A Message to Stakeholders

Under the SECOM Group Road Map 2027,
we will strive to enhance corporate value
through the creation of new value.

Ichiro Ozeki
President and Representative Director

AZ-Air, a security system for small and medium-sizedcommercial facilities and offices. In April 2023, we
introduced anone, a communication and conversation
service for seniors that uses a robot. We also responded toincreasingly diverse customer needs by launching YORiSOS,
an emergency alert and daily health management app thatcan be linked to the Apple Watch’s fall detection feature tonotify SECOM should a fall be detected.
Overseas, we continued to focus on Association ofSoutheast Asian Nations (ASEAN) member states, which are
expected to continue seeing economic growth, promoting the
introduction of services customized to reflect local market
needs, including an interactive security system that links
with smartphones. In February 2023, Turkish subsidiary
Secom Aktif Guvenlik Yatirim A.S. provided relief supplies
and took part in rescue efforts in the wake of the major
earthquake that struck the south of that country.
We also pushed ahead with efforts to enhance oursustainability program, which strives to contribute tosustainable growth for society and to improve corporate
value by addressing key related challenges. In December
2022, we earned the top rating in the climate change
disclosure program run by the CDP, an international not-forprofit environmental organization, making the Climate
Change A List and earning a place on the Supplier
Engagement Leaderboard for the third consecutive year.
During the period, we proceeded with theimplementation of strategies in line with the SECOM Group
Road Map 2022, developed with the aim of ensuring
achievement of the SECOM Group’s Vision for 2030. With
some pandemic-related restrictions on business activities
remaining in place, inflation and attendant cost surges,
together with necessary investments in growth and asecond consecutive annual base salary increase
implemented to bolster employee motivation, meant that we
fell short of the road map’s consolidated operating profit
target. Nonetheless, we did make steady progress, posting
record-high consolidated revenue.

SECOM Group Road Map 2022: A look backConsolidated operating results
The Japanese economy showed signs of a gradual recovery
in the fiscal year ended March 31, 2023. While economic andsocial activity gradually returned to normal andimprovements were seen in corporate earnings and privatesector consumption, among others, as people graduallyadapted to the post-COVID-19 “new normal,” downside
economic risks, including those associated with the current
unstable global situation, supply side constraints, rising
prices and tightening monetary policy around the world, as
well as fluctuations in financial and capital markets,
continued to warrant attention.
Against this backdrop, we pressed forward with efforts toachieve the SECOM Group’s Vision for 2030, formulated withthe aim of realizing our Social System Industry vision, whichseeks to deliver safety and peace of mind, as well as to makelife more comfortable and convenient. These focused on
extending meticulously tailored, seamless services that
respond to the diverse and sophisticated needs of customers.

Consolidated net sales and operating revenue for theperiod under review amounted to ¥1,227.3 billion, up 5.2%,
or ¥61.2 billion, owing to contributions from Senon Ltd.,
which became a consolidated subsidiary in July 2022, and toincreases in all segments except fire protection services.
Operating income declined 6.9%, or ¥10.9 billion, to ¥145.6
billion, owing to the fact that the security services and fire
protection services segments benefitted from comparatively
profitable projects in the preceding period, as well as toinvestments in growth, primarily in the security services
segment, an increase in losses due to natural disasters in
the insurance services segment and an elevated fuel costadjustment unit price in the BPO and ICT services segment.
Net income attributable to SECOM CO., LTD., rose 3.6%, or¥3.8 billion, to ¥111.6 billion, reflecting factors such asincreases in gain on private equity investments and equity in
net income of affiliated companies.

