Notice of Convocation
The 57th Ordinary General Meeting of Shareholders

The following is an English translation of the Notice of Convocation of the 57th
Ordinary General Meeting of Shareholders of SECOM CO., LTD. to be held on
June 26, 2018, except for the translation of the INSTRUCTION ON ONLINE
VOTING and the ACCESS MAP FOR THE PLACE OF THE MEETING in the
Notice. The Company provides this translation for your reference and convenience
only and without any warranty as to its accuracy or otherwise.

[English Translation]
1

Table of Contents
Notice of Convocation of The 57th Ordinary General Meeting of Shareholders ····
Reference Document Concerning the General Meeting of Shareholders ··············

4
8[Attached Documents]
Business Report ···················································································I.
Outline of the Group’s Business ·····················································
1. The Current Business Development and Results of Operations ··············
2. Issues the Group Has to Cope with ·················································
3. Capital Expenditures ··································································
4. Fund Raising ············································································
5. Trends in Earnings and Assets of the Group ·····································
6. Trends in Earnings and Assets of the Company ···································
7. Matters Concerning Principal Subsidiaries ·······································
8. Principal Business of the Group ·····················································
9. Principal Offices of the Group ·······················································
10. Matters Concerning Employees of the Group and the Company ············
11. Principal Lenders ······································································
12. Other Important Matters Concerning the Group ·······························

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II.
1.
2.
3.
4.
5.

Matters Concerning the Company’s Shares and Shareholders ···············
Total Number of Shares to be Issued ···············································
Total Number of Issued Shares ······················································
Number of Shareholders at the End of the Fiscal Year ·························
Number of Shares Constituting a Unit of Shares ································
Major Shareholders ····································································

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III.
1.

Directors and Audit & Supervisory Board Members ···························
Names and Titles of Directors and Audit & Supervisory Board
Members ·················································································
Description of the Agreement Limiting Liabilities ································
Remuneration of Directors and Audit & Supervisory Board
Members ·················································································
Policy for Determining the Amount of Remuneration of Directors
and Audit & Supervisory Board Members ········································
Outside Directors and Outside Audit & Supervisory Board
Members ················································································

33

2.
3.
4.
5.

[English Translation]
2

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IV.
1.
2.
3.
4.
5.

Accounting Auditor ····································································Name of Accounting Auditor ························································
Remuneration of Accounting Auditor ··············································
Consent for the Amount of Remuneration for Accounting Auditor ···········
Non-Audit Duties ········································································
Policy for Decision for Dismissal or Non-reappointment ·······················

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V.

System under which the Company’s Business is Ensured to be
Properly Executed ·····································································
Basic Policy Regarding Internal Control System ································
Outline of Status of Operation of Internal Control System ····················
Result of Evaluation of the Board of Directors ···································

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48
51

1.
2.
3.

Consolidated Financial Statements
Consolidated Balance Sheet ··································································
Consolidated Statement of Income ··························································
Consolidated Statement of Changes in Net Assets ·······································
Non-Consolidated Financial Statements
Non-Consolidated Balance Sheet ····························································
Non-Consolidated Statement of Income ···················································
Non-Consolidated Statement of Changes in Net Assets ·································
Auditors’ Reports
Certified Copy of the Accounting Auditor’s Report (Consolidated) ·················
Certified Copy of the Accounting Auditor’s Report (Non-Consolidated) ···········
Certified Copy of the Audit & Supervisory Board’s Report ···························(Note) This Table of Contents is for this abridged English translation only, and not the same as that in
the original Japanese documents.

[English Translation]
3

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Stock Exchange Code: 9735
June 4, 2018

Notice of Convocation of
The 57th Ordinary General Meeting of Shareholders
Dear Shareholders:
You are cordially invited to attend the 57th Ordinary General Meeting of
Shareholders of SECOM CO., LTD. (the “Company”).
If you are unable to attend the aforesaid meeting, you can exercise yourvoting rights through either of the methods stated below. The Company respectfully
requests you to study the “Reference Document Concerning the General Meeting of
Shareholders” below and exercise your voting rights on or before 6:00 p.m. (JST)June 25, 2018 (Monday):[In case of exercising voting rights by mail]Please indicate on the Voting Rights Exercise Form enclosed herewith
your approval or disapproval to the proposals on the agenda, and returnthe form to the Company by mail on or before the time limit statedabove.
[In case of exercising voting rights via the Internet]
Please access the website for the exercise of voting rights(https://www.evote.tr.mufg.jp/), using the log-in ID and temporary
password which are shown on the Voting Rights Exercise Form. After
logging in, please indicate whether you approve or disapprove the itemson the agenda by following the instructions on the display screen by thetime limit stated above.
Yours very truly,
SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo, Japan
By: YASUO NAKAYAMA
President and Representative Director[English Translation]
4

(Note) Please note that shareholders with addresses outside Japan may notthemselves use these voting procedures. For these shareholders please consult theircustodian in Japan as to the exercise of voting rights.

[English Translation]
5

PARTICULARS

1.

Date and Time of the Meeting:
Tuesday, June 26, 2018 at 10:00 a.m.

2.

Place of the Meeting:Bersarle Hanzomon, Sumitomo Fudosan Hanzomon-Ekimae Building 2F,
6-4, Kojimachi 1-chome, Chiyoda-ku, Tokyo

3.

Matters to be dealt with at the Meeting:
Matters to be Reported:
1. Report on the Business Report, the Consolidated Financial
Statements for the 57th Fiscal Year (from April 1, 2017 to March
31, 2018) and the Results on the Audits of Consolidated Financial
Statements by the Accounting Auditor and the Audit &Supervisory Board.
2. Report on the Non-Consolidated Financial Statements for the57th Fiscal Year (April 1, 2017 to March 31, 2018).
Matters to be Resolved upon:First Item of Business:
Second Item of Business:
Third Item of Business:

4.

Proposed Distribution of Surplus
Election of Eleven (11) Directors
Election of One (1) Audit &Supervisory Board Member

Matters related to Exercise of Voting Rights:
1) In the event that a shareholder wants to exercise non-uniform
voting, he/she shall notify the Company to make non-uniform
voting and the reason thereof in writing three (3) days prior to thedate of the General Meeting of Shareholders.
2) In the event that a shareholder exercises voting rights both via
return mail (Voting Rights Exercise Form) and the Internet, theCompany will consider the exercise of voting rights via the Internet
to be valid.
3) In the event that a shareholder exercises voting rights via theInternet more than once, the Company will consider the last
exercise of voting rights to be valid.

[English Translation]
6

(Internet disclosure)
Following matters are made available on the Company’s website
pursuant to the relevant laws and ordinances, and Article 16 of the
Articles of Incorporation of the Company and are not included in the
Attached Documents.
1) “Notes to Consolidated Financial Statements” in the Consolidated
Financial Statements2) “Notes to Non-Consolidated Financial Statements” in the
Non-Consolidated Financial Statements
The Company’s Website: https://www.secom.co.jp/english/ir/(on the “Investor Relations: Stocks and Bonds” section)
The Consolidated Financial Statements and Non-Consolidated
Financial Statements audited by the Accounting Auditor and the
Audit & Supervisory Board consist of each document attached to the
Notice of Convocation of the Ordinary General Meeting of
Shareholders, as well as the Notes to Consolidated Financial
Statements and the Notes to Non-Consolidated Financial Statements
available on the Company’s Website.
(Note)
If you plan to attend the Meeting, please submit the enclosed Voting
Rights Exercise Form to the receptionist at the Meeting.
(Notice)
If there are any amendments to the contents of the Reference
Document Concerning the General Meeting of Shareholders, theBusiness Report, the Consolidated Financial Statements and theNon-Consolidated Financial Statements, the Company will announce
such amendments on the “Investor Relations: Stocks and Bonds”
section of the Company’s website(https://www.secom.co.jp/english/ir/).

[English Translation]
7

Reference Document Concerning the General Meeting of Shareholders
Proposal and Reference Items
First Item of Business: Proposed Distribution of Surplus
The Company considers the return of profit to shareholders as one of theimportant managerial issues, and the Company has determined a dividend payout
ratio on a consolidated basis and the level of internal reserves after making an
overall judgment on the expansion of the Company’s business and trends of future
revenues and profits of the Company on a consolidated basis while considering
the Company’s basic policy that ensures the payment of continual and steady
dividends. The Company has made it a basic rule to distribute a dividend twice ayear, as the interim dividend whose record date is September 30 each year, and theyear-end dividend whose record date is March 31 each year. The interim dividend
is determined by the Board of Directors and the year-end dividend is determinedby the General Meeting of Shareholders. Furthermore, the Company will utilize
internal reserves for investments required for increased new customers, researchand development and investments and the like for strategic businesses so that theCompany will exert its efforts to reinforce the corporate structure and to expand
its business.
Based on the aforesaid basic policy for cash dividends and to reward
shareholders’ continued support, it is proposed that the year-end dividend for the
fiscal year under review is YEN 80 per share. A total amount of dividend per share,
together with the interim dividend of YEN 75 per share, will be YEN 155, anincrease of YEN 10 per share from the previous fiscal year in which dividend was
YEN 145 per share.
Matters related to the year-end dividend:(1)
Kind of assets distributed:
Cash(2)Matter related to distribution of cash and total amount:
YEN 80 per share of common stock of the Company
The total amount:
YEN 17,460,789,440(3)Effective date for distribution of surplus:
June 27, 2018[English Translation]
8

Second Item of Business:

Election of Eleven (11) Directors

The term of office of all of the eleven (11) Directors will expire at theclose of this Meeting. In connection therewith, we would like to ask shareholders
to elect eleven (11) Directors.
The candidates are as follows:

No.

Name

Current
Position at theCompany
SupremeAdvisor andDirector
President andRepresentative
Director
SeniorExecutive
Director

1

Re-election

Makoto Iida

2

Re-election

Yasuo Nakayama

3

Re-election

Yasuyuki Yoshida

4

Re-election

Junzo Nakayama

Executive
Director

5

Re-election

Ichiro Ozeki

Executive
Director

6

Re-election

Tatsuro Fuse

Executive
Director

7

Re-election

Tatsuya Izumida

Director

8

Re-election

Tatsushi Kurihara

Director

9

Re-election

Takaharu Hirose

OutsideDirector

Independent
Officer

Outside Director

10

Re-election

Hirobumi Kawano

OutsideDirector

Independent
Officer

Outside Director

11

Re-election

Hajime Watanabe

OutsideDirector

Independent
Officer

Outside Director[English Translation]
9

Candidate
Number1

Makoto Iida

Re-election(Date of birth: April 1, 1933)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Jul 1962
President and Representative Director (Founder)
Feb 1976 Chairman and Representative Director
Jun 1997 Supreme Advisor and Director (currently)
Reasons for Election
Mr. Makoto Iida established the current SECOM group as the founder of the Company,and gives guidance and advice on overall management from the long-term and wide
range of viewpoints. In the light of continuous enhancement of corporate value, wewould like to ask shareholders to elect him as Director.

Candidate
Number2

Yasuo Nakayama*

Number of Sharesof the Company
Owned
4,240,929
sharesRe-election(Date of birth: November 1, 1952)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Jul 2003
Branch Manager, Nagoya Branch, The Bank of Japan
Jul 2005
Director-General, Secretariat of the Policy Board, The Bank of JapanMay 2007 Advisor, SECOM Co., Ltd.
Executive Director
Jun 2007
May 2016 President and Representative Director (currently)
May 2017 Chairman, Tokyo Security Service Association (currently)<Important Position of Other Organizations Concurrently Assumed>
Chairman of Tokyo Security Service Association
Reasons for Election
Mr. Yasuo Nakayama has assumed the office of Representative Director of theCompany since May 2016 on the basis of a long-term period of career at The Bank ofJapan and engagement as Director in the general affairs division of the Company.
Following the assumption of the office of Representative Director, he made theCompany perform the favorable results of operation for the year under review with hisstrong leadership and management ability. He also has carried out steadily management
renovation from a viewpoint of mid- and long-term targets. In the light of continuous
enhancement of corporate value, we would like to ask shareholders to elect him as
Director.

[English Translation]
10

Number of Sharesof the Company
Owned
4,376 shares

Candidate
Number3

Yasuyuki Yoshida*

Re-election(Date of birth: March 28, 1958)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Mar 1980 Joined SECOM Co., Ltd.
Feb 1997 Associate General Manager, Strategic Planning DivisionSep 1998 Director, Toyo Fire and Marine Insurance Co., Ltd. (presently Secom
General Insurance Co., Ltd.)Jun 2002 President and Representative Director, Secom General Insurance Co., Ltd.
Apr 2010 Executive Officer
Jun 2010 Group Companies Supervisor (currently)
Jun 2012 Director
Jun 2016 Executive Director
Jun 2017 Senior Executive Director (currently)

Number of Sharesof the Company
Owned
2,814 shares

Reasons for Election
Mr. Yasuyuki Yoshida served in charge of overall business planning, including
security business and overall management planning of the group, including supervisinggroup companies as Director. He holds a high level of knowledge and insight in overallmanagement including management control and strategic planning areas based on
affluent management experience at SECOM group. In the light of continuous
enhancement of the corporate value, we would like to ask shareholders to elect him as
Director.

