Notice of Convocation
The 55th Ordinary General Meeting of Shareholders

The following is an English translation of the Notice of Convocation of the 55th
Ordinary General Meeting of Shareholders of SECOM CO., LTD. to be held on
June 24, 2016, 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 your reference andconvenience only and without any warranty as to its accuracy or otherwise.

Table of Contents
Notice of Convocation of The 55th Ordinary General Meeting of Shareholders ····
Reference Document Concerning the General Meeting of Shareholders ··············

4
7[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 ····································································

III.
1.

Directors and Audit & Supervisory Board Members ··························· 25
Names and Titles of Directors and Audit & Supervisory Board
Members ················································································· 25
Discription of the Agreement Limiting Liabilities ································ 27
Remuneration of Directors and Audit & Supervisory Board
Members ················································································· 27
Policy for Determining the Amount of Remuneration of Directors
and Audit & Supervisory Board Members ······································· 27
Outside Directors and Outside Audit & Supervisory Board Members ········· 28

2.
3.
4.
5.
IV.
1.
2.
3.
4.
5.

Accounting Auditor ····································································Name of Accounting Auditor ························································
Remuneration of Accounting Auditor ··············································
Concent for the Amount of Remuneration for Accounting Auditor ···········
Non-Audit Duties ········································································
Policy for Decision for Dismissal or Non-reappointment ·······················[English Translation]
2

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V.
1.
2.

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 ····················

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 as that in
the original Japanese documents.

[English Translation]
3

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54

Stock Exchange Code: 9735
June 2, 2016

Notice of Convocation of
The 55th Ordinary General Meeting of Shareholders
Dear Shareholders:
You are cordially invited to attend the 55th Ordinary General Meeting of
Shareholders of SECOM CO., LTD. (the “Company”).
If you are unable to attend the aforesaid meeting, you can exercise yourvoting rights through either of the methods stated below. The Company
respectfully requests you to study the “Reference Document Concerning theGeneral Meeting of Shareholders” below and exercise your voting rights on or
before 6:00 p.m. (JST) June 23, 2016 (Thursday):[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, and returnthe form to the Company by mail on or before the time limit statedabove.
[In case of exercising voting rights via the Internet]
Please access the website for the exercise of voting rights(http://www.evote.jp/), using the log-in ID and temporary password
which are shown on the Voting Rights Exercise Form. After logging in,please indicate whether you approve or disapprove the items on theagenda 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(Note) Please note that shareholders with addresses outside Japan may notthemselves use these voting procedures. For these shareholders please consult theircustodian in Japan as to the exercise of voting rights.

[English Translation]
4

PARTICULARS

1.

Date and Time of the Meeting:
Friday, June 24, 2016 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 55th Fiscal Year (from April 1, 2015 to March
31, 2016) 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
55th Fiscal Year (April 1, 2015 to March 31, 2016).
Matters to be Resolved upon:First Item of Business:
Second Item of Business:

4.

Proposed Distribution of Surplus
Election of Ten (10) Directors

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 the Internet
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.
(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 the Consolidated
Financial Statements2) “Notes to Non-Consolidated Financial Statements” in the
Non-Consolidated Financial Statements
The Company’s Website: http://www.secom.co.jp/english/ir/[English Translation]5

(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(http://www.secom.co.jp/english/ir/).

[English Translation]
6

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 theimportant 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 and trends of future
revenues and profits of the Company on a consolidated basis while considering
the Company’s basic policy that ensures the payment of continual and steady
dividends. The Company has made it a basic rule to distribute a dividend twice ayear, as the interim dividend whose record date is September 30 each year, and theyear-end dividend whose record date is March 31 each year. The interim dividend
is determined by the Board of Directors and the year-end dividend is determinedby the General Meeting of Shareholders. Furthermore, the Company will utilize
internal reserves for investments required for increased new customers, researchand development and investments and the like for strategic businesses so that theCompany 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 70 per share. A total amount of dividend per share,
together with the interim dividend of YEN 65 per share, will be YEN 135, anincrease of YEN 10 per share from the previous fiscal year in which dividend was
YEN 125 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 70 per share of common stock of the Company
The total amount:
YEN 15,278,332,510(3)Effective date for distribution of surplus:
June 27, 2016[English Translation]
7

Second Item of Business:

Election of Ten (10) Directors

The term of office of all of the nine (9) Directors will expire at the closeof this Meeting. In connection therewith, we would like to ask shareholders toelect ten (10) Directors in which five (5) are to resume and the other five (5) are
newly to assume offices.
In March 2016, the Company set up the Nomination and Compensation
Committee consisting of two (2) Outside Directors and three (3) Directors for the
purpose of further strengthening supervising function of the Board of Directors
and enriching corporate governance system by securing objectivity, transparency
and fairness with respect to nomination of candidates for Directors anddetermination of compensation.
The Nomination and Compensation Committee had repeatedly discussed
officially and unofficially candidates for Directors and constituents for the Boardof Directors suited for the Company and shareholders since March 2016.
However, it was unable to reach a conclusion and determined the relevant
decision would be commissioned to the Board of Directors.
On May 11, 2016, the Board of Directors finally reached resolution ofcandidates for Directors after considerate discussion.
At present, the Company’s operating results have been progressed
steadily. However, to achieve further growth over the medium to long term, andthus to ensure the satisfaction of shareholders and customers, we must continue torally the comprehensive capabilities of the SECOM Group to create and deliver
services that provide security and peace of mind, as well as comfort andconvenience. To this end, we recognize the need for a management structure that,while remaining true to our corporate philosophy, nurtures a free and open
corporate culture that enables us to actively pursue new challenges and positions
us as an innovator.
At the same time, the inclusion of independent Outside Directors will
guarantee the transparency and objectivity of our Board of Directors. This will
help us realize a management structure that encourages the trust of shareholders
and customers, which we are confident will enhance corporate value for the entire
SECOM Group.
Candidates for Directors will be able to enhance the corporate value of
the Company through free and active discussion on the basis of their insight andexperience. In the light of further enhancement of transparency and objectivity
the number of independent Outside Directors has increased by one (1).
The candidates are as follows:
Candidate Number 1

Number of Shares of theCompany Owned
4,320,500 shares

Makoto Iida

(Date of birth: April 1, 1933)(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 founderof the Company, and gives guidance and advice on overall managementfrom the long-term and wide range of viewpoints. In the light ofcontinuous enhancement of corporate value, we would like to ask
shareholders to elect him as Director.

[English Translation]
8

Candidate Number 2

Number of Shares of theCompany Owned
3,800 shares

Yasuo Nakayama*(Date of birth: November 1, 1952)(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 Bankof JapanApr 2007 Personnel and Corporate Affairs Department, The Bank ofJapan
May 2007 Advisor, SECOM Co., Ltd.
Jun 2007 Executive Director
May 2016 President and Representative Director (currently)(Reasons for Election)
Mr. Yasuo Nakayama holds serving experience for a long period at The
Bank of Japan and served as Director of the Company in charge of theGeneral Affairs Division. He holds a high level of knowledge andexperience in establishment and arrangement of corporate governancesystem and CSR and the like, and a wide range of view cultivatedthrough communication with public sector and private sector. In thelight of continuous enhancement of corporate value, we would like to
ask shareholders to elect him as Director.

Candidate Number 3

Number of Shares of theCompany Owned
1,400 shares

Junzo Nakayama*(Date of birth: February 24, 1958)(Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any)
Mar 1980 Joined SECOM Co., Ltd.
Nov 1999 President and Representative Director, Japan Image
Communications Co., Ltd. (presently Turner Japan K. K.)
Dec 2009 Associate General Manager, Strategic Planning OfficeJun 2010 Associate General Manager, Assistant to President in chargeof special tasks
Jan 2011 Deputy General Manager, Finance DivisionJun 2012 Director and General Manager, Finance DivisionJun 2014 Executive Director (currently)(Reasons for Election)
Mr. Junzo Nakayama served for the finance and accounting departments
as Director, in addition to affuluent management experience at SECOM
group. He has a high level of knowledge and experience in overallmanagement including finance area. In the light of continuous
enhancement of corporate value, we would like to ask shareholders toelect him as Director.

[English Translation]
9

Candidate Number 4

Number of Shares of theCompany Owned
2,200 shares

Yasuyuki Yoshida*(Date of birth: March 28, 1958)(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 (Strategic Planning Office)Jun 2010 Outside Audit & Supervisory Board Member, Secom
Joshinetsu Co., Ltd.
Jun 2010 Group Companies Supervisor (currently)
Jun 2012 Director (currently)(Reasons for Election)
Mr. Yasuyuki Yoshida served in charge of management control andstrategic planning as Director of the Company. He holds a high level ofknowledge and experience in overall management including
management control and strategic planning areas based on affuluent
management experience at SECOM group. In the light of continuous
enhancement of corporate value, we would like to ask shareholders toelect him as Director.

