MARUI GROUP Co., Ltd.
MARUI IR DAY 2023
<Questions and Answers>

Future directions of forward-looking investments, FinTech's forward-looking investments.
Q.

Can we expect new initiatives such as forward-looking investments and embedded finance to spillover into the existing businesses of Epos Card and the Marui Group as a whole? Or are you aiming
for growth in non-existing businesses by building up new initiatives? We would like you to sort out
in what way this will work for the overall performance and earnings growth of Epos Card.

A.

Our FinTech direction is to develop new services and businesses with a commitment to uniqueness.
For example, the gold card, which is the mainstay of our existing services, was designed with adifferent approach to the industry standard gold card, and as a result has been accepted by customers.
Rather than existing and new services being at odds with each other, we want to expand our
corporate value by building up highly unique services. Cards tailored to each individual's interests
has become such a big and unique initiative, but five years ago it was about one-seventh the size ofour membership. Although there are unknowns as to how new initiatives will be accepted bycustomers, we intend to expand the market by actively taking on various challenges and developing
a number of customer-oriented services.

Q.

The background to the downward revision of the profit contribution of forward-looking investmentsfrom 2 billion to 1 billion, as explained at the results briefing, was well understood. You have listed
four projects that you have decided to discontinue this time, but we would like you to look backand explain why you decided to discontinue them. I would like you to look back on the reasons forthe decision to discontinue these businesses. On top of that, although the profit contribution is 1
billion yen in the current mid-term plan, how much weight should be given to these forward-looking
investments as a growth engine for the Marui Group when the time horizon is extended to longer
time horizons such as 2030 and 2035, rather than the year ending 26 March?

A.

The four businesses that were discontinued were Q-SUI, Bread, VEGAN and FoodTec; Q-SUI wasa paid subscription service that allowed water to be supplied at various restaurants, etc., with the1vision of eliminating plastic water bottles in the future, which was combined with a map app. Breadand VEGAN were also mainly e-commerce subscription-based services. Food Tech was trying tocreate a kind of showcase for national and international food tech, centred around shops, and toboost it as a business combined with investment.
As indicated on page 7, if the deepening of knowledge on the horizontal axis is a new business thatis close to existing businesses, the above four businesses were all aimed more at the unknown
business of knowledge exploration on the vertical axis, closer to 0 → 1, and as a result theystruggled. Unfortunately, the Investment Committee had no choice but to suspend the project
because the number of users and customers did not increase as planned and the business was notprofitable and there was no prospect of recovering the investment. However, we did not justabruptly discontinue the project, but also resolved it in a progressive manner through the 'Fail
Forward Award', in which the teams involved in its development look back on what they have done
and share within the company what they have learnt from their failures and what they can utilise in
future new projects.
If what is learned is close to the existing business, it becomes a kaizen, and if the existing businessitself becomes obsolete with changes in society and customers, kaizen alone will not be enough.
On the other hand. We have come to realise that if we try to move far away from the existing
business and aim for something closer to 0 → 1, we will not be able to utilise our strengths andresources and will end up spinning out of control, which will reduce our chances of success. In thepast two and a half years of intensive work, we have seen that we should aim for what we call the'third way', the middle ground, where the strengths and resources of existing businesses can beutilised to the fullest extent.
Based on this, how do we think about the results of our forward-looking investments, especially in
new businesses, in the medium to long term? When we look at the two main earnings drivers,
retailing and FinTech, as existing businesses, we inevitably see that as time goes by, the world andcustomers change, and It becomes obsolete. We are taking this into the future and opening up newareas for the future, from the existing business to slightly unknown areas. We believe that is therole of new businesses that we should be aiming for.
A concrete example of this is the embedded finance and Only One Card, which I explained earlier.
By building on these, we will constantly revitalise our existing businesses, which are our strongest
and most cash-flow-linked, and open up new areas for the future, faster than they become obsolete.

2Our medium- to long-term approach is to develop a growth strategy by continuing to evolve in thisway.
We also believe that the Marui Group's core strengths are very important in promoting sustainability
management. The first is that our business model is extremely stable. With a very high profit margin,
mainly in the card business, we believe that it is very important for sustainability management tobe able to take a long-term viewpoint with a certain degree of leeway.
The other is the corporate culture, which has changed over the last decade or so. The compositionof employees who feel that they are respected in the workplace has also increased dramatically. We
have a very good situation where many employees feel that they are respected and can work directly
managed sales floors. I believe that this culture change, the directly managed sales floors, theinnovation that comes from it and the culture of hand-raising have now become one of Marui's corecompetencies.