Candidate
Number4

Junzo Nakayama*

Re-election(Date of birth: February 24, 1958)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Mar 1980 Joined SECOM Co., Ltd.
Nov 1999 President and Representative Director, Japan Image Communications Co.,
Ltd. (presently Turner Japan K. K.)
Dec 2009 Associate General Manager, Strategic Planning OfficeJun 2010 Associate General Manager, Assistant to President in charge of special
tasks
Jan 2011
Deputy Head, Finance DivisionJun 2012 Director
Jun 2014 Executive Director (currently)
Reasons for Election
Mr. Junzo Nakayama served for the finance and accounting departments as Director, in
addition to affluent management experience at SECOM group. He has a high level ofknowledge and insight in overall management including finance area. In the light ofcontinuous enhancement of corporate value, we would like to ask shareholders to electhim as Director.

[English Translation]
11

Number of Sharesof the Company
Owned
2,073 shares

Candidate
Number5

Ichiro Ozeki*

Re-election(Date of birth: March 1, 1961)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Apr 1983 Joined Sumitomo Bank, Ltd. (presently Sumitomo Mitsui Banking
Corporation)
Apr 1992 Joined Tokyo Steel Manufacturing Co., Ltd.
Advisor, Secom General Insurance Co., Ltd.
Jan 2001
Jun 2001
Director, Secom General Insurance Co., Ltd.
Apr 2010 President and Representative Director, Secom General Insurance Co., Ltd.
Apr 2015 Executive Officer
Jun 2016
Chairman and Director, Secom General Insurance Co., Ltd.
Jun 2016
Director
Chairman and Representative Director, Secom General Insurance Co., Ltd.
Jun 2017(currently)
Jun 2017
Executive Director (currently)<Important Position of Other Organizations Concurrently Assumed>
Chairman and Representative Director of Secom General Insurance Co., Ltd.
Reasons for Election
Mr. Ichiro Ozeki has engaged in overall sales and marketing of security business and ininsurance business as Director. Based on affluent experience in management of
SECOM group he holds a high level of knowledge and insight in overall business andmanagement for security service business. In the light of continuous enhancement of
the corporate value, we would like to ask shareholders to elect him as Director.

[English Translation]
12

Number of Sharesof the Company
Owned
300,139 shares

Candidate
Number6

Tatsuro Fuse*

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

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Mar 1982 Joined SECOM Co., Ltd.
Mar 2002 Director, Secom Medical System Co., Ltd.
Jun 2009 President and Representative Director, Secom Medical System Co., Ltd.
Apr 2010 Executive Officer
Jun 2013 Director (retired in Jun. 2016)
Apr 2016 Chairman and Representative Director, Secom Medical System Co., Ltd.
Jun 2016 Managing Executive Officer
Jun 2017 Chairman and Director, Secom Medical System Co., Ltd. (currently)
Jun 2017 Executive Director (currently)

Number of Sharesof the Company
Owned
3,039 shares<Important Position of Other Organizations Concurrently Assumed>
Chairman and Director of Secom Medical System Co., Ltd.
Reasons for Election
Mr. Tatsuro Fuse has been engaged in medical service business as well as corporate
communication & marketing division as Director of the Company. He holds affluent
management experience at SECOM group and a high level of knowledge and insight inexternal business activities such as corporate communication & marketing, and foroverall management including medical service business. In the light of continuous
enhancement of the corporate value, we would like to ask shareholders to elect him as
Director.

Candidate
Number7

Tatsuya Izumida*

Re-election(Date of birth: November 3, 1960)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Mar 1986 Joined SECOM Co., Ltd.
Jun 2003 Executive Director, Secom Information System Co., Ltd. (presently
Secom Trust Systems Co., Ltd.)Jul 2009
General Manager, Training Department
May 2010 General Manager, Human Resource Department
Oct 2012 Executive Officer
Jun 2014 President and Representative Director, Secom Trust Systems Co., Ltd.
Dec 2015 Managing Executive Officer
Jun 2016 Director (currently)
Reasons for Election
Mr. Tatsuya Izumida has served for BPO and ICT business as Director of the Company
for years. He holds affluent experience in management of SECOM group and a highlevel of knowledge and insight. In the light of continuous enhancement of the corporate
value, we would like to ask shareholders to elect him as Director.

[English Translation]
13

Number of Sharesof the Company
Owned
1,127 shares

Candidate
Number8

Tatsushi Kurihara*

Re-election(Date of birth: June 5, 1961)

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Jul 2008
Branch Manager, Niigata Branch, The Bank of Japan
Jul 2010
Deputy Director-General, Financial System and Bank Examination
Department, The Bank of Japan
Director-General and Internal Auditor, Internal Auditors’ Office, The
Jun 2014
Bank of JapanMay 2016 Advisor, SECOM Co., Ltd.
Director (currently)
Jun 2016

Number of Sharesof the Company
Owned
327 shares

Reasons for Election
Mr. Tatsushi Kurihara holds affluent experience through a long period at The Bank ofJapan and the general affairs department of the Company serving as Director. He holds
affluent experience and a high level of knowledge and insight in overall businessadministration and management. In the light of continuous enhancement of thecorporate value, we would like to ask shareholders to elect him as Director.

Candidate
Number9

Re-election

Takaharu Hirose

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

Candidate for Independent Officer

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Sep 1965 Founded Fuji Vending Co., Ltd., and assumed Representative Director
Apr 1972 Founded Food & Beverage Vending Association, and assumed Chairman
Apr 1987 Founded Japan Automatic Merchandising Association, and assumed
ChairmanApr 2003 Advisor and Director, GAIN Inc. (presently Monitas, Inc.)
May 2008 President and Representative Director, GAIN Inc.
May 2011 Chairman and Representative Director, GAIN Inc. (currently)
Jun 2013 Director, SECOM Co., Ltd. (currently)<Important Position of Other Organizations Concurrently Assumed>
Chairman and Representative Director of Monitas, Inc.
Reasons for Election
Mr. Takaharu Hirose established and managed venture business and made efforts toestablish and operate industry groups so that he contributed to development of businessand industry. He holds affluent experience and a high level of knowledge and insight in
IT enterprises. In the light of continuous enhancement of corporate value, we would
like to ask shareholders to elect him as Outside Director.

[English Translation]
14

Number of Sharesof the Company
Owned
0 sharesCandidate
Number10

Re-election

Hirobumi Kawano

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

Candidate for Independent Officer

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Jul 1969
Joined Ministry of International Trade and Industry (MITI ) (presently
Ministry of Economy, Trade and Industry (METI))
Jun 1995
Director-General, Petroleum Department, Agency for Natural Resources
and Energy, MITI
Aug 1996 Deputy Director-General, Machinery Information Industries Bureau, MITI
Jun 1998
Director-General, Basic Industries Bureau, MITI
Sep 1999 Commissioner, Agency for Natural Resources and Energy, MITI
Jul 2002
Retired Agency for Natural Resources and Energy, METI
Sep 2002 Advisor, The Tokio Marine and Fire Insurance Co., Ltd. (presently Tokio
Marine & Nichido Fire Insurance Co., Ltd.)Jun 2003
Outside Director, Sony Corporation
Aug 2004 Senior Managing Executive Officer, JFE Steel Corporation
Apr 2008 President, Japan Oil, Gas and Metals National Corporation
Feb 2016 Special Advisor, Japan Oil, Gas and Metals National Corporation(currently)
Director, SECOM Co., Ltd. (currently)
Jun 2016
Reasons for Election
Mr. Hirobumi Kawano has a career in important positions at the government offices
such as the Ministry of International Trade and Industry (presently Ministry of
Economy, Trade and Industry) and Japan Oil, Gas and Metals National Corporation.
He holds affluent experience accumulated through his career and a high level ofknowledge and insight. In the light of continuous enhancement of the corporate value,
we would like to ask shareholders to elect him as Outside Director.

[English Translation]
15

Number of Sharesof the Company
Owned
0 sharesCandidate
Number11

Re-election

Hajime Watanabe

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

Candidate for Independent Officer

Brief History, Position, Responsibility, and Important Position of Other Organizations
Concurrently Assumed , if any
Mar 1975 Joined Watanabe Pipe Co., Ltd.
Apr 1978 Executive Director, Watanabe Pipe Co., Ltd.
Apr 1983 Senior Executive Director, Watanabe Pipe Co., Ltd.
Jun 1985 Vice President and Representative Director, Watanabe Pipe Co., Ltd.
Nov 1991 President and Representative Director, Watanabe Pipe Co., Ltd.
(currently)
Jun 2016 Director, SECOM Co., Ltd. (currently)

Number of Sharesof the Company
Owned
400 shares<Important Position of Other Organizations Concurrently Assumed>
President and Representative Director of Watanabe Pipe Co., Ltd.
Reasons for Election
Mr. Hajime Watanabe has engaged in management of Watanabe Pipe Co., Ltd. formany years. He holds rich experience accumulated through his career on corporate
management and a high level of knowledge and insight. In the light of continuous
enhancement of corporate value, we would like to ask shareholders to elect him as
Outside Director.

(Notes)
1.
2.
3.

4.

5.

6.

There is no particular interest between the Company and each of the said candidates.
Candidates with * are Executive Officers currently in office.
Based on the nomination policy that the Board of Directors established, the nominationof candidates for Directors are decided after discussing in the Board of Directors. The
Board of Directors decided the candidates for Directors after the discussion process of
the Nomination and Compensation Committee including Outside Directors.
Messrs. Takaharu Hirose, Hirobumi Kawano and Hajime Watanabe are candidates for
Outside Directors. The designation of Messrs. Takaharu Hirose, Hirobumi Kawano andHajime Watanabe as Independent Officers has been filed with Tokyo Stock Exchange,Inc.
On February 16, 2017 Watanabe Pipe Co., Ltd. of which Mr. Hajime Watanabe isRepresentative Director received a cease and desist order and a surcharge payment
order from the Japan Fair Trade Commission in charge of violating the Act Concerning
Prohibition of Private Monopolization and Maintenance of Fair Trade (AntimonopolyAct) in connection with a construction work related to horticultural facility placed orderby local public body and the like in the designated areas of Miyagi prefecture or
Fukushima prefecture as construction sites.
The number of years during which Mr. Takaharu Hirose is in the office of Outside
Director of the Company will have been five (5) years at the close of this General
Meeting of Shareholders.

[English Translation]
16

7.

8.

The number of years during which Messrs. Hirobumi Kawano and Hajime Watanabe
are in the office of Outside Director of the Company will have been for two (2) years at
the close of this General Meeting of Shareholders.
Pursuant to Article 427, Paragraph 1 of the Companies Act, the Company has enteredinto a liability limit agreement limiting a compensation liability provided for in Article
423, Paragraph 1 of the Companies Act with each of Messrs. Takaharu Hirose,
Hirobumi Kawano and Hajime Watanabe. In case each of them is re-elected, it isscheduled that the liability limit agreement will continuously be made.
Furthermore, the limited amount of compensation liability is the minimum liability limit
provided for in Article 425, Paragraph 1 of the Companies Act.

[English Translation]
17

Third Item of Business:

Election of One (1) Audit & Supervisory Board
MemberMr. Ryohei Komatsu will resign the office of Audit & Supervisory Board
Member at the close of this Ordinary General Meeting of Shareholders,accordingly we would like to ask shareholders to elect one (1) Audit &Supervisory Board Member to supplement the vacant office.
With respect to this item of business, the Audit & Supervisory Board has
given consent.
Furthermore, the term of office of Mr. Koji Kato if elected will be until
the close of the Ordinary General Meeting of Shareholders scheduled to be held in
June 2019 pursuant to the provisions of the Articles of Incorporation.
The candidate for Audit & Supervisory Board Member is as follows:

Candidate

Koji Kato

New Candidate(Date of birth: August 19, 1953)

Brief History, Position and Important Position of Other Organizations Concurrently
Assumed , if any
Mar 1977 Joined SECOM Co., Ltd.
Oct 1990 General Manager, Management and Control Division
May 2000 Audit & Supervisory Board Member, Secom General Insurance Co., Ltd.
Jun 2001 Audit & Supervisory Board Member, Pasco Corporation
Jun 2007 Director, Toyo Tec Co., Ltd.
Jun 2010 Audit & Supervisory Board Member, Toyo Tec Co., Ltd.
Sep 2017 Deputy Head, Corporate Communication & Marketing Headquarters(currently)
Reasons for Election
Mr. Koji Kato has served for fund-raising, M&A deals, IR activities etc. of theCompany for many years, as well as for management and control duties in the area offinancial and legal affairs of SECOM group companies. He holds affluent experiencein management and a high level of knowledge. The Company expects he willsupervise, and give effective advice to overall management from his wide insight. We
would like to ask shareholders to elect him as Full-time Audit & Supervisory Board
Member.

