Research Coverage Report by Shared Research Inc.

9787

Aeon Delight
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Coverage initiated on: 2013-06-06
Last update: 2023-01-25

INDEX
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.
Key financial indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
Recent updates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.
Trends and outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.
Quarterly trends and results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.
FY02/23 company forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20...
Medium- and long-term outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23..
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28..
Business description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28..
Business overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28..
Strengths and weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34..
Market and value chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34..
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38..
Income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38..
Balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39..
Statement of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40...
ROE and dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41...
Other information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42..
Historical financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46..
News and topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73..
Company profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76..

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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 streamline overall facility costs and generate rationalization benefits for thecustomer. Aeon Delight is more than 50% owned by the Aeon group. Aeon is a large retailing group, comprising more than
300 Japanese and overseas companies and generating group sales of more than JPY8tn. In FY02/22, Aeon Delight derived
64.4% of its sales from transactions within the group.
Looking at performance by segment, in FY02/22 Facilities Management accounted for 19.4% of total sales and 22.7% of
operating profit. The corresponding figures were 14.9% and 14.2% for Security Services, 21.1% and 33.4% for Cleaning
Services, 13.5% and 14.8% for Construction Work, 17.8% and 10.6% for Materials and Supplies Sourcing Services, 8.3% and2.5% for Vending Machine Services, and 5.0% and 1.8% for Support Services. Customers from outside the Aeon group
include commercial facilities, office buildings and offices, hotels and accommodation facilities, medical and welfare facilities,
education facilities, factories and workshops, warehouses and distribution centers, government offices, and events. The
company operates a recurring revenue business model. Contracts typically last for one year and are usually renewed,
maintaining low cancellation rates.
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 members of
the Aeon group. Overseas operations accounted for 7.8% of sales in FY02/22. The company uses a three-pronged growthstrategy 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 Central and South China to boost the Aeon Delight brand profile.

Trends and outlook
For FY02/22, the company reported sales of JPY317.7bn (+5.9% YoY), operating profit of JPY15.7bn (+3.3% YoY), recurring
profit of JPY15.8bn (+3.4% YoY), and net income attributable to owners of the parent of JPY10.7bn (-8.7% YoY). Sales rose YoY
in all seven segments, and operating profit was up in all but two (Construction Work and Vending Machine Services). The
Cleaning Services segment saw increases in sales and profit and buoyed overall performance. This segment benefited fromthe pandemic, as the company was called upon to clean entire facilities with alcohol disinfectant whenever someone there
tested positive for COVID-19. In the Construction Work segment, sales rose but profit fell. Sales benefited from orders forrestoration work related to the Fukushima Prefecture Offshore earthquake in February 2021. However, various construction
projects were postponed or scaled back due to the pandemic. Despite an extraordinary gain associated with the sale of fixed
assets at a subsidiary, net income attributable to owners of the parent declined YoY due to higher income taxes. The annual
dividend was JPY84.0/share (payout ratio of 39.4%).
The company forecast for FY02/23 calls for sales of JPY310.0bn (-2.4% YoY), operating profit of JPY17.0bn (+8.1% YoY),
recurring profit of JPY17.0bn (+7.7% YoY), net income attributable to owners of the parent of JPY10.7bn (+0.3%), EPS of
JPY213.9, and annual dividends per share of JPY85.0 (payout ratio of 39.7%). The expected YoY decline in sales is due to theapplication from FY02/23 of the new Accounting Standard for Revenue Recognition. The company’s sales forecast equates toa 9.3% YoY increase in sales under the previous accounting standard. The company expects COVID-19 to have a JPY800mn
negative effective on operating profit. Even so, the company forecasts YoY increases in operating profit and all accounting
line items below that point due to higher sales and efforts to reduce costs.
The company released its Aeon Delight Vision 2025 plan. This aims to make Aeon Delight a company that createsenvironmental 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.
In April 2021, the company formulated a medium-term plan covering the next three years (FY02/22–FY02/24) as it moves
toward achieving the goals of Aeon Delight Vision 2025. The medium-term plan targets FY02/24 sales of JPY361.0bn(CAGR of 6.4%), operating profit of JPY22.0bn (CAGR of 13.0%), and net income attributable to owners of the parent of
JPY14.0bn. By FY02/24, the company aims to increase sales within the Aeon group by JPY25.0bn versus FY02/21 to
JPY220.0bn (60% of total sales, -5pp versus FY02/21), while growing sales outside the Aeon group by JPY35.0bn to
JPY140.0bn (40% of total sales, +5pp versus FY02/21) and raising OPM to 6.0% (+0.9pp versus FY02/21). The company
intends to raise the dividend payout ratio to the 40% level by FY02/24.

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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

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Est.

248,876

256,654

265,572

277,926

292,607292,396

302,915

308,582

300,085

317,657

310,000
-2.4%

YoY

13.2%

3.1%

3.5%

4.7%

5.3%

-0.1%

3.6%

1.9%

-2.8%

5.9%

Gross profit

30,22733,24534,29034,83635,73634,87135,452

38,57037,17539,498

YoY

5.6%

10.0%

3.1%

1.6%

2.6%

-2.4%

1.7%

8.8%

-3.6%

6.2%

Gross profit margin

12.1%

13.0%

12.9%

12.5%

12.2%

11.9%

11.7%

12.5%

12.4%

12.4%

Operating profit

FY02/23

13,901

14,622

15,39014,556

14,13912,90913,03016,001

15,23015,73317,000

YoY

1.0%

5.2%

5.3%

-5.4%

-2.9%

-8.7%

0.9%

22.8%

-4.8%

3.3%

8.1%

Operating profit margin

5.6%

5.7%

5.8%

5.2%

4.8%

4.4%

4.3%

5.2%

5.1%

5.0%

5.5%

13,892

14,60015,472

14,534

14,263

13,381

13,362

15,94915,26815,78917,000

YoY

0.8%

5.1%

6.0%

-6.1%

-1.9%

-6.2%

-0.1%

19.4%

-4.3%

3.4%

7.7%

Recurring profit margin

5.6%

5.7%

5.8%

5.2%

4.9%

4.6%

4.4%

5.2%

5.1%

5.0%

5.5%

Net income

7,509

7,039

7,965

7,247

7,093

6,397

6,415

9,348

11,680

10,665

10,700

YoY

8.6%

-6.3%

13.2%

-9.0%

-2.1%

-9.8%

0.3%

45.7%

24.9%

-8.7%

0.3%

Net margin

3.0%

2.7%

3.0%

2.6%

2.4%

2.2%

2.1%

3.0%

3.9%

3.4%

3.5%

Shares issued (year-end; '000)

54,17054,17054,17054,17054,17054,17054,17054,17054,17054,170

EPS

143.2

134.2

151.7

138.0

135.0

121.7

122.9

187.2

233.7

213.3

EPS (fully diluted)

142.7

133.8

151.3

137.6

134.6

121.3

122.6

186.9

233.5

213.1

Recurring profit

Per-share data

Dividend per share

46

48

50

52

55

61

63

65

82

84

Book value per share

1,202

1,303

1,400

1,471

1,559

1,637

1,466

1,579

1,747

1,891

213.9
85

Balance sheet (JPYmn)
Cash and cash equivalents

10,014

12,565

15,58020,386

31,71739,53644,23362,35559,773

68,282

Total current assets

79,32389,914

103,634

104,190111,098

118,311

108,771

112,362

110,008

121,013

Tangible fixed assets

3,796

4,258

4,361

7,061

9,064

10,041

10,161

9,671

9,481

7,080

Investments and other assets

5,257

5,829

6,268

8,176

8,904

8,512

7,578

7,698

11,557

9,111

Intangible assets

12,321

11,008

10,32010,006

8,802

7,813

8,103

7,185

5,518

5,653

Total assets

100,699

111,010

124,584

129,434

137,870

144,678

134,614

136,917

136,565

142,859

Accounts payable

24,544

21,87624,93428,457

25,11425,82025,967

23,38822,17022,070

Short-term debt

10

5

-

-

271

225

394

252

299

247

34,95539,30946,63945,83447,05149,06051,40848,864

44,12343,892

5

-

-

-

293

-

15

11

-

-

Total fixed liabilities

1,195

1,556

2,387

3,925

6,214

6,474

7,667

6,767

4,160

3,544

Total liabilities

36,15140,86549,02649,76053,26655,53559,07555,631

48,28347,437

Total net assets

64,547

70,14575,55879,67484,604

89,14375,53981,28688,281

95,421
12,598

Total current liabilities
Long-term debt

Cash flow statement(JPYmn)
Cash flows from operating activities-4,35821,35917,234

10,303

11,703

13,56812,373

7,371

10,403

Cash flows from investing activities

7,086-16,632-11,365-3,2552,233-2,666

12,256

13,838-7,325-386

Cash flows from financing activities-2,257-2,475-2,594-2,821-2,400-3,264-19,686-3,392-5,324-4,572Financial ratios
Total interest-bearing debt

15

5

-

-

564

225

409

263

299

247

Net cash

28,01944,98056,90657,74862,866

71,311

59,82462,09259,474

68,035

ROA (RP-based)

14.4%

13.8%

13.1%

11.4%

10.7%

9.5%

9.6%

11.7%

11.2%

11.3%

ROE

12.5%

10.7%

11.2%

9.6%

8.9%

7.6%

8.1%

12.3%

14.1%

11.7%

Equity ratio

62.6%

61.6%

59.0%

59.7%

59.4%

59.5%

54.4%

57.6%

64.0%

66.2%

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.

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Recent updates
Plans for stock grants to employees via employee shareholding
association
2022-12-26

Aeon Delight Co., Ltd. announced plans to make stock grants to employees via its employee shareholding association.
In commemoration of the 50-year anniversary of the company’s founding, Aeon Delight decided to make stock grants to its
employees and the employees of its domestic subsidiaries via its employee shareholding association (hereinafter, theprogram).
Purpose of the program
On the 50-year anniversary of its founding, the company is looking to increase the awareness of all employees of theimportance of their individual contributions to the running of its business by offering them the opportunity to acquire sharesin the company.
This follows the share buybacks the company has been engaged in since October 2022 as a way of making additional returns
to shareholders. With employees being an important stakeholder in the company, the program offering each an opportunity
to acquire the company's stock is aimed at boosting employee loyalty and commitment to growing earnings going forward.
Employee share grants under the program
In commemoration of the 50-year anniversary of its founding, the company plans an incentive award in the form of 30 sharesof its common stock to members of its employee shareholding association, described below. The stock grant will be includedin the company’s budget for FY2023.
Name: Aeon Delight Employee Stockholding Association
Address: 1-1-1 Kandanishiki-cho, Chiyoda-ku, Tokyo
Association chairman: Shigeki Higashi
Number of Aeon Delight shares held: 527,000 (as of August 31, 2022)
Ownership stake in Aeon Delight: 1.05% (of shares outstanding)Aeon Delight awarded Excellent Facility Management Award
2022-12-15

Aeon Delight Co., Ltd. announced that it had been named as the recipient of Excellent Facility Management Award at the17th Japan Facility Management Awards.
Sponsored by the Japan Facility Management Association, the award is made to companies and organizations in recognitionof excellence in facility management. In its naming of Aeon Delight as the recipient of Excellent Facility Management Award,
the association cited in particular the DX-inspired layout of the new head office building into which the company had moved
in August 2021.

Release of Aeon Delight Integrated Report 2022
2022-11-04

On November 2, 2022, Aeon Delight Co., Ltd. announced the release of Aeon Delight Integrated Report 2022.
The report provides information on the progress of the company's medium-term plan for 2021–2023, the history of thecompany on its 50th anniversary, and the results of scenario analysis per recommendations from the Task Force on ClimateRelated Financial Disclosures (TCFD).
Aeon Delight Integrated Report 2022 can be viewed here (Japanese only).

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Trends and outlook
Quarterly trends and results
Quarterly results (after application of the Accounting Standard for Revenue Recognition)
Cumulative(JPYmn)FY02/21 (previous accounting standards)

FY02/22 (new accounting standards)

FY02/23 (new accounting standards)

Q1

Q1-Q2

Q1-Q3

Q1-Q4

Q1

Q1-Q2

Q1-Q3

Sales

73,532

149,734

224,398

300,085

71,146

146,580

215,261

YoY

-7.0%

-4.9%

-3.5%

-2.8%

-

-

-

0.9%

0.7%

5.4%

Gross profit

8,963

18,23927,561

37,175

9,765

20,462

29,832

9,745

19,60630,291

-7.7%

-5.0%

Q1

Q1-Q2

Q1-Q3

71,786

147,660

226,833

YoY

-6.9%

-3.6%

8.9%

8.2%

-0.2%

Gross profit margin

12.2%

12.2%

12.3%

12.4%

13.7%

14.0%

13.9%

13.6%

13.3%

13.4%

SG&A expenses

5,507

10,73816,347

21,945

6,036

12,035

17,9796,462

13,004

19,473

YoY

-5.6%

-3.9%

-3.3%

-2.8%

9.6%

12.1%

10.0%

7.1%

8.1%

8.3%

SG&A ratio

7.5%

7.2%

7.3%

7.3%

8.5%

8.2%

8.4%

9.0%

8.8%

8.6%

Operating profit

3,455

7,500

11,214

15,230

3,728

8,427

11,852

3,282

6,602

10,818YoY-9.1%-12.7%

-7.4%

-4.8%

7.9%

12.4%

5.7%

-12.0%-21.7%-8.7%

Operating profit margin

4.7%

5.0%

5.0%

5.1%

5.2%

5.7%

5.5%

4.6%

4.5%

4.8%

Recurring profit

3,459

7,496

11,245

15,268

3,751

8,489

11,943

3,300

6,602

11,001

YoY-9.5%-13.4%

-7.7%

8.4%

13.2%

6.2%

-12.0%-22.2%

-7.9%

-4.3%

12.2%

Q1-Q4

-4.2%

FY02/23

Q1-Q4% of Est.

FY Est.

73.2%

310,000
-2.4%

1.5%

63.6%

17,000
8.1%
5.5%

64.7%

17,00066.9%

10,700

7.7%

Recurring profit margin

4.7%

5.0%

5.0%

5.1%

5.3%

5.8%

5.5%

4.6%

4.5%

4.8%

Net income

2,991

3,943

6,326

11,680

2,507

5,557

8,495

2,246

4,336

7,163

YoY

44.5%

-23.9%-14.2%

24.9%-16.2%

40.9%

34.3%

-10.4%-22.0%-15.7%

0.3%

Net margin

4.1%

2.6%

2.8%

3.9%

3.5%

3.8%

3.9%

3.1%

2.9%

3.2%

3.5%

Quarterly(JPYmn)FY02/21 (previous accounting standards)

FY02/22 (new accounting standards)

5.5%

FY02/23 (new accounting standards)

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q1

Q2

Q3

Sales

73,532

76,202

74,66475,687

71,14675,434

68,681

71,78675,874

79,173

YoY

-7.0%

-2.8%

-0.7%

-0.3%

-

-1.0%

-8.0%

Q4

0.9%

0.6%

15.3%

Gross profit

8,963

9,276

9,322

9,614

9,765

10,697

9,370

9,745

9,861

10,685

YoY

-6.9%

-8.4%

0.8%

0.6%

8.9%

15.3%

0.5%

-0.2%

-7.8%

14.0%

Gross profit margin

12.2%

12.2%

12.5%

12.7%

13.7%

14.2%

13.6%

13.6%

13.0%

13.5%

SG&A expenses

5,507

5,231

5,609

5,598

6,036

5,999

5,944

6,462

6,542

6,469

YoY

-5.6%

-2.0%

-2.3%

-1.1%

9.6%

14.7%

6.0%

7.1%

9.1%

8.8%

SG&A ratio

7.5%

6.9%

7.5%

7.4%

8.5%

8.0%

8.7%

9.0%

8.6%

Q4

8.2%

Operating profit

3,455

4,045

3,714

4,016

3,728

4,699

3,425

3,282

3,320

4,216

YoY

-9.1%

-15.6%

5.8%

3.1%

7.9%

16.2%

-7.8%

-12.0%-29.3%

23.1%

Operating profit margin

4.7%

5.3%

5.0%

5.3%

5.2%

6.2%

5.0%

4.6%

4.4%

5.3%

Recurring profit

3,459

4,037

3,749

4,023

3,751

4,738

3,454

3,300

3,302

4,399

YoY

-9.5%

-16.5%

6.1%

7.0%

8.4%

17.4%

-7.9%

-12.0%-30.3%

27.4%

Recurring profit margin

4.7%

5.3%

5.0%

5.3%

5.3%

6.3%

5.0%

4.6%

4.4%

5.6%

Net income

2,991

952

2,383

5,354

2,507

3,050

2,938

2,246

2,090

2,827

YoY

44.5%

-69.4%

8.9%

170.5%-16.2%

220.4%

23.3%-10.4%-31.5%-3.8%

Net margin

4.1%

1.2%

3.2%

7.1%

3.5%

4.0%

4.3%

3.1%

2.8%

3.6%

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.
YoY comparison for FY02/23 sales (based on the new accounting standards) was made against FY02/22 results retroactively adjusted to reflect the new accounting standards.

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(Reference) Quarterly results (previous accounting standards)
Cumulative(reference)

FY02/21 (previous accounting standards)(JPYmn)FY02/22 (previous accounting standards)

FY02/23 (previous accounting standards)

Q1

Q1-Q2

Q1-Q3

Q1-Q4

Q1

Q1-Q2

Q1-Q3

Q1-Q4

Q1

Q1-Q2

Q1-Q3

Sales

73,532

149,734

224,398

300,085

79,688

163,907240,715317,657

80,183

165,312

253,020

YoY

-7.0%

-4.9%

-3.5%

-2.8%

8.4%

9.5%

7.3%

5.9%

0.6%

0.9%

5.1%

Gross profit

8,963

18,23927,561

37,175

9,765

20,462

29,83239,498

9,745

19,60630,291

YoY

-6.9%

-7.7%

-5.0%

-3.6%

8.9%

12.2%

8.2%

6.2%

-0.2%

-4.2%

1.5%

Gross profit margin

12.2%

12.2%

12.3%

12.4%

12.3%

12.5%

12.4%

12.4%

12.2%

11.9%

12.0%

SG&A expenses

5,507

10,73816,347

21,945

6,036

12,035

17,97923,764

6,462

13,004

19,473

YoY

-5.6%

-3.9%

-3.3%

-2.8%

9.6%

12.1%

10.0%

8.3%

7.1%

8.1%

Q1-Q4

FY02/23% of Est.

FY Est.

63.6%

17,000

8.3%

SG&A ratio

7.5%

7.2%

7.3%

7.3%

7.6%

7.3%

7.5%

7.5%

8.1%

7.9%

7.7%

Operating profit

3,455

7,500

11,214

15,230

3,728

8,427

11,852

15,733

3,282

6,602

10,818YoY-9.1%-12.7%

-7.4%

-4.8%

7.9%

12.4%

5.7%

3.3%

-12.0%-21.7%-8.7%

Operating profit margin

4.7%

5.0%

5.0%

5.1%

4.7%

5.1%

4.9%

5.0%

4.1%

4.0%

4.3%

Recurring profit

3,459

7,496

11,245

15,268

3,751

8,489

11,943

15,789

3,300

6,602

11,001

YoY-9.5%-13.4%

-7.7%

-4.3%

8.4%

13.2%

6.2%

3.4%

-12.0%-22.2%-7.9%

Recurring profit margin

4.7%

5.0%

5.0%

5.1%

4.7%

5.2%

5.0%

5.0%

4.1%

4.0%

4.3%

Net income

2,991

3,943

6,326

11,680

2,507

5,557

8,495

10,665

2,246

4,336

7,163

44.5%

-23.9%-14.2%

24.9%-16.2%

40.9%

34.3%

-8.7%

-10.4%-22.0%-15.7%

0.3%

4.1%

2.6%

2.8%

3.9%

3.1%

3.4%

3.5%

3.4%

2.8%

2.6%

2.8%

-

YoY
Net margin
Quarterly(reference)

FY02/21 (previous accounting standards)(JPYmn)FY02/22 (previous accounting standards)

8.1%
64.7%

17,000
7.7%
-

66.9%

10,700FY02/23 (previous accounting standards)

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Sales

73,532

76,202

74,66475,687

79,68884,21976,80876,94280,18385,12987,708

YoY

-7.0%

-2.8%

-0.7%

-0.3%

8.4%

10.5%

2.9%

1.7%

0.6%

1.1%

14.2%

Gross profit

8,963

9,276

9,322

9,614

9,765

10,697

9,370

9,666

9,745

9,861

10,685

YoY

-6.9%

-8.4%

0.8%

0.6%

8.9%

15.3%

0.5%

0.5%

-0.2%

-7.8%

14.0%

Gross profit margin

12.2%

12.2%

12.5%

12.7%

12.3%

12.7%

12.2%

12.6%

12.2%

11.6%

12.2%

SG&A expenses

5,507

5,231

5,609

5,598

6,036

5,999

5,944

5,785

6,462

6,542

6,469

YoY

-5.6%

-2.0%

-2.3%

-1.1%

9.6%

14.7%

6.0%

3.3%

7.1%

9.1%

8.8%

SG&A ratio

7.5%

6.9%

7.5%

7.4%

7.6%

7.1%

7.7%

7.5%

8.1%

7.7%

7.4%

Operating profit

3,455

4,045

3,714

4,016

3,728

4,699

3,425

3,881

3,282

3,320

4,216

YoY

-9.1%

-15.6%

5.8%

3.1%

7.9%

16.2%

-7.8%

-3.4%

-12.0%-29.3%

23.1%

Operating profit margin

4.7%

5.3%

5.0%

5.3%

4.7%

5.6%

4.5%

5.0%

4.1%

3.9%

Q4

4.8%

Recurring profit

3,459

4,037

3,749

4,023

3,751

4,738

3,454

3,846

3,300

3,302

4,399

YoY

-9.5%

-16.5%

6.1%

7.0%

8.4%

17.4%

-7.9%

-4.4%

-12.0%-30.3%

27.4%

Recurring profit margin

4.7%

5.3%

5.0%

5.3%

4.7%

5.6%

4.5%

5.0%

4.1%

3.9%

5.0%

Net income

2,991

952

2,383

5,354

2,507

3,050

2,938

2,170

2,246

2,090

2,827

YoY

44.5%

-69.4%

8.9%

170.5%-16.2%

220.4%

23.3%-59.5%-10.4%-31.5%-3.8%

Net margin

4.1%

1.2%

3.2%

7.1%

3.1%

3.6%

3.8%

2.8%

2.8%

2.5%

3.2%

Source: Shared Research based on company materials
Note: The company adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) from FY02/23, but above table shows FY02/23 sales
based on the previous accounting standards.

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

FY02/21 (previous accounting standards)

Cumulative (JPYmn)

FY02/22 (new accounting standards)

Q1

Q1-Q2

Q1-Q3

Q1-Q4

Q1

Q1-Q2

Q1-Q3

Sales

73,532

149,734

224,398

300,085

71,146

146,580

215,261

YoY

-7.0%

-4.9%

-3.5%

-2.8%

-

-

Facilities Management

14,511

29,086

43,831

58,223

15,51131,011

YoY

-2.8%

-1.8%

-1.0%

-0.1%

-

-

Security Services

10,843

21,69532,96644,393

11,63823,645

FY02/23 (new accounting standards)
Q1-Q4

Q1

Q1-Q2

Q1-Q3

71,786

147,660

226,833

0.9%

0.7%

5.4%

46,492

16,131

32,25149,003

-

4.0%

4.0%

5.4%

35,422

11,934

24,12436,909

YoY

-2.7%

-2.2%

-1.0%

-0.6%

7.3%

9.0%

7.5%

2.5%

2.0%

4.2%

Cleaning Services

15,00830,42746,08562,45916,56834,10650,47016,57633,76951,130

YoY

-2.6%

-1.6%

-0.9%

0.2%

10.4%

12.1%

9.5%

0.0%

-1.0%

1.3%

Construction Work

11,52322,12031,02640,657

11,205

24,776

33,697

10,282

23,35038,207

YoY

-4.1%

-4.3%

-3.1%

-2.8%

-2.8%

12.0%

8.6%

-8.2%

-5.8%

13.4%

Materials and Supplies Sourcing

12,957

26,60939,64653,060

9,908

20,22230,150

10,205

20,46530,994

YoY

-0.2%

2.7%

2.8%

3.8%

-

-

-

3.0%

1.2%

2.8%

Vending Machine Services

4,725

12,054

19,05725,453

2,201

4,766

6,952

2,199

4,780

7,084

YoY

-38.6%-25.0%-19.8%-19.3%

-

-

-

-0.1%

0.3%

1.9%

Support Services

3,963

7,739

11,784

15,837

4,113

8,055

12,090

4,456

8,918

13,503

YoY-18.7%-19.8%-17.1%-15.6%

4.1%

2.6%

10.7%

11.7%

Operating profit

5,417

7,500

11,214

15,230

3,728

8,427

11,852

3,282

6,602

10,818

YoY

42.6%-12.7%

-7.4%

-4.8%

-31.2%

3.8%

12.4%

5.7%

-12.0%

8.3%-21.7%-8.7%

Operating profit margin

7.4%

5.0%

5.0%

5.1%

5.2%

5.7%

5.5%

4.6%

4.5%

4.8%

Facilities Management

1,256

2,549

3,916

5,175

1,275

2,622

4,038

1,372

2,825

4,269

YoY

5.7%

-12.4%

-8.6%

-3.0%

-2.2%

1.5%

2.9%

3.1%

7.6%

7.7%

Operating profit margin

8.7%

8.8%

8.9%

8.9%

8.2%

8.5%

8.7%

8.5%

8.8%

8.7%

Security Services

763

1,594

2,387

3,307

796

1,702

2,596

733

1,443

2,307

4.5%

12.9%

8.8%

-7.9%

-15.2%-11.1%

YoY

8.2%

8.9%

4.3%

6.8%

Operating profit margin

7.0%

7.3%

7.2%

7.4%

6.8%

7.2%

7.3%

6.1%

6.0%

Cleaning Services

1,646

3,430

5,340

7,324

1,974

4,276

6,172

1,681

3,328

5,036

YoY

-4.5%

-2.3%

0.9%

5.1%

19.9%

24.7%

15.6%

-14.8%-22.2%-18.4%

6.3%

Operating profit margin

11.0%

11.3%

11.6%

11.7%

11.9%

12.5%

12.2%

10.1%

9.9%

9.8%

Construction Work

1,139

2,081

2,879

3,880

1,067

2,250

2,861

694

1,405

2,714

YoY

4.1%

-4.3%

1.3%

1.7%

-6.3%

8.1%

-0.6%

-35.0%-37.6%-5.1%

Operating profit margin

9.9%

9.4%

9.3%

9.5%

9.5%

9.1%

8.5%

6.7%

6.0%

7.1%

Materials and Supplies Sourcing

612

1,284

1,851

2,467

656

1,362

1,932

615

994

1,455

YoY

-14.0%

-5.2%

-4.9%

-0.9%

7.2%

6.1%

4.4%

-6.3%

-27.0%-24.7%

Operating profit margin

4.7%

4.8%

4.7%

4.6%

6.6%

6.7%

6.4%

6.0%

4.9%

4.7%

Vending Machine Services

-10

357

563

653

116

353

414

208

556

791

-

-49.4%-40.6%-53.2%--1.1%-26.5%

79.3%

57.5%

91.1%
11.2%

YoY
Operating profit margin

-0.2%

3.0%

3.0%

2.6%

5.3%

7.4%

6.0%

9.5%

11.6%

Support Services

8

-100

-171

-75

119

255

330

162

279

419

YoY

-

-

-

-

-

-

-

36.1%

9.4%

27.0%

Operating profit margin

0.2%

-1.3%

-1.5%

-0.5%

2.9%

3.2%

2.7%

3.6%

3.1%

3.1%

Eliminations, goodwill, other-1,959-3,695-5,551-7,502-2,277-4,394-6,491-2,183-4,228-6,173

Segment performance

FY02/21 (previous accounting standards)

FY02/22 (new accounting standards)

Q1-Q4

FY02/23 (new accounting standards)

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Quarterly (JPYmn)
Sales

Q1

Q2

Q3

Q4

Q1

Q2

Q3

73,532

76,202

74,66475,687

71,14675,434

68,681

Q4

Q1

Q2

Q3

71,78675,874

79,173

YoY

-7.0%

-2.8%

-0.7%

-0.3%

-

-1.0%

-8.0%

0.9%

0.6%

15.3%

Facilities Management

14,511

14,575

14,745

14,392

15,511

15,500

15,482

16,131

16,12016,752

YoY

-2.8%

-0.9%

0.8%

2.6%

-

-

-

4.0%

4.0%

8.2%

Security Services

10,843

10,852

11,271

11,427

11,63812,007

11,777

11,934

12,19012,785

YoY

-2.7%

-1.7%

1.3%

0.7%

7.3%

10.6%

4.5%

2.5%

1.5%

8.6%

Cleaning Services

15,00815,41915,65816,374

16,56817,53816,364

16,576

17,19317,361

YoY

-2.6%

-0.7%

0.4%

3.4%

10.4%

13.7%

4.5%

0.0%

-2.0%

6.1%

Construction Work

11,523

10,597

8,906

9,631

11,205

13,571

8,921

10,282

13,06814,857

YoY

-4.1%

-4.4%

-0.2%

-1.9%

-2.8%

28.1%

0.2%

-8.2%

-3.7%

66.5%

Materials and Supplies Sourcing

12,957

13,652

13,037

13,414

9,908

10,314

9,927

10,205

10,26010,529

6.7%

-

-

-

3.0%

-0.5%

6.1%

Vending Machine Services

YoY

4,725

7,329

7,003

6,396

2,201

2,565

2,186

2,199

2,581

2,304

YoY

-38.6%-0.2%-12.5%

5.6%

-8.9%

3.1%

-17.8%

-

-

-

-0.1%

0.6%

5.4%

Support Services

3,963

3,776

4,045

4,053

4,113

3,942

4,035

4,456

4,462

4,585

YoY

13.6%

-18.7%-20.9%-11.4%-11.1%

3.8%

4.4%

-0.2%

8.3%

13.2%

Operating profit

5,417

2,083

3,714

4,016

3,728

4,699

3,425

3,282

3,320

4,216

YoY

42.6%

-56.5%

5.8%

3.1%-31.2%

125.6%-7.8%-12.0%-29.3%

23.1%

Operating profit margin

2.7%

5.0%

5.3%

5.2%

6.2%

5.0%

4.6%

4.4%

5.3%

Facilities Management

1,256

1,293

1,367

1,259

1,275

1,347

1,416

1,372

1,453

1,444

YoY

-12.4%

7.4%

-4.6%

9.4%

0.4%

1.5%

4.2%

3.6%

7.6%

7.9%

2.0%

Operating profit margin

8.7%

8.9%

9.3%

8.7%

8.2%

8.7%

9.1%

8.5%

9.0%

8.6%

Security Services

763

831

793

920

796

906

894

733

710

864

YoY

4.5%

21.8%

-0.3%

10.7%

4.3%

9.0%

12.7%

-7.9%

-21.6%-3.4%

Operating profit margin

7.0%

7.7%

7.0%

8.1%

6.8%

7.5%

7.6%

6.1%

5.8%

6.8%

Cleaning Services

1,646

1,784

1,910

1,984

1,974

2,302

1,896

1,681

1,647

1,708
-9.9%

YoY

-4.5%

-0.1%

7.2%

18.4%

19.9%

29.0%

-0.7%

-14.8%-28.5%

Operating profit margin

11.0%

11.6%

12.2%

12.1%

11.9%

13.1%

11.6%

10.1%

9.6%

Construction Work

1,139

942

798

1,001

1,067

1,183

611

694

711

1,309

YoY

4.1%

-12.8%

19.3%

2.9%

-6.3%

25.6%

-23.4%-35.0%-39.9%

114.2%

Operating profit margin

9.9%

8.9%

9.0%

10.4%

9.5%

8.7%

6.8%

6.7%

5.4%

8.8%

Materials and Supplies Sourcing

612

672

567

616

656

706

570

615

379

461

-14.0%

4.5%

-4.1%

13.4%

7.2%

5.1%

0.5%

-6.3%

-46.3%-19.1%

YoY
Operating profit margin

4.7%

4.6%

6.6%

-10

367

206

90

116

237

61

208

348

235

-

-18.3%-15.2%-79.9%--35.4%-70.4%

79.3%

46.8%

285.2%

-0.2%

5.0%

2.9%

1.4%

5.3%

9.2%

2.8%

9.5%

13.5%

10.2%

Support Services

8

-108

-71

96

119

136

75

162

117

140

YoY

-

-

-

-

-

-

-

36.1%

-14.0%

86.7%

0.2%

-2.9%

-1.8%

2.4%

Operating profit margin

Operating profit margin

4.9%

4.3%

Eliminations, goodwill, other

6.8%

5.7%

6.0%

9.8%

Vending Machine Services
YoY

Q4

3.7%

4.4%

2.9%

3.5%

1.9%

3.6%

2.6%

3.1%

-2,277-2,118-2,098-2,183-2,045-1,945

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.
Consolidated, Facilities Management, Materials and Supplies Sourcing Services, and Vending Machine Services sales for FY02/22 were retroactively adjusted to reflect the
new accounting standards.