Candidate Number 5

Number of Shares of theCompany Owned
800 shares

New Candidate

Tatsuya Izumida*(Date of birth: November 3, 1960)(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 (currently)(Reasons for Election)
Mr. Tatsuya Izumida served for human resource department andinformation and communication related business as Executive Officerof the Company. He holds affuluent experience in management of
SECOM group and a high level of knowledge. In the light ofcontinuous enhancement of corporate value, we would like to ask
shareholders to elect him as Director.

[English Translation]
10

Candidate Number 6

Number of Shares of theCompany Owned
300,000 shares

New Candidate

Ichiro Ozeki*(Date of birth: March 1, 1961)(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.
Apr 2001 General Manager, Sales and Planning Department, Secom
General Insurance Co., Ltd.
Jun 2001 Director, Secom General Insurance Co., Ltd.
Jun 2004 Executive Director, Secom General Insurance Co., Ltd.
Jun 2008 Vice President and Director, Secom General Insurance Co.,Ltd.
Apr 2010 President and Representative Director, Secom General
Insurance Co., Ltd. (currently)
Apr 2015 Executive Officer, SECOM Co., Ltd. (currently)<Important Position of Other Organizations Concurrently Assumed>
President and Representative Director, Secom General Insurance Co.,Ltd.
(Reasons for Election)
Mr. Ichiro Ozeki has engaged in reinforcement of affiliation of SECOM
group as Executeive Officer. He holds affuluent experience inmanagement of SECOM group and a high level of knowledge. In thelight of continuous enhancement of corporate value, we would like to
ask shareholders to elect him as Director.

Candidate Number 7

Number of Shares of theCompany Owned
0 shares

New Candidate

Tatsushi Kurihara(Date of birth: June 5, 1961)(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. (currently)(Reasons for Election)
Mr. Tatsushi Kurihara holds affuluent experience in financial practiceand a high level of knowledge accumulated for a long period at The
Bank of Japan and a wide range of view cultivated throughcommunication with public sector and private sector. In the light ofcontinuous enhancement of corporate value, we would like to ask
shareholders to elect him as Director.

[English Translation]
11

Candidate Number 8

Number of Shares of theCompany Owned
0 shares

Candidate for
Outside Director

Takaharu Hirose(Date of birth: October 25, 1944)(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, andassumed Chairman
Apr 1987 Founded Japan Automatic Merchandising Association,
and assumed Chairman
Apr 2003 Advisor and Director, GAIN 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, GAIN Inc.
(Reasons for Election)
Mr. Takaharu Hirose established and managed venture business andmade efforts to establish and operate industry groups so that hecontributed to development of business and industry. He holds affluent
experience in and a high level of knowledge of IT enterprises. In thelight of continuous enhancement of corporate value, we would like to
ask shareholders to elect him as Outside Director.

Candidate Number 9

Number of Shares of theCompany Owned
0 shares

New Candidate for
Outside Director

Hirobumi Kawano(Date of birth: Jan 1, 1946)(Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any)
Jul 1969 Joined Ministry of International Trade and Industry (MITI )(presently Ministry of Economy, Trade and Industry(METI))
Jun 1995 Director-General, Petroleum Department, Agency for
Natural Resources 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 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 (currently)(Reasons for Election)
Mr. Hirobumi Kawano has a career in important position at the
Ministry of Economy, Trade and Industry and Japan Oil, Gas andMetals National Corporation. He holds rich experience accumulated
through his career and a high level of knowledge. In the light ofcontinuous enhancement of corporate value, we would like to ask
shareholders to elect him as Outside Director.

[English Translation]
12

Candidate Number 10

Number of Shares of theCompany Owned
0 shares

New Candidate forHajime Watanabe(Date of birth: November 18, 1951)(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)

Outside Director<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. for many years. He holds rich experience accumulated
through his career on corporate management and a high level ofknowledge. In the light of continuous enhancement of corporate value,
we would like to ask shareholders to elect him as Outside Director.

(Notes)1.
There is no particular interest between the Company and each of the said
candidates.
2.
Candidates with * are Executive Officers currently in office.
3.
Based on the nomination policy that the Board of Directors established,
the nomination of candidates for Directors are decided after discussingin the Board of Directors. The Board of Directors decided the candidates
for Directors after the discussion process of the Nomination andCompensation Committee including Outside Directors.
4.
Messrs. Takaharu Hirose, Hirobumi Kawano and Hajime Watanabe are
candidates for Outside Directors. The designation of Mr. Takaharu
Hirose as Independent Officer has been filed with Tokyo Stock
Exchange, Inc. Messrs. Hirobumi Kawano and Hajime Watanabe areplanned to be notified as Independent Officers to Tokyo Stock Exchange,
Inc.
5.
The number of years during which Mr. Takaharu Hirose are in the officeof Outside Director of the Company will have been three (3) years at theclose of this General Meeting of shareholders.
6.
Pursuant to Article 427, Paragraph 1 of the Companies Act, the Company
has entered into a liability limit agreement limiting a compensation
liability provided for in Article 423, Paragraph 1 of the Companies Act
with Mr. Takaharu Hirose. In case he is re-elected, it is scheduled that theliability limit agreement will continuously be made. In case Messrs.
Hirobumi Kawano and Hajime Watanabe are elected, the Company willenter into the same liability limit agreement with each of them.
Furthermore, the limited amount of compensation liability is theminimum liability limit provided for in Article 425, Paragraph 1of theCompanies Act.

[English Translation]
13

[Attached Documents]

Business Report (Fiscal Year Ended March 31, 2016)
I. Outline of the Group’s Business1. The Current Business Development and Results of Operations
During the fiscal year ended March 31, 2016 (“the current fiscal year”), despite
moderate upward trend in corporate earnings and employment and income
environment, the outlook for Japanese economy has been remained uncertain
mainly due to concerns over downturn in overseas economies including China andrecent stagnation in enterprise and consumer confidences.
In this environment, we have been continuously trying to satisfy the increasingly
diversified and sophisticated needs of our customers for their security, peace ofmind, comfort and convenience, with the aim of realizing our vision of theestablishment of “Social System Industry”, a society where everyone can live safe
and secure anytime and anywhere. To this end, we have made efforts to develop
and provide high-grade products and services suited to customer needs in our
security services segment, as well as in our fire protection services, medical
services, insurance services, geographic information services, information andcommunication related services, and real estate and other services segment. We
also pressed forward with efforts to apply the ALL SECOM concept, whichemphasizes cooperation among our various independent businesses to strengthen
the bond of the Group as a whole with a view to hastening our advance to growth.
Furthermore, preparing for future Japanese society, we promote the effort todevelop innovative services through the ALL SECOM concept, in terms of key
themes: super-aged society and disaster preparedness/business continuity planning(BCP)/environmental preservation, based on a foundation of our security services.
In April 2015, we established “SECOM Lifestyle Partner Kugayama”, a facility
designed to provide one-stop consultation services addressing a variety of worries
for seniors in daily life. In February 2016, based on the experience earned from
“SECOM Lifestyle Partner Kugayama” and operational know-how of SECOM
group including “SECOM My Doctor Plus”, an emergency medical alert system
for seniors, and “SECOM Medical Support Center”, in addition to the seniorresidence services, we launched “SECOM My-home Concierge Service”, a newlimited area membership-based service to provide supports for seniors who would
like to live in familiar own homes. Also, we are promoting practical use of latest
security systems utilizing advanced technologies including “SECOM Airship”
designed for crime prevention in private sectors.
As a result, consolidated revenue for the current fiscal year increased by 4.8% to
YEN 881.0 billion compared with the previous fiscal year. Consolidated operating
profit increased by 4.0% to YEN 128.5 billion. Consolidated ordinary profit
decreased by 1.4% or YEN 1.8 billion to YEN 134.8 billion, mainly due to thedecrease in net gains on private equity investment in the U.S. from the previous
fiscal year (YEN 1.1 billion for the current fiscal year and YEN 9.2 billion for theprevious fiscal year). Consolidated net income attributable to owners of the parent
increased by 2.2% or YEN 1.6 billion to YEN 77.0 billion, mainly due to thedecrease in tax expenses. Consolidated revenue, consolidated operating profit andconsolidated net income attributable to owners of the parent reached arecord-high.

