セコム（9735） – Notice of Convocation of The 61st Ordinary General Meeting of Shareholders

Notice of Convocation The 61st Ordinary General Meeting of Shareholders The following is an English translation of the Notice of Convocation of the 61st Ordinary General Meeting of Shareholders of SECOM CO., LTD. to be held on June 28, 2022, except for the translation of the INSTRUCTION ON ONLINE VOTING and the ACCESS MAP FOR THE PLACE OF THE MEETING in the Notice. The Company provides this translation for your reference and convenience only and without any warranty as to its accuracy or otherwise. [English Translation] 1 Table of Contents 3 Notice of Convocation of The 61st Ordinary General Meeting of Shareholders ······ Reference Document Concerning the General Meeting of Shareholders ··············· 8 Business Report ····················································································· 22 Consolidated Financial Statements ······························································ 58 Non-Consolidated Financial Statements ······················································· 62 Auditors’ Reports ··················································································· 66 (Note) This Table of Contents is for this abridged English translation only, and not the same as that in the original Japanese documents. [English Translation] 2 Stock Exchange Code: 9735 June 6, 2022 Notice of Convocation of The 61st Ordinary General Meeting of Shareholders Dear Shareholders: Secom Co., Ltd. (the “Company”) hereby notifies you as follows that the 61st Ordinary General Meeting of Shareholders of the Company will be held as described below. We will hold this Ordinary General Meeting of Shareholders with adequate prevention measures against COVID-19. A live streaming of its proceedings will also be available on the Internet (for more information, please refer to the attachment). We would like shareholders to carefully consider attending the meeting in person and strongly recommend that they exercise their voting rights in advance by mail or via the Internet. Please exercise your voting rights by mail or via the Internet on or before 6:00 p.m. (JST) June 27, 2022 (Monday) after studying the Reference Document Concerning the General Meeting of Shareholders attached below: [In case of exercising voting rights by mail] Please indicate on the Voting Rights Exercise Form enclosed herewith your approval or disapproval to the proposals on the agenda, and return the form to the Company by mail on or before the time limit stated above. [In case of exercising voting rights via the Internet] for the website Please access the exercise of voting rights (https://www.evote.tr.mufg.jp/). Please indicate whether you approve or disapprove the items on the agenda by following the instructions on the display screen by the time limit stated above. (Platform for Electronic Exercise of Voting Rights) Institutional shareholders may use the platform for the electronic exercise of voting rights that is operated by ICJ Inc. Yours very truly, SECOM CO., LTD. 5-1, Jingumae 1-chome, Shibuya-ku, Tokyo, Japan By: ICHIRO OZEKI President and Representative Director [English Translation] 3 (Note) Please note that shareholders with addresses outside Japan may not themselves use these voting procedures. For these shareholders please consult their custodian in Japan as to the exercise of voting rights. [English Translation] 4 PARTICULARS 1. Date and Time of the Meeting: Tuesday, June 28, 2022 at 10:00 a.m. 2. Place of the Meeting: Bersarle Hanzomon, Sumitomo Fudosan Hanzomon-Ekimae Building 2F, 6-4, Kojimachi 1-chome, Chiyoda-ku, Tokyo 3. Matters to be dealt with at the Meeting: Matters to be Reported: 1. Report on the Business Report, the Consolidated Financial Statements for the 61st Fiscal Year (from April 1, 2021 to March 31, 2022) and the Results on the Audits of Consolidated Financial Statements by the Accounting Auditor and the Audit & Supervisory Board. 2. Report on the Non-Consolidated Financial Statements for the 61st Fiscal Year (from April 1, 2021 to March 31, 2022). Matters to be Resolved upon: First Item of Business: Second Item of Business: Third Item of Business: Proposed Distribution of Surplus Partial Amendments to the Articles of Incorporation Election of Ten (10) Directors 4. Matters related to Exercise of Voting Rights: 1) In the event that a shareholder wants to exercise non-uniform voting, he/she shall notify the Company to make non-uniform voting and the reason thereof in writing or by electromagnetic means three (3) days prior to the date of the General Meeting of Shareholders. 2) In the event that a shareholder exercises voting rights both via return mail (Voting Rights Exercise Form) and the Internet, the Company will consider the exercise of voting rights via the Internet to be valid. 3) In the event that a shareholder exercises voting rights via the Internet more than once, the Company will consider the last exercise of voting rights to be valid. [English Translation] 5 (Internet disclosure) Following matters are made available on the Company’s website pursuant to the relevant laws and ordinances, and Article 16 of the Articles of Incorporation of the Company and are not included in the Attached Documents. 1) “Notes to Consolidated Financial Statements” in the Consolidated Financial Statements 2) “Notes to Non-Consolidated Financial Statements” in the Non-Consolidated Financial Statements The Company’s Website: https://www.secom.co.jp/english/ir/ (on the “Investor Relations” section) The Consolidated Financial Statements and Non-Consolidated Financial Statements audited by the Accounting Auditor and the Audit & Supervisory Board consist of each document attached to the Notice of Convocation of the Ordinary General Meeting of Shareholders, as well as the Notes to Consolidated Financial Statements and the Notes to Non-Consolidated Financial Statements available on the Company’s Website. (Note) 1) If you plan to attend the Meeting, please submit the enclosed Voting Rights Exercise Form to the receptionist at the Meeting. 2) In order to avoid the risk of COVID-19 infections at the meeting, we will take the following measures at the General Meeting of Shareholders. Your understanding and cooperation will be greatly appreciated. ・Our administrative staff of the General Meeting of Shareholders will make sure that they will be in good health condition by, for example, measuring their body temperature and wear masks while working. ・We will measure your body temperature near the entrance to the venue, and alcohol disinfectant will be available near the reception desk. You are also asked to bring and wear a mask. ・If you have a fever (37.5ᵒC or higher) or otherwise appear to be feeling unwell, you may be asked by the administrative staff to refrain from entering the venue. ・Regarding the filming of the proceedings of the meeting for live streaming, the staff will make efforts to avoid filming the appearance of the attending shareholders, but these efforts may not always be successful. In addition, if you make a comment, your voice will be recorded and streamed. Your understanding is requested in advance. ・If we decide to change the infection prevention measures outlined above due