Notice of Convocation
The 53rd Ordinary General Meeting of Shareholders

The following is an English translation of the Notice of Convocation of the 53rd
Ordinary General Meeting of Shareholders of SECOM CO., LTD. to be held on
June 25, 2014, 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 53rd Ordinary General Meeting of Shareholders ····
Reference Document Concerning the General Meeting of Shareholders ··············

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

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

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

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III.
1.

26

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 Directors and 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

26
28
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29

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

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38

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43
44
45
46
48
50
52

Stock Exchange Code: 9735
June 3, 2014

Notice of Convocation of
The 53rd Ordinary General Meeting of Shareholders
Dear Shareholders:
You are cordially invited to attend the 53rd Ordinary General Meeting of
Shareholders of SECOM CO., LTD. (the “Company”).
If you are unable to attend the aforesaid meeting, you can exercise yourvoting rights through either of the methods stated below. The Company
respectfully requests you to study the “Reference Document Concerning theGeneral Meeting of Shareholders” below and exercise your voting rights on or
before 6:00 p.m. (JST) June 24, 2014 (Tuesday):[In case of exercising voting rights by mail]Please indicate on the Voting Rights Exercise Form enclosed herewith
your approval or disapproval to the proposals on the agenda, and returnthe form to the Company by mail on or before the time limit statedabove.
[In case of exercising voting rights via the Internet]
Please access the website for the exercise of voting rights(http://www.evote.jp/), using the log-in ID and temporary password
which are shown on the Voting Rights Exercise Form. After logging in,please indicate whether you approve or disapprove the items on theagenda by following the instructions on the display screen by the time
limit stated above.
Yours very truly,
SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo, Japan
By: HIROSHI ITO
President and Representative Director(Note) Please note that shareholders with addresses outside Japan may notthemselves use these voting procedures. For these shareholders please consult theircustodian in Japan as to the exercise of voting rights.

[English Translation]
4

PARTICULARS

1.

Date and Time of the Meeting:
Wednesday, June 25, 2014 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 53rd Fiscal Year (from April 1, 2013 to March
31, 2014) and the Results on the Audits of Consolidated Financial
Statements by the Accounting Auditor and the Audit &Supervisory Board.
2. Report on the Non-Consolidated Financial Statements for the
53rd Fiscal Year (April 1, 2013 to March 31, 2014).
Matters to be Resolved upon:First Item of Business:
Second Item of Business:

Proposed Distribution of Surplus
Partial Amendments to the Articles
of Incorporation
Election of Eleven (11) Directors

Third Item of Business:

4.

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 Statements[English Translation]52) “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 are any amendments to the contents of the Reference
Document Concerning the General Meeting of Shareholders, theBusiness Report, the Consolidated Financial Statements and theNon-Consolidated Financial Statements, the Company will announce
such amendments on the “Investor Relations: Stocks and Bonds”
section of the Company’s website(http://www.secom.co.jp/english/ir/).

[English Translation]
6

Reference Document Concerning the General Meeting of Shareholders
Proposal and Reference Items
First Item of Business: Proposed Distribution of Surplus
The Company considers the return of profit to shareholders as one of theimportant managerial issues, and the Company has determined the 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 whileconsidering the Company’s basic policy that ensures the payment of continual andsteady dividends. At present, The Company has made it a basic rule to distribute a
dividend once a year as the year-end dividend, which is determined by theGeneral Meeting of Shareholders. Furthermore, the Company will utilize internal
reserves for investments required for increased new customers, research anddevelopment and investments 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 115
per share, an increase of YEN 10 per share from the previous fiscal year in which
dividend was YEN 105 per share.
Matters related to the year-end dividend:(1)
Kind of assets distributed:
Cash(2)Matter related to distribution of cash and total amount:
YEN 115 per share of common stock of the Company
The total amount:
YEN 25,100,671,075(3)Effective date for distribution of surplus:
June 26, 2014

Second Item of Business:

1.

Partial Amendments to the Articles ofIncorporation

Reasons for amendments(1)

Amendment relating to management of the general meeting ofshareholders and the Board of Directors
In the light of enabling the general meeting of shareholders and theBoard of Directors to manage their operation flexibly, the provisions
with respect to the person entitled to convene the general meeting ofshareholders and the Board of Directors and chairman thereat areproposed to be amended.
(2) Amendment to introduce interim dividend
In order to increase opportunities for making return of profit toshareholders, it is proposed to render a necessary amendment to enable
for the Company to pay a part of surplus (“interim dividend”) upon
resolution of the Board of Directors based on Article 454, Paragraph 5 of[English Translation]7the Companies Act.
The number of the Articles following the insertion shall beaccordingly renumbered.

2.

Details of amendment

The details of amendment are as follows:(The underlined parts are changed parts.)
Current Articles of Incorporation
Proposed changes(Person to Convene General Meetings of (Person to Convene General Meetings ofShareholders)Shareholders)
Article 14
Article 14
Except as otherwise provided by laws
Except as otherwise provided by laws
and regulations, the general meeting
and regulations, the general meetingof shareholders shall be convened byof shareholders shall be convened by
the President and Director by
the Chairman and Director or the
President and Director by resolution
resolution of the Board of Directors.
of the Board of Directors.
2. When the President and Director is 2. When both of the Chairman and
Director and the President andprevented from so acting, one of the
Director are prevented from so acting,other Directors selected in accordance
one of the other Directors selected inwith the order of priority determined inaccordance with the order of priority
advance by a resolution of the Board
determined in advance by a resolutionof Directors shall take his/her place.
of the Board of Directors shall takehis/her place.
(Chairman of General Meeting of (Chairman of General Meeting of
Shareholders)Shareholders)
Article 15
Article 15
A Director who was determined in
The President and Director shall act asadvance by a resolution of the Board
chairman at the general meeting ofof Directors from among theshareholders.
Chairman and Director andthePresident and Director shall act aschairman at the general meeting ofshareholders.

[English Translation]
8

Current Articles of Incorporation
2. If the President and Director is 2.
prevented from so acting, one of theother Directors selected in accordancewith the order of priority determinedin advance by a resolution of theBoard of Directors shall take his/herplace.

Proposed changes
If both of the Chairman and Director
and the President and Director are
prevented from so acting, one of theotherDirectors
selectedinaccordance with the order of priority
determined in advance by aresolution of the Board of Directors
shall take his/her place.

