Directors, Audit and Supervisory Board Members
and Executive Officers
Directors

Yasuo Nakayama

FounderPresident andRepresentative Director

SECOM CO., LTD.

Makoto Iida

Junzo Nakayama

Ichiro Ozeki

Tatsuro Fuse

Senior Executive Director

Executive Director

Executive Director

Executive Director

ANNUAL REPORT 2018

Yasuyuki Yoshida

SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo 150-0001, Japanwww.secom.co.jp

Tatsuya Izumida

Tatsushi Kurihara

Takaharu Hirose

Hirobumi Kawano

Hajime Watanabe

Director

Director

Outside Director

Outside Director

Outside Director

Audit andSupervisory Board
Members

Executive Team

Takayuki Ito

Directors

Koji Kato

Yasuo Nakayama

Kenichi Furukawa

Sumiyuki Fukumitsu

Osamu Ueda

Kazuhiro Mitomo

Hideki Kato*

President andRepresentative Director

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Masahiro Takeda

Kensuke Shindo

Yoshinori Yamanaka

Takehiko Senda

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Toshiaki Mizuno

Yasufumi Kuwahara

Seiya Nagao

Takashi Nakada

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Shokichi Ishimura

Noriyuki Fukuoka

Noriyuki Uematsu

Michiyoshi Morita

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Keitaro Arai

Takeshi Akagi

Osamu Nagai

Makoto Inaba

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Yoichi Sugimoto

Sadahiro Sato

Atsushi Komatsu

Executive Officer

Executive Officer

Executive Officer

Makoto Yasuda*
Masao Yokomizo*

Yasuyuki Yoshida
Senior Executive Director

Junzo Nakayama
Executive Director*Outside

Ichiro Ozeki
Executive Director

Tatsuro Fuse
Executive Director

Tatsuya Izumida
Director

ANNUAL REPORT 2018Year ended March 31, 2018

In response to changing customer needs,
SECOM is working to realize its vision for the
future— the Social System Industry —by
providing comprehensive, integrated services
and systems that make life more secure,convenient and comfortable.

Executive Officers

Tatsushi Kurihara
Director

101(As of July 31, 2018)

Printed in JapanSECOM Annual Report 2018

セコムアニュアルレポート2018（英語版）

表紙オモテ

三校

Profile

SECOM CO., LTD.,

Since its establishment,
has sought tokeep abreast of the times with the aim of creating pioneering services
and systems that deliver safety and peace of mind, as well as
make life more comfortable and convenient, in line withits mission of helping to achieve a society free from concerns,
thereby helping to resolve key social imperatives.

Contents
Established in 1962, SECOM is recognized as Japan’s first security services provider.
Since then, the Company has sought to develop and advance a wide range of services
and systems that respond to evolving social imperatives and benefit society. These
include on-line security systems for commercial subscribers; home security systems;
COCO-SECOM, a mobile security system for outdoor use; and the SECOM Drone, asmall autonomous flying surveillance robot.
SECOM, which comprises the parent company and the companies of the SECOM
Group, strives to create services and systems that deliver safety and peace of mind,
as well as make life more comfortable and convenient, whenever and wherever necessary. Accordingly, we are pushing forward with efforts to realize our Social System
Industry vision, which describes a framework of distinctive, integrated services andsystems. Today, our business portfolio encompasses security services, fire protection
services, medical services, insurance services, geographic information services, business process outsourcing and information and communication technology (BPO andICT) services, and real estate and other services.
To accelerate the realization of our Social System Industry vision, in May 2017 weformulated the SECOM Group’s Vision for 2030. Guided by this vision, we are working tocreate the ANSHIN* Platform, a service infrastructure designed to provide peace ofmind to people in their everyday lives, as well as to society as a whole. Going forward,
we will capitalize on the ANSHIN Platform to alleviate problems and resolve concernswith the aim of delivering enduring peace of mind and growing together with society.
We have also expanded outside Japan. Currently active in 19 countries and territories, where we provide uniquely SECOM security services, fire protection services,
medical services, geographic information services, and BPO and ICT services customized to reflect local needs and sensibilities, we continue working to grow ouroverseas operations.

2 Financial Highlights
4 A Message to Shareholders
9 Corporate Philosophy
10 Milestones
12 SECOM at a Glance
14 The Value Creation Process
16 The SECOM Group’s Vision for 2030
20 Special Feature: SECOM’s Growth Strategies
24 SECOM Today
34 Corporate Social Responsibility
36 ESG Initiatives
45 Financial Review
49 Audited Financial Statements
82 Other Financial Data
87 Consolidated Financial Data
(Based on Japanese GAAP) (Reference)
91 Nonconsolidated Financial Data
(Based on Japanese GAAP) (Reference)
95 Corporate Information
99 SECOM’s Basic Business Areas
101 Directors, Audit and Supervisory Board Members
and Executive Officers*ANSHIN is Japanese for “peace of mind.”

SECOM
SECOMAnnual
AnnualReport
Report2018
2018

1

1

Financial Highlights

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

U.S. GAAP

Japanese GAAPSECOM CO., LTD. and Subsidiaries
For the years ended/as of March 31

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

In millions of yen

In thousands of U.S. dollars

Years ended March 31

Year ended March 31

2018

2017

2016

2018

¥1,082,792
142,835
96,623
1,838,945
1,000,277¥1,031,261
130,178
91,387
1,763,278
929,242¥ 983,428
118,905
84,072
1,681,332
865,278$10,215,019
1,347,500
911,537
17,348,538
9,436,576

In yenIn U.S. dollars¥ 385.19
130.0065.00
3,964.40$ 4.18
1.42
0.71
43.24

SECOM CO., LTD. and Subsidiaries
For the years ended/as of March 31

Revenue
Operating profit
Ordinary profit
Net income attributable to owners of the parent
Total assets
Total net assets¥ 442.70
150.0075.00
4,582.96

Cash dividends(Interim dividend)
SECOM CO., LTD. shareholders’ equity¥ 418.71
140.0070.00
4,257.50

Notes: 1. Yen amounts have been translated into U.S. dollars, solely for the convenience of the reader, at the approximate rate of ¥106=US$1, the rate
prevailing on the Tokyo Foreign Exchange Market on March 31, 2018.
2. Net income attributable to SECOM CO., LTD. per share of common stock is based on the average number of shares outstanding during each period,
less treasury stock.
3. SECOM CO., LTD. shareholders’ equity per share of common stock is based on the number of shares outstanding at the end of each period, lesstreasury stock.
4. Cash dividends per share of common stock are based on dividends approved and paid in each fiscal year. At the general shareholders’ meeting heldon June 26, 2018, approval was granted for a proposal to pay a year-end dividend of ¥80.00 for the year ended March 31, 2018. (For further
information, please see Note 18 of the Notes to Consolidated Financial Statements.)

2017

2016

2018

¥ 970,624
135,448
144,318
86,993
1,720,268
1,081,213¥ 928,098
131,050
147,033
84,1701,650,176
1,013,253¥ 881,028
128,582
134,826
77,0391,568,052
943,144$ 9,156,830
1,277,811
1,361,491
820,689
16,228,943
10,200,123

In yenIn U.S. dollars¥ 352.97
135.0065.00
3,817.82$ 3.76
1.46
0.71
41.18

80

70.6

74.0

84.1

Per share of common stock:¥ 398.58
155.0075.00
4,364.63

Net income
Cash dividends(Interim dividend)
Net assets

Note: Cash dividends per share of common stock are based on dividends the record dates for which fall in each fiscal year. The consolidated dividend payout
ratio for the fiscal year ended March 31, 2018, was 38.9%.

91.4

96.6

100

80

63.7

60

60

40

40

20

20

0

2013

2014

2015

2016

¥ 385.64
145.0070.00
4,086.87(In billions of yen)

(In billions of yen)

80.2

Year ended March 31

Net income attributable toowners of the parent (Japanese GAAP)Net income attributable to
SECOM CO., LTD. (U.S. GAAP)100

In thousands of U.S. dollars

2018

Per share of common stock:
Net income attributable to SECOM CO., LTD.

In millions of yen
Years ended March 31

2017

2018

0

2013

69.9

2014

75.4

77.0

2015

2016

84.2

2017

87.0

2018

Note: In the year ended March 31, 2018, net income attributable to SECOM CO., LTD., advanced ¥5.2 billion, to ¥96.6 billion. This result was attributable tohigher operating income in six segments, including security services.
In the year ended March 31, 2017, net income attributable to SECOM CO., LTD., advanced ¥7.3 billion, to ¥91.4 billion. Factors behind this result
included an increase in operating income, bolstered by higher sales of on-line security systems and a decrease in impairment loss on long-lived assets,
and a gain on private equity investments.
In the year ended March 31, 2016, net income attributable to SECOM CO., LTD., rose ¥3.9 billion, to ¥84.1 billion. Contributing factors included
increases in operating income in the security services segment—underpinned by higher revenue from on-line security systems—the medical services
segment and the fire protection services segment, as well as reduced income taxes, which reflected a decline in the statutory tax rate.

2

SECOM Annual Report 2018

SECOM Annual Report 20183

A Message to Shareholders

Understanding and Responding to Change

Through the ANSHIN Platform, a service infrastructure designed
to provide peace of mind to people in their everyday lives,
as well as to society as a whole, we continue working to addressincreasingly diverse and sophisticated social imperatives,
as well as to ensure sustainable growth and enhance
corporate value.

Operating in an environment characterized by dramatic change and mounting uncertainty, we
recognize that ensuring sustainable growth and accelerating the realization of our Social System
Industry vision will depend on encouraging a managerial mindset among all employees, thatis, on fostering employees who share SECOM’s Philosophy and have the ability to form
judgments and act independently. To bolster the functioning of this managerial mindset, we
continue to promote a fair and impartial organization that ensures a free and open corporate
culture. We are also working to maximize employees’ latent capabilities and inspiring themto fulfill their professional ambitions by creating a virtuous circle rooted in employee job
satisfaction, understanding that motivating employees to create and provide superior offerings
enables us to extend services that exceed the expectations of customers, which in turnConsolidated Operating Results

enhances customer satisfaction and society’s trust of SECOM as a company. This, in turn, drives

In the fiscal year ended March 31, 2018, the Japanese economy remained on a gentle upward

employees’ efforts to create and provide even better services.

trend, sustained by improved corporate earnings and employment levels, as well as by a

Makoto Iida
Founderthe SECOM Group through 2030, and set forth the ANSHIN Platform, a service infrastructure

policy shifts in the United States, the economic outlook for the People’s Republic of China

designed to provide peace of mind to people in their everyday lives, as well as to society as(PRC) and emerging economies, a lack of clarity around the United Kingdom’s exit from thea whole. This infrastructure seeks to alleviate problems and resolve concerns by responding

European Union, and the impact of geopolitical risk. These factors, together with the influence

to the increasingly diverse needs of individual customers through the seamless provisionof fluctuations in the financial and capital markets, continued to warrant caution.

of services that deliver enduring peace of mind whenever and wherever necessary. Guided

Against this backdrop, we continued to press forward toward the realization of our Social

partners in industry, government and academia that have the same mission to advanceas making life more comfortable and convenient, whenever and wherever necessary. Efforts

initiatives aimed at addressing social imperatives and creating new services and systems.

continued to concentrate on responding to the needs of customers through the provision

In the fiscal year ended March 31, 2018, employees in our seven businesses—securityof high-grade services and systems in our security services, fire protection services, medical

services, fire protection services, medical services, insurance services, geographic information

services, insurance services, geographic information services, BPO and ICT services, and real

services, BPO and ICT services, and real estate and other services—promoted a variety of

estate and other services businesses.

ambitious efforts, working with diligence and a high sense of purpose, as well as withsegments and the addition of results for new subsidiary TMJ, Inc., consolidated on October 2,

President and Representative Director

by our vision of a society free from concerns, over the past year we have collaborated with

System Industry vision, in line with our goal of providing safety and peace of mind, as well

Bolstered by a solid performance in the security services and fire protection services

Yasuo Nakayama

In May 2017, we formulated the SECOM Group’s Vision for 2030, a long-term plan to guiderecovery in consumer spending. However, uncertainties persisted regarding, among others,

autonomy and a common understanding of the vision we have outlined for SECOM in 2030.
In our commercial security services business, we reported an increase in contracts for our

2017, consolidated net sales and operating revenue in the period under review rose 5.0%, or

on-line security systems, as well as for static guard, cash collection and delivery, and other¥51.5 billion, to ¥1,082.8 billion. Operating income increased 9.7%, or ¥12.7 billion, to ¥142.8

services, reflecting our ability to respond effectively to customer needs. SECOM LX, whichbillion, bolstered by higher net sales and operating revenue in six segments, including security

combines on-line security with access control functions to help customers manage personnel

services. Despite a decline in gain on private equity investments, the increase in operating

efficiently, thereby reducing costs, helps companies objectively ascertain employees’ working

income pushed net income attributable to SECOM CO., LTD., up 5.7%, or ¥5.2 billion, tohours and address the issue of overwork, a key social imperative in Japan. Demand remained¥96.6 billion.

firm for SECOM LX, as well as for SECOM AX, a remote imaging on-line security system
featuring advanced image recognition technologies, and SECOM FX, which combines on-line

Enhancing Returns to Shareholders
Seeing the provision of a fair return to shareholders as a crucial management task, we

4

SECOM Annual Report 2018security with facility control functions.
In the area of security services for large-scale events, we recently commenced the full-scale

determine our consolidated dividend payout ratio based on an overall assessment of efforts

provision of 3-Dimensional Security. This service begins with SECOM 3D Security Planning,

to expand our operations and trends in our consolidated operating performance, in line withwhich uses high-precision 3D maps to support the formulation of an optimal security plan,

our policy of ensuring a consistent and stable distribution of profits. At the Ordinary Generaland encompasses the latest security services—including surveillance from above using

Meeting of Shareholders held on June 26, 2018, the payment of a year-end dividend of ¥80.00

the SECOM Airship or SECOM Aerostat dirigible and on the ground using temporarily installed

per share was approved. As a consequence, dividends for the full term, which also include an

security cameras, wearable cameras and the SECOM Drone Detection System—combined withinterim dividend of ¥75.00, amounted to ¥155.00, up ¥10.00 from the previous fiscal year.

security guards. These various services are coordinated by a vehicle-mounted On-Site Center,

SECOM Annual Report 2018

5

A Message to Shareholdersa mobile monitoring base that gathers and disseminates information, thereby supporting thesafe and secure staging of large-scale events.
In April 2018, we concluded an agreement to acquire 80.1% of the outstanding shares ofcommon stock of Toshiba Security Guard Corporation (TOSEC) from Toshiba Corporation.
Going forward, we will endeavor to leverage TOSEC’s wealth of experience and extensive

In our insurance services businesses, sales of distinctive non-life insurance policies
expanded favorably. These include MEDCOM, an unrestricted cancer treatment policy thatcovers all treatment costs, and fire insurance policies that extend discounts to subscribers who
have installed on-line security systems, recognizing this as a risk-mitigating factor.
Our geographic information services business centers on the collection of geographic dataknow-how in the provision of static guard services for plants and other large-scale facilities tofrom commercial satellite images, aerial photography, and vehicle/ground and other types offurther grow our commercial security services business by developing and extending high-surveying, which we integrate, process and analyze to provide geospatial information services

value-added services that go beyond static guards to underpin the safety and security ofto public sector entities—including national and local governments—and customers in thecustomers’ production capabilities.

private sector. We also offer these services to government agencies in emerging economies. In

In the home security services market, in July 2017 we launched SECOM Home Security

the period under review, Group company Pasco Corporation continued working to fortify its

NEO, a flexible system suited to diverse modern lifestyles that can be connected to various

data collection capabilities to further enhance the quality of the services we provide to address

devices. Concurrently, we released the SECOM My Doctor Watch, an emergency medical alert

increasingly diverse and sophisticated domestic and overseas needs associated with, amongand health management service centered on a wearable wristband tracker, which can be usedothers, the construction and maintenance of critical infrastructure and the prevention andwith SECOM Home Security NEO. In December 2017, we commenced sales of a second new

mitigation of risks and disasters.

service, SECOM Anshin Home Delivery Box, which facilitates the safe delivery of packages

BPO and ICT services business encompasses the provision of data center, business

whether the recipients are at home or not, an offering developed to respond to the rising need

continuity planning (BCP) support, information security, cloud-based services and BPO

for redelivery to recipients who were not at home to collect their packages the first time, which

services. In October 2017, we acquired all shares in TMJ, which boasts extensive experience andhas become somewhat of an issue in Japan.

know-how in the provision of high-grade contact center and other BPO services to a wide

Overseas, we continued working to expand the provision of SECOM-style security services,

range of major companies. The addition of this company, now a consolidated subsidiary, willa term we use to describe comprehensive on-line security systems that encompass everything

assist our efforts to fortify our capabilities in this area by, among others, enabling us to expand

from the installation of security equipment at the subscriber’s premises to the prompt

our safe and secure business support services.

dispatch of emergency response personnel when needed. In the period under review, ourOur real estate and other services business continued to emphasize the development andefforts concentrated on the growing economies of Southeast Asia and the PRC. Achievements

sale of condominiums equipped with distinctive security and disaster preparedness features.

included the formation of a strategic partnership with a major electric appliances manufacturer

Other services include real estate leasing, construction and installation.

in the PRC aimed at cultivating the local market for home security services. Elsewhere,
subsidiary Secom plc in the United Kingdom won the CCTV System of the Year Award in theCharting Sustainable GrowthInternational Fire and Security Conference (IFSEC) Security and Fire Excellence Awards 2017,

Operating in a constantly changing environment, we remain committed to continuously

garnering praise for the quality of the system’s products and services.

reevaluating what SECOM must do to ensure our actions are just and beneficial, as well as to

In fire protection services, SECOM Group companies Nohmi Bosai Ltd. and Nittan Co., Ltd.,

communicating our intentions to our stakeholders, as we work toward the achievement of

two of Japan’s leading names in this field, continued to earn consistently high marks fromour Vision for 2030. To this end, in May 2018 we formulated the SECOM Group Road Map 2022.

customers for their superior automatic fire alarm, fire extinguishing and other fire protection

Having identified technological advances and a declining labor force as priority issues, we will

systems, which they provide for a variety of applications, including office buildings, plants,

continue striving to address social imperatives and increase corporate value by anticipating thetunnels, structures designated as cultural properties, ships and homes. In the period underevolving needs of society. We believe that doing so will lead to major business opportunities,

review, the two companies continued to leverage their respective business foundations andallowing us to contribute to improved social productivity.

product development capabilities to address the needs of diverse customers, bolstering orders
for fire protection systems.

Technological advances have brought an increase in the variety of connected devices. Thisis driving a variety of profound changes, including the realization of connected vehicles, moves

Efforts in our medical services business continued to focus on Home Medical Services,

toward unattended retail facilities and the expanded use of robots. In such an environment,

which comprise home nursing and pharmaceutical dispensing services, as well as on thesafety and peace of mind are critical issues. We expect this to push up demand related to theoperation of residences for seniors, the provision of electronic medical reporting systems, sales

need for security in a connected society. Owing to a declining labor force, we are seeing risingof medical equipment and pharmaceuticals, personal care services and support for associateddemand underpinned by the need to be able to rely on others. For companies, the need tohospitals.

reduce labor requirements is prompting an increase in the outsourcing of noncore functions,while for families the growing prevalence of two-income households is propelling demand
related to care for children and seniors.

6

SECOM Annual Report 2018

SECOM Annual Report 20187

A Message to Shareholders

Over the next two years, which we have positioned as an investment phase, we will
endeavor to reinforce our management foundation by making substantial systems investments
aimed at, among others, upgrading core systems, and by promoting investments in humanresources designed to strengthen our human capital. Through such forward-looking, focusedinvestments, we will endeavor to leverage the latest technologies to derive maximum benefits,
as well as to attract people who are adaptable to change, creative and keen to contribute tosociety. Human resources who share SECOM’s Philosophy and thrive in a free and open corporate culture are priceless intangible assets and a vital source of our competitiveness. We will continue to capitalize on advanced technologies to maximize the capabilities of our employees,
positioning us to drive bold service innovation and grow together with society. We will also
­promote forward-looking, focused investments in people and systems, thereby increasing ourability to make effective use of these intangible assets and positioning us to drive bold ­service
innovation and cement our competitive edge.
In addition to focused investments, we will advance a personnel and organizational strategy, a business strategy that encompasses operations both in Japan and overseas, and a capital strategy. On the personnel and organizational front, we will step up efforts to hire and train
human resources with outstanding expertise and experience, as well as to allocate humanresources to growth businesses, to ensure a robust organization.
Our business strategy centers on hastening the implementation of measures in linewith four concepts crucial to creating the ANSHIN Platform: “ALL SECOM,” “Collaboration,”“Connection” and “Enhanced value.” In Japan, we will offer high-grade services that respondto growing demand related to security in a connected society and the need to rely on others.
Overseas, we will expand operations in countries and territories where we have establisheda presence, as well as enter promising new markets. Our capital strategy includes allocating¥200 billion for mergers and acquisitions (M&A) over the next five years, which we will use toinvest in growth businesses. We will also seek to maintain return on equity (ROE) and to provide a stable and consistent return to shareholders, in line with our basic policy of ensuring aconsistent and stable distribution of profits. In addition, we will work to maximize shareholder
value and take steps to fortify and expand constructive and healthy dialogue with shareholders.
Through our efforts to realize the ANSHIN Platform, we remain committed to further
strengthening our bond with society and to addressing diverse social imperatives. By
thus reinforcing our relationship with society, we will continue seeking to move forwardwith society and achieve sustainable growth. We look forward to the ongoing support ofshareholders in all of our endeavors.
June 26, 2018

Makoto Iida
Founder

8

SECOM Annual Report 2018

Yasuo Nakayama
President and Representative Director

Corporate Philosophy

MissionMissionOur role and raison d’êtreWe see our mission as being to help achieve a society free from concerns.
Accordingly, throughout our history we have sought to create services
and systems that benefit society as a whole.

VisionVisionOur ideal view of SECOM in the future
In 1989, we declared our commitment to the Social System Industry.
We continue to promote bold initiatives with the aim of realizing this vision.

ValuesValues

Our shared beliefs and guiding principles
Achieving our mission depends on our values being understood andshared by all employees. Since our establishment, we have adhered to
SECOM’s Philosophy, which emphasizes contributing to society
through our business activities. Shared ideas and principles ofconduct, including this philosophy, guide everything to do andhave nurtured a uniquely SECOM identity that remains
crucial to our competitive edge.

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

SECOM’s Philosophy
SECOM’s Philosophy has been passed down through generations of employees since our establishment and continues to be the driving force behind
all we do. This philosophy emphasizes a refusal to be content with the status quo and a commitment to doing what is appropriate. The first element
expresses our determination to provide innovative services and systems by challenging accepted norms, while the second means judging the legitimacy of our actions by examining whether they are just, fair and beneficial not only to SECOM but to society as a whole. The efforts of our employees
to act in compliance with this philosophy have nurtured a uniquely SECOM identity, while our ability to provide high-grade, distinctive services has
given us a sharp competitive edge and remains the major driving force behind our growth and evolution.

SECOM Annual Report 20189

Milestones(Net sales and operating revenue)(In billions of yen)

Established as Japan’s first security services company, SECOM has pioneered the creation of services that deliver safety and

1,200Real estate and other services

peace of mind. Going forward, we will continue to develop and provide innovative services and systems that accelerate theQ2000

realization of our Social System Industry vision, an original concept unparalleled anywhere else in the world.

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

Geographic information services
Q1999 Invests in Pasco Corporation, a leading provider of aerial surveying services

Corporate Message: “Providing Reliable Peace of Mind”
Our commitment to customers, encapsulated in our corporate message, continues tounderpin our efforts as a trailblazer in Japan’s security services industry. Our abiding goal
is to develop and provide services and systems that deliver safety and peace of mind
and make life more comfortable and convenient. Sustained by the passion that has
always driven us, we will continue to leverage our proprietary network and the extensive
know-how we have cultivated as security professionals, taking a uniquely SECOM
approach to achieving new milestones.
QSecurity services

QInsurance services

QOverseas security services

QGeographic information services

QFire protection services

QBPO and ICT services

QMedical services

QReal estate and other services

Q2007 Launches ground surveying services using

Insurance services
Q1998 Invests in Toyo Fire and Marine Insurance Co., Ltd. (currently Secom General Insurance Co., Ltd.)
Q2001 Launches MEDCOM, Japan’s first unrestricted cancer treatment policy

1989 Q
Declares 1989 the first year of
the Social System Industry
vision

Q1974

Q1978

Q1983

Lists on the Second
Section of the Tokyo
Stock Exchange

Moves up the First
Section of the Tokyo
Stock Exchange

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

Medical services

Q2014

Q1991

Begins providing visiting nurse services

Q1983

Begins providing information andcommunications-related services

Q2004

Q2012

Launches SECOM Safety
Confirmation Service

Acquires At Tokyo Corporation, Acquires BPO
one of Japan’s leading dataservices firm TMJ, Inc.
center services firm

Fire protection services
Q1974

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

Overseas security services

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

Q1978 Establishes joint venture Taiwan Secom Co., Ltd.,in Taiwan, its first overseas market

Q1988

Q1991 Establishes presence in the United Kingdom and Malaysia

Establishespresence inThailand

Q1992 Establishes presence in the PRC, Singapore and Australia

Security Services
Q1962

600

Q2012

Acquires newly issued shares in
Nohmi Bosai, which becomesa consolidated subsidiary

Acquires all outstanding shares in
Nittan Co., Ltd., Japan’s third-largest fire
protection services provider, making
the company a consolidated subsidiary

Q2006

Q2011

Establishes presencein Vietnam

Establishes presencein New Zealand

Q2014

400

Establishes presencein Myanmar

System Co., Ltd. (currently SI Corporation) in the
Republic of Korea (ROK)

Q2001

Q2007

Q1981

Develops and releases COCOSECOM mobile security system

Commences operation of private financeinitiative (PFI) correctional facility

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

Established as Japan’s firstcommercial security services provider

Q2017

Q2006

Q1994 Establishes presence in Indonesia

Q1981 Establishes joint venture Korea Security

800

Opens Sakra World Hospital,a general hospital, in India

BPO and ICT services

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

1,000

synthetic aperture radar (SAR) satellite images

200
Q1975

Q2004

Commences operation of the world’s firstcomputerized security system (CSS)
Q1964

Introduces the SECOM
AED Package Service

Q1966

Q2015

Acquires Asahi Security Co., Ltd., a leading providerof cash collection and delivery services, whichbecomes consolidated subsidiary

0
1962

1965

1970

1975

Security service industry

1980

1985

Safety (“ANZEN ”)
industry

1990

1995

2000

2005

2010

2015

2018

Social System Industry

Note: As indicated in the legend, this graph shows net sales and operating revenue for each fiscal year at the time of announcement. Figures have not been
readjusted. However from the fiscal year ended November 30, 1978 through the fiscal year ended March 31, 2004, the Company reported “revenue and otherincome.” Owing to a change in the Company’s settlement date, the fiscal year ended March 31, 1990, was a transitional four-month period. Data for periods up
to and including the fiscal year ended November 30, 1977, is nonconsolidated revenue for SECOM CO., LTD., calculated using Japanese GAAP.

10SECOM Annual Report 2018

SECOM Annual Report 2018

11

SECOM At a Glance
Segment

Percentage of consolidated
net sales and operating revenue*

Principal operations

Competitive advantages

Integrated approach to providing on-line security systems
Robust technological foundation made possible by proprietary research and development configuration
Q Nationwide network of 2,800 emergency depots, facilitating swift response in the event of an emergency andappropriate operational control
Q Rental format that minimizes initial costs for subscribers and enables SECOM to take responsibility forequipment maintenance and upkeep
Q Solid income foundation (attributable to stable recurring revenue) and robust customer base
Q Overseas operations centered on the provision of on-line security systems with emergency response services

Principal Group companies

Q

Security Services

51.9%

Q

On-line security systems

Q

Static guard services

Q

Armored car services

Q

Merchandise and other

Q

Fire Protection
Services

12.6%

Q

Principal initiatives

Pages 24–27

Fire alarm systems

Q

Fire extinguishing systems

Q

Maintenance services
Principal initiatives

Page 28

Home medical services
Operation of residences for seniors
Q Electronic medical report and remote image diagnosis support systems
Q Sales of medical equipment and pharmaceuticals
Q Support for affiliated medical institutions
Page 29
Principal initiatives

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

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

Q

Comprehensive lineup of services that respond to a broad range of customer needs

Q

Integrated service configuration encompassing R&D and planning, equipment design and production,
installation and maintenanceNohmi Bosai Ltd.**,Q

Stable demand for equipment that complies with Japan’s Fire Service Act

Nittan Co., Ltd.

Q

Ability to extend renovation proposals that draw on a wealth of experience

Q

Expertise in fire extinguishing systems for tunnels and other large-scale structures

Q

Conviction that protecting health and life is the ultimate expression of the SECOM commitment to delivering safety

Q
Q

Medical Services

Insurance Services

16.2%

4.2%

Q

Fire insurance policies

Q

Automobile insurance policies

Q

Cancer treatment policies
Principal initiatives

Q

Geographic
Information Services

4.7%

Q

Q

and peace of mind
Q

Experience and extensive know-how in the provision of diverse medical services

Q

Strong collaboration with local communities aimed at realizing effective comprehensive community healthcare systems

Q

Belief in the need for both security services, which are preventative by nature, and non-life insurance,
which looks after people in the event of misfortune

Q

Development and provision of unique policies that take into account the risk mitigating factors of on-line security systems

Q

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

Q

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

Q

Service configuration overseen by the leading company in Japan’s aerial surveying and geographic information system

Secom Medical System Co., Ltd.

Secom General Insurance Co., Ltd.

Page 30(GIS) markets

Public sector services
Q

Ability to provide geographic information based on geographic data collected from satellite images, aerial photography,
and vehicle/ground and shipborne surveying

Q

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

Q

Active efforts to cultivate new geospatial information services

Private sector services
Overseas operations
Principal initiatives

Page 31

Operation of data centers that are among Japan’s largest: Business encompassing robust data center facility construction,
stable electric power supplies, dependable networks and top-grade SECOM security
Q One of Japan’s leading disaster management support services
Q Seamless information security services encompassing the formulation of strategies, monitoring, implementation ofcountermeasures and restoration
Q Information and communications technology (ICT) services that reflect technological prowess, operational capabilities andknow-how that facilitates the construction and operation of network systems that leverage extensive experience in theprovision of security services
Q Provision of high-grade contact center and other BPO services that deliver security and peace of mind

Pasco Corporation**

Q

Data center services
Q Large-scale disaster preparedness services
Q Information security services
Q Cloud-based services
Q BPO services
Principal initiatives
Q

BPO and ICT
Services

6.4%

Pages 32–33

Real estate development and sales
Real estate leasing
Q Construction and installation services
Q Home services

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

Q

Real Estate andOther Services

4.0%

Q

Principal initiatives* Pie charts show percentage of consolidated net sales and operating revenue (excluding intersegment transactions) for the year ended March 31, 201812

SECOM Annual Report 2018

Q

Development and sale of condominiums that incorporate sophisticated SECOM security as standard features

Q

Provision of diverse lifestyle support services that deliver safety and security and make life more comfortable
and convenient

Secom Home Life Co., Ltd.

Page 33** Listed on the First Section of the Tokyo Stock Exchange*** Listed on the Second Section of the Tokyo Stock Exchange

SECOM Annual Report 201813

The Value Creation Process
We remain committed to providing enduring peace of mind by keeping abreast or where possible ahead of the times.
By continuing to reinforce our relationship with society and address increasingly diverse social imperatives, we work to
maximize our corporate value and grow together with society.

Enhancedvalue

MissionConnection

Collaboration

Help achievea society freefrom concerns

ALL SECOM

Acceleration of
growthInvestment

The SECOM Group’s
Vision for 2030

SECOM Group Road Map 2022

A uniquely SECOM identity

Values (Philosophy, code of conduct, corporate culture)
Management foundation and strengths
Demographic change

Technological evolution

Crimes/accidents

Illness/aging

Shift of global economic
center/urbanization

Security

Real estate services
Fireandprotection
other services
services
BPO and ICT
services
Naturaldisasters

An integrated portfolio thatmarshals diverse businesses
Q198 Group companies in sevenbusiness areas**
Human
QOperations in 19 countries
Technologies
and territories overseas
Resources
QBusiness model that fuses
people and technologies
QA corporate philosophy
QApproximately 2,800
shared by all employees
emergency depots in JapanQ60,460 Group employees*
QAround 60,000,000 security
sensors installed at
subscribers’ premises
Q

Cyber
crimesMegatrends continue
to drive the evolutionof social imperatives

Organization

Geographic
information
services

Medicalservices
Insuranceservices

Performance
Close ties with society
and a strong track record
QMore than 3,000,000
security service subscribers
QOver 6,000,000 SECOM
Safety Confirmation
Service users
Q

Increasingly severe
environmental issues

VisionRealize theSocial System Industry

Knowledge
Know-how cultivatedin JapanQDeployment of initiatives
developed in Japan, a front
runner in addressing
challenges associated witha super-aged society andnatural disasters
Q(Growth of Asian economies)

ESG initiatives* Employees of SECOM Group companies (excluding variable interest entities),
as of March 31, 2018** Consolidated subsidiaries and equity-method companies, as of March 31, 201814

SECOM Annual Rep
Reportport 2018

SECOM Annual Report 201815

The SECOM Group’s Vision for 2030
To accelerate the realization of our Social System Industry vision, in May 2017 we announced the
SECOM Group’s Vision for 2030, which positions 2030 as an important milestone and further
defines our direction going forward. One year later, in May 2018, we formulated the SECOM
Group Road Map 2022 to clarify the challenges we must address over the next five years toachieve this vision.

Conceptual framework of the ANSHIN Platform
As part of our vision, we are working tocreate the ANSHIN Platform, a service infrastructure through which we are striving toprovide tailored services that deliver enduring peace of mind. Created in collaboration
with partners in industry, government andacademia who share our mission to help
achieve a society free from concerns andhave diverse technologies and expertise,
this infrastructure is designed to provide
peace of mind to people in their everyday
lives, as well as to society as a whole. The
ANSHIN Platform centers on three features,summarized as “peace of mind, whenever
and wherever necessary,” “peace of mind,
for anyone and everyone” and “peace ofmind, seamlessly.”

The sort of ordinary, uneventful life wetend to think of as natural depends onsafety and peace of mind. In other words,
safety and peace of mind are essential to
everyday life for all people. Crimes, accidents, disasters and illnesses happen whenleast expected. Making sure that you will beokay even in the event of misfortune is key
to peace of mind. This is where the SECOMANSHIN Flow comes in.
When an unanticipated crime or disasteroccurs, the daily rhythm is interrupted. Thisis true for both companies and individuals.
For companies, productivity can fall sharply.
The greater the damage is, the longer ittakes to restore operations. Society faces
significant risks associated with crimes,

accidents, cyber attacks, natural disasters,
illnesses and aging. In addition to recognizing the importance of routine advance
preparation, we provide comprehensive
services designed to address potential risks
by helping companies accurately grasp
conditions, minimize impact and achieve
restoration. These four steps comprise
the SECOM ANSHIN Flow, enabling us toprovide enduring peace of mind.

stomers and society
lationships with cu
ECOM’s re
S
g
n
i
c
r
reinfotherruFEnhanced value

C

Connection

on
ati
e
r

t
IN Pla
ANSH
e
h
of t

form

ALL SECOMSECOM Annual Report 2018

We are currently promoting initiatives inline with four core strategies with the goalof creating the ANSHIN Platform. The “ALLSECOM” strategy focuses on rallying SECOM
Group strengths to maximize synergies,
while our “collaboration” strategy, throughwhich we seek to integrate business ideas

and technologies of various partners whoshare our mission. Our “connection” strategyemphasizes strengthening our relationship with our customers and society byleveraging Big Data analysis, which makes
use of up-to-date information, to respondto latent needs, while our “enhanced value”

strategy focuses on addressing everyday
concerns by adding greater value toservices that make life more comfortable
and convenient.

Targeting sustainable growth: Devising the SECOM Group Road Map 2022
We have identified technological advances
and a declining labor force as priority
issues in achieving the SECOM Group’s
Vision for 2030. For businesses and society,these issues can become threats if notaddressed appropriately. We believe that
anticipating evolving needs arising fromthese two issues will lead to major business
opportunities, allowing us to contribute toimproved social productivity. In this environment, we will seek to secure the latest
technologies, as well as to ensure that we
remain the first choice of talented humanresources through forward-looking, focusedinvestments in people and systems withthe goal of creating a strong foundation,
believing that doing so is the most effective way to accelerate growth as we work
toward achievement of the SECOM Group’s
Vision for 2030. Accordingly, in May 2018 weused backcasting* to devise the SECOM
Group Road Map 2022 with the intention ofclarifying challenges we must address overthe next five years to achieve our vision. We
have thus positioned the road map as acornerstone of the SECOM Group’s Vision
for 2030.
* Backcasting is a planning method that starts withenvisioning a desirable future and working backwardfrom there to identify steps necessary to attainthat future.

Collaboration

16

Strategies for creating the ANSHIN Platform

J Addressing market needs arisingfrom technological advances
Rapid technological advances in recent
years has brought an increase in the varietyof connected devices. This is driving a variety of profound changes, including the realization of connected vehicles, the expanded
use of drones and robots, moves toward
unattended retail facilities and a cashlesssociety, and the increasing popularity ofsmart homes, that is, homes equipped withwireless smart locks and smart speakers,
among others. In an environment characterized by technological advances such asthese, safety and peace of mind are criticalissue and are expected to push up demand
related to the need for security in a connected society, which involves the fusion ofphysical and cyber security.
J Responding to market needs arisingfrom a declining labor force
The other priority issue for many
companies is a declining labor force, aconsequence of efforts to bolster competitiveness by reducing labor requirements
and promoting unattended facilities. With
companies increasing the outsourcing of
noncore functions, we are seeing risingdemand underpinned by companies’ need
to be able to rely on others. In such a scenario, the impact of unexpected incident
at a firm to which noncore functions havebeen commissioned can extend as far ascore operations. Needs for commissioned
firms that deliver safety and peace of mind
are thus expanding.
A declining labor force is also leading
to an increase in needs related to care forchildren and seniors attributable to factors
such as falling birthrates, the graying ofJapanese society and the increasing prevalence of families in which both parents
work outside the home.
We are capitalizing on our accumulated
know-how in the provision of high-grade
around-the-clock security systems and ourhighly secure data center, cyber security
and cloud-based services. In October 2017,
we welcomed TMJ to the SECOM Group,
reinforcing our infrastructure for providing
safe and secure BPO services. Recognizing
growing demand related to the need to
be able to rely on others as an importantbusiness opportunity, we will continue
working to extend distinctive services that
contribute to a significant improvement ofsocial productivity.
J SECOM-Transformation

Embracing the challenge of selftransformation—which we have dubbed“SECOM-Transformation”—we will embark
on initiatives designed to leverage thelatest technologies to derive maximum
benefits with the goal of building

SECOM Annual Report 201817

The SECOM Group’s Vision for 2030

next-generation core systems and improving functions with a view to addressing
rising needs. In addition, we will makeinvestments to reduce labor requirements
and enhance employee capabilities withthe purpose of improving both service
quality and productivity. We will also
invest in artificial intelligence (AI), theInternet of Things (IoT) and robotic process
automation (RPA), among others, to bolster
operational quality and efficiency, as well as
to drive R&D targeting innovative services
and products that respond to needs

engendered by technological advances
and a declining labor force.
Initiatives aimed at ensuring that we
remain the first choice of talented humanresources will center on actively seeking
to attract people and to create positive
working environments. To enhance
motivation, we are planning investments
designed to help employees fulfill theirpotential, including in the enhancement ofour diverse training programs. We will also
invest actively to ensure the competitiveness of our personnel, including seeking
to attract high-mobility IT specialists andindividuals with global business skills;
reallocating employees to high-growthbusinesses in which steps have been taken
to improve efficiency and productivity;
promoting diversity; rehiring experienced
retirees; and introducing alternative
working styles, including telecommuting
arrangements and shorter working hours.
Such investments will underpin criticalcapabilities that cannot be replaced withtechnology, notably our ability to respondto change, create value and secure humanresources committed to social contribution.

will also seek to ensure a stable andconsistent return to shareholders and tomaintain ROE above a certain level. In
addition, we will promote positive engagement with investors by sharing our policies
regarding sustainable growth and theenhancement of corporate value over the
medium to long term and by reinforcing
and expanding opportunities forconstructive, quality dialogue.

fundamental commitment to creating services that anticipate what society will need,rather than simply offering services thatwill sell in any market. This is why ourultimate priority will always be people andtechnology. We will continue to increase
our ability to make effective use of these
intangible assets, positioning us to drivebold service innovation and cement ourcompetitive edge.

J Targeting continuous,

sustainable growth
We place a high emphasis on the sustainability of society and businesses. We see theexpenditures targeting sustainable growth
not as a cost but rather as investments thatenable us to integrate changes in our operating environment into our operations overthe long term. We are a company that has
tirelessly pursued innovation in its services
since its establishment. This comes from our

SECOM Group Road Map 2022

Forecasts for the fiscal year ending March 31, 2023 (Japanese GAAP) (Provided for reference only)

Strategies Under the SECOM Group Road Map 2022
J Human resources andorganizational strategies
Under the SECOM Group Road Map 2022,
we will advance a variety of initiatives
to strengthen our human resources andorganization by increasing our employees’
ability to deal with change and create
value and by fortifying our organization’s
resilience and capacity for innovation. We
will also promote the focused investmentof human resources in growth areas byincreasing operational efficiency andproductivity. In addition, we will strengthen
hiring and training, reinforcing efforts tosecure and train IT specialists and individuals with global business skills. We will also
promote shared services to improve profit
margins and make more effective use ofhuman resources and build an impeccableorganization by further emphasizing
SECOM’s Philosophy to strengthen our risk
management framework and corporate
governance.

