ALSOK REPORT 2018

Fiscal Year Ended March 31, 2018

Communities Friendly to People Are
Protected by Courageous People

SOHGO SECURITY SERVICES CO., LTD.

Securities Code: 2331

Communities Friendly
to People Are Protectedby Courageous People

The role the ALSOK Group plays in response to safety andsecurity needs that grow with the times has become more
complex and diverse.
What should be held as important in protecting and supporting
security of society for all people are generosity of heart andcourage that enables us to face any kind of challenge.
We as safety professionals are committed to continuing ourefforts aimed at self-improvement and advancement under the
motto of “sincerity, accuracy, strength, and speed.”Management Philosophy

CONTENTS

Based on two core principles exemplified by “arigato no kokoro” (a feelingof gratefulness and gratitude) and “bushi no seishin” (a samurai spirit), we
devote ourselves to protecting the safety and security of our customers
and of society as a whole.

Overview

VisionStrategy

ESG

Financial
Information
01

1
3
5
7
9

Management Philosophy/Editorial Policy

11
13
15

ALSOK’s Value Creation Model

19

Special Feature: ALSOK’s Research and Development
That Creates New Security

23

ALSOK’s Business Operations

27
29
39
43

CSR Management

47
61

Financial Section

The ALSOK Group’s Operating Environment
ALSOK Group’s Business
Financial Highlights
Non-Financial Highlights

Message from the Chairman
Message from the President

Initiatives for Realizing Sustainable Improvement in Corporate Value
Corporate GovernanceDirectors, Audit & Supervisory Board Members, and Executive Officers

Corporate Information/Stock Information

Editorial Policy

ALSOK REPORT 2018 has been constructed as an integrated report that compiles financial information on the
Company’s performance, business operations, and strategies as well as non-financial information on its corporate social responsibility (CSR) activities and other topics with the aim of obtaining the opportunity to deepen our
engagement with shareholders, investors, and other stakeholders. In addition to describing the state of management from an economic perspective, this report also explains the ALSOK Group’s environmental, social, andgovernance (ESG) initiatives as well as the various CSR activities the Group carries out to contribute to theinternational society’s drive to achieve the United Nations’ Sustainable Development Goals (SDGs), along with theGroup’s approach to achieving growth through sustainable value creation and its business structure that supports
medium- to long-term management, business strategies, and growth.
Data and more detailed information on corporate activities that were not included in this report are available on
the Company’s corporate website.

Reporting MediaThe Company provides reports via a booklet and its corporatewebsite, making full use of the characteristics of each respective media. In the booklet, items are narrowed down to those ofhigher importance or with greater interest among readers andthe explanations on them are provided in a manner that is easy
to read and understand. Meanwhile, the website comprehensively includes financial information and initiatives related to
CSR and other matters in general.
FocusedInformation for Shareholders and Other Investors
ALSOK’s corporate website includes detailed
information on the Company’s management
policies, financial position, business performance, and stocks as well as an assortment ofinvestor relations (IR) materials.

https://www.alsok.co.jp/en/ir/
ALSOK REPORT
Investor Relations
CSR

Comprehensive

Importance to the ALSOK Group and stakeholders

CSR and Social Contribution Activities
Detailed information on the CSR and social
contribution activities that ALSOK is advancing
as part of its business activities based on ISO
26000 can be found on its corporate website.

https://www.alsok.co.jp/en/csr/
02

The ALSOK Group’s Operating Environment

Trends in the Security Services Industry
prevention activities or conducting such activities on one’s
behalf. As such, security services companies make a businessof protecting the safety and security of society based on therequests of their customers. The security services industry inJapan is comprised of approximately 9,500 security services
companies with roughly 550,000 security guards, and the
combined sales of these companies total about ¥3.5 trillion.
Net sales of the ALSOK Group’s Security Services account for
approximately 10% of these sales, giving it the No. 2 positionin the whole industry.

In 2017, the number of reported cases of crimes in Japandeclined for the 15th consecutive year, hitting another lowest
record since World War II. The cases of intrusion and theft inparticular were roughly one-fifth the level from 2002 when thenumber of such cases peaked. Behind this situation lies theincreased recognition of the role of security services by society
and the accompanying increase in the use of these services asevidenced by the fact that the number of facilities that use
so-called electronic security services, in which sensors are
installed at customer premises to detect abnormalities so that
security guards can be dispatched to the scene, has continued
to increase in recent years and topped 3 million.

Given the labor-intensive nature of the security services industry,labor shortages arising from the declining birthrate and aging
population are an issue, making the improvement of laborproductivity a task. Therefore, active use of artificial intelligence(AI), the Internet of things (IoT), and robots, etc., is expected.

However, we are put in a situation where heinous crimes
preying on senior citizens and differently abled individuals,
etc., and common crimes including special-case scams,
stalking crimes, and crimes preying on children and womencontinue to occur. In addition, risks faced by society such as
natural disasters including earthquakes, wind and flood
damage, international terrorism, cybercrimes including
cryptocurrency outflow, information leakage, etc., havebecome diversified, and one cannot claim that the perceptionof public safety is getting better.

The security services industry is expected to take part inensuring the safe operation of Rugby World Cup 2019 and the
Olympic and Paralympic Games Tokyo 2020. April 2018 saw
the launch of the Olympic and Paralympic Games Tokyo 2020
Security Consortium to establish an “all-Japan structure” withthe cooperation of numerous private-sector companies. The
Company is committed to contributing to the event’s successas a co-representative of the consortium.

The security services industry provides services for protecting
safety in people’s lives by completing one’s own crime

Note: ALSOK is a Tokyo 2020 Official Partner (Security Services and Planning).

ALSOK

Number of Reported Cases of Crimes and Buildings Introducing Electronic Security Services

Approx. 10 % No. 2(Cases)3,500,000

3,038,191

3,000,000

2,500,000

Share of Sales
in the Japanese
Security Services Industry

2,000,000(Calculated by ALSOK)

1,500,000

915,0421,000,000

500,000

73,122
0
2002

2003

2004

■ Number of reported casesof crimes (Total)

2005

2006

2007

2008

2009

2010

2011

■ Cases of intrusion and theft among the numberof reported cases of crimes

2012
■

2013

2014

2015

2016

2017 (Year)

Buildings introducing electronic
security services

Selected Crime-Related Figures
Number of Consultations
Regarding Stalking

23,079Ratio of Minor Victimsof Kidnapping andHuman Trafficking

76.5

%

Number of Arrests Related
to Cybercrimes

Number of Reported
Special-Case Scams

Total Amountof Damage Related
to Special-Case Scams

9,014 18,212 ¥39.47

billionRatio of Special-Case
Scams Targeting Senior
Citizens Over the Age of 65

72.5

%

Source: “The White Paper on Police, 2018,” “Overview of the Security Industry in 2017,” “Crime statistics materials for January to December 2017,” and “Status of reported special-case scams
and arrests thereof in 2017,” National Police Agency; “Public perception surveys,” Cabinet Office

03

ALSOK REPORT 2018

Trends in the Building Maintenance Services Industry
continuing to grow even though labor shortages have been aserious issue.

Building maintenance services provide cleaning, maintenance,
operation of equipment, and other maintenance andmanagement services mainly for buildings and otherconstructions and also cover a diverse range of other businessactivities including health-related inspections, facility
installation, and renovation. Combined net sales for theindustry were estimated to be approximately ¥4 trillion, 40% of
which is estimated to be generated from general cleaning
services and 30% from equipment management services.
Given the growth of inbound tourism demand and the trend ofincreasing use of outsourcing in recent years, the market is

The ALSOK Group commenced building cleaning services
right after its foundation and has gradually expanded theoperations to cover air conditioning and health facility
installation, building maintenance services, etc., as anextension of the cleaning services. The concept of “generalproperty management” in which building safety and acomfortable environment are provided in an integrated
manner has a high affinity for security services.

Net Sales of the Building Maintenance Services Industry (Estimated)¥3,930.3 billion(Billions of yen)

4.000
3,800
3,600
3,400
3,200
3,000
2,800

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016 (FY)

Source: “BUILDING MAINTENANCE INFORMATION YEARBOOK 2018,” The Japan Building Maintenance Association (JBMA), etc.

Trends in the Long-Term Care Industry
alone. The market is expected to expand even more as thenumber of persons requiring long-term care increases in the
future. Meanwhile, the labor shortages in comparison with thenumber of persons requiring long-term care has been posing aserious issue even though the number of care workers has
increased by around 0.8 million in 10 years, amounting to about
1.8 million.

Presently, the number of persons requiring long-termcare/needing support in Japan is approximately 6.4 million. The
number is expected to top 8.1 million in 2025 and an estimate
indicates that one in five senior citizens would be diagnosed withdementia.
The long-term care industry covers a wide range of businessincluding rental of nursing care equipment, life-support service,
etc., in addition to long-term residential care in facilities, daycare, and home-visit care services and has formed a market thatboasts total annual sales of approximately ¥10 trillion fromservices that use the public long-term care insurance system

ALSOK has been proactively developing its business with a focus
on facility service type long-term care and in-home service typelong-term care, positioning its caring service as one of the coreservices from the perspective of “protecting” senior citizens.

Number of Persons Requiring Long-Term Care/Needing Support

6,412,000(Persons)(Provisional)

7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

(FY)

Source: “Status Reports on the Insurance (Annual Reports),” “Status Report on the Long-term Care Insurance (Provisional) (March 2018),” “Status Report on the Long-term Care Insurance
in FY2016 (Annual Report),” and “Annual Report on the Aging Society: 2018,” Ministry of Health, Labour and Welfare; “Report Compiled by Study Group for Future Supply and Demandof Elderly Nursing Care Systems,” Ministry of Economy, Trade and Industry

04

ALSOK Group’s Business

Since its founding, the ALSOK Group has consistently endeavored to protect the safety and security of society as aleading company in the security services industry. The Group delivers not only Security Services, its main line ofbusiness, and care service and watching over services, which leverage the experience and expertise gained
through its security services operations, but also multifaceted support for business activities with building
maintenance and ancillary installation services as well as with disaster prevention, business continuity plans(BCPs), and terrorism countermeasure services, etc. The ALSOK Group remains committed to creating new value
for realizing a “safe and secure” future.

Electronic Security Services Contracts(for Corporate Clients and Individual Users)

ATMs Managed throughTotal ATM Management System

Machines Managed through Cash Deposit
and Dispenser Machine On-Line System

Approx.

Approx.

Approx.

Note: Approx. 1,610,000 housing units covered
when including contracts
with housing complexes

Note: Approx. 200,000 ATMs
in Japan in total(based on Company estimate)

68,50021,500Aggregate AED Sales

Long-Term Care Services Bases

Safety Confirmation Systems Contracts

920,000
Approx.

153,000 units

Approx.

340

Approx.

1,150

Service Users

In-Facility Care Services Approx. 3,600
In-House Care Services Approx. 15,000

Note: Approx. 690,000 AEDs in Japan in total(between 2004 and 2016; based on survey
by Ministry of Health, Labourand Welfare research team)

Note: As of March 31, 2018

Business Performance for the Fiscal Year Ended March 31, 2018
Long-Term Care Services

5.9%

Other Services

0.9%

General Property Management
and Fire Protection Services

14.2%

Security Services

Net Sales¥435.9billionTransportation
Security Services

13.8%

05

11.2%

Individuals

79.0%

39.9%

Stationed Security
Services

25.3%

60.5%

Public Institutions

7.2%

Net Salesby Client TypeElectronic Security
Services
Financial
Institutions

21.1%

Business
Corporations

ALSOK REPORT 2018

■ Security Services■ General Property Management

and Fire Protection Services

Electronic Security Services
Electronic Security Services, which utilizes state-of-the-art
information and communications technology (ICT) and IoT and islinked to customer properties, is the mainstay of ALSOK’s Security
Services. Signals from a network of around 50 million sensors in total,
which covers roughly 920,000 contracts nationwide, areinstantaneously analyzed and security guards will be swiftly dispatchedin the case of an abnormality, utilizing about 2,400 bases across Japan,
to ensure customers’ safety. ALSOK aims to reinforce prevention of
accidents and crimes by detecting suspicious activities and tracking
individuals via facial recognition systems, etc., with utilization of thelatest technologies such as AI, IoT, and 5G in the near future.

ALSOK provides comprehensive property management
services that include maintenance and management of various
facilities and installation of equipment at buildings, etc., alongwith security, taking advantage of intra-Group coordination.
ALSOK supports any kind of safety and security related tofacilities including smoke alarms, fire extinguishing equipment,
automated external defibrillators (AEDs), etc., for use in houses
and stores and other abundant products and services including
improving and updating equipment. In addition, ALSOK
provides Vacation Rental Solutions concerning the demands ofinbound tourism.

Net Sales

Net Sales

Sales
Composition

39.9%¥173.8 billion
Up

1.9%

Sales
Composition

14.2%

YOY

Large demand has been generated from successive construction of
new large-sized building complexes associated with urban
redevelopment plans and holding of large-scale events, etc., inaddition to a rise in security outsourcing needs. With the aim ofproviding more efficient and higher quality security, ALSOK is
working to utilize wearable cameras, manage access through facialrecognition, detect hazardous materials through introduction ofstate-of-the-art equipment, provide patrols and information desk
work with robots, and predict crowd behavior with the use of AI. In
such ways, ALSOK’s security is making ongoing evolution.

¥110.2 billion
Up

9.7%

Cash handled in ALSOK’s Transportation Security Services in a year
is more than ¥350 trillion. The Total ATM Management System,
demand for which has been increasing partly due to pursuit ofefficiency improvement at financial institutions, supports stable
operation of ATMs across Japan through formulation of detailed fundplanning, safe cash transportation, and quick incident responses.
Needs for the Cash Deposit and Dispenser Machine On-Line System
is increasing at retail stores and restaurants, etc., where cash ishandled, led partly by labor shortages and work-style reforms.

Sales
Composition

5.9%¥60.2 billion
Up

7.3%

YOY

¥25.6 billion
Up

2.8%

YOY

■ Other Services
ALSOK provides solution services for various risks in relation to
BCPs of corporations, including support for plan formulationand safety confirmation services. In addition, cybersecurity
needs, which are inextricably linked with the advancement of
ICT, are also increasing. The Regional Protection Systemaddresses the needs for watching over children and seniorcitizens in households and regions, with mobile security
terminal MAMOLOOK and lightweight and miniature
MIMAMORI Tags.

Net Sales

Net Sales

13.8%

YOY

Net Sales

YOY

Transportation Security Services

Sales
Composition

7.2%

Under the situation where the number of people requiringlong-term care is growing, ALSOK positions Long-Term Care
Services with high social needs as a new pillar of its business.
ALSOK offers extensive services ranging from in-home careservices to in-facility care services mainly in the Tokyo
metropolitan area, providing optimal support even if customers’
physical conditions change. In addition, all facilities areequipped with security systems, and evacuation drills, etc., areinstituted at these facilities through collaboration withneighboring ALSOK offices. In such ways, ALSOK endeavors toprovide safety and security to its customers and their family
members.

Net Sales

25.3%

Up

■ Long-Term Care Services

Stationed Security Services

Sales
Composition¥61.9 billion

Sales
Composition

0.9%¥4.0 billion
18.1%

Up

YOY
06

Financial Highlights

Net Sales

Ordinary Income¥435.9billionUp 5.5% YOY¥435.9(Billions of yen)40

billion

¥31.9

360

30

240

20

120

10

0

2015

2016

2017

0

2018

2014

(FY)

Ordinary Income Margin

2015

2016

2017

billion

2018

(FY)

Total Net Assets/ROE

9.3%

7.3%
± 0.0

billionUp 5.3% YOY(Billions of yen)
480

2014

¥31.9

Ordinary Income

ROE

Down 0.4 point YOY

percentage

percentage
point YOY

(%)
12.0

Total Net Assets¥241.3(Millions of yen)
250,000(%)

billion 15.0

12.0

200,000

7.3%

9.0

ROE

9.3%
9.0

150,000
6.0

3.0

0

2015

2016

2018

2017

50,000

3.0

2014

(FY)

Total Assets/ROA¥19.3

percentage
point YOY

Total Assets¥397.1(Millions of yen)
400,000

ROA(Millions of yen)
20,0009.0

15,000200,000

6.0

10,000100,000

3.0

5,000

300,000

billion

8.2%

2014

2015

2016

2017

2018

0
(As of March 31)

2016

2017

2018

billionUp 5.5% YOY

(%)
12.0

0

2015

Profit Attributable to Owners of Parent

8.2%

± 0.0

07

6.0

0

2014

ROA

100,000¥19.3

billion

0

0
(FY)

2014

2015

2016

2017

2018

(FY)

ALSOK REPORT 2018

Dividends per ShareDividend Payout Ratio¥60.0031.3％

Up ¥5.00 YOY

Up 1.1 points YOY

percentage¥60.00

(Yen)
60.00

(%)
35

31.3%
40.00

30

20.00

25

0

2014

2015

2016

2017

20

2018

Price Earnings Ratio (PER)

27.5

2014

(FY)

2015

2016

¥191.93times

Up ¥9.56 YOY(Times)35¥191.93(Yen)
200

27.5 times

30

150

25

100

20

50

15

2015

2016

2017

2018

0

2014

(As of March 31)

Price to Book Value Ratio (PBR)

2.4

2016

2017

2018

(As of March 31)¥2,155.74

timesUp ¥199.49 YOY(Times)
3.5

(Yen)
2,500

3.0

2,000

2.4 times

2.5

1,000

1.5

500

1.0

2016

2017

2018

0
(As of March 31)¥2,155.74

1,500

2.0

2015

2015

Book Value Per Share (BPS)

Up 0.3 point YOY

2014

(FY)

Earnings Per Share (EPS)Up 4.7points YOY

2014

2018

2017

2014

2015

2016

2017

2018

(As of March 31)

08

Non-Financial Highlights

Environment Governance

Fuel Usage

Electricity Consumption

36,291 t-CO

8,775.5 kl

28,212 kWh

Give consideration for the global environment,
set specific goals for CO2 emission reduction,etc., and promote reduced environmental
impactPromote setting up of optimal routes forsecurity vehicles, introduction of environmental conservation vehicles, etc., to reduce fuelusage

Thoroughly implement measures to conserve
electricity on a Companywide basis through, forexample, promotion of “cool biz” or coolbusiness attire in summer, reduction of thenumber of office lights in use, air conditioning inan energy-efficient way, etc.

CO2 Emissions Volume(Non-Consolidated)(Non-Consolidated)

2(Down 1.0% YOY)

(Down 1.6% YOY)

Audit &
Supervisory Board Members

Number of Directors

4

12(of whom 3 are outside Audit &Supervisory Board members)(of whom 4 areoutside directors)

A p p o i n t fo u r i n d e p e n d e n t
outside directors to invigorate
Board of Directors’ Meetingsand provide transparency inbusiness management

Rate of Attendanceat the Boardof Directors’ Meetings

Attend Audit & Supervisory Board and Board of Directors’Meetings and provide observation and supervision on senior
managers from an objective and impartial perspective.
Appoint three outside Audit & Supervisory Board members toprovide observation and supervision on operational execution
performance of all directors from a more professional andobjective perspective

Number of Group Companies
That Used the Internal
Reporting System

Number of Group Companies
That Acquired Certification
Under ISO 27001 (ISMS)

100%

74 companies

17 companies

Held 14 times during the year. Attended by all
directors and Audit & Supervisory Board
members who properly determine theCompany’s management policies and importantmatters pertaining to operational execution

Set up the ALSOK Hotline in April 2004 to
facilitate early identification and prevention of
corporate ethics issues

Formulate the Basic Information Security
Policy and promote acquisition of certification
for the purpose of strengthening protection
and management of information assets* Includes all directors and Audit& Supervisory Board members

09(Up 1.3% YOY)

(Non-Consolidated)(As of March 31, 2018)(As of March 31, 2018)

ALSOK REPORT 2018

SocialNumber of Employees

Ratio of Female Employees

37,51912.4%(Consolidated)(Consolidated)

Male Employees 32,852, Female Employees 4,667

Work to build a comfortable workplace environment by, for example, enhancing training systems,
supporting career development, and promoting diversity, and help diverse human resources to realize
their full potential

Percentage of Administrative
Positions Filled by Women(Non-Consolidated)

3.7%(As of April 1, 2018)

Support female employees in developing theircareers through promotion of measures toincrease the number of female employees andvarious other initiatives with the aim of achieving
higher percentage of administrative positions
filled by women

Number of ALSOKHOTTO LIFE KOZAClasses Held

95 times/year

Number of Employee
Satisfaction Meetings Held

116 times/year(Fiscal Year Ended March 31, 2018)

Male Employees

Female Employees

16.6 years 14.8 years

Implement various internal systems that makeit possible for employees to work actively for along period of time with peace of mind andpromote work–life balance

Number of Participantsin ALSOK ANSHIN KYOSHITSU

Aggregate total of

1,426,000(As of March 31, 2018)

Provide opportunities for senior managers andemployees to exchange opinions, and incorporate requests solicited from employees into
internal measures, etc.

Dispatch employees who are safety professionals to elementary schools throughout Japan tohold visiting classes to provide an opportunity
for learning about crime prevention and first aid

Annual Social Contribution
Expenditure

Employees That Have
Completed First-Aid Training¥416.4 million

Aggregate
total of(Fiscal Year Ended March 31, 2018)(Fiscal Year Ended March 31, 2018)

Hold visiting classes to learn about trends ofand countermeasures against special-casescams, etc., preying on senior citizens andcontribute to safety and security in theeveryday lives of senior citizens

Average Number of Yearsof Continuous Service
by Gender (Non-Consolidated)

18,912(including Standard and Advanced courses)(As of March 31, 2018)

Educational activities on crime prevention anddisaster prevention in local communities,
initiatives for patronage of culture, promotionof sports and education, and ongoing support
for regions impacted by disasters

Improve quality of security through acquisitionof skills required in the case of an emergency
such as chest compressions, usage of AED,
and hemostatic method

10

ALSOK’s Value Creation Model

Input of Capital
Number of Employees

37,519As of March 31, 2018

Employeeswith Security Planner
Certification

600

Depots LocatedNationwide

Approx.