(Person to Convene Meetings of the Board (Person to Convene Meetings of the Boardof Directors)of Directors)
Article 26
Article 26
Unless otherwise provided for by laws
Unless otherwise provided for by laws
and regulations, the President andand regulations, the Chairman and
Director shall convene meetings of the
Director or the President and Director
Board of Directors.
shall convene meetings of the Boardof Directors.
2. When the President and Director is 2. When both of the Chairman andunable to act, one of the other
Director and the President andDirectors selected in accordance with
Director are unable to act, one of thethe order of priority determined inother Directors selected in accordance
advance by a resolution of the Board
with the order of priority determined inof Directors shall take his/her place.
advance by a resolution of the Boardof Directors shall take his/her place.
(Chairman)(Chairman)
Article 28
Article 28
The President and Director shall act as
The Chairman and Director or thethe chairman at meetings of the Board
President and Director shall act as theof Directors.
chairman at meetings of the Board of
Directors.
2. When the President and Director is 2. When both of the Chairman and
Director and the President andunable to act as the chairman, one of
Director are unable to act as thethe other Directors selected inchairman, one of the other Directors
accordance with the order of priority
selected in accordance with the order
determined in advance by a resolutionof priority determined in advance by aof the Board of Directors shall takeresolution of the Board of Directors
his/her place.
shall take his/her place.

[English Translation]
9

Current Articles of Incorporation
Proposed changes(Record date for Distribution of Surplus) (Record date for Distribution of Surplus)
Article 48
Article 48
The record date of the Company for
The record date of the Company for
distribution of year-end dividend shall
distribution of year-end dividend shallbe March 31 each year.
be March 31 each year.
(Newly established)
2. In addition to above, the Company may
distribute surplus by fixing thespecified record date.
(Newly established)(Interim dividend)
Article 49
The Company may distribute interim
dividend with the record date of
September 30 each year upon
resolution of the Board of Directors.

(Prescription Period of Dividends)
Article 49(The contents of the Articles areintentionally omitted.)

Third Item of Business:(Prescription Period of Dividends)
Article 50(The numerical numbers of all the Articles
hereafter shall be increased by one (1), andthe contents of the Articles are unaffected.)

Election of Eleven (11) Directors

The term of office of all of the eleven (11) Directors will expire at theclose of this Meeting. Eleven (11) Directors are proposed to be elected.
The candidates are as follows:
Name(Date of Birth)1

Makoto Iida
(April 1, 1933)

Profile(Brief history, Position, Responsibility, and Important
Position of Other Organizations Concurrently Assumed , ifany)Jul 1962
President and Representative Director(Founder)Feb 1976
Chairman and Representative Director
Jun 1997
Supreme Advisor and Director (currently)[English Translation]
10

The Numberof Shares
Held

4,320,500

Name(Date of Birth)

2

3

4

5

Shuji Maeda(September 27, 1952)*

Hiroshi Ito(February 7, 1952)*

Yasuo Nakayama(November 1, 1952)*

Kazuaki Anzai(January 14, 1952)*

Profile(Brief history, Position, Responsibility, and Important
Position of Other Organizations Concurrently Assumed , ifany)
Jan 1981
Joined SECOM Co., Ltd.
Jun 1997
Director
Jun 2000
Executive Director
Jun 2004
Director and Managing Executive Officer
Apr 2005
Executive Director
Jun 2009
Executive Vice President and Director
Jan 2010
President and Representative Director
Jun 2014
Chairman and Representative 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.)Jun 2004
Executive Officer
Jun 2009
Executive Director
Jun 2014
President and Representative Director(currently)
Jul 2003
Branch Manager, Nagoya Branch, The Bankof JapanJul 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)(Important position of other organization concurrently
assumed)Outside Audit & Supervisory Board Member, Secom
General Insurance Co., 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 DivisionJun 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.

[English Translation]
11

The Numberof Shares
Held

13,300

5,100

3,500

484

Name
(Date of Birth)

6

7

8

9

Junzo Nakayama(February 24, 1958)*

Kenichi Furukawa(March 17, 1959)*

Yasuyuki Yoshida(March 28, 1958)*

Tatsuro Fuse
(September 9, 1957)*

Profile(Brief history, Position, Responsibility, and Important
Position of Other Organizations Concurrently Assumed , ifany)
Mar 1980
Joined SECOM Co., Ltd.
Nov 1999
President and Representative Director, Japan
Image Communications Co., Ltd.(currently
Turner Japan K. K.)
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
Jun 2014
Executive Director (currently)
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
Jun 2013
Director
Jun 2014
Executive Director (currently)
Mar 1980
Joined SECOM Co., Ltd.
Feb 1997
Associate General Manager, Strategic
Planning DivisionSep 1998
Director, Toyo Fire and Marine InsuranceCo., Ltd. (presently Secom General InsuranceCo., 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)
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
Jun 2013
Director (currently)(Important position of other organization concurrently
assumed)President and Representative Director,
Secom Medical System Co., Ltd.

[English Translation]
12

The Numberof Shares
Held

1,000

1,000

1,700

2,800

Name
(Date of Birth)

10

Takaharu Hirose(October 25, 1944)
Outside Director

11

Takashi Sawada(July 12, 1957)
Outside Director

Profile(Brief history, Position, Responsibility, and Important
Position of Other Organizations Concurrently Assumed , ifany)
Sep 1965
Founded Fuji Vending Co., Ltd., andassumed 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)
Jun 2013
Director (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,
FAST RETAILING 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)
Jun 2013
Director (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(Notes)1.
There is no particular interest between the Company and each of the said
candidates.
2.
Candidates with * are Executive Officers currently in office.
3.
Messrs. Takaharu Hirose and Takashi Sawada are candidates for Outside
Directors. The designation of Messrs. Takaharu Hirose and Takashi
Sawada as Independent Officers has filed with Tokyo Stock Exchange,
Inc.
4.
Reasons for Election of Candidates for Outside Directors(1)
Mr. Takaharu Hirose set up a venture engaging in soft drink vending
machine industry during his college period, exerted effort to establish
and manage the industry organization and contributed to develop thebusiness and industry. He transferred to a research services company
for the Internet in 2003 and has been pursuing business opportunities
by activating research of enterprises by the Internet. The Company
deems his rich experience accumulated through his career on
corporate management and a high level of his insight to be reflectedon the enforcement of management and enhancement of corporate[English Translation]
13

0

200

5.

