A MESSAGE TO SHAREHOLDERS

Consolidated Operating Results
In the fiscal year ended March 31, 2009, a harsh economic environment persisted inJapan as the impact of the financial crisis precipitated by the U.S. subprime loan
debacle spread, triggering sharp declines in the economies of countries around theworld and leading to deteriorating corporate profits and a decline in private-sector
capital investment, as well as by worsening unemployment and falling personal
income, which hampered consumer spending.
In this environment, we continued to respond to customers’ needs with the aimof realizing our Social System Industry vision. To this end, we stepped up efforts toprovide high-grade products and services suited to customer needs in our core
security services business, as well as in our other businesses, namely, fire protection
services, medical services, insurance services, geographic information services, realestate development and sales, and information and communication related andother services.
While net sales and operating revenue increased steadily in the security services,
fire protection services, medical services and geographic information services businesses, declines were reported in the insurance services business, due to an increasein loss on other-than-temporary impairment of investment securities reflecting a stagnant stock market; the real estate development and sales business, owing to flagging
conditions in the condominium market; and the information and communication
related and other services business, a consequence of efforts to scale back lowermargin services. Consolidated net sales and operating revenue slipped 2.5%, or¥17.9 billion, to ¥688.8 billion. The decline in net sales and operating revenue,
together with the write-down on real estate inventories in the real estate development and sales business, pushed operating income down 27.4%, or ¥28.9 billion, to¥76.7 billion. Net income fell 50.5%, or ¥31.2 billion, to ¥30.6 billion, owing mainly
to an increase in loss on other-than-temporary impairment of investment securities.
Having judged the negative turn in our performance to be a transitory phenomenon, we prioritized solid returns to shareholders when determining dividends. At thegeneral shareholders’ meeting on June 25, 2009, shareholders approved a resolution
to pay annual cash dividends of ¥85.00 per share, the same amount as in the previous
fiscal year. With the aim of enhancing returns, we also repurchased ¥30.0 billion
worth of treasury stock during the period under review.

Makoto Iida
Founder

Understanding and Responding to Changes in the Operating Environment
In the security services business, the increasing frequency of malicious and cunning
crimes and changing social imperatives have led to increasingly diverse and sophisticated safety and security needs. As a consequence, demand for security services isexpanding. At the same time, difficult economic conditions have raised customers’
cost consciousness, prompting an increasing need for products and services thatdeliver better quality and cost performance than ever before.

4SECOM CO., LTD.

Annual Report 2009

In the market for commercial security services, we took steps to reinforce sales
activities with the aim of increasing our market share. While we have always promoted ambitious marketing initiatives, there are still a number of industries andcustomer groups for which our efforts have been insufficient and thus there arepotential customer groups which remain untapped. As always, our basic approach isfor SECOM sales personnel to visit each potential customer in person, thus ensuring
our ability to accurately grasp needs and respond with appropriate product and service proposals, thereby leading to new contracts. For existing customers, we continue
to offer distinctive, comprehensive packages of products and services—including
building facility inspection and maintenance—tailored to customers’ needs. Owing toevolving social conditions and flagging business conditions, shops and building tenants today move location with increasing frequency. In response to this trend, wecontinue to capitalize on our nationwide network of offices to enable customers
changing premises to transfer their security services contracts to their new locations,as well as to encourage new tenants to sign contracts.
In the home security market, despite worsening conditions in the housing market
and shrinking sales of built-for-sale single-family dwellings, residential customers continue to seek higher levels of security, prompted by the rising incidence of vicious andcunning crimes targeting homes and the increasing prevalence of home security systems. Here, too, we continue to focus on increasing the number of contracts for
SECOM Home Security systems by strengthening our sales efforts. A recent partial
revision of Japan’s Fire Services Act has made it mandatory for new homes to installfire alarm systems. By 2011, local authorities will enact corresponding ordinances
obliging existing homes to do the same. Taking advantage of this change, we aretaking decisive steps to market Home Fire Sensor, which can be connected to SECOM
Home Security systems, to existing residential customers. We have also marketed fire
insurance to SECOM Home Security subscribers, capitalizing on the fact that suchcustomers are eligible for discounts on fire insurance premiums because security
systems reduce the risk of fire. To accommodate customers’ demand for even greater
security, we have also reinforced the marketing of a variety of security products thatcan be connected to SECOM home security systems, including high-impact, breakage-resistant window glass and our External Image Monitoring System. We are also
expanding and enhancing the popular SECOM Home Service, a suite of lifestyle support services through which we assist SECOM Home Security subscribers in resolving
everyday problems.
We are gradually increasing our presence in overseas security services markets,particularly in other parts of Asia. In the PRC, which continues to see considerable
economic growth, we offer SECOM security services in key coastal cities and surrounding urban areas. With the aim of gaining increased market acceptance, we arealso expanding into inland areas. In Southeast Asia, where demand for security services is increasing in tandem with economic growth, we are working to further bolster
our operations by establishing new bases and expanding our business foundation.

