Financial Results for the Fiscal Year Ended
February 28, 2019

AEON DELIGHT CO., LTD.
Kazumasa Hamada, President and CEO
June 28, 2019

Contents

0

Inappropriate Accounting by our Consolidated Subsidiary KAJITAKU CO., Ltd.

1 Financial Report for the Fiscal Year Ended February 20192

Initiatives for the Fiscal Year Ending February 2020©2019 AEON Delight All Rights Reserved2

Results of the Investigation by the Special Investigation Committee

Inappropriate acts by KAJITAKU Identified through Investigation① Recording of sales from uninstalled property invoicing② Recording of fictitious sales through profit and loss adjustment, etc.

③ Unrecorded purchases of ID photo machines , etc.
④ Unrecorded purchases of used copiers, etc.
⑤ Unrecorded purchases of new copiers, etc.
⑥ Inventory valuation, etc. that do not reflect actual conditions⑦ Other inappropriate acts©2019 AEON Delight All Rights Reserved 3

Recommendations for Recurrence Prevention Measures from the Special Investigation Committee

Recommendations from the Special Investigation Committee
1. Recommendations for improvement concerning the management of our subsidiaries(1) Changes in the consciousness of our executives(2) Review of budget control-oriented subsidiary management system(3) Clarification of divisions and executives in charge of improvement of subsidiaries’
compliance structures, etc.
(4) Expansion of Compliance division, Affiliated companies administration division
and Management audit division(5) Dispatch of fill-time executives and staffs to subsidiaries
2. Recommendations for recurrence prevention measures at KAJITAKU(1) KAJITAKU’s management reshuffle, increase directors(2) Reform corporate culture, change in compliance consciousness(3) Enhancement of KAJITAKU’s Administration division (Accounting division inparticular)(4) Improvement of KAJITAKU’s compliance structure, organizational reform(5) Clearly state business procedures and workflow and thoroughly comply with them©2019 AEON Delight All Rights Reserved 4

Efforts toward Strengthening Group Governance Structure

Strengthen group governance structure in accordance withrecommendations from the Special Investigation Committee

Concentrated our emphasis on the governance of the Company itself andgroup governance functions for subsidiaries were inadequate

To accelerate the entire AEON Delight Group’s growth strategy and tostrengthen group governance structure once again

we will establish 3 pillars of group governance(①Budget control, ②Growth strategies of each company, ③Internal
control system)©2019 AEON Delight All Rights Reserved 5

Basic Policies for Recurrence Prevention Measures
We will develop and implement effective recurrence prevention measures inaccordance with recommendations from the Special Investigation Committee to avoid
a recurrence of such a situation
Basic Policies for Recurrence Prevention Measures
1. Our Company’s recurrence prevention measures(1) Changes in the consciousness of our executives to further promote compliance structure(2) Review of subsidiary management system to support stable and sustainable growth of the groupcompanies(3) Improvement of compliance structures of the group companies(4) Improvement of the organization to carry out audits from the viewpoint of the group companies’
healthy business support, appropriate monitoring and prevention of inappropriate acts
(5) Dispatch of full-time executives and staffs engaged in businesses on a daily basis, early detectionof inappropriate acts through personnel exchanges and improvement of corporate culture

2. Recurrence prevention measures at KAJITAKU(1) Management reshuffle, delivery of compliance-oriented message by the new President(2) Reform corporate culture, change in compliance consciousness(3) Ensuring of reliability of financial, accounting and budget businesses, visualization of operations(4) Establishment of compliance structure, compliance with company rules and thorough monitoring(5) Clearly state business procedures and workflow and thoroughly comply with them

*We will inform you on the specific recurrence prevention measures as soon as a decision ismade.
©2019 AEON Delight All Rights Reserved 6

Effect on the consolidated financial statements(Cumulative effect on net assets during the entire survey period)

Cumulative Adjustments for 5 Fiscal Years (FY2/14-FY2/18) and FY2/19
Item

Issue amount (100 million yen)①

Modification of Uninstalled Property Claims②

Adjustment for fictitious sales

- 22
- 26

③

Purchase adjustment for ID photomachines- 17④

Adjustment for purchase of used copiers⑤

Other purchase adjustment⑥

Valuation loss on inventories

- 12
-2
- 12

⑦

Revision to confirm accounts receivablebalance- 0.4⑧

Revision of suspense accounts⑨

Other adjustments⑩

Cumulative effect found by theinvestigation of the Special
Investigation Committee (subtotal)
Amount of change in revenue recognition
standard (*)
Cumulative effect for the past years andfor the fiscal year ended February 2019(subtotal)⑪

Total allowance (*)
Total cumulative impact* More information about ⑩ and ⑪ is described on the following page.