to the status of the spread of infection or the announcement of the government through the date of the General Meeting of [English Translation] 6 Shareholders, the change will be notified on the website of the Company on the Internet. (Notice) If there are any amendments to the contents of the Reference Document Concerning the General Meeting of Shareholders, the Business Report, the Consolidated Financial Statements and the Non-Consolidated Financial Statements, the Company will announce such amendments on the “Investor Relations” section of the Company’s website: (https://www.secom.co.jp/english/ir/). [English Translation] 7 Reference Document Concerning the General Meeting of Shareholders Proposal and Reference Items First Item of Business: Proposed Distribution of Surplus The Company considers the return of profit to shareholders as one of the important managerial issues, and the Company has determined a dividend payout ratio on a consolidated basis and the level of internal reserves after making an overall judgment on the expansion of the Company’s business and trends of future revenues and profits of the Company on a consolidated basis while considering the Company’s basic policy that ensures the payment of continual and steady dividends. The Company has made it a basic rule to distribute a dividend twice a year, as the interim dividend whose record date is September 30 each year, and the year-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. Furthermore, the Company will utilize internal reserves for investments required for increased new customers, research and development and investments and the like for strategic businesses so that the Company will exert its efforts to reinforce the corporate structure and to expand its business. Based on the aforesaid basic policy for cash dividends and to reward shareholders’ continued support, it is proposed that the year-end dividend for the fiscal year under review is YEN 90 per share. A total amount of dividend per share, together with the interim dividend of YEN 90 per share, will be YEN 180, YEN 10 higher than YEN 170 for the previous year. Matters related to the year-end dividend: Kind of assets distributed: (1) Cash (2) Matter related to distribution of cash and total amount: YEN 90 per share of common stock of the Company The total amount: Effective date for distribution of surplus: June 29, 2022 YEN 19,627,454,790 (3) [English Translation] 8 Second Item of Business: Partial Amendments to the Articles of Incorporation 1. Reasons for the proposal （1）The amended provisions stipulated in the proviso of Article 1 of the supplementary provisions of the “Act Partially Amending the Companies Act” (Act No. 70 of 2019) will be enforced on September 1, 2022. Accordingly, in order to prepare for the introduction of the system for electronic provision of materials for general meetings of shareholders, the Articles of Incorporation of the Company shall be amended as follows: ・The proposed Article 16, Paragraph 1 provides that information contained in the reference materials for the General Meeting of Shareholders, etc. shall be provided electronically. ・The purpose of proposed Article 16, Paragraph 2 is to establish a provision to limit the scope of matters to be included in the paper copy to be sent to shareholders who have requested it. ・The provisions related to the Internet disclosure and deemed provision of the reference materials for the general meeting of shareholders, etc. (Article 16 of the current Articles of Incorporation) will become unnecessary and will therefore be deleted. ・In line with the above establishment and deletion of the provisions, supplementary provisions related to the effective date, etc. shall be established. （2）In order that the Company may also enter into a liability limit agreement with Non-executive Directors and Internal Audit & Supervisory Board Members to ensure that Non-executive Directors and all Audit & Supervisory Board Members adequately fulfill the roles expected of them, necessary amendments shall be made to Article 32 (Liability Limitation Agreement with Outside Director) and Article 42 (Contracts for Limitation of Liability with Outside Audit & Supervisory Board Members) of the current Articles of Incorporation. The Company has obtained the consent of each Audit & Supervisory Board Member for the proposed amendment to Article 32 of the current Articles of Incorporation. [English Translation] 9 2. Contents of Changes Contents of Changes are as follows: Current Articles of Incorporation (Disclosure of Reference Materials for General Meeting of Shareholders via the Internet and Deemed Furnished) Article 16 When convening a General Meeting of Shareholders, the Company may, in a manner using the Internet pursuant to Ministry of Justice Ordinances, disclose information concerning matters required to be described or presented in the reference materials of the General Meeting of Shareholders, business reports, financial statements and consolidated financial statements and deem such information furnished to shareholders. (Newly Established) [English Translation] 10 (Underlines indicate the changes) Proposed changes (Deleted) (Measures for the Provision of Information in Electronic Format, etc.) Article 16 the Company On convening a General Meeting of shall Shareholders, implement measures for the provision of information constituting the contents of reference documents, etc. for the General Meeting of Shareholders in electronic format. 2. Among matters for which measures are implemented for provision in electronic format, the Company may exclude all or part of the matters prescribed by an ordinance of the Ministry of Justice from the paper documents that will be delivered to shareholders who request delivery in paper format by the record date for voting rights. Current Articles of Incorporation (Liability Limitation Agreement with Outside Director) Article 32 Proposed changes (Liability Limitation Agreement with Director) Article 32 compensation Pursuant to Paragraph 1 of Article 427 of the Companies Act the Company may enter into an agreement with Outside Director to limit damage liability provided for in Paragraph 1 of Article 423 of the Companies Act; Provided, however, that the limited amount of compensation liability pursuant to this agreement is the amount provided for in the laws and ordinances. (Contracts for limitation of liability with Outside Audit and Supervisory Board Members) Article 42 to Pursuant to Paragraph 1 of Article 427 of the Companies Act the Company may enter into an agreement with Outside Audit and limit Supervisory Board Member damage compensation liability provided for in Paragraph 1 of Article 423 of the Companies Act; Provided, however, that the limited amount of compensation liability pursuant to this agreement is the amount provided for in the laws and ordinances. (Newly Established) compensation Pursuant to Paragraph 1 of Article 427 of the Companies Act the Company may enter into an agreement with Director (excluding those who are executive directors, etc.) to limit damage liability provided for in Paragraph 1 of Article 423 of the Companies Act; Provided, however, that the limited amount of compensation liability pursuant to this agreement