Annual Securities Report(Report pursuant to Article 24, Paragraph 1 of the Financial Instruments and Exchange Act)

Fiscal year
(The 84th term)

From: April 1, 2019
To: March 31, 2020MARUI GROUP CO., LTD.
(E03040)
This document was prepared based on the Company’s Annual Securities Report in Japanese.
However, “V. Financial Information” of the Annual Securities Report has been replaced by the Consolidated Financial Statements
prepared separately and is not a translation of the Annual Securities Report. The Consolidated Financial Statements have been
prepared by making certain reclassifications and rearrangements in order to present them in a form that is more familiar to readers
outside Japan, and have been audited by PricewaterhouseCoopers Aarata LLC.
The original in Japanese shall prevail in case of any discrepancies between the original and this translated document.
Forward-looking statements in this document are based on information available at the time of preparation and on assumptions thathave been deemed to be rational. Actual performance may differ greatly due to a variety of factors.

[Cover page][Document title]

Annual Securities Report[Clause of stipulation]

Article 24, Paragraph 1 of the Financial Instruments andExchange Act of Japan[Place of filing]

Director-General, Kanto Local Finance Bureau[Filing date]August 6, 2020

[Fiscal year]

The 84th term (from April 1, 2019 to March 31, 2020)[Company name]

Kabushiki Kaisha MARUI GROUP[Company name in English]

MARUI GROUP CO., LTD.

[Title and name of representative]

Hiroshi Aoi, President and Representative Director[Address of head office]3-2, Nakano 4-chome, Nakano-ku, Tokyo, Japan[Telephone number]+81-3-3384-0101 (main)[Name of contact person]

Ryosuke Murai, General Manager, Financial Department[Nearest place of contact]

3-2, Nakano 4-chome, Nakano-ku, Tokyo[Telephone number]+81-3-3384-0101 (main)[Name of contact person]

Ryosuke Murai, General Manager, Financial Department[Place for public inspection]

Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo, Japan)

1

I. Company Information
I. Overview of Company
1. Summary of business results(1) Business results of group
Term

80th

81st

82nd

83rd

84th

Fiscal year ended

March 2016

March 2017

March 2018

March 2019

March 2020

245,867

237,022240,469

251,415

247,582

29,16331,13935,14539,786

40,415

17,771

18,72420,90725,341

25,39615,196

19,331

23,525

26,776

23,645282,101

274,339

274,900

284,752

290,330

730,126

806,575

865,887

890,196885,969

Revenue
Ordinary income
Net income attributable toowners of parent
Comprehensive income
Net assets
Total assets(Millionsof yen)(Millionsof yen)(Millionsof yen)(Millionsof yen)(Millionsof yen)(Millionsof yen)Net assets per share(Yen)

1,161.81

1,196.23

1,245.22

1,309.53

1,351.57

Earnings per share

(Yen)

70.68

80.24

93.18

115.99117.58

Diluted earnings per share

(Yen)

70.67

80.24

93.18

－

－

Equity ratio

(%)

38.6

34.0

31.7

32.0

32.7

Return on equity

(%)

6.0

6.7

7.6

9.1

8.8

Price earnings ratio(Times)

22.8

18.9

23.3

19.3

15.4

Cash flows from operating(Millions(35,310)(45,955)(19,329)
26,39639,909activities
of yen)Cash flows from investing(Millions(4,063)
1,995
747(9,232)(20,315)
activities
of yen)Cash flows from financing(Millions
40,71947,63027,773(15,880)(25,487)
activities
of yen)Cash and cash equivalents at (Millions
32,57536,24545,437
46,72040,827end of periodof yen)Number of employees
5,899
5,732
5,548
5,326
5,130
[In addition, average number (Persons)[1,947][1,755][1,642][1,520][1,453]of part-time employees]
Notes:
1. Revenue does not include consumption taxes, etc.
2. From the 83rd term, the Group changed the reporting method of gain on bad debts recovered from “non-operating
income (expenses)” to “revenue.” Figures for the summary of business results for the 82nd term have been
retroactively restated.
3. The Group has applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ
Statement No. 28 February 16, 2018), etc., from the beginning of the 83rd term. These accounting standards, etc.,
have been retroactively applied to figures for the summary of business results for the 82nd term.
4. From the 81st term, the Group introduced performance-linked stock-based compensation for its Directors, etc., andan incentive plan for employees in management positions, establishing an Officer Remuneration Board Incentive
Plan Trust (the “BIP Trust”) and a Stock Benefit Employee Stock Ownership Plan Trust (the “ESOP Trust”).
Company stock held under these Trusts is included in treasury stock reported in the consolidated balance sheets.
Accordingly, these shares of treasury stock are included in those deducted from the calculation of the average
number of shares during the period in determining basic and diluted earnings per share, as well as those deductedfrom the number of shares issued and outstanding at the end of the year in determining net assets per share.
5. Diluted earnings per share for the 83rd and 84th terms are not stated as there are no dilutive shares.

2

(2) Business results of reporting company
Term

80th

81st

82nd

83rd

84th

Fiscal year ended

March 2016

March 2017

March 2018

March 2019

March 2020

13,076

13,684

18,797

17,34523,507

8,036

9,087

13,78911,35916,933

8,404

8,858

12,75010,436

16,24635,92035,92035,92035,92035,920278,660,417

233,660,417

233,660,417

223,660,417

223,660,417

232,096

214,417

206,738

201,998

197,399645,562

712,649

763,439

772,534

754,167

957.31

936.49938.05928.96920.66

22.00

33.00

38.00

49.00

50.00

[11.00][16.00][18.00][23.00][28.00]Operating revenue
Ordinary income
Net income
Capital stock
Total number of sharesissued and outstanding(Millionsof yen)(Millionsof yen)(Millionsof yen)(Millionsof yen)(Shares)(Millionsof yen)(Millionsof yen)Net assets
Total assets
Net assets per share(Yen)

Dividends per share[Of which, interim dividend
per share](Yen)

Earnings per share

(Yen)

33.43

37.96

56.82

47.76

75.22

Diluted earnings per share

(Yen)

33.42

37.96

56.82

－

－

Equity ratio

(%)

35.9

30.1

27.1

26.1

26.2

Return on equity

(%)

3.4

4.0

6.1

5.1

8.1

Price earnings ratio(Times)

48.3

39.9

38.2

46.8

24.1

(%)

65.8

86.9

66.9

102.6

66.5

207

244

277

322

367

[16]

[22]

[23]

[21]

[22]

119.8

114.9

165.6

174.1

147.0

[89.2][102.3][118.5][112.5][101.8]

Payout ratio
Number of employees[In addition, average numberof part-time employees]
Total shareholder return[Benchmark: TOPIX Net
Total Return Index](Persons)(%)

Highest share price

(Yen)

2,072

1,852

2,170

2,861

2,795

Lowest share price

(Yen)

1,273

1,249

1,442

1,929

1,607

Notes:

1. Operating revenue does not include consumption taxes, etc.
2. From the 81st term, the Company introduced performance-linked stock-based compensation for its Directors, etc.,
and an incentive plan for employees in management positions, establishing the BIP Trust and the ESOP Trust.
Company stock held under these Trusts is included in treasury stock reported in the non-consolidated balance
sheets. Accordingly, these shares of treasury stock are included in those deducted from the calculation of theaverage number of shares during the period in determining basic and diluted earnings per share, as well as thosededucted from the number of shares issued and outstanding at the end of the year in determining net assets per
share.
3. Diluted earnings per share for the 83rd and 84th terms are not stated as there are no diluted shares.
4. Total shareholder return (TSR) has been calculated based on the share price of ¥1,365 as of March 31, 2015.
5. The highest and lowest share prices refer to those of the First Section of the Tokyo Stock Exchange.

32. History
The Group was launched on February 17, 1931, when Chuji Aoi founded an installment sales business in Nakano-ku, Tokyo,
Japan, after separating from Maruni Shokai Co., Ltd. On March 30, 1937, it was reorganized into a corporate entity (MARUI CO.,
LTD.; capital of ¥50,000; Chuji Aoi, President).
The history of the Company and its main subsidiaries and affiliates since the Company’s founding is as follows.
July 1941

Suspended business and temporarily closed all stores due to wartime business restrictions.

August 1946

Resumed business in cash furniture sale with a temporary store in Nakano.

December 1950

Resumed installment sales.

August 1959

Established Marui Koukoku Jigyosha Co., Ltd. (currently AIM CREATE CO., LTD.).

January 1960

Renamed the monthly payment system “credit” to structurally improve and modernize the Company.

March 1960

Issued the first credit card in Japan.

October 1960

Established Marui Unyu Co., Ltd. (currently MOVING CO., LTD.).

April 1963

Listed stock on the Second Section of the Tokyo Stock Exchange.

June 1965

Stock designated to be listed on the First Section of the Tokyo Stock Exchange.

August 1966

Introduced computers.

April 1974

Introduced POS system and launched an online credit inquiry system to simplify contracting work.

May 1974

Opened the New Shinjuku Marui (currently Shinjuku Marui Main Building).

September 1975

Began offering on-the-spot approval at stores for “Akai Card” credit cards.

February 1981

Began a cash advance business, celebrating the 50th anniversary of founding.

September 1984

Established M & C SYSTEMS CO., LTD.

July 1987

Established CSC Service Co., Ltd. (currently MARUI FACILITIES Co., Ltd.).

September 1988

Published “Voi” mail-order catalogue.

February 1991

Established M1 Card Co., Ltd. (renamed ZERO FIRST Co., Ltd. in February 1996).

December 1994

Relocated the head office to 3-2, Nakano 4-chome, Nakano-ku, Tokyo.

October 2000

Introduced a new revolving payment system as a payment method for cash advances.

October 2003

Opened Kobe Marui, the first store in the Kansai region.

February 2004

Opened Kitasenju Marui, the largest Marui store to date.

October 2004

Established Marui Card Co., Ltd. (currently Epos Card Co., Ltd.).

November 2004

Established MRI Co., Ltd.

March 2006

Launched the new “EPOS card,” with the versatility of the Visa brand added to the benefits of an inhouse credit card.
Opened Namba Marui, the first store in Osaka.

September 2006
October 2007

November 2015

The Company switched to a holding company system via a corporate demerger, renamed MARUIGROUP CO., LTD.
The retail business was succeeded by a newly established company, MARUI CO., LTD., and the credit
card business was succeeded by Epos Card Co., Ltd.
Established MARUI HOME SERVICE Co., Ltd.
Opened Yurakucho Marui.
Established Epos Small Amounts and Short Term Reserve CO., LTD. (currently Epos Small Amount andShort Term Insurance Co., Ltd.).
Merged ZERO FIRST Co., Ltd. through an absorption-type merger with Epos Card Co., Ltd. as thesurviving company.
Established the MARUI GROUP Corporate Governance Guidelines.

April 2016

Opened Hakata Marui, the first store in the Kyushu region.

February 2018

Established TSUMITATE SECURITIES PREPARATORY CO., LTD. (currently tsumiki Co., Ltd.).

January 2020

Established D2C & Co. Inc.

February 2013
October 20144

3. Description of Business
The Group’s operations integrate retailing and FinTech and is comprised of the Company, MARUI GROUP CO., LTD., whichis the holding company, and subsidiaries and affiliates of the Company (17 subsidiaries and six affiliates).
Furthermore, the details of each business and main Group companies are as follows. Businesses are categorized in the samemanner as segments.
Retailing
The following five consolidated subsidiaries as well as unconsolidated subsidiaries and affiliates not accounted for using theequity method engage in businesses including rental, operation, and management of commercial facilities; consignment agreement
sales of apparel items and fashion accessories; store renovation; advertising; fashion distribution subcontracting; and maintenanceand management of buildings and other facilities.
<Consolidated subsidiaries>
MARUI CO., LTD., AIM CREATE CO., LTD., MOVING CO., LTD., M & C SYSTEMS CO., LTD., MARUI FACILITIESCo., Ltd.
<Non-consolidated subsidiaries and affiliates not accounted for using the equity method>MARUI KIT CENTER CO., LTD., MIZONOKUCHISHINTOSHI Co., Ltd., etc.
FinTechThe following five consolidated subsidiaries as well as unconsolidated subsidiaries and affiliates not accounted for using theequity method engage in businesses including credit card services, cash advance services, rent guarantee services, information
system services, real estate rental.
<Consolidated subsidiaries>
Epos Card Co., Ltd., MRI Co., Ltd., M & C SYSTEMS CO., LTD., MARUI HOME SERVICE Co., Ltd., MARUI HOMESERVICE MANAGEMENT Co., Ltd.
<Non-consolidated subsidiaries and affiliates not accounted for using the equity method>
Epos Small Amount and Short Term Insurance Co., Ltd., tsumiki Co., Ltd., etc.
In addition to the above, subsidiaries and affiliates of the Company rent/lease real estate properties from related parties that are
not subsidiaries or affiliates, namely, NAKANO Co., Ltd. and another company.
As the Company is a specified listed company, etc., consolidated figures shall be applied to numerical standards defined incomparison with the scale of the listed company among the criteria for regarding a material fact as minor pertaining to insider
trading regulations.

5[Organization Chart]
The status of the Group’s organization is as illustrated below.

Retailing

FinTech(Operation of commercial facilities, consignment
agreement sales)(Credit card services, etc.)

MARUI CO., LTD.

Epos Card Co., Ltd.

(Operation of commercial facilities, store renovation,etc.)(Collection of receivables)

AIM CREATE CO., LTD.

MRI Co., Ltd.
(Apparel distribution)(Small amount and short term insurance)

MOVING CO., LTD.

Epos Small Amount and Short Term
Insurance Co., Ltd.
(Systems operations)
M & C SYSTEMS CO., LTD.

MARUI GROUP CO., LTD.
(Holding company)(Systems operations)
M & C SYSTEMS CO., LTD.

(Maintenance and management of buildings, etc.)
MARUI FACILITIES Co., Ltd.

(Rental of real estate)(Administrative agency)

MARUI HOME SERVICE Co., Ltd.

MARUI KIT CENTER CO., LTD.

MARUI HOME SERVICEMANAGEMENT Co., Ltd.

(Management of real estate)
MIZONOKUCHISHINTOSHI Co.,
Ltd.

(Securities)
tsumiki Co., Ltd.

NAKANO Co., Ltd.
etc.

etc.

etc.

Consolidated subsidiaries

Non-consolidated subsidiaries (notaccounted for using the equity method)

Affiliates (not accounted for using
the equity method)

Related parties other than subsidiaries andaffiliates64. Subsidiaries and Affiliates
Company Name

Location

Capital stock(Millionsof yen)Principal businessHolding ratioof votingrights (%)

Relationship(Consolidated subsidiaries)

MARUI CO., LTD. (Notes 3 and 4)

Nakano-ku, Tokyo

100

Epos Card Co., Ltd. (Notes 3 and 5)

Nakano-ku, Tokyo500

MRI Co., Ltd.

Nakano-ku, Tokyo

500

AIM CREATE CO., LTD. (Note 6)

Nakano-ku, Tokyo100

MOVING CO., LTD.

Toda-shi, Saitama

100

M & C SYSTEMS CO., LTD.

Nakano-ku, Tokyo

234

MARUI FACILITIES Co., Ltd.

Nakano-ku, Tokyo100

MARUI HOME SERVICE Co., Ltd.

Nakano-ku, Tokyo100

MARUI HOME SERVICEMANAGEMENT Co., Ltd.

Nakano-ku, Tokyo

10

Notes:

Operation of Marui/ModiStores, Original Sales
and Private Brand
Operation andDevelopment, Online
Shopping and Mailorder, Outside Specialty
Store Businesss
Credit Card Business,
Credit Loan BusinessCollection andManagement ofReceivables Business,
Credit Check Business
Proposal of Commercial
Facilities Category,
Design and Interior
Decoration, Operationand Management,
Planning and Making ofAdvertisement
Trucking Business,
Forwarding Business
Software Development,
Computer Operation
Building Management
Service Business,
Security Service
Business
Real-Estate Rental
Business
Real-Estate Rental
Business

100.0Management advisory, etc.
Interlocking directorship…Yes

100.0

Management advisory, etc.
Interlocking directorship…Yes

100.0 Management advisory, etc.
[100.0] Interlocking directorship…Yes

60.0

100.0
100.0
100.0

Management advisory, etc.
Interlocking directorship…Yes

Management advisory, etc.
Interlocking directorship…Yes
Management advisory, etc.
Interlocking directorship…Yes
Management advisory, etc.
Interlocking directorship…Yes

Management advisory, etc.
Interlocking directorship…Yes
100.0 Management advisory, etc.
[100.0] Interlocking directorship…No
100.0

1. Figures in brackets in the “Holding ratio of voting rights” column indicate the ratio of indirect holdings.
2. In addition to the above relations, funds are borrowed and loaned between the Company and the Group companies
under a cash management system that centrally manages Group funds.
3. A specified subsidiary.
4. Revenue (excluding internal revenue from other consolidated companies of the Group) of MARUI CO., LTD. isgreater than 10% of consolidated revenue.
Primary profit (loss) information, etc.
Revenue: ¥94,935 million; Ordinary income: ¥6,214 million; Net income: ¥968 million;
Net assets: ¥226,242 million; Total assets: ¥263,927 million
5. Revenue (excluding internal revenue from other consolidated companies of the Group) of Epos Card Co., Ltd. isgreater than 10% of consolidated revenue. However, primary profit (loss) information, etc., is omitted as the said
revenue is greater than 90% of revenue of “FinTech” stated in “31. SEGMENT INFORMATION.”
6. The holding ratio of voting rights in AIM CREATE CO., LTD. became 60.0% (100% as of the end of the previous
fiscal year) following the transfer of shares to Sumitomo Forestry Co., Ltd. effective July 1, 2019. The Modi
business unit of AIM CREATE CO., LTD. was demerged through a company split effective April 1, 2019, and was
succeeded by MARUI CO., LTD.

7

5. Employees(1) Consolidated basis

As of March 31, 2020
Number of employees (Persons)Name of segment
Retailing

3,167 [

785]

FinTech1,596 [

646]

367 [

22]

Pure holding company
Notes:

Total
5,130 [ 1,453]
1. The number of employees represents the number of active employees, exclusive of the average number of part-time
employees during the fiscal year (calculated based on prescribed monthly working hours) which is shown inbrackets in the number of employees column.
2. The number of employees under pure holding company is the number of employees of the Company not
attributable to a particular segment.

(2) Non-consolidated basis

As of March 31, 2020
Average length of service
Number of employees (Persons)Average age (Years old)
Average annual salary (Yen)(Years)367 [ 22]39.0
15.5
6,514,100
Notes:
1. The number of employees represents the number of active employees, exclusive of the average number of part-time
employees during the fiscal year (calculated based on prescribed monthly working hours) which is shown inbrackets in the number of employees column.
2. Average annual salary includes bonuses and other non-standard payments.
(3) Labor unions
The Group has MARUI GROUP UNION, which is a member union of UA ZENSEN. Management-labor relations have beensmooth, and there are no items of note to report.

8II. Business Overview
1. Management Policies, Management Environment, and Issues to be Addressed
Forward-looking statements in this document are based on the judgment of the Group at the end of the fiscal year
under review.
■ Basic management policies
The Group’s mission is to work together with our stakeholders to help build a flourishing and inclusive society thatoffers happiness to all based on our corporate philosophy of “continue evolving to better aid our customers” and“equate the development of our people with the development of our company.”
The Group aims to increase profit for all stakeholders including customers, shareholders, investors, communities
and society, business partners, employees and future generations. In order to achieve this goal, we endeavor to create
value that we can share with our stakeholders by taking their perspectives into consideration as we deliberate andtake action on all matters. We hope to promote “co-creation sustainability management” to improve our corporate
value as a result of these endeavors.
For details of the Group’s co-creation sustainability management, please refer to the Co-Creation Management
Report 2019 and the VISION BOOK 2050.
Co-Creation Management Report (https://www.0101maruigroup.co.jp/en/ir/lib/i-report.html)
VISION BOOK 2050 (https://www.0101maruigroup.co.jp/en/sustainability/lib/s-report.html)■ Target management indicators
Under the five-year medium-term management plan, the Group will strive to achieve targets of earnings per share(EPS) of more than ¥130, return on equity (ROE) of more than 10%, and return on invested capital (ROIC) of morethan 4% for the fiscal year ending March 31, 2021, its final year.
■ Medium- to long-term management strategy
i. Changes in the business environment
The consumption environment has further shifted from “goods” to “experiences,” and while the e-commerce market
is continuing to grow in the retail sector, there is a risk of a future decline in business models that rely on brick-andmortar stores centered on merchandise sales.
The infrastructure for the credit market has been developing and markets are expected to grow, while innovation in
financial services driven by new technology may bring about a drastic change in the market.
ⅱ. Medium-term management plan framework- Improvement of corporate value through integrated Group operations- Creation of new businesses through transformation of Group businesses- Development of optimal capital structure and further improvement of productivity
ⅲ. Specific Initiatives
Retailing- The stores business will improve capital productivity by completing its transition in business structure focused on
department stores to one focused on shopping centers and fixed-term rental agreements while deploying nextgeneration lifestyle-oriented shopping centers.
- The omni-channel retailing business will develop businesses focused on Internet sales while expanding the scopeof business that combine Group expertise and other unique business models.
- The facility management and distribution business will utilize store renovation, distribution, building management,
and other retailing expertise in an integrated manner and advance business-to-business operations.
FinTech- The credit card business will increase the number of EPOS card fans across Japan and reinforce collaboration withcommercial facilities and companies while maintaining high profit margins and simultaneously expanding businessscale.
- The financial services business will expand revenues from rent guarantee, insurance, and other services utilizing
credit know-how to improve ROIC through business requiring minimal invested capital.
- The IT business will support expansion of Group business scope by utilizing new technologies to improve customer
convenience.
Optimal capital structure, growth investments, and productivity improvement- We will create a structure in which ROIC consistently exceeds capital costs by improving ROIC through income
growth and establishing optimal capital structure suited to Group business structure.
- We will develop commercial facilities utilizing shopping center and fixed-term rental know-how, invest in venturecompanies to acquire new technologies, and execute other growth investments for improving corporate value.
9

- We will utilize human resources as necessitated by business portfolio as a united MARUI GROUP to further
improve Group productivity.
*Approach to optimal capital structure- Total assets are expected to rise considerably as a result of higher operating receivables (accounts receivableinstallment and operating loans) that will accompany growth in the FinTech segment. Meanwhile, the liability
portion of our balance sheet has been more oriented toward retailing with high levels of shareholders’ equity. Under
the medium-term management plan, we aim to address this structure by transforming our business model based on
our target balance sheet to achieve an equity ratio of approximately 30%.
- Higher funding demands will be met through the procurement of low-cost capital as we seek to lower overall capitalcosts by increasing the portion of funds accounted for by interest-bearing debt (excluding lease obligation anddeposits received). At the same time, we will seek to maintain a level of interest-bearing debt that is equivalent toaround 90% of operating receivables to ensure financial safety.
- We plan to continue diversifying our fund procurement methods by liquidating operating receivables and procuring
funds through borrowings from financial institutions and issuance of bonds with the end goal of improving asset
efficiency by limiting the increase in total assets and liabilities.
■ Shareholder returns
The Group will effectively utilize cash flows generated through business operations to increase growth investments
and enhance shareholder returns based on the medium-term management plan with the fiscal year ending March 31,
2021 as its final year. Specifically, core operating cash flow over the five-year period of the medium-term
management plan is expected to amount to ¥230.0 billion, and approximately ¥110.0 billion of that amount will go
to shareholder returns.
The Company will endeavor to continuously increase the level of dividends according to long term growth in EPS
to realize high growth coupled with high returns. The Company will gradually raise its target for the consolidated
payout ratio from 40% to approximately 55% by the fiscal year ending March 31, 2024 and implement ongoing,
long-term dividend increases.
Share buybacks are conducted at an appropriate time after comprehensively considering a range of factors including
cash flows, targeting a total return ratio of approximately 70% for improving capital efficiency and enhancing
shareholder interest. Acquired shares of treasury stock are, in principle, to be canceled.
Indicators for shareholder returns■ The Group’s idea of sustainability
In 2016, the Group took its first steps toward practicing future-oriented co-creation sustainability management, an
integrated approach that integrates consideration for business and the environment, the resolution of social issues,and corporate governance initiatives. We identified four core themes by redefining the focus of our business ofserving everyone from the perspective of inclusion and linking this concept to the United Nations Sustainable
Development Goals (“SDGs”). The concept of inclusion entails integrating and including individuals that had
previously been excluded and is congruent with the principles embodied by the SDGs.
Furthermore, in 2019 we formulated the MARUI GROUP’s 2050 Vision, our long-term vision for 2050, to achieve
full-fledged co-creation sustainability management. To achieve this vision, we have established three businesses
founded on co-creation based on the four core themes to which we have dedicated ourselves.
10

MARUI GROUP’s 2050 Vision
Harnessing the power of business to build a world that transcends dichotomies
Three business founded on Co-creationⅰ. Inter-generational businesses
Through green businesses and human businesses, it will provide options for coexistence with the global environment
and future generations.
ⅱ. Co-creative business
Functioning as a platform to society, enabling it to provide spaces and services emphasizing balance between
individuality and connections through co-creation with all the stakeholders that touch its value chain.
ⅲ. Financial inclusion
We will provide options for alleviating income disparity and other concerns regarding money felt by people aroundthe world.
Four core themes for inclusion
The Group is proactively pursuing these four core themes in order to develop our three businesses established toachieve our long-term vision.
ⅰ. Customer Diversity and Inclusion
We will seek to develop products, services, and stores that bring joy to all customers, regardless of their age, gender,or physical characteristics.
Core initiatives
Inclusive Store Development

We are developing stores that are comfortable in terms of both facilities and customer
service to provide enjoyable and relaxing shopping experiences to all customers, including
senior citizens, differently abled individuals, non-Japanese people, and members of theLGBT community, regardless of age or gender.

Inclusive Product Development

MARUI GROUP views product creation as the process of developing products that match
the physical characteristics of each customer. We are thus establishing development andsales frameworks for supplying products that benefit all customers, excluding no one
regardless of their physical characteristics, in an aim to create new demand.

Financial Inclusion

Under our mission of providing financial services for everyone, we are working on
financial inclusion with the goal of providing everyone with the financial services theyneed when they need them, regardless of income or age, instead of providing limited
financial services exclusively to the wealthy.

ⅱ. Workplace inclusion
Based on MARUI GROUP’s corporate philosophy of striving to “continue evolving to better aid our customers” and“equate the development of our people with the development of our company,” we will provide all employees withvenues through which they can excel.
Core initiatives

Development of an Organization That
Utilizes Diversity

We build a corporate culture where more than 5,000 employees accept one
another’s differences and values by promoting diversity with regard toindividual talents, gender, and age. Furthermore, our employees are provided
with a range of opportunities, including the intra-Group profession changesystem that enables them to hone their individual specialized skills andexpertise, and the Groupwide project teams that allow for discussions thatexceed the boundaries of age or position. By merging the capabilities of ouremployees through these opportunities, we translate the human capital
represented by their expertise and knowledge into organizational capital for
the Group.

Wellness Management Energizing
Employees

We believe it is important to go beyond the basic approach of preventing
illness in order to foster more energized and happy employees. We havetherefore been promoting wellness management that combines theseapproaches. Wellness management has been positioned as an importantelement of our strategies and is thus being practiced on a Groupwide scale.

Human Resource Investments

Recognizing that employees that are committed to helping others are thesource of the corporate value we create, we are proactively conducting
investments in the recruitment and development of human resources to fostera corporate culture that is respectful of diverse values and in which all
employees can feel energized and continue growing.

11

ⅲ. Ecological inclusion
We will develop businesses with low environmental impact, and contribute to the realization of a low-carbon society
and a circular economy, and propose ecologically sound lifestyles that are in harmony with nature and theenvironment.
Core initiatives
The medium- to long-term targets for reducing greenhouse gas emissions
formulated in September 2019 were certified as “targeting 1.5°C” by theinternational initiative known as Science Based Targets (SBT).
Groupwide targets to reduce greenhouse gas emissions are as follows:
By 2030, from the level in the fiscal year ended March 31, 2017,- An 80% reduction in combined volume of Scope 1 *1 and Scope 2*2
emissions- A 35% reduction of Scope 3*3 emissions
By 2050, from the level in the fiscal year ended March 31, 2017,- A 90% reduction in combined volume of Scope 1 and Scope 2
emissions
Environmental Footprint Reduction

Achievement for the fiscal year ended March 31, 2020
- A 26.7% total reduction attributable to Scope 1 (13,799 tons) and Scope
2 (67,916 tons)- A 12% reduction attributable to Scope 3 (351,962 tons)
Resulting in greenhouse gas emissions per unit*4 of 10.3, 83.0% of thelevel in the previous fiscal year.
We became a member of RE100 in July 2018 and will source 100% of theelectricity used in our business activities from renewable energy by 2030. The
ratio of renewable energy for the fiscal year ended March 31, 2020 was 23%.
*1) Greenhouse gas emissions from its use of fuel*2) Greenhouse gas emissions from its use of electricity, etc.
*3) Greenhouse gas emissions from its value chain*4) Calculated based on the ratio of greenhouse gas emissions (tons) toconsolidated operating income (¥1 million)

Responsible Procurement

We recognize our responsibility as a producer across the entire value chain,from the procurement of raw materials and product creation to the sale anddisposal of products. Through co-creation with stakeholders, we strive not
only to contribute to local communities but also to address human rights
issues and improve work environments across the value chain.

Innovative Services for Reducing
Environmental Impacts

We shall leverage our unique platform, which combines our strengths in
IT/logistics, etc. and our Retailing/FinTech businesses to develop innovative
services that deliver new forms of convenience, addressing social change andcustomer needs while also reducing environmental impact.

