A MESSAGE TO SHAREHOLDERS“Peace of mind”
for everyone
Consolidated Operating Results
In the fiscal year ended March 31, 2008, harsh economic conditions persisted asa slowdown in the U.S. economy—precipitated by the subprime loan crisis—andsoaring fuel and raw materials prices squeezed corporate profits, while the risingcost of living hindered consumer spending.
In this environment, we continued to respond promptly to our customers’changing needs for security and peace of mind with the aim of realizing our Social
System Industry vision, by stepping up efforts to reinforce our core security services business, as well as our fire protection, medical, insurance, geographic information, and information and communication related and other services.
These efforts contributed to record-high consolidated net sales and operating revenue, operating income and net income. Owing to a full year of contributions from the fire protection services segment—newly established in December
2006—and favorable increases in security services, medical services, geographic
information services and insurance services, net sales and operating revenue
amounted to ¥706.7 billion, an increase of 11.0%, or ¥70.0 billion. Higher net sales
and operating revenue, together with a decline in impairment losses on long-lived
assets and goodwill, supported an increase of 11.9%, or ¥11.2 billion in operating
income, to ¥105.6 billion. Net income rose 10.5%, or ¥5.9 billion, to ¥61.8 billion.
Calculated in accordance with accounting principles generally accepted inJapan—Japanese GAAP—consolidated revenue rose 11.2%, to ¥682.6 billion while
operating profit, ordinary profit and net income totaled ¥104.7 billion, ¥114.3 billionand ¥61.5 billion, respectively—all record highs.
With the intention of providing returns to shareholders that more closely reflect
our operating performance, in the previous fiscal year we shifted the basis fordetermining dividends, which are calculated using Japanese GAAP, to consolidatedresults, from nonconsolidated results. At the general shareholders’ meeting on
June 26, 2008, shareholders approved a resolution to pay annual cash dividendsof ¥85.00 per share, an increase of ¥5.00.

Makoto Iida
Founder

Responding to Changes in the Operating Environment
In the security services business, the growing number of cunning and malicious
crimes has made customers more inclined to reinforce security against potential
dangers, both at home and in the workplace. As a consequence, we are seeing apronounced increase in demand for high-quality security products and services.
With the aim of accommodating the increasingly varied needs of customers inthe security services market, we continue to focus on further enhancing service
quality by improving the skills of our employees and the capabilities of our security systems. Our ability to provide high-quality security services is due to our integrated approach, whereby we take full responsibility for maintaining control of

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Annual Report 2008

every aspect of product and service development, from research and development
to manufacturing, sales, security planning, installation, monitoring, emergency
response services and equipment maintenance. Improving the skills and teamworkof employees in these areas thus enables us to further enhance service quality.
In the commercial security services market, needs are diversifying in responseto changing social conditions. In recent years, building tenant turnover and theemergence of new formats for tenancy have increaseed. This has in turn boosted
liquidity in the commercial security services market. In Japan, for instance, building tenants change with increasing frequency as companies choose to close poorly
performing offices and shops and reopen in more profitable locations—after which
the vacated premises are leased to another company, most likely in a different
industry. Recognizing this trend early on, we have endeavored to increase our market share by making it possible for customers changing premises to transfer theirsecurity services contracts to their new locations and by encouraging new tenants
to enter into new contracts. An increasing emphasis on lower operating costs andgreater efficiency has heightened the popularity of automated, unmanned facilities in a broad range of industries. We are stepping up efforts to develop products
and services designed specifically to accommodate the needs of such customers.
Recent additions to our lineup include a new security system featuring a facility
control mechanism that enables remote opening and closing of doors and shutters.
We are also seeing an increase in the need for around-the-clock security forcommercial premises. In response to an increase in crimes targeting stores andoffices in recent years, we continue to propose access-control systems that suita variety of requirements to ensure security when employees are present. We
have augmented existing on-line systems with a new feature which monitors windows and doors using sensors in the early morning and late at night, even whenemployees are present, thereby helping to prevent unlawful access and ensure
employee safety.
Employee identification cards based on integrated circuit (IC) card technology
have rapidly grown in popularity among companies in Japan in recent years. As aconsequence, there is an increasing need for employee identification cards thatcan be used for commercial security systems, facility access-control, time clocks,
PC access-control and other systems. Our mainstay security systems can not only
be used with the SECOM Wireless IC Card, but can also be made compatible withIC cards from other manufacturers. We are actively promoting these options tocustomers seeking systems that maximize the convenience of IC cards.
In the home security market, we continue to focus on boosting the numberof contracts for our on-line home security services. Underscoring the increasing
unease in society today, residential security customers are seeking ever-higher
levels of security. We offer a wide range of options carefully tailored to customer
needs. The recent revision of Japan’s Fire Protection Law and the introduction ofcorresponding regulations by local authorities have increased the number of homesthat are required to install fire alarm systems. In response, we have begun offering New Home Fire Sensor, which can be connected to our on-line home security

Shohei Kimura
ChairmanKanemasa Haraguchi
President andRepresentative Director

Secom Co., Ltd.

