Translation: Please note that the following purports to be an accuratelytranslated excerpt of the original Japanese version prepared for theconvenience of investors outside Japan. However, in the case of any
discrepancy between the translation and the Japanese original, the lattershall prevail.

Stock Exchange Code: 8252
June 2, 2017
3-2, Nakano 4-chome, Nakano-ku, TokyoMARUI GROUP CO., LTD.
Hiroshi Aoi
President and Representative Director

Notice of Convocation of the 81st Ordinary General Meeting of Shareholders
Dear Shareholders:
You are cordially invited to attend the 81st Ordinary General Meeting of Shareholders of MARUIGROUP CO., LTD. (the “Company”).
If you are unable to attend the aforesaid meeting, you can exercise your votes through either of themethods stated below. The Company respectfully requests you to view the “Reference Document
Concerning the General Meeting of Shareholders” below and exercise your voting rights on or
before 7:00 p.m. (JST) June 23, 2017 (Friday).

GUIDANCE ON THE WAY TO EXERCISE THE VOTING RIGHTS:[For those attending the General Meeting of Shareholders]
Please submit the Voting Rights Exercise Form enclosed herewith to the reception at the venue of themeeting. Furthermore, please be advised that persons other than the shareholders such as proxy who is
not a shareholder and persons accompanying you shall not be able to enter the place of meeting.
[For those exercising voting rights by mail]Please indicate on the Voting Rights Exercise Form enclosed herewith your consent or dissent to the
proposals on the agenda, and return the form to the Company by mail on or before the deadline statedabove.
[For those exercising voting rights via the Internet]
Please access the website for the exercise of voting rights (http://www.evote.jp/), using the log-in ID
and temporary password which are shown on the Voting Rights Exercise Form. After logging in,(English Translation)―1―

please indicate whether you approve or disapprove the items on the agenda by following the
instructions on the screen by the deadline stated above.
With respect to exercising voting rights via the Internet, the Company takes liberty to ask shareholders
to confirm the Guidelines for the Exercise of Voting Rights via the Internet. (Note: This paragraphintentionally omitted as the Internet voting service is only available in Japan in the Japanese
language.)
PARTICULARS

1. Date and Time of the Meeting:

2. Place of the Meeting:Monday, June 26, 2017 at 10:00 a.m.
(Reception commences at 9:00 a.m.)

3rd Floor of the Head Office of MARUI GROUP CO., LTD.
at 3-2, Nakano 4-chome, Nakano-ku, Tokyo, Japan
Please be aware that the place of the meeting is different from that of lastyear.
Souvenirs distributed on the day of the General Meeting of Shareholders
will no longer be provided. We appreciate your understanding.

3. Matters to be Addressed at the Meeting:
Matters to be Reported:
1. Report on the Business Report, the Consolidated Financial Statements andthe Non-Consolidated Financial Statements for the 81st Fiscal Year (from
April 1, 2016 to March 31, 2017).
2. Report on the Results of the Audits of Consolidated Financial Statements by
the Accounting Auditors and the Audit & Supervisory Board.
Matters to be Resolved:
Proposal 1: Proposed Disposal of Surplus
Proposal 2: Election of Seven (7) Directors
Proposal 3: Election of One (1) Substitute Audit & Supervisory Board Member
Guidance for Exercising Voting Rights:(1) In the event that a shareholder exercises voting rights both via return mail (Voting Rights
Exercise Form) and the Internet, the Company will consider the exercise of voting rights
via the Internet to be valid.
(2) In the event that a shareholder exercises voting rights via the Internet more than once, theCompany will consider the last exercise of voting rights to be valid.
- End (English Translation)―2―

・ If there is any amendment to the contents of the Reference Document Concerning the General Meetingof Shareholders, the Business Report, the Non-Consolidated Financial Statements, the Consolidated
Financial Statements, the Company will announce such amendment on the Company’s homepage(http://www.0101maruigroup.co.jp/).

(English Translation)―3―

A message to all of our shareholders
Hiroshi Aoi
President and Representative
Director, and Group Representative
Executive Officer
Let me begin by expressing by sincere appreciation for your ongoing patronage and support of the
MARUI GROUP.
Our corporate philosophy is to “continue evolving to better aid our customers” and we “equate thedevelopment of our people with the development of our company.” Based on this philosophy, ourmission is to maintain ties with our customers to co-create new customer happiness. By always striving
to attend to the needs of our customers and to bring them joy, we treasure our interactions withcustomers and accordingly base all our actions from their perspective. This sentiment is not only
imprinted in the Group's corporate DNA; it is also the point of origin for the co-creation management
we envision.
We believe that corporate value is found at the intersection of our stakeholders’ interests and happiness,and view expanding this intersection as key to enhancing our corporate value.
MARUI GROUP’s co-creation of corporate value has only just begun. We hope that continued dialogue
with all of our shareholders serves as a basis for “co-creation management” with all of our stakeholders.
We look forward to your continued patronage in the future.
June 2017(English Translation)―4―

Reference Document Concerning the General Meeting of Shareholders
Proposals and Reference Materials
Proposal 1:

Proposed Disposal of Surplus

The Company considers that returning the profit to the shareholders is one of the important management
priorities. The Company has a basic policy of continuing to return profits to the shareholders in proportion
to the operating results with a view to retaining the consolidated payout ratio at least 40%. The Company
will carry out return of profit to the shareholders taking into consideration results of operation and financial
conditions and other relevant factors.
Based on the above basic policy, it is proposed that the year-end dividends for the fiscal year under review
be 17 yen per share. Together with the interim dividends of 16 yen per share which have been paid, theannual payment of dividends for the fiscal year under review shall be 33 yen per share, an increase of 11
yen per share compared with the previous fiscal year, which is the increase in dividends for five (5)consecutive fiscal years.
Matters related to the year-end dividend:(1) Type of assets distributed: Cash
(2) Matter related to distribution of cash and total amount:
17 yen per share of common stock of the Company
Total amount: 3,900,785,439 yen(3) Effective date for distribution of surplus: June 27, 2017(English Translation)―5―

Proposal 2:

Election of Seven (7) Directors

The term of office of all of the six (6) Directors will expire at the close of this General Meeting.
In line with above, the Company would like to propose to elect seven (7) Directors, including the additionof one (1) External Director, in order to enhance management transparency and further strengthen the
supervisory functions of Board of Directors’ meetings.
Accordingly, the number of External Directors will be three (3).
The candidates for Directors are as follows:
Candidate
Number1

Name

Positions and Responsibilities
at the Company

Hiroshi Aoi

President andRepresentative Director,
and Group Representative
Executive Officer【Reappointment】【Reappointment】

2

Koichiro Horiuchi 【Candidate for External Director】

External Director【Candidate for Independent Director】【Reappointment】
3

Etsuko Okajima【Candidate for External Director】

External Director【Candidate for Independent Director】【New appointment】
4

Masahiro Muroi 【Candidate for External Director】【Candidate for Independent Director】

5

Masao Nakamura 【Reappointment】

6

Tomoo Ishii【Reappointment】

7

Hirotsugu Kato

【Reappointment】(English Translation)―6―

Director and Managing
Executive Officer
Responsible for Retailing
Business
Director and Managing
Executive Officer, and Chief
Operating Officer, Healthcare
Promotion
In charge of General
Affairs, Personnel and
Healthcare Promotion
Director and Senior
Executive Officer
General Manager, IR
Division
In charge of Corporate
Planning and ESG
Promotion

Name(Date of Birth)(Brief History, Positions, Responsibilities, and Important
Positions at Other Organizations Concurrently Assumed, If Any)
Jul. 1986
Apr. 1991
Apr. 1995

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

1

Hiroshi Aoi(January 17, 1961)【Reappointment】

Number of
Shares Held

Joined the Company
Director, and General Manager, Sales Planning
Headquarters
Managing Director, Deputy General Manager,
Sales Promotion Headquarters, and General
Manager, Sales Planning Division
Managing Director, and General Manager, Sales
Promotion Headquarters
Executive Vice President and Representative
Director
President and Representative Director
President and Representative Director, and Group
Representative Executive Officer (Incumbent)

Reasons for nomination as a candidate for Director

1,538,300

Mr. Hiroshi Aoi has properly operated the Board of Directors as
the chairman and duly performed his supervisory functions forimportant management decision making and operational
execution as President and Representative Director of theCompany since 2005. He has ample business experience andknowledge as a corporate manager, and has controlled overall
operation of the Group and performed his duties properly asGroup Representative Executive Officer. Based on the above
reasons, the Company believes that he can fully perform his
functions for long- and mid- term improvement in corporate
value of the Company. Therefore, the Company has nominatedhim as a candidate for a Director.
Apr. 1983
Mar. 1988

Koichiro Horiuchi(September 17,1960)【Reappointment】【Candidate forExternal Director】

2▸ Term of office from theappointment as Directorof the Company to theclose of this Ordinary
General Meeting of
Shareholders: 9 years▸ Attendance to the
Meetings of the Board of
Directors: 10 out of 10(English Translation)

Jun. 1988
Feb. 1989
Jun. 1989

Sep. 1989
Jun. 2008
Jun. 2012

Joined The Long-Term Credit Bank of Japan
Joined FUJI KYUKO CO., LTD., General
Manager,
Corporate Planning Division, FUJI KYUKO CO.,LTD.
Director, FUJI KYUKO CO., LTD.
Senior Managing Director, FUJI KYUKO CO.,LTD.
Representative Director and Senior Managing
Director,
FUJI KYUKO CO., LTD.
President and Representative Director, FUJIKYUKO CO., LTD. (Incumbent)
External Director (Incumbent)
External Audit & Supervisory Board Member,
THE YAMANASHI CHUO BANK, LTD.
(Incumbent)

Reasons for nomination as a candidate for External Director
Mr. Koichiro Horiuchi has experience and extensive knowledgeof corporate management. He also has actively made comments
as External Director of the Company from an independent,
objective position and have currently performed his duties for theCompany properly. As the Company believes that he cancontinue to contribute to the reinforcement of supervisory
function for management of the Company, the Company has
nominated him as a candidate for an External Director.

―7―

0

Name
(Date of Birth)

Etsuko Okajima(May 16, 1966)【Reappointment】【Candidate forExternal Director】

3▸ Term of office from theappointment as Directorof the Company to theclose of this Ordinary
General Meeting of
Shareholders: 3 years▸ Attendance to the
Meetings of the Board of
Directors: 10 out of 10(Brief History, Positions, Responsibilities, and Important
Positions at Other Organizations Concurrently Assumed, If Any)
Apr. 1989
Jan. 2001
Jul. 2005
Jun. 2007
Jun. 2014

Mar. 2016

Ms. Etsuko Okajima has experience and extensive knowledge ofcorporate management and is well versed in diversity. She has
currently performed her duties as External Director of theCompany properly from an independent, objective position. As
the Company believes that she can continue to contribute to thereinforcement of supervisory function for management of theCompany, the Company has nominated her as a candidate for anExternal Director.

Jun. 2000
Apr. 2002
Apr. 2007
Apr. 2009

Apr. 2013
Masahiro Muroi(July 13, 1955)

Apr. 2015【New appointment】

Jun. 2016【Candidate forExternal Director】

Apr. 2017

Joined Nomura Computer System Co., Ltd.
(current Nomura Research Institute, Ltd.)
Member of the Board, Nomura ResearchInstitute, Ltd.
Senior Corporate Managing Director, Member ofthe Board, Nomura Research Institute, Ltd.
Senior Executive Managing Director, Member ofthe Board, Nomura Research Institute, Ltd.
Representative and Senior Executive Managing
Director, Member of the Board, Nomura
Research Institute, Ltd.
Representative and Vice President, Member ofthe 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 ResearchInstitute, Ltd. (Scheduled to retire in June 2017)

Reasons for nomination as a candidate for External Director
Mr. Masahiro Muroi has experience in taking the initiative incorporate governance reforms as a corporate manager and deep
knowledge of leading-edge technology and the digital field. As
the Company believes that he can contribute to the reinforcementof supervisory function for management of the Company whendeveloping a growth strategy via open innovation which theCompany will promote, the Company has nominated him as a
candidate for an External Director.

(English Translation)0

Reasons for nomination as a candidate for External Director

Apr. 1978

4

Joined Mitsubishi Corporation
Joined McKinsey & Company
Representative and CEO, GLOBIS Management
Bank
Representative and CEO, ProNova Inc.
(Incumbent)
External Director, Astellas Pharma Inc.
(Incumbent)
External Director (Incumbent)
External Director, Link and Motivation Inc.
(Incumbent)

Number of
Shares Held

―8―

0

Name
(Date of Birth)(Brief History, Positions, Responsibilities, and Important
Positions at Other Organizations Concurrently Assumed, If Any)
Apr. 1983
May 2003
Apr. 2007
Jun. 2008

Apr. 2011

Apr. 2015

5

Masao Nakamura(June 11, 1960)

Apr. 2016【Reappointment】

May 2016

Joined the Company
General Manager, Store Planning Division, Sales
Promotion Headquarters
Executive Officer, and General Manager, Group
Business Promotion Division
Director and Executive Officer, and General
Manager, Corporate Planning Division andBusiness Development Division
Managing Director and Managing Executive
OfficerPresident and Representative Director, MARUICo., Ltd.
Director and Managing Executive Officer
Responsible for Retailing and Store Operations
Business
President and Representative Director, AIM
CREATE CO., LTD. (Incumbent)
Director and Managing Executive Officer
Responsible for Retailing Business (Incumbent)

Reasons for nomination as a candidate for Director
Mr. Masao Nakamura has business experience in corporate
planning, business development, store planning, etc. and has
performed his supervisory functions properly for importantmanagement decision making and operational execution as
Director of the Company since 2008. He has controlled retailingbusiness and performed his duties properly as Managing
Executive Officer of the Company. Based on the above reasons,the Company believes that he can fully perform his functions forlong- and mid-term improvement in corporate value of theCompany. Therefore, the Company has nominated him as a
candidate for a Director.