6.

governance of the Company. Accordingly, the Company proposes tothe shareholders to elect him as Outside Director continuously.
(2)
Mr. Takashi Sawada engaged in management of Fast Retailing Co.,
Ltd., and then established Revamp Corporation in 2005, since which
he promoted various kinds of new businesses to be established andgave assistance and the like for management of enterprises. The
Company deems his rich experience accumulated through his career
on corporate management and a high level of his insight to bereflected on the enforcement of management and enhancement ofcorporate governance of the Company. Accordingly, the Company
proposes to the shareholders to elect him as Outside Director
continuously.
The number of years during which Mr. Takaharu Hirose and Mr. Takashi
Sawada are in the office of Outside Directors of the Company has beenone (1) year at the close of this General Meeting of Shareholders.
The Company has entered into, with each of Mr. Takaharu Hirose and Mr.
Takashi Sawada, an agreement limiting their liabilities as prescribed by
Article 423, Paragraph 1 of the Companies Act, pursuant to theprovisions of Article 427, Paragraph 1 of the Companies Act. The
maximum amount of the liabilities under this agreement which they incuris equal to the lowest amount of liabilities stipulated in Article 425,
Paragraph 1 of the Companies Act.

[English Translation]
14

[Attached Documents]

Business Report (Fiscal Year Ended March 31, 2014)
I. Outline of the Group’s Business1. The Current Business Development and Results of Operations
During the fiscal year ended March 31, 2014 (“the current fiscal year”), Japanese
economy has been gradually improving as shown in the progress of thedepreciation of yen and rising share prices resulting from the governmental
economic and monetary policy, the improvement of the corporate earnings, andthe some signs of recovery in the employment and the individual income.
Furthermore, the increase in consumer spending stimulated by last-minutedemand prior to the consumption tax raise has contributed to the trend of
economic recovery.
In this environment, we have been continuously trying to satisfy the increasingly
diversified 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, information and communication related services,and real estate and other services segment. We also pressed forward with efforts
to apply the ALL SECOM concept, which emphasizes cooperation among ourvarious independent businesses to strengthen the bond of the Group as a wholewith a view to hastening our advance to growth. Furthermore, preparing for future
Japanese society, we promote the effort to develop innovative services through
ALL SECOM concept, in terms of key themes: super-aged society and disaster
preparedness/business continuity planning (BCP)/environmental preservation,
based on a foundation of our security services.
As a result, consolidated revenue for the current fiscal year increased by 7.4% to
YEN 822.2 billion, compared with the previous fiscal year. Consolidated
operating profit went up by 10.7% to YEN 120.0 billion. Consolidated ordinary
profit increased by 11.5% to YEN 126.6 billion, mainly due to contribution by
YEN 4.0 billion of net gains on private equity investment in the U.S., improvingfrom YEN 2.3 billion in the previous period. Consolidated net income increased
by 9.8% to YEN 69.8 billion. Consolidated revenue, consolidated operating profit,
consolidated ordinary profit and consolidated net income reached a record-high.
（Millions of Yen）
Revenue
Current fiscal
year (FY2013)
Previous fiscal
year (FY2012)

Operating profit

Ordinary profit

Net income

822,228

120,018

126,677

69,876765,635

108,370

113,618

63,658From the current fiscal year, information and communication related services
segment, formerly included in information and communication related and otherservices segment, is separately reported. Also, real estate development and sales
segment, previously reported separately, was included in real estate and otherservices segment accompanying with change of its name from information andcommunication related and other services segment. Furthermore, from the current
fiscal year, construction and installation services, previously included in security[English Translation]
15

services segment, is reclassified to real estate and other services segment. As suchthe prior year’s figures in the following prior year comparison are also reclassified
to conform to these changes.
A 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 strived to catch the customers’ needs precisely and propose the most suitable
services from our extensive lineup so that we can make our customer relationshipmore solid and provide the customers with the long-term safety, peace of mind,
comfort, and convenience.
For our commercial security services, we have made an effort to market highvalue added on-line security systems, such as “SECOM AX,” which is
high-quality on-line security systems supported by imaging technology, “SECOM
LX,” which has an access control function for the promotion of labor management
and cost reduction, and “SECOM FX,” which has a facility control function.
For our residential security services, we have promoted “SECOM Home Security
G-Custom,” home security controller with the function to provide services close
to customers’ regular life. In addition, we have launched new services for thesuper aging society, including “SECOM My Doctor Plus,” an emergency
correspondence services addressing the outside and inside occurrences andcombining the rescuing and caring services for the aged, with the cooperation of
the two major nursing business companies. As options available to SECOM Home
Security subscribers, we also offer the Keeping in Touch call and Keeping inTouch visiting services for seniors, by combining our medical services and life
support services to ensure peace of mind both for seniors receiving support andfor loved ones living far away.
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 6.3% to YEN 459.1 billion and operating profit
increased by 3.8% to YEN 105.8 billion.
In the fire protection services segment, we provided a broad range of fire
protection systems such as high-quality fire alarm systems and fire extinguishingsystems along with customers’ needs to a wide variety of facilities such as officebuildings, production facilities, tunnels, cultural properties, ships and residences.
In the current fiscal year, two major fire protection companies, Nohmi Bosai Ltd.
and Nittan Co., Ltd., promoted various fire protection systems based on eachcompany’s business infrastructure and product development expertise.
Revenue increased by 6.9% to YEN 122.0 billion and operating profit increased
by 61.4% to YEN 10.4 billion, mainly due to the cost reduction.
In the medical services segment, we provided various medical services such as
our core home medical services, including home nursing services andpharmaceutical dispensing and home delivery services, operation of residences forseniors, sales of electronic medical report systems, sales of medical equipments
and pharmaceutical products, personal care services, and the leasing of real estate
for medical institutions. In the current fiscal year, in a joint venture with a local
firm and others, we opened Sakra World Hospital in Bangalore, India, the first
general hospital jointly managed by Japanese and local company in India,
leveraging our know-how accumulated through our medical services. In Japan, we
opened a medical complex for seniors, SECOM CAREA Azamino, the continued
care facility combined with attendant nursing care service etc.
Revenue increased by 11.9% to YEN 53.8 billion, mainly owing to the firm
increase in sales of pharmaceutical products. Operating profit increased by 5.9%
to YEN 4.5 billion.

