Notice of Convocation
The 56th Ordinary General Meeting of Shareholders

The following is an English translation of the Notice of Convocation of the 56th
Ordinary General Meeting of Shareholders of SECOM CO., LTD. to be held on
June 27, 2017, 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.

[English Translation]
1

Table of Contents
Notice of Convocation of The 56th Ordinary General Meeting of Shareholders ····
Reference Document Concerning the General Meeting of Shareholders ·············

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

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

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

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III.
1.

Directors and Audit & Supervisory Board Members ·························· 34
Names and Titles of Directors and Audit & Supervisory Board
Members ················································································ 34
Description of the Agreement Limiting Liabilities ······························· 36
Remuneration of Directors and Audit & Supervisory Board
Members ················································································ 36
Policy for Determining the Amount of Remuneration of Directors
and Audit & Supervisory Board Members ······································· 36
Outside Directors and Outside Audit & Supervisory Board
Members ···················································································37

2.
3.
4.
5.

[English Translation]
2

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

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

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V.

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

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48
51

1.
2.
3.

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

[English Translation]
3

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Stock Exchange Code: 9735
June 5, 2017

Notice of Convocation of
The 56th Ordinary General Meeting of Shareholders
Dear Shareholders:
You are cordially invited to attend the 56th Ordinary General Meeting of
Shareholders of SECOM CO., LTD. (the “Company”).
If you are unable to attend the aforesaid meeting, you can exercise yourvoting rights through either of the methods stated below. The Company
respectfully requests you to study the “Reference Document Concerning theGeneral Meeting of Shareholders” below and exercise your voting rights on or
before 6:00 p.m. (JST) June 26, 2017 (Monday):[In case of exercising voting rights by mail]Please indicate on the Voting Rights Exercise Form enclosed herewith
your approval or disapproval to the proposals on the agenda, and returnthe form to the Company by mail on or before the time limit statedabove.
[In case of exercising voting rights via the Internet]
Please access the website for the exercise of voting rights(http://www.evote.jp/), using the log-in ID and temporary password
which are shown on the Voting Rights Exercise Form. After logging in,please indicate whether you approve or disapprove the items on theagenda by following the instructions on the display screen by the time
limit stated above.
Yours very truly,
SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo, Japan
By: YASUO NAKAYAMA
President and Representative Director[English Translation]
4

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

[English Translation]
5

PARTICULARS

1.

Date and Time of the Meeting:
Tuesday, June 27, 2017 at 10:00 a.m.

2.

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

3.

Matters to be dealt with at the Meeting:
Matters to be Reported:
1. Report on the Business Report, the Consolidated Financia lStatements for the 56th Fiscal Year (from April 1, 2016 to March
31, 2017) and the Results on the Audits of Consolidated Financial
Statements by the Accounting Auditor and the Audit &Supervisory Board.
2. Report on the Non-Consolidated Financial Statements for the56th Fiscal Year (April 1, 2016 to March 31, 2017).
Matters to be Resolved upon:First Item of Business:
Second Item of Business:
Third Item of Business:

Proposed Distribution of Surplus
Election of Eleven (11) Directors
Election of One (1) Audit &Supervisory Board Member
Determination of Remuneration
payable to Directors enabling
non-transferable stock to be granted
to Directors

Fourth Item of Business:

4.

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

[English Translation]6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: https://www.secom.co.jp/english/ir/(on the “Investor Relations: Stocks and Bonds” section)
The Consolidated Financial Statements and Non-Consolidated
Financial Statements audited by the Accounting Auditor and the
Audit & Supervisory Board consist of each document attached to the
Notice of Convocation of the Ordinary General Meeting of
Shareholders, as well as the Notes to Consolidated Financial
Statements and the Notes to Non-Consolidated Financial Statements
available on the Company’s Website.
(Note)
If you plan to attend the Meeting, please submit the enclosed Voting
Rights Exercise Form to the receptionist at the Meeting.
(Notice)
If there are any amendments to the contents of the Reference
Document Concerning the General Meeting of Shareholders, theBusiness Report, the Consolidated Financial Statements and theNon-Consolidated Financial Statements, the Company will announce
such amendments on the “Investor Relations: Stocks and Bonds”
section of the Company’s website(https://www.secom.co.jp/english/ir/).

[English Translation]
7

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

Proposed Distribution of Surplus

The Company considers the return of profit to shareholders as one of theimportant managerial issues, and the Company has determined a dividend payout
ratio on a consolidated basis and the level of internal reserves after making an
overall judgment on the expansion of the Company’s business and trends of future
revenues and profits of the Company on a consolidated basis while considering
the Company’s basic policy that ensures the payment of continual and steady
dividends. The Company has made it a basic rule to distribute a dividend twice ayear, as the interim dividend whose record date is September 30 each year, and theyear-end dividend whose record date is March 31 each year. The interim dividend
is determined by the Board of Directors and the year-end dividend is determinedby the General Meeting of Shareholders. Furthermore, the Company will utilize
internal reserves for investments required for increased new customers, researchand development and investments and the like for strategic businesses so that theCompany will exert its efforts to reinforce the corporate structure and to expand
its business.
Based on the aforesaid basic policy for cash dividends and to reward
shareholders’ continued support, it is proposed that the year-end dividend for the
fiscal year under review is YEN 75 per share. A total amount of dividend per share,
together with the interim dividend of YEN 70 per share, will be YEN 145, anincrease of YEN 10 per share from the previous fiscal year in which dividend was
YEN 135 per share.
Matters related to the year-end dividend:(1)
Kind of assets distributed:
Cash(2)Matter related to distribution of cash and total amount:
YEN 75 per share of common stock of the Company
The total amount:
YEN 16,369,518,525(3)Effective date for distribution of surplus:
June 28, 2017[English Translation]
8

Second Item of Business:

Election of Eleven (11) Directors

The term of office of all of the ten (10) Directors will expire at the closeof this Meeting. In connection therewith, we would like to ask shareholders toelect eleven (11) Directors in which ten (10) are to resume and the other one (1) is
newly to assume office.
The candidates are as follows:

Candidate
Number1

Makoto Iida
(Date of birth: April 1, 1933)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Jul 1962
President and Representative Director (Founder)
Feb 1976 Chairman and Representative Director
Jun 1997 Supreme Advisor and Director (currently)
Reasons for Election
Mr. Makoto Iida established the current SECOM group as the founder of the Company,and gives guidance and advice on overall management from the long-term and wide
range of viewpoints. In the light of continuous enhancement of corporate value, wewould like to ask shareholders to elect him as Director.
Candidate
Number
2

Number of Sharesof the Company
Owned
4,240,500
sharesYasuo Nakayama*(Date of birth: November 1, 1952)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Jul 2003
Branch Manager, Nagoya Branch, The Bank of Japan
Jul 2005
Director-General, Secretariat of the Policy Board, The Bank of JapanApr 2007 Personnel and Corporate Affairs Department, The Bank of JapanMay 2007 Advisor, SECOM Co., Ltd.
Jun 2007 Executive Director
May 2016 President and Representative Director (currently)
Reasons for Election
Mr. Yasuo Nakayama has assumed the office of Representative Director of theCompany since May 2016 on the basis of a long term period of career at The Bank ofJapan and engagement as Director in the general affairs division of the Company.
Following the assumption of the office of Representative Director, he made theCompany perform the favorable results of operation for the year under review with hisstrong leadership and management ability. He also has carried out steadily
management renovation from a viewpoint of mid- and long-term targets. In the light ofcontinuous enhancement of corporate value, we would like to ask shareholders to electhim as Director.

[English Translation]
9

Number of Sharesof the Company
Owned
3,900 shares

Candidate
Number3

Junzo Nakayama*(Date of birth: February 24, 1958)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Mar 1980 Joined SECOM Co., Ltd.
Nov 1999 President and Representative Director, Japan Image Communications Co.,
Ltd. (presently Turner Japan K. K.)
Dec 2009 Associate General Manager, Strategic Planning OfficeJun 2010 Associate General Manager, Assistant to President in charge of special
tasks
Jan 2011
Deputy General Manager, Finance DivisionJun 2012 Director
Jun 2014 Executive Director (currently)

Number of Sharesof the Company
Owned
1,700 shares

Reasons for Election
Mr. Junzo Nakayama served for the finance and accounting departments as Director, in
addition to affluent management experience at SECOM group. He has a high level ofknowledge and experience in overall management including finance area. In the lightof continuous enhancement of corporate value, we would like to ask shareholders toelect him as Director.
Candidate
Number4

Yasuyuki Yoshida*(Date of birth: March 28, 1958)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Mar 1980 Joined SECOM Co., Ltd.
Feb 1997 Associate General Manager, Strategic Planning DivisionSep 1998 Director, Toyo Fire and Marine Insurance Co., Ltd. (presently Secom
General Insurance Co., Ltd.)Jun 2002 President and Representative Director, Secom General Insurance Co., Ltd.
Apr 2010 Executive Officer
Jun 2010 Group Companies Supervisor (currently)
Jun 2012 Director
Jun 2016 Executive Director(currently)
Reasons for Election
Mr. Yasuyuki Yoshida served in charge of overall business planning, including
security business and overall management planning of the group, including supervisinggroup companies as Director. He holds a high level of knowledge and experience inoverall management including management control and strategic planning areas basedon affluent management experience at SECOM group. In the light of continuous
enhancement of the corporate value, we would like to ask shareholders to elect him as
Director.

[English Translation]
10

Number of Sharesof the Company
Owned
2,400 shares

Candidate
Number5

Tatsuya Izumida*(Date of birth: November 3, 1960)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Mar 1986 Joined SECOM Co., Ltd.
Jun 2003 Executive Director, Secom Information System Co., Ltd. (presently
Secom Trust Systems Co., Ltd.)Jul 2009
General Manager, Training Department
May 2010 General Manager, Human Resource Department
Oct 2012 Executive Officer
Jun 2014 President and Representative Director, Secom Trust Systems Co., Ltd.
Dec 2015 Managing Executive Officer
Jun 2016 Director (currently)

Number of Sharesof the Company
Owned
900 shares

Reasons for Election
Mr. Tatsuya Izumida served for human resource department and information andcommunication related business as Director of the Company. He holds affluent
experience in management of SECOM group and a high level of knowledge. In thelight of continuous enhancement of the corporate value, we would like to ask
shareholders to elect him as Director.
Candidate
Number6

Ichiro Ozeki*(Date of birth: March 1, 1961)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Apr 1983 Joined Sumitomo Bank, Ltd. (presently Sumitomo Mitsui Banking
Corporation)
Apr 1992 Joined Tokyo Steel Manufacturing Co., Ltd.
Jan 2001
Advisor, Secom General Insurance Co., Ltd.
Apr 2001 General Manager, Sales and Planning Department, Secom General
Insurance Co., Ltd.
Jun 2001
Director, Secom General Insurance Co., Ltd.
Jun 2004
Executive Director, Secom General Insurance Co., Ltd.
Jun 2008
Vice President and Director, Secom General Insurance Co., Ltd.
Apr 2010 President and Representative Director, Secom General Insurance Co., Ltd.
Apr 2015 Executive Officer
Jun 2016
Chairman and Director, Secom General Insurance Co., Ltd. (currently)
Jun 2016
Director (currently)
Reasons for Election
Mr. Ichiro Ozeki has engaged in overall operation of security business mainly incorporate customers and insurance business as Director. Based on affluent experiencein management of SECOM group he holds a high level of knowledge and insight on
overall management including security business. In the light of continuous
enhancement of the corporate value, we would like to ask shareholders to elect him as
Director.

