Notice of Convocation
The 52nd Ordinary General Meeting of Shareholders

The following is an English translation of the Notice of Convocation of the 52nd
Ordinary General Meeting of Shareholders of SECOM CO., LTD. to be held on
June 25, 2013, 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 52nd 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 ·······························

16
16
16
19
20
20
20
21
23
24
24
24
25
25

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 ····································································

26
26
26
26
26
26

III.
1.

27

4.

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

IV.
1.
2.
3.
4.

Accounting Auditor ····································································Name of Accounting Auditor ························································
Remuneration of Accounting Auditor ··············································
Non-Audit Duties ········································································
Policy for Decision for Dismissal or Non-reappointment ························

2.
3.

[English Translation]
2

27
29
29
30

32
32
32
32
32

V.
1.
2.

System under which the Company’s Business is Ensured to be
Properly Executed ·····································································
Basic Policy Regarding Internal Control System ································
Organizations etc. Relating to 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 sameas that in the original Japanese documents.

[English Translation]
3

33
33
38

41
42
43
44
45
46
48
50
52

Stock Exchange Code: 9735
June 3, 2013

Notice of Convocation of
The 52nd Ordinary General Meeting of Shareholders
Dear Shareholders:
You are cordially invited to attend the 52nd 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 the General Meeting of
Shareholders” below and exercise your voting rights on or before 6:00 p.m. (JST)June 24, 2013 (Monday):[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 aforesaid deadline.
[Exercising voting rights via the Internet]
Please access the website for the exercise of voting rights(http://evote.jp/), using the log-in ID and temporary password which are
shown on the Voting Rights Exercise Form. After logging in, pleaseindicate whether you approve or disapprove the items on the agenda byfollowing the instructions on the display screen on or before theaforesaid deadline.
Yours very truly,
SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo, Japan
By: SHUJI MAEDA
President and Representative Director(Note) Please note that shareholders with addresses outside Japan may notthemselves use these voting procedures. For these shareholders please consult theirstanding agents within Japan as to the exercise of voting rights.

[English Translation]
4

PARTICULARS

1.

Date and Time of the Meeting:
Tuesday, June 25, 2013 at 10:00 a.m.

2.

Place of the Meeting:Bersarle Hanzomon, Sumitomo Fudosan Hanzomon-Ekimae
Building 2F, 6-4 Koujimachi 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 52nd Fiscal Year (from April 1, 2012 toMarch 31, 2013) and the Results on the Audits ofConsolidated Financial Statements by the Accounting
Auditor and the Audit & Supervisory Board.
2. Report on the Non-Consolidated Financial Statements for the
52nd Fiscal Year (from April 1, 2012 to March 31, 2013).
Matters to be Resolved upon:First Item of Business:

Proposed Distribution of Surplus

Second Item of Business: Partial Amendments to the
Articles of Incorporation
Third Item of Business:

Election of Thirteen (13) Directors

Fourth Item of Business: Election of One (1) Audit &Supervisory Board Member
Fifth Item of Business:

Presentation of Retirement
Allowance to Retired and Retiring
Directors

Sixth Item of Business:

Presentation of Retirement
Allowance to Retired Audit &Supervisory Board Member

Seventh Item of Business: Presentation of Retirement
Allowance to Directors Resulting
from Termination of Retirement
Allowance System[English Translation]5

Eighth Item of Business:

4.

Presentation of Retirement
Allowance to Audit & Supervisory
Board Members Resulting from
Termination of Retirement
Allowance System

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/(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 is any amendment to the contents of the Reference Document
Concerning the General Meeting of Shareholders, the Business Report,
the Consolidated Financial Statements and the Non-Consolidated
Financial Statements, the Company will announce such amendmentson the “Investor Relations: Stocks and Bonds” section of theCompany’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 trend 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 once a
year as the year-end dividend, which is determined by the General Meeting of
Shareholders. Furthermore, the Company will utilize internal reserves forinvestments required for increased new customers, research and development andinvestments and the like for strategic business expansion so that the Company will
exert its efforts to strengthen the corporate structure and to expand its business.
Based on the aforesaid basic policy, to reward shareholders’ continued
support, it is proposed that dividend for the fiscal year under review be YEN 105
per share, an increase of YEN 15 per share from the previous fiscal year in which
dividend was YEN 90 per share.
Matters related to the year-end dividend:(1)
Kind of assets distributed:
Cash(2)Matters related to distribution of cash and total amount:
YEN 105 per share of common stock of the Company
The total amount:
YEN 22,918,325,430(3)Effective date for distribution of surplus:
June 26, 2013
Second Item of Business:

1.

Partial Amendments to the Articles ofIncorporation

Reason for amendment

Article 32 (Liability Limitation Agreement with Outside Director) is
proposed to be newly set forth under Article 427 of the Companies Act in light ofenabling the Company to invite appropriate personnel as Outside Director easily
and also enabling Outside Director to discharge expected roles to the full extent.
Furthermore, each Audit & Supervisory Board member has consented tothe establishment of this provision.
Moreover, due to insertion of this new established provision, thenumber of the Articles thereafter will be renumbered.

2.

Details of amendment

The details of amendment are as follows:[English Translation]
7

Current Articles of Incorporation(Newly established)(The underlined parts are amended parts.)
Proposed changes(Liability Limitation Agreement with
Outside Director)
Article 32 Pursuant to Paragraph 1 of
Article 427 of the Companies Act
the Company may enter into anagreement with Outside Director tolimit damage compensation liability
provided for in Paragraph 1 of
Article 423 of the Companies Act;
Provided, however, that the limited
amount of compensation liability
pursuant to this agreement is theamount provided for in the laws andordinances.

Articles 32 ~ 48 (Articles 32 to 48 are
intentionally omitted)

Articles 33 ~ 49 (The number of Articles
shall be renumbered and the content
shall be the same as current)

Third Item of Business: Election of Thirteen (13) Directors
The term of office of all of the eleven (11) Directors will expire at theclose of this Meeting. In order to reflect outside opinion to the management
decision, two (2) outside directors are proposed to be added. Therefore, it is
proposed to reelect nine (9) Directors and newly elect four (4) Directors.
The candidates are as follows:
No.
1

2

3

Name
(Date of Birth)
Makoto Iida
(April 1, 1933)
Juichi Toda
(March 7, 1932)

Shuji Maeda(September 27,
1952)*

Summary of Career, Title and Responsibility, and Important
Position of Other Organization Concurrently Assumed
Jul 1962
Feb 1976
Jun 1997
Jul 1962
Feb 1976
Jun 1997
Jan 1981
Jun 1997
Jun 2000
Jun 2004
Apr 2005
Jun 2009
Jan 2010

President and Representative Director (Founder)
Chairman and Representative Director
Supreme Advisor and Director (currently)
Senior Executive Director (Co-founder)
Executive Vice Chairman and Representative
Director
Supreme Advisor and Director (currently)
Joined SECOM Co., Ltd.
Director
Executive Director
Director and Managing Executive Officer
Executive Director
Executive Vice President and Director
President and Representative Director (currently)[English Translation]
8

The Numberof Shares Held
4,320,500

3,152,216

12,700

No.
4

5

6

7

8

Name
(Date of Birth)
Koichi Sato
(February 5, 1953)*

Yasuo Nakayama(November 1, 1952)*

Hiroshi Ito(February 7, 1952)*

Kazuaki Anzai(January 14, 1952)*

Yasuyuki Yoshida(March 28, 1958)*

Summary of Career, Title and Responsibility, and Important
Position of Other Organization Concurrently Assumed
Apr 1976
Jun 2004
Jun 2005
Jun 2007Jun 2008

Joined SECOM Co., Ltd.
Executive Officer
Managing Executive Officer
Executive Director
President and Representative Director, Secom
Joshinetsu Co., Ltd.
Jun 2009
Chairman and Director, Secom Joshinetsu Co.,Ltd.
Jun 2009
Executive Vice President and Director (currently)
Jul 2003
Branch Manager, Nagoya Branch, The Bank ofJapan
Jul 2005
Director-General, Secretariat of the Policy Board,
The Bank of JapanApr 2007
Personnel and Corporate Affairs Department, The
Bank of JapanMay 2007 Advisor, SECOM Co., Ltd.
Jun 2007
Executive Director (currently)
Feb 1979
Joined SECOM Co., Ltd.
May 1989 Executive Director, Secom Mie Co., Ltd.
Jun 2000
Director (up to Jun 2004)
Jun 2003
President and Representative Director, Secom
Information System Co., Ltd. (presently Secom
Trust Systems Co., Ltd.) (currently)
Jun 2004
Executive Officer
Jun 2009
Executive Director (currently)(Important position of other organization concurrently assumed)
President and Representative Director, Secom Trust Systems
Co., Ltd.
Apr 1975
Joined Fuji Bank, Ltd. (presently Mizuho Bank,Ltd.)
May 2003 Branch Manager, Kanda Branch, Mizuho Bank, Ltd.
Jul 2005
Associate General Manager, Tokyo Regional
Headquarter, SECOM Co., Ltd.
Sep 2005
Deputy General Manager, Corporate Development
Division
Jun 2006
Executive Officer (up to Jun 2008)
Mar 2008
Executive Director, Secom Alpha Co., Ltd.
Jun 2011
Senior Executive Director, Secom Alpha Co., Ltd.
Sep 2011
Assistant to President in charge of special tasks
Jan 2012
Managing Executive Officer
Jun 2012
Executive Director (currently)(Important position of other organization concurrently assumed)
Outside Director, Nohmi Bosai Ltd.
Outside Director, Toyo Tec Co., Ltd.
Mar 1980
Joined SECOM Co., Ltd.
Feb 1997
Associate General Manager, Strategic Planning
Division
Sep 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),
SECOM Co., Ltd.
Jun 2010
Outside Audit & Supervisory Board Member,
Secom Joshinetsu Co., Ltd.
Jun 2010
Group companies supervisor (currently)
Jun 2012
Director (currently)[English Translation]
9