[English Translation]
16

In the insurance services segment, we expanded marketing efforts for our uniquenon-life insurance offerings, including Security Discount Fire Policy forcommercial facilities that offers discounts on premiums to customers who haveinstalled on-line security systems, recognizing such systems as a risk-mitigating
factor; SECOM Anshin My Home, the comprehensive fire insurance policy forresidences that offers a variety of compensation plans and discount policies;
MEDCOM, an unrestricted cancer treatment policy that offers compensation of
actual cost of medical treatment; and SECOM Anshin My Car, a comprehensive
automobile insurance policy that offers on-site support services provided by our
emergency response personnel in the event of an accident.
Revenue increased by 1.7% to YEN 35.7 billion, mainly due to the firm increasein sales of MEDCOM and fire insurance policy. Operating loss was YEN 0.4
billion, improving from operating loss of YEN 0.9 billion in the previous
corresponding period, with the decrease in selling, general and administrative
expenses.
In the geographic information services segment, we collected geographic datafrom aerial photography, vehicle/ground surveying systems and satellite images,
and by integrating, processing, and analyzing the geographic data, provided thegeospatial data services for domestic national and local governmental agencies,
private sectors, and foreign governmental agencies including emerging anddeveloping countries. To improve road safety, we started to sales ofhigh-precision 3D data for highways following to those for national road. We also
strived to increase in processing capacity of geographical information suited toour customers’ needs, including infrastructure management and national resilience,etc.
Revenue increased by 6.8% to YEN 54.6 billion, mainly due to the firm increasein public division’s sales. Operating profit increased by 11.4% to YEN 4.1 billion,
mainly due to the improvement in cost ratio of the international division.
In the information and communication related services segment, our distinctive
portfolio includes the core data center services, as well as BCP support,
information security services and a variety of cloud-based services. In the current
fiscal year, in light of increased demand since the Great East Japan Earthquake,
we opened two new data center facilities in Tokyo and Osaka. We launched
Real-Time Disaster Information Services, analyzing public disaster informationand our independently collected information, and providing accurate informationof evacuation and BCP. We also started Cyber Dojo Services, training of method
for coping with cyber attack. In addition, we signed a joint agreement with Tokyo
Metropolitan Police Department to promote collaborative preventive efforts toprevent cyber attack and cybercrime.
Revenue increased by 58.7% to YEN 47.7 billion and operating profit went up by
60.0% to YEN 5.6 billion, chiefly owing to contribution by At Tokyo Corporation,
newly consolidated from October 31, 2012.
Real estate and other services segment comprises developing and selling
condominiums equipped with advanced security and disaster mitigation features,
real estate leasing, construction and installation services, etc.
Revenue decreased by 10.7% to YEN 49.0 billion, chiefly due to the decrease insales of condominiums in the real estate development and sales business.
Operating profit went down by 3.0% to YEN 4.2 billion.

[English Translation]
17

Results by Business Segment (53rd Fiscal Year – current fiscal year)(Millions of Yen)
Revenue
Business segment

Inter-segment

Security services

459,101

13,098472,200

105,871

Fire protection services

122,045

5,111

127,157

10,427

Medical services

53,802

149

53,951

4,569

Insurance services

35,7692,946

38,716(465)

54,69672

54,7694,182

47,727

6,194

53,922

5,607

49,0842,255

51,3394,282

822,228

29,828852,056

134,477-(29,828)(29,828)(14,458)

822,228-

822,228

120,018

Geographic information
services
Information andcommunication related
services
Real estate and otherservices
Total
Eliminations andcorporate items
Consolidated revenue

Total

Operatingprofit (loss)

Customers

With respect to the results by geographical segments, in Japan, revenue increased
by 6.9% to YEN 782.8 billion. Overseas revenue increased by 19.1% to YEN 39.3
billion.
2. Issues the Group Has to Cope with
As society undergoes constant change, people’s demand for security and safety
increases and becomes diverse and sophisticated.
In view of this situation, the Group is aiming to realize “Social System Industry”
through providing various services and products, in our security services, fire
protection services, medical services, insurance services, geographic information
services, information and communication related services, real estate development
and sales and other services. Moreover, by combining these services and products,
the Group endeavors to create and supply unique services and products. To thisend, the Group declared the slogan, “ALL SECOM,” to further rally cooperation
among the Group’s various businesses, and each and every employee of theGroup has been actively working to maximize the strength of the Group as awhole. We place high value on the data center business handling our customers’classified information as one of our business bases. Furthermore, we promote
aggressively the creation of highly-value-added services only the Group could
provide, from the viewpoint of key words like security, super-aging society,disaster, business continuity planning (BCP) 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. Through these efforts, we ultimately seek to establish a more secured,safe, comfortable and convenient society. Additionally, the Group aims to further
instigate growth by leveraging its know-how accumulated through its business inJapan and using it to aggressively develop businesses overseas.
We look forward to the support from our shareholders in these and all of ourendeavors.

[English Translation]18

3. Capital Expenditures
Capital expenditures for the current fiscal year totaled YEN 54.4 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 37.5 billion.
AmountBusiness segment(Millions of Yen)

Security services

37,575Fire protection services

1,635

Medical services

2,052

Insurance services

1,646

Geographic information services

4,742

Information and communication related services

5,768

Real estate and other services

496
Subtotal

53,918Eliminations and corporate items

525
Total

54,444

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)
53rd fiscal year

50th fiscal year

51st fiscal year

52nd fiscal year

(4/1/2010–(4/1/2011–(4/1/2012–

3/31/2011)

3/31/2012)

3/31/2013)

Revenue

663,887

679,173765,635

822,228

Operating profit

99,141

81,078108,370

120,018

Ordinary profit

109,674

87,839113,618

126,677

Net income

60,84635,48963,65869,876279.07

162.63291.65320.14

Total assets

1,094,400

1,101,884

1,249,110

1,328,226

Net assets

654,055

671,517764,139

830,369

Fiscal years

Category

Net income pershare (Yen)[English Translation]
19(current fiscal year)(4/1/2013–
3/31/2014)

6. Trends in Earnings and Assets of the Company(Millions of Yen except for net income per share)
53rd fiscal year

50th fiscal year

51st fiscal year

52nd fiscal year

(4/1/2010–(4/1/2011–(4/1/2012–

3/31/2011)

3/31/2012)

3/31/2013)

Revenue329,297

345,476355,393364,280

Operating profit

68,68870,196

69,952

72,909Ordinary profit

74,501

75,212

76,33678,884

Net income

45,023

26,81849,12851,497206.50122.90225.08235.94

Total assets

694,656

699,448

749,317772,910

Net assets

558,417567,758

599,112627,242

Fiscal years
Category

Net income per share(Yen)(current fiscal year)(4/1/2013–
3/31/2014)

In the current fiscal year, the Company’s non-consolidated revenue increased by
2.5% to YEN 364.2 billion, operating profit increased by 4.2% to YEN 72.9
billion, ordinary profit increased by 3.3% to YEN 78.8 billion, and net income
increased by 4.8% to YEN 51.4 billion. Net income per share increased to YEN
235.94 compared to YEN 225.08 in the previous fiscal year.
Contract revenue accounted for 85.0% of total revenue, or YEN 309.4 billion, andsales of products and equipment accounted for 15.0% of total revenue, or YEN
54.7 billion.
Revenue from centralized systems, which is the core of revenue and profit,
recorded YEN 259.2 billion and accounted for 71.2% of total revenue. Static
guard contracts generated revenue of YEN 25.0 billion, and revenue from armoredcar services came to YEN 17.2 billion. The remaining revenue amounted to YEN
8.0 billion, the majority of which came from management fees paid bysubsidiaries and other companies.
Product sales totaled YEN 33.3 billion, 9.1% of total revenue, and equipment
sales to subsidiaries and other companies totaled YEN 21.4 billion, 5.9% of total
revenue.
Costs of service and sales were YEN 215.8 billion, and sales and generaladministrative expenses were YEN 75.5 billion. As a result, operating profit
recorded YEN 72.9 billion.
Non-operating income was YEN 10.2 billion, which included interest anddividends received, while non-operating expenses, including interest paid and loss
on sales and disposal of fixed assets, totaled YEN 4.2 billion.
For the fiscal year under review, the Company posted net income of YEN 51.4
billion, having recorded an extraordinary profit of YEN 0.4 billion including thegain on redemption of investment securities, and an extraordinary loss of YEN 1.6
billion including the provision for allowance for doubtful accounts with respect toloans to consolidated subsidiaries.

