Notice of Convocation
The 51st Ordinary General Meeting of Shareholders

The following is an English translation of the Notice of Convocation of the 51st
Ordinary General Meeting of Shareholders of SECOM CO., LTD. to be held on
June 26, 2012, 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 51st 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 ·········································································
6. Matters Concerning Principal Subsidiaries ····················································
7. Principal Business of the Group ·······································································
8. Principal Offices of the Group ·········································································
9. Matters Concerning Employees of the Group and the Company ·················
10. Principal Lenders ······························································································
11. 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 ···························································································

24
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24

III.
1.
2.
3.

Directors and Corporate Auditors ···································································
Names and Titles of Directors and Corporate Auditors ································
Remuneration of Directors and Corporate Auditors ·····································
Outside Corporate Auditors ·············································································

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25
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27

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 ································

29
29
29
29
29

V.

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 ································

30
30
35

1.
2.

[English Translation]2

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 Board of Corporate Auditors’ 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
39
40
41
42
44
46
48

Stock Exchange Code: 9735
June 4, 2012

Notice of Convocation of
The 51st Ordinary General Meeting of Shareholders
Dear Shareholders:
You are cordially invited to attend the 51st Ordinary General Meeting of
Shareholders of SECOM CO., LTD. (the “Company”).
If you are unable to attend the aforesaid meeting, you can exercise yourvotes through either of the methods stated below. The Company respectfully
requests you to study the “Reference Document Concerning the General Meeting of
Shareholders” below and exercise your voting rights on or before 6:00 p.m. (JST)June 25, 2012 (Monday):[Exercising voting rights by mail]Please indicate on the Voting Rights Exercise Form enclosed herewith
your approval or disapproval to the proposals on the agenda, and returnthe form to the Company by mail on or before the aforesaid deadline.
[Exercising voting rights via the Internet]
Please access the website for the exercise of voting rights(http://evote.jp/), using the log-in ID and temporary password which are
shown on the Voting Rights Exercise Form. After logging in, pleaseindicate whether you approve or disapprove the items on the agenda byfollowing the instructions on the display screen on or before theaforesaid deadline.
Yours very truly,
SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo, Japan
By: SHUJI MAEDA
President and Representative Director(Note) Please note that shareholders with addresses outside Japan may notthemselves use these voting procedures. For these shareholders please consult theirstanding agents within Japan as to the exercise of voting rights.

[English Translation]
4

PARTICULARS

1.

Date and Time of the Meeting:
Tuesday, June 26, 2012 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 51st Fiscal Year (from April 1, 2011 toMarch 31, 2012) and the Results on the Audits ofConsolidated Financial Statements by the Accounting
Auditor and the Board of Corporate Auditors.
2. Report on the Non-Consolidated Financial Statements for the
51st Fiscal Year (April 1, 2011 to March 31, 2012).
Matters to be Resolved upon:First Item of Business:

Proposed Distribution of Surplus

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

Election of Eleven (11) Directors

Fourth Item of Business: Election of Two (2) Corporate
Auditors
Fifth Item of Business:

4.

Presentation of Retirement
Allowances to Retiring Directors
and Retiring Corporate Auditors

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 theGeneral 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.

[English Translation]53) In the event that a shareholder exercises voting rights via theInternet more than once, the Company will consider the last
exercise of voting rights to be valid.

(Internet disclosure)
Following matters are made available on the Company’s website
pursuant to the relevant laws and ordinances, and Article 16 of the
Articles of Incorporation of the Company and are not included in the
Attached Documents.
1) “Notes to Consolidated Financial Statements” in the Consolidated
Financial Statements2) “Notes to Non-Consolidated Financial Statements” in the
Non-Consolidated Financial Statements
The Company’s Website: http://www.secom.co.jp/english/ir/(on the “Stocks and Bonds” section)
The Consolidated Financial Statements and Non-Consolidated
Financial Statements audited by the Accounting Auditor and theBoard of Corporate Auditors consist of each document attached to
the Notice of Convocation of the Ordinary General Meeting of
Shareholders, as well as the Notes to Consolidated Financial
Statements and the Notes to Non-Consolidated Financial Statements
available on the Company’s Website.
(Note)
If you plan to attend the Meeting, please submit the enclosed Voting
Rights Exercise Form to the receptionist at the Meeting.
(Notice)
If there is any amendment to the contents of the Reference Document
Concerning the General Meeting of Shareholders, the Business Report,
the Consolidated Financial Statements and the Non-Consolidated
Financial Statements, the Company will announce such amendmentson the “Stocks and Bonds” section of the Company’s website(http://www.secom.co.jp/english/ir/).

[English Translation]
6

Reference Document Concerning the General Meeting of Shareholders
Proposal and Reference Items
First Item of Business:

Proposed Distribution of Surplus

The Company considers the return of profit to shareholders as one of theimportant managerial issues, and the Company has determined a dividend payout
ratio on a consolidated basis and the level of internal reserves after making an
overall judgment on the expansion of the Company’s business and trend of future
revenues and profits of the Company on a consolidated basis while considering
the Company’s basic policy that ensures the payment of continual and steady
dividends. The Company has made it a basic rule to distribute a dividend once a
year as the year-end dividend, which is determined by the General Meeting of
Shareholders. Furthermore, the Company will utilize internal reserves forinvestments required for increased new contractors, research and development andinvestments and the like for strategic businesses so that the Company will exert its
efforts to strengthen the corporate structure and to expand its business.
It is proposed that, based on the aforesaid basic policy, cash dividends forthe fiscal year under review be YEN 90 per share to reward shareholders’continued support.
Matters related to the year-end dividend:(1)
Kind of assets distributed:
Cash(2)Matters related to distribution of cash and total amount:
YEN 90 per share of common stock of the Company
The total amount:
YEN 19,644,392,340(3)Effective date for distribution of surplus:
June 27, 2012
Second Item of Business:
1.

Partial Amendments to the Articles ofIncorporation
Reasons for amendments(1)
Amendments of Purpose
Article 2 (Purpose) is proposed to be amended so that the content
of business may be definitively stated to reflect the current status of
SECOM Group business.
(2)
Amendments of the provisions relating to the election ofRepresentative Directors and Directors with Special Titles.
Article 24 (Representative Directors and Directors with Special
Titles) is proposed to be amended so that management of the Board of
Directors may be made more flexible.

2.

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

(The underlined parts are changed parts.)
Current Articles of Incorporation
Proposed Changes(Purpose)(Purpose)
Article 2 The purpose of the Company
Article 2 The purpose of the Company
shall be to engage in the following
shall be to engage in thebusiness:following business:
1. Business relating to contracting
to provide security protection andensuring such protection;
2. Business relating to inspection,
guidance, advice and publishingconcerning security protection andsafety;3. Business relating todevelopment, manufacture,leasing, sales and operation ofequipment, devices and security
systems etc., related to preventionof crimes and fire, protection fromdisasters, emergency aid andsafety;4. Business of escorted
transportation of cash andvaluables, and groundtransportation business for such
purpose;5. Business relating to contracting
for management and security ofbuildings, facilities and vehicles,
and maintenance and repair
thereof;
6. Business of designing,
administrating, executing andmaintaining of electric installation
work, telecommunications
installation work, construction
work, fire extinguishing facilities
work and other works;
7. Business relating to information
processing, data base and otherinformation services, and loans;
Item 1 to Item 17 are the same as
8. Business relating tocurrent.
telecommunications andbroadcasting;
9. Business relating toinvestigation, research, consulting
and guidance in business
management;
10. Business relating to life
insurance and non-life insurance
agency services;[English Translation]
811. Business relating todevelopment, manufacture,leasing, and sales of appliancesfor education, medical treatment
and health;12. Business relating to nursing
services and home care service
outside of hospital, andmanagement of pharmacies;
13. Business relating todevelopment, manufacture,leasing, and sales of water
purification and gas exhaust
filtering equipment;
14. Business relating to the
management of hotels, food andbeverage establishments, sports
facilities as well as rest centersand other welfare facilities, andbusiness related to travel;
15. Business relating to sales andpurchasing, rental, brokering, andmanagement of real estate;
16. Business relating to aerial
surveying and mapping services;
17. Business relating to mail-order;
18. The processing, planning, andsale of agricultural products;

18. The processing, planning, andsale of agricultural products andthe industrial production and salesof plants for medical or edible
purpose;Item 19 is the same as current.
20. Business relating to serving
household matters and housecleaning;
21. Any and all business incidental
or related to the foregoing items.

19. Banking agent business;(Newly established)

20. Any and all business incidental
or related to the foregoing items.
(Representative Directors and Directors
with Special Titles)
Article 24 The Board of Directors shall,by its resolution, elect not morethan three (3) Representative
Directors from among the
Directors.
2. The Board of Directors shall, by
its resolution, appoint one (1)Chairman and Director and one(1) President and Director. In
addition to the foregoing, theBoard of Directors may appoint(Representative Directors and Directors
with Special Titles)
Article 24 The Board of Directors shallelect Representative Directors by
its resolution.