12

ⅳ. Co-creation corporate governance
We will develop a management structure which includes stakeholders in order to achieve harmony between theinterests and “happiness” of all stakeholders.
Core initiatives

Co-Creation with Stakeholders

Sustainability Management

We are reinforcing our co-creation management activities through constructive
dialogue with stakeholders with the ultimate goal of developing a business thatbrings joy to all customers. These initiatives are also aimed at winning the
support of employees, customers, shareholders, other investors, members ofcommunities and society, and business partners with regard to our inclusionoriented activities.
We have been verifying activities as necessary for the promotion of the threebusinesses we have developed based on co-creation sustainability management,
and are confirming our progress on the key performance indicators (KPI) for
evaluating sustainability in our businesses.
In order to strengthen our sustainability management system, we establishedSustainability Advisors and the Sustainability Committee in 2019.
In addition, we included target ESG ratings based on research by a third-party
institution in the conditions of performance achievement in determining
performance-linked stock-based compensation for Directors.
Target indicator- Inclusion in DJSI World* in the fiscal year ending March 31, 2021
* Dow Jones Sustainability World Index: An ESG index comprising companies
selected through comprehensive evaluation from the point of view of longterm improvement to shareholder value, based on the three perspectives of
economy, environment, and society.

Cultivation of Future Leaders

In April 2017, we launched the Co-Creation Management Academy (CMA)
future leader development program. Each year 10 to 20 candidates are selected,
and through this program we seek to discover and cultivate future leaders under
the guidance of our External Directors.
We established the MARUI GROUP Code of Conduct as the foundation for
co-creation sustainability management. Under that Code of Conduct, weformulated the MARUI GROUP Human Rights Policy, the MARUI GROUP
Occupational Health and Safety Policy, the MARUI GROUP Environmental
Policy, etc.

Risk Management

In addition, in order to respond to the volatile operating environment while
accelerating business structure reforms through digitization and technologicalinnovation, we appointed a Chief Digital Officer (CDO) and established theDigitization Committee.
We established the MARUI GROUP Information Security Policy, the MARUIGROUP Privacy Policy, the MARUI GROUP Social Media Policy and the
MARUI GROUP Tax Policy in 2018. The effectiveness of these policies isverified once a year and all Group employees are familiarized with themthrough training and other activities.
To strengthen measures in response to information security risks, weestablished the Information Security Committee and appointed a Chief
Security Officer (CSO) to serve as the highest-level authority on security
responsible for managing and protecting Groupwide information assets.
We will review as required and promote risk management suitable for thetimes in the future.

13

■ Initiatives related to climate change and endorsing the TCFD
Climate change should be considered as a climate crisis today. Recognizing climate change as one of its mostimportant management priorities, MARUI GROUP aims to “limit the rise in the global temperature to below 1.5°C
above pre-industrial levels,” as presented in the Paris Agreement. The Group has strengthened its governance system
to actively engage in creating a low-carbon society based on the long-term targets of the Paris Agreement inaccordance with the MARUI GROUP Environmental Policy as revised in April 2020. At the same time, the Group
has analyzed the potential impact of climate change on business, and is promoting initiatives in capturing
opportunities for growth and responding appropriately to relevant risks resulting from climate change. The Groupendorsed the recommendations of the TCFD, which was established by the Financial Stability Board, and disclosed
information in its annual securities report for the fiscal year ended March 31, 2019, based on these recommendations.
We conducted repeated analyses at this time to elaborate on opportunities and physical risks due to climate change.
As we continue to focus on enhancing our information disclosure in the future, we will benchmark theappropriateness of the Group’s responses to climate change using the TCFD recommendations to promote cocreation sustainability management.
<Governance>
The Sustainability Committee was established in May 2019 as an advisory body to the Board of Directors, chairedby the Representative Director, for the purpose of examining and discussing the Group’s basic policies and major
items related to climate change. In addition, the Environment and CSR Committee was established as a subordinateof the Sustainability Committee for carrying out duties pertaining to the management of relevant risks and othermatters based on its instructions. In formulating business strategies and implementing investment and financing, we
will strengthen our governance related to climate change based on this system by comprehensively discussing andmaking decisions with considerations for the MARUI GROUP Environmental Policy and other major items related
to climate change.
<Business strategies>(Business risks and opportunities)
Recognizing that a 4°C rise in the global temperature resulting from climate change would have an enormous impact
on society, and we believe it is important to work together to contribute to the movement seeking to limit global
warming to below 1.5°C above pre-industrial levels. In order to strengthen our ability to respond to scenarios below
2°C (with a target of 1.5°C), we will identify the impact of climate-related risks and opportunities on our business,and proceed to formulate relevant strategies.
The Group aims to create a new business model integrating Retailing and FinTech with “Co-Creation Investment”
that leads to mutual development, by investing in start-ups, etc., with which we can share our corporate philosophy
or visions. Climate change would pose such risks as damages to stores, facilities, etc., from floods caused bytyphoons and torrential rains, and an increase in costs due to the introduction of carbon taxes along with tightened
regulations. On the other hand, we view the provision of goods and services responding to increased consumer
environmental awareness and investing in eco-friendly companies as the Group’s business opportunities.
(Analysis and calculation of financial impacts)
Financial impacts on businesses are analyzed based on our climate change scenario, etc., and calculated by item as
the amount of impact on income anticipated within the period through 2050. As physical risks, even if a rise intemperature is held below 1.5°C, we anticipate that flood damage will abruptly occur due to typhoons, torrential
rains, etc. These risks are expected to affect rent revenues, etc., due to suspension of store operations (¥1.9 billion)
and cause building damages (¥3.0 billion). We assessed the transition risks by estimating increases in future energyrelated costs, which are expected to be renewable power procurement costs (¥0.8 billion) and the introduction ofcarbon taxes (¥2.2 billion). The relevant opportunities are expected to have an impact on store revenue as a result of
proposing lifestyles to highly environmentally conscious consumers (¥1.9 billion), long-term revenue due to anincrease in credit cardholders (¥2.6 billion), and return from investment in environmentally friendly companies (¥0.9
billion). We project long-term revenue owing to an increase in recurring payments due to credit cardholders using
electrical power from renewable energy, leading to the conversion of cardholders to Gold cardholders (¥2.0 billion),a reduction of procurement costs resulting from entering the power retailing business (¥0.3 billion), and exemption
from carbon taxes (¥2.2 billion). We will conduct analysis regularly based on various future trends, and continue toreview our evaluations and disclose relevant information.

14

(Assumptions)Target Period

Present to 2050

Scope

All businesses of MARUI GROUP

Calculation
requirements

Analyses based on climate change scenarios (IPCC, IEA, etc.)
Calculation of financial impacts assumed during the period byitem
Calculation of risks in the amount of impact if an event occurs
Calculation of opportunities for lifetime value (LTV), inprinciple
Not considering infrastructure enhancements such as public
works and technology advancements, etc.

15

Opportunities

Transition risks

Physical risks(Risks and opportunities associated with climate change)
Changes
Risks faced by
Description of risks
in society
MARUI GROUP
Impact on rent revenues, etc., due to businesssuspension
Suspension of store
Flood damage
operations
Building damages due to flooding (recovery of
due to typhoons,
power supply facilities, etc.)
heavy rains, etc.
*1

Financial
impacts
Approx.
¥1.9 billion
Approx.
¥3.0 billion
Response
completed

Stop ofsystem centers

Groupwide suspension of business activities due todowned systems

Increase indemand forrenewableenergyRise in renewableenergy prices

Increase in energy costs due to renewable energy
procurement

Approx.
¥0.8 billion(Annual)Tightening ofgovernment’s
environmental
regulations

Introduction ofcarbon taxes

Tax increase due to carbon taxes

Approx.
¥2.2 billion(Annual)Changes insociety

MARUI GROUP’s
opportunities*2

Revenue from bringing in eco-friendly tenants, orother efforts

Financial
impacts
Approx. ¥1.9
billionIncrease in sustainability-minded credit cardholders

Approx. ¥2.6
billionReturns from investments in eco-friendly
companies

Approx. ¥0.9
billionResponse to demand
from generalhouseholds forrenewable energy

Revenue from credit cardholders using electrical
power from renewable energy

Approx. ¥2.0
billionDiversificationof electricity
procurement

Entry into the power
retailing business

Reduction in intermediary costs due to direct
procurement of electricity

Approx. ¥0.3
billion(Annual)Tightening ofgovernment’s
environmental
regulations

Introduction of carbon
taxes

Exemption from carbon taxes from achieving zero
greenhouse gas emissions

Approx. ¥2.2
billion(Annual)Enhancedenvironmental
consciousness
and change inlifestyles

Propose sustainable
lifestyles

Description of opportunities

*3

*4

*5

*1. Assuming flooding of a river that will have the most significant effects based on hazard maps (Arakawa River)(three-month effect on two stores in the watershed areas)*2. Assuming no financial impacts as a backup center has been established*3. Increased rent revenues and credit card usage*4. Calculated revenue from credit card admission and usage*5. Calculated revenue from increased Gold cardholders due to recurring payments, etc.
<Risk management>
MARUI GROUP performs scenario analyses to track and assess the impacts of climate change on its business andidentify climate change-related risks and opportunities. The identified risks and opportunities are managed in termsof strategy formulation and individual business operations through a promotion system centered on the Sustainability
Committee. The content of deliberations by the Environment and CSR Committee, which comprises officers ofGroup companies (retailing, facility management, distribution, building management, etc.), is regularly reported anddiscussed at the Sustainability Committee, and reports and advice are provided to the Board of Directors as necessary
for specific items. Going forward, strategies and measures will be examined based on a myriad of factors. External
factors on which information will be shared include climate change and other trends that may impact corporate
strategies as well as legal and regulatory revisions. Internal factors examined will include progress in the measuresof Group companies and future risks and opportunities.
16

<Indicators and targets>- The Group has set environmental efficiency (ratio of operating income to CO 2 emissions) and the ratio of circularrevenue (ratio of circular sales/transactions to total Retailing segment transactions) as indicators for green
businesses.
- Our Groupwide greenhouse gas emission reduction targets are as follows: an 80% reduction in emissions
attributable to Scope 1 and Scope 2 and a 35% reduction attributable to Scope 3 from the level in the fiscal year
ended March 31, 2017 by 2030 (a 90% reduction in emissions attributable to Scope 1 and Scope 2 from the levelin the fiscal year ended March 31, 2017 by 2050); and they were certified as “targeting 1.5°C” by the SBT initiativein September 2019.
- The Group has set a target of procuring 100% of the electricity used in its business activities from renewable powersources by 2030 (medium-term target: 70% by 2025) and became a member of RE100 in July 2018.
■ Response to COVID-19
With stakeholders’ health and safety as a first priority, the Group is taking various measures. We would like to reflect
on our relationships and further strengthen our partnerships in order to overcome the coronavirus crisis.
(Customers)
Marui and Modi stores shortened business hours and some of them temporarily closed for two days in March. Aftera state of emergency was declared, all stores were closed except for food corners and certain tenants. In the regions
where the emergency declaration was lifted, stores gradually resumed operations by taking infection prevention
measures, and all of the stores have resumed operations since June.
With regard to EPOS cards, we determine any necessary changes to payment due dates, as well as inform customers
using the card for rent settlement of the government’s Housing Security Benefit system.
(Business partners)
Based on our co-creation philosophy aiming to enhance stakeholders’ interests, the Group implemented measures
for strengthening partnerships such as exemption of rent in its full amount during the stores' temporary closings. We
will overcome this unprecedented crisis by strengthening partnerships with our business partners, and strive toenhance our corporate value over the medium-to-long term.
Measures for strengthening partnerships to overcome COVID-19- 10%–15% reduction of fixed rent and common area charges (for March).
- Exemption of rent and common area charges in full amount for business partners’ closing period.
- Removal of minimum guaranteed sales of business partners of consignment sales (for a period from March toAugust).
- Return one to two months’ worth of security deposits at business partner’s request (for business partners who had
deposited for six months or longer).
- Postponement of payments for a period from May to July by six months at business partner’s request.
- Assist customers in filing an “application for rent support grant.”(Shareholders and investors)
The global situation is greatly changing and the outlook is uncertain due to the spread of COVID-19. We will,
however, disclose information in a timely and appropriate manner. We will facilitate management trusted byshareholders and investors by securing business continuity and stability.
(Employees)
Employees placed on standby at home due to the temporary closing of stores were treated as taking special leave. At
departments requiring employees to come to the office, such as call centers and logistics centers, we created anenvironment where staff can work with peace of mind by decentralizing offices and taking thorough measures toprevent droplet infection. At the head office, the implementation rate of teleworking has risen since laptop computers
had been already introduced as part of work style reforms. A new work style has become common along with theinfection prevention measures.
The Group seeks to realize a flourishing and inclusive society that offers happiness to all people. The impact of
COVID-19 still remains uncertain. We will, however, provide our customers with various options and advance ourefforts to create attractive stores through co-creation with our business partners in the future.

17

2. Business and Other Risks
Matters stated in the business overview and financial information of our securities report that may affect the judgmentof investors are as follows.
Forward-looking statements in this document are based on the judgment of the Group at the end of the fiscal year
under review.
1. Major risks(1) Risks concerning business strategies
1) Risks concerning Retailing and FinTech environments- Changes in consumption trends- Occurrence and intensification of competition- Expansion of the e-commerce market, and diversification of settlement methods- Revision of the taxation system and relevant laws
(Impact)
The Group’s operations integrate Retailing and FinTech. The Group conducts operations at sales offices centered on
the Tokyo metropolitan area and sales offices located throughout the country. We anticipate to see a decline in thenumber of visiting customers and transactions at stores due to changes in markets causing sluggish consumer spending,such as fluctuations in business conditions, changes in economic conditions, the declining population, intensifying
competition, the expansion of the e-commerce market, and the rise in the sharing economy. In addition, the share ofcredit card usage in the market is expected to shrink as a result of the technological advances such as the diversificationof settlement means associated with the transition to cashless payments, or changes in consumer behaviors. If theserisks become apparent, the financial position and business results of the Group may be affected.
In store operations, the Group has been building a stable earnings structure by transitioning to a business structure
focused on shopping centers and fixed-term rental agreements. However, the financial position and business results of
the Group may be affected by cancellation of fixed-term rental agreements with tenants and increased vacant floor
space, both of which will lead to a decline in rental revenue, posting of impairment loss due to fluctuations in land
prices, increased tax burden due to a revision of the taxation system, and other factors.
Furthermore, allowance for doubtful accounts is provided with respect to operating receivables (accounts receivable–
installment and operating loans) of cards that account for a large share of the Group’s total assets, based on theoccurrence of receivables in arrears, historical bad debt ratios, etc. However, payments in arrears and uncollected
receivables could increase due to worsening economic conditions, changes in relevant laws, or other factors. The
financial position and business results of the Group may be affected by a sharp increase in bad debt expenses orallowance for doubtful accounts, etc. Provision for loss on interest repayment has been provided to prepare for the
repayment of interest on cash advances, by projecting the amount of future repayments based on the past actual
repayments. However, if the amount of provision is insufficient for the amount of future claims for interest repayment,
additional costs may be incurred.
(Countermeasures)
We are pushing ahead with a marriage of Internet and physical venues centered on our e-commerce site “MARUI web
channel.” Marui and Modi stores have been working to realize the co-existence of physical venues with e-commerce
and to constantly improve facility value by working to promote “digital native stores” to accommodate the post-digitalera. The Group is working to diversify touchpoints with customers by having stores also play a complementary role todigital. Moreover, we endeavor to broaden our customer base and increase the number of customers by advancing“Customer Diversity and Inclusion,” providing products and services that bring joy to all customers, regardless of theirage, physical characteristics, or gender.
Recognizing the promotion of the transition to cashless payments as a big opportunity, the FinTech segment responds
to diversified payment methods by increasing EPOS Gold and Platinum cardholders and encouraging them to use their
EPOS card as their main card by implementing the strategy of maximizing the share of EPOS card payments amonghousehold finances, such as the rent guarantee services business. Moreover, aiming to realize financial inclusion withthe goal of providing everyone with the financial services they need when they need them, regardless of income or age,
we provide initial credit by utilizing big data based on credit expertise acquired from the time of our founding, as wellas credit monitoring under the belief that “creditability should be built together with customers.” We have achieved alow ratio of delinquent debt by increasing credit limits based on usage frequency and transaction amounts and payment
history.

182) Risks concerning co-creation investment- Uncertainty of return on investment- Risk of impairment loss on investment in unlisted companies- Fluctuations in prices of investment securities(Impact)
The Group is promoting “Co-Creation Investment,” investing in growing companies as part of its measures to accelerate
investments in intangible assets. We aim to create value greater than the sum of individual businesses by building abusiness model integrating Retailing and FinTech with “Co-Creation Investment.” In executing investments, we
conduct a preliminary detailed review through confirmation of the financial conditions and contracts of prospective
investees, etc., and interviews with their management, to fully examine risks. However, in cases where a problem thatcannot be identified through preliminary investigation is found, e.g., the occurrence of a contingent liability or the
discovery of unrecognized debt, or depending on future business performance or changes in business policies of theinvestees, the expected outcome may not be achieved, leading to the recording of an impairment loss. Furthermore,listed shares held by the Group may be affected by price fluctuations depending on stock market trends.
(Countermeasures)
In selecting investees, we prepare our own plan based on a business plan obtained from the investee, and makeinvestment decisions after checking profitability including not only financial returns but also cooperative returns to begenerated from cooperation with the Group. Most importantly, in “Co-Creation Investment,” we believe that we cancontribute to mitigating investment risks and increasing returns by realizing “co-creation” by uniting resources of thecredit card business, the retailing business, and human resources involved in them, with intangible assets such as
investees’ know-how and skills, and by greatly contributing to the achievement of their business plans and development
as a corporation.
In principle, we will not engage in cross-shareholdings except for cases in which such holdings are deemed necessary
for maintaining or building upon collaborative or transactional relationships that are strategically critical for improving
corporate value. At a meeting of the Board of Directors held in February 2016, it was determined that the Company
had already established sufficiently strong business relationships with cross-shareholding counterparties, and it wastherefore decided to undertake a phased reduction in cross-shareholdings out of consideration for asset efficiency andstock price fluctuation risks.

19

(2) Risks concerning natural disasters, infectious disease, etc.
1) Risks concerning large-scale disasters- Stagnation of economic activities and decline in consumption activities- Damage to assets held and occurrence of repair costs- Suspension of business activities due to damages to offices and systems, and adverse impact on employees(Impact)
The Group conducts operations at sales offices centered on the Tokyo metropolitan area and sales offices locatedthroughout the country. In the event of a natural disaster such as a large-scale earthquake or storm/flood, or a terrorist
attack in areas where sales offices are located, the sales offices may be forced to suspend business activities due to thedisruption of social infrastructure, etc., and this may affect the financial position and business results of the Group.
(Countermeasures)
The Group prepares against various disasters and accidents by taking measures such as introducing an employee safety
confirmation system, formulating a disaster countermeasures manual, implementing earthquake-resistant measures forbuildings, facilities, systems, etc. (including data backup), fire, disaster, and flood prevention drills, and stocking
necessities. In the event of an earthquake, etc., the Group Earthquake Disaster Response Headquarters is establishedand Group companies work together to establish systems that enable business continuity.
2) Risks concerning climate change- Damages to stores and facilities from typhoons, torrential rains, etc.,- Introduction of carbon taxes, etc. along with the tightening of regulations(Impact)
The financial position and business results of the Group may be affected by damage to stores from flooding caused bytyphoons and torrential rains, and an increase in costs due to the introduction of carbon taxes, etc.
(Countermeasures)
The Group believes it is important to capture opportunities for growth and respond appropriately to relevant risks
resulting from climate change. The details of the initiatives related to climate change and endorsing the TCFD areprovided in “1. Management Policies, Management Environment, and Issues to be Addressed ■ Initiatives related toclimate change and endorsing the TCFD.”
3) Risks concerning infectious disease- Stagnation of economic activities and decline in consumption activities- Refraining from or suspending business activities at stores due to the spread of infection- Suspension of business activities due to infection of employees(Impact)
The Group conducts operations at sales offices centered on the Tokyo metropolitan area and sales offices locatedthroughout the country. If an infectious disease is prevalent in areas where sales offices are located or if measures suchas voluntary restraints on going out are taken to prevent the spread of infection, the financial position and businessresults of the Group may be affected by restrictions on business activities such as suspension of store operations.
Furthermore, it may become difficult to continue business due to the spread of infection among employees. The detailsof the impacts of the spread of COVID-19 are provided in “3. Management’s Analysis of the Company’s Financial
Condition, Results of Operations, and Cash Flow Conditions (1) Summary of operating results, etc., Consolidated
business results.”(Countermeasures)
In order to prevent the spread of infectious diseases, employees mainly based at offices are encouraged to remotely
work from home as much as possible, while those in charge of logistics, such as e-commerce, work in shifts. In addition,
we are taking infection preventative measures for our customers and employees at sales offices, such as installing
alcohol antiseptic solution dispensers, requiring the wearing of masks, and ensuring the adherence to social distancing.
In response to the spread of COVID-19, placing top priority on the health and safety of our customers, business partners
and employees, opening hours of our stores were shortened and urban stores were temporarily closed in March toprevent the spread of infection. After a state of emergency was declared in April, all stores were closed except for foodcorners and certain tenants. The details of response to the spread of COVID-19 are provided in “1. Management Policies,
Management Environment, and Issues to be Addressed, Response to COVID-19.”
20

(3) Risks concerning corporate operations
1) Risks concerning fund procurement- Constraining fund procurement- Raising fund procurement interest rates(Impact)
The FinTech segment is expected to grow, with card shopping transactions increasing and financial services including
rent guarantee expanding. Amid this situation, the Group expects to see an expansion of cash demand owing to anincrease in operating receivables (accounts receivable–installment and operating loans). Accordingly, new funds will
be needed in addition to handling repayments and redemption of funds previously procured. We anticipate that risks
concerning fund procurement will grow as the procurement amount will gradually increase in the future.
In the case of turmoil in the financial market, fund procurement may be constrained. Furthermore, a substantial
deterioration of the business results of the Group or a rapid decline in its creditability would make it difficult to borrowfrom financial institutions and hinder issuance of corporate bonds. If these risks become apparent, they may materiallyaffect the financing of the Group.
In addition, as fund procurement interest rates fluctuate depending on the market environment or other factors,
procurement costs may sharply rise depending on such trend, and this may affect the financial position and businessresults of the Group.
(Countermeasures)
The Group seeks to maintain a level of interest-bearing debt to around 90% in order to control the risk arising from anincrease in debts.
In raising fund necessary for operating activities, we will diversify the procurement methods we use by indirectly
procuring funds from financial institutions, directly procuring funds through issuance of corporate bonds andcommercial paper, as well as liquidating operating receivables. We also utilize these procurement methods in a balancedmanner.
In order to cope with the risk of refinancing, we maintain consistent annual repayment and/or redemption levels bycontrolling the years of procurement. We have established a system to ensure procurement even if fund procurement isrestricted, by executing commitment line contracts or establishing overdraft facilities with financial institutions for suchamounts to ensure liquidity.
As for the procurement interest rate, we minimize the impact of an increase in procurement costs due to the fluctuations
in market interest rates by maintaining the procurement methods with fixed interest rates at a rate of 50% to 60%.
2) Risks concerning information security- System failure due to an accident, defect, etc.
- Unauthorized entries and access from outside, and virus infection- Leakage of customer information(Impact)
i. System-related
The Group employs a variety of computer systems and communication networks. In the event of a system error due toa hardware or software defect, or a communication network failure, a system delay, a service outage or the alterationof a website due to unauthorized access from outside, etc., it may affect the financial position and business results of
the Group.
ii. Personal information-related
The Group maintains EPOS cardholder information and other personal information of many customers and stakeholders.
If, by any chance, customer information is leaked or fraudulent use occurs, the Group may suffer the risk of losingsocial creditability and incurring liability for damages, which may affect the business performance of the Group.

21

(Countermeasures)
i. System-related
The Group operates systems aiming at stable operation by duplicating computer systems and communication networks,
replacing systems regularly, as well as preventing computer viruses or unauthorized entries. In addition, the Group
strives to further strengthen information security by utilizing risk assessment by outside consultants.
ii. Personal information-related
The Group recognizes the enhancement of Groupwide information security, such as the protection of customer
information and other information assets held by the Group against unauthorized access or cyber attack, as a top
management priority. By establishing the MARUI GROUP Information Security Policy and the MARUI GROUP
Privacy Policy, we are working to properly manage and protect all the personal information obtained.
Specifically, based on the Act on the Protection of Personal Information, other laws and regulations, and relevant
guidelines, standards, etc., we take safety management measures concerning personal information. At the same time,
we continue to properly protect personal information by constant improvement through implementation and operationof the personal information protection management system.
Specifically, our Group companies handling large amounts of personal information have acquired the “PrivacyMark”
and practice appropriate handling of personal information.
3) Risks concerning human resources- Shortage of management personnel- Intensified competition for securing human resources(Impact)
We believe that growth of the Group can be attained by the development and contribution of each employee. If
competition intensifies for the securing of human resources, an outflow of human resources occurs, and a consequent
shortage in future management personnel becomes apparent, these may affect the evolution and continuity of ourbusiness.
(Countermeasures)
The Group emphasizes the importance of human resource investments to accumulate the intangible assets that are awellspring of future corporate value, based on the culture where all of our employees can tackle new challenges. We
are currently creating an environment where employees can fully realize personal growth and are highly motivatedowing to our conducting of systematic human resource investments from a variety of angles. These investments include
education and training programs based on open application, and the Groupwide project teams that engage in discussions
on important topics for Group management. These efforts also include the establishment of the Co-Creation
Management Academy (CMA) Future Leader Development Program, which cultivates human resources capable ofpromoting management reforms, as well as the secondment of employees to start-up companies.
2. Risk management system
The Group maintains five committees, i.e., Public Relations IR Committee, Internal Control Committee, Information
Security Committee, Safety Control Committee, and Insider Trading Prevention Committee to control high-risk areasin business operations and strive for speedy operational improvement and the prevention of accidents. At the sametime, the Compliance Promotion Board, chaired by the Representative Director, is set up to coordinate the functions of
all committees.
In addition, the Sustainability Committee has been established as an advisory body to the Board of Directors, chairedby the Representative Director, for the purpose of examining and discussing the Group’s basic policies and major items
related to climate change. The Environment and CSR Committee has been established within the Sustainability
Committee and carries out duties pertaining to the management of relevant risks and other matters based on the
instruction of the Sustainability Committee.
The Group enhances the effectiveness of risk management by holding regular meetings participated by Executive
Officers as well as holding and establishing the meetings of the above committees and subcommittees to realize close
coordination, risk information sharing, and speedy decision making and implementation of countermeasures.
Furthermore, the Company has established the MARUI GROUP Information Security Policy, which sets specificpolicies for developing systems and formulating measures to ensure the security of information assets, and the MARUIGROUP Tax Policy, which clearly delineates guidelines for compliance with tax laws and minimization of tax risks.
The effectiveness of these policies is verified once a year and all Group employees are familiarized with them throughtraining and other activities.

223. Management’s Analysis on the Company’s Financial Condition, Results of Operations and Cash Flow
Conditions(1) Summary of operating results, etc.
A summary of the financial position, operating results, and cash flows (“operating results, etc.”) of the Company
and its consolidated subsidiaries (the “Group”) in the fiscal year under review is as follows.
Consolidated business results- The Group achieved EPS of ¥117.58 (+1% and +¥1.59 year on year), exceeding the previous year's level andreaching a record high for the second consecutive year thanks to profit growth and capital policy. ROE was 8.8%(-0.3% year on year), exceeding capital costs (6.9%) for the second consecutive year, while ROIC was 3.7%(+0.0% year on year), exceeding weighted average cost of capital (WACC, 3.0%) for the fourth consecutive year.
- Total Group transactions were ¥2,903.7 billion (+14% year on year), exceeding the previous fiscal year by ¥364.1
billion, as card shopping transactions in the FinTech segment drove transactions for the Group as a whole.
- Operating income increased for the eleventh consecutive year to ¥41.9 billion (+2% year on year), while net income
increased for the ninth consecutive year to ¥25.4 billion (+0% year on year).
* In “3. Management’s Analysis on the Company’s Financial Condition, Results of Operations and Cash Flow
Conditions,” amounts expressed in billions of yen have been rounded off to the first decimal place.
☐ Consolidated business results☐ ROE and ROIC

23

Impact of the spread of COVID-19 and major special factors affecting changes in operating income- Since fixed costs incurred during the suspension of operations at stores were deemed as nonrecurring expenses,
costs in the amount of ¥0.4 billion were reclassified from selling, general and administrative expenses toextraordinary losses.
- Due to the impact of the spread of COVID-19 in the fiscal year under review, operating income in the Retailingsegment is estimated to have declined by approximately ¥1.5 billion due to decreases in sales and variable costs.
In the FinTech segment, while ¥0.4 billion was added to allowance for doubtful accounts based on the estimationof bad debt expense for operating receivables, operating income increased by approximately ¥0.2 billion due to adecrease in variable costs.
- Operating income decreased by ¥0.5 billion owing to the recording of gain on transfer of receivables in line withthe factoring of accounts receivable in the amount of ¥7.1 billion (+¥1.0 billion year on year), and write-offs andexpenses of ¥2.2 billion (+¥1.5 billion year on year).
- Operating income decreased by ¥1.1 billion owing to the recording of provision for loss on interest repayment of¥4.4 billion (+¥1.1 billion year on year) to prepare for the repayment of interest on cash advances.
- Operating income of the FinTech segment increased by ¥0.5 billion due to recording the cost of issuing EPOS
cards as an asset and amortizing it over the useful life of the card from the fourth quarter.
☐

Changes in operating income

Business results by segment- In the Retailing segment, operating income was ¥10.0 billion (-12% year on year), a decrease of ¥1.4 billion fromthe previous fiscal year.
- In the FinTech segment, operating income was ¥38.4 billion (+10% year on year), with both revenues and profits
increasing for the eighth consecutive year as card shopping transactions performed favorably.
☐ Segment operating income<Retailing segment>- The shift to shopping center-type stores over the five-year period to the previous fiscal year resulted in further
improvement in revenues and stabilization of profits. From the fiscal year under review, to realize our new Digital
Native Store strategy, we are introducing brands providing D2C (Direct to Consumer) and sharing services, aiming
to create stores that provide experiences and communication opportunities that cannot be provided online. Despite
steady progress in stabilizing revenues from plots under fixed term rental contracts, revenues and profits declined
due to a drop in sales as a result of the consumption tax hike and poor weather conditions as well as voluntary
restraints on going out and store closures to prevent the spread of COVID-19 in the second half of the fiscal year,
in addition to revenue improvement having run its course.
24☐ Changes in operating income from the Retailing segment

Notes:“Platform” refers to business-to-business operations in which the Group utilizes store renovation, distribution,building management, and other retailing expertise in an integrated manner.