[English Translation]
20

Revenue by Business Category of the Company

Fiscal years

Contract revenue%

249,81753rd fiscal year
(Current fiscal year)(4/1/2013–3/31/2014)

Amount(Millionsof Yen)

%

72.3

4.4

256,02572.0

2.5

259,249

71.2

1.3

24,9237.2

0.4

25,223

7.1

1.2

25,0016.9(0.9)

17,2765.0

1.8

17,0734.8(1.2)

17,223

4.7

0.9

Other

7,506

2.2

(18.0)

6,977

2.0

(7.0)

8,023

2.2

15.0

Subtotal

299,523

86.7

3.2

305,30085.9

1.9

309,49985.0

1.4

Products

28,0348.1

0.8

29,3898.3

4.8

33,3289.1

13.4

Equipment

17,9175.2

59.5

20,7035.8

15.5

21,4535.9

3.6

Subtotal

45,952

13.3

17.7

50,092

14.1

9.0

54,781

15.0

9.4

Total

345,476 100.0

4.9

355,393

100.0

2.9

364,280 100.0

2.5

Centralized
systems
Static guard
services
Armored car
servicesAmount(Millionsof Yen)52nd fiscal year
(4/1/2012–3/31/2013)

Change(%)

Category

Sales

51st fiscal year
(4/1/2011–3/31/2012)[English Translation]
21

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.

6,650
(Millions of Yen)

16,808(Millions of Yen)

Pasco Corpration

8,758(Millions of Yen)

Secom Trust Systems Co., Ltd.

1,468
(Millions of Yen)

At Tokyo Corporation

13,378(Millions of Yen)

Secom Home Life Co., Ltd.

3,700
(US$)

The Westec Security Group, Inc.

301
(Thousands ofSecom Plc

UK Pounds)

44,126Percentage ofownership(Percentage
of votingrights)(%)
50.87(50.88)(%)
50.36(50.93)(%)
100.00(100.00)(%)
100.00(100.00)(%)
97.11(97.82)(%)
69.84(72.80)(%)
100.00(100.00)(%)
50.88(50.88)(%)
99.94(99.95)(%)
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
Information security services andsoftware development

Data center business

Development and sales of real estate

Holding company in the U.S.

(%)
100.00(100.00)

Security business in the U.K.

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

[English Translation]
22

8. Principal Business of the GroupThe Group consists of the Company, 174 consolidated subsidiaries and 25
affiliates accounted for under the equity method. The principal business activitiesof the Group are as follows: Security Services centering on contracted security
services; Fire Protection Services centering on comprehensive fire protection
services; Medical Services, focusing on home medical services and managementof residences for seniors; Insurance Services consisting mainly of non-life
insurance; Geographic Information Services that mainly entails the provision ofsurveying and measuring operations; Information and Communication Related
Services including security network services, development and operation ofbusiness systems and information security services; and Real Estate Development
and Sales centering on development and sales of condominiums and Other
Services.
9. Principal Offices of the Group(i) Headquarters of the Company:
5-1, Jingumae 1-chome, Shibuya-ku, Tokyo(ii) Regional Headquarters:
Hokkaido (Sapporo City), Tohoku (Sendai City), West Kanto (Saitama City),
East Kanto (Chiba City), Tokyo (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 Trust Systems Co.,
Ltd. (Shibuya-ku, Tokyo), At Tokyo Corporation (Koto-ku, Tokyo), Secom
Home Life Co., Ltd. (Shibuya-ku, Tokyo), Arai & Co., Ltd. (Shibuya-ku,
Tokyo).
(iv) Overseas Subsidiaries:
The Westec Security Group, Inc. (Dover, Delaware, USA), Secom Plc(Kenley, Surrey, UK), Secom (China) Co., Ltd. (Beijing, China).
10. Matters Concerning Employees of the Group and the Company(1) Matters Concerning Employees of the Group
Increase from the end of the previous

Number of employees

fiscal year

37,241768(2) Matters Concerning Employees of the Company
Number of
employees

Increase from the end of theprevious fiscal year

Average age

Average years of service

15,095
191
41.6
15.0
(Note)The number of employees refers to the number of full-time employees.

[English Translation]
23

11. Principal Lenders(Millions of Yen)
Lenders

BalanceMizuho Bank, Ltd.

20,378The Bank of Tokyo-Mitsubishi UFJ, Ltd.

12,379Sumitomo Mitsui Banking Corp.

9,437

Mitsubishi UFJ Trust and Banking Corp.

4,466

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

[English Translation]24

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 15,022,012 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)

27,054100 shares
Percentage ofownership(%)

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

17,889

8.19

The State Street Bank and Trust Company

17,872

8.18

Japan Trustee Services Bank, Ltd.
(Trust Account)

11,549

5.29

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

6,153

2.81

Makoto Iida

4,320

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

BNP Paribas Securities

3,615

1.65

Juichi Toda

3,152

1.44

The State Street Bank and Trust Company
505223

2,736

1.25

(Notes)1. Although the Company holds treasury stock of 15,022,012 shares, it is not included in thetable above. The percentage of ownership is calculated on the basis of the total number ofshares outstanding excluding treasury stock. The percentage of ownership is truncated totwo decimal places.
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.
3. Although Mr. Juichi Toda passed away on January 30, 2014, transfer of title has not been
completed as of March 31, 2014. Therefore, the name is indicated as in the register list ofshareholders.