2. The Board of Directors shall, by
its resolution, appoint one (1)President and Director. In
addition to the foregoing, theBoard of Directors may appoint
one (1) Chairman and Director[English Translation]9

one (1) or more Executive Vice
Chairmen and Directors,
Executive Vice Presidents andDirectors, Senior Executive
Directors and Executive Directors.

Third Item of Business:and one (1) or more Executive
Vice Chairmen and Directors,
Executive Vice Presidents andDirectors, Senior Executive
Directors and Executive
Directors.

Election of Eleven (11) Directors

The term of office of all of the ten (10) Directors will expire at the closeof this Meeting. Director, Mr. Fumio Obata resigned on March 31, 2012.
Therefore, it is proposed to reelect eight (8) Directors and newly elect three (3)Directors.
The candidates are as follows:
No.
1

2

3

4

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

Shohei Kimura(May 2, 1943)

Kanemasa Haraguchi(August 7, 1950)

Summary of Career, Title and Responsibility, and Important
Position of Other Organization Concurrently Assumed
Jul 1962
Feb 1976
Jun 1997
Jul 1962
Feb 1976

President and Representative Director (Founder)
Chairman and Representative Director
Supreme Advisor and Director (currently)
Senior Executive Director (Co-founder)
Executive Vice Chairman and Representative
Director
Jun 1997
Supreme Advisor and Director (currently)
Apr 1967
Joined SECOM Co., Ltd.
Feb 1985
Director
Feb 1988
Executive Director
Jun 1995
Senior Executive Director
Apr 2002
President and Representative Director
Jun 2004
President and Representative Director andExecutive Officer
Apr 2005
Chairman and Director (currently)(Important position of other organization concurrently assumed)
Chairman, All Japan Security Service Association
Outside Corporate Auditor, Secom General Insurance Co., Ltd.
Apr 1974
Joined SECOM Co., Ltd.
Jun 1990
Director
Jun 1995
Executive Director
Jun 1997
Senior Executive Director
Jun 2002
Director and Executive Vice President
Jun 2004
Director and Executive Vice President andExecutive Officer
Apr 2005
President and Representative Director
Jan 2010
Executive Vice Chairman and Director (currently)(Important position of other organization concurrently assumed)
Outside Director, Secom Joshinetsu Co., Ltd.
Outside Director, Toyo Tec Co., Ltd.

[English Translation]
10

The Numberof Shares Held
4,320,500

3,152,216

38,60011,344

No.
5

6

7

8

9

Name
(Date of Birth)
Shuji Maeda(September 27,
1952)*

Koichi Sato
(February 5, 1953)*

Yasuo Nakayama(November 1, 1952)*

Hiroshi Ito(February 7, 1952)*

Kazuaki Anzai(January 14, 1952)*
New Candidate

Summary of Career, Title and Responsibility, and Important
Position of Other Organization Concurrently Assumed
Jan 1981
Jun 1997
Jun 2000
Jun 2004
Apr 2005
Jun 2009
Jan 2010
Apr 1976
Jun 2004
Jun 2005
Jun 2007Jun 2008

Joined SECOM Co., Ltd.
Director
Executive Director
Director and Managing Executive Officer
Executive Director
Executive Vice President and Director
President and Representative Director (currently)
Joined SECOM Co., Ltd.
Executive Officer
Managing Executive Officer
Executive Director
President and Representative Director, Secom
Joshinetsu Co., Ltd.
Jun 2009
Chairman and Director, Secom Joshinetsu Co.,Ltd.
Jun 2009
Executive Vice President and Director (currently)(Important position of other organization concurrently assumed)
Outside Director, Nohmi Bosai Ltd.
Jul 2003
Branch Manager, Nagoya Branch, The Bank ofJapan
Jul 2005
Director-General, Secretariat of the Policy Board,
The Bank of JapanApr 2007
Personnel and Corporate Affairs Department, The
Bank of JapanMay 2007 Advisor, SECOM Co., Ltd.
Jun 2007
Executive Director (currently)
Feb 1979
Joined SECOM Co., Ltd.
May 1989 Executive Director, Secom Mie Co., Ltd.
Jun 2000
Director (up to Jun 2004)
Jun 2003
President and Representative Director, Secom
Information System Co., Ltd. (presently Secom
Trust Systems Co., Ltd.) (currently)
Jun 2004
Executive Officer
Jun 2009
Executive Director (currently)(Important position of other organization concurrently assumed)
President and Representative Director, Secom Trust Systems
Co., Ltd.
Apr 1975
Joined Fuji Bank, Ltd. (presently Mizuho Bank,Ltd.)
May 2003 Branch Manager, Kanda Branch, Mizuho Bank,Ltd.
Jul 2005
Associate General Manager, Tokyo Regional
Headquarter, SECOM Co., Ltd.
Sep 2005
Deputy General Manager, Corporate Development
Division
Jun 2006
Executive Officer (up to Jun 2008)
Mar 2008
Executive Director, Secom Alpha Co., Ltd.
Jun 2011
Senior Executive Director, Secom Alpha Co., Ltd.
Sep 2011
Assistant to President in charge of special tasks
Jan 2012
Managing Executive Officer (General Manager,
Sales Division) (currently)[English Translation]
11

The Numberof Shares Held

6,700

3,388

3,000

4,300

284

No.
10

Name
(Date of Birth)
Yasuyuki Yoshida(March 28, 1958)*
New Candidate

Summary of Career, Title and Responsibility, and Important
Position of Other Organization Concurrently Assumed
Mar 1980
Feb 1997
Sep 1998

Jun 2002
Apr 2010
Jun 2010

11

Junzo Nakayama(February 24, 1958)
New Candidate

Jun 2010
Mar 1980
Nov 1999
Sep 2009
Dec 2009
Jun 2010
Jan 2011

Joined SECOM Co., Ltd.
Associate General Manager, Strategic Planning
Division
Director, Toyo Fire and Marine Insurance Co.,
Ltd. (presently Secom General Insurance Co.,Ltd.)
President and Representative Director, Secom
General Insurance Co., Ltd.
Executive Officer (Strategic Planning Office),
SECOM Co., Ltd. (currently)
Outside Corporate Auditor, Secom Joshinetsu Co.,
Ltd.
Group companies supervisor (currently)
Joined SECOM Co., Ltd.
President and Representative Director, Japan
Image Communications Co., Ltd.
Positioned in Personnel Department
Associate General Manager, Strategic Planning
OfficeAssociate General Manager, Assistant to President
in charge of special tasks
Deputy General Manager, Finance Division(currently)

The Numberof Shares Held8000(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.

Fourth Item of Business:

Election of Two (2) Corporate Auditors

Corporate Auditors Messrs. Teruo Ogino and Hiroshi Yasuda will resign
as Corporate Auditors at the close of this Meeting. It is proposed to elect two (2)Corporate Auditors to substitute the remaining term of the resigning Corporate
Auditors.
Moreover, the consent of the Board of Corporate Auditors has beenobtained for this Item of Business.
In the event that the two candidates are elected as Corporate Auditors,
their term shall expire at the close of the Ordinary General Meeting of
Shareholders to be held in June 2015 as regulated in the Articles of Incorporation.
The candidates are as follows:
No.
1

Name
(Date of Birth)
Katsuhisa Kuwahara(May 9, 1948)
New Candidate

Summary of Career, Title and Responsibility, and Important
Position of Other Organization Concurrently Assumed
Apr 1971
Jun 1990
Jun 1995
Jun 2004
Apr 2005

Joined SECOM Co., Ltd.
Director
Executive Director
Director and Managing Executive Officer
Executive Director (currently)[English Translation]
12

The Numberof Shares Held

3,700

No.
2

Name
(Date of Birth)
Hideki Kato
(January 5, 1950)
New Candidate

Summary of Career, Title and Responsibility, and Important
Position of Other Organization Concurrently Assumed
Apr 1973
Jul 1990
Sep 1996
Apr 1997
Apr 2006

Jun 2006

Oct 2009
Apr 2010
May 2012

The Numberof Shares Held

Joined the Ministry of FinanceDirector, Planning Office, Secretariat, the Fair
Trade Commission
Retired the Ministry of FinanceFounded Japan Initiative, a policy think tank, andbecame Representative (currently)
Chairman, the Tokyo Foundation, an incorporated
foundation (presently a public interest
incorporated foundation)
President, Shikoku Minka Museum, anincorporated foundation (presently a public
interest incorporated foundation) (currently)
Member and Director-General, Government
Revitalization Unit (currently)
President, the Tokyo Foundation, a public interest
incorporated foundation (currently)
Member, Advisory Committee for Administrative
Reform (currently)(Notes)1. The Company pays a membership fee to Japan Initiative, a non-profit
independent policy think tank, the president of which is Mr. Hideki Kato.
There is no particular interest between the Company and Mr. Katsuhisa
Kuwahara.
2. Mr. Hideki Kato is a candidate for Outside Corporate Auditor.
3. Reason for election of a candidate for Outside Corporate Auditor:
Mr. Hideki Kato has experienced engagement in the execution ofnational policies while in office of the Ministry of Finance, the Fair
Trade Commission, etc., as well as in the realization of a number ofprojects at Japan Initiative, a policy think tank. Based on suchengagement and experience, the Company expects that he willsuperintend the overall management of the Company and provide usefuladvice to the Company from a wide range of his views. Accordingly, theCompany proposes its shareholders to elect him as Outside Corporate
Auditor.
4. Reason why the Company made judgment that the candidate may duly
discharge duties as Outside Corporate Auditor:
Mr. Hideki Kato has not engaged directly in management of companies,
but is acquainted with knowledge on finance and accounting to thereasonable extent through the engagement in finance while in office ofthe Ministry of Finance, as well as through presentations with respect tothe public accounting system reviewing administrative services from theviewpoint of balance sheets as one of activities of the aforesaid thinktank. Accordingly, the Company deems him to be able to duly discharge
duties as Outside Corporate Auditor.
5. In the event that Mr. Hideki Kato assumes office as Corporate Auditor,
the Company is scheduled to enter into a contract for limitation of
liability with him to limit his liability for damages set forth in Article 423,
Paragraph 1 of the Companies Act, pursuant to Article 427, Paragraph 1of the Companies Act.