[English Translation]
11

Number of Sharesof the Company
Owned
300,000 shares

Candidate
Number7

Tatsushi Kurihara*(Date of birth: June 5, 1961)

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

Number of Sharesof the Company
Owned
100 shares

Reasons for Election
Mr. Tatsushi Kurihara holds affluent experience through a long period at The Bank ofJapan and the general affairs department of the Company serving as Director. In thelight of continuous enhancement of the corporate value, we would like to ask
shareholders to elect him as Director.
Candidate
Number8

Tatsuro Fuse*(Date of birth: September 9, 1957)

New Candidate

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Mar 1982 Joined SECOM Co., Ltd.
Apr 2001 General Manager, Project Development Department, Medical Division
Mar 2002 Director, Secom Medical System Co., Ltd.
May 2005 Executive Director, Secom Medical System Co., Ltd.
Jun 2008 Senior Executive Director, Secom Medical System Co., Ltd.
Jun 2009 President and Representative Director, Secom Medical System Co., Ltd.
Apr 2010 Executive Officer
Jun 2013 Director (retired in Jun. 2016)
Apr 2016 Chairman and Representative Director, Secom Medical System Co., Ltd.
(currently)
Jun 2016 Managing Executive Officer (currently)<Important Position of Other Organizations Concurrently Assumed>
Chairman and Representative Director, Secom Medical System Co., Ltd.
Reasons for Election
Mr. Tatsuro Fuse has been engaged in medical service business as well as the divisionof advertising, public relations and marketing as Executive Officer of the Company
and holds affluent management experience and a high level of knowledge and insightin SECOM group. In the light of continuous enhancement of the corporate value, wewould like to ask shareholders to elect him as Director.

[English Translation]
12

Number of Sharesof the Company
Owned
2,800 shares

Candidate
Number9

Candidate for Outside Director

Takaharu Hirose(Date of birth: October 25, 1944)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Sep 1965 Founded Fuji Vending Co., Ltd., and assumed Representative Director
Apr 1972 Founded Food & Beverage Vending Association, and assumed Chairman
Apr 1987 Founded Japan Automatic Merchandising Association, and assumed
ChairmanApr 2003 Advisor and Director, GAIN Inc. (presently Monitas, Inc.)
May 2008 President and Representative Director, GAIN Inc.
May 2011 Chairman and Representative Director, GAIN Inc. (currently)
Jun 2013 Director, SECOM Co., Ltd. (currently)<Important Position of Other Organizations Concurrently Assumed>
Chairman and Representative Director, Monitas, Inc.

Number of Sharesof the Company
Owned
0 shares

Reasons for Election
Mr. Takaharu Hirose established and managed venture business and made efforts toestablish and operate industry groups so that he contributed to development of businessand industry. He holds affluent experience in and a high level of knowledge of IT
enterprises. In the light of continuous enhancement of corporate value, we would liketo ask shareholders to elect him as Outside Director.
Candidate
Number10

Candidate for Outside Director

Hirobumi Kawano(Date of birth: Jan 1, 1946)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Jul 1969
Joined Ministry of International Trade and Industry (MITI ) (presently
Ministry of Economy, Trade and Industry (METI))
Jun 1995
Director-General, Petroleum Department, Agency for Natural Resources
and Energy, MITI
Aug 1996 Deputy Director-General, Machinery Information Industries Bureau, MITI
Jun 1998
Director-General, Basic Industries Bureau, MITI
Sep 1999 Commissioner, Agency for Natural Resources and Energy, MITI
Jul 2002
Retired Agency for Natural Resources and Energy, METI
Sep 2002 Advisor, The Tokio Marine and Fire Insurance Co., Ltd. (presently Tokio
Marine & Nichido Fire Insurance Co., Ltd.)Jun 2003
Outside Director, Sony Corporation
Aug 2004 Senior Managing Executive Officer, JFE Steel Corporation
Apr 2008 President, Japan Oil, Gas and Metals National Corporation
Feb 2016 Special Advisor, Japan Oil, Gas and Metals National Corporation(currently)
Jun 2016
Director, SECOM Co., Ltd. (currently)
Reasons for Election
Mr. Hirobumi Kawano has a career in important positions at the government offices
such as the Ministry of International Trade and Industry (presently Ministry of
Economy, Trade and Industry) and Japan Oil, Gas and Metals National Corporation.
He holds affluent experience accumulated through his career and a high level of[English Translation]
13

Number of Sharesof the Company
Owned
0 sharesknowledge. In the light of continuous enhancement of the corporate value, we would
like to ask shareholders to elect him as Outside Director.
Candidate
Number11

Candidate for Outside Director

Hajime Watanabe(Date of birth: November 18, 1951)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Mar 1975 Joined Watanabe Pipe Co., Ltd.
Apr 1978 Executive Director, Watanabe Pipe Co., Ltd.
Apr 1983 Senior Executive Director, Watanabe Pipe Co., Ltd.
Jun 1985 Vice President and Representative Director, Watanabe Pipe Co., Ltd.
Nov 1991 President and Representative Director , Watanabe Pipe Co., Ltd.
(currently)
Jun 2016 Director, SECOM Co., Ltd. (currently)<Important Position of Other Organizations Concurrently Assumed>
President and Representative Director, Watanabe Pipe Co., Ltd.

Number of Sharesof the Company
Owned
100 shares

Reasons for Election
Mr. Hajime Watanabe has engaged in management of Watanabe Pipe Co., Ltd. formany years. He holds rich experience accumulated through his career on corporate
management and a high level of knowledge. In the light of continuous enhancement ofcorporate value, we would like to ask shareholders to elect him as Outside Director.

(Notes)1.
There is no particular interest between the Company and each of the said
candidates.
2.
Candidates with * are Executive Officers currently in office.
3.
Based on the nomination policy that the Board of Directors established,
the nomination of candidates for Directors are decided after discussing in
the Board of Directors. The Board of Directors decided the candidates
for Directors after the discussion process of the Nomination andCompensation Committee including Outside Directors.
4.
Messrs. Takaharu Hirose, Hirobumi Kawano and Hajime Watanabe are
candidates for Outside Directors. The designation of Messrs. Takaharu
Hirose, Hirobumi Kawano and Hajime Watanabe as Independent
Officers has been filed with Tokyo Stock Exchange, Inc.
5.
On February 16, 2017 Watanabe Pipe Co., Ltd. of which Mr. Hajime
Watanabe is Representative Director received a cease and desist orderand a surcharge payment order from the Japan Fair Trade Commission in
charge of violating the Act Concerning Prohibition of Private
Monopolization and Maintenance of Fair Trade (Antimonopoly Act) inconnection with a construction work related to horticultural facility
placed order by local public body and the like in the designated areas of
Miyagi prefecture or Fukushima prefecture as construction sights.

[English Translation]
14

6.

7.

8.

The number of years during which Mr. Takaharu Hirose is in the officeof Outside Director of the Company will have been four (4) years at theclose of this General Meeting of Shareholders.
The number of years during which Messrs. Hirobumi Kawano andHajime Watanabe are in the office of Outside Director of the Company
will have been for one (1) year at the close of this General Meeting of
Shareholders.
Pursuant to Article 427, Paragraph 1 of the Companies Act, the Company
has entered into a liability limit agreement limiting a compensation
liability provided for in Article 423, Paragraph 1 of the Companies Act
with each of Messrs. Takaharu Hirose, Hirobumi Kawano and Hajime
Watanabe. In case each of them is re-elected, it is scheduled that theliability limit agreement will continuously be made.
Furthermore, the limited amount of compensation liability is theminimum liability limit provided for in Article 425, Paragraph 1 of theCompanies Act.

[English Translation]
15

Third Item of Business:

Election of One (1) Audit & Supervisory Board
MemberMr. Kenichi Sekiya will resign the office of Audit & Supervisory
Board Member at the close of this Ordinary General Meeting of
Shareholders so that we would like to ask shareholders to elect one (1)Audit & Supervisory Board Member to supplement the vacant office.
With respect to this item of business the Audit & Supervisory Board has
given consent.
Furthermore, the term of office of Mr. Masao Yokomizo if
elected will be until the close of the Ordinary General Meeting of
Shareholders scheduled to be held in June 2019 pursuant to theprovisions of the Articles of Incorporation.
The candidate for Audit & Supervisory Board Member is as follows:

Candidate for Outside Audit &Supervisory Board Member

Candidate

Masao Yokomizo(Date of birth: March 10, 1934)

New Candidate

Brief History, Position and Important Position of Other Organizations Concurrently
Assumed , if any
Apr 1956 Joined Ministry of Labor (presently Ministry of Health, Labor andWelfare)Feb 1960 Joined Economic Planning Agency (presently Cabinet Office) Planning
BureauJul 1984
Director-General, Research Bureau, Economic Planning Agency
Jun 1985 Director-General, Quality-of-Life Policy Bureau, Economic Planning
AgencyJun 1987 Director-General, Coordination Bureau , Economic Planning Agency
Jun 1988 Deputy Director-General for Economic Planning, Economic Planning
AgencyJun 1989 Retired Economic Planning Agency
Jul 1989
Director, Nikko Research Center, Inc.
Nov 1991 Research Councilor, Nippon Institute for Research Advancement
Feb 1995 Chief Director, Nikko Research Center, Inc.
Dec 2000 President, Economic Research Association
Nov 2006 Vice President, The Japan Association of Business Cycle studies
Nov 2009 Adviser, The Japan Association of Business Cycle studies (currently)
Reasons for Election
Mr. Masao Yokomizo was engaged for many years in important positions at Ministries
such as the Economy Planning Agency (presently Cabinet Office). He holds affluent
experience and a wide range of knowledge accumulated through his career. The
Company expects he will supervise, and give effective advice to, overall managementfrom his wide insight. We would like to ask shareholders to elect him as Outside Audit& Supervisory Board Member.