Highlights of the period
Guided by our goal of delivering safety and peace of mind, as
well as making life more comfortable and convenient, we
promoted a variety of initiatives in our various businesses in
the period under review. In June 2022, autonomous security
robot cocobo began operating at Narita International Airport.
Cocobo was also honored with multiple awards, including a

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GOOD DESIGN AWARD, an annual evaluation andrecommendation program in Japan that acknowledges
outstanding examples of industrial design, underscoring theacclaim it has earned. In July, Senon, a leader in theprovision of airport security services, joined the SECOM
Group. The same month, we launched System Security

Over the five years of the SECOM Group Road Map 2022,
which was devised in May 2018 and concluded in the period
under review, we positioned responding to technologicaladvances and a declining labor force as priority challenges
and worked actively to keep abreast of rising needs related
to these issues, which we saw as likely to yield significant
business opportunities. To ensure achievement of the
SECOM Group’s Vision for 2030, we also promoted crucial
investments with a medium- to long-term perspective,
including concentrated investments in people and systems.
With artificial intelligence (AI), the Internet of Things (IoT),
5G mobile communications and other advanced technologies
continuing to evolve at an astounding pace, the security
services industry, which is expected to benefit greatly fromsuch progress, has entered an era of transformation.
Recognizing that making the most of this opportunity to
evolve our businesses will require capabilities and a senseof urgency on an entirely different level, we strove toenhance our R&D system by, for example, promoting open
innovation, which allows us to leverage the knowledge andexpertise of various partners, in addition to proprietary
SECOM technologies.
The spread of COVID-19 had a major impact on all facetsof life, including by restricting business activities. At thesame time, new business practices and patterns ofconsumption took hold as the world moved online,
accelerating digital transformation (DX) in all aspects of life.
One consequence of this is the emergence of new needs for,among others, services that support minimally staffed andunattended retail facilities, employee attendance

management services that accommodate work stylereforms, information security improvement and document
digitalization services, and monitoring services that help
protect elderly parents and other family members, which we
took decisive steps to address. We also promoted various
investments—including to boost the capacity of our coresystem, which is critical to our on-line security systems—
that enabled us to respond flexibly to these and other newneeds, as well as technological change.
In the area of on-line security systems for commercial
facilities, the core of our commercial security services
business, we developed and actively promoted System
Security AZ, which offers excellent scalability that allows its
expansion to include, for example, facility control andemployee attendance management. In addition to reinforcing
and expanding the added value of System Security AZ by
adding human resources tech, among others, we
strengthened our sales and service systems by assigninghuman resources with increasingly critical ICT-related
knowledge and skills to all regions of Japan, thereby
improving the IT literacy and proposal development
capabilities of sales staff.
Looking ahead, we will continue to promote System
Security AZ as our mainstay on-line commercial security
system, capitalizing on its scalability to introduce various
new services that add value. To encourage broad adoption ofthese new value-adding services, we will not only strive toattract new subscribers but also advance a project designed
to replace existing subscribers’ currently installed
equipment with up-to-date models. Through such efforts,

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A Message to Stakeholders

we will look to increase the percentage of our on-line
commercial security system subscribers using System
Security AZ.
In home security services, pandemic restrictions on
movement made it difficult for people living any distanceaway to return to their family home, exacerbating the need forassistance in monitoring seniors. We stepped up advertisingand publicity activities, highlighting our home security
systems, whereby we keep an eye on elderly parents aroundthe clock on behalf of family members living apart anddispatch emergency response personnel from the nearest
SECOM emergency depot if required, which succeeded inbolstering the market’s awareness of SECOM Home Security
as a monitoring solution. We also responded to varied needs
by launching a variety of meticulously tailored optional
services for SECOM Home Security subscribers, including
cloud-based services, and improving user conveniencethrough enhanced connectivity with Apple Watch.
We worked to expand our operations overseas throughboth organic growth in countries and territories where wecurrently operate, as well as through M&As, including in newmarkets, with the objective of boosting revenue generated inmarkets outside Japan to 10% of the consolidated total, fromthe current 5%. To this end, as part of the concentrated
investments to reinforce human resources called for under
the SECOM Group Road Map 2022 we increased hiring ofmanagement staff with superior international businessskills who share SECOM’s principles and philosophies. We
also resolved to revamp our service and product lineups
from the bottom up with the goal of moving away from our
traditional focus on Japanese companies to target local
customers as a full-fledged participant in local markets. Our
first move was to introduce a highly convenient and scalable
cloud-based on-line security system in Thailand, where
economic growth has given rise to a burgeoning middle
class, leveraging results subsequently by, among others,
broadening deployment to other regions. Also in Thailand,
we kicked off our first overseas promotional effort, centeredon television advertisements, which led to a dramatic rise ininquiries from potential local customers, as well as
significant concrete benefits, including improved motivationon the part of local staff and a significant rise in applicantsfor employment. In addition, we secured major orders for
products and system installation projects in multiple otheroverseas markets, including Singapore, the United Kingdom
and Australia, that fortified our local presence. Other moves
included acquiring on-line security systems companies in
Malaysia, Singapore and Hong Kong, and establishing a new
business development project to further advance businessalliances and M&As overseas.
In the BPO and ICT services segment, we continued torespond to the ever-increasing demand for vital infrastructureamid labor shortages and the proliferation of DX. In the area