[English Translation]
13

0The amount of his liability for damages stipulated in the contract islimited to the minimum amount set forth in Article 425, Paragraph 1 of
the Companies Act.
Fifth Item of Business:

Presentation of Retirement Allowances to
Retiring Directors and Retiring Corporate
Auditors

It is hereby proposed that retirement allowances be granted to Mr. Fumio
Obata who resigned as Director as of March 31, 2012, Messrs. Katsuhisa
Kuwahara and Takayuki Ito who will retire as Directors at the close of thisMeeting due to the maturity of the term, and Messrs. Teruo Ogino and Hiroshi
Yasuda who will resign as Corporate Auditors at the close of this Meeting, inappreciation of their services rendered while in office, each in a reasonableamount based on the established standards and practice of the Company, and that
determination of the actual amount, the time and method of payment, and otherrelevant matters be left to the resolution of the Board of Directors in case of
resigning Directors and consultation of Corporate Auditors in case of resigning
Corporate Auditors.
Furthermore, since Mr. Takayuki Ito is scheduled to be an Executive
Officer of the Company after the close of this Meeting, retirement allowancepayable for services during office of Director will be paid together with retirement
allowance payable during office of Executive Officer when he retires as Executive
Officer.
The brief histories of the resigning Directors and resigning Corporate
Auditors are as follows:
Name
Fumio Obata

Katsuhisa Kuwahara

Takayuki Ito
Teruo Ogino
Hiroshi Yasuda

Jun 2000
Jun 2009
Mar 2012
Jun 1990
Jun 1995
Jun 2004
Apr 2005
Jun 2007Jun 2003
Jun 2003

Summary of Career of the Retiring Directors
and Corporate Auditors
Assumed office of Director
Assumed office of Senior Executive Director
Resigned as Director
Assumed office of Director
Assumed office of Executive Director
Assumed office of Director and Managing Executive Officer
Assumed office of Executive Director (currently)
Assumed office of Director (currently)
Assumed office of Full-time Corporate Auditor (currently)
Assumed office of Corporate Auditor (currently)[English Translation]
14

[Attached Documents]

Business Report (Fiscal Year Ended March 31, 2012)
I. Outline of the Group’s Business1. The Current Business Development and Results of Operations
During the fiscal year ended March 31, 2012 (“the current fiscal year”), whereas
Japanese economy has indicated signs of gradual recovery from temporal
economic retention caused by the Great East Japan Earthquake, future of Japanese
economy still seems unpredictable owing to European credit concern, rise in oil
price, appreciation of Japanese yen, deflation, etc.
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, real estate development and sales, andinformation and communication related and other services segments. In
addition, aiming at our further growth, we enhanced “ALL SECOM,” thecombination of all SECOM Group’s power to promote our synergies even more,with all segments standing on their own and promoting mutual cooperation.
As a result, consolidated revenue for the current fiscal year increased by 2.3% toYEN 679.1 billion, compared with the previous fiscal year. Consolidated
operating profit, on the other hand, decreased by 18.2% to YEN 81.0 billion,
attributable to the recognition of write-down on real estate inventories of YEN
20.7 billion; and consolidated ordinary profit also went down by 19.9% to YEN
87.8 billion. Net income went down by 41.7% to YEN 35.4 billion, due toimpairment loss on fixed assets of YEN 8.1 billion, settlement regarding software
related expense in Pasco Corporation of YEN 0.7 billion, etc., recognized in
extraordinary losses.
（Millions of Yen）
Revenue
Current fiscal
year (FY2011)
Previous fiscal
year (FY2010)

Operating profit

Ordinary profit

Net income

679,173

81,07887,83935,489663,887

99,141

109,674

60,846

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, wedeveloped and dealt in systems and products, including “SECOM Home Security
G-Custom,” which has a function of being entrusted with essential private
information of customers, etc., reflecting the experience of the Great East Japan
Earthquake, and also “My Page” function to promote relationship between
business partners and customers. Also, we reinforced sales of security systems forrental housing, as well as reviewed door-to-door sales promotion thoroughly.
Additionally, we enriched services integrated with all Group’s power, starting
services to keep an eye on the aged living remote from customers, by combining
on-line security systems with medical services and home services. Furthermore,[English Translation]15

we aimed at upgrading organizational management systems to provide services
more suited to customer needs, including the merger of Secom Techno Service
Co., Ltd., a consolidated subsidiary engaged in installation and maintenance of
on-line security systems, etc., in July 2011, in order to make security services
more efficient.
Outside Japan, through acquisition of local companies, we expanded into New
Zealand and enhanced security services for financial institutions in the United
Kingdom. We also promoted to make our security services more popular ineconomically developing areas, including People’s Republic of China, Southeast
Asia, etc.
As a result, revenue increased by 2.3% to YEN 424.2 billion and operating profit
increased by 2.1% to YEN 100.6 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.
Owing to the efforts of proactive business activities and improvement in
profitability to satisfy market needs, despite the severe business environment,
revenue increased by 7.3% to YEN 80.6 billion and operating profit increased by
43.0% to YEN 4.3 billion.
In the medical services segment, we provided various medical services such as ourcore home medical services, including home nursing services and pharmaceuticaldispensing and home delivery services, operation of residences for seniors, salesof electronic medical report systems, sales of medical equipments, personal careservices, and the leasing of real estate for medical institutions. In the current fiscal
year, we strived to increase the number of residents in the residences for seniors
opened in recent years and enriched medical services to accommodate ourselvesto changes in society, by expanding various services for seniors, including
increase in adult day service facilities for senior citizens as well as establishing a
hub that provides integrally both home nursing services and home care services,
etc.
Revenue increased by 7.4% to YEN 42.9 billion and operating profit increased by
47.4% to YEN 4.0 billion. These results were attributable to brisk revenue fromhome medical services.
In the insurance services segment, we expanded marketing efforts for our uniquenon-life insurance offerings, including Security Discount Fire Policy forcommercial facilities that offers discounts on premiums to customers who haveinstalled on-line security systems, recognizing such systems as a risk-mitigating
factor; SECOM Anshin My Home, the comprehensive fire insurance policy forresidences that offers a variety of compensation plans and discount policies;
SECOM Anshin My Car, a comprehensive automobile insurance policy that offers
on-site support services provided by our emergency response personnel in theevent of an accident; and MEDCOM, an unrestricted cancer treatment policy thatoffers compensation of actual cost of medical treatment.
Strong sales increased revenue by 6.7% to YEN 34.1 billion and operating loss of
YEN 0.9 billion in the previous fiscal year turned into operating profit of YEN 47
million in the current fiscal year.
In the geographic information services segment, by exploiting up-to-datemeasuring machine and technologies, we provided geospatial information services
for domestic national and local governmental agencies, private sectors, andforeign governmental agencies including emerging and developing countries. Bycollecting high-precision and clear geospatial photo data such as satellite images,
and utilizing our data processing technologies, we also strived to provide a variety
of services suited to our customers’ needs, including mapping arrangement,
environmental monitoring, fire protection, and measures to deal with naturalcalamities.