(English Translation)―9―

Number of
Shares Held

20,800Name(Date of Birth)(Brief History, Positions, Responsibilities, and Important
Positions at Other Organizations Concurrently Assumed, If Any)
Apr. 1983
Oct. 2005
Apr. 2007
Jun. 2009
Apr. 2013
Apr. 2015

Apr. 2016

6

Tomoo Ishii(July 16, 1960)【Reappointment】

Apr. 2017

Joined the Company
General Manager, Group Compliance Division
Executive Officer, and General Manager, Group
Compliance Division
Director and Executive Officer, and General
Manager, General Affairs Division
Director and Executive Officer, and General
Manager, Personnel Division
Director and Managing Executive Officer, Chief
Operating Officer, Healthcare Promotion, andGeneral Manager, Personnel Division
In charge of General Affairs and Healthcare
Promotion
Director and Managing Executive Officer, andChief Operating Officer, Healthcare Promotion
In charge of General Affairs, Personnel and
Healthcare Promotion (Incumbent)
President and Representative Director, MOVING
CO., LTD. (Incumbent)

Reasons for nomination as a candidate for Director
Mr. Tomoo Ishii has business experience in Personnel, General
Affairs and Compliance Division, etc. and has performed his
supervisory functions properly for important management
decision making and operational execution as Director of theCompany since 2009. He also has controlled general affairs,
personnel and healthcare promotion and performed his duties
properly as Managing Executive Officer of the Company. Basedon the above reasons, the Company believes that he can fully
perform his functions for long- and mid-term improvement incorporate value of the Company. Therefore, the Company has
nominated him as a candidate for a Director.

(English Translation)― 10 ―

Number of
Shares Held

17,500Name(Date of Birth)(Brief History, Positions, Responsibilities, and Important
Positions at Other Organizations Concurrently Assumed, If Any)
Mar. 1987
Apr. 2013
Apr. 2015
Oct. 2015
Jun. 2016

Oct. 2016

7

Hirotsugu Kato
(July 30, 1963)【Reappointment】

Apr. 2017

Joined the Company
General Manager, Corporate Planning Division
Executive Officer, and General Manager,
Corporate Planning Division
Executive Officer, and General Manager,
Corporate Planning Division and IR Division
Director and Senior Executive Officer
General Manager, Corporate Planning Division
and IR Division
Director and Senior Executive Officer
General Manager, Corporate Planning Division
and IR Division
In charge of ESG Promotion
Director and Senior Executive Officer
General Manager, IR Division
In charge of Corporate Planning and ESG
Promotion (Incumbent)

Number of
Shares Held

4,500

Reasons for nomination as a candidate for Director
Mr. Hirotsugu Kato has business experience in Corporate
Planning, Finance and IR Divisions, etc. and has performed his
supervisory functions properly for important management
decision making and operational execution as Director of theCompany since 2016. He also has controlled corporate planningand ESG promotion and performed his duties properly as Senior
Executive Officer of the Company. Based on the above reasons,the Company believes that he can fully perform his functions forlong- and mid-term improvement in corporate value of theCompany. Therefore, the Company has nominated him as a
candidate for a Director.

Notes:
1. Mr. Koichiro Horiuchi and Ms. Etsuko Okajima are candidates for External Directors and theCompany has submitted a notification designating them as independent directors to Tokyo Stock
Exchange, Inc.
2. Ms. Etsuko Okajima’s name on the family register is Ms. Etsuko Mino.
3. Mr. Masahiro Muroi is a candidate for External Director and the Company plans to submit a
notification designating him as an independent director to Tokyo Stock Exchange, Inc. subject to his
appointment.
4. Mr. Masahiro Muroi is a Member of the Board of Nomura Research Institute, Ltd., which is abusiness partner of the Company, and he will retire from his post in June 23, 2017, and is expected
to be appointed as Advisor on the same day. The Company’s payment amount to Nomura ResearchInstitute, Ltd. for the most recent fiscal year was 8 million yen, which accounted for 0.002% ofconsolidated sales of Nomura Research Institute, Ltd., and therefore he satisfies the “Criteria for
Independence for External Directors and Audit & Supervisory Board Members” of the Company.
For the “Criteria for Independence for External Directors and Audit & Supervisory Board Members”
of the Company, please see “Criteria for Independence for External Directors and Audit &Supervisory Board Members” set forth as follows hereafter.
5. The Company has entered into a liability limit agreement with each of Mr. Koichiro Horiuchi and
Ms. Etsuko Okajima under which his/her liability shall be limited to the minimum amount provided
for in laws and regulations. In the event that they are re-elected as External Directors, the Company(English Translation)― 11 ―

is scheduled to enter into the same agreement with each of them. In the event that Mr. Masahiro
Muroi is elected, the Company plans to enter into a liability limit agreement with him identical tothe above.

(English Translation)― 12 ―

Proposal 3: Election of One (1) Substitute Audit & Supervisory Board Member
The resolution of electing Mr. Akira Nozaki as a Substitute Audit & Supervisory Board Member made at
the 80th Ordinary General Meeting of Shareholders of the Company held on June 29, 2016 will be in effectuntil the start of this General Meeting.
For the purpose of preparing the case in which the number of Audit & Supervisory Board Member falls
below the minimum number stipulated in the laws and regulations, the Company would like to propose toelect one (1) Substitute Audit & Supervisory Board Member.
Furthermore, the Audit & Supervisory Board has consented to this proposal.
Candidate for Substitute Audit & Supervisory Board Member is as follows:

Name(Date of Birth)

Akira Nozaki(November 20, 1957)【Candidate for
Substitute Audit &Supervisory Board
Member】(Brief History and Important Positions at Other Organizations Concurrently
Assumed, If Any)
Apr. 1988
Jun. 2015

Number of
Shares Held

Registered as Attorney
External Director, J-OIL MILLS, Inc. (Scheduled to retirein June 2017)
External Director, ICHIKAWA CO., LTD. (Incumbent)

Reasons for nomination as a candidate for Substitute External Audit &Supervisory Board Member

0

The Company believes that he can carry out audit of the Company based on
his legal knowledge and experience obtained through his long-term practiceas a lawyer. Therefore, the Company has nominated him as a candidate for a
Substitute External Audit & Supervisory Board Member.

Notes:
1. There is no special interest between the candidate and the Company.
2. Mr. Akira Nozaki is a candidate for Substitute External Audit & Supervisory Board Member of theCompany. In the event that his election is approved and he assumes the post of External Audit &Supervisory Board Member, the Company plans to submit an Independent Officer Registration
Statement to the Tokyo Stock Exchange, Inc. that designates him as an independent audit &supervisory board member.
3. Mr. Akira Nozaki serves as an External director of J-OIL MILLS, Inc., but will resign on June 22
2017, and is scheduled to be appointed as an External Audit & Supervisory Board Member at said
Company on the same day.
4. In the event that Mr. Akira Nozaki is elected, the Company plans to enter into a liability limiting
agreement with Mr. Akira Nozaki, under which his responsibility would be limited to the extent of
the minimum amount provided for in the laws and regulations, upon his assumption of office as
Audit & Supervisory Board Member.

(English Translation)― 13 ―

Criteria for Independence for External Directors and Audit & Supervisory Board Members
MARUI GROUP 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 theindependence of External Directors, External Audit & Supervisory Board Members, and candidates forthese two positions. Individuals that meet 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 and must not have been a person involved in operation during the past ten (10) years.
2. The individual must not be a major supplier*2 of the Company, its subsidiaries, or its affiliates or aperson involved in operation of a major supplier.
3. The individual must not be a major customer*3 of the Company, its subsidiaries, or its affiliates or aperson 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.
5. The individual must not be a person involved in operation of an entity in which the Company, its
subsidiaries, or its affiliates possesses direct or indirect holdings equating to 10% or more of thetotal voting rights of such entity.
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 Company, its subsidiaries, or its affiliates that are separate from the compensation
paid for services as a Director or Audit & Supervisory Board Member. The individual also must notbelong 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 from the Company, its subsidiaries, or its affiliates and must not belong to a company orother organization that receives such donations.
8. The individual must not be the accounting auditor of the Company. The individual also must notbelong to a company 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 (5) years.
10. The individual must not be a relative*5 of an individual that qualifies under Items 2. to 8. (onlyapplicable to relatives 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 theCompany is in interrelationship of external officers*7.
*1 A “person involved in operation” is defined as an executive director, executive officer, or employee 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, non-company legal entities, or organizations.
*2 A “major supplier” is defined as an entity that fulfills one of the following conditions:a. 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 Company, its subsidiaries, or its
affiliates and for which transactions with the Company, its subsidiaries, and its affiliates equated to 10
million yen or more and represented more than 2% of the total consolidated net sales or transaction
revenues of the supplier group in the most recently completed fiscal year.

(English Translation)― 14 ―

b. A supplier group with which liabilities of the Company, its subsidiaries, or its affiliates are associatedand for which the applicable liabilities equated to 10 million yen or more 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.
*3 A “major customer” is defined as an entity that fulfills one of the following conditions:a. A customer group (the corporate group to which the customer that serves as the direct transaction

counterparty belongs) to which the Company, its subsidiaries, or its affiliates provide products orservices and for which the total amount of transactions with the customer group equated to 10 million
yen or more and represented more than 2% of the consolidated total operating revenues of theCompany in the most recently completed fiscal year.
b. A customer group possessing liabilities that are associated with the Company, its subsidiaries, or its
affiliates and that equated to 10 million yen or more and represented more than 2% of the consolidated
total assets of the Company as of the end of the most recently completed fiscal year.
c. A financial group (the financial group to which the customer that serves as the direct transaction
counterparty belongs) from which the Company, its subsidiaries, or its affiliates procure funds throughborrowings and from which the total amount of funds borrowed represented more than 2% of theconsolidated total assets of the Company as of the end of the most recently completed fiscal year.
*4 A “large amount of monetary payments or other financial assets” means monetary payments or other financial assets,
the total amount of which is 10 million yen or more within the most recent fiscal year.
*5 A “relative” means a spouse of, and any family member who has relation within the second degree with, theindividual.
*6 “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.
*7 “Interrelationship of external officers” refers to a relationship whereby a person involved in operation of the Company,
its subsidiaries and its affiliates serves as an external officer of another company, and a person involved in operationof the said company serves as an external officer of the Company.

End(English Translation)― 15 ―

MARUI GROUP DIGEST 2016
April

■ Opened “Hakata Marui”, the first store in Kyushu■ Issued EPOS card’s first Hokkaido facility collaborative card, “Rera EPOS card”(Chitose City)May■ Participated in TOKYO RAINBOW PRIDE 2016
■ Established a Nomination and Compensation Committee

June■ Selected in the upper ranks in the retail sector in America’s “Institutional Investor”
ranking of the Best IR Companies in Japan・ No. 2 Ranking for Best IR Company on the Sell Side・ Combined No. 2 Ranking for Best CEO

July■ Opened “maruinoshoes” in Sendai PARCO2■ Acquired “Platinum Kurumin” certification as a company that supports child-rearing

August■ Set up an exhibit at “Comic Market 90”■ Showing of “YELL FOR THE BLUE SKY,” the first film for which the Company
was part of the production committee

September■ Signed a business and capital alliance agreement with MONEY DESIGN Co., Ltd., afintech venture company■ Awarded the Grand Prize at the “IKUMEN AWARD 2016”

October■ Grand opening of “Kashiwa Marui” and “Kashiwa Modi”■ “maruinoshoes” opens in LaLaport Shonan Hiratsuka■ Credit card business awarded the 16th “Porter Prize”■ Issued the “ASPIA Akashi EPOS card”

November■ Grand opening of “Shizuoka Marui” and “Shizuoka Modi”■ Issued “IDC OTSUKA EPOS Card”

December■ Set up an exhibit at “EcoPro 2016”■“2016 Grand Prize as a Company where it Easy to Combine Work and Child-Rearing,”
Recognition Award

January■ Issued the “MALLAGE KASHIWA EPOS card”

February■ Opened “Wowma! Brand Square” at the Company’s specialty shop for fashion brands,“Wowma! for au,” a mail-order website■ Opened Rakuchin Kirei Shoes “Fit Studio” at the Kinshicho store, offering customers
a new experience■ Received “Excellent Health and Productivity Management Corporation (White 500)”
certification

March■ Participated in the production committee for the film “GIN TAMA”■ Opened Rakuchin Kirei Shoes “Fit Studio” in AEON MALL Kisogawa■ Apple Pay starts accepting EPOS card
■ Issued “Feeeal EPOS card” (Asahikawa City, Hokkaido) and “HOSHIGAOKA card
EPOS” (Nagoya City, Aichi)■Signed a partnership agreement with Japan Blind Football Association (JBFA)(English Translation)― 16 ―

(Attached Materials)