<FinTech segment>- In order to increase the number of users of EPOS cards, we have strengthened the promotion of new membershipin Marui stores and online services. We have also promoted the issuance of affiliate cards with commercial facilities
nationwide, and have expanded the number of affiliated facilities to 30 (increase by five from the previous fiscal
year). We are also working to maximize our share in household consumption through alliances and collaborations
with rent guarantee, recurring business and subscription companies with the aim of further enhancing usage rates
and amounts.
- As a result, the number of cardholders steadily increased to 7.2 million (+5% year on year). The number of Platinum
and Gold cardholders increased to 2.5 million (+16% year on year), accounting for 35% of all cardholders, due toour steady efforts to build up customers, including increasing the number of our unique family card EPOS FamilyGold cardholders.
- In terms of total transactions, although growth slowed due to voluntary restraints on going out and other measures
to prevent the spread of COVID-19, card shopping transactions continued to increase to ¥2,171.0 billion (+16%year on year), and rent guarantee and other service transactions grew steadily to ¥353.9 billion (+26% year on year).
☐ FinTech segment

25

Indicators of LTV Stability
As a result of the change in our business model, “recurring revenue” (unaudited information), which includes rent
revenues from our stores and card commissions, has increased to account for a larger proportion of total sales andprofits, altering the Group’s revenue structure. Recurring revenue, which is recurring revenue from contracts withcustomers and business partners, can be viewed as “contracted future recurring revenue” (unaudited information) for
the following fiscal year and beyond, and can be used as an indicator to measure the stability of earnings. These areimportant elements of the Group's long-term management that emphasizes lifetime profit (LTV).
- During the fiscal year under review, recurring revenue (on a gross profit basis) was ¥131.1 billion (+7% year onyear), and the ratio of recurring revenue to gross profit increased to 65.3% (+2.4% year on year).
Note: Gross profit used in calculating the gross profit-based recurring revenue and its composition includes selling,
general and administrative expenses paid by business partners on a recurring basis.
☐

Recurring revenue- The calculation of contracted future recurring revenue is based on the remaining contract years for rent revenues,
the repayment period for revolving and installment fees and cash advance interest, the period until expiration datesfor (recurring) affiliate commissions, and the number of remaining years of residency for rent guarantees.
- At the end of the fiscal year under review, contracted future recurring revenue was ¥350.0 billion (+7% year onyear), and it is expected that it will generate future earnings approximately 2.7 times the recurring revenue (basedon gross profit) for the fiscal year under review.
☐

Contracted future recurring revenue at the end of the fiscal year under review

Financial position- Operating receivables (accounts receivable-installment and operating loans) increased by ¥52.6 billion from theend of the previous fiscal year, owing to the increase in card shopping transactions. However, due to the factoringof accounts receivable, the amount outstanding decreased by ¥10.1 billion. Total assets decreased by ¥4.2 billion
to ¥886.0 billion.
- Interest-bearing debt (excluding lease obligation and deposits received) decreased by ¥6.8 billion from the end of
the previous fiscal year as a result of fund procurement via the factoring of accounts receivable above. The
proportion of interest-bearing debt to operating receivables was 86.4% (+0.4% compared with the end of theprevious fiscal year).
- The increase in shareholders’ equity was limited to ¥5.0 billion from the previous fiscal year to ¥289.8 billion
owing to purchase of treasury stock of ¥7.0 billion and other factors, resulting in an equity ratio of 32.7% (+0.7%
compared with the end of the previous fiscal year).

26

☐ Balance sheet*1 Ratio of factoring accounts receivable = factoring accounts receivable ÷ (operating receivables + factoring accounts
receivable)*2 Ratio of operating receivables = interest-bearing debt ÷ operating receivables
Notes: 1. In order to build the optimal capital structure tailored to the Group’s business structure, the Group istargeting interest-bearing debt of approximately 90% of operating receivables and an equity ratio of
approximately 30%.
2 From the previous fiscal year, the Group has been systematically increasing fund procurement throughthe factoring of operating receivables. The Group will take steps to achieve its target balance sheet bykeeping the amount of factoring at approximately 25% of operating receivable in the fiscal year ending
March 31, 2021, thereby limiting increases in interest-bearing debt and total assets to ensure that theamount of total assets are ¥1 trillion or less.
☐ Target balance sheet

Cash flows- Net cash provided by operating activities was ¥39.9 billion (¥26.4 billion provided in the previous fiscal year).
- Core operating cash flow (unaudited information), which excludes outflows associated with increases in operatingreceivables, increased by ¥0.4 billion from the previous fiscal year to ¥39.0 billion, partly owing to an increase inprovision for point card certificates, although income before income tax was largely flat from the previous fiscal
year.
- Net cash used in investing activities was ¥20.3 billion (¥9.2 billion used in the previous fiscal year), owing partly
to ¥11.0 billion used in the purchase of property and equipment and ¥9.0 billion used for the purchase of investment
securities.
- Net cash used in financing activities was ¥25.5 billion (¥15.9 billion used in the previous fiscal year), owing partly
to ¥11.7 billion of cash dividends paid and ¥7.9 billion in purchase of treasury stock including purchase throughthe BIP Trust and ESOP Trust.
27☐ Cash flows

Notes: 1

The Group's credit card EPOS card has seen an increase in the number of members and an increase in therate and amount of usage. At this stage of growth, operating cash flow tends to be negative, and therefore
the Group uses core operating cash flow, which excludes outflows associated with changes in operatingreceivables (accounts receivable-installment and operating loans), as an indicator of profitability andsoundness.
2 In the medium-term management plan, the Group is targeting core operating cash flow of ¥230.0 billion,
and intends to allocate ¥200.0 billion to growth investments and shareholder returns to achieve sustainablegrowth and improve capital efficiency.
3 The calculation method for core operating cash flow has been changed and (1) gain on transfer ofreceivables in line with the factoring of accounts receivable and write-offs, etc. have been included incore operating cash flow. 2) In order to exclude the impact of bank business days and temporary changes
in receivables and payables, changes in accounts payable to tenants, etc. are not included in core operating
cash flow. As a result, core operating cash flow for the previous fiscal year decreased by ¥4.1 billion, and“Decrease (increase) in trade receivables, etc.” increased by ¥4.1 billion.

Production, orders received, and sales
1) Production
This item does apply for the Company and its subsidiaries and affiliates.
2) Orders received
Certain operations in the Retailing and FinTech segments are based on orders received, and orders received in
the fiscal year under review were ¥12,297 million (87.1% of the previous fiscal year), bringing outstandingorders received to ¥3,111 million as of March 31, 2020 (86.0% of the previous fiscal year).
Note: Amounts above do not include consumption taxes, etc.
3) SalesSales result by segment in the fiscal year under review were as follows.
Segment

Amount(Millions of yen)

Year on year (%)

Retailing
Revenue from fixed term tenants,
etc.

42,497102.2

Consignment revenue

36,195

72.9

Rent revenue and others

7,355

76.7

Related business revenue

24,912

101.3

Retailing total

110,960

88.5

136,662108.4

247,582

98.5

FinTechTotal
Notes: 1. Amounts above do not include consumption taxes, etc.

2. Amounts above represent revenue from customers outside the Group.

284) Procurement
Product procurement amount by segment in the fiscal year under review was as follows.
Segment

Amount(Millions of yen)

Retailing
Note:

Year on year (%)
22,844

79.6

Amounts above do not include consumption taxes, etc.

(2) Management’s Analysis on the Company’s Financial Condition, Results of Operations and Cash Flow Conditions
regarding operating results
Management’s Analysis on the Company’s Financial Condition, Results of Operations and Cash Flow Conditions
regarding the Group’s operating results is as follows. Forward-looking statements below are based on the judgmentof the Group at the end of the fiscal year under review.
1) Important accounting estimates and assumptions used in such estimates
The Group’s consolidated financial statements are prepared in accordance with accounting principles generally
accepted in Japan (“Japanese GAAP”). In preparing these consolidated financial statements, we use estimatesand assumptions that affect the reported amounts of assets, liabilities, revenues and expenses; however, figures
based on these estimates and assumptions may differ from actual results.
The significant accounting estimates and assumptions used in the preparation of the consolidated financial
statements are as follows:
The accounting estimates associated with the spread of COVID-19 are described in “V. Financial Information
1. Consolidated Financial Statements (1) Notes to Consolidated Financial Statements 5. ADDITIONAL
INFORMATION.”
Impairment of fixed assets
As for impairment loss, an asset group will be tested for impairment when there is an indication of an impairment,
and if the future cash flow from the asset group are lower than the carrying amount, the carrying amount will be
reduced to the recoverable amount and an impairment loss will be recorded.
In identifying any indications of an impairment, and recognizing and measuring impairment loss, we makereasonable judgments based on information available at the time of settlement of accounts. However,
impairment may become necessary if the recoverable amount decreases due to changes in preconditions andassumptions, such as changes in the business environment and land prices.
Deferred tax assets
The recoverability of deferred tax assets is determined by judging whether it has the effect of reducing the tax
burden in the future based on the sufficiency of taxable income before temporary differences, etc. based on
profitability, the sufficiency of taxable income before temporary differences, etc. based on tax planning, and thesufficiency of taxable temporary difference.
If such estimates and assumptions were to be revised due to changes in the external environment or other factors,
deferred tax assets could be reduced and tax expense could be recorded.
Allowance for doubtful accounts
The allowance for doubtful accounts is stated at the amount determined based on the historical experience of bad
debt with respect to ordinary receivables, plus an estimate of uncollectible amounts determined by reference tospecific doubtful receivables of customers experiencing financial difficulties.
If the credit risk of receivables held at the end of the fiscal year differs significantly from the credit risk ofreceivables held in the past due to changes in the external environment or other factors, the historical experienceof bad debt will require adjustment, leading to the possibility of an increase or decrease in the amount ofallowance for doubtful accounts.
With regard to the impact of COVID-19, after considering the bad debt risk of trade receivables (accounts
receivable-installment and operating loans), allowance for doubtful accounts was increased by ¥430 million in
the fiscal year under review.
Provision for loss on interest repayment
Provision for loss on interest repayment is provided in lump sum for claims for interest repayment by reasonably
estimating the amount to be refunded in the future.
In making estimates, we analyze the status of past interest repayment amounts and other factors for each fiscal
period and reasonably estimate the amount of future losses on interest repayment. Accordingly, if the current
amount of the allowance is insufficient for future claims for refunds, additional expenses may be incurred.

292) Analysis of operating results, financial position, and cash flows.
As described in “(1) Summary of operating results, etc.”
Information on financial resources and liquidity of capital are described in “2. Business and Other Risks” and“V. Financial Information 1. Consolidated Financial Statements (1) Notes to Consolidated Financial Statements
25. FINANCIAL INSTRUMENTS.”
4. Important business contracts
There are no particular items that require mentioning.
5. Research and development activities
There are no particular items that require mentioning.

30

III. Equipment and Facilities
1. Overview of capital investments, etc.
In the fiscal year under review, the Group made capital investments totaling ¥10,468 million, including salesfloor
renovations in existing stores and investment in system infrastructure. Capital investment by segment was as follows.
Amount(Millions of yen)Segment
Retailing

8,311

FinTech3,448

Adjustments(1,291)
Total

10,468Notes: 1. Amounts above include intangible assets in addition to property and equipment.
2. Amounts above do not include consumption taxes, etc.

2. Major facilities
Major facilities were as follows.
(1) Filing company
As of March 31, 2020
Carrying amount (Millions of yen)
Facility(Location)
Head office(Nakano-ku, Tokyo)

Segment―

Description Buildings
andstructures
Office16
facilities

Land
[m2]

Leasedassets

Other

Total

[-]

-

190

206

Numberofemployees
367[22]

Notes: 1. “Other” in carrying amount includes intangible assets in addition to property and equipment.
2. Amounts above do not include consumption taxes, etc.
3. The number of employees represents the number of active employees, and the average number of part-time employees
in the fiscal year (calculated based on prescribed working hours) is shown exclusive in brackets (“[ ]”) in the numberof employees column.

31(2) Domestic subsidiaries
As of March 31, 2020
Major subsidiaries

MARUI CO.,LTD.

Facility(Location)

Carrying amount (Millions of yen)Segment Description Buildings
Land
Leased
and
Other
Total
2
assetsstructures [m ]Marui Group
Head Office(Nakano-ku, Tokyo)

Retailing

Nakano Marui(Nakano-ku, Tokyo)

Stores, etc.
Retailing (incl. officefacilities)

Shinjuku Marui
Retailing(Shinjuku-ku, Tokyo)
Ikebukuro Marui
Retailing(Toshima-ku, Tokyo)
Shibuya Marui
Retailing(Shibuya-ku, Tokyo)
Kichijoji Marui(Musashino-shi,
Retailing
Tokyo)
Kashiwa Marui
Retailing(Kashiwa-shi, Chiba)
Shizuoka Marui(Shizuoka-shi,
Retailing
Shizuoka)
Machida Marui
Retailing(Machida-shi, Tokyo)
Omiya Marui
Retailing(Saitama-shi, Saitama)
Kinshicho Marui
Retailing(Sumida-ku, Tokyo)
Ueno Marui
Retailing(Taito-ku, Tokyo)
Kokubunji Marui(Kokubunji-shi,
Retailing
Tokyo)
Soka Marui
Retailing(Soka-shi, Saitama)
Marui City Yokohama(Yokohama-shi,
Retailing
Kanagawa)
Marui Family
Mizonokuchi
Retailing(Kawasaki-shi,
Kanagawa)
Marui Family Shiki
Retailing(Shiki-shi, Saitama)
Marui Family Ebina(Ebina-shi,
Retailing
Kanagawa)
Kobe Marui
Retailing(Kobe-shi, Hyogo)
Kitasenju Marui
Retailing(Adachi-ku, Tokyo)
Namba Marui
Retailing(Osaka-shi, Osaka)
Yurakucho Marui
Retailing(Chiyoda-ku, Tokyo)
Kyoto Marui
Retailing(Kyoto-shi, Kyoto)
Hakata Marui(Fukuoka-shi,
Retailing
Fukuoka)

Numberofemployees

3,621

6,199
[4,278]-292

10,113

426
[31]

4,276

219
[3,207]

-

107

4,604

20
[6]

Stores, etc.

4,971

5,735
[1,861]-

4,184

14,891

Stores, etc.

849

[-]

-

578

1427

Stores, etc.

568

708
[855]

-

73

1,350

Stores, etc.

804

[-]

-

387

1,191

31
[5]

Stores, etc.

601

[-]

-

766

1,368

20
[5]

Stores, etc.

1,190

443
[1,254]

-

761

2,395

29
[6]

Stores, etc.

1,318

[-]

-

273

1,592

Stores, etc.

1,267

[-]

-

1,166

2,433

Stores, etc.

1,641

-

63

8,486

Stores, etc.

1,724

6,780
[6,059]
[-]

-

519

2,243

Stores, etc.

633

[-]

-

2,322

2,956

59
[17]

Stores, etc.

797

2,480
[4,010]

-

47

3,324

19
[8]

Stores, etc.

917

[-]

-

6,871

7,789

73
[8]

Stores, etc.

4,070

10,856[4,053]-

1,763

16,68980[11]Stores, etc.

1,165

1,747
[3,603]

-

621

3,534

39
[17]

Stores, etc.

291

[-]

-

1,358

1,649

53
[11]

Stores, etc.

462

[-]

1,171

769

2,403

Stores, etc.

4,654

8,653
[4,892]-

1,536

14,845Stores, etc.

865

[-]

-

1,076

1,941

Stores, etc.

3,995

22,294[2,912]-639

26,929Stores, etc.

-

[-]

-

841

841

Stores, etc.

2,582

[-]

-

966

3,548

Officefacilities

32

138
[19]
55
[4]
37
[9]

50
[5]
40
[9]
60
[6]
69
[6]

40
[5]
94
[16]
77
[9]
115
[6]
54
[12]
42
[5]

Machida Modi
(Machida-shi, Tokyo)
Totsuka Modi
(Yokohama-shi,
Kanagawa)
Kawagoe Modi
(Kawagoe-shi,
Saitama)
Shibuya Modi
(Shibuya-ku, Tokyo)
Kashiwa Modi
(Kashiwa-shi, Chiba)
Shizuoka Modi
(Shizuoka-shi,
Shizuoka)
Toda Product Center(Toda-shi, Saitama)

Retailing Stores, etc.

1,762

4,513
[2,182]

-

19

6,295

[-]

Retailing Stores, etc.

745

1,916
[1,283]

-

267

2,929

22
[3]

Retailing Stores, etc.

353

2,964
[4,188]

-

6

3,324

1
[1]

Retailing Stores, etc.

1,980

3,066
[374]

-

52

5,098

Retailing Stores, etc.

951

4,500
[1,567]

-

19

5,470

Retailing Stores, etc.

1,045

2,485
[1,504]

-

7

3,538

[-]
8
[-]
[-]

1
Delivery
1,407
1,322 [22,415]
20
2,750
[-]
centerStores,Head office, etc.
Epos Card Co.,
1,423
office550(Nakano-ku, Tokyo
FinTech
927
4,182
5,660
[586]
Ltd.
[610]
facilities,
and elsewhere)etc.
Head office, etc.
OfficeAIM CREATE
336
49(Nakano-ku, Tokyo
Retailing facilities,
98
83
231
[208]
CO., LTD.
[30]
etc.
and elsewhere)
OfficeProduct center, etc.
MOVING CO.,
417
facilities,
1,436(Toda-shi, Saitama
Retailing
1,340 [8,006]
1,653
4,431
LTD.
[373]
sales
and elsewhere)
offices, etc.
System center, etc.
Retailing Office
M & C SYSTEMS
1,100
166
(Toda-shi, Saitama
andfacilities,
1,247 [3,145]
469
1,522
4,338
CO., LTD.
[9]and elsewhere)
FinTech etc.
OfficeRental condominiums,
MARUI HOME
facilities,
etc.
69
2,225
SERVICE Co.,
FinTech rental
1,929
63
4,218
[3,734][7](Musashino-shi,Ltd.
housing,
Tokyo and elsewhere)etc.
Notes: 1. “Other” in carrying amount includes intangible assets and guarantee deposits in addition to property and equipment.
2. Amounts above do not include consumption taxes, etc.
3. The number of employees represents the number of active employees, and the average number of part-time employees
in the fiscal year (calculated based on prescribed working hours) is shown exclusive in brackets (“[ ]”) in the numberof employees column.
4. In this fiscal year under review, MARUI CO., LTD. succeeded the Modi business unit of AIM CREATE CO., LTD.
through a company split and took over the facilities related to this business.
5. Of the stores, etc. above, 435,095 m2 of floorspace is rental floorspace from buildings outside the Group.
Retailing

3. Plans for new additions or disposals, etc.
(1) Significant new facilities, etc.
Major plans for facilities as of the end of the fiscal year under review were as follows.

Company

Facility(Location)

Planned investment
amountTotal
AmountSegment Description
amountpaid(Millions (Millionsof yen)of yen)MARUICO., LTD.

Store
renovations

RetailingStoreinterior

5,000

-

Fund
Expectedprocurement Construction Completion revenue(annual)methodOwn funds,
etc.

April
2020

March
2021

Notes: 1. Amounts above do not include consumption taxes, etc.
2. Planned facilities are transferred to the property and equipment account as they are acquired or completed.

(2) Disposal of significant facilities, etc.
Not applicable33-

IV. Corporate Information
1. Information on the Company’s shares, etc.
(1) Total number of shares, etc.
1) Total number of sharesClass of shares

Number of authorized shares (Shares)

Common stock

1,400,000,000
Total

1,400,000,0002) Number of shares issued
Class of shares

Number of shares
Number of sharesissued as of the end of issued as of the filingthe fiscal year (Shares)
date (Shares)(March 31, 2020)(August 6, 2020)

Common stock
Total

Stock listing/registration

Details

223,660,417

223,660,417

First Section ofTokyo Stock
Exchange

The number of shares per unit ofshares is 100 shares

223,660,417

223,660,417――(2) Subscription rights to shares
1) Details of stock option plans
Not applicable2) Details of rights plans
Not applicable3) Other subscription rights to shares, etc.
Not applicable(3) Exercise status of bonds with subscription rights to shares containing a clause for exercise price adjustment, etc.
Not applicable(4) Changes in the total number of shares issued, capital stock, etc.

Date

Change in the Total number
total number ofof shares
shares issued
outstanding(Thousands of (Thousands ofshares)shares)Changes incapital stock(Millions ofyen)

Balance ofcapital stock(Millions ofyen)

Changes inlegal capitalsurplus(Millions ofyen)

Balance oflegal capitalsurplus(Millions ofyen)

December 9, 2016*1(45,000)

233,660―

35,920―91,307

May 31, 2018*2(10,000)

223,660―

35,920―91,307

Notes: 1. The total number of shares outstanding decreased owing to the cancellation of 45,000 thousand shares of treasury
stock on December 9, 2016.
2. The total number of shares outstanding decreased owing to the cancellation of 10,000 thousand shares of treasury
stock on May 31, 2018.

34

(5) Status by shareholder classification
As of March 31, 2020
Status of shares (1 unit = 100 shares)
JapaneseClassification National andForeign shareholders
Financial financial
Other
Individuals
local
instruments corporations
and other
Other thangovernments institutions businessIndividuals
individuals
operators
Number ofshareholders
―
66
29
269
577
45
25,453(Persons)
Number ofshares held―
963,089
34,295
330,170
631,32163
276,653(Units)Shareholding
―
43.08
1.53
14.77
28.24
0.00
12.38
ratio (%)

Total

Shares lessthan one unit
(Shares)

26,439―2,235,591

101,317100.00―Notes: 1. Of 8,703,268 shares of treasury stock, 87,032 units are included in “Individuals and other” and 68 shares are included
in “Shares less than one unit.”
2. Figures under “Financial institutions” above include 5,451 units of shares held under the BIP Trust and the ESOP
Trust.

(6) Major shareholders
As of March 31, 2020

Name

Address

The Master Trust Bank of Japan, Ltd.
11-3, Hamamatsucho 2-chome, Minato-ku, Tokyo(Trust Account)
Japan Trustee Services Bank, Ltd.
8-11, Harumi 1-chome, Chuo-ku, Tokyo(Trust Account)

Number of shares
Number of shares
held to total
heldnumber of shares(Thousands of issued (excluding
treasury stock)shares)(%)
33,401

15.54

17,545

8.16

Aoi Real Estate Co., Ltd.

21-3, Jinnan 1-chome, Shibuya-ku, Tokyo

6,019

2.80

MUFG Bank, Ltd.

7-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo

5,808

2.70

5,001

2.32

3,886

1.81

Japan Trustee Services Bank, Ltd.
8-11, Harumi 1-chome, Chuo-ku, Tokyo(Trust Account 7)
Trust & Custody Services Bank, Ltd.
(Securities Investment Trust
8-12, Harumi 1-chome, Chuo-ku, Tokyo
Account)
TOHO CO., LTD.

2-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo

3,779

1.76

Japan Trustee Services Bank, Ltd.
(Trust Account 5)

8-11, Harumi 1-chome, Chuo-ku, Tokyo

3,675

1.71

25 BANK STREET, CANARY WHARF,LONDON, E14 5JP, UNITED KINGDOM(2-15-1 Konan, Minato-ku, Tokyo)

3,628

1.69

3-2, Nakano 4-chome, Nakano-ku, Tokyo

3,242

1.51

85,98740.00

JP MORGAN CHASE BANK
385151(Standing proxy: Mizuho Bank, Ltd.)AOI SCHOLARSHIPFOUNDATION
Total

―

Notes: 1. The Company holds 8,703 thousand shares of treasury stock, which is excluded from the major shareholders above.
Treasury stock held by the Company does not include shares of the Company held by the BIP Trust or the ESOP
Trust.
2. The Company received a report regarding the possession of shares by Nomura Securities Co., Ltd. and its joint holders
as of October 31, 2018 as follows, in a statement of large-volume holdings (statement of changes) made available tothe public on November 6, 2018. However, as the Company was unable to confirm the number of substantial
shareholding as of the end of the fiscal year under review, major shareholders above is based on the shareholder
register.

35

Name

Address

NOMURA INTERNATIONAL PLC 1 Angel Lane, London, EC4R 3AB, UK
Nomura Asset Management Co., Ltd. 12-1, Nihonbashi 1-chome, Chuo-ku, Tokyo

Number ofshares held(Thousands ofshares)Number ofshares held tototal number ofshares issued (%)

231

0.10

15,458

6.91

3. The Company received a report regarding the possession of shares by BlackRock Japan Co., Ltd. and its joint holders
as of May 31, 2019 as follows, in a statement of large-volume holdings (statement of changes) made available to the
public on June 6, 2019. However, as the Company was unable to confirm the number of substantial shareholding asof the end of the fiscal year under review, major shareholders above is based on the shareholder register.
Number of
Number ofshares held
shares held toName
Address
total number of(Thousands ofshares issued (%)
shares)BlackRock Japan Co., Ltd.

8-3, Marunouchi 1-chome, Chiyoda-ku, Tokyo

3,890

1,74

BlackRock Investment Management
LLC

1 University Square Drive, Princeton, New Jersey,
US

237

0.11

BlackRock Fund Managers Limited

12 Throgmorton Avenue, London, UK

349

0.16

BlackRock Asset Management
Ireland Limited

1st Floor, 2 Ballsbridge Park, Ballsbridge, Dublin,
Ireland887

0.40BlackRock Fund Advisors

400 Howard Street, San Francisco, California, US

2,830

1.27

400 Howard Street, San Francisco, California, US

2,803

1.25

782

0.35

BlackRock Institutional Trust
Company, N.A.
BlackRock Investment Management(UK) Limited

12 Throgmorton Avenue, London, UK

4. The Company received a report regarding the possession of shares by MUFG Bank, Ltd. and its joint holders as ofJuly 30, 2019 as follows, in a statement of large-volume holdings (statement of changes) made available to the public
on August 6, 2019. However, as the Company was unable to confirm the number of substantial shareholding as ofthe end of the fiscal year under review, major shareholders above is based on the shareholder register.
Number of
Number ofshares held
shares held toName
Address
total number of(Thousands ofshares issued (%)
shares)MUFG Bank, Ltd.
Mitsubishi UFJ Trust and Banking
Corporation
Mitsubishi UFJ Kokusai AssetManagement Co., Ltd.
Mitsubishi UFJ Morgan Stanley
Securities Co., Ltd.

7-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo

5,808

2.60

4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo

11,721

5.24

12-1, Yurakucho 1-chome, Chiyoda-ku, Tokyo

4,474

2.00

5-2, Marunouchi 2-chome, Chiyoda-ku, Tokyo

590

0.26

5. The Company received a report regarding the possession of shares by Sumitomo Mitsui Trust Asset Management
Co., Ltd. and its joint holders as of February 14, 2020 as follows, in a statement of large-volume holdings (statementof changes) made available to the public on February 20, 2020. However, as the Company was unable to confirm thenumber of substantial shareholding as of the end of the fiscal year under review, major shareholders above is basedon the shareholder register
Number of
Number ofshares held
shares held toName
Address
total number of(Thousands ofshares issued (%)
shares)Sumitomo Mitsui Trust Asset
1-1, Shibakoen 1-chome, Minato-ku, Tokyo
5,804
2.60
Management Co., Ltd.
Nikko Asset Management Co., Ltd.

7-1, Akasaka 9-chome, Minato-ku, Tokyo

.

36

8,398

3.75

(7) Voting rights
1) Shares issued
As of March 31, 2020
Number of shares(Shares)Number of voting rights(Units)Description

Non-voting shares

―

―

―

Shares with restricted voting rights(treasury stock, etc.)
Shares with restricted voting rights(other)

―

―

―

―

―

―

―

―

Classification

Shares with full voting rights(treasury stock, etc.)
Shares with full voting rights (other)
Shares less than one unit

(Treasury shares)
Common shares
8,703,200
Common shares
214,855,900
Common shares
101,317

Total number of shares outstanding

223,660,417

Total voting rights held by all
shareholders
Note:2,148,559―――

Shares less than one unit
(100 shares)――
2,148,559―

The number of common shares under “shares with full voting rights (other)” includes 545,100 shares (5,451 units ofvoting rights) held under the BIP Trust and the ESOP Trust.

2) Treasury stock, etc.
As of March 31, 2020
Number of
Number ofsharesheld
Total number
shares held
under theof shares held
under own
names of
(Shares)name (Shares) others (Shares)

Number ofshares held tototal numberof shares
issued (%)

Shareholder nameShareholder address(Treasury stock)
MARUI GROUP CO.,LTD.

3-2, Nakano 4-chome, Nakano-ku,
Tokyo8,703,200―

8,703,200

3.89

Total

―

8,703,200―

8,703,200

3.89

Note:

545,100 shares of the Company held under the BIP Trust and the ESOP Trust are not included in the above number oftreasury shares.

37

(8) Details of officer and employee stock ownership schemes
BIP Trust
1. Overview of the scheme
In the fiscal year ended March 31, 2017, the Company and 11 Group subsidiaries, etc. (MARUI CO., LTD., Epos
Card Co., Ltd., etc.; collectively, “Applicable Subsidiaries”) introduced the BIP Trust for Directors and Executive
Officers of the Company (excluding External Directors and non-residents of Japan) and directors of Applicable
Subsidiaries (excluding external directors and non-residents of Japan; together with Directors and Executive Officersof the Company, collectively, “Eligible Directors, etc.”), in order to increase motivation to contribute to improved
performance and corporate value for the Group over the medium to long term.
The details of the trust agreement in the scheme are as follows.
Details of the BIP Trust agreement
Type of trust

Money trust other than a specified individually operated monetary trust (third-party benefit trust)

Trust objective

To incentivize Eligible Directors, etc.

Settlor

The Company

Trustee

Mitsubishi UFJ Trust and Banking Corporation(Joint trustee: The Master Trust Bank of Japan, Ltd.)

