I would like to thank everyone for taking time out of their busy
schedules to join us today for MARUI IR DAY.
This is the first of the two MARUI IR DAY events we hold eachyear to complement our financial results briefings.

Today, the strategies of each of our business segments will be
explained by their respective representatives.
Before that, I will be explaining MARUI GROUP’s approach tosustainability management.

Let me begin my explanation of MARUI GROUP’s sustainability
management.
MARUI GROUP conducts sustainability initiatives in a wide rangeof areas. We are committed to explaining these initiatives on an
individual basis at IR DAY events and at other opportunities.
Today, we will focus on the first of these areas: green businesses
aimed at addressing climate change and other issues.

To date, MARUI GROUP has been engaged in various green
business initiatives for mitigating environmental impacts. These
initiatives have included greenhouse gas emissions reduction
initiatives, carbon footprint initiatives, the issuance of green
bonds to support such initiatives, CSR procurement initiatives,
and waste reduction initiatives.

These initiatives have earned MARUI GROUP much recognition
from various institutions.
For example, we were the first Japanese retailing company to be
included in CDP’s Climate A-List.

To guide future activities, we established a long-term vision andtargets in February 2019, culminating in the announcement of
MARUI GROUP’s 2050 Vision.
When categorizing the green businesses I will be discussing today
among the three business types that constitute MARUI GROUP’s
sustainability management, they primarily fall under the intergenerational businesses category.

These businesses, of course, target all stakeholders. However,they are perhaps most focused on future generations.
Some may ask, “Who exactly do you refer to when you say ‘future
generations’?”Well, one example would be members of the younger generations
living today , such as the individuals highlighted on this slide.
Does anyone recognize this girl?
This is Greta Ernman Thunberg.
She made waves among younger generations around the world
with her influential “Our House is on Fire” speech. This speech
motivated high school students around the world to take part in aseries of “Fridays for Future” demonstrations.

The waves Greta made reached Japan as well.
What is amazing is that even adults responded to Greta’s call toaction.
In fact, she was invited to a Davos conference to make her case.
Greta was also called to speak at a conference in England.
Amid this movement, MARUI GROUP stands committed to joining
hands with the younger generations of today to advance green
businesses.

One topic that cannot be avoided in this regard is climate change.
The 2015 Paris Agreement states that, if temperatures continue toincrease at this rate, the average global temperature will rise more than
4℃ above pre-industrial levels by the end of this century. Suchcatastrophic temperature increases would threaten the very survival of
the human race through higher sea levels, food shortages, andecosystem destruction. It was for this reason that the Paris Agreement
put forth the goal of keeping global warming below 2℃ above preindustrial levels.
However, the pace of global warming was recently found to be much
faster than initially expected, presenting the risk of the average global
temperature climbing to more than 4℃ above pre-industrial levels by
the middle of the century. Recognizing the crisis we are in, the target
was revised to keeping warming below 1.5℃ above pre-industrial levels
at the 24th Conference of the Parties to the United Nations Framework
Convention on Climate Change (COP24) held in December 2018, andthere has been a growing push to work toward this goal.
MARUI GROUP too is working toward the accomplishment of this goal.

I would thus like to talk about MARUI GROUP’s initiatives forcombating climate change.

I will first explain the background that frames these activities.
Of MARUI GROUP’s environmental costs, electricity represents thelargest portion, accounting for almost 60% of total costs. Theseelectricity costs amount to ¥3.0 billion a year.
Moreover, over 80% of our CO2 emissions come from electricity
use.

Factors behind this situation include the large amounts ofelectricity consumed by our stores for lighting and air conditioning
as well as by the increase in the amount of kitchen equipment
and in the number of refrigerators as a result of the recent rise infood vendors.
As a result, the per area electricity use of stores is generally
double that of factories.

We are therefore advancing an effort to lower electricity consumption.
We have long been engaged in activities for reducing electricity consumption throughmore efficient use and other means.
Regardless, if we stay the current course, it is possible that electricity consumption will
actually rise as we respond to the strong customer demand for a wider range of food
options by increasing food vendors. A drastic solution is thus imperative.
This solution is to join “RE100” declaring that to source all of the electricity we use fromrenewable energy sources.
MARUI GROUP has announced its goal of sourcing 100% of the electricity it uses fromrenewable energy sources by the fiscal year ending March 31, 2031, and we embarked
on our quest toward accomplishing this goal in 2018.
Our most ambitious target for this quest is for this year, the fiscal year ending March
31, 2020, in which we are looking to source 20% of our electricity from renewablesources.
This means we will need to achieve a 19-percentage point increase in the ratio ofrenewable energy in just one year. This will be no easy task, but our power
procurement team is aggressively pursuing this target.
In the fiscal year ending March 31, 2021, we aim to register MARUI GROUP as a power
retailer so that we can procure renewable energy directly. This approach should allow
us to secure the necessary quantities of power while reducing intermediary costs.