Business Report(For the fiscal year from April 1, 2016 to March 31, 2017)
1. Information on the Status of Marui Corporate Group(1) Development of the Businesses of the Corporate Group and Financial Results
The Group brought about innovation through a shift in its business structure and achieved the goals of
the previous mid-term management plan in the fiscal year ended March 31, 2016, one year ahead of theoriginal schedule. Therefore, the Group has formulated a new five-year mid-term management plan withthe fiscal year ending March 31, 2021 as the final year. The target indicators in the new mid-term
management plan are 130 yen or more EPS (earnings per share), 10% or higher ROE (return on equity),and 4% or higher ROIC (return on invested capital).
Under such circumstances, while ROIC for the fiscal year under review has fallen below the previous
fiscal year, EPS increased by 14% and 9.5 yen from the previous fiscal year to 80.2 yen and ROE
increased by 0.7% from the previous fiscal year to 6.7% due to profit growth and capital policies.
Total group transactions for the fiscal year under review increased by 14% and 230.3 billion yen fromthe previous fiscal year to 1,933.7 billion yen primarily as a result of card shopping transactions in the
FinTech business. Operating income increased by 6% from the previous fiscal year to 31.3 billion yen,which is an increase in operating income for eight consecutive fiscal years. In addition, net income
attributable to owners of parent increased by 5% from the previous fiscal year to 18.7 billion yen, which
is an increase in net income attributable to owners of parent for six consecutive fiscal years.
From the fiscal year under review, the Group has changed its segment categories, reorganizing theprevious three business segments of “Retailing and Store Operation,” “Credit Card Services,” and“Retailing-related Services,” into the two core businesses of “Retailing,” led by stores, omni-channel
retailing, and facility management and distribution, and “FinTech,” led by credit cards, financial
services, and IT. In line with the above, year on year comparisons were carried out by reclassifying thefigures in the previous fiscal year into the new segment categories.
(Consolidated financial results for the fiscal year ended March 31, 2017)

EPS (Yen)ROE (%)ROIC (%)

Total Group Transactions
Revenue
Gross Profit[Gross Profit Margin (%)]
Selling, General and
Administrative Expenses
Operating Income
Ordinary Income
Net Income Attributableto Owners of Parent(English Translation)

114
96
104
[-]

Increase(Decrease) fromthe previous
fiscal year
9.5
0.7
(0.2)
(Billionsof yen)
230.3
(8.8)
5.9
[4.9]

134.7

103

4.3

29.6
29.2

31.3
31.1

106
107

1.6
2.0

17.8

18.7

105

1.0

Fiscal year
ended March
31, 2015

Fiscal year
ended March
31, 2016

Fiscal year
ended March
31, 2017

58.9
5.2
3.3
(Billionsof yen)1,469.1
249.8
159.4[63.8]

70.7
6.0
3.3
(Billionsof yen)1,703.4
245.9
160.0[65.1]

80.2
6.7
3.1
(Billionsof yen)1,933.7
237.0
166.0[70.0]

131.4

130.4

28.0
28.0
16.0

― 17 ―

Year on Year
114%
(%)

Retailing
In an environment where customer needs are changing from “goods” to “experiences,” the Group will
shift from a department store-type business model under traditional consignment buying contracts to a
shopping center (SC)-type business model under fixed-term lease contracts by the fiscal year ending
March 31, 2019, in an effort to improve profits.
In April last year, the Group opened its first Kyushu store, Hakata Marui, and at its Kashiwa and
Shizuoka stores where it renovated the entire buildings in the fall, it expanded its lifestyle category,
centered on restaurants, following significant requests from customers, resulting in many customers
visiting the stores regardless of gender and age.
As a result of the concerted efforts of renovation through the shift in business structure to creating SCtype stores under fixed-term lease contracts, with respect to its progress after the passage of three years,
the fixed-term lease contract conversion ratio (fixed-term lease contract conversion floor area/floor area
subject to conversion to fixed-term lease (0.2 million m2)) as of March 31, 2017 was 62% (42%increase from the previous fiscal year), and the Group achieved the current fiscal year’s plan of 60%.
While conversion to fixed-term lease contracts led to an increase in revenue improvement of 2.0 billion
yen and revenue improvement in EC increased 0.3 billion yen, there was a temporary increase of idle
space that occurred due to the closure of retail spaces during the course of renovation, etc., which had anegative effect of 2.6 billion yen, in addition to stagnant sales in retail spaces that were not converted to
fixed-term lease contracts, etc., which had a negative effect of 2.6 billion yen for the fiscal year ended
March 31, 2017. As a result, operating income in the retailing business for the fiscal year under review
decreased by 27% from the previous fiscal year to 7.8 billion yen.
FinTechIn the FinTech business, while new card memberships registered outside the Group fell below theprevious fiscal year due to factors such as the issuance of affiliated cards being concentrated in thesecond half of the fiscal year, those inside the Group increased by 21 thousand members compared tothe previous fiscal year due to the opening of Hakata Marui. As a result, the number of new card
memberships was 741 thousand members, a 2% increase from the previous fiscal year.
Transaction volume increased by 17% from the previous fiscal year to 1,723.3 billion yen, and driven
by gold cards, the shopping transaction balance was favorable, posting a 19% increase from theprevious fiscal year. In particular, the utilization of revolving payments and installment payments
increased due to the expansion of stores handling installment payments, etc., and as a result, the balanceof revolving payments and installment payments increased by 51.0 billion yen, or 25%, from theprevious fiscal year to 255.5 billion yen.
As a result, operating income in the FinTech business for the fiscal year under review increased by 17%
to 27.1 billion yen, which is an increase in operating income for five consecutive fiscal years.

(English Translation)― 18 ―

(Information on the status of the FinTech business for the fiscal year ended March 31, 2017)
Increase(Decrease) from
Fiscal year ended Fiscal year ended
March 31, 2016 March 31, 2017 Year on Year the previous fiscal(10Thousands of (10Thousands of(%)
year
persons)
persons)(10Thousands of
persons)
Number of New Card Memberships

73

74

102

1

[Of which, from outside the Group]

[17]

[16]

[94]

[(1)]

Number of Card Memberships

612

635

104

22

Platinum / Gold

132

156

118

24

(Billionsof yen)(Billionsof yen)(Billionsof yen)Year on Year(%)

Card Shopping Transactions

1,165.6

1,390.6

119

225.0

[Transactions from outside the Group][1,054.0][1,274.7][121][220.7]

Cash Advance Transactions

142.6

136.3

96

(6.4)

Balance of Revolving Payments andInstallment Payments

204.5

255.5

125

51.0

Balance of Operating Loans

134.1

140.6

105

6.5

(Segment Information)
Category(Millions of yen)
Retailing

FinTech

Total

Adjustments

Consolidated

Revenue
To Outside Customers

142,113

94,909237,022-

237,022

Inter-Segment
Revenue orTransferred Revenue

5,975

2,192

8,168

(8,168)-148,089

97,101

245,190(8,168)237,022[Year on Year (%)]

[87.4][114.0][96.3][-][96.4]

Segment Profit

7,759

27,111

34,870(3,616)

31,253[Year on Year (%)]

[72.8][117.4][103.3][-][105.5]

5.2

27.9

-

-

13.2

Total

Operating Margin (%)(English Translation)― 19 ―

(Detail of Total Group Transactions)Category
Product sales
Consignment sales
Rent revenues and others
Retailing-related services
Retailing
Card shopping
Cash advances
Financial services
IT and others
FinTechEliminations
Total

Total Transactions(Millions of yen)
71,818133,285
97,14924,074
326,327
1,390,627
136,253
187,8728,500
1,723,254(115,896)
1,933,685

Composition
Ratio (%)
3.7
6.9
5.0
1.3
16.9
71.9
7.1
9.7
0.4
89.1
(6.0)
100.0

Year on Year (%)
80.4
73.2
234.1
83.1
95.5
119.3
95.5
119.8
102.3
116.9
113.5

Note: Total transactions for retailing-related services include interior design and furnishing for retail stores,
publicity and advertising, distribution/logistics for fashion goods, while IT and others includes IT
systems services, and the management and maintenance of buildings and rent on real estate, etc.
(2) Capital Investments
The capital investments of the Group were mainly for the renovation of sales floors at existing storesand the upgrading of information terminals. The total expenditures on capital investments during the
fiscal year under review amounted to 15,696 million yen.

(3) Fund Procurement
The Group raises funds with the highest priority given to ensuring financial stability, while making
efforts to lengthen its funding period and diversifying its maturity dates as well as funding methods.
During the consolidated fiscal year under review, the Group raised funds of 100.0 billion yen in loans
from financial institutions and 25.0 billion yen from the issuance of bonds in response to an increase intrade receivables of the FinTech business and the repayment of loans.

(4) Issues to be Addressed
The Group is undertaking initiatives to realize its five-year medium-term management plan startingfrom this fiscal year and concluding in the fiscal year ending in March 31, 2021.
The retailing business continues to transition to SC-type stores under fixed term lease contracts, andthe Company plans to improve earnings by converting to fixed-term rentals all floor space capable ofbeing converted by the end of the fiscal year ending March 31, 2019. Through this transition, the Groupis significantly altering the composition of its store categories by transitioning from the present focus on
apparel to restaurants, services and sundries, and is steadily developing a store format that reflects along-term trend marked by a shift from “goods to experiences.” “Hakata Marui,” a store opened in April
last year based on this new store format that attracted a greater number of customers than planned, hadcustomer traffic on the same scale as the Yurakucho store.
In omni-channel retailing, we have undertaken initiatives to develop a unique business model thatcombines the Company’s store, credit card and online strengths. Specifically, there is a store for tryingon women’s shoes that only displays samples for fittings on the floor, and we are developing stores with(English Translation)― 20 ―

sections devoted to “try-ons” that allow customers to freely experiment. Customers can place orders
themselves using tablets at the stores and have the items delivered to their homes for free. By having
customers register for online membership and become credit card members in order to make payments
online, we are creating a business model that generates profits from three areas: sales at stores, lifetime
value when customers register online, and lifetime value when customers become credit card members.
Similar to the try-on store, the business model for the anime business, which started this fiscal year, isbased on a three-in-one model that combines real stores, credit cards, and online shopping. Goingforward, regardless of whether the business we are involved in focuses on goods or experiences, weplan to specialize in enterprise value linked businesses by integrating stores, credit cards and online
shopping. Furthermore, with regard to e-commerce, we have been collaborating with KDDI since
February this year and have expanded sales by operating the online fashion brand sales platform“Wowma! for au,”a mail-order website, and aim to increase our customer numbers through points ofcontact with au’s 38 million customers.
By developing SC-type stores under fixed-term lease contracts and an omni-channel model, we will
make up for losses at poorly performing stores, etc. that cannot be converted to fixed-term rental
contacts, and aim to achieve operating income of 18.0 billion yen or more stated in the Company’s
initial plan in the fiscal year ending March 31, 2021.
In the FinTech business, the amount of transactions handled by the Group has grown by 17% annually
and we have realized strong growth since we started issuing the EPOS card in the fiscal year ended
March 31, 2007. This fiscal year, new credit card memberships have exceeded the previous year due tothe opening of the Hakata Marui store, but “collaboration cards” did not achieve our initial target.
Collaboration cards struggled due to delays opening new commercial facilities and changes in theoperating environment for affiliate companies. We will continue to pursue business alliances in highgrowth fields, such as e-commerce, services and contents-related areas, and make up shortfalls by
expanding throughout the country by collaborating with commercial facilities that leverage the Group’s
expertise and human resources.
Operating income at the FinTech business exceeded our initial plan this fiscal period, but we expect
operating income in the fiscal year ending March 31, 2021 to be in line with our original plan of 40.0
billion yen or more, owing to a conservative view of future trends for cash advances and bad-debt
expenses.
■ Long-term changes in the environment and initiatives targeting new growth
After examining our management strategy for the next 10 years, the Company has been focusing onseven long-term trends. These are the “spread of e-commerce,” “shift in consumption from goods toexperiences”, “emergence of the sharing economy”, “aging population and the low birth rate,” “growing
demand from inbound tourism,” “shift to a cashless society” and “from savings to investment.” We
have summarized our views below upon examining the type of opportunities and threats these long-term
growth trends will create for the Company going forward, as well as the appropriate response.
In the retail business, based on the assumption that the department store retail format where real
stores conduct sales, mainly of goods, continues in the future, we expect the next ten years to be marked
by few opportunities and many threats. The only definite opportunity will be “growing demand frominbound tourism.” However, while there will be many threats, the most significant threat is likely tocome from the “shift to e-commerce.” The shift to e-commerce in Japan is presently approximately 5%,
but we believe there is a real possibility that after ten years this could reach approximately 20%,exceeding Europe, the U.S., and China. Specifically, in industries in which the fashion component, suchas apparel and sundries, comprises a large proportion of sales, we expect the substitution ratio caused by
the shift to e-commerce to be high compared to industries that focus on foods, and the impact will be(English Translation)― 21 ―

