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 1, 2018
3-2, Nakano 4-chome, Nakano-ku, TokyoMARUI GROUP CO., LTD.
Hiroshi Aoi
President and Representative Director

Notice of Convocation of the 82nd Ordinary General Meeting of Shareholders
Dear Shareholders:
You are cordially invited to attend the 82nd 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 22, 2018 (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 (https://evote.tr.mufg.jp/), using the log-in
ID and temporary password which are shown on the Voting Rights Exercise Form. After logging in,please indicate whether you approve or disapprove the items on the agenda by following the
instructions on the screen by the deadline stated above.
(English Translation)―1―

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:Monday, June 25, 2018 at 10:00 a.m.
(Reception commences at 9:00 a.m.)

2. Place of the Meeting: 3rd Floor of the Head Office of MARUI GROUP CO., LTD.
at 3-2, Nakano 4-chome, Nakano-ku, Tokyo, Japan
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 82nd Fiscal Year (from
April 1, 2017 to March 31, 2018).
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: Partial Amendments to the Articles of Incorporation
Proposal 3: Election of Seven (7) Directors
Proposal 4: Election of One (1) Audit & Supervisory Board Member
Proposal 5: 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 my sincere appreciation for your ongoing patronage and support of the
MARUI GROUP.
Since its foundation in 1931, the Group has continued evolving its unique business models whereretailing and financing are integrated to respond to changes in the times and consumer tastes.
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 co-create “happiness” of all of our stakeholders.
To achieve this goal, we are focused on the concept of “inclusion.”
By reviewing its businesses that have been pursued to date with a focus on “everyone” through theconcept of “inclusion,” the Group has taken the first step towards “Co-Creation Sustainability
Management,” which is future-oriented management that integrates considerations for business and theenvironment, solutions to social issues, and initiatives for governance.
The MARUI GROUP will engage in communication with shareholders and pursue “Co-Creation
Sustainability Management” to help co-create a flourishing and inclusive society that offers happinessto everyone. We look forward to your continued patronage in the future.
June 2018(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 20 yen per share. Together with the interim dividends of 18 yen per share which have been paid, theannual payment of dividends for the fiscal year under review shall be 38 yen per share, an increase of 5 yen
per share compared with the previous fiscal year, which is the increase in dividends for six (6) 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:
20 yen per share of common stock of the Company
Total amount: 4,417,864,220 yen(3) Effective date for distribution of surplus: June 26, 2018(English Translation)―5―

Proposal 2:
1.

Partial Amendments to the Articles of Incorporation

Reasons for the amendments(1) In line with the business expansion of the Group, the Company proposes the addition of businesspurposes to Article 2 (Purpose) of the current Articles of Incorporation.
(2) The Company proposes revisions to Article 25 (Liability Limit Agreement with External
Directors) and Article 32 (Liability Limit Agreement with External Audit & Supervisory Board
Members) of the current Articles of Incorporation to further clarify the maximum amount ofliability for damages under the liability limit agreements. For amendments to Article 25 (Liability
Limit Agreement with External Directors), the Group has obtained consent from all Audit &Supervisory Board Members.
(3) Other items, including changes to and removal of provisions in line with the current state, etc., areproposed to be made as necessary.

2.

Contents of the amendments
Contents of amendments are as follows:
Current Articles of Incorporation

Article 2 (Purpose)
The Purpose of the Company shall be:
to control and manage the businessactivities of the corporations that
conduct the following businesses byowing shares in such corporations.
(1) to (9)(Omitted)(10)
Non-life insurance agency and life
insurance solicitation(11)

Installment sales, installment sales
agency, purchase of installment
receivables, commissioned money
collection,
creditresearch,andcommissioned computing(Newly established)(12) to (19)(English Translation)(Omitted))(Amended parts are underlined)
Proposed Amendments
Article 2 (Purpose)
The Purpose of the Company shall be:
to control and manage the businessactivities of the corporations that
conduct the following businesses byowing shares in such corporations.
(1) to (9)(Unchanged)(10) Non-life insurance agency, life
insurance solicitation and short-term
insurance business(11) Installment sales, credit purchasebrokerage, rent guarantee, purchase of
installment receivables, commissioned
money collection, credit research, andcommissioned computing(12) Financial instruments trading, financial
instruments brokerage, and otherfinance-related business(13) to (20)(Unchanged)―6―Current Articles of Incorporation

Proposed Amendments

Article 25 (Liability Limit Agreement with
External Directors)
The Company shall be able to enter intoa liability limit agreement with External
Director to limit liability for thedamages stipulated in Article 423,
Paragraph 1 of the Companies Act,
pursuant to the provisions of Article
427, Paragraph 1 of the same Act. The
maximum amount of liability fordamages under such agreement shall betheminimum
liability
amountstipulated by laws and regulations.

Article 25 (Liability Limit Agreement with
External Directors)
The Company shall be able to enter intoa liability limit agreement with External
Director to limit liability for thedamages stipulated in Article 423,
Paragraph 1 of the Companies Act,
pursuant to the provisions of Article
427, Paragraph 1 of the same Act. The
maximum amount of liability fordamages under such agreement shall be
the higher of a predetermined amountof 10 million yen or more or theamount set by the laws and regulations.
Article 32 (Liability Limit Agreement with
External Audit & Supervisory
Board Members)
The Company shall be able to enter intoa liability limit agreement with External
Audit & Supervisory Board Member tolimit liability for the damages stipulated
in Article 423, Paragraph 1 of theCompanies Act, pursuant to theprovisions of Article 427, Paragraph 1of the same Act. The maximum amountof liability for damages under suchagreement shall be the higher of apredetermined amount of 10 million
yen or more or the amount set by thelaws and regulations.
(Removed)

Article 32 (Liability Limit Agreement with
External Audit & Supervisory Board
Members)
The Company shall be able to enter intoa liability limit agreement with External
Audit & Supervisory Board Member tolimit liability for the damages stipulated
in Article 423, Paragraph 1 of theCompanies Act, pursuant to theprovisions of Article 427, Paragraph 1of the same Act. The maximum amountof liability for damages under suchagreement shall be the minimum
liability amount stipulated by laws andregulations.
Article 36 (Conversion Period of Convertible
Bonds）For the first year-end dividend orinterim dividend paid for shares issued
by a conversion request of convertible
bonds, the conversion is deemed tohave been made on April 1 for requests
submitted between April 1 and
September 30, and October 1 forrequests submitted between October 1
and March 31 of the following year.
Article 37(Omitted)(English Translation)

Article 36―7―(Unchanged)

Proposal 3:

Election of Seven (7) Directors

The term of office of all of the seven (7) Directors will resign from his office expire at the close of this
General Meeting.
External Director, Mr. Koichiro Horiuchi, will at the close of this General Meeting.
Accordingly, the Company would like to propose to elect seven (7) Directors, including three (3) External
Directors.
The candidates for Directors are as follows:rAttendance to

Candidate
NumberPositions and Responsibilities the Meetings ofthe Board of
at the Company

Name

Directors
1

Hiroshi Aoi【Reappointment】

President and Representative
Director, and Group
Representative Executive
Officer

10/10
100%

External Director

10/10
100%

【Reappointment】
2

Etsuko Okajima【Candidate for External Director】【Candidate for Independent Director】【New appointment】

3

Yoshitaka Taguchi 【Candidate for External Director】――【Candidate for Independent Director】【Reappointment】
4

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

External Director

*8/8
100%

Director and Senior Managing
Executive Officer, CHO,
10/10
5
Tomoo Ishii
In charge of Audit, General【Reappointment】
100%
Affairs, Personnel and
Healthcare Promotion
Director and Managing
10/10
Executive Officer
6
Masao Nakamura 【Reappointment】
Responsible for FinTech
100%
Business
Director and Senior
Executive Officer, CDO
10/10
General Manager, IR
7
Hirotsugu Kato 【Reappointment】
Division100%
In charge of Corporate
Planning and ESG Promotion*Attendance to the Meetings of the Board of Directors for Mr. Masahiro Muroi indicates the status after his assumption of
office as Director on June 26, 2017.

