Research Coverage Report by Shared Research Inc.

9787

Aeon Delight
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Coverage initiated on: 2013-06-06
Last update: 2024-07-23

INDEX
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.
Key financial indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
Recent updates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.
Trends and outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.
Quarterly trends and results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.
FY02/25 company forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11..
Medium- and long-term outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13..
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17..
Business description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17..
Business overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17..
Strengths and weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25..
Market and value chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26..
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29..
Income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29..
Balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30..
Statement of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31..
ROE and dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32...
Other information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33..
Historical financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37..
News and topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50..
Company profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54..

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Executive summary
Aeon Delight Co., Ltd. is Japan's largest facilities management company, providing various solutions for customer facilities
and their surrounding environments. The company provides services for integrated facilities management and ancillary workthat is non-core for the customer. These services improve overall facility costs and streamline the customer's operations.
Aeon Delight is more than 50% owned by Aeon Co., Ltd. (TSE Prime: 8267). Aeon is a large retailing group, comprisingmore than 300 Japanese and overseas companies and generating group sales of more than JPY9tn. In FY02/24, Aeon
Delight derived 62.2% of its sales from transactions within the group.
Looking at performance by segment, in FY02/24 Facilities Management accounted for 21.4% of total sales and 24.9% of
operating profit. The corresponding figures were 15.7% and 13.1% for Security Services, 21.7% and 22.2% for Cleaning
Services, 18.2% and 22.4% for Construction Work, 14.3% and 9.8% for Materials and Supplies Sourcing Services, 3.0% and5.4% for Vending Machine Services, and 5.8% and 2.3% for Support Services. Customers from outside the Aeon group arewide-ranging, including commercial facilities, office buildings and offices, hotels and accommodation facilities, medical andwelfare facilities, education facilities, factories and workshops, warehouses and distribution centers, government offices, andevents. There are many single-year contracts, but the cancellation rate is low. The company's businesses generate recurring
revenue.
Aeon Delight has established account managers for its major customers, and manages customer information in a unified
manner across businesses. Account managers gain a better understanding of their customers and their respective industries,
which leads to improved customer satisfaction and expanded business by sending customers to other businesses. In addition,
the company is able to collectively contract services that span multiple divisions (for example, Construction Work is
contracted to provide services related to the Facilities Management business), and to provide the same services across Japanto customers who operate nationwide, contributing to an increase in its share of customer wallets.
In the facilities management industry, labor shortage has become an industry-wide issue. In this situation, the company has
established customer service centers at all eight branches in Japan to create a system for remote support for customer
facilities. At the same time, it has been promoting automation and labor-saving in on-site management operations byinstalling cameras and sensors at site facilities. The company has also been promoting the introduction of "areamanagement" in which facility managers are shared in a certain area, taking into account customer needs and facility andregional characteristics. This has led to a decrease in the number of facility managers and an increase in unmanned facilities,
which in turn has led to cost reduction and has helped to address the labor shortage.
Overseas, the company is active in China, Malaysia, Vietnam, and Indonesia, operating in the Facilities Management,
Security Services, Cleaning Services, and Support Services segments. Around half of overseas customers are Aeon groupcompanies. Overseas operations accounted for 9.9% of sales in FY02/24. The company uses a three-pronged growth strategy
that addresses safety and security, manpower shortage, and the environment, and aims to expand its contracted facilities
management services throughout the Asian region. In China, the strategy is to provide quality facilities management
centered on North, East, Central, and South China to boost the Aeon Delight brand profile.

Trends and outlook
In FY02/24, Aeon Delight reported sales of JPY324.8bn (+6.9% YoY), operating profit of JPY15.2bn (-3.7% YoY), recurring
profit of JPY15.5bn (-3.3% YoY), and net income attributable to owners of the parent of JPY10.7bn (+5.5% YoY). The company
paid an annual dividend of JPY86 per share, with a payout ratio of 39.1%. Sales grew YoY to exceed the initial target, fueledby a higher share of existing customer wallets in and outside the Aeon group and an increase in new contracts. The
company's enhanced sales activities, as well as its track record and expertise, led to an increase in the number of contracts
from non-group companies and organizations. Sales increased YoY in all seven segments. Sales growth was particularly
notable in Construction Work and Materials and Supplies Sourcing Services. In Construction Work, the company expanded
contracts for energy-saving and renovation/repair work. Meanwhile, it increased orders for various materials in Materials andSupplies Sourcing Services. However, operating profit fell YoY as segment profit growth was not enough to offset an increasein SG&A expenses.
For FY02/25, Aeon Delight forecasts sales of JPY340.0bn (+4.7% YoY), operating profit of JPY16.0bn (+5.0% YoY), recurring
profit of JPY16.0bn (3.3% YoY), and net income attributable to owners of the parent of JPY10.4bn (-2.9% YoY). The company
intends to further expand its market share, while accelerating the transformation into a business model that enables
sustainable growth. It forecasts EPS of JPY216.07. It plans to pay an annual dividend of JPY87 per share (payout ratio: 40.3%;+JPY1 YoY), increasing dividends YoY for the twentieth consecutive year.

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The company established its Aeon Delight Vision 2025 plan in April 2021. This aims to make Aeon Delight a company thatcreates environmental value and contributes to solving social issues, with a three-pronged growth strategy in Asia that
addresses safety and security, manpower shortage, and the environment. The company targets sales of JPY471.0bn, operating
profit of JPY37.0bn, and ROE of 15% in FY02/26.

Strengths and weaknesses
Shared Research believes the company’s strengths are 1) strong ties with the Aeon group, 2) industry leader in facilities
management, and 3) the ability to generate stable cash flows. Weaknesses include its 1) limited organic growth, 2) heavy
dependence on the Aeon group, and 3) mature property management market (see Strengths and weaknesses section for
details).

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Key financial indicators
Income statement(JPYmn)Sales
YoY
Gross profit
YoY

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23

FY02/24

FY02/25

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Company
forecast

265,572

277,926

292,607292,396

302,915

308,582

300,085

317,657

303,776

324,820

340,000

3.5%

4.7%

5.3%

-0.1%

3.6%

1.9%

-2.8%

5.9%

-4.4%

6.9%

4.7%

34,29034,83635,73634,87135,452

38,57037,17539,49841,43742,613

3.1%

1.6%

2.6%

-2.4%

1.7%

8.8%

-3.6%

6.2%

4.9%

2.8%

Gross profit margin

12.9%

12.5%

12.2%

11.9%

11.7%

12.5%

12.4%

12.4%

13.6%

13.1%

Operating profit

15,39014,556

14,13912,90913,03016,001

15,23015,733

15,814

15,23516,000

YoY

5.3%

-5.4%

-2.9%

-8.7%

0.9%

22.8%

-4.8%

3.3%

0.5%

-3.7%

5.0%

Operating profit margin

5.8%

5.2%

4.8%

4.4%

4.3%

5.2%

5.1%

5.0%

5.2%

4.7%

4.7%

15,472

14,534

14,263

13,381

13,362

15,94915,26815,78916,006

15,482

16,000

6.0%

-6.1%

-1.9%

-6.2%

-0.1%

19.4%

Recurring profit
YoY

-4.3%

3.4%

1.4%

-3.3%

3.3%

Recurring profit margin

5.8%

5.2%

4.9%

4.6%

4.4%

5.2%

5.1%

5.0%

5.3%

4.8%

4.7%

Net income

7,965

7,247

7,093

6,397

6,415

9,348

11,680

10,665

10,152

10,707

10,400

YoY

13.2%

-9.0%

-2.1%

-9.8%

0.3%

45.7%

24.9%

-8.7%

-4.8%

5.5%

-2.9%

Net margin

3.0%

2.6%

2.4%

2.2%

2.1%

3.0%

3.9%

3.4%

3.3%

3.3%

3.1%

Shares issued at year-end(000shares)54,17054,17054,17054,17054,17054,17054,17054,17050,67049,170

EPS

151.7

138.0

135.0

121.7

122.9

187.2

233.7

213.3

203.5

219.7

EPS (fully diluted)

151.3

137.6

134.6

121.3

122.6

186.9

233.5

213.1

203.4

219.6

Per-share data

Dividend per share

50

52

55

61

63

65

82

84

85

86

Book value per share

1,400

1,471

1,559

1,637

1,466

1,579

1,747

1,891

1,992

2,124

216.1
87

Balance sheet (JPYmn)
Cash and deposits

15,58020,386

31,71739,53644,23362,35559,773

68,28257,60068,350Total current assets

103,634

104,190111,098

118,311

108,771

112,362

110,008

121,013

129,534

139,980

Tangible fixed assets

4,361

7,061

9,064

10,041

10,161

9,671

9,481

7,080

6,499

6,484

Investments and other assets

6,268

8,176

8,904

8,512

7,578

7,698

11,557

9,111

8,222

7,693

Intangible assets

10,32010,006

8,802

7,813

8,103

7,185

5,518

5,653

6,371

6,098

Total assets

124,584

129,434

137,870

144,678

134,614

136,917

136,565

142,859

150,628

160,257

Accounts payable

24,93428,457

25,11425,82025,967

23,38822,17022,07025,90129,292

Short-term debt

-

-

271

225

394

252

299

247

182

378

46,63945,83447,05149,06051,40848,864

44,12343,892

48,40653,445

-

-

293

-

15

11

-

-

-

-

Total fixed liabilities

2,387

3,925

6,214

6,474

7,667

6,767

4,160

3,544

2,830

2,599

Total liabilities

49,02649,76053,26655,53559,07555,631

48,28347,437

51,23756,044

Total net assets

75,55879,67484,604

89,14375,53981,28688,281

95,421

99,391

104,212

Cash flows from operating activities

17,234

10,303

11,703

13,56812,373

7,371

10,403

12,598

8,895

18,518Cash flows from investing activities-11,365-3,2552,233-2,666

12,256

13,838-7,325-386-10,715-4,319Cash flows from financing activities-2,594-2,821-2,400-3,264-19,686-3,392-5,324-4,572-6,181-6,922

Total current liabilities
Long-term debt

Cash flow statement(JPYmn)

Financial ratios
Total interest-bearing debt

-

-

564

225

409

263

299

247

182

378

Net cash

56,90657,74862,866

71,311

59,82462,09259,474

68,03557,41867,972

ROA (RP-based)

13.1%

11.4%

10.7%

9.5%

9.6%

11.7%

11.2%

11.3%

10.9%

10.0%

ROE

11.2%

9.6%

8.9%

7.6%

8.1%

12.3%

14.1%

11.7%

10.5%

10.6%

Equity ratio

59.0%

59.7%

59.4%

59.5%

54.4%

57.6%

64.0%

66.2%

65.3%

64.3%

Source: Shared Research based on company data
Note: From FY02/23, the company has adopted the new Accounting Standard for Revenue Recognition, which will affect the way sales are recorded. Operating profit and line
items below are not affected.
Note: Accounts payable-trade figures do not include electronically recorded obligations-operating.

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Recent updates
Change in second-tier subsidiaries (share acquisition andsubscription to new shares by overseas consolidated subsidiary)
2024-05-28

Aeon Delight Co., Ltd. has decided that its subsidiary (second-tier subsidiary), Aeon Delight (China) Service Management
Group Co., Ltd., will acquire a 60% stake in Zhejiang Wancai Logistics Co., Ltd. by purchasing existing shares andsubscribing to newly issued shares.
Wancai Logistics has extensive experience, track record, and expertise in logistics facility operations. The group will
make Wancai Logistics a consolidated subsidiary to expand the scope of such operations in its China business. Aeon Delight(China) Service Management Group will acquire a 60% stake in Wancai Logistics by purchasing existing shares andsubscribing to newly issued shares (scheduled contract signing date: June 2024). In FY12/23, Wancai Logistics reported
revenue of CNY28.1mn, operating profit of CNY682,000, recurring profit of CNY1.2mn, and net income of CNY1.2mn.
The share transfer requires approval from relevant authorities. The company expects the change in second-tier subsidiaries tohave a minor impact on its consolidated earnings.

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Trends and outlook
Quarterly trends and results
Quarterly results (after application of the Accounting Standard for Revenue Recognition)
Cumulative

FY02/23 (new accounting standards)(JPYmn)Sales

FY02/24 (new accounting standards)

FY02/25 (new accounting standards)

Q1

Q1-Q2

Q1-Q3

Q1-Q4

Q1

Q1-Q2

Q1-Q3

Q1-Q4

Q1

71,786

147,660

226,833

303,776

79,118

161,511

241,911324,820

81,121

YoY

0.9%

0.7%

5.4%

7.0%

10.2%

9.4%

6.6%

6.9%

2.5%

Gross profit

9,745

19,60630,291

41,437

10,226

20,811

31,162

42,613

10,402

YoY

-0.2%

4.9%

4.9%

2.8%

1.7%

Gross profit margin

13.6%

13.3%

13.4%

13.6%

12.9%

12.9%

12.9%

13.1%

12.8%

SG&A expenses

6,462

13,004-4.2%

19,473

1.5%

25,623

6,778

13,547

20,29927,377

7,134

YoY

7.1%

8.1%

8.3%

7.8%

4.9%

4.2%

4.2%

6.8%

5.3%

SG&A ratio

9.0%

8.8%

8.6%

8.4%

8.6%

8.4%

8.4%

8.4%

8.8%

Operating profit

3,282

6,602

10,81815,814

3,447

7,263

10,862

15,235

3,267

YoY-12.0%-21.7%

-8.7%

0.5%

5.0%

10.0%

0.4%

-3.7%

-5.2%

Operating profit margin

4.6%

4.5%

4.8%

5.2%

4.4%

4.5%

4.5%

4.7%

4.0%

Recurring profit

3,300

6,602

11,001

16,006

3,487

7,401

11,072

15,482

3,350

YoY-12.0%-22.2%

-7.9%

5.7%

12.1%

-3.3%

-3.9%

1.4%

6.1%

2.9%

0.6%

Recurring profit margin

4.6%

4.5%

4.8%

5.3%

4.4%

4.6%

4.6%

4.8%

4.1%

Net income

2,246

4,336

7,163

10,152

2,299

5,325

7,617

10,707

2,597

YoY

Q1-Q2

Q1-Q3

FY02/25

Q1-Q4% of Est.

FY Est.

23.9%

340,000
4.7%

20.4%

16,000
5.0%
4.7%

20.9%

16,00025.0%

10,400

3.3%
4.7%-10.4%-22.0%-15.7%

-4.8%

2.4%

22.8%

6.3%

5.5%

13.0%

-2.9%

Net margin

3.1%

2.9%

3.2%

3.3%

2.9%

3.3%

3.1%

3.3%

3.2%

3.1%

Quarterly

FY02/23 (new accounting standards)(JPYmn)FY02/24 (new accounting standards)

FY02/25 (new accounting standards)

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Sales

71,78675,874

79,17376,943

79,11882,39380,40082,90981,121

YoY

0.9%

0.6%

15.3%

12.3%

10.2%

8.6%

1.5%

7.8%

2.5%
10,402Gross profit

9,745

9,861

10,685

11,146

10,226

10,585

10,351

11,451

YoY

-0.2%

-7.8%

14.0%

15.3%

4.9%

7.3%

-3.1%

2.7%

1.7%

Gross profit margin

13.6%

13.0%

13.5%

14.5%

12.9%

12.8%

12.9%

13.8%

12.8%

SG&A expenses

6,462

6,542

6,469

6,150

6,778

6,769

6,752

7,078

7,134

YoY

7.1%

9.1%

8.8%

6.3%

4.9%

3.5%

4.4%

15.1%

5.3%

SG&A ratio

9.0%

8.6%

8.2%

8.0%

8.6%

8.2%

8.4%

8.5%

Q3

Q4

8.8%

Operating profit

3,282

3,320

4,216

4,996

3,447

3,816

3,599

4,373

3,267

YoY

-12.0%-29.3%

23.1%

28.7%

5.0%

14.9%

-14.6%-12.5%-5.2%

Operating profit margin

4.6%

4.4%

5.3%

6.5%

4.4%

4.6%

4.5%

5.3%

4.0%

Recurring profit

3,300

3,302

4,399

5,005

3,487

3,914

3,671

4,410

3,350

YoY

-3.9%

-12.0%-30.3%

27.4%

30.1%

5.7%

18.5%

-16.5%-11.9%

Recurring profit margin

4.6%

4.4%

5.6%

6.5%

4.4%

4.8%

4.6%

5.3%

4.1%

Net income

2,246

2,090

2,827

2,989

2,299

3,026

2,292

3,090

2,597

YoY

-10.4%-31.5%

-3.8%

37.7%

2.4%

44.8%

-18.9%

3.4%

13.0%

3.1%

2.8%

3.6%

3.9%

2.9%

3.7%

2.9%

3.7%

3.2%

Net margin

Q2

Source: Shared Research based on company data
Notes: The company adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) from FY02/23.

Quarterly results by segment (after adoption of the Accounting Standard for Revenue
Recognition)
Segment performance

FY02/23 (new accounting standards)

Cumulative (JPYmn)

Q1

Q1-Q2

Q1-Q3

Q1-Q4

Q1

Q1-Q2

Q1-Q3

Q1-Q4

Q1

71,786

147,660

226,833

303,776

79,118

161,511

241,911324,820

81,121Sales
YoY
Facilities Management
YoY
Security Services
YoY
Cleaning Services
YoY
Construction Work

FY02/24 (new accounting standards)

FY02/25 (new accounting standards)

0.9%

0.7%

5.4%

7.0%

10.2%

9.4%

6.6%

6.9%

2.5%

16,131

32,25149,00364,79417,08634,55552,40469,50918,201

4.0%

4.0%

5.4%

5.3%

5.9%

7.1%

6.9%

7.3%

6.5%

11,934

24,12436,90949,47812,71025,421

38,13150,91912,905

2.5%

2.0%

4.2%

4.7%

6.5%

5.4%

3.3%

2.9%

1.5%

16,57633,76951,13068,336

17,46435,20052,90970,42818,051

0.0%

-1.0%

1.3%

2.0%

5.4%

4.2%

3.5%

3.1%

3.4%

10,282

23,35038,20752,084

13,38828,811

42,101

59,21913,072

YoY

-8.2%

-5.8%

13.4%

21.1%

30.2%

23.4%

10.2%

13.7%

-2.4%

Materials and Supplies Sourcing

10,205

20,46530,99441,544

11,301

22,99334,86446,315

11,983

3.0%

1.2%

2.8%

4.8%

10.7%

12.4%

12.5%

11.5%

Vending Machine Services

YoY

2,199

4,780

7,084

9,466

2,316

4,904

7,263

9,616

2,218

YoY

-0.1%

0.3%

1.9%

1.3%

5.3%

2.6%

2.5%

1.6%

-4.2%

Support Services

4,456

8,918

13,50318,070

4,850

9,624

14,236

18,810

4,689

YoY

8.3%

10.7%

11.7%

12.6%

8.8%

7.9%

5.4%

4.1%

-3.3%

3,282

6,602

10,81815,814

3,447

7,263

10,862

15,235

3,267

YoY-12.0%-21.7%

-8.7%

0.5%

5.0%

10.0%

0.4%

-3.7%

-5.2%

Operating profit margin

4.6%

4.5%

4.8%

5.2%

4.4%

4.5%

4.5%

4.7%

4.0%

Facilities Management

1,372

2,825

4,269

5,810

1,335

2,866

4,432

5,913

1,463

YoY

7.6%

7.7%

5.7%

5.7%

-2.7%

1.5%

3.8%

1.8%

9.6%

Operating profit margin

8.5%

8.8%

8.7%

9.0%

7.8%

8.3%

8.5%

8.5%

8.0%

Security Services

733

1,443

2,307

3,279

833

1,584

2,366

3,108

756

-7.9%

-15.2%-11.1%

-4.5%

13.6%

9.8%

2.6%

-5.2%

-9.2%

Operating profit margin

6.1%

6.0%

6.3%

6.6%

6.6%

6.2%

6.2%

6.1%

5.9%

Cleaning Services

1,681

3,328

5,036

7,014

1,451

2,787

4,034

5,277

1,362

YoY

-14.8%-22.2%-18.4%-13.5%-13.7%-16.3%-19.9%-24.8%-6.1%

Operating profit margin

10.1%

9.9%

9.8%

10.3%

8.3%

7.9%

7.6%

7.5%

7.5%

694

1,405

2,714

4,080

1,089

2,376

3,429

5,322

1,095

-35.0%-37.6%

-5.1%

13.9%

56.9%

69.1%

26.3%

30.4%

0.6%

Operating profit margin

6.7%

6.0%

7.1%

7.8%

8.1%

8.2%

8.1%

9.0%

8.4%

Materials and Supplies Sourcing

615

994

1,455

1,999

630

1,116

1,697

2,322

660

-6.3%

-27.0%-24.7%-21.9%

2.4%

12.3%

16.7%

16.2%

4.7%

Construction Work
YoY

YoY

Q1-Q3

Q1-Q4

6.0%

Operating profit

YoY

Q1-Q2

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Operating profit margin

6.0%

4.9%

4.7%

4.8%

5.6%

4.9%

4.9%

5.0%

Vending Machine Services

208

556

791

1,083

258

650

982

1,290

269

79.3%

57.5%

91.1%

78.1%

24.0%

16.9%

24.1%

19.1%

4.3%

9.5%

11.6%

11.2%

11.4%

11.1%

13.3%

13.5%

13.4%

YoY
Operating profit margin
Support Services

5.5%

12.1%

162

279

419

462

149

264

409

545

306

YoY

36.1%

9.4%

27.0%

4.8%

-8.0%

-5.4%

-2.3%

17.8%

104.8%

Operating profit margin

3.6%

3.1%

3.1%

2.6%

3.1%

2.7%

2.9%

2.9%

6.5%

Eliminations, goodwill, other-2,183-4,228-6,173-7,913-2,298-4,380-6,487-8,542

Segment performance

FY02/23 (new accounting standards)

Quarterly (JPYmn)
Sales
YoY
Facilities Management
YoY
Security Services
YoY
Cleaning Services
YoY
Construction WorkYoY
Materials and Supplies Sourcing

FY02/24 (new accounting standards)-2,644
FY02/25 (new accounting standards)