tremendous. Furthermore, we believe the decline in apparel sales caused by the “shift in consumption
from goods to experiences” will continue over the long term.
Next is “emergence of the sharing economy”. It is believed that users of this economy are presently
approximately 2%, but this is likely to increase to as much as approximately 10% in the next ten years.
Stated differently, since “sharing” means not purchasing goods, this is a threat for retail. Furthermore,
the population of the working generation, which is a determinant of consumption, has been declining
each year because of “the aging population and the low birth rate.”
Our response to these threats are the transition to the SC-type stores under fixed-term lease contracts
and the omni-channel model being developed under the present medium-term management plan. Bytransitioning from a department store format that mainly sells goods to an SC-type format, we will not
only expand our restaurants category, which is not easily affected by the shift to e-commerce, but
increase tenants offering services and experiences that cannot be easily substituted by e-commerce. We
will also begin to strategically introduce omni-channel tenants to simultaneously develop e-commerceand real stores.
Initiatives are proceeding at the Company to facilitate the shift to an omni-channel model. We will
expand the “try-on shoes” stores to include other items, and will begin to hold events, etc. for the threein-one anime model. Meanwhile, with the “emergence of the sharing economy,” we will begin
initiatives to commercialize both goods and space as a new business. Furthermore, in response to thedeclining population, we will begin work to expand our customer base and customer numbers by
utilizing “customer diversity and inclusion” initiatives, which provide products, services andcommercial facilities that can be enjoyed by all people, irrespective of age, physical features or age.
Next, in contrast to retail, the FinTech business is benefiting from many opportunities, and threats toretail will turn into opportunities. The most significant opportunity will be the “shift to a cashlesssociety.” We believe that the shift to e-commerce, shift in consumption from goods to experiences, andthe emergence of the sharing economy, etc. will be factors that encourage the shift to a cashless society.
As society become more cashless, the credit card market has grown at annual rate of 7% over theprevious ten years, this growth, combined with preparations for the 2020 Olympics and Paralympic
Games, should continue going forward.
Furthermore, while the shift “from savings to investment” has not led to opportunities forconventional credit card businesses, it will create opportunities by redefining the FinTech business. Thatsaid, in terms of threats, there are concerns that the cash advance market could shrink as society
becomes increasingly cashless. This, along with diverse payment methods created in line with the shift
to a cashless society, will lead to the emergence of payment methods other than credit cards, and this
could lead to the cannibalization of credit card market share.
The Company’s response to these developments was to transition from a house credit card to a
general credit card, which was been underway since 2006, and to redefine our business from a card to a
fintech business. By transforming to a general credit card, the EPOS card transitioned to a businesscapable of benefiting from the shift to a cashless society. Going forward, by redefining the business as a
fintech business from a card business, new business opportunities will increase. At the same time, by
seeking to develop diverse payment methods, etc. as part of its own fintech, rather than allowing thisshare of the market to be unilaterally cannibalized, we hope that linking new payment methods to credit
card enables the Company to change threats into opportunities.
To summarize the Company’s response to opportunities and threats, retailing will confront several
simultaneous threats, but by responding with a shift to SC-type stores under a fixed-term lease contracts
and an omni-channel model, threats will turn into opportunities. Furthermore, we are implementing
inclusive businesses as initiatives to appeal to all customers, as well as developing new businesses in
preparation for new businesses that facilitate the arrival of the sharing economy. At the FinTech(English Translation)― 22 ―

business, in addition to opportunities from the expansion of the credit card market as society becomesincreasingly cashless, we will realize continued strong growth by increasing memberships andpositioning the EPOS card as a main card through our sales capabilities, absorbing risk associated withthe shrinking of the cash advance market. Furthermore, by expanding our business fields in the fintech
field, we will develop new businesses and strive to realize financial inclusion, centered on young people.
■Growth investment and shareholder returns
The Group will effectively utilize the cash flow generated from its business, and enforce growthinvestment and shareholder returns based on its mid-term management plan ending in the fiscal year
ending March 31, 2021. In terms of growth investments, we plan to allocate 30.0 billion yen to new
businesses other than existing businesses.
We have positioned three fields as investment fields. These are fintech, e-commerce and the sharing
economy. We divided fintech and the sharing economy into two fields; for fintech, the fields are
payments and asset management, and for the sharing economy they are goods and space. The purposeof investments is not just simply investment but rather to expand and generate innovation at corebusinesses through investment and collaboration.
As for dividends, the Group will aim to achieve both “high growth” and “high returns” by targeting a
consolidated payout ratio of 40% or higher and exerting efforts to continuously improve dividend levels
in tandem with long-term EPS growth.
Furthermore, as for acquisition of treasury stock, in comprehensive consideration of cash flow
situation, etc., the Group will acquire treasury stock in a timely manner to improve capital efficiency
and shareholders’ profit. Treasury stock acquired will be cancelled as a general rule.
The Group is committed to further improving corporate value by implementing group strategies
based on the mid-term management plan as described above. Management, therefore, looks forward to
the continuing support and encouragement of its shareholders.
(5) Assets and Profits and Losses
78th
Fiscal year ended
Category
March 31, 2014
Total Grouptransactions *(Millions of yen)
Net Sales
416,460(Millions of yen)
Revenue *(Millions of yen)
Ordinary income
27,698(Millions of yen)
Profit attributableto owners of
15,409parent(Millions of yen)
Earnings per
share
56.29
(Yen)
ROE (%)
Total assets(Millions of yen)
Net assets(Millions of yen)(English Translation)

79th
Fiscal year ended
March 31, 2015

80th
Fiscal year ended
March 31, 2016

81st
Fiscal year ended
March 31, 2017

1,469,111

1,703,353

1,933,685

404,947--

249,847

245,867

237,02228,002

29,16331,13916,036

17,771

18,724

58.87

70.68

80.24

5.0

5.2

6.0

6.7

664,019675,627

730,126

806,575

315,889

307,255

282,101

274,339― 23 ―

* From the 80th fiscal year, the Group has introduced the “total Group transactions” as a new indicator of
growth potential of the Group. Furthermore, in conjunction with the change of the accounting policy,
the line item that was previously “net sales” has changed to “revenue.” In line with this change, thefigures for the 79th fiscal year are those retroactively reflected the change of such accounting policy.

(English Translation)― 24 ―

(6) Major Subsidiaries of the Groupi. Major Subsidiaries of the Group
Company Name

Capital Stock(Millions of yen)

MARUI Co., Ltd.

100

Epos Card Co., Ltd.

100

MRI SERVICER Co.,
Ltd.

500

AIM CREATE CO.,
LTD.

100

MOVING CO., LTD.

100

Percentageof Ownership(%)

Principal Business

Marui Store Business Operation,
Original Sales and Private Brand
100.0 Operation and Development, Online
Shopping and Mail-order, Outside
Specialty Store Business
Credit Card Business, Credit Loan
100.0
Business
Collection and Management of
100.0
Receivables Business, Credit Check[100.0]Business
Proposal of Commercial Facilities
Category, Design and Interior
Decoration, Operation and
100.0Management, Operation of Modi
stores, Planning and Making ofAdvertisement
Trucking Business, Forwarding
100.0
Business
Software Development,
95.0
Computer Operation
Building Management Service
100.0
Business, Security Service Business

M&C SYSTEMS CO.,234
LTD.
MARUI FACILITIES
100
Co., Ltd.
MARUI HOME
100
100.0 Real-Estate Rental Business
SERVICE Co., Ltd.
Notes: The figure in square brackets “[ ]” in the Percentage of Ownership column indicates the share ofindirect ownership as an included number.
ii. Status of Specified Wholly Owned Subsidiaries as of the End of the Fiscal Year under Review
Total Amount ofCompany Name
Address
Total Assets of the Company
Book Value(Millions of yen)
MARUI Co., Ltd.
Epos Card Co., Ltd.

(Millions of yen)

222,529

3-2, Nakano 4chome, Nakanoku, Tokyo

712,649
149,850(7) Lines of Business of the GroupThe Group’s lines of business are Retailing (rental and operational management of commercial facilities,
etc. and over-the-counter and online sales of apparel, luxury and accessory goods, etc.,), and FinTech(credit card services, consumer loans, and rent guarantees, etc.).

(English Translation)― 25 ―

(8) Major Business Hubsi. Head Office
Company Name

Location

MARUI GROUP CO., LTD.
MARUI Co., Ltd.
Epos Card Co., Ltd.
MRI SERVICER Co., Ltd.
Nakano-ku, Tokyo

AIM CREATE CO., LTD.
M&C SYSTEMS CO., LTD.
MARUI FACILITIES Co., Ltd.
MARUI HOME SERVICE Co., Ltd.
MOVING CO., LTD.

Toda-shi, Saitama Prefectureii. Stores
PrefectureStore NameTokyo

Shinjuku, Ikebukuro Marui, Shibuya Marui and Modi, Kinshicho, Ueno Marui,
Kitasenju Marui, Yurakucho Marui, Nakano Marui, Kichijoji, Machida Marui andModi, Kokubunji Marui

Kanagawa

Marui City Yokohama, Kawasaki, Marui Family Mizonokuchi, Marui Family
Ebina, Totsuka Modi

Saitama
Chiba
IbarakiShizuoka
Osaka
Hyogo
Kyoto
FukuokaOmiya Marui, Soka Marui, Marui Family Shiki, Kawagoe Modi
Kashiwa Marui and Modi
Mito
Shizuoka Marui and Modi
Namba Marui
Kobe MaruiKyoto Marui
Hakata Marui(9) Matters concerning Employees
Business Category
Retailing
FinTechCorporate (Common functions)

Number of Employees(Number of Person)
4,241
1,247
244

Total

5,732

Comparison with
the Previous Fiscal Year End(Number of Person)
341 (decrease)137 (increase)37 (increase)167 (decrease)

Notes:
1. The number of employees shown above does not include part-time employees. Average number of(English Translation)― 26 ―

part-time employees during the fiscal year (calculated based on monthly work hours) is 1,755.
2. Corporate (Common functions) refers to corporate management departments and others that cannot
be included in any specific segment.
(10) Main Loan Lenders
Lenders

Outstanding Balance(Millions of yen)

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

85,900Syndicated loan

85,000Sumitomo Mitsui Banking Corporation

47,000Mitsubishi UFJ Trust and Banking Corporation

29,100Mizuho Bank, Ltd.

22,300Development Bank of Japan Inc.

18,000Note: Syndicated loan is co-financing whose manager is The Bank of Tokyo-Mitsubishi UFJ, Ltd.
2. Matters concerning the Shares of the Group(1) Total Number of Shares Authorized to be Issued: 1,400,000,000 shares(2) Number of Shares Issued and Outstanding: 233,660,417 shares (including 4,202,450 shares oftreasury stock)(3) Number of Shareholders: 24,080 shareholders(4) Principal Shareholders (Top 10)
Number of SharesHeld(thousand shares)

Registered Name

Percentage ofShareholding%

The Master Trust Bank of Japan, Ltd. (Trust Account)30,135

Japan Trustee Services Bank, Ltd. (Trust Account)

17,144

13.1
7.5

GOLDMAN, SACHS & CO. REG

6,185

2.7

Aoi Real Estate Company

6,019

2.6

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Trust & Custody Services Bank, Ltd.(Securities
Investment Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account 9)

5,808

2.5

5,460

2.4

4,179

1.8

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

3,814

1.7

Toho Co., Ltd.

3,779

1.6

Aoi Scholarship Foundation

3,234

1.4

Notes:
1. The Company holds 4,202 thousand shares of treasury stock which is excluded from the above
principal shareholders.
2. Percentage of shareholding is calculated based on the total number of shares issued and outstanding,excluding the treasury stock of 4,202 thousand shares.
3. The calculation for the percentage of shareholding includes 502 thousand shares held by the Officer
Remuneration BIP Trust and Stock Benefit ESOP Trust(English Translation)― 27 ―

(5) Other Significant Matters concerning Equity
1. Acquisition of treasury stock through Tokyo Stock Exchange’s owns share repurchase trading(ToSTNeT-3) and market buying
・Treasury stock acquired as authorized at the Board of Directors’ Meeting held on May 12, 2016:
Type and total number of shares acquired: 9,936,400 shares of common stock
Total cost of acquisition: 14,999,950,400 yen
Period of acquisition: From May 13, 2016 to September 21, 2016
・Treasury stock acquired as authorized at the Board of Directors’ Meeting held on November 4,
2016:
Type and total number of shares acquired: 3,029,900 shares of common stock
Total cost of acquisition: 4,999,914,000 yen
Period of acquisition: From November 7, 2016 to January 24, 2017
2. Cancellation of treasury stock・Treasury stock cancelled as authorized at the Board of Directors’ Meeting held on November 4,
2016:
Type and total number of shares cancelled: 45,000,000 shares of common stock
Date of cancellation: December 9, 2016(English Translation)― 28 ―

3. Matters concerning Officers of the Group(1) Names of Directors and Audit & Supervisory Board Members of the Group
Name

Hiroshi Aoi

Position in Charge and Important Position of
Other Organizations Concurrently Assumed

Position
President and Representative
Director,
Group Representative
Executive Officer

Koichiro Horiuchi

Director

Etsuko Okajima

Director

Masao Nakamura

Director,
Managing Executive Officer

Tomoo Ishii

Director,
Managing Executive Officer

Hirotsugu Kato

Director,
Senior Executive Officer

Hideaki Fujizuka

Audit & Supervisory Board
Member (Full time)

Tetsuji Sunami

Audit & Supervisory Board
Member (Full time)

Tadashi Ooe

Audit & Supervisory Board
MemberTakehiko Takagi

Audit & Supervisory Board
MemberPresident and Representative Director, FUJIKYUKO CO., LTD.
External Audit & Supervisory Board
Member, THE YAMANASHI CHUO
BANK, LTD.
Representative and CEO, ProNova Inc.
External Director, Astellas Pharma Inc.
External Director, Link and Motivation Inc.
Responsible for Retailing BusinessPresident and Representative Director, AIM
CREATE CO., LTD.
Chief Operating Officer, Healthcare
Promotion
In charge of General Affairs, Personnel and
Healthcare Promotion
General Manager, Corporate Planning
Division and IR Division
In charge of ESG Promotion

Attorney
External Audit & Supervisory Board
Member, Canon Inc.
External Director, Jeco Co., Ltd.
Outside Director, NISSAN CHEMICALINDUSTRIES. LTD.
Tax Accountant
External Audit & Supervisory Board
Member, Totenko Co., Ltd.
External Audit & Supervisory Board
Member, KAWADA technologies, inc.

