SECOM REPORT

2020

Year ended March 31, 2020

ProfileE

stablished in 1962, SECOM is recognized as Japan’s first security services provider. Since then, the Company has strived
to create services and systems that deliver safety and peace of mind, as well as make life more comfortable and­convenient, whenever and wherever necessary, for anyone and everyone, and has pushed forward with efforts torealize its Social System Industry vision, which describes a framework of distinctive, integrated services and systems. Today,the business portfolio of SECOM, which comprises the parent company and the companies of the SECOM Group, encompasses security services, fire protection services, medical services, insurance services, geospatial information services, businessprocess outsourcing and information and communications technology (BPO and ICT) services, and real estate and otherservices.
To accelerate the realization of its Social System Industry vision, in May 2017 SECOM formulated the SECOM Group’s Vision
for 2030. Guided by this vision, the Group is working to create the ANSHIN* Platform, a service infrastructure designed toprovide peace of mind to people in their everyday lives, as well as to society as a whole. Through such efforts, we continue
striving to grow together with society.
SECOM has also expanded outside Japan. Currently active in 17 countries and territories, the Group works to provide­distinctively SECOM security services, fire protection services, medical services, geospatial information services, and BPO andICT services customized to reflect local needs and sensibilities.
*ANSHIN is Japanese for “peace of mind.”Contents
1

Corporate Philosophy

Financial Information and References

2

Financial Highlights

57

Financial Review

4

A Message to Shareholders

62

Consolidated Financial Statements

12

The Path to Value Creation

69

Other Financial Data

14

SECOM at a Glance73

Corporate Information

16

The Value Creation Process

77

Regarding Publication of SECOM Report 2020

18

SECOM’s Core Competitive Advantages

19

The SECOM Group’s Vision for 2030

23	Initiatives Aimed at Achieving the Goals of the SECOM
Group Road Map 2022
24

SECOM Today

39

Sustainability

40

ESG Initiatives

56

SASB Index

SECOM REPORT 2020

Corporate Philosophy

MissionOur role and raison d’êtreWe see our mission as being to help achieve a society free from concerns.

MissionAccordingly, throughout our history we have sought to create services andsystems that benefit society as a whole.

VisionOur ideal view of SECOM in the future

VisionIn 1989, we declared our commitment to the Social System Industry.
We continue to promote bold initiatives with the aim of realizing this vision.

Values
Our shared beliefs and guiding principles
Since our establishment, we have adhered to SECOM’s Philosophy, which

Valuesemphasizes contributing to society through our business activities. Ideas andprinciples of conduct, including this philosophy, which are shared by all employees,
guide everything we do and have nurtured a uniquely SECOM identity thatremains crucial to our ability to achieve our mission.

The Social System Industry
Our Social System Industry vision describes a framework of innovative and integrated services and systems that deliver safety, peace ofmind, comfort and convenience.

SECOM’s Philosophy
SECOM’s Philosophy has been passed down through generations of employees since our establishment and continues to be the driving force
behind all we do. This philosophy emphasizes a refusal to be content with the status quo and a commitment to doing what is appropriate.
The first element expresses our determination to provide innovative services and systems by challenging accepted norms, while the secondmeans judging the legitimacy of our actions by examining whether they are just, fair and beneficial not only to SECOM but to society as awhole. We have published SECOM’s Philosophy in the form of a handbook, which has been distributed to employees in Japan and overseas,
and continue to capitalize on training and other opportunities to share the philosophy and advance its implementation.

SECOM REPORT 20201

Financial Highlights

U.S. GAAPSECOM CO., LTD. and Subsidiaries

In millions of yen

In thousands of U.S. dollars

For the years ended/as of March 31

Years ended March 31

Year ended March 31

Net sales and operating revenue
Operating income
Net income attributable to SECOM CO., LTD.
Total assets
Total SECOM CO., LTD. shareholders’ equity

2020

2019

2018

2020

¥1,160,707
130,564
87,1362,081,120
1,088,738¥1,111,600
123,71189,686
1,879,710
1,044,184¥1,082,792
140,11196,623
1,838,945
1,000,277$10,648,688
1,197,835
799,413
19,092,843
9,988,423

In yenIn U.S. dollars¥ 442.70
150.0075.00
4,582.96$ 3.66
1.56
0.78
45.76

Per share of common stock:
Net income attributable to SECOM CO., LTD.
Cash dividends(Interim dividend)
SECOM CO., LTD. shareholders’ equity¥ 399.23
170.0085.00
4,988.25¥ 410.91
160.0080.00
4,784.12

Notes: 1. Yen amounts have been translated into U.S. dollars, solely for the convenience of the reader, at the approximate rate of ¥109=US$1, the rate
prevailing on the Tokyo Foreign Exchange Market on March 31, 2020.
2. Net income attributable to SECOM CO., LTD. per share of common stock is based on the average number of shares outstanding during each period,
less treasury stock.
3. SECOM CO., LTD. shareholders’ equity per share of common stock is based on the number of shares outstanding at the end of each period, lesstreasury stock.
4. Cash dividends per share of common stock are based on dividends approved and paid in each fiscal year. At the general shareholders’ meeting heldon June 25, 2020, approval was granted for a proposal to pay a year-end dividend of ¥85.00 for the year ended March 31, 2020.

Net income attributable to
SECOM CO., LTD. (U.S. GAAP)(In billions of yen)

100
91.4

80

80.2

96.6

84.1

89.7

87.1

2019

2020

60

40

20

0
2015

2016

2017

2018

Note: In the year ended March 31, 2020, net income attributable to SECOM CO., LTD., decreased ¥2.6 billion, to ¥87.1 billion, despite operating income
growth led by the fire protection services segment. This was primarily due to a loss on private equity investments, compared with a gain on suchinvestments in the previous fiscal year, and an increase in income taxes that reflected a larger reversal of the valuation allowance in the preceding period.
In the year ended March 31, 2019, net income attributable to SECOM CO., LTD., was down ¥6.9 billion, to ¥89.7 billion. Principal factors contributing
to this result included the application of a new accounting standard whereby gains or losses on equity investments are now charged to income for theperiod, which resulted in an increase in loss on other-than-temporary impairment of investment securities; investments to reinforce SECOM’s operating
foundation with the aim of ensuring sustainable growth; and the impact of multiple major natural disasters on results in the insurance services segment.
In the year ended March 31, 2018, net income attributable to SECOM CO., LTD., advanced ¥5.2 billion, to ¥96.6 billion. This result was attributable tohigher operating income in six segments, including security services.

2

SECOM REPORT 2020

Pursuant to the applicable Japanese law, SECOM is required to publish results in line with accounting principles generally accepted in Japan(Japanese GAAP). Key financial highlights calculated using Japanese GAAP are shown below for reference.

Japanese GAAPSECOM CO., LTD. and Subsidiaries

In millions of yen

In thousands of U.S. dollars

For the years ended/as of March 31

Years ended March 31

Year ended March 31

Revenue
Operating profit
Ordinary profit
Net income attributable to owners of the parent
Total assets
Total net assets

2020

2019

2018

2020

¥1,060,070
142,858
151,356
89,0801,815,121
1,172,494¥1,013,823
130,213
144,889
92,0091,765,105
1,125,954¥ 970,624
135,448
144,318
86,993
1,715,123
1,081,213$ 9,725,413
1,310,624
1,388,587
817,248
16,652,486
10,756,826

In yenIn U.S. dollars¥ 398.58
155.0075.00
4,364.63$ 3.74
1.56
0.78
43.51

Per share of common stock:
Net income
Cash dividends(Interim dividend)
Net assets¥ 408.14
170.0085.00
4,742.58¥ 421.56
165.0080.00
4,562.08

Note: Cash dividends per share of common stock are based on dividends the record dates for which fall in each fiscal year. The consolidated dividend payout
ratio for the fiscal year ended March 31, 2020, was 41.7%.

Net income attributable toowners of the parent (Japanese GAAP)(In billions of yen)

100

80
75.4

77.0

2015

2016

84.2

87.0

2017

2018

92.0

89.1

2019

2020

60

40

20

0

SECOM REPORT 2020

3

A Message to Shareholders

We remain committed to developing and providing
high-value-added services that anticipate social change andenhancing productivity and profitability across the SECOM Group
with the aim of growing together with society.

Consolidated operating results
In the fiscal year ended March 31, 2020, the Japanesegeospatial information services, BPO and ICT services, andeconomy remained on a moderate upswing, underpinned

real estate and other services businesses. Thanks to increases

by favorable corporate earnings and improved employment

in all segments, consolidated net sales and operatinglevels. Nonetheless, uncertainties persisted regarding therevenue in the period under review advanced 4.4%, ortrade war between the United States and the People’s¥49.1 billion, to ¥1,160.7 billion. Despite the impact ofRepublic of China (PRC), fluctuations in global financial andforward-looking investments to reinforce the Company’s

capital markets, and the impact of natural disasters and an

operating foundation with the aim of ensuring sustainable

increase in Japan’s consumption tax rate. In recent months,

growth, operating income rose 5.5%, or ¥6.9 billion, to

the COVID-19 pandemic has further complicated the¥130.6 billion, bolstered by operating income growth insituation, inflicting significant damage on economies acrossthe fire protection services, BPO and ICT services, geospatial

the globe.

information services, real estate and other services, andAgainst this backdrop, we pressed forward with ongoing

medical services segments, as well as by a smaller operating

efforts to realize our Social System Industry vision, in line

loss in the insurance services segment. Nonetheless, owing towith our goal of providing safety and peace of mind, as wella ¥139 million loss on private equity investments, comparedas making life more comfortable and convenient, wheneverwith a ¥4.7 billion gain on such investments in the fiscal

and wherever necessary, for anyone and everyone. We

year ended March 31, 2019, together with an increase incontinued to concentrate on extending high-grade services

income taxes that reflected a larger reversal of the valuationand systems optimized to meet the increasingly diverse andallowance in the preceding period, net income attributable

sophisticated needs of customers in our security services,

to SECOM CO., LTD., decreased 2.8%, or ¥2.6 billion, tofire protection services, medical services, insurance services,¥87.1 billion.

Enhancing returns to shareholders

4

Seeing the provision of fair returns to shareholders as a

distribution of profits. At the Ordinary General Meeting

crucial management task, we determine our consolidatedof Shareholders on June 25, 2020, the payment of a year-

dividend payout ratio and internal reserves based on an

end dividend of ¥85.00 per share was approved. As aoverall assessment of efforts to expand our businesses

consequence, dividends for the full term—the record dates

and trends in our consolidated operating performance,

for which fall in the period under review—amounted toin line with our policy of ensuring a consistent and stable¥170.00, up ¥5.00 from the previous fiscal year.

SECOM REPORT 2020

Our mission and SECOM’s Philosophy
We see our mission as helping to achieve a society freesociety as a whole. The SECOM Group Code of Employee

from concerns. Guiding our efforts to fulfill this mission

Conduct is a compilation of standards developed based on

are SECOM’s Philosophy, which has been handed downbusiness management know-how accumulated throughsince our establishment and provides an essential spiritualinteraction with a diverse range of customers over our history

anchor for Group employees and the entire SECOM Group,that must be observed by all SECOM Group employees

and the SECOM Group Code of Employee Conduct, which

regardless of job or rank.

governs the actions of employees around the world.

By encouraging awareness of SECOM’s Philosophy and

SECOM’s Philosophy emphasizes a refusal to be content

adherence to the SECOM Group Code of Employee Conduct,with the status quo and a commitment to doing what is

we continue striving to foster a corporate climate andappropriate. The first element of the philosophy expresses

culture, as well as to motivate employees and encourage

our determination to offer innovative services and systems

them to approach their jobs in a manner that is consistentby challenging accepted norms, while the second calls forwith our commitment to doing what is appropriate. Throughjudging the legitimacy of our actions by examining whether

such efforts, we aim to ensure our ability to grow together

they are just, fair and beneficial not only to SECOM but towith society and further enhance our corporate value.

Megatrends, the evolution of social imperatives and initiatives to promote future growth
Megatrends such as demographic change, technologicalpromising human resources in the fiscal years ended Marchevolution, increasingly severe environmental issues, and31, 2019 and 2020, with the resulting increase in costs

the shift of the global economic center and urbanizationand expenses expected to have an impact on income ofcontinue to drive the evolution of social imperatives, as wellapproximately ¥10 billion annually.

as to amplify uncertainties in our operating environment.

Investment in systems centers on building next-generation

Accordingly, we are working to create the ANSHIN Platform, asecurity service core systems, as well as on introducing artifi-

service infrastructure designed to provide services that delivercial intelligence (AI), the Internet of Things (IoT) and robotic

seamless peace of mind to anyone and everyone, wheneverprocess automation (RPA). By developing new systems

and wherever necessary, guided by the SECOM Group’s

through such investments, we will seek to boost operational

Vision for 2030, which is to be a company that is capable ofquality and efficiency, as well as to improve capital efficiency.

delivering enduring peace of mind in an ever-changing society

At the same time, we are also pursuing a strategy of collabo-

by keeping abreast or where possible ahead of the times. In

ration, which emphasizes working with partner companies

May 2018, we devised the SECOM Group Road Map 2022 to

who share our philosophy. Initiatives such as SECOM Openclarify the principal challenges we must address by the fiscal

Lab enable us to capitalize on proposals for technologicalyear ending March 31, 2023, to achieve this vision, namely,

development and business collaboration from partner com-technological advances and a declining labor force.

panies in Japan and overseas in the development of various

The SECOM Group Road Map 2022 calls for focused,

SECOM products and services. In December 2019, we estab-

forward-looking investments in systems and humanlished the SECOM DESIGN FACTORY brand, which will beresources, that is, in initiatives aimed at leveraging advanced

used for collaborative projects that seek to accelerate growthtechnologies and ensuring SECOM remains the choice ofand the creation of customer and social value.

SECOM REPORT 2020

5

A Message to Shareholders

Investments in human resources centers on active efforts toour recruitment of frontline staff, as well as to raise employee

secure individuals with the high-level technical skills necessary

satisfaction, including through the creation of positive work

to work in IT, which will be key to our future growth, as wellenvironments, to bolster our competitiveness in the security

as individuals with the skills necessary to propel the expansion

services and other businesses.

of our overseas businesses. We are also investing to reinforce

Initiatives in the period under review and ongoing investments in growth
To achieve the goals of the SECOM Group Road Map 2022,

expanded use of financial technology (“fintech”), which

we continue to actively take advantage of new technologies

utilizes AI, IoT and other information technologies (IT)—and know-how to create and provide high-value-added

we sought to enhance our services to accommodate

services. In the fiscal year ended March 31, 2020, our efforts

increasingly diverse data center needs. To this end,

centered on expanding remote monitoring services that assist

we opened new data centers in Japan’s Kansai region.

with care for seniors living alone, reinforcing our BPO andAnticipating that many companies will accelerate efforts

ICT services business, strengthening our overseas operations

to make use of cloud-based and other external systems,

and improving productivity, making significant strides on all

we also resolved to enlarge our data center in Tokyo,

four fronts.

with new facilities scheduled to come online in 2025.

Recognizing that needs for assistance with care for seniors

We will continue to expand our data center business,

living alone vary depending on age group and family structure,recognizing the importance of disaster-resistant data

we added a number of new selections to our lineup of remote

centers as key components of a robust, resilient social

monitoring services. In addition to our mainstay SECOM

infrastructure.

Home Security and SECOM My Doctor Watch, available asAs Japan’s labor force continues to decline, the need toan option to SECOM Home Security subscribers, we beganrealize meaningful work style reforms and improve employee

offering the SECOM Senior Care Phone Service, an emergency

productivity will remain common themes for companies in all

monitoring service that combines emergency medical alert,

industries. Against this backdrop, we expect our BPO services

health consultation and safety confirmation functions, andbusiness to continue seeing stable growth. Accordingly, we

Mago Channel with SECOM, a new service that encourages

are stepping up the use of advanced technologies with thecommunication with parents living apart while providing

objective of offering distinctively SECOM BPO services that

unstructured monitoring. Looking ahead, we will further

deliver safety and peace of mind and in so doing respondcultivate demand from individual subscribers by creating andto demand arising from the need to rely on others, helping

introducing innovative services that make use of domestic andcustomers implement work style reforms and address theoverseas technologies.

challenges of a shrinking labor force.

To reinforce our BPO and ICT services business, we actively

6

Unlike in Japan, the population of which is expected toproposed such services to security services subscribers in line

continue shrinking, we expect our businesses in overseas

with our abiding resolve to extend distinctly SECOM services

markets to see high growth. We are thus taking strategicthat deliver safety and peace of mind. With the increased use

steps to strengthen our overseas operations with the goal ofof advanced digital technologies and cloud-based services—boosting business in overseas markets to 10% of consolidated

as evidenced by, for example, the financial services industry’s

revenue, up from the current level of approximately 4%. The

SECOM REPORT 2020

first of these was to launch projects in the PRC and Thailand

On another front, we are advancing the use of digital

aimed at developing systems suited to local needs thattools by upgrading our administrative IT systems andincorporate advanced technologies. In the PRC, we establishedreviewing diverse business processes to raise operating

an innovation center in Shanghai where young employees

efficiency and optimize costs. We have formulated anplay a central role in advancing the creation of new services,

investment and execution plan under which we are graduallyworking in collaboration with local companies. In Thailand,

introducing new systems and achieving greater operational

we launched home security services and are formulating

efficiency. This effort is spearheaded by our newly integrated

growth strategies based on meticulous market research. Going

and fortified corporate headquarters’ information systems

forward, we will explore ways to effectively apply know-

department. Reviews of business processes are conducted

how gained through these projects to efforts to expand ourby managers in each department, who are tasked with

operations in other countries and territories.

identifying issues and taking ownership thereof, thereby

To improve productivity, we are advancing initiatives thatreflect our belief that for SECOM digital transformation (DX)

improving employee awareness.
We are also working to improve productivity in themeans leveraging data and digital technologies to resolve

administration of SECOM Group companies. Having

issues challenging companies and society at large. Theseestablished solid communications with individual CEOs andinclude capitalizing on AI and fifth-generation (5G) mobile

managers, we are promoting the delegation of authority

communications technologies to increase customer value andfor day-to-day management, respecting each company’s

promote the active development and provision of innovative

strategies while facilitating agile, effective management

services and products that enhance the efficiency of frontlineof the Group as a whole. In addition, we are promoting

business processes. We are also introducing programs that

personnel exchanges within the SECOM Group and othermake use of virtual reality (VR) technologies into in-houseinitiatives aimed at strengthening efforts to improvetraining for frontline staff to improve safety and skills.

Groupwide competitiveness.

Thriving in a new normal
We continue to operate in an environment rocked by the

succeeded in minimizing the impact on our provision

evolution of social imperatives, driven by megatrends andof services. That said, the current crisis has given us aincreasing uncertainties. Conditions have been further

renewed awareness and we have embarked on a review ofcomplicated by COVID-19, which has brought fundamental

measures implemented with the aim of achieving further

changes to society, including business practices, consumer

improvements. For example, our sales efforts center on

behavior and work styles. With many of these changes likely

face-to-face interaction and close personal attention toto remain even after the pandemic has eased, companies

customers; however, once a state of emergency had beenmust respond effectively to survive and thrive in what isdeclared in Japan we had no choice but to refrain fromemerging as a “new normal.”face-to-face contact. This experience has prompted us to

Because our business portfolio is dominated by on-line

seek ways to create an even more stable business model by

security systems and other recurring revenue–based

promoting the development of products that do not rely on

businesses, the impact of COVID-19 on revenue overface-to-face sales and building an organized, proposal-based

the short term has been relatively minor. We have also

sales configuration that makes effective use of IT. We are also

SECOM REPORT 2020

7

A Message to Shareholders

leveraging experience gained through the promotion ofcloud-based services that ensure safe and secure operations.

teleworking and efforts to upgrade and further digitize our

These include employee attendance management andadministrative IT system.

safety confirmation services, services that fortify information

At the same time, new business practices and consumer
behavior are creating new market needs and opportunities
for us to contribute to society. For example, the need for

security and services that facilitate the digitization of
documentation.
In medical services, we saw the launch of online

security for offices has risen, owing to increases in the

diagnostics, an idea that had somewhat stalled for several

number of hours during which offices are empty or only

years. We expect the expansion of telemedicine using

minimally staffed because of efforts to rotate work schedules

advanced ICT to contribute substantially to society in theand disperse staff over multiple locations. In addition, withyears ahead.

a greater number of around-the-clock convenience stores

Although many measures implemented in recent months

shifting to shorter working hours, needs for security systems

were initially designed to curb the spread of COVID-

with monitoring for intruders, refrigerated storage malfunc-

19, recognition of the practicality and efficiency of newtions and fires is outpacing that for security systems designed

work arrangements has grown thanks to rapid advances

for stores that are always open, which center on emergency

in digitization and the use of ICT. This trend underscores

alerts and surveillance cameras. Given the higher risk of

expectations that new forms of economic and social activity

infection with cash, cashless payment is becoming moreand new lifestyles will emerge and represents the seed of awidely accepted, another trend that we must address.

wave of significant social change that has overtaken us in

In the market for home security services, requests thatpeople refrain from traveling and other factors made it

recent months.
Major disasters such as the COVID-19 pandemic can cause

difficult to visit parents and other family members living

anxiety and distress for homes, individuals, companies andapart, underpinning rising demand for services that assist

society as a whole, driving a desire for greater safety andwith care for seniors living alone. With more people working

peace of mind. Our business is built on the commitment andat home and attending online classes, we anticipate greater

efforts of each and every SECOM employee to remain closedemand for more functional home security, as well as new

to our customers and provide services that respond to theirdemand for services that facilitate the secure online ordering,needs, an approach that continues to earn customers’ trust.

delivery and receipt of food and other daily necessities.

We believe that we have a mission and a responsibility to

In the area of BPO and ICT services, we are seeing

stand at the forefront of this wave and play a vital part ingrowing demand for contact center services. In addition,

promoting social change.

the growing prevalence of telework is driving up needs for

Promoting environmental, social and governance (ESG)–related initiatives

8

Since our establishment, we have sought to fulfill ourare committed to delivering satisfaction and inspiration

responsibility to society through our business activities,

that exceed customers’ expectations. To bolster employees’

acknowledging the importance of sustainability for

motivation, we endeavor to encourage a managerial mind-

ourselves and for society. The key to our efforts to further

set, that is, to foster employees who understand ourenhance corporate value is having human resources who

mission and are capable of forming judgments and acting

SECOM REPORT 2020

independently. To this end, we seek to maximize employees’

long-term targets for the reduction of greenhouse gas

capabilities and encourage them to fulfill their potential byemissions. These initiatives earned designation by the Tokyo

creating a virtuous circle rooted in employee job satisfaction

prefectural government as a business demonstrating particu-

and stepping up the promotion of initiatives in line with ourlar excellence in the implementation of initiatives to counterTri-ion initiative, which seeks to ensure that SECOM’s

global warming. Seeking to further our goal of helping toPhilosophy fully penetrates every aspect of our operations.

achieve sustainability for society, in July 2019 we announced

Our core business is security services. As such, we

our support for the recommendations of the Task Force on

recognize the importance of governance, of each and every

Climate-related Financial Disclosures (TCFD), pledging toemployee discharging his or her duties in good faith andadhere to the TCFD’s framework for companies to disclosein keeping with the spirit of related laws. We thus viewthe financial impacts of climate changes on their businesses.

compliance as an integral component of our day-to-day

Our day-to-day business activities, into which we

operations. All employees are required to act in accordance

incorporate consideration for the expansion of businesswith the SECOM Group Code of Employee Conduct and theopportunities and the reduction of business risks, are

Behavioral Guidelines Based on SECOM’s Philosophy and to

structured to both facilitate sustainable growth and resolve

ensure compliance. Maintaining confidentiality is also critical

ESG-related issues. To phrase it another way, we believe

to the provision of security services. We have establishedthat increasing corporate value by expanding our businessa policy and rules for the handling of various types ofactivities directly improves our ability to address ESG-

information that are applicable to all SECOM employees andrelated issues, which in turn enables us to contribute to thepromote the scrupulous protection of data and information.

achievement of the United Nations’ Sustainable Development

We work actively to reinforce our corporate governance

Goals (SDGs).

system, recognizing that a robust configuration is crucial for

In line with our basic policy of contributing to society

related measures to have teeth. We are also taking steps

through our business activities, and the fact that judging

to increase the diversity and effectiveness of our Board of

our actions are beneficial to society is the foundation of

Directors, including appointing a female outside director.

everything we do, we are committed to providing services

We believe that protecting the environment is essential

and conducting our operations in a manner that helps

to our ability to attain our goal of delivering security andrealize a safe and secure society to pass down to our

supporting comfortable lifestyles. We thus incorporate envi-

children and grandchildren. These efforts have earned solidronmental conservation into all of our business activities. For

marks, evidenced by the fact that SECOM has been selected

example, because we provide on-line security system equip-

as a constituent of all four ESG investment indices forment to security services subscribers on a rental basis, we are

Japanese equities used by Japan’s Government Pension

able to collect all installed equipment after use, recycle what

Investment Fund (GPIF).* Looking ahead, we will continue

can be repaired and reused, and appropriately dispose ofworking to enhance our provision of ESG- and sustainability-

what cannot, a zero–resource waste business model that

related information to our diverse stakeholders.

dates back half a century. In our security services business,
which uses a significant number of service vehicles, welargely completed the planned introduction of fuel-efficient* The four indexes used by the GPIF are the FTSE Blossom Japan Index, the MSCIJapan ESG Select Leaders Index, the MSCI Japan Empowering Women Index(WIN) and the S&P/JPX Carbon Efficient Index.

vehicles. Going forward, we will upgrade to next-generation
fuel-efficient vehicles with a reduced environmental impact.
In our data center business, which uses a considerable
amount of electric power, we have set medium- andSECOM REPORT 2020

9

A Message to Shareholders

The challenge of creating new value
Operating in an environment characterized by significant

We will continue working to improve corporate value by

upheaval, dramatic change and rising uncertainty,

adhering to SECOM’s Philosophy with the aim of responding

compounded by the unpredictable impact of COVID-19 on

to the expectations of our shareholders by maintaining a

global economic and business conditions, we will continue

stable dividend payout ratio of between 40% and 45%,

working to extend services that deliver seamless peace ofas set forth in the SECOM Group Road Map for 2022. In

mind. To fulfil this mission, ongoing investment will bepromoting such initiatives, we will remain aware of ourcritical. During the investment phase of the SECOM Groupultimate goals of achieving the SECOM Group’s Vision forRoad Map 2022, we actively promoted focused investment in

2030 and realizing a society free from concerns by tirelessly

systems and human resources. Currently, we have a number

pursuing innovation in our services.

of promising potential investments under consideration.

The Olympic and Paralympic Games Tokyo 2020 have

Accordingly, beginning in the fiscal year ending March 31,

officially been rescheduled and will now begin on July 23,

2021, we will explore priorities while continuing to promote

2021. We are committed to preparing ourselves even better

investments in efforts to reinforce our operating foundation,

to contribute to the success of the games next year.

as well as in growth. This will require us to secure sufficient
capital assets.