(English Translation)

―8―

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】

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
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.

(English Translation)

Number of
Shares Held

―9―

1,538,300

Name(Date of Birth)(Brief History, Positions, Responsibilities, and Important
Positions at Other Organizations Concurrently Assumed, If Any)

Etsuko Okajima(May 16, 1966)

Apr. 1989
Jan. 2001
Jul. 2005【Reappointment】

Jun. 2007【Candidate forJun. 2014

External Director】【Candidate for2Mar. 2016

Independent Director】▸ Term of office from theappointment as Directorof the Company to theclose of this Ordinary
General Meeting of
Shareholders: 4 years▸ Attendance to the
Meetings of the Board of
Directors: 10 out of 10

Joined Mitsubishi Corporation
Joined McKinsey & Company
Representative and CEO, GLOBIS Management
Bank
Representative and CEO, ProNova Inc.
(Incumbent)
External Director, Astellas Pharma Inc.
(Scheduled to retire in June 2018)
External Director, the Company (Incumbent)
External Director, Link and Motivation Inc.
(Incumbent)

Number of
Shares Held0

Reasons for nomination as a candidate for External Director
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.
Mar. 1985

Yoshitaka Taguchi(April 20, 1961)【New appointment】【Candidate for3

External Director】【Candidate for
Independent Director】

Joined Seino Transportation Co., Ltd. (current
Seino Holdings Co., Ltd.)
Jul. 1989
Director, Seino Transportation Co., Ltd. (current
Seino Holdings Co., Ltd.)
Jul. 1991
Managing Director, Seino Transportation Co.,
Ltd. (current Seino Holdings Co., Ltd.)
Jun. 1996
Senior Managing Director, Seino Transportation
Co., Ltd. (current Seino Holdings Co., Ltd.)
Oct. 1998
Representative Director and Vice President,
Seino Transportation Co., Ltd. (current Seino
Holdings Co., Ltd.)
Jun. 2003
President and Chief Operating Officer, Seino
Transportation Co., Ltd. (current Seino Holdings
Co., Ltd.) (Incumbent)
Reasons for nomination as a candidate for External Director
Mr. Yoshitaka Taguchi has ample experience and extensive
knowledge with many years of active participation in corporate
management. As the Company believes that he can contribute to
the reinforcement of supervisory function for management of theCompany from an independent and objective position as External
Director of the Company, the Company has nominated him as a
candidate for an External Director.

(English Translation)― 10 ―0Name(Date of Birth)(Brief History, Positions, Responsibilities, and Important
Positions at Other Organizations Concurrently Assumed, If Any)
Apr. 1978
Jun. 2000

Masahiro Muroi(July 13, 1955)【Reappointment】

4

Apr. 2009【Candidate forApr. 2013

External Director】

Apr. 2015【Candidate forJun. 2016

Independent Director】
Jun. 2017▸ Term of office from theappointment as Directorof the Company to theclose of this Ordinary
General Meeting of
Shareholders: 1 year
▸ Attendance to the
Meetings of the Board of
Directors: 8 out of 8(English Translation)

Joined Nomura Computer System Co., Ltd.
(current Nomura Research Institute, Ltd.)
Member of the Board, Nomura ResearchInstitute, 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)
External Director, the Company (Incumbent)

Jun. 2018

Audit & Supervisory Board Member, The
Norinchukin Bank (Scheduled)
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 by digital innovation which theCompany will promote, the Company has nominated him as a
candidate for an External Director.

― 11 ―

Number of
Shares Held

0

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

5

Tomoo Ishii(July 16, 1960)【Reappointment】

Apr. 2017
Apr. 2018

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
President and Representative Director,
MOVING CO., LTD. (Incumbent)
Director and Senior Managing Executive
Officer and CHO
In charge of Audit, General Affairs, Personnel
and Healthcare Promotion, the Company(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 personnel, generalaffairs, healthcare promotion and audits, and performed his duties
properly as Senior Managing Executive Officer of the Company.
Based on the above reasons, the Company believes that he canfully perform his functions for long- and mid-term improvement
in corporate value of the Company. Therefore, the Company has
nominated him as a candidate for a Director.

(English Translation)― 12 ―

Number of
Shares Held

18,400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

Apr. 2016

6

Masao Nakamura(June 11, 1960)

May 2016【Reappointment】
Oct. 2017

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, theCompany
Responsible for Retailing BusinessDirector and Managing Executive Officer
Responsible for FinTech 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 fintech
business 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)― 13 ―

Number of
Shares Held

21,500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

Apr. 20177

Hirotsugu Kato
(July 30, 1963)【Reappointment】

Oct. 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 Division and
ESG Promotion
Director and Senior Executive Officer
CDO
General Manager, IR Division
In charge of Corporate Planning and ESG
Promotion (Incumbent)

Number of
Shares Held

5,200

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. Ms. Etsuko Okajima and Mr. Masahiro Muroi 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. Yoshitaka Taguchi 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 tohis appointment.
4. Mr. Yoshitaka Taguchi concurrently serves as Representative Director of Seino Holdings Co., Ltd.
A subsidiary of the Company recorded 17 million yen of commission fee for instore delivery
services, etc., received from two subsidiaries of the said company (Seino Transportation Co., Ltd.
and another company) for the most recent fiscal year. The amount accounted for 0.007% of thetotal consolidated operating revenue of the Company, 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 andAudit & Supervisory Board Members” set forth as follows hereafter.
5. The Company has entered into a liability limit agreement with each of Ms. Etsuko Okajima andMr. Masahiro Muroi under which his/her liability shall be limited to the minimum amountprovided for in laws and regulations. In the event that Ms. Etsuko Okajima, Mr. Yoshitaka(English Translation)― 14 ―

Taguchi and Mr. Masahiro Muroi are elected as External Directors, the Company plans tocontinue or enter into a liability limit agreement with each of them. The maximum amount ofliability for damages under such agreement shall be the higher of a predetermined amount of 10
million yen or more or the amount set by the laws and regulations, provided Proposal 2: Partial
Amendments to the Articles of Incorporation is approved.

(English Translation)― 15 ―

Proposal 4:

Election of One (1) Audit & Supervisory Board Member

The term of office of Audit & Supervisory Board Member Mr. Tetsuji Sunami, one (1) of current four (4)Members, will expire at the close of this General Meeting.
Accordingly, the Company would like to propose to elect one (1) Audit & Supervisory Board Member.
Furthermore, the Audit & Supervisory Board has consented to this proposal.
The candidate for Audit & Supervisory Board Member is as follows:
Name(Date of Birth)(Brief History and Important Positions at Other Organizations Concurrently
Assumed, If Any)
Mar. 1982
Feb. 2005
Apr. 2007
Apr. 2011
Apr. 2013
Jun. 2013

Nariaki Fuse
(June 3, 1959)【New appointment】

Joined the Company
General Manager, Customer System Development
Division, M&C SYSTEMS CO., LTD.
Director, M&C SYSTEMS CO., LTD.
Executive Officer, the Company
Managing Director, M&C SYSTEMS CO., LTD.
President and Representative Director, M&C SYSTEMS
CO., LTD.
Director and Executive Officer, the Company

Apr. 2015

Senior Executive Officer
In charge of Audit and Information Systems
Apr. 2016
Senior Executive Officer, CIO
In charge of Audit
Reasons for nomination as a candidate for Audit & Supervisory Board
MemberMr. Nariaki Fuse has ample business experience in information systembusiness of the Group. He also has management experience as Senior
Executive Officer, and is well-versed in a variety of businesses of theGroup. Based on the above reasons, the Company believes that he cancontribute to fair audit as Audit and Supervisory Board Member of theCompany, and has nominated him as a candidate for Audit & Supervisory
Board Member.

