(report pursuant to article 24 ... - 0101maruigroup.co.jp · 4 2. history the group was launched on...
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Annual Securities Report
(Report pursuant to Article 24, Paragraph 1 of the Financial Instruments and Exchange Act)
Fiscal year
(The 84th term)
From: April 1, 2019
To: March 31, 2020
MARUI GROUP CO., LTD.
(E03040)
This document was prepared based on the Company’s Annual Securities Report in Japanese. However, “V. Financial Information” of the Annual Securities Report has been replaced by the Consolidated Financial Statements
prepared separately and is not a translation of the Annual Securities Report. The Consolidated Financial Statements have been prepared by making certain reclassifications and rearrangements in order to present them in a form that is more familiar to readers outside Japan, and have been audited by PricewaterhouseCoopers Aarata LLC.
The original in Japanese shall prevail in case of any discrepancies between the original and this translated document. Forward-looking statements in this document 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.
1
[Cover page]
[Document title] Annual Securities Report
[Clause of stipulation] Article 24, Paragraph 1 of the Financial Instruments and
Exchange Act of Japan
[Place of filing] Director-General, Kanto Local Finance Bureau
[Filing date] August 6, 2020
[Fiscal year] The 84th term (from April 1, 2019 to March 31, 2020)
[Company name] Kabushiki Kaisha MARUI GROUP
[Company name in English] MARUI GROUP CO., LTD.
[Title and name of representative] Hiroshi Aoi, President and Representative Director
[Address of head office] 3-2, Nakano 4-chome, Nakano-ku, Tokyo, Japan
[Telephone number] +81-3-3384-0101 (main)
[Name of contact person] Ryosuke Murai, General Manager, Financial Department
[Nearest place of contact] 3-2, Nakano 4-chome, Nakano-ku, Tokyo
[Telephone number] +81-3-3384-0101 (main)
[Name of contact person] Ryosuke Murai, General Manager, Financial Department
[Place for public inspection] Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo, Japan)
2
I. Company Information
I. Overview of Company 1. Summary of business results
(1) Business results of group
Term 80th 81st 82nd 83rd 84th
Fiscal year ended March 2016 March 2017 March 2018 March 2019 March 2020
Revenue (Millions of yen)
245,867 237,022 240,469 251,415 247,582
Ordinary income (Millions of yen)
29,163 31,139 35,145 39,786 40,415
Net income attributable to owners of parent
(Millions of yen)
17,771 18,724 20,907 25,341 25,396
Comprehensive income (Millions of yen)
15,196 19,331 23,525 26,776 23,645
Net assets (Millions of yen)
282,101 274,339 274,900 284,752 290,330
Total assets (Millions of yen)
730,126 806,575 865,887 890,196 885,969
Net assets per share (Yen) 1,161.81 1,196.23 1,245.22 1,309.53 1,351.57
Earnings per share (Yen) 70.68 80.24 93.18 115.99 117.58
Diluted earnings per share (Yen) 70.67 80.24 93.18 － －
Equity ratio (%) 38.6 34.0 31.7 32.0 32.7
Return on equity (%) 6.0 6.7 7.6 9.1 8.8
Price earnings ratio (Times) 22.8 18.9 23.3 19.3 15.4
Cash flows from operating activities
(Millions of yen)
(35,310) (45,955) (19,329) 26,396 39,909
Cash flows from investing activities
(Millions of yen)
(4,063) 1,995 747 (9,232) (20,315)
Cash flows from financing activities
(Millions of yen)
40,719 47,630 27,773 (15,880) (25,487)
Cash and cash equivalents at end of period
(Millions of yen)
32,575 36,245 45,437 46,720 40,827
Number of employees (Persons)
5,899 5,732 5,548 5,326 5,130
[In addition, average number of part-time employees]
[1,947] [1,755] [1,642] [1,520] [1,453]
Notes: 1. Revenue does not include consumption taxes, etc.
2. From the 83rd term, the Group changed the reporting method of gain on bad debts recovered from “non-operating income (expenses)” to “revenue.” Figures for the summary of business results for the 82nd term have been retroactively restated.
3. The Group has applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28 February 16, 2018), etc., from the beginning of the 83rd term. These accounting standards, etc., have been retroactively applied to figures for the summary of business results for the 82nd term.
4. From the 81st term, the Group introduced performance-linked stock-based compensation for its Directors, etc., and an incentive plan for employees in management positions, establishing an Officer Remuneration Board Incentive Plan Trust (the “BIP Trust”) and a Stock Benefit Employee Stock Ownership Plan Trust (the “ESOP Trust”). Company stock held under these Trusts is included in treasury stock reported in the consolidated balance sheets. Accordingly, these shares of treasury stock are included in those deducted from the calculation of the average number of shares during the period in determining basic and diluted earnings per share, as well as those deducted from the number of shares issued and outstanding at the end of the year in determining net assets per share.
5. Diluted earnings per share for the 83rd and 84th terms are not stated as there are no dilutive shares.
3
(2) Business results of reporting company
Term 80th 81st 82nd 83rd 84th
Fiscal year ended March 2016 March 2017 March 2018 March 2019 March 2020
Operating revenue (Millions of yen)
13,076 13,684 18,797 17,345 23,507
Ordinary income (Millions of yen)
8,036 9,087 13,789 11,359 16,933
Net income (Millions of yen)
8,404 8,858 12,750 10,436 16,246
Capital stock (Millions of yen)
35,920 35,920 35,920 35,920 35,920
Total number of shares issued and outstanding
(Shares) 278,660,417 233,660,417 233,660,417 223,660,417 223,660,417
Net assets (Millions of yen)
232,096 214,417 206,738 201,998 197,399
Total assets (Millions of yen)
645,562 712,649 763,439 772,534 754,167
Net assets per share (Yen) 957.31 936.49 938.05 928.96 920.66
Dividends per share (Yen)
22.00 33.00 38.00 49.00 50.00
[Of which, interim dividend per share]
[11.00] [16.00] [18.00] [23.00] [28.00]
Earnings per share (Yen) 33.43 37.96 56.82 47.76 75.22
Diluted earnings per share (Yen) 33.42 37.96 56.82 － －
Equity ratio (%) 35.9 30.1 27.1 26.1 26.2
Return on equity (%) 3.4 4.0 6.1 5.1 8.1
Price earnings ratio (Times) 48.3 39.9 38.2 46.8 24.1
Payout ratio (%) 65.8 86.9 66.9 102.6 66.5
Number of employees (Persons)
207 244 277 322 367
[In addition, average number of part-time employees]
[16] [22] [23] [21] [22]
Total shareholder return (%)
119.8 114.9 165.6 174.1 147.0
[Benchmark: TOPIX Net Total Return Index]
[89.2] [102.3] [118.5] [112.5] [101.8]
Highest share price (Yen) 2,072 1,852 2,170 2,861 2,795
Lowest share price (Yen) 1,273 1,249 1,442 1,929 1,607
Notes: 1. Operating revenue does not include consumption taxes, etc.
2. From the 81st term, the Company introduced performance-linked stock-based compensation for its Directors, etc., and an incentive plan for employees in management positions, establishing the BIP Trust and the ESOP Trust. Company stock held under these Trusts is included in treasury stock reported in the non-consolidated balance sheets. Accordingly, these shares of treasury stock are included in those deducted from the calculation of the average number of shares during the period in determining basic and diluted earnings per share, as well as those deducted from the number of shares issued and outstanding at the end of the year in determining net assets per share.
3. Diluted earnings per share for the 83rd and 84th terms are not stated as there are no diluted shares.
4. Total shareholder return (TSR) has been calculated based on the share price of ¥1,365 as of March 31, 2015.
5. The highest and lowest share prices refer to those of the First Section of the Tokyo Stock Exchange.
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2. History
The Group was launched on February 17, 1931, when Chuji Aoi founded an installment sales business in Nakano-ku, Tokyo,
Japan, after separating from Maruni Shokai Co., Ltd. On March 30, 1937, it was reorganized into a corporate entity (MARUI CO.,
LTD.; capital of ¥50,000; Chuji Aoi, President).
The history of the Company and its main subsidiaries and affiliates since the Company’s founding is as follows.
July 1941 Suspended business and temporarily closed all stores due to wartime business restrictions.
August 1946 Resumed business in cash furniture sale with a temporary store in Nakano.
December 1950 Resumed installment sales.
August 1959 Established Marui Koukoku Jigyosha Co., Ltd. (currently AIM CREATE CO., LTD.).
January 1960 Renamed the monthly payment system “credit” to structurally improve and modernize the Company.
March 1960 Issued the first credit card in Japan.
October 1960 Established Marui Unyu Co., Ltd. (currently MOVING CO., LTD.).
April 1963 Listed stock on the Second Section of the Tokyo Stock Exchange.
June 1965 Stock designated to be listed on the First Section of the Tokyo Stock Exchange.
August 1966 Introduced computers.
April 1974 Introduced POS system and launched an online credit inquiry system to simplify contracting work.
May 1974 Opened the New Shinjuku Marui (currently Shinjuku Marui Main Building).
September 1975 Began offering on-the-spot approval at stores for “Akai Card” credit cards.
February 1981 Began a cash advance business, celebrating the 50th anniversary of founding.
September 1984 Established M & C SYSTEMS CO., LTD.
July 1987 Established CSC Service Co., Ltd. (currently MARUI FACILITIES Co., Ltd.).
September 1988 Published “Voi” mail-order catalogue.
February 1991 Established M1 Card Co., Ltd. (renamed ZERO FIRST Co., Ltd. in February 1996).
December 1994 Relocated the head office to 3-2, Nakano 4-chome, Nakano-ku, Tokyo.
October 2000 Introduced a new revolving payment system as a payment method for cash advances.
October 2003 Opened Kobe Marui, the first store in the Kansai region.
February 2004 Opened Kitasenju Marui, the largest Marui store to date.
October 2004 Established Marui Card Co., Ltd. (currently Epos Card Co., Ltd.).
November 2004 Established MRI Co., Ltd.
March 2006 Launched the new “EPOS card,” with the versatility of the Visa brand added to the benefits of an in-house credit card.
September 2006 Opened Namba Marui, the first store in Osaka.
October 2007 The Company switched to a holding company system via a corporate demerger, renamed MARUI GROUP CO., LTD. The retail business was succeeded by a newly established company, MARUI CO., LTD., and the credit card business was succeeded by Epos Card Co., Ltd. Established MARUI HOME SERVICE Co., Ltd. Opened Yurakucho Marui.
February 2013 Established Epos Small Amounts and Short Term Reserve CO., LTD. (currently Epos Small Amount and Short Term Insurance Co., Ltd.).
October 2014 Merged ZERO FIRST Co., Ltd. through an absorption-type merger with Epos Card Co., Ltd. as the surviving company.
November 2015 Established the MARUI GROUP Corporate Governance Guidelines.
April 2016 Opened Hakata Marui, the first store in the Kyushu region.
February 2018 Established TSUMITATE SECURITIES PREPARATORY CO., LTD. (currently tsumiki Co., Ltd.).
January 2020 Established D2C & Co. Inc.
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3. Description of Business
The Group’s operations integrate retailing and FinTech and is comprised of the Company, MARUI GROUP CO., LTD., which
is the holding company, and subsidiaries and affiliates of the Company (17 subsidiaries and six affiliates).
Furthermore, the details of each business and main Group companies are as follows. Businesses are categorized in the same
manner as segments.
Retailing
The following five consolidated subsidiaries as well as unconsolidated subsidiaries and affiliates not accounted for using the
equity method engage in businesses including rental, operation, and management of commercial facilities; consignment agreement
sales of apparel items and fashion accessories; store renovation; advertising; fashion distribution subcontracting; and maintenance
and management of buildings and other facilities.
<Consolidated subsidiaries>
MARUI CO., LTD., AIM CREATE CO., LTD., MOVING CO., LTD., M & C SYSTEMS CO., LTD., MARUI FACILITIES
Co., Ltd.
<Non-consolidated subsidiaries and affiliates not accounted for using the equity method>
MARUI KIT CENTER CO., LTD., MIZONOKUCHISHINTOSHI Co., Ltd., etc.
FinTech
The following five consolidated subsidiaries as well as unconsolidated subsidiaries and affiliates not accounted for using the
equity method engage in businesses including credit card services, cash advance services, rent guarantee services, information
system services, real estate rental.
<Consolidated subsidiaries>
Epos Card Co., Ltd., MRI Co., Ltd., M & C SYSTEMS CO., LTD., MARUI HOME SERVICE Co., Ltd., MARUI HOME
SERVICE MANAGEMENT Co., Ltd.
<Non-consolidated subsidiaries and affiliates not accounted for using the equity method>
Epos Small Amount and Short Term Insurance Co., Ltd., tsumiki Co., Ltd., etc.
In addition to the above, subsidiaries and affiliates of the Company rent/lease real estate properties from related parties that are
not subsidiaries or affiliates, namely, NAKANO Co., Ltd. and another company.
As the Company is a specified listed company, etc., consolidated figures shall be applied to numerical standards defined in
comparison with the scale of the listed company among the criteria for regarding a material fact as minor pertaining to insider
trading regulations.
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[Organization Chart]
The status of the Group’s organization is as illustrated below.
etc. etc.
Consolidated subsidiaries Non-consolidated subsidiaries (not
accounted for using the equity method)
Affiliates (not accounted for using
the equity method)
Related parties other than subsidiaries and
affiliates
FinTechRetailing
(Operation of commercial facilities, store renovation,
etc.)
AIM CREATE CO., LTD.
(Apparel distribution)
MOVING CO., LTD.
(Maintenance and management of buildings, etc.)
MARUI FACILITIES Co., Ltd.
(Credit card services, etc.)
Epos Card Co., Ltd.
(Collection of receivables)
MRI Co., Ltd.
(Small amount and short term insurance)
Epos Small Amount and Short Term
Insurance Co., Ltd.
(Systems operations)
M & C SYSTEMS CO., LTD.
(Rental of real estate)
MARUI HOME SERVICE Co., Ltd.
MARUI HOME SERVICE
MANAGEMENT Co., Ltd.
(Administrative agency)
MARUI KIT CENTER CO., LTD.
(Systems operations)
M & C SYSTEMS CO., LTD.
(Management of real estate)
etc.
MIZONOKUCHISHINTOSHI Co.,
Ltd.
NAKANO Co., Ltd.
MARUI GROUP CO., LTD.
(Holding company)
(Operation of commercial facilities, consignment
agreement sales)
MARUI CO., LTD.
(Securities)
tsumiki Co., Ltd.
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4. Subsidiaries and Affiliates
Company Name Location Capital stock
(Millions of yen)
Principal business Holding ratio
of voting rights (%)
Relationship
(Consolidated subsidiaries)
MARUI CO., LTD. (Notes 3 and 4) Nakano-ku, Tokyo 100
Operation of Marui/Modi Stores, Original Sales and Private Brand Operation and Development, Online Shopping and Mail-order, Outside Specialty Store Businesss
100.0 Management advisory, etc. Interlocking directorship…Yes
Epos Card Co., Ltd. (Notes 3 and 5) Nakano-ku, Tokyo 500 Credit Card Business, Credit Loan Business
100.0 Management advisory, etc. Interlocking directorship…Yes
MRI Co., Ltd. Nakano-ku, Tokyo 500
Collection and Management of Receivables Business, Credit Check Business
100.0 [100.0]
Management advisory, etc. Interlocking directorship…Yes
AIM CREATE CO., LTD. (Note 6) Nakano-ku, Tokyo 100
Proposal of Commercial Facilities Category, Design and Interior Decoration, Operation and Management, Planning and Making of Advertisement
60.0 Management advisory, etc. Interlocking directorship…Yes
MOVING CO., LTD. Toda-shi, Saitama 100 Trucking Business, Forwarding Business
100.0 Management advisory, etc. Interlocking directorship…Yes
M & C SYSTEMS CO., LTD. Nakano-ku, Tokyo 234 Software Development, Computer Operation
100.0 Management advisory, etc. Interlocking directorship…Yes
MARUI FACILITIES Co., Ltd. Nakano-ku, Tokyo 100
Building Management Service Business, Security Service Business
100.0 Management advisory, etc. Interlocking directorship…Yes
MARUI HOME SERVICE Co., Ltd. Nakano-ku, Tokyo 100 Real-Estate Rental Business
100.0 Management advisory, etc. Interlocking directorship…Yes
MARUI HOME SERVICE MANAGEMENT Co., Ltd.
Nakano-ku, Tokyo 10 Real-Estate Rental Business
100.0 [100.0]
Management advisory, etc. Interlocking directorship…No
Notes: 1. Figures in brackets in the “Holding ratio of voting rights” column indicate the ratio of indirect holdings.
2. In addition to the above relations, funds are borrowed and loaned between the Company and the Group companies under a cash management system that centrally manages Group funds.
3. A specified subsidiary.
4. Revenue (excluding internal revenue from other consolidated companies of the Group) of MARUI CO., LTD. is greater than 10% of consolidated revenue.
Primary profit (loss) information, etc.
Revenue: ¥94,935 million; Ordinary income: ¥6,214 million; Net income: ¥968 million;
Net assets: ¥226,242 million; Total assets: ¥263,927 million
5. Revenue (excluding internal revenue from other consolidated companies of the Group) of Epos Card Co., Ltd. is greater than 10% of consolidated revenue. However, primary profit (loss) information, etc., is omitted as the said revenue is greater than 90% of revenue of “FinTech” stated in “31. SEGMENT INFORMATION.”