We look forward to the ongoing support and guidance ofshareholders in all of our endeavors to expand and enhancethe operations of the SECOM Group.
June 25, 2020

10

Makoto Iida

Yasuo Nakayama

Ichiro Ozeki

Founder

Chairman and
Representative Director

President andRepresentative Director

SECOM REPORT 2020

Responding to COVID-19

An effective crisis management system that protects customers and employeesWe extend our deepest sympathies to everyone who has been affected by the COVID-19 crisis and our gratitude to
medical professionals and others who are working at considerable danger to themselves to help curb the spread of
the pandemic.
The Basic Policies for Novel Coronavirus Disease Control published by Japan’s government designates our medical, security,
building maintenance, data center and insurance services, among others, as social infrastructure necessary for safety andsecurity and requested their continuation even while the country was under a state of emergency. Against this backdrop,
we believe that the greatest contribution we can make to society is to do our utmost to maintain services at the maximum
level possible while keeping the number of clerical staff and sales people working onsite to the minimum level necessary. In
addition, the doctors, nurses and other staff at our 20 partner hospitals in Japan and Sakra World Hospital in India areamong the many medical professionals who continue to work in extremely harsh conditions around the world to treat
patients and suppress transmission.
In response to the spread of COVID-19, in March 2020 we established a COVID-19 headquarters and immediately put inplace a number of measures, including taking employees’ temperatures before they began work, mandating gargling andthe wearing of masks, installing alcohol-based hand sanitizer stations, staggering commutes and introducing telework.
We have also created a Groupwide framework for ensuring business continuity under a state of emergency and taking
necessary measures to help prevent the further spread of infection, including conducting daily employee health checks andfurther expanding use of telework arrangements, placing our highest priority on ensuring the safety of our customers andour employees.
In our International Business Division and at our overseas subsidiaries, we have established the COVID-19 Risk Response
Committee with the aim of protecting the health of overseas employees, maintaining business continuity and helping
prevent the further spread of infection. To ensure the safety of employees from Japan assigned to overseas posts, we
actively gather information on the spread of the pandemic in each country and territory, including local government
measures. Where necessary, we allow these individuals to return to Japan temporarily, providing support for them during
mandatory quarantine when they enter the country and ensuring they have access to the necessary medical care. To ensurebusiness continuity overseas, we have identified critical operations and formulated business continuity plans (BCPs) tailoredto the risk level in each location. To date, this has enabled us to maintain uninterrupted services.
Although Japan’s state of emergency has been lifted, we continue to promote stringent measures to curb the spread of
COVID-19 in compliance with government guidelines. These include reducing face-to-face contact as much as possible,
providing services as appropriate given local conditions while not causing customers untoward trouble, in line with ourabiding commitment to providing services that deliver safety and peace of mind and make life more comfortable andconvenient.

SECOM REPORT 2020

11

The Path to Value Creation
Established as Japan’s first security services company, SECOM has pioneered the creation of services thatdeliver safety and peace of mind. Going forward, we will continue to develop and provide innovative
services and systems that accelerate the realization of our Social System Industry vision, an original
concept unparalleled anywhere else in the world.

QSecurity services

QInsurance services

QOverseas security services

QGeospatial information services

QFire protection services

QBPO and ICT services

QMedical services

QReal estate and other services

BPO and ICT services
Q

1983 Begins providing information andcommunications-related services

Fire protection services
Q

1974 Forms business alliance with Nohmi Bosai Kogyo Co., Ltd. (currently Nohmi Bosai Ltd.),
Japan’s top provider of fire protection services

Overseas security services
Q

1978 Establishes joint venture Taiwan Secom Co., Ltd., in Taiwan,
its first overseas market

Security Services
Q

1962 Established as Japan’s first commercial security services provider

1962

1965

1970

1975

1980

1985

Safety (“ANZEN” )industry

Security service industry
Q 1962

Established as Nihon Keibi Hosho Co., Ltd.
(name was later changed to SECOM CO., LTD.)

Q 1974

Lists on the Second Section of
the Tokyo Stock Exchange

1990

Q 1981Introduces My Alarm (currently SECOM Home
Security), Japan’s first home security system

Q 1975

Commences operation of the world’s firstcomputerized security system (CSS)
Q 1978Q 1964

Provides security services at the Olympic
Village during the first Tokyo Olympics

Moves up to the First Section of theTokyo Stock Exchange
Q 1981

Establishes joint venture Korea Security System
Co., Ltd. (currently SI Corporation) in the
Republic of Korea (ROK)
Q 1983

Q 1966Develops SP Alarm, Japan’s first on-line
security system

Changes name from
Nihon Keibi Hosho Co., Ltd. to SECOM CO., LTD.
Q 1985

Launches information security services
Q 1988Establishes presence in Thailand
Q 1989Declares 1989 the first year of
the Social System Industry vision
Note: As indicated in the legend, this graph shows net sales and operating revenue for each fiscal year at the time of announcement. Figures have not been readjusted.
However, data for periods up to and including the fiscal year ended November 30, 1977, is nonconsolidated revenue for SECOM CO., LTD., calculated using
Japanese GAAP, while from the fiscal year ended November 30, 1978 through the fiscal year ended March 31, 2004, the Company reported “revenue and otherincome.” Owing to a change in the Company’s settlement date, the fiscal year ended March 31, 1990, was a transitional four-month period.

12

SECOM REPORT 2020

(Net sales and operating revenue)(In billions of yen)
1,200Real estate and other services
Q

2000 Secom Home Life Co., Ltd. commences real estate development and sales

Geospatial information services
Q

1,000

1999 Invests in Pasco Corporation, a leading provider of aerial surveying services

Insurance services
Q

1998 Invests in Toyo Fire and Marine Insurance Co., Ltd. (currently Secom General Insurance Co., Ltd.)

800

Medical services
Q

1991 Begins providing visiting nurse services
600

400

200

0

1995

2000

2005

2010

2015

2020

Social System Industry
Q 1991

Establishes presence in the United Kingdom
and Malaysia
Q 1992

Establishes presence in the PRC, Singapore andAustralia
Q 1994

Establishes presence in Indonesia

Q 2001Develops and releases
COCO-SECOM mobile
security systems
Q 2001

Launches MEDCOM, Japan’s first unrestricted
cancer treatment policy
Q 2004Introduces the SECOM AED Package Service
Q 1994

Begins offering Japan’s first remote image
diagnosis support service
Q 1996

Commences management of residences
for seniors
Q 1998

Launches certification authority businessQ 2000Establishes the Secure Data Center

Q 2004

Launches SECOM Safety Confirmation Service
Q 2006

Acquires newly issued shares in Nohmi Bosai,
which becomes a consolidated subsidiary
Q 2006

Establishes presence in Vietnam
Q 2007

Launches ground surveying services usingsynthetic aperture radar (SAR) satellite images
Q 2007

Commences operation ofprivate finance initiative(PFI) correctional facility

Q 2011

Establishes presence in New Zealand
Q 2012Acquires all outstanding shares in Nittan Co., Ltd.,
Japan’s third-largest fire protection services provider,making the company a consolidated subsidiaryQ 2012Acquires At Tokyo Corporation, one of Japan’s
leading data center services firm
Q 2014

Establishes presence in Myanmar
Q 2014

Opens Sakra World Hospital, a general hospital,
in India
Q 2015Acquires Asahi Security Co., Ltd., a leading
provider of cash collection and delivery services,which becomes a consolidated subsidiaryQ 2017

Acquires BPO services firm TMJ, Inc.
Q 2019Establishes presence in Turkey

SECOM REPORT 2020

13

SECOM at a Glance
Security Services

Fire Protection Services

On-line security systems
Static guard services
Armored car services
Merchandise and otherFire alarm systems
Fire extinguishing systems
Maintenance services

Home medical services
Operation of residences forseniorsMedical services thatleverage ICTSales of medical equipment
and pharmaceuticals
Support for affiliatedmedical institutions













Principal
operations

Pages 24–29

Pages 30–31

Integrated approach to providing on-line security
systems

Two Group companies with thelargest and third-largest shares of
the Japanese fire protection market






Solid technological foundation made possible byproprietary research and development configurationComprehensive lineup of services
that respond to a broad range ofcustomer needs




Nationwide network of 2,800 emergency depots,
facilitating swift response in the event of an emergency
and appropriate operational control



Rental format that minimizes initial costs for subscribers
and enables SECOM to take responsibility for equipment
maintenance and upkeepCompetitive
advantages

Medical Services

Integrated service configurationencompassing R&D and planning,equipment design and production,
installation and maintenance




Stable demand for equipment thatcomplies with Japan’s Fire Service Act

Solid income foundation (attributable to stable
recurring revenue) and robust customer base




Overseas operations centered on the provision of
distinctively SECOM on-line security systems






Ability to extend renovation
proposals that draw on a wealth ofexperiencePages 32–33
Conviction that protecting healthand life is the ultimate expression of
the SECOM commitment todelivering safety and peace of mind




Experience and extensive know-how
in the provision of diverse medical
servicesStrong collaboration with local
communities aimed at realizing
effective comprehensive community
healthcare systems




ICT-based services that leverageexpertise accumulated in theprovision of medical services andSECOM’s management resources




Expertise in fire extinguishingsystems for tunnels and other largescale structures




Principal
Groupcompanies*

SECOM CO., LTD.**
Secom Joshinetsu Co., Ltd.***Asahi Security Co., Ltd.,
Secom plc

Nohmi Bosai Ltd.**
Nittan Co., Ltd.

Secom Medical System Co., Ltd.

Percentage of Consolidated Net Sales and Operating Revenue

49.7%
Fire Protection Services
13.1%
Medical Services
16.1%
Insurance Services
3.8%
Geospatial Information Services 4.6%
BPO and ICT Services
8.4%
Real Estate and Other Services
4.3%
Security Services

Consolidated
net sales andoperating revenue¥1,160.7
billionNote: This pie chart shows percentage of consolidated net sales and operating revenue (excluding intersegment transactions) for the year ended March 31, 2020

14

SECOM REPORT 2020

Insurance Services
Fire insurance policies
Automobile insurance
policies
Cancer treatment policiesGeospatial Information
Services
Services for public sector
entitiesServices for private sector
entities
Services for overseas
customers
Page 34
Belief in the need for both security
services, which are preventative by
nature, and non-life insurance,
which looks after people in theevent of misfortune

Development and provision ofunique policies that take into
account the risk mitigating factorsof on-line security systems



Development and provision of an
automotive insurance policy that
includes access to emergency
response services



Development and provision of acancer treatment policy that features
full coverage for all treatment costs

Data center services
Large-scale disaster
preparedness services

Information security services
Cloud-based services
BPO servicesPage 35
Service configuration overseen by
the leading company in Japan’s
aerial surveying and geographic
information system (GIS) markets



Ability to provide geospatial
information based on geographic
data collected by commercial
satellites, aircraft, drones, vehicles
and ships

Technological capabilities andexpertise in the integration,
processing and analysis of geographic
and related data to provide
geospatial information



Active efforts to cultivate new
geospatial information services

Real Estate andOther Services

BPO and ICT Services

Real estate development
and salesReal estate leasingConstruction and installation
servicesHome services
Pages 36–37
Highly secure facilities and equipment and tailored support, as well
as data center facilities boasting
excellent connectivity that areamong Japan’s largest

One of Japan’s leading disastermanagement support services

Seamless information security
services encompassing theformulation of strategies,
monitoring, implementation ofcountermeasures and restoration

Page 38
Development and sale ofcondominiums that incorporate
sophisticated SECOM security as
standard featuresProvision of lifestyle support services
that deliver safety and security andmake life more comfortable andconvenient

ICT services that reflect technologicalprowess, operational capabilities andknow-how that facilitates theconstruction and operation of
network systems that leverage
extensive experience in the provisionof security services

Provision of high-grade contact
center and other BPO services thatdeliver safety and peace of mind

Secom General Insurance Co., Ltd.

Pasco Corporation**

Secom Trust Systems Co., Ltd.
At Tokyo Corporation
TMJ, Inc.

Secom Home Life Co., Ltd.

* For more information, please see pages 73–76.
** Listed on the First Section of the Tokyo Stock Exchange*** Listed on the Second Section of the Tokyo Stock Exchange

SECOM REPORT 2020

15

The Value Creation Process
We remain committed to providing enduring peace of mind by keeping abreast or where possible aheadof the times. By reinforcing our relationship with society and addressing increasingly diverse social
imperatives, we continue working to maximize our corporate value and grow together with society.

Megatrends continue todrive the evolution ofsocial imperatives
Megatrends

Business model based on the resolution of issues
SECOM Group Road Map 2022
Q Expand services that assist with care for seniors

Strategies for 2020

Q Reinforce BPO and ICT services business
Q Strengthen overseas operations

Q

Demographic change

Q

Technological evolution

Q

Increasingly severe
environmental issues

Q

Shift of global economic
center/urbanization

Q

Improve productivity and promote related
investments

Business areas
Security
services

Real estate
andother services(Growth of Asian economies)

Fire
protection
servicesESG
BPO and ICT initiatives
services
Geospatial
information
services

Social imperatives

Medicalservices

Insuranceservices

Crimes/accidents
Management foundation and strengths
Human
Resources

Illness/aging
Q

Q

A corporate philosophy
shared by all employees

64,143 Group

Organization
QQ

employees*

Cyber crimes

An integrated portfolio thatmarshals diverse businesses

183 Group companies inTechnologies
Q

Q

seven business areas**

Q

Operations in 17 countries
and territories overseas

Q

Business model that fuses
people and technologies
Approximately 2,800
emergency depots in Japan
Around 60,000,000
security sensors installedat subscribers’ premises

Natural disasters

Values16

SECOM REPORT 2020

The SECOM Group’s Vision for 2030
Strategies for creating
the ANSHIN Platform

MissionEnhanced value

Help achievea society free fromconcerns

Connection
Collaboration
ALL SECOM

Resolution of social issues
Resolution of ESG-related issues

VisionRealize theSocial System Industry

Performance
Q

Q

Q

Close ties with society
and a strong track record
More than 3,410,000
security service subscribers
Over 7,100,000 SECOM
Safety Confirmation
Service users

Knowledge
Know-how cultivatedin Japan
Q Deployment overseas
of initiatives developedin Japan, a front runnerin addressing challenges
associated with asuper-aged society andnatural disasters

Contributing to
the success of the SDGs

Q

* Employees of SECOM Group
companies (excluding variableinterest entities), as ofMarch 31, 2020** The parent company,
consolidated subsidiaries andequity-method companies,
as of March 31, 2020

A uniquely SECOM identity(Philosophy, code of conduct, organizational culture)

SECOM REPORT 2020

17

SECOM’s Core Competitive Advantages

We continue to leverage three competitive advantages—a powerful brand, a recurring
revenue–based business model and Group strengths—to respond to customers’ expectations
and ensure sustainable growth.

A powerful brandsatisfaction by providing services that exceed their expectations.

As Japan’s security services pioneer, we have consistently led theWe also have customer satisfaction staff, who visit customers inindustry, keeping abreast of society’s evolving needs by providing

person to furnish useful information and gain feedback, which

services and systems that deliver safety and peace of mind, as

we incorporate into our unceasing efforts to improve services

well as make life more comfortable and convenient. At present,

and systems and grasp latent needs. We have applied our recur-

contracts for our domestic on-line commercial and home security

ring revenue–based business model to various SECOM Groupsystems number more than 2.35 million, and we continue toservices and will continue to reinvest in growth using cash gen-enjoy the leading share of the market. Our accumulated experi-

erated by these businesses to further enhance our competitiveence and know-how in the provision of services that deliveredge and ensure sustainable growth.

safety and peace of mind, together with our robust customer
base, have earned us a reputation for reliability and contributedGroup strengths

to the rise of the SECOM brand. Recognition of SECOM as the

At present, the SECOM business portfolio encompasses sevenleader of Japan’s security services industry and our outstanding

segments: security services, fire protection services, medical ser-growth potential position us well to secure and foster talented

vices, insurance services, geospatial information services, BPO

human resources and maintain an edge over the competition.

and ICT services, and real estate and other services. In all ofthese areas, we endeavor to resolve customers’ concerns by ral-A recurring revenue–based business model

lying SECOM Group strengths to provide a diverse range of ser-Our operating revenue is generated largely by recurring revenue–

vices and products. To date, we have not only strengthened

based businesses. In addition to cultivating new customers, we

services and products in each business and fortified collaboration

endeavor to ensure that existing customers are content to leave

across the Group, but also invested in M&As to further enhancecontracts in place. In our core on-line security systems business,

Group strengths. Looking ahead, we will continue working to

all employees—from emergency response personnel to sales,

expand our lineup of services to effectively respond to market

technology and administrative staff—work to increase customer

needs, thereby deepening our ties with customers.

Variable and Fixed Costs for On-Line Security Systems
Variable costs

Subscriber

Security equipment isprovided on a rental basis(SECOM assets)

New contract is secured

Increased customer satisfaction ensures thatthe contract continues over the long term
Diversification of services bolsters
per-customer income

Fixed costsusing
1 Alerttelecommunications circuits

SECOM emergency
3 Dispatch
response personnel

SECOM
Emergency
Depot(Approximately
2,800 across Japan)

18

SECOM REPORT 2020

SECOM
2 Alertemergency
response personnel

SECOM
Control Center(Major locations
across Japan)

Continuous income expansion

Reinvestment in growth
Increased competitiveness andsustainable growthThe SECOM Group’s Vision for 2030

To accelerate the realization of our Social System Industry vision, in May 2017,
we formulated the SECOM Group’s Vision for 2030, which positions 2030 as animportant milestone and further defines our direction going forward. One year
later, in May 2018, we devised the SECOM Group Road Map 2022 to clarify thechallenges that must be addressed for us to achieve this vision, identifying 2022
as a particularly critical juncture.

Conceptual framework of the ANSHIN Platform
Guided by the SECOM Group’s Vision for 2030, we are working

For both companies and individuals, the occurrence of an

to create the ANSHIN Platform, a service infrastructure throughunanticipated crime or disaster can interrupt daily rhythms. For

which we strive to provide services that deliver seamless peace ofcompanies, productivity can fall sharply. Moreover, the greatermind for anyone and everyone whenever and wherever

the damage is, the longer it takes to recover. Society faces signif-

necessary.

icant risks associated with crimes, accidents, cyber crimes, natu-

Anchored in the relationship of trust that we have cultivated

ral disasters, illnesses and aging. In addition to recognizing thewith society, the ANSHIN Platform seeks to provide peace ofimportance of routine advance preparation, we provide compre-

mind to people in their everyday lives, as well as to society as ahensive services designed to address potential risks by helping

whole through collaboration with partners in industry, govern-customers accurately grasp conditions, minimize impact andment and academia who share our mission to help achieve aachieve restoration. These four approaches, which comprisesociety free from concerns and who have diverse technologies

what we call the SECOM ANSHIN Flow, enable us to provide

and expertise.

seamless peace of mind.

Tha ANSHIN Platform Service Infrastructure

The SECOM Anshin Flow
<Value>Safety andpeace of mindIn
everydaylife

AdvancepreparationInthe event of Grasp
an emergency the situationInthe event of Minimize
an emergency damage

Life/health/assets/information AI, IOT and Big Data

After
Restorean emergency operations
Operations/emergency response services

Real-world

Crimes and accidents
Diverserisks

Cyber crimes
Natural disasters

Risks
ks mayoccur
simultaneously
ltaneouslyy

Rather than stand-alone services, we strive toprovide integrated packages that deliver seamless safety andpeace of mind and provide added value that makes life
more comfortable and convenientEx
EExtensive
coverage

Illnesses/aging<Added value>

Comfort andconvenience
Issues to be addressedIn
everydaylife

Need to improve efficiency

Everyday concerns

Need to reduce costs

Need to rely on others

SECOM REPORT 2020

19

The SECOM Group’s Vision for 2030

Strategies for creating the ANSHIN Platform
To create the ANSHIN Platform, we are currently promoting ini-technologies, to respond to latent needs and strengthen our

tiatives in line with four core strategies. The “ALL SECOM”

relationships with customers, while our “Enhanced value”

strategy focuses on rallying SECOM Group strengths to maxi-

strategy revolves around addressing everyday concerns bymize synergies. Through our “Collaboration” strategy we areadding greater value to services that make life more comfortableendeavoring to promote open innovation by integrating theand convenient. Guided by these efforts, we continue tobusiness ideas and technologies of various partners who sharepromote the creation of services and systems that respondour mission. Our “Connection” strategy emphasizes leveraging

to increasingly diverse needs for safety and peace of mind.

Big Data analysis, which makes use of advanced information

lationships with customers and s
SECOM’s reocietyforcing
n
i
e
r
r
e
h
t
Fur

Cr
e

Connectionion
atEnhanced value

Platform
SHIN
e AN
h
t
of

ALL SECOM

Collaboration

Targeting sustainable growth: Devising the SECOM Group Road Map 2022
In May 2018, we introduced the SECOM Group Road Map

believe that anticipating evolving needs for solutions to these2022, devised using backcasting* with the aim of clarifying theissues will lead to major business opportunities that will allow us

challenges we must address to achieve the SECOM Group’s

to contribute to the improvement of social productivity.

Vision for 2030. The road map identifies technological advances
and a declining labor force as priority issues in today’s rapidlychanging society. For both companies and society in general,these issues can become threats if not addressed properly. We

20

SECOM REPORT 2020

* Backcasting is a planning method that starts with envisioning a desirable future
and working backward from there to identify steps necessary to attain that
future.

Targeting sustainable growth
We place a particular emphasis on the sustainability of society

what is needed to ensure sustainability for society, rather thanand our businesses and thus see related expenditures not as

simply providing services that will sell in any market. This is why

costs but rather as investments that enable us to integrate

people and technology will always be given top priority. Looking

changes in our operating environment into our operations overahead, we will continue working tirelessly to enhance our ability

the long term. Since our establishment, we have tirelessly pur-to make effective use of these intangible assets, positioning us

sued service innovations that create value. This is rooted in ourto cement our competitive edge and earn the trust of our

fundamental commitment to offering services that anticipate

customers and society, thereby growing sustainably.

Linking social change and business opportunities to address social imperatives
Technological advances have brought an increase in the variety

distinctive services that deliver safety and peace of mind andof connected devices. This is driving a variety of profoundmake life more comfortable and convenient, thereby helping tochanges, including the realization of connected vehicles, theaddress key social imperatives.

expanded use of drones and robots, the increasing prevalence of

The COVID-19 pandemic has brought fundamental changes

unattended retail facilities and cashless transactions, and theto society, transforming business practices, consumer behavior

rising popularity of smart homes. Such changes are expected to

and work styles. With many of these changes likely to remain

push up demand related to the need for security in a connectedeven after the pandemic has eased, companies must respondsociety, which involves the fusion of physical and cyber security.

effectively to survive and thrive in what is emerging as a new

Owing to a declining labor force, companies face a growing

normal. In response to demand in diverse areas arising from theneed to outsource noncore functions, which enables them tospread of COVID-19, including that related to the advance ofconcentrate on core businesses. With the rising prevalence ofdigitization and the use of ICT, we will continue to drive social

families in which both parents work outside the home, we arechange to help resolve new social imperatives, thereby ensuring

also seeing an increase in needs related to the care of children

our ability to play a key role in both the social and consumer

and seniors. In response to expanding demand related to theinfrastructures.

need to rely on others, we will continue working to extend

Investments in future growth
Recognizing that responding to demand arising from an increas-that respond to needs engendered by technological progress

ingly connected society and from the need to rely on others

and a declining labor force.

would require us to change significantly ourselves—a process we

Investments in human resources emphasize the reinforcement

dubbed “SECOM-Transformation”—we positioned the two-yearof critical capabilities that cannot be replaced with technology.

period ended March 31, 2020, as an investment phase, during

Accordingly, we are stepping up efforts to enhance our humanwhich we would promote the focused outlays in the areas ofcapital by securing human resources who have the ability tosystems and human resources.

adapt to change and create value and who seek to contribute toInvestments in systems center on building next-generationsociety. Specifically, we are improving our ability to attract andcore systems and reinforcing functions with the goal of improv-

foster talented, experienced personnel, including IT specialists

ing service quality and productivity by reducing labor require-

and individuals with global business skills. In addition, we makements and enhancing employee capabilities. We also invest

investments aimed at helping employees fulfill their potential,

actively in areas that help bolster the quality and efficiency ofincluding the enhancement of our various training programs andour operations, including AI, the IoT and RPA, as well as inother efforts to create positive working environments and boost

efforts to drive R&D targeting innovative services and products

job satisfaction.

SECOM REPORT 2020

21

The SECOM Group’s Vision for 2030

Achieving the Goals of the SECOM Group Road Map 2022
Having made extensive, focused investments in systems andphysical security, cyber security, BPO and ICT services andhuman resources, the next challenge we face is to develop andhealthcare, as well as in start-ups with advanced technologicaldeploy new services that build on these investments. To thesecapabilities both in Japan and overseas.
In addition to promoting new businesses, we will respond toends, we will step up efforts to collaborate with partners whoshare our mission. Overseas, we will continue working to expand

changes arising from the COVID-19 pandemic. Through thesethe variety of services we offer, as well as to actively enterand other efforts, we will strive to achieve the quantitative

promising new markets.

targets we have set for the fiscal year ending March 31, 2023,
including consolidated revenue of ¥1.1 trillion and consolidated

We have also allocated ¥200 billion from equity over five
years (April 1, 2018–March 31, 2023) for M&As. During thisoperating profit of ¥155.0 billion. (Targets are based on

period, we will seek to invest in key growth businesses, namely,

Japanese GAAP.)SECOM Group Road Map 2022
Targets for the fiscal year ending March 31, 2023 (Japanese GAAP) (Provided for reference only)

1.1 trillion

Consolidated
revenue: ¥155.0 billion ROE: 8% plus

Consolidated
operating profit: ¥Dividend
payment ratio:

40%—45%

Note: Figures do not reflect the impact of new M&As.

Investment phase
Consolidated revenue

Consolidated operating profit

Consolidated revenue ¥1.1 trillion
Consolidated operating profit ¥155.0 billion

Consolidated revenue ¥970.6 billion
Consolidated operating profit ¥135.4 billion

6.0%
rox.
p
p
A
t):
profi
ting
a
r
e
(op
CAGR

: 3.09%profit)erating
p
(o
R
CAG

2015

2016

2017

High-growth phase

2018

2019

2020

Investment phase

2021

2022

(Years ended/2023 ending March 31)

High-growth phase

Japan
Leverage investments to introduce new services
Q Promote more active collaboration with partners
Q
Q

Invest in human resources

Q

Invest in systems

Overseas
Expand services in countries and territories
where SECOM has a presenceQ Actively establish operations in promising new markets
Q

22

SECOM REPORT 2020

Initiatives Aimed at Achieving the Goals of the SECOM Group
Road Map 2022

Active expansion into the area of cyber security
IoT, smart homes, security solution for cryptocurrencies

3-Dimensional Security
Next-generation On-Site Center mobile monitoring bases
Next-generation fire protection systems
Pages 26–27,
SecurityFire protection
Geospatial info.
30–31
Expansion into the automotive field (connected vehicles, etc.)
Security

BPO and ICT

Security
Insurance
BPO and ICT

Page 27
New solutions for help with care forvulnerable individuals
SecurityJapan

MedicalUse of drones and robots

Strengthening of proposal
capabilities in the areasof facility management,
building management andsupply chain management

Security
Geospatial info.