[English Translation]
16

Number of Sharesof the Company
Owned
0 shares(Notes)
1.
There is no particular interest between the Company and the said
candidate.
2.
Mr. Masao Yokomizo is a candidate for Outside Audit & Supervisory
Board Member. The Company is scheduled to file him with Tokyo Stock
Exchange, Inc. as Independent Officer.
3.
Reasons for judgment that he will be able to discharge duties as Outside
Audit & Supervisory Board Member
Mr. Masao Yokomizo has not participated directly in management ofcompanies but he has career at the former Ministry of Labor andEconomic Planning Agency, etc. and holds insight and knowledge on
economy and corporate practice. He will duly discharge duties as Outside
Audit & Supervisory Board Member in the judgment of the Company.
4.
Pursuant to Article 427, Paragraph 1 of the Companies Act, the Company
is scheduled to enter into a liability limit agreement limiting acompensation liability provided for in Article 423, Paragraph 1 of theCompanies Act with Mr. Masao Yokomizo in case of him elected as
Audit & Supervisory Board Member.
Furthermore, the limited amount of compensation liability is theminimum liability limit provided for in Article 425, Paragraph 1 of theCompanies Act.

[English Translation]17

Forth Item of Business:

Determination of Remuneration payable to
Directors enabling restricted stock to be granted to
Directors

The amount of remuneration payable to Directors as a group was
approved as YEN 600 million or less per annum (excluding salary portion payable
to Directors serving as employees at the same time) at the 44th Ordinary General
Meeting of Shareholders held on June 29, 2005.
In this occasion as a link to reviewing the Officers’ Remuneration
System with a view to giving Directors of the Company (other than Outside
Directors; hereinafter the “Subject Directors”) an incentive to promote continuous
enhancement of the corporate value of the Company and further promoting theshare of value between Directors and shareholders, the Company would like toprovide the Subject Directors remuneration to acquire restricted stock in addition
to the aforesaid remuneration.
Under this item of business, remuneration provided to the Subject
Directors for granting restricted stock is monetary claim (hereinafter the“Monetary Remuneration Claim”) and the total amount should be a reasonableamount in the light of the above purpose which is YEN 100 million or less perannum. When this remuneration is paid and how much remuneration is paid toeach of the Subjet Directors shall be decided at the Board of Directors. The
provision of such remuneration to each of the Subject Directors shall be subject tothe relevant Subject Director’s consent to the undermentioned contribution in kindand entering into the Allotment Agreement (defined below).
Furthermore, the aforesaid remuneration shall not include salary portion
payable to Directors serving as employees at the same time. The number of
Directors currently is ten (10), including three (3) Outside Directors but if thesecond item of business “Election of Eleven (11) Directors” is approved asoriginally proposed the number of Directors will be eleven (11) including three(3) Outside Directors.
Based on the resolution of the Board of Directors of the Company, theSubject Directors shall transfer to the Company the whole of the Monetary
Remuneration Claim provided by this item of business as contribution in kind andthereby receive Company’s shares of common stock issued or disposed by theCompany as restricted stock. The total number of Company’s shares of common
stock issued or disposed by the Company shall be 20,000 or less per year;
provided, however, that in the event that the Company consummates stock split ofcommon stock of the Company, free distribution of shares of common stock, or
consolidation of shares of common stock or any other event necessitating
adjustment of the total number of Company’s shares of common stock issued or
disposed as restricted stock, such total number of Company’s shares of common
stock shall be adjusted to the reasonable extent. The dilution rate on the
Company’s shares of common stock by granting such restricted stock shall be less[English Translation]18

than 0.01 percent per annum and therefore the Company recognizes that the effectsuch granting of restricted stock will have to the shareholders of the Company isminor.
The payment amount per share of the Company’s shares of common
stock issued or disposed as restricted stock shall be determined at the Board of
Directors of the Company within the range not specially favorable to certain
Subject Directors subscribing the shares on the basis of the closing price of theshares of common stock of the Company on the Tokyo Stock Exchange on thebusiness day preceding the date of resolution of the Board of Directors pertaining
to such issuance or disposition (or the closing price on the transaction date
immediately prior thereto if no transaction is made on such business day). Further,in connection with issuance and disposition of such shares of common stock of
the Company, restricted stock allotment agreement including the following
content (the "Allotment Agreement") shall be entered into between the Company
and each of the Subject Directors.
(1) Non-transferable term
The Subject Director shall not transfer, create mortgage on, or otherwise
dispose of, shares of common stock of the Company allotted to the
Subject Director (the “Allotted Stock”) by this Allotment Agreement
during such period as determined by the Board of Directors of theCompany (the “Non-transferable Period”) within the range of three (3)year to five (5) year period following the date of such issuance ordisposition of the Allotted Stock (the “Restriction”). The Restriction
shall be rescinded after Non-transferable Period has passed.
(2) Treatment in the event of resignation etc. before the maturity of
Non-transferable Period
In the event that the Subject Director resigns or retires from office andceases to be any of Director, Executive Officer, Audit & Supervisory
Board Member and employee of the Company (the “Directors”) before
the maturity of the Non-transferable Period (including the resignation
and retirement due to the death, hereinafter the “Retirements”), theCompany shall acquire the Allotted Stock free of charge as a matter ofcourse. Provided, however, that in such cases where such Retirements of
the relevant Subject Director is due to the expiration of term of office,reaching retiring age, death or other due reason approved by the Boardof Directors, notwithstanding any provisions of (1) above, theRestriction shall be rescinded as of the time of such Retirements withregard to certain number of Allotted Stock determined in accordancewith the reasonable standard set out in advance by the Board of
Directors of the Company among the Allotted Stock held by such
Subject Director, and the Company shall acquire the rest of Allotted
Stock held by such Subject Director free of charge as a matter of course.

[English Translation]19

(3) Treatment in case of reorganization and the like
Notwithstanding any provisions of (1) above, in the event that theGeneral Meeting of Shareholders of the Company (or the Board of
Directors of the Company in case of the reorganization and the likewhich is not subject to approval by resolution of the General Meeting of
Shareholders of the Company under applicable laws) approves byresolution any merger agreement under which the Company is absorbed
or any stock exchange agreement under which the Company becomes awholly owned company or any item related to stock transfer plan orother reorganization and the like (limited to the case where the effective
date of such reorganization and the like arrives before the
Non-transferable Period expires) before the maturity of the
Non-transferable Period, the Restriction shall be rescinded at the time
immediately before the business day preceding the effective date ofsuch reorganization and the like with respect to certain number ofAllotted Stock determined in accordance with the reasonable standard
set out in advance by the Board of Directors of the Company among the
Allotted Stock held by Subject Directors as of the date of such approval,
and the Company shall acquire the rest of Allotted Stock held bySubject Directors free of charge as a matter of course.
(4) Other Matters determined at the Board of Directors
In addition to the above, expression of intention and method ofcorrespondence, method to amend the Allotment Agreement and othermatters to be determined at the Board of Directors shall be stated in the
Allotment Agreement.
- End -[English Translation]
20

[Attached Documents]

Business Report (Fiscal Year Ended March 31, 2017)
I. Outline of the Group’s Business1. The Current Business Development and Results of Operations
During the fiscal year ended March 31, 2017 (“the current fiscal year”), despite
stagnations in private consumption being seen, the outlook for Japanese economy
has been in moderate upward trend in corporate earnings and employment
environment thanks to the effects of various economic and financial policies. On
the other hand, continual attentions to the uncertainties in emerging economies
including China, UK exiting the EU (BREXIT) and the trends in the U.S.
economy and financial policies have been required.
In this environment, we have been continuously trying to satisfy the increasingly
diversified and sophisticated needs of our customers for their safety, peace ofmind, comfort and convenience, with the aim of realizing our vision of theestablishment of “Social System Industry”, a society where everyone can live safe
and secure anytime and anywhere. To this end, we have made efforts to develop
and provide high-grade products and services suited to customer needs in our
security services segment, as well as in our fire protection services, medical
services, insurance services, geographic information services, information andcommunication related services, and real estate and other services segment. We
also pressed forward with efforts to apply the ALL SECOM concept, whichemphasizes cooperation among our various independent businesses to strengthen
the bond of the Group as a whole with a view to hastening our advance to growth.
Furthermore, preparing for future Japanese society, we promote the effort todevelop innovative services through the ALL SECOM concept, in terms of key
themes: super-aged society and disaster preparedness, business continuity
planning (BCP), environmental preservation, based on a foundation of our
security services. In September 2016, we launched “Secom 3D Security Planning”
based on high-precision 3D images for security planning which demonstrated its
effectiveness in security operations at the G7 Ise-Shima Summit. Also, in
December 2016, we announced “Secom My Doctor Watch”, wearable wristband
terminal for health management and emergency medical service, to be launched in2017 early summer. “Secom My Doctor Watch” was developed capitalizing ourbroad range of service for providing security and peace of mind.
As a result, consolidated revenue for the current fiscal year increased by 5.3% toYEN 928.0 billion compared with the previous fiscal year. Consolidated operating
profit increased by 1.9% to YEN 131.0 billion. Consolidated ordinary profit
increased by 9.1% to YEN 147.0 billion, mainly due to the increase in net gains
on private equity investment in the U.S. (YEN 14.4 billion for the current fiscal
year and YEN 1.1 billion for the previous fiscal year) Consolidated net income
attributable to owners of the parent increased by 9.3% to YEN 84.1 billion.
Consolidated revenue, consolidated operating profit, consolidated ordinary profit[English Translation]
21

and consolidated net income attributable to owners of the parent all reached arecord-high.
（Millions of Yen）
Revenue

Operating profit

Ordinary profit

Net income
attributable toowners of theparentCurrent fiscal
year (FY2016)

928,098

131,050

147,033

84,170Previous fiscal
year (FY2015)

881,028

128,582

134,826

77,039In the security services segment, we provided customers chiefly with commercial
and residential security services (on-line security systems), as well as static guard
services, armored car services and merchandises. In the current fiscal year, wehave strived to catch the customers’ needs precisely and propose the most suitable
services from our extensive lineup so that we can make our customer relationshipmore solid and provide the customers with the long-term safety, peace of mind,
comfort, and convenience.
For our commercial security services, we have made an effort to market highvalue added on-line security systems, such as “SECOM AX,” which is
high-quality on-line security systems supported by imaging technology, “SECOM
LX,” which has an access control function for the promotion of labor management
and cost reduction, and “SECOM FX,” which has a facility control function. In
addition, we provided supports for large-scale events ensuring safety and peace ofmind for all concerned with strengthened offer of services and systems. For the
security planning, we assisted to develop an optimum security plan capitalizing“Secom 3D Security Planning”. And for the provision of security services, we
contributed to the successful staging of the events utilizing “3D Security”, adistinctive package of the latest security systems including “Secom Aerostat” tosecure the scene and “Secom static guards” from the air and “temporary
surveillance cameras”, “wearable cameras” and “Secom Drone Detection System”
on the ground.
For our residential security services, the demand for SECOM Home Security
which delivers safety and peace of mind, as well as comfort and convenience, hasbeen solid. In this circumstance, we have been promoting “SECOM Home
Security G-Custom”, home security controller with the function to provide
services close to customers’ daily life. Also, we introduced “Secom Anshin App”,
which allows subscribers to set their security systems remotely from theirsmartphones. In addition, we began providing “Coco Secom” service, which
combines location service utilizing GPS and mobile phone networks and response
services by Secom security personnel, to smartphones for kids, which major
telecommunications newly marketed in January 2017.