[English Translation]
25

III. Directors and Audit & Supervisory Board Members
1.

Names and Titles of Directors and Audit & Supervisory Board Members(As of March 31, 2014)
Position

Field of responsibility and important
position of other organization
concurrently assumed

Name

Director

Makoto Iida

Supreme Advisor

President andRepresentative Director

Shuji Maeda

Executive Officer

Executive Director

Yasuo Nakayama

Executive Director

Hiroshi Ito

Executive Director

Kazuaki Anzai

Director

Yasuyuki Yoshida

Director

Junzo Nakayama

Director

Tatsuro Fuse

Director

Kenichi Furukawa

Director

Takaharu Hirose

Director

Takashi Sawada

Audit & Supervisory
Board Member
Audit & Supervisory
Board Member

Seiji Sakamoto
Katsuhisa Kuwahara

Audit & Supervisory
Board Member

Ken Tsunematsu

Audit & Supervisory
Board Member

Hideki Kato[English Translation]
26

Executive Officer (general manager ofgeneral affairs division)
Outside Audit & Supervisory Board
Member of Secom General InsuranceCo., Ltd.
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.
Executive Officer (in charge of strategicplanning office and in charge of groupcompanies supervisor)
Executive Officer (general manager offinance division)
Executive Officer (in charge of medical
business), President and Representative
Director of Secom Medical System Co.,
Ltd.
Executive Officer (general manager ofplanning department)
Chairman and Representative Director of
GAIN Inc.
President and Representative Director of
Revamp Corporation, Outside Directorof Nomura Research Institute, Ltd.,
Outside Director of Culture Convenience
Club Co., Ltd.
Full-time Audit & Supervisory Board
MemberFull-time Audit & Supervisory Board
MemberAttorney-at-law, Managing Director of
Secom Science and Technology
Foundation
President of Shikoku Minka Museum, apublic interest incorporated foundation

Position

Field of responsibility and important
position of other organization
concurrently assumed

Name

Audit & Supervisory
Kenichi Sekiya
Director Emeritus of DISCO Corporation
Board Member(Notes)1. Messrs. Takaharu Hirose and Takashi Sawada are Outside Directors as stipulated in
Article 2, Item 15 of the Companies Act.
2. Messrs. Ken Tsunematsu, Hideki Kato and Kenichi Sekiya are Outside Audit &Supervisory Board Members as stipulated in Article 2, Item 16 of the Companies Act.
3. 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.
4. 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.
5. 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.
6. There are no particular interests between the Company and other corporations employing
Outside Director, Messrs. Takaharu Hirose and Takashi Sawada.
7. There are no particular interests between the Company and other corporations employing
Audit & Supervisory Board Members, Messrs. Ken Tsunematsu, Hideki Kato and
Kenichi Sekiya.
8. The notice of Outside Directors, Messrs. Takaharu Hirose and Takashi Sawada being
independent officers was submitted to Tokyo Stock Exchange, Inc.
9. The notice of Outside Audit & Supervisory Board Members, Messrs. Ken Tsunematsu,
Hideki Kato and Kenichi Sekiya being independent officers was submitted to Tokyo
Stock Exchange, Inc.
10. Changes in Directors and Audit & Supervisory Board Members during the current fiscal
year1) Director Mr. Shohei Kimura and Director Kanemasa Haraguchi retired at the close of
the 52nd Ordinary General Meeting of Shareholders held on June 25, 2013.
2) Audit & Supervisory Board Member Mr. Kohei Yamashita resigned at the close of
the 52nd Ordinary General Meeting of Shareholders held on June 25, 2013.
3) Messrs. Tatsuro Fuse, Kenichi Furukawa, Takaharu Hirose and Takashi Sawada were
elected as Director at the 52nd Ordinary General Meeting of Shareholders held on June25, 2013, and assumed the office.
4) Mr. Kenichi Sekiya was elected as Audit & Supervisory Board Member at the 52nd
Ordinary General Meeting of Shareholders held on June 25, 2013, and assumed theoffice.
5) Executive Vice President and Director Mr. Koichi Sato resigned on December 31,
2013.
6) Mr. Juichi Toda, Director (supreme advisor), passed away on January 30, 2014.
11. The following changes in status have been resolved at the Board of Directors Meeting
held on May 8, 2014.
1) President and Representative Director Mr. Shuji Maeda will assume the Chairman and
Representative Director on June 1, 2014.
2) Executive Director Mr. Hiroshi Ito will assume the President and Representative
Director on June 1, 2014.
3) Director Mr. Junzo Nakayama will assume Executive Director on June 1, 2014.
4) Director Mr. Kenichi Furukawa will assume Executive Director on June 1, 2014.

[English Translation]27

〈Reference〉
Executive Officers who are not Directors are as follows:(As of May 1, 2014)
Title

Name

Managing Executive

Naohide Nakamura, Toshiyuki Mukai, Masahiro Takeda, Teruhisa

Officer

Yoshimura, Hideo Morishita
Takayuki Ito, Minoru Takaoka, Tsuneo Komatsuzaki, Ryohei

Executive Officer

Komatsu, Keitaro Arai, Hiromichi Sonoda, Hiroshi Ishikawa,
Yoichi Sugimoto, Tatsuya Izumida, Shokichi Ishimura, Toshiaki
Mizuno(Notes)
1. Mr. Masahiro Takeda and Teruhisa Yoshimura were appointed to Managing Executive
Officers as of June 1, 2013.
2. Mr. Shokichi Ishimura was appointed to Executive Officer as of January 1, 2014.
3. Executive Officer Mr. Hideo Morishita was appointed to Managing Executive Officer asof April 1, 2014.
4. Mr. Toshiaki Mizuno was appointed to Executive Officer as of April 1, 2014.
5. Managing Executive Officer Mr. Shunji Ogahara was retired from Managing Executive
Officer as of April 30, 2014.

2. Remuneration of Directors and Audit & Supervisory Board Members
Number of
Recipients

Combined total of
remuneration etc.
(Millions of Yen)

Directors

15433(of which Outside Directors)

(2)

(12)

6

71

(4)

(28)

21

504

Audit & Supervisory Board Members(of which Outside Audit & Supervisory
Board Members)
Total(Notes)1. Combined total of remuneration etc. for Directors in the above table includes 63 million
YEN bonuses to directors for the current fiscal year.
2. Combined total of remuneration etc. for Directors and Audit & Supervisory Board Membersin the above table includes YEN 8 million of a provision amount accrued to retirement
benefits for Directors and Audit & Supervisory Board Members (YEN 8 million for
Directors (of which YEN 0 for Outside Directors), YEN 0 million for Audit & Supervisory
Board Members (of which YEN 0 for Outside Audit & Supervisory Board Members)).

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.

