A MESSAGE TO SHAREHOLDERS

Working to gain the unfailing loyalty of customers

Consolidated Operating Results
Despite lingering economic uncertainty, owing to persistently
high unemployment rates, the continued appreciation ofthe yen and gradual deflation, Japan’s economy had begun
showing signs of recovery as both corporate earnings andprivate-sector capital investment improved, bolstered by global
economic recovery and the positive impact of government
stimulus packages. However, as a result of the Great East Japan
Earthquake of March 11, 2011, the economic outlook is­currently unclear.
We at SECOM continue doing our utmost to actively assist
relief and recovery efforts in areas affected by the earthquakeand subsequent tsunami. In light of deteriorating sanitation
at evacuation centers, we provided five million hygienic masks
and 10,000 liters of disinfectant in the days immediately following the disaster. Consolidated subsidiary Secom Medical
System Co., Ltd., and its associated hospitals dispatched a
medical team to help provide vital health care services. Goingforward, we will continue to provide assistance as needed ateach stage of recovery.
Operating in such an environment, we continued working
toward the realization of our Social System Industry vision,
responding to the needs of customers by providing high-grade
products and services in our mainstay security services segment, as well as in our other business segments: fire protection
services, medical services, insurance services, geographic
information services, real estate development and sales, andinformation and communication related and other services.
Consolidated net sales and operating revenue for theyear ended March 31, 2011, rose 12.1%, or ¥81.2 billion, to¥751.9 billion. This result was attributable to newly consolidated organizations managing hospitals and health care-related
institutions, which were determined to be variable interestentities, as well as to robust sales of units in large-scale condominium complexes in the real estate development and salessegment. Operating income advanced 3.3%, or ¥3.3 billion,to ¥100.4 billion, owing to operating income in the real estatedevelopment and sales ­segment, compared with an operating
loss in the previous period, and to an increase in operating
income in the geographic information services segment, reflecting efforts to promote in-house manufacturing and stringent
process control. Net income attributable to SECOM CO., LTD.,

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Secom Co., Ltd.
Annual Report 2011

advanced 33.4%, of ¥15.7 billion, to ¥62.7 billion, bolstered by
the increase in operating income and a gain on private equity
investments, compared with a loss in the previous period, andby an increase in equity in net income of affiliated companies.

Distribution of Dividends
Recognizing the provision of a fair return to shareholders as animportant management task, we determined the consolidated
dividend payout ratio based on an overall assessment of trends
in our consolidated operating performance, in line with ourpolicy of ensuring a consistent, stable distribution of profits. At
the general shareholders’ meeting on June 24, 2011, management proposed and shareholders approved the payment ofannual cash dividends of ¥90.00 per share, an increase of¥5.00 per share from the previous period.

Understanding and Responding to Change
Social change and the increasing diversity and sophistication ofpeople’s needs for security and peace of mind continue to drivechange and growth in the security services market. Evolvingsocial imperatives, changing patterns of criminal behavior,technological advances and improvements in social infrastructure are among the many factors that influence the needs ofcustomers for service systems that provide greater security andpeace of mind.
In the security services business, we continued to introduce
innovative new systems with the aim of cultivating new
subscribers, as well as offering existing subscribers ever-greaterlevels of security. New offerings in this business included theIntelligent Emergency Alert System, which applies our image
recognition and voice processing technologies. The system
automatically detects abnormal or suspicious situations, suchas a robbery, and alerts a SECOM control center without theneed for anyone to press an emergency alarm button. We
also introduced a new external sensor featuring a laser beam,facilitating the detection of intrusions over a wide area andensuring effective monitoring at sites where physical impediments would hamper the performance of conventional sensors.
In addition to being suitable for installation at the premises of
new customers, these systems—both of which are examplesof our application of pioneering proprietary technologies torespond to demand from customers seeking more advanced