Annual Report 2008

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A MESSAGE TO SHAREHOLDERS

systems, and have already received substantial numbers of orders. Other security
products that can also be connected to our on-line security systems to make homes
more secure include SECOM Anshin Glass—a high-impact, breakage-­resistantwindow glass—and residential monitoring cameras, both of which continue toearn praise from customers. These and other business activities have benefited
from the efforts in recent years of our network of offices, which has bolsteredsales and increased opportunities for us to interact directly with customers. Sales
have also benefited from the introduction of such value-added options as SECOM
Home Service, a suite of lifestyle support services through which we assist customers in resolving everyday household problems. Originally offered in the Tokyo
Metropolitan area, this service is now available nationwide. Going forward, we willcontinue to enhance and broaden the SECOM Home Service lineup with the aim ofincreasing convenience for customers.
The proliferation of mobile phones has significantly changed the face of thehome security market in many ways, one of which is a rise in the number of homes
without landlines. Because home security systems traditionally use home telephones to notify control centers should an abnormality be detected, this change has
had a noticeable impact on the security services industry. In developing our COCOSECOM mobile security system, we established a communications infrastructureusing COCO-SECOM, thereby making it possible for us to offer SECOM Home
Security to customers without home telephones. Accordingly, because we are able
to offer security services using a variety of communications methods, we are notdependent on the user’s communications infrastructure and can guarantee a­uniform level of service to all customers.
We are also expanding our presence in overseas markets. In the growing market of the PRC, we offer SECOM security services in key coastal cities and surrounding urban centers. Given our rapidly expanding contract volume in the PRC,
we are planning to double our number of branches in the years ahead by, amongothers, expanding into inland areas. In the high-growth economies of Southeast
Asia, we are working to establish new bases and expand our operations in theregion. In the United Kingdom, subsidiary Secom Plc won the top prize in the 2007
Security Excellence Awards for best customer care initiative—underscoring thehigh regard in which SECOM’s approach to security services is held in the U.K.
market. Moving forward, we will continue to enhance our capabilities by further
raising the quality of our security services, while at the same time expanding ourpresence in promising markets.
To further accelerate our growth, we are also taking decisive steps to expand
businesses other than security services. In the area of fire protection services,
we have expanded sales in the home fire protection market, as well as reinforced
efforts to coordinate sales activities for large-scale buildings and develop an optimal execution and maintenance system. In medical services, we have enhanced
our various home services, which include home nursing and pharmaceutical dispensing and delivery services, as well as our other services. In insurance services,6

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Annual Report 2008

we have endeavored to bolster sales of distinctive non-life insurance policies,
which include a fire insurance policy for commercial premises, a comprehensive
home insurance policy, a comprehensive automobile insurance policy and
MEDCOM, an unrestricted cancer treatment policy that covers the cost of treatments, including those not covered by Japan’s national health insurance scheme.
In geographic information services, we have built on our advanced measuring technologies and accumulated geographic information system (GIS) surveying capabilities to generate geospatial data, which we supply to public- and private-sector
customers. We have also obtained exclusive rights in Japan and nonexclusive
rights worldwide to sell image data generated by TerraSAR-X, a German commercial satellite. We have already laid a solid business foundation that will enable us touse this data in a wide range of areas. Our information and communication related
and other services business encompasses a wide array of services, ranging fromconsulting to the provision of effective solutions, with a focus on such areas as
information security services and disaster response support services. Recentefforts have included expanding the lineup of services offered under the umbrellaof the SECOM Safety Confirmation Service, which is designed to help confirm thesafety of employees in the event of a major disaster.
Realizing the Social System Industry
Having positioned the security services business as our core focus and expanded ourbusiness portfolio to include fire protection services, medical services, insurance services, geographic information services, and information and communication related
and other services, we have developed products and services that deliver evergreater added value by promoting close collaboration among these businesses. Ourquest to realize our Social System Industry vision involves the creation of a comprehensive framework of products and services that are an essential part of life. To thisend, we are striving to develop and offer new products and services that contributeto a safer and more secure society. We are confident that such efforts will enable us
to achieve steady growth in corporate value.
On January 1, 2008, we unveiled a new corporate message, “providing reliable
peace of mind.” This reflects our mission as a company providing products and services that promote a level of safety worthy of the trust of our customers, thereby
enabling us to realize our Social System Industry vision.
We look forward to the support of our shareholders in these and all of ourendeavors.
June 26, 2008

Makoto Iida
Founder

Shohei Kimura
ChairmanKanemasa Haraguchi
President and Representative Director

Secom Co., Ltd.

Annual Report 20087