At the same time, we intend to install large-scale storage
batteries at our stores.
These batteries will enable us to level daytime and nighttime
usage amounts and thereby lower the cost of procuring
renewable energy.

We will also be developing a new business through the capital andbusiness alliance concluded with Minna Denryoku Co., Ltd., in2018.
Our renewable energy initiatives will not be limited to procuring
power for our own use. We recognize that the desire to use
renewable energy is one that we share with many of ourcustomers. Accordingly, we intend to encourage these customers
to switch to renewable energy through this business.
This business will employ a scheme in which we introduce the6,880,000 EPOS cardholders to Minna Denryoku and allow thosethat sign up for its services to pay their monthly electricity bills
with their EPOS card.
Customers also benefit from this scheme as they are able toaccrue EPOS card points each month when they pay theirelectricity bills.

A survey of EPOS cardholders found that almost 60% of themwere interested in switching to renewable energy, and wetherefore see significant potential for this business.

Based on what I have discussed thus far, we calculated the risks
and opportunities faced in green businesses using the frameworkof the Task Force on Climate-related Financial Disclosures. These
calculations can be found on this slide.
Based on a scenario that assumes the world will work to keep
global warming below 1.5℃ above pre-industrial levels, thefinancial impacts of the risks and opportunities seen in green
businesses can be measured at ¥3.0 billion and ¥4.5 billion,
respectively.
What I want to stress here is that the potential benefits of theopportunities outweigh the impacts of the risks.

I would now like to take a moment to explain the factors behindthese calculations.
Beginning with risks, we estimated the potential financial impact
using projections for future costs based on climate change
scenarios.
We anticipate that costs will rise as we switch to renewableenergy.
Based on the current prices for renewable energy, we anticipate
an increase in costs of up to ¥4 per 1 kWh, making for a total
increase of approximately ¥0.8 billion.
Another factor considered was carbon taxes.
For carbon taxes, we formulated estimates using theInternational Energy Agency’s Sustainable Development Scenario.
If carbon taxes rise to ¥20,000 per ton of CO2, the resulting costs
will amount to an additional ¥2.2 billion.

Moving on, let me explain the projected financial benefits ofopportunities.
As we encourage EPOS cardholders to switch to renewableenergy, we anticipate an increase in the number of cardholders
using their cards to make recurring payment transactions.
An increase in such cardholders would drive growth in thenumber of Gold cardholders, which in turn would lead to higher
credit card lifetime value, generating benefits equivalent to ¥2.0
billion in income.
Meanwhile, our quest to source 100% of our electricity fromrenewable sources will free us from the burden of carbon taxes,
effectively eliminating the ¥2.2 billion in costs I explained amoment ago.
We also anticipate a decrease in costs of roughly ¥0.3 billion toresult from our entry into the power retailing business.

As I have explained, addressing issues—whether social,environmental, or other—always entails both risks andopportunities.
The approach dictated by corporate social responsibility could beseen as one focused on risks, namely how to identify and limit
costs. Conversely, MARUI GROUP’s sustainability management is
an approach focused on opportunities, seeking to improve
corporate value while mitigating risks by growing earnings
through the creation of new businesses.

In this manner, our sustainability management aims toaccomplish our vision by transcending the traditional dichotomy
represented by the opposition between the resolution of social
issues and increases in costs.

With this, I conclude my portion of the presentation.
I thank you for your attention.

Greetings, my name is Masahisa Aoki. I have been placed incharge of MARUI GROUP’s Retailing segment from the fiscal year
ending March 31, 2020.

Together with Director Miyuki Kawara, I will be explaining the
Retailing segment’s initiatives and progress.