[English Translation]
14

（Millions of Yen）
Net income
Revenue

Operating profit

Ordinary profit

attributable toowners of theparentCurrent fiscal
year (FY2015)
Previous fiscal
year (FY2014)

881,028

128,582

134,826

77,039840,722

123,615

136,688

75,392In 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 and merchandises. In the current fiscal year, wehave strived to catch the customers’ needs precisely and propose the most suitable
services from our extensive lineup so that we can make our customer relationshipmore solid and provide the customers with the long-term security, peace of mind,
comfort, and convenience.
For our commercial security services, we have made an effort to market highvalue added on-line security systems, such as “SECOM AX,” which is
high-quality on-line security systems supported by imaging technology, “SECOM
LX,” which has an access control function for the promotion of labor management
and cost reduction, and “SECOM FX,” which has a facility control function. Also,
we introduced “SECOM Drone” service, unprecedented small autonomous flying
surveillance robot for on-line security customers operating large scale facilities. In
the event of an intrusion, “SECOM Drone” captures sharp, clear images ofunauthorized individuals or vehicles by flying around them. In addition, in orderto strengthen armored car services, we acquired all of the outstanding shares ofAsahi Security Co., Ltd, which became a new subsidiary.
For our residential security services, the demand for SECOM Home Security
which delivers security and peace of mind, as well as comfort and convenience,has been solid. In this circumstance, we have been promoting “SECOM Home
Security G-Custom”, home security controller with the function to provide
services close to customers’ daily life.
Outside Japan, we promoted our “SECOM-style” security services, which has
specialty in emergency response services, especially in economically developing
areas, such as People’s Republic of China and Southeast Asia. We also enhanced
the proposal to Japanese companies which expand their business to overseas.
As a result, mainly due to brisk sales of centralized systems, i.e., on-line security
systems, for commercial and residential use, as well as security merchandise
including security camera systems, revenue increased by 5.1% to YEN 492.8
billion and operating profit increased by 3.8% to YEN 112.0 billion.
In the fire protection services segment, we provided a broad range of fire
protection systems such as high-quality fire alarm systems and fire extinguishingsystems along with customers’ needs to a wide variety of facilities such as officebuildings, production facilities, tunnels, cultural properties, ships and residences.
In the current fiscal year, two major fire protection companies, Nohmi Bosai Ltd.
and Nittan Co., Ltd., promoted various fire protection systems based on eachcompany’s business infrastructure and product development expertise.

[English Translation]15

Revenue increased by 8.7% to YEN 131.7 billion, operating profit increased by
16.7% to YEN 13.9 billion, mainly due to the active marketing efforts and thecontribution of large-scale projects.
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 forseniors, sales of electronic medical report systems, sales of medical equipments
and pharmaceutical products, personal care services, and the leasing of real estate
for medical institutions.
Revenue increased by 6.4% to YEN 64.0 billion, operating profit increased by
18.0% to YEN 5.2 billion, mainly due to the firm increase in sales ofpharmaceutical products.
In the insurance services segment, we expanded marketing efforts for our uniquenon-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.
Despite revenue increased by 6.5% to YEN 40.1 billion, mainly due to the firm
increase in sales of “MEDCOM” and fire insurance policy, operating profit
decreased by 3.3% to YEN 1.8 billion, mainly owing to the increase in losses
incurred from damage of typhoons.
In the geographic 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
agencies, private sectors, and foreign governmental agencies including emerging
and developing countries. In the current fiscal year, we responded to diversified
and sophisticated needs for the development and maintenance of criticalinfrastructure and the disaster recovery in Japan and overseas, through thegeospatial information technology.
Revenue decreased by 0.4% to YEN 52.5 billion, reflecting the decrease inrevenue in public division and private division, despite of the increase in revenue
in international division. Operating profit decreased by 61.9% to YEN 0.8 billion,
mainly due to the increase in cost ratio in public division and the provision
recognized for the future anticipated losses.
In the information and communication related services segment, our distinctive
portfolio includes the core data center services, as well as BCP support,
information security services and a variety of cloud-based services. In the current
fiscal year, we marketed “SECOM Anshin My Number Service”, an integrated
service that secures the collection and storage of My Number and ensures they
can be used safely when necessary.
Revenue increased by 1.5% to YEN 48.4 billion and operating profit increased by
9.1% to YEN 5.2 billion, chiefly owing to the launch of “SECOM Anshin My
Number Service”.
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 decreased by 2.1% to YEN 51.1 billion, mainly due to the decrease inrevenue in the real estate development and sales business. Operating profit went

[English Translation]16

up by 2.8% to YEN 4.9 billion, chiefly owing to the decrease in selling, generaland administrative expenses.
Results by Business Segment (55th Fiscal Year – current fiscal year)(Millions of Yen)
Revenue
Business segment

Inter-segment

Security services

492,843

11,950504,794

112,063

Fire protection services

131,743

3,764

135,507

13,909

Medical services

64,038

177

64,216

5,207

Insurance services

40,186

2,945

43,131

1,848

Geographic
services

52,553

182

52,736854

48,488

7,456

55,944

5,212

Real estate and otherservices

51,1752,478

53,653

4,972

Total

881,028

28,955909,984

144,068-(28,955)(28,955)(15,485)

881,028-

881,028

128,582

information

Information
communication
servicesandrelatedEliminations
corporate items

andConsolidated revenue

Total

OperatingprofitCustomers

With respect to the results by geographical segments, in Japan, revenue increased
by 4.7% to YEN 833.9billion. Overseas revenue increased by 6.5% to YEN 47.0
billion.
2. Issues the Group Has to Cope with
As society undergoes constant change, people’s demand for security and safety
increases and becomes diverse and sophisticated.
In view of this situation, the Group is aiming to realize “Social System Industry”
by providing various services and products leading to people’s “security, peace ofmind, comfort, and convenience,” including not only our security services, butalso our fire protection services, medical services, insurance services, geographic
information services, information and communication related services, real estatedevelopment and sales and other services. Moreover, by combining these services
and products, the Group endeavors to create and supply distinctive services andproducts. To this end, the Group declared the slogan, “ALL SECOM,” to further
rally cooperation among the Group’s various businesses, and each and every
employee of the Group has been actively working to maximize the strength of theGroup as a whole. We place high value on the data center business handling ourcustomers’ classified information as one of our business bases. Furthermore, we[English Translation]17

promote aggressively the creation of highly-value-added services only the Group
could provide, from the viewpoint of key words like security, super-aging society,and disaster preparedness/BCP/environmental preservation.
We will continue our efforts to develop high-quality systems that can earn thetrust of our customers and provide services that accurately respond to their needs,
while working to provide comprehensive services by maximizing the Group’s
capabilities. Through these efforts, we ultimately seek to establish a more secured,safe, comfortable and convenient society. Additionally, the Group aims to further
instigate growth by leveraging its know-how accumulated through its business inJapan and using it to aggressively develop businesses overseas.
Furthermore, based on the business strategies described above, we will deal withvarious issues related to ESG (E for Environment, S for Society and G for
Governance) in a proper manner, including the realization of effective corporate
governance.
We look forward to the support from our shareholders in these and all of ourendeavors.
3. Capital Expenditures
Capital expenditures for the current fiscal year totaled YEN 59.0 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 39.2 billion.
AmountBusiness segment(Millions of Yen)

Security services

39,201

Fire protection services

4,911

Medical services

3,049

Insurance services

2,403

Geographic information services

2,123

Information and communication related services

7,639

Real estate and other services

219
Subtotal

59,549Eliminations and corporate items

(517)
Total

59,031

4. 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]18

5. Trends in Earnings and Assets of the Group(Millions of Yen except for net income per share)
55th fiscal year

52nd fiscal year

53rd fiscal year

54th fiscal year

(4/1/2012–(4/1/2013–(4/1/2014–

3/31/2013)

3/31/2014)

3/31/2015)

Revenue

765,635

822,228

840,722881,028

Operating profit

108,370

120,018

123,615

128,582

Ordinary profit

113,618

126,677

136,688

134,826

63,65869,87675,392

77,039291.65320.14345.42352.97

10.0%

10.0%

9.9%

9.4%

Total assets

1,249,110

1,328,226

1,410,715

1,568,052

Net assets

764,139

830,369

907,341

943,144

Fiscal years

CategoryNet(current fiscal year)(4/1/2015–
3/31/2016)

incomeattributabletoowners of the parent
Net income pershare (Yen)
Return on Equity

6. Trends in Earnings and Assets of the Company(Millions of Yen except for net income per share)
55th fiscal year

52nd fiscal year

53rd fiscal year

54th fiscal year

(4/1/2012–(4/1/2013–(4/1/2014–

3/31/2013)

3/31/2014)

3/31/2015)

Revenue

355,393364,280

370,663

376,044

Operating profit

69,952

72,90973,17475,664

Ordinary profit

76,33678,884

81,572

86,612

Net income

49,12851,49757,49258,442225.08235.94263.41

267.76

8.4%

8.4%

9.0%

8.8%

Total assets

749,317772,910795,778

826,124

Net assets

599,112627,242

650,132

678,355

Fiscal years
Category

Net income per share(Yen)
Return on Equity(current fiscal year)(4/1/2015–
3/31/2016)

In the current fiscal year, the Company’s non-consolidated revenue increased by
1.5% to YEN 376.0 billion, operating profit increased by 3.4% to YEN 75.6
billion, ordinary profit increased by 6.2% to YEN 86.6 billion, and net income
increased by 1.7% to YEN 58.4 billion. Net income per share increased to YEN
267.76 compared to YEN 263.41 in the previous fiscal year.

