Financial Results for the Six Months Ended
August 31, 2019
AEON DELIGHT CO., LTD.
Kazumasa Hamada,President, Group CEO
October 10, 2019

Contents

1

Financial Report for the First Half of FY2/20

2

Progress of Recurrence Prevention Measures for Inappropriate Accounting by KAJITAKU

3

Aeon Delight Vision 2025

4

Initiatives for the Second Half of FY2/20©2019 AEON Delight All Rights Reserved2Consolidated Statement of Income
Sales and profits increased, and all-time high profits were reported.
(100 million yen)
Showed steady progress against the plan.
FY2/191H (Ratio to sales)

FY2/201H (Ratio to sales)

Difference

PercentagechangeNet sales

1,526(100.0%)1,574(100.0%)48

103.2%

Gross profit

174(11.4%)

197(12.5%)

23

113.2%

SG&A expenses

111(7.3%)

111(7.1%)▲0

99.8%

Operating income

62(4.1%)

85(5.5%)

23

137.0%

Ordinary income

63(4.2%)

86(5.5%)

23

136.3%Net income attributableto owners of parent

28(1.9%)

51(3.3%)

23

182.5%©2019 AEON Delight All Rights Reserved

3

[Reference] Income Statement excluding KAJITAKU (Same Scale Comparison)
Net sales increased due to the expansion of new customers and the growth ofoverseas subsidiaries.
Operating income increased driven by the Building Maintenance business.

[Reference](100 million yen)
FY2/191H (Ratio to sales)

FY2/201H (Ratio to sales)

Difference

PercentagechangeNet sales

1,498(100.0%)1,547(100.0%)48

103.3%

Gross profit

194(13.0%)

199(12.9%)

5

102.6%

SG&A expenses

106(7.1%)

107(6.9%)

0.5

100.5%

Operating income

87(5.8%)

92(6.0%)

4

105.2%©2019 AEON Delight All Rights Reserved

4Sales by Segment
Increase sales in 4 businesses.
Cleaning services: Acquisition of Indonesia's SJS contributed to the growth.
(100 million yen)
Construction work: Construction orders increased
Percentage change
FY2/20 1H
FY2/19 1H
Facilities management

281

296

105.4%

Security services

220

221

100.5%

Cleaning services

286

309

108.0%

Construction work

216

231

106.6%

Materials/supplies
sourcing services

260

259

99.6%

Vending machineservices

163

160

98.1%

Support services

97

96

99.4%

(Reference)
Excluding KAJITAKU

69

68

99.3%

1,526

1,574

103.2%

Total©2019 AEON Delight All Rights Reserved

5Profit by Segment
Increase sales in 4 businesses. Earnings model of vending machine services has changed.
Materials: Worked to reduce logistics costs to improve profitability(100 million yen)
Percentage change

FY2/19 1H

FY2/20 1H

Facilities management

28

27

99.2%

Security services

14

14

100.7%

Cleaning services

33

35

106.2%

Construction work20

21

107.8%

Materials/supplies
sourcing services

14

13

90.6%

Vending machineservices57132.1%

△15

2

-%

9

8

94.3%

100

122

121.9%

Support services(Reference)
Excluding KAJITAKU

Total©2019 AEON Delight All Rights Reserved

6Consolidated Balance Sheet(100 million yen)

514

500

▲13

71

65

▲6

Total liabilities

585

565

▲19

▲10

Shareholder’sequity

727

763

36

250

▲17

Total net assets

755

789

34

1,355

14

Total liabilities
and net assets

1,340

1,355

14

2019/8Current assets

1,072

1,105

32

101

98

▲３

81

76

▲4

85

74

Fixed assets

267

Total assets

1,340

fixed assets
Intangible
fixed assets
Investments,
etc.

Difference

2019/8

2019/2

Tangible

Liabilities andnet assets

2019/2

AssetsDifference

Current
liabilities
Fixedliabilities©2019 AEON Delight All Rights Reserved

7

Consolidated Cash Flow Statement(100 million yen)
2018/8Cash flows fromoperating activities

2019/8Difference(100 million yen)
20

Operating CF
Financing CF

Investing CF

15

18

9

▲8

10
5

Cash flows frominvesting activities▲10

Cash flows fromfinancing activities▲15

Cash and cash
equivalents at theend of year

▲17

▲6

0
(5)

▲16

▲1

(10)
(15)

378

409

31

(20)