[English Translation]28

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

Category

Name

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

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

Takaharu Hirose

9-(out of 9)

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

OutsideDirector

Takashi Sawada

8-(out of 9)

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

[English Translation]
29

Category

Name

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

Main Activities

He has high level of insight tocorporate legal matters and knowledge
about management and interests
between stakeholders through many
domestic and international securities

Outsideissuing projects and abundance ofAudit &
Supervisory

Ken Tsunematsu

Board

12

12

experience in the area of finance and(out of 12)(out of 12)

accounting, which were cultivated inmany years as attorney-at-law. He

Memberprimarily offered advice andsuggestions at the meetings of theBoard of Directors in order to ascertain
the validity and/or appropriateness ofoperations and management.
He offered advice and suggestions at
the meetings of the Board of Directors
Outsideby making use of his experience in the

Audit &
Supervisory

Hideki Kato

Board

12

12

(out of 12)(out of 12)

execution of national policies andinsight gained through many
accomplishments at a policy think tank.

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

[English Translation]
30

Category

Name

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

Main Activities

He offered advice and suggestions at
the meetings of the Board of Directors
by making use of his experience andinsight gained through serving as afounding manager and as arepresentative and chairman of global

Outsideorganizations. He also asked questions

Audit &
Supervisory

Kenichi Sekiya

Board

8

8

(out of 9)(out of 9)

and stated opinions in order to clarify
unclear issues.
He also makes efforts to understand theMembercontents of the meetings of the Boardof Directors and Audit & Supervisory
Board which he had missed byreceiving reports on resolutions andsuch from Full-time Audit &Supervisory Board Members.
(Notes)
1. Mr. Takaharu Hirose and Mr. Takashi Sawada were elected as Directors at the 52nd Ordinary
General Meeting of Shareholders held on June 25, 2013, and assumed the office. Therefore, the tableshows the attendance figures of the meetings of the Board of Directors held on and after June 25,
2013.
2. Mr. Kenichi Sekiya was elected as Audit & Supervisory Board Member at the 52nd Ordinary
General Meeting of Shareholders held on June 25, 2013, and assumed the office. Therefore, the tableshows the attendance figures of the meetings of the Board of Directors and Audit & Supervisory
Board held on and after June 25, 2013.

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

[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 229 million
YEN 652 million(Notes)1. Based on the audit contract between the Company and the Accounting Auditor, theremuneration paid to the auditor is not distinguished between that which relates to theaudits under the Companies Act and that which relates to the audits under Financial
Instruments and Exchange Act as they cannot be distinguished. Therefore, the amountgiven in (1) shown above is the combined total of these amounts.
2. Of the major subsidiaries of the Company, the Westec Security Group Inc. is audited by
McGladrey 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 crossorganaization 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

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

Ordinary times(3) System risk

(4) Service providing risk
(5) Administrative workand 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, andfor the purpose of accomplishment thereof, the Board of Directors will
design an annual business plan and deliberate progress of the plan eachmonth.

(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,
2014)

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 (including 2 Outside
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 Board of Directors determines
management policies and business execution policies in relation tobusiness in general, oversees the execution of duties by Directors, actively
exchanges opinions and endeavors to make decisions in a precise andspeedy fashion.
8 out of 11 Directors are involved in business execution, and 3 Directors(1 Supreme Advisor, 2 Outside Directors) do not engage in businessexecution.
(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 8 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 almost every meeting of theBoard of Directors in addition to other important conferences, exchange
opinions relating to corporate management in general, receive reports on
the status of execution of duties from Directors etc. and conduct audits
focusing on whether 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: 98.3%(ii) Audit & Supervisory Board Members’ attendance rate at
meetings of the Audit & Supervisory Board: 98.3%(iii) Conducted interviews with Directors etc. of the Company andits subsidiaries and affiliates: 59 times(iv) Conducted on-site audits at business locations of the Company,
its subsidiaries, affiliates, etc.: 181 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 22 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. 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, 2014)(Millions of Yen)ITEM

AMOUNTASSETS
Current 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

558,574
210,51458,597
20,500115,318
25,174
12,95533,18835,345
15,42913,254
2,699
17,623

Allowance for doubtful accounts(2,026)

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

769,633
360,833
153,278
68,759113,946
24,849Intangible assets:
Software
Goodwill
Other

53,596
12,188
19,951
21,457

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

355,203
246,233
45,701
22,154
17,612
13,521
26,332(16,352)

Deferred assets:
Other

17
17

TOTAL ASSETSITEMAMOUNT

LIABILITIES

1,328,226[English Translation]
41

Current liabilities:
Notes and accounts payable, trade
Bank loans
Current portion of straight bonds
Lease obligations
Payables – otherAccrued income taxes
Accrued consumption taxes
Accrued expenses
Deferred revenue
Accrued bonuses
Reserve for losses on construction
contracts
Other
Long-term liabilities:
Straight bonds
Long-term loans
Lease obligations
Guarantee deposits received
Deferred income taxes
Accrued retirement benefits for
directors and audit & supervisoryboard members
Net defined benefit liability
Investment deposits by policyholders,
unearned premiums and otherinsurance liabilities
Other
Total liabilities
NET ASSETS

256,684
49,40952,1204,640
579
31,316
27,7444,151
4,625
31,027
14,437

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

732,036
66,377
83,054656,286(73,682)

1,981
34,649241,171
7,796
17,256
4,183
36,542
11,1691,635
18,569141,099
2,918
497,856(1,921)
12,504(33)(10,885)(3,506)100,253
830,369
1,328,226

Consolidated Statement of Income(Fiscal Year from April 1, 2013 to March 31, 2014)(Millions of Yen)ITEM

AMOUNT
822,228

Revenue
542,949

Costs of revenue

279,278

Gross profit
159,259

Selling, general and administrative expenses

120,018

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 allowance for doubtful accounts
Gain on sale of shares of subsidiaries and affiliates
Gain on redemption of investment securities
Gain on return of reserve
Gain on sales of investment securities
Gain on negative goodwill
Gain on sales of fixed assets
Other
Extraordinary losses:
Impairment losses on fixed assets
Loss on revaluation of investment securities
Loss on sales of fixed assets
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

820
748
1,144
3,864
4,041
2,481
1,012
97
2,994
725
1,611

630
432
284
233
185
94
51
111
3,081
44
34
716
48,485(2,110)13,1006,441
126,677

2,025

3,876
124,826
46,37578,451
8,574
69,876

Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2013 to March 31, 2014)(Millions of Yen)
Shareholders’ equity
CommonTotal
CapitalRetainedstock insurplusearnings

treasury, at

Common stock

shareholders’equitycost

Balance at the beginning of the66,377fiscal year

83,054609,275(73,664)

685,042

Change in the fiscal year:
Cash dividends
Net income(22,918)(22,918)

69,87669,876

Purchase of treasury stock

(18)

(18)