Overseas Operations

2,400 9countries centeredon Southeast Asia

SocietyMore Diverse Threats Facing Society● International terrorism,
information leakage,
threats in cyberspace

Based on two core“Protecting”

principles exemplified bysafetyand security● Labor shortages due to decline for customers
in the number of labor force
and society(a feeling of gratefulness● The aging of social infrastructure● Crimes preying on senior citizens, children,
women, and differently abled individuals“arigato no kokoro”
and gratitude) and“bushi no seishin”(a samurai spirit),
we devote ourselves● Natural disasters that cause great damage

to protecting the safety

and security of our custom

and of society as a whole.

FourMaterial
CSR Themes
11

Consumer:
Providing Products
and Services
That Help Resolve
Social Issues

Labour Practice:Community:

Cultivating Human Resources

Contributing to Local

and Building a Comfortable

Communities throughWorkplace Environment

Active Communication

ALSOK REPORT 2018

The ALSOK Group has continued to provide security services of impeccable quality for more than 50 years since its
establishment. The Group’s human resources, organizational capabilities, and reliability recognized by customers
and society are some of its greatest strengths. The Company is reinforcing its operating foundations with the aimof achieving consolidated net sales of ¥1 trillion and income of ¥100 billion. Although conditions are changing rapidly
both inside and outside of the Company, we remain committed to creating new value for “protecting” safety andsecurity for customers and society while simultaneously increasing ALSOK’s earnings capacity. By accomplishingthese goals, we will achieve growth that meets the expectations of all stakeholders.

Capital Expenditures¥16.8 billion(Fiscal Year Ended March 31, 2018)

Number of Vehicles

Approx.

8,300

Investment Aimed
at Further GrowthTargets

Net Sales

Human
Resource

Organizational
Capabilities

Medium-Term Management Plan

Grand Design 2020
Net Sales
Approx.

¥500.0 billion¥1trillion

IncomeOrdinary Income
Approx.

¥100¥40.0 billion

Reliability

billionmers.

Operating Practice:
Providing Trustworthy
Security Services+

Common goals
for internationalsociety (SDGs)
towards 2030

Consideration
for the Global Environment
12

Message from the Chairman

Value That the ALSOK Group
Needs to Provide to Society
Chairman and Representative Director
Chief Executive Officer (CEO)Atsushi Murai
Advancement of the ALSOK Groupstarts with advancement of local
communities and society. Basedon two core principles exemplified
by “arigato no kokoro” (a feeling ofgratefulness and gratitude) and“bushi no seishin” (a samurai
spirit), we devote ourselves to further ensuring the safety andsecurity of people who live there.

Thoughts Behind “Communities Friendly
to People Are Protected by Courageous People”
We have put the message of “Communities Friendly to People
Are Protected by Courageous People” on the front cover of the
ALSOK REPORT 2018. Behind the message lies a thought that“appropriate systems and courage are required to protect
Japan’s desired form of society,” and the message is aparaphrase of ALSOK’s Management Philosophy of providing
impeccable security with “arigato no kokoro” and “bushi noseishin” as set out in the ALSOK Charter.
For the sake of providing supplementary explanations on theforegoing, “Japan’s desired form of society” means a society inwhich people care for each other with kindness, and a society

13

in which all people live with peace of mind regardless ofgender, age, and nationality, with or without disabilities, etc.
Thinking of who protect that society, they are those who havecourage to firmly confront with risks. Also put into thatmessage is a sentiment that ALSOK’s employees who arefinely trained professionals should always be that kind of
person.

ALSOK REPORT 2018

Foundation and Two Tokyo Olympic GamesALSOK was founded in 1965 led by the experience of the founder
who was deeply engaged in the operation of the Tokyo Olympic
Games in the previous year of 1964, and has achieved growthever since. We consider the Olympic and Paralympic GamesTokyo 2020 as an opportunity to reaffirm our founding philosophy
and aim to put all our efforts into fulfilling our responsibility as aco-representative of the Olympic and Paralympic Games Tokyo
2020 Security Consortium and contributing to achieving a safe
and secure event through concerted efforts of the industry.
ALSOK has focused its efforts also on the promotion of sports,
producing numerous Olympic medalists, and has two People's
Honor Award recipients in the Company. We learn the motivationand the mettle or determination to make the utmost effort andpursue one’s goal wholeheartedly and with patience from theseathletes. In addition, what is common to the ALSOK Group’sbusiness is their way of making advancement through new
discoveries in their daily practices.
We will engage in security of the 2020 event with determination tobuild everything from the ground up, giving due consideration to
the education and training of staff and deploying security guards
who are capable of making effective responses by considering
thoroughly all sorts of situations that may occur during the event,so as not to bring dishonor to the name of the ALSOK Group. We
are determined to ensure the safety of all the people who visit theevent venue including athletes, parties concerned, and people
who come to see the Games from around the world, along with“hospitality” performed in a way unique to Japan.
Note: ALSOK is a Tokyo 2020 Official Partner (Security Services and Planning).

In Order to Protect the Safety and Security of Society
In recent years, threats facing society are growing more diverse
as exemplified by not only crimes preying on children, seniorcitizens, differently abled individuals, etc., cyberattacks targeting
corporations, and international terrorism but also an increase in
the number of natural disasters and accidents due to aging of
public infrastructure.
We are required to establish concrete countermeasures in
preparation for such unexpected situations by using all wisdom.
To this end, ALSOK implements comprehensive security
nationwide, ranging from stationed security to electronic security
services, crowd control, transporting valuables, and guarding
important people, as a security services company responsible fora critical component of social infrastructure supporting thesafety of society.
The reason for our existence lies in the embodiment of our
founding spirit, “contributing to safety of society throughimpeccable security for which our customers show gratefulness

and gratitude to us.” We cannot permanently sustain reliability
and trust accumulated since the foundation in any other way but
to foster highly principled employees with a high sense of ethics
who never deviate from the right path to follow.
From this point of view, we adopt the “arigato no kokoro” attitude
for employees as well and give due consideration to theirtreatment at all times. We are focusing our efforts on not only
improvement of employee health and welfare but also measures
to immediately respond to any issues including power
harassment, sexual harassment, unpaid overtime, etc., in orderto ensure that employees feel motivated in their pleasant working
environment.
The ALSOK Group aims to be a corporation that is admired as “awarm company of integrity” and “a highly principled company” by
not only customers but also shareholders, investors, and peers,
and that employees and their family members take a strong
sense of pride in.

What Should Be Left Unchanged, What Should Be Changed
Long-lived corporations have their foursquare founding
philosophy, but they flexibly change their business contents,
management methods, etc., according to changes in theenvironment. The important thing is to ascertain “what shouldbe left unchanged” and “what should be changed.” ALSOK has
the principle of “bushi no seishin” as well as “arigato no kokoro.”
A bushi, or samurai, in a general sense is “a person who
respects and keeps order and courtesy” but in anotherimportant sense they are “warriors.” They embody theprinciple of “bushi no seishin” by proactively acquiring
techniques and skills at all times and achieving constanttransformation in order to win a battle. We as well have tothink about how we can continue to be a corporate groupneeded by society while maintaining the founding spirit andalways having long-term views.
We are committed to creating ALSOK’s new corporate value by
providing impeccable services that receive words of“gratefulness and gratitude” from our customers, changing
what should be changed, keeping what should be kept, andworking on strategies tailored to changes in the environment.
There are many long-lived corporations with over 200 years ofhistory since their foundation in Japan, and the ALSOK Groupis working to develop sustainable business with the aim of
becoming one of them.

14Message from the President“Evolution” and “Deepening” that continue supporting the safety
and security of customers and society
President and Representative Director
Chief Operating Officer (COO)

Yukiyasu Aoyama

In our three-year Medium-Term Management Plan Grand Design 2020
(GD2020), which starts from the fiscal year ending March 31, 2019, we view
all kinds of safety and security needs surrounding Japan as business opportunities and link them to long-term sustainable growth as an integrated
safety and security solutions provider.
15

ALSOK REPORT 2018

Looking Back over GD2017
Under the previous Medium-Term Management Plan:
FY2016–FY2018, we strove to boost productivity and strengthen
our sales capabilities in order to increase the top line (sales) and
improve our profit margin. Having actively utilized M&As toachieve our objectives, we were able to further increase
productivity in our existing security services and achieved a profit
in long-term care services by expanding its business in the fiscal
year under review.
Looking also at our approach to the manufacturing industry inJapan, we have expanded our business scope to include not only
existing Security Services but also facility management including
equipment inspections and others. Through these efforts, we
support “return of manufacturing” in the manufacturing industry
amid contemporary issues such as labor shortages and theaging population.

In addition, in light of recurrent disasters, we are committed tocontributing to inspections of public infrastructure from a newperspective as part of measures to build national resilience.
While labor shortages are becoming an increasingly serious
issue amid the progressing population decline, and declining
birthrate and aging population, we need to continue to pushforward with our work-style reforms. We have to provide various
types of products and services that allow corporations to promote
work-style reforms, and in turn contribute to the resolution ofvarious issues. Furthermore, we are seeking to also utilize newtechnologies including AI, IoT, and robots to achieve
breakthroughs to establish post-2020 security services andequipment management, which will require the development of
human resources.

〈Consolidated Financial Target Achievements of GD2017〉
Target figures

Actual figures(Announced in May 2015)(Fiscal year ended March 31, 2018)

Net Sales

Approx. ¥500.0 billion¥435.9 billion+¥70.2 billion

Ordinary Income

Approx. ¥40.0 billion¥31.9 billion+¥7.2 billion

Ordinary Income Margin

Approx. 8.0%

7.3%

+0.5 percentage point

ROE

Approx. 10.0%

9.3%+1.5 percentage points

Increase/Decrease
from the Fiscal Year Ended March 31, 2015

Response to Environmental Changes
Among the environmental changes that occurred during theperiod covered by GD2017, what we found especially impactful on
our business were increases in threats arising from extreme
weather and natural disasters, with global warming as a
backdrop in addition to increasing labor shortages.
Concerning natural disasters, there have been a series ofearthquakes and torrential rains occurring across Japan, causing
great damage. In order to respond to such circumstances,measures to support related parties including the public sector
from the perspectives of self-help, mutual aid, and public
assistance, which include consideration for risk minimization andcare for the vulnerable in our society, are strongly demanded.
The ALSOK Group deems it necessary to quickly establish abusiness scheme for comprehensive security services andequipment management.

society, namely the declining birthrate, aging population, andpopulation decline. These circumstances are expected to become
increasingly serious going forward. While this could result in the
expansion of outsourcing needs, at the same time it may serve as
constraints on the growth of the security services industry whichis grounded upon human resources. As such, overcoming theissue is of supreme importance. The resolution will be achieved
through labor productivity improvements by utilizing Big Data andnew technologies including AI, IoT, and robots and heightened
operating efficiency by multitasking security guards and staff incharge of equipment.
On top of that, in our view, there is a need to proactively promote
new products and services that help address the safety andsecurity needs of local communities that are heightening on theback of increased inbound travelers, aging of infrastructure andfacilities, and depopulation in rural areas.

Behind the labor shortages lie structural problems of Japanese16

Message from the President
Basic Policies of GD2020
Japan is facing a number of issues such as its declining birthrate,
aging population, population decline, and aging of public andprivate infrastructure, and may be referred to as an advanced
aging society. Threats of natural disasters and terrorism and thosein cyberspace are also significant.
GD2020 positions the three years starting from the fiscal year
ending March 31, 2019 as the period to achieve sustainable growthby striving for further “evolution” and “deepening” of the Group’sbusiness. Under the five basic policies set forth in the plan, we aim
to make Groupwide efforts to promote our business as anintegrated safety and security solutions provider that meets
society’s various needs.

Enhancement of existing business to correspond to diversifying needs of customers
Amid fast-paced changes in the social environment, customer
needs are also increasingly diversified. We provide services thatoffer security services and facility management in an integrated
manner, such as our ALSOK Security and Equipment Service
Package, to meet such needs, and aim to further improve andenhance them. We are further committed to focusing our effortson the provision of products and services to seamlessly protect
the safety and security of senior citizens, women, and children invarious activities taking place in houses they live in and otherlocations.
We have set up the International Affairs Division in April 2018 inanticipation of the further expansion of overseas needs. We are
seeking to expand the ALSOK brand’s operations overseas whileproviding not only stationed security services but also electronic
security services and general property management and fire
protection services, not to mention strengthening collaboration
with local leading companies, among other things.

Sophistication of security model and improvement in productivity
It is expected that labor shortages in the security services
industry will continue due to the decline in the working-age
population associated with the declining birthrate and aging
population. The most effective way to address these issues is toimprove productivity by fundamentally transforming the businessmodel through the application of the results of technologicalinnovations.
The following four priority themes are set forth in GD2020 for the
ALSOK Group to transform its business model: “realization ofservices for preventive measures,” “highly-functioned robots,”“correspondence towards sophisticated crimes,” and “realizationof urban space security.” As regards services for preventive
measures, in particular, we will focus on developing technologies
and know-how to minimize risks and damage associated withincidents by utilizing AI.
In addition, we aim to achieve improved operating efficiency andlaborsaving by promoting multitasking of each security guard
who engages in not only security services but also maintenanceincluding disaster prevention inspections, etc., on equipment inbuildings, thereby increasing added value per person.

17

Business expansion in the elderly market
ALSOK aims to nurture its Long-Term Care Services as the main
pillar by further distinguishing ALSOK’s long-term care with aneye to expanding its services for senior citizens.
As regards the elderly monitoring business which we promotejointly with municipal governments, we intend to proceed with thebuilding of a safer and securer watching-over network by suchmeans as collaboration between watching-over networks of local
communities and ALSOK’s distinctive services of dispatching of
security guards to the scene and consultation with our staff about
one’s health condition. In addition, we are committed tostrengthening collaborations among the long-term care domain
and the medical and health care domain and further improving
our services for senior citizens as Care Plus Co., Ltd., a company
that provides visiting medical massage, had joined the ALSOKGroup.

Stable securement and active promotion ofhuman resources
ALSOK is currently working on efforts to strengthen humanresources on a Groupwide basis. We proactively promote thework-style reforms with the aim of allowing diverse humanresources including women and senior citizens to play an activerole and making their work rewarding, and furthermore,achieving their work–life balance. More specifically, we have set
action plans to achieve correction of long working hours, anincrease in the rate of acquisition of annual paid holiday, etc., andare working to establish the environment to that end. Moreover,
we intend to introduce advanced education that utilizes ICT withthe aim of cultivating highly specialized human resources.

ALSOK REPORT 2018●

Further “evolution” and “deepening”●

Achieving sustainable growth
GD2020 target figures

2019 G20 Osaka Summit

Fiscal Year Ended March 31, 2018

Net
sales

¥435.9 billion

Ordinary income¥31.9 billion

Tokyo
Tokyo 2020 Test Events
2020 Games
under the control of Tokyo 2020
Rugby World Cup 2019

GD2017¥500.0 billion

Net sales
Approx.

Ordinary income Approx.

Groupwide

Net
sales

¥1 trillion

Income¥100 billion¥40.0 billion

GD2020FY2016–FY2018

FY2019–FY2021● Expansionof consolidated
net sales

Ⅰ

ⅡⅢ● Transition to ahighly profitablestructure

Enhancementof existing businessto correspondto diversifying needsof customers

Sophisticationof security modeland improvementin productivity

Business
expansionin the elderly
marketFY2022 and thereafter

Five Basic Policies

Correspondence to the Olympic and Paralympic Games Tokyo 2020
ALSOK founder Jun Murai was deeply engaged in the operationof the Olympic Games Tokyo 1964 as Deputy Secretary-Generalon the organizing committee for the Olympic Games Tokyo 1964,
and this experience led him to establish the Company in thefollowing year. The Olympic Games Tokyo 1964 was precisely theorigin of the Company’s foundation. We are positioning the Tokyo
2020 Games as a return to our founding spirit. We are committed
to fulfilling our heavy responsibilities as a co-leader of the
Olympic and Paralympic Games Tokyo 2020 Security Consortiumand channeling all our efforts into the realization of the event’s
safe and secure operation.
I also have the passion for taking the Tokyo 2020 Games as anopportunity to newly establish a model of “security services
provided in a way unique to Japan” and disseminate it to theworld. “Security services provided in a way unique to Japan”
means security management that focuses on making use ofcharacteristics of Japanese people such as compassion anddelicate consideration, preventing crimes and terrorism andminimizing risks associated with disasters.
We will engage in the Tokyo 2020 Games with the public–private“all-Japan” security framework which will be establishedthrough concerted efforts of the security services industry inJapan and together with the Japanese government and local
governments. This initiative will be a new step ahead toward therealization of “Japan as the world’s safest country.”
Note: ALSOK is a Tokyo 2020 Official Partner (Security Services and Planning).

Ⅳ

Stable securement
and active promotionof human resources

Ⅴ

Correspondence
to Tokyo 2020 Olympic
and Paralympic Games

Toward further
market expansion

CSR Management and Improvementin Corporate Value
The ALSOK Group’s core business is to provide customers andsociety with products and services that contribute to safety andsecurity. The business of protecting safety and security itself acts
as a social contribution, and our sustainable improvement incorporate value is closely linked with our corporate social
responsibility (CSR).
We have defined four material CSR themes, namely:(1) Consumer: Providing products and ser vices that help
resolve social issues(2) Labour practice: Cultivating human resources and building
a comfortable workplace environment(3) Community: Contributing to local communities throughactive communication(4) Operating practice: Providing trustworthy security services
These overlap with the 17 Sustainable Development Goals(SDGs); and in recent years, I have become increasingly aware
while working on our CSR activities based on environmental,social, and governance (ESG) factors that achievement of theSDGs is essential for sustainable improvement in corporate
value.
Corporations cannot grow if the local community does not grow.
Local communities, municipal governments, and corporations
are formed of individuals; protecting them is, in fact, protecting
the safety and security of individuals. Receiving high recognition
from stakeholders as a corporate group that provides integrated
safety and security solutions protecting people’s smiling faces
and local communities, and relate it to the sustainableimprovement in corporate value―I believe this is precisely thegrowth path the ALSOK Group should follow.

18

Special
FeatureALSOK’s Research and Development That Creates New Security
Robot

5G

Initiatives for“ALSOK×Cutting-Edge Technologies ＝∞ Safety and Security”
AI

ALSOK’s Research and Development System
Under the situation where various issues surrounding modern society―the declining birthrate andaging population, labor shortages due to the population decline, frequent natural disasters, and threatsof terrorist attacks―materialize, ALSOK constantly works to “create new safety and security” by adopting the latest ICT into the know-how it has accumulated so far as a security services company. ALSOK’s
R&D is supported mainly through the four sections indicated below, supporting the creation of security
that proactively utilizes cutting-edge technologies.
The Security Science Institute plays a central role in further improving
efficiency and pursuing higher performance of ALSOK’s existing electronic
security services systems and creating technologies to build a new style ofsecurity services. These days in particular, among the advanced
technologies, we place focuses on 4K high-resolution cameras that act as“eyes,” AI that acts as a “brain,” and 5G (fifth generation of cellular mobile
communications) that acts as “nerves” to connect the eyes and the brain,
and are pushing forward with research aiming at introducing security
services systems that organically combine them.
In addition to the foregoing, we proactively promote collaboration among
the industry, government, and academia including corporations anduniversities working on research and development of the latest
technologies, and initiatives for open innovations.

The section takes charge of manufacture
and configuration of equipment andsystems. At ALSOK, a system isestablished to enable cooperation withm a n u fa c t u re rs , te le co m m u n i ca t i o ncompanies, system-related corporations,etc., that have technologies appropriate forthe purposes of the new products andservices. We create high-quality products
through discussions for optimizationa m o n g t h e p a r t i e s , w i t h a fo c u s o n
speediness.

3. Development

4. Operation
andmanagement

2. Planning
1. Research

Products and services that protect customers and society areplanned in various domains related to safety and security while
adopting new technologies and ideas. We always consider
matching between social issues and technologies to solve themin order to promptly deal with increasingly diversified andcomplex needs, labor shortages, etc., and what is more, toexpand the role of security services.

19

Many of the completed equipment and systems will
generate value as “ALSOK’s products and services”
by combining them with security services, etc.,
provided by the ALSOK Group throughout Japan. We
also provide maintenance, management, andservice on an end-to-end basis, offering safety andsecurity in a comprehensive way.

G

ALSOK REPORT 2018

We uphold “sophistication of security model and improvementin productivity” as one of the basic policies stipulated in the
new Medium-Term Management Plan, GD2020, formulatedwith an eye toward the realization of long-term sustainablegrowth and aim to establish a business model that proactively
utilizes cutting-edge ICT.
In this special feature, we present an overview of ALSOK’s
research and development system to create new security andexamples of the latest verification tests, etc.

Pioneering Example: Building a Safe and Secure Community Utilizing AI and Robots
ALSOK is pursuing future security services byparticipating in an initiative aimed at building a safe
and comfortable community undertaken by Mitsubishi
Estate Co., Ltd.
In January 2018, we conducted a verification test of
New Hospitality Services at Shin-Marunouchi Building(Chiyoda-ku, Tokyo) in which camera images wereanalyzed using AI. It was an experiment where images
from security cameras in the building were analyzed
using AI to automatically detect behavior of people whoseem to be “in trouble” such as having got lost, notfeeling well, etc., and people in wheelchairs or with
infants, and send this information to smartphones heldby security guards patrolling in the area, the purposeof which is to prevent accidents and improve services
for customers.
As a result, we identified some kinds of behavior that
we can successfully detect highly precisely andobtained effective data on how to assist “patrolling,”

which had previously been done visually by security
guards inside buildings and facilities where so many
people were passing by, through the analysis ofcamera images using AI. We also identified issues tobe addressed toward commercialization.
It was followed by the replacement of conventional
stationed security guards with REBORG®-X, ALSOK’s
security robot, at Shin-Marunouchi Building, inco n j u n c t i o n w i t h t h e I n i t i a t i ve s fo r B u i l d i n g a
Prosperous Community in the Marunouchi Area
Utilizing Robots starting from April of the same year.
The purpose is to verify the effectiveness of robots andserve customers with hospitality by mounting functions
to search stores in the building and provide information
about surrounding stations as countermeasuresagainst future shortages of security guards. At present,
R E B O R G - X s e r ve s a ro u n d t h e c lo c k p rov i d i n gcustomers with various information in the daytime andpatrolling and security guarding at nighttime. The robot
is beloved and popularly known by many of thecustomers visiting the building.
On average, approximately 200 customers touch
the information screen per day (estimate)

New Hospitality Services verification test
Automated patrols
inside the building
at nighttime

20

Special
FeatureALSOK’s Research and Development That Creates New Security

Latest Major Examples Toward
Initiatives for Safety and Security Utilizing AI
ALSOK is currently working on the development of a new security
model with enhanced image monitoring.
Crime prevention utilizing electronic security services hasconventionally been based on a framework under which asecurity guard is dispatched to the scene in response to an alarm
upon intrusion detection made with sensors and cameras.
However, in recent years customers’ needs have shifted to“intrusion prevention,” “crime prevention,” etc., and there also
exists heightened interest in terrorism countermeasure services.
In this context, while satisfying the aforementioned needs byeffectively utilizing camera images, we aim to prevent damage at

an earlier stage through AI’s identification of suspicious activities
and objects based on camera images in the near future and also
help prevent occurrence and expansion of terrorism and similarc r i m e s i n p u b l i c s p a ce s . A t p re s e n t , m o v e s t o w a rdcommercialization have been accelerated as exemplified by theproactive implementation of verification tests at contracts, etc.
We are committed to continuing the promotion of products thatutilize AI and expansion of the lineup so as to enable ourcustomers to live their daily life even more safely and securely
with ALSOK’s new security services that embrace the latest
technologies.

