so that audits shall be performed efficiently.
(ii) The Audit & Supervisory Board Members attend the meetings of theBoard of Directors, attend important meetings to exchange opinions
regarding overall management-related matters if necessary, andconduct periodical interviews with Directors and employees of theCompany and the subsidiaries.
(iii) The Company ensures that the Audit & Supervisory Board may
retain attorneys-at-law at its discretion and, if necessary, haveopportunities to retain and consult professional accountants withrespect to their audit duties.
2. Outline of Status of Operation of Internal Control System

The Company, pursuant to the basic policy described above, has established theInternal Control System, and is continuously operating this System in a proper
manner. An outline of the status of operation of the System during the current
fiscal year is as follows.
(1) “System under which the execution of duties by Directors and employees is
ensured to comply with laws and regulations and the Articles ofIncorporation”

The Company promotes to instill awareness of the importance ofcompliance with the SECOM Group Code of Employee Conduct, which setsbehavioral standards for the execution of duties, including compliance withlaws, regulations, and the Articles of Incorporation in day-to-day business
operations. In addition, all training curriculum contains training related tothe philosophy of SECOM, and the Company is also making efforts toinstill and entrench the philosophy of SECOM through “Tri-ion” initiativeand e-learning system and in-house newsletter. The Company takes
appropriate actions to respond to any revisions of laws and regulations byrequiring its Executive Officers in charge of each area to have thoroughknowledge of laws and regulations related to their areas and to obtain[English Translation]49

information concerning revisions of relevant laws and regulations on aregular basis. The Audit and Compliance Department, as a leadingorganization, conducts operational audits based on the audit plan, reports theaudit results to the President and Representative Director and the Audit &Supervisory Board Members on a monthly basis, and instructs to takecorrectional measures necessary to solve any issues identified. Furthermore,
any internal reports made through “Hot Helpline” are dealt with in a proper
manner in collaboration with relevant departments. Any importantorganizational culture-related issues (including compliance-related matters)
are deliberated and dealt with at a meeting of the Organizational Culture
Committee when necessary. The effectiveness of internal control related tofinancial reporting is properly evaluated based on the basic plans andpolicies.
(2) “System under which information regarding execution of business byDirectors shall be maintained and controlled”

Minutes of the meetings of the Board of Directors and decision-making
documents are recorded in a paper form or electromagnetic media, andstored and managed in a proper manner.
(3) “System regarding control of risk of loss and other system”

Each Executive Officer in charge analyzes and assesses business risks andfraud risks in the operational areas for which he/she is responsible, andreports the results to the President and Representative Director and Audit &Supervisory Board Members once a year, and further, reviews internal rules
and manuals that have been established as appropriate and makes
amendments as needed. Furthermore, a Risk Committee, which is chairedby the Director responsible for risk management, has been newly
established. The Risk Committee grasps company wide risk and considers
necessary measures.
(4) “System by which efficient execution of duties of Directors shall be ensured”

The Board of Directors of the Company consists of 10 Directors including 3
outside Directors. As a general rule, a meeting of the Board of Directors isheld once a month with the attendance of Directors as well as 5 Audit &Supervisory Board Members including 3 outside Audit & Supervisory
Board Members. At a meeting of the Board of Directors, importantmanagement matters are deliberated and the status of execution of duties byDirectors is reported, based on the business vision of the Company, and theBoard of Directors strives for accurate and prompt decision-making. 29
Executive Officers including 6 Directors are making efforts to makedecisions and to execute their duties in a more expeditious manner.
(The above officer structure is as of March 31, 2019.)(5)“System under which the group of enterprises consisting of the Company
and its subsidiaries is ensured to properly execute its business”
Directors of the Company and its subsidiaries are promoting proper
operation based on the “Constitution of SECOM’s Business andOperation” as their basic philosophy. The President and Representative
Director of the Company convened a meeting of the “SECOM GroupManagement Committee” quarterly to share the Group information and[English Translation]
50