[English Translation]
19

Contract revenue accounted for 84.5% of total revenue, or YEN 317.7 billion, andsales of products and equipment accounted for 15.5% of total revenue, or YEN
58.2 billion.
Revenue from centralized systems, which is the core of revenue and profit,
recorded YEN 267.3 billion and accounted for 71.1% of total revenue. Static
guard contracts generated revenue of YEN 25.5 billion, and revenue from armoredcar services came to YEN 17.2 billion. The remaining revenue amounted to YEN
7.6 billion, the majority of which came from management fees paid bysubsidiaries and other companies.
Product sales totaled YEN 40.6 billion, 10.8% of total revenue, and equipment
sales to subsidiaries and other companies totaled YEN 17.5 billion, 4.7% of total
revenue.
Costs of service and sales were YEN 223.1 billion, and selling and generaladministrative expenses were YEN 77.1 billion. As a result, operating profit
recorded YEN 75.6 billion.
Non-operating income was YEN 13.6 billion, which included interest income anddividends income, while non-operating expenses, including interest expenses andloss on sales and disposal of fixed assets, totaled YEN 2.6 billion.
For the current fiscal year, the Company posted net income of YEN 58.4 billion,
having recorded an extraordinary profit of YEN 3.0 billion including the reversalof allowance for doubtful accounts etc., and an extraordinary loss of YEN 6.7
billion including the impairment losses on fixed assets etc.
Revenue by Business Category of the Company

Fiscal years

Amount(Millionsof Yen)

%

71.2

1.3

263,39771.0

1.6

267,348

71.1

1.5

25,0016.9(0.9)

25,5046.9

2.0

25,5366.8

0.1

17,2234.7

0.9

17,3134.7

0.5

17,229

4.6

(0.5)

Other

8,023

2.2

15.0

7,853

2.1

(2.1)

7,650

2.0

(2.6)

Subtotal

309,49985.0

1.4

314,06884.7

1.5

317,764

84.5

1.2

Products

33,3289.1

13.4

37,66510.2

13.0

40,68210.8

8.0

Equipment

21,4535.9

3.6

18,9295.1(11.8)

17,5974.7(7.0)

Subtotal

54,781

15.0

9.4

56,594

15.3

3.3

58,280

15.5

3.0

Total

364,280 100.0

2.5

370,663

100.0

1.8

376,044 100.0

1.5

Contract revenue

Centralized
systems
Static guard
services
Armored car
servicesAmount(Millionsof Yen)%259,249

55th fiscal year
(Current fiscal year)(4/1/2015–3/31/2016)

54th fiscal year
(4/1/2014–3/31/2015)

Change(%)

Category

Sales

53rd fiscal year
(4/1/2013–3/31/2014)[English Translation]
20

AmountChange(Millions(%)
of Yen)%Change(%)

7. Matters Concerning Principal Subsidiaries

Company name

Issued capital(Millions of Yen)

Secom Joshinetsu Co., Ltd.

3,530
(Millions of Yen)

Asahi Security Co., Ltd.

516
(Millions of Yen)

Nohmi Bosai Ltd.

13,302(Millions of Yen)

Nittan Co., Ltd.

2,302
(Millions of Yen)

Secom Medical System Co., Ltd.

Secom General Insurance Co.,
Ltd.

6,650
(Millions of Yen)

16,808(Millions of Yen)

Pasco Corporation

8,758(Millions of Yen)

Secom Trust Systems Co., Ltd.

1,468
(Millions of Yen)

At Tokyo Corporation

13,378(Millions of Yen)

Secom Home Life Co., Ltd.

3,700
(US$)

The Westec Security Group, Inc.

301
(Thousands ofSecom Plc

UK Pounds)

44,126Percentage ofownership(Percentage
of votingrights)(%)
50.87(50.88)(%)
100.00(100.00)(%)
50.36(50.71)(%)
100.00(100.00)(%)
100.00(100.00)(%)
97.11(97.82)(%)
69.84(72.70)(%)
100.00(100.00)(%)
50.88(50.88)(%)
99.94(99.95)(%)
100.00(100.00)

Principal business activities

Security and safety services

Cash collection and delivery
services
Comprehensive fire protection
services
Comprehensive fire protection
services
Home medical services andremote image diagnosis support
services
Non-life insurance
Surveying, measuring andgeographic information systemservices
Information security services andsoftware development

Data center business

Development and sales of real estate

Holding company in the U.S.

(%)
100.00(100.00)

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.

[English Translation]
21

8. Principal Business of the GroupThe Group consists of the Company, 176 consolidated subsidiaries and 22
affiliates accounted for under the equity method. The principal business activitiesof the Group are as follows: Security Services centering on contracted security
services; Fire Protection Services centering on comprehensive fire protection
services; Medical Services, focusing on home medical services and managementof residences for seniors; Insurance Services consisting mainly of non-life
insurance; Geographic Information Services that mainly entails the provision ofsurveying and measuring operations; Information and Communication Related
Services including security network services, development and operation ofbusiness systems and information security services; and Real Estate and Other
Services centering on development and sales of condominiums and other services.
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 (Shinjuku-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 (HiroshimaCity), 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.
(Shibuya-ku, Tokyo), At Tokyo Corporation (Koto-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
Increase from the end of the previous

Number of employees

fiscal year

42,6874,744(2) Matters Concerning Employees of the Company
Number of
employees

Increase from the end of theprevious fiscal year

Average age

Average years of service

15,318
122
42.1
15.6
(Note)The number of employees refers to the number of full-time employees.

[English Translation]
2211. Principal Lenders(Millions of Yen)
Lenders

Balance

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

19,316

Mizuho Bank, Ltd.

17,811

Sumitomo Mitsui Banking Corp.

9,729

Mitsubishi UFJ Trust and Banking Corp.

3,400

12. Other Important Matters Concerning the Group
There is no matter applicable.

[English Translation]
23

II. Matters Concerning the Company’s Shares and Shareholders
900,000,000
233,288,717

1. Total Number of Shares to be Issued:
2. Total Number of Issued Shares:(including 15,026,824 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:
5. Major Shareholders (Top 10)
Name of Shareholders

Number of shares held(Thousands of Shares)

24,975100 shares
Percentage ofownership(%)

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

22,263

10.20

STATE STREET BANK AND TRUSTCOMPANY

14,910

6.83

Japan Trustee Services Bank, Ltd.
(Trust Account)

14,320

6.56

Makoto Iida

4,320

1.98

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

4,148

1.90

Secom Science and Technology Foundation

4,025

1.84

THE BANK OF NEW YORK MELLON
SA/NV 10

3,804

1.74

STATE STREET BANK WEST CLIENT –TREATY 505234

3,566

1.63

Trust & Custody Services Bank, Ltd.
(Securities Investment Trust Account)

3,523

1.61

GIC PRIVATE LIMITED

3,434

1.57

(Note)
Although the Company holds treasury stock of 15,026,824 shares, it is not included in thetable above. The percentage of ownership is calculated on the basis of the total number ofshares outstanding excluding treasury stock. The percentage of ownership is truncated totwo decimal places.