6. The holding ratio of voting rights in AIM CREATE CO., LTD. became 60.0% (100% as of the end of the previous fiscal year) following the transfer of shares to Sumitomo Forestry Co., Ltd. effective July 1, 2019. The Modi business unit of AIM CREATE CO., LTD. was demerged through a company split effective April 1, 2019, and was succeeded by MARUI CO., LTD.
8
5. Employees
(1) Consolidated basis As of March 31, 2020
Name of segment Number of employees (Persons)
Retailing 3,167 [ 785]
FinTech 1,596 [ 646]
Pure holding company 367 [ 22]
Total 5,130 [ 1,453]
Notes: 1. The number of employees represents the number of active employees, exclusive of the average number of part-time employees during the fiscal year (calculated based on prescribed monthly working hours) which is shown in brackets in the number of employees column.
2. The number of employees under pure holding company is the number of employees of the Company not attributable to a particular segment.
(2) Non-consolidated basis As of March 31, 2020
Number of employees (Persons) Average age (Years old) Average length of service
(Years) Average annual salary (Yen)
367 [ 22] 39.0 15.5 6,514,100
Notes: 1. The number of employees represents the number of active employees, exclusive of the average number of part-time employees during the fiscal year (calculated based on prescribed monthly working hours) which is shown in brackets in the number of employees column.
2. Average annual salary includes bonuses and other non-standard payments.
(3) Labor unions
The Group has MARUI GROUP UNION, which is a member union of UA ZENSEN. Management-labor relations have been
smooth, and there are no items of note to report.
9
II. Business Overview
1. Management Policies, Management Environment, and Issues to be Addressed
Forward-looking statements in this document are based on the judgment of the Group at the end of the fiscal year
under review.
■ Basic management policies
The Group’s mission is to work together with our stakeholders to help build a flourishing and inclusive society that
offers happiness to all based on our corporate philosophy of “continue evolving to better aid our customers” and
“equate the development of our people with the development of our company.”
The Group aims to increase profit for all stakeholders including customers, shareholders, investors, communities
and society, business partners, employees and future generations. In order to achieve this goal, we endeavor to create
value that we can share with our stakeholders by taking their perspectives into consideration as we deliberate and
take action on all matters. We hope to promote “co-creation sustainability management” to improve our corporate
value as a result of these endeavors.
For details of the Group’s co-creation sustainability management, please refer to the Co-Creation Management
Report 2019 and the VISION BOOK 2050.
Co-Creation Management Report (https://www.0101maruigroup.co.jp/en/ir/lib/i-report.html)
VISION BOOK 2050 (https://www.0101maruigroup.co.jp/en/sustainability/lib/s-report.html)
■ Target management indicators
Under the five-year medium-term management plan, the Group will strive to achieve targets of earnings per share
(EPS) of more than ¥130, return on equity (ROE) of more than 10%, and return on invested capital (ROIC) of more
than 4% for the fiscal year ending March 31, 2021, its final year.
■ Medium- to long-term management strategy
i. Changes in the business environment
The consumption environment has further shifted from “goods” to “experiences,” and while the e-commerce market
is continuing to grow in the retail sector, there is a risk of a future decline in business models that rely on brick-and-
mortar stores centered on merchandise sales.
The infrastructure for the credit market has been developing and markets are expected to grow, while innovation in
financial services driven by new technology may bring about a drastic change in the market.
ⅱ. Medium-term management plan framework
- Improvement of corporate value through integrated Group operations
- Creation of new businesses through transformation of Group businesses
- Development of optimal capital structure and further improvement of productivity
ⅲ. Specific Initiatives
Retailing
- The stores business will improve capital productivity by completing its transition in business structure focused on
department stores to one focused on shopping centers and fixed-term rental agreements while deploying next-
generation lifestyle-oriented shopping centers.
- The omni-channel retailing business will develop businesses focused on Internet sales while expanding the scope
of business that combine Group expertise and other unique business models.
- The facility management and distribution business will utilize store renovation, distribution, building management,
and other retailing expertise in an integrated manner and advance business-to-business operations.
FinTech
- The credit card business will increase the number of EPOS card fans across Japan and reinforce collaboration with
commercial facilities and companies while maintaining high profit margins and simultaneously expanding business
scale.
- The financial services business will expand revenues from rent guarantee, insurance, and other services utilizing
credit know-how to improve ROIC through business requiring minimal invested capital.
- The IT business will support expansion of Group business scope by utilizing new technologies to improve customer
convenience.
Optimal capital structure, growth investments, and productivity improvement
- We will create a structure in which ROIC consistently exceeds capital costs by improving ROIC through income
growth and establishing optimal capital structure suited to Group business structure.
- We will develop commercial facilities utilizing shopping center and fixed-term rental know-how, invest in venture
companies to acquire new technologies, and execute other growth investments for improving corporate value.
10
- We will utilize human resources as necessitated by business portfolio as a united MARUI GROUP to further
improve Group productivity.
*Approach to optimal capital structure
- Total assets are expected to rise considerably as a result of higher operating receivables (accounts receivable-
installment and operating loans) that will accompany growth in the FinTech segment. Meanwhile, the liability
portion of our balance sheet has been more oriented toward retailing with high levels of shareholders’ equity. Under
the medium-term management plan, we aim to address this structure by transforming our business model based on
our target balance sheet to achieve an equity ratio of approximately 30%.
- Higher funding demands will be met through the procurement of low-cost capital as we seek to lower overall capital
costs by increasing the portion of funds accounted for by interest-bearing debt (excluding lease obligation and
deposits received). At the same time, we will seek to maintain a level of interest-bearing debt that is equivalent to
around 90% of operating receivables to ensure financial safety.
- We plan to continue diversifying our fund procurement methods by liquidating operating receivables and procuring
funds through borrowings from financial institutions and issuance of bonds with the end goal of improving asset
efficiency by limiting the increase in total assets and liabilities.
■ Shareholder returns
The Group will effectively utilize cash flows generated through business operations to increase growth investments
and enhance shareholder returns based on the medium-term management plan with the fiscal year ending March 31,
2021 as its final year. Specifically, core operating cash flow over the five-year period of the medium-term
management plan is expected to amount to ¥230.0 billion, and approximately ¥110.0 billion of that amount will go
to shareholder returns.
The Company will endeavor to continuously increase the level of dividends according to long term growth in EPS
to realize high growth coupled with high returns. The Company will gradually raise its target for the consolidated
payout ratio from 40% to approximately 55% by the fiscal year ending March 31, 2024 and implement ongoing,
long-term dividend increases.
Share buybacks are conducted at an appropriate time after comprehensively considering a range of factors including
cash flows, targeting a total return ratio of approximately 70% for improving capital efficiency and enhancing
shareholder interest. Acquired shares of treasury stock are, in principle, to be canceled.
Indicators for shareholder returns
■ The Group’s idea of sustainability
In 2016, the Group took its first steps toward practicing future-oriented co-creation sustainability management, an
integrated approach that integrates consideration for business and the environment, the resolution of social issues,
and corporate governance initiatives. We identified four core themes by redefining the focus of our business of
serving everyone from the perspective of inclusion and linking this concept to the United Nations Sustainable
Development Goals (“SDGs”). The concept of inclusion entails integrating and including individuals that had
previously been excluded and is congruent with the principles embodied by the SDGs.
Furthermore, in 2019 we formulated the MARUI GROUP’s 2050 Vision, our long-term vision for 2050, to achieve
full-fledged co-creation sustainability management. To achieve this vision, we have established three businesses
founded on co-creation based on the four core themes to which we have dedicated ourselves.
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MARUI GROUP’s 2050 Vision
Harnessing the power of business to build a world that transcends dichotomies
Three business founded on Co-creation
ⅰ. Inter-generational businesses
Through green businesses and human businesses, it will provide options for coexistence with the global environment
and future generations.
ⅱ. Co-creative business
Functioning as a platform to society, enabling it to provide spaces and services emphasizing balance between
individuality and connections through co-creation with all the stakeholders that touch its value chain.
ⅲ. Financial inclusion
We will provide options for alleviating income disparity and other concerns regarding money felt by people around
the world.
Four core themes for inclusion
The Group is proactively pursuing these four core themes in order to develop our three businesses established to
achieve our long-term vision.
ⅰ. Customer Diversity and Inclusion
We will seek to develop products, services, and stores that bring joy to all customers, regardless of their age, gender,
or physical characteristics.
Core initiatives
Inclusive Store Development
We are developing stores that are comfortable in terms of both facilities and customer
service to provide enjoyable and relaxing shopping experiences to all customers, including
senior citizens, differently abled individuals, non-Japanese people, and members of the
LGBT community, regardless of age or gender.
Inclusive Product Development
MARUI GROUP views product creation as the process of developing products that match
the physical characteristics of each customer. We are thus establishing development and
sales frameworks for supplying products that benefit all customers, excluding no one
regardless of their physical characteristics, in an aim to create new demand.
Financial Inclusion
Under our mission of providing financial services for everyone, we are working on
financial inclusion with the goal of providing everyone with the financial services they
need when they need them, regardless of income or age, instead of providing limited
financial services exclusively to the wealthy.
ⅱ. Workplace inclusion
Based on MARUI GROUP’s corporate philosophy of striving to “continue evolving to better aid our customers” and
“equate the development of our people with the development of our company,” we will provide all employees with
venues through which they can excel.
Core initiatives
Development of an Organization That
Utilizes Diversity
We build a corporate culture where more than 5,000 employees accept one
another’s differences and values by promoting diversity with regard to
individual talents, gender, and age. Furthermore, our employees are provided
with a range of opportunities, including the intra-Group profession change
system that enables them to hone their individual specialized skills and
expertise, and the Groupwide project teams that allow for discussions that
exceed the boundaries of age or position. By merging the capabilities of our
employees through these opportunities, we translate the human capital
represented by their expertise and knowledge into organizational capital for
the Group.
Wellness Management Energizing
Employees
We believe it is important to go beyond the basic approach of preventing
illness in order to foster more energized and happy employees. We have
therefore been promoting wellness management that combines these
approaches. Wellness management has been positioned as an important
element of our strategies and is thus being practiced on a Groupwide scale.
Human Resource Investments
Recognizing that employees that are committed to helping others are the
source of the corporate value we create, we are proactively conducting
investments in the recruitment and development of human resources to foster
a corporate culture that is respectful of diverse values and in which all
employees can feel energized and continue growing.
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ⅲ. Ecological inclusion
We will develop businesses with low environmental impact, and contribute to the realization of a low-carbon society
and a circular economy, and propose ecologically sound lifestyles that are in harmony with nature and the
environment.
Core initiatives
Environmental Footprint Reduction
The medium- to long-term targets for reducing greenhouse gas emissions
formulated in September 2019 were certified as “targeting 1.5°C” by the
international initiative known as Science Based Targets (SBT). Groupwide targets to reduce greenhouse gas emissions are as follows:
By 2030, from the level in the fiscal year ended March 31, 2017, - An 80% reduction in combined volume of Scope 1*1 and Scope 2*2
emissions - A 35% reduction of Scope 3*3 emissions
By 2050, from the level in the fiscal year ended March 31, 2017, - A 90% reduction in combined volume of Scope 1 and Scope 2
emissions
Achievement for the fiscal year ended March 31, 2020
- A 26.7% total reduction attributable to Scope 1 (13,799 tons) and Scope
2 (67,916 tons) - A 12% reduction attributable to Scope 3 (351,962 tons) Resulting in greenhouse gas emissions per unit*4 of 10.3, 83.0% of the
level in the previous fiscal year.
We became a member of RE100 in July 2018 and will source 100% of the
electricity used in our business activities from renewable energy by 2030. The
ratio of renewable energy for the fiscal year ended March 31, 2020 was 23%. *1) Greenhouse gas emissions from its use of fuel *2) Greenhouse gas emissions from its use of electricity, etc. *3) Greenhouse gas emissions from its value chain *4) Calculated based on the ratio of greenhouse gas emissions (tons) to
consolidated operating income (¥1 million)
Responsible Procurement
We recognize our responsibility as a producer across the entire value chain,
from the procurement of raw materials and product creation to the sale and
disposal of products. Through co-creation with stakeholders, we strive not
only to contribute to local communities but also to address human rights
issues and improve work environments across the value chain.
Innovative Services for Reducing
Environmental Impacts
We shall leverage our unique platform, which combines our strengths in
IT/logistics, etc. and our Retailing/FinTech businesses to develop innovative
services that deliver new forms of convenience, addressing social change and
customer needs while also reducing environmental impact.
13
ⅳ. Co-creation corporate governance
We will develop a management structure which includes stakeholders in order to achieve harmony between the
interests and “happiness” of all stakeholders.
Core initiatives
Co-Creation with Stakeholders
We are reinforcing our co-creation management activities through constructive
dialogue with stakeholders with the ultimate goal of developing a business that
brings joy to all customers. These initiatives are also aimed at winning the
support of employees, customers, shareholders, other investors, members of
communities and society, and business partners with regard to our inclusion-
oriented activities.
Sustainability Management
We have been verifying activities as necessary for the promotion of the three
businesses we have developed based on co-creation sustainability management,
and are confirming our progress on the key performance indicators (KPI) for
evaluating sustainability in our businesses.
In order to strengthen our sustainability management system, we established
Sustainability Advisors and the Sustainability Committee in 2019.
In addition, we included target ESG ratings based on research by a third-party
institution in the conditions of performance achievement in determining
performance-linked stock-based compensation for Directors.
Target indicator
- Inclusion in DJSI World* in the fiscal year ending March 31, 2021
* Dow Jones Sustainability World Index: An ESG index comprising companies
selected through comprehensive evaluation from the point of view of long-
term improvement to shareholder value, based on the three perspectives of
economy, environment, and society.
Cultivation of Future Leaders
In April 2017, we launched the Co-Creation Management Academy (CMA)
future leader development program. Each year 10 to 20 candidates are selected,
and through this program we seek to discover and cultivate future leaders under
the guidance of our External Directors.
Risk Management
We established the MARUI GROUP Code of Conduct as the foundation for
co-creation sustainability management. Under that Code of Conduct, we
formulated the MARUI GROUP Human Rights Policy, the MARUI GROUP
Occupational Health and Safety Policy, the MARUI GROUP Environmental
Policy, etc.
In addition, in order to respond to the volatile operating environment while
accelerating business structure reforms through digitization and technological
innovation, we appointed a Chief Digital Officer (CDO) and established the
Digitization Committee. We established the MARUI GROUP Information Security Policy, the MARUI
GROUP Privacy Policy, the MARUI GROUP Social Media Policy and the
MARUI GROUP Tax Policy in 2018. The effectiveness of these policies is
verified once a year and all Group employees are familiarized with them
through training and other activities. To strengthen measures in response to information security risks, we
established the Information Security Committee and appointed a Chief
Security Officer (CSO) to serve as the highest-level authority on security
responsible for managing and protecting Groupwide information assets.
We will review as required and promote risk management suitable for the
times in the future.
14
■ Initiatives related to climate change and endorsing the TCFD
Climate change should be considered as a climate crisis today. Recognizing climate change as one of its most
important management priorities, MARUI GROUP aims to “limit the rise in the global temperature to below 1.5°C
above pre-industrial levels,” as presented in the Paris Agreement. The Group has strengthened its governance system
to actively engage in creating a low-carbon society based on the long-term targets of the Paris Agreement in
accordance with the MARUI GROUP Environmental Policy as revised in April 2020. At the same time, the Group
has analyzed the potential impact of climate change on business, and is promoting initiatives in capturing
opportunities for growth and responding appropriately to relevant risks resulting from climate change. The Group
endorsed the recommendations of the TCFD, which was established by the Financial Stability Board, and disclosed
information in its annual securities report for the fiscal year ended March 31, 2019, based on these recommendations.
We conducted repeated analyses at this time to elaborate on opportunities and physical risks due to climate change.
As we continue to focus on enhancing our information disclosure in the future, we will benchmark the
appropriateness of the Group’s responses to climate change using the TCFD recommendations to promote co-
creation sustainability management.
<Governance>
The Sustainability Committee was established in May 2019 as an advisory body to the Board of Directors, chaired
by the Representative Director, for the purpose of examining and discussing the Group’s basic policies and major
items related to climate change. In addition, the Environment and CSR Committee was established as a subordinate
of the Sustainability Committee for carrying out duties pertaining to the management of relevant risks and other
matters based on its instructions. In formulating business strategies and implementing investment and financing, we
will strengthen our governance related to climate change based on this system by comprehensively discussing and
making decisions with considerations for the MARUI GROUP Environmental Policy and other major items related
to climate change.
<Business strategies>
(Business risks and opportunities)
Recognizing that a 4°C rise in the global temperature resulting from climate change would have an enormous impact
on society, and we believe it is important to work together to contribute to the movement seeking to limit global
warming to below 1.5°C above pre-industrial levels. In order to strengthen our ability to respond to scenarios below
2°C (with a target of 1.5°C), we will identify the impact of climate-related risks and opportunities on our business,
and proceed to formulate relevant strategies.
The Group aims to create a new business model integrating Retailing and FinTech with “Co-Creation Investment”
that leads to mutual development, by investing in start-ups, etc., with which we can share our corporate philosophy
or visions. Climate change would pose such risks as damages to stores, facilities, etc., from floods caused by
typhoons and torrential rains, and an increase in costs due to the introduction of carbon taxes along with tightened
regulations. On the other hand, we view the provision of goods and services responding to increased consumer
environmental awareness and investing in eco-friendly companies as the Group’s business opportunities.