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

71,78675,874

79,17376,943

79,11882,39380,40082,90981,121

0.9%

0.6%

15.3%

12.3%

10.2%

8.6%

1.5%

7.8%

2.5%

16,131

16,12016,752

15,791

17,086

17,46917,84917,105

18,201

4.0%

4.0%

8.2%

5.0%

5.9%

8.4%

6.5%

8.3%

6.5%

11,934

12,19012,785

12,56912,71012,711

12,71012,78812,905

2.5%

1.5%

8.6%

6.4%

6.5%

4.3%

-0.6%

1.7%

1.5%

16,576

17,19317,361

17,206

17,464

17,736

17,70917,51918,051

0.0%

-2.0%

6.1%

4.3%

5.4%

3.2%

2.0%

1.8%

3.4%

10,282

13,06814,857

13,877

13,38815,423

13,29017,11813,072

-8.2%

-3.7%

66.5%

48.9%

30.2%

18.0%

-10.5%

23.4%

-2.4%

10,205

10,26010,52910,55011,301

11,692

11,871

11,451

11,983

YoY

3.0%

-0.5%

6.1%

11.2%

10.7%

14.0%

12.7%

8.5%

6.0%

Vending Machine Services

2,199

2,581

2,304

2,382

2,316

2,588

2,359

2,353

2,218
-4.2%

YoY

-0.1%

0.6%

5.4%

-0.4%

5.3%

0.3%

2.4%

-1.2%

Support Services

4,456

4,462

4,585

4,567

4,850

4,774

4,612

4,574

4,689

YoY

8.3%

13.2%

13.6%

15.4%

8.8%

7.0%

0.6%

0.2%

-3.3%

Operating profit

3,282

3,320

4,216

4,996

3,447

3,816

3,599

4,373

3,267

YoY

-12.0%-29.3%

23.1%

28.7%

5.0%

14.9%

-14.6%-12.5%-5.2%

Operating profit margin

4.6%

4.4%

5.3%

6.5%

4.4%

4.6%

4.5%

5.3%

4.0%

Facilities Management

1,372

1,453

1,444

1,541

1,335

1,531

1,566

1,481

1,463

YoY

7.6%

7.9%

2.0%

5.8%

-2.7%

5.4%

8.4%

-3.9%

9.6%

Operating profit margin

8.5%

9.0%

8.6%

9.8%

7.8%

8.8%

8.8%

8.7%

8.0%

Security Services

733

710

864

972

833

751

782

742

756

-7.9%

-21.6%

-3.4%

15.9%

13.6%

5.8%

-9.5%

-23.7%

-9.2%

YoY

6.8%

7.7%

Cleaning Services

Operating profit margin

1,681

1,647

1,708

1,978

1,451

1,336

1,247

1,243

1,362

YoY

-14.8%

6.1%-28.5%

-9.9%

2.3%

-13.7%-18.9%-27.0%-37.2%-6.1%

Operating profit margin

10.1%

9.6%

9.8%

11.5%

8.3%

7.5%

7.0%

7.1%

7.5%

694

711

1,309

1,366

1,089

1,287

1,053

1,893

1,095

Construction Work
YoY

5.8%

6.6%

5.9%

6.2%

5.8%

-35.0%-39.9%

114.2%

89.2%

56.9%

81.0%

-19.6%

38.6%

0.6%

6.7%

5.4%

8.8%

9.8%

8.1%

8.3%

7.9%

11.1%

8.4%

Materials and Supplies Sourcing

615

379

461

544

630

486

581

625

660

-6.3%

-46.3%-19.1%-13.4%

2.4%

28.2%

26.0%

14.9%

4.8%

4.9%

5.5%

5.5%

Operating profit margin
Vending Machine Services

6.0%

3.7%

4.4%

5.2%

5.6%

4.2%

208

348

235

292

258

392

332

308

269

YoY

79.3%

46.8%

285.2%

50.5%

24.0%

12.6%

41.3%

5.5%

4.3%

Operating profit margin

9.5%

13.5%

10.2%

12.3%

11.1%

15.1%

14.1%

13.1%

12.1%

Support Services

162

117

140

43

149

115

145

136

306

36.1%

-14.0%

86.7%-61.3%

-8.0%

-1.7%

3.6%

216.3%

105.4%

YoY

Q3

Q4

5.9%

Operating profit margin
YoY

Q2

Operating profit margin

3.6%

2.6%

3.1%

0.9%

3.1%

2.4%

3.1%

3.0%

6.5%

Eliminations, goodwill, other-2,183-2,045-1,945-1,740-2,298-2,082-2,107-2,055-2,644

Source: Shared Research based on company data
Notes: The company adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) from FY02/23..

Q1 FY02/25 results
Sales: JPY81.1bn (+2.5% YoY)
Operating profit: JPY3.3bn (-5.2% YoY)
Recurring profit: JPY3.4bn (-3.9% YoY)
Net income attributable to owners of the parent: JPY2.6bn (+12.9% YoY)

Summary
In Q1 FY02/25, sales were 23.9% of the full-year forecast, operating profit 20.4%, recurring profit 20.9%, and net income
attributable to owners of the parent 25.0%.
Sales grew YoY, fueled by growth in the share of existing customer wallets (in and outside the Aeon group) and in thenumber of newly contracted facilities. The company has been revising contract prices through negotiations with customers
since FY02/24 amid rising personnel costs in facility management operations such as equipment management, security, andcleaning, which also contributed to sales growth. Sales increased YoY in Facilities Management, Security Services, Cleaning
Services, and Materials and Supplies Sourcing Services.
Profit grew YoY in Facilities Management, Construction Work, Materials and Supplies Sourcing Services, Vending Machine
Services, and Support Services. As a result, total segment profit increased YoY. However, profit declined YoY in Security
Services and Cleaning Services mainly due to rising personnel costs. Operating profit fell YoY despite segment profit
growth, driven by higher SG&A expenses. Net income attributable to owners of the parent increased due to government tax
measures promoting wage increases.

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Segment trends
Facilities Management
Sales: JPY18.2bn (+6.5% YoY)
Operating profit: JPY1.5bn (+9.6% YoY)
In addition to revising contract prices, the company worked to improve profitability by digitalization operations to curtail
costs, a strategy initiated in previous years. In Q1 FY02/25, sales and operating profit grew YoY as the company won new
renewal contracts and expanded orders for various maintenance services. Sales from in and outside the Aeon groupincreased.
Security Services
Sales: JPY12.9bn (+1.5% YoY)
Operating profit: JPY756mn (-9.2% YoY)
Sales increased YoY as the company revised contract prices and acquired new contracts for security services. However,operating profit decreased YoY due to lower profitability resulting from rising personnel expenses. Sales from non-group
customers increased (mainly at Chinese subsidiaries).
Cleaning Services
Sales: JPY18.1bn (+3.4% YoY)
Operating profit: JPY1.4bn (-6.1% YoY)
Sales rose YoY due to price revisions, growth in renewal contracts, and contribution from askmaintenance, a wholly owned
subsidiary acquired in April 2023. Operating profit fell YoY due to lower profitability caused by rising personnel costs. Sales
from outside the Aeon group increased (mainly overseas and at askmaintenance). The company aims to expand orders andimprove operational efficiency by promoting customer-centric operations, including daytime cleaning, where it is easier tosecure personnel.
Construction Work
Sales: JPY13.1bn (-2.4% YoY)
Operating profit: JPY1.1bn (+0.6% YoY)
The company undertook restoration work related to the Noto Peninsula earthquake in January 2024. It also focused onenergy-saving and other works, as in FY02/24. However, sales declined YoY due to fewer renovation projects YoY and delays
in some planned projects. Meanwhile, the company improved profitability by optimizing operations and processes, boosting
operating profit YoY. Sales from Aeon group customers increased, while those from non-group customers decreased. The
company expects to recover from some construction delays (in and outside the Aeon group) in Q2 and later.
Materials and Supplies Sourcing Services
Sales: JPY12.0bn (+6.0% YoY)
Operating profit: JPY660mn (+4.7% YoY)
Sales and operating profit increased YoY despite rising raw materials and logistics costs. The company worked to increase
orders for various materials and supplies, while passing on material cost increases to selling prices as appropriate. Sales from
Aeon group companies increased, driven by transactions with new customers that began in FY02/24.
Vending Machine Services
Sales: JPY2.2bn (-4.2% YoY)
Operating profit: JPY269mn (+4.3% YoY)
The number of vending machines installed declined due to facility closures and the removal of unprofitable machines. As aresult, sales fell YoY. Meanwhile, operating profit grew YoY due to improved profitability resulting from the optimization of
earnings structure, including the removal of unprofitable machines. Sales from Aeon group companies increased, but thosefrom non-group companies decreased slightly.
Support Services

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Sales: JPY4.7bn (-3.3% YoY)
Operating profit: JPY306mn (+104.8% YoY)
The company worked on expanding its services to meet outsourcing needs to manage and operate customer facilities andtheir surrounding environment. However, in Q1 FY02/25, sales dropped YoY due to a decline in contracted work.
Meanwhile, operating profit grew sharply YoY as contracts expired in the copier business acquired from KJS Co., Ltd.
(formerly Kajitaku Co., Ltd.) following the merger. Sales from in and outside the Aeon group decreased slightly.
Overseas business (within each segment)
Sales: JPY9.4bn (+12.1% YoY)
Operating profit: JPY340mn (+4.2% YoY)
Profit fell YoY despite sales growth in China, while sales and profit grew YoY in the ASEAN region. Earnings from theoverseas business are included within each segment.
Aeon Delight sees the greatest growth potential in the Chinese market. The company steadily grew the China business as
its core business company expanded the share of customer wallets and cultivated new customers. However, profit
declined YoY despite sales growth due to a temporary rise in SG&A expenses accompanying the business expansion. The
economic downturn in China has had a limited impact on earnings. The company expects to grow the overseas businessby winning new contracts and expanding its market share.
Sales were up YoY in all ASEAN countries in which the company operates. Sales and profit grew YoY in the ASEAN
region as the adoption of SLAs improved profitability in Malaysia and Vietnam.

Initiatives for Q2 and beyond
Amid rising costs, the company will continue working to expand its market share by stepping up sales efforts, while
implementing measures to improve profitability. It will focus on the following initiatives to increase sales.
Carry out contracted large projects and expand orders for related operations
Increase the share of customer wallets based on the account management approach
Steadily recover from construction delays seen in Q1
Expand orders for energy-saving projects
Employ specified skilled foreign workers to promote the resort strategy (bed-making)
The Aeon group is promoting the employment of specified skilled workers, aiming to hire 4,000 workers by FY2030.
Aeon Delight plans to hire several dozen workers this fiscal year.
The company will focus on the following initiatives to improve profitability.
Actively engage in price negotiations with customer companies based on the account management approach
Revise contract prices by reducing customers' facility management costs through DX
Improve the accuracy of estimates and actively engage in negotiations for construction projects in Construction Work
Improve operational efficiency of group companies in Japan based on the area strategy

Initiatives to optimize transaction prices
Based on Aeon Delight's price negotiation policy, the company has stepped up its efforts to optimize prices for transactions
with business partners. To improve organizational response, Aeon Delight disseminated and implemented the pricenegotiation policy across the group, while clearly defining the person in charge and response systems for price negotiations
for each transaction. The company designated the period from June 1 to August 31 as the price negotiation period, creating
opportunities to negotiate prices at least once a year. During this period, it held negotiations with each business partner torevise prices at contract renewals, reflecting changes in personnel and other costs.

OthersIn May 2024, the company announced that its subsidiary (second-tier subsidiary) Aeon Delight (China) Service Management
Group Co., Ltd. would acquire a 60% stake in Zhejiang Wancai Logistics Co., Ltd. by purchasing existing shares andsubscribing to newly issued shares. The company aims to expand the scope of logistics facility operations in China.

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FY02/25 company forecast
Full-year company forecast
FY02/23

FY02/24

FY02/25(JPYmn)1H Act.

2H Act.

FY Act.

1H Act.

2H Act.

FY Act.

FY Est.

Sales

147,660

156,116

303,776

161,511

163,309324,820

340,000
4.7%

-

-

-

9.4%

4.6%

6.9%

Cost of sales

128,054

134,284

262,338

140,700

141,507282,207

Gross profit

YoY

19,606

21,831

41,437

20,81121,802

42,613

YoY

-4.2%

14.7%

4.9%

6.1%

-0.1%

2.8%

Gross profit margin

13.3%

14.0%

13.6%

12.9%

13.4%

13.1%

SG&A expenses

13,004

12,61925,623

13,547

13,83027,377

YoY

8.1%

7.6%

7.8%

4.2%

9.6%

6.8%

SG&A ratio

8.8%

8.1%

8.4%

8.4%

8.5%

8.4%

Operating profit
YoY
Operating profit margin
Recurring profit
YoY
Recurring profit margin
Net income
YoY

6,602

9,212

15,814

7,263

7,972

15,23516,000-21.7%

26.1%

0.5%

10.0%

-13.5%

-3.7%

5.0%

4.5%

5.9%

5.2%

4.5%

4.9%

4.7%

4.7%

6,602

9,404

16,006

7,401

8,081

15,482

16,000-22.2%

28.8%

1.4%

12.1%

-14.1%

-3.3%

3.3%

4.5%

6.0%

5.3%

4.6%

4.9%

4.8%

4.7%

4,336

5,816

10,152

5,325

5,382

10,707

10,400-22.0%

13.9%

-4.8%

22.8%

-7.5%

5.5%

-2.9%

Source: Shared Research based on company data
Note: From FY02/23, the company has adopted the new Accounting Standard for Revenue Recognition, which will affect the way sales are recorded. Operating profit and line
items below are not affected.

Company forecast for FY02/25
Sales: JPY340.0bn (+4.7% YoY)
Operating profit: JPY16.0bn (+5.0% YoY)
Recurring profit: JPY16.0bn (+3.3% YoY)
Net income attributable to owners of the parent: JPY10.4bn (-2.9% YoY)EPS: JPY216.07
Annual dividends per share: JPY87 (payout ratio: 40.3%)
The company expects sales and operating profit to grow 4.7% and 5.0% YoY, respectively, with an OPM of 4.7% (flat YoY). It
intends to further expand its market share, while accelerating the transformation into a business model that enables
sustainable growth.
Dividend payout ratio
For FY02/25, the company expects to pay an annual dividend of JPY87 per share (+JPY1 YoY), with a payout ratio of 40.3%. It
plans to increase dividends YoY for the twentieth consecutive year. At the beginning of the year (April 2024), the company
announced the acquisition of treasury shares. It expects to buy back shares worth JPY3.1bn by December 30, 2024.

Initiatives for FY02/25
Major initiatives for FY02/25 are as follows.

Accelerate transition to a sustainable business model
Aeon Delight aims to promote the digitalization of operational processes and services, thereby accelerating the shift towardsustainable business.
The company believes that human resources, digital transformation (DX), and IT drive a sustainable business, and will allocate
resources in these areas. In terms of human resources, it will focus on developing management talent and expanding the
global workforce. The company aims to provide high-value-added services by making its workforce more sophisticated anddiversified. In terms of DX and IT, it will focus on accelerating the digitalization of operational processes and strengthening
data management functions. The company believes the digitalization can drastically change workstyles of one-site workers
and create a system where they can spend more time with customers and make data-based proposals.

Expand market share and improve profitability
Aeon Delight will work on improving profitability to offset cost increases, including outsourcing and personnel costs, whilefurther expanding its market share.

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The company will expand sales by strengthening its account management strategy to increase its share of customer wallets(expand service offerings and win new contracts to manage facilities and supply materials), expanding proposals for small
repair work, cultivating new customers, and growing orders for energy-saving and other construction work. The company
expects the order value of energy-saving work to remain unchanged from the previous year, when such orders expanded. It
expects to receive bulk contracts for management of hotels, hospitals, and other facilities nationwide. Further, Aeon Delightindicated it may be commissioned to provide comprehensive management services (from consulting to building
maintenance) for a large urban development project. For subsidiaries, Aeon Delight Connect intends to improve operational
efficiency by focusing resources on its main services for small to medium-sized facilities, while Aeon Compass expects
higher sales as demand continues to recover. With the aim of improving profitability, Aeon Delight will continue working on
revising contract prices, as in FY02/24, and improve the accuracy of estimates and its negotiation capability in contracting
construction work.

Expand operations in Asia
Aeon Delight will continue expanding operations in Asia, where it expects sales growth. For FY2024, the company targets
sales and profit growth, driven by improved profitability.
China
In China, the company will strengthen group management, centered on Aeon Delight (Jiangsu) Comprehensive Facility
Management Service Co., Ltd. (former Aeon Delight Jiangsu), which oversees operations in the country. Aeon Delight will
deploy the business expertise of Aeon Delight (Jiangsu) Comprehensive Facility Management Service across all subsidiaries,
with the aim of expanding operations and improving profitability. It will also actively invest in DX, energy saving, and otherfocus areas.
ASEAN regions
In Malaysia, the company will use service level agreements (SLA; a contract form based on the agreed service outcomes
between the service provider and the customer) to improve service quality and productivity. In Vietnam, it will continue
solidifying business foundation and develop business in line with the expansion of Aeon group facilities. In Indonesia, it will
increase its share within the Aeon group for growth, while promoting service quality and productivity improvement.

Other
The company is preparing to release its new medium-term management plan when announcing its Q1 or Q2 earnings.

Historical forecast accuracy
Results vs. Initial Est.

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Sales (Initial Est.)

270,000

280,000

305,000

305,000

305,000

315,000

315,000

325,000

310,000

310,000

Sales (Results)

324,820(JPYmn)FY02/24265,572

277,926

292,607292,396

302,915

308,582

300,085

317,657

303,776

Results vs. Initial Est.

-1.6%

-0.7%

-4.1%

-4.1%

-0.7%

-2.0%

-4.7%

-2.3%

-2.0%

4.8%

Operating profit (Initial Est.)

16,00017,00017,50018,00018,50018,00016,50016,50017,00016,000Operating profit (Results)

15,39014,556

14,13912,90913,03016,001

15,23015,733

15,814

15,235Results vs. Initial Est.

-3.8%

-14.4%-19.2%-28.3%-29.6%-11.1%

-7.7%

-4.6%

-7.0%

-4.8%

Recurring profit (Initial Est.)

16,00017,00017,50018,00018,50018,00016,50016,50017,00016,000
15,482

Recurring profit (Results)

15,472

14,534

14,263

13,381

13,362

15,94915,26815,78916,006

Results vs. Initial Est.

-3.3%

-14.5%-18.5%-25.7%-27.8%-11.4%

-7.5%

-4.3%

-5.8%

-3.2%

Net income (Initial Est.)

8,600

9,400

10,00010,70011,00010,80010,00010,50010,70010,400Net income (Results)

7,965

7,247

7,093

6,397

6,415

9,348

11,680

10,665

10,152

10,707

Results vs. Initial Est.

-7.4%

-22.9%-29.1%-40.2%-41.7%-13.4%

16.8%

1.6%

-5.1%

3.0%

Source: Shared Research based on company data.
Note: Results through FY02/18 have not been retrospectively adjusted.

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Medium- and long-term outlook
Medium-term plan
(JPYmn)Sales

FY02/21

FY02/22

FY02/23

FY02/24

FY02/25

Cons. (previous
accounting standards)

Cons. (previous
accounting
standards)

Cons. (new accounting
standards)

Cons. (new accounting
standards)

Company forecast

Targets

300,085

317,657

303,776

324,820

340,000

471,000

YoY
Operating profit
YoY
Operating profit margin

-2.8%

5.9%

-

6.9%

4.7%

15,23015,733

15,814

15,23516,000

-4.8%

3.3%

0.5%

-3.7%

5.0%

5.1%

5.0%

5.2%

4.7%

4.7%

11,680

10,665

10,152

10,707

10,400

YoY

24.9%

-8.7%

-4.8%

5.5%

-2.9%

Net margin

3.9%

3.4%

3.3%

3.3%

3.1%

Net income

FY02/26

37,000
7.9%

Source: Shared Research based on company data
Note: From FY02/23, the company has adopted the new Accounting Standard for Revenue Recognition, which will affect the way sales are recorded. Operating profit and line
items below are not affected.

Aeon Delight Vision 2025
In October 2018, the company announced its Aeon Delight Vision 2025. In line with the company's management principle,
which calls for the ongoing pursuit of "environmental value" for customers and local communities, with Aeon Delight Vision
2025, the company aims to be one that creates environmental value and contributes to solving social issues in Asia, with“safety and security,” “manpower shortage,” and “environment” as three pillars of its growth strategy. Thereafter, in the faceof accounting irregularities at Kajitaku in FY02/20 and pandemic-related delays in some measures in FY02/21, Aeon
Delight announced new targets when it released its FY02/21 earnings results in April 2021, although with no change in thecompany’s overall direction.
The new targets for FY02/26 are sales of JPY471.0bn (CAGR of 9.4%), operating profit of JPY37.0bn (CAGR of 19.4%), andROE of at least 15% (ROE was 14.1% in FY02/21). (The targets announced in October 2018 were sales of JPY525.0bn andoperating profit of JPY48.0bn.) The company is aiming for top-ten sales and top-level OPM globally and number one sales in
Asia in the facilities management industry. To become one of the top ten companies in the world, the company is aiming to
expand its market share in Japan by constructing Aeon Delight economic zone and concentrating management resources in
China for its overseas operation.

Progress of the medium-term management plan (as of April 2023)
In its revised medium-term management plan (announced in April 2021), Aeon Delight aimed for JPY361.0bn in sales and
JPY22.0bn in operating profit for FY02/24, but the full-year forecast for FY02/24 announced in April 2023 set the targets
at JPY310.0bn in sales and JPY16.0bn in operating profit. The “customer-oriented management,” “promotion of digitaltransformation (DX),” and “group management” initiatives in the plan have steadily penetrated and are beginning tocontribute to business performance. In particular, earnings recovered in 2H FY02/23. However, due to changes in social
conditions such as the outbreak of COVID-19, and delays in delivery of materials and equipment, the company recognizes
that there has been a delay of one to two years in the contribution of various initiatives such as area management to its
earnings. It also recognizes that it was difficult to promote acquisitions as set forth in the medium-term management plan.
In FY02/24, the company will seek to optimize SG&A expenses by reducing expenses at the head office. ROE declined ascapital accumulated due to the recording of profits. The company will promote improvement in capital efficiency byreviewing the status of shareholders' equity and how it is used. It plans for a dividend payout ratio for FY02/24 of 40.1%. It
had set a target of 40% by FY02/24, but achieved it in FY02/23 ahead of schedule. While the basic policy set forth in Aeon
Delight Vision 2025 remains unchanged, in light of changes in the external environment, including the Ukraine issue,
soaring energy prices, and rising personnel costs, the company will promote new measures such as strengthening proposals
for energy-saving and expanding healthcare solutions.