FY2/19 2Q

FY2/20 2Q©2019 AEON Delight All Rights Reserved

8Strengthening Group Governance Structure
In response to recommendations from the Special Investigation Committee
regarding inappropriate accounting by KAJITAKU, we formulated measures toprevent recurrence (details will be presented later).
We will establish 3 pillars of group governance for thoroughimplementation of measures to prevent recurrence(① Growth strategies of each company, ② Budget control, ③Internal
control system )① Reorganization of the Board of Directors② Implement structural reforms (newly established Group CEO,COOs, CCOs, and CFO)

Accelerating the Aeon Delight Group’s Growth Strategy©2019 AEON Delight All Rights Reserved

9Major initiatives for the First Half
1

Safety● Aggressive proposal activities to support the development of disaster prevention and disaster mitigation
systems● Promoted direct management of maintenance and inspection services to enhance technical capabilities
as a group of specialists in facility management● Research and development of power storage systems using renewable energy as part of BCP measures

2

Labor shortage● Developed integrated facility management services using open building automation system to build AD
Platform● Started a new project with SECOM CO., LTD to strengthen non-onsite management to expand service
provision to small and medium-sized offices in the Kanto region

3

Environment● To establish energy management services, promoted demonstration of electricity supply for renewableenergy in the Urawamisono district in Saitama Prefecture through collaboration with other companies.
©2019 AEON Delight All Rights Reserved

10Domestic: Initiatives to Reduce Safety and Environmental Impact
September 1, 20192019 Comprehensive Emergency Drill in
Okinawa Prefecture AEON CO., LTD. and AEONRYUKYU CO.,LTD. participated thisevent
 Aeon Group established Balloon
Shelter, a large-scale tent for
emergency evacuation toaccommodate up to 50 people, forthe first time in remote islands in
Okinawa (Miyakojima).

Going forward, Aeon Group companies
will cooperate with local governments
and relevant organizations to● Source: Nihon Building Shimbun No. 1189, Page 2 (September 16, 2019)

Help ensure safety
in local communities©2019 AEON Delight All Rights Reserved

11

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

100
80

China

Malaysia

VietnamIndonesia

Operating income

91
71

16

60

12

40

7
4

20
0

20

Net sales

Operating income

FY2/19 2Q* Figures are simple totals of results of operating companies.

84

Net sales

Operating income0

FY2/20 2Q©2019 AEON Delight All Rights Reserved

12

Contents

1

Financial Report for the First Half of FY2/20

2

Progress of Recurrence Prevention Measures for Inappropriate Accounting by KAJITAKU

3

Aeon Delight Vision 2025

4

Initiatives for the Second Half of FY2/20©2019 AEON Delight All Rights Reserved

13Improvement of Compliance Structures of the Group Companies
Established to strengthen group governanceand implement preventive measures on July 24

Group Compliance Division

Group Compliance Department

Named "Group" on all
4 subordinate departments

Group Internal Control Department

to strengthen governancefrom a Group perspective

Group Internal Audit Department

Group Legal Department©2019 AEON Delight All Rights Reserved

14

Initiatives of the GC Division to Strengthen the Group's Management Base

For the entire AEON Delight Group
Creating a corporate culture that does not cause frauds

×

Establishment of fraud prevention mechanisms

Strengthening the Group's management foundationfrom the viewpoints of corporate culture and structure©2019 AEON Delight All Rights Reserved

15

Recommendations for Recurrence Prevention Measures from the Special Investigation Committee■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 andManagement audit division(5) Dispatch of fill-time executives and staffs to subsidiaries■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

16Basic Policy for recurrence prevention measures at our company
No.

Our Company’s recurrence prevention measures

Implementation①

Changes in the consciousness of our executives tofurther promote compliance structure

FY2/20 3Q②

Review of subsidiary management system to support
stable and sustainable growth of the group companies

FY2/21 1Q③

Improvement of compliance structures of the groupcompanies

FY2/20 3Q④

Improvement of the organization to carry out audits from theviewpoint of the group companies’ healthy business support,
appropriate monitoring and prevention of inappropriate acts

FY2/20 3Q⑤

Dispatch of full-time executives and staffs engaged inbusinesses on a daily basis, early detection of inappropriate
acts through personnel exchanges and improvement ofcorporate culture

FY2/20 3Q

For more details of recurrence prevention measures:"Measures to Prevent Recurrence of Inappropriate Accounting at Our Consolidated Subsidiary KAJITAKU CO., Ltd.“at July. 22, 2019©2019 AEON Delight All Rights Reserved

17Basic Policy for Recurrence prevention measures at KAJITAKUNo.