operating philosophy and to ensure the appropriate operations of eachcompany. To enhance subsidiaries’ corporate governance, Audit &Supervisory Board Members visited and interviewed subsidiaries (total of
47 times). Furthermore, to reinforce cooperation, Audit & Supervisory
Board held the “SECOM Group Audit & Supervisory Board Members andInternal Audit Departments Joint Liaison Meeting” (once) with Group
Audit & Supervisory Board Members, internal audit departments andAccounting Auditor, besides cooperation by Group Audit & Supervisory
Board Members (total of 22 times). Internal audit departments inspect andprovide guidance to subsidiaries as needed, and take appropriate steps incollaboration with relevant sections and subsidiaries in response to any
internal reports made through the “Group Head Office Helpline.” Throughdecision-making on important matters upon prior consultation andreporting of important matters by subsidiaries in accordance with the“Basic Rules for SECOM Group Corporate Management,” the Company
and its subsidiaries strive to ensure that subsidiaries’ operations areproperly carried out.
(6)

“Matters related to employees to assist duties of Audit & Supervisory
Board Members when Audit & Supervisory Board Members request to doso”
The Company has established the Office of Audit & Supervisory Board
manned by at least two designated employees at all times, who assists
Audit & Supervisory Board Members in carrying out audits following the
instructions of Audit & Supervisory Board Members.

(7)“Matters related to the independence of the employees in item (6) abovefrom Directors and ensuring the effectiveness of the instructions of the
Audit & Supervisory Board Members”
The assistants for the Audit & Supervisory Board Members carry out theirduties following the instructions of the Audit & Supervisory Board
Members.

(8)“System under which any report is made to Audit & Supervisory Board
Members”
Audit & Supervisory Board Members receive from the internal audit
departments, in addition to the matters to be reported by Directors to Audit& Supervisory Board Members pursuant to the basic policies of internal
control system, any matter internally reported through the whistle-blowing
system, namely, “Hot Helpline” and “Group Head Office Helpline,” ateach time it occurs.

(9)“System which ensures that the persons who made the reports under item
(8) above will not be treated disadvantageously on the grounds of suchreports”
Any internal report is handled as confidential pursuant to the “Basic Policyon the SECOM Group for Compliance” and a system under which aperson who made a report is not treated disadvantageously has been
established. This has been complied with during the current fiscal year.

(10) “Matters regarding the policies for the procedures of the advance payment
or reimbursement of expenses incurred for the execution of duties by[English Translation]
51

Audit & Supervisory Board Members and processing of other expenses ordebts incurred for the execution of such duties”
Budget for expenses that will arise in relation to the execution of duties by
Audit & Supervisory Board Members are determined by resolution of the
Audit & Supervisory Board and reported to the Board of Directors. These
expenses are paid by the Company.
(11) “System under which audit by Audit & Supervisory Board Members is
ensured to be performed efficiently”

Audit & Supervisory Board Members held meetings twelve times with the
President and Representative Director and eleven times with Accounting
Auditors to exchange opinions. In addition, Audit & Supervisory Board
Members attend meetings of the Board of Directors and other important
meetings to exchange opinions, and conduct interviews with Directors andemployees of the Company and its subsidiaries on a regular basis.
3. Result of Evaluation of the Board of Directors

The Company has conducted the evaluation of the Board of Directors throughthe questionnaires conducted at the Board of Directors and Audit & Supervisory
Board Members and the interview with the respective Directors and Audit &Supervisory Board Members. As a result, it was confirmed that the diversity
and the appropriateness of the size of the Board of Directors are secured, andthe Outside Directors are actively making a comment and thus the businessexecution and the oversight of the management are well-balanced.