Medium-term plan (FY02/22–FY02/24)
In April 2021, Aeon Delight formulated a medium-term plan covering the next three years (FY02/22–FY02/24) as it moves
toward realizing the goals of Aeon Delight Vision 2025. As described below, it aims to achieve this sales growth and OPM
improvement by putting customer-oriented group management into practice and promoting digital transformation (DX).

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Customer-oriented management
Increase in ratio of sales outside Aeon group
Under the three-year medium-term management plan, the company plans to increase the share of sales outside the Aeon
group to 40% (+5pp vs FY02/21).
Since the pace of openings of large new Aeon group stores has slowed in Japan, the company aims to expand its share in
non-Aeon group and overseas markets.
It has already been expanding its presence in the non-Aeon group market (the ratio of sales outside the Aeon group rosefrom 34% in FY02/11 to 36% in FY02/21). However, the allocation of its sales resources to the non-Aeon group market has
been limited because its long-term growth has been specifically linked to the Aeon group’s own aggressive store opening
strategy.
Under the medium-term plan, the sales division will be divided into two teams; one to develop new customers and the otherto expand the share of services provided to existing customers. For existing customers, the company will assign accountmanagers who will be responsible for all transactions with each customer, grasp the needs of that customer, and track andanalyze trends in the industry to which the customer belongs.
In addition, Customer Support Centers (CSCs), which began operating at all eight branches in Japan in March 2021, willconsolidate information about each facility and its requirements. The company will analyze this information by customer andby facility for use in service development and quality assurance, with the aim of providing all customers, new and existing,with optimal solutions for the challenges they face.
Development of Aeon Delight platform
Aeon Delight aims to create a system that transforms customer feedback into organizational strength in service development,
quality assurance, and sales. To that end, the company believes it is necessary to have a mechanism for collecting andanalyzing a range of data (including customer feedback, facility conditions, and market trends in customers’ industries) andprocessing it into valuable information.
At the same time, it will develop Aeon Delight Platform to serve as a conduit for efficiently sharing information and data
analysis results not only internally, but across its entire service network, including group companies and their partners. To
build such a system, in February 2021 the company reorganized its sales and business divisions and all domestic branches,and established a marketing DX division to oversee them.
With Aeon Delight Platform, the sales division will strengthen the company’s relationships with its customers to better
understand their needs, along with trends in the industries to which they belong. Furthermore, as mentioned, CSCs, whichbegan operating at all eight branches in Japan in March 2021, will consolidate and analyze information about each facility
and its requirements. The information will be used in service development and quality assurance as the company aims toprovide customers with optimal solutions.

Promotion of digital transformation (DX)
Nationwide rollout of area management system centered on CSCs
Aeon Delight established CSCs at all eight domestic branches in March 2021 and will promote area management nationwide
based on the results of proof-of-concept testing at the Hokkaido branch. Under its medium-term plan, it aims to increase thenumber of facilities subject to area management to 360, allowing it to reduce the number of facilities management
personnel by 180 people.
Centered on the CSCs, the company will develop a new facilities management model using DX to address the manpower
shortage and reduce the number of permanently stationed facilities management personnel. It aims to replace theconventional facilities management model (management of individual stores) with an area management model in which
personnel are shared by facilities in a certain area.

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Proof of concept at Hokkaido branch: With the cooperation of Aeon Hokkaido, the company conducted proof-of-concept
testing in FY02/21 at its Hokkaido branch to determine the viability of area management. It established a CSC at the
Hokkaido branch first and, in addition to a remote alarm management system, set up a monitoring station that integrates
systems for monitoring the status of equipment within facilities and any anomalies. At Aeon Yoichi, the store used in thetest, the company installed various systems and sensors, and facility inspection operations were shifted to the CSC to be
conducted remotely. By enabling this operating structure centered on the CSC from daily inspection work to
emergency response, Aeon Yoichi has achieved an unmanned management of onsite facilities since November 2020.

Relocation of head office
Aeon Delight relocated its Tokyo head office in September 2021 to consolidate its head office functions. By updating theequipment and layout of the new head office, the company is creating an environment in which diverse human resources
using a variety of work styles can all maximize their performance.
The head office will be constantly in contact with CSCs located in branches, allowing real-time sharing of customer status. In
addition, it will employ energy-saving and BCP measures and be open to the public as an example of an advanced facility
environment, making it a strategic office for disseminating information on facilities management, allowing the company toexpand its business opportunities.
Furthermore, as part of consolidating head office functions, the company will review its business processes, reduce head
office staff by 20%, and reassign those employees directly to relevant departments to improve productivity.

Group management
Establishment of Aeon Delight Connect for management of small and medium facilities
In March 2021, the company merged A to Z Service Co., Ltd., an interior construction and maintenance services provider for
mainly Kanto-area small and medium facilities, with Do Service Co., Ltd., a cleaning services provider for mainly Kansai-areasmall and medium facilities, to create Aeon Delight Connect Co., Ltd. The new company is set to become a core company
within the group providing comprehensive facility management services for small and medium facilities throughout Japan.
The reorganization allows the company to expand the service area of A to Z Service and Do Service and increase theservices available to existing customers. Aeon Delight has mobilized its management team to join sales staff in marketing
activities, targeting nationwide convenience store, restaurant, supermarket, and clothing store chains.
Establishment of company to oversee China business
In April 2021, the company established Aeon Delight China (AD China) to oversee its operations in China. It had alreadyestablished a local subsidiary in Beijing in 2007. Thereafter, it built a business foundation and expanded its service network
in China by adding to the group two local companies; Aeon Delight Jiangsu in 2012 and Wuhan Xiaozhu Property
Management in 2013. Taking advantage of the expertise and energy-saving technologies the company has cultivated inJapan, the two subsidiaries, Aeon Delight Jiangsu and Wuhan Xiaozhu, have expanded their businesses by participating inregional redevelopment projects and providing services in various regions and types of facilities, including largecommercial facilities, upscale residential buildings, and transportation infrastructure facilities.
With the establishment of AD China, the company aims to promote synergies among companies operating in China andenable comprehensive management of the quality of services provided there, so that it can establish the Aeon Delight brandin China as a reliable brand. In addition, it will accelerate growth in China by providing support to its companies operating
there, especially in the North, East, Central, and South China areas.
In October 2022, Aeon Delight made its Chinese subsidiary Aeon Delight (China), whose main line of business was facility
management, an investment company, and renamed the subsidiary Aeon Delight (China) Investment Holdings Co., Ltd. The
company also increased its stake in the subsidiary. In February 2024, the company established a new operating company inHong Kong.
Purpose: The company intends to acquire local facility management companies and new businesses that operate invarious regions in China to expand its China business. Having made Aeon Delight (China) an investment company, thecompany can now invest in local companies operating in other industries, thereby further expanding the scope of its
China operations. It also increased its stake in the subsidiary to actively carry out M&A activities.

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Outlook: The company targets FY02/25 sales of JPY60.0bn (versus JPY17.0bn in FY02/22) for its China business. Of the
JPY60.0bn sales target, the company aims to generate JPY40.0bn through organic growth and JPY20.0bn fromacquisitions. It intends to invest in local companies that have expertise and customer bases in the energy andenvironment-related field, parking lot and parking facility operations, and in fields other than facility management where
the company has already developed a business in the country. It aims to grow sales through synergies generated throughcross-selling while continuing to push forward with business diversification. Depending on the project, the company's
headquarters in Japan may further increase its stake in Aeon Delight (China) Investment Holdings.
Aeon Delight also aims to expand its operations in Vietnam, where it expects Aeon Mall to actively open new stores. It will
particularly target Japanese companies entering the Vietnamese market.
Consideration of M&A candidates
The company considers M&A to be an important strategy for achieving the goals of its Vision 2025 plan, so in the five years
from FY02/22 to FY02/26 it will consider M&A, with a maximum ownership limit of about JPY25.0bn. M&A objectives
would be to create regional economic zones and overseas bases and to expand the company’s business domain (for example,
by acquiring companies that conduct facilities management business for hospitals or factories).
In selecting investment projects, the company will take into account the capital cost and implement the following threefinancial measures. First, it will decide a standard for holding a certain level of liquidity on hand; second, it will secure avariety of financing sources; and third, it will establish financial discipline. To ensure adequate liquidity on hand, it maintains
cash and deposits (about JPY50.0bn) equivalent to two months’ sales (1.5 months for working capital and 0.5 months as a risk
reserve), while taking into account the cost of capital. The company plans to use surplus cash and deposits mainly for M&A
and other growth strategies, but may also invest in low risk options such as securities. It intends to invest for growth,
including M&A, and has obtained a credit rating with a view to financing externally in case it is unable to cover investmentswith its own cash reserves. When financing externally, the company understands that it needs to maintain a certain degree offinancial discipline, such as reducing its net assets in line with its ROE target.
Promotion of shared services and creation of a suitable organizational culture
Aeon Delight will continue working to enhance group governance to prevent improper conduct by group companies. As
part of this effort, it will promote the consolidation of finance and accounting departments (shared services) to increase thereliability of financial statements produced by group companies. Based on reflection regarding the accounting irregularities
at the old Kajitaku, the company established an organizational culture committee, because it is critical to have a suitableorganizational culture to complement basic administrative mechanisms and rules.

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Business
Business description
Aeon Delight provides maintenance services for retail facilities and office buildings. The company, formerly known as Japan
Maintenance (a subsidiary of MyCal Corp.), was established mainly to undertake maintenance at Mycal stores in November
1972.
Mycal filed for bankruptcy in September 2001 and became a subsidiary of Aeon in 2003. Japan Maintenance merged with
Aeon Techno Service and the name was changed to Aeon Delight in September 2006. In FY02/24, the company derived
62.2% of sales from Aeon Retail Co., Ltd. and other Aeon group companies. Aeon Delight handles between 60% and 90% of
the facilities management work required by Aeon group customers such as Aeon Retail, Aeon Mall, and MaxValue.
Aeon Delight is active in acquisitions. It has purchased companies in cleaning, building management, and store interior
construction. It has also purchased domestic and overseas companies in businesses ancillary to facilities management, andbeen proactive in seeking out alliances in other formats.

Business model
Aeon Delight became a leading integrated facilities management operator through its relationship with the Aeon group. The
company derives its earnings by providing an integrated, all-in-one package of facilities management services to large retailand commercial properties. It was able to differentiate itself from competitors by its expertise and costs competitiveness.
Competitors included Tokyu Community Corp. (unlisted), Biru Daiko Co., Ltd., Nihon Housing Co., Ltd. (TSE Standard: 4781),
and Nippon Kanzai Co., Ltd. (unlisted).
There are three type of property management, residential, commercial, and office buildings. Most of these competitors weremainly involved in residential management of condominiums. Few other large companies were focused on commercial
facilities and building management due the high costs involved. The company was able to gain expertise in commercial
property management through servicing large retail facilities such as shopping malls and supermarkets. The property
maintenance industry includes over 5,000 companies, most of which are small and medium-sized businesses.
The structure of the building maintenance industry resembles that of the construction industry, with second- and third-tier
subcontractors working under prime contractors. Aeon Delight, a prime contractor, uses a number of subcontractors. Most of
its contracts are signed on an annual basis, which are almost always renewed. In other words, it has a recurring-revenue
structure.
The company renegotiates contracts once a year, a process that regularly challenges its pricing, quality, and ability to offer
clients attractive packages. For example, the parent company Aeon conducts a competitive bidding to keep the process fairand open. However, Aeon Delight is able to provide competitive bids given its knowledge of the client’s needs, and knowhow. Its superior position as a large company with comprehensive reliable services will be further enhanced as the size ofbuildings expands. The company is able to handle large facilities maintenance given its size and economy of scale, whichfurther reinforces its strength and position. Thus, Shared Research believes that Aeon Delight’s position within thecommercial facilities industry is likely to improve, as the company has know-how and expertise.

Business overview
Aeon Delight operates seven main business segments: Facilities Management, Security Services, Cleaning Services,
Construction Work, Materials and Supplies Sourcing Services, Vending Machines, and Support Services.
Customers outside the Aeon group include commercial facilities, office buildings and offices, hotels and lodging facilities,
medical and welfare facilities, school facilities, factories and workshops, warehouses and logistics centers, public facilities,
various events, and others.

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Main business fields
Provides unique solutions to a variety of issues. Helps customer companies prepare
for large-scale disasters, address labor shortages, reduce environmental impact,
Office buildings / public facilities
and implement pandemic countermeasures. Supports the realization of asustainable business model and further business growth.
Supports the establishment of facilities and systems that allow visitors to enjoy
shopping in a safe, secure, and comfortable environment. Helps facility operators
Commercial facilities
prepare a business continuity plan (BCP), address labor shortages, and reduce
environmental impact.
Hospitals and research facilities require a higher level of hygiene. Creates ahygienic environment through infection control and realizes a thoroughly protected
Hospitals / research facilities
environment with advanced disaster prevention equipment. Provides optimal
solutions tailored to the unique needs of each facility.
Serves customers who wish to outsource facility management. Supports energy
conservation, efficient facility management, and other efforts. Proposes measures
Factories / warehouses
that enable customers to keep producing and supplying in the event of large-scaledisasters, supporting business continuity and rapid recovery.
Source: Company materials

Main service offerings
Facility budget management

Energy management
Workplace management
Management services
BCP formulation
Repair plan formulation andmanagement
Business partner management(evaluation/instruction)
Facilities Management
Construction Work
Security Services

Vending Machine Services
Operational services
Materials and Supplies Sourcing
Services

Support Services

Cleaning Services

Centrally manages facility costs (land, building, equipment,
security, and cleaning). Plans and implements customer
companies' budgets.
Comprehensively manages and optimizes facility energy
use. Optimizes lifecycle costs by introducing energy-saving
equipment to reduce electricity use.
Proposes soft and hard measures to transform officeenvironment, business habits, and operational processes.
Develops plans that allow customer companies to continue
operations and quickly restore facilities in the event of adisaster.
Develops and executes repair plans tailored to individual
buildings to extend service life while reducing costs.
Maximizes the performance of customer companies'
operational partners by supporting the implementation andimprovement of systematic management methods.
Provides optimal operation, inspection, maintenance, andimprovement services for customer facilities. Offers an open
network system to reduce facility management costs.
Supports planning, design, and construction supervision forrestoration, renovation, interior, and large-scale repair work.
Provides facility security, traffic control, and event security
services. Offers unique plans that incorporate cutting-edge
equipment.
Helps customer companies improve profitability and enduser satisfaction by providing high value-added vending
machines tailored to the needs of installation locations.
Sells packaging, sanitary, and other materials for stores.
Offers environmentally conscious materials, while helping
customer companies reduce total costs and streamline
material ordering processes.
Provides various services ancillary to facility management tocustomers who wish to outsource facility management andrelated operations. These services include planting,catering, cafeteria operation, business trip support, andmeeting room leasing.
Offers cleaning services that improve facilities' aesthetic
quality and lifespan. Provides hygienic cleaning and New
Standard Cleaning services to support infection control.

Source: Company materials

Facilities Management, Security Services, and Cleaning Services are recurring revenue businesses. Many contracts inthese businesses are automatically renewed. The company often provides a contracted facility with all three services.
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HR and location
The group employs over 20,000 qualified personnel, from facility maintenance staff to those with knowledge and skills in
reducing environmental impact. The employees include licensed building environment and sanitation management
technicians, chief electricity engineers (levels 1, 2, and 3), energy managers (heat and electricity managers), class 1
refrigerant CFC handling technicians, and Eco-tuning engineers. The group also has a proprietary training facility, Aeon
Delight Academy Nagahama, where employees receive practical training that replicates on-site facility environments andlectures to acquire necessary knowledge and skills. The training facility aims to develop professionals with technicalcapabilities offering customer-centric hospitality services.
The company has a network of over 500 service locations throughout Japan. Further, it provides high-quality, uniform
services nationwide by partnering with around 5,000 external companies.
Account management
The company is stepping up its initiatives in the area of account management. In the past, the company communicated withcustomers at the segment level. Now, it is assigning account managers to major customers and creating a system to manage
customer information centrally. By better understanding customers and their industries, the company aims to increasecustomer satisfaction and expand its own business through customer referrals to other segments. Through accountmanagement, the company proposes that services covering multiple departments be provided collectively (for instance,
operations related to Facilities Management could be handled by Construction Work) and that the same services areprovided throughout the country to customers that are operating on a nationwide basis.
The company is also promoting industry-specific proposals. The company is analyzing the information it collects on customers
and industries through account management, and has brought in personnel with expertise in the industries it targets.

Facilities Management
Segment performance

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23(JPYmn)

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Sales

45,83948,96250,551

52,69956,36458,28958,223

61,53864,79469,509

3.4%

YoY
Operating profit
YoY
Operating profit margin

5.5%

7.0%

FY02/24

6.8%

3.2%

4.2%

-0.1%

5.7%

5.3%

7.3%

4,217

4,206

4,350

4,644

5,558

5,293

5,175

5,495

5,810

5,913

-10.8%

-0.3%

3.4%

6.8%

19.7%

-4.8%

-2.2%

6.2%

5.7%

1.8%

9.2%

8.6%

8.6%

8.8%

9.9%

9.1%

8.9%

8.9%

9.0%

8.5%

Source: Shared Research based on company materials
Note: The company adopted the Accounting Standard for Revenue Recognition from Q1 FY02/23. The figures for YoY comparisons for FY02/23 are based on FY02/22 figures
retroactively adjusted under the new accounting standard.

In this segment, the company carries out maintenance, inspection, and servicing of building facilities.
This segment is involved in inspection, protection, and maintenance of facilities, providing monitoring support 24 hours aday, 365 days a year. Specific services are tailored to meet the needs of individual clients. This is a staple business for Aeon
Delight with few contract cancellations. Licensed technicians (such as electricians) are on standby at all times in large
shopping centers. Specifically, the company manages utilities such as electricity, water, and gas, HVAC (operations, repairs,
construction, and required inspections), exit and entrance management, anti-theft measures, and automobile parking.
Operating profit margin is about 9%. Required facilities are purchased by the client (property owner), and primarily costs
incurred by the company are personnel costs and facilities management costs (water and utilities costs and depreciation). The
company puts personnel on-site at large retail facilities, while smaller facilities are visited periodically and monitored
remotely.
Aeon Delight provide services for Aeon group commercial facilities, as well as stores for retailers, manufacturers, and othernon-group companies with multiple locations, factories, and offices.
The facilities management industry is facing a shortage of legally qualified personnel. Aeon Delight is ahead of its
competitors in securing such personnel, as the introduction of area management has enabled labor savings. Further, as thecompany operates nationwide, it is able to recruit legally qualified personnel from all over Japan. Against such background,the company has been receiving an increasing number of new contracts from customers who have switched from othercompanies.
Area management
Under the new area management approach, the company manages multiple facilities by area. The facilities are monitored
remotely at customer support centers, using cameras and sensors, to reduce on-site operations and visited regularly.

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In March 2021, Aeon Delight set up customer service centers at all eight branches in Japan and rolled out remote support
systems for customer facilities. The company also installed security cameras and sensors at facilities under management toautomate on-site management tasks and save labor. In addition to setting up such a system, the company adopted an area
management strategy, which involves the sharing of facilities management personnel in a given area with reference tocustomers' needs and attributes of each facility and region, and this led to cost reductions through labor savings andautomation. The company first introduced the strategy primarily for Aeon Retail stores among the several thousand facilities
under contract.
As of February 2024, the company had introduced the area management approach to a total of 320 facilities, and reduced
the number of full-time facility management staff by about 219. The company reassigned these specialized personnel to
newly contracted facilities, sales and construction departments, and other departments so that they can use their expertise
cultivated on-site to further expand earnings opportunities.
Data integration platform, Aeon Delight Platform
Aeon Delight Platform collects, analyzes, and processes information from inside and outside facilities to increase its value. In
FY02/23, the company developed a framework to centrally manage major internal systems and link them to datavisualization tools. The framework has enabled the company to extract, analyze, and process any data from various systems.
The company started using output data.
The system gathers information on facility management and customers and industries, from customer support centers andaccount managers, respectively. It then analyzes the data to offer optimal solutions to issues faced by customers. Further, it
shares the data across the service network, including group companies and business partners. The system has been updated
to include new features. For instance, it analyzes transactions by industry and facility type and visualizes repair work progress.
These enhancements have helped the company enhance the efficiency of business activities, prevent opportunity losses, andappropriately manage construction progress to improve service quality.
Specific examples are as follows.
Equipment repair proposals: Previously, facility managers presented customers with equipment repair proposals based on
their expertise. However, the new system identifies equipment in need of repair based on data (evidence), such as
manufacturer, model number, installation date, and malfunction history. As a result, customers benefit from more accurate
and planned repair proposals.
Energy-saving proposals: The system compares and analyzes the energy usage in real time between facilities of the sameuse and size. Customers can choose an energy-saving plan that best fits their individual facilities as they face rising energy
costs.
Utilization of technology: Next-generation facilities management model
The next-generation facilities management model uses an open facilities management network system the company has
developed. This system introduces IoT into facilities management. Data are measured automatically by sensors installed
throughout customers' facilities. These data are consolidated in the cloud, reducing manpower and time while allowing alldata to be managed at once.
Using IoT, the system performs remote monitoring and automatic control of air conditioning and lighting. It is an open
network utilizing existing control equipment and IoT; it has a low installation cost (in some cases, it can reduce costs by halfthrough multiple vendors); enables lower operation costs by reducing necessary manpower through remote monitoring; andsaves energy. The company is watching out for replacement demand for central monitors (every 15–20 years) to capture
replacement orders with its accumulated commercial facilities management know-how.
While leveraging its track record for large commercial facilities, its specialty, the company is also rolling out the system inother areas including drug stores to secure market share. In Asia ex. Japan, new purchases account for most market demand
while in Japan most demand is replacement demand. The company intends to make its services the de facto industry standard
in conventional facilities management.
The company appears to be considering several business models such as one that generates more sales and profits at
installation, one that generates sales and profit through operation, and one that generates profit when energy savings orother measures exceed a certain level. The company’s next-generation facilities management system, one of its value-added
services, leads to less manpower required for commercial facilities. As such, profitability is expected to rise with sales.