KAJITAKU’s Recurrence prevention measures

Implementation①

Management reshuffle, delivery of complianceoriented message by the new President

Continuous
improvement②

Reform corporate culture, change in complianceconsciousness

FY2/21 1Q③

Ensuring of reliability of financial, accounting andbudget businesses, visualization of operations

FY2/20 3Q④⑤

Establishment of compliance structure, compliancewith company rules and thorough monitoring
Clearly state business procedures and workflow andthoroughly comply with them

FY2/20 4Q

FY2/20 4Q

For more details of recurrence prevention measures:"Measures to Prevent Recurrence of Inappropriate Accounting at Our Consolidated Subsidiary KAJITAKU CO., Ltd.“at July. 22, 2019©2019 AEON Delight All Rights Reserved

18

Establishment of Recurrence Prevention Committee
Monitor the progress of preventive measures and evaluate the effectiveness

Including outside experts, we established

Recurrence Prevention Committee
on October 1

Held quarterly through the end of February 2021
Recommended corrections to Aeon Delight as necessary
Thorough prevention of recurrence with objective
evaluation to enhance effectiveness©2019 AEON Delight All Rights Reserved

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

20

Contents

1

Financial Report for the First Half of FY2/20

2

Progress of Recurrence Prevention Measures for Inappropriate Accounting by KAJITAKU

3

Aeon Delight Vision 2025

4

Initiatives for the Second Half of FY2/20©2019 AEON Delight All Rights Reserved

21

Aeon Delight Vision 2025
Aiming to be an environmental value-creating company in Asia
that resolves social issues based on “Safety," “Labor shortage,"and “Environment" as the three pillars of its growth strategies

Targets for 2025

Operating income

Net sales¥525 billion¥48 billion

AEONdelight Vision 2025

Net Sales
Global TOP10Net Sales
No.1 in Asia

Operatingincome margin
GlobalTop-level©2019 Aeon Delight All Rights Reserved

13Strategic Direction by Area
To become Asia's No.1 Facility Management Corporate GroupJapan● By utilizing the AD platform and building a service network,

China● Accelerate business expansion through "One Aeon Delight Strategy"
Form regional economic zones in line with the Yangtze River Economic Belt

ASEAN

● Build optimal FM models for each area

Form regional economic zones in each area where 8 branches are located.

©2019 AEON Delight All Rights Reserved

24

To Form Regional Economic Zones -AD Platforms and Service Networks
Providing optimal solutions for customers' issues[Customer]

Operation data from sensors installed each equipment
External Information (weather, disaster, etc.)

Proposing optimal solutions
for individual issues

AD Platform
Data collection andstorageAnalysis and processing
by AI

Optimum solution

Efficiency and quality
improvement
Maintenance and inspection data from the distributed management system "Delight Viewer"[Service network]

Partner companies and alliance partners

AEON DELIGHT Group©2019 AEON Delight All Rights Reserved

25Started Provision of Integrated Facility Management Services Using Open Systems
Achieved energy saving of facilities, reduction of operation costs,
and labor saving of FM operations
Development and launch of new services as the foundation of AD platform[Integrated facility
management services]■ Networking/Integrated control offacilities through an open system■ Remote operations with mobile
devices and wearable cameras■ Use IoT garbage box,
automated-driving cleaning
robots● Controlling all kinds of facilities anywhere with mobile terminals
Realized a Moving Disaster Prevention Center©2019 AEON Delight All Rights Reserved

26

Establishment of corporate brands to build regional economic zones

Establish a corporate brand as a facilities management experts

human

technical capabilities

andEnhanceto demonstrate leadership in service networks inregional economic zone

FY2/20 2H
To further refine our technical capabilities
Hold Technical Contests in Facility Management, Security, and Cleaning©2019 AEON Delight All Rights Reserved

27

Contents

1

Financial Report for the First Half of FY2/20

2

Progress of Recurrence Prevention Measures for Inappropriate Accounting by KAJITAKU

3

Aeon Delight Vision 2025

4

Initiatives for the Second Half of FY2/20©2019 AEON Delight All Rights Reserved28

Progress toward FY2/20 Full-Year Forecasts
We will work to achieve full-year forecasts by improving the profitability of ourcore businesses, further expanding our share of the domestic market andincreasing profits through growth of domestic and overseas subsidiaries

Full-year Forecast 1H Progress Rate

1H Result

2H Plan

1,574

1,576

3,150

50.0%

Operating income

85

95

180

47.2%

Ordinary income

86

94

180

47.8%

Net income
attributable toowners of parent

51

57

108

47.2%

(100 million yen)
Net sales©2019 AEON Delight All Rights Reserved29

Target Achievement Scenario for Full-year Oprating Income
2H Operating Income Target (excluding KAJITAKU,): 9.32 billion yen, +1 billion yen YoY (*)* Calculated from the operating income target of KAJITAKU for 2H of 180 million yen and the results for the previous FY of
8.32 billion yen.