Summary
Cumulative effect on net assets

during the entire survey period
Reporting period(From March 2013 to the end of
February 2019)

0.5
-2
- 97
- 37
- 135
- 27
-162
©2019 AEON Delight All Rights Reserved7Effect on the Consolidated Financial Statement(Supplementary Explanation on the Breakdown of Adjusted Accumulated Amount①)⑩ Change in the amount of revenue
recognition standard-3.7 billion yen

The sales prices of equipment such as KAJITAKU’s copiers and ID photo machines indicate thatthe company received maintenance revenues in advance over thelease term, and it turned out that these are recorded as sales at the time of equipment sales

We made prior period adjustments and recorded sales appropriately after the fiscal year
when the contract was signed as it is considered that the amount received in advanceshould be recorded on an accrual basis.
Conceptual diagram of the process for receiving maintenance cost in advance
保守費用の前受処理の概念図

5
保守相当
maintenance

Equivalent of

25

売 ジ

通常荒利
gross profit

Ordinary

25

価 タ

機器原価
Equipment

50

KAJITAKU
sales price

カ

ク

5

5

5

5
(Recorded sales after the fiscal
25（契約締結年度以降に売上計上）
year when the contract was signed)

5年リース
5-year leasecost

st year1
1年目

nd year
22年目

rd year3
3年目

th year
44年目

th year55年目©2019 AEON Delight All Rights Reserved 8

Effect on the Consolidated Financial Statement(Supplementary Explanation on the Breakdown of Adjusted Accumulated Amount②)⑪ Amount of allowance recorded-2.7 billion yen

To achieve sales budget in the Store Support Business, KAJITAKU carried out
excessive sales measures (KAJITAKU compensates for losses when sales fall
below the guaranteed minimum sales)

Recorded future compensation for losses identified based on the contract as allowance as of theend of February 2019

With the aim of reducing future cash outflow, a special assignment team has already been set up andbegan negotiations toward appropriate maintenance cost and dissolution of loss compensation contract©2019 AEON Delight All Rights Reserved 9

Effect on the Consolidated Financial Statement (FY2/14-FY2/16)(100 million yen)
Fiscal year

FY2/14
Beforecorrection

Aftercorrection

Net sales

2,572

2,566

Gross profit

337

OperatingincomeFY2/15
Beforecorrection

Aftercorrection

-5

2,667

2,655

332

-4

351

151

146

-4

Ordinary
income150

146

Net income81

Net assets
Total assets

Item

FY2/16
Beforecorrection

Aftercorrection

-11

2,810

2,779

-31

342

-8

373

348

-25

158

153

-4

167

145

-21

-4

159

154

-4

166

145

-21

70

-11

87

79

-7

96

72

-24

713

701

-11

774

755

-19

840

796

-43

1,121

1,110

-11

1,260

1,245

-14

1,313

1,294

-19

changechangechange©2019 AEON Delight All Rights Reserved

10Impact on Consolidated Financial Statements (FY2/17-FY2/19)(100 million yen)
Fiscal year

FY2/17

FY2/19FY2/18Beforecorrection

AftercorrectionchangeBeforecorrection

Aftercorrection

Net sales

2,947

2,926

-21

2,958

2,923

-34

3,029

103.6%

Gross profit

389

357

-32

389

348

-40

354

101.7%

Operatingincome

172

141

-31

168

129

-39

130

100.9%

Ordinary
income

173

142

-31

172

133

-39

133

99.9%

Net income
attributable toowners of parent

102

70

-31

103

63

-39

64

100.3%Net assets

920

846

-74

1,005

891

-114

755

84.7%

Total assets

1,395

1,378

-16

1,468

1,446

-21

1,346

93.0%

Item

changeResultYoY©2019 AEON Delight All Rights Reserved

11KAJITAKU’s Future Direction[Basic policy]
Verify business continuity on the assumption that the Company will not record
further loss