[English Translation]
24

III. Directors and Audit & Supervisory Board Members
1.

Names and Titles of Directors and Audit & Supervisory Board Members(As of March 31, 2016)
Position

Director
Chairman and
Representative Director
President andRepresentative Director

Makoto Iida

Supreme Advisor

Shuji Maeda

Executive Officer

Hiroshi Ito

Executive Officer

Executive Director

Yasuo Nakayama

Executive Director

Kazuaki Anzai

Executive Director

Junzo Nakayama

Executive Director

Kenichi Furukawa

Director

Yasuyuki Yoshida

Director

Tatsuro Fuse

Director

Takaharu Hirose

Director

Takashi Sawada

Audit & Supervisory
Board Member
Audit & Supervisory
Board Member
Audit & Supervisory
Board Member
Audit & Supervisory
Board Member
Audit & Supervisory
Board Member

Field of responsibility and important
position of other organization
concurrently assumed

Name

Executive Officer (general manager ofgeneral affairs division)
Executive Officer (general manager ofsales division, in charge of sales
administration), Outside Director of
Nohmi Bosai Ltd., Outside Director of
Toyo Tec Co., Ltd.
Executive Officer (general manager offinance division)
Executive Officer (in charge of planningdepartment), President andRepresentative Director of Secom
Industries Co., Ltd.
Executive Officer (in charge of strategicplanning office and in charge of groupcompanies supervisor)
Executive Officer (in charge of medical
business), President and Representative
Director of Secom Medical System Co.,
Ltd.
Chairman and Representative Director of
GAIN Inc.
President and Representative Director of
Revamp Corporation, Outside Directorof Nomura Research Institute, Ltd.,
Outside Director of K'S Holdings Corp.
Full-time Audit & Supervisory Board
MemberFull-time Audit & Supervisory Board
MemberTakayuki Ito
Ryohei Komatsu
Hideki Kato
Kenichi Sekiya

Director Emeritus of DISCO Corporation

Makoto Yasuda

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

[English Translation]
25

(Notes)
1. Messrs. Takaharu Hirose and Takashi Sawada are Outside Directors as stipulated in
Article 2, Item 15 of the Companies Act.
2. Messrs. Hideki Kato, Kenichi Sekiya and Makoto Yasuda 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 a long-term experienceby working at a financial institution and has considerable knowledge of finance andaccounting matters.
4. There are no particular interests between the Company and other corporations employing
Outside Director, Messrs. Takaharu Hirose and Takashi Sawada.
5. There are no particular interests between the Company and other corporations employing
Outside Audit & Supervisory Board Members, Messrs. Kenichi Sekiya and Makoto
Yasuda.
6. The notice of Outside Directors, Messrs. Takaharu Hirose and Takashi Sawada being
independent officers was submitted to Tokyo Stock Exchange, Inc.
7. The notice of Outside Audit & Supervisory Board Members, Messrs. Hideki Kato,
Kenichi Sekiya and Makoto Yasuda being independent officers was submitted to Tokyo
Stock Exchange, Inc.
8. Changes in Audit & Supervisory Board Members during the current fiscal year
1) Audit & Supervisory Board Members Messrs. Seiji Sakamoto, Katsuhisa Kuwahara
and Ken Tsunematsu resigned at the close of the 54th Ordinary General Meeting of
Shareholders held on June 25, 2015.
2) Messrs. Takayuki Ito, Ryohei Komatsu and Makoto Yasuda were elected as Audit &Supervisory Board Members at 54th Ordinary General Meeting of Shareholders held on
June 25, 2015 and assumed the office.
9. Following changes in posts of Directors were resolved at the meetings of the Board of
Directors held on May 11, 2016.
1) Executive Director Mr. Yasuo Nakayama was assumed the office of President andRepresentative Director as of May 11, 2016.
2) Chairman and Representative Director Mr. Shuji Maeda changed his role to Director
as of May 11, 2016, and after that he resigned from Director as of the same day.
3) President and Representative Director Mr. Hiroshi Ito changed his role to Director asof May 11, 2016, and after that he resigned from Director as of the same day.

〈Reference〉
Executive Officers who are not Directors are as follows:(As of May 1, 2016)
Title
Managing Executive
OfficerName
Masahiro Takeda, Teruhisa Yoshimura, Hideo Morishita, Tsuneo
Komatsuzaki, Toshiaki Mizuno, Tatsuya Izumida, Shokichi
Ishimura
Yoichi Sugimoto, Sumiyuki Fukumitsu, Kensuke Shindo, Ichiro

Executive Officer

Ozeki, Yasufumi Kuwahara, Noriyuki Fukuoka, Takeshi Akagi,
Sadahiro Sato, Osamu Ueda, Yoshinori Yamanaka, Seiya Nagao,
Noriyuki Uematsu, Osamu Nagai, Atsushi Komatsu(Notes)
1. Executive Officers Messrs. Keitaro Arai and Hiromichi Sonoda were resigned as of May
31, 2015.
2. Mr. Noriyuki Fukuoka was appointed to Executive Officer as of Jun. 1, 2015.
3. Executive Officer Mr. Tatsuya Izumida was appointed to Managing Executive Officer asof Dec. 4, 2015.
4. Messrs. Takeshi Akagi, Sadahiro Sato and Osamu Ueda were appointed to Executive
Officer as of Dec. 4, 2015.

[English Translation]
26

5.

6.
7.

Managing Executive Officer Mr. Toshiyuki Mukai and Executive Officer Mr. Hiroshi
Ishikawa were resigned from Managing Executive Officer and Executive Officer,
respectively, as of Mar 31, 2016.
Executive Officer Mr. Shokichi Ishimura was appointed to Managing Executive Officer asof Apr. 1, 2016
Messrs. Yoshinori Yamanaka, Seiya Nagao, Noriyuki Uematsu, Osamu Nagai and Atsushi
Komatsu were appointed to Executive Officer as of Apr. 1, 2016.

2. Description of the Agreement Limiting Liabilities
The Company has entered into with each of the Outside Directors and each of
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 each of
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
Number of
Recipients

Combined total of
remuneration etc.
(Millions of Yen)

Directors

11454(of which Outside Directors)

(2)

(16)

8

69

(4)

(26)

19

524

Audit & Supervisory Board Members(of which Outside Audit & Supervisory
Board Members)
Total(Note) Combined total of remuneration etc. for Directors in the above table includes YEN 68
million bonuses to directors for the current fiscal year.

4. Policy for Determining the Amount of Remuneration of Directors andAudit & Supervisory Board Members(1) Remuneration of Directors
The remuneration of Directors is determined by the consultation of theNomination and Compensation Committee including Outside Directors, which
is authorized by the Board of Directors, within the limit of the amount of
remuneration resolved at the General Meeting of Shareholders.
(2) Remuneration of Audit & Supervisory Board Members
The remuneration of Audit & Supervisory Board Members is determined by
the resolution 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 limit of the amount of
remuneration resolved at the General Meeting of Shareholders.

[English Translation]27

5. Outside Directors and Outside Audit & Supervisory Board Members(1) Activities of Outside Directors and Outside Audit & Supervisory Board
Members during the current fiscal year

Category

Name

Attendance ofAttendance of thethe Meetings ofMeetings of thethe Board ofAudit &
Directors
Supervisory Board

Main Activities
He offered advice and suggestions at
the meetings of the Board of Directors
by making use of his experience andOutsideDirector

Takaharu Hirose

12-(out of 12)

insight gained through the foundationand the management of many
enterprises and organizations. 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 andinsight gained through the foundationand the management of manyorganizations. He also asked questions

OutsideDirector

Takashi Sawada

11-(out of 12)

and stated opinions in order to clarify
unclear issues.
He also makes efforts to understand thecontents of the meetings of the Boardof Directors which he had missed byreceiving reports on resolutions andsuch from an operating chief of theBoard.

[English Translation]
28

Category

Name

Attendance ofAttendance of thethe Meetings ofMeetings of thethe Board ofAudit &
Directors
Supervisory Board

Main Activities

He offered advice and suggestions at
the meetings of the Board of Directors
by making use of his experience in theexecution of national policies andinsight gained through many
Outsideaccomplishments at a policy think tank.

Audit &
Supervisory

Hideki Kato

Board

12

11

(out of 12)(out of 12)

He also asked questions and statedopinions in order to clarify unclear
issues.

MemberHe also makes efforts to understand thecontents of the meetings of Audit &Supervisory Board which he had
missed by receiving reports on
resolutions and such from full-time
Audit & Supervisory Board Members.
He offered advice and suggestions at
the meetings of the Board of Directors
by making use of his experience andinsight gained through serving as afounding management and as arepresentative and chairman of globalorganizations. He also asked questions

Outsideand stated opinions in order to clarify

Audit &
Supervisory

Kenichi Sekiya

Board

11

11

(out of 12)(out of 12)

unclear issues.
He also makes efforts to understand thecontents of the meetings of the Board

Memberof Directors and Audit & Supervisory
Board which he had missed byreceiving reports on resolutions andsuch from an operating chief of theBoard and full-time Audit &Supervisory Board Members,
respectively.