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Monitoring screens displayed at a large facility in Chiba

Source: Shared Research based on company data

Security Services
Segment performance

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23(JPYmn)

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Sales

36,62238,456

41,06843,29044,49244,64744,393

47,23949,47850,919

YoY

7.0%

5.0%

6.8%

5.4%

2.8%

0.3%

-0.6%

6.4%

4.7%

2.9%

Operating profit

FY02/24

3,102

3,032

3,110

2,857

2,881

3,038

3,307

3,435

3,279

3,108

YoY

8.3%

-2.3%

2.6%

-8.1%

0.8%

5.4%

8.9%

3.9%

-4.5%

-5.2%

Operating profit margin

8.5%

7.9%

7.6%

6.6%

6.5%

6.8%

7.4%

7.3%

6.6%

6.1%

Source: Shared Research based on company data

This segment provides comprehensive security services (i.e., security for facilities, security to handle crowds and traffic, andprotection of valuable goods). By combining manual labor and the latest advances in technology, the company provides
customized security solutions to clients.
It places security guards at client facilities, and recurring revenue business with ongoing security services is common. This
segment outsources most of its work to Aeon Delight Security, a subsidiary. Due to heavy personnel costs for security guards,
the operating profit margin is stuck at about 7%. The industry is experiencing a rise in personnel expenses due to chroniclabor shortages. However, the company is promoting the systematization of store entry and exit management and opening
and closing operations to improve profitability.
The company also offers an attendant security service, which is similar in nature to a concierge service. Attendants are female
security guards that also provide information services to patrons. This service was started in an effort to shed the old “security
guard” image and provide a more hospitable environment. Although costs will arise from staff training, this businessprovides high added value.
In Japan, in addition to Aeon group commercial facilities, Aeon Delight provides services to facilities outside the group(automakers, hospitals, hotels, commercial complexes, and business centers of financial institutions), and in China, togovernment-affiliated properties, commercial complexes, and condominiums.

Cleaning Services
Segment performance

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23

FY02/24(JPYmn)

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Sales

44,28747,87053,36555,29758,18562,36262,45966,963

68,33670,428

4.6%

8.1%

11.5%

3.6%

5.2%

7.2%

0.2%

7.2%

2.1%

3.1%

6,289

6,031

6,012

6,228

6,694

6,967

7,324

8,106

7,014

5,277

YoY
Operating profit
YoY

10.0%

-4.1%

-0.3%

3.6%

7.5%

4.1%

5.1%

10.7%

-13.5%-24.8%

Operating profit margin

14.2%

12.6%

11.3%

11.3%

11.5%

11.2%

11.7%

12.1%

10.3%

7.5%

Source: Shared Research based on company data

The company provides cleaning services, mainly in large shopping centers for the Aeon group. Because large commercial
facilities tend to have a wide variety of people passing through and frequent layout changes, it is a relatively difficult area ofthe cleaning industry. Although it is a labor-intensive business, the company has implemented measures to increase
efficiency of large machinery such as floor cleaners. These and other initiatives serve to standardize and increase theefficiency of work performed. This is a recurring revenue business and the company has built long-term relationships with
about 80% of its customers in this segment.
On an orders-received basis, the business is composed of about 10–20% work performed directly by the parent company,
and 80–90% work performed by outsourcing partners. Primary outsourcing partners are Aeon Delight Connect Co., Ltd. andKankyouseibi Co., Ltd. Approximately 30,000 persons are involved in the cleaning services business.

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Hygienic cleaning
The company leverages the track record and expertise it has built up through hospital-oriented hygienic cleaning and New
Standard Cleaning, a cleaning method for maintaining a hygienic, attractive environment developed based on thecompany's proprietary cleaning services previously provided to hospitals. It focuses to offer high value-added services toraise facilities' hygiene levels. Since the outbreak of COVID-19, demand for disinfection cleaning, quarantine cleaning, andspecial cleaning to prevent the spread of infection has increased, and the company established a specialized organization in
April 2022 to strengthen related proposals. This has led to development of new non-group customers, such as hospitals andhotels.
Contract renewal for hygienic cleaning services at hospitals typically happens every year, so it is difficult to turn it into arecurring revenue business. That said, a limited number of companies have the scale needed to provide bulk cleaning
services for major groups with many medical facilities nationwide. Aeon Delight presents proposals capitalizing on its bases
nationwide; its name recognition as a publicly traded company and as a member of the Aeon group; its track record withmajor medical institutions; and the visible quality of its cleaning services.

Construction Work
Segment performance

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23(JPYmn)

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Sales

41,97243,85545,81440,897

41,47041,84440,65743,01552,084

59,219

YoY

-8.0%

4.5%

4.5%

-10.7%

1.4%

0.9%

-2.8%

5.8%

21.1%

13.7%

2,807

3,218

3,210

3,305

3,989

3,816

3,880

3,583

4,080

5,322

YoY

8.8%

14.6%

-0.2%

3.0%

20.7%

-4.3%

1.7%

-7.7%

13.9%

30.4%

Operating profit margin

6.7%

7.3%

7.0%

8.1%

9.6%

9.1%

9.5%

8.3%

7.8%

9.0%

Operating profit

FY02/24

Source: Shared Research based on company data

In this segment, the company conducts large-scale renovation, interior planning and design, and restoration. It also proposes
energy-saving sand CO2 reduction solutions and installs related devices. In addition, it installs solar power systems and offer
energy data management services. In this segment, the company generates roughly 60% of its sales from Aeon groupcompanies. Renovation is remodeling (not designing) of Aeon retail locations, such as replacing signage, or modifying retailfloor space. In recent years, there has been an increasing amount of work related to changeover of tenants inside Aeon Malls(restoration and new interiors). In March 2021, Aeon Delight absorbed store design specialist U-COM, and the upstream
approach has enabled it to win an increasing number of contracts from outside the Aeon group.
With material prices on the rise, the company established a department specializing in estimating construction costs in
FY02/23. It plans to improve profitability by increasing estimate accuracy and strengthening cost negotiations.

Construction work process for commercial facility tenant replacement

Source: Shared Research based on company data

Materials and Supplies Sourcing Services
Segment performance

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23(JPYmn)

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Sales

47,61850,51650,74050,26551,007

51,12553,06056,49741,54446,315-26.5%

YoY

0.4%

-0.9%

3.8%

6.5%

2,111

2,806

2,774

2,868

2,779

2,489

2,467

2,560

1,999

2,322

YoY

-9.5%

32.9%

-1.1%

3.4%

-3.1%

-10.4%

-0.9%

3.8%

-21.9%

16.2%

Operating profit margin

4.4%

5.6%

5.5%

5.7%

5.4%

4.9%

4.6%

4.5%

4.8%

5.0%

Operating profit

6.9%

6.1%

1.5%

0.2%

FY02/24

11.5%

Source: Shared Research based on company data
Note: The company adopted the Accounting Standard for Revenue Recognition from Q1 FY02/23.

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Through efficient logistics, the company in this business aims to reduce costs and improve operational efficiency at customer
companies in procuring intermediate materials used in offices and retail stores. The company handles materials for sales atstores (plastic shopping bags and gift bags), uniforms, and other consumables (stationery for employees and cleaningmaterials). In recent years, the company has strengthened its handling of environmentally friendly packaging materials.
In this business, stores running out of inventories of materials is not an option. The company also performs logistics functions
for customers. Through efficient logistics operations, it aims to reduce costs and improve operational efficiency related to the
procurement of intermediate materials. Even though this is a business where adding value is difficult, the company maintains
an OPM of around 5%. The rises in crude oil prices, raw materials, and distribution costs will increase the purchase costs ofpackaging materials. In addition to streamlining distribution costs, the company continues to make efforts to reflect risingcosts in selling prices.
Collaborating with other businesses, the company sold cleaning and sanitation materials to customers in Cleaning Services,and materials and equipment to those in Facilities Management and Security Services. In FY02/23, sales declined YoY due
to the application of the new Accounting Standard for Revenue Recognition (sales would have grown 5.6% YoY under theprevious accounting standard).

Vending Machine Services
Segment performance

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23(JPYmn)

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Sales

34,82532,74132,87932,834

31,95531,54425,45326,353

9,466

9,616

4.5%

-6.0%

-1.3%

-19.3%

3.5%-64.1%

YoY
Operating profit

0.4%

-0.1%

-2.7%

FY02/24

1.6%

2,965

2,846

2,812

2,105

1,164

1,396

653

608

1,083

1,290

YoY

-3.4%

-4.0%

-1.2%

-25.1%-44.7%

19.9%-53.2%

-6.9%

78.1%

19.1%

Operating profit margin

8.5%

8.7%

8.6%

6.4%

3.6%

4.4%

2.6%

2.3%

11.4%

13.4%

Source: Shared Research based on company data
Note: The company adopted the Accounting Standard for Revenue Recognition from Q1 FY02/23.

In this segment, the company operates soft drink vending machines. It also creates relaxation areas with foliage plants and air
purification equipment.
The company’s vending machines stock a variety of products from different manufacturers. About 80% of vending machinesales come from machine in supermarkets belonging to the Aeon group. The remaining 20% of sales come from machines
in shopping malls operated by non-Aeon companies. The business started in September 2010, when Aeon Delight acquired
vending machine operator Certo Corp., which spun off from the trading division of Aeon.
The company operates its own vending machines as well as those owned by partners such as beverage makers’ sales
companies. Beverage purchasing and vending machine restocking are outsourced to operators, while the company
determines locations and coordinates the product lineup. The company's sales are roughly tied to beverage sales, withadditional compensation from the manufacturers. Operating profit is the amount left after paying commissions to operatorsand installation sites. Sales tend to increase in Q2 (June–August) due to strong beverage sales in summer. In FY02/23, sales
fell sharply YoY due to the application of the new Accounting Standard for Revenue Recognition (sales would have grown
2.2% YoY under the previous accounting standard).

Support Services
Segment performance

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23(JPYmn)

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Sales

14,406

15,52418,18817,325

19,43918,76815,837

16,04918,07018,810

9.7%

12.6%

YoY
Operating profit
YoY
Operating profit margin

FY02/24

7.8%

17.2%

-4.7%

12.2%

-3.5%

-15.6%

1.3%

281

-580

-850

-1,466-2,270

416

-75

441

462

545

-16.4%

-

-

-

-

-

-

-

4.8%

17.8%

4.1%

2.0%

-3.7%

-4.7%

-8.5%

-11.7%

2.2%

-0.5%

2.7%

2.6%

2.9%

Source: Shared Research based on company data

In this segment, the company provides travel agency services, education and human resource services, business process
outsourcing (BPO), housework support services, business travel services, training services, and staffing services. Much ofthese support services are conducted by companies acquired through M&A.
Development of BPO services began with the acquisition of General Services, Inc. Services that BPO undertake include costmanagement, salary calculations, administrative functions, social security and welfare, receipt of telephone calls, and systemmanagement.

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The main subsidiary in this segment is Aeon Compass. It primarily offers B2B services including Business Travel Management(domestic business trips, support for overseas assignments) and MICE (planning and management of meetings, seminars,
trainings). Aeon Delight Academy, Co., Ltd. operates the “Aeon Delight Academy Nagahama” in Shiga Prefecture to provide
real-world training. It also operates a staffing service for technical professions.
The company provides a wide rage of services such as travel agency and event-related services for the Aeon group. It alsooffers on-site shipping services for Aeon Mall facilities. The company also addresses non-group customers' outsourcing needs
associated with management and operation of contracted facilities and their surroundings. (e.g., operation of venues for new
employee welcoming ceremonies and employee training, and operations peripheral to building maintenance). In China, it
offers maintenance and peripheral services for government buildings and support services for new buildings.

Overseas business
The company has expanded from Japan to China and ASEAN countries by leveraging its standardized technology and quality
control capabilities cultivated over 50 years of operation in Japan. It aims to become the number one facility managementcompany in Asia. Overseas, the company is active in China, Malaysia, Vietnam, Indonesia, and Cambodia, operating in the
Facilities Management, Security Services, Cleaning Services, and Support Services segments. Around half of overseas
customers are Aeon group companies. Overseas operations accounted for 9.9% of sales in FY02/24. The company uses athree-pronged growth strategy that addresses safety and security, manpower shortage, and the environment, and aims to
expand its contracted facility management services throughout the Asian region. In China, the strategy is to provide quality
facilities management centered on North, East, Central, and South China to boost the Aeon Delight brand profile.
Sales from overseas operations are included in each business.

China
In China, the company is expanding its business domain to include property management services (maintenance andoperation of facilities), catering (peripheral operations for building management), cleaning services, and services forresidents in nursing homes, centering on quality facilities management services.
The company operates in Beijing, Hebei, Tianjin, Shandong, Jiangsu, Shanghai, Zhejiang, Hubei, Guangdong, Hunan, andHong Kong. It provides services to a variety of facilities, including large shopping centers, luxury residences, andtransportation infrastructure facilities. It also participates in community redevelopment projects. In FY02/24, sales from the
China business were JPY23.9bn.
M&A activities
The company targets sales of JPY60.0bn for the China business in FY02/26 (vs JPY22.7bn in FY02/23). The breakdown of
the JPY60.0bn sales is JPY40.0bn from organic growth and JPY20.0bn from acquisitions. In China, the company is actively
utilizing acquisitions and business alliances to acquire expertise, expand its business domain, and strengthen its customer
base. It plans to expand its business throughout China in the future. The company engages in facilities management
operations in China. In addition, it aims to invest in local companies that have expertise and customer bases in energy,
environment, and parking lot management, and companies that provide security and cleaning services for local hospitals andfactories of Japanese companies.
Main subsidiaries
Aeon Delight (China) Service Management Group Co., Ltd. (former Aeon Delight [Jiangsu]): Oversees the company's
businesses in China. It provides security, cleaning, and support services for government-affiliated facilities, offices, andcommercial facilities. It is working to contract new properties and increase its share of customer wallets. In June 2021,
Aeon Delight Jiangsu acquired a 60% stake in Suzhou Nakamura Integrated Facility Management Service (making it asubsidiary), which has a high level of knowledge and success in contracting services for Japanese-owned factories, inorder to expand market share in Suzhou where there is significant growth in factories owned by Japanese businesses. In
2023, the company reorganized its business to further expand the areas of operation and enhance collaboration between
operating companies. As part of this effort, it redefined the role of Aeon Delight (China) Service Management Group,
positioning the subsidiary to oversee operations in China.
Wuhan Xiaozhu: One of the core operating companies. It became a subsidiary in 2013. It is a major property
management company in Wuhan, Hubei Province, and holds a first-class license for property management.

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Aeon Delight (China) Investment Holdings: Aeon Delight (China) was established in 2021 to further grow businesses in
China. (Its form was changed from a facilities management company to an investment company, and it was renamed to
Aeon Delight (China) Investment Holdings Co., Ltd.) It is responsible for strengthening group governance, generatingsynergies among operating companies, and controlling the quality of services provided in China. As an investmentcompany, it is able to invest in local companies in other industries.
Zhejiang Metelan Property Management: Became a subsidiary in March 2022. It is a local company that manages andoperates healthcare facilities in Zhejiang and Jiangxi provinces.
Aeon Delight (Hong Kong): Established in March 2024. The subsidiary aims to expand facility management operations inHong Kong, mainly for facilities owned by Japanese companies and local medium- to high-end facilities.

ASEAN
In the ASEAN region, the company has subsidiaries in Indonesia, Malaysia, and Vietnam.
The company is making preparations to establish a head office for the ASEAN business in Malaysia to reinforce group
governance and develop a new growth strategy for the region as a whole. The company's ASEAN business has governanceissues, more so than the China business, and so the company is dispatching personnel from Japan to address these issues andstrengthen governance of the local business. In FYY02/24, sales from the ASEAN business were JPY11.8bn.
Malaysia: The company provides facilities management, repair, and cleaning and disinfecting services for Aeon Malaysia
facilities as well as non-group facilities.
Vietnam: Target customers are commercial facilities in Vietnam and Cambodia. Aeon Mall is strengthening store
openings in Vietnam and plans to accelerate further store openings from 2025 to 2026. Aeon Delight is also working tostrengthen its system by increasing the personnel headcount.
Indonesia: The company offers its expertise in facilities management. It also aims to win local contracts. Personnel costs
are on an upward trend as the company works to improve working conditions following the revision of the law. Indonesia
is a larger market within the ASEAN region, and the company has access to the customer base of a cleaning company itpurchased in the country in 2018. It is building local infrastructure by dispatching staff from Japan with an eye toward
expanding contracts with Aeon group facilities.

Strengths and weaknesses
Strengths
Strong ties with the Aeon group: Aeon Delight is a subsidiary of Aeon Co., Ltd., and 62.2% of sales were generated fromthe Aeon group in FY02/24. This provides for stable sales, and the Aeon group’s expansion into Asia is also proving to bea positive factor for Aeon Delight’s growth. The company is able to leverage economies of scale from the Aeon group,and has accumulated expertise in facilities management from its transactions with Aeon. This provides for a stable
recurring-revenue model.
Industry leader in facilities management: Aeon Delight is the industry leader capable of providing integrated all-in-one
building maintenance services such as facilities management, security, cleaning, and renovations that are non-core
activities for many companies. Its competitors can only provide one to two of these services (i.e., security or cleaning).
The number of companies that can provide one-stop services is limited.
Ability to generate stable cash flows: Over the past five years, average operating cashflow has been JPY11.6bn per annum,
and the company has spent JPY3.0bn per year on the acquisition of tangible fixed assets, generating total cashflow ofabout JPY8.6bn. The company is using stable cash flow to invest strategically in acquisitions and technologicaldevelopment based on its longer-term vision. If there are no investment outlets that meet its growth strategy, the cash
flow funds shareholder returns. Over the past five years, Aeon Delight has spent an average of JPY3.9bn in dividend
payments (cash flow basis) yearly. It has increased dividends YoY for the twentieth consecutive year through FY02/24. In
FY02/19, the company spent JPY9.9bn on a share buyback. From October 2022 to October 2023, it bought back sharesworth JPY4.5bn. (It also announced its plan to buy back shares worth JPY3.1bn in April 2024.)

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Weaknesses
Limited organic growth: Aeon Delight depends mainly on the domestic market; overseas sales accounted for just 9.9% of
total sales in FY02/24. The markets for its existing businesses in Japan are mature, which is a weakness in terms of thecompany’s growth potential. To sustain growth, Aeon Delight must rely on aggressive development overseas and winning
contracts in ancillary businesses as a facilities management company and growing market share.
Heavy dependence on the Aeon group: Aeon Delight is a consolidated subsidiary of Aeon, and the Aeon groupaccounted for 62.2% of sales in FY02/24. A drawback of such a strong relationship is that the parent company may ask forsupport in pursuing its agenda. Recently, Aeon acquired 50% of Tesco Japan, the U.K. supermarket chain operator’s Japanretail business. A joint venture company, Aeon Every Co., Ltd. is in charge of supermarket operations. The parent Aeon
could ask the company for support in future acquisitions.
Mature property management market: The property management market is relatively mature. However, small retail storesin urban areas offer growth opportunities given the greater number of customer volume. Many small retailers arerenovating their stores and upgrading facilities. Aeon Delight’s expertise has been in large facilities, mainly supporting
the Aeon group retail stores such as shopping centers and supermarkets. As smaller commercial facilities emerge inlarge urban areas, the question remains whether the company can successfully adapt its facilities maintenance know-how
to this segment of the market. The company may need to look at this segment for growth.

Market and value chain
Market overview
Japan’s building maintenance market was worth roughly JPY4.6tn in FY2022, up 5.7% YoY, according to a survey released in
October 2023 by Yano Research Institute Ltd.
Building maintenance market includes building cleaning, facilities maintenance, and security services. It also includes
repair work, renovation work, and renewal work undertaken by building maintenance companies. But businesses
unrelated to building maintenance are not included in the data even though they are undertaken by these companies.

Scale of the building management market (prime contractor basis)

Source: Shared Research based on Yano Research Institute Ltd. materials (October 2023)

Building maintenance services were mainly used by office buildings (21.7%), shops and commercial facilities (18.1%),
medical and welfare facilities (10.2%), factories and workplaces (9.3%), and education facilities (9.3%). The company has asignificant share of the shop and commercial facilities market, but low shares in office buildings, medical and welfare
facilities, and factories and work places, leaving room for growth.
Sales growth rates by end user were up 5.1% YoY for office buildings, up 5.2% YoY for shops and commercial facilities, up
6.5% YoY for medical and welfare facilities, up 5.1% YoY for factories and workplaces, and up 3.4% YoY for education facilities.