is the amount provided for in the laws and ordinances. (Contracts for limitation of liability with Audit and Supervisory Board Members) Article 42 to Pursuant to Paragraph 1 of Article 427 of the Companies Act the Company may enter into an agreement with Audit and Supervisory Board Member limit damage compensation liability provided for in Paragraph 1 of Article 423 of the Companies Act; Provided, however, that limited amount of compensation the liability pursuant to this agreement is the amount provided for in the laws and ordinances. Supplementary Provisions 1. The amendments to Article 16 shall come into effect on September 1, 2022, which is the date of enforcement of the amended provisions stipulated in the proviso of Article 1 of the supplementary provisions of the the Act Partially Amending Companies Act (Act No. 70 of 2019). [English Translation] 11 Current Articles of Incorporation Proposed changes 2. Notwithstanding the provisions of the preceding paragraph, Article 16 of the Articles of Incorporation (Disclosure of Reference Materials for General Meeting of Shareholders via the Internet and Deemed Furnished) shall remain in force with respect to any general meeting of shareholders to be held on a date by the end of February 2023. 3. These Supplementary Provisions shall be deleted after March 1, 2023 or the lapse of three months from the date of the general meeting of shareholders set forth in the preceding paragraph, whichever is later. [English Translation] 12 Re-election Third Item of Business: Election of Ten (10) Directors The term of office of all of the eleven (11) Directors will expire at the close of this Meeting. In connection therewith, we would like to ask shareholders to elect ten (10) Directors. The candidates are as follows: No. Name Gender Re-election Yasuo Nakayama Male Re-election Ichiro Ozeki Re-election Yasuyuki Yoshida Re-election Tatsuro Fuse Re-election Tatsuya Izumida Re-election Tatsushi Kurihara Current Position at the Company Chairman and Representative Director President and Representative Director Senior Executive Director Executive Director Male Male Male Male Director Male Director Re-election Takaharu Hirose Outside Director Independent Officer Male Outside Director Re-election Hirobumi Kawano Male Outside Director Re-election Hajime Watanabe Male Outside Director Outside Director Outside Director Outside Director Independent Officer Independent Officer Independent Officer 10 Re-election Miri Hara Female Outside Director 1 2 3 4 5 6 7 8 9 [English Translation] 13 Number of Shares of the Company Owned 6,461 shares Number of Shares of the Company Owned 301,356 shares Candidate Number 1 Yasuo Nakayama* (Date of birth: November 1, 1952) Re-election Brief History, Position, Responsibility, and Important Position of Other Organizations Concurrently Assumed, if any Jul 2003 Jul 2005 May 2007 Jun 2007 May 2016 May 2017 Jun 2019 Jun 2019 Branch Manager, Nagoya Branch, The Bank of Japan Director-General, Secretariat of the Policy Board, The Bank of Japan Advisor, SECOM Co., Ltd. Executive Director President and Representative Director Chairman, Tokyo Security Service Association Chairman, All Japan Security Association (currently) Chairman and Representative Director (currently) Chairman, All Japan Security Association Reasons for Election Mr. Yasuo Nakayama has assumed the office of Chairman and Representative Director of the Company since June 2019, after President and Representative Director in May 2016. Following the assumption of the office of Representative Director, he has contributed to steady growth of the Company from a viewpoint of mid- and long-term time span. Additionally, as Chairman of All Japan Security Association, he has made a contribution to foster the development of the industry. In the light of continuous enhancement of the corporate value, we would like to ask shareholders to elect him as Director. Candidate Number 2 Ichiro Ozeki* (Date of birth: March 1, 1961) Re-election Brief History, Position, Responsibility, and Important Position of Other Organizations Concurrently Assumed, if any Apr 1983 Apr 1992 Jan 2001 Jun 2001 Apr 2010 Apr 2015 Jun 2016 Jun 2016 Jun 2017 Jun 2017 Jun 2019 Joined Sumitomo Bank, Ltd. (presently Sumitomo Mitsui Banking Corporation) Joined Tokyo Steel Manufacturing Co., Ltd. Joined SECOM Co., Ltd. Director, Secom General Insurance Co., Ltd. President and Representative Director, Secom General Insurance Co., Ltd. Executive Officer Chairman and Director, Secom General Insurance Co., Ltd. Director Chairman and Representative Director, Secom General Insurance Co., Ltd. Executive Director President and Representative Director (currently) Reasons for Election Following the assumption of the office as Director of the Company, Mr. Ichiro Ozeki has led the sales and operation divisions and he holds a high level of knowledge and experience in overall management of the security services business. Following the assumption of the office of President and Representative Director in June 2019, he worked to strengthen the business of the entire SECOM Group including the security services business, overseas business, and ICT business, while focusing on group-wide cost reduction and productivity improvement to achieve steady growth for the Company with his strong leadership and management ability. He also has carried out steadily management reformation from a viewpoint of mid- and long-term targets. In the light of continuous enhancement of the corporate value, we would like to ask shareholders to elect him as Director. [English Translation] 14 Candidate Number 3 Yasuyuki Yoshida* (Date of birth: March 28, 1958) Re-election Brief History, Position, Responsibility, and Important Position of Other Organizations Concurrently Assumed, if any Mar 1980 Feb 1997 Sep 1998 Jun 2002 Apr 2010 Jun 2012 Jun 2016 Jun 2017 Joined SECOM Co., Ltd. Associate General Manager, Strategic Planning Division Director, Toyo Fire and Marine Insurance Co., Ltd. (presently Secom General Insurance Co., Ltd.) President and Representative Director, Secom General Insurance Co., Ltd. Executive Officer Director Executive Director Senior Executive Director (currently) Reasons for Election Mr. Yasuyuki Yoshida has served as Director of the Company in charge of overall business planning including the security services business and overall management planning including risk management and governance of the SECOM Group. Accordingly, he holds a high level of knowledge and experience in the management of the SECOM Group. In the light of continuous enhancement of the corporate value, we would like to ask shareholders to elect him as Director. Candidate Number 4 Mar 1982 Mar 2002 Jun 2009 Apr 2010 Jun 2013 Apr 2016 Jun 2016 Jun 2017 Jun 2017 Tatsuro Fuse* (Date of birth: September 9, 1957) Re-election Brief History, Position, Responsibility, and Important Position of Other Organizations Concurrently Assumed, if any Joined SECOM Co., Ltd. Director, Secom Medical System Co., Ltd. President and Representative Director, Secom Medical System Co., Ltd. Executive Officer Director (retired in Jun 2016) Chairman and Representative Director, Secom Medical System Co., Ltd. Managing Executive Officer Chairman and Director, Secom Medical System