Note: There is no special interest between the candidate and the Company.

(English Translation)

Number of
Shares Held

― 16 ―

9,800

Proposal 5: 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 81st Ordinary General Meeting of Shareholders of the Company held on June 26, 2017 will be in effectuntil the start of this General Meeting.
For the purpose of preparing for 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.
The 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】【Candidate for
Independent Audit &Supervisory Board
Member】(Brief History and Important Positions at Other Organizations Concurrently
Assumed, If Any)
Apr. 1988
Jun. 2015

Registered as Attorney
External Director, ICHIKAWA CO., LTD. (Incumbent)

Jun. 2017

Audit & Supervisory Board Member, J-OIL MILLS, Inc.
(Incumbent)

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

Number of
Shares Held0

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
the Company. 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. In the event that Mr. Akira Nozaki is elected, the Company plans to enter into a liability
limitation agreement with him at the time of his assumption of office as External Audit &Supervisory Board Member. The maximum amount of liability for damages under suchagreement shall be the higher of a predetermined amount of 10 million yen or more or theamount set by the laws and regulations, provided Proposal 2: Partial Amendments to the Articles
of Incorporation is approved.

(English Translation)― 17 ―

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 whichtransactions with the Company, its subsidiaries, and its affiliates equated to 10 million yen or more andrepresented more than 2% of the total consolidated net sales (the total consolidated operating revenue) ortransaction revenues of the supplier group in the most recently completed fiscal year.
b. A supplier group with which liabilities of the Company, its subsidiaries, or its affiliates are associated and forwhich the applicable liabilities equated to 10 million yen or more and represented more than 2% of theconsolidated total assets of the supplier group as of the end of the most recently completed fiscal year.

(English Translation)― 18 ―

*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 or services and for which thetotal amount of transactions with the customer group equated to 10 million yen or more and represented morethan 2% of the total consolidated operating revenue of the Company in the most recently completed fiscal year.
b. A customer group possessing liabilities that are associated with the Company, its subsidiaries, or its affiliates andthat equated to 10 million yen or more and represented more than 2% of the consolidated total assets of theCompany 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 through borrowings and fromwhich the total amount of funds borrowed represented more than 2% of the consolidated total assets of theCompany 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)― 19 ―

MARUI GROUP DIGEST 2017
April

・ Issued EPOS card’s first Tohoku area facility collaborative card, “ELM EPOS card”(Goshogawara City, Aomori)May・ Participated in TOKYO RAINBOW PRIDE 2017
・ Ranked No.1 in the Combined and Buy Side rankings among retail sector companies
in the Best IR Companies category released by U.S. Financial Industry Magazine“Institutional Investor”
・ Recognized in the “Companies Exhibiting Excellence in Promoting Women’s
Empowerment” in the “SMBC Nadeshiko Loans and Private Placement Bonds Selection”

June

・ Issued “GINTAMA EPOS card”
・Issued a new EPOS card designed by “PARAART” artist with collaboration withSHOUGAISHA JIRITSU SUISHIN KIKOU ASSOCIATIONJuly・ Selected for the first time as an index component of “FTSE4Good Index Series”
・Chosen for inclusion for all three ESG Indexes selected by GPIF

August・ Held “Inclusion Fes 2017” as a venue to raise awareness of employees and“experience and feel” diversity

September・Issued “GODZILLA EPOS card”
・Selected as in index component of “Dow Jones Sustainability Asia Pacific Index(DJSI Asia Pacific)”, one of Socially Responsible Investment (SRI) Index Series
・Opened “KITCHEN GARDEN 350” at Kitasenju Marui

October・ Strengthened Business Alliance with Laxus Technologies Inc., who operates Japan’slargest bag sharing service “Laxus”
・ Issued “GTN EPOS card,” Japan’s first credit card available only to foreigners
・ Opened the world’s first GODZILLA official shop “GODZILLA STORE Tokyo” at
Shinjuku Marui annex

November・ Opened “KARITOKE,” a real store of designer-brand watch rental service at
Yurakucho Marui

December・ Opened “Amazon Holiday 2017 Pop-UpStore” at Shibuya Marui and Modi for alimited period

January

・Ranked first in the “retail and restaurants category” in the “21st Nikkei Corporate
Environmental Management Survey” conducted by Nikkei Inc.

February

・ Included, for the first time, as “Yearbook Member” in the “RobecoSAM Sustainability
Yearbook 2018”
・ Selected for the first time in the “2018 Health and Productivity Stock Selection,” ajoint program launched by the Ministry of Economy, Trade and Industry and Tokyo
Stock Exchange, Inc.

March・ Issued “KITTE MARUNOUCHI EPOS card”
・ Issued “SHIN TENNIS NO OJISAMA EPOS card”
・ Selected for the first time in the “Nadeshiko Brand” and “New Diversity Management
Selection 100” in 2018
・Received, for the first time among retail companies in Japan, certification of the“Science Based Targets (SBT) Initiative” in the recognition of MARUI GROUP’s
target of reduction in greenhouse gas emissions(English Translation)― 20 ―

(Attached Materials)

Business Report(For the fiscal year from April 1, 2017 to March 31, 2018)
1. Information on the Status of Marui Corporate Group(1) Development of the Businesses of the Corporate Group and Financial Results
In the consumption environment, a shift in consumption from “goods” to “experiences” has further
progressed and there is continued growth seen in the EC market in the retail sector. However, there is apotential risk of a future decline in business models that rely on real stores focused on merchandise
sales.
In the credit market, while infrastructure development has progressed in preparation of the 2020
Olympics and Paralympic Games and markets are expected to grow, there will be a possibility thatmarkets will drastically change due to innovation in financial services driven by new technology.
In order to respond to these business environment changes, the Group has been evolving its uniquebusiness models where retailing and financing are integrated to enhance corporate value.
In the retailing segment, the Group is promoting a shift from the department store-type stores to realestate-type stores as well as developments of SC-type stores under fixed-term lease contracts, whereby
conversion from purchases commitment to fixed-term lease contracts are conducted. Through suchinitiatives, the Group will strive to meet customer needs and stabilize revenue as well as pursue its
unique omni-channel strategy with an emphasis on EC.
In the FinTech segment, with an aim to increase membership of the EPOS card nationwide, the Grouphas pursued business alliances with commercial facilities and contents-related companies to achieveboth the maintaining of high profitability and expanding of business scale.
Through these initiatives, total group transactions for the fiscal year under review increased by 13%
from the previous fiscal year to 2,189.4 billion yen, marking the first time to exceed 2,000 billion yen.
Revenue increased by 1% from the previous fiscal year to 239.0 billion yen, and operating income
increased by 13% from the previous fiscal year to 35.2 billion yen, which is an increase in operating
income for nine consecutive fiscal years. In addition, net income attributable to owners of parent
increased by 12% from the previous fiscal year to 20.9 billion yen, which is an increase in net income
attributable to owners of parent for seven consecutive fiscal years. The Group recorded increases both inrevenue and income for the first time in four fiscal years.
As a result, EPS (earnings per share) for the fiscal year under review increased by 16% and 12.9 yen
from the previous fiscal year to 93.2 yen, and ROE (return on equity) increased by 0.9 % from theprevious fiscal year to 7.6%, both achieving the plan due to profit growth and capital policies. ROIC
(return on invested capital) also increased by 0.1% from the previous fiscal year to 3.2% due to steadyprogress on a shift to the business and capital structure aimed at corporate value creation under the midterm management plan.