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Building maintenance market (by building use)
(JPYbn)FY2018FY2019FY2020

FY2021

Residential

134.7

151.5

153.6

157.9

YoY

7.4%

12.5%

1.4%

2.8%

12.3%

3,860.5

4,124.8

4,080.1

4,184.5

4,411.5

Non-residential

FY2022
177.3

YoY

6.8%

6.8%

-1.1%

2.6%

5.4%

Office buildings

875.4

933.2

919.4

946.0

994.5

6.4%

6.6%

-1.5%

2.9%

5.1%

736.8

783.2

772.2

788.4

829.7

YoY
Stores and commercial facilities
YoY
Medical and welfare facilities
YoY
Educational facilities
YoY
Factories and workshops
YoY

6.5%

6.3%

-1.4%

2.1%

5.2%

390.8

423.6

424.1

439.4

467.9

8.1%

8.4%

0.1%

3.6%

6.5%

403.6

424.1

411.9

413.2

427.4

5.2%

5.1%

-2.9%

0.3%

3.4%

387.4

409.2

401.1

407.6

428.3

6.1%

5.6%

-2.0%

1.6%

5.1%

Source: Shared Research based on Yano Research Institute Ltd. materials (October 2023)

Aeon group stores by format (domestic and overseas)
FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23

618

625

626

584

583

612

613

618

613

609

Supermarket

2,038

2,121

2,130

2,159

2,166

2,228

2,291

2,285

2,316

2,324

Discount store

381

530

566

568

587

592

599

605

605

587

DIY store

121

120

119

122

122

120

118

117

119

118

Supercenter

29

28

28

28

27

25

25

25

25

Department store

1

1

1

1

1

1

1

1

1

1

Specialty store

4,683

5,061

4,348

4,332

4,039

3,801

3,515

4,503

4,447

4,347

Convenience store

3,932

4,331

5,261

5,436

5,449

5,350

5,300

4,661

2,039

2,015

Drugstore and pharmacy

3,347

3,765

3,980

4,376

4,817

2,392

2,599

2,868

3,176

3,246

Other retail formats

884

803

856

907

1,015

1,150

1,252

1,341

1,405

1,486

Financial services

698

701

705

690

640

658

636

592

596

GMS

FY02/24

25

592

Services

1,640

1,934

2,013

2,045

2,070

2,016

1,999

1,978

2,049

2,108

Total

18,382

20,02020,633

21,24821,516

18,945

18,94819,594

17,391

17,458

Aeon Mall

148

161

166

174

180

172

174

202

199

202

Aeon Town

130

134

138

139

140

145

147

150

151

155

Total

278

295

304

313

320

317

321

352

350

357

FY02/16

FY02/17

FY02/18

FY02/23

FY02/24

Source: Shared Research based on company data

Stores overseas by format
FY02/19

FY02/20

FY02/21

FY02/22

GMS

77

84

87

94

96

101

103

103

94

92

Supermarket

FY02/15
101

115

173

150

150

125

125

131

144

137

Discount store

24

24

23

21

22

22

22

21

21

21

2,532

2,840

2,998

3,172

3,252

3,353

3,315

2,711

138

164
13

Convenience store
Drugstore

0

0

0

0

0

7

10

11

12

Specialty store

42

44

52

54

39

5

0

7

7

7

Other retail formats

30

79

97

115

124

148

147

153

153

155

Financial services

339

Services
Total

339

342

324

276

295

269

225

234

239

180

282

335

390

426

446

431

425

435

464

3,325

3,845

4,107

4,320

4,385

4,502

4,422

3,787

1,238

1,292

Source: Shared Research based on company data

Customers
In FY02/24, Aeon Delight generated almost 62.2% of its sales from the Aeon group companies, including Aeon Retail, Aeon
Mall (TSE Prime: 8905), and MaxValu companies. The remainder comes from non-Aeon group customers that includecommercial facilities, offices, hotels, medical facilities, schools, factories, warehouses, government offices, and event
operators.

Sales composition by customer

Source: Shared Research based on company data

Outside Japan, Aeon Delight seeks to reduce its reliance on the Aeon group to about 40%.
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Plans for overseas openings of Aeon Malls
FY02/24 FY02/25 FY02/26
Overseas (stores)

2

4

4

China (stores)

1

2

2

ASEAN (stores)

1

2

2

Source: Shared Research based on Aeon Mall data

Overseas businesses of the Aeon group
Overseas stores: Aeon Mall

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23

FY02/24

9

17

19

24

27

30

32

34

37

37

China

6

12

13

17

19

21

21

22

22

22

ASEAN

Total number of stores

3

5

6

7

8

9

11

12

15

15

Vietnam

2

3

4

4

4

5

6

6

6

6

Cambodia

1

1

1

1

2

2

2

2

3

4

1

1

2

2

2

3

5

6

5

Indonesia, Cambodia

Source: Shared Research based on Aeon Mall data

Competition
Aeon Delight derives some 60–70% of its sales from the Aeon group. Within the group, Aeon Delight’s share in Aeon Retailis about 80%. The company’s share in Aeon Mall is about 60%, while its share in MaxValu companies is between 60% and70%.
Aeon Delight’s competitors include SECOM Co., Ltd. (TSE Prime: 9735) and Sohgo Security Services Co., Ltd. (TSE Prime:
2331) in security services. It competes with Azbil Corporation (TSE Prime: 6845), Nippon Kanzai Co. Ltd. (unlisted), andTokyu Community Corporation (unlisted) in property management services. There are no major competitors that offer
cleaning services; Aeon Delight competes with smaller, regional cleaning operators. In construction-related work, Aeon
Delight competes with Azbil in the environmental solutions business, while in the energy-saving business, major rivals are
NTT Facilities, Inc. (unlisted) and Hitachi, Ltd. (TSE Prime: 6501).

Barriers to entry
Property management for residential and small office buildings has relatively low barriers to entry. However, the barriers arehigh for large facilities given the comprehensive services required. Smaller residential or office building owners are lessconcerned about having total package of services and usually focus on cleaning or security. However, large facilities requirecomprehensive services such as maintenance, cleaning, and security, all-in-one. Instead of hiring a contractor for eachservice, large building owners prefer to contract out these services to one company that is able to provide all of these
services in package. Consequently, this enables Aeon Delight to enjoy a relatively high barrier of entry in its market niche,
namely servicing large retail stores and office buildings, due to its expertise in providing an all-in-one package of services.
The company’s market share within the Aeon group is high. Being a group company, Aeon Delight is well aware of thebusiness practices and facility characteristics that are common throughout the Aeon group and the risk of its competitors
gaining a significant portion of the market share is fairly slim.

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Financial Statements
Income statement
Income statement

FY02/15(JPYmn)FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23

FY02/24

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Sales

265,572

277,926

292,607292,396

302,915

308,582

300,085

317,657

303,776

324,820

YoY

3.5%

4.7%

5.3%

-0.1%

3.6%

1.9%

-2.8%

5.9%

-

6.9%

Cost of sales

231,281

243,089

256,871257,524

267,463

270,011

262,910278,158

262,338

282,207

Gross profit

42,61334,29034,83635,73634,87135,452

38,57037,17539,49841,437

YoY

3.1%

1.6%

2.6%

-2.4%

1.7%

8.8%

-3.6%

6.2%

-

2.8%

Gross profit margin

12.9%

12.5%

12.2%

11.9%

11.7%

12.5%

12.4%

12.4%

13.6%

13.1%

SG&A expenses

25,62327,377

18,90020,28021,596

21,961

22,421

22,56921,94523,764

YoY

1.5%

7.3%

6.5%

1.7%

2.1%

0.7%

-2.8%

8.3%

-

SG&A ratio

7.1%

7.3%

7.4%

7.5%

7.4%

7.3%

7.3%

7.5%

8.4%

8.4%

Operating profit

15,39014,556

14,13912,90913,03016,001

15,23015,733

15,814

15,235

YoY

5.3%

-5.4%

-2.9%

-8.7%

0.9%

22.8%

-4.8%

3.3%

0.5%

-3.7%

Operating profit margin

5.8%

5.2%

4.8%

4.4%

4.3%

5.2%

5.1%

5.0%

5.2%

4.7%

82

-22

124

472

332

-52

38

56

193

247

15,472

14,534

14,263

13,381

13,362

15,94915,26815,78916,006

15,482

YoY

6.0%

-6.1%

-1.9%

-6.2%

-0.1%

19.4%

-4.3%

3.4%

1.4%

-3.3%

Recurring profit margin

5.8%

5.2%

4.9%

4.6%

4.4%

5.2%

5.1%

5.0%

5.3%

Extraordinary gains (losses)

-665

-408

-174

-1,135-195-401-4,617

566

-430

96

44.1%

46.0%

45.9%

42.9%

46.2%

38.3%

-8.6%

35.4%

34.5%

30.6%

Non-operating income (expenses)
Recurring profit

Implied tax rate
Net income attributable to non-controllinginterests

6.8%

4.8%

310

386

533

598

664

245

-110

-99

49

97

Net income

7,965

7,247

7,093

6,397

6,415

9,348

11,680

10,665

10,152

10,707

YoY

13.2%

-9.0%

-2.1%

-9.8%

0.3%

45.7%

24.9%

-8.7%

-4.8%

5.5%

Net margin

3.0%

2.6%

2.4%

2.2%

2.1%

3.0%

3.9%

3.4%

3.3%

3.3%

Source: Shared Research based on company data
Note: The company restated prior-year results in June 2019.

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Balance sheet
Balance sheet

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23

FY02/24

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cash and deposits

15,580Accounts receivable(JPYmn)Assets

20,386

31,71739,53644,23362,35559,773

68,28257,60068,35035,75734,32835,36035,73940,08942,612

39,17640,70847,06551,519Allowance for doubtful accounts

-168

-360

-202

-130

-167

-242

-212

-134

-95

-164

Inventories

2,663

2,840

3,218

2,623

2,211

1,822

2,006

2,074

2,363

2,858

Deposits for consumption to subsidiaries
and affiliates

41,32637,362

31,71332,00016,000

-

-

-

-

-

Other

8,476

9,634

9,292

8,543

6,405

5,815

9,265

10,083

22,59917,414

103,634

104,190111,098

118,311

108,771

112,362

110,008

121,013

129,534

139,980

1,009

1,629

1,631

1,582

1,479

1,458

1,671

1,629

1,494

1,358

211

190

175

-

-

-

-

-

-

-

2,516

2,651

3,307

4,892

5,064

4,846

4,264

3,589

2,967

2,948

278

1,978

1,975

1,975

2,032

2,032

2,000

466

434

193

-

-

-

-

-

-

-

-

-

-

345

610

1,974

1,591

1,585

1,334

1,545

1,394

1,604

1,984

Total tangible fixed assets

4,361

7,061

9,064

10,041

10,161

9,671

9,481

7,080

6,499

6,484

Goodwill

8,452

7,654

6,813

6,113

6,865

5,975

3,938

3,360

3,046

2,203

Other

1,867

2,352

1,989

1,699

1,338

1,209

1,579

2,293

3,324

3,894

Total intangible assets

10,32010,006

8,802

7,813

8,103

7,185

5,518

5,653

6,371

6,098

Investment securities

3,768

4,463

4,546

5,334

4,256

3,623

3,960

3,720

4,021

4,123

Deferred tax assets

284

310

551

330

412

1,763

4,840

2,951

1,841

1,210

Other

2,750

3,896

4,342

3,458

3,264

2,347

2,766

2,470

2,378

2,380

Allowance for doubtful accounts

-535

-494

-536

-610

-355

-36

-11

-30

-19

-19

Investments and other assets

6,268

8,176

8,904

8,512

7,578

7,698

11,557

9,111

8,222

7,693

Total current assets
Buildings
Facilities and equipment for area
management
Tools, furniture, and fixtures
Land
Construction in progress
Other fixed assets

Total fixed assets

20,95025,244

26,772

26,367

25,842

24,55426,556

21,84521,093

20,277

Total assets

124,584

129,434

137,870

144,678

134,614

136,917

136,565

142,859

150,628

160,257

24,93428,457

25,11425,82025,967

23,38822,17022,07025,90129,292

-

-

271

225

394

252

299

247

182

378

Other

15,771

17,377

21,666

18,541

20,137

20,41017,466

17,156

17,203

18,103

Total current liabilities

46,63945,83447,05149,06051,40848,864

44,12343,892

48,40653,445

-

-

293

-

15

11

-

-

-

-

2,387

3,925

5,921

6,474

7,652

6,756

4,160

3,543

2,827

2,596

Liabilities
Accounts payable
Short-term debt

Long-term debt
Other
Total fixed liabilities

2,387

3,925

6,214

6,474

7,667

6,767

4,160

3,544

2,830

2,599

Total liabilities

49,02649,76053,26655,53559,07555,631

48,28347,437

51,23756,044

Capital stock

3,238

3,238

3,238

3,238

3,238

3,238

3,238

3,238

3,238

3,238

Capital surplus

18,85018,862

18,94919,01913,88813,88013,226

13,2394,739

532

Retained earnings

50,50555,09959,35562,756

65,91072,06380,34486,55991,421

97,918Treasury stock

-443

-441

-436

-430

-10,327-10,208-10,123-10,077-3,415-1,779Other comprehensive income

1,373

525

799

1,484

466

-86

662

1,619

2,413

3,181

166

221

263

303

299

186

119

86

86

Share subscription rights
Non-controlling interests

68

1,869

2,168

2,434

2,773

2,062

2,213

814

757

908

1,054

Total net assets

75,55879,67484,604

89,14375,53981,28688,281

95,421

99,391

104,212Working capital

13,486

8,711

13,464

12,542

16,33321,046

19,012

20,712

23,52725,085

-

-

564

225

409

263

299

247

182

378

Net cash

56,90657,74862,866

71,311

59,82462,09259,474

68,03557,41867,972

Shareholders' equity

73,52377,285

81,90786,06773,17878,88787,34894,57898,397103,090

Equity ratio

59.0%

59.7%

59.4%

59.5%

54.4%

57.6%

64.0%

66.2%

65.3%

64.3%

Total interest-bearing debt

Source: Shared Research based on company data
Note: The company restated prior-year results in June 2019.

AssetsIn order of value, the company’s assets are cash and deposits, accounts receivable, tangible fixed assets, and intangible assets.
In FY02/24, interest-bearing debt was JPY378mn. The company has a cash-rich balance sheet. Tangible fixed assets andintangible assets are small, as the company’s business structure does not require a large balance sheet.
Majority of its investment securities are with Aeon Mall (TSE Prime: 8905), Aeon Hokkaido (TSE Standard: 7512), Aeon
Kyushu (TSE Standrd: 2653), Aeon Fantasy (TSE Prime: 4343), and MaxValu companies.

Shareholders’ equity
At end-FY02/24, the equity ratio was 64.3%. In recent years, this ratio has remained over 60%.

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Profitability and financial ratios
Profit margins

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23(JPYmn)

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

FY02/24Cons.

Gross profit

34,29034,83635,73634,87135,452

38,57037,17539,49841,43742,613Gross profit margin

12.9%

12.5%

12.2%

11.9%

11.7%

12.5%

12.4%

12.4%

13.6%

13.1%

Operating profit

15,39014,556

14,13912,90913,03016,001

15,23015,733

15,814

15,235

5.8%

5.2%

4.8%

4.4%

4.3%

5.2%

5.1%

5.0%

5.2%

4.7%

17,501

17,014

16,92816,03816,391

19,16818,45819,21019,10519,033

EBITDA margin

6.6%

6.1%

5.8%

5.5%

5.4%

6.2%

6.2%

6.0%

6.3%

5.9%

Net margin

3.0%

2.6%

2.4%

2.2%

2.1%

3.0%

3.9%

3.4%

3.3%

3.3%

ROA (RP-based)

13.1%

11.4%

10.7%

9.5%

9.6%

11.7%

11.2%

11.3%

10.9%

10.0%

ROE

11.2%

9.6%

8.9%

7.6%

8.1%

12.3%

14.1%

11.7%

10.5%

2.3

2.2

2.2

2.1

2.2

2.3

2.2

2.3

2.1

2.1

Working capital (JPYmn)

13,486

8,711

13,464

12,542

16,33321,046

19,012

20,712

23,52725,085Current ratio

222.2%

227.3%

236.1%

241.2%

211.6%

229.9%

249.3%

275.7%

267.6%

261.9%

Quick ratio

198.3%

200.1%

209.5%

218.4%

194.8%

214.3%

223.8%

248.0%

216.0%

224.0%OCF / Current liabilities

40.1%

22.3%

25.2%

28.2%

24.6%

14.7%

22.4%

28.6%

19.3%

36.4%

OCF / Total liabilities

35.2%

20.7%

22.0%

24.4%

20.9%

13.2%

21.5%

26.6%

17.4%

33.0%

15.4

10.1

9.7

12.4

13.6

18.3

20.8

19.5

22.4

23.1

-1,661-4,775

4,753

-922

3,791

4,713

-2,034

1,700

2,815

1,558

FY02/24

Operating profit margin
EBITDA

Financial ratios

Total asset turnover

Cash conversion cycle (days)
Change in working capital

10.6%

Source: Shared Research based on company data

Statement of cash flows
Cash flow statement

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23(JPYmn)

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cash flows from operating activities (1)17,234

10,303

11,703

13,56812,373

7,371

10,403

12,598

8,895

18,518Pre-tax profit

14,807

Depreciation

16,526

14,08912,247

13,166

15,54810,651

16,355

15,577

15,579

1,341

1,699

2,069

2,414

2,602

2,352

2,427

2,755

2,483

2,918

Impairment losses

578

250

122

39

123

175

1,659

441

77

316

Amortization of goodwill

770

759

720

715

759

815

801

722

808

880

Change in working capital

2,008

-552

449

1,035

-53

-4,745-1,831-2,311-6,6902,992

Income taxes-6,615-6,336-6,602-6,115-5,188-6,506-4,838-2,592-3,248-3,890

Other

4,345

-2,043

856

3,233

964

-268

1,534

-2,772-112-277

Cash flows from investing activities (2)-11,365-3,2552,233-2,666

12,256

13,838-7,325-386-10,715-4,319Purchase of intangible/tangible fixed
assets-1,903-2,414-4,113-3,228-2,059-2,361-2,469-3,478-3,009-3,613

18

116

24

14

15

-

39

3,254

1

692

-

-4,771---1,516

-

-

-117

-489

-283

Payments of deposit for consumption to
subsidiaries and affiliates-220,511-218,798-229,151-250,400-284,000-192,500-31,000---

Collection of deposit for consumption
from subsidiaries and affiliates

211,605

222,762

234,800

250,113300,000

208,500

31,000

-

-

-

-574

-150

673

835

-184

199

-4,895-45-7,218-1,115

Proceeds from sale ofintangible/tangible fixed assets
Acquisition of shares in subsidiaries
affecting the scope of consolidation

Other
Free cash flow (1+2)

5,869

7,048

13,936

10,902

24,62921,2093,078

12,212-1,82014,199Cash flows from financing activities-2,594-2,821-2,400-3,264-19,686-3,392-5,324-4,572-6,181-6,922

Net change in short-term borrowings

-

-

219

-28

179

-143

60

-74

-85

40

Net change in long-term borrowings

-

-

324

90

-2

-3

-14

-

-

-

-2,573-2,676-2,842-2,996-3,259-3,195-3,397-4,450-4,200-4,213

37

14

28

41

-9,906109---1,850-2,602

-

-

-57

-21

-6,458--1,853

-

-

-

-58

-159

-72

-350

-240

-160

-120

-48

-45

-147

Payment of dividends
Acquisition of treasury stock
Acquisition of shares in subsidiaries notaffecting the scope of consolidation
Other
Other

172

-229

-6

80

-228

-98

32

925

477

441

Change in cash and cash equivalent

3,447

3,997

11,530

7,718

4,715

17,719-2,2148,564-7,523

7,717

Cash and cash equivalent (year-end)

15,476

19,47331,00438,72243,437

61,15158,93767,52059,99667,714

Source: Shared Research based on company data
Note: The company restated prior-year results in June 2019.

Cash flows from operating activities
Cash flows from operating activities for the company are mainly from net income before tax, depreciation, goodwill
amortization, and changes to working capital. Fluctuations are comparatively small as the company runs a large proportion ofrecurring revenue type businesses.

Cash flows from investing activities
Annual spending on acquiring tangible and intangible fixed assets is about JPY3.0bn, small compared to operating cash flow.
Because the company is relatively aggressive in acquisitions, in some years there is a significant increase in share purchases.

Cash flows from financing activities
Previously, the main element in the company’s financing cash flows was dividend payments. In recent years, however, it has
also been reporting purchase of treasury shares.

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Cash conversion cycle

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23

FY02/24

Accounts receivable turnover

7.6

7.9

8.4

8.2

8.0

7.5

7.3

8.0

6.9

6.6

Days in accounts receivable

48.2

46.0

43.5

44.4

45.7

48.9

49.7

45.9

52.7

55.4

Inventory turnover

88.3

88.3

84.8

88.2

110.7

133.9

137.4

136.4

118.3

108.1

Days in inventory

4.1

4.1

4.3

4.1

3.3

2.7

2.7

2.7

3.1

3.4

Accounts payable turnover

9.9

9.1

9.6

10.1

10.3

10.9

11.5

12.6

10.9

10.2

Days in accounts payable

36.9

40.1

38.1

36.1

35.3

33.4

31.6

29.0

33.4

35.7

Cash conversion cycle (days)

15.4

10.1

9.7

12.4

13.6

18.3

20.8

19.5

22.4

23.1

Source: Shared Research based on company data

Days in accounts receivable are longer than days in accounts payable (including notes payable and electronically recorded
obligations), which means that working capital will increase and operating cash flow will slow in the short term during thebusiness expansion. Accounts receivable are mainly from Aeon group companies, while accounts payable are with various
suppliers, such as soft drink beverage suppliers.

ROE and dividends
FY02/15

FY02/16

FY02/17

FY02/18

FY02/19(JPYmn)

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

ROE

11.2%

9.6%

8.9%

7.6%

8.1%

12.3%

14.1%

11.7%

10.5%

10.6%

Net margin

3.0%

2.6%

2.4%

2.2%

2.1%

3.0%

3.9%

3.4%

3.3%

3.3%

Total asset turnover

2.25

2.19

2.19

2.07

2.17

2.27

2.19

2.27

2.07

2.09

Financial leverage (equity multiplier)

1.66

1.68

1.68

1.68

1.75

1.79

1.65

1.54

1.52

1.54

13.1%

11.4%

10.7%

9.5%

9.6%

11.7%

11.2%

11.3%

10.9%

10.0%

ROA (RP-based)
ROIC

13.1%

12.1%

11.5%

10.2%

10.9%

FY02/20

FY02/21

FY02/22

FY02/23

FY02/24

14.1%

12.4%

11.8%

11.2%

NOPAT

9,540

9,368

9,464

8,925

9,040

11,101

10,567

10,916

10,972

10,570Interest-bearing deb + Net assets

72,854

77,61682,421

87,26882,65878,74985,065

92,124

97,621102,082

10.4%

ROIC (before tax)

21.1%

18.8%

17.2%

14.8%

15.8%

20.3%

17.9%

17.1%

16.2%

14.9%

Operating profit margin

5.8%

5.2%

4.8%

4.4%

4.3%

5.2%

5.1%

5.0%

5.2%

4.7%

Sales / Invested capital

3.65

3.58

3.55

3.35

3.66

3.92

3.53

3.45

3.11

3.18

Source: Shared Research based on company data

Dividends
FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

FY02/23

FY02/24

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

2,625

2,731

2,890

3,207

3,114

3,246

4,099

4,201

4,225

4,173

b)

1

-

-

1

9,906

-

-

-

1,850

2,602

c) = a) + b)

2,626

2,731

2,890

3,208

13,020

3,246

4,099

4,201

6,075

6,775

d)

7,965

7,247

7,093

6,397

6,415

9,348

11,680

10,665

10,152

10,707

Dividend payout ratioa) / d)

33.0%

37.7%

40.7%

50.1%

48.5%

34.7%

35.1%

39.4%

41.6%

39.0%

Total shareholder return ratioc) / d)

33.0%

37.7%

40.7%

50.1%

203.0%

34.7%

35.1%

39.4%

59.8%

63.3%

EPS

(JPY)

151.7

138.0

135.0

121.7

122.9

187.2

233.7

213.3

203.5

219.7

Dividend per share

(JPY)

50.0

52.0

55.0

61.0

63.0

65.0

82.0

84.0

85.0

86.0

Dividend on equity ratioa) / f)

3.7%

3.6%

3.6%

3.8%

3.9%

4.3%

4.9%

4.6%

4.4%

4.1%

(JPYmn)Total dividendsa)Total treasury stock acquired
Total returns to shareholders
Net income attributable to parent
company shareholders

Source: Shared Research based on company data

Shareholder returns
Aeon Delight’s stance on capital policy
The company will use proactive investments to achieve sustainable growth. It will work to boost shareholder value in thelonger term and increase returns to shareholders as the company grows. Further, the company views return on equity(ROE) as an important benchmark of capital efficiency, with its ROE target set at around 12% for the time being.
The company will place importance on the balance in the distribution of annual profit between growth investments andshareholder returns and has a standard stable dividend payout ratio of 40%.
In FY02/19, it spent JPY9.9bn to buy back its own shares. From October 2022 to October 2023, the company acquired
JPY4.5bn worth of its own shares. In April 2024, it announced the plan to acquire treasury shares worth JPY3.1bn. It cancels
the acquired shares as appropriate. The company will continue to consider buying back shares as a capital policy.