(Reference) Quarterly results by segment (previous accounting standards)
Segment performance(reference)
Cumulative (JPYmn)

FY02/21 (previous accounting standards)

FY02/22 (previous accounting standards)

FY02/23 (previous accounting standards)

Q1

Q1-Q2

Q1-Q3

Q1-Q4

Q1

Q1-Q2

Q1-Q3

Q1-Q4

Q1

Q1-Q2

Q1-Q3

Sales

73,532

149,734

224,398

300,085

79,688

163,907240,715317,657

80,183

165,312

253,020

YoY

-7.0%

-4.9%

-3.5%

-2.8%

8.4%

9.5%

7.3%

5.9%

0.6%

0.9%

5.1%

Facilities Management

14,511

29,086

43,831

58,223

15,50731,006

46,47461,53816,09432,296

48,731

YoY

-2.8%

-1.8%

-1.0%

-0.1%

6.9%

6.6%

6.0%

5.7%

3.8%

4.2%

4.9%

Security Services

10,843

21,69532,96644,393

11,63823,64535,422

47,23911,934

24,12436,909

YoY

-2.7%

-2.2%

-1.0%

-0.6%

7.3%

9.0%

7.5%

6.4%

2.5%

2.0%

4.2%

Cleaning Services

15,00830,42746,08562,45916,56834,10650,47066,963

16,57633,76951,130

YoY

-2.6%

-1.6%

-0.9%

0.2%

10.4%

12.1%

9.5%

7.2%

0.0%

-1.0%

1.3%

Construction Work

11,52322,12031,02640,657

11,205

24,776

33,69743,015

10,282

23,35038,207

YoY

-4.1%

-4.3%

-3.1%

-2.8%

-2.8%

12.0%

8.6%

5.8%

-8.2%

-5.8%

13.4%

Materials and Supplies Sourcing

12,957

26,60939,64653,06014,126

28,77942,771

56,497

14,50029,24344,268

YoY

-0.2%

2.7%

2.8%

3.8%

9.0%

8.2%

7.9%

6.5%

2.6%

1.6%

3.5%

Vending Machine Services

4,725

12,054

19,05725,453

6,529

13,535

19,78926,353

6,338

13,60820,269YoY-38.6%-25.0%-19.8%-19.3%

38.2%

12.3%

3.8%

3.5%

-2.9%

0.5%

2.4%

Support Services

3,963

7,739

11,784

15,837

4,113

8,055

12,09016,049

4,456

8,918

13,503

YoY-18.7%-19.8%-17.1%-15.6%

3.8%

4.1%

2.6%

1.3%

10.7%

11.7%

Operating profit

3,455

7,500

11,214

15,230

3,728

8,427

11,852

15,733

3,282

6,602

10,818YoY-9.1%-12.7%

-7.4%

-4.8%

7.9%

12.4%

5.7%

3.3%

-12.0%

8.3%-21.7%-8.7%

Operating profit margin

4.7%

5.0%

5.0%

5.1%

4.7%

5.1%

4.9%

5.0%

4.1%

4.0%

4.3%

Facilities Management

1,256

2,549

3,916

5,175

1,275

2,622

4,038

5,495

1,372

2,825

4,269

YoY

5.7%

-12.4%

-8.6%

-3.0%

-2.2%

1.5%

2.9%

3.1%

6.2%

7.6%

7.7%

Operating profit margin

8.7%

8.8%

8.9%

8.9%

8.2%

8.5%

8.7%

8.9%

8.5%

8.7%

8.8%

Security Services

763

1,594

2,387

3,307

796

1,702

2,596

3,435

733

1,443

2,307

4.5%

12.9%

3.9%

-7.9%

-15.2%-11.1%

YoY

8.2%

8.9%

4.3%

6.8%

8.8%

Operating profit margin

7.0%

7.3%

7.2%

7.4%

6.8%

7.2%

7.3%

7.3%

6.1%

6.0%

Cleaning Services

1,646

3,430

5,340

7,324

1,974

4,276

6,172

8,106

1,681

3,328

5,036

YoY

-4.5%

-2.3%

0.9%

5.1%

19.9%

24.7%

15.6%

10.7%

-14.8%-22.2%-18.4%

6.3%

Operating profit margin

11.0%

11.3%

11.6%

11.7%

11.9%

12.5%

12.2%

12.1%

10.1%

9.9%

9.8%

Construction Work

1,139

2,081

2,879

3,880

1,067

2,250

2,861

3,583

694

1,405

2,714

YoY

4.1%

-4.3%

1.3%

1.7%

-6.3%

8.1%

-0.6%

-7.7%

-35.0%-37.6%-5.1%

Operating profit margin

9.9%

9.4%

9.3%

9.5%

9.5%

9.1%

8.5%

8.3%

6.7%

6.0%

7.1%

Materials and Supplies Sourcing

612

1,284

1,851

2,467

656

1,362

1,932

2,560

615

994

1,455

YoY

-14.0%

-5.2%

-4.9%

-0.9%

7.2%

6.1%

4.4%

3.8%

-6.3%

-27.0%-24.7%

Operating profit margin

4.7%

4.8%

4.7%

4.6%

4.6%

4.7%

4.5%

4.5%

4.2%

3.4%

3.3%

Vending Machine Services

-10

357

563

653

116

353

414

608

208

556

791

-

-49.4%-40.6%-53.2%--1.1%-26.5%

-6.9%

79.3%

57.5%

91.1%
3.9%

YoY
Operating profit margin

-

3.0%

3.0%

2.6%

1.8%

2.6%

2.1%

2.3%

3.3%

4.1%

Support Services

8

-100

-171

-75

119

255

330

441

162

279

419

YoY

-

-

-

-

-

-

-

-

36.1%

9.4%

27.0%

0.2%

-

-

-

Eliminations, goodwill, other-1,959-3,695-5,551-7,502

Segment performance

Operating profit margin

FY02/21 (previous accounting standards)

2.9%

3.2%

2.7%

2.7%

-2,277-4,394-6,491-8,497

FY02/22 (previous accounting standards)

Q1-Q4

3.6%

3.1%

3.1%

-2,183-4,228-6,173

FY02/23 (previous accounting standards)

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Quarterly (JPYmn)
Sales

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

73,532

76,202

74,66475,687

79,68884,21976,80876,94280,18385,12987,708

YoY

-7.0%

-2.8%

-0.7%

-0.3%

8.4%

10.5%

2.9%

1.7%

0.6%

1.1%

14.2%

Facilities Management(previous accounting standards)

14,511

14,575

14,745

14,392

15,507

15,49915,46815,06416,094

16,202

16,435

YoY
Security Services
YoY
Cleaning Services
YoY
Construction WorkYoY
Materials and Supplies Sourcing(previous accounting standards)
YoY

-2.8%

-0.9%

0.8%

2.6%

6.9%

6.3%

4.9%

4.7%

3.8%

4.5%

6.3%

10,843

10,852

11,271

11,427

11,63812,007

11,777

11,817

11,934

12,19012,785

-2.7%

-1.7%

1.3%

0.7%

7.3%

10.6%

4.5%

3.4%

2.5%

1.5%

8.6%

15,00815,41915,65816,374

16,56817,53816,364

16,493

16,576

17,19317,361

-2.6%

-0.7%

0.4%

3.4%

10.4%

13.7%

4.5%

0.7%

0.0%

-2.0%

6.1%

11,523

10,597

8,906

9,631

11,205

13,571

8,921

9,318

10,282

13,06814,857

-4.1%

-4.4%

-0.2%

-1.9%

-2.8%

28.1%

0.2%

-3.2%

-8.2%

-3.7%

66.5%

12,957

13,652

13,037

13,414

14,126

14,653

13,992

13,726

14,50014,74315,025-0.2%

Vending Machine Services(previous accounting standards)
YoY
Support Services
YoY

7.3%

2.3%

2.6%

0.6%

7.4%

4,725

7,329

7,003

6,396

6,529

7,006

6,254

6,564

6,338

7,270

6,661

-38.6%-12.5%

5.6%

-8.9%

3.1%

-17.8%

6.7%

38.2%

9.0%

-4.4%

7.3%

-10.7%

2.6%

-2.9%

3.8%

6.5%

3,963

3,776

4,045

4,053

4,113

3,942

4,035

3,959

4,456

4,462

4,585
13.6%

-18.7%-20.9%-11.4%-11.1%

3.8%

4.4%

-0.2%

-2.3%

8.3%

13.2%

Operating profit

3,455

4,045

3,714

4,016

3,728

4,699

3,425

3,881

3,282

3,320

4,216

YoY

-9.1%

-15.6%

5.8%

3.1%

7.9%

16.2%

-7.8%

-3.4%

-12.0%-29.3%

23.1%

Operating profit margin

4.7%

Facilities Management
YoY
Operating profit margin
Security Services
YoY
Operating profit margin
Cleaning Services

5.3%

5.0%

5.3%

4.7%

5.6%

4.5%

5.0%

4.1%

3.9%

4.8%

1,256

1,293

1,367

1,259

1,275

1,347

1,416

1,457

1,372

1,453

1,444

-12.4%

-4.6%

9.4%

0.4%

1.5%

4.2%

3.6%

15.7%

7.6%

7.9%

2.0%

8.7%

8.9%

9.3%

8.7%

8.2%

8.7%

9.2%

9.7%

8.5%

9.0%

8.8%

763

831

793

920

796

906

894

839

733

710

864

4.5%

21.8%

-0.3%

10.7%

4.3%

9.0%

12.7%

-8.8%

-7.9%

-21.6%

-3.4%

7.0%

7.7%

7.0%

8.1%

6.8%

7.5%

7.6%

7.1%

6.1%

5.8%

6.8%

1,646

1,784

1,910

1,984

1,974

2,302

1,896

1,934

1,681

1,647

1,708
-9.9%

YoY

-4.5%

-0.1%

7.2%

18.4%

19.9%

29.0%

-0.7%

-2.5%

-14.8%-28.5%

Operating profit margin

11.0%

11.6%

12.2%

12.1%

11.9%

13.1%

11.6%

11.7%

10.1%

9.6%

1,139

942

798

1,001

1,067

1,183

611

722

694

711

1,309

YoY

4.1%

-12.8%

19.3%

2.9%

-6.3%

25.6%

-23.4%-27.9%-35.0%-39.9%

114.2%

Operating profit margin

9.9%

8.9%

9.0%

10.4%

9.5%

8.7%

6.8%

7.7%

6.7%

5.4%

8.8%

612

672

567

616

656

706

570

628

615

379

461

-14.0%

4.5%

-4.1%

13.4%

7.2%

5.1%

0.5%

1.9%

-6.3%

-46.3%-19.1%

Construction Work

Materials and Supplies Sourcing
YoY
Operating profit margin

4.7%

4.6%

4.6%

-10

367

206

90

116

237

61

194

208

348

235

-

-18.3%-15.2%-79.9%--35.4%-70.4%

115.6%

79.3%

46.8%

285.2%

-0.2%

5.0%

2.9%

1.4%

1.8%

3.4%

1.0%

3.0%

3.3%

4.8%

3.5%

8

-108

-71

96

119

136

75

111

162

117

140

-

-

-

-

-

-

-

15.6%

36.1%

-14.0%

86.7%

Operating profit margin
Support Services
YoY

4.9%

4.3%

4.8%

4.1%

4.6%

4.2%

2.6%

9.8%

Vending Machine Services
YoY

Q4

3.1%

Operating profit margin

0.2%

-2.9%

-1.8%

2.4%

2.9%

3.5%

1.9%

2.8%

3.6%

2.6%

3.1%

Eliminations, goodwill, other-1,959-1,736-1,856-1,951-2,277-2,117-2,097-2,006-2,183-2,045-1,945

Cumulative Q3 FY02/23 results
Sales: JPY226.8bn (+5.4% YoY, +5.1% YoY based on the previous accounting standard)
Operating profit: JPY10.8bn (-8.7% YoY)
Recurring profit: JPY11.0bn (-7.9% YoY)
Net income attributable to owners of the parent: JPY7.2bn (-15.7% YoY)
The company adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) effective
Q1 FY02/23. As a result, revenue recognition standard was changed for some operations of the Facilities Management,
Materials and Supplies Sourcing Services, and Vending Machine Services segments. The adoption of the new accounting
standard reduced cumulative Q3 sales and cost of sales by JPY26.2bn each. Meanwhile, operating profit, recurring profit, andpre-tax profit increased JPY34mn each due to applying the new standard. The balance of retained earnings at the beginningof the fiscal year decreased JPY1.1bn.
YoY comparisons in this report have been calculated after retroactively applying the new accounting standard to FY02/22
results.
Sales
Sales were up 5.4% YoY. Sales increased in all seven segments due to an increase in the share of existing customer wallets
on the back of strengthened account management and sales activities, an increase in newly contracted facilities, andlessened impact from the COVID-19 pandemic. In particular, from 2H FY02/23, Construction Work has been awarded an
expanded number of contracts for various works, including restoration-related works following the March 2022 Fukushima
earthquake, resulting in YoY sales growth.
Looking at the current industry environment, rising energy costs and other factors have prompted customers to reassess theiroutsourcing contractors as part of cost-cutting measures. Against this backdrop, the company is seeing an increase in thenumber of new contracts in the form of a switch from competitors in the same industry. This comes because the company isable to reduce total outsourcing costs through all-at-once outsourcing of its Facilities Management, Security Services, andCleaning Services, thereby earning a reputation from customers for its operational quality.
Operating profit
Operating profit was JPY10.8bn (-8.7% YoY).

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Gross profit: Gross profit grew 1.5% YoY to JPY30.3bn, with the GPM down 0.5pp YoY to 13.4%. GPM declined in
Cleaning Services, Security Services, and Materials and Supplies Sourcing Services. In Cleaning Services, GPM fell in
cumulative Q3 FY02/23 in reaction to the elevated demand seen a year ago for relatively high-margin services, such as
disinfectant cleaning for facilities that had been exposed to COVID-19. In Security Services, GPM declined as demand for
security cameras (so-called surveillance cameras), which are high-margin products, declined. In Materials and Supplies
Sourcing Services, a rise in procurement costs driven by soaring raw material and logistics costs depressed GPM.
SG&A expenses: SG&A expenses were JPY19.5bn (+8.3% YoY), and the SG&A ratio was 8.6% (+0.2pp YoY). The rise in
SG&A expenses was attributed to upfront expenditures including capital, personnel, and digitalization investments thecompany made as initially planned. In particular, the company has strengthened its investment in systems to promote area
management (detailed below).
Net income attributable to owners of the parent
Net income attributable to owners of the parent fell due to a decline in operating profit. Non-operating income/expenses
and extraordinary gains/losses had only a marginal impact on earnings.

Progress versus full-year company forecast
Versus the full-year FY02/23 company forecast, cumulative Q3 sales were 73.2% (75.8% of full-year results in cumulative Q3
FY02/22, based on the previous accounting standard), operating profit 63.6% (75.3%), recurring profit 64.7% (75.6%), andnet income 66.9% (79.7%).
Sales were largely in line with plan, while profits somewhat lagged the plan. In Cleaning Services, orders for high-margin
alcohol sanitizing and cleaning services were stagnant, while procurement costs rose in Materials and Supplies Sourcing
Services. Although the company stepped up efforts to improve profitability in each of its businesses, there was an effect fromCOVID-19, the Russia–Ukraine crisis, and other external factors, which caused a decline in operating profit of JPY860mn.
Initiatives aimed at achieving full-year targets
The company aims to grow sales in all segments for the full year by strengthening proposal-based sales. At the same time, itwill work to improve profitability.
Energy saving proposals: The company will strengthen proposals highlighting energy-saving benefits in Construction
Work. Specifically, it will make proposals that can contribute to reducing energy costs and environmental burden,
including switching over to LED lighting and upgrading air conditioners, as well as the sale of non-CFC cases, forcommercial facilities with high electricity demand, amid rising electricity and other energy costs due to soaring crude oil
prices. Through these measures, the company aims to expand earnings. In particular, the company will strengthen its
proposals to the Aeon group, which is stepping up investment in energy conservation, aiming to win projects andcomplete construction within FY02/23. The enhanced energy-saving proposals are expected to contribute to sales not
only in FY02/23 but also in FY02/24 and beyond.
Proposals to meet safety, security, and aesthetic demand: In Construction Work, the company will propose safetymeasures for facilities, such as the installation of U-shaped poles in parking lots of commercial facilities to prevent
vehicles from crashing into stores. It will also make other proposals to enhance safety and security of facilities, aimed atpreventing accidents and preparing them for a natural disaster.
Minor repair projects: In Facility Management, Construction Work, and Cleaning Services, the company will step up
efforts to make proposals for minute, detailed work (minor repairs, cleaning, etc.) necessary for facility maintenance andmanagement. By focusing on making proposals related to energy savings, safety and security, compliance, and hygiene,
the company aims to enhance the closing rate, or the probability of its proposals being accepted by customers. Minor
repair work refers to irregular, small, detailed work for contracted facilities. While sales per project are small for theminor repair work compared with other contracted projects, many are highly profitable and orders are frequent, andhence are expected to contribute to earnings and profitability growth.
Profitability improvement: In Facilities Management, Aeon Delight will promote labor saving by reducing the number of
personnel assigned to customer facilities through area management, and in Security Services, the company will promotelabor saving by systematizing entry/exit management and store closure operations. In Materials and Supplies Sourcing
Services, it will continue negotiations to improve the efficiency of logistics costs and pass on rising costs to sales prices.

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Strengthening collaboration with domestic subsidiaries: Aeon Delight Connect Co., Ltd. (main customers are restaurant
chains, convenience stores, and drug stores), Hakuseisha Co., Ltd. (department stores), and Kankyouseibi Co., Ltd. are themain subsidiaries in the building maintenance business. With energy costs rising, the subsidiaries are struggling with
impacts from the external environment, such as major customers working to reduce costs by holding down outsourcing
costs. Under these circumstances, the company's main management has strengthened its involvement in the managementof these subsidiaries and is promoting initiatives to exert synergy effects by collaborating with them in sales andoperations.

Main initiatives in FY02/23
Made a Chinese subsidiary an investment company
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.
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 acquisitions.
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.
Collaboration with Kao Professional Services Co., Ltd.
In October 2022, the company announced the start of collaboration with Kao Professional Services Co., Ltd. to develop the
new Infectious Disease Risk Assessment Service, with the aim of supporting companies and organizations in the prevention of
infectious diseases.
Kao Professional Services: A wholly owned subsidiary of Kao Corporation (TSE Prime: 4452), a major daily goods
manufacturer in Japan. Kao Professional Services manufactures and sells products and provides consulting services forhygiene management for operators of restaurants, hospitals and long-term care facilities, and hotels.
Collaboration overview: Kao Professional Services will utilize its knowledge of infection risk assessment developed
through its hygiene management business. Aeon Delight will leverage its expertise and service development capabilities
accumulated through providing cleaning solutions to customers. The two companies aim to develop a new service
through which they assess hygiene risks and provide solutions based on behavioral analysis in various situations, including
public spaces and living areas.
Share buyback and grant of shares to employees
In October 2022, the company announced a share buyback. As of the end of December 2022, it had acquired 349,300
shares. The share buyback was in line with the company's goal of improving capital efficiency through implementing aflexible capital policy in response to changes in the business environment and enhancing shareholder returns.
Type of shares to be acquired: Common stock of the company
Total number of shares to be acquired: 1,500,000 shares (maximum; 3.00% of shares outstanding, excluding treasury
stock)
Total value of shares to be acquired: JPY5.3bn (maximum)
Period of acquisition: October 5, 2022 to October 4, 2023
Aeon Delight has decided to grant its shares to employees of the company and its domestic group companies through theemployees stockholding association, with the aim of raising employees' awareness of participation in management. It
aims to increase employees' commitment and loyalty toward the company's performance.

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Quarterly results
Q1 FY02/23: Sales were JPY71.8bn (+0.9% YoY), and operating profit was JPY3.3bn (-12.0% YoY). The decline inoperating profit was attributed to an increase in SG&A expenses, as the company incurred upfront costs—including
capital, personnel, and digitalization investments—as initially planned. By segment, sales grew in Facilities Management,
Security Services, Cleaning Services, Materials and Supplies Sourcing Services, and Support Services. Operating profit
increased in Facilities Management, Vending Machine Services, and Support Services.
Q2 FY02/23: Sales amounted to JPY75.9bn (+0.6% YoY) while operating profit dipped 29.3% YoY to JPY3.3bn. The drop
in operating profit was due to an increase in SG&A expenses as the company continued to incur upfront costs in the formof capital, personnel, and digitalization investments as it did in Q1. By segment, sales fell in Cleaning Services due to a
falloff in demand for cleaning services using alcohol disinfectants, and sales were also down in Materials and Supplies
Souring Services. Meanwhile, sales grew in Vending Machine Services owed to extreme heat. Operating profit rose in
Facilities Management and Vending Machine Services. The rate of decline in operating profit widened in Security
Services, Cleaning Services, and Construction Work due to sluggish demand for high-margin services. Operating profit
also fell by a greater margin in Materials and Supplies Sourcing Services due to higher procurement costs.
Q3 FY02/23: Sales were JPY79.2bn (+15.3% YoY) and operating profit was JPY4.2bn (+23.1% YoY). As in 1H FY02/23,
SG&A expenses rose due to upfront investments. Still, operating profit grew YoY as sales growth offset higher SG&A
expenses. Sales increased in all seven segments. Facilities Management and Vending Machine Services maintained an
upward trend in profit. Construction Work and Support Services posted turned profitable on the back of significant
growth in sales. Security Services, Cleaning Services, and Materials and Supplies Sourcing Services continued to see
declines in profits, but the margin of decline narrowed.

Segment trends
In Q3 FY02/23, sales increased YoY in all seven segments. Operating profit grew in Facilities Management, Vending
Machine Services, and Support Services, while it fell in Security Services, Cleaning Services, Construction Work, andMaterials and Supplies Sourcing Services.

Facilities Management
Sales grew 5.4% YoY to JPY49.0bn (+4.9% YoY based on the previous accounting standard), and operating profit
increased 5.7% YoY to JPY4.3bn.
Sales and profit in the segment grew YoY due to an increased share of wallets, driven by growth in renewal contracts and inorders for various maintenance services. With the expansion of the customer base, sales and profit increased versus
cumulative Q3 FY02/20, before the outbreak of COVID-19.
Aeon group stores as well as non-group (manufacturers, financial institutions) facilities contracted in FY02/22 contributed to
the full-year sales. In addition, the company continued to win new contracts for Aeon group stores and non-group facilities in
China in FY02/23. The company's share of existing customer wallets increased, in part due to its account management
initiatives. Also contributing to the increased share of wallets were new contracts for retailers and manufacturers that operate
multiple outlets, company stores, factories, and offices of corporate customers.
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.
In terms of profits, while costs are trending upward, the company worked to improve profitability by reducing the number of
personnel assigned to customer facilities through area management and cutting outsourcing costs by reviewing,
consolidating, and negotiating prices with facility inspectors.
Quarterly results
Sales were up 4.0% YoY in 1H and 8.2% YoY in Q3, showing signs of a recovery trend. New facilities contracted in FY02/22
and FY02/23 contributed to the increase. Operating profit increased 7.7% YoY in 1H and 2.0% YoY in Q3. The company

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attributed the weaker YoY growth in Q3 versus 1H to seasonality and changes in accounting standards, and maintains thatprofitability has not actually deteriorated.
Full-year outlook
Both sales and operating profit were in line with plan, and are expected to land in a range close to the company's initial
forecast for FY02/23. In Q4, the company will continue to strengthen its sales efforts aimed at winning new contracts and its
efforts to improve profitability.
Initiatives in Facilities Management
Account management: Instead of communicating with customers on a business basis as in the past, the company now
appoints account managers for key clients and centrally manages customer information across businesses. It was able toexpand transaction volume by deepening account managers' understanding of customers and various industries, andmade progress in improving customer satisfaction and referring customers to other segments. It is working to provide
services across the segments in a single package (for example, Construction Work carries out an order associated with
Facilities Management), and to provide the same services regardless of region to clients operating nationwide. These
efforts have contributed to the company's increased share of wallets.
Area management: 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 to automate on-site management tasks and save labor. In addition to setting up such a system, thecompany adopted an area management strategy, which involves the sharing of facility management personnel in a given
area with reference to customers' needs and attributes of each facility and region, and this led to cost reductions throughlabor savings and automation. The company first introduced the strategy primarily for Aeon Retail stores among theseveral thousand facilities under contract. As of end-Q3 FY02/23, 269 facilities (versus 178 at end-FY02/22)
implemented the area management strategy, with facility management personnel down by 156 (115). The company plans
to introduce area management at more than 360 Aeon group facilities by end-FY02/24. Following upfront investments,
the company expects profitability to improve from FY02/24 as the number of facilities under area management grows.

Security Services
Sales were up 4.2% YoY to JPY36.9bn, while operating profit fell 11.1% YoY to JPY2.3bn.
Sales increased YoY, driven by an increase in the number of customer companies as the company won new contracts forgovernment buildings, commercial facilities, and condominiums among others in China. In Japan, lower orders of safety
cameras for the Aeon group adversely affected sales. Meanwhile, newly contracted facilities, including new Aeon groupstores and non-Aeon group facilities (automakers, hospitals, hotels, commercial complexes, and business centers of financial
institutions), and facilities contracted in 2H FY02/22 contributed to sales growth. As in Facilities Management and Cleaning
Services, the number of new contractors increased as a result of switching from other companies in the industry. The
company captured a larger share of customer wallets and acquired new customers through reinforcing account management.
Operating profit fell YoY. Profitability deteriorated in cumulative Q3 due to lower orders of high-margin safety cameras in
1H. Aeon group is striving to cut costs amid the pandemic, and as one of its cost-cutting measures, it is refraining from
replacing or installing additional security cameras. Under these circumstances, to improve profitability, the company
continued negotiations to optimize unit prices and worked to automate systems to handle tasks such as facility entry/exit
management and store opening/closing.
Sales and profit ware up versus cumulative Q3 FY02/20, before the outbreak of COVID-19, due to the expanding customer
base.
Quarterly results
Sales were up 2.0% YoY in 1H and 8.6% YoY in Q3, showing stronger growth. Operating profit was down 15.2% YoY in 1H and3.4% YoY in Q3. The YoY profit decline narrowed in Q3 versus 1H as Q3 orders of safety cameras showed signs of recovery
following the deterioration in 1H.
Full-year outlook
Both sales and operating profit were somewhat below projections. The company will continue efforts to improve profitability.