[English Translation]
52

Consolidated Balance Sheet(As of March 31, 2019)(Millions of Yen)ITEM
ASSETSAMOUNT

Current assets:
Cash on hand and in banks
Cash deposits for armored car services
Notes and accounts receivable, trade
Due from subscribers
Short-term investments
Lease receivables and investment in leased
assetsMerchandise and products
Real estate inventories
Work in process
Costs on uncompleted construction contracts
Work in process for real estate inventories
Raw materials and supplies
Short-term loans receivable
Other
Allowance for doubtful accounts

846,759
350,319
142,335
133,659
41,61625,382
41,826

Fixed assets:
Tangible assets:
Buildings and improvements, net
Machinery and equipment andautomobiles
Security equipment and control stations, net
Tools, furniture and fixtures
Land
Construction in progress

918,346
378,401
148,6939,726

Intangible assets:
Software
Goodwill
Other

128,215
21,98974,19432,031

Investments and others:
Investment securities
Long-term loans receivable
Lease deposits
Long-term prepaid expenses
Net defined benefit asset
Deferred income taxes
Other
Allowance for doubtful accounts

411,728
269,575
35,284
14,18824,80738,48827,46914,956(13,042)TOTAL ASSETS

14,146
5,864
5,872
10,97130,743
10,3984,398
31,000(1,775)71,715
24,623116,8766,765

1,765,105[English Translation]
53

ITEM
LIABILITIESCurrent liabilities:
Notes and accounts payable, trade
Bank loans
Current portion of straight bonds
Lease obligations
Payables – otherAccrued income taxes
Accrued consumption taxes
Accrued expenses
Deposits received for armored car services
Deferred revenue
Accrued bonuses
Provision for losses on construction
contracts
Other

AMOUNT

Long-term liabilities:
Straight bonds
Long-term loans
Lease obligations
Guarantee deposits received
Deferred income taxes
Accrued retirement benefits for
directors and audit & supervisoryboard members
Net defined benefit liability
Investment deposits by policyholders,
unearned premiums and other insurance
liabilities
Other

269,691
4,702
10,063
11,96032,9558,735
1,046

Total liabilities
NET ASSETS
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Common stock in treasury, at cost
Accumulated other comprehensive income(losses):
Unrealized gains on securities
Deferred losses on hedges
Foreign currency translation
adjustments
Remeasurements of defined benefit plans, netof taxes
Noncontrolling interests:
Total net assets
TOTAL LIABILITIES AND NET
ASSETS

369,458
45,826
39,126
2,009
4,875
42,64522,7677,209
7,329
121,086
30,43817,255
2,913
25,975

22,953
172,866

4,406

639,150
981,846
66,39280,360908,852(73,759)
13,87318,157(21)(10,683)
6,421
130,234
1,125,954
1,765,105

Consolidated Statement of Income(Fiscal Year from April 1, 2018 to March 31, 2019)(Millions of Yen)ITEM

AMOUNT

Revenue
Costs of revenue
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income:Interest income
Dividends income
Gain on sales of investment securities
Net gains from investment in affiliated companies
accounted for under the equity method
Gain on private equity investments
Other
Non-operating expenses:
Interest expenses
Loss on sales of investment securities
Loss on sales and disposal of fixed assets
Write-off of long-term prepaid expenses
Foreign exchange loss, net
Provision of allowance for doubtful accounts
Other
Ordinary profit
Extraordinary profit:
Gain on sales of fixed assets
Gain on sales of investment securities
Other
Extraordinary losses:
Impairment losses on fixed assets
Net losses on disposal of fixed assets
Loss on revaluation of investment securities
Allowance for price fluctuation
Other
Income before income taxes
Income taxes- current
Income taxes - deferred
Net income
Net income attributable to noncontrolling interests
Net income attributable to owners of the parent[English Translation]
54

1,013,823
692,211
321,611
191,397130,213
1,190
794
895
6,699
8,372
1,695
788
43
2,153
583
169
296
935

1,317
398
193
594
545
416
194
1,086
47,001(7,808)19,646

4,970
144,889

1,909

2,838
143,960
39,193
104,766
12,75792,009

Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2018 to March 31, 2019)(Millions of Yen)
Shareholders’equityCommon stock

Capitalsurplus

CommonTotal

Retainedstock inshareholders’earnings

treasury, at

equitycost
Balance at the beginning of the
fiscal year
Changes during the fiscal year:
Issuance of new stocks
Cash dividends
Net income attributable toowners of the parent
Purchase of treasury stock
Disposal of treasury stock
Changes in shares of parent
arising from transactions
with non-controllinginterest
Changes due to changes inaccounting standards ofoverseas consolidated
subsidiaries
Changes in the scope of
application of the equity
methodNet changes of items otherthan shareholders’ equity
Total changes during the fiscal
year
Balance at the end of the fiscal
year