security—can be added as upgrades to the systems of existing
subscribers.
Other new launches include SECOM LX, an on-line security
system for businesses that not only monitors unauthorizedaccess at night, but also limits and records daytime access;
SECOM AS, a security system for small-scale apartmentbuildings that boasts the same performance features as ouron-line home security systems, thereby responding to security
needs in the rental housing market; and the SECOM On-LineAED Management Service, which ensures automated externaldefibrillators (AEDs) are kept in proper working order.
The introduction of new products and services also
increased opportunities for us to propose new ideas to customers, enabling us to maintain close communication with subscribers and ­reinforce relationships by enhancing trust. We also
created a new position, placing individuals in charge of improving ­customer satisfaction nationwide. This new position has
enhanced our basic approach, whereby sales personnel visit
each subscriber in person, thus enabling us to accurately interpret needs and expectations and to respond effectively and in atimely manner. We will continue to promote meticulous­communication with subscribers as we work to encourage theinstallation of up-to-date security systems and to ensure
greater customer satisfaction.
On another front, to optimize the allocation of management
resources, we implemented key organizational and administrative reforms. Of particular note, at a meeting of the Board ofDirectors on May 11, 2011, we resolved to absorb security
equipment installation and maintenance subsidiary, SecomTechno Service Co., Ltd., in July 2011.
Overseas, we took steps to encourage broad acceptanceof security services and advance our presence in key markets,with an emphasis on the developing economies of the People’s
Republic of China (PRC) and Southeast Asia. Throughout Asia,
economic growth continues to spur increased demand for
security services. To reinforce our capabilities in key growthmarkets, we revised our organizational structure to facilitate
the development and implementation of consistent, comprehensive strategies, and the further expansion of our overseas
operations. In the PRC, which is expected to continue seeingexceptional economic growth, we have already expanded ourservice areas, previously limited to the country’s important

Makoto Iida

Shohei KimuraFounderChairman

Kanemasa Haraguchi

Shuji Maeda

Executive Vice Chairman

President and Representative Director

Secom Co., Ltd.
Annual Report 20115

A MESSAGE TO SHAREHOLDERS

coastal regions, to include major inland cities, and haveestablished a network of bases, through which we are actively
marketing our products and services. In addition, we commenced operations in New Zealand, broadening our geographical coverage to 12 countries and territories. With subsidiaries
in both Australia and New Zealand, we are well-positioned tobroaden our operations in Oceania.
In line with our vision for the future—the Social SystemIndustry—we also implemented key measures in businesses
other than security services. In the fire protection services, thedeterioration of older office buildings has stimulated replacement demand for fire alarms and other systems. Accordingly,
consolidated subsidiary Nohmi Bosai Ltd., Japan’s leading provider of fire protection services, is focusing on the renovations
market, leveraging its wealth of experience and the solid trustof its customers to respond to the needs of building owners
and secure replacement orders.
In the medical services business, the rapid aging of Japanesesociety and an expanding market for home health care arebolstering demand for our home medical services, which
include home nursing services and pharmaceutical dispensing
and home delivery services. In October 2010, we opened Alive
Setagaya Nakamachi, our 12th residence for seniors, in Tokyo.
Our insurance services business emphasizes distinctive
non-life insurance policies. These include a fire insurance
policy for commercial premises and SECOM Anshin My Home,a comprehensive fire insurance policy for residences, both ofwhich take into account the risk-mitigating factor of on-line
security systems, offering discounts; SECOM Anshin My Car,a comprehensive automobile insurance policy that includes
access to on-site support services by emergency response
personnel; and MEDCOM, an unrestricted cancer treatment
policy that provides coverage for all treatment costs. With
competition in the comprehensive home insurance market
intensifying, we are revising SECOM Anshin My Home toenhance flexibility, enabling subscribers to set terms that suit
their particular needs. MEDCOM continues to earn acclaim forproviding access to the best treatment available, prompting
steady growth in the number of subscriptions.
In the area of geographic information services, we offer avariety of geospatial information that makes use of advanced
measuring devices and technologies. In the period under

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Secom Co., Ltd.
Annual Report 2011

review, this business continued to generate robust results. We
also continued to actively expand our overseas operations,securing orders for major mapping projects, as well as for thecreation of national land maps in developing countries.
In our real estate development and sales business, wepressed forward with efforts to develop and sell condominiums
equipped with sophisticated security systems and contingency
planning features.
Efforts in the information and communication related andother services business focused on reinforcing our information
security services, as well as our comprehensive informationand network services, designed to ensure the security of
subscribers’ information and communication in the event of anatural disaster. In response to increasing needs for assistancein the formulation of business continuity plans (BCPs), inAugust 2010, we established a new Secure Data Center. We
also worked to expand sales of our highly rated SECOM Safety
Confirmation Service.