Beneficiaries

Eligible Directors, etc. who satisfy the beneficiary criteria

Trust administrator

A third party with no special interests with the Company (certified public accountants)

Trust period

August 29, 2016 – August 31, 2021 (planned)

Exercise of voting rights Non-exercise
Class of shares to beacquiredTiming of acquisition ofsharesCommon shares of the Company
September 1, 2016 – September 6, 2016
August 16, 2019 ・ August 19, 2019

Method of acquiring
sharesTo be acquired from the stock market or the Company (disposal of treasury stock)(To be acquired from the stock market in the trust period after the change)

Holder of vested rights

The Company

Residual assets

The Company, the holder of vested rights, shall receive any residual assets within the scope of thereserve for trust fees, which is the trust money less share acquisition funds.

Note:

The Trust may be extended by amending the trust agreement and entrusting additional money when the extended trust
period of the Trust expires.

2. Total number of shares to be acquired by Eligible Directors, etc.
Up to 400,000 shares
3. Scope of persons eligible for beneficiary rights and other rights under this officer stock ownership plan
Eligible Directors, etc. who satisfy the beneficiary criteria

38

ESOP Trust
1. Overview of the scheme
In the fiscal year ended March 31, 2017, the Company introduced the ESOP Trust incentive plan for employees of
the Group in management positions (“executive employees”), in order to increase motivation to contribute toimproved performance and corporate value over the medium to long term.
By the introduction of this scheme, executive employees enjoy the economic benefits of an increase in the
Company’s share price, and therefore they are prompted to execute business operations with share prices in mind,
and enhance their morale. In addition, voting rights to the Company’s shares in the ESOP Trust assets are exercisedso as to reflect the intention of executive employees who are the beneficiary candidates.
The details of the trust agreement in the scheme are as follows.
Details of the ESOP Trust agreement
Type of trust

Money trust other than a specified individually operated monetary trust (third-party benefit trust)

Trust objective

To incentivize executive employees

Settlor

The Company

Trustee

Mitsubishi UFJ Trust and Banking Corporation(Joint trustee: The Master Trust Bank of Japan, Ltd.)

Beneficiaries

Executive employees who satisfy the beneficiary criteria

Trust administrator

A third party with no special interests with the Company (certified public accountants)

Trust period

August 29, 2016 – August 31, 2021 (planned)

Exercise of voting rights

Voting rights for the Company’s shares shall be exercised in accordance with the instructions of thetrust administrator, which shall reflect the intention of the beneficiary candidates.

Class of shares to beacquiredTiming of acquisition ofsharesCommon shares of the Company
September 7, 2016 – September 15, 2016
August 16, 2019

Method of acquiring
sharesTo be acquired from the stock market

Holder of vested rights

The Company

Residual assets

The Company, the holder of vested rights, shall receive any residual assets within the scope of thereserve for trust fees, which is the trust money less share acquisition funds.

Note:

The Trust may be extended by amending the trust agreement and entrusting additional money when the extended trust
period of the Trust expires.

2. Total number of shares to be acquired by executive employees
Up to 250,000 shares
3. Scope of persons eligible for beneficiary rights and other rights under this employee stock ownership plan
Executive employees who satisfy the beneficiary criteria

39

2. Acquisition of treasury stock, etc.
Class of shares: Acquisition of common stock under Article 155, Item 3 and Article 155, Item 7 of the Companies
Act(1) Acquisition resolved by a general meeting of shareholders
Not applicable(2) Acquisition resolved by the Board of Directors
Number of shares(Shares)Classification
Resolution by the Board of Directors (May 14, 2019)(Acquisition period: May 15, 2019 – March 31, 2020)

Total amount(Yen)

3,900,000

7,000,000,000

Treasury stock acquired before the fiscal year under review――

Treasury stock acquired during the fiscal year under review

2,990,000

6,999,899,700

910,000

100,300

23.3

0.0

―

―

23.3

0.0

Total number and value of remaining shares subject to theresolution
Percentage of un-exercised acquisition as of the fiscal year-end(%)
Treasury stock acquired during the period
Ratio of un-exercised portion as of the date of filing (%)(3) Acquisition not resolved by the general meeting of the shareholders or the Board of Directors
Classification

Number of shares(Shares)

Total amount(Yen)

Treasury stock acquired during the fiscal
year under review

874

2,066,662

Treasury stock acquired during the period

199

357,007

Note:

Treasury stock acquired during the period does not include shares acquired through the purchase of shares less than one
unit from August 1, 2020 to the filing date of this securities report.

(4) Status of the disposal and ownership of treasury stock acquired
Fiscal year under review
Classification

Number of shares(Shares)

PeriodTotal disposal
amount(Yen)

Number of shares(Shares)

Total disposal
amount(Yen)

Treasury stock acquired offered forsubscription

―

―

―

―

Treasury stock acquired that were cancelled

―

―

―

―

―

―

―

―

73

150,114――8,703,268―

8,703,467―

Treasury stock acquired that weretransferred for merger, share exchange, orcompany split
Other(treasury stock acquired that were sold inresponse to requests from shareholders
holding shares less than one unit)
Number of treasury shares held

Notes: 1. Treasury stock disposed of during the period do not include shares disposed of through the sale of shares less than
one unit and shares disposed of for the exercise of subscription rights to shares from August 1, 2020 to the filing dateof this securities report.
2. The number of treasury shares held during the period does not include shares less than one unit purchased and soldfrom August 1, 2020 to the filing date of this securities report.
3. The number of treasury shares held does not include 545,184 shares of the Company held under the BIP Trust andthe ESOP Trust.

40

3. Dividend policy
Under the medium-term management plan with the fiscal year ending March 31, 2021 as its final year, the Groupwill effectively utilize cash flows generated through business operations to increase growth investments and enhanceshareholder returns. The Company will endeavor to continuously increase the level of dividends according to longterm growth in EPS to realize high growth coupled with high returns. The Company will gradually raise its target
for the consolidated payout ratio from 40% to approximately 55% by the fiscal year ending March 31, 2024 andimplement ongoing, long-term dividend increases.
Based on the above policy, it was resolved that the year-end dividend for the fiscal year under review be ¥22 pershare, and that together with the interim dividend of ¥28 per share, the annual payment of dividends for the fiscal
year under review shall be ¥50 per share, an increase of ¥1 per share compared with the previous fiscal year.
The basic policy of the Company is to pay dividend from surplus twice a year, one interim and one year-end. The
Company stipulates in its Articles of Incorporation that it may, pay interim dividends as of the record date of
September 30 of each year by a resolution of the Board of Directors. Year-end dividends are subject to resolution by
the general meeting of shareholders.
Dividends from surplus for the fiscal year under review are as follows:
Date of resolution

Total dividend amount(Millions of yen)

November 7, 2019
Resolution by the Board of Directors
June 29, 2020
Resolution by the Ordinary General
Meeting of Shareholders

Dividend per share (Yen)

6,065

28

4,729

22

4. Corporate governance(1) Overview of corporate governance1) Basic corporate governance policy
Based on our corporate philosophy to “continue evolving to better aid our customers” and “equate the developmentof our people with the development of our company,” the Group will support our employees as they strive to help
customers, and thereby pursue medium- to long-term improvements in corporate value by creating a virtuous cycle
through which the development of people drives the development of the Company. Accordingly, the Company
positions corporate governance as a top management priority, and established the MARUI GROUP Corporate
Governance Guidelines (the “Guidelines”) at a meeting of the Board of Directors held on November 6, 2015 for the
purpose of ensuring its management is sound, highly transparent, efficient and capable of generating profits. These
Guidelines will be continually reexamined and refined to promote the improvement of the Company’s corporate
governance.
For details of these Guidelines, please visit the MARUI GROUP Corporate Governance Guidelines on the
Company’s website. (https://www.0101maruigroup.co.jp/pdf/cgg_20200730_en.pdf)
2) Overview of the corporate governance structure and reasons for adoption•

The MARUI GROUP is a Company with Company Auditor(s) which has in place a Board of Directors
comprised of eight Directors and an Audit & Supervisory Board comprised of four Audit & Supervisory Board
Members.

•

Of the eight Directors, three are External Directors, and the system seeks to strengthen the supervisory functionof the Board of Directors by facilitating lively discussions centered on the External Directors who have been
designated as independent directors. In addition, the term of office of each Director is one year with the aim ofclarifying transparency and management responsibility in business execution. The Board of Directors holds
meetings in principle 10 times a year and engages in active deliberations and supervises the execution of duties
by Directors.

•

Of the four Audit & Supervisory Board Members, two are External Audit & Supervisory Board Members.

•

In accordance with the Group’s authorization rules, the duties of Directors and Executive Officers are explicitly
defined, and the Group’s Directors and Executive Officers perform their duties in an efficient and swift manner.

•

The Group has set up the Management Committee that is comprised of Executive Officers appointed by the
Board of Directors and seeks to accelerate operational decision-making by commissioning such committee to41

make important management decisions regarding execution of duties within the scope of the Group’s
authorization rules.
•

The Company seeks to ensure objectivity and transparency and further enhance the corporate governancesystem through discussions by the Nominating and Compensation Committee, comprised primarily of External
Directors, related to the nomination of Directors, etc., and compensation for the management.

•

The Sustainability Committee has been established to serve as an advisory body to the Board of Directors forthe purpose of promoting co-creation sustainability management. In addition, the Environment and CSR
Committee has been established within the Sustainability Committee and carries out duties pertaining to the
management of relevant risks and other matters based on the instruction of the Sustainability Committee.

•

The Board of Directors shall maintain five committees (Public Relations IR Committee, Internal Control
Committee, Information Security Committee, Safety Control Committee, and Insider Trading Prevention
Committee) to control high-risk areas in business operations, through which to strive for speedy operational
improvement and the prevention of accidents. The Compliance Promotion Board, chaired by the Representative
Director, is set up as a coordinating function of all committees.

•

The composition of each body is as follows. (The ◎ symbol indicates the chair or leader of the body.)○

Yoshitaka Taguchi

Director (External)○○

Masahiro Muroi

Director (External)○

Director,
Senior Managing
Executive Officer
Director,
Managing
Hirotsugu Kato
Executive Officer
Director,
Masahisa Aoki
Senior Executive
Officer
Director,
Yuko Ito
Executive Officer
Audit &
Hitoshi Kawai
Supervisory Board
Member (Full time)
Audit &
Nariaki Fuse
Supervisory Board
Member (Full time)
Audit &
Supervisory Board
Takehiko Takagi
Member (External)
Audit &
Yoko Suzuki
Supervisory Board
Member (External)
Executive Vice
Motohiko Sato
President
Senior Managing
Tomoo Ishii
Executive Officer
Managing
Toshikazu Takimoto
Executive Officer
Masao Nakamura

○

○

◎

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○
◎

◎

○

○

◎

○
○

○

Insider Trading
Prevention Committee○◎

Safety Control
Committee

Director (External)◎

Information Security
Committee

Etsuko Okajima○◎

Internal Control
Committee◎

Public Relations IR
Committee

Hiroshi Aoi

President andRepresentative
Director,
Representative
Executive Officer

Compliance Promotion
Board

Position

Environment and CSR
Committee

Sustainability
Committee
Nominating andCompensation
Committee
Management
Committee

Audit & Supervisory
Board

Board of Directors

Name

○

○

○

○
○
○
○

○

○

○
42

○

○

○

○

◎

○

○

○

◎

○

○

○

○

Internal Control
Committee

Information Security
Committee

○

○

○

○

○

○

○

Yoshiaki Kogure

Executive Officer○○

Mayuki Igayama

Executive Officer○

Junko Tsuda

Executive Officer○

Miyuki Kawara

Executive Officer○

Tatsuo Niitsu

Executive Officer○○

Takeshi Ebihara

Executive Officer○○

Reiko Kojima

Executive Officer○○

Akikazu Aida

Executive Officer○○

Hajime Sasaki
Masahiro Aono

○

○

○

Insider Trading
Prevention Committee

Public Relations IR
Committee○

Managing
Executive Officer
Senior Executive
Officer
Senior Executive
Officer

Yoshinori Saito

Safety Control
Committee

Compliance Promotion
Board

Environment and CSR
Committee

Sustainability
Committee
Nominating andCompensation
Committee
Management
Committee

Audit & Supervisory
Board

Position

Board of Directors

Name

○
○

○

◎

○

○

○

○

○

○

○

○
○

○

○

○

Other members(persons)

―

―

―

―

1

6

3

2

6

9

11

4

Total

8

4

20

3

11

11

18

13

19

14

14

7

43

The following is a diagram of our structures for supervising business execution andmanagement and our internal control and risk management systems:3) Other items related to corporate governance
Implementation of internal control systems and risk management systems••

The Group had established internal control systems from the perspective of Group management in order tofacilitate sound, transparent, and efficient management.
The Group’s Code of Conduct shall be fully communicated to promote sound corporate activities grounded onhigh ethical standards for the Group.

•

In order to ensure Groupwide compliance with laws, regulations, and the rules of the Company, operational
manuals are prepared for every category and internal training is encouraged.

•

The Company adheres to the MARUI GROUP Information Security Policy, which sets specific policies fordeveloping systems and formulating measures to ensure the security of information assets, and the MARUIGROUP Tax Policy, which clearly delineates guidelines for compliance with tax laws and minimization of tax
risks, and in doing so manages the risks faced by the Group.

•

The General Affairs Department and the Audit Department coordinate efforts in promoting internal controls,
and in doing so work to minimize operational risks through documentation and monitoring of the operations ofeach Group company in terms of predictable risks and relevant countermeasures.

•

The MARUI Group Hot Line (internal notification system) is maintained as a means for the prevention andearly detection of problems by allowing direct contact with external lawyers.

•

The Company resolutely refuses to have any connection with antisocial forces that threaten the order and safetyof society and shall reject any unwarranted demands, and is committed to strengthening ties with external
specialized organizations such as the police and lawyers in establishing systems to eliminate antisocial forces.
44

Systems established to ensure the appropriateness of business operations of Group subsidiaries•

The Group has a reporting system for subsidiaries to report important decisions to the Company in accordancewith the authorization rules of the Group, and governs the appropriateness of business execution by thesesubsidiaries as a pure holding company.

Overview of liability limitation agreements•

In accordance with the provisions of Article 427, Paragraph 1 of the Companies Act, the Company concludes
agreements with each External Director and External Audit & Supervisory Board Member to limit their liability
for damages as stipulated under Article 423, Paragraph 1 of the same Act. Based on these agreements, his/her
liability shall be limited to the higher of a predetermined amount of over ¥10 million or the amount set by laws
and regulations.

Number of Directors•

The Company has stipulated in its Articles of Incorporation that there shall be no more than 15 Directors andno more than five Audit & Supervisory Board Members.

Requirement for a resolution to elect Directors•

The Company stipulates in its Articles of Incorporation that a resolution for the election of Directors shall be
adopted by a majority vote of shareholders present holding not less than one-third of the shares with voting
rights held by shareholders entitled to exercise their voting rights, and that the resolution shall not be via acumulative vote.

General meeting of shareholders resolutions that can be delegated to the Board of Directors
a. Acquisition of treasury stock
In accordance with the provisions of Article 165, Paragraph 2 of the Companies Act, the Company stipulates in
its Articles of Incorporation that it may, by a resolution of the Board of Directors, acquire treasury stock throughmarket transactions to enable a flexible capital policy.
b. Interim dividends
In accordance with the provisions of Article 454, Paragraph 5 of the Companies Act, the Company stipulates in
its Articles of Incorporation that it may, by a resolution of the Board of Directors, pay interim dividends fromsurplus to shareholders or registered pledgees of shares as of the record date of September 30 of each year. The
purpose of this provision is to enable the return of profits to our shareholders in a flexible manner.
Requirement for a special resolution at the general meeting of shareholders•

For the purpose of ensuring that the general meeting of shareholders is operated smoothly, the Company
stipulates in its Articles of Incorporation that a special resolution at the general meeting of shareholders,provided for in Article 309, Paragraph 2 of the Companies Act, shall be adopted by a two-thirds or more voteof shareholders present holding not less than one-third of the shares with voting rights held by shareholders
entitled to exercise their voting rights. The purpose of relaxing the quorum for special resolutions at the general
meeting of shareholders is to ensure the meeting proceeds smoothly.

45

2. Directors, Audit & Supervisory Board Members, and Executive Officers
1) Directors, Audit & Supervisory Board Members, and Executive Officers
9 men, 3 women (female ratio of 25%)
Position

Name

Date of birth

Career history
Jul. 1986
Jan. 1991
Apr. 1991
Jan. 1993
Aug.1993

President andRepresentative
Director,
Representative
Executive
Officer

Apr. 1995
HiroshiAoi

Jan. 17,
1961

Jan. 1999
Jan. 2001
Apr. 2004
Jun. 2004
Apr. 2005
Oct. 2006
Apr. 2019

Director

EtsukoOkajima

May 16,1966

Apr. 1989
Jan. 2001
Jul. 2005
Jun. 2007
Jun. 2014
Mar. 2016
Dec. 2018
Mar. 1985

Director

Yoshitaka
TaguchiApr. 20,
1961

Jul. 1989
Jul. 1991
Jun. 1996
Oct. 1998
Jun. 2003
Jun. 2018

Joined the Company
General Manager, Sales Planning Headquarters
Director and General Manager, Sales Planning Headquarters
Director and General Manager, General Manager’s Office, Sales
Promotion Headquarters
Director and Deputy General Manager, Sales Promotion
Headquarters and General Manager, Sales Planning Division
Managing Director and Deputy General Manager, Sales Promotion
Headquarters and General Manager, Sales Planning Division
Managing Director and Deputy General Manager, Sales Promotion
Headquarters
Managing Director and General Manager, Sales Promotion
Headquarters
Managing Director
Executive Vice President and Representative Director
President and Representative Director
President and Representative Director
Representative Executive Officer
President and Representative Director
Representative Executive Officer, CEO (Incumbent)
Joined Mitsubishi Corporation
Joined McKinsey & Company
Representative and CEO, GLOBIS Management Bank
President & CEO, ProNova Inc. (Incumbent)
Outside Director, Astellas Pharma Inc.,
External Director (Incumbent)
Outside Director, Link and Motivation Inc.
Outside Director, euglena Co., Ltd. (Incumbent)
Joined Seino Transportation Co., Ltd. (currently Seino Holdings Co.,Ltd.)
Director, Seino Transportation Co., Ltd.
Managing Director, Seino Transportation Co., Ltd.
Senior Managing Director, Seino Transportation Co., Ltd.
Representative Director and Vice President, Seino Transportation
Co., Ltd.
President and Chief Operating Officer, Seino Transportation Co.,
Ltd. (Incumbent)
External Director (Incumbent)

46

SharesheldTerm ofoffice(Thousands)(Note 3)

1,548

(Note 3)―(Note 3)0

Position

Name

Date of birth

Career history
Apr. 1978
Jun. 2000
Apr. 2002
Apr. 2007
Apr. 2009

Director

Masahiro
Muroi

Jul. 13,
1955

Apr. 2013
Apr. 2015
Jun. 2016
Apr. 2017
Jun. 2017
Jun. 2018
Apr. 1983
Oct. 2006
Apr. 2007
Mar. 2008
Jun. 2008

Mar. 2009

Director,
Senior Managing
Executive
Officer

Apr. 2011
Masao
NakamuraJun. 11,1960

Apr. 2015
Apr. 2016
May 2016
Oct. 2017
Apr. 2019

Apr. 2020

Joined Nomura Computer System Co., Ltd. (currently Nomura
Research Institute, Ltd.)
Member of the Board, Nomura Research Institute, Ltd.
Senior Corporate Managing Director, Member of the Board, Nomura
Research Institute, Ltd.
Senior Executive Managing Director, Member of the Board, Nomura
Research Institute, Ltd.
Representative and Senior Executive Managing Director, Member ofthe Board, Nomura Research Institute, Ltd.
Representative and Vice President, Member of the Board, Nomura
Research Institute, Ltd.
Vice Chairman, Member of the Board, Nomura Research Institute,
Ltd.
External Director, Ryoden Corporation (Incumbent)
Member of the Board, Nomura Research Institute, Ltd.
External Director (Incumbent)
Audit & Supervisory Board Member, The Norinchukin Bank
(Incumbent)
Joined the Company
Store Manager, Marui City Ikebukuro
Executive Officer and General Manager, Group Business Promotion
Division
Executive Officer, General Manager, Corporate Planning Division
and General Manager, Business Development Division
Director and Executive Officer, General Manager, Corporate
Planning Division and General Manager, Business Development
Division
Director and Executive Officer, General Manager, Corporate
Planning Division
Managing Director and Managing Executive Officer
President and Representative Director, MARUI CO., LTD.
Director and Managing Executive Officer Responsible for Retailingand Store Operation BusinessPresident and Representative Director, AIM CREATE CO., LTD.
Director and Managing Executive Officer Responsible for Retailing
Business
Director and Managing Executive Officer Responsible for FinTech
Business
Director and Senior Managing Executive Officer
Responsible for FinTech BusinessIn charge of Corporate Planning, Real Estate Business, andCustomer SuccessDirector and Senior Managing Executive Officer In charge ofRetailing Business In charge of Corporate Planning and Customer
Success (Incumbent)

47

SharesheldTerm ofoffice(Thousands)(Note 3)―(Note 3)26

Position

Director,
Managing
Executive
Officer

Name

Hirotsugu
Kato

Date of birthJul. 30,
1963

Career history
Mar. 1987 Joined the Company
Apr. 2013 General Manager, Corporate Planning Division
Apr. 2015 Executive Officer and General Manager, Corporate Planning
Division
Oct. 2015 Executive Officer and General Manager, Corporate Planning
Division and IR Department
Jun. 2016 Director and Senior Executive Officer
General Manager, Corporate Planning
Division and IR Department
Oct. 2016 Director and Senior Executive Officer
General Manager, Corporate Planning
Division and IR Department
In charge of ESG Promotion
Apr. 2017 Director and Senior Executive Officer
General Manager, IR Department
In charge of Corporate Planning and ESG Promotion
Oct. 2017 Director and Senior Executive Officer CDO
General Manager, IR Department
In charge of Corporate Planning and
ESG Promotion
Apr. 2019 Director and Managing Executive Officer CFO
General Manager, IR Department
In charge of Finance, Investment Research, Sustainability, and ESG
Promotion
July. 2020

Apr. 1992
Apr. 2015
Apr. 2016
Apr. 2017
Apr. 2018

Director,
Senior Executive
Officer

Masahisa
Aoki

Jul. 16,
1969

Apr. 2019

Jun. 2019

Jun. 2020

Director,
Executive
Officer

Yuko
Ito

Jun. 2,
1962

Mar. 1986
Oct. 2007
Apr. 2012
Apr. 2014
Apr. 2018
Apr. 2019
Jun. 2019

Director and Managing Executive Officer CFO
General Manager, IR Department
In charge of Finance, Sustainability, and ESG Promotion(Incumbent)
Joined MOVING CO., LTD.
Store Manager, Shinjuku Marui Annex, MARUI CO., LTD.
General Manager, Anime Business Department
Executive Officer, General Manager, Anime Business Department
Executive Officer, General Manager, New Business Development
Department
In charge of Anime Business
Senior Executive Officer
President and Representative Director, MARUI CO., LTD.
In charge of Anime BusinessDirector and Senior Executive Officer
President and Representative Director, MARUI CO., LTD.
In charge of Anime BusinessDirector and Senior Executive Officer
General Manager, Co-Creation Investment Department(Incumbent)
Joined the Company
General Manager, Construction Department
Director, AIM CREATE CO., LTD.
Executive Officer and General Manager, Construction Department
Executive Officer, General Manager, Group Design Center andConstruction Department (Incumbent)
Executive Officer
Managing Director, AIM CREATE CO., LTD.
Director and Executive Officer
Managing Director, AIM CREATE CO., LTD. (Incumbent)

48

SharesheldTerm ofoffice(Thousands)(Note 3)8(Note 3)

6(Note 3)10

Position

Name

Date of birth

Career history
Apr. 1989
Jan. 2013
Oct. 2014

Audit &
Supervisory
Board Member(Full time)

HitoshiKawaiJan. 17,1967

Jun. 2016

May. 2017
Apr. 2020
Jun. 2020
Mar. 1982
Apr. 2011
Apr. 2013
Audit &
Supervisory
Board Member(Full time)

Nariaki
Fuse

Jun. 3,
1959

Jun. 2013
Apr. 2015
Apr. 2016

Audit &
Supervisory
Board Member

TakehikoTakagiJan. 23,
1945

Jun. 2018
Jul. 2001
Jul. 2002
Jul. 2003
Aug. 2003
May 2006
Jun. 2008
Jun. 2010
Apr. 1998
Nov. 2002
Apr. 2015

Audit &
Supervisory
Board Member

Yoko
SuzukiSep. 21,1970

Mar. 2018
Jun. 2018

Jun. 2020

Joined The Mitsubishi Bank, Ltd. (current MUFG
Bank, Ltd.)
General Manager, Business Planning Division,
Mitsubishi UFJ Morgan Stanley Securities Co.,Ltd.
General Manager, Corporate Banking Group No.2, Corporate
Banking Division No. 8, The Bankof Tokyo-Mitsubishi UFJ, Ltd.
(current MUFGBank, Ltd.)
Executive Officer, General Manager, Corporate Banking Group No.
2, Corporate Banking Division No. 8, The Bank of TokyoMitsubishiUFJ, Ltd. (current MUFG Bank, Ltd.)
Executive Officer, Branch Manager, Kyoto Branch, The Bank ofTokyo-Mitsubishi UFJ, Ltd.(current MUFG Bank, Ltd.)
Executive Officer, MUFG Bank, Ltd. (scheduledto retire in June
2020)
Audit & Supervisory Board Member (Full time) (Incumbent)
Joined the Company
Executive Officer
President and Representative Director, M & C SYSTEMS CO.,LTD.
Director and Executive Officer
Senior Executive Officer
In charge of Audit and Information Systems
Senior Executive Officer and CIO
In charge of Audit
Audit & Supervisory Board Member (Full time) (Incumbent)
Chief, Kanazawa Regional Taxation Bureau
President, National Tax College
Retired from National Tax Administration Agency
Registered as Certified Public Tax Accountant
External Audit & Supervisory Board Member, TOH-TEN-KOH
Corporation
External Audit & Supervisory Board Member (Incumbent)
Outside Audit & Supervisory Board Member, KAWADATECHNOLOGIES, Inc. (Incumbent)
Registered as Attorney Joined Takagi Godo Law OfficePartner, Suzuki Sogo Law Office (Incumbent)
Auditor, The Research Institute of Economy,Trade and Industry(Incumbent)
Outside Director, Member of the Audit Committee, Bridgestone
Corporation (Incumbent)
Outside Director, Audit & Supervisory Committee Member, Nippon
Pigment Company Limited (Incumbent)
Auditor, Hitotsubashi University Collaboration Center (Incumbent)
External Audit & Supervisory Board Member (Incumbent)
Total

SharesheldTerm ofoffice(Thousands)(Note 4)―(Note 5)

11

(Note 4)8(Note 4)―

1,621

Notes: 1. Directors Etsuko Okajima, Yoshitaka Taguchi, and Masahiro Muroi are External Directors.
2. Audit & Supervisory Board Members Takehiko Takagi and Yoko Suzuki are External Audit & Supervisory Board
Members.
3. From the close of the Ordinary General Meeting of Shareholders for the fiscal year ended March 31, 2020 up to theclose of the Ordinary General Meeting of Shareholders for the fiscal year ending March 31, 2021.
4. From the close of the Ordinary General Meeting of Shareholders for the fiscal year ended March 31, 2020 up to theclose of the Ordinary General Meeting of Shareholders for the fiscal year ending March 31, 2024.
5. From the close of the Ordinary General Meeting of Shareholders for the fiscal year ended March 31, 2018 up to theclose of the Ordinary General Meeting of Shareholders for the fiscal year ending March 31, 2022.
6 The Company has appointed one Substitute Audit & Supervisory Board Member for the purpose of preparing for thecase in which the number of Audit & Supervisory Board Members falls below the minimum number stipulated inlaws and regulations in accordance with the provisions of Article 329, Paragraph 3 of the Companies Act. The career
history of this Substitute Audit & Supervisory Board Member is as follows:

49

Name

Date of
birth

Akira
Nozaki

Apr. 1988 Registered as Attorney
Jun. 2005 Outside Corporate Auditor, ICHIKAWA CO., LTD.
Nov. 20, Jun. 2015 Outside Director, J-OIL MILLS, Inc.
1957
External Director, ICHIKAWA CO., LTD. (Incumbent)
Jun. 2017 Audit & Supervisory Board Member, J-OIL MILLS, Inc.
(Incumbent)

Career history

Shares held(Thousands)―

The Company has adopted an Executive Officer System to strengthen management andexecution systems Groupwide. The following 14 Executive Officers are not serving concurrently
as Directors of the Company:
Executive Vice President
Motohiko Sato
Senior Managing Executive Officer Tomoo Ishii

Managing Executive Officer

Managing Executive Officer

Senior Executive Officer
Senior Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer

Executive Officer
Executive Officer

CDO
CIO
CSO
CHO

CSO
CHO
In charge of Audit, Real Estate Business,General Affairs, Personnel
and Wellness Promotion
Toshikazu Takimoto CIO
President and Representative Director, M&C SYSTEMS CO., LTD.
In charge of Anime Business of the Company
Yoshinori Saito
In charge of FinTech BusinessPresident and Representative Director, Epos Card Co., Ltd.
Director, MRI Co., Ltd.
Hajime Sasaki
President and Representative Director, AIM CREATE Co., Ltd.
In charge of Architecture Division of the Company
Masahiro Aono
President and Representative Director, MARUI CO.,LTD.
Director, AIM CREATE Co., Ltd.
Yoshiaki Kogure
President and Representative Director, MARUI FACILITIES Co., Ltd.
Director, MARUI HOME SERVICE Co., Ltd.
Mayuki Igayama
President and Representative Director, MOVING CO., LTD.
Junko Tsuda
Director and General Manager, Cardholder Service Department, Epos
Card Co., Ltd.
Miyuki Kawara
Director and Store Manager, Marui Family Mizonokuchi, MARUICO., LTD.
Tatsuo Niitsu
Director and General Manager, Business Planning Division, MARUICO., LTD.
Takeshi Ebihara
CDO
Director and General Manager, Digital Transformation Promotion
Department,
M & C SYSTEMS CO., LTD.
Director, Epos Card Co., Ltd.
Reiko Kojima
General Manager, Wellness Promotion Division
Akikazu Aida
General Manager, Corporate Planning Division and Customer Success
Department
Director, D2C & Co. Inc.