66,38580,3287

7851,764(73,748)924,729(34,921)

14(34,921)92,00992,009
(10)

(10)
-

35

35

(9)

(9)

-

7

32

57,087(10)

57,117

66,39280,360908,852(73,759)

981,846[English Translation]
55

(Millions of Yen)
Accumulated other comprehensive income
Total
Foreign

Remeasure-accumulated

currency

ments of definedother(losses) on

translation

benefit plans,

comprehen-hedgesadjustments

net of taxes

sive income(5,774)

9,933

27,894

Unrealized gains Deferred gains
on securities

Balance at the beginning of the
fiscal year
Changes during the fiscal year:
Issuance of new stocks
Cash dividends
Net income attributable toowners of the parent
Purchase of treasury stock
Disposal of treasury stock
Changes in shares of parent
arising from transactions
with non-controllinginterests
Changes due to changes inaccounting standards ofoverseas consolidated
subsidiaries
Changes in the scope of
application of the equity
methodNet changes of items otherthan shareholders’ equity
Total changes during the fiscal
year
Balance at the end of the fiscal
year

23,759(24)

Noncontrolling interests in Total net assets
subsidiaries

128,589

1,081,213
14(34,921)92,009
(10)
35

(9)

(5,601)

2(4,909)(3,511)(14,020)

1,644(12,376)(5,601)

2(4,909)(3,511)(14,020)

1,644

44,741

18,157(21)(10,683)

6,421

13,873130,234

1,125,954[English Translation]56

Non-Consolidated Balance Sheet(As of March 31, 2019)(Millions of Yen)ITEM
ASSETSAMOUNTITEM
LIABILITIESAMOUNT

Current assets:
Cash on hand and in banks
Cash deposits for armored car
services
Notes receivable
Due from subscribers
Accounts receivable, trade
Receivables – other
Merchandise
Supplies
Prepaid expenses
Short-term loans receivable
Other
Allowance for doubtful accounts

246,218 Current liabilities:
Accounts payable
120,815
39,504
Bank loans
Lease obligations
723
Payables – other
17,931
Payables – construction
11,516
Accrued income taxes
4,714
Accrued consumption taxes
7,047
Accrued expenses
1,686
Deposits received for armored car
2,599
services
35,250
Deferred revenue
4,530
Accrued bonuses
(101)
Other

113,104
3,820
21,211309
19,7695,437
11,2103,221
747
18,348Fixed assets:
Tangible assets:
Buildings and improvements
Automobiles
Security equipment and control
stations
Machinery and equipment
Tools, furniture and fixtures
Land
Construction in progress
Other

675,254 Long-term liabilities:
118,025
Lease obligations
16,263
Guarantee deposits received
501
Accrued pension and severance
69,049
costs
Other
143
3,566
21,952
4,721
1,827
Total liabilities
NET ASSETS
9,480
8,560
920 Shareholders’ equity:
Common stock
Capital surplus:
547,748
Additional paid-in capital
21,982Other capital surplus
353,375
Retained earnings:
Legal reserve
Other retained earnings
2,149
Reserve for systemdevelopments
113,221
General reserve
7,578
Accumulated earnings carried
20,461
forward21,410Common stock in treasury, at cost
5,442
4,109 Valuation, translation
2,458 adjustments and others:
Unrealized gains on securities(4,442)

22,566
3,971
16,462
1,788

Intangible assets:
Software
Other
Investments and others:
Investment securities
Investment securities insubsidiaries and affiliatedcompanies
Investments in subsidiaries andaffiliated companies
Long-term loans receivable
Lease deposits
Long-term prepaid expenses
Prepaid pension and severance
costs
Deferred income taxes
Insurance funds
Other
Allowance for doubtful accounts

TOTAL ASSETS

921,472[English Translation]
57

Total net assets
TOTAL LIABILITIESAND NET ASSETS

19,949
6,488
2,590

343

135,670
780,679
66,392
83,06983,0690704,976
9,028
695,947800
2,212
692,935(73,759)
5,122
5,122
785,801
921,472