(Analysis and calculation of financial impacts)
Financial impacts on businesses are analyzed based on our climate change scenario, etc., and calculated by item as
the amount of impact on income anticipated within the period through 2050. As physical risks, even if a rise in
temperature is held below 1.5°C, we anticipate that flood damage will abruptly occur due to typhoons, torrential
rains, etc. These risks are expected to affect rent revenues, etc., due to suspension of store operations (¥1.9 billion)
and cause building damages (¥3.0 billion). We assessed the transition risks by estimating increases in future energy-
related costs, which are expected to be renewable power procurement costs (¥0.8 billion) and the introduction of
carbon taxes (¥2.2 billion). The relevant opportunities are expected to have an impact on store revenue as a result of
proposing lifestyles to highly environmentally conscious consumers (¥1.9 billion), long-term revenue due to an
increase in credit cardholders (¥2.6 billion), and return from investment in environmentally friendly companies (¥0.9
billion). We project long-term revenue owing to an increase in recurring payments due to credit cardholders using
electrical power from renewable energy, leading to the conversion of cardholders to Gold cardholders (¥2.0 billion),
a reduction of procurement costs resulting from entering the power retailing business (¥0.3 billion), and exemption
from carbon taxes (¥2.2 billion). We will conduct analysis regularly based on various future trends, and continue to
review our evaluations and disclose relevant information.
15
(Assumptions)
Target Period Present to 2050
Scope All businesses of MARUI GROUP
Calculation
requirements
Analyses based on climate change scenarios (IPCC, IEA, etc.)
Calculation of financial impacts assumed during the period by
item
Calculation of risks in the amount of impact if an event occurs
Calculation of opportunities for lifetime value (LTV), in
principle
Not considering infrastructure enhancements such as public
works and technology advancements, etc.
16
(Risks and opportunities associated with climate change)
Changes
in society
Risks faced by
MARUI GROUP Description of risks
Financial
impacts
Ph
ysi
cal
risk
s
Flood damage
due to typhoons,
heavy rains, etc. *1
Suspension of store
operations
Impact on rent revenues, etc., due to business
suspension
Approx.
¥1.9 billion
Building damages due to flooding (recovery of
power supply facilities, etc.)
Approx.
¥3.0 billion
Stop of
system centers
Groupwide suspension of business activities due to
downed systems
Response
completed
*2
Tra
nsi
tio
n r
isk
s
Increase in
demand for
renewable
energy
Rise in renewable
energy prices
Increase in energy costs due to renewable energy
procurement
Approx.
¥0.8 billion
(Annual)
Tightening of
government’s
environmental
regulations
Introduction of
carbon taxes Tax increase due to carbon taxes
Approx.
¥2.2 billion
(Annual)
Changes in
society MARUI GROUP’s
opportunities Description of opportunities
Financial impacts
Op
po
rtun
itie
s
Enhanced environmental consciousness and change in
lifestyles
Propose sustainable lifestyles
Revenue from bringing in eco-friendly tenants, or other efforts
Approx. ¥1.9 billion
*3
Increase in sustainability-minded credit cardholders Approx. ¥2.6
billion *4
Returns from investments in eco-friendly companies
Approx. ¥0.9 billion
Response to demand from general
households for renewable energy
Revenue from credit cardholders using electrical power from renewable energy
Approx. ¥2.0 billion
*5
Diversification of electricity procurement
Entry into the power retailing business
Reduction in intermediary costs due to direct procurement of electricity
Approx. ¥0.3 billion
(Annual)
Tightening of government’s environmental
regulations
Introduction of carbon taxes
Exemption from carbon taxes from achieving zero greenhouse gas emissions
Approx. ¥2.2 billion
(Annual)
*1. Assuming flooding of a river that will have the most significant effects based on hazard maps (Arakawa River)
(three-month effect on two stores in the watershed areas)
*2. Assuming no financial impacts as a backup center has been established
*3. Increased rent revenues and credit card usage
*4. Calculated revenue from credit card admission and usage
*5. Calculated revenue from increased Gold cardholders due to recurring payments, etc.
<Risk management>
MARUI GROUP performs scenario analyses to track and assess the impacts of climate change on its business and
identify climate change-related risks and opportunities. The identified risks and opportunities are managed in terms
of strategy formulation and individual business operations through a promotion system centered on the Sustainability
Committee. The content of deliberations by the Environment and CSR Committee, which comprises officers of
Group companies (retailing, facility management, distribution, building management, etc.), is regularly reported and
discussed at the Sustainability Committee, and reports and advice are provided to the Board of Directors as necessary
for specific items. Going forward, strategies and measures will be examined based on a myriad of factors. External
factors on which information will be shared include climate change and other trends that may impact corporate
strategies as well as legal and regulatory revisions. Internal factors examined will include progress in the measures
of Group companies and future risks and opportunities.
17
<Indicators and targets>
- The Group has set environmental efficiency (ratio of operating income to CO2 emissions) and the ratio of circular
revenue (ratio of circular sales/transactions to total Retailing segment transactions) as indicators for green
businesses.
- Our Groupwide greenhouse gas emission reduction targets are as follows: an 80% reduction in emissions
attributable to Scope 1 and Scope 2 and a 35% reduction attributable to Scope 3 from the level in the fiscal year
ended March 31, 2017 by 2030 (a 90% reduction in emissions attributable to Scope 1 and Scope 2 from the level
in the fiscal year ended March 31, 2017 by 2050); and they were certified as “targeting 1.5°C” by the SBT initiative
in September 2019.
- The Group has set a target of procuring 100% of the electricity used in its business activities from renewable power
sources by 2030 (medium-term target: 70% by 2025) and became a member of RE100 in July 2018.
■ Response to COVID-19
With stakeholders’ health and safety as a first priority, the Group is taking various measures. We would like to reflect
on our relationships and further strengthen our partnerships in order to overcome the coronavirus crisis.
(Customers)
Marui and Modi stores shortened business hours and some of them temporarily closed for two days in March. After
a state of emergency was declared, all stores were closed except for food corners and certain tenants. In the regions
where the emergency declaration was lifted, stores gradually resumed operations by taking infection prevention
measures, and all of the stores have resumed operations since June.
With regard to EPOS cards, we determine any necessary changes to payment due dates, as well as inform customers
using the card for rent settlement of the government’s Housing Security Benefit system.
(Business partners)
Based on our co-creation philosophy aiming to enhance stakeholders’ interests, the Group implemented measures
for strengthening partnerships such as exemption of rent in its full amount during the stores' temporary closings. We
will overcome this unprecedented crisis by strengthening partnerships with our business partners, and strive to
enhance our corporate value over the medium-to-long term.
Measures for strengthening partnerships to overcome COVID-19
- 10%–15% reduction of fixed rent and common area charges (for March).
- Exemption of rent and common area charges in full amount for business partners’ closing period.
- Removal of minimum guaranteed sales of business partners of consignment sales (for a period from March to
August).
- Return one to two months’ worth of security deposits at business partner’s request (for business partners who had
deposited for six months or longer).
- Postponement of payments for a period from May to July by six months at business partner’s request.
- Assist customers in filing an “application for rent support grant.”
(Shareholders and investors)
The global situation is greatly changing and the outlook is uncertain due to the spread of COVID-19. We will,
however, disclose information in a timely and appropriate manner. We will facilitate management trusted by
shareholders and investors by securing business continuity and stability.
(Employees)
Employees placed on standby at home due to the temporary closing of stores were treated as taking special leave. At
departments requiring employees to come to the office, such as call centers and logistics centers, we created an
environment where staff can work with peace of mind by decentralizing offices and taking thorough measures to
prevent droplet infection. At the head office, the implementation rate of teleworking has risen since laptop computers
had been already introduced as part of work style reforms. A new work style has become common along with the
infection prevention measures.
The Group seeks to realize a flourishing and inclusive society that offers happiness to all people. The impact of
COVID-19 still remains uncertain. We will, however, provide our customers with various options and advance our
efforts to create attractive stores through co-creation with our business partners in the future.
18
2. Business and Other Risks
Matters stated in the business overview and financial information of our securities report that may affect the judgment
of investors are as follows.
Forward-looking statements in this document are based on the judgment of the Group at the end of the fiscal year
under review.
1. Major risks
(1) Risks concerning business strategies
1) Risks concerning Retailing and FinTech environments
- Changes in consumption trends
- Occurrence and intensification of competition
- Expansion of the e-commerce market, and diversification of settlement methods
- Revision of the taxation system and relevant laws
(Impact)
The Group’s operations integrate Retailing and FinTech. The Group conducts operations at sales offices centered on
the Tokyo metropolitan area and sales offices located throughout the country. We anticipate to see a decline in the
number of visiting customers and transactions at stores due to changes in markets causing sluggish consumer spending,
such as fluctuations in business conditions, changes in economic conditions, the declining population, intensifying
competition, the expansion of the e-commerce market, and the rise in the sharing economy. In addition, the share of
credit card usage in the market is expected to shrink as a result of the technological advances such as the diversification
of settlement means associated with the transition to cashless payments, or changes in consumer behaviors. If these
risks become apparent, the financial position and business results of the Group may be affected.
In store operations, the Group has been building a stable earnings structure by transitioning to a business structure
focused on shopping centers and fixed-term rental agreements. However, the financial position and business results of
the Group may be affected by cancellation of fixed-term rental agreements with tenants and increased vacant floor
space, both of which will lead to a decline in rental revenue, posting of impairment loss due to fluctuations in land
prices, increased tax burden due to a revision of the taxation system, and other factors.
Furthermore, allowance for doubtful accounts is provided with respect to operating receivables (accounts receivable–
installment and operating loans) of cards that account for a large share of the Group’s total assets, based on the
occurrence of receivables in arrears, historical bad debt ratios, etc. However, payments in arrears and uncollected
receivables could increase due to worsening economic conditions, changes in relevant laws, or other factors. The
financial position and business results of the Group may be affected by a sharp increase in bad debt expenses or
allowance for doubtful accounts, etc. Provision for loss on interest repayment has been provided to prepare for the
repayment of interest on cash advances, by projecting the amount of future repayments based on the past actual
repayments. However, if the amount of provision is insufficient for the amount of future claims for interest repayment,
additional costs may be incurred.
(Countermeasures)
We are pushing ahead with a marriage of Internet and physical venues centered on our e-commerce site “MARUI web
channel.” Marui and Modi stores have been working to realize the co-existence of physical venues with e-commerce
and to constantly improve facility value by working to promote “digital native stores” to accommodate the post-digital
era. The Group is working to diversify touchpoints with customers by having stores also play a complementary role to
digital. Moreover, we endeavor to broaden our customer base and increase the number of customers by advancing
“Customer Diversity and Inclusion,” providing products and services that bring joy to all customers, regardless of their
age, physical characteristics, or gender.
Recognizing the promotion of the transition to cashless payments as a big opportunity, the FinTech segment responds
to diversified payment methods by increasing EPOS Gold and Platinum cardholders and encouraging them to use their
EPOS card as their main card by implementing the strategy of maximizing the share of EPOS card payments among
household finances, such as the rent guarantee services business. Moreover, aiming to realize financial inclusion with
the goal of providing everyone with the financial services they need when they need them, regardless of income or age,
we provide initial credit by utilizing big data based on credit expertise acquired from the time of our founding, as well
as credit monitoring under the belief that “creditability should be built together with customers.” We have achieved a
low ratio of delinquent debt by increasing credit limits based on usage frequency and transaction amounts and payment
history.
19
2) Risks concerning co-creation investment
- Uncertainty of return on investment
- Risk of impairment loss on investment in unlisted companies
- Fluctuations in prices of investment securities
(Impact)
The Group is promoting “Co-Creation Investment,” investing in growing companies as part of its measures to accelerate
investments in intangible assets. We aim to create value greater than the sum of individual businesses by building a
business model integrating Retailing and FinTech with “Co-Creation Investment.” In executing investments, we
conduct a preliminary detailed review through confirmation of the financial conditions and contracts of prospective
investees, etc., and interviews with their management, to fully examine risks. However, in cases where a problem that
cannot be identified through preliminary investigation is found, e.g., the occurrence of a contingent liability or the
discovery of unrecognized debt, or depending on future business performance or changes in business policies of the
investees, the expected outcome may not be achieved, leading to the recording of an impairment loss. Furthermore,
listed shares held by the Group may be affected by price fluctuations depending on stock market trends.
(Countermeasures)
In selecting investees, we prepare our own plan based on a business plan obtained from the investee, and make
investment decisions after checking profitability including not only financial returns but also cooperative returns to be
generated from cooperation with the Group. Most importantly, in “Co-Creation Investment,” we believe that we can
contribute to mitigating investment risks and increasing returns by realizing “co-creation” by uniting resources of the
credit card business, the retailing business, and human resources involved in them, with intangible assets such as
investees’ know-how and skills, and by greatly contributing to the achievement of their business plans and development
as a corporation.
In principle, we will not engage in cross-shareholdings except for cases in which such holdings are deemed necessary
for maintaining or building upon collaborative or transactional relationships that are strategically critical for improving
corporate value. At a meeting of the Board of Directors held in February 2016, it was determined that the Company
had already established sufficiently strong business relationships with cross-shareholding counterparties, and it was
therefore decided to undertake a phased reduction in cross-shareholdings out of consideration for asset efficiency and
stock price fluctuation risks.
20
(2) Risks concerning natural disasters, infectious disease, etc.
1) Risks concerning large-scale disasters
- Stagnation of economic activities and decline in consumption activities
- Damage to assets held and occurrence of repair costs
- Suspension of business activities due to damages to offices and systems, and adverse impact on employees
(Impact)
The Group conducts operations at sales offices centered on the Tokyo metropolitan area and sales offices located
throughout the country. In the event of a natural disaster such as a large-scale earthquake or storm/flood, or a terrorist
attack in areas where sales offices are located, the sales offices may be forced to suspend business activities due to the
disruption of social infrastructure, etc., and this may affect the financial position and business results of the Group.
(Countermeasures)
The Group prepares against various disasters and accidents by taking measures such as introducing an employee safety
confirmation system, formulating a disaster countermeasures manual, implementing earthquake-resistant measures for
buildings, facilities, systems, etc. (including data backup), fire, disaster, and flood prevention drills, and stocking
necessities. In the event of an earthquake, etc., the Group Earthquake Disaster Response Headquarters is established
and Group companies work together to establish systems that enable business continuity.
2) Risks concerning climate change
- Damages to stores and facilities from typhoons, torrential rains, etc.,
- Introduction of carbon taxes, etc. along with the tightening of regulations
(Impact)
The financial position and business results of the Group may be affected by damage to stores from flooding caused by
typhoons and torrential rains, and an increase in costs due to the introduction of carbon taxes, etc.
(Countermeasures)
The Group believes it is important to capture opportunities for growth and respond appropriately to relevant risks
resulting from climate change. The details of the initiatives related to climate change and endorsing the TCFD are
provided in “1. Management Policies, Management Environment, and Issues to be Addressed ■ Initiatives related to
climate change and endorsing the TCFD.”
3) Risks concerning infectious disease
- Stagnation of economic activities and decline in consumption activities
- Refraining from or suspending business activities at stores due to the spread of infection
- Suspension of business activities due to infection of employees
(Impact)
The Group conducts operations at sales offices centered on the Tokyo metropolitan area and sales offices located
throughout the country. If an infectious disease is prevalent in areas where sales offices are located or if measures such
as voluntary restraints on going out are taken to prevent the spread of infection, the financial position and business
results of the Group may be affected by restrictions on business activities such as suspension of store operations.
Furthermore, it may become difficult to continue business due to the spread of infection among employees. The details
of the impacts of the spread of COVID-19 are provided in “3. Management’s Analysis of the Company’s Financial
Condition, Results of Operations, and Cash Flow Conditions (1) Summary of operating results, etc., Consolidated
business results.”
(Countermeasures)
In order to prevent the spread of infectious diseases, employees mainly based at offices are encouraged to remotely
work from home as much as possible, while those in charge of logistics, such as e-commerce, work in shifts. In addition,
we are taking infection preventative measures for our customers and employees at sales offices, such as installing
alcohol antiseptic solution dispensers, requiring the wearing of masks, and ensuring the adherence to social distancing.
In response to the spread of COVID-19, placing top priority on the health and safety of our customers, business partners
and employees, opening hours of our stores were shortened and urban stores were temporarily closed in March to
prevent the spread of infection. After a state of emergency was declared in April, all stores were closed except for food
corners and certain tenants. The details of response to the spread of COVID-19 are provided in “1. Management Policies,
Management Environment, and Issues to be Addressed, Response to COVID-19.”
21
(3) Risks concerning corporate operations
1) Risks concerning fund procurement
- Constraining fund procurement
- Raising fund procurement interest rates
(Impact)
The FinTech segment is expected to grow, with card shopping transactions increasing and financial services including
rent guarantee expanding. Amid this situation, the Group expects to see an expansion of cash demand owing to an
increase in operating receivables (accounts receivable–installment and operating loans). Accordingly, new funds will
be needed in addition to handling repayments and redemption of funds previously procured. We anticipate that risks
concerning fund procurement will grow as the procurement amount will gradually increase in the future.
In the case of turmoil in the financial market, fund procurement may be constrained. Furthermore, a substantial
deterioration of the business results of the Group or a rapid decline in its creditability would make it difficult to borrow
from financial institutions and hinder issuance of corporate bonds. If these risks become apparent, they may materially
affect the financing of the Group.