Co., Ltd. (currently) Executive Director (currently) Chairman and Director, Secom Medical System Co., Ltd. Reasons for Election Mr. Tatsuro Fuse has been engaged in medical services business as well as corporate communication & marketing division as Director of the Company. He holds affluent management experience at SECOM group and a high level of knowledge and experience in external business activities such as corporate communication & marketing, and in overall management including medical service business. In the light of continuous enhancement of the corporate value, we would like to ask shareholders to elect him as Director. Number of Shares of the Company Owned 4,174 shares Number of Shares of the Company Owned 4,094 shares [English Translation] 15 Candidate Number 5 Tatsuya Izumida* (Date of birth: November 3, 1960) Re-election Brief History, Position, Responsibility, and Important Position of Other Organizations Concurrently Assumed, if any Mar 1986 Jun 2003 Jul 2009 May 2010 Oct 2012 Jun 2014 Dec 2015 Jun 2016 Joined SECOM Co., Ltd. Executive Director, Secom Information System Co., Ltd. (presently Secom Trust Systems Co., Ltd.) General Manager, Training Department General Manager, Human Resource Department Executive Officer President and Representative Director, Secom Trust Systems Co., Ltd. Managing Executive Officer Director (currently) Reasons for Election Mr. Tatsuya Izumida, as Director of the Company, has broad and longstanding business experience in the security services business and has engaged in the BPO and ICT services business of the SECOM Group. Thus, he possesses an abundance of experience and a high level of knowledge in overall management of our business including the security services business and the BPO and ICT services business. In the light of continuous enhancement of the corporate value, we would like to ask shareholders to elect him as Director. Candidate Number 6 Tatsushi Kurihara* (Date of birth: June 5, 1961) Re-election Brief History, Position, Responsibility, and Important Position of Other Organizations Concurrently Assumed, if any Jul 2008 Jul 2010 Jun 2014 May 2016 Jun 2016 Branch Manager, Niigata Branch, The Bank of Japan Deputy Director-General, Financial System and Bank Examination Department, The Bank of Japan Director-General and Internal Auditor, Internal Auditors’ Office, The Bank of Japan Advisor, SECOM Co., Ltd. Director (currently) Reasons for Election After working for the Bank of Japan for many years, Mr. Tatsushi Kurihara has served as Director of the Company in charge of overall administrative business including the general affairs and human resources divisions. He also has a high level of knowledge in overall management including sustainability, ESG and SDGs of the SECOM group. In the light of continuous enhancement of the corporate value, we would like to ask shareholders to elect him as Director. Number of Shares of the Company Owned 1,931 shares Number of Shares of the Company Owned 1,231 shares [English Translation] 16 Candidate Number 7 Takaharu Hirose (Date of birth: October 25, 1944) Re-election Candidate for Outside Director Candidate for Independent Officer Brief History, Position, Responsibility, and Important Position of Other Organizations Concurrently Assumed, if any Sep 1965 Apr 1972 Apr 1987 Apr 2003 May 2008 May 2011 Jun 2013 Founded Fuji Vending Co., Ltd., and assumed Representative Director Founded Food & Beverage Vending Association, and assumed Chairman Founded Japan Automatic Merchandising Association, and assumed Chairman Advisor and Director, GAIN Inc. (presently Monitas, Inc.) President and Representative Director, GAIN Inc. Chairman and Representative Director, GAIN Inc. (currently) Director, SECOM Co., Ltd. (currently) Chairman and Representative Director, Monitas, Inc. Reasons for Election and Outline of Expected Role Mr. Takaharu Hirose established and managed venture business and made efforts to establish and operate industry groups so that he contributed to development of business and industry. He holds affluent experience and a high level of knowledge in IT enterprises. As a member of the Board of Directors, he has provided advice and recommendations in many occasions from a high-level perspective on key directions of management including the future of SECOM that capitalizes on technology. As he has played an appropriate role as Outside Director including the supervision of business execution, in the light of continuous enhancement of the corporate value, we would like to ask shareholders to elect him as Outside Director. After the election, he is expected to continue to play the role mentioned above. Number of Shares of the Company Owned 0 shares [English Translation] 17 Number of Shares of the Company Owned 0 shares Candidate Number 8 Hirobumi Kawano (Date of birth: January 1, 1946) Re-election Candidate for Outside Director Candidate for Independent Officer Brief History, Position, Responsibility, and Important Position of Other Organizations Concurrently Assumed, if any Jul 1969 Aug 1996 Jun 1998 Sep 1999 Jun 2003 Aug 2004 Apr 2008 Jun 2016 Jun 2018 Joined Ministry of International Trade and Industry (MITI) (presently Ministry of Economy, Trade and Industry (METI)) Deputy Director-General, Machinery Information Industries Bureau, MITI Director-General, Basic Industries Bureau, MITI Commissioner, Agency for Natural Resources and Energy, MITI Outside Director, Sony Corporation (presently Sony Group Corporation) Senior Managing Executive Officer, JFE Steel Corporation President, Japan Oil, Gas and Metals National Corporation Director, SECOM Co., Ltd. (currently) Outside Audit & Supervisory Board Member, San-Ai Oil Co., Ltd. (presently SAN-AI OBBLI Co., Ltd.) (currently) Outside Audit & Supervisory Board Member, SAN-AI OBBLI Co., Ltd. Reasons for Election and Outline of Expected Role Mr. Hirobumi Kawano has a career in important positions at the government offices such as the Ministry of International Trade and Industry (presently Ministry of Economy, Trade and Industry) and the Agency for Natural Resources and Energy as well as in the private sector such as Japan Oil, Gas and Metals National Corporation. As a member of the Board of Directors, he has provided advice and recommendations from a diverse perspective on key directions of management as well as on business in general and the execution and risk management of overseas projects in particular. As he has played an appropriate role as Outside Director including the supervision of business execution, in the light of continuous enhancement of the corporate value, we would like to ask shareholders to elect him as Outside Director. After the election, he is expected to continue to play the role mentioned above. [English Translation] 18 Hajime Watanabe (Date of birth: November 18, 1951) Re-election Candidate for Outside Director Candidate for Independent Officer Brief History, Position, Responsibility, and Important Position of Other Organizations Concurrently Assumed, if any Joined Watanabe Pipe Co., Ltd. Executive Director, Watanabe Pipe Co., Ltd. Senior Executive Director, Watanabe Pipe Co., Ltd. Vice President and Representative Director, Watanabe Pipe Co., Ltd. President and Representative Director, Watanabe Pipe Co., Ltd. Director, SECOM Co., Ltd. (currently) Chairman and Representative Director, Watanabe Pipe Co., Ltd.