: Chief Digital Officer: Chief Information Officer: Chief Security Officer: Chief Health Officer2) External Directors and Audit & Supervisory Board Members
The Company appoints three External Directors and two External Audit & Supervisory Board Members.
Ms. Etsuko Okajima has experience and extensive knowledge of corporate management. Therefore, the Company
has appointed her as an External Director with the belief that she will seek to strengthen the supervisory function forthe management of the Company from an independent and objective position. The Company has determined that nointerpersonal, capital, transactional, or any other interest exist between the Company and Ms. Etsuko Okajima.
Furthermore, the Company has determined that no interpersonal, capital, significant transactional, or any otherinterest exist between the Group and other organizations at which Ms. Etsuko Okajima serves or has served
concurrently, including affiliated companies. As Ms. Etsuko Okajima is deemed not to pose conflict of interest withgeneral shareholders, the Company has notified the Tokyo Stock Exchange, Inc. of her designation as an independent
director.
50

Mr. Yoshitaka Taguchi has ample experience and extensive knowledge with many years of active participation incorporate management. Therefore, the Company has appointed him as an External Director with the belief that hewill seek to strengthen the supervisory function for the overall management of the Company from an independentand objective position. He held 400 shares in the Company as of the end of March 2020, which is not considered tobe material. The Company has determined that no further interpersonal, capital, transactional, or other interest exist
between the Company and Mr. Yoshitaka Taguchi. It is to be noted that Mr. Yoshitaka Taguchi concurrently serves
as Representative Director of Seino Holdings Co., Ltd. A subsidiary of the Company recorded ¥26 million ofcommission fees for instore delivery services, etc., received from two subsidiaries of said company (Seino
Transportation Co., Ltd. and another company) for the most recent fiscal year. The amount accounted for 0.01% of
the total consolidated operating revenue of the Company, and therefore he satisfies the “Criteria for Independenceof External Directors and Audit & Supervisory Board Members” of the Company. As Mr. Yoshitaka Taguchi isdeemed not to pose conflict of interest with general shareholders, the Company has notified the Tokyo Stock
Exchange, Inc. of his designation as an independent director.
Mr. Masahiro Muroi has experience taking initiative in corporate governance reforms as a corporate manager.
Therefore, the Company has appointed him as an External Director with the belief that he will seek to strengthen the
supervisory function for the management of the Company from an independent and objective position. The Company
has determined that no interpersonal, capital, transactional, or any other interest exist between the Company and Mr.
Masahiro Muroi. Furthermore, the Company has determined that no interpersonal, capital, significant transactional,
or any other interest exist between the Group and other organizations at which Mr. Masahiro Muroi serves or has
served concurrently, including affiliated companies. As Mr. Masahiro Muroi is deemed not to pose conflict of interest
with general shareholders, the Company has notified the Tokyo Stock Exchange, Inc. of his designation as anindependent director.
Mr. Takehiko Takagi has been appointed as an External Audit & Supervisory Board Member with the belief that hewill carry out fair audits of the Company based on his experience and extensive knowledge as a tax and accounting
specialist. He held 8,600 shares in the Company as of the end of March 2020, which is not considered to be material.
The Company has determined that no further interpersonal, capital, transactional, or other interest exist between the
Company and Mr. Takehiko Takagi. Furthermore, the Company has determined that no interpersonal, capital,
significant transactional, or any other significant interest exist between the Group and other organizations at which
Mr. Takehiko Takagi serves or has served concurrently, including affiliated companies. As Mr. Takehiko Takagi isdeemed not to pose conflict of interest with general shareholders, the Company has notified the Tokyo Stock
Exchange, Inc. of his designation as an independent Audit & Supervisory Board Member.
Ms. Yoko Suzuki has been appointed as an External Audit & Supervisory Board Member with the belief that she
would contribute to fair audits of the Company based on the fact that she is well versed in corporate legal affairs andlegality audits through her experience of serving as a corporate auditor, director and audit committee member, etc.
at other companies, in addition to abundant expertise as a lawyer.
The Company has determined that no interpersonal, capital, transactional, or any other interest exist between the
Company and Ms. Yoko Suzuki. Furthermore, the Company has determined that no interpersonal, capital, significant
transactional, or any other interest exist between the Group and other organizations at which Ms. Yoko Suzuki serves
or has served concurrently, including affiliated companies. As Ms. Yoko Suzuki is deemed not to pose conflict ofinterest with general shareholders, the Company has notified the Tokyo Stock Exchange, Inc. of his designation as
an independent director.
The Board of Directors held 9 meetings in the fiscal year under review. Ms. Etsuko Okajima attended eight out of 9
meetings, Yoshitaka Taguchi, Masahiro Muroi, and Takehiko Takagi attended all 9 meetings. All members
expressed their opinions appropriately as necessary.
The Company’s criteria for the independence of External Directors and Audit & Supervisory Board Members is asfollows:<Criteria for Independence of External Directors and Audit & Supervisory Board Members>
The Company aims to ensure the appropriate levels of objectivity and transparency necessary for effective corporate
governance. For this reason, it has established the following criteria for determining the independence of external
directors, external Audit & Supervisory Board members, and candidates for these two positions. Individuals thatmeet all of these criteria are judged to be sufficiently independent from the Company.
1. The individual must not be a person involved in operation*1 of the Company, its subsidiaries, or its affiliates(hereinafter, collectively, the “Group”) and must not have been a person involved in operation during the past 10
years.
2. The individual must not be a major supplier*2 of the Group or a person involved in operation of a major supplier.
3. The individual must not be a major customer*3 of the Group or a person involved in operation of a major customer.
4. The individual must not be a major shareholder of the Company possessing direct or indirect holdings equating to
10% or more of voting rights or a person involved in operation of a major shareholder.
51

5. The individual must not be a person involved in operation of an entity that possesses direct or indirect holdings
equating to 10% or more of the total voting rights of the Group.
6. The individual must not be a consultant, a certified public accountant or other accounting specialist, or a lawyer
or other legal specialist receiving large amounts of monetary payments or other financial assets*4 from the Group
that are separate from the compensation paid for services as a director or Audit & Supervisory Board member.
The individual also must not belong to a company or other organization that receives such payments or assets.
7. The individual must not receive large amounts of monetary payments or other financial assets*4 as donations fromthe Group and must not belong to a company or other organization that receives such donations.
8. The individual must not be the accounting auditor of the Company. The individual also must not belong to acompany or other organization that serves as the accounting auditor of the Company.
9. The individual must not have been applicable under items 2. to 8. during the past five years.
10. The individual must not be a relative*5 of an individual that qualifies under items 2. to 8. (only applicable torelatives of important persons involved in operation *6 for all items except items 6. and 8.).
11. The individual must not be a person involved in operation of another company with which the Group is in aninterlocking relationship of external officers.*7
Notes:

1. A “person involved in operation” is defined as an executive director, executive officer, or employee

2.

3.

4.

5.
6.

7.

with operational execution responsibilities of a stock company; a director of a non-company legal entity
or organization; or individuals serving persons in similar positions or at similar companies, noncompany legal entities, or organizations.
A “major supplier” is defined as an entity that fulfills one of the following conditions:• A supplier group (the corporate group to which the supplier that serves as the direct transaction
counterparty belongs) that provides products or services to the Group and for which transactions
with the Group equated to more than ¥10 million and represented more than 2% of the total
consolidated net sales (consolidated operating revenue) or transaction revenues of the suppliergroup in the most recently completed fiscal year.
• A supplier group with which liabilities of the Group are associated and for which the applicableliabilities equated to more than ¥10 million and represented more than 2% of the consolidated
total assets of the supplier group as of the end of the most recently completed fiscal year.
A “major customer” is defined as an entity that fulfills one of the following conditions:• A customer group (the corporate group to which the customer that serves as the direct transaction
counterparty belongs) to which the Group provides products or services and for which the total
amount of transactions with the customer group equated to more than ¥10 million and represented
more than 2% of the consolidated operating revenue of the Group in the most recently completed
fiscal year.
• A customer group possessing liabilities that are associated with the Group and that equated tomore than ¥10 million and represented more than 2% of the consolidated total assets of the Groupas of the end of the most recently completed fiscal year.
• A financial group (the financial group to which the customer that serves as the direct transaction
counterparty belongs) from which the Group procures funds through borrowings and from which
the total amount of loans payable represented more than 2% of the consolidated total assets of
the Group as of the end of the most recently completed fiscal year.
A “large amount of monetary payments or other financial assets” refers to monetary payments or otherfinancial assets equated to a total of more than ¥10 million within the most recently completed fiscal
year.
A “relative” is defined as a spouse or a relative within the second degree.
“Important persons involved in operation” refers to directors, executive officers, and employees with
operational execution responsibilities ranked as division manager or higher, or individuals with similar
operational execution authority.
An “interlocking relationship of external officers” refers to the relationship in which a person involvedin operation of the Group serves as an External Director or Audit & Supervisory Board Member ofanother company, and a person involved in operation of said company serves as an External Directoror Audit & Supervisory Board Member of the Company.

3) Coordination between supervision or audits by External Directors and External Audit & Supervisory Board Members
and internal audits, corporate audits, and accounting audits, and relationship with internal control departments
The General Affairs Department and the Audit Department are responsible for supporting the External Directors andExternal Audit & Supervisory Board Members, and strive to strengthen the system to convey information by
distributing reference materials for meetings of the Board of Directors in advance and fully explaining their content.
Coordination between the External Audit & Supervisory Board Members and the Accounting Auditor is detailed in“3. Audits.”52

3. Audits
1) Corporate auditsa. Organization and members for corporate audits•

The Audit & Supervisory Board of the Company is comprised of two Audit & Supervisory Board Members(Full time) and two Audit & Supervisory Board Members (Part time), two of whom are External Audit &Supervisory Board Members.
Position
Audit &
Supervisory
Board Member(Full time)(Chair)Audit &
Supervisory
Board Member(Full time)
External Audit& Supervisory
Board Member
External Audit& Supervisory
Board Member

Name

Career summary

Hideaki Fujizuka(Note)He has held important posts at The Bank of Tokyo-Mitsubishi UFJ, Ltd.
(currently MUFG Bank, Ltd.), Olympus Corporation, and other companies.
Based on his abundant experience, he has excellent insight into finance,accounting, risk management, and other areas.
He has extensive operational experience in the Group's information systems
business, as well as management experience as Senior Executive Officer, and isfamiliar with the Group's various businesses.

Nariaki Fuse

Tadashi Ooe

He appropriately performs his duties based on his legal expertise andexperience he has cultivated over many years as a lawyer.

(Note)

Takehiko Takagi

He is a qualified tax accountant and appropriately performs his duties based on
his expertise and experience in the accounting field.

Note: He retired upon the conclusion of the 84th Ordinary General Meeting of Shareholders held on June 29,
2020.
• To support the execution of duties of Audit & Supervisory Board Members, two staff (one with concurrent

posts) with necessary expertise and skills have been assigned.
b. Frequency of Audit & Supervisory Board meetings and attendance status of each Audit & Supervisory Board
Member
The Audit & Supervisory Board met 15 times during the fiscal year under review. The attendance of each Audit& Supervisory Board Member is as follows.
Name

Number of meetings

Number of attendance

Attendance rate

Hideaki Fujizuka

15 times

15 times

100%

Nariaki Fuse

15 times

15 times

100%

Tadashi Ooe

15 times

15 times

100%

Takehiko Takagi

15 times

15 times

100%c. Main matters for consideration by the Audit & Supervisory Board(Status of development and operation of the internal control system)
Confirmation of audit plans, audit activity reports, the risk management system at the Compliance Promotion
Board and Internal Control Committee, and inspection of stores and other important business locations(Confirmation of business plans)
Confirmation of progress of business plans through quarterly and year-end financial results(Development of auditing environment)
Confirmation of expenses related to the Audit & Supervisory Board, selection of staff to support Audit &Supervisory Board Members(Appropriateness of auditing by the Accounting Auditor)
Appointment of the Accounting Auditor, confirmation of the outline of the auditor's audit plans, and evaluation of
the auditor
d. Status of activities of Audit & Supervisory Board Members (full-time and part-time)(Priority audit items)• Development of a governance system and confirmation of its operational status (full time and part time Audit53

& Supervisory Board Members)
Confirmation of status of development and implementation of the internal control system and verification of
its effectivenessConfirmation of appropriate responses to revisions of various laws and regulations
Confirmation of the status of development and operation of risk systems at Group companies• Progress in initiatives to achieve the medium-term management plan (full time and part time Audit &Supervisory Board Members)
Progress in profit improvement and confirmation of tasks after achieving 100% fixed term rental contracts in
the Retailing segment
Confirmation of progress and control status of new business alliances in the FinTech segment
Confirmation of decision-making process and progress in investment projects• Confirmation of progress in strategies to increase corporate value (full time and part time Audit & Supervisory
Board Members)
Confirmation of the governance system regarding collaborative business with capital and business alliancepartners
Confirmation of progress in new business development and risk response
Confirmation of progress in co-creation sustainability management(Ordinary audit items)• Audit of the status of execution of duties of Directors (full time and part time Audit & Supervisory Board

Members)
Audit of decision-making of the Board of Directors and Management Committee
Audit of status of development and implementation of the internal control system
Audit of competitive transactions, conflict of interest transactions, gratuitous provision of profits, and abnormaltransactions
Receipt of reports from Directors and employees• Regular meeting with the Representative Director (full time and part time Audit & Supervisory Board
Members)• Attendance at important meetings including the Board of Directors and Management Committee (full time andpart time Audit & Supervisory Board Members)• Hearing reports from Directors, Executive Officers, and management of the Group on operations (full time
Audit & Supervisory Board Members)• Site visits to offices and subcontractors (full time and part time Audit & Supervisory Board Members)• Regular meetings with External Directors (full time and part time Audit & Supervisory Board Members)• Cooperation with the auditing firm (full time and part time Audit & Supervisory Board Members)• Cooperation with Audit & Supervisory Board Members of Group companies (full time Audit & Supervisory
Board Members)• Cooperation with the Audit Department and departments in charge of internal audit at Group companies (fulltime Audit & Supervisory Board Members)• Audit under the internal control system based on the system resolution as stipulated in the Companies Act (fulltime Audit & Supervisory Board Members)• Audit under the Internal Control Reporting System (Financial Instruments and Exchange Act) (full time Audit& Supervisory Board Members)• Inspection of important documents and audit of document and information management (full time Audit &Supervisory Board Members)• Investigation of company assets and confirmation of product inventories (full time Audit & Supervisory Board
Members)• Quarterly review of financial results (full time Audit & Supervisory Board Members)• Audit of dividend from surplus (full time and part time Audit & Supervisory Board Members)• Response to year-end audits and shareholders' meetings (full time and part time Audit & Supervisory Board
Members)2) Internal audits•

Internal audits are conducted by the Audit Department (12 members as of the end of March 2020).

•

Operational audits investigate the effectiveness, propriety, and legal compliance status of operations based oninternal regulations, and accounting audits investigate the status of compliance with accounting standards andinternal regulations in order to ensure thorough compliance and improve operations Groupwide, including
subsidiaries.

543) Accounting auditsa. Name of auditing firm
PricewaterhouseCoopers Aarata LLC
b. Number of years of continuous audit
One yearc. The Certified Public Accountants engaged in the audit
Naoaki Kobayashi
Tatsuya Chiba
d. Assistants to the audit
Certified Public Accountants: 8
Others: 17
e. Policy and reason for selecting the auditing firm
The Audit & Supervisory Board of the Company confirms the independence, audit systems, and status and qualityof implementation of audits of the Accounting Auditor. As a result, taking into consideration a comprehensive
evaluation of independence, expertise, and propriety, the Company has determined that it is appropriate to appoint
PricewaterhouseCoopers Aarata LLC as the Accounting Auditor of the Company.
f. Evaluation of the auditing firm by the Audit & Supervisory Board Members and the Audit & Supervisory Board
The Audit & Supervisory Board Members and Audit & Supervisory Board have evaluated and effectively
communicated with the auditing firm to exchange opinions and understand the status of audits in a timely andappropriate manner. The Company has therefore confirmed that the accounting audits by the auditing firm arefunctioning effectively and being performed properly.
g. Change of auditing firm
The auditing firm was changed as follows:
83rd term: KPMG AZSA LLC
84th term: PricewaterhouseCoopers Aarata LLC

Information described in the extraordinary report (filed on May 14, 2019) is as follows:(1) Name of Certified Public Accountants engaged in audit regarding the change
1) Name of Certified Public Accountants engaged in audit to be appointed: PricewaterhouseCoopers Aarata LLC
2) Name of Certified Public Accountants engaged in audit to retire: KPMG AZSA LLC(2) Date of change
June 20, 2019 (Date of the 83rd Ordinary General Meeting of Shareholders)(3) Most recent date on which the retiring Certified Public Accountant engaged in audit became the Certified Public
Accountant engaged in audit
June 25, 2018(4) Matters concerning opinions, etc. in audit reports, etc. or internal control reports prepared by the retiring Certified
Public Accountant engaged in audit in the most recent three years
Not applicable55

(5) Reasons and background behind the decision for change
The term of the Company’s accounting auditor KPMG AZSA LLC will expire at the close of the 83rd Ordinary
General Meeting of Shareholders scheduled on June 20, 2019. Although we believe that the auditing firm has asufficient system to ensure that accounting audits are conducted appropriately and reasonably, the Audit &Supervisory Board has determined that it is time to review the accounting auditor because of its long years ofcontinuous service. In line with this, we compared and reviewed several auditing firms, and as a result ofcomprehensively considering the expertise, independence, and quality control systems required of our accounting
auditor, as well as the understanding of our unique business model that integrates Retailing and FinTech, we
decided that PricewaterhouseCoopers Aarata LLC will be appropriate as a candidate, and thus determined the
proposal to appoint the firm as the new accounting auditor.

(6) Opinion of the retiring Certified Public Accountant engaged in audit concerning the matters stated in the audit
report, etc. or the internal control audit report with regard to the reason and background described in (5) above
We received responses that they had no particular opinion.
4) Audit fees
a. Compensation for Certified Public Accountants engaged in audit

Category
The Company
Consolidated
subsidiaries
Total

Previous fiscal year
Compensation for
Remuneration foraudit attestation
non-audit services
work
98
1

(Millions of yen)
Fiscal year under review
Compensation for
Remuneration foraudit attestation
non-audit services
work
74
2

45

2

45

1

144

3

120

3

Compensation paid to Certified Public Accountants engaged in audit in the previous fiscal year representscompensation paid to KPMG AZSA LLC.
Non-audit services for the Company and its consolidated subsidiaries in the fiscal year under review include work
conducted in relation to the provision of letters of comfort in connection with issuance of corporate bonds.
b. Compensation for organizations belonging to the same network (PricewaterhouseCoopers) as Certified Public
Accountants engaged in audit (excluding a.)

Category

Previous fiscal year
Compensation for
Remuneration foraudit attestation
non-audit services
work
2

Fiscal year under review
Compensation for
Remuneration foraudit attestation
non-audit services
work
40

The Company
Consolidated
subsidiaries
Total
2
40
Compensation related to the previous fiscal year is for the same network (KPMG International) as KPMG AZSA
LLC, which is the previous Accounting Auditor.
The main content of the non-audit services for the Company is research and advisory services related to sustainability
projects.
c. Other significant compensation
Not applicabled. Policy on determining the audit fee
The fee is decided as appropriate after considering factors including the time required for audit and the corporate
scale and characteristics of business.
e. Reason for the Audit & Supervisory Board’s consent of the compensation, etc. to the Accounting Auditor
The Audit & Supervisory Board has determined that compensation for the Accounting Auditor as proposed by the
Board of Directors is appropriate for maintaining and improving the quality of audits, upon confirming the time56required for audits and the compensation unit rate, and gave consent as provided for in Article 399, Paragraph 1of the Companies Act based on the “Practical Guidelines for Audit & Supervisory Board Members Concerning
the Evaluation of Accounting Auditor and Formulation of Selection Standards” published by the Japan Audit &Supervisory Board Members Association.
(4) Officer compensation, etc.
1) Policies related to deciding the amount or calculation method of officer compensation, etc.
Compensation system for officers
Compensation for Directors of the Company (excluding External Directors and non-residents of Japan) comprises
fixed basic compensation as well as performance-linked bonuses, which are based on the performance of theCompany for each fiscal year as a short term incentive, and performance-linked stock-based compensation (BIP
Trust) based on the medium- to long-term performance of the Company as a medium- to long-term incentive.
Compensation levels and the ratio of performance-linked compensation are confirmed each year by benchmarking
the officer compensation levels of similar-sized companies referring to data from officer compensation surveys
conducted by external research firms. External Directors and Audit & Supervisory Board Members will only receive
basic compensation based on their role and to ensure their independence.
The compensation levels and the ratio of performance-linked compensation have been revised to increase the portionof performance-linked compensation. This revision was aimed at boosting motivation to contribute to improving
medium-to-long-term performance and corporate value in order to have officers share the interests with shareholders
and to strengthen management from a shareholder perspective.
Ratio up to the fiscal year ended March 31, 2019
Basic compensation : Performance-linked bonuses : Performance-linked stock-based compensation = 8 : 1 : 1
Ratio from the fiscal year ending March 31, 2020
Basic compensation : Performance-linked bonuses : Performance-linked stock-based compensation = 6 : 1 : 3
Methods, organizations, and procedures for deciding compensation(i) Role and activities of the Nominating and Compensation Committee
The Nominating and Compensation Committee is put in place to improve the transparency and objectivity of thedeliberation process related to nomination of and compensation for Directors.
• The Nominating and Compensation Committee comprises at least three members, two or more of whom are,in principle, External Directors.
• Members of the Nominating and Compensation Committee are to be appointed by resolution by the Boardof Directors.
• The Nominating and Compensation Committee shall be delegated authority from the Board of Directors to
discuss the following matters and make decisions regarding compensation upon comprehensively taking into
account the recipient’s level of responsibility in Group management and progress on the medium-term
management plan, and other factors. Compensation for Directors shall be within the confines of thecompensation systems and limits resolved at the general meeting of shareholders.
(a) Matters related to the compensation of individual Directors and Executive Officers(b) Matters related to changes in compensation systems for Directors and Executive Officers(c) Other matters for which the Board of Directors may seek counsel or delegate authority.
In the fiscal year ended March 31, 2020, the Nominating and Compensation Committee met four times. In May
2019, the committee discussed and decided on performance-linked bonuses for group executives. Discussions
and decisions were made in May 2020 regarding performance-linked compensation for External Directors forthe fiscal year ending March 31, 2020.
(ii) Activities of the Board of Directors related to deciding compensation
Discussions regarding the revision of officer compensation took place at a meeting of the Board of Directors heldin February 2019, and the final proposal for the revisions to officer compensation submitted at the Ordinary
General Meeting of Shareholders held on June 20, 2019, was discussed and approved at a meeting of the Boardof Directors held in May 2019.

57

Performance-linked compensation(i) Performance-linked bonuses
Performance-linked bonuses are decided in accordance with the duties of each Director and with the goal ofincreasing motivation for improving corporate performance on a single fiscal year basis. Performance-linked
coefficients are set based on the degree of accomplishment of targets for performance indicators in a given fiscal
year, and these coefficients are multiplied by the standard amount of compensation defined for each rank. For the
fiscal year ended March 31, 2020, EPS (published plan) was set as the target indicator to better share value withshareholders and link them to corporate performance. The range of performance-linked coefficient has beenchanged from 90% to 110% in the previous fiscal year to 0% to 200% depending on the degree of accomplishmentof the target.
☐•

Calculation formula for performance-linked bonuses
Performance-linked bonuses = Rank-based standard amount × Performance-linked coefficient

Target indicators and performance-linked coefficients
Target indicator

TargetPerformance(bottom row: excluding
extraordinary factors)

Performance-linked
coefficient

Fiscal year ended
March 31, 2019

Consolidated operating
income¥41.0 billion¥41.2 billion¥40.3 billion*

98% *Fiscal year ending
March 31, 2020
Fiscal year ending
March 31, 2021

¥127.20¥117.58

92%

EPS¥130.00－

0-200%* The performance-linked coefficient for the fiscal year ended March 31, 2019 was calculated excluding gain on the transfer offactoring accounts receivable and other extraordinary factors.

☐

Limit for performance-linked bonuses• At the General Meeting of Shareholders held on June 29, 2016, the upper limit for performance-linked
bonuses (excluding bonuses paid to Directors that are also employees of the Company or Group companies)
to Directors (excluding External Directors) in a given fiscal year was set at ¥100 million.

(ii) Performance-linked stock-based compensation
In the fiscal year ended March 31, 2017, the Group introduced performance-linked stock-based compensation(BIP Trust) to increase motivation to contribute to improved medium-to-long-term performance and corporate
value for the Company. Performance-linked stock-based compensation employs a scheme in which a trust fundestablished through contribution by the Company is used to issue shares of the Company’s stock to Directors.
• Over the two-year period beginning with the fiscal year ending March 31, 2020, and ending with the fiscal
year ending March 31, 2021, Directors will be awarded points based on their rank at a set time each year.
These points will then be adjusted via a performance-linked coefficient within the range of 0% to 110%
determined based on the Company’s performance (EPS, ROE, and ROIC) and ESG indicators (selected basedon third party surveys to facilitate the promotion of co-creation sustainability management) in the fiscal year
ending March 31, 2021. Shares of the Company’s stock will then be allocated to each Director reflecting
their cumulative total of points post adjustment.
☐ Calculation formula for allocation of shares
Shares allocated = Cumulative points awarded based on rank × (Financial performance-linked coefficient + Nonfinancial performance-linked coefficient)•

Target indicators and performance-linked coefficients
Target indicator

Fiscal year
ending March
31, 2021

Financial
indicators
Non-financial
indicators

TargetEPS¥130 or more

ROE

10.0% or more

ROIC

4.0% or more

ESG indicators

Inclusion in DJSIWorld*

Performance

Performance-linked coefficient－

100% if three targets accomplished
70% if two targets accomplished
30% if one target accomplished0% if no targets accomplished
0% or 10%

* Dow Jones Sustainability World Index: An ESG index comprising companies selected through comprehensive evaluation in
the three areas of economic, environmental, and social factors from the perspective of long-term improvements to shareholder
value.

58

☐

Limit for performance-linked stock-based compensation
Upper limit for fund contributions from the Company• At the General Meeting of Shareholders held on June 20, 2019, it was determined that the upper limit forfund contributions from the Company under the performance-linked stock-based compensation scheme fromthe fiscal year ending March 31, 2020, would be ¥200 million multiplied by the number of years in the given
allocation scheme period. Accordingly, the upper limit for the two-year period beginning with the fiscal year
ending March 31, 2020, and ending with the fiscal year ending March 31, 2021, will be ¥400 million.
Upper limit for shares, etc. of the Company’s stock acquired by Directors• At the General Meeting of Shareholders held on June 20, 2019, it was determined that the upper limit forshares of the Company’s stock acquired by Directors from the fiscal year ending March 31, 2020, would be
100,000 points (equivalent to 100,000 shares) multiplied by the number of years in the given allocation
scheme period. Accordingly, the upper limit for the two-year period beginning with the fiscal year ending
March 31, 2020, and ending with the fiscal year ending March 31, 2021, will be 200,000 points (equivalent
to 200,000 shares).

☐ Allocation of shares of the Company’s shares, etc. to Directors• Directors that satisfy the beneficiary requirements will receive allocations of shares of the Company’s stockin an amount equivalent to the allocated points, in principle, in June or later after the conclusion of the final
year of the allocation scheme period. At this time, applicable Directors will receive a number of shares of theCompany’s stock based on part of the allocated points, the remaining shares of the Company’s stock will beappraised by the trust fund, and the applicable Directors will receive monetary payments in an amountequivalent to the appraised liquidation value of shares. However, shares allocated under the first allocation
scheme period will be subject to a one-year transfer restriction period beginning with the date of issuanceduring which the shares are prohibited from being transferred, used as collateral, or disposed of through othermeans.
• Should it be decided to extend the allocation scheme period and maintain the trust fund, the number of yearsof the extension shall be the number of years remaining in the Company’s current medium-term management
plan. Should a new allocation scheme period be established with a duration of two years, shares allocatedunder this period will also be subject to a one-year transfer restriction period beginning with the date ofissuance.
☐ Clawback provisions• The Group has instituted provisions that will enable it to seize the beneficiary rights to receive shares of theCompany’s stock to be allocated (malus) or to demand restitution in the form of monetary payments
equivalent to the value of allocated shares (clawback) should an applicable Director be found to have engaged
in serious misconduct or legal violations.
☐ Other compensation limits• At the General Meeting of Shareholders held on June 27, 2012, the upper limit for basic compensation(excluding salaries paid to Directors that are also employees of the Company or Group companies) to
Directors was set at ¥300 million.
• At the General Meeting of Shareholders held on April 28, 1987, the upper limit for monthly compensationof Audit & Supervisory Board Members was set at ¥6 million. The amount of monthly compensation paid toindividual Audit & Supervisory Board Members is decided through discussion by the Audit & Supervisory
Board, in line with the upper limit set at the general meeting of shareholders.