[English Translation]
29

Category

Name

Attendance ofAttendance of thethe Meetings ofMeetings of thethe Board ofAudit &
Directors
Supervisory Board

Main Activities

He offered advice and suggestions at
the meetings of the Board of Directors

Outsideby making use of his experience andAudit &
Supervisory

Makoto Yasuda

Board

9

9

insight gained through serving as a(out of 9)(out of 9)management of global enterprise. He
also asked questions and statedMemberopinions in order to clarify unclear
issues.
(Note) Mr. Makoto Yasuda was elected as Audit & Supervisory Board Member at the 54th ordinary general
meeting of shareholders held on June 25, 2015, and assumed the office. Therefore, the table shows
the attendance figures of the meetings of the board of directors and audit & supervisory board held
on and after June 25 2015.

[English Translation]
30

IV. Accounting Auditor
1. Name of Accounting Auditor
KPMG AZSA LLC
2. Remuneration of Accounting Auditor(1) Remuneration for duties relating to Article 2, Paragraph
1 of the Certified Public Accountants Act to be paid by
the Company(2) Total cash and other remuneration to be paid by theCompany and subsidiaries to the Accounting Auditor

YEN 229million
YEN 649 million(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 to theaudits under the Companies Act and that which relates to the audits under Financial
Instruments and Exchange Act as they cannot be distinguished. Therefore, the amountgiven in (1) shown above is the combined total of these amounts.
2. Of the major subsidiaries of the Company, the Westec Security Group Inc. is audited by
RSM US LLP (formerly McGladrey 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,
including work for financial due dilligence, in addition to the services provided
for in Article 2, Paragraph 1 of the Certified Public Accountants Act.
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 is deemedthat the Accounting Auditor has come to fall within the purview of Article 340,
Paragraph 1 of the Companies Act or the Accounting Auditor or the firm of the
Accounting Auditor is subjected to the disposition of suspension of business by
the supervisory authorities, the Audit & Supervisory Board will hold Meeting ofAudit & Supervisory Board Members, and, when all Audit & Supervisory Board
Members have consented thereto, the Audit & Supervisory Board Member willtake action for the dismissal of the subject Accounting Auditor or the subject firmof the Accounting Auditor. In such case, the Audit & Supervisory Board Member
selected by the Audit & Supervisory Board will report the reasons for thedismissal at the general meeting of shareholders convened for the first time after
such dismissal.
Aside from the above, when there exists any situation where it is acknowledgedthat the Accounting Auditor is not fit to act as Accounting Auditor, a proposal
will, with the consent of the Audit & Supervisory Board, be submitted to thegeneral meeting of shareholders for the dismissal or non-reappointment of the
Accounting Auditor.

[English Translation]
31

V. System under which the Company’s Business is Ensured to be Properly
Executed
1. Basic Policy Regarding Internal Control System
At the Board of Directors’ Meeting held on April 8, 2015, the Company has
resolved to change 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 of enterprises
consisting of the Company and subsidiaries is ensured to properly execute its
business” (basic policy regarding the internal control system) defined in item(6),paragraph 4,Article 362 of the Companies Act. The content of the resolution isset out below.
(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 the Companies
Act.
The internal control system based on this resolution shall be establishedurgently by officers in charge, and shall be constantly reviewed andimproved.

(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 and regulations, and the
Article of Incorporation. The SECOM Group Code of Employee Conduct isbased on the philosophy of SECOM, which we have followed since theestablishment of the business. These ethical guidelines prescribe ideals
covering the official and private affairs of all executives and employees andaction 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 compliancemanagement system is as follows:(i) From the start, compliance with laws and regulations and the Articles ofIncorporation has been an indispensable requirement of our business, andwe 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 the frontline of promoting the code of conduct, including legal compliance. The
implementation of guidelines is carried out by the line managers of theorganization. Further control is provided by the executive officers incharge of departments under their control, with the President andRepresentative Director providing companywide control.
(ii) The executive officers in charge of each area are responsible for having

thorough knowledge particularly of regulations related to their duties andthe 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 andother relevant departments and sections support them, providing
cross-organization coordination.

[English Translation]
32

(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 cornerstoneof developing and maintaining the corporate organization, anddetermines important official commendations and punishments.
(vi) Revisions of the SECOM Group Code of Employee Conduct and/or

critical compliance-related matters are undertaken after discussion with
the Organizational Culture Committee and subject to the approval of theBoard of Directors after obtaining the opinions of the Audit &Supervisory Board Members.
(vii) Basic plans and policies concerning internal controls related to financial

reporting are determined and evaluated in accordance with the standardsof 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 of the
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 be amended 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
day-to-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 and[English Translation]
33

emergency preparedness when incidents occur, daily risk monitoringand 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)Any important changes of the Company’s risk control system shall be
subject to the approval of the Board of Directors after obtaining theopinions of the Audit & Supervisory Board Members. The risks attimes of large scale calamities and at ordinary times are as follows.
Risk Category
Large scale calamity

Example(1) Large scale calamity
risk(2) Compliance risk

(3) System risk

Ordinary times(4) Service providing risk
(5) Administrative workand accounting risk(6) Others(5)

Earthquake, wind, flood, volcanic
disasters, radiation leakage, etc.
Noncompliance with “Constitution of
SECOM’s Business and Operation,”“SECOM Group Code of Employee
Conduct,” other internal rules andguidelines, etc., risk accompanied byestablishment or changes in regulations(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 and communication
technology) related risk, etc.
Risk incurred when providing services(Accidents related to security, fire alarmor equipment maintenance businesses,
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 tobusiness infrastructure (fire on the
Company’s
premises,pandemic
influenza, disease epidemic, etc.), etc.

System 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 suchas decision making for management by the Board of Directors anddecision 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]
34

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

System under which the group of enterprises consisting of the Company andsubsidiaries 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 by theseguidelines, the executives and employees work to accomplish thecorporate goals in an appropriate manner.
(ii) Each of the subsidiaries carries out IT controls in conformance with the“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 theCompany’s President and Representative Director and whose members
are composed of the presidents of major subsidiaries and other parties
appointed by the chairperson, works to ensure that appropriate
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 Boardof Directors and the Audit & Supervisory Board.
(iv) The President and Representative Director of the Company issues orders
to the internal audit departments (Audit and Compliance Department andGroup Governance Department) to inspect subsidiaries, if necessary.
The subsidiaries accept the inspection by the Company, and at the sametime promote the understanding and improvement of compliance-related
issues by exchanging information with the Company. Furthermore, theCompany establishes the whistle-blowing system “Hot Help Line”
which enables executives and employees of subsidiaries to directly
report to the Company’s Group Governance Department, whenever they
become aware of any non-compliance. Pursuant to the “Basic Policy of
the SECOM Group for Compliance,” the Company will keep thereported matters confidential, and promptly take necessary investigation
and appropriate measures. The reporter will suffer no disadvantage on
the 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.

[English Translation]35

(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, thesubsidiaries will take appropriate measures under the Company’s control.
(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 at least
two employees who are fully familiarized with the exclusive duties andinternal 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.

(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 made to
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;[English Translation]36

(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 Help Line” 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,”
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
or debts 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 andRepresentative 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, and conductperiodical interviews with Directors and employees of the Company andthe subsidiaries.
(iii)The Company ensures that the Audit & Supervisory Board may retain
attorneys-at-law at its discretion and, if necessary, have opportunities toretain and consult professional accountants with respect to their audit
duties.

[English Translation]37

2. Outline of Status of Operation of Internal Control System
The Company, pursuant to the basic policy described above, has establishedthe Internal Control System, and is continuously operating this System in aproper manner. An outline of the status of operation of the System during thecurrent 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 of compliancewith the "SECOM Group Code of Employee Conduct", which sets behavioral
standards for the execution of duties, including compliance with laws,
regulations, and the Articles of Incorporation in day-to-day business
operations. In addition, all training curriculum contains training related to thephilosophy of SECOM, and the Company is also making efforts to instill andentrench the philosophy of SECOM through in-house newsletter. The
Company takes appropriate actions to respond to any revisions of laws andregulations by requiring its officers in charge of each area to have thoroughknowledge of laws and regulations related to their areas and to obtain
information concerning revisions of relevant laws and regulations on a regularbasis. The Audit and Compliance Department, as a leading organization,
conducts operational audits based on the audit plan, reports the audit results to
the President and Representative Director and the Audit & Supervisory Board
Members on a monthly basis, and instructs them to take correctional measuresnecessary to solve any issues identified. Furthermore, any internal reports
made through “Hot Helpline” are dealt with in a proper manner incollaboration with relevant departments. Any important organizational
culture-related issues (including compliance-related matters) are deliberated
and dealt with at a meeting of the Organizational Culture Committee whennecessary. The effectiveness of internal control related to financial reporting isproperly evaluated based on the basic plans and policies.

(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, and stored
and managed in a proper manner.