(currently) Number of Shares of the Company Owned 1,400 shares Candidate Number 9 Mar 1975 Apr 1978 Apr 1983 Jun 1985 Nov 1991 Jun 2016 Apr 2022 Chairman and Representative Director, Watanabe Pipe Co., Ltd. Reasons for Election and Outline of Expected Role Mr. Hajime Watanabe has engaged in management of Watanabe Pipe Co., Ltd. for many years. He holds rich experience and a high level of knowledge accumulated through his career in the management of the company that has a national network. As a member of the Board of Directors, he has provided effective advice and recommendations in many occasions on key directions of management as well as on the execution and risk management of business in general and other matters including work site operations and employee management. As he has played an appropriate role as Outside Director including the supervision of business execution, in the light of continuous enhancement of the corporate value, we would like to ask shareholders to elect him as Outside Director. After the election, he is expected to continue to play the role mentioned above. Candidate Number 10 Miri Hara (Date of birth: December 20, 1961) Re-election Candidate for Outside Director Candidate for Independent Officer Brief History, Position, Responsibility, and Important Position of Other Organizations Concurrently Assumed, if any Jun 1988 Jun 1988 Oct 2017 Jun 2020 Jun 2021 Joined Hara Jisho Co., Ltd. Director, Hara Jisho Co., Ltd. (currently) Founded Tax Corporation Yokohama Benten Accounting, Inc. and assumed Representative Certified Public Tax Accountant (currently) Director, SECOM Co., Ltd. (currently) Outside Director, Nippon Sanso Holdings Corporation (currently) Representative Certified Public Tax Accountant of Tax Corporation Yokohama Benten Accounting, Inc. Outside Director, Nippon Sanso Holdings Corporation Reasons for Election and Outline of Expected Role Ms. Miri Hara has been gaining experience as director of a real estate management company for a long period of time, and possesses rich experience and considerable insight accumulated through her career on tax affairs, corporate accounting, etc., at a tax accountant corporation. As a member of the Board of Directors, she has provided useful advice and recommendations on key directions of management as well as on services for households. As she has played an appropriate role as Outside Director including the supervision of business execution, in the light of continuous enhancement of the corporate value, we would like to ask shareholders to elect her as Outside Director. After the election, she is expected to continue to play the role mentioned above. [English Translation] 19 Number of Shares of the Company Owned 0 shares (Notes) 1. 2. 3. 4. 5. 6. 7. 8. 9. There is no particular interest between the Company and each of the said candidates. Candidates with * are Executive Officers currently in office. Based on the nomination policy that the Board of Directors established, the nomination of candidates for Directors are decided after discussion at the Board of Directors. The Board of Directors decides the candidates for Directors after the discussion process of the Nomination and Compensation Committee comprising a majority of Outside Directors. Messrs. Takaharu Hirose, Hirobumi Kawano, Hajime Watanabe and Ms. Miri Hara are candidates for Outside Directors. The designation of Messrs. Takaharu Hirose, Hirobumi Kawano, Hajime Watanabe and Ms. Miri Hara as Independent Officers has been filed with Tokyo Stock Exchange, Inc. The number of years during which Mr. Takaharu Hirose is in the office of Outside Director of the Company will have been for nine (9) years at the close of this General Meeting of Shareholders. The number of years during which Messrs. Hirobumi Kawano and Hajime Watanabe are in the office of Outside Director of the Company will have been for six (6) years at the close of this General Meeting of Shareholders. The number of years during which Ms. Miri Hara is in the office of Outside Director of the Company will have been for two (2) years at the close of this General Meeting of Shareholders. Pursuant to Article 427, Paragraph 1 of the Companies Act, the Company has entered into a liability limit agreement limiting a compensation liability provided for in Article 423, Paragraph 1 of the Companies Act with each of Messrs. Takaharu Hirose, Hirobumi Kawano, Hajime Watanabe and Ms. Miri Hara. In case each of them is re-elected, it is scheduled that the liability limit agreement will continuously be made. Furthermore, the limited amount of compensation liability is the minimum liability limit provided for in Article 425, Paragraph 1 of the Companies Act. The Company has entered into an officers’ liability insurance contract with an insurance company. A summary of the contents of the insurance policy is given on page 39 of this Notice of Convocation (“3. Description of the Officers’ Liability Insurance Contract”). Each of the candidates is currently a director of the Company and is insured under the relevant insurance contract. If each candidate is reappointed, he or she will continue to be insured under the insurance contract. The Company intends to renew the insurance policy for the same terms during their term of office. [English Translation] 20 〈Reference〉 Knowledge and experiences possessed by each candidate for Director and Audit & Supervisory Board Member (Skills Matrix) Name Current Position at the Company Corporate Management Finance and Accounting Legal, Compliance and Risk Sustainability and ESG Security Services Industry Global Business ICT and Technology Yasuo Nakayama Ichiro Ozeki Yasuyuki Yoshida Tatsuro Fuse Tatsuya Izumida Tatsushi Kurihara Takaharu Hirose Hirobumi Kawano Hajime Watanabe Miri Hara Takayuki Ito Koji Kato Hideki Kato Makoto Yasuda Setsuo Tanaka Chairman and Representative Director President and Representative Director Senior Executive Director Executive Director Director Director Outside Director Outside Director Outside Director Outside Director Audit & Supervisory Board Member Audit & Supervisory Board Member Outside Audit & Supervisory Board Member Outside Audit & Supervisory Board Member Outside Audit & Supervisory Board Member ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● *Up to four (4) knowledge and experiences possessed by each candidate for Director and Audit & Supervisory *The above list does not represent all the knowledge and experiences of each candidate for Director and Audit & Board Member are marked. Supervisory Board Member. [English Translation] 21 [Attached Documents] Business Report (Fiscal Year Ended March 31, 2022) I. Outline of the Group’s Business 1. The Current Business Development and Results of Operations During the fiscal year ended March 31, 2022 (“the current fiscal year”), the Japanese economy showed movements of recovery in some areas such as corporate earnings and private consumption, although the situation remained challenging due to COVID-19. While economic and social activities move toward normalization with measures to prevent the spread of infections, continual attention has been required to downside risks in the economy