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Cleaning Services
Sales were up 1.3% YoY to JPY51.1bn, while operating profit declined 18.4% YoY to JPY5.0bn.
Sales increased YoY. 1H FY02/22 saw a rise in demand for disinfectant cleaning, quarantine-related cleaning, and special
cleaning services, which contributed to the increase in sales. Such demand declined in 1H FY02/23, but the segment saw
growth in renewal contracts, particularly with commercial facilities and medical institutions. Operating profit declined YoY
due to a decreased in demand for high-margin alcohol disinfectant cleaning services, upfront investments to improveoverseas working conditions, and higher outsourcing and cleaning staff personnel expenses in Japan and overseas.
Sales from the Aeon group were sluggish in reaction to increased demand for special cleaning services a year ago, whilesales from outside the group grew due to an upsurge in new contracts in China and Japan.
Versus cumulative Q3 FY02/20, before the outbreak of COVID-19, sales increased but profit decreased. Overseas
investment to improve working environments decreased profit. The company expects profitability to improve as price passthrough progresses.
Quarterly results
In FY02/23, sales declined 1.0% YoY in 1H, but increased 6.1% YoY in Q3. Operating income declined 22.2% YoY in 1H and
9.9% YoY in Q3, narrowing the margin of decline. In 1H, sales and profit decreased in reaction to an increase in demand foralcohol disinfection and cleaning services 1H FY02/22, but the reaction diminished in Q3.
Full-year outlook
The company expects higher full-year sales YoY due to contributions from newly acquired facilities with recurring contracts incumulative Q3. However, both sales and operating profit were slightly below projections. Aeon Delight will propose
healthcare solutions outside the Aeon group (financial institutions, manufacturers, retail stores, hospitals, and other facilities),
offering special cleaning services such as New Standard Cleaning, a cleaning method for maintaining a hygienic, attractive
environment developed based on the company's proprietary cleaning services previously provided to hospitals. In addition,
the company will strengthen account management for introduction to major companies and expand areas where it can win
contracts.

Construction Work
Sales rose 13.4% YoY to JPY38.2bn, and operating profit fell 5.1% YoY to JPY2.7bn.
Sales rose YoY. Although sales were negatively impacted by deferments and postponements of construction and delays in the
procurement of materials and equipment, they grew as the company won orders for restoration-related work following theearthquake. Versus cumulative Q3 FY02/20, before the outbreak of COVID-19, sales were up but operating profit was down.
Operating profit fell YoY. OPM declined on higher material prices and a decrease in orders for minor repair andmaintenance works with high margins. In FY02/23, Aeon Delight established a department specializing in estimating
construction costs. The accuracy of estimates is improving, and cost negotiations are making progress, leading to improved
profitability.
Quarterly results
Sales were down 5.8% YoY in 1H but up 66.5% YoY in Q3. Operating profit was down 37.6% YoY in 1H but up 114.2% YoY in
Q3.
1H saw delays in some construction work due to shortages and delayed procurement of construction materials, such as parts
and air conditioning equipment, against a backdrop of the COVID-19 pandemic and the Russian invasion of Ukraine. Further,orders declined as some retailers cut back on their capital spending in light of uncertainties in the external environment andsoaring electricity and other costs. Orders were also hurt by customers' cancellation or postponement of capex plans, as wellas their cutting back on minor repair and maintenance works. In addition, orders for large-scale construction projects withlower margins were a factor in the OPM decline.
In Q3 FY02/23, the same impact as in 1H continued. However, sales and profit grew in Q3 as the company recorded most of
the earnings from restoration-related work for Aeon group stores damaged by the earthquake that occurred off the coast of
Fukushima Prefecture in March 2022. In addition, the completion in Q3 of some of the construction work that had been
delayed or postponed in 1H also contributed to higher sales and profit.
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Full-year outlook
Sales and operating profit were on par with the forecast, and the company expects full-year results to grow YoY. The company
expects projects delayed in 1H to contribute to earnings in the full-year. Earnings from the earthquake restoration-related
construction had been booked by Q3. It intends to step up efforts to offer services that can contribute to lowering electricity
costs and environmental burden, including LED lighting and automatic air-conditioning control services, as well as selling
non-CFC cases, for commercial facilities with high electricity demand amid rising electricity costs.
On the profit front, the company is seeing an increase in material prices. It will continue to work to reduce costs byenhancing the accuracy of its construction cost estimates and by strengthening cost negotiations. It will also strengthen efforts
to acquire high-margin construction projects.

Materials and Supplies Sourcing Services
Sales grew 2.8% YoY to JPY31.0bn (+3.5% YoY based on the previous accounting standard), while operating profit fell
24.7% YoY to JPY1.5bn.
Sales increased YoY. Sales in and outside the Aeon goup increased. The company strengthened sales efforts targeting the
Aeon group to increase share within the group. It expanded business with companies that have newly joined the Aeon
group: Fuji Retailing Co., Ltd. (TSE Prime: 8278), which runs supermarkets in the Chugoku/Shikoku region, and Can Do Co.,
Ltd. (TSE Standard: 2698), which has a nationwide chain of 100-yen shops. 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.
Operating profit declined YoY. Profitability deteriorated due to higher purchase costs for packaging and other materials
driven by hikes in crude oil prices, raw materials prices, and logistics costs, which were not passed on to customers. Under
these circumstances, the company continued to streamline logistics and other expenses, while seeking to adjust prices inaccordance with rising costs.
Versus cumulative Q3 FY02/20, before the outbreak of COVID-19, sales increased but profit decreased.
Quarterly results
Sales were up 1.2% YoY in 1H and 6.1% YoY in Q3, showing stronger growth. Operating profit was down 27.0% in 1H and
19.1% in Q3, narrowing the margin of decline. From Q3, the company began to pass on higher procurement costs tocustomers.
Full-year outlook
Sales were as planned, but operating profit was below expectations. There was a delay in price negotiations aimed at passing
on higher costs to customers. The negotiations are underway, and the company expects OPM to improve in Q4.

Vending Machine Services
Sales rose 1.9% YoY to JPY7.1bn (+2.4% YoY based on the previous accounting standard), while operating profit
jumped 91.0% YoY to JPY791mn.
Sales increased YoY. In Q2, beverage demand began to recover due to the upturn in human flows and the impact of the heatwave in July–August 2022, and again in Q3 on the lessening impact of COVID-19.
Operating profit increased in Q4 FY02/22 on a decrease in depreciation expenses due to impairment losses on
unprofitable machines.
Both sales and profits were down compared to Q3 FY02/20, before the outbreak of COVID-19. Although customer footfall at
the commercial facilities where the company has installed vending machines is recovering, demand for beverages sold fromvending machines in commercial facilities has been slow due to changes in consumer behavior caused by the spread of
COVID-19.
Quarterly trends
Sales were up 0.3% YoY in 1H and 5.4% YoY in Q3, showing stronger growth. Operating profit was up 57.5% YoY in 1H and285.2% YoY in Q3. Beverage demand showed signs of recovery in Q3, and the company received large orders from the

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major manufacturer factories. The company also serves them in Facilities Management and Cleaning Services, and thecooperation between the businesses led to the orders.
Full-year outlook
Sales were below projections, but operating profit was as planned.
The company will continue installing more of its multi-brand vending machines (which offer beverages from several different
brands) to improve profitability per machine. It recorded impairment losses for loss-making machines in FY02/22, andexpects this to contribute to improved earnings throughout FY02/23.

Support Services
Sales were up 11.7% YoY to JPY13.5bn, and operating profit was up 26.9% YoY to JPY419mn.
Sales were up YoY. The company focused on responding to recovering business trip demand in travel-related services andwinning event-related orders. It also won contracts for on-site shipping operations for newly opened Aeon Mall stores.
Outside the Aeon group, the company worked to expand services that were compatible with its other businesses to address
outsourcing needs related to the management and operation of contracted facilities and their surroundings (e.g., operationof venues for new employee welcoming ceremonies and employee training, and operations peripheral to building
maintenance). The company also acquired new contracts in China, including for operations peripheral to governmentbuilding management and support services for new building constructions.
Operating profit grew YoY. Profitability improvement at travel business subsidiary Aeon Compass, in addition to sales growth,
contributed to higher profit.
Quarterly results
Sales were up 10.7% YoY in 1H and 13.6% YoY in Q3, showing stronger growth. Operating profit was up 9.4% YoY in 1H and
86.7% YoY in Q3. Travel-related demand showed signs of recovery in Q3. The consolidation of Zhejiang Metelan Property
Management Co. Ltd., which became a subsidiary in March 2022, also helped.
Full-year outlook
Sales were in line with the plan, but operating profit was below plan. As the impact of COVID-19 subsides, the number ofcontracts for domestic business trips is expected to rise. The company expects higher sales and operating profit for the fullyear.

Overseas business (within each segment)
Sales increased 35.9% YoY to JPY24.1bn, while operating profit rose 8.6% YoY to JPY1.3bn.
Sales and profit grew in China and the ASEAN region.
Earnings of the overseas business are included in each segment. The company operates the Facilities Management, Security
Services, Cleaning Services, and Support Services businesses overseas. Aeon group companies comprise roughly half of its
customers.
China
Sales grew 36.5% YoY to JPY16.7bn, benefiting from consolidation of Zhejiang Metelan Property Management, which wasmade a subsidiary in March 2022, and an increase in the number of contracted facilities of Aeon Delight Jiangsu(government facilities, offices, commercial facilities, etc.). The company won contracts for new facilities in Security Services,
Cleaning Services, and Support services, and worked to capture a larger share of customer wallets.
Operating profit increased on a yen basis but was almost flat YoY in local currency terms. SG&A expenses increased as thecompany hired additional personnel to strengthen governance, but profit increased on a yen basis due to the impact of the
yen's depreciation.
Although the impact of COVID-19 was limited in cumulative Q3, it has been expanding since December 2022. As of early
January 2023, business is continuing as usual, but there are concerns that an increased number of people traveling in andAeon Delight 9787
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outside China around Chinese New Year (January 22, 2023) may cause infections to spread again. The company is closely
monitoring the spread of COVID-19.
The company is actively seeking out M&A and partnership opportunities to develop specialty, expand business domains, andstrengthen customer base. In March 2022, it acquired a local company (Zhejiang Metelan Property Management) thatmanages and operates healthcare facilities under contract in Zhejiang and Jiangxi provinces. In October 2022, the company
made Aeon Delight (China) an investment company, making it easier to enter into cross-industry partnerships.
ASEAN
ASEAN as a whole saw increases in both sales and profit. The economies of the countries in which the company operates
have begun to recover from the stagnation caused by the COVID-19 pandemic, with sales increasing in those countries. The
company made preparations to establish a head office for the ASEAN business in Malaysia to reinforce group governanceand develop a new growth strategy for the region as a whole. The company's ASEAN business has governance issues, moreso than the China business, and so the company is dispatching personnel from Japan to address these issues and strengthen
governance of the local business.
Malaysia: Sales rose 50.5% YoY to JPY1.6bn. Operating profit also increased YoY in both yen and local currency
terms. Sales grew due to growth in orders mainly from the Aeon group. The company continued to win orders from
FY02/22 for various services including facility management, repair, and cleaning and disinfecting at existing Aeon
Malaysia stores. Despite higher personnel expenses on increased headcount, profit grew supported by higher sales.
Hourly wages were on an uptrend due to labor shortages caused by stricter border controls imposed on immigrants andforeign workers amid the COVID-19 pandemic, but hourly wages are gradually coming down to the pre-pandemic levels
as border regulations are relaxed.
Vietnam: Sales rose 29.4% YoY to JPY2.7bn. Operating profit was also up YoY in both yen and local currency terms. Aeon
Mall plans to further accelerate store openings in Vietnam from 2025 to 2026. The company is also working to enhance
its local business structure, such as by increasing the personnel headcount. COVID-19 is subsiding, and the company
expects profitability to improve in Q4.
Indonesia: Sales amounted to JPY3.1bn (+31.1% YoY), but the company posted an operating loss. Operating loss expanded
on a yen basis due to the impact of the yen's depreciation. Sales grew as the company won contracts for Aeon Mall stores,
but operating profit fell into the red due to higher personnel expenses on expanded efforts to improve the work
environment in compliance with the revised local labor law. The increase in personnel expenses stemming from therevised law may also affect earnings in FY02/24. Indonesia is a larger market within the ASEAN region, and the company
has access to the customer base of a cleaning company it purchased 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.

Key initiatives for FY02/23
In FY02/23, Aeon Delight will carry out initiatives to realize the basic policies under its medium-term management plan:“customer-oriented management,” “promotion of digital transformation (DX),” and “group management.” The company will
also step up M&A efforts, both in Japan and overseas.
Customer-oriented management
A KPI for customer-oriented management is to generate 40.0% of sales outside the Aeon group in FY02/24. (This figure was
35.6% as of end-FY02/22 and 35.7% for FY02/21.) This figure marked 36.0% in Q3 FY02/23.
In FY02/22, the company assigned account managers to key customers. This approach created a system for managing
customer information centrally. By using account managers to build stronger customer relationships, the company has also
increased its share of customers outside the Aeon group.
Reorganizing and strengthening sales function: In April 2022, the company carried out structural reforms to reorganizeand strengthen its sales function. It reorganized business areas covered by its total eight branch offices nationwide tobetter reflect and accommodate regional characteristics. It also redefined the responsibilities of each branch officeposition from the operation to management levels. Further, the company held training sessions for branch managers toenhance their job proficiency and awareness as a manager of each regional unit. Having reorganized its sales structure,
the company aims to increase transactions with both existing and new customers, through reinforcing its accountmanagement initiatives for existing customers and making customer-centric proposals.

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Developing healthcare solutions: In this category, the company makes proposals for raising facilities’ hygiene levels. Its
solutions leverage the track record and expertise the company has built up through hospital-oriented “hygienic cleaning”
and New Standard Cleaning. In April 2022, the company set up an organization tasked with honing proposals. With thisorganization, the company intends to expand proposals to non-group customers such as hospitals and hotels, and to win
new contracts.
Developing solutions to support decarbonization: In April 2022, the company set up a dedicated team that takes anintegrated approach toward helping customers decarbonize their operations. Efforts to date have focused on individual
steps for shrinking a customer’s carbon footprint: installation of energy saving equipment and other energy-saving
operations at individual facilities. Going forward, the company plans to expand into such areas as buying renewableenergy and issuing environmental certifications.
Promotion of digital transformation
KPIs for the promotion of digital transformation (DX) are to achieve OPM of 6.0% by FY02/24, maintain ROE of 12%,
introduce area management (sharing of facility management personnel between facilities located in a predetermined area)at 360 facilities, reduce the number of people assigned to specific facilities by 180, and reassign 20% of headquarters staff todirect departmental positions. In cumulative Q3 FY02/23, OPM was 4.8%, the number of facilities under area management
was 269 (+91 versus end-FY02/22), and reductions in the number of people assigned to customer facilities was 156 (+41).
Promoting use of the Aeon Delight platform: The company plans to use the platform to collect customer feedback, facility
conditions, market trends in customers’ industries, and external information about weather and disasters. It will use AI toanalyze and process the data and efficiently share them across the service network of the company, group companies, andpartner companies. In FY03/23, the company plans to raise process efficiency by promoting links between the Aeon
Delight platform and various systems, and enhance the value of data by increasing the volume of information. In addition,in the sales department the company aims to make proposals from the customer’s perspective. To do so, the company will
utilize data from the Aeon Delight platform, as well as visualizing and sharing information about customer requests.
Group management
KPIs for group management to be achieved by FY02/24 are JPY65.0bn in sales at group companies in Japan, overseas sales
accounting for more than 8% of the total, and a shift toward shared services at the finance and accounting departments ofgroup companies in Japan. In cumulative Q3 FY02/23, overseas sales accounted for 10.6% of total sales, up from 7.8% at
end-FY02/22. The rise in the share of overseas sales is also attributed to the depreciation of the yen.
Promote growth of each group company in Japan by strengthening intragroup cooperation
Aeon Compass: In addition to handling overseas and domestic travel, the subsidiary also plans and manages events.
Performance recovered as it worked to capture recovering business trip demand and demand arising from theresumption of events.
Building maintenance subsidiary: Building maintenance subsidiaries include Aeon Delight Connect (core subsidiary inthe small and medium-sized facilities market), Hakuseisha (provides cleaning, hygiene management, security, facility
management, and construction services), and Kankyouseibi (handles facility management, construction, security,
cleaning management, designated manager operations). The business environment remained harsh, due tocustomers' postponement or brining forward of capital spending in light of changes in their operating environment,
shortages and procurement delays of materials and equipment caused by the pandemic and Russia–Ukraine war, andhigher initial spending for newly contracted facilities. Under these circumstances, in FY02/23, the company intends
to strengthen Aeon Delight Connect’s foundations by promoting cooperation, such as sharing personnel more
actively, and strengthening sales at companies operating small- and medium-sized stores nationwide. The company
also plans to strengthen the construction department through U-COM (designs commercial facilities and handles
interior construction), which it absorbed in March 2021.
Overseas, expand business in China and strengthen management base in the ASEAN region
China: The company aims to achieve organic growth by bolstering contracts for priority facilities such as medium- tohigh-end shopping centers, hospitals and nursing homes, and facilities in areas undergoing redevelopment. Aeon
Delight also seeks to acquire and form business alliances with local companies that provide security and cleaning
services for local hospitals and the factories of Japanese companies. In these ways, it aims to acquire expertise, expand
its business domain, and strengthen its customer base.

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ASEAN region: The company expects business to grow in this region in the medium to long term, due to the openingof new Aeon group stores and the expansion of Japanese companies. Aeon Delight is moving toward theestablishment of an ASEAN regional headquarters to strengthen the management base and help it plan growthstrategies in individual countries.

FY02/23 company forecast
Full-year company forecast
FY02/21 (previous accounting standards)

FY02/22 (previous accounting standards)

FY02/23 (new accounting standards)(JPYmn)1H Act.

2H Act.

FY Act.

1H Act.

2H Act.

FY Act.

1H Act.

2H Est.

FY Est.

Sales

149,734

150,351

300,085

163,907

153,750

317,657

147,660

162,340

310,000

-

-2.4%

-4.9%

-0.5%

-2.8%

9.5%

2.3%

5.9%

-

Cost of sales

131,494

131,416

262,910

143,444

134,714

278,158

128,054

Gross profit

YoY

18,23918,93637,175

20,462

19,03639,49819,606

YoY

-7.7%

0.7%

-3.6%

12.2%

0.5%

6.2%

-4.2%

Gross profit margin

12.2%

12.6%

12.4%

12.5%

12.4%

12.4%

13.3%

SG&A expenses

10,738

11,207

21,945

12,035

11,72923,76413,004

YoY

-3.9%

-1.7%

-2.8%

12.1%

4.7%

8.3%

8.1%

SG&A ratio

7.2%

7.5%

7.3%

7.3%

7.6%

7.5%

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

8.8%

7,500

7,730

15,230

8,427

7,306

15,733

6,602

10,39817,000-12.7%

4.4%

-4.8%

12.4%

-5.5%

3.3%

-21.7%

42.3%

8.1%

5.0%

5.1%

5.1%

5.1%

4.8%

5.0%

4.5%

6.4%

5.5%

7,496

7,772

15,268

8,489

7,300

15,7896,602

10,39817,000-13.4%

6.6%

-4.3%

13.2%

-6.1%

3.4%

-22.2%

42.4%

7.7%

5.0%

5.2%

5.1%

5.2%

4.7%

5.0%

4.5%

6.4%

5.5%

3,943

7,737

11,680

5,557

5,108

10,665

4,336

6,364

10,700-23.9%

85.7%

24.9%

40.9%

-34.0%-8.7%-22.0%

24.6%

0.3%

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.

The company forecast for FY02/23 calls for sales of JPY310.0bn (-2.4% YoY), operating profit of JPY17.0bn (+8.1% YoY),
recurring profit of JPY17.0bn (+7.7% YoY), net income attributable to owners of the parent of JPY10.7bn (+0.3%), EPS of
JPY213.9, and annual dividends per share of JPY85.0 (payout ratio of 39.7%).
The expected YoY decline in sales is due to the application from FY02/23 of the new Accounting Standard for Revenue
Recognition. The company’s sales forecast equates to a 9.3% YoY increase in sales under the previous accounting standard.
The company expects COVID-19 to have a JPY800mn negative effective on operating profit. Even so, the company forecasts
YoY increases in operating profit and all accounting line items below that point due to higher sales and efforts to reduce
costs.
The company forecasts OPM of 5.5% (+0.5pp YoY). In the mainstay Facilities Management segment, the company aims tobolster GPM by nearly 2.0pp by reinforcing area management and reorganizing to achieve operational efficiencies. In theConstruction Work segment, the company aims to curtail the negative impact of rising materials prices by estimating
construction costs more precisely.
The forecast for net income attributable to owners of the parent excludes any extraordinary gains and losses.
The company anticipates a payout ratio of 40% in FY02/23. Previously, the company had sought to maintain a 35% payout
ratio and aimed to reach a 40% level by FY02/24. The company now aims to bring this date forward.

Initiatives in FY02/23
In FY02/23, the company will be carrying out initiatives to realize the basic policies under its medium-term management
plan: “customer-oriented management,” “promotion of digital transformation (DX),” and “group management.” Thepandemic is delaying the impact of these measures by one to two years, and overseas M&A activity has been delayed. In
FY02/23, the company plans to step up M&A efforts, both in Japan and overseas, to achieve the objectives outlined in themedium-term management plan.
Customer-oriented management
A KPI for customer-oriented management is to generate 40.0% of sales outside the Aeon group in FY02/24. (This figure was
35.6% as of end-FY02/22 and 35.7% for FY02/21.)
In FY02/22, the company assigned account managers to key customers. (Account managers are salespeople in charge ofhandling all transactions for a specific customer.) This approach created a system for managing customer information

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centrally. By using account managers to build stronger customer relationships, the company aims to boost its share ofcustomers outside the Aeon group.
Reorganizing and strengthening the sales function: In April 2022, the company carried out structural reforms toreorganize and strengthen the sales function. For existing customers, Aeon Delight stepped up account management. To
boost its share of business with existing customers outside the Aeon group, the company drew up a list of 100 companies
toward which it would step up sales activities (up from 80 in FY02/22). At the same time, the company will focus on
cultivating new non-group customers.
Developing healthcare solutions: In this category, the company makes proposals for raising facilities’ hygiene levels. Its
solutions leverage the track record and expertise the company has built up through hospital-oriented “hygienic cleaning”
and New Standard Cleaning. In April 2022, the company set up an organization tasked with honing proposals. With thisorganization, the company intends to expand proposals to non-group customers such as hospitals and hotels, and to win
new contracts.
Developing solutions to support decarbonization: In April 2022, the company set up a dedicated team that takes anintegrated approach toward helping customers decarbonize their operations. Efforts to date have focused on individual
steps for shrinking a customer’s carbon footprint: installation of energy saving equipment and other energy-saving
operations at individual facilities. Going forward, the company plans to expand into such areas as buying renewableenergy and issuing environmental certifications.
Promotion of digital transformation
KPIs for the promotion of digital transformation (DX) are to achieve OPM of 6.0% by FY02/24, maintain ROE of 12%,
introduce area management at 360 facilities, reduce the number of people assigned to specific facilities by 180, andreassign 20% of headquarters staff to direct departmental positions. In Facilities Management, the company intends tostrengthen the introduction of “area management” (assigning facility management personnel across a set area rather than toindividual facilities) and save costs by reducing the number of facility management personnel and introducing automation.
Achieving OPM of 6.0% (5.0% in FY02/22 and 5.1% in FY02/21) and, by boosting OPM, maintaining ROE of 12% (11.7%
and 14.1%): The company plans to introduce area management for more facilities, reducing the number of people
assigned to specific facilities and reassigning these people to other positions.
Introducing area management at 360 facilities (151 and 27) and, as a result, reducing the number of people assigned to
specific facilities by 180 (reduction of 115 people in FY02/22): The company plans to alleviate labor shortages andtransform its earnings structure by accelerating the rollout of area management and applying DX to its operations. By endFY02/23, the company aims to have reduced personnel numbers by 155 (115) at a cumulative 278 facilities (178) andreassigned these people. The company is also pursuing R&D aimed at DX in Security Services, Cleaning Services, andSupport Services.
Reassigning 20% of headquarters staff: In FY02/22, the company improved business processes at its headquarters
divisions. In FY02/23, it plans to reduce headquarters staff by 20% (for reassignment elsewhere), saving back-officeresources by outsourcing non-core operations and using automation tools.
Promoting use of the Aeon Delight platform: The company plans to use the platform to collect customer feedback, facility
conditions, market trends in customers’ industries, and external information about weather and disasters. It will use AI toanalyze and process the data and efficiently share them across the service network of the company, group companies, andpartner companies. In FY02/23, the company plans to raise process efficiency by promoting links between the Aeon
Delight platform and various systems, and enhance the value of data by increasing the volume of information. In addition,in the sales department the company aims to make proposals from the customer’s perspective. To do so, the company will
utilize data from the Aeon Delight platform, as well as visualizing and sharing information about customer requests.
Group management
KPIs for group management to be achieved by FY02/24 are JPY65.0bn in sales at group companies in Japan, overseas sales
accounting for more than 8% of the total, and a shift toward shared services at the finance and accounting departments ofgroup companies in Japan.
Sales of JPY65.0bn at group companies in Japan (JPY52.1bn in FY02/22, JPY52.8bn in FY02/21): Progress in this area has
been slow, as COVID-19 has had a greater-than-expected impact. The company is strengthening cooperation among groupcompanies and promoting growth at group companies in Japan.

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Aeon Delight Connect: This company resulted from a March 2021 merger between A to Z Service Co., Ltd. (aconstruction and maintenance service provider for small and medium-sized facilities in eastern Japan) and Do Service
Co., Ltd. (a cleaning services provider for small and medium-sized facilities in western Japan). Aeon Delight hadplanned to position the new company as a core subsidiary in the market for small- and medium-sized facilities and toaccelerate the formation of a regional economic zone, but progress has been slow. In FY02/23, the company intends
to strengthen Aeon Delight Connect’s foundations by promoting cooperation, such as sharing personnel more
actively, and strengthening sales at companies operating small- and medium-sized stores nationwide. The company
also plans to strengthen the construction department through U-COM (designs commercial facilities and handles
interior construction), which it absorbed in March 2021.
Hakuseisha: Provides services such as cleaning and sanitation management, security, facilities management,
construction, and installation. Aims to expand its share of business among existing customers.
Kankyouseibi: Provides services such as facility management, construction, security, management of cleaning, anddesignated manager operations. Aims to expand market share in the northern Kanto region in cooperation with Aeon
Delight’s Kanto branch.
Aeon Compass: In addition to handling overseas and domestic travel, the company also plans and manages events. In
FY02/22, performance was lackluster due to the pandemic, but Aeon Compass is responding to resurgent demand
and working to develop new services.
An overseas sales ratio of more than 8% (7.8% and 6.7%): In FY02/22, Aeon Delight expanded its business in China
through a combination of organic growth and acquisitions of leading local companies. The company is working to expand
in China and strengthen its management base in the ASEAN region.
China: The company aims to achieve organic growth by bolstering contracts for priority facilities such as medium- tohigh-end shopping centers, hospitals and nursing homes, and facilities in areas undergoing redevelopment. Aeon
Delight also seeks to acquire and form business alliances with local companies that provide security and cleaning
services for local hospitals and the factories of Japanese companies. In these ways, it aims to acquire expertise, expand
its business domain, and strengthen its customer base.
ASEAN region: The company expects business to grow in this region in the medium to long term, due to the openingof new Aeon group stores and the expansion of Japanese companies. Aeon Delight is moving toward theestablishment of an ASEAN regional headquarters to strengthen the management base and help it plan growthstrategies in individual countries. The Aeon group plans to accelerate the opening of new stores in Vietnam from2024, so Aeon Delight will strengthen its system for winning contracts there. In FY02/23, the company may incur anoperating loss in Indonesia, which is stepping up efforts to improve the labor environment, leading to higher
personnel expenses and other costs.

Business-specific initiatives and forecasts
The company expects sales to decline in the Materials and Supplies Sourcing Services and the Vending Machine Services
segments, due to application of the new Accounting Standard for Revenue Recognition. The company forecasts YoY growthacross all segments, however, based on the previous standard. Because it is engaging in group management, the company
does not disclose business-specific sales and operating profit.
Facilities Management: The company expects to generate higher sales through a focus on expanding market shareamong existing customers (by strengthening account management) and acquiring new customers outside the Aeon
group. The company also intends to step up the introduction of area management at facilities both in and outside the
Aeon group. The company forecasts a rise in profitability. It anticipates improved earnings at facilities where area
management was introduced in FY02/22, and is working to reduce outsourcing expenses.
Security Services: The company expects to increase sales by expanding its share of business among existing customers (asa result of stronger account management) and winning new customers. In FY02/22, the company installed security
systems at some 200 stores and curtailed the number of security personnel. As the effect of installing security systems
becomes apparent in FY02/23, the company expects OPM to increase. Additionally, the company aims to strengthenarea management, mechanize operations, win contracts for highly profitable large projects and event security, and pass
on higher personnel expenses.