This slide shows some of the highlights from the Retailingsegment in the fiscal year ended March 31, 2019.
Operating income rose for the second consecutive year, growing
to ¥11.4 billion, an increase of ¥2.6 billion year on year.
We made steady progress in the transition to shopping centersand fixed-term rental contracts, accomplishing a ratio of fixedterm rental contracts of 106%.
The number of customers visiting our stores reached a record
high of 210 million.
Lastly, transactions in e-commerce operations were up for the
fourth consecutive year.

As for our performance in the fiscal year ended March 31, 2019,
return on invested capital, or ROIC, was up 1.0 percentage point
year on year, to 3.8%, while total transactions rose 3%, to¥337.0 billion.

This slide shows a breakdown of the factors behind the ¥2.6
billion year-on-year increase in operating income. The largest
factors behind this increase included income improvements fromthe transition to shopping centers and fixed-term rental contracts,
which boosted operating income by ¥2.3 billion, and from ecommerce operations, which increased income by ¥0.4 billion.

This slide shows our progress in the transition to shopping
centers and fixed-term rental contracts. The ratio of fixed-term
rental contracts rose in the fiscal year ended March 31, 2019,reaching 106% and contributing to steady improvements inincome.

With this slide, I would like to discuss changes in the numbers of our store
staff as a result of completion of the transition to fixed-term rental contracts.
On March 31, 2014, prior to the start of the shift, MARUI GROUP’s store staff
comprised 3,550 employees.
After commencing the transition, we started converting stores to fixed-term
rental contracts while also pursuing increased efficiency in our specialty store
operations. As a result, our store staff on March 31, 2019, five years later,
totaled 1,950 employees, a decrease of 1,600 employees, or nearly 50%.
Breaking down this 1,600-employee decrease, 770 employees were relocatedto our growing FinTech business; 100 employees were transferred to anime,
sharing, and other new businesses; 30 employees were invested in to cultivate
IT human resources; and the remaining 700 employees left the Company due
to mandatory retirement or other natural attrition factors.
These staff reductions resulted in substantial improvements in store earnings.
Having completed the transition to fixed-term rental contracts, our specialty
store operations have become more robust and efficiently managed. Now, I
believe that we have entered a stage at which the Retailing segment’s humanresources can contribute in both new and existing business fields.

While seeking to reverse trends in existing specialty store operations,
we are also utilizing the store operation and customer service expertise
cultivated through these operations to expand directly operated sales
floors belonging to new categories. Examples of these sales floors
include those used for anime and sharing businesses as well as forevents.
Our anime business, for example, has seen a six-fold increase intransactions, from ¥1.2 billion to ¥7.5 billion, and a 14-fold increase inemployee numbers, from four to 57, over the past three years.
As for in-store events, we have been able to increase per m2 efficiency
several fold by subdividing sales floor space into segments as small as
three m2 for periods as short as one to two weeks.
MARUI GROUP employees boast expertise in customer service. Having
these employees operate such sales floors is an effective means ofincreasing transaction volumes and EPOS card issuance numbers. Goingforward, we look to expand such directly operated sales floors thatincorporate MARUI GROUP’s retailing expertise and DNA.

Next, I would like to explain our future store strategies.

We have formulated two approaches for improving income after
the completion of the transition to fixed-term rental contracts.
The first is to pursue value increases.
The second is to implement differentiation strategies.

With this slide, we will take a look at the first of theseapproaches: the pursuit of value increases.
Although we have completed the transition to fixed-term rental
contracts, net operating income yield has been falling below thehurdle rate at both urban and suburban stores.
This situation indicates that there is room for improving net
operating income by around ¥0.8 billion. Looking ahead, we
anticipate that existing tenants will be replaced with new tenants
and that existing tenants renting around 33,000 m2 of floor space
will renew their contracts each year. We expect to be able togenerate income improvements of more than ¥0.8 billion by
pursuing value increases in conjunction with these replacements
and renewals.

The second approach is our differentiation strategies, which are
geared toward evolving our department stores and shopping
centers into digital native stores.
The pre-digital stores that have been mainstream up until now
have been characterized by a separation between the physicaland the digital. We look to evolve our stores into post-digital
stores that feature an inverted relationship between the physicaland the digital.
I will discuss the aims and anticipated benefits of these initiatives
a little later on. Before that, I would like to explain three digital
native brand tenants that we have teamed up with.