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Other information
History
Date
April
February

1973
1976

Description
Nichii Japan Development Co., Ltd. established in Higashi, Osaka
Changed name to Japan Maintenance Co., Ltd., following absorption-type merger with Nichii Maintenance Co., Ltd.
Following absorption-type merger with Aeon Techno Service Co., Ltd., Japan Maintenance changed name to Aeon Delight Co.,Ltd.

September

2006

November
October
April
September

2007
2008
2009
2010

Wholly owned subsidiary Aeon Delight (Beijing) Co., Ltd. (now Aeon Delight (China) Co., Ltd.) established
Acquires 40% of shares in Kankyouseibi Co., Ltd. (Utsunomiya, Tochigi) and made it affiliate
Acquires 40% of shares in Do Service Co., Ltd. (Nishinari, Osaka) and made it affiliate
Absorption-type merger with Certo Corp., supplier of vending services to business supply companies

April
May

2011

Acquires 90% of shares in Kajitaku Inc. (Chuo, Tokyo) and made it subsidiary
Acquired additional shares in A to Z Service Co., Ltd. (Shinjuku, Tokyo) and made it subsidiary
With 70% stake, established joint venture FMS Solution Co., Ltd. (Mihama, Chiba) with Vinculum Japan Corporation (now VINX
Corp.)
Established wholly owned subsidiary, Aeon Delight (Malaysia) Sdn. Bhd.
Aeon Delight (Beijing) Co., Ltd. (now Aeon Delight (China) Co., Ltd.) and Tianjin Teda Co., Ltd. established joint venture, Aeon
Delight (Tianjin) Co., Ltd.

December
March

2012

AugustOctober
October
DecemberAcquired 53.7% of shares in General Services, Inc. (Chiyoda, Tokyo) and made it subsidiary
Acquired 54.9% of shares in Aeon Compass Co., Ltd. (Mihama, Chiba) via third-party allocation and made it subsidiary
Established A-Life Support Co., Ltd. (Chuo, Tokyo) a 85.8% owned joint venture with Familynet Japan Corporation
Acquired 51% of shares in Aeon Delight Sufang (Suzhou) Comprehensive Facility Management Service Co., Ltd. (now Aeon
Delight (Jiangsu)) and made it subsidiary

DecemberJanuary
July

2013

Established wholly owned subsidiary Aeon Delight (Vietnam) Co., Ltd.
Acquired 51% of shares in Wuhan Xiaozhu Comprehensive Facility Management Service Co., Ltd. and made it subsidiary
Established Kikugawa-Ishiyama Solar Co., Ltd. (Kikugawa, Shizuoka), a 37% owned joint venture with Recycle One Co., Ltd.
(now Renova, Inc.) and one other partner; Kikugawa-Horinouchiya Solar Co., Ltd., a 37% owned joint venture with Recycle One
and two other partners
Acquired shares in Hakuseisha Co., Ltd. (Chiyoda, Tokyo) via tender offer and made it subsidiary
Acquired remaining VINX Corp. stake in FMS Solution Co., Ltd. via tender offer and made it wholly owned subsidiary

November
December
March

2015
2016

Acquired remaining Familynet Japan Corporation stake in A-Life Support Co., Ltd. in September 2016, and conductedabsorption-type merger
Established wholly owned subsidiary Aeon Delight (Shanghai) Management Co., Ltd.
Wuhan Xiaozhu Comprehensive Facility Management Service Co., Ltd. established wholly owned subsidiary Wuhan Xiaozhu
Hotel Management Service Co., Ltd.
Absorption-type mergers with FMS Solution Co., Ltd. and Aeon Delight Seres Co., Ltd.
Established Aeon Delight DeepBlue Technology (Shanghai) Co., Ltd., a 65% owned joint venture with DeepBlue Technology
Co., Ltd.

December
March

2017

April
June
April

2018

May

Acquired 100% of shares in U-COM Co., Ltd. (Minato, Tokyo) and made it subsidiary
Acquired additional shares in Aeon Delight (Jiangsu) Comprehensive Facility Management Service Co., Ltd. and Wuhan
Xiaozhu Comprehensive Facility Management Service Co., Ltd., and made them wholly owned subsidiaries
Acquired 90% of shares in PT Sinar Jernih Sarana, and made it subsidiary
Conducted incorporation-type company split of Kajitaku's housework support business, which was transferred to Aqutia Co.,
Ltd., a newly established wholly owned subsidiary

November
DecemberFebruary

2020

February

2021

Absorbed KJS Co., Ltd. (formerly Kajitaku Co., Ltd.)Do Service Co., Ltd. was merged into A to Z Service Co., Ltd., and the name of the surviving company was changed to Aeon
Delight Connect Co., Ltd.
Merged with U-COM Co., Ltd. in an absorption-type merger
Transferred all stake in Aeon Delight Jiangsu, Wuhan Xiaozhu, and Aeon Delight (Shanghai) to Aeon Delight (China) as acontribution in kind
Subsidiary Aeon Delight (China) (currently Aeon Delight [China] Investment Holdings) acquired a 51% stake in Zhejiang
Metelan Property Management Co., Ltd., and made it a subsidiary

March

November
March

2022

April
April
November

2023

Switched stock listing from the First Section to the Prime Market of TSE following the exchange's market restructuring
Acquired all shares in askmaintenance (Kumamoto, Kumamoto Prefecture) and made it a subsidiary
Changed the trade name of Aeon Delight (Jiangsu) to Aeon Delight (China) Service Management Group Co., Ltd.

Source: Shared Research based on company data

Major shareholders
Shares held ('000)

Shareholding ratio

Aeon Co., Ltd.

27,61356.89%The Master Trust Bank of Japan, Ltd. (Trust account)

Top shareholders

3,170

6.53%

Aeon Delight Business Partners Stockholding Association

1,316

2.71%

Custody Bank of Japan, Ltd. (Trust account)

871

1.80%

SMBC Nikko Securities Inc.

788

1.63%

Aeon Delight Employees Stockholding Association

693

1.43%

BNY GCM CLIENT ACCOUNT JPRD AC ISG (FE-AC)

640

1.32%

Nomura Securities Co., Ltd. Self-transfer account

600

1.24%

The Nomura Trust & Banking Co .(Trust account)

499

1.03%

STATE SREET BANK AND TRUST CLIENT OMNIBUS ACCOUNT OM02 505002

484

1.00%

Source: Shared Research based on company data
(As of end-February 2024)

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Corporate governance(As of May 2024)
Form of organization and capital structure
Form of organization
Parent company

Company with Audit & Supervisory Board
Y

Parent company ticker
Directors
Number of directors (per Articles of Incorporation)
Directors' term of office (per Articles of Incorporation)
Number of directors

Aeon Co., Ltd. 8267
20
1
8

Outside directors
Independent outside officers
Audit & Supervisory Board
Existence of Audit & Supervisory Board
Number of Audit & Supervisory Board members per Articles of Incorporation

4
4
Y
5

Number of members of Audit & Supervisory Board
Outside members of Audit & Supervisory Board
Independent outside officers
General shareholders meeting4
3
2Participation to electronic voting platform
Preparation of convening notices in English
Investor relations
Corporate disclosure policy
Regular briefings for individual investors

Y
Y
Y
Y

Regular briefings for overseas investors
Regular briefings for analysts and institutional investors
Online access to IR documents
Dedicated IR section and/or staff
Other current assets

Y
YY
President's Office, Public Relations & IR Group

Foreign shareholding ratio
Independent officers
Implementation of measures regarding director incentives
Disclosure of individual director's compensation

10–20%
6
Stock option
N

Policy to determine amount and calculation method of remuneration
Corporate takeover defenses

Y
N

Source: Shared Research based on company data

Top management
President and CEO: Kazumasa Hamada (born in 1964)
President and CEO Kazumasa Hamada joined Jusco Co., Ltd. (currently Aeon Co., Ltd.) in 1987. Appointed as head ofmanagement planning department, Posful Corp. (currently Aeon Hokkaido Corp.) in 2006 and executive officer in 2007;
regional office manager of Hokuriku, Shinetsu Regional Company in February 2011 and executive officer in March that year.
In 2013 he was appointed director and control & accounting officer of Aeon Co., Ltd. In 2015, he was named regional officemanager of Kitakanto and Niigata Company of Aeon Retail Co., Ltd. and director and senior managing officer of Aeon Retail.
In 2017 he became senior managing executive officer at Aeon Retail. In March 2018 he was dispatched to Aeon Delight Co.,
Ltd. as an advisor, before being appointed to his current position as president and CEO of Aeon Delight in May 2018. In
December 2018 he was appointed representative commissioner at PT Sinar Jernih Sarana. In June 2019 he was appointed
chief administrative officer, head of business administration division, and head of finance division of Aeon Delight. He has
held his current position since April 2020.

Employees
At end-FY02/24, Aeon Delight had 21,209 employees (21,719 at end-FY02/23) and an average of 7,883 temporary
employees (7,440) on a consolidated basis. At the parent level, there were 4,326 employees (4,231) and 2,898 temporary
employees (2,838).
In FY02/24, the average age, average length of employment, and average annual salary on a parent basis were as follows:
Average age: 46.2 years
Average length of employment: 11.2 years
Average annual salary: JPY5.1mn
In the Aeon group, the Aeon Delight Union (5,310 members) has been organized and belongs to the Aeon Delight Labor
Union and the Japanese Federation of Textile, Chemical, Food, Commercial, Service and General Workers' Unions (UAAeon Delight 9787
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ZENSEN. The Aeon group adopts a union shop system.
Union shop system: Under this system, an employer requires its employees to join a union within a certain period of
employment. If an employee does not join the union, withdraws from the union, or is expelled from the union, theemployer is obliged to dismiss the employee. Unlike a closed shop system that employs only union members, the union
shop system does not require employees to join a union in order to be hired. On the other hand, an open shop systemdoes not require union membership of employees, leaving it up to their free will.

Investor relations
Aeon Delight holds earnings briefings twice a year (following half-year and full-year business results).

By the way
Corporate social responsibility (CSR) activities
The company's management principle calls for the ongoing pursuit of "environmental value" for customers and local
communities. In 2021, the company established its Basic Policies for Sustainability in accordance with this management
principle. These policies stipulate that the company shall contribute to the achievement of a decarbonized society, support
biodiversity conservation, and facilitate resource recycling.
Included below are some examples of efforts the company is performing to improve the global environment.
Proposals concerning energy conservation at facilities
The company offers proposals that it believes will reduce overall facility power consumption by combining its expertise withsystems for conserving energy consumed through facility operations. These systems include LED and other lighting
equipment capable of substantially reducing power usage, as well as energy-saving equipment such as air conditioning
equipment, refrigerated display cases, etc. The company helps its customers reduce their CO2 emissions and energy costs
while contributing to the decarbonization of society.
Renewable energy-related business development
Through its power supply services, the company provides commercial facilities, office buildings, medical institutions, andother extra-high and high-voltage facilities with inexpensive, high-quality, and stable electricity. At the same time, it is striving
to prevent global warming by offering CO2 Emission Reduction Plan and 100% Renewable Energy Plan.
Environmentally-friendly product proposals in materials business
The company is promoting the use of biomass plastic, recycled plastic, and traceable paper.
Participation in Aeon 1% Club
Aeon 1% Club supports projects to protect the environment, boost international cultural and human exchange, promote
regional cultural and social activities, and donate to welfare projects. It is an initiative under which group companies
contribute 1% of their pretax profits so that these activities can be maintained regardless of the companies’ businessperformances. In addition to providing children with opportunities to think about environmental issues, the company is
involved in a number of social contribution activities, including support for school construction and teacher training inSoutheast Asia and for the reconstruction of Shuri Castle in Okinawa.
Tree planting through Aeon Environmental Foundation
The Aeon Environmental Foundation, which celebrated its 30th anniversary in 2020, has been engaged in projects toaddress current global environmental issues. One representative example of the foundation's activities is the Aeon Forest
Program, an ongoing tree-planting project. The foundation is also quite active outside of Japan, where it has conducted its
Project to Revitalize the Forests at the Great Wall of China (a tree planting and growing activity) while also participating intree planting activities in countries including Vietnam, Cambodia, and Malaysia.

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“Clean Day” on the 11th Day of Each MonthOn the 11th of every month, all of the company's employees conduct ecologically- and locally-themed community
contribution activities (focused on improving environmental conditions and giving back to the community, respectively).
Acquisition of Eco Mark certification for Cleaning Services
In 2022, the Japan Environment Association (JEA) granted the company Eco Mark certification for its Cleaning Services. The
Eco Mark is an environmental label issued by JEA that indicates products and services that have a low environmental impact
throughout their life cycles (from production to disposal) and are useful in terms of environmental conservation.

TCFD recommendations
The company has endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The
TCFD promotes the understanding and disclosure of the impact of climate change on business activities. The company has
also established strategies, indicators, and targets to address climate change. Further, it helps customer companies combat
global warming by supporting energy-saving at their facilities, providing fluorocarbon management services, and promoting
the use of environmentally friendly materials.

Multi-stakeholder policy
In April 2024, Aeon Delight established a multi-stakeholder policy as a guideline for co-creating value and building good
relationships with various stakeholders. The company believes that co-creating value with various stakeholders, including
shareholders, employees, business partners, customers, creditors, and the local community, is an important aspect ofcorporate management. Accordingly, it intends to effectively collaborate with these stakeholders. The company aims toappropriately distribute profits to stakeholders from earnings and results generated through value co-creation and improved
productivity, thereby maintaining wage growth momentum and supporting sustainable economic development. Accordingly,
it will push forward with related initiatives while rewarding employees and ensuring due consideration for business partners.
In addition, Aeon Delight’s logo is a mascot named “Gu Jo-Kun,” derived from “a good job!” and symbolizes that thecompany wishes to make all people happy.

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Historical financial statements
Full-year FY02/24 results
Sales: JPY324.8bn (+6.9% YoY)
Operating profit: JPY15.2bn (-3.7% YoY)
Recurring profit: JPY15.5bn (-3.3% YoY)
Net income attributable to owners of the parent: JPY10.7bn (+5.5% YoY)

Summary
Sales were 104.8% of the full-year FY02/24 forecast, operating profit 95.2%, recurring profit 96.8%, and net income
attributable to owners of the parent 103.0%.
Sales grew YoY to exceed the initial forecast, fueled by growth in the share of customer wallets (in and outside the Aeon
group) and in the number of newly contracted facilities. The company's enhanced sales activities, as well as its track recordand expertise, led to an increase in the number of contracts with non-group companies and organizations. Sales increased
YoY in all seven segments. Sales growth was particularly notable in Construction Work and Materials and Supplies Sourcing
Services. In Construction Work, the company expanded contracts for energy-saving and renovation/repair work. Meanwhile,
it expanded orders for various materials in Materials and Supplies Sourcing Services. Inquiries from customers in andoutside the Aeon group held steady as the operating environment recovered from the COVID-19 pandemic.
Operating profit fell YoY as segment profit growth was not enough to offset an increase in SG&A expenses. Sales weightingof group and non-group companies was 62.2% and 37.8%, respectively (sales weighting of non-group companies rose 1.2pp
versus end-FY02/23). Net income attributable to owners of the parent exceeded the forecast, driven by a lower tax rate
following tax effect adjustments associated with business restructuring.
Aeon Delight accelerated its area management strategy by integrating operations into customer support centers
equipped with remote monitoring functions and using digital devices to streamline on-site work. The company realizedlabor savings and unmanned operation at a total of 47 facilities (cumulative total of 320 facilities), cutting the equivalentof about 52 resident facility management jobs (cumulative total of 219 jobs).
The company implemented the following measures aimed at customer-oriented management.
Expand market share by stepping up sales activities: The company pushed forward with expanding its service offeringsand contracting management of other facilities of existing customers by targeting specific customers from its local
branches and offices, thereby increasing its share of customer wallets. It also started serving a wider range of facilities,
leveraging its track record and expertise to offer customized proposals, including for energy conservation andpandemic countermeasures.
Have on-site workers actively make small-scale repair proposals: In order to make/keep facilities under management
safe/secure, functional, and aesthetically pleasing, the company had its on-site workers at all of its eight branches inJapan actively make small-scale repair proposals. As a result, it expanded sales and profits. The company monitored
the number of proposals made and projects contracted at each branch, boosting sales.
Respond to soaring energy costs: Amid rising energy costs facing companies and organizations, the company
accelerated its efforts to help large electricity consumers make energy-saving improvements to their facilities, such as
installing LED lighting and updating air conditioning and heating equipment. By doing so, the company helped saveenergy at facilities, while sharply growing orders for related construction work.
In efforts to promote digitalization, the company added additional functions to Aeon Delight Platform, a data integration
platform, namely a tool for analyzing transactions by customer industry and building use and a tool for visualizing
progress of planned maintenance and repair work. This has enabled the company to increase efficiency of its sales
activities, prevent opportunity losses, and improve quality by appropriately managing construction progress.

Segment trends
Facilities Management
Sales: JPY69.5bn (+7.3% YoY)
Operating profit: JPY5.9bn (+1.8% YoY)

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Sales and operating profit grew YoY as the company won new orders for contract management and expanded the number ofcontracts for various maintenance services. The company reported higher sales from in and outside the Aeon group. It
promoted labor savings in facility management to enhance its competitiveness. It also pushed forward with revising contract
prices for FY02/25 to improve profitability.
Security Services
Sales: JPY50.9bn (+2.9% YoY)
Operating profit: JPY3.1bn (-5.2% YoY)
Sales increased YoY as the company acquired new contracts for security services. However, operating profit declined YoY due
to rising personnel and outsourcing expenses. Sales from Aeon group companies (in Vietnam, Indonesia, and othercountries) grew steadily. The company worked on the systematization of store entry and exit management and closing
operations to improve profitability. It also pushed forward with revising contract prices for FY02/25 to improve profitability.
Cleaning Services
Sales: JPY70.4bn (+3.1% YoY)
Operating profit: JPY5.3bn (-24.8% YoY)
Sales rose YoY due to growth in renewal contracts and contribution from askmaintenance, a wholly owned subsidiary acquiredin April 2023. At askmaintenance and overseas, sales from non-group companies increased. Sales from group companies
were weak, but the company expects demand to recover somewhat as the flow of people returns. Operating profit fell YoY
due to lower profitability caused by rising personnel costs (mainly overseas, including Malaysia and Indonesia). The company
negotiated with customers for more flexible work schedules, while working to raise contract prices for FY02/25 and later.
Construction Work
Sales: JPY59.2bn (+13.7% YoY)
Operating profit: JPY5.3bn (+30.4% YoY)
The company strengthened its framework by streamlining operations under the area management strategy. This led to growthin contracts for energy-saving and other works. Further, it improved profitability by optimizing operations and processes. As aresult, sales and profit grew substantially. Projects for Aeon group companies were strong. The company also won a large
construction project from a non-group customer. It actively made renovation/repair proposals for facilities undermanagement, thereby expanding orders for various construction work (including safety-related work). Orders for energysaving work were largely as projected.
Materials and Supplies Sourcing Services
Sales: JPY46.3bn (+11.5% YoY)
Operating profit: JPY2.3bn (+16.2% YoY)
Sales and operating profit increased YoY despite rising raw materials and logistics costs. The company worked to increase
orders from in and outside the Aeon group, while passing on material cost increases to selling prices as appropriate. Sales
from in and outside the Aeon group grew, with the former particularly strong. Amid rising logistics costs, the company
worked to improve loading efficiency and revise delivery terms for FY02/25.
Vending Machine Services
Sales: JPY9.6bn (+1.6% YoY)
Operating profit: JPY1.3bn (+19.1% YoY)
Sales and operating profit rose YoY. The company revised product prices, and secured new sites for installation of vending
machines as a result of enhanced sales activities. Sales from Aeon group companies grew steadily. The company focused onmarketing new vending machine models, including frozen food vending machines, in pursuit of further business
opportunities. In terms of profit margins, the company revised product prices and cut costs (including depreciation), boosting
profits.
Support Services
Sales: JPY18.8bn (+4.1% YoY)
Operating profit: JPY545mn (+17.8% YoY)

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The company worked on expanding its services to meet outsourcing needs to manage and operate customer facilities andtheir surrounding environment. Performance of the travel-related service also contributed to sales and profit growth. Sales
from non-group customers increased (sales were strong at subsidiaries and in Vietnam).
Overseas business (within each segment)
Sales: JPY35.7bn (+7.6% YoY)
Operating profit: JPY1.5bn (-20.3% YoY)
Sales grew but profit fell in China and the ASEAN region. Earnings from the overseas business are included within eachsegment. In FY02/24, the overseas sales ratio was 9.9%, above the 8% target.
Aeon Delight sees the greatest growth potential in the Chinese market. The company steadily grew the China business as
its core business company expanded the share of customer wallets and increased newly acquired facilities centered on
medium- to high-end facilities. The subsidiary also participated in the urban development project, resulting inconcentrated contracts for facilities management operations. However, operating profit fell YoY despite sales growth, due
to higher SG&A expenses. With the aim of further promoting group management, the company redefined the role ofAeon Delight (Jiangsu)
Comprehensive Facility Management Service Co., Ltd. (former Aeon Delight Jiangsu), positioning the subsidiary tooversee operations in China. In February 2024, the company established a new operating company in Hong Kong.
Sales were up YoY in all ASEAN countries in which the company operates. Operating profit in the ASEAN business as awhole declined YoY despite sales growth, due in part to higher personnel costs in Indonesia and Malaysia resulting fromthe January 2023 revision of employment laws. In Malaysia, the company utilized service level agreements (SLA; acontract form based on the agreed service outcomes between the service provider and the customer) to improve
profitability in 2H.
Subsidiary earnings
Sales grew but profit fell at subsidiaries in Japan. Aeon Compass earnings recovered, while the consolidation of
askmaintenance boosted earnings. However, group building maintenance service providers struggled.
Aeon Delight Connect: Sales increased as the subsidiary expanded maintenance and construction contracts forrestaurant chains and convenience stores. However, profit decreased due to higher personnel expenses.
Aeon Compass: Sales and profit rose. As the flow of people increased, earnings from business trip support services
and corporate travel business remained robust.
Kankyoseibi: Sales grew thanks to new renewal contracts and repair work orders. However, profit declined due tohigher personnel expenses.
Hakuseisha: Sales remained flat YoY, while profit fell due to an increase in personnel expenses.
askmaintenance: The subsidiary provides cleaning services in the Kyushu area. Aeon Delight made it a wholly owned
subsidiary in April 2023. Sales and profit grew, driven by growth in new contracts.