Examples of Technologies Utilizing AI under Research
Shoplifting Activity Detection

AI That Assists X-Ray Inspection

Camera images are analyzed using AI to detect activities before
committing shoplifting (line of sights and behavior wary of thesurroundings), etc., and prevent the commission of offenses.

Images from the X-ray screening systems used at
airports for baggage inspections, etc., are analyzed
using AI and items prohibited from bringing onplanes are automatically identified.

[Sales Floor]

Images

Shoplifting detecting AI [Backyard]① Notification in real time

CamerasTalking tosubjects, etc.

[Salesclerks and Other Staff]

Periodic updatingby ALSOK② Reporting
A PC in the store

Traditional screening

・Inspectors
conduct visualinspections on
images to identify
items prohibitedfrom bringing onplanes, such as aknife

X-ray baggage
inspection systems

Radiolucent images

AI analysis systems
AI that assists X-ray inspection

AI analyzed images

・AI automaticallydetects items
prohibited frombringing onplanes・Alert notification
sent toinspectors

Inspectors

Detection of Abnormal Noises

Sounds such as people’s screaming and breaking of glass are detected using AI. The accuracy of abnormality detection isheightened as the sensing function gets closer to the five senses of a human being by combining the “eyes” of cameras andthe “ears” of microphones.
Note: This research has been proposed jointly with Hmcomm Inc. and selected as a contracted R&D project of the New Energy and Industrial Technology Development Organization (NEDO).

Sophistication of Security Robots
ALSOK boasts a history of security robot research anddevelopment spanning over 30 years, and the robots have played
an active role in information desk work for customers, patrols, etc.,
at many of the facilities and event venues throughout Japan. Now isjust about the time when security services by robots are entering a
new stage.

Moreover, the robot is expected to assume new roles in the futuresuch as earlier detection of signs of incidents using cameras andsensors and utilization in terrorism countermeasure services. We
strive to keep REBORG-X evolving so that it will be actively used bymany of our customers.

The state-of-the-art security robot REBORG-X participated in the“Robot Experiment Project at Haneda Airport” during the period
between fiscal 2017 and fiscal 2018 to verify the effectiveness of thefunctions to provide information and security services at public
spaces crowded with a large number of unspecified customers.
As a result, the practicality of various functions necessary for the
dissemination of security robots has been verified, including continuous and safe automated patrols, the convenience of the function to provide customers with facility information using touch
panels and speech recognition, detection of suspicious individuals
using facial recognition and detection of intruders at the nighttime.

21

The ﬁrst guard robot
completed in 1985

REBORG-X undergoing
the Haneda Airport veriﬁcation test

ALSOK REPORT 2018

Creation of New Security
Realization of Urban Space Security with 5Gverification results on detecting anomalies on the hypothesisof fires, traffic accidents, etc.

In pursuit of sophisticated security services that utilize 5G
technologies, ALSOK participated, as a corporate partner,
together with NEC Corporation, in the “Comprehensive
demonstration test on the fifth-generation mobile communications system (5G) for the creation of a new market with therealization of 5G” sponsored by the Ministry of Internal Affairs
and Communications and implemented by NTT DOCOMO, INC.
in fiscal 2018. In the verification test, where security services
were assumed to be provided within facilities, it was confirmedthat accurate understanding of the circumstances is possible
as a result of the fact that the frequency of successful face
identification was significantly increased as the smoothness of
the images of the security guards’ wearable cameras improved
thanks to the ultra-high speed and high-capacity telecommunication capabilities of 5G.
In addition, as an attempt towatch over urban spaces from apanoramic perspective, averification test on wide-areamonitoring utilizing the 4K
high-resolution cameras installed
a t Te m b o D e c k o f T O K Y O
SKYTREE ® (340 meters above
ground) and the AI processing
servers was conducted, fromwhich we obtained effective

We aim to realize new security services systems capable ofmonitoring the entire urban space by commercializing thesetechnologies in the future. In addition, as illustrated in theconceptual image of the “modern-day watchtower,” we will
promote initiatives that enable us to create new platforms tocomprehensively provide safety and security in urban spaces in
the areas of not only security services but also as an alert for
natural disasters, watching-over of dementia sufferers toprevent such individuals from becoming lost, monitoring ofsocial infrastructure, etc.

Modern-Day Watchtower Concept
Malicious drones

High-resolution
cameras (4K)+AI

Bug’s-eye view

5G
base station

Fisheye view

Suspicious
individual

SpecifiedpersonLarge-sizedcommercial facilities, etc.

Bird’s-eye view

Bird’s-eye view

5G
base station
Fisheye view

Crowds fleeing
in terror

Runaway
vehicleTourist spots, etc.

High-rise buildings

Fisheye view

Security services
dronesWatching over

Disasters (fire, etc.)

Urban districts, etc.

Densely populated
residential areas, etc.

Initiatives for Security Operations at Large-Scale Events
In security operations at large-scale events undertaken inrecent years, ALSOK has worked to utilize ALSOK Zone
Security Management in which three-dimensional andcomplex monitoring is provided, making skillful use of not only
ALSOK Hyper Security Guard—security guards armed with ICT
equipment such as wearable cameras—but also various ICT
equipment including sensors, surveillance cameras, robots,
etc.
On another front, the keys to ALSOK’s Electronic Security
Services are the “automatic direct routing system*” underwhich servers in the Guard Centers centrally receive alarming
signals from the contracts, immediately detect the closest
security guard, and automatically issue an order to dispatch asecurity guard to the scene, and the “dispatch system” that
automatically sends customer information to the mobile deviceof that closest security guard to be dispatched.
ALSOK combines these systems developed to dispatch
security guards to customers’ places as swiftly as possible
with ALSOK Zone Security Management and pushes forward* The automatic direct routing system
is ALSOK’s proprietary system forwhich a patent was granted in 2012.

with initiatives toward the realization of efficient and effective
security operations at large-scale events. Additionally, we aim
to achieve more sophisticated security services throughcommercialization of high-resolution images, AI, 5G, etc.
We a re a l s o wo r k i n g o n t h e d eve lo p m e n t o f a “ S ta f f
communication tool” (tentative name) that allows all on-site
staff, including workers and volunteer members, to connect tothe monitoring center using a smartphone app for security
services communications. It is a system created to ensure thesafe and secure operation of events, under which potential
risks noticed by staff who felt there was something “odd” or“unusual” are consolidated to the monitoring center inreal-time via the app, and the closest security guard
immediately handles the situation. This means that all on-site
staff have the “eyes of security guards” and form a network as
a security community.
ALSOK Zone Security Management will continue evolving
going forward as well.

Staff communication tool under development (Conceptual image)22

ALSOK’s Business Operations■ Security Services Operations

Key Events from October 2017 to September 2018
■ Acquired Gunma Sohgo Guard System Co., Ltd. as a wholly owned subsidiary through a simplified share exchange (October 3, 2017)■ Conducted verification test analyzing camera images using AI (January 11, 2018)■ Launch of Assembly-Type Metal Detector (March 5, 2018)■ Formation of ALSOK Myanmar Security Services Co., Ltd. as an overseas subsidiary (March 12, 2018)■ Establishment of the Olympic and Paralympic Games Tokyo 2020 Security Consortium and assumption of a post as a co-leader (April 3, 2018)■ Commencement of trial operation of the ALSOK Traffic Control System (June 26, 2018)■ Launch of the 3D Laser Radar with highly precise detection performance (June 25, 2018)■ Participation in the smart city project of Kakogawa City (July 18, 2018)

Electronic Security Services

Introduction video(in Japanese only)

For corporate customers, the number of facilities that haveintroduced the electronic security services systems topped
500,000. We provide all-in-one services that satisfy diverse
needs including those arising from work-style reforms,
w h i c h i n c l u d e n o t o n ly A L S O K - S T ( re a d a s “A L S O K
Standard”), a standard security system equipped with
monitoring and management services for intrusions, fires,
equipment, etc., and image monitoring, but also ALSOK-GV(read as “ALSOK G-five”), which allows customers to browse
information related to when employees arrive at and leave
work, etc., and operate equipment remotely through a
website.
For individual customers, we proactively promote products
and services to protect the safety and security of residencesand daily life, and the number of households enrolled in
A L S O K ’s h o m e s e c u r i t y s e r v i ce s ( i n c l u d i n g h o u s i n gcomplexes) has surpassed 1.11 million. The contract
numbers of Home Security Basic, the current standard
model in ALSOK’s home security lineup; HOME ALSOK
Premium, which allows customers to check the camera
images themselves; and other services are steadily growing.
In addition, sales of ALBO eye, a personal security service
that requires no installation, and HOME ALSOK MIMAMORISUPPORT, which watches over the safe and healthy lives of23

senior citizens with Emergency Reporting services, etc., arealso increasing.
We aim to create, in the near future, electronic security
services that go beyond conventional intrusion detection
services to help prevent crimes and accidents before they
happen by utilizing, for example, analysis of images froms e c u r i t y c a m e r a s u s i n g A I , f a c i a l re c o g n i t i o n , 5 G
telecommunications, etc.

ALSOK REPORT 2018

Stationed Security Services

Introduction video(in Japanese only)

The Stationed Security Services segment continues to deliversolid performance as demand for security services is strong
due to such reasons as needs to outsource in-house security
operations on the back of labor shortages across Japan andconstruction of new office buildings and large-sizedcommercial facilities associated with urban redevelopments.
Going forward, we aim to improve our security services
capabilities in a broader range as well as in their swiftnessa n d a l s o o p t i m i z e c o s t s t h ro u g h t h e p ro v i s i o n o fstate-of-the-art security services that enable fast response tooccurrences or signs of an incident and collaboration between
security guards armed with IoT equipment combined with new
ICT, and the accumulated know-how in Stationed Security
Services. Through this, we help to resolve the difficult issue oflabor shortages in the security services industry.

Transportation Security Services

Introduction video(in Japanese only)

There was a strong trend in orders for Total ATM Management
Services according to the outsourcing needs of financial
institutions.
In addition, demand for the Cash Deposit and Dispenser
Machine On-Line System for retail stores and restaurants,
etc., is increasing with the progression of work-style reforms
and labor shortages as its backdrop.
In the meantime, discussions on the promotion of cashless
payments accelerated in Japan on account of improved
productivity, etc., and the needs for such payments is also
increasing rapidly in line with the increased number of
inbound travelers.
ALSOK will work to provide the Multi-QR Payment Solution, which supports cashless payments alongside the new cash management
services that merge register operation with the Cash Deposit and Dispenser Machine On-Line System, and thereby to provide
one-stop services for payment methods broadly ranging from cash to cashless.

Further Enhancement of Overseas Operations of the ALSOK Brand
Seoul(Representative office)

China
Myanmar
India

VietnamManila(Representative office)ThailandIndonesia

ALSOK currently operates its business in various Asian
countries. In these regions, approximately 4,000 security
guards who have completed ALSOK original education
provide ALSOK-quality services, and the security services
quality has received strong reputation from local
customers.
The International Affairs Division was newly set up in April
2018 to further accelerate the overseas operations of the
ALSOK brand. We strive to expand our overseas businesssubstantially by providing electronic security services andgeneral property management and fire protection
services on top of existing stationed security services, andwhat is more, by increasing business collaboration withlocal leading companies, among other things.

24

ALSOK’s Business Operations■ Non-Security Operations

Key Events from October 2017 to September 2018
■ Commenced collaborative service between PC Management Services and antivirus software MR-EP (March 29, 2018)■ Conducted verification test toward the “Realization of a safe and secure ICT environment” jointlywith the Wakayama Prefectural Board of Education and Wakayama University (April 6, 2018)■ Acquired Care Plus Co., Ltd. as a subsidiary (June 18, 2018)■ Conducted verification test of plant inspections using drones (July 2, 2018)■ Commenced the Solution for Improving the Safety of Internet Usage Environment (July 17, 2018)■ Commenced the ALSOK Multi-QR Payment Solution (August 20, 2018)

General Property Management and Fire Protection Services

Introduction video(in Japanese only)

The ALSOK Group is working to provide comprehensive property management
services, which encompass the maintenance, management, and operation ofvarious facilities, based on increased coordination between Group companies,
and receiving orders steadily for comprehensive building management services,cleaning services, and equipment installation work. In addition, needs fordisaster prevention and mitigation have increased due to natural disasters
occurring frequently throughout Japan, and sales of disaster preparedness
items such as stockpiles, batteries, and items for flood-control measures, andsmoke alarms for households are also growing.
In addition to the above, we boast a continued large share in AED sales in Japan,
with the aggregate number of units sold exceeding 150,000.
Outsourcing needs related to operation and management of buildings andfacilities are expected to keep increasing due to labor shortages. Accordingly, weare committed to enhancing the contents of our products and services including
the ALSOK Security and Equipment Service Package.

Long-Term Care Services

Introduction video(in Japanese only)

The ALSOK Group provides long-term care services in theTokyo metropolitan area and in other major cities, including
Osaka, Nagoya, and Sendai. At the core of the business are
three companies, namely HCM Corporation, ALSOK Care &Support Co., Ltd. and Wisnet Co., Ltd., and at present there
are 340 service bases and approximately 18,600 users (as ofMarch 31, 2018).

rehabilitation functions so as to keep enhancing our service
systems even more.
In addition, we aim to provide comprehensive services, which are
long-term care services provided by a security services company,that would lead to ensuring the safety of facility users throughcollaboration with security services, provision of safety andsecurity for users and their families, and improved convenience.

A broad range of services are provided on a Groupwide basis,
ranging from in-home care services to in-facility care services,
and a system has been put in place to be able to meet diverse
customer needs. Meanwhile, social interest in longer healthy life
expectancy and improved physical functions is increasing, andthe long-term care insurance system is pointing the way toward
increased emphasis on supporting independence. In this recent
context, the Group acquired Care Plus Co., Ltd., which provides
visiting medical massage, to enhance our services. We will work
to strengthen collaboration with medical institutions andVisit by ALSOK-certified athletes Kanae Yagi (right) and Namika Matsumoto (left)to one of our long-term care facilities

25

ALSOK REPORT 2018

Other Services
protect the safe working environment in such ways as to ensure
the safety of working women who meet their customers alone
and to prevent employees working in factories and construction
sites from getting involved in accidents. Our watching-overservice involving a whole local community that uses lightweightand miniature MIMAMORI Tags and a smartphone app isselected by many municipal governments as a measure to watch
over senior citizens with dementia, etc.

Sales of services in the information security field that address
cyberspace threats and safety confirmation systems, anindispensable part of companies’ business continuity plans(BCPs), have been strong.
In the information security field, in particular, those withexperience in personnel exchanges with the Center for Financial
Industry Information Systems (FISC) are playing an active role.
The ALSOK PC Management Service in which ALSOK’s
Information Security Services Monitoring Center carries out
various operations related to information security on behalf ofthe contracts, including software version and license
management which are becoming increasingly complex following
the widespread use of tablets and other smart devices, has beendrawing more attention as a service capable of strengthening
cybersecurity and reducing the operational
workload of people in charge of security at the
A Branch
contracts.
MAMOLOOK, a GPS-equipped multifunctional
mobile security terminal, meets needs to watch
over children and senior citizens outdoor. Needfor the product is also increasing as a tool to

In addition to the foregoing, we are proactively promoting solution
services for addressing types of crises that have been frequently
occurring in recent years including support for countermeasuresagainst disasters caused by volcanic eruptions, flooding, wildlife
damage, etc., and our telegram service which takes advantage of
the ALSOK Group’s nationwide network, among other things.
Headquarters
ReportReducing
the workload
Servers

Monthly inspections

B Branch

Review of the operation history

PCs

Smartphones

Monthly reports

Agency service

Review of the operation history

Software renewal

Software renewal

IT equipment management

IT equipment management

Information Security Services
Monitoring Center

ALSOK PC Management Service

Establishment of the Olympic and Paralympic GamesTokyo 2020 Security
Consortium and Assumption of a Post as a Co-Leader
ALSOK established the Olympic and Paralympic GamesTokyo 2020 Security Consortium andassumed a post as a co-leader to contribute to the realization of the “safety and security” of
the Olympic and Paralympic Games Tokyo 2020. As a Tokyo 2020 Official Partner, ALSOK had
engaged in continuous discussions on the security framework for the Olympic andParalympic Games Tokyo 2020 with the Tokyo Organising Committee of the Olympic and Paralympic Games, etc. As a result,the “all-Japan structure” was determined to be the best measure available, where participation is made by not only twopartner corporations in the Security Services and Planning category but also many other security services companies.
Accordingly, the so-called joint venture method was selected to pursue the event’s success.
We are committed to firmly fulfilling our role as a co-leader of the Olympic and Paralympic GamesTokyo 2020 Security
Consortium and channeling all our efforts into contributing to the realization of the “safe and secure” event throughconcerted efforts of the whole industry.

Note: ALSOK is a Tokyo 2020 Official Partner (Security Services and Planning).

26

CSR Management

To ALSOK, CSR entails remaining ever mindful of the expectations of customers and society at large andexercising its management philosophy based on the principles of “arigato no kokoro,” an ever-present feelingof gratefulness and gratitude, and “bushi no seishin,” a strong and noble samurai spirit that emphasizes
toughness, fairness, and generosity as well as teamwork and unity.

ALSOK’S CSR Policy
Since its founding in July 1965, the Company has continued to develop its
security services business based on its fundamental spirit, which is definedby the two principles set out in its management philosophy of “arigato no
kokoro” and “bushi no seishin,” and with a strong sense of commitment toprotecting the safety and security of customers and society.
We believe that CSR entails protecting the safety and security of society bycontributing to the resolution of the issues faced by customers and society
through our business activities. To facilitate this undertaking, ALSOK has
established its management policies and code of conduct as well as aframework of internal regulations and rules. Furthermore, the Company hasoutlined issues to address in its CSR activities, giving a clear structure to its
CSR ideals. The management policies set out the principles of how the
ALSOK Group should engage with its stakeholders. The code of conduct
defines how all members of the Company, including employees andexecutive officers, should act in carrying out their daily business activities.
The Company has also established various internal regulations and rules
related to specific issues. Based on these guidelines, we are incorporating
CSR activities into all areas of our business operations.

Management
Philosophy

Management
Policies

Code of Conduct

Internal Regulations and Rules

In 2014, we defined four material CSR themes as specific pillars of our CSR activity policy to pursue ongoing improvements incorporate value while developing our business. We also facilitate CSR activities to resolve social issues from a global perspective
through verification of compliance with the Sustainable Development Goals (SDGs), which were adopted by the United Nations withthe aim of resolving some of the major problems affecting the world.

AL SO K C h a r te r
Management Philosophy

Based on two core principles exemplified by “arigato no
kokoro” (a feeling of gratefulness and gratitude) and “bushi noseishin” (a samurai spirit), we devote ourselves to protecting
the safety and security of our customers and of society as awhole.
Management Policies

1. Fundamental Spirit

3. Basic Strategy

Under any condition that we face, we work hard to live by a

While security services remain at the heart offundamental spirit that reflects our management

our business, as our basic strategy, we also

philosophy—as exemplified by a feeling of gratefulness andseek to offer a diverse range of products andgratitude and a samurai spirit based on toughness, fairness,

services in new fields to satisfy the needs ofand generosity—to be a highly principled company.

the everchanging times.

Code of Conduct

1. We will devote ourselves to serving our customers andsociety as a whole in a way that reflects a feeling ofgratefulness and gratitude.

2. We will embody a samurai spirit in everything we do based on
toughness, fairness, and generosity, standing firm in the faceof adversity and banding together to embrace success.

3. We will value autonomy in our actions, empowered by “yacho
seishin” (the spirit of a wild bird)—which represents
independence, self-respect, perseverance, acuity, andtenacity—and take responsibility for delivering results.

4. We will carry out our day-to-day activities based on theprinciples of sincerity, accuracy, strength, and speed.

5. We will know no complacency, always marching forward

2. Priority

4. Contributing to Society

Our top priority is to provide products and services of the first

Allying ourselves with public bodies charged

rank, while cultivating the highest levels of motivation in ourwith protecting public safety and security,

employees and living up to shareholder expectations throughwe com mit o u rs e lve s to deve lo pin g

attractive profit growth.

value-adding products and services, thereby
always contributing to society.

27

purposefully while growing and refining our business tocontinue to provide value to customers and to society as awhole, thereby continuing to be relevant.

6. We will pursue perpetual self-improvement and remain
highly committed to compliance, thereby attracting andnurturing human resources of the caliber worthy of theindustry leader.

ALSOK REPORT 2018

Initiatives for Realizing Sustainable Improvement in Corporate Value
Material CSR Theme

1

Providing Products and Services
That Help Resolve Social Issues
Material CSR ThemeALSOK’s
CSR
ALSOK facilitates
its CSR activities basedon its corporate philosophy.