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Cleaning Services: In FY02/22, extraordinary demand related to quarantine-related cleaning amid the pandemic had a
JPY3.0bn positive impact on sales. The company expects this extraordinary demand to be absent in FY02/23. Even so, itwill work to increase sales by winning new contracts with hospitals, hotels, and other customers outside the Aeon groupby proposing solutions that raise facility hygiene levels. In FY02/22, OPM was 12.1% (+0.4pp YoY), due to an increase in
special cleaning. In FY02/23, the company expects OPM to fall back to FY02/20 levels (around 11.2%). Despite thelower OPM, the company expects profit to rise on the back of higher sales.
Construction Work: In FY02/22, the company won construction contracts related to restoration work following theoffshore earthquake in Fukushima Prefecture. In FY02/23, the company anticipates higher sales due to store
refurbishments that were delayed by the pandemic, as well as large-scale renovation projects. The percentage of in-groupsales is relatively high in the Construction Work segment. To win customers outside the Aeon group, the company isenhancing its proposals targeting energy-saving measures and the shift to LED lighting. On the profit front, the company
is seeing an increase in materials prices. It will work to reduce costs by setting up a new organization to estimate
construction costs more accurately, and by strengthening cost negotiations.
Materials and Supplies Sourcing Services: In this segment, approximately 30% of sales (equivalent to JPY17.0bn to
JPY18.0bn) will no longer be recognized as sales under the new Accounting Standard for Revenue Recognition.
However, the company forecasts YoY sales growth based on the previous standard. The company will work to win businesswith companies that have newly joined the Aeon group: Fuji Retailing Co., Ltd. (TSE Prime: 8278), which runs
supermarkets in the Chugoku/Shikoku region, and Can Do Co., Ltd. (TSE Standard: 2698), which has a nationwide chainof 100-yen shops. The company will strengthen cost management to secure profits. Additionally, Aeon Delight willaugment sales efforts targeting non-group customers, its system for managing customers under contract, and its
compliance system.
Vending Machine Services: In this segment, approximately 40% of sales (equivalent to around JPY10.0bn) will no longer
be recognized as sales under the new Accounting Standard for Revenue Recognition. However, the company forecasts
YoY sales growth based on the previous standard. The company expects the impact of the COVID-19 epidemic to ease.
Support Services: Although the pandemic is slowing a rebound in demand for travel arrangements, the company plans totarget existing customers with which it has contracts in place for integrated facility management (IFM). It intends to step
up proposals for the outsourcing of non-core businesses, such as offering to manage workplace vaccination sites and run
employee onboarding events.

Historical forecast accuracy
Results vs. Initial Est.

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Sales (Initial Est.)

260,000

270,000

280,000

305,000

305,000

305,000

315,000

315,000

325,000

310,000

Sales (Results)

256,654

265,572

277,926

292,607292,396

302,915

308,582

300,085

317,657(JPYmn)Results vs. Initial Est.

-1.3%

-1.6%

-0.7%

-4.1%

-4.1%

-0.7%

-2.0%

-4.7%

-2.3%

Operating profit (Initial Est.)

15,50016,00017,00017,50018,00018,50018,00016,50016,500Operating profit (Results)

14,622

15,39014,556

14,13912,90913,03016,001

15,23015,733Results vs. Initial Est.

-5.7%

-3.8%

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

-7.7%

-4.6%

Recurring profit (Initial Est.)

15,50016,00017,00017,50018,00018,50018,00016,50016,500Recurring profit (Results)

14,60015,472

14,534

14,263

13,381

13,362

15,94915,26815,789Results vs. Initial Est.

-5.8%

-3.3%

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

-7.5%

-4.3%

Net income (Initial Est.)

8,300

8,600

9,400

10,00010,70011,00010,80010,00010,500Net income (Results)

7,039

7,965

7,247

7,093

6,397

6,415

9,348

11,680

10,665Results vs. Initial Est.

-15.2%-7.4%-22.9%-29.1%-40.2%-41.7%-13.4%

16.8%

1.6%

FY02/23

17,00017,00010,700Source: Shared Research based on company data.
Note: Results through FY02/18 have not been retrospectively adjusted.

Medium- and long-term outlook
Medium-term plan

FY02/21

FY02/22

FY02/23

FY02/24

FY02/26

3-year5-year

Cons.

Cons.

FY Est.

Targets

Targets

CAGR

CAGR

Sales

300,085

317,657

310,000

361,000

471,000

6.4%

9.4%

YoY

-2.8%

5.9%

-2.4%

16.5%

Operating profit

15,23015,73317,00022,00037,000

13.0%

19.4%

YoY

-4.8%

3.3%

8.1%

29.4%

(JPYmn)

5.1%

5.0%

5.5%

6.1%

Net income

Operating profit margin

11,680

10,665

10,70014,000

YoY

24.9%

-8.7%

0.3%

30.8%

3.5%

7.9%

Net margin

3.9%

3.4%

Sales: Non-Aeon group ratio

35.7%

35.6%

40.0%

3.9%
50.0%

Sales: Overseas ratio

6.7%

7.8%

Over 8%Over 15%

ROE

14.1%

11.7%

12%

15%

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.

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Aeon Delight Vision 2025
In October 2018, the company announced Aeon Delight Vision 2025 (“Vision 2025”). Aeon Delight’s management
principle calls for the creation of “environmental value” for clients and regional communities. In accordance with thisprinciple, Vision 2025 aims to transform Aeon Delight into a company that creates environmental value and contributes tosolving social issues, with “safety and security,” “manpower shortage,” and “environment” as three pillars of its growthstrategy. Thereafter, in the face of accounting irregularities at Kajitaku in FY02/20 and pandemic-related delays in somemeasures in FY02/21, Aeon Delight announced new targets when it released its FY02/21 earnings results, although with nochange in the company’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). (It was previously targeting sales of JPY525.0bn and operating profit of
JPY48.0bn.) The company is aiming for top ten sales and top-level OPM globally and number one sales in Asia in thefacilities 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 (AD) economic zone and concentrating management resources in China
for its overseas operation.

Progress of the medium-term management plan
In its medium-term management plan, Aeon Delight has set a target of JPY22.0bn in operating profit for FY02/24. The“customer-oriented management,” “promotion of digital transformation (DX),” and “group management” initiatives in theplan have steadily penetrated and are beginning to contribute to business performance. In particular, Q3 showed a recovery
trend. However, due to changes in social conditions such as the outbreak of COVID-19, there was a delay of one to two years
in the contribution of various initiatives to business performance. The company also recognizes that it was difficult to promoteacquisitions as set forth in the medium-term management plan. In fact, progress toward the company's operating profit targetof JPY17.0bn for FY02/23 has been slow, at 63.6% of the company's full-year forecast in cumulative Q3.
Against this background, the company is considering reviewing its numerical targets with the aim to redevelop its mediumterm management plan.

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. The medium-term plan targets FY02/24 sales of JPY361.0bn (CAGR
of 6.4%), operating profit of JPY22.0bn (CAGR of 13.0%), and net income of JPY14.0bn. By FY02/24, the company aims toincrease sales within the Aeon group by JPY25.0bn versus FY02/21 to JPY220.0bn (60% of total sales, -5pp versus FY02/21),
while growing sales outside the Aeon group by JPY35.0bn to JPY140.0bn (40% of total sales, +5pp versus FY02/21) andraising OPM to 6.0% (+0.9pp versus FY02/21). It aims to achieve this sales growth and OPM improvement by putting
customer-oriented group management into practice and promoting digital transformation (DX).

Customer-oriented management
Increase in ratio of sales outside Aeon group
Under the medium-term plan, Aeon Delight plans to increase sales outside the Aeon group to approximately JPY140.0bn(+JPY35.0bn versus FY02/21) by FY02/24, raising the ratio to total sales to 40% (+5pp versus 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.

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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.
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.

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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 intends to 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.
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.
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 investments

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with 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 will establish 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 (delisted on September 17, 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
FY02/22, the company derived 64.4% of sales from Aeon Retail Co., Ltd. and other Aeon group companies. Aeon Delighthandles between 80% and 90% of the facilities management work required by Aeon Retail, and about 65% of such workrequired by Aeon Mall Co., Ltd. Facilities management work at Aeon Mall was previously done by a subsidiary of Diamond
City, a Mitsubishi Corp. affiliate absorbed by Aeon Mall in 2007. The company is aiming to increase the share of work
handled for Aeon Mall by following its overseas expansion in recent years and keeping a close relationship. Aeon Delightalso handles between 60% and 70% of the facilities management work at MaxValu retail stores owned by the Aeon group.

M&A activities
Aeon Delight is active in M&A. It has purchased companies in cleaning, building management, and store interior
construction. It has also purchased companies in businesses ancillary to facilities management, and been proactive in seeking
out alliances in other formats. In 2018 it announced collaboration with SECOM (TSE Prime: 9735) to create a new businessmodel for small and medium-sized facilities.

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. (not listed), Biru Daiko Co., Ltd., Nihon Housing Co., Ltd. (TSE Standard:4781), and Nippon Kanzai Co., Ltd. (TSE Prime: 9728).
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.

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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.
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
Facilities Management

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Sales

42,05043,45845,83948,96250,551

52,69956,36458,28958,223

61,538

YoY

-0.2%

3.3%

5.5%

6.8%

3.2%

4.2%

7.0%

3.4%

-0.1%

5.7%

Operating profit

4,661

4,725

4,217

4,206

4,350

4,644

5,558

5,293

5,175

5,495

(JPYmn)FY02/22

YoY

-8.3%

1.4%

-10.8%

-0.3%

3.4%

6.8%

19.7%

-4.8%

-2.2%

6.2%

Operating profit margin

11.1%

10.9%

9.2%

8.6%

8.6%

8.8%

9.9%

9.1%

8.9%

8.9%

Source: Shared Research based on company data

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.
Area management
In March 2021, Aeon Delight set up customer service centers at all eight branches in Japan and rolled out remote support
systems. The company also achieved labor-saving on-site as it installed systems and sensors at its facilities. This infrastructure
enabled cost reductions through labor-saving and automation based on area management, which involves the sharing offacilities management personnel in a set area. The company first launched the area management concept with a focus on
Aeon Retail stores among the several thousand facilities under contract.
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 facility 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. It also plans to utilize its big data andAI.
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.
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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.

Monitoring screens displayed at a large facility in Chiba (operates in parallel with a central
monitor)

Source: Shared Research based on company data

Security Services
Security Services

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Sales

31,80534,242

36,62238,456

41,06843,29044,49244,64744,393

47,239YoY(JPYmn)FY02/22

-1.3%

7.7%

7.0%

5.0%

6.8%

5.4%

2.8%

0.3%

-0.6%

6.4%

Operating profit

2,692

2,865

3,102

3,032

3,110

2,857

2,881

3,038

3,307

3,435

YoY

-4.6%

6.4%

8.3%

-2.3%

2.6%

-8.1%

0.8%

5.4%

8.9%

3.9%

Operating profit margin

8.5%

8.4%

8.5%

7.9%

7.6%

6.6%

6.5%

6.8%

7.4%

7.3%

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%.
In the security industry, personnel expenses are on the rise due to chronic labor shortages. To improve profit margins, thecompany is automating entry/exit management and store opening/closing operations.
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.

Cleaning Services
Cleaning Services(JPYmn)FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Sales

40,51942,32044,28747,87053,36555,29758,18562,36262,45966,963

YoY

1.7%

4.4%

4.6%

8.1%

11.5%

3.6%

5.2%

7.2%

0.2%

7.2%

Operating profit

5,918

5,716

6,289

6,031

6,012

6,228

6,694

6,967

7,324

8,106

YoY

0.6%

-3.4%

10.0%

-4.1%

-0.3%

3.6%

7.5%

4.1%

5.1%

10.7%

Operating profit margin

14.6%

13.5%

14.2%

12.6%

11.3%

11.3%

11.5%

11.2%

11.7%

12.1%

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 company, and 80–
90% work performed by outsourcing partners. Primary outsourcing partners are Aeon Delight Connect Co., Ltd. andAeon Delight 9787
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Kankyouseibi Co., Ltd. Approximately 30,000 persons are involved in the cleaning services business. In recent years, thecompany has been working to secure orders in the hygienic cleaning business, previously untapped territory for it, which
can lead to high value-added services.
Hygienic cleaning
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.
The company believes the hygienic cleaning business will continue to steadily increase sales. There are more than 1.5mn
hospital beds in medical facilities across Japan, out of which the number of hospital beds at medical facilities Aeon Delighthas hygienic cleaning contracts with still make up only 2–3%. Aeon Delight began offering hygienic cleaning services in
FY02/15 and began providing service to two major medical facilities in April 2015. As of April 2015, the company wasproviding hygienic cleaning services for 14,000 beds. In 2018, that number has increased to over 25,000 beds.
Since the start of the pandemic, demand has increased for disinfectant cleaning (to prevent infection from spreading), as wellas quarantine-related cleaning and special cleaning. The company is providing outside the Aeon group special cleaning
services such as New Standard Cleaning. This is a cleaning method with procedural guidelines to maintain a hygienic,
attractive environment based on the company's own cleaning service that was previously provided to hospitals.

Japanese hospitals and clinics
Hospitals

Clinics

As of end-January 2022

Number of beds

As of end-January 2022

Number of beds

8,193

1,580,892

104,376

82,566

Source: Shared Research based on the Ministry of Health, Labour and Welfare's Statistical Survey of Medical Facilities

Construction Work
Construction Work

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Sales

53,071

45,63041,97243,85545,81440,897

41,47041,84440,65743,015(JPYmn)FY02/22

YoY

86.1%

-14.0%

-8.0%

4.5%

4.5%

-10.7%

1.4%

0.9%

-2.8%

5.8%

Operating profit

2,209

2,580

2,807

3,218

3,210

3,305

3,989

3,816

3,880

3,583

YoY

14.1%

16.8%

8.8%

14.6%

-0.2%

3.0%

20.7%

-4.3%

1.7%

-7.7%

Operating profit margin

4.2%

5.7%

6.7%

7.3%

7.0%

8.1%

9.6%

9.1%

9.5%

8.3%

Source: Shared Research based on company data

This segment conducts large-scale renovation, interior design work, restoration, and installation of energy-saving devices (i.e.,
LED lighting) and solar power systems. This segment generates roughly 60% of its sales from Aeon group companies.
Renovation is remodeling (not designing) of Aeon retail locations, such as replacing signage, or modifying retail floor space.
In recent years, there has been an increasing amount of work related to changeover of tenants inside Aeon Malls (restorationand new interiors). In March 2021, Aeon Delight absorbed store design specialist U-COM, and the upstream approach hasenabled it to win an increasing number of contracts from outside the Aeon group.

Construction work process for commercial facility tenant replacement

Source: Shared Research based on company data

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Materials and Supplies Sourcing Services
Materials and Supplies Sourcing

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

39,28444,54347,61850,51650,74050,26551,007

51,12553,06056,497

7.0%

13.4%

(JPYmn)
Sales
YoY

6.9%

6.1%

1.5%

0.2%

FY02/22

0.4%

-0.9%

3.8%

6.5%

Operating profit

1,462

2,333

2,111

2,806

2,774

2,868

2,779

2,489

2,467

2,560

YoY

18.5%

59.6%

-9.5%

32.9%

-1.1%

3.4%

-3.1%

-10.4%

-0.9%

3.8%

Operating profit margin

3.7%

5.2%

4.4%

5.6%

5.5%

5.7%

5.4%

4.9%

4.6%

4.5%

Source: Shared Research based on company data

Through efficient logistics, this business reduces costs for intermediate materials used in offices and retail stores. The
segment deals in items such as plastic bags, gift bags, clothing, and other consumables (employee stationery, cleaningmaterials, etc.). The pandemic is pushing up demand for quarantine-related materials such as professional-use masks, gloves,and alcohol, as well as acrylic partitions to prevent droplet dispersion. The company is also strengthening its handling ofenvironmentally-friendly packaging materials.
In this business, where stores running out of inventories of materials is not an option, the company also performs logistics
functions for customers. Through efficient logistics operations, the company aims to reduce costs and improve operational
efficiency related to the procurement of intermediate materials. Even though this is a business where adding value isdifficult, the company maintains an OPM of around 5%.

Vending Machine Services
Vending Machine Services

FY02/13(JPYmn)FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Sales

31,20033,32934,82532,74132,87932,834

31,95531,54425,45326,353

YoY

-3.3%

6.8%

4.5%

-6.0%

0.4%

-0.1%

-2.7%

-1.3%

-19.3%

3.5%

Operating profit

2,396

3,068

2,965

2,846

2,812

2,105

1,164

1,396

653

608

YoY

2.8%

28.0%

-3.4%

-4.0%

-1.2%

-25.1%-44.7%

19.9%-53.2%-6.9%

Operating profit margin

7.7%

9.2%

8.5%

8.7%

8.6%

6.4%

3.6%

4.4%

2.6%

2.3%

Source: Shared Research based on company data

This segment operates soft drink vending machines. It also creates relaxation areas with foliage plants and air purificationequipment.
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 came from machines in
shopping malls operated by Aeon group and non-Aeon companies. In September 2010, 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.

Support Services
Support Services(JPYmn)FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Sales

10,942

13,12914,406

15,52418,18817,325

19,43918,76815,837

16,049

YoY

36.1%

20.0%

9.7%

7.8%

17.2%

-4.7%

12.2%

-3.5%

-15.6%

1.3%

741

336

281

-580

-850

-1,466-2,270

416

-75

441

137.5%-54.7%-16.4%

-

-

-

-

-

-

-

6.8%

2.6%

2.0%

-3.7%

-4.7%

-8.5%

-11.7%

2.2%

-0.5%

2.7%

Operating profit
YoY
Operating profit margin

Source: Shared Research based on company data

This segment provides business process outsourcing (BPO), housework support services, business travel services, training
services, and staffing services. Much of these support services are conducted by companies acquired through M&A.
The company entered the BPO services market with the acquisition of General Services, Inc. Services that BPO undertake
include cost management, salary calculations, administrative functions, social security and welfare, receipt of telephone calls,
and system management.

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The main subsidiaries in the segment are 1) Aeon Compass: mainly B2B services including Business Travel Management(domestic business trips, support for overseas assignments) and MICE (planning and management of meetings, seminars,
trainings), and 2) Aqutia: household support services.
Kajitaku: In 2019, accounting fraud was discovered at subsidiary Kajitaku, which operated storefront promotion andhousework support businesses. The company submitted corrected financial statements covering FY02/14 throughFY02/18. In February 2020, it spun off the housework support business, which got a new start under the name Aqutia.
In June 2020, the company sold the ID photo machine business of Kajitaku (renamed KJS), and in FY02/21 withdrew
from the smartphone printing and picture palette businesses of KJS. In February 2021, Aeon Delight conducted anabsorption-type merger with KJS and took over the copy machine business, for which some customers still have contracts
in force.

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.

Overseas business
Aeon Delight sees China and ASEAN as main growth drivers. In China, the company mainly operates through its subsidiaries
in Suzhou and Wuhan. For now, it plans to target the Yangtze River Delta and surrounding regions to build up its brandpower as a company that provides quality facilities management. In the medium term, it plans to expand its business to thenorthern and southern regions. In ASEAN, the company has subsidiaries in Indonesia, Malaysia, and Vietnam. The
Indonesian business purchased in 2018 is the second-largest company in the cleaning industry in the promising Indonesianmarket. Aeon Delight plans to provide its expertise in other facility services and win outsourcing contracts locally.
China
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.
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,
the company 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.
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 through cross-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.
Under the oversight of Aeon Delight China (AD China), Aeon Delight Jiangsu and Wuhan Xiaozhu Property Management
focused on bolstering contracts for priority facilities such as medium- to high-end shopping centers, hospitals and nursing
homes, and facilities in areas undergoing redevelopment. They are working to expand their business domains to include
property management operations (facility maintenance and operation), catering services (peripheral services that
accompany property management), cleaning services, and services for residents at nursing homes, while focusing on
facility management operations.
In June 2021, Aeon Delight Jiangsu acquired a 60% stake in Suzhou Nakamura Integrated Facility Management Service(making it a subsidiary), which has a high level of knowledge and success in contracting services for Japanese-owned
factories, in order to expand market share in Suzhou where there is significant growth in factories owned by Japanesebusinesses.
ASEAN
Malaysia: The company has built a system aimed at increasing contracts with Aeon group facilities.

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Vietnam: Aeon Mall is working to strengthen operations by opening new stores, and the company is enhancing its system
accordingly.
Indonesia: The company currently has contracts with four Aeon group facilities. The group plans to open more stores, so
Aeon Delight is sending employees from Japan to set up a system so it can win contracts at these new stores.

Strengths and weaknesses
Strengths
Strong ties with the Aeon group: Aeon Delight is a subsidiary of Aeon Co., Ltd., and 64.4% of sales were generated fromthe Aeon group in FY02/22. 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 JPY11.3bn per annum,
and the company has spent JPY2.7bn per year on the acquisition of tangible fixed assets, generating total cashflow ofabout JPY8.5bn. 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 JPY3.5bn in dividend
payments (cash flow basis) yearly. In FY02/19 it spent JPY9.9bn on a share buyback. The dividend payout ratio was 35% in
FY02/21, and the company targets a ratio of 40% from FY02/23.

Weaknesses
Limited organic growth: Aeon Delight depends mainly on the domestic market; overseas sales accounted for just 7.8% of
total sales in FY02/22. 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 64.4% of sales in FY02/22. 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 JPY4.2tn in FY2020, down 1.0% YoY, according to a survey releasedin October 2021 by Yano Research Institute Ltd.

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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 2021)

Building maintenance services were mainly used by office buildings (21.7%), shops and commercial facilities (18.2%),
medical and welfare facilities (10.0%), factories and workplaces (9.5%), and education facilities (9.7%). 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 ample scope to grow.
Sales growth rates by end user were down 1.5% YoY for office buildings, down 1.4% YoY for shops and commercial facilities,
up 0.1% YoY for medical and welfare facilities, down 2.0% YoY for factories and workplaces, and up 2.9% YoY for education
facilities.

Building maintenance market (by building use)
FY2018FY2019FY2020(Est.)

Residential

134.7

151.5

153.6

YoY

7.4%

12.5%

1.4%

3,860.5

4,124.8

4,080.1-1.1%

Non-residential
YoY

6.8%

6.8%

Office buildings

875.4

933.2

919.4

YoY

6.4%

6.6%

-1.5%

736.8

783.2

772.2

6.5%

6.3%

-1.4%

403.6

424.1

411.9

5.2%

5.1%

-2.9%

390.8

423.6

424.1

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

8.1%

8.4%

Factories and workshops

387.4

409.2

401.1

YoY

6.1%

5.6%

-2.0%

0.1%

Source: Shared Research based on Yano Research Institute Ltd. materials (October 2021)

Aeon group stores by format (domestic and overseas)
FY02/13GMS

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

598

617

618

625

626

584

583

612

613

618

Supermarket

1,708

1,977

2,038

2,121

2,130

2,159

2,166

2,228

2,291

2,285

Discount store

152

353

381

530

566

568

587

592

599

605

DIY store

123

122

121

120

119

122

122

120

118

117

Supercenter

26

26

29

28

28

28

27

25

25

25

Department store

1

1

1

1

1

1

1

1

1

1

Specialty store

4,462

4,581

4,683

5,061

4,348

4,332

4,039

3,801

3,515

4,503

Convenience store

3,932

3,664

3,853

4,331

5,261

5,436

5,449

5,350

5,300

4,661

3,347

3,765

3,980

4,376

4,817

2,392

2,599

2,868

Other retail formats

562

756

884

803

856

907

1,015

1,150

1,252

1,342

Financial services

527

641

698

701

705

690

640

658

636

592

Services

1,394

1,519

1,640

1,934

2,013

2,045

2,070

2,016

1,999

1,978

Total

Drugstore and pharmacy

13,217

14,44018,382

20,02020,633

21,24821,516

18,945

18,94819,595

Aeon Mall

62

137

148

161

166

174

180

172

174

202

Aeon Town

115

122

130

134

138

139

140

145

147

150

Total

177

259

278

295

304

313

320

317

321

352

Source: Shared Research based on company data

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Stores overseas by format
FY02/13

FY02/14

FY02/19

FY02/20

FY02/21

FY02/22

GMS

61

69

77

84

87

94

96

101

103

103

Supermarket

81

95

101

115

173

150

150

125

125

131

Discount store

22

23

24

24

23

21

22

22

22

21

2,294

2,370

2,532

2,840

2,998

3,172

3,252

3,353

3,315

2,711
11

Convenience store

FY02/15

FY02/16

FY02/17

FY02/18

Drugstore

0

0

0

0

0

0

0

7

10

Specialty store

55

61

42

44

52

54

39

5

0

7

Other retail formats

29

29

30

79

97

115

124

148

147

153

Financial services

279

Services
Total

302

339

339

342

324

276

295

269

225

41

95

180

282

335

390

426

446

431

425

2,862

3,044

3,325

3,845

4,107

4,320

4,385

4,502

4,422

3,787

Source: Shared Research based on company data

Customers
In FY02/22, Aeon Delight generated almost 64.4% 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%.

Plans for overseas openings of Aeon Malls
FY02/21 FY02/22 FY02/23
Overseas (stores)

2

2

1

China (stores)

0

1

0

ASEAN (stores)

2

1

1

Source: Shared Research based on Aeon Mall data

Overseas businesses of the Aeon group
Overseas stores: Aeon Mall

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

3

5

9

17

19

24

27

30

32

34

China

3

4

6

12

13

17

19

21

21

22

ASEAN

-

1

3

5

6

7

8

9

11

12

1

2

3

4

4

4

5

6

6

1

1

1

1

2

2

2

2

1

1

2

2

2

3

4

Total number of stores

Vietnam
Cambodia
Indonesia
Total openings
China
ASEAN

1

1

2

6

1

5

3

3

1

2

1

1

2

6

1

4

2

2

-

1

1

1

1

1

1

1

1

Vietnam
Cambodia

1

Indonesia111

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%.