[English Translation]
16

Just after the Great East Japan Earthquake, by utilizing several satellites, wequickly provided Japanese government and related institutions with a variety of
information related to widespread destruction caused by the Great East Japan
Earthquake.
Revenue increased by 15.2% to YEN 50.1 billion owing to the contribution of a
subsidiary newly consolidated in December 2010. Operating profit also increasedby 7.4% to YEN 3.5 billion.
In the real estate development and sales segment, we devoted our best efforts todeveloping and selling condominiums equipped with advanced security anddisaster prevention systems.
In the current fiscal year, since demand in the condominium market had not fully
recovered, revenue went down by 52.8% to YEN 11.7 billion and we recognized
write-down on real estate inventories of YEN 20.7 billion in costs of revenue. As
a result, operating profit of YEN 0.4 billion in the previous fiscal year turned into
operating loss of YEN 21.4 billion in the current fiscal year.
The information and communication related and other services segment covers
information and communication related services, real estate leasing, etc. In theinformation and communication related services, we have continued striving toprovide comprehensive information network services, focusing on information
security, development and management of business systems and major-disaster
response services. In the current fiscal year, we began to deal in “Total Support
Service of Emergency Management,” which is to support for BCP (BusinessContinuity Plan) of clients when they encounter with contingency, by utilizing ourentire Group’s power.
Revenue increased by 4.9% to YEN 35.2 billion, chiefly due to the increase insales of information and communication related services, including those of
Secure Data Center, and operating profit increased by 19.5% to YEN 4.1 billion.
Results by Business Segment (51st Fiscal Year – current fiscal year)(Millions of Yen)
Revenue
Business segment
Security services
Fire protection services
Medical services
Insurance services
Geographic information
services
Real estate development
and sales
Information andcommunication related
and other services
Total
Eliminations andcorporate items
Consolidated revenue

Total

Operatingprofit (loss)

Customers

Inter-segment

424,223
80,67742,942
34,173

10,387
4,092
147
2,750

434,610
84,77043,09036,923

100,684
4,367
4,013
47

50,173215

50,3883,591

11,724525

12,250(21,461)

35,2586,599

41,857

4,163

679,173

24,718703,892

95,406-(24,718)(24,718)(14,328)

679,173-

679,173

81,078With respect to the results by geographical segments, in Japan, revenue increasedby 1.9% to YEN 650.4 billion. Overseas revenue increased by 12.8% to YEN 28.7
billion due to expansion into New Zealand and enhancement of security services
for financial institutions in the United Kingdom, through acquisition of local
companies.

[English Translation]17

2. Issues the Group Has to Cope with
As society undergoes constant change, people’s demand for security and safety
increases and becomes diverse and sophisticated.
In view of this situation, the Group is aiming to realize “Social System Industry”
through providing various services and products, mainly in our core security
services, and also in fire protection services, medical services, insurance services,
geographic information services, real estate development and sales, andinformation and communication related and other services, which can help realize
more secured, convenient, and comfortable society. Moreover, by combining
these services and products, the Group endeavors to create and supply uniqueservices and products. To this end, the Group, in November 2010, declared theslogan, “ALL SECOM,” to further rally the cooperation among the Group’s
various businesses, and each and every employee of the Group has been actively
working to maximize the strength of the Group as a whole. We will continue ourefforts to develop high-quality systems that can earn the trust of our customers
and provide services that accurately respond to their needs, while working toprovide comprehensive services by maximizing the Group’s capabilities.
Additionally, the Group aims to further instigate growth by leveraging its
know-how accumulated through its business in Japan and using it to aggressively
develop businesses overseas, while remaining committed to its efforts to pursue
business efficiency through unremitting business improvements.
We look forward to the support of our shareholders in these and all of ourendeavors.
3. Capital Expenditures
Capital expenditures for the current fiscal year totaled YEN 56.4 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 36.8 billion.
AmountBusiness segment(Millions of Yen)

Security services

36,886

Fire protection services

1,042

Medical services

1,665

Insurance services

633

Geographic information services

3,857

Real estate development and sales

18

Information and communication related

12,949and other services
Subtotal

57,053Eliminations and corporate items

(650)

Total

56,402

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

[English Translation]18

5. Trends in Earnings and Assets(1) Trends in Earnings and Assets of the Group (Consolidated)(Millions of Yen except for net income per share)
51st fiscal year

48th fiscal year

49th fiscal year

50th fiscal year

(4/1/2008–(4/1/2009–(4/1/2010–

3/31/2009)

3/31/2010)

3/31/2011)

Revenue

678,400

654,678

663,887

679,173

Operating profit

87,634

98,53999,141

81,078

Ordinary profit

90,924

98,327

109,674

87,839Net income

21,502

47,61160,84635,48996.69

218.37279.07

162.63

Total assets

1,090,483

1,081,679

1,094,400

1,101,884

Net assets

582,608

625,153654,055

671,517

Fiscal years

CategoryNet

incomepershare (Yen)(current fiscal year)(4/1/2011–
3/31/2012)(2) Trends in Earnings and Assets of the Company (Non-Consolidated)(Millions of Yen except for net income per share)
51st fiscal year

48th fiscal year

49th fiscal year

50th fiscal year

(4/1/2008–(4/1/2009–(4/1/2010–

3/31/2009)

3/31/2010)

3/31/2011)

Revenue

336,893

328,773

329,297

345,476

Operating profit

72,616

71,527

68,68870,196

Ordinary profit

78,346

77,46274,501

75,212

Net income

32,41445,80645,023

26,818145.76210.09206.50122.90Total assets

679,858

668,207694,656

699,448

Net assets

504,932

532,931558,417567,758

Fiscal years
Category

Net income per share(Yen)(current fiscal year)(4/1/2011–
3/31/2012)

In the current fiscal year, the Company’s revenue increased by 4.9% to YEN
345.4 billion, operating profit increased by 2.2% to YEN 70.1 billion, ordinary
profit increased by 1.0% to YEN 75.2 billion, and net income decreased by 40.4%
to YEN 26.8 billion. Net income per share decreased to YEN 122.90 compared toYEN 206.50 in the previous fiscal year.
Contract revenue accounted for 86.7% of total revenue, or YEN 299.5 billion, andsale of products and equipment accounted for 13.3% of total revenue, or YEN
45.9 billion.

[English Translation]
19

Revenue from centralized system contracts, which is the core of revenue andprofit in contract revenue, recorded YEN 249.8 billion and accounted for 72.3%
of total revenue. Static guard contracts generated revenue of YEN 24.9 billion,
and revenue from armored car services came to YEN 17.2 billion. The remaining
revenue amounted to YEN 7.5 billion, the majority of which came frommanagement fees paid by subsidiaries and other companies.
Product sales totaled YEN 28.0 billion, 8.1% of total revenue, and equipment
sales to subsidiaries and other companies totaled YEN 17.9 billion, 5.2 % of total
revenue.
Costs of service and sales were YEN 203.3 billion, and sales and generaladministrative expenses were YEN 71.8 billion. As a result, operating profit
recorded YEN 70.1 billion.
Non-operating income was YEN 8.0 billion, which included interest anddividends received, while non-operating expenses, including interest paid andlosses on sales and disposal of fixed assets, totaled YEN 3.0 billion. As a result,ordinary profit was YEN 75.2 billion.
The Company posted gain on extinguishment of tie-in shares of YEN 22.9 billion
under extraordinary profit as a result of the absorption-type merger of Secom
Techno Service Co., Ltd. In terms of extraordinary losses, the Company posted aprovision for allowance for doubtful accounts of YEN 5.6 billion on the long-termloans receivable to a consolidated subsidiary of the real estate development andsales segment and a debt-equity-swap loss of YEN 24.9 billion in relation to theconversion into equity of a part of the long-term loans receivable to this subsidiaryfor supporting its restructuring, owing to the write-down in real estate inventories
on this subsidiary. Additionally an impairment loss on fixed assets of YEN 7.9
billion was recorded. As a result, net income came to YEN 26.8 billion.

Revenue by Business Category of the Company

Fiscal years

Amount(Millionsof Yen)

%

73.1

(0.5)

239,311

72.7

(0.5)

249,817

72.3

4.4

24,781

7.5(4.0)

24,8157.5

0.1

24,9237.2

0.4

17,0405.2(2.4)

16,973

5.1(0.4)

17,276

5.0

1.8

9,086
291,325
26,78810,659

2.8
88.6
8.2
3.2

(4.4)
(1.0)
(13.6)(7.5)

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

2.8
88.1
8.5
3.4

0.7
(0.4)
3.8
5.4

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

2.2
86.7
8.1
5.2

(18.0)
3.2
0.8
59.5

Subtotal

37,447

11.4(11.9)

39,04511.9

4.3

45,952

13.3

17.7

Total

328,773 100.0(2.4)

329,297

100.0

0.2

345,476 100.0

4.9

Contract revenue

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

Amount(Millionsof Yen)%240,41751st fiscal year
(Current fiscal year)(4/1/2011–3/31/2012)

50th fiscal year
(4/1/2010–3/31/2011)

Change(%)

Category

Sales

49th fiscal year
(4/1/2009–3/31/2010)[English Translation]
20

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

6. 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)

Secom Medical System Co., Ltd.

Secom General Insurance Co.,
Ltd.

6,545
(Millions of Yen)

16,808(Millions of Yen)

Pasco Corporation

8,758(Millions of Yen)

Secom Home Life Co., Ltd.

3,700
(Millions of Yen)

Secom Trust Systems Co., Ltd.

1,468
(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)(%)
97.11(97.82)(%)
69.84(72.91)(%)
99.94(99.95)(%)
100.00(100.00)(%)
100.00(100.00)

Principal business activities

Security and safety services

Comprehensive fire protection
services
Home medical services andremote image diagnosis support
services
Non-life insurance
Surveying, measuring andgeographic information systemservices
Development and sales of real estate

Information security services andsoftware development

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.
3. The Company entered into a debt-equity-swap transaction in relation to a part of thelong-term loans receivable to Secom Home Life Co., Ltd. for supporting its restructuring.
4. Secom Plc issued new shares of stock to a shareholder (cash contribution) in June 2011,
resulting in an increase in its capital from 39,126 thousand pounds to 44,126 thousand
pounds.
5. The Company merged Secom Techno Service Co., Ltd. on July 1, 2011.