[English Translation]
22

Outside Japan, we promoted our “SECOM-style” security services, which has
specialty in emergency response services, especially in economically developing
areas, such as People’s Republic of China and Southeast Asia. We also enhanced
the proposal to Japanese companies which expand their business to overseas.
Furthermore, in order to strengthen the service foundation in UK, Secom plc
acquired all of the outstanding shares of Scan Alarms Ltd., which became a new
subsidiary.
As a result, mainly due to brisk sales of centralized systems, i.e., on-line security
systems, for commercial and residential use, as well as security merchandise
including access control systems and owing to the contribution of Asahi Security
Co., Ltd., a newly consolidated subsidiary from December 2015, revenue
increased by 8.4% to YEN 534.2 billion and operating profit increased by 1.3% to
YEN 113.5 billion.
In the fire protection services segment, we provided a broad range of fire
protection systems such as high-quality fire alarm systems and fire extinguishingsystems along with customers’ needs to a wide variety of facilities such as officebuildings, production facilities, tunnels, cultural properties, ships and residences.
In the current fiscal year, two major fire protection companies, Nohmi Bosai Ltd.
and Nittan Co., Ltd., promoted various fire protection systems based on eachcompany’s business infrastructure and product development expertise. ,Revenue decreased by 4.2% to YEN 126.2 billion and operating profit decreased
by 5.2% to YEN 13.1 billion, mainly attributable to the contribution of large-scale
projects in the previous fiscal year, despite of active marketing efforts.
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 andpharmaceutical products, personal care services, and the leasing of real estate for
medical institutions.
Despite revenue increased by 4.4% to YEN 66.8 billion, mainly due to firm
increase in sales of pharmaceutical products and owing to the contribution of
Takshasila Hospitals Operating Pvt. Ltd., a newly consolidated general hospitalbusiness subsidiary in India, operating profit decreased by 10.0% to YEN 4.6
billion, chiefly owing to the increase in cost ratio.
In the insurance services segment, we expanded marketing efforts for our uniquenon-life insurance offerings including Security Discount Fire Policy forcommercial facilities that offers discounts on premiums to customers who haveinstalled on-line security systems, recognizing such systems as a risk-mitigating
factor; SECOM Anshin My Home, the comprehensive fire insurance policy forresidences that offers a variety of compensation plans and discount policies;
MEDCOM, an unrestricted cancer treatment policy that offers compensation of
actual cost of medical treatment; and SECOM Anshin My Car, a comprehensive
automobile insurance policy that offers on-site support services provided by our
emergency response personnel in the event of an accident.
Revenue increased by 4.4% to YEN 41.9 billion and operating profit increased by
16.0% to YEN 2.1 billion, mainly due to the firm increase in sales of MEDCOM,[English Translation]23

unrestricted cancer treatment policy provided by Secom General Insurance Co.,Ltd.
In the geographic information services segment, we collected geographic datafrom aerial photography, vehicle and/or ground surveying systems and satellite
images, and provided the geospatial data services, by integrating, processing, andanalyzing the geographic data, to domestic national and local governmental
agencies, private sectors, and foreign governmental agencies including emerging
and developing countries. In the current fiscal year, we responded to diversified
and sophisticated needs for the development and maintenance of criticalinfrastructure and the disaster recovery in Japan and overseas, through thegeospatial information technology.
Revenue decreased by 1.8% to YEN 51.6 billion, reflecting the decrease inrevenue in international division. Operating profit increased by 47.4% to YEN 1.2
billion, mainly attributable to the improvement in the cost ratio and the decrease
in selling, general and administrative expenses.
In the information and communication related services segment, our distinctive
portfolio includes the core data center services, as well as BCP support,
information security services and a variety of cloud-based services. We
commenced sales of the “Secom Premium Net Remote Browser”, a cloud-based
service, which isolates customers’ in-house computer systems from the internet toprotect them from increasingly sophisticated and cunning web-based viruses andcyber-attacks.
Revenue increased by 2.8% to YEN 49.8 billion, chiefly owing to the contribution
of “SECOM Anshin My Number Service” launched in the previous fiscal year.
Operating profit increased by 34.0% to YEN 6.9 billion, chiefly owing to thedecrease in operation costs relating to data center facilities.
Real estate and other services segment comprises developing and selling
condominiums equipped with advanced security and disaster prevention systems,
real estate leasing, and construction and installation services.
Revenue increased by 12.0% to YEN 57.3 billion and operating profit went up by
5.5% to YEN 5.2 billion, mainly due to the increase in revenue in the real estatedevelopment and sales business.

[English Translation]
24

Results by Business Segment (56th Fiscal Year – current fiscal year)(Millions of Yen)
OperatingprofitCustomers

Revenue
Inter-segment

Security services

534,295

11,714

546,010

113,507

Fire protection services

126,2313,458

129,690

13,180

Medical services

66,839182

67,021

4,687

Insurance services

41,965

3,093

45,0592,144

Geographic
services

51,609230

51,8391,259

49,834

7,018

56,852

6,987

Real estate and otherservices

57,323

1,922

59,245

5,245

Total

928,098

27,621

955,720

147,012-(27,621)(27,621)(15,961)

928,098-

928,098

131,050

Business segment

information

Information
communication
servicesandrelatedEliminations
corporate items

andConsolidated revenue

Total

With respect to the results by geographical segments, in Japan, revenue increased
by 5.8% to YEN 882.2billion. Overseas revenue decreased by 2.4% to YEN 45.8
billion.

[English Translation]25

2. Issues the Group Has to Cope with
While working to realize its Social System Industry vision, operating in anenvironment characterized by drastic change and increasing uncertainty, as part ofthis process, the Group has formulated a vision for 2030, which targets the year
2030 to realize the "ANSHIN Platform" concept.
The “ANSHIN Platform” is a service platform anchored in the relationship of trustthat SECOM has cultivated with society. Created in collaboration, sharing andexchanging various technologies and knowledge with partners who share
SECOM’s philosophy, this platform is designed to provide peace of mind topeople in their everyday lives, as well as to society as a whole. Through this"ANSHIN Platform", we will provide refined and seamless services centered onpeace of mind. For that purpose, we continue promoting "ALL SECOM"(Rallying Group strengths), further enhance cooperation between various
businesses that the Group operates and improve the environment so that each
SECOM employee can make the best use of the Group's comprehensive strength.
In addition, we seek to establish a society with more safety, peace of mind,
comfort and convenience through provision of comfortable and convenientservices for daily lives with greater value as well as responding to latent customer
needs by using cutting-edge technologies and analyzing Big Data.
In response to the increasing needs of customers overseas, SECOM will leverage
its know-how cultivated in Japan, a front runner in addressing critical challenges
with global relevance, to offer services on overseas markets that are customized toreflect local needs and sensibilities.
SECOM will continue striving to keep abreast of, or where possible to anticipate,social change, thereby ensuring its ability to provide enduring peace of mind. To
this end, SECOM remains committed to evolving and improving. By realizing the"ANSHIN Platform" concept, SECOM will reinforce relationships with society,and by solving various social issues, SECOM will continue to grow together withsociety and strive for the improvement of sustainable corporate value.
Furthermore, based on the business strategies described above, we will deal withvarious issues related to ESG (E for Environment, S for Society and G for
Governance) in a proper manner, including the realization of effective corporate
governance.
We look forward to the support from our shareholders in these and all of ourendeavors.

[English Translation]26

3. Capital Expenditures
Capital expenditures for the current fiscal year totaled YEN 56.0 billion (abreakdown is given below). A major portion was for system investments(including those for security equipment and control stations) etc. in the security
services segment, which totaled to YEN 35.8 billion.
Amount(Millions of Yen)

Business segment
Security services

35,848Fire protection services

4,543

Medical services

3,522

Insurance services

2,220

Geographic information services

1,903

Information and communication related services

7,685

Real estate and other services

208
Subtotal

55,934

Eliminations and corporate items

124
Total

56,058

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]27

5. Trends in Earnings and Assets of the Group
Fiscal years
Category
Revenue
Operating profit
Ordinary profit
Net
incomeattributabletoowners of the parent
Net income pershare (Yen)
Return on Equity
Total assets
Net assets

53rd fiscal year
(4/1/2013–
3/31/2014)
822,228
120,018
126,677(Millions of Yen except for net income per share)
56th fiscal year
54th fiscal year 55th fiscal year
(current fiscal year)(4/1/2014–(4/1/2015–(4/1/2016–
3/31/2015)
3/31/2016)
3/31/2017)
840,722881,028
928,098
123,615
128,582
131,050
136,688
134,826
147,033

69,87675,392

77,03984,170320.14345.42352.97385.6410.0%
1,328,226
830,3699.9%
1,410,715
907,341

9.4%
1,568,052
943,1449.8％
1,650,176
1,013,253[English Translation]28

6. Trends in Earnings and Assets of the Company(Millions of Yen except for net income per share)
Fiscal years

53rd fiscal year
(4/1/2013–
3/31/2014)

54th fiscal year
(4/1/2014–
3/31/2015)

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

56th fiscal year
(current fiscal year)(4/1/2016–
3/31/2017)364,280
72,90978,88451,497

370,663
73,174
81,57257,492

376,044
75,664
86,61258,442

382,476
76,28386,54363,260235.94263.41

267.76289.848.4%
772,910627,2429.0%
795,778
650,132

8.8%
826,124
678,3559.1%
850,851
713,263

Category
Revenue
Operating profit
Ordinary profit
Net income
Net income per share(Yen)
Return on Equity
Total assets
Net assets[English Translation]29

7. Matters Concerning Principal Subsidiaries
Company name

Issued capital(Millions of Yen)

Secom Joshinetsu Co., Ltd.

3,530
(Millions of Yen)

Asahi Security Co., Ltd.

100
(Millions of Yen)

Nohmi Bosai Ltd.

13,302(Millions of Yen)

Nittan Co., Ltd.

2,302
(Millions of Yen)

Secom Medical System Co., Ltd.

Secom General Insurance Co.,
Ltd.

100
(Millions of Yen)

16,808(Millions of Yen)

Pasco Corporation

8,758(Millions of Yen)

Secom Trust Systems Co., Ltd.

1,468
(Millions of Yen)

At Tokyo Corporation

13,378(Millions of Yen)

Secom Home Life Co., Ltd.

3,700
(US$)

The Westec Security Group, Inc.

301
(Thousands ofSecom Plc

UK Pounds)

44,126[English Translation]
30

Percentage ofownership(Percentage ofvoting rights)
(%)
50.87
(51.15)(%)
100.00(100.00)(%)
50.36(50.71)(%)
100.00(100.00)(%)
100.00(100.00)(%)
97.11(97.82)(%)
69.84(72.68)(%)
100.00(100.00)(%)
50.88(50.88)(%)
99.94(99.95)(%)
100.00(100.00)

Principal business activities

Security and safety services

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

Data center business

Development and sales of realestateHolding 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.