● Housekeeping Support Business

The market is expected to expand in the future
Consider pursuing growth through efficient management from theperspective of “selection and concentration”● Store Support Business
Difficult to expect future growth although it has a certain size of market

Temporarily stop selling and placing new equipment, and focus on
improving existing contracts©2019 AEON Delight All Rights Reserved 12

Disposition of Related Persons【 KAJITAKU 】
PersonActionFormer President

Dismissal

Former Director

Dismissal

in charge of Store Support businessand imposed disciplinary actions against 6 people concerned(5 executive staffs and 1 staff）©2019 AEON Delight All Rights Reserved 13

Clarification of Management Responsibility【AEON delight】
Title

Name

ActionIppei Nakayama

RemovalPresident & CEO

Kazumasa Hamada

30% cut of remuneration forsix months

Executive Vice President

Nobuo Yamazato

10% cut of remuneration for
one month

Senior Managing Director

Yukio Furukawa

RemovalManaging Director

Motoyuki Shikata

10% cut of remuneration for
one month

Managing Director

Hideyuki Mito

10% cut of remuneration for
one month

Director

Tajiro Yashi

10% cut of remuneration for
one month

Director

Hiroki Sadaoka

10% cut of remuneration for
one month

Chairperson

and imposed disciplinary actions against 6 people concerned(5 executive staffs and 1 staff）©2019 AEON Delight All Rights Reserved 14

We would like to express our deepest
apologies to our stakeholders for theirserious inconvenience and concern.

©2019 AEON Delight All Rights Reserved

15

Contents

0

Inappropriate Accounting by our Consolidated Subsidiary KAJITAKU CO., Ltd.

1 Financial Report for the Fiscal Year Ended February 20192

Initiatives for the Fiscal Year Ending February 2020©2019 AEON Delight All Rights Reserved

16

Consolidated Income Statements
Net sales increased due to the expansion of new customers and the growth of overseas subsidiaries.
On the other hand, profits were significantly below the plan due to the impact of the matters at KAJITAKU Co., Ltd.
(100 million yen)

FY2/18(Ration to sales)

FY2/19(Ration to sales)

Net sales

2,923(100.0%)3,029

Gross profit

348(11.7%)

SG&A expenses

219

Operating income

Difference

Percentagechange(100.0%)105103.6%

354(11.9%)

5

101.7%(7.4%)

224(7.5%)

4

102.1%

129(4.3%)

130(4.4%)

1

100.9%

Ordinary income

133(4.4%)

133(4.5%)▲1

99.9%

Net income attributableto owners of parent

63(2.1%)

64(2.2%)

1

100.3%* Initial plan: net sales of 305.0 billion yen, operating income of 18.5 billion yen* Percentage change is compared to the revised consolidated results for FY2/18.

©2019 AEON Delight All Rights Reserved

17[Reference] Group Income Statement excluding KAJITAKU (Same Scale Comparison)
Net sales increased due to the expansion of new customers and the growth of overseas subsidiaries.
Operating income increased, driven by capital management and construction[Reference](100 million yen)

FY2/18(Ration to sales)

FY2/19(Ration to sales)

Net sales

2,876(100.0%)2,974(100.0%)98

103.4%

Gross profit

370(12.8%)

384(12.9%)

14

103.9%

SG&A expenses

209(7.3%)

214(7.2%)

4

102.2%

Operating income

160(5.6%)

170(5.7%)

9106.1%

Percentage
Difference change©2019 AEON Delight All Rights Reserved

18

Sales by Segment
Increase sales in 6 businesses. Cultivate new customers in Japan and overseas for cleaning andfacilities management services.
Construction orders grew in the 2H of the fiscal year in line with initial forecasts, and sales increased.
(100 million yen)

FY2/18

FY2/19

Facilities management

526

563

107.0%

Security services

432

444

102.8%

Cleaning services

552

581

105.2%

Construction work

408

414

101.4%

Materials/supplies
sourcing services

502

510

101.5%

Vending machine services

328

319

97.3%

Support services

171

194

113.4%(Reference)
Excluding KAJIYAKU

123

139

113.2%

Total

2,923

3,029

104.3%

Percentage change©2019 AEON Delight All Rights Reserved

19Profit by Segment
Increase sales in 4 businesses. Achieved double-digit growth in facility management and construction work.
Vending machines are undergoing a transition to a revenue model, and support services are suffering a large
loss due to the matters by KAJITAKU.
(100 million yen)