7. Principal Business of the GroupThe Group consists of the Company, 172 consolidated subsidiaries and 26
affiliates accounted for under the equity method. The principal business activitiesof the Group are as follows: Security Services centering on contracted security[English Translation]
21

services; Fire Protection Services centering on comprehensive fire protection
services; Medical Services, focusing on home medical services and managementof residences for seniors; Insurance Services consisting mainly of non-life
insurance; Geographic Information Services that mainly entails the provision ofsurveying and measuring operations; Real Estate Development and Sales
centering on development and sales of condominiums; and Information andCommunication Related and Other Services, including security network services,development and operation of business systems and information security services.
8. 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), Secom Medical System Co., Ltd. (Shibuya-ku, Tokyo), Secom
General Insurance Co., Ltd. (Chiyoda-ku, Tokyo), Pasco Corporation(Meguro-ku, Tokyo), Secom Home Life Co., Ltd. (Shibuya-ku, Tokyo),
Secom Trust Systems Co., Ltd. (Shibuya-ku, Tokyo), 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).
9. 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

34,063256(2) Matters Concerning Employees of the Company
Number of
employees

Increase from the end of theprevious fiscal year

Average age

Average years of service

14,911

1,260

40.9

14.1

(Note)
1.

The number of employees refers to the number of full-time employees.

2.

The increase of employees is mainly due to the merger of the Company and Secom
Techno Service Co., Ltd. on July 1, 2011.

[English Translation]
22

10. Principal Lenders(Millions of Yen)
Lenders

Balance

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

12,543

Mizuho Bank, Ltd.

11,316

Sumitomo Mitsui Banking Corp.

8,296

Mitsubishi UFJ Trust and Banking Corp.

5,372

11. Other Important Matters Concerning the GroupOn January 10, 2012, the Company entered into a share transfer agreement with
JS Group Corporation (JS) and LIXIL Corporation, a consolidated subsidiary ofJS, to acquire 100% of the issued shares of common stock (14,328 thousand
shares) of LIXIL NITTAN Co., Ltd., held by LIXIL Corporation, effective on
April 1, 2012. Subsequently, on April 1, 2012, the Company acquired the sharesof LIXIL NITTAN Co., Ltd., which became its consolidated subsidiary. As of thesame date, LIXIL NITTAN Co., Ltd. changed its name to NITTAN Co., Ltd.

[English Translation]
23

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

1. Total Number of Shares to be Issued:
2. Total Number of Issued Shares:(including 15,017,691 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)

29,118100 shares
Percentage ofownership(%)

The State Street Bank and Trust Company

24,258

11.11

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

14,260

6.53

Japan Trustee Services Bank, Ltd.
(Trust Account)

11,434

5.23

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

6,153

2.81

SSBT OD05 OMNIBUS
ACCOUNT-TREATY CLIENTS

4,577

2.09

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

The State Street Bank and Trust Company
505223

3,324

1.52

Juichi Toda

3,152

1.44

(Notes)1. The Company holds treasury stock of 15,017,691 shares although it is not included in thetable above. The percentage of ownership is calculated on the basis of the total number ofshares outstanding excluding treasury stock. The percentage of ownership is truncated totwo decimal places.
2. In the case of the trust banks listed above, banking business-related shares and trust
service-related shares are registered under different register names. Therefore, the numberof shares held under the register name of banking business is registered separately.
3. Secom Science and Technology Foundation changed its status from a foundation to a
public interest foundation as of April 1, 2012.

[English Translation]
24

III. Directors and Corporate Auditors
1.

Names and Titles of Directors and Corporate Auditors(As of March 31, 2012)
Position

Field of responsibility and important
position of other organization
concurrently assumed

Name

Director

Makoto Iida

Supreme Advisor

Director

Juichi Toda

Supreme Advisor
Chairman of All Japan Security Service
Association, Outside Corporate Auditorof Secom General Insurance Co., Ltd.
Outside Director of Secom Joshinetsu
Co., Ltd., Outside Director of Toyo Tec
Co., Ltd.

Chairman and Director

Shohei Kimura

Executive Vice Chairman
and Director

Kanemasa Haraguchi

President andRepresentative Director

Shuji Maeda

Executive Vice President
and Director

Koichi Sato

Senior Executive Director

Fumio Obata

Executive Director

Katsuhisa Kuwahara

Executive Director

Yasuo Nakayama

Executive Director

Hiroshi Ito

Director

Takayuki Ito

Corporate Auditor

Teruo Ogino

Full-time Corporate Auditor

Corporate Auditor

Seiji Sakamoto

Full-time Corporate Auditor

Corporate Auditor

Ken Tsunematsu

Corporate Auditor

Hiroshi Yasuda

Corporate Auditor

Kohei Yamashita

Executive Officer
Executive Officer (general manager ofgroup international business division),
Outside Director of Nohmi Bosai Ltd.
Executive Officer (in charge of special
tasks)
Executive Officer (general manager offinance division)
Executive Officer (general manager ofgeneral affairs division)
Executive Officer (general manager ofhuman resources division, in charge of
information systems and liaison),President and Representative Director of
Secom Trust Systems Co., Ltd.
Executive Officer (general manager ofreal estate division), President andRepresentative Director of Secom Home
Life Co., Ltd.

Attorney-at-law, Managing Director of
Secom Science and Technology
Foundation
President and Director of Yasuda
Gakuen Kyoikukai
President and Representative Director of
Kokyo Tatemono Co., Ltd.

(Notes)1. Messrs. Ken Tsunematsu, Hiroshi Yasuda and Kohei Yamashita are Outside Corporate
Auditors as stipulated in Article 2, Item 16 of the Companies Act.
2. The Corporate Auditor, Mr. Teruo Ogino had been in charge of the Company’s financial
affairs for 11 years and has considerable knowledge of finance and accounting matters.

[English Translation]
25

3.
4.

5.

6.

7.
8.

The Corporate Auditor, Mr. Seiji Sakamoto has a long-term experience by working at afinancial institution and has considerable knowledge of finance and accounting matters.
The Corporate Auditor, Mr. Ken Tsunematsu, has for many years been involved insecurities issuance businesses for domestic and overseas companies, public institutions,organizations, etc. as an attorney-at-law. He has experienced in the analysis andevaluation of the financial statements of these issuers, and has considerable knowledgeof finance and accounting matters.
There are no special interests between the Company and other corporations employing
Outside Corporate Auditors, Messrs. Ken Tsunematsu, Hiroshi Yasuda and Kohei
Yamashita.
The notice of Outside Corporate Auditor, Mr. Ken Tsunematsu being an independent
officer was submitted to Tokyo Stock Exchange, Inc. and Osaka Securities ExchangeCo., Ltd.
Secom Science and Technology Foundation changed its status from a foundation to a
public interest foundation as of April 1, 2012.
Changes in Directors and Corporate Auditors during the current fiscal year
1) Mr. Seiji Sakamoto was elected as Corporate Auditor at the 50th ordinary general
meeting of shareholders held on June 24, 2011, and assumed the office. (Mr. Sakamoto
was elected as Full-time Corporate Auditor at the board of Corporate Auditors held on
the same day and assumed the office.)2) Mr. Fumio Obata resigned Senior Executive Director of the Company as of March 31,
2012.

〈Reference〉
Executive Officers who are not Directors are as follows:(As of May 1, 2012)
Title

Name

Managing Executive
Officer

Shunji Ogahara, Naohide Nakamura, Kazuaki Anzai
Minoru Takaoka, Hideo Morishita, Tsuneo Komatsuzaki, Ryohei
Komatsu, Yukio Tsunoda, Masahiro Takeda, Teruhisa Yoshimura,

Executive Officer

Keitaro Arai, Yasuyuki Yoshida, Tatsuro Fuse, Hiromichi Sonoda,
Toshiyuki Mukai, Hiroshi Ishikawa, Kenichi Furukawa, Yoichi
Sugimoto(Notes)
1. Mr. Kazuaki Anzai was appointed to Managing Executive Officer as of January 1, 2012.
2. Messrs. Toshiyuki Mukai, Hiroshi Ishikawa and Kenichi Furukawa were appointed to
Executive Officer as of January 1, 2012.
3. Mr. Yoichi Sugimoto was appointed to Executive Officer as of April 1, 2012.

2. Remuneration of Directors and Corporate Auditors
Number of
Recipients

Combined total of
remuneration(Millions of Yen)

Directors

11476

Corporate Auditors

5

60

Total

16

537

(Notes)
1. In the table shown above, the total combined remuneration for the 3 Outside Corporate
Auditors is YEN 24 million.

[English Translation]26

2. The Directors’ bonuses of YEN 61 million paid for the current fiscal year are included in
the total amount of remunerations of Directors shown above.
3. The total amount of remunerations of Directors and Corporate Auditors shown above
includes YEN 62 million (YEN 60 million to Directors and YEN 2 million to Corporate
Auditors (of which YEN 0 to Outside Corporate Auditors), respectively) which was accrued
to retirement benefits for Directors and Corporate Auditors in the current fiscal year.
4. In addition to the above, retirement benefits of YEN 15 million (previously approved at thegeneral meeting of shareholders) were paid to one Director who had retired at theconclusion of the 43rd Ordinary General Meeting of Shareholders held on June 29, 2004
(who had been appointed to Executive Officer simultaneously with his retirement from
Director and retired on May 31, 2011 from the office of Executive Officer).