The first tenant is FABRIC TOKYO, which offers a direct-toconsumer brand of order-made suits.
FABRIC TOKYO employs a scheme in which measurements aretaken at stores and orders are placed online.
The scheme of this tenant has the potential to contribute tohigher earnings for MARUI GROUP through both store rental fees
as well as through increased usage of EPOS cards for ecommerce purposes. We therefore concluded a capital andbusiness alliance with FABRIC TOKYO, based on which we areencouraging this partner to open locations in our stores andpromoting the issuance of collaboration cards.

The second tenant is Wacom Co., Ltd., the global share leader inthe pen tablet market, which opened a location at Shinjuku Marui
Annex.
This store has no product inventory, rather opting to provide only
experiences to customers.
Sales at this store are strong. In fact, the usage amounts bycustomers that made purchases via this experience-providing
store generally exceed those of customers that made theirpurchases through conventional e-commerce sites.
Operation of this store has been outsourced to MARUI GROUP
employees that have experience running directly operated sales
floors.

The third and final tenant that I would like to talk about is
Suruga-Ya, Japan’s leading online seller of used hobby items.
This tenant opened a location at Shinjuku Marui Annex in April
2018. The ratio of sales from female customers at this location is
striking when compared to those of Suruga-Ya’s online stores andof other commercial facilities, and this location has come to boast
the highest transaction volumes and customer numbers of any
Suruga-Ya location.
Moreover, Suruga-Ya has come to view Marui stores as animportant point of contact with customers that makes significant
contributions to customer acquisition efforts.
On the next slide, I would like to explain the reasons why thesetrend-setting digital native tenants find the prospect of opening alocation at a Marui store appealing.

The physical stores of today, i.e., those employing conventional department store and shopping
center business models, are characterized by a clear separation between in-store sales and digitaltechnologies and e-commerce. Therefore, in the past the only metric used by tenants in judging
the appropriateness of rents has been sales from the customers that visited these stores.
In other words, tenants assessed the value of stores only in terms of the sales to be gained andonly accepted rent fees that matched that value.
The digital native stores of the future, however, will function as “boosters” or as “catalysts” forincreasing sales through digital venues, as seen in the experiences and communities provided at
the locations of FABRIC TOKYO and Wacom that I just discussed.
In the past, a customer interaction ended at the sale, whether through a physical or digital store.
Going forward, however, we will look to achieve high levels of lifetime value by fostering mediumto-long-term relations through the increased engagement made possible by the experiences andcommunities provided at physical stores.
To summarize, up until now, tenants have only viewed stores in terms of in-store sales and shortterm timetables, causing them to take a stringent approach toward assessing our rent fees.
However, accounting for e-commerce sales, a medium-to-long-term timetable, and lifetime value
has prompted tenants to be more flexible with regard to the maximum amounts of rent that they
are willing to pay.
Our mission as an operator of commercial facilities going forward will be to provide tenants withmedium-to-long-term benefits in the forms of sales through digital venues and customer
engagement. This mission will inform future store development activities.
Currently, MARUI GROUP is the only commercial facility operator capable of providing business
partners with these benefits and with business models centered on lifetime value. We thus see
these operations as a unique form of value unique to MARUI GROUP.

Next, I would like to explain just exactly what constitutes MARUI GROUP’s uniquenessand the value it provides.
As shown on this slide, direct-to-consumer companies and other digital native tenants
are in the process of collecting data on the purchasing behavior of all customers.
The structure of earnings for these tenants can be broken down into four categories:
customer traffic, conversion ratios, customer spending amounts, and retention rates.
Digital native tenants developing Internet-based operations look to maximize ecommerce sales and medium-to-long-term lifetime value by acquiring new customers
and heightening engagement.
MARUI GROUP stores see visits by as many as 210 million customers a year. In
addition, the Company also boasts 6,880,000 EPOS cardholders. Together with ourability to expand points of contact with customers and increase engagement throughcontract operation services provided by MARUI GROUP employees, these factors
represent substantial points of differentiation for the Company.
Differentiated in this manner, we have been able to contribute to improved lifetime
value for tenants while growing MARUI GROUP’s earnings from rent and other sources.
The unique value provided by MARUI GROUP is anticipated to heighten the value of its
real estate-model Marui and Modi stores.
These factors will influence the possible decision to raise overall hurdle rates over the
medium-to-long term.

As we advance such store strategies and new store development
activities, we will first look to rapidly expand the portion of total
tenants represented by those who provide new value. Specificexamples of these tenants include direct-to-consumer,
experience- or content-providing, sharing, food, service, andother such tenants.
The aforementioned digital native stores will be central to thisundertaking. We look to raise the ratio of these stores to total
stores to 25% and then utilize the resulting customer numbers
and ripple effects to push forward with the digitization of all Maruiand Modi stores.