Security

BPO and ICT

Fire protection

Pages 26–27,
35

Pages 25–26, 31
Establishment of the SECOM DESIGN FACTORY
brand for collaborative projects that accelerate
the creation of new value
Page 28

Real estate

Pages 27–28
Development of services for unattended
retail facilities and the trend towardcashless transactions
Security

BPO and ICT

Healthcare services tailored to lifestyles
Security

Pages 32–33

MedicalCurrent markets
Collaboration with local partners

Overseas

Page 29

Response to outsourcing needs of financial institutions

Broadening of systems integration business to leverage
investment in production facilities, buildings and infrastructure

New markets

Full-scale expansion intohome security services markets

Page 29

Q Promotion of efforts to expand into promising new markets

Growth of customer base
Expansion andevolution of services

Increase in opportunities forcustomers to use services

Promotion of efforts
to reduce labor
requirements

Improvement of
performance

Improvement ofskills and capabilities

Increasein efficiency

Increase in motivationand discipline

Increase inreliability(Maximization)
Per-customer
incomeInvestment in human resources with advanced and specialized expertise

Page 36

BPO and ICT

Tri-ion Initiative, employee job satisfaction surveys,
application of RPA to operations and others

Security

High-value-added home security
Application of AI and IoT, etc.

Number ofcustomers

Continuationof contracts

Optimization of
cost structure

Increase inproductivity

Provision of services that exceed
customers’ expectations

Maximization of income

Increase in value provided to customers

Improvement of capital efficiency

SECOM REPORT 2020

23

SECOM Today

Security
Services

Net sales and operating revenue

Business summary
A distinguishing feature of our security services
business is that it primarily consists of recurring
revenue–based services, that is, services basedon long-term contracts. For example, the initial
contract period for mainstay on-line security
systems is five years, after which the contract is
automatically renewed annually. The provisionof SECOM on-line security systems includes theinstallation of sensors and other monitoring
equipment and around-the-clock monitoringby a SECOM control center via telecommunications circuits. In the event an intruder, fire orother irregularity is detected, control center
staff dispatch emergency response personnel
from the nearest SECOM emergency depot
and, if necessary, notify the police and/or fire
department. To deliver seamless services, we
maintain ownership of security equipment andextend it to subscribers on a rental basis. The
fact that we take full responsibility for all
aspects of our on-line security systems, from
R&D through to equipment manufacturing,security planning, installation, around-theclock monitoring, emergency response services and equipment maintenance, ensures
exceptional quality and reliability.

Since our founding, we have sought toexpand our menu of services in response toincreasingly diverse and sophisticated market
needs—a consequence of rising subscriber
numbers and socioenvironmental changes—
by capitalizing on the three componentsof our operating foundation, namely, ourtechnological prowess, human resources andoperational and control structure. Our technological prowess is underpinned by the SECOM
Intelligent Systems Laboratory, which conducts
forward-looking research in the area of coretechnologies, and the SECOM Development
Center, which capitalizes on these coretechnologies to develop highly reliable security
systems. Our R&D team’s ability to keep
abreast of the latest technological trends
and take into account social imperatives andtrends in criminal activity has enabled us torealize unparalleled services and systems thatleverage optimal technologies. In addition,
the critical opinions and needs of subscribers,
obtained by sales staff, emergency response
personnel and other employees in the courseof their work, are conveyed to our R&D team,facilitating swift and precise adjustments thatfurther enhance the quality of our on-line
security systems.

(In billions of yen)

600
580.5
565.4

567.2

550

On-Line Security Systems
500

450

Flashing light

2018

2019

2020

SECOM sticker

Light flashes if the system
detects an irregularity to warn
people in the vicinity and to
guide SECOM emergency
response personnel dispatchedto the subscriber’s premises.

Subscribers display the
SECOM security sticker,
the sign of well-protected
premises.

Subscriber

Operating income

Police Dept.

(In billions of yen)

125
114.5

110.1

108.9

SECOM
3 Dispatch
emergency response
personnel

100

using
1 Alerttelecommunications

24

Gas
Company

Alert emergency
services as necessary

75

50

circuits

Fire Dept.

2018

2019

SECOM REPORT 2020

2020

SECOM
Emergency
Depot

2

Alert SECOM
emergency
response personnel

SECOM
Control
CenterSECOM control center

Contracts for On-line
Security Systems in Japan(As of March 31, 2020)

Home

Commercial

Service industries

7.0%

Financial services

6.7%

Retailing/wholesaling

3.6%

Manufacturing

3.2%

Government agencies 3.1%
Other

17.0%

Residences (excluding

condominiums and apartments) 37.0%

Condominiums andapartments

22.4%

To foster human resources, we provide training for new recruits, as well as for emergency
response personnel, sales staff, administrative
staff and other employees, at four training
centers in Japan. This enables us to ensurethat employees fully understand our corporate
philosophy and observe a code of conduct
befitting security professionals and equips themwith advanced knowledge and technical skills.
We also leverage our wealth of experience inserving a diverse range of customers to improve
our training programs. Strengthening our effort
to cultivate human resources has enabled us
to build a strong organization that underpins
our ability to extend high-grade, distinctively
SECOM services.
We have established an incomparable
operational and control structure by offering
on-line security systems through a nationwide
network of approximately 2,800 emergency
depots across Japan, extensive know-how
accumulated over many years, the unerring
decision making of our highly experienced
control center staff and the swift actions of
our emergency response personnel. By maintaining a close proximity to the communities
in which we operate, we ensure our ability topromptly ascertain customers’ needs for safety
and peace of mind and provide the optimum
solutions. Our experience addressing diverse
customer needs gives us outstanding flexibility
and broad responsiveness. These capabilities have earned us the trust of customers,
enhancing the value of the SECOM brand.
Looking ahead, we will continue to rally
SECOM Group strengths, at the core of which
is on-line security systems, to offer uniqueservices and products that deliver safety andpeace of mind and make life more comfortable and convenient. Through these efforts,
we will endeavor to further differentiate
SECOM from its competitors, as well as
to deepen and strengthen our ties withcustomers.

Operating highlights
Commercial security services

We work actively to provide an extensive lineup
of security services, centered on on-line security
systems, that respond to the diverse needs ofcustomers. In recent years, on-line security systems for commercial subscribers must not onlyoffer monitoring for irregularities to guarantee
security and prevent fires, but also support
the business activities of subscribers aroundthe clock. In response to such needs, we areworking to reinforce our business policy, whichemphasizes the quality of subscriptions, byextending a variety of high-value-added offerings. In line with this policy, in the fiscal year
ended March 31, 2020, we launched System
Security AZ, an updated on-line security systemfor commercial use that further enhances ourability to respond swiftly and flexibly to theneeds of subscribers.

Introducing System Security AZIn 1966, we developed and launched the firston-line security system in Japan and have since
expanded our lineup to accommodate businessestablishments of different sizes and customers
with various business formats. Today, customer
needs are highly diverse and continue to
evolve in line with changing business andsocial conditions. In response, in September
2019 we launched System Security AZ, an allin-one system that leverages our unmatchedknow-how in the provision of security. In
addition to security, fire prevention and access
control functions, AZ can be integrated withattendance management systems to create
effective work efficiency solutions, as well aswith biometric systems such as SESAMO IDf, afinger vein authentication system, to provide
rigorous identity confirmation, record imagesof people arming and disarming the system,
allow the adjustment of security settings andconfirmation of images remotely from a smartphone and browsing of operating history, andthe efficient management of user informationand other functions. Because it consolidates
multiple systems for commercial subscribers

SECOM REPORT 2020

25

SECOM Today

System Security AZ

into one, AZ also benefits us by helping
reduce our inventory, development andprocurement costs.
AZ also boasts superb expandability,
making it possible to heighten the system’sfunctions in response to evolving customer
needs, technological innovations and changes
in the communications infrastructure. Goingforward, we will work to expand the popularity of this system by further improving service
quality through the addition of functions suchas centralized multisite management and theintroduction of advanced new sensors.

The launch of the SECOM IP Camera
system and SECOM Cloud Video
Surveillance Service



SECOM IP Camera system

Trial using the Virtual Security Guard System
to measure visitors’ body temperature

The new SECOM IP Camera system is a nextgeneration surveillance camera system thatmeets the security needs of a broad rangeof premises. Incorporating box-type, dometype, attractively designed compact 180°
omnidirectional or other cameras, this system
makes it possible to record in full HD for clear,high-resolution images that capture eventhe smallest details. Recorded images can bechecked via the Internet from a computer orfrom a smartphone using a dedicated application. Linking this system to the SECOM CloudVideo Surveillance Service makes it possible tomanage captured video images in the cloudand check them anytime and anywhere froma computer or a smartphone. This eliminates
the need for a video recorder, minimizing theamount of equipment necessary to install asurveillance camera system.

Protecting facilities with the Virtual
Security Guard System



SECOM Robot X2 on patrol
at the G20 Osaka Summit

26

SECOM REPORT 2020

Against a backdrop of rising security needs
and increasing labor shortages in the security
services industry, we launched the AI-powered
Virtual Security Guard System, which featuresa virtual character who performs security,
receptionist and other static guard duties.
With the goal of helping prevent the spreadof COVID-19, a practical trial of this systemlinked with a thermographic camera tomeasure visitors’ body temperature, as well as
to request that they wear a mask is currently
under way.
Security services forlarge-scale events
Extending SECOM security services
for the G20 Osaka Summit

In June 2019, we deployed SECOM 3D
Security Planning to assist the Osaka
Prefectural Police (OPP) Headquarters in
preparing a security plan for the G20 Osaka
Summit and carried out a preliminary aerial
check of the security area using a SECOM
Aerostat dirigible. We also offered SECOM
Robot X2 autonomous patrol robot units andthe SECOM IP Camera system to the OPP
Headquarters to help ensure the safety andsecurity of this global event. In addition, we
extended security services, including static
guards equipped with wearable cameras, for
the G20 Ibaraki–Tsukuba Ministerial Meetingon Trade and Digital Economy, helping tofacilitate the safe and secure staging of thisimportant event.

Earning certification as Japan’s firstemergency medical care facility
with ELSTsIn December 2019, we earned certification as
Japan’s first emergency medical care facility withemergency life-saving technicians (ELSTs)*. This
makes it possible for our ELSTs to provide specialized emergency medical care under the directionof physicians. Accordingly, we will expand thescope of our services for large-scale events andmajor facilities, creating a framework for providing medical assistance that will enable us to offer
integrated services encompassing both security
and First Aid.
* Certification provided by Japan’s Accreditation Board forPrehospital Medical Oversight (ABPMO) for systems of
training and rules for legal compliance aimed at ensuring the quality of the medical care provided by ELSTs.



Airborne stadium surveillance
by a drone

Participation in demonstration testof stadium security using 5G mobile
communications system

In collaboration with a major telecommunications group, we successfully conducted a demonstration test of security around the Hanazono
Rugby Stadium in the city of Higashi-Osakausing the 5G mobile communications system.
During the tests, 4K video was transmitted inreal time by SECOM Robot X2 units and cameras
worn by security guards, as well as by drones
operated by the telecommunications provider,over 5G networks to one of SECOM’s vehiclemounted On-Site Center mobile monitoringbases, enabling the assessment of security
status over a broad area and prompt provisionof an assortment of security responses, including the detection and apprehension of suspicious individuals. AI is used to analyze themovement of people, automatically flagging
irregularities and notifying On-Site Center
operators, demonstrating the ability to ensure
the timely detection of problems and swift
implementation of response measures. Looking
ahead, we will capitalize on the results of thistest in the provision of security for large-scale
events with the aim of realizing sophisticatedsecurity that leverages 5G technology.
Home security services

SECOM Home Security NEO

©2020
Sony
Corporation

aibo see offs a SECOM Home Security
subscriber
aibo is a product of Sony Corporation

Enhanced convenience continues to underscore steady growth in the popularity of
SECOM Home Security NEO, a home security
system that can be armed and disarmed
remotely from a smartphone and includes
an automatic notification feature thatenables subscribers to receive alerts on theirsmartphones when the system is accessedby family members entering or leaving thehome. In addition to standard home security,
including monitoring for intruders and fires
and emergency alerts, and optional services
such as medical emergency calls, monitoring
for gas leaks and safety monitoring, SECOM
Home Security NEO can be linked with deviceson the IoT to facilitate use of a variety of newservices.

New service linking SECOM Home
Security and the aibo entertainment
robot premiers

In January 2020, we began offering a newservice linking SECOM Home Security withthe aibo autonomous entertainment robot. In
addition to enabling aibo to see subscribers off
when they go out and greet them when they
return, this service makes it possible to checkup on their home remotely via aibo when they
are out, providing comfort and further enhancing satisfaction with SECOM Home Security. In
the years ahead, we will continue working to
combine our expertise in the area of security
services and our partner’s capabilities in theareas of AI, robotics and entertainment tocreate truly original new services.


SECOM Senior Care Phone Service
for resolving users’ concerns
whether indoors or out

The SECOM Senior Care Phone Service is an
emergency monitoring service that combines
emergency medical alert, health consultationand safety confirmation functions. Whether
indoors or out, the device sends an emergency
alert to SECOM when activated by pulling in
its strap and, if deemed necessary, triggers thedispatch of emergency response personnel.
When the user presses the safety confirmation
prompt on the device’s display, an email verifying his or her safety is automatically sent toregistered individuals. If the user does not
respond to the prompt, family members orother registered individuals can request the
dispatch of emergency response personnel.
This service, which does not require a SECOM
Home Security contract, continues to earn solidmarks as an offering that helps resolve the concerns of elderly individuals and their families.


Provision of Mago Channel withSECOM commences

In January 2020, we began extending Mago(“grandchild”) Channel with SECOM, a newservice based on the concept of “joyful care,”in collaboration with an IoT startup. Mago
Channel enables users to display photographs

SECOM REPORT 2020

27

SECOM Today

Mago Channel with SECOM

or videos on the home televisions of parents
living apart. Information from Mago Channel’senvironment sensor also makes it possible forusers to check whether their parents are up or
in bed and advise them of heatstroke alerts,
among others, as well as to monitor indoor
temperature and humidity changes, using anapplication. Going forward, we will continue
to expand our lineup of services that addressneeds arising from factors such as declining
birthrates and the graying of Japanese society.
New initiatives
Establishment of the SECOM DESIGNFACTORY brandIn December 2019, we established the SECOMDESIGN FACTORY brand, which will be used
for strategic projects undertaken with partners
that will seek to develop innovative, original
services. The new brand will be used for initiatives designed to capitalize on the beliefs andideals of our diverse partners, rather than
exclusively our own, and for new services
and products that accelerate the creation ofcustomer and social value. SECOM DESIGNFACTORY projects to date include the development of Mago Channel with SECOM, a newservice linking SECOM Home Security withthe aibo entertainment robot, and training
programs for security guards that make use

SECOM DESIGN FACTORY logo

of VR technologies. Multiple other initiatives
are currently underway that we expect will
yield a variety of new services and productsin the future.
Other security services

COCO-SECOM, a mobile security system foroutdoor use, uses signals from GPS satellites
and cellular phone base stations to pinpoint
the location of dedicated portable transmitters
carried by individuals or attached to objects.
If a customer wants to locate a transmitter,he or she can trace it precisely via a dedicated
COCO-SECOM website or by contacting the
COCO-SECOM Operations Center. Upon
receiving a search request from a customer,
operations center operators dispatch emergency response personnel and, if necessary,
notify the police or fire department. Users
can also alert the COCO-SECOM Operations
Center if they are concerned for their physicalsafety by pushing the transmitter’s emergency
alert button. Applications for COCO-SECOM
are diverse, ranging from deterring childabductions and tracking dementia patients
who wander to preventing the theft of carsand motorcycles, managing taxi and bus
fleets, averting the theft of ATMs, managing
employee safety and aiding self-defense.
Overseas security services

Extending services in 13 countries
and territories



COCO-SECOM Mobile Security System(Location and Emergency Response)

GPS satellite

Positioning
information

COCO-SECOM
Operations
CenterCellular phonebase station
Request forsearch(telephone/Internet)

Subscriber

28

SECOM REPORT 2020

COCO-SECOM Transmitter
Device (vehicle-mounted)
COCO-SECOM
Transmitter Device(portable)

Notification of police(if warranted)

SECOM
Emergency
Depot

Policedepartment,
emergency
services

Dispatchemergency
response personnel(if requested)

We made our overseas debut in 1978, when
we established a presence in Taiwan. Today,
our overseas business encompasses operationsin 13 countries and territories. A distinguishing feature of our overseas security services
is that we offer on-line security systems withSECOM-style emergency response services
customized to reflect local needs and sensibilities. The high quality of the services weextend continues to earn praise from overseas
customers, as a result of which market
acceptance is increasing.
Publicly listed affiliated company Taiwan
Secom, the largest security services company in
the Taiwanese market, offers a broad lineup ofControl center in Thailand(Thai SECOM Security Co., Ltd.)

Emergency response vehicle(Shanghai Secom Security Co., Ltd.)

security services, ranging from home security
to safety management systems for large-scale
facilities. The company is also working actively
to improve services by incorporating new technologies, including using SECOM wearable
cameras to provide security for an internationalladies’ professional golf tournament.
In the ROK, affiliated company S1 extends
a wide variety of security services and building solutions, centered on on-line security
systems. Also publicly listed, S1 continues
to garner praise from customers for its swift
initial responses, which it provides throughapproximately 650 emergency depots.
In the PRC, we have established thatcountry’s largest security network, whichtoday encompasses bases in 25 key coastal
and inland cities. We have also established amanufacturing facility in Shanghai that produces security equipment tailored to local
market needs.
In Southeast Asia, which continues tosee economic growth, the efforts of Group
companies are bolstering acceptance ofSECOM-style on-line security systems. As thelargest security services company in Thailand,
we provide comprehensive security systems
that encompass tailored solutions. We alsooffer comprehensive services in Malaysia that
range from on-line security systems to static
guard and security management services.
In Singapore and Indonesia, we continue toearn solid marks for on-line security systems
and anti-terrorism security. In Vietnam andMyanmar, which continue to see brisk economic growth, we extend security services tomajor Japanese companies.
We entered the Turkish market in 2019and have begun providing a diverse range of
security services, from home security to safety
management systems for large-scale facilities.
Group companies in Australia extend
security services to private-sector companies
such as financial institutions, large commercial
facilities, and to state and federal government
agencies. In New Zealand, our high-grade
security and maintenance/inspection services
enjoyed solid support from customers.

Subsidiary Secom plc provides on-line
security systems and other security services tocustomers across the United Kingdom. The
company has long been trusted by government agencies and major corporate customers,
including prominent British banks, and has
built a robust reputation for service quality.

Tailoring services to local needsIn addition to promoting a variety of efforts
to ensure an accurate understanding ofcustomer needs in overseas markets, including conducting market surveys, we actively
promote open innovation with manufacturers
and IT companies around the world andcollaborate with overseas partner companies
to drive innovation in a manner that meets
local needs. In June 2019, we established the
China Innovation Center, an R&D facility, inShanghai, and are creating a framework forleveraging advanced technologies and local
market conditions to swiftly develop services
and systems that address local needs. We also
continued working with a major local electric
appliances manufacturer and a telecommunications company to help create services that
help address key social imperatives.
In Thailand, where the number of
middle-income earners continues to rise, we
advanced initiatives aimed at achieving a fullscale entry into the market for home security
services. These included commencing sales ofhome security services in July 2019. We arealso collaborating with partner companies inThailand and will inaugurate a project todevelop and launch services optimized tomeet local market needs. In addition, plans
are in place to establish the ASEAN Innovation
Center, in Bangkok, which will support efforts
to expand our presence in other Southeast
Asian markets. We will also deploy our
ANSHIN Platform service infrastructure overseas and promote ANSHIN as a universally
recognized and accepted term.

SECOM REPORT 2020

29

SECOM Today

Fire Protection
Services

Operating highlights

by drawing on their solid track record and

The evolution of society, as represented byproposal-oriented sales efforts. In fire extin-

the growth of cities and advances in building

guishing equipment, orders remained brisk.

the trust of customers to promote optimized

techniques, continues to drive demand for

The new TASKis cloud-based disaster
response support software

increasingly diverse and sophisticated fire pro-

tection services. At the same time, new issues
are emerging, including the aging of existing

Nohmi Bosai recently launched TASKis, abuildings and infrastructure. The operations ofcloud-based disaster response support soft-Nohmi Bosai and Nittan, two of Japan’s leading

ware that assists efforts to promote awarenessfire protection services companies, include

of BCP emergency response manuals and to

the provision of automatic fire alarms and fire

create an initial disaster response infrastruc-extinguishing systems, as well as equipment

ture. In the event of a fire, earthquake orinspection and maintenance, for a broad range

other emergency, TASKis sends manual-basedof applications, including residences, com-

instructions regarding tasks to perform tomercial facilities and cultural properties. Boththe smartphones of pertinent individuals.

companies boast competitive advantages that

This enables individuals to act swiftly andderive from extensive experience and know-

appropriately while checking the instructions

how, as well as an integrated service configura-displayed on their smartphone screens and totion encompassing everything from R&D tosend a status report back to their supervisor

system planning, manufacturing, installation

once tasks have been completed. As a soft-and maintenance, allowing them to extend

ware that adds new value, TASKis is also ideal

high-grade services tailored to customer needs.

for proposals offered to maintenance andIn the area of automatic fire alarms, sales

inspection services customers. Looking ahead,efforts in the period under review focused on

the company will continue to upgrade TASKis

securing orders for alarms for new buildings.

to accommodate customers’ needs while at

Net sales and operating revenue

Nohmi Bosai and Nittan also responded tothe same time expanding the provision of this(In billions of yen)replacement demand in the renovations market

promising recurring revenue–based service.

200
150

140.7

144.1

155.9
Start ofrestoration

Request forassistance
StatusreportDiscoveryof rescuees

100

Start
of fireextinguishing

Evacuation
advisory

50

Site
confirmation

Start ofevacuation

0

2018

2019

2020

Site
confirmation

Fire!

Problem!

Operating income(In billions of yen)

20
15

17.8
15.7

14.2

10
5
0

2018

2019

2020
Visual representation of TASKis action guidelines (Nohmi Bosai)

30

SECOM REPORT 2020

Protecting cultural properties against
fire



plans to add additional functions, including
equipment location and management, with the

In the wake of major fires that caused heavy

aim of contributing to the provision of offices

damage to Notre Dame cathedral in Paris andthat are safer as well as more secure andShuri Castle in Okinawa, Japan’s Agency for

comfortable.

Cultural Affairs published new guidelines toor important cultural properties (structures)

Active efforts to expand overseas
operations

against fire. These guidelines are expected to

Nittan’s fire alarm systems have also garnered

increase the need for fire protection measurespraise overseas for their ease of use, reliability

at buildings that have earned World Heritageand quality. This, combined with the skill of theSite or National Treasure designations and muse-company’s installers, has led to the increased

ums. Nohmi Bosai, which boasts a wealth ofadoption of Nittan systems. Nittan Europe Ltd.,

experience providing fire protection systems forthe company’s consolidated subsidiary in thecultural properties, has taken steps to respond to

United Kingdom, established a training centersuch rising needs by strengthening its framework

in 2017 and launched a program to provide

for developing proposals and its installation

support to distributors and installers with thecapabilities and will continue working to provide

goal of reinforcing its sales capabilities andautomatic fire alarm and fire extinguishing

improving the quality of installation work. Thissystems optimized for such structures.

led to a European Standards (ENs)-compliant

enhance the protection of national treasures

Water cannon test (Nohmi Bosai)Nittan Evolution series analogue addressable

The debut of the B Catch Now
indoor location information systemfire detection system being installed in a new

A new addition to Nittan’s portfolio is B Catchters on a building with a complex architecturalNow, which uses positioning information to

structure that dates back to the 18th century.

aid the evacuation of people from facilities in

Nittan smoke detectors were incorporated into

the event of an emergency. If a fire breaks out,

hospitals newly built as an emergency measure

this system, which is linked with an automaticas part of the United Kingdom’s response to

fire alarm system, swiftly pinpoints the point of

the COVID-19 crisis. Nittan Europe also offers

origin and the location of individuals and sends

technical support for systems that comply witha visual notification to the facility’s disasterthe ENs and UL LLC standards installed byprevention center, thereby making it possible

partners outside of the United Kingdom andto swiftly extinguish the fire and guide rescue

Europe. These include the UL-compliant SPERA

operations. On an everyday basis, customers

fire alarm system installed at a major hospital in

can use the system to track people in the

Dhaka, the capital of Bangladesh.



student accommodation development that cen-facility, analyze the time and frequency of
B Catch Now sensor beacon and screen
displaying location information (Nittan)

meetings and operations, and generate visual
information and data for flow lines, helping to
improve workplace efficiency and office environments. The beacons used by B Catch Now
to measure location require maintenance toreplace depleted batteries and make repairs,
but because Nittan services the system on thesame cycle as it conducts fire alarm systeminspections it is always in working order withno additional burden on the customer. Nittan

University student accommodation developmentin the United Kingdom that installed a Nittan fire
detection system

SECOM REPORT 2020

31

SECOM Today

MedicalServices

Operating highlights

medical treatment and nursing care in theBelieving that extending services that protect

her physician. Our pharmaceuticals dispens-

health and life is the ultimate expression ofing services involve filling prescriptions andour commitment to providing safety anddelivering medications needed by patients at

peace of mind, we have created a medical

home, as well as providing medical supplies,

services business in four key categories: medi-

including infusion lines and syringes for home

cal care, personal care, health and preventa-

parenteral nutrition (HPN) administered via

tive care, and ICT-based services. Our

central venous catheter, and medical hygiene

operations in this area reflect our commitment

products.

patient’s home under the direction of his or

to providing a menu of services tailored to the

Our support for affiliated medical institu-

needs of individuals with medical care, nursing

tions focuses on partnering with diverse hospi-

care or healthcare concerns. We continue totals and clinics providing services ranging from

capitalize on ICT to create seamless, inte-

emergency medicine to convalescent care to

grated community-based healthcare models

help ensure high-grade medical care services

encompassing, among others, support for

and working to create integrated community-

affiliated medical institutions and the provision

based healthcare models. We also leverageof home nursing, pharmaceutical dispensing,our extensive expertise and proficiency inpersonal care, and health and preventative

home medical care to open and operatecare services.

