Secom : Internet Disclosure Accompanying the Notice of the Convocation of The 56th Ordinary General Meeting of Shareholders

Notes to Consolidated Financial Statements 1

Notes to Non-Consolidated Financial Statements 17

Pursuant to the relevant law and ordinance, and Article 16 of the Articles of Incorporation of SECOM CO., LTD., "Notes to Consolidated Financial Statements" and "Notes to Non-Consolidated Financial Statements" are made available on the Company's web site (https://www.secom.co.jp/english/ir/). The Company provides this translation for your reference and convenience only and without any warranty as to its accuracy or otherwise.

Notes to Consolidated Financial Statements

1. Scope of Consolidation

2. Number of Consolidated Subsidiaries: 176 Names of major consolidated subsidiaries:

   Secom Joshinetsu Co., Ltd., 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., At Tokyo Corporation, Secom Home Life Co., Ltd., The Westec Security Group, Inc., Secom Plc

3. Descriptions of Non-Consolidated Subsidiaries:

   Nohmi Facilities Co., Ltd., Nohmi Baoli (Beijing) Intelligent Fire Protection Co., Ltd., Eishin Denshi Co., Ltd. and 12 other companies

   (The reason for exclusion from scope of consolidation)

   All of these 15 non-consolidated subsidiaries are of a small size, so that the aggregate amounts of total assets, revenue, net income/loss (an amount prorated to ownership) and retained earnings (an amount prorated to ownership) and others do not have a significant effect on the consolidated financial statements.

4. Names of other companies owing majority of voting rights not regarded as subsidiaries:

5. Global Sales Training, Inc., CLP Auto Interior Corp., US Water, LLC, CLP Consumer Products, LLC, Taymax Group Holdings, LLC, United Tactical System Holdings, LLC, CLP Legal Services, LLC

   (The reason for not regarded as subsidiaries)

   These companies were acquired by subsidiaries of The Westec Security Group, Inc. through normal course of business with the objective of investment, not with the objective of control.

6. Equity Method

7. Number of equity method affiliates: 21

   Names of major affiliates accounted for under the equity method: S1 Corporation, Toyo Tec Co., Ltd., Taiwan Secom Co., Ltd.

8. Number of non-equity method affiliates: 6

9. (The reason for not applying the equity method)

   These 6 companies are not accounted for under the equity method because their effect on net income/loss (an amount prorated to ownership) and retained earnings (an amount prorated to ownership) is insignificant and immaterial as a whole.

10. Changes in Scope of Consolidation and Companies Accounted for under the Equity Method

    Consolidation

    Newly consolidated subsidiaries: 4

    Scan Alarms Ltd. and 1 other company (Acquisition)

    Jiangsu Secom Security Co., Ltd. and 1 other company (New establishment)

    Excluded from consolidation: 4

    Secom Data Protection Pte. Ltd. and 3 other companies (Liquidation)

    Equity Method

    New companies accounted for under the equity method: 1 Dynamic Map Planning Co., Ltd. (New establishment, etc.)

    Excluded from affiliates accounted for under the equity method: 2 Transmart Inc. and 1 other company (Divesture)

11. Closing Dates of Consolidated Subsidiaries and Equity Method Affiliates

    With respect to overseas consolidated subsidiaries, 7 U.S. subsidiaries such as The Westec Security Group Inc., 8 Australia and New Zealand subsidiaries such as Secom Australia Pty. Ltd., , 5 U.K. subsidiaries such as Secom Plc, 18 Chinese subsidiaries such as Secom (China) Co., Ltd., 5 Vietnam subsidiaries such as Secom Vietnam Security Service JSC, Secom (Singapore) Pte Ltd., Secom Medical System (Singapore) Pte Ltd., D'Garde Security Pte Ltd., Takshasila Hospitals Operating Pvt. Ltd., Takshasila Healthcare and Research Service Pvt. Ltd., PT. Nusantara Secom Infotech, PT. Secom Indonesia, Pasco Thailand Co., Ltd., Thai Secom Security Co., Ltd., Pasco Philippines Corp., FM-International Oy, Nohmi Taiwan Ltd., Pasco Do Brasil Consultoria Technica Ltda., Aerodata International Surveys BVBA, Pasco Europe B.V. and Pasco Laos Sole Co., Ltd. close their book as of December 31 each year, and the financial statements as of this date are used for preparation of the consolidated financial statements.

    With respect to domestic consolidated subsidiaries, while 2 companies such as Zao Urbane Properties Co., Ltd. close their book as of December 31 each year, the financial statements prepared pursuant to the provisional closing of books conducted as of March 31 are used for preparation of the consolidated financial statements.

    With respect to equity method affiliates, 9 companies such as S1 Corporation and Taiwan Secom Co., Ltd. close their book as of December

    31 each year, and the financial statements as of this date are used for preparation of the consolidated financial statements. While Koatsu Co., Ltd. closes its book as of September 30 each year, the financial statements prepared pursuant to the provisional closing of books conducted as of March 31 are used for preparation of the consolidated financial statements.

    The necessary adjustments related to the consolidation are made for any major transactions which arise between the consolidated closing dates. The closing dates of other consolidated subsidiaries and equity method affiliates are the same as the consolidated closing date.

12. Significant Accounting Policies

14. Valuation policies and methods for significant assets

15. Securities

16. Held-to-maturity debt securities are carried at amortized cost.

17. Available-for-sale Securities with fair value

    Stock and beneficiary securities: At fair value based on the average market price one month prior to the fiscal year-end Others: At fair value based on market price at fiscal year-end

    Net unrealized gains and losses of securities are primarily reported directly in net assets. The cost of securities sold is primarily calculated by the moving average method.

    Securities with no fair value

    At cost, principally based on the moving average method

18. Derivatives

    Derivatives are stated at fair value.

19. Inventories

    Inventories are principally stated at cost based on the moving average method (or at the net realizable value (NRV) calculated by writing down the book value to reflect a decrease in the NRV).

20. Real estate for sale

    Stated at cost by the specific cost method (or at the NRV calculated by writing down the book value to reflect a decrease in the NRV).

21. Depreciation and Amortization of Depreciable and Amortizable Fixed Assets

22. Tangible Assets (except for leased assets)

23. Security equipment and control stations

    Security equipment and control stations are depreciated over their average estimated useful lives (5-8 years) by the declining-balance method.

24. Other tangible fixed assets

    Other tangible fixed assets are depreciated by the straight-line method.

    Their main useful lives are as follows: Buildings and improvements: 22-50 years Tools and equipment: 2-20 years

25. Intangible Assets (except for leased assets)

    Intangible fixed assets are amortized by the straight-line method. The software used in the Company is amortized by the straight-line method based on the useful lives within the Company (5 years).

26. Leased Assets