Operating Data. Financial Data. Consolidated Cash Flows 2, % 2, % 120% % % 126% % 113% 41.

Transcription

1 Data Transaction volume Consolidated Actual Results 2,482.9 Year-on-Year Change 114% Non-Consolidated Actual Results 2,180.2 Year-on-Year Change 112% revenues % % Revenue from credit card shopping % % Revenue from cash advances % % Income % % Net income % % Financial Data Consolidated Cash Flows Total Assets Installment sales receivables loans receivables Net assets Shareholders equity ratio Consolidated Actual Results % Increase/ Decrease % Non-Consolidated Actual Results % *Minority interests are deducted from the amount of increase or decrease in consolidated total assets. Increase/ Decrease % Fiscal Year Ended February 20, 2006 Cash and cash equivalents, beginning of year 16.6) Income before income taxes and minority interests Increase in finance receivables Other Net cash used in operating activities Net cash used in investing activities Net cash provided by financing activities Cash and cash equivalents, end of year 38.6) -1, ) ) 16.4) Fiscal Year Ended February 20,

2 Dividends Stock Splits and Dividends Received Interim dividend Year-end dividend Full-term dividend Fiscal Year Ended Feb. 20, 2006 (Yen) Fiscal Year Ended Feb. 20, 2007 (Yen) Forecast Dividends 15 (Actual Results) 25 ( 5 of commemorative dividend included) 40 ( 5 of commemorative dividend included) Value of Dividends without Stock Split [45] [75] [120] Fiscal Year Ending Feb Forecast Dividends (Yen) The graph below shows the shares and dividends received by a shareholder initially owing 1,000 shares on February 20, (Shares/Shareholders) 15,626 10,000 15,700 10,520 Total shareholders (left) 8,000 No. of shares (left) 8,399 Dividends received (right) No. of shares: 12,645 6,000 4,000 2,000 0 No. of shares: 1,000 Full-term Dividends received: 15,000 4,096 4,978 5,541 Full-term dividends received: 505, (Thousands of yen) Payout ratio 24.8% 35.1% 33.9% * For purposes of comparison, figures in [ ] indicate what the dividend per share would have been without the 3-for-1 stock split on February 21, 2006 for shareholders as of February 20, Total Cardholders (Consolidated) No. of Cardholders Net increase Number of Cardholders (Consolidated) The number of new sign-ups increased by 240,000 from the previous fiscal year to 2,250,000 We plan to achieve 2,370,000 cardholders the fiscal year ending February 20, 2008 Japan Thailand Hong Kong 14,550,000 1,540, , , , ,000 (Thousands of People) 250 2, , ,970 No. of Overseas Cardholders No. of Domestic Cardholders 470 1,500 1, ,500 2, ,670 2, ,750 2, ,750 Taiwan 110, ,000 1, Malaysia 70, , Total 17,220,000 +1,110, /2004 2/2005 2/2006 2/2007 2/2008 (Actual)

3 Increase in Active Cardholders (Consolidated) 11,000 1,100 9, , Annual Card-Use Rate (Consolidated) No. of Overseas Active Cardholders No. of Domestic Active Cardholders , , ,220 1,050 7, ,910 1,250 7, ,760 1,460 8,300 The number of active cardholders increased by 850,000 from the previous fiscal year to 9,760,000, and we plan to achieve 10,720,000, a net increase of 960,000 for the fiscal year ending February 20, Annual card-use rate increased by 1.4 points to 58.6%, and we expect 60.0%, up 1.4 points for the fiscal year ending February 20, (Thousands of People) ,720 1,720 9,000 Credit Card Shopping Transaction Volume (Consolidated) 2,000 1,600 1, Overseas Credit Card Shopping Transaction Volume Domestic Credit Card Shopping Transaction Volume (23% up) 1,117.9 (20% up) 1,348.8 (21% up) 1,590.4 (18% up) Credit card shopping transaction volume was 1,590.4 billion (up 18% from the previous fiscal year) We plan to achieve 1,879 billion for the fiscal year ending February 20, 2008 (up 18% from the previous fiscal year) (Billions of Yen) 1,879.0 (18% up) /2004 2/2005 2/2006 2/2007 2/2008 (Actual) 0 2/2004 2/2005 2/2006 2/2007 2/2008 (Actual) Credit Card Shopping Transaction Volume (Consolidated) Transaction expanding outside Aeon Group 400% Transaction volume outside Aeon Group Overseas transaction volume with Aeon Card Transaction volume within Aeon Group 300% 286% 200% 227% 152% Allowance for Possible Credit Losses <Allowance for Possible Credit Losses> (Billions of Yen) FY Ended Feb. 20, 2006 Balance, beginning of year Provision for allowance for possible credit losses Write-off of credit losses Balance, end of year Allowance for losses on interest repayment, end of year Total FY Ended Feb. 20, [1.4] Personal bankruptcies <Breakdown of Allowance for Possible Credit Losses> FY Ended Feb. 20, 2007 Loans over three months in arrears and loans subject to legal liquidation General allowance for possible credit losses Total All losses already written off % 2/2003 2/2004 2/2005 2/2006 2/2007 2/2008 (Actual) Percentage of total finance receivables 4.09% 6.40%

4 Response to New Money Lending Business Law (1) Response to New Money Lending Business Law (2) Enhanced credit control for cardholders using cash advance services since the first half of the fiscal year ended February 20, % 0% -10% -20% <Monthly Growth Rates of Cash Advance Services Transaction Volume> New MLB Law came into effect Enhanced credit control 2/2007 2/2008 Increase transaction volume by targeting new customer segments Cash advance interest rate reduced to 18% - Activate sleeping cardholders - Organize loyal customers - Mitigate risks of interest repayment requests 2/2009 Started to respond to the enforcement of New MLB Law ahead of schedule Items New loans Existing balance Issuance of loan document Issuance of receipt Regulation of total transaction volume Collection New source of income Cash advance interest rate has been reduced to 18.0% for all cardholders since March 11 Respond depending on the situation Upgrading systems Measures Controlled by computer-aided name identification Credit advice time and frequency have been controlled by system Cash advance New product New business Target new customer segments in response to interest rate reduction Develop loan cards and purpose loans Enhance electronic money, acquiring, and processing businesses Fund procurement (1) 100% 80% 60% 40% 20% 0% Long-term, fixed interest financing ratio Direct financing ratio 72.7% 34.2% 2/01 2/02 2/03 2/04 2/05 2/06 2/07 2/08 (Actual) Within 2 years 18% Within 1 year 18% Long-term, fixed interest financing ratio progressed over 70% Duration of long-term, fixed interest borrowings is 3 years and 1 month Duration of long-term, fixed interest borrowings Within 3 years 15% Over 5 years 19% Within 5 years 20% Within 4 years 10% Fund procurement (2) (Impact on Interest Rate Fluctuations) <FY ended February 20, 2007 Actual> Short-term 0.50% Long-term 1.15% Average Interest paid on procured funds 0.98% Case (1) Case (2) Case (3) Short-term 0.90% Long-term 1.40% Average Interest paid on procured funds 1.23% Short-term 1.15% Long-term 1.60% Average Interest paid on procured funds 1.25% Short-term 1.40% Long-term 1.80% Average Interest paid on procured funds 1.29% Cost 200 million Cost 360 million Cost 530 million *Long-term are calculated based on 3-year and 5-year interest rate swaps.

5 Number of Cardholders Forecast (Non-Consolidated) We are targeting 2,500,000 sign-ups and 1,750,000 cardholders for the fiscal year ending February 20, 2008 (Thousands of People) 2,400 2,000 1,600 1,500 1,900 No. of Cardholders No. of Sign-ups 1,500 1,900 1,670 2,070 2,250 1,750 1,750 2,500 1, /2004 2/2005 2/2006 2/2007 2/2008 (Actual) Targeting New Customer Segments Expand customer base in male, young, the greater Tokyo metropolitan area resident segments Expansion of ETC Cards ETC Card cardholders increased by 440,000 to 1,040,000 We are targeting 1,600,000 cardholders for the fiscal year ending February 20, 2008 AEON Card Cosmo the Card Opus AEON id AEON Suica Card THRU WAY Card in tie-ups with Hanshin Expressway Hanshin Expressway Area ETC Issue Rate:8% Male Young (In 20s/early 30s) Greater Tokyo (Tokyo, Saitama, Chiba, Kanagawa) Monthly Card- Use Rate 28% 19% 17% 30% 64% 27% 25% 45% 40% 38% 42% 31% 74% West Nippon Expressway Area ETC Issue Rate:6% Central Nippon Expressway Area ETC Issue Rate:6% East Nippon Expressway Area ETC Issue Rate:4% Metropolitan Expressway Area ETC Issue Rate:6%

6 Expansion of Gold Cards Newly-additional functions - Settlement in small amount using Suica, AEON id, and electronic money - Expanded use by affiliated merchants and ETC Cards Enhanced privileges - Use of airport lounges - Travel Accident Insurance Service (proceeds raised up to 50 million) - Increase the number of AEON Lounges (to 100 offices) Horizontal development to co-branded cards Marketing the use of SATY and VIVRE Cards to cardholders who use the card in large amount The number of Gold Card cardholders increased by 120,000 to 450,000 We are targeting 600,000 cardholders for the fiscal year ending February 20, 2008 No Annual Fee Development of New Co-Branded Cards Ordinary Mobile Phones ( 9 trillion) Convenience Stores ( 7 trillion) Railway ( 14 trillion) GMS/SM ( 17 trillion) Service Product Airlines ( 4 trillion) Travel Agency ( 6 trillion) Consumer Electronics ( 4 trillion) Department Stores ( 8 trillion) (Market Size) Extraordinary More Convenient, Valuable Cards Provide convenience for customers by enhancing special privileges Impact of Tokimeki Point Club Sales of the Company s cards at travel agencies 57% Annual Card-Use Rate (Non-Consolidated) 58.8% 60.0% WAON Card ATM card function Year-on-year change (%) in sales of affiliated merchant A (introduced) Year-on-year change (%) in sales of affiliated merchant B (not-introduced) Introduced Point Club Target + 100% Expand to 50 affiliated merchants Warner Mycal discount 53% 49% 45% 0% Gold Card AEON Festival system 2/2003 2/2004 2/2005 2/2006 AEON id Birthday Passport system (Actual) AEON Suica Tokimeki Point Club system Free theft insurance/no annual fee Tokimeki W (Double) Point system 2/2007 2/ % 0% + 29% -3% Dec (2005) June (2006) + 47% -8% Dec (2006)

7 Expansion of Payment Services After starting monthly utility bill payments, monthly use amount will increase because credit cards can be used as main cards Credit card settlement will increase in services of utility bill payments this fiscal year <Expansion of Payment Services> Merchandise Transportation Telecommunication Medical / Insurance <Railway> <Cell-phone> Food and drink Tax / Water bill <Expressway> Leisure Utility charges NHK viewing fees Overseas travel <as station> Electricity Gas Internet T&E Daily life Card Loan Business 18.0% Start to accept applications via mobile phones (April) Meet the sudden finance needs at various stages of life such as marriage, childbirth, and entrance into school Interest Rate Credit Limit 0.5 million Acquiring Business Take in acquiring business of group and develop as a source of income Group GMS/SM etc. AEON MYCAL MaxValu Kasumi Sales trillion <Potential> 300 billion Midterm Plan 600 billion 14.8% 1 million AEON Value Card VIP Credit Guarantee Business 9.8% 2 million 3 million Specialty stores in SC In AEON Mall In Diamond City Non-group companies Co-branded card companies Sales 700 billion Sales 1 trillion 100 billion 200 billion 60 billion Current 2/2008 Forecast

8 Electronic Money Business (1) Respond to new settlement methods and develop new businesses 1950s ~ 1970s ~ 2000s ~ Electronic Money Business (2) Start WAON, a unique electronic money business Develop transactions of small payment as a new source of income Start issuing in the form of single function card, credit cards, and family cards Customer s View Company s View Versatility Safety Speed Point Program Cleanliness Cost Use of Information Profitability Cash Shopping Credit Credit Card Debit Card Suica/iD Credit Cards Family Cards Single Function Cards Synergy effect for credit cards Improve card-use rate with the increase of card-carrying rate Development of new customer segments Organize cash customers and young customers New source of income Acquiring fees and charge fees New Financial Services Business AEON Credit Service <Provide platforms> Develop new sources of income through bank agency business and structural change of insurance business The Company s functions Sign-up Processing Settlement Infrastructure Electronic Money AEON Bank System Implementation Operation HR/Accounting /Management JSOX : Completed : To be implemented in FY ending Feb.20, 2008 Finance Authorization System Intrusion Detection Host Billing Sales Credit Multiple Interest System Monitoring Transaction DWH Scoring Marketing Customer Service Internet Access Hub Customer Service Common Database Credit Check IVR Contact Center Credit Management Affiliate Management Credit Check/Control DM/Invoice Insurance Development of New Source of Income id Suica Electronic Money Credit Guarantee Personal Information Protection Measures (SWAT) Disaster Recovery (Disaster countermeasures)

9 Reinforcement of Disaster Recovery System Four Administrative Centers Enhance the response to increased volume of credit check and credit management NCS Kosan (Insurance Agency) Outline of operations in the fiscal year ended February 20, Continued to achieve sales and profit increase while insurance industry remains stagnant Fiscal Year ended February 20, 2007 Revenues 1.07billion 0% Income 0.57billion 3% To be established in FY ending Feb.20, 2008 Sendai Key goals for the fiscal year ending February 20, Consolidate insurance businesses of group companies - Expand investment for business structural change Fukuoka Osaka Tokyo Nagoya Three Centers Housing Backbone Systems Fiscal Year ending February 20, 2008 Revenues 1.22billion 13% Income 0.66billion 16% ACS Credit Management (Servicer Business) Outline of operations in the fiscal year ended February 20, Acquired collection businesses from 12 companies including power and gas companies - Expanded service areas of the market test for the collection of national pension premiums - to a total of 9 areas - Doubled the number of contact center seats to 300 in response to expansion of business Fiscal Year ended February 20, 2007 Revenues 1.66billion 31 Income 0.47billion 22 Key goals for the fiscal year ending February 20, Open sales office in Sendai - Establish the internal system for IPO Fiscal Year ending February 20, 2008 Revenues 2.42billion 46 Income 0.73billion 55

10 Expansion of Overseas Operations (Billions of Yen) Overseas operating revenues Overseas operating income Due to steady growth of consolidated subsidiaries, both operating revenues and operating income increased Overseas operations increased to 27% of consolidated operating revenues +24% % % % /2004 2/2005 2/2006 2/2007 2/2008 (Actual) % Recovery of Performance in Hong Kong Stable operation development through restructuring of business foundations Transaction volume 94.6 billion ( change 16%) revenues: 17.3 billion ( change 31%) (Billions of Yen) *Exchange Rate: 1HK$ = Ordinary Income Interim 2.0 2/2002 2/2003 2/2004 2/2005 2/2006 2/2007 *Figures shown above are calculated on exchange rates of the last business day of each fiscal year. 38 New Business Development in Thailand Adopted best practice in Japan and started new business development in full swing Transaction volume : billion ( change 10%) revenues : 24.5 billion ( change 19%) * Exchange Rate: 1 Baht = 3.17 <Established life insurance agency> <Started leasing business> Operations in Malaysia (Results for FY ended Feb. 20, 2007) Transaction volume : 20.7 billion ( change 100%) revenues : 4.5 billion ( change 70%) Ordinary income : 0.8 billion ( change 43%) * Exchange Rate: 1 Ringgit = <Became the first non-bank to issue ATM cards>

11 Operations in Malaysia (Plan for FY ending Feb. 20, 2008) Transaction volume : 30.1 billion ( change 45%) revenues : 6.3 billion ( change 40%) Ordinary income : 1.3 billion ( change 52%) * Exchange Rate: 1 Ringgit = Plan for IPO <Expand sales network from 24 to 30 branch offices> Operations in Taiwan Outline of operations in the fiscal year ended February 20, Issued four-type cards, such as Two Tigers Card used in 15 affiliated merchants, mainly in Taipei - Raised the number of cardholders to 110,000 - Expanded affiliated merchant network to 5,000 stores - Return to profitability in terms of monthly results Food chain (Pepper Lunch Card) Tourism center (Okinawa Card) Shoes store (Two Tigers Card) Welfare organization (Sousei-kikin Card) Key goals for the fiscal year ending February 20, Raise the number of cardholders to 150,000 - Expand affiliated merchant network to 6,000 stores - Return to profitability in terms of yearly results Local credit cooperation PC mass retailer Sign-up starts from April Sign-up starts from May Operations in Indonesia Expansion of Asia Network Outline of operations in the fiscal year ended February 20, Launched hire purchase operations of consumer electronics and furniture - Expanded affiliated merchant network to 500 stores <Reception desk at shopping mall located in suburban area > Beijing Qingdao Shanghai Start credit guarantee business in China Guangzhou Shenzhen Hanoi Taiwan Thailand Hong Kong Manila Establish system company in Philippine Key goals for the fiscal year ending February 20, 2008 Malaysia - Expand affiliated merchant network to 1,300 stores - Issue new member cards for cardholders with good credit records Indonesia

12 Results Forecasts for the Fiscal Year Ending February 20, 2008 (Billions of Yen) Transaction volume revenues income Ordinary income Net income Consolidated Forecast 2, YoY Change (%) Non-Consolidated Forecast 2, YoY Change (%) Statements contained in this report with respect to the Company s management strategies, business policies and results forecasts are forward-looking statements about the future performance of the Company, which are based on the assumptions and beliefs in light of the information currently available. These forward-looking statements involve known and unknown risks, uncertainties and other factors such as economic trends, industry competition, market demand, exchange rates, tax and other systems that may cause the Company s actual results, performance or achievements to differ materially from the expectations expressed herein.