Notes:
1. Director, Mr. Motohiko Sato retired from his post at the expiration of his term of office at the closeof the 80th Ordinary General Meeting of Shareholders held on June 2016.
2. Directors, Mr. Koichiro Horiuchi and Ms. Etsuko Okajima are External Directors. The Group has
submitted a notification to Tokyo Stock Exchange, Inc. designating them as an independent director.
3. Audit & Supervisory Board Members, Mr. Tadashi Ooe and Mr. Takehiko Takagi are both External
Audit & Supervisory Board Members. The Group has submitted a notification to Tokyo Stock
Exchange, Inc., designating them as an independent audit & supervisory board member.
4. The Group has no special relations with entities in which Directors Mr. Koichiro Horiuchi and Ms.
Etsuko Okajima and Audit & Supervisory Board Members Mr. Tadashi Ooe and Mr. Takehiko
Takagi concurrently assume office.
5. Director, Ms. Etsuko Okajima’s name on the family register is Ms. Etsuko Mino.
6. Audit & Supervisory Board Member, Mr. Tadashi Ooe is a qualified attorney and well-versed incorporate law.
7. Audit & Supervisory Board Member, Mr. Takehiko Takagi is a certified public tax accountant and(English Translation)― 29 ―

has an appreciable extent of knowledge in finance and accounting.
8. There were changes in directors’ positions, duties and important concurrent offices as of April 1,

2017.
Previous

Present

Tomoo Ishii

Director and Managing Executive
Officer,
Chief Operating Officer, Healthcare
Promotion
In charge of General Affairs,
Personnel and Healthcare Promotion

Director and Managing Executive
Officer,
Chief Operating Officer, Healthcare
Promotion
In charge of General Affairs,
Personnel and Healthcare Promotion
President and Representative
Director, MOVING CO., LTD.

Hirotsugu Kato

Director and Senior Executive
Officer
General Manager, Corporate
Planning Division and IR Division
In charge of ESG Promotion

Director and Senior Executive
Officer
General Manager, IR Division
In charge of Corporate Planning and
ESG Promotion

Name(2) Remuneration, etc. to Directors and Audit & Supervisory Board Members
Category

Number of Persons
subject to Payment

Total Amount of Remuneration(Millions of yen)

Director(External Director)

7
(2)

210
(28)

Audit & Supervisory Board
Member (External Audit &Supervisory Board Member)

4
(2)

49
(15)

Total

11

260

Notes:
1. Basic remuneration for Directors with the resolution at the General Meeting of Shareholders has amaximum limit of 300 million yen per year (remuneration for Directors does not include salary
portion payable to Directors who concurrently serve as employees of the Company.). (Resolution
Date of the General Meeting of Shareholders: June 27, 2012)
In addition, remuneration for Directors (other than External Directors) from the performance-linked
bonus has a maximum limit of 100 million yen per year (remuneration for Directors does notinclude bonus portions payable to Directors who concurrently serve as employees of the Company),
and remuneration for Directors (other than External Directors) by performance-linked stockcompensation has a maximum limit of 300 million yen for the three fiscal years from the fiscal year
ended March 31, 2017 to the fiscal year ending March 31, 2019 and each three fiscal years
thereafter. (Resolution Date of the General Meeting of Shareholders: June 29, 2016)
2. Basic remuneration for Audit & Supervisory Board Member with the resolution at the General
Meeting of Shareholders has the ceiling amount of 6 million yen per month. (Resolution Date of theGeneral Meeting of Shareholders: April 28, 1987)
3. The above remuneration and other amounts include 15 million yen of payment for the performancelinked bonus and 16 million yen of expenses for the current fiscal year of the performance-linked
stock compensation to five Directors (other than External Directors).
(3) Policy Regarding Decision on Compensation of Directors and Audit & Supervisory Board
Members
・ The amount of compensation paid to individual Directors is decided by the Nomination andCompensation Committee and set within the limit approved at general meeting of shareholders.
・ The Nomination and Compensation Committee consists of three (3) or more members, two (2) of(English Translation)― 30 ―

which are, in principle, External Directors, and has been set to improve the transparency andobjectivity of deliberation process related to compensation plans for Directors.
・ Compensation for Directors has been set at a level that will serve as an adequate motivation for
Directors to properly perform their duties of making management decisions and providing
supervisory functions.
・ Compensation for Directors includes fixed compensation as well as performance-linked
compensation. The portion of compensation linked to performance is meant to provide incentive
for pursuing sustainable growth for the Company. However, external directors will only receive
fixed compensation based on their position to ensure that they maintain an independent standpoint.
・ Compensation for Audit & Supervisory Board Members consists only of fixed compensation andis decided through discussion among the Audit & Supervisory Board and set within the limit
approved at a general meeting of shareholders.
(4) Information on External Officers
i. Principal Activities of External Officers
Position

Name

Principal Activities of External Officers

Koichiro Horiuchi

Attended all 10 meetings of the Board of Directors held during
the fiscal year under review. Raised questions and madecomments, mainly from the perspective of an experienced
manager, and, as necessary, expressed his opinions in a timely
and appropriate manner.

Etsuko Okajima

Attended all 10 meetings of the Board of Directors held in thefiscal year under review. Raised questions and madecomments, mainly from the perspective of an experienced
manager, and, as necessary, expressed her opinions in a timely
and appropriate manner.

Tadashi Ooe

Attended all 10 meetings of the Board of Directors and all 16
meetings of the Audit & Supervisory Board held during the
fiscal year under review. Expressed his opinions in a timely
and appropriate manner based mainly on his professional
knowledge as an attorney. In addition, held meetings
periodically with the Representative Director; exchanged
opinions regarding risks confronting the Company, major
issues related to audit of the Company, and other matters; andis working to deepen mutual understanding and trust.

Takehiko Takagi

Attended all 10 meetings of the Board of Directors and all 16
meetings of the Audit & Supervisory Board held during the
fiscal year under review. Expressed his opinions in a timely
and appropriate manner based mainly on his professional
knowledge as a certified public tax accountant. In addition,
held meetings periodically with the Representative Director;
exchanged opinions regarding risks confronting the Company,
major issues related to auditing of the Company, and othermatters; and is working to deepen mutual understanding andtrust.

Directors

Audit &
Supervisory Board
Membersii. Outline of the Content of Liability Limitation Contracts
The Company concludes contracts with each of External Directors and External Audit & Supervisory
Board Members to limit their liability for damages, as provided under Article 423-1 of the Companies
Act. Based on these contracts, a maximum limit is placed on the amount of liabilities which isequivalent to the minimum amount of such liabilities as determined by law.

(English Translation)― 31 ―

4. Matters concerning Accounting Auditors(1) Name of Accounting Auditors of the Company

KPMG AZSA LLC(2) Remuneration, etc. to the Accounting Auditors during the Fiscal Year under Review
1. Remuneration paid for services rendered as accounting auditors for the fiscal year under review:
97 million yen
2. Total cash and other remuneration to be paid by the Company and its subsidiaries to the accounting
auditors: 146 million yen
Note: In the audit contract between the Company and its accounting auditor, remuneration paid foraudits under the Companies Act and audits under the Financial Instruments and Exchange Act
are not clearly distinguished and cannot be practically separated. Therefore, the total amountsof remuneration, etc. paid to the accounting auditor is stated in 1 and 2 as the amount of
remuneration, etc. for the fiscal year under review.
3. Reason for the Audit & Supervisory Board’s consent of the remuneration, etc. to the accounting
auditor:In addition to obtaining necessary documents and receiving reports from Directors, related
departments of the Company and the accounting auditor, based on the status of implementation ofaudit of the previous fiscal year, the Audit & Supervisory Board has considered that the
remuneration is appropriate to maintain and improve the quality of audit and gave consent to the
remuneration as a result of confirmation of time required for audit and the unit rate of the
remuneration specified in the audit plan submitted by the accounting auditor.
(3) Content of Non-Auditing Activities
The Company and its subsidiaries call upon the accounting auditor to conduct work related to theprovision of letters of comfort in connection with corporate bond issuance.
(4) Policy Regarding the Dismissal or Non-Reappointment of the Accounting Auditor
If the Audit & Supervisory Board deems that the accounting auditor falls under any item of Article 340,
Paragraph 1 of the Companies Act, it will dismiss the accounting auditor with unanimous consent ofAudit & Supervisory Board Members, as necessary. In such case, an Audit & Supervisory Board
Member who is delegated by the Audit & Supervisory Board will report the fact that the Audit &Supervisory Board dismissed the accounting auditor and the reason therefor at an ordinary general
meeting of shareholders to be held for the first time after the dismissal of the accounting auditor.
In addition to the above case, if the Audit & Supervisory Board deems that the accounting auditor isunable to conduct proper audit due to an event that impairs qualification or independence of theaccounting auditor, it will decide on details of a proposal regarding dismissal or non-reappointment of
the accounting auditor.

5.

Company’s Systems and Policies(1) System to Ensure That the Execution of Duties by Directors Complies with Laws and Ordinances
and the Articles of Incorporation, and System to Ensure That the Business Operations of theCompany, as well as of the Corporate Group Consisting of the Company and Its Subsidiaries (theGroup), is Duly Executed, and Status of Operation of Those Systems.
○ Systems
The Group will proceed with arrangement for the internal control system from the viewpoint ofcarrying out the Group operation and promote efficient operation with healthy and a high level of(English Translation)― 32 ―

transparency.
i. System which ensures that execution of duties by Directors comply with laws and regulations and the
Articles of Incorporation
a. Directors shall discharge legally and duly duties in accordance with the Directors’/ Audit & Supervisory
Board Members’ Internal Regulations and the Code of Conduct of the Group.
b. The Board of Directors shall hold meetings in principle ten (10) times a year and supervise theexecution of duties by Directors.
c. Audit & Supervisory Board Members shall audit independently the execution of business by Directors
and Executive Officers in accordance with the Regulations of the Audit & Supervisory Boards.
d. Highly independent External Directors and External Audit & Supervisory Board Members shall beelected and the objectivity and transparency of operation shall be enhanced.
ii. System for maintaining and managing information regarding execution of business by Directors
a. The Company shall arrange the regulations for controlling documents, pursuant to which minutes of theBoard of Directors and other important documents related to the execution of business by Directors
shall be maintained.
iii. Regulations related to controlling risk of loss and other systema. Though 6 committees established to control high-risk areas in business operations (Public Relations IR
Committee, Internal Control Committee, Environment CSR Promotion Committee, Personal
Information Protection Promotion Committee, Safety Control Committee and Insider Trading
Prevention Committee), the Company shall strive for speedy operational improvement and theprevention of accidents. As a coordinating function of all committees, the Compliance Promotion Board,
with the Representative Director as the chairperson, is set up for the Group’s risk management.
b. The General Affairs Department and Audit Department shall cooperate in promoting internal control.
Through documentation and the monitoring of the operation of each group company, in terms ofpredictable risks and countermeasures, they shall work to minimize operational risks.
iv. System to ensure that Directors can execute their duties efficiently
a. In accordance with the Group’s authorization rules, the duties of Directors and Executive Officers shallbe explicitly defined, and the Group’s Directors and Executive Officers shall perform their duties in an
efficient and swift manner.
v. System to ensure that financial reports are made properlya. The corporate-wide policy and procedures to ensure appropriate financial reporting shall be presented
and the proper arrangement and operation shall be secured.
b. A system for evaluating risks arising from inappropriate statements with respect to important items offinancial report and for reducing risks shall be established.
c. A system for monitoring the internal control system with respect to financial reports shall be properly
arranged to confirm the conditions and status of operation.
vi. System to ensure that subsidiaries’ Directors and the Group’s employees execute business incompliance with laws and regulations and the Articles of Incorporationa. The Group’s Code of Conduct shall be fully understood, to promote sound corporate activities groundedon high ethical standards for the Group.
b. In order to ensure full compliance with laws and ordinances and company rules across the entire Group,
operational manuals in every category shall be prepared and internal training is encouraged.
c. The Marui Group Hot Line (Internal Reporting System) shall be set up, which allows direct contact with(English Translation)― 33 ―

outside lawyers, to prevent problems from occurring and for the early detection of problems.
d. The Group shall conduct internal audits to grasp the internal control status, and improve compliancewith laws, regulations and company rules.
vii. Other systems to ensure the appropriateness of business operations of the Groupa. The documentation of the internal control system of each group company shall be continuously
reviewed.
b. Through the Compliance Promotion Board and the 6 Committees, the Group shall confirm the latest
control status of each Group company, and maintain an appropriate system.
c. Reporting system for the important decisions of subsidiaries to the Company shall be determined inaccordance with the authorization rules of the Group.
d. The cooperation of Audit & Supervisory Board Members from each group company and the Internal
Control Department shall be strengthened to further promote the establishment of an audit system forensuring proper transactions and accounting treatments.
e. The Group shall refuse any unwarranted demands and disassociate from anti-social bodies, which
threaten social order and safety, and strengthen the ties with external specialists, such as the police andlawyers, to establish system to eradicate anti-social bodies.
viii. Matters relating to employees if Audit & Supervisory Board Members request their appointment as
assistants, issues of independence of such employees from Directors and how to ensure theeffectiveness of instructions to such employees
a. Based on the request of Audit & Supervisory Board Members, audit staff with sufficient skills andknowledge shall be assigned to conduct requested duties.
b. Audit & Supervisory Board Members shall be allowed to instruct audit staff to assist with their audit
work, and no Directors shall interfere with such instruction.
ix. System to report to Audit & Supervisory Board Members from Directors or employees, system toensure the fair treatment of reporters
a. The internal audit system shall be reinforced and supporting function for Audit & Supervisory Board
Members shall be strengthened.
b. The Directors and employees of each group company shall make report to Audit & Supervisory Board
Members as soon as possible when Directors and employees know any undue conduct, any fact whichmight infringe seriously any company in the Group or any act violating any laws, regulations or the
Articles of Incorporation.
c. It shall be confirmed that no unfair treatment has been applied on the grounds of reporting to Audit &Supervisory Board Members.
x. Matters relating to the prepayment of expenses incurred through the execution of duties by Audit &Supervisory Board Members and reimbursement procedures and policies on processing expenses andliabilities incurred through the execution of duties by Audit & Supervisory Board Members
a. When Audit & Supervisory Board Members claim for expenses incurred during the execution of duties,
such expenses shall be reimbursed, unless they are deemed unnecessary.
xi. Other system to ensure that efficient audit is carried out by Audit & Supervisory Board Members
a. The Board of Directors shall seriously cooperate with any request made by Audit & Supervisory Board
Members in connection with discharging their duties smoothly.
b. Representative Directors and Audit & Supervisory Board Members shall have a meeting regularly andmutually confirm the status of executing business or discharging duties.
c. Audit & Supervisory Board Members may attend the Board of Directors’ and other importantmanagement meetings as necessary to grasp the process under which important decision-making is(English Translation)― 34 ―