(Note)
There is no particular interest between the Company and the said candidate.

[English Translation]
18

Number of Sharesof the Company
Owned
5,400 shares

[Attached Documents]

Business Report (Fiscal Year Ended March 31, 2018)
I. Outline of the Group’s Business1. The Current Business Development and Results of Operations
During the fiscal year ended March 31, 2018 (“the current fiscal year”), Japanese
economy has been in a moderate upward trend as shown in improvements incorporate earnings and employment environment, as well as recovery in private
consumption. On the other hand, continual attentions to the effects of uncertainties
in overseas economies related to various policies of the U.S., the trends of theemerging economies in Asia, including China, U.K. exiting the E.U. (BREXIT),
the effects of geopolitical risks, in addition to the fluctuations in the financial andcapital markets, have been required.
In this environment, we have been continuously pushing forward with efforts toestablish “Social System Industry” which deliver safety and peace of mind, as
well as make life more comfortable and convenient, whenever and wherevernecessary for everyone. In May 2017, we formulated the SECOM Group’s Vision
for 2030. Guided by this vision, we have been continuously promoting the “ALLSECOM” concept, which emphasizes cooperation among our various businesses
to strengthen the bond of the group. In addition, we are working to realize the
ANSHIN Platform, a service infrastructure designed to provide peace of mind topeople in their everyday lives, as well as to society as a whole. To create the
ANSHIN Platform, we are advancing collaborative initiatives with partners having
same philosophy who provide various technologies and knowledges. In the period
under review, we have been continuously trying to satisfy the increasingly
diversified and sophisticated needs of our customers for their safety and peace ofmind through the seamless provision of services.
In August 2017, “On-site Center”, a vehicle type monitoring center, wasdeveloped in order to support disaster affected areas or provide security inlarge-scale events. This mobile monitoring base enables real time gathering andprovision of information, as well as on-site supervision. We provided security
system combining it with wearable cameras among others in a city event andmajor sport events during the current fiscal year.
We have also been promoting innovative security services utilizing robot
technologies. In March 2018, we started providing patrol and surveillance service
using “SECOM Drone”, Japan’s first service with an autonomous small flying
robot that launches, flies, returns and charges batteries autonomously.
Furthermore, we have been actively working toward creating innovative services,such as developments of “SECOM Robot X2”, which conducts patrols andsurveillances autonomously at unattended facilities during the night-time, and“SECOM Robot X3”, a communication robot with multiple functions in addition[English Translation]19

to security, route guidance and conversation, capitalizing mobile technologies
through open-innovation with a major domestic research institute.
As a result, consolidated revenue for the current fiscal year increased by 4.6% to
YEN 970.6 billion compared with the previous fiscal year. Consolidated operating
profit increased by 3.4% to YEN 135.4 billion. Consolidated ordinary profit
decreased by 1.8% to YEN 144.3 billion, mainly due to the decrease in net gains
on private equity investment in the U.S. etc. (YEN 2.1 billion for the current fiscal
year and YEN 14.4 billion for the previous fiscal year). Consolidated net income
attributable to owners of the parent increased by 3.4% to YEN 86.9 billion,
chiefly owing to the net increase in extraordinary profit/(losses) by YEN 5.1
billion. Consolidated revenue, consolidated operating profit and consolidated net
income attributable to owners of the parent reached a record-high.
（Millions of Yen）
Revenue

Operating profit

Ordinary profit

Net income
attributable toowners of theparentCurrent fiscal
year (FY2017)

970,624

135,448

144,318

86,993

Previous fiscal
year (FY2016)

928,098

131,050

147,033

84,170During the current fiscal year, we acquired TMJ, Inc., a newly consolidated
subsidiary, which boasts extensive experience in the area of BPO (Note 1) services,
including operation of call center services. We are aiming to further expand ourbusiness capabilities through integrating BPO related services with our existing
information and communication related services that focus primarily on ICT (Note2) related services and data center services. Accordingly, Information andCommunication related services were changed to BPO and ICT services.
Reportable segments are not reclassified by this change.
Note 1: BPO (Business Process Outsourcing) means outsourcing operations such as data input/output andprocessing with the aim of improving efficiency and productivity.
Note 2: ICT (Information and Communication Technology)

In the security services segment, we provided customers chiefly with commercial
and residential security services (on-line security systems), as well as static guard
services, armored car services and merchandises. In the current fiscal year, wehave strived to catch the customers’ needs precisely and propose the most suitable
services from our extensive lineup so that we can make our customer relationshipmore solid and provide the customers with the long-term safety, peace of mind,
comfort and convenience.

[English Translation]
20

For our commercial security services, we have made continuous efforts to market
high value added on-line security systems, such as “SECOM AX”, which is
high-quality on-line security systems supported by imaging technology, “SECOM
LX”, which has an access control function for the promotion of labor management
and cost reduction and “SECOM FX”, which has a facility control function. In
addition, we commenced a full-scale provision of “3-Dimensional Security” forlarge-scale events. “SECOM 3D Security Planning”, which uses high-precision
3D maps for the formulation of an optimal security plan, combining with static
guards, overhead venue surveillance by “SECOM Aerostat”, temporarily installedsurveillance cameras on the ground, wearable cameras and “SECOM Drone
Detection System”, among others, contributed to the successful staging of eventswith security and peace of mind.
For our residential security services, the demand for “SECOM Home Security”
which delivers safety and peace of mind as well as comfort and convenience, hasbeen solid. In this circumstance, we have started providing “SECOM Home
Security NEO”, a flexible system suited to modern life styles that can be linked
with devices on the IoT, etc., facilitating expansion of services. Concurrently, we
launched “SECOM My Doctor Watch”, an emergency medical alert and healthmanagement service centered on a wearable wristband tracker, which is available
as an optional service to “SECOM Home Security” subscribers. We also
promoted another new optional product, “SECOM ANSHIN Home Delivery Box”,
which enables recipients to receive parcels securely whether they are at home ornot.
Outside Japan, we promoted our “SECOM-style” security services, which has
specialty in emergency response services, especially in economically developing
areas, such as People’s Republic of China and Southeast Asia. We also enhanced
the proposal to Japanese companies which expand their business to overseas.
Furthermore, we formed a strategic partnership with a major local electric
appliance manufacturer to cultivate the home security market in China.
As a result, mainly due to brisk sales of on-line security systems for commercial
and residential use, as well as the increases in revenue in Asahi Security Co., Ltd.,a provider of cash collection and delivery services, and in static guard services,
revenue increased by 2.2% to YEN 545.7 billion and operating profit increased by
1.9% to YEN 115.6 billion.
In the fire protection services segment, we provided a broad range of fire
protection systems such as high-quality fire alarm systems and fire extinguishingsystems along with customers’ needs to a wide variety of facilities such as officebuildings, production facilities, tunnels, cultural properties, ships and residences.
In the current fiscal year, two major fire protection companies, Nohmi Bosai Ltd.

[English Translation]
21

and Nittan Co., Ltd., promoted various fire protection systems based on eachcompany’s business infrastructure and product development expertise. ,Revenue increased by 8.2% to YEN 136.5 billion, mainly attributable to thecontribution of large-scale projects, as a result of active marketing efforts, andoperating profit increased by 18.6% to YEN 15.6 billion, chiefly owing to theimprovement in cost ratio ascribed to the improvement of business efficiency.
In the medical services segment, we provided various medical services such as ourcore home medical services, including home nursing services and pharmaceuticaldispensing and home delivery services, operation of residences for seniors, salesof electronic medical report systems, sales of medical equipments andpharmaceutical products, personal care services, and the leasing of real estate for
medical institutions.
Revenue increased by 6.2% to YEN 70.9 billion, mainly due to firm increase insales of medical equipment and pharmaceutical dispensing services, in addition to
the contribution of Takshasila Hospitals Operating Pvt. Ltd., a general hospitalbusiness subsidiary in India, and operating profit increased by 15.8% to YEN 5.4
billion, chiefly owing to the improvement in cost ratio.
In the insurance services segment, we expanded marketing efforts for our uniquenon-life insurance offerings, including Security Discount Fire Policy forcommercial facilities that offers discounts on premiums to customers who haveinstalled on-line security systems, recognizing such systems as a risk-mitigating
factor; SECOM Anshin My Home, the comprehensive fire insurance policy forresidences that offers a variety of compensation plans and discount policies;
MEDCOM, an unrestricted cancer treatment policy that offers compensation of
actual cost of medical treatment; and SECOM Anshin My Car, a comprehensive
automobile insurance policy that offers on-site support services provided by our
emergency response personnel in the event of an accident.
Despite revenue increased by 3.1% to YEN 43.2 billion, mainly due to the firm
increase in sales of MEDCOM, unrestricted cancer treatment policy, and fire
insurance policy provided by Secom General Insurance Co., Ltd., operating profit
decreased by 36.8% to YEN 1.3 billion, owing to the increase in losses incurredfrom typhoons.
In the geographic information services segment, we collected geographic datafrom aerial photography, vehicle/ground surveying systems and satellite images,
and provided the geospatial data services, by integrating, processing, andanalyzing the geographic data, to domestic national and local governmental
agencies, private sectors, and foreign governmental agencies including emerging
and developing countries. In the current fiscal year, we responded to diversified
and sophisticated needs for the development and maintenance of criticalinfrastructure and the disaster recovery in Japan and overseas, through thegeospatial information technology.

[English Translation]
22

Revenue decreased by 1.4% to YEN 50.9 billion, mainly owing to the decrease inrevenue in international division. Operating profit increased by 63.7% to YEN 2.0
billion, mainly attributable to the improvement in cost ratio ascribed to thedecrease in provision for losses on construction contracts.
In the BPO and ICT services segment, our distinctive portfolio includes BCP(business continuity planning) support, information security services and a variety
of cloud-based services centering on the data centers as well as BPO related
services including operation of call center services. On October 2, 2017, we
acquired TMJ, Inc., a newly consolidated subsidiary in order to expand our securebusiness support services, which boasts extensive experience and know-how inprovision of quality outsourcing services to major companies in various
industries.
Revenue increased by 39.9% to YEN 69.7 billion, chiefly owing to thecontribution of TMJ, Inc., a newly consolidated subsidiary and the increase inrevenue in data center. Despite the increases in cost ratio and in selling, generaland administrative expenses, operating profit increased by 3.8% to YEN 7.2
billion, attributable to the increase in revenue.
Real estate and other services segment comprises developing and selling
condominiums equipped with advanced security and disaster prevention systems,
real estate leasing, and construction and installation services.
Revenue decreased by 6.9% to YEN 53.3 billion and operating profit decreasedby 3.4% to YEN 5.0 billion, mainly due to the decrease in revenue in the realestate development and sales business.

[English Translation]
23

Results by Business Segment (57th Fiscal Year – current fiscal year)(Millions of Yen)
OperatingprofitCustomers

Revenue
Intersegment

Security services

545,789

12,586558,376

115,646

Fire protection services

136,558

4,170

140,728

15,632

Medical services

70,987

184

71,172

5,429

Insurance services

43,2493,034

46,284

1,354

Geographic information
services

50,905

175

51,081

2,060

BPO and ICT services

69,741

7,133

76,875

7,252

Real estate and otherservices

53,391

2,003

55,395

5,065

970,624

29,289999,914

152,443-(29,289)(29,289)(16,995)

970,624-

970,624

135,448

Business segment

Total
Eliminations andcorporate items
Consolidated revenue

Total

With respect to the results by geographical segments, in Japan, revenue increased
by 4.5% to YEN 922.0 billion. Overseas revenue increased by 5.8% to YEN 48.5
billion.