The Numberof Shares Held

4,188

3,300

4,700

384

1,500

No.
9

10

11

12

Name
(Date of Birth)
Junzo Nakayama(February 24, 1958)*

Tatsuro Fuse
(September 9, 1957)*
New Candidate

Kenichi Furukawa(March 17, 1959)*
New Candidate

Takaharu Hirose(October 25, 1944)
New Candidate for
Outside Director

13

Takashi Sawada(July 12, 1957)
New Candidate for
Outside Director

Summary of Career, Title and Responsibility, and Important
Position of Other Organization Concurrently Assumed
Joined SECOM Co., Ltd.
President and Representative Director, Japan
Image Communications Co., Ltd.
Sep 2009
Positioned in Personnel Department
Dec 2009
Associate General Manager, Strategic Planning
OfficeJun 2010
Associate General Manager, Assistant to President
in charge of special tasks
Jan 2011
Deputy General Manager, Finance DivisionJun 2012
Director and General Manager, Finance Division(currently)
Mar 1982
Joined SECOM Co., Ltd.
Apr 2001
Manager, Project Development Department,
Medical Division
Mar 2002
Director, Secom Medical System Co., Ltd.
May 2005 Executive Director, Secom Medical System Co., Ltd.
Jun 2008
Senior Executive Director, Secom Medical System
Co., Ltd.
Jun 2009
President and Representative Director, Secom
Medical System Co., Ltd. (currently)
Apr 2010
Executive Officer in charge of medical business(currently)(Important position of other organization concurrently assumed)
President and Representative Director, Secom Medical System
Co., Ltd.
Mar 1982
Joined SECOM Co., Ltd.
May 1999 Manager, Development Control Group,
Development CenterApr 2006
General Manager, Development Strategic Group,
Development Center
Jan 2010
General Manager, Planning Department
Jan 2012
Executive Officer (currently)
Sep 1965
Founded Fuji Vending Co., Ltd., and assumed
Representative Director
Apr 1972
Founded Food & Beverage Vending Association,
and assumed Chairman
Apr 1987
Founded Japan Automatic Merchandising
Association and assumed 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)(Important position of other organization concurrently assumed)
Chairman and Representative Director, GAIN Inc.
Apr 1981
Joined ITOCHU Corporation
May 1997 Joined FAST RETAILING CO., LTD.
Nov 1997
Executive Director, FAST RETAILING CO., LTD.
Nov 1998
Executive Vice President and Director, FASTRETAILING CO., LTD.
Jan 2003
President and Representative Director, KIACON
Corporation
Oct 2005
Representative Director, Revamp Corporation
Feb 2011
President and Representative Director, Revamp
Corporation (currently)(Important position of other organization concurrently assumed)
President and Representative Director, Revamp Corporation
Outside Director, Nomura Research Institute, Ltd.
Outside Director, Culture Convenience Club Co., Ltd.

The Numberof Shares Held

Mar 1980
Nov 1999[English Translation]
10

1,000

1,600

100

0

0

(Notes)
1. There is no particular interest between the Company and each of the said
candidates.
2. Candidates placed with an asterisk (*) are Executive Officers currently in
office.
3. Messrs. Takaharu Hirose and Takashi Sawada are candidates for Outside
Director. They are planned to be notified as Independent Officers to Tokyo
Stock Exchange, Inc.
4. Reason for election of candidates for Outside Director:(1)Mr. Takaharu Hirose launched an automatic vending machine-related
venture business in his school days and has devoted himself to theestablishment and administration of related associations, contributing to
the advance of automatic vending machine business and its industry. In
2003, he changed his jobs to an internet research service company and has
tried expanding business chance by utilizing internet research service. The
Company judged that his wealth of experience and considerable
discernment of business management cultivated through his career would
help contribute to the enhancement of the Company’s business and theadvancement of its corporate governance. Accordingly, the Company
proposes its shareholders to elect him as Outside Director.
(2)Mr. Takashi Sawada was engaged in the management of FASTRETAILING CO., LTD. After that, in 2005, he established Revamp
Corporation and has, as a director responsible for the Corporation’s
management, promoted the launch of various business and support forbusiness management. The Company judged that his wealth of experienceand considerable discernment of business management cultivated throughhis career would help contribute to the enhancement of the Company’sbusiness and the advancement of its corporate governance. Accordingly,
the Company proposes its shareholders to elect him as Outside Director.
5. If the proposed amendments to the Articles of Incorporation in the Second
Item of Businesses is approved at the General Meeting of Shareholders
and Messrs. Takaharu Hirose and Takashi Sawada assume the office ofOutside Directors, the Company is scheduled, pursuant to the provisions ofArticle 427, Paragraph 1 of the Companies Act, to enter into an agreement
for limitation of liability with each of these two Outside Directors, which
could limit their damage compensation liabilities pursuant to theprovisions of Article 423, Paragraph 1 of the Companies Act. The amountof each of their compensation liabilities for damages stipulated in theagreement is limited to the minimum amount set forth in Article 425,
Paragraph 1 of the Companies Act.

Fourth Item of Business:

Election of One (1) Audit & Supervisory Board
MemberAudit & Supervisory Board Member Mr. Kohei Yamashita will resign as
Audit & Supervisory Board Member at the close of this Meeting. It is proposed toelect one (1) Audit & Supervisory Board Member to serve the remaining term of
the resigning Audit & Supervisory Board Member.
The consent of the Board of Audit & Supervisory Board has beenobtained for this Item of Business.

[English Translation]
11

In the event that the one candidate, Mr. Kenichi Sekiya is elected as
Audit & Supervisory Board Member, his term shall expire at the close of theOrdinary General Meeting of Shareholders to be held in June 2015 as prescribedby the Articles of Incorporation.
The candidate is as follows:
No.
1

Name

Summary of Career, Title and Responsibility, and Important(Date of Birth)
Kenichi Sekiya(March 5, 1938)
New Candidate for
Outside Audit &Supervisory Board
MemberPosition of Other Organization Concurrently Assumed
Apr 1960
Mar 1963
May 1964
Apr 1970
Mar 1985
Jul 1998
Jun 2001
Jul 2008

The Numberof Shares Held

Joined Dai-ichi Seitosho Co., Ltd. (presently
DISCO Corporation)
Director, Dai-ichi Seitosho Co., Ltd.
Executive Director, Dai-ichi Seitosho Co., Ltd.
Executive Vice President and Director, Dai-ichi
Seitosho Co., Ltd.
President and Representative Director, DISCO
Corporation
Chairman, President and Representative Director,
DISCO Corporation
Chairman and Representative Director, DISCO
Corporation
Resigned the post and became Director Emeritus,
DISCO Corporation (Currently)(Notes)1. There is no particular interest between the Company and the said
candidate.
2. Mr. Kenichi Sekiya is a candidate for Outside Audit & Supervisory
Board Member. He is planned to be notified as Independent Officer toTokyo Stock Exchange, Inc.
3. Reason for election of the candidate for Outside Audit & Supervisory
Board Member:
Mr. Kenichi Sekiya, as the founder and executive, strived to contribute to
the advance of DISCO Corporation for a long time. He was also, for along time, in the office of Representative and Director of SEMI,
Semiconductor Equipment and Materials International, which is aninternational industrial association for semiconductor production
equipment and material, much contributing to global advance of theindustry. Based on such wealth of experience and considerable
international discernment of business management cultivated through his
career, the Company expects that he will superintend the overallmanagement of the Company and provide useful advice to the Company
from a wide range of his views. Accordingly, the Company proposes its
shareholders to elect him as Outside Audit & Supervisory Board
Member.
4. If Mr. Kenichi Sekiya is elected and assumes office as Audit &Supervisory Board Member, the Company is scheduled, pursuant to theprovisions of Article 427, Paragraph 1 of the Companies Act, to enter
into an agreement for limitation of liability with him, which could limit
his damage compensation liability pursuant to the provisions of Article
423, Paragraph 1 of the Companies Act.

[English Translation]
12

2,000

The amount of his compensation liability for damages stipulated in theagreement is limited to the minimum amount set forth in Article 425,
Paragraph 1 of the Companies Act.