8. Principal Business of the GroupThe Group consists of the Company, 176 consolidated subsidiaries and 21
affiliates accounted for under the equity method. The principal business activitiesof the Group are as follows: Security Services centering on contracted security
services; Fire Protection Services centering on comprehensive fire protection
services; Medical Services, focusing on home medical services and managementof residences for seniors; Insurance Services consisting mainly of non-life
insurance; Geographic Information Services that mainly entails the provision ofsurveying and measuring operations; Information and Communication Related
Services including security network services, development and operation ofbusiness systems and information security services; and Real Estate and Other
Services centering on development and sales of condominiums and other services.
9. Principal Offices of the Group(i) Headquarters of the Company:
5-1, Jingumae 1-chome, Shibuya-ku, Tokyo(ii) Regional Headquarters:
Hokkaido (Sapporo City), Tohoku (Sendai City), West Kanto (Saitama City),
East Kanto (Chiba City), Tokyo (Shinjuku-ku, Tokyo), Metropolitan Static
Guard Service (Shibuya-ku, Tokyo), Metropolitan Armored Car Service(Shibuya-ku, Tokyo), Kanagawa (Yokohama City), Shizuoka (Shizuoka
City), Chubu (Nagoya City), Kinki (Kyoto City), Osaka (Osaka City), Kansai
Static Guard Service (Osaka City), Hyogo (Kobe City), Chugoku (HiroshimaCity), Shikoku (Takamatsu City), Kyushu (Fukuoka City).
(iii) Domestic Subsidiaries:
Secom Joshinetsu Co., Ltd. (Niigata City), Asahi Security Co., Ltd.
(Minato-ku, Tokyo), Nohmi Bosai Ltd. (Chiyoda-ku, Tokyo), Nittan Co.,
Ltd. (Shibuya-ku, Tokyo), Secom Medical System Co., Ltd. (Shibuya-ku,
Tokyo), Secom General Insurance Co., Ltd. (Chiyoda-ku, Tokyo), Pasco
Corporation (Meguro-ku, Tokyo), Secom Trust Systems Co., Ltd.
(Shibuya-ku, Tokyo), At Tokyo Corporation (Koto-ku, Tokyo), Secom
Home Life Co., Ltd. (Shibuya-ku, Tokyo), Arai & Co., Ltd. (Shibuya-ku,
Tokyo).
(iv) Overseas Subsidiaries:
The Westec Security Group, Inc. (Dover, Delaware, USA), Secom Plc(Kenley, Surrey, UK), Secom (China) Co., Ltd. (Beijing, China).

[English Translation]
31

10. Matters Concerning Employees of the Group and the Company(1) Matters Concerning Employees of the Group
Number of employees

Increase from the end of the previous
fiscal year

43,071384(2) Matters Concerning Employees of the Company
Number of
employees

Increase from the end of theprevious fiscal year

Average age

Average years of service

15,40385
42.4(Note)The number of employees refers to the number of full-time employees.

15.9

11. Principal Lenders(Millions of Yen)
Lenders

Balance

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

14,195

Mizuho Bank, Ltd.

12,419Sumitomo Mitsui Banking Corp.

6,814

Mitsubishi UFJ Trust and Banking Corp.

2,600

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

[English Translation]32

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 15,028,470 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)

The Master Trust Bank of Japan, Ltd.

25,200100 shares
Percentage ofownership(%)

24,974

11.44

STATE STREET BANK AND TRUSTCOMPANY

14,443

6.61

Japan Trustee Services Bank, Ltd.
(Trust Account)

14,425

6.60

STATE STREET BANK AND TRUSTCOMPANY 505223

4,942

2.26

THE BANK OF NEW YORK MELLON
SA/NV 10

4,818

2.20

Makoto Iida

4,240

1.94

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

4,148

1.90

Secom Science and Technology Foundation

4,025

1.84

3,992

1.82

(Trust Account)

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

STATE STREET BANK WEST CLIENT –
3,678
1.68
TREATY 505234(Note)
Although the Company holds treasury stock of 15,028,470 shares, it is not included in thetable above. The percentage of ownership is calculated on the basis of the total number ofshares outstanding excluding treasury stock. The percentage of ownership is truncated totwo decimal places.

[English Translation]
33

III. Directors and Audit & Supervisory Board Members
1.

Names and Titles of Directors and Audit & Supervisory Board Members

Position(As of March 31, 2017)
Field of responsibility and important
position of other organization
concurrently assumed

Name

Director

Makoto Iida

Supreme Advisor

President andRepresentative Director

Yasuo Nakayama

Executive Officer

Executive Director

Junzo Nakayama

Executive Director

Yasuyuki Yoshida

Director

Tatsuya Izumida

Director

Ichiro Ozeki

Director

Tatsushi Kurihara

Director

Takaharu Hirose

Director

Hirobumi Kawano

Director

Hajime Watanabe

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

Executive Officer (general manager offinance division)
Executive Officer (in charge of planningadministration, strategic planning office,group companies supervisor and risk
control)
Executive Officer (general manager ofhuman resources division and in chargeof information systems)
Executive Officer (general manager ofcorporate sales division and in charge of
insurance business)
Executive Officer (general manager ofgeneral affairs division)
Chairman and Representative Director of
Monitas, Inc.

President and Representative Director of
Watanabe Pipe Co., Ltd
Full-time Audit & Supervisory Board
MemberFull-time Audit & Supervisory Board
MemberTakayuki Ito
Ryohei Komatsu
Hideki Kato
Kenichi Sekiya

Director Emeritus of DISCO Corporation

Makoto Yasuda

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

[English Translation]
34

(Notes)
1. Messrs. Takaharu Hirose, Hirobumi Kawano and Hajime Watanabe are Outside
Directors as stipulated in Article 2, Item 15 of the Companies Act.
2. Messrs. Hideki Kato, Kenichi Sekiya and Makoto Yasuda are Outside Audit &Supervisory Board Members as stipulated in Article 2, Item 16 of the Companies Act.
3. The Audit & Supervisory Board Member, Mr. Takayuki Ito has a long-term experienceby working at a financial institution and has considerable knowledge of finance andaccounting matters.
4. There are no particular interests between the Company and other corporations employing
Outside Director, Messrs. Takaharu Hirose and Hajime Watanabe.
5. There are no particular interests between the Company and other corporations employing
Outside Audit & Supervisory Board Members, Messrs. Kenichi Sekiya and Makoto
Yasuda.
6. The notice of Outside Directors, Messrs. Takaharu Hirose, Hirobumi Kawano andHajime Watanabe being independent officers was submitted to Tokyo Stock Exchange,Inc.
7. The notice of Outside Audit & Supervisory Board Members, Messrs. Hideki Kato,
Kenichi Sekiya and Makoto Yasuda being independent officers was submitted to Tokyo
Stock Exchange, Inc.
8. Changes in post of Representative Directors during the current fiscal year
1) Executive Director Mr. Yasuo Nakayama was assumed the office of President andRepresentative Director as of May 11, 2016.
2) Chairman and Representative Director Mr. Shuji Maeda changed his role to Director
as of May 11, 2016, and after that he resigned from Director as of the same day.
3) President and Representative Director Mr. Hiroshi Ito changed his role to Director asof May 11, 2016, and after that he resigned from Director as of the same day.
9. Changes in posts of Directors during the current fiscal year
1) Directors Kazuaki Anzai, Kenichi Furukawa, Tatsuro Fuse and Takashi Sawada
resigned at the close of the 55th Ordinary General Meeting of Shareholders held on June24, 2016.
2) Messrs. Tatsuya Izumida, Ichiro Ozeki, Tatsushi Kurihara, Hirobumi Kawano andHajime Watanabe were elected as Director at 55th Ordinary General Meeting of
Shareholders held on June 24, 2016 and assumed the office.
10. Change in position of Director during the current fiscal year
Director Mr. Yasuyuki Yoshida was appointed to Executive Director as of Jun. 24, 2016.

〈Reference〉
Executive Officers who are not Directors are as follows:(As of May 1, 2017)
Title

Name

Managing Executive
Officer

Kenichi Furukawa, Tatsuro Fuse, Masahiro Takeda, Teruhisa
Yoshimura, Hideo Morishita, Toshiaki Mizuno, Shokichi Ishimura

Executive Officer

Yoichi Sugimoto, Sumiyuki Fukumitsu, Kensuke Shindo,
Yasufumi Kuwahara, Noriyuki Fukuoka, Takeshi Akagi, SadahiroSato, Osamu Ueda, Yoshinori Yamanaka, Seiya Nagao, Noriyuki
Uematsu, Osamu Nagai, Atsushi Komatsu(Notes)1. Messrs. Kenichi Furukawa and Tatsuro Fuse were appointed to Managing Executive
Officer as of June 24, 2016.
2. Managing Executive Officer Mr. Tsuneo Komatsuzaki was resigned as of March 31, 2017.

[English Translation]35

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

16(4)

Combined total of
remuneration etc.
(Millions of Yen)
310
(27)

5
(3)

70
(25)

21

380

Number of
Recipients
Directors(of which Outside Directors)
Audit & Supervisory Board Members(of which Outside Audit & Supervisory
Board Members)
Total(Note) Combined total of remuneration etc. for Directors in the above table includes YEN 53
million bonuses to directors for the current fiscal year.

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

[English Translation]36

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

Category

Name

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

OutsideDirector

Takaharu Hirose

12(out of 12)-

OutsideDirector

Hirobumi
Kawano8(out of 9)-

OutsideDirector

HajimeWatanabe9(out of 9)-[English Translation]
37

Main Activities
He offered advice and suggestions at
the meetings of the Board of Directors
by making use of his experience andinsight gained through the foundationand the management of many
enterprises and organizations. He also
asked questions and stated opinions inorder to clarify unclear issues.
He offered advice and suggestions at
the meetings of the Board of Directors
by making use of his experience andinsight gained through the important
positions in government. He also asked
questions and stated opinions in orderto clarify unclear issues.
He also makes efforts to understand thecontents of the meetings of the Boardof Directors which he had missed byreceiving reports on resolutions andsuch from an operating chief of theBoard.
He offered advice and suggestions at
the meetings of the Board of Directors
by making use of his experience andinsight gained through corporate
management for many years as acorporate executive. He also asked
questions and stated opinions in orderto clarify unclear issues.

Category

Name

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

OutsideAudit &
Supervisory
Board
Member

Hideki Kato

12
(out of 12)

12(out of 12)

OutsideAudit &
Supervisory
Board
MemberKenichi Sekiya

11(out of 12)

11(out of 12)

OutsideAudit &
Supervisory
Board
MemberMakoto Yasuda

12(out of 12)

12(out of 12)

Main Activities
He offered advice and suggestions at
the meetings of the Board of Directors
by making use of his experience in theexecution of national policies andinsight gained through many
accomplishments at a policy think tank.
He also asked questions and statedopinions in order to clarify unclear
issues.
He offered advice and suggestions at
the meetings of the Board of Directors
by making use of his experience andinsight gained through serving as afounding management and as arepresentative and chairman of globalorganizations. He also asked questions
and stated opinions in order to clarify
unclear issues.
He also makes efforts to understand thecontents of the meetings of the Boardof Directors and Audit & Supervisory
Board which he had missed byreceiving reports on resolutions andsuch from an operating chief of theBoard and full-time Audit &Supervisory Board Members,
respectively.
He offered advice and suggestions at
the meetings of the Board of Directors
by making use of his experience andinsight gained through serving as amanagement of global enterprise. He
also asked questions and statedopinions in order to clarify unclear
issues.