Percentage change

FY2/18

FY2/19

Facilities management

46

55

119.7%

Security services

28

28

100.8%

Cleaning services

6266

107.5%

Construction work

33

39

120.7%

Materials/supplies
sourcing services

28

27

96.9%

Vending machine services

21

11

55.3%

Support services

-14

-22

-%

(Reference)
Excluding KAJITAKU

17

17

103.5%

Total

205

207

101.2%©2019 AEON Delight All Rights Reserved20Consolidated Balance Sheet(100 million yen)

Liabilities andnet assets

FY2/18

FY2/19Difference

Current
liabilities

490

514

23

1

Fixed
liabilities

64

76

11

81

3

Total
liabilities

555

590

35

85

75

▲10

Shareholder’sequity

845

727

▲118

Fixed assets

263

258

▲5

Total net assets

891

755

▲136

Total assets

1,446

1,346

▲100

Total liabilities
and net assets

1,446

1,346

▲100

AssetsFY2/18

FY2/19Current assets

1,183

1,087

▲96

Tangible
fixed assets

100

101

Intangible
fixed assets

78

Investments,
etc.

Difference©2019 AEON Delight All Rights Reserved21

Consolidated Cash Flow Statement(100 million yen)(100 million yen)

FY2/18

FY2/19Difference

200
150

Cash flows fromoperating activities

135

123

▲11

Operating
CF operating activities
Cashflows from
Investment
CF
Investing CF
Finance
CF CF
Financing

100
50

Cash flows frominvesting activities

▲26

122

149

0
(50)

Cash flows fromfinancing activities
Cash and cash
equivalents at the endof year

▲32

▲196

▲164

(100)
(150)

387

434

47

(200)

FY2/18

FY2/19©2019 AEON Delight All Rights Reserved

22Balance Sheet(100 million yen)

Liabilities andnet assets

FY2/18Difference
FY2/19Difference

FY2/18

FY2/19Difference

Current assets

959

846

▲110

Current
liabilities

367

375

8

Tangible
fixed assets

66

66

0

Fixed
liabilities

89

123

34

Intangible
fixed assets

70

61

▲9

Total
liabilities

457

499

42

Investments,
etc.

202

296

94

Shareholder’sequity

821

757

▲64

Fixed assets

338

423

84

Total net assets

837

770

▲67

Total assets

1,295

1,269

▲26

Total liabilities
and net assets

1,295

1,269

▲26

Assets©2019 AEON Delight All Rights Reserved

23

FY2/19 3 Initiatives to Solve the Society Issues
1

Safety● Recovery support through providing services to disaster-stricken areas such as earthquakes,
torrential rains, and typhoons● Aggressive proposal activities to support the development of disaster prevention and disastermitigation systems

2

Labor shortage● Established a joint venture with a local AI company in Shanghai, China (April)● Introduced "Delight Viewer" , a distributed management system (October)● Introduced and started sales of automated floor cleaning robots (November)● Constructed labor-saving model for Security services at commercial facilities due to collaboration withSECOM CO.,LTD

3

Environment● Participation in a demonstration project for electric power exchange utilizing blockchain technology● Newly established “Electricity Planning Department” in October to operate Energy Management Services.
©2019 AEON Delight All Rights Reserved

24

FM International Standard ISO: Acquired 41001 certification for the first time in Japan

International standard for facility management (FM)
Acquired ISO 41001 certification for the first time as a Japanese company

ISO 41001

Require support for growth of companies
and organizations through FM

Building a leading level of business quality in the FM Industry
for branding in global markets©2019 AEON Delight All Rights Reserved

25[Reference] Group Results for the 3-year Period Excluding KAJITAKUGroup results for FY2/19 excluding KAJITAKU
Both net sales and operating income increased.
[Reference](100 million yen)

Net sales
Operating income

FY2/17

FY2/18

FY2/19

2,863

2,876

2,974

164

160

170

* The above is the consolidated results based on the KAJITAKU's results on a zero basis.
©2019 AEON Delight All Rights Reserved

26

Business expansion in Asia
Double-digit growth in both sales and operating income in the Overseas Business (*)
Overseas Business Sales and Operating Income (100 million yen)
OperatingincomeNet sales
180

China

Malaysia

VietnamIndonesia

Operating income

20

159
150

16

129
120
11

90

12

9
8

60
4

30
0

0

Net sales

Operating income
2017
FY2/18* Figures are simple totals of results of operating companies.