2

Cultivating Human Resources
and Building a Comfortable
Workplace Environment
Material CSR Theme

3

Contributing to Local Communities
through Active Communication
Material CSR Theme

4

Providing Trustworthy Security Services
Consideration for the
Global Environment

CSR Promotion Framework
The ALSOK CSR Office takes the initiative in strengthening theCompany’s CSR promotion framework. In addition to our
in-house quarterly ALSOK CSR Newsletter and our CSR
Activities Guide, we hold CSR seminars and workshops for
newly promoted managers to cultivate a CSR-based mind-set
in all employees.
Furthermore, we conduct CSR activity surveys of employees atthe Head Office, branches, and all Group companies once
each year to collect quantitative and qualitative information on
the state of ESG matters within the Group. Since the fiscal
year ended March 31, 2015, the Company has published
ALSOK REPORTS, a series of yearly reports that compile, in aneasy-to-understand manner, both financial and non-financial

ALSOK has been included in the FTSE4Good
Index Series, a socially responsible
investment index, for 11 consecutive years.

information on the ALSOK Group’s activities to provide a more
integrated view of the link between the Group’s businessactivities and CSR activities. Meanwhile, we provide morerobust disclosure of information related to CSR activities and
ESG initiatives through our corporate website.
As a result of these efforts, ALSOK has been recognized byexternal institutions as a company that exercises its social
responsibility from an ESG perspective. Such institutions havethus selected the Company for inclusion in various investment
indexes.

ALSOK is included in the FTSE Blossom
Japan Index, an ESG investment index.

ALSOK is included in the MSCI Japan ESG SelectLeaders Index, an ESG investment index.

28

Initiatives for Realizing Sustainable Improvement in Corporate Value

Material CSR
Theme

1

Providing Products and Services
That Help Resolve Social Issues

Relationship with SDGs

ALSOK offers a multifaceted lineup of services that help resolve
issues faced by customers and society through an accurate
understanding of changes in the natural environment and social
trends by leveraging its security services expertise.

Development of Communities Where Everyone Is Safe
Emergency Reporting System to Protect Senior
Citizens and Differently Abled Individuals

MIMAMORI Tag Service Watches Over Children andSenior Citizens in Our Communities

ALSOK’s Emergency Reporting System was developed withthe goal of watching over senior citizens and differently abledindividuals. Due to the lack of personnel and the significant
burden on individuals, the number of municipalities
contracting with ALSOK to provide this service has been
increasing. Our Emergency Reporting System allows our staff
to visit and enter individual residences, with staff being given
spare keys, in response to emergency alerts and requests forsafety confirmation checks; the system also includes a healthconsultation service provided by certified nurses and otherpersonnel, and is popular. The Emergency Reporting System
has been adopted by Chiba City, Sendai City, and many othermunicipal governments.

In cooperation with individual municipal governments and support from
communities, ALSOK promotes the development of communities wherechildren and senior citizens live securely through its MIMAMORI Tag
Service. For example, with regard to safeguarding children, we have been
entrusted with the implementation of the ICT Safe and Secure Social
Infrastructure Development and Maintenance Project, which uses
custom-made detectors and security cameras placed along schoolroutes in Kakogawa City. In addition, our services were adopted for the
Smart Wellness Housing Test Project initiated by the Ministry of Land,
Infrastructure, Transport and Tourism to watch over senior citizens withdementia. Currently, ALSOK is collaborating on this project with 10
municipal governments throughout Japan to create regional networks forwatching over residents. This project has already contributed to locating
missing persons.

Number of Municipal Governments
using ALSOK’s Emergency
Reporting System(As of March 31, 2018)

474

MIMAMORI Tag (left) andMIMAMORI Tag Detector(right) that contributes to thedevelopment of regional
networks

Development of Products and Services that Respondto the Shrinking of the Labor Force in Japan
Comprehensive Property Management Service—
ALSOK Security and Equipment Service Package
Due to the rapidly declining population, decreasing birthrate,
and aging population, a wide range of industries have faced
serious shortages of human resources and difficulty securing
staff required to maintain their buildings.
Since 2017, ALSOK has provided the ALSOK Security andEquipment Service Package through its Group network. This is
a comprehensive building management service that seeks tooptimize building and facility management, and which
includes security, equipment management, cleaning, andother value-added services.

Drone Aerial Photography Services for Petroleum Plants
ALSOK is developing solutions to energy plant maintenanceand management issues such as dangerous high-elevation
work, high costs, and a lack of skilled operators. In July 2018,
we used drone aerial photography to validate effective andsafe inspections for a flare stack, a pipe used to carry
unwanted gas generated in the manufacture of petroleum
products so they can be burned off and detoxified.

Management Services Responding to Aging
Social Infrastructure
Aging social infrastructure has also become a serious issue
for municipal governments facing a lack of human resources.
ALSOK’s wide range of maintenance and support services,such as road surface monitoring and bridge and tunnel
inspections, contributes to the prevention of disasters causedby accidents.

29

Drone aerial photography services
for petroleum plants

ALSOK REPORT 2018

Measures against Frequently Occurring Natural Disasters
Flood Control Act Response Solutions

Underpass Monitoring Service

The Flood Control Act was revised in 2013 to enhance disasterprevention measures, maintain public safety, and mitigate
damage when powerful typhoons and record-breaking
torrential rain occur. This revision specified the obligation ofmanagers of underground shopping complexes and otherfacilities which face the risk of damage that can quickly
become serious enough to put human lives at risk to establish
evacuation and flood prevention plans, implement drills, andestablish independent flood control organizations. The revisionin 2015 added the obligation to seek the opinion of the owners
and managers of connected buildings. Management
responsibility has increased each year.

Flooding often occurs on roads during typhoons andhard-to-predict downpours of rain in concentrated areas. The
depth of water collecting in underpasses*, the structure ofwhich tends to cause water to collect there, is hard to
estimate, and this increases the risk of accident and damage.
ALSOK offers an Underpass Monitoring Service that helps toprotect vehicles from accidents caused by flooding, byimplementing emergency communication that makes use of
weather information, flooding sensors that can detecthazardous water levels, and security cameras, in combination
with automated roadblocks.

ALSOK provides Flood Control Act Response Solutions for
integrated risk-management support, covering every stage
from the establishment of plans and the implementation oftraining and drills, through to the implementation of effective
response when facilities have become flooded, so as to ensure
the safety of facility users and employees.

* The lower road at grade separations

Predicting sudden downpoursin concentrated areasfrom meteorological data

Remote control of air-operated
blocking devices
by the order of municipal governments

Reporting the status of individual sites
to municipal governments
after photographic confirmation
Air-operated blocking devices(During flooding)Air-operated
blocking device

Monitoring camera
at an automatedroadblock
Vehicles entering
an underpass

Underpassmonitoring camera

River Monitoring Solutions

Sluice pipe operations
Ultrasonic-type level gauge

ALSOK facilitates flood prevention by monitoring river waterlevel with ultrasonic-type level gauges and the operation ofsluice pipe gates. While ALSOK is commissioned to monitor
the measurement devices for rivers and dams in Joso City,
Ibaraki Prefecture damaged by the torrential rains in the
Kanto and Tohoku regions in 2015 and Kyushu Regional
Development Bureau offices in Fukuoka Prefecture, it also
controls sluice gate operations at Yokkaichi Port in Mie
Prefecture.

Emergency Kits for Disaster—Emergency Supply Kits for Senior Citizens
ALSOK launched emergency kits in May 2017 for use by senior citizens requiring nursing careand other individuals during evacuation when disaster strikes. Based on the opinions of staff
from the ALSOK Group’s nursing care company who had experienced the 2016 Kumamoto
earthquakes in Japan, we selected essential items for senior citizens during evacuation, suchas food, including liquid nourishment, daily commodities, and nursing care products.

30

Initiatives for Realizing Sustainable Improvement in Corporate Value

Material CSR
Theme

2

Cultivating Human Resources
and Building a Comfortable
Workplace Environment

Relationship with SDGs

ALSOK is constantly working to improve the workplace environment toenable human resources, which are the base of sustainable growth for
the Company, to fully exercise their talents through the enhancement oftraining systems, active support for career development, and thepromotion of diversity.

Development of Human Resources That Embody ALSOK’s Philosophy
Employee Skill Improvement Programand Their Career Development
The ALSOK Group takes the initiative in improving educationand training systems aiming to cultivate human resources
capable of embodying their commitment to doing their utmost
to protect the safety and security of customers and society,which is the goal of its corporate philosophy.
Through the Employee Skill Improvement Program, we
continuously improve ALSOK’s correspondence education
programs, which now include 110 courses. Considering
globalization and the Olympic and Paralympic Games Tokyo
2020, ALSOK has newly provided its Introduction to Chinese
Conversation with Hospitality in addition to the existing
English, Korean, and Spanish programs it offers to improve
multilingual conversation skills. ALSOK also operates the
ALSOK LIBRARY. Boasting 3,671 books as of March 31, 2018,t h e A L S O K L I B R A R Y p rov i d e s e m p loye e s w i t h b ro a dopportunities to read.
To invigorate its organization and facilitate human resource
development, ALSOK actively conducts personnel exchanges
within the Group as well as with central government agencies
and other companies. In addition, we recruit security solutions
staff for providing security services to Japanese embassies
and consulates overseas through an internal open application
system and are thereby working to cultivate employees thatcan function globally. This open application system is used to
discover and develop human resources capable of working inand forming the core of not only our mainstay security
services operations but also operations in various other fields,such as long-term care services.

Training

Respect for Human Rights and Diversity
Promoting Diversified Human Resources
ALSOK has developed frameworks to enable diverse humanresources to fully exercise their talents. We place effort inproviding approximately 8,500 female employees (including
part-time employees, as of March 31, 2018) with a workplaceenvironment that empowers them. These efforts have received
a high degree of external recognition.
In February 2017, ALSOK was certified as an “Eruboshi”
company by the Ministry of Health, Labour and Welfare ina cco rd a n ce w i t h t h e A c t o n P ro m o t i o n o f Wo m e n ’s
Participation and Advancement in the Workplace. In August
2018, the Company met the standards in all areas forcertification as a Level 3 company, the highest rank. In April
2018, our efforts to ensure a working environment that enables
female employees to exercise their talents were recognized by

31

the Japan Productivity Center with the Encouragement Awardof the 3rd Women Empowerment Award.
In 2010, ALSOK Business Support Co., Ltd., a speciallycertified subsidiary under the Act on Employment Promotionof Persons with Disabilities which undertakes business card
printing, print-on-demand (POD) business, etc., wasestablished as part of our efforts to normalize the presence ofdifferently abled individuals in the workplace and ensure
employment exceeding the statutory rate. Furthermore, wehave implemented a Groupwide framework to rehire
employees that have undergone mandatory retirement andplace them in the ideal position. Effectively utilizing the skillsof employees that would have otherwise retired is contributing
to improved productivity.

ALSOK REPORT 2018

ALSOK promotes respect for human rights and different
cultures overseas. In Thailand, we actively promote theadvancement of female employees in the sales department,
and promote career development through improvement of thematernity leave system. We also provide an in-house place ofworship in Indonesia for Muslim employees and makebusiness rotation plans to allow all Muslim employees time
for worship. ALSOK continues to prioritize consideration fordifferent cultures.

Women Empowerment Award ceremony

Eruboshi certification logo

Work-Style Reforms and Work–Life Balance
Enforcement of Welfare System

Work-Style Reform Action Plans

ALSOK puts effort into improving the working environment sothat employees can continue to work with peace of mind, while
enjoying a better work–life balance.

For a company to continue to grow, its employees must havefulfilling professional and private lives; and the working
environment must energize employees.

We also offer ALSOK LTD, long-term disability insurance
designed to help replace lost income in the event that an
employee is unable to work for an extended period. We also
provide a wide range of
we l fa re p ro g ra m ssuch as special
discounts for sports
facilities and hotels, sothat employees canenjoy satisfying,high-quality leisuretime.

To realize highly efficient and productive employee work
styles, ALSOK implemented its 3-year Work-Style Reform
Action Plans starting from April 1, 2018. We set numericaltargets to correct long overtime work, increase the use of paid
leaves, and promote flexible work styles. In addition to
currently implemented no-overtime workdays (twice perweek), we also promote specific action plans such as the
Platinum Holiday System for long-term paid leave.

By the end of March 2021
Rate of Annual
Paid Leave Use

Number of
Female Employees

Overtime
Working Hours

Improvedby%Improvedby%

Reducedby%(Compared with
March 31, 2018)(Compared withfiscal 2018)10(Compared with fiscal 2018)

5

5

Promotion of Health Management
Health Management for the Company and Employees
Ensuring occupational health and safety, and helping
employees maintain sound physical and mental health isvitally important for a business enterprise. Accordingly,
ALSOK has established occupational health and safetycommittees at all offices and has formulated targets for theprevention of occupational accidents. We are also developing
and instituting occupational health and safety education
programs. Through these efforts, we seek to ensure safe
workplaces and employee health. In addition, ALSOK is apartner to the Ministry of Health, Labour and Welfare’s Action
Plan for Companies Promoting Cancer Prevention Program.
As a partner, we incorporate more extensive tests into regular
health examinations and enable screenings for multiple
cancer types to be conducted simultaneously. We also hostHustle Weight Loss Games (a collaborative health event) and
Aruchokku Challenge (promoting walking) each year incooperation with the ALSOK Health Insurance Society. These
activities help employees manage their health with enjoyableways to address lifestyle diseases. Furthermore, the ALSOKSupport Line, a mental health help desk, has been established

to offer flexible responses to the concerns of employees andtheir families (currently available at 44 Group companies).
Such unified efforts for health management by the Company
and employees were recognized under the 2018 Certified
H e a l t h a n d P ro d u c t i v i t y M a n a g e m e n t O rg a n i z a t i o n
Recognition Program (White 500) for two consecutive years
from 2017.

Employee undergoing a health examination

32

Initiatives for Realizing Sustainable Improvement in Corporate Value

Material CSR
Theme

3

Contributing to Local Communities
through Active Communication

Relationship with SDGs

To give form to “arigato no kokoro” (a feeling of gratefulness andgratitude)—part of ALSOK’s fundamental spirit—the Company acts as agood corporate citizen, diligently working to contribute to the resolutionof the various issues faced by the communities it serves.

Contributions to Safety for Communities Utilizing
the Know-How of Security Services
Safety for Children

Safety for Senior Citizens

With the aim of responding to the requests and expectations oflocal communities for safety and security, the ALSOK Group
dispatches its employees, who are safety professionals, toelementary schools throughout Japan to conduct the ALSOKANSHIN KYOSHITSU program. This program teaches children
crime prevention and first-aid skills. The program has beenrunning for 14 years, and over 45,622 classes have been
conducted with the participation of more than 1,426,000
children (as of March 31, 2018).

Using its know-how in senior citizen support and the nursing
care business, ALSOK holds its ALSOK HOTTO LIFE KOZA, avisiting class program that includes two types of class: onethat teaches senior citizens about recent trends in the
categories of crime targeting their age group, and how toprotect themselves against these types of crime, and one
designed to teach participants how to use an AED in the eventthat their partner or another family member has collapsed. In
fiscal 2017, ALSOK conducted these two classes on 95
occasions for a total of 2,477 participants. In addition, ALSOK
security staff approached senior citizens using their mobile
phone at ATMs to guard them against falling victim to banktransfer scams targeting senior citizens. In fiscal 2017, ALSOK
helped to prevent 99 bank transfer scams. For this effort, we
received 53 letters of appreciation from the relevant
authorities.

ALSOK also hosts activities that teach children the importanceof the security work that helps to keep communities safe andsecure. Together with the Future Innovation Forum, anorganization that collaborates with companies to advancesocial contribution activities, ALSOK holds an annual work
experience program for elementary school students. The fifth
iteration of this program in July 2017 was based on the themeof The Frontline of Security. Students participating were given
the opportunity to experience cutting-edge technologies using
drones and security techniques of the future using AI whilelearning the principles and basic skills of guard work. In April
2018, ALSOK held an exhibit at Manabi no Fes 2018 Spring, anannual hands-on education event for elementary school
students and their parents sponsored by The Mainichi
Newspapers Co., Ltd. This exhibit included an emergency
first-aid experience activity using the SHIN-NO-SUKE-KUN
chest compression training machine, which displays users’“score” so that they can see how effectively they have
performed.

ALSOK HOTTO LIFE KOZAWork experience program—On the Frontline of Security

Safety for WomenALSOK holds an ALSOK Women’s Crime Prevention Seminar visiting seminar. Our
female staff familiarize female college and vocational school students—who belong toan age group which is statistically particularly likely to become a victim of crime—withcase studies of crimes targeting women, and teach them practical techniques for
defending themselves. In fiscal 2018, we held 55 seminars, with a total of 2,418
participants.

Number of Crimes against Women (per 100,000 people)
1,197
645

← and Vocational School-Age Students
Female College

623

555

422

353

264

Less than Women in Women in Women in Women in Women in Women in (Age)20 years
their 20s their 30s their 40s their 50s their 60s their 70s
of ageSource: “Crime Trends 2013” by the National Police Agency of Japan.
The numbers are rounded down to the nearest decimal.

33

ALSOK REPORT 2018

Donations, Patronage, and Sports Promotion Activities
Support for the Next Generation

Contribution to Culture and the Arts

ALSOK donates enthusiastically to various causes as part ofits social contribution activities. Since 2017, ALSOK has
donated a portion of its profits from home security-related
products through the Fund to Support Children’s Future
established as a part of the National Movement to Support
Children’s Future promoted by the Cabinet Office. Our
donations have been used for NPOs engaged in helping
children suffering from poverty.

ALSOK’s business provides security services to protect historical buildings and natural heritage sites that have been designated as World Heritage. In addition, the Group supports thecontinuation of traditional events, encourages employee participation to contribute to their success and provides patronage for local culture and arts. One of the Company’s club
activities is the ALSOK SHISHIMAI (Lion Dance) CLUB. Members of this club receive instruction from a master of the Daikagura lion dance and perform their dance at customer companies and events around the New Year season. This clubs
activities have been certified as a This is MECENAT 2018 activity by the Association for Corporate Support of the Arts out ofrecognition of how these corporate activities contribute toenriching society through culture and the arts.

Lion dance performedby ALSOK SHISHIMAI CLUB

Catalog presentation
by ALSOK

Promoting and Supporting Sports

Para Athletics Track and Field–200m
Yoshimasa Kitaura[ALSOK Business Support Co., Ltd.]ALSOK currently has a total of 10 sports clubs, including its
prestigious wrestling club as well as its judo, weight lifting,marksmanship, and track and field clubs. These clubs havecontributed to promoting sports in Japan by producing
numerous national team athletes and world champions.
Currently, we also make a concerted effort to provide support
to para-athletes in track and field and goalball who have set
their sights on international competition.
Goalball
Haruka WakasugiPartnerships for Supporting Disaster Relief
Disaster Volunteer Activities

Post-Disaster Restoration Support

The ALSOK Group has been engaging in restoration support
activities for regions heavily impacted by natural disasters
through partnerships. Sixty-eight ALSOK employees headed to
Northern Kyushu as volunteers to help residents remove mudand clean houses after torrential rains hit in 2017. ALSOK
employees were engaged in volunteer activities in Fukuyama
City, Hiroshima Prefecture, Kurashiki City, Okayama
Prefecture, and Ozu City, Ehime Prefecture, regions
significantly damaged by torrential rain in July 2018.

ALSOK strives to create bonds with people in regions damaged bydisasters. ALSOK has participated in the “Watashitachi wa Wasurenai(We Will Never Forget) – Carrying Rehabilitation Assistance into the
Future” disaster reduction and prevention project implemented by
the Japanese Red Cross Society since 2016, and spreads awarenessof our determination not to allow the lessons and experiences accumulated in the past
to be forgotten byd i s p l a y i n g“Watashitachi wa
Wasurenai” project
stickers on all
security businessvehicles, etc.

34

Initiatives for Realizing Sustainable Improvement in Corporate Value

Material CSR
Theme

4

Providing Trustworthy
Security Services

Relationship with SDGs

ALSOK is expected to maintain high levels of social trust while acting in ahighly ethical and disciplined manner. We therefore position complianceand business continuity as management issues of extreme importance, andare advancing various initiatives in relation to these matters.

Stringent Compliance Education
Promoting Compliance throughout the GroupALSOK has established a Compliance Committee headed by the
executive officer in charge of compliance. The committee strives
to spread and install an unwavering awareness of compliance inall executive officers and employees based on rules formulated in
2002. We also promote compliance throughout the Group withactive campaigns, education and training.
In addition, the ALSOK Hotline was set up in April 2004 to
facilitate reporting and consultation regarding harassmentand other inappropriate corporate behavior. If employees
encounter legal issues, improper conduct, or unethicalbehavior, they are able to report such instances using thisvenue without fear of detrimental treatment. The ALSOK
Hotline is based on the principles of the protection of thereporter, the prevention of detrimental treatment, and theability to report anonymously and is thus able to safeguard
corporate value by ensuring that illegal or improper conduct isquickly detected. As of March 31, 2018, the ALSOK Hotline wasavailable to the employees of ALSOK and 73 Group companies.

Compliance-Related Campaigns in the
Fiscal Year Ended March 31, 2018
PeriodTheme

Apr.–May

Thorough labor management to prevent excessive
work hours and unpaid overtime work

Jun.–Jul.

Education on complianceAug.–Sep.

Compliance with traffic-related laws and regulations,and company regulations

Oct.–Nov.

Thorough management of compliance as an insurance agency

Dec.–Jan.

Compliance with business-related laws and regulations

Feb.–Mar.

Prevention of information leaks through appropriate useof information systems

Booklets provided
to all employees

Measures for Protecting and Managing Information Assets
Approaches to Information Security
Because the ALSOK Group receives important information from
customers through security contracts, the appropriate protection andmanagement of information assets is essential. With this in mind, weestablished a Basic Information Security Policy in 2004 to apply to all
employees, including executive officers, and all information assets
while promoting acquisition of certification under ISO 27001, theinternational standard for information security management systems.
As of March 31, 2018, ALSOK and 16 Group companies had acquired
this accreditation. In addition, the Company has established an internal
computer security incident response team (CSIRT) as a precaution for
the risk of serious information security breaches.

35

The ALSOK Group conducts periodic security diagnostics on all internal
systems and systems necessary for the provision of its security
services. In addition, the Company periodically sends e-mails similar to
the type used in targeted e-mail attacks to employees to ensure that all
employees are able to respond appropriately to everchanging
cyberattacks to quickly detect threats and prevent the spread ofdamage that may shake the very foundations of the ALSOK Group.
As a security company responsible for protecting
customers’ lives and assets, ALSOK strives
continuously to achieve even higher levels of
personal information management. One example
of our efforts is acquisition of PrivacyMark ®
accreditation in July 2013.