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Aeon Delight’s competitors include SECOM Co., Ltd. and Sohgo Security Services Co., Ltd. in security services. It competes
with Azbil Corporation (TSE Prime: 6845), Nippon Kanzai Co. Ltd. (TSE Prime: 9728), and Tokyu Community Corporation(not listed) in property management services. There are no major competitors that offer cleaning services; Aeon Delightcompetes with smaller, regional cleaning operators. In construction-related work, Aeon Delight competes with Azbil in theenvironmental solutions business, while in the energy-saving business, major rivals are NTT Facilities, Inc. (not listed) 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

FY02/13(JPYmn)FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Sales

248,876

256,654

265,572

277,926

292,607292,396

302,915

308,582

300,085

317,657

YoY

13.2%

3.1%

3.5%

4.7%

5.3%

-0.1%

3.6%

1.9%

-2.8%

5.9%

Cost of sales

218,648

223,409231,281

243,089

256,871257,524

267,463

270,011

262,910278,158

Gross profit

39,49830,22733,24534,29034,83635,73634,87135,452

38,57037,175

YoY

5.6%

10.0%

3.1%

1.6%

2.6%

-2.4%

1.7%

8.8%

-3.6%

6.2%

Gross profit margin

12.1%

13.0%

12.9%

12.5%

12.2%

11.9%

11.7%

12.5%

12.4%

12.4%

SG&A expenses

23,764

16,326

18,622

18,90020,28021,596

21,961

22,421

22,56921,945

YoY

9.8%

14.1%

1.5%

7.3%

6.5%

1.7%

2.1%

0.7%

-2.8%

SG&A ratio

6.6%

7.3%

7.1%

7.3%

7.4%

7.5%

7.4%

7.3%

7.3%

7.5%

Operating profit

13,901

14,622

15,39014,556

14,13912,90913,03016,001

15,23015,733

YoY

1.0%

5.2%

5.3%

-5.4%

-2.9%

-8.7%

0.9%

22.8%

-4.8%

3.3%

Operating profit margin

5.6%

5.7%

5.8%

5.2%

4.8%

4.4%

4.3%

5.2%

5.1%

5.0%

-9

-22

82

-22

124

472

332

-52

38

56

13,892

14,60015,472

14,534

14,263

13,381

13,362

15,94915,26815,789

-4.3%

3.4%

Non-operating income (expenses)
Recurring profit

8.3%

YoY

0.8%

5.1%

6.0%

-6.1%

-1.9%

-6.2%

-0.1%

19.4%

Recurring profit margin

5.6%

5.7%

5.8%

5.2%

4.9%

4.6%

4.4%

5.2%

5.1%

Extraordinary gains (losses)

27-1,180

-665

-408

-174

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

566

45.3%

46.1%

44.1%

46.0%

45.9%

42.9%

46.2%

38.3%

-8.6%

35.4%

Implied tax rate
Net income attributable to non-controllinginterests

5.0%

104

188

310

386

533

598

664

245

-110

-99

Net income

7,509

7,039

7,965

7,247

7,093

6,397

6,415

9,348

11,680

10,665

YoY

8.6%

-6.3%

13.2%

-9.0%

-2.1%

-9.8%

0.3%

45.7%

24.9%

-8.7%

Net margin

3.0%

2.7%

3.0%

2.6%

2.4%

2.2%

2.1%

3.0%

3.9%

3.4%

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

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cash and deposits

10,014

Accounts receivable(JPYmn)Assets12,565

15,58020,386

31,71739,53644,23362,35559,773

68,282

44,67334,44835,75734,32835,36035,73940,08942,612

39,17640,708

Allowance for doubtful accounts

-144

-290

-168

-360

-202

-130

-167

-242

-212

-134

Inventories

2,237

2,575

2,663

2,840

3,218

2,623

2,211

1,822

2,006

2,074

Deposits for consumption to subsidiaries andaffiliates

18,02032,42041,32637,362

31,71332,00016,000

-

-

-

Other

4,523

8,196

8,476

9,634

9,292

8,543

6,405

5,815

9,265

10,08379,32389,914

103,634

104,190111,098

118,311

108,771

112,362

110,008

121,013

1,089

1,046

1,009

1,629

1,631

1,582

1,479

1,458

1,671

1,629

274

238

211

190

175

-

-

-

-

-

2,079

2,487

2,516

2,651

3,307

4,892

5,064

4,846

4,264

3,589

282

278

278

1,978

1,975

1,975

2,032

2,032

2,000

466

-

-

-

-

-

-

-

-

-

-

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

72

209

345

610

1,974

1,591

1,585

1,334

1,545

1,394

Total tangible fixed assets

Other fixed assets

3,796

4,258

4,361

7,061

9,064

10,041

10,161

9,671

9,481

7,078

Goodwill

10,801

9,399

8,452

7,654

6,813

6,113

6,865

5,975

3,938

3,360

Other

1,520

1,609

1,867

2,352

1,989

1,699

1,338

1,209

1,579

2,293

Total intangible assets

12,321

11,008

10,32010,006

8,802

7,813

8,103

7,185

5,518

5,653

Investment securities

2,973

3,897

3,768

4,463

4,546

5,334

4,256

3,623

3,960

3,720

Deferred tax assets

288

254

284

310

551

330

412

1,763

4,840

2,951

2,196

1,877

2,750

3,896

4,342

3,458

3,264

2,347

2,766

2,470

Other
Allowance for doubtful accounts

-200

-199

-535

-494

-536

-610

-355

-36

-11

Investments and other assets

5,257

5,829

6,268

8,176

8,904

8,512

7,578

7,698

11,557

9,111

Total fixed assets

21,37521,096

20,95025,244

26,772

26,367

25,842

24,55426,556

21,845

Total assets

100,699

111,010

124,584

129,434

137,870

144,678

134,614

136,917

136,565

142,859

-

-

-

-

-

-

-

-

-

-

24,544

21,87624,93428,457

25,11425,82025,967

23,38822,17022,070Liabilities
Accounts payable
Short-term debt

-30

10

5

-

-

271

225

394

252

299

247

Other

10,401

12,622

15,771

17,377

21,666

18,541

20,137

20,41017,466

21,575

Total current liabilities

34,95539,30946,63945,83447,05149,06051,40848,864

44,12343,892Long-term debt
Other

5

-

-

-

293

-

15

11

-

-

1,190

1,556

2,387

3,925

5,921

6,474

7,652

6,756

4,160

3,544

Total fixed liabilities

1,195

1,556

2,387

3,925

6,214

6,474

7,667

6,767

4,160

3,544

Total liabilities

36,15140,86549,02649,76053,26655,53559,07555,631

48,28347,437

Capital stock

3,238

3,238

3,238

3,238

3,238

3,238

3,238

3,238

3,238

3,238

Capital surplus

18,77018,81818,85018,862

18,94919,01913,88813,88013,226

13,239Retained earnings

40,53945,11250,50555,09959,35562,756

65,91072,06380,34486,559Treasury stock

-458

-449

-443

-441

-436

-430

-10,327-10,208-10,123-10,077

Other comprehensive income

992

1,711

1,373

525

799

1,484

466

-86

662

1,619

Share subscription rights

205

165

166

221

263

303

299

186

119

86

Non-controlling interests

1,260

1,547

1,869

2,168

2,434

2,773

2,062

2,213

814

757

Total net assets

64,547

70,14575,55879,67484,604

89,14375,53981,28688,281

95,421

Working capital

22,36615,147

13,486

8,711

13,464

12,542

16,33321,046

19,012

20,712

15

5

-

-

564

225

409

263

299

247

Net cash

28,01944,98056,90657,74862,866

71,311

59,82462,09259,474

68,035

Shareholders' equity

63,082

68,43373,52377,285

81,90786,06773,17878,88787,34894,578Equity ratio

62.6%

61.6%

59.0%

59.7%

59.4%

59.5%

54.4%

57.6%

64.0%

66.2%

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 (JPY68.3bn, FY02/22), accounts receivable (JPY40.7bn),
tangible fixed assets (JPY7.1bn), and intangible assets (JPY5.7bn). Interest-bearing debt is JPY247mn. The company has a cashrich balance sheet. Tangible fixed assets and intangible assets are small as the company’s business structure does not requirea large balance sheet. In FY02/20 the company ended its policy of leaving deposits with Aeon, from a cash governance
perspective.
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-FY02/22, the equity ratio was 66.2%. Although it declined to 54.4% at end-FY02/19 following the restatement ofprior-year earnings accompanying the Kajitaku accounting fraud, it subsequently recovered.

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Profitability and financial ratios
Profit margins

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21(JPYmn)

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

FY02/22Cons.

Gross profit

30,22733,24534,29034,83635,73634,87135,452

38,57037,17539,498Gross profit margin

12.1%

13.0%

12.9%

12.5%

12.2%

11.9%

11.7%

12.5%

12.4%

12.4%

Operating profit

13,901

14,622

15,39014,556

14,13912,90913,03016,001

15,23015,733

5.6%

5.7%

5.8%

5.2%

4.8%

4.4%

4.3%

5.2%

5.1%

5.0%

16,13817,054

17,856

17,014

16,92816,03816,391

19,16818,45815,733

EBITDA margin

6.5%

6.6%

6.7%

6.1%

5.8%

5.5%

5.4%

6.2%

6.2%

5.0%

Net margin

3.0%

2.7%

3.0%

2.6%

2.4%

2.2%

2.1%

3.0%

3.9%

3.4%

ROA (RP-based)

14.4%

13.8%

13.1%

11.4%

10.7%

9.5%

9.6%

11.7%

11.2%

11.3%

ROE

12.5%

10.7%

11.2%

9.6%

8.9%

7.6%

8.1%

12.3%

14.1%

2.6

2.4

2.3

2.2

2.2

2.1

2.2

2.3

2.2

2.3

Working capital (JPYmn)

22,36615,147

13,486

8,711

13,464

12,542

16,33321,046

19,012

20,712Current ratio

226.9%

228.7%

222.2%

227.3%

236.1%

241.2%

211.6%

229.9%

249.3%

275.7%

Quick ratio

207.6%

201.3%

198.3%

200.1%

209.5%

218.4%

194.8%

214.3%

223.8%

248.0%OCF / Current liabilities-12.7%

57.5%

40.1%

22.3%

25.2%

28.2%

24.6%

14.7%

22.4%

28.6%

OCF / Total liabilities-12.1%

52.3%

35.2%

20.7%

22.0%

24.4%

20.9%

13.2%

21.5%

26.6%

18.5

22.3

15.4

10.1

9.7

12.4

13.6

18.3

20.8

19.5

13,319-7,219-1,661-4,775

4,753

-922

3,791

4,713

-2,0341,700

FY02/22

Operating profit margin
EBITDA

Financial ratios

Total asset turnover

Cash conversion cycle (days)
Change in working capital

11.7%

Source: Shared Research based on company data

Statement of cash flows
Cash flow statement

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21(JPYmn)

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cash flows from operating activities (1)-4,35821,35917,234

10,303

11,703

13,56812,373

7,371

10,403

12,598Pre-tax profit

13,92013,42014,807

16,526

14,08912,247

13,166

15,54810,651

16,355

Depreciation

1,130

1,294

1,341

1,699

2,069

2,414

2,602

2,352

2,427

2,755

-

678

578

250

122

39

123

175

1,659

441

Amortization of goodwill

1,107

1,138

770

759

720

715

759

815

801

722

Change in working capital-13,728

10,386

2,008

-552

449

1,035

-53

-4,745-1,831-2,311

Income taxes-6,578-6,114-6,615-6,336-6,602-6,115-5,188-6,506-4,838-2,592

-209

557

4,345

-2,043

856

3,233

964

-268

1,534

-2,772

Cash flows from investing activities (2)7,086-16,632-11,365-3,2552,233-2,666

12,256

13,838-7,325-386

Purchase of intangible/tangible fixed
assets-1,607-1,999-1,903-2,414-4,113-3,228-2,059-2,361-2,469-3,478

Impairment losses

Other

Proceeds from sale ofintangible/tangible fixed assets

147

41

18

116

24

14

15

-

39

3,254

Acquisition of shares in subsidiaries
affecting the scope of consolidation

-694

-388

-

-4,771---1,516---117

Payments of deposit for consumption to
subsidiaries and affiliates-170,520-212,400-220,511-218,798-229,151-250,400-284,000-192,500-31,000-

Collection of deposit for consumption
from subsidiaries and affiliates

180,020

198,000

211,605

222,762

234,800

250,113300,000

208,500

31,000

-

-260

114

-574

-150

673

835

-184

199

-4,895-45

OtherFree cash flow (1+2)

2,728

4,727

5,869

7,048

13,936

10,902

24,62921,2093,078

12,212

Cash flows from financing activities-2,257-2,475-2,594-2,821-2,400-3,264-19,686-3,392-5,324-4,572

Net change in short-term borrowings

-25

-

-

-

219

-28

179

-143

60

-74

Net change in long-term borrowings

-6

-

-

-

324

90

-2

-3

-14

-

-2,256-2,464-2,573-2,676-2,842-2,996-3,259-3,195-3,397-4,450Acquisition of treasury stock

2

57

37

14

28

41

-9,906109--

Acquisition of shares in subsidiaries notaffecting the scope of consolidation

-

-

-

-

-57

-21

-6,458--1,853

-

28

-68

-58

-159

-72

-350

-240

-160

-120

-48

Payment of dividends

Other
Other

26

99

172

-229

-6

80

-228

-98

32

925

Change in cash and cash equivalent

497

2,351

3,447

3,997

11,530

7,718

4,715

17,719-2,214

8,564

Cash and cash equivalent (year-end)

9,676

12,02815,476

19,47331,00438,72243,437

61,15158,93767,520Source: 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
The main element in the company’s financing cash flows is dividend payments. There were significant outflows in FY02/19
including JPY9.9bn to buy back the company’s shares and additional amounts to make consolidated subsidiaries fully owned.

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Cash conversion cycle

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

Accounts receivable turnover

6.6

6.5

7.6

7.9

8.4

8.2

8.0

7.5

7.3

8.0

Days in accounts receivable

55.7

56.3

48.2

46.0

43.5

44.4

45.7

48.9

49.7

45.9

Inventory turnover

116.2

92.9

88.3

88.3

84.8

88.2

110.7

133.9

137.4

136.4

Days in inventory

3.1

3.9

4.1

4.1

4.3

4.1

3.3

2.7

2.7

2.7

Accounts payable turnover

9.1

9.6

9.9

9.1

9.6

10.1

10.3

10.9

11.5

12.6

Days in accounts payable

40.3

37.9

36.9

40.1

38.1

36.1

35.3

33.4

31.6

29.0

Cash conversion cycle (days)

18.5

22.3

15.4

10.1

9.7

12.4

13.6

18.3

20.8

19.5

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

FY02/13
12.5%

10.7%

11.2%

9.6%

8.9%

7.6%

8.1%

12.3%

14.1%

11.7%

Net margin

3.0%

2.7%

3.0%

2.6%

2.4%

2.2%

2.1%

3.0%

3.9%

3.4%

Total asset turnover

2.57

2.42

2.25

2.19

2.19

2.07

2.17

2.27

2.19

2.27

Financial leverage (equity multiplier)

1.61

1.61

1.66

1.68

1.68

1.68

1.75

1.79

1.65

1.54

14.4%

13.8%

13.1%

11.4%

10.7%

9.5%

9.6%

11.7%

11.2%

11.3%

ROA (RP-based)
ROIC

FY02/14

13.4%

13.5%

13.1%

12.1%

11.5%

10.2%

10.9%

FY02/20

FY02/21

FY02/22

14.1%

12.4%

11.8%

NOPAT

8,245

9,064

9,540

9,368

9,464

8,925

9,040

11,101

10,567

10,916

Interest-bearing deb + Net assets

61,40067,35672,854

77,61682,421

87,26882,65878,74985,065

92,124

ROIC (before tax)

22.6%

21.7%

21.1%

18.8%

17.2%

14.8%

15.8%

20.3%

17.9%

17.1%

Operating profit margin

5.6%

5.7%

5.8%

5.2%

4.8%

4.4%

4.3%

5.2%

5.1%

5.0%

Sales / Invested capital

4.05

3.81

3.65

3.58

3.55

3.35

3.66

3.92

3.53

3.45

Source: Shared Research based on company data

Dividends
FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

FY02/22

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

2,413

2,519

2,625

2,731

2,890

3,207

3,114

3,246

4,099

4,201

b)

1

1

1

-

-

1

9,906

-

-

-

c) = a) + b)

2,414

2,520

2,626

2,731

2,890

3,208

13,020

3,246

4,099

4,201

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

d)

7,509

7,039

7,965

7,247

7,093

6,397

6,415

9,348

11,680

10,665

Dividend payout ratioa) / d)

32.1%

35.8%

33.0%

37.7%

40.7%

50.1%

48.5%

34.7%

35.1%

39.4%

Total shareholder return ratioc) / d)

32.1%

35.8%

33.0%

37.7%

40.7%

50.1%

203.0%

34.7%

35.1%

39.4%

EPS

(JPY)

143.2

134.2

151.7

138.0

135.0

121.7

122.9

187.2

233.7

213.3

Dividend per share

(JPY)

46.0

48.0

50.0

52.0

55.0

61.0

63.0

65.0

82.0

84.0

Dividend on equity ratioa) / f)

4.0%

3.8%

3.7%

3.6%

3.6%

3.8%

3.9%

4.3%

4.9%

4.6%

Source: Shared Research based on company data

Shareholder returns
THe company had planned to achieve a dividend payout ratio of 40% by FY02/24, but it has since brought forward this date
to FY02/23. In FY02/19, the company spent JPY9.9bn to buy back its own shares.
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, and is aiming to maintain a level of 12% through FY02/24.
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%.

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Other information
History
Date

Description

April
February

1973
1976

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.

September

2006

November

2007

Following absorption-type merger with Aeon Techno Service Co., Ltd., Japan Maintenance changed name to Aeon Delight Co.,
Ltd.
Wholly owned subsidiary Aeon Delight (Beijing) Co., Ltd. (now Aeon Delight (China) Co., Ltd.) established

October2008

Acquires 40% of shares in Kankyouseibi Co., Ltd. (Utsunomiya, Tochigi) and made it affiliate

April
September

2009
2010

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

2011

Acquires 90% of shares in Kajitaku Inc. (Chuo, Tokyo) and made it subsidiaryMay

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.)

December
March

2012

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.

AugustOctober

Acquired 53.7% of shares in General Services, Inc. (Chiyoda, Tokyo) and made it subsidiary

October
DecemberAcquired 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
Established wholly owned subsidiary Aeon Delight (Vietnam) Co., Ltd.

DecemberJanuary

2013

July

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

November
December

2015

March

2016

Acquired remaining VINX Corp. stake in FMS Solution Co., Ltd. via tender offer and made it wholly owned subsidiary
Acquired remaining Familynet Japan Corporation stake in A-Life Support Co., Ltd. in September 2016, and conductedabsorption-type merger

2017

Established wholly owned subsidiary Aeon Delight (Shanghai) Management Co., Ltd.

December
March

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.

April
June
April

Established Aeon Delight DeepBlue Technology (Shanghai) Co., Ltd., a 65% owned joint venture with DeepBlue Technology
Co., Ltd.
Acquired 100% of shares in U-COM Co., Ltd. (Minato, Tokyo) and made it subsidiary

2018

May

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

November
DecemberFebruary

2020

February

2021

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
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

MarchTransferred all stake in Aeon Delight Jiangsu, Wuhan Xiaozhu, and Aeon Delight (Shanghai) to Aeon Delight (China) as acontribution in kind

November

Source: Shared Research based on company data

Major shareholders
Shares held ('000)

Shareholding ratio

Aeon Co., Ltd.

27,613

55.2%

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

Top shareholders

3,439

6.9%

Aeon Delight Business Partners Stockholding Association

1,187

2.4%

SSBTC CLIENT OMNIBUS ACCOUNT

914

1.8%

The Nomura Trust & Banking Co.(Trust account)

711

1.4%

Custody Bank of Japan, Ltd. (Trust account)

696

1.4%

The Bank of New York Mellon Corporation 140044

526

1.1%

Aeon Delight Employees Stockholding Association

507

1.0%

BNP PARIBAS LONDON BRANCH FOR PRIME BROKERAGE CLEARANCE ACC FOR THIRD PARTY

389

0.8%

Custody Bank of Japan, Ltd.(Trust account 4)

367

0.7%

Source: Shared Research based on company data
(As of end- February 2022)

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Corporate governance(As of May 2022)
Form of organization and capital structure
Form of organization
Controlling shareholder
Parent company ticker

Company with Audit & Supervisory BoardY
Aeon Co., Ltd. 8267

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

20
1

Number of directors
Outside directors

84

Independent outside officers

4

Audit & Supervisory Board
Existence of Audit & Supervisory Board

Y

Number of Audit & Supervisory Board members per Articles of Incorporation
Number of members of Audit & Supervisory Board

5
4

Outside members of Audit & Supervisory Board

3

Independent outside officers
General shareholders meeting2

Participation to electronic voting platformY

Preparation of convening notices in English
Investor relations

Y

Corporate disclosure policy
Regular briefings for individual investorsY
Y

Briefings by representative directors

Y

Regular briefings for analysts and institutional investors
Online access to IR documents

Y
Y

Dedicated IR section and/or staff
Other current assets

Y

Foreign shareholding ratio
Independent officers
Implementation of measures regarding director incentives

10–20%
6
Stock option

Disclosure of individual director's compensation
Policy to determine amount and calculation method of remuneration

N
Y

Corporate takeover defenses

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-FY02/22, Aeon Delight had 20,200 employees (20,117 at end-FY02/21) and an average of 7,556 temporary
employees (7,191) on a consolidated basis. At the parent level, there were 4,174 employees (4,118) and 2,862 temporary
employees (2,915).
In FY02/22, the average age, average length of employment, and average annual salary on a parent basis were as follows:
Average age: 45.9 years
Average length of employment: 11.5 years
Average annual salary: JPY5.0mn
In the Aeon group, the Aeon Delight Union (4,870 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.
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
1H FY02/23 results
Sales: JPY147.7bn (+0.7% YoY, +0.9% based on the previous accounting standard)
Operating profit: JPY6.6bn (-21.7% YoY)
Recurring profit: JPY6.6bn (-22.2% YoY)
Net income attributable to owners of the parent: JPY4.3bn (-22.0% YoY)
The company adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) effective
Q1 FY02/23. As a result, revenue recognition standard was changed for some operations of the Facilities Management,
Materials and Supplies Sourcing Services, and Vending Machine Services segments. Due to the adoption of the new
accounting standard, 1H sales were reduced by JPY17.7bn, cost of sales by JPY17.6bn, and operating profit, recurring profit,and pre-tax profit by JPY4mn each. The balance of retained earnings at the beginning of the fiscal year was reduced by
JPY1.1bn.
YoY comparisons in this report have been calculated after retroactively applying the new accounting standard to FY02/22
results.
Sales were up 0.7% YoY. Sales increased in five segments—Facilities Management, Security Services, Materials andSupplies Sourcing Services, Vending Machine Services, and Support Services—due to an increase in the share ofexisting customer wallets on the back of strengthened account management and sales activities, an increase in newly
contracted facilities, and lessened impact from the COVID-19 pandemic. Meanwhile, sales fell in Cleaning Services due
to a decline in demand for cleaning with alcohol disinfectants and in Construction Work due to postponement orcancellation of capex plans.
Gross profit: Gross profit fell 4.2% YoY to JPY19.6bn, with the GPM also down 0.7pp YoY to 13.3%, due primarily to a drop
in GPM in Cleaning Services and Materials and Supplies Sourcing Services. In Cleaning Services, GPM fell in reaction
to elevated demand for relatively high-margin services, such as disinfectant cleaning for facilities that have been exposed
to COVID-19, seen a year ago. In Materials and Supplies Sourcing Services, a rise in procurement costs driven by soaring
raw material and logistics costs depressed GPM.
SG&A expenses: SG&A expenses were JPY13.0bn (+8.1% YoY), and the SG&A ratio was 8.8% (+0.6pp YoY). The rise in
SG&A expenses was attributed to upfront expenditures including capital, personnel, and digitalization investments thecompany made as initially planned. In personnel investment, the company expanded hiring of both new graduates andmid-career candidates, and strengthened employee training.
Net income attributable to owners of the parent fell due to a decline in operating profit. Non-operating income/expenses
and extraordinary gains/losses had only a marginal impact on earnings.
Impact from the external enviornment
The impact of changes in the external environment, including rising crude oil prices and forex fluctuations, had a marginal
impact on the cost of sales and SG&A expenses. Meanwhile, earnings contributions from overseas operations expanded due
to a weaker yen, which provided a JPY100mn boost to 1H operating profit. The company expects these contributions to begreater in 2H.

Recent initiatives
Made a Chinese subsidiary an investment company
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.
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.
Collaboration with Kao Professional Services Co., Ltd.
In October 2022, the company announced the start of collaboration with Kao Professional Services Co., Ltd. to develop the
new Infectious Disease Risk Assessment Service, with the aim of supporting companies and organizations in the prevention of
infectious diseases.
Kao Professional Services: A wholly owned subsidiary of Kao Corporation (TSE Prime: 4452), a major daily goods
manufacturer in Japan. Kao Professional Services manufactures and sells products and provides consulting services forhygiene management for operators of restaurants, hospitals and long-term care facilities, and hotels.
Collaboration overview: Kao Professional Services will utilize its knowledge of infection risk assessment developed
through its hygiene management business. Aeon Delight will leverage its expertise and service development capabilities
accumulated through providing cleaning solutions to customers. The two companies aim to develop a new service
through which they assess hygiene risks and provide solutions based on behavioral analysis in various situations, including
public spaces and living areas.
Share buyback
In October 2022, the company announced a share buyback. The share buyback was in line with the company's goal of
improving capital efficiency through implementing a flexible capital policy in response to changes in the businessenvironment and enhancing shareholder returns.
Type of shares to be acquired: Common stock of the company
Total number of shares to be acquired: 1,500,000 shares (maximum; 3.00% of shares outstanding, excluding treasury
stock)
Total value of shares to be acquired: JPY5.3bn (maximum)
Period of acquisition: October 5, 2022 to October 4, 2023

Progress versus full-year company forecast
Versus the full-year FY02/23 company forecast, 1H sales were 47.6% (51.6% of full-year results in 1H FY02/22, based on theprevious accounting standard), operating profit 38.8% (53.6%), recurring profit 38.8% (53.8%), and net income 40.5%(52.1%).
Sales were largely in line with plan, while profits lagged the plan. All profit categories from the operating line down fell
short of their respective targets due to a decline in highly profitable minor repair and maintenance work in Construction
Work and higher procurement costs in Materials and Supplies Sourcing Services.
Initiatives aimed at achieving full-year targets
The company aims to grow sales in all segments for the full year by strengthening proposal-based sales, primarily inConstruction Work where recovery is being delayed. It also intends to implement cost-cutting measures to meet the full-year
operating profit target.
Energy saving proposals: The company will strengthen proposals highlighting energy-saving benefits in Construction
Work. Specifically, it will make proposals that can contribute to reducing energy costs and environmental burden,
including LED lighting and automatic air-conditioning control services, as well as the sale of non-CFC cases, forcommercial facilities with high electricity demand, amid rising electricity and other energy costs due to soaring crude oil
prices. Through these measures, the company aims to recover earnings in Construction Work.
Proposals to meet safety and security demand: In Construction Work, the company will propose safety measures forfacilities, such as the installation of U-shaped poles in parking lots of commercial facilities to prevent vehicles from

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crashing into stores. It will also make other proposals to enhance safety and security of facilities, aimed at preventing
accidents and preparing them for a natural disaster.
Minor repair projects: In Facility Management, Construction Work, and Cleaning Services, the company will step up
efforts to make proposals for minute, detailed work (minor repairs, cleaning, etc.) besides contracted work necessary forfacility maintenance and management. By focusing on making proposals related to energy savings, safety and security,
compliance, and hygiene, the company aims to enhance the closing rate, or the probability of its proposals being
accepted by customers. Minor repair work refers to irregular, small, detailed work for contracted facilities. While sales
per project are small for the minor repair work compared with other contracted projects, many are highly profitable andorders are frequent, and hence are expected to contribute to earnings and profitability growth.

Quarterly results
Q1 FY02/23: Sales were JPY71.8bn (+0.9% YoY), and operating profit was JPY3.3bn (-12.0% YoY). The decline inoperating profit was attributed to an increase in SG&A expenses, as the company incurred upfront costs—including
capital, personnel, and digitalization investments—as initially planned. By segment, sales grew in Facilities Management,
Security Services, Cleaning Services, Materials and Supplies Sourcing Services, and Support Services. Operating profit
increased in Facilities Management, Vending Machine Services, and Support Services.
Q2 FY02/23: Sales amounted to JPY75.9bn (+0.6% YoY) while operating profit dipped 29.3% YoY to JPY3.3bn. The drop
in operating profit was due to an increase in SG&A expenses as the company continued to incur upfront costs in the formof capital, personnel, and digitalization investments as it did in Q1. By segment, sales fell in Cleaning Services due to a
falloff in demand for cleaning services using alcohol disinfectants, and sales were also down in Materials and Supplies
Souring Services. Meanwhile, sales grew in Vending Machine Services owed to extreme heat. Operating profit rose in
Facilities Management and Vending Machine Services. The rate of decline in operating profit widened in Security
Services, Cleaning Services, and Construction Work due to sluggish demand for high-margin services. Operating profit
also fell by a greater margin in Materials and Supplies Sourcing Services due to higher procurement costs.

Segment trends
In 1H FY02/23, sales increased YoY in the five segments other than Construction Work and Cleaning Services. Operating
profit grew in Facilities Management, Vending Machine Services, and Support Services, while it fell in Security Services,
Cleaning Services, Construction Work, and Materials and Supplies Sourcing Services.

Facilities Management
Sales: JPY32.3bn (+4.0% YoY; +4.2% YoY based on the previous accounting standard)
Operating profit: JPY2.8bn (+7.7% YoY)
Sales and profit in the segment grew due to an increased share of wallets, driven by growth in renewal contracts and inorders for various maintenance services.
Sales growth was attributed to new contracts in 1H for building maintenance work for new Aeon group stores as well as nongroup facilities, and contributions from facilities contracted in 2H FY02/22 (facilities of non-Aeon group manufacturers andfinancial institutions). The company's share of existing customer wallets increased, in part due to its account management
initiatives. Also contributing to the increased share of wallets were new contracts for retailers and manufacturers that operate
multiple outlets, and stores, factories, and offices of corporate customers.
Account management: Instead of communicating with customers on a segment basis as in the past, the company now
appoints account managers for key clients and centrally manages customer information across segments. It was able toexpand transaction volume by deepening account managers' understanding of customers and various industries, andmade progress in improving customer satisfaction and referring customers to other segments. It is working to provide
services across the segments in a single package (for example, Construction Work carries out an order associated with
Facilities Management), and to provide the same services regardless of region to clients operating nationwide. These
efforts have contributed to the company's increased share of wallets.
Area management: 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 to automate on-site management tasks and save labor. In addition to setting up such a system, thecompany adopted an area management strategy, which involves the sharing of facility management personnel in a given
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area with reference to customers' needs and attributes of each facility and region, and this led to cost reductions throughlabor savings and automation. The company first introduced the strategy primarily for Aeon Retail stores among theseveral thousand facilities under contract. The company targets to have 360 area-managed facilities and reduce facility
management personnel by 180 by the end of FY02/24. Progress toward these targets was largely in line with plan as ofend-1H FY02/23, with 248 facilities (versus 178 at end-FY02/22) covered by the area management strategy and facility
management personnel down by 141 (115).
Outlook for 2H
For 2H, the company expects to maintain sales growth comparable to that of 1H. It expects newly contracted facilities in 1H
to contribute to earnings throughout the year. On the profit front, OPM is projected to improve in 2H as area management
initiatives and measures to cut outsourcing costs bear fruit, and also due to a falloff in one-time expenses booked in 1H. To
reduce outsourcing costs, the company is considering to change or consolidate contract facility inspectors, and negotiate
prices.
Further, the company intends to accelerate the adoption of the area management strategy nationwide. At facilities under area
management in Hokkaido, the use of surveillance cameras, smart meters, temperature and humidity sensors, and othertechnologies is contributing to labor savings for on-site operations. In 2H, the company intends to introduce thesetechnologies to all facilities under its management throughout Japan, with cost savings expected to materialize from
FY02/24 onward.