(Note) Messrs. Hirobumi Kawano and Hajime Watanabe were elected as Director at the 55th ordinary
general meeting of shareholders held on June 24, 2016, and assumed the office. Therefore, the tableshows the attendance figures of the meetings of the board of directors and audit & supervisory board
held on and after June 24, 2016.

[English Translation]
38

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

YEN 225 million
YEN 682 million(Notes)1. Based on the audit contract between the Company and the Accounting Auditor, theremuneration paid to the auditor is not distinguished between that which relates to theaudits under the Companies Act and that which relates to the audits under Financial
Instruments and Exchange Act as they cannot be distinguished. Therefore, the amountgiven in (1) shown above is the combined total of these amounts.
2. Of the major subsidiaries of the Company, the Westec Security Group Inc. is audited by
RSM US LLP and Secom Plc by KPMG LLP.

3. Consent for the Amount of Remunerations for Accounting Auditor
Audit & Supervisory Board consents under Article 399, Paragraph 1 of theCompanies Act for the amount of remunerations for Accounting Auditors uponverifying the basis for calculation of remunerations of Accounting Auditors,
including contents of audit plan prepared by the Accounting Auditors, the statusof implementation of accounting audits, etc.
4. Non-Audit Duties
The Company pays consideration to the Accounting Auditor for services,
including work for financial due dilligence, in addition to the services provided
for in Article 2, Paragraph 1 of the Certified Public Accountants Act.
5. Policy for Decision for Dismissal or Non-reappointment
Whenever there occurs any material event which could be a substantial hazard to
the performance of audit duties of the Company, such as a case when it is deemedthat the Accounting Auditor has come to fall within the purview of Article 340,
Paragraph 1 of the Companies Act or the Accounting Auditor or the firm of the
Accounting Auditor is subjected to the disposition of suspension of business by
the supervisory authorities, the Audit & Supervisory Board will hold Meeting ofAudit & Supervisory Board Members, and, when all Audit & Supervisory Board
Members have consented thereto, the Audit & Supervisory Board Member willtake action for the dismissal of the subject Accounting Auditor or the subject firmof the Accounting Auditor. In such case, the Audit & Supervisory Board will
make decision on appointment of a temporary Accounting Auditor or a substitute[English Translation]39

Accounting Auditor and will submit a proposal of the appointment of a substituteAccounting Auditor to the general meeting of shareholders convened for the firsttime after such decision. The Audit & Supervisory Board Member selected by the
Audit & Supervisory Board will also report the reasons for the dismissal at thegeneral meeting of shareholders.
Aside from the above, when there exists any situation from the view point ofexecution of duties and audit system, etc. where it is acknowledged that the
Accounting Auditor is not fit to act as Accounting Auditor, the Audit &Supervisory Board will make decision on non-reappointment of the subject
Accounting Auditor and appointment of a substitute Accounting Auditor, with amajority approval, and will submit a proposal to the general meeting ofshareholders.

[English Translation]
40

V. System under which the Company’s Business is Ensured to be Properly
Executed
1. Basic Policy Regarding Internal Control System
At the Board of Directors’ Meeting held on April 8, 2015, the Company has
resolved to change the “system under which the execution of duties by Directors
is ensured to comply with laws and regulations and the Articles of Incorporation,and the system under which the Company’s business and the group of enterprises
consisting of the Company and subsidiaries is ensured to properly execute its
business” (basic policy regarding the internal control system) defined in Article
362, paragraph 4, item (6) of the Companies Act. The content of the resolution isset out below.
(1)

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

(2)

System under which the execution of duties by Directors and employees is
ensured to comply with laws and regulations and the Articles ofIncorporation
Directors and employees are required to act in accordance with the SECOM
Group Code of Employee Conduct, which sets behavioral standards for the
execution of duties, including compliance with laws and regulations, and the
Article of Incorporation. The SECOM Group Code of Employee Conduct isbased on the philosophy of SECOM, which we have followed since theestablishment of the business. These ethical guidelines prescribe ideals
covering the official and private affairs of all executives and employees andaction standards (including the blocking relationships with anti-social
forces) to be followed in the execution of specific daily duties. As such,these guidelines provide the basis of all actions. The compliancemanagement system is as follows:(i) From the start, compliance with laws and regulations and the Articles ofIncorporation has been an indispensable requirement of our business, andwe have always sought to operate in strict adherence to this spirit.
Therefore, compliance is a part of the Company’s daily routines, whichshould not require a system in which a specific section or manager is
responsible for implementation. Each and every employee is at the frontline of promoting the code of conduct, including legal compliance. The
implementation of guidelines is carried out by the line managers of theorganization. Further control is provided by the executive officers in[English Translation]
41

charge of departments under their control, with the President andRepresentative Director providing companywide control.
(ii) The executive officers in charge of each area are responsible for having

thorough knowledge particularly of regulations related to their duties andthe relationships of such regulations with their own operations. They are
responsible for proposing responses to any revisions of laws to the
President and Representative Director. The Legal Affairs Department andother relevant departments and sections support them, providing
cross-organization coordination.
(iii) Following the orders of the President and Representative Director, theAudit and Compliance Department provides cross-organizational
inspection in a timely manner over the execution of duties, indicating
how to improve morale through the observance of laws and regulations
and the Company’s rules and at the same time pointing out matters thatneed correction. The Audit and Compliance Department will promptly
report the findings of the inspection to the President and Representative
Director.
(iv) When executives and employees of the Company become aware ofunethical actions, they have the obligation to report such actions to theproper superior without hesitation. A “Hot Helpline” is established tofacilitate direct contact with the Audit and Compliance Department if
corrective actions are not taken even after reporting to superiors or it isdifficult to report. Pursuant to the “Basic Policy of the SECOM Group
for Compliance,” the Company will keep the reported mattersconfidential, and promptly take necessary investigation and appropriate
measures. The reporter will suffer no disadvantage on the grounds ofsuch report.
(v) The Company establishes a standing Organizational Culture Committee,

chaired by the President and Representative Director. The Organizational
Culture Committee examines important organizational culture-related
issues (including compliance-related matters), which are the cornerstoneof developing and maintaining the corporate organization, anddetermines important official commendations and punishments.
(vi) Revisions of the SECOM Group Code of Employee Conduct and/or

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

reporting are determined and evaluated in accordance with the standardsof the Business Accounting Council.
(3)

System under which information regarding execution of business by[English Translation]42

Directors shall be maintained and controlled
Information regarding the execution of duties of Directors (minutes of the
Meetings of the Board of Directors and decision-making documents), etc.
shall be properly maintained, administered (including destruction)
pursuant to the rules of the Company, which will be amended upon
reviewing the operating conditions if necessary.
(4)

System regarding control of risk of loss and other system(i) The Company’s approach to risk management is embedded in
day-to-day business activities, with acknowledgement that risk
management itself is the Company’s business. Executive officers incharge, under the direction of the President and Representative
Director, analyze and assess business risk and fraud risk in theoperational areas for which they are responsible, and revise
established rules and manuals as conditions change. Rules andmanuals are based on risk analysis and assessment, and stipulate
preventive measures, prompt and appropriate communication andemergency preparedness when incidents occur, daily risk monitoringand other systems.
(ii) The Executive officer in charge shall report to the President andRepresentative Director and the Audit & Supervisory Board on the
results of risk analysis and assessment.
(iii)Any important changes of the Company’s risk control system shall be
subject to the approval of the Board of Directors after obtaining theopinions of the Audit & Supervisory Board Members. The risks attimes of large scale calamities and at ordinary times are as follows.

[English Translation]43

Large scale calamity

Risk Category

Example(1) Large scale calamity
risk

Earthquake, wind, flood, volcanic
disasters, radiation leakage, etc.
Noncompliance with “Constitution of
SECOM’s Business and Operation,”“SECOM Group Code of Employee
Conduct,” other internal rules andguidelines, etc., risk accompanied byestablishment or changes in regulations(in the area of tax system, medical
system, etc.), breach of law, etc.
Information system shut down, electronic
data
extinguishment,
large
scale
blackout, wide area circuit disturbance,
ICT (information and communication
technology) related risk, etc.
Risk incurred when providing services(Accidents related to security, fire alarmor equipment maintenance businesses,
etc.)
Input error or input omission inadministrative or account processing,estimation error for allowance, etc.
Offence from outsiders (groundlessrumor, calumniation, theft, terror, etc.),
risk related to M&A, risk related to new
system development, other risk related tobusiness infrastructure (fire on the
Company’s
premises,pandemic
influenza, disease epidemic, etc.), etc.

(2) Compliance risk

(3) System risk

Ordinary times(4) Service providing risk

(5) Administrative workand accounting risk(6) Others(5)

System by which efficient execution of duties of Directors shall beensured(i) All Directors shall carry out the operation and execution of business on
the basis of the “Constitution of SECOM’s Business and Operation” sothat they may share the ideas essential to the execution of the duties suchas decision making for management by the Board of Directors anddecision making for the execution of duties by the Directors.
(ii) On the basis of the preceding item, the Company, aiming to implement
the execution of duties efficiently, introduces the system of executive
officers so that decision making and the execution of business shall befurther facilitated.
(iii)The Company develops the IT system for dissemination of notices, etc.,
and decision making by managerial decision requests, and maintains thesystem for swiftly enabling full introduction and implementation.