processed and the status of executing business.
d. Audit & Supervisory Board Members may receive the provision of report or information from Directors
and employees as necessary and inspect materials and records.
e. By appointing the Company’s Audit & Supervisory Board Members as the same of its principal
subsidiaries, information sharing and accurate confirmation of status can be realized.
○ Status of Operation of the Systems
i. Overall internal control systema. The Group recognizes and improves the status of the Group’s overall internal control system throughinternal audit jointly made by Audit & Supervisory Board Members and internal audit departments ofeach group company.
b. The Group promotes highly effective internal control by documenting business content and anticipatedrisks of, and measures therefor to be taken by, each group company and monitoring the status of
implementation of such measures through self-assessment and internal audit.
c. As for internal control related to financial reporting pursuant to the Financial Instruments and ExchangeAct, the Internal Control Committee develops, operates and evaluates such internal control bycommission from the Board of Directors.
ii. Compliance systema. The Group seeks to fully disseminate its Code of Conduct to its personnel and promote sound corporate
activities based on high ethical standards.
b. In order to ensure compliance with laws and regulations and the Group’s internal regulations, the Groupdevelops various manuals and promotes operation of those manuals as well as provides education for its
personnel. In the fiscal year under review, the Group provided training to its personnel regarding“personal information” and “harassment” as focused subjects.
c. For the purpose of prevention and correction of violation of laws and regulations and misconduct, theGroup has set up the Marui Group Hot Line (an internal reporting system) to allow its personnel todirectly report to outside lawyers, and confirmed that the system has properly operated.
iii. Risk management systema. The Group promotes efficient control of risks through the Public Relations IR Committee, Internal
Control Committee, Environment CSR Promotion Committee, Personal Information Protection
Promotion Committee, Safety Control Committee and Insider Trading Prevention Committee, whichwere set up to manage high-risk areas for business operation.
b. The Group holds meetings of the Compliance Promotion Board which supervises activities of thecommittees and recognizes the status of risk control of each group company. In the fiscal year underreview the Group held meetings of the Compliance Promotion Board twice.
iv. Directors’ execution of their duties
a. The Group ensures that Directors execute their duties lawfully and properly in accordance with theGroup’s internal regulations such as the Code of Conduct of the Group and Regulations for Officers.
b. The Group appoints two (2) External Directors who have extensive experience and expertise outside theGroup and have satisfied the Group’s Criteria for Independence of External Directors and Audit &Supervisory Board Members to reinforce the supervisory functions of the Board of Directors andimprove the transparency of management.
c. The Board of Directors conducts proper deliberations pursuant to the Group’s authorization rules andengages in fulfilling discussions on individual subjects such as the Group’s strategies. In the fiscal year
under review, the Board of Directors held its meetings ten (10) times.
d. 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 suchcommittee to make important management decisions regarding execution of duties within the scope of
the Group’s authorization rules. In the fiscal year under review, the meetings of the Management
Committee were held 21 times.

(English Translation)― 35 ―

v. Audit & Supervisory Board Members’ execution of their duties
a. Audit & Supervisory Board Members exchange information at any time by holding regular meetings
with Representative Director and confirm the status of operational execution. In the fiscal year underreview, the regular meetings were held four (4) times.
b. Audit & Supervisory Board Members attend meetings of the Board of Directors, the Management
Committee, etc. and understand decision making process and the status of operational execution.
c. Audit & Supervisory Board Members exchange information and opinions with External Directors,
accounting auditors and internal audit departments on a regular basis.
d. Audit & Supervisory Board Members concurrently assume office of auditors at nine (9) subsidiaries andconfirm the status of operational execution of each of such subsidiaries by attending meetings of theBoard of Directors of such subsidiaries and holding meeting of the Group’s Audit & Supervisory Board
Members Liaison Committee each month.
e. The Group has established a system where Audit & Supervisory Board Members can execute theirduties smoothly by ways such as assigning two (2) employees who work for Audit & Supervisory Board
Members to serve as the secretariat for Audit & Supervisory Board Members.
(2) Basic Policy toward Controlling the Company
i. Basic policy toward any person(s) who should have control in determining the Company’s policy
regarding finance and businessWith respect to the person who shall have control in determining the Company’s policy regarding
finance and business, the Company believes that the person would be one who secures and enhances
corporate value and common interest of shareholders of the Company.
Furthermore, it is imperative that the Company should be managed stably upon fully understanding theCompany’s corporate philosophy and management resources on a basis of long- and mid-term for the
purpose of enhancing corporate value and common interest of shareholders of the Company.
At present, the Company has exerted its best efforts to operate its business amid extremely severe
competition in the retail industry to secure and enhance corporate value and common interest ofshareholders of the Company. However, although the capital market in Japan is said to be legally
adjusted and arranged to a certain extent, it is highly possible that a large scale of shares of a listedcompany might, in the Company’s judgment, purchased unilaterally without having sufficientnegotiation, or process for an agreement with the targeted company in the Japanese capital market.
It goes without saying that as far as the Company is a listed company, it is the principle that a purchaseand sale of the Company’s shares should be conducted at the complete discretion of shareholders andinvestors. Even if an acquisition of a large scale of shares is intended to be conducted, the Company
believes that the judgment on whether or not to allow such acquisition to proceed should be left
ultimately to shareholders. Accordingly, the Company shall not negate such acquisition if it contributes
to the enhancement of corporate value and common interest of shareholders of the Company.
However, there might exist an acquisition of a large scale of shares which does not contribute to theenhancement of corporate value and common interest of shareholders of a targeted company, such as an
acquisition after which, judging from the purpose of the acquisition, the targeted company may haveunrecoverable damage instead of aiming for rational management with sincerity, an acquisition whichmight in practice force shareholders to sell their shares, or an acquisition with respect to which a
sufficient time and required information have not been provided to shareholders and the board of
directors of the targeted company to enable them to examine the terms and conditions of the acquisitionor the board of directors to make an alternative proposal.
The Company deems any of the aforesaid purchasers inappropriate as a person who should have control(English Translation)― 36 ―

in determining the Company’s policy regarding finance and business.
ii. Details of the measures contributing to realization of the Basic Policy(a) Measures by which corporate value and common interest of shareholders of the Company is secured
and enhanced
The Group is a corporate group supporting “all people’s life style having young mind” through three (3)segments, namely retailing and store operations, credit card services and retailing-related services basedon the corporate philosophies that are “continue evolving to better aid our customers” and “equate thedevelopment of our people with the development of our company.” Through business operation, with anemphasis on being useful to the shareholders, customers, business partners and people in the local
communities, the Company will target to be a corporate group to be trusted furthermore by these parties.
The detailed approach by the Company is shown in above-mentioned (1) Development of theBusinesses of the Corporate Group and Financial Results (page 17-20) and (4) Issues to be Addressed(page 20-23) in 1. Information on the Status of Marui Corporate Group(b) Measures for social responsibility
The Company intends to continue to be a corporate group to be trusted by shareholders, customers,
business partners, people in the local communities and the employees. The Group has promoted the
conduct of various social contribution activities such as the establishment of safe and secure sales
system and compliance with laws and ordinances including protection of personal information andpreservation of environment so as to discharge actively corporate social responsibilities. The Company
will further enhance the corporate value of the Company by virtue of responding to increasingly
sophisticated demands for social responsibilities.
(c) Measures for enforcing corporate governance
The Company considers that healthy and fair management is placed as the first priority; the corporate
governance in principle facilitates stably to enhance the corporate value and common interests ofshareholders on a long-term basis. As part of such enhancement, the Company has shortened the termsof office of Directors as well as appointment of multiple External Directors. Going forward, theCompany will further strengthen the corporate governance.
iii. Measures to prevent inappropriate person from controlling the Company
The Company deemed the measures stated in ii. above as its principle and will seek for maximizing
corporate value and common interest of shareholders of the Company, but an acquisition of a large scaleof shares which will not contribute to corporate value and common interest of shareholders of theCompany might be conducted. The Board of Directors of the Company at its meeting held on May 13,
2014 resolved upon the renewal of the “measures against conduct for acquisition of a large scale ofshares of the Company (anti-takeover measures)” without substantial amendments (amended plan to becalled the “Plan”), which was further approved by shareholders at the 78th Ordinary General Meeting of
Shareholders of the Company held on June 26, 2014.
In the event that an acquisition of a large scale of shares is conducted, for the purpose of enabling
shareholders to make appropriate judgment or the management of the Company or the Independent
Committee of the Company to negotiate or discuss with the Purchaser, etc., the Plan purports to securenecessary and sufficient information and time to be provided by the Purchaser, etc., so that corporate(English Translation)― 37 ―

value and common interest of shareholders of the Company is secured and enhanced.
The Plan is applicable in the following cases: (a) purchases of shares, etc. of the Company resulting in
the acquirer to hold 20% or more; or (b) a tender offer resulting in the acquirer to hold 20% or more of
the Company’s shares, etc. together with a number of percentages of shares, etc. of the Company’s
shares, etc. held by the specially related person(s) (the “Purchases, etc.”).
In the event that the Purchases, etc. is to be conducted, a person conducting the Purchases, etc. (the“Purchaser, etc.”) shall in advance submit documents stating information necessary to examine thecontents of the Purchases, etc. as well as stating compliance with the terms and conditions of the Plan to
the Board of Directors of the Company. Then, information provided by the Purchaser, etc., an opinion of
the Board of Directors and materials on which the opinion was based and an alternative proposal
prepared by the Board of Directors shall be submitted to the Independent Committee composed byindependent External Directors and External Audit & Supervisory Board Members, which proceeds toinvestigate and evaluate the same. The Independent Committee shall evaluate or investigate the content
of the Purchases, etc., examine the alternative proposal submitted by the Board of Directors, directly or
indirectly negotiate with the Purchasers, etc., and make disclosures, etc. to shareholders, whenevernecessary upon receiving advice from independent third parties (including financial adviser, certified
public accountants, lawyers, consultants, other professionals).
In the event that the Purchasers, etc. do not comply with the procedures stipulated in the Plan, or the
Independent Committee deems the Purchases, etc. to fall under any of the requirements of the Plan suchas the case in which the Purchases, etc. might explicitly infringe corporate value and common interest ofshareholders of the Company, the Independent Committee shall make a recommendation to the Board of
Directors to carry out gratis allotment of stock acquisition rights.
The Board of Directors as an organization under the Companies Act shall adopt a resolution whether or
not gratis allotment of stock acquisition rights should be carried out upon respecting the recommendationof the Independent Committee to the fullest extent. In the event that the Company adopts a resolution tocarry out gratis allotment of stock acquisition rights upon respecting the recommendation of the
Independent Committee to make gratis allotment of stock acquisition rights, the Company shall convene
the General Meeting of Shareholders and confirm the intention of shareholders (excluding the case inwhich the Purchasers, etc. have not complied with the procedures stipulated in the Plan).
The Plan is in effect from the close of the 78th Ordinary General Meeting of Shareholders held on June
26, 2014 to the close of the General Meeting of Shareholders to be held in June 2017. However, even ifprior to the end of the effective period, in the event that the abolition of the Plan is approved by amajority of shares with voting rights represented at the General Meeting of Shareholder of the Company
or by a resolution of the Board of Directors composed by Directors elected at the General Meeting of
Shareholders of the Company, the Plan shall be abolished at that time.
At the time of amendment of the Plan, since gratis allotment of stock acquisition rights is not carried out,
rights and interest of shareholders are not directly actually affected. On the other hand, in the event thatgratis allotment of stock acquisition rights is carried out, if shareholders did not exercise stockacquisition rights nor made payment of cash equivalent to the exercise price, the values of shares of theCompany held by the shareholders would be diluted as a result of exercise of stock acquisition rights byother shareholders (excluding the case in which the Company delivers shares of the Company toshareholders in exchange for acquiring stock acquisition rights from shareholders other than unqualified
persons). Furthermore, even if gratis allotment of stock acquisition rights has once been approved to be
carried out, in the event that the Company suspends to carry out gratis allotment of stock acquisitionrights or determines to acquire stock acquisition rights free of charge from allotted shareholders inaccordance with the terms and conditions of the Plan, the value of each share is not diluted. Accordingly,
shareholders who sold or purchased shares in anticipation of shares of the Company diluted would be
subject to loss corresponding to the fluctuation of market price of the Company’s shares.