Security Services
Sales: JPY24.1bn (+2.0% YoY)
Operating profit: JPY1.4bn (-15.2% YoY)
Sales increased YoY, driven by an increase in the number of customer companies as the company won new contracts forgovernment buildings, commercial facilities, and condominiums among others in China. In Japan as well, newly contracted
facilities, including new Aeon group stores and non-Aeon group facilities (automakers, hospitals, hotels, commercial
complexes, and business centers of financial institutions), and facilities contracted in 2H FY02/22 contributed to sales
growth. The company captured a larger share of customer wallets and acquired new customers through reinforcing accountmanagement.
Operating profit fell YoY. Profitability fell due in part to a decline in orders for security cameras mainly from the Aeon group.
Aeon group is striving to cut costs amid the pandemic, and as one of its cost-cutting measures, it is refraining from replacing
or installing additional security cameras. Under these circumstances, to improve profitability, the company continued
negotiations to optimize unit prices and worked to automate systems to handle tasks such as facility entry/exit management
and store opening/closing.
Outlook for 2H
The company expects sales to remain on an uptrend in 2H as well, on contributions from newly contracted facilities in 1H. It
also expects OPM to improve in 2H. Costs incurred in Q1 for the launch of services for newly contracted facilities were a
one-time factor, and efforts to automate systems for facility entry/exit management and store opening/closing as well as
negotiations aimed at optimizing unit prices are expected to begin bearing fruit.

Cleaning Services
Sales: JPY33.8bn (-1.0% YoY)
Operating profit: JPY3.3bn (-22.2% YoY).
Sales were flat YoY despite a falloff in demand for disinfectant cleaning, quarantine-related cleaning, and special cleaning
services which increased a year ago due to the pandemic, as recurring contracts for new facilities both in and outside the
Aeon group increased. The company also worked to introduce and expand special cleaning services at customers outside the
Aeon group (including financial institutions, manufacturers, retailers, and hospitals), such as New Standard Cleaning, acleaning method for maintaining a hygienic, attractive environment developed based on the company's proprietary cleaning
services previously provided to hospitals.
Operating profit was down YoY due to a decline in OPM attributable to a drop in orders for high-margin cleaning services
using alcohol disinfectants.

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Outlook for Q2 onward
For 2H, the company expects sales to increase YoY, supported by contributions from recurring contracts acquired in 1H. It
aims to strengthen account management for major corporations and expand areas where it can win contracts. Further, by
utilizing its expertise acquired through providing sanitary cleaning services for hospitals and the New Standard Cleaning
service, it plans to provide Healthcare Solutions that raise hygiene standards. Inbound tourists are projected to increase in
2H, and so the company will focus on providing these solutions to hotels.
Contracts for high-margin special cleaning services were down in 2H FY02/22, and hence the company expects YoY decline
in 2H FY02/23 to be smaller.

Construction Work
Sales: JPY23.4bn (-5.8% YoY)
Operating profit: JPY1.4bn (-37.5% YoY).
Sales were down YoY due to delays in some construction work caused by shortages and delayed procurement of construction
materials, such as parts and air conditioning equipment, against a backdrop of the COVID-19 pandemic and the Russian
invasion of Ukraine. Further, orders declined as some retailers cut back on their capital spending in light of uncertainties inthe external environment and soaring electricity and other costs. Orders were also hurt by customers' cancellation or
postponement of capex plans, as well as their cutting back on minor repair and maintenance works.
Operating profit fell YoY, due to lower sales and rising raw material prices. The drop in orders for high-margin minor repair
and maintenance work depressed OPM.
Outlook for Q2 onward
Sales and profit are projected to increase in 2H and for the full year.
Some Aeon group store facilities were damaged by the earthquake that struck off the coast of Fukushima Prefecture in March
2022. The company received orders for restoration-related work for the facilities damaged by the earthquake, and expects tobook sales for most of these orders in Q3. In FY02/22 as well, there was an earthquake off the coast of Fukushima Prefecture(in February 2021), which also resulted in an increase in restoration work-related sales, but these sales were booked in Q2
FY02/22. For this reason, the company expects a YoY increase in Q3 FY02/23 sales.
The company expects projects that were delayed in 1H to contribute to earnings in the full-year. It intends to step up efforts
to offer services that can contribute to lowering electricity costs and environmental burden, including LED lighting andautomatic air-conditioning control services, as well as selling non-CFC cases, for commercial facilities with high electricity
demand amid rising electricity costs.
On the profit front, the company is seeing an increase in material prices. It will work to reduce costs by enhancing theaccuracy of its construction cost estimates and by strengthening cost negotiations. It will also strengthen efforts to acquire
high-margin construction projects.

Materials and Supplies Sourcing Services
Sales: JPY20.5bn (+1.2% YoY; +1.6% YoY based on the previous accounting standard)
Operating profit: JPY994mn (-27.0% YoY)
Sales increased YoY, as the company focused on increasing its share within the Aeon group. The company expanded businesswith companies that have newly joined the Aeon group: Fuji Retailing Co., Ltd. (TSE Prime: 8278), which runs supermarkets
in the Chugoku/Shikoku region, and Can Do Co., Ltd. (TSE Standard: 2698), which has a nationwide chain of 100-yen shops.
From existing customers, it won contracts to source new materials and supplies. Sales to non-Aeon group customers also
grew, thanks in part to the sale of building maintenance-related materials, such as materials for floor cleaning and waxing, ata reasonable price.
Operating profit declined on lower OPM, as the company failed to sufficiently pass on higher costs for packing and othermaterials caused by soaring crude oil prices and higher raw material and logistics costs to selling prices.

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Outlook for 2H
The company expects to maintain sales growth on an increase in the number of contracts. It expects OPM to improve, as it ismaking progress in negotiating with customers to raise prices to better reflect higher cost of sales.

Vending Machine Services
Sales: JPY4.8bn (+0.3% YoY; +0.5% YoY based on the previous accounting standard)
Operating profit: JPY556mn (+57.3% YoY)
Sales were flat YoY, despite a recovery in customer footfall at commercial facilities where the company has installed vending
machines, as recovery in demand for beverages sold by these vending machines was delayed due to consumer behavior
changes caused by the pandemic. Sales grew in Q2, however, on the back of increased beverage sales owing to a recovery
in out-of-home activities and extreme heat in July–August 2022. Operating profit grew thanks to lower depreciation, as thecompany booked impairment losses for loss-making machines in Q4 FY02/22.
Outlook for 2H
The company will continue installing more of its multi-brand vending machines (which offer beverages from several different
brands) to improve profitability per machine. It recorded impairment losses for loss-making machines in FY02/22, andexpects this to contribute to improved earnings throughout FY02/23.

Support Services
Sales: JPY8.9bn (+10.7% YoY)
Operating profit: JPY279mn (+9.5% YoY)
Sales were up YoY. Business trip demand increased in travel-related services, and the company won contracts for on-site
shipping operations for newly opened Aeon Mall stores. Outside the Aeon group, the company worked to expand services
that were compatible with its other businesses to address outsourcing needs related to the management and operation ofcontracted facilities and their surroundings (e.g., operation of venues for new employee welcoming ceremonies andemployee training, and operations peripheral to building maintenance). The company also acquired new contracts in China,
including for operations peripheral to building management and support services for new building constructions.
Operating profit grew YoY due to higher sales and profit generated by subsidiary Aeon Compass, which operates a travelbusiness, from posting losses previously due to the pandemic.
Outlook for 2H
The company expects higher sales and operating profit driven by an increase in the number of contracts for domestic
business trips as the pandemic settles down.

Overseas business (within each segment)
Sales: JPY15.3bn (+30.2% YoY)
Operating profit: JPY790mn (-7.9% YoY)
Earnings of the overseas business are included in each segment. The company operates the Facilities Management, Security
Services, Cleaning Services, and Support Services businesses overseas. Aeon group companies comprise roughly half of its
customers.
Sales increased in China and the ASEAN region.
China
Sales grew 34.0% YoY to JPY10.6bn, benefiting from consolidation of Zhejiang Metelan Property Management, which wasmade a subsidiary in March 2022, and an increase in the number of contracted facilities managed by Aeon Delight Jiangsu(government facilities, offices, commercial facilities, etc.). The company won contracts for new facilities in Security Services,
Cleaning Services, and Support services, and worked to capture a larger share of customer wallets.
Operating profit fell YoY due to an increase in SG&A expenses as the company hired additional personnel to strengthen
governance.

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The company is actively seeking out M&A and partnership opportunities to develop specialty, expand business domains, andstrengthen customer base. In March 2022, it acquired a local company (Zhejiang Metelan Property Management) thatmanages and operates healthcare facilities under contract in Zhejiang and Jiangxi provinces. In October 2022, the company
made Aeon Delight (China) an investment company, making it easier to enter into cross-industry partnerships.
ASEAN
Sales were up in all ASEAN countries in which the company operates, as the economies that had been stagnant amid the
pandemic began to recover. The company made 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 businesshas governance issues, more so than the China business, and so the company dispatched personnel from Japan to addressthese issues and strengthen governance of the local business.
Malaysia: Sales jumped 43.1% YoY to JPY1.0bn, and operating profit also increased YoY. Sales grew as the company
secured contracts for various services including facility management, repair, and cleaning and disinfecting from existing
Aeon Malaysia stores for which the company initially won contracts at end-FY02/22. Despite higher personnel expenses
on increased headcount, profit grew supported by higher sales. Hourly wages were on an uptrend due to labor shortages
caused by stricter border controls imposed on immigrants and foreign workers amid the COVID-19 pandemic, but hourly
wages are gradually coming down to the pre-pandemic levels as border regulations are relaxed.
Vietnam: Sales rose 11.3% YoY to JPY1.8bn, and operating profit was also up YoY. Aeon Mall plans to accelerate store
openings in Vietnam between 2025 and 2026 in target areas, and the company accordingly is strengthening its local
business structure to capture demand anticipated to arise from the new stores. The company expects results to improve in
2H, as the pandemic is winding down and Aeon Mall is opening more stores in Vietnam and Cambodia.
Indonesia: Sales amounted to JPY2.0bn (+24.8% YoY), but the company posted an operating loss. Sales grew as thecompany won contracts for Aeon Mall stores, but operating profit fell into the red due to higher personnel expenses on
expanded efforts to improve the work environment in compliance with the revised local labor law. The increase inpersonnel expenses stemming from the revised law may also affect earnings in FY02/24. Indonesia is a larger market
within the ASEAN region, and the company has access to the customer base of a cleaning company it purchased 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.

Key initiatives for FY02/23
In FY02/23, Aeon Delight will carry out initiatives to realize the basic policies under its medium-term management plan:“customer-oriented management,” “promotion of digital transformation (DX),” and “group management.” The company will
also step up M&A efforts, both in Japan and overseas.
Customer-oriented management
A KPI for customer-oriented management is to generate 40.0% of sales outside the Aeon group in FY02/24. (This figure was
35.6% as of end-FY02/22 and 35.7% for FY02/21.) This figure rose to 36.3% as of end-1H FY02/23, thanks to contributions
from Facilities Management.
In FY02/22, the company assigned account managers to key customers. This approach created a system for managing
customer information centrally. By using account managers to build stronger customer relationships, the company has also
increased its share of customers outside the Aeon group.
Reorganizing and strengthening sales function: In April 2022, the company carried out structural reforms to reorganizeand strengthen its sales function. It reorganized business areas covered by its total eight branch offices nationwide tobetter reflect and accommodate regional characteristics. It also redefined the responsibilities of each branch officeposition from the operation to management levels. Further, the company held training sessions for branch managers toenhance their job proficiency and awareness as a manager of each regional unit. Having reorganized its sales structure,
the company aims to increase transactions with both existing and new customers, through reinforcing its accountmanagement initiatives for existing customers and making customer-centric proposals.
Developing healthcare solutions: In this category, the company makes proposals for raising facilities’ hygiene levels. Its
solutions leverage the track record and expertise the company has built up through hospital-oriented “hygienic cleaning”
and New Standard Cleaning. In April 2022, the company set up an organization tasked with honing proposals. With thisAeon Delight 9787
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organization, the company intends to expand proposals to non-group customers such as hospitals and hotels, and to win
new contracts.
Developing solutions to support decarbonization: In April 2022, the company set up a dedicated team that takes anintegrated approach toward helping customers decarbonize their operations. Efforts to date have focused on individual
steps for shrinking a customer’s carbon footprint: installation of energy saving equipment and other energy-saving
operations at individual facilities. Going forward, the company plans to expand into such areas as buying renewableenergy and issuing environmental certifications.
Promotion of digital transformation
KPIs for the promotion of digital transformation (DX) are to achieve OPM of 6.0% by FY02/24, maintain ROE of 12%,
introduce area management (sharing of facility management personnel between facilities located in a predetermined area)at 360 facilities, reduce the number of people assigned to specific facilities by 180, and reassign 20% of headquarters staff todirect departmental positions. As of end-1H FY02/23, OPM was 4.5%, the number of facilities under area management was
248 (+70 versus end FY02/22), and reductions in the number of people assigned to specific facilities was 141 (+26).
Promoting use of the Aeon Delight platform: The company plans to use the platform to collect customer feedback, facility
conditions, market trends in customers’ industries, and external information about weather and disasters. It will use AI toanalyze and process the data and efficiently share them across the service network of the company, group companies, andpartner companies. In FY03/23, the company plans to raise process efficiency by promoting links between the Aeon
Delight platform and various systems, and enhance the value of data by increasing the volume of information. In addition,in the sales department the company aims to make proposals from the customer’s perspective. To do so, the company will
utilize data from the Aeon Delight platform, as well as visualizing and sharing information about customer requests.
Group management
KPIs for group management to be achieved by FY02/24 are JPY65.0bn in sales at group companies in Japan, overseas sales
accounting for more than 8% of the total, and a shift toward shared services at the finance and accounting departments ofgroup companies in Japan. In 1H, overseas sales accounted for 10.4% of total sales, up from 7.8% at end-FY02/22. The rise in
the share of overseas sales was also attributed to the depreciation of the yen.
Promote growth of each group company in Japan by strengthening intragroup cooperation
Aeon Compass: In addition to handling overseas and domestic travel, the subsidiary also plans and manages events.
Performance recovered as it worked to capture recovering business trip demand and demand arising from theresumption of events.
Building maintenance subsidiary: Building maintenance subsidiaries include Aeon Delight Connect (core subsidiary inthe small and medium-sized facilities market), Hakuseisha (provides cleaning, hygiene management, security, facility
management, and construction services), and Kankyouseibi (handles facility management, construction, security,
cleaning management, designated manager operations). The business environment remained harsh, due tocustomers' postponement or brining forward of capital spending in light of changes in their operating environment,
shortages and procurement delays of materials and equipment caused by the pandemic and Russia–Ukraine war, andhigher initial spending for newly contracted facilities. Under these circumstances, in FY02/23, the company intends
to strengthen Aeon Delight Connect’s foundations by promoting cooperation, such as sharing personnel more
actively, and strengthening sales at companies operating small- and medium-sized stores nationwide. The company
also plans to strengthen the construction department through U-COM (designs commercial facilities and handles
interior construction), which it absorbed in March 2021.
Overseas, expand business in China and strengthen management base in the ASEAN region
China: The company aims to achieve organic growth by bolstering contracts for priority facilities such as medium- tohigh-end shopping centers, hospitals and nursing homes, and facilities in areas undergoing redevelopment. Aeon
Delight also seeks to acquire and form business alliances with local companies that provide security and cleaning
services for local hospitals and the factories of Japanese companies. In these ways, it aims to acquire expertise, expand
its business domain, and strengthen its customer base.
ASEAN region: The company expects business to grow in this region in the medium to long term, due to the openingof new Aeon group stores and the expansion of Japanese companies. Aeon Delight is moving toward the

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establishment of an ASEAN regional headquarters to strengthen the management base and help it plan growthstrategies in individual countries.

Q1 FY02/23 results
Sales: JPY71.8bn (+0.9% YoY, +0.6% based on the previous accounting standard)
Operating profit: JPY3.3bn (-12.0% YoY)
Recurring profit: JPY3.3bn (-12.0% YoY)
Net income: JPY2.2bn (-10.4% YoY)
The company adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) effectivefrom Q1 FY02/23. As a result, revenue recognition standard was changed for some of the Facilities Management, Materials
and Supplies Sourcing Services, and Vending Machine Services segments. Due to the adoption of the new accounting
standard, Q1 sales and cost of sales were each reduced by JPY8.4bn while operating profit, recurring profit, and pre-tax profit
each increased by JPY10mn; the balance of retained earnings at the beginning of the fiscal year was reduced by JPY1.1bn.
YoY comparisons in this report have been calculated after retroactively applying the new accounting standard to FY02/22
results.
Sales were up 0.9% YoY, due to an increase in the share of customers' wallet on the back of strengthened accountmanagement and advances made in acquiring new customers. Meanwhile, recovery was delayed in Construction Work,
with the segment posting a YoY decline in sales.
Gross profit: Gross profit was JPY9.7bn (-0.2% YoY), and GPM was 13.6% (-0.1pp YoY). In Q1 FY02/22, demand forservices with relatively high GPM such as disinfectant cleaning for facilities with COVID-19 exposures increased. Q1
FY02/23 results were affected by the falloff of such demand, but any negative impact from this factor was largely offset by
GPM growth in Facilities Management, Support Services, and Vending Machine Services.
SG&A expenses: SG&A expenses were JPY6.5bn (+7.1% YoY), and the SG&A expenses ratio was 9.0% (+0.5pp YoY). The
rise in SG&A expenses were attributed to upfront spending including capital expenditures as well as investments inpersonnel and digital transformation the company made as initially planned. External factors, such as the rising crude oil
price and changes in operating environment, only had a minor impact.
Net income attributable to owners of the parent fell due to a decline in operating profit. Non-operating income/expenses(JPY18mn) and extraordinary gains/losses (JPY6mn) had only a marginal impact on earnings.

Progress versus full-year company forecast
Versus the full-year FY02/23 company forecast, Q1 sales were 23.2% (25.1% of full-year results in Q1 FY02/22, based on theprevious accounting standard), operating profit 19.3% (23.7%), recurring profit 19.4% (23.8%), and net income 21.0%(23.5%). Progress rates in Q1 fell short of those in Q1 FY02/22.
Sales and earnings fell short of projections in Construction Work due to delayed business recovery, but results were in linewith plan in other segments.
Initiatives aimed at achieving full-year targets
The company aims to grow sales in all segments for the full year by strengthening proposal-based sales, primarily inConstruction Work where recovery is delayed.
Energy saving proposals: The company will strengthen proposals highlighting energy-saving benefits in Construction
Work. Specifically, it will make proposals that can contribute to reducing energy costs and environmental burden,
including LED lighting and automatic air-conditioning control services, as well as the sale of non-CFC cases, forcommercial facilities with high electricity demand, amid rising electricity and other energy costs due to soaring crude oil
prices. Through these measures, the company aims to recover earnings in Construction Work.
Proposals to meet safety and security demand: In Construction Work, the company will propose safety measures forfacilities, such as the installation of U-shaped poles in parking lots of commercial facilities to prevent vehicles fromcrashing into stores. It will also make other proposals to enhance safety and security of facilities, aimed at preventing
accidents and preparing them for a natural disaster.

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Minor repair projects: In Facility Management, Construction Work, and Cleaning Services, the company will step up
efforts to make proposals for minute, detailed work (minor repairs, cleaning, etc.) besides contracted work necessary forfacility maintenance and management. By focusing on making proposals related to energy savings, safety and security,
compliance, and hygiene, the company aims to enhance the closing rate, or the probability of its proposals being
accepted by customers. Minor repair work refers to irregular, small, detailed work for contracted facilities. While sales
per project are small for the minor repair work compared with other contracted projects, many are highly profitable andorders are frequent, and hence are expected to contribute to earnings and profitability growth.

Segment trends
Sales increased YoY in the five segments other than Construction Work and Vending Machine Services, owing to an increasein the share of wallets of existing customers on strengthened account management and advances made in new customer
acquisitions. Overall sales were up only 0.9% YoY, however, due to delays in earnings recovery in Construction Work.
Operating profit fell YoY, due to an increase in initial spending required for the launch of operations at newly contracted
facilities in Security Services, a decline in high-margin projects in Cleaning Services, and lower sales in Construction Work.

Facilities Management
Sales: JPY16.1bn (+4.0% YoY; +3.9% YoY based on the previous accounting standard)
Operating profit: JPY1.4bn (+7.6% YoY)
OPM: 8.5% (+0.3pp YoY)
Sales and profit in the segment grew owing to an increased share of customer wallets driven by growth in orders for various
maintenance services and new orders for contract management.
Sales growth was attributed to orders for building maintenance work for new Aeon group stores as well as non-groupfacilities, and contributions from facilities contracted in 2H FY02/22 (facilities of non-Aeon group manufacturers andfinancial institutions). The company's share of existing customer wallets increased, in part due to its account management
initiatives. It won new contracts for retailers and manufacturers that operate multiple outlets, and stores, factories, and officesof corporate customers.
Account management: Instead of communicating with customers on a segment basis as in the past, the company now
appoints account managers for key clients and centrally manages customer information. It aims to expand transaction
volume by deepening its understanding of customers and various industries, and accordingly improve customer
satisfaction and refer customers to other segments. To achieve this, it plans to provide services across the segments in asingle package (for example, Construction Work carries out an order associated with Facilities Management), and provide
the same services regardless of region to clients operating nationwide.
In March 2021, Aeon Delight set up customer service centers at all eight branches in Japan and rolled out remotesupport systems. The company also installed systems and sensors at facilities under management to promote labor saving.
This infrastructure enabled cost reductions through labor-saving and automation based on area management, which
involves the sharing of facilities management personnel in a set area. The company first launched the area management
concept with a focus on Aeon Retail stores among the several thousand facilities under contract. The company targets tohave 360 area-managed facilities and reduce 180 facilities management personnel by the end of FY02/24. Progress
toward these targets was largely in line with plan, with 231 facilities (versus 178 at end-FY02/22) covered by the area
management scheme and facilities management personnel down by 135 (115) as of end-Q1 FY02/23
Outlook for Q2 onward
From Q2 onward, the company expects to maintain a sales growth rate comparable to that of Q1. It expects newly contracted
facilities in Q1 to contribute to earnings throughout the year. OPM is also projected to improve from Q2 onward, as theeffects of area management initiatives and outsourcing expense cuts become apparent.

Security Services
Sales: JPY11.9bn (+2.5% YoY)
Operating profit: JPY733mn (-7.9% YoY)
OPM: 6.1% (-0.7pp YoY)

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Sales increased YoY. The number of customer companies under contract increased owing to the acquisition of new contracts
for new Aeon group stores as well as non-group facilities (hospitals, hotels, commercial facilities, administrative centers offinancial institutions). The company's share of existing customer wallets increased supported by enhanced accountmanagement, and progress was made in new customer acquisitions. In China as well, the number of customer companies
under contract grew as the company won contracts for new facilities such as commercial facilities and condominiums.
Operating profit fell YoY, as subsidiary Aeon Delight Security incurred higher initial expenses for facilities, equipment, andpersonnel for the launch of services at newly contracted facilities. Labor cost is rising in the security sector due to chronic
worker shortages. The company continued negotiations to optimize unit prices and worked to automate systems to handletasks such as facility entry/exit management and store opening/closing, with the aim of improving profitability.
Outlook for Q2 onward
The company expects the rate of sales growth from Q2 onward to be slightly higher than that of Q1, due to contributions
from newly contracted facilities. It also expects OPM to improve, as the expenditures accompanying the launch of services
for newly contracted facilities incurred in Q1 were a one-time factor and the efforts to automate systems for facility entry/exit
management and store opening/closing are expected to begin bearing fruit.

Cleaning Services
Sales: JPY16.6bn (flat YoY)
Operating profit: JPY1.7bn (-14.8% YoY)
OPM: 10.1% (-1.8pp YoY)
Sales were flat YoY despite a fall in demand for disinfectant cleaning, quarantine-related cleaning, and special cleaning
services which increased a year ago due to the pandemic, as recurring contracts for new facilities both in and outside the
Aeon group increased. The company also worked to introduce and expand special cleaning services at customers outside the
Aeon group such as New Standard Cleaning, a cleaning method to maintain a hygienic, attractive environment based on thecompany's own cleaning service that was previously provided to hospitals.
Operating profit was down YoY, due to lower OPM attributable to a decline in orders for high-margin cleaning anddisinfectant services using alcohol.
Outlook for Q2 onward
Achieving YoY sales growth in 1H may be difficult due to the absence of special demand that boosted results a year ago, but
the company expects 2H sales to expand YoY on the back of an increase in the number of new recurring contracts. OPM is
expected to fall below the previous year's level.

Construction Work
Sales: JPY10.3bn (-8.2% YoY)
Operating profit: JPY694mn (-35.0% YoY)
OPM: 6.7% (-2.8pp YoY)
Sales were down YoY, due to delays in some construction work caused by shortages and procurement delays of construction
materials, such as parts and air conditioning equipment, against a backdrop of the COVID-19 pandemic and Russian invasionof Ukraine. Further, orders declined as some retail companies cut back on their capital spending in light of uncertainties inthe external environment and soaring electricity and other costs.
Operating profit fell YoY, due to lower sales and rising raw material prices.
Outlook for Q2 onward
Some Aeon group store facilities were damaged by the earthquake that struck off the coast of Fukushima Prefecture in March
2022. The company received orders for restoration-related work, and expects to book sales for these orders in Q2 and Q3.
In FY02/22 as well, there was an earthquake off the coast of Fukushima Prefecture (in February 2021), which resulted in an
increase in restoration work-related sales in Q2 FY02/22. However, this year's sales from restoration work are expected to behigher YoY.
The company expects projects that were delayed in Q1 to contribute to earnings in the full-year. Further, it intends to step up
efforts to offer services that can contribute to reduced electricity costs and environmental burden, including LED lighting andAeon Delight 9787
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automatic air-conditioning control services, as well as the sale of non-CFC cases, for commercial facilities with high electricity
demand, amid rising electricity costs. These measures are expected to contribute to earnings in Q3 and Q4.
On the profit front, the company is seeing an increase in material prices. It will work to reduce costs by enhancing theaccuracy of its construction cost estimates and by strengthening cost negotiations. It will also strengthen efforts to acquire
high-margin construction projects.

Materials and Supplies Sourcing Services
Sales: JPY10.2bn (+3.0% YoY; +2.6% based on the previous accounting standard)
Operating profit: JPY615mn (-6.3% YoY)
OPM: 6.0% (-0.6pp YoY)
Sales increased YoY. The company expanded business with companies that have newly joined the Aeon group: Fuji RetailingCo., Ltd. (TSE Prime: 8278), which runs supermarkets in the Chugoku/Shikoku region, and Can Do Co., Ltd. (TSE Standard:
2698), which has a nationwide chain of 100-yen shops. With existing customers, it won orders to source new materials andsupplies.
Operating profit declined on lower OPM, as the company failed to sufficiently pass on higher costs for packing and othermaterials caused by soaring crude oil prices and higher raw material and logistics costs to selling prices.
Outlook for Q2 onward
The company expects to maintain sales growth, supported by an increase in the number of contracts. To improve operating
profit, it is negotiating with customers to pass on the increase in costs to selling prices.

Vending Machine Services
Sales: JPY2.2bn (-0.1% YoY; -2.9% YoY based on the previous accounting standard)
Operating profit: JPY208mn (+79.3% YoY)
OPM: 9.5% YoY (-4.2pp YoY)
Sales were flat YoY, as recovery in demand for beverages sold by vending machines located in commercial facilities wasdelayed due to changes in consumer purchasing behavior brought about by the pandemic. Profit grew, however, owing to a
decline in depreciation, as the company booked impairment losses for loss-making machines in Q4 FY02/22.
Outlook for Q2 onward
The company will continue installing more of its multi-brand vending machines (which offer beverages from several different
brands) to improve profitability per machine. It recorded impairment losses for loss-making machines in FY02/22, andexpects this to contribute to improved earnings throughout FY02/23.

Support Services
Sales: JPY4.5bn (+8.3% YoY)
Operating profit: JPY162mn (+36.1% YoY)
OPM: 3.6% (+0.7pp YoY)
Sales and profit increased YoY. Business trip demand increased in travel-related services, and the company won contracts for
in-facility shipping operations for newly opened Aeon Mall stores. It worked to expand services that were compatible with thecompany's other businesses to address outsourcing needs related to the management and operation of contracted facilities
and their surroundings. The company also acquired new contracts in China.
Outlook for Q2 onward
The company expects higher sales and operating profit, based on its projection that contracts for domestic business trip will
increase if the pandemic comes under control.