3. Outside Corporate Auditors(1) Activities of Outside Corporate Auditors during the current fiscal year

Name

Attendanceof theMeetings ofthe Board of
Directors

Attendanceof theMeetings ofthe Board of
Corporate
Auditors

Main Activities

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

abundance of experience in the area of

13

10(out of 13)(out of 10)

finance and accounting, which were
cultivated in many years as
attorney-at-law. He primarily offeredadvice and suggestions at the Board of
Directors Meeting in order to ascertain thevalidity and/or appropriateness ofoperations and management.
He offered advice and suggestions at theBoard of Directors Meeting based on his
ample experience and insights of company
management and directorships gained
from previously held positions. He also

Hiroshi Yasuda

12

9(out of 13)(out of 10)

asked questions and stated opinions inorder to clarify unclear issues.
In addition, with respect to the meetings
for which he was absent, he received fromthe Full-time Corporate Auditors detailed
reports on the resolutions of the meetings
so as to remain fully informed.

[English Translation]
27

Name

Attendanceof theMeetings ofthe Board of
Directors

Attendanceof theMeetings ofthe Board of
Corporate
Auditors

Main Activities

He offered advice and suggestions at theBoard of Directors Meeting based on his
Kohei Yamashita

13

10(out of 13)(out of 10)

ample experience and insights ofmanaging a global corporation. He also
asked questions and stated opinions inorder to clarify unclear issues.

(2) Description of the agreement limiting liabilities
The Company has entered into with each of the Outside Corporate Auditors anagreement limiting his liabilities as prescribed by Article 423, Paragraph 1 of
the Companies Act, pursuant to the provisions of Article 427, Paragraph 1 of
the Companies Act.
The maximum amount of the liabilities under this agreement which each of
the Outside Corporate Auditors incurs is equal to the lowest amount ofliabilities stipulated in Article 425, Paragraph 1 of the Companies Act.

[English Translation]28

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 210 million
YEN 517 million(Notes)1. Based on the audit contract between the Company and the Accounting Auditor, theremuneration paid to the auditor is not distinguished between that which relates to theaudits under the Companies Act and that which relates to the audits under Financial
Instruments and Exchange Act as they cannot be distinguished. Therefore, the amountgiven in (1) shown above is the combined total of these amounts.
2. Of the major subsidiaries of the Company, The Westec Security Group Inc. is auditedby PricewaterhouseCoopers LLP and Secom Plc by KPMG LLP.

3. Non-Audit Duties
The Company pays consideration to the Accounting Auditor for services,
including work for financial due dilligence, in addition to the services provided
for in Article 2, Paragraph 1 of the Certified Public Accountants Act.
4. Policy for Decision for Dismissal or Non-reappointment
Whenever there occurs any material event which could be a substantial hazard to
the performance of audit duties of the Company, such as a case when it is deemedthat the Accounting Auditor has come to fall within the purview of Article 340,
Paragraph 1 of the Companies Act or the Accounting Auditor or the firm of the
Accounting Auditor is subjected to the disposition of suspension of business by
the supervisory authorities, the Board of Corporate Auditors will examine thesituation, and, when all Corporate Auditors have consented thereto, the Corporate
Auditor will take action for the dismissal of the subject Accounting Auditor or the
subject firm of the Accounting Auditor. In such case, the Corporate Auditor
selected by the Board of Corporate Auditors will report the reasons for thedismissal at the general meeting of 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 Board of Corporate Auditors, be submitted to the general
meeting of shareholders for the dismissal or non-reappointment of the Accounting
Auditor.

[English Translation]
29

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]
30

Legal Affairs Department supports them, providing
cross-organizational coordination.
(Inspection)
Following the orders of the President and Representative Director,
the Audit and Compliance Department provides cross-organizational
inspection in a timely manner, indicating how to improve morale
through observance and at the same time pointing out matters thatneed correction. The findings of the inspection are reported promptly
to the President and Representative Director.
(Whistleblower System)
When executives and employees of the Company become aware ofunethical actions, they have the obligation to report such actions to
the proper superior without hesitation. A “Hot Helpline” has been
established to facilitate contact with the Audit and ComplianceDepartment if corrective actions are not taken even after reporting tosuperiors or it is difficult to report. Such reports will remain strictly
confidential, preventing any harm to the reporter and any necessary
investigation and appropriate measures will be taken promptly.
(Organizational Culture Committee)
The Company establishes a standing, active Organizational Culture
Committee, chaired by the President and Representative Director.
The Organizational Culture Committee examines importantorganizational culture-related issues (including compliance-related
matters), which are the cornerstone of developing and maintaining
the corporate organization, and determines important official
commendations and punishments.
(ii) Revisions of SECOM Group Code of Employee Conduct and/or criticalcompliance-related matters are undertaken after discussion with theOrganizational Culture Committee and subject to the approval of theBoard of Directors after obtaining opinions of the Corporate Auditors.
(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
examination and review of (i) above, and operation and management[English Translation]31

of the database of (ii) above shall be reported to the President andRepresentative Director, the Board of Directors, and the Board of
Corporate Auditors.
(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 Corporate Auditors.
(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 Board of Corporate Auditors
on 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
Corporate Auditors.
Risk Category
Large scale calamity(1)Large

scale

Examplecalamityrisk

Earthquake,wind,flood,

volcanic

disasters, radiation leakage, etc.
Noncompliance with “Constitution of
SECOM’s Business and Operation,”“SECOM Group Code of Employee
Conduct,”(2)Compliance risk

otherinternal

rules

and

guidelines, 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

Ordinary times

data(3)System risk

extinguishment,

large

scale

blackout, wide area circuit disturbance,
ICT (information and communication
technology) related risk, etc.
Risk incurred when providing services(4)Service providing risk

(Accidents related to security, fire alarmor equipment maintenance businesses,
etc.)[English Translation]
32

Risk Category(5)Administrative

Examplework

and accounting risk

Input

error

or

input

omissioninadministrative or account processing,estimation error for allowance, etc.
Offencefromoutsiders(groundlessrumor, calumniation, theft, terror, etc.),

Ordinary times

risk related to M&A, risk related to new(6)Others

system development, other risk related tobusiness infrastructure (fire on the
Company’s

premises,pandemic

influenza, disease epidemic, etc.), etc.

(5)

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

(6)

System under which the Company and the Company Group consistingof the parent company and subsidiaries is ensured to properly executeits business(i) Abiding by the “Constitution of SECOM’s Business and Operation,”each of the companies of the SECOM Group shares SECOM Group
Code of Employee Conduct, which applies to all executives andemployees. United by these guidelines, the executives and employees
work to accomplish the corporate goals in an appropriate manner.
(ii) The “Basic Rules for SECOM Group Corporate Management” provide
guidelines to enhance Group synergy, leading to the achievement of thebusiness vision by the entire SECOM Group. Covering criticaldecision-making by the companies, these basic rules clarify thecoordination of items to be approved in prior consultation with the[English Translation]33

parent 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 conformancewith 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 Board of Corporate
Auditors.
(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 Corporate Auditors of the Company visit important subsidiaries andconduct audits regarding internal controls.
(vii) A liaison meeting with Group Corporate Auditors is established after
discussion with the Board of Corporate Auditors in an attempt to share
information.
(7)

Matters related to employees to assist duties of Corporate Auditors
when Corporate Auditors requests to do so
The Office of Corporate Auditors will be established and at least two
employees will be manned to assist audit duties of the Corporate Auditors.

(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 Board of Corporate Auditors.
The assistants who received necessary instruction on audit duties by
Corporate Auditors shall not be subject to any instruction or order from
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 Corporate
Auditors and system under which any report is made to Corporate
Auditors(i) Regulation providing for matters to be reported to Corporate Auditors
shall be established upon discussion with the Board of Corporate
Auditors, and Directors shall make reports with respect to the following
matters: (1) matters resolved by the Organization Culture Committee andother committees; (2) matters likely to be materially harming the[English Translation]
34

Company; (3) important matters relating to monthly business conditions;(4) important matters relating to internal audit and risk management; (5)material violation of laws and regulations or the Articles ofIncorporation; (6) condition of usage and content of the Hot Help Line;and (7) in addition, important matters from viewpoint of compliance.
(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 Corporate Auditors pursuant to the preceding paragraph.
(10) System under which audit by Corporate Auditors is ensured to be
performed efficiently(i) The Board of Corporate Auditors 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 Board of Corporate Auditors 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,
2012)

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 Corporate
Auditors, including 3 Outside Corporate Auditors, and the Board of Directors,
coordinating with internal audit departments etc. audit and oversee Directors
and executive officers in the execution 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 10 Directors and is attended by 5
Corporate Auditors (including 3 Outside Corporate Auditors). It isconvened once a month as a general rule. The Board of Directors
determines management policies and business execution policies inrelation to business in general, oversees the execution of duties byDirectors, actively exchanges opinions and endeavors to make decisions in
a precise and speedy fashion.
6 out of 10 Directors are involved in business execution, and 4 Directors(2 Supreme Advisors, Chairman and Executive Vice Chairman) do not
engage in business execution.
(ii) Executive Officers
The Company has an executive officer system by which decisions are
made by the President and Representative Director or the Board of
Directors, and business is executed by the Executive Officers. The systemstrengthens field divisions and enhances the service system for customers
by expediting business execution and clarifying responsibilities andauthority.
There are 24 Executive Officers, including 6 Directors.

