A Message to Shareholders

The Management

We are endeavoring to ensure sustainable growth bybuilding on the ALL SECOM concept to alleviate problems andresolve concerns and responding to ever-changing customer needs.

Consolidated Operating Results
In the fiscal year ended March 31, 2016, the Japanese economy continued to recover gradually, buoyed by improvements
in corporate earnings, as well as in employment levels and personal income. Nonetheless, the outlook remained uncertain,
owing to concerns prompted by a slowdown in growth in key
overseas economies, including the People’s Republic of China(PRC) and languishing corporate and consumer confidence.
In this environment, we continued working toward the realization of our vision, the Social System Industry, in line with ourgoal of providing safety and peace of mind, as well as comfort
and convenience, whenever and wherever necessary. We continued to respond to the needs of customers through the provision of high-grade services and systems in our security
services segment, as well as in our other segments: fire protection services, medical services, insurance services, geographic
information services, information and communication related
services, and real estate and other services. We also sought toaddress evolving social imperatives, pressing forward withefforts to apply the ALL SECOM concept to reinforce collaboration among our various independent businesses with a view tomaximizing synergies, developing innovative services and systems and expanding the scope of our operations.
Consolidated net sales and operating revenue rose 4.0%,
or ¥38.2 billion, to ¥983.4 billion. Principal factors behind
this result included higher net sales and operating revenue inthe security services segment—underpinned by an upsurge
in revenue from on-line security systems and an increase in
the number of consolidated subsidiaries—as well as in thefire protection services and medical services segments, theformer due to higher orders and the latter to elevated sales ofpharmaceuticals and rising patient numbers at hospitals.

4SECOM Annual Report 2016

Despite gains in the security services, medical services and fire
protection services segments, operating income slipped 2.5%,
or ¥3.1 billion, to ¥118.9 billion, with contributing factors
including an increase in impairment losses on long-lived assets.
Nonetheless, net income attributable to SECOM CO., LTD., wasup 4.8%, or ¥3.9 billion, to ¥84.1 billion, owing to, amongothers, a decrease in income taxes resulting from a decline in
the statutory tax rate, a consequence of tax reform in Japan.

Enhancing Returns to Shareholders
We recognize the provision of a fair return to shareholders
as a crucial management task. In line with our basic policy ofensuring a consistent and stable distribution of profits, wedetermine our consolidated dividend payout ratio and levelof internal reserves based on an overall assessment of efforts
to expand our operations and of trends in our consolidated
operating performance. At the Ordinary General Meeting ofShareholders, held on June 24, 2016, management proposedand shareholders approved the payment of a year-end dividend of ¥70.00 per share. Together with an interim dividendof ¥65.00, dividends for the full term amounted to ¥135.00
per share, up ¥10.00 from the previous fiscal year.

New Management TeamAt the meeting of the Board of Directors held on May 11,
2016, Yasuo Nakayama was newly appointed president andrepresentative director. Guided by our corporate philosophy,
which emphasizes contributing to society through our business activities, the new management team will clarify the way
forward and ensure strong leadership for the entire SECOM
Group as we work to further enhance corporate value and at
the same time ensure sustainable growth.

Makoto Iida

Yasuo Nakayama

FounderPresident and Representative Director

Understanding and Responding to Change
Needs for safety, peace of mind, comfort and convenience are
evolving and becoming increasingly varied and sophisticated.
To respond swiftly to such needs, we are capitalizing on thethree elements of our operating foundation, namely, ourtechnologies, our people and our operational and control
structure, to promote the timely development and provisionof systems and services that help customers address key
challenges.
In our core commercial security services business, westepped up sales of high-value-added offerings, including
SECOM AX, a remote imaging on-line security system thatfeatures advanced image recognition technologies; SECOM
LX, which combines on-line security and access control functions to allow efficient personnel management, thus reducingcosts; and SECOM FX, an on-line security and facility controlsystem. For subscribers with factories or other large premises,
we began providing the SECOM Drone, a small flying robot
for the private sector that autonomously takes off and flies
toward unauthorized individuals or vehicles, capturing sharp,
clear images, which it transmits to SECOM. For even larger
areas, we proceeded with efforts to commercialize systems
employing pioneering technologies, including the SECOM
Airship, a dirigible that provides monitoring over wide areas.
We also sought to reinforce our operating foundation byacquiring all shares in Asahi Security Co., Ltd., thereby
enhancing our armored car services.
In the area of home security services, we continued torespond to growing needs for systems that enhance safety,
peace of mind, comfort and convenience, including SECOM
Home Security G-Custom, an on-line residential security

system that includes a variety of other useful features. In addition, we acquired a 100% stake in Kumalift Co., Ltd., Japan’s
top manufacturer of small freight elevators in terms of market
share, with which we have begun developing new offerings
combining security systems and elevators.
Overseas, we sought to expand sales of SECOM-stylesecurity services, a term we use to describe comprehensive
on-line security systems that encompass everything from theinstallation of security equipment at the subscriber’s premises
to the prompt dispatch of emergency response personnel.
These efforts focused on the rapidly growing economies ofSoutheast Asia and the PRC. We also began promoting theidea of more robust security to Japanese companies for theiroverseas operations.
In fire protection services, subsidiaries Nohmi Bosai Ltd.
and Nittan Co., Ltd., two of Japan’s leading names in the areaof fire protection services, continued to provide high-grade
automatic fire alarm systems and fire extinguishing systems
for office buildings, plants, tunnels, structures designatedas cultural properties, ships and homes. In the period underreview, assertive sales efforts that leverage the respective product development capabilities and other strengths of the twocompanies led to major orders for systems for, among others,
electric power generating facilities and tunnels.
Efforts in our medical services business continued toconcentrate on Home Medical Services, which comprise homenursing and pharmaceutical dispensing services, as well as on
the operation of residences for seniors, the provision of electronic medical reporting systems, sales of medical equipment
and pharmaceuticals, personal care services and support for
associated hospitals.