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of data center services, we opened data centers not only inTokyo, but also in the Kansai area, in western Japan, andin several smaller regional cities, taking advantage of low
latency and highly reliable connectivity with the megacloud,and opened access points, which simplify connectivity to
cloud service providers, in key cities across the country,
the first step in a plan to build a nationwide platform witha view to expanding our edge data center business. In ICT
services, we built and operated IT systems, enabling us to
support the digitalization of customers’ operations, as wellas to commence sales of new products that offer greater
efficiency and safety. In BPO services, with demand driven by
COVID-19 appearing to flag but that for outsourcing services
flourishing, we established new contact centers and otherservice facilities in multiple locations.
On another front, operating conditions encouraged us toreview our business portfolio and take steps to optimize the
SECOM Group. Key among these were the divestiture of aconsolidated real estate development and sales subsidiaryand the transformation of listed subsidiary Secom Joshinetsu
Co., Ltd., into a wholly owned subsidiary. We also acquired
Senon, a move aimed at elevating our presence in the market
for security services for airports and other major
infrastructure, as well as for large-scale facilities, andincreasing productivity in the security services business.
To enhance productivity Groupwide, we began working to
replace existing in-house business systems that haveundergone repeated modifications over many years. This
followed a thorough review of the substance of work
performed and processes used by each individual
department, as well as efforts to revamp administrative
rules and promote multitasking among related departments.
This is a massive, ongoing undertaking requiringconsiderable time to consider a broad range of factors, but
we made steady progress.
The five years of the SECOM Road Map 2022 brought
momentous socioenvironmental changes. Particularly
notable, of course, were the pandemic and rapid inflation.
Nonetheless, thanks to various initiatives, we reported
record-high consolidated operating profit in the fiscal year
ended March 31, 2022. In the fiscal year ended March 31,
2023, the plan’s final year, we saw key challenges—including
improving employee engagement, promoting open
innovation and making additional investments to solidify ouroperating foundation—take on greater urgency to ensure ourachievement of the SECOM Group’s Vision for 2030,
prompting us to focus on decisive related initiatives. One
consequence of this was that we fell short of the road map’s
ultimate consolidated operating profit target. However, weare confident that the accumulated benefits of initiatives
implemented under this road map, particularly in the
security services business, which is undergoing greatchange, will help accelerate growth in the years ahead.

SECOM Group Road Map 2027: The path forward
In May 2023, we announced the SECOM Group Road Map
2027, which clarifies our direction through to the fiscal year
ending March 31, 2028. This road map sets forth five core
strategies for growing and enhancing our operations as wework to achieve the SECOM Group’s Vision for 2030: Expand
monitoring and security services, strengthen overseas
operations, reinforce BPO and ICT services, improve
productivity and reward stakeholders.
Initiatives to expand monitoring and security services
will emphasize realizing seamless protection by linking
diverse information in the Mimamori* Cloud and creating
security-focused services and solutions by, among others,
creating highly convenient offerings that combine robust
SECOM security services and open cloud services.
* Mimamori is Japanese for “monitoring.”

To strengthen overseas operations, we will seek to realize
further growth in promising overseas markets. Accordingly,
we will augment existing businesses by broadening offerings
that meet individual market needs, as well as enter untappedmarkets and create new growth models.
With the aim of reinforcing BPO and ICT services, we will
focus on creating business infrastructures and offering
services that provide digital support for customers’
operations. These will include continuing to bolster our data
centers, network, Software as a Service (SaaS) solutions and
BPO services.