Medical care services

Our medical care services business beganwith home nursing services and pharmaceutical dispensing services, both of which areprovided to patients in the comfort of their
Net sales and operating revenue

own homes. Today, our home nursing services(In billions of yen)assist home medical care by dispatching

200

175.5

181.9

187.3

visiting nurses from a nationwide network of
34 visiting nurse stations to provide expert

150

Pharmaceutical dispensing services
100
50

Home Medical Services
0

2018

2019

2020

Prescription

Medical Care
Institution

Operating income

Coordination

9

5.8

6

Physician’s guidelines
Nurse’s report(In billions of yen)

6.2

Home Nursing
Services

Pharmaceutical
Dispensing andHome Delivery Service(SECOM Visiting
Nurse Station)(SECOM Pharmacy)

4.0

Consultation

3
Prescription
Pharmaceutical delivery
0

32

2018

2019

SECOM REPORT 2020

2020

Patient

Nurse visit
Outpatient care

ICT-based services

community clinics. Leveraging our experiencen 

in Japan, we also opened and currently oper-

These services center on the deployment of

ate Sakra World Hospital, a general hospital,

distinctively SECOM networked services. One

in Bengaluru, India.

example is the SECOM Vitalook remote medical support platform, which capitalizes on

Personal care services

Visiting personal care servicesn 

our accumulated expertise in home medical

This category includes the operation ofcare and in the provision of support for affili-­residences for seniors, which brings together

ated medical institutions, together with ourour know-how in security services and incapabilities in ICT and unique management­medical and personal care. We also provide

resources. We also provide an extensive selec-

visiting personal care services and adult day

tion of cloud-based medical record systems

care services, as well as operate comprehen-designed to suit the needs of a range ofsive senior care centers that offer diverse

medical care institutions, from clinics to small­in-home care services.

and medium-sized hospitals. Other offerings
include solutions that leverage our know-how

Health and preventative careservicesin ICT, data center operation and medical

We are taking steps to expand health andneeds of medical care institutions, such as

preventative care services to encourage health

SECOM LINKus, which allows medical person-

maintenance and promotion and enhancenel to share electronic medical records stored

quality of life. We also manage SECOM Healthat a SECOM data center, the Hospi-net remote

Care Club KENKO, a membership-based club

image diagnosis support system and SECOM

that provides access to a variety of health

SMASH, a hospital management information

management services.

analysis system.

n 

Hospi-net remote image diagnosis
support system

Collection and storageof home medicalcare patient’s
biometric data
Patient’s home
Patient’ s device

services to respond to the diverse information

SECOM

Remote monitoring ofpatient’s condition
by healthcare professionals
Contracted hospitals

SECOM
data centerCollection and storageof biometric data
Automatic alerts
Video calls
Display of pertinent data
Sharing of information
with related organizations

Relatedorganization

SECOM REPORT 2020

33

SECOM Today

Insurance
Services

We believe that both security services, which

SECOM Anshin My Home is a fire insurance

are preventative by nature, and non-life

policy for residential customers that offers ainsurance, which looks after people should

discount on premiums for subscribers who

misfortune strike, are essential to our ability

have installed on-line security systems, reflect-

to deliver uninterrupted safety and peace ofing our belief that such systems reduce themind. In line with this belief, we continue torisk of theft and fire. The Security Discountexpand the scope of our insurance services

Fire Policy is a similar policy for commercial

business by offering a variety of distinctive

customers who have installed on-line security

policies that support the daily lives and busi-

systems in which premiums are discounted

ness activities of our customers.

to reflect the risk-mitigating benefits ofsuch systems. Active efforts to propose fire

Net sales and operating revenue(In billions of yen)



60
47.7

44.8

46.9

40

20

0

2018

2019

2020

Subscriptions to MEDCOM
continue to risement policy that provides coverage for costs

up subscriptions. Going forward, we willassociated with all inpatient hospital treat-

continue to focus on expanding sales of thesements, including those covered under Japan’s

policies in line with increasing security services

National Health Insurance (NHI) scheme, those

subscriptions.

for advanced medical care, and those forwhich the individual usually bears the burden.
Coverage for inpatient treatment is unlimited,while that for outpatient treatment provides

5
-4.9

0

-5

2018

2019

-4.3

2020

systems to potential home and commercial
security services customers continues to push(In billions of yen)

6.2

insurance when introducing on-line security

MEDCOM is an unrestricted cancer treat-

Operating income (loss)
10

Fire insurance policies with
distinctively SECOM discounts

Operating highlights



SECOM Anshin My Car: Backed byon-site support from emergency
response personnel

up to ¥10 million per five-year period. This

SECOM Anshin My Car is an automotive

allows the subscriber to concentrate on treat-

insurance policy that includes around-the-ment without having to worry about the eco-clock access to on-site support by SECOM

nomic implications thereof. Developed fromemergency response personnel in the eventthe perspective of the subscriber to facilitateof an accident if requested, thereby helping

the best possible cancer treatment, MEDCOM

to resolve concerns. This feature, which also

continues to attract support, underpinning theincludes emergency response personnel con-

expansion of subscriptions.

tacting the police and ambulance services andphotographing the accident site, continues toearn high marks.

New pamphlets for MEDCOM, SECOM Anshin My Homeand SECOM Anshin My Car

34

SECOM REPORT 2020

A security advisor proposes fire insurance to new home
security subscribers

Geospatial
Information
Services

Net sales and operating revenue(In billions of yen)

60
51.1

51.9

53.7

40

2018

2019

2020

Operating income(In billions of yen)

3.0

3

2

1.7

1.9

1

0

Subsidiary Pasco collects geographic data fromcommercial satellites, aircraft, drones andproprietary vehicle- and ship-mounted
sensors, among others, which it integrates,
processes and analyzes to provide a variety ofgeospatial information services, assisting
efforts to address diverse social imperatives.
Pasco provides services to public sector
entities—including national and local
governments—and private sector customers inJapan. The company also extends services tocustomers in both the public and private sectors overseas. Services for public sector entities
in Japan account for approximately 80% ofsegment net sales and operating revenue.


20

0

Operating highlights

2018

2019

2020

3D image (mountainous area)

Contributing to national resilience

The need for measures to prevent disasters
attributable to climate change, including flooding rivers and landslides, continues to grow.
Using aerial lasers, Pasco collects high-precision
3D topographical data necessary for effective
dam and river management and erosion control and conducts risk assessments and evaluates scale of impact. The company also offers
comprehensive surveying services that use adrone-mounted green laser scanner, enabling
the simultaneous 3D topographical measurement of both the beds and above-ground
portions of water bodies, helping boost theefficiency and precision of river management
and fields included in the i-Construction*
program. Pasco looks forward to expanding
its deployment of sophisticated geospatial
information technologies to facilitate an
accurate topographical understanding, as well

3D image (river)

PASCO collects high-precision 3D topographical data necessary to assess various risks

as to provide comprehensive assistance for risk
assessment, the formulation of countermeasures and effective management.
Support for efforts to preventthe deterioration of infrastructure

The aging of Japan’s infrastructure, much ofwhich was built during the country’s postwar
period of rapid economic growth, has becomea major issue. Pasco continues to see brisk
results for the development of plans designed
to extend the lifespan of roads, bridges, schools
and other infrastructure assets. The company
also provides integrated support for the preparation of infrastructure-specific electronic ledgers,
as well as the implementation of inspections toassess deterioration, and the formulation of
long-term repair plans and maintenance work,
and will continue to actively submit proposals to
local governments nationwide.
Providing total services for logistics

Pasco is collaborating with companies toenhance services and expand marketing
channels in order to solve challenges in thelogistics industry. Pasco leverages its geospatial information technologies to conduct marketing and location analysis and determine
optimal warehouse configurations, and has
partnered an ICT solutions provider in the areaof warehouse management and with a logistics solutions developer in the area of delivery
management. To enhance delivery from warehouses, Pasco prepares optimized delivery
plans and ensures effective crisis managementin the event of a disaster, while an allied
mobile navigation services provider offers
route navigation.
Looking ahead, Pasco will step up its
efforts to provide total logistics and othernext-generation services that will lead tofuture growth. To this end, it will strengthen
cooperation with companies and academic
institutions in diverse fields.
* The i-Construction program was launched by Japan’s
Ministry of Land, Infrastructure, Transport and Tourism(MLIT) as an initiative aimed at deploying ICT inconstruction and civil engineering to help overcome
persistent labor shortages.

SECOM REPORT 2020

35

SECOM Today

BPO and ICT
Services

Operating highlights

pandemic forcing people to change the way

This segment encompasses the operations oftelework, the company is also focusing efforts

subsidiaries Secom Trust Systems, which devel-on proposing cloud-based services that makeops and provides ICT services that resolve a

new work styles safer and more comfortable.

variety of issues faced by customers, delivering

Examples include personnel management–

safety and peace of mind and making lives

related services such as the SECOM Anshin

more comfortable and convenient; At Tokyo,

Employee Attendance Management Service

one of Japan’s largest data center operators,

KING OF TIME Edition, which makes it possible

which offers services boasting excellent con-for employees utilizing telework to enter work

nectivity to mainstay cloud-based services; andstart and end times and manage attendance

TMJ, which provides BPO services, including

data online regardless of their location, andcontact center and back office support

the SECOM Secure Digital Payslip Service that

services.

enables employees to safely manage and view

they work, accelerating the trend towardsalary details protected by stringent SECOM

Large-scale disaster preparedness,
information security andcloud-based services

security. SECOM Trust Systems also capitalizes

Secom Trust Systems provides wide-ranging

as a certification authority to offer a variety

services that assist in the formulation of BCPs

of services that contribute to the resolution

to ensure preparedness, the implementationof issues faced by companies, includingof effective immediate response measures andthe SECOM Secure Digital Minutes Service,

the prompt restart of operations in the after-

which makes it possible to approve digitizedmath of a major disaster. The SECOM Safety

minutes of Board of Directors’ meetings held

Confirmation Service enables subscribers to

via Web conference or teleconference; theswiftly ascertain the safety of employees andSECOM Anshin Eco Document Digitization

Net sales and operating revenue

their families and damage to sites in the event

Service, which digitizes contracts and other(In billions of yen)of a major earthquake or other disaster or the

documents; and the SECOM Secure Filefailure of key infrastructure. As of March 31,

Transmission Service, which facilitates the



120
101.3
80

110.9

on our robust secure data center capabilities
and the competitive advantage we enjoy

2020, this service was used by approximately

76.8

7,900 companies employing around 7.1
million individuals, with contracts with large

40

companies and public-sector entities continuing to grow. Since its release, steps have been

0

2018

2019

2020

(In billions of yen)using the business communication tools of

12

10.6
8.1

improve convenience, as a result of which it is
now possible to confirm and report on safety

Operating income

8taken in response to customer feedback to

9.4

major social media services.
In response to COVID-19, Secom Trust
Systems prepared a questionnaire template
to help companies to promptly confirm the4status of their employees’ health, providing
certain components free of charge to support

0

2018

2019

2020

companies’ efforts to prevent the further
spread of the virus. Moreover, with the
SECOM Safety Confirmation Service:
Helping ensure safety in the COVID-19 era

36

SECOM REPORT 2020

BPO services

safe and secure transmission of electronic

files to and from individuals in teleworking

In Japan, a declining labor force and theenvironments. Looking ahead, SECOM Trust

spread of COVID-19 are spurring brisk

Systems will continue to enhance its lineup of

demand for high-grade BPO services that

services that support new ways of working.

deliver safety and peace of mind. Subsidiary
TMJ provides highly rated contact center

Data center services

At Tokyo data centerand back office support services tailored toData center operator At Tokyo capitalizes

the needs of financial institutions and otheron its many years of experience and opera-

companies. In March 2020, TMJ leveraged

tional know-how to offer a broad range ofits know-how in the management of contact

customers uninterrupted, around-the-clock

centers to develop voice sentiment analysis AI

data center services that respond to diverseto assist call center operations in collaborationneeds and have earned a reputation forwith a firm specializing in AI-based voiceworld-class quality and reliability. Of note,

sentiment analysis. This AI is deployed tothe company’s key competitive advantage isanalyze and evaluate the emotions of call

its ability to provide high-grade services that

center operators and customers from theirboast low latency and excellent connectivity

vocal intonation and displays the results on

together with megacloud, internet exchange

the operators’ monitors. Supervisors can check(IX) and diverse other services, creating an

the results displayed in real time and provide

important IT infrastructure for companies foradvice, thereby helping to improve the skills

which system outages would significantlyof new operators. This also contributes to theimpact society. In recent years, companies

creation of more positive work environments

have been forced to address business risks

for operators.

associated with large-scale natural disasters,
Operator at call center deploying
voice sentiment analysis (TMJ)

With an increasing number of companies

prompting a further increase in demand for

introducing telework arrangements as adata center services in the Kansai region,

result of COVID-19, TMJ is working to boost

which is unlikely to suffer a disaster concur-

sales of the SECOM Call on Duty Service,

rently with the Tokyo metropolitan area. In

an outsourced telephone receptionist

light of this trend, in January 2020 At Tokyo

service that responds to calls coming into

opened a new data center in the Kansai

the customers premises around the clock

region to help ensure business continuity forwhenever requested. Through the provision

financial institutions in the event of a majorof this service, the company seeks to support

disaster. In April, the company opened

the creation of an environment that enables

another new data center for use as a network

employees to work from remote locations

communication hub in the same region.

comfortably and securely, as well as toGoing forward, At Tokyo will continue
to promote the qualitative and quantitative

increase customers for its high-grade contact
center services.

expansion of its data center operations in
response to rising demand, providing aplatform that will support the realizationof diverse services essential to tomorrow’s
advanced information society.

SECOM REPORT 2020

37

SECOM Today

Real Estate
andOther Services

Operating highlightsReal estate leasing

Our real estate leasing business focuses on

Real estate development and sales

advantageous locations in central Tokyo. This

We continue to promote the development andbusiness comprises extensive, highly rated

sales of the Glorio Residence series of family-

maintenance and management that are usedfocused condominiums, which boast the latest

by diverse companies in various industries.



security systems, extensive disaster prepared-

Construction and installation

ness features and dependable follow-up

services, reflecting the concepts of security,

We have created a configuration for providing

peace of mind and reliability. We also offer

a wide range of high-grade services, from thethe Glorio Comfort series of inviting, high-design and installation of air conditioning,

performance urban condominiums that offer

plumbing and electrical systems to building

Net sales and operating revenue

outstanding security in a compact package,

maintenance.

(In billions of yen)and the Glorio Scelto series of condominiums

60

Home services

for lease and pre-owned condominiums that

have been renovated in response to rising

SECOM Home Service is an optional suite of

demand. On another front, we opened

services available to SECOM Home Security

condominium information centers in thesubscribers with a diverse menu that enables

Tokyo metropolitan area to handle inquiries

us to tailor packages that help customers

about housing-related issues. With remoteresolve concerns in everyday life. Services

support becoming a new normal in the era

offered vary from housework support toof COVID-19, we also launched an online

patrolling around subscribers’ homes when

Operating income

condominium information center that enables

they are out.

(In billions of yen)people to access services from their homes.

45.5

46.6

51.2

40

20

0

2018

2019

2020

12

Looking ahead, we will promote sales
activities that make use of these facilities.

8

6.9
5.1

6.0

4

0

2018

2019

2020

SECOM Home Service

Glorio Residence Urawa Motocho

38

SECOM REPORT 2020

Condominium information center display room

Sustainability

Basic philosophy and framework for promotion
Since our establishment, we have sought to fulfill our responsibil-

understand the need for rigorous corporate governance inity to society through our business activities, acknowledging theincreasing the trust of society and fully leveraging our competi-

importance of sustainability for ourselves and for society. In light oftive edge. Further, recognizing that protecting the environment isdramatic socioenvironmental changes and the increasingly serious

essential to our ability to provide services that deliver safety andnature of issues such as crimes and accidents, cyber crimes, illness

peace of mind and make life more comfortable and convenient,and aging, and natural disasters, the entire SECOM Group is work-

we incorporate consideration for the environment into all aspects

ing as one to create the ANSHIN Platform, a service infrastructureof our operations.

designed to provide services that deliver peace of mind to people
in their everyday lives, as well as to society as a whole.

Our day-to-day business activities are structured to both facilitate sustainable growth, as well as to resolve ESG-related issues.

The key to our efforts to further enhance corporate value is

We believe that increasing corporate value by expanding our busi-

having human resources who are committed to providing satis-

ness activities directly improves our ability to address ESG-related

faction that exceeds customers’ expectations. The evolution ofissues, which in turn enables us to contribute to the achievementsocial imperatives continues to underscore the importance ofof the SDGs. We thus continue to place a priority on maintaining

securing and fostering talented human resources who have thea strong relationship and encouraging dialogue with our various

ability to adapt to change and create value and who seek tostakeholders as we advance sustainability. To further strengthen

contribute to society. By ensuring that SECOM’s Philosophy

sustainability initiatives, in October 2019 we established thepermeates our operations and encouraging adherence to the

Sustainability Promotion Office, which functions as a Groupwide

SECOM Group Code of Employee Conduct, we have built abody, collecting and sharing information from relevant depart-

diverse team of people who thrive in a free and open corporate

ments while working to reinforce efforts to address ESG-related

culture, which we recognize as our greatest asset. We also

issues and enhance related disclosure.

Support for the UNGCIn May 2018, we became a signatory to the United Nations
Global Compact (UNGC) and pledged our support for the Ten
Principles of the UNGC, which are classified into the four
categories of ”Human rights,” “Labour,” “Environment”
and “Anti-corruption.”

Earning selection for inclusion in ESG investment indices
Our efforts to address ESG-related issues continue to earn highkey global ESG investment indices. These include all four indicesmarks from third-party assessment organizations around the world.

for Japanese equities used by Japan’s GPIF*.

Of note, we have been selected as a constituent of a number of* The four indexes used by the GPIF are the FTSE Blossom Japan Index, the MSCIJapan ESG Select Leaders Index, the MSCI Japan Empowering Women Index(WIN) and the S&P/JPX Carbon Efficient Index.

THE INCLUSION OF SECOM CO., LTD., IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO
NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF SECOM CO., LTD., BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE
EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

SECOM REPORT 2020

39

ESG Initiatives

Social initiatives
Relevant SDGs

Central themes

Occupational health and safety

Summary
Preparation of manuals that draw on our accumulated know-how andpromotion of training to ensure employee safety and collaboration with the
SECOM Health Insurance Union to manage employee health

SECOM’s Philosophy and the SECOM Efforts to ensure the full penetration of SECOM’s Philosophy and encourage
strict compliance with the SECOM Group Code of Employee Conduct toGroup Code of Employee Conduct
bolster employee motivation and earn the trust of society
Securing and fostering talented
human resources

Focus on securing and fostering talented human resources who have theability to adapt to change and create value and who seek to contribute tosociety

Advancing diversity

Assignment of diversity and inclusion staff to the Human Resource
Department to promote the creation of positive work environments in which
diverse employees can maximize their capabilities

Promoting work–life balance

Establishment of programs and promotion of ongoing efforts to enhancework–life balance and increase employee retention

Dialogue with employees

Employee job satisfaction surveys and the exchange of opinions between the
SECOM Employee Union Federation and executives to facilitate the creationof employee-friendly workplaces

Occupational health and safety
We believe that our ability to provide safety and peace of mind tonecessary to enhance occupational safety. The division has

our customers depends on first ensuring the health and vitality ofdeveloped procedures and equipment designed to prevent

our employees. Accordingly, we promote various initiatives aimed

accidents and promotes initiatives to improve employee skills,

at protecting and enhancing employee health and creating safe,

including a program that seeks to improve driving techniques.

employee-friendly workplaces.

Efforts to ensure safe, employee-friendly workplaces also

The Human Resource Division has established a system to com-

include the provision of extensive training aimed at preventing

prehensively manage occupational health in collaboration with theoccupational accidents, including that related to the risks of

Health Promotion Office, which is staffed with occupational healthsecurity accidents in various situations.

physicians (OHPs), and the SECOM Health Insurance Union. To promote continuous improvements in occupational health and safety,
health committees nationwide meet monthly to discuss key issues,
including employee working hours and efforts to improve health,Participants in Training Aimed at
Preventing Occupational Accidents

enhance work environments ensure safety and prevent risks. We(Number of people)

also actively care for employees’ mental health, conducting stress

3,000
2,610

checks, arranging meetings with psychiatrists and specialized
counselors, to make certain that employees feel both physically

2,348
2,000

2,015

and mentally supported.
To ensure occupational safety, the Operation Division verifies
day-to-day security operations and works to reduce identified

1,000

occupational safety risks. Our operational and control structure
facilitates the efficient exchange of reports and instructions
between the front lines and senior management, ensuring thatthe latter is fully apprised of day-to-day operations across Japanand able to provide guidance for the improvements where

40

SECOM REPORT 2020

0

2018

2019

2020

(Years ended March 31)*Scope of reporting: SECOM CO., LTD.

SECOM’s Philosophy and the SECOM Group Code of Employee Conduct
Encouraging awareness of SECOM’s Philosophy and adherenceby challenging accepted norms, while the second calls for judging

to the SECOM Group Code of Employee Conduct are essential

the legitimacy of our actions by examining whether they are just,to maximizing the trust of stakeholders and our corporate value.

fair and beneficial not only to SECOM but also to society as a whole.

Handed down since our establishment, SECOM’s Philosophy pro-The SECOM Group Code of Employee Conduct sets forth ideals forvides a spiritual anchor for Group employees and the entire SECOM

the conduct of employees in both public and private life and spe-

Group. The driving force behind our growth and evolution, thiscific standards for the day-to-day performance of duties. We have

philosophy emphasizes a refusal to be content with the status quo

published SECOM’s Philosophy and the SECOM Group Code of Em-

and a commitment to doing what is appropriate. The first element

ployee Conduct in the form of handbooks and pocket-sized guides,

expresses our determination to offer innovative services and systems

which are distributed to employees in Japan and overseas.

Penetration of SECOM’s Philosophy

Tri ion

Passion Emotion Motivation

Initiative

Employees who
personify SECOM’s
Philosophy

A stronger
corporate
cultureA wellestablished
brand

Trust ofsociety• Increased contracts• Improved assessment by society• Optimized operations

Incomparable intangible assets
Diverse human resources who share SECOM’s Philosophy andthrive in a free and open organizational culture
Sustainable growth
Questions on SECOM’s Philosophy and the SECOM Group Code ofother steps to promote more strict observance. Since 2018,

Employee Conduct are included in our e-learning program, which

we have promoted the Tri-ion initiative, which seeks to ensure

is provided annually, and employees’ compliance status is reflectedthat SECOM’s Philosophy fully penetrates every aspect of ourin their semiannual performance reviews. An employee who

operations and to bolster motivation and productivity Groupwide.

becomes aware of a violation is obliged to submit a report toThrough this initiative, we aim to nurture employees who embody

his or her superior. In addition, we have established a whistle-

SECOM’s Philosophy to foster a stronger corporate culture, ensure

blowing system. We are currently using IT equipment and taking

a well-established brand and further earn the trust of society.

Securing and fostering talented human resources
Our vibrant, diverse team of employees, who are critical to ouremployee-friendly workplaces. One such program enables employ-ability to provide services that deliver safety and peace of mind,

ees to choose the geographic location to which they are assigned

are our greatest asset and another driving force behind our growth

to suit career phase or personal preference.

and evolution. Accordingly, we strive to secure and foster talented

We provide extensive training to foster human resources withhuman resources who have the ability to adapt to change andhigh ethical standards and superior skills. In addition to training for

create value and who seek to contribute to society.

all new employees, we have developed department- and job-specificAs a company that extends services across Japan and aroundcurricula that reinforce practical capabilities in a manner that ben-

the world, we promote active recruiting efforts. We also work toefits employees on the front lines. We have also launched a variety

enhance employee welfare with the goal of improving our ability toof specialized training options, including an overseas study program

retain human resources, and have established a variety of programs

and a subsidy system for employees to take correspondence courses.

designed to boost motivation and productivity, as well as to create

In the area of training for security guards, we have introduced VR

SECOM REPORT 2020

41

ESG Initiatives

technology, among others, to improve effectiveness and ensureParticipation in Training Programs
Hours spent in training (left scale)Participants (right scale)(Number of people)

employees acquire excellent discernment and know-how.
Employee performance reviews look to impartially evaluate
employees’ efforts and support self-realization. Evaluations are(Hours)17,500

325,000
289,364

based on reports prepared by employees assessing their executionof duties, achievements and areas in need of improvement, and15,884

rational assessment categories optimized for each particular job.

12,500175,000

systems designed to assist with career development, including
the Self-Reporting System and Challenge Support System, which
encourage employees to declare and assists their efforts to realize

15,000203,699

We use an open, fair format whereby review results are disclosed
to employees. In addition, we promote self-actualization through243,993

250,000

11,461
10,884
100,000

2018

2019

10,0002020(Years ended March 31)

their own future goals and aspirations.

*Scope of reporting: SECOM CO., LTD.

Advancing diversity
Recognizing the importance of welcoming a broad spectrum of

Declaration of Promoting Diversity and Inclusionsindividuals with wide-ranging ideas, to the creation of new value,• Guided by a disciplined corporate culture rooted in SECOM’s

we actively promote diversity in our labor force, including byadvancing career opportunities for female employees. In 2017,
we established the Declaration of Promoting Diversity andInclusions, and assigned diversity and inclusion staff to the Human

Philosophy, we respect differences and prioritize diversity in ourhuman resources.
• We aim to be an organization in which all employees can workwith drive, vitality, confidence and pride.

Resource Department. We currently promote the creation of• We consistently pursue the creation of innovative value by sup-positive work environments that maximize the capabilities of all

porting employee growth and enhancing synergies among theemployees regardless of gender, nationality, age, physical ability,

various strengths of individual employees.

sexual orientation or gender identity.
With the aim of actively fostering female leaders, we are a

Labor Force by Gender

member of the nonprofit organization Japan Women’s Innovative
Network (J-Win). We also dispatch two female employees to participate in J-Win programs, which are aimed at cultivating skills andhelping female employees build networks.

Executive management
Other
Total

As of March 31, 2020

Male
91.2%
76.0%
81.5%

Female
8.8%
24.0%
18.5%

*Scope of reporting: SECOM CO., LTD.

Promoting work–life balance
We view work–life balance, including sufficient physical and• Flex vacation: Enables employees to take 10 consecutive

mental rest and a fulfilling private life as essential to the ability

vacation days annually, in theory at any time during the year

to approach one’s work with energy and focus. In addition to• Refresh vacation: A two-week vacation available to employees

actively encouraging employees to take annual paid vacation

every 10 years

days, we have established vacation and leave systems in line with• Maternity leave: Available for the six weeks prior to and eight

which we promote ongoing efforts to help employees achieve

weeks after giving birth; an additional two weeks is available toa balance between their careers and private lives and enhance
employee retention.

employees who wish to start their maternity leave earlier• Childcare leave: Can be taken by both female and male
employees up until the day before the child’s third birthday

42

SECOM REPORT 2020

• Change in working hours/exemption (shorter working• SECOM Life Support Program: Allows employees to tem-

hours) for childcare: Available within certain restrictions on

porarily change work style and/or location to which they arerequest to employees who are pregnant or have children who

assigned to provide childcare or nursing care or to accompany ahave not yet entered the second grade of elementary school

spouse who has been transferred overseas and provides support(exceeds legal requirement, which is children under the ageof three)for long-term career advancement• Job Return Program: Enables people who have left employ-• Nursing care leave or change in working hours/exemption (shorter working hours) for nursing care: Full leave or

ment at SECOM for unavoidable reasons such as childbirth,childcare or nursing care to apply to return to work

adjusted working hours for up to six months (maximum of 186days) for employees providing nursing care to a family member
wishing to return to work full-time after conclusion of nursing
care provision
Percentage of Annual Paid Vacation Days
Taken by Employees

Employees Taking Childcare Leave
JTotal (left scale)(%)(Number ofpeople)

60

200
53.3

50

53.2

JMale employees (right scale)(Number ofpeople)

20

160

50.0

16
138

137

127

120

12
10

40

30

2018

2019

2020

9

80

8

40

4

0

2018

2019

2020

0

(Years ended March 31)(Years ended March 31)*Scope of reporting: SECOM CO., LTD.

10

*Scope of reporting: SECOM CO., LTD.

Dialogue with employees
We seek to achieve sustainable growth as a strong, flexible organi-principle employees automatically become union members when

zation that is impervious to the impact of social change and thethey are hired. As a consequence, our union membership rate forcompetitive environment. We are thus working to create a virtuous

eligible employees is 100%.

circle, recognizing the importance of enabling employees who

We place a priority on dialogue between labor and manage-

share SECOM’s Philosophy to demonstrate their full potential,

ment. With the aim of boosting employee morale, building awhich helps raise the quality of the services and products wevibrant and healthy organizational culture and maximizing organi-provide, thereby enhancing customer satisfaction and earning thezational energy, the management representatives, including thetrust of society, which in turn increases employees’ job satisfaction.