Q.

The qualitative direction of the new business is to aim for a direction between the existing businessand 0 → 1, as shown on page 7. On the other hand, have the criteria for the numerical aspectchanged within the Investment Committee as a result of this revision of the new business approach?

A.

From the outset, investment decisions in new businesses have been based on the guideline of turninga profit in three years and wiping out accumulated losses in five to seven years. In line with this, an
Investment Committee meeting is held about once a half-year, with external experts and investors
attending, to ensure an objective view. The four projects mentioned earlier were suspended after
less than three years because the prospects for this were not clear. Therefore, we have not changed
this criterion.
Rather than a change in the criteria for investment decisions, we are trying to change the very way
in which new businesses are perceived from 0 to 1, not as venture start-ups, but as innovative new
businesses that expand existing areas towards the unknown.
Accordingly, changes are being made to the development approach. Initially, we were aiming fordevelopment to be centred on incubation companies, but we have found that there are disadvantages
to this, such as the very heavy fixed costs of having a full-time person working on the project, andthe damage that can be done in the event of failure by having a full-time person, so we are now
using a form of concurrent appointment that we call an initiative, We are now using a method of3

working on development for a certain period of time in what we call an initiative. As a result, wehave found that there is a high probability of success, as seen with the owner/freelancer card, so weare thinking of adopting this approach. By doing so, we can also reduce the amount of investment,
as it opens up within the costs of the existing business. The idea is to increase efficiency in termsof return on investment by promoting such improvements.

Q.

Dental Credit is 13 years old before it was fully launched, but what is the background to such along time?

A.

The implication is not that it took 13 years for Dental Credit to be considered, but rather that it was
not possible to create new and novel services during that time. Originally, we had a mainstay
business called Licence Credit, which was mainly used by young people, but there was a sense ofcrisis that in the future, with the declining birth rate and ageing population, it would gradually
become more difficult to expand the business. All this time, we have been trying to create newservices using this licence credit know-how. However, because Licensed Credit had to expand
nationwide and deal with legislation, it has not been possible to devote significant resources to thecreation of the next innovation in practice.
In conclusion, it has been difficult to create new services from within the operating companies. The
Dental Credit project was also triggered as part of the Group's initiatives, so we feel that it is difficult
to create new services in the course of operating the business of an operating company, and this is
an area we have reflected on.
In the future, we would like to hit the ground running with innovation, or rather, we would like tocreate new services one after another, so the Group will work together to gain new perspectives andnew ideas, while ensuring that our business is able to quickly Accompolish services. Within Epos
Card, the number of young employees and members with experience in various new businesses isincreasing, so we will try to make the most of new ideas, mainly from such people.

Q.

I think there were comments made during the Q2 results briefing that the competitive environment
for FinTech is being changed by the online cards. Is it correct to assume that this new service isdifferentiated from online cards?

A.

For example, making a one-of-a-kind certificate means that other companies can invest in4

infrastructure and technically set up the conditions for issuing the card. However, as with cards
tailored to each individual's interests, we already have the know-how we have cultivated, thecontacts with customers in shops and a network of business partners.
If we could develop new business partners around a single theme, for example, pets, we believethat this would create a very high barrier to entry as a large co-creation network and ecosystem. We
believe that launching such services at an early stage and building a network that includes ourbusiness partners is a differentiating factor.
As for freelancer cards, while other companies may be able to provide credit to those who do notwork for a company in the same way, general credit cards are aimed at those who have a regularincome based on a monthly salary and no fluctuations in living expenses or other costs. Payment
methods tailored to the way freelancers work, for example, who work for three months and earn
their income from their deliveries, are also not yet provided for by general credit cards, which is
why we are focusing on this issue. Along with credit, we feel that what freelancers are looking forin terms of payment flexibility and supplementary services is completely different from whatgeneral business people are looking for.
We want to create a completely new card that includes those things. If we can design the wholeservice in a way that is close to the customer, we believe it will be a very big differentiating factor.

Q.