ALSOK REPORT 2018

Improvement of Security Service Quality and Customer Satisfaction
In-House Competitions and Quality
Improvement Activities
The ALSOK Group continues to hold the Sohgo Security Alliance Quality
Improvement Tournament to encourage employees to improve theirskills as a way to enhance the quality of security services. At the eighth
tournament in November 2017, a total of 210 employees advanced frompreliminary tournaments held across Japan to put skills honed throughdaily operations to the test in the main tournament’s 17 events. Taking
account of the expected increase of visitors from abroad for international
conferences and sports events, we included events in language service
and luggage inspection categories in anticipation of the need to manage
multilingual services and accommodate wheelchair users. The second
Presentations of Quality Improvement Initiatives by the ALSOK Group
Long-Term Care Service Companies were held to share outstanding
examples of our services among Group companies.

The ALSOK Group approaches quality improvement through a wide
range of initiatives. For example, we established the ALSOK Standards toclarify numeric targets for compliance and the quality of customer
services. We also compile customer input (both complaints and praiseto ALSOK Group companies from customers and the general public) topromote improvement. In 2017, we implemented a policy of dispatching
female security guards and technicians to respond to female customers
living alone in principle. We post customer input on the CS Message
Board on our Company intranet; by sharing information about customer
service improvement activities, we aim to improve customer service andcustomer satisfaction.

Breakdown of Customer Input Reports Compiled by ALSOK(Fiscal year ended March 31, 2018)

Reports of Praise

Language service category
Luggage inspection category

Reports of Complaints

3,065 1,009

Business Continuity Management
Business Continuity Planand Preparation for Emergencies
ALSOK has established a business continuity plan (BCP) in preparation
for a wide range of potential disruptions such as major earthquakes,
typhoons, and other natural disasters, system malfunctions, terrorism,
and outbreaks of new strains of infections. Based on this BCP, weacquired certification under ISO 22301, the international standard forbusiness continuity management system (BCMSs), in March 2014 toensure preparedness for all potential risks. Under the BCP, a disaster
response correspondence office is promptly established when thedamage caused by natural disaster threatens to spread or when adisaster warranting a Companywide response has been predicted. Such
offices were formed nine times in the year under review as necessary to
respond to natural disasters, including earthquakes and typhoons, andwe were thereby able to provide swift responses to these disasters.
ALSOK has also created its own disaster manual based on experienceduring actual disasters to increase the effectiveness of its preparation for
emergencies. In 2017, we revised the Disaster Manuals (Preparation,
Disaster Response, and Miscellaneous Knowledge Editions) and theDisaster Response Correspondence Office Manual. Furthermore, the
ALSOK Group conducts comprehensive disaster response drills twice ayear to prepare for natural disasters and conducts drills four times a year

for employees reporting to duty on foot and for safety confirmation toensure preparedness for any emergency. In addition, individual offices
coordinate disaster response drills with community members to prepare
for emergencies. For example, our Transportation Security Services
Branch Kinki conducted fire-fighting drills using indoor fire hydrants,
carrying injured individuals and cardiopulmonary resuscitation using an
AED in cooperation with the Higashinari Fire Department in Osaka.

Joint disaster
response drills
with the fire station

36

Initiatives for Realizing Sustainable Improvement in Corporate Value

Consideration for the Global Environment
Relationship with SDGs

Understanding that environmental issues affect all of humanity, ALSOK is working to reduce
the environmental impact of its operations and has set goals for the reduction of CO2 emission
and other environmental indicators while engaging in initiatives to address climate change andpreserve the natural environment. The Company shapes such initiatives based on the United
Nations Framework Convention on Climate Change and other global consensus and targets.

Environmental Management and Environmental
Initiative Promotion Systems
Recent years have seen increased movement toward
establishing global consensus and targets related to theenvironment, including the United Nations Framework
Convention on Climate Change and the Paris Agreement,
which was negotiated at the 2015 United Nations Climate
Change Conference. In April 2006, ALSOK established theGreen Purchasing Guidelines to guide it in developing its
business while exercising a greater degree of responsibility for
global environmental issues. We coordinate with suppliers andbusiness partners (supply chains) in a drive to step up
environmental preservation initiatives that encompass the
manufacture, use, and disposal stages of our productl i fe c y c le s . Fu r t h e r m o re , t h e C o m p a n y e s t a b l i s h e denvironmental policies and acquired ISO 14001 certification forcertain operating sites in 2016 to help realize a sustainable
society. The Environmental Committee plays a central role in
implementing a plan–do–check–act (PDCA) cycle with regard
to our environmental management system in order to promote
eco-friendly action on a Companywide level.

Environment-related committees using electronic data to increase consideration for the environment

Green Purchasing Guidelines

Environmental Policies

ALSOK endeavors to use resourcesm o re e f fe c t i v e ly i n t h e s e c u r i t yequipment it employs and to limit
waste. At the same time, the Company
coordinates with business partners topromote environmental preservation
initiatives that encompass the
manufacturing, use, and disposal
stages of the Company’s productlifecycles.

As a leader in providing security and otherrelated services, ALSOK recognizes that global
environmental concerns are common issues forall of humanity. Exercising the principles of“arigato no kokoro” and “bushi no seishin” describedin its management philosophy, the Company
formulates environmental policies and institutes
ongoing improvements to its environmental
management system to contribute to therealization of a sustainable society.

New Environmental Targets
Humanity is currently facing global warming and the loss ofdiversity arising from deforestation and marine pollution. In
light of this situation, the Japanese government hasannounced its Plan for Global Warming Countermeasures.
With the fiscal year ended March 31, 2014, as the base year,
this plan puts forth a medium-term target of achieving a 26%
reduction in total greenhouse gas emissions by the fiscal yeare n d i n g M a rc h 3 1 , 2 0 3 1 , a n d a l o n g - t e r m t a rg e t o f
accomplishing an 80% reduction by 2050.
Following this example, in 2017 ALSOK set a new short-termtarget of achieving a year-on-year decrease of 1.4% in CO2emissions each year leading up to the fiscal year ending
March 31, 2021. (Results of the fiscal year ended March 31,2018 revealed a 1.0% reduction compared with the previous
term.) We also set a new medium-term target of achieving a
26% reduction for the fiscal year ending March 31, 2031, fromthe level in the fiscal year ended March 31, 2014, and a newlong-term goal of reducing CO 2 emissions by 80% of thisyear’s level by 2050.

37

CO2 Emissions Reduction Targets Leading Up
to the Fiscal Year Ended March 31, 2017,
and New Short-Term Targets and Performance（t-CO2）Previous target
Achieve an average decrease of

42,00040,971.0

39,942.0

1.0%

10.3

Successfully achieved%
reduction in the fiscal year ended
March 31, 2017

41,377.0

each year
39,587.0

40,000(vs. the fiscal year ended
March 31, 2010)

39,212.0
38,022.0

38,00037,390.0
36,649.0

36,000

New target

36,291 decrease of 1.4% each year
Achieve

34,00032,000
0

2010

2011

2012

■ CO2 Emissions (Non-consolidated)

2013
■
■

2014

2015

2016

2017

2018

2019

2020

2021 (FY)

TargetMedium-Term CO2 Emissions Reduction Target
for the Fiscal Year Ending March 31, 2031

Achieve26% reduction(vs. the fiscal year ended March 31, 2014)

ALSOK REPORT 2018

The “3Rs” and Energy Conservation Initiatives
ALSOK is advancing Companywide initiatives based on the“3Rs,” or reduce, reuse, and recycle. We cooperate withgarbage separation and ink cartridge collection programs,
and also reuse and recycle various types of equipment. For
example, articles to be disposed of at branches in the Tokyo
metropolitan area are accumulated at our repair center in
Shin Yokohama, which categorizes, repairs, ships, andproperly disposes of or recycles these items. In the year underreview, the average ratio of items reused at all branches
across Japan as a result of these initiatives came toapproximately 36%, an increase of 5 percentage points overthe previous fiscal year. In addition, the rechargeable
nickel-cadmium batteries used in our various power supply
equipment are recycled for reuse, and approximately 24,000
batteries were recycled in this manner during the year under review,
making further
contributions to
the reduction of
our environmental
footprint.

Repair center

Mindful that we have many offices, facilities, and vehicles forbusiness use throughout Japan, we are making a concerted
effort to reduce electricity usage and vehicle fuel consumption
volumes. In the fiscal year ended March 31, 2018, we worked
to cultivate a mind-set focused on electricity conservation
among employees while actively introducing fuel-efficient
vehicles and motorcycles into our fleet. At the same time, withthe aim of reducing vehicle traveling distance, we developed
more efficient routes for use by sales staff on sales visits andlowered the number of technicians placed on night duty. As aresult, we achieved a 19.0% reduction in fuel usage and a
11.7% reduction in electricity usage in comparison with thefiscal year ended March 31, 2010, the base year for reduction
targets as defined by the revised Act on the Rational Use ofEnergy. During the fiscal year ending March 31, 2019, we arealso discussing the implementation of electric trucks for our
security transport business with car manufacturers.

Implemented
electric vehicles

Environmental Consideration
ALSOK seeks to limit the use of certain hazardous substancesand promote environmentally friendly design in procurementand development activities.
In procurement operations, we consider raw ingredients,
reduction of hazardous substances, product reuse andeasy-to-reuse design, improvement of durability (lifespan),
packaging, energy-saving measures, and reduction ofenvironmental load in waste disposal. In addition, we also
work toward the reduction of CO 2 emissions during the
p rov i s i o n o f s e r v i ce s . O n e o f o u r a p p ro a c h e s i s t h edigitalization of business logs and security reports.

In addition to approaches through business activities, we
strive to contribute to the preservation of the global
environment through a wide
range of opportunities suchas participation in the Tokyo
2020 Medal Project—making medals out of
discarded devices such as
mobile phones (sponsoredb y t h e To k y o 2 0 2 0Organizing Committee).
Collection box

Ongoing Reforestation Activities inDisaster-Stricken Areas
In 2015, we conducted reforestation activities in collaboration
with the NPO Laboratory of Earth Conscious Life, planting 2,000Japanese black pine saplings on the Hasunuma coastline in
Sammu City, Chiba Prefecture, an area that suffered severe
damage in the Great East Japan Earthquake, as a part of oursocial contribution initiatives commemorating ALSOK’s 50th
anniversary. The aim of these activities was to help preserve thecoastline environment and revive a forest that had previously
played an important part in limiting disaster damage. After
planting saplings, underbrush must be cleared for at least
several years to ensure healthy development. Such activities
were conducted for the fourth time in September 2018. In
addition to helping preserve the environment, this can truly becalled a unique social contribution activity leading to thesecurity and safety of the disaster-stricken areas.

The reforestation and maintenance (clearing underbrush)
activities in disaster-stricken areas were certified as official
Tokyo 2020 Programs.

Employees and family members weeding

38Corporate Governance

Aiming to Achieve
Corporate GovernanceThat Is Unique to ALSOK
and Contributes
to Sustainable Corporate
Value Growth
Basic Policies and Systems
Based on its management philosophy exemplified by the principles of “arigato no
kokoro” (a feeling of gratefulness and gratitude) and “bushi no seishin” (a samurai
spirit), ALSOK devotes itself to protecting the safety and security of its customers
and of society as a whole. The ALSOK Group also advocates “contributing tosociety” as one of its management policies. Meanwhile, to continue to be a corporate group that is trusted by all stakeholders, we strive to reinforce Groupwide
corporate governance with measures that separate managerial execution andoversight functions, allow swifter decision making, encourage strong corporate
ethics, and provide transparency in business management.

2003

Board
of Directors

Numberofmembers2013
2007

OutsideAudit &
Supervisory Board

Numberofmembers
Outside

2013

8

7

7

Mr. Takehana possesses abundant experience andinsight, and advanced ability, developed through serving
in important positions at government agencies overmany years and as an officer at a major electricalmachinery manufacturer. As such, the Company believes
he will continue to contribute to the Group's corporate
value and has nominated him as an outside director.

2015

2009

2015

2016

2018
12

8

10

2009

2016

2017

2018

1

2

3

4

2008

2009

2018

4

5

4

2003

2006

2018

3

2

3

Revisions to the Rules
June 2002

Formulation of the Compliance Rules

December 2002

Formulation of the Risk Management Rules

April 2004

39

Introduction of the Executive Officer System

November 2002

August 2004

Yutaka Takehana■ Reason for Appointment

History of ALSOK’s Corporate GovernanceYear

Outside Director

Setting up of the ALSOK Hotline
Formulation of the Basic Information Security Policy

September 2004

Establishment of Information Asset Management Committee

December 2004

Formulation of the Personal Information Security Policy

May 2006

Formulation of the Basic Policy Related to the Internal Control System

July 2009

Formulation of Information Asset Management Rules

April 2016

Setting up of an external reporting hotline under the ALSOK Hotline

Becoming a Company That Has
a Keen Awareness of Risk
A role of outside directors is to contribute to
ALSOK’s advancement based on experienceand insight that officers with a lifelong careerat ALSOK do not possess. I am supported by
my own experience in managing the large
police organization and taking charge of scandal handling, knowledge of safety, and experience in risk management in a global major
enterprise, among other things.
I have monitored this company for more than
three years now, and have no special concern
over it as the company is coping well withupheaval in the business environment.
Reputation of this company is strongly relied
upon how the staff work. As such, I will leverage my experience to keenly establish risk
measures in a broad sense, while giving consideration for employees’ morale, avoiding
headwinds arising out of minor issues, andbearing in mind external communications.

ALSOK REPORT 2018

Outside Director

Outside Director

Outside Director

Masakazu Iwaki

Seiei Ono

Hideharu Kadowaki■ Reason for Appointment■ Reason for Appointment■ Reason for Appointment

Mr. Iwaki possesses abundant experience andinsight, and advanced ability, developed as a manager at a major steel manufacturer. As such, theCompany believes he will continue to contribute to
the Group's corporate value and has nominatedhim as an outside director.

Mr. Ono possesses abundant international experience and insight, and advanced ability, developed asa manager at a major trading company and elsewhere. As such, the Company believes he willcontinue to contribute to the Group's corporate
value and has nominated him as an outside director.

Mr. Kadowaki possesses abundant experience andinsight, and advanced ability, developed as a manager at a major financial institution and elsewhere.
As such, the Company believes he will contributeto the Group's corporate value and has nominatedhim as an outside director.

Requisites for Realization of theMedium-Term Management Plan

Being a Healthy andSustainable Company

Aiming to Create New Value in
Response to Changes in Society

This company boasts high achievement rates forthe management plan. Its strength lies in theapproach to follow the policies in all circumstances and ability to make Groupwide unitedefforts. For the coming three years in particular,
this company needs to play a role in achieving
success of the Tokyo Olympic Games. In addition,
while the company has proactively made andbeen successful in M&As, it needs to get theoverseas business on a growth path in the future.

I highly recognize this company’s proactive andfaithful initiatives towards corporate governance which are undertaken based on thestrong awareness of becoming a company
trusted by society. Such awareness comesfrom its services of ensuring safety and security of society, which is of a highly public nature.

I highly recognize that this company presents its
management philosophy, the origin of corporate
governance, quite clearly, and thoroughly implements it among employees. In addition, I consider
this company’s system as being fully in line withthe governance code, as the number of independent, outside directors accounts for one-third of
all the directors, allowing the company to standamong the top 20% companies listed on the First
Section of the Tokyo Stock Exchange. I also
recognize that the company has a transparent
management system wherein opinions fromoutside are reflected in management. I expectthat efforts will be made in the future to broaden
the system with high awareness of governance to
the Group as a whole.

Meanwhile, while the domestic market is becoming mature, we have entered the time when sales
capabilities of corporations are called into question even more. In order to achieve sustainablegrowth, not only sales activities by the company
leadership but also diligent sales activities byregional offices, branches, and sales offices are
becoming more and more important.
Going forward as well, I am committed tocontributing to improvement of the ALSOKGroup’s corporate value, positioning myself in an
objective and impartial standpoint as an outside
director and aiming to achieve growth of various
stakeholders and this company based on a-priori
perspective.

I believe it will be important for the company
going forward to put verification of and measures to ensure the effectiveness of the governance system on the PDCA cycle. I am going tomonitor initiatives undertaken to that end froma broad and panoramic perspective as an
outside director and ascertain whether the
PDCA cycle of governance is functioning andthe management is firmly handling the cycle. In
addition, I will express my opinions based on
the experience I have accumulated so far fromthe perspectives of whether sound management
is achieved for all stakeholders related to thecompany and whether the company is navigatedto achieve sustainable corporate management.

Challenges faced by this company are to tackle
and respond to labor shortages due to population
decline as well as the rapidly changing businessenvironment associated with technologicaladvances as exemplified by AI. I, as an outside
director, am committed to providing opinionsfrom a proactive and beneficial standpoint and at
the same time from a perspective different fromthe internal one, in order to contribute to creationof permanent corporate value of this company.

40

Corporate GovernanceObservation of Japan’s Corporate Governance CodeCommittee to provide appropriate oversight for management.

The Company observes the principles put forth by Japan’s
Corporate Governance Code, which was formulated by Tokyo
Stock Exchange, using these policies as guidelines forcorporate governance and carrying out detailed inspections
and reviews of organizational structures. In addition, we
submit a Corporate Governance Report to the Tokyo Stock
Exchange, on a yearly basis and post this report on our
corporate website (in Japanese only). This report contains
information on our efforts to observe the Corporate
Governance Code.

We have adopted the current system based on the judgmentthat it effectively ensures the impartiality and transparency ofmanagement.

Going forward, we will continue to examine possible measuresfor our various systems in order to create an organizational
structure that features more effective corporate governance,
incorporating social trends as part of this endeavor.

Overview of Corporate Governance Systems
and Reasons for Adoption
The Company has adopted the Company with Audit &Supervisory Board structure described in the Companies Act
of Japan. By implementing the following systems, theCompany affirms that effective and complete audits are
conducted by Audit & Supervisory Board members and thatmanagement is being appropriately governed. The Company
has appointed 12 directors, four of which are outside
directors, and four Audit & Supervisory Board members, threeof which are outside Audit & Supervisory Board members.
The Board of Directors meets once a month, in principle, todecide on basic management policies and important matterspertaining to operational execution and to supervise theexecution of duties by directors and executive officers. The
Management Committee, which is chaired by the chairman
and representative director, meets twice a month, in principle,
to determine the agenda items to be presented to the Board of
Directors and to discuss the operational execution policies
formulated based on Board of Directors’ decisions.
The Audit & Supervisory Board meets once a month, inprinciple, to discuss and make decisions based on reports onimportant matters related to audits. One Audit & Supervisory
Board member attends meetings of the Management

Reasons for Appointment and Duties of Outside
Directors and Outside Audit & Supervisory Board
Members
Outside directors and outside Audit & Supervisory Board
members are assumed to cover the functions of observationand supervision of the management team with objective andneutral standpoints.
Outside directors and outside Audit & Supervisory Board
members attend meetings of the Board of Directors, at which
they offer their opinions on the matters at hand. They receive
briefings on the issues to be discussed at meetings of theBoard of Directors the day prior to the meeting, allowing themto more effectively monitor management. The outside Audit &Supervisory Board members coordinate with the Inspection
Department and the independent auditing corporation
employed by the Company in regard to audits by Audit &Supervisory Board members, internal audits, and accounting
audits. To facilitate this coordination, the outside Audit &S u p e r v i s o r y B o a rd m e m b e rs p e r i o d i ca l ly exc h a n g e
information with these bodies.
The participation of the outside directors in these meetings
enables them to monitor the operational execution of otherdirectors with regard to Internal Control Operations and othermatters from an independent standpoint.
They also evaluate the legality of the measures implemented
by Internal Control Operations. To this end, they perform both
operational and accounting audits of the organization andreview all relevant documents.
The Company employs four outside directors and threeoutside Audit & Supervisory Board members; applications
have been submitted to the Tokyo Stock Exchange, identifying
each of these individuals as independent officers.

General Shareholders’ Meeting
Board of Directors’ Meetings(Monthly)

4 Outside Directors
8 Internal Directors

Audit &
Supervisory
Board

Total: 12

Discussions about Operational Policies on Business Affairs

Committees

Management Committee (Twice monthly)

Risk Management Committee
Compliance Committee
Information Asset Management Committee

Chairman and Chief Executive Officer (CEO)3 Outside Audit & Supervisory Board Members
1 Internal Audit & Supervisory Board Member
Total: 4 (Includes two part-time Audit& Supervisory Board Members)

Outside Audits by an Independent
Auditing Corporation: Accounting Audits Conductedby Grant Thornton Taiyo LLC

Internal Audits

President and Chief Operating Officer (COO)

Inspection Department
Discussions about Operational Policies on Business Affairs
Operating Committeeof the Company(Twice monthly)

Executive Officers
7 Directors and Executive Officers
13 Executive Officers
Total: 20

Internal
Control
Operations

Advisory Contracts with Attorneys in Specialized Fields
Legal Consultation
Legal Office
As of June 26, 2018

41

ALSOK REPORT 2018

Policies and Methods for Deciding Compensation
Amounts
Annual limits of ¥400 million for the compensation of directors and¥120 million for the compensation of Audit & Supervisory Board
members have been set at the General Shareholders’ Meeting.
The compensation of directors includes a fixed amount,calculated according to their positions and whether they are
an outside director or not, as well as a performance-linked
amount, calculated based on an evaluation of the operational
execution performance of individual directors in the previous
fiscal year conducted in accordance with predetermined
standards. Decisions regarding the exact amounts ofcompensation of directors are made by the Board of Directors.
The compensation of Audit & Supervisory Board members is
paid as a fixed amount, and the exact amounts ofcompensation are decided in accordance with standards set
by the Audit & Supervisory Board.

Internal Control System
Based on the Companies Act and the Financial Instruments
and Exchange Act, the Company has established systems toensure directors perform duties in compliance with all
relevant laws and regulations and its articles of incorporation.
I n a d d i t i o n , t h e C o m p a n y h a s i n p l a ce s y s t e m s fo r
guaranteeing that proper operating practices are observed byother listed companies and the corporate groups consisting ofthese companies and their subsidiaries.
The management of the ALSOK Group carried out anevaluation of the Group’s internal control system as of March
31, 2018, based on the Financial Instruments and ExchangeAct. This evaluation found that the internal control system is
effective, which has been noted in the report on the internal
control system. The independent auditing corporation, Grant
Thornton Taiyo LLC, has also expressed the opinion that theresult of the evaluation by the management noted in theinternal control report is accurate.