18

SECOM Annual Report 2018

J Business strategies

With the aim of creating the ANSHIN
Platform, we will expedite the implementation of measures in line with the four
strategic concepts of our vision for 2030(“ALL SECOM,” “Collaboration,” “Connection”
and “Enhanced value”). In Japan, we will
extend high-grade services that respond to
growing demand related to the need for
security in a connected society. Of note, wewill take proactive steps to advance threedimensional security, enter the area of cybersecurity, expand into areas related to connected and other self-driving vehicles, andenhance the value of our home security
services, including linkage with AI andIoT services.
In response to a declining labor force, wewill address demand driven by the need
to be able to rely on others by making useof drones and robots, strengthening ourfacility management, building management
and supply chain management solutions
capabilities, creating services for unattended retail facilities and a cashless society,developing health care services tailored tovarious lifestyles and providing new services
for the personal monitoring market.

Overseas, we will focus on using investments to expand markets. We will also work
to secure and train individuals with global
business skills, actively hiring and expanding education and training for local staff. On
the service front, in countries and territories
where we have established a presence
we will seek to capture demand arisingfrom the outsourcing needs of financial
institutions, expand systems integration
services targeting the plant and building
construction and infrastructure investment
sectors, and expand collaboration withlocal partners to chart a full-scale entry into
the markets for residential services. In countries and territories in which we do not yet
have a presence, we will seek to establish
operations in promising markets.

1.1trillion

Consolidated
revenue: ¥155.0billion

Consolidated
operating profit: ¥ROE:

8% plusDividend
payment ratio:

40%—45%

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

Investment phase
Consolidated revenue

Consolidated operating profit

Consolidated revenue ¥1.1 trillion
Consolidated operating profit ¥155.0 billion

Consolidated revenue ¥970.6 billion
Consolidated operating profit ¥135.4 billion.0%rox. 6pp
A:)
profit
ating
r
e
p
o
(
CAGR

: 3.09%g profit)
peratin
(o
R
G
A
C

2015

High-growth phase

2016

2017

2018

2019

2020

2021

2022

2023

(Years ended/ending March 31)

J Capital strategy

Our strategy for making effective use ofcapital assets includes allocating ¥200
billion for M&A over the next five years,
which we will use to invest in key growthbusiness, namely, physical security, cybersecurity, BPO and ICT services and healthcare, as well as in venture companies withadvanced technological capabilities. We

Investment phase

High-growth phase

Japan
QInvest in human resources
QInvest in systems

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

Overseas
QExpand services in countries and territories

where SECOM has a presenceQActively establish operations in promising

new markets

SECOM Annual Report 201819

Special Feature: SECOM’s Growth Strategies
We are currently promoting initiatives in line with four core strategies—“ALL SECOM,” “Collaboration,” “Connection” and“Enhanced value”—with the aim of creating the ANSHIN Platform. This special feature looks at the progress of these initiatives.

“ALL SECOM” strategic initiatives“Collaboration” initiatives
To create the ANSHIN Platform, we are actively

facilities, but also features a face recognition

AI and IoT technologies to reduce the laboradvancing a strategy of collaboration withfunction and AI-based image recognition

requirements and improve operations undervarious partners that share our mission totechnologies that enable it to perform duties

from social network services. This has reduced

the ALL SECOM banner. At the same time,

expedite the creation of services and systems

that require communication, including

opment of innovative services and systems.

the sifting of information by humans to

we will work to accumulate know-how andthat address the increasingly diverse needs ofproviding directions and engaging in

Examples of such distinctive offerings include

approximately one-tenth the previous level,

insights in both areas and embrace the chal-customers for peace of mind.

conversation.

SECOM 3D Security Planning, development of

which has substantially improved efficiency. In

lenge of transforming SECOM in preparation

which was facilitated by the integration of

the geographic information services business,for the changes ahead.

Q Reducing labor requirements,

ticated security services, we partnered with a

SECOM Intelligent Systems Laboratory tech-subsidiary Pasco has developed an AI-based

nologies and geospatial information service

automatic identification technology for satel-technologies belonging to subsidiary Pasco;

lite images and has begun providing urban

Amidst expanding needs for the manage-

and non-life insurance policies SECOM Anshinchange analysis map and parked vehicle

ment of large-scale facilities, we recently

purpose of cultivating demand for home

generation high-speed 5G telecommunica-

My Home and Security Discount Fire Policy—

estimation map services.

partnered with a leading name in the provi-

security services. We will continue to work with

tions network. In the years ahead, both

Guided by the “ALL SECOM” strategy, whichhave applied AI to the process of extracting

Going forward, we will continue to apply

focuses on reinforcing collaboration among

information useful to subscribers from thevarious Group businesses, we are further

vast amount of disaster information available

maximizing synergies to advance the devel-

With the aim of realizing ever-more sophis-

advancing automation andenhancing efficiency

Signing ceremony for business alliance at the headquartersof a leading electric appliance manufacturer in the PRC

leading telecommunications carrier in Japan
to conduct demonstration tests for a security
system that makes use of Japan’s next-

sion of related services and have embarked

this company to leverage our accumulatedcompanies will further step up collaboration

respectively—which offer discounts to sub-marathons and other major events, we useon the creation of a new business model. We

expertise in the provision of security services

to realize increasingly innovative services that

scribers who have installed on-line security

an image recognition system that employs AI

expect that building on our respective service

to expand our selection of high-grade security

enhance our ability to help make society safer

systems, recognizing this as mitigating the risk

technologies to analyze images from surveil-bases, technologies and know-how will help

services, as well as to promote joint productand more secure.

of theft or fire.

lance cameras to effectively assess crowding

reduce the labor requirements and advanceplanning and development and the formula-

We are also working with a major mobileand detect unauthorized individuals who try

the automation of large-scale facility manage-

tion of sales plans. With this alliance, we havecommunications carrier to utilize low-power

Q Making use of AI

to enter the marathon course, thereby ensur-

ment and administration. In Japan, we will

gained a potent partner that will assist our

wide-area (LPWA) networks* to extend theWith SECOM on-line security systems, surveil-

ing our ability to prevent disruptions andwork together to cultivate new markets, while

market development efforts in the PRC to

SECOM AED On-line Management Service, alance is conducted by equipment. Should an

promptly detect irregularities.

overseas we will collaborate to introduce joint

provide safety and peace of mind, as well as toservice that monitors the operational statusservices in the fast-growing Chinese market.

make life more comfortable and convenient.

of automated external defibrillators (AEDs).

for residential and commercial customers,

In the provision of security for international

irregularity be detected, appropriate
responses are made by skilled staff. In other

Use of LPWA networks facilitates the on-line

On another front, we combined
proprietary image processing technologies

Q Leveraging technologies

management of AEDs in locations that do notof mechanical precision and human percep-that help provide safety and peace of mind

We are also advancing collaborative efforts tooffer easy access to an electric power source,tion enables us to provide efficient services

with advanced AI technologies from Japan’s

make use of advanced robotics technologies.

thereby facilitating the use of AEDs wheneverand systems and is a key competitive

leading information and communications

In March 2018, we completed development ofand wherever needed, which is seen as key tostrength. With the goal of further enhancing

technology (ICT) firm to analyze data fromthe SECOM Robot X3 autonomous multifunc-

expanding the availability of these units.

the quality and efficiency of our services, wesurveillance cameras and sensors installed intional robot, which integrates our distinctive

are making use of advanced AI and IoT tech-stores to facilitate the provision of information

robotics technologies with autonomous

nologies, drones and robots to optimize theservices that support facility management,

motion technology from a leading domestic

use of equipment and human capabilities.

which we began offering on an experimental

research facility. This robot not only patrols

words, our ability to combine the advantages

We are also taking steps to reduce thebasis at one of Tokyo’s international airports.

labor requirements and bolster the quality

Looking ahead, we will continue to promoteof services. In June 2017, we inaugurated

the development of new services that sup-a dedicated team that is charged withport facility management and the movement

promoting the use of cutting-edge AI andof guests to enhance safety, peace of mind,

IoT technologies and a team that provides

convenience and comfort.

* An LPWA network is a type of low-cost low-power
wireless telecommunications wide-area network.

Free-standing unit usedin verification testing for
LPWA-linked AEDs

technological support. In the area of BPO andICT services, we offer the Real-Time DisasterQ Market development

Information Service, whereby subsidiary

In the PRC, we have formed a strategic market

Secom Trust Systems provides highly accurate
information in the event of a disaster. We

20

SECOM Annual Report 2018

development alliance with a leading local
Information for the Real-Time Disaster Information Service is collected and analyzed at
the SECOM Anshin Information Centerelectric appliance manufacturer with the

SECOM Robot X3

SECOM Annual Report 201821

Special Feature: SECOM’s Growth Strategies

On another front, we continued to offer

devices on the IoT. Our partner is contributing

warehousing firms can verify the safety ofservices that use the SECOM Drone, an autono-

technologies for incorporating confidential

assessed facilities. In June 2018, we launchedmous small flying surveillance robot. Our

information into the semiconductors

SECOM Supply Chain Security Select, aknow-how in this area is playing a role in themounted in devices, while we are providing

service designed to support the efforts ofProject for Realization of Energy-Saving Society

digital certificate and other information secu-

companies to secure certification. As a result,

Using Robots and Drones, an initiative currently

rity technologies, as well as know-how in the

we now provide comprehensive support forbeing promoted by Japan’s New Energy andarea of physical security. In response to rising

everything from assistance in strengthening

Industrial Technology Development

demand for improved security of devices on

physical security capabilities to obtaining

Organization (NEDO). The area of the project

the IoT, we will continue working to offer ser-certificates that represent an objective

we are involved is development of anvices that enhance comfort and convenienceassessment of supply chain security.

unmanned traffic management function forfor users by ensuring a safe IoT platform.

SECOM Anshin Home Delivery Box

the security services sector—facilitating thesimultaneous remote control of multiple

Q Support for the acquisition ofdrones over wide areas—that is compliant withsecurity certificates for supply chainsthe 4G LTE network. Here, too, we are working

In recent years, the need for security measureswith a leading telecommunications carrier andto prevent the theft of cargo has become aother firms. Potential applications include

key issue in the logistics and warehousing

locating and calling attention to suspicious

sectors. As a result of research conducted in

objects in large facilities, detecting fires ofpartnership with the Japanese arm of thesuspicious origin and nighttime security.

world’s leading inspection, verification, testing

the recipient’s phone when a package haspossible for packages to be delivered securely

forward, we will continue to expand our port-

and certification organization, in February

been delivered and monitors to prevent unau-

regardless of where the recipient may be. With

folio of connected services that deliver safety

Q Ensuring a safe IoT platform2018 we cooperated with the firm to establish

thorized opening and emergency response

the increasing popularity of online shopping,and peace of mind, as well as make life more

We are currently working with a leading

the SGS Facility Security Evaluation Criteria

services in the event of a break-in, making it

the rising need for the redelivery of packages

comfortable and convenient.

semiconductor manufacturer to ensure theas a new standard for supply chain security.

reliability of information exchanged among

By acquiring this certification, logistics andIn Japan, work style reforms designed to both

capitalize on TMJ’s extensive experience andenhance operating efficiency and improve

SECOM Home Security NEO

to recipients unable to take delivery the firsttime has become an issue in Japan. Going

Sticker indicating SGS Facility Security Evaluation
registration (left)“Enhanced value” initiatives“Connection” initiatives

improve working environments and boost

proficiency to extend efficient BPO services.

service quality, thereby positioning ourselves toEfforts to realize our Social System Industry

In line with our “connection” strategy, we areproductivity are encouraging an increasing

With the market for BPO services expecteddevelop and provide BPO services that respondvision have enabled us to build a relationshippromoting a strategy of connection, further

number of companies to consider the out-

to expand, we will also work to realize high-to an increasingly wide range of market needs,of trust with customers. Our on-line security

strengthening our relationship with customers

sourcing of non-core operations. We have built

value-added services that respond to evolving

increase our competitiveness and contribute tosystems continue to expand and gain popular-

and society. Among new products and services

up a solid track record and broad expertise as

market needs. We will also leverage advanced

increased social productivity.

ity among customers as a familiar, ever-present

developed under the umbrella of connection

a provider of security outsourced by corporate

AI, IoT and other technologies to further

component of the social infrastructure. Linking

is SECOM Home Security NEO, a flexible homecustomers since we launched operations. In

security products, including surveillance

security system that can be linked with devices

October 2017, we acquired TMJ, which boasts

camera systems, access control systems, auto-on the IoT to facilitate a variety of services that

extensive experience and know-how in thematic fire extinguishing systems and externaldeliver safety and peace of mind, as well as

monitoring systems, to our on-line security

make life more comfortable and convenient.

systems further enhances our ability to provide

The first of these is SECOM My Doctor Watch.

customers with safety and peace of mind.

Centered on a wearable wristband-style unit,

features, with an emergency alert service

we will capitalize on our robust operating

Technological advances, including the

SECOM My Doctor Watch combines healththat detects falls and summons help. The

foundation, which reflects our experience andgrowing importance of the IoT, are driving themanagement functions, including pedometer,second is SECOM Anshin Home Delivery Box, aknow-how in the provision of around-the-clock

evolution of an increasingly connected society.

sleep tracking and calorie expenditure countersecure delivery box that sends a notification toservices, position as one of Japan’s largest

SECOM My Doctor Watch

provision of high-grade contact center andother BPO services for leading financial institutions and other customers. Looking ahead,providers of data center services and capabilities in the strategic use of data, as well as to

22

SECOM Annual Report 2018

A TMJ contact center

SECOM Annual Report 201823

SECOM Today

Security Services

JNet sales and operating revenue (Left scale)
JOperating income (Right scale)(In billions of yen)

600

508.1

(In billions of yen)

546.5

565.4

400

200

0

300

200
110.9

2016

112.7

2017

116.6

2018

100

0

responsibility for everything, including R&D,

that they fully understand SECOM’s

production, marketing, security planning,

Philosophy and observe a code of conduct

equipment installation, around-the-clock

befitting security professionals, yielding amonitoring, emergency response services androbust service framework. Our operational

maintenance, which ensures the exceptionaland control structure centers on know-how

quality and reliability of our services.

and a wealth of experience built up since ourOur ability to provide integrated on-line

establishment, which underpins the prompt

security services derives from the three com-

decision making of control center staff andponents of our operating foundation, namely,

our nationwide network of 2,800 emergency

our technological prowess, human resources,

depots, the largest in Japan.

and operational and control structure. To rein-

We also principally use a rental format,

force our technological prowess, the SECOM

whereby we retain ownership of security

Intelligent Systems Laboratory conducts

equipment and rent it to subscribers, an

research in the area of core technologies,

approach which minimizes initial costs forwhile the SECOM Development Centercustomers. This format means that we takeleverages these core technologies to develop

responsibility for the maintenance andnew security systems. Our integrated service

upkeep of security equipment, guaranteeing

configuration allows the swift development

both the quality and stability of our services.

of systems that respond to the requirements

Business summary
Our security services business centers on theprovision of on-line security systems, which
includes the installation of sensors and othermonitoring equipment and around-the-clockmonitoring by a SECOM control center via
telecommunications circuits. In the event an

and views of customers. To foster humanresources, we provide training for emergency
response personnel, sales staff, administrative
staff and other employees at four training
centers across Japan. This enables us to equip
employees with the advanced knowledge
and technical skills they need and ensures

intruder, fire or other irregularity is detected,
control center staff dispatch emergency
response personnel from the nearest SECOM
emergency depot and, if necessary, notify

On-Line Security Systems

the police and/or fire department.
A key competitive advantage of ouron-line security systems is our integrated
service framework, whereby we takeFlashing lightLight flashes if the system detects anirregularity to warn people inthe vicinity and to guide
SECOM emergency response
personnel dispatched to thesubscriber’s premises.

SECOM sticker

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

Subscriberusing
1 Alerttelecommunications

SECOM
3 Dispatch
emergency response

circuits

personnel

Police
Dept.
Fire
Dept.
Gas
Company

Alert emergency
services as necessary

SECOM
Emergency
Depot

SECOM
2 Alertemergency
response personnel

SECOM control center

24

SECOM Annual Report 2018

SECOM
Control Center

SECOM LX, an on-line security system that

Operating highlights
J Commercial security services

Capitalizing on our extensive lineup of on-line
security systems, we work actively to respondaccurately to the diverse security needs ofcompanies in Japan. In the period underreview, sales of on-line security systems tocommercial subscribers continued to expand,
led by high-value-added offerings. Customer
needs in the area of static guard services andarmored car services also remained high.
SECOM AX is a remote imaging on-line
security system that employs sophisticatedimage sensors installed at the subscriber’s
premises to detect the presence of an
intruder—even in the dark—and transmit analert, together with images and sounds, to a
SECOM control center. This enables control
center staff to swiftly assess the situation andissue prompt and accurate instructions to

combines monitoring for intruders and fires

J Security services for large-scale

eventswith access control functions, uses existing

To support organizers’ efforts to ensure theIC cards such as employee ID cards. Because

safety and security of large-scale events, werecorded entry and exit data can be used forprovide 3-Dimensional Security, which seeks

managing employee attendance and otherto provide security over wide areas frompurposes, SECOM LX helps improve theboth the ground and the air. 3-Dimensional

efficiency and lower the cost of personnel

Security begins with SECOM 3D Security

management.

Planning, which makes use of high-precision

SECOM FX, which is designed for unat-

digital relief maps to prepare simulations,tended facilities and small offices, integrates

facilitating a firm grasp of potential risks andmonitoring for intruders and fires that can be

the formulation of an optimal security plan.

set to, for example, turn lights, air condition-

With 3-Dimensional Security, images captured

ers, signage illumination and security camerasby temporarily installed security cameras,

on and off at the subscriber’s discretion,

wearable cameras borne by security guards,

thereby helping to reduce consumption ofand SECOM Airship and SECOM Aerostat

energy and electricity. Looking ahead, we will

dirigibles allow the swift and accurate

continue working to develop and provide

assessment of event status in real time. This

on-line security systems that respond to theservice also enables the event’s On-Sitevaried needs of subscribers.

Center mobile monitoring base to collect andintegrate image data from multiple cameras,

emergency response personnel. Control cen-

as well as to use image recognition and AI

ter staff can also broadcast a verbal warningtechnologies to analyze suspicious circum-

to the intruder using on-premises speakers tostances and crowding, generating information

deter the commission of crimes.

that is then communicated to security guards
on-site to support the safe and secure stagingof large-scale events. Going forward, we willcontinue to develop and provide distinctive,
sophisticated security services tailored to therequirements of such events.

Contracts for On-Line
Security Systems(As of March 31, 2018)

Home

Commercial
Commercia

Financial services

7.4%

Service industries

7.2%

Retailing/wholesaling

3.8%

Government agencies

3.4%

Manufacturing

3.4%

Other

17.0%

Residences (excluding

condominiums and apartments) 36.1%

Condominiums andapartments

21.7%
SECOM LX

On-Site Center

SECOM Annual Report 201825

SECOM TodayJ Home security services

A recent addition to our home security

operations center operators dispatch emer-

In July 2017, we launched SECOM Home

services lineup is SECOM Anshin Home

gency response personnel and, if necessary,

Security NEO, a new mainstay system in our

Delivery Box, developed in response to thenotify the police and/or emergency services.

home security services lineup that can beincreasing volume of packages handled by

COCO-SECOM’s ability to offer all of these

armed and disarmed remotely from a smart-couriers resulting from the increasing popu-

services in a single system is its principal

phone. The system also enables subscribers

larity of online shopping, and the rising needdistinguishing feature.

to receive alerts on their smartphone when

for redelivery to recipients unable to takethe system is accessed by family membersdelivery the first time, which have pushed up

individuals, COCO-SECOM was originally used

entering and leaving the home. Enhanced

demand in Japan for secure delivery boxes.

to deter child abductions, as well as to track

convenience continues to underscore steadyConnected to SECOM Home Security NEO,dementia patients who wander, as well as

growth in the popularity of this system. In

SECOM Anshin Home Delivery Box includes

to prevent the theft of cars and motorcycles.

addition to standard home security, includ-

monitoring for unauthorized opening andToday, the system is also used to manage taxi

ing monitoring for intruders and fires andemergency response services in the event of aand bus fleets, prevent the theft of construc-emergency alerts, and optional services suchbreak-in.

tion equipment and ATMs, and manage

Designed as a portable security system for

employee safety.

as medical emergency calls, monitoring for
gas leaks and safety monitoring, SECOM HomeJ Other security services

Security NEO can be linked with devices on

We have taken steps to expand the scope

J Overseas security services

the IoT to facilitate use of a variety of newof COCO-SECOM, a mobile security system

We made our overseas debut in 1978,services. One of these is SECOM My Doctor

for outdoor use, in response to customer

when we established a presence in Taiwan.

Watch, an emergency medical alert andrequests. COCO-SECOM uses signals fromToday, our overseas business encompasses

health management service based on a wear-

GPS satellites and cellular phone base sta-

operations in 12 countries and territories. A

able wristband tracker. Offered as an option

tions to pinpoint the location of dedicateddistinguishing feature of our overseas security

to SECOM Home Security subscribers, SECOM

portable transmitters carried by individuals

services is that we offer on-line security

My Doctor Watch sends an alert if it senses

or attached to objects. If a customer wants

systems with SECOM-style services custom-

no movement from the wearer regardlessto locate a transmitter, he or she can traceized to reflect local needs and sensibilities.

of whether he or she is inside or outside theit via a dedicated website or by contacting

The services we provide overseas, which are

home, notifying SECOM that assistance is

the COCO-SECOM Operations Center. Uponof the same high quality as those provided inrequired. The tracker also features fall detec-

receiving a search request from a customer,

Japan, continue to earn praise from overseas

tion, automatically sensing if the wearer has
fallen due to a loss of consciousness or any

COCO-SECOM Mobile Security Systemother reason and alerting SECOM. SECOM My(Location and Emergency Response)

Doctor Watch’s health management function
includes a pedometer, sleep tracking and acalorie expenditure counter and enables thewearer to access advice regarding lifestyle

Positioning
information

GPS satellite

COCO-SECOM
Operations
CenterNotification of police(if warranted)

improvements by smartphone.

Request forsearch(telephone/Internet)

Subscriber

SECOM Home Security NEO

26

SECOM Annual Report 2018

Cellular phonebase station

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

SECOM
Emergency
Depot

Policedepartment,
emergency
services

Dispatchemergency
response
personnel(if requested)customers, as a result of which market

Fire and Security Conference (IFSEC) Security

safely in crowds, and are working toward

acceptance is increasing steadily.

and Fire Excellence Awards 2017.

commercialization.

In the PRC, we currently provide security

We recognize that the desire for safety

services to subscribers through a networkand peace of mind, as well as for comfort andof bases in 25 key coastal and inland cities.

convenience, is global. Accordingly, we will

With the aim of cultivating demand for home

continue to encourage acceptance of SECOM-

With the goal of providing more sophisti-

security services, we recently entered into astyle services in the countries where we havecated, efficient security services for large-scale

strategic business alliance with a leading local

operations, as well as to cultivate promisingfacilities, we recently began providing a newelectric appliance manufacturer.

new overseas markets.

patrol and monitoring service employing the

Our affiliated companies in Taiwan and the

Q Launch of new SECOM Drone patrol

and monitoring services

SECOM Drone to the Mine Rehabilitation

ROK, both of which are publicly listed compa-

J Other new services

Program Center, a private finance initiative

nies, provide a wide array of security services

Q Newly developed robots that leverage(PFI) correctional facility. With this service, theto local subscribers and continue working todistinctive robotics technologies(Secom Robot X2 and Secom Robot X3)

expand their operations. In Southeast Asia,

drone is programmed prior to launch andflies a predetermined route, allowing

which continues to see economic growth, theWe began offering SECOM Robot X, devel-

confirmation by security office staff in real

efforts of Group companies are bolstering

oped as an alternative to security guards andtime. Surveillance from above using theacceptance of SECOM-style on-line security

Japan’s first outdoor surveillance robot, indrone’s on-board camera eliminates blind

systems in Thailand, Malaysia, Singapore,2005. SECOM Robot X2, an updated autono-

spots, facilitating effective monitoring ofIndonesia, Vietnam and Myanmar. Group

mous version of this robot with an arm thatrooftops and other high places, reducing

companies in Australia and New Zealandcontains infrared laser sensors, thermal imag-

work load. Image data can be stored, making

provide security services to major financial

ing sensors and a metal detector, can moveit possible to confirm past images and leaving

institutions and other customers, earning

about freely both indoors and outdoors toimages as an official record/evidence, which

solid support from customers.

inspect suspicious objects, garbage cans andwill help improve security levels. Goingother items. We recently completed develop-

forward, we will propose use of this service

services to customers across the United

ment of SECOM Robot X3, which boasts

to a variety of large-scale facilities, including

Kingdom. Secom plc recently won the CCTV

security, route guidance and conversational

suburban shopping malls, plants andSystem of the Year Award in the International

abilities, among others, can move aroundsupermarkets.

IFSEC Security and Fire Excellence Awards 2017
ceremony

SECOM Robot X2

SECOM Drone patrol and monitoring services

Subsidiary Secom plc provides security

SECOM Annual Report 201827

SECOM Today

promote proposal-oriented sales efforts. In fire
extinguishing equipment, large-scale orders
remained steady.

Fire Protection
Services

expressway tunnels

JOperating income (Right scale)

150

135.5

(In billions of yen)

129.7

140.7

100

30

20
13.7

13.1

10

0

0

2017

2018

systems for Buddhist temples designatedimportant cultural properties and for

In the period under review, Nohmi Bosai

production facilities and industrial complexes

installed fire detectors, alarm panels and firethat desire fire protection that exceeds theextinguishing and other equipment in therequirements set forth in Japan’s Fire Service

tunnels along a newly opened expressway

Act. With demand for such systems increasing,in the Osaka–Kobe area. Nohmi Bosai, which

Nittan will continue to leverage its wealth ofhas accumulated extensive experience in fire

experience to respond to market needs.

protection for tunnels, provides integrated
services in this area that encompass system

15.8

50

2016

for temples designated important
cultural properties
Nittan provides specialized fire protection

J Fire protection systems installed in

JNet sales and operating revenue (Left scale)(In billions of yen)

J Providing fire protection systems

planning, installation and maintenance. The

J Operations in overseas markets see

brisk growthcompany continues to leverage its advanced

Nitttan’s subsidiary in the United Kingdom

technological capabilities and extensive

and production facility in Vietnam spearheadknow-how with the aim of expanding orders.

efforts to develop products that comply with
Underwriters Laboratories (UL) and European

Operating highlights

J New research facility established toNorm (EN) standards, which the company

Despite concerns regarding the impact ofreinforce R&D configuration

supplies to a variety of customers, including

rising labor costs and trends in raw materials

Nohmi Bosai established a new facility

government facilities, banks, high-rise build-

prices, the market for fire protection services

dedicated to research in the area of fire detec-

ings and hotels, around the world. In theremained firm, bolstered by a recovery intion and fire extinguishing technologies. The

period under review, the company reported

private-sector capital expenditures.

new research facility, dubbed Test Building ”A”,

robust sales in the United Kingdom and in

Nonetheless, the evolution of society—boasts a spacious testing site for conducting

Southeast Asia. Of particular note, deliveries ofincluding the deterioration of structures andhygrothermal and other specialized experi-

SPERA and other UL standard-compliant fire

infrastructure, and the evolution of cityscapesments, as well as a laboratory for International

detection systems were strong in Vietnam.

and buildings—is transforming the targets

Organization for Standardization (ISO)-related

Nittan has also established sales bases in theand nature of fires, bringing new challenges toand other testing. The new facility allows cus-

United Kingdom and Vietnam with the goal of

the fire protection services industry. Seeking

tomers to view experiments assuming actual

further expanding sales.

to address such issues, subsidiaries Nohmi

fire situations to demonstrate the effective-

Bosai and Nittan, two of Japan’s leading fire

ness of fire protection equipment and isprotection services providers, sought to lever-contributing to order growth.

age their respective business foundations andproduct development capabilities to advanceforward-looking sales aimed at expandingorders for advanced fire protection systems
designed to protect lives and property.
In the area of automatic fire alarms, sales
focused on securing profitable orders foralarms for new buildings. At the same time,with the deterioration of existing automatic
fire alarm systems fueling orders in therenovations market, Nohmi Bosai and Nittan
continue to draw on their solid track record
and the solid trust of customers to actively
Nohmi Bosai’s new research facility

28

SECOM Annual Report 2018

Comprehensive fire protection systems installed at
temple designated an important cultural property (Nittan)

and support for affiliated medical ­institutions,ward. This facility brings together our proprietary

all of which we continue to expand.

expertise in security and fire protection with our
know-how in the provision of medical care andMedical ServicesgS ecom Medical System becomes first Net sales and operating revenue (Left scale) Operating income (Right scale)(In billions of yen)

(In billions of yen)

200
150

8

175.5

169.0

163.7

6
4.1

100

4

2.9
50
0

2

1.7

2016

2017

2018

nursing care for seniors to provide a full range of­ esignated facility for training for nursesdpertaining to specified medical acts0

Operating highlights
In Japan awareness of the importance of
medical care, nursing care and healthcare­services continues to grow, pushing up
demand for high-grade, sophisticated andnursing care services to residents.
Japan is currently promoting the creation

In the period under review, Group companyof comprehensive community-based health-

Secom Medical System earned designation

care systems. We have concluded a “Shibuya

by the Ministry of Health, Labour and Welfare

Social Action Partner” with Shibuya’s munici-(MHLW), becoming Japan’s first private-sector

pal government. Alive Yoyogi Oyama-cho

facility for training nurses pertaining to speci-

was developed in line with this framework

fied medical acts*. We continue to leverage

as a vital component of such a community

our accumulated know-how in the area of

healthcare system that supports efforts tomedical services and our close ties with mul-

ensure effective healthcare for local seniors.

tiple hospitals to help nurture nurses who are

Going forward, we will promote interaction

leaders capable of specified medical acts andand collaboration between residents of thecreate work environments in which nurses

facility and a local university and university

can thrive with the aim of helping to further

hospital with the aim of contributing to theenhance the quality of medical care in Japan.

realization of a community that contributes to* “Specified medical acts” is used to describe certain
types of medical assistance (e.g., intravenous drips fordehydrated individuals and adjustment of artificial­respirators) or dental assistance that can be performedby nurses based on directions given by, respectively, aphysician or dentist.

peace of mind for all inhabitants.

diverse services. Believing that protecting
the health and lives of people is a naturalextension of our commitment to providinggA live Yoyogi Oyama-cho residence

for seniors opens

safety and peace of mind, we have created an

We recently opened Alive Yoyogi Oyama-cho,extensive menu of medical services centeredthe 16th facility in our network of residences foron home nursing, pharmaceutical dispensing

seniors and nursing homes, in Tokyo’s Shibuya

and other home medical services.
Our mainstay home medical services busi-

Home Medical Services

ness encompasses pharmaceutical dispensing
and home delivery, which involves filling­prescriptions, delivering medications, providing

Alive Yoyogi Oyama-cho

Medical Care
Institution

Prescription

medical and hygienic supplies, and extending

Nurse’s report

advice to patients. We provide home nursing

Coordination­services through a nationwide network of 35­visiting nurse stations. Our highly skilled visiting
nurses visit homes to provide expert services
under the direction of the patient’s physician. In

Physician’s guidelines

Home Nursing
Services

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

the period under review, sales in the pharmaceuConsultationtical d­ ispensing services business were robust.
This business also includes the operation ofresidences for seniors, electronic medical reportservices, sales of medical equipment, personal

Prescription

Patient
Pharmaceutical delivery

Nurse visit
Outpatient care

care services, the operation of a hospital in India

SECOM Annual Report 201829

SECOM Today

Insurance Services

J Subscriptions to the MEDCOM

are discounted to reflect the risk-mitigating

unrestricted cancer treatment
policy continue to growbenefits of such systems. We continue to see

MEDCOM is an unrestricted cancer treatment

our on-line security systems choosing to also

policy that features full coverage for all treat-sign up for non-life insurance policies at thement costs, both those covered under Japan’ssame time. As a consequence, subscriptions

National Health Insurance (NHI) scheme andto these policies are expanding.

those for which the patient usually bears the
JNet sales and operating revenue (Left scale)
JOperating income (Right scale)(In billions of yen)

(In billions of yen)

15

60

40

47.7

46.9

43.6

10
6.8

7.3

6.2

20

0

5

2016

2017

2018

0

burden. MEDCOM coverage also extends
to outpatient treatment, an increasingly
key component of cancer care, providing

J SECOM Anshin My Car: Backed by

support from emergency response
personnel

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

Another attractive product in our non-life

policy’s extensive coverage, together withinsurance policy portfolio is SECOM Anshin

the fact that it enables subscribers to focus

My Car, an automotive insurance policy thaton treatment without worrying about theincludes around-the-clock access to on-site

economic implications, continues to bolster

support by SECOM emergency response

subscriptions.

personnel in the event of an accident. Thisfeature, which includes contacting the police

J Distinctive features of SECOM

Operating highlights

an increasing number of new subscribers forIn the non-life insurance market, the emer-

Anshin My Home and Security
Discount Fire Policy

gence of new risks affecting the activities

SECOM Anshin My Home is a policy forof individuals and corporate entities arisingresidential customers that offers a discount on

from changes in the social structure is driving

premiums for subscribers who have installed

demand for high-value-added policies thaton-line security systems, recognizing that

respond to evolving customer needs. In thissuch systems reduce the risk of theft and fire.

environment, we are promoting the develop-

Security Discount Fire Policy is a similar policy

ment of distinctive insurance policies andfor commercial customers who have installed

to cultivate sales channels with the goal of

on-line security systems in which premiums

and ambulance services and photographing
the accident site, continues to earn highmarks from subscribers.

reinforcing the foundation of this business.

Call center operated by Secom General Insurance

30

SECOM Annual Report 2018

Secom General Insurance headquarters

SECOM Anshin My Car on-site support

J AI-based urban change analysis

Geographic
Information Services
JNet sales and operating revenue (Left scale)
JOperating income (Right scale)(In billions of yen)

60

52.7

(In billions of yen)

51.8

4.5

51.1

3.0

40
1.9

20

1.5
0

0
–0.3

2016

–0.9

2017

2018

–1.5

map and parked vehicle estimation
map services are launched

J New 3D data service introduced forthe i-Construction program
The i-Construction program was launched

Pasco’s new urban change analysis map

by Japan’s Ministry of Land, Infrastructure,service involves the application of AI tech-Transport and Tourism as an initiative aimed

nologies to synthetic aperture radar (SAR)at deploying ICT in construction and civil

satellite images to automatically detect urban

engineering by normalizing standards andchange and map topographical changes.

harmonizing procedures for projects, thereby

Mapping of manmade objects, deforested

helping overcome persistent labor shortages.

land, forested areas/trees together with spatial

This has led to demand for program-estimates and a chronological representation

compliant services for the creation of 3D dataof changes enables users to gauge the speed

for all processes, including advance surveying,of urbanization and forest depletion, amongplanning, engineering and execution.

others, underscoring expectations for highCapitalizing on its spaceborne, airborne,

demand from developing countries andterrestrial and water area surveying capabili-

emerging economies.

ties, as well as its advanced data processing

With a new parked vehicle estimation map

technologies, Pasco is able to provide consult-service, AI technologies are applied to high-ing services that take into account the con-resolution optical satellite images* to countstruction environment and the unique

Operating highlights

the number of parked vehicles in a particularcharacteristics of items measured and maxi-

Owing to factors such as the graying of soci-area. This service offers promise for use inmize the benefits of 3D data. The scope of

ety, a declining labor force and the increasing

measuring economic activity—by, for exam-

application for the i-Construction program has

risk of natural disasters attributable to climate

ple, tracking the movement of vehicles for

expanded to include transport and disposal ofchange, our operating environment continues

export in and out of harbor motor pools orseabed/riverbed sediment, paving and bridge

to evolve, growing increasingly diverse andthe number of vehicles in the parking lots ofbuilding. Accordingly, Pasco will take advan-

sophisticated. Subsidiary Pasco has built

large-scale retail facilities—and for adaptation

tage of its 3D data service’s measurement

a portfolio encompassing ongoing andto use in disaster situations to gauge theprecision and ability to help ensure the safety

subcontracted businesses that centers on theextent of damage by counting houses andof production sites to expand orders.

visual representation, analysis and distribution

other structures.

of geospatial information. The company also
employs a variety of next-generation tools,
including AI and IoT, robotics and blockchain
technologies, to increase the automation andsophistication of its services.

* The resolution of images captured by optical satellites
varies depending on the power of the satellite. The
term “high-resolution optical satellite image” is generally used for images with a resolution of several dozen
centimeters.

Pasco provides services to national andlocal governments and private sector customers in Japan, as well as to government agencies overseas. Services to national and local
governments account for approximately 80%

3D data incorporating images
captured by dronesof segment net sales and operating revenue.
Because deliveries to the public sector are
generally clustered at the end of March,
segment income follows a similar trend.

Urban change analysis map service

SECOM Annual Report 201831

SECOM Today

services. We also took steps to expand our

J Information security services

BPO business.

To ensure preparedness against dangers suchas disasters, targeted cyber attacks and system

BPO and ICT Services

J Data center businessfailures, we provide seamless services that

Our data center business, which is among theensure the security of our customers’ informa-largest in Japan, enables subscribers to store

tion and systems, encompassing monitoring,data at a highly secure data center facility

response services and normalization.

boasting outstanding security and a stable
JNet sales and operating revenue (Left scale)
JOperating income (Right scale)(In billions of yen)

(In billions of yen)

80
60

56.8 7.3

55.8

10.0

76.8

8.2

40

7.5

electric power supply that is accessed via a

J Cloud-based services

reliable network. In the period under review,

Underpinned by our around-the-clock moni-these services continued to garner praise

toring capabilities, we offer SECOM Anshin My

from both Japanese and foreign-owned

Number Service, which enables companies

subscribers.

to collect and securely manage their employees’ My Number (personal social security and5.0
J Large-scale disaster preparedness

20

2.5

services

tax number system) information. Our cloudbased services also include the SECOM Anshin

We provide a variety of services that assist

Employee Attendance Management Service,companies in preparing BCPs to ensure their

which facilitates the efficient management

ability to implement effective immediateof time clock data, and the e-Kakushin

Operating highlights

response measures and promptly restart

Schedule service, which allows the automatic

The risks to life and livelihood today areoperations in the aftermath of a major disas-

preparation of shift schedules, and SECOM

increasingly complex and include large-scaleter. The SECOM Safety Confirmation Service

Anshin Health Check Service, which supports

disasters, terrorism and cyber crime, as a result

helps subscribers ascertain the safety of

the arrangement of annual employeesof which people feel a rising sense of unease.

employees and their families in the event ofhealth checks.

In the period under review, we maximized ouran earthquake or other disaster or the failure

expertise in the deployment of ICT technolo-of key infrastructure. This system has earned

J BPO services

gies in the area of on-line security systems

solid marks and is one of Japan’s leading

In October 2017, we acquired TMJ, which

to bolster sales in the area of distinctive

disaster management support services.

provides high-grade contact center and other

0

0.3

2016

2017

2018

0

business continuity planning support services,

BPO services for leading financial institutions

which focus on data center services, as welland other customers. Looking ahead, we will

as in information security and cloud-based

maximize TMJ’s extensive experience andknow-how to develop and provide safe andsecure BPO services that respond toincreasingly diverse market needs.
J New services
Q Technologies provided for the digital

storage of deposit and withdrawal slips
We are providing digital signature andtimestamping* technologies to regional
financial institutions, which have sought
to develop a system for the digital storageof deposit and withdrawal slips and otherdocuments that must be submitted to the
National Tax Agency, thereby helping suchinstitutions to increase operating efficiency
SECOM data center facility

32

SECOM Annual Report 2018and reduce costs. We will continue working tocommenced full-scale condominium renova-

provide solutions that assist a broad range oftion services. On another note, we opened

companies improve their business processes,

secure condominium showrooms in Tokyo

Real Estate andOther Services

focusing particularly on technologies fortransforming documents into digital form.

and in Kanagawa, Saitama and Chiba prefectures, enabling us to provide advice andproposals customized to the different life

* Timestamping verifies when a digital file was created(file creation timestamp) and when it was modified(last modified timestamp).

stages and needs of customers.
JNet sales and operating revenue (Left scale)

Q Participation in

new securities consortium
In January 2018, a securities consortium wasformed in Japan as a cross-industry bodythe purpose of which is to conduct basic

JOperating income (Right scale)(In billions of yen)

(In billions of yen)

60
45
30

10.0

49.5

44.1
4.9

45.5

6.9

5.2

7.5
5.0

industry as a whole. As a participant in thisconsortium, we will oversee the construction

We provide detailed, carefully tailored realestate leasing services, focusing on central
Tokyo, to assist the business activities ofdiverse companies in various industries. In the
period under review, revenue from real estateleasing declined temporarily, owing toresearch in emerging technologies and create
a common technological foundation for the

J Real estate leasing

15

2.5

0

0

2016

2017

2018

of an identity confirmation platform thatchanges in real estate held for leasing
attributable to the sale of certain properties.
J Construction and installation

leverages biometric authentication and other

Operating highlights

advanced technologies. This will increase the

J Real estate development and sales

This business encompasses a wide range of

convenience of authentication proceduresWith prices for land suitable for condominium

services, from the installation of air condition-for individuals using securities companies’

development soaring, we faced ongoinging, plumbing, electrical and fire protection

web-based services. In the future, the system

difficulties in purchasing land for this busi-

equipment, renovation and enlargement to

may also be for authentication in other areas

ness. Against a backdrop of persistent labor

design, construction and maintenance.

of securities’ companies’ businesses.

shortages, construction costs also peaked. In

services

this environment, we continued to promote

J Home services

Making use of the extensive know-how in thethe development and sales of high-grade

SECOM Home Service is an optional suite ofissue and management of private keys that

Glorio series condominiums with exceptional

services available to SECOM Home Security

we have accumulated as certification author-

security and disaster-preparedness features, in

subscribers with a diverse menu that enables

ity, we also entered into a business allianceline with our goal of providing living spaces

us to tailor packages to customer needs.

with a virtual currency exchange and beganthat deliver safety and peace of mind. We also

Services offered range from housework sup-providing a global-standard secure virtual

recently developed and launched the Glorio

port to patrolling around subscribers homes

currency wallet* service.