(3) "System regarding control of risk of loss and other system"
Each officer in charge analyzes and assesses business risks and fraud risks inthe operational areas for which he/she is responsible, and reports the results to
the President and Representative Director and Audit & Supervisory Board
Members once a year, and further, reviews internal rules and manuals thathave been established as appropriate and makes amendments as needed.

(4) "System by which efficient execution of duties of Directors shall be ensured"
The Board of Directors of the Company consists of 11 Directors including 2
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, important management[English Translation]38

matters are deliberated and the status of execution of duties by Directors isreported, based on the business vision of the Company, and the Board of
Directors strives for accurate and prompt decision-making. 26 Executive
Officers including 8 Directors are making efforts to make decisions and to
execute their duties in a more expeditious manner.
(The above officer structure is as of March 31, 2016.)(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 and Operation"
as their basic philosophy. The President and Representative Director of theCompany convened a meeting of the "SECOM Group Management
Committee" quarterly to share the Group information and operating
philosophy and to ensure the appropriate operations of each company. To
enhance subsidiaries' corporate governance, Audit & Supervisory Board
Members visited and interviewed subsidiaries (total of 44 times), and at a
meeting of the Audit & Supervisory Board, responsible persons fromsubsidiaries presented Reports on Outline of Business Performance (8 times).
Furthermore, to enhance collaboration with internal and external audit
departments including accounting auditors in the Group companies, theprevious "liaison meeting with Group Audit & Supervisory Board
Members" was expanded and the "SECOM Group Audit & Supervisory
Board Members and Internal Audit Departments Joint Liaison Meeting" washeld (once). Internal audit departments inspect and provide guidance tosubsidiaries as needed, and take appropriate steps in collaboration with
relevant sections and subsidiaries in response to any internal report madethrough the "Group Head Office Helpline." Through decision-making onimportant matters upon prior consultation and reporting of important mattersby subsidiaries in accordance with the "Basic Rules for SECOM Group
Corporate Management," the Company and its subsidiaries strive to ensurethat subsidiaries' operations are properly carried out.

(6)

"Matters related to employees to assist duties of Audit & Supervisory Board
Members when Audit & Supervisory Board Members request to do so"
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," at eachtime it occurs.

(9)"System which ensures that the persons who made the reports under item (8)[English Translation]
39

above will not be treated disadvantageously on the grounds of such reports"
Any internal report is handled as confidential pursuant to the "Basic Policyon the SECOM Group for Compliance" and a system under which a person
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 Audit &Supervisory Board Members and processing of other expenses or debts
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.

[English Translation]
40

Consolidated Balance Sheet(As of March 31, 2016)(Millions of Yen)ITEM

AMOUNTASSETSITEMAMOUNT

LIABILITIESCurrent 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 assets
Inventories
Real estate inventories

689,744
228,458
128,267
122,048
31,812
34,44839,54236,306
26,552

Deferred income taxes

12,728

Short-term loans receivable
Other
Allowance for doubtful accounts

4,086
27,375(1,883)Fixed assets:
Tangible assets:
Buildings and improvements
Security equipment and control stations
Land
Other

878,293376,305
148,828
71,447
116,613
39,415Intangible assets:
Software
Goodwill
Other

119,505
18,071
70,61930,814

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

382,482
264,400
39,401
25,26230,796
8,602
29,715(15,698)

Deferred assets:
Other

14
14

TOTAL ASSETS

1,568,052[English Translation]
41

Current 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 loss on construction
contracts
Other

347,633
41,79455,283
2,582
4,724
38,37622,341
6,611
5,562

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 bypolicyholders, unearned premiums
and other insurance liabilities
Other
Total liabilities
NET ASSETS

277,274
8,251
20,033
11,95435,002
14,026

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

101,306
31,38915,524
1,397
20,7381,387
22,816
159,636
4,166
624,907816,340
66,37780,326743,353(73,717)
16,944
19,964(40)(2,196)(783)
109,859
943,144
1,568,052

Consolidated Statement of Income(Fiscal Year from April 1, 2015 to March 31, 2016)(Millions of Yen)ITEM

AMOUNT
881,028

Revenue
586,539

Costs of revenue

294,488

Gross profit
165,906

Selling, general and administrative expenses

128,582

Operating profit
Non-operating income:Interest income
Dividends income
Gain on sales of investment securities
Net gains from investment in affiliated companies accounted forunder 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
Loss on revaluation of investment securities
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]
42

1,250
682
629
6,069
1,133
1,614
896
128
1,587
617
556
418
931

1,032
414
137
11,584860
2,557
39,150(526)

11,3805,136
134,826

1,584

15,003
121,408
38,62482,784
5,745
77,039

Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2015 to March 31, 2016)(Millions of Yen)
Shareholders’ equity
CommonTotal
CapitalRetainedstock insurplusearnings

treasury, at

Common stock

shareholders’equitycost

Balance at the beginning of the
fiscal year

66,37780,265

694,688(73,701)

767,630

Changes in the fiscal year:
Cash dividends(28,374)(28,374)

77,03977,039Net income attributable to ownersof the parent
Purchase of treasury stock0

Disposal of treasury stock

(16)

(16)

0

0

Changes in share of parent arising61

from transactions with61

noncontrolling interests
Net changes of items other thanshareholders’ equity
Total changes in the fiscal year
Balance at the end of the fiscal year-61

48,665(16)

48,70966,37780,326743,353(73,717)816,340[English Translation]
43

(Millions of Yen)
Accumulated other comprehensive income

Balance at the beginning of the
fiscal year

Unrealized

Deferred

gains onlosses on

securities

hedges26,981(34)

Remeasure-

Total

Foreignments ofaccumulat-

currency

defineded othertranslation

benefitcomprehenadjustments

plans, net of

-sive

taxes

income

1,477

4,390

32,815

Noncontro-llingTotal net

interests inassetssubsidiaries

106,895

907,341

Changes in the fiscal year:
Cash dividends(28,374)

Net income attributable to owners
77,039of the parent
Purchase of treasury stock(16)

Disposal of treasury stock0

Changes in share of parent arisingfrom transactions with61

noncontrolling interests
Net changes of items other than
(7,017)(5)(3,673)(5,173)(15,870)

2,963(12,906)

Total changes in the fiscal year

(7,017)(5)(3,673)(5,173)(15,870)

2,963

35,803

Balance at the end of the fiscal year

19,964(40)(2,196)(783)

16,944

109,859

943,144

shareholders’ equity[English Translation]
44

Non-Consolidated Balance Sheet(As of March 31, 2016)(Millions of Yen)ITEM
ASSETSAMOUNT

Current assets:
Cash on hand and in banks
Cash deposits for armored car services
Notes receivable
Due from subscribers
Accounts receivable, trade
Receivables – other
Short-term investments

159,867
45,43340,877592
16,22910,9964,454
3,444

Merchandise

6,453

Supplies
Prepaid expenses
Deferred income taxes
Short-term loans receivable
Other
Allowance for doubtful accounts

1,676
2,172
3,736
22,255
1,698(152)

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

666,256
112,187
16,572795

Intangible assets:
Software
Other

ITEM
LIABILITIESCurrent liabilities:
Accounts payable
Bank loans
Lease obligations
Payables – otherAccrued income taxes
Accrued consumption taxes
Accrued expenses
Deposits received for armored car
services
Deferred revenue
Payables – construction
Accrued bonuses
Other

118,699
3,641
36,923
198
15,698
9,479
2,718
737

Long-term liabilities:
Lease obligations
Guarantee deposits received
Deferred income taxes

29,0682,601
17,0386,213

67,624

Accrued pension and severance costs

170
3,424
22,015
1,564
18

Other

6,369
5,794
574

Investments and others:
Investment securities
Investments in subsidiaries andaffiliates
Long-term loans receivable
Lease deposits
Long-term prepaid expense
Prepaid pension and severance costs
Insurance funds
Other
Allowance for doubtful accounts

547,700
20,588TOTAL ASSETS

826,124

327,042
146,716
7,642
21,244
23,177
4,294
2,545(5,551)[English Translation]
45

AMOUNT

13,97520,923
3,980
6,246
4,177

2,835
378

Total liabilities
NET ASSETS

147,768

Shareholders’ equity:
Common stock
Capital surplus:
Additional paid-in capital
Other capital surplus
Retained earnings:
Legal reserve
Other retained earnings
Reserve for system developments
General reserve
Accumulated earnings carried forward
Common stock in treasury, at cost

673,836
66,377
83,054
83,0540598,122
9,028
589,094
800
2,212
586,082(73,717)

Valuation, translation adjustments andothers:
Unrealized gains on securities
Total net assets
TOTAL LIABILITIES AND
NET ASSETS

4,518
4,518
678,355
826,124

Non-Consolidated Statement of Income(Fiscal Year from April 1, 2015 to March 31, 2016)(Millions of Yen)ITEM