Non-Consolidated Statement of Income(Fiscal Year from April 1, 2018 to March 31, 2019)(Millions of Yen)ITEM

AMOUNT

Revenue
Costs of revenue
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income:Interest income
Dividends income
Other
Non-operating expenses:
Interest expenses
Loss on sales and disposal of fixed assets
Write-off of long-term prepaid expenses
Other
Ordinary profit
Extraordinary profit:
Gain on sales of investment securities
Other
Extraordinary losses:
Loss on sale of tangible assets
Loss on revaluation of investment securities insubsidiaries and affiliated companies
Loss on revaluation of investment securities
Allowance for doubtful accounts
Other
Income before income taxes
Income taxes - current
Income taxes - deferred
Net income[English Translation]
58

234,046
83,301

394,181
160,134
76,833

1,279
13,186
540
189
1,907
459
310
86
0

15,0062,866
88,972
87

63
54
42
25
18
23,180(8,341)

203
88,855
14,83874,016

Non-Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2018 to March 31, 2019)(Millions of Yen)
Shareholders’ equity
Capital surplus
Common stock Additional paidin capital
Balance at the beginning of the
fiscal year
Changes during the fiscal year:
Issuance of new stocks
Cash dividends
Net income
Purchase of treasury stock
Net changes of items otherthan shareholders’ equity
Total changes during the
fiscal year
Balance at the end of the
fiscal year

Other capitalsurplus

Total capitalsurplus

0

83,062

66,38583,061

7

7

7

7

-

7

66,392

83,0690

83,069

7(Millions of Yen)
Shareholders’ equity
Retained earnings
Other retained earnings
Legal
reserve

Balance at the beginning of
the fiscal year
Changes during the fiscal year:
Issuance of new stocks
Cash dividends
Net income
Purchase of treasury stock
Net changes of items otherthan shareholders’ equity
Total changes during the
fiscal year
Balance at the end of the fiscal
year

Reservefor systemdevelopments

Generalreserve

800

2,212

9,028

Accumulated Total retained
earnings
earnings
carriedforward653,840

665,881(34,921)74,016(34,921)74,016---39,09439,094

9,028

800

2,212

692,935

704,976[English Translation]
59

(Millions of Yen)
Shareholders’ equity
Common stock
Total
in treasury, at shareholders’costequityBalance at the beginning of the
fiscal year
Changes during the fiscal year:
Issuance of new stocks
Cash dividends
Net income
Purchase of treasury stock(73,748)

741,579(10)

14(34,921)74,016(10)

Net changes of items otherthan shareholders’ equity

Valuation, translation
adjustments and others
Unrealized
gains onsecurities

Total
valuation,translation
adjustments
and others

Total net
assets

7,408

7,408

748,98814(34,921)74,016(10)(2,285)(2,285)(2,285)

Total changes during the fiscal
year

(10)

39,099(2,285)(2,285)36,813

Balance at the end of the fiscal
year(73,759)

780,679

5,122

5,122

785,801[English Translation]
60

Certified Copy of the Accounting Auditor’s Report (Consolidated)[English Translation of the Accounting Auditor’s Report Originally Issued in theJapanese Language]
Independent Auditor’s Report
May 23, 2019

The Board of Directors
SECOM Co., Ltd.

KPMG AZSA LLC
Kiyoyuki Sakurai (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Hideki Yoshida (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Shuji Ezawa (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
We have audited the consolidated financial statements, comprising theconsolidated balance sheet, the consolidated statement of income, theconsolidated statement of changes in net assets and the related notes of SECOM
Co., Ltd. as at March 31, 2019 and for the year from April 1, 2018 to March 31,
2019 in accordance with Article 444, Paragraph 4 of the Companies Act.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of theconsolidated financial statements in accordance with accounting principles
generally accepted in Japan, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatements, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the consolidated financial
statements based on our audit as independent auditor. We conducted our audit
in accordance with auditing standards generally accepted in Japan. Those[English Translation]
61