Fifth Item of Business: Presentation of Retirement Allowance to Retired
and Retiring Directors
It is hereby proposed that retirement allowances be granted to Mr. Fumio
Obata who resigned from Director as of March 31, 2012, Messrs. Katsuhisa
Kuwahara and Takayuki Ito who retired from Directors at the close of the 51st
Ordinary General Meeting of Shareholders held on June 26, 2012 due to thematurity of the term, and Messrs. Shohei Kimura and Kanemasa Haraguchi whowill retire from Directors at the close of this Meeting due to the maturity of theirterms, in appreciation of their services rendered while in office, in YEN 551
million or less in aggregate based on the established standards and practice of theCompany, and that determination of the actual amount, the timing and method of
payment, and other relevant matters be left to the resolution of the Board of
Directors.
Furthermore, since Mr. Takayuki Ito was appointed to and has been an
Executive Officer of the Company from the close of the 51st Ordinary General
Meeting of Shareholders held on June 26, 2012, retirement allowance payable forhis services during office of Director will be paid when he retires from Executive
Officer.
The brief summary of careers of the resigned and resigning Directors are
as follows:
Name
Fumio Obata

Katsuhisa Kuwahara

Takayuki Ito
Shohei KimuraJun 2000
Jun 2009
Mar 2012
Jun 1990
Jun 1995
Jun 2004
Apr 2005
Jun 2012
Jun 2007Jun 2012
Feb 1985
Feb 1988
Jun 1995
Apr 2002
Jun 2004
Apr 2005

Summary of Career of the Retired and Retiring Directors
Assumed office of Director
Assumed office of Senior Executive Director
Resigned from Director
Assumed office of Director
Assumed office of Executive Director
Assumed office of Director and Managing Executive Officer
Assumed office of Executive Director
Retired from Director
Assumed office of Director
Retired from Director
Assumed office of Director
Assumed office of Executive Director
Assumed office of Senior Executive Director
Assumed office of President and Representative Director
Assumed office of President and Representative Director and Executive
Officer
Assumed office of Chairman and Director (currently)[English Translation]
13

Name
Kanemasa Haraguchi

Jun 1990
Jun 1995
Jun 1997
Jun 2002
Jun 2004
Apr 2005
Jan 2010
Jun 2012

Sixth Item of Business:

Summary of Career of the Retired and Retiring Directors
Assumed office of Director
Assumed office of Executive Director
Assumed office of Senior Executive Director
Assumed office of Director and Executive Vice President
Assumed office of Director and Executive Vice President andExecutive Officer
Assumed office of President and Representative Director
Assumed office of Executive Vice Chairman and Director
Assumed office of Director (currently)

Presentation of Retirement Allowance toRetired Audit & Supervisory Board Member

It is hereby proposed that retirement allowances be granted to Mr. Teruo
Ogino who resigned from Full-time Audit & Supervisory Board Member at theclose of the 51st Ordinary General Meeting of Shareholders held on June 26,
2012, in appreciation of his services rendered while in office, in YEN 15 million
or less based on the established standards and practice of the Company, and that
determination of the actual amount, the timing and method of payment, and otherrelevant matters be left to the consultation of Audit & Supervisory Board
Members.
The brief summary of a career of the resigned Audit & Supervisory Board
Member is as follows:
Name
Teruo Ogino

Summary of Career of the Retired Audit & Supervisory Board Member
Jun 2003
Assumed office of Full-time Audit & Supervisory Board Member
Jun 2012
Resigned from Full-time Audit & Supervisory Board Member

Seventh Item of Business:

Presentation of Retirement Allowance toDirectors Resulting from Termination of
Retirement Allowance System

In light of reviewing the remuneration scheme for Directors and Audit &Supervisory Board Members, the Company resolved at its Board of Directors’
meeting held on March 6, to terminate the current retirement allowance system
for Directors and Audit & Supervisory Board Members at the close of thisOrdinary General Meeting of Shareholders.
In connection herewith, in the event that the Third Item of Business isapproved, it is proposed that seven (7) Directors, namely Shuji Maeda, Koichi
Sato, Yasuo Nakayama, Hiroshi Ito, Kazuaki Anzai, Yasuyuki Yoshida, and Junzo
Nakayama out of the Directors who will have been reelected, be paid inappreciation of their services rendered while in office, each in a reasonableamount based on the established standards and practice of the Company in theaggregate amount of not more than YEN 297 million under the retirement
allowance system to be terminated.
It is also proposed that the payment will be made at the time of retirementof each Director (however, retiring Director who continues to assume office of
Executive Officer shall be paid at the time of retirement of Executive Officer), and[English Translation]
14

the actual amount to each Director, method of payment, and other relevant mattersbe left to the resolution of the Board of Directors.
The brief summary of careers of the Directors who are paid under theretirement allowance system to be terminated are as follows:
Name
Shuji Maeda

Koichi Sato
Yasuo Nakayama
Hiroshi Ito
Kazuaki Anzai
Yasuyuki Yoshida
Junzo Nakayama

Jun 1997
Jun 2000
Jun 2004
Apr 2005
Jun 2009
Jan 2010
Jun 2007Jun 2009
Jun 2007Jun 2009
Jun 2012
Jun 2012
Jun 2012

Eighth Item of Business:

Summary of Career of the Directors
Assumed office of Director
Assumed office of Executive Director
Assumed office of Director and Managing Executive Officer
Assumed office of Executive Director
Assumed office of Executive Vice President and Director
Assumed office of President and Representative Director (currently)
Assumed office of Executive Director
Assumed office of Executive Vice President and Director (currently)
Assumed office of Executive Director (currently)
Assumed office of Executive Director (currently)
Assumed office of Executive Director (currently)
Assumed office of Director (currently)
Assumed office of Director (currently)

Presentation of Retirement Allowance to Audit& Supervisory Board Members Resulting from
Termination of Retirement Allowance System

As explained with respect to Seventh Item of Business, in light ofreviewing the remuneration system for Directors and Audit & Supervisory Board
Members, the Company decided to terminate the current retirement allowancesystem for Directors and Audit & Supervisory Board Members at the close ofthis Ordinary General Meeting of Shareholders by resolution of the Board of
Directors held on March 6, 2013.
In connection therewith, it is proposed that Full-time Audit & Supervisory
Board Members Seiji Sakamoto and Katsuhisa Kuwahara, both currently in office
be paid each in a reasonable amount for the respective periods in office of Audit &Supervisory Board Members until the close of this General Meeting of
Shareholders based on the established standards and practice of the Company inthe aggregate amount of not more than YEN 5 million to these two Audit &Supervisory Board Members as a group under the retirement allowance system tobe terminated (excluding Outside Audit & Supervisory Board Members).
It is also proposed that the payment will be made at the time of retirementof each Audit & Supervisory Board Member, and the actual amount, method of
payment, and other relevant matters be left to the consultation among the Audit &Supervisory Board Members.
The brief summary of careers of the Audit & Supervisory Board Members
who are paid under the retirement allowance system to be terminated are as
follows:
Name
Seiji Sakamoto
Katsuhisa Kuwahara

Summary of Career of the Audit & Supervisory Board Members
Jun 2011
Assumed office of Full-time Audit & Supervisory Board Member(currently)
Jun 2012
Assumed office of Full-time Audit & Supervisory Board Member(currently)[English Translation]
15

[Attached Documents]

Business Report (Fiscal Year Ended March 31, 2013)
I. Outline of the Group’s Business1. The Current Business Development and Results of Operations
During the fiscal year ended March 31, 2013 (“the current fiscal year”), therecovery of Japanese economy had seemed to be at a standstill owing to theappreciation in yen, the effect of continuing deflation, etc. However, since the endof last year, the economy has seemed to be improving as reflected in the rise ofstock price, robust consumer spending, etc., ascribed to the downward trend ofJapanese yen and expectation of economic recovery.
In this environment, we have been continuously trying to satisfy the increasingly
diverse and sophisticated needs of our customers for their safety and peace ofmind, with the aim of realizing our vision of the establishment of “Social System
Industry”, a society where everyone can live safe and secure anytime andanywhere. 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, real estate development and sales, andinformation and communication related and other services segments. In addition,
aiming at our further growth, we enhanced “ALL SECOM,” the combination of
all SECOM Group’s power to promote our synergies even more, with all
segments standing on their own and promoting mutual cooperation.
As a result, consolidated revenue for the current fiscal year increased by 12.7% to
YEN 765.6 billion, compared with the previous fiscal year. Consolidated
operating profit went up by 33.7% to YEN 108.3 billion, mainly attributable to therecognition of write-down on real estate inventories of YEN 20.7 billion in theprevious period. Consolidated ordinary profit increased by 29.3% to YEN 113.6
billion, and consolidated net income increased by 79.4% to YEN 63.6 billion, due
mainly to the recognition of impairment loss for fixed assets of YEN 8.1 billion in
the previous period. Moreover, consolidated revenue, operating profit and net
income reached a record-high, compared with the past fiscal years.
（Millions of Yen）
Revenue
Current fiscal
year (FY2012)
Previous fiscal
year (FY2011)

Operating profit

Ordinary profit

Net income

765,635

108,370

113,618

63,658679,173

81,07887,83935,489A breakdown by business segments is as follows:
In the security services segment, we provided customers chiefly with commercial
and residential security services (on-line security systems), as well as static guard
services, armored car services and merchandises. In the current fiscal year, wehave been performing door-to-door sales promotion thoroughly so that we canmake our customer relationship more solid and that customers can utilize our safe
and secure services. For our commercial security services, we have made an effort
to market our various 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 customers’
security level and cost reduction, and “SECOM FX,” which has a facility control[English Translation]16

function. For our residential security services, we have tried enhancing theconvenience of “SECOM Home Security G-Custom,” which has been launched in
the previous fiscal year, for its sales promotion. In addition, we have endeavored
to develop new services for the super aging society, including “SECOM My
Doctor Plus,” an emergency correspondence services for the aged with thecooperation of the two major nursing business companies.
Outside Japan, we promoted our “SECOM-style” security services, which has
specialty in emergency response services, in economically developing areas,
including People’s Republic of China, and Southeast Asia.
As a result, revenue increased by 4.0% to YEN 441.1 billion and operating profit
increased by 1.8% to YEN 102.4 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, in addition to Nohmi Bosai Ltd. in charge of the fire
protection business in our group, Nittan Co., Ltd., the third fire protection
company in the domestic market share, became our consolidated subsidiary on
April 1, 2012. We promoted various fire protection systems based on eachcompany’s business infrastructure and product development expertise.
Owing to contribution by Nittan Co., Ltd. and the efforts of proactive businessactivities to satisfy market needs in the severe business environment, revenue
increased by 41.5% to YEN 114.1 billion and operating profit increased by 47.9%
to YEN 6.4 billion.
In the medical services segment, we provided various medical services such as ourcore home medical services, including home nursing services and pharmaceuticaldispensing and home delivery services, operation of residences for seniors, salesof electronic medical report systems, sales of medical equipments, personal careservices, and the leasing of real estate for medical institutions. In the current fiscal
year, we enriched medical services to accommodate ourselves to changes insociety, by expanding various services for seniors, including launching rental
housing for seniors with supportive services.
Revenue increased by 12.0% to YEN 48.0 billion, primarily due to brisk sales of
medical equipment. Operating profit increased by 7.6% to YEN 4.3 billion,
reflecting decrease in SG&A expenses which is primarily due to the absence ofamortization of goodwill completed in the previous period.
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;
SECOM Anshin My Car, a comprehensive automobile insurance policy that offers
on-site support services provided by our emergency response personnel in theevent of an accident; and MEDCOM, an unrestricted cancer treatment policy thatoffers compensation of actual cost of medical treatment.
Strong sales increased revenue by 2.9% to YEN 35.1 billion and operating profit
of YEN 40 million in the previous fiscal year turned into operating loss of YEN
0.9 billion in the current fiscal year, primarily owing to the increase inunderwriting expenses, caused by the increase in the number of natural disasters.
In the geographic information services segment, by exploiting up-to-datemeasuring machine and technologies, we provided geospatial data services fordomestic national and local governmental agencies, private sectors, and foreign
governmental agencies including emerging and developing countries. In thecurrent fiscal year, by collecting high-precision and clear geospatial photo datasuch as satellite images, and utilizing our data processing technologies, we also