[English Translation]24

2. Issues the Group Has to Cope with
While working to realize its Social System Industry vision, operating in anenvironment characterized by drastic change and increasing uncertainty, theGroup has formulated the “SECOM Group’s Vision for 2030” which set the year
2030 as a milestone. Under this Vision, the Group is taking various measures torealize the "ANSHIN Platform" concept. In May 2018, the Group has formulated“SECOM Group Road Map 2022,” which further defines our direction going
forward and ensures our growth towards the year 2030.
The “ANSHIN Platform” is a service platform anchored in the relationship of trustthat SECOM has cultivated with society. Created in collaboration, sharing andexchanging various technologies and knowledge with partners who share
SECOM’s philosophy, this platform is designed to provide peace of mind topeople in their everyday lives, as well as to society as a whole. Through this"ANSHIN Platform", we will provide refined and seamless services centered onpeace of mind. For that purpose, we continue promoting "ALL SECOM"(Rallying Group strengths), further enhance cooperation between various
businesses that the Group operates and improve the environment so that each
SECOM employee can make the best use of the Group's comprehensive strength.
In addition, we seek to establish a society with more safety, peace of mind,
comfort and convenience through provision of comfortable and convenientservices for daily lives with greater value as well as responding to latent customer
needs by using cutting-edge technologies and analyzing Big Data.
In response to the increasing needs of customers overseas, SECOM will leverage
its know-how cultivated in Japan, a front runner in addressing critical challenges
with global relevance, to offer services on overseas markets that are customized toreflect local needs and sensibilities.
SECOM will continue striving to keep abreast of, or where possible to anticipate,social change, thereby ensuring its ability to provide enduring peace of mind. To
this end, SECOM remains committed to evolving and improving. By realizing the"ANSHIN Platform" concept, SECOM will reinforce relationships with society,and by solving various social issues, SECOM will continue to grow together withsociety and strive for the improvement of sustainable corporate value.
Furthermore, based on the business strategies described above, we will deal withvarious issues related to ESG (Environment, Social and Governance) in a proper
manner, including the realization of effective corporate governance.
We look forward to the support from our shareholders in these and all of ourendeavors.

[English Translation]25

3. Capital Expenditures
Capital expenditures for the current fiscal year totaled YEN 55.9 billion (abreakdown is given below). A major portion was for system investments(including those for security equipment and control stations) etc. in the security
services segment, which totaled to YEN 39.6 billion.
(Millions of Yen)
Business segment

AmountSecurity services

39,690Fire protection services

3,456

Medical services

1,443

Insurance services

1,986

Geographic information services

1,697

BPO and ICT services

6,297

Real estate and other services

1,677
Subtotal

56,249Eliminations and corporate items

(342)
Total

55,907

4. Fund Raising
During the current fiscal year, no funds were raised by the Group in capital
markets through the issuance of corporate bonds or new shares.

[English Translation]26

5. Trends in Earnings and Assets of the Group
Fiscal years
Category
Revenue
Operating profit
Ordinary profit
Net income
attributable toowners of the parent
Net income pershare (Yen)
Return on Equity
Total assets
Net assets

54th fiscal year
(4/1/2014–
3/31/2015)
840,722
123,615
136,688(Millions of Yen except for net income per share)
57th fiscal year
55th fiscal year 56th fiscal year
(current fiscal year)(4/1/2015–(4/1/2016–(4/1/2017–
3/31/2016)
3/31/2017)
3/31/2018)
881,028
928,098
970,624
128,582
131,050
135,448
134,826
147,033
144,318

75,392

77,03984,17086,993345.42352.97385.64398.589.9%
1,410,715
907,341

9.4%
1,568,052
943,1449.8％
1,650,176
1,013,253

9.4％
1,720,268
1,081,213[English Translation]27

6. Trends in Earnings and Assets of the Company(Millions of Yen except for net income per share)
Fiscal years

54th fiscal year
(4/1/2014–
3/31/2015)

55th fiscal year
(4/1/2015–
3/31/2016)

56th fiscal year
(4/1/2016–
3/31/2017)57th fiscal year
(current fiscal year)(4/1/2017–
3/31/2018)

370,663
73,174
81,57257,492

376,044
75,664
86,61258,442

382,476
76,28386,54363,260387,881
78,16891,08367,692263.41

267.76289.84310.15

9.0%
795,778
650,132

8.8%
826,124
678,3559.1%
850,851
713,2639.3%
887,673
748,988

Category
Revenue
Operating profit
Ordinary profit
Net income
Net income per share(Yen)
Return on Equity
Total assets
Net assets[English Translation]28

7. Matters Concerning Principal Subsidiaries
Company name

Issued capital(Millions of Yen)

Secom Joshinetsu Co., Ltd.

3,530
(Millions of Yen)

Asahi Security Co., Ltd.

100
(Millions of Yen)

Nohmi Bosai Ltd.

13,302(Millions of Yen)

Nittan Co., Ltd.

2,302
(Millions of Yen)

Secom Medical System Co., Ltd.

Secom General Insurance Co.,
Ltd.

100
(Millions of Yen)

16,808(Millions of Yen)

Pasco Corporation

8,758(Millions of Yen)

Secom Trust Systems Co., Ltd.

1,468
(Millions of Yen)

At Tokyo Corporation

13,378(Millions of Yen)

TMJ, Inc.

100(Millions of Yen)

Secom Home Life Co., Ltd.

3,700
(US$)

The Westec Security Group, Inc.

301

[English Translation]
29

Percentage ofownership(Percentage ofvoting rights)
(%)
50.87
(50.92)(%)
100.00(100.00)(%)
50.36(50.71)(%)
100.00(100.00)(%)
100.00(100.00)(%)
97.11(97.82)(%)
69.84(72.64)(%)
100.00(100.00)(%)
50.88(50.88)(%)
100.00(100.00)(%)
99.97(99.98)(%)
100.00(100.00)

Principal business activities

Security and safety services

Cash collection and delivery
services
Comprehensive fire protection
services
Comprehensive fire protection
services
Home medical services andremote image diagnosis
support services
Non-life insurance
Surveying, measuring andgeographic information systemservices
Information security services andsoftware development

Data center business

BPO business including contact
center business
Development and sales of realestateHolding company in the U.S.

Company name

Issued capital(Thousands ofSecom Plc

UK Pounds)

44,126Percentage ofownership(Percentage ofvoting rights)

Principal business activities(%)
100.00(100.00)

Security business in the U.K.

(Notes)1. The percentages of ownership (percentages of voting rights) are truncated to two decimal
places.
2. The percentages of ownership (percentages of voting rights) for Secom Joshinetsu Co.,
Ltd. and Nohmi Bosai Ltd. include those owned by the Company’s subsidiaries.

8. Principal Business of the GroupThe Group consists of the Company, 179 consolidated subsidiaries and 18
affiliated companies accounted for under the equity method. The principal
business activities of the Group are as follows: Security Services centering oncontracted security services; Fire Protection Services centering on comprehensive
fire protection services; Medical Services focusing on home medical services andmanagement of residences for seniors; Insurance Services consisting mainly of
non-life insurance; Geographic Information Services that mainly entails theprovision of surveying and measuring operations; BPO and ICT Services
centering on information security services, large-scale anti-disaster operations,
datacenter and BPO business; and Real Estate and Other Services centering on
development and sales of condominiums and other services.
9. Principal Offices of the Group(i) Headquarters of the Company:
5-1, Jingumae 1-chome, Shibuya-ku, Tokyo(ii) Regional Headquarters:
Hokkaido (Sapporo City), Tohoku (Sendai City), West Kanto (Saitama City),
East Kanto (Chiba City), Tokyo (Minato-ku, Tokyo), Metropolitan Static
Guard Service (Shibuya-ku, Tokyo), Metropolitan Armored Car Service(Shibuya-ku, Tokyo), Kanagawa (Yokohama City), Shizuoka (Shizuoka
City), Chubu (Nagoya City), Kinki (Kyoto City), Osaka (Osaka City), Kansai
Static Guard Service (Osaka City), Hyogo (Kobe City), Chugoku (HiroshimaCity), Shikoku (Takamatsu City), Kyushu (Fukuoka City).
(iii) Domestic Subsidiaries:
Secom Joshinetsu Co., Ltd. (Niigata City), Asahi Security Co., Ltd.
(Minato-ku, Tokyo), Nohmi Bosai Ltd. (Chiyoda-ku, Tokyo), Nittan Co.,
Ltd. (Shibuya-ku, Tokyo), Secom Medical System Co., Ltd. (Shibuya-ku,[English Translation]30

Tokyo), Secom General Insurance Co., Ltd. (Chiyoda-ku, Tokyo), Pasco
Corporation (Meguro-ku, Tokyo), Secom Trust Systems Co., Ltd.
(Shibuya-ku, Tokyo), At Tokyo Corporation (Koto-ku, Tokyo), TMJ, Inc.
(Shinjuku-ku, Tokyo), Secom Home Life Co., Ltd. (Shibuya-ku, Tokyo),
Arai & Co., Ltd. (Shibuya-ku, Tokyo).
(iv) Overseas Subsidiaries:
The Westec Security Group, Inc. (Dover, Delaware, USA), Secom Plc(Kenley, Surrey, UK), Secom (China) Co., Ltd. (Beijing, China).

10. Matters Concerning Employees of the Group and the Company(1) Matters Concerning Employees of the Group
Number of employees

Increase from the end of the previous
fiscal year

54,648

11,577(2) Matters Concerning Employees of the Company
Number of
employees

Increase from the end of theprevious fiscal year

Average age

Average years of service

15,677274
42.6(Note)The number of employees refers to the number of full-time employees.

16.1

11. Principal Lenders(Millions of Yen)
Lenders

Balance

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

13,446

Mizuho Bank, Ltd.

11,104

Sumitomo Mitsui Banking Corp.

6,908

Mitsubishi UFJ Trust and Banking Corp.

2,300(Note)The Bank of Tokyo-Mitsubishi UFJ, Ltd. has changed its trade name to MUFG Bank, Ltd.
effectively April 1, 2018.

12. Other Important Matters Concerning the Group
There is no matter applicable.

[English Translation]31

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

900,000,000

2. Total Number of Issued Shares:

233,290,441(including 15,030,573 shares of treasury stock held by the Company)

3. Number of Shareholders at the End of the Fiscal Year:

26,809100 shares

4. Number of Shares Constituting a Unit of Shares:
5. Major Shareholders (Top 10)
Name of Shareholders

Number of shares held(Thousands of Shares)

Percentage ofownership(%)

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

27,584

12.63

Japan Trustee Services Bank, Ltd.
(Trust Account)

15,3087.01

JP MORGAN CHASE BANK 380072

13,916

6.37

STATE STREET BANK AND TRUSTCOMPANY 505223

5,248

2.40

STATE STREET BANK WEST CLIENT –TREATY 505234

4,607

2.11

Makoto Iida

4,240

1.94

The Nomura Trust and Banking Co., Ltd.
(Trust Account 2052088)

4,148

1.90

Secom Science and Technology Foundation

4,025

1.84

Japan Trustee Services Bank, Ltd.
(Trust Account 5)

3,875

1.77

THE BANK OF NEW YORK MELLON
3,529
1.61
SA/NV 10(Note)
Although the Company holds treasury stock of 15,030,573 shares, it is not included in thetable above. The percentage of ownership is calculated on the basis of the total number ofshares outstanding excluding treasury stock. The percentage of ownership is truncated totwo decimal places.

[English Translation]
32

III. Directors and Audit & Supervisory Board Members
1. Names and Titles of Directors and Audit & Supervisory Board Members

Position
Director(As of March 31, 2018)
Field of responsibility and important
position of other organization
concurrently assumed

Name
Makoto Iida

Supreme Advisor
Executive Officer
Chairman of Tokyo Security Service
Association
Executive Officer (in charge ofplanning administration, strategicplanning office, group companies
supervisor and risk control)
Executive Officer (head of financedivision)
Executive Officer (head of Sales
administration division and in charge of
insurance business)
Chairman and Representative Director of
Secom General Insurance Co., Ltd.
Executive Officer (head of corporate
communication & marketing division)
Chairman and Director of Secom
Medical System Co., Ltd.
Executive Officer (head of humanresource division and in charge of BPO
and ICT businesses)
Executive Officer (head of generalaffairs division)
Chairman and Representative Director of
Monitas, Inc.

President andRepresentative Director

Yasuo Nakayama

Senior Executive Director

Yasuyuki Yoshida

Executive Director

Junzo Nakayama

Executive Director

Ichiro Ozeki

Executive Director

Tatsuro Fuse

Director

Tatsuya Izumida

Director

Tatsushi Kurihara

Director

Takaharu Hirose

Director

Hirobumi Kawano

Director

Hajime Watanabe

Audit & Supervisory
Board Member
Audit & Supervisory
Board Member
Audit & Supervisory
Board Member

President and Representative Director of
Watanabe Pipe Co., Ltd.
Full-time Audit & Supervisory Board
MemberFull-time Audit & Supervisory Board
MemberOutside Director of SMBC Nikko
Securities Inc.

Takayuki Ito
Ryohei Komatsu
Hideki Kato[English Translation]
33

Position

Audit & Supervisory
Board Member

Field of responsibility and important
position of other organization
concurrently assumed
President and Representative Director of
Yasuda Makoto & Co., Ltd., Outside
Director of Sanwa Holdings Corp.