In addition, as fund procurement interest rates fluctuate depending on the market environment or other factors,
procurement costs may sharply rise depending on such trend, and this may affect the financial position and business
results of the Group.
(Countermeasures)
The Group seeks to maintain a level of interest-bearing debt to around 90% in order to control the risk arising from an
increase in debts.
In raising fund necessary for operating activities, we will diversify the procurement methods we use by indirectly
procuring funds from financial institutions, directly procuring funds through issuance of corporate bonds and
commercial paper, as well as liquidating operating receivables. We also utilize these procurement methods in a balanced
manner.
In order to cope with the risk of refinancing, we maintain consistent annual repayment and/or redemption levels by
controlling the years of procurement. We have established a system to ensure procurement even if fund procurement is
restricted, by executing commitment line contracts or establishing overdraft facilities with financial institutions for such
amounts to ensure liquidity.
As for the procurement interest rate, we minimize the impact of an increase in procurement costs due to the fluctuations
in market interest rates by maintaining the procurement methods with fixed interest rates at a rate of 50% to 60%.
2) Risks concerning information security
- System failure due to an accident, defect, etc.
- Unauthorized entries and access from outside, and virus infection
- Leakage of customer information
(Impact)
i. System-related
The Group employs a variety of computer systems and communication networks. In the event of a system error due to
a hardware or software defect, or a communication network failure, a system delay, a service outage or the alteration
of a website due to unauthorized access from outside, etc., it may affect the financial position and business results of
the Group.
ii. Personal information-related
The Group maintains EPOS cardholder information and other personal information of many customers and stakeholders.
If, by any chance, customer information is leaked or fraudulent use occurs, the Group may suffer the risk of losing
social creditability and incurring liability for damages, which may affect the business performance of the Group.
22
(Countermeasures)
i. System-related
The Group operates systems aiming at stable operation by duplicating computer systems and communication networks,
replacing systems regularly, as well as preventing computer viruses or unauthorized entries. In addition, the Group
strives to further strengthen information security by utilizing risk assessment by outside consultants.
ii. Personal information-related
The Group recognizes the enhancement of Groupwide information security, such as the protection of customer
information and other information assets held by the Group against unauthorized access or cyber attack, as a top
management priority. By establishing the MARUI GROUP Information Security Policy and the MARUI GROUP
Privacy Policy, we are working to properly manage and protect all the personal information obtained.
Specifically, based on the Act on the Protection of Personal Information, other laws and regulations, and relevant
guidelines, standards, etc., we take safety management measures concerning personal information. At the same time,
we continue to properly protect personal information by constant improvement through implementation and operation
of the personal information protection management system.
Specifically, our Group companies handling large amounts of personal information have acquired the “PrivacyMark”
and practice appropriate handling of personal information.
3) Risks concerning human resources
- Shortage of management personnel
- Intensified competition for securing human resources
(Impact)
We believe that growth of the Group can be attained by the development and contribution of each employee. If
competition intensifies for the securing of human resources, an outflow of human resources occurs, and a consequent
shortage in future management personnel becomes apparent, these may affect the evolution and continuity of our
business.
(Countermeasures)
The Group emphasizes the importance of human resource investments to accumulate the intangible assets that are a
wellspring of future corporate value, based on the culture where all of our employees can tackle new challenges. We
are currently creating an environment where employees can fully realize personal growth and are highly motivated
owing to our conducting of systematic human resource investments from a variety of angles. These investments include
education and training programs based on open application, and the Groupwide project teams that engage in discussions
on important topics for Group management. These efforts also include the establishment of the Co-Creation
Management Academy (CMA) Future Leader Development Program, which cultivates human resources capable of
promoting management reforms, as well as the secondment of employees to start-up companies.
2. Risk management system
The Group maintains five committees, i.e., Public Relations IR Committee, Internal Control Committee, Information
Security Committee, Safety Control Committee, and Insider Trading Prevention Committee to control high-risk areas
in business operations and strive for speedy operational improvement and the prevention of accidents. At the same
time, the Compliance Promotion Board, chaired by the Representative Director, is set up to coordinate the functions of
all committees.
In addition, the Sustainability Committee has been established as an advisory body to the Board of Directors, chaired
by the Representative Director, for the purpose of examining and discussing the Group’s basic policies and major items
related to climate change. The Environment and CSR Committee has been established within the Sustainability
Committee and carries out duties pertaining to the management of relevant risks and other matters based on the
instruction of the Sustainability Committee.
The Group enhances the effectiveness of risk management by holding regular meetings participated by Executive
Officers as well as holding and establishing the meetings of the above committees and subcommittees to realize close
coordination, risk information sharing, and speedy decision making and implementation of countermeasures.
Furthermore, the Company has established the MARUI GROUP Information Security Policy, which sets specific
policies for developing systems and formulating measures to ensure the security of information assets, and the MARUI
GROUP Tax Policy, which clearly delineates guidelines for compliance with tax laws and minimization of tax risks.
The effectiveness of these policies is verified once a year and all Group employees are familiarized with them through
training and other activities.
23
3. Management’s Analysis on the Company’s Financial Condition, Results of Operations and Cash Flow
Conditions
(1) Summary of operating results, etc.
A summary of the financial position, operating results, and cash flows (“operating results, etc.”) of the Company
and its consolidated subsidiaries (the “Group”) in the fiscal year under review is as follows.
Consolidated business results
- The Group achieved EPS of ¥117.58 (+1% and +¥1.59 year on year), exceeding the previous year's level and
reaching a record high for the second consecutive year thanks to profit growth and capital policy. ROE was 8.8%
(-0.3% year on year), exceeding capital costs (6.9%) for the second consecutive year, while ROIC was 3.7%
(+0.0% year on year), exceeding weighted average cost of capital (WACC, 3.0%) for the fourth consecutive year.
- Total Group transactions were ¥2,903.7 billion (+14% year on year), exceeding the previous fiscal year by ¥364.1
billion, as card shopping transactions in the FinTech segment drove transactions for the Group as a whole.
- Operating income increased for the eleventh consecutive year to ¥41.9 billion (+2% year on year), while net income
increased for the ninth consecutive year to ¥25.4 billion (+0% year on year).
* In “3. Management’s Analysis on the Company’s Financial Condition, Results of Operations and Cash Flow
Conditions,” amounts expressed in billions of yen have been rounded off to the first decimal place.
☐ Consolidated business results
☐ ROE and ROIC
24
Impact of the spread of COVID-19 and major special factors affecting changes in operating income
- Since fixed costs incurred during the suspension of operations at stores were deemed as nonrecurring expenses,
costs in the amount of ¥0.4 billion were reclassified from selling, general and administrative expenses to
extraordinary losses.
- Due to the impact of the spread of COVID-19 in the fiscal year under review, operating income in the Retailing
segment is estimated to have declined by approximately ¥1.5 billion due to decreases in sales and variable costs.
In the FinTech segment, while ¥0.4 billion was added to allowance for doubtful accounts based on the estimation
of bad debt expense for operating receivables, operating income increased by approximately ¥0.2 billion due to a
decrease in variable costs.
- Operating income decreased by ¥0.5 billion owing to the recording of gain on transfer of receivables in line with
the factoring of accounts receivable in the amount of ¥7.1 billion (+¥1.0 billion year on year), and write-offs and
expenses of ¥2.2 billion (+¥1.5 billion year on year).
- Operating income decreased by ¥1.1 billion owing to the recording of provision for loss on interest repayment of
¥4.4 billion (+¥1.1 billion year on year) to prepare for the repayment of interest on cash advances.
- Operating income of the FinTech segment increased by ¥0.5 billion due to recording the cost of issuing EPOS
cards as an asset and amortizing it over the useful life of the card from the fourth quarter.
☐ Changes in operating income
Business results by segment
- In the Retailing segment, operating income was ¥10.0 billion (-12% year on year), a decrease of ¥1.4 billion from
the previous fiscal year.
- In the FinTech segment, operating income was ¥38.4 billion (+10% year on year), with both revenues and profits
increasing for the eighth consecutive year as card shopping transactions performed favorably.
☐ Segment operating income
<Retailing segment>
- The shift to shopping center-type stores over the five-year period to the previous fiscal year resulted in further
improvement in revenues and stabilization of profits. From the fiscal year under review, to realize our new Digital
Native Store strategy, we are introducing brands providing D2C (Direct to Consumer) and sharing services, aiming
to create stores that provide experiences and communication opportunities that cannot be provided online. Despite
steady progress in stabilizing revenues from plots under fixed term rental contracts, revenues and profits declined
due to a drop in sales as a result of the consumption tax hike and poor weather conditions as well as voluntary
restraints on going out and store closures to prevent the spread of COVID-19 in the second half of the fiscal year,
in addition to revenue improvement having run its course.
25
☐ Changes in operating income from the Retailing segment
Notes: “Platform” refers to business-to-business operations in which the Group utilizes store renovation, distribution,
building management, and other retailing expertise in an integrated manner.
<FinTech segment>
- In order to increase the number of users of EPOS cards, we have strengthened the promotion of new membership
in Marui stores and online services. We have also promoted the issuance of affiliate cards with commercial facilities
nationwide, and have expanded the number of affiliated facilities to 30 (increase by five from the previous fiscal
year). We are also working to maximize our share in household consumption through alliances and collaborations
with rent guarantee, recurring business and subscription companies with the aim of further enhancing usage rates
and amounts.
- As a result, the number of cardholders steadily increased to 7.2 million (+5% year on year). The number of Platinum
and Gold cardholders increased to 2.5 million (+16% year on year), accounting for 35% of all cardholders, due to
our steady efforts to build up customers, including increasing the number of our unique family card EPOS Family
Gold cardholders.
- In terms of total transactions, although growth slowed due to voluntary restraints on going out and other measures
to prevent the spread of COVID-19, card shopping transactions continued to increase to ¥2,171.0 billion (+16%
year on year), and rent guarantee and other service transactions grew steadily to ¥353.9 billion (+26% year on year).
☐ FinTech segment
26
Indicators of LTV Stability
As a result of the change in our business model, “recurring revenue” (unaudited information), which includes rent
revenues from our stores and card commissions, has increased to account for a larger proportion of total sales and
profits, altering the Group’s revenue structure. Recurring revenue, which is recurring revenue from contracts with
customers and business partners, can be viewed as “contracted future recurring revenue” (unaudited information) for
the following fiscal year and beyond, and can be used as an indicator to measure the stability of earnings. These are
important elements of the Group's long-term management that emphasizes lifetime profit (LTV).
- During the fiscal year under review, recurring revenue (on a gross profit basis) was ¥131.1 billion (+7% year on
year), and the ratio of recurring revenue to gross profit increased to 65.3% (+2.4% year on year).
Note: Gross profit used in calculating the gross profit-based recurring revenue and its composition includes selling,
general and administrative expenses paid by business partners on a recurring basis.
☐ Recurring revenue
- The calculation of contracted future recurring revenue is based on the remaining contract years for rent revenues,
the repayment period for revolving and installment fees and cash advance interest, the period until expiration dates
for (recurring) affiliate commissions, and the number of remaining years of residency for rent guarantees.
- At the end of the fiscal year under review, contracted future recurring revenue was ¥350.0 billion (+7% year on
year), and it is expected that it will generate future earnings approximately 2.7 times the recurring revenue (based
on gross profit) for the fiscal year under review.
☐ Contracted future recurring revenue at the end of the fiscal year under review
Financial position
- Operating receivables (accounts receivable-installment and operating loans) increased by ¥52.6 billion from the
end of the previous fiscal year, owing to the increase in card shopping transactions. However, due to the factoring
of accounts receivable, the amount outstanding decreased by ¥10.1 billion. Total assets decreased by ¥4.2 billion
to ¥886.0 billion.
- Interest-bearing debt (excluding lease obligation and deposits received) decreased by ¥6.8 billion from the end of
the previous fiscal year as a result of fund procurement via the factoring of accounts receivable above. The
proportion of interest-bearing debt to operating receivables was 86.4% (+0.4% compared with the end of the
previous fiscal year).
- The increase in shareholders’ equity was limited to ¥5.0 billion from the previous fiscal year to ¥289.8 billion
owing to purchase of treasury stock of ¥7.0 billion and other factors, resulting in an equity ratio of 32.7% (+0.7%
compared with the end of the previous fiscal year).
27
☐ Balance sheet
*1 Ratio of factoring accounts receivable = factoring accounts receivable ÷ (operating receivables + factoring accounts
receivable)
*2 Ratio of operating receivables = interest-bearing debt ÷ operating receivables
Notes: 1. In order to build the optimal capital structure tailored to the Group’s business structure, the Group is
targeting interest-bearing debt of approximately 90% of operating receivables and an equity ratio of
approximately 30%.
2 From the previous fiscal year, the Group has been systematically increasing fund procurement through
the factoring of operating receivables. The Group will take steps to achieve its target balance sheet by
keeping the amount of factoring at approximately 25% of operating receivable in the fiscal year ending
March 31, 2021, thereby limiting increases in interest-bearing debt and total assets to ensure that the
amount of total assets are ¥1 trillion or less.
☐ Target balance sheet
Cash flows
- Net cash provided by operating activities was ¥39.9 billion (¥26.4 billion provided in the previous fiscal year).
- Core operating cash flow (unaudited information), which excludes outflows associated with increases in operating
receivables, increased by ¥0.4 billion from the previous fiscal year to ¥39.0 billion, partly owing to an increase in
provision for point card certificates, although income before income tax was largely flat from the previous fiscal
year.
- Net cash used in investing activities was ¥20.3 billion (¥9.2 billion used in the previous fiscal year), owing partly
to ¥11.0 billion used in the purchase of property and equipment and ¥9.0 billion used for the purchase of investment
securities.
- Net cash used in financing activities was ¥25.5 billion (¥15.9 billion used in the previous fiscal year), owing partly
to ¥11.7 billion of cash dividends paid and ¥7.9 billion in purchase of treasury stock including purchase through
the BIP Trust and ESOP Trust.
28
☐ Cash flows
Notes: 1 The Group's credit card EPOS card has seen an increase in the number of members and an increase in the
rate and amount of usage. At this stage of growth, operating cash flow tends to be negative, and therefore
the Group uses core operating cash flow, which excludes outflows associated with changes in operating
receivables (accounts receivable-installment and operating loans), as an indicator of profitability and
soundness.
2 In the medium-term management plan, the Group is targeting core operating cash flow of ¥230.0 billion,
and intends to allocate ¥200.0 billion to growth investments and shareholder returns to achieve sustainable
growth and improve capital efficiency.
3 The calculation method for core operating cash flow has been changed and (1) gain on transfer of
receivables in line with the factoring of accounts receivable and write-offs, etc. have been included in
core operating cash flow. 2) In order to exclude the impact of bank business days and temporary changes
in receivables and payables, changes in accounts payable to tenants, etc. are not included in core operating
cash flow. As a result, core operating cash flow for the previous fiscal year decreased by ¥4.1 billion, and
“Decrease (increase) in trade receivables, etc.” increased by ¥4.1 billion.
Production, orders received, and sales
1) Production
This item does apply for the Company and its subsidiaries and affiliates.
2) Orders received
Certain operations in the Retailing and FinTech segments are based on orders received, and orders received in
the fiscal year under review were ¥12,297 million (87.1% of the previous fiscal year), bringing outstanding
orders received to ¥3,111 million as of March 31, 2020 (86.0% of the previous fiscal year).
Note: Amounts above do not include consumption taxes, etc.
3) Sales
Sales result by segment in the fiscal year under review were as follows.
Segment Amount
(Millions of yen) Year on year (%)
Retailing
Revenue from fixed term tenants,
etc. 42,497 102.2
Consignment revenue 36,195 72.9
Rent revenue and others 7,355 76.7
Related business revenue 24,912 101.3
Retailing total 110,960 88.5
FinTech 136,662 108.4
Total 247,582 98.5
Notes: 1. Amounts above do not include consumption taxes, etc.
2. Amounts above represent revenue from customers outside the Group.
29
4) Procurement
Product procurement amount by segment in the fiscal year under review was as follows.
Segment Amount
(Millions of yen) Year on year (%)
Retailing 22,844 79.6
Note: Amounts above do not include consumption taxes, etc.
(2) Management’s Analysis on the Company’s Financial Condition, Results of Operations and Cash Flow Conditions
regarding operating results
Management’s Analysis on the Company’s Financial Condition, Results of Operations and Cash Flow Conditions
regarding the Group’s operating results is as follows. Forward-looking statements below are based on the judgment
of the Group at the end of the fiscal year under review.
1) Important accounting estimates and assumptions used in such estimates
The Group’s consolidated financial statements are prepared in accordance with accounting principles generally
accepted in Japan (“Japanese GAAP”). In preparing these consolidated financial statements, we use estimates
and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses; however, figures
based on these estimates and assumptions may differ from actual results.
The significant accounting estimates and assumptions used in the preparation of the consolidated financial
statements are as follows:
The accounting estimates associated with the spread of COVID-19 are described in “V. Financial Information
1. Consolidated Financial Statements (1) Notes to Consolidated Financial Statements 5. ADDITIONAL
INFORMATION.”
Impairment of fixed assets
As for impairment loss, an asset group will be tested for impairment when there is an indication of an impairment,
and if the future cash flow from the asset group are lower than the carrying amount, the carrying amount will be
reduced to the recoverable amount and an impairment loss will be recorded.