Compliance
The Company has established the Compliance Committee, which
is headed by the executive officer in charge of compliance, topromote legal compliance. The committee strives to inculcate an
unwavering awareness of compliance in all executive officers andemployees based on the compliance rules formulated in 2002,
and periodically verifies the status of compliance in business andother activities. Furthermore, the Company conducts activities topromote compliance on a Groupwide basis. Moreover, together
with the Education & Training Department, the Compliance
Committee is implementing corporate ethics training and taking
o t h e r s t e p s t o c u l t i v a t e a n d t h o ro u g h ly e n t re n c h acompliance-based mind-set.

hotline allows executive officers and employees to report any
illegal, inappropriate, or unethical behavior they may witness
via email, telephone, or written statement without fear of
suffering disadvantageous treatment. On April 1, 2016, theCompany established an external reporting hotline to add tothe already existing internal hotline.

Risk Management
T h e C o m p a n y p l a ce s p a r t i c u l a r i m p o r ta n ce o n r i s kmanagement, which is central to its business of protecting thesafety and security of society. Accordingly, the Company
formulated risk management rules in 2002. The Company
then established the Risk Management Committee based onthese risk management rules and assigned the executive
officer in charge of risk management as its chairperson. In
addition, individual risk management assessment bodies havebeen set up at the Head Office and each individual businessoffice to undertake Companywide risk management activities,
such as the identification and evaluation of risks and theformulation of preventative measures and countermeasures.
The Risk Management Committee also containss u b c o m m i t t e e s f o r r i s k s i n s p e c i f i c a re a s . T h e s esubcommittees gather information on the risks in theirdesignated area, analyze and evaluate these risks, and draft
measures to mitigate these risks. Furthermore, the Company
has developed organizational structures to ensure that it can
respond quickly should a serious emergency occur. Throughsuch structures, the Company is able to relay urgent orders
throughout the organization, set up a response headquarters,
or take other emergency response measures.

Disclosure and IR Activities
ALSOK has formulated its Disclosure Policy based on which it
actively conducts impartial and timely information disclosure.
In addition, the Company has revised its investor relations (IR)website to provide stakeholders with greater ease in finding
the information they seek. We also aim to foster a deeper
understanding among overseas institutional investors of the
security services industry in Japan and the growth strategiesof the ALSOK Group. To this end, we provide English-languagetranslations of financial summaries and other documents on
our English-language IR website.

The Company’s IR Website
https://www.alsok.co.jp/en/ir/

The ALSOK Hotline was set up in April 2004 to facilitate early
identification and prevention of corporate ethics issues. This

42

Directors, Audit & Supervisory Board Members, and Executive Officers

As of June 30, 2018

Back row, from left

Ikuhiro Watanabe Makoto Uenoyama Takeshi Oiwa Masaki Tatsuguchi
Audit & Supervisory Board Member(Outside Audit & Supervisory Board Member)

Audit & Supervisory Board Member(Outside Audit & Supervisory Board Member)

Audit & Supervisory Board Member(Outside Audit & Supervisory Board Member)

Audit & Supervisory Board Member

Ikuji Kayaki
Representative Director
Executive Vice President

Front row, from left

43

Seiei Ono

Yutaka Takehana

Atsushi Murai

Director (Outside Director)

Director (Outside Director)

Chairman and Representative Director
Chief Executive Officer (CEO)ALSOK REPORT 2018

Hirohisa Hokari Hiraku Otani
Director
Executive Vice President

Director
Senior Executive Officer

Tsuyoshi Murai Shigeki Nomura
Director
Senior Executive Officer

Director
Senior Executive Officer

Masato Yagi
Director
Senior Executive Officer

Yukiyasu Aoyama

Masakazu Iwaki

Hideharu Kadowaki

President and Representative Director
Senior Executive President
Chief Operating Officer (COO)

Director (Outside Director)

Director (Outside Director)

44

Directors, Audit & Supervisory Board Members, and Executive Officers

As of June 30, 2018

Atsushi Murai

Yukiyasu Aoyama

Ikuji Kayaki

Chairman and Representative Director
Chief Executive Officer (CEO)President and Representative Director
Senior Executive President
Chief Operating Officer (COO)
Chief Officer of Business Promotion Division

Representative Director
Executive Vice President
Head of ALSOK In-house Company
Deputy Chief Officer of Business Promotion Division
East Japan
Corporate Customers

Sep. 1995: Director-General, Chubu Regional Police Bureau(Resigned in Jun. 1996)
Jun. 1996: Deputy Governor, Deposit Insurance Corporation ofJapan (Resigned in Sep. 1997)
Sep. 1997: Joined the Company as a consultant
Jun. 1998: Senior Executive Vice President and Representative
Director
Jun. 2001: President and Representative Director
Jul. 2003: Chief Officer of Business Promotion Division
Apr. 2004: Chief Officer of Security Operations Division
Apr. 2011: Chief Executive Officer (Current)
Apr. 2012: Chairman and Representative Director (Current)

Jul. 2006: Director-General, Customs and Tariff Bureau,
Ministry of Finance Japan (Resigned in Jul. 2008)
Aug. 2008: Joined the Company as Senior Executive Officer,
Chief Officer of Security Operations Division
Apr. 2009: In charge of Human Resources, Security Operations,and Corporate Ethics
Jun. 2009: Executive Vice President and Representative Director
Apr. 2010: Senior Executive Vice President and Representative
Chief Officer of Business Promotion Division
Apr. 2011: Chief Operating Officer (Current)
Apr. 2012: President and Representative Director (Current)
Senior Executive President (Current)
Apr. 2018: Chief Officer of Business Promotion Division (Current)

Apr. 1982: Joined the Company
Apr. 2011: Chief Officer of Regional Division (Ⅳ)
Apr. 2012: Executive Officer
Apr. 2014: In charge of Security Operations andStructural Reform ofTransportation Security Services
Apr. 2015: Senior Executive Officer
Second in charge of Security Operations
Jun. 2017: Director and Senior Executive Officer
Apr. 2018: Executive Vice President
and Representative Director (Current)
Head of ALSOK In-house Company (Current)
Deputy Chief Officer of Business Promotion Division (Current)
In charge of East Japan (Current)
and Corporate Customers (Current)

Major Concurrent Position
Dec. 1997: Representative Director, SOHGO CORPORATION(Current)

Major Concurrent Position
Dec. 1997: Representative Director, SOHGO CORPORATION(Current)

Hirohisa Hokari

Hiraku Otani

Tsuyoshi Murai

Director
Executive Vice President
Deputy Chief Officer of Business Promotion DivisionCorporate Planning & Administration
Investor Relations
Strategic BusinessBusiness Planning & Management
Sales Promotion
Financial Institutions

Director
Senior Executive Officer
Chief Officer of International Affairs
International Affairs
Procurement

Director
Senior Executive Officer
Chief Officer of Tokyo 2020 Olympic
and Paralympic Games Promotion Affairs
Deputy Chief Officer of Business Promotion Division
Human Resources
General Affairs/PR
Central Japan Area
Business Promotion Division in the Central Japan area
Corporate Ethics
Compliance
Risk Management
Information Assets Management

Apr. 2010: Director-General of Operations Department at Bankof Japan (Resigned in Jun. 2011)
Jun. 2011: Joined the Company as Executive Officer
In charge of Business Planning and Financial
Institution Marketing & Sales Promotion
General Manager of Business Planning Department
Feb. 2012: Senior Executive Officer and Deputy
Chief Officer of Business Promotion Division (Current)
In charge of Business Planning & Management
Apr. 2012: In charge of Financial Institution Services andTransportation Security Services
Apr. 2014: In charge of General Affairs/Corporate Planning,
Financial Institution Services, Compliance, Risk
Management, and Information Asset Management
Jun. 2014: Director and Senior Executive Officer
Apr. 2016: In charge of Corporate Planning & Administration (Current),
Investor Relations (Current), Strategic Business (Current),
Business Planning & Management (Current)
and Financial Institutions (Current)
Apr. 2018: Executive Vice President and Director (Current)
In charge of Sales Promotion (Current)

Apr. 2008: Executive Officer, Mizuho Corporate Bank, Ltd.
(Currently Mizuho Bank, Ltd.) (Resigned in Apr. 2010)
Jun. 2010: Joined the Company as Executive Officer
In charge of Financial & Accounting and Internal
Control
Jun. 2011: Senior Executive Officer
Apr. 2012: In charge of Procurement
Apr. 2013: In charge of International Affairs (Current)
Apr. 2014: Chief Officer of International Management
Jun. 2016: Director and Senior Executive Officer (Current)
Apr. 2018: Chief Officer of International Affairs (Current)
In charge of Procurement (Current)

Jul. 1997: Joined the Company
Jun. 2007: Chief Officer of Home Marketing Division
Apr. 2010: Executive Officer
Chief Officer of Regional Division Ⅰ()
Feb. 2011: In charge of General Property Management
Mar. 2011: President and Representative Director, Japan Facilio Co., Ltd.
(Seconded, resigned in Mar. 2014)
Apr. 2014: Senior Executive Officer
Deputy Chief Officer ofBusiness Promotion Division (Current)
In charge of Business Planning & Management
and Regional Financial Institution Services
Apr. 2016: In charge of Human Resources
and Corporate Ethics (Current)
Jun. 2016: Director and Senior Executive Officer (Current)
Apr. 2018: Chief Officer of Tokyo 2020 Olympic
and Paralympic Games Promotion Affairs (Current)
In charge of General Affairs/PR (Current),
Compliance (Current)
Risk Management
and Information Assets Management (Current)
May 2018: In charge of Central Japan Area (Current)and Business Promotion Division in theCentral Japan area (Current)
Major Concurrent Position
Sep. 2014: Representative Director, SOHGO CORPORATION(Current)

Shigeki Nomura

Masato Yagi

Director
Senior Executive Officer
Deputy Chief Officer of Business Promotion Division
West Japan Area
Business promotion in Kansai Area

Director
Senior Executive Officer
Chief Officer of Regional Division Ⅰ()
Deputy Chief Officer of Business Promotion Division in the
Metropolitan area

Apr. 1984: Joined the Company
Apr. 2011: General Manager of Human Resources Department
Jun. 2011: Executive Officer
In charge of Human Resources
Apr. 2014: Senior Executive Officer
Deputy Chief Officer
of Business Promotion Division in Central Japan
Chief Officer of Regional Division (Ⅲ)
Apr. 2017: Chief Officer of Regional Division (Ⅶ)
Jun. 2017: Director and Senior Executive Officer (Current)
May 2018: Deputy Chief Officer of Business Promotion Division in the
Kansai area (Current)
In charge of West Japan Area (Current)
and business promotion in Kansai Area (Current)

Apr. 1979: Joined the Company
Apr. 2011: Chief Officer of Regional Division (Ⅶ)
Apr. 2012: Executive Officer
Apr. 2015: Chief Officer of Regional Division Ⅰ( ) (Current)
Apr. 2016: Senior Executive Officer (Current)
Apr. 2018: Deputy Chief Officer of Business Promotion Division
In charge of Metropolitan area (Current)
Jun. 2018: Director and Senior Executive Officer (Current)

Major Concurrent Positions
Jun. 2018: Representative Director,
Hiroshima Sohgo Security Services Co., Ltd. (Current)
Representative Director,
Ehime Sohgo Security Services Co., Ltd. (Current)

45

Major Concurrent Position
Apr. 2015: Representative Director,
URBAN SECURITY Co., Ltd. (Current)

ALSOK REPORT 2018

Yutaka Takehana

Masakazu Iwaki

Seiei Ono

Director (Outside Director)

Director (Outside Director)

Director (Outside Director)

Sep. 2001: Director, Hiroshima Prefectural Police Headquarters
Jun. 2003: Vice Governor of Tokyo (Resigned in Jul. 2005)
Aug. 2005: Director of Public Safety Department, National Police
Agency (Resigned in Jan. 2007)
Mar. 2007: Consultant, Matsushita Electric Industrial Co. Ltd.
(Currently Panasonic Corporation)
Oct. 2007: Member of Tokyo Metropolitan Board of Education(Resigned in Sep. 2015)
Apr. 2008: Executive Officer, Matsushita Electric Industrial Co.
Ltd. (Currently Panasonic Corporation)
Apr. 2009: Managing Executive Officer, Panasonic Corporation(Resigned in Mar. 2013)
Jun. 2013: President & CEO, Tokyo Big Sight Inc.
(Resigned in Jun. 2017)
Jun. 2015: Joined the Company as Outside Director (Current)
May 2017: Advisor, Meiji Yasuda Life Insurance Company (Current)

Jun. 2010: Representative and Executive Vice President, Nippon
Steel Corporation (Currently NIPPON STEEL &SUMITOMO METAL CORPORATION,
resigned in Mar. 2014)
Apr. 2014: Member of the Board, NIPPON STEEL& SUMITOMO METAL CORPORATION(Resigned in Jun. 2014)
Jun. 2014: Executive Advisor, NIPPON STEEL & SUMITOMOMETAL CORPORATION
Jun. 2016: Joined the Company as Outside Director (Current)
Jul. 2016: Advisor, NIPPON STEEL & SUMITOMO METALCORPORATION (Resigned in Jun. 2017)
Jun. 2017: Director, Misawa Homes Co., Ltd. (Current)

Apr. 2009: Executive Vice President, Mitsubishi Corporation(Resigned in Mar. 2013)
Apr. 2010: President, Mitsubishi International Corporation(Resigned in Mar. 2012)
Apr. 2012: Regional CEO, North America (Concurrently)
President, Mitsubishi Corporation (Americas)(Resigned in Mar. 2013)
Dec. 2013: Executive Vice President and Representative Director,
Mitsubishi Research Institute, Inc.
Dec. 2014: Executive Vice President and Representative Director,
Mitsubishi Research Institute, Inc. (Resigned in Dec. 2016)
Dec. 2016: Executive Advisor, Mitsubishi Research Institute, Inc.
Jun. 2017: Joined the Company as Outside Director (Current)
Jan. 2018: Advisor, Mitsubishi Research Institute, Inc. (Current)

Hideharu Kadowaki

Masaki Tatsuguchi

Takeshi Oiwa

Director (Outside Director)

Audit & Supervisory Board Member

Audit & Supervisory Board Member(Outside Audit & Supervisory Board Member)

Apr. 2001: Representative Director, Senior Managing Director,
and Senior Managing Executive Officer,
Sumitomo Mitsui Banking Corporation (Resigned in Nov. 2002)
Dec. 2002: Representative Director and Senior Managing Director,
Sumitomo Mitsui Financial Group, Inc.
Jun. 2003: Deputy President and Representative Director,
Sumitomo Mitsui Financial Group, Inc. (Resigned in Mar. 2004)
Jun. 2004: Chairman, The Japan Research Institute,
Limited (Resigned in Jun. 2008)
Jun. 2008: Special Adviser and Senior Fellow,
The Japan Research Institute, Limited (Current)
Jun. 2012: Member of the Board, Asian Rural Institute (Current)
Jul. 2017 Advisor, C’BON COSMETICS Co., Ltd. (Current)
Jun. 2018: Joined the Company as Outside Director (Current)

Apr. 1978: Joined the Company
Aug. 2005: General Manager of Shiga Branch
Jan. 2010: General Manager of Finance & Accounting
Department
Oct. 2012: General Manager of General Affairs Department
Jun. 2014: Chief Officer of Regional Division (Ⅷ)
Jun. 2015: Standing Audit & Supervisory Board Member (Current)

Apr. 2007: Managing Executive Officer, Sompo Japan Insurance
Inc. (Currently Sompo Japan Nipponkoa Insurance Inc.)
Jun. 2007: Director and Managing Executive Officer, Sompo
Japan Insurance Inc. (Currently Sompo Japan
Nipponkoa Insurance Inc.)
Jun. 2010: Director and Senior Managing Executive Officer,
Sompo Japan Insurance Inc. (Currently Sompo Japan
Nipponkoa Insurance Inc.)
Jan. 2011: Deputy President and Director, Sompo Japan
Insurance Inc. (Currently Sompo Japan Nipponkoa
Insurance Inc., resigned in Mar. 2011)
Apr. 2011: Audit & Supervisory Board Member, Nippon Export
and Investment Insurance (Resigned in Mar. 2017)
Jun. 2011: Joined the Company as Outside Audit & Supervisory
Board Member
Jun. 2017: Joined the Company as Standing Audit & Supervisory
Board Member (Outside) (Current)

Makoto Uenoyama

Ikuhiro Watanabe

Audit & Supervisory Board Member(Outside Audit & Supervisory Board Member)

Audit & Supervisory Board Member(Outside Audit & Supervisory Board Member)

Jun. 2007: Director, Matsushita Electric Industrial Co. Ltd.
(Currently Panasonic Corporation)
Apr. 2010: Managing Director, Panasonic Corporation(Resigned in Jun. 2012)
Jun. 2012: Managing Executive Officer, Panasonic Corporation(Resigned in Mar. 2013)
Apr. 2013: Corporate Advisor, Panasonic Corporation(Resigned in Mar. 2015)
Jun. 2013: Joined the Company as Outside Audit & Supervisory
Board Member
Apr. 2015: Associate, Panasonic Corporation (Current)
Jun. 2017: Joined the Company as Outside Audit & Supervisory
Board Member (Current)

Jun. 2007: General Manager of Custodial Department, The
Norinchukin Bank (Resigned in May 2009)
Jun. 2009: Manager of Internal Audit Division, Starzen Co., Ltd.
Apr. 2013: Executive Officer and Manager of Legal Department,Starzen Co., Ltd. (Resigned in Sep. 2014)
Oct. 2014: Corporate Advisor, Norinchukin Research InstituteCo., Ltd. (Resigned in Jun. 2015)
Jun. 2015: Joined the Company as Outside Audit & Supervisory
Board Member (Current)
Jun. 2016: Auditor, Norinchukin Research Institute Co., Ltd.
(Resigned in Jun. 2017)

Executive Officers
Takashi Kumagai

Koji Kishimoto

Norihiko Mizutani

Motohisa Suzuki

Kazuhide Shigemi

Senior Executive Officer
Deputy Chief Officer
of Business Promotion Division
Long-Term CareManagement Company
Second in charge of R&D
HOME ALSOK

Senior Executive Officer
Financial & Accounting
Internal Control

Senior Executive Officer
R&D

Senior Executive Officer
Deputy Chief Officerof Tokyo 2020 Olympic
and Paralympic Games
Promotion Affairs
Security Operations
Structural Reformof Transportation
Security Services

Executive Officer
Second in chargeof Corporate Planning& Administration
Second in chargeof Strategic Business

Kazumi Suzuki

Seiji Ono

Yasuhiro Yoshimoto

Shinichi Honjo

Yoshio Kumazaki

Executive Officer
R&D Planning

Executive Officer
Business Planningand Sales Promotion

Executive Officer
General Property Management
and Fire Protection Services

Executive Officer
Chief Officer
of Regional Division (Ⅱ)

Executive Officer
Chief Officer
of Regional Division (Ⅲ)

Ken Takahashi

Akira Kono

Yoshiharu Nagashima

Executive Officer
Chief Officer
of Regional Division (Ⅳ)

Executive Officer
Chief Officer
of Regional Division (Ⅴ)

Executive Officer
Chief Officer
of Regional Division (Ⅵ)

46

Financial Section

Management Indexes
2010

2011

285,004

278,579

279,272

215,711210,097

209,364

72,70969,292

68,482

69,908Selling, general and administrative expenses

58,91359,34959,211

59,555

Operating income

13,795

9,943

9,270

10,352

Ordinary income

14,642

10,63010,81911,765

Profit attributable to owners of parent

7,653

4,224

4,563

4,706

Gross profit margin (%)

25.5

24.3

24.6

25.0

Operating income margin (%)

4.8

3.5

3.3

3.7

Ordinary income margin (%)

5.1

3.7

3.9

4.2

Return on assets (ROA) (%)

5.0

3.6

3.8

4.2

Return on equity (ROE) (%)

5.6

3.1

3.3

3.3

EV/EBITDA (Times)

5.1

3.0

2.3

1.4

46.2

47.7

50.9

50.3

2008

2009

Net sales

284,996

Cost of sales

212,287

Gross profit

Fiscal years ended March 31

Profit and loss (Millions of yen)

Profitability

1Stability
Equity capital ratio (%)
Equity capital ratio on market-value basis (%)

47.4

29.5

39.4

32.0

Interest-bearing liabilities (Millions of yen)

74,48566,24751,31849,311

15.2

20.7

24.0

20.1

Total asset turnover ratio (Times)

1.0

1.0

1.0

1.0

Shareholders’ equity turnover ratio (Times)

2.1

2.1

2.0

2.0

Tangible fixed assets turnover ratio (Times)

5.0

5.0

4.9

4.9

Net assets per share (Yen)

1,356.35

1,364.33

1,397.90

1,421.67

Earnings per share (Yen)

75.07

41.90

45.39

46.82

Price to book value ratio (Times)

1.0

0.6

0.8

0.6

Price earnings ratio (Times)

18.5

20.2

23.9

19.3

Dividends per share (Yen)

20

20

20

20

Interest coverage ratio (Times)
Efficiency

Per share information

Consolidated dividend payout ratio (%)

26.6

47.7

44.1

42.7

Closing stock price (Yen)

1,390

845

1,083

905

26,01426,96027,322

27,790

11.8

11.9

12.3

12.7

—

—

92.2

90.2

—

—

40,871

39,968Other information
Number of employees (Consolidated)
Average number of years of continuous service (Non-consolidated)
Percentage of employees returning to work after childcare leave(Non-consolidated, total for male and female employees)
CO2 emissions volume (Non-consolidated, t-CO2)

1. Method of calculation for EV/EBITDA is as follows:
EV (Enterprise value) = Market capitalization + Interest-bearing liabilities – Short-term liquidity (Cash and deposits + Short-term investments in securities)
EBITDA (Earnings before interest, tax, depreciation and amortization) = Operating income + Depreciation and amortization