Name

Makoto Yasuda

Audit & Supervisory
Masao Yokomizo
Board Member(Notes)1. Messrs. Takaharu Hirose, Hirobumi Kawano and Hajime Watanabe are Outside
Directors as stipulated in Article 2, Item 15 of the Companies Act.
2. Messrs. Hideki Kato, Makoto Yasuda and Masao Yokomizo are Outside Audit &Supervisory Board Members as stipulated in Article 2, Item 16 of the Companies Act.
3. The Audit & Supervisory Board Member, Mr. Takayuki Ito has a long-term experienceby working at a financial institution and has considerable knowledge of finance andaccounting matters.
4. There are no particular interests between the Company and other corporations employing
Outside Director, Messrs. Takaharu Hirose and Hajime Watanabe.
5. There are no particular interests between the Company and other corporations employing
Outside Audit & Supervisory Board Member, Messrs. Hideki Kato and Makoto Yasuda.
6. The notice of Outside Directors, Messrs. Takaharu Hirose, Hirobumi Kawano andHajime Watanabe being independent officers was submitted to Tokyo Stock Exchange,Inc.
7. The notice of Outside Audit & Supervisory Board Members, Messrs. Hideki Kato,
Makoto Yasuda and Masao Yokomizo being independent officers was submitted toTokyo Stock Exchange, Inc.
8. Changes in post of Directors and Audit & Supervisory Board Members during thecurrent fiscal year
1) Mr. Tatsuro Fuse was elected as Director at the 56th Ordinary General Meeting of
Shareholders held on June 27, 2017 and assumed the office.
2) Audit & Supervisory Board Member Mr. Kenichi Sekiya resigned from Audit &Supervisory Board Member at the close of the 56th Ordinary General Meeting of
Shareholders held on June 27, 2017.
3) Mr. Masao Yokomizo was elected as Audit & Supervisory Board Member at the 56th
Ordinary General Meeting of Shareholders held on June 27, 2017 and assumed theoffice.
9. Changes in position of Directors during the current fiscal year
1) Executive Director Mr. Yasuyuki Yoshida was appointed to Senior Executive Director
as of June 27, 2017.
2) Director Mr. Ichiro Ozeki was appointed to Executive Director as of June 27, 2017.
3) Director Mr. Tatsuro Fuse was appointed to Executive Director as of June 27, 2017.

[English Translation]34

〈Reference〉
Executive Officers who are not Directors are as follows:(As of May 1, 2018)
Title

Name

Managing Executive
Officer

Kenichi Furukawa, Masahiro Takeda, Teruhisa Yoshimura, Hideo
Morishita, Toshiaki Mizuno, Shokichi Ishimura, Keitaro Arai

Executive Officer

Yoichi Sugimoto, Sumiyuki Fukumitsu, Kensuke Shindo,
Yasufumi Kuwahara, Noriyuki Fukuoka, Takeshi Akagi, SadahiroSato, Osamu Ueda, Yoshinori Yamanaka, Seiya Nagao, Noriyuki
Uematsu, Osamu Nagai, Atsushi Komatsu, Kazuhiro Mitomo,
Takehiko Senda, Takashi Nakada(Notes)
1. Mr. Keitaro Arai was appointed to Managing Executive Officer as of June 1, 2017.
2. Messrs. Kazuhiro Mitomo, Takehiko Senda and Takashi Nakada were appointed to
Executive Officer as of June 1, 2017.

2. Description of the Agreement Limiting Liabilities
The Company has entered into with each of the Outside Directors and each of
the Outside Audit & Supervisory Board Members an agreement limiting their
liabilities as prescribed by Article 423, Paragraph 1 of the Companies Act,
pursuant to the provisions of Article 427, Paragraph 1 of the Companies Act.
The maximum amount of the liabilities under this agreement which each of
the Outside Directors and each of the Outside Audit & Supervisory Board
Members incurs is equal to the lowest amount of liabilities stipulated in
Article 425, Paragraph 1 of the Companies Act.
3. Remuneration of Directors and Audit & Supervisory Board Members
Total amount of
remuneration etc.
(Millions of Yen)
Directors(excluding Outside
Directors)
Audit & Supervisory
Board Members(excluding Outside
Audit & Supervisory
Board Members)
Outside Directors

Breakdown of total amount of
remuneration etc.
(Millions of Yen)
Basic
Stock
Bonus Restricted
optionstock*

No. ofentitled
officers

319

261

-

46

11

8

45

45

-

-

-

2

28

28

-

-

-

3

25

-

-

-

4

360

-

46

11

17

Outside Audit &Supervisory Board
25
Members
Total
418* Shares with limited transfer.

[English Translation]35

4. Policy for Determining the Amount of Remuneration of Directors andAudit & Supervisory Board Members(1) Remuneration of Directors
The remuneration for the directors of the Company consists of pecuniary
remuneration and share-based remuneration (by means of share with limited
transfer). Outside directors receive only pecuniary remuneration.
The pecuniary remuneration of Directors is determined by the consultation of
the Nomination and Compensation Committee, which is authorized by the
Board of Directors meeting, within the limit of the amount of remuneration
resolved at the General Meeting of Shareholders. The share-based
remuneration is determined by the Board of Directors meeting, after
considering the deliberations made by the Nomination and Compensation
Committee with respect, within the limit of the amount of remuneration
resolved at the General Meeting of Shareholders, which is separately set fromthe one of the pecuniary remuneration.
(2) Remuneration of Audit & Supervisory Board Members
The remuneration for Audit & Supervisory Board Members of the Company
consists of pecuniary remuneration. The remuneration of Audit & Supervisory
Board Members is determined by the discussion among Audit & Supervisory
Board Members, the amount of which is commensurate with the duties of
Audit & Supervisory Board Members on an individual basis, within the limit of
the amount of remuneration resolved at the General Meeting of Shareholders.

[English Translation]36

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

Category

Name

Attendance of Attendance of thethe Meetings ofMeetings of thethe Board ofAudit &
Directors
Supervisory Board

OutsideDirector

Takaharu Hirose

12(out of 12)-

OutsideDirector

Hirobumi
Kawano12(out of 12)-

OutsideDirector

HajimeWatanabe

12(out of 12)-

OutsideAudit &
Supervisory
Board
Member

Hideki Kato

12
(out of 12)

12(out of 12)[English Translation]
37

Main Activities
He offered advice and suggestions at
the meetings of the Board of Directors
by making use of his experience andinsight gained through the foundationand the management of many
enterprises and organizations. He also
asked questions and stated opinions inorder to clarify unclear issues.
He offered advice and suggestions at
the meetings of the Board of Directors
by making use of his experience andinsight gained through the important
positions in government. He also asked
questions and stated opinions in orderto clarify unclear issues.
He offered advice and suggestions at
the meetings of the Board of Directors
by making use of his experience andinsight gained through corporate
management for many years as acorporate executive. He also asked
questions and stated opinions in orderto clarify unclear issues.
He offered advice and suggestions at
the meetings of the Board of Directors
by making use of his experience in theexecution of national policies andinsight gained through many
accomplishments at a policy think tank.
He also asked questions and statedopinions in order to clarify unclear
issues.

Category

Name

Attendance of Attendance of thethe Meetings ofMeetings of thethe Board ofAudit &
Directors
Supervisory Board

Main Activities

He offered advice and suggestions at
the meetings of the Board of Directors
by making use of his experience andinsight gained through serving as amanagement of global enterprise. He
also asked questions and statedopinions in order to clarify unclear
Outsideissues.
Audit &
11
11
He also makes efforts to understand theSupervisory Makoto Yasuda(out of 12)(out of 12)
contents of the meetings of the Board
Board
of Directors and Audit & Supervisory
MemberBoard which he had missed byreceiving reports on resolutions andsuch from an operating chief of theBoard and full-time Audit &Supervisory Board Members,
respectively.
He offered advice and suggestions at
the meetings of the Board of Directors
Outsideby making use of his experience andAudit &Masao
99insight gained through the important
Supervisory
Yokomizo(out of 9)(out of 9)
positions in government. He also asked
Board
questions and stated opinions in order
Memberto clarify unclear issues.
(Note) Mr. Masao Yokomizo was elected as Audit & Supervisory Board Member at the 56th ordinary
general meeting of shareholders held on June 27, 2017, and assumed the office. Therefore, the tableshows the attendance figures of the meetings of the board of directors and audit & supervisory board
held on and after June 27, 2017.

[English Translation]
38

IV. Accounting Auditor
1. Name of Accounting Auditor
KPMG AZSA LLC
2. Remuneration of Accounting Auditor
Category

Previous Fiscal Year
Audit certification
Non-audit work
work
225
17

(Millions of Yen)
Current Fiscal Year
Audit certification
Non-audit work
work
225
32

Company
Consolidated
435
5
390
27
Subsidiaries
Total
660
22
616
60
(Notes)1. Based on the audit contract between the Company and the Accounting Auditor, theremuneration paid to the auditor is not distinguished between that which relates to theaudits under the Companies Act and that which relates to the audits under Financial
Instruments and Exchange Act as they cannot be distinguished. Therefore, the amountgiven in the Company shown above is the combined total of these amounts.
2. Of the major subsidiaries of the Company, the Westec Security Group Inc. is audited by
WEAVER AND TIDWELL LLP and Secom Plc by KPMG LLP.

3. Consent for the Amount of Remunerations for Accounting Auditor
Audit & Supervisory Board consents under Article 399, Paragraph 1 of theCompanies Act for the amount of remunerations for Accounting Auditors uponverifying the basis for calculation of remunerations of Accounting Auditors,
including contents of audit plan prepared by the Accounting Auditors, the statusof implementation of accounting audits, etc.
4. Non-Audit Duties
The Company pays consideration to the Accounting Auditor for services as
non-audit duties, including work for financial due dilligence.
5. Policy for Decision for Dismissal or Non-reappointment
Whenever there occurs any material event which could be a substantial hazard to
the performance of audit duties of the Company, such as a case when it is deemedthat the Accounting Auditor has come to fall within the purview of Article 340,
Paragraph 1 of the Companies Act or the Accounting Auditor or the firm of the
Accounting Auditor is subjected to the disposition of suspension of business by
the supervisory authorities, the Audit & Supervisory Board will hold Meeting ofAudit & Supervisory Board Members, and, when all Audit & Supervisory Board
Members have consented thereto, the Audit & Supervisory Board Member willtake action for the dismissal of the subject Accounting Auditor or the subject firmof the Accounting Auditor. In such case, the Audit & Supervisory Board will

[English Translation]
39

make decision on appointment of a temporary Accounting Auditor or a substituteAccounting Auditor and will submit a proposal of the appointment of a substituteAccounting Auditor to the general meeting of shareholders convened for the firsttime after such decision. The Audit & Supervisory Board Member selected by the
Audit & Supervisory Board will also report the reasons for the dismissal at thegeneral meeting of shareholders.
Aside from the above, when there exists any situations from the view point ofexecution of duties and audit system, etc. where it is acknowledged that the
Accounting Auditor is not fit to act as Accounting Auditor, the Audit &Supervisory Board will make decision on non-reappointment of the subject
Accounting Auditor and appointment of a substitute Accounting Auditor, with amajority approval, and will submit a proposal to the general meeting ofshareholders.

[English Translation]
40

V. System under which the Company’s Business is Ensured to be Properly
Executed
1. Basic Policy Regarding Internal Control System
Outline of the “system under which the execution of duties by Directors is ensured
to comply with laws and regulations and the Articles of Incorporation, and thesystem under which the Company’s business and the group of enterprises
consisting of the Company and subsidiaries is ensured to properly execute its
business” (so-called the basic policy regarding the internal control system) of theCompany, which the Board of Directors’ Meeting resolved, is as follows. (Thelatest revision was made on April 8, 2015.)(1)

GeneralThis resolution manifests the basic policy regarding the internal control
system of the Company to be specifically established by the President andRepresentative Director based on Article 362, Paragraph 5 of the Companies
Act.
The internal control system based on this resolution shall be establishedurgently by Executive Officers in charge, and shall be constantly reviewed
and improved.