Comfort series of highly secure compact con-when they are out.

* A system of managing virtual currency transactions
that is crucial for virtual currency exchanges

dominiums that maximize use of residentialuse land. To take advantage of expanding
demand for pre-owned condominiums, weGlorio Residence Machida Nakamachi

SECOM Home Service

SECOM Annual Report 201833

Corporate Social Responsibility

Since our establishment, we have sought toabstract a broad range of social imperatives,

imperatives through our businesses asfulfill our responsibility to society through ourwhich we examine in light of our manage-“strategic” and those aimed at earning thebusiness activities, acknowledging the impor-ment resources and the opinions and expec-

trust of stakeholders as “basic.”

tance of sustainability for ourselves and fortations of our stakeholders. We classify CSR

society. In promoting CSR initiatives, we

initiatives designed to help address social

Social trends/imperatives(Demographic change, technological progress, shift of global economic center/urbanization, aggravation of environmental issues)

Opportunities and risks

Communication withstakeholders

Strategic CSR Goal: Provide enduring peace of mind toan ever-changing society by creating
the ANSHIN Platform

Basic CSRSECOM’s management resources/foundation(Human resources, organization, technologies, performance, knowledge)

The SDGs and the UNGC
Our basic policy of contributing to societysociety. Seeking to further our goal of helping

through our business activities has manyto achieve sustainability for society, on May

aspects in common with the United Nations’2, 2018, we became a signatory to the United

Sustainable Development Goals (SDGs)* in

Nations Global Compact (UNGC).

terms of focus on achieving sustainability for* The SDGs were adopted at the UN Sustainable Development Summit in September 2015 as
goals essential to sustainable development for the planet to be attained by 2030.

34

SECOM Annual Report 2018

Key areas of focus: Consumer issues, human rights
and labor practices, the environment, community
involvement and development, fair businesspractices, organizational governanceBasic CSR initiatives
Taking into account the key areas of focus in

Our commitment to respect for humanISO 26000, the international standard for social

rights is proclaimed in The Constitutions of

4. Community involvement anddevelopment

responsibility, we have organized our basic

the SECOM Group, a set of 10 provisions that

We recognize contributing to the community

CSR initiatives into six key categories.

serve as our basic operating principle, while

through the provision of safety and peace

the SECOM Group Code of Employee Conductof mind as an important responsibility. We

sets forth specific standards to be observed.

promote a variety of efforts to fulfill this

1. Consumer issues
To guarantee that the quality of our services is

We also place a priority on ensuring safety

responsibility, including offering programs

consistently worthy of the SECOM name, we

and a favorable work–life balance for ourfor children, women and seniors designed

have established a framework in our security

employees. Accordingly, we have put in place

to raise crime prevention awareness. In theservices business that ensures exceptional

generous health management and leavefiscal year ended March 31, 2018, such efforts

safety and reliability across all processes, fromprograms. In addition, we have established aincluded child safety classes and crime

R&D through to maintenance, and conduct

dedicated website and a sexual harassment

prevention awareness seminars for women,

practical training for employees that aims tohotline that enable employees to anony-held 168 times and 15 times, respectively, atenhance their know-how and skill levels.

mously consult with professionals regarding

locations across Japan. Our social contribution

problems or concerns.

activities include extending support to areas

We also work to further enhance service
quality by paying heed to feedback fromOnce annually, we conduct employee

devastated by natural disasters.

customers. We have positioned staff acrosssatisfaction surveys. Survey findings are

Japan who specialize in promoting customer

published in-house and reflected in improve-

5. Fair business practices

satisfaction and who are charged with visit-

ments to various systems and programs.

Efforts to strengthen our cooperation withing customers to gain feedback. Throughsuppliers, as well as to promote mutual

SECOM customer service centers we respond

3. Environment

understanding and compliance with laws andto various requests and inquiries received

In the belief that protecting the environment

regulations, have enabled us to create a solidby telephone regarding services, systems

is essential to our ability to provide security

framework for providing high-grade services

and products.

and support comfortable lifestyles, weand systems.

continue to promote awareness of our envi-

We also work to promote awareness of key

2. Human rights and labor practices

ronmental philosophy, which is to incorporate

components of CSR, including preventing cor-

In line with our belief that creating working

consideration for the environment into all

ruption, safeguarding human rights, ensuring

environments conducive to job satisfaction

areas of our operations, and of our basic envi-

industrial safety and employee wellbeing, andand helping employees fulfill their potential

ronmental policy. We are also implementing

protecting the environment, across our entire

are key to driving growth for SECOM, we

measures aimed at addressing such key issues

value chain.

attach importance to diversity. We also recog-

as global warming and resource depletion

nize respect for human rights as an essentialand ensuring our operations conform with

6. Organizational governanceaspect of corporate management and provide

pertinent laws and regulations.

To increase the efficiency and transparency

training aimed at enhancing employees’of management practices, thereby enablingunderstanding thereof.

us to consistently increase our corporate
value, we are taking steps to enhance ourcorporate governance system. As well, we arepromoting decisive management-led efforts
to strengthen our compliance framework andimprove disclosure.

SECOM Annual Report 201835

ESG Initiatives

Environmental initiatives
Combating global warming
We have positioned the reduction of CO2 emis-

environmental performance of service vehicles,

we have set a target for reducing greenhousesions as a key performance indicator (KPI) since

we are working to replace all four-wheeled vehi-

gas emissions attributable to our security ser-2008. In the fiscal year ended March 31, 2018,cles with fuel-efficient alternatives by the year

vices business by 35.0% from the level in theinitiatives implemented in relation to SECOM

ended March 31, 2021. We are also promoting

year ended March 31, 2014, by the year ending

service vehicles and offices with the goal ofenvironment-friendly and safe driving throughMarch 31, 2031.

preventing global warming reduced emissions

education and efforts to advance awareness.

Seeking to do our part to curb increases inof greenhouse gases by 384 metric tons. Total

In line with the goal of Paris Agreement,

global average temperature, we will endeavor toemissions of greenhouse gases in the period

to which 196 countries and territories haveachieve an 80.0% reduction of our greenhouse

under review amounted to 76,750.0 metric tons,

become party, and the Japanese govern-gas emissions by 2050.

down 5.1% from the base year. To improve thement’s plan for reducing greenhouse gases,

Breakdown of CO2 Emissions
in the Year Ended March 31, 2018

Greenhouse Emissions: Actual Results and Medium-Term Target
JActual results JTarget (35.0% reduction from the levelin the fiscal year ended March 31, 2014)(Metric tons of CO2)

100,000

Base year

Other 2.5%

5.1% decrease

80,000Target for the year ending
March 31, 2035: 35.0% reduction

60,000Burning of
fuel
by vehicles

Use ofelectricity

43.1%

54.4%

40,00020,000080,871

78,907

79,29581,50876,750

2014

2015

2016

2017

2018

52,5662031(Years ended/ending March 31)* Greenhouse gas emissions for each fiscal year are calculated in terms of metric tons of CO2 equivalent.
** Scope of reporting: SECOM CO., LTD. and 27 principal subsidiaries in the security services business.

* Scope of reporting: SECOM CO., LTD. and 27 principal
subsidiaries in the security services business.

Creating a zero resource-waste, low-carbon business model
Our integrated framework for providing on-line

have distributed the SECOM Green Design

security systems, whereby we take responsibil-

Guidelines to our 122 suppliers. As a result of

ity for the entire life cycle of equipment, fromthis initiative, in the fiscal year ended March 31,

R&D and production through to installation,

2018, we succeeded in reducing CO2 emissions

operation, collection and disposal, has enabledattributable to the use by customers andus to create a zero resource-waste, low-carbon

disposal as waste of SECOM equipment bybusiness model, that is, a business model that

13,345.0 metric tons.

seeks to enhance recycling rates and energy
efficiency.

36

From the perspectives of environmental
preservation and effective resource use, weWith the goal of advancing environment-

repair and reuse security equipment collected

friendly equipment design, that is, design thatfrom subscribers, or carefully dismantle suchminimizes impact on the environment, includ-

equipment and separate constituent materi-ing by reducing consumption of electricity,

als. In the period under review, these efforts

facilitating reuse, promoting long-time use

yielded 922.0 metric tons of resources withand eliminating hazardous substances, wemarketable value.

SECOM Annual Report 2018

Industrial Waste and Resources with
Marketable Value JIndustrial waste (left scale)

Resources with marketable value(right scale)(Metric tons)(Metric tons)

4,000

922 1,000

908

3,000
2,000

693
442

500

508

1,000
0

750

250
2,959

2,910

2,763 3,445

3,670

2014

2015

2016

2018

2017

0

(Years ended March 31)* Scope of reporting: SECOM CO., LTD. and 27 principal
subsidiaries in the security services business.

Social initiatives
Support in the aftermath of major disasters
Since launching the SECOM Disaster Support

Earthquake and the torrential rains in north-and encourage employees who want to

Project in December 2016, we have provided

ern Kyushu in July 2017, for example, we

register as volunteer firefighters.

long-term on-site support for recovery

capitalized on our distinctive technologicaland reconstruction in areas struck by geo-

prowess and know-how to provide extensivegraphically extensive major disasters. As well,

support for local residents. We also cooper-

we have sought to assist with everyday

ate enthusiastically in the implementation ofefforts to enhance disaster preparedness. In

volunteer fire brigade activities, the corner-areas damaged by the April 2016 Kumamotostone of community fire prevention efforts,

Employee training and education
In line with our belief that the power of anwhich ranges from corporate principles andsimply mandating study but also conducting

organization is the sum of its parts, we devote

the SECOM Group Code of Employee Conduct

exams to ascertain comprehension, thereby

considerable resources to fostering humanto social norms, CSR, business policies andreinforcing awareness.

resource. We have developed training and edu-

product knowledge. We have also developed

cational programs tailored to different growth

an e-learning program for all employees

stages and job classifications. In addition,that addresses the protection of confidential

we have added an e-learning component to

information, prevention of insider trading andpromotion examinations, the content ofelimination of all types of harassment by not

Advancing diversity and inclusion
Recognizing the importance of welcoming
a broad spectrum of individuals with wideranging values and of leveraging the capabilities of such individuals to drive the creation

Percentage of Labor Force Accounted forby Individuals with Disabilities
(%)

(%)

2.5

12

of value, in 2016 we established the SECOM

9

Diversity and Inclusion Policy.
With the aim of creating an inclusive organizational framework, that is, one that ensures

2.0

1.99
1.90

2.02

their potential, in October 2017 we announced
our commitment to diversity and inclusion
and appointed individuals in charge ofdiversity and inclusiveness.

Overall

9.6

9.9

6.6

7.0

7.2

2014

2015

2016

9.1

2.08
1.96

acceptance of and respect for diverse humanresources and allows all employees to fulfill

Female Employees
in Management Positions

6

Non-security areas

10.7

11.0

7.8

8.1

2017

2018

3
1.5

2014/6 2015/6 2016/6 2017/6 2018/6(As of June 1 of each year)* Scope of reporting: SECOM CO., LTD., Secom Trust
Systems Co., Ltd. and Secom Business Plus Co., Ltd.

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

SECOM Annual Report 201837

ESG Initiatives

Supporting work–life balance
We view work–life balance, including sufficient physical and mental rest and a fulfilling private life as essential to the ability toapproach one’s work with energy and focus.

Percentage of Annual Paid Vacation Days
Taken by Employees(%)

60

Accordingly, we have introduced systems thatallow employees to take a “flex” vacation of

50

55.6

160

50.4
46.3

“refresh” vacation every 10 years. In addition,

To assist employees in balancing the40

demand of career and home, we have createdchildcare and nursing care leave programs

30

2016

2017

2018

0

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

choose a location and work style that accommodates the circumstances of each individual
employee and have created the SECOM Life
Support Program, which seeks to provide
long-term support for career advancement.

An Official Partner of the Olympic and Paralympic Games Tokyo 2020

38

As an official partner (Security Services andthe trust of society, an achievement that

Planning category), we will contribute tocontributed to our subsequent evolution

the safe and secure staging of the Olympic

and growth.
We look forward to helping ensure the

Our history with the Olympics

safety and security of the Olympic andstretches back five decades. Still in our

Paralympic Games Tokyo 2020 and will

infancy, in 1964 we provided security

continue working to create innovative

services for the Olympic Village at the firstservices that will help us achieve this goal.

SECOM Annual Report 2018

121

12
8

4

3

2016

2017

5

2018

4
0

(Years ended March 31)

encourage their use. We also endeavor toTokyo Olympics, earning high marks and126*Scope: SECOM CO., LTD.

and continue to promote measures toand Paralympic Games Tokyo 2020.

20

80

40

we actively encourage employees to takeannual paid vacation days.

(Number ofpeople)

16

143

120

up to 10 consecutive days annually—in theory
at any time of the year—and a two-week

Employees Taking Childcare Leave(Number ofpeople) JTotal (left scale)
200 JMale employees (right scale)Corporate governance
Basic philosophy
With the aim of earning the support of our

In line with Japan’s Corporate Governanceinformation to shareholders and othercustomers, shareholders, clients, employees,

Code and at the direction of top manage-

stakeholders and strengthen our compliancelocal communities and other stakeholders as

ment, outside members of the Board of Direc-

framework.

a company with value that is worthy of trust,tors and Audit & Supervisory Board provide

we strive to maximize corporate value overindependent oversight of the management

the medium to long term and recognize theteam’s performance in a manner that takes

importance of fulfilling our responsibilities as

into account the interest of stakeholders anda corporate citizen and achieving sustainable

ensures the appropriate execution of businessgrowth and development.

activities. We also work actively to disclose

Initiatives to strengthen corporate governance
Area

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

1986

2000

2005

2010

2015

2018

Q 1986: Creates SECOM’s Philosophy
Q 2006: Formulates basic rules of management for SECOM Group companies
Q 2010: Establishes the SECOM Group Management Committee
Q 2004: Institutes an executive officer system

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

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

Number of directors

Q 2002–2003: 22–23
Q From 2004: 10–13

Up to 2010: 4

Number of auditors

Q From 2011: 5
Q 2013–2015: 2

Number ofoutside directors
Number ofoutside auditors

Q From 2016: 3

Up to 2002: 2
Q From 2003: 3
Q 2016:

Remuneration for/appointment of
directors

Establishes Nomination andCompensation Committee
Q 2017:Adopts performance-linked
remuneration system

SECOM Annual Report 201839

ESG Initiatives

Outline of corporate governance system
We are a company with an Audit & Supervi-

Board, which includes three outside mem-

The Nomination and Compensation

sory Board. The Board of Directors, whichbers, and the Board of Directors coordinate

Committee has been established as internal

includes three outside members, makes deci-with the internal audit departments to audit

committee of the Board of Directors. This

sions pertaining to business execution andand supervise directors’ and executive officers’committee, which is responsible for present-

other corporate matters. Executive officers, leddischarge of their duties. We believe that thising candidates for the position of director toby the President and Representative Director,

enables us to conduct independent oversightthe Board of Directors and for ensuring theare responsible for business execution. Weof management and ensure appropriate

appropriateness of remuneration for directors,

have adopted an Audit & Supervisory Board

business execution.

comprises five directors, three of whom are

System, whereby the Audit & Supervisory

outside.

Corporate governance organization
General Meeting of Shareholders
Appointment/
dismissal

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

Appointment/
dismissal

Proposal of candidates forthe position of director
Authorization/consultation
regarding remuneration
Determination/submission ofdecisions regarding remuneration

Nomination andCompensation
Committee

Internal audit
departments(five members, three of whom
are outside)

Office of Audit & Supervisory Board:
Three employees(Operational, accounting andcompliance audits)

Reporting on important matters

President andRepresentative Director

Audit & Supervisory Board

Coordination

Legal Affairs Department

Enhancement of compliance/internal auditing

Executive Officers

Deliberation

Organizational
Culture Committee

Audit by independent
public accountants
Accounting audit

40

Board of Directors

Executive Officers

Audit & Supervisory Board

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

We have adopted an executive officers system,
whereby the Board of Directors is responsible fordecision making and the executive officers are
responsible for business execution. This was donewith the aim of strengthening field divisions andenhancing customer service systems by clarifying
responsibilities and authority and expediting
business execution. We currently have 30
executive officers, seven of whom are also
directors.

The Audit & Supervisory Board comprises fivemembers, two of whom are full-time and three ofwhom are outside. In principle, the Audit &Supervisory Board meets monthly. Individuals
well-versed in our businesses and internal affairs, aswell as in finance and accounting, are appointed toserve as full-time members, while individuals whoare independent of the management team, haveextensive knowledge of corporate management,
legal, financial and other matters and are capableof providing effective oversight and monitoring of
the management team, are appointed to serve as
outside members.

SECOM Annual Report 2018

Nomination of candidates forappointment to the Board of Directors
and the Audit & Supervisory Board

activities, as well those of subsidiaries andauditors, as well as additional meetings as nec-

affiliates, in accordance with annual audit plans.

essary, for the purpose of exchanging opinions

In accordance with the policy for appoint-

Principal activities of the
Audit & Supervisory Boardin the fiscal year ended March 31, 2018

members receive explanations and exchange

Participation in meetings of theBoard of Directors

98.33%

Board members also act as witnesses during

Participation in meetings of the
Audit & Supervisory Board

98.33%

ment set forth by the Board of Directors,
candidates for appointment to the Board of
Directors and the Audit & Supervisory Board
are decided through deliberation by the
Board of Directors. Candidates for the Boardof Directors are nominated from among
candidates proposed by the Nomination andCompensation Committee, which include
outside directors. Candidates for the Audit &Supervisory Board are nominated with theagreement of the Audit & Supervisory Board.

and information. Audit & Supervisory Board
opinions regarding annual audit plans andaudit results. If necessary, Audit & Supervisory

Information sessions with directors
and other executives of subsidiaries 76 times
and affiliated companies
Audits conducted by Audit &Supervisory Board members at
remote locations

112
locations

audits conducted by the accounting auditors at
remote locations and during audit reviews (38times in the fiscal year ended March 31, 2018).

Collaboration with internal audit andother departments
Audit & Supervisory Board members holdregular (monthly) meetings with the Audit
and Compliance Department, during which
they receive reports and exchange opinions

Audits by the Audit & Supervisory Board

Regular meetings between the representative director and Audit & Supervisory
Board members

Audit & Supervisory Board members attend

Audit & Supervisory Board members hold

SECOM Group companies from and exchange

important meetings, including those of theregular (monthly) meetings with the Repre-

Board of Directors, to exchange opinions on

sentative Director, during which they

overall corporate management, as well as toexchange opinions on important manage-

collect reports on the discharge of duties fromment-related issues, including the results ofdirectors and other pertinent individuals andaudits, to ensure common understanding.

Internal audits and cooperation
among boards and offices

regarding the results of internal audits and, as
appropriate, receive reports on inspections of
opinions and information with the Group
Governance Department. If necessary, toensure the efficiency of audits, Audit &Supervisory Board members ask the internal
audit departments to conduct investigations.

conduct audits focused on the possible occurrence of violations of laws, regulations, theArticles of Incorporation and/or shareholders’Meetings between Audit & Supervisory
Board members and accounting auditors

interests. The Audit & Supervisory Board also

Audit & Supervisory Board members meet reg-

conducts audits of our overall businessularly (six times annually) with the accounting

Outside directors and outside Audit & Supervisory Board members
We appoint individuals who have extensiveof the management team). We have also

independent oversight of management per-knowledge of corporate management toestablished an auditing organization (includ-

formance in a manner that takes into accountserve as outside directors, thereby incorporat-

ing the Office of Audit & Supervisory Board

the interests of stakeholders.

ing a broad range of external perspectives not

Members) that operates independent of day-constrained by the internal affairs. We haveto-day operations and a process (including

Audit & Supervisory Board members on thethus structure that ensures the transparency

periodic meetings between the Representa-

basis of requirements for outside directors set

and objectivity of management.

tive Director, among others, and the Audit &forth in Japan’s Companies Act and the stan-

We appoint Audit & Supervisory Board

Supervisory Board members). This insures thatdards concerning independence set forth bymembers who have a wealth of knowledge

Audit & Supervisory Board members’ objective

financial instruments exchanges.

of corporate management, legal, financial

and neutral opinions are reflected promptly

and other matters (including three outside

in operations. As a consequence, we believe

members, who are essentially independentthat we fulfill our responsibility to conduct

We appoint outside directors and outside

SECOM Annual Report 201841

ESG Initiatives

Outside directors and outside Audit & Supervisory Board members
Attendance atBoard ofDirectors’
meetings

Attendance at
Audit &
Supervisory
Board
meetings

Takaharu Hirose

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

12/12

—

Hirobumi Kawano

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

12/12

—

Hajime Watanabe

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

12/12

—

Hideki Kato

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

12/12

12/12

Makoto Yasuda

Mr. Yasuda offers advice and suggestions at meetings of the Board of Directors
based on experience and insights gained in the management of a global
enterprise. He also asks questions and states opinions to clarify issues.
Mr. Yasuda made efforts to understand what had transpired at the Board of
Directors and Audit & Supervisory Board meetings he missed by receiving areport from, respectively, the meeting administrator and full-time Audit &Supervisory Board members.

11/12

11/12

Masao Yokomizo

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

9/9

9/9

Name

Outsidedirectors

Outside Audit &Supervisory
Board members

Principal activities

Note: Information on attendance at meetings of the Board of Directors and Audit & Supervisory Board is for the fiscal year ended March 31, 2018. Masao Yokomizo was appointed andassumed the position of Audit & Supervisory Board at the 56th Ordinary General Meeting of Shareholders held on June 27, 2017. Accordingly, the figures for his attendance atmeetings of the Board of Directors and Audit & Supervisory Board held on or after that day.

42

SECOM Annual Report 2018

Remuneration for directors and Audit & Supervisory Board members
Remuneration for directors consists ofindividual contribution. Outside directors receive

to promote the further sharing of value withpecuniary remuneration and stock compen-

basic remuneration only.

shareholders.

sation (shares with restrictions on transfer).

Stock compensation is determined by

Remuneration for Audit & Supervisory

Outside directors are eligible for pecuniary

discussion of the Board of Directors, taking into

Board members, which comprises pecuniary

remuneration only.

account deliberations by the Nomination andremuneration only, is determined throughPecuniary remuneration is determined byCompensation Committee within the limit

discussion involving Audit & Supervisory

the Nomination and Compensation Committee,

resolved at the Ordinary General Meeting ofBoard members in amounts commensurate

which has received authorization from the Board

Shareholders set separately from that set forwith individual duties. Remuneration for Audit

of Directors, within the maximum limit resolved

pecuniary remuneration. In addition to incen-& Supervisory Board members is set withinat the Ordinary General Meeting of Sharehold-tives offered with the goal of driving sustain-

the maximum limit resolved at the Ordinary

ers. Pecuniary remuneration for directors com-able growth in corporate value, directors other

General Meeting of Shareholders.

prises basic remuneration and bonuses, whichthan those who are outside receive shares withare linked to consolidated operating results andrestrictions on transfer, the objective of which is

Remuneration for directors and Audit & Supervisory Board members (Fiscal year ended March 31, 2018)
Position

Total remuneration(Millions of yen)

Breakdown of total remuneration(Millions of yen)Basicremuneration

Bonus

Restricted stock

Number ofentitled officers

Directors (excluding outside directors)

319

261

46

11

8

Audit & Supervisory Board members(excluding outside members)

45

45

–

–

2

Outside directors and outside
Audit & Supervisory Board members

53

53

–

–

7

Total

418

360

46

11

17

Evaluation of the Board of Directors’ effectivenessEvaluation process

for critical matters. The matters handled byAudit & Supervisory Board members. In addi-

In January 2018, the Board of Directors con-the Board of Directors were selected appro-tion, where necessary, consensus building

ducted a survey, after which it interviewed

priately. Opinions were expressed regarding

between full-time directors and outside direc-

additional pertinent individuals as necessary.

further diversification of the Board’s composi-

tors is carried out smoothly. This shows that the

Responses were collated by the Board’s secre-tion and simplification of its administration.

monitoring function of the Board of Directors is
judged to be sufficient. Constructive opinions

tariat in early March and a summary of findings subsequently discussed at a meeting of

Monitoring function of the Board of Directors

have also been expressed regarding the need

the Board of Directors.

In an atmosphere that encourages members

for further discussion of key issues pertaining

to speak, both outside directors and outside

to global strategies, key issues in individual

Summary of findings

Audit & Supervisory Board members actively

segments, and the identification of risks.

Composition of the Board of Directors
and frequency of meetings

express their views, ensuring an appropriatebalance between execution and monitoring.

Future initiatives

The diversity of the Board of Directors is

Matters deemed particularly critical by the

To further enhance corporate value and real-guaranteed. The Board is an appropriate size

Board of Directors are discussed by the board

ize an even more effective Board of Directors,

to ensure swift decision making. In principle,

prior to resolution and pending matters are

we will continue to promote efforts to

the Board of Directors meets monthly, with

reported on at the Board of Directors meeting

improve the board’s functions based on the

additional meetings held as necessary tosubsequent to resolution, thereby facilitating2018 evaluation and on opinions expressed.

ensure swift discussion and decision making

appropriate judgment by directors andSECOM Annual Report 201843

ESG Initiatives

Compliance
Basic policy and system
We provide security services, the objective of

directors and employees. We take advantage

overseen by a specific department or director.

which is to protect the lives and assets of ourof various opportunities to promote theEach and every employee is on the front line

customers from legal violations or malfea-

unqualified observance of the code.

of promoting the SECOM Group Code ofsance by third parties. As such, we recognize

We view compliance as encompassing

Employee Conduct, including compliance,

the importance of discharging duties in good

not only observing laws, regulations and ourwith direction provided by individuals infaith to earn the trust of our customers and of

Articles of Incorporation, but also operating

charge in each department. Directors provide

society as a whole. To this end, we have for-in a manner that adheres to the spirit thereof.

further control for departments under theirmulated the SECOM Group Code of Employee

Accordingly, compliance forms an integral

control, while the president and representa-

Conduct, which prescribes ideals covering

component of our day-to-day operations. This

tive director provides control for the Company

official and private affairs and standards to beapproach is notable in that it does not involve

as a whole.

followed in the discharge of duties for all

the establishment of a dedicated system

Initiatives aimed at ensuring fair operating practices
The SECOM Group Code of Employee Conduct

incorruptible by overcoming the temptation

customers or affiliated companies. We work

contains rules regarding, among others, theto hinder others’ discharge of their duties; andactively to enforce the observance of thesemaintenance of a mindset that refuses to be

the prevention of bribery, including throughrules.

tempted to commit graft, which begins withthe prohibition of individual transactions anda pretense of kindness; the pride of being

the lending or borrowing of money involving

Operation of whistle-blowing system
We have established a whistle-blowing system

circumstances make submitting a report

help lines is kept confidential and necessarythat enables individuals to seek advice regard-difficult, employees and executives can report

investigations and appropriate measures are

ing or report issues of non-compliance.

to the Audit and Compliance Department

undertaken swiftly. This protects whistle-

Employees and executives becoming aware of

directly via the Hot Helpline. We have also

blowers from any adverse impacts. Help line

a violation of the SECOM Group Code ofestablished the Group Head Office Helpline,

reports received totaled 60 in the fiscal year

Employee Conduct are obliged to submit awhich enables employees and executives ofended March 31, 2018, 60 in the fiscal year

report to his or her superior. However, in thesubsidiaries to report compliance violations

ended March 31, 2017 and 33 in the fiscal year

event that no corrective measures are taken

directly to the Group Governance Department.

ended March 31, 2016.

after the submission of a report, or if

The content of reports submitted via these

Global compliance training
To ensure our ability to provide same level ofadvance awareness thereof. We also provide

obeying laws and regulations, preventing

service in overseas markets as we do in Japan,

compliance training tailored to local circum-

bribery and ensuring effective information

we have translated SECOM’s Philosophy andstances for senior management at overseas

management.

the SECOM Group Code of Employee Conduct

Group companies and employees from Japan

into multiple different languages and work to

taking up overseas postings that focuses on

Other initiatives
We have formulated the SECOM Group CSR

and fair operating practices, human rights

Guidelines for Suppliers, which sets forthand labor practices, consumer issues and theissues that we require suppliers to address.

environment.

These include organizational governance

44

SECOM Annual Report 2018

Financial Review
Operating Results
Overview
In the fiscal year ended March 31, 2018,
SECOM CO., LTD. and its subsidiaries (collectively, “the Company”) sought to provide highquality products and services that respond to
the needs of customers in its core security services segment, as well as in its fire protection
services, medical services, insurance services,
geographic information services, BPO and ICT
services, and real estate and other services
segments.
Bolstered by a solid performance in the
security services and fire protection services
segments and the addition of results for new
subsidiary TMJ, consolidated on October 2,
2017, consolidated net sales and operating
revenue in the period under review rose 5.0%,
or ¥51.5 billion, to ¥1,082.8 billion. Operating
income increased 9.7%, or ¥12.7 billion, to¥142.8 billion, bolstered by higher net sales
and operating revenue in six segments,
including security services. Despite a decline
in gain on private equity investments, theincrease in operating income pushed net
income attributable to SECOM CO., LTD., up
5.7%, or ¥5.2 billion, to ¥96.6 billion.
Net Sales and Operating Revenue
Consolidated net sales and operating revenue
were up 5.0%, or ¥51.5 billion, to ¥1,082.8
billion. The BPO and ICT services, security
services, fire protection services, medical
services and insurance services segments
reported increases while the geographic
information services and real estate andother services segments reported decreases.
(For further details, please see Segment
Information below.)
Cost and Expenses
Total costs and expenses, at ¥940.0 billion,rose 4.3%, or ¥38.9 billion. Cost of sales
advanced 5.7%, or ¥40.5 billion, to ¥750.4 billion, and was equivalent to 69.3% of net sales
and operating revenue, up from 68.8% in thepreceding fiscal year. Principal factors behind
this result were the acquisition of a newly
consolidated subsidiary with a comparatively
high cost of sales ratio and an increase in thecost of sales ratio in the insurance services
segment as a consequence of typhoons.
Selling, general and administrative (SG&A)
expenses were up 3.1%, or ¥5.7 billion, to¥190.2 billion, improving to 17.6% of net sales
and operating revenue, from 17.9% in theprevious period.

Impairment loss on long-lived assets
amounted to ¥841 million, down from the¥2.7 billion in the preceding fiscal year when
the company recognized losses on certain
assets in the geographic information services
segment. The Company also recognized an
impairment loss on goodwill of ¥11 million in
the medical services segment, while in theprevious period it recognized an impairment
loss on goodwill of ¥1.2 billion in the security
services segment. Additionally, the Company
reported a gain on sales and disposal of fixed
assets, net, of ¥1.5 billion, reflecting increased
income from real estate sales, compared witha net loss of ¥2.8 billion in the preceding
fiscal year.
Operating Income
Operating income rose 9.7%, or ¥12.7 billion,to ¥142.8 billion, equivalent to 13.2% of net
sales and operating revenue, up from 12.6% in
the previous period. Principal factors behind
this result included the increase in net sales
and operating revenue, together with a gainon sales and disposal of fixed assets, net,compared with a loss in the preceding fiscal
year, a decline in impairment loss on longlived assets and impairment loss on goodwill.
Segments, in order of contribution to operating income, were security services, fire protection services, BPO and ICT services, real estateand other services, insurance services, medical
services and geographic information services.
(For further details, please see Segment
Information below.)
Other Income and Expenses
Other income decreased ¥7.4 billion, to ¥10.7
billion, owing primarily to a ¥8.0 billion
decline in gain on private equity investments,
to ¥5.9 billion, while other expenses were
down ¥315 million, to ¥2.8 billion, reflecting adecline in net exchange losses, to ¥213 million, from ¥454 million in the preceding fiscal
year. The result was net other income of ¥8.0
billion, a decrease of ¥7.1 billion.
Income from Continuing Operations
before Income Taxes and Equity in
Net Income of Affiliated Companies
Despite a decline in net other income, income
from continuing operations before income
taxes and equity in net income of affiliatedcompanies rose 3.8%, or ¥5.6 billion, to ¥150.8
billion, bolstered by higher operating income.

Income Taxes
Income taxes totaled ¥48.1 billion, an increaseof ¥1.1 billion. This was equivalent to 31.9% ofincome from continuing operations before
income taxes and equity in net income ofaffiliated companies, compared with 32.4% in
the previous period, owing to the inclusion ofoverseas income tax-related income.
Equity in Net Income of
Affiliated Companies
Equity in net income of affiliated companies,
at ¥7.2 billion, was up ¥2.0 billion. This result
was due largely to the fact that equity in
net income of certain affiliated companies
overseas was down in the preceding
fiscal year.
Net Income Attributable to
Noncontrolling Interests
Net income attributable to noncontrollinginterests amounted to ¥13.2 billion, up ¥1.2
billion from the previous period. Principal
factors behind this result were a decline ingain on private equity investments and anincrease in operating income in the fire
protection services segment.
Net Income Attributable to
SECOM CO., LTD.
Net income attributable to SECOM CO., LTD.,advanced 5.7%, or ¥5.2 billion, to ¥96.6 billion,
equivalent to 8.9% of net sales and operating
revenue, level with the previous period. Net
income attributable to SECOM CO., LTD. pershare was ¥442.70, up from ¥418.71.
At the Ordinary General Meeting of
Shareholders held on June 26, 2018, a proposal to pay a year-end dividend of ¥80.00
was approved. As a consequence, cash dividends for the period—which also included aninterim dividend of ¥75.00 approved at theBoard of Directors’ meeting held on
November 9, 2017—amounted to ¥155.00 per
share, an increase of ¥10.00. However,
because both the ¥75.00 per share year-end
dividend for the year ended March 31, 2017,
approved at the Ordinary General Meeting of
Shareholders held on June 27, 2017, and the¥75.00 per share interim dividend for the preceding fiscal year, determined by the Board of
Directors and paid to shareholders of record
as of September 30, 2017, were paid during
the period, cash dividends paid to shareholders in the period under review—the figurethat appears in the financial statements—
amounted to ¥150.00 per share.

SECOM Annual Report 201845

Financial Review

Segment Information(For further details, please see note 26 of the Notes to the Consolidated Financial Statements.)

Security Services
The security services segment comprises
electronic security services, which center on
on-line security systems; other security services; and merchandise and other. In the
period under review, net sales and operating
revenue in this segment advanced 3.5%, or¥18.9 billion, to ¥565.4 billion. Excluding intersegment transactions, net sales and operating
revenue in this segment amounted to ¥562.3
billion, representing 51.9% of overall net sales
and operating revenue, compared with 52.7%
in the previous fiscal year.
In addition to on-line commercial andhome security systems, electronic security
services include large-scale proprietary
security systems, which center on surveillanceservices for the subscriber’s premises. On-line
commercial and home security systems use
sensors, controllers and other equipment
installed at the subscriber’s premises to detect
events, including intrusions, fires and equipment malfunctions. Equipment is linked to a
SECOM control center via telecommunications circuits to facilitate around-the-clock
remote monitoring. Should an irregularity be
detected, relevant information is relayed tothe control center, where staff dispatch
emergency response personnel to takeappropriate measures. Control center staff
also notify the police, fire department or otherauthorities, if necessary.
The Company employs a rental format,
whereby it maintains ownership of security
equipment and provides it to subscribers ona rental basis. This minimizes initial costs forsubscribers and guarantees the quality andstability of its services. The initial contract
period for security services is five years, with
contracts renewed automatically each subsequent year. Depreciation for security equipment is computed using the straight-line
method principally over five years.
The Company takes full responsibility for all
aspects of its on-line commercial and home
security systems, from R&D through to equipment manufacturing, sales, security planning,
installation, monitoring, emergency response
services and equipment maintenance. This
integrated approach leverages the Company’s
half-century-plus of experience and knowhow in providing electronic security services,
together with its R&D team’s ability to recognize and address false alarms, to ensure highly
efficient operations.
In the period under review, net sales andoperating revenue from electronic security
services edged up 0.7%, or ¥2.4 billion, to¥341.2 billion, despite a decline in installationsof large-scale security systems, among others,
thanks to expanded sales of value-added

46

SECOM Annual Report 2018services that respond to diverse security
needs, which bolstered sales of on-line
security systems.
Other security services include static guard
services and armored car services. Static guard
services, which are provided by highly trained
professional security guards for situations
requiring human judgment and flexible
responsiveness, generated net sales andoperating revenue of ¥59.0 billion, up 4.6%, or¥2.6 billion, bolstered by solid demand and achange in the status of an overseas Group
company from equity-method affiliate toconsolidated subsidiary. Armored car services,which involve the transport of cash, securities
and other valuables using specially fittedarmored cars and security professionals,
reported net sales and operating revenue of¥61.1 billion, up 5.6%, or ¥3.2 billion, owing
principally to firm sales in the area ofcollection and delivery services.
The merchandise and other category
encompasses sales of a wide range of security
products, including security camera systems,
access control systems, automated fire
extinguishing systems and external monitoring systems, which can be freestanding or
linked to on-line security systems. Net sales
and operating revenue in this category
advanced 11.6%, or ¥10.5 billion, to ¥101.0
billion, owing to robust results for large-scale
sales-type leases.
Operating income in the security services
segment rose 3.5%, or ¥3.9 billion, to ¥116.6
billion. The operating margin remained levelwith the preceding fiscal year at 20.6%. These
results primarily reflected higher sales in thearea of on-line security systems and theabsence of an impairment loss on goodwill
reported in the previous period.
Fire Protection Services
The fire protection services segment focuseson high-grade, tailored, automatic fire alarmsystems, fire extinguishing systems and otherfire protection systems for a wide range ofapplications, including office buildings, plants,
tunnels, cultural properties, ships andresidences. In the period under review,
Nohmi Bosai and Nittan, two of Japan’s
leading domestic fire protection services
providers, sought to leverage their respective
business foundations and product development capabilities to secure orders for fire
protection systems.
Net sales and operating revenue in thissegment amounted to ¥140.7 billion, up 8.5%,
or ¥11.0 billion, from the previous period,
bolstered by contributions from major projects, a result of robust sales efforts. Operating
income climbed 20.0%, or ¥2.6 billion, to ¥15.8

billion, as greater business efficiency led to an
improved cost of sales ratio. The operating
margin improved to 11.2%, from 10.1% in theprevious period.
Medical Services
The medical services segment encompasses
home medical services, which center onhome nursing and pharmaceutical dispensing
services, as well as the operation of residences
for seniors, electronic medical report systems,
sales of medical equipment, personal careservices, and support for the management of
hospitals and health care-related institutions.
The segment also includes the operations ofvariable interest entities of which theCompany is the primary beneficiary,
which manage hospitals and health carerelated institutions.
Segment net sales and operating revenue
advanced 3.8%, or ¥6.5 billion, to ¥175.5 billion. The principal factors behind this result
were increases in sales and operating revenues for variable interest entities, underpinned by the expansion and modification of
hospitals and the opening of new wards inrecent years, which boosted user numbers;
the inclusion of a full year of results for a hospital management company in India that wasconsolidated in the preceding fiscal year; andan expanded number of users of our pharmaceutical dispensing services. Operating
income soared 136.1%, or ¥2.4 billion, to ¥4.1
billion, while the operating margin rose to2.3%, from 1.0%, owing mainly to an improvement in the profitability of hospitals managed
by variable interest entities and an absence ofan impairment loss on long-lived assets
reported in the preceding fiscal year.
Insurance Services
The insurance services segment continued to
expand sales of an extensive lineup of distinctive products, including the Security DiscountFire Policy, a commercial fire insurance policy,
and SECOM Anshin My Home, a comprehensive fire insurance policy for homes—both ofwhich offer discounts on premiums to customers who have installed on-line security
systems, recognizing this as a risk-mitigating
factor—and SECOM Anshin My Car, a comprehensive automobile insurance policy thatoffers onsite support services provided by
SECOM emergency response personnel
should the policyholders be involved in an
accident. Other offerings include MEDCOM,an unrestricted cancer treatment policy thatcovers the entire cost of medical treatment
for cancer.
Despite a ¥310 million decline in net
realized investment gain, net sales andoperating revenue in this segment rose 1.8%,
or ¥843 million, to ¥47.7 billion, with contributing factors including favorable sales of
MEDCOM and fire insurance policies.
Operating income fell 14.5%, or ¥1.1 billion,
to ¥6.2 billion, while the operating margin
dipped to 13.1%, from 15.6% in the previous
fiscal year, owing to an increase in losses
incurred as a result of typhoons.
Geographic Information Services
The geographic information services segment
includes the collection of geographic datafrom satellite images, aerial photography, andvehicle/ground and other types of surveying,
which it integrates, processes and analyzes toprovide a variety of geospatial information
services to public sector entities, including
national and local governments, and private
sector customers in Japan. The Company also
extends geospatial information services togovernment agencies overseas.
Segment net sales and operating revenue
decreased 1.5%, or ¥758 million, to ¥51.1 billion, owing to a decline in net sales and operating revenue from services for overseas
customers. The segment reported operating
income of ¥1.9 billion, compared with anoperating loss of ¥944 million in the previous
fiscal year. The principal factors behind thisresult were a ¥1.1 billion decrease in impairment loss on long-lived assets and the reversal of a provision against futures losses
recorded in the previous period.
BPO and ICT Services
The BPO and ICT services segment encompasses data center services, as well as BCP
support services, information security services,cloud-based services and BPO services. In
October 2017, we acquired all shares in TMJ,
which provides contact center and other BPO
services, as a result of which the company
became a consolidated subsidiary. With theaim of integrating TMJ’s capabilities with ourexisting data center and other informationand communications related services to further grow these businesses, we changed thedesignation of this segment—formerly“information and communication related
services”—to BPO and ICT services. Thischange involved no reclassification ofreporting segments.
Net sales and operating revenue in thissegment soared 35.3%, or ¥20.0 billion, to¥76.8 billion, bolstered chiefly bycontributions from newly acquired subsidiary
TMJ and higher revenue from data center
services. Operating income rose 13.1%, or¥1.0 billion, to ¥8.2 billion, although theoperating margin declined to 10.7%, from
12.8% in the previous fiscal year. This reflected
the addition of TMJ’s operating income andthe fact that TMJ has a comparatively lower
operating margin.
Real Estate and Other Services
The real estate and other services segment
encompasses the development and salesof, among others, condominiums equippedwith sophisticated security and disasterpreparedness features, as well as real estateleasing, construction and installation, andother services.
Segment net sales and operating revenue
declined 8.2%, or ¥4.1 billion, to ¥45.5 billion.
Principal factors behind this result included a
decrease in the real estate development andsales business. Operating income climbed
32.0%, or ¥1.7 billion, to ¥6.9 billion. The operating margin climbed to 15.2%, from 10.6% in
the previous fiscal year. Higher operating
income reflected increased income from realestate sales.