47

ALSOK REPORT 2018

2012

2013

2014

2015

2016

2017

2018

304,723

315,564

328,209

365,749

381,818

413,343

232,812242,410

248,900

276,116

282,880

310,704

71,91073,15379,30889,632

98,937

102,639

61,10061,36360,37566,66069,901

74,217

10,81011,79018,932

22,971

29,03628,422

12,55814,741

20,74524,70030,66730,309

3,903

8,574

10,955

13,534

17,86818,330435,982
330,493
105,489
75,37830,111
31,913
19,344

23.6

23.2

24.2

24.5

25.9

24.8

3.5

3.7

5.8

6.3

7.6

6.9

4.1

4.7

6.3

6.8

8.0

7.3

4.4

5.1

6.5

6.9

8.5

8.2

2.7

5.7

7.0

7.8

9.9

9.7

1.4

2.7

5.3

10.1

13.4

8.7

51.3

52.1

46.2

48.4

51.9

51.0

34.8

46.5

63.5

110.1

175.4

108.2

39,27037,45571,66673,69847,20865,599

34.1

36.9

36.4

28.5

30.1

54.2

1.1

1.1

1.0

1.0

1.1

1.1

2.1

2.1

2.1

2.2

2.1

2.2

5.2

5.4

5.2

5.4

5.3

5.1

1,446.93

1,536.30

1,574.74

1,800.15

1,805.09

1,956.25

38.83

85.30

108.99134.65177.77182.37

0.7

0.9

1.4

2.3

3.4

2.1

25.3

16.1

19.9

30.4

34.3

22.8

24.2
6.9
7.3
8.2
9.3
10.7
54.9
134.1
52,655
25.8
1.1
2.1
4.9
2,155.74
191.93
2.4
27.5
60
31.3
5,260

20

25

30

38

50

55

51.5

29.3

27.5

28.2

28.1

30.2

982

1,373

2,164

4,095

6,100

4,155

27,86828,05428,091

31,221

31,446

36,693

13.3

13.8

14.4

14.9

15.4

15.9

93.3

97.6

92.4

96.6

93.0

91.3

37,51916.4
92.6

38,022

38,587

41,377

39,21237,39036,64936,29148

Financial Section

Management’s Discussion and Analysis
Analysis of Business Performance
Operating Environment
Consolidated Financial Results for the Fiscal Year Ended March
31, 2018 (April 1, 2017–March 31, 2018)
During the fiscal year under review, overall the Japanese economy
sustained a modest recovery. Although a shrinking labor force
prompted labor shortages, the employment and labor situation
continued to improve, causing personal consumption and exports
to rebound and capital investment to rise gradually. The global
economy was likewise characterized by a gentle rebound eventhough a sense of future uncertainty remains due to such factors
as geopolitical risk, trade issues, and growing volatility in financial
and capital markets.
With regard to public safety in Japan, the number of reported
crimes fell below 1 million in 2016 for the first time since WorldWar II. This number decreased further in 2017, declining toapproximately 915,000. That being said, people’s everyday lives
continue to be affected by crimes, including malicious crimes andspecial-case scams targeting senior citizens and differently abledindividuals, stalking, and crimes aimed at women and children. At
the same time, society faces increasingly diverse risks, such as
natural disasters, international terrorism, cryptocurrency
outflows and other forms of cybercrime, and information leaks.
As a company responsible for an important piece of the social
infrastructure supporting the safety and security of society,
ALSOK thus realizes the need to provide a wide range of services
that respond to social needs.

and Fire Protection Services segment. We also strove to curtail
costs by encouraging personnel to multitask and consolidating
Guard Centers, and undertook business reforms throughout theGroup with the aim of bolstering efficiency. To achieve further
growth, we took on the challenge of developing new services
employing state-of-the-art technologies, such as artificial
intelligence (AI), the Internet of Things (IoT), and 5G.
As a result, consolidated net sales rose 5.5% year on year, to¥435,982 million; operating income grew 5.9%, to ¥30,111 million;
ordinary income rose 5.3%, to ¥31,913 million; and profit
attributable to owners of parent expanded 5.5%, to ¥19,344 million.

Sales by Business Segment
During this fiscal year, the Company reorganized its reportablesegments and revised its method of allocating certain earnings
and expenses. For purposes of year-on-year comparison,
operating performance for the preceding fiscal year has been
restated to match the revised categories and allocation methods.

Services, which are included in the General Property Management

Security Services
Electronic Security Services
Within the Security Services segment, the Electronic Security
Services business promoted sales of various services for corporateclients. These services included ALSOK-ST (read as “ALSOKStandard”), a standard security system that is equipped with
monitoring and management services related to intrusions, fires,and equipment issues. Meanwhile, recent labor shortages havehighlighted the issue of long working hours. Given this situationand the backdrop of work-style reforms, the need for appropriate
facility management and attendance management have increased.
Accordingly, we recorded favorable sales for ALSOK-GV (read as“ALSOK G-five”), a service that combines image monitoring withALSOK Information Service. This service allows for information
regarding when employees arrive at or leave premises to beviewed online, while also providing Internet-based remote control
functionality for equipment. Robust sales of security camera
systems, such as ALSOK Image Cloud Service, as well as access

Net Sales

Ordinary Income/Ordinary Income Margin

Fiscal years ended March 31

Fiscal years ended March 31

Operating Results
In this environment, based on its policy of “responding accurately
to customers’ various risks and outsourcing needs,” the ALSOKGroup continued working to strengthen and expand its Security
Services business. We also endeavored to grow businesses inperipheral fields that are highly compatible with Security Services,such as Long-Term Care Services and Facility Management

Millions of yen(%)

Millions of yen

(%)

12.0

40,00012.0

360,000

9.0

30,000240,000

6.0

20,0006.0

120,000

3.0

10,0003.0

480,000¥435,982 million¥31,913 million
9.0

7.3%9.0

0
FY

14

15

16

17

18

0

0
FY

14

Ordinary Income

49

15

16

Ordinary Income Ratio

17

18

0

ALSOK REPORT 2018

management systems, contributed to sales.
In services for individual customers, sales were positive for Home
Security Basic, which offers a sophisticated security system as astandard function, and for HOME ALSOK Premium, which offers
even more fine-tuned functionality to meet the diverse needs ofhousehold customers and various household environments.
Additionally, we recorded increased sales of HOME ALSOKMIMAMORI SUPPORT, a service that contributes to a society
characterized by a falling birthrate and an aging population, andMIMAMORI Tags, which support the construction of regional
watch networks.
Stationed Security Services
In the Stationed Security Services business, the operating
environment was characterized by a rising need for high-quality
security and security augmentation services in response to various
risks associated with labor shortages, the outsourcing of security
operations in manufacturing and other sectors, and security needs
related to redevelopment in the Tokyo metropolitan area.

coordination, and orders for general property management,
cleaning services, and repair work contributed to sales
accordingly. In line with growing demand for disaster prevention
and mitigation, disaster preparedness items and residential fire
alarms and other fire-fighting equipment also contributed to sales.
Amid rising demand for construction, the facility installation
department also enjoyed solid orders. As a result of these factors,
sales in the General Property Management and Fire Protection
Services segment rose 7.2%, to ¥61,993 million, and operating
income increased 10.8%, to ¥5,075 million.
Long-Term Care Services
In the Long-Term Care Services segment, increased use of carefacilities (such as fee-based, long-term care facilities and grouphomes) contributed to sales, which grew 2.8%, to ¥25,631 million.
To improve management in this segment, we optimized personnel
allocations and undertook initiatives to raise operating efficiency.
These efforts enabled the segment to move into the black,
generating operating income of ¥105 million, compared with anoperating loss of ¥354 million in the preceding fiscal year.

Transportation Security Services
The Transportation Security Services business benefited from firm
orders in the solutions business, such as orders from financial
institutions for the Total ATM Management System. Against the
backdrop of ongoing work-style reforms and labor shortages, thebusiness also experienced strong orders for cash deposit anddispenser machines from retail and food and beverage
establishments.

Analysis of Individual Items
In the fiscal year under review, net sales increased ¥22,638 million,
or 5.5%, year on year, to ¥435,982 million.

In addition, thanks to the effect of M&As, sales in the Security
Services segment expanded 5.2%, to ¥344,302 million, andoperating income grew 2.0%, to ¥33,292 million.

Selling, general and administrative expenses amounted to ¥75,378
million due to a ¥550 million amortization of goodwill and a ¥453
million rise in salaries and allowances.
Ordinary income was up ¥1,604 million, or 5.3%, to ¥31,913 million,
in line with the rise in operating income.

General Property Management and Fire Protection Services
In the General Property Management and Fire Protection Services
segment, we focus on comprehensive management services thatencompass maintenance, management, and operation services forvarious facilities provided through enhanced intra-Group

Cost of sales was ¥330,493 million, primarily due to a ¥9,870
million increase in labor costs, a ¥6,157 million rise in
miscellaneous expenses, and a ¥3,761 million rise in the cost of
products sold and installation.

Extraordinary income fell due to a decline in the gain on sales ofinvestment securities.

Number of Electronic Security Services Contracts

Number of Contracts for Individual Users

Fiscal years ended March 31

Fiscal years ended March 31

Contracts(%)

414,554 contracts (%)

Contracts

1,000,000

922,928 contracts 12.0

400,000

750,000

9.0

300,000

9.0

500,000

6.0

200,000

6.0

250,000

3.0

100,000

3.0

0
FY

14

15

16

17

18

0

0
FY

14

15

16

17

18

0

50

Financial Section

The extraordinary loss decreased due to comparison with theprevious year’s recording of a ¥95 million provision for loss on
dissolution of the employees’ pension fund.
In line with the growth in ordinary income, profit attributableto owners of parent increased ¥1,014 million, or 5.5%, to¥19,344 million.
Comprehensive income increased ¥2,691 million, or 11.8%, to¥25,514 million. The rise was attributable mainly to a ¥2,370
million rise in remeasurements of defined benefit plans, netof tax, stemming from the increased valuation of assets
under management.
Forecast for the Fiscal Year Ending March 31, 2019
In the fiscal year ending March 31, 2019, we expect the Japanese
economy to benefit from various government measures. However, we
will need to monitor overseas markets for growing geopolitical risk
and other uncertainties, as well as developments in the financial andexchange markets and trends in corporate business confidence.
In addition to conventional security needs, we expect the security
industry to see growing needs for safety and security in responseto changes in internal and external environments. We also
anticipate expanding business opportunities due to increased
needs arising from the accelerated development of both tangible
and intangible social infrastructure as part of preparations forlarge-scale events. However, increasingly severe labor shortages
and decreases in earnings among financial institutions resulting
from Japan’s negative interest rate policy are forecast to createa harsh operating environment in the security services market
during the fiscal year ending March 31, 2019. Success under these
difficult conditions will require that we promote the further
differentiation of our products and services.

Financial Position
AssetsTotal assets at the end of the fiscal year under review increased¥11,287 million, or 2.9%, from the previous fiscal year-end, to¥397,164 million. Total current assets decreased ¥2,781 million,
or 1.4%, to ¥196,845 million, while total noncurrent assets rose
¥14,068 million, or 7.6%, to ¥200,319 million.
The decrease in current assets was primarily the result of a ¥8,013
million decline in cash and deposits, despite increases of ¥2,167
million in notes and accounts receivable—trade and ¥1,970 million
in cash for Transportation Security Services.
The growth in noncurrent assets was due mainly to a ¥3,716
million increase in net defined benefit asset stemming from a risein the valuation of assets under management, a ¥3,022 million risein other intangible assets (stemming from such items as softwarein progress, an investment in a backbone system slated forcompletion in an upcoming fiscal year), and ¥2,493 million higher
goodwill associated with the conversion of ALSOK KANTO
DELIVERY CO., LTD. to a consolidated subsidiary. Other increases
in noncurrent assets included ¥2,884 million in lease assets,¥2,727 million in machinery, equipment and vehicles, and ¥2,297
million in investment securities.

ALSOK has always been a company that protects the bodies, lives,and assets of its customers, and it has continued to build upon its
security services track record since its establishment. In addition
to growing its security services operations, the entire Group will

Liabilities
Total liabilities at the end of the year under review decreased¥7,864 million, or 4.8%, from the previous fiscal year-end, toTotal Assets/ROA

Total Net Assets/ROE

Fiscal years ended March 31

Fiscal years ended March 31%¥397,164 million 12.0

Millions of yen

400,000

300,000

8.2%

200,0000
FY

9.0

Millions of yen%

250,000¥241,382 million 15.0

200,000

12.0

150,000

9.3% 9.0

100,000

6.0

50,0003.0

6.0

100,000

3.0

14

Total Assets

51

actively develop businesses in peripheral fields going forward. At
the same time, we will strive to provide new products and services
that utilize cutting-edge technologies, endeavor to bolster
productivity, and achieve sustainable growth for the Group.
Consequently, the ALSOK Group forecasts net sales of ¥450,000
million for the fiscal year ending March 31, 2019, up 3.2% year on
year. We expect operating income to grow 9.9%, to ¥33,100 million,
ordinary income to rise 9.7%, to ¥35,000 million, and profit attributable to owners of parent to expand 13.7%, to ¥22,000 million.

15
ROA

16

17

18

0

0
FY

14

Total Net Assets

15
ROE

16

17

18

0

ALSOK REPORT 2018

¥155,782 million. Total current liabilities were down ¥5,609 million,
or 5.7%, to ¥92,495 million, and total noncurrent liabilities
decreased ¥2,255 million, or 3.4%, to ¥63,287 million.

dividends paid (down 0.0%), ¥4,420 million in repayments of leaseobligations (up 3.6%), and ¥3,456 million in repayment of long-termloans payable (down 9.7%).

The decline in current liabilities stemmed from a ¥13,002 million
decrease in short-term loans payable, while accounts
payable—other rose ¥5,701 million and notes and accounts
payable—trade grew ¥1,994 million.

Dividend Policies
The ALSOK Group considers the return of earnings toshareholders to be a top management priority, and its basic policy
is to distribute profits to shareholders based on its operating
results while fortifying internal reserves. The Group uses internal
reserves for investments in R&D required for future growth anddevelopment, qualitative upgrades to information systems, andcapital investment for new businesses as it works to improve
corporate value.

The fall in noncurrent liabilities was due to decreases of ¥2,667
million in long-term loans payable and ¥2,244 million in the net
defined benefit liability, whereas lease obligations increased¥2,564 million.
Net Assets
Total net assets on March 31, 2018, were up ¥19,151 million, or8.6%, from the previous fiscal year-end, to ¥241,382 million.
Cash and Cash Equivalents
The balance of cash and cash equivalents (hereafter referred toas “cash”) at March 31, 2018 was ¥40,484 million, down from
¥47,549 million at March 31, 2017. This decrease was because net
cash provided by operating activities was ¥25,496 million, net cashused in investing activities was ¥19,125 million, and net cash usedin financing activities was ¥13,429 million.
Cash flows from operating activities
During the fiscal year under review, net cash provided by operating
activities amounted to ¥25,496 million, 53.3% less than in thepreceding fiscal year. Principal sources of cash were ¥31,841
million in income before income taxes (up 5.4% year on year),¥14,133 million in depreciation and amortization (up 2.6%), and¥5,033 million from an increase in notes and accounts
payable–trade (compared with a decrease of ¥2,300 million in theprevious fiscal year). Major uses of cash were a ¥13,630 million
decrease in assets and liabilities for Transportation Security
Services (compared with a ¥18,157 million increase in the previous
fiscal year) and income taxes paid of ¥11,591 million (up 9.2%).
Increase (decrease) in assets and liabilities for Transportation
Security Services includes the increases and decreases in funds
procured for transportation security services that are included in cash
for Transportation Security Services and short-term loans payable.
Cash flows from investing activities
Net cash used in investing activities totaled ¥19,125 million(down 13.3% from the preceding fiscal year). Major uses of cash
were ¥11,776 million for the purchase of property, plant andequipment (up 7.0%), ¥5,973 million for the purchase of sharesof subsidiaries resulting in change in scope of consolidation(down 7.0%), and ¥1,987 million for the purchase of investment
securities (down 31.5%).
Cash flows from financing activities
Net cash used in financing activities was ¥13,429 million (down
34.8% year on year). Major uses of cash were ¥5,780 million in cash

Also, it is the policy of the ALSOK Group to issue dividends fromretained earnings twice a year as interim and year-end dividends.
The year-end dividend is decided at the General Shareholders’Meeting, while the interim dividend is decided by the Board of
Directors. Accordingly, for the fiscal year ended March 31, 2018, in
consideration of results in the year under review, results forecasts
for the current fiscal year, and capital investment plans, theCompany paid an annual dividend of ¥60.00 per share, including aninterim dividend of ¥30.00 per share, for a consolidated payout
ratio of 33.7%.
Risk Information
In relation to the ALSOK Group's business and accounting
circumstances, the following items can potentially have significant
effects on the judgment of investors. Future-related information
mentioned below was deemed appropriate by the Group as of June
26, 2018, the date on which the 53rd Securities Report was filed.
1. Sales Depending on a Specific Business Sector
Sales from the financial institutions sector accounted for over 20
percent of the Group’s total sales in the fiscal year ended March
31, 2018. Consequently, trends in the economic environment
surrounding financial institutions, including the possible
cancellations of existing security services contracts due to theelimination or consolidation of branch locations, can have aconsiderable effect on the Group’s operating performance.
Therefore, the Group will continue to aggressively advance sales
promotion toward other business sectors in order to find newclients as well as maintain and develop firm relationships withexisting clients in the financial institutions sector.
2. Electronic Security Services BusinessOf the Group’s total sales, 39.9% are dependent on the Electronic
Security Services business. The effective operation of theElectronic Security Services business requires continuous capital
investment for structuring and maintaining operational
infrastructures such as the preparation of Guard Centers anddepots, vehicles for Electronic Security Services andcommunication systems, as well as personnel expenses for Guard
Center staff and security staff. Should the Group fail to enter into acertain volume of Electronic Security Services contracts due to anyof a wide range of factors associated with the Group’s Electronic52

Financial Section

Security Services business, the Group's operating performancecan be affected. Also, in situations such as when troubles occur inbusiness operations by communication system failure, the Group's
operating performance can be affected. Therefore, we have tried todiversify our business so that we can minimize business risks.
3. Transportation Security Services
The Group uses its own funds or funds financed through overdrafts
as cash to be used in the CD machines installed by the subsidiaries
of financial institutions in their business partners' stores andoffices or cash used to deposit advances for Cash Deposit Machine
On-line System contracts. For this reason, though the Groupendeavors on the efficient operations of the fund, should there be
an increase in interest rates associated with cash procured forthese purposes, the Group’s operational performance could be
adversely affected. Consequently, the Group must renegotiate thepricing conditions defined in contracts between the Group and its
clients. Further, the Company has subscribed to cash securities
transport insurance to cover any damage or loss that may occur
during the transportation or storage of such cash. If the trend of
cashless settlement becomes more common in Japan, the needs
toward cash transportation would decline, and the Group’s
operating performance can be affected. Therefore, the Groupmakes a study of developing new services based on the progress ofthe cashless trend.
4. Dependency on a Specific Equipment Supplier
The Group mostly depends on some companies for development andprovision of the center equipment installed in the Guard Centers.
Should any difficulty arise in the provision of such center equipment
due to natural disasters or other reasons, the normal operation of theGuard Centers could be affected. As for provision involving the center
equipment as well as main equipment used for the offer of Electronic
Security Services, the Group enters into a master agreement forcommodity purchases to provide for anticipated quantities of items.
Furthermore, the Group holds certain levels of spare items formaintenance to allow for emergencies.
5. Adaptation to Changes in the Technological Environment
The development of new products and services utilizing AI, IoT,
robots, and ICT technology are indispensable to the Group’s
adequate provision of security services, since we need to deal
with brutal and sophisticated crimes such as terrorism andcyberattacks; a declining birthrate and aging of society; natural
disasters such as earthquakes, volcanic eruption, and wind andflood damage; and decrepit infrastructure equipment. Should ouradaption to technological progress fall behind the changes in thetechnological environment, the Group’s operating performance
could be negatively affected. Therefore, the ALSOK Group
continues to make efforts in the development of security-related
equipment and advanced technologies such as ICT, IoT, and AI
principally in the R&D Department of the Group. At the same time,
we work to avoid risk by staying abreast of the latest technology
trends in communications, devices, and other technologies.

53

6. Management of Client Information
In order to conclude a security services contract with clients, theGroup obtains a significant amount of information about themincluding their names, addresses, and phone numbers of relatedparties, as well as various information about the clients’ premises
where security services are to be provided, and utilizes thatessential information for the execution of security services andbusiness activities. If any problem, whether inevitable or not,should arise, the Group may suffer for unfavorable reputation andlegal claim for damages. We, therefore, have managed client
information properly through employee education and carefulobservation of subcontractors. These measures enable us to avoid
leaking, losing, and deleting personal information. As a further
precaution, the ALSOK Group has Cyber Risk Insurance, which
covers all Group companies.
7. Ensuring Human Resources
In recent years, Japanese society has been rapidly super aging due
to a combination of extended average life expectancy and a plungein the birthrate. Although it can be anticipated that these trends
will lead to a rise in the need for ALSOK’s security services, it
could become more difficult to recruit younger workers in thislabor-intensive industry and could lead to long working hours
caused by labor shortage. We promote government-led work-stylereform while improving labor productivity as we secure the healthof employees. As well, to further strengthen the Group's
cooperative recruitment structure we actively recruit year-round,implementing local recruitment through our nationwide security
base. Moreover, we work to cultivate the abilities of employees andbe well-placed through the promotion of personnel exchanges
between urban and regional areas. In addition, we established acompany which re-employs experienced retired workers for the
purpose of securing a high-quality labor force.
8. Legal Restrictions
In order to provide our clients with various security and otherservices, the Group is subject to a variety of legal restrictions,
including major ones stated in the table below. Should any of these
legal restrictions be amended or abolished, or any new legal
provisions established, the Group’s operating performance could
be affected.
9. Measures of System Failures Due to Natural and Other Disasters
In the event an unprecedented natural disaster were to occur,
information exchange with the clients would become unavailable,causing serious difficulties such as the suspension of our security
services. In such cases, the resulting claims for damages and thedecline in public trust of the Group could affect the operating
performance and future business development of the Group. In
addition, the Group may be compelled to pay huge expenses torecover damaged monitoring centers and other facilities. The
Group has established data centers at two sites in eastern andwestern Japan, creating a backup environment for importantsystems and mutual monitoring to further ensure business
continuity. Preparing for a major, wide-area natural disaster, theGroup will reduce risk by taking measures for each stage.