[English Translation]17

strived to provide a variety of services suited to our customers’ needs, including
mapping arrangement, environmental monitoring, fire protection, and measures todeal with natural calamities.
Since sales in public, private and international division firmly increased, revenue
increased by 2.0% to YEN 51.1 billion. Operating profit increased by 4.5% to
YEN 3.7 billion, mainly due to the decrease in cost ratio of the international
division, despite the increase in labor costs etc. along with expansion of businessscale.
In the real estate development and sales segment, we devoted our best efforts todeveloping and selling condominiums equipped with advanced security anddisaster prevention systems.
In the current fiscal year, revenue went up by YEN 15.3 billion or 131.3% to YEN
27.1 billion, mainly attributable to the release of large-scale condominiums during
the second quarter and efforts to focus on sales and delivery of inventories on
hand. Operating loss of YEN 21.4 billion in the previous period, mainly due to therecognition of write-down on real estate inventories of YEN 20.7 billion, turned
into operating profit of YEN 1.7 billion for the current fiscal year.
The information and communication related and other services segment covers
information and communication related services and real estate leasing, etc. In theinformation and communication related services, we have continued striving toprovide comprehensive information network services, focusing on information
security, development and management of business systems and major-disaster
response services. In the current fiscal year, we acquired and consolidated At
Tokyo Corporation as a subsidiary, which is the one of the most prestigious data
center operating company in Japan in terms of scale, stability of electric power
supply, security level, etc.
Revenue increased by 38.3% to YEN 48.7 billion, due chiefly to contribution by
At Tokyo Corporation and the increase in sales of information and communication
related services, including those of Secure Data Center, and operating profit
increased by 38.3% to YEN 5.7 billion.
Results by Business Segment (52nd Fiscal Year – current fiscal year)(Millions of Yen)
Revenue
Business segment
Security services
Fire protection services
Medical services
Insurance services
Geographic information
services
Real estate development
and sales
Information andcommunication related
and other services
Total
Eliminations andcorporate items
Consolidated revenue

Total

Operatingprofit (loss)

Customers

Inter-segment

441,178
114,12948,08235,173

11,658
4,308
165
2,816

452,837
118,437
48,24837,989102,487
6,460
4,316
(978)

51,194

127

51,321

3,753

27,121

3,535

30,657

1,746

48,7546,870

55,625

5,756

765,635

29,482795,117

123,543-(29,482)(29,482)(15,173)765,635-

765,635

108,370

With respect to the results by geographical segments, in Japan, revenue increasedby 12.6% to YEN 732.5 billion. Overseas revenue increased by 14.9% to YEN
33.0 billion.

[English Translation]18

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”
through providing various services and products, mainly in our core security
services, and also in fire protection services, medical services, insurance services,
geographic information services, real estate development and sales, andinformation and communication related and other services, which can help realize
more secured, convenient, and comfortable society. Moreover, by combining
these services and products, the Group endeavors to create and supply uniqueservices and products. To this end, the Group declared the slogan, “ALLSECOM,” to further rally the cooperation among the Group’s various businesses,
and each and every employee of the Group has been actively working tomaximize the strength of the Group as a whole. We place a high value on data
center business handling our customers’ information as one of our business base.
Furthermore, we promote aggressively to create highly-value-added services only
the Group could provide, from the view point of key words like security, disaster,
super-aging society and environment.
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. Additionally, the Group aims to further instigate growth byleveraging its know-how accumulated through its business in Japan and using it toaggressively develop businesses overseas. The Group will seek to incorporate
consideration for the environment into all aspects of its operations, whileremaining committed to its efforts to pursue business efficiency throughunremitting business improvements.
We look forward to the support from our shareholders in these and all of ourendeavors.

[English Translation]19

3. Capital Expenditures
Capital expenditures for the current fiscal year totaled YEN 60.5 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 38.5 billion.
AmountBusiness segment(Millions of Yen)

Security services

38,514

Fire protection services

1,404

Medical services

6,569

Insurance services

910

Geographic information services

2,758

Real estate development and sales

17

Information and communication related

11,159and other services
Subtotal
Eliminations and corporate items

61,334
(803)

Total

60,531

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.
5. Trends in Earnings and Assets of the Group(Millions of Yen except for net income per share)
52nd fiscal year

49th fiscal year

50th fiscal year

51st fiscal year

(4/1/2009–(4/1/2010–(4/1/2011–

3/31/2010)

3/31/2011)

3/31/2012)

Revenue

654,678

663,887

679,173765,635

Operating profit

98,53999,141

81,078108,370

Ordinary profit

98,327

109,674

87,839113,618

Net income

47,61160,84635,48963,658218.37279.07

162.63291.65

Total assets

1,081,679

1,094,400

1,101,884

1,249,110

Net assets

625,153654,055

671,517764,139

Fiscal years

CategoryNet

incomepershare (Yen)[English Translation]
20(current fiscal year)(4/1/2012–
3/31/2013)

6. Trends in Earnings and Assets of the Company(Millions of Yen except for net income per share)
52nd fiscal year

49th fiscal year

50th fiscal year

51st fiscal year

(4/1/2009–(4/1/2010–(4/1/2011–

3/31/2010)

3/31/2011)

3/31/2012)

Revenue

328,773

329,297

345,476355,393

Operating profit

71,527

68,68870,196

69,952

Ordinary profit

77,46274,501

75,212

76,336

Net income

45,80645,023

26,81849,128210.09206.50122.90225.08

Total assets

668,207694,656

699,448

749,317

Net assets

532,931558,417567,758

599,112

Fiscal years
Category

Net income per share(Yen)(current fiscal year)(4/1/2012–
3/31/2013)

In the current fiscal year, the Company’s non-consolidated revenue increased by
2.9% to YEN 355.3 billion, operating profit decreased by 0.3% to YEN 69.9
billion, ordinary profit increased by 1.5% to YEN 76.3 billion, and net income
increased by 83.2% to YEN 49.1 billion. Net income per share decreased to YEN
225.08 compared to YEN 122.90 in the previous fiscal year.
Contract revenue accounted for 85.9% of total revenue, or YEN 305.3 billion, andsale of products and equipment accounted for 14.1% of total revenue, or YEN
50.0 billion.
Revenue from centralized system contracts, which is the core of revenue andprofit, recorded YEN 256.0 billion and accounted for 72.0% of total revenue.
Static guard contracts generated revenue of YEN 25.2billion, and revenue fromarmored car services came to YEN 17.0 billion. The remaining revenue amounted
to YEN 6.9 billion, the majority of which came from management fees paid bysubsidiaries and other companies.
Product sales totaled YEN 29.3 billion, 8.3% of total revenue, and equipment
sales to subsidiaries and other companies totaled YEN 20.7 billion, 5.8% of total
revenue.
Costs of service and sales were YEN 210.7 billion, and sales and generaladministrative expenses were YEN 74.6 billion. As a result, operating profit
recorded YEN 69.9 billion.
Non-operating income was YEN 10.1 billion, which included interest anddividends received, while non-operating expenses, including interest paid andlosses on sales and disposal of fixed assets, totaled YEN 3.7 billion.
For the fiscal year under review, the Company posted net income of YEN
49.1 billion, having recorded an extraordinary profit of YEN 1.2 billion
including the reversal of retirement benefits for Directors and Audit &Supervisory Board Members, and an extraordinary loss of YEN 1.0 billion
including the provision for allowance for doubtful accounts with respect toloans to consolidated subsidiaries.

[English Translation]21

Revenue by Business Category of the Company

Fiscal years

Contract revenue%

239,31152nd fiscal year
(Current fiscal year)(4/1/2012–3/31/2013)

Amount(Millionsof Yen)

%

72.7

(0.5)

249,81772.3

4.4

256,025

72.0

2.5

24,8157.5

0.1

24,9237.2

0.4

25,223

7.1

1.2

16,973

5.1(0.4)

17,2765.0

1.8

17,073

4.8

(1.2)

9,151
290,252
27,808
11,236

2.8
88.1
8.5
3.4

0.7
(0.4)
3.8
5.4

7,506
299,523
28,034
17,917

2.2
86.7
8.1
5.2

(18.0)
3.2
0.8
59.5

6,977
305,300
29,38920,703

2.0
85.9
8.3
5.8

(7.0)
1.9
4.8
15.5

Subtotal

39,04511.9

4.3

45,952

13.3

17.7

50,092

14.1

9.0

Total

329,297 100.0

0.2

345,476

100.0

4.9

355,393 100.0

2.9Centralized
systems
Static guard
services
Armored car
services
Other
Subtotal
Products
Equipment

Amount(Millionsof Yen)51st fiscal year
(4/1/2011–3/31/2012)

Change(%)

Category

Sales

50th fiscal year
(4/1/2010–3/31/2011)[English Translation]
22

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)

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.