President and Representative Director, meet monthly with SECOM

Since 2016, we have conducted an annual anonymous employee

Lively Union to exchange views. Discussions are also held at

job satisfaction survey. In the fiscal year ended March 31, 2020,

SECOM Group companies and branches across Japan to address

the response rate for this survey was 85.5%.

issues such as improving workplace environments and operating

Reflecting our fundamental belief that the growth of ourprocedures and ensuring occupational health and safety. SECOM

employees is inextricably linked to our prosperity, we signed a

Lively Union also exchanges views with management throughunion membership qualification agreement with SECOM Lively

meetings with employees on organizational culture and theUnion (the SECOM Employee Union Federation), which was estab-

SECOM Employee Central Council.

lished in 1964, and became a union shop, meaning that in

SECOM REPORT 2020

43

ESG Initiatives

Governanceinitiatives
GovernanceRelevant SDGs

Central themes

Summary

Corporate governanceIndependent oversight of management and ensure proper businessexecution while working to actively disclose information to shareholders
and other stakeholders

Compliance

Efforts to improve compliance by promoting strict adherence to the
SECOM Group Code of Employee Conduct

Information security/data security

Promotion of information security through establishment of the
SECOM Group Information Security Basic Policy and creating andoperating a robust information security system

Basic philosophy
In line with Japan’s Corporate Governance Code and at theWith the aim of earning the continued support of our customers,
shareholders, clients, employees, local communities and otherdirection of top management, outside members of the Board of

stakeholders as a company with value that is worthy of trust,Directors and Audit & Supervisory Board provide independent

we strive to maximize corporate and shareholder value over theoversight of the management team’s performance in a manner

medium to long term and recognize the importance of fulfillingthat takes into account the interest of stakeholders and ensures

our responsibilities as a corporate citizen and achieving sustainable

the appropriate execution of business activities. We also work

growth and development.

actively to disclose information to shareholders and otherstakeholders and strengthen our compliance framework.

Initiatives to strengthen corporate governance
Area

Establishment ofcorporate governancesystem
Separation of management
and execution
Number of directors
designated in the Articles
of Incorporation
Term of service of
directors

1986


2000

2005

2010

2015

2020

1986: Creates SECOM’s Philosophy
 2006: Formulates basic rules of management for SECOM Group companies
 2010: Establishes the SECOM Group Management Committee

 2004: Institutes an executive officer system

Up to 2004: Maximum of 40
 From 2005: Maximum of 20

Up to 2003: 2 years
 From 2004: 1 year2000–2001: 28–29

Number of directors

2002–2003: 22–23
 From 2004: 10–13

Up to 2010: 4

Number of auditors

 From 2011: 5
2013–2015: 2

Number ofoutside directors
Number ofoutside auditors

From 2016: 3

 From 2020: 4

Up to 2002: 2
 From 2003: 3
 2016:

Remuneration for/appointment of
directors

44

SECOM REPORT 2020

Establishes Nomination and Compensation
Committee
 2017:Adopts performance-linked remuneration
systemOutline of corporate governance system
We are a company with an Audit & Supervisory Board. The Board

officers’ discharge of their duties. We believe that this enables us

of Directors, which includes four outside members, determines

to conduct independent oversight of management and ensure

overall management and business execution policies and super-

appropriate business execution.

vises the execution of duties by directors. Executive officers, led

The Nomination and Compensation Committee has beenby the President and Representative Director, are responsible forestablished as a discretionary committee of the Board of Directors.

business execution. Under our corporate governance system, theThis committee, which is responsible for presenting candidates for

Audit & Supervisory Board, which includes three outside mem-the position of director to the Board of Directors and for ensuringbers, and the Board of Directors coordinate with the internal

the appropriateness of remuneration for directors, comprises

audit departments to audit and supervise directors’ and executive

seven directors, four of whom are outside.

Corporate governance organization
General Meeting of Shareholders
Appointment/
dismissal

Board of Directors(11 members, four of whom areoutside directors)
Selection/
oversight

Appointment/
dismissal

Proposal of candidates forthe position of director
Authorization/consultation
regarding remuneration

Nomination andCompensation
Committee

Determination/submission ofdecisions regarding remuneration

Internal audit
departments

President andRepresentative Director(Five members, three of whom
are outside)
Office of Audit & Supervisory Board:
Three employees(Operational, accounting andcompliance audits)

Reporting on important matters

Chairman and
Representative Director

Audit & Supervisory Board

Coordination

Legal affairs departments

Enhancement of compliance/internal auditing

Executive Officers

Deliberation

Organizational
Culture Committee

Audit by independent
public accountants
Accounting audit

Board of Directors

Executive Officers

Audit & Supervisory Board

The Board of Directors comprises 11 directors
and in principle meets monthly, with fivemembers of the Audit & Supervisory Board also
in attendance. The Board of Directors is
responsible for deciding overall management
policies and business execution policies, as well
as for monitoring the performance of duties bydirectors, and strives to promote the active
exchange of opinions with the aim of ensuring
effective and swift decision making. Six of the
11 members are responsible for businessexecution, with the remaining five members(the founder and the four outside directors)
having no involvement.

We have adopted an executive officers system,
whereby the Board of Directors is responsiblefor decision making and the executive officers
are responsible for business execution. This wasdone with the aim of strengthening field
divisions and enhancing customer service
systems by clarifying responsibilities andauthority and expediting business execution.
We currently have 30 executive officers, six ofwhom are also directors.

The Audit & Supervisory Board comprises fivemembers, two of whom are full-time and threeof whom are outside. In principle, the Audit &Supervisory Board meets monthly. Individuals
well-versed in our businesses and internalaffairs, as well as in finance and accounting,are appointed to serve as full-time members,
while individuals who are independent of the
management team, have extensive knowledgeof corporate management, legal, financial andother matters and are capable of providing
effective oversight and monitoring of the
management team, are appointed to serve as
outside members.

SECOM REPORT 2020

45

ESG Initiatives

In accordance with the policy for appointment set forth by theRegular meetings between the President andRepresentative Director and Audit & Supervisory
Board members

Board of Directors, candidates for appointment to the Board ofAudit & Supervisory Board members hold regular (monthly) meet-

Directors and the Audit & Supervisory Board are decided throughings with the President and Representative Director, during which

deliberation by the Board of Directors. Candidates for the Board

they exchange opinions on important management-related issues,of Directors are nominated from among candidates determined

including the results of audits, to ensure common understanding.

Nomination of candidates for appointment to theBoard of Directors and the Audit & Supervisory Board

through discussion by the Nomination and Compensation
dates for the Audit & Supervisory Board are nominated with the

Meetings between Audit & Supervisory Board members
and accounting auditors

agreement of the Audit & Supervisory Board.

Audit & Supervisory Board members meet regularly (six times

Committee, the majority of whom are outside directors. Candi-

annually) with the accounting auditors, as well as additional meet-Internal audits and cooperation among board
members and offices

ings as necessary, for the purpose of exchanging opinions andAudits by Audit & Supervisory Board members

tions and exchange opinions regarding annual audit plans andAudit & Supervisory Board members attend important meetings,

audit results. If necessary, Audit & Supervisory Board members

including those of the Board of Directors, to exchange opinions on

also act as witnesses during audits conducted by the accounting

overall corporate management, as well as to collect reports on theauditors at remote locations and during audit reviews (23 times indischarge of duties from directors and other pertinent individuals

the fiscal year ended March 31, 2020).

information. Audit & Supervisory Board members receive explana-and conduct audits focused on the possible occurrence of violationsof laws, regulations, the Articles of Incorporation and/or sharehold-

Collaboration with internal audit and other departments

ers’ interests. The Audit & Supervisory Board also conducts audits of

Audit & Supervisory Board members hold regular (monthly) meet-

our overall business activities, as well as those of subsidiaries andings with the Internal Audit and Compliance Department, during

affiliates, in accordance with annual audit plans.

which they receive reports and exchange opinions on the resultsof internal audits and, as appropriate, receive reports on inspections of subsidiaries from and exchange opinions and information

Principal Activities of Audit & Supervisory Board
members in the Fiscal Year Ended March 31, 2020
Participation in meetings of the Board of Directors

98.18%

Participation in meetings of the Audit & Supervisory
Board

98.18%

Information sessions with directors and other executivesof the parent company, subsidiaries and affiliatedcompanies

77 times

Audits conducted by Audit & Supervisory Board
members at remote locations

46

with the Group Governance Department. If necessary, to ensure

SECOM REPORT 2020

the efficiency of audits, Audit & Supervisory Board members ask
the internal audit departments to conduct investigations.

101
locationsOutside directors and outside Audit & Supervisory Board members
We appoint individuals who have extensive knowledge of corpo-

between the President and Representative Director, among others,

rate management to serve as outside directors, thereby incorpo-

and the Audit & Supervisory Board members). This ensures thatrating a broad range of external perspectives not constrained byAudit & Supervisory Board members’ objective and neutral opin-

the internal affairs. We thus have a structure that ensures theions are reflected promptly in operations. As a consequence, wetransparency and objectivity of management.

believe that we fulfill our responsibility to conduct independent

We appoint Audit & Supervisory Board members who have a
wealth of knowledge of corporate management, legal, financial
and other matters (including three outside members, who are

oversight of management performance in a manner that takes
into account the interests of stakeholders.
We appoint outside directors and outside Audit & Supervisory

essentially independent of the management team). We have also

Board members on the basis of pertinent requirements set forthestablished an auditing organization (including the Office of Audit

in Japan’s Companies Act and the standards concerning inde-& Supervisory Board Members) that operates independent of day-pendence set forth by financial instruments exchanges.

to-day operations and a process (including periodic meetings

Outside directors and outside Audit & Supervisory Board members

Outsidedirectors

Name

Principal activities

Attendanceat Board of
Directors’
meetings

Attendance at
Audit &
Supervisory
Board
meetings

Takaharu Hirose

Mr. Hirose offers advice and suggestions at meetings of the Board of
Directors based on experience and insights gained in the foundation andmanagement of multiple enterprises and industry organizations. He alsoasks questions and states opinions to clarify issues.

11/11

—

Mr. Kawano offers advice and suggestions at meetings of the Board of
Directors based on experience and insights gained through the holding of
Hirobumi Kawano
important positions in government. He also asks questions and states
opinions to clarify issues.

11/11

—

Mr. Watanabe offers advice and suggestions at meetings of the Board of
Directors based on experience and insights gained through his many
Hajime Watanabe
years of experience in corporate management. He also asks questions
and states opinions to clarify issues.

11/11

—

Hideki Kato

Mr. Kato offers advice and suggestions at meetings of the Board of
Directors based on experience gained through the execution of national
policies and insights gained as a result of his accomplishments at a policy
think tank. He also asks questions and states opinions to clarify issues.

11/11

11/11

Makoto Yasuda

Mr. Yasuda offers advice and suggestions at meetings of the Board of
Directors based on experience and insights gained in the management of a
global enterprise. He also asks questions and states opinions to clarify issues.

11/11

11/11

Setsuo Tanaka

Mr. Tanaka offers advice and suggestions at meetings of the Board of
Directors based on experience and insights gained through the holding ofimportant positions in government. He also asks questions and states
opinions to clarify issues. He also makes efforts to understand what was
discussed at Board of Directors or Audit & Supervisory Board meetings he
has missed by obtaining reports on resolutions from, respectively, theindividual in charge of meeting administration or an Audit & Supervisory
Board member.

7/8

7/8

Outside Audit &Supervisory
Board members

Notes: 1. Information on attendance at meetings of the Board of Directors and Audit & Supervisory Board is for the fiscal year ended March 31, 2020.
2. Setsuo Tanaka was elected and assumed the position of Audit & Supervisory Board member at the ordinary general meeting of shareholders held on July 26, 2019.
Accordingly, the figures for his attendance are for meetings of the Board of Directors meetings and the Audit & Supervisory Board held on or after that date.

SECOM REPORT 2020

47

ESG Initiatives

Remuneration for directors and Audit & Supervisory Board members
Remuneration for directors consists of pecuniary remuneration

and Compensation Committee within the limit resolved at the Or-

and stock compensation (shares with restrictions on transfer).

dinary General Meeting of Shareholders set separately from that

Outside directors are eligible for pecuniary remuneration only.

set for pecuniary remuneration. In addition to incentives offered

Pecuniary remuneration is determined by the Nomination andwith the goal of driving sustainable growth in corporate value,Compensation Committee, which has received authorization

directors other than those who are outside receive shares withfrom the Board of Directors, within the maximum limit resolved

restrictions on transfer, the objective of which is to promote theat the Ordinary General Meeting of Shareholders. Pecuniary

further sharing of value with shareholders.

remuneration for directors comprises basic remuneration andRemuneration for Audit & Supervisory Board members, which

bonuses, the latter of which is linked to consolidated operating

comprises pecuniary remuneration only, is determined throughresults and individual contribution. Outside directors receive

discussion involving Audit & Supervisory Board members inbasic remuneration only.

amounts commensurate with individual duties. Remuneration for

Stock compensation is determined by discussion of the Board

Audit & Supervisory Board members is set within the maximumof Directors, taking into account deliberations by the Nomination

limit resolved at the Ordinary General Meeting of Shareholders.

Remuneration for directors and Audit & Supervisory Board members (Fiscal year ended March 31, 2020)
Position48

Total remuneration(Millions of yen)

Breakdown of total remuneration(Millions of yen)Basicremuneration

Bonus

Restricted stock

Number ofentitled individuals

Directors (excluding outside directors)

341

272

52

15

7

Audit & Supervisory Board members(excluding outside members)

45

45

–

–

2

Outside directors

30

30

–

–

3

Outside Audit & Supervisory Board members

25

25

–

–

4

Total

442

373

52

15

16

SECOM REPORT 2020

Philosophy regarding the diversity and size of the Board of Directors
The Board of Directors consists of internal directors, who are

and the number of members is appropriate to facilitate discussions

familiar with SECOM’s businesses and have diverse knowledge

and resolutions of substance. We will continue working to enhanceand several outside directors, includes several outside directors

the effectiveness of the Board of Directors by promoting further

with extensive insight in corporate management and other areas.

diversity and ensuring the appropriate size of the Board.

Diversity in terms of gender and international experience is ensured

Evaluation of the Board of Directors’ effectivenessEvaluation processexpressed the opinion that the atmosphere in which they function

The effectiveness of the Board of Directors is evaluated annually.

encourages them to speak and that further improvements in the

In January 2020, a survey was conducted. Responses were col-administration of the Board of Directors had been seen since thelated by the Board’s secretariat in early March and findings were2019 survey. Various opinions were also expressed, including that

subsequently discussed by the Board.

opportunities should be created for free debate, thereby invigorating discussion, as well as for further communication with outside

Summary of findings

directors.

Composition of the Board of Directors
The opinion was expressed that the diversity of the Board ofOversight function of the Board of Directors

Directors and the balance between execution and oversight are

Matters handled by the Board of Directors are selected appropri-

suitable and that the Board is an appropriate size to ensure active

ately, based on the Rules of the Board of Directors and the opin-

discussion and swift decision making. Constructive views were also

ion was expressed that discussions on management policies andexpressed regarding further diversification of the Board’s composi-

corporate philosophy are rigorous. In addition, constructive views

tion in terms of gender and other considerations.

were expressed regarding the progress of discussions regarding
changes in the operating environment attributable to technologi-

Administration of the Board of Directors

cal innovation and a declining labor force and related risks under-

The Board of Directors meets once monthly in principle to enabletaken with a medium- to long-term perspective.

swift discussion and resolution of critical matters. To ensure that
directors and Audit & Supervisory Board members are able to

Future initiatives

make appropriate decisions, matters deemed particularly critical

To further enhance corporate value and realize an even moreare discussed by the Board of Directors prior to resolution andeffective Board of Directors, we will continue to promote efforts

pending matters are reported to the Board of Directors subse-

to improve the board’s functions based on evaluations and opin-

quent to resolution. In 2020, both outside directors and outsideions expressed.

Audit & Supervisory Board members actively made comments andSECOM REPORT 2020

49

ESG Initiatives

Directors, Audit & Supervisory Board Members andExecutive Officers
Audit & Supervisory
Board Members

Directors

Takayuki Ito
Koji Kato
Hideki Kato*
Makoto Yasuda*
Setsuo Tanaka**Outside

Makoto Iida

Yasuo Nakayama

Ichiro Ozeki

Founder

Chairman and
Representative Director

President andRepresentative Director

Executive Team
Directors

Executive Officers

Yasuo Nakayama

Kenichi Furukawa

Yoichi Sugimoto

Chairman and
Representative Director

Managing Executive Officer

Executive Officer

Masahiro Takeda

Sumiyuki Fukumitsu

Managing Executive Officer

Executive Officer

Toshiaki Mizuno

Kensuke ShindoManaging Executive Officer

Executive Officer

Senior Executive
Director

Shokichi Ishimura

Yasufumi Kuwahara

Managing Executive Officer

Executive Officer

Tatsuro Fuse

Keitaro Arai

Noriyuki Fukuoka

Executive Director

Managing Executive Officer

Executive Officer

Tatsuya Izumida

Osamu Ueda

Takeshi Akagi

Director

Managing Executive Officer

Executive Officer

Tatsushi Kurihara

Yoshinori Yamanaka

Sadahiro Sato

Director

Managing Executive Officer

Executive Officer

Ichiro Ozeki
President andRepresentative Director

Yasuyuki Yoshida

Yasuyuki Yoshida

Tatsuro Fuse

Tatsuya Izumida

Tatsushi Kurihara

Senior Executive
Director

Executive Director

Director

Director

Seiya Nagao
Executive Officer

Takaharu Hirose

Hirobumi Kawano Hajime Watanabe Miri Hara

Outside Director

Outside Director

Outside Director

Outside Director

Noriyuki Uematsu
Executive Officer

Osamu Nagai
Executive Officer

Atsushi Komatsu
Executive Officer

Kazuhiro Mitomo
Executive Officer

Takehiko Senda
Executive Officer

Takashi Nakada
Executive Officer

Michiyoshi Morita
Executive Officer

Makoto Inaba
Executive Officer

Toshinori Sugimoto
Executive Officer(As of July 31, 2020)

50

SECOM REPORT 2020

Compliance
Basic philosophy
We provide security services, the objective of which is to protect

our basic policy has always been to promote systematic measuresthe lives and assets of our customers from legal violations or mal-to ensure unqualified compliance with the letter and spirit offeasance by third parties. As such, we recognize that it is essential

the law.

that we not only abide by the Constitution of Japan but also

The SECOM Group Code of Employee Conduct prescribes

operate in a manner that complies with the letter and the spirit of

specific standards for employee behavior and ethical principles that

pertinent laws and regulations.

must be observed by all executives and employees in their relation-

Because they are in the position of regulating others, employees

ships with stakeholders, including communities, customers andmust also conduct themselves in a disciplined manner, discharging

suppliers. The code, which is also published in the form of atheir duties in good faith and in compliance with the letter and thepocket-sized guide, thus serves as a universal and timeless tem-spirit of the law, to earn the trust of customers, which is critical toplate for everyone in the SECOM family. Standards govern, among

the security services business. Since our establishment, we haveothers, deterring relations with antisocial elements, prohibiting ofviewed compliance as a matter of utmost importance. Accordingly,

corruption and bribery and complying with related laws.

System for promotion and administration
Our approach to compliance is notable in that it does not involveor she may seek the assistance of the Legal Department andthe establishment of a dedicated system overseen by a specificother related departments. When such laws and regulations

department or director, but rather positions each and every

are revised, executive officers are responsible for determining

employee on the front line of promoting the SECOM Group Codeappropriate responses, including examining the need to amendof Employee Conduct, including standards governing compliance,

the SECOM Group Code of Employee Conduct and, here again

and ensuring ethical behavior.

with cooperation of the Legal Department and other related

Compliance is the foundation of each employee’s day-to-day
work. Managers are responsible for providing guidance regarding
the SECOM Group Code of Employee Conduct and overseeing

departments, presenting related proposals to the President andRepresentative Director.
The duties of the internal audit departments, i.e., the Internal

the actions of employees to ensure compliance. Executive officers

Audit and Compliance Department and the Group Governanceare responsible for providing control for the department they

Department, include inspecting each group, department and sub-supervise, while the President and Representative Director pro-sidiary, providing guidance on addressing matters requiring correc-

vides control for the company as a whole. Each executive officer

tive action, and reporting inspection results to the President andmust also have a thorough knowledge of the laws and regulations

Representative Director, as well as to relevant executive officers.

pertinent to the department he or she supervises, for which he

SECOM REPORT 2020

51

ESG Initiatives

Whistle-blowing system
The SECOM Group Code of Employee Conduct requires employ-

Whistle-blower’s names and the content of whistle-blower

ees to report to their superior should they discover that anreports are kept confidential. As long as a report has been madeemployee, executive or other individual affiliated with a sub-in good faith, whistle-blowers are protected from any adverse

contractor has engaged in or appears likely to engage in an

impacts even if the report is not borne out by the subsequentaction that violates the code. In the event that no corrective

investigation. Pertinent executive officers are obliged to swiftly

measures are taken after a report has been made, or if circum-

assess the results of investigations and take appropriate corrective

stances make reporting to a supervisor difficult, employees may

measures to resolve the situation. Whistle-blowers are notified

report directly to the Internal Audit and Compliance Department

confidentially of the nature and outcome of investigations.

via the Hot Helpline. Executives and employees of subsidiaries
may report violations via the Group Head Office Helpline directly

Whistle-Blower Reports Received

to the Group Governance Department.

Year ended
March 31, 2018

Number ofreports

Year ended
March 31, 201960

48

Year ended
March 31, 2020

56

Organizational Culture Committee
The Organizational Culture Committee is a standing committee

reported to the President and Representative Director by thechaired by the President and Representative Director that meetsInternal Audit and Compliance Department or the executive

periodically or as necessary at the direction of the President andofficer in charge. If necessary, the committee examines proposals

Representative Director, and examines important organizational

for modifying the system for administering compliance or amend-

culture-related issues and determines important official

ing the SECOM Group Code of Employee Conduct. All suchcommendations and punishments.

proposals must be deliberated by the Organizational Culture

The Organizational Culture Committee also deliberates onmatters related to compliance with and the administration of theCommittee, reviewed by Audit & Supervisory Board members
and approved by the Board of Directors.

SECOM Group Code of Employee Conduct that have been

Global compliance training

52

We have translated SECOM’s Philosophy and the SECOM Group

global SECOM Group. We also provide training to the senior

Code of Employee Conduct, which outlines the basic concept

management of overseas Group companies on key aspects ofand specific standards for employee behavior, into multiple

compliance, including observance of laws and regulations, thedifferent languages and work to advance awareness across theprevention of bribery and internal controls.

SECOM REPORT 2020

Information and Data Security
Policy and system for promoting information security
With the rapid spread of IT, information security risks have risen

information security. When we outsource work, we enter into

significantly, as can be seen from the increasing sophistication of

appropriate contracts and provide guidance and supervision to

cyber attacks. Any leaks of personal or confidential information

subcontractors. We have put an executive officer in charge of

entrusted to us by a customer has the potential to seriously hinder

information security for the Group as a whole. In addition, execu-

our ability to provide security services, damage or adversely impact

tive officers in charge of each business have been made respon-

the customer, and result in the forfeiture of our brand image andsible for information security–related matters for their particular

reputation for reliability. Accordingly, we have created and main-

business, as well as for collaborating with the executive officer intain a robust information security system.

charge of information security to report on issues and presenting

We have also established the SECOM Group Information

proposals to the President and Representative Director.

Security Basic Policy, to guide our efforts to promote stringent

Reducing information security risk
We have implemented powerful security measures to reduce risks

Information system controls and audits are the responsibility of

associated with information leaks and cyber attacks. We also work

subsidiary Secom Trust Systems and are conducted in accordance

to ensure that all employees of the SECOM Group, regardless ofwith Japan’s Information Security Management System (ISMS)

employment format, comply fully with our information security

standards under the guidance of the executive officer in charge ofrules, which include rules governing the use of personal comput-

information security. As well as conducting regular assessments of

ers and cellular telephones that must be protected for confiden-

vulnerability to external cyber attack risks, we monitor information

tiality reasons, the storage and carrying of information, and steps

systems around the clock to ensure we are prepared to respond toto be taken when an information security–related incident arises

risks, including those related to large-scale disasters and cyberor a violation of any other information security rule is discovered.

attacks.

Protecting personal information
The SECOM Group Code of Employee Conduct states that allcomplaints and consultations regarding our system for managing

information obtained in the course of business is confidential

and protecting personal information, facilitating swift andand must not be leaked, a stipulation with which all executives

appropriate responses. The parent company and Secom Trustand employees must strictly comply. We strive to prevent leak-

Systems have earned certification under Japan’s Privacy Mark,age, loss and damage through employee training and efforts

which is granted to organizations that take appropriate

to promote awareness regarding the treatment of personalmeasures to protect personal information.

information, as well as by ensuring stringent management.
All employees are required to participate in e-learning programs

Thorough information security (Year ended March 31, 2020)

and tests annually to confirm understanding of and adherence• Annual e-learning and testing to confirm understanding andto basic procedures and rules. The internal audit departments

adherence (participation: 100% of employees)

conduct periodic inspections of the handling of personal infor-• Voluntary audits (implementation: 100% of sites)

mation, data management and access control at each SECOM• No leaks of information

Group site. In addition, we have established a contact point for
queries regarding the handling of personal information and for*Scope of reporting: SECOM CO., LTD.

SECOM REPORT 2020

53

ESG Initiatives

Environmental Initiatives
Relevant SDGs

Central themes

Summary
Evaluation and management of the progress of environmental
conservation initiatives against environmental key management indicators

Prevention of global warming
Reduction of environmental impact
across the value chain
Response to the recommendations of
the TCFD

Efforts to grasp and reduce greenhouse gas emissions (Scopes 1, 2 and 3)
and promote environment-friendly design

Evaluation of risks and opportunities based on climate change scenario
analysis and promotion of disclosure

Prevention of global warming
Environmental Management Indicators
1. Greenhouse gas emissions (Scopes 1 and 2)
2. Reduction of greenhouse gas emissions as against target
reduction from the base year to be achieved by the fiscal year
ending March 31, 2031
3. CO2 emissions per unit of production (emissions intensity)
4. Consumption of fuel by vehicles
5. Use of electric power
6. Industrial waste and resources with market value
7. Greenhouse gas emissions across the value chain (Scopes 1, 2 and 3)
Scope 1: Direct emissions (including those from the combustion offuel by vehicles, use of town gas and use of kerosene)
Scope 2: Indirect emissions (including those from the consumptionof purchased electric power, cold and hot water, andsteam)
Scope 3: Other indirect emissions (those not covered in Scope 1 or
2, from the activities of other companies up and down
the value chain)

We have established an environmental philosophy and basic environmental policy, in line with which we incorporate initiatives
aimed at resolving environmental issues with the aim of achieving
sustainable development. We evaluate and manage the SECOM
Group’s progress in promoting these initiatives over the long termagainst seven major environmental management indicators.