My name is Miyuki Kawara, and I will be explaining MARUIGROUP’s e-commerce operations.

Total e-commerce revenue rose for the fourth consecutive year,
by 5%, to ¥24.2 billion.
This increase was largely the product of three initiatives. The firstinitiative was the enhancement of our product lineups, which wasachieved by the sharing of inventory information with business
partners. The second initiative was the expansion of our presence
on external websites, such as those of KDDI CORPORATION. The
third was the advancement of “click and collect” initiatives
utilizing stores.

As a result of our promotion, of “click and collect” initiatives
utilizing stores at all stores, one in 10 customers have come touse our in-store pickup services while one in 5 have used ourin-store return services. These figures demonstrate the large
increase in customer convenience realized through these services.
Meanwhile, these services create profit benefits for MARUIGROUP in the form of reduced delivery costs as well as the trend
toward customers purchasing other items when they visit a store
to pick up or return a product. There are also environmental
benefits for society through reduced CO2 emissions. In thismanner, these initiatives are beneficial to all parties.

Next, I would like to explain some of our initiatives for expanding
e-commerce operations going forward.
Our first initiative will be to grow certain product categories.
MARUI GROUP’s operations are currently centered on apparel andfashion accessories. However, we plan to develop additional
products in categories that feature high customer demand andpurchase frequencies, such as cosmetics and sporting goods, toincrease the number of brands that we handle.

The second initiative for expanding e-commerce operations will
be to evolve how we match product sizes to customers.
At the moment, a scheme is in place exclusively for e-commerce
operations that allows customers to compare clothing sizes withclothing that they have subjectively judged to fit. Looking ahead,
we intend to add features to our e-commerce sites that integrate
in-store purchase history data to display recommended sizes andthat allow customers to search for similar-fitting items.

The third initiative for expanding e-commerce operations is totransition to a focus on e-commerce for private brand products.
We look to make private brand products born out of co-creation
with customers better resonate with customers by increasing
communication via Instagram and other forms of social media.
Meanwhile, stores will be transformed into venues for customers
to receive support from staff as they try on products and makepurchases via e-commerce websites.
With this as our approach, we will proceed to expand lifetime
value with a digital focus.
Through these initiatives, we aim to achieve growth of 10% ormore in e-commerce revenue in the fiscal year ending March 31,
2020.

Lastly, I would like to talk about our income forecasts for the
fiscal year ending March 31, 2020.

In the fiscal year ending March 31, 2020, we forecast that the
Retailing segment will see an increase of ¥1.6 billion, or 14%,
year on year in operating income, to ¥13.0 billion. This increase
will be a product of income improvements stemming from thetransition to fixed-term rental contracts and from e-commerce
operations.
Specifically, we expect income improvements stemming from thetransition to fixed-term rental contracts to contribute ¥1.0 billion
to this increase while income improvements from e-commerce
operations contribute ¥0.5 billion and income improvements fromfacility management and distribution operations contribute ¥0.1
billion.
This concludes my explanation of the initiatives and progress of
the Retailing segment.
Thank you for your attention thus far.

Hello, my name is Junko Tsuda, and I have been placed in chargeof the FinTech segment from the fiscal year ending March 31,
2020.
I will handle the first half of our presentation on the FinTech
segment while the president of Epos Card Co., Ltd., Yoshinori
Saito, will take over for the second half.

This slide shows our agenda for today.

We will look first at some of the highlights from the fiscal year
ended March 31, 2019.
Operating income increased for the seventh consecutive year, to¥35.0 billion. In addition, we posted return on invested capital, or
ROIC, of 4.1%, achieving the initial target of the medium-term
management plan two years ahead of schedule.
Meanwhile, total transactions exceeded ¥2.0 trillion for the firsttime due to the continuation of strong growth in card shoppingtransactions and rent guarantee services revenues.
In addition, new card applications surpassed 800,000.

This slide details our performance in the fiscal year ended March
31, 2019.
ROIC increased by 0.3 percentage point, to 4.2%, achieving ourtarget thanks to operating income growth and improvements ininvested capital that resulted from the liquidation of receivables.
At the same time, operating income rose ¥3.6 billion due tohigher transaction volumes, but only rose ¥3.1 billion whenexcluding the benefits of extraordinary factors.