[English Translation]
35

(iii) Corporate Auditors and Board of Corporate Auditors
The Board of Corporate Auditors consists of 5 Corporate Auditors,
consisting of 2 Full-time Corporate Auditors and 3 Outside Corporate
Auditors. It is convened once a month as a general rule.
For the office of Full-time Corporate Auditor, the Company appoints
persons who are well versed in the Company’s business, internal affairs
and finance. For the office of Outside Corporate Auditors, the Company
appoints persons who are independent from the management, haveconsiderable knowledge of management, legal matters, finance and otherfields and are capable of providing appropriate oversight and supervisionof management.
Corporate Auditors attend almost every meeting of the Board of Directors
in addition to other important conferences, exchange opinions relating tocorporate management in general, receive reports on the status ofexecution of duties from Directors etc. and conduct audits focusing onwhether there are any facts of violations of laws, regulations, the Articles
of Incorporation or shareholders’ interests.
The Board of Corporate Auditors 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) Corporate Auditors’ attendance rate at meetings of the Board of
Directors: 98.3%(ii) Corporate Auditors’ attendance rate at meetings of the Board of
Corporate Auditors: 97.9%(iii) Conducted interviews with Directors etc. of the Company andits subsidiaries and affiliates: 51 times(iv) Conducted on-site audits at business locations of the Company,
its subsidiaries, affiliates, etc.: 223 locations(2)

Coordination among Organizations and Business Units(i) Periodic Meetings among Representative Director, etc. and Corporate
Auditors:
Corporate Auditors hold meetings with the President and Representative
Director with the presence of Chairman and Director and Executive Vice
Chairman and Director periodically (once a month). At the meeting,Corporate Auditors report the results of audits etc. and exchange opinions
on important issues regarding management, to share mutual recognition.
(ii) Conferences etc. among Corporate Auditors and the Accounting Auditor:
Corporate Auditors hold periodical meetings with the Accounting Auditor
6 times a year and have ones additionally as necessary, and exchange
opinions and information. Corporate Auditors and the Board of Corporate
Auditors receive explanation and exchange opinions regarding the audit
plan and audit results* from the Accounting Auditor. In addition,
Corporate Auditors present themselves as a witness during visiting audits
and audit review conducted by the Accounting Auditor as necessary.
(Witness frequency: 32 times in the current fiscal year)* including the reports of quarterly reviews and audit under the CompaniesAct.
(iii) Cooperation with Internal Audit Division etc.:
Corporate Auditors hold conferences with the Audit and ComplianceDepartment periodically (once a month), are reported to on audit results
and exchange opinions with them. And Corporate Auditors endeavor to
conduct audits in an efficient manner such as requesting the internal audit
division etc. to conduct an investigation as necessary.

[English Translation]
36

Consolidated Balance Sheet(As of March 31, 2012)(Millions of Yen)ITEM

AMOUNTASSETS
503,479
182,41254,011
28,00085,744
24,83019,936
14,60523,74642,35911,383
4,389
13,489(1,428)Fixed assets:
Tangible assets:
Buildings and improvements
Security equipment and control stations
Land
Other

598,359
290,747
97,95566,900104,426
21,464

Intangible assets:
Software
Goodwill
Other

25,043
12,5407,320
5,182

Deferred assets:
Other

Current liabilities:
Notes and accounts payable, trade
Bank loans
Current portion of straight bonds
Lease obligations
Payables – otherAccrued income taxes
Accrued consumption taxes
Accrued expenses
Deferred revenue
Accrued bonuses
Reserve for losses on construction
contracts
Other

215,780
30,731
47,985
5,983
354
27,627
14,688
3,833
4,169
30,834
12,739Long-term liabilities:
Straight bonds
Long-term loans
Lease obligations
Guarantee deposits received
Deferred income taxes
Accrued pension and severance costs
Accrued retirement benefits for
directors and corporate auditors
Investment deposits by policyholders,
unearned premiums and otherinsurance liabilities
Other

214,586
9,625
10,7002,884
38,235
8,415
12,585282,568

Total liabilities

177,655
46,197
19,46019,13014,793
22,915(17,584)

NET ASSETS

45
45

TOTAL ASSETSAMOUNT

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

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

ITEM

1,101,884[English Translation]
37

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

834
35,997

2,509
127,812
1,817
430,366

641,034
66,377
83,054565,261(73,659)(33,026)
4,559
(28)

Foreign currency translation
adjustments(37,556)

Minority interests in subsidiaries:

63,509Total net assets

671,517

TOTAL LIABILITIES AND
NET ASSETS

1,101,884

Consolidated Statement of Income(Fiscal Year from April 1, 2011 to March 31, 2012)(Millions of Yen)ITEM

AMOUNT

Revenue
Costs of revenue
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income:Interest income
Dividends income
Gain on sales of investment securities
Net gains from investment in affiliates accounted for under theequity method
Gain on private equity investments
Other
Non-operating expenses:
Interest expenses
Loss on sales of investment securities
Loss on sales and disposal of fixed assets
Write-off of long-term prepaid expenses
Other
Ordinary profit
Extraordinary profit:
Insurance income
Gain on negative goodwill
Gain on sales of fixed assets
Gain on sales of investment securities
Other
Extraordinary losses:
Impairment losses on fixed assets
Loss on revaluation of investment securities
Loss related to disasters
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]
38

679,173458,452
220,720
139,642
81,078
872
350
1,873
4,597
2,739
2,537
1,145
1,224
1,253
841
1,744

178
34
33
18
22
8,133
922
539
8
1,954
32,023
4,600

12,9706,209
87,839287

11,55876,56736,62339,9434,454
35,489

Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2011 to March 31, 2012)(Millions of Yen)
Shareholders’ equity
CommonTotal
CommonCapitalRetainedstock instock

surplusearnings

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

66,377

year

83,054

549,747(74,923)624,255

Change in the fiscal year:
Cash dividends
Net income(19,622)(19,622)35,48935,489Purchase of treasury stock(351)

Disposal of treasury stock

(292)

(292)

1,556

1,204

Transfer of losses on disposal of

351

(351)

-

-

15,514

1,263

16,77866,377

83,054565,261(73,659)

641,034-

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

Accumulated other comprehensive income
Total
Unrealized
DeferredForeignaccumulated
gains
gains
currency
other(losses) on(losses) on
translation
comprehensive
securities
hedgesadjustments
incomeBalance at the beginning of the fiscal
year

2,192

(35)

(34,166)(32,010)

Minority
interests in
subsidiaries

Total
net
assets61,810654,055

Change in the fiscal year:(19,622)

Cash dividends
Net income

35,489Purchase of treasury stock(292)

Disposal of treasury stock

1,204

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

2,366

7

(3,390)(1,015)

1,699

683

Total changes in the fiscal year

2,366

7

(3,390)(1,015)

1,699

17,461

Balance at the end of the fiscal year

4,559

(28)

(37,556)(33,026)

63,509671,517

shareholders’ equity[English Translation]
39

Non-Consolidated Balance Sheet(As of March 31, 2012)(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

192,804
82,631
52,386720
14,324
10,039
2,159
456
5,152
1,470
2,253
4,269
15,574
1,632(268)

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
Other106,1212,400
27,65980
13,756
3,938
2,062
716
22,06622,340
4,343
6,116
640

Fixed assets:
Tangible assets:
Buildings and improvements
Automobiles
Security equipment and control
stations
Machinery and equipment
Tools, furniture and fixtures
Land
Construction in progress
Other
Intangible assets:
Goodwill
Software
Other
Investments and others:
Investment securities
Investment securities and investments
in subsidiaries and affiliates
Long-term loans receivable
Lease deposits
Long-term prepaid expense
Prepaid pension and severance costs
Deferred income taxes
Insurance funds
Other
Allowance for doubtful accounts

506,643
116,286
16,409231

Long-term liabilities:
Lease obligations
Guarantee deposits received
Accrued pension and severance costs
Accrued retirement benefits for
directors and corporate auditors
Other

25,5682,217
18,0993,945

TOTAL ASSETS

65,341361
3,301
28,555
1,710
374
10,424
3,350
5,487
1,586
379,933
23,906
192,189
128,074
8,147
24,013
15,903
130
4,181
2,713
(19,326)

699,448[English Translation]
40

ITEM
LIABILITIESAMOUNT

1,294
10

Total liabilities
NET ASSETS

131,689

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

566,727
66,377
83,054
83,054490,9549,028
481,926800
2,212
478,914(73,659)