Overseas business (January–March 2022)
Sales: JPY7.1bn (+26.8% YoY)
Operating profit: JPY380mn (-9.5% YoY)

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Earnings of the overseas business are included in each segment. The company operates the Facilities Management, Security
Services, Cleaning Services, and Support Services businesses overseas. Aeon group companies comprise roughly half of its
customers.
Sales increased in China and the ASEAN region.
China
Sales grew 34.3% YoY to JPY5.0bn while operating profit fell YoY. Orders for contracted operations declined as commercial
facilities in Wuhan were temporarily closed due to the pandemic, but Aeon Delight Jiangsu secured a higher number offacility contracts (offices, commercial facilities, and government affiliated facilities). Further, the company worked to expand
its share of customer wallets in the region.
Profit fell YoY due to a one-time increase in infection countermeasure-related costs due to the spread of COVID-19 in
Wuhan.
The impact of lockdowns in Shanghai was limited, as the company had only a few facilities under contract in the city.
The company is actively seeking out M&A and partnership opportunities to develop specialty, expand business domains,and strengthen customer base. In March 2022, Aeon Delight China acquired a local company (Zhejiang Metelan Property
Management) that manages and operates healthcare facilities under contract in Zhejiang or Jiangxi provinces.
ASEAN
Sales in the ASEAN region as a whole grew thanks to the company's efforts to expand orders in each country it operates in.
The company began preparing to establish a head office in the region, with the aims of reinforcing group governance andforming a new growth strategy for the region as a whole.
Malaysia: Sales came to JPY450mn (+148% YoY), and operating profit also increased YoY. Sales grew as the company
secured contracts for services including facility management, repairs, and cleaning and disinfecting services from existing
Aeon Malaysia stores for which the company initially won contracts at end-FY02/22. Despite higher personnel expenses
on increased headcount, profit grew backed by higher sales.
Vietnam: Sales were JPY800mn (-5.7% YoY), and operating profit fell YoY. Performance deteriorated as restaurants andother facilities under contract were not able to operate normally due to the spread of COVID-19. Aeon Mall is stepping
up store rollouts in Vietnam, so the company is strengthening its local sales structure. The company expects results toimprove in 2H, as the pandemic is winding down and Aeon Mall is opening more stores in Vietnam and Cambodia.
Indonesia: Sales amounted to JPY930mn (+22.3% YoY), but the company posted an operating loss. Sales grew as thecompany won contracts for Aeon Mall stores, but operating profit fell into the red due to higher personnel expenses on
expanded efforts to improve the work environment in compliance with the revised local labor law. The increase inpersonnel expenses stemming from the revised law may also affect earnings in FY02/24. Indonesia is a larger market
within the ASEAN region, and the company has access to the customer base of a cleaning company it purchased 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.

Key initiatives for FY02/23
In FY02/23, Aeon Delight will carry out initiatives to realize the basic policies under its medium-term management plan:“customer-oriented management,” “promotion of digital transformation (DX),” and “group management.” The company will
also step up M&A efforts, both in Japan and overseas.
Customer-oriented management
A KPI for customer-oriented management is to generate 40.0% of sales outside the Aeon group in FY02/24. (This figure was
35.6% as of end-FY02/22 and 35.7% for FY02/21.) This figure rose to 36.3% as of end-Q1 FY02/23, thanks to contributions
from Facilities Management.
In FY02/22, the company assigned account managers to key customers. (Account managers are salespeople in charge ofhandling all transactions for a specific customer.) This approach created a system for managing customer information
centrally. By using account managers to build stronger customer relationships, the company has increased its share ofcustomers outside the Aeon group.
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Reorganizing and strengthening sales function: In April 2022, the company carried out structural reforms to reorganizeand strengthen its sales function. It reorganized business areas covered by its total eight branch offices nationwide tobetter reflect and accommodate regional characteristics. It also redefined the responsibilities of each branch officeposition from the operation to management levels. Further, the company held training sessions for branch managers toenhance their job proficiency and awareness as a manager of each regional unit. Having reorganized its sales structure,
the company aims to increase transactions with both existing and new customers, through reinforcing its accountmanagement initiatives for existing customers and making customer-centric proposals.
Developing healthcare solutions: In this category, the company makes proposals for raising facilities’ hygiene levels. Its
solutions leverage the track record and expertise the company has built up through hospital-oriented “hygienic cleaning”
and New Standard Cleaning. In April 2022, the company set up an organization tasked with honing proposals. With thisorganization, the company intends to expand proposals to non-group customers such as hospitals and hotels, and to win
new contracts.
Developing solutions to support decarbonization: In April 2022, the company set up a dedicated team that takes anintegrated approach toward helping customers decarbonize their operations. Efforts to date have focused on individual
steps for shrinking a customer’s carbon footprint: installation of energy saving equipment and other energy-saving
operations at individual facilities. Going forward, the company plans to expand into such areas as buying renewableenergy and issuing environmental certifications.
Promotion of digital transformation
KPIs for the promotion of digital transformation (DX) are to achieve OPM of 6.0% by FY02/24, maintain ROE of 12%,
introduce area management (sharing of facility management personnel between facilities located in a predetermined area)at 360 facilities, reduce the number of people assigned to specific facilities by 180, and reassign 20% of headquarters staff todirect departmental positions. In Q1, OPM was 4.6%, the number of facilities under area management was 231 (+53 versus
end FY02/22), and the number of people assigned to specific facilities was 135 (+20).
Promoting use of the Aeon Delight platform: The company plans to use the platform to collect customer feedback, facility
conditions, market trends in customers’ industries, and external information about weather and disasters. It will use AI toanalyze and process the data and efficiently share them across the service network of the company, group companies, andpartner companies. In FY03/23, the company plans to raise process efficiency by promoting links between the Aeon
Delight platform and various systems, and enhance the value of data by increasing the volume of information. In addition,in the sales department the company aims to make proposals from the customer’s perspective. To do so, the company will
utilize data from the Aeon Delight platform, as well as visualizing and sharing information about customer requests.
Group management
KPIs for group management to be achieved by FY02/24 are JPY65.0bn in sales at group companies in Japan, overseas sales
accounting for more than 8% of the total, and a shift toward shared services at the finance and accounting departments ofgroup companies in Japan. In Q1, overseas sales accounted for 9.0% of total sales, up from 7.8% at end-FY02/22.
Promote growth of each group company in Japan by strengthening intragroup cooperation
Aeon Compass: In addition to handling overseas and domestic travel, the subsidiary also plans and manages events.
Performance recovered as it worked to capture recovering business trip demand and demand arising from theresumption of events.
Building maintenance subsidiary: Building maintenance subsidiaries include Aeon Delight Connect (core subsidiary inthe small and medium-sized facilities market), Hakuseisha (provides cleaning, hygiene management, security, facility
management, and construction services), and Kankyouseibi (handles facility management, construction, security,
cleaning management, designated manager operations). The business environment remained harsh, due tocustomers' postponement or brining forward of capital spending in light of changes in their operating environment,
shortages and procurement delays of materials and equipment caused by the pandemic and Russia–Ukraine war, andhigher initial spending for newly contracted facilities. Under these circumstances, in FY02/23, the company intends
to strengthen Aeon Delight Connect’s foundations by promoting cooperation, such as sharing personnel more
actively, and strengthening sales at companies operating small- and medium-sized stores nationwide. The company
also plans to strengthen the construction department through U-COM (designs commercial facilities and handles
interior construction), which it absorbed in March 2021.
Overseas, expand business in China and strengthen management base in the ASEAN region

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China: The company aims to achieve organic growth by bolstering contracts for priority facilities such as medium- tohigh-end shopping centers, hospitals and nursing homes, and facilities in areas undergoing redevelopment. Aeon
Delight also seeks to acquire and form business alliances with local companies that provide security and cleaning
services for local hospitals and the factories of Japanese companies. In these ways, it aims to acquire expertise, expand
its business domain, and strengthen its customer base.
ASEAN region: The company expects business to grow in this region in the medium to long term, due to the openingof new Aeon group stores and the expansion of Japanese companies. Aeon Delight is moving toward theestablishment of an ASEAN regional headquarters to strengthen the management base and help it plan growthstrategies in individual countries.

FY02/22 results
Sales: JPY317.7bn (+5.9% YoY)
Operating profit: JPY15.7bn (+3.3% YoY)
Recurring profit: JPY15.8bn (+3.4% YoY)
Net income: JPY10.7bn (-8.7% YoY)
Sales expanded in all seven segments, and operating profit rose in five of the seven, with Construction Work and Vending
Machine Services being the exceptions.
Gross profit was JPY39.5bn (+6.2% YoY), and GPM was 12.4% (flat YoY). Services for disinfectant cleaning at facilities with
COVID-19 exposures boosted GPM. This positive impact was offset by lower-margin orders in Construction Work, such as
restoration work related to the February 2021 Fukushima Prefecture Offshore earthquake.
SG&A expenses were JPY23.8bn (+8.3% YoY), and the SG&A expense ratio was 7.5% (+0.2pp YoY). Although thecompany worked to automate operations, reduce labor, and lower costs mainly in Facilities Management and Security
Services, personnel expenses rose due to increased hiring and training of new graduates and mid-career recruits, and to
growth in expenses to promote area management and digital transformation (DX).
Net income attributable to owners of the parent decreased. As positive factors, the company sold two properties, including
one that housed the headquarters of a subsidiary, and booked a JPY1.2bn gain on the sale of fixed assets as extraordinary
profit. Another positive factor for net income was the dropout of the year-earlier JPY1.3bn extraordinary loss on the sale ofbusinesses associated with the divestiture of the ID photo machine business. Although pre-tax profit rose accordingly, higher
income taxes resulted in a YoY decline in net income.

Progress versus full-year company forecast
As a percentage of full-year company forecasts for FY02/22, sales came to 97.7% (95.3% in FY02/21), operating profit to
95.4% (92.3%), recurring profit to 95.7% (92.5%), and net income attributable to owners of the parent to 101.6% (116.8%).
Sales, operating profit, and recurring profit undershot company forecasts. In 1H FY02/22, performance outpaced company
forecasts due to special cleaning at facilities with COVID-19 exposures and restoration work related to the February 2021
Fukushima Prefecture Offshore earthquake. However, the pandemic resurged in 2H, leading to delays and cutbacks on
projects in the Construction Work segment. This outbreak also delayed recovery in Vending Machine Services, affecting fullyear results. COVID-19 had a JPY1.2bn impact on operating profit, higher than the JPY500mn the company had initially
expected.
Net income attributable to owners of the parent exceeded the full-year company forecast, which had not factored in
extraordinary gains on the sale of fixed assets at a consolidated subsidiary.

Quarterly results
Q1 FY02/22 (March–May 2021): Sales came to JPY79.7bn (+8.4% YoY) and operating profit to JPY3.7bn (+7.9% YoY).
Sales and profit increased in six of the seven segments. Construction Work was the exception due to some delays inconstruction work. Performance was supported in particular by Cleaning Services. Operating profit expanded in tandemwith sales growth.

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Q2 FY02/22 (June–August 2021): Sales came to JPY84.2bn (+10.5% YoY) and operating profit to JPY4.7bn (+16.2% YoY).
Sales and profit increased in six of the seven segments, with Vending Machine Services being the exception. Earnings
were mainly driven by Cleaning Services and Construction Work. In Cleaning Services, contracts for unscheduled
disinfectant cleaning at facilities with COVID-19 exposures increased. In Construction Work, the company undertook
restoration work at Aeon group facilities that were affected by the Fukushima Prefecture Offshore earthquake in February
2021.
Q3 FY02/22 (September–November 2021): Sales came to JPY76.8bn (+2.9% YoY) and operating profit to JPY3.4bn(-7.8% YoY). The rate of sales growth fell QoQ, lowering operating profit. The main factors affecting performance were (1)lower orders for disinfectant cleaning using alcohol in Cleaning Services (due to a nationwide decline in COVID-19
cases), (2) some delays in construction work in Construction Work, and (3) a drop in sales of beverages from vending
machines in Vending Machine Services.
Q4 FY02/22 (December 2021–February 2022): Sales came to JPY76.9bn (+1.7% YoY), and operating profit was JPY3.9bn(-3.4% YoY). The rate of sales growth fell QoQ, lowering operating profit. The main reason was project delays in theConstruction Work segment.

Segment trends
Sales expanded in all seven segments, and operating profit rose in five of the seven, with Construction Work and Vending
Machine Services being the exceptions.

Facilities Management
Sales: JPY61.5bn (+5.7% YoY)
Operating profit: JPY5.5bn (+6.2% YoY)
OPM: 8.9% (flat YoY)
Sales increased. The company acquired stores of new Aeon group companies as customers, as well as manufacturers andfinancial institutions outside the group. It set up a sales department that specializes in cultivating new customers, worked toincrease the transparency of—and share information about—its sales activities, and analyzed processes that lead to signed
contracts. These organizational initiatives strengthened sales. The company stepped up account management initiatives for
key customers (discussed below). There were no changes in the shares of sales inside and outside the Aeon group.
Profit increased as the company promoted area management (discussed below) directed toward reforming its work
processes.
Quarterly results
1H FY02/22: Sales came to JPY31.0bn (+6.6% YoY), operating profit to JPY2.6bn (+2.9% YoY), and OPM to 8.5% (-0.3pp
YoY). The company achieved sales and profit growth by adding new customers and expanding its services to existingcustomers.
Q3 FY02/22: Sales came to JPY15.5bn (+4.9% YoY), operating profit to JPY1.4bn (+3.6% YoY), and OPM to 9.2% (-0.1pp
YoY). The company acquired new Aeon group stores and manufacturers and financial institutions outside the group as new
customers, and it expanded its services to existing customers.
Q4 FY02/22: Sales came to JPY15.1bn (+4.7% YoY), operating profit to JPY1.5bn (+15.7% YoY), and OPM to 9.7% (+0.1pp
YoY). The company acquired stores of new Aeon group companies as customers and expanded services to existingcustomers. Extraordinary factors pushed up OPM.
Account management
The company reinforced its account management initiatives. Instead of communicating with customers on a segment basis asin the past, it appointed account managers for key clients and centrally manages customer information. It expanded
transaction volume by deepening its understanding of customers and various industries, and accordingly improving customer
satisfaction and referring customers to other segments. The company provided services across the segments in a single
package (for example, Construction Work carries out an order associated with Facilities Management), and offered the same
services nationwide to clients.

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The company promoted industry-specific proposals. In addition to analyzing data on customers and various industries
collected through account management, the company made use of personnel familiar with target industries. In FY02/22, itgrew sales by strengthening sales to manufacturers who have become increasingly sensitive to cost management amid the
COVID-19 pandemic, and by capturing outsourcing demand. In FY02/23, it looks to build sales infrastructure thatconcentrates on the hotel, hospital, and other sectors where demand is expected to recover, and provide solutions-based
sales.
Area management
In March 2021, Aeon Delight set up customer service centers at all eight branches in Japan and rolled out remote support
systems. The company also achieved labor-saving on-site as it installed systems and sensors at its facilities. This infrastructure
enabled cost reductions through labor-saving and automation based on area management, which involves the sharing offacilities management personnel in a set area. The company first launched the area management concept with a focus on
Aeon Retail stores among the several thousand facilities under contract. It has FY02/24 targets of 360 area-managed
facilities and the reduction of 180 facilities management personnel. The company introduced the system at 151 facilities andhad reduced the facilities management headcount by 115 as of end-FY02/22.
In FY02/22, the company experienced only limited cost benefits from reduced headcount. From Q3 FY02/22, personnel
affected by these changes were redeployed to facility management positions at new properties outside the Aeon group or tosales positions, placed in charge of proposing construction estimates, or made site supervisors. The limited cost-reduction
impact was because new projects for customers under contract outside the Aeon group fell below the company's
expectations. The company anticipates that the results of personnel redeployment in area management will become
apparent in FY02/23.
Area management should reduce the number of personnel assigned to customer facilities and reduce the amount customers
pay. However, the company has maintained the quality of facilities management using remote support, and worked toincrease the spend per customer by negotiating an increase in fees per on-site personnel, and by collaborating on providing
services with other segments.

Security Services
Sales: JPY47.2bn (+6.4% YoY)
Operating profit: JPY3.4bn (+3.9% YoY)
OPM: 7.3% (-0.1pp YoY)
Sales expanded as growth in new contracts for new Aeon group stores, large automakers' factories, and others outside the
Aeon group pushed up the number of customers under contract, and because demand for event security and other services
recovered. Contract prices were unchanged YoY.
Operating profit rose in tandem with growth in the number of contracts. Labor costs were rising in the security sector due tochronic worker shortages. The company continued negotiations to optimize unit prices and worked to automate systems tohandle tasks such as facility entry/exit management and store opening/closing, with the aim of improving profitability. As aresult, OPM remained flat YoY.
In China, earnings from existing customers were stable, as the company signed new project contracts for complexes andcondominiums, and the impact of the pandemic waned. Shared Research understands that the Security Services segment
generated around JPY5.0bn in sales in China.
Quarterly results
1H FY02/22: Sales came to JPY23.6bn (+9.0% YoY), operating profit to JPY1.7bn (+6.8% YoY), and OPM to 7.2% (-0.1pp
YoY). The company continued to win new customers outside the Aeon group, and benefited from rising orders for event
crowd control and transport security. It conducted price negotiations and worked on automation measures in an effort toimprove profitability.
Q3 FY02/22: Sales came to JPY11.8bn (+4.5% YoY), operating profit to JPY894mn (+12.7% YoY), and OPM to 7.6%(+0.6pp YoY). Growth in new contracts for new Aeon group stores and customers outside the Aeon group drove up sales.
OPM improved as the effects of automation efforts started to manifest.
Q4 FY02/22: Sales came to JPY11.8bn (+3.4% YoY), operating profit to JPY839mn (-8.8% YoY), and OPM to 7.1% (-1.0pp
YoY). The company received contracts to provide security at sporting events and the factories of large automakers.

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Progress on automation
The company has introduced security systems at some 200 stores, which has helped curtail the number of security
personnel. In FY02/22, the company incurred some costs for this automation (although not a large amount), which it expects
to bolster profitability in FY02/23.

Cleaning Services
Sales: JPY67.0bn (+7.2% YoY)
Operating profit: JPY8.1bn (+10.7% YoY)
OPM: 12.1% (+0.4pp YoY)
Sales and profit improved, boosting companywide performance. The company expanded disinfectant cleaning, quarantinerelated cleaning, and special cleaning services to prevent the further spread of COVID-19. It won new customers andexpanded contracts from existing customers. The number of customers under recurring revenue contracts increased as somecustomers who had previously requested one-time services switched to recurring contracts. The company also worked to
introduce and expand special cleaning services at customers outside the Aeon group such as New Standard Cleaning, acleaning method to maintain a hygienic, attractive environment based on the company's own cleaning service that waspreviously provided to hospitals.
Quarterly results
1H FY02/22: Sales came to JPY34.1bn (+12.1% YoY), operating profit to JPY4.3bn (+24.7% YoY), and OPM to 12.5%(+1.2pp YoY). Sales and profit increased as the company won new customers and expanded orders from existingcustomers. Margins improved on increased adoption of services such as New Standard Cleaning, a high-margin special
cleaning service, and thanks to growth in contracts for unscheduled disinfectant cleaning at facilities with COVID-19
exposures.
Q3 FY02/22: Sales came to JPY16.4bn (+4.5% YoY), operating profit to JPY1.9bn (-0.7% YoY), and OPM to 11.6% (-0.6pp
YoY). Contracts from new Aeon group stores supported the growth in sales. However, sales growth slowed on a drop inorders for disinfectant cleaning using alcohol as the number of COVID-19 cases declined across the country. Profitability
also worsened due to a drop in the number of orders for high-margin special cleaning services.
Q4 FY02/22: Sales came to JPY16.5bn (+0.7% YoY), operating profit to JPY1.9bn (-2.5% YoY), and OPM to 11.7% (-0.4pp
YoY). A resurgence in COVID-19 led to contracts for unscheduled disinfectant cleaning at facilities with COVID-19
exposures. However, much of this cleaning was simple, and instances of highly profitable special cleaning for customers
under contact fell, sapping profitability.

Construction Work
Sales: JPY43.0bn (+5.8% YoY)
Operating profit: JPY3.6bn (-7.7% YoY)
OPM: 8.3% (-1.2pp YoY)
Sales increased, while profit fell. Sales rose due to restoration work related to the Fukushima Prefecture Offshore
earthquake in February 2021. Although some large construction work continued to be postponed, scaled back, or canceled,the company redoubled sales efforts targeting renovation work for customers in and outside the Aeon group. This initiative
boosted sales. OPM for restoration and renovation work is lower than for large-scale construction, so operating profit
decreased.
Quarterly results
1H FY02/22: Sales came to JPY24.8bn (+12.0% YoY), operating profit to JPY2.3bn (+8.1% YoY), and OPM to 9.1% (-0.3pp
YoY). In Q1, some construction work was delayed due to the COVID-19 pandemic, leading to a decline in sales and profit.
In Q2, however, sales and profit rose due to restoration work related to the February 2021 Fukushima Prefecture
Offshore earthquake at Aeon group facilities, and to an expanded volume of renovation contracts outside the Aeon
group.
Q3 FY02/22: Sales came to JPY8.9bn (+0.2% YoY), operating profit to JPY611mn (-23.4% YoY), and OPM to 6.8% (-2.2pp
YoY). Factors negatively affecting sales included delays in and cancellations of large-scale construction work, and delayeddeliveries of air conditioning and other equipment attributable to disruptions in distribution and semiconductor

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shortages. Profit declined as the company increased low-margin repair work orders to offset sluggish orders for largescale construction work.
Q4 FY02/22: Sales came to JPY9.3bn (-3.2% YoY), operating profit to JPY722mn (-27.9% YoY), and OPM to 7.7% (-2.7pp
YoY). Profit fell because the company took on more relatively low-margin repair work during the pandemic, as orders forlarge-scale construction work were sluggish.

Materials and Supplies Sourcing Services
Sales: JPY56.5bn (+6.5% YoY)
Operating profit: JPY2.6bn (+3.8% YoY)
OPM: 4.5% (-0.1pp YoY).
Sales and profit increased on sales growth for quarantine-related materials such as masks, gloves, alcohol for professional use,
and acrylic partitions to prevent droplet spread amid the COVID-19 pandemic, and also thanks to growth in sales of
packaging materials to newly acquired customers within the Aeon group. The company also strengthened its handling ofenvironmentally-friendly packaging materials and their sales value increased.
Quarterly results
1H FY02/22: Sales came to JPY28.8bn (+8.2% YoY), operating profit to JPY1.4bn (+6.1% YoY), and OPM to 4.7% (-0.1pp
YoY). Sales and profit increased due to high demand for quarantine-related materials amid the pandemic, and to risingnumbers of new customer inside and outside the Aeon group.
Q3 FY02/22: Sales came to JPY14.0bn (+7.3% YoY), operating profit to JPY570mn (+0.5% YoY), and OPM to 4.1% (-0.2pp
YoY). Demand for quarantine-related materials declined as the number of COVID-19 cases settled down, but sales grew as
the company secured new customers within the Aeon group and expanded sales of packaging materials. The company
stepped up sales activities, focusing on companies that have newly joined the Aeon group, in a bid to become a top
supplier able to meet all the materials needs of the group.
Q4 FY02/22: Sales came to JPY13.7bn (+2.3% YoY), operating profit to JPY628mn (+1.9% YoY), and OPM to 4.6% (flat
YoY). The company acquired new customers in the Aeon group, and sales of packaging materials increased.

Vending Machine Services
Sales: JPY26.4bn (+3.5% YoY)
Operating profit: JPY608mn (-6.9% YoY)
OPM: 2.3% (-0.3pp YoY)
Sales rose, while profit fell. Despite an uptrend in the number of customers at shopping malls where the company installs
vending machines, customer stays are growing shorter, and visitors continue to refrain from eating and drinking in public
places. Accordingly, fewer consumers are purchasing beverages from vending machines than before the pandemic.
Improvements from the previous year supported sales growth. The company installed more of its own multi-brand vending
machines (which offer products from several different brands) to improve profitability per unit. Sales per unit rose, but rising
fixed costs pushed profit down.
Quarterly results
1H FY02/22: Sales came to JPY13.5bn (+12.3% YoY), operating profit to JPY353mn (-1.1% YoY), and OPM to 2.6% (-0.4pp
YoY). Demand for beverages from vending machines slumped in 1H FY02/21 on the closure of facilities, people
refraining from going out, and increased teleworking in the wake of the government’s declaration of a state of
emergency. In 1H FY02/22, sales increased as customer traffic began to return to facilities and offices, and demand forbeverages from vending machines recovered. Profit fell on higher fixed costs as the company installed more of its own
multi-brand vending machines.
Q3 FY02/22: Sales came to JPY6.3bn (-10.7% YoY), operating profit to JPY61mn (-70.4% YoY), and OPM to 1.0% (-1.9pp
YoY). Commercial facilities operated normally, but growth in the number of customers using vending machines was
sluggish as overall customer traffic was lackluster and the time spent by customers in such facilities was short. On the
profit front, fixed costs expanded as the company installed more of its own multi-brand vending machines, and thispushed down profit.

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Q4 FY02/22: Sales came to JPY6.6bn (+2.6% YoY), operating profit to JPY194mn (+115.6% YoY), and OPM to 3.0%(+1.6pp YoY). Commission income from beverage producers increased, as the company hit target sales volumes, causing
operating profit to double.

Support Services
Sales: JPY16.0bn (+1.3% YoY)
Operating profit: JPY441mn (loss of JPY75mn in FY02/21)
OPM: 2.7%
Sales rose, and the segment turned profitable. Owing to the pandemic, demand was sluggish for services to plan and conduct
overseas training. Demand for arranging domestic and overseas business trips was also lackluster. However, sales increased
due to condominium management services in China. The company worked to expand services compatible with its businesses
from a customer perspective in an effort to meet outsourcing needs related to the management and operation of contracted
facilities and their surroundings.
Quarterly results
1H FY02/22: Sales came to JPY8.1bn (+4.1% YoY), operating profit to JPY255mn (versus a loss of JPY100mn in 1H
FY02/21), and OPM to 3.2%. Sales and profit increased due to a recovery in demand for event, travel, and business trip
support services at company subsidiary Aeon Compass, and to the exit from a loss-making subsidiary. Demand athousehold support services company Aqutia slumped amid price cuts by competitors.
Q3 FY02/22: Sales came to JPY4.0bn (-0.2% YoY), operating profit to JPY75mn (versus a loss of JPY71mn in Q3
FY02/21), and OPM to 1.9%. The company won contracts to deliver mail and parcels to tenants at new Aeon group stores,
and secured a higher volume of contracts to clean shared offices.
Q4 FY02/22: Sales came to JPY4.0bn (-2.3% YoY), operating profit to JPY111mn (+15.6% YoY), and OPM to 2.8% (+0.4pp
YoY). Although demand for arranging business trips was lackluster, the company acquired contracts for condominium
management services in China. Being highly profitable, these products contributed to operating profit.

Overseas business
Sales: JPY24.7bn (+24.1% YoY)
Operating profit: JPY1.5bn (-6.3% YoY)
OPM: 6.1% (-1.9pp YoY).
In the overseas business, individual segments are in charge depending on the type of project. Earnings from the overseas
business are included within each segment. The company is active overseas in the Facilities Management, Security Services,
Cleaning Services, and Support Services segments. Around half of customers are Aeon group companies.
China
Sales: JPY16.9bn (+32.0% YoY)
Operating profit: JPY1.4bn (-2.2% YoY)
OPM: 6.1% (-4.4pp YoY)
Sales increased, owing to a rise in the number of customers under contract and hikes in service rates at some facilities. Sales
rose in Security Services (business in China accounts for 30% of the segment's total), Cleaning Services, and Support
Services. Aeon Delight Jiangsu and Wuhan Xiaozhu Property Management became consolidated subsidiaries through theacquisition of local companies, and they have won government-related products. Among its overseas business, the pandemic
had a relatively small impact on business in China, and economic activity recovered quickly.
Operating profit fell, and OPM declined as a result of higher personnel expenses (stemming from a hike in minimum
wages), a more competitive environment in Facilities Management, and the winning of new low-margin projects. That said,
OPM tends to be higher on business in China than in Japan. That is because although competition in China is growing,
China is still less competitive than Japan. Also, no outsourcing expenses are incurred by the company's own employees.
Under the oversight of Aeon Delight China (AD China; a company established in April 2021 for this purpose), Aeon
Delight Jiangsu and Wuhan Xiaozhu Property Management focused on bolstering contracts for priority facilities such as
medium- to high-end shopping centers, hospitals and nursing homes, and facilities in areas undergoing redevelopment.

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They worked to expand their business domains to include property management operations (facility maintenance andoperation), catering services (peripheral services that accompany property management), cleaning services, and services
for residents at nursing homes, while focusing on facility management operations.
In June 2021, Aeon Delight Jiangsu acquired a 60% stake in Suzhou Nakamura Integrated Facility Management Service(making it a subsidiary), which has a high level of knowledge and success in contracting services for Japanese-owned
factories, in order to expand market share in Suzhou where there is significant growth in factories owned by Japanesebusinesses. It expects related earnings contributions to emerge from FY02/22.
ASEAN
Sales increased while profit declined for the ASEAN region as a whole. A resurgence of the pandemic restricted economic
activity in individual countries. The company implemented measures including the suspension of operations at facilities andshorter operating hours. Although there was an effect on the employment of staff at each of these local subsidiaries and atpartner companies, the company ensured operations at contracted facilities while undertaking epidemic prevention
measures.
Malaysia: Sales came to JPY1.5bn (+50.5% YoY) and operating profit to JPY19mn (-64.2% YoY). Sales growth was aided inpart by the effects from the infrastructure built to secure contracts from Aeon group facilities, and by contracts fromexisting stores of Aeon Malaysia. Profit fell as the company had to lower its prices due to price competition from rivals,
and because personnel expenses rose due to increased headcount.
Vietnam: Sales came to JPY3.1bn (+9.4% YoY) and operating profit to JPY180mn (-18.2% YoY). Sales expanded thanks tosales contributions from facilities contracted in the same period the previous year. In 2H, a resurgence in COVID-19 cases
undermined normal sales activities, and growth in personnel and fixed costs pushed profit down. Aeon Mall is stepping
up store rollouts in Vietnam, so the company is strengthening its local infrastructure.
Indonesia: Sales were JPY3.2bn (-3.0% YoY), and the company posted an operating loss of JPY17mn (operating profit of
JPY43mn in FY02/21). Sales fell amid economic restrictions caused by the COVID-19 pandemic. The operating loss
stemmed from higher personnel expenses, reflecting an initiative to improve employee compensation. The company has
access to the customer base of a cleaning company it purchased in the Indonesia in 2018. The company has orders fromfour Aeon group facilities. The group plans to open more stores there, and Aeon Delight is building local infrastructure
by dispatching staff from Japan with an eye toward expanding contracts with those group facilities.