To improve productivity, in addition to businessexpansion we will take steps to maximize our service value.
We will also leverage the latest technologies to help
employees demonstrate their full potential and boost ouroperational efficiency.
In addition to the ongoing efforts to provide services thatearn customer satisfaction and increase returns toshareholders, we will seek to reward stakeholders bypromoting investments to secure and foster humanresources and stepping up the creation of workplaces thatenable each employee to capitalize on their individuality andfully exercise their capabilities. We will also strive toconsistently earn the trust of society by actively
incorporating sustainability perspectives into management
decisions and business standards to accelerate ourachievement of sustainable management.
Guided by the SECOM Group Road Map 2027, we will takeadvantage of our advanced technologies and extensive
know-how to address social imperatives and enhance
corporate value, positioning us to achieve sustainablegrowth together with society. Expect great things fromSECOM going forward! (For more information on the SECOM
Group Road Map 2027, please see pages 14–19.)

Sustainable management
More than ever before, growing sustainably together withsociety requires that we conduct our operations in abalanced manner, taking into account all of our various
stakeholders, that is, our shareholders, customers,
employees, business partners and local communities.
Reflecting our desire to continue to earn the trust of society,that is, of our stakeholders, we will expedite the integrationof management and sustainability strategies under the
SECOM Group Road Map 2027. In terms of efforts to date, in

December 2021, we formulated the SECOM Group Basic
Sustainability Policy. Having identified material sustainability
issues, in October 2022 we formulated related key goalindicators (KGIs) and key performance indicators (KPIs),
toward the attainment of which we are promoting a variety
of initiatives. We will periodically evaluate our progress
and publicize our findings with the aim of encouraging
improvement.

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A Message to Stakeholders

As part of our commitment to promoting diversity, we
aim to boost the proportion of management-level positions
occupied by women to at least 30% by the fiscal year ending
March 31, 2031. To achieve this target, we are focusing on
expanding the scope of jobs available to women and actively
promoting female employees, as well as on fostering female
leaders. We have appointed a number of women to
management positions in the home security services
business’ sales departments and administrative offices. In
April 2023, we appointed female employees to the positionof manager at security services offices, a move that had long
been under consideration.

Reinforcing corporate governance
Scrupulous corporate governance is vital to earning thetrust of society and bringing our abilities into full play. We
are working to strengthen our corporate governance system
to improve the transparency and objectivity of management.
Our Board of Directors, which currently has five inside
and three outside directors, engages in active discussion. As
part of our effort to enhance corporate value over the
medium to long term, we are currently considering
increasing the diversity of the Board’s composition, including
by raising the proportion of outside directors and thenumber of female directors.
Remuneration for directors (excluding outside directors)
has to date comprised fixed monthly salary, bonuses andshare-based remuneration, with a relative proportion of
approximately 80:15:5. We recently resolved to increase theproportion of share-based remuneration to further
encourage management that takes a shareholder
perspective and emphasized the improvement of corporate
value, as a result of which the relative proportion going
forward will be 65:15:20. Regarding the method we use todetermine bonuses paid to these directors, which are
performance-linked, we resolved to give comprehensive
consideration to operating profit, earnings per share andemployee engagement (employee satisfaction)—key
management targets—and to make decisions based on levelof achievement of these key management targets.
In June 2023, an outside director was appointed to chair
our Nomination and Compensation Committee, established
as a discretionary committee of the Board of Directors, tofurther bolster objectivity and transparency. Looking ahead,
we will work to further strengthen our pipeline of candidates
for appointment to management positions by debating
succession plans.
We hold listed shares for strategic purposes, primarily
from a business perspective. The Board of Directors
continues to verify the appropriateness of holdings annually.
If a holding’s appropriateness is judged insufficient, it will betargeted for reduction through the sale of shares.

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SECOM REPORT 2023

In a move aimed at expediting the expansion of ouroperations overseas, in October 2022 we formulated the
SECOM Group Human Rights Policy to underpin our efforts
to address human rights issues, a global challenge, as wellas to ensure we remain an organization that is trusted bysociety by clarifying our stance as an organization thatmeets its obligations with respect to human rights.
By continuing to enhance employee engagement,
encourage work–life balance, and promote diversity andinclusion, we will strive to bolster the capabilities of ourhuman resources, realize a varied labor force and contributeto the spiritual affluence and well-being of society.

