Notice of Convocation
The 61st Ordinary General Meeting of Shareholders

The following is an English translation of the Notice of Convocation of the 61st
Ordinary General Meeting of Shareholders of SECOM CO., LTD. to be heldon June 28, 2022, 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 yourreference and convenience only and without any warranty as to its accuracy orotherwise.

[English Translation]
1

Table of Contents
Notice of Convocation of The 61st Ordinary General Meeting of Shareholders ······
Reference Document Concerning the General Meeting of Shareholders ···············
Business Report ·····················································································
Consolidated Financial Statements ······························································
Non-Consolidated Financial Statements ·······················································
Auditors’ Reports ···················································································(Note) This Table of Contents is for this abridged English translation only, and not the same asthat in the original Japanese documents.

[English Translation]
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Stock Exchange Code: 9735
June 6, 2022

Notice of Convocation of
The 61st Ordinary General Meeting of Shareholders
Dear Shareholders:
Secom Co., Ltd. (the “Company”) hereby notifies you as follows that the
61st Ordinary General Meeting of Shareholders of the Company will be held as
described below.
We will hold this Ordinary General Meeting of Shareholders withadequate prevention measures against COVID-19. A live streaming of its
proceedings will also be available on the Internet (for more information,please refer to the attachment).
We would like shareholders to carefully consider attending themeeting in person and strongly recommend that they exercise their voting
rights in advance by mail or via the Internet.
Please exercise your voting rights by mail or via the Internet on or
before 6:00 p.m. (JST) June 27, 2022 (Monday) after studying the Reference
Document Concerning the General Meeting of Shareholders attached below:[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 stated above.
[In case of exercising voting rights via the Internet]
Please access the website for the exercise of voting rights(https://www.evote.tr.mufg.jp/). Please indicate whether you approve ordisapprove the items on the agenda by following the instructions on thedisplay screen by the time limit stated above.
(Platform for Electronic Exercise of Voting Rights)
Institutional shareholders may use the platform for the electronic
exercise of voting rights that is operated by ICJ Inc.
Yours very truly,
SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo, JapanBy: ICHIRO OZEKI
President and Representative Director[English Translation]
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(Note) Please note that shareholders with addresses outside Japan may notthemselves use these voting procedures. For these shareholders please consult theircustodian in Japan as to the exercise of voting rights.

[English Translation]
4

PARTICULARS
1.

Date and Time of the Meeting:
Tuesday, June 28, 2022 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 Financial
Statements for the 61st Fiscal Year (from April 1, 2021 to March
31, 2022) and the Results on the Audits of Consolidated Financial
Statements by the Accounting Auditor and the Audit &Supervisory Board.
2. Report on the Non-Consolidated Financial Statements for the 61st
Fiscal Year (from April 1, 2021 to March 31, 2022).
Matters to be Resolved upon:First Item of Business:
Second Item of Business:

Proposed Distribution of Surplus
Partial Amendments to the Articles
of Incorporation
Election of Ten (10) Directors

Third Item of Business:
4.

Matters related to Exercise of Voting Rights:
1) In the event that a shareholder wants to exercise non-uniform
voting, he/she shall notify the Company to make non-uniform
voting and the reason thereof in writing or by electromagnetic
means three (3) days prior to the date 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 theInternet to be valid.
3) In the event that a shareholder exercises voting rights via theInternet more than once, the Company will consider the last
exercise of voting rights to be valid.

[English Translation]
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(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 theConsolidated 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” 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)
1) If you plan to attend the Meeting, please submit the enclosed
Voting Rights Exercise Form to the receptionist at the Meeting.
2) In order to avoid the risk of COVID-19 infections at the meeting,
we will take the following measures at the General Meeting of
Shareholders. Your understanding and cooperation will be greatly
appreciated.
・Our administrative staff of the General Meeting of Shareholders
will make sure that they will be in good health condition by, forexample, measuring their body temperature and wear masks whileworking.
・We will measure your body temperature near the entrance to thevenue, and alcohol disinfectant will be available near the reception
desk. You are also asked to bring and wear a mask.
・If you have a fever (37.5ᵒC or higher) or otherwise appear to befeeling unwell, you may be asked by the administrative staff to refrainfrom entering the venue.
・Regarding the filming of the proceedings of the meeting for live
streaming, the staff will make efforts to avoid filming the appearanceof the attending shareholders, but these efforts may not always be
successful. In addition, if you make a comment, your voice will berecorded and streamed. Your understanding is requested in advance.
・If we decide to change the infection prevention measures outlined
above due to the status of the spread of infection or the announcementof the government through the date of the General Meeting of[English Translation]
6

Shareholders, the change will be notified on the website of theCompany on the Internet.

(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 the NonConsolidated Financial Statements, the Company will announce such
amendments on the “Investor Relations” section of the Company’s
website:(https://www.secom.co.jp/english/ir/).

[English Translation]
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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 offuture revenues and profits of the Company on a consolidated basis whileconsidering the Company’s basic policy that ensures the payment of continualand steady dividends. The Company has made it a basic rule to distribute a
dividend twice a year, as the interim dividend whose record date is September 30
each year, and the year-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 determined by the General Meeting of Shareholders. Furthermore, theCompany will utilize internal reserves for investments required for increased newcustomers, research and development and investments and the like for strategic
businesses so that the Company 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 90 per share. A total amount of dividend per share,
together with the interim dividend of YEN 90 per share, will be YEN 180, YEN
10 higher than YEN 170 for the previous year.
Matters related to the year-end dividend:(1)
Kind of assets distributed:
Cash(2)Matter related to distribution of cash and total amount:
YEN 90 per share of common stock of the Company
The total amount:
YEN 19,627,454,790(3)Effective date for distribution of surplus:
June 29, 2022

[English Translation]
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Second Item of Business: Partial Amendments to the Articles of Incorporation
1. Reasons for the proposal（1）The amended provisions stipulated in the proviso of Article 1 of the supplementaryprovisions of the “Act Partially Amending the Companies Act” (Act No. 70 of 2019)will be enforced on September 1, 2022. Accordingly, in order to prepare for the
introduction of the system for electronic provision of materials for general meetings ofshareholders, the Articles of Incorporation of the Company shall be amended asfollows:
・The proposed Article 16, Paragraph 1 provides that information contained in thereference materials for the General Meeting of Shareholders, etc. shall be provided
electronically.
・The purpose of proposed Article 16, Paragraph 2 is to establish a provision to limit
the scope of matters to be included in the paper copy to be sent to shareholders
who have requested it.
・The provisions related to the Internet disclosure and deemed provision of thereference materials for the general meeting of shareholders, etc. (Article 16 of thecurrent Articles of Incorporation) will become unnecessary and will therefore bedeleted.
・In line with the above establishment and deletion of the provisions, supplementaryprovisions related to the effective date, etc. shall be established.
（2）In order that the Company may also enter into a liability limit agreement with Nonexecutive Directors and Internal Audit & Supervisory Board Members to ensure that
Non-executive Directors and all Audit & Supervisory Board Members adequately
fulfill the roles expected of them, necessary amendments shall be made to Article 32(Liability Limitation Agreement with Outside Director) and Article 42 (Contracts for
Limitation of Liability with Outside Audit & Supervisory Board Members) of thecurrent Articles of Incorporation. The Company has obtained the consent of each
Audit & Supervisory Board Member for the proposed amendment to Article 32 of thecurrent Articles of Incorporation.

[English Translation]
92. Contents of Changes
Contents of Changes are as follows:
Current Articles of Incorporation(Disclosure of Reference Materials for General
Meeting of Shareholders via the Internet andDeemed Furnished)
Article 16
When convening a General Meeting of
Shareholders, the Company may, in amanner using the Internet pursuant toMinistry of Justice Ordinances, disclose
information concerning matters required to
be described or presented in the referencematerials of the General Meeting of
Shareholders, business reports, financial
statements and consolidated financial
statements and deem such information
furnished to shareholders.
(Newly Established)(Underlines indicate the changes)
Proposed changes(Deleted)(Measures for the Provision of Information inElectronic Format, etc.)
Article 16
On convening a General Meeting of
Shareholders,theCompany
shall
implement measures for the provision of
information constituting the contents ofreference documents, etc. for the General
Meeting of Shareholders in electronic
format.
2. Among matters for which measures are
implemented for provision in electronic
format, the Company may exclude all orpart of the matters prescribed by an
ordinance of the Ministry of Justice fromthe paper documents that will be delivered
to shareholders who request delivery inpaper format by the record date for voting
rights.

[English Translation]
10Current Articles of Incorporation
Proposed changes(Liability Limitation Agreement with Outside (Liability Limitation Agreement with
Director)
Director)
Article 32
Article 32
Pursuant to Paragraph 1 of Article 427 of
Pursuant to Paragraph 1 of Article 427 of
the Companies Act the Company may enter
the Companies Act the Company may enter
into an agreement with Outside Director to
into an agreement with Director (excluding
limit damage compensation liability
those who are executive directors, etc.) toprovided for in Paragraph 1 of Article 423
limit damage compensation liabilityof the Companies Act; Provided, however,provided for in Paragraph 1 of Article 423
that the limited amount of compensationof the Companies Act; Provided, however,liability pursuant to this agreement is thethat the limited amount of compensation
amount provided for in the laws andliability pursuant to this agreement is theordinances.
amount provided for in the laws andordinances.

(Contracts for limitation of liability with(Contracts for limitation of liability with
Outside Audit and Supervisory Board
Audit and Supervisory Board Members)
Members)
Article 42
Article 42
Pursuant to Paragraph 1 of Article 427 of
Pursuant to Paragraph 1 of Article 427 of
the Companies Act the Company may enter
the Companies Act the Company may enter
into an agreement with Audit andinto an agreement with Outside Audit andSupervisory Board Member to limit
Supervisory Board Member to limit
damage compensation liability provided fordamage compensation liability provided forin Paragraph 1 of Article 423 of thein Paragraph 1 of Article 423 of theCompanies Act; Provided, however, that
Companies Act; Provided, however, thatthe limited amount of compensation
the limited amount of compensation
liability pursuant to this agreement is theliability pursuant to this agreement is theamount provided for in the laws andamount provided for in the laws andordinances.
ordinances.
(Newly Established)

Supplementary Provisions
1. The amendments to Article 16 shall comeinto effect on September 1, 2022, which isthe date of enforcement of the amended
provisions stipulated in the proviso of
Article 1 of the supplementary provisionsof the Act Partially Amending theCompanies Act (Act No. 70 of 2019).

[English Translation]
11

Current Articles of Incorporation
2.

3.

[English Translation]
12

Proposed changes
Notwithstanding the provisions of thepreceding paragraph, Article 16 of the
Articles of Incorporation (Disclosure ofReference Materials for General Meetingof Shareholders via the Internet andDeemed Furnished) shall remain in force
with respect to any general meeting ofshareholders to be held on a date by the endof February 2023.
These Supplementary Provisions shall bedeleted after March 1, 2023 or the lapse of
three months from the date of the general
meeting of shareholders set forth in thepreceding paragraph, whichever is later.

Third Item of Business: Election of Ten (10) Directors
The term of office of all of the eleven (11) Directors will expire at theclose of this Meeting. In connection therewith, we would like to ask shareholders
to elect ten (10) Directors.
The candidates are as follows:
No.

Name

GenderCurrent
Position at theCompany
Chairman and
Representative
Director
President andRepresentative
Director

1

Re-election

Yasuo Nakayama

Male

2

Re-election

Ichiro Ozeki

Male

3

Re-election

Yasuyuki Yoshida

Male

Senior Executive
Director

4

Re-election

Tatsuro Fuse

Male

Executive
Director

5

Re-election

Tatsuya Izumida

Male

Director

6

Re-election

Tatsushi Kurihara

Male

Director

7

Re-election

Takaharu Hirose

OutsideDirector

Independent
Officer

Male

Outside Director

8

Re-election

Hirobumi Kawano

OutsideDirector

Independent
Officer

Male

Outside Director

9

Re-election

Hajime Watanabe

OutsideDirector

Independent
Officer

Male

Outside Director

10

Re-election

Miri Hara

OutsideDirector

Independent
Officer

FemaleOutside Director[English Translation]
13

Candidate
Number1

Yasuo Nakayama*

Re-election(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 JapanMay 2007 Advisor, SECOM Co., Ltd.
Jun 2007
Executive Director
May 2016 President and Representative Director
May 2017 Chairman, Tokyo Security Service Association
Jun 2019 Chairman, All Japan Security Association (currently)
Jun 2019 Chairman and Representative Director (currently)

Number of Sharesof the Company
Owned
6,461 shares<Important Position of Other Organizations Concurrently Assumed>
Chairman, All Japan Security Association
Reasons for Election
Mr. Yasuo Nakayama has assumed the office of Chairman and Representative Directorof the Company since June 2019, after President and Representative Director in May
2016. Following the assumption of the office of Representative Director, he has
contributed to steady growth of the Company from a viewpoint of mid- and long-termtime span. Additionally, as Chairman of All Japan Security Association, he has made acontribution to foster the development of the industry. In the light of continuous
enhancement of the corporate value, we would like to ask shareholders to elect him as
Director.
Candidate
Number2

Ichiro Ozeki*

Re-election(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
Joined SECOM Co., Ltd.
Jun 2001
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.
Jun 2016
Director
Jun 2017
Chairman and Representative Director, Secom General Insurance Co., Ltd.
Jun 2017
Executive Director
Jun 2019
President and Representative Director (currently)
Reasons for Election
Following the assumption of the office as Director of the Company, Mr. Ichiro Ozeki has
led the sales and operation divisions and he holds a high level of knowledge and experiencein overall management of the security services business. Following the assumption of theoffice of President and Representative Director in June 2019, he worked to strengthen thebusiness of the entire SECOM Group including the security services business, overseas
business, and ICT business, while focusing on group-wide cost reduction and productivity
improvement to achieve steady growth for the Company with his strong leadership andmanagement ability. He also has carried out steadily management reformation from aviewpoint of mid- and long-term targets. In the light of continuous enhancement of thecorporate value, we would like to ask shareholders to elect him as Director.

[English Translation]
14

Number of Sharesof the Company
Owned
301,356 shares

Candidate
Number3

Yasuyuki Yoshida*

Re-election(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 2012
Director
Jun 2016
Executive Director
Jun 2017
Senior Executive Director (currently)

Number of Sharesof the Company
Owned
4,174 shares

Reasons for Election
Mr. Yasuyuki Yoshida has served as Director of the Company in charge of overallbusiness planning including the security services business and overall management
planning including risk management and governance of the SECOM Group.
Accordingly, he holds a high level of knowledge and experience in the management of
the SECOM Group. In the light of continuous enhancement of the corporate value, wewould like to ask shareholders to elect him as Director.
Candidate
Number4

Tatsuro Fuse*

Re-election(Date of birth: September 9, 1957)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed, if any
Mar 1982 Joined SECOM Co., Ltd.
Mar 2002 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.
Jun 2016 Managing Executive Officer
Jun 2017 Chairman and Director, Secom Medical System Co., Ltd. (currently)
Jun 2017 Executive Director (currently)<Important Position of Other Organizations Concurrently Assumed>
Chairman and Director, Secom Medical System Co., Ltd.
Reasons for Election
Mr. Tatsuro Fuse has been engaged in medical services business as well as corporate
communication & marketing division as Director of the Company. He holds affluent
management experience at SECOM group and a high level of knowledge and experiencein external business activities such as corporate communication & marketing, and in
overall management including medical service business. In the light of continuous
enhancement of the corporate value, we would like to ask shareholders to elect him as
Director.

[English Translation]
15

Number of Sharesof the Company
Owned
4,094 shares

Candidate
Number5

Tatsuya Izumida*

Re-election(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
1,931 shares

Reasons for Election
Mr. Tatsuya Izumida, as Director of the Company, has broad and longstanding businessexperience in the security services business and has engaged in the BPO and ICT services
business of the SECOM Group. Thus, he possesses an abundance of experience and ahigh level of knowledge in overall management of our business including the security
services business and the BPO and ICT services business. In the light of continuous
enhancement of the corporate value, we would like to ask shareholders to elect him as
Director.
Candidate
Number6

Tatsushi Kurihara*

Re-election(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)
Reasons for Election
After working for the Bank of Japan for many years, Mr. Tatsushi Kurihara has served
as Director of the Company in charge of overall administrative business including thegeneral affairs and human resources divisions. He also has a high level of knowledge inoverall management including sustainability, ESG and SDGs of the 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]
16

Number of Sharesof the Company
Owned
1,231 shares

Candidate
Number7

Re-election

Takaharu Hirose

Candidate for Outside Director(Date of birth: October 25, 1944)

Candidate for Independent Officer

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.
Reasons for Election and Outline of Expected Role
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 and a high level of knowledge in IT
enterprises. As a member of the Board of Directors, he has provided advice andrecommendations in many occasions from a high-level perspective on key directions ofmanagement including the future of SECOM that capitalizes on technology. As he has
played an appropriate role as Outside Director including the supervision of businessexecution, in the light of continuous enhancement of the corporate value, we would liketo ask shareholders to elect him as Outside Director. After the election, he is expected tocontinue to play the role mentioned above.

[English Translation]
17

Number of Sharesof the Company
Owned
0 sharesCandidate
Number8

Re-election

Hirobumi Kawano

Candidate for Outside Director(Date of birth: January 1, 1946)

Candidate for Independent Officer

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))
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
Jun 2003
Outside Director, Sony Corporation (presently Sony Group Corporation)
Aug 2004 Senior Managing Executive Officer, JFE Steel Corporation
Apr 2008 President, Japan Oil, Gas and Metals National Corporation
Jun 2016
Director, SECOM Co., Ltd. (currently)
Jun 2018
Outside Audit & Supervisory Board Member, San-Ai Oil Co., Ltd.
(presently SAN-AI OBBLI Co., Ltd.) (currently)<Important Position of Other Organizations Concurrently Assumed>
Outside Audit & Supervisory Board Member, SAN-AI OBBLI Co., Ltd.
Reasons for Election and Outline of Expected Role
Mr. Hirobumi Kawano has a career in important positions at the government offices suchas the Ministry of International Trade and Industry (presently Ministry of Economy,
Trade and Industry) and the Agency for Natural Resources and Energy as well as in theprivate sector such as Japan Oil, Gas and Metals National Corporation. As a member ofthe Board of Directors, he has provided advice and recommendations from a diverse
perspective on key directions of management as well as on business in general and theexecution and risk management of overseas projects in particular. As he has played an
appropriate role as Outside Director including the supervision of business execution, in
the light of continuous enhancement of the corporate value, we would like to ask
shareholders to elect him as Outside Director. After the election, he is expected tocontinue to play the role mentioned above.

[English Translation]
18

Number of Sharesof the Company
Owned
0 sharesCandidate
Number9

Re-election

Hajime Watanabe

Candidate for Outside Director(Date of birth: November 18, 1951)

Candidate for Independent Officer

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.
Jun 2016 Director, SECOM Co., Ltd. (currently)
Apr 2022 Chairman and Representative Director, Watanabe Pipe Co., Ltd.(currently)

Number of
Shares of theCompany
Owned
1,400 shares<Important Position of Other Organizations Concurrently Assumed>
Chairman and Representative Director, Watanabe Pipe Co., Ltd.
Reasons for Election and Outline of Expected Role
Mr. Hajime Watanabe has engaged in management of Watanabe Pipe Co., Ltd. for many
years. He holds rich experience and a high level of knowledge accumulated through his
career in the management of the company that has a national network. As a member ofthe Board of Directors, he has provided effective advice and recommendations in manyoccasions on key directions of management as well as on the execution and risk
management of business in general and other matters including work site operations andemployee management. As he has played an appropriate role as Outside Director
including the supervision of business execution, in the light of continuous enhancementof the corporate value, we would like to ask shareholders to elect him as Outside Director.
After the election, he is expected to continue to play the role mentioned above.
Candidate
Number10

Re-election

Miri Hara

Candidate for Outside Director(Date of birth: December 20, 1961 )Candidate for Independent Officer

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed, if any
Jun 1988
Joined Hara Jisho Co., Ltd.
Jun 1988
Director, Hara Jisho Co., Ltd. (currently)
Oct 2017
Founded Tax Corporation Yokohama Benten Accounting, Inc. andassumed Representative Certified Public Tax Accountant (currently)
Jun 2020
Director, SECOM Co., Ltd. (currently)
Jun 2021
Outside Director, Nippon Sanso Holdings Corporation (currently)<Important Position of Other Organizations Concurrently Assumed>
Representative Certified Public Tax Accountant of Tax Corporation Yokohama Benten
Accounting, Inc.
Outside Director, Nippon Sanso Holdings Corporation
Reasons for Election and Outline of Expected Role
Ms. Miri Hara has been gaining experience as director of a real estate managementcompany for a long period of time, and possesses rich experience and considerable insightaccumulated through her career on tax affairs, corporate accounting, etc., at a tax
accountant corporation. As a member of the Board of Directors, she has provided usefuladvice and recommendations on key directions of management as well as on services forhouseholds. As she has played an appropriate role as Outside Director including thesupervision of business execution, in the light of continuous enhancement of the corporate
value, we would like to ask shareholders to elect her as Outside Director. After theelection, she is expected to continue to play the role mentioned above.

[English Translation]
19

Number of
Shares of theCompany
Owned
0 shares(Notes)
1.
2.
3.

4.

5.

6.

7.

8.

9.

There is no particular interest between the Company and each of the said candidates.
Candidates with * are Executive Officers currently in office.
Based on the nomination policy that the Board of Directors established, thenomination of candidates for Directors are decided after discussion at the Boardof Directors. The Board of Directors decides the candidates for Directors after the
discussion process of the Nomination and Compensation Committee comprising amajority of Outside Directors.
Messrs. Takaharu Hirose, Hirobumi Kawano, Hajime Watanabe and Ms. Miri Haraare candidates for Outside Directors. The designation of Messrs. Takaharu Hirose,
Hirobumi Kawano, Hajime Watanabe and Ms. Miri Hara as Independent Officers
has been filed with Tokyo Stock Exchange, Inc.
The number of years during which Mr. Takaharu Hirose is in the office of Outside
Director of the Company will have been for nine (9) years at the close of this
General Meeting of Shareholders.
The number of years during which Messrs. Hirobumi Kawano and Hajime
Watanabe are in the office of Outside Director of the Company will have been forsix (6) years at the close of this General Meeting of Shareholders.
The number of years during which Ms. Miri Hara is in the office of Outside
Director of the Company will have been for two (2) years at the close of this
General Meeting of Shareholders.
Pursuant to Article 427, Paragraph 1 of the Companies Act, the Company hasentered 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, Hajime Watanabe and Ms. Miri Hara. In caseeach of them is re-elected, it is scheduled that the liability limit agreement willcontinuously be made.
Furthermore, the limited amount of compensation liability is the minimum liability
limit provided for in Article 425, Paragraph 1 of the Companies Act.
The Company has entered into an officers’ liability insurance contract with aninsurance company. A summary of the contents of the insurance policy is given on
page 39 of this Notice of Convocation ("3. Description of the Officers’ Liability
Insurance Contract"). Each of the candidates is currently a director of the Company
and is insured under the relevant insurance contract. If each candidate is reappointed,
he or she will continue to be insured under the insurance contract. The Company
intends to renew the insurance policy for the same terms during their term of office.

[English Translation]
20

〈Reference〉
Knowledge and experiences possessed by each candidate for Director and Audit &Supervisory Board Member (Skills Matrix)
Name
Yasuo
Nakayama
Ichiro Ozeki
Yasuyuki
YoshidaTatsuro Fuse
TatsuyaIzumidaTatsushi
Kurihara
Takaharu
HiroseHirobumi
KawanoHajimeWatanabe
Miri Hara

Current Positionat the Company

Corporate
Management

Finance andAccounting

●

●

●

●

●

●

Chairman and
Representative
Director
President andRepresentative
Director
Senior Executive
Director
Executive
Director

Legal,
Complianceand Risk

Sustainability
and ESG

Security
Services
Industry

●

●
●

●

●

●

●

●

●

●

●

●

Director●

Outside Director●

Outside Director●

Outside Director●●

Outside Director

●

●

●

●

●

●

●

●

●

●

Audit &
Takayuki Ito
Supervisory
Board Member
Audit &
Koji Kato
Supervisory
Board Member
Outside Audit &Hideki Kato
Supervisory
Board Member
Outside Audit &Makoto Yasuda Supervisory
Board Member
Outside Audit &Setsuo Tanaka Supervisory
Board Member

●

●

●
●

●

●
●

●
●

●

●

Director●

ICT andTechnology●●●

GlobalBusiness

●

●

●

●

●

●

●

●

*Up to four (4) knowledge and experiences possessed by each candidate for Director and Audit & Supervisory
Board Member are marked.
*The above list does not represent all the knowledge and experiences of each candidate for Director and Audit &Supervisory Board Member.

[English Translation]
21

[Attached Documents]

Business Report (Fiscal Year Ended March 31, 2022)
I. Outline of the Group’s Business1. The Current Business Development and Results of Operations
During the fiscal year ended March 31, 2022 (“the current fiscal year”), the Japanese
economy showed movements of recovery in some areas such as corporate earnings andprivate consumption, although the situation remained challenging due to COVID-19.
While economic and social activities move toward normalization with measures toprevent the spread of infections, continual attention has been required to downside risks
in the economy due to the trends of the infectious disease in Japan and overseas, thefluctuations in the financial and capital markets, as well as the growing uncertainty of
the international situation and the impact of rising raw material prices.
Under these circumstances, we have been actively working to implement initiatives toachieve the SECOM Group’s Vision for 2030, formulated with an aim to establish the“Social System Industry,” which delivers safety and peace of mind, as well as makes life
more comfortable and convenient, and the SECOM Group Road Map 2022, in which we
clarified what we should do now to achieve the vision.
As an Official Partner in the category of Security Services and Planning, we sponsored
the Olympic and Paralympic Games Tokyo 2020, held from July to September 2021. We
contributed to safe and secure staging of the games by providing security services forcompetition venues and facilities. In response to the significant decline in the labor force
and the rising demand for security, we launched the AI-powered Virtual Security Guard
System in January 2022, which features a virtual character who performs security,
receptionist and other static guard duties. We also started providing cocobo, a security
robot that makes use of AI and 5G technologies to conduct security duties at commercial
facilities and office buildings. In February, we released SECOM Cantabile, the app forApple Watch and iPhone, which enhances the more convenient and pleasant use of
SECOM Home Security. In the period under review, we continued to provide meticulous
and seamless services through various initiatives to satisfy the increasingly diversified
and sophisticated needs of our customers for their safety and peace of mind.
In December 2020, we transferred all of the issued shares of Secom Home Life Co., Ltd.,
which had been a consolidated subsidiary, and excluded it from the scope of
consolidation. As a result, the segment name was changed from “real estate and otherservices” to “other services” from the current fiscal year. There is no change in thesegment classification as a result of this change regarding the segment name noted above.
Effective from the current fiscal year, we have reviewed the segment classifications fromthe perspective of similarity and relevance of business activities in order to provide more
appropriate information, and have reclassified some businesses previously included in
the security services segment to the BPO and ICT services segment and the other services
segment. For comparisons with the same period of the previous fiscal year, information
prepared in accordance with the classification after the change is presented and analyzed.

[English Translation]22

As a result, consolidated revenue for the current fiscal year increased by 1.3% to
1,049.8 billion yen compared with the previous fiscal year, due to the increases
in revenue in all reportable segments despite the effect of the decreases in revenue
by 13.1 billion yen owing to the exclusion of Secom Home Life Co., Ltd. and its
subsidiary from the scope of consolidation in December 2020 and 3.3 billion yen
attributable to the application of “Accounting Standard for Revenue Recognition”(ASBJ Statement No.29, March 31, 2020), etc. Consolidated operating profit
increased by 4.8% to 143.4 billion yen, attributable to the effect of increases inoperating profit in security services, fire protection services, medical services,
insurance services and BPO and ICT services. Consolidated ordinary profit
increased by 10.2% to 153.1 billion yen, mainly due to the recognition of net
gains of 2.8 billion yen on private equity investment in the U.S. etc., comparedwith net losses of 3.5 billion yen in the previous fiscal year, in non-operating
income/expenses. Consolidated net income attributable to owners of the parent
increased by 26.2% to 94.2 billion yen, mainly attributable to the recognition ofamortization of goodwill of 5.6 billion yen and net losses of 2.9 billion yen on
sales of investment securities in subsidiaries and affiliates in the previous fiscal
year in extraordinary losses.
Operating profit, ordinary profit and net income attributable to owners of theparent reached a record-high.
（Millions of Yen）

Revenue

Operating profit

Ordinary profit

Net income
attributable toowners ofthe parent

Current fiscal
year (FY2021)

1,049,859

143,499

153,186

94,273

Previous fiscal
year (FY2020)

1,035,898

136,925

138,990

74,681

By business segment, in the security services segment, we provided mainly
centralized monitoring services (on-line security systems) for commercial andresidential clients, as well as static guard services, armored car services andmerchandises.
For our commercial security services, we worked to expand the sales of System
Security AZ (*1), an all-in-one system that accommodates a variety of functions
that benefit customers’ business operations, including security and fire protection,
as well as work efficiency solutions such as employee attendance management.
In response to the increasingly diverse needs for video surveillance, we offered
SECOM IP Camera System and SECOM Cloud Video Surveillance, which canbe integrated with AZ and flexibly respond to a wide range of requests regardless[English Translation]23

of the scale of facilities, with the extensive lineup of surveillance cameras andcloud capability.
For our residential security services, in addition to responding to security and fire
protection needs, we improved the functions of SECOM Home Security NEO, aflexible system suited to modern lifestyles that can expand its services by linking
with various devices, and have made continuous efforts to market it. We alsobegan offering the Monitoring Service for Seniors as an optional service for
SECOM Home Security, which enables family members to check up on theirparents living apart in a nonintrusive manner by using a smartphone app.
Outside Japan, we promoted our “SECOM-style” security services, characterized
by its emergency response services, mainly in economically developing areas,such as Southeast Asia and the People’s Republic of China. We accelerated
efforts to develop and introduce security systems adapted to the local market
while advancing initiatives for digital transformation of on-line security systems
by incorporating the latest technologies.
As a result, revenue increased by 0.4% to 558.0 billion yen, mainly due to thebrisk sales of on-line security systems for commercial and residential use, as wellas the increase in revenue in static guard services, despite the effect of thedecrease in revenue by 5.5 billion yen owing to the exclusion of a subsidiary ofSecom Home Life Co., Ltd. from the scope of consolidation. Operating profit
increased by 3.8% to 116.1 billion yen.
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 that respond to customers’ needs to a wide variety of facilities such as
office buildings, production facilities, tunnels, cultural properties, ships andresidences. In the current fiscal year, two major fire protection companies, Nohmi
Bosai Ltd. and Nittan Co., Ltd., promoted various fire protection systems basedon each company’s business infrastructure and product development expertise.
Revenue increased by 4.3% to 148.8 billion yen, mainly attributable to theincrease in revenue from fire alarm systems provided by Nohmi Bosai Ltd.
Operating profit increased by 14.0% to 14.7 billion yen, chiefly owing to theconcentration of projects with high profitability.
In the medical services segment, we provided various medical services such as
our core home medical services, including home nursing services andpharmaceutical dispensing and home delivery services, operation of residences
for seniors, sales of electronic medical report systems, sales of medical equipment
and pharmaceutical products, personal care services, and the leasing of real estate
for medical institutions.
Revenue increased by 4.1% to 74.5 billion yen, mainly due to the increases insales of medical consumables and in revenue in Takshasila Hospitals Operating
Pvt. Ltd., a general hospital operating company in India. Operating profit[English Translation]
24

increased by 37.9% to 5.6 billion yen.
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
the actual cost of medical treatment; and SECOM Anshin My Car, acomprehensive automobile insurance policy that offers on-site support services
provided by our emergency response personnel in the event of an accident.
Revenue increased by 6.5% to 52.6 billion yen, mainly due to the firm increasein sales of MEDCOM, an unrestricted cancer treatment policy provided by Secom
General Insurance Co., Ltd. Operating profit increased by 27.0% to 1.0 billion
yen, largely attributable to the decrease in losses from natural disasters.
In the geospatial information services segment, we collected geographic datafrom aerial photography, vehicle/ground surveying systems and satellite images,
which we integrated, processed, and analyzed to provide geospatial information
services to domestic national and local governmental agencies, private sectors,
and foreign governmental agencies including emerging and developing countries.
Revenue increased by 2.8% to 56.3 billion yen, chiefly owing to the rise inrevenue from domestic public-sector customers, with the increase in surveying
services using airborne laser and in other services. Operating profit decreased by
13.4% to 4.0 billion yen, mainly attributable to the inclusion of head officerelocation expenses and the rise in personnel expenses resulting from an increasein the number of employees, as well as the reversal of the provision for loss on
construction contracts of large-scale projects in the international division in theprevious fiscal year.
In the BPO and ICT services segment, our distinctive portfolio includes business
continuity planning (BCP) support, teleworking support, information security
services and a variety of cloud-based services, centering on the data centers, aswell as BPO related services including operation of contact center services.
Revenue increased by 3.3% to 115.6 billion yen, chiefly owing to the increases
in revenue in TMJ, Inc., a provider of BPO services including contact centers andback office services, and data center business. Operating profit increased by 4.1%
to 13.1 billion yen.
Other services segment comprises real estate leasing and construction andinstallation services.
Revenue decreased by 11.8% to 43.6 billion yen, mainly due to the effect of thedecrease in revenue by 7.5 billion yen owing to the exclusion of Secom Home

[English Translation]
25

Life Co., Ltd. from the scope of consolidation. Operating profit decreased by
3.4% to 5.9 billion yen.

[English Translation]
26

Results by Business Segment (61st Fiscal Year – current fiscal year)(Millions of Yen)
OperatingprofitCustomers

Revenue
Intersegment

Security services

558,093

11,718569,811116,139

Fire protection services

148,803

3,302

152,106

14,788

Medical services

74,575

235

74,8105,661

Insurance services

52,691

3,151

55,842

1,007

Geospatial information
services

56,371

193

56,565

4,085

BPO and ICT services

115,683

9,082

124,766

13,179Other services

43,6401,234

44,875

5,975

1,049,859

28,9181,078,778

160,837-(28,918)(28,918)(17,337)

1,049,859-

1,049,859

143,499

Business segment

Total
Eliminations andcorporate items
Consolidated revenue

Total

With respect to the results by geographical segments, in Japan, revenue
increased by 1.0% to YEN 1,001.6 billion. Overseas revenue increased by 9.2%
to YEN 48.1 billion.
Revenue by business segment, excluding intersegment transactions (Millions of Yen)

[English Translation]27

2. Issues the Group Has to Cope with

The circumstances surrounding the SECOM Group pose certain social challenges
to be addressed, including the declining birthrate and aging population,
manpower reduction, and rapidly-changing lifestyles due to technologicalinnovation. With these circumstances in mind, the SECOM Group considers
technological advances and a declining labor force as priority issues, andpromotes the following efforts to find solutions to these challenges:(1) Capitalizing on advanced technologies and expertise
Amid ongoing technological evolution, we will proactively collect and deploy
information on advanced technologies and know-how, in order to achieve thecreation of added value, the improvement of service quality, etc., through theeffective use of digitalization and cutting-edge technologies. Based on these
efforts, we will work diligently to create products and services in Japan andoverseas that fuse advanced technologies with human capability.
(2) Domestic businesses (Increasing the competitiveness of our services andproducts)
For domestic businesses, we will improve our competitiveness by boosting thequalities and functionality of our services and products for commercial clients,
and also focus on further cultivating individual consumer markets, through theprovision of new services, including care for seniors. We will make best use of
the business resources of the SECOM Group, in order to offer high value-added
services that meet diversified customer needs, thereby aiming to establish asociety that enjoys “safety, peace of mind, comfort and convenience.”(3) Strengthening overseas businesses
For overseas businesses, while making progress in sales promotion including
advertisement, we will proactively adopt cutting-edge technologies andstrengthen our business development with increasing security needs in mind,
including business planning and product development targeted at overseas local
markets suitable for local needs, in addition to services for large-scale properties.
Furthermore, we will promote active local hiring, and improve the quality ofservices in overseas operations by fortifying education and training.
(4) Improving operating efficiency and quality
As part of efforts to address the manpower reduction resulting from thedecreasing labor force population, we will promote operational efficiency
through system investments to improve functionalities, thereby improving
productivity, profitability, and service quality. At the same time, we will review
operational processes and internal operational procedures to promote cost
reduction.
(5) Securing human resources that will increase competitiveness[English Translation]28

Due to the decreasing labor force population, securing talented human resources
represents a challenge. The SECOM Group will set up efforts to recruit talented
human resources including individuals with IT skills or the ability to function in
global business environments, while promoting cultivation of existing employees,
education/training for improving their abilities to adapt to change, as well as
development of pleasant work environment. We will also accelerateorganizational strategies to strengthen growing sectors, including the reallocationof human resources, as well as efforts to improve the SECOM Group’s
competitiveness.
(6) Strengthening compliance and governance systems
In promoting the efforts described above, securing and maintaining customer
trust through compliance with laws and the spirit of the law, is one of the mostimportant management issues for the SECOM Group, which aims to provide“safety and peace of mind.” The SECOM Group has been making efforts tofurther strengthen its compliance system, based on SECOM’s Philosophy, which
has been passed down since the establishment of the business. It has also beenworking to ensure business management that gives consideration to stakeholders
through the development of the governance system.
We look forward to the support from our shareholders in these and all of ourendeavors.

[English Translation]29

3. Capital Expenditures

Capital expenditures for the current fiscal year totaled YEN 61.9 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 38.1 billion.
(Millions of Yen)
Business segment

AmountSecurity services

38,147

Fire protection services

4,760

Medical services

1,663

Insurance services

2,881

Geospatial information services

2,607

BPO and ICT services

7,634

Other services

4,181
Subtotal

Eliminations and corporate items

61,87745

Total

61,922

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]30

5. Trends in Earnings and Assets of the Group(Millions of Yen except for net income per share)
61st fiscal year
Fiscal years 58th fiscal year 59th fiscal year 60th fiscal year
(current fiscal year)(4/1/2018–(4/1/2019–(4/1/2020–
Category(4/1/2021–
3/31/2019)
3/31/2020)
3/31/2021)
3/31/2022)
Revenue
1,013,823
1,060,070
1,035,898
1,049,859
Operating profit
130,213
142,858
136,925
143,499
Ordinary profit
144,889
151,356
138,990
153,186
Net income
attributable to92,00989,08074,681
94,273owners of theparent
Net income per408.14342.17431.27421.56
share (Yen)
Return on Equity
Total assets
Net assets

9.4%
1,765,105
1,125,954

8.8%
1,815,121
1,172,494

7.1%
1,864,179
1,229,824

8.6%
1,907,755
1,256,036(Note)
From the beginning of the 61st fiscal year, we have applied “Accounting Standard for Revenue Recognition” (ASBJ
Statement No.29, March 31, 2020).

[English Translation]
31

6. Trends in Earnings and Assets of the Company(Millions of Yen except for net income per share)
61st fiscal year
Fiscal years 58th fiscal year 59th fiscal year 60th fiscal year
(current fiscal year)(4/1/2018–(4/1/2019–(4/1/2020–(4/1/2021–
Category
3/31/2019)
3/31/2020)
3/31/2021)
3/31/2022)
Revenue
394,181
398,929394,389
395,181
Operating profit
76,83376,87775,54178,703
Ordinary profit
88,972
90,53889,301
95,094
Net income
74,01665,80859,96069,885
Net income per339.12301.51274.72319.70share (Yen)
Return on Equity
9.6%
8.2%
7.3%
8.2%
Total assets
921,472
947,194
971,493993,501
Net assets
785,801
812,878
838,562
859,950(Note)
From the beginning of the 61st fiscal year, we have applied “Accounting Standard for Revenue Recognition” (ASBJ
Statement No.29, March 31, 2020).

[English Translation]32

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 InsuranceCo., 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)

TMJ, Inc.
100(US$)
The Westec Security Group,
Inc.

301
(Thousands of UK
Pounds)Secom Plc

44,126[English Translation]
33

Percentage ofownership(Percentage ofvoting rights)(%)
100.00(100.00)(%)
100.00(100.00)(%)
50.36(50.71)(%)
100.00(100.00)(%)
100.00(100.00)(%)
97.11(97.82)(%)
71.55(72.16)(%)
100.00(100.00)(%)
50.88(50.88)(%)
100.00(100.00)(%)
100.00(100.00)(%)
100.00(100.00)

Principal business activities

Security and safety services

Cash collection anddelivery services
Comprehensive fire
protection services
Comprehensive fire
protection services
Home medical services andremote image diagnosis
support services
Non-life insurance

Surveying, measuring andgeospatial information systemservices
Information security services
and software development

Data center business

BPO business including
contact center businessHolding company in the U.S.

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 Nohmi Bosai Ltd.
include those owned by the Company’s subsidiaries.
3. The Company acquired the entire equities of Secom Joshinetsu Co., Ltd., asubsidiary of the Company, as of November 1, 2021 and Secom Joshinetsu Co., Ltd.
became a wholly owned subsidiary of the Company.

8. Principal Business of the GroupThe Group consists of the Company, 161 consolidated subsidiaries and 16
affiliated companies accounted for under the equity method. The principal
business activities of the Group are as follows: Security Services centering oncontracted security services; Fire Protection Services centering on comprehensive
fire protection services; Medical Services focusing on home medical services andmanagement of residences for seniors; Insurance Services consisting mainly of
non-life insurance; Geospatial Information Services that mainly entails theprovision of surveying and measuring operations; BPO and ICT Services
centering on information security services, large-scale anti-disaster operations,
datacenter and BPO business; and Other Services centering on real estate leasing
and construction and installation services 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 (Minato-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), Hyogo(Kobe City), Chugoku (Hiroshima City), Shikoku (Takamatsu City), Kyushu(Fukuoka City).
(iii) Domestic Subsidiaries:
Secom Joshinetsu Co., Ltd. (Niigata City), Asahi Security Co., Ltd. (Minatoku, 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), TMJ, Inc. (Shinjuku-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]
34

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

59,745309(2) Matters Concerning Employees of the Company
Number of
employees

Decrease from the end of
the previous fiscal year

Average age

Average years of service

16,27911
43.5
17.1(Note)The number of employees refers to the number of full-time employees.

11. Principal Lenders(Millions of Yen)

Lenders

Balance

MUFG Bank, Ltd.

10,912

Mizuho Bank, Ltd.

8,807

Sumitomo Mitsui Banking Corp.

4,955

Resona Bank Ltd.

3,611

12. Other Important Matters Concerning the Group

There is no matter applicable.

[English Translation]
35

II. Matters Concerning the Company’s Shares and Shareholders
1. Total Number of Shares to be Issued:

900,000,000

2. Total Number of Issued Shares:

233,298,049(including 15,215,218 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:

23,401
100 shares

5. Major Shareholders (Top 10)
Name of Shareholders

Number of shares held(Thousands of Shares)

Percentageof ownership(%)

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

51,977

23.83

Custody Bank of Japan, Ltd.
(Trust Account)

16,314

7.48

JP MORGAN CHASE BANK 380055

9,747

4.46

STATE STREET BANK AND
TRUST COMPANY 505223

4,913

2.25

STATE STREET BANK WEST
CLIENT-TREATY 505234

4,387

2.01

Makoto Iida

4,242

1.94

4,025

1.84

Custody Bank of Japan, Ltd.
(Investment Trust Account)

3,246

1.48

STATE STREET BANK AND TRUSTCOMPANY 505103

2,675

1.22

SSBTC CLIENT OMNIBUS ACCOUNT

2,592

1.18

Secom Science
Foundation

andTechnology(Note)
Although the Company holds treasury stock of 15,215,218 shares, it is not included in
the table above. The percentage of ownership is calculated on the basis of the total
number of shares outstanding excluding treasury stock. The percentage of ownershipis truncated to two decimal places.

6. Shares Granted to Officers of the Company for Their Business Execution during
Current Fiscal Year
Number of shares
2,123

Directors (excluding Outside Directors)[English Translation]
36

Number of
Grantees7III. Directors and Audit & Supervisory Board Members
1.

Names and Titles of Directors and Audit & Supervisory Board Members
Position(As of March 31, 2022)
Field of responsibility andimportant position of otherorganization
concurrently assumed

Name

Director

Makoto Iida

Supreme Advisor

Chairman and
Representative Director

Yasuo Nakayama

Executive Officer
Chairman, All Japan Security
Association

President andRepresentative Director

Ichiro Ozeki

Executive Officer

Yasuyuki Yoshida

Executive Officer (in charge ofplanning administration, groupcompanies supervisor and risk
control)

Senior Executive
Director

Executive Officer (head of corporate
communication & marketing
division)
Chairman and Director of Secom
Medical System Co., Ltd.
Executive Officer (in charge of BPO
and ICT)

Executive Director

Tatsuro Fuse

Director

Tatsuya Izumida

Director

Tatsushi Kurihara

Director

Takaharu Hirose

Director

Hirobumi Kawano

Director

Hajime Watanabe

Director

Miri Hara[English Translation]
37

Executive Officer (head of generalaffairs & human resources division)
Chairman and Representative
Director of Monitas, Inc.
Outside Audit & Supervisory Board
Member of San-Ai Oil Co., Ltd.
(presently SAN-AI OBBLI Co., Ltd.)
President and Representative Directorof Watanabe Pipe Co., Ltd.
Representative Certified Public Tax
Accountant of Tax Corporation
Yokohama Benten Accounting, Inc.
Outside Director, Nippon Sanso
Holdings Corporation

Position

Field of responsibility and important
position of other organization
concurrently assumed

Name

Audit & Supervisory
Board Member

Takayuki Ito

Full-time Audit & Supervisory Board
MemberAudit & Supervisory
Board Member

Koji Kato

Full-time Audit & Supervisory Board
MemberAudit & Supervisory
Board Member

Hideki Kato

Outside Director of SMBC Nikko
Securities Inc.

Audit & Supervisory
Board Member

Makoto Yasuda

President and Representative Directorof Yasuda Makoto & Co., Ltd.,

Setsuo Tanaka

Representative Director of Public
Interest Incorporated Foundation Japan
Police Support Association
Representative Director of Public
Interest Incorporated Foundation Japan
Police Scholarship Association

Audit & Supervisory
Board Member(Notes)1. Messrs. Takaharu Hirose, Hirobumi Kawano, Hajime Watanabe and Ms. Miri Hara
are Outside Directors as stipulated in Article 2, Item 15 of the Companies Act.
2. Messrs. Hideki Kato, Makoto Yasuda and Setsuo Tanaka 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 long-term
experience working at a financial institution and has considerable knowledge offinance and accounting matters.
4. There are no particular interests between the Company and other corporations
employing Outside Director, Messrs. Takaharu Hirose, Hirobumi Kawano, Hajime
Watanabe and Ms. Miri Hara.
5. There are no particular interests between the Company and other corporations
employing Outside Audit & Supervisory Board Member, Messrs. Hideki Kato and
Makoto Yasuda.
6. The Company made donation to two foundations which Outside Audit & Supervisory
Board Member Mr. Setsuo Tanaka concurrently assumes positions. However, theamounts of donation were less than 10 million yen, respectively. Moreover, both offoundations are certified as designated public interest corporations to contribute topromote public interest so that it is unlikely that independency between both foundations
and the Company, also between him and the Company would be suspicious, nor conflictof interest as to ordinary shareholders would be endangered.
7. The notice of Outside Directors, Messrs. Takaharu Hirose, Hirobumi Kawano,
Hajime Watanabe and Ms. Miri Hara being independent officers was submitted toTokyo Stock Exchange, Inc.
8. The notice of Outside Audit & Supervisory Board Members, Messrs. Hideki Kato,
Makoto Yasuda and Setsuo Tanaka being independent officers was submitted toTokyo Stock Exchange, Inc.
9. Changes in important position of other organizations concurrently assumed by
Directors during the current fiscal year
Outside Director, Ms. Miri Hara assumed Outside Director of Nippon Sanso
Holdings Corporation as of June 18, 2021.

[English Translation]
38

10.

Changes in important position of other organizations concurrently
assumed by Directors after the current fiscal year
Outside Director, Mr. Hajime Watanabe assumed Chairman and
Representative Director, Watanabe Pipe Co., Ltd. as of April 1, 2022.

〈Reference〉
Executive Officers who are not Directors are as follows:(As of May 1, 2022)
Title

Name

Managing Executive
Officer

Kenichi Furukawa, Osamu Ueda, Yoshinori Yamanaka, Yoichi
Sugimoto, Sumiyuki Fukumitsu, Osamu Nagai

Executive Officer

Kensuke Shindo, Yasufumi Kuwahara, Noriyuki Fukuoka,
Takeshi Akagi, Sadahiro Sato, Seiya Nagao, Noriyuki Uematsu,
Atsushi Komatsu, Takehiko Senda, Takashi Nakada,Michiyoshi Morita, Makoto Inaba, Toshinori Sugimoto,
Satoshi Araki, Satoshi Takizawa, Izumi Sawamoto(Notes)1. Messrs. Masahiro Takeda and Keitaro Arai resigned from Managing Executive Officer
as of September 30, 2021.
2. Messrs. Toshiaki Mizuno and Shokichi Ishimura resigned from Managing Executive
Officer as of March 31, 2022.
3. Mr. Kazuhiro Mitomo resigned from Executive Officer as of March 31, 2022.
4. Messrs. Yoichi Sugimoto, Sumiyuki Fukumitsu and Osamu Nagai were appointed toManaging Executive Officer as of April 1, 2022.
5. Messrs. Satoshi Takizawa and Izumi Sawamoto were appointed to Executive Officer as ofApril 1, 2022.

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. Description of the Officers’ Liability Insurance Contract
The Company has entered into an officers’ liability insurance contractprescribed in Article 430-3, Paragraph 1 of the Companies Act with aninsurance company to compensate the insured persons for any damage thatthey may incur when a claim for damages is made against them, including
damages and litigation cost.
The insured persons of this insurance contract are main business executives of
the Company, including Directors, Audit & Supervisory Board Members, andExecutive Officers.
However, if the insurance policy provides for a deductible amount and does
not cover damage that does not reach the deductible amount, or if certain
exemptions apply, such as when an act is committed with the knowledge thatit violates laws and regulations, the insurance policy shall not cover the[English Translation]
39

damage to ensure that the appropriateness of the performance of duties bydirectors and officers is not impaired.
The insurance premiums are paid by the Company, including those for special
clauses such as the special clause on indemnity for shareholder representative
lawsuits, and the insured does not bear the actual cost of the premiums.
4. Remuneration of Directors and Audit & Supervisory Board Members
Breakdown of total amount of remuneration etc.
(Millions of Yen)
Total amount of
Basic
Performance-based Non-pecuniary No. of
remuneration etc. remuneration
remuneration
remuneration entitled(Millions of Yen)
officers
Stock
Restricted
Fixed
Bonus
optionstock
Directors (excluding
Outside Directors)

374

298

-

57

18

7

Audit & Supervisory
Board Members(excluding Outside
Audit & Supervisory
Board Members)

45

45

-

-

-

2

Outside Directors

40

40

-

-

-

4

Outside Audit &Supervisory Board
Members

25

25

-

-

-

3

Total
485
409
57
18
16
(Notes)
The remuneration described above is in accordance with the policy for determining thecontent of individual remuneration for Directors, which was established in advance by the
Board of Directors.
With regard to the above performance-based remuneration, the target of consolidated
operating profit for the fiscal year under review was 139,500 million yen, and the actual result
was 143,499 million yen.

5. Policy for Determining the Amount of Remuneration of Directors andAudit & Supervisory Board Members(1) Remuneration of Directors
The Company has established a policy for determining the contents ofremuneration of individual directors (hereinafter referred to as the“Determination Policy”), and its outline is as follows:
The remuneration of Directors shall consist of pecuniary remuneration (fixedmonthly remuneration and bonus) and share-based remuneration. Outside
Directors shall be entitled only to fixed monthly remuneration. In the case of adeath of an incumbent Director of the Company (excluding Outside Directors),
officer condolence money shall be paid to the bereaved family of the deceased
Director in accordance with the Regulations on the Provision of Officer
Condolence Money established by the resolution of the Board of Directors
subject to the approval of the General Meeting of Shareholders.
Regarding pecuniary remuneration (fixed monthly remuneration and bonus), it[English Translation]40

was resolved at the 44th Ordinary General Meeting of Shareholders held on
June 29, 2005 that the total amount shall not exceed 600 million yen per year(the number of Directors pertaining to the resolution was eleven (11)).
Additionally, with regard to the share-based remuneration to be paid to
Directors excluding Outside Directors (hereinafter the “Subject Directors”), it
was resolved at the 60th Ordinary General Meeting of Shareholders held on
June 25, 2021 that (a) the total amount of monetary claims to be provided to
grant restricted stock shall not exceed 100 million yen per year, which isseparate from pecuniary remuneration, and that the number of common stock
shares to be issued or disposed as restricted stock shall not exceed 20,000 shares
per year (the number of Subject Directors pertaining to this resolution wasseven (7)); (b) the Non-transferable period shall be the period from the date on
which the Subject Director receives the issuance or disposition of the common
stock shares of the Company (hereinafter the “Grant Date”) until the day on
which the Subject Director resigns or retires from the office and ceases to be
any of Director, Executive Officer, Audit & Supervisory Board Member, andemployee of the Company (hereinafter the “Directors, etc.”) (including
resignation or retirement due to death, hereinafter the “Retirement, etc.”); (c)upon the expiration of the Non-transferable Period, the Company shall acquire
all such common stock shares held by such Subject Director free of charge asa matter of course unless the Retirement, etc. of a Subject Director from theoffice of Director, etc. is determined by the Board of Directors of the Company
to be due to a reasonable cause, such as expiration of the term of office,mandatory retirement due to age, or death; and (d) upon the expiration of the
Non-transferable Period, notwithstanding the determination by the Board of
Directors that the Retirement, etc. of a Subject Director from the office of
Director, etc. is due to a reasonable cause, such as expiration of the term ofoffice, mandatory retirement due to age, or death, if the Retirement, etc. occurs
before the close of the first Ordinary General Meeting of Shareholders held
after the Grant Date, except for a certain number of such common stock shares
determined in accordance with the reasonable standard set out in advance by
the Board of Directors of the Company among such common stock shares heldby such a Subject Director, the Company shall acquire the rest of such common
stock shares held by such Subject Director free of charge as a matter of course.
Based on this resolution of the general meeting of shareholders, the Board of
Directors, based on the result of deliberation by the Nomination andCompensation Committee, shall determine the share-based remuneration ofeach director within the limit of the maximum amount and number mentionedin (a) above.
The amount of fixed monthly remuneration (pecuniary remuneration) of each
Director and the amount of share-based remuneration (the amount of monetaryclaims provided to grant restricted stock) of each Director (excluding Outside
Directors) shall be determined in comprehensive consideration of the job
responsibility and the number of years of office of each Director as well as thefinancial performance of the Company. The amount of bonus of each Director(excluding Outside Directors) shall be determined in comprehensive
consideration of consolidated operating profit, which is one of the key[English Translation]41

management targets of the Company, as well as the job responsibility and thenumber of years of office of each Director.
The relative proportion of fixed monthly remuneration, bonus, and share-based
remuneration in the total amount of remuneration of each Director (excluding
Outside Directors) shall be roughly 80:15:5. Fixed monthly remuneration ispaid every month. Bonus for each fiscal year is paid in July of the following
fiscal year. Share-based remuneration for each fiscal year is paid in July of thesame year subject to the Non-transferable Period above.
As the remuneration of each Director for the current fiscal year has been
determined in accordance with the procedure outlined above, the Board of
Directors has determined that the contents of the remuneration are in line with
the Determination Policy.
To strengthen the independence and objectivity of the functions and theaccountability of the Board of Directors concerning the nomination andremuneration of Directors, the Company has established a Nomination andCompensation Committee. The Committee submits a proposal on the election
and removal of Directors to the Board of Directors and determines and adviseson the remuneration of Directors. The Nomination and Compensation
Committee consists of the following seven (7) members in total (including four(4) Outside Directors): Makoto Iida (Chairperson, Supreme Advisor andDirector), Yasuo Nakayama (Chairman and Representative Director ), Ichiro
Ozeki (President and Representative Director), Takaharu Hirose (Outside
Director), Hirobumi Kawano (Outside Director), Hajime Watanabe (Outside
Director), and Miri Hara (Outside Director).
(2) Remuneration of Audit & Supervisory Board Members
The remuneration of Audit & Supervisory Board Members of the Company
consists of pecuniary remuneration. It was resolved at the 50th Ordinary
General Meeting of Shareholders held on June 24, 2011 that the total amountof remuneration of Audit & Supervisory Board Members shall not exceed 80
million yen per year (the number of Audit & Supervisory Board Members
pertaining to the resolution was five (5)). The amount of remuneration of each
Audit & Supervisory Board Member shall be determined by consultation
among Audit & Supervisory Board Members based on the job responsibility ofeach Audit & Supervisory Board Member within the limit of the maximum
amount of such remuneration resolved at the General Meeting of Shareholders.

No performance-based remuneration has been introduced as remuneration of
Audit & Supervisory Board Members.

[English Translation]42

6. Outside Directors and Outside Audit & Supervisory Board Members

Activities of Outside Directors and Outside Audit & Supervisory Board
Members during the current fiscal year

Category

Name

Attendanceof theMeetings ofthe Board of
Directors

Attendance ofthe Meetings of
the Audit &Supervisory
Board

OutsideDirector

Takaharu
Hirose13(out of 13)-

OutsideDirector

Hirobumi
Kawano13(out of 13)-[English Translation]
43

Main Activities

He offered advice andrecommendations at the meetings ofthe Board of Directors by making
use of his extensive experience andinsight gained through thefoundation and the management ofmany enterprises and industry
organizations. He also served as amember of the Nomination andCompensation Committee toparticipate in deliberations.
Through these activities, he has
performed the supervisory function
adequately and has played an
appropriate role as an Outside
Director.
He offered advice andrecommendations at the meetings ofthe Board of Directors by making
use of his extensive experience andinsight gained through holding
important positions in government
as well as in industry. He also
served as a member of theNomination and Compensation
Committee to participate indeliberations. Through these
activities, he has performed thesupervisory function adequately andhas played an appropriate role as an
Outside Director.

Category

Name

Attendance ofthe Meetings ofthe Board of
Directors

Attendance of the
Meetings of the
Audit &
Supervisory
Board

OutsideDirector

HajimeWatanabe13(out of 13)-

OutsideDirector

Miri Hara

13(out of 13)-

OutsideAudit &
Supervisory
Board
Member

Hideki Kato

13
(out of 13)

12(out of 12)[English Translation]
44

Main Activities

He offered advice andrecommendations at the meetings ofthe Board of Directors by making
use of his extensive experience andinsight gained from many years of
involvement in corporate
management. He also served as amember of the Nomination andCompensation Committee toparticipate in deliberations.
Through these activities, he has
performed the supervisory function
adequately and has played an
appropriate role as an Outside
Director.
She offered advice andrecommendations at the meetings ofthe Board of Directors by making
use of her extensive experience andinsight gained from her experience
as a corporate officer and a tax
accountant. She also served as amember of the Nomination andCompensation Committee toparticipate in deliberations.
Through these activities, she has
performed the supervisory function
adequately and has played an
appropriate role as an Outside
Director.
He offered advice and suggestions
at the meetings of the Board of
Directors by making use of his
experience in the execution ofnational policies and insight gained
through many accomplishments at apolicy think tank. He also asked
questions and stated opinions inorder to clarify unclear issues.

Category

Name

Attendance ofthe Meetings ofthe Board of
Directors

Attendance of the
Meetings of the
Audit &
Supervisory
Board

OutsideAudit &
Supervisory
Board
MemberMakotoYasuda13(out of 13)

12(out of 12)

OutsideAudit &
Supervisory
Board
MemberSetsuoTanaka13(out of 13)

12(out of 12)[English Translation]
45

Main Activities

He offered advice and suggestions
at the meetings of the Board of
Directors by making use of his
experience and insight gained
through serving as a management of
global enterprise. 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 and insight gained
through the important positions ingovernment. He also asked
questions and stated opinions inorder to clarify unclear issues.

IV. Accounting Auditor
1. Name of Accounting Auditor

KPMG AZSA LLC
2. Remuneration of Accounting Auditor
Previous Fiscal Year
Category(Millions of Yen)
Current Fiscal Year

Audit certificationwork

Non-audit work

Audit certificationwork

Non-audit work

Company

198

4

186

16

Consolidated
Subsidiaries

378

62

364

96

Total

576

67

550

112

(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 the Company 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 WEAVER AND TIDWELL 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
Consolidated subsidiaries pay consideration to the Accounting Auditor forservices as non-audit duties, including verifying work for the status of
preparedness on internal control system, in accordance with Auditing andAssurance Practice Committee Practical Guideline No 86, “Assurance Reports
on Controls at a Service Organization.”
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 firm

[English Translation]46

of the Accounting Auditor. In such case, the Audit & Supervisory Board
will make decision on appointment of a temporary Accounting Auditor or asubstitute Accounting Auditor and will submit a proposal of the appointment ofa substitute Accounting Auditor to the general meeting of shareholders convened
for the first time after such decision. The Audit & Supervisory Board Member
selected by the Audit & Supervisory Board will also report the reasons for thedismissal at the general meeting of shareholders.
Aside from the above, when there exists any situations 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.
V. System under which the Company’s Business is Ensured to be Properly
Executed
1. Basic Policy Regarding Internal Control System

Outline of 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” (so-called the basic policy regarding the internal control system) of theCompany, which the Board of Directors’ Meeting resolved, is as follows. (Thelatest revision was made on April 4, 2019.)(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 theCompanies 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
Executives 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 andregulations, and the Article of Incorporation. The SECOM Group Code of
Employee Conduct is based on the philosophy of SECOM, which we havefollowed since the establishment of the business. These ethical guidelines
prescribe ideals covering the official and private affairs of all executives
and employees and action standards (including the blocking relationships[English Translation]47

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
compliance management system is as follows:(i) From the start, compliance with laws and regulations and the Articles
of Incorporation has been an indispensable requirement of our business,
and we have always sought to operate in strict adherence to this spirit.
Therefore, compliance is a part of the Company’s daily routines, whichshould not require a system in which a specific section or manager is
responsible for implementation. Each and every employee is at thefront line of promoting the code of conduct, including legal compliance.
The implementation of guidelines is carried out by the line managersof the organization. Further control is provided by the Executive
Officers in charge of departments under their control, with the
President and Representative Director providing companywide control.
(ii) The Executive Officers in charge of each area are responsible forhaving thorough knowledge particularly of regulations related to theirduties and the relationships of such regulations with their own
operations. They are responsible for proposing responses to any
revisions of laws to the President and Representative Director. The
Legal Affairs Department and other relevant departments and sections
support them, providing cross-organization coordination.
(iii) Following the orders of the President and Representative Director, theInternal Audit and Compliance Department provides crossorganizational inspection in a timely manner over the execution ofduties, indicating how to improve morale through the observance oflaws and regulations and the Company’s rules and at the same time
pointing out matters that need correction. The Internal Audit andCompliance Department will promptly report the findings of theinspection 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 Internal Audit and ComplianceDepartment if corrective actions are not taken even after reporting tosuperiors or it is difficult to report. Pursuant to the “Basic Policy of the
SECOM Group for Compliance,” the Company will keep the reported
matters confidential, and promptly take necessary investigation andappropriate measures. The reporter will suffer no disadvantage on the
grounds of such 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 cornerstone of developing and maintaining the corporate
organization, and determines important official commendations andpunishments.

[English Translation]48

(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 approvalof the Board of Directors after obtaining the opinions of the Audit &Supervisory Board Members.
(vii) Basic plans and policies concerning internal controls related tofinancial reporting are determined and evaluated in accordance withthe standards of the Business Accounting Council.
(3)

System under which information regarding execution of business byDirectors shall be maintained and controlled
Information regarding the execution of duties of Directors (minutes of the
Meetings of the Board of Directors, decision-making documents, etc.),
shall be properly maintained, administered (including destruction) pursuant
to the rules of the Company, which will be amended upon reviewing theoperating 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-today business activities, with acknowledgement that risk management
itself is the Company’s business. Executive Officers in charge, under
the direction of the President and Representative Director, analyze andassess business risk and fraud risk in the operational areas for which
they are responsible, and revise established rules and manuals asconditions change. Rules and manuals are based on risk analysis andassessment, and stipulate preventive measures, prompt and appropriate
communication and emergency preparedness when incidents occur,
daily risk monitoring and 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) In order to grasp company wide risks and consider necessary measures,a Risk Committee, which is chaired by the Director responsible for risk
management, shall be convened and report as necessary to the
President and Representative Director.
(iv) 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.

[English Translation]
49

The risks at times of large scale calamities and at ordinary times are as follows.
Risk Category
Large scalecalamity

Ordinary times

Earthquake, wind, flood, volcanic
disasters, radiation leakage, etc.

(1) Large scalecalamity risk

Noncompliance with “Constitution of
SECOM’s Business and Operation,”“SECOM Group Code of Employee
Conduct,” other internal rules and(2) Compliance risk
guidelines, etc., risk accompanied byestablishmentorchangesinregulations (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(3) System risk
disturbance, ICT (information andcommunication technology) relatedrisk, etc.
Risk incurred when providing services(4) Service providing risk (Accidents related to security, fire
alarm or equipment maintenance, etc.)
Input error or input omission inadministrative or account processing,estimation error for allowance, etc.

(5) Administrative
work andaccounting risk

Offence from outsiders (groundlessrumor, calumniation, theft, terror, etc.),
risk related to M&A, risk related to
new system development, other risk
related to business infrastructure (fireon the Company’s premises, pandemic
influenza, disease epidemic, etc.), etc.

(6) Others(5)

ExampleSystem by which efficient execution of duties of Directors shall beensured(i)

All Directors shall carry out the operation and execution of businesson the basis of the “Constitution of SECOM’s Business and Operation”
so that they may share the ideas essential to the execution of the duties
such as decision making for management by the Board of Directors
and decision 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[English Translation]
50

the system for swiftly enabling full introduction and implementation.
(iv) The Company will share the medium and long-term business vision,and for the purpose of the accomplishment thereof, the Board of
Directors will design an annual business plan and deliberate theprogress of the plan.
(6)

System under which the group of enterprises consisting of the Company
and subsidiaries 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 bythese guidelines, the executives and employees work to accomplish thecorporate goals in an appropriate manner.
(ii) Each of the subsidiaries carries out IT controls in conformance withthe “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
the Company’s President and Representative Director and whose
members are composed of the presidents of major subsidiaries andother parties appointed by the chairperson, works to ensure thatappropriate 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 Board of Directors and the Audit &Supervisory Board.
(iv) The President and Representative Director of the Company issues
orders to the internal audit departments (Internal Audit andCompliance Department and Group Governance Department) toinspect subsidiaries, if necessary. The subsidiaries accept theinspection by the Company, and at the same time promote theunderstanding and improvement of compliance-related issues byexchanging information with the Company. Furthermore, theCompany establishes the whistle-blowing system “Group Head Office
Helpline” which enables executives and employees of subsidiaries todirectly 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 the reported matters confidential, and promptly takenecessary 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[English Translation]51

major subsidiaries and conduct audits regarding internal controls.
(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
for the 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 atleast two employees who are fully familiarized with the exclusive
duties and internal 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.

[English Translation]
52

The assistants who received necessary instruction on audit duties by Audit& Supervisory Board Members shall not be subject to any instruction ororder from Directors and Executive Officers and employees with respect tothe subject audit duties, nor be obligated to report to them.
(9)

The following systems and other systems under which any report is madeto 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 Helpline” will be reported to the Audit& Supervisory Board Members from the Internal Audit andCompliance Department.
(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., other persons equivalent
to such persons, and employees, or any persons receiving reports fromthese 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 such reports

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 ordebts incurred for the execution of such duties.

[English Translation]
53

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, andconduct periodical interviews with Directors and employees of theCompany and the subsidiaries.
(iii) The Company ensures that the Audit & Supervisory Board may retain
attorneys-at-law at its discretion and, if necessary, have opportunities
to retain and consult professional accountants with respect to theiraudit duties.
2. Outline of Status of Operation of Internal Control System

The Company, pursuant to the basic policy described above, has established theInternal Control System, and is continuously operating this System in a proper
manner. An outline of the status of operation of the System during the current
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 and the Behavioral
Guidelines Based on SECOM’s Philosophy, which set 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 the philosophy of SECOM,
and the Company is also making efforts to instill and entrench thephilosophy of SECOM through “Tri-ion” initiative and e-learning system
and in-house newsletter. The Company takes appropriate actions to respondto any revisions of laws and regulations by requiring its Executive Officers
in charge of each area to have thorough knowledge of laws and regulations
related to their areas and to obtain information concerning revisions of
relevant laws and regulations on a regular basis. The Internal Audit andCompliance Department, as a leading organization, conducts operational
audits based on the audit plan, reports the audit results to the President andRepresentative Director and the Audit & Supervisory Board Members on amonthly basis, and instructs to take correctional measures necessary to solve
any issues identified. Furthermore, any internal reports made through “Hot[English Translation]
54

Helpline” are dealt with in a proper manner in collaboration with relevant
departments. Any important organizational culture-related issues (including
compliance-related matters) are deliberated and dealt with at a meeting of
the Organizational Culture Committee when necessary. The effectiveness ofinternal control related to financial 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. Furthermore, a Risk Committee, which is chaired by
the Director responsible for risk management, has been established. The Risk
Committee grasps company wide risk and considers necessary measures.
(4) “System by which efficient execution of duties of Directors shall be ensured”

The Board of Directors of the Company consists of 11 Directors including 4
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. 29 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, 2022.)(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” semi-annually 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
Members visited and interviewed Group subsidiaries (57 times), moreover,to enhance the integration with Group Audit & Supervisory Board Members,
the internal audit departments and Auditor, held “the liaison meeting withGroup Audit & Supervisory Board Members and the internal audit
departments of SECOM Group”(one time), and held information exchange
meetings to reinforce cooperation with Group Audit & Supervisory Board[English Translation]
55

Members (20 times). Internal audit departments inspect (by way ofleveraging online meetings utilizing teleconference system as a preventive
measure against spread of COVID-19) to subsidiaries as needed, and takeappropriate steps in collaboration with relevant sections and subsidiaries in
response to any internal reports made through the “Group Head Office
Helpline.” Through decision-making on important matters upon priorconsultation and reporting of important matters by subsidiaries inaccordance with the “Basic Rules for SECOM Group Corporate
Management,” the Company and its subsidiaries strive to ensure thatsubsidiaries’ 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 suchreports”
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
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.

[English Translation]
56

(11) “System under which audit by Audit & Supervisory Board Members is
ensured to be performed efficiently”

Audit & Supervisory Board Members held meetings 8 times with the
President and Representative Director and 13 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 to Directors and Audit & Supervisory Board Members. As a result,it was confirmed that the diversity and the appropriateness of the size of the Boardof Directors are secured, and the Outside Directors are actively expressing theiropinions and thus the business execution and the oversight of the management
are well-balanced. Meanwhile, there were constructive suggestions prompting
further development of debate from a medium- to long-term perspective on
subjects including specific discussion on major direction of business strategy inconsideration of changes in the social environment, changes in the businessenvironment resulting from technological innovations as well as a decrease in theworking-age population and the risks associated therewith.

[English Translation]
57

Consolidated Balance Sheet(As of March 31, 2022)(Millions of Yen)ITEM
ASSETSAMOUNT

Current assets:
Cash on hand and in banks
Cash deposits for armored car services
Notes and accounts receivable - tradeand contract assets
Due from subscribers
Short-term investments
Lease receivables and investment in leased
assetsMerchandise and products
Real estate inventories
Work in process
Raw materials and supplies
Short-term loans receivable
Other
Allowance for doubtful accounts

986,202522,363
136,477
149,878

Fixed assets:
Tangible assets:
Buildings and improvements, net
Machinery and equipment andAutomobiles, net
Security equipment and control stations, net
Tools, furniture and fixtures, net
LandConstruction in progress

921,553
390,467
151,809
9,053

Intangible assets:
Software
Goodwill
Other

115,228
21,54659,996
33,684

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

415,858
276,230
29,494
17,335
17,34647,852
27,407
12,386(12,195)

TOTAL ASSETS

39,46827,02037,51814,724
2,593
5,629
13,9302,563
36,064(2,031)73,911
23,917122,050
9,724

1,907,755[English Translation]
58

ITEM
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 and supervisoryboard members
Net defined benefit liability
Long-term deferred revenue
Investment deposits by policyholders,
unearned premiums and other insurance
liabilities
Other

Total liabilities
NET ASSETS
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Common stock in treasury, at cost
Accumulated other comprehensive income(losses):
Unrealized gains on securities
Deferred losses on hedges
Foreign currency translation
adjustments
Remeasurements of defined benefit plans,
net of taxes
Noncontrolling interests:
Total net assets
TOTAL LIABILITIESAND NET ASSETSAMOUNT
361,750
44,271
32,159409
4,843
43,25725,0438,966
8,436
118,971
38,22817,9602,159
17,041

289,969
3,489
11,65015,077
23,6696,859
842

21,896
16,545
185,698

4,240

651,719
1,101,084
66,41970,335
1,043,766(79,436)
21,451
20,220(6)(5,627)
6,865
133,499
1,256,036
1,907,755

Consolidated Statement of Income(Fiscal Year from April 1, 2021 to March 31, 2022)(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 for under 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
Foreign exchange loss, net
Provision of allowance for doubtful accounts
Other
Ordinary profit
Extraordinary profit:
Gain on sales of investment securities
Gain on sales of fixed assets
Other
Extraordinary losses:
Net losses on disposal of fixed assets
Loss on revaluation of investment securities
Impairment losses on fixed assets
Loss on sales of investment securities
in subsidiaries and affiliates
Amortization of goodwill
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]
59

1,049,859
712,187
337,672
194,173
143,499
1,230
670
260
6,745
2,872
3,199

14,977

837
246
1,878
100
15
2,213

5,290
153,186

717
269
45

1,033

1,005
274
113
94
63
655
45,0451,223

2,206
152,013
46,269105,744
11,47094,273

Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2021 to March 31, 2022)(Millions of Yen)
Shareholders’equityCommon stock

Capitalsurplus

CommonTotal

Retainedstock inshareholders’earnings

treasury, at

equitycost
Balance at the beginning of the
fiscal year
Cumulative effects of changes inaccounting policies
Restated balance
Changes during the fiscal year:
Issuance of new stocks
Cash dividends
Net income attributable toowners of the parent
Changes due to share exchange
Purchase of treasury stock
Disposal of treasury stock
Changes in shares of parent
arising from transactions
with non-controllinginterest
Net changes of items otherthan shareholders’equityTotal changes during the fiscal
year
Balance at the end of the fiscal
year

66,41081,801

998,405(73,785)(10,717)
66,41081,8019

9987,688

1,072,832(10,717)(73,785)

1,062,115(38,195)

18(38,195)

94,273

94,273

214

5,589(11,241)00(11,690)

5,804(11,241)
0(11,690)9(11,465)

56,077(5,651)

38,96966,41970,335

1,043,766(79,436)

1,101,084[English Translation]
60

(Millions of Yen)
Accumulated other comprehensive income (losses)
Total
Unrealized gains Deferred gains

Balance at the beginning of the
fiscal year
Cumulative effects of changes inaccounting policies
Restated balance
Changes during the fiscal year:
Issuance of new stocks
Cash dividends
Net income attributable toowners of the parent
Changes due to share exchange
Purchase of treasury stock
Disposal of treasury stock
Changes in shares of parent
arising from transactions
with non-controllinginterest
Net changes of items otherthan shareholders’ equity
Total changes during the fiscal
year
Balance at the end of the fiscal
year

Foreign

Remeasure-accumulated

currency

ments of definedother(losses) on(losses) on

translation

benefit plans,

comprehen-securities

hedgesadjustments

net of taxes

sive income

Noncontrolling interests Total net assets

22,122(11)(17,011)

4,247

9,346

147,645

1,229,824

-

(625)

(11,343)

22,122(11)(17,011)

4,247

9,346

147,019

1,218,481
18(38,195)
94,273
5,804(11,241)
0(11,690)(1,901)

4

11,384

2,618

12,105(13,519)(1,414)(1,901)

4

11,384

2,618

12,105(13,519)

37,555

20,220(6)(5,627)

6,865

21,451

133,499

1,256,036[English Translation]
61

Non-Consolidated Balance Sheet(As of March 31, 2022)(Millions of Yen)ITEM
ASSETSAMOUNTITEM
LIABILITIESAMOUNT

Current assets:
Cash on hand and in banks
Cash deposits for armored car
services
Notes receivable
Due from subscribers
Accounts receivable-trade andcontract assets
Receivables – other
Merchandise
Supplies
Prepaid expenses
Short-term loans receivable
Other
Allowance for doubtful accounts

334,790 Current liabilities:
227,828
Accounts payable
33,777
Bank loans
Lease obligations
363
Payables – other
17,890
Payables – construction
9,777
Accrued income taxes
Accrued consumption taxes
4,375
Accrued expenses
7,328
Deposits received for armored car
2,507
services
8,674
Deferred revenue
14,420Accrued bonuses
7,887
Other
(41)

106,496
3,676
17,467275
16,445
3,530
11,1893,489
779
16,313Fixed assets:
Tangible assets:
Buildings and improvements
Automobiles
Security equipment and control
stations
Machinery and equipment
Tools, furniture and fixtures
Land
Construction in progress
Other

658,710 Long-term liabilities:
117,553
Lease obligations
16,534
Guarantee deposits received
588
Long-term deferred revenue
68,972
Accrued pension and severance
costs
90
Other
4,071
22,230
3,542
Total liabilities
1,521
NET ASSETS
10,792
7,137 Shareholders’ equity:
Common stock
3,655
Capital surplus:
Additional paid-in capital
530,365
Other capital surplus
23,047Retained earnings:
393,659
Legal reserve
Other retained earnings:
2,179
Reserve for systemdevelopments
51,307
General reserve
7,565
Accumulated earnings carried
11,721
forward29,605
Common stock in treasury, at cost
5,548
4,370 Valuation, translation
adjustments and others:
2,234
Unrealized gains on securities(874)

27,054
3,691
15,975
6,059
1,037

Intangible assets:
Software
Other
Investments and others:
Investment securities
Investment securities insubsidiaries and affiliates
Investments in subsidiaries andaffiliates
Long-term loans receivable
Lease deposits
Long-term prepaid expenses
Prepaid pension and severance
costs
Deferred income taxes
Insurance funds
Other
Allowance for doubtful accounts

TOTAL ASSETS

993,501[English Translation]
62

Total net assets
TOTAL LIABILITIESAND NET ASSETS

22,963
6,432
3,932

291

133,551

853,900
66,41986,52883,0953,432
780,388
9,028
771,360
800
2,212
768,348(79,436)
6,049
6,049

859,950
993,501

Non-Consolidated Statement of Income(Fiscal Year from April 1, 2021 to March 31, 2022)(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
Other
Ordinary profit
Extraordinary profit:
Gain on sales of investment securities
Other
Extraordinary losses:
Loss on revaluation of investment securities insubsidiaries and affiliates
Loss on disposal of intangible assets
Loss on revaluation of investment securities
Other
Income before income taxes
Income taxes - current
Income taxes - deferred
Net income[English Translation]
63

395,181234,703
160,478
81,77578,703688
17,421
762
144
1,609
726

18,872

2,480
95,094

545
3

548

772
554
204
89
21,7202,415

1,621
94,021
24,13569,885

Non-Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2021 to March 31, 2022)(Millions of Yen)
Shareholders’ equity
Capital surplus
Common stock Additional paidin capital
Balance at the beginning of the
fiscal year
Cumulative effects of changes
in accounting policies
Restated balance
Changes during the fiscal year:
Issuance of new stocks
Cash dividends
Net income
Changes due to share exchange
Purchase of treasury stock
Disposal of treasury stock
Net changes of items otherthan shareholders’ equity
Total changes during the
fiscal year
Balance at the end of the
fiscal year

Other capitalsurplus

Total capitalsurplus66,41083,086

0

83,08766,41083,086

0

83,087

9

9

9

3,431

3,431

0

0

9

9

3,431

3,441

66,41983,095

3,432

86,528(Millions of Yen)
Shareholders’ equity
Retained earnings
Other retained earnings

Balance at the beginning of
the fiscal year
Cumulative effects of changes
in accounting policies
Restated balance
Changes during the fiscal year:
Issuance of new stocks
Cash dividends
Net income
Changes due to share exchange
Purchase of treasury stock
Disposal of treasury stock
Net changes of items otherthan shareholders’ equity
Total changes during the
fiscal year
Balance at the end of the fiscal
year

Legal
reserve

Reservefor systemdevelopments

Generalreserve

9,028

800

2,212

9,028

800

Accumulated Total retained
earnings
earnings
carriedforward2,212

744,495

756,535(7,836)(7,836)736,658

748,698(38,195)
69,885(38,195)
69,885---31,69031,690

9,028

800

2,212

768,348780,388[English Translation]
64

(Millions of Yen)
Shareholders’ equity

Valuation, translation
adjustments and others

Common stock
Total
Unrealizedin treasury, at shareholders’ gains (losses)
costequityon securities

Balance at the beginning of the
fiscal year
Cumulative effects of changes
in accounting policies
Restated balance
Changes during the fiscal year:
Issuance of new stocks
Cash dividends
Net income
Changes due to share exchange
Purchase of treasury stock
Disposal of treasury stock(73,785)

832,248(73,785)

824,411

5,589(11,241)0

18(38,195)
69,885
9,021(11,241)0

Totalvaluation,translation
adjustments
and others

Total net
assets

6,313

6,313

838,562

6,313

6,313

830,725(7,836)

Net changes of items otherthan shareholders’ equity
Total changes during the fiscal
year(5,651)

Balance at the end of the fiscal
year(79,436)[English Translation]
65(7,836)18(38,195)
69,885
9,021(11,241)
0
(264)

(264)

(264)

29,488

(264)

(264)

29,224

853,900

6,049

6,049

859,950

Certified Copy of the Accounting Auditor’s Report (Consolidated)
Independent Auditor’s Report
May 20, 2022
The Board of Directors of SECOM Co., Ltd.:KPMG AZSA LLC
Tokyo Office, Japan
Michitaka Shishido (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Kiyoyuki Sakurai (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Shuji Ezawa (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
OpinionWe have audited the consolidated financial statements, which comprise the consolidatedbalance sheet, the consolidated statement of income, the consolidated statement ofchanges in net assets and the related notes of SECOM Co., Ltd. (“the Company”) and its
consolidated subsidiaries (collectively referred to as “the Group”), as at March 31, 2022
and for the year from April 1, 2021 to March 31, 2022 in accordance with Article 444-4of the Companies Act.
In our opinion, the consolidated financial statements referred to above present fairly, inall material respects, the consolidated financial position and the results of operations of
the Group for the period, for which the consolidated financial statements were prepared,in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted inJapan. Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Consolidated Financial Statements section of ourreport. We are independent of the Group in accordance with the ethical requirementsthat are relevant to our audit of the consolidated financial statements in Japan, and wehave fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.