Here are the subjects we will be discussing with regard to theprogress of the medium-term management plan.

First of all, you will find trends in card shopping transactions on
this slide.
Transactions by holders of premium EPOS cards, namely Gold andPlatinum cards, have been growing rapidly, with an averageannual growth rate of 26% over the past five years. These
cardholders were a major factor behind our ability to achievesmooth growth in card shopping transactions to ¥1,880.0 billion
in the fiscal year ended March 31, 2019.

Next, here are some trends regarding smartphone payments, asubject that garnered attention last year.
As a payment method, smartphone payments are intrinsicallylinked to credit cards. In total, transactions via smartphone
payments amounted to ¥27.5 billion in the fiscal year ended
March 31, 2019, an increase of 130% year on year.
However, these transactions only accounted for 1.5% of all card
shopping transactions. Of these transactions, QR codetransactions, a topic of interest, amounted to ¥3.1 billion,
representing 0.2% of total card shopping transactions.

On this slide, you will see trends in revolving and installment
payment transactions.
We began expanding the number of affiliates at which installment
payments can be used in March 2016, and we followed this moveby introducing services allowing customers to change toinstallment payments after purchases have been made in
December 2017.
Owing to these initiatives, installment payment transactions
showed a substantial increase, contributing to a 25% year-onyear increase in the volume of revolving and installment paymenttransactions in the fiscal year ended March 31, 2019.

As a result, the balance of revolving and installment payments on March 31, 2019, was
1.6 times higher than on March 31, 2016, before installment payment initiatives were
stepped up, and the balance of installment payments was 5.1 times higher.
In addition, revenue in the fiscal year ended March 31, 2019, was similarly 1.6 times
higher than in the fiscal year ended March 31, 2016.
Several revelations were made by stepping up installment payment initiatives.
As the first revelation, customers that felt there was a high barrier needing to be
overcome to use revolving payments have started using installment payments, leading
to growth in new customers.
The second was that, as installment payments are repaid on short timetables, they areeasier to be used in a planned manner. For this reason, customers tend to use this formof payment at higher frequencies and in greater amounts, contributing to increases intransaction volumes and subsequently affiliate commissions.
For the third revelation, the risk of default is relatively low for installment payments. As
such, when these payments account for a greater portion of the total balance ofreceivables, it means we have lower bad debt-related expenses and higher capitalefficiency.
These factors drove up ROIC, which reached 4.2% in the fiscal year ended March 31,
2019, achieving the initial target of the medium-term management plan two years inadvance.

This slide shows new card application trends.
While we previously faced challenges on this front, we were able
to overcome these challenges to achieve a new card application
number of more than 800,000 in the fiscal year ended March 31,
2019.
The increase was particularly large in relation to individuals
applying via the Internet or through service-related venues.
Applications at stores and commercial facilities, meanwhile,remained consistently above 500,000.

This slide details our nationwide expansion efforts with regard to
EPOS cards.
The ratios of people holding EPOS cards rose both inside andoutside of our business area due to increases in cards issued atpartner facilities and via the Internet, driving smooth growth inoverall cardholder numbers.
As shown on the map on this slide, the ratio of people holding
EPOS cards in areas where we have partner facilities is on therise. Conversely, there is a need for efforts to increase
cardholders in areas where we lack such partners, such as the
Hokuriku, Chugoku, and Shikoku regions, going forward.

Trends in card user numbers and usage rates can be seen on this slide.
Moving forward, we plan to implement initiatives emphasizing card user
numbers and usage rates in order to efficiently grow our business.
Although there has been a steady increase in card user numbers, growth inusage rates has remained flat, at around 65%. This is an issue needing to beaddressed.
Looking at usage rates by card type, holders of standard VISA cards, which
represent a large portion of our cardholder base, have low usage rates justabove 50%. The low rates among these cardholders are dragging down theoverall rates.
To address this issue, we will shift the emphasis of our operations fromcardholder numbers and card numbers to lifetime value.
At the same time, we look to increase the ratio of EPOS cardholders with Goldcards by stepping up initiatives targeting rent, recurring, and e-commerce
payments.
We will be discussing some of our measures for accomplishing these objectives
later on in this presentation.
Going forward, MARUI GROUP will target higher card user numbers and usage
rates through these two approaches.