[English Translation]
44

(iv) The Company will share the medium and long term business vision, andfor the purpose of the accomplishment thereof, the Board of Directors
will design an annual business plan and deliberate the progress of the
plan.
(6)

System under which the group of enterprises consisting of the Company andsubsidiaries is ensured to properly execute its business(6-1) System under which the execution of duties by Directors, etc. andemployees of subsidiaries is ensured to comply with laws and regulations
and the Articles of Incorporation(i) Abiding by the “Constitution of SECOM’s Business and Operation,”each of the subsidiaries shares the SECOM Group Code of Employee
Conduct, which applies to all executives and employees. United by theseguidelines, the executives and employees work to accomplish thecorporate goals in an appropriate manner.
(ii) Each of the subsidiaries carries out IT controls in conformance with the“Basic Policy of the SECOM Group for Information Security.” The
Company’s IT executive officers conduct timely inspections covering
the IT management of major subsidiaries.
(iii)The “SECOM Group Management Committee,” which is chaired by theCompany’s President and Representative Director and whose members
are composed of the presidents of major subsidiaries and other parties
appointed by the chairperson, works to ensure that appropriate
operations are carried out. It accomplishes this goal by conducting
discussions of issues related to the Group’s internal controls in an effort
to share Group information and operating philosophy. Where necessary,
the President and Representative Director reports the results to the Boardof Directors and the Audit & Supervisory Board.
(iv) The President and Representative Director of the Company issues orders
to the internal audit departments (Audit and Compliance Department andGroup Governance Department) to inspect subsidiaries, if necessary. The
subsidiaries accept the inspection by the Company, and at the same time
promote the understanding and improvement of compliance-related
issues by exchanging information with the Company. Furthermore, theCompany establishes the whistle-blowing system “Hot Help Line”
which enables executives and employees of subsidiaries to directly
report to the Company’s Group Governance Department, whenever they
become aware of any non-compliance. Pursuant to the “Basic Policy of
the SECOM Group for Compliance,” the Company will keep thereported matters confidential, and promptly take necessary investigation
and appropriate measures. The reporter will suffer no disadvantage on
the grounds of such report.
(v) The Audit & Supervisory Board Members of the Company visit major
subsidiaries and conduct audits regarding internal controls.

[English Translation]
45

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

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

(8)Matters related to the independence of the employees in item (7) from
Directors and ensuring the effectiveness of the instructions of the Audit &Supervisory Board Members
Transfer and evaluation of the assistants for the Audit & Supervisory
Board Members shall be subject to the approval of the Audit &Supervisory Board. The assistants who received necessary instruction on
audit duties by Audit & Supervisory Board Members shall not be subject[English Translation]46

to any instruction or order from Directors and executive officers andemployees with respect to the subject audit duties, nor be obligated toreport to them.
(9)

The following systems and other systems under which any report is made to
Audit & Supervisory Board Members(9-1) System under which Directors and Accounting Advisors and employees
make any reports to the Audit & Supervisory Board Members(i) Upon discussion with the Audit & Supervisory Board, the following
matters shall be considered as the matters to be reported by Directors to
the Audit & Supervisory Board Members.
(1) matters resolved by the Organization Culture Committee andother committees;(2) matters likely to be materially harming the Company;(3) important matters relating to monthly business conditions;(4) important matters relating to internal audit and risk management;(5) material violation of laws and regulations or the Articles ofIncorporation; and(6) important matters from viewpoint of compliance.
(ii) Notwithstanding (i) above, the Audit & Supervisory Board Members
may, where necessary and in a timely manner, request that Directors
and employees make a report.
(iii) The matters reported to the “Hot Help Line” will be reported to the
Audit & Supervisory Board Members from the Audit and ComplianceDepartment.
(9-2)

System under which persons executing duties as the subsidiary’s
Directors, Accounting Advisors, Audit & Supervisory Board Members,
Executive Officers, members who execute the business, etc., otherpersons equivalent to such persons, and employees, or any persons
receiving reports from these persons, make reports to the Audit &Supervisory Board Members
The matters reported to the "Group Head Office Helpline" will bereported to the Audit & Supervisory Board Members from the Group
Governance Department.

(10)

System which ensures that the persons who made the reports under (9)above will not be treated disadvantageously on the grounds of suchreports
Pursuant to the “Basic Policy of the SECOM Group for Compliance,”
the Company will keep the reported matters confidential, and promptly
take necessary investigation and appropriate measures, while the reporter
will suffer no disadvantage on the grounds of such report.

(11)

Matters regarding the policies for the procedures of the advance payment
or reimbursement of expenses incurred for the execution of duties by the
Audit & Supervisory Board Members and other processing of expenses
or debts incurred for the execution of such duties[English Translation]
47

The Company bears the expenses incurred for the execution of duties by
the Audit & Supervisory Board Members.
(12) System under which audit by Audit & Supervisory Board Members is
ensured to be performed efficiently(i) The Company establishes the system under which the Audit &Supervisory Board shall regularly hold meetings with the President andRepresentative Director and the Accounting Auditor, to exchange
opinions so that audits shall be performed efficiently.
(ii) The Audit & Supervisory Board Members attend the meetings of theBoard of Directors, attend important meetings to exchange opinions
regarding overall management-related matters if necessary, and conductperiodical interviews with Directors and employees of the Company andthe subsidiaries.
(iii)The Company ensures that the Audit & Supervisory Board may retain
attorneys-at-law at its discretion and, if necessary, have opportunities toretain and consult professional accountants with respect to their audit
duties.
2. Outline of Status of Operation of Internal Control System
The Company, pursuant to the basic policy described above, has establishedthe Internal Control System, and is continuously operating this System in aproper manner. An outline of the status of operation of the System during thecurrent fiscal year is as follows.
(1) “System under which the execution of duties by Directors and employees is
ensured to comply with laws and regulations and the Articles ofIncorporation”
The Company promotes to instill awareness of the importance of compliancewith the "SECOM Group Code of Employee Conduct", which sets behavioral
standards for the execution of duties, including compliance with laws,
regulations, and the Articles of Incorporation in day-to-day business
operations. In addition, all training curriculum contains training related to thephilosophy of SECOM, and the Company is also making efforts to instill andentrench the philosophy of SECOM through e-learning system and in-housenewsletter. The Company takes appropriate actions to respond to any revisionsof laws and regulations by requiring its executive officers in charge of eacharea to have thorough knowledge of laws and regulations related to their areas
and to obtain information concerning revisions of relevant laws andregulations on a regular basis. The Audit and Compliance Department, as aleading organization, conducts operational audits based on the audit plan,
reports the audit results to the President and Representative Director and the
Audit & Supervisory Board Members on a monthly basis, and instructs to takecorrectional measures necessary to solve any issues identified. Furthermore,
any internal reports made through “Hot Helpline” are dealt with in a proper[English Translation]
48

manner in collaboration with relevant departments. Any importantorganizational culture-related issues (including compliance-related matters)
are deliberated and dealt with at a meeting of the Organizational Culture
Committee when necessary. The effectiveness of internal control related tofinancial reporting is properly evaluated based on the basic plans and policies.
(2) “System under which information regarding execution of business byDirectors shall be maintained and controlled”
Minutes of the meetings of the Board of Directors and decision-making
documents are recorded in a paper form or electromagnetic media, and stored
and managed in a proper manner.
(3) "System regarding control of risk of loss and other system"
Each executive officer in charge analyzes and assesses business risks andfraud risks in the operational areas for which he/she is responsible, andreports the results to the President and Representative Director and Audit &Supervisory Board Members once a year, and further, reviews internal rules
and manuals that have been established as appropriate and makes
amendments as needed.
(4) "System by which efficient execution of duties of Directors shall be ensured"
The Board of Directors of the Company consists of 10 Directors including 3
outside Directors. As a general rule, a meeting of the Board of Directors isheld once a month with the attendance of Directors as well as 5 Audit &Supervisory Board Members including 3 outside Audit & Supervisory Board
Members. At a meeting of the Board of Directors, important management
matters are deliberated and the status of execution of duties by Directors isreported, based on the business vision of the Company, and the Board of
Directors strives for accurate and prompt decision-making. 27 Executive
Officers including 6 Directors are making efforts to make decisions and to
execute their duties in a more expeditious manner.
(The above officer structure is as of March 31, 2017.)(5)"System under which the group of enterprises consisting of the Company
and its subsidiaries is ensured to properly execute its business"
Directors of the Company and its subsidiaries are promoting proper
operation based on the "Constitution of SECOM's Business and Operation"
as their basic philosophy. The President and Representative Director of theCompany convened a meeting of the "SECOM Group Management
Committee" quarterly to share the Group information and operating
philosophy and to ensure the appropriate operations of each company. To
enhance subsidiaries' corporate governance, Audit & Supervisory Board
visited and interviewed subsidiaries (total of 53 times), and conducted
meetings with Oustide Directors for Reports on Outline of Business
Performance presented by responsible persons from subsidiaries (5 times).
Furthermore, to enhance collaboration with internal and external audit
departments including accounting auditors in the Group companies, the[English Translation]49

previous "liaison meeting with Group Audit & Supervisory Board
Members" was expanded and the "SECOM Group Audit & Supervisory
Board Members and Internal Audit Departments Joint Liaison Meeting" washeld (once). Internal audit departments inspect and provide guidance tosubsidiaries as needed, and take appropriate steps in collaboration with
relevant sections and subsidiaries in response to any internal report madethrough the "Group Head Office Helpline." Through decision-making onimportant matters upon prior consultation and reporting of important mattersby subsidiaries in accordance with the "Basic Rules for SECOM Group
Corporate Management," the Company and its subsidiaries strive to ensurethat subsidiaries' operations are properly carried out.
(6)

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

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

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

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

(10) "Matters regarding the policies for the procedures of the advance payment or
reimbursement of expenses incurred for the execution of duties by Audit &Supervisory Board Members and processing of other expenses or debts
incurred for the execution of such duties"
Budget for expenses that will arise in relation to the execution of duties by[English Translation]
50

Audit & Supervisory Board Members are determined by resolution of the
Audit & Supervisory Board and reported to the Board of Directors. These
expenses are paid by the Company.
(11) "System under which audit by Audit & Supervisory Board Members is
ensured to be performed efficiently"
Audit & Supervisory Board Members held meetings twelve times with the
President and Representative Director and eight times with Accounting
Auditors to exchange opinions. In addition, Audit & Supervisory Board
Members attend meetings of the Board of Directors and other important
meetings to exchange opinions, and conduct interviews with Directors andemployees of the Company and its subsidiaries on a regular basis.
3. Result of Evaluation of the Board of Directors
The Company has conducted the evaluation of the Board of Directors through thequestionnaires conducted at the Board of Directors and Audit & Supervisory
Board Members and the interview with the respective Directors and Audit &Supervisory Board Members. As a result, it was confirmed that the diversity andthe appropriateness of the size of the Board of Directors are secured, and theOutside Directors are actively making a comment and thus the business execution
and the oversight of the management are well-balanced.