standards require that we plan and perform the audit to obtain reasonableassurance about whether the consolidated financial statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about theamounts and disclosures in the consolidated financial statements. The
procedures selected depend on our judgment, including the assessment of therisks of material misstatement of the consolidated financial statements, whether
due to fraud or error. In making those risk assessments, we consider internal
control relevant to the entity’s preparation and fair presentation of theconsolidated financial statements in order to design audit procedures that areappropriate in the circumstances, while the objective of the financial statement
audit is not for the purpose of expressing an opinion on the effectiveness of theentity’s internal control. An audit also includes evaluating the appropriatenessof accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of theconsolidated financial statements.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position and the results of operationsof SECOM Co., Ltd. and its consolidated subsidiaries for the period, for which
the consolidated financial statements were prepared, in accordance withaccounting principles generally accepted in Japan.
Other Matter
Our firm and engagement partners have no interest in the Company whichshould be disclosed pursuant to the provisions of the Certified Public
Accountants Act of Japan.

[English Translation]
62

Certified Copy of the Accounting Auditor’s Report (Non-Consolidated)[English Translation of the Accounting Auditor’s Report Originally Issued in theJapanese Language]
Independent Auditor’s Report
May 23, 2019
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA LLC
Kiyoyuki Sakurai (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Hideki Yoshida (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Shuji Ezawa (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
We have audited the financial statements, comprising the balance sheet, thestatement of income, the statement of changes in net assets and the related
notes, and the supplementary schedules of SECOM Co., Ltd. as at March 31,
2019 and for the 58th business year from April 1, 2018 to March 31, 2019 inaccordance with Article 436, Paragraph 2, Item 1 of the Companies Act.
Management’s Responsibility for the Financial Statements and Others
Management is responsible for the preparation and fair presentation of thefinancial statements and the supplementary schedules in accordance withaccounting principles generally accepted in Japan, and for such internal control
as management determines is necessary to enable the preparation of financial
statements and the supplementary schedules that are free from material
misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial statements and the
supplementary schedules based on our audit as independent auditor. We
conducted our audit in accordance with auditing standards generally accepted inJapan. Those standards require that we plan and perform the audit to obtain[English Translation]63

reasonable assurance about whether the financial statements and the
supplementary schedules are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about theamounts and disclosures in the financial statements and the supplementaryschedules. The procedures selected depend on our judgment, including theassessment of the risks of material misstatement of the financial statements andthe supplementary schedules, whether due to fraud or error. In making thoserisk assessments, we consider internal control relevant to the entity’s
preparation and fair presentation of the financial statements and the
supplementary schedules in order to design audit procedures that are appropriate
in the circumstances, while the objective of the financial statement audit is not
for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates madeby management, as well as evaluating the overall presentation of the financial
statements and the supplementary schedules.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the financial statements and the supplementary schedules
referred to above present fairly, in all material respects, the financial position
and the results of operations of SECOM Co., Ltd. for the period, for which thefinancial statements and the supplementary schedules were prepared, in
accordance with accounting principles generally accepted in Japan.
Other Matter
Our firm and engagement partners have no interest in the Company whichshould be disclosed pursuant to the provisions of the Certified Public
Accountants Act of Japan.

[English Translation]
64

Certified Copy of the Audit & Supervisory Board’s Report[English Translation of the Audit & Supervisory Board’s Report Originally
Issued in the Japanese Language]
Audit Report
Mr. Yasuo Nakayama
President and Representative Director
SECOM Co., Ltd.

May 23, 2019

Audit & Supervisory Board of
SECOM Co., Ltd.
Takayuki Ito (Seal)
Audit & Supervisory Board
Member (Full-time)
Koji Kato (Seal)
Audit & Supervisory Board
Member (Full-time)
Hideki Kato (Seal)
Outside Audit & Supervisory
Board Member
Makoto Yasuda (Seal)
Outside Audit & Supervisory
Board Member
Masao Yokomizo (Seal)
Outside Audit & Supervisory
Board Member
The Audit & Supervisory Board has received the audit reports of theperformance of duties of the Directors during the 58th business term from April
1, 2018 through March 31, 2019 from each of the Audit & Supervisory Board
Members. After deliberating such reports, we have prepared this Audit Reportand report as follows:
1. Method and Details of Audit Performed by Audit & Supervisory Board

Members and the Audit & Supervisory Board(1) The Audit & Supervisory Board has established the audit policy and audit
plan for the current fiscal year, received reports on the status and results ofaudits from each Audit & Supervisory Board Member, received reports on
the status of execution of duties from Directors, etc. and the Accounting
Auditor, and requested explanations when necessary.