How is bad debt risk managed for freelancer cards, owner cards and office rent guarantees? For
example, the bad debt risk for owner cards is slightly higher than in the past, but the market appears
to be a blue ocean, so is the idea to capture that part of the market as well?

A.

In particular, with regard to owner cards, we have been hesitant to enter such a field because of ourlack of credit know-how in this kind of corporate sector, but as we have explained today, based on
the owner's personal credit usage and deposit results, we will support the business he or she isrunning at an early stage. We consider it a new challenge to manage risk based on a two-tierapproach to credit.
We have devised risk management through our dealings with individual customers in the past, andwe would like to use this to take on the challenge of extending credit to new customers in thecorporate sector.

A.

Sole traders have been using Epos Card cash advances to fund their businesses for some time, and5

the new owner card was designed to provide these people with a little more credit capacity or alittle more flexibility in repayment methods. In that sense, we already have a good track record in
credit, so we have some results in controlling the risk of bad debts. I think we can control it wellenough if we are cautious and not too overconfident.
We also have results in credit for freelancers with irregular income, including freelancers andfreelancers, as well as those in the construction and catering industries. I think our strength is that
we can manage and control the risk of credit to these people with irregular income. Basically, rather
than acquiring know-how on bad debts from now on, I think it is better to understand that we are
expanding what is already there, but with caution.
Q.

As a result of the initiatives you have undertaken to date, such as new businesses, Co-Creative
investments and human capital investments, do you feel that the ability of your employees to create
new businesses has increased? In terms of the operation of initiatives, what operational
considerations are taken into account, such as optimising the areas in which decisions can be madeby individual employees and the areas in which decisions are made by individual teams anddepartments, as I believe that the overall balance would be upset if only individuals made suchdecisions?

A.

We are now at the stage where the corporate culture change that we have been working on for morethan a decade has become like a single nursery, and we are moving towards a culture of 'corporate
culture change 2.0', where failure is accepted and challenges are encouraged. Our only goal throughall of this is still the consistent desire to be a company that can create innovation. Looking back,
we have reflected on the fact that our inability to create these innovations led to the business crisis
that began in 2007, and we have been working on it for a long time. I feel that we are finally starting
to be able to create these small innovations little by little.
From the 2nd Internal App Koshien, some very reasonable proposals have spontaneously emergedthat could become new businesses beyond our expectations and that could not only improve ourcompany's operations, but could also become businesses by offering them to other companies. Our
employees love events and are very good at organising them, so we would like to create such aforum and make it more exciting so that new proposals can emerge.
The same applies to initiatives: if you think of everything from 0 to 1 yourself, from 'what to do',you often struggle with what to do, so the themes are set by the company. There are gradations from
impact-oriented to profit-oriented, but we operate by asking employees to choose one of the themes

6and raise their own hand. We try to operate in such a way that what the company should work on
and what each employee wants to do are well matched, so that they live up to the success of thedevelopment.

Q.

The idea that cards tailored to each individual's interests will increase in membership and customer
spend and come close to becoming gold cards is understandable, but is there any risk that changes
in the business environment or other factors will cause membership and customer spend to stagnate
and not grow as planned in five years' time?

A.

Cards tailored to each individual's interests bring in all sorts of exciting news on a daily basis. The
development of the cards has been progressing one after another, and the ones that have been set
up spontaneously by individual employees, with each employee asking themselves whether theywould like to do this or that, have been extremely successful, and we believe that we can achieve
two million members.
In terms of the per-customer spending limit, we were not able to raise the limit because ouroperations were not keeping up with the needs of customers who wanted to use it more as theirmain card, which was causing inconvenience to them. By removing this inconvenience, we believethat the amount of usage will increase quite naturally and that we will be able to increase the amountof usage per customer as planned, so we are not worried at all. Therefore, we consider our fifth year
plan to be a very solid plan.

Q.

Do you envisage the number of members growing first, followed by growth in customer spend?

A.

Yes. Accomplish faster in terms of revenue contribution if the amount spent grows faster than thenumber of new cardholders. Therefore, we believe that the amount spent will contribute more in
the period of this medium-term plan. On the other hand, new cardholders will have a small or
negative effect in a single year, but it will definitely work in the medium to long term. For thisreason, we describe this as the second growth engine.

Dialogue with External Director

7

Q.

On page 61, ten issues are listed as perceived challenges around 2014, which of these took thelongest to resolve in the last ten years?