Short-term target (previous target)
Average annual decrease in CO2 emissions of 1.5% until
the fiscal year ending March 31, 2021
Medium-term target
35% reduction in greenhouse gas emissions from the fiscal year
ended March 31, 2014, by the fiscal year ending March 31, 2031
Long-term target
80% reduction in greenhouse gas emissions by 2050

Breakdown of CO2 Emissions by
the SECOM Group in
the Fiscal Year Ended March 31, 2020
Other 2.6%
Combustionof fuel by
vehicles
29.9%

Greenhouse Gas Emissions: Actual Results and Medium-Term Target
J Actual results J Target (35.0% reduction from the level(Metric tons of CO2)

in the fiscal year ended March 31, 2014)

100,000

Base year

13.5% decrease(Average annual
decrease: 2.4%)

90,00080,000Use ofelectricity

67.5%

70,000Target for the year ending
March 31, 2031:

60,000(Average annual
decrease: 2.5%)

35.0% reduction

50,00040,00080,871

78,907

79,29581,50876,751

74,947

69,93952,566

2014

2015

2016

2017

2018

2019

2020

2031

(Years ended/ending March 31)* Greenhouse gas emissions for each fiscal year are calculated in terms of metric tons of CO2 equivalent.
** Scope of reporting: SECOM CO., LTD. and 27 principal subsidiaries in the security services business.

54

SECOM REPORT 2020

Reduction of environmental impact across the value chain
Since the fiscal year ended March 31, 2014, we have sought to

Example of a System witha Reduced Environmental Impact

reduce greenhouse gas emissions across the entire value chain.

(HANKS III s Security System for Financial Institutions)Consumption ofelectric power: - 57%

Efforts to identify and reduce greenhouse gas emissions(Scopes 1, 2 and 3)
We request all suppliers to calculate and report energy input, greenhouse gas
emissions and water usage for products and services supplied to the SECOM Group.
As of March 31, 2020, reports had been received from suppliers accounting for
approximately 76% of procurement in monetary terms.

Volume:

- 55%

Mass:

- 66%

Efforts to promote environment-friendly design
We have distributed green engineering guidelines to 109 suppliers. In designing
products and services, we are also working to eliminate harmful chemical substances, reduce consumption of electric power, conserve resources, extend usefullife and promote recycling.

Response to the recommendations of the TCFD
In July 2019, we declared our support for the Task Force on

We recognize that the price of fuel consumed by vehicles used

Climate-related Financial Disclosures (TCFD), pledging to proac-in our security services business and climate change–related risks

tively disclose information on the financial impacts of risks andaffecting our nonlife insurance and data center services businesses

opportunities associated with climate change on our future

will increase, but we also understand that shifting customer needs

business activities in line with TCFD recommendations.

will yield opportunities to expand demand for new services. Accord-

In businesses such as security services, data center services

ingly, we will promote strategies that seek to capitalize on opportu-

and medical services, the ability to provide stable and uninter-

nities while remaining mindful of the potential impact of risks onrupted services is critical. To maintain services and systems at an

our operations.

acceptable level, we have established a Risk Committee andassess risks from multiple perspectives, including scope of impact,
scale, anticipated monetary cost of damage, urgency and frequency of occurrence, based on the results of Companywide risk
analysis. For example, we are using a scenario that assumes we
suffer damage due to a natural disaster to explore measures tominimize destruction and have created a management system
whereby a report is made to the Board of Directors if theseriousness of damage warrants it.

Note: The TCFD was established in 2015 under the auspices of the Financial
Stability Board (FSB) with the goal of developing basic disclosure
recommendations to provide information on the potential impact ofclimate change on their profitability and cash flows.

SECOM REPORT 2020

55

ESG Initiatives

SASB Index
We have prepared a report under Sustainability Accounting Standards Board (SASB) guidance for the Professional & Commercial Services
sector, which most closely aligns with the business of SECOM. This report can be accessed from the IR section of our corporate website.

SECOM’s SASB Index
Professional & Commercial Services Sector Sustainability Indicators
Topic

Code

SV-PS-230a.1

Description of approach to identifying and addressing data security risks

SV-PS-230a.2

Description of policies and practices relating to collection, usage, and retention ofcustomer information

SV-PS-230a.3(1) Number of data breaches, (2) Percentage involving customers’ confidential
business information or personally identifiable information, (3) Number of customers
affected

SV-PS-330a.1

Percentage of gender and racial/ethnic group representation for (1) executive
management and (2) all other employees

SV-PS-330a.2(1) Voluntary and (2) involuntary turnover rate for employees

SV-PS-330a.3

Employee engagement as a percentage

SV-PS-510a.1

Description of approach to ensuring professional integrity

SV-PS-510a.2

Total amount of monetary losses as a result of legal proceedings associated withprofessional integrity

Data Security

Workforce Diversity &Engagement

Professional Integrity

Topic

Accounting Metric

Code

Activity Metric

SV-PS-000.A

Number of employees by:(1) full-time and part-time, (2) temporary,and (3) contract(1) Full-time employees:(2) Temporary employees:(3) Contract employees:

SV-PS-000.B

Employee hours worked, percentage billable

Employee hours worked: 29,892,709
Percentage billable:
N/A

Activity metrics

Data*

14,506
1,390
1,647*Data for “Activity metrics” is for SECOM CO., LTD., and is as of March 31, 2020, or for the fiscal year ended March 31, 2020. Because billing for electronic security
services, our principal business, is based on fixed monthly fees, “percentage billable” is not applicable.

56

SECOM REPORT 2020

Financial Information and References

Financial Review
Operating Results
Overview
In the fiscal year ended March 31, 2020, SECOM CO., LTD. andits consolidated subsidiaries (collectively, “the Company”) sought
to provide high-quality services and products that respond to thediverse needs of customers in its core security services segment,
as well as in its fire protection services, medical services, insurance
services, geospatial information services, BPO and ICT services,and real estate and other services segments.
Thanks to increases in all segments, consolidated net sales
and operating revenue in the period under review advanced
4.4%, or ¥49.1 billion, to ¥1,160.7 billion. Despite the impact of
forward-looking investments to reinforce the Company’s operating foundation with the aim of ensuring sustainable growth,
operating income rose 5.5%, or ¥6.9 billion, to ¥130.6 billion,
bolstered by operating income growth in the fire protection services, BPO and ICT services, geospatial information services, realestate and other services, and medical services segments, as well
as by a smaller operating loss in the insurance services segment.
Nonetheless, owing to a ¥139 million loss on private equity investments, compared with a ¥4.7 billion gain on such investments inthe fiscal year ended March 31, 2019, together with an increase
in income taxes that reflected a larger reversal of the valuation
allowance in the preceding period, net income attributable
to SECOM CO., LTD., decreased 2.8%, or ¥2.6 billion, to¥87.1 billion.

Other Income and Expenses
Other income decreased ¥1.3 billion, to ¥10.0 billion, owing
primarily to a loss on private equity investments of ¥139 million,
compared with a gain of ¥4.7 billion in the preceding period,
although this was partially offset by a ¥2.3 billion gain on sales of
securities, net, resulting from the sale of a U.S. subsidiary in thegeospatial information services business during the period underreview, compared with a ¥115 million loss on sales of securities,
net, in the previous fiscal year. Other expenses rose ¥116 million,
to ¥6.5 billion. Net other income thus amounted to ¥3.5 billion,
down ¥1.4 billion.

Net Sales and Operating Revenue
Consolidated net sales and operating revenue in the period underreview rose 4.4%, or ¥49.1 billion, to ¥1,160.7 billion, thanks
to increases in all segments. (For further information, please see
Segment Information below.)

Equity in Net Income of Affiliated Companies
Equity in net income of affiliated companies slipped ¥348 million,
to ¥6.7 billion.

Costs and Expenses
Total costs and expenses advanced 4.3%, or ¥42.3 billion, to¥1,030.1 billion. Cost of sales rose 4.5%, or ¥34.9 billion, to¥819.9 billion, and was equivalent to 70.6% of net sales andoperating revenue, essentially level with the previous fiscal year.
Selling, general and administrative (SG&A) expenses were up
2.4%, or ¥4.9 billion, to ¥205.8 billion, equivalent to 17.7%of net sales and operating revenue, an improvement from
18.1% in the preceding period. Impairment loss on long-lived
assets increased ¥357 million, to ¥952 million. The Company
also reported an impairment loss on goodwill of ¥758 million.
Additionally, the Company reported a loss on sales and disposalof fixed assets, net, of ¥2.8 billion, ¥1.3 billion more than in
the previous fiscal year, reflecting the disposal of certain existingbuildings as a consequence of reconstruction, a decline in salesof real estate for lease and other factors.
Operating Income
Operating income rose 5.5%, or ¥6.9 billion, to ¥130.6 billion.
This was largely attributable to the increase in net sales andoperating revenue, which absorbed higher costs and expenses.
The operating margin edged up to 11.2%, from 11.1%.

Income from Continuing Operations before Income Taxes
and Equity in Net Income of Affiliated Companies
The aforementioned results yielded income from continuing
operations before income taxes and equity in net income of affiliated companies of ¥134.0 billion, up 4.3%, or ¥5.5 billion, fromthe preceding period.
Income Taxes
Income taxes amounted to ¥40.9 billion, an increase of ¥5.8 billion, owing to a larger reversal of the valuation allowance in theprevious fiscal year. This was equivalent to 30.5% of income fromcontinuing operations before income taxes and equity in net
income of affiliated companies, up from 27.3%.

Net Income Attributable to Noncontrolling Interests
Net income attributable to noncontrolling interests rose ¥1.9
billion, to ¥12.6 billion. The principal factor behind this result wasincreases in operating income in the fire protection services andgeospatial information services segments.
Net Income Attributable to SECOM CO., LTD.
Net income attributable to SECOM CO., LTD., decreased 2.8%, or¥2.6 billion, to ¥87.1 billion, equivalent to 7.5% of net sales andoperating revenue, declining from 8.1% in the preceding period.
Net income attributable to SECOM CO., LTD., per share was¥399.23, down from ¥410.91. At the Ordinary General Meetingof Shareholders held on June 25, 2020, a proposal to pay a yearend dividend of ¥85.00 was approved. As a result, cash dividends
for the period—which also included an interim dividend of ¥85.00
per share approved at the Board of Directors meeting held on
November 8, 2019—amounted to ¥170.00, an increase of ¥5.00.
However, the figure of ¥170.00 for cash dividends per share thatappears in the consolidated financial statements represents cash
dividends paid to shareholders during the period, namely, the¥85.00 per share year-end dividend for the year ended March 31,
2019, approved at the Ordinary General Meeting of Shareholders
held on June 26, 2019, and the ¥85.00 per share interim dividend
for the previous fiscal year, determined by the Board of Directors
and paid to shareholders of record as of September 30, 2019.

SECOM REPORT 202057

Financial Review

Segment Information
Security Services
The security services segment comprises electronic security
services, which center on on-line security systems; other security
services; and merchandise and other. In the fiscal year ended
March 31, 2020, net sales and operating income in this segmentrose 2.3%, or ¥13.3 billion, to ¥580.5 billion. Excludingintersegment transactions, segment net sales and operating
income amounted to ¥577.3 billion, representing 49.7% of
overall net sales and operating revenue, down from 50.8% in
the preceding period.
In addition to on-line commercial and home security systems,
electronic security services include large-scale proprietary security
systems, which focus on surveillance services for subscribers’premises. On-line commercial and home security systems use
sensors, controllers and other equipment installed at subscribers’premises to detect events, including intrusions, fires and equipment malfunctions. Equipment is linked to a SECOM control
center via telecommunications circuits to facilitate around-theclock monitoring. Should an irregularity be detected, relevant
information is relayed to the control center, where staff dispatch
emergency response personnel to take appropriate measures. If
necessary, control center staff also notify the police, fire
department or other emergency services.
The Company employs a rental format, whereby it maintains
ownership of security equipment and provides it to subscribers ona rental basis. This minimizes initial costs for subscribers andguarantees the quality and stability of its services. The initial
contract period for security services is five years, with contracts
renewed automatically each subsequent year. Depreciation for
security equipment is computed using the declining balancemethod principally over five years.
The Company takes full responsibility for all aspects of its
on-line commercial and home security systems, from R&D throughto equipment manufacturing, security planning, installation,
monitoring, emergency response services and equipment maintenance. This integrated approach leverages the Company’s halfcentury-plus of experience and knowhow in providing electronic
security services, together with its R&D team’s ability to recognize
and address false alarms, to ensure highly efficient operations.
Net sales and operating revenue from electronic security
services edged up 0.8%, or ¥2.9 billion, to ¥347.2 billion. Thiswas due to increased sales of on-line security systems, underpinned by expanded sales of high-value-added commercial
systems that respond to diverse security needs and peripheralservices, and of SECOM Home Security NEO and other home
security services that address growing needs for help in caring
for vulnerable members of society.

58

SECOM REPORT 2020

Other security services include static guard and armored car
services. Net sales and operating revenue generated by static
guard services which are provided by highly trained professional
security guards for systems requiring human judgment and flexible
responsiveness, advanced 5.7%, or ¥3.8 billion, to ¥70.0 billion.
This was a consequence of the first full year of contributions from
Secom Tosec Co., Ltd., in which we acquired an 80.1% stake inAugust 2018, as well as solid demand for static guard services.
Armored car services, which involve the transport of cash, securities and other valuables using special fitted armored cars andsecurity professionals, generated net sales and operating revenueof ¥63.6 billion, up 1.9%, or ¥1.2 billion. Principal factors behind
this result included an increase in the sales of Asahi Security,
which principally provides cash collection and delivery services.
The merchandise and other category encompasses a wide
range of security products, including security camera systems,
access control systems, automated fire extinguishing systems andexternal monitoring systems, which can be freestanding or linked
to on-line security systems. Net sales and operating revenue in thiscategory rose 6.3%, or ¥5.7 billion, to ¥96.5 billion, underpinnedby an increase in sales-type leases of large-scale security systems
and higher sales of access control and custom-built systems.
Operating income in the security services segment declined
1.1%, or ¥1.2 billion, to ¥108.9 billion. The operating margin
slipped to 18.8%, from 19.4% in the previous fiscal year. These
results primarily reflected forward-looking investments to reinforce
the Company’s operating foundation with the aim of ensuring
sustainable growth and an impairment loss on goodwill.
Fire Protection Services
The fire protection services segment focuses on high-grade,tailored, automatic fire alarm systems, fire extinguishing systems
and other fire protection systems for a wide range of applications,
including office buildings, plants, tunnels, cultural properties, ships
and residences. In the period under review, Nohmi Bosai andNittan, two of Japan’s leading domestic fire protection services
providers, sought to leverage their respective business foundations
and product development capabilities to secure orders for fire
protection systems.
Segment net sales and operating revenue increased 8.2%, or¥11.8 billion, to ¥155.9 billion, bolstered by contributions fromlarge-, medium- and small-scale projects, a result of potent sales
efforts. Operating income climbed 25.6%, or ¥3.6 billion, to¥17.8 billion, owing to the increase in net sales and operating
revenue, as well as to a number of comparatively profitableprojects and a decline in cost of sales due to improved operating
efficiency. The operating margin was 11.4%, up from 9.8% in
the preceding period.

Financial Information and References

Medical Services
The medical services segment provides home nursing services,
pharmaceutical dispensing services, support for affiliated medical
institutions in Japan, sales of medical equipment, the operation ofa general hospital in India, the operation of residences for seniors
and other personal care services, health and preventative careservices, and ICT-based services, which included electronic medical
report systems. Additionally, this segment includes the operationsof variable interest entities (VIEs) of which the Company is theprimary beneficiary, which manage hospitals and health carerelated institutions.
Net sales and operating revenue in this segment were up
3.0%, or ¥5.4 billion, to ¥187.3 billion, a consequence ofincreases in the net sales and operating revenue of VIEs, underpinned by a rising number of patients at affiliated medical institutions, as well as to higher sales of pharmaceuticals and medical
equipment and revenue from pharmaceutical dispensing services.
Operating income advanced 7.8%, or ¥450 million, to ¥6.2
billion, reflecting an improvement in the operating income of a
hospital operated by the Company in India. The operating margin
improved to 3.3%, from 3.2% in the previous fiscal year.
Insurance Services
The insurance services segment continued to expand sales of an
extensive lineup of distinctive non-life insurance policies, including
the Security Discount Fire Policy, a commercial fire insurance
policy, and SECOM Anshin My Home, a comprehensive fire
insurance policy for homes—both of which extend discounts onpremiums to customers who have installed on-line security systems, recognizing this as a risk-mitigating factor—and SECOM
Anshin My Car, a comprehensive automobile insurance policy thatoffers onsite support services provided by SECOM emergency
response personnel should the policyholders be involved in an
accident, and MEDCOM, an unrestricted cancer treatment policythat covers the entire cost of medical treatment for cancer.
Segment net sales and operating revenue, at ¥46.9 billion,
increased 4.9%, or ¥2.2 billion, bolstered by brisk sales of
MEDCOM and fire and automobile insurance policies. The
segment reported an operating loss of ¥4.3 billion, an improvement from ¥4.9 billion in the preceding period, attributable tohigher net sales and operating revenue, as well as to a decreasein losses incurred as a result of multiple major natural disasters.

Geospatial Information Services
The geospatial information services segment centers on thecollection of geographic data using commercial satellites, aircraft
and surveying using proprietary vehicles, among others, which is
integrated, processed and analyzed to provide geospatial information services to public-sector entities—including national and local
governments—and customers in the private sector in Japan. These
services are also offered to government agencies overseas. Net
sales and operating revenue in this segment rose 3.5%, or ¥1.8
billion, to ¥53.7 billion, bolstered by an increase in revenue fromdomestic public-sector customers, owing to the expanded provision of surveying services employing aerial lasers to such customers. Operating income jumped 61.3%, or ¥1.2 billion, to ¥3.0
billion, while the operating margin improved to 5.6%, from 3.6%.
This primarily reflected declines in depreciation expenses andimpairment losses.
BPO and ICT Services
BPO and ICT services encompass the provision of data center
services, BCP support services, information security services,cloud-based services and BPO services. Segment net sales andoperating revenue increased 9.5%, or ¥9.7 billion, to ¥110.9
billion, bolstered by higher revenue from data center services andcontributions from subsidiary TMJ, a provider of contact center,back office support and other BPO services. Operating income, at¥10.6 billion, was up 13.1%, or ¥1.2 billion, and the operating
margin rose to 9.6%, from 9.3%, reflecting an improvement in
the cost of sales ratio attributable to higher sales in the data
center business.
Real Estate and Other Services
The real estate and other services segment includes the development and sale of, among others, condominiums equipped with
distinctive security and disaster preparedness features, as well as
real estate leasing, construction and installation, and other services. Net sales and operating revenue in this segment advanced
9.9%, or ¥4.6 billion, to ¥51.2 billion, with contributing factors
including an increase in condominium development and sales.
Operating income rose 17.9%, or ¥912 million, to ¥6.0 billion,
and the operating margin increased to11.7%, from 10.9%.

SECOM REPORT 202059

Financial Review

Financial Position
Total assets as of March 31, 2020, amounted to ¥2,081.1 billion,
an increase of ¥201.4 billion from the end of the previous fiscal
year. Total current assets rose ¥65.6 billion, to ¥935.9 billion,
and accounted for 45.0% of total assets. The current ratio was
2.2 times, up from 2.1 times. Cash and cash equivalents totaled¥414.7 billion, an increase of ¥64.9 billion, reflecting the factthat net cash provided by operating activities exceeded net cashused in investing and financing activities. (For further details,
please see Cash Flows, which follows this section.) Notes andaccounts receivable, trade, rose ¥9.7 billion, to ¥166.6 billion,
owing to higher net sales and operating revenue. Notes andaccounts receivable are affected by the fact that income in the fire
protection services and geospatial information services businesses
tend to be concentrated toward the end of the fiscal year. Cashdeposits for armored car services declined ¥1.4 billion, to ¥140.9
billion. These cash deposits are funded primarily through bankoverdrafts and deposits and their use by the company is restricted.
The sales of real estate for sale and other factors led to a decline
in inventories of ¥9.6 billion, to ¥56.3 billion.
Investments and long-term receivables decreased ¥16.1 billion,to ¥325.3 billion, which represented 15.6% of total assets.
Investment securities, at ¥194.8 billion, were down ¥17.8 billion.
Contributing factors included the reclassification of corporate
bonds and other debt securities due within one year as current
assets.
Property, plant and equipment, less accumulated depreciation,amounted to ¥425.5 billion, up ¥9.3 billion and equivalent to20.4% of total assets. This primarily reflected increases in buildings
and improvements, attributable to data center business–related
investments, and in security equipment and control stations, a
result of purchases of security equipment necessitated by a risingnumber of security services subscribers.

Other assets, at ¥394.4 billion, were up ¥142.6 billion andaccounted for 19.0% of total assets. Owing to the application of
Accounting Standards Update (ASU) No. 2016-02, “Leases,” fromthe beginning of the period under review, the Company was
required to recognize almost all lease assets and lease liabilities
arising from lease contracts, which are classified as operatingleases, on its balance sheets. As a consequence, operating leaseright-of-use assets of ¥143.5 billion were included in otherassets. In addition, prepaid pension and severance costs declined¥6.7 billion, to ¥31.8 billion, reflecting deteriorating investment
conditions, while deferred income taxes rose ¥3.7 billion, to¥25.8 billion.
Total liabilities as of March 31, 2020, amounted to ¥853.7
billion, up ¥149.9 billion from the end of the preceding period,
and accounted for 41.0% of total liabilities and equity. Total
current liabilities, at ¥431.2 billion were up ¥25.8 billion andrepresented 20.7% of total liabilities and equity, owing largely
to the application of ASU No. 2016-02, which resulted in the
inclusion of current operating lease liabilities of ¥19.2 billion,
and to a ¥4.9 billion increase in other current liabilities, to ¥37.9
billion, as a consumption tax rate hike led to an increase inaccrued consumption tax.
Total long-term liabilities rose ¥124.1 billion, to ¥422.5 billion,
and represented 20.3% of total liabilities and equity. This increaseprimarily reflected the inclusion of long-term operating leaseliabilities of ¥124.3 billion as a result of the application of ASU
No. 2016-02.
Total SECOM CO., LTD., shareholders’ equity increased¥44.6 billion, to ¥1,088.7 billion. Retained earnings rose ¥50.0
billion, to ¥1,017.7 billion, owing principally to net income
attributable to SECOM CO., LTD., and the payment of dividends.
Accumulated other comprehensive loss rose ¥7.0 billion, to ¥7.1
billion. As a consequence, the equity ratio was 52.3%, comparedwith 55.6% at the end of the previous fiscal year.

Percentage of Consolidated
Net Sales and Operating Revenue*

SECOM CO., LTD.
Shareholders’ Equity per ShareTotal Assets(Year ended March 31, 2020)(In yen)(In billions of yen)

5,000

2,500

4,000

2,000

3,000

1,500

2,000

1,000

1,000

500

8.4%

4.3%

4.6%
3.8%
16.1%

49.7%

13.1%
Security Services
Medical Services
Geospatial Information Services
Real Estate and Other Services

Fire Protection Services
Insurance Services
BPO and ICT Services* Pie chart shows percentage of consolidated net sales andoperating revenue (excluding intersegment transactions)

60

SECOM REPORT 20200

16 17 18 19 20

0

16 17 18 19 20

Financial Information and References

Cash Flows
The Company is committed to maintaining sufficient liquidity
to allow flexibility in its operations and ensure a solid financial
foundation. To the best of its ability, the Company is also firmly
committed to financing strategic investments with cash generated
by its operating activities.
In the period under review, net cash provided by operating
activities amounted to ¥184.4 billion. The principal componentsof this were net income of ¥99.8 billion and an adjustment for
depreciation and amortization, including amortization of deferredcharges, a non-cash item, of ¥77.6 billion. Net cash provided byoperating activities was ¥26.1 billion higher than in the fiscal year
ended March 31, 2019. Factors behind this result included a ¥5.1
billion increase in accrued income taxes, compared with a ¥4.9
billion decrease in the previous fiscal year; a decrease in deferredincome taxes of ¥7.4 billion; an increase in receivables and duefrom subscribers, net of allowances, of ¥10.6 billion, comparedwith an increase of ¥17.4 billion in the preceding period; and anincrease in accrued consumption tax of ¥4.5 billion, comparedwith a decrease of ¥831 million in the previous fiscal year.
Net cash used in investing activities amounted to ¥66.6
billion. Principal components of this were payments for purchasesof property, plant and equipment of ¥63.1 billion, owing topurchases of security equipment necessitated by a rising numberof security services subscribers and forward-looking investments
to reinforce the Company’s operating foundation; payments forpurchases of intangible assets of ¥11.7 billion, attributable toforward-looking investments to reinforce the Company’s operating
foundation; and payments for purchases of investment securities

Depreciation andAmortizationof ¥45.3 billion, primarily in the insurance services segment
and through private-equity investments in the United States,
exceeding proceeds from sales and redemptions of investment
securities of ¥50.3 billion. Net cash used in investing activities rose
¥2.2 billion from the previous fiscal year, with contributing factors
including a ¥1.6 billion decrease in time deposits, compared witha ¥1.3 billion increase in the preceding period, and payments forpurchases of property, plant and equipment, which were up ¥6.7
billion from the previous fiscal year. Owing to investments in theinsurance services segment and private equity investments in the
United States, net cash generated by an increase in short-term
investments and net proceeds from sales and redemptions ofinvestment securities rose to ¥3.6 billion, from ¥2.7 billion in theprevious fiscal year.
Net cash used in financing activities was ¥52.9 billion. This
primarily reflected dividends paid to SECOM CO., LTD. shareholders of ¥37.1 billion and repayments of long-term debt of ¥18.8
billion. Net cash used in financing activities was ¥7.4 billion lessthan in the preceding period. This was due largely to declines in
dividends paid to noncontrolling interests and payments for acquisition of shares of consolidated subsidiaries from noncontrollinginterest holders, the latter a result of the absence of the purchaseof treasury stock by subsidiary Secom Joshinetsu, which pushed
up outlays in the previous fiscal year.
Owing to the Company’s operating, investing and financing
activities in the period under review, cash and cash equivalents at
end of year amounted to ¥414.7 billion, up ¥64.9 billion fromcash equivalents at beginning of year, which were ¥349.7 billion.

Purchases of Property,
Plant and Equipment
and Intangible Assets

Cash Flows(In billions of yen)

(In billions of yen)

(In billions of yen)

100

80

200

75

60

150
100
50

40

25

20

50
0
-50

0

16 17 18 19 20

0

16 17 18 19 20

-100

18

19

20

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities

SECOM REPORT 202061

Consolidated Financial Statements
Consolidated Balance Sheets
SECOM CO., LTD. and Subsidiaries
March 31, 2020 and 2019ASSETS
Current assets:
Cash and Cash equivalents ....................................................................................
Time deposits ........................................................................................................
Cash deposits for armored car services ..................................................................
Short-term investments .........................................................................................
Notes and accounts receivable, trade.....................................................................
Due from subscribers.............................................................................................
Inventories ............................................................................................................
Short-term receivables ...........................................................................................
Allowance for doubtful accounts ...........................................................................
Deferred insurance acquisition costs ......................................................................
Other current assets ..............................................................................................

Translation into thousandsof U.S. dollars

March 31

March 31

2019

2020

¥ 414,668 ¥ 349,730
9,097
10,619140,906
142,336
31,08425,294
166,612
156,869
63,11263,01256,29765,94525,67927,111(1,641)(1,738)4,301
6,809
25,74924,301$ 3,804,294
83,4591,292,716
285,174
1,528,550
579,009516,486
235,587(15,055)
39,459236,2292020

Total current assets ........................................................................................

935,864

870,2888,585,908

Investments and long-term receivables:
Investment securities .............................................................................................
Investments in affiliated companies .......................................................................
Long-term receivables ...........................................................................................
Lease deposits .......................................................................................................
Other investments .................................................................................................
Allowance for doubtful accounts ...........................................................................