(English Translation)― 21 ―

(Consolidated financial results for the fiscal year ended March 31, 2018)

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

113
101
105

Increase(Decrease) fromthe previous
fiscal year
12.9
0.9
0.1
(Billionsof yen)
255.7
2.0
8.4

[73.0]

[-]

[3.0]

134.7

139.2

103

4.5

29.6
29.2

31.3
31.1

35.2
35.1

113
113

4.0
4.0

17.8

18.7

20.9

112

2.2

Fiscal year
ended
March 31,
2016
70.7
6.0
3.3
(Billionsof yen)1,703.4
245.9
160.0

Fiscal year
ended
March 31,
2017
80.2
6.7
3.1
(Billionsof yen)1,933.7
237.0
166.0

Fiscal year
ended
March 31,
2018
93.2
7.6
3.2
(Billionsof yen)2,189.4
239.0
174.4

[65.1][70.0]

130.4

Year on Year
116%
(%)

Retailing segment
In the retail segment, due to continued development of SC-type stores under fixed-term lease contracts,
the fixed-term lease contract conversion ratio as of March 31, 2018 was 87% (25% increase from theend of the previous fiscal year), exceeding the plan. The progress of conversion to SC-type stores under
fixed-term lease contracts has been facilitating a shift in the composition of store categories from thepresent focus on apparel to lifestyle categories focused on restaurants, services and sundries, leading toan increase in the number of visitors.
Moreover, through strengthened collaboration with business partners, including sharing of theirinventory information, transaction volume in the EC business grew from the previous fiscal year.
While operating income decreased in the platform business from the previous fiscal year, in part owing
to a deteriorating order environment, stores and omni-channel business saw an increase, supported by
an improvement in revenue by conversion to fixed-term lease contracts, absorbing stagnant sales inretail spaces. As a result, operating income in the overall retailing segment increased by 1.1 billion yen
from the previous fiscal year, marking the first rise in two years.
FinTech segment
In the FinTech segment, in order to increase EPOS card membership, the Company has been holding
promotional activities at Marui stores, rolling out collaboration with commercial facilities nationwide,and pursuing business alliances in high-growth fields, such as EC, service contents-related areas.
The number of card memberships totaled 6,570 thousand members, a 3% increase from the previous
fiscal year. The number of Platinum/Gold card memberships grew significantly to 1,840 thousand
members, a 17% increase from the previous fiscal year, due to tireless efforts to increase regularcustomers.
Transaction volume in card shopping continued to grow significantly to 1,600.9 billion yen, a 15%
increase from the previous fiscal year, and service transaction volume such as rent guarantee steadily
increased to 225.1 billion yen, a 20% increase from the previous fiscal year. The balance of revolving
payments and installment payments grew favorably to 300.1 billion yen, a 17% increase from theprevious fiscal year due to initiatives to improve customer convenience.

(English Translation)― 22 ―

As a result, operating income in the FinTech segment for the fiscal year under review increased by 3.2
billion yen to 30.3 billion yen, an increase both in revenue and income for six consecutive fiscal years.
(Information on the status of the FinTech segment for the fiscal year ended March 31, 2018)
Increase(Decrease) from
Fiscal year ended Fiscal year ended
March 31, 2017 March 31, 2018 Year on Year the previous fiscal(10Thousands of (10Thousands of(%)
year
persons)
persons)(10Thousands of
persons)
Number of New Card Memberships

74

75

101

1

[Of which, from outside the Group]

[17]

[19]

[114]

[2]

Number of Card Memberships

636

657

103

21

Platinum / Gold

157

184

117

27

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

FinTech Transactions

1,723.3

1,972.5

114

249.2

Card Shopping

1,390.6

1,600.9

115

210.3

[Outside the Group][1,274.7][1,489.3][117][214.6]

Cash Advance

136.3

138.0

101

1.7

Financial services

187.9

225.1

120

37.2

488.8

548.0

112

59.3

255.5

300.1

117

44.6

Balance of Operating Receivables
Balance of Revolving Payments
and Installment Payments(Segment Information)
Category(Millions of yen)
Retailing
Segment

FinTechSegment

Total

Adjustments

Consolidated

Revenue
To Outside Customers

132,241

106,758

238,999－

238,999

Inter-Segment
Revenue orTransferred Revenue

5,839

2,187

8,026

(8,026)－

138,081108,945

247,026(8,026)238,999[Year on Year (%)]

[93.2][112.2][100.7][－][100.8]Segment Profit

8,826

30,31039,137(3,894)35,243[Year on Year (%)]

[113.8][111.8][112.2][－][112.8]

6.4

27.8

－

－

14.7

Total

Operating Margin (%)(English Translation)― 23 ―

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

Total Transactions(Millions of yen)

Composition
Ratio (%)

58,876
85,691
159,862
24,055
328,486
1,600,890
138,001
225,091
8,498
1,972,482(111,594)
2,189,374

2.7
3.9
7.3
1.1
15.0
73.1
6.3
10.3
0.4
90.1
(5.1)
100.0

Year on Year (%)
82.0
64.3
164.5
99.9
100.7
115.1
101.3
119.8
100.0
114.5
－
113.2

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 stores,
the introduction of automated warehouse for mail-order business and the upgrading of information
terminals. The total expenditures on capital investments during the fiscal year under review amounted
to 10,250 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 66.0 billion yen in loans
from financial institutions and 20.0 billion yen from the issuance of bonds in response to an increase inoperating receivables of the FinTech segment and the repayment of loans. Addintionally, the Group
increased the amount of funds raised through the securitization of receivables by 15.0 billion yen.

(4) Issues to be Addressed■ Mid-to-long term management strategies
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 contribute to co-creation of a flourishing and inclusive society that offers happiness toeveryone including customers, shareholders, other investors, communities, the greater society, business
partners, and employees.
The Group aims to further improve corporate value generated as its outcome, and under the five-year
mid-term management plan with the fiscal year ending March 31, 2021 as the final year, we will strive
to achieve targets of 10% or higher in ROE (return on equity), 4% or higher in ROIC (return on invested
capital), and 130 yen or more in EPS (earnings per share) for the final year.

■ Initiatives targeting achievement of the mid-term management plan

(English Translation)― 24 ―

In the retailing segment, the Company will continue to transition from a department store-type stores
to a shopping center SC-type stores by pursuing the conversion to SC-type stores under fixed-termlease contracts, to expand restaurant and service categories. We will respond to the shift in consumer
needs from “goods” to “experiences” through such initiatives and also make efforts to improve
profitability when renewing lease contracts with tenants in the future.
With regard to EC business, we are planning to increase floor space at logistics centers in response
to increase in the number of transactions, pursue work efficiency utilizing robots, and upgrade
merchandise management systems, for further growth. Furthermore, in response to increased use ofsmartphones, an upgrade of user interface (UI) will be implemented through co-creation withcustomers.
In the FinTech segment, the Company will continue to aim to achieve both the maintaining of highprofitability and expanding of business scale. With regard to the EPOS card, we will strengthen
promotional activities at Marui stores and endeavor to expand business collaboration. In addition to
traditional business partners who are mainly centered on goods and real stores, business alliances inareas of experiences and the Internet will be promoted to further increase the number of new card
memberships. Our target number of new card memberships for the fiscal year ending March 31, 2021
is 1 million persons.
Moreover, for our rent guarantee business, which has been steadily growing since its launch in thefiscal year ended March 31, 2009, we will utilize collaboration with major property managementcompanies to target 10.0 billion yen of revenue for the fiscal year ending March 31, 2021. Goingforward, we will strengthen such businesses where profit can be generated without increasing assets toimprove capital efficiency.
■Future direction for new growth
Going forward, the Group will take initiatives to increase corporate value through development ofbusinesses that help solve social issues, by taking advantage of our strength in a “three-in-one modelthat combines real stores, credit cards, and online shopping.” With regard to investment in new
businesses, our focus will be on social issues which can be turned into businesses with the Company’s
unique business model, and we will also actively invest in start-up companies with which we can cocreate such businesses.
As we have invested in the past in the anime business, etc., with certain positive outcomes, we will
launch six new business projects all at once in this fiscal year, namely, “sharing,” “share house,”“development of new business in the restaurant category,” “personalization in sizes,” “lifestyle
application and wallet,” and “financial inclusion,” and will develop new businesses at a fast pace.
Moreover, as the most important investment for future growth, we will accelerate investment in
human resource development. We will further enhance our support for our employees to voluntarily
learn and grow through activities such as a next-generation executive development program, which
was started in the previous year, secondment to start-up companies, deployment to business schools,
and project activities, seminars and study groups.
For financial inclusion, believing it is our mission to provide the financial services that had been
only available to the wealthy, to everyone regardless of their income or generation, we have taken
active initiatives to realize this mission. During the fiscal year ended March 31, 2018, we started, as
our first step, to issue credit cards dedicated for foreign students residing in Japan. In the fiscal year
ending March 31, 2019, we will enter the securities business.
Our decision to enter into the securities business came in response to future concerns among young
generation. As many of them are anxious about the future, they are frugal and active in saving.
However, many of them are reluctant in investment because they think that investment “seems
difficult,” or that “they are not knowledgeable.” In Japan, cash and deposits reportedly amount to 900
trillion yen, and the nation’s ratio of cash and deposits to its total financial assets is the highest among(English Translation)― 25 ―