0

0

0

Disposal of treasury stock

52

Change of scope of consolidation

52

Net changes of items other thanshareholders’ equity-

0

47,011(17)

46,993

66,377

83,054656,286(73,682)732,036

Total changes in the fiscal year
Balance at the end of the fiscal year

Accumulated other comprehensive income
Remeasurem
Unrealized

Deferred

gains onlosses on

securities

hedgesForeignents ofcurrency

definedtranslation

benefitadjustments

plans, net of

other

taxes
Balance at the beginning of the
fiscal year

11,783(41)(27,760)

Total
accumulated-comprehensive

Minority
interests in
subsidiaries

Total net
assetsincome(16,018)

95,114764,139

Change in the fiscal year:
Cash dividends(22,918)

Net income

69,876

Purchase of treasury stock(18)

Disposal of treasury stock0

Change of scope of consolidation

52

Net changes of items other than720

7

16,875(3,506)

14,097

5,139

19,236720

716,875(3,506)

14,097

5,139

66,22912,504(33)(10,885)(3,506)(1,921)

100,253

830,369

shareholders’ equity
Total changes in the fiscal year
Balance at the end of the fiscal year

[English Translation]
43

Non-Consolidated Balance Sheet(As of March 31, 2014)(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

202,248
80,90856,818683
14,991
9,960
2,699
437
5,489
1,303
2,109
4,382
20,653
2,031(221)

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
Other120,976
3,429
36,703
176
14,546
12,3661,478
802
17,87021,301
4,218
6,246
1,834

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

570,662
119,644
17,466865

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

24,692
2,747
17,622
307

66,683

Machinery and equipment

232

Tools, furniture and fixtures
Land
Construction in progress
Other
Intangible assets:
Goodwill
Software
Other

2,922
29,520
1,848
105
8,286
2,607
3,910
1,768

Investments and others:
Investment securities

442,730
23,789Investment in subsidiaries and affiliates

240,835

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

143,741
7,553
20,78016,962
3,988
2,777(17,698)

TOTAL ASSETS

772,910[English Translation]
44

ITEM
LIABILITIES

Accrued pension and severance costs
Other

AMOUNT

3,555
459

Total liabilities
NET ASSETS

145,668

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

624,768
66,377
83,054
83,0540
549,018
9,028
539,990
800
2,212
536,978(73,682)

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

2,473
2,473
627,242772,910

Non-Consolidated Statement of Income(Fiscal Year from April 1, 2013 to March 31, 2014)(Millions of Yen)ITEM

AMOUNT

Revenue

364,280

Costs of revenue

215,849

Gross profit

148,431

Selling, general and administrative expenses

75,521

Operating profit

72,909Non-operating income:Interest income

1,829

Dividends income

8,002

Other

438

10,269Non-operating expenses:
Interest expenses

304

Loss on sales and disposal of fixed assets

2,808

Write-off of long-term prepaid expenses

642

Other

540

Ordinary profit

4,295
78,884Extraordinary profit:
Gain on redemption of investment securities

284

Gain on sales of investment securities

185

Other

21

491

Extraordinary losses:
Provision for allowance for doubtful accounts
Impairment losses on fixed assets

1,198
397

Other

9

Income before income taxes

1,604
77,771

Income taxes - current

25,617

Income taxes - deferred

655

Net income

26,27351,497[English Translation]45

Non-Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2013 to March 31, 2014)(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-

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

-

-

0

0

66,377

83,0540

83,054

Shareholders’ equity
Retained earnings
Other retained earnings
Legal

Reserve forreserve

Generalsystemdevelopments

Balance at the beginning of the
fiscal year

9,028

800

reserve

Total

Accumulated

retainedearnings carriedearnings

forward2,212

508,398

520,439(22, 918)(22,918)

51,49751,497

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

-

-

-

28,57928,579

9,028

800

2,212

536,978

549,018[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(73,664)596,206

2,905

2,905

599,112

Change in the fiscal year:
Cash dividends(22,918)(22,918)

Net income

51,49751,497Purchase of treasury stock

(18)

(18)

(18)

Disposal of treasury stock

0

0

0

Net changes of items otherthan shareholders’ equity

(432)

(432)

(432)

Total changes in the fiscal(17)

28,561

(432)

(432)

28,129(73,682)

624,768

2,473

2,473

627,242year
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, 2014
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA LLC
Masakazu Hattori (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Kentaro Maruta (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Hideki Yoshida (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant

We have audited the consolidated financial statements, comprising theconsolidated balance sheet, the consolidated statement of income, theconsolidated statement of changes in net assets and the related notes of SECOM
Co., Ltd. as at March 31, 2014 and for the year from April 1, 2013 to March 31,
2014 in accordance with Article 444, Paragraph 4 of the Companies Act.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of theconsolidated financial statements in accordance with accounting principles
generally accepted in Japan, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatements, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the consolidated financial
statements based on our audit as independent auditor. We conducted our audit inaccordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to otain audit evidence about theamounts and disclosures in the consolidated financial statements. The procedures
selected depend on our judgement, including the assessment of the risks ofmaterial misstatement of the consolidated financial statements, whether due tofraud or error. In making those risk assessments, we consider internal control[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, 2014
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA LLC
Masakazu Hattori (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Kentaro Maruta (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Hideki Yoshida (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant

We have audited the financial statements, comprising the balance sheet, thestatement of income, the statement of changes in net assets and the related notes,
and the supplementary schedules of SECOM Co., Ltd. as at March 31, 2014 andfor the 53rd business year from April 1, 2013 to March 31, 2014 in accordancewith Article 436, Paragraph 2, Item 1 of the Companies Act.
Management’s Responsibility for the Financial Statements and Others
Management is responsible for the preparation and fair presentation of thefinancial statements and the supplementary schedules in accordance withaccounting principles generally accepted in Japan, and for such internal control as
management determines is necessary to enable the preparation of financial
statements and the supplementary schedules that are free from material
misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial statements and the
supplementary schedules based on our audit as independent auditor. We
conducted our audit in accordance with auditing standards generally accepted inJapan. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements and the
supplementary schedules are free from material misstatement.
An audit involves performing procedures to otain audit evidence about theamounts and disclosures in the financial statements and the supplementaryschedules. The procedures selected depend on our judgement, including theassessment of the risks of material misstatement of the financial statements and[English Translation]
50

the 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 19, 2014

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
Hideki Kato (Seal)
Outside Audit & Supervisory
Board Member
Kenichi Sekiya (Seal)
Outside Audit & Supervisory
Board Member
The Audit & Supervisory Board has received the audit reports of the performanceof duties of the Directors during the 53rd business term from April 1, 2013 throughMarch 31, 2014 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