Financial Position
Total assets as of March 31, 2018, amounted
to ¥1,838.9 billion, up ¥75.7 billion from theend of the previous fiscal year. Total current
assets rose ¥34.0 billion, to ¥807.9 billion, andaccounted for 43.9% of total assets. The current ratio was level at 2.0 times. Cash and cash
equivalents totaled ¥316.7 billion, an increaseof ¥17.1 billion, reflecting the fact that net
cash provided by operating activities
exceeded net cash used in investing andfinancing activities. (For further details, please
see Cash Flows, which follows this section.)
Notes and accounts receivable, trade, climbed¥9.9 billion, to ¥144.7 billion, reflecting an

increase in net sales and operating revenue inthe fire protection services segment. Notes
and accounts receivable are affected by thefact that income in the fire protection services
and geographic information services segments tend to be concentrated toward theend of the fiscal year. Cash deposits forarmored car services advanced ¥5.2 billion, to¥135.8 billion, with contributing factors
including an increase in service contracts. Realestate for sale, at ¥44.5 billion, was up ¥16.9
billion, as a consequence of which inventories
rose ¥19.4 billion, to ¥82.1 billion.

Investments and long-term receivables
increased ¥8.6 billion, to ¥358.2 billion. This
represented 19.5% of total assets. Property,
plant and equipment, less accumulated
depreciation, fell ¥1.7 billion, to ¥412.3 billion,
equivalent to 22.4% of total assets, with contributing factors including sales of real estate
for lease.
Other assets totaled ¥260.5 billion, up¥34.7 billion, and accounted for 14.2% of total
assets. The consolidation of TMJ, among
others, boosted goodwill ¥17.6 billion, to¥106.5 billion, and other intangible assets¥6.3 billion, to ¥57.0 billion. Prepaid pension

Percentage of Consolidated
Net Sales and Operating Revenue*

SECOM CO., LTD.
Shareholders’ Equity per ShareTotal Assets(Year ended March 31, 2018)(In yen)(In billions of yen)

5,000

2,000

4,000

1,600

3,000

1,200

2,000

800

1,000

400

6.4%

4.0%

4.7%
4.2%
16.2%

51.9%

12.6%
Security Services
Medical Services
Geographic Information Services
Real Estate and Other Services

Fire Protection Services
Insurance Services
BPO and ICT Services0

14 15 16 17 18

0

14 15 16 17 18* Pie chart shows percentage of consolidated net sales andoperating revenue (excluding intersegment transactions)

SECOM Annual Report 201847

Financial Review
and severance costs rose ¥6.1 billion, to ¥41.4
billion, bolstered by increases in the fair valueof plan assets. Owing to the revision of an
accounting standard governing balance sheet
classification whereby deferred tax assets andliabilities must be classified as noncurrent
assets and liabilities on the balance sheets,
deferred income taxes climbed ¥5.0 billion,to ¥13.2 billion.
Total liabilities as of March 31, 2018,
amounted to ¥707.6 billion, down ¥4.2 billion
from the end of the previous fiscal year, andaccounted for 38.5% of total liabilities andequity. Total current liabilities were ¥399.7
billion, an increase of ¥5.7 billion, andaccounted for 21.7% of total liabilities andequity. Deposits received rose ¥6.8 billion, to¥118.9 billion, as an increase in service
contracts pushed up cash deposits forarmored car services.
Total long-term liabilities, at ¥308.0 billion,
were down ¥9.9 billion, and represented
16.8% of total liabilities and equity. Long-term
debt, at ¥50.3 billion, was down ¥3.9 billion,
owing to repayments, as well as to the shift ofcertain debt to the bank loans category,among others. The revision of an accounting
standard was one of several factors contributing to a ¥7.3 billion decrease in deferredincome taxes, to ¥26.5 billion.

Total SECOM CO., LTD. shareholders’ equity
advanced ¥71.0 billion, to ¥1,000.3 billion.
Retained earnings rose ¥63.8 billion, to ¥896.6
billion, with contributing factors including an
increase in net income attributable to SECOM
CO., LTD. and the payment of dividends. A
positive pension liability adjustment of ¥1.6
billion, compared with a negative adjustmentof ¥3.5 billion in the preceding fiscal year,
boosted accumulated other comprehensive
income ¥7.1 billion, to ¥27.2 billion. As a result,the equity ratio was 54.4%, compared with
52.7% as of March 31, 2017.

billion decrease in accrued income taxes,
compared with a ¥4.3 billion increase in thepreceding fiscal year; and other, net, of ¥2.8
billion, down from ¥9.3 billion provided bythis item in the previous period. The decline in
cash provided in the other, net, category, primarily reflected the impact on the preceding
period’s result of payments received from theCompany’s principal partner in a joint condominium development and sales project,which served as lead manager.
Net cash used in investing activities was¥61.5 billion. This result reflected payments forpurchases of property, plant and equipmentof ¥53.8 billion, reflecting outlays for security
equipment and control stations necessitatedby an increase in the number of security services subscribers; payments for purchases ofinvestment securities of ¥51.1 billion, primarily
in the insurance services segment andthrough private equity investments in the
United States; and acquisitions, net of cash
acquired, of ¥23.3 billion, owing to the acquisition of TMJ, among others. These outlays
were partially offset by proceeds from sales
and redemptions of investment securities of¥69.4 billion.

Net cash used in investing activities was¥14.3 billion higher than in the fiscal year
ended March 31, 2017. Contributing factors
included a ¥23.1 billion increase inacquisitions, net of cash acquired.
Net cash used in financing activities
amounted to ¥55.0 billion. This was attributable primarily to dividends paid to SECOM
CO., LTD. shareholders of ¥32.7 billion andrepayments of long-term debt of ¥20.6 billion.
Net cash used in financing activities was¥4.8 billion lower than in the preceding fiscal
year. Factors behind this change included
increases of ¥2.2 billion in dividends paid to
SECOM CO., LTD. and ¥1.9 billion in dividends
paid to noncontrolling interests and adecrease in bank loans, net, of ¥3.4 billion,
compared with a decrease of ¥13.5 billion in
the previous period.
The Company’s operating, investing andfinancing activities in the period under review
yielded net cash and cash equivalents at endof year of ¥316.7 billion, up ¥17.1 billion fromnet cash and cash equivalents at beginning ofyear, which were ¥299.6 billion.

Cash Flows
The Company is committed to maintaining
sufficient liquidity to allow flexibility in its
operations and ensure a solid financial foundation. To the best of its ability, the Company
is also firmly committed to financing strategic investments with cash generated by its
operating activities.
In the period under review, net cash provided by operating activities amounted to¥133.3 billion. The principal components ofthis were net income of ¥109.9 billion; depreciation and amortization, including amortization of deferred charges, a non-cash item, of¥79.0 billion; an increase in inventories of¥18.6 billion; and an increase in deferredcharges of ¥15.9 billion, attributable primarily
to the deferral of costs related to the installation of equipment used to provide on-line
security systems. (For further details, pleasesee note 12 of the Notes to the Consolidated
Financial Statements.)
Net cash provided by operating activitieswas ¥45.4 billion lower than in fiscal year
ended March 31, 2017. Factors behind thisdecline included an ¥18.6 billion increase ininventories, compared with an decrease of¥187 million in the previous period; a ¥2.4

Purchases of Property,
Plant and Equipment
and Intangible Assets

Cash Flows(In billions of yen)

(In billions of yen)

100

80

200

75

60

50

40

Depreciation andAmortization(In billions of yen)

150
100
50
0
25

–50

20

–100
0

14 15 16 17 18

0

14 15 16 17 18

–150

16

17

18

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

48

SECOM Annual Report 2018

AUDITED FINANCIAL STATEMENTS

Contents
Consolidated Financial Statements ............................................................................ 50
Consolidated Balance Sheets.................................................................................... 50
Consolidated Statements of Income ................................................................... 52
Consolidated Statements of Comprehensive Income.............................. 52
Consolidated Statements of Changes in Equity ........................................... 53
Consolidated Statements of Cash Flows .......................................................... 54
Notes to Consolidated Financial Statements ................................................. 55
Independent Auditors’ Report ........................................................................................ 81

SECOM Annual Report 201849

Consolidated Financial Statements
Consolidated Balance Sheets
SECOM CO., LTD. and Subsidiaries
March 31, 2018 and 2017
Translation into thousandsof U.S. dollars (Note 3)

March 31

March 31

2018

2017

2018

Current assets:
Cash and Cash equivalents (Notes 5 and 22) ............................................................................................................ ¥ 316,729
Time deposits (Note 13) .........................................................................................................................................................
9,593
Cash deposits for armored car services (Note 6).....................................................................................................
135,809
Short-term investments (Notes 7 and 22) ...................................................................................................................
17,211
Notes and accounts receivable, trade ...........................................................................................................................
144,657
Due from subscribers ...............................................................................................................................................................
49,789Inventories (Note 8) ...................................................................................................................................................................
82,058
Short-term receivables (Notes 9, 13, 20 and 21)......................................................................................................
27,930Allowance for doubtful accounts (Note 9) .................................................................................................................
(1,807)
Deferred insurance acquisition costs (Note 14).......................................................................................................
6,540
Deferred income taxes (Note 17)......................................................................................................................................
—
Other current assets ..................................................................................................................................................................
19,368¥ 299,600
9,562
130,620
29,224
134,794
46,467
62,686
26,074(1,821)
6,440
12,611
17,595$ 2,988,009
90,5001,281,217
162,368
1,364,689
469,708
774,132
263,491(17,047)
61,698—
182,717ASSETS

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

807,877

773,852

7,621,482

Investments and long-term receivables:
Investment securities (Notes 2 (7), 7, 13 and 22) ....................................................................................................
Investments in affiliated companies (Note 10) ........................................................................................................
Long-term receivables (Notes 9, 13, 20 and 21) ......................................................................................................
Lease deposits ..............................................................................................................................................................................
Other investments .....................................................................................................................................................................
Allowance for doubtful accounts (Note 9) .................................................................................................................

227,255
64,62043,281
17,264
10,086(4,298)227,245
57,922
42,407
15,675
10,510(4,178)2,143,915
609,623
408,311
162,868
95,151(40,547)

358,208

349,5813,379,321

Property, plant and equipment (Notes 11, 13, 19 and 20):Land
Buildings and improvements..............................................................................................................................................
Security equipment and control stations ....................................................................................................................
Machinery, equipment and automobiles ....................................................................................................................
Construction in progress .......................................................................................................................................................

113,916
340,822329,655
150,528
7,479

115,210
329,631317,352
143,789
7,683

1,074,679
3,215,302
3,109,953
1,420,075
70,557

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

942,400(530,052)

913,665(499,597)

8,890,566(5,000,491)

412,348

414,068

3,890,075

42,325
106,51257,02741,40913,23942,606
88,95050,72635,2828,213

399,292
1,004,830
537,991
390,651
124,896

Other assets:
Deferred charges (Note 2 (12)) ...........................................................................................................................................
Goodwill (Note 12) .....................................................................................................................................................................
Other intangible assets (Notes 12, 13, 19 and 20) ..................................................................................................
Prepaid pension and severance costs (Note 15) .....................................................................................................
Deferred income taxes (Note 17)......................................................................................................................................

260,512

225,777

2,457,660

Total assets .......................................................................................................................................................................... ¥1,838,945¥1,763,278$17,348,538

See accompanying notes to consolidated financial statements.

50

In millions of yen

SECOM Annual Report 2018

LIABILITIES AND EQUITY

In millions of yen

Translation into thousandsof U.S. dollars (Note 3)

March 31

March 31

2017

2018

2018

Current liabilities:
Bank loans (Notes 6 and 13)................................................................................................................................................. ¥ 38,969
Current portion of long-term debt (Notes 13, 19 and 21) ................................................................................
19,632
Notes and accounts payable, trade.................................................................................................................................
44,901Other payables .............................................................................................................................................................................
41,546
Deposits received (Note 6) ...................................................................................................................................................
118,897
Deferred revenue........................................................................................................................................................................
38,395
Accrued income taxes .............................................................................................................................................................
25,994
Accrued payroll ............................................................................................................................................................................
36,531Other current liabilities (Note 17) .....................................................................................................................................
34,792¥42,09919,61546,28038,612
112,053
38,732
27,61532,08436,822$367,632
185,208
423,594
391,943
1,121,670
362,217245,226
344,632
328,226

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

399,657

393,9123,770,348

Long-term liabilities:
Long-term debt (Notes 13, 19 and 21) ..........................................................................................................................
Guarantee deposits received .............................................................................................................................................
Accrued pension and severance costs (Note 15) ...................................................................................................
Long-term deferred revenue ..............................................................................................................................................
Unearned premiums and other insurance liabilities (Note 14)......................................................................
Investment deposits by policyholders (Notes 14 and 21).................................................................................
Deferred income taxes (Note 17)......................................................................................................................................
Other long-term liabilities (Notes 21, 22 and 23) ....................................................................................................

50,29932,10929,384
15,194
114,814
25,20826,53014,44554,14932,52929,636
15,444110,018
27,69133,815
14,616474,519
302,915
277,208
143,340
1,083,151
237,811250,283
136,274

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

307,983

317,898

2,905,501

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

707,640

711,810

6,675,849

66,385
73,133
10,733
896,586

66,37873,102
10,632
832,785

626,274
689,934
101,255
8,458,358

22,797
—
1,578
2,814

22,529—(3,492)
1,039

215,066—
14,887
26,547

27,18920,076

256,500

Commitments and contingent liabilities (Note 24)
Equity:SECOM CO., LTD. shareholders’ equity (Note 18):
Common stock
Authorized—900,000,000 shares, issued 233,290,441 shares in 2018
Authorized—900,000,000 shares, issued 233,288,717 shares in 2017 .................................................
Additional paid-in capital ......................................................................................................................................................
Legal reserve ..................................................................................................................................................................................
Retained earnings.......................................................................................................................................................................
Accumulated other comprehensive income (loss):
Unrealized gains on securities (Note 7)...................................................................................................................
Unrealized gains on derivative instruments (Note 23) ..................................................................................
Pension liability adjustments (Note 15) ..................................................................................................................
Foreign currency translation adjustments ............................................................................................................
Common stock in treasury, at cost:
15,030,573 shares in 2018 and 15,028,470 shares in 2017 ..............................................................................

(73,749)(73,731)(695,745)

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

1,000,277

929,2429,436,576

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

131,028

122,226

1,236,113

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

1,131,305

1,051,468

10,672,689

Total liabilities and equity .......................................................................................................................................... ¥1,838,945¥1,763,278$17,348,538

See accompanying notes to consolidated financial statements.

SECOM Annual Report 201851

Consolidated Statements of Income
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2018

In millions of yen

Translation into thousandsof U.S. dollars (Note 3)

Years ended March 31

Year ended March 31

2017

2016

2018

Net sales and operating revenue (Notes 14 ,18 and 22)¥1,082,792 ¥1,031,261
Costs and expenses:
Cost of sales (Note 8) .............................................................................................................................................................................
750,422709,962
Selling, general and administrative expenses (Notes 2 (17), 2 (18), 2 (19) and 4) ............................................
190,187
184,487
Impairment loss on long-lived assets (Note 11) ...................................................................................................................
841
2,689
Impairment loss on goodwill (Note 12) .....................................................................................................................................
11
1,193
Gain and loss on sales and disposal of fixed assets, net ..................................................................................................
(1,504)
2,752
939,957
901,083
Operating income................................................................................................................................................................
142,835
130,178
Other income:Interest and dividends ..........................................................................................................................................................................
1,637
1,286
Gain on sales of securities, net (Notes 7 and 18) ..................................................................................................................
237
391
Gain on private equity investments (Note 22).......................................................................................................................
5,884
13,887
Other (Notes 16, 18 and 23) ..............................................................................................................................................................
2,972
2,571
10,73018,135
Other expenses:
Interest ..........................................................................................................................................................................................................
1,236
1,369
Loss on other-than-temporary impairment of investment securities (Notes 18 and 22) ...........................
57
77
Other (Note 16) ........................................................................................................................................................................................
1,482
1,644
2,775
3,090
Income from continuing operations before income taxes and equity
in net income of affiliated companies ..................................................................................................................
150,790145,223
Income taxes (Note 17):
Current ..........................................................................................................................................................................................................
54,22543,449Deferred .........................................................................................................................................................................................................
(6,118)
3,563
48,10747,012
Income from continuing operations before equity in net income ofaffiliated companies .........................................................................................................................................................
102,683
98,211Equity in net income of affiliated companies (Note 18) ...............................................................................................
7,179
5,178
Net income...............................................................................................................................................................................
109,862
103,389
Less: Net income attributable to noncontrolling interests ......................................................................................
(13,239)(12,002)
Net income attributable to SECOM CO., LTD. .................................................................................................... ¥ 96,623 ¥ 91,387¥983,428$10,215,019

674,533
176,269
11,814—
1,907
864,523
118,905

7,079,453
1,794,217
7,934
104(14,189)
8,867,519
1,347,500

1,440
1,480
1,718
3,041
7,679

15,443
2,236
55,50928,038101,226

1,388
402
2,333
4,123

11,660538
13,981
26,179122,461

1,422,547

39,135
1,177
40,312

511,557(57,717)453,840

82,1497,162
89,311(5,239)¥ 84,072

968,70767,726
1,036,433(124,896)$ 911,537

In yenTranslation into
U.S. dollars (Note 3)

Years ended March 31

Year ended March 31

2018

Per share data (Note 2 (21)):
Net income attributable to SECOM CO., LTD. ........................................................................................................................
Cash dividends per share (Note 18) ..............................................................................................................................................

2018

2017

2016

2018

¥442.70¥150.00¥418.71¥140.00¥385.19¥130.00

$4.18
$1.42

In millions of yen

Translation into thousandsof U.S. dollars (Note 3)

Years ended March 31

Year ended March 31

Consolidated Statements of Comprehensive Income
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2018

Comprehensive income:Net income ..................................................................................................................................................................................................
Other comprehensive income (loss), net of tax:
Unrealized gains and losses on securities ..........................................................................................................................
Unrealized gains on derivative instruments .....................................................................................................................
Pension liability adjustments .....................................................................................................................................................
Foreign currency translation adjustments.........................................................................................................................
Total comprehensive income...........................................................................................................................................................
Less: Comprehensive income attributable to noncontrolling interests..........................................................
Comprehensive income attributable to SECOM CO., LTD.....................................................................................................
See accompanying notes to consolidated financial statements.

52

SECOM Annual Report 2018

2018

2017

2016

2018

¥109,862¥103,389¥89,311$1,036,434

256
—
5,376
1,952
117,446(13,710)¥103,736

4,600
—
4,675
(5,726)
106,938(12,388)¥ 94,550(7,823)(9)(6,402)(3,234)
71,843(3,820)¥68,023

2,415—
50,717
18,416
1,107,982(129,340)$ 978,642

Consolidated Statements of Changes in Equity
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2018
In millions of yen
Number ofsharesissuedCommonstock

Additional
paid-in
capitalLegalreserve

Retainedearnings

Accumulated
other comprehensive
income (loss)

Commonstock intreasury,
at costTotal
SECOM CO., LTD.
shareholders’equityNoncontrollinginterests

Balance, March 31, 2015 ...........................................................................................
Comprehensive income:Net income.....................................................................................................................
Other comprehensive income (loss), net of tax (Note 18):
Unrealized gains on securities....................................................................
Unrealized gains on derivative instruments ......................................
Pension liability adjustments ......................................................................
Foreign currency translation adjustments .........................................
Total comprehensive income .............................................................................
Cash dividends paid to SECOM CO., LTD. shareholders ..............................
Cash dividends paid to noncontrolling interests ...........................................
Transfer to legal reserve..................................................................................................
Equity transactions with noncontrolling interests and other(Note 18)
Gains on disposal of treasury stock .........................................................................
Net changes in treasury stock ....................................................................................

233,288,717¥66,378¥73,442¥10,401¥716,487¥32,962(¥73,701)¥ 825,969¥113,198¥ 939,167

Total

—

—

—

—

84,072——

84,072

5,239

89,311

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

(7,411)(5)(5,752)(2,881)

—
—
—
—

—
—
—

—
—
—

—
—
—

—
—
125

(28,373)
—
(125)

—
—
—

—
—
—

(7,411)(5)(5,752)(2,881)
68,023(28,373)
—
—

(412)
(4)
(650)
(353)
3,820
—
(2,943)—(7,823)(9)(6,402)(3,234)
71,843(28,373)(2,943)
—

—
—
—

—
—
—

(324)
0
—

—
—
—

—
—
—

—
—
—

—
—
(17)

(324)
0
(17)

(2,756)——(3,080)0(17)Balance, March 31, 2016 ...........................................................................................
Comprehensive income:Net income.....................................................................................................................
Other comprehensive income (loss), net of tax (Note 18):
Unrealized gains on securities....................................................................
Unrealized gains on derivative instruments ......................................
Pension liability adjustments ......................................................................
Foreign currency translation adjustments .........................................
Total comprehensive income .............................................................................
Cash dividends paid to SECOM CO., LTD. shareholders ..............................
Cash dividends paid to noncontrolling interests ...........................................
Transfer to legal reserve..................................................................................................
Equity transactions with noncontrolling interests and other(Note 18)
Gains on disposal of treasury stock .........................................................................
Net changes in treasury stock ....................................................................................

233,288,717

66,37873,118

10,526772,061

16,913(73,718)

865,278

111,319

976,597

—

—

—

—

91,387——

91,387

12,002

103,389

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

4,376
—
4,400
(5,613)

—
—
—
—

—
—
—

—
—
—

—
—
—

—
—
106

(30,557)
—
(106)

—
—
—

—
—
—

4,376
—
4,400
(5,613)
94,550(30,557)
—
—

224
—
275
(113)
12,388—(2,941)
—

4,600
—
4,675
(5,726)
106,938(30,557)(2,941)
—

—
—
—

—
—
—

(16)
0
—

—
—
—

—
—
—

—
—
—

—
—
(13)

(16)
0
(13)

1,460
—
—

1,444
0
(13)

Balance, March 31, 2017 ...........................................................................................
Comprehensive income:Net income.....................................................................................................................
Other comprehensive income (loss), net of tax (Note 18):
Unrealized gains on securities....................................................................
Unrealized gains on derivative instruments ......................................
Pension liability adjustments ......................................................................
Foreign currency translation adjustments .........................................
Total comprehensive income .............................................................................
Issuance of new stocks....................................................................................................
Cash dividends paid to SECOM CO., LTD. shareholders ..............................
Cash dividends paid to noncontrolling interests ...........................................
Transfer to legal reserve..................................................................................................
Equity transactions with noncontrolling interests and other(Note 18)
Changes in the scope of application of the equity method ...................
Gains on disposal of treasury stock .........................................................................
Net changes in treasury stock ....................................................................................

233,288,717

66,37873,102

10,632

832,785

20,076(73,731)929,242

122,226

1,051,468

—

—

—

—

96,623——96,623

13,239109,862

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

268
—
5,070
1,775

—
—
—
—

1,724
—
—
—

7
—
—
—

7
—
—
—

—
—
—
101

—
(32,738)
—
(101)

—
—
—
—

—
—
—
—

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

(12)
—
306
177
13,710——(5,381)
—

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

—
—
—
—

—
—
—
—

24
—
0
—

—
—
—
—

—
17
—
—

—
—
—
—

—
—
—
(18)

24
17
0
(18)

473
—
—
—

497
17
0
(18))

Balance, March 31, 2018 ........................................................................................... 233,290,441¥66,385¥73,133¥10,733¥896,586¥27,189(¥73,749)¥1,000,277¥131,028¥1,131,305

Commonstock intreasury,
at costTotal
SECOM CO., LTD.
shareholders’equityNoncontrollinginterests

Total

Translation into thousands of U.S. dollars (Note 3)

Balance, March 31, 2017
Comprehensive income:Net income.......................................................................................................................................................
Other comprehensive income (loss), net of tax (Note 18):
Unrealized gains on securities......................................................................................................
Unrealized gains on derivative instruments ........................................................................
Pension liability adjustments ........................................................................................................
Foreign currency translation adjustments ...........................................................................
Total comprehensive income ...............................................................................................................
Issuance of new stocks......................................................................................................................................
Cash dividends paid to SECOM CO., LTD. shareholders ................................................................
Cash dividends paid to noncontrolling interests .............................................................................
Transfer to legal reserve....................................................................................................................................
Equity transactions with noncontrolling interests and other(Notes 18) ................................................................................................................................................................
Changes in the scope of application of the equity method .....................................................
Gains on disposal of treasury stock ...........................................................................................................
Net changes in treasury stock ......................................................................................................................

Commonstock

Additional
paid-in
capitalLegalreserve

Retainedearnings

Accumulated
other comprehensive
income (loss)$626,208$689,642$100,302$7,856,462$189,396($695,575)$8,766,435$1,153,075$ 9,919,510

—

—

—

911,538——

911,538

124,896

1,036,434

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

2,528
—
47,83016,746

—
—
—
—

66
—
—
—

66
—
—
—

—
—
—
953

—
(308,849)
—
(953)

—
—
—
—

—
—
—
—

2,528
—
47,83016,746
978,642132(308,849)
—
—

(113)
—
2,887
1,670
129,340——(50,764)—

2,415—
50,717
18,416
1,107,982
132(308,849)(50,764)
—

—
—
—
—

226
—
0
—

—
—
—
—

—
160
—
—

—
—
—
—

—
—
—
(170)

226
160
0
(170)

4,462
—
—
—

4,688
160
0
(170)

$256,500 ($695,745)$9,436,576

Balance, March 31, 2018 ........................................................................................................................... $626,274 $689,934$101,255 $8,458,358$1,236,113 $10,672,689

See accompanying notes to consolidated financial statements.

SECOM Annual Report 201853

Consolidated Statements of Cash Flows
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 20182018

Cash flows from operating activities:
Net income ..................................................................................................................................................................................................... ¥109,862
Adjustments to reconcile net income to net cash provided by operating activities—
Depreciation and amortization, including amortization of deferred charges(Notes 2 (11), 2 (12) and 12)..........................................................................................................................................................
78,955
Accrual for pension and severance costs, less payments ............................................................................................
977
Deferred income taxes .......................................................................................................................................................................
(6,118)Gain and loss on sales and disposal of fixed assets, net ................................................................................................
(1,541)
Impairment loss on long-lived assets (Note 11).................................................................................................................
841
Write-down on real estate inventories (Note 8) .................................................................................................................
865
Gain on private equity investments (Note 22) ....................................................................................................................
(5,884)
Impairment loss on goodwill (Note 12) ..................................................................................................................................
11
Gain on sales of securities, net (Notes 7 and 14) ...............................................................................................................
(1,073)
Loss on other-than-temporary impairment of investment securities (Notes 14 and 22) ........................
199
Equity in net income of affiliated companies ......................................................................................................................
(7,179)Changes in assets and liabilities, net of effects from acquisitions and disposals:(Increase) decrease in cash deposits for armored car services...........................................................................
(5,189)(Increase) decrease in receivables and due from subscribers, net of allowances ..................................
(8,292)(Increase) decrease in inventories ........................................................................................................................................ (18,639)
Increase in deferred charges.................................................................................................................................................... (15,902)
Increase (decrease) in notes and accounts payable .................................................................................................
(378)
Increase (decrease) in deposits received .........................................................................................................................
5,962
Decrease in deferred revenue .................................................................................................................................................
(779)
Increase (decrease) in accrued income taxes................................................................................................................
(2,441)
Increase (decrease) in guarantee deposits received .................................................................................................
(474)
Increase in unearned premiums and other insurance liabilities .......................................................................
4,796
Increase (decrease) in accrued consumption tax .......................................................................................................
1,924
Other, net .............................................................................................................................................................................................
2,754
Net cash provided by operating activities ................................................................................................................ 133,257
Cash flows from investing activities:(Increase) decrease in time deposits ...............................................................................................................................................
172
Proceeds from sales of property, plant and equipment ......................................................................................................
6,166
Payments for purchases of property, plant and equipment ............................................................................................. (53,751)
Payments for purchases of intangible assets..............................................................................................................................
(7,859)Proceeds from sales and redemptions of investment securities (Note 7) ................................................................
69,365
Payments for purchases of investment securities ................................................................................................................... (51,098)(Increase) decrease in short-term investments .........................................................................................................................
(1,150)Acquisitions, net of cash acquired (Note 4) ................................................................................................................................. (23,283)(Increase) decrease in short-term receivables, net .................................................................................................................
(457)
Payments for long-term receivables ................................................................................................................................................
(840)
Proceeds from long-term receivables .............................................................................................................................................
1,224
Other, net ..........................................................................................................................................................................................................
50
Net cash used in investing activities ............................................................................................................................ (61,461)
Cash flows from financing activities:
Proceeds from long-term debt ...........................................................................................................................................................
9,613
Repayments of long-term debt .......................................................................................................................................................... (20,582)
Increase (decrease) in bank loans, net ............................................................................................................................................
(3,378)
Increase (decrease) in investment deposits by policyholders .........................................................................................
(2,483)
Dividends paid to SECOM CO., LTD. shareholders ................................................................................................................... (32,738)
Dividends paid to noncontrolling interests.................................................................................................................................
(5,426)
Payments for acquisition of shares of consolidated subsidiaries from noncontrollinginterest holders ...........................................................................................................................................................................................
(120)
Proceeds from sales of shares of consolidated subsidiaries to noncontrollinginterest holders ...........................................................................................................................................................................................
—
Increase in treasury stock, net ..............................................................................................................................................................
(17)
Other, net ..........................................................................................................................................................................................................
94
Net cash used in financing activities ............................................................................................................................ (55,037)
370
Effect of exchange rate changes on cash and cash equivalents ..............................................................................
17,129Net increase in cash and cash equivalents ................................................................................................................................
Cash and cash equivalents at beginning of year .................................................................................................................. 299,600
Cash and cash equivalents at end of year .................................................................................................................................. ¥316,729
See accompanying notes to consolidated financial statements.

54

SECOM Annual Report 2018

In millions of yen

Translation into thousandsof U.S. dollars (Note 3)

Years ended March 31

Year ended March 31

2017

2016

2018

¥103,389¥ 89,311$1,036,434

78,183
754
3,563
2,712
2,689
1,164
(13,887)
1,193(1,500)182(5,178)72,481(2,246)
1,177
1,815
11,814
1,463(1,718)—(2,101)549(7,162)744,858
9,217(57,717)(14,538)
7,934
8,160
(55,509)104(10,123)
1,877(67,726)(2,352)(1,268)187(15,887)
3,435
6,627
(1,560)4,334(1,023)
4,449
(879)
9,296
178,623

3,642(9,741)(2,445)(15,501)
646
2,985
(515)
959
(1,070)
5,984(7,003)(473)
142,851(48,953)(78,226)(175,840)(150,019)(3,566)56,245(7,349)(23,028)(4,472)45,245
18,151
25,983
1,257,142

(70)
1,465
(51,222)(7,338)43,290(32,613)(2,283)
(167)
(62)
(760)
1,721
839
(47,200)

(517)
3,030
(59,454)(8,409)55,036(49,361)(241)(73,540)
(7)
(639)
1,218
190
(132,694)

1,623
58,170(507,085)(74,142)654,387(482,057)(10,849)(219,651)(4,311)(7,925)
11,547472(579,821)

8,407(20,059)(13,528)(2,112)(30,557)(3,556)

9,357(15,197)
8,691
(469)
(28,373)(2,208)90,689(194,170)(31,868)(23,425)(308,849)(51,189)

(489)

(846)

(1,132)

618
(13)
1,464
(59,825)(980)
70,618228,982¥299,600—(16)65(28,996)(806)(19,645)
248,627¥228,982

—
(160)
887
(519,217)
3,490
161,594
2,826,415$2,988,009

Notes to Consolidated Financial Statements
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2018

1. Nature of Operations
The parent company and its subsidiaries (collectively “the Company”)
are engaged in the businesses of security services, fire protection
services, medical services, insurance services, geographic information
services, BPO and ICT services, and real estate and other services. With
these services combined, the Company is focusing on the establishmentof a Social System Industry, a network of integrated services and systems,
targeted at the needs of people and business.
The Company’s principal business activities are security services,
including on-line security systems for commercial and residential premises, static guard services, armored car services for cash collection anddeposit and sales of security merchandise. The Company has also been
diversifying its services covering: fire protection services, including automatic fire alarm systems and fire extinguishing systems; medical services,
including home and other medical services and the operations of variable interest entities of which the Company is the primary beneficiarythrough managing hospitals and health care-related institutions; non-life
insurance services; geographic information services using geographic
information systems (GIS) and surveying and measuring technology;
BPO and ICT services, including data center services, business continuity
plan support, information security services and cloud-based services; aswell as Business Process Outsourcing (“BPO”) related services; real estateand other services, including the development and sale of condominiums equipped with security and contingency planning features, lease ofreal estate, construction and installation services and other services.
2. Significant Accounting Policies
The parent company and its Japanese subsidiaries maintain theirrecords and prepare their statutory financial statements in accordancewith accounting principles generally accepted in Japan (“Japanese
GAAP”). Certain adjustments and reclassifications have been incorporated in the accompanying financial statements to conform with U.S.
generally accepted accounting principles (“U.S. GAAP”). These
adjustments were not recorded in the statutory books of account.
Significant accounting policies used in the preparation of theaccompanying consolidated financial statements are summarized
below:(1) Basis of Consolidation and Investments in Affiliated Companies
The consolidated financial statements include the accounts of theparent company and those of its majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated inconsolidation.
Investments in companies in which the ability to exercise significant
influence exists (generally 20 to 50 percent owned companies), areaccounted for under the equity method. Consolidated income includes
the Company’s current equity in the net income of affiliated companies,
after elimination of intercompany profits.

(2) Consolidation of Variable Interest Entities
The consolidated financial statements also include variable interest
entities (“VIEs”) of which the Company is the primary beneficiary.
The Accounting Standards Codification (“ASC”) 810, “Consolidation,”
issued by the Financial Accounting Standards Board (“FASB”) requires
the reporting entity to consolidate a variable interest entity (“VIE”) as its
primary beneficiary when it is deemed to have a controlling financial
interest in a VIE, meeting both of the following characteristics:• The power to direct activities of a VIE that most significantly impact
the VIE’s economic performance.
• The obligation to absorb losses of the VIE that could potentially besignificant to the VIE or the right to receive benefits from the VIE that
could potentially be significant to the VIE.
The Company provides investments, loans and guarantees toorganizations managing hospitals and health care-related institutions, toa company holding real estate, and to a PFI (Private Finance Initiative)
organization which was established to build, maintain and operate correctional facilities. Certain of these organizations are considered VIEs
under ASC 810.
Total assets and liabilities held by VIEs of which the Company is theprimary beneficiary were ¥74,539 million ($703,198 thousand) and¥84,029 million ($792,726 thousand), respectively, at March 31, 2018, and¥73,742 million and ¥85,325 million, respectively, at March 31, 2017. The
creditors of VIEs do not have recourse to the Company’s general credit
with the exception of debts guaranteed by the Company. Total assets
and liabilities held by VIEs of which the Company holds significant variable interests but is not the primary beneficiary were ¥29,232 million($275,774 thousand) and ¥27,699 million ($261,311 thousand), respectively, at March 31, 2018, and ¥29,778 million and ¥28,628 million,
respectively, at March 31, 2017. The Company’s assets in the consolidated balance sheets and the Company’s maximum exposure to losses
related to VIEs at March 31, 2018 and 2017 were ¥6,415 million ($60,519
thousand) and ¥5,997 million, respectively.
(3) Revenue Recognition
The Company generates revenue principally through the sales ofmerchandise and services in the areas of security services, fire protection
services, medical services, insurance services, geographic information
services, BPO and ICT services, and real estate and other services under
separate contractual arrangements. The Company recognizes revenue
when persuasive evidence of an arrangement exists, delivery has
occurred or services have been rendered, title and risk of loss have beentransferred to the customer, the sales price is fixed or determinable, andcollectibility is probable.
Revenue from term service contracts, including security services, isrecognized over the contractual period or, in the case of specific services, when such services are rendered. Subscribers are generally
requested to prepay a portion of service charges, especially for security
services, which are credited to deferred revenue and recognized inincome ratably over the covered service period. Revenue from theinstallation of security equipment used to provide on-line centralized
security services is deferred and recognized over the contractual periodof security services after completion of the installation. The related
installation costs are also deferred and amortized over the contractual
period (Note 2 (12)).

SECOM Annual Report 2018

55

The Company enters into arrangements with multiple elements,
which may include any combination of security equipment, installationand security services. The Company allocates revenue to each element
based on its relative fair value if such element meets criteria for treatment as a separate unit of accounting as prescribed in ASC 605,
“Revenue Recognition.” Otherwise, revenue is deferred until theundelivered elements are fulfilled as a single unit of accounting.
Revenue from sales of merchandise and software is recognized whenthe merchandise and software are received by the customer and, in thecase of installations, when such installations are completed.
Revenue from construction contracts is principally recognized whenconstruction is completed.
Revenue from long-term contracts for fire protection services andgeographic information services is principally recognized under thepercentage-of-completion method.
Property and casualty insurance premiums are earned ratably over theterms of the related insurance contracts. Unearned premiums are earned
ratably over the terms of the unexpired portion of premiums written.
Revenue from sales of real estate is recognized when the title of thereal estate is transferred to the customer.
Revenue from sales of equipment under sales-type leases is recognized at the inception of the lease. Unearned income on sales-typeleases and direct-financing leases is recognized over the life of each
respective lease using the interest method. Leases not qualifying as
sales-type leases or direct-financing leases are accounted for as operating leases and the related revenue is recognized over the lease term.
Taxes collected from customers and remitted to governmental
authorities on revenue-producing transactions are accounted for on a
net basis and therefore are excluded from net sales and operating
revenue in the consolidated statements of income.
(4) Foreign Currency Translation
All asset and liability accounts of foreign subsidiaries and affiliates aretranslated into Japanese yen at the rates of exchange in effect at yearend and all income and expense accounts are translated at average rates
of exchange during the year. The resulting translation adjustments areaccumulated and reported as part of other comprehensive income(loss).
Foreign currency receivables and payables of the Company aretranslated into yen at the rate in effect at the balance sheet date and theresulting translation gains and losses are credited or charged to foreign
currency income/expenses for the year.
(5) Cash Equivalents
For the purpose of the consolidated statements of cash flows, theCompany considers all highly liquid investments purchased with initial
maturities of three months or less to be cash equivalents.
(6) Investments in Debt and Equity Securities
The Company classifies investments in debt and equity securities as“available-for-sale” or “held-to-maturity.” The Company has no securities
classified as “trading.” “Held-to-maturity” securities are those securities inwhich the Company has the ability and intent to hold the security until
maturity. All securities not included in “trading” or “held-to-maturity” areclassified as “available-for-sale” securities. Marketable debt and equity
securities which are classified as “available-for-sale” are recorded at fairvalue. Unrealized holding gains and losses on securities classified as“available-for-sale” are reported as part of accumulated other comprehensive income (loss), net of tax. Debt securities classified as “held-tomaturity” are reported at amortized cost.

56

SECOM Annual Report 2018

A decline in the fair value of any available-for-sale securities below
cost that is deemed to be other-than-temporary results in a reduction in
the carrying amount to fair value. The impairment is charged to income
and a new cost basis for the securities is established. To determine
whether an impairment is other-than-temporary, the Company considers the length of time and extent to which the market value of the
security has been less than its original cost, the financial condition, otherspecific factors affecting the market value, deterioration of the credit
condition of the issuers, and whether or not the Company is able toretain the investment for a period of time sufficient to allow for the
anticipated recovery in market value.
Other investments in non-public companies, except for private equity
investments, are recorded at cost as fair value is not readily determinable.
The Company periodically evaluates the values of other investments in
non-public companies for possible impairment by taking into consideration the financial and operating conditions of the issuer, the generalmarket conditions in the issuer’s industry and the period of the decline
in the estimated fair value and other relevant factors. If the impairment isdetermined to be other-than-temporary, other investments in nonpublic companies are written down to their impaired value through acharge to income.
Realized gains or losses on the sale of investments are based on themoving-average cost method and are credited or charged to income.
(7) Private Equity Investments
The Company accounts for private equity investments in accordancewith ASC 946, “Financial Services—Investment Companies,” in whichinvestments are accounted for at fair value based on the Company’s
assessment of each underlying investment. The investments, by theirnature, have little or no price transparency.
Investments are initially carried at cost as an approximation of fairvalue. Adjustments to carrying value are made if there is evidence of achange in fair value. Downward adjustments are also made, in theabsence of third-party transactions, if it is determined that the expected
realizable value of the investment has declined below the carrying value.
The carrying value of private equity investments was ¥29,815 million($281,274 thousand) and ¥49,738 million at March 31, 2018 and 2017,
respectively.
Private equity investments are included in investment securities in the
consolidated balance sheets.
(8) Inventories
Inventories, consisting of security-related products, fire protectionrelated products, real estate and other related products, are stated at thelower of cost or market. Cost is determined, in the case of real estate,based on the specific identification method and, in the case of otherinventories, primarily using the moving-average method.
(9) Allowance for Doubtful Accounts
The Company recognizes an allowance for doubtful accounts toensure trade, short-term and long-term receivables, and other receivables are not overstated due to uncollectibility. Allowance for doubtful
accounts is maintained for all customers based on a variety of factors,
including the length of time receivables are past due, macroeconomic
conditions, significant one-time events and historical experience. An
additional reserve for individual accounts is recorded when the
Company becomes aware of a customer’s inability to meet its financial
obligations, such as in the case of bankruptcy filings or deterioration in
the customer’s operating results or financial position. If circumstances
related to customers change, estimates of the recoverability ofreceivables would be further adjusted.