ALSOK REPORT 2018

10. Risk Related to Massive Disasters
Should a major earthquake occur, or there be wind and flood
damage, and following disasters such as long-term power failure
occur, the Group’s networks or other operational infrastructure
could stop functioning, which may disrupt its ability to provide
security and other services. Moreover, such disasters could
damage the Group’s assets, such as security equipment located onclients' premises, forcing the Group to repair or replace thoseassets, and the Group’s operating performance or financial
position could be adversely affected. Therefore, the Group has
developed a number of precautionary measures based on its
wealth of security-related experience and expertise. It has
formulated disaster response rules in accordance with disaster
response regulations, established a BCP and other responsemanuals, stockpiled necessary disaster prevention items, andMajor Operation

Electronic Security Services
Stationed Security Services
Transportation Security Services

Electronic Security Services
General Property Management and Fire
Protection Services

Electronic Security Services

Transportation Security Services, Other Services

developed a flexible nationwide response network. It also conducts
periodic disaster prevention training and education and otherprecautionary measures. In addition, to ensure that in time ofdisaster ATMs remain in operation as much as possible, on March
20, 2014 we acquired ISO 22301, the international standard forbusiness continuity management systems, certification for theoperation of Transportation Security Services that load cash
into ATMs in Tokyo managed by the ALSOK Group and thetroubleshooting of ATMs. It was Japan's first as a security services
company to acquire this certification. Hereafter, the Group will
enhance the structure, and will contribute to the preservation ofsocial infrastructure.

Relevant Laws
Security Business Law
Road Traffic Law

Construction Business Act

Ministry of Land, Infrastructure, Transport and Tourism

Act on Ensuring Fair Electric Business Practices
Electrical Appliance and Material Safety Act

Ministry of Economy, Trade and Industry
Ministry of Economy, Trade and Industry
Ministry of Economy, Trade and Industry/
Consumer Affairs Agency
Consumer Affairs Agency

The Specified Commercial Transaction Act
Consumer Contract Act
Truck Transport Business Law
Freight Forwarding Business Law
Road Trucking Vehicle Law
Warehousing Business Law

Stationed Security Services

Act on Penal Detention Facilities and Treatment of
Inmates and Detainees
Act on Special Districts for Structural Reform

Other Services

Ministry of Land, Infrastructure, Transport andTourism
Ministry of Land, Infrastructure, Transport andTourism
Ministry of JusticeCabinet OfficeFire and Disaster Management Act

Ministry of Internal Affairs and Communications

Fire Prevention OrdinancePharmaceutical and Medical Device Act
Act on Maintenance of Sanitation in Building
Waste Disposal Act
Building Lots and Buildings Transaction Business Law
Architect Act
Act on Advancement of Proper Condominium
Management

Each municipality

Electricity Business Act
Law Concerning the Securing of Safety and the
Optimization of Transaction of Liquefied Petroleum
Gas
Long-Term Care Services

National Public Safety Commission

Act against Delay in Payment of Subcontract Proceeds, Japan Fair Trade Commission/
Small and Medium Enterprise Agency
Etc. to Subcontractors
Telecommunications Business Law
Ministry of Internal Affairs and Communications
Radio Law

Transportation Security Services

General Property Management and Fire
Protection Services

Competent Authorities, etc.

Long-term Care Insurance Act
Act on Social Welfare for the Elderly
Correspondence Delivery Act
Worker Dispatching Act
Employment Security Act
Insurance Business Law
Financial Instruments and Exchange Act
Act on Prevention of Transfer of Criminal Proceeds
Law About the Adequacy of Duties of the Detective
Business
Personal Information Protection Law
Act on Special Measures to Prevent and Correct Shiftfor Consumption Tax
Act Against Unjustifiable Premiums and Misleading
Representations

Ministry of Health, Labour and Welfare
Ministry of the Environment
Ministry of Land, Infrastructure, Transport andTourism

Ministry of Economy, Trade and Industry
Ministry of Health, Labour and Welfare/
Each prefecture/Each municipality
Ministry of Internal Affairs and Communications
Ministry of Health, Labour and Welfare
Financial Services Agency
National Public Safety Commission
Personal Information Protection Commission
Japan Fair Trade Commission/Small and Medium
Enterprise Agency/Consumer Affairs Agency
Consumer Affairs Agency

54

Financial Section

Consolidated Balance Sheets
Millions of yen
As of March 31

AssetsCurrent assets
Cash and deposits
Cash for Transportation Security Services
Notes and accounts receivable―trade
Lease receivables and investment assets
Short-term investment securities
Raw materials and supplies
Costs on uncompleted construction contracts
Advances paid
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Land
Lease assets
Accumulated depreciation
Lease assets, net
Construction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Software
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Lease and guarantee deposits
Insurance funds
Net defined benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

55

2017

2018

55,587
66,745
50,118
4,336
803
5,375
451
6,340
2,183
7,881
(197)
199,627

47,57368,71552,286
4,535
338
5,708
456
6,526
2,311
8,620
(226)
196,845

48,336(25,480)
22,856130,824(111,367)
19,45723,01829,444(13,513)
15,931
992
16,227(11,509)
4,717
86,97448,096(26,191)
21,905
136,429(114,244)
22,18522,74033,291(14,475)
18,815662
17,049(12,111)
4,937
91,246

3,411
18,615
2,973
25,0003,207
21,1085,996
30,31340,300
359
8,935
2,167
533
10,394
11,975(392)
74,275
186,250
385,877

42,597
337
8,447
1,679
4,250
8,912
12,913(380)
78,759200,319
397,164

ALSOK REPORT 2018

Millions of yen
As of March 31

Liabilities
Current liabilities
Notes and accounts payable―trade
Short-term loans payable
Current portion of long-term loans payable
Current portion of bonds
Accounts payable―other
Lease obligations
Income taxes payable
Accrued consumption taxes
Provision for bonuses
Provision for directors’ bonuses
Deferred tax liabilities
Other
Total current liabilities
Noncurrent liabilities
Bonds payable
Long-term loans payable
Lease obligations
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Net defined benefit liability
Provision for directors’ retirement benefits
Asset retirement obligations
Other
Total noncurrent liabilities
Total liabilities

Net Assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income (loss)
Non-controlling interests
Total net assets
Total liabilities and net assets

2017

2018

21,42627,4383,378
54
17,060
4,090
6,214
3,849
1,958
100
0
12,534
98,104

23,42014,435
3,176
24
22,762
4,511
5,769
3,762
2,189
118
0
12,32492,49547
11,161
19,429621
314
29,572
1,778
77
2,539
65,542
163,647

23
8,493
21,993808
314
27,327
1,806
101
2,417
63,287
155,782

18,67531,485
157,596(2,019)205,737

18,67534,243
171,161(1,069)223,010

7,306(5,286)69(11,204)(9,114)25,607222,230
385,877

7,358(5,286)4(6,850)(4,773)23,144
241,382
397,164

56

Financial Section

Consolidated Statements of Income andConsolidated Statements of Comprehensive Income
Consolidated Statements of Income
Fiscal years ended March 31

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Gain on sales of investment securities
Rent income
Gain from insurance claim
Equity in earnings of affiliates
Penalty income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on sales of investment securities
Loss on retirement of noncurrent assets
Financing expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Total extraordinary income
Extraordinary loss
Loss on valuation of investment securities
Impairment loss
Provision for loss on dissolution of the employees’ pension fundTotal extraordinary loss
Income before income taxes
Income taxes―current
Income taxes―deferred
Total income taxes
Net income
Profit attributable to non-controlling interests
Profit attributable to owners of parent

Millions of yen

2017

2018

413,343
310,704
102,639
74,21728,422435,982
330,493
105,489
75,37830,111

176
587
6
277
57
1,420
274
999
3,798

176
613
86
311
87
1,292
300
942
3,810

1,005
3
162
296
443
1,911
30,309

987
1
198
295
525
2,008
31,913

59
59

1
1

12
45
95
153
30,215
10,940(659)
10,281
19,934
1,603
18,3301
73―
74
31,841
11,366(473)
10,893
20,948
1,603
19,344

Consolidated Statements of Comprehensive Income

57

Millions of yen

Fiscal years ended March 31

2017

2018

Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income (loss) of associates accounted for using equity method
Total other comprehensive income
Comprehensive income(Contents)
Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

19,93420,948

755
48
2,091
(6)
2,888
22,823

56
(61)
4,462
108
4,566
25,514

21,128
1,694

23,761
1,752

ALSOK REPORT 2018

Consolidated Statements of Changes in Net Assets
Millions of yen
Shareholders’ equity
Retainedearnings

Treasury stock

Total
shareholders’equityCapital stock

Capital surplus

Balance as of April 1, 2016
Cumulative effects of changes in accounting policies
Balance at the beginning of current period reflecting changes
in accounting policies
Changes of items during the period
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Change in treasury stock of parent arising fromtransactions with non-controlling interest shareholders
Net changes of items other than shareholders’ equity

18,675

32,117

144,551495(1,991)

193,352495

18,675

32,117145,046(1,991)

193,848(28)(5,780)18,330(28)

Total changes of items during the period
Balance as of March 31, 2017—
18,675(5,780)18,330(632)(632)
31,485(632)
12,550157,596

Accumulated other comprehensive income

Balance as of April 1, 2016
Cumulative effects of changes in accounting policies
Balance at the beginning of current period reflecting changes
in accounting policies
Changes of items during the period
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Change in treasury stock of parent arising fromtransactions with non-controlling interest shareholders
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance as of March 31, 2017(28)
(2,019)11,889205,737

Noncontrollinginterests

Total net
assetsValuationdifference on
available-for-salesecurities

Revaluation
reserve for land

6,570

(5,286)113(13,309)(11,912)24,182

205,622495

6,570(5,286)113(13,309)(11,912)24,182

206,118

Total accumulated
Foreign currency Remeasurements
translation of defined benefit other comprehensive
income (loss)
adjustment
plans, net of tax(5,780)18,330
(28)
735
735
7,306

—
—
(5,286)

(43)
(43)
69

2,105
2,105
(11,204)

2,797
2,797
(9,114)

1,425
1,425
25,607(632)
4,222
16,112
222,230
Millions of yen

Shareholders’ equity

Balance as of April 1, 2017
Cumulative effects of changes in accounting policies
Balance at the beginning of current period reflecting changes
in accounting policies
Changes of items during the period
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Change in treasury stock of parent arising fromtransactions with non-controlling interest shareholders
Purchase of shares of consolidated subsidiaries
Capital increase of consolidated subsidiaries
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance as of March 31, 2018

Capital stock

Capital surplus

Retainedearnings

Treasury stock

18,67531,485

157,596(2,019)205,737―

18,67531,485

157,596(2,019)205,737(1)952( 5 ,7 8 0 )19,344(1)
4,374( 5 ,7 8 0 )19,344
3,422

―
(668)
4

(668)
4
—
18,675

2,758
34,243

Total shareholders’equity13,564
171,161950(1,069)17,273223,010

Noncontrollinginterests

Total net
assets

Accumulated other comprehensive income

Balance as of April 1, 2017
Cumulative effects of changes in accounting policies
Balance at the beginning of current period reflecting changes
in accounting policies
Changes of items during the period
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Change in treasury stock of parent arising fromtransactions with non-controlling interest shareholders
Purchase of shares of consolidated subsidiaries
Capital increase of consolidated subsidiaries
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance as of March 31, 2018

Valuationdifference on
available-for-salesecurities

Revaluation
reserve for land

7,306

(5,286)69(11,204)(9,114)25,607222,230―

7,306(5,286)69(11,204)(9,114)25,607222,230

Total accumulated
Foreign currency Remeasurements
translation of defined benefit other comprehensive
adjustment
plans, net of tax
income (loss)(5,780)19,344
(1)
4,374

51
51
7,358

―
―
(5,286)

(64)
(64)
4

4,354
4,354
(6,850)

4,341
4,341
(4,773)(2,462)(2,462)
23,144

―
(668)
4
1,878
19,151
241,38258

Financial Section
Consolidated Statements of Cash Flows
Millions of yen
Fiscal years ended March 31

Net cash provided by (used in) operating activities
Income before income taxes
Depreciation and amortization
Impairment loss
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors’ bonuses
Interest and dividends income
Interest expenses
Equity in (earnings) losses of affiliates
Loss (gain) on sales of noncurrent assets
Loss on retirement of noncurrent assets
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Loss (gain) on valuation of derivatives
Decrease (increase) in notes and accounts receivable—trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable—trade
Decrease (increase) in net defined benefit asset
Decrease (increase) in assets and liabilities for Transportation Security Services
Other
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Income taxes refund
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Decrease (increase) in time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Proceeds from sales of investment securities
Payments for transfer of business
Purchase of shares of subsidiaries resulting in change in scope of consolidation
Purchase of shares of subsidiaries and associates
Decrease (increase) in short-term loans receivable
Payments of long-term loans receivableCollection of long-term loans receivable
Other
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Redemption of bonds
Purchase of treasury stock
Repayments of lease obligations
Cash dividends paid
Cash dividends paid to non-controlling interests
Payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

59

2017

2018

30,215
13,773
45
1,076
(20)
658
184
(36)
(763)
1,005
(1,420)
(22)
162
(62)
12
9
(878)
844
(2,300)402
18,1574,135
65,181984(1,005)(10,617)19
54,561

31,841
14,133
73
1,627
17
(329)
210
17
(790)
987
(1,292)
9
198
(87)
1
20
(2,175)
(323)
5,033
438
(13,630)
1,014
36,996
1,056(989)(11,591)
23
25,496(741)(11,006)165(2,899)2,106947(11,776)22(1,987)1,544(43)(5,973)
(108)
25
(45)
76
(1,807)(19,125)―(6,424)

―

183
(90)
110
(3,459)(22,055)(5,989)491(3,826)(104)(1)(4,265)(5,780)(474)(632)(20,582)(4)
11,91935,63047,549196
586(3,456)(54)(1)(4,420)(5,780)(500)―(13,429)(7)(7,064)47,54940,484

ALSOK REPORT 2018

Breakdown of Sales/Number of Contracts
Net Sales by Service Type
Billions of yen

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Electronic Security Services

142.5

138.9

138.4

142.9

147.1

151.8

160.4

167.1

170.5

173.8

Stationed Security Services

72.8

70.6

71.3

71.3

73.8

77.2

88.4

93.9

100.4

110.2

Transportation Security Services
General Property Management
and Fire Protection Services1

47.4

46.8

47.6

49.8

50.8

51.0

52.3

54.6

56.1

60.2

―

―

17.0

36.6

40.6

44.8

58.3

54.9

57.8

61.9

Fiscal years ended March 31

Security Services

―

―

―

―

―

―

―

7.5

24.9

25.6

Other Services

22.2

22.1

4.7

4.0

3.0

3.2

6.2

3.5

3.4

4.0

Total

285.0

278.5

279.2

304.7

315.5

328.2

365.7

381.8

413.3

435.9

Long-Term Care Services

2

1. General Property Management and Fire Protection Services was converted to a reportable segment in the fiscal year ended March 31, 2012, and accordingly net sales amounts for this segment are displayed separately fromthe fiscal year ended March 31, 2011, and onward. Net sales amounts for fiscal years ended March 31, 2010, and prior are included under “Other Services”
2. Long-Term Care Services was converted to a reportable segment in the fiscal year ended March 31, 2017, and accordingly net sales amounts for this segment are displayed separately from the fiscal year ended March 31,
2016, and onward. Net sales amounts for fiscal years ended March 31, 2015, and prior are included under “Other Services.”

Net Sales by Client Type
Billions of yen
Fiscal years ended March 31

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Business corporations3

164.8

163.1

160.9

178.4

186.5

196.7

224.9

234.3

244.9

263.5

Financial institutions

90.4

85.7

88.3

90.7

89.8

90.5

91.3

92.3

91.7

92.0

Public institutions3

19.6

19.5

19.3

20.5

22.0

22.8

26.4

26.2

29.7

31.4

Individuals4

10.0

10.1

10.6

14.9

17.1

18.0

22.9

28.9

46.8

48.9

Total

285.0

278.5

279.2

304.7

315.5

328.2

365.7

381.8

413.3

435.9

3

3. In conjunction with the conversion of Japan Post to a privately operated company in October 2007, sales to Japan Post Co., Ltd., have been transferred from “Public institutions” to “Business corporations” and sales to Japan
Post Bank Co., Ltd., and Japan Post Insurance Co., Ltd., have been transferred to “Financial institutions.” Sales to subsidiaries of financial institutions were previously included under “Business corporations” but have since
been transferred to “Financial institutions.”
4. Sales of HOME ALSOK APARTMENT AND CONDOMINIUM PLAN and HOME ALSOK MIMAMORI SUPPORT have been included under “Individuals,” even for contracts in which the customer is a business corporation or
government office.

Number of Contracts
Contracts

2010

2011

2012

2013

2014

2015

2016

2017

2018

Electronic Security Services 507,954

524,708

541,654580,263

630,977

677,672

803,601

854,083

888,955

922,928

Corporate Clients

381,759

388,853

396,580

406,261

422,676

440,028

463,053478,925

493,035

508,374

Individual Users

126,195

135,855

145,074

174,002

208,301

237,644

340,548

375,158

395,920

414,554

2,854

2,785

2,866

2,934

3,020

3,227

3,597

3,871

4,213

4,357

Transportation Security Services 33,960
General Property Management―
and Fire Protection Services5

35,96339,06548,284

51,69855,42059,134

62,14665,75572,454―

44,212

47,91354,90363,00473,89881,90889,67098,0442009

Fiscal years ended March 31

Security Services

Stationed Security Services

―

―

―

―

―

―

―

12,804

22,62821,234

Other Services

43,17142,909

8,307

8,957

11,98913,72522,477

18,21722,28525,263

Total

587,939

606,365

636,104

688,351

752,587

813,048962,707 1,033,029 1,093,506 1,144,280

Long-Term Care Services

67

5. General Property Management and Fire Protection Services was converted to a reportable segment in the fiscal year ended March 31, 2012, and accordingly the number of contracts for this segment is displayed separatelyfrom the fiscal year ended March 31, 2011, and onward. The number of contracts for fiscal years ended March 31, 2010, and prior is included under “Other Services.”
6. Long-Term Care Services was converted to a reportable segment in the fiscal year ended March 31, 2017, and accordingly the number of contracts for this segment is displayed separately from the fiscal year ended March
31, 2016, and onward. The number of contracts for fiscal years ended March 31, 2015, and prior is included under “Other Services.”
7. If contracts for individual households in housing complexes are included, this figure would be approximately 1,110,000.

60

Corporate Information/Stock Information
Corporate Information (As of April 1, 2018)
Corporate Name
Head Office
Established
CapitalFiscal Year-End
Employees
Business Operations

Distribution of Shares by Shareholder Type (As of March 31, 2018)

SOHGO SECURITY SERVICES CO., LTD.
1-6-6 Motoakasaka, Minato-ku, Tokyo
107-8511, Japan
July 16, 1965
¥18,675 million
March 31(Consolidated) 37,519(Non-consolidated) 11,976
Head office/64 Branches/37 Offices/251 Sales
Offices/72 Consolidated Subsidiaries(Including 9 Overseas Subsidiaries)/11
Companies Accounted For by the Equity Method

Securities Companies 0.6%

Treasury Stock
0.8%

Financial Institutions
32.6%

Individuals
and Other
19.3%
Foreign Investors
22.6%

Domestic Corporations
24.1%

Major Shareholders (Top 10)

Stock Information(As of March 31, 2018)

Total Number of
Shares Authorized
Number of Shares Issued

300,000,000

Name

102,040,042

SOHGO CORPORATION
Saitama Machinery Co., Ltd.
Employees Shareholding Association
Trust & Custody Services Bank, Ltd.
(as trustee for Mizuho Bank Ltd.
Retirement Benefit Trust Account re-entrusted
by Mizuho Trust and Banking Co., Ltd.)

7,388
5,283
4,269

7.29
5.21
4.21

4,261

4.20

Kamakura Corporation
Japan Master Trust Bank, Ltd. (Trust account)
Japan Trustee Services Bank, Ltd. (Trust account)
Kizuna Corporation
Atsushi Murai

4,150
3,739
3,421
2,950
2,885

4.09
3.69
3.37
2.91
2.84

SMBC Trust Bank Ltd.
(Sumitomo Mitsui Banking Corporation
Retirement Benefit Trust Account)

2,735

2.70

(including 781,657 shares of treasury stock)

Number of Shareholders
at the End of the Preceding
Fiscal Period
Stock Listing
Securities CodeMinimum Trading Lot

13,067First Section of Tokyo Stock Exchange
2331
100

Number ofControlling
Shares Held
Share
(Thousand shares)(%)* Treasury stock (781,657 shares) has been excluded.

Stock Chart
（Yen）

（Yen）

8,000

24,0006,000

18,000

4,000

2,000

Nikkei Stock Average

12,0006,000

Our Closing Price (Left axis)00（Thousand shares）
18,000
Trading Volume

12,0006,000
02009/3

61

2010/3

2011/3

2012/3

2013/3

2014/3

2015/3

2016/32017/3

2018/3

ALSOK REPORT 2018

ALSOK is a Tokyo 2020 Official Partner.
In October 2015, ALSOK concluded an agreement with the Tokyo Organising Committee of the Olympic and Paralympic Games to become a Tokyo 2020 Official Partner inthe category of “Security Services and Planning.”
The Company has long contributed to the promotion of sports in Japan by producing
many of the athletes who have represented the country in such Olympic sports as judo
and wrestling. Leading up to Olympic and Paralympic Games Tokyo 2020, we willcontinue to support the efforts of our athletes. During the event itself, we will contribute to the event’s success through rigorous security provided by an all-Japan team.

62

SOHGO SECURITY SERVICES CO., LTD.
1-6-6 Motoakasaka, Minato-ku, Tokyo 107-8511, Japan
URL http://www.alsok.co.jp/en/
IR OfficeTEL +81-3-3423-2331
FAX +81-3-3470-1565

CSR Office

TEL +81-3-3470-1972
FAX +81-3-5411-1636

・REBORG is a registered trademark of SOHGO
SECURITY SERVICES CO., LTD.
・Tokyo SKYTREE is a registered trademark of
Tobu Railway Co., Ltd.
・PrivacyMark and PrivacyMark System areregistered trademarks of JIPDEC.

● The CO2 emissions released during the creation of this report (2,000 kg) have been carbon offset

using the Offsetting Credit certified by the Ministry of the Environment.

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