due to the trends of the infectious disease in Japan and overseas, the fluctuations in the financial and capital markets, as well as the growing uncertainty of the international situation and the impact of rising raw material prices. Under these circumstances, we have been actively working to implement initiatives to achieve the SECOM Group’s Vision for 2030, formulated with an aim to establish the “Social System Industry,” which delivers safety and peace of mind, as well as makes life more comfortable and convenient, and the SECOM Group Road Map 2022, in which we clarified what we should do now to achieve the vision. As an Official Partner in the category of Security Services and Planning, we sponsored the Olympic and Paralympic Games Tokyo 2020, held from July to September 2021. We contributed to safe and secure staging of the games by providing security services for competition venues and facilities. In response to the significant decline in the labor force and the rising demand for security, we launched the AI-powered Virtual Security Guard System in January 2022, which features a virtual character who performs security, receptionist and other static guard duties. We also started providing cocobo, a security robot that makes use of AI and 5G technologies to conduct security duties at commercial facilities and office buildings. In February, we released SECOM Cantabile, the app for Apple Watch and iPhone, which enhances the more convenient and pleasant use of SECOM Home Security. In the period under review, we continued to provide meticulous and seamless services through various initiatives to satisfy the increasingly diversified and sophisticated needs of our customers for their safety and peace of mind. In December 2020, we transferred all of the issued shares of Secom Home Life Co., Ltd., which had been a consolidated subsidiary, and excluded it from the scope of consolidation. As a result, the segment name was changed from “real estate and other services” to “other services” from the current fiscal year. There is no change in the segment classification as a result of this change regarding the segment name noted above. Effective from the current fiscal year, we have reviewed the segment classifications from the perspective of similarity and relevance of business activities in order to provide more appropriate information, and have reclassified some businesses previously included in the security services segment to the BPO and ICT services segment and the other services segment. For comparisons with the same period of the previous fiscal year, information prepared in accordance with the classification after the change is presented and analyzed. [English Translation] 22 As a result, consolidated revenue for the current fiscal year increased by 1.3% to 1,049.8 billion yen compared with the previous fiscal year, due to the increases in revenue in all reportable segments despite the effect of the decreases in revenue by 13.1 billion yen owing to the exclusion of Secom Home Life Co., Ltd. and its subsidiary from the scope of consolidation in December 2020 and 3.3 billion yen attributable to the application of “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29, March 31, 2020), etc. Consolidated operating profit increased by 4.8% to 143.4 billion yen, attributable to the effect of increases in operating profit in security services, fire protection services, medical services, insurance services and BPO and ICT services. Consolidated ordinary profit increased by 10.2% to 153.1 billion yen, mainly due to the recognition of net gains of 2.8 billion yen on private equity investment in the U.S. etc., compared with net losses of 3.5 billion yen in the previous fiscal year, in non-operating income/expenses. Consolidated net income attributable to owners of the parent increased by 26.2% to 94.2 billion yen, mainly attributable to the recognition of amortization of goodwill of 5.6 billion yen and net losses of 2.9 billion yen on sales of investment securities in subsidiaries and affiliates in the previous fiscal year in extraordinary losses. Operating profit, ordinary profit and net income attributable to owners of the parent reached a record-high. Revenue Operating profit Ordinary profit （Millions of Yen） Net income attributable to owners of the parent Current fiscal year (FY2021) Previous fiscal year (FY2020) 1,049,859 143,499 153,186 94,273 1,035,898 136,925 138,990 74,681 By business segment, in the security services segment, we provided mainly centralized monitoring services (on-line security systems) for commercial and residential clients, as well as static guard services, armored car services and merchandises. For our commercial security services, we worked to expand the sales of System Security AZ (*1), an all-in-one system that accommodates a variety of functions that benefit customers’ business operations, including security and fire protection, as well as work efficiency solutions such as employee attendance management. In response to the increasingly diverse needs for video surveillance, we offered SECOM IP Camera System and SECOM Cloud Video Surveillance, which can be integrated with AZ and flexibly respond to a wide range of requests regardless [English Translation] 23 of the scale of facilities, with the extensive lineup of surveillance cameras and cloud capability. For our residential security services, in addition to responding to security and fire protection needs, we improved the functions of SECOM Home Security NEO, a flexible system suited to modern lifestyles that can expand its services by linking with various devices, and have made continuous efforts to market it. We also began offering the Monitoring Service for Seniors as an optional service for SECOM Home Security, which enables family members to check up on their parents living apart in a nonintrusive manner by using a smartphone app. Outside Japan, we promoted our “SECOM-style” security services, characterized by its emergency response services, mainly in economically developing areas, such as Southeast Asia and the People’s Republic of China. We accelerated efforts to develop and introduce security systems adapted to the local market while advancing initiatives for digital transformation of on-line security systems by incorporating the latest technologies. As a result, revenue increased by 0.4% to 558.0 billion yen, mainly due to the brisk sales of on-line security systems for commercial and residential use, as well as the increase in revenue in static guard services, despite the effect of the decrease in revenue by 5.5 billion yen owing to the exclusion of a subsidiary of Secom Home Life Co., Ltd. from the scope of consolidation. Operating profit increased by 3.8% to 116.1 billion yen. In the fire protection services segment, we provided a broad range of fire protection systems such as high-quality fire alarm systems and fire extinguishing systems that respond to customers’ needs to a wide variety of facilities such as office buildings, production facilities, tunnels, cultural properties, ships and residences. In the current fiscal year, two major fire protection companies, Nohmi Bosai Ltd. and Nittan Co., Ltd., promoted various fire protection systems based on each company’s business