OthersAt the time of its earnings results announcement, the company disclosed its plan to acquire treasury shares. The total numberof shares to be acquired is 700,000 (1.44% of total issued shares), and the total acquisition value is JPY3.1bn.
In March 2024, Aeon Delight announced its initiatives to optimize contract prices. Specifically, the company is working on
the following measures.
Establish a price negotiation policy, train employees on the policy, and disseminate information across the group
Conduct customer surveys and address customer feedback
Communicate what makes a fair deal at technical competitions and study sessions with customers
Promote the use of a customer support line
Going forward, Aeon Delight plans to clearly define the responsibilities and response systems for price negotiation bycontract type, and set up opportunities to negotiate prices at least once a year (price negotiation month).

Cumulative Q3 FY02/24 results
Sales: JPY241.9bn (+6.6% YoY)

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Operating profit: JPY10.9bn (+0.4% YoY)
Recurring profit: JPY11.1bn (+0.6% YoY)
Net income attributable to owners of the parent: JPY7.6bn (+6.3% YoY)

Summary
In cumulative Q3, sales reached 78.0% of the full-year FY02/24 forecast (74.7% a year ago of the full-year result), operating
profit 67.9% (68.4%), recurring profit 69.2% (68.7%), and net income attributable to owners of the parent 73.2% (70.6%).
Sales increased in all seven segments due to growth in the share of existing customer wallets in and outside the Aeon group(the latter in particular) and in the number of newly contracted facilities. Results exceeded the initial forecast. The company's
enhanced sales activities, as well as its track record and expertise, led to an increase in the number of contracts from nongroup companies and organizations. By segment, sales growth in Construction Work and Materials and Supplies Sourcing
Services was notable. In Construction Work, the company expanded contracts for energy-saving and renovation/repair work.
In Materials and Supplies Sourcing Services, it increased orders for various materials and made progress in passing on risingcosts into selling prices.
GPM fell 0.5pp YoY to 12.9% as cost of sales increased due to rising personnel, raw materials, and logistics expenses.
However, the company expanded sales and worked to curtail SG&A expenses as initially planned, resulting in YoY growth inoperating profit. Nevertheless, operating profit fell short of the initial target as the company's measures to improve
profitability were not enough to offset a rise in cost of sales. The progress rate versus the full-year forecast was higher for net
income attributable to owners of the parent than for operating or recurring profits. The company attributed this to a decline
in income taxes-deferred as a result of the group's restructuring.
The company is working to pass on the rising cost of sales (personnel, raw materials, and logistics expenses) to selling
prices in each segment. However, its operating environment remains harsh as it is required to continue raising wages.
Accordingly, the company intends to improve profits by growing sales.
Profit increased in Facilities Management, Security Services, Construction Work, Materials and Supplies Sourcing Services,and Vending Machine Services, but decreased in Cleaning Services and Support Services. Profitability deteriorated at someof the group's building maintenance companies due to rising personnel, outsourcing, and other costs. Accordingly, in Japan,
sales grew but profit fell for the group as a whole. Sales from outside the Aeon group showed strong growth. As a result,sales weighting of group and non-group companies was 62.1% and 37.9%, respectively (compared with end-FY02/23, sales
weighting of non-group companies rose 2.3pp YoY).
In facility management operations utilizing digital devices, the company automated routine tasks, such as facility
inspection and report preparation, using cameras and sensors, and established a system for visualizing electricity
consumption of each facility. The company's services were newly adopted by 92 facilities (cumulative total of 263
facilities).
Under the area management model, the company manages multiple facilities by area. The facilities are monitored
remotely and visited regularly. The company realized energy savings and unmanned operation at a total of 46 facilities(cumulative total of 319 facilities), cutting the equivalent of about 51 resident facility management jobs (cumulative totalof 218 jobs). It also reassigned skilled personnel.
The company has developed a proprietary interactive AI system, AI Manager, to improve operational efficiency. The ideaof AI Manager emerged from discussions among younger employees. The system was released in October 2023. The
company has trained the system on internal regulations and manuals to assist back-office operations. Further, it started
using AI Manager on a trial basis to prepare estimates in Construction Work, with the aim of improving the accuracy of
estimates and streamlining related operations. The system has been trained on order and estimate data from different
construction work. The company intends to equip AI Manager with facility management expertise so that it can use thesystem for on-site operations.
The company implemented the following measures aimed at customer-oriented management.
Further strengthen sales activities targeting specific customers: The company aims to expand its market share by
stepping up sales activities. To this end, its branches and offices worked on strengthening their ties with customers to
expand their customized service offerings and win contracts to manage other facilities of existing customers. As aresult, it increased its share of customer wallets. The company also started serving a wider range of facilities,
leveraging its track record and expertise.

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Have on-site workers actively make small-scale repair proposals: In order to make/keep facilities under management
safe/secure, functional, and aesthetically pleasing, the company had its on-site workers at all of its eight branches inJapan actively make small-scale repair proposals. It also had its on-site workers at different branches compete against
each other in terms of the number of proposals and orders, thereby facilitating on-site efforts to make proposals. By
doing so, it worked to expand sales at branches.
Strengthen Construction Work: Amid rising energy costs facing companies and organizations, the company saw
growing demand for energy-saving work and accelerated its efforts to help its customers (mainly large electricity
consumers) make energy-saving improvements to their facilities, such as installing LED lighting and updating air
conditioning and heating equipment. Further, the company actively made renovation/repair proposals for facilities
under management, expanding orders for different construction work.

Segment trends
Facilities Management
Sales: JPY52.4bn (+6.9% YoY)
Operating profit: JPY4.4bn (+3.8% YoY)
Sales and profit grew as the company won new orders for contract management and expanded the number of contracts forvarious maintenance services. Sales from in and outside the group expanded. The parent company enhanced its efforts tomake small-scale proposals, leading to growth in inspection and maintenance work. Sales growth at subsidiary Aeon Delight
Connect contributed to earnings. The company worked to optimize personnel costs while streamlining facility management
operations to improve profitability. Further, it started revising per-contract prices and bringing some maintenance work inhouse to change its cost structure.
Security Services
Sales: JPY38.1bn (+3.3% YoY)
Operating profit: JPY2.4bn (+2.6% YoY)
Sales and profit were up as the company acquired new contracts for security services. Sales from in and outside the groupincreased. Sales from the Aeon group were particularly strong as the company contracted new facilities in line with groupstore openings. It worked on the systematization of store entry and exit management and closing operations to improve
profitability.
Cleaning Services
Sales: JPY52.9bn (+3.5% YoY)
Operating profit: JPY4.0bn (-19.9% YoY)
Sales increased due to growth in renewal contracts. Sales from the Aeon group fell slightly due to sluggish results at theparent. However, sales from non-group companies expanded thanks to strong performance at the parent and overseas(Indonesia and China), as well as the consolidation of askmaintenance. Meanwhile, operating profit dropped due to lower
profitability caused by rising personnel and outsourcing expenses. The company will revise per-contract prices to reflectincreasing costs. It also plans a change in type of contract with customers (to service level agreement [SLA], a form ofcontract based on service outcomes agreed upon between the service provider and the customer) to improve profitability.
Trials are currently underway at five commercial facilities.
Specifically, under the SLA, the company cleaned facilities during the day to streamline hiring and personnel costs, while
improving productivity by using cleaning chemicals and equipment designed for that purpose.
Construction Work
Sales: JPY42.1bn (+10.2% YoY)
Operating profit: JPY3.4bn (+26.3% YoY)
The company strengthened its framework by streamlining operations under the area management strategy. This led to growthin contracts for energy-saving and other works. Further, it improved profitability by optimizing operations and processes. As aresult, sales and profit grew substantially. Sales from the Aeon group declined due to the absence of the year-ago large
construction project. However, sales from outside the group grew sharply thanks to energy-saving work, large repair work,and sales growth at Aeon Delight Connect. The company worked to improve profitability by increasing the accuracy ofAeon Delight 9787
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estimates. For instance, it ensured that contract prices for each construction project reflected increased personnel costs. The
company also increased small-scale repair proposals, leading to higher sales per customer.
Materials and Supplies Sourcing Services
Sales: JPY34.9bn (+12.5% YoY)
Operating profit: JPY1.7bn (+16.7% YoY)
Sales and operating profit increased despite rising raw materials and logistics costs. The company worked to increase its
share within the Aeon group, while passing on material cost increases to selling prices as appropriate. Sales from in andoutside the group expanded, with the former particularly strong. The company negotiated with customers to pass on risingprocurement costs into prices.
Vending Machine Services
Sales: JPY7.3bn (+2.5% YoY)
Operating profit: JPY982mn (+24.1% YoY)
Sales and operating profit rose. The company revised product prices, and secured new sites for installation of vending
machines as a result of enhanced sales activities. Sales from in and outside the group grew. Profitability improved
substantially as the company worked to reflect costs in selling prices as appropriate, while revising fixed costs. The company
focused on marketing new vending machine models, including frozen food vending machines, in pursuit of further business
opportunities.
Support Services
Sales: JPY14.2bn (+5.4% YoY)
Operating profit: JPY409mn (-2.3% YoY)
The company worked on expanding its services to meet outsourcing needs to manage and operate customer facilities andtheir surrounding environment. Sales from outside the group drove segment sales growth. Performance of the travel-related
service also contributed. Higher procurement and personnel costs, as well as inter-segment expense adjustments, depressed
profit.
Overseas business (within each segment)
Sales: JPY26.3bn (+9.2% YoY)
Operating profit: JPY1.1bn (-9.6% YoY)
Sales grew but profit fell in China and the ASEAN region. Earnings from the overseas business are included within eachsegment.
The company steadily grew the China business as its core business company expanded the share of customer wallets andincreased newly acquired facilities centered on medium- to high-end facilities. The subsidiary also participated in theurban development project, resulting in concentrated contracts for facilities management operations. However,profitability declined due to higher personnel expenses. As a result, sales rose but profit dropped. In the China business,the company focuses on expanding sales and market share and actively engages in M&A activities. It intends to improve
profitability by standardizing systems at newly acquired subsidiaries, implementing operational reforms based on its
domestic business, and expanding into areas with growth potential, such as maintenance.
Sales were up in all ASEAN countries in which the company operates. Operating profit in the ASEAN business as a wholedeclined due in part to higher personnel costs resulting from the January 2023 revision of employment laws in Malaysia
and Indonesia. The company plans to lay a foundation for the ASEAN business centered on Vietnam, where the Aeon
group sees growing demand for its stores.
Domestic subsidiaries
Sales from domestic subsidiaries grew, while profit fell due to sluggish performance of building maintenance companies.
That said, Aeon Delight Connect (small to mid-size facility management) and Aeon Compass (travel support) saw theirearnings recover.
Aeon Delight Connect: Sales and profit increased. The subsidiary expanded maintenance and construction contracts forrestaurant chains and convenience stores.
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Aeon Compass: Sales and profit rose. As the flow of people increased, earnings from business trip support services andcorporate travel business remained robust.
Kankyoseibi: Sales grew thanks to new renewal contracts and repair contracts. However, profit declined due to higher
personnel expenses.
Hakuseisha: Sales remained flat YoY, while profit fell due to an increase in personnel expenses.
askmaintenance: Sales and profit increased thanks to growth in new contracts.
Other
Aeon Compass collaborated with an Indonesia-based company to develop a framework that supports foreign nationals'
employment in Japan. The framework focuses on those who speak Japanese and have building cleaning skills. Aeon Compass
has begun accepting specified skilled workers in the building cleaning area. It hired 11 such workers in November 2023,
and plans to hire another 16 in 2024. Going forward, the subsidiary will expand the scope of hiring to include personnel
specializing in other areas.
With the aim of improving capital efficiency and enhancing shareholder returns, the company acquired 150mn shares of its
own stock from October 2022 to July 2023. It cancelled the acquired shares in October 2023.

Measures for Q4 onward
The company will promote the following measures to expand sales.
Increase orders for energy conservation-related construction work, including the switch to LED lights to counter risingenergy costs and replacement of air conditioning and heating equipment.
Strengthen on-site sales efforts to win contracts for small-scale repair work, aiming to make/keep facilities safe/secure,functional, and aesthetically pleasing.
The company will roll out the following measures to improve profitability.
Facilities Management: Improve efficiency of on-site operations to optimize personnel costs. Revise per-contract
prices and bring some maintenance operations in-house to change the cost structure.
Security Services: Achieve energy savings by systemizing entry and exit management and closing operations, andpromote unite price optimization through price negotiations
Materials and Supplies Sourcing Services: Appropriately reflect the increase in the cost of various materials andsupplies in selling prices

Next medium-term management plan
According to the Aeon Delight Integrated Report 2023 published in October 2023, the company is currently preparing its
new medium-term management plan for FY02/25 and beyond. Its basic financial strategy calls for investing decisively insustainable growth while maintaining financial soundness. Based on this policy, the company aims to establish a competitiveedge through aggressive growth investments underpinned by its strong financial base (growth investments planned in suchareas as HR, DX, and M&A). The company expects FY02/24 ROE to fall short of its target. Accordingly, it recognizes
improving profitability as the most pressing issue, and will include necessary strategies and specific measures in its next
medium-term management plan.

1H FY02/24 results
Sales: JPY161.5bn (+9.4% YoY)
Operating profit: JPY7.3bn (+10.0% YoY)
Recurring profit: JPY7.4bn (+12.1% YoY)
Net income attributable to owners of the parent: JPY5.3bn (+22.8% YoY)

Summary
In 1H, sales reached 52.1% of the full-year FY02/24 forecast (48.6% a year ago of the full-year result), operating profit 45.4%(41.7%), recurring profit 46.3% (41.2%), and net income attributable to owners of the parent 51.2% (42.7%).

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Sales increased in all seven segments due to growth in the share of existing customer wallets (in and outside the Aeon
group) and in the number of newly contracted facilities. 1H sales were higher than initially expected. As the company
worked to strengthen its sales capabilities, the number of contracts from non-group companies and organizations increased.
By segment, sales growth in Construction Work and Materials and Supplies Sourcing Services was notable. The company
expanded contracts for energy-saving work in line with rising energy costs in Construction Work, while increasing orders forvarious materials in Materials and Supplies Sourcing Services.
Operating profit grew YoY thanks to sales growth. However, profit fell short of the initial target due to higher costs of sales
caused by rising personnel, raw materials, and logistics expenses. Profit was up in Facilities Management, Security Services,
Construction Work, Materials and Supplies Sourcing Services, and Vending Machine Services, but down in Cleaning andSupport Services. Sales and profit increased for domestic group companies overall, owing to earnings recovery at Aeon
Delight Connect, a core company in small and medium-sized facility management, and Aeon Compass, a group company
engaged in travel-related operations. Sales weighting of group and non-group companies was 62.7% and 37.4%, respectively(compared with end-FY02/23, sales weighting of non-group companies rose 0.8pp YoY).
In efforts to promote digitalization, the company added additional functions to Aeon Delight Platform, a data integration
platform, namely a tool for analyzing transactions by customer industry and building use and a tool for visualizing
progress of planned maintenance and repair work. In facility management operations utilizing digital devices, thecompany automated routine tasks, such as facility inspection and report preparation, using cameras and sensors, andestablished a system for visualizing electricity consumption of each facility. The company's services were newly adopted
by 86 facilities (cumulative total of 257 facilities).
In area management, the company realized energy savings and unmanned operation at a total of 39 facilities (cumulative
total of 312 facilities), cutting the equivalent of about 43 resident facility management jobs (cumulative total of 210 jobs)
and leading to improved cost efficiency.
The company pushed forward with various initiatives set forth at the beginning of the fiscal year to expand its market
share. Specific measures were as follows.
First, the company made progress in further bolstering marketing activities targeting specific customers. It expanded
its service offerings and won contracts to manage other facilities of existing customers. It also made customer-centric
proposals to provide services for a range of facilities.
Second, the company strengthened its building construction work. It saw increased orders for energy conservation
projects by ramping up energy-saving proposals (switching to LED lights, upgrading air conditioning and heating
equipment, etc.).

Segment trends
Facilities Management
Sales: JPY34.6bn (+7.1% YoY)
Operating profit: JPY2.9bn (+1.5% YoY)
Sales from in and outside the Aeon group grew as the company won new orders for contract management and expandedvarious maintenance service contracts. Aeon Delight Connect, Kankyoseibi, and other subsidiaries also contributed torevenue growth. Profit growth slowed as cost of sales increased due to higher outsourced personnel costs. The company
worked to optimize personnel costs while promoting its area management strategy and streamlining facility management
operations to improve profitability. Further, it started revising per-contract prices and bringing some maintenance work inhouse to change its cost structure.
Security Services
Sales: JPY25.4bn (+5.4% YoY)
Operating profit: JPY1.6bn (+9.8% YoY)
Sales were up as the company acquired new security service contracts and expanded safety camera orders. Sales from in andoutside the Aeon group increased, but sales from overseas group companies (mainly China, Vietnam, and Indonesia) grew
more than others. The company also worked on the systematization of store entry and exit management and closing
operations, price optimization through negotiations, and other initiatives aimed at improving profitability. As a result,operating profit increased. However, the company incurred initial costs for newly contracted facilities following new facility

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openings, as it allocated a larger number of security personnel. Further, it saw higher personnel expenses overseas.
Accordingly, Q2 OPM dropped QoQ.
Cleaning Services
Sales: JPY35.2bn (+4.2% YoY)
Operating profit: JPY2.8bn (-16.2% YoY)
Sales increased due to growth in renewal contracts, mainly with external customers. Sales from outside the Aeon group werestrong at the parent company, Indonesia and China businesses, and subsidiary Aeon Delight Connect, boosting segment
sales. In Cleaning Services, the company often outsources its operations. As such, profitability declined due to higher
outsourced and overseas personnel costs, resulting in lower operating profit. The company plans a change in type of contract
with customers (to service level agreement [SLA], a form of contract based on service outcomes agreed upon between theservice provider and the customer) to improve profitability. It is currently under experiment with five commercial facilities. It
is also working to revise per-contract prices.
Construction Work
Sales: JPY28.8bn (+23.4% YoY)
Operating profit: JPY2.4bn (+69.1% YoY)
The company strengthened its framework by streamlining operations under the area management strategy. This led to growthin contracts for various works, including energy-saving work in line with rising energy costs. Further, it improved profitability
by optimizing operations and processes. As a result, sales and profit grew substantially. Sales from in and outside the Aeon
group increased. That said, sales from external customers grew by a wider margin. The company received strong orders forenergy-saving work and store renovation work following tenant changes from group companies. Sales from externalcustomers increased as the parent company contracted energy-saving work and several large projects. Subsidiary Aeon
Delight Connect also contributed to revenue growth.
Q2 OPM was up 0.2pp QoQ to 8.3%. The company does not have a uniform pricing system in Construction Work, making iteasier to pass on rising personnel and parts/materials costs to contract prices. Further, it was able to improve the accuracy ofquotes by using AI and other technologies, resulting in improved profitability.
Materials and Supplies Sourcing Services
Sales: JPY23.0bn (+12.4% YoY)
Operating profit: JPY1.1bn (+12.2% YoY)
Sales from in and outside the Aeon group improved. Amid a rise in raw materials and logistics costs, the company worked toincrease its share within the Aeon group. Sales of packaging materials to external customers expanded. Sales and operating
profit grew as the company passed on material cost increases to selling prices as appropriate. Q2 operating profit declined
slightly QoQ due to sales growth of packaging materials and other low-margin products, and higher logistics costs.
Vending Machine Services
Sales: JPY4.9bn (+2.6% YoY)
Operating profit: JPY650mn (+17.0% YoY)
Sales and operating profit rose. The company secured new sites for installation of vending machines as a result of enhanced
sales activities. Growth in beverage sales due to intense summer heat also contributed. Sales from Aeon group companies
expanded. It focused on marketing new vending machine models, including frozen food vending machines, in pursuit offurther business opportunities. Q2 OPM improved QoQ due to sales volume growth and a greater share of high-margin
original products in the sales mix.
Support Services
Sales: JPY9.6bn (+7.9% YoY)
Operating profit: JPY264mn (-5.4% YoY)
The company worked on expanding its services to meet outsourcing needs to manage and operate customer facilities andtheir surrounding environment. Performance of the travel-related service also contributed to sales growth. Sales from large
companies outside the Aeon group expanded. In Q2, the company incurred one-off expenses for investment in service
development to meet customers' outsourcing demand, in addition to higher procurement and personnel costs.
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Overseas business (within each segment)
Sales: JPY17.3bn (+13.3% YoY)
Operating profit: JPY730mn (-7.7% YoY)
Sales grew but profit fell in China and the ASEAN region. Earnings from the overseas business are included within eachsegment.
The company steadily grew the China business as its core business company expanded the share of customer wallets andincreased newly acquired facilities centered on medium- to high-end facilities. The subsidiary also participated in theurban development project, resulting in concentrated contracts for facilities management operations. However, operating
profit declined due to higher personnel expenses.
Sales were up in all ASEAN countries in which the company operates, as economies that had been stagnant amid the
pandemic began to recover. Operating profit in the ASEAN business as a whole declined due in part to higher personnel
costs resulting from the revision of employment laws in Malaysia.
Other
In April 2023, the company made askmaintenance Co., Ltd. a wholly owned subsidiary. The subsidiary provides cleaning andother services in the Kyushu area, and posted higher sales and profit (consolidated from Q2) due to new contacts.