developed nations. As a result, growth in financial assets is lower than that of other counties, and the
Financial Services Agency is promoting a shift “from saving to investment.” The Group’s new
businesses will aim to solve such social issues.
As a new business, we will provide “everyone including young people” with an “investment trust
qualified for Tsumitate (Accumulation) NISA” “paid by EPOS card’s credit payment.” Purchasing an
investment trust by using a credit card is the first scheme in Japan, and we will establish a security
company to realize the scheme.
By utilizing the Group’s three-in-one model that combines “6.5 million card members,” “stores
visited by 200 million customers per year,” and “website as a platform,” we will strive to provide ourservice to 1 million customers and achieve 1 trillion yen of total asset balance in 10 years.
Furthermore, the Group is making efforts to respond to the large market of cash settlements in small
amounts. Currently, credit cards are mainly used as a convenient payment method for settlements oflarge amounts, and electric money is used for settlements in small amounts at large scale stores. As we
expect the QR code to become a widespread payment method in the future for settlements in small
amounts at small-scale stores, the Group will enter into the market of settlements for small amounts byintroducing a smartphone application for QR code payments from the fiscal year ending March 31,
2019.
The credit card market is expected to continue to grow, supported by long-term changes in economic
structures including the progression of EC and the expansion of the sharing economy. Amid thissituation, EPOS Card Co., Ltd. will promote use in EC in collaboration with GMO Payment Gateway,
Inc., and strengthen the area of recurring transactions by partnering with property managementcompanies such as ABLE INC., who will soon be a new business partner, for rent payment by credit
card, and by working with securities companies for monthly Tsumitate (Accumulation) NISA
contributions to be paid by credit card, to further increase its lifetime value (lifetime revenue of abusiness).
■Capital policies and shareholder returns
The Group aims to develop optimal capital composition suitable to the Group’s innovation, andrealize the financial structure where ROIC (Return on investment capital) stably exceeds capital costs.
For increasing operating receivables in the FinTech segment, we are promoting procurement of lowcost interest-bearing debt. We have set an optimal capital composition of interest-bearing debt to beabout 90% of operating receivables, and a shareholders’ equity ratio of about 30%.
Meanwhile, as the most recent balance of operating receivables is increasing more than planned, we
will strive to reduce the risks pertaining to diversification of procurement by expanding securitizationof operating receivables, and also aim for further enhancement of corporate value by controllingincreases in total assets and liabilities and improving capital efficiency.
For the future direction of shareholder returns, the Company will make a gradual shift from theacquisition of treasury stock to dividend payments. A total consolidated return ratio of 70% is ourguideline as it would allow the shareholders’ equity ratio to remain at 30%. We will endeavor togradually increase the consolidated payout ratio up to around 55%, aiming for a continued increase individends over an extended period.
■Initiatives for ESG
Since 2016, the Group has taken the first step toward Co-Creation Sustainability Management,
which is future-oriented management that integrates considerations for business and the environment,
solutions for social issues, and initiatives for governance. Under Co-Creation Sustainability
Management, we defined the following four core themes by reviewing our businesses, that have been
pursued to date with a focus on “everyone” through the concept of “inclusion” and by associating themwith the United Nations Sustainable Development Goals (SDGs).
(English Translation)― 26 ―

(1) Customer Diversity & Inclusion
We will seek to develop products, services, and stores that bring joy to all customers, regardlessof their age, gender, or physical characteristics.
(2) Workplace Inclusion
Based on the MARUI GROUP’s corporate philosophy of striving to “continue evolving to betteraid our customers” and “equate the development of our people with the development of ourcompany,” we will provide all employees with venues through which they can excel.
(3) Ecological Inclusion
We will develop eco-friendly businesses that are considerate of natural capital and propose
ecologically sound lifestyles that are in harmony with nature and the environment.
(4) Co-Creation Corporate Governance
We will develop governance frameworks that include multi stakeholders in order to achieve
harmony between the interests and the happiness of all stakeholders.
Inclusion entails including and reaching out to all those who have previously been excluded, and thisconcept is congruent with the direction set by the principles of the SDGs.
The Marui Group is in a quest to help build a flourishing and inclusive society that offers happinessto all, and will aim to make proactive contributions to the accomplishment of these goals through cocreation with all of its stakeholders.
For details of the Group’s initiatives for sustainability, please refer to the “Co-Creation
Sustainability Reports.”（http://www.0101maruigroup.co.jp/en/sustainability/lib/s-report.html）
We will endeavor to seek further improvement in corporate value as described above. We sincerely
ask for continued support and encouragement from our shareholders.

(English Translation)― 27 ―

(5) Assets and Profits and Losses
79th
Fiscal year ended
Category
March 31, 2015
Total Grouptransactions *1,469,111(Millions of yen)
Net Sales
404,947(Millions of yen)
Revenue *249,847(Millions of yen)
Ordinary income
28,002(Millions of yen)
Profit attributableto owners of
16,036parent(Millions of yen)
Earnings per
share
58.87
(Yen)
ROE (%)

80th
Fiscal year ended
March 31, 2016

81st
Fiscal year ended
March 31, 2017

82nd
Fiscal year ended
March 31, 2018

1,703,353

1,933,685

2,189,374---

245,867

237,022238,999

29,16331,13935,145

17,771

18,72420,907

70.68

80.24

93.18

6.0

6.7

7.6

5.2

Total assets
675,627
730,126
806,575
867,150(Millions of yen)
Net assets
307,255
282,101
274,339
274,900(Millions of yen)
* 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)― 28 ―

(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: 1. The figure in square brackets “[ ]” in the Percentage of Ownership column indicates theshare of indirect ownership as an included number.
2. Epos Card Co., Ltd. increased its capital stock to 500 million yen as of April 1, 2018.

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 ValueMARUI Co., Ltd.