(2)

System under which the execution of duties by Directors and employees is
ensured to comply with laws and regulations and the Articles ofIncorporation
Directors and employees are required to act in accordance with the SECOM
Group Code of Employee Conduct, which sets behavioral standards for the
execution of duties, including compliance with laws and regulations, and the
Article of Incorporation. The SECOM Group Code of Employee Conduct isbased on the philosophy of SECOM, which we have followed since theestablishment of the business. These ethical guidelines prescribe ideals
covering the official and private affairs of all executives and employees andaction standards (including the blocking relationships with anti-social
forces) to be followed in the execution of specific daily duties. As such,these guidelines provide the basis of all actions. The compliancemanagement system is as follows:(i) From the start, compliance with laws and regulations and the Articles ofIncorporation has been an indispensable requirement of our business, andwe have always sought to operate in strict adherence to this spirit.
Therefore, compliance is a part of the Company’s daily routines, whichshould not require a system in which a specific section or manager is
responsible for implementation. Each and every employee is at the frontline of promoting the code of conduct, including legal compliance. The
implementation of guidelines is carried out by the line managers of theorganization. Further control is provided by the Executive Officers incharge of departments under their control, with the President and[English Translation]
41

Representative Director providing companywide control.
(ii) The Executive Officers in charge of each area are responsible for having

thorough knowledge particularly of regulations related to their duties andthe relationships of such regulations with their own operations. They are
responsible for proposing responses to any revisions of laws to the
President and Representative Director. The Legal Affairs Department andother relevant departments and sections support them, providing
cross-organization coordination.
(iii) Following the orders of the President and Representative Director, theAudit and Compliance Department provides cross-organizational
inspection in a timely manner over the execution of duties, indicating
how to improve morale through the observance of laws and regulations
and the Company’s rules and at the same time pointing out matters thatneed correction. The Audit and Compliance Department will promptly
report the findings of the inspection to the President and Representative
Director.
(iv) When executives and employees of the Company become aware ofunethical actions, they have the obligation to report such actions to theproper superior without hesitation. A “Hot Helpline” is established tofacilitate direct contact with the Audit and Compliance Department if
corrective actions are not taken even after reporting to superiors or it isdifficult to report. Pursuant to the “Basic Policy of the SECOM Group
for Compliance,” the Company will keep the reported mattersconfidential, and promptly take necessary investigation and appropriate
measures. The reporter will suffer no disadvantage on the grounds ofsuch report.
(v) The Company establishes a standing Organizational Culture Committee,

chaired by the President and Representative Director. The Organizational
Culture Committee examines important organizational culture-related
issues (including compliance-related matters), which are the cornerstoneof developing and maintaining the corporate organization, anddetermines important official commendations and punishments.
(vi) Revisions of the SECOM Group Code of Employee Conduct and/or

critical compliance-related matters are undertaken after discussion with
the Organizational Culture Committee and subject to the approval of theBoard of Directors after obtaining the opinions of the Audit &Supervisory Board Members.
(vii) Basic plans and policies concerning internal controls related to financial

reporting are determined and evaluated in accordance with the standardsof the Business Accounting Council.
(3)

System under which information regarding execution of business byDirectors shall be maintained and controlled[English Translation]
42

Information regarding the execution of duties of Directors (minutes of the
Meetings of the Board of Directors and decision-making documents), etc.
shall be properly maintained, administered (including destruction)
pursuant to the rules of the Company, which will be amended upon
reviewing the operating conditions if necessary.
(4)

System regarding control of risk of loss and other system(i) The Company’s approach to risk management is embedded in
day-to-day business activities, with acknowledgement that risk
management itself is the Company’s business. Executive Officers incharge, under the direction of the President and Representative
Director, analyze and assess business risk and fraud risk in theoperational areas for which they are responsible, and revise
established rules and manuals as conditions change. Rules andmanuals are based on risk analysis and assessment, and stipulate
preventive measures, prompt and appropriate communication andemergency preparedness when incidents occur, daily risk monitoringand other systems.
(ii) The Executive Officer in charge shall report to the President andRepresentative Director and the Audit & Supervisory Board on the
results of risk analysis and assessment.
(iii)Any important changes of the Company’s risk control system shall be
subject to the approval of the Board of Directors after obtaining theopinions of the Audit & Supervisory Board Members. The risks attimes of large scale calamities and at ordinary times are as follows.

[English Translation]
43

Risk Category
Large scale calamity

Example(1) Large scale calamity
risk(2) Compliance risk

(3) System risk

Ordinary times(4) Service providing risk

(5) Administrative workand accounting risk(6) Others(5)

Earthquake, wind, flood, volcanic
disasters, radiation leakage, etc.
Noncompliance with “Constitution of
SECOM’s Business and Operation,”“SECOM Group Code of Employee
Conduct,” other internal rules andguidelines, etc., risk accompanied byestablishment or changes in regulations(in the area of tax system, medical
system, etc.), breach of law, etc.
Information system shut down, electronic
data
extinguishment,
large
scale
blackout, wide area circuit disturbance,
ICT (information and communication
technology) related risk, etc.
Risk incurred when providing services(Accidents related to security, fire alarmor equipment maintenance businesses,
etc.)
Input error or input omission inadministrative or account processing,estimation error for allowance, etc.
Offence from outsiders (groundlessrumor, calumniation, theft, terror, etc.),
risk related to M&A, risk related to new
system development, other risk related tobusiness infrastructure (fire on the
Company’s
premises,pandemic
influenza, disease epidemic, etc.), etc.

System by which efficient execution of duties of Directors shall beensured(i) All Directors shall carry out the operation and execution of business on
the basis of the “Constitution of SECOM’s Business and Operation” sothat they may share the ideas essential to the execution of the duties suchas decision making for management by the Board of Directors anddecision making for the execution of duties by the Directors.
(ii) On the basis of the preceding item, the Company, aiming to implement
the execution of duties efficiently, introduces the system of Executive
Officers so that decision making and the execution of business shall befurther facilitated.
(iii)The Company develops the IT system for dissemination of notices, etc.,
and decision making by managerial decision requests, and maintains thesystem for swiftly enabling full introduction and implementation.

[English Translation]
44

(iv) The Company will share the medium and long-term business vision, andfor the purpose of the accomplishment thereof, the Board of Directors
will design an annual business plan and deliberate the progress of the
plan.
(6)

System under which the group of enterprises consisting of the Company andsubsidiaries is ensured to properly execute its business(6-1) System under which the execution of duties by Directors, etc. andemployees of subsidiaries is ensured to comply with laws and regulations
and the Articles of Incorporation(i) Abiding by the “Constitution of SECOM’s Business and Operation,”each of the subsidiaries shares the SECOM Group Code of Employee
Conduct, which applies to all executives and employees. United by theseguidelines, the executives and employees work to accomplish thecorporate goals in an appropriate manner.
(ii) Each of the subsidiaries carries out IT controls in conformance with the“Basic Policy of the SECOM Group for Information Security.” The
Company’s IT Executive Officers conduct timely inspections covering
the IT management of major subsidiaries.
(iii)The “SECOM Group Management Committee,” which is chaired by theCompany’s President and Representative Director and whose members
are composed of the presidents of major subsidiaries and other parties
appointed by the chairperson, works to ensure that appropriate
operations are carried out. It accomplishes this goal by conducting
discussions of issues related to the Group’s internal controls in an effort
to share Group information and operating philosophy. Where necessary,
the President and Representative Director reports the results to the Boardof Directors and the Audit & Supervisory Board.
(iv) The President and Representative Director of the Company issues orders
to the internal audit departments (Audit and Compliance Department andGroup Governance Department) to inspect subsidiaries, if necessary. The
subsidiaries accept the inspection by the Company, and at the same time
promote the understanding and improvement of compliance-related
issues by exchanging information with the Company. Furthermore, theCompany establishes the whistle-blowing system “Group Head Office
Helpline” which enables executives and employees of subsidiaries todirectly report to the Company’s Group Governance Department,
whenever they become aware of any non-compliance. Pursuant to the“Basic Policy of the SECOM Group for Compliance,” the Company willkeep the reported matters confidential, and promptly take necessary
investigation and appropriate measures. The reporter will suffer nodisadvantage on the grounds of such report.
(v) The Audit & Supervisory Board Members of the Company visit major[English Translation]45

subsidiaries and conduct audits regarding internal controls.
(vi) The Company establishes a liaison meeting with Group Audit &Supervisory Board Members after discussion with its Audit &Supervisory Board in an attempt to share information.
(6-2) System under which the matters related to the execution of duties byDirectors, etc., of subsidiaries are reported to the Company
In order to enhance Group synergy leading to the achievement of thebusiness vision by the entire SECOM Group, the Company establishes andimplements the “Basic Rules for SECOM Group Corporate Management,”
which clarify the guidelines for the reporting of the important items, theitems to be coordinated in advance with the Company and the items to beapproved by the Company.
(6-3) Rules and other systems for controlling risks of loss of subsidiaries
Pursuant to the “Meaning of the Risk Control and Risk Control Basic Policy
for SECOM and SECOM Group,” the subsidiaries develop risk control
systems. Furthermore, upon the occurrence of important events, thesubsidiaries will take appropriate measures under the Company’s control.
(6-4) System which ensures that Directors, etc., of the subsidiaries execute theirduties efficiently(i) All Directors of the subsidiaries will efficiently carry out the operationand execution of business on the basis of the “Constitution of SECOM’s
Business and Operation.”(ii)The Company and the subsidiaries will formulate the business plans forthe next year based on the business vision by the entire SECOM Group,and confirm the progress of the plans.
(7)

Matters related to employees to assist duties of Audit & Supervisory Board
Members when Audit & Supervisory Board Members requests to do so(i) The Company establishes the system to assist audit duties, by
establishing the Office of Audit & Supervisory Board manned by at least
two employees who are fully familiarized with the exclusive duties andinternal situations.
(ii)The assistants for the Audit & Supervisory Board Members may conduct
investigations necessary for the audit by the Audit & Supervisory Board
Members, following the instructions of the Audit & Supervisory Board
Members.

(8)Matters related to the independence of the employees in item (7) from
Directors and ensuring the effectiveness of the instructions of the Audit &Supervisory Board Members[English Translation]46

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

The following systems and other systems under which any report is made to
Audit & Supervisory Board Members(9-1) System under which Directors and Accounting Advisors and employees
make any reports to the Audit & Supervisory Board Members(i) Upon discussion with the Audit & Supervisory Board, the following
matters shall be considered as the matters to be reported by Directors to
the Audit & Supervisory Board Members.
(1) matters resolved by the Organization Culture Committee andother committees;(2) matters likely to be materially harming the Company;(3) important matters relating to monthly business conditions;(4) important matters relating to internal audit and risk management;(5) material violation of laws and regulations or the Articles ofIncorporation; and(6) important matters from viewpoint of compliance.
(ii) Notwithstanding (i) above, the Audit & Supervisory Board Members
may, where necessary and in a timely manner, request that Directors
and employees make a report.
(iii) The matters reported to the “Hot Helpline” will be reported to the Audit& Supervisory Board Members from the Audit and ComplianceDepartment.
(9-2)

System under which persons executing duties as the subsidiary’s
Directors, Accounting Advisors, Audit & Supervisory Board Members,
Executive Officers, members who execute the business, etc., otherpersons equivalent to such persons, and employees, or any persons
receiving reports from these persons, make reports to the Audit &Supervisory Board Members
The matters reported to the “Group Head Office Helpline” will bereported to the Audit & Supervisory Board Members from the Group
Governance Department.

(10)

System which ensures that the persons who made the reports under (9)above will not be treated disadvantageously on the grounds of suchreports[English Translation]47

Pursuant to the “Basic Policy of the SECOM Group for Compliance,”
the Company will keep the reported matters confidential, and promptly
take necessary investigation and appropriate measures, while the reporter
will suffer no disadvantage on the grounds of such report.
(11)

Matters regarding the policies for the procedures of the advance payment
or reimbursement of expenses incurred for the execution of duties by the
Audit & Supervisory Board Members and other processing of expenses
or debts incurred for the execution of such duties
The Company bears the expenses incurred for the execution of duties by
the Audit & Supervisory Board Members.