Cumulative Q3 FY02/22 results
Sales: JPY240.7bn (+7.3% YoY)
Operating profit: JPY11.9bn (+5.7% YoY)
Recurring profit: JPY11.9bn (+6.2% YoY)
Net income: JPY8.5bn (+34.3% YoY)
In cumulative Q3 FY02/22, sales expanded in all seven segments, and operating profit rose in five of the seven segments,
with Construction Work and Vending Machine Services being the exceptions.
Gross profit: Gross profit was JPY29.8bn (+8.2% YoY), and GPM was 12.4% (+0.1pp YoY). Demand for services withrelatively high GPMs such as disinfectant cleaning at facilities with COVID-19 exposures increased.
SG&A expenses: SG&A expenses were JPY18.0bn (+10.0% YoY), and the SG&A expenses ratio was 7.5% (+0.2pp YoY).
Although the company worked to automate operations, reduce labor, and lower costs mainly in Facilities Management
and Security Services, personnel expenses rose due to increased hiring of new graduates and mid-career recruits, and to
growth in expenses to promote area management.
Net income attributable to owners of the parent increased. The company sold two properties, including one that housed theheadquarters of a subsidiary, and booked a JPY1.2bn gain on the sale of fixed assets as extraordinary profit. The growth in net
income was also in part supported by the dropout of the year-earlier JPY1.3bn loss on the sale of businesses associated withthe divestiture of the ID photo machine business.

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Progress versus full-year company forecast
Versus the FY02/22 full-year company forecast, sales in cumulative Q3 FY02/22 achieved 74.1% (74.8% of full-year resultsin cumulative Q3 FY02/21), operating profit 71.8% (73.6%), recurring profit 72.4% (73.7%), and net income 80.9% (54.2%).
This fell short of the progress in cumulative Q3 FY02/21.
At the start of the year, the company expected Construction Work and Vending Machine Services to recover as the COVID19 pandemic settled down, but that recovery was slower than anticipated.

Quarterly results
Q1 FY02/22 (March–May 2021): Sales came to JPY79.7bn (+8.4% YoY) and operating profit to JPY3.7bn (+7.9% YoY).
Sales and profit increased in six of the seven segments. Construction Work was the exception due to some delays inconstruction work. Performance was supported in particular by earnings growth in Cleaning Services. Operating profit
expanded in tandem with sales growth.
Q2 FY02/22 (June–August 2021): Sales came to JPY84.2bn (+10.5% YoY) and operating profit to JPY4.7bn (+16.2% YoY).
Sales and profit increased in six of the seven segments, with Vending Machine Services being the exception. Earnings
were mainly driven by Cleaning Services and Construction Work. In Cleaning Services, contracts for unscheduled
disinfectant cleaning at facilities with COVID-19 exposures increased. In Construction Work, the company undertook
restoration work at Aeon group facilities that were affected by the Fukushima Prefecture Offshore earthquake in February
2021.
Q3 FY02/22 (September–November 2021): Sales came to JPY76.8bn (+2.9% YoY) and operating profit to JPY3.4bn(-7.8% YoY). While sales rose, slower sales growth pushed operating profit down. The main factors affecting performance
were (1) lower orders for disinfectant cleaning using alcohol in Cleaning Services (due to a nationwide decline in COVID19 cases), (2) some delays in construction work in Construction Work, and (3) a drop in sales of beverages from vending
machines in Vending Machine Services.

Segment trends
Facilities Management
Sales improved 6.0% YoY to JPY46.5bn, while operating profit expanded 3.1% YoY to JPY4.0bn. OPM was down 0.2pp
YoY to 8.7%.
Sales increased. The company acquired new Aeon group stores and manufacturers and financial institutions outside of thegroup as new customers. It had previously set up a sales team that specializes in cultivating new customers, worked toincrease the transparency of—and share information about—its sales activities, and analyzed processes that lead to signed
contracts. These organizational initiatives to strengthen sales started to pay off. Among existing customers, orders expanded
mainly for maintenance of air conditioning equipment and elevators. Account management for key customers (discussed
below) and other initiatives also provided contributions. There were no changes in the shares of sales inside and outside the
Aeon group.
Profit increased as the company promoted area management (discussed below) directed toward reforming its work
processes.
1H FY02/22: Sales came to JPY31.0bn (+6.6% YoY), operating profit to JPY2.6bn (+2.9% YoY), and OPM to 8.5% (-0.3pp
YoY). The company achieved sales and profit growth by adding new customers and expanding its services to existingcustomers.
Q3 FY02/22: Sales came to JPY15.5bn (+4.9% YoY), operating profit to JPY1.4bn (+3.6% YoY), and OPM to 9.2% (-0.1pp
YoY). The company acquired new Aeon group stores and manufacturers and financial institutions outside of the group as
new customers, and it expanded its services to existing customers.
Account management
The company started account management initiatives. Instead of communicating with customers on a segment basis as in thepast, it now appoints account managers for key clients and centrally manages customer information. It aims to expand
transaction volume by deepening its understanding of customers and various industries, and accordingly improving customer
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satisfaction and referring customers to other segments. To achieve this, it plans to provide services across the segments in asingle package (for example, Construction Work carries out an order associated with Facilities Management), and provide thesame services nationwide to clients.
The company promoted industry-specific proposals. In addition to analyzing data on customers and various industries
collected through account management, the company made use of personnel familiar with target industries. In FY02/22, itgrew sales by strengthening sales to manufacturers who have become increasingly sensitive to cost management amid the
COVID-19 pandemic, and by capturing outsourcing demand. In FY02/23, it looks to build sales infrastructure thatconcentrates on the hotel, hospital, and other sectors where demand is expected to recover, and provide solutions-based
sales.
Area management
In March 2021, Aeon Delight set up customer service centers at all eight branches in Japan and rolled out remote support
systems. The company also achieved labor-saving on-site as it installed systems and sensors at its facilities. This infrastructure
enabled cost reductions through labor-saving and automation based on area management, which involves the sharing offacilities management personnel in a set area. The company first launched the area management concept with a focus on
Aeon Retail stores among the several thousand facilities under contract. It has FY02/24 targets of 360 area-managed
facilities and the reduction of 180 facilities management personnel. The company introduced the system at 133 facilities andreduced the facilities management headcount by about 114 through Q3 FY02/22. Progress was as planned.
In Q3, the company started redeploying personnel affected by these changes to new properties or sales positions. It expects
cost reduction benefits to become apparent going forward. Area management should reduce the number of personnel
assigned to customer facilities and reduce the amount customers pay. However, the company has maintained the quality offacilities management using remote support, and worked to increase the spend per customer by negotiating an increase infees per on-site personnel, and by collaborating on providing services with other segments.

Security Services
Sales improved 7.5% YoY to JPY35.4bn while operating profit expanded 8.8% YoY to JPY2.6bn. OPM was up 0.1pp YoY
to 7.3%.
Sales expanded as growth in new contracts for new Aeon group stores and stores outside of the Aeon group pushed up thenumber of customers under contract, and because demand for event security and other services recovered. Contract prices
were unchanged YoY.
Operating profit rose in tandem with growth in the number of contracts. Labor costs were rising in the security sector due tochronic worker shortages. The company continued negotiations to optimize unit prices and worked to automate systems tohandle tasks such as facility entry/exit management and store opening/closing, with the aim of improving profitability. As aresult, OPM remained on par with the year-earlier level. Expenses rose temporarily in tandem with automation efforts.
1H FY02/22: Sales came to JPY23.6bn (+9.0% YoY), operating profit to JPY1.7bn (+6.8% YoY), and OPM to 7.2% (-0.1pp
YoY). The company continued to win new customers outside the Aeon group, and benefited from rising orders for event
crowd control and transport security. It conducted price negotiations and worked on automation measures in an effort toimprove profitability.
Q3 FY02/22: Sales came to JPY11.8bn (+4.5% YoY), operating profit to JPY894mn (+12.7% YoY), and OPM to 7.6%(+0.6pp YoY). Growth in new contracts for new Aeon group stores and customers outside the Aeon group drove up sales.
OPM improved as the effects of automation efforts started to manifest.

Cleaning Services
Sales improved 9.5% YoY to JPY50.5bn while operating profit expanded 15.6% YoY to JPY6.2bn. OPM was up 0.6pp
YoY to 12.2%.
Sales and profit improved. The company focused on introducing and expanding disinfectant cleaning, quarantine-related
cleaning, and special cleaning services to prevent the further spread of COVID-19. It acquired new customers and expanded
contracts from existing customers. The number of customers under recurring revenue contracts increased as some customers
who had previously requested one-time services switched to recurring contracts. The company also worked to introduce andexpand special cleaning services at customers outside the Aeon group such as New Standard Cleaning, a cleaning method

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to maintain a hygienic, attractive environment based on the company's own cleaning service that was previously provided tohospitals.
In regions with labor shortages, the company worked to secure subcontractors by strengthening its relationships with
regional cleaning service providers.
1H FY02/22: Sales came to JPY34.1bn (+12.1% YoY), operating profit to JPY4.3bn (+24.7% YoY), and OPM to 12.5%(+1.2pp YoY). Sales and profit increased as the company won new customers and expanded orders from existingcustomers. Margins improved on increased adoption of services such as New Standard Cleaning, a high-margin special
cleaning service, and thanks to growth in contracts for unscheduled disinfectant cleaning at facilities with COVID-19
exposures.
Q3 FY02/22: Sales came to JPY16.4bn (+4.5% YoY), operating profit to JPY1.9bn (-0.7% YoY), and OPM to 11.6% (-0.6pp
YoY). Contracts from new Aeon group stores supported the growth in sales. However, sales growth slowed on a drop inorders for disinfectant cleaning using alcohol as the number of COVID-19 cases declined across the country. Profitability
also worsened due to a drop in the number of orders for high-margin special cleaning services.

Construction Work
Sales improved 8.6% YoY to JPY33.7bn while operating profit fell 0.6% YoY to JPY2.9bn. OPM was down 0.8pp YoY to
8.5%.
While some large-scale construction work was behind plan due to the COVID-19 pandemic, strengthened sales activities to
win renovation contracts within and outside the Aeon group supported sales growth. However, operating profit fell becauserenovation work generates lower margins than large-scale construction work.
1H FY02/22: Sales came to JPY24.8bn (+12.0% YoY), operating profit to JPY2.3bn (+8.1% YoY), and OPM to 9.1% (-0.3pp
YoY). In Q1, some construction work was delayed due to the COVID-19 pandemic, leading to a decline in sales and profit.
In Q2, however, sales and profit rose due to restoration work related to the February 2021 Fukushima Prefecture
Offshore earthquake at Aeon group facilities, and to an expanded volume of renovation contracts outside the Aeon
group.
Q3 FY02/22: Sales came to JPY8.9bn (+0.2% YoY), operating profit to JPY611mn (-23.4% YoY), and OPM to 6.8% (-2.2pp
YoY). Factors negatively affecting sales included delays in and cancellations of large-scale construction work, and delayeddeliveries of air conditioning and other equipment attributable to disruptions in distribution and semiconductor
shortages. Profit declined as the company increased low-margin renovation orders to offset sluggish orders for large-scaleconstruction work.
In Q4 FY02/22, the company expects demand to recover as the pandemic settles down. It plans to strengthen sales activities
and review construction specifications and procedures to tackle work that has been delayed due to the pandemic, and workon new projects. Through its account managers, it intends to make proposals for renovation work and other services, andsecure a higher volume of contracts. The company plans cost-cutting moves such as scrutinizing expenses more carefully at
the construction estimate stage in an effort to improve margins.

Materials and Supplies Sourcing Services
Sales improved 7.9% YoY to JPY42.8bn, while operating profit expanded 4.4% YoY to JPY1.9bn. OPM was down 0.2pp
YoY to 4.5%.
Sales and profit increased on sales growth for quarantine-related materials such as masks, gloves, alcohol for professional use,
and acrylic partitions to prevent droplet spread amid the COVID-19 pandemic, and also thanks to growth in sales of
packaging materials to newly acquired customers within the Aeon group.
1H FY02/22: Sales came to JPY28.8bn (+8.2% YoY), operating profit to JPY1.4bn (+6.1% YoY), and OPM to 4.7% (-0.1pp
YoY). Sales and profit increased due to high demand for quarantine-related materials amid the pandemic, and to risingnumbers of new customer inside and outside the Aeon group.
Q3 FY02/22: Sales came to JPY14.0bn (+7.3% YoY), operating profit to JPY570mn (+0.5% YoY), and OPM to 4.1% (-0.2pp
YoY). Demand for quarantine-related materials declined as the number of COVID-19 cases settled down, but sales grew as
the company secured new customers within the Aeon group and expanded sales of packaging materials. The company

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stepped up sales activities, focusing on companies that have newly joined the Aeon group, in a bid to become a top
supplier able to meet all the materials needs of the group.

Vending Machine Services
Sales improved 3.8% YoY to JPY19.8bn, while operating profit fell 26.5% to JPY414mn. OPM was down 0.9pp YoY to
2.1%.
While the operating environment remained tough due to restrictions on movement and changes in consumer purchasing
behavior under the COVID-19 pandemic, improvements from the previous year supported sales growth. The company
installed more of its own multi-brand vending machines (which offer products from several different brands) to improve
profitability per unit, but rising fixed costs pushed profit down.
1H FY02/22: Sales came to JPY13.5bn (+12.3% YoY), operating profit to JPY353mn (-1.1% YoY), and OPM to 2.6% (-0.4pp
YoY). Demand for beverages from vending machines slumped in 1H FY02/21 on the closure of facilities, people
refraining from going out, and increased teleworking in the wake of the government’s declaration of a state of
emergency. In 1H FY02/22, sales increased as customer traffic began to return to facilities and offices, and demand forbeverages from vending machines recovered. Profit fell on higher fixed costs as the company installed more of its own
multi-brand vending machines.
Q3 FY02/22: Sales came to JPY6.3bn (-10.7% YoY), operating profit to JPY61mn (-70.4% YoY), and OPM to 1.0% (-1.9pp
YoY). Commercial facilities operated normally, but growth in the number of customers using vending machines was
sluggish as overall customer traffic was lackluster and the time spent by customers in such facilities was short. On the
profit front, fixed costs expanded as the company installed more of its own multi-brand vending machines, and thispushed down profit.

Support Services
Sales improved 2.6% YoY to JPY12.1bn while operating profit came to JPY330mn (versus a loss of JPY171mn incumulative Q3 FY02/21). OPM was 2.7%.
Sales and profit improved as the company worked to expand services compatible with its businesses from a customer
perspective in an effort to meet outsourcing needs related to the management and operation of contracted facilities andtheir surroundings.
1H FY02/22: Sales came to JPY8.1bn (+4.1% YoY), operating profit to JPY255mn (versus a loss of JPY100mn in 1H
FY02/21), and OPM to 3.2%. Sales and profit increased due to a recovery in demand for event, travel, and business trip
support services at company subsidiary Aeon Compass, and to the exit from a loss-making subsidiary. Demand athousehold support services company Aqutia slumped amid price cuts by competitors.
Q3 FY02/22: Sales came to JPY4.0bn (-0.2% YoY), operating profit to JPY75mn (versus a loss of JPY71mn in Q3
FY02/21), and OPM to 1.9%. The company won contracts to deliver mail and parcels to tenants at new Aeon group stores,
and secured a higher volume of contracts to clean shared offices.

Overseas business
Sales improved 24.5% YoY to JPY17.8bn while operating profit expanded 1.2% YoY to JPY1.2bn. OPM was down 1.5pp
YoY to 6.5%.
In the overseas business, individual segments are in charge depending on the type of project. Earnings from the overseas
business are included within each segment.
Sales and profit grew, as the business expanded mainly in China. The company operates Facilities Management, Security
Services, Cleaning Services, and Support Services overseas. Aeon group companies comprise roughly half of its customers.
OPM in each business is roughly the same as in the company's domestic business.
China
Sales improved 35% YoY to JPY12.2bn while operating profit increased by double digits YoY to JPY1.1bn, leaving both sales
and profit on an upward trajectory. Sales rose as Aeon Delight Jiangsu secured a higher number of facility contracts, andAeon Delight 9787
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increased the pricing of its services. Compared with other regions in the overseas business, the impact of the COVID-19
pandemic was relatively small in China, and economic activity also rebounded quickly.
Under the oversight of Aeon Delight China (AD China; a company established in April 2021 for this purpose), Aeon
Delight Jiangsu and Wuhan Xiaozhu Property Management focused on bolstering contracts for priority facilities such as
medium- to high-end shopping centers, hospitals and nursing homes, and facilities in areas undergoing redevelopment.
They worked to expand their business domains to include property management operations (facility maintenance andoperation), catering services (peripheral services that accompany property management), cleaning services, and services
for residents at nursing homes, while focusing on facility management operations.
In June 2021, Aeon Delight Jiangsu acquired a 60% stake in Suzhou Nakamura Integrated Facility Management Service(making it a subsidiary), which has a high level of knowledge and success in contracting services for Japanese-owned
factories, in order to expand market share in Suzhou where there is significant growth in factories owned by Japanesebusinesses. It expects related earnings contributions to emerge from FY02/22.
ASEAN
The spread of COVID-19 continued in the ASEAN region, and there were restrictions on economic activity in Malaysia,
Indonesia, and Vietnam, where the company has local entities. This means that the company continued to face a toughoperating environment in the region, with measures including the suspension of operations at facilities and shorter
operating hours. Although there was an effect on the employment of staff at each of these local subsidiaries and at partnercompanies, the company ensured operations at contracted facilities while taking thorough epidemic prevention measures.
Malaysia: Sales came to JPY1.1bn (+50% YoY) and operating profit to JPY6mn. Sales growth was aided in part by the effects
from the infrastructure built to secure contracts from Aeon group facilities, and by contracts from existing stores of Aeon
Malaysia. Profit deteriorated as the company had to lower its prices due to price competition from rivals, and because
personnel expenses increased due to additional hiring.
Vietnam: Sales came to JPY2.1bn (+5.5% YoY) and operating profit to JPY120mn (YoY decline of about 30%). Sales
expanded thanks to sales contributions from facilities contracted in the same period the previous year. A resurgence in
COVID-19 cases undermined normal sales activities, and growth in fixed expenses pushed profit down. Aeon Mall is
stepping up store rollouts in Vietnam, so the company is strengthening its local infrastructure.
Indonesia: Sales were JPY2.4bn (-6% YoY), and the company posted an operating loss. The loss was attributable to lower
sales amid economic restrictions caused by the COIVD-19 pandemic. Indonesia is a large market within the ASEAN
region, and the company has access to the customer base of a cleaning company it purchased in the country in 2018. It isbuilding local infrastructure by dispatching staff from Japan with an eye toward expanding contracts with Aeon groupfacilities.

Summary of measures for FY02/22
Obtained external credit rating
The company obtained a new credit rating from Rating and Investment Information, Inc. (R&I). Shared Research understands
it obtained the rating to expand future fundraising options as it intends to increase capital expenditures and step up M&A
going forward.
Reducing dependence on the Aeon group
The company intends to increase the ratio of sales outside the Aeon group to 40.0% by the end of FY02/24 from 35.7% in
FY02/21 to reduce its dependence on intragroup sales. It reformed its sales structure in November 2020 with the aim of
expanding transactions with external companies. It established a department to cultivate new customers among majordomestic companies, and plans to efficiently secure such customers through focused sales activities. The company is making
progress with bringing in new customers from outside the group in Facilities Management, Security Services, and Cleaning
Services.
In Q3 FY02/22, the ratio of sales outside the group was 34.9% (35.7% at end-FY02/12). Demand for disinfectant cleaningand similar services at group companies increased, and the company continued to win orders from outside the group. Note:
There is no difference between service pricing and the company’s margins for services offered within the Aeon group andexternally.

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Head office relocation
The company relocated its head office in September 2021. Head office functions previously divided between Tokyo, Chiba,
and Osaka were consolidated in Tokyo (Chiyoda). Relocation expenses and expenses for relocating employees were booked
through 1H, but were small. The company capitalized renovation expenses in Q3.
The company's interior design department remodeled the premises with the aim of creating a smart office to boost head
office operational efficiency and facilitate work style reforms. The company has built a system enabling smoothcommunication with employees working from home or satellite offices with an enhanced communication environment
throughout the building. It has also established a network environment permanently connected to all eight domestic
branches, enabling instant communication with group companies in Japan and overseas.
Digital transformation progress
In June 2021, the Ministry of Economy, Trade and Industry named the company a digital transformation (DX) certified
business, in recognition of its initiatives in promoting DX aimed at building sustainable business models in facilities
management. With an increasingly acute labor shortage in the facilities management business, the company plans to use DX
to build systems that enable efficient service provision.
The company continues to develop its Aeon Delight platform. It plans to use the platform to collect, analyze, and process
customer feedback, facility conditions, and market trends in customers’ industries. It plans to use the data to strengthen
relationships between the sales department and customers and offer solutions that will solve customer issues.

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News and topics
Decision on acquisition of treasury stock and commencement ofcollaboration with Kao Professional Services
2022-10-05

On October 4, 2022, Aeon Delight Co., Ltd. announced that the Board of Directors had resolved at a meeting held on thesame day to undertake the repurchase of treasury stock.
Reason for acquisition of treasury stock
To improve capital efficiency through implementing a flexible capital policy in response to changes in the businessenvironment and to enhance shareholder returns.
Details relating to the acquisition of treasury stock
Type of shares to be acquired: Common stock of the company
Total number of shares to be acquired: 1,500,000 shares (maximum; 3.00% of shares outstanding, excluding treasury
stock)
Total value of shares to be acquired: JPY5.3bn (maximum)
Period of acquisition: October 5, 2022 to October 4, 2023
Method of acquisition: Market purchases on the Tokyo Stock Exchange based on discretionary agreements
Other: Shares acquired as part of this transaction will be cancelled by a resolution of the Board of Directors inaccordance with Article 178 of the Companies Act.
On the same day, the company announced the start of a collaboration with Kao Professional Services Co., Ltd. to develop a
new service, the Infectious Disease Risk Assessment Service, to support companies and organizations in the prevention of
infectious diseases. Kao Professional Services provides hygiene management services for businesses in Japan.
Kao Professional Services will utilize its knowledge of assessment methods developed through its hygiene managementbusiness. Aeon Delight will leverage its expertise and service development capabilities accumulated through the provisionof cleaning methods to its customers. The two companies aim to develop a new service to assess hygiene risks and provide
solutions based on behavioral analysis in various situations, including public spaces and living areas.

Expansion of scope of Eco Mark certification for Cleaning
Services2022-10-03

On September 30, 2022, Aeon Delight Co., Ltd. announced that, as of September 29, 2022, the scope of certification for
Eco Mark Product Category No. 510 "Cleaning Services Version 1.0" (Eco Mark Cleaning Services), which is certified by theJapan Environment Association, has been expanded to 440 commercial facilities.
The Eco Mark is an environmental label certified by the Japan Environment Association for products and services that are
acknowledged as having a lower environmental impact throughout their life cycle—from production through disposal—andas contributing to environmental conservation. Eco Mark Cleaning Services covers cleaning services for specified buildings
as stipulated in the Act on Maintenance of Sanitation in Buildings, and is certified based on criteria for environmental
considerations for materials and equipment used, waste disposal, and overall operations, and cleaning quality standards.
Upon the initial certification in January 2022, 46 commercial facilities for which the company provided cleaning services
were covered. With the expansion of scope, 394 commercial facilities for which partner companies provide cleaning
services are now covered under the certification.
Based on the partnership building declaration unveiled in March 2022, the company has extended the environmental
impact reduction initiative to its partners. Aeon Delight aims to improve the quality of operations and achieve coexistence
and co-prosperity by sharing the social significance of Eco Mark certification criteria and initiatives with its partnercompanies.

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The company aims to expand Eco Mark Cleaning Services to around 2,000 facilities by FY02/26. This includes commercial
facilities, offices, hotels, and factories.

Change of trade name and corporate form (to investmentcompany) of Chinese subsidiary, and capital increase2022-07-27

On July 26, 2022, Aeon Delight Co., Ltd. announced that it would change the name of a subsidiary in China and convert it
into an investment company.
The company held a board meeting today and decided to change the name of Aeon Delight (China) Co., Ltd. (AD China), a
consolidated subsidiary, and convert it into an investment company. The parent company also decided to raise thesubsidiary’s capital. The move comes as the company seeks to strengthen its customer-oriented group management structure
and achieve further growth in China.
Objective of the change
The company will seek to achieve further growth in China by accelerating business expansion throughout the country. The
company will aggressively acquire facility management companies that have operations in various regions and purchasecompanies in different industries to enter new business domains. The company will change the name of AD China to Aeon
Delight (China) Investment Holdings Co., Ltd. (planned) and convert it into an investment company so that it can engage inwide-ranging operations. The company will also raise the subsidiary's capital as it aggressively acquires new businesses.
Outlook
Aeon Delight targets FY2025 revenue of JPY60.0bn (versus JPY17.0bn in FY02/22) for its China business. The figure breaks
down as JPY40.0bn from organic growth and JPY20.0bn from acquisitions. The company aims to invest in local companies
operating in the fields where its expertise lies, including facility management, energy and environment, and automobile
parking.

Launch of DX Education Program for about 500 employees
2022-07-22

On July 21, 2022, Aeon Delight Co., Ltd. announced the launch of a DX Education Program for approximately 500
employees.
As of July 2022, Aeon Delight launched a DX Education Program for approximately 500 employees in their 20s, to develop
human resources to take responsibility for the next-generation facility management industry.
The program is the first phase of developing digital transformation (DX) human resources, and participation is required offull-time employees under the age of 30 who are in their second year of employment or later. During the program,participants will learn the basics of DX through video-based e-learning. Taking the IT Passport certification examination after
completion of the program is also part of the curriculum. In the future, Aeon Delight plans to train leaders to spearhead DX
promotion by conducting ongoing education for those who have acquired the IT Passport.

Retirement of treasury stock2022-04-08

On April 7, 2022, Aeon Delight Co., Ltd. has announced the retirement of treasury stock.
Class of shares to be retired: Common stock of the company
Number of shares to be retired: 3,500,000 (6.46% of total shares issued before retirement)
Scheduled date of retirement: April 28, 2022
The total number of shares issued after the retirement will be 50,669,633 shares.

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Structural reforms
2022-04-01

On March 31, 2022, Aeon Delight Co., Ltd. announced structural reforms.
The company formulated a thee-year medium-term management plan starting in FY02/22 and has been progressing a range
of initiatives consistent with the basic policies of customer-oriented management, promotion of digital transformation (DX),and group management. The company plans to reorganize to accelerate the implementation of these basic policies.
The reorganization takes effect on April 1, 2022. The company will reorganize the role of Officer in charge of Marketing DX
and establish the new position of COO of Japan Group Companies under the direct control of the president. The company
will also perform reforms in divisions under the supervision of Officer in charge of Marketing DX, COO of Japan Group
Companies, COO of ASEAN Business, Officer in charge of Materials and Vending Machines Business.

Partnership building declaration
2022-03-28

On March 25, 2022, Aeon Delight Co., Ltd. announced a partnership building declaration.
On March 22, 2022, the company unveiled its own partnership building declaration in support of the "Declaration ofPartnership Building" framework initiated by the Council on Promoting Partnership Building for Cultivating the Future
whose members include the chairs of Keidanren and Japan Chamber of Commerce and Industry, and the president of theJapanese Trade Union Confederation (Rengo). Other members are government ministers (the Minister of State for Economic
and Fiscal Policy, the Minister of Economy, Trade and Industry, the Minister of Health, Labour and Welfare, the Minister ofAgriculture, Forestry and Fisheries, and the Minister of Land, Infrastructure, Transport and Tourism).

Training of 37 infection control cleaning team leaders2022-02-28

On February 25, 2022, Aeon Delight Co., Ltd. made an announcement regarding the training of 37 infection control
cleaning team leaders.
In September 2021, Aeon Delight established the Advanced Course training program aimed at fostering team leaders forthe company's New Standard Cleaning services incorporating proprietary measures for epidemic prevention throughinfection control. In February 2022, 37 people were certified as the first graduates.
As infection control cleaning team leaders, graduates of the Advanced Course will advise customers on how New Standard
Cleaning can assist in quality improvement and epidemic prevention, while also taking responsibility for instructing otherinfection control cleaning specialists.

Plans to accelerate provision of eco-friendly products towardachieving a sustainable society2022-02-25

On February 24, 2022, Aeon Delight Co., Ltd. announced its plan to accelerate the shift to the provision of eco-friendly
products toward achieving a sustainable society.
Based on the Aeon Plastic Usage Policy which aims to reduce the disposable plastic usage volume by half by 2030
(compared with 2018), the company will expand the number and volume of eco-friendly products delivered to and used at
Aeon group company stores.
The company has provided group companies with products whose materials have changed from plastics to paper-basedmaterials or biomass plastics. In FY2021, by providing paper and wooden cutlery and paper straws, the company expects tocontribute to reducing the disposable plastic usage volume by about 150 tons for the year.

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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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