Human resources strategy
Our ability to provide high-grade services that earn thesatisfaction of customers depends on continuing to secureand foster human resources, and on making it possible forevery employee to fully exercise their abilities. To this end,
employees must be motivated to work at SECOM and feel job
satisfaction. Our human resources strategy thus focuses onenhancing employee engagement and promoting diversity.
We recognize that optimizing the workloads of the frontline employees is essential to our security services businessand that improving their terms of employment, including
remuneration, is indispensable to better employee
engagement. Over the past several years, we haveaddressed raising productivity, necessary to optimize frontline workloads, as a priority challenge. In the period underreview, we implemented a second consecutive annual basesalary increase, viewing such outlays as investments insustainable growth, rather than as expenses, and as anecessity in light of recent socioeconomic conditions.
Looking ahead, we will continue to boost returns toemployees in a manner that takes socioeconomic factors
into consideration. Additionally, to encourage employees’
efforts to build assets, and to approach their work with aperspective similar to that of management and investors, wehave introduced a benefit plan that grants common stock
shares as restricted stock to all employees of the parent
company, as well as to employees of certain SECOM Group
companies, or approximately 23,000 individuals in total. In
March 2024, eligible employees and executive officers willbe allotted 25 shares and 50 shares, respectively, to be
facilitated by the disposal of treasury stock. This is expected
to result in the accumulation of 100 shares for each
employee and 200 shares for each executive officer over the
next four years. We are confident that these and otherefforts to optimize workloads and improve terms of
employment for employees will underpin efforts to attract
and retain human resources, thereby effectively enhancing
our team of employees, which are our most importantmanagement resource.

Financial strategies
The SECOM Group Road Map 2027 outlines four financial
targets for the fiscal year ending March 31, 2028:
Consolidated revenue of at least ¥1,250.0 billion, operating
profit of between ¥160.0 billion and ¥180.0 billion, a dividend
payout ratio of around 45%, and a return on equity (ROE) of
10%. (Targets are based on Japanese GAAP.)

Capital management
Our philosophy for the allocation of cash is to earmark cashon hand and cash generated by our portfolio of stable
recurring revenue–based businesses, notably on-line
security systems, for investments in growth, operating funds
and returns to shareholders. With the security services
industry in an era of transformation, guaranteeing future
growth will require critical investments going forward.
Accordingly, our current emphasis is on investments ingrowth. Recognizing the effective use of cash as a criticalmanagement issue, and that investments in growth are a
growth driver that enhances corporate value but can at thesame time be challenging, our policy is to fund theseparticular investments from equity, although ensuring the
optimal allocation of cash remains a priority.
Operating funds are the funds needed to ensure ourability to provide services without interruption, regardless ofchanges in the operating environment, thereby fulfilling our
responsibility to deliver safety and peace of mind. SECOM
Group companies differ in terms of working capital andcapital investment needed to guarantee business continuity.
Because risk levels for these companies vary depending on
the nature of their businesses, this is also taken into accountin determining the appropriate level of operating funds.
Regarding returns to shareholders, we ensure the steadyand continuous distribution of growing consolidated income
as dividends, in line with our dividend payout ratio target,
which under the SECOM Group Road Map 2022 was between
40% and 45% and under the SECOM Group Road Map 2027

has been amended to around 45%. In the fiscal year ended
March 31, 2023, dividends for the full term—the record dates
for which fall during the period—amounted to ¥185.00, an
increase of ¥5.00 from the previous fiscal year. Looking
ahead, we will continue to promote flexible share buybacks
while paying careful heed to such factors as our cash
position, the scale and timing of investments in growth, andtrends in share prices. We recently repurchased our own
shares between February and June 2022 and February and
May 2023, with total repurchase prices of approximately¥30 billion and ¥25 billion, respectively. We resolved to
implement a second buyback this term—between Augustand December 2023—which will have a total repurchaseprice of ¥30 billion.
We maintain high credit ratings from key ratings
agencies (AA+ from Japan Credit Rating Agency, Ltd. (JCR)
and AA from Rating and Investment Information, Inc. (R&I)),
evidence that our capital strategies are considered agile.