Valuation, translation adjustments andothers:
Unrealized gains on securities

Total net assets
TOTAL LIABILITIES AND
NET ASSETS

1,031
1,031

567,758
699,448

Non-Consolidated Statement of Income(Fiscal Year from April 1, 2011 to March 31, 2012)(Millions of Yen)ITEM

AMOUNT

Revenue

345,476

Costs of revenue

203,386

Gross profit

142,089

Selling, general and administrative expenses

71,893Operating profit

70,196

Non-operating income:Interest income

1,668

Dividends income

5,927

Other

452

8,048

Non-operating expenses:
Interest expenses

325

Loss on sales and disposal of fixed assets

1,043

Write-off of long-term prepaid expenses

774

Other

889

Ordinary profit

3,032
75,212Extraordinary profit:
Gain on extinguishment of tie-in shares

22,985Gain on sales of investment securities

11

Other

4

23,001

Extraordinary losses:
Debt-equity-swap loss

24,999Impairment losses on fixed assets

7,909

Provision for allowance for doubtful accounts

6,391

Loss on revaluation of investment securities

757

Loss related to disasters

465

Other

171

Income before income taxes

40,69557,518

Income taxes – current

17,270

Income taxes – deferred

13,429Net income

30,69926,818[English Translation]
41

Non-Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2011 to March 31, 2012)(Millions of Yen)
Shareholders’ equity
Capital surplus
CommonAdditional

Other capital

Total capital

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

83,054－

83,054

(351)

(351)

351

351

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

－

－

－

－

66,377

83,054－

83,054

Shareholders’ equity
Retained earnings
Other retained earnings
Legal

Reserve forreservesystemGeneraldevelopments
Balance at the beginning of the800

retainedearnings carriedearnings

forward472,070

484,110

Cash dividends(19,622)(19,622)

Net income

26,81826,818

(351)

(351)

fiscal year

9,028

reserve

Total

Accumulated

2,212

Change in the fiscal year:

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

-

-

-

6,844

6,844

9,028

800

2,212

478,914490,954[English Translation]
42

(Millions of Yen)
Valuation, translation

Shareholders’ equity
Commonstock intreasury, atcost
Balance at the beginning of
the fiscal year

adjustments and others
Total

Total

Unrealized

valuation,

shareholders’gains (losses)

translation

equityon securities

adjustments

Total net
assetsand others(74,923)558,619

(201)

(201)

558,417

Change in the fiscal year:
Cash dividends(19,622)(19,622)

Net income

26,81826,818Purchase of treasury stock

(292)

(292)

(292)

Disposal of treasury stock

1,556

1,204

1,204

－

－

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

1,232

1,232

1,232

Total changes in the fiscal
1,263

8,108

1,232

1,232

9,341

(73,659)

566,727

1,031

1,031

567,758

year
Balance at the end of the fiscal
year[English Translation]
43

Certified Copy of the Accounting Auditor’s Report (Consolidated)[English Translation of the Accounting Auditor’s Report Originally Issued in theJapanese Language]
Independent Auditor’s Report
May 17, 2012
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA LLC
Hiroaki Sugiura (Seal)
Designated Limited Liability Partner
Certified Public Accountant
Kentaro Maruta (Seal)
Designated Limited Liability Partner
Certified Public Accountant

We have audited the consolidated financial statements, comprising theconsolidated balance sheet, the consolidated statement of income, the consolidated
statement of changes in net assets and the related notes of SECOM Co., Ltd. as at
March 31, 2012 and for the year from April 1, 2011 to March 31, 2012 inaccordance with Article 444, Paragraph 4 of the Companies Act.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of theconsolidated financial statements in accordance with accounting principles
generally accepted in Japan, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatements, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the consolidated financial
statements based on our audit as independent auditor. We conducted our audit inaccordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to otain audit evidence about theamounts and disclosures in the consolidated financial statements. The procedures
selected depend on our judgement, including the assessment of the risks ofmaterial misstatement of the consolidated financial statements, whether due tofraud or error. In making those risk assessments, we consider internal control
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[English Translation]
44

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]
45

Certified Copy of the Accounting Auditor’s Report(Non-Consolidated)[English Translation of the Accounting Auditor’s Report Originally Issued in theJapanese Language]
Independent Auditor’s Report
May 17, 2012
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA LLC
Hiroaki Sugiura (Seal)
Designated Limited Liability Partner
Certified Public Accountant
Kentaro Maruta (Seal)
Designated Limited Liability 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, 2012 andfor the 51st business year from April 1, 2011 to March 31, 2012 in accordancewith Article 436, Paragraph 2, Item 1 of the Companies Act.
Management’s Responsibility for the Financial Statements and Others
Management is responsible for the preparation and fair presentation of thefinancial statements and the supplementary schedules in accordance withaccounting principles generally accepted in Japan, and for such internal control as
management determines is necessary to enable the preparation of financial
statements and the supplementary schedules that are free from material
misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial statements and the
supplementary schedules based on our audit as independent auditor. We
conducted our audit in accordance with auditing standards generally accepted inJapan. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements and the
supplementary schedules are free from material misstatement.
An audit involves performing procedures to otain audit evidence about theamounts and disclosures in the financial statements and the supplementaryschedules. The procedures selected depend on our judgement, including theassessment of the risks of material misstatement of the financial statements andthe supplementary schedules, whether due to fraud or error. In making those risk
assessments, we consider internal control relevant to the entity’s preparation andfair presentation of the financial statements and the supplementary schedules inorder to design audit procedures that are appropriate in the circumstances, while
the objective of the financial statement audit is not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control. An audit also

[English Translation]46

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]
47

Certified Copy of the Board of Corporate Auditors’ Report[English Translation of the Board of Corporate Auditors’ Report Originally Issued in theJapanese Language]

Audit Report
May 18, 2012

Mr. Shuji Maeda
President and Representative Director
SECOM Co., Ltd.
Board of Corporate Auditors of
SECOM Co., Ltd.
Teruo Ogino (Seal)
Corporate Auditor (Full-time)
Seiji Sakamoto (Seal)
Corporate Auditor (Full-time)
Ken Tsunematsu (Seal)
Outside Corporate Auditor
Hiroshi Yasuda (Seal)
Outside Corporate Auditor
Kohei Yamashita (Seal)
Outside Corporate Auditor
The Board of Corporate Auditors has received the audit reports of the performanceof duties of the Directors during the 51st business term from April 1, 2011 through March
31, 2012 from each of the Corporate Auditors. After deliberating such reports, we have
prepared this Audit Report and report as follows:
1. Method and Details of Audit Performed by Corporate Auditors and the Board of
Corporate Auditors
The Board of Corporate Auditors has established the audit policy and audit plan forthe current fiscal year, received reports on the status and results of audits from each
Corporate Auditor, received reports on the status of execution of duties from Directors,
etc. and the Accounting Auditor, and requested explanations when necessary.
Each of the Corporate Auditors, in accordance with the audit policy, audit plan, etc.
of the current fiscal year set up by the Board of Corporate Auditors, worked tocommunicate with Directors, the internal audit division and other employees, etc. madeefforts 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 whennecessary, inspecting documents concerning matters such as important decisions, andinvestigating the conditions of the business and financial conditions at the head office andthe principal offices. Also, the Corporate Auditors, on a regular basis, received from
Directors and employees, etc. reports on the establishment and operation of the system(internal control system) based on the resolution of the Board of Directors as stipulated in
Article 100, Paragraph 1 or Paragraph 3 of the Companies Act Enforcement Order toensure the execution of the duties of Directors as described in the Business Reportcomplies with laws and regulations and the Articles of Incorporation and to ensure
appropriate company operation, obtained explanation from them, and expressed opinions
when necessary.

[English Translation]48

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 andCorporate Auditors, etc. of subsidiaries and received reports on operations fromsubsidiaries when necessary. The above methods were used to examine the business
report and supplementary schedule for the current fiscal year.
The Board of Corporate Auditors received reports on internal control regarding
financial reporting from Directors and the Accounting Auditor about discussion between
Directors and the Accounting Auditor, evaluation of internal control of the Company andaudit circumstance, also requested explanations when necessary. With respect tosubsidiaries, Corporate Auditors have endeavored to exchange information and promote
understanding and, obtained reports from Directors and Corporate Auditors ofsubsidiaries.
On the basis of the forgoing procedures, the Board of Corporate Auditors has
considered the Business Report and supplementary schedules.
Furthermore, in addition to monitoring and examining whether the Accounting
Auditor maintained an independent position and performed auditing appropriately, we
received reports from the Accounting Auditor on the execution of their duties andrequested explanations when necessary. In addition, we received notice from the
Accounting Auditor that “The systems for ensuring the proper execution of duties” (setforth in each Item of Article 131 of the Ordinance for Corporate Accounting) is organizedin accordance with the “Standards for Quality Control of Audit” (Business Accounting
Council, October 28, 2005) and other relevant standards, and sought explanations
whenever necessity arose. Based on the above methods, we examined the financial
statements (balance sheet, statement of income, statement of changes in net assets andrelated notes), supplementary schedules and the consolidated financial statements(consolidated balance sheet, consolidated statement of income, consolidated statement ofchanges 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 unjust activity or
violations 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]
49