[English Translation]65

(2) Each of the Audit & Supervisory Board Members, in accordance with the
Audit & Supervisory Board audit standards determined by the Audit &Supervisory Board, and following the audit policy, audit plan, etc. worked
to communicate with Directors, the internal audit division and other
employees, etc., and along with making efforts to gather information andestablish the audit environment, performed the audit using the following
methods.
(i) Each Audit & Supervisory Board Member attended the meetings of theBoard of Directors and other important meetings, received reports
from the Directors and other managers, etc. on their duties, requested
explanations when necessary, inspected documents concerning matterssuch as important decisions, and investigated the conditions of thebusiness and financial conditions at the head office and the principal
offices. Also, each Audit & Supervisory Board Members worked tocommunicate and exchange information with Directors and Audit &Supervisory Board Members of subsidiaries, receiving reports fromsubsidiaries when necessary.
(ii) The Audit & Supervisory Board Members, on a regular basis, received
reports from Directors and employees, etc. on the establishment andoperation of the system (internal control system) based on the resolutionof the Board of Directors as stipulated in Article 100, Paragraph 1 orParagraph 3 of the Companies Act Enforcement Order to ensure thesystem under which the execution of duties by Directors is ensured tocomply with laws and regulations and the Articles of Incorporation andto ensure the system under which the group of enterprises consisting of
the Company and its subsidiaries is ensured to properly execute its
business, both of which are on the Business Report, obtained
explanation from them, and expressed opinions when necessary.
(iii) The Audit & Supervisory Board Members received reports from
Directors, etc. and the Accounting Auditor on the status of discussions
between them and the status of evaluation and audit of the internal
control on financial reporting, and requested explanations as necessary.
(iv) In addition to monitoring and examining whether the Accounting
Auditor maintained independence and performed auditing appropriately,
the Audit & Supervisory Board Members received reports from the
Accounting Auditor on the execution of their duties and requested
explanations when necessary. The Audit & Supervisory Board received
notice from the Accounting Auditor that “The systems for ensuring theproper execution of duties” (set forth in each Item of Article 131 of theOrdinance for Corporate Accounting) is organized in accordance withthe “Standards for Quality Control of Audit” (Business Accounting
Council, October 28, 2005) and other relevant standards, and sought
explanations when necessary.

[English Translation]
66

Based on the above methods, the Audit & Supervisory Board has
considered the Business Report and its supplementary schedules, the financial
statements (balance sheet, statement of income, statement of changes in net
assets and related notes) and its supplementary schedules, and the consolidated
financial statements (consolidated balance sheet, consolidated statement ofincome, consolidated statement of changes in net assets and related notes) forthe current fiscal year.
2. Result of audit(1) Result of audit of business report etc.
i)The Business Report and supplementary schedules fairly represent thecondition of the Company in accordance with laws and regulations and the
Articles of Incorporation of the Company.
ii) We have determined that there were no serious occurrences of
misconduct or violations of any laws or regulations or the Articles ofIncorporation of the Company by any of the Directors in carrying out theirduties.
iii) We believe the contents of the resolution of the Board of Directors
regarding the internal control system are appropriate. We found no mattersto note regarding the execution of duties of Directors regarding the internal
control system, as well as the internal control system regarding financial
reporting.
(2) Result of audit of financial statements and supplementary schedules

In our opinion, the audit procedures and audit results of the Accounting
Auditor KPMG AZSA LLC are appropriate.

(3) Result of audit of consolidated financial statements

In our opinion, the audit procedures and audit results of the Accounting
Auditor KPMG AZSA LLC are appropriate.
End[English Translation]
67