(10) Deferred Insurance Acquisition Costs
Costs that vary with and are primarily related to acquiring new insurance policies are deferred and amortized principally over the premiumpaying period of the related insurance policies applying a percentage
relationship of cost incurred to premiums from contracts issued toapplicable unearned premiums throughout the period of the contract.
(11) Property, Plant and Equipment and Depreciation
Property, plant and equipment, including significant leasehold
improvements, are carried at cost and depreciated at rates based on theestimated useful lives of the assets. Depreciation is computed using thestraight-line method for assets other than security equipment and control stations. Security equipment and control stations are depreciatedusing the declining-balance method. Assets leased to others underoperating leases are depreciated using the straight-line method over theestimated useful lives. Depreciation expense was ¥54,127 million($510,632 thousand), ¥53,677 million and ¥50,098 million for the years
ended March 31, 2018, 2017 and 2016, respectively. Maintenance, repairs
and renewals are charged to income as incurred.
The estimated useful lives of depreciable assets are as follows:
Buildings
22 to 50 years
Security equipment and control stations
5 to 8 years
Machinery, equipment and automobiles
2 to 20 years
The Company recognizes asset retirement obligations if the fair valueof the obligations can be reasonably estimated. Asset retirement obligations include those for which an entity has a legal obligation to perform
an asset retirement activity, however, the timing and/or method of settling the obligation are conditional on a future event that may or may
not be within the control of the entity.
Performance of a contractual asset retirement obligation is required
for the building leased by a certain subsidiary when the lease matures
and the Company returns the leased building to its owner. However, theCompany plans not to relocate from the building and to continue to use
it until it will be demolished without restoration. As such, the executionof such obligation is not expected. The Company evaluated all the available evidence as of March 31, 2018 and performed efforts to establish
the best estimate. However, the scope and the amount of execution of
the obligation cannot be reasonably estimated. Therefore, an asset
retirement obligation for that building lease is not recognized.
(12) Deferred Charges
Deferred charges primarily consist of costs related to installation services of security equipment used to provide on-line security systems. The
installation costs are deferred and amortized using the straight-line
method over the contractual period of security services after completionof the installation. Amortization expense was ¥15,529 million ($146,500
thousand), ¥15,596 million and ¥15,129 million for the years ended
March 31, 2018, 2017 and 2016, respectively.
(13) Impairment or Disposal of Long-Lived Assets
In accordance with ASC 360, “Property, Plant and Equipment,” theCompany reviews the carrying amount of its long-lived assets held andused, other than goodwill and intangible assets with indefinite lives, andassets to be disposed of, whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. Long-lived
assets to be held and used are reviewed for impairment by comparing
the carrying amount of the assets with their estimated future

undiscounted cash flows. If it is determined that an impairment loss has
occurred, the loss would be recognized during the period, and calculated as the difference between the assets’ carrying amount and the fairvalue. Long-lived assets that are to be disposed of other than by sale areconsidered held and used until they are disposed of. Long-lived assetsthat are to be disposed of by sale are reported at the lower of theircarrying amount or fair value less cost to sell. Reductions in the carrying
amount are recognized in the period in which the long-lived assets areclassified as held for sale.
(14) Goodwill and Other Intangible Assets
Goodwill represents the excess of costs over the fair value of assets ofbusiness acquired. Pursuant to ASC 350, “Intangibles—Goodwill andOther,” goodwill and intangible assets acquired in a purchase businesscombination and determined to have an indefinite useful life are notamortized, but instead tested for impairment at least annually. Thisaccounting standard also requires that intangible assets with estimableuseful lives be amortized over their respective estimated useful lives totheir estimated residual values, and reviewed for impairment in accordance with ASC 360. The Company conducts its annual impairment test
each fiscal year.
(15) Unearned Premiums and Other Insurance Liabilities
Unearned premiums are related to unexpired periods of insurance
contracts and are earned on a pro-rata basis over the remaining contract
period. Other insurance liabilities consist principally of liabilities for
unpaid claims and adjustment expenses, which are estimates of payments to be made on reported claims and incurred but not reported
claims, which are computed based on past experience for unpaid losses.
(16) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
bases, and operating loss carryforwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences and carryforwards are expected to be realized or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. Valuation allowances arerecorded to reduce deferred tax assets when it is more likely than notthat a tax benefit will not be realized.
The Company recognizes in the consolidated financial statements
the impact of a tax position, if any, based on the technical merits of theposition, when that position is more likely than not to be sustained upon
examination. The benefit of the tax position is measured at the largest
amount of benefit that has greater than 50 percent likelihood of being
realized upon settlement with the appropriate tax authority.
The Company recognizes interest and penalties accrued related tounrecognized tax benefits in income taxes in the consolidated statements of income.
(17) Research and Development
Research and development costs are charged to income as incurred.
Research and development expenses included in selling, general andadministrative expenses for the years ended March 31, 2018, 2017 and2016 were ¥6,383 million ($60,217 thousand), ¥6,491 million and ¥6,771
million, respectively.

SECOM Annual Report 201857

(18) Advertising Costs
Advertising costs are charged to income as incurred, except for thecosts related to insurance policies. Advertising costs for acquiring new
insurance policies are deferred and amortized as part of insurance
acquisition costs. Advertising expenses included in selling, general andadministrative expenses for the years ended March 31, 2018, 2017 and2016 were ¥5,011 million ($47,274 thousand), ¥5,072 million and ¥4,388
million, respectively.
(19) Shipping and Handling Costs
Shipping and handling costs included in selling, general andadministrative expenses for the years ended March 31, 2018, 2017 and2016 were ¥1,380 million ($13,019 thousand), ¥1,220 million and ¥1,213
million, respectively.
(20) Derivative Financial Instruments
The Company accounts for derivative financial instruments inaccordance with ASC 815, “Derivatives and Hedging.”
The Company recognizes all derivative financial instruments in the
consolidated financial statements at fair value regardless of the purpose
or intent for holding them. Changes in the fair value of derivative
financial instruments are either recognized periodically in income or inequity as a component of accumulated other comprehensive income(loss) depending on whether the derivative financial instruments qualify
for hedge accounting, and if so, whether they qualify as a fair value
hedge or a cash flow hedge. Changes in the fair values of derivative
financial instruments accounted for as a fair value hedge are recorded
in income along with the portion of the change in the fair value of thehedged item that relates to the hedged risk. Changes in the fair value ofderivative financial instruments accounted for as a cash flow hedge, tothe extent it is effective as a hedge, are recorded in accumulated othercomprehensive income (loss), net of tax. Changes in the fair value ofderivative financial instruments not qualifying as a hedge are reported
in income.
The Company meets the documentation requirements necessaryfor effective hedges which include the risk management objective andstrategy for undertaking various hedge transactions. In addition, formal
assessment is made at inception of the hedge and periodically on an
on-going basis, as to whether the derivatives used in hedging activities
are highly effective in offsetting changes in fair values or cash flows ofhedged items. Hedge accounting is discontinued for ineffective hedges,
if any. Changes in fair value of discontinued hedges are recognized
in income.
(21) Per Share Data
Basic Earnings per Share (“EPS”) is computed based on the average
number of shares of common stock outstanding for the period. The average number of shares of common stock outstanding for the years ended
March 31, 2018, 2017 and 2016 was 218,260 thousand shares, 218,261
thousand shares and 218,263 thousand shares, respectively. There wereno potentially dilutive shares outstanding during the years ended March
31, 2018, 2017 or 2016.
Cash dividends per share shown in the accompanying consolidated
statements of income are computed based on dividends approved andpaid in each fiscal year.

58

SECOM Annual Report 2018(22) Use of Estimates
The preparation of the consolidated financial statements requires
management of the Company to make a number of estimates andassumptions relating to the reported amounts of assets and liabilities,
the disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues
and expenses during the period. Actual results could differ from thoseestimates. Significant items subject to such estimates and assumptions
include the carrying amounts of inventories, deferred insurance acquisition costs, investment securities, other investments, property, plant andequipment, goodwill, other intangible assets, unearned premiums andother insurance liabilities, valuation of receivables, valuation allowances
for deferred income taxes, valuation of derivative instruments, assets andobligations related to employee benefits, asset retirement obligations,income tax uncertainties, and other contingencies.
(23) Recent Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, “Revenue fromContracts with Customers.” This accounting standard requires an entity
to depict the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity expects to beentitled in exchange for those goods or services. This accounting standard also requires an entity to disclose sufficient information to enable
users of financial statements to understand the nature, amount, timing,and uncertainty of revenue and cash flows arising from contracts withcustomers. Both qualitative and quantitative information is required. Thisaccounting standard was originally planned to be effective for fiscal
years beginning after December 15, 2016, however, in August 2015,
the FASB issued ASU No. 2015-14, which defers the effective date of ASU
No. 2014-09 for one year. Therefore, this accounting standard is effective
for fiscal years beginning after December 15, 2017, including interim
periods within that reporting period, and will be adopted by theCompany in the fiscal year beginning April 1, 2018. This accounting
standard may be applied retrospectively to each prior period presented
or retrospectively with the cumulative effect recognized at the date ofinitial application. The Company is currently evaluating the transition
method and the effect of adopting this accounting standard on its
consolidated financial statements.
In November 2015, the FASB issued ASU No. 2015-17, “Balance SheetClassification of Deferred Taxes.” This accounting standard requires
deferred tax assets and liabilities be classified as noncurrent on thebalance sheet. This accounting standard is effective for fiscal years
beginning after December 15, 2016, and was adopted by the Company
in the fiscal year beginning April 1, 2017. Prior periods were notretrospectively adjusted.
In January 2016, the FASB issued ASU No. 2016-01 “Recognition andMeasurement of Financial Assets and Financial Liabilities.” This accounting standard significantly changes the income statement impact ofequity investments, and the recognition of changes in fair value of financial liabilities when the fair value is elected. This accounting standard iseffective for fiscal years beginning after December 15, 2017, includinginterim periods within that reporting period, and will be adopted by theCompany in the fiscal year beginning April 1, 2018. The Company is currently evaluating the effect of adopting this accounting standard on its
consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02 “Leases.” Thisaccounting standard requires lessees to recognize almost all lease assets
and lease liabilities on the balance sheet that arise from lease contracts
which are classified as operating leases. This accounting standard iseffective for fiscal years beginning after December 15, 2018, includinginterim periods within that reporting period, and will be adopted by theCompany in the fiscal year beginning April 1, 2019.
In June 2016, the FASB issued ASU No. 2016-13, “Measurement ofCredit Losses on Financial Instruments.” This accounting standard
replaces the current incurred loss methodology that delays recognitionof the full amount of credit losses until the loss was probable of occurring with a methodology that reflects expected credit losses andrequires consideration of a broader range of reasonable and supportable
information to inform credit loss estimates. This accounting standard iseffective for fiscal years beginning after December 15, 2020, includinginterim periods within that reporting period, and will be adopted by theCompany in the fiscal year beginning April 1, 2021.
In October 2016, the FASB issued ASU No. 2016-16, “Intra-Entity
Transfers of Assets Other Than Inventory.” This accounting standard eliminates the exception for an intra-entity transfer of an asset other thaninventory which prohibits the recognition of current and deferredincome tax until the asset has been sold to an outside party and requires
an entity to recognize the income tax consequences when the transfer
occurs. This accounting standard is effective for fiscal years beginning
after December 15, 2017, including interim periods within that reporting
period, and will be adopted by the Company in the fiscal year beginning
April 1, 2018.
In January 2017, the FASB issued ASU No. 2017-04, “Simplifying theTest for Goodwill Impairment.” This accounting standard eliminates Step
2 from the goodwill impairment test. Instead, the amendments require
an entity to perform its annual, or interim, goodwill impairment test bycomparing the fair value of a reporting unit with its carrying amount andrecognize an impairment charge for the amount by which the carrying
amount exceeds the reporting unit’s fair value. This accounting standard
is effective for fiscal years beginning after December 15, 2020, includinginterim periods within that reporting period, and will be adopted by theCompany in the fiscal year beginning April 1, 2021.
In March 2017, the FASB issued ASU No. 2017-07, “Improving the
Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost.” This accounting standard requires an entity
to disaggregate the service cost component from the other components
of net benefit cost, and present the service cost component in the sameline item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income
statement separately from the service cost component, such as in otherincome (expenses). This accounting standard allows only the service cost
component to be eligible for capitalization. This accounting standard iseffective for fiscal years beginning after December 15, 2017, includinginterim periods within that reporting period, and will be adopted by theCompany in the fiscal year beginning April 1, 2018.

(25) Reclassifications
Certain amounts in the accompanying consolidated financial
statements for the years ended March 31, 2017 and 2016 have been
reclassified to conform to the presentation used for the year ended
March 31, 2018.
3. U.S. Dollar Amounts
U.S. dollar amounts have been included in these financial statements
solely for the convenience of the reader. The translations of yen into U.S.
dollars have been made at the rate of ¥106=US$1, the approximate rate
prevailing on the Tokyo Foreign Exchange Market on March 31, 2018.
These translations should not be construed as representing that the yenamounts actually constitute, or have been or could be converted into
U.S. dollars at that rate.
4. Acquisitions
Acquisition of TMJ, Inc.
On October 2, 2017, the Company acquired 100% of common shares
outstanding of TMJ, Inc. for ¥26,550 million ($250,472 thousand) in cash.
The purpose of this acquisition is to increase corporate value throughgenerating various synergies including further improvements in qualityof existing business and development and provision of new BPO(Business Process Outsourcing) services by taking full advantage of thecollective strengths of SECOM and TMJ.
The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition.
In millions of yen

In thousands of
U.S. dollars

Cash and cash equivalents ..........................................
Cash deposits for armored car services ...............
Other current assets.........................................................
Investments and long-term receivables .............
Property, plant and equipment ................................
Intangible assets, including goodwill ...................

¥ 2,654
3,803
290
1,642
1,262
24,919$ 25,038
35,877
2,736
15,49011,906
235,085

Total assets acquired .......................................................

34,570326,132

Current liabilities ................................................................
Long-term liabilities .........................................................

5,075
2,945

47,877
27,783

Total liabilities assumed .................................................

8,020

75,660Net assets acquired ..........................................................

¥26,550$250,472

Intangible assets of ¥7,448 million ($70,264 thousand) subject toamortization include customer relationships of ¥6,796 million ($64,113
thousand) with a 15-year useful life. The goodwill of ¥17,471 million($164,821 thousand) represents expected excess earnings power basedon the future business operations. It is not deductible for tax purposes
and has been assigned to the BPO and ICT services segment.
The Company recorded the acquisition costs of ¥274 million ($2,585
thousand) related to this acquisition in selling, general and administrative
expenses for the year ended March 31, 2018.

(24) Discontinued Operations
ASC 205-20, “Discontinued Operations,” requires the operating resultsof any component of an entity with its own identifiable operations andcash flows which is disposed of or is classified as held for sale, and withwhich the Company will not have significant continuing involvement tobe reported in discontinued operations.

SECOM Annual Report 2018

59

The following unaudited pro forma information shows the Company’s
consolidated results of operations for the years ended March 31, 2018and 2017 as if the newly consolidated subsidiaries acquired in the year
ended March 31, 2018, were consolidated on April 1,2016.

Unaudited

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2017

2018

2018

Pro forma net sales andoperating revenue.................................... ¥1,099,655 ¥1,066,938
Pro forma net income attributable
to SECOM Co., Ltd. ....................................
97,714
92,070

Unaudited

Pro forma net income attributable
to SECOM Co., Ltd. per share..............

$10,374,104
921,830

In yenIn U.S. dollars

Years ended
March 31

Year ended
March 31

2018

2017

2018

¥447.69¥421.83$4.22

The unaudited pro forma data is not necessarily indicative of theCompany’s consolidated results of operations that would actually havebeen reported if the transaction in fact had occurred on April 1, 2016,
and is not necessarily representative of the Company’s consolidated
results of operations for any future period.
5. Cash and Cash Equivalents
Cash and cash equivalents at March 31, 2018 and 2017 comprise thefollowing:

Cash ....................................................................
Time deposits.................................................
Call loan .............................................................
Investment securities ................................

In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2018

2017

2018

¥304,415
12,165—149¥316,729¥281,433
18,004—
163¥299,600$2,871,839
114,764—
1,406$2,988,009

Investment securities include negotiable certificates of deposit andmoney management funds. These agreements mature within threemonths and their carrying values approximate fair value. The Company
has not experienced any losses through default of the financial institutions and does not anticipate default of any outstanding agreements.
6. Cash Deposits for Armored Car Services
The Company operates cash collection and deposit services forfinancial institutions relating to cash dispensers located outside offinancial institution facilities and also operates cash collection anddelivery services for entities other than financial institutions. Cashdeposit for armored car services balances are segregated from cash andcash equivalents and are restricted as to use by the Company. The
Company funds most of the cash for such operations through bankoverdrafts and deposits. Bank loans and deposits received, which relate
to these operations, were ¥21,940 million ($206,981 thousand) and¥113,830 million ($1,073,868 thousand), respectively, at March 31, 2018,and ¥22,704 million and ¥107,878 million, respectively, at March 31,
2017. As part of its fee arrangement, the Company is reimbursed for theinterest cost of the related overdrafts.

60

SECOM Annual Report 2018

7. Short-Term Investments and Investment Securities
Short-term investments (current) and investment securities(noncurrent) include debt and equity securities. The related aggregate
fair value, gross unrealized gains, gross unrealized losses and costs
pertaining to “available-for-sale” and “held-to-maturity” investments at
March 31, 2018 and 2017 are as follows:
In millions of yen
March 31, 2018
Gross unrealized
Cost

Short-term investments:
Available-for-sale:
Debt securities ....................... ¥ 16,319
Held-to-maturity:—
Debt securities .......................
¥ 16,319
Investment securities:
Available-for-sale:
Equity securities .................... ¥ 35,071
Debt securities ....................... 105,423
Held-to-maturity:
13,006
Debt securities .......................
¥153,500

Gains

LossesFair value

¥

902 ¥

10

¥ 17,211

¥

—
902 ¥

—
10

—
¥ 17,211¥31,714 ¥ 175
2,799
913

¥ 66,610
107,309

1,546—¥36,059 ¥1,088

14,552¥188,471
In millions of yen
March 31, 2017

Gross unrealized
Cost

Short-term investments:
Available-for-sale:
Debt securities ....................... ¥ 28,051
Held-to-maturity:
Debt securities .......................
—¥ 28,051
Investment securities:
Available-for-sale:
Equity securities .................... ¥ 33,892
Debt securities .......................
88,199Held-to-maturity:
Debt securities .......................
13,058¥135,149

Gains

LossesFair value¥ 1,174¥ 1¥ 29,224—¥ 1,174—¥ 1—¥ 29,224¥27,885
5,347

¥ 57
231

¥ 61,720
93,315

1,404¥34,636—¥288

14,462¥169,497

In thousands of U.S. dollars
March 31, 2018
Gross unrealized
Cost

Short-term investments:
Available-for-sale:
Debt securities ................ $ 153,953 $Held-to-maturity:—
Debt securities ................
$ 153,953 $Gains

LossesFair value

8,509 $

94

$ 162,368—
8,509 $—
94—
$ 162,368

Investment securities:
Available-for-sale:
Equity securities ............. $ 330,858 $299,189 $ 1,651
Debt securities ................
994,557
26,405
8,613
Held-to-maturity:
122,698
14,585—
Debt securities ................
$1,448,113 $340,179 $10,264$ 628,396
1,012,349
137,283$1,778,028

Gross unrealized losses on, and fair value of, “available-for-sale” and“held-to-maturity” securities, aggregated by investment category andthe length of time that individual securities have been in a continuous
unrealized loss position at March 31, 2018 are as follows:

In thousands of U.S. dollars
March 31, 2018
Available-for-sale
Cost

In millions of yen
March 31, 2018
Less than 12 months

Available-for-sale:
Equity securities ...................
Debt securities ......................
Held-to-maturity:
Debt securities ......................

12 months or longer

Fair valueGrossunrealized
lossesFair valueGrossunrealized
losses¥ 1,482
45,507¥46,989¥ 157
923¥1,080

¥—
—
¥—

¥—
—
¥—

¥

¥

¥—

¥—

—

—

In thousands of U.S. dollars
March 31, 2018
Less than 12 months

Available-for-sale:
Equity securities ...................
Debt securities ......................
Held-to-maturity:
Debt securities ......................

12 months or longer

Fair valueGrossunrealized
lossesFair valueGrossunrealized
losses$ 13,981
429,311$443,292$ 1,481
8,708$10,189

$—
—
$—

$—
—
$—

$

$

$—

$—

—

—

Based on the Company’s ability and intent to hold the investments fora reasonable period of time sufficient for a recovery of fair value, thecredit condition of the issuers and other relevant factors, the Company
does not consider these investments to be other-than-temporarily
impaired at March 31, 2018.
At March 31, 2018, debt securities principally consisted of short-term
investments in monetary trusts, Japanese government bonds, corporate
bonds, U.S. treasury securities and U.S. Government Agency Bonds.
The cost and fair value of “available-for-sale” and ”held-to-maturity”
debt securities by contractual maturity at March 31, 2018 are as follows:
In millions of yen
March 31, 2018
Available-for-saleDue within 1 year ............
Due after 1 year
through 5 years ..............
Due after 5 years
through 10 years ...........
Due after 10 years ..........

Cost

Fair value¥ 16,319¥ 17,211

80,476

81,122

7,335
17,612¥121,742

7,480
18,707¥124,520

Held-to-maturity

¥

Cost

Fair value

—

¥

1,510
—
11,496¥13,006—

Fair value

Due within 1 year ............ $ 153,953 $ 162,368
Due after 1 year
through 5 years ..............
759,208
765,302
Due after 5 years
through 10 years ...........
69,19870,566
Due after 10 years ..........
166,151
176,481$1,148,510 $1,174,717

Cost

$

—

Fair value$—

14,245

14,698—108,453$122,698—
122,585$137,283

During the years ended March 31, 2018, 2017 and 2016, the net
unrealized gains and losses on “available-for-sale” securities included aspart of accumulated other comprehensive income (loss), net of tax,
increased by ¥268 million ($2,528 thousand), increased by ¥4,376 million
and decreased by ¥7,411 million, respectively.
Proceeds from the sale of “available-for-sale” securities for the years
ended March 31, 2018, 2017 and 2016 were ¥26,488 million ($249,887
thousand), ¥15,574 million and ¥21,397 million, respectively. On thosesales, the gross realized gains and gross realized losses, using a movingaverage cost basis, for the years ended March 31, 2018, 2017 and 2016
are as follows:

Gross realized gains......................
Gross realized losses ....................

In millions of yen

In thousands of U.S.
dollars

Years ended
March 31

Year ended
March 31

2018

2017

2016

2018

¥1,689268¥1,62372¥1,921
110$15,934
2,528

The Company maintains long-term investment securities, issued by anumber of non-public companies, included as investment securities in
the consolidated balance sheets. The aggregate carrying amount of theinvestments in non-public companies, at cost net of other-than-temporary impairment, was ¥10,515 million ($99,198 thousand) and ¥9,414 million at March 31, 2018 and 2017, respectively. The corresponding fairvalue at that date was not computed as such estimation was not practicable and no significant events or changes that might have affected thefair value of the investments were observed.
8. Inventories
Inventories at March 31, 2018 and 2017 comprise the following:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

1,558—
12,994¥14,552

Held-to-maturity

2018

2017

2018

Security-related products................................. ¥ 7,433
Fire protection-related products.................. 20,476
Real estate .................................................................. 44,455
Other-related products ......................................
9,694¥82,058¥ 6,961
18,13527,507
10,083¥62,686$ 70,123
193,170419,387
91,452$774,132

Work in process for real estate inventories at March 31, 2018 and 2017,
amounting to ¥39,689 million ($374,425 thousand) and ¥22,284 million,
respectively, are included in real estate.
Costs on uncompleted construction contracts at March 31, 2018 and2017, amounting to ¥10,974 million ($103,528 thousand) and ¥9,053
million, respectively, are included in fire protection-related products.

SECOM Annual Report 2018

61

The amount of write-down on real estate inventories included in costof sales for the years ended March 31, 2018, 2017 and 2016 were ¥865
million ($8,160 thousand), ¥1,164 million and ¥1,463 million, respectively.
9. Credit Quality of Financing Receivables and Allowance for
Doubtful Accounts
The Company has financing receivables and classifies them into four
categories: “lease receivables,”“loans receivable resulting from medical
services,”“other loans receivable” and “other.” Financing receivables classified
as “lease receivables” are resulting from lease transactions of security
merchandise and security systems.
The Company continuously monitors overdue financing receivables
which, the Company considers, have a risk of uncollectability. For
financing receivables with specific customer collection issues, theCompany individually evaluates their collectability in order to determine
the amount of allowance for doubtful accounts. For other financing
receivables, the Company categorizes these receivables into groups by
their nature and characteristics. The Company collectively evaluates thecollectability of each group, using its historical experience of write-offs
and determines the amount of allowance for doubtful accounts.
Financing receivables and allowance for doubtful accounts at March
31, 2018 and 2017 are as follows:

In millions of yen

Year ended March 31, 2018

Lease
receivables

Allowance for
doubtful accounts:
Balance at
beginning of year................. ¥ 356
Provision (Reversal) .........
(133)
Charge off .............................
52
Other* .....................................
—
Balance at
end of year ...............................
Individually
evaluated............................
Collectively
evaluated............................ ¥Loansreceivable
resulting frommedicalservices

Other
loans
receivable

Other

Other
loans
receivable

Other

Total

368
(71)
59
—

¥1,995
395
—
—

¥ 705
64
(7)
(64)

¥1,688
(124)
(714)
0

¥ 4,756
264
(662)
(64)

356

2,390

698

850

4,294

133

2,390

698

850

4,071

Lease
receivables

Allowance for
doubtful accounts:
Balance at
beginning of year.................
Provision (Reversal) .........
Charge off .............................
Other* .....................................
Balance at
end of year ...............................
Individually
evaluated............................
Collectively
evaluated............................
Financing receivables:
Individually
evaluated............................
Collectively
evaluated............................

¥

¥

223

¥

—

¥

¥

152

¥5,856¥ 803¥1,098¥ 7,90952,287

546

932

149

53,914¥52,439¥6,402¥1,735¥1,247¥61,823

Total

0

¥

—

¥

223

In thousands of U.S. dollars
Year ended March 31, 2018

¥ 698
(143)
—
(16)

275

2,373

539

1,216

4,403

119

2,373

539

1,216

4,247

156

¥

¥54,400

Loans
receivable
resulting frommedicalservices* “Other” principally includes the effect of changes in foreign currency exchange rates and thescope of consolidation.

¥2,390(17)——

Financing receivables:
Individually
evaluated............................ ¥ 197
Collectively
evaluated............................ 54,203

In millions of yen
Year ended March 31, 2017

—

¥

0

¥ 850 ¥ 4,294
366
73
(0)
52
0
(16)

¥

—

¥

156

¥5,666¥ 948¥1,404¥ 8,215

548

921

143

55,815¥6,214¥1,869¥1,547¥64,030* “Other” principally includes the effect of changes in foreign currency exchange rates and thescope of consolidation.

Lease
receivables

Allowance for
doubtful accounts:
Balance at
beginning of year................. $ 3,358
Provision (Reversal) .........
(1,255)Charge off .............................
491
Other* .....................................
—
Balance at
end of year ...............................
2,594
Individually
evaluated............................
1,122
Collectively
evaluated............................ $ 1,472

Loans
receivable
resulting frommedicalservices

Other loans
receivable

Other

Total

$22,547 $ 6,585 $ 8,019 $ 40,509(160)(1,349)
3,453
689
—
—
(0)
491
—
(151)
0
(151)
22,387

5,085

11,472

41,53822,387

5,085

11,47240,066$—$0Financing receivables:
Individually
evaluated............................ $ 1,858
Collectively
evaluated............................ 511,350$53,453
5,170

8,689

$513,208$58,623$17,632$ 8,943$— $ 1,472$13,245 $ 77,499
1,349

526,558$14,594 $604,057* “Other” principally includes the effect of changes in foreign currency exchange rates and thescope of consolidation.

62

SECOM Annual Report 2018

The Company considers receivables are past due and the financial
position of the debtor to be credit quality indicators and classifies
financing receivables into Overdue and Current. Financing receivables
determined to have no prospects for collecting contractual intereston the basis of being past due and other factors are placed on
nonaccrual status.
The aging analysis of the recorded financing receivables and financing
receivables on nonaccrual status at March 31, 2018 and 2017 are as
follows:

In millions of yen
March 31, 2018

Lease
receivables

Loans
receivable
resulting frommedicalservices

Other
loans
receivable

Other

Total

Current ............................................
Overdue..........................................

¥54,203
197¥6,177
37

¥ 953
916

¥ 843
704

¥62,176
1,854

Total:
Financing receivables ..........

¥54,400¥6,214¥1,869¥1,547¥64,030

Financing receivables
on nonaccrual status ...........

¥

¥

¥ 948

¥

¥

—

4

Impaired receivables and the related allowance for doubtful accounts
at March 31, 2018 and 2017 are as follows:
In millions of yen
March 31, 2018

Impaired receivables ..............
Related allowance for
doubtful accounts .................

Lease
receivables

Loans
receivable
resulting frommedicalservices

Other
loans
receivable

Other

Total

¥197

¥5,666¥948¥1,404¥8,215

119

2,373

539

1,216

4,247

In millions of yen—

952

March 31, 2017

Impaired receivables ..............
Related allowance for
doubtful accounts .................

Lease
receivables

Loans
receivable
resulting frommedicalservices

Other
loans
receivable

Other

Total

¥152

¥5,856¥803¥1,098¥7,909

133

2,390

698

850

4,071

In millions of yen

In thousands of U.S. dollars

March 31, 2017

Leasereceivables

Loans
receivable
resulting frommedicalservices

Other
loans
receivable

Other

Total

Current ............................................
Overdue..........................................

¥52,287
152¥6,362
40

¥ 989
746

¥ 880
367

¥60,518
1,305

Total:
Financing receivables ..........

¥52,439¥6,402¥1,735¥1,247¥61,823

Financing receivables
on nonaccrual status ...........

¥

¥

¥ 803

¥

¥

—

7

—

810

March 31, 2018

Impaired receivables ..............
Related allowance for
doubtful accounts .................

Lease
receivables

Loans
receivable
resulting frommedicalservices

Other

Total

$1,858$53,453$8,943 $13,245$77,499

1,122

24,387

5,085

40,066

In millions of yen

Leasereceivables

Loans
receivable
resulting frommedicalservices

Other
loans
receivable

Other

Total

¥175

¥5,760¥876¥1,251¥8,062Lease
receivables

Loans
receivable
resulting frommedicalservices$1,651$54,340

March 31, 2018

Lease
receivables

Other
loans
receivable

Other

Total

Current ............................................ $511,350
Overdue..........................................
1,858$58,274 $ 8,990 $ 7,952 $586,566
349
8,642
6,642
17,491

Total:
Financing receivables .......... $513,208$58,623 $17,632 $14,594 $604,057

Financing receivables
on nonaccrual status ........... $$—38 $ 8,943 $— $ 8,981

11,472

The average amounts of impaired receivables for the year ended
March 31, 2018 are as follows:

In thousands of U.S. dollars
Loans
receivable
resulting frommedicalservices

Other
loans
receivable

Average amounts of
impaired receivables ............

In thousands of U.S. dollars

Average amounts of
impaired receivables ............

Other
loans
receivable

Other

Total

$8,264 $11,802$76,057

SECOM Annual Report 201863

10. Investments in Affiliated Companies
The Company has investments in affiliated companies that are
accounted for under the equity method. Investments principally consistof Taiwan Secom Co., Ltd., a 28.7 percent owned affiliate, which is listedon the Taiwan Stock Exchange; S1 Corporation, a 28.8 percent owned
affiliate, which is listed on the Korea Exchange; and Toyo Tech Co., Ltd., a27.1 percent owned affiliate, which is listed on the Second Section of theTokyo Securities Exchange.
Combined financial information for the affiliated companies
accounted for under the equity method is as follows:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2018

2017

2018

Current assets ...................................................... ¥127,793
Noncurrent assets ............................................. 196,908¥104,780
183,063$1,205,594
1,857,623

Total assets....................................................... ¥324,701¥287,843$3,063,217

Current liabilities ................................................ ¥ 79,246
Long-term liabilities .........................................
42,160Equity ........................................................................ 203,295¥ 68,683
39,477
179,683$ 747,604
397,736
1,917,877

Total liabilities and equity....................... ¥324,701¥287,843$3,063,217

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2018

2017

2016

2018

Net sales ...................................... ¥283,066¥255,263¥289,131$2,670,434

Gross profit ................................ ¥ 83,626¥ 78,246¥ 89,152$ 788,925

Net income
attributable toaffiliated companies .......... ¥ 25,266¥ 17,320¥ 25,012$ 238,358

Dividends received from affiliated companies for the years ended
March 31, 2018, 2017 and 2016 were ¥4,199 million ($39,613 thousand),¥3,036 million and ¥3,614 million, respectively.
Three listed affiliated companies accounted for under the equity
method with an aggregated carrying amount of ¥51,410 million($485,000 thousand) and ¥48,971 million at March 31, 2018 and 2017,
respectively, had a quoted market value of ¥141,738 million ($1,337,151
thousand) and ¥133,190 million at March 31, 2018 and 2017,
respectively.
The amounts of goodwill included in the carrying amount of investments in affiliated companies were ¥4,836 million ($45,623 thousand)and ¥4,600 million at March 31, 2018 and 2017, respectively.

64

SECOM Annual Report 2018

A summary of transactions and balances with the affiliated companies
accounted for under the equity method is presented below:
In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2018

2017

2016

2018

Sales ...............................................

¥1,371¥1,455¥1,398$12,934

Purchases ....................................

¥6,293¥4,749¥5,527$59,368

In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2018

2017

2018

Notes and accounts
receivable, trade...................................................

¥ 475

¥ 526

$ 4,481Loans receivable.....................................................

¥ 492

¥ 693

$ 4,642

Notes and accounts payable..........................

¥2,406¥2,668$22,698

Guarantees for bank loans ...............................

¥

¥

$

—

50

—

The Company’s equity in undistributed income of affiliates at
March 31, 2018 and 2017 included in retained earnings was ¥37,763
million ($356,255 thousand) and ¥34,888 million, respectively.
11. Long-Lived Assets
The Company has assessed the potential impairment of its long-lived
assets. As a result of a significant decrease in revenue forecasts, theCompany principally recognized impairment losses on certain businessassets of the BPO and ICT services segment for the year ended March 31,
2018, on certain business assets of the geographic information services
segment for the year ended March 31, 2017, and on certain businessassets of the BPO and ICT services segment and certain real estateincluded as corporate items for the year ended March 31, 2016. The fairvalue was determined based on the estimated present value of future
cash flows or appraisal value.
Impairment losses on long-lived assets by business segment for theyears ended March 31, 2018, 2017 and 2016 are as follows:
In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2017

2016

2018

42 ¥
62
556
—

—
—
329
—

$ 443
142
—
—

364
415

1,473
485

1,152
5,637

3,434
3,915

—
—

71
—

—
4,696

—
—

¥2,689 ¥11,814$7,9342018

Security services ...................................
Fire protection services....................
Medical services ...................................
Insurance services ...............................
Geographic information
services ....................................................
BPO and ICT services .........................
Real estate andother services ......................................
Corporate items....................................

¥ 47
15
—
—

¥

Total .................................................

¥841

12. Goodwill and Other Intangible Assets
The components of acquired intangible assets, excluding goodwill, atMarch 31, 2018 and 2017 are as follows:
In millions of yen
March 31, 2018
Gross
carrying
amountAccumulated
amortization

Net
carrying
amountAmortized intangible assets:
Software ................................................................ ¥53,535
Other ....................................................................... 40,228¥93,763(¥33,380)(9,307)(¥42,687)¥20,155
30,921¥51,076

Unamortized intangible assets ..................... ¥ 5,951¥¥ 5,951—

In millions of yen
March 31, 2017

Amortized intangible assets:
Software ................................................................
Other .......................................................................

Unamortized intangible assets .....................

Gross
carrying
amountAccumulated
amortization

Net
carrying
amount¥50,386
33,115¥83,501(¥29,699)(7,299)(¥36,998)¥20,687
25,816¥46,503¥ 4,223¥¥ 4,223—

In thousands of U.S. dollars
March 31, 2018
Gross
carrying
amountAmortized intangible assets:
Software ................................................................ $505,047
Other ....................................................................... 379,509$884,556
Unamortized intangible assets ..................... $ 56,143

Accumulated
amortization

Net
carrying
amount($314,906) $190,141(87,802) 291,707($402,708) $481,848$— $ 56,143

Aggregate amortization expense for the years ended March 31, 2018,2017 and 2016 was ¥9,299 million ($87,726 thousand), ¥8,910 million and¥7,254 million, respectively. Amortized intangible assets are amortizedusing the straight-line method over their estimated useful lives. The
weighted average amortization period for internal use software isapproximately five years.
The estimated aggregate amortization expense for intangible assets
for the next five years is as follows:
Years ending March 31

2019 .......................................................................................
2020 .......................................................................................
2021 .......................................................................................
2022 .......................................................................................
2023 .......................................................................................

In millions of yen

In thousands of
U.S. dollars¥9,777
8,340
6,622
4,813
3,367

$92,236
78,67962,47245,406
31,764The changes in the carrying amount of goodwill by business segment
for the years ended March 31, 2018 and 2017 are as follows:
In millions of yen
Security
services

Goodwill .......................... ¥62,877
Accumulated
impairment
losses............................... (1,723)
March 31, 2016 ............ 61,154
Goodwill acquired
during the year .........
110
Disposal ...........................
—
Impairment
losses............................... (1,156)
Translation
adjustment..................
(246)
Goodwill .......................... 62,741
Accumulated
impairment
losses............................... (2,879)
March 31, 2017 ............ 59,862
Goodwill acquired
during the year .........
38
Disposal ...........................
—
Impairment
losses...............................
—
Translation
adjustment..................
9
Goodwill .......................... 62,788
Accumulated
impairment
losses............................... (2,879)
March 31, 2018 ......... ¥59,909

Fire
protection
services

Medicalservices

Geographic
information
services

BPO and ICT
services

Real estateand otherservices¥1,942¥9,399

Total¥4,580¥17,643¥1,962¥ 98,403—
1,942(5,350)
4,049

(738)
3,842

(175)
17,468

(135)
1,827

(8,121)90,282

—
—

—
—

—
—

—
—

—
—

110
—

—

—

(37)

—

—

(1,193)

—
1,942

—
9,399

(3)
4,577

—
17,643

—
1,962

(249)
98,264—
1,942(5,350)
4,049

(775)
3,802

(175)
17,468

(135)
1,827

(9,314)
88,950

57
—

—
—

—
—

17,471———

17,566
—

—

(11)

—

—

—

(11)

—
1,999

—
9,399

(2)
4,575

—
35,114—
1,962

7
115,837— (5,361)¥1,999 ¥4,038(775)(175) (135)(9,325)¥3,800 ¥34,939 ¥1,827 ¥106,512

Fireprotection
services

Geographic
information
services

In thousands of U.S. dollars
Security
services

Medicalservices

BPO and ICT
services

Real estateand otherservices

Total

Goodwill .......................... $591,896 $18,321 $88,670 $43,179 $166,443 $18,510 $ 927,019
Accumulated
impairment
losses............................... (27,160)— (50,472) (7,311)(1,651) (1,274)(87,868)
March 31, 2017 ............ 564,736 18,321 38,198 35,868 164,792 17,236
839,151
Goodwill acquired
during the year .........
358
538
—
— 164,821—
165,717
Disposal ...........................
—
—
—
—
—
—
—
Impairment
losses...............................
—
—
(104)
—
—
—
(104)
Translation
adjustment..................
85
—
—
(19)
—
—
66
Goodwill .......................... 592,339 18,859 88,670 43,160 331,264 18,510 1,092,802
Accumulated
impairment
losses............................... (27,160)— (50,576) (7,311)(1,651) (1,274)(87,972)
March 31, 2018 ......... $565,179 $18,859 $38,094 $35,849 $329,613 $17,236 $1,004,830

Impairment losses on goodwill recognized in the above table aremainly due to decreases in the estimated fair value of reporting units ineach segment mainly caused by decreases in projected cash flows. The
fair value is determined based on the estimated present value of future
cash flows.