(English Translation)― 38 ―

For further details of the Plan please refer to the “Measures (Anti-takeover Measures) Concerning LargeScale Purchase Action of Shares of the Company” (only in Japanese) dated May 13, 2014.
(http://www.0101maruigroup.co.jp/pdf/settlement/14_0513/14_0513_2.pdf)
iv. Judgment and reason thereof of the Board of Directors of the Company on the detailed measures
The measures stated in Paragraphs ii. and iii. above were introduced for the purpose of securing andenhancing corporate value and common interest of shareholders of the Company, in conformity with thebasic policy of the Company. In particular, the Plan has been introduced upon approval at the General
Meeting of Shareholders and been provided with reasonable and objective requirements, and it also
seriously regards the judgment by the Independent Committee constituted by independent External
Director and Audit & Supervisory Board Member. The Independent Committee may obtain advice fromprofessional third parties. In addition, the term of office of Directors is one year and shareholders areable to express their opinions on the Plan through the election of Directors each year. Furthermore, thePlan may be abolished at any time upon the General Meeting of Shareholders or the Board of Directors’Meeting. With all these factors mentioned above, the fairness and objectivity of the Plan is pledged, andtherefore the Plan does not infringe corporate value and common interest of shareholders of theCompany nor serve to maintain the positions of Directors.
(Reference)
The Plan is in effect until the close of the 81st Ordinary General Meeting of Shareholders scheduled tobe held in June 26, 2017. The Company resolved to abolish the Plan at the end of the effective period byresolution of a Board of Directors meeting held on May 11, 2017.
〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰
Treatment of rounding numbers displayed in this report
・Listed amounts: Rounded to the nearest hundred million units or otherwise rounded down
・Number of shares:Rounded down
Rounded to the nearest unit
・Ratios, etc.:(English Translation)― 39 ―

Consolidated Balance Sheet(As of March 31, 2017)(Millions of yen)
Item

AmountAssetsCurrent assets
Cash and deposits

558,799

Notes and accounts receivable-trade36,2574,840

Accounts receivable-installment

348,191

Operating loans

140,569

Merchandise

10,437

Deferred tax assets

6,934

Other

20,920Allowance for doubtful accounts(9,352)

Noncurrent assets

247,776

Property, plant and equipment
Buildings and structures
Land
Construction in progress
Other

178,654
67,242
103,540
195
7,675

Intangible assets
Software
Other

6,295

Investments and other assets
Investment securities

62,826
18,850

Guarantee deposits
Deferred tax assets
Other

4,925

Item
Liabilities
Current liabilities
Accounts payable-trade
Short-term loans payable
Current portion of bonds
Commercial papers
Income taxes payable
Provision for bonuses
Provision for point card certificates
Reserve for loss from redemptionof gift certificates
Other
Noncurrent liabilities
Bonds payable
Long-term loans payable
Deferred tax liabilities
Provision for loss on interest
repayment
Provision for loss on guarantees
Provision for stock benefits
Asset retirement obligations
Other
Total liabilities

1,369

34,0316,870
3,073(English Translation)

145,051
15,85050,82720,000
5,000
7,214
3,671
9,181
158
33,150387,184
85,000273,500
4,003
11,487197
179
887
11,928532,236

Net Assets
Shareholders’ equity
Capital stock

274,918
35,92091,307

Capital surplus
Retained earnings

155,079

Treasury stock(7,389)

Accumulated other comprehensive
incomeValuation difference on availablefor-sale securities(1,034)

Subscription rights to shares
Non-controlling interests

Total assets

Amount806,575― 40 ―(1,034)2453

Total net assets

274,339

Total liabilities and net assets

806,575

Consolidated Statement of Income(From April 1, 2016 to March 31, 2017)(Millions of yen)
Item

AmountRevenue
Cost of sales
Gross profit
Selling, general and administrative expenses

237,02271,057
165,964
134,711

Operating income
Non-operating income
Interest income
Dividends income
Gain on bad debts recovered
Other

31,253
103
338
1,231
369

Non-operating expenses
Interest expenses
Financing expenses
Other
Ordinary income
Extraordinary income
Gain on sales of noncurrent assets
Gain on sales of investment securities

1,682
187
285

13,659208

Extraordinary loss
Loss on retirement of noncurrent assets
Loss on closing of stores
Impairment loss
Loss on sales of investment securities
Loss on interest repayment
Provision for loss on interest repayment
Other

11,487
248

Income before income taxes
Income taxes-current
Income taxes-deferred

10,420(1,126)2,156
31,13913,867

2,918
1,310
291
330
377
16,96328,043

Net income
Net income attributable to non-controllinginterests
Net income attributable to owners of parent(English Translation)

2,042― 41 ―

9,293
18,74924
18,724

Consolidated Statement of Changes in Net Assets(From April 1, 2016 to March 31, 2017)(Millions of yen)
Shareholders’ equity
Capitalstock
Balance as of April 1, 2016

Capitalsurplus35,920Retainedearnings

91,307210,237

Total
shareholders’equityTreasurystock(54,238)

283,226

Changes in the fiscal year:
Dividends(6,386)(6,386)

Net income attributable toowners of parent

18,724

18,724

Acquisition of treasury stock(20,698)(20,698)

Disposition of treasury stock

(1)

53

51

Retirement of treasury stock(67,494)

67,494―

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

67,495(67,495)―

Total changes in the fiscal year――

(55,157)

46,849(8,308)

Balance as of March 31, 201735,92091,307

155,079(7,389)274,918(Millions of yen)
Accumulated other comprehensive
incomeSubscription
Valuationrights to
Total accumulateddifference onsharesother comprehensive
available-for-saleincomesecurities
Balance as of April 1, 2016

(1,616)(1,616)53

Noncontrollinginterests

Total
net
assets437

282,101

Changes in the fiscal year:
Dividends(6,386)

Net income attributable toowners of parent

18,724

Acquisition of treasury stock(20,698)

Disposition of treasury stock

51

Retirement of treasury stock―

Transfer to capital surplus fromretained earnings
Changes in items other thanshareholders’ equity-net

―
581

581

(51)

16

546

Total changes in the fiscal year

581

581

(51)

16

(7,761)

Balance as of March 31, 2017

(1,034)(1,034)2453

274,339(English Translation)― 42 ―

Notes to Consolidated Financial Statements
1. Significant Matters on the Basis for the Preparation of the Consolidated Financial Statements(1) Scope of consolidationi) Number of consolidated subsidiaries: 9
Names of principal consolidated subsidiaries:
MARUI Co., Ltd., Epos Card Co., Ltd., MRI SERVICER Co., Ltd., AIM CREATE CO., LTD.,
MOVING CO., LTD., M&C SYSTEMS CO., LTD., MARUI FACILITIES Co., Ltd., MARUIHOME SERVICE Co., Ltd.
ii) Names of non-consolidated subsidiaries:
MARUI (Shanghai) Co., Ltd., Epos Small Amount and Short Term Insurance Co., Ltd.,MARUI KIT CENTER CO., LTD. Kitasenju Urban Development Co., Ltd., Totsuka
Commercial Buildings Management Co., Ltd., Shiki Urban Development Co., Ltd.
Reasons for excluding non-consolidated subsidiaries from the scope of consolidation
The six non-consolidated subsidiaries above are excluded from the scope of consolidation
because each of the sums of their total assets, revenue, net income (an amount prorated toownership) and retained earnings (an amount prorated to ownership) has no significant impact
on the Company’s consolidated financial statements.
(2) Application of the equity method
The Company does not apply an equity method for the above six non-consolidated subsidiaries and thefollowing four affiliates: MIZONOKUCHISHINTOSHI Co., Ltd., Nakano Suncuore Co., Ltd.,
Yurakucho Ekimae Development Co., Ltd., Mito Urban Development Co., Ltd., because their respective
net income (an amount prorated to ownership) and retained earnings (an amount prorated to ownership)
have no significant impact on the consolidated financial statements.
(3) Summary of significant accounting policies
i) Basis and method for valuation of significant assets(a) Inventories
Merchandise is valued at cost using the monthly weighted average method (carrying amount in thebalance sheet is calculated with consideration of write-downs due to decreased profitability).
(b) Securities
Available-for-sale securities for which fair values are available are valued at the quoted market
price prevailing at the end of each consolidated 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 determinedby the moving-average method). Available-for-sale securities for which fair values are not available
are stated at cost using the moving-average method.
ii) Method of depreciation and amortization of significant depreciable assets(a) Property, plant and equipment (excluding lease assets)
Property, plant and equipment are depreciated using the straight-line method.
(b) Intangible assets (excluding lease assets)
Intangible assets are amortized using the straight-line method, however, software for internal use isamortized using the straight-line method over the useful life estimated by the Company (notexceeding five years).
(c) Lease assets
Lease assets under financial lease contracts that do not transfer ownership of leased property to thelessee are depreciated using the straight-line method over the lease term with a residual value ofzero.
iii) Basis for recognizing significant allowances and provisions(a) Allowance for doubtful accounts
The estimated uncollectible amounts are determined based on the historical rate of bad-debt losses
for general receivables and on the case-by-case analysis of recoverability for receivables with(English Translation)― 43 ―

default possibility.
(b) Provision for bonuses
The portion of estimated bonus payments that is incurred during the current consolidated fiscal year
is recognized.
(c) Provision for point card certificates
Based on the balance of points awarded to card members outstanding at the end of the current
consolidated fiscal year, the amount expected to be used is recognized.
(d) Reserve for loss from redemption of gift certificates
With regard to gift and other certificates that have been recognized as revenue after passage of acertain length of time after their issuance, the amount estimated to be exchanged in the future isrecognized.
(e) Provision for loss on interest repayment
The amount of consumer loan interest estimated to be repaid at the end of the current consolidated
fiscal year is recognized.
(f) Provision for loss on guarantees
With regard to the guaranteed obligations relating to consumer loans extended by financial
institutions, the amount of loss estimated to have been incurred is recognized.
(g) 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.
iv) Other significant matters for the preparation of consolidated financial statements(a) Basis for recognizing revenues and expenses
Financial charges earned on installment sales and consumer loan interest income are recognized onan accrual basis by the method of charging on the declining balance of loans.
(b) Accounting treatment of consumption taxes
National and local consumption taxes are accounted for by the tax-excluded method.
(Additional Information)
The “Revised Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ
Guidance No. 26 of March 28, 2016) has been applied from the consolidated fiscal year underreview.
2. Notes to Consolidated Balance Sheet(1) Accumulated depreciation of property, plant and equipment(2) Guarantee liabilities
Loan guarantees for personal loans offered by financial institutions(3) Balance of securitized receivables(4) Accumulated reduction entry excluded national subsidy fromacquisition costs of tangible fixed assets(English Translation)― 44 ―

216,277 million yen
25,428 million yen
64,290 million yen
66 million yen

3. Notes to Consolidated Statement of Income(1) Impairment loss
The Group recognized the amount of impairment loss on the following asset groups.
(Unit: Millions of yen)
PurposeLocation

Type

StoresKawasaki
Kawasaki-shi, Kanagawa, etc.

AmountBuildings and structures
Other

278
12

Total

291

Assets are grouped with stores in the Group as the basic unit representing the minimum unit responsible
for generating cash flows and rental properties are grouped on the basis of properties. These carrying
amounts of the asset groups above have been written down to the recoverable amount and the amount of
the write-down has been reported as impairment loss under extraordinary losses.
Furthermore, the recoverable amount by asset group has been evaluated by its net sale value or value in
use. For stores that continue to have a negative amount of income produced through operating activities,
the value in use has been evaluated as zero because cash flow cannot be expected. For stores, etc.,
subject to closure or the disposal of equipment, the net sale value has been evaluated as zero.
(2) Provision for loss on interest repayment
Although claims for interest repayments on credit card cash advances decreased compared to theprevious fiscal year, the provision for loss on interest repayment was recalculated and the necessaryamount was recognized in consideration of current trends in claims for interest repayments.
4. Notes to Consolidated Statement of Changes in Net Assets(1) Type and number of shares issued
Share Class

Number of Shares
as of April 1, 2016

Increase in Shares in
the Fiscal Year

Decrease in Shares in
the Fiscal Year

Number of Shares
as of March 31,
2017

Commonstock

278,660,417 shares-

45,000,000 shares

233,660,417 shares

Note: The decrease in shares was due to the retirement of treasury stocks.
(2) Dividendsi) Cash dividends paid
Resolution
Ordinary
General Meetingof Shareholders
on June 29,
2016
Board ofDirectors
Meeting on
November 4,
2016

Share Class

Total Amount of
Dividend(Millions ofyen)

Dividend per
Share (Yen)Record Date

Effective Date

Common stock

2,666

11

March 31, 2016

June 30, 2016

Common stock

3,719

16

September 30,
2016

December 5,
2016

Note: Total amount of dividend resolved by the Board of Directors Meeting on November 4, 2016 includes
8 million yen of dividends from the Company’s shares owned by Officer Remuneration BIP Trust andStock Benefit ESOP Trust.