SECOM Annual Report 2016

5

A Message to Shareholders

The Management

In our insurance services business, sales of our distinctive
non-life insurance policies expanded favorably. These include
SECOM Anshin My Home, a comprehensive fire insurance
policy for homes, and the Security Discount Fire Policy, a fireinsurance policy for commercial premises, both of which
extend discounts to subscribers who have installed on-line
security systems, recognizing the risk-mitigating factors ofsuch systems; MEDCOM, an unrestricted cancer treatment
policy that covers all treatment costs; and SECOM Anshin
My Car, a comprehensive automobile insurance policy that
includes access to on-site support services provided by ouremergency response personnel in the event of an accident.
Our geographic information services business centers on
the collection of geographic data from commercial satellite
images, aerial photography and vehicle/ground surveying,
which we integrate, process and analyze to provide geospatial
information services to public sector entities—including
national and local governments—and private-sector customers
in Japan. We also offer these services to government agencies
abroad, including those in developing countries. In the period
under review, we sought to extend services that respond toincreasingly diverse and sophisticated domestic and overseas
needs for geospatial information associated with, among others, the construction and maintenance of critical infrastructure
and the prevention and mitigation of risks and disasters.
We are also known for our broad range of information andcommunication related services, which focus on data center
services and encompass business continuity planning (BCP)
support services, information security services and cloud-basedservices. In advance of the implementation of Japan’s My
Number social security and tax number system, under which

every resident has been assigned a personal ID number, webegan providing the SECOM Anshin My Number Service,
which enables companies to collect, manage and, whennecessary, use the ID numbers of their employees in a securemanner. Sales of the service were brisk, bolstered by efforts toattract new customers.
Our real estate and other services business continued
to emphasize the development and sale of condominiums
equipped with distinctive security and disaster-preparedness
features. Other services include real estate leasing, construction
and installation.

ALL SECOM: Driving Sustainable Growth
We remain committed to pushing ahead with the development of innovative services and systems that anticipate socialchange in line with three key themes—security, a super-agedsociety and disaster preparedness/BCP/environmental preservation. Guided by the ALL SECOM concept, we are also reinforcing collaboration among SECOM Group companies with theaim of further strengthening the Group’s collective capabilities
and ensuring sustainable growth.
In recent years, companies have come under increasingpressure to help address social imperatives. In line with ourphilosophy of contributing to society through our businessactivities, we continue to develop and extend services andsystems that deliver safety, peace of mind, comfort andconvenience. In response to the increasing risks facing society,for example, we are responding to increasingly sophisticatedneeds by developing systems designed to ensure security overlarge areas. These include the SECOM Airship, a dirigible thatdelivers a bird’s-eye view. In May 2016, we contributed to thesafe staging of the G7 Ise-Shima Summit by providing security
planning based on high-precision 3D maps, as well as overhead
images captured by the SECOM Airship.
We also pledge to further enhance safety, peace of mind,
comfort and convenience for our home security customers. To
this end, we are capitalizing on the robust operating foundation we have established in the security services business todevelop new services that alleviate problems and resolve concerns. Such efforts will enable us to expand our service menu,
which centers on SECOM Home Security G-Custom, and also
includes such offerings as SECOM Home Service, an optional
suite of lifestyle support services available to SECOM Home
Security subscribers, and SECOM My Doctor Plus, an emergency
medical alert system for seniors.
In addition, we are developing and extending new services
in the area of information security, as evidenced by such newadditions to our lineup as the SECOM Anshin My Number
Service and SECOM Premium Net, which protects against
online banking scams. To help address the concerns of Japan’sseniors, we also continue to expand our range of services tailored to the needs of a super-aged society. For example, we
recently launched the SECOM My-home Concierge Service, aregion-specific membership-based service designed to support
seniors who wish to remain in their own homes. In overseas
markets, we will also continue to expand our overseas operations by leveraging the high-grade systems and services weoffer in Japan to provide services customized to reflect local
needs and sensibilities.
In line with our corporate message—“Providing reliable
peace of mind”—we will continue to rally the capabilities of
the SECOM Group, guided by the ALL SECOM concept tooffer indispensable services that make SECOM an ever-present
part of our customers’ lives. Through such efforts, we will
endeavor to accelerate the realization of our Social SystemIndustry vision.
We also recognize that employee satisfaction is a criticalfactor behind our ability to further enhance the quality of ourservices and systems and, in turn, to bolster customer satisfaction. Accordingly, we strive to ensure an upbeat, unfetteredcorporate culture and to create working environments thatencourage employees to have lofty ideals and derive a senseof achievement from meeting the expectations of society andour customers. Looking ahead, we will continue working toachieve sustainable growth and enhance corporate value by
providing services and systems that are worthy of customer
satisfaction. In these and all our endeavors, we look forward
to the ongoing support of shareholders.
June 24, 2016

Makoto IidaFounder6

SECOM Annual Report 2016

Yasuo Nakayama
President and Representative Director

SECOM Annual Report 20167