592) Total compensation by officer classification and compensation type, and number of recipients (fiscal year ended
March 31, 2020)

Officer classification

Directors(excluding External
Directors)
Audit & Supervisory Board
Members(excluding External Audit& Supervisory Board
Members)
External Directors andAudit & Supervisory Board
Members

Total compensation(Millions of yen)

Total compensation by type(Millions of yen)
Performance-linked
Basic
Performancestock-based
compensation
linked bonuses
compensation

Numbers ofrecipients

171

150

21

－

5

34

34

－

－

2

45

45

－

－

5

Notes: 1. On March 31, 2020, the number of Directors (excluding External Directors) was five, the number of Audit& Supervisory Board Members (excluding External Audit & Supervisory Board Members) was two, andthe number of External Directors and External Audit & Supervisory Board Members was five. However,the number of recipients in the table above includes one Director who retired following the end of theterm upon the conclusion of the Ordinary General Meeting of Shareholders held on June 20, 2019. In
addition, one Director who is not included in the number of recipients in the table above received
compensation from a subsidiary in the amount of ¥16 million.
2. The amount of performance-linked bonuses refers to the estimated amount to be paid in the fiscal year
under review.
3. There is no expense recorded for performance-linked stock-based compensation for the fiscal year underreview.
3) Total compensation on a consolidated basis by officer
This information is not stated since there were no individual whose total compensation on a consolidated basis
exceeded ¥100 million.
(5) Status of shares held
1) Standards and approach for the classification of shares for investment
The Company classifies shares for investment into those for pure investment and those for other purposes.
••“Shares for investment for pure investment” refers to shares held for the purpose of generating income throughchanges in share prices or dividends related to the shares.
“Shares for investment for other purposes” refers to shares held for the purpose of maintaining or building
upon collaborative or transactional relationships that are strategically critical for improving the Group’s
corporate value.

2) Shares for investment for other purposesa. Holding policies, method of verifying the rationality of holdings, and verification of the appropriateness of holding
specific issues at meetings of the Board of Directors, etc.
In principle, the Company will not engage in cross-shareholdings except for cases in which such holdings are deemednecessary for maintaining or building upon collaborative or transactional relationships that are strategically criticalfor improving corporate value. The Company regularly verifies the rationality of shareholdings and discloses an
overview of the content thereof after annual verification at meetings of the Board of Directors. Shares withdiminished rationality for holding will be sold in phases upon considering the status of the counterparty.
Furthermore, at a meeting of the Board of Directors held in February 2016, it was determined that the Company had
already established sufficiently strong business relationships with cross-shareholding counterparties, and it wastherefore decided to undertake a phased reduction in cross-shareholdings out of consideration for asset efficiency
and stock price fluctuation risks. Since then, the returns from each cross-shareholding have been verified at meetingsof the Board of Directors held in either July or August of each year. The extent to which holdings have been reduced
was confirmed at these meetings.

60

b. Number of issues held and their balance sheet amount
Number of issues

Total balance sheet amount(Millions of yen)

Unlisted shares

23

3,542

Other shares

10

12,493Issues with increased number of shares in the fiscal year under review
Total purchase amount forincrease in number of shares(Millions of yen)

Number of issues

Unlisted shares

10

Other shares－

Reason for increase in number of shares

Mainly for funding and investment for
3,012 start-ups related to the creation of new
businesses, etc.
－－

Issues with decreased number of shares in the fiscal year under review
Total proceeds from sale fordecrease in number of shares(Millions of yen)

Number of issues
Unlisted shares

2

0

Other shares－－

Note: Issues for which the number of shares has increased or decreased do not include fluctuations due toinitial public offering.
☐

Changes in the number of issues of listed shares held for purposes other than pure investment and the amountrecorded on the balance sheet• Since December 2015, we have gradually reduced the number of issues and the amount held, but they
have increased due to new listing of two issues of unlisted shares in March 2020.

61

c. Information on the number of shares, balance sheet amounts, etc. of each issue of specified shares for investment
and deemed shareholdings
Specified shares for investment

Issue

TOHO CO., LTD.

BASE, Inc. *4

Mitsubishi UFJ Financial Group,Inc.

Fiscal year underPrevious fiscal year
review
Shares of
Purpose and quantitative effect of
Number of shares
Number of sharestheholding*1, and reason for increase inCompany
Balance sheet
Balance sheet
number of shares
held*2amountamount(Millions of yen)
(Millions of yen)
2,578,800
2,578,800 To facilitate smooth collaboration, as
we have business relationship otherthan leasing of store buildings, such as
Yes
8,510
11,462 the opening of GODZILLA STORETokyo at MARUI and issuance of
GODZILLA EPOS cards－ To facilitate smooth collaboration, as
1,261,200
we have business relationshipincluding the opening at MARUI of
No－ SHIBUYA BASE, which is a
1,373
permanent physical shop for owners
that opened online shops using BASE.
2,440,000
2,440,000 To facilitate smooth transactions with
No *3
983
1,342 the major financial institution.
460,000 To facilitate smooth collaboration, as
we have business relationshipincluding the opening of nojima stores
924 at MARUI and issuance of nojima
EPOS affiliated cards.
－ To facilitate smooth collaboration as
we have business relationship in－ relation to gift services offered in theofficial EPOS card app.
127,338 To facilitate smooth transactions with76 the financial institution.

460,000
Nojima Corporation

820
500,000

giftee, Inc. *5643

The Chiba Bank, Ltd.
WACOAL HOLDINGS CORP.
Sumitomo Mitsui Financial Group,
Inc.
AEON CO., LTD.
Isetan Mitsukoshi Holdings Ltd.

Notes: 1.

2.
3.
4.
5.

127,33860

25,000 To facilitate smooth transactions
including the opening of stores at
68 MARUI as tenants and purchasing.
15,025 To facilitate smooth transactions with58 the financial institution.

25,00058
15,025
39
2,000
4
340
0

Yes

No

Yes
No *3
No *3

2,000 To gather information on industry
4 trends, etc.

No

340 To gather information on industry
0 trends, etc.

No

The quantitative effect of holding is not stated in order to protect the confidentiality of transactions withthe counterparty and other reasons.
For the issues above, at meetings of the Board of Directors held in August 2019 and August 2020, theCompany verified the status of revenue, including dividend yield, collaboration and business relationship,
and also confirmed the status of reduction in the total amount of holdings.
Information on whether or not shares of the Company are held is based on the shareholder register as ofMarch 31, 2020.
These counterparties do not hold shares of the Company, but their subsidiaries hold shares of theCompany.
BASE, Inc. was listed on October 25, 2019.
giftee, Inc. was listed on September 20, 2019.

62

“V. Financial Information” of the Annual Securities Report has been replaced by the Consolidated Financial Statements
prepared separately with commensurate information by making certain reclassifications and rearrangements in order topresent them in a form that is more familiar to readers outside Japan. The Consolidated Financial Statements have been
audited by PricewaterhouseCoopers Aarata LLC.
For details, please refer to “1. BASIS OF PRESENTATION” in the Notes to Consolidated Financial Statements.

63

〈Consolidated Financial Statements〉
Consolidated Balance Sheets
MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
As of March 31, 2019 and 2020
Thousands of U.S.
dollars (Note 1)

Millions of yen

2019

2020

2020

¥46,731¥40,839$381,672

Inventories
Other
Total current assets

6,138
428,180
137,473(13,818)
557,974
5,196
30,476640,379

5,153
416,250
139,313(16,106)
544,610
4,766
36,550626,766

48,1583,890,186
1,301,990(150,523)
5,089,813
44,542
341,588
5,857,626

Property and equipment (Note 30):
Land
Buildings and structures (Note 8)
Construction in progress
Other (Note 8)
Property and equipment, net

103,044
63,285551
8,189
175,071

103,542
61,751
1,190
8,281
174,765

967,682
577,112
11,121
77,392
1,633,317

Investments and other assets:
Investment securities (Notes 10, 25 and 26)
Intangible assets
Leasehold and other deposits (Notes 24, 25)
Deferred tax assets (Note 28)
Other (Note 11)
Total investments and other assets
Total assets

22,172
6,849
31,895
10,5893,238
74,745¥890,196

27,388
8,113
30,912
13,8684,153
84,436¥885,969

255,962
75,822
288,897
129,60738,813
789,121$8,280,084

AssetsCurrent assets:
Cash and deposits (Notes 23 and 25)
Notes and accounts receivable–trade (Note 25)
Accounts receivable–installment (Notes 6 and 25)
Operating loans (Notes 6,7 and 25)
Allowance for doubtful accounts (Note 25)

The accompanying notes are an integral part of these consolidated financial statements.

64Thousands of U.S.
dollars (Note 1)

Millions of yen

2019Liabilities
Current liabilities:
Accounts payable–trade (Note 25)
Short-term loans payable and current portion of long-termloans payable (Notes 25 and 34)
Current portion of bonds payable (Notes 25 and 34)
Income taxes payable (Note 25)
Provision for bonuses
Provision for point card certificates
Provision for stock benefits (Note 5)
Provision for loss on redemption of gift certificates
Other
Total current liabilities
Non-current liabilities:
Bonds payable (Notes 25 and 34)
Long-term loans payable (Notes 25, 27, and 34)
Deferred tax liabilities (Note 28)
Provision for loss on interest repayment
Provision for loss on guarantees
Asset retirement obligations (Note 29)
Other
Total non-current liabilities
Total liabilities

2020

2020

¥10,231¥7,145$66,775

71,632

102,335

956,401

30,0008,211
3,516
14,181673
165
57,765
196,376

15,00010,724
3,482
20,583—160
54,996
214,425

140,186
100,224
32,542
192,364—
1,495
513,9812,003,971

85,000300,000
3,470
4,957
190
2,777
12,672
409,067
605,443

90,000272,500
1,884
4,663
166
953
11,045381,212595,638

841,1212,546,728
17,607
43,5791,551
8,906
103,224
3,562,728
5,566,710

35,92035,920335,700

91,323
166,858

91,824
180,522858,168
1,687,121(12,327)(19,661)(183,747)

281,774

288,606

2,697,252

2,977
0
2,977
—
284,752¥890,196

1,185
(0)
1,185
538
290,330¥885,969

11,074(0)
11,074
5,028
2,713,364$8,280,084

Contingent liabilities (Note 12)
Net assets (Note 21)
Shareholders’ equity:
Capital stock
Authorized: 1,400,000,000 shares of common stock
Issued:223,660,417 shares as of March 31, 2019 and223,660,417 shares as of March 31, 2020

Capital surplus
Retained earnings
Treasury stock
6,214,767 shares as of March 31, 2019 and
9,248,452 shares as of March 31, 2020

Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

The accompanying notes are an integral part of these consolidated financial statements.

65

Consolidated Statements of Income
MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
For the fiscal years ended March 31, 2019 and 2020
Thousands of U.S.
dollars (Note 1)

Millions of yen

Revenue (Note 30)
Cost of sales (Notes 13 and 30)
Gross profit
Selling, general and administrative expenses(Notes 14 and 30)
Operating income
Non-operating income (expenses):Dividend income
Gain on donation of property and equipment
Gain on sale of property and equipment (Note 15)
Gain on sale of investment securities
Infectious disease related costs (Note 18)
Interest expenses
Loss on retirement of property and equipment (Note 16)
Loss on closing of stores (Note 17)
Loss on valuation of investment securities
Loss on valuation of shares of subsidiaries and affiliates
Other, net
Income before income taxes
Income taxes (Note 28)
Income taxes–current
Income taxes–deferred
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

2019¥251,415
60,913
190,5022020¥247,582
51,916
195,6662020$2,313,850
485,196
1,828,654

149,317

153,721

1,436,644

41,18441,944

392,000

229
67
1,754
4
—
(1,465)(1,337)(2,000)
(435)
—
(569)
(3,751)37,433

225
36
—
211
(410)
(1,330)(1,299)—(126)(1,010)(832)(4,535)37,408

2,102
336
—
1,971
(3,831)(12,429)(12,140)—(1,177)(9,439)(7,775)(42,383)
349,60712,301(228)
12,07225,36018¥25,341

16,048(4,077)
11,971
25,43740¥25,396

149,981(38,102)111,878
237,728373$237,345

The accompanying notes are an integral part of these consolidated financial statements.

66

Consolidated Statements of Comprehensive Income
MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
For the fiscal years ended March 31, 2019 and 2020
Thousands of U.S.
dollars (Note1)

Millions of yen

Net income
Other comprehensive income (Note 20):
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests

2019¥25,360

2020¥25,4372020$237,728

1,414
1
1,416
¥26,776(1,792)(0)(1,792)¥23,645(16,747)(0)(16,747)$220,981¥26,757
18¥23,60440$220,598
373

The accompanying notes are an integral part of these consolidated financial statements.

U.S. dollars(Note 1)Yen

Per share data (Note 33)
Net income per share:
Basic
Cash dividends
Net assets per share

2019

2020

¥115.99
49.00
1,309.53¥117.58
50.00
1,351.57

The accompanying notes are an integral part of these consolidated financial statements.

67

2020
$1.09
0.46
12.63

Consolidated Statements of Changes in Net Assets
MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
For the fiscal years ended March 31, 2019 and 2020
Millions of yen
Shareholders’ equity

Balance as of April 1, 2018
Changes of items during period:
Dividends from surplus
Net income attributable to ownersof parent
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Transfer from retained earnings tocapital surplus
Change in ownership interest ofparent due to transactions with
non-controlling interests
Net changes of items other thanshareholders’ equity
Total changes of items during period
Balance as of April 1, 2019
Changes of items during period:
Dividends from surplus
Net income attributable toowners of parent
Purchase of treasury stock
Disposal of treasury stock
Transfer from retained earnings
to capital surplus
Change in ownership interest ofparent due to transactions with
non-controlling interests
Net changes of items other thanshareholders’ equity
Total changes of items during period
Balance as of March 31, 2020

Accumulated other comprehensive income
Valuation
Deferreddifference on
gains oravailable-forlosses onsale securities
hedges
Total

Capitalstock

CapitalsurplusRetainedearnings

Treasury
stock

Total

¥35,920¥91,307¥168,034¥(22,389)¥272,872

15¥91,323

501¥91,824¥274,900

25,341

25,341

25,341(7,002)0—(7,002)
0
—

—

—

15

15

(7,002)0
17,064(17,064)(1,175)¥166,858

10,062¥(12,327)

8,902¥281,774

1,414

1

1,416

(466)

949

1,414
¥2,9771¥0

1,416¥2,977

(466)
—

9,852
¥284,752(11,731)(11,731)(11,731)

25,39625,39625,396(7,886)552(7,886)
552

—

—

501

501

(7,886)
552
0

501

—
¥35,920¥466(9,452)0(0)¥1,561(9,452)

15—¥35,920¥(1)

Total net
assets(9,452)0(17,064)
17,064¥1,563

Non-controllinginterests

13,664¥180,522(7,334)¥(19,661)

68

6,831
¥288,606(1,792)(0)(1,792)538(1,254)(1,792)¥1,185(0)¥(0)(1,792)¥1,185

538
¥538

5,577
¥290,330

Thousands of U.S. dollars (Note 1)
Shareholders’ equity

Balance as of April 1, 2019
Changes of items during period:
Dividends from surplus
Net income attributable toowners of parent
Purchase of treasury stock
Disposal of treasury stock
Transfer from retained earnings
to capital surplus
Change in ownership interest ofparent due to transactions with
non-controlling interests
Net changes of items otherthan shareholders’ equity
Total changes of items during period
Balance as of March 31, 2020

Accumulated other comprehensive income
Valuation
Deferreddifference on
gains oravailable-forlosses onsale securities
hedges
Total

Capitalstock

CapitalsurplusRetainedearnings

Treasury
stock

Total

$335,700$853,485$1,559,420$(115,205)$2,633,401

4,682$858,168$27,822$—$2,661,233(109,635)(109,635)

237,345

237,345

237,345(73,700)
5,158(73,700)
5,158

—

—

4,682

4,682

(73,700)
5,158
0

4,682

—
$335,700$0Total net
assets(109,635)0(0)$27,822

Non-controllinginterests

127,700$1,687,121(68,542)$(183,747)

The accompanying notes are an integral part of these consolidated financial statements.

69

63,841$2,697,252(16,747)(0)(16,747)

5,028(11,719)(16,747)$11,074(0)$(0)(16,747)$11,074

5,028$5,02852,121$2,713,364

Consolidated Statements of Cash FlowsMARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
For the fiscal years ended March 31, 2019 and 2020
Thousands of U.S.
dollars (Note 1)

Millions of yen

Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Impairment loss
Increase (decrease) in provision for point card certificates
Increase (decrease) in provision for allowance for doubtful
accounts
Increase (decrease) in provision for loss on interest repayment
Increase (decrease) in provision for bonuses
Interest and dividend income
Interest expenses
Loss (gain) on retirement of property and equipment
Loss (gain) on sale of property and equipment
Loss (gain) on sale of investment securities
Loss (gain) on valuation of investment securities
Decrease (increase) in notes and accounts receivable–trade
Decrease (increase) in accounts receivable–installment
Decrease (increase) in operating loans
Decrease (increase) in inventories
Increase (decrease) in accounts payable–trade
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Income taxes refund
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchase of property and equipment
Proceeds from sale of property and equipment
Purchase of investment securities
Proceeds from sale of investment securities
Payments for leasehold and other deposits
Proceeds from collection of leasehold and other deposits
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury stock
Cash dividends paid (Note 22)
Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation
Other, net
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period (Note 23)

2019

2020

2020

¥37,433
9,911
4
2,736

¥37,408
9,191
128
6,402

$349,607
85,897
1,196
59,831

1,975

2,288

21,383(1,123)
(424)
(269)
1,465
304
(1,754)249
476
868(26,150)
8,537
2,098
(2,129)4,735
38,944237(1,460)(11,344)
18
26,396

(294)
(34)
(240)
1,330
407
—
(211)
1,238
985
11,930(1,840)719(3,086)(12,831)53,493233(1,342)(12,851)377
39,909(2,747)(317)(2,242)
12,4293,803—(1,971)
11,5709,205
111,495(17,196)
6,719(28,841)(119,915)
499,934
2,177(12,542)(120,102)
3,523
372,981(8,788)2,702(6,009)
113
(324)
2,159
914
(9,232)(10,979)
6(9,035)
212
(25)
1,005
(1,500)(20,315)(102,607)
56(84,439)
1,981
(233)
9,392
(14,018)(189,859)(14,698)
37,000(31,000)
19,899(10,000)(7,009)(9,452)

21,701
23,500(42,000)
19,895(30,000)(7,892)(11,731)202,813219,626(392,523)
185,934(280,373)(73,757)(109,635)

(463)

—

—

(156)
(15,880)
1,283
45,437¥46,720

1,039(25,487)(5,892)
46,720¥40,827

9,710(238,196)(55,065)436,635$381,560

The accompanying notes are an integral part of these consolidated financial statements.

70Notes to Consolidated Financial Statements
MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
As of and for the fiscal years ended March 31, 2019 and 2020

1.

BASIS OF PRESENTATIONMARUI GROUP CO., LTD. (“the Company”) and its consolidated subsidiaries (collectively, “the Group”)
prepare the consolidated financial statements in accordance with the “Regulation on Terminology, Forms, andPreparation Methods of Consolidated Financial Statements” (Ministry of Finance Order No. 28 of 1976).
The Group maintain their accounts and records in accordance with the provisions set forth in the Companies
Act of Japan and the Financial Instruments and Exchange Act of Japan, and in conformity with accounting
principles generally accepted in Japan, which are different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards.
These consolidated financial statements are audited by PricewaterhouseCoopers Aarata LLC based on theprovisions set forth in Article 193-2, Paragraph (1) of the Financial Instruments and Exchange Act in Japan,
then filed and issued domestically as the Security Report by sending to the Director-General of the Kanto
Finance Bureau.
The accompanying consolidated financial statements of the Group have been prepared by making certain
reclassifications and rearrangements to the aforementioned consolidated financial statements issued
domestically in order to present them in a form that is more familiar to readers outside Japan. In addition,certain reclassifications have been made in the 2019 consolidated financial statements to conform to theclassifications used in 2020. These accompanying consolidated financial statements are also audited byPricewaterhouseCoopers Aarata LLC on a voluntary basis.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which theCompany is incorporated and operates.
As permitted by the regulations under the Financial Instruments and Exchange Act of Japan, amounts ofless than one million yen have been omitted. As a result, the totals shown in the accompanying consolidated
financial statements in Japanese yen do not necessarily agree with the sums of the individual amounts.
The U.S. dollar amounts shown in the accompanying consolidated financial statements and notes thereto
were translated from the presented Japanese yen amounts into U.S. dollar amounts at the rate of ¥107 = $1, theapproximate rate of exchange at March 31, 2020, and were then rounded down to the nearest thousand. As aresult, the totals shown in the accompanying consolidated financial statements in U.S. dollars do notnecessarily agree with the sums of the individual amounts. This translation of Japanese yen amounts into U.S.
dollar amounts is included solely for the convenience of readers outside Japan. Such translation should not be
construed as a representation that Japanese yen could be converted into U.S. dollars at that or any other rate.

2.

SIGNIFICANT ACCOUNTING POLICIES(1) Principles of consolidation and accounting for investments in unconsolidated subsidiaries andaffiliates
The consolidated financial statements as of and for the fiscal years ended March 31, 2019 and 2020, include
the accounts of the Company and its nine significant subsidiaries.

71Under the control or influence concept, those companies in which the Company, either directly or
indirectly, is able to exercise control over operations are consolidated, and those companies over which theCompany has the ability to exercise significant influence are accounted for using the equity method. For the
fiscal years ended March 31, 2019 and 2020, there was no subsidiary or affiliate accounted for using the equity
method. Investments in the remaining unconsolidated subsidiaries and affiliates are stated at cost. If the equity
method of accounting was applied to the investments in these companies, the effect on the accompanying
consolidated financial statements would not be material.
All significant intercompany balances and transactions have been eliminated in consolidation.
The fiscal year-end of all consolidated subsidiaries is March 31, the same as that of the Company.
(2) Investment securities
Investment securities held by the Group are all classified as available-for-sale securities.
Available-for-sale securities with a determinable market value are stated at fair value based on the market
value at the balance sheet date, and valuation difference, net of applicable income taxes, are reported as aseparate component of net assets. Cost of securities sold is computed based on the moving-average method.
Available-for-sale securities without a determinable market value are stated at cost, principally determined by
the moving-average method.
Investments in unconsolidated subsidiaries and affiliates are stated at cost determined by the movingaverage method.
Investments in investment limited partnerships are stated at the net amount equivalent to the Company’sownership interest based on the latest financial statements available as of the reporting date stipulated in thepartnership agreement.
(3) Inventories
Inventories are measured at the lower of cost determined by the monthly weighted-average method or net
selling value.
(4) Depreciation and amortization
Property and equipment (excluding leased assets) are depreciated by the straight-line method.
Intangible assets are amortized by the straight-line method. Capitalized computer software costs forinternal use are amortized by the straight-line method over the estimated useful lives (within five years).
For finance leases that do not transfer ownership of the leased assets to the lessee, leased assets are
depreciated by the straight-line method over the lease terms with no residual value.
(5) Allowance for doubtful accounts
The allowance for doubtful accounts is stated at the amount determined based on the historical experience ofbad debt with respect to ordinary receivables (“general reserve”), plus an estimate of uncollectible amounts
determined by reference to specific doubtful receivables of customers experiencing financial difficulties(“specific reserve”).

72(6) Provision for bonuses
The provision for bonuses is accrued at the fiscal year-end to which such bonuses are attributable.
(7) Provision for point card certificates
Credit card points are awarded to customers when they make purchases using EPOS cards and, upon request,
the Company will allow customers to use their accumulated credit card points for their payment.
The provision for point card certificates is accrued to the estimated amount required based on the balanceof credit card points awarded to cardholders outstanding at the fiscal year-end.
(8) Provision for loss on redemption of gift certificates
The monetary value of gift certificates and other certificates that have not been redeemed for a set period oftime after issuance is recognized as income. However, some gift certificates and other certificates can beredeemed after the recognition of income.
The provision for loss on redemption of gift certificates is provided at the estimated amount to beredeemed in the future based on historical experience.
(9) Provision for loss on interest repayment
The provision for loss on interest repayment is provided to the estimated amount of repayment claims on
consumer loan interests at the fiscal year-end.
(10) Provision for loss on guarantees
The provision for loss on guarantees is provided at the estimated amount of loss arising from the Group’s
guarantee obligations of customers’ liabilities in relation to loans to individuals from financial institutions withwhich the Group has guarantee service arrangements.
(11) Provision for stock benefits
The provision for stock benefits is provided at the estimated amount for stock benefits to directors andemployees at the fiscal year-end in accordance with the internal rule for stock delivery.
(12) Basis for revenue recognition
The charges for installment sales and interest income on consumer loans are recognized on an accrual basis
based on the remaining loan balances.
(13) Cash and cash equivalents
In preparing the consolidated statements of cash flows, the Group considers cash on hand, readily available
deposits, and highly liquid short-term investments with maturities of three months or less when purchased thatare exposed to an insignificant risk of changes in value to be cash and cash equivalents.
(14) Consumption taxes
National and local consumption taxes are accounted for by the tax-excluded method. Non-deductible
consumption tax and other taxes imposed on fixed assets are recorded as expenses as incurred.
73

3.

ACCOUNTING STANDARD ISSUED BUT NOT YET APPLIED

The following standard and guidance were issued but not yet applied.
⚫ “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020)⚫ “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30,
March 31, 2020)(1) Overview
The above standard and guidance provide comprehensive principles for revenue recognition. Under the standard
and guidance, revenue is recognized by applying the following five steps.
Step 1: Identify contract(s) with customers
Step 2: Identify the performance obligations in the contract(s)Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract(s)Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation(2) Scheduled date of application
The Company plans to apply the aforementioned standard and guidance from the beginning of the fiscal year
ending March 31, 2022.
(3) Effect of application
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effectsof this new standard and guidance on the consolidated financial statements.
⚫ “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019)⚫ “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.
31, July 4, 2019)⚫ “Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, July 4, 2019)⚫ “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019)⚫ “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ GuidanceNo. 19, March 31, 2020)(1) Overview
In order to improve comparability with international accounting standards, “Accounting Standard for Fair
Value Measurement” and the “Implementation Guidance on Accounting Standard for Fair Value Measurement”(hereinafter referred to as “Fair Value Accounting Standards, etc.”) were developed, and guidance and otherrules were established with regard to the method for fair value measurement. Fair Value Accounting Standards,
etc. are applied to the fair values of the following items:- Financial instruments included in the “Accounting Standard for Financial Instruments”- Inventory held for trading purposes included in “Accounting Standard for Measurement of Inventories”

74

In addition, the “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” wasrevised, and notes were stipulated including the breakdown by level of fair values of financial instruments.
(2) Scheduled date of application
The Company plans to apply the aforementioned standards and guidance from the beginning of the fiscal year
ending March 31, 2022.
(3) Effect of application
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effectsof these new standards and guidance on the consolidated financial statements.
⚫ “Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections”(ASBJ Statement No. 24, March 31, 2020)(1) Overview
The purpose of this accounting standard is to provide an overview of the principles and procedures for theaccounting treatment adopted in the event that related accounting standards, etc. are unclear.
(2) Scheduled date of application
The Company plans to apply the aforementioned standard from the end of the fiscal year ending March 31, 2021.
⚫ “Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31, March 31,
2020)(1) Overview
The purpose of this accounting standard is to disclose information that contributes to the understanding offinancial statement users regarding items of the accounting estimates recorded in the financial statements forthe current fiscal year that have the risk of materially affecting the financial statements for the following fiscal
year.
(2) Scheduled date of application
The Company plans to apply the aforementioned standard from the end of the fiscal year ending March 31,
2021.

4.

CHANGE IN PRESENTATION

Consolidated Statements of Income
The account “Financing expenses,” which was previously shown as a separate line item under “Non-operating
income (expenses),” was included in “Other, net” in the fiscal year ended March 31, 2020, as the monetaryimpact on the consolidated financial statements was no longer significant. The reclassification was made to theconsolidated financial statements as of March 31, 2019, to conform to the current presentation.

75

As a result, in the consolidated statement of income for the fiscal year ended March 31, 2019, the amounts of¥153 million presented as “Financing expenses” under “Non-operating income (expenses)” was reclassified as“Other, net”.

5.

ADDITIONAL INFORMATION

Accounting treatment of expenses for credit card issuance
The Group’s credit card, issued by Epos Card Co., Ltd., improved security functions with an update to a new
type of IC chip, thereby further developing an environment for encouraging customers to use the credit cards
that offer further enhanced safety and security as their main card. Furthermore, with the potential to provide
optimal approaches based on card utilization for each individual customer with the introduction of a new
system, it became clear that promoting continuous utilization will provide future revenue acquisition, and anincrease in asset value for credit cards was recognized in the fourth quarter of the fiscal year under review. As
a result, although the Company previously recognized expenses for card issuance as expenses at the time ofissuance, expenses for card issuance arising from January 2020 onward are recognized as assets which are
depreciated over the effective period of the cards. As a result, operating income, ordinary income and income
before income taxes of the Company for the consolidated fiscal year under review increased by ¥489 million($4,570 thousand) compared to when the previous method is used.
Accounting estimates for effects of COVID-19
The impact of COVID-19 on the Group can primarily be witnessed in the temporary closure and shortening ofbusiness hours of Marui and Modi stores to prevent the spread of infection, sluggish store revenue due tocustomers restraining from going out and decline in consumer sentiment, and delayed recovery in credit cardtransactions. Throughout the affected period, the Group shortened business hours for about one month inaddition to closing stores for two to three months in the following consolidated fiscal year. After that, assumingthat the situation will gradually recover to conventional performance levels over the period from October 2020
at the earliest and October 2021 at the latest, the impact on each segment’s profit for the following
consolidated fiscal year is estimated to be a decrease of ¥3.0 billion ($28 million) to ¥9.0 billion ($84 million)
for the retailing segment and a decrease of ¥3.5 billion ($32 million) to ¥4.5 billion ($42 million) for the
FinTech segment. The Group has made accounting estimates that are based on a scenario that assumes aconservative median in consideration of these figures. From this estimate of impact on profit and thecalculation of future cash flows based on certain assumptions, it was determined that there was no significant
impact of COVID-19 on impairment of noncurrent assets and the recoverability of deferred tax assets. In
addition, as a result of examining the risk of doubtful accounts in operating receivables (installment sales
accounts receivable and consumer loans outstanding operating loans), allowance for doubtful accounts
increased by ¥430 million ($4,018 thousand) in the current consolidated fiscal year. If the assumptions used in
the above estimates and future cash flow calculations change drastically, there is a possibility that theCompany’s financial condition and operating results for the following consolidated fiscal year may besignificantly affected.