Measures for Q3 (September–November) onward
The company will promote the following measures to expand sales.
Increase orders for energy conservation-related construction work, including the switch to LED lights to counter risingenergy costs and replacement of air conditioning and heating equipment.
Steadily carry out planned maintenance/repair work to keep facilities safe and secure and aesthetically pleasing, andenhance proposals for small-scale maintenance/repair work
In 1H, the company won energy-saving construction orders worth JPY6.0bn. In 2H, it expects to undertake approximately
JPY3.0bn worth of such work. The company aims to further expand orders by stepping up proposals to individual groupcompanies. It has set targets for the number of small repair contracts, in addition to proposals made to win such contracts,
to strengthen on-site repair proposal capabilities.
The company will roll out the following measures to improve profitability.
Facilities Management: Promote area management strategy and improve efficiency of on-site operations to optimize
personnel costs. Revise per-contract prices and bring some maintenance operations in-house to change the cost
structure.
Security Services: Achieve energy savings by systemizing entry and exit management and closing operations, andpromote unite price optimization through price negotiations
Materials and Supplies Sourcing Services: Appropriately reflect the increase in the cost of various materials andsupplies in selling prices
The company will implement the above measures to achieve the full-year profit target, despite slow progress.
The company expects personnel costs to remain high for the time being. In 2H, it plans to review contract prices inearnest before next contract renewals in Facilities Management, Security Services, and Cleaning Services. The company
will pass on costs to selling prices and increase sales to achieve the full-year profit target.

Q1 FY02/24 results
Sales: JPY79.1bn (+10.2% YoY)
Operating profit: JPY3.4bn (+5.0% YoY)
Recurring profit: JPY3.5bn (+5.7% YoY)
Net income attributable to owners of the parent: JPY2.3bn (+2.4% YoY)

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Summary
Q1 FY02/24 sales increased in all seven segments due to growth in the share of existing customer wallets (in and outside
the Aeon group) and in the number of newly contracted facilities. As the company worked to strengthen its sales capabilities,
the number of contracts from non-group companies and organizations increased, and newly contracted work in FY02/23 also
contributed to results. Sales in Construction Work grew due to the higher number of contracts for various works, including
energy-saving works in line with rising energy costs.
Operating profit grew YoY thanks to sales growth, despite a surge in procurement costs and increased personnel expenses
due to wage revisions. Operating profit increased in Security Services, Construction Work, Materials and Supplies Sourcing
Services, and Vending Machine Services, but fell in Facilities Management, Cleaning, and Support Services. Sales and profit
increased for domestic group companies overall, owing to earnings recovery at Aeon Delight Connect, a core company insmall and medium-sized facility management, and Aeon Compass, a group company engaged in travel-related operations.
Sales weighting of group and non-group companies was 62.7% and 37.4%, respectively (compared with end-FY02/23, sales
weighting of non-group companies rose 0.8pp YoY).
In efforts to promote digitalization, the company added additional functions to Aeon Delight Platform, a data integration
platform, namely a tool for analyzing transactions by customer industry and building use and a tool for visualizing
progress of planned maintenance and repair work. In facility management operations utilizing digital devices, thecompany automated routine tasks, such as facility inspection and report preparation, using cameras and sensors, andestablished a system for visualizing electricity consumption of each facility. The company's services were newly adopted
by 80 facilities (cumulative total of 251 facilities).
In area management, the company realized energy savings and unmanned operation at a total of 16 facilities (cumulative
total of 289 facilities), cutting the equivalent of about 15 resident facility management jobs (cumulative total of 183 jobs)
and leading to improved cost efficiency.
The company pushed forward with various initiatives set forth in the beginning of the fiscal year with the goal of
expanding market share. In particular, it made progress in further bolstering marketing activities targeting specificcustomers (expanded services provided by strengthening relationships with customers, won contracts for the
management of other facilities of existing customers, and began providing services for a range of facilities) andstrengthening building construction work (increased orders for energy conservation-related construction work, andincreased orders for various construction work by actively making renovation and repair proposals).

Progress versus full-year company forecast
Versus the full-year FY02/24 company forecast, Q1 sales were 25.5% (23.6% of full-year results in Q1 FY02/23), operating
profit 21.5% (20.8%), recurring profit 21.8% (20.6%), and net income 22.1% (22.1%). Progress rates in Q1 exceeded those of
Q1 FY02/23.
Progress in operating profit fell short of the initial plan. Cost of sales increased due to higher personnel, raw material, andlogistics expenses. While the company expects the external environment to remain challenging on the profit front, it plansto secure sales in each segment and work on various initiatives to improve earnings.

Segment trends
Facilities Management
Sales: JPY17.1bn (+5.9% YoY)
Operating profit: JPY1.3bn (-2.7% YoY)
Sales grew as the company acquired new contracts for contract management and expanded the number of contracts forvarious maintenance services. However, operating profit fell due to investments in newly contracted facilities and rising
personnel and outsourcing expenses. The company promoted initiatives to expand the area management strategy andreform facilities management operations to improve profitability. However, these efforts could not sufficiently offset the
decline in profitability caused by higher personnel, raw material, and logistics expenses, and the company says it intends tomake up for the delay in profit growth by growing sales with an increase in project numbers.
New contracts from companies or organizations outside the Aeon group were robust. Unit prices rose in tandem with anincrease in expenses in the facility management industry, and some prospective customers changed service providers at thetime of their contract renewal. This trend contributed to increased orders at the company, which has been providing efficient

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services through area management and other measures. Further, the company says by stepping up marketing activities
targeting specific customers (to increase share of wallet), it was able to cultivate customers in a wider range of industries andwin larger contracts.
Security Services
Sales: JPY12.7bn (+6.5% YoY)
Operating profit: JPY833mn (+13.5% YoY)
Sales were up as the company acquired new contracts for security services and expanded the number of contracts for safety
cameras. It also worked on labor-saving measures by systemizing store entry and exit management and closing operations,price optimization through negotiations, and other initiatives aimed at improving profitability. As a result, operating profit
increased. Outside the Aeon group, the company won new orders from the finance and manufacturing industries, as it did in
FY02/23. In FY02/24, the company also received new orders from electronics mass retailers and other retailers. Overseas,
China performed strong thanks to new orders.
Cleaning Services
Sales: JPY17.5bn (+5.4% YoY)
Operating profit: JPY1.5bn (-13.7% YoY)
Sales increased due to growth in renewal contracts, but operating profit fell due to lower profitability caused by rising
personnel expenses. Within the Aeon group, the parent company struggled due to customers' cost reduction measures, but
the environmental improvement-related business of an overseas subsidiary performed strong. Outside the group, Zhejiang
Metelan Property Management, which was consolidated in FY02/23, contributed to results. Further, earnings from major
accounts and performance of subsidiary Aeon Delight Connect were on a recovery track.
The company is planning a change in the type of contract with customers (to service level agreements [SLA], a form ofcontract based on service outcomes agreed upon between the service provider and the customer) to improve profitability.
The new contract is in place with five commercial facilities on a trial basis.
Construction Work
Sales: JPY13.4bn (+30.2% YoY)
Operating profit: JPY1.1bn (+56.9% YoY)
Sales and operating profit grew substantially as the company expanded contracts for various works, including energy-saving
works in line with rising energy costs, in and outside the Aeon group.
Within the group, energy conservation-related construction work was robust, owing to efforts to strengthen energy-saving
proposals such as the switch to LED lights and energy-saving air conditioners. Outside the group as well, air conditioningrelated construction work grew. Improved accuracy of quotes and price optimization through cost negotiations contributed to
profit growth.
Materials and Supplies Sourcing Services
Sales: JPY11.3bn (+10.7% YoY)
Operating profit: JPY630mn (+2.5% YoY)
Sales and operating profit were up despite rising raw materials and logistics costs, as the company worked to increase its
share within the Aeon group. While the company was able to pass on the increase in cost of sales to selling prices in
FY02/23, the ongoing increase in the cost of sales and soaring logistics costs weighed on profitability.
Vending Machine Services
Sales: JPY2.3bn (+5.3% YoY)
Operating profit: JPY258mn (+24.1% YoY)
Sales and operating profit rose. The company secured new sites for installation of vending machines as a result of enhanced
sales activities. Within the Aeon group, sales were robust thanks to new store openings and floor expansion, as well as anincrease in customer footfall. Outside the group, the company stepped up marketing activities targeting specific customers(to increase share of wallet), resulting in an increase in new vending machine installations for existing customers.

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Support Services
Sales: JPY4.9bn (+8.8% YoY)
Operating profit: JPY149mn (-8.3% YoY)
The company worked on expanding its services to meet outsourcing needs to manage and operate customer facilities andtheir surrounding environment. Orders from outside the Aeon group in particular contributed to sales growth. In otherareas, the travel-related business contributed to sales growth. On the profit front, profitability deteriorated due to higher
personnel and outsourcing expenses.
Overseas business (within each segment)
Sales: JPY8.4bn (+17.4% YoY)
Operating profit: JPY330mn (-13.6% YoY)
Sales and profit grew in China and the ASEAN region. Earnings from the overseas business are included within eachsegment.
The company steadily grew the China business as its core business company expanded the share of customer wallets andincreased newly acquired facilities centered on medium- to high-end facilities. The subsidiary also participated in the urban
development project, resulting in concentrated contracts for facilities management operations. However, operating profit
declined due to higher personnel expenses.
Sales were up in all ASEAN countries in which the company operates, as economies that had been stagnant amid the
pandemic began to recover. Operating profit in the ASEAN business as a whole declined due in part to higher personnel
costs resulting from the revision of employment laws in Malaysia, despite higher sales in the country.

Other
As part of its initiatives to form regional economic zones, in April 2023, the company made askmaintenance Co., Ltd. (which
operates cleaning, facility management, condominium management, and construction businesses in the Kyushu area) awholly owned subsidiary.

Measures for Q2 onward
The company will promote the following measures to expand sales.
Increase orders for energy conservation-related construction work, including the switch to LED lights to counter risingenergy costs and replacement of air conditioning and heating equipment.
Steadily carry out planned maintenance/repair work to keep facilities safe and secure and aesthetically pleasing, andenhance proposals for small-scale maintenance/repair work
Execute large projects for which the company has already won orders
Expand share of wallet of existing customers through account management, and cultivate new customers
The company will roll out the following measures to improve profitability.
Facilities Management: improve efficiency of on-site operations
Security Services: achieve energy savings by systemizing entry and exit management and closing operations, andpromote unite price optimization through price negotiations
Cleaning Services: promote unit price optimization by revising specifications
Materials and Supplies Sourcing Services: appropriately reflect the increase in the cost of various materials andsupplies in selling prices

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News and topics
Decision on matters relating to acquisition of treasury shares,
and establishment of multi-stakeholder policy
2024-04-09

Aeon Delight Co., Ltd. has decided upon the specific details of an upcoming acquisition of treasury shares, established amulti-stakeholder policy, and determined candidates for positions as directors and auditors.

Share buyback
Aeon Delight has decided upon the specific details of an upcoming acquisition of treasury shares. Through this acquisition,
the company aims to improve capital efficiency by flexibly executing its capital policy in response to changes in its operating
environment while enhancing shareholder returns.
Total number of shares to be acquired: Up to 700,000 shares (1.44% of total issued shares [excluding treasury stock])
Total acquisition cost: Up to JPY3.1bn
Acquisition period: April 22–December 30, 2024
Acquisition method: Market purchase executed through the Tokyo Stock Exchange in accordance with a discretionary
trading agreement

Multi-stakeholder policy
Aeon Delight has established a multi-stakeholder policy as a guideline for co-creating value and building good relationships
with various stakeholders. The company believes that co-creating value with various stakeholders, including shareholders,
employees, business partners, customers, creditors, and the local community, is an important aspect of corporate
management. Accordingly, it intends to effectively collaborate with these stakeholders. The company aims to appropriately
distribute profits to stakeholders from earnings and results generated through value co-creation and improved productivity,
thereby maintaining wage growth momentum and supporting sustainable economic development. Accordingly, it will pushforward with related initiatives while rewarding employees and ensuring due consideration for business partners.

Decision on candidates for executive positions
At a meeting held on April 9, 2024, Aeon Delight’s Board of Directors decided on candidates for positions as directors andauditors. The company will propose their appointments during its 51st ordinary general meeting of shareholders scheduled
for May 17, 2024.

Certified as Health & Productivity Management Outstanding
Organization 2024
2024-03-12

Aeon Delight Co., Ltd. has been certified by the Nippon Kenko Kaigi as a Health & Productivity Management Outstanding
Organization 2024 (large enterprise category).
Established by the Ministry of Economy, Trade and Industry (METI), the Certified Health & Productivity Management
Outstanding Organization Recognition Program recognizes small, midsize, and large companies with outstanding initiatives
promoting health and productivity management. These initiatives include those addressing regional health issues and healthpromotion measures supported by the Nippon Kenko Kaigi. The company has been certified as a Health & Productivity
Management Outstanding Organization for the second consecutive year. Aeon Delight Academy Co., Ltd., Aeon Compass
Co., Ltd. (large enterprise category), and Aeon Delight Security Co., Ltd. (SME category) have each received thiscertification.
As one of its key measures, Aeon Delight strives to reduce employee illness and create a comfortable working environment,
thereby improving productivity, job satisfaction, and corporate value. The company is working to enhance employee's mental
and physical health by partnering with health insurance associations and providing smoking cessation support, while striving
to create a safe, secure, and vibrant workplace by optimizing working hours and holding seminars on mental health and otherthemes.
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Establishment of a new operating company in Hong Kong andstructural reforms
2024-02-29

Aeon Delight Co., Ltd. sees the Chinese market as a top growth area in Asia and aims to further expand its business in the
country. Accordingly, the company decided to establish a new operating company in Hong Kong and launch operations inMarch 2024. It also announced structural reforms and changes in executive officers and executives.

Establishment of a new operating company in Hong Kong
Hong Kong has become a leading international financial center in Asia. Many Japanese companies, including the Aeon
group, to which Aeon Delight belongs, have operations in the region. In recent years, with the opening of many largecommercial facilities, there has been growing demand for facility management services. By setting up a new company inHong Kong, Aeon Delight aims to expand contracts for managing facilities owned by Japanese companies and local mid- tohigh-end facilities.
The company was among the first in the industry to enter overseas markets. It operates primarily in Asia and aims to become
a global facility management provider. In 2007, it established a company in Beijing, China, a top growth market in Asia.
Suzhou Sufang Property Management (now Aeon Delight [China]) and Wuhan Xiaozhu Property Management, both industry
leaders in China, joined the group in 2012 and 2023, respectively. Having built a business foundation through these efforts,
Aeon Delight now has a network of service bases in many parts of the country, including Beijing, Hebei, Tianjin, Shandong,
Jiangsu, Shanghai, Zhejiang, Hubei, Guangdong, Hunan, Jiangxi, and Liaoning.
Aeon Delight aims to provide services across China. To this end, it is working to strengthen its business foundation andinvestment functions in the country. In 2023, the company reorganized its business to further expand the areas of operationand enhance collaboration between operating companies. As part of this effort, it redefined the role of Aeon Delight(China), positioning the subsidiary to oversee operations in China. By setting up a new company in Hong Kong to expand theareas of operation, the company aims to make facilities in the area and their surrounding environment safe and secure. At
the same time, it intends to further grow its business in China.
Company name: Aeon Delight (Hong Kong)
Representative: Chairman Chen Xiaokang
Head office location: Hong Kong
Date of establishment: March 2024
Business: Facility management and other related services
Capital: HKD3mn

Structural reforms and changes in executive officers and executives
Overview of structural reforms
The company decided to scrap the current management structure comprising 23 managerial positions and divisions andbuild a new structure led by 11 managers. By streamlining the organization, it aims to facilitate communication, consolidate
departments to strengthen cooperation among them, improve operational efficiency, and standardize operations, thereby
optimizing overall operations to improve productivity. With the aim of steadily implementing important measures, thecompany will delegate the authority to make decisions to respective officers in charge. Further, it will establish a dedicateddepartment to facilitate coordination between the headquarters and branches and support the management of branches. The
company will also address management issues by establishing a dedicated department, separate from the HR department, todevelop HR strategies aimed at achieving management goals.
Details of structural reforms (as of March 1, 2024)(1) Positions, divisions, and offices directly reporting to the president
Eliminate the position of officer in charge of marketing DX
Eliminate Quality Control Division, Aeon Group Sales Division, and Construction Work Division under officer incharge of marketing DX to consolidate their functions under the newly appointed officer in charge of business
operations; eliminate IT Division and Sales Division to consolidate their functions to the newly appointed officers incharge of IT and sales

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Rename the position of officer in charge of Materials and Supplies Sourcing Services and Vending Machine Services
to officer in charge of the Materials and Supplies Sourcing Services and Vending Machine Services businesses
Establish the new positions of officer in charge of branches in Eastern Japan and officer in charge of branches inWestern Japan
Eliminate the position of officer in charge of China operations; transfer its function under the newly appointed officer
in charge of overseas operations
Rename the position of officer in charge of group strategies to officer in charge of group management planning
Rename President's Office and ESG Promotion Office to President's Office
Establish the new position of officer in charge of group HR strategies
Eliminate Group Finance and Accounting Division, Group Control Division, Affiliated Companies Division, Group HR& General Affairs Division, Group Hiring and Training Division, and Group Governance Division to consolidate theirfunctions under the newly appointed CFO(2) Under officer in charge of business operations
Establish Quality Control Department, Aeon Group Operations Department, and Construction Work Department(3) Under officer in charge of sales
Establish Customer Success Department
Place Inspection Department(4) Under officer in charge of the Materials and Supplies Sourcing Services and Vending Machine Services businesses
Establish Materials and Supplies Sourcing Services Department and Vending Machine Services Department(5) Under officer in charge of branches in Eastern Japan
Place Hokkaido, Tohoku, Hokuriku Shinetsu, and Kanto branches(6) Under officer in charge of branches in Western Japan
Place Tokai, Kansai, Chugoku Shikoku, and Kyushu braches(7) Under officer in charge of overseas operations
Place COO of China operations and COO of ASEAN operations(8) Under officer in charge of group management planning
Establish Group Strategies Department
Transfer AD Research Institute
Place Business Planning Department(9) Under CFO
Establish Group Finance and Accounting Department, Group Business Management Department, and Group HR &General Affairs Department
See the company release (Japanese only) for changes in executive officers and other employees (as of March 1, 2024).

Credit rating unchanged
2024-02-28

Aeon Delight Co., Ltd. maintained its issuer credit rating of A- from Rating and Investment Information, Inc.

Details
Rating agency: Rating and Investment Information, Inc.
Name: Issuer credit rating
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Rating: A- (unchanged)
Outlook: Stable
The credit rating was published on February 28, 2024. Aeon Delight aims to diversify and stabilize future financing sourcesby having its business and financial condition objectively evaluated by a third party.

Cancellation of treasury shares2023-10-10

Aeon Delight Co., Ltd. announced the cancellation of treasury shares.
Type of shares to be canceled: Aeon Delight common stock
Number of shares to be canceled: 1.5mn shares (2.96% of all issued shares before cancellation)
Planned date of cancellation: October 31, 2023
Total number of issued shares after cancellation: 49,169,633 shares

Launch of AI Manager
2023-09-29

Aeon Delight Co., Ltd. announced the launch of AI Manager, an interactive AI system for employees.
Aeon Delight has developed a proprietary interactive AI system, AI Manager, supported by Microsoft Japan's Azure OpenAI
Service to improve operational efficiency. Some 4,000 employees of the company will start using the system in October
2023. It plans to expand the scope of AI support in stages, starting from back-office operations, while improving usability andenhancing functions. By doing so, it aims to reduce monthly work hours by 1,000 hours YoY from April 2024.

Scope of AI support and expansion plan
First phase (October–December 2023)
The company will release AI Manager trained on internal regulations and manuals to assist back-office operations such as
checking rules and handling applications.
Second phase (December 2023–March 2024)
The company aims to train the system on various facility management/operation methods, incident/accident data, andmanuals on how to respond to them, thereby expanding the scope of AI support to include on-site facility management
operations. It also plans to improve the accuracy of estimates and streamline related operations by training the system onorder and estimate data from different construction work. The company will have its employees actually use the system toimprove its usability and response accuracy.
Third phase (from April 2024)
The company will enhance AI Manager functions to develop the system into a reliable partner for its employees.

Background and outlook
The company has implemented a variety of initiatives to transform its business model. For instance, it has developed a data
coordination platform, Aeon Delight Platform, which collects, analyzes, and processes information from inside and outsidefacilities under management. It has also promoted an area management strategy as a new facility management model, while
using cameras and sensors to streamline on-site operations.
Under its FY2023 slogan of "Envision the future," the company in January 2023 launched a project where younger
employees in their 20s and 30s discuss themes such as new business creation and business model reform. The idea of AI
Manager emerged through repeated discussions among these younger employees. Going forward, the company will use
generative AI to provide more accurate solutions to customer issues. To this end, it will explore integrating generative AI
into the Aeon Delight Platform.

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Profile
Company Name

Head Office

Aeon Delight Co., Ltd.

Teitokanda Building. 1-1-1 Kandanishiki-cho, Chiyoda-ku, Tokyo,
Japan 101-0054

Phone
Listed On

03-4360-3558

Tokyo Stock Exchange, Prime Market
EstablishedExchange Listing

1972-11-16

1995-09-29
Fiscal Year-End
Feb

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About Shared Research Inc.
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