Net sales

Operating income
2018
FY2/19©2019 AEON Delight All Rights Reserved

27

Contents

0

Inappropriate Accounting by our Consolidated Subsidiary KAJITAKU CO., Ltd.

1 Financial Report for the Fiscal Year Ended February 20192

Initiatives for the Fiscal Year Ending February 2020©2019 AEON Delight All Rights Reserved28What must be done in FY2/20

To Accelerate Our Growth Strategy● Strengthen the Group Governance System, in addition tomeasures to prevent the recurrence of KAJITAKU matter● Review of medium-to long-term growth strategies including the“Aeon Delight Vision 2025”

Strengthen our management foundation
To return to a growth path as a Group©2019 AEON Delight All Rights Reserved29

Target for FY2/20(100 million yen)

FY2/19 Result(Ratio to sales)

FY2/20 Forecast(Ratio to sales)

Net sales

3,029(100.0%)3,150(100.0%)104.0%

Operating income

130(4.4%)

180(5.7%)

138.2%

Ordinary income

133(4.5%)

180(5.7%)

134.7%Net income attributableto owners of parent

64(2.2%)

108(3.4%)

168.4%

Percentage change©2019 AEON Delight All Rights Reserved30Target Achievement Scenario for Income
Aim to achieve the operating income target
by the growth of the parent company and domestic and overseas subsidiaries(100 million yen)

200

Operating income
excluding KAJITAKU
170

160

KAJITAKU
Operating loss forecast
5

Operating income
130

120

OperatingAccumulated
Income target
operating income
180
15Effect amount of
KAJITAKU
170

80“Major Initiatives by Area”
toward achieving the operating
income target are presented fromthe next section

40

0
FY2/19FY2/20©2019 AEON Delight All Rights Reserved

31

FY2/20 Key Initiatives by Area
Maintain strong trend and steadily expand FM businessin Japan, China and ASEAN

Japan● Establish Regional Economic Zones in each area to help solve the
3 society issues of safety, labor shortage, and the environment

China● Accelerating business expansion through “One Aeon Delight Strategy”

ASEAN● Expanding business in Indonesia through SJS, which was acquiredin the previous fiscal year

©2019 AEON Delight All Rights Reserved

32

Domestic : Establishment of Community-based Branch Office Management Structure

Realize management on a regional basis at the initiative of branch offices tocreate a Regional Economic Zones

Redefine the role of Branch Managers
along with restructuring branch office functions● Build a trusting relationships with customers, government, business communityand organizations as a manager● Create a regional economic zones and build a foundation for business growthin the region

Established a branch office management structure by
structural reform as of March 1, 2019©2019 AEON Delight All Rights Reserved 33

Domestic : Branch Management ① Expansion of Orders in Each Area through Improvement in Communication

Expansion of orders through improvement in communication with customers in each area

Activate communication with customers
And expand orders for building maintenance business through stronger relationships(Example of Efforts in 2019) Organizational Restructuring of the Kyushu Branch・ Established a regional system by prefecture.
Kyushu-Minami Branch, which previously had jurisdiction over Kumamoto, Miyazaki, andKagoshima, was dissolved and "Sales Offices" were newly established in each prefecture.
・ Promoted young human resources who were in charge at work-sites as Sales
Office Managers

Contact frequency increased and are well received by customers in each prefecture (also has
positive impact numerically)
Raised the morale of young human resources and led to organizational activation.
We will strengthen relationships with local subcontractors
Expand to other branch offices as a good example©2019 AEON Delight All Rights Reserved 34

Domestic : Branch Management ② Creation of Regional Economic Zones in the Construction Work

Newly establish “Construction division” in Kanto and Kansai branch offices
Improve community-based contract system in cooperation with the existing easternJapan and western Japan Construction divisions