(12) System under which audit by Audit & Supervisory Board Members is
ensured to be performed efficiently(i) The Company establishes the system under which the Audit &Supervisory Board shall regularly hold meetings with the President andRepresentative Director and the Accounting Auditor, to exchange
opinions so that audits shall be performed efficiently.
(ii) The Audit & Supervisory Board Members attend the meetings of theBoard of Directors, attend important meetings to exchange opinions
regarding overall management-related matters if necessary, and conductperiodical interviews with Directors and employees of the Company andthe subsidiaries.
(iii)The Company ensures that the Audit & Supervisory Board may retain
attorneys-at-law at its discretion and, if necessary, have opportunities toretain and consult professional accountants with respect to their audit
duties.
2. Outline of Status of Operation of Internal Control System
The Company, pursuant to the basic policy described above, has establishedthe Internal Control System, and is continuously operating this System in aproper manner. An outline of the status of operation of the System during thecurrent fiscal year is as follows.
(1) “System under which the execution of duties by Directors and employees is
ensured to comply with laws and regulations and the Articles ofIncorporation”
The Company promotes to instill awareness of the importance of compliancewith the SECOM Group Code of Employee Conduct, which sets behavioral
standards for the execution of duties, including compliance with laws,
regulations, and the Articles of Incorporation in day-to-day business
operations. In addition, all training curriculum contains training related to thephilosophy of SECOM, and the Company is also making efforts to instill and[English Translation]48

entrench the philosophy of SECOM through e-learning system and in-housenewsletter. The Company takes appropriate actions to respond to any revisionsof laws and regulations by requiring its Executive Officers in charge of eacharea to have thorough knowledge of laws and regulations related to their areas
and to obtain information concerning revisions of relevant laws andregulations on a regular basis. The Audit and Compliance Department, as aleading organization, conducts operational audits based on the audit plan,
reports the audit results to the President and Representative Director and the
Audit & Supervisory Board Members on a monthly basis, and instructs to takecorrectional measures necessary to solve any issues identified. Furthermore,
any internal reports made through “Hot Helpline” are dealt with in a proper
manner in collaboration with relevant departments. Any importantorganizational culture-related issues (including compliance-related matters)
are deliberated and dealt with at a meeting of the Organizational Culture
Committee when necessary. The effectiveness of internal control related tofinancial reporting is properly evaluated based on the basic plans and policies.
(2) “System under which information regarding execution of business byDirectors shall be maintained and controlled”
Minutes of the meetings of the Board of Directors and decision-making
documents are recorded in a paper form or electromagnetic media, and stored
and managed in a proper manner.
(3) “System regarding control of risk of loss and other system”
Each Executive Officer in charge analyzes and assesses business risks andfraud risks in the operational areas for which he/she is responsible, andreports the results to the President and Representative Director and Audit &Supervisory Board Members once a year, and further, reviews internal rules
and manuals that have been established as appropriate and makes
amendments as needed.
(4) “System by which efficient execution of duties of Directors shall be ensured”
The Board of Directors of the Company consists of 11 Directors including 3
outside Directors. As a general rule, a meeting of the Board of Directors isheld once a month with the attendance of Directors as well as 5 Audit &Supervisory Board Members including 3 outside Audit & Supervisory Board
Members. At a meeting of the Board of Directors, important management
matters are deliberated and the status of execution of duties by Directors isreported, based on the business vision of the Company, and the Board of
Directors strives for accurate and prompt decision-making. 30 Executive
Officers including 7 Directors are making efforts to make decisions and to
execute their duties in a more expeditious manner.
(The above officer structure is as of March 31, 2018.)(5)“System under which the group of enterprises consisting of the Company
and its subsidiaries is ensured to properly execute its business”[English Translation]49

Directors of the Company and its subsidiaries are promoting proper
operation based on the “Constitution of SECOM's Business and Operation”
as their basic philosophy. The President and Representative Director of theCompany convened a meeting of the “SECOM Group Management
Committee” quarterly to share the Group information and operating
philosophy and to ensure the appropriate operations of each company. To
enhance subsidiaries' corporate governance, Audit & Supervisory Board
visited and interviewed subsidiaries (total of 59 times). Furthermore, Audit& Supervisory Board held the “SECOM Group Audit & Supervisory Board
Members and Internal Audit Departments Joint Liaison Meeting” (once)with Group Audit & Supervisory Board Members, internal audit
departments and Accounting Auditor, besides cooperation by Group Audit& Supervisory Board Members (total of 22 times). Internal audit
departments inspect and provide guidance to subsidiaries as needed, andtake appropriate steps in collaboration with relevant sections andsubsidiaries in response to any internal reports made through the “Group
Head Office Helpline.” Through decision-making on important matters uponprior consultation and reporting of important matters by subsidiaries inaccordance with the “Basic Rules for SECOM Group Corporate
Management,” the Company and its subsidiaries strive to ensure thatsubsidiaries' operations are properly carried out.
(6)

“Matters related to employees to assist duties of Audit & Supervisory Board
Members when Audit & Supervisory Board Members request to do so”
The Company has established the Office of Audit & Supervisory Board
manned by at least two designated employees at all times, who assists Audit& Supervisory Board Members in carrying out audits following the
instructions of Audit & Supervisory Board Members.

(7)“Matters related to the independence of the employees in item (6) abovefrom Directors and ensuring the effectiveness of the instructions of the Audit& Supervisory Board Members”
The assistants for the Audit & Supervisory Board Members carry out theirduties following the instructions of the Audit & Supervisory Board
Members.

(8)“System under which any report is made to Audit & Supervisory Board
Members”
Audit & Supervisory Board Members receive from the internal audit
departments, in addition to the matters to be reported by Directors to Audit& Supervisory Board Members pursuant to the basic policies of internal
control system, any matter internally reported through the whistle-blowing
system, namely, “Hot Helpline” and “Group Head Office Helpline,” at eachtime it occurs.

(9)“System which ensures that the persons who made the reports under item (8)above will not be treated disadvantageously on the grounds of such reports”[English Translation]
50

Any internal report is handled as confidential pursuant to the “Basic Policyon the SECOM Group for Compliance” and a system under which a person
who made a report is not treated disadvantageously has been established.
This has been complied with during the current fiscal year.
(10) “Matters regarding the policies for the procedures of the advance payment or
reimbursement of expenses incurred for the execution of duties by Audit &Supervisory Board Members and processing of other expenses or debts
incurred for the execution of such duties”
Budget for expenses that will arise in relation to the execution of duties by
Audit & Supervisory Board Members are determined by resolution of the
Audit & Supervisory Board and reported to the Board of Directors. These
expenses are paid by the Company.
(11) “System under which audit by Audit & Supervisory Board Members is
ensured to be performed efficiently”
Audit & Supervisory Board Members held meetings twelve times with the
President and Representative Director and eight times with Accounting
Auditors to exchange opinions. In addition, Audit & Supervisory Board
Members attend meetings of the Board of Directors and other important
meetings to exchange opinions, and conduct interviews with Directors andemployees of the Company and its subsidiaries on a regular basis.
3. Result of Evaluation of the Board of Directors
The Company has conducted the evaluation of the Board of Directors through thequestionnaires conducted at the Board of Directors and Audit & Supervisory
Board Members and the interview with the respective Directors and Audit &Supervisory Board Members. As a result, it was confirmed that the diversity andthe appropriateness of the size of the Board of Directors are secured, and theOutside Directors are actively making a comment and thus the business execution
and the oversight of the management are well-balanced.

[English Translation]
51

Consolidated Balance Sheet(As of March 31, 2018)(Millions of Yen)ITEM

AMOUNTITEMASSETSLIABILITIESCurrent assets:
Cash on hand and in banks
Cash deposits for armored car services
Notes and accounts receivable, trade
Due from subscribers
Short-term investments
Lease receivables and investment in leased
assetsMerchandise and products
Real estate inventories
Work in process
Costs on uncompleted construction contracts
Work in process for real estate inventories
Raw materials and supplies
Deferred income taxes
Short-term loans receivable
Other
Allowance for doubtful accounts

806,746
317,267
135,808
129,984
35,272
17,360

Fixed assets:
Tangible assets:
Buildings and improvements, net
Machinery and equipment and automobiles
Security equipment and control stations, net
Tools, furniture and fixtures
Land
Construction in progress

913,521373,689
148,622
8,645
70,872
23,770114,287
7,490

45,544
12,321
4,766
5,057
10,441
39,6888,849
14,651
5,196
26,352(1,818)Intangible assets:
Software
Goodwill
Other

131,028
17,83378,06135,133

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

408,803
280,659
35,284
14,286
24,67041,40912,15013,374(13,033)

TOTAL ASSETSAMOUNT

1,720,268[English Translation]
52

Current liabilities:
Notes and accounts payable, trade
Bank loans
Current portion of straight bonds
Lease obligations
Payables – otherAccrued income taxes
Accrued consumption taxes
Accrued expenses
Deposits received for armored car
services
Deferred revenue
Accrued bonuses
Provision for losses on construction
contracts
Other

357,544
43,92941,558795
4,932
40,10225,896
7,959
7,084

Long-term liabilities:
Straight bonds
Long-term loans
Lease obligations
Guarantee deposits received
Deferred income taxes
Accrued retirement benefits for
directors and audit & supervisoryboard members
Net defined benefit liability

281,510
5,322
12,721
11,902
33,181
19,362

Investment deposits bypolicyholders, unearned premiums
and other insurance liabilities
Other

113,830
30,30916,2092,436
22,4991,421
21,849172,345
3,403

Total liabilities
NET ASSETS
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Common stock in treasury, at cost
Accumulated other comprehensive
income (losses):
Unrealized gains on securities
Deferred losses on hedges
Foreign currency translation
adjustments
Remeasurements of defined benefit
plans, net of taxes

639,054924,729
66,38580,328
851,764(73,748)
27,89423,759(24)(5,774)
9,933

Noncontrolling interests:

128,589

Total net assets

1,081,213

TOTAL LIABILITIES AND
NET ASSETS

1,720,268

Consolidated Statement of Income(Fiscal Year from April 1, 2017 to March 31, 2018)(Millions of Yen)ITEM

AMOUNT

Revenue
Costs of revenue
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income:Interest income
Dividends income
Gain on sales of investment securities
Net gains from investment in affiliated companies accounted forunder the equity method
Gain on private equity investments
Other
Non-operating expenses:
Interest expenses
Loss on sales of investment securities
Loss on sales and disposal of fixed assets
Write-off of long-term prepaid expenses
Foreign exchange loss, net
Provision of allowance for doubtful accounts
Other
Ordinary profit
Extraordinary profit:
Gain on sales of fixed assets
Overseas tax related gain
Gain on sales of investment securities
Other
Extraordinary losses:
Allowance for price fluctuation
Impairment losses on fixed assets
Loss on revaluation of investment securities
Other
Income before income taxes
Income taxes- current
Income taxes - deferred
Net income
Net income attributable to noncontrolling interests
Net income attributable to owners of the parent[English Translation]
53

970,624652,673
317,950
182,502
135,448
1,102
803
1,056
6,398
2,185
1,606
775
275
1,160
614
213
229
1,013

13,152

4,281
144,318

990
725
504
251
1,188
841
1
514
54,811(9,314)

2,471

2,545
144,245
45,496
98,74811,75586,993

Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2017 to March 31, 2018)(Millions of Yen)
Shareholders’ equity

Common stock

Balance at the beginning of the
fiscal year
Changes during the fiscal year:
Issuance of new stocks
Cash dividends
Net income attributable to ownersof the parent
Purchase of treasury stock
Disposal of treasury stock
Changes in shares of parent
arising from transactions
with non-controlling interest
Changes in the scope of
application of the equity
methodNet changes of items other thanshareholders' equity
Total changes during the fiscal
year
Balance at the end of the fiscal
year

Capital surplus

66,37780,297

7

7

Retainedearnings

797,493

Common stock
in treasury, at

Total
shareholders’costequity(73,731)

870,437(32,739)14(32,739)

86,99386,993
(17)
0

0
23

(17)
0
23

17

17

7

30

54,271(17)

54,292

66,38580,328

851,764(73,748)924,729[English Translation]
54

(Millions of Yen)
Accumulated other comprehensive income
Remeasure-

Total

Noncontroll-ments ofaccumulated

ing interests

Total net

definedotherinassetsbenefit plans,

comprehen-subsidiaries

net of taxes

sive income

4,423

21,563Foreign
Unrealized

Deferred

gains ongains (losses)

securities

on hedges

currencytranslation
adjustments

Balance at the beginning of the
fiscal year
Changes during the fiscal year:
Issuance of new stocks
Cash dividends
Net income attributable to ownersof the parent
Purchase of treasury stock
Disposal of treasury stock
Changes in shares of parent
arising from transactions with
non-controlling interests
Changes in the scope of
application of the equity
methodNet changes of items other thanshareholders’ equity
Total changes during the fiscal
year
Balance at the end of the fiscal
year25,125(30)(7,954)

121,253

1,013,253
14(32,739)
86,993
(17)
0
23

17
(1,365)

5

2,180

5,510

6,330

7,336

13,667(1,365)

5

2,180

5,510

6,330

7,336

67,95923,759(24)(5,774)

9,933

27,894

128,589

1,081,213[English Translation]
55

Non-Consolidated Balance Sheet(As of March 31, 2018)ITEM
ASSETSAMOUNT

Current assets:
Cash on hand and in banks
Cash deposits for armored car services
Notes receivable
Due from subscribers
Accounts receivable, trade

199,756
85,00938,347523
17,286
10,995

Receivables – other

4,387

Merchandise
Supplies
Prepaid expenses
Deferred income taxes
Short-term loans receivable
Other
Allowance for doubtful accounts

5,628
1,767
2,556
3,627
28,017
1,712(105)