6,545
(Millions of Yen)

16,808(Millions of Yen)

Pasco Corporation

8,758(Millions of Yen)

Secom Home Life Co., Ltd.

3,700
(Millions of Yen)

Secom Trust Systems Co., Ltd.

1,468
(Millions of Yen)

At Tokyo Corporation

13,378(US$)

The Westec Security Group, Inc.

301
(Thousands ofSecom Plc

UK Pounds)

44,126Percentage ofownership(Percentage
of votingrights)(%)
50.87(50.88)(%)
50.36(50.94)(%)
100.00(100.00)(%)
100.00(100.00)(%)
97.11(97.82)(%)
69.84(72.87)(%)
99.94(99.95)(%)
100.00(100.00)(%)
50.88(50.88)(%)
100.00(100.00)

Principal business activities

Security and safety 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
Development and sales of real estate

Information security services andsoftware development

Data center businessHolding 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.
3. Nittan Co., Ltd. and At Tokyo Corporation became consolidated subsidiaries effective on
April 1, 2012 and October 31, 2012, respectively.

[English Translation]
23

8. Principal Business of the GroupThe Group consists of the Company, 171 consolidated subsidiaries and 26
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; Real Estate Development and Sales
centering on development and sales of condominiums; and Information andCommunication Related and Other Services, including security network services,development and operation of business systems and information security 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 (Bunkyo-ku, Tokyo), Metropolitan Static
Guard Service (Shinjuku-ku, Tokyo), Metropolitan Armored Car Service(Saitama City), Kanagawa (Yokohama City), Shizuoka (Shizuoka City ),Chubu (Nagoya City), Kinki (Kyoto City),Osaka (Osaka City), Kansai Static
Guard Service (Osaka City), Hyogo (Kobe City), Chugoku (Hiroshima City),
Shikoku (Takamatsu City), Kyushu (Fukuoka City).
(iii) Domestic Subsidiaries:
Secom Joshinetsu Co., Ltd. (Niigata City), 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 Home Life Co., Ltd.
(Shibuya-ku, Tokyo), Secom Trust Systems Co., Ltd. (Shibuya-ku, Tokyo),
At Tokyo Corporation (Koto-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

36,4732,410(Note)The number of employees increased mainly due to that Nittan Co., Ltd and At Tokyo
Corporation joined the Group in the consolidated fiscal year under review.

[English Translation]24

(2) Matters Concerning Employees of the Company
Number of
employees

Decrease from the end of theprevious fiscal year

Average age

Average years of service

14,9047
41.2
14.5(Note)The number of employees refers to the number of full-time employees.

11. Principal Lenders(Millions of Yen)
Lenders

Balance

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

12,235

Sumitomo Mitsui Banking Corp.

9,940

Mizuho Bank, Ltd.

9,461

Mitsubishi UFJ Trust and Banking Corp.

4,736

12. Other Important Matters Concerning the GroupOn October 31, 2012, the Company acquired 50.88% of the outstanding commonshares (170,526 shares) of At Tokyo Corporation (“At Tokyo”) held by Tokyo
Electric Power Company, Inc. for YEN 33,327 million and included At Tokyo
into its consolidated subsidiary.

[English Translation]25

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 15,018,951 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)

27,628100 shares
Percentage ofownership(%)

The State Street Bank and Trust Company

19,4308.90

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

15,549

7.12

Japan Trustee Services Bank, Ltd.
(Trust Account)

12,707

5.82

The Nomura Trust and Banking Co., Ltd.
(Trust Account 2052098)

6,153

2.81

Makoto Iida

4,320

1.97

SSBT OD05 OMNIBUS
ACCOUNT-TREATY CLIENTS

4,318

1.97

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

4,148

1.90

Secom Science and Technology Foundation

4,025

1.84

The State Street Bank and Trust Company
505223

3,866

1.77

Juichi Toda

3,152

1.44

(Notes)1. The Company holds treasury stock of 15,018,951 shares although 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.
2. In the case of the trust banks listed above, banking business-related shares and trust
service-related shares are registered under different register names. Therefore, the numberof shares held under the register name of banking business is registered separately.

[English Translation]
26

III. Directors and Audit & Supervisory Board Members
1.

Names and Titles of Directors and Audit & Supervisory Board Members(As of March 31, 2013)
Position

Field of responsibility and important
position of other organization
concurrently assumed

Name

Director

Makoto Iida

Supreme Advisor

Director

Juichi Toda

Supreme Advisor

Shohei Kimura

Chairman of All Japan Security Service
Association, Outside Audit &Supervisory Board Member of Secom
General Insurance Co., Ltd.

Shuji Maeda

Executive Officer

Chairman and Director

President andRepresentative Director
Executive Vice President
and Director

Koichi Sato

Executive Director

Yasuo Nakayama

Executive Director

Hiroshi Ito

Executive Director

Kazuaki Anzai

Director

Kanemasa Haraguchi

Director

Yasuyuki Yoshida

Director

Junzo Nakayama

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

Seiji Sakamoto
Katsuhisa Kuwahara

Ken Tsunematsu

Kohei Yamashita
Hideki Kato[English Translation]
27

Executive Officer (general manager ofgroup international business division)
Executive Officer (general manager ofgeneral affairs division)
Executive Officer (general manager ofhuman resources division, in charge of
information systems and liaison),President and Representative Director of
Secom Trust Systems Co., Ltd.
Executive Officer (general manager ofsales division, in charge of sales
administration), Outside Director of
Nohmi Bosai Ltd., Outside Director of
Toyo Tec Co., Ltd.
Chairman of Secom Pension Fund,
Chairman of Secom Health InsuranceSociety
Executive Officer (in charge of strategicplanning office and in charge of groupcompanies supervisor)
Executive Officer (general manager offinance division)
Full-time Audit & Supervisory Board
MemberFull-time Audit & Supervisory Board
MemberAttorney-at-law, Managing Director of
Secom Science and Technology
Foundation
President and Representative Director of
Kokyo Tatemono Co., Ltd.
President of Shikoku Minka Museum, apublic interest incorporated foundation

(Notes)
1. Messrs. Ken Tsunematsu, Kohei Yamashita and Hideki Kato are Outside Audit &Supervisory Board Members as stipulated in Article 2, Item 16 of the Companies Act.
2. The Audit & Supervisory Board Member, Mr. Seiji Sakamoto has a long-term
experience by working at a financial institution and has considerable knowledge offinance and accounting matters.
3. The Audit & Supervisory Board Member, Mr. Katsuhisa Kuwahara had been in chargeof the Company’s financial affairs for 27 years and has considerable knowledge offinance and accounting matters.
4. The Audit & Supervisory Board Member, Mr. Ken Tsunematsu, has for many years been
involved in securities issuance businesses for domestic and overseas companies, public
institutions, organizations, etc. as an attorney-at-law. He has experienced in the analysis
and evaluation of the financial statements of these issuers, and has considerable
knowledge of finance and accounting matters.
5. There are no special interests between the Company and other corporations employing
Outside Audit & Supervisory Board Members, Messrs. Ken Tsunematsu, Kohei
Yamashita and Hideki Kato.
6. The notice of Outside Audit & Supervisory Board Member, Mr. Ken Tsunematsu being
an independent officer was submitted to Tokyo Stock Exchange, Inc. and Osaka
Securities Exchange Co., Ltd.
7. Changes in Directors and Audit & Supervisory Board Members during the current fiscal
year1) Director Mr. Katsuhisa Kuwahara and Director Mr. Takayuki Ito retired at the closeof the 51st ordinary general meeting of shareholders held on June 26, 2012.
2) Audit & Supervisory Board Member Mr. Teruo Ogino and Audit & Supervisory
Board Member Mr. Hiroshi Yasuda resigned at the close of the 51st ordinary general
meeting of shareholders held on June 26, 2012.
3) Messrs. Kazuaki Anzai, Yasuyuki Yoshida and Junzo Nakayama were elected as
Director at the 51st ordinary general meeting of shareholders held on June 26, 2012, andassumed the office.
4) Messrs. Katsuhisa Kuwahara and Hideki Kato were elected as Audit & Supervisory
Board Member at the 51st ordinary general meeting of shareholders held on June 26,
2012, and assumed the office.
8. Changes in status of Director during the current fiscal year
Executive Vice Chairman and Director Mr. Kanemasa Haraguchi assumed the office of
Director on June 26, 2012.

〈Reference〉
Executive Officers who are not Directors are as follows:(As of May 1, 2013)
Title
Managing Executive
Officer

Name
Shunji Ogahara, Naohide Nakamura, Toshiyuki Mukai
Takayuki Ito, Minoru Takaoka, Hideo Morishita, Tsuneo
Komatsuzaki, Ryohei Komatsu, Masahiro Takeda, Teruhisa

Executive Officer

Yoshimura, Keitaro Arai, Tatsuro Fuse, Hiromichi Sonoda,
Hiroshi Ishikawa, Kenichi Furukawa, Yoichi Sugimoto, Tatsuya
Izumida(Notes)
1. Mr. Tatsuya Izumida was appointed to Executive Officer as of October 1, 2012.
2. Executive Officer Mr. Yukio Tsunoda was retired from Executive Officer as of March
31, 2013
3. Executive Officer Mr. Toshiyuki Mukai was appointed to Managing Executive Officer asof April 1, 2013.