In identifying any indications of an impairment, and recognizing and measuring impairment loss, we make
reasonable judgments based on information available at the time of settlement of accounts. However,
impairment may become necessary if the recoverable amount decreases due to changes in preconditions and
assumptions, such as changes in the business environment and land prices.
Deferred tax assets
The recoverability of deferred tax assets is determined by judging whether it has the effect of reducing the tax
burden in the future based on the sufficiency of taxable income before temporary differences, etc. based on
profitability, the sufficiency of taxable income before temporary differences, etc. based on tax planning, and the
sufficiency of taxable temporary difference.
If such estimates and assumptions were to be revised due to changes in the external environment or other factors,
deferred tax assets could be reduced and tax expense could be recorded.
Allowance for doubtful accounts
The allowance for doubtful accounts is stated at the amount determined based on the historical experience of bad
debt with respect to ordinary receivables, plus an estimate of uncollectible amounts determined by reference to
specific doubtful receivables of customers experiencing financial difficulties.
If the credit risk of receivables held at the end of the fiscal year differs significantly from the credit risk of
receivables held in the past due to changes in the external environment or other factors, the historical experience
of bad debt will require adjustment, leading to the possibility of an increase or decrease in the amount of
allowance for doubtful accounts.
With regard to the impact of COVID-19, after considering the bad debt risk of trade receivables (accounts
receivable-installment and operating loans), allowance for doubtful accounts was increased by ¥430 million in
the fiscal year under review.
Provision for loss on interest repayment
Provision for loss on interest repayment is provided in lump sum for claims for interest repayment by reasonably
estimating the amount to be refunded in the future.
In making estimates, we analyze the status of past interest repayment amounts and other factors for each fiscal
period and reasonably estimate the amount of future losses on interest repayment. Accordingly, if the current
amount of the allowance is insufficient for future claims for refunds, additional expenses may be incurred.
30
2) Analysis of operating results, financial position, and cash flows.
As described in “(1) Summary of operating results, etc.”
Information on financial resources and liquidity of capital are described in “2. Business and Other Risks” and
“V. Financial Information 1. Consolidated Financial Statements (1) Notes to Consolidated Financial Statements
25. FINANCIAL INSTRUMENTS.”
4. Important business contracts
There are no particular items that require mentioning.
5. Research and development activities
There are no particular items that require mentioning.
31
III. Equipment and Facilities
1. Overview of capital investments, etc.
In the fiscal year under review, the Group made capital investments totaling ¥10,468 million, including salesfloor
renovations in existing stores and investment in system infrastructure. Capital investment by segment was as follows.
Segment Amount
(Millions of yen)
Retailing 8,311
FinTech 3,448
Adjustments (1,291)
Total 10,468
Notes: 1. Amounts above include intangible assets in addition to property and equipment.
2. Amounts above do not include consumption taxes, etc.
2. Major facilities
Major facilities were as follows.
(1) Filing company
As of March 31, 2020
Facility
(Location) Segment Description
Carrying amount (Millions of yen) Number
of
employees Buildings
and structures
Land [m2]
Leased assets Other Total
Head office
(Nakano-ku, Tokyo) ―
Office
facilities 16
- [-] - 190 206
367
[22]
Notes: 1. “Other” in carrying amount includes intangible assets in addition to property and equipment.
2. Amounts above do not include consumption taxes, etc.
3. The number of employees represents the number of active employees, and the average number of part-time employees
in the fiscal year (calculated based on prescribed working hours) is shown exclusive in brackets (“[ ]”) in the number
of employees column.
32
(2) Domestic subsidiaries
As of March 31, 2020
Major subsidiaries Facility
(Location) Segment Description
Carrying amount (Millions of yen) Number
of
employees Buildings
and structures
Land [m2]
Leased assets Other Total
MARUI CO., LTD.
Marui Group
Head Office
(Nakano-ku, Tokyo)
Retailing Office
facilities 3,621
6,199 [4,278] - 292 10,113
426 [31]
Nakano Marui
(Nakano-ku, Tokyo) Retailing
Stores, etc.
(incl. office
facilities)
4,276 219
[3,207] - 107 4,604 20
[6]
Shinjuku Marui
(Shinjuku-ku, Tokyo) Retailing Stores, etc. 4,971
5,735 [1,861] - 4,184 14,891
138 [19]
Ikebukuro Marui
(Toshima-ku, Tokyo) Retailing Stores, etc. 849
- [-] - 578 1427
55 [4]
Shibuya Marui
(Shibuya-ku, Tokyo) Retailing Stores, etc. 568 708
[855] - 73 1,350
37 [9]
Kichijoji Marui
(Musashino-shi,
Tokyo)
Retailing Stores, etc. 804 -
[-] - 387 1,191 31 [5]
Kashiwa Marui
(Kashiwa-shi, Chiba) Retailing Stores, etc. 601
- [-] - 766 1,368
20 [5]
Shizuoka Marui
(Shizuoka-shi,
Shizuoka)
Retailing Stores, etc. 1,190 443
[1,254] - 761 2,395
29
[6]
Machida Marui
(Machida-shi, Tokyo) Retailing Stores, etc. 1,318
- [-] - 273 1,592
50
[5]
Omiya Marui
(Saitama-shi, Saitama) Retailing Stores, etc. 1,267
- [-] - 1,166 2,433
40 [9]
Kinshicho Marui
(Sumida-ku, Tokyo) Retailing Stores, etc. 1,641
6,780 [6,059]
- 63 8,486 60 [6]
Ueno Marui
(Taito-ku, Tokyo) Retailing Stores, etc. 1,724
- [-] - 519 2,243
69 [6]
Kokubunji Marui
(Kokubunji-shi,
Tokyo)
Retailing Stores, etc. 633 -
[-] - 2,322 2,956 59
[17]
Soka Marui
(Soka-shi, Saitama) Retailing Stores, etc. 797
2,480 [4,010] - 47 3,324
19 [8]
Marui City Yokohama
(Yokohama-shi,
Kanagawa)
Retailing Stores, etc. 917 -
[-] - 6,871 7,789 73 [8]
Marui Family
Mizonokuchi
(Kawasaki-shi,
Kanagawa)
Retailing Stores, etc. 4,070 10,856 [4,053] - 1,763 16,689
80 [11]
Marui Family Shiki
(Shiki-shi, Saitama) Retailing Stores, etc. 1,165
1,747 [3,603] - 621 3,534
39 [17]
Marui Family Ebina
(Ebina-shi,
Kanagawa)
Retailing Stores, etc. 291 -
[-] - 1,358 1,649 53
[11]
Kobe Marui
(Kobe-shi, Hyogo) Retailing Stores, etc. 462
- [-] 1,171 769 2,403
40 [5]
Kitasenju Marui
(Adachi-ku, Tokyo) Retailing Stores, etc. 4,654
8,653 [4,892] - 1,536 14,845
94 [16]
Namba Marui
(Osaka-shi, Osaka) Retailing Stores, etc. 865
- [-] - 1,076 1,941
77 [9]
Yurakucho Marui
(Chiyoda-ku, Tokyo) Retailing Stores, etc. 3,995
22,294 [2,912] - 639 26,929
115 [6]
Kyoto Marui
(Kyoto-shi, Kyoto) Retailing Stores, etc. -
- [-] - 841 841
54 [12]
Hakata Marui
(Fukuoka-shi,
Fukuoka)
Retailing Stores, etc. 2,582 -
[-] - 966 3,548 42 [5]
33
Notes: 1. “Other” in carrying amount includes intangible assets and guarantee deposits in addition to property and equipment.
2. Amounts above do not include consumption taxes, etc.
3. The number of employees represents the number of active employees, and the average number of part-time employees
in the fiscal year (calculated based on prescribed working hours) is shown exclusive in brackets (“[ ]”) in the number
of employees column.
4. In this fiscal year under review, MARUI CO., LTD. succeeded the Modi business unit of AIM CREATE CO., LTD.
through a company split and took over the facilities related to this business.
5. Of the stores, etc. above, 435,095 m2 of floorspace is rental floorspace from buildings outside the Group.
3. Plans for new additions or disposals, etc.
(1) Significant new facilities, etc.
Major plans for facilities as of the end of the fiscal year under review were as follows.
Company Facility
(Location) Segment Description
Planned investment
amount Fund
procurement
method
Construction Completion Expected revenue (annual)
Total
amount
(Millions
of yen)
Amount
paid
(Millions
of yen)
MARUI
CO., LTD.
Store
renovations Retailing
Store
interior 5,000 -
Own funds,
etc.
April
2020
March
2021 -
Notes: 1. Amounts above do not include consumption taxes, etc.
2. Planned facilities are transferred to the property and equipment account as they are acquired or completed.
(2) Disposal of significant facilities, etc.
Not applicable
Machida Modi
(Machida-shi, Tokyo) Retailing Stores, etc. 1,762
4,513 [2,182] - 19 6,295
- [-]
Totsuka Modi
(Yokohama-shi,
Kanagawa)
Retailing Stores, etc. 745 1,916
[1,283] - 267 2,929 22 [3]
Kawagoe Modi
(Kawagoe-shi,
Saitama)
Retailing Stores, etc. 353 2,964
[4,188] - 6 3,324 1
[1]
Shibuya Modi
(Shibuya-ku, Tokyo) Retailing Stores, etc. 1,980
3,066 [374]
- 52 5,098 -
[-]
Kashiwa Modi
(Kashiwa-shi, Chiba) Retailing Stores, etc. 951
4,500 [1,567] - 19 5,470
8 [-]
Shizuoka Modi
(Shizuoka-shi,
Shizuoka)
Retailing Stores, etc. 1,045 2,485
[1,504] - 7 3,538 -
[-]
Toda Product Center
(Toda-shi, Saitama) Retailing
Delivery
center 1,322
1,407 [22,415] - 20 2,750
1 [-]
Epos Card Co., Ltd.
Head office, etc.
(Nakano-ku, Tokyo
and elsewhere)
FinTech
Stores,
office
facilities,
etc.
927 550
[586] - 4,182 5,660
1,423 [610]
AIM CREATE CO., LTD.
Head office, etc.
(Nakano-ku, Tokyo
and elsewhere)
Retailing
Office
facilities,
etc.
98 49
[208] - 83 231 336 [30]
MOVING CO., LTD.
Product center, etc.
(Toda-shi, Saitama
and elsewhere)
Retailing
Office
facilities,
sales
offices, etc.
1,340 1,436
[8,006] - 1,653 4,431 417
[373]
M & C SYSTEMS CO., LTD.
System center, etc.
(Toda-shi, Saitama
and elsewhere)
Retailing
and
FinTech
Office
facilities,
etc.
1,247 1,100
[3,145] 469 1,522 4,338 166
[9]
MARUI HOME SERVICE Co., Ltd.
Rental condominiums,
etc.
(Musashino-shi,
Tokyo and elsewhere)
FinTech
Office
facilities,
rental
housing,
etc.
1,929 2,225
[3,734]
- 63 4,218 69 [7]
34
IV. Corporate Information
1. Information on the Company’s shares, etc.
(1) Total number of shares, etc.
1) Total number of shares
Class of shares Number of authorized shares (Shares)
Common stock 1,400,000,000
Total 1,400,000,000
2) Number of shares issued
Class of shares
Number of shares issued as of the end of the fiscal year (Shares)
(March 31, 2020)
Number of shares issued as of the filing
date (Shares) (August 6, 2020)
Stock listing/ registration Details
Common stock 223,660,417 223,660,417 First Section of
Tokyo Stock Exchange
The number of shares per unit of
shares is 100 shares
Total 223,660,417 223,660,417 ― ―
(2) Subscription rights to shares
1) Details of stock option plans
Not applicable
2) Details of rights plans
Not applicable
3) Other subscription rights to shares, etc.
Not applicable
(3) Exercise status of bonds with subscription rights to shares containing a clause for exercise price adjustment, etc.
Not applicable
(4) Changes in the total number of shares issued, capital stock, etc.
Date
Change in the total number of shares issued
(Thousands of shares)
Total number of shares
outstanding (Thousands of
shares)
Changes in
capital stock
(Millions of
yen)
Balance of
capital stock
(Millions of
yen)
Changes in legal capital
surplus (Millions of
yen)
Balance of legal capital
surplus (Millions of
yen)
December 9, 2016*1 (45,000) 233,660 ― 35,920 ― 91,307
May 31, 2018*2 (10,000) 223,660 ― 35,920 ― 91,307
Notes: 1. The total number of shares outstanding decreased owing to the cancellation of 45,000 thousand shares of treasury
stock on December 9, 2016.
2. The total number of shares outstanding decreased owing to the cancellation of 10,000 thousand shares of treasury
stock on May 31, 2018.
35
(5) Status by shareholder classification
As of March 31, 2020
Classification
Status of shares (1 unit = 100 shares)
Shares less
than one unit
(Shares) National and
local governments
Financial
institutions
Japanese financial
instruments business operators
Other corporations
Foreign shareholders Individuals and other Total
Other than
individuals Individuals
Number of shareholders (Persons)
― 66 29 269 577 45 25,453 26,439 ―
Number of
shares held
(Units)
― 963,089 34,295 330,170 631,321 63 276,653 2,235,591 101,317
Shareholding ratio (%) ― 43.08 1.53 14.77 28.24 0.00 12.38 100.00 ―
Notes: 1. Of 8,703,268 shares of treasury stock, 87,032 units are included in “Individuals and other” and 68 shares are included
in “Shares less than one unit.”
2. Figures under “Financial institutions” above include 5,451 units of shares held under the BIP Trust and the ESOP
Trust.
(6) Major shareholders
As of March 31, 2020
Name Address
Number of shares
held
(Thousands of
shares)
Number of shares held to total
number of shares issued (excluding
treasury stock) (%)
The Master Trust Bank of Japan, Ltd.
(Trust Account) 11-3, Hamamatsucho 2-chome, Minato-ku, Tokyo 33,401 15.54
Japan Trustee Services Bank, Ltd. (Trust Account) 8-11, Harumi 1-chome, Chuo-ku, Tokyo 17,545 8.16
Aoi Real Estate Co., Ltd. 21-3, Jinnan 1-chome, Shibuya-ku, Tokyo 6,019 2.80
MUFG Bank, Ltd. 7-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo 5,808 2.70
Japan Trustee Services Bank, Ltd.
(Trust Account 7) 8-11, Harumi 1-chome, Chuo-ku, Tokyo 5,001 2.32
Trust & Custody Services Bank, Ltd.
(Securities Investment Trust
Account)
8-12, Harumi 1-chome, Chuo-ku, Tokyo 3,886 1.81
TOHO CO., LTD. 2-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo 3,779 1.76
Japan Trustee Services Bank, Ltd. (Trust Account 5) 8-11, Harumi 1-chome, Chuo-ku, Tokyo 3,675 1.71
JP MORGAN CHASE BANK 385151 (Standing proxy: Mizuho Bank, Ltd.)
25 BANK STREET, CANARY WHARF,
LONDON, E14 5JP, UNITED KINGDOM
(2-15-1 Konan, Minato-ku, Tokyo)
3,628 1.69
AOI SCHOLARSHIP
FOUNDATION 3-2, Nakano 4-chome, Nakano-ku, Tokyo 3,242 1.51
Total ― 85,987 40.00
Notes: 1. The Company holds 8,703 thousand shares of treasury stock, which is excluded from the major shareholders above.
Treasury stock held by the Company does not include shares of the Company held by the BIP Trust or the ESOP
Trust.
2. The Company received a report regarding the possession of shares by Nomura Securities Co., Ltd. and its joint holders
as of October 31, 2018 as follows, in a statement of large-volume holdings (statement of changes) made available to
the public on November 6, 2018. However, as the Company was unable to confirm the number of substantial
shareholding as of the end of the fiscal year under review, major shareholders above is based on the shareholder
register.
36
Name Address
Number of
shares held
(Thousands of
shares)
Number of shares held to
total number of shares issued (%)
NOMURA INTERNATIONAL PLC 1 Angel Lane, London, EC4R 3AB, UK 231 0.10
Nomura Asset Management Co., Ltd. 12-1, Nihonbashi 1-chome, Chuo-ku, Tokyo 15,458 6.91
3. The Company received a report regarding the possession of shares by BlackRock Japan Co., Ltd. and its joint holders
as of May 31, 2019 as follows, in a statement of large-volume holdings (statement of changes) made available to the
public on June 6, 2019. However, as the Company was unable to confirm the number of substantial shareholding as
of the end of the fiscal year under review, major shareholders above is based on the shareholder register.
Name Address
Number of
shares held
(Thousands of
shares)
Number of shares held to
total number of shares issued (%)
BlackRock Japan Co., Ltd. 8-3, Marunouchi 1-chome, Chiyoda-ku, Tokyo 3,890 1,74
BlackRock Investment Management
LLC
1 University Square Drive, Princeton, New Jersey,
US 237 0.11
BlackRock Fund Managers Limited 12 Throgmorton Avenue, London, UK 349 0.16
BlackRock Asset Management
Ireland Limited
1st Floor, 2 Ballsbridge Park, Ballsbridge, Dublin,
Ireland 887 0.40
BlackRock Fund Advisors 400 Howard Street, San Francisco, California, US 2,830 1.27
BlackRock Institutional Trust
Company, N.A. 400 Howard Street, San Francisco, California, US 2,803 1.25
BlackRock Investment Management
(UK) Limited 12 Throgmorton Avenue, London, UK 782 0.35
4. The Company received a report regarding the possession of shares by MUFG Bank, Ltd. and its joint holders as of
July 30, 2019 as follows, in a statement of large-volume holdings (statement of changes) made available to the public
on August 6, 2019. However, as the Company was unable to confirm the number of substantial shareholding as of
the end of the fiscal year under review, major shareholders above is based on the shareholder register.
