A MESSAGE TO SHAREHOLDERS

Consolidated Operating Results
In the fiscal year ended March 31, 2010, improved economic conditions overseas andemergency economic stimulus measures in Japan prompted a recovery in corporate earnings and stemmed the decline in capital investment. Nevertheless, the Japanese economy
fell short of a full recovery, owing to a persistently harsh employment situation, coupled withfears of another economic downturn overseas and deflation at home.
In this environment, SECOM continued to respond to needs of customers by providing
high-grade products and services in our mainstay security services business, as wellas in our other businesses: fire protection services, medical services, insurance services,
geographic information services, real estate development and sales, and information andcommunication related and other services. Through such efforts, we pressed forward torealize our Social System Industry vision.
Despite increases in our medical services, insurance services and geographic information
services segments, consolidated net sales and operating revenue were down 2.0%, or¥13.4 billion, to ¥670.6 billion. This result was largely attributable to a decrease in net sales
and operating revenue in our mainstay security services segment, which reflected a decline
in sales of merchandise and the negative impact of foreign exchange rate fluctuations on
the net sales and operating revenues of overseas subsidiaries, which increased on a local
currency basis. Other factors included flagging conditions in the condominium market,
which prompted us to restrict our selection of properties for development while paying heed
to profitability. In contrast, operating income rose 27.4%, or ¥20.9 billion, to ¥97.2 billion,
owing to decreases in loss on other-than-­temporary impairment of investment securities in
the insurance services segment and write-down of real estate ­inventories in the real estatedevelopment and sales segment. Net income attributable to SECOM CO., LTD., advanced
53.8%, or ¥16.4 billion, to ¥47.0 billion, reflecting the increase in operating income anddecrease in the loss on o­ ther-than-temporary impairment of investment securities.
Distribution of Dividends
Recognizing the provision of a fair return to shareholders as an important task, we determine consolidated dividend payout levels based on an overall assessment of trends in ouroperating performance, in line with our policy of ensuring a consistent, stable distribution ofprofits. At the general shareholders’ meeting held on June 25, 2010, shareholders approved
the payment of annual cash dividends of ¥85.00 per share, the same as in the previous­fiscal year.
New Management TeamAt a meeting of SECOM’s Board of Directors on November 16, 2009, directors voted toappoint new senior executives. Accordingly, effective January 1, 2010, Kanemasa
Haraguchi was appointed executive vice chairman and Shuji Maeda took the reins as­president and representative director.

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Creating New Business Opportunities
The nature of security services is changing with the times. Evolving social imperatives,changing patterns of criminal behavior, technological advances and improvements in thesocial infrastructure are among the many factors that influence the constantly evolving
needs of customers for security and peace of mind. The security services market must
keep pace with these changes.
One result of such changes has been a broadening of our customer base for on-line
home security systems. Another has been more diversity in interpretations of “security andpeace of mind” among existing customers, particularly for SECOM Home Security. Inresponse, we have introduced a wider range of peripheral products and services that help
make life more secure. These range from remote monitoring services that use surveillancecameras placed outside the subscriber’s home to high-impact, breakage-resistant window
glass. Looking ahead, needs and family structures will continue to evolve as the aging ofsociety spurs an increase in the number of elderly couples and seniors living alone. We
believe that SECOM has the flexibility necessary to respond accurately to the evolving
needs of such a diverse range of customers. Our confidence derives from our proven­service capabilities, substantial management resources and distinctive c­ orporate culture.
In our core on-line security services business, we maintain control over every aspect ofour security services, from R&D to manufacturing, sales, security planning, installation,around-the-clock monitoring, emergency response services and equipment maintenance.
This approach enables us to swiftly incorporate feedback from subscribers and potential
customers—obtained through day-to-day sales and service activities—into the development process. Our R&D departments use such information in the development of new
security systems as well as in ongoing efforts to improve existing systems, further enhancing our ability to respond to customer needs. We have also established a department dedicated to comprehensively investigating and analyzing social trends. This department serves
as our very own radar, picking up on social changes and predicting how such changes willtransform the market, and constantly verifying and widening its research to back up findings. The results of these activities are also fed back to our R&D groups, bolstering our ability to develop proprietary technologies and new products and systems, and to determine
new R&D themes. Such close cooperation among sales, operations and R&D teams is adirect result of our uniquely ­integrated business approach.
This approach helps us deliver uninterrupted high-grade services around the clock,a prerequisite to security and peace of mind. To ensure that our security systems operate
dependably, regardless of weather conditions and where they are installed, we have­established our own stringent quality standards that all products and services must meet.
Information gathered by our various departments is collected, analyzed and used toimprove our day-to-day operations. These and other efforts to continuously improve andenhance are the secret to SECOM quality and reliability.
Building on our mainstay security services, we have developed our business portfolio toinclude fire protection services, medical services, insurance services, geographic information services, real estate development and sales, and information and communication
related and other services. By leveraging the capabilities of our Group companies, weAnnual Report 2010