infrastructure and product development expertise. Revenue increased by 4.3% to 148.8 billion yen, mainly attributable to the increase in revenue from fire alarm systems provided by Nohmi Bosai Ltd. Operating profit increased by 14.0% to 14.7 billion yen, chiefly owing to the concentration of projects with high profitability. In the medical services segment, we provided various medical services such as our core home medical services, including home nursing services and pharmaceutical dispensing and home delivery services, operation of residences for seniors, sales of electronic medical report systems, sales of medical equipment and pharmaceutical products, personal care services, and the leasing of real estate for medical institutions. Revenue increased by 4.1% to 74.5 billion yen, mainly due to the increases in sales of medical consumables and in revenue in Takshasila Hospitals Operating Pvt. Ltd., a general hospital operating company in India. Operating profit [English Translation] 24 increased by 37.9% to 5.6 billion yen. In the insurance services segment, we expanded marketing efforts for our unique non-life insurance offerings, including Security Discount Fire Policy for commercial facilities that offers discounts on premiums to customers who have installed on-line security systems, recognizing such systems as a risk-mitigating factor; SECOM Anshin My Home, the comprehensive fire insurance policy for residences that offers a variety of compensation plans and discount policies; MEDCOM, an unrestricted cancer treatment policy that offers compensation of the actual cost of medical treatment; and SECOM Anshin My Car, a comprehensive automobile insurance policy that offers on-site support services provided by our emergency response personnel in the event of an accident. Revenue increased by 6.5% to 52.6 billion yen, mainly due to the firm increase in sales of MEDCOM, an unrestricted cancer treatment policy provided by Secom General Insurance Co., Ltd. Operating profit increased by 27.0% to 1.0 billion yen, largely attributable to the decrease in losses from natural disasters. In the geospatial information services segment, we collected geographic data from aerial photography, vehicle/ground surveying systems and satellite images, which we integrated, processed, and analyzed to provide geospatial information services to domestic national and local governmental agencies, private sectors, and foreign governmental agencies including emerging and developing countries. Revenue increased by 2.8% to 56.3 billion yen, chiefly owing to the rise in revenue from domestic public-sector customers, with the increase in surveying services using airborne laser and in other services. Operating profit decreased by 13.4% to 4.0 billion yen, mainly attributable to the inclusion of head office relocation expenses and the rise in personnel expenses resulting from an increase in the number of employees, as well as the reversal of the provision for loss on construction contracts of large-scale projects in the international division in the previous fiscal year. In the BPO and ICT services segment, our distinctive portfolio includes business continuity planning (BCP) support, teleworking support, information security services and a variety of cloud-based services, centering on the data centers, as well as BPO related services including operation of contact center services. Revenue increased by 3.3% to 115.6 billion yen, chiefly owing to the increases in revenue in TMJ, Inc., a provider of BPO services including contact centers and back office services, and data center business. Operating profit increased by 4.1% to 13.1 billion yen. Other services segment comprises real estate leasing and construction and installation services. Revenue decreased by 11.8% to 43.6 billion yen, mainly due to the effect of the decrease in revenue by 7.5 billion yen owing to the exclusion of Secom Home [English Translation] 25 Life Co., Ltd. from the scope of consolidation. Operating profit decreased by 3.4% to 5.9 billion yen. [English Translation] 26 Results by Business Segment (61st Fiscal Year – current fiscal year) Business segment Customers Revenue Intersegment Total Security services 558,093 11,718 569,811 116,139 (Millions of Yen) Operating profit Fire protection services Medical services Insurance services Geospatial information services BPO and ICT services Other services Eliminations and corporate items 148,803 74,575 52,691 56,371 115,683 43,640 – Total 1,049,859 Consolidated revenue 1,049,859 3,302 235 3,151 193 9,082 1,234 152,106 74,810 55,842 56,565 124,766 44,875 28,918 1,078,778 (28,918) (28,918) – 1,049,859 14,788 5,661 1,007 4,085 13,179 5,975 160,837 (17,337) 143,499 With respect to the results by geographical segments, in Japan, revenue increased by 1.0% to YEN 1,001.6 billion. Overseas revenue increased by 9.2% to YEN 48.1 billion. Revenue by business segment, excluding intersegment transactions (Millions of Yen) [English Translation] 27 2. Issues the Group Has to Cope with The circumstances surrounding the SECOM Group pose certain social challenges to be addressed, including the declining birthrate and aging population, manpower reduction, and rapidly-changing lifestyles due to technological innovation. With these circumstances in mind, the SECOM Group considers technological advances and a declining labor force as priority issues, and promotes the following efforts to find solutions to these challenges: (1) Capitalizing on advanced technologies and expertise Amid ongoing technological evolution, we will proactively collect and deploy information on advanced technologies and know-how, in order to achieve the creation of added value, the improvement of service quality, etc., through the effective use of digitalization and cutting-edge technologies. Based on these efforts, we will work diligently to create products and services in Japan and overseas that fuse advanced technologies with human capability. (2) Domestic businesses (Increasing the competitiveness of our services and products) For domestic businesses, we will improve our competitiveness by boosting the qualities and functionality of our services and products for commercial clients, and also focus on further cultivating individual consumer markets, through the provision of new services, including care for seniors. We will make best use of the business resources of the SECOM Group, in order to offer high value-added services that meet diversified customer needs, thereby aiming to establish a society that enjoys “safety, peace of mind, comfort and convenience.” (3) Strengthening overseas businesses For overseas businesses, while making progress in sales promotion including advertisement, we will proactively adopt cutting-edge technologies and strengthen our business development with increasing security needs in mind, including business planning and product development targeted at overseas local markets suitable for local needs, in addition to services for large-scale properties. Furthermore, we will promote active local hiring, and improve the quality of services in overseas operations by fortifying education and training. (4) Improving operating efficiency and quality As part of efforts to address the manpower reduction resulting