Name Address
Number of
shares held
(Thousands of
shares)
Number of shares held to
total number of shares issued (%)
MUFG Bank, Ltd. 7-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo 5,808 2.60
Mitsubishi UFJ Trust and Banking
Corporation 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 11,721 5.24
Mitsubishi UFJ Kokusai Asset
Management Co., Ltd. 12-1, Yurakucho 1-chome, Chiyoda-ku, Tokyo 4,474 2.00
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
5-2, Marunouchi 2-chome, Chiyoda-ku, Tokyo 590 0.26
5. The Company received a report regarding the possession of shares by Sumitomo Mitsui Trust Asset Management
Co., Ltd. and its joint holders as of February 14, 2020 as follows, in a statement of large-volume holdings (statement
of changes) made available to the public on February 20, 2020. However, as the Company was unable to confirm the
number of substantial shareholding as of the end of the fiscal year under review, major shareholders above is based
on the shareholder register
Name Address
Number of
shares held
(Thousands of
shares)
Number of shares held to
total number of shares issued (%)
Sumitomo Mitsui Trust Asset Management Co., Ltd.
1-1, Shibakoen 1-chome, Minato-ku, Tokyo 5,804 2.60
Nikko Asset Management Co., Ltd. 7-1, Akasaka 9-chome, Minato-ku, Tokyo 8,398 3.75
.
37
(7) Voting rights
1) Shares issued
As of March 31, 2020
Classification Number of shares
(Shares)
Number of voting rights
(Units) Description
Non-voting shares ― ― ―
Shares with restricted voting rights
(treasury stock, etc.) ― ― ―
Shares with restricted voting rights
(other) ― ― ―
Shares with full voting rights
(treasury stock, etc.)
(Treasury shares) Common shares
8,703,200 ― ―
Shares with full voting rights (other) Common shares
214,855,900 2,148,559 ―
Shares less than one unit Common shares
101,317 ―
Shares less than one unit
(100 shares)
Total number of shares outstanding 223,660,417 ― ―
Total voting rights held by all
shareholders ― 2,148,559 ―
Note: The number of common shares under “shares with full voting rights (other)” includes 545,100 shares (5,451 units of
voting rights) held under the BIP Trust and the ESOP Trust.
2) Treasury stock, etc.
As of March 31, 2020
Shareholder name Shareholder address
Number of shares held under own
name (Shares)
Number of shares held under the names of
others (Shares)
Total number of shares held
(Shares)
Number of shares held to total number
of shares issued (%)
(Treasury stock)
MARUI GROUP CO.,
LTD.
3-2, Nakano 4-chome, Nakano-ku,
Tokyo 8,703,200 ― 8,703,200 3.89
Total ― 8,703,200 ― 8,703,200 3.89
Note: 545,100 shares of the Company held under the BIP Trust and the ESOP Trust are not included in the above number of
treasury shares.
38
(8) Details of officer and employee stock ownership schemes
BIP Trust
1. Overview of the scheme
In the fiscal year ended March 31, 2017, the Company and 11 Group subsidiaries, etc. (MARUI CO., LTD., Epos
Card Co., Ltd., etc.; collectively, “Applicable Subsidiaries”) introduced the BIP Trust for Directors and Executive
Officers of the Company (excluding External Directors and non-residents of Japan) and directors of Applicable
Subsidiaries (excluding external directors and non-residents of Japan; together with Directors and Executive Officers
of the Company, collectively, “Eligible Directors, etc.”), in order to increase motivation to contribute to improved
performance and corporate value for the Group over the medium to long term.
The details of the trust agreement in the scheme are as follows.
Details of the BIP Trust agreement
Type of trust Money trust other than a specified individually operated monetary trust (third-party benefit trust)
Trust objective To incentivize Eligible Directors, etc.
Settlor The Company
Trustee Mitsubishi UFJ Trust and Banking Corporation
(Joint trustee: The Master Trust Bank of Japan, Ltd.)
Beneficiaries Eligible Directors, etc. who satisfy the beneficiary criteria
Trust administrator A third party with no special interests with the Company (certified public accountants)
Trust period August 29, 2016 – August 31, 2021 (planned)
Exercise of voting rights Non-exercise
Class of shares to be
acquired Common shares of the Company
Timing of acquisition of
shares
September 1, 2016 – September 6, 2016
August 16, 2019 ・ August 19, 2019
Method of acquiring
shares
To be acquired from the stock market or the Company (disposal of treasury stock)
(To be acquired from the stock market in the trust period after the change)
Holder of vested rights The Company
Residual assets The Company, the holder of vested rights, shall receive any residual assets within the scope of the reserve for trust fees, which is the trust money less share acquisition funds.
Note: The Trust may be extended by amending the trust agreement and entrusting additional money when the extended trust
period of the Trust expires.
2. Total number of shares to be acquired by Eligible Directors, etc.
Up to 400,000 shares
3. Scope of persons eligible for beneficiary rights and other rights under this officer stock ownership plan
Eligible Directors, etc. who satisfy the beneficiary criteria
39
ESOP Trust
1. Overview of the scheme
In the fiscal year ended March 31, 2017, the Company introduced the ESOP Trust incentive plan for employees of
the Group in management positions (“executive employees”), in order to increase motivation to contribute to
improved performance and corporate value over the medium to long term.
By the introduction of this scheme, executive employees enjoy the economic benefits of an increase in the
Company’s share price, and therefore they are prompted to execute business operations with share prices in mind,
and enhance their morale. In addition, voting rights to the Company’s shares in the ESOP Trust assets are exercised
so as to reflect the intention of executive employees who are the beneficiary candidates.
The details of the trust agreement in the scheme are as follows.
Details of the ESOP Trust agreement
Type of trust Money trust other than a specified individually operated monetary trust (third-party benefit trust)
Trust objective To incentivize executive employees
Settlor The Company
Trustee Mitsubishi UFJ Trust and Banking Corporation
(Joint trustee: The Master Trust Bank of Japan, Ltd.)
Beneficiaries Executive employees who satisfy the beneficiary criteria
Trust administrator A third party with no special interests with the Company (certified public accountants)
Trust period August 29, 2016 – August 31, 2021 (planned)
Exercise of voting rights Voting rights for the Company’s shares shall be exercised in accordance with the instructions of the
trust administrator, which shall reflect the intention of the beneficiary candidates.
Class of shares to be
acquired Common shares of the Company
Timing of acquisition of
shares
September 7, 2016 – September 15, 2016
August 16, 2019
Method of acquiring
shares To be acquired from the stock market
Holder of vested rights The Company
Residual assets The Company, the holder of vested rights, shall receive any residual assets within the scope of the reserve for trust fees, which is the trust money less share acquisition funds.
Note: The Trust may be extended by amending the trust agreement and entrusting additional money when the extended trust
period of the Trust expires.
2. Total number of shares to be acquired by executive employees
Up to 250,000 shares
3. Scope of persons eligible for beneficiary rights and other rights under this employee stock ownership plan
Executive employees who satisfy the beneficiary criteria
40
2. Acquisition of treasury stock, etc.
Class of shares: Acquisition of common stock under Article 155, Item 3 and Article 155, Item 7 of the Companies
Act
(1) Acquisition resolved by a general meeting of shareholders
Not applicable
(2) Acquisition resolved by the Board of Directors
Classification Number of shares
(Shares)
Total amount
(Yen)
Resolution by the Board of Directors (May 14, 2019) (Acquisition period: May 15, 2019 – March 31, 2020)
3,900,000 7,000,000,000
Treasury stock acquired before the fiscal year under review ― ―
Treasury stock acquired during the fiscal year under review 2,990,000 6,999,899,700
Total number and value of remaining shares subject to the
resolution 910,000 100,300
Percentage of un-exercised acquisition as of the fiscal year-end
(%) 23.3 0.0
Treasury stock acquired during the period ― ―
Ratio of un-exercised portion as of the date of filing (%) 23.3 0.0
(3) Acquisition not resolved by the general meeting of the shareholders or the Board of Directors
Classification Number of shares
(Shares)
Total amount
(Yen)
Treasury stock acquired during the fiscal
year under review 874 2,066,662
Treasury stock acquired during the period 199 357,007
Note: Treasury stock acquired during the period does not include shares acquired through the purchase of shares less than one
unit from August 1, 2020 to the filing date of this securities report.
(4) Status of the disposal and ownership of treasury stock acquired
Classification
Fiscal year under review Period
Number of shares
(Shares)
Total disposal amount (Yen)
Number of shares
(Shares)
Total disposal amount (Yen)
Treasury stock acquired offered for subscription
― ― ― ―
Treasury stock acquired that were cancelled ― ― ― ―
Treasury stock acquired that were transferred for merger, share exchange, or company split
― ― ― ―
Other (treasury stock acquired that were sold in response to requests from shareholders holding shares less than one unit)
73 150,114 ― ―
Number of treasury shares held 8,703,268 ― 8,703,467 ―
Notes: 1. Treasury stock disposed of during the period do not include shares disposed of through the sale of shares less than
one unit and shares disposed of for the exercise of subscription rights to shares from August 1, 2020 to the filing date
of this securities report.
2. The number of treasury shares held during the period does not include shares less than one unit purchased and sold
from August 1, 2020 to the filing date of this securities report.
3. The number of treasury shares held does not include 545,184 shares of the Company held under the BIP Trust and
the ESOP Trust.
41
3. Dividend policy
Under the medium-term management plan with the fiscal year ending March 31, 2021 as its final year, the Group
will effectively utilize cash flows generated through business operations to increase growth investments and enhance
shareholder returns. The Company will endeavor to continuously increase the level of dividends according to long-
term growth in EPS to realize high growth coupled with high returns. The Company will gradually raise its target
for the consolidated payout ratio from 40% to approximately 55% by the fiscal year ending March 31, 2024 and
implement ongoing, long-term dividend increases.
Based on the above policy, it was resolved that the year-end dividend for the fiscal year under review be ¥22 per
share, and that together with the interim dividend of ¥28 per share, the annual payment of dividends for the fiscal
year under review shall be ¥50 per share, an increase of ¥1 per share compared with the previous fiscal year.
The basic policy of the Company is to pay dividend from surplus twice a year, one interim and one year-end. The
Company stipulates in its Articles of Incorporation that it may, pay interim dividends as of the record date of
September 30 of each year by a resolution of the Board of Directors. Year-end dividends are subject to resolution by
the general meeting of shareholders.
Dividends from surplus for the fiscal year under review are as follows:
Date of resolution Total dividend amount
(Millions of yen) Dividend per share (Yen)
November 7, 2019
Resolution by the Board of Directors 6,065 28
June 29, 2020 Resolution by the Ordinary General Meeting of Shareholders
4,729 22
4. Corporate governance
(1) Overview of corporate governance
1) Basic corporate governance policy
Based on our corporate philosophy to “continue evolving to better aid our customers” and “equate the development
of our people with the development of our company,” the Group will support our employees as they strive to help
customers, and thereby pursue medium- to long-term improvements in corporate value by creating a virtuous cycle
through which the development of people drives the development of the Company. Accordingly, the Company
positions corporate governance as a top management priority, and established the MARUI GROUP Corporate
Governance Guidelines (the “Guidelines”) at a meeting of the Board of Directors held on November 6, 2015 for the
purpose of ensuring its management is sound, highly transparent, efficient and capable of generating profits. These
Guidelines will be continually reexamined and refined to promote the improvement of the Company’s corporate
governance.
For details of these Guidelines, please visit the MARUI GROUP Corporate Governance Guidelines on the
Company’s website. (https://www.0101maruigroup.co.jp/pdf/cgg_20200730_en.pdf)
2) Overview of the corporate governance structure and reasons for adoption
• The MARUI GROUP is a Company with Company Auditor(s) which has in place a Board of Directors
comprised of eight Directors and an Audit & Supervisory Board comprised of four Audit & Supervisory Board
Members.
• Of the eight Directors, three are External Directors, and the system seeks to strengthen the supervisory function
of the Board of Directors by facilitating lively discussions centered on the External Directors who have been
designated as independent directors. In addition, the term of office of each Director is one year with the aim of
clarifying transparency and management responsibility in business execution. The Board of Directors holds
meetings in principle 10 times a year and engages in active deliberations and supervises the execution of duties
by Directors.
• Of the four Audit & Supervisory Board Members, two are External Audit & Supervisory Board Members.
• In accordance with the Group’s authorization rules, the duties of Directors and Executive Officers are explicitly
defined, and the Group’s Directors and Executive Officers perform their duties in an efficient and swift manner.
• 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 such committee to
42
make important management decisions regarding execution of duties within the scope of the Group’s
authorization rules.
• The Company seeks to ensure objectivity and transparency and further enhance the corporate governance
system through discussions by the Nominating and Compensation Committee, comprised primarily of External
Directors, related to the nomination of Directors, etc., and compensation for the management.
• The Sustainability Committee has been established to serve as an advisory body to the Board of Directors for
the purpose of promoting co-creation sustainability management. In addition, the Environment and CSR
Committee has been established within the Sustainability Committee and carries out duties pertaining to the
management of relevant risks and other matters based on the instruction of the Sustainability Committee.
• The Board of Directors shall maintain five committees (Public Relations IR Committee, Internal Control
Committee, Information Security Committee, Safety Control Committee, and Insider Trading Prevention
Committee) to control high-risk areas in business operations, through which to strive for speedy operational
improvement and the prevention of accidents. The Compliance Promotion Board, chaired by the Representative
Director, is set up as a coordinating function of all committees.
• The composition of each body is as follows. (The ◎ symbol indicates the chair or leader of the body.)
Name Position
Bo
ard o
f Directo
rs
Au
dit &
Sup
erviso
ry
Bo
ard
Man
agem
ent
Co
mm
ittee
No
min
ating
and
C
om
pen
sation
C
om
mittee
Su
stainab
ility
Co
mm
ittee
En
viro
nm
ent an
d C
SR
C
om
mittee
Co
mp
liance P
rom
otio
n
Bo
ard
Pu
blic R
elation
s IR
Co
mm
ittee
Intern
al Con
trol
Co
mm
ittee
Info
rmatio
n S
ecurity
C
om
mittee
Safety
Con
trol
Co
mm
ittee
Insid
er Trad
ing
P
reven
tion
Co
mm
ittee
Hiroshi Aoi
President and Representative
Director, Representative
Executive Officer
◎ ◎ ○ ◎ ◎
Etsuko Okajima Director (External) ○ ○
Yoshitaka Taguchi Director (External) ○ ○
Masahiro Muroi Director (External) ○
Masao Nakamura
Director,
Senior Managing
Executive Officer
○ ○ ○ ○ ○ ◎
Hirotsugu Kato
Director,
Managing
Executive Officer ○ ○ ○ ◎ ○ ○ ○ ◎
Masahisa Aoki
Director,
Senior Executive
Officer ○ ○ ○ ○ ○
Yuko Ito Director,
Executive Officer ○ ○ ○ ○
Hitoshi Kawai
Audit &
Supervisory Board
Member (Full time) ◎ ○ ○ ○
Nariaki Fuse
Audit &
Supervisory Board
Member (Full time) ○ ○ ○
Takehiko Takagi
Audit &
Supervisory Board
Member (External) ○
Yoko Suzuki
Audit &
Supervisory Board
Member (External) ○
Motohiko Sato Executive Vice
President ○ ○ ○ ○ ◎ ○ ○
Tomoo Ishii Senior Managing
Executive Officer ○ ○ ○ ○ ◎
Toshikazu Takimoto Managing
Executive Officer ○ ○ ○ ○ ○ ○
43
Name Position
Bo
ard o
f Directo
rs
Au
dit &
Sup
erviso
ry
Bo
ard
Man
agem
ent
Co
mm
ittee
No
min
ating
and
C
om
pen
sation
C
om
mittee
Su
stainab
ility
Co
mm
ittee
En
viro
nm
ent an
d C
SR
C
om
mittee
Co
mp
liance P
rom
otio
n
Bo
ard
Pu
blic R
elation
s IR
Co
mm
ittee
Intern
al Con
trol
Co
mm
ittee
Info
rmatio
n S
ecurity
C
om
mittee
Safety
Con
trol
Co
mm
ittee
Insid
er Trad
ing
P
reven
tion
Co
mm
ittee
Yoshinori Saito Managing
Executive Officer ○ ○ ○ ○ ○ ○
Hajime Sasaki Senior Executive
Officer ○ ○ ○
Masahiro Aono Senior Executive
Officer ○ ○ ○ ○ ○ ◎
Yoshiaki Kogure Executive Officer ○ ○ ○ ○ ○
Mayuki Igayama Executive Officer ○ ○ ○
Junko Tsuda Executive Officer ○
Miyuki Kawara Executive Officer ○ ○ ○
Tatsuo Niitsu Executive Officer ○ ○
Takeshi Ebihara Executive Officer ○ ○
Reiko Kojima Executive Officer ○ ○ ○
Akikazu Aida Executive Officer ○ ○ ○ ○ ○ ○
Other members
(persons)
― ― ― ― 1 6 3 2 6 9 11 4
Total 8 4 20 3 11 11 18 13 19 14 14 7
44
The following is a diagram of our structures for supervising business execution and
management and our internal control and risk management systems:
3) Other items related to corporate governance
Implementation of internal control systems and risk management systems
• The Group had established internal control systems from the perspective of Group management in order to
facilitate sound, transparent, and efficient management.