On this slide, you will find information on trends in interest
repayment.
In the fiscal year ended March 31, 2019, the amount of interest
repayment was ¥4.5 billion, a year-on-year decrease of 17%.
However, interest repayments received, an indicator designatedfor advanced monitoring, was relatively unchanged year on yearwith a decrease of only 1%. For this reason, payments into
provisions were made in an amount of ¥3.3 billion in the fiscal
year ended March 31, 2019, to prepare for losses in subsequentfiscal years.
As a result, the amount of outstanding provision came to ¥4.9
billion on March 31, 2019.

Moving on, this slide provides information on the liquidation ofreceivables.
In the fiscal year ended March 31, 2019, the amount ofliquidated receivables not recorded on the balance sheet wasapproximately ¥120.0 billion, representing 17% of operatingreceivables.
We are planning the phased liquidation of receivables with theaim of raising the amount of these receivables to around 25% of
total receivables going forward to move us toward the optimal
capital structure.
This concludes my portion of today’s presentation.

Hello, I am Yoshinori Saito, president and representative directorof Epos Card Co., Ltd.
I will be talking about our initiatives for maximizing the share of
EPOS card payments in household finances.

I would like to begin by detailing the initiatives for maximizing theshare of EPOS card payments in household finances that wereexplained at the financial results briefing for the fiscal year ended
March 31, 2019.
In the FinTech segment, we aim to maximize the share of EPOS
card payments in household finances through the provision ofunique financial and payment services and through theconversion of all family members into EPOS Family Gold
cardholders.

Currently, the average share of EPOS card payments in thehousehold finances of cardholders stands at 12%. This share is
only 5% for standard VISA cardholders, but the share has
expanded rapidly to 17% for Gold cardholders and 41% for
Platinum cardholders.
Looking at Gold cardholders, who account for the largest amountof transactions among the different card types, the average shareis 17%. However, those Gold cardholders that have low shares ofless than 10% represent approximately 40% of all Gold
cardholders. We therefore see sufficient room for growth in thisarea.

On this next slide, you will see a comparison between a household inwhich EPOS card payments represent a small share of household
finances and a household in which EPOS card payments represent ahigh share of household finances. In the high-share household, rent
and other recurring payments are made using their credit card.
When cardholders use their EPOS card to make rent and other recurring
payments, it tends to lead to ongoing use. The rates of conversion toGold cards as well as the credit card lifetime value of these cardholders
are much higher than those of other cardholders, and these cardholders
are increasingly using their EPOS card as their main credit card.
The more these cardholders use their EPOS card as their main credit
card, the more they will use their cards to make payments for food andleisure, areas traditionally dominated by cash payments. The end result
has been a higher share of EPOS card payments in household finances.
Accordingly, we see the increasing use of EPOS cards for making rent
and other recurring payments represented on the right-hand side ofthis slide as being an incredibly important strategy for growing theshare of EPOS card payments in household finances.

I would like to first talk about our rent guarantee services
initiatives.
In light of the upcoming revision of the Civil Code scheduled for
2020, the scale of the rent guarantee services market is expected
to grow to ¥11 trillion while the number of residences using rent
guarantee companies rises to 9.6 million.
The rent guarantee services industry currently consists of around250 companies of various sizes, many of which are dedicatedcredit companies, but even the major players in this industry only
generate sales of around ¥10.0 billion.
The favorable operating environment for this market has recently
prompted new market entry by major retail credit cardcompanies along with a rise in businesses targeting non-Japanese
residents of Japan. Accordingly, we anticipate the intensificationof competition going forward.

In this environment, MARUI GROUP has continued to grow its rent
guarantee services business based on a unique model.
Strengths of this model include services that allow for points to be
accrued through rent payments, perhaps one of our business’
most noteworthy features, as well as the efficient business
operations made possible through joint operation with our credit
card services business and the system capabilities that enable us
to respond to the needs of our business partners.
Furthermore, the financial capacities of MARUI GROUP give us ahigh degree of reliability.
We were also quick to participate in the market serving nonJapanese residents of Japan through investment in Global Trust
Networks Co., Ltd., which took place in 2018.
These strengths have enabled us to achieve an average annual
growth rate in revenue from rent guarantee services of more than
30% over the past five years, poising us to target revenue ofmore than ¥10.0 billion.