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A MESSAGE TO SHAREHOLDERS­ ontinue to deliver unrivaled products and services that provide safety and security forc
­people everywhere.
What really makes this integrated approach to the provision of products and services
work—enabling us to capitalize on comprehensive Group capabilities to provide advanced
and highly reliable products and services—is the efforts of our employees. In all of ourefforts, we adhere to our original corporate philosophy, which emphasizes not being content with the status quo and striving to do what is appropriate. The former means continually seeking to provide more innovative and appropriate solutions; the latter means judging
the legitimacy of our actions based on whether they are just and fair and beneficial to society. This philosophy also guides the actions of each and every SECOM employee, inspiringthem to work with pride and dedication.
By continuing to place a high priority on advanced technologies and product dependability, we pledge to continue combining our products and services into distinctive packages,
to achieve our overarching goal of providing safety and security for people whenever andwherever necessary. We have always sought to keep abreast of social trends and changing
patterns of criminal activity, among others, to leverage our diverse basic technologies andaccumulated know-how and create products and services that make life more secure, convenient and comfortable. We will push forward with the expansion of our businesses bydeveloping forward-looking products and services that respond accurately to customerneeds and by infusing new energy into our sales activities.
Strengthening Operations in Growing Markets Overseas
In key Asian markets, economic growth has spurred an increase in security needs in recentyears. The defining feature of our overseas security services business is that we provide“SECOM-style” on-line security services, that is, services of the same high quality as inJapan, customized to reflect local needs and cultural sensibilities. The standard businessmodel of security services companies in Europe and the United States is to sell security
equipment outright. While such equipment is linked to an on-line monitoring center, thestandard response in the event of an emergency is simply to notify the police and/or otherpertinent authorities. In contrast, “SECOM-style” on-line security services encompass theinstallation of security equipment at the subscriber’s premises, around-the-clock monitoringfrom a SECOM control center and prompt dispatch of emergency response personnel
should an abnormality be detected. Going forward, we will continue working to increase thetrust of subscribers in overseas markets, while at the same time promoting greater marketpenetration for “SECOM-style” services.
In the People’s Republic of China (PRC), which continues to see exceptional economicgrowth, we are actively promoting “SECOM-style” security services. We have establisheda network of bases, particularly in key cities in the country’s important coastal regions. In
the coming years, we intend to expand this network to major inland cities, enabling us toprovide the same reliable services to an increasing number of subscribers. We have alsoestablished an R&D facility in Shanghai, which is gathering information in relation to theamendment of standards for security equipment in the PRC—a change that is expected tohave far-reaching ramifications for security services companies in the country. Additionally,4Secom Co., Ltd.

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we are preparing for the launch of on-line home security services, which will open up a
brand new market to us.
Repositioning SECOM Firmly on a New Growth Trajectory
We continue to pursue a variety of initiatives aimed at realizing our Social System Industry
vision, which depicts a framework of distinctive, integrated products and services that makelife more secure, convenient and comfortable. To this end, we not only provide individualproducts and services, but also combine them into tailored, integrated packages, thereby
creating an essential social infrastructure for our customers, one that will support ourgrowth and expansion in the years ahead. To further consummate our vision, we also needto respond swiftly and accurately to evolving social imperatives and to customer feedback,well informed by a solid grasp of people’s needs for safety and security—tasks that relygreatly on our technological capabilities.
In April 2010, we held the first SECOM Technical Fair at our head office in Tokyo. We­welcomed approximately 4,000 visitors over the three days of this event, which highlighted
our technological and product development capabilities, presenting groundbreaking prototype security systems that augur the future of the security services industry in line with ourvision. Looking ahead, we will hone the astuteness necessary to stay abreast of evolvingsocial imperatives, rally our t­echnological strengths to develop and launch advanced­products and services in a timely manner and promote further market acceptance.
Overseas, we will leverage expertise accumulated in Japan to provide security services tocustomers in key growth markets, particularly in the PRC. Through such efforts, we will
work to expand and accelerate growth in our overseas security services business.
As always, our most important task is to earn the trust of our customers. In line with ourcorporate message—“Providing reliable peace of mind”—we pledge to work as one to contribute to society through our business activities and to prove SECOM worthy of the trust ofcustomers and achieve new growth. In these and all of our endeavors, we look forward tothe continued support of shareholders.

Makoto Iida
FounderShohei Kimura
ChairmanJune 25, 2010
Kanemasa Haraguchi
Executive Vice Chairman

Makoto Iida

Shohei KimuraFounderChairman

Kanemasa Haraguchi

Shuji Maeda

Shuji Maeda

Executive Vice Chairman

President and Representative Director

President and Representative Director

Annual Report 2010

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