76Officer Remuneration Board Incentive Plan Trust
The Company also has an incentive plan using the “Officer Remuneration Board Incentive Plan Trust (“BIP
Trust”)” to provide an incentive to (i) Directors and Executive Officers (excluding External Directors and nonresidents in Japan) of the Company and (ii) Directors of 11 subsidiaries of the Group (excluding External
Directors and non-residents in Japan; collectively, with the Directors and Executive Officers of the Company,
the “Executives”).
(1) Overview of the plan
The Company sets up a trust with the Executives who fulfill certain requirements as beneficiaries, bycontributing funds to acquire the Company’s stock. The trust acquires the Company’s own stock from the stock
market for the number of shares required for delivering to the Executives based on the prescribed internal rule
for stock delivery. Then, in accordance with the internal rule, the Company makes a delivery or payment of its
shares and cash equivalents to the amount obtained by converting a part of the shares into cash based on therank of each Executive and degree of achievement of the performance target.
The Company applies the “Practical Solution on Transactions of Delivering the Company’s Own Stock to
Employees, etc. through Trusts” (PITF No. 30, March 26, 2015) for the accounting treatment of the plan.
(2) The Company’s shares held at the trust
The Company’s shares held at the trust are carried at their book value at the trust (excluding incidental
expenses) and accounted for as treasury stock under net assets. The book value of applicable treasury stock is¥683 million ($6,383 thousand) and the number of shares is 347,750 shares as of March 31, 2019 and 2020.
Stock Benefit Employee Stock Ownership Plan Trust
The Company has an incentive plan using the “Stock Benefit Employee Stock Ownership Plan Trust (“ESOP
Trust”)” to provide an incentive to the Group’s employees holding senior management positions (hereinafter
the “Senior Managers”), aiming to enhance their commitment to further improve the business performance andcorporate value over the medium-to-long term.
(1) Overview of the plan
The Company sets up a trust with the Senior Managers who fulfill certain requirements as beneficiaries, bycontributing funds to acquire the Company’s stock. The trust acquires the Company’s own stock from the stock
market for the number of shares required for delivering to the Senior Managers based on the prescribedinternal rule for stock delivery. Then, in accordance with the internal rule, the Company makes a delivery or
payment of its shares and cash equivalents to the amount obtained by converting a part of the shares into cash
based on the rank of each Senior Manager and degree of achievement of the performance target. The Company
applies the “Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees, etc.
through Trusts” (PITF No. 30, March 26, 2015) for the accounting treatment of the plan.

77

(2) The Company’s shares held at the trust
The Company’s shares held at the trust are carried at their book value at the trust (excluding incidental
expenses) and accounted for as treasury stock under net assets. The book value of applicable treasury stock is¥345 million ($3,224 thousand), and the number of shares is 197,434 shares as of March 31, 2019 and 2020.
MATTERS RELATED TO CONSOLIDATED BALANCE SHEETS
6.

ACCOUNTS RECEIVABLE-INSTALLMENT

The following balances for receivables are securitized and are therefore excluded from the consolidatedbalance sheets as of March 31, 2019 and 2020:
Thousands of U.S.
dollars (Note 1)

Millions of yen

2019
Card shopping:
Lump sums receivable
Revolving receivable
Cash advance:
Revolving receivable

7.

2020

2020

¥79,920
26,164¥107,904
60,486$1,008,448
565,289

13,17913,550126,635

LOAN COMMITMENTS

Certain consolidated subsidiaries that operate in the credit card business provide cash advance services tocustomers.
The unused balance of loans contingent with the loan commitments is as follows:
Thousands of U.S.
dollars (Note 1)

Millions of yen

2019¥1,255,552
150,652¥1,104,900

Total loan limits
Amount executed as loans
Unused balance

2020¥1,331,778
152,863¥1,178,914

2020$12,446,523
1,428,626$11,017,887

The figures include amounts of receivables subject to securitization. Under the provisions of the loan
service contract, the Group is able to decline a loan request or decrease a loan limit when a customer’s
financial condition or other circumstances change. Thus, the total unused balance will not necessarily be
executed as loans.

8.

REDUCTION ENTRY AMOUNTAs a result of the acceptance of national subsidies, the following reduction entry amount was deducted fromthe acquisition cost of property and equipment.
Thousands of U.S.
dollars (Note 1)

Millions of yen

2019
Reduction entry amount

2020
¥66

78

¥66

2020
$616

9.

Acquisition price and accumulated depreciation of property, plant and equipment

The breakdown of the acquisition price and accumulated depreciation of property, plant and equipment that are
shown as net on the balance sheet are as follows:
Thousands of U.S.
dollars (Note 1)

Millions of yen

2019

2020

2020

Buildings and structures¥247,635¥248,241$2,320,009

Accumulated depreciation(184,349)(186,489)(1,742,887)

Other

33,261

33,762

315,532

Accumulated depreciation(25,071)(25,481)(238,140)

10. INVESTMENTS IN STOCKS OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES
The balance of “Investment securities” includes the investments in stocks of unconsolidated subsidiaries andaffiliates as follows:
Thousands of U.S.
dollars (Note 1)

Millions of yen

2019
Stocks of unconsolidated subsidiaries and affiliates

2020¥4,0592020¥4,949$46,252

11. INVESTMENTS IN CAPITAL OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES
The balance of “Other” includes the investments in capital of unconsolidated subsidiaries and affiliates asfollows:
Thousands of U.S.
dollars (Note 1)

Millions of yen

2019
Capital of unconsolidated subsidiaries and affiliates

¥132

2020
¥132

2020
$1,233

12. CONTINGENT LIABILITIESThe Group has commitments to guarantee customers’ liabilities in relation to their personal loans fromfinancial institutions with which the Group has guarantee service arrangements.
As of March 31, 2019 and 2020, the amounts of the Group’s guarantee obligations were ¥22,217 millionand ¥19,829 million ($185,317 thousand), respectively.
MATTERS RELATED TO CONSOLIDATED STATEMENTS OF INCOME
13. COST OF SALESFor the fiscal years ended March 31, 2019 and 2020, cost of sales included the revaluation loss on inventories
in the amounts of ¥23 million and ¥34 million ($317 thousand), respectively.

7914. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the fiscal years ended March 31, 2019 and 2020, are as
follows:
Thousands of U.S.
dollars (Note 1)

Millions of yen

2019¥12,298
14,181
14,36430,8693,223
13,67915,501
8,614
36,584¥149,317

Advertisement
Provision for point card certificates
Provision for allowance for doubtful accounts
Salaries and allowances
Provision for bonuses
Commission expenses
Rent
Depreciation and amortization
Other
Total

2020
¥7,545
20,583
15,982
29,484
3,124
16,00915,552
7,861
37,578¥153,721

2020$70,514
192,364
149,364
275,551
29,196
149,616
145,345
73,467351,196$1,436,644

The account “Commission expenses,” which was previously included in “Other” under “Selling, general andadministrative expenses,” was shown as a separate line item in the fiscal year ended March 31, 2020 due to anincrease in its monetary impact. The reclassification was made to the consolidated financial statements as ofMarch 31, 2019, to conform to the current presentation.
As a result, in the consolidated statement of income for the fiscal year ended March 31, 2019, theamount of ¥50,264 million presented as “Other” under “Selling, general and administrative expenses” wasreclassified as “Commission expenses” and “Other” in the amounts of ¥13,679 million and ¥36,584 million,
respectively.

15. GAIN ON SALE OF PROPERTY AND EQUIPMENT
Gain on sale of property and equipment for the fiscal years ended March 31, 2019 and 2020, consisted of thefollowing:Thousands of U.S.
dollars (Note 1)

Millions of yen

2019¥1,754¥1,754Land, etc.
Total

2020

2020
$—
$—

—
—

16. LOSS ON RETIREMENT OF PROPERTY AND EQUIPMENT
Loss on retirement of property and equipment for the fiscal years ended March 31, 2019 and 2020, consistedof the following:Thousands of U.S.
dollars (Note 1)

Millions of yen

2019
Buildings and structures
Furniture and fixtures, etc.
Total

¥192
1,145
¥1,337

80

2020
¥338
961
¥1,2992020$3,158
8,981$12,140

17. LOSS ON CLOSING OF STORES
Loss on closing of stores for the fiscal years ended March 31, 2019 and 2020, consisted of the following:Thousands of U.S.
dollars (Note 1)

Millions of yen

2019¥2,000¥2,000

Restoration costs,etc.
Total

2020

2020
$—
$—

—
—

18. INFECTIOUS DISEASE RELATED COSTS
Infectious disease related costs include fixed costs, such as rent and depreciation that were reclassified fromselling, general and administrative expenses to extraordinary losses during the suspension of operations atstores.

19. IMPAIRMENT LOSSThe Group recognized the amount of impairment loss on the following asset groups and included it in “Other,
net” under “Non-operating income (expenses).
The impairment loss recognized for the fiscal year ended March 31, 2019, is as follows:
Use
StoresMillions of yen

Thousands of U.S.
dollars (Note 1)

Buildings

¥4

$37

Total

¥4

$37

Location
Kyoto MaruiKyoto, Kyoto

Type of assets

The Group recognized the amount of impairment loss on the following asset groups and included it in “Other,
net” under “Non-operating income (expenses)”.
The impairment loss recognized for the fiscal year ended March 31, 2020, is as follows:
Use
Rentalproperties, etc.

Millions of yen

Thousands of U.S.
dollars (Note 1)

Buildings¥128$1,196

Total

¥128

$1,196

Location
Shinjuku-ku, Tokyo, etc.

Type of assets

The Group has categorized its fixed assets by either store or rental property, which is the minimum cashgenerating unit. The carrying value of each asset group is written down to its respective recoverable amountand in doing so is recognized as an impairment loss.
The Group estimated the recoverable amount of each asset group based on value in use or fair value lesscosts to sell. If a store reports continuous operating losses, the Group evaluates that the value in use of thestore is zero since positive cash flows cannot be expected in the future. If a store is planned to be closed or
disposed of, the Group evaluates that the fair value less costs to sell is zero.

8120. MATTERS RELATED TO CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Thousands of U.S.
dollars (Note 1)

Millions of yen

2019
Valuation difference on available-for-sale securities:
Amounts incurred for the year
Reclassification adjustments
Before tax effect adjustment
Tax effect
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges:
Amounts incurred for the year
Tax effect
Deferred gains or losses on hedges
Total other comprehensive income

2020

2020

¥1,778
250
2,028
(614)
1,414

¥(2,580)$(24,112)——(2,580)788(1,792)(24,112)
7,364(16,747)2(0)1¥1,416(0)0(0)¥(1,792)(0)0(0)$(16,747)

MATTERS RELATED TO CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
21. CLASS & NUMBER OF SHARES ISSUED AND OUTSTANDING AND TREASURY STOCK
The following table summarizes the number of shares of common stock, issued and outstanding, and treasury
stock:
Number of shares
2019
2020
Common stock, issued and outstanding:At the beginning of the year
Decrease due to retirement of treasury stock
At the end of the year
Treasury stock:
At the beginning of the year
Increase due to purchase of treasury stock in the stock market
Increase due to the acquisition of treasury stock in relation to the
Officer Remuneration Board Incentive Plan Trust (“BIP Trust”)
and the Stock Benefit Employee Stock Ownership Plan Trust(“ESOP Trust”)
Increase due to purchase of odd lot shares
Decrease due to retirement of treasury stock
Decrease due to the provision of the treasury stock in relation to
the BIP Trust and the ESOP Trust
Decrease due to sale of stock to odd lot shareholders
At the end of the year82

233,660,417(10,000,000)
223,660,417

223,660,417—
223,660,417

13,269,506
2,944,300

6,214,767
2,990,000—

441,800

962(10,000,000)

874
—

—

(398,916)(1)
6,214,767(73)
9,248,452

22. DIVIDENDS
The following tables summarize the dividends paid for the fiscal years ended March 31, 2019 and 2020:2019
Total amount ofdividends
Resolution
Ordinary General
Meeting of
Shareholders held on
June 25, 2018
Board of Directors’
meeting held on
November 8, 2018

Class of share

Dividends per
share(Millions of yen)

(Yen)

Record date

Effective dateCommon stock¥4,417¥20

March 31, 2018

June 26, 2018

Common stock

5,034

23

September 30,
2018

December 4,
2018

Notes: 1 The amount of dividends resolved at the Ordinary General Meeting of Shareholders held on June25, 2018, includes ¥10 million of dividends for the BIP Trust and ESOP Trust.
2 The amount of dividends resolved at the Board of Directors’ meeting held on November 8, 2018,
includes ¥11 million of dividends for the BIP Trust and ESOP Trust.
2020
Total amount of dividends
Resolution
Ordinary General
Meeting of
Shareholders held on
June 20, 2019
Board of Directors’
meeting held on
November 7, 2019

Dividends per share(Millions of yen)(Thousands of
U.S. dollars)(Note 1)

Commonstock¥5,666$52,953¥26

Common
stock

6,065

56,68228

Class ofshare

Recorddate

Effective
date

$0.24

March 31,2019

June 21,
2019

0.26

September
30, 2019

December4, 2019(U.S. dollars)(Note 1)

(Yen)

Notes: 1 The amount of dividends resolved at the Ordinary General Meeting of Shareholders held on June20, 2019, includes ¥13 million ($121 thousand) of dividends for the BIP Trust and ESOP Trust.
2 The amount of dividends resolved at the Board of Directors’ meeting held on November 7, 2019,
includes ¥15 million ($140 thousand) of dividends for the BIP Trust and ESOP Trust.
Dividends with a record date during the fiscal year ended March 31, 2020, but with an effective date
subsequent to the fiscal year ended March 31, 2020, are as follows:

Resolution
Ordinary
GeneralMeeting of
Shareholders
held on June29, 2020

Class ofshare
Commonstock

Total amount of dividends

Dividends per share(Millions of yen)(Thousands of
U.S. dollars)(Note 1)

(U.S.
dollars)(Note 1)

¥4,729$44,196

SourceRetainedearnings

(Yen)

¥22

$0.20

Recorddate

Effective
date

March
31, 2020

June 302020

Note: The amount of dividends resolved at the Ordinary General Meeting of Shareholders held on June 29,2020, includes ¥11 million ($102 thousand) of dividends for the BIP Trust and ESOP Trust.

8323. MATTERS RELATED TO CONSOLIDATED STATEMENTS OF CASH FLOWS
Reconciliations of cash and cash equivalents in the consolidated statements of cash flows to accounts andamounts in the accompanying consolidated balance sheets as of March 31, 2019 and 2020, are as follows:
Thousands of U.S.
dollars (Note 1)

Millions of yen

Cash and deposits
Time deposits with maturity in excess of three months
Cash and cash equivalents

2019¥46,731(11)¥46,720

2020¥40,839(11)¥40,8272020$381,672(102)$381,560

24. LEASES(As a Lessee)
The Group capitalizes leased assets under finance leases that do not transfer ownership. These assets mainlycomprise buildings and properties in connection with the Retailing segment.
The future minimum lease payments under non-cancellable operating leases are as follows:
Thousands of U.S.
dollars (Note 1)

Millions of yen

2019¥3,328
14,543¥17,872

Within one year
Over one year
Total

2020
¥2,884
12,215¥15,100

2020$26,953
114,158$141,121(As a Lessor)
The future minimum lease receipts under non-cancellable operating leases are as follows:
Thousands of U.S.
dollars (Note 1)

Millions of yen

2019¥7,303
4,907¥12,211Within one year
Over one year
Total

2020
¥6,4743,450¥9,924

2020$60,504
32,242$92,747

25. FINANCIAL INSTRUMENTS(1) Status of financial instruments(a) Policy on financial instruments- The Group is a corporate group that provides customers of a wide range of ages with rich lifecycle byengaging in operations integrating retailing and FinTech. In the FinTech segment, operating receivables(accounts receivable-installment and operating loans) increased owing to a growth in card shoppingtransactions and stable handling of cash advance. The Group properly conducts credit control based on the
belief, which has been nurtured since its foundation, that “creditability should be built together withcustomers.”- The amount of funds procured has been increasing due to continuously growing demand for funds as the
FinTech segment grows. We proceed with the fund procurement with utmost priority on financial security.
The Group utilizes derivative transactions only to avoid risks, including the interest rate fluctuation risk onloans, and does not use them for speculative purposes.

84

- With regard to growth investments, we aim to build a new business model based on the trinity combining“Retailing” and “FinTech” with “Co-Creation Investment.” We will mitigate investment risks and increase
returns by realizing “Co-Creation” through combining the businesses and human resources of the Group withintangible assets such as know-how and skills of its investees. In addition, we will not engage in crossshareholdings, in principle, except for cases in which such holdings are deemed necessary for maintaining orbuilding upon collaborative or transactional relationships that are strategically critical for improving
corporate value. The Group has decided to undertake a phased reduction in cross-shareholdings withcounterparts with which it has already established sufficiently strong business relationships, out ofconsideration for asset efficiency and stock price fluctuation risks.
(b) Financial instruments, their risks, and the risk management system- Accounts receivable-installment and operating loans, which are the Group’s major operating receivables, aregenerated from the use of EPOS cards such as card shopping transactions and cash advances. These
receivables involve credit risks such as delay in payment or bad debt if a customer fails to perform its
obligations in compliance with the contract. In accordance with the internal risk management rules, theGroup mitigates such risk by monitoring and evaluating the credit status of each customer by means of thirdparty personal credit information agencies and the Group’s own credit monitoring system.
- Fund procurement may be constrained if financial markets fall into turmoil, the Group’s businessperformance significantly deteriorates, or its credit worthiness suddenly declines. There are liquidity risks
that the Group cannot raise sufficient funds, and may fall short of funds necessary for each business or may
not be able to repay loans or corporate bonds, etc. on the due date of repayment or redemption. Furthermore,
there are interest rate fluctuation risks that the procurement interest rates fluctuate depending on the market
environment and other factors, resulting in higher procurement costs.
Amid FinTech projected to grow, demand for funds will continue to expand and the risk concerning fundprocurement will increase in the future. Therefore, the Group takes the following measures from theperspectives of safety and cost.
- We seek to maintain a level of interest-bearing debt that is equivalent to around 90% of operatingreceivables, considering a decline in financial security due to an increase in debts.
- We diversify our fund procurement methods by indirectly procuring funds from financial institutions,directly procuring funds through issuance of bonds and commercial papers, as well as liquidating
operating receivables. We also strike a balance among procurement menus.
- In order to cope with the risk of refinancing the funds, we maintain consistent levels of annual
repayment and/or redemption amounts by controlling the years of procurement, and have established abackup system mainly by executing commitment line contracts and establishing overdraft facilities withfinancial institutions for such amounts.
- As for the interest rate of funds procured, we curb a sharp increase in procurement costs due to thefluctuations in market interest rates by maintaining the structure of fixed interest rates at a certain rate of
50% to 60%.
- Investment securities primarily consist of shares issued by companies with which the Group has business
relationships and shares obtained through “Co-Creation Investment” which is to invest in growing
companies. These securities entail both the credit risk of the issuers and the market risk due to market price85

fluctuations. With regard to “Co-Creation Investment,” the Group makes investment decisions after checking
profitability including not only financial returns but also collaborative returns to be generated fromcollaboration with the Group. Also, the Group mitigates risks by regularly monitoring the fair value and thefinancial condition, etc. of the counterparties as well as by selling in phases shares with diminishedrationality for holding upon considering the transaction relationship with the counterparties.
(c) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on the market price, and when no market price exists, arationally calculated amount is used. The calculation of such prices rests on variable factors, and therefore suchprices may change depending on different assumptions and factors used.
(2) Estimated fair value of financial instruments
Carrying value, fair value, and the difference between them as of March 31, 2019 and 2020, are summarized
below. Financial instruments for which the fair value is extremely difficult to determine are excluded from thefollowing table (See Note 2 below).
Millions of yen

2019
Carrying value(1) Cash and deposits(2) Notes and accounts receivable–trade(3) Accounts receivable–installment
Allowance for doubtful accounts*1(4) Operating loans
Allowance for doubtful accounts*2(5) Investment securities:
Available-for-sale securities(6) Leasehold and other deposits
Assets, total(1) Accounts payable–trade(2) Short-term loans payable andcurrent portion of long-term loans
payable(3) Current portion of bonds payable(4) Income taxes payable(5) Bonds payable(6) Long-term loans payable
Liabilities, total

Fair value

2020
Difference

Carrying value

Fair value

Difference¥40,839
5,153

¥―
―

450,830

45,725

153,450

17,544¥46,7316,138
428,180(9,565)
418,615
137,473(3,058)134,414¥46,731
6,138

¥―
―

469,541

50,925

152,12117,706¥40,8395,153
416,250(11,145)
405,104
139,313(3,407)
135,906

14,6305,334¥625,865¥10,231

14,6305,388¥694,552¥10,231―54¥68,686¥―

13,513
4,833¥605,350¥7,145

13,513
4,848¥668,635¥7,145―
15¥63,284¥―

71,632

71,632―

102,335

102,335―

30,0008,211
85,000300,000¥505,075

30,0008,211
85,230299,745¥505,051

―
―
230
(254)
¥(24)

15,00010,72490,000272,500¥497,704

15,00010,72489,491
272,279¥496,975

―
―
(508)
(220)
¥(729)*1 The amount presents the total of general reserve and specific reserve for accounts receivable–installment.
*2 The amount presents the total of general reserve and specific reserve for operating loans.

86Thousands of U.S. dollars (Note 1)

2020(1) Cash and deposits(2) Notes and accounts receivable–trade(3) Accounts receivable–installment
Allowance for doubtful accounts(4) Operating loans
Allowance for doubtful accounts(5) Investment securities:
Available-for-sale securities(6) Leasehold and other deposits
Assets, total(1) Accounts payable–trade(2) Short-term loans payable andcurrent portion of long-term loans
payable(3) Current portion of bonds payable(4) Income taxes payable(5) Bonds payable(6) Long-term loans payable
Liabilities, total

Carrying value

Fair value

Difference$381,672
48,1583,890,186(104,158)
3,786,018
1,301,990(31,841)
1,270,149$381,672
48,158$――4,213,364

427,336

1,434,112

163,962

126,289
45,168$5,657,476$66,775

126,289
45,308$6,248,925$66,775―140$591,439$―

956,401

956,401―

140,186
100,224
841,1212,546,728$4,651,439

140,186
100,224
836,3642,544,663$4,644,626――(4,747)(2,056)$(6,813)

Notes: 1 Calculation method for fair value of financial instruments and information on securities andderivative transactions
Assets:(1) Cash and deposits and (2) Notes and accounts receivable–trade
The fair value approximates their carrying value because of their short maturities.
(3) Accounts receivable–installment and (4) Operating loans
The fair value is determined as their present value by discounting, using the risk-free rate, future
cash flows adjusted for their credit risk identified in the credit control process. With regard to
doughtful receivables and loans, allowance for doubtful accounts is estimated based on thepresent value of their estimated future cash flows. The fair value approximates the amount ofcarrying value less allowance for doubtful accounts. Thus, the amount of carrying value lessallowance for doubtful accounts is used as fair value.
(5) Investment securities
The fair value is based on quotes on an exchange.
(6) Leasehold and other deposits

87

The fair value is determined as their present value by discounting future cash flows at the riskfree rate adjusted for credit risk premium. The amount includes the current portion of leasehold
and other deposits.
Liabilities:(1) Accounts payable–trade, (2) Short-term loans payable and current portion of long-term loans
payable, (3) Current portion of bonds payable, and (4) Income taxes payable
The fair value approximates their carrying value because of their short maturities.
(5) Bonds payable
The fair value is based on the present value calculated by discounting the sum of principal andinterests using an interest rate, for which credit risk and redemption periods are taken into
account.
(6) Long-term loans payable
The carrying value of long-term loans payable with a floating interest rate approximates its fairvalue since the interest rate reflects the market rate in the short term. Thus, carrying value is used
as its fair value. The fair value of long-term loans payable with fixed interest rates is calculatedby discounting the sum of principal and interests using an interest rate that would be applied tosimilar new borrowings.
Derivative transactions
See Note 27, “DERIVATIVE TRANSACTIONS,” for details.
2 Financial instruments whose fair value is extremely difficult to determine
Thousands of U.S.
dollars (Note 1)

Millions of yen

2019¥5,805
1,735――
27,263

Unlisted stocks
Contributions to investment limited partnerships
Contributions to limited liability companies
Unlisted bonds
Part of security deposits

2020¥8,492
2,452
2,429
499
26,797

2020$79,364
22,91522,7004,663
250,439

The items above are not included in (5) Investment securities or (6) Leasehold and other deposits inthe table on page 24-26 as it is extremely difficult to determine the fair value since there were no market
prices available and their future cash flows cannot be estimated.

88

3 Redemption schedule for monetary claims and securities with maturities
Millions of yen

2019

Cash and deposits
Notes and accounts receivable–trade
Accounts receivable–installment
Operating loans
Leasehold and other deposits
Total

Due in one year
or less

Due after one
year throughfive years

Due after five
years throughten years

Due after ten
years¥46,7316,138
258,355
72,991
684¥384,901¥――
105,417
64,336
2,667¥172,421¥――
35,52097
1,083¥36,701¥――
28,88648
899¥29,834

Millions of yen

2020
Due in one year
or less

Due after one
year throughfive years

Due after five
years throughten years¥40,8395,153
271,61475,834
1,524¥394,965¥――
77,044
63,3491,400¥141,794¥――
36,96884
1,008¥38,061

Cash and deposits
Notes and accounts receivable–trade
Accounts receivable–installment
Operating loans
Leasehold and other deposits
Total

Due after ten
years

¥―
―
30,62245899¥31,568

Thousands of U.S. dollars (Note 1)

2020
Due in one year
or less

Due after one
year throughfive years

Due after five
years throughten years$381,672
48,1582,538,448
708,728
14,242$3,691,261$――
720,037
592,046
13,084$1,325,177$――
345,495785
9,420$355,710

Cash and deposits
Notes and accounts receivable–trade
Accounts receivable–installment
Operating loans
Leasehold and other deposits
Total

Due after ten
years

$―
―
286,186420
8,401$295,028

See Note 34, “SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBT,” for the schedule ofaggregate annual maturities of long-term debt.

8926. INVESTMENT SECURITIES(1)Information on available-for-sale securities as of March 31, 2019 and 2020, is as follows:
Millions of yen

2019
Carrying
value

Acquisition
cost

Carrying value exceeding acquisition cost:
Stocks¥13,154¥8,632
Subtotal
13,154
8,632
Carrying value not exceeding acquisition cost:
Stocks
1,476
1,703
Subtotal
1,476
1,703
Total
¥14,630¥10,335

2020
Difference

Carrying
value

Acquisition
cost

Difference¥4,522
4,522¥12,061
12,061¥9,655
9,655¥2,406
2,406

(226)
(226)
¥4,295

1,451
1,451¥13,513

2,110
2,110
¥11,766

(658)
(658)
¥1,747

Thousands of U.S. dollars (Note 1)

2020
Carrying
value

Acquisition
cost

Carrying value exceeding acquisition cost:
Stocks$112,719$90,233
Subtotal
112,719
90,233Carrying value not exceeding acquisition cost:
Stocks13,56019,719Subtotal
13,56019,719
Total$126,289$109,962

Difference$22,485
22,485(6,149)(6,149)$16,327

Unlisted stocks in the amount of ¥1,746 million and ¥3,543 million ($33,112 thousand) as of March 31,
2019 and 2020, respectively, contributions to limited liability companies in the amount of ¥2,429 million($22,700 thousand) as of March 31, 2020, contributions to investment limited partnerships in the amount of¥1,735 million and ¥2,452 million ($22,915 thousand) as of March 31, 2019 and 2020, and unlisted bonds inthe amount of ¥499 million ($4,663 thousand) as of March 31, 2020 are not included in the table above as it
is extremely difficult to determine the fair value since their market price is not readily available and their
future cash flows cannot be estimated.
(2)Information on sale of available-for-sale securities for the fiscal years ended March 31, 2019 and 2020, is asfollows:
Millions of yen

2019
Proceeds
from sales

Stocks
Total

Gains

¥104
¥104

2020
Proceeds
from sales

Losses

¥4
¥4

¥253
¥253

Thousands of U.S. dollars (Note 1)

2020
Proceeds
from sales

StocksTotal$1,971$1,971

Gains

Losses$1,971$1,971

90

$0
$0

¥211
¥211

Gains

¥211
¥211

Losses¥0¥0(3) For the fiscal years ended March 31, 2019 and 2020, the disclosure of impairment loss on investment
securities was omitted due to insignificance of the amount. When the fair value of investment securities
declines by 30% to 50%, the Group recognizes an impairment loss after comprehensively evaluating therecoverability of the market price.

27.

DERIVATIVE TRANSACTIONS

For the fiscal years ended March 31, 2019 and 2020, the Group’s derivative transactions were limited tointerest rate swaps that qualified for hedge accounting and met the requirements for the special accounting
treatment for interest rate swaps as described below. There were no derivative transactions for which hedge
accounting was not applied.
Hedge accounting method:

Special treatment for interest rate swaps

Type of derivative transactions:Interest rate swaps, receive floating/pay fixed

Hedged item:

Long-term loans payable
Millions of yen

2019

2020

Contract amount
Total

Contract amountDue after one year

¥10,000

Fair value

¥―

Total

*

Due after one year¥―

Fair value¥―

Thousands of U.S. dollars (Note 1)

2020
Contract amountTotal

Due after one year$―$―

Fair value** Interest rate swaps under the special accounting treatment are accounted for as an integral component of the long-termloans payable designated as hedged items. Thus, their fair value is included in that of long-term loans payable.

91*28. DEFERRED TAX ACCOUNTING
Major components of deferred tax assets and deferred tax liabilities as of March 31, 2019 and 2020, are as
follows:
Thousands of U.S.
dollars (Note 1)

Millions of yen

2019
Deferred tax assets:
Depreciation
Impairment loss
Provision for loss on interest repayment
Provision for point card certificates
Net unrealized loss on non-current assets
Provision for bonuses
Net operating loss carried forward
Other
Subtotal
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserve for special account for advanced depreciationof non-current assets
Valuation difference on available-for-sale securities
Other
Total deferred tax liabilities
Deferred tax assets, net

2020

2020

¥5,257
3,196
1,516
4,164
1,048
1,088
1,051
8,110
25,433(5,815)¥19,617¥5,034
3,028
1,426
6,052
1,138
1,146
558
8,889
27,277(5,759)¥21,518$47,046
28,29913,32756,560
10,635
10,7105,214
83,074
254,925(53,822)$201,102¥10,891¥8,802$82,261

1,314
293¥12,498¥7,119526
204¥9,533¥11,984

4,915
1,906
$89,093$112,000

Income taxes consist of corporation tax, inhabitants’ tax, and enterprise tax. Reconciliations between thestatutory tax rate and the effective tax rate reflected in the consolidated statements of income are as follows:
Statutory tax rate
Adjustments:
Permanent differences such as entertainment
expenses, etc.
Permanent differences such as dividends, etc.
Change in valuation allowance
Inhabitants’ tax
Difference in tax rates of consolidated subsidiaries
Other
Effective tax rate

2019
30.6%

2020
―%

0.2

―

(0.0)
0.5
0.4
0.2
0.4
32.3%

―
―
―
―
―
―

* For the fiscal year ended March 31, 2020, the difference between the statutory tax rate and effective tax
rate is not more than 5% of the statutory tax rate, and therefore notes are omitted.