SECOM Annual Report 201865

13. Bank Loans and Long-Term Debt
Bank loans of ¥38,965 million ($367,594 thousand) and ¥42,099 million
at March 31, 2018 and 2017, respectively, are generally comprised of 30
to 365 day notes. The weighted average interest rate was 0.76 percent
and 0.87 percent at March 31, 2018 and 2017, respectively. Substantiallyall of these loans are borrowed from banks. The Company has enteredinto basic agreements with these banks which state that, with respect toall present or future loans with such banks, collateral (including sums on
deposit with such banks) or guarantors shall be provided immediately
upon request. Further, any collateral furnished pursuant to such agreements or otherwise will be applicable to all indebtedness to such banks.
The Company has not been requested to submit such additional
security.
At March 31, 2018, Nohmi Bosai Ltd., a subsidiary of the parent company, had an unused committed line of credit from a short-term arrangement of ¥4,000 million ($37,736 thousand). The line of credit expires inMarch 2021. Under the agreement, Nohmi Bosai Ltd. is required to pay
commitment fees, at an annual rate of 0.15 percent, on the unused portion of the line of credit. At March 31, 2018, the Company had overdraft
agreements with 35 banks and its unused lines of credit amounted to¥66,547 million ($627,802 thousand). The Company incurs no fee on theunused portion of these overdraft agreements. The overdraft agreements expire in the period from April 2018 to March 2019. The Company
has the ability and intent to extend these overdraft agreements undersimilar terms and conditions.
Long-term debt at March 31, 2018 and 2017 comprises the following:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2017

2018

2018

Loans, principally from banks due
2017–2033 with interest rates
ranging from 0.08% to 14.00%:
Secured ....................................................................... ¥14,545 ¥16,799
Unsecured................................................................. 25,106
24,435
0.43% unsecured bonds due 2018 ..................
—
100
0.38% unsecured bonds due 2021 ..................
490
486
0.26% unsecured bonds due 2021 ..................
70—
0.25% unsecured bonds due 2021 ..................
70—
0.31% unsecured bonds due 2023 ..................
40—
0.40% unsecured bonds due 2024 ..................
26—
0.29% unsecured bonds due 2022 ..................
40—
Unsecured bonds due 2017–2027
with floating interest rates basedon 6-month Japanese yen TIBOR ................... 5,299
7,752
Obligations under capital leases,
due 2017–2043 (Note 19) ................................... 24,246
24,192............................................................................. 69,932
73,764
Less: Portion due within one year .................... (19,632) (19,615)............................................................................. ¥50,300 ¥54,149$137,217
236,849
—
4,623
660
660
377
245
377
49,992
228,736
659,736(185,208)$474,528

Assets pledged as collateral for bank loans and long-term debt at
March 31, 2018 and 2017 are as follows:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2017

2018

Time deposits................................................................. ¥ 1,437 ¥ 1,654
Short-term and long-term receivables ..........
6,130
6,209
Investment securities ................................................
1,332
1,321
Property, plant and equipment .......................... 43,510 49,575
Other intangible assets ............................................ ¥ 818 ¥ 818$ 13,557
57,83012,566
410,472$ 7,717

2018

66

SECOM Annual Report 2018

The aggregate annual maturities on long-term debt at March 31, 2018
are as follows:
Years ending March 31

2019 .....................................................................................
2020 .....................................................................................
2021 .....................................................................................
2022 .....................................................................................
2023 .....................................................................................
Thereafter .........................................................................
...............................................................................................

In millions of yen

In thousands of
U.S. dollars¥19,632
16,123
12,330
6,899
5,071
9,877
¥69,932$185,208
152,104
116,32165,08547,84093,178$659,736

14. Insurance-Related Operations
Secom General Insurance Co., Ltd. (“Secom Insurance”), a subsidiary of
the parent company, maintains accounting records as noted in Note 2 inaccordance with Japanese GAAP, which vary in certain respects from U.S.
GAAP. Those differences are principally, (a) that insurance acquisition
costs are charged to expense when incurred under Japanese GAAP
whereas under U.S. GAAP, those costs are deferred and amortized generally over the premium-paying period of the insurance policies, (b) thatliabilities related to incurred but not reported claims are computed
based on related regulations in Japan whereas under U.S. GAAP, thoseliabilities are computed based on past experience for unreported losses,and (c) that unearned premiums are calculated based on the documents
authorized by the Supervisory Authorities in Japan whereas under U.S.
GAAP, unearned premiums are reflected based on the lapse andsurrender over the contract period.
In addition, under certain property and casualty insurance contracts
with a refund clause and long-term insurance policies that provide
refunds at maturity, such as personal accident and fire, the policyholder
receives a refund if premiums have been fully paid unless a substantial
settlement (as defined in the policy) has occurred. The Company has
provided for such refundable amounts by classifying a portion of the net
premiums written, together with interest thereon, as investment deposits by policyholders. Contract and policy terms are principally five years.
For purposes of preparing the consolidated financial statements,
appropriate adjustments have been made to reflect such items inaccordance with U.S. GAAP.
The net equity of Secom Insurance at March 31, 2018 and 2017 was¥75,968 million ($716,679 thousand) and ¥73,757 million, respectively.
Net sales and operating revenue of Secom Insurance include net realized investment gains and losses, including gains and losses on sales of
securities, losses on other-than-temporary impairment of investment
securities and impairment losses on long-lived assets. Net realized investment gains and losses, including losses on other-than-temporary impairments, for the years ended March 31, 2018, 2017 and 2016 were gains of¥694 million ($6,547 thousand), ¥1,004 million and ¥473 million, respectively. Losses on other-than-temporary impairments of investment securities for the years ended March 31, 2018, 2017 and 2016 were ¥142
million ($1,340 thousand), ¥105 million and ¥147 million, respectively.
15. Pension and Severance Costs
Employees of the parent company and its domestic subsidiaries
whose services are terminated are, under most circumstances, eligible
for lump-sum benefits and/or eligible for pension benefits.

The parent company and certain domestic subsidiaries have adopted
a cash balance pension plan and a defined contribution pension plan.
Benefits under the cash balance pension plan are calculated as a certain
percentage of employees’ annual income over their period of service,plus interest calculated as the 3-year average yield for 10-year government bonds. The defined contribution pension plan was established in
April 2003, by transferring a portion equivalent to 20 percent of the cash
balance pension plan, including portions funded in prior periods. A
specified percentage of employees’ annual income is contributed to thedefined contribution pension plan.
In April 2005, the parent company and certain domestic subsidiaries
transferred an additional portion of the cash balance pension plan to thedefined contribution pension plan. Accordingly, the ratio of the accumulated amount in the cash balance pension plan and the amount of contributions to the defined contribution pension plan changed to 70
percent and 30 percent, including portions funded in prior periods.
Net periodic pension and severance costs for the years ended
March 31, 2018, 2017 and 2016 are as follows:
In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2017

2018

2016

Net periodic pension andseverance costs:
Service cost .......................................... ¥7,996 ¥7,889 ¥7,739
Interest cost .........................................
404
349
718
Expected return onplan assets .......................................... (3,109) (2,919) (2,756)
Amortization of priorservice benefit .................................
(306)(966) (1,504)
Recognized actuarial loss ............
287
754
714
Net periodic pension
and severance costs ............... ¥5,272 ¥5,107 ¥4,911

2018

In thousands of
U.S. dollars

March 31

March 31

2018

2017

2018

¥41,409¥35,282$390,651(29,384)¥12,025(29,636)¥ 5,646(277,208)$113,443

Other changes in plan assets and benefit obligations recognized inother comprehensive income (loss) for the year ended March 31, 2018
are summarized as follows:
In millions of yen

In thousands of
U.S. dollars(¥7,597)(287)
306(¥7,578)($71,670)(2,708)2,887($71,491)

Current year actuarial gain .........................................
Amortization of actuarial loss ...................................
Amortization of prior service benefit ...................

Amounts recognized in accumulated other comprehensive income(loss) at March 31, 2018 and 2017 consist of:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

(29,330)

2018

2017

2018

¥751
227
¥978

¥8,635(79)¥8,556$7,0842,142$9,226(2,887)
2,708$49,736

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2017

2018

¥111,032
7,889
349(2,189)(5,449)—$1,053,132
75,435
3,811(12,085)(56,774)
5,575

111,632

1,069,094

2018

Prepaid pension andseverance costs ................................................
Accrued pension andseverance costs ................................................
Net amount recognized..............

In millions of yen$75,437
3,811

The changes in benefit obligation, plan assets and funded status are
as follows:

Change in benefit obligation:
Benefit obligation
at beginning of year ............................ ¥111,632
Service cost .................................................
7,996
Interest cost ................................................
404
Actuarial (gain) loss ................................
(1,281)
Benefits paid ...............................................
(6,018)Acquisition ...................................................
591
Benefit obligation
at end of year........................................... 113,324
Change in plan assets:
Fair value of plan assets
at beginning of year ............................ 117,278
Actual return on plan assets .............
9,425
Employer contribution.........................
2,396
Benefits paid ...............................................
(4,139)Acquisition ...................................................
389
Fair value of plan assets
at end of year........................................... 125,349
Funded status
at the end of year ........................................ ¥ 12,025

Amounts recognized in the consolidated balance sheets at March 31,2018 and 2017 consist of:Actuarial loss...............................................................
Prior service benefit ...............................................
Net amount recognized....................

The estimated prior service benefit and actuarial loss for the defined
benefit pension plans that will be amortized from accumulated othercomprehensive income (loss) into net periodic benefit cost over the
next year are ¥2 million ($19 thousand) and ¥197 million ($1,858
thousand), respectively.
The accumulated benefit obligation for the pension plan was¥113,039 million ($1,066,406 thousand) and ¥111,278 million at March
31, 2018 and 2017, respectively.
The projected benefit obligation, accumulated benefit obligation andfair value of plan assets for the pension plans with accumulated benefit
obligation in excess of plan assets were ¥49,470 million ($466,698
thousand), ¥49,186 million ($464,019 thousand) and ¥29,006 million($273,642 thousand), respectively, at March 31, 2018, and ¥47,779 million,¥47,425 million and ¥25,367 million, respectively, at March 31, 2017.
The Company uses March 31 as the measurement date for thedomestic pension plan.
Weighted-average assumptions used to determine the benefit
obligation at March 31, 2018 and 2017 are as follows:
March 31111,761
6,797
2,343(3,623)—

1,106,396
88,91522,603(39,047)
3,670

117,278

1,182,537¥ 5,646$ 113,443

Discount rate .....................................................................................................
Rate of compensation increase .............................................................

2018

2017

0.4%
2.6%

0.4%
2.7%

SECOM Annual Report 201867

Weighted-average assumptions used to determine net pension andseverance costs for the years ended March 31, 2018, 2017 and 2016 are
as follows:
Years ended March 31

Discount rate ..........................................................................
Expected return on plan assets ..................................
Rate of compensation increase ..................................

2018

2017

2016

0.4%
3.0%
2.7%

0.3%
3.0%
2.6%

0.8%
3.0%
2.7%

The Company determines the expected long-term rate of return
based on the expected long-term return of the various asset categories
in which it invests. The Company considers the current expectations for
future returns and the actual historical returns of each plan asset
category.
The Company’s investment policy is designed to ensure that sufficientplan assets are available to provide future payments of pension benefits
to the eligible plan participants. The policy uses target allocations for theindividual asset categories. Plan assets are invested primarily in equity
and debt securities, and pooled funds with the objective to minimize risk
and achieve the expected rate of return. The investment results are
periodically checked and asset allocation is adjusted as necessary.
The following table represents the fair value of the Company’s pension
plan assets at March 31, 2018 and 2017. The three levels of inputs used tomeasure fair value are more fully described in Note 22.

In millions of yen
March 31, 2017
Level 1

Cash and cash
equivalents...........................
Equity securities
Japanesecompanies......................
Foreigncompanies......................
Debt securities
Government
bonds ................................
Non-government
bonds ................................
Pooled funds .........................
Call loans ..................................
Insurance contracts...........
Other ..........................................

Level 2

¥ 6,482¥—¥

Level 3

Total—

¥ 6,482

25,495424—

25,919

3,626

—

—

3,626

2,128

571

—

2,699

—
731
—
—
—
¥38,462

2,055
32,977
3,256
12,251
231¥51,765—
26,273——778¥27,051

2,055
59,981
3,256
12,251
1,009¥117,278* The plan’s government bonds include approximately 5% Japanese bonds and 95%
foreign bonds. The non-goverment bonds are all foreign bonds.
* The pension investment trust fund included in the plan’s pooled funds is classified as
Level 2, and invests approximately 60% in equity securities, 30% in debt securities and
10% in other investments. The unquoted beneficial certificate of security investment
trust included in the plan’s pooled funds is classified as Level 3.

In millions of yen

In thousands of U.S. dollars

March 31, 2018
Level 1

Cash and cash
equivalents...........................
Equity securities
Japanesecompanies......................
Foreigncompanies......................
Debt securities
Government
bonds ................................
Non-government
bonds ................................
Pooled funds .........................
Call loans ..................................
Insurance contracts...........
Other ..........................................

¥ 8,142

Level 2¥—

Level 3

¥

—

¥

8,142

23,703434—

24,137

3,837

—

—

3,837

2,515

494

—

3,009

—
595
—
—
—
¥38,792

2,032
39,134
5,314
13,127355¥60,890—
24,433——
1,234¥25,667

2,032
64,162
5,314
13,127
1,589¥125,349* The plan’s government bonds include approximately 5% Japanese bonds and 95%
foreign bonds. The non-goverment bonds are all foreign bonds.
* The pension investment trust fund included in the plan’s pooled funds is classified as
Level 2, and invests approximately 50% in equity securities, 40% in debt securities and
10% in other investments. The unquoted beneficial certificate of security investment
trust included in the plan’s pooled funds is classified as Level 3.

68

SECOM Annual Report 2018

March 31, 2018

Total

Level 1

Cash and cash
equivalents...........................
Equity securities
Japanesecompanies......................
Foreigncompanies......................
Debt securities
Government
bonds ................................
Non-government
bonds ................................
Pooled funds .........................
Call loans ..................................
Insurance contracts...........
Other ..........................................

$ 76,811

Level 2$

— $Level 3

—

Total

$

76,811

223,613

4,095—

227,708

36,198——36,19823,727

4,660—

28,387

19,170—369,188 230,500
50,132—
123,839—
3,349
11,642$574,433 $242,142

19,170605,301
50,132
123,839
14,991$1,182,537

—
5,613
—
—
—
$365,962* The plan’s government bonds include approximately 5% Japanese bonds and 95%
foreign bonds. The non-goverment bonds are all foreign bonds.
* The pension investment trust fund included in the plan’s pooled funds is classified as
Level 2, and invests approximately 50% in equity securities, 40% in debt securities and
10% in other investments. The unquoted beneficial certificate of security investment
trust included in the plan’s pooled funds is classified as Level 3.

The following table represents the changes in Level 3 investments forthe years ended March 31, 2018 and 2017.
Level 3 investments, mainly in unquoted certificates of beneficial
interests in securities investment trust included in the plan’s pooled
funds, are at the discretion of the administrator of the fund. Their fairvalues are estimated based on unobservable inputs provided by theadministrator of the fund.

In millions of yen

16. Exchange Gains and Losses
Other expenses for the years ended March 31, 2018, 2017 and 2016
includes net exchange losses of ¥213 million ($2,009 thousand), ¥454
million and ¥557 million, respectively.
17. Income Taxes
Total income taxes for the years ended March 31, 2018, 2017 and 2016
are allocated as follows:Year ended March 31, 2018
Pooled
funds

Other

Total

Balance at beginning of year ................................... ¥26,273 ¥ 778 ¥27,051
Actual return on plan assets:
Relating to assets sold during the year........
(1,047)68(979)
Relating to assets held at end of year ...........
615
(78)
537
Purchases, sales and settlements, net.................
(1,408)466(942)
Transfer to Level 3, net..................................................
———
Balance at end of year .................................................. ¥24,433 ¥1,234 ¥25,667
In millions of yen
Year ended March 31, 2017

Balance at beginning of year ...................................
Actual return on plan assets:
Relating to assets sold during the year........
Relating to assets held at end of year ...........
Purchases, sales and settlements, net.................
Transfer to Level 3, net..................................................
Balance at end of year ..................................................

Pooled
funds

Other

Total

¥26,749¥465¥27,214595(1,849)473
305¥26,273

54
(25)
284
—
¥778

649
(1,874)757
305¥27,051

In thousands of U.S. dollars
Year ended March 31, 2018
Pooled
funds

Other

Total

Balance at beginning of year ................................... $247,858 $ 7,340 $255,198
Actual return on plan assets:
Relating to assets sold during the year........
(9,877)642(9,235)
Relating to assets held at end of year ...........
5,802
(736)
5,066
Purchases, sales and settlements, net................. (13,283)
4,396(8,887)
Transfer to Level 3, net..................................................
———
Balance at end of year .................................................. $230,500 $11,642 $242,142

The Company expects to contribute ¥2,235 million ($21,085 thousand)to its domestic defined benefit plans in the year ending March 31, 2019.
The following benefit payments, which reflect future service, as
appropriate, are expected to be paid.
Years ending March 31

2019 .....................................................................................
2020 .....................................................................................
2021 .....................................................................................
2022 .....................................................................................
2023 .....................................................................................
2024–2028 .......................................................................

In millions of yen

In thousands of
U.S. dollars¥ 5,551
5,371
5,535
5,659
5,824
29,942¥ 52,368
50,67052,21753,38754,943
282,472

The parent company and certain subsidiaries have defined contribution pension plans. The contributions to the defined contribution pension plans for the years ended March 31, 2018, 2017 and 2016 were
¥1,851 million ($17,462 thousand), ¥2,192 million and ¥1,796 million,
respectively.

2018

Consolidated income taxes
from continuing
operations ............................................. ¥48,107
Shareholders’ equity—
accumulated othercomprehensive
income (loss):
Unrealized gains
on securities ...................................
155
Unrealized gains
on derivative
instruments.....................................
—
Pension liability
adjustments.................................... 2,332
Foreign currencytranslation
adjustments....................................
662............................................................ ¥51,256

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2016

2018

¥47,012 ¥40,312$453,840

2017

1,244

(3,447)

1,462

—

(5)

—

1,876

(2,926)22,000(358)(783)¥49,774 ¥33,151

6,245$483,547

The parent company and its domestic subsidiaries are subject to anumber of income taxes. As a result of revisions to domestic laws during
the third quarter ended December 31, 2015, and the fourth quarters
ended March 31, 2016, the statutory income tax rate in Japan, which wasapproximately 32.9 percent for the year ended March 31, 2016,
decreased to approximately 30.7 percent for the years ended March 31,2017 and 2018.
Reconciliations of the differences between income taxes computed atstatutory tax rates and consolidated income taxes from continuing
operations are as follows:2018

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2016

2018

2017

Income taxes computed
at statutory tax rate.......................... ¥46,293 ¥44,584 ¥40,290
Increase (decrease)resulting from:
Provision of valuation
allowance......................................... 2,116
714
1,104
Per capita tax ....................................
882
867
845
Reversal of valuation
allowance.........................................
(835) (1,048) (3,697)
Net effect of changes incorporate tax rates .....................
660
512
464
Other, net............................................ (1,009)
1,383
1,306
Consolidated income
taxes from continuing
operations ................................. ¥48,107 ¥47,012 ¥40,312$436,726

19,962
8,321(7,877)
6,227(9,519)$453,840

SECOM Annual Report 2018

69

The significant components of deferred tax assets and liabilities at
March 31, 2018 and 2017 are as follows:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2017

2018

2018

Deferred tax assets:
Loss carryforwards ........................................
Accrued pension andseverance costs ............................................
Property, plant and equipment ............
Deferred revenue ..........................................
Adjustment of book value atthe date of acquisition
Land and buildings ................................
Other assets ................................................
Accrued bonus................................................
Vacation accrual .............................................
Investment securities ..................................
Intangible assets ............................................
Allowance for doubtful accounts........
Write-down on real estate
inventories.......................................................
Other .....................................................................
Gross deferred tax assets ....................
Less: Valuation allowance ...................
Total deferred tax assets ......................
Deferred tax liabilities:
Adjustment of book value atthe date of acquisition
Intangible assets ......................................
Land and buildings ................................
Other assets ................................................
Prepaid pension andseverance costs ............................................
Unrealized gains on securities...............
Investments in affiliatedcompanies.......................................................
Deferred installation costs .......................
Other .....................................................................
Gross deferred tax liabilities ..............
Net deferred tax assets(liabilities) ............................................

¥ 9,138¥ 9,393$ 86,208

8,637
7,448
7,176

8,851
8,300
7,328

81,481
70,264
67,698

6,153
399
5,813
4,289
2,139
1,798
1,774

5,995
402
5,623
3,585
—
1,772
1,831

58,047
3,764
54,84040,462
20,17916,962
16,736631
12,00367,398(27,509)39,889837
10,97564,892(25,647)
39,245

5,953
113,236
635,830(259,519)
376,311(9,690)(4,117)(951)(7,858)(4,211)(868)(91,415)(38,840)(8,972)(12,646)(9,570)(10,820)(9,419)(119,302)(90,283)(6,458)(5,204)(4,544)(53,180)(5,303)(5,276)(10,000)(53,755)(60,925)(49,094)(42,867)(501,698)(¥13,291) (¥14,510)($125,387)

The valuation allowance principally relates to deferred tax assets ofsubsidiaries with operating loss carryforwards, for tax purposes, that are
not expected to be realized. The net change in the total valuation allowance for the years ended March 31, 2018, 2017 and 2016 was an increaseof ¥1,862 million ($17,566 thousand), and an increase of ¥599 million anda decrease of ¥1,514 million, respectively.
In assessing the realizability of deferred tax assets, the Company’s
management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of futuretaxable income during the periods in which those temporary differences
become deductible. The Company’s management considered thescheduled reversal of deferred tax liabilities, projected future taxable
income and tax planning strategies in making this assessment. Basedupon the level of historical taxable income and projections for futuretaxable income over the periods in which the deferred tax assets are
deductible, the Company’s management believes it is more likely than
not that the Company will realize the benefits of these deductible
differences, net of the existing valuation allowance at March 31, 2018and 2017.

70

SECOM Annual Report 2018

Net deferred tax assets (liabilities) at March 31, 2018 and 2017 arereflected in the accompanying consolidated balance sheets under thefollowing captions:Deferred income taxes(Current assets) .............................................
Deferred income taxes(Other assets) .................................................
Other current liabilities(Current liabilities) .......................................
Deferred income taxes(Long-term liabilities)................................
Net deferred tax assets(liabilities) ............................................

In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2018

2017

2018

—

¥12,611

13,2398,213

124,896—(1,519)—(26,530)(33,815)(250,283)(¥13,291)(¥14,510)($125,387)

¥

$

—

The Company has not recognized deferred tax liabilities for a portionof undistributed earnings of foreign subsidiaries of ¥32,875 million($310,142 thousand) totaling ¥608 million ($5,736 thousand) at
March 31, 2018 as they are not expected to be remitted in theforeseeable future.
At March 31, 2018, the operating loss carryforwards of domestic
subsidiaries amounted to ¥18,942 million ($178,698 thousand) and areavailable for offsetting against future taxable earnings of such
subsidiaries for up to nine years, as follows:
Expires in the years ending March 31

2019 .......................................................................................
2020 .......................................................................................
2021 .......................................................................................
2022 .......................................................................................
2023 .......................................................................................
2024 .......................................................................................
2025 .......................................................................................
2026 .......................................................................................
2027 .......................................................................................
...................................................................................................

In millions of yen

In thousands of
U.S. dollars¥ 5,256
327
197
2,302
1,300
2,304
3,477
2,266
1,513
¥18,942$ 49,585
3,085
1,858
21,717
12,264
21,73632,802
21,377
14,274$178,698

The operating loss carryforwards of overseas subsidiaries at March 31,2018 amounted to ¥10,273 million ($96,915 thousand), a part of which will
begin to expire in the year ending March 31, 2019.
The total amount of unrecognized tax benefits for the years ended
March 31, 2018, 2017 and 2016 was insignificant. Also, there were no
significant movements in the gross amounts of unrealized tax benefits
and the amounts of interest and penalties recognized due to theunrecognized tax benefits during the years ended March 31, 2018, 2017and 2016.
Although the Company believes its estimates of unrecognized tax
benefits are reasonable, uncertainties regarding the final determinationof income tax audit settlements and any related litigation could affectthe total amount of unrecognized tax benefits in future periods. Basedon the information available as of March 31, 2018, the Company does
not expect significant changes to the unrecognized tax benefits within
the next twelve months.
The Company files tax returns in Japan and various foreign jurisdictions. In Japan, the Company is no longer subject to regular income tax
examinations by the tax authorities for years before 2012. In other foreign tax jurisdictions, major subsidiaries are no longer subject to income
tax examinations by tax authorities for years before 2017, with some
exceptions.

18. Shareholders’ Equity(1) Additional Paid-In Capital
The change in additional paid-in capital includes the effect of changes
in the Company’s ownership interest in its consolidated subsidiaries.
The net income attributable to SECOM CO., LTD. and transfers from (to)noncontrolling interests for the years ended March 31, 2018, 2017 and2016 are as follows:2018

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2016

2018

2017

Net income attributable
to SECOM CO., LTD. ............................ ¥96,623 ¥91,387 ¥84,072
Net transfers from (to)noncontrolling interests .............
24
(16)
(324)
Change from net income
attributable to SECOM CO.,LTD. and transfers from (to)noncontrolling interests ................. ¥96,647 ¥91,371 ¥83,748$911,537
226$911,763(2) Retained Earnings
The Japanese Companies Act provides that an amount equal to 10
percent of surplus distributed by the parent company and its Japanesesubsidiaries be appropriated as a legal reserve until the aggregate
amount of additional paid-in capital and legal reserve equals 25 percentof the common stock account.
The amount available for dividends under the Japanese Companies
Act is based on the amount recorded in the parent company’s nonconsolidated statutory financial statements in accordance with Japanese
GAAP. Such amount was ¥583,102 million ($5,500,962 thousand) at
March 31, 2018.
Subsequent to March 31, 2018, the parent company’s Board of
Directors declared a year-end cash dividend of ¥80 ($0.75) per share,
totaling ¥17,461 million ($164,726 thousand), to shareholders of record
on March 31, 2018. The dividend declared was approved at the generalshareholders’ meeting held on June 26, 2018. Dividends are recorded in
the year they are declared.
The Company has made it a basic policy to distribute dividends twicea year, the interim dividend whose record date is September 30 eachyear and commenced from the year ended March 31, 2015, and theyear-end dividend whose record date is March 31 each year. The interim
dividend is determined by the Board of Directors and the year-end
dividend is determined by the General Meeting of Shareholders.
Cash dividends per share are computed based on dividends paid forthe year.
(3) Common Stock in Treasury
The Company may repurchase its common stock from the market
pursuant to the Japanese Companies Act. There are certain restrictions
on payment of dividends in connection with the treasury stock repurchased.

(4) Other Comprehensive Income (Loss)
Components of other comprehensive income (loss) for the years
ended March 31, 2018, 2017 and 2016 are as follows:
In millions of yen
Tax(expense)or benefit

Net-of-tax
amount(¥ 413)

¥ 906

258

(650)

—

—

—

—

(2,315)

5,380

(17)

(4)

(662)

1,952

(¥3,149)¥7,584¥7,048(¥1,586)¥5,462(1,204)

342

(862)

—

—

—

—

—

—

6,656

(1,869)

4,787

(105)

(7)

(112)

(6,084)358(5,726)¥6,311(¥2,762)¥3,549Pre-tax
amount

For the year ended March 31, 2018:
Unrealized gains on securities—
Unrealized gains or losses
arising during the period ......................... ¥ 1,319
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income............................................
(908)
Unrealized gains on derivative
instruments—
Unrealized gains or losses
arising during the year ..............................
—
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income............................................
—
Pension liability adjustments—
Unrealized gains or losses
arising during the period .........................
7,695
Less: Reclassification
adjustment for gains
or losses realized
in net income ........................................
13
Foreign currency
2,614translation adjustments ..................................
Other comprehensive
income (loss) ............................................. ¥10,733
For the year ended March 31, 2017:
Unrealized gains on securities—
Unrealized gains or losses
arising during the period .........................
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income............................................
Unrealized gains on derivative
instruments—
Unrealized gains or losses
arising during the year ..............................
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income............................................
Pension liability adjustments—
Unrealized gains or losses
arising during the period .........................
Less: Reclassification
adjustment for gains
or losses realized
in net income ........................................
Foreign currencytranslation adjustments ..................................
Other comprehensive
income (loss) .............................................

SECOM Annual Report 2018

71

In millions of yen
Pre-tax
amount

For the year ended March 31, 2016:
Unrealized gains on securities—
Unrealized gains or losses
arising during the period .........................
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income............................................
Unrealized gains on derivative
instruments—
Unrealized gains or losses
arising during the year ..............................
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income............................................
Pension liability adjustments—
Unrealized gains or losses
arising during the period .........................
Less: Reclassification
adjustment for gains
or losses realized
in net income ........................................
Foreign currencytranslation adjustments ..................................
Other comprehensive
income (loss) .............................................

(¥ 9,756)

Tax(expense)or benefit¥2,991Net-of-tax
amountReclassification adjustments for gains or losses realized in net income(pre-tax amount) included in the consolidated statements of income forthe years ended March 31, 2018, 2017 and 2016 are as follows:
In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2017

2016

2018

(¥694) (¥1,007)(¥981)($6,547)

(269)

(268)

(929)

(2,538)

55

71

396

519

—

—

(14)

—

(19)

(212)

(790)

(179)

¥ 32

¥ 107

¥ 73

$ 301

(¥ 6,765)
2018(1,514)456(1,058)

—

—

—

(14)

5

(9)

(8,611)

2,551(6,060)

(717)

375

(342)

(4,017)783(3,234)(¥24,629)¥7,161(¥17,468)

In thousands of U.S. dollars
Pre-tax
amountTax(expense)or benefit

Net-of-tax
amount

For the year ended March 31, 2018:
Unrealized gains on securities—
Unrealized gains or losses
arising during the period ...................... $ 12,443 ($ 3,896) $ 8,547
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income.........................................
(8,566)2,434(6,132)
Unrealized gains on derivative
instruments—
Unrealized gains or losses
arising during the year ...........................
———
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income.........................................
———
Pension liability adjustments—
Unrealized gains or losses
arising during the period ......................
72,595(21,840)
50,755
Less: Reclassification
Less: adjustment for gains
Less: or losses realized
Less: in net income ...................................
122
(160)
(38)
Foreign currency
24,660(6,245)
18,415translation adjustments ...............................
Other comprehensive
income (loss) .......................................... $101,254 ($29,707) $71,547

Unrealized gains on
securities—
Net sales andoperating revenue .....................
Gain on sales of
securities, net.................................
Loss on other-thantemporary impairment ofinvestment securities ...............
Unrealized gains onderivative instruments—
Other income ..................................
Pension liability
adjustments—
Net periodic pension
and severance costs(Note 15) ...........................................
Equity in net income ofaffiliated companies ........................

19. Lessee
The Company leases certain office space, employee residential facilities, equipment for armored car services and transportation equipment.
Some leased buildings, and equipment for armored car services andtransportation equipment are held under capital leases. Other leases areclassified as operating leases.
On April 23, 1996, the Company entered into a long-term lease agreement for a building and land in Mitaka, Tokyo. The lease term is 30 years
beginning May 1, 1996. On July 15, 2010, the Company also entered intoa long-term lease agreement for the adjoining land and buildings. The
lease term is also 30 years beginning July 15, 2010. For financial reporting
purposes, the portion of these lease arrangements relating to the building has been classified as a capital lease; accordingly, an asset of approximately ¥7,209 million ($68,009 thousand) has been recorded in thebuildings and improvements account. The portion of the lease relating
to the land has been classified as an operating lease. The future minimum lease payment for the site at March 31, 2018 was ¥4,254 million($40,132 thousand).
A summary of leased assets under capital leases at March 31, 2018 and2017 is as follows:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2017

2018

¥ 8,452 ¥ 8,452$ 79,736

31,930125

308,151
2,811(21,723) (20,816)¥19,691 ¥19,691(204,934)$185,764

2018

Buildings and improvements.........................
Machinery, equipment
and automobiles .................................................
Other intangible assets ......................................
Accumulated depreciation
and amortization.................................................
..............................................................................

32,664298

Depreciation and amortization expenses for assets under capitalleases for the years ended March 31, 2018, 2017 and 2016 were ¥6,313
million ($59,557 thousand), ¥6,785 million and ¥3,495 million,
respectively.
72

SECOM Annual Report 2018

The following is a schedule by year of future minimum lease payments
under capital leases and the present value of the net minimum lease
payments at March 31, 2018:
Years ending March 31

2019 ...........................................................................................
2020 ...........................................................................................
2021 ...........................................................................................
2022 ...........................................................................................
2023 ...........................................................................................
Thereafter ...............................................................................
Total minimum lease payments ...............................
Less: Amount representing interest .......................
Present value of net minimum
lease payments (Note 13) ..........................................
Less: Current portion .......................................................
Long-term capital leaseobligations ....................................................................

In millions of yen

In thousands of
U.S. dollars¥ 6,967
5,489
3,968
2,692
1,694
10,96331,773(7,527)$ 65,726
51,78337,43425,396
15,981
103,425
299,745(71,009)24,246(6,386)

228,736(60,245)¥17,860$168,491

Rental expenses under operating leases for the years ended March 31,
2018, 2017 and 2016 were ¥25,513 million ($240,689 thousand), ¥25,359
million and ¥24,619 million, respectively. A significant portion of suchrentals relates to cancelable short-term leases for office space andemployee residential facilities, many of which are renewed upon
expiration.
On December 8, 2000, the Company entered into a lease agreement
for a building and land in Shibuya, Tokyo. The lease term is 20 years
beginning December 8, 2000. For financial reporting purposes, the leasehas been classified as an operating lease. Based on the agreement, theannual lease payment for the site is approximately ¥1,312 million($12,377 thousand) over a 20-year period.
The future minimum lease payments required under operating leases
that have initial or remaining noncancelable lease terms in excess of one
year at March 31, 2018 are as follows:
Years ending March 31

2019 ..........................................................................................
2020 ..........................................................................................
2021 ..........................................................................................
2022 ..........................................................................................
2023 ..........................................................................................
Thereafter ..............................................................................
Total future minimum lease
payments ......................................................................

In millions of yen

In thousands of
U.S. dollars¥10,979
9,180
8,334
7,342
7,053
24,623$103,575
86,60478,623
69,264
66,538232,292¥67,511$636,896

20. Lessor
The Company’s leasing operations consist principally of leasing of
security merchandise, security systems and real estate for offices andmedical institutions. Most of the security merchandise and security
systems on lease are classified as sales-type leases or direct-financing
leases. Other leases are classified as operating leases.

A summary of lease receivables under sales-type and direct-financing
leases at March 31, 2018 and 2017 is as follows:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2017

2018

¥63,766 ¥62,137(5,839) (4,787)(3,527) (4,911)
54,400 52,439(17,899) (16,769)¥36,501 ¥35,670$601,566(55,085)(33,273)
513,208(168,859)$344,349

2018

Total minimum lease payments
to be received .......................................................
Estimated executory cost .................................
Unearned income .................................................
Lease receivables, net .........................................
Less: Current portion ...........................................
Long-term lease receivables, net...........

The following is a schedule by year of future minimum lease payments
to be received under sales-type leases and direct-financing leases at
March 31, 2018:
Years ending March 31

In millions of yen

In thousands of
U.S. dollars¥20,251
16,317
11,666
8,456
4,879
2,197

$191,047
153,934
110,057
79,77446,02820,726¥63,766$601,566

2019 ..........................................................................................
2020 ..........................................................................................
2021 ..........................................................................................
2022 ..........................................................................................
2023 ..........................................................................................
Thereafter ..............................................................................
Total future minimum lease
payments to be received ....................................

A summary of investment in property under operating leases andproperty held for lease at March 31, 2018 and 2017 is as follows:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2017

2018

¥31,499 ¥33,754
30,578 32,160
662
662$297,160
288,472
6,245(12,725) (12,572)¥50,014 ¥54,004(120,047)$471,830

2018

Land ..............................................................................
Buildings and improvements.........................
Other intangible assets ......................................
Accumulated depreciation
and amortization .................................................
..............................................................................

The future minimum rentals under noncancelable operating leases at
March 31, 2018 are as follows:
Years ending March 31

2019 ..........................................................................................
2020 ..........................................................................................
2021 ..........................................................................................
2022 ..........................................................................................
2023 ..........................................................................................
Thereafter ..............................................................................
Total future minimum rentals .............................

In millions of yen

In thousands of
U.S. dollars¥1,942
162
162
162
162
2,748
¥5,338$18,321
1,528
1,528
1,528
1,528
25,925$50,358

SECOM Annual Report 201873

21. Fair Value of Financial Instruments
The following methods and assumptions were used to estimate thefair value of financial instruments in cases for which it is practicable. The
three levels of inputs used to measure fair value are more fully describedin Note 22.

The carrying amounts and estimated fair values of financial instruments, excluding, debt and equity securities, which are disclosed in
Notes 2 (7) and 7, at March 31, 2018 and 2017 are as follows:
In millions of yen
March 31

(1) Cash and Cash Equivalents; Time Deposits; Cash Deposits for armoredcar services; Notes and Accounts Receivable, Trade; Due from Subscribers;
Short-Term Receivables; Bank Loans; Notes and Accounts Payable, Trade;
Other Payables; Deposits Received; Accrued Income Taxes; and Accrued
Payroll
The carrying amounts approximate fair value because of the shortterm maturities of such instruments.
(2) Short-Term Investments; Investment Securities
The fair values of short-term investments and investment securities
are principally based on quoted market prices.
(3) Long-Term Receivables Including Current PortionLong-term receivables, including the current portion, are classified as
Level 2 and fair value is estimated based on the present value of future
cash flows through estimated maturity, discounted using estimatedmarket discount rates.
(4) Long-Term Debt Including Current PortionLong-term debt, including the current portion, is classified as Level
2 and fair value is estimated based on the present value of future cash
flows of each instrument discounted using the Company’s current
incremental borrowing rates for similar liabilities.
(5) Investment Deposits by Policyholders
The fair values of investment deposits by policyholders are classified
as Level 3 and estimated based on the present value of future cash flows,
discounted using the interest rates currently being offered for similar
contracts.
(6) Derivatives
The fair values of derivatives are estimated using current market
pricing models by obtaining quotes from financial institutions.

2017

2018
Carrying
amountNon-derivatives:
Assets—Long-term receivables
including current
portion (Less allowancefor doubtful accounts) .......... ¥58,996
Liabilities—
Long-term debt
including current
portion............................................ 69,931
Investment deposits
by policyholders ....................... 25,208
Derivatives:
Assets—Forward exchange
contract(Other current assets) ............
—
Liabilities—
Interest rate swaps(Other long-term
liabilities)........................................
33

Estimated
fair value

Carrying
amountEstimated
fair value¥59,356¥56,638¥57,440

69,93773,76473,794

26,212

27,691

29,023

—

2

2

33

59

59

In thousands of U.S. dollars
March 31, 2018
Carrying
amountNon-derivatives:
Assets—Long-term receivables including current
portion (Less allowance for doubtful
accounts) .............................................................................
Liabilities—
Long-term debt including current
portion...................................................................................
Investment deposits
by policyholders ..............................................................
Derivatives:
Assets—Forward exchange contract(Other current assets) ...................................................
Liabilities—
Interest rate swaps (Other long-term
liabilities)...............................................................................

Estimated
fair value$556,566 $559,962
659,726

659,783

237,811247,283

—

—

311

311

Limitation:
Fair value estimates are made at a specific point in time based on
relevant market information and information about financial
instruments. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and therefore cannot
be determined with precision. Changes in assumptions could
significantly affect the estimates.

74

SECOM Annual Report 201822. Fair Value Measurements
ASC 820, “Fair Value Measurements and Disclosures,” defines fair value as
the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for theasset or liability in an orderly transaction between market participants at
the measurement date. This accounting standard establishes a three-level
fair value hierarchy that prioritizes the inputs used to measure fair value asfollows:
Level 1— Inputs are quoted prices in active markets for identicalassets or liabilities.
Level 2— Inputs are quoted prices for similar assets or liabilities in
active markets, quoted prices for identical or similar assets
or liabilities in markets that are not active, inputs otherthan quoted prices that are observable, and inputs that arederived principally from or corroborated by observable
market data by correlation or other means.
Level 3— Inputs are derived from valuation techniques in which one
or more significant inputs or value drivers are unobservable, which reflect the reporting entity’s own assumptions
about the assumptions that market participants would use
in establishing a price.
The following table represents the Company’s assets and liabilities
that are measured at fair value on a recurring basis at March 31, 2018and 2017. Transfers between levels are recognized at the end of therespective reporting periods.
In millions of yen
March 31, 2018
Level 1

Assets:Cash equivalents ...........
Short-term
investments andinvestment
securities..........................
Derivatives(Other current
assets) ................................
Total assets ..............................
Liabilities:
Derivatives(Other long-term
liabilities)..........................
Total liabilities........................

¥

149

Level 2¥—

Level 3

¥

—

Total

¥

149

In millions of yen
March 31, 2017
Level 1

Level 2

Level 3

Total

Assets:Cash equivalents ...........
Short-term
investments andinvestment
securities..........................
Derivatives(Other current
assets) ................................
Total assets ..............................

152,088

31,74649,738233,572—¥152,2512¥31,748—¥49,7382¥233,737

Liabilities:
Derivatives(Other long-term
liabilities)..........................
Total liabilities........................

¥
¥

¥
¥

¥
¥

¥
¥

¥

163

¥

—
—

—

¥

59
59

—

¥

—
—

163

59
59

In thousands of U.S. dollars
March 31, 2018
Level 1

Level 2

Level 3

Total

Assets:Cash equivalents ........... $1,406
Short-term
investments andinvestment
securities.......................... 1,409,103
Derivatives(Other current
assets) ................................
—
Total assets ............................... $1,410,509

281,274

2,081,254——$390,877 $281,274—$2,082,660

Liabilities:
Derivatives(Other long-term
liabilities)........................... $Total liabilities......................... $

$
$

$
$

—
—

$

— $

390,877

311 $
311 $

—

—
—

$

1,406

311
311

149,365

41,43329,815

220,613—¥149,514—¥41,433—¥29,815—¥220,762

Cash Equivalents
All highly liquid investments with initial maturities of three months or lessare considered to be cash equivalents, and principally valued using quoted
prices for identical assets in markets that are not active.