(English Translation)― 45 ―

ii) Dividends for which the record date falls in the current consolidated fiscal year, but the effective datefalls in the following consolidated fiscal year.
The item regarding dividend on common stock is being proposed as follows:
Resolution

Share Class

Total Amount of
Dividend(Millions of yen)

Resourcefor
Dividend

Dividend per
Share (Yen)Record Date

Effective Date

Ordinary
GeneralMeeting of
Shareholders
on June 26,
2017Common
stock

3,900

Retainedearnings

17

March 31,2017

June 27, 2017

Note: Total amount of dividend to be resolved by the Ordinary General Meeting of Shareholders on June 26,
2017 includes 8 million yen of dividends from the Company’s shares owned by Officer
Remuneration BIP Trust and Stock Benefit ESOP Trust.
(3) The class and the number of shares underlying subscription rights to shares (excluding subscription
rights to shares of which the commencement date of their exercise period has not arrived) at the end of
the current consolidated fiscal year.
Common stock
1,400 shares(English Translation)― 46 ―

5. Notes to Financial Instruments(1) Matters concerning the status of financial instruments
The Group raises funds primarily through loans from financial institutions and bond issuance.
Temporary surplus funds are held in highly safe cash and bank deposits.
We strive to lower the customer credit risks relating to installment sales receivables and operating loansin accordance with our rules on extending credit. All of the investment securities are stocks, and the fairvalues of listed stocks are checked on a quarterly basis. Guarantee money deposited is mainly inconnection with lease agreements for stores.
Loans are used as working capital. Interest rate swap transactions are used for a part of long-term loans
payable in order to reduce interest volatility risks. According to the Company’s policy, we utilize
derivative transactions solely for the purpose described above and not for speculative purposes.
(2) Fair value, etc. of financial instruments
Carrying amount in the consolidated balance sheets, fair value and net unrealized gain/loss of financial
instruments as of March 31, 2017 are shown in the table below.
(Millions of yen)
Consolidated Balance Sheets
Carrying Amount

Fair Value

Unrealized Gain/Loss(1) Cash and deposits

36,25736,257-(2) Notes and accounts receivable-trade

4,840

4,840

-

385,860

43,904

138,219

157,324

19,105

17,42917,429-(3) Accounts receivable-installment
Allowance for doubtful accounts

348,191(6,236)
341,955(4) Operating loans
Allowance for doubtful accounts

140,569(2,349)(5) Investment securities
Other securities(6) Guarantee deposits

6,993

6,902

(90)

545,695

608,615

62,919(1) Accounts payable-trade(2) Short-term loans payable(3) Current portion of bonds(4) Commercial papers(5) Income taxes payable(6) Bonds payable(7) Long-term loans payable(8) Derivative transactions

15,85050,82720,0005,000
7,214
85,000273,500-

15,85050,82720,0005,000
7,214
85,049272,556
-

49
(943)
-

Total liabilities

457,391

456,498(893)

Total assets

Notes: 1. Method of determining the fair value of financial instruments, and matters concerning securities
and derivative transactions.
Assets(1) Cash and deposits and (2) Notes and accounts receivable-trade
For those items that are settled within short periods of time, the carrying amount is used asfair value because their fair value approximates their carrying amounts.
(3) Accounts receivable-installment and (4) Operating loans
Fair value of these items is determined at their present value by discounting, at the risk freerate, their future cash flows that are adjusted for their credit risks identified in the credit
control process. With respect to receivables with default possibility, the unrecoverable amount(English Translation)― 47 ―

is estimated based on the present value of their estimated future cash flows. Their fair value
thus is very close to the balance sheets amount at the end of the consolidated fiscal year underreview less the estimated unrecoverable amount. This amount is therefore used as the fairvalue.
(5) Investment securities
Investment securities are measured at their quoted prices on the stock exchange.
(6) Guarantee deposits
Fair value of guarantee deposits is determined at the present value of their future cash flows,
discounted at a rate that equals the risk free rate, adjusted for credit risks.
Guarantee deposits that are expected to be repaid within one year are included.
Liabilities(1) Accounts payable-trade, (2) Short-term loans payable, (3) Current portion of bonds, (4)Commercial papers, and (5) Income taxes payable
These items are stated at their carrying amounts as they are settled within a short period oftime and their fair values approximate their carrying amounts.
(6) Bonds payable
Each bond is measured at the present value of the sum of the principal amount and interest
payments, discounted at a rate that takes into account the remaining period of the bond andcredit risks.
(7) Long-term loans payable
Long-term loans payable with variable rates are stated at their carrying amounts as such loans
reflect the market interest rate in a short period of time and their carrying amounts
approximate fair value. Some of these loans are subject to the special treatment for interest
rate swaps (See item (8) below). The sum of the principal amount and interest payments thatis treated in combination with such an interest rate swap is discounted at a reasonably
estimated interest rate that would be applicable to other similar loans.
Those with a fixed interest rate are measured by discounting the sum of the principal amountand interest payments at an interest rate assumed to be applied if the same loans were newly
executed.
(8) Derivative transactions
The interest rate swaps that are subject to the special treatment are treated in combination
with long-term loans payable that are designated as the hedged items. Their fair value is thus
presented as part of the long-term loans payable (See item (7) above).
2. As it is extremely difficult to determine the fair value of non-publicly traded stocks (in theamount of 1,421 million yen on the consolidated balance sheets) for which no market prices areavailable and the future cash flows cannot be estimated, they are not included in item (5)Investment securities above.
As it is also extremely difficult to determine the fair value of part of the lease deposits (in theamount of 27,796 million yen on the consolidated balance sheets) for which no market prices areavailable and the future cash flows cannot be estimated, they are not included in item (6)Guarantee deposits.

(English Translation)― 48 ―

6. Notes to Real Estate for Rent and Others(1) Matters concerning the status of real estate for rent and others
Certain subsidiaries of the Company own commercial properties (including land) for rent in Tokyo andother areas.
(2) Matters concerning the fair value of real estate for rent and others(Millions of yen)
Consolidated Balance Sheets Carrying Amount

Fair Value

86,249159,321

Notes:
1. The amount shown in the consolidated balance sheets equals the cost less accumulated depreciation
and accumulated impairment loss.
2. Fair value at the end of the consolidated fiscal year under review is an amount based primarily on
real-estate appraisals including index-based adjustments by licensed outside real estate appraisers.
7. Notes to Per Share Information(1) Net assets per share(2) Net income per share

1,196.23 yen
80.24 yen

8. Notes to Significant Subsequent Events
Not applicable.
〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰
Amounts in theses consolidated financial statements have been rounded down to the nearest unit. Ratio etc. arerounded off to the nearest digit.

(English Translation)― 49 ―

Non-Consolidated Balance Sheet(As of March 31, 2017)(Millions of yen)
Item

AmountItem
Liabilities

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

307,562
25,12992
280,193

Noncurrent assets
Property, plant and equipment
Buildings
Structures
VehiclesFurniture and fixtures

405,087
1,378
14
1
0
1,361

Intangible assets
Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates
Investments in capital ofsubsidiaries and affiliates
Deferred tax assets
Other

2,171
(24)

33
403,675
17,710377,746
132
7,748
337

Current liabilities
Short-term loans payable
Current portion of bonds
Short-term loans payable tosubsidiaries and affiliates
Commercial papers
Accounts payable-otherAccrued expenses
Income taxes payable
Deposits received
Provision for bonuses
Other
Noncurrent liabilities
Bonds payable
Long-term loans payable
Provision for stock benefits
Other
Total liabilities
Net Assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
Retained earnings brought forward
Treasury stock
Valuation and translation
adjustments
Valuation difference on availablefor-sale securities
Subscription rights to shares
Total net assets

Total assets(English Translation)

Amount712,649

Total liabilities and net assets― 50 ―

139,599
50,70020,00062,217
5,000
379
369
83
208
228
413
358,633
85,000273,500
66
67
498,232
215,492
35,92091,30791,30795,653
8,980
86,67386,673(7,389)(1,077)(1,077)
2
214,417712,649

Non-Consolidated Statement of Income(From April 1, 2016 to March 31, 2017)(Millions of yen)
Item

AmountOperating revenue

13,684

Operating expenses
Operating income
Non-operating income
Interest income
Dividends income
Other
Non-operating expenses
Interest expenses
Financing expenses
Other
Ordinary income
Extraordinary income
Gain on sales of investment securities
Extraordinary loss
Loss on sales of investment securities
Other

5,077
8,607
2,056
336
19
1,612
187
132

Income before income taxes
Income taxes-current
Income taxes-deferred
Net income(English Translation)

2,412

1,932
9,087

208

208

330
23

354
8,941

154
(71)

― 51 ―

838,858

Non-Consolidated Statement of Changes in Net Assets(From April 1, 2016 to March 31, 2017)(Millions of yen)
Shareholders’ equity
Capital surplus
Capitalstock

Balance as of April
1, 2016
Changes in thefiscal year:
Dividends
Dividends(interim)
Net income
Acquisition oftreasury stock
Disposition oftreasury stock
Retirement oftreasury stock
Transfer tocapital surplus
from retained
earnings
Change in items
other thanshareholders’equity-net
Total changes in
the fiscal year
Balance as ofMarch 31, 2017(English Translation)

35,920Retained earnings

Legal
capitalsurplus

Othercapitalsurplus

Total capitalsurplus

Legal retained
earnings

91,307-91,307

8,980

(1)

(1)

(67,494)(67,494)

67,49567,495

Other retained
earnings
Retained earnings
brought forward

Total retained
earnings

151,696

160,676(2,666)(2,666)(3,719)(3,719)

8,858

8,858

(67,495)(67,495)

-

-

-

-

-

(65,022)(65,022)35,92091,307-91,307

8,980

86,673

95,653― 52 ―

(Millions of yen)
Shareholders’ equity

Balance as ofApril 1, 2016
Changes in thefiscal year:
Dividends
Dividends(interim)
Net income
Acquisition oftreasury stock
Disposition oftreasury stock
Retirement oftreasury stock
Transfer tocapital surplus
from retained
earnings
Change in items
other thanshareholders’equity-net
Total changes in
the fiscal year
Balance as ofMarch 31, 2017(English Translation)

Valuation and translation adjustments

Treasury stock

Total
shareholders’equity(54,238)

233,666

Valuationdifference on
available-for-salesecurities(1,623)

Total valuationand translation
adjustments(1,623)

Subscription rights
to shares

Total net assets

53

232,096(2,666)(2,666)(3,719)(3,719)

8,858

8,858

(20,698)(20,698)(20,698)

53

51

51

67,494

-

-

-

-

546

546

(51)

494

46,849(18,173)

546

546

(51)

(17,679)(7,389)215,492(1,077)(1,077)

2

214,417― 53 ―

Notes to Non-Consolidated Financial Statements
1. 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 stated at cost using themoving-average method.
(2) Method of depreciation and amortization of noncurrent assets(a) Property, plant and equipment
Property, plant and equipment are depreciated using the straight-line method.
(b) 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(a) Allowance for doubtful accounts
The estimated uncollectible amounts are determined on the case-by-case analysis of recoverability
for receivables with default possibility.
(b) Provision for bonuses
The portion of estimated bonus payments that is incurred during the current fiscal year is recognized.
(c) 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.
(Additional Information)
The “Revised Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ
Guidance No. 26 of March 28, 2016) has been applied from the fiscal year under review.

2. Notes to Non-Consolidated Balance Sheet(1) Accumulated depreciation of property, plant and equipment(2) Guarantee liabilities
Guarantee liabilities in respect to the amount of payables of theconsolidated subsidiary, Epos Card Co., Ltd. to their business partner(3) Receivables and payables to subsidiaries and affiliates
Short-term receivables
Short-term payables

833 million yen

10,174 million yen
280,209 million yen
62,217 million yen

3. Notes to Non-Consolidated Statement of Income
Transaction with subsidiaries and affiliates
Operating transactions
Operating revenues
Operating expenses
Non-operating transactions(English Translation)

13,684 million yen
809 million yen
2,083 million yen― 54 ―

4. Notes to Non-Consolidated Statement of Changes in Net Assets
Class and number of shares of treasury stock
Share Class

Number of Shares
as of April 1, 2016

Increase in Sharesin the Fiscal Year

Decrease in Sharesin the Fiscal Year

Number of Shares
as of March 31,
20174,704,750 shares

Common stock
36,270,334 shares 13,469,778 shares 45,035,362 shares
Notes:
1. Shares of common stock held as treasury stock increased by 13,469,778 shares due to the purchaseof treasury stock (12,966,300 shares), the acquisition of treasury stocks for Officer Remuneration
BIP Trust and Stock Benefit ESOP Trust (502,300 shares), and the purchase of shares in response
to purchase demands for less than one unit (1,178 shares).
2. Shares of common stock held as treasury stock decreased by 45,035,362 shares due to thecancelation of treasury stocks held (45,000,000 shares), the exercise of stock options (35,300
shares), and the sale of fractional shares (62 shares).
3. The number of shares of common stock as of March 31, 2017 includes 502,300 shares of theCompany’s shares owned by Officer Remuneration BIP Trust and Stock Benefit ESOP Trust.

5. Notes to Tax Effect Accounting
Principal components of deferred tax assets and deferred tax liabilities(Deferred tax assets)
Impairment loss of investment securities in subsidiaries andaffiliates for restructuring
Other
Sub-total
Valuation allowance
Total(English Translation)― 55 ―

7,238 million yen
3,109 million yen
10,347 million yen(2,507) million yen
7,840 million yen

6. Notes to Transactions with Related Parties
Subsidiaries, affiliates and other related parties

Type

Name

VotingRights heldby theCompany(%)

Business Contents

Relationship
Concurrent Posts of
Directors and Audit &Supervisory Board
Members

Business
Relationship

MARUI Co., Ltd.

Marui Store Business,
Private Brand
Management andDevelopment, Mail-order
Business, Outlet Business(Ownership)
Direct100.0

1 personBusinessmanagement

Epos Card Co., Ltd.

Credit Card Business,
Credit Loan Business(Ownership)
Direct100.0

2 personsBusinessmanagement

Name

Transactions

Amount ofTransactions(Millions of yen)Account Item

Balance as ofMarch 31, 2017
(Millions of yen)

Borrowing of funds*Note140,062

Short-term loans
payable tosubsidiaries andaffiliates

48,725Businessmanagement fee*Note2

1,494-

Lending of funds*Note1

273,046

Short-term loans
receivable fromsubsidiaries andaffiliates

Businessmanagement fee*Note2

2,548

-

-

Receipt of interests

2,047

-

-

Subsidiaries

Type

MARUI Co., Ltd.

Subsidiaries

Epos Card Co., Ltd.

-279,028

Terms of transactions and policy for deciding transaction terms
Notes:
1. These loans are intended to centralize control of the intra-Group funds by the cash management
system. The interest rate is reasonably determined based on the market interest rate. The
transaction amounts shown in the table above are average outstanding balances.
2. These represent fees for accounting and personnel management related services provided and aredetermined on a reasonable basis.
7. Notes to Per-Share Information(1) Net assets per share(2) Net income per share

936.49 yen
37.96 yen

8. Notes to Significant Subsequent Events
Not applicable.
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Amounts in these non-consolidated financial statements have been rounded down to the nearest unit. Ratio etc.
are rounded off to the nearest digit.

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