Fixed assets:
Tangible assets:
Buildings and improvements
Automobiles
Security equipment and control
stations
Machinery and equipment
Tools, furniture and fixtures
Land
Construction in progress
Other

687,917
114,504
16,160611

Intangible assets:
Software
Other
Investments and others:
Investment securities
Investment securities in subsidiaries
and affiliated companies
Investments in subsidiaries andaffiliated companies
Long-term loans receivable
Lease deposits
Long-term prepaid expenses
Prepaid pension and severance costs
Insurance funds
Other
Allowance for doubtful accounts
TOTAL ASSETS

67,746
162
2,861
22,077
4,812
72
6,644
5,903
741
566,767
24,583
350,551
2,098
138,277
7,650
20,622
20,763
4,046
2,613(4,440)887,673[English Translation]
56

ITEM
LIABILITIES(Millions of Yen)
AMOUNT

Current liabilities:
Accounts payable
Bank loans
Lease obligations
Payables – other
Payables – construction
Accrued income taxes
Accrued consumption taxes
Accrued expenses
Deposits received for armored car
services
Deferred revenue
Accrued bonuses
Other

110,226
4,108
21,940229
16,708
3,897
13,162
3,817
691

Long-term liabilities:
Lease obligations
Guarantee deposits received
Deferred income taxes
Accrued pension and severance costs
Other

28,4582,358
16,640
7,203
2,164
91

Total liabilities
NET ASSETS
Shareholders’ equity:
Common stock
Capital surplus:
Additional paid-in capital
Other capital surplus
Retained earnings:
Legal reserve
Other retained earnings
Reserve for system developments
General reserve
Accumulated earnings carried forward
Common stock in treasury, at cost
Valuation, translation adjustments andothers:
Unrealized gains on securities

16,446
20,3006,300
2,623

138,685

741,579
66,38583,062
83,0610665,8819,028
656,852800
2,212
653,840(73,748)
7,408
7,408

Total net assets

748,988

TOTAL LIABILITIES AND
NET ASSETS

887,673

Non-Consolidated Statement of Income(Fiscal Year from April 1, 2017 to March 31, 2018)(Millions of Yen)ITEM

AMOUNT

Revenue
Costs of revenue
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income:Interest income
Dividends income
Other
Non-operating expenses:
Interest expenses
Loss on sales and disposal of fixed assets
Write-off of long-term prepaid expenses
Other
Ordinary profit
Extraordinary profit:
Reversal of allowance for doubtful accounts
Overseas tax related gain
Gain on sales of investment securities
Other
Extraordinary losses:
Loss on revaluation of investment securities insubsidiaries and affiliated companies
Loss on sale of tangible asset
Other
Income before income taxes
Income taxes - current
Income taxes - deferred
Net income[English Translation]
57

387,881229,332
158,549
80,38078,168
1,521
12,927
530
189
951
489
433

1,000
725
168
2

14,9782,064
91,083

1,896

316
5
3
24,694268

324
92,65524,962
67,692

Non-Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2017 to March 31, 2018)(Millions of Yen)
Shareholders’ equity
Capital surplus
Additional
Other capital

Common stock

paid-in capital
Balance at the beginning of the
fiscal year
Changes during the fiscal year:
Issuance of new stocks
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock

surplus66,377

83,054

7

7

Total capitalsurplus0

83,0547

00

Net changes of items otherthan shareholders’ equity
Total changes during the fiscal
year
Balance at the end of the fiscal
year

7

7

0

7

66,38583,061

0

83,062[English Translation]
58

(Millions of Yen)
Shareholders’ equity
Retained earnings
Other retained earnings
Legal

Reserve forreserve

Balance at the beginning of the
fiscal year
Changes during the fiscal year:
Issuance of new stocks
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock
Net changes of items otherthan shareholders’ equity
Total changes during the fiscal
year
Balance at the end of the fiscal
year

Generalreservesystemdevelopments

9,028

Accumulated

Total

earnings
carriedretainedearnings

forward

800

2,212

618,887

630,927(32,739)
67,692(32,739)
67,692---

34,953

34,953

9,028

800

2,212

653,840

665,881[English Translation]
59

(Millions of Yen)
Shareholders’ equity
Commonstock intreasury, atcost
Balance at the beginning of the
fiscal year
Changes during the fiscal year:
Issuance of new stocks
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock

Total

Unrealized

Totalvaluation,

shareholders’equitygains onsecurities

translation
adjustments

year

Total net
assetsand others(73,731)706,629(17)0

14(32,739)
67,692(17)0

Net changes of items otherthan shareholders' equity
Total changes during the fiscal
year
Balance at the end of the fiscal

Valuation, translation
adjustments and others

6,634

6,634

713,26314(32,739)
67,692
(17)
0

774

774

774

(17)

34,950774

774

35,724(73,748)

741,579

7,408

7,408

748,988[English Translation]
60

Certified Copy of the Accounting Auditor’s Report (Consolidated)[English Translation of the Accounting Auditor’s Report Originally Issued in theJapanese Language]
Independent Auditor’s Report
May 21, 2018
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA LLC
Kiyoyuki Sakurai (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Hideki Yoshida (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant

We have audited the consolidated financial statements, comprising theconsolidated balance sheet, the consolidated statement of income, the consolidated
statement of changes in net assets and the related notes of SECOM Co., Ltd. as at
March 31, 2018 and for the year from April 1, 2017 to March 31, 2018 inaccordance with Article 444, Paragraph 4 of the Companies Act.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of theconsolidated financial statements in accordance with accounting principles
generally accepted in Japan, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatements, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the consolidated financial
statements based on our audit as independent auditor. We conducted our audit inaccordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to otain audit evidence about the[English Translation]
61

amounts and disclosures in the consolidated financial statements. The procedures
selected depend on our judgement, including the assessment of the risks ofmaterial misstatement of the consolidated financial statements, whether due tofraud or error. In making those risk assessments, we consider internal control
relevant to the entity’s preparation and fair presentation of the consolidated
financial statements in order to design audit procedures that are appropriate in thecircumstances, while the objective of the financial statement audit is not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position and the results of operationsof SECOM Co., Ltd. and its consolidated subsidiaries for the period, for which theconsolidated financial statements were prepared, in accordance with accounting
principles generally accepted in Japan.
Other Matter
Our firm and engagement partners have no interest in the Company which should
be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.

[English Translation]
62

Certified Copy of the Accounting Auditor’s Report(Non-Consolidated)[English Translation of the Accounting Auditor’s Report Originally Issued in theJapanese Language]
Independent Auditor’s Report
May 21, 2018
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA LLC
Kiyoyuki Sakurai (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Hideki Yoshida (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant

We have audited the financial statements, comprising the balance sheet, thestatement of income, the statement of changes in net assets and the related notes,
and the supplementary schedules of SECOM Co., Ltd. as at March 31, 2018 andfor the 57th business year from April 1, 2017 to March 31, 2018 in accordancewith Article 436, Paragraph 2, Item 1 of the Companies Act.
Management’s Responsibility for the Financial Statements and Others
Management is responsible for the preparation and fair presentation of thefinancial statements and the supplementary schedules in accordance withaccounting principles generally accepted in Japan, and for such internal control as
management determines is necessary to enable the preparation of financial
statements and the supplementary schedules that are free from material
misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial statements and the
supplementary schedules based on our audit as independent auditor. We
conducted our audit in accordance with auditing standards generally accepted inJapan. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements and the
supplementary schedules are free from material misstatement.

[English Translation]63

An audit involves performing procedures to otain audit evidence about theamounts and disclosures in the financial statements and the supplementaryschedules. The procedures selected depend on our judgement, including theassessment of the risks of material misstatement of the financial statements andthe supplementary schedules, whether due to fraud or error. In making those risk
assessments, we consider internal control relevant to the entity’s preparation andfair presentation of the financial statements and the supplementary schedules inorder to design audit procedures that are appropriate in the circumstances, while
the objective of the financial statement audit is not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements and the
supplementary schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our audit opinion.
OpinionIn our opinion, the financial statements and the supplementary schedules referred
to above present fairly, in all material respects, the financial position and theresults of operations of SECOM Co., Ltd. for the period, for which the financial
statements and the supplementary schedules were prepared, in accordance withaccounting principles generally accepted in Japan.
Other Matter
Our firm and engagement partners have no interest in the Company which should
be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.

[English Translation]
64

Certified Copy of the Audit & Supervisory Board’s Report[English Translation of the Audit & Supervisory Board’s Report Originally Issued in theJapanese Language]

Audit Report
May 21, 2018

Mr. Yasuo Nakayama
President and Representative Director
SECOM Co., Ltd.
Audit & Supervisory Board of
SECOM Co., Ltd.
Takayuki Ito (Seal)
Audit & Supervisory Board
Member (Full-time)
Ryohei Komatsu (Seal)
Audit & Supervisory Board
Member (Full-time)
Hideki Kato (Seal)
Outside Audit & Supervisory
Board Member
Makoto Yasuda (Seal)
Outside Audit & Supervisory
Board Member
Masao Yokomizo (Seal)
Outside Audit & Supervisory
Board Member
The Audit & Supervisory Board has received the audit reports of the performanceof duties of the Directors during the 57th business term from April 1, 2017 throughMarch 31, 2018 from each of the Audit & Supervisory Board Members. After
deliberating such reports, we have prepared this Audit Report and report as follows:
1. Method and Details of Audit Performed by Audit & Supervisory Board Members andthe Audit & Supervisory Board
The Audit & Supervisory Board has established the audit policy and audit plan forthe current fiscal year, received reports on the status and results of audits from each Audit& Supervisory Board Member, received reports on the status of execution of duties from
Directors, etc. and the Accounting Auditor, and requested explanations when necessary.
Each of the Audit & Supervisory Board Members, in accordance with the audit
policy, audit plan, etc. of the current fiscal year set up by the Audit & Supervisory Board,[English Translation]
65

worked to communicate with Directors, the internal audit division and other employees,
etc., and made efforts to gather information and establish the audit environment, in
addition to attending the meetings of the Board of Directors and other important
meetings, receiving reports from the Directors and other managers, etc. on their duties,
requesting explanations when necessary, inspecting documents concerning matters suchas important decisions, and investigating the conditions of the business and financial
conditions at the head office and the principal offices. Also, the Audit & Supervisory
Board Members, on a regular basis, received from Directors and employees, etc. reportson the establishment and operation of the system (internal control system) based on the
resolution of the Board of Directors as stipulated in Article 100, Paragraph 1 or Paragraph
3 of the Companies Act Enforcement Order to ensure the system under which theexecution of duties by Directors is ensured to comply with laws and regulations and the
Articles of Incorporation and to ensure the system under which the group of enterprises
consisting of the Company and its subsidiaries is ensured to properly execute its business,both of which are on the Business Report, obtained explanation from them, and expressed
opinions when necessary.
Furthermore, we received reports from Directors, etc. and the Accounting Auditor
on the status of discussions between them and the status of evaluation and audit of theinternal control on financial reporting, and requested their reports as necessary.
We worked to communicate and exchange information with the Directors andAudit & Supervisory Board Members, etc. of subsidiaries and received reports on
operations from subsidiaries.
On the basis of the forgoing procedures, the Audit & Supervisory Board has
considered the Business Report and supplementary schedules.
Furthermore, in addition to monitoring and examining whether the Accounting
Auditor maintained independence and performed auditing appropriately, we received
reports from the Accounting Auditor on the execution of their duties and requested
explanations when necessary. In addition, we received notice from the Accounting
Auditor that “The systems for ensuring the proper execution of duties” (set forth in each
Item of Article 131 of the Ordinance for Corporate Accounting) is organized inaccordance with the “Standards for Quality Control of Audit” (Business Accounting
Council, October 28, 2005) and other relevant standards, and sought explanations whennecessary. Based on the above methods, we examined the financial statements (balance
sheet, statement of income, statement of changes in net assets and related notes),
supplementary schedules and the consolidated financial statements (consolidated balance
sheet, consolidated statement of income, consolidated statement of changes in net assets
and related notes) for the current fiscal year.
2. Result of audit(1) Result of audit of business report etc.
i) The Business Report and supplementary schedules fairly represent the condition of
the Company in accordance with laws and regulations and the Articles ofIncorporation of the Company.
ii) We have determined that there were no serious occurrences of misconduct orviolations of any laws or regulations or the Articles of Incorporation of theCompany by any of the Directors in carrying out their duties.
iii) We believe the contents of the resolution of the Board of Directors regarding theinternal control system are appropriate. We found no matters to note regarding theexecution of duties of Directors regarding the internal control system, as well as theinternal control system regarding financial reporting.

[English Translation]66

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

End[English Translation]
67