• The Group’s Code of Conduct shall be fully communicated to promote sound corporate activities grounded on
high ethical standards for the Group.
• In order to ensure Groupwide compliance with laws, regulations, and the rules of the Company, operational
manuals are prepared for every category and internal training is encouraged.
• The Company adheres to the MARUI GROUP Information Security Policy, which sets specific policies for
developing systems and formulating measures to ensure the security of information assets, and the MARUI
GROUP Tax Policy, which clearly delineates guidelines for compliance with tax laws and minimization of tax
risks, and in doing so manages the risks faced by the Group.
• The General Affairs Department and the Audit Department coordinate efforts in promoting internal controls,
and in doing so work to minimize operational risks through documentation and monitoring of the operations of
each Group company in terms of predictable risks and relevant countermeasures.
• The MARUI Group Hot Line (internal notification system) is maintained as a means for the prevention and
early detection of problems by allowing direct contact with external lawyers.
• The Company resolutely refuses to have any connection with antisocial forces that threaten the order and safety
of society and shall reject any unwarranted demands, and is committed to strengthening ties with external
specialized organizations such as the police and lawyers in establishing systems to eliminate antisocial forces.
45
Systems established to ensure the appropriateness of business operations of Group subsidiaries
• The Group has a reporting system for subsidiaries to report important decisions to the Company in accordance
with the authorization rules of the Group, and governs the appropriateness of business execution by these
subsidiaries as a pure holding company.
Overview of liability limitation agreements
• In accordance with the provisions of Article 427, Paragraph 1 of the Companies Act, the Company concludes
agreements with each External Director and External Audit & Supervisory Board Member to limit their liability
for damages as stipulated under Article 423, Paragraph 1 of the same Act. Based on these agreements, his/her
liability shall be limited to the higher of a predetermined amount of over ¥10 million or the amount set by laws
and regulations.
Number of Directors
• The Company has stipulated in its Articles of Incorporation that there shall be no more than 15 Directors and
no more than five Audit & Supervisory Board Members.
Requirement for a resolution to elect Directors
• The Company stipulates in its Articles of Incorporation that a resolution for the election of Directors shall be
adopted by a majority vote of shareholders present holding not less than one-third of the shares with voting
rights held by shareholders entitled to exercise their voting rights, and that the resolution shall not be via a
cumulative vote.
General meeting of shareholders resolutions that can be delegated to the Board of Directors
a. Acquisition of treasury stock
In accordance with the provisions of Article 165, Paragraph 2 of the Companies Act, the Company stipulates in
its Articles of Incorporation that it may, by a resolution of the Board of Directors, acquire treasury stock through
market transactions to enable a flexible capital policy.
b. Interim dividends
In accordance with the provisions of Article 454, Paragraph 5 of the Companies Act, the Company stipulates in
its Articles of Incorporation that it may, by a resolution of the Board of Directors, pay interim dividends from
surplus to shareholders or registered pledgees of shares as of the record date of September 30 of each year. The
purpose of this provision is to enable the return of profits to our shareholders in a flexible manner.
Requirement for a special resolution at the general meeting of shareholders
• For the purpose of ensuring that the general meeting of shareholders is operated smoothly, the Company
stipulates in its Articles of Incorporation that a special resolution at the general meeting of shareholders,
provided for in Article 309, Paragraph 2 of the Companies Act, shall be adopted by a two-thirds or more vote
of shareholders present holding not less than one-third of the shares with voting rights held by shareholders
entitled to exercise their voting rights. The purpose of relaxing the quorum for special resolutions at the general
meeting of shareholders is to ensure the meeting proceeds smoothly.
46
2. Directors, Audit & Supervisory Board Members, and Executive Officers
1) Directors, Audit & Supervisory Board Members, and Executive Officers
9 men, 3 women (female ratio of 25%)
Position Name Date of birth Career history Term of
office
Shares held
(Thousands)
President and
Representative
Director,
Representative
Executive
Officer
Hiroshi
Aoi
Jan. 17,
1961
Jul. 1986 Joined the Company
(Note 3) 1,548
Jan. 1991 General Manager, Sales Planning Headquarters
Apr. 1991 Director and General Manager, Sales Planning Headquarters
Jan. 1993 Director and General Manager, General Manager’s Office, Sales
Promotion Headquarters
Aug. 1993 Director and Deputy General Manager, Sales Promotion
Headquarters and General Manager, Sales Planning Division
Apr. 1995 Managing Director and Deputy General Manager, Sales Promotion
Headquarters and General Manager, Sales Planning Division
Jan. 1999 Managing Director and Deputy General Manager, Sales Promotion
Headquarters
Jan. 2001 Managing Director and General Manager, Sales Promotion
Headquarters
Apr. 2004 Managing Director
Jun. 2004 Executive Vice President and Representative Director
Apr. 2005 President and Representative Director
Oct. 2006 President and Representative Director
Representative Executive Officer
Apr. 2019 President and Representative Director
Representative Executive Officer, CEO (Incumbent)
Director Etsuko
Okajima
May 16,
1966
Apr. 1989 Joined Mitsubishi Corporation
(Note 3) ―
Jan. 2001 Joined McKinsey & Company
Jul. 2005 Representative and CEO, GLOBIS Management Bank
Jun. 2007 President & CEO, ProNova Inc. (Incumbent)
Jun. 2014 Outside Director, Astellas Pharma Inc.,
External Director (Incumbent)
Mar. 2016 Outside Director, Link and Motivation Inc.
Dec. 2018 Outside Director, euglena Co., Ltd. (Incumbent)
Director Yoshitaka
Taguchi
Apr. 20,
1961
Mar. 1985 Joined Seino Transportation Co., Ltd. (currently Seino Holdings Co.,
Ltd.)
(Note 3) 0
Jul. 1989 Director, Seino Transportation Co., Ltd.
Jul. 1991 Managing Director, Seino Transportation Co., Ltd.
Jun. 1996 Senior Managing Director, Seino Transportation Co., Ltd.
Oct. 1998 Representative Director and Vice President, Seino Transportation
Co., Ltd.
Jun. 2003 President and Chief Operating Officer, Seino Transportation Co.,
Ltd. (Incumbent)
Jun. 2018 External Director (Incumbent)
47
Position Name Date of birth Career history Term of
office
Shares held
(Thousands)
Director Masahiro
Muroi
Jul. 13,
1955
Apr. 1978 Joined Nomura Computer System Co., Ltd. (currently Nomura
Research Institute, Ltd.)
(Note 3) ―
Jun. 2000 Member of the Board, Nomura Research Institute, Ltd.
Apr. 2002 Senior Corporate Managing Director, Member of the Board, Nomura
Research Institute, Ltd.
Apr. 2007 Senior Executive Managing Director, Member of the Board, Nomura
Research Institute, Ltd.
Apr. 2009 Representative and Senior Executive Managing Director, Member of
the Board, Nomura Research Institute, Ltd.
Apr. 2013 Representative and Vice President, Member of the Board, Nomura
Research Institute, Ltd.
Apr. 2015 Vice Chairman, Member of the Board, Nomura Research Institute,
Ltd.
Jun. 2016 External Director, Ryoden Corporation (Incumbent)
Apr. 2017 Member of the Board, Nomura Research Institute, Ltd.
Jun. 2017 External Director (Incumbent)
Jun. 2018 Audit & Supervisory Board Member, The Norinchukin Bank
(Incumbent)
Director,
Senior Managing
Executive
Officer
Masao
Nakamura
Jun. 11,
1960
Apr. 1983 Joined the Company
(Note 3) 26
Oct. 2006 Store Manager, Marui City Ikebukuro
Apr. 2007 Executive Officer and General Manager, Group Business Promotion
Division
Mar. 2008 Executive Officer, General Manager, Corporate Planning Division
and General Manager, Business Development Division
Jun. 2008 Director and Executive Officer, General Manager, Corporate
Planning Division and General Manager, Business Development
Division
Mar. 2009 Director and Executive Officer, General Manager, Corporate
Planning Division
Apr. 2011 Managing Director and Managing Executive Officer
President and Representative Director, MARUI CO., LTD.
Apr. 2015 Director and Managing Executive Officer Responsible for Retailing
and Store Operation Business
Apr. 2016 President and Representative Director, AIM CREATE CO., LTD.
May 2016 Director and Managing Executive Officer Responsible for Retailing
Business
Oct. 2017 Director and Managing Executive Officer Responsible for FinTech
Business
Apr. 2019
Apr. 2020
Director and Senior Managing Executive Officer
Responsible for FinTech Business
In charge of Corporate Planning, Real Estate Business, and
Customer Success
Director and Senior Managing Executive Officer In charge of
Retailing Business In charge of Corporate Planning and Customer
Success (Incumbent)
48
Position Name Date of birth Career history Term of
office
Shares held
(Thousands)
Director,
Managing
Executive
Officer
Hirotsugu
Kato
Jul. 30,
1963
Mar. 1987 Joined the Company
(Note 3) 8
Apr. 2013 General Manager, Corporate Planning Division
Apr. 2015 Executive Officer and General Manager, Corporate Planning
Division
Oct. 2015 Executive Officer and General Manager, Corporate Planning
Division and IR Department
Jun. 2016 Director and Senior Executive Officer
General Manager, Corporate Planning
Division and IR Department
Oct. 2016 Director and Senior Executive Officer
General Manager, Corporate Planning
Division and IR Department
In charge of ESG Promotion
Apr. 2017 Director and Senior Executive Officer
General Manager, IR Department
In charge of Corporate Planning and ESG Promotion
Oct. 2017 Director and Senior Executive Officer CDO
General Manager, IR Department
In charge of Corporate Planning and
ESG Promotion
Apr. 2019 Director and Managing Executive Officer CFO
General Manager, IR Department
In charge of Finance, Investment Research, Sustainability, and ESG
Promotion
July. 2020 Director and Managing Executive Officer CFO General Manager, IR Department
In charge of Finance, Sustainability, and ESG Promotion
(Incumbent)
Director,
Senior Executive
Officer
Masahisa
Aoki
Jul. 16,
1969
Apr. 1992 Joined MOVING CO., LTD.
(Note 3) 6
Apr. 2015 Store Manager, Shinjuku Marui Annex, MARUI CO., LTD.
Apr. 2016 General Manager, Anime Business Department
Apr. 2017 Executive Officer, General Manager, Anime Business Department
Apr. 2018 Executive Officer, General Manager, New Business Development
Department
In charge of Anime Business
Apr. 2019 Senior Executive Officer
President and Representative Director, MARUI CO., LTD.
In charge of Anime Business
Jun. 2019 Director and Senior Executive Officer
President and Representative Director, MARUI CO., LTD.
In charge of Anime Business
Jun. 2020 Director and Senior Executive Officer
General Manager, Co-Creation Investment Department
(Incumbent)
Director,
Executive
Officer
Yuko
Ito
Jun. 2,
1962
Mar. 1986 Joined the Company
(Note 3) 10
Oct. 2007 General Manager, Construction Department
Apr. 2012 Director, AIM CREATE CO., LTD.
Apr. 2014 Executive Officer and General Manager, Construction Department
Apr. 2018 Executive Officer, General Manager, Group Design Center and
Construction Department (Incumbent)
Apr. 2019 Executive Officer
Managing Director, AIM CREATE CO., LTD.
Jun. 2019 Director and Executive Officer
Managing Director, AIM CREATE CO., LTD. (Incumbent)
49
Position Name Date of birth Career history Term of
office
Shares held
(Thousands)
Audit &
Supervisory
Board Member
(Full time)
Hitoshi
Kawai
Jan. 17,
1967
Apr. 1989 Joined The Mitsubishi Bank, Ltd. (current MUFG
Bank, Ltd.)
(Note 4) ―
Jan. 2013 General Manager, Business Planning Division,
Mitsubishi UFJ Morgan Stanley Securities Co.,Ltd.
Oct. 2014 General Manager, Corporate Banking Group No.2, Corporate
Banking Division No. 8, The Bankof Tokyo-Mitsubishi UFJ, Ltd.
(current MUFGBank, Ltd.)
Jun. 2016 Executive Officer, General Manager, Corporate Banking Group No.
2, Corporate Banking Division No. 8, The Bank of Tokyo-
MitsubishiUFJ, Ltd. (current MUFG Bank, Ltd.)
May. 2017 Executive Officer, Branch Manager, Kyoto Branch, The Bank of
Tokyo-Mitsubishi UFJ, Ltd.(current MUFG Bank, Ltd.)
Apr. 2020 Executive Officer, MUFG Bank, Ltd. (scheduledto retire in June
2020)
Jun. 2020 Audit & Supervisory Board Member (Full time) (Incumbent)
Audit &
Supervisory
Board Member
(Full time)
Nariaki
Fuse
Jun. 3,
1959
Mar. 1982 Joined the Company
(Note 5) 11
Apr. 2011 Executive Officer
Apr. 2013 President and Representative Director, M & C SYSTEMS CO.,
LTD.
Jun. 2013 Director and Executive Officer
Apr. 2015 Senior Executive Officer
In charge of Audit and Information Systems
Apr. 2016 Senior Executive Officer and CIO
In charge of Audit
Jun. 2018 Audit & Supervisory Board Member (Full time) (Incumbent)
Audit &
Supervisory
Board Member
Takehiko
Takagi
Jan. 23,
1945
Jul. 2001 Chief, Kanazawa Regional Taxation Bureau
(Note 4) 8
Jul. 2002 President, National Tax College
Jul. 2003 Retired from National Tax Administration Agency
Aug. 2003 Registered as Certified Public Tax Accountant
May 2006 External Audit & Supervisory Board Member, TOH-TEN-KOH
Corporation
Jun. 2008 External Audit & Supervisory Board Member (Incumbent)
Jun. 2010 Outside Audit & Supervisory Board Member, KAWADA
TECHNOLOGIES, Inc. (Incumbent)
Audit &
Supervisory
Board Member
Yoko
Suzuki
Sep. 21,
1970
Apr. 1998 Registered as Attorney Joined Takagi Godo Law Office
(Note 4) ―
Nov. 2002 Partner, Suzuki Sogo Law Office (Incumbent)
Apr. 2015 Auditor, The Research Institute of Economy,Trade and Industry
(Incumbent)
Mar. 2018 Outside Director, Member of the Audit Committee, Bridgestone
Corporation (Incumbent)
Jun. 2018 Outside Director, Audit & Supervisory Committee Member, Nippon
Pigment Company Limited (Incumbent)
Auditor, Hitotsubashi University Collaboration Center (Incumbent)
Jun. 2020 External Audit & Supervisory Board Member (Incumbent)
Total 1,621
Notes: 1. Directors Etsuko Okajima, Yoshitaka Taguchi, and Masahiro Muroi are External Directors.
2. Audit & Supervisory Board Members Takehiko Takagi and Yoko Suzuki are External Audit & Supervisory Board
Members.
3. From the close of the Ordinary General Meeting of Shareholders for the fiscal year ended March 31, 2020 up to the
close of the Ordinary General Meeting of Shareholders for the fiscal year ending March 31, 2021.
4. From the close of the Ordinary General Meeting of Shareholders for the fiscal year ended March 31, 2020 up to the
close of the Ordinary General Meeting of Shareholders for the fiscal year ending March 31, 2024.
5. From the close of the Ordinary General Meeting of Shareholders for the fiscal year ended March 31, 2018 up to the
close of the Ordinary General Meeting of Shareholders for the fiscal year ending March 31, 2022.
6 The Company has appointed one Substitute Audit & Supervisory Board Member for the purpose of preparing for the
case in which the number of Audit & Supervisory Board Members falls below the minimum number stipulated in
laws and regulations in accordance with the provisions of Article 329, Paragraph 3 of the Companies Act. The career
history of this Substitute Audit & Supervisory Board Member is as follows:
50
Name Date of
birth Career history
Shares held
(Thousands)
Akira
Nozaki
Nov. 20,
1957
Apr. 1988 Registered as Attorney
―
Jun. 2005 Outside Corporate Auditor, ICHIKAWA CO., LTD.
Jun. 2015 Outside Director, J-OIL MILLS, Inc.
External Director, ICHIKAWA CO., LTD. (Incumbent)
Jun. 2017 Audit & Supervisory Board Member, J-OIL MILLS, Inc.
(Incumbent)
The Company has adopted an Executive Officer System to strengthen management and
execution systems Groupwide. The following 14 Executive Officers are not serving concurrently
as Directors of the Company:
Executive Vice President Motohiko Sato CSO
Senior Managing Executive Officer Tomoo Ishii CHO
In charge of Audit, Real Estate Business,General Affairs, Personnel
and Wellness Promotion
Managing Executive Officer Toshikazu Takimoto CIO
President and Representative Director, M&C SYSTEMS CO., LTD.
In charge of Anime Business of the Company
Managing Executive Officer Yoshinori Saito In charge of FinTech Business
President and Representative Director, Epos Card Co., Ltd.
Director, MRI Co., Ltd.
Senior Executive Officer Hajime Sasaki President and Representative Director, AIM CREATE Co., Ltd.
In charge of Architecture Division of the Company
Senior Executive Officer Masahiro Aono President and Representative Director, MARUI CO.,LTD.
Director, AIM CREATE Co., Ltd.