MARUI GROUP is stepping up collaboration with major partners,
most notably Sumitomo Forestry Co., Ltd., with which werecently formed a partnership, and ABLE. INC., with which fullfledged collaboration started in May 2019. These collaborative
initiatives are aimed at increasing the use of our rent guarantee
services and thereby growing these operations.
Around 40% of all cardholders live in rental housing. We areencouraging such cardholders to use our rent guarantee services
through our proprietary website, which showcases properties forwhich these services can be used. In this manner, we aim toincrease the use of MARUI GROUP’s rent guarantee services
through both outside alliances and efforts within the Company.

We will next look at our initiatives for expanding EPOS card use
for recurring payments.
Recurring payment transactions are rising in conjunction withoverall credit card transactions. However, the share of thesetransactions among total card shopping transactions hasremained flat at 12% for the past five years. We therefore see aneed to ramp up our efforts in this area.
Up until now, we have continued to encourage cardholders to use
their credit cards for recurring payments at stores. Goingforward, we will coordinate with companies that offer services
entailing recurring payments while enhancing cardholder services.
At the same time, we will move forward with initiatives thatleverage digital points of contact to promote use of EPOS cards
for these payments.

Moving on, I would like to talk about our initiatives for promoting e-commerceuse. June 2019 will see the full-fledged launch of a collaboration scheme with
GMO Payment Gateway, Inc., aimed at promoting e-commerce use among
EPOS cardholders and expanding our cardholder base.
Normally, when someone wants to make payments via e-commerce websites,
they are required to register their credit card number with each individual
website. However, the collaborative scheme with GMO Payment Gateway will
make it possible for a customer to use the same ID and password for allaffiliated e-commerce websites, even if it is their first time using a given
website. This scheme will thus result in a massive improvement in convenience
when using e-commerce websites.
This service, known as EPOS Easy Payment, is patent pending, but we havealready received informal agreements from 30 companies regarding the
introduction of this service.
We will request that all affiliated websites make efforts to recruit EPOS
cardholders. Moreover, this service will employ real-time inspections that areavailable 24 hours a day to enable card application, payment, and use of
application benefits to be conducted simultaneously. Through this service, wewill target more than 200 affiliates and over 100,000 new card applicants inthe fifth year of service.

I would next like to talk about our EPOS Family Gold card
initiatives.
We have engaged in various premium card initiatives to date.
One of these was the launch of the EPOS Family Gold card, which
was born out of co-creation with customers, in June 2018.
This new card contributed to a year-on-year increase of 310,000
in the number of Gold and Platinum cardholders, to 2,150,000,
on March 31, 2019.
The contribution from the EPOS Family Gold card came as the
50,000 existing cardholders introduced the card to 60,000 family
members, leading the number of EPOS Family Gold cardholders
to increase to 110,000 individuals in some 50,000 households asof March 31, 2019.

When all members of the 50,000 households with EPOS FamilyGold cards were converted to holders of this card, the average
share of EPOS card payments in household finances rose from theprior 14%, to 23%.
At the moment, we are recruiting EPOS Family Gold cardholders
through our website and via email. We also plan to start in-store
recruitment efforts in the fiscal year ending March 31, 2020. We
anticipate that these efforts will accelerate the growth of ourcardholder base, and we aim to have these cards held by morethan 1 million individuals in 500,000 households five years fromnow.

Through these measures, MARUI GROUP will seek to raise theshare of EPOS card payments in the household finances of Gold
cardholders from the current 17% to between 22% and 25%
over the next five years. Combined with the increase in thenumber of Gold cardholders over the same period, this shouldmake for growth in transactions of between ¥800.0 billion and¥1,000.0 billion.
At the same time, we project that the share of EPOS card
payments in the household finances of all EPOS cardholders willrise to between 12% and 16%.

We anticipate that the initiatives I have explained thus far will
enable the FinTech segment to achieve total transactions of morethan ¥5.0 trillion five years from now, of which ¥1.0 trillion will be
attributable to the benefits of our strategies for maximizing theshare of EPOS card payments in household finances. This level of
total transactions will put us on par with industry leaders.

Lastly, we will take a look at our numerical targets.

In the fiscal year ending March 31, 2020, we anticipate ROIC of
4.4%, up 0.2 percentage point year on year, and operating
income of ¥39.0 billion, up ¥4.0 billion.

Furthermore, our targets for the fiscal year ending March 31,
2021, the final year of the medium-term management plan, callfor ROIC of 4.5% and operating income of ¥42.0 billion.
With this, I conclude my portion of today’s presentation. I thankyou for your attention.