Shohei Kimura
ChairmanKanemasa Haraguchi
President and Representative Director

SECOM CO., LTD.

Annual Report 20095

A MESSAGE TO SHAREHOLDERS

To realize our Social System Industry vision, we are also stepping up efforts toexpand businesses other than security services. In the area of fire protection services,
we continue to see brisk sales of fire protection systems in the renovations market. In
recent years, demand has grown in the renovations market as building owners, anxious to minimize costs, increasingly choose to renovate rather than rebuild. Subsidiary
Nohmi Bosai Ltd., a leading name in the fire protection market, continues to draw on
its outstanding reputation and accumulated expertise to advise building owners on
the most appropriate choices for their needs.
In medical services, we are enhancing our various home medical services, which
include home nursing and pharmaceutical dispensing and home delivery services, aswell as distinctive and highly innovative residences for seniors. In June 2009, weopened Comfort Hills Rokko, a new residence that capitalizes on our accumulated
expertise and the first such facility in Japan to be linked directly to a general hospital.
In insurance services, we expanded marketing efforts for our unique non-life
insurance offerings. These include fire insurance policies for businesses and homesthat offer discounts on premiums to customers that have installed on-line security
systems, recognizing such systems as a risk-mitigating factor; a comprehensive automobile insurance policy that encompasses support services provided by our emergency response personnel; and MEDCOM, an unrestricted cancer treatment policy.
With the number of contracts for fire insurance and MEDCOM continuing toincrease, we will take further steps to reinforce sales.
In geographic information services, we have built on our accumulated geographic
information system (GIS) surveying capabilities to generate geospatial data, which we
supply to public- and private-sector customers. We have also obtained exclusive rights
in Japan and nonexclusive rights worldwide to sell image data generated by a certain
commercial satellite, and have launched this as a new business in Japan and overseas.
Our real estate development and sales business involves the development and saleof condominiums equipped with advanced security and disaster prevention systems.
In response to flagging demand for condominiums in the period under review, wesought to bolster sales and reduce inventories by restricting our selection of properties
for development and sale and revising sales prices.
Our information and communication related and other services business focuseson comprehensive information and network services, encompassing information
security and disaster response support services. We recently added “new strains ofinfluenza” to the list of applicable situations for the SECOM Safety Confirmation
Service, which is designed to help companies confirm the safety of their employees in
the aftermath of a major disaster.
Realizing the Social System Industry Vision
Having positioned the security services business as our core focus and expanded ourportfolio to include fire protection services, medical services, insurance services, geographic information services, real estate development and sales, and information and6SECOM CO., LTD.

Annual Report 2009

communication related and other services, we are developing and providing products
and services that deliver greater added value by promoting close collaboration among
these businesses. Our quest to realize our Social System Industry vision involves thecreation of a comprehensive framework of distinctive products and services that benefit society. To this end, we will continue striving to reinforce our grasp of changing
social imperatives and the needs of customers for security and peace of mind, withthe aim of offering products and services that deliver increased value. Through theseefforts, we will contribute to the creation of a society in which all people feel safe
and at ease.
Overseas, we will leverage expertise accumulated in Japan to provide security
services of the same high quality as we do in the domestic market customized tomeet different national and regional market needs.
In line with our ultimate objective as a corporate entity, which is to contribute tosociety through our business activities, we are guided by our original corporate philosophy, which emphasizes challenging accepted norms to create innovative and better-suited solutions, and striving to do what is appropriate, that is, judging thelegitimacy of our actions based on whether they are just and fair and benefit society.
Our continued growth to date is attributable to our determination, guided by thisphilosophy, to proceed forward boldly, not fearing change but rather capitalizing on
it to cultivate innovative new businesses. Our corporate message—“Providing reliable
peace of mind”—encapsulates our mission to develop and offer products and services that promote a level of safety worthy of the trust of our customers, thereby
enabling us to realize our Social System Industry vision. The management andemployees of SECOM thus pledge to work as one to continue achieving growth.
In these and all of our endeavors, we look forward to the continuous support ofour shareholders.
June 25, 2009

Makoto Iida
Founder

Shohei Kimura
ChairmanKanemasa Haraguchi
President and Representative Director

SECOM CO., LTD.

Annual Report 20097