Executive Officer Yoshiaki Kogure President and Representative Director, MARUI FACILITIES Co., Ltd.
Director, MARUI HOME SERVICE Co., Ltd.
Executive Officer Mayuki Igayama President and Representative Director, MOVING CO., LTD.
Executive Officer Junko Tsuda Director and General Manager, Cardholder Service Department, Epos
Card Co., Ltd.
Executive Officer Miyuki Kawara Director and Store Manager, Marui Family Mizonokuchi, MARUI
CO., LTD.
Executive Officer Tatsuo Niitsu Director and General Manager, Business Planning Division, MARUI
CO., LTD.
Executive Officer Takeshi Ebihara CDO
Director and General Manager, Digital Transformation Promotion
Department,
M & C SYSTEMS CO., LTD.
Director, Epos Card Co., Ltd.
Executive Officer Reiko Kojima General Manager, Wellness Promotion Division
Executive Officer Akikazu Aida General Manager, Corporate Planning Division and Customer Success
Department
Director, D2C & Co. Inc.
CDO : Chief Digital Officer
C I O : Chief Information Officer
CSO : Chief Security Officer
CHO : Chief Health Officer
2) External Directors and Audit & Supervisory Board Members
The Company appoints three External Directors and two External Audit & Supervisory Board Members.
Ms. Etsuko Okajima has experience and extensive knowledge of corporate management. Therefore, the Company
has appointed her as an External Director with the belief that she will seek to strengthen the supervisory function for
the management of the Company from an independent and objective position. The Company has determined that no
interpersonal, capital, transactional, or any other interest exist between the Company and Ms. Etsuko Okajima.
Furthermore, the Company has determined that no interpersonal, capital, significant transactional, or any other
interest exist between the Group and other organizations at which Ms. Etsuko Okajima serves or has served
concurrently, including affiliated companies. As Ms. Etsuko Okajima is deemed not to pose conflict of interest with
general shareholders, the Company has notified the Tokyo Stock Exchange, Inc. of her designation as an independent
director.
51
Mr. Yoshitaka Taguchi has ample experience and extensive knowledge with many years of active participation in
corporate management. Therefore, the Company has appointed him as an External Director with the belief that he
will seek to strengthen the supervisory function for the overall management of the Company from an independent
and objective position. He held 400 shares in the Company as of the end of March 2020, which is not considered to
be material. The Company has determined that no further interpersonal, capital, transactional, or other interest exist
between the Company and Mr. Yoshitaka Taguchi. It is to be noted that Mr. Yoshitaka Taguchi concurrently serves
as Representative Director of Seino Holdings Co., Ltd. A subsidiary of the Company recorded ¥26 million of
commission fees for instore delivery services, etc., received from two subsidiaries of said company (Seino
Transportation Co., Ltd. and another company) for the most recent fiscal year. The amount accounted for 0.01% of
the total consolidated operating revenue of the Company, and therefore he satisfies the “Criteria for Independence
of External Directors and Audit & Supervisory Board Members” of the Company. As Mr. Yoshitaka Taguchi is
deemed not to pose conflict of interest with general shareholders, the Company has notified the Tokyo Stock
Exchange, Inc. of his designation as an independent director.
Mr. Masahiro Muroi has experience taking initiative in corporate governance reforms as a corporate manager.
Therefore, the Company has appointed him as an External Director with the belief that he will seek to strengthen the
supervisory function for the management of the Company from an independent and objective position. The Company
has determined that no interpersonal, capital, transactional, or any other interest exist between the Company and Mr.
Masahiro Muroi. Furthermore, the Company has determined that no interpersonal, capital, significant transactional,
or any other interest exist between the Group and other organizations at which Mr. Masahiro Muroi serves or has
served concurrently, including affiliated companies. As Mr. Masahiro Muroi is deemed not to pose conflict of interest
with general shareholders, the Company has notified the Tokyo Stock Exchange, Inc. of his designation as an
independent director.
Mr. Takehiko Takagi has been appointed as an External Audit & Supervisory Board Member with the belief that he
will carry out fair audits of the Company based on his experience and extensive knowledge as a tax and accounting
specialist. He held 8,600 shares in the Company as of the end of March 2020, which is not considered to be material.
The Company has determined that no further interpersonal, capital, transactional, or other interest exist between the
Company and Mr. Takehiko Takagi. Furthermore, the Company has determined that no interpersonal, capital,
significant transactional, or any other significant interest exist between the Group and other organizations at which
Mr. Takehiko Takagi serves or has served concurrently, including affiliated companies. As Mr. Takehiko Takagi is
deemed not to pose conflict of interest with general shareholders, the Company has notified the Tokyo Stock
Exchange, Inc. of his designation as an independent Audit & Supervisory Board Member.
Ms. Yoko Suzuki has been appointed as an External Audit & Supervisory Board Member with the belief that she
would contribute to fair audits of the Company based on the fact that she is well versed in corporate legal affairs and
legality audits through her experience of serving as a corporate auditor, director and audit committee member, etc.
at other companies, in addition to abundant expertise as a lawyer.
The Company has determined that no interpersonal, capital, transactional, or any other interest exist between the
Company and Ms. Yoko Suzuki. Furthermore, the Company has determined that no interpersonal, capital, significant
transactional, or any other interest exist between the Group and other organizations at which Ms. Yoko Suzuki serves
or has served concurrently, including affiliated companies. As Ms. Yoko Suzuki is deemed not to pose conflict of
interest with general shareholders, the Company has notified the Tokyo Stock Exchange, Inc. of his designation as
an independent director.
The Board of Directors held 9 meetings in the fiscal year under review. Ms. Etsuko Okajima attended eight out of 9
meetings, Yoshitaka Taguchi, Masahiro Muroi, and Takehiko Takagi attended all 9 meetings. All members
expressed their opinions appropriately as necessary.
The Company’s criteria for the independence of External Directors and Audit & Supervisory Board Members is as
follows:
<Criteria for Independence of External Directors and Audit & Supervisory Board Members>
The Company 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 the independence of external
directors, external Audit & Supervisory Board members, and candidates for these 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
(hereinafter, collectively, the “Group”) and must not have been a person involved in operation during the past 10
years.
2. The individual must not be a major supplier*2 of the Group or a person involved in operation of a major supplier.
3. The individual must not be a major customer*3 of the Group or a person 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.
52
5. The individual must not be a person involved in operation of an entity that possesses direct or indirect holdings
equating to 10% or more of the total voting rights of the Group.
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 Group
that are separate from the compensation paid for services as a director or Audit & Supervisory Board member.
The individual also must not belong 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 Group and must not belong to a company or other organization that receives such donations.
8. The individual must not be the accounting auditor of the Company. The individual also must not belong 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 years.
10. The individual must not be a relative*5 of an individual that qualifies under items 2. to 8. (only applicable 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 the Group is in an
interlocking relationship of external officers.*7
Notes: 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 supplier group (the corporate group to which the supplier that serves as the direct transaction
counterparty belongs) that provides products or services to the Group and for which transactions
with the Group equated to more than ¥10 million and represented more than 2% of the total
consolidated net sales (consolidated operating revenue) or transaction revenues of the supplier
group in the most recently completed fiscal year. • A supplier group with which liabilities of the Group are associated and for which the applicable
liabilities equated to more than ¥10 million and represented more than 2% of the consolidated
total assets of the supplier group as of the end of the most recently completed fiscal year. 3. A “major customer” is defined as an entity that fulfills one of the following conditions:
• A customer group (the corporate group to which the customer that serves as the direct transaction
counterparty belongs) to which the Group provides products or services and for which the total
amount of transactions with the customer group equated to more than ¥10 million and represented
more than 2% of the consolidated operating revenue of the Group in the most recently completed
fiscal year. • A customer group possessing liabilities that are associated with the Group and that equated to
more than ¥10 million and represented more than 2% of the consolidated total assets of the Group
as of the end of the most recently completed fiscal year. • A financial group (the financial group to which the customer that serves as the direct transaction
counterparty belongs) from which the Group procures funds through borrowings and from which
the total amount of loans payable represented more than 2% of the consolidated total assets of
the Group as of the end of the most recently completed fiscal year. 4. A “large amount of monetary payments or other financial assets” refers to monetary payments or other
financial assets equated to a total of more than ¥10 million within the most recently completed fiscal
year.
5. A “relative” is defined as a spouse or a relative within the second degree.
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. An “interlocking relationship of external officers” refers to the relationship in which a person involved
in operation of the Group serves as an External Director or Audit & Supervisory Board Member of
another company, and a person involved in operation of said company serves as an External Director
or Audit & Supervisory Board Member of the Company.
3) Coordination between supervision or audits by External Directors and External Audit & Supervisory Board Members
and internal audits, corporate audits, and accounting audits, and relationship with internal control departments
The General Affairs Department and the Audit Department are responsible for supporting the External Directors and
External Audit & Supervisory Board Members, and strive to strengthen the system to convey information by
distributing reference materials for meetings of the Board of Directors in advance and fully explaining their content.
Coordination between the External Audit & Supervisory Board Members and the Accounting Auditor is detailed in
“3. Audits.”
53
3. Audits
1) Corporate audits
a. Organization and members for corporate audits
• The Audit & Supervisory Board of the Company is comprised of two Audit & Supervisory Board Members
(Full time) and two Audit & Supervisory Board Members (Part time), two of whom are External Audit &
Supervisory Board Members.
Position Name Career summary
Audit & Supervisory
Board Member (Full time)
(Chair)
Hideaki Fujizuka (Note)
He has held important posts at The Bank of Tokyo-Mitsubishi UFJ, Ltd. (currently MUFG Bank, Ltd.), Olympus Corporation, and other companies. Based on his abundant experience, he has excellent insight into finance, accounting, risk management, and other areas.
Audit & Supervisory
Board Member (Full time)
Nariaki Fuse He has extensive operational experience in the Group's information systems business, as well as management experience as Senior Executive Officer, and is familiar with the Group's various businesses.
External Audit & Supervisory Board Member
Tadashi Ooe (Note)
He appropriately performs his duties based on his legal expertise and experience he has cultivated over many years as a lawyer.
External Audit & Supervisory Board Member
Takehiko Takagi He is a qualified tax accountant and appropriately performs his duties based on his expertise and experience in the accounting field.
Note: He retired upon the conclusion of the 84th Ordinary General Meeting of Shareholders held on June 29,
2020.
• To support the execution of duties of Audit & Supervisory Board Members, two staff (one with concurrent
posts) with necessary expertise and skills have been assigned.
b. Frequency of Audit & Supervisory Board meetings and attendance status of each Audit & Supervisory Board
Member
The Audit & Supervisory Board met 15 times during the fiscal year under review. The attendance of each Audit
& Supervisory Board Member is as follows.
Name Number of meetings Number of attendance Attendance rate
Hideaki Fujizuka 15 times 15 times 100%
Nariaki Fuse 15 times 15 times 100%
Tadashi Ooe 15 times 15 times 100%
Takehiko Takagi 15 times 15 times 100%
c. Main matters for consideration by the Audit & Supervisory Board (Status of development and operation of the internal control system) Confirmation of audit plans, audit activity reports, the risk management system at the Compliance Promotion
Board and Internal Control Committee, and inspection of stores and other important business locations (Confirmation of business plans) Confirmation of progress of business plans through quarterly and year-end financial results (Development of auditing environment) Confirmation of expenses related to the Audit & Supervisory Board, selection of staff to support Audit &
Supervisory Board Members (Appropriateness of auditing by the Accounting Auditor)
Appointment of the Accounting Auditor, confirmation of the outline of the auditor's audit plans, and evaluation of
the auditor d. Status of activities of Audit & Supervisory Board Members (full-time and part-time)
(Priority audit items) • Development of a governance system and confirmation of its operational status (full time and part time Audit
54
& Supervisory Board Members)
Confirmation of status of development and implementation of the internal control system and verification of
its effectiveness Confirmation of appropriate responses to revisions of various laws and regulations Confirmation of the status of development and operation of risk systems at Group companies
• Progress in initiatives to achieve the medium-term management plan (full time and part time Audit &
Supervisory Board Members)
Progress in profit improvement and confirmation of tasks after achieving 100% fixed term rental contracts in
the Retailing segment Confirmation of progress and control status of new business alliances in the FinTech segment Confirmation of decision-making process and progress in investment projects
• Confirmation of progress in strategies to increase corporate value (full time and part time Audit & Supervisory
Board Members)
Confirmation of the governance system regarding collaborative business with capital and business alliance
partners Confirmation of progress in new business development and risk response Confirmation of progress in co-creation sustainability management
(Ordinary audit items) • Audit of the status of execution of duties of Directors (full time and part time Audit & Supervisory Board
Members)
Audit of decision-making of the Board of Directors and Management Committee Audit of status of development and implementation of the internal control system Audit of competitive transactions, conflict of interest transactions, gratuitous provision of profits, and abnormal
transactions Receipt of reports from Directors and employees
• Regular meeting with the Representative Director (full time and part time Audit & Supervisory Board
Members)
• Attendance at important meetings including the Board of Directors and Management Committee (full time and
part time Audit & Supervisory Board Members) • Hearing reports from Directors, Executive Officers, and management of the Group on operations (full time
Audit & Supervisory Board Members)
• Site visits to offices and subcontractors (full time and part time Audit & Supervisory Board Members)
• Regular meetings with External Directors (full time and part time Audit & Supervisory Board Members)
• Cooperation with the auditing firm (full time and part time Audit & Supervisory Board Members)
• Cooperation with Audit & Supervisory Board Members of Group companies (full time Audit & Supervisory
Board Members)
• Cooperation with the Audit Department and departments in charge of internal audit at Group companies (full
time Audit & Supervisory Board Members)
• Audit under the internal control system based on the system resolution as stipulated in the Companies Act (full
time Audit & Supervisory Board Members)
• Audit under the Internal Control Reporting System (Financial Instruments and Exchange Act) (full time Audit
& Supervisory Board Members)
• Inspection of important documents and audit of document and information management (full time Audit &
Supervisory Board Members)
• Investigation of company assets and confirmation of product inventories (full time Audit & Supervisory Board
Members)
• Quarterly review of financial results (full time Audit & Supervisory Board Members)
• Audit of dividend from surplus (full time and part time Audit & Supervisory Board Members)
• Response to year-end audits and shareholders' meetings (full time and part time Audit & Supervisory Board
Members)
2) Internal audits
• Internal audits are conducted by the Audit Department (12 members as of the end of March 2020).
• Operational audits investigate the effectiveness, propriety, and legal compliance status of operations based on
internal regulations, and accounting audits investigate the status of compliance with accounting standards and
internal regulations in order to ensure thorough compliance and improve operations Groupwide, including
subsidiaries.
55
3) Accounting audits
a. Name of auditing firm
PricewaterhouseCoopers Aarata LLC
b. Number of years of continuous audit
One year
c. The Certified Public Accountants engaged in the audit
Naoaki Kobayashi
Tatsuya Chiba
d. Assistants to the audit
Certified Public Accountants: 8
Others: 17
e. Policy and reason for selecting the auditing firm
The Audit & Supervisory Board of the Company confirms the independence, audit systems, and status and quality
of implementation of audits of the Accounting Auditor. As a result, taking into consideration a comprehensive
evaluation of independence, expertise, and propriety, the Company has determined that it is appropriate to appoint
PricewaterhouseCoopers Aarata LLC as the Accounting Auditor of the Company.
f. Evaluation of the auditing firm by the Audit & Supervisory Board Members and the Audit & Supervisory Board
The Audit & Supervisory Board Members and Audit & Supervisory Board have evaluated and effectively
communicated with the auditing firm to exchange opinions and understand the status of audits in a timely and
appropriate manner. The Company has therefore confirmed that the accounting audits by the auditing firm are
functioning effectively and being performed properly.
g. Change of auditing firm
The auditing firm was changed as follows:
83rd term: KPMG AZSA LLC
84th term: PricewaterhouseCoopers Aarata LLC
Information described in the extraordinary report (filed on May 14, 2019) is as follows:
(1) Name of Certified Public Accountants engaged in audit regarding the change
1) Name of Certified Public Accountants engaged in audit to be appointed: PricewaterhouseCoopers Aarata LLC
2) Name of Certified Public Accountants engaged in audit to retire: KPMG AZSA LLC
(2) Date of change
June 20, 2019 (Date of the 83rd Ordinary General Meeting of Shareholders)
(3) Most recent date on which the retiring Certified Public Accountant engaged in audit became the Certified Public
Accountant engaged in audit
June 25, 2018
(4) Matters concerning opinions, etc. in audit reports, etc. or internal control reports prepared by the retiring Certified
Public Accountant engaged in audit in the most recent three years
Not applicable
56
(5) Reasons and background behind the decision for change
The term of the Company’s accounting auditor KPMG AZSA LLC will expire at the close of the 83rd Ordinary
General Meeting of Shareholders scheduled on June 20, 2019. Although we believe that the auditing firm has a
sufficient system to ensure that accounting audits are conducted appropriately and reasonably, the Audit &
Supervisory Board has determined that it is time to review the accounting auditor because of its long years of
continuous service. In line with this, we compared and reviewed several auditing firms, and as a result of
comprehensively considering the expertise, independence, and quality control systems required of our accounting
auditor, as well as the understanding of our unique business model that integrates Retailing and FinTech, we
decided that PricewaterhouseCoopers Aarata LLC will be appropriate as a candidate, and thus determined the
proposal to appoint the firm as the new accounting auditor.
(6) