November 8, 2018

Six Months Ended September 30, 2018

Financial Results and Future Developments

MARUI GROUP CO., LTD.

1

Today’s Agenda

1. Overview of Performance in Six Months Ended September 30, 2018, and Full-Year Forecasts

Hirotsugu Kato Director and Senior Executive Officer, General Manager, IR Department, MARUI GROUP CO., LTD.

Hiroshi Aoi President and Representative Director, Representative Executive Officer, MARUI GROUP CO., LTD.

2. Progress of Medium-Term Management Plan

3. Directives for the Future

Hiroshi Aoi President and Representative Director, Representative Executive Officer, MARUI GROUP CO., LTD.

Overview of Performance in Six Months Ended September 30, 2018, and Full-Year Forecasts Hirotsugu Kato Director and Senior Executive Officer, General Manager, IR Department, MARUI GROUP CO., LTD.

1

3

Highlights in the Six Months Ended September 30, 2018

1. EPS increases 38% year on year to reach record high of ¥56.9

2. Revenue up for first time in four years and operating income also increases

3. Higher asset efficiency pursued by liquidating ¥25.8 billion worth of revolving payment receivables, increasing factoring accounts receivable to ¥96.1 billion

4. Upward revision to full-year forecasts to reflect six-month performance

4

・EPS increases 38% to ¥56.9 due to income growth and capital measures ・Revenue up for first time in four years and higher operating income for fourth consecutive year

Six months ended Sep. 30,

2017 Sep. 30,

2018 YoY

change

YoY

difference

EPS (yen) 41.1 56.9 +38 +15.8

Billions of yen Billions of yen ％ Billions of yen

Total Group transactions 1,046.8 1,206.5 +15 +159.6

Revenue 115.4 123.3 +7 +7.9

Gross profit 85.1 94.2 +11 +9.1

SG&A expenses 69.3 74.4 +7 +5.2

Operating income 15.9 19.8 +25 +3.9

[% of full-year target (%)] [44] [49] 00 00

Ordinary income 15.5 19.2 +24 +3.8

Net income 9.3 12.5 +34 +3.2

Consolidated Performance

0

20

40

60

1H of FY85

1H of FY91

1H of FY96

1H of FY02

1H of FY07

1H of FY09

1H of FY19

¥56.7

Money Lending Business Act revision

2008 Financial crisis

5

■Six-Month EPS

Bubble collapse

¥56.9

EPS Trends

(Yen)

・EPS reaches record high of ¥56.9, exceeding previous record of ¥56.7 achieved during bubble period in the 90s

Segment Income

・Rise in corporate expenses of ¥0.7 billion due to new business development, but 25% increase in consolidated operating income following massively higher Retailing and FinTech segment income

Six months ended

Operating income ROIC

Sep. 30, 2017

Sep. 30, 2018

Sep. 30, 2018

YoY change

YoY difference

YoY difference

Billions of yen Billions of yen % Billions of yen

％ ％

Retailing 2.8 4.7 +71 +2.0 1.6 +0.7ppt

FinTech 15.1 17.8 +17 +2.6 2.2 +0.2ppt

Eliminations/

Corporate (2.0) (2.7) － -0.7 － －

Consolidated 15.9 19.8 +25 +3.9 1.8 +0.3ppt

6

Factors Affecting Operating Income

7

・Massive increase of ¥2.8 billion (18% YoY) in consolidated operating income even when excluding extraordinary factors

1H of FY18 1H of FY19

¥15.9 billion

Increase in operating income excluding extraordinary factors

+¥2.8 billion (+18% YoY)

Retailing +¥2.0 billion

FinTech +¥1.5 billion

Eliminations/ Corporate

-¥0.7 billion

Gain on transfer of factoring accounts receivable

+¥4.2 billion

Provision for loss on

interest repayment -¥2.5 billion

¥18.7 billion

¥19.8 billion

Extraordinary factors

+¥1.1 billion

Adoption of sized-based

business tax

-¥0.6 billion

Mar. 31, 2018 Sep. 30, 2018 YoY difference

Billions of yen Billions of yen Billions of yen

Operating receivables 548.0 558.2 +10.2

Installment sales accounts receivable 402.0 409.2 +7.2

(Factoring accounts receivable)

[Ratio of liquidation (%) ]

(72.8)

[11.7]

(96.1)*1

[14.7]

(+23.4)

[+3.0 ppt]

Operating loans 146.0 149.0 +3.0

Fixed assets 243.2 245.9 +2.7

Interest-bearing debt 485.3 491.3 +6.0

[% of operating receivables (%)*2] [88.6] [88.0] [-0.6 ppt]

Shareholders’ equity 274.4 278.2 +3.7

[Equity ratio (%)] [31.7] [31.8] [+0.1 ppt]

Total assets 865.9 874.2 +8.3

8 8

Consolidated Balance Sheets

*1 Including the ¥25.8 billion worth of revolving payment receivables liquidated in September 2018 *2 Ratio of operating receivables＝Interest-bearing debt／Operating receivables

・Higher asset efficiency pursued by liquidating ¥25.8 billion worth of revolving payment receivables, increasing factoring accounts receivable to ¥96.1 billion

*1

Cash Flows

Six months ended

Sep. 30, 2017

Six months ended

Sep. 30, 2018

YoY

difference

Billions of yen Billions of yen Billions of yen

Net cash provided by (used in) operating activities

(8.7) 0.4 +9.2

Increase in operating receivables (22.7) (11.2) +11.6

Core operating cash flow 14.0 11.6 -2.4

Capital investments (5.0) (4.2) +0.8

Gains on sales of fixed assets 1.3 0.6 -0.8

Gains on sales of investment securities, etc. 2.2 (2.0) -4.2

Net cash provided by (used in) investing activities (1.5) (5.7) -4.2

Increase in interest-bearing debt 27.9 5.7 -22.2

Cash dividends paid (3.9) (4.4) -0.5

Purchase of treasury stock, etc. (15.1) (7.1) +8.0

Net cash provided by (used in) financing activities 8.9 (5.8) -14.7

Cash and cash equivalents at end of period 34.9 34.3 -0.6 9

・Increase in operating receivables and interest-bearing debt limited through higher liquidation of receivables

FY18

FY19

(Initial forecast)

FY19

(Revised forecast)

Change from initial forecast

YoY change

EPS (yen) 93.2 109.9 114.4 +4.5 +23

ROE (%) 7.6 8.6 8.9 +0.3 ppt －

ROIC (%) 3.3 3.6 3.6 － －

Billions of yen Billions of yen Billions of yen Billions of

yen ％

Total Group transactions

2,189.4 2,500.0 2,533.0 +33.0 +16

Revenue 240.5 249.0 253.0 +4.0 +5

Gross profit 175.9 186.0 190.0 +4.0 +8

SG&A expenses 139.5 146.0 149.0 +3.0 +7

Operating income 36.4 40.0 41.0 +1.0 +13

Net income 20.9 24.0 25.0 +1.0 +20

10

・Upward revisions to full-year forecasts, record-breaking EPS of ¥114.4 (up 23% YoY) projected

Full-Year Forecasts for FY2019

Note: Figures for FY18 are after the retroactive application of the change in the accounting method for gain on bad debts recovered.

Segment Income Forecasts for FY2019

Operating income ROIC

FY18 FY19 (Initial

forecast)

FY19 (Revised forecast)

FY19 (Revised forecast)

FY21 (Forecast)

Change from initial

forecast

YoY difference

YoY difference

Billions of yen

Billions of yen

Billions of yen

Billions of yen

％ ％ ppt ％

Retailing 8.8 11.0 11.5 +0.5 +31 3.8 +1.0 5.3

FinTech 31.4 33.5 35.0 +1.5 +11 4.2 +0.3 4.1

Eliminations/Corporate

(3.9) (4.5) (5.5) -1.0 － － － －

Consolidated 36.4 40.0 41.0 +1.0 +13 3.6 +0.3 4.0

・Upward revision to forecasts for Retailing and FinTech segments based on six-month period, increase in corporate expenses due to additional expenses incurred for new business development

11

0

10

20

30

40

50

09.3 12.3 13.3 14.3 15.3 16.3 17.3 18.3 19.3

・Interim dividend up ¥5 per share, to ¥23, marking fourth consecutive year of higher interim dividends ・Full-year dividend of ¥47 per share planned, which will break record for third consecutive year

Shareholder Returns

Payout ratio More than

30% More than

40%

■Cash Dividends per Share

12

¥22 ¥19

¥33

¥47 (Planned)

¥24 (Planned)

¥18

¥38

¥23

¥20 ¥28

EPS ¥70.7 ¥80.2 ¥114.4

(Planned) ¥93.2 ¥58.9

Treasury Stock Acquisitions

¥35.0 billion

¥20.0 billion

¥7.0 billion (Planned)

¥15.0 billion

¥15.0 billion

(Yen)

FY09 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

Progress of Medium-Term Management Plan Hiroshi Aoi President and Representative Director, Representative Executive Officer, MARUI GROUP CO., LTD.

2

Progress of Medium-Term Management Plan

1．Transition to Shopping Centers and

Fixed-Term Rental Contracts

and Future Outlook

2．E-Commerce Operations

5．tsumiki Securities Co., Ltd.

4．Service Revenues

14

６．ESG Topics

3．EPOS Cards

62％

15

・Ratio of fixed-term rental contracts of 96% achieved, transition to be completed by fiscal year-end ・Income improvements of ¥1.3 billion in 1H of FY2019 as forecast

Note: Ratio of fixed-term rental contracts = Fixed-term rental contracted floor space ÷ Total floor space capable of being contracted as fixed-term rental (200,000 ㎡)

Ratio of fixed-term

rental contracts

1H of FY19

7% 20%

Income improvements

Income improvement

amounts (YoY)

Increase value through contract renewals

¥0.9 billion ¥2.0 billion ¥3.2 billion

Transition to Shopping Centers and Fixed-Term Rental Contracts

87％ 100％

FY19

96％

¥1.3 billion

¥1.9 billion

¥0.6 billion

¥6.0 billion (five-year aggregate)

¥7.0 billion (six-year aggregate)

■Plan for and Increases in Ratio of Fixed-Term Rental Contracts and Income Improvements (As of end of each fiscal year)

FY15 FY16 FY17 FY18 FY20 FY21

0

20

40

60

80

100

120

17.3 18.3 19.3 21.3

Future Outlook for Transition to Shopping Centers and Fixed-Term Rental Contracts

16

■Forecasts for Ratio of Fixed-Term Rental Contracts ＜Additional floor space to be converted＞

62％ (125,000 ㎡)

87％ (178,000 ㎡)

100％ (200,000 ㎡) 231,000 m2

+26,000 ㎡

・Additional 26,000 ㎡ to be converted after completion of initially planned transition due to increase in applicable stores ・Approx. 16,000 ㎡ of floor space (7% of total floor space) to be inactive at any given time due to replacement of fixed-term rental contract tenants

Note: Ratio of fixed-term rental contracts = Fixed-term rental contracted floor space ÷ Total floor space capable of being contracted as fixed-term rental (200,000 ㎡)

FY19 FY17 FY18 FY21

17

Directives for Developing the Stores of the Future

Departure from stores focused on sales through the transition to shopping

centers and fixed-term rental contracts

Stores of the future that cater to

changing customer needs

Shift from consumption of goods to consumption of experiences

Move away from ownership to use

Union of online and physical venues

Development of Stores of the Future —Provision of Experiences and Communities

lululemon (Shinjuku Marui Main Building)

Apple Store Shinjuku (Shinjuku Marui Main Building)

Free, hands-on programs in which participants learn how to use Apple products

Community yoga and running events

Provision of Experiences and Communities

18

Proactive introduction of tenants following the examples of Apple and lululemon

19

Development of Stores of the Future —Sharing Economy (Goods)

DRENI (Yurakucho Marui)

:

Collaboratively operated pay-by-month rental service

specializing in brand-name watches

KARITOKE (Yurakucho Marui)

Directly operated dress rental shop focused

on e-commerce

Growth of the sharing economy amid rising support from millennials and Generation Z

Shared space available to members with fees

starting at ¥980 a month

Shared office space complete with children’s area

(For corporate members)

20

Provision of sharing economy for spaces in addition to goods

Development of Stores of the Future —Sharing Economy (Spaces)

enicia (Shizuoka Marui)

Choku Choku… (Soka Marui)

Physical venue for use by business owners utilizing BASE to meet and

interact with customers

Physical venue of exclusively online bank used to provide face-to-face

loan application support

21

Development of Stores of the Future —Union of Online and Physical Venues

Sumishin Net Bank (Marui City Yokohama)

SHIBUYA BASE (Shibuya Marui)

Development of new business models through the union of online and physical venues

World’s first official GODZILLA shop allowing visitors to take pictures

and experience the world of GODZILLA

22

Development of Stores of the Future —Operation Contracting

Contract-basis operation of experience-oriented stores by MARUI GROUP staff

GODZILLA Store Tokyo (Shinjuku Marui Annex)

？

Currently under negotiation

Differentiation from existing commercial facilities and department stores to be achieved by increasing

the range of stores with food vendors on entry floors

(Kobe Marui) (Soka Marui)

23

Development of Stores of the Future —Food Vendors on Entry Floors

Introduction of food vendors on entry floors to attract customers of all ages and genders

MARUI Marche

12.3 13.3 14.3 15.3 16.3 17.3 18.3 19.3

0

50

100

150

200

250

24

20

¥25.0 billion

(Full-year forecast)

(Billions of yen)

E-Commerce Operations

¥20.4 billion

¥21.3 billion

¥23.0 billion

■Total E-Commerce Transactions

・Growth in total e-commerce transactions from FY2016, total transactions of ¥25.0 billion forecast in FY2019

¥11.2 billion

(1H performance, +7% YoY)

FY19 FY15 FY16 FY17 FY18 FY13 FY12 FY14

0

10

20

30

0

500

1000

1500

2000

2500

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

Card Shopping Transactions

■Card Shopping Transactions and Growth Rates

(Billions of yen)

・Card shopping transactions exceeding industry averages, projected to reach ¥1,870.0 billion (up 17% YoY) in FY2019

(％)

Industry average

Epos Card

¥1,870.0 billion

(Full-year forecast)

¥889.0 billion

(1H performance, +16% YoY)

25

Average annual growth

+19%

Average annual growth

+7%

0

10

20

30

40

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

FinTech Segment Operating Income

26

¥21.9 billion

¥5.7 billion

+¥4.5 billion

+¥3.0 billion

■Operating Income

Annual growth of ¥3.0 billion– ¥4.0 billion

(Billions of yen)

・Annual growth of ¥3.0 billion–¥4.0 billion in FinTech segment operating income since FY2015; operating income growth of ¥4.7 billion in FY2019

Money Lending Business Act

revision

¥17.8 billion

(1H performance, +7% YoY)

¥35.0 billion

(Full-year forecast,

+¥4.7 billion)

+¥4.0 billion

+¥3.2 billion

58 55 55 58 58

71 72 71 73 73 74 75

0

20

40

60

80

100

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

■New Card Applicants

500,000 700,000 Target more than 800,000

(Ten thousands of people)

New Card Applicants

Changes to application benefits

・New card applicants projected to reach 800,000 in FY2019, the level targeted since FY2017

400,000 (1H performance)

820,000 (Full-year forecast)

Opening of Hakata Marui

27

■Forecast for Growth in New Card Applicants (FY2019)

Forecast for Growth in New Card Applicants

28 FY18 FY19

0

50

100

750,000

(People)

510,000

Physical stores

Experiences

Goods

Sale of goods

Content/Sharing E-commerce

Services

+10,000 applicants

+10,000 applicants

Collaboration with commercial

facilities, etc.

Partnerships with service providers

520,000

120,000 110,000

180,000 130,000

・Growth in new card applicants to be achieved through steady Internet application, corporate partnership, and other Internet and experience field initiatives advanced alongside prior physical store and goods field initiatives

+70,000

Internet

Internet application

+50,000 applicants

820,000 (Full-year forecast)

1,000,000

500,000

0

1.1 1.6

2.2 2.8

3.6

4.9 3.6

0

25

50

75

100

13.3 14.3 15.3 16.3 17.3 18.3 19.3 20.3 21.3 29

Service Revenues

Average annual growth rate over past five years

+30％

■Collaboration in Rent Guarantee Services

ABLE. INC.

・Services available at ABLE locations

since March 2018

・ABLE EPOS CARD scheduled to be

launched in December 2018

Nasic

・Services available through Nasic

of Tokyu Fudosan Group since

October 2018

■Revenue from Rent Guarantee Services

¥6.4 billion (Full-year forecast)

¥10.0 billion or more

(Target)

¥2.8 billion

(Billions of yen)

・Increased service revenues to be pursued to improve ROIC in FinTech segment ・Strong growth in revenue from rent guarantees with average annual growth of 30% over past five years, future growth to be achieved through collaboration going forward

10.0

7.5

5.0

2.5

(1H performance)

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

tsumiki Securities Co., Ltd.

■Applications Received by tsumiki Securities in September and October 2018

(Reference) Ratio of Applicants Aged 20–49

Approx. 30% based on survey by The Investment Trusts Association Approx. 60% at independent fund management companies

20–29

29％

Distribution of Applicants by Age

30–39

34％

40–49

24％

50 and above

13％

Distribution of Applicants by Investment Experience

No experience

60％

Experienced

32％

Novices

8％

Note: “Novices” refers to customers with less than one year of investment experience.

20–49

87％

(Reference) Ratio of Applicants with No Investment Experience Approx. 40% at independent fund management companies

・Approx. 5,400 applications received from customers in two months since start of service ・Ratios of applications from younger and first time investor customers much higher than those of existing financial institutions

30

Fund Management Companies Partnered with tsumiki Securities

■Breakdown of Financial Institution Customers by Returns (Announced by Financial Services Agency; based on common, comparable KPIs)

・Fund management companies partnered with tsumiki Securities ranked top three among financial institutions with high ratios of customers enjoying positive returns in ranking announced by Financial Services Agency

Source: MARUI GROUP CO., LTD. (Based on data from Nikkei Inc.)

Gains Losses

-40 -20 0 20 40 60 80 100

MONEX

SBI SECURITIES

Mizuho Bank

SMBC Nikko Securities

NOMURA SECURITIES

Loss of 11%–30% Loss of 0%–10% Breakeven Gain of 0%–10% Gain of 11%–30% Gain of more than 30%

98％

91％

85％

% of customers (%)

31

Commons Asset Management

Rheos Capital Works

Saison Asset Management

Limited-Time tsumiki Securities Pop-Up Store

■tsumiki Securities Pop-Up Store

Pop-up store opened on a limited-time basis (one month) in the 1F event space of Yurakucho Marui

Number of customers applying or receiving consultation (in first 10 days after opening): Approx. 140

・Deployment of tsumiki Support service to provide opportunities to experience tsumiki Securities’ services and to address questions and concerns regarding cumulative investments that cannot be resolved via the Internet

32

tsumiki Securities—Co-Creation Initiatives with Partners

・Talk events held in event space of Yurakucho Marui at which tsumiki Securities partners explained the benefits of cumulative investments

■Talk event with Aya Maeno and other tsumiki Securities partners meant to encourage people to conduct cumulative investments

Feedback from Customers

“Securities company seminars generally have a stiff atmosphere, but I enjoyed today’s seminar.”

“The talk today dispelled my fears pertaining to investment.”

“I am a little uneasy about handling everything through the Internet, so I was happy for the chance to receive consultation in-store.”

33

ESG Topics

■Issuance of Green Bonds

・Member of RE100 international initiative advocating commitment to 100% renewable power since July 2018 ・First green bonds in Japan to be used 100% for renewable power issued in October 2018 ・Selected for inclusion in DJSI Asia Pacific (for second time with first being in 2017) and DJSI World (first time)

■Inclusion in DJSI Indices

Inclusion in DJSI World in 2018 following inclusion in DJSI

Asia Pacific in 2017

DJSI Asia Pacific Selected in two consecutive years

DJSI World

Only 10 retail sector companies included, MARUI GROUP only Japanese

retail sector company selected

Maturity period: Five years Issue amount: ¥10.0 billion

Issuance of green bonds to be used 100% for renewable power

(First issue of green bonds by domestic retailer)

34

Directives for the Future―Incorporating investor feedback―

Hiroshi Aoi President and Representative Director, Representative Executive Officer, MARUI GROUP CO., LTD.

3

36

(2) Policies for Future Growth Strategies

and Corporate Value Improvement

(1) Impact of Trend in Cashless Payments

on Credit Card Business

Directives for the Future

(1) Impact of Trend in Cashless Payments

on Credit Card Business

37

3. Directives for the Future

A. Potential for reductions in affiliate commissions

B. Risk of credit cards being replaced

by smartphone payments

Potential for Reductions in Affiliate Commissions

■Factors Creating Concerns over Risks

38

1. Concerns arising over the possibility of credit card affiliate commissions being reduced over the medium-to-long term exacerbated by newspaper articles

2. Concern that the spread of smartphone payments may place downward pressure on affiliate commissions

Sankei Shimbun Article on requests for the government to lower credit card fees (published on October 19, 2018)

Nikkei Article on upper limit for credit card fees being set around 3% to promote cashless payments (published on October 20, 2018)

⇒ Approx. 5% drop in stock prices of major credit card companies after publication

Unique Earnings Structure of MARUI GROUP’s Credit Card Business

39

■Distribution of Earnings of Credit Card Companies (FY2018)

・Earnings structure of EPOS Card in which affiliate commissions account for a smaller portion of earnings than standard credit card businesses (operated by banks)

44％ 27％ 29％

21％ 32％ 47％

Source: The Credit Consumer Monthly, September 2018

19％ 8％ 73％

1. Large number of younger cardholders contributing to high usage of revolving and installment payments and cash advances

2. Specialization in issuer work, almost no acquirer work performed

Bank credit card provider A

Retail credit card provider B

EPOS Card

Affiliate commissions Revolving and

installment payments Cash

advances

■Resources for Differences in Epos Card’s Earning Structure from Rivals

(Standard credit card business)

Relationship between Parties Involved in Credit Card Transactions and Earnings Structure

40

Affiliate Acquirers Issuer Acquisition and management of

affiliates

Card issuance and billing

3.2%

(4%–5%) Small to medium-

sized retailers

Interchange fees (Regulated rates)

2.3%

Scope of transactions for standard credit card companies

Source: Cashless Vision, Ministry of Economy, Trade and Industry

License fees 0.05％

License fees 0.05％

Scope of transactions for Epos Card

International brand

Provision of payment infrastructure

Requests for the government to lower fees

・Impact on revenue from EPOS cards due to reductions in affiliate commissions projected to be limited

Projected Impacts of Reductions in Affiliate Commissions

41

■Projected Impact on MARUI GROUP

・EPOS card transactions at affiliates applicable to commission reductions (restaurants, small to medium-sized retailers)

・Impact assuming 1% reduction in affiliate commissions

0.5% reduction (impact split between MARUI GROUP and acquirers)

⇒ Amount of impact: Approx. ¥1.0 billion

(¥200.0 billion × 0.5%)

Approx. ¥200.0 billion

Risk of Credit Cards Being Replaced by Smartphone Payments

42

(1) Possibility of spread of smartphone payments in Japan

taking similar form as in China

(2) Established belief that the entry of IT companies into

payment and financial services businesses will disrupt

traditional financial services businesses

■Factors Creating Concern over Risks

Method of payment

through app

Difference between Payment Interface and Payment Method

43

・Payment method of credit cards linked to the payment interface of payment applications, accounting for approximately 60% of all

payments through payment applications

Credit card payments Smartphone payments

Debit card Credit card Payment app

e-money charge

Account Debit Credit

■Payment Landscape in China

In-store payment interface

Approx. 60% of payments via

smartphones made using credit cards

Source: Chinese bank representative

Payment app Payment app

Debit card Credit card

Demand for Distinctive Credit Function of Credit Cards

44

・Ongoing demand for credit cards centered on large-sum payments due to credit function (payment at later date) not provided by other payment options

■Factors Considered When Selecting Payment Option

Source: Bank of Japan, 2018

■Functions and Average Transaction Amounts by Payment Option

＋

Payment function

Payment function

Payment function

Credit function

Make payments in place of cash

Delay dates of payment

Prepaid cards

Approx. ¥1,200 (Prepayment)

Debit cards

Approx. ¥2,700 (On-the-spot payment)

Credit cards

Approx. ¥4,200 (Payment at later date)

Source: Payment Trend Survey, Infcurion Group, Inc., 2017

9

23

29

31

34

37

42

51

0204060

Points and discounts

Size of transaction

Speed of payment processing

Risk of overuse

Fees and other costs

Security and other safety matters

Accessibility of payment histories

Articles needing to be carried around (cash/cards)

（％）

Market Trends by Payment Option

・小規模店舗での5000円未満の少額決済を中心とした約90兆円が

スマホ（QRコード）決済の対象と想定される

Small stores

Prepaid cards/e-money Approx. 1 million payment terminals

Approx.

¥90 trillion Approx. ¥10 trillion

Small sum (Less than ¥5,000)

Large-scale stores (Chain stores)

Approx.

¥60 trillion

■Market Scale by Payment Method (Based on consumer spending excluding housing loans)

Cash

Credit cards Approx. 10 million payment terminals

Large sum

Source: MARUI GROUP CO., LTD. (Based on National Accounts of Japan, Cabinet Office; materials from Japan Consumer Credit Association; General Survey of Payment Methods, Bank of Japan; General Survey of Electronic Payment Methods 2017–2018, CardWave Co., Ltd.; and other materials)

Cash

Approx.

¥40 trillion

Area in which smartphone

payments may replace other options

going forward

EPOS Pay Launched in November 2018

Increased use of credit cards through contactless payment

via smartphones

Transaction volume

Up 120% YoY (April–September 2018)

45

EPOS Pay Initiatives

46

・Launch of EPOS Pay QR code payment service tied to EPOS cards

・Promotion of use for small-sum payments by forming contracts with stores lacking credit card processing terminals

Smartphone

Read QR code

Service launched in Nakano area of Tokyo

in November 2018

Data linkage

EPOS Card EPOS Card Affiliate

No need for terminal (Just display QR code)

Payment via EPOS card (Points may be used)

・Potential for EPOS Pay to achieve transaction volumes of up to ¥2.4 trillion by capturing a share of the ¥90.0 trillion smartphone payment market that is of a similar level to EPOS card’s share of the credit card payment market

Emergence of New Payment Methods

47

Small stores

★

■Market Scale by Payment Method (Based on consumer spending excluding housing loans)

Potential EPOS Pay transaction volume

(Calculated assuming same 2.7% share as in the credit

card services market)

¥2.4 trillion

Approx.

¥90 trillion

Cash Smartphone payments

Small sum (Less than ¥5,000)

Large sum

Prepaid cards/e-money

Approx. ¥10 trillion

Large-scale stores (Chain stores)

EPOS card Transaction volume

¥1.6 trillion

Share 2.7% Credit cards

Approx.

¥60 trillion

Cash

Approx. ¥40 trillion

48

(2) Policies for Future Growth Strategies

and Corporate Value Improvement

3. Directives for the Future

Future Growth Strategies

49

■Accelerated Development of New Businesses

■Promotion of Digitization

・Establishment of dedicated organization and commencement of full-fledged initiatives in April 2017, acceleration of co-creation with start-up companies going forward・

・Digitization of EPOS cards centered on smartphone application to be achieved by FY2021

Collaboration with start-up

companies

Integration

Stores

Credit cards

Internet

× Social issues to be addressed

Commercialization of resolutions for

social issues

・New businesses envisioned by MARUI GROUP

・Steady growth investments aimed at developing new businesses, ¥4.8 billion earmarked for such investments in FY2019

Progress of New Businesses

■Investments in FY2019

＜Themes＞

Sharing, share houses, lifestyle applications, and food category new business development

・Internal projects for developing new businesses as part of future growth strategies

■New Business Projects

50

・tsumiki Securities

・Investments in venture companies and venture capital firms

¥1.8 billion

¥3.0 billion

Total of ¥4.8 billion

・New business competitions open to all employees to be commenced based on corporate culture encouraging voluntary participation

・Development of new businesses to be accelerated through co-creation with investee venture companies and other partners

Acceleration of New Business Development

51

FY17

Cultivation of corporate culture encouraging voluntary participation

Investment in and collaboration with venture companies and venture capital firms

Co-creation with

start-up companies Examine the potential for accelerator

programs with investee venture companies

New business competitions Solicit new business ideas

from all employees

1H of FY19

Establishment of New Business Development Department

■New Business Development Initiatives

FY16

+

－

+

－

・Expansion of FinTech business through digitization of MARUI GROUP’s existing payment and financial functions amid trend of other companies investing in the introduction of payment services with the goal of participating in the financial services field

Policies for Digitization of EPOS Cards

52

Past Going forward Future

Existing payment and financial services Expansion of services

by utilizing data

Introduction of payment services to

collect data Profit

Participation in financial services field

Online sales, social media

× FinTech

businesses of IT companies

Payment Finance IT (digital) ×

Profit

Digitization Payment + Finance × FinTech

business of MARUI GROUP

＝

＝

Digitization of EPOS Cards

53

Time lags Optimal timing (real time)

Only able to collect data Data collection + Utilization via AI

Notifications and recommendations customized for individual customers

Standardized notifications

Transition from physical card to digital app

Digital (Smoothly integrated digital experience)

Physical (Divided user experience)

・Transformation of business structure from prior flow-based businesses to stock-based business focused on credit cards and fixed-term rental contract stores to forge longer-lasting relationships with customers

Policies for Corporate Value Improvement (Prior)

54

Past Present

Off-balance sheet assets

On-balance sheet assets

Consignment agreements

Credit cards

Off-balance sheet assets

On-balance sheet assets

Credit cards

Fixed-term rental contract stores

tsumiki Securities Rent guarantees

Impro

vem

ent o

f LTV

E-commerce E-commerce

Omni-channel retailing

Flow-based

Stock-based

Flow-based

Stock-based

Credit cards

Fixed-term rental contract stores

tsumiki Securities

Rent guarantees

・Enhancement of model combining stock-based business and off-balance sheet assets, pursuit of improved corporate value through management emphasizing lifetime value (LTV) and ROIC

Policies for Corporate Value Improvement (Going Forward)

55

Credit cards (Liquidation of receivables)

E-commerce

Fixed-term rental contract stores

E-commerce

Omni-channel retailing

New businesses

tsumiki Securities

Rent guarantees

Omni-channel retailing

Heightening of ROIC

Impro

vem

ent o

f LTV

Off-balance sheet assets

On-balance sheet assets

Stock-based

Flow-based

Off-balance sheet assets

On-balance sheet assets

Stock-based

Flow-based

Present Future

Forward-looking statements contained in this presentation are based on information available at the time of preparation and

on assumptions that have been deemed to be rational. Actual performance may differ greatly due to a variety of factors.

Any inquiries may be directed to the IR Department (Tel: 03-5343-0075).