3-2, Nakano 4chome, Nakanoku, Tokyo(Millions of yen)

(Millions of yen)

222,529

763,339(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)― 29 ―

(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
Prefecture
Tokyo
Kanagawa
Saitama
Chiba
IbarakiShizuoka
Osaka
Hyogo
Kyoto
Fukuoka(English Translation)

Store Name
Shinjuku, Ikebukuro Marui, Shibuya Marui and Modi, Kinshicho, Ueno Marui,
Kitasenju Marui, Yurakucho Marui, Nakano Marui, Kichijoji, Machida Marui andModi, Kokubunji Marui
Marui City Yokohama, Marui Family Mizonokuchi, Marui Family Ebina, Totsuka
Modi
Omiya Marui, Soka Marui, Marui Family Shiki, Kawagoe Modi
Kashiwa Marui and Modi
Mito
Shizuoka Marui and Modi
Namba Marui
Kobe MaruiKyoto Marui
Hakata Marui― 30 ―

(9) Matters concerning Employees
Business Category

Number of Employees

Retailing segment
FinTech segment
Corporate (Common functions)(Number of Person)
3,906
1,365
277

Total

5,548

Comparison with
the Previous Fiscal Year End(Number of Person)
335 (decrease)118 (increase)33 (increase)184 (decrease)

Notes: 1. The number of employees shown above does not include part-time employees. Average numberof part-time employees during the fiscal year (calculated based on monthly work hours) is
1,642.
2. Corporate (Common functions) refers to corporate management departments and others thatcannot be included in any specific segment.
(10) Main Loan Lenders
Lenders

Outstanding Balance(Millions of yen)

Syndicated loan

110,000

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation

95,900Mitsubishi UFJ Trust and Banking Corporation

31,100Mizuho Bank, Ltd.

22,300Development Bank of Japan Inc.

22,00050,000Note: Syndicated loan is co-financing whose manager is The Bank of Tokyo-Mitsubishi UFJ, Ltd.

(English Translation)― 31 ―

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 12,767,206 shares oftreasury stock)(3) Number of Shareholders: 24,302 shareholders(4) Principal Shareholders (Top 10)
Registered Name
The Master Trust Bank of Japan, Ltd. (Trust Account)

Number of SharesHeld(thousand shares)
31,735Percentage ofShareholding%
14.4

Japan Trustee Services Bank, Ltd. (Trust Account)

17,242

7.8

Japan Trustee Services Bank, Ltd. (Trust Account 9)

6,220

2.8

Aoi Real Estate Company

6,019

2.7

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
5,808
2.6
UBS AG LONDON A/C IPB SEGREGATED CLIENT
4,171
1.9
ACCOUNT
Toho Co., Ltd.
3,779
1.7
Trust & Custody Services Bank, Ltd.(Securities
3,770
1.7
Investment Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account 5)
3,603
1.6
STATE STREET BANK WEST CLIENT-TREATY
3,529
1.6
505234
Notes: 1. The Company holds 12,767 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 andoutstanding, excluding the treasury stock of 12,767 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(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 11, 2017:
Type and total number of shares acquired: 8,564,700 shares of common stock
Total cost of acquisition: 14,999,850,900 yen
Period of acquisition: From May 12, 2017 to March 22, 2018(English Translation)― 32 ―

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, and Group
Representative Executive
OfficerPresident 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.

Koichiro Horiuchi

Director

Etsuko Okajima

Director

Masahiro Muroi

Director

External Director, Ryoden Corporation

Masao Nakamura

Director and Managing
Executive Officer

Tomoo Ishii

Director and Managing
Executive Officer

Hirotsugu Kato

Director and Senior Executive
Officer

Responsible for FinTech BusinessPresident and Representative Director, AIM
CREATE CO., LTD.
Chief Operating Officer, Healthcare
Promotion
In charge of General Affairs, Personnel and
Healthcare Promotion
President and Representative Director,
MOVING CO., LTD.
CDO
General Manager, IR Division
In charge of Corporate Planning and ESG
Promotion

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
MemberAttorney
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. Directors, Mr. Koichiro Horiuchi, Ms. Etsuko Okajima and Mr. Masahiro Muroi are External
Directors. The Group has submitted a notification to Tokyo Stock Exchange, Inc. designatingthem as an independent director.
2. Audit & Supervisory Board Members, Mr. Tadashi Ooe and Mr. Takehiko Takagi are bothExternal Audit & Supervisory Board Members. The Group has submitted a notification to
Tokyo Stock Exchange, Inc., designating them as an independent audit & supervisory board
member.
3. The Group has no special relations with entities in which Directors Mr. Koichiro Horiuchi, Ms.
Etsuko Okajima and Mr. Masahiro Muroi, and Audit & Supervisory Board Members Mr.
Tadashi Ooe and Mr. Takehiko Takagi concurrently assume office.
4. Director, Ms. Etsuko Okajima’s name on the family register is Ms. Etsuko Mino.

(English Translation)― 33 ―

5. Audit & Supervisory Board Member, Mr. Tadashi Ooe is a qualified attorney and well-versed incorporate law.
6. Audit & Supervisory Board Member, Mr. Takehiko Takagi is a certified public tax accountant
and has an appreciable extent of knowledge in finance and accounting.
7. There were changes in directors’ positions, duties and important concurrent offices as of April 1,
2018.
Name

Tomoo Ishii(English Translation)

Previous

Present

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.

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

― 34 ―

(Reference)
Executive Officers (excluding those who concurrently serve as Director) are as follows. (As of April 1,
2018)
Name

Position

Position in Charge

Senior Managing Executive
Officer

CFO
In charge of IR and FinanceToshikazu Takimoto

Managing Executive Officer

CIO
Responsible for Retailing BusinessPresident and Representative Director, M&C
SYSTEMS CO., LTD.

Takashi Wakashima

Managing Executive Officer

In charge of Sustainability, Real EstateBusiness and Architecture

Hajime Sasaki

Senior Executive Officer

President and Representative Director,
MARUI Co., Ltd.

Yoshinori Saito

Senior Executive Officer

President and Representative Director, Epos
Card Co., Ltd.

Yoshiaki Kogure

Executive Officer

President and Representative Director,
MARUI FACILITIES Co., Ltd.

Masahiro Aono

Executive Officer

Managing Director, MARUI Co., Ltd.

Yuko Ito

Executive Officer

General Manager, Group Design Center andArchitecture Division
Director and Deputy General Manager,
Space Production Business Headquarters,
AIM CREATE CO., LTD.

Mayuki Igayama

Executive Officer

Director and General Manager, OmniChannel Retailing Division, MARUI Co.,Ltd.

Junko Tsuda

Executive Officer

Director and Store Manager, Marui Family
Mizonokuchi, MARUI Co., Ltd.

Miyuki Kawara

Executive Officer

Director and Store Manager, Ueno Marui,
MARUI Co., Ltd.

Masahisa Aoki

Executive Officer

General Manager, New Business
Development Division
In charge of Anime Business

Motohiko Sato

(English Translation)― 35 ―

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

7
(3)

219
(38)

4
(2)

50
(15)

Total
11
270
Notes: 1. Basic remuneration for Directors with the resolution at the General Meeting of Shareholders has
a maximum 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 performancelinked bonus has a maximum limit of 100 million yen per year (remuneration for Directors
does not include bonus portions payable to Directors who concurrently serve as employees of
the Company), and remuneration for Directors (other than External Directors) by performancelinked stock compensation 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 Dateof the General Meeting of Shareholders: April 28, 1987)
3. The above remuneration and other amounts include 16 million yen of payment for the
performance-linked bonus and 16 million yen of expenses for the current fiscal year of theperformance-linked stock compensation to four 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) ofwhich 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.

(English Translation)― 36 ―

(4) Information on External Officers
i. Principal Activities of External Officers
Position

Directors

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

Masahiro Muroi

Tadashi Ooe

Audit &
Supervisory Board
Members

Takehiko Takagi

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 her opinions in a timely
and appropriate manner.
Attended all 8 meetings of the Board of Directors held after
his appointment at the 81st Ordinary General Meeting of
Shareholders. Raised questions and made comments, mainly
from the perspective of an experienced manager, and, as
necessary, expressed his opinions in a timely and appropriatemanner.
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.
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.

ii. 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, Paragraph 1 of theCompanies Act. Based on these contracts, a maximum limit is placed on the amount of liabilities
which is equivalent to the minimum amount of such liabilities as determined by law.

(English Translation)― 37 ―

1. 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: 143 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.

2.

Company’s Systems and Status of Operation(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 oftransparency.

(English Translation)― 38 ―

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 the 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 withoutside 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 compliance(English Translation)― 39 ―

with 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
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.