from the decreasing labor force population, we will promote operational efficiency through system investments to improve functionalities, thereby improving productivity, profitability, and service quality. At the same time, we will review operational processes and internal operational procedures to promote cost reduction. (5) Securing human resources that will increase competitiveness [English Translation] 28 Due to the decreasing labor force population, securing talented human resources represents a challenge. The SECOM Group will set up efforts to recruit talented human resources including individuals with IT skills or the ability to function in global business environments, while promoting cultivation of existing employees, education/training for improving their abilities to adapt to change, as well as development of pleasant work environment. We will also accelerate organizational strategies to strengthen growing sectors, including the reallocation of human resources, as well as efforts to improve the SECOM Group’s competitiveness. (6) Strengthening compliance and governance systems In promoting the efforts described above, securing and maintaining customer trust through compliance with laws and the spirit of the law, is one of the most important management issues for the SECOM Group, which aims to provide “safety and peace of mind.” The SECOM Group has been making efforts to further strengthen its compliance system, based on SECOM’s Philosophy, which has been passed down since the establishment of the business. It has also been working to ensure business management that gives consideration to stakeholders through the development of the governance system. We look forward to the support from our shareholders in these and all of our endeavors. [English Translation] 29 3. Capital Expenditures Capital expenditures for the current fiscal year totaled YEN 61.9 billion (a breakdown is given below). A major portion was for system investments (including those for security equipment and control stations) etc. in the security services segment, which totaled to YEN 38.1 billion. Business segment (Millions of Yen) Amount Security services Fire protection services Medical services Insurance services Geospatial information services BPO and ICT services Other services Eliminations and corporate items 4. Fund Raising 38,147 4,760 1,663 2,881 2,607 7,634 4,181 61,877 45 61,922 Subtotal Total During the current fiscal year, no funds were raised by the Group in capital markets through the issuance of corporate bonds or new shares. [English Translation] 30 5. Trends in Earnings and Assets of the Group Category Fiscal years 58th fiscal year (4/1/2018– 3/31/2019) 59th fiscal year (4/1/2019–3/31/2020) 60th fiscal year (4/1/2020– 3/31/2021) 61st fiscal year (current fiscal year) (4/1/2021– 3/31/2022) (Millions of Yen except for net income per share) Revenue Operating profit Ordinary profit Net income attributable to owners of the parent Net income per share (Yen) Return on Equity Total assets Net assets 1,013,823 130,213 144,889 92,009 1,060,070 142,858 151,356 89,080 1,035,898 136,925 138,990 74,681 421.56 408.14 342.17 9.4% 1,765,105 1,125,954 8.8% 1,815,121 1,172,494 7.1% 1,864,179 1,229,824 1,049,859 143,499 153,186 94,273 431.27 8.6% 1,907,755 1,256,036 (Note) From the beginning of the 61st fiscal year, we have applied “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29, March 31, 2020). [English Translation] 31 6. Trends in Earnings and Assets of the Company Fiscal years Category 58th fiscal year (4/1/2018– 3/31/2019) 59th fiscal year (4/1/2019– 3/31/2020) 60th fiscal year (4/1/2020– 3/31/2021) 61st fiscal year (current fiscal year) (4/1/2021– 3/31/2022) (Millions of Yen except for net income per share) Revenue Operating profit Ordinary profit Net income Net income per share (Yen) Return on Equity Total assets Net assets 394,181 76,833 88,972 74,016 339.12 9.6% 921,472 785,801 398,929 76,877 90,538 65,808 301.51 8.2% 947,194 812,878 394,389 75,541 89,301 59,960 274.72 7.3% 971,493 838,562 395,181 78,703 95,094 69,885 319.70 8.2% 993,501 859,950 (Note) From the beginning of the 61st fiscal year, we have applied “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29, March 31, 2020). [English Translation] 32 7. Matters Concerning Principal Subsidiaries Percentage of ownership (Percentage of voting rights) Company name Issued capital Principal business activities Secom Joshinetsu Co., Ltd. Security and safety services (%) 100.00 (100.00) (%) 100.00 (100.00) (%) 50.36 (50.71) (%) 100.00 (100.00) (%) 100.00 (100.00) (%) 97.11 (97.82) (%) 71.55 (72.16) (%) 100.00 (100.00) (%) 50.88 (50.88) (%) 100.00 (100.00) (%) 100.00 (100.00) (%) 100.00 (100.00) Cash collection and delivery services Comprehensive fire protection services Comprehensive fire protection services Home medical services and remote image diagnosis support services Non-life insurance Surveying, measuring and geospatial information system services Information security services and software development BPO business including contact center business Holding company in the U.S. Security business in the U.K. (Millions of Yen) (Millions of Yen) 3,530 100 (Millions of Yen) 13,302 (Millions of Yen) (Millions of Yen) 2,302 100 (Millions of Yen) 16,808 (Millions of Yen) (Millions of Yen) 8,758 1,468 (Millions of Yen) 13,378 (Millions of Yen) 100 (US$) 301 (Thousands of UK Pounds) 44,126 Asahi Security Co., Ltd. Nohmi Bosai Ltd. Nittan Co., Ltd. Secom Medical System Co., Ltd. Secom General Insurance Co., Ltd. Pasco Corporation Secom Trust Systems Co., Ltd. TMJ, Inc. The Westec Security Group, Inc. Secom Plc [English Translation] 33 At Tokyo Corporation Data center business (Notes) 1. The percentages of ownership (percentages of voting rights) are truncated to two decimal places. 2. The percentages of ownership (percentages of voting rights) for Nohmi Bosai Ltd. include those owned by the Company’s subsidiaries. 3. The Company acquired the entire equities of Secom Joshinetsu Co., Ltd., a subsidiary of the Company, as of November 1, 2021 and Secom Joshinetsu Co., Ltd. became a wholly owned subsidiary of the Company. 8. Principal Business of the Group The Group consists of the Company, 161 consolidated subsidiaries and 16 affiliated companies accounted for under the equity method. The principal business activities of the Group are as follows: Security Services centering on contracted security services; Fire Protection Services centering on comprehensive fire protection services; Medical Services focusing on home medical services and management of residences for seniors; Insurance Services consisting mainly of non-life insurance; Geospatial Information Services that mainly entails the provision of surveying and measuring operations; BPO and ICT Services centering on information security services, large-scale anti-disaster operations, datacenter and BPO business; and Other Services centering on real estate leasing and construction and installation services and other services. 9. Principal Offices of the Group (i) Headquarters of the Company: 5-1, Jingumae 1-chome, Shibuya-ku, Tokyo (ii) Regional Headquarters: Hokkaido (Sapporo City), Tohoku (Sendai City), West Kanto (Saitama City), East Kanto (Chiba City), Tokyo (Minato-ku,