¥
¥

¥
¥

¥
¥

¥
¥

Short-Term Investments and Investment Securities
Equity securities and debt securities classified as Level 1 assets are valued
using unadjusted quoted market prices in active markets with sufficientvolume and frequency of transactions.
Level 2 assets comprise principally debt securities, which are valued
using quoted prices for similar assets in active markets, or quoted prices
for identical or similar assets in markets that are not active.
Non-marketable securities classified as Level 3 assets are valued basedon unobservable inputs as the market for the assets was not active at themeasurement date. The fair value is determined by using a valuation
technique, such as the discounted cash flow model, which best reflects
the nature, characteristics and risks of each asset. These significant
unobservable inputs contain discount rates, exit timing and an EBITDA
multiple. An increase (decrease) in the discount rates, the later (earlier)exit and a decrease (increase) in the EBITDA multiple would result in adecrease (increase) in the fair value of non-marketable securities.

—
—

33
33

—
—

33
33

SECOM Annual Report 201875

The Company’s Level 3 investment securities that are measured at fairvalue on a recurring basis at March 31, 2018 and 2017, amounting to¥29,815 million ($281,274 thousand) and ¥49,738 million, respectively,
are primarily private equity investments. The valuation technique andsignificant unobservable inputs are as follows:
March 31, 2018
Valuation techniqueSignificant unobservable inputs

Range

Discounted cash flows

Discount rate
Exit timing
EBITDA multiple

20%–30%2018–2022
3.2x–8x

Valuation techniqueSignificant unobservable inputs

Range

Discounted cash flows

Discount rate
Exit timing
EBITDA multiple

20%–30%2017–2020
1.1x–42.2x

March 31, 2017

Derivative Financial Investments
Derivative financial instruments comprise forward exchange contracts,
interest rate swaps and others. These derivative instruments are valued
using observable market data and classified as Level 2 liabilities.
The following table represents the changes in Level 3 assets measured
on a recurring basis for the years ended March 31, 2018 and 2017.
In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2017

2018

Balance at beginning of year ............................ ¥49,738 ¥34,852
Total gains or losses(realized and unrealized):
Included in earnings...................................
5,964 14,016
Included in othercomprehensive income.........................
——
Purchases.................................................................
5,270
1,132
Sales ............................................................................ (29,479)(99)
Redemptions.........................................................
——
Cancellation of contract.................................
——
Foreign currency translation
adjustments......................................................... (1,678)(163)
Balance at end of year ........................................... ¥29,815 ¥49,738$469,226

2018

Changes in unrealized gains
or losses relating to instruments
still held at end of year:
Included in earnings................................... ¥399 ¥15,051

56,265—49,717(278,104)——(15,830)$281,274$

3,764

Total gains or losses (realized or unrealized) related to short-term
investments and investment securities are primarily included in net sales
and operating revenue or gain/loss on private equity investments, in the
consolidated statements of income.

76

SECOM Annual Report 2018

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Non-marketable equity securities with a carrying amount of ¥10,517
million ($99,217 thousand) were written down to their fair value of¥10,515 million ($99,198 thousand), resulting in an other-than-temporary
impairment charge of ¥2 million ($19 thousand), which was includedin earnings for the year ended March 31, 2018. For the year ended
March 31, 2017, non-marketable equity securities with a carrying
amount of ¥9,424 million were written down to their fair value of ¥9,414
million, resulting in an other-than-temporary impairment charge of¥10 million, which was included in earnings. All impaired non-marketable equity securities were classified as Level 3 assets as the Company
uses unobservable inputs such as future cash flows to value theseinvestments.
Long-lived assets (Note 11) and goodwill (Note 12) are also measured
at fair value on a nonrecurring basis. All impaired long-lived assets
and goodwill were classified as Level 3 assets as the Company uses
unobservable inputs to value these assets. These Level 3 assets are notsignificant.
23. Derivative Financial Instruments(1) Risk Management Policy
The Company utilizes derivative financial instruments in the normal
course of business to reduce exposure to fluctuations in interest rates.
The Company assesses interest rate risk by continually monitoringchanges in the exposure and by evaluating hedging opportunities. The
Company does not hold or issue derivative financial instruments for
trading purposes. The Company is also exposed to credit-related losses
in the event of non-perfomance by counterparties to derivative financial
instruments, but it is not expected that any counterparties will fail tomeet their obligations, because most of the counterparties are internationally recognized financial institutions and contracts are diversified
amongst a number of major financial institutions.
(2) Risk Management
The Company has exposure to the market risk of changes in interest
rates which relates primarily to its debt obligations. The Company
principally enters into interest rate swap agreements to manage fluctuations in cash flows resulting from changes in interest rates. Interest rate
swaps are used to change floating rates on debt obligations to fixed
rates by entering into receive-floating, pay-fixed interest rate swaps
under which the Company receives floating interest rate proceeds andmakes fixed interest rate payments, thereby effectively creating fixed-rate
debt.
(3) Cash Flow Hedges
The Company designates interest rate swap agreements as cash flow
hedges for variability of cash flows originating from floating rate borrowings. The effective portion of changes in fair values of derivative instruments designated as cash flow hedges of these debt obligations arereported in other comprehensive income (loss). These amounts arereclassified into current income in the same period that hedged items
affect current income. The ineffective portion of changes in fair values
are reported in income immediately.

(4) Derivative Instruments Not Designated as Hedges
The Company enters into interest rate swap agreements to reduce
exposure to fluctuations in interest rates relating primarily to debt
obligations and other agreements. Changes in fair value of these derivative financial instruments, which are not designated as hedges, arereported in current income.
Fair values of derivative instruments reflected in the consolidatedbalance sheets as of March 31, 2018 and 2017 are as follows:
Derivatives not designated as hedging instruments

Assets:Forward exchange
contract
Liabilities:
Interest rate swaps

In millions of yen

In thousands of
U.S. dollars

March 31

March 31

Location

2018

2017

2018

Other current
assets

¥ 0

¥ 2

$

Other long-term
liabilities

33

59

311

0

Effects of derivative instruments on the consolidated statements
of income for the years ended March 31, 2018, 2017 and 2016 are
as follows:
Gains (losses) reclassified from accumulated other comprehensive
income (loss) into income (effective portion)

Interest rate swaps

Forward exchange
contract
Interest rate swaps

25. Supplemental Cash Flow Information
Supplemental cash flow information is as follows:
In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2016

2018

¥ 1,379 ¥ 1,408
40,16538,832$ 12,057
528,019

2017

2018

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

Location

2018

2017

2016

2018

Other income

¥—

¥—

¥14

$—

Derivatives not designated as hedging instruments

24. Commitments and Contingent Liabilities
The Company has commitments outstanding at March 31, 2018 forthe purchase of property, plant and equipment of approximately ¥2,061
million ($19,443 thousand).
The Company provides guarantees to third parties mainly with respect
to bank loans extended to its affiliated companies and other entities.
Such guarantees are provided to enhance the credit standing of the affiliated companies and other entities. For each guarantee provided, theCompany would have to per form under the guarantee if the affiliatedcompanies and other entities default on a payment within the guaranteed period of one to five years. The maximum amount of undiscounted
payments the Company would have to make in the event of default
amounts to ¥1,853 million ($17,481 thousand) at March 31, 2018. The
carrying amounts of the liabilities recognized as the Company’s obligations under these guarantees at March 31, 2018 and 2017 were deemed
insignificant.
It is not anticipated that damages, if any, resulting from legal actions
will have a material impact on the Company’s consolidated financial
statements.

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

Location

2018

2017

2016

2018

Other income
Other income

¥—
27

¥ 2
38

¥—
16

$ —
255

Cash paid during theyear for:
Interest ..............................................
Income taxes .................................
Non-cash investing andfinancing activities:
Additions to obligations
under capital leases ................
Increase in land, buildings
and improvements byoffsetting long-term
receivables ...................................
Significant acquisitions(Note 4)—
Assets acquired ........................
Liabilities assumed.................
Considerations forequity ..........................................
Cash and cash
equivalents on hand ..........
Total considerations..............

¥ 1,278
55,970

6,355

6,035

2,543

59,953————34,570(8,020)——188,136(107,136)

326,132(75,660)

26,550—81,000250,472—(11,565)— ¥ 69,435(25,038)$225,434(2,654)¥23,896¥

SECOM Annual Report 201877

26. Segment Information
The Company discloses financial and descriptive information about
the Company’s reportable operating segments. The operating segments
reported below are the segments of the Company for which separate
financial information is available and for which operating profit/loss
amounts are evaluated regularly by management in deciding how toallocate resources and assess performance.
The Company has seven reportable business segments: security services, fire protection services, medical services, insurance services, geographic information services, BPO and ICT services, and real estate andother services.
The Company changed the designation of information and communication related services, which focused primarily on ICT related services
and data center services, to BPO and ICT services with the acquisitionof TMJ, Inc., a subsidiary newly consolidated from October 2017. The
Company acquired all shares in TMJ, Inc. which provides various BPO
related services including operation of call center services with the aimof expanding its business capabilities through integrating BPO related
services with existing information and communication related services.
Reportable segments are not reclassified by this change.
The security services segment provides various types of security services by utilizing the Company’s unique security systems and manufacturing and selling security merchandise. The fire protection services
segment provides various types of fire protection equipment, such as
automatic fire alarm and fire extinguishing and other fire protection systems for office buildings, plants, tunnels, ships, residences and culturalmonuments. The medical services segment provides intravenous solutions to patients at home, home-based nursing care services, medical
data transmission services by utilizing the Company’s network and leasing of real estate for medical institutions. In addition, the VIE, of which
the Company is the primary beneficiary manage hospitals and healthcare-related institutions. The insurance services segment includes the
non-life insurance-related underwriting business in the Japanese market.
The geographic information services segment includes surveying andmeasuring services and GIS services. The BPO and ICT services segment
includes various BPO related services, data center services, business continuity plan support, information security services and cloud services.
The real estate and other services segment includes development andsales of condominiums equipped with security and contingency planning features, leasing of real estate, construction and installation services
and other services.
Corporate expenses consist principally of general and administrative
expenses of the planning, personnel and administrative departments ofthe parent company and administrative departments of the foreign
holding company.
Intersegment sales are priced on a basis intended to approximate
amounts charged to unaffiliated customers.
Identifiable assets are those assets used exclusively in the operationsof each segment or which are allocated when used jointly. Corporate
assets, which are held by the parent company and the foreign holding
company for general and administrative facilities, consist principally ofcash and cash equivalents, short-term investments, investment securities, land, buildings and improvements, machinery, equipment andautomobiles.

78

SECOM Annual Report 2018

Information by business and geographic segments for the years
ended and as of March 31, 2018, 2017 and 2016 is as follows:(1) Business Segment Information

2018

Net sales andoperating revenue:
Security services—
External customers ............ ¥ 562,272
Intersegment.........................
3,144...................................................
565,416
Fire protection services—
External customers ............
136,559
Intersegment.........................
4,170...................................................
140,729
Medical services—
175,318
External customers ............
Intersegment.........................
185...................................................
175,503
Insurance services—
44,683External customers ............
Intersegment.........................
3,034...................................................
47,717
Geographic information
services—
External customers ............
50,906
Intersegment.........................
176...................................................
51,082
BPO and ICT services—
External customers ............
69,569Intersegment.........................
7,275...................................................
76,844
Real estate andother services—
External customers ............
43,485Intersegment.........................
2,004...................................................
45,489Total ................................................. 1,102,780
Eliminations ................................
(19,988)
Total net sales andoperating revenue........... ¥1,082,792

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2016

2018

¥ 543,524 ¥ 505,058
2,968
3,028
546,492
508,086$ 5,304,453
29,6605,334,113

2017

126,232
3,459
129,691

131,743
3,764
135,507

1,288,292
39,3401,327,632

168,819182
169,001

163,538
178
163,716

1,653,943
1,745
1,655,688

43,7803,094
46,87440,654
2,945
43,599421,538
28,623450,161

51,609231
51,84052,553183
52,736480,245
1,660
481,905

49,681
7,126
56,807

48,2947,550
55,844

656,311
68,632724,943

47,616
41,5881,923
2,479
49,53944,0671,050,244 1,003,555(18,983) (20,127)

410,236
18,906429,142
10,403,584(188,566)¥1,031,261 ¥ 983,428$10,215,018

2018

Operating income (loss):
Security services .....................
Fire protection
services ......................................
Medical services......................
Insurance services .................
Geographic information
services ......................................
BPO and ICT services ...........
Real estate andother services .........................
Total ................................................
Corporate expenses
and eliminations ..................
Operating income .................
Other income ...........................
Other expenses .......................
Income before income
taxes and equity in net
income of affiliatedcompanies...........................

Assets:Security services .....................
Fire protection
services ......................................
Medical services......................
Insurance services .................
Geographic information
services ......................................
BPO and ICT services ...........
Real estate andother services .........................
Total ................................................
Corporate items ......................
Investments inaffiliated companies ..........
Total assets .................................

In millions of yen

In thousands of
U.S. dollars

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

Years ended
March 31

Year ended
March 31

2016

2018

2017

¥116,639¥112,734¥110,919$1,100,368

15,760
4,090
6,233

13,1291,732
7,289

13,654
2,921
6,842

148,679
38,58558,802

1,923
8,241

(944)
7,288

(268)
308

18,14277,745

6,920
159,806

5,241
146,469

4,900
139,276

65,283
1,507,604(16,971)¥142,835
10,730(2,775)(16,291)¥130,178
18,135(3,090)(20,371)¥118,905
7,679(4,123)(160,104)$1,347,500
101,226(26,179)¥150,790¥145,223¥122,461$1,422,547

In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2018

2017

2018

¥ 727,449¥ 707,640$ 6,862,726

159,114
180,594
233,618

148,642
185,799
230,455

1,501,075
1,703,717
2,203,943

69,306
149,553

69,042
115,537

653,830
1,410,877

145,289
1,664,923
109,402130,365
1,587,480
117,876

1,370,651
15,706,819
1,032,096

64,620¥1,838,945

57,922¥1,763,278

609,623$17,348,538

Depreciation andamortization:
Security services .....................
Fire protection
services ......................................
Medical services......................
Insurance services .................
Geographic information
services ......................................
BPO and ICT services ...........
Real estate andother services .........................
Total ................................................
Corporate items ......................
Total depreciation
and amortization.............
Capital expenditure:
Security services .....................
Fire protection
services ......................................
Medical services......................
Insurance services .................
Geographic information
services ......................................
BPO and ICT services ...........
Real estate andother services .........................
Total ................................................
Corporate items ......................
Total capital
expenditures ......................

2018

2017

2016

2018

¥54,091¥54,770¥ 50,007$510,292

2,128
8,675
1,808

1,837
8,433
1,521

1,663
8,293
1,319

20,075
81,84017,057

2,540
7,813

3,011
6,824

2,998
6,592

23,96273,708

1,066
78,121
834

868
77,264919

951
71,823658

10,057736,991
7,868¥78,955¥78,183¥ 72,481$744,859¥44,404¥39,956¥130,686$418,906

3,910
5,276
1,900

4,678
9,646
2,087

5,026
14,9082,307

36,887
49,774
17,925

1,701
31,987

1,904
7,686

2,124
7,708

16,047
301,764

1,690
90,868349

233
66,190856

229
162,988409

15,943
857,246
3,292¥91,217¥67,046¥163,397$860,538

The capital expenditures in the above table represent the additions toproperty, plant and equipment and intangible assets of each segment.
The Company has no single customer that accounts for more than 10
percent of total revenues.

SECOM Annual Report 2018

79

The following table is a breakdown of security services revenue toexternal customers by service category. The security services businessis managed as a single operating segment by the Company’s
management.

Electronic security
services .......................................
Other security services:
Static guard
services .................................
Armored car
services .................................
Merchandise andother .........................................
Total security
services ................................

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2018

2017

2016

2018

¥341,157¥338,744¥330,843$3,218,462

59,03056,41755,907556,887

61,08957,87332,990576,311

100,996

90,49085,318952,793¥562,272¥543,524¥505,058$5,304,453(2) Geographic Segment Information
Net sales and operating revenue attributed to countries based on
the geographical location of customers for the years ended 2018, 2017and 2016 and long-lived assets as of March 31, 2018 and 2017 wereas follows:2018

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2016

2018

2017

Net sales andoperating revenue:
Japan ................................... ¥1,034,228 ¥ 985,366
Other ...................................
48,56445,895
Total ............................... ¥1,082,792 ¥1,031,261

Long-lived assets:
Japan ......................................
Other ......................................
Total ..................................

¥936,392 $ 9,756,868
47,036458,151¥983,428 $10,215,019

In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2018

2017

2018

¥629,069
11,239¥640,308¥606,302
10,558¥616,860$5,934,613
106,028$6,040,641

There are no individually material countries other than Japan withrespect to net sales and operating revenue and long-lived assets.

80

SECOM Annual Report 201827. Subsequent Events
The Company entered into a share transfer agreement in July 2018
to sell certain investment securities held by a consolidated subsidiary,
Westec Security Group Inc. This transaction will generate a gain on
sales of securities, which will be included in gains on private equity
investments in the consolidated financial statements for the year ending
March 31, 2019. The amount of the gain is under calculation.

Independent Auditors’ Report

The Board of Directors and Shareholders
SECOM CO., LTD.:
We have audited the accompanying consolidated financial statements of SECOM CO., LTD. and its subsidiaries, which comprise the consolidatedbalance sheets as of March 31, 2018 and 2017, and the related consolidated statements of income, comprehensive income, changes in equity, andcash flows for each of the years in the three-year period ended March 31, 2018, and the related notes to the consolidated financial statements.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with U.S. generally
accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fairpresentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordancewith auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SECOM CO.,LTD. and its subsidiaries as of March 31, 2018 and 2017 and the results of their operations and their cash flows for each of the years in the three-year
period ended March 31, 2018, in accordance with U.S. generally accepted accounting principles.
Convenience Translations
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2018 are presented
solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made on the basis described in Note 3 to the consolidated financial statements.

Tokyo, Japan
July 30, 2018

SECOM Annual Report 201881

OTHER FINANCIAL DATA

Contents
Summary of Selected Financial Data .......................................................................... 83
Common Stock Data ............................................................................................................. 85

82

SECOM Annual Report 2018

Summary of Selected Financial Data
SECOM CO., LTD. and Subsidiaries
Years ended/as of March 31
In millions of yen
2017

2018

Composition of consolidated net sales andoperating revenue by segment
Net sales and operating revenue ........................................................................................... ¥1,082,792 ¥1,031,261
562,272
543,524
Security services: .........................................................................................................................
As a percentage of net sales and operating revenue ...............................
51.9%
52.7%
Electronic security services.............................................................................................
341,157
338,744
As a percentage of net sales and operating revenue ...............................
31.5
32.8
Other security services—
Static guard services .....................................................................................................
59,03056,417
As a percentage of net sales and operating revenue ...............................
5.5
5.5
Armored car services ....................................................................................................
61,08957,873As a percentage of net sales and operating revenue ...............................
5.6
5.6
Subtotal .....................................................................................................................
120,119
114,290
Merchandise and other.....................................................................................................
100,996
90,490As a percentage of net sales and operating revenue ...............................
9.3
8.8
Fire protection services ...........................................................................................................
136,559
126,232
As a percentage of net sales and operating revenue ...............................
12.6
12.2
Medical services...........................................................................................................................
175,318
168,819
As a percentage of net sales and operating revenue ...............................
16.2
16.4
Insurance services ......................................................................................................................
44,683
43,780As a percentage of net sales and operating revenue ...............................
4.2
4.3
Geographic information services .....................................................................................
50,906
51,609As a percentage of net sales and operating revenue ...............................
4.7
5.0
BPO and ICT services ................................................................................................................
69,56949,681
As a percentage of net sales and operating revenue ...............................
6.4
4.8
Real estate and other services ............................................................................................
43,48547,616
As a percentage of net sales and operating revenue ...............................
4.0
4.6

Return on total assets (percentage) (a) ..................................................................................
Return on equity (percentage) (b) ............................................................................................
Percentage of net sales and operating revenue absorbed by (c):Depreciation and amortization .........................................................................................
Rental expense under operating leases.......................................................................
Ratio of accumulated depreciation to depreciable
assets (percentage) .......................................................................................................................
Net property turnover (times) (c)...............................................................................................
Before-tax interest coverage (times) (c) (d) .............................................................................

2015

2014

2013

¥983,428
505,058
51.4%
330,84333.6¥945,238
487,06351.5%
326,300
34.5¥921,146
472,44951.3%
318,11634.5¥858,406
443,23151.6%
307,477
35.8

55,9075.7
32,9903.4
88,89785,3188.7
131,743
13.4
163,538
16.6
40,654
4.1
52,553
5.4
48,294
4.9
41,588
4.2

53,788
5.7
21,0102.2
74,79885,965
9.1
121,18912.8
155,884
16.5
38,2594.1
52,7605.6
47,412
5.0
42,671
4.5

51,681
5.6
20,7672.3
72,44881,8858.9
122,04613.3
150,535
16.3
37,011
4.0
54,697
5.9
46,992
5.1
37,416
4.1

47,877
5.6
20,532
2.4
68,40967,345
7.8
114,13013.3
140,957
16.4
35,864
4.2
51,194
6.0
29,541
3.4
43,4895.1

91,38730,557929,242¥ 84,072
28,373865,278¥ 80,184
38,197
825,969¥ 73,979
22,918753,099¥ 70,580
19,645679,176

3.5
1.7
0.5
4.1
9.8
90.2
100.0

4.0
1.9
0.7
4.5
11.1
88.9
100.0

5.6
1.8
0.8
5.3
13.5
86.5
100.0

4.7
1.4
0.9
4.9
11.9
88.1
100.0

6.0
1.8
0.9
4.6
13.3
86.7
100.0

5.0
2.2
1.1
5.1
13.4
86.6
100.0

5.3
9.7

5.2
9.8

5.0
9.7

5.3
9.7

5.1
9.8

5.3
10.4

7.3
2.3

7.6
2.5

7.4
2.5

7.3
2.4

7.2
2.4

7.0
2.1

64.6
2.63
123.0

63.2
2.49
107.1

62.8
2.38
89.2

61.6
2.38
93.8

60.8
2.34
90.4

60.0
2.24
78.8

Net income attributable to SECOM CO., LTD., cash dividends
and SECOM CO., LTD. shareholders’ equity
Net income attributable to SECOM CO., LTD.................................................................. ¥ 96,623
Cash dividends paid (2) ....................................................................................................................
32,738
SECOM CO., LTD. shareholders’ equity ................................................................................. 1,000,277
Consolidated financial ratios
Percentage of working capital accounted for by:
Debt—
Bank loans ..................................................................................................................................
Current portion of long-term debt ...........................................................................
Straight bonds ........................................................................................................................
Other long-term debt ........................................................................................................
Total debt .............................................................................................................................
SECOM CO., LTD. shareholders’ equity ...........................................................................
Total capitalization..........................................................................................................

2016

¥

Note: Installation revenue is included in the corresponding electronic security services.

SECOM Annual Report 2018

83

2018

2017

2016

2015

2014

2013

Number of shares outstanding
Issued .............................................................................................................
Owned by the Company ...................................................................

233,290,441
15,030,573

233,288,717
15,028,470

233,288,717
15,026,824

233,288,717
15,024,812

233,288,717
15,022,012

233,288,717
15,018,951

Balance ..........................................................................................................

218,259,868

218,260,247

218,261,893

218,263,905

218,266,705

218,269,766¥ 442.70
150.00¥ 418.71
140.00¥ 385.19
130.00¥ 367.37
175.00¥ 338.94
105.00¥ 323.36
90.00

4,582.96
649.44
1.73
17.89
12.20
7,920

4,257.50
631.91
1.87
19.03
12.61
7,969

3,964.40
582.27
2.11
21.72
14.37
8,366

3,784.27
557.88
2.12
21.84
14.38
8,025

3,450.36
529.35
1.72
17.54
11.23
5,946

3,111.64
496.34
1.56
15.00
9.77
4,850

Per share information
Net income attributable to SECOM CO., LTD.
per share (in yen) (1) ..............................................................................
Cash dividends paid per share (in yen) (2) .................................
SECOM CO., LTD. shareholders’ equity
per share (in yen) (3) ..............................................................................
Cash flow per share (in yen) (1) (e) .....................................................
Price/Book value ratio ..........................................................................
Price/Earnings ratio ...............................................................................
Price/Cash flow ratio.............................................................................
Stock price at year-end (in yen) .....................................................

Notes: (a) Net income attributable to SECOM CO., LTD. / Total assets(b) Net income attributable to SECOM CO., LTD. / SECOM CO., LTD.
shareholders’ equity(c) Including discontinued operations(d) (Income before income taxes and equity in net income of affiliatedcompanies + Interest expense) / Interest expense(e) (Net income attributable to SECOM CO., LTD. + Depreciation andamortization – Dividends approved) / Average number of shares outstanding
during each period

84

SECOM Annual Report 2018

(1) Per share amounts are based on the average number of shares outstanding
during each period.
(2) Subsequent to March 31, 2018, cash dividends of ¥17,461 million (¥80 per share)
were approved at the general shareholders’ meeting on June 26, 2018 (see Note
18 of the accompanying notes to consolidated financial statements).
(3) Per share amounts are based on the number of shares outstanding at the end ofeach period, less treasury stock.

Common Stock Data
SECOM CO., LTD.
As of March 31

SHAREHOLDER INFORMATION
Number of shareholders .........................................................................
Common shares held by:
Financial institutions ............................................................................
Securities firms ........................................................................................
Other domestic corporations ........................................................
Foreign investors ....................................................................................
Individuals and others ........................................................................
Treasury stock...........................................................................................
Total ..........................................................................................................

2018

2017

2016

2015

2014

2013

26,80925,20024,97524,852

27,054

27,62835.94%
1.63
2.53
44.85
8.61
6.44
100.00%35.05%
3.89
2.51
43.42
8.69
6.44
100.00%32.50%
3.52
2.92
44.46
10.16
6.44
100.00%29.89%
3.43
3.16
44.95
12.13
6.44
100.00%31.28%
4.88
2.56
42.32
12.52
6.44
100.00%30.86%
5.58
3.63
41.33
12.16
6.44
100.00%

PRICE INFORMATION (TOKYO STOCK EXCHANGE)
2016
2017

2018

April–June .....................................................................................................................................
July–September ........................................................................................................................
October–December ...............................................................................................................
January–March ..........................................................................................................................
April–June .....................................................................................................................................
July–September ........................................................................................................................
October–December ...............................................................................................................
January–March ..........................................................................................................................

Price per share (in yen)

Nikkei Stock Average (in yen)

High

Low

High

Low

¥8,830
8,050
8,630
8,812
8,686
8,687
9,118
8,833

¥7,167
7,392
7,293
7,969
7,814
7,921
8,170
7,435

¥17,572.49
17,081.98
19,494.53
19,633.75
20,230.41
20,397.58
22,939.18
24,124.15¥14,952.02
15,106.98
16,251.54
18,787.99
18,335.63
19,274.82
20,400.78
20,617.86

SECOM Annual Report 201885

COMMON STOCK ISSUES

June
Dec.
May
May
Dec.
May
June
Dec.
Nov.
Dec.
Dec.
June
Dec.
Jan.
Nov.
Nov.
Nov.
Jan.
Nov.
Nov.
Jan.
Nov.
Nov.
Jan.
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
Nov.
Mar.
Mar.
Mar.
Mar.
Mar.
July
July

Date

Additional
shares issued(In thousands)

Sharesoutstanding
after issue(In thousands)

Share capital
after issue(In thousandsof yen)Allotment ratio
to shareholders

15, 1974
21, 1974
21, 1975
21, 1975
1, 1975
31, 1976
1, 1976
1, 197630, 1977
1, 1977
1, 1978
1, 1981
1, 198120, 1983
30, 1983
30, 1984
30, 1985
20, 1986
30, 1986
30, 1987
20, 1988
30, 1988
30, 1989
19, 1990
31, 1990
31, 1991
31, 1992
31, 1993
31, 1994
31, 1995
31, 1996
31, 1997
31, 1998
31, 1999
19, 1999
31, 2000
31, 2001
31, 2002
31, 2003
31, 2005
27, 2017
26, 2018

1,968
2,760
1,196
1,244
4,320
1,880
2,060
6,798
2,042
6,300
7,560
3,000
4,836
5,320
194
1,418
186
6,031
2,878
1,609
3,541
439
1,808
22,986
1,446
2,949
2,035
267
6,986
477
613
1,825
29
159
116,410
273
25
175
6
8
1
2

9,200
11,96013,156
14,40018,72020,60022,66029,45831,50037,80045,36048,36053,19658,51658,71060,12860,314
66,34569,22370,832
74,37374,812
76,62099,606
101,052
104,001
106,036
106,303113,289
113,766
114,379
116,204
116,233
116,392
232,802
233,075
233,100
233,275
233,281
233,289
233,290
233,292¥00,460,000
598,000
657,800
720,000
936,000
1,030,000
1,133,000
1,472,900
1,575,000
1,890,000
2,268,000
2,418,000
2,659,800
3,000,000
3,280,942
5,329,282
5,602,945
5,602,945
11,269,932
15,021,200
15,021,200
16,063,099
21,573,139
21,573,139
25,070,104
32,244,732
37,338,751
37,991,568
56,756,263
58,214,178
59,865,105
65,253,137
65,327,060
65,709,927
65,709,927
66,096,852
66,126,854
66,360,338
66,368,827
66,377,829
66,385,263
66,392,692—
3 for 10
1 for 10—
3 for 10—
1 for 10
3 for 10—
2 for 10
2 for 10—
1 for 10
1 for 10———
1 for 10——
0.5 for 10——
3 for 10
—
—
—
—
—
—
—
—
—
—
10 for 10*
—
—
—
—
—
—
—

Remarks

Issue at market price (¥900)
Stock split
Stock split
Issue at market price (¥1,134)
Stock split
Issue at market price (¥2,570)
Stock split
Stock split
Issue at market price (¥1,700)
Stock split
Stock split
Issue at market price (¥2,230)
Stock split
Stock split
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Stock split
Conversion of convertible bonds
Conversion of convertible bonds
Stock split
Conversion of convertible bonds
Conversion of convertible bonds
Stock split
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Stock split
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Issue of new shares as restricted stock compensation
Issue of new shares as restricted stock compensation

Note: The above is a record of SECOM’s common stock issues since the common stock was listed on the Tokyo Stock Exchange in June 1974.
*One share was split into two.

86

SECOM Annual Report 2018

CONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP) [REFERENCE]

Contents
Condensed Consolidated Balance Sheets(Based on Japanese GAAP)............................................................................................. 88
Condensed Consolidated Statements of Income(Based on Japanese GAAP)............................................................................................. 90
Consolidated Statements of Comprehensive Income(Based on Japanese GAAP)............................................................................................. 90

SECOM Annual Report 201887

Condensed Consolidated Balance Sheets (Based on Japanese GAAP)SECOM CO., LTD. and Subsidiaries
As of March 31
In millions of yen
2018

2017

2016

2015

2014

2013

Current assets:
Cash on hand and in banks ................................................................................. ¥ 317,267
135,808
Cash deposits for armored car services .......................................................
—
Call loans .........................................................................................................................
129,984
Notes and accounts receivable, trade ..........................................................
35,272
Due from subscribers ..............................................................................................
17,360
Short-term investments.........................................................................................
45,544
Lease receivables and investments in leased assets............................
12,321
Merchandise and products .................................................................................
4,766
Real estate inventories............................................................................................
5,057
Work in process...........................................................................................................
10,441
Costs on uncompleted construction contracts......................................
39,688Work in process for real estate inventories ................................................
8,849
Raw materials and supplies .................................................................................
14,651
Deferred income taxes ...........................................................................................
5,196
Short-term loans receivable ................................................................................
26,352Other ..............................................................................................................................
(1,818)
Allowance for doubtful accounts ....................................................................
806,746
Total current assets ..................................................................................

¥ 302,364
130,619—
119,801
33,09029,38743,974
11,915
5,223
4,913
8,979
22,2838,385
14,003
4,942
23,684(1,766)
761,804¥ 228,458
128,267—
122,048
31,812
34,44839,542
13,099
3,527
5,557
9,070
23,024
8,579
12,728
4,086
27,375(1,883)689,744¥ 232,221
50,395
15,500114,071
26,31628,517
39,242
14,163
3,063
4,031
9,460
21,058
7,913
12,8082,268
21,111(1,997)600,146¥ 210,514
58,597
20,500115,318
25,174
12,95533,18814,186
33
4,602
8,983
15,396
7,573
13,254
2,699
17,623(2,026)558,574¥ 175,427
56,08946,500106,638
24,05914,72327,56912,321
12,944
4,526
7,563
13,3486,430
14,384
4,158
18,453(2,302)542,836ASSETS

88

Fixed assets:
Tangible assets:
Buildings and improvements, net .............................................................
Security equipment and control stations, net ...................................
Land..............................................................................................................................
Other, net ..................................................................................................................
Total tangible assets................................................................................

148,62270,872
114,287
39,907
373,689

150,254
69,569116,825
39,886
376,536

148,828
71,447
116,613
39,415376,305

148,375
70,478
119,604
23,702
362,161

153,278
68,759113,946
24,849360,833

155,839
67,200115,652
22,839361,532

Intangible assets.........................................................................................................

131,028

112,131

119,505

49,41153,59655,079Investments and others:
Investment securities ........................................................................................
280,659
35,284Long-term loans receivable...........................................................................
Prepaid pension and severance costs.....................................................
—Net defined benefit asset................................................................................
41,40912,150
Deferred income taxes .....................................................................................
52,332Other ............................................................................................................................
Allowance for doubtful accounts ..............................................................
(13,033)
408,803
Total investments and others ...........................................................
913,521
Total fixed assets .......................................................................................
Deferred assets ..............................................................................................................
—
Total assets .................................................................................................... ¥1,720,268

280,974
38,403—35,282
9,592
51,436(15,990)399,698
888,367
4¥1,650,176

264,400
39,401—30,796
8,602
54,978(15,698)
382,482
878,29314¥1,568,052

284,32242,904—35,0104,874
49,382(17,525)
398,969
810,541
26¥1,410,715

246,233
45,701—
17,612
13,521
48,486(16,352)
355,203769,633
17¥1,328,226

189,042
42,33819,572—
11,711
43,706(16,742)
289,629706,241
32¥1,249,110

SECOM Annual Report 2018

In millions of yen

LIABILITIESCurrent liabilities:
Notes and accounts payable, trade.................................................................. ¥ 43,929
41,558Bank loans ........................................................................................................................
795
Current portion of straight bonds .....................................................................
4,932
Lease obligations .........................................................................................................
40,102
Payables—other ...........................................................................................................
25,896
Accrued income taxes ..............................................................................................
7,959
Accrued consumption taxes.................................................................................
7,084
Accrued expenses .......................................................................................................
113,830
Deposits received for armored car services ................................................
30,309Deferred revenue .........................................................................................................
16,209Accrued bonuses .........................................................................................................
2,436
Provision for loss on construction contracts...............................................
22,499Other....................................................................................................................................
357,544
Total current liabilities..............................................................................
Long-term liabilities:
Straight bonds ...............................................................................................................
Long-term loans ...........................................................................................................
Lease obligations .........................................................................................................
Guarantee deposits received................................................................................
Deferred income taxes .............................................................................................
Accrued pension and severance costs...........................................................
Accrued retirement benefits for directors andaudit and supervisory board members.......................................................
Net defined benefit liability...................................................................................
Investment deposits by policyholders, unearned
premiums and other insurance liabilities...................................................
Other....................................................................................................................................
Total long-term liabilities .......................................................................
Total liabilities................................................................................................

2017

2018

¥

44,63544,9691,460
4,752
37,46927,557
5,765
5,315
107,878
30,552
15,447
2,532
25,596353,933

2016¥

41,79455,283
2,582
4,724
38,37622,341
6,611
5,562
101,306
31,38915,524
1,397
20,738347,633

2015¥

43,16044,9651,414
503
33,84921,063
12,878
4,653
16,94531,34814,652
1,612
20,707
247,755

2014¥

49,40952,1204,640
579
31,316
27,744
4,151
4,625
17,76531,027
14,437
1,981
16,883
256,684

2013¥

43,68442,3504,487
537
31,40629,282
4,377
4,571
24,86230,88014,031
1,714
15,691
247,879

5,322
12,721
11,902
33,181
19,362—

7,003
14,123
11,77733,907
21,943—8,251
20,033
11,95435,002
14,026—

8,413
20,602
3,712
36,00013,554—

7,796
17,256
4,183
36,542
11,169—8,847
19,8283,438
36,125
13,40017,137

1,421
21,8491,306
22,4281,387
22,816

1,415
18,504

1,635
18,5692,443—

172,345
3,403
281,510
639,054

166,155
4,342
282,989
636,922

159,636
4,166
277,274
624,907150,119
3,295
255,618
503,374

141,099
2,918
241,171497,856

133,627
2,242
237,091
484,970

NET ASSETS
Shareholders’ equity:
Common stock .............................................................................................................. ¥ 66,385
80,328
Capital surplus ...............................................................................................................
851,764Retained earnings .......................................................................................................
(73,748)
Common stock in treasury, at cost ...................................................................
924,729
Total shareholders’ equity ......................................................................

¥

66,37780,297
797,493(73,731)
870,437¥

66,37780,326743,353(73,717)816,340¥

66,37780,265
694,688(73,701)
767,630¥

66,377
83,054656,286(73,682)732,036¥

66,377
83,054609,275(73,664)
685,042

Accumulated other comprehensive income:Unrealized gains on securities .............................................................................
Deferred losses on hedges ....................................................................................
Foreign currency translation adjustments ...................................................
Remeasurements of defined benefit plans, net of taxes.....................
Total accumulated other comprehensive income ................

23,759(24)(5,774)
9,933
27,89425,125(30)(7,954)
4,423
21,563

19,964(40)(2,196)(783)
16,94426,981
(34)
1,477
4,390
32,815

12,504(33)(10,885)(3,506)(1,921)

11,783(41)(27,760)—(16,018)

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

128,589

121,253

109,859

106,895

100,253

95,114

Total net assets ............................................................................................. 1,081,213
Total liabilities and net assets .............................................................. ¥1,720,268

1,013,253¥1,650,176

943,144¥1,568,052

907,341¥1,410,715

830,369¥1,328,226

764,139¥1,249,110

SECOM Annual Report 201889

Condensed Consolidated Statements of Income (Based on Japanese GAAP)SECOM CO., LTD. and Subsidiaries
Years ended March 31
In millions of yen
2018

2017

2016

2015

2014

2013

Revenue ................................................................................................................................
Percentage change from prior year ................................................................

¥970,624
4.6%¥928,098
5.3%¥881,028
4.8%¥840,722
2.2%¥822,228
7.4%¥765,635
12.7%

Costs of revenue ................................................................................................................
As a percentage of revenue .................................................................................

652,67367.2

621,412
67.0

586,53966.6

557,884
66.4

542,94966.0

504,006
65.8

Gross profit ............................................................................................................................
As a percentage of revenue .................................................................................

317,95032.8

306,686
33.0

294,48833.4

282,83733.6

279,278
34.0

261,629
34.2

Selling, general and administrative expenses .................................................
As a percentage of revenue .................................................................................

182,50218.8

175,63618.9

165,906
18.8

159,22218.9

159,259
19.4

153,258
20.0

Operating profit..................................................................................................................
As a percentage of revenue .................................................................................

135,44814.0

131,050
14.1

128,582
14.6

123,61514.7

120,018
14.6

108,370
14.2

Non-operating income ..................................................................................................
Non-operating expenses ..............................................................................................

13,152
4,281

22,371
6,388

11,3805,136

18,366
5,293

13,1006,441

11,171
5,922

Ordinary profit .....................................................................................................................
As a percentage of revenue .................................................................................

144,31814.9

147,033
15.8

134,826
15.3

136,68816.3

126,677
15.4

113,618
14.8

Extraordinary profit...........................................................................................................
Extraordinary losses .........................................................................................................

2,471
2,545

516
5,697

1,584
15,003

1,962
11,384

2,025
3,876

984
2,623

Income before income taxes .....................................................................................
As a percentage of revenue .................................................................................

144,24514.9

141,852
15.3

121,40813.8

127,265
15.1

124,82615.2

111,980
14.6

Income taxes—current..................................................................................................
Income taxes—deferred ...............................................................................................

54,811(9,314)43,3262,369

39,150(526)

43,156(37)

48,485(2,110)43,211(252)

Net income............................................................................................................................

98,74896,15682,784

84,14678,451

69,021

Net income attributable to noncontrolling interests .................................

11,755

11,986

5,745

8,754

8,574

5,363

Net income attributable to owners of the parent ........................................
As a percentage of revenue .................................................................................
Percentage change from prior year ................................................................

86,9939.0
3.4

84,170
9.1
9.3

77,0398.7
2.2

75,3929.0
7.9

69,8768.5
9.8

63,6588.3
79.4

Consolidated Statements of Comprehensive Income (Based on Japanese GAAP)SECOM CO., LTD. and Subsidiaries
Years ended March 31

90

In millions of yen
2018

2017

2016

2015

2014

2013

Net income............................................................................................................................
Other comprehensive income (loss):
Unrealized gains (losses) on securities ...........................................................
Deferred gains on hedges......................................................................................
Foreign currency translation adjustments ...................................................
Remeasurements of defined benefit plans .................................................
Share of other comprehensive gains (losses) of affiliatedcompanies accounted for under the equity method ........................