Advancing to the Next Stage of Growth
Our Social System Industry vision depicts a framework of
distinctive products and services—both individually and in
tailored packages—that deliver security and peace of mind andmake life more secure, convenient and comfortable. To this end,
we will continue responding to changing customer needs bycreating service systems that leverage our unique capabilities.
We also recognize the need to anticipate and respond swiftly to
evolving social imperatives by developing and marketing service
systems worthy of our customers’ trust. One recent measuretaken with the aim of hastening realization of the Social System
Industry is the introduction of the ALL SECOM concept.
Having established a broad business portfolio encompassing security services, fire protection services, medical services,
insurance services, geographic information services, real estatedevelopment and sales, and information and communication
related and other services, we are pursuing a variety of initiatives in each business with the aim of further consummating
our vision. ALL SECOM emphasizes advancing cooperation
among such businesses to strengthen the Group as a wholeand build new synergies, and enabling us to better grasp whatcustomers expect from us so as to respond with products
and services that make a meaningful contribution to society.

These initiatives include the creation of a team comprising key
individuals appointed from each business, which is charged
with spearheading projects aimed at developing solutions
that enable us to respond swiftly and effectively as a Group toneeds for greater security and peace of mind. By facilitating
the sharing of information among our various businesses,
ALL SECOM will help enhance the efficiency of Group service
system sales efforts.
We will also actively promote this concept overseas. The
defining feature of our overseas security services businessis that we provide SECOM-style on-line security systems of
the same high quality as in Japan, customized to reflect local
needs and cultural sensibilities. SECOM-style security services
encompass the installation of security equipment at a subscriber’s premises, around-the-clock monitoring from a SECOM
control center and the prompt dispatch of emergency response
personnel should an abnormality be detected. As previouslymentioned, in March 2011, we began offering such services
in New Zealand. In the years ahead, we will continue working
to expand into new markets overseas, primarily by seeking out
promising M&A opportunities and forming joint ventures withlocal firms.
The development of new products and services will be
crucial to expanding the scale of our operations. The Great East
Japan Earthquake has caused tremendous upheaval in Japan,fundamentally altering lifestyles and accepted norms. Suchan event inevitably transforms peoples’ values. Social systems
must evolve in response to new values. Recognizing that there

is considerable scope for us to make unique and meaningful
contributions, we will push ahead with efforts to realize ourSocial System Industry vision by capitalizing on latent capabilities in our seven existing businesses, as well as by taking boldsteps to foster new businesses.
Furthermore, to accelerate growth, we will implement
measures aimed at reinforcing our operating foundation andincreasing productivity and at cultivating new markets, keeping
an eye open for beneficial M&A opportunities both in Japanand overseas. Through such measures, we seek to drive growthby positioning ourselves to better grasp the needs of customers
in different markets for security and peace of mind, as well as
to accelerate the development and provision of reliable products and services.
As always, our success depends on earning the trust ofcustomers. In line with our corporate message—“Providing reliable peace of mind”—we pledge to work as one to contributeto society through our business activities and to prove SECOM
worthy of the trust of our customers.
Guided by the ALL SECOM concept, we are committed
to maintaining a corporate culture that emphasizes cultivating new businesses that challenge accepted norms and toaccelerating efforts to realize our Social System Industry vision,
thereby enabling us to advance to the next stage of growth. In
these and all of our endeavors, we look forward to the continued support of our shareholders.
June 24, 2011

Makoto Iida

Shohei KimuraFounderChairman

Kanemasa Haraguchi

Shuji Maeda

Executive Vice ChairmanPresident and Representative Director

Secom Co., Ltd.
Annual Report 20117