(English Translation)― 40 ―

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 documents business content and anticipated risks of, and measures therefor to be taken by,each group company. Also, by monitoring the status of operation of such measures through selfassessment and internal audit, the Group promotes highly effective internal control.
c. At each of the Group companies, various rules have been developed to clarify operation and rules frominternal control perspective, and the rules are reviewed and revised as necessary.
d. 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. In the fiscal year under review, the Group revised the Code of
Conduct of the Group by integrating initiatives and concepts the Group has forged, to set forthcontribution to local community and society, respect for human rights, elimination of inappropriate
transactional conducts, protection and management of information, etc.
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, in addition to practical trainings tailoredto each business area.
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 6 Committees of Public Relations IR
Committee, Internal Control Committee, Environment CSR Promotion Committee, Personal
Information Protection Promotion Committee, Safety Control Committee and Insider Trading
Prevention Committee, which were 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 three (3) External Directors who have extensive experience and expertise outside
the Group 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(English Translation)― 41 ―

Committee were held 17 times.
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 eight (8) subsidiaries
and confirm 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.
〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰
Treatment of rounding numbers displayed in this report
Listed amounts are rounded down to the nearest million yen unit, the number of shares are rounded down, andother is rounded to the nearest unit.

(English Translation)― 42 ―

Consolidated Balance Sheet(As of March 31, 2018)(Millions of yen)
Item

AmountAssetsItem

Intangible assets
Software
Other

6,388

Liabilities
Current liabilities
Accounts payable-trade
Short-term loans payable
Current portion of bonds
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

4,854

Total liabilities

1,534

Net Assets

Investments and other assets
Investment securities

53,963
14,999Current assets
Cash and deposits

629,994

Notes and accounts receivable-trade45,4487,006

Accounts receivable-installment

402,030

Operating loans

146,011Merchandise

7,489

Deferred tax assets

7,328

Other

26,522

Allowance for doubtful accounts(11,843)

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

Guarantee deposits
Deferred tax assets
Other

Total assets(English Translation)

237,156
176,803
64,674
103,680764
7,684

32,527
3,492
2,944

Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Accumulated other comprehensive
incomeValuation difference on available-

Amount168,431
12,36175,331
10,0005,961
3,940
11,445
156
49,236423,818
95,000305,000
3,315
6,081
203
363
874
12,980592,249
272,872
35,92091,307
168,034(22,389)
1,561
1,563

for-sale securities
Deferred gains or losses on hedges(1)

Non-controlling interests

466

Total net assets

274,900

Total liabilities and net assets

867,150

867,150― 43 ―

Consolidated Statement of Income(From April 1, 2017 to March 31, 2018)(Millions of yen)
Item

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

238,999
64,593
174,405
139,162
35,243Operating income
Non-operating income
Interest income
Dividends income
Gain on bad debts recovered
Other

46
353
1,122
391

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

1,492
224
293

2,011
35,145

1,121
429

Extraordinary loss
Loss on retirement of noncurrent assets
Loss on closing of stores
Impairment loss
Loss on sales of investment securities
Other
Income before income taxes
Income taxes-current
Income taxes-deferred
Net income
Net income attributable to non-controllinginterests
Net income attributable to owners of parent(English Translation)

1,912― 44 ―

1,643
604
1,184
1,334
39
10,765
194

1,551

4,807
31,888
10,95920,92921
20,907

Consolidated Statement of Changes in Net Assets(From April 1, 2017 to March 31, 2018)(Millions of yen)
Shareholders’ equity
Capitalstock

Capitalsurplus35,920

Balance as of April 1, 2017

Retainedearnings

91,307

Total
shareholders’equityTreasurystock

155,079(7,389)274,918

Changes in the fiscal year:
Dividends(7,953)(7,953)

Net income attributable toowners of parent

20,907

20,907

Acquisition of treasury stock
Disposition of treasury stock(0)

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

0(0)(15,002)(15,002)2

2－

Total changes in the fiscal year－－

12,954(15,000)(2,045)

Balance as of March 31, 201835,92091,307

168,034(22,389)

272,872(Millions of yen)
Accumulated other comprehensive income
Valuationdifference on
available-forsale
securities
Balance as of April 1, 2017

(1,034)

Total
Subscription
accumulated
rights toothersharescomprehensive
incomeDeferred
gains orlosses onhedges－(1,034)2

Noncontrollinginterests

Total
net
assets453

274,339

Changes in the fiscal year:
Dividends
Net income attributable toowners of parent
Acquisition of treasury
stock
Disposition of treasury
stock
Transfer to capital surplus
from retained earnings
Changes in items otherthan shareholders’ equitynet
Total changes in the fiscal
year
Balance as of March 31,
2018(English Translation)(7,953)
20,907(15,002)
2
－
2,597

(1)

2,596

(2)

12

2,607

2,597

(1)

2,596

(2)

12

561

1,563

(1)

1,561

－

466

274,900― 45 ―

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.,TSUMITATE SECURITIES PREPARATORY 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 seven 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 seven non-consolidated subsidiaries andthe following 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 mainly 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 withdefault possibility.

(English Translation)― 46 ―

(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.
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)― 47 ―

218,974 million yen
24,616 million yen
72,750 million yen
66 million yen

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

Stores

Mito
Mito-shi, Ibaraki, etc.

Type

Amount

Land
Other

738
446

Total

1,184

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.
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, 2017

Increase in Shares in
the Fiscal Year

Decrease in Shares in
the Fiscal Year

Number of Shares
as of March 31,
2018

Commonstock

233,660,417 shares--

233,660,417 shares(2) Dividendsi) Cash dividends paid
Resolution
Ordinary
General Meetingof Shareholders
on June 26,
2017
Board ofDirectors
Meeting on
November 9,
2017

Share Class

Total Amount of
Dividend(Millions ofyen)

Dividend per
Share (Yen)Record Date

Effective Date

Common stock

3,900

17

March 31, 2017

June 27, 2017

Common stock

4,052

18

September 30,
2017

December 4,
2017

Note: 1. Total amount of dividend 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.
2. Total amount of dividend resolved by the Board of Directors Meeting on November 9, 2017
includes 9 million yen of dividends from the Company’s shares owned by Officer Remuneration
BIP Trust and Stock Benefit ESOP Trust.
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:(English Translation)― 48 ―

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 25,
2018

Common
stock

4,417

Retainedearnings

20

March 31,2018

June 26, 2018

Note: Total amount of dividend to be resolved by the Ordinary General Meeting of Shareholders on June 25,2018 includes 10 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.
Not applicable(English Translation)― 49 ―

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. The investment securities are mainly stocks, and thefair values 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, 2018 are shown in the table below.
(Millions of yen)
Consolidated Balance Sheets
Carrying Amount

Fair Value

Unrealized Gain/Loss(1) Cash and deposits

45,44845,448-(2) Notes and accounts receivable-trade

7,006

7,006

-

434,942

40,937143,239

162,550

19,31012,954

12,954-(3) Accounts receivable-installment
Allowance for doubtful accounts

402,030(8,024)
394,005(4) Operating loans
Allowance for doubtful accounts

146,011(2,771)(5) Investment securities
Other securities(6) Guarantee deposits

6,173

6,236

62

Total assets

608,829

669,139

60,310(1) Accounts payable-trade

12,361

12,361-(2) Short-term loans payable

75,33175,331-(3) Current portion of bonds

10,00010,000-(4) Income taxes payable

5,961

5,961

-

(5) Bonds payable

95,00095,140140(6) Long-term loans payable

305,000

304,597(402)(7) Derivative transactions

-

-

-

Total liabilities

503,654503,392(261)

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(English Translation)― 50 ―

control process. With respect to receivables with default possibility, the unrecoverable amountis 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, and (4)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.
(5) 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.
(6) 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 (7) 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.
(7) 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 (6) above).
2. As it is extremely difficult to determine the fair value of non-publicly traded stocks (in theamount of 1,788 million yen on the consolidated balance sheets) and investments in capital toinvest limited partners (in the amount of 256 million yen on the consolidated balance sheet) for
which no market prices are available and the future cash flows cannot be estimated, they are notincluded 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 28,225 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)― 51 ―

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

103,928

Notes:

215,080

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 estateappraisers.