[English Translation]
28

2. Remuneration of Directors and Audit & Supervisory Board Members

Directors

Number of
Recipients

Combined total of
remuneration etc.
(Millions of Yen)

13

676

386

289

7

65

62

3

20

741

449

292

Audit & Supervisory
Board Members
Total

BreakdownAmount of accrued
retirement benefits
Amount offor directors andremuneration
audit & supervisory(Millions of Yen)
board members(Millions of Yen)

(Notes)
1. In the table shown above, the combined total of remuneration amount for the 4 Outside
Audit & Supervisory Board Members was YEN 24 million, of which amount includes Yen
0 accrued to retirement benefits for Directors and Audit & Supervisory Board Members.
2. In the same table, the Directors’ bonuses of YEN 60 million paid for the current fiscal year
is included in YEN 386 million under Amount of remuneration column.
The amount of remuneration to Directors as a group was limited up to YEN 600 million peryear (not including a provision accrued to retirement benefits for Director and Audit &Supervisory Board Members) by the resolution of the 44th General Meeting of Shareholders
held on June 29, 2005.
3. The amount of remuneration to Audit & Supervisory Board Members as a group was
resolved upon YEN 80 million (not including a provision amount accrued to retirement
benefits for Director and Audit & Supervisory Board Members) or less per year at the 50th
General Meeting of Shareholders held on June 24, 2011.

3. 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 President andRepresentative Director—who is authorized by the Board of Directors—basedon the duties and performance of Directors on an individual basis, within thelimit 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 determinedsubject to the resolution among Audit & Supervisory Board Members, theamount 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]29

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

Name

Attendanceof theMeetings ofthe Board of
Directors

Attendanceof theMeetings of
the Audit &Supervisory
Board

Main Activities

He has high level of insight to corporate
legal matters and knowledge about
management and interests between
stakeholders through many domestic andinternational securities issuing projects and
Ken Tsunematsu

abundance of experience in the area of

13

12(out of 13)(out of 12)

finance and accounting, which were
cultivated in many years as
attorney-at-law. He primarily offeredadvice and suggestions at the Board of
Directors Meeting in order to ascertain thevalidity and/or appropriateness ofoperations and management.
He offered advice and suggestions at theBoard of Directors Meeting based on his

Kohei Yamashita

13

12(out of 13)(out of 12)

ample experience and insights ofmanaging a global corporation. He also
asked questions and stated opinions inorder to clarify unclear issues.
He offered advice and suggestions at theBoard of Directors Meeting by making useof his experience in the execution of

Hideki Kato

99(out of 9)(out of 9)national policies and insight gained
through many accomplishments at a policy
think tank. He also asked questions andstated opinions in order to clarify unclear
issues.

Mr. Hideki Kato was elected as Audit & Supervisory Board Member at the 51st
ordinary general meeting of shareholders held on June 26, 2012, and assumed theoffice. Therefore, the table shows the attendance figures of the meetings of theboard of directors and audit & supervisory board held on and after June 26, 2012.

[English Translation]30

(2) Description of the agreement limiting liabilities
The Company has entered into with each of the Outside Audit & Supervisory
Board Members an agreement limiting his 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 Audit & Supervisory Board Members incurs is equal to the lowest
amount of liabilities stipulated in Article 425, Paragraph 1 of the Companies
Act.

[English Translation]
31

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 theCompany(2) Total cash and other remuneration to be paid by theCompany and subsidiaries to the Accounting Auditor

YEN 226 million
YEN 619 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 auditedby PricewaterhouseCoopers LLP and Secom Plc by KPMG LLP.

3. 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.
4. 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 examine thesituation, and, when all Audit & Supervisory Board Members have consented
thereto, the Audit & Supervisory Board Member will take action for the dismissalof the subject Accounting Auditor or the subject firm of the Accounting Auditor.
In such case, the Audit & Supervisory Board Member selected by the Audit &Supervisory Board will report the reasons for the dismissal at the general meetingof shareholders convened for the first time after such dismissal.
In any other case, when there exists any situation where it is acknowledged that
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 the general
meeting of shareholders for the dismissal or non-reappointment of the Accounting
Auditor.

[English Translation]
32

V. System under which the Company’s Business is Ensured to be Properly
Executed
1. Basic Policy Regarding Internal Control System
The Company’s basic policy regarding the internal control system, i.e. the “system
under which execution of duties by Directors is ensured to comply with laws andregulations and the Articles of Incorporation, and the system under which theCompany’s business is ensured to be properly executed,” approved by the
resolution of the Board of Directors is set out below. (Last revised on April 7,
2010)
(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 execution of duties by Directors and employees is
ensured to comply with laws and regulations and the Articles ofIncorporation(i) In order to ensure even more thorough compliance with laws andregulations and the Articles of Incorporation in the execution of duties,
the Company has integrated its compliance manual with SECOM Group
Code of Employee Conduct, which sets key ethical standards to befollowed, and at the same time, it has conducted a review of manuals on
critical laws. SECOM Group Code of Employee Conduct is based on thephilosophy of SECOM, which we have followed since the establishmentof the business. These ethical guidelines prescribe ideals covering theofficial and private affairs of all executives and employees and action
standards (including the blocking relationships with anti-social forces) tobe followed in the execution of specific daily duties. As such, theseguidelines provide the basis of all actions. The compliance management
system is as follows:(Ensuring compliance)
From the start, the compliance of laws and regulations has been an
indispensable requirement of our business, and we have always
sought to operate in strict adherence to this spirit. Therefore,
compliance is a part of the Company’s daily routines, which should
not require a system in which a specific section or manager is
responsible for implementation. Each and every employee is at thefront line of promoting the code of conduct, including legal
compliance. The implementation of guidelines is carried out by theline managers of the organization. Further control is provided by the
executive officers in charge of departments under their control, with
the President and Representative Director providing companywide
control.
(Executive officers in charge)
The executive officers in charge of each area are responsible forhaving thorough knowledge particularly of regulations related totheir duties and the relationships of such regulations with their own
operations. They are responsible for proposing responses to any
revisions of laws to the President and Representative Director. The[English Translation]
33

Legal Affairs Department supports them, providing
cross-organizational coordination.
(Inspection)
Following the orders of the President and Representative Director,
the Audit and Compliance Department provides cross-organizational
inspection in a timely manner, indicating how to improve morale
through observance and at the same time pointing out matters thatneed correction. The findings of the inspection are reported promptly
to the President and Representative Director.
(Whistleblower System)
When executives and employees of the Company become aware ofunethical actions, they have the obligation to report such actions to
the proper superior without hesitation. A “Hot Helpline” has been
established to facilitate contact with the Audit and ComplianceDepartment if corrective actions are not taken even after reporting tosuperiors or it is difficult to report. Such reports will remain strictly
confidential, preventing any harm to the reporter and any necessary
investigation and appropriate measures will be taken promptly.
(Organizational Culture Committee)
The Company establishes a standing, active Organizational Culture
Committee, chaired by the President and Representative Director.
The Organizational Culture Committee examines importantorganizational culture-related issues (including compliance-related
matters), which are the cornerstone of developing and maintaining
the corporate organization, and determines important official
commendations and punishments.
(ii) Revisions of SECOM Group Code of Employee Conduct and/or criticalcompliance-related matters are undertaken after discussion with theOrganizational Culture Committee and subject to the approval of theBoard of Directors after obtaining opinions of the Audit & Supervisory
Board Members.
(iii) Basic plans and policies concerning internal controls related to financial

reporting are determined in accordance with the standards of theBusiness Accounting Council. Furthermore, an internal control system
is being developed by reinforcing information security and throughother steps.
(3)

System under which information regarding execution of business byDirectors shall be maintained and controlled(i) Documents and other information regarding execution of duties suchas those concerned with decision making (hereinafter referred to as
the “information on executing duties”) shall be properly maintained,
administered (including destruction) pursuant to the Document
Administration Regulation of the Company, which will be amended
upon reviewing the operating conditions if necessary.
(ii) Information on executing duties shall be recorded on database withnecessary information protection measure so that a search system canbe established to enable quick search as to whether or not theparticular document exists or the condition of storage of theparticular document.
(iii) Any business related to the preceding two paragraphs shall be
undertaken by officers in charge, and in particular the status of[English Translation]34

examination and review of (i) above, and operation and managementof the database of (ii) above shall be reported to the President andRepresentative Director, the Board of Directors, and the Audit &Supervisory Board.
(iv) Establishment and important amendments of the Regulation regarding(i) above shall be subject to approval of the Board of Directors after
obtaining opinions of the Audit & Supervisory Board Members.
(4)

Regulation 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 andemergency preparedness when incidents occur, daily risk monitoringand other systems.
(ii) The officer in charge shall report the President and Representative
Director, the Board of Directors and the Audit & Supervisory Boardon matters related to control of risk.
(iii)Any important changes of the risk control system shall be subject toapproval of the Board of Directors after obtaining opinions of the
Audit & Supervisory Board Members.
Risk Category
Large scale calamity(1)Large

scale

Examplecalamityrisk(2)Compliance risk

Ordinary times(3)System risk(4)Service providing risk(5)Administrativework

and accounting risk[English Translation]
35

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.

Risk Category

Ordinary times(5)

ExampleOffence 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.

(6)Others

System by which efficient execution of duties of Directors shall beensured(i) All Directors of the Company shall carry out operation and execution ofbusiness on the basis of the “Constitution of SECOM’s Business andOperation” so that they may share the idea essential to execution of theduties such as decision making for management by the Board of
Directors, decision making for execution of duties by the Directors.
(ii) On the basis of the preceding, to implement execution of duties
efficiently, the system of executive officers has been introduced so thatdecision making and execution of business shall be further facilitated.
(iii)In executing duties, in order to unify the power of the entire Company, asystem utilizing IT should be established and thereby, enabling
information to be immediately disseminated to the entire Company tothe fullest extent.
(iv) With respect to particular decision making or execution of duties, asystem utilizing IT should be established to carry out the decision
making and execution immediately and definitely.
(v) The Company will share the medium- and long-term business vision,and for the purpose of accomplishment thereof, the Board of Directors
will design an annual business plan and deliberate progress of the planeach month.