Investments in growth
In addition to our rapidly evolving security services business,
we are promoting investments in other promising areas,
including the BPO and ICT services business. We areconfident that such investments will accelerate our growthin the years ahead and will continue to proactively seek out
appropriate targets while keeping a close eye on capitalcosts. For investments through M&As, we target companies
both in Japan and overseas that will strengthen and add
value to our on-line security systems, or broaden our BPO
and ICT services, including in such areas as SaaS and healthtech. In 2023, we invested in ARTERIA Networks Corporationin Japan, which we followed with Eagle Eye Networks, Inc.,
and Brivo, Inc. in the United States. Capital investments during
the period focused on reinforcing our internal networks toboost productivity, expanding our data centers to meetgrowing demand and building a second hospital in India.

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A Message to Stakeholders

Improving capital efficiency
Our target for ROE in the SECOM Group Road Map 2022 was
8%-plus, but in the SECOM Group Road Map 2027 we lifted
this to 10%. To reach this target, we will take steps to lift
profit levels and control capital. Through organic growth
attained through the implementation of core strategies, aswell as through M&As and other investments in growth, wewill strive to achieve our target for consolidated operating
profit in the plan’s final year, that is, the fiscal year ending

March 31, 2028, of between ¥160.0 billion and ¥180.0 billion.
To achieve an ROE of 10%, we will also conduct sharebuybacks in a timely manner.
We continue to explore ways to make effective use oftreasury stock, which has increased as a result of recent
share buybacks. In the period under review, we introduceda system for disposing of treasury stock as restricted stock
for the purpose of enhancing employee engagement.

Ensuring reliable growth
We are confident that security-related needs will remain
firm, owing to incipient demand for monitoring services andworsening perceptions of public safety. Nonetheless,operating conditions remain uncertain. Amid the persistenttightening of monetary policy worldwide, downside risks
continue to demand attention, including those associatedwith the possibility that downturns overseas will exert
downward pressure on the Japanese economy, as well aswith persistent supply side constraints, rising prices, andfluctuations in financial and capital markets. In the fiscal
year ending March 31, 2024, we also expect advanceinvestments in, among others, initiatives aimed at boostingproductivity, promotions in overseas markets and salary
increases, as well as a one-time increase incommunications-related outlays, to push up costs.
We have worked hard to absorb the impact of cost
increases. However, in August 2023 we were forced to raise
subscription fees for SECOM Home Security systems toreflect a sharp surge in costs attributable to labor shortages.
In data center services, to mitigate volatility in electricity
costs, which significantly impact our operating performance
we are amending service contracts to incorporate a billingformat that reflects changes in electricity costs. We also
expect to begin seeing the positive impact of the various
investments and initiatives we have made to date.
Advanced technologies have found practical uses amid
significant changes in our operating environment, including
a declining birthrate, the aging of Japan’s population andlabor shortages. These issues, together with the postpandemic “new normal.” are revolutionizing the security
services business. We see this as the perfect opportunity for
us to hasten growth and secure an unassailable market
position by creating new value. To make the most of thisopportunity, we recognize that we must tirelessly seek out
excellent investments in growth. These include investments
not only in facilities and M&As, but also to secure superior
human resources and enhance employee engagement. We
are confident that this management approach will position
us to increase benefits for both ourselves and our
stakeholders, underpinning greater corporate value. We

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believe that this, plus active efforts to addressing
environmental, social and governance (ESG)-related issues,
will improve our sustainability and enable us to fulfill our
mission, unchanged since our founding, of realizing a society
free from concerns.
Recent years have given us reason to feel the weight ofour responsibility to our stakeholders more than ever before.
I remain humbled that I have been entrusted with the
management of SECOM at this extraordinary time. I hopethat you, our stakeholders, will continue to expect greatthings from SECOM. In all of our endeavors, I look forward to
your ongoing support and guidance.

August 9, 2023

Ichiro Ozeki
President and Representative Director