7. Notes to Per Share Information(1) Net assets per share(2) Net income per share

1,245.22 yen
93.18 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)― 52 ―

Non-Consolidated Balance Sheet(As of March 31, 2018)(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

363,307
33,21399
327,046

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

400,131
1,412
14
1
33
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

2,982
(33)

39
398,680
13,650377,846
132
6,655
396

Current liabilities
Short-term loans payable
Current portion of bonds
Short-term loans payable tosubsidiaries and affiliates
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
Total net assets

Total assets(English Translation)

Amount

763,439

Total liabilities and net assets― 53 ―

156,497
75,20010,00068,952
872
501
50
207
274
439
400,203
95,000305,000
136
67
556,700
205,288
35,92091,30791,307
100,450
8,980
91,47091,470(22,389)
1,449
1,449

206,738
763,439

Non-Consolidated Statement of Income(From April 1, 2017 to March 31, 2018)(Millions of yen)
Item

AmountOperating revenue

18,797

Operating expenses
Operating income
Non-operating income
Interest income
Dividends income
Other
Non-operating expenses
Interest expenses
Financing expenses
Other

6,137
12,660Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on sales of noncurrent assets
Extraordinary loss
Loss on sales of investment securities
Other
Income before income taxes
Income taxes-current
Income taxes-deferred
Net income(English Translation)

2,537
350
52

2,939

1,427
224
157

1,809
13,789

429
0
1,334
40
125
(30)

― 54 ―

430

1,374
12,84595
12,750Non-Consolidated Statement of Changes in Net Assets(From April 1, 2017 to March 31, 2018)(Millions of yen)
Shareholders’ equity
Capital surplus
Capitalstock

Balance as of April
1, 2017
Changes in thefiscal year:
Dividends
Net income
Acquisition oftreasury stock
Disposition 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, 2018(English Translation)

35,920Retained earnings

Legal
capitalsurplus

Othercapitalsurplus

Total capitalsurplus

Legal retained
earnings

91,307－91,307

8,980

(0)

(0)

0

0

Other retained
earnings
Retained earnings
brought forward

Total retained
earnings

86,673

95,653(7,953)(7,953)12,75012,750

(0)

(0)

－

－

－

－

－

4,796

4,796

35,92091,307－91,307

8,980

91,470100,450― 55 ―

(Millions of yen)
Shareholders’ equity

Treasury stock

Total
shareholders’equityValuation and translation adjustments
Valuationdifference on
available-for-salesecurities

Total valuationand translation
adjustments

Subscription rights
to shares

Balance as of(7,389)215,492(1,077)(1,077)
April 1, 2017
Changes in thefiscal year:(7,953)
Dividends
12,750Net income
Acquisition of(15,002)(15,002)
treasury stock
Disposition of22treasury stock
Transfer tocapital surplus－
from retained
earnings
Change in items
other than
2,526
2,526
shareholders’equity-net
Total changes in(15,000)(10,203)
2,526
2,526
the fiscal year
Balance as of(22,389)
205,2881,449
1,449
March 31, 2018
Amounts in these consolidated statements have been rounded down to the nearest unit.

(English Translation)― 56 ―

2

Total net assets

214,417(7,953)12,750(15,002)
2

－

(2)

2,524

(2)

(7,678)－

206,738

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 mainly stated at costusing the moving-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.

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

821 million yen

14,950 million yen
327,250 million yen
69,230 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)

18,794 million yen
1,084 million yen
2,577 million yen― 57 ―

4. Notes to Non-Consolidated Statement of Changes in Net Assets
Class and number of shares of treasury stock
Number of Shares
as of March 31,
2018
Common stock
4,704,750 shares
8,566,173 shares
1,417 shares
13,269,506 shares
Notes: 1. Shares of common stock held as treasury stock increased by 8,566,173 shares due to thepurchase of treasury stock (8,564,700 shares), and the purchase of shares in response topurchase demands for less than one unit (1,473 shares).
2. Shares of common stock held as treasury stock decreased by 1,417 shares due to the exercise ofstock options (1,400 shares), and the sale of fractional shares (17 shares).
3. The number of shares of common stock as of March 31, 2018 includes 502,300 shares of theCompany’s shares owned by Officer Remuneration BIP Trust and Stock Benefit ESOP Trust.
Share Class

Number of Shares
as of April 1, 2017

Increase in Sharesin the Fiscal Year

Decrease in Sharesin the Fiscal Year

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

7,238 million yen
2,674 million yen
9,912 million yen(2,519) million yen
7,393 million yen(Deferred tax liabilities)
Valuation difference on availablefor-sale securities
Total

639 million yen
639 million yen

Net deferred tax assets(English Translation)

6,754 million yen― 58 ―

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, 2018
(Millions of yen)

Borrowing of funds*Note150,647

Short-term loans
payable tosubsidiaries andaffiliates

55,047

Businessmanagement fee*Note2

1,619-

Lending of funds*Note1

336,768

Short-term loans
receivable fromsubsidiaries andaffiliates

Businessmanagement fee*Note2

3,193

-

-

Receipt of interests

2,525

-

-

Subsidiaries

Type

MARUI Co., Ltd.

Subsidiaries

Epos Card Co., Ltd.

-

325,037

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 andare determined on a reasonable basis.
7. Notes to Per-Share Information(1) Net assets per share(2) Net income per share

938.05 yen
56.82 yen

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

(English Translation)― 59 ―

[Reference]
Notice concerning determination of particulars related to acquisition of treasury stock and retirement of treasury
stock(Acquisition of own shares stipulated in the Articles of Incorporation, under Article 165, Paragraph 3 of theCompanies Act, and retirement of treasury stock stipulated in Article 178 of the Companies Act)
This is to announce that the Company passed a resolution as follows, at the Board of Directors meeting held on
May 10, 2018, on the particulars of acquisition of treasury stock pursuant to the provision of Article 156 of theCompanies Act applied by replacing the terms and phrases based on the provisions of Article 165, Paragraph 3 ofthe same Act, and retirement of treasury stock pursuant to the provisions of Article 178 of the same Act.
1. Reasons for acquisition of treasury stock and retirement of treasury stock
Under the five-year mid-term management plan with the fiscal year ending March 31, 2021 as the final year,
the Group will strive for innovation and integrated management of the Group’s businesses for profit growth.
Under these financial strategies, with an aim of achieving optimal capital composition suitable to the Group’sbusiness structure, the Company will effectively utilize basic operational cash flows generated over the five
years to increase investment for growth and enhance shareholder returns. As part of this initiative, theCompany will promote acquisition of treasury stock and retirement of treasury stock to target ROE of 10% or
higher, ROIC of 4% or higher, and EPS of 130 yen or more, to increase corporate value. The following
particulars are resolved based on the above approaches.
2. Particulars of acquisition of treasury stock(1) Type of shares to be acquired:
Common stock(2) Total number of shares to be acquired: No more than 4 million shares(1.81% of the total number of issued shares excluding treasury stock)(3) Total amount of acquisition:
No more than 7,000 million yen(4) Period of acquisition:
From May 11, 2018 to March 31, 2019
3．Particulars of retirement of treasury stock(1) Type of shares to be retired:
Common stock(2) Total number of shares to be retired:
10 million shares(4.28% of the total number of issued shares)(3) Total number of issued shares subsequent to retirement: 223,660,417 shares(4) Date of retirement:
May 31, 2018(English Translation)― 60 ―