[English Translation]
66

Emphasis of Matter
We draw attention to Notes to Significant Subsequent Events to the consolidated
financial statements, which describes the Company entered into the share purchaseagreement on May 12, 2022 to acquire 55.1% shares of the common shares outstandingof SENON LIMITED on July 1, 2022.
Our opinion is not modified in respect of this matter.
Other Information
The other information comprises the business report and its supplementary schedules.
Management is responsible for the preparation and presentation of the otherinformation. Corporate auditors and the board of corporate auditors are responsible foroverseeing the directors’ performance of their duties with regard to the design,
implementation and maintenance of the reporting process for the other information.
Our opinion on the consolidated financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other information
is materially inconsistent with the consolidated financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and Corporate Auditors and the Board of
Corporate Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated
financial statements in accordance with accounting principles generally accepted inJapan, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible forassessing the Group’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern in accordance with accounting principles generally
accepted in Japan.
Corporate auditors and the board of corporate auditors are responsible for overseeing
the directors’ performance of their duties with regard to the design, implementation andmaintenance of the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated
financial statements as a whole are free from material misstatement, whether due tofraud or error, and to issue an auditor’s report that includes our opinion. Misstatements
can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of these consolidated financial statements.

[English Translation]67

As part of our audit in accordance with auditing standards generally accepted in Japan,
we exercise professional judgment and maintain professional skepticism throughout theaudit. We also: Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The selection and application of audit procedures
depends on the auditor’s judgment.
 Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, while the objective of theaudit is not to express an opinion on the effectiveness of the Group’s internal control.
 Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
 Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s
ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related
disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
 Evaluate whether the presentation and disclosures in the consolidated financial
statements are in accordance with accounting standards generally accepted in Japan,
the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial
statements represent the underlying transactions and events in a manner that achieves
fair presentation.

 Obtain sufficient appropriate audit evidence regarding the financial information of
the entities or business activities within the Group to express an opinion on the
consolidated financial statements. We are responsible for the direction, supervisionand performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with corporate auditors and the board of corporate auditors regarding,among other matters, the planned scope and timing of the audit, significant audit
findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide corporate auditors and the board of corporate auditors with a statementthat we have complied with relevant ethical requirements regarding independence, andcommunicate with them all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, related safeguards.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the
Company and its subsidiaries which are required to be disclosed pursuant to theprovisions of the Certified Public Accountants Act of Japan.

[English Translation]
68Notes to the Reader of Independent Auditor’s Report:
The Independent Auditor’s Report herein is the English translation of the Independent
Auditor’s Report as required by the Companies Act for the conveniences of the reader.

[English Translation]
69

Certified Copy of the Accounting Auditor’s Report (Non-Consolidated)
Independent Auditor’s Report
May 20, 2022
The Board of Directors of SECOM Co., Ltd.:KPMG AZSA LLC
Tokyo Office, Japan
Michitaka Shishido (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Kiyoyuki Sakurai (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Shuji Ezawa (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
OpinionWe have audited the financial statements, which comprise the balance sheet, thestatement of income, the statement of changes in net assets and the related notes, andthe accompanying supplementary schedules (“the financial statements and theaccompanying supplementary schedules”) of SECOM Co., Ltd. (“the Company”) as at
March 31, 2022 and for the year from April 1, 2021 to March 31, 2022 in accordancewith Article 436-2-1 of the Companies Act.
In our opinion, the financial statements and the accompanying supplementary schedules
referred to above present fairly, in all material respects, the financial position and theresults of operations of the Company for the period, for which the financial statements
and the accompanying supplementary schedules were prepared, in accordance withaccounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted inJapan. Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements and the Accompanying
Supplementary Schedules section of our report. We are independent of the Company inaccordance with the ethical requirements that are relevant to our audit of the financial
statements in Japan, and we have fulfilled our other ethical responsibilities inaccordance with these requirements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

[English Translation]
70

Emphasis of Matter
We draw attention to Notes to Significant Subsequent Events to the financial
statements, which describes the Company entered into the share purchase agreement on
May 12, 2022 to acquire 55.1% shares of the common shares outstanding of SENON
LIMITED on July 1, 2022.
Our opinion is not modified in respect of this matter.
Other Information
The other information comprises the business report and its supplementary schedules.
Management is responsible for the preparation and presentation of the otherinformation. Corporate auditors and the board of corporate auditors are responsible foroverseeing the directors’ performance of their duties with regard to the design,
implementation and maintenance of the reporting process for the other information.
Our opinion on the financial statements and the accompanying supplementary schedules
does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements and the accompanying
supplementary schedules, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with thefinancial statements and the accompanying supplementary schedules or our knowledge
obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and Corporate Auditors and the Board of
Corporate Auditors for the Financial Statements and the Accompanying
Supplementary Schedules
Management is responsible for the preparation and fair presentation of the financial
statements and the accompanying 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 accompanying supplementary schedules that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements and the accompanying supplementary schedules,
management is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern in accordance withaccounting principles generally accepted in Japan.
Corporate auditors and the board of corporate auditors are responsible for overseeing
the directors’ performance of their duties with regard to the design, implementation andmaintenance of the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements and the
Accompanying Supplementary Schedules
Our objectives are to obtain reasonable assurance about whether the financial statements
and the accompanying supplementary schedules as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that[English Translation]
71

includes our opinion. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these financial
statements and the accompanying supplementary schedules.
As part of our audit in accordance with auditing standards generally accepted in Japan,
we exercise professional judgment and maintain professional skepticism throughout theaudit. We also: Identify and assess the risks of material misstatement of the financial statements andthe accompanying supplementary schedules, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The selection andapplication of audit procedures depends on the auditor’s judgment.
 Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, while the objective of theaudit is not to express an opinion on the effectiveness of the Company’s internal
control.
 Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
 Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the
Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to therelated disclosures in the financial statements and the accompanying supplementaryschedules or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’sreport. However, future events or conditions may cause the Company to cease tocontinue as a going concern.

 Evaluate whether the presentation and disclosures in the financial statements and theaccompanying supplementary schedules are in accordance with accounting standards
generally accepted in Japan, the overall presentation, structure and content of thefinancial statements and the accompanying supplementary schedules, including thedisclosures, and whether the financial statements and the accompanying
supplementary schedules represent the underlying transactions and events in amanner that achieves fair presentation.
We communicate with corporate auditors and the board of corporate auditors regarding,among other matters, the planned scope and timing of the audit, significant audit
findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide corporate auditors and the board of corporate auditors with a statementthat we have complied with relevant ethical requirements regarding independence, andcommunicate with them all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, related safeguards.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the
Company which are required to be disclosed pursuant to the provisions of the Certified
Public Accountants Act of Japan.

[English Translation]
72

Notes to the Reader of Independent Auditor’s Report:
This is an English translation of the Independent Auditor’s Report as required by theCompanies Act of Japan for the conveniences of the reader.

[English Translation]
73

Certified Copy of the Audit & Supervisory Board’s Report
Audit Report
Mr. Ichiro Ozeki
President and Representative Director
SECOM Co., Ltd.

May 20, 2022

Audit & Supervisory Board of
SECOM Co., Ltd.
Takayuki Ito (Seal)
Audit & Supervisory Board
Member (Full-time)
Koji Kato (Seal)
Audit & Supervisory Board
Member (Full-time)
Hideki Kato (Seal)
Outside Audit & Supervisory
Board Member
Makoto Yasuda (Seal)
Outside Audit & Supervisory
Board Member
Setsuo Tanaka (Seal)
Outside Audit & Supervisory
Board Member

The Audit & Supervisory Board has received the audit reports of theperformance of duties of the Directors during the 61st business term from April
1, 2021 through March 31, 2022 from each of the Audit & Supervisory Board
Members. After deliberating such reports, we have prepared this Audit Reportand report as follows:
1. Method and Details of Audit Performed by Audit & Supervisory Board

Members and the Audit & Supervisory Board(1) The Audit & Supervisory Board has established the audit policy and audit
plan for the current fiscal year, received reports on the status and results ofaudits 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.

[English Translation]74

(2) Each of the Audit & Supervisory Board Members, in accordance with the
Audit & Supervisory Board audit standards determined by the Audit &Supervisory Board, and following the audit policy, audit plan, etc. worked tocommunicate with Directors, the internal audit division and other employees,
etc., and along with making efforts to gather information and establish theaudit environment, performed the audit using the following methods.
(i) Each Audit & Supervisory Board Member attended the meetings of theBoard of Directors and other important meetings, received reports fromthe Directors and other managers, etc. on their duties, requested
explanations when necessary, inspected documents concerning matterssuch as important decisions, and investigated the conditions of thebusiness and financial conditions at the head office and the principal
offices. Also, each Audit & Supervisory Board Members worked tocommunicate and exchange information with Directors and Audit &Supervisory Board Members of subsidiaries, receiving reports fromsubsidiaries when necessary.
(ii) The Audit & Supervisory Board Members, on a regular basis, received
reports from Directors and employees, etc. on the establishment andoperation of the system (internal control system) based on the resolutionof the Board of Directors as stipulated in Article 100, Paragraph 1 orParagraph 3 of the Companies Act Enforcement Order to ensure thesystem under which the execution of duties by Directors is ensured tocomply with laws and regulations and the Articles of Incorporation andto 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 explanationfrom them, and expressed opinions when necessary.
(iii) The Audit & Supervisory Board Members received reports from Directors,
etc. and the Accounting Auditor on the status of discussions between themand the status of evaluation and audit of the internal control on financial
reporting, and requested explanations as necessary.
(iv) In addition to monitoring and examining whether the Accounting Auditor
maintained independence and performed auditing appropriately, theAudit & Supervisory Board Members received reports from the
Accounting Auditor on the execution of their duties and requested
explanations when necessary. The Audit & Supervisory Board received
notice from the Accounting Auditor that “The systems for ensuring theproper execution of duties” (set forth in each Item of Article 131 of theOrdinance for Corporate Accounting) is organized in accordance with the“Standards for Quality Control of Audit” (Business Accounting Council,
October 28, 2005) and other relevant standards, and sought explanations
when necessary.

[English Translation]
75

Based on the above methods, the Audit & Supervisory Board has
considered the Business Report and its supplementary schedules, the financial
statements (balance sheet, statement of income, statement of changes in net assets
and related notes) and its 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 thecondition of the Company in accordance with laws and regulations and the
Articles of Incorporation of the Company.
ii) We have determined that there were no serious occurrences of misconduct
or violations of any laws or regulations or the Articles of Incorporation of
the Company by any of the Directors in carrying out their duties.
iii) We believe the contents of the resolution of the Board of Directors
regarding the internal control system are appropriate. We found no mattersto note regarding the execution of duties of Directors regarding the internal
control system, as well as the internal control system regarding financial
reporting.
(2) Result of audit of financial statements and supplementary schedules

In our opinion, the audit procedures and audit results of the Accounting
Auditor KPMG AZSA LLC are appropriate.
(3) Result of audit of consolidated financial statements

In our opinion, the audit procedures and audit results of the Accounting
Auditor KPMG AZSA LLC are appropriate.
Notes to the Reader of Audit Report:
This is an English translation of the Audit Report as required by the Companies Act ofJapan for the conveniences of the reader.

End[English Translation]76