(6)

System under which the Company and the Company Group consistingof the parent company and subsidiaries is ensured to properly executeits business(i) Abiding by the “Constitution of SECOM’s Business and Operation,”each of the companies of the SECOM Group shares SECOM Group
Code of Employee Conduct, which applies to all executives andemployees. United by these guidelines, the executives and employees
work to accomplish the corporate goals in an appropriate manner.
(ii) The “Basic Rules for SECOM Group Corporate Management” provide
guidelines to enhance Group synergy, leading to the achievement of thebusiness vision by the entire SECOM Group. Covering criticaldecision-making by the companies, these basic rules clarify thecoordination of items to be approved in prior consultation with theparent company and ensure the acknowledgement of such important
items.
(iii)Each of the companies of the SECOM Group carries out IT controls
covering administration and management information in conformance[English Translation]
36

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.
(iv) The “SECOM Group Management Committee,” which is chaired by theCompany’s President and Representative Director and whose members
are composed of the presidents of 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. The President andRepresentative Director reports the results of the Group Management
Committee to the Board of Directors and the Audit & Supervisory
Board.
(v) The President and Representative Director issues orders to the Audit andCompliance Department and the supervising executive officers at Group
companies to inspect subsidiaries, if necessary. The subsidiaries accept
the inspection by the Company, which is the parent company, and at thesame time promote the understanding of compliance-related issues byexchanging information with the Company.
(vi) The Audit & Supervisory Board Members of the Company visit
important subsidiaries and conduct audits regarding internal controls.
(vii) A liaison meeting with Group Audit & Supervisory Board Members isestablished after discussion with the Audit & Supervisory Board in an
attempt to share information.
(7)

Matters related to employees to assist duties of Audit & Supervisory
Board Members when Audit & Supervisory Board Members requests to
do so
The Office of Audit & Supervisory Board Members will be established andat least two employees will be manned to assist audit duties of the Audit &Supervisory Board Members.

(8)

Matters related to independence of the employees in the preceding item
concerned from Directors
Transfer and evaluation of assistants in the preceding item shall be subject tothe 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 orderfrom Directors, executive officers or employees with respect to the subject
audit duties, nor be obligated to report to them.

(9)

System under which Directors and employees report to Audit &Supervisory Board Members and system under which any report ismade to Audit & Supervisory Board Members(i) Regulation providing for matters to be reported to Audit & Supervisory
Board Members shall be established upon discussion with the Audit &Supervisory Board, and Directors shall make reports with respect to thefollowing matters: (1) matters resolved by the Organization Culture
Committee and other committees; (2) matters likely to be materiallyharming the Company; (3) important matters relating to monthly
business conditions; (4) important matters relating to internal audit andrisk management; (5) material violation of laws and regulations or the[English Translation]
37

Articles of Incorporation; (6) condition of usage and content of the Hot
Help Line; and (7) in addition, important matters from viewpoint ofcompliance.
(ii) If an employee finds a fact falling within the preceding paragraph, asystem by which the fact may be transmitted directly to the President
and Representative Director through such means as the Hot Help Lineshall be arranged and the President and Representative Director shallreport to Audit & Supervisory Board Members pursuant to the preceding
paragraph.
(10) System under which audit by Audit & Supervisory Board Members is
ensured to be performed efficiently(i) The Audit & Supervisory Board shall regularly hold the meetings with
the President and Representative Director and the Accounting Auditor,
to exchange opinions so that audit shall be performed efficiently.
(ii) 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.
2.

Organizations etc. Relating to Internal Control System (as of May 1,
2013)

The Company’s governance system is as follows: The Board of Directors makes
decisions on business execution and other company matters; executive officers
led by President and Representative Director execute business; and Audit &Supervisory Board Members, including 3 Outside Audit & Supervisory Board
Members, and the Board of Directors, coordinating with internal audit
departments etc. audit and oversee Directors and executive officers in theexecution of their duties. More details are provided below.
(1)

Organizations etc. involved in business execution, auditing andsupervision of the Company(i) Directors and Board of Directors
The Board of Directors consists of 11 Directors and is attended by 5 Audit& Supervisory Board Members (including 3 Outside Audit & Supervisory
Board Members). It is convened once a month as a general rule. The Boardof Directors determines management policies and business execution
policies in relation to business in general, oversees the execution of duties
by Directors, actively exchanges opinions and endeavors to makedecisions in a precise and speedy fashion.
7 out of 11 Directors are involved in business execution, and 4 Directors(2 Supreme Advisors, 1 Chairman and 1 Director) do not engage inbusiness execution.
(ii) Executive Officers
The Company has an executive officer system by which decisions are
made by the President and Representative Director or the Board of
Directors, and business is executed by the Executive Officers. The systemstrengthens field divisions and enhances the service system for customers
by expediting business execution and clarifying responsibilities andauthority.
There are 24 Executive Officers, including 7 Directors.
(iii) Audit & Supervisory Board Members and Audit & Supervisory Board[English Translation]
38

The Audit & Supervisory Board consists of 5 Audit & Supervisory Board
Members, consisting of 2 Full-time Audit & Supervisory Board Members
and 3 Outside Audit & Supervisory Board Members. It is convened once amonth as a general rule.
For the office of Full-time Audit & Supervisory Board Member, theCompany appoints persons who are well versed in the Company’sbusiness, internal affairs and finance. For the office of Outside Audit &Supervisory Board Members, the Company appoints persons who are
independent from the management, have considerable knowledge ofmanagement, legal matters, finance and other fields and are capable ofproviding appropriate oversight and supervision of management.
Audit & Supervisory Board Members attend every meeting of the Boardof Directors in addition to other important conferences, exchange opinions
relating to corporate management in general, receive reports on the statusof execution of duties from Directors etc. and conduct audits focusing onwhether there are any facts of violations of laws, regulations, the Articles
of Incorporation or shareholders’ interests.
The Audit & Supervisory Board also conducts audits on operations ingeneral within the Company as well as its subsidiaries and affiliates
according to the audit plan.
Major Activities in the current fiscal year(i) Audit & Supervisory Board Members’ attendance rate at
meetings of the Board of Directors: 100%(ii) Audit & Supervisory Board Members’ attendance rate at
meetings of the Audit & Supervisory Board: 100%(iii) Conducted interviews with Directors etc. of the Company andits subsidiaries and affiliates: 60 times(iv) Conducted on-site audits at business locations of the Company,
its subsidiaries, affiliates, etc.: 183 locations(2)

Coordination among Organizations and Business Units(i) Periodic Meetings among Representative Director, etc. and Audit &Supervisory Board Members:
Audit & Supervisory Board Members hold meetings with the President
and Representative Director with the presence of Chairman and Director
periodically (once a month). At the meeting, Audit & Supervisory Board
Members report the results of audits etc. and exchange opinions onimportant issues regarding management, to share mutual recognition.
(ii) Conferences etc. among Audit & Supervisory Board Members and the
Accounting Auditor:
Audit & Supervisory Board Members hold periodical meetings with the
Accounting Auditor 6 times a year and have ones additionally asnecessary, and exchange opinions and information. Audit & Supervisory
Board Members and the Audit & Supervisory Board receive explanationand exchange opinions regarding the audit plan and audit results* from the
Accounting Auditor. In addition, Audit & Supervisory Board Memberspresent themselves as a witness during visiting audits and audit review
conducted by the Accounting Auditor as necessary. (Attended 17 times in
the current fiscal year)* including the result of quarterly reviews and audit under the CompaniesAct.
(iii) Cooperation with Internal Audit Division etc.:
Audit & Supervisory Board Members hold conferences with the Audit andCompliance Department periodically (once a month), are reported to on
audit results and exchange opinions with them. And Audit & Supervisory[English Translation]
39

Board Members endeavor to conduct audits in an efficient manner such as
requesting the internal audit division etc. to conduct an investigation asnecessary.

[English Translation]
40

Consolidated Balance Sheet(As of March 31, 2013)(Millions of Yen)ITEM

AMOUNTASSETS
542,836
175,427
56,08946,500106,638
24,05914,72327,56930,84026,292
14,384
4,158
18,453(2,302)

Fixed assets:
Tangible assets:
Buildings and improvements
Security equipment and control stations
Land
Other

706,241
361,532
155,839
67,200115,652
22,839Intangible assets:

55,07911,67821,765
21,634

Investments and others:
Investment securities
Long-term loans receivable
Long-term prepaid expenses
Prepaid pension and severance costs
Deferred income taxes
Other
Allowance for doubtful accounts

Deferred assets:
Other

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
Deferred revenue
Accrued bonuses
Reserve for losses on construction
contracts
Other

247,879
43,68442,3504,487
537
31,40629,282
4,377
4,571
30,88014,031Long-term liabilities:
Straight bonds
Long-term loans
Lease obligations
Guarantee deposits received
Deferred income taxes
Accrued pension and severance costs
Accrued retirement benefits for
directors and audit & supervisoryboard members
Investment deposits by policyholders,
unearned premiums and otherinsurance liabilities
Other

237,091
8,847
19,8283,438
36,125
13,40017,137

289,629

Total liabilities

189,042
42,33820,335
19,572
11,711
23,370(16,742)NET ASSETS

32
32

TOTAL ASSETSAMOUNT

LIABILITIESCurrent assets:
Cash on hand and in banks
Cash deposits for armored car services
Call loans
Notes and accounts receivable, trade
Due from subscribers
Short-term investments
Lease receivables and investment in leased assets
Inventories
Real estate inventories
Deferred income taxes
Short-term loans receivable
Other
Allowance for doubtful accounts