194,82264,49941,566
17,725
10,947(4,237)

212,641
63,69740,095
17,245
11,952(4,218)

1,787,358
591,734
381,339
162,615
100,431(38,872)

325,322

341,4122,984,605

Property, plant and equipment:
Land......................................................................................................................
Buildings and improvements..................................................................................
Security equipment and control stations ................................................................
Machinery, equipment and automobiles ................................................................
Construction in progress .......................................................................................

117,457
365,362
346,168
156,830
7,026

116,540
351,947
337,756
155,944
6,759

1,077,587
3,351,945
3,175,853
1,438,807
64,459

Accumulated depreciation .....................................................................................

992,843(567,339)

968,946(552,719)

9,108,651(5,204,945)

425,504

416,227

3,903,706

143,468
25,664
108,925
58,814
31,79025,769—25,220108,12257,89238,48922,0601,316,220
235,450
999,312539,578
291,651
236,413394,430

251,783

3,618,624¥2,081,120 ¥1,879,710$19,092,843

Other assets:
Operating lease right-of-use assets ........................................................................
Deferred charges ...................................................................................................
Goodwill ...............................................................................................................
Other intangible assets ..........................................................................................
Prepaid pension and severance costs .....................................................................
Deferred income taxes...........................................................................................
Total assets ....................................................................................................

62

In millions of yen

SECOM REPORT 2020

Financial Information and References

LIABILITIES AND EQUITYCurrent liabilities:
Bank loans ............................................................................................................
Current portion of long-term debt.........................................................................
Notes and accounts payable, trade ........................................................................
Other payables ......................................................................................................
Deposits received ..................................................................................................
Deferred revenue...................................................................................................
Accrued income taxes............................................................................................
Accrued payroll .....................................................................................................
Current operating lease liabilities ...........................................................................
Other current liabilities ..........................................................................................

In millions of yen

Translation into thousandsof U.S. dollars

March 31

March 31

2019

2020

2020

¥

39,002 ¥ 38,658
17,98318,44748,466
46,60644,331
44,208
122,796
127,61937,04835,947
24,811
22,90439,65037,987
19,171—37,90632,992$357,817
164,982444,642406,706
1,126,569
339,890
227,624
363,761
175,881
347,761

Total current liabilities ....................................................................................

431,164

405,368

3,955,633

Long-term liabilities:
Long-term debt .....................................................................................................
Guarantee deposits received..................................................................................
Accrued pension and severance costs ....................................................................
Long-term deferred revenue ..................................................................................
Unearned premiums and other insurance liabilities ................................................
Investment deposits by policyholders .....................................................................
Deferred income taxes...........................................................................................
Long-term operating lease liabilities.......................................................................
Other long-term liabilities ......................................................................................

44,25531,546
31,393
12,511
128,908
21,51613,132
124,297
14,99145,342
31,88730,913
11,623
124,30923,615
16,041—
14,710406,009289,413
288,009
114,779
1,182,642
197,394
120,477
1,140,339
137,532

Total long-term liabilities ................................................................................

422,549

298,440

3,876,594

Total liabilities ................................................................................................

853,713703,808

7,832,227

66,401
74,68010,833
1,017,661

66,39373,166
10,783
967,679

609,183
685,138
99,3859,336,339

2,046(4,601)(4,506)

2,309
(742)
(1,645)

18,771(42,211)(41,338)(7,061)(78)(64,778)

Commitments and contingent liabilities
Equity:SECOM CO., LTD. shareholders’ equity:
Common stock
Authorized—900,000,000 shares, issued 233,293,998 shares in 2020
Authorized—900,000,000 shares, issued 233,292,219 shares in 2019...............
Additional paid-in capital.......................................................................................
Legal reserve .........................................................................................................
Retained earnings..................................................................................................
Accumulated other comprehensive income (loss):
Unrealized gains on securities ............................................................................
Pension liability adjustments ..............................................................................
Foreign currency translation adjustments ...........................................................
Common stock in treasury, at cost:
15,033,588 shares in 2020 and 15,031,867 shares in 2019.................................

(73,776)(73,759)(676,844)

Total SECOM CO., LTD. shareholders’ equity ..................................................

1,088,738

1,044,184

9,988,423

Noncontrolling interests ............................................................................................

138,669

131,718

1,272,193

Total equity ....................................................................................................

1,227,407

1,175,902

11,260,616

Total liabilities and equity ...............................................................................

¥2,081,120 ¥1,879,710$19,092,843

SECOM REPORT 202063

Consolidated Financial Statements
Consolidated Statements of Income
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2020

2020

In millions of yen

Translation into thousandsof U.S. dollars

Years ended March 31

Year ended March 31

2018

2020

Net sales and operating revenue.................................................................................. ¥1,160,707 ¥1,111,600 ¥1,082,792
Costs and expenses:
Cost of sales .................................................................................................................
819,867
784,918
751,944
Selling, general and administrative expenses .................................................................
205,796
200,932
191,389
Impairment loss on long-lived assets .............................................................................
952
595
841
Impairment loss on goodwill .........................................................................................
758—
11
Gain and loss on sales and disposal of fixed assets, net .................................................
2,770
1,444
(1,504)
1,030,143
987,889
942,681
Operating income.............................................................................................
130,564
123,711140,111
Other income:Interest and dividends ...................................................................................................
2,127
1,807
1,637
Gain and loss on sales of securities, net.........................................................................
2,297
—
237
Gain on private equity investments ...............................................................................
—
4,673
5,884
Other ............................................................................................................................
5,557
4,766
5,696
9,981
11,246
13,454
Other expenses:
Interest .........................................................................................................................
1,151
1,184
1,236
Gain and loss on sales of securities, net.........................................................................
—
115—
Loss on other-than-temporary impairment of investment securities ...............................
3,738
3,959
57
Loss on private equity investments ................................................................................
139——
Other ............................................................................................................................
1,482
1,136
1,482
6,510
6,394
2,775
Income from continuing operations before income taxes and equity
134,035
128,563
150,790in net income of affiliated companies .............................................................
Income taxes:
Current .........................................................................................................................
45,65447,21054,225
Deferred .......................................................................................................................
(4,715)(12,086)(6,118)40,93935,124
48,107
Income from continuing operations before equity in net income ofaffiliated companies........................................................................................
93,09693,439102,683
Equity in net income of affiliated companies ..............................................................
6,654
7,002
7,179
Net income.......................................................................................................
99,750100,441
109,862
Less: Net income attributable to noncontrolling interests .........................................
(12,614)(10,755)(13,239)
Net income attributable to SECOM CO., LTD. ................................................... ¥ 87,136 ¥ 89,686 ¥ 96,623$10,648,688

Per share data:
Net income attributable to SECOM CO., LTD. ...............................................................
Cash dividends per share ..............................................................................................

2019

SECOM REPORT 2020

10,560—34,294
1,275
13,59559,724
1,229,680
418,844(43,256)
375,588$854,092
61,046915,138(115,725)
799,413

In yenTranslation into
U.S. dollars

Years ended March 31

Year ended March 31

2019

2018

2020

¥399.23¥170.00¥410.91¥160.00¥442.70¥150.00

$3.66
$1.56

In millions of yen

Translation into thousandsof U.S. dollars

Years ended March 31

Year ended March 31

Consolidated Statements of Comprehensive Income

64

19,514
21,073—50,982
91,5692020

SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2020

Comprehensive income:Net income ...................................................................................................................
Other comprehensive income (loss), net of tax:
Unrealized gains on securities ...................................................................................
Pension liability adjustments .....................................................................................
Foreign currency translation adjustments ..................................................................
Total comprehensive income .........................................................................................
Less: Comprehensive income attributable to noncontrolling interests .....................
Comprehensive income attributable to SECOM CO., LTD. .................................................

7,521,715
1,888,037
8,734
6,954
25,4139,450,853
1,197,835

2020

2019

2018

2020

¥99,750¥100,441¥109,862$915,138(263)(4,037)(2,934)92,516(12,364)¥80,152274(2,566)(4,908)93,241(10,060)¥ 83,181

256
5,376
1,952
117,446(13,710)¥103,736(2,413)(37,037)(26,917)
848,771(113,431)$735,340

Financial Information and References

Consolidated Statements of Changes in Equity
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2020

In millions of yen
Number ofsharesissuedAccumulated
other comRetained
prehensive
earnings income (loss)

Commonstock

Additional
paid-in
capitalBalance, March 31, 2017 ................................................... 233,288,717
Comprehensive income:Net income .....................................................................
—
Other comprehensive income (loss), net of tax:
Unrealized gains on securities ....................................
—
Pension liability adjustments ......................................
—
Foreign currency translation adjustments ...................
—
Total comprehensive income ...........................................
Issuance of new stocks.........................................................
1,724
Cash dividends paid to SECOM CO., LTD. shareholders ........
—Cash dividends paid to noncontrolling interests ....................
—
Transfer to legal reserve .......................................................
—
Equity transactions with noncontrolling interestsand other...........................................................................
—
Changes in the scope of application of the equity method ...
—Gains on disposal of treasury stock ......................................
—Net changes in treasury stock...............................................
—¥66,378¥73,102 ¥10,632 ¥ 832,785

Legalreserve

CommonTotal
stock in SECOM CO., LTD.
treasury,shareholders’ Noncontrollingat costequityinterests

Total¥20,076(¥73,731)¥ 929,242¥122,226¥1,051,468

—

—

—

96,623——96,623

13,239109,862

—
—
—

—
—
—

—
—
—

—
—
—

268
5,070
1,775

—
—
—

7
—
—
—

7
—
—
—

—
—
—
101

—
(32,738)
—
(101)

—
—
—
—

—
—
—
—

268
5,070
1,775
103,736
14(32,738)
—
—

(12)
306
177
13,710——(5,381)
—

256
5,376
1,952
117,446
14(32,738)(5,381)
—

—
—
—
—

24
—
0
—

—
—
—
—

—
17
—
—

—
—
—
—

—
—
—
(18)

24
17
0
(18)

473
—
—
—

497
17
0
(18)

Balance, March 31, 2018 ................................................... 233,290,441
Cumulative effect adjustments resulting from adoption of
new accounting standards, net of tax ................................
—
Comprehensive income:Net income .....................................................................
—
Other comprehensive income (loss), net of tax:
Unrealized gains on securities ....................................
—
Pension liability adjustments ......................................
—
Foreign currency translation adjustments ...................
—
Total comprehensive income ...........................................
Issuance of new stocks.........................................................
1,778
Cash dividends paid to SECOM CO., LTD. shareholders ........
—Cash dividends paid to noncontrolling interests ....................
—
Transfer to legal reserve .......................................................
—
Equity transactions with noncontrolling interestsand other...........................................................................
—
Changes in the scope of application of the equity method ...
—Gains on disposal of treasury stock ......................................
—Net changes in treasury stock...............................................
—

66,385

73,133

10,733

896,586

27,189(73,749)

1,000,277

131,028

1,131,305———

16,379(20,762)—(4,383)(421)(4,804)———

89,686——

89,686

10,755

100,441

—
—
—

—
—
—

—
—
—

—
—
—

274
(2,320)(4,459)

—
—
—

8
—
—
—

7
—
—
—

—
—
—
50

—
(34,922)
—
(50)

—
—
—
—

—
—
—
—

274
(2,320)(4,459)83,181
15(34,922)
—
—

—
(246)
(449)
10,060——(6,252)—274(2,566)(4,908)93,241
15(34,922)(6,252)
—

—
—
—
—

26
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
(10)

26
—
—
(10)

(2,697)———(2,671)——(10)

Balance, March 31, 2019 ................................................... 233,292,219
Comprehensive income:Net income .....................................................................
—
Other comprehensive income (loss), net of tax:
Unrealized gains on securities ....................................
—
Pension liability adjustments ......................................
—
Foreign currency translation adjustments ...................
—
Total comprehensive income ...........................................
Issuance of new stocks.........................................................
1,779
Cash dividends paid to SECOM CO., LTD. shareholders ........
—Cash dividends paid to noncontrolling interests ....................
—
Transfer to legal reserve .......................................................
—
Equity transactions with noncontrolling interestsand other...........................................................................
—
Changes in the scope of application of the equity method ...
—Gains on disposal of treasury stock ......................................
—Net changes in treasury stock...............................................
—

66,39373,166

10,783

967,679(78)(73,759)

1,044,184

131,718

1,175,902———

87,136——

87,136

12,61499,750

—
—
—

—
—
—

—
—
—

—
—
—

(263)
(3,858)(2,862)

—
—
—

8
—
—
—

8
—
—
—

—
—
—
50

—
(37,104)
—
(50)

—
—
—
—

—
—
—
—

(263)
(3,858)(2,862)80,153
16(37,104)
—
—

—
(178)
(72)
12,364——(3,438)—(263)(4,036)(2,934)92,517
16(37,104)(3,438)
—

—
—
—
—

1,506
—
0
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
0
(17)

1,506
—
0
(17)

(1,975)
—
—
—

(469)
—
0
(17)

Balance, March 31, 2020 ................................................... 233,293,998¥66,401¥74,680 ¥10,833 ¥1,017,661(¥ 7,061)(¥73,776)¥1,088,738¥138,669¥1,227,407

Translation into thousands of U.S. dollars

Commonstock

Additional
paid-in
capitalLegalreserve

Accumulated
other comRetained
prehensive
earnings income (loss)

Balance, March 31, 2019 ...................................................
Comprehensive income:Net income .....................................................................
Other comprehensive income (loss), net of tax:
Unrealized gains on securities ....................................
Pension liability adjustments ......................................
Foreign currency translation adjustments ...................
Total comprehensive income ...........................................
Issuance of new stocks.........................................................
Cash dividends paid to SECOM CO., LTD. shareholders ........
Cash dividends paid to noncontrolling interests ....................
Transfer to legal reserve .......................................................
Equity transactions with noncontrolling interestsand other...........................................................................
Changes in the scope of application of the equity method ...
Gains on disposal of treasury stock ......................................
Net changes in treasury stock...............................................

$609,110 $671,248 $98,926 $8,877,789

Balance, March 31, 2020 ...................................................

$609,183 $685,138 $99,385 $9,336,339($

CommonTotal
stock in SECOM CO., LTD.
treasury,shareholders’ Noncontrollingat costequityinterests

716) ($676,688)$9,579,669

Total$1,208,422 $10,788,091

—

—

—

799,413——

799,413

115,725

915,138

—
—
—

—
—
—

—
—
—

—
—
—

(2,413)(35,393)(26,256)

—
—
—

73
—
—
—

73
—
—
—

—
—
—
459

—
(340,404)
—
(459)

—
—
—
—

—
—
—
—

(2,413)(35,393)(26,256)
735,351
146(340,404)———(1,633)(661)
113,431——(31,541)—(2,413)(37,026)(26,917)
848,782
146(340,404)(31,541)
—

—
—
—
—

13,817
—
0
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
0
(156)

13,817—0(156)(18,119)———(4,302)—0(156)($64,778) ($676,844)$9,988,423$1,272,193 $11,260,616

SECOM REPORT 202065

Consolidated Financial Statements
Consolidated Statements of Cash Flows
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2020

2020

Cash flows from operating activities:
Net income ........................................................................................................................
Adjustments to reconcile net income to net cash provided by operating activities—
Depreciation and amortization, including amortization of deferred charges....................
Accrual for pension and severance costs, less payments .................................................
Deferred income taxes ...................................................................................................
Gain and loss on sales and disposal of fixed assets, net ..................................................
Impairment loss on long-lived assets ..............................................................................
Write-down on real estate inventories ............................................................................
Gain and loss on private equity investments ...................................................................
Impairment loss on goodwill ..........................................................................................
Gain on sales of securities, net .......................................................................................
Loss on other-than-temporary impairment of investment securities ................................
Equity in net income of affiliated companies ..................................................................
Changes in assets and liabilities, net of effects from acquisitions and disposals:(Increase) decrease in cash deposits for armored car services ......................................
(Increase) decrease in receivables and due from subscribers, net of allowances...........
(Increase) decrease in inventories ...............................................................................
Increase in deferred charges ......................................................................................
Increase (decrease) in notes and accounts payable .....................................................
Increase (decrease) in deposits received ......................................................................
Increase (decrease) in deferred revenue ......................................................................
Increase (decrease) in accrued income taxes ...............................................................
Increase (decrease) in guarantee deposits received .....................................................
Increase in unearned premiums and other insurance liabilities ....................................
Increase (decrease) in accrued consumption tax .........................................................
Other, net ..................................................................................................................
Net cash provided by operating activities ...............................................................
Cash flows from investing activities:(Increase) decrease in time deposits....................................................................................
Proceeds from sales of property, plant and equipment .......................................................
Payments for purchases of property, plant and equipment .................................................
Payments for purchases of intangible assets .......................................................................
Proceeds from sales and redemptions of investment securities............................................
Payments for purchases of investment securities ................................................................
(Increase) decrease in short-term investments .....................................................................
Acquisitions, net of cash acquired ......................................................................................
(Increase) decrease in short-term receivables, net ...............................................................
Payments for long-term receivables ....................................................................................
Proceeds from long-term receivables ..................................................................................
Other, net ..........................................................................................................................
Net cash used in investing activities .......................................................................
Cash flows from financing activities:
Proceeds from long-term debt............................................................................................
Repayments of long-term debt...........................................................................................
Increase (decrease) in bank loans, net ................................................................................
Increase (decrease) in investment deposits by policyholders ................................................
Dividends paid to SECOM CO., LTD. shareholders ..............................................................
Dividends paid to noncontrolling interests ..........................................................................
Payments for acquisition of shares of consolidated subsidiaries from noncontrollinginterest holders ................................................................................................................
Proceeds from sales of shares of consolidated subsidiaries to noncontrollinginterest holders ................................................................................................................
Increase in treasury stock, net ............................................................................................
Other, net ..........................................................................................................................
Net cash used in financing activities .......................................................................
Effect of exchange rate changes on cash and cash equivalents .....................................
Net increase in cash and cash equivalents ........................................................................
Cash and cash equivalents at beginning of year..............................................................
Cash and cash equivalents at end of year ........................................................................

66

SECOM REPORT 2020

In millions of yen

Translation into thousandsof U.S. dollars

Years ended March 31

Year ended March 31

2018

2020

¥ 99,750 ¥100,441 ¥109,862$ 915,138

77,574
1,193(4,715)
2,770
952
66
139
758
(2,962)
8,540(6,654)201975,300614(12,086)
1,444
595
580
(4,673)
—
(901)
8,991
(7,002)

78,955977(6,118)(1,541)841
865(5,884)11(1,073)
199(7,179)711,688
10,945(43,257)
25,413
8,734
606
1,275
6,954
(27,174)
78,349(61,046)

1,430(6,527)(10,576) (17,404)
9,256
4,285
(11,754) (10,716)
2,361
3,388
(4,822)
8,690
1,874
938
5,146
(4,914)
(352)
(164)
4,600
9,495
4,529
(831)
5,295
8,784
184,398 158,327(5,189)(8,292)(18,639)(15,902)
(378)
5,962
(779)
(2,441)
(474)
4,796
1,924
2,754
133,257

13,119(97,028)
84,917(107,835)
21,661(44,239)
17,19347,211(3,229)42,202
41,55048,577
1,691,724

1,564
1,178
(63,126)(11,722)
50,259(45,325)(1,357)(725)(147)(1,416)
1,578
2,628(66,611)(1,251)
3,379(56,401)(11,454)
43,597(36,686)(4,256)(3,133)62(1,024)
1,685
1,052(64,430)

172
6,166(53,751)(7,859)69,365(51,098)(1,150)(23,283)
(457)
(840)
1,224
50
(61,461)

14,34910,807(579,138)(107,541)
461,092(415,826)(12,450)(6,651)(1,349)(12,991)
14,477
24,114(611,107)

8,802(18,793)162(2,099)(37,104)(3,425)

7,161(20,184)(1,789)(1,592)(34,922)(6,263)

9,613(20,582)(3,378)(2,483)(32,738)(5,426)80,752(172,413)
1,486(19,257)(340,404)(31,422)(659)(3,033)(120)(6,046)

—
—
—
(16)
(10)
(17)
190
331
94
(52,942) (60,301) (55,037)
93
(595)
370
64,93833,001
17,129349,730 316,729 299,600¥414,668 ¥349,730 ¥316,729

—
(147)
1,743
(485,708)
853
595,762
3,208,532$3,804,294

Financial Information and References

Segment Information

Information by business and geographic segments for the years
ended and as of March 31, 2020, 2019 and 2018 is as follows:

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2018

2020

(1) Business Segment Information

2020

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2018

2020

2019

Net sales andoperating revenue:
Security services—
Customers ................ ¥ 577,252 ¥ 563,739 ¥ 562,272 $ 5,295,890
Intersegment .............
3,207
3,428
3,144
29,422..............................
580,459
567,167
565,416
5,325,312
Fire protection
services—
Customers ................
151,861
140,139
136,559
1,393,220
4,050
3,942
4,170
37,156
Intersegment .............
..............................
155,911
144,081
140,729
1,430,376
Medical services—
Customers ................
187,101
181,705
175,318
1,716,523
Intersegment .............
220
168
185
2,018
..............................
187,321
181,873
175,503
1,718,541
Insurance services—
Customers ................
43,515
41,63744,683399,220
3,413
3,120
3,034
31,312
Intersegment .............
..............................
46,92844,75747,717
430,532
Geospatial information
services—
Customers ................
53,53551,51050,906491,147
386
176
1,844
201
Intersegment .............
..............................
53,73651,89651,082492,991
BPO and ICT services—
Customers ................
97,51588,06569,569894,633
Intersegment .............
13,422
13,2097,275
123,138..............................
110,937
101,274
76,844
1,017,771
Real estate andother services—
Customers ................
49,92844,80543,485458,055
1,271
1,787
2,004
11,661
Intersegment .............
..............................
51,19946,59245,489469,716
Total............................. 1,186,491 1,137,640 1,102,780 10,885,239
Eliminations .................
(25,784)(26,040)(19,988)(236,551)
Total net sales andoperating revenue ... ¥1,160,707 ¥1,111,600 ¥1,082,792 $10,648,688

2020

2019

Operating income (loss):
Security services .............. ¥108,923 ¥110,146 ¥114,469
Fire protection
services .........................
17,817
14,18815,730
Medical services ..............
6,232
5,782
4,034
Insurance services............
(4,319)(4,856)
6,221
Geospatial information
services .........................
3,030
1,878
1,676
BPO and ICT services .......
10,6249,390
8,133
Real estate and6,910
other services ................
5,996
5,084
Total................................ 148,303 141,612 157,173
Corporate expenses
and eliminations............
(17,739) (17,901) (17,062)
Operating income ........... ¥130,564 ¥123,711 ¥140,111
Other income ..................
9,981
11,246 13,454
Other expenses ...............
(6,510)(6,394) (2,775)
Income fromcontinuing operations
before income taxes ... ¥134,035 ¥128,563 ¥150,790

163,459
57,174(39,624)
27,79897,46855,0091,360,578(162,743)$1,197,835
91,569(59,724)$1,229,680

In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2019

2020

¥ 853,101 ¥ 768,128$ 7,826,615

2020

Assets:Security services ..............
Fire protection
services .........................
Medical services ..............
Insurance services............
Geospatial information
services .........................
BPO and ICT services .......
Real estate andother services ................
Total................................
Corporate items ..............
Investments inaffiliated companies ......
Total assets......................

$ 999,294

175,854
201,449
231,650

162,549
178,755
235,773

1,613,339
1,848,156
2,125,229

68,516
243,152

67,768
152,777

628,5872,230,752

137,425
1,911,147
105,473

142,750
1,708,500
107,5131,260,780
17,533,458
967,642

64,50063,697¥2,081,120 ¥1,879,710

591,743$19,092,843

SECOM REPORT 202067

Consolidated Financial Statements
Segment Information

2020

Depreciation andamortization:
Security services ..........
Fire protection
services .....................
Medical services ..........
Insurance services........
Geospatial information
services .....................
BPO and ICT services ...
Real estate andother services ............
Total............................
Corporate items ..........
Total depreciation
and amortization ....
Capital expenditure:
Security services ..........
Fire protection
services .....................
Medical services ..........
Insurance services........
Geospatial information
services .....................
BPO and ICT services ...
Real estate andother services ............
Total............................
Corporate items ..........
Total capital
expenditures ..........

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2018

2020

2019

¥50,383¥49,409¥54,091$462,231

2,537
8,321
2,290

2,375
8,684
1,792

2,128
8,675
1,808

23,27576,33921,0091,700
10,644

2,249
9,075

2,540
7,813

15,59697,651

842
76,717857

953
74,537763

1,066
78,121
834

7,725
703,826
7,862¥77,574¥75,300¥78,955$711,688¥44,930¥48,451¥44,404$412,202

2,569
8,778
4,440

2,269
4,750
2,972

3,910
5,276
1,900

23,56980,532
40,734

2,987
12,894

2,420
9,085

1,701
31,987

27,404
118,294

2,121
78,7191,116

4,550
74,4971,291

1,690
90,868349

19,459722,194
10,239¥79,835¥75,788¥91,217$732,433

The capital expenditures in the above table represent the additions
to property, plant and equipment and intangible assets of eachsegment.
The Company has no single customer that accounts for more than
10 percent of total revenues.
The following table is a breakdown of security services revenue toexternal customers by service category. The security services businessis managed as a single operating segment by the Company’s
management.

2020

Electronic security
services .........................
Other security services:
Static guard
services .....................
Armored car
services .....................
Merchandise andother ..........................
Total security
services .....................

68

SECOM REPORT 2020

¥347,156

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2018

2020

¥344,297 ¥341,157$3,184,917

2019

70,02966,26559,030642,468

63,60262,41761,089583,505

96,46590,760100,996

885,000¥563,739 ¥562,272$5,295,890¥577,252(2) Geographic Segment Information
Net sales and operating revenue attributed to countries based on
the geographical location of customers for the years ended 2020,2019 and 2018 and long-lived assets as of March 31, 2020 and 2019were as follows:2020

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2018

2020

Net sales andoperating revenue:
Japan................... ¥1,111,521 ¥1,063,223 ¥1,034,228
Other...................
49,186
48,37748,564
Total ................ ¥1,160,707 ¥1,111,600 ¥1,082,792$10,197,440
451,248$10,648,688

In millions of yen

In thousands of
U.S. dollars

Long-lived assets:
Japan.............................
Other.............................
Total ..........................

2019

March 31

March 31

2020

2019

2020

¥772,155
13,122¥785,277¥618,061
11,699¥629,760$7,083,991
120,385$7,204,376

There are no individually material countries other than Japan withrespect to net sales and operating revenue and long-lived assets.