A.

The third, diversity promotion, started around 2013-2014, and management's essential
understanding has progressed, and women have become more oriented towards higher positions,but the more we do it, the higher the mountain is getting. We are now producing a 'Women's Vigor
Index', but we are also starting to address issues such as gender roles in the home, which is a fairly
deep-seated problem. We have made considerable progress in terms of awareness and operationcompared to other companies, but it has been difficult to raise the ratio of female managers, which
is currently at around 18%. However, as Ms Aoi explained earlier, we believe that this is acombination with cultural change, which will take a little more time, so we think that the mountainis quite high.

Q.

If the issue facing the Marui Group is in terms of its share price, I feel that the core FinTech businessitself has become less precise in terms of its plans, and there have been changes in the external
environment that have forced it to make revisions to its performance, etc. From the perspective ofan external director, what level of responsiveness to change do you think the Marui Group is at?

A.

We are really sorry for the part you have pointed out, but we see it as an appropriate capture interms of our ability to respond to change. On the other hand, with regard to the accuracy of
FinTech's plans, etc., we have become a vertically divided organisation, and I honestly believe that
we have not been able to analyse the trends and signs of the figures correctly in some areas. As
external directors, we are working hard to review the operational structure in terms of monitoring,but I don't think we have been able to look at the figures accurately and interpret changes fromthere. I think we will be able to improve the sensitivity of our analysis from this point onwards, so
I hope you can look forward to that.

Q.

I think the strategy committee is analysing how to increase the value of the company. What do you
think is still not understood in the capital markets from the way it should be and the corporate value
it should have?

A.

We have had a lot of discussions about how we would have to increase our P/B ratio to 5x, which
would mean an ROE of around 25%, and we would also have to increase our P/E ratio. However, I
still believe that our strengths should be factored into the PER.

8

One point that has made it very difficult for analysts and investors is that we have not been able toexplain how our unique model is going to be a winning one, as there are parts of the industry andsector that are difficult to cut through. Although we say it is because we are a trinity, we have notbeen able to fully explain the meaning and strengths of our retailing and FinTech business, and weare not able to explain where our strengths lie in terms of human capital, which in fact cannot beseen from the outside, even if you look at people in a granular way. So I think we have not beenable to explain whether we have the potential.
We want to build on the strengths of our people or the strengths of our business model in a way thatis even easier for you to understand and expect. We believe that if you take this into consideration,
we will be able to raise our PER.

Q.

It was very clear that Okajima-san himself has contributed to the Marui Group's human investment
and sustainability initiatives. On the other hand, if you hold five concurrent positions and have been
in office for 10 years, I am concerned that from the perspective of the voting criteria, you may beseen as having many concurrent positions and having held them for a long period of time and as
being internalised. Do you consider that this is the case?

A.

We hope that you will understand that the number of concurrent positions will decrease slightly. To
be more specific, there are some companies where I was an external director who came in with a
VC from an unlisted company and was an external director, and then the VCs left before thecompany went public and I was left alone as an external director. Some of the requirements havetaken a bit of time to build the team back up from there, so I think we can gradually reduce that. I
think the concurrent positions will fall into the area that you all think is desirable, at least in thefour listed companies.
The other point is the longer term, which I think is also a kind of trade-off between independence
and proficiency. When I think about working external directors and co-creation in an interactive
way, as I mentioned earlier, I think that proficiency is extremely important. I have been discussing
this at the Japan Institute of Directors with outside directors such as Nakagami, and I know thatmany US outside directors have been in office for 20 years or so, and many of them are experienced
management professionals. At that timeI think what we have to be careful about is that we are going
to increase the level of proficiency, but we still have to be very careful about their independence asa monitoring type. I think the best way to do that is to have the Executive Board members now give9

us their views on how they think about independence, or to have investors give us their views on
how they think about independence.
Q.

Very well understood. We, investors, have recently been meeting with an increasing number ofexternal directors, but we have sometimes wondered whether this is really the best way to monitor
the company, as some of them do not have a good understanding of the company and its industry.
In that sense, listening to your explanation today, I could see the depth of your experience andknowledge, and I personally felt that you have a good understanding of Marui and the various things
you do. If that is what you think of your dual role, I hope that you will work hard to achieve avaluation of 5 times P/B.

A.

Thank you10