Software
Goodwill
Other

ITEM

1,249,110[English Translation]
41

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

1,714
40,554

2,443

133,627
2,242
484,970685,042
66,377
83,054609,275(73,664)(16,018)
11,783(41)

Foreign currency translation
adjustments(27,760)

Minority interests in subsidiaries:

95,114

Total net assets

764,139TOTAL LIABILITIES AND
NET ASSETS

1,249,110

Consolidated Statement of Income(Fiscal Year from April 1, 2012 to March 31, 2013)(Millions of Yen)ITEM

AMOUNT

Revenue
Costs of revenue
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income:Interest income
Dividends income
Gain on sales of investment securities
Net gains from investment in affiliates accounted for under theequity 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
Other
Ordinary profit
Extraordinary profit:
Reversal of retirement benefits for directors and audit &supervisory board members
Gain on sales of investment securities
Gain on sales of fixed assets
Gain on negative goodwill
Other
Extraordinary losses:
Impairment losses on fixed assets
Provision for allowance for doubtful accounts
Loss on sales of investment in shares of subsidiaries andaffiliates
Loss on sales of fixed assets
Loss on revaluation of investment securities
Other
Income before income taxes
Income taxes- current
Income taxes - deferred
Net income before minority interests in subsidiaries
Minority interests in subsidiaries
Net income[English Translation]
42

765,635
504,006
261,629
153,258
108,370
745
416
767
4,024
2,396
2,821
1,118
259
2,132
755
1,656

11,171

5,922
113,618

728
114
57
5
79

984

932
480
393
33
7
776
43,211(252)

2,623
111,980
42,95869,021
5,363
63,658

Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2012 to March 31, 2013)(Millions of Yen)
Shareholders’ equity
CommonTotal
CommonCapitalRetainedstock instock

surplusearnings

treasury, atshareholders’equitycost
Balance at the beginning of the fiscal

66,377

year

83,054565,261(73,659)

641,034

Change in the fiscal year:
Cash dividends
Net income(19,644)(19,644)

63,65863,658Purchase of treasury stock(0)

Disposal of treasury stock

(5)

(5)

0

0

Transfer of losses on disposal of

0

(0)

-

-

44,013(5)44,00866,377

83,054609,275(73,664)

685,042-

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

Accumulated other comprehensive income
Total
Foreign
Unrealized
Deferredaccumulated
currency
gains onlosses onothertranslation
securities
hedgescomprehensive
adjustments
incomeBalance at the beginning of the fiscal
year

4,559

(28)

(37,556)(33,026)

Minority
interests in
subsidiaries

Total
net
assets63,509671,517

Change in the fiscal year:(19,644)

Cash dividends

63,658Net income
Purchase of treasury stock(5)

Disposal of treasury stock0

Transfer of losses on disposal oftreasury stock
Net changes of items other than

7,224

(12)

9,796

17,00831,605

48,613

Total changes in the fiscal year

7,224

(12)

9,796

17,00831,605

92,622

Balance at the end of the fiscal year

11,783(41)(27,760)(16,018)

95,114764,139

shareholders’ equity[English Translation]
43

Non-Consolidated Balance Sheet(As of March 31, 2013)(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
Merchandise
Supplies
Prepaid expenses
Deferred income taxes
Short-term loans receivable
Other
Allowance for doubtful accounts

174,52154,13653,551700
14,856
9,691
2,528
1,048
5,585
1,012
2,332
5,268
19,237
4,819(248)

Current liabilities:
Accounts payable
Bank loans
Lease obligations
Payables – otherAccrued income taxes
Accrued consumption taxes
Accrued expenses
Deposits received
Deferred revenue
Payables – construction
Accrued bonuses
Other

124,174
3,044
26,598121
15,042
19,5102,538
726
24,131
21,671
4,333
6,089
365

Fixed assets:
Tangible assets:
Buildings and improvements
Automobiles
Security equipment and control
stations

574,796
117,936
17,059521

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

26,031
2,449
17,859788

Machinery and equipment
Tools, furniture and fixtures
Land
Construction in progress
Other
Intangible assets:
Goodwill
Software
Other
Investments and others:
Investment securities

65,329288
2,979
29,802
1,719
235
9,308
2,978
4,269
2,061
447,551
21,583

Investment in subsidiaries and affiliates

238,136

Long-term loans receivable
Lease deposits
Long-term prepaid expense
Prepaid pension and severance costs
Insurance funds
Other
Allowance for doubtful accounts

155,813
7,747
21,594
16,263
3,991
2,728(20,307)

TOTAL ASSETS

749,317[English Translation]
44

ITEM
LIABILITIES

Accrued pension and severance costs
Accrued retirement benefits for
directors and audit & supervisory board
members
Other
Total liabilities
NET ASSETS
Shareholders’ equity:
Common stock
Capital surplus:
Additional paid-in capital
Retained earnings:
Legal reserve
Other retained earnings
Reserve for system developments
General reserve
Accumulated earnings carried forward
Common stock in treasury, at cost
Valuation, translation adjustments andothers:
Unrealized gains on securities

Total net assets
TOTAL LIABILITIES AND
NET ASSETSAMOUNT

4,051
857
25
150,205

596,206
66,377
83,054
83,054520,439
9,028
511,410800
2,212
508,398(73,664)
2,905
2,905

599,112749,317Non-Consolidated Statement of Income(Fiscal Year from April 1, 2012 to March 31, 2013)(Millions of Yen)ITEM

AMOUNT

Revenue

355,393

Costs of revenue

210,790

Gross profit

144,603

Selling, general and administrative expenses

74,651

Operating profit

69,952Non-operating income:Interest income

1,812

Dividends income

7,599

Other

761

10,173Non-operating expenses:
Interest expenses

325

Loss on sales and disposal of fixed assets

1,957

Write-off of long-term prepaid expenses

688

Other

818

Ordinary profit

3,789
76,336Extraordinary profit:
Reversal of retirement benefits for directors and audit &supervisory board members
Gain on sales of investment securities in subsidiaries andaffiliates

Gain on sales of investment securities

728
367
114

Other

9

1,219

Extraordinary losses:
Provision for allowance for doubtful accounts

945

Impairment loss on investments in subsidiaries and affiliates

77

Impairment losses on fixed assets

22

Loss on revaluation of investment securities

0

Other

7

Income before income taxes

1,052
76,502

Income taxes - current

28,481

Income taxes - deferred(1,107)

Net income

27,374
49,128[English Translation]45

Non-Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2012 to March 31, 2013)(Millions of Yen)
Shareholders’ equity
Capital surplus
CommonAdditional

Other capital

Total capital

paid-in capitalsurplussurplusstock
Balance at the beginning of the66,377fiscal year

83,054-

83,054

(0)

(0)

0

0

Change in the fiscal year:
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock
Transfer of losses on disposal oftreasury stock
Net changes of items other thanshareholders’ equity
Total changes in the fiscal year
Balance at the end of the fiscal
year

-

-

-

-

66,377

83,054-

83,054

Shareholders’ equity
Retained earnings
Other retained earnings
Legal

Reserve forreservesystemGeneraldevelopments
Balance at the beginning of the800

retainedearnings carriedearnings

forward478,914490,954

Cash dividends(19,644)(19,644)

Net income

49,12849,128(0)(0)

fiscal year

9,028

reserve

Total

Accumulated

2,212

Change in the fiscal year:

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

-

-

-

29,48429,484

9,028

800

2,212

508,398

520,439[English Translation]
46

(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(73,659)

566,727

1,031

1,031

567,758

Change in the fiscal year:
Cash dividends(19,644)(19,644)

Net income

49,12849,128Purchase of treasury stock

(5)

(5)

(5)

Disposal of treasury stock

0

0

0

-

-

Transfer of losses on
disposal of treasury stock
Net changes of items otherthan shareholders’ equity

1,874

1,874

1,874

Total changes in the fiscal(5)29,478

1,874

1,874

31,353(73,664)596,206

2,905

2,905

599,112year
Balance at the end of the fiscal
year[English Translation]
47

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 16, 2013
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA LLC
Hiroaki Sugiura (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Masakazu Hattoi (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Kentaro Maruta (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, the consolidated
statement of changes in net assets and the related notes of SECOM Co., Ltd. as at
March 31, 2013 and for the year from April 1, 2012 to March 31, 2013 inaccordance 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[English Translation]48

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
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]
49

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 16, 2013
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA LLC
Hiroaki Sugiura (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Masakazu Hattoi (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Kentaro Maruta (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, 2013 andfor the 52nd business year from April 1, 2012 to March 31, 2013 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 the[English Translation]50

assessment 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
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]
51

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, 2013

Mr. Shuji Maeda
President and Representative Director
SECOM Co., Ltd.
Audit & Supervisory Board of
SECOM Co., Ltd.
Seiji Sakamoto (Seal)
Audit & Supervisory Board
Member (Full-time)
Katsuhisa Kuwahara (Seal)
Audit & Supervisory Board
Member (Full-time)
Ken Tsunematsu (Seal)
Outside Audit & Supervisory
Board Member
Kohei Yamashita (Seal)
Outside Audit & Supervisory
Board Member
Hideki Kato (Seal)
Outside Audit & Supervisory
Board Member
The Audit & Supervisory Board has received the audit reports of the performanceof duties of the Directors during the 52nd business term from April 1, 2012 throughMarch 31, 2013 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]52

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 execution of the duties of
Directors as described in the Business Report complies with laws and regulations and the
Articles of Incorporation and to ensure appropriate company operation, 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 an 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]
53