Financial Information and References

Other Financial Data
Summary of Selected Financial Data
SECOM CO., LTD. and Subsidiaries
Years ended/as of March 31

In millions of yen
2020

2019

2018

2017

2016

2015

¥983,428
505,058
51.4%
330,84333.6¥945,238
487,06351.5%
326,300
34.5

55,9075.7
32,9903.4
88,89785,3188.7
131,743
13.4
163,538
16.6
40,654
4.1
52,553
5.4
48,294
4.9
41,588
4.2

53,788
5.7
21,0102.2
74,79885,965
9.1
121,18912.8
155,884
16.5
38,2594.1
52,7605.6
47,412
5.0
42,671
4.5

91,38730,557929,242¥ 84,072
28,373865,278¥ 80,184
38,197
825,969

Composition of consolidated net sales andoperating revenue by segment
Net sales and operating revenue ................................................. ¥1,160,707 ¥1,111,600 ¥1,082,792 ¥1,031,261
Security services: .....................................................................
577,252
563,739562,272
543,524
As a percentage of net sales and operating revenue ...
49.7%
50.8%
51.9%
52.7%
341,157
338,744
Electronic security services ..................................................
347,156
344,297
As a percentage of net sales and operating revenue ...
29.9
31.0
31.5
32.8
Other security services—
70,02966,26559,03056,417
Static guard services .......................................................
6.0
6.0
5.5
5.5
As a percentage of net sales and operating revenue ...
57,873
Armored car services.......................................................
63,60262,41761,089As a percentage of net sales and operating revenue ...
5.5
5.6
5.6
5.6
Subtotal..................................................................
133,631
128,682
120,119
114,290
Merchandise and other .......................................................
96,46590,760100,996
90,490
8.3
8.2
9.3
8.8
As a percentage of net sales and operating revenue ...
136,559
126,232
Fire protection services ............................................................
151,861
140,139
As a percentage of net sales and operating revenue ...
13.1
12.6
12.6
12.2
Medical services ......................................................................
187,101
181,705
175,318
168,819
16.1
16.3
16.2
16.4
As a percentage of net sales and operating revenue ...
Insurance services ...................................................................
43,515
41,63744,683
43,780
3.8
4.2
4.3
3.8
As a percentage of net sales and operating revenue ...
Geospatial information services ..............................................
53,53551,51050,906
51,609
4.6
4.6
4.7
5.0
As a percentage of net sales and operating revenue ...
BPO and ICT services...............................................................
97,51588,06569,56949,681
7.9
6.4
4.8
8.4
As a percentage of net sales and operating revenue ...
Real estate and other services .................................................
49,92844,80543,48547,616
As a percentage of net sales and operating revenue ...
4.0
4.0
4.6
4.3
Net income attributable to SECOM CO., LTD.,
cash dividends and SECOM CO., LTD.
shareholders’ equity
Net income attributable to SECOM CO., LTD. ............................ ¥ 87,136
Cash dividends paid(2) .................................................................
37,104
SECOM CO., LTD. shareholders’ equity ....................................... 1,088,738
Consolidated financial ratios
Percentage of working capital accounted for by:
Debt—
Bank loans ..........................................................................
Current portion of long-term debt ......................................
Straight bonds ....................................................................
Other long-term debt .........................................................
Total debt .......................................................................
SECOM CO., LTD. shareholders’ equity ...................................
Total capitalization ..........................................................
Return on total assets (percentage)(a)...........................................
Return on equity (percentage)(b) ..................................................
Percentage of net sales and operating revenue absorbed by(c):Depreciation and amortization ................................................
Rental expense under operating leases ...................................
Ratio of accumulated depreciation to depreciable
assets (percentage) ...................................................................
Net property turnover (times)(c)....................................................
Before-tax interest coverage (times)(c) (d) .......................................

¥

89,68634,922
1,044,184¥

96,62332,7381,000,277

¥

3.3
1.5
0.3
3.4
8.5
91.5
100.0

3.4
1.6
0.4
3.6
8.9
91.1
100.0

3.5
1.7
0.5
4.1
9.8
90.2
100.0

4.0
1.9
0.7
4.5
11.1
88.9
100.0

5.6
1.8
0.8
5.3
13.5
86.5
100.0

4.7
1.4
0.9
4.9
11.9
88.1
100.0

4.2
8.0

4.8
8.6

5.3
9.7

5.2
9.8

5.0
9.7

5.3
9.7

5.7
2.4

6.8
2.5

7.3
2.3

7.6
2.5

7.4
2.5

7.3
2.4

65.3
2.73
117.5

65.4
2.67
109.6

64.6
2.63
123.0

63.2
2.49
107.1

62.8
2.38
89.2

61.6
2.38
93.8

Note: Installation revenue is included in the corresponding electronic security services.

SECOM REPORT 202069

Other Financial Data
Summary of Selected Financial Data

2020

2019

2018

2017

2016

2015

Number of shares outstanding
Issued ..................................................................... 233,293,998
Owned by the Company ......................................... 15,033,588

233,292,219
15,031,867

233,290,441
15,030,573

233,288,717
15,028,470

233,288,717
15,026,824

233,288,717
15,024,812

Balance ................................................................... 218,260,410

218,260,352

218,259,868

218,260,247

218,261,893

218,263,905¥ 399.23
170.00¥ 410.91
160.00¥ 442.70
150.00¥ 418.71
140.00¥ 385.19
130.00¥ 367.37
175.004,988.25
533.88
1.80
22.48
16.81
8,974

4,784.12
590.91
1.98
23.08
16.05
9,482

4,582.96
649.44
1.73
17.89
12.20
7,920

4,257.50
631.91
1.87
19.03
12.61
7,969

3,964.40
582.27
2.11
21.72
14.37
8,366

3,784.27
557.88
2.12
21.84
14.38
8,025

Per share information
Net income attributable to SECOM CO., LTD.
per share (in yen) (1) ...............................................
Cash dividends paid per share (in yen) (2) .................
SECOM CO., LTD. shareholders’ equity
per share (in yen) (3) ...............................................
Cash flow per share (in yen) (1) (e) ..............................
Price/Book value ratio..............................................
Price/Earnings ratio .................................................
Price/Cash flow ratio ...............................................
Stock price at year-end (in yen) ...............................

Notes: (a) Net income attributable to SECOM CO., LTD. / Total assets(b) Net income attributable to SECOM CO., LTD. / SECOM CO., LTD.
shareholders’ equity(c) Including discontinued operations(d) (Income before income taxes and equity in net income of affiliatedcompanies + Interest expense) / Interest expense(e) (Net income attributable to SECOM CO., LTD. + Depreciation andamortization – Dividends approved) / Average number of shares
outstanding during each period

70

SECOM REPORT 2020

(1) Per share amounts are based on the average number of shares
outstanding during each period.
(2) Subsequent to March 31, 2020, cash dividends of ¥18,552 million(¥85 per share) were approved at the general shareholders’ meetingon June 25, 2020 (see Note 18 of the accompanying notes toconsolidated financial statements).
(3) Per share amounts are based on the number of shares outstanding at
the end of each period, less treasury stock.

Financial Information and References

Common Stock Data
SECOM CO., LTD.
As of March 31

SHAREHOLDER INFORMATION
Number of shareholders.......................................
Common shares held by:
Financial institutions .........................................
Securities firms .................................................
Other domestic corporations ............................
Foreign investors ..............................................
Individuals and others.......................................
Treasury stock...................................................
Total .............................................................

2020

2019

2018

2017

2016

2015

23,29724,02326,80925,20024,97524,85238.65%
1.95
2.50
42.76
7.70
6.44
100.00%37.14%
3.30
2.46
42.74
7.92
6.44
100.00%35.94%
1.63
2.53
44.85
8.61
6.44
100.00%35.05%
3.89
2.51
43.42
8.69
6.44
100.00%32.50%
3.52
2.92
44.46
10.16
6.44
100.00%29.89%
3.43
3.16
44.95
12.13
6.44
100.00%

PRICE INFORMATION (TOKYO STOCK EXCHANGE)
2018

2019

2020

April–June..........................................................................
July–September..................................................................
October–December ............................................................
January–March ..................................................................
April–June..........................................................................
July–September..................................................................
October–December ............................................................
January–March ..................................................................

Price per share (in yen)
High
Low

¥8,550
9,368
9,827
9,684
9,670
10,005
10,095
9,965¥7,751
8,130
8,765
8,781
8,830
8,149
9,288
7,188

Nikkei Stock Average (in yen)
High
Low

¥23,002.37
24,120.04
24,270.62
21,822.04
22,307.58
22,098.84
24,066.12
24,083.51¥21,292.29
21,546.99
19,155.74
19,561.96
20,408.54
20,261.04
21,341.74
16,552.83

SECOM REPORT 202071

Other Financial Data
Common Stock Data

COMMON STOCK ISSUES

Date

Additional
shares issued(In thousands)

Sharesoutstanding
after issue(In thousands)

Share capital
after issue(In thousandsof yen)Allotment ratio
to shareholders

June 15, 1974
Dec. 21, 1974
May 21, 1975
May 21, 1975
Dec. 1, 1975
May 31, 1976
June 1, 1976
Dec. 1, 1976
Nov. 30, 1977
Dec. 1, 1977
Dec. 1, 1978
June 1, 1981
Dec. 1, 1981
Jan. 20, 1983
Nov. 30, 1983
Nov. 30, 1984
Nov. 30, 1985
Jan. 20, 1986
Nov. 30, 1986
Nov. 30, 1987
Jan. 20, 1988
Nov. 30, 1988
Nov. 30, 1989
Jan. 19, 1990
Mar. 31, 1990
Mar. 31, 1991
Mar. 31, 1992
Mar. 31, 1993
Mar. 31, 1994
Mar. 31, 1995
Mar. 31, 1996
Mar. 31, 1997
Mar. 31, 1998
Mar. 31, 1999
Nov. 19, 1999
Mar. 31, 2000
Mar. 31, 2001
Mar. 31, 2002
Mar. 31, 2003
Mar. 31, 2005
July 27, 2017
July 26, 2018
July 26, 2019
July 22, 2020

1,968
2,760
1,196
1,244
4,320
1,880
2,060
6,798
2,042
6,300
7,560
3,000
4,836
5,320
194
1,418
186
6,031
2,878
1,609
3,541
439
1,808
22,986
1,446
2,949
2,035
267
6,986
477
613
1,825
29
159
116,410
273
25
175
6
8
1
2
2
2

9,200
11,96013,156
14,40018,72020,60022,66029,45831,50037,80045,36048,36053,19658,51658,71060,12860,314
66,34569,22370,832
74,37374,812
76,62099,606
101,052
104,001
106,036
106,303113,289
113,766
114,379
116,204
116,233
116,392
232,802
233,075
233,100
233,275
233,281
233,289
233,290
233,292
233,294
233,296¥00,460,000
598,000
657,800
720,000
936,000
1,030,000
1,133,000
1,472,900
1,575,000
1,890,000
2,268,000
2,418,000
2,659,800
3,000,000
3,280,942
5,329,282
5,602,945
5,602,945
11,269,932
15,021,200
15,021,200
16,063,099
21,573,139
21,573,139
25,070,104
32,244,732
37,338,751
37,991,568
56,756,263
58,214,178
59,865,105
65,253,137
65,327,060
65,709,927
65,709,927
66,096,852
66,126,854
66,360,338
66,368,827
66,377,829
66,385,263
66,392,692
66,401,083
66,410,237—
3 for 10
1 for 10—
3 for 10—
1 for 10
3 for 10—
2 for 10
2 for 10—
1 for 10
1 for 10———
1 for 10——
0.5 for 10——
3 for 10
—
—
—
—
—
—
—
—
—
—
10 for 10*
—
—
—
—
—
—
—
—
—

Remarks

Issue at market price (¥900)
Stock split
Stock split
Issue at market price (¥1,134)
Stock split
Issue at market price (¥2,570)
Stock split
Stock split
Issue at market price (¥1,700)
Stock split
Stock split
Issue at market price (¥2,230)
Stock split
Stock split
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Stock split
Conversion of convertible bonds
Conversion of convertible bonds
Stock split
Conversion of convertible bonds
Conversion of convertible bonds
Stock split
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Stock split
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Issue of new shares as restricted stock compensation
Issue of new shares as restricted stock compensation
Issue of new shares as restricted stock compensation
Issue of new shares as restricted stock compensation

Note: The above is a record of SECOM’s common stock issues since the common stock was listed on the Tokyo Stock Exchange in June 1974.
*One share was split into two.

72

SECOM REPORT 2020

Financial Information and References

Corporate Information(As of June 30, 2020)

Headquarters:
Independent auditors:
Administrator of the registerof shareholders:

5-1, Jingumae 1-chome, Shibuya-ku, Tokyo 150-0001, Japan
KPMG AZSA LLC
Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212, Japan

MAJOR CONSOLIDATED SUBSIDIARIES

Domestic<Security services>
Secom Joshinetsu Co., Ltd.
Secom Hokuriku Co., Ltd.
Secom Yamanashi Co., Ltd.
Secom Mie Co., Ltd.
Secom Sanin Co., Ltd.
Secom Kochi Co., Ltd.
Secom Miyazaki Co., Ltd.
Secom Ryukyu Co., Ltd.
Secom Jastic Co., Ltd.
Secom Jastic Joshinetsu Co., Ltd.
Secom Jastic Hokuriku Co., Ltd.
Secom Jastic Yamanashi Co., Ltd.
Secom Jastic Sanin Co., Ltd.
Secom Jastic Kochi Co., Ltd.
Secom Jastic Miyazaki Co., Ltd.
Secom Static Hokkaido Co., Ltd.
Secom Static Tohoku Co., Ltd.
Secom Static Nishi-Nihon Co., Ltd.
Secom Static Kansai Co., Ltd.
Secom Static Ryukyu Co., Ltd.
Secom Sado Co., Ltd.
JK. Siress Co., Ltd.
Japan Safety Guard Co., Ltd.
Japan Nuclear Security System Co., Ltd.
Meian Co., Ltd.
Secom Tech Sanin Co., Ltd.
Secom Techno Joshinetsu Co., Ltd.
Secom Win Co., Ltd.
Secom Industries Co., Ltd.
Otec Electronics Co., Ltd.
Secom Alpha Co., Ltd.
Secom Mine Security Co., Ltd.
Social Rehabilitation Support Kitsuregawa Co., Ltd.
Secom Kitsuregawa Security Co., Ltd.
Home Life Kanri Co., Ltd.
Kumalift Co., Ltd.
Asahi Security Co., Ltd.
Secom Tosec Co., Ltd.
Aroba Inc.

Issued capital(In millions of yen)

Percentageof equity/
voting rights¥3,530
201
15
50
290
50
30
76
100
40
10
10
10
10
10
50
50
50
50
10
24
10
100
200
60
23
30
15
499
200
271
30
10
50
40
100
100
30
255

(53.4)%
59.1
70.0
51.0
64.3
40.0
68.3
50.0
100.0
(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)
100.0
100.0
100.0
100.0
(100.0)(100.0)(100.0)
60.0
50.0
51.0
(100.0)(100.0)
66.7
100.0
82.0
100.0
100.0
51.7
100.0
(100.0)
100.0
100.0
80.1
100.0

Lines of business(As of June 30, 2020)

Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Installation of security equipment
Installation of security equipment
Installation of security equipment and facilities
Manufacturing of security equipment
Manufacturing and sales of security systems
Sales of security and water-treatment equipment
Security services
Operation of PFI correctional facilities
Security services
Condominium management
Manufacture, sales and maintenance of freight elevators
Security services
Security services
Software development

Notes: 1. ( ) indicates the percentage of equity/voting rights held by both SECOM CO., LTD. and certain of its subsidiaries, or by certain subsidiaries independently.
2. Subsidiaries are categorized into segments above according to their major lines of business.

(Continued )SECOM REPORT 202073Corporate Information

MAJOR CONSOLIDATED SUBSIDIARIES
Issued capital(In millions of yen)<Fire protection services>
Nohmi Bosai Ltd.

(50.4)%

Lines of business

28
30
20
80
20
30
32
20
50
10
20
40
20
20
20
20
20
80
2,303

(73.2)(100.0)(70.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(82.0)(100.0)100.0

Nittan Electronic Co., Ltd.
Nittan Denko Co., Ltd.
Nittan Hokkaido Service Center Co., Ltd.
Shell Beach Co., Ltd.
Consilium Nittan Marine Ltd.

60
10
10
10
42

(100.0)(100.0)(100.0)(100.0)(50.0)<Medical services>
Secom Medical System Co., Ltd.
Mac Corp.
Yoshikikaku Co., Ltd.
Kensei Co., Ltd.
Secomfort Tama Co., Ltd.
Alive Medicare Co., Ltd.
Secomfort Co., Ltd.
Secomfort West Co., Ltd.
US Chemical Co., Ltd.
Secom Medipharma Co., Ltd.

100
95
20
100
100
50
100
100
3
10

100.0
(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)Home health/nursing care and other medical-related services
Sales of medical equipment
Operation of restaurants and shops at medical facilities
Management of pharmacies
Management of nursing homes
Management of nursing homes
Management of nursing homes
Management of nursing homes
Management of pharmacies
Wholesaling of pharmaceuticals

Notes: 1. ( ) indicates the percentage of equity/voting rights held by both SECOM CO., LTD. and certain of its subsidiaries, or by certain subsidiaries independently.
2. Subsidiaries are categorized into segments above according to their major lines of business.

74(As of June 30, 2020)

Manufacturing and sales of fire protection equipment
and facilities
Installation of fire protection equipment
Installation and maintenance of fire protection equipment
Building management
Installation of fire protection equipment
Maintenance of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of environmental monitoring systems
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation and maintenance of fire protection equipment
Installation, sales and maintenance of fire protection
equipment
Manufacturing of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Sales of fire protection equipment

Ichibou Co., Ltd.
Kyushu Nohmi Co., Ltd.
Chiyoda Service Co., Ltd.
Nohmi Engineering Corp.
Nohmi System Co., Ltd.
Iwate Nohmi Co., Ltd.
Tohoku Nohmi Co., Ltd.
Aomori Nohmi Co., Ltd.
Nissin Bohsai Co., Ltd.
Chiba Nohmi Co., Ltd.
Shikoku Nohmi Co., Ltd.
Nohmi Techno Engineering Co., Ltd.
Akita Nohmi Co., Ltd.
Fukushima Nohmi Co., Ltd.
Niigata Nohmi Co., Ltd.
Hokkaido Nohmi Co., Ltd.
Yashima Bosai Setsubi Co., Ltd.
System Service Co., Ltd.
Nittan Co., Ltd.

¥13,302

Percentageof equity/
voting rights

SECOM REPORT 2020

(Continued )Financial Information and References

MAJOR CONSOLIDATED SUBSIDIARIES
Issued capital(In millions of yen)

Percentageof equity/
voting rights<Insurance services>
Secom Insurance Service Co., Ltd.
Secom General Insurance Co., Ltd.

¥ 100
16,809(100.0)%97.1

Non-life insurance agency
Non-life insurance<Geospatial information services>
Pasco Corp.
GIS Hokkaido Co., Ltd.
GIS Kanto Co., Ltd.
Mid Map Tokyo Corp.
RIIC Corp.
Higashi-Nihon Sogo Keikaku Co., Ltd.
Satellite Image Marketing Corp.

8,758
190
40
15
20
200
60

69.8
(100.0)(52.6)(60.0)(100.0)(100.0)(100.0)

Geospatial information services
Geospatial information services
Geospatial information services
Geospatial information services
Geospatial information services
Geospatial information services
Geospatial information services<BPO and ICT services>
Secom Trust Systems Co., Ltd.

1,469

100.0

At Tokyo Corp.
TMJ, Inc.
BiOS, Inc.
Mobile Select, Inc.

13,379
100
39
10

50.9
100.0
(90.0)(100.0)Information, communication, information security
services and software development
Data center business
BPO services
Bilingual IT services
Contact center support services<Real estate and other services>
Secom Home Life Co., Ltd.
Arai & Co., Ltd.
Arai Corporation, Inc.
Secom Credit Co., Ltd.
Secom Corp.
Secom Auto Service Co., Ltd.
Wonder Dream Co., Ltd.
Secom Business Plus Co., Ltd.
Secom Home Service Co., Ltd.
Secom Engineering Co., Ltd.
Toko Create Co., Ltd.

3,700
3,000
10
400
100
45
100
20
32
100
50

99.9
86.7
(100.0)
100.0
100.0
100.0
100.0
100.0
100.0
100.0
96.6

Development of residential buildings
Real estate leasing
Management of real estate
Credit services
Clerical services
Car maintenance
Employee welfare for SECOM Group
General office services
Lifestyle support services
Design, construction and maintenance of facilities
Electrical engineeringLines of business(As of June 30, 2020)

Notes: 1. ( ) indicates the percentage of equity/voting rights held by both SECOM CO., LTD. and certain of its subsidiaries, or by certain subsidiaries independently.
2. Subsidiaries are categorized into segments above according to their major lines of business.

(Continued )SECOM REPORT 202075

Financial Information and References

Corporate Information

MAJOR CONSOLIDATED SUBSIDIARIES
Issued capital

Percentageof equity/
voting rights

Lines of business

Overseas<Security services>
Secom plc
Scan Alarms Ltd.
Scan Alarms & Security Systems (UK) Ltd.
Secom (China) Co., Ltd.
Dalian Secom Security Co., Ltd.
Shanghai Secom Security Co., Ltd.
Beijing Jingdun Secom Electronic Security Co., Ltd.
Qingdao Secom Security Co., Ltd.
Guangdong Secom Security Co., Ltd.
Fujian Secom Security Co., Ltd.
Sichuan Secom Security Co., Ltd.
Shaanxi Secom Security Co., Ltd.
Zhejiang Secom Security Co., Ltd.
Liaoning Secom Security Co., Ltd.
Tianjin Secom Security Co., Ltd.
Jiangsu Secom Security Co., Ltd.
PT. Secom Indonesia
PT. Secom Bhayangkara
PT. Secom Realty Indonesia
Thai Secom Security Co., Ltd.
Secom Australia Pty. Ltd.
Secom Technical Services Unit Trust
Secom Guardall NZ Ltd.
Secom Trading Co., Ltd.
Secom Vietnam Security Service JSC
Secom (Singapore) Pte. Ltd.
D’Garde Security Pte. Ltd.
Secom Aktif Guvenlik Yatirim A.S.
Secom Aktif Elektronik Güvenlik Cözümleri A.S.

£44,126 thousand£20 thousand£50 thousand¥5,550 million
US$2,000 thousand
Rmb80,000 thousand
US$2,500 thousand
US$1,000 thousand
US$4,500 thousand
Rmb15,000 thousand
Rmb10,000 thousand
Rmb10,000 thousand
Rmb15,000 thousand
Rmb10,000 thousand
Rmb5,000 thousand
Rmb15,000 thousand
US$4,111 thousand
I.RPA3,200 million
I.RPA97,972 million
THB378,934 thousand
AUD18,126 thousand
AUD5,951 thousand
NZD1,604 thousand¥120 million
VND95,177 million
S$5,000 thousand
S$100 thousand
TRY57,783 thousand
TRY57,865 thousand

100.0%(100.0)(100.0)100.0(95.0)(85.0)(80.0)(80.0)(100.0)(95.0)(100.0)(100.0)(97.0)(60.0)(100.0)(100.0)49.0(40.0)(99.9)
49.0
100.0(70.0)(100.0)100.0(80.0)
46.6(100.0)50.0(100.0)

Security services
Holding company
Security services
Holding company
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Real estate leasing
Security services
Security services
Security services
Security services
Sales of security equipment
Security services
Security services
Security services
Security services
Security services<Other services>
Shanghai Nohmi Secom Fire Protection Equipment Co., Ltd.

US$14,300 thousand(100.0)Nohmi Taiwan Ltd.

NT$15,000 thousand(100.0)Nittan Europe Ltd.
Nittan Asean Co., Ltd. – Vietnam Headquarters
Secom Medical System (Singapore) Pte. Ltd.
Takshasila Hospitals Operating Pvt. Ltd.
Takshasila Healthcare and Research Service Pvt. Ltd.
Pasco Philippines Corp.
Pasco (Thailand) Co., Ltd.
PT. Nusantara Secom InfoTech£1,194 thousand
US$3,236 thousand
S$51,330 thousand
INR3,029 million
INR15 million
PHP50,400 thousand
THB129,000 thousand
US$3,304 thousand(100.0)(100.0)(100.0)(49.7)(99.3)(100.0)(100.0)(100.0)

Pasco North America Inc.
Value Communication Services (Shanghai), Inc.
Jie Sheng Communication Services (Shanghai), Inc.
TMJP BPO Services, Inc.
The Westec Security Group, Inc.
ClearLight Partners, LLC
ClearLight Partners II, LLC
ClearLight Partners III, LLC

US$5,621 thousand
Rmb35,749 thousand
Rmb5,000 thousand
PHP35,900 thousand
US$0.3 thousand———(100.0)(100.0)(100.0)(99.9)
100.0(99.7)(99.0)(98.0)

Manufacturing and sales of fire protection equipment
and facilities
Manufacturing and sales of fire protection equipment
and facilities
Sales of fire protection equipment
Manufacturing of fire protection equipment
Holding company
Hospital management
Management of hospital real estate
Geospatial information services
Geospatial information services
Geospatial information services andsoftware development
Geospatial information services
BPO services
BPO services
BPO services
Holding company
Investment
Investment
Investment

Notes: 1. ( ) indicates the percentage of equity/voting rights held by both SECOM CO., LTD. and certain of its subsidiaries, or by certain subsidiaries independently.
2. Subsidiaries are categorized into segments above according to their major lines of business.

76(As of June 30, 2020)

SECOM REPORT 2020

Regarding Publication of SECOM Report 2020
Disclosure Configuration
The IR and Sustainability sections of the SECOM corporate website provide additional detailed information on ouroperating performance, including financial statements prepared in accordance with U.S. GAAP, and initiatives aimed at
helping realize a sustainable society.

Detailed
Sustainability Reporthttps://www.secom.co.jp/english/csr/

Financial data (U.S. GAAP)ESG Comparison Table/ESG Data

https://www.secom.co.jp/english/ir/lib05.html

https://www.secom.co.jp/english/csr/esg/

Nonfinancial
information

SECOM Report

Financialinformation

GeneralEditorial Policy

Scope of Reporting

For many years, we published an annual report that provided a comprehensive
look at our activities and performance, focusing on financial information but
also including ESG-related and other nonfinancial information.
In 2020, we revised our overall approach to the report, enhancing
nonfinancial information to more accurately reflect our identity as a company
that seeks to provide enduring peace of mind to an ever-changing society and,through that effort, to continue growing together with society. Accordingly, we
also changed the name to “SECOM Report,” which we feel is more appropriate
for the current format. References used in the production of SECOM Report2020 include the disclosure framework for integrated reports issued by theInternational Integrated Reporting Council (IIRC) and Guidance for Collaborative
Value Creation, put out by Japan’s Ministry of Economy, Trade and Industry(METI). We have positioned this report as a core tool that systematically andconcisely communicates with shareholders and investors by combining
information on the various strategies that are essential to the creation of
corporate value with financial and nonfinancial information.

In principle, this report provides information on SECOM CO., LTD., and its
consolidated subsidiaries, equity-method companies and variable interest
entities. (In instances where the scope differs, an explanation is provided.)

Reporting Period
This report is for the fiscal year ended March 31, 2020. (Some data subsequent
to that period is included.)Accounting Principles
Unless otherwise indicated, all financial data has been prepared in accordancewith U.S. GAAP.

Forward-Looking Statements
This report contains forward-looking statements about future plans andstrategies, as well as forecasts and expectations regarding SECOM’s
performance. Actual results may differ materially from these statements.

An Official Partner of the Olympic and Paralympic Games Tokyo 2020
As an official partner (Security Services andPlanning category), we will contribute to
the safe and secure staging of the Olympic
and Paralympic Games Tokyo 2020.
Our history with the Olympics
stretches back five decades. Still in our
infancy, in 1964 we provided security
services for the Olympic Village at the first

Tokyo Olympics, earning high marks andthe trust of society, an achievement that
contributed to our subsequent evolution
and growth.
We will continue working to create
innovative services to help ensure thesafe and secure staging of the upcoming
games.

SECOM REPORT 2020

77

SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo 150-0001, Japanwww.secom.co.jp

Printed in Japan