[English Translation]
51

Consolidated Balance Sheet(As of March 31, 2017)(Millions of Yen)ITEM
ASSETSAMOUNT

Current assets:
Cash on hand and in banks
Cash deposits for armored car services
Notes and accounts receivable, trade
Due from subscribers
Short-term investments
Lease receivables and investment in leased assets
Inventories
Real estate inventories

761,804
302,364
130,619
119,801
33,09029,38743,97434,19427,507

Deferred income taxes

14,003

Short-term loans receivable
Other
Allowance for doubtful accounts

4,942
23,684(1,766)

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

888,367
376,536
150,254
69,569116,825
39,886ITEM
LIABILITIESCurrent liabilities:
Notes and accounts payable, trade
Bank loans
Current portion of straight bonds
Lease obligations
Payables – otherAccrued income taxes
Accrued consumption taxes
Accrued expenses
Deposits received for armored car
services
Deferred revenue
Accrued bonuses
Provision for losses on construction
contracts
Other
Long-term liabilities:
Straight bonds
Long-term loans
Lease obligations
Guarantee deposits received
Deferred income taxes
Accrued retirement benefits for directors
and audit & supervisory board
members
Net defined benefit liability

Intangible assets:
Software
Goodwill
Other

112,131
18,07665,75928,296

Investments and others:
Investment securities
Long-term loans receivable
Long-term prepaid expenses
Net defined benefit asset

399,698
280,974
38,40324,960Investment deposits by policyholders,
unearned premiums and otherinsurance liabilities
Other

35,282
9,592
26,475(15,990)

Total liabilities
NET ASSETS

Deferred income taxes
Other
Allowance for doubtful accounts
Deferred assets:
Other

4
4

TOTAL ASSETS

1,650,176[English Translation]
52

AMOUNT

353,933
44,63544,9691,460
4,752
37,46927,557
5,765
5,315
107,878
30,552
15,447
2,532
25,596282,989
7,003
14,123
11,77733,907
21,943
1,306
22,428
166,155
4,342
636,922

Shareholders’ equity:
Common stock
Capital surplus
Retained earnings

870,437
66,37780,297
797,493

Common stock in treasury, at cost
Accumulated other comprehensive income:(73,731)

Unrealized gains on securities
Deferred losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans,
net of taxes
Noncontrolling interests:

25,125(30)(7,954)

121,253

Total net assets

1,013,253

TOTAL LIABILITIES AND
NET ASSETS

1,650,176

21,563

4,423

Consolidated Statement of Income(Fiscal Year from April 1, 2016 to March 31, 2017)(Millions of Yen)ITEM

AMOUNT

Revenue
Costs of revenue
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income:Interest income
Dividends income
Gain on sales of investment securities
Net gains from investment in affiliated companies accounted forunder the equity method
Gain on private equity investments
Other
Non-operating expenses:
Interest expenses
Loss on sales of investment securities
Loss on sales and disposal of fixed assets
Write-off of long-term prepaid expenses
Foreign exchange loss, net
Provision of allowance for doubtful accounts
Other
Ordinary profit
Extraordinary profit:
Gain on sales of fixed assets
Gain on sales of investment securities
Other
Extraordinary losses:
Impairment losses on fixed assets
Allowance for price fluctuation
Loss on revaluation of investment securities
Other
Income before income taxes
Income taxes- current
Income taxes - deferred
Net income
Net income attributable to noncontrolling interests
Net income attributable to owners of the parent[English Translation]
53

928,098
621,412306,686
175,636
131,050

863
683
1,170
3,734
14,470
1,448
974
72
2,107
620
453
1,027
1,132

312
136
67
2,747
1,086
37
1,825
43,3262,369

22,371

6,388
147,033

516

5,697
141,852
45,695
96,156
11,986
84,170Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2016 to March 31, 2017)(Millions of Yen)
Shareholders’ equity
Capitalsurplus

Common stock

Balance at the beginning of the
fiscal year
Accumulated effect of change inaccounting policies

66,377Retainedearnings

80,326743,353

Commonstock intreasury, at
cost

Total
shareholders’equity(73,717)816,340

526

526

Balance at the beginning of the
fiscal year after changes inaccounting policies
Changes in the fiscal year:
Cash dividends
Net income attributable to ownersof the parent
Purchase of treasury stock
Disposal of treasury stock
Changes in share of parent arisingfrom transactions with
noncontrolling interests
Net changes of items other thanshareholders’ equity
Total changes in the fiscal year
Balance at the end of the fiscal year

66,37780,326

743,879(73,717)(30,556)(30,556)

84,17084,170
(13)
0

0
(29)

66,377(29)
80,297[English Translation]
54

816,866

(13)
0
(29)

53,613
797,493(13)(73,731)53,570870,437(Millions of Yen)
Accumulated other comprehensive income

Balance at the beginning of the fiscal year
Accumulated effect of change inaccounting policies
Balance at the beginning of the fiscal year
after changes in accounting policies
Changes in the fiscal year:
Cash dividends
Net income attributable to owners of theparentPurchase of treasury stock
Disposal of treasury stock
Changes in share of parent arising fromtransactions with noncontrollinginterests
Net changes of items other thanshareholders’ equity
Total changes in the fiscal year
Balance at the end of the fiscal year

Unrealized

Deferred

gains onlosses on

securities

hedges19,964

19,964Foreign

Remeasureme-

currency

nts of definedtranslation

benefit plans,adjustments

(40)

(40)

(2,196)(2,196)net of taxes

(783)

(783)

Total

Noncontro-

accumulated

lling

Total netotherinterests inassetscomprehensi-

subsidiaries

ve income

16,944

16,944

109,859

943,144111

637

109,971943,782(30,556)
84,170
(13)
0
(29)

5,161

9

(5,758)

5,206

4,618

11,281

15,9005,161

9(5,758)

5,206

4,618

11,281

69,471

25,125(30)(7,954)

4,423

21,563

121,253

1,013,253[English Translation]
55

Non-Consolidated Balance Sheet(As of March 31, 2017)
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
Merchandise

198,394
87,38737,869621
16,48010,6503,088
5,312

Supplies

1,722

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

2,323
3,710
27,5391,804(117)

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

652,456
110,585
16,282709

Intangible assets:
Software
Other

ITEM
LIABILITIES(Millions of Yen)
AMOUNT

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

109,053
3,604
22,703215
14,476
14,345
2,883
697

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

28,5332,477
16,804
6,642

65,997

Accrued pension and severance costs

179
3,173
21,978
2,195
69

Other

6,526
6,125
400

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

535,344
23,083TOTAL ASSETS

850,851

326,092
134,796
7,559
20,847
21,6434,294
2,560(5,532)[English Translation]
56

15,187
20,629
4,018
6,278
4,014

2,506
103

Total liabilities
NET ASSETS

137,587

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

706,629
66,377
83,054
83,054
0630,927
9,028
621,899
800
2,212
618,887(73,731)

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

6,634
6,634
713,263
850,851

Non-Consolidated Statement of Income(Fiscal Year from April 1, 2016 to March 31, 2017)(Millions of Yen)ITEM

AMOUNT

Revenue
Costs of revenue
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income:Interest income
Dividends income
Other
Non-operating expenses:
Interest expenses
Loss on sales and disposal of fixed assets
Write-off of long-term prepaid expenses
Other
Ordinary profit
Extraordinary profit:
Gain on sales of investment securities in subsidiaries
and affiliates
Gain on sales of investment securities
Gain on sales of tangible assets
Other
Extraordinary losses:
Loss on valuation of investments in capital ofsubsidiaries and affiliates
Other
Income before income taxes
Income taxes - current
Income taxes - deferred
Net income[English Translation]
57

382,476
227,204
155,271
78,98876,283
1,632
11,290
466
208
1,853
509
559

13,3893,130
86,543

452
106
47
45

651

93
7
23,843(9)

100
87,094
23,83363,260Non-Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2016 to March 31, 2017)(Millions of Yen)
Shareholders’ equity
Capital surplus
Additional
Other capital

Commonstock
Balance at the beginning of the
fiscal year

paid-in capital

66,377

surplus

83,054

Total capitalsurplus0

Accumulated effect of change

83,054-in accounting policies
Balance at the beginning of the
fiscal

year

after

changesin

66,377

83,0540

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

-

-

0

0

66,377

83,0540

83,054[English Translation]
58

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

Reserve forreservesystemdevelopments

Balance at the beginning of the
fiscal year

9,028

800

Accumulated

Total retained

Generalearnings

earnings

reservecarriedforward

2,212

Accumulated effect of changein accounting policies

586,082

598,122101

101

586,183

598,223(30,556)
63,260(30,556)
63,260

Balance at the beginning of the
fiscal year after changes in

9,028

800

2,212

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

-

-

-

32,70432,704

9,028

800

2,212

618,887

630,927[English Translation]
59

(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 ontranslation

equitysecurities

adjustments

Total net
assetsand others(73,717)673,836

4,518

4,518

678,355

Accumulated effect of
101change in accounting

101

policies
Balance at the beginning of
the fiscal year after changes inaccounting policies
Changes in the fiscal year:
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock(73,717)673,938(13)
0(30,556)
63,260(13)
0

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

4,518

4,518

678,457(30,556)
63,260
(13)
0
2,115

2,115

2,115

(13)

32,690

2,115

2,115

34,806(73,731)706,629

6,634

6,634

713,263[English Translation]
60

Certified Copy of the Accounting Auditor’s Report (Consolidated)[English Translation of the Accounting Auditor’s Report Originally Issued in theJapanese Language]
Independent Auditor’s Report
May 22, 2017
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA LLC
Masakazu Hattori (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Hideki Yoshida (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant

We have audited the consolidated financial statements, comprising theconsolidated balance sheet, the consolidated statement of income, the consolidated
statement of changes in net assets and the related notes of SECOM Co., Ltd. as at
March 31, 2017 and for the year from April 1, 2016 to March 31, 2017 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 the[English Translation]
61

amounts 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
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]
62

Certified Copy of the Accounting Auditor’s Report(Non-Consolidated)[English Translation of the Accounting Auditor’s Report Originally Issued in theJapanese Language]
Independent Auditor’s Report
May 22, 2017
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA LLC
Masakazu Hattori (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Hideki Yoshida (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant

We have audited the financial statements, comprising the balance sheet, thestatement of income, the statement of changes in net assets and the related notes,
and the supplementary schedules of SECOM Co., Ltd. as at March 31, 2017 andfor the 56th business year from April 1, 2016 to March 31, 2017 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.

[English Translation]63

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
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]
64

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

Audit Report
May 22, 2017

Mr. Yasuo Nakayama
President and Representative Director
SECOM Co., Ltd.
Audit & Supervisory Board of
SECOM Co., Ltd.
Takayuki Ito (Seal)
Audit & Supervisory Board
Member (Full-time)
Ryohei Komatsu (Seal)
Audit & Supervisory Board
Member (Full-time)
Hideki Kato (Seal)
Outside Audit & Supervisory
Board Member
Kenichi Sekiya (Seal)
Outside Audit & Supervisory
Board Member
Makoto Yasuda (Seal)
Outside Audit & Supervisory
Board Member
The Audit & Supervisory Board has received the audit reports of the performanceof duties of the Directors during the 56th business term from April 1, 2016 throughMarch 31, 2017 from each of the Audit & Supervisory Board Members. After
deliberating such reports, we have prepared this Audit Report and report as follows:
1. Method and Details of Audit Performed by Audit & Supervisory Board Members andthe Audit & Supervisory Board
The Audit & Supervisory Board has established the audit policy and audit plan forthe current fiscal year, received reports on the status and results of audits from each Audit& Supervisory Board Member, received reports on the status of execution of duties from
Directors, etc. and the Accounting Auditor, and requested explanations when necessary.
Each of the Audit & Supervisory Board Members, in accordance with the audit
policy, audit plan, etc. of the current fiscal year set up by the Audit & Supervisory Board,[English Translation]
65

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

[English Translation]66

(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]
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