Item
① AEON DELIGHT(Non-consolidated)

Change in Gross profit vs. previous 2H (100 million yen)

4~5

② Domestic subsidiaries

1③ Overseas subsidiaries

5①~③ Total gross profit

10 ~ 11

Change in SG&A expenses YoY

0Change in operating income YoY

10 ~ 11©2019 AEON Delight All Rights Reserved30Initiatives to Achieve the Non-Consolidated 2H Income Target ① Recognition of Challenges

Achieve profit target for 2H
by promptly tackling issues in core businesses
In FY2019, through the promotion of branch management,
increase share of building maintenance business in various regions
Meanwhile,  Improve profitability in facility management

and cleaning Achieve steady capture of construction demand inconstruction work
These are issues for securing profit target for 2H(to be addressed from the next section)©2019 AEON Delight All Rights Reserved

31Initiatives to Achieve Our Non-Consolidated 2H Income Target ② Improve Profitability of Facility Management

Reduce Costs through Business Structural Reforms and Direct Management① Reform the business structure.
● Promote labor savings at resident sites by continuing to improve efficiency in on-site
operations from the previous fiscal year
● Accelerate labor saving in conjunction with the expansion of the introduction of open
systems● Resources redeployed to sales centers (patrol-type bases)② Direct management of maintenance and inspection services● Made emergency power generators burden test directly under management (trial
conducted during the 3Q)

Labor savings on business at group companies and partner companies
to reduce cost of sales including outsourcing costs©2019 AEON Delight All Rights Reserved

32Initiatives to Achieve Our Non-Consolidated 2H Income Target ③ Improvement in Profitability of Cleaning Services

Improve profitability by eliminating low-profit properties andexpanding sales of high-profit services and products① Elimination of low-profit properties
Examine the income and expenditures of each property on a branch officebasis, and eliminate low-income properties② To expand sales of highly profitable services and products
Expand sales of highly profitable services and products that require
specialized technologies, such as escalator step cleaning and foodworkplace cleaning, in collaboration with Group companies

To improve profitability©2019 AEON Delight All Rights Reserved

33Initiatives to Achieve Our Non-Consolidated 2H Income Target ④ Capturing Demand for Construction Work

Avoid missed opportunities in growth areas
with a flexible service supply system

Despite a strong trend in renovation work,
demand for some construction projects in 2Q delayed to 3Q or later
Develop a flexible construction system centered on the large
markets of the Kanto and Kansai regions to avoid missed
opportunities in growth areas

Steadily capture construction demand associated withlarge-scale renovations and the replacement ofcommercial facilities as tenants©2019 AEON Delight All Rights Reserved34

Growth of Domestic Subsidiaries
Through collaboration with our branch offices, we have maintained a strong trend,
especially among building maintenance companies.
Aiming to further expand market share for building regional economic zones.
【Service network】
Performance trends of group companies● Kankyouseibi, DO SERVICE, and A to Z

Districtcharacteristic

Partner companies

・・・

Service remained strong as in the 1H.
● Hakuseisha began providing services tolarge-scale department stores that opened in
September
Selecting the best
partners in each area

Expertise● Aeon Delight Security maintained a strong trend
as in the 1H.

・・・©2019 AEON Delight All Rights Reserved35

Growth of Overseas Subsidiaries ① China: Accelerate business expansion through One Aeon Delight strategies

Expand contracts, mainly in the Yangtze River Delta region,
based on One Aeon Delight strategies【One Aeon Delight Strategies】① Unifying Operations by building Aeon
Delight brand② Enhancing Quality and Brand Power③ In the Yangtze River delta andsurrounding areas, expanding contracts
for facilities targeted (*)
Changjiang Delta
andSurrounding area

* Priority targets: Medium-to-high-end shopping
centers, hospitals and nursing homes,
Infrastructure and Developing Area, etc.

Changjiang Delta andSurrounding area

AD Jiangsu
Wuhan Xiaozhu©2019 AEON Delight All Rights Reserved36Growth of Overseas Subsidiaries ② ASEAN: Expand Business in Indonesia

Expand business in Indonesia, ASEAN's largest market

Shifting PT Sinar Jernih Sarana (Syneral
Journy Salana) from a cleaning businessto an FM company
through outsourcing of comprehensive
facilities management at local AEON Mall

Establishment of FM models
suitable for each ASEAN region©2019 AEON Delight All Rights Reserved37Supplementary
information©2019 AEON Delight All Rights ReservedShareholder Return

Dividends have increased for 14 consecutive years since FY2/06.
15 Consecutive Years of Dividend Increase
For FY2/19, we increased the dividendby 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 Reserved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.
https://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.