29. ASSET RETIREMENT OBLIGATIONS(1) Asset retirement obligations recognized on the consolidated balance sheets
The Group’s asset retirement obligations mainly include the cost of restoring the store sites to their original
condition under the real estate lease contracts of stores. The Group calculated its asset retirement obligations
by assuming the lease period as the expected period of use and applying discount rates of 0.00% to 1.38%.

92

The Company changed the estimate of the asset retirement obligation to recognize an additional ¥1,600
million ($14,953 thousand) for the fiscal year ended March 31, 2019 and a negative ¥547 million ($5,112
thousand) for the fiscal year ended March 31, 2020, respectively, of the asset retirement obligation due to achange in estimate mainly because the amount of costs required at the time of retirement of certain assets
became determinable. Asset retirement obligations as of March 31, 2019 and 2020, consist of the following:
Asset retirement obligations as of March 31, 2019 and 2020, consist of the following:Thousands of U.S.
dollars (Note 1)

Millions of yen

Beginning balance
Increase due to acquisition of property and equipment
Increase (decrease) due to change in estimate
Adjustments due to passage of time
Decrease due to fulfillment of obligation
Ending balance

2019
¥897
301
1,600
4
(24)
¥2,7792020¥2,779
―
(547)
4
(2)
¥2,2332020$25,971―(5,112)37(18)$20,869

30. INVESTMENT AND RENTAL PROPERTY
Certain consolidated subsidiaries hold commercial properties, including land, for rental in the Tokyo
metropolitan area and other areas. The net rental income in connection with these properties for the fiscal years
ended March 31, 2019 and 2020, was ¥18,168 million and ¥20,179 million ($188,588 thousand), respectively.
The rental income was included in “Revenue” and the associated rental expenses were included in “Cost of
sales” and “Selling, general and administrative expenses.” The carrying value and the fair value of such assets
are as follows:
Thousands of U.S.
dollars (Note 1)

Millions of yen

Carrying value*1:
Beginning balance
Changes during the year*2
Ending balance
Fair value*3

2019

2020

2020

¥103,928
12,205¥116,134¥251,003¥116,134
291¥116,426¥239,656$1,085,364
2,719$1,088,093$2,239,775*1 Carrying value represents the amount on the consolidated balance sheets that is carried at the acquisition cost lessaccumulated depreciation.
*2 Major items are the increases due to reclassification of holding purposes of properties in the amount of ¥12,897 million for
the fiscal year ended March 31, 2019, and due to an increase of assets in the amount of ¥1,403 million ($13,112 thousand)for the fiscal year ended March 31, 2020.
*3 Fair value is basically based on the appraised value provided by third-party real estate appraisers.

9331. SEGMENT INFORMATION(1) Overview of reportable segments
The Group defines its reportable segments as a component of the Group for which separate financial
information is available and whose operating results are regularly evaluated by the Board of Directors to makedecisions about how resources are to be allocated among the Group and assess their performance.
The Group consists of the following two reportable segments identified by products and services:“Retailing” and “FinTech.”
The Retailing segment engages in management of commercial property rental, retailing operations ofclothes and accessories, space production, advertising, apparel distribution, and management of buildings andother facilities. The FinTech segment engages in the credit card services, the consumer loans, and the rent
guarantee businesses; IT systems; and real estate rental.
In addition, Geographical information and information about major customers, as required by theaccounting principles and practices generally accepted in Japan, are omitted since our business primarily
operates in Japan and there is no particular customer to whom revenue exceeds 10% of the total
revenue recorded in the consolidated statements of income.
(2) Basis of measurement for the amounts of segment revenue, segment income or loss, segment assets,
and other items
The accounting policies of each reportable segment are consistent with those disclosed in Note 2,“SIGNIFICANT ACCOUNTING POLICIES.”
Segment income is measured on the basis of operating income. Intersegment sales and transfers areaccounted for based on the prevailing market price.
Millions of yen

2019
Reportable segment

Revenue:
Outside customers
Intersegment
Total
Segment income
Segment assets*3
Other items:
Depreciation and amortization
Increase in property andequipment and intangible assets*1

Adjustment

Consolidated

Retailing

FinTech

Total

*1

*2

¥125,410
6,270¥131,681¥11,421¥301,520¥126,005
2,296¥128,301¥35,018¥622,712¥251,415
8,567¥259,982¥46,439¥924,232¥―(8,567)¥(8,567)¥(5,255)¥(34,035)¥251,415―¥251,415¥41,184¥890,196¥7,701¥1,765¥9,466¥444¥9,911

6,882

3,025

9,908

(813)

9,094

Adjustment to segment income consists of intersegment elimination of ¥2,278 million and corporate expenses of¥(7,533) million that are not allocated to each reportable segment. Adjustment to segment assets mainly consists ofintersegment elimination of ¥(432,711) million and corporate assets of ¥399,889 million, which mainly present theCompany’s loans in connection with the Group’s cash management system.

*2

Segment income is reconciled to operating income in the consolidated statements of income.

*3

Fixed assets at stores are included in Retailing segment assets. However, stores are important touch points for acquiring
new customers based on the business model generating synergies by integrating “stores, cards, and the Web” of theGroup. Therefore, these assets also contribute to the Fintech segment income as locations for issuing EPOS cards.

94Millions of yen

2020
Reportable segment

Revenue:
Outside customers
Intersegment
Total
Segment income
Segment assets*3
Other items:
Depreciation and amortization
Increase in property andequipment and intangible assets

Adjustment

Consolidated

Retailing

FinTech

Total

*1

*2

¥110,960
5,311¥116,271¥10,027¥275,779¥136,622
2,923¥139,546¥38,399¥622,438¥247,582
8,235¥255,817¥48,426¥898,217¥―(8,235)¥(8,235)¥(6,482)¥(12,248)¥247,582―¥247,582¥41,944¥885,969¥6,816¥1,897¥8,713¥477¥9,191

8,311

3,448

11,759(1,291)

10,468

Thousands of U.S. dollars (Note 1)

2020
Reportable segment
Retailing

Revenue:
Outside customers$1,037,009
Intersegment
49,635
Total$1,086,644
Segment income$93,710Segment assets*3$2,577,373
Other items:
Depreciation and amortization$63,700
Increase in property and77,672equipment and intangible assets*1

FinTech

Total

Adjustment

Consolidated*1*2$1,276,841 $2,313,850$―
27,31776,962(76,962)$1,304,168 $2,390,813 $(76,962)$358,869$452,579 $(60,579)$5,817,177 $8,394,551 $(114,467)$2,313,850―$2,313,850$392,000$8,280,084$17,728$81,429$4,457$85,897

32,224

109,897(12,065)

97,831

Adjustment to segment income consists of intersegment elimination of ¥2,334 million ($21,813 thousand) and corporate
expenses of ¥(8,816) million ($(82,392) thousand) that are not allocated to each reportable segment. Adjustment tosegment assets mainly consists of intersegment elimination of ¥(398,869) million ($(3,727,747) thousand) and corporate
assets of ¥389,314 million ($3,638,448 thousand), which mainly present the Company’s loans in connection with theGroup’s cash management system.

*2

Segment income is reconciled to operating income in the consolidated statements of income.

*3

Fixed assets at stores are included in Retailing segment assets. However, stores are important touch points for acquiring
new customers based on the business model generating synergies by integrating “stores, cards, and the Web” of theGroup. Therefore, these assets also contribute to the Fintech segment income as locations for issuing EPOS cards.

For the fiscal years ended March 31, 2019 and 2020, an impairment loss of ¥4 million and ¥128 million($1,196 thousand), respectively, was reported by the Retailing segment.

95

32. RELATED PARTY INFORMATION
Related party information where directors and their close relatives substantially own a majority of the voting
rights is as follows:
2019
Name ofcompany
Nakano Co.,Ltd.

Seiwa Kogyo
Co., Ltd.

Location
Shinjuku,
Tokyo

Capital(Millions of
yen)
¥10

Shinjuku,
Tokyo

10

Business
Real estate
rentalReal estate
rentalVotingrightsDirect1.1%

Direct0.8%

Relationship
Property
rentalConcurrent
position as
director

Transaction
Property
rentalProperty
rentalConcurrent
position as
director

Property
rentalAmount(Millions of
yen)
¥47

32

Balance(Millions of
yen)
¥41

Account
nameLeaseholdand other
deposits
Other
current
liabilities
Leaseholdand other
deposits

1
191

The monetary amounts above do not include consumption taxes. Terms and conditions for rental
agreements are determined similarly to those of third-party transactions.
2020
Name ofcompany
Nakano Co.,Ltd.

Seiwa Kogyo
Co., Ltd.

Location
Shinjuku,Tokyo

Shinjuku,
Tokyo

Capital(Millions ofyen)
Business¥10 Real estate($93 thousand) rental

10 Real estate($93 thousand) rental

VotingrightsDirect1.1%

Direct0.8%

Relationship
Property
rentalConcurrent
position as
director

Transaction
Property
rentalProperty
rentalConcurrent
position as
director

Property
rentalAmount(Millions ofyen)¥47($439 thousand)

Balance(Millions ofyen)¥41($383 thousand)Account
nameLeaseholdand other
deposits
Other
current
liabilities

1($9 thousand)16($149 thousand)

The monetary amounts above do not include consumption taxes. Terms and conditions for rental
agreements are determined similarly to those of third-party transactions.

33. PER SHARE INFORMATION
Net income per share, both basic and diluted, for the fiscal years ended March 31, 2019 and 2020, is asfollows:
U.S. dollars(Note 1)Yen

2019¥115.99

Net income per share2020¥117.58

2020
$1.09

Thousands of shares

2019
218,488

Weighted-average number of outstanding shares

2020
216,001

Diluted earnings per share is not stated as there are no diluted shares.
Net income per share is computed based on the net income attributable to shareholders of common stockand the weighted-average number of outstanding shares.

96For the computation of net income per share, the number of shares held by BIP Trust and ESOP Trust is
deducted from the weighted-average number of outstanding shares (502 thousand shares and 479 thousand
shares for the fiscal years ended March 31, 2019 and 2020, respectively).

34. SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBT
Short-term loans payable and current portion of long-term loans payable as of March 31, 2019 and 2020,
consist of the following:Thousands of
U.S. dollars(Note 1)Millions of yen

2019¥29,632
42,000¥71,632

Short-term loans payable
Current portion of long-term loans payable
Total

2020
¥51,335
51,000¥102,3352020$479,766
476,635$956,401

Annual weighted-average interest rates of short-term loans payable were 0.27% and 0.25% and those ofcurrent portion of long-term loans payable were 0.21% and 0.10% for the fiscal years ended March 31, 2019and 2020, respectively.
Long-term debt as of March 31, 2019 and 2020, consists of the following:Thousands of
U.S. dollars(Note 1)Millions of yen

0.26% long-term loans from banks and others due through 2029,
excluding current portion
22nd series unsecured 0.850% corporate bond, due 2019
25th series unsecured 0.344% corporate bond, due 2019
26th series unsecured 0.562% corporate bond, due 2021
27th series unsecured 0.337% corporate bond, due 2020
28th series unsecured 0.543% corporate bond, due 2022
29th series unsecured 0.050% corporate bond, due 201930th series unsecured 0.130% corporate bond, due 2021
31st series unsecured 0.190% corporate bond, due 2022
32nd series unsecured 0.300% corporate bond, due 2024
33rd series unsecured 0.040% corporate bond, due 2021
34th series unsecured 0.190% corporate bond, due 2023
(Green bond)35th series unsecured 0.170% corporate bond, due 2024
36th series unsecured 0.250% corporate bond, due 2026
Lease obligation
Less: Current portion of corporate bond and lease obligation
Total

97

2019

2020

2020

¥300,000¥272,500$2,546,728

5,000
10,00010,00015,00010,00015,00010,00010,00010,00010,000――10,00015,00010,000―10,00010,00010,00010,000――93,457140,186
93,457―93,45793,45793,45793,457

10,00010,00093,457――

10,00010,00093,45793,4571,550
416,550
30,175¥386,375

1,780
379,280
15,291¥363,989

16,6353,544,672
142,906$3,401,766

The aggregate annual maturities of long-term debt subsequent to March 31, 2020, are as follows:Year ending March 31

Millions of yen
Long-term loans
Bondspayablepayable

2021
2022
2023
2024
2025 and thereafter
Total¥51,000
37,00035,00032,600167,900¥323,500¥15,000
30,00020,00010,00030,000¥105,000

Lease
obligation

¥291
241
241
241
766
¥1,780Thousands of U.S. dollars (Note 1)
Long-term loans
Bonds
Lease
payablepayableobligation$476,635
345,794
327,102304,672
1,569,158$3,023,364$140,186
280,373
186,915
93,457
280,373$981,308$2,719
2,252
2,252
2,252
7,158
$16,635

35. QUARTERLY FINANCIAL INFORMATION (Unaudited)
Cumulative period

the 1st quarterthe 2nd quarterthe 3rd quarter¥57,407¥125,489¥186,430¥247,582

Income before income taxes(million yen)

8,231

21,06730,10037,408Net income attributable toowners of parent (million yen)

5,596

13,981

19,90525,396

Net income per share (yen)

25.75

64.45

91.97

117.58the 1st quarterthe 2nd quarterthe 3rd quarterthe 4th quarter¥25.75¥38.73¥27.50¥25.58

Revenue (million yen)

Each quarter
Net income per share (yen)98Year-End

Independent Auditor’s Report
To the Board of Directors of MARUI GROUP CO., LTD.
OpinionWe have audited the consolidated financial statements of MARUI GROUP CO., LTD. and its
subsidiaries (the Group), which comprise the consolidated balance sheets as at March 31, 2020, andthe consolidated statements of income, consolidated statements of comprehensive income,consolidated statements of changes in net assets and consolidated statements of cash flows for theyear then ended, and notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2020, and its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance withaccounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of theGroup in accordance with the ethical requirements that are relevant to our audit of the consolidated
financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordancewith these requirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Other Matter
The consolidated financial statements of the Group for the year ended March 31, 2019 were audited byanother firm of auditors whose report, dated on August 30, 2019, expressed an unmodified opinion on
those statements.
Responsibilities of Management and Those Charged with Governance for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as applicable, matters related to going
concern.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.

PricewaterhouseCoopers Aarata LLC
Otemachi Park Building, 1-1-1 Otemachi, Chiyoda-ku, Tokyo 100-0004, Japan
T: +81 (3) 6212 6800, F: +81 (3) 6212 6801, www.pwc.com/jp/assuranceAuditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is nota guarantee that an audit conducted in accordance with auditing standards generally accepted inJapan will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.
 Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, while the purpose of the consolidated
financial statement audit is not to express an opinion on the effectiveness of the Group’s internal
control.
 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
 Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
 Evaluate whether the presentation and disclosures of the consolidated financial statements are inaccordance with accounting principles generally accepted in Japan, the overall presentation,
structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events ina manner that achieves fair presentation.
 Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.

2 of 3

Convenience translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to theyear ended March 31, 2020 are presented solely for convenience. Our audit also included thetranslation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation
has been made on the basis described in Note 1 to the consolidated financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

Naoaki Kobayashi

Tatsuya Chiba

Designated Engagement Partner
Certified Public Accountant

Designated Engagement Partner
Certified Public Accountant

November 19, 2020

3 of 3

（For reference）
1) Non-Consolidated Balance Sheets(As of March 31, 2019 and 2020)

Millions of yen
2019

2020

¥365,521¥341,469

AssetsCurrent assets
Cash and deposits
Short-term loans receivable fromsubsidiaries and affiliates
Other
Allowance for doubtful accounts*1*1

Noncurrent assets
Property, plant and equipment
Buildings
Structures
VehiclesTools, furniture and fixtures
Construction in progress
Intangible assets
Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates
Investments in capital ofsubsidiaries and affiliates
Deferred tax assets
Other
Total assets

102

32,012
330,824
2,718
(33)

*1
*1

25,667
311,3284,505(33)407,013
1,400
16
1
26
1,355
―

412,698
1,465
15
1
20
1,343
84

51

77

405,562
17,418381,529132

411,155
21,418382,414
132

6,222
260

6,963
227

¥772,534¥754,167

Millions of yen
2019

2020

¥185,469¥194,200

71,50030,00081,352
769
527
109
207
279
240
483

102,200
15,00074,567
695
465
218
197
326
―
531

Liabilities
Current liabilities
Short-term loans payable
Current portion of bonds
Short-term loans payable to subsidiaries and affiliates
Accounts payable-otherAccrued expenses
Income taxes payable
Deposits received
Provision for bonuses
Provision for stock benefits
Other
Noncurrent liabilities
Bonds payable
Long-term loans payable
Other

*1
*1
*1

*1
*1
*1

385,067
85,000300,000
67

362,567
90,000272,500
67

570,536556,767

Shareholders’ equity

199,270

196,451

Capital stock

35,92035,920Capital surplus
Legal capital surplus

91,30791,30791,30791,307Retained earnings
Legal retained earnings
Other retained earnings
Retained earnings brought forward

84,3688,980

88,8838,980

75,38879,903

Treasury stock(12,327)(19,661)

2,728
2,728

948
948

Total net assets

201,998

197,399

Total liabilities and net assets¥772,534¥754,167

Total liabilities
Net Assets

Valuation and translation adjustments
Valuation difference on available-for-sale securities

1032) Non-Consolidated Statements of Income(For the fiscal years ended March 31, 2019 and 2020)

Millions of yen
2019
Operating revenue*1

Operating expenses*1, *2

Operating income

2020¥17,345
6,835*1*1, *2

10,510Non-operating income
Interest income
Dividend income
Other

*1

Non-operating expenses
Interest expenses
Other

*1

Ordinary income

2,588
2,302
225
60
1,739
1,404
335

¥23,507
7,471
16,036

*1

*1

2,570
2,318
220
31
1,673
1,271
402

11,35916,933Extraordinary income
Gain on sales of investment securities
Gain on sales of shares of subsidiaries and affiliates
Gain on sales of noncurrent assets

4
4
―
0

1,442
211
1,231
―

Extraordinary loss
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on valuation of shares of subsidiaries and affiliates
Retirement lump-sum payment
Other

689
253
435
―
―
0

1,404
0
126
1,010
267
0

10,675

16,971

239
272
(33)

725
681
44

¥10,436¥16,246

Income before income taxes
Total income taxes
Income taxes-current
Income taxes-deferred
Net income1043) Non-Consolidated Statements of Changes in Net Assets(From April 1, 2018 to March 31, 2019)(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings

Other
capitalsurplusTotal
capitalsurplusLegalretainedearnings

Other retained
earnings
Retained earnings
brought forward

Total
retainedearnings¥－¥91,307¥8,980¥91,470¥100,450

Dividends(4,417)(4,417)

Dividends(Interim dividend)(5,034)(5,034)

Net income

10,436

10,436(17,064)(17,064)

Balance as of April 1, 2018

Capital
stock

Legal
capitalsurplus¥35,920¥91,307

Changes in the fiscal year:

Acquisition of treasury stock
Disposition of treasury stock00Cancellation of treasury stock(17,064)(17,064)

17,064

17,064

Transfer to capital surplus
from retained earnings
Change in items other thanshareholders’ equity-net
Total changes in the fiscal
year
Balance as of March 31, 2019

－

－

－

－

－

(16,081)(16,081)¥35,920¥91,307¥－¥91,307¥8,980¥75,388¥84,368(Millions of yen)
Valuation andShareholders’ equity
translation adjustments
Valuation
Total valuation
Total
difference on
Treasury
and translation
shareholders’stockavailable-forequity
adjustments
sale securities
Balance as of April 1, 2018¥(22,389)¥205,288¥1,449¥1,449Total net assets¥206,738

Changes in the fiscal year:
Dividends(4,417)(4,417)

Dividends(Interim dividend)(5,034)(5,034)

Net income

10,436

10,436

Acquisition of treasury stock(7,002)(7,002)(7,002)

Disposition of treasury stock

0

0

0

Cancellation of treasury stock

17,064－－－－

Transfer to capital surplus
from retained earnings
Change in items other thanshareholders’ equity-net

1,278

1,278

1,278

Total changes in the fiscal year

10,062(6,018)

1,278

1,278

(4,740)

Balance as of March 31, 2019

¥ (12,327)¥199,270¥2,728¥2,728¥201,998

105

(From April 1, 2019 to March 31, 2020)(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings

Other
capitalsurplusTotal
capitalsurplusLegalretainedearnings

Other retained
earnings
Retained earnings
brought forward

Total
retainedearnings¥－¥91,307¥8,980¥75,388¥84,368

Dividends(5,666)(5,666)

Dividends(Interim dividend)(6,065)(6,065)

Net income

16,246

16,24600Balance as of April 1, 2019

Capital
stock

Legal
capitalsurplus¥35,920¥91,307

Changes in the fiscal year:

Acquisition of treasury stock
Disposition of treasury stock

0

0

(0)

(0)

Cancellation of treasury stock
Transfer to capital surplus
from retained earnings
Change in items other thanshareholders’ equity-net
Total changes in the fiscal
year
Balance as of March 31, 2020

－

－

－

－

－

4,514

4,514

¥35,920¥91,307¥－¥91,307¥8,980¥79,903¥88,883(Millions of yen)
Valuation andtranslation adjustments
Valuation
Total valuation
Total
difference on
Treasuryshareholders’and translation
stock
available-forequity
adjustments
sale securities
Shareholders’ equity

Balance as of April 1, 2019

¥ (12,327)¥199,270¥2,728¥2,728

Total net assets¥201,998

Changes in the fiscal year:
Dividends(5,666)(5,666)

Dividends(Interim dividend)(6,065)(6,065)

Net income

16,246

16,246

Acquisition of treasury stock(7,886)(7,886)(7,886)

Disposition of treasury stock

552

552

552

－

－

－

－

Cancellation of treasury stock
Transfer to capital surplus
from retained earnings
Change in items other thanshareholders’ equity-net(1,779)(1,779)(1,779)Total changes in the fiscal year

(7,334)(2,819)(1,779)(1,779)(4,598)

Balance as of March 31, 2020

¥ (19,661)¥196,451

¥948

¥948

¥197,399

Amounts in these consolidated statements have been rounded down to the nearest unit.

106Notes to Non-Consolidated Financial Statements
Notes on Matters concerning Significant Accounting Policies
1.

Basis and method for valuation of assets
Securities
Stocks in subsidiaries and affiliates are stated at cost using the moving average method.
Available-for-sale securities for which fair values are available are valued at the quoted market priceprevailing at the end of each fiscal year (with any unrealized gains or losses reported as a separate
component of net assets at a net-of-tax amount and cost of sales determined by the moving-averagemethod). Available-for-sale securities for which fair values are not available are mainly stated at costusing the moving-average method. Investments in investment limited partnerships are stated at the net
value of equities based on the most recent financial statement available prepared according to thefinancial reporting date specified in the respective partnership agreement.

2.

Method of depreciation and amortization of noncurrent assets(1) Property, plant and equipment
Property, plant and equipment are depreciated using the straight-line method.
(2) Intangible assets
Intangible assets are amortized using the straight-line method. Software for internal use, however, isamortized using the straight-line method over the useful life estimated by the Company (notexceeding five years).

3.

Basis for recognizing allowances and provisions(1) Allowance for doubtful accounts
The estimated uncollectible amounts are determined on the case-by-case analysis of recoverability
for receivables with default possibility.
(2) Provision for bonuses
The portion of estimated bonus payments that is incurred during the current fiscal year is recognized.
(3) Provision for stock benefits
To prepare for provision of the Company’s stock benefits to officers and employees pursuant to thestock allotment regulations, provisions are recorded based on the estimated amount of stock benefit
obligations as of the end of the fiscal year under review.

4.

Other significant matters for the preparation of financial statements
National and local consumption taxes are accounted for by the tax-excluded method.

107

CHANGE IN PRESENTATION
Non-Consolidated Statements of Income
The account “Financing expenses,” which was previously shown as a separate line item under “Nonoperating income (expenses),” was included in “Other, net” in the fiscal year ended March 31, 2020, as themonetary impact on the non-consolidated financial statements was no longer significant. The reclassification
was made to the non-consolidated financial statements for the fiscal year ended March 31, 2019, to conformto the current presentation.
As a result, in the non-consolidated statement of income for the fiscal year ended March 31, 2019, theamounts of ¥153 million presented as “Financing expenses” and ¥181 million presented as “Other, net” under“Non-operating income (expenses)” were reclassified as “Other, net” in the amount of ¥335 million.

ADDITIONAL INFORMATION
Officer Remuneration Board Incentive Plan Trust
The description of the Officer Remuneration Board Incentive Plan Trust (“BIP Trust”) is identical to that in“Notes to Consolidated Financial Statements, 6. ADDITIONAL INFORMATION” in the consolidated
financial statements, and is therefore omitted.
Stock Benefit Employee Stock Ownership Plan Trust
The description of the Stock Benefit Employee Stock Ownership Plan Trust is identical to that in “Notes toConsolidated Financial Statements, 6. ADDITIONAL INFORMATION” in the consolidated financial
statements, and is therefore omitted.

MATTERS RELATED TO NON-CONSOLIDATED BALANCE SHEETS
1. MONETARY CLAIMS AND DEBTS*1. The amounts of monetary claims and debts to subsidiaries and affiliates are as follows:(Millions of yen)

Short-term monetary claims
Short-term monetary debts
2.

2019

2020

¥331,048
81,590¥312,760
74,749CONTINGENT LIABILITIESThe Group provides guarantees for unpaid funds to business partners of Epos Card Co., Ltd., a consolidated
subsidiary, as follows:(Millions of yen)
2019

2020

¥18,872¥22,540108

MATTERS RELATED TO NON-CONSOLIDATED STATEMENTS OF INCOME
1. TRANSACTION VOLUMES*1. Transaction volumes with subsidiaries and affiliates for the fiscal years ended March 31, 2019 and 2020are as follows:(Millions of yen)Transaction volumes ofoperating transactions
Operating revenue
Operating expenses
Transaction volumes of
non-operating transactions

2019

2020

¥17,338
1,029
2,338

¥23,505
1,330
2,357

2. OPERATING EXPENSES*2. The main expenses and amounts recorded under operating expenses for the fiscal years ended March 31,
2019 and 2020 are as follows:(Millions of yen)

Salaries and allowances
Provision for bonuses
Outsourcing expenses
Commission expenses
Depreciation and amortization

2019

2020

¥2,479
279
898
868
72

¥2,697
326
1,235
935
77

INVESTMENT SECURITIESThe fair values of the stocks of subsidiaries and affiliates have been omitted, as it is extremely difficult todetermine the fair value since their market price is not readily available.
Balance sheet amounts of the stocks of subsidiaries and affiliates for which the fair values are extremely
difficult to determine are as follows:(Millions of yen)
2019

2020

Stocks of subsidiaries¥379,961¥381,556

Stocks of affiliates

1,568

857

¥381,529¥382,414

Total

109

DEFERRED TAX ACCOUNTING
1. Principal components of deferred tax assets and deferred tax liabilities(Millions of yen)
2019

2020

Impairment loss ofinvestment securities insubsidiaries and affiliates
for restructuring
Other¥7,238¥7,238

2,859

3,107

Sub-total

10,097

10,345

Valuation allowance(2,671)(2,963)

Total¥7,426¥7,382¥1,204¥419¥1,204¥419¥6,222¥6,963(Deferred tax assets)(Deferred tax liabilities)
Valuation difference on
available-for-sale securities
Total
Net deferred tax assets

2. Income taxes consist of corporation tax, inhabitants’ tax, and enterprise tax. Reconciliations between thestatutory tax rate and the effective tax rate reflected in the non-consolidated statements of income are as
follows:

Statutory tax rate
Adjustments:
Permanent differences such asentertainment expenses, etc.
Permanent differences such as
dividends, etc.
Change in valuation allowance
Other
Effective tax rate
SUBSEQUENT EVENT
Not applicable.

110

2019

2020

30.6%

30.6%

0.4

0.4

(30.3)(28.5)

1.4
0.1
2.2%

1.7
0.1
4.3%

4) SUPPLEMENTARY SCHEDULES
The schedule for property and equipment, etc. consists of the following:

Asset type
Property and equipment
Buildings
Structures
VehiclesTools, furniture and fixtures
Construction in progress
Total
Intangible assets
Other(Millions of yen)
Decrease
Balance as
Amortization
Accumulated
duringof Marchduring period
depreciation
period31, 2020

Balance asof April 1,
2019

Increaseduringperiod

¥124
21
34
2,059
－

¥－

¥－

－
－
10
84

¥2,239
¥146

－
－
12
－

¥0
0
6
21
－

¥124
21
34
2,057
84

¥108
19
14
713
－

¥94

¥12

¥29

¥2,321

¥856

¥40

¥－

¥13

¥186

¥108

¥－
Total
¥146
¥40
¥13
¥186
¥108
Note: The balance as of April 1, 2019 and the balance as of March 31, 2020 are based on the acquisition
costs.

The schedule for allowances and provisions consists of the following:
Balance as of April
1, 2019

Increase during
period(Millions of yen)
Decrease during Balance as of March
period31, 2020

Allowance for doubtful
accounts

¥33

¥－

¥0

¥33

Provision for bonuses

279

326

279

326

Provision for stock
benefits

240

－

240

－

(2)MAJOR ASSETS AND LIABILITIESThe Group prepares consolidated financial statements, and details of the major assets and liabilities are
therefore omitted.

(3)OTHER

Not applicable.

111