AMOUNT

Revenue

376,044

Costs of revenue

223,189

Gross profit

152,855

Selling, general and administrative expenses

77,191

Operating profit

75,664Non-operating income:Interest income

1,740

Dividends income

11,527

Other

371

13,639Non-operating expenses:
Interest expenses

300

Loss on sales and disposal of fixed assets

1,460

Write-off of long-term prepaid expenses

510

Other

419

Ordinary profit

2,691
86,612Extraordinary profit:
Reversal of allowance for doubtful accounts

2,051

Gain on sales of investment securities

823

Gain on sales of tangible assets

168

Other

21

3,064

Extraordinary losses:
Impairment loss on fixed assets

5,682

Loss on revaluation of investment securities

748

Overseas tax related loss

51

Other

251

Income before income taxes

6,733
82,943

Income taxes - current

19,989

Income taxes - deferred

4,510

Net income

24,50058,442[English Translation]46

Non-Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2015 to March 31, 2016)(Millions of Yen)
Shareholders’ equity
Capital surplus
CommonAdditional

Other capital

Total capital

paid-in capitalsurplussurplusstock
Balance at the beginning of the
fiscal year

66,377

83,0540

83,05400Changes in the fiscal year:
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock
Net changes of items other thanshareholders’ equity
Total changes in the fiscal year
Balance at the end of the fiscal
year

-

-

0

0

66,377

83,0540

83,054[English Translation]
47

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

Reserve forreserve

Generalsystemdevelopments

Balance at the beginning of the800

Total retained

earnings carriedearnings

forward556,013568,053

Cash dividends(28,374)(28,374)

Net income

58,44258,442

fiscal year

9,028

reserve

Accumulated

2,212

Changes in the fiscal year:

Purchase of treasury stock
Disposal of treasury stock
Net changes of items other thanshareholders’ equity
Total changes in the fiscal year
Balance at the end of the fiscal
year

-

-

-

30,06830,068

9,028

800

2,212

586,082

598,122[English Translation]
48

(Millions of Yen)
Valuation, translation

Shareholders’ equity

Total

Commonstock intreasury, atcost
Balance at the beginning of
the fiscal year

adjustments and others

Total

Unrealized

valuation,

shareholders’gains ontranslation

equitysecurities

adjustments

Total net
assetsand others(73,701)

643,784

6,347

6,347

650,132

Changes in the fiscal year:
Cash dividends(28,374)(28,374)

Net income

58,44258,442

Purchase of treasury stock

(16)

(16)

(16)

Disposal of treasury stock

0

0

0

Net changes of items otherthan shareholders’ equity(1,828)(1,828)(1,828)

Total changes in the fiscal(16)

30,052(1,828)(1,828)28,223(73,717)673,836

4,518

4,518

678,355

year
Balance at the end of the fiscal
year[English Translation]
49

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 17, 2016
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA LLC
Masakazu Hattori (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Hideki Yoshida (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, 2016 and for the year from April 1, 2015 to March 31,
2016 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 inaccordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to otain audit evidence about theamounts and disclosures in the consolidated financial statements. The procedures
selected depend on our judgement, including the assessment of the risks ofmaterial misstatement of the consolidated financial statements, whether due tofraud or error. In making those risk assessments, we consider internal control
relevant to the entity’s preparation and fair presentation of the consolidated
financial statements in order to design audit procedures that are appropriate in thecircumstances, 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 of accounting[English Translation]50

policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate
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 theconsolidated financial statements were prepared, in accordance with accounting
principles generally accepted in Japan.
Other Matter
Our firm and engagement partners have no interest in the Company which should
be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.

[English Translation]
51

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 17, 2016
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA LLC
Masakazu Hattori (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Hideki Yoshida (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, 2016 andfor the 55th business year from April 1, 2015 to March 31, 2016 in accordancewith 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 obtainreasonable assurance about whether the financial statements and the
supplementary schedules are free from material misstatement.
An audit involves performing procedures to otain audit evidence about theamounts and disclosures in the financial statements and the supplementaryschedules. The procedures selected depend on our judgement, including theassessment of the risks of material misstatement of the financial statements andthe supplementary schedules, whether due to fraud or error. In making those risk
assessments, we consider internal control relevant to the entity’s preparation andfair presentation of the financial statements and the supplementary schedules inorder 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[English Translation]52

an opinion on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by 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 and appropriate
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 theresults of operations of SECOM Co., Ltd. for the period, for which the financial
statements and the supplementary schedules were prepared, in accordance withaccounting principles generally accepted in Japan.
Other Matter
Our firm and engagement partners have no interest in the Company which should
be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.

[English Translation]
53

Certified Copy of the Audit & Supervisory Board’s Report[English Translation of the Audit & Supervisory Board’s Report Originally Issued in theJapanese Language]

Audit Report
May 17, 2016

Mr. Yasuo Nakayama
President and Representative Director
SECOM Co., Ltd.
Audit & Supervisory Board of
SECOM Co., Ltd.
Takayuki Ito (Seal)
Audit & Supervisory Board
Member (Full-time)
Ryohei Komatsu (Seal)
Audit & Supervisory Board
Member (Full-time)
Hideki Kato (Seal)
Outside Audit & Supervisory
Board Member
Kenichi Sekiya (Seal)
Outside Audit & Supervisory
Board Member
Makoto Yasuda (Seal)
Outside Audit & Supervisory
Board Member
The Audit & Supervisory Board has received the audit reports of the performanceof duties of the Directors during the 55th business term from April 1, 2015 throughMarch 31, 2016 from each of the Audit & Supervisory Board Members. After
deliberating such reports, we have prepared this Audit Report and report as follows:
1. Method and Details of Audit Performed by Audit & Supervisory Board Members andthe Audit & Supervisory Board
The Audit & Supervisory Board has established the audit policy and audit plan forthe current fiscal year, received reports on the status and results of audits 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.
Each of the Audit & Supervisory Board Members, in accordance with the audit
policy, audit plan, etc. of the current fiscal year set up by the Audit & Supervisory Board,
worked to communicate with Directors, the internal audit division and other employees,
etc., and made efforts to gather information and establish the audit environment, in
addition to attending the meetings of the Board of Directors and other important
meetings, receiving reports from the Directors and other managers, etc. on their duties,
requesting explanations when necessary, inspecting documents concerning matters suchas important decisions, and investigating the conditions of the business and financial
conditions at the head office and the principal offices. Also, the Audit & Supervisory
Board Members, on a regular basis, received from Directors and employees, etc. reportson the establishment and operation of the system (internal control system) based on the[English Translation]54

resolution of the Board of Directors as stipulated in Article 100, Paragraph 1 or Paragraph
3 of the Companies Act Enforcement Order to ensure the system under which theexecution of duties by Directors is ensured to comply with laws and regulations and the
Articles of Incorporation and to 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.
Furthermore, we received reports from Directors, etc. and the Accounting Auditor
on the status of discussions between them and the status of evaluation and audit of theinternal control on financial reporting, and requested their reports as necessary.
We worked to communicate and exchange information with the Directors andAudit & Supervisory Board Members, etc. of subsidiaries and received reports on
operations from subsidiaries.
On the basis of the forgoing procedures, the Audit & Supervisory Board has
considered the Business Report and supplementary schedules.
Furthermore, in addition to monitoring and examining whether the Accounting
Auditor maintained independence and performed auditing appropriately, we received
reports from the Accounting Auditor on the execution of their duties and requested
explanations when necessary. In addition, we received notice from the Accounting
Auditor that “The systems for ensuring the proper execution of duties” (set forth in each
Item of Article 131 of the Ordinance for Corporate Accounting) is organized inaccordance with the “Standards for Quality Control of Audit” (Business Accounting
Council, October 28, 2005) and other relevant standards, and sought explanations whennecessary. Based on the above methods, we examined the financial statements (balance
sheet, statement of income, statement of changes in net assets and related notes),
supplementary schedules and the consolidated financial statements (consolidated balance
sheet, consolidated statement of income, consolidated statement of changes in net assets
and related notes) for the current fiscal year.
2. Result of audit(1) Result of audit of business report etc.
i) The Business Report and supplementary schedules fairly represent the condition of
the Company in accordance with laws and regulations and the Articles ofIncorporation of the Company.
ii) We have determined that there were no serious occurrences of misconduct orviolations of any laws or regulations or the Articles of Incorporation of theCompany by any of the Directors in carrying out their duties.
iii) We believe the contents of the resolution of the Board of Directors regarding theinternal control system are appropriate. We found no matters to note regarding theexecution of duties of Directors regarding the internal control system, as well as theinternal 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]
55