¥ 98,748¥ 96,156¥ 82,784¥ 84,146¥78,451¥69,021(1,649)0(1,003)
5,595

5,324
—
(3,539)
4,698(7,103)—(1,616)(6,163)

15,058
—
9,527
8,581

543
—
11,787
—

7,500
—
6,222
—

3,876

(1,327)(2,743)

3,676

6,649

4,402

Total other comprehensive income (loss) ..............................................

6,819

5,155

(17,626)

36,843

18,98018,124Comprehensive income................................................................................................

105,568

101,31265,157

120,990

97,43187,146Comprehensive income attributable to:
Owners of the parent company .........................................................................
Noncontrolling interests .........................................................................................

93,323
12,24488,78912,522

61,1683,989

110,128
10,861

87,4809,950

80,666
6,480

SECOM Annual Report 2018

NONCONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP) [REFERENCE]

Contents
Condensed Nonconsolidated Balance Sheets(Based on Japanese GAAP)............................................................................................. 92
Condensed Nonconsolidated Statements of Income(Based on Japanese GAAP)............................................................................................. 94

SECOM Annual Report 201891

Condensed Nonconsolidated Balance Sheets (Based on Japanese GAAP)SECOM CO., LTD.
As of March 31
In millions of yen
2018

2017

2016

2015

2014

2013

Current assets:
Cash on hand and in banks ....................................................................................
Cash deposits for armored car services ..........................................................
Notes receivable ............................................................................................................
Due from subscribers .................................................................................................
Accounts receivable, trade .....................................................................................
Receivables—other .....................................................................................................
Short-term investments............................................................................................
Merchandise ....................................................................................................................
Supplies ..............................................................................................................................
Prepaid expenses ..........................................................................................................
Deferred income taxes ..............................................................................................
Short-term loans receivable ...................................................................................
Other.....................................................................................................................................
Allowance for doubtful accounts .......................................................................
Total current assets .....................................................................................

¥ 85,009
38,347523
17,286
10,995
4,387
—
5,628
1,767
2,556
3,627
28,017
1,712(105)
199,756¥ 87,387
37,869621
16,48010,650
3,088
—
5,312
1,722
2,323
3,710
27,5391,804(117)
198,394¥ 45,433
40,877592
16,22910,996
4,454
3,444
6,453
1,676
2,172
3,736
22,255
1,698(152)
159,867¥ 93,569
48,396640
16,066
11,202
3,054
437
6,694
1,379
2,210
4,415
20,4231,772(216)
210,048¥ 80,908
56,818683
14,991
9,960
2,699
437
5,489
1,303
2,109
4,382
20,6532,031(221)
202,248¥ 54,136
53,551700
14,856
9,691
2,528
1,048
5,585
1,012
2,332
5,268
19,237
4,819(248)
174,521

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

16,160611
67,746
162
2,861
22,077
4,812
72
114,504

16,282709
65,997
179
3,173
21,9782,195
69
110,585

16,572795
67,624170
3,424
22,0151,564
18112,187

16,458824
67,715
192
3,326
28,303
1,714
12
118,548

17,466865
66,683232
2,922
29,5201,848
105
119,644

17,059521
65,329288
2,979
29,802
1,719
235
117,936

Intangible assets:
Goodwill .......................................................................................................................
Software........................................................................................................................
Other ...............................................................................................................................
Total intangible assets ..............................................................................

—
5,903
741
6,644

—
6,125
400
6,526

—
5,794
574
6,369

—
4,644
730
5,375

2,607
3,910
1,768
8,286

2,978
4,269
2,061
9,308

24,58323,083

20,58829,72523,78921,583

350,551

323,993

325,104

239,120

239,008

236,3092,098
138,277
7,650
20,622
20,763
4,046
2,613(4,440)566,767
687,917¥887,673

2,098
134,796
7,559
20,847
21,6434,294
2,560(5,532)535,344
652,456¥850,851

1,938
146,716
7,642
21,244
23,177
4,294
2,545(5,551)
547,700
666,256¥826,124

1,938
150,955
7,526
22,126
21,5304,294
2,534(17,946)
461,806
585,730¥795,778

1,827
143,741
7,553
20,78016,962
3,988
2,777(17,698)442,730
570,662¥772,910

1,827
155,813
7,747
21,594
16,263
3,991
2,728(20,307)447,551574,796¥749,317

ASSETS

Investments and others:
Investment securities ...........................................................................................
Investment securities in subsidiaries andaffiliated companies ...........................................................................................
Investments in subsidiaries andaffiliated companies ...........................................................................................
Long-term loans receivable..............................................................................
Lease deposits...........................................................................................................
Long-term prepaid expenses ..........................................................................
Prepaid pension and severance costs........................................................
Insurance funds........................................................................................................
Other ...............................................................................................................................
Allowance for doubtful accounts .................................................................
Total investments and others ..............................................................
Total fixed assets ..........................................................................................
Total assets .......................................................................................................

92

SECOM Annual Report 2018

In millions of yen
2018

2017

2016

2015

2014

2013

4,108
21,940229
16,708
3,897
13,162
3,817
691
16,446
20,3006,300
2,623
110,226¥ 3,604
22,703215
14,476
4,018
14,3452,883
697
15,187
20,6296,278
4,014
109,053¥ 3,641
36,923
198
15,698
3,980
9,479
2,718
737
13,97520,923
6,246
4,177
118,699¥ 3,172
29,416
185
15,675
4,480
10,826
7,088
800
15,124
21,2696,296
4,311
118,647¥ 3,429
36,703
176
14,546
4,218
12,3661,478
802
16,17521,301
6,246
3,530
120,976¥ 3,044
26,598121
15,042
4,333
19,5102,538
726
22,554
21,671
6,089
1,942
124,174

2,358
16,640
7,203
2,164

2,477
16,804
6,642
2,506

2,601
17,038
6,213
2,835

2,661
17,286
3,400
3,241

2,747
17,622
307
3,555

2,449
17,859
788
4,051

—
91
28,458
138,685—103
28,533
137,587—378
29,068
147,768—
408
26,998145,646—459
24,692
145,668857
25
26,031150,205¥ 66,385¥ 66,377¥ 66,377¥ 66,377¥ 66,377¥ 66,377

83,061
0
83,062

83,0540
83,054

83,0540
83,054

83,0540
83,054

83,0540
83,054

83,054—
83,054

9,028

9,028

9,028

9,028

9,028

9,028

800
2,212
653,840
665,881(73,748)
741,579

800
2,212
618,887
630,927(73,731)706,629800
2,212
586,082
598,122(73,717)673,836800
2,212
556,013568,053(73,701)
643,784

800
2,212
536,978
549,018(73,682)
624,768800
2,212
508,398
520,439(73,664)596,206

7,408

6,634

4,518

6,347

2,473

2,905

7,408
748,988¥887,673

6,634
713,263¥850,851

4,518
678,355¥826,124

6,347
650,132¥795,778

2,473
627,242¥772,910

2,905
599,112¥749,317

LIABILITIESCurrent liabilities:
Accounts payable ........................................................................................................
Bank loans ........................................................................................................................
Lease obligations .........................................................................................................
Payables—other ...........................................................................................................
Payables—construction ..........................................................................................
Accrued income taxes ..............................................................................................
Accrued consumption taxes.................................................................................
Accrued expenses .......................................................................................................
Deposits received for armored car services ................................................
Deferred revenue .........................................................................................................
Accrued bonuses .........................................................................................................
Other....................................................................................................................................
Total current liabilities..............................................................................
Long-term liabilities:
Lease obligations .........................................................................................................
Guarantee deposits received................................................................................
Deferred income taxes .............................................................................................
Accrued pension and severance costs...........................................................
Accrued retirement benefits for directors andaudit and supervisory board members.......................................................
Other....................................................................................................................................
Total long-term liabilities .......................................................................
Total liabilities................................................................................................

NET ASSETS
Shareholders’ equity:
Common stock ..............................................................................................................
Capital surplus:
Additional paid-in capital..................................................................................
Other capital surplus............................................................................................
Total capital surplus ..................................................................................
Retained earnings:
Legal reserve .............................................................................................................
Other retained earnings:
Reserve for system developments ........................................................
General reserve..................................................................................................
Accumulated earnings carried forward .............................................
Total retained earnings ...........................................................................
Common stock in treasury, at cost ...................................................................
Total shareholders’ equity ......................................................................
Valuation, translation adjustments and others:
Unrealized gains (losses) on securities ...........................................................
Total valuation, translation adjustments
and others ....................................................................................................
Total net assets .............................................................................................
Total liabilities and net assets ..............................................................

¥

SECOM Annual Report 201893

Condensed Nonconsolidated Statements of Income (Based on Japanese GAAP)SECOM CO., LTD.
Years ended March 31
In millions of yen
2018

94

2017

2016

2015

2014

2013

Revenue ................................................................................................................................
Percentage change from prior year ................................................................
Service charges .............................................................................................................
Percentage change from prior year ................................................................
Sales of merchandise.................................................................................................
Percentage change from prior year ................................................................

¥387,881
1.4%
327,470
1.6
60,411
0.5¥382,476
1.7%
322,338
1.4
60,1373.2¥376,044
1.5%
317,764
1.2
58,2803.0¥370,663
1.8%
314,068
1.5
56,5943.3¥364,280
2.5%
309,499
1.4
54,7819.4¥355,393
2.9%
305,300
1.9
50,092
9.0

Costs ..........................................................................................................................................
As a percentage of revenue .................................................................................
Costs of service .............................................................................................................
As a percentage of service charges .................................................................
Costs of sales ..................................................................................................................
As a percentage of merchandise sales ..........................................................

229,33259.1
186,63957.0
42,693
70.7

227,204
59.4
184,22557.2
42,97871.5

223,18959.4
181,59757.1
41,591
71.4

221,44159.7
180,850
57.6
40,59071.7

215,849
59.3
177,33957.3
38,50970.3

210,790
59.3
174,33157.1
36,45872.8

Gross profit ............................................................................................................................
As a percentage of revenue .................................................................................
Gross profit on service ..............................................................................................
As a percentage of service charges .................................................................
Gross profit on sales ...................................................................................................
As a percentage of merchandise sales ..........................................................

158,54940.9
140,83143.0
17,71829.3

155,27140.6
138,11242.8
17,15928.5

152,855
40.6
136,166
42.9
16,68828.6

149,22140.3
133,21742.4
16,00328.3

148,43140.7
132,159
42.7
16,272
29.7

144,60340.7
130,969
42.9
13,63427.2

Selling, general and administrative expenses .................................................
As a percentage of revenue .................................................................................

80,38020.7

78,988
20.7

77,191
20.5

76,04620.5

75,521
20.7

74,651
21.0

Operating profit..................................................................................................................
As a percentage of revenue .................................................................................

78,16820.2

76,28319.9

75,66420.1

73,17419.8

72,90920.0

69,952
19.7

Non-operating income ..................................................................................................
Non-operating expenses ..............................................................................................

14,9782,064

13,3893,130

13,6392,691

11,714
3,316

10,2694,295

10,173
3,789

Ordinary profit .....................................................................................................................
As a percentage of revenue .................................................................................

91,083
23.5

86,54322.6

86,61223.0

81,57222.0

78,884
21.7

76,336
21.5

Extraordinary profit...........................................................................................................
Extraordinary losses .........................................................................................................

1,896
324

651
100

3,064
6,733

1,670
2,805

491
1,604

1,219
1,052

Income before income taxes .....................................................................................
As a percentage of revenue .................................................................................

92,65523.9

87,09422.8

82,94322.1

80,43721.7

77,771
21.3

76,502
21.5

Income taxes ........................................................................................................................
Effective tax rate........................................................................................................

24,962
26.9

23,83327.4

24,50029.5

22,94528.526,27333.8

27,37435.8

Net income............................................................................................................................
As a percentage of revenue .................................................................................
Percentage change from prior year ................................................................

67,69217.5
7.0

63,26016.5
8.2

58,44215.5
1.7

57,492
15.5
11.6

51,49714.1
4.8

49,128
13.8
83.2

SECOM Annual Report 2018

Corporate Information(As of June 30, 2018)

Headquarters:
Independent auditors:
Administrator of the registerof shareholders:

5-1, Jingumae 1-chome, Shibuya-ku, Tokyo 150-0001, Japan
KPMG AZSA LLC
Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212, Japan

MAJOR CONSOLIDATED SUBSIDIARIES

Domestic<Security services>
Secom Joshinetsu Co., Ltd.
Secom Hokuriku Co., Ltd.
Secom Yamanashi Co., Ltd.
Secom Mie Co., Ltd.
Secom Sanin Co., Ltd.
Secom Kochi Co., Ltd.
Secom Miyazaki Co., Ltd.
Secom Ryukyu Co., Ltd.
Secom Jastic Co., Ltd.
Secom Jastic Joshinetsu Co., Ltd.
Secom Jastic Hokuriku Co., Ltd.
Secom Jastic Yamanashi Co., Ltd.
Secom Jastic Sanin Co., Ltd.
Secom Jastic Kochi Co., Ltd.
Secom Jastic Miyazaki Co., Ltd.
Secom Static Hokkaido Co., Ltd.
Secom Static Tohoku Co., Ltd.
Secom Static Nishi-Nihon Co., Ltd.
Secom Static Kansai Co., Ltd.
Secom Static Ryukyu Co., Ltd.
Secom Sado Co., Ltd.
JK. Siress Co., Ltd.
Japan Safety Guard Co., Ltd.
Japan Nuclear Security System Co., Ltd.
Meian Co., Ltd.
Secom Tech Sanin Co., Ltd.
Secom Techno Joshinetsu Co., Ltd.
Secom Win Co., Ltd.
Secom Industries Co., Ltd.
Otec Electronics Co., Ltd.
Secom Alpha Co., Ltd.
Secom Mine Security Co., Ltd.
Social Rehabilitation Support Kitsuregawa Co., Ltd.
Secom Kitsuregawa Security Co., Ltd.
Home Life Kanri Co., Ltd.
Kumalift Co., Ltd.
Okinawa Kumalift Co., Ltd.
Asahi Security Co., Ltd.

Issued capital(In millions of yen)

Percentageof equity/
voting rights¥3,530
201
15
50
290
50
30
76
100
40
10
10
10
10
10
50
50
50
50
10
24
10
100
200
60
23
30
15
499
200
271
30
10
50
40
100
10
100

(50.9)%
59.1
70.0
51.0
64.3
40.0
68.3
50.0
100.0
(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)
100.0
100.0
100.0
100.0
(100.0)(100.0)(100.0)
60.0
50.0
51.0
(100.0)(100.0)
66.7
100.0
82.0
100.0
100.0
51.7
100.0
(100.0)100.0(100.0)100.0

Lines of business(As of June 30, 2018)

Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Installation of security equipment
Installation of security equipment
Installation of security equipment and facilities
Manufacturing of security equipment
Manufacturing and sales of security systems
Sales of security and water-treatment equipment
Security services
Operation of PFI correctional facilities
Security services
Condominium management
Manufacture, sales and maintenance of freight elevators
Sales of freight elevators
Security services

Notes: 1. ( ) indicates the percentage of equity/voting rights held by both SECOM CO., LTD. and certain of its subsidiaries, or by certain subsidiaries independently.
2. Subsidiaries are categorized into segments above according to their major lines of business.

(Continued )SECOM Annual Report 201895

MAJOR CONSOLIDATED SUBSIDIARIES
Issued capital(In millions of yen)

Percentageof equity/
voting rights¥13,302(50.4)%

28
30
20
80
20
30
32
20
50
10
20
40
20
20
20
20
20
80
2,303

(73.2)(100.0)(70.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(82.0)(100.0)100.0

Nittan Electronic Co., Ltd.
Nittan Denko Co., Ltd.
Nittan Hokkaido Service Center Co., Ltd.
Nittan Tohoku Service Center Co., Ltd.
Nittan Nagoya Service Center Co., Ltd.
Nittan Service Center Osaka Co., Ltd.
Nittan Hiroshima Service Center Co., Ltd.
Nittan Shikoku Service Center Co., Ltd.
Nittan Fukuoka Service Center Co., Ltd.
Sogo Denki Trading Co., Ltd.
Shell beach Co., Ltd.
Consilium Nittan Marine Ltd.

60
10
10
10
10
10
10
10
10
10
10
42

(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(50.0)

Manufacturing and sales of fire protection equipment
and facilities
Installation of fire protection equipment
Installation and maintenance of fire protection equipment
Building management
Installation of fire protection equipment
Maintenance of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of environmental monitoring systems
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation and maintenance of fire protection equipment
Installation, sales and maintenance of fire protection
equipment
Manufacturing of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Sales of fire protection equipment<Medical services>
Secom Medical System Co., Ltd.
Mac Corp.
Yoshikikaku Co., Ltd.
Kensei Co., Ltd.
Secomfort Tama Co., Ltd.
Alive Medicare Co., Ltd.
Secomfort Co., Ltd.
Secomfort West Co., Ltd.
US Chemical Co., Ltd.
Secom Medipharma Co., Ltd.

100
95
20
100
100
50
100
100
3
10

100.0
(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)Home health/nursing care and other medical-related services
Sales of medical equipment
Operation of restaurants and shops at medical facilities
Management of pharmacies
Management of nursing homes
Management of nursing homes
Management of nursing homes
Management of nursing homes
Management of pharmacies
Wholesaling of pharmaceuticals<Fire protection services>
Nohmi Bosai Ltd.
Ichibou Co., Ltd.
Kyushu Nohmi Co., Ltd.
Chiyoda Service Co., Ltd.
Nohmi Engineering Corp.
Nohmi System Co., Ltd.
Iwate Nohmi Co., Ltd.
Tohoku Nohmi Co., Ltd.
Aomori Nohmi Co., Ltd.
Nissin Bohsai Co., Ltd.
Chiba Nohmi Co., Ltd.
Shikoku Nohmi Co., Ltd.
Nohmi Techno Engineering Co., Ltd.
Akita Nohmi Co., Ltd.
Fukushima Nohmi Co., Ltd.
Niigata Nohmi Co., Ltd.
Hokkaido Nohmi Co., Ltd.
Yashima Bosai Setsubi Co., Ltd.
System Service Co., Ltd.
Nittan Co., Ltd.

Lines of businessNotes: 1. ( ) indicates the percentage of equity/voting rights held by both SECOM CO., LTD. and certain of its subsidiaries, or by certain subsidiaries independently.
2. Subsidiaries are categorized into segments above according to their major lines of business.

96

SECOM Annual Report 2018

(As of June 30, 2018)(Continued )MAJOR CONSOLIDATED SUBSIDIARIES
Issued capital(In millions of yen)

Percentageof equity/
voting rights<Insurance services>
Secom Insurance Service Co., Ltd.
Secom General Insurance Co., Ltd.

¥ 100
16,809(100.0)%97.1

Non-life insurance agency
Non-life insurance<Geographic information services>
Pasco Corp.
GIS Hokkaido Co., Ltd.
GIS Kanto Co., Ltd.
Mid Map Tokyo Corp.
RIIC Corp.
Higashi-Nihon Sogo Keikaku Co., Ltd.
Satellite Image Marketing Corp.

8,758
190
40
15
20
200
60

69.8
(100.0)(52.6)(60.0)(100.0)(100.0)(100.0)Geographic information services
Geographic information services
Geographic information services
Geographic information services
Geographic information services
Geographic information services
Geographic information services<BPO and ICT services>
Secom Trust Systems Co., Ltd.

1,469

100.0

At Tokyo Corp.
TMJ, Inc.
BiOS, Inc.

13,379
100
39

50.9
100.0
(90.0)

Information, communication, information security
services and software development
Data center business
BPO services
Bilingual IT services<Real estate and other services>
Secom Home Life Co., Ltd.
Arai & Co., Ltd.
Arai Corporation, Inc.
Secom Credit Co., Ltd.
Secom Corp.
Secom Auto Service Co., Ltd.
Wonder Dream Co., Ltd.
Secom Staff Service Co., Ltd.
Secom Business Plus Co., Ltd.
Secom Home Service Co., Ltd.
Kurashi-TEL Co., Ltd.
Secom Engineering Co., Ltd.
Toko Create Co., Ltd.

3,700
3,000
10
400
100
45
100
50
20
32
100
100
50

99.9
86.7
(100.0)
100.0
100.0
100.0
100.0
(100.0)
100.0
100.0
100.0
100.0
96.6

Development of residential buildings
Real estate leasing
Management of real estate
Credit services
Printing services
Car maintenance
Employee welfare for SECOM Group
Employment agency
General office services
Lifestyle support services
Comprehensive lifestyle support services
Design, construction and maintenance of facilities
Electrical engineeringLines of businessNotes: 1. ( ) indicates the percentage of equity/voting rights held by both SECOM CO., LTD. and certain of its subsidiaries, or by certain subsidiaries independently.
2. Subsidiaries are categorized into segments above according to their major lines of business.

(As of June 30, 2018)(Continued )SECOM Annual Report 2018

97

MAJOR CONSOLIDATED SUBSIDIARIES

Overseas<Security services>
Secom plc
Scan Alarms Ltd.
Scan Alarms & Security Systems (UK) Ltd.
Secom (China) Co., Ltd.
Dalian Secom Security Co., Ltd.
Shanghai Secom Security Co., Ltd.
Beijing Jingdun Secom
Electronic Security Co., Ltd.
Qingdao Secom Security Co., Ltd.
Guangdong Jinpeng Secom Security Co., Ltd.
Fujian Secom Security Co., Ltd.
Sichuan Secom Security Co., Ltd.
Shaanxi Secom Security Co., Ltd.
Zhejiang Secom Security Co., Ltd.
Liaoning Secom Security Co., Ltd.
Secom Jindun (Tianjin) Security Co., Ltd.
Jiangsu Secom Security Co., Ltd.
PT. Secom Indonesia
PT. Secom Bhayangkara
PT. Secom Realty Indonesia
Thai Secom Security Co., Ltd.
Secom Australia Pty. Ltd.
Secom Technical Services Unit Trust
Secom Guardall NZ Ltd.
Secom Trading Co., Ltd.
Secom Vietnam Security Service JSC
Secom (Singapore) Pte. Ltd.
D’Garde Security Pte. Ltd.
<Other services>
Shanghai Nohmi Secom
Fire Protection Equipment Co., Ltd.
Nohmi Taiwan Ltd.

Issued capital

Percentageof equity/
voting rights

Lines of business£44,126 thousand£20 thousand£50 thousand¥5,550 million
US$2,000 thousand
Rmb80,000 thousand
US$2,500 thousand

100.0%(100.0)(100.0)100.0(95.0)(85.0)(80.0)

Security services
Holding company
Security services
Holding company
Security services
Security services
Security services

US$1,000 thousand
US$4,500 thousand
Rmb15,000 thousand
Rmb10,000 thousand
Rmb10,000 thousand
Rmb15,000 thousand
Rmb10,000 thousand
Rmb5,000 thousand
Rmb15,000 thousand
US$4,111 thousand
I.RPA3,200 million
I.RPA97,972 million
THB378,934 thousand
AUD17,297 thousand
AUD5,951 thousand
NZD1,604 thousand¥120 million
VND95,177 million
S$5,000 thousand
S$100 thousand(80.0)(90.0)(95.0)(100.0)(100.0)(97.0)(60.0)(69.4)(100.0)49.0(40.0)(99.9)
49.0
100.0(70.0)(100.0)100.0(80.0)
46.6(100.0)

Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Real estate leasing
Security services
Security services
Security services
Security services
Sales of security equipment
Security services
Security services
Security services

US$14,300 thousand(100.0)

NT$15,000 thousand(96.3)

Manufacturing and sales of fire protection equipment
and facilities
Manufacturing and sales of fire protection equipment
and facilities
Sales of fire protection equipment
Sales of fire protection equipment
Manufacturing of fire protection equipment
Holding company
Hospital management
Management of hospital real estate
Geographic information services
Geographic information services
Geographic information services

Nittan Europe Ltd.
Nittan Fire Protection System (Zhongshan) Co., Ltd.
Nittan Asean Co., Ltd. – Vietnam Headquarters
Secom Medical System (Singapore) Pte. Ltd.
Takshasila Hospitals Operating Pvt. Ltd.
Takshasila Healthcare and Research Service Pvt. Ltd.
Pasco Philippines Corp.
Pasco China Corp.
Suzhou Super Dimension Earth Science Researchand Development Co., Ltd.
Pasco (Thailand) Co., Ltd.
PT. Nusantara Secom InfoTech£1,194 thousand
US$1,400 thousand
US$3,236 thousand
S$51,330 thousand
INR3,659 million
INR15 million
PHP50,400 thousand
Rmb22,320 thousand
Rmb1,000 thousand(100.0)(100.0)(100.0)(100.0)(49.7)(99.3)(100.0)(99.0)(92.0)

THB129,000 thousand
US$3,304 thousand(100.0)(100.0)Aerodata International Surveys BVBA
Pasco Europe B.V.
Pasco North America Inc.
Keystone Aerial Surveys Inc.
Pasco Geo-Spatial Vietnam Co., Ltd.
Value Communication Services (Shanghai), Inc.
Jie Sheng Communication Services (Shanghai), Inc.
TMJP BPO Services, Inc.
The Westec Security Group, Inc.
ClearLight Partners, LLC
ClearLight Partners II, LLC
ClearLight Partners III, LLC

EUR87 thousand
EUR4,000 thousand
US$5,621 thousand
US$0.6 thousand
VND8,908 million
Rmb35,749 thousand
Rmb5,000 thousand
PHP35,900 thousand
US$0.3 thousand———(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(99.9)
100.0(99.7)(99.0)(98.0)

Geographic information services
Geographic information services andsoftware development
Geographic information services
Geographic information services
Geographic information services
Geographic information services
Geographic information services
BPO services
BPO services
BPO services
Holding company
Investment
Investment
Investment

Notes: 1. ( ) indicates the percentage of equity/voting rights held by both SECOM CO., LTD. and certain of its subsidiaries, or by certain subsidiaries independently.
2. Subsidiaries are categorized into segments above according to their major lines of business.

98

SECOM Annual Report 2018

(As of June 30, 2018)

Profile

SECOM’s Basic Business Areas

Static Guard Services

On-Line Security Systems

SECOM offers a wide range of services and ­products with theaim of realizing its Social System Industry vision.

Static guard services are provided for facilities where customer needs are best
served by professionally trained on-site personnel.

Armored Car Services

SECOM provides armored car services for the collection and ­transportation of cash
and other valuables.

Security Services
On-Line Security Systems for Commercial Use andSecurity Services for Large-Scale Events

SECOM CO., LTD.,

Since its establishment,
has sought tokeep abreast of the times with the aim of creating pioneering services
and systems that deliver safety and peace of mind, as well as
make life more comfortable and convenient, in line withits mission of helping to achieve a society free from concerns,
thereby helping to resolve key social imperatives.

99

セコムアニュアルレポート2018（英語版）

表紙ウラ

初校

SECOM AED Package Service
PoliceDept.

The SECOM AED Package Service is a full-service package encompassing leasing
and maintenance of emergency lifesaving kits featuring automated external
defibrillators (AEDs) to non-medical professionals.

SECOM AXSECOM AX is an on-line security ­system with advanced on-site image sensors thatincorporate microphones to enable SECOM control center staff to check thesubscriber’s premises by listening and viewing.
SECOM IXSECOM IX is a remote imaging security system for ­commercial facilities offering
around-the-clock services.
SECOM DXSECOM DX is an on-line security system developed to meet the needs of shops, offices,
warehouses, factories and other commercial and industrial establishments.
SECOM TXSECOM TX is an on-line security system for commercial ­buildings with more than one
tenant.
HANKS SYSTEMHANKS SYSTEM is an on-line security system for financial institutions, including
automated banking facilities.
SECOM CXSECOM CX offers a comprehensive building management system that monitors andmanages large building complexes.
SECOM LX
SECOM LX is an on-line security system that includes an access control function.
SECOM FXSECOM FX is a system that combines monitoring for intruders and fire with facility
control functions.
SECOM DRONE
Working in tandem with an on-line security system, this small autonomous flying
surveillance robot flies toward unauthorized individuals or vehicles, choosing the
optimal angles from which to capture images, which are then sent to a control center.
SECOM 3D SECURITY PLANNING
SECOM 3D Security Planning makes use of high-precision digital relief maps to
conduct multifaceted, multidimensional risk assessments, thereby facilitating
sophisticated security planning.
SECOM AIRSHIP/SECOM AEROSTAT
These dirigibles are used for overhead surveillance at large-scale events to ensure
the prompt detection of problems and in disaster situations to provide support for
efforts to swiftly gauge the extent of damage to evacuation guidance, among others.

On-Line Security Systems for Residential Use

Fire Protection Services

Medical Services

Insurance Services

BPO and ICT Services

FIRE ALARM SYSTEMSThis business encompasses the assembly, installation and sale of a broad range ofequipment and systems, including automatic fire alarm systems, environmental monitoring systems, and fire and smoke control systems, suited to buildings of varying
sizes and uses, from homes to large-scale ­commercial and industrial facilities.
FIRE EXTINGUISHING SYSTEMSSECOM offers an extensive lineup, including fire sprinklers and other water fire­extinguishing systems, foam fire extinguishing systems, dry chemical fire extinguishingsystems and inert gas fire extinguishing systems, for applications r­ anging from officebuildings to chemical plants and tunnels.
MAINTENANCE SERVICES
This business centers on inspection, maintenance and repair services, as well asaround-the-clock on-line monitoring and other services provided through a c­ ustomer
services center.
OTHERSThis category comprises the installation and maintenance of parking lot control­systems and the assembly and sale of printed circuit boards for manufacturers in otherindustries, including medical and electronics equipment.

HOME MEDICAL SERVICESSECOM’s medical services for patients at home include pharmaceutical services,encompassing the preparation and delivery of prescription pharmaceuticals, andhome nursing services provided through visiting nurse stations. SECOM also provides
consulting and support services for physicians opening home medical care clinics.
HOME-BASED PERSONAL CARE SERVICESSECOM provides patients recovering at home with caregivers to assist with personal
hygiene, bathing, exercise and other daily activities, as well as provide
light housekeeping.
SECOM UBIQUITOUS ELECTRONIC MEDICAL REPORT (EMR)
SECOM Ubiquitous EMR is a medical report system for home medical care aimed atclinics and small and medium-sized hospitals. The system enables the sharing of data
among members of the home-care team, including the primary physician, visiting
nurse and pharmacy.
Hospi-net
Hospi-net, a remote image diagnosis support service, transmits magnetic resonanceimaging (MRI), computerized tomography (CT) and other images to SECOM’s Hospinet center, where ­diagnostic experts examine them and provide consultation to theprimary physician.
MY SPOONMy Spoon is a robot that enables people with impaired upper body mobility to eat
with minimal assistance. This is the first robot of its kind in Japan.
RESIDENCES FOR SENIORS AND NURSING HOMESSECOM manages the Sacravia Seijo, Comfort Royal Life Tama, Comfort Garden Azamino
and Comfort Hills Rokko residences for seniors and the Alive Care Home series ofnursing homes.
SECOM HEALTH CARE CLUB KENKO
SECOM Health Care Club KENKO is a membership-based club that provides access to avariety of health management services, including testing with a PET/CT scanner. The
club is offered through an alliance with Yotsuya Medical Cube, a cutting-edge clinicin Tokyo.

SECURITY DISCOUNT FIRE POLICY
Security Discount Fire Policy is a commercial fire insurance policy that f­eatures
reduced premiums for subscribers to commercial security systems.
SECOM ANSHIN MY HOME
SECOM Anshin My Home is a comprehensive fire insurance policy that ­features
reduced premiums for subscribers to home security systems.
MEDCOM
MEDCOM is an unrestricted treatment policy that covers the cost of cancer treatment not covered by Japan’s national health insurance scheme, as well as thepatient’s portion of the cost of medical care covered by the national health insurance scheme. MEDCOM also provides hospital referrals and ­treatment-related­consulting services.
SECOM ANSHIN MY CAR
SECOM Anshin My Car is a comprehensive automobile insurance policy that
includes on-site emergency services in the event of an accident, as well as
discounts for drivers without a traffic violation history or on cars equipped with­antitheft devices.

DATA CENTERS
Robust facility construction, stable electric power supplies, dependable networks
and top-grade SECOM security enable SECOM to provide safe storage for
information assets, as well as a variety of other services.
LARGE-SCALE DISASTER RESPONSE SERVICESSECOM provides solutions encompassing everything from services that optimize
companies’ preparedness for disasters to services that assist companies whendisaster strikes and during post-disaster reconstruction. These include SECOM Safety
Confirmation Service, which helps companies confirm the safety of employees inthe event of a disaster, as well as to gather and share crucial information on
conditions on the ground.
INFORMATION SECURITY SERVICESSECOM provides a variety of services designed to protect subscribers’ information
against cyber attacks and other dangers, including diagnosing and analyzing
network problems, monitoring for system and network viruses and emergency
on-site response services in the event an irregularity is detected.
CLOUD-BASED SERVICESSECOM extends cloud-based services that help increase customers competitiveness,
productivity and ability to create value by digitizing their business processes.
BPO SERVICESSECOM offers contact center, back office support and a broad range of otherBPO services.

SECOM Annual Report 2018

SECOM
3 Dispatch
emergency response
personnel

1

SECOM
Emergency
Depot

SECOM
Control Center
SECOM emergency
2 Alertresponse personnel

SECOM HOME SECURITY
SECOM Home Security is a comprehensive home security system combining aroundthe-clock ­intrusion- and fire-prevention services, emergency call services, gas leakmonitoring and medical emergency call ­services. The new SECOM Home Security NEO
is an advanced version that features a desktop controller and can be operated from asmartphone. This service can also be linked with devices on the IoT, facilitating accessto a variety of new services.
SECURITY SYSTEMS FOR CONDOMINIUMS AND APARTMENTS
SECOM provides comprehensive building ­management functions for condominiums
and total safety with a centralized ­security sys­tem for each unit in the building.
SECOM’s menu includes services for small-scale apartments.
SECOM MY DOCTOR WATCH
SECOM My Doctor Watch is a wearable wristband-style emergency medical alert andhealth management service. This service is offered as an option to SECOM Home
Security subscribers.
SECOM MY DOCTOR PLUS
SECOM My Doctor Plus is an emergency medical alert system for seniors featuring an
exclusive portable device that incorporates a GPS locator and a cellular phone.

Fire
Dept.

Alert using
telecommunications
circuits

Gas
Company• Alert emergency
services asnecessary

Whether indoors or out, the device, when activated, sends an emergency signal to
SECOM. If requested, SECOM dispatches emergency response personnel. If deemednecessary, SECOM staff also contacts emergency services and sends preregisteredemergency information to the subscriber’s device, thereby ensuring it isimmediately available to ambulance attendants and hospital staff. Other services
include telephone health consultation. SECOM will also act as go-between withnursing care providers for individuals who have independently contracted careservices.

Large-Scale Proprietary Security Systems
TOTAX ZETATOTAX ZETA integrates networking capabilities and a security system into acomprehensive local control ­system for industrial ­complexes and buildings.

COCO-SECOM

COCO-SECOM is an innovative system that uses signals from global positioning
system (GPS) satellites and cellular telephone base stations to locate moving
objects, such as people, vehicles and property. As an option, customers can also
request to have emergency response personnel dispatched to the location of theobject or an emergency alert relayed to a ­predetermined telephone number.

Geographic Information Services
PasCAL SERIES
Designed for local governments, the PasCAL series of comprehensive GIS services
facilitates the effective use of GIS in a variety of situations.
MarketPlanner SERIESThe MarketPlanner series uses a variety of data sorting and presentation m­ ethods tosupport the efforts of growing companies to establish area ­marketing strategies.
SAFE ROUTE MAPPING SERVICEThis service helps companies ensure their employees are able to reach home safely
and assists crisis management efforts in the event of a major earthquake. A versionof this service is also available to individuals.

Merchandise
SECURITY CAMERA SYSTEM
This multifunctional, cost-effective security camera system provides stable
monitoring even in places where insufficient light makes clear images difficult andallows the combined use of digital and analog cameras. It is also capable ofdetecting attempts to disable or destroy the camera. The system offers an optional
service whereby camera images are transmitted via a network to a SECOM data
center facility for storage.
SECURILOCK SERIESThe SECURILOCK series uses identification numbers, integrated circuit (IC) pass cards
and other methods to control access to restricted areas.
SESAMO SERIESThe SESAMO series comprises access-control systems for use in c­ orporate offices,
factories, parking facilities and any other security-sensitive areas. These systems
employ such technologies as contactless IC pass cards, magnetic cards, personal
identification numbers, and finger vein authentication.
TOMAHAWK SERIESThe TOMAHAWK series is an extensive lineup of innovative ­extinguishing systems,
including TOMAHAWK MACH II residential-use fire extinguisher and TOMAHAWK III
high-speed automated fire extinguishing system with gas suppression.
PYTHAGORAS SERIESPYTHAGORAS is a series of security vaults with superior protection, heat r­ esistanceand performance.
SECURIFACESECURIFACE is a residential intercom system that combines a face detection
function with SECOM Home Camera System, enhancing security for people
at home.
LASER SENSOR
Laser Sensor is an external monitoring sensor that uses a laser beam to facilitate
effective detection of intrusions over a broad area. The sensor is flexible and can be
programmed to accommodate various monitoring areas.

Real Estate and Other Services
REAL ESTATE DEVELOPMENT AND SALESSECOM offers Glorio condominiums.
SECOM HOME SERVICE/SEIKATSU TASUKESECOM Home Service is a suite of convenient lifestyle support services for SECOM
Home Security subscribers ranging from patrolling subscribers’ homes whenoccupants are away to assistance with housekeeping. Seikatsu Tasuke is acomprehensive suite of lifestyle and household support services.

SECOM Annual Report 2018100

Directors, Audit and Supervisory Board Members
and Executive Officers
Directors

Yasuo Nakayama

FounderPresident andRepresentative Director

SECOM CO., LTD.

Makoto Iida

Junzo Nakayama

Ichiro Ozeki

Tatsuro Fuse

Senior Executive Director

Executive Director

Executive Director

Executive Director

ANNUAL REPORT 2018

Yasuyuki Yoshida

SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo 150-0001, Japanwww.secom.co.jp

Tatsuya Izumida

Tatsushi Kurihara

Takaharu Hirose

Hirobumi Kawano

Hajime Watanabe

Director

Director

Outside Director

Outside Director

Outside Director

Audit andSupervisory Board
Members

Executive Team

Takayuki Ito

Directors

Koji Kato

Yasuo Nakayama

Kenichi Furukawa

Sumiyuki Fukumitsu

Osamu Ueda

Kazuhiro Mitomo

Hideki Kato*

President andRepresentative Director

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Masahiro Takeda

Kensuke Shindo

Yoshinori Yamanaka

Takehiko Senda

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Toshiaki Mizuno

Yasufumi Kuwahara

Seiya Nagao

Takashi Nakada

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Shokichi Ishimura

Noriyuki Fukuoka

Noriyuki Uematsu

Michiyoshi Morita

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Keitaro Arai

Takeshi Akagi

Osamu Nagai

Makoto Inaba

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Yoichi Sugimoto

Sadahiro Sato

Atsushi Komatsu

Executive Officer

Executive Officer

Executive Officer

Makoto Yasuda*
Masao Yokomizo*

Yasuyuki Yoshida
Senior Executive Director

Junzo Nakayama
Executive Director*Outside

Ichiro Ozeki
Executive Director

Tatsuro Fuse
Executive Director

Tatsuya Izumida
Director

ANNUAL REPORT 2018Year ended March 31, 2018

In response to changing customer needs,
SECOM is working to realize its vision for the
future— the Social System Industry —by
providing comprehensive, integrated services
and systems that make life more secure,convenient and comfortable.

Executive Officers

Tatsushi Kurihara
Director

101(As of July 31, 2018)

Printed in JapanSECOM Annual Report 2018

セコムアニュアルレポート2018（英語版）

表紙オモテ

三校

Directors, Audit and Supervisory Board Members
and Executive Officers
Directors

Yasuo Nakayama

FounderPresident andRepresentative Director

SECOM CO., LTD.

Makoto Iida

Junzo Nakayama

Ichiro Ozeki

Tatsuro Fuse

Senior Executive Director

Executive Director

Executive Director

Executive Director

ANNUAL REPORT 2018

Yasuyuki Yoshida

SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo 150-0001, Japanwww.secom.co.jp

Tatsuya Izumida

Tatsushi Kurihara

Takaharu Hirose

Hirobumi Kawano

Hajime Watanabe

Director

Director

Outside Director

Outside Director

Outside Director

Audit andSupervisory Board
Members

Executive Team

Takayuki Ito

Directors

Koji Kato

Yasuo Nakayama

Kenichi Furukawa

Sumiyuki Fukumitsu

Osamu Ueda

Kazuhiro Mitomo

Hideki Kato*

President andRepresentative Director

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Masahiro Takeda

Kensuke Shindo

Yoshinori Yamanaka

Takehiko Senda

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Toshiaki Mizuno

Yasufumi Kuwahara

Seiya Nagao

Takashi Nakada

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Shokichi Ishimura

Noriyuki Fukuoka

Noriyuki Uematsu

Michiyoshi Morita

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Keitaro Arai

Takeshi Akagi

Osamu Nagai

Makoto Inaba

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Yoichi Sugimoto

Sadahiro Sato

Atsushi Komatsu

Executive Officer

Executive Officer

Executive Officer

Makoto Yasuda*
Masao Yokomizo*

Yasuyuki Yoshida
Senior Executive Director

Junzo Nakayama
Executive Director*Outside

Ichiro Ozeki
Executive Director

Tatsuro Fuse
Executive Director

Tatsuya Izumida
Director

ANNUAL REPORT 2018Year ended March 31, 2018

In response to changing customer needs,
SECOM is working to realize its vision for the
future— the Social System Industry —by
providing comprehensive, integrated services
and systems that make life more secure,convenient and comfortable.

Executive Officers

Tatsushi Kurihara
Director

101(As of July 31, 2018)

Printed in JapanSECOM Annual Report 2018

セコムアニュアルレポート2018（英語版）

表紙オモテ

三校