FY2/19 : Strengthened the structure of planning and designing field
Accuracy of contract for work improved at the proposal of upstream. Orders forlarge scale constructions expanded from the 2nd half

FY2/20 : Improve the structure capable of undertaking various renovation
works in close relation to the community
Expand orders for various renovation works by strengthening relationships
with local subcontractors

Making steady progress toward the creation of regional
economic community in the Construction work
©2018 Aeon Delight All Rights Reserved 35

Domestic: Efforts to resolve labor shortages-Strengthening non-on-site management

Promote initiatives to eliminate labor shortages in collaboration with Secom Co., Ltd.
Expanding service provision to small and medium-sized offices by strengthening nonon-site management

Collaboration began in April 2018. Building a labor-saving model for security
services in FY2/19.
Continue to verify further labor saving in facility management operations

Strengthen nonresident management with using strengths of both companies (SECOM:
Security, Aeon Delight: Facility Management) and expand services to small and mediumsized offices. Already started this project in the Kanto region.

©2019 AEON Delight All Rights Reserved36

Domestic: Initiatives to Reduce Safety and Environmental Impact

Contributing to the Achievement of the Aeon Group Vision as a company
responsible for the “safety” and “environment” of facilities

AEON Group

Aeon
Manifesto on
the Preventionof Global
Warming(2008-2011)

AEON Eco Project (2012-2020)

Reducecampaign

Createcampaign

Protect
campaign

Our Company

Sales and installation of LED lighting,
Energy-saving operation of facilities

AEON
Decarbonize
Vision 2050

● Verification of Establishment of Energy
Management Services including the administration
and retail of renewableenergy● Verification of power storage utilizing renewableenergy as part of BCP©2019 AEON Delight All Rights Reserved37China: Accelerate business expansion through 1 Aeon Delight strategies
Expand contracts, mainly in the Yangtze River Delta region,
based on 1 Aeon Delight strategies
Acquired 2 core operating companies as wholly
owned subsidiaries in the previous fiscal year

① Aeon Delight brand Unifying Operations
Northern China

Changjiang Delta
andSurrounding area
Southern
China Area
AD Jiangsu
Wuhan Xiaozhu② Enhancing Quality and Brand Power③ In the Yangtze River delta andsurrounding areas Expanding contracts
for facilities targeted (*)* Priority targets: Medium-to-high-end shopping
centers, hospitals and nursing homes,
Infrastructure and Development, etc.

Expanding business tonorthern and southern China©2019 AEON Delight All Rights Reserved

38

ASEAN: Expand business in Indonesia through early realization of synergies with SJSExpand business in Indonesia, ASEAN's largest market

In the top class in the country's cleaning industry
in the previous fiscal year
PT Sinar Jernih Sarana
Was made into a consolidated subsidiary

Through the early realization ofsynergies with us Accelerating

Business Expansion in Indonesia©2019 AEON Delight All Rights Reserved

39

Shareholder Return

Dividends have increased for 14 consecutive years since FY2/06.
15 Consecutive Years of Dividend Increase

For FY2/19, we increased the dividend by 2 yen from the previous
fiscal year, to63 yenFor FY2/20, based on the assumption that the performance forecasts will be achieved,
Plan to pay dividends of

65 yen,up 2 yen from FY2/19 with consolidated dividend payout ratio of 30% (*),* Net income attributable to owners of parent: 10.8 billion yen©2019 AEON Delight All Rights Reserved40

If you have any questions or comments, please contact us below.
■ These materials contain statements about forecasts and estimates relating to the future plans, strategies, andperformance of AEON DELIGHT.
These statements are based not only on past performance, but also on assumptions based on information currently
available to the company. For this reason, please note that the actual performance may differ from our estimates.
■ The information contained in these materials has been prepared by the following methods if not specifically statedotherwise.
◇ All statements are based on consolidated results◇ All figures of less than 100 million yen have been rounded down
◇ Percentages have been rounded off to one decimal place

AEON DELIGHT CO., LTD.
(Securities Code: 9787)

IR Contact : Emiko Ishii
Delight Communication Department
TEL 03-6840-5712
Please contact us on our website.
http://www.aeondelight.co.jp

Based on information available up to the date of publication (June 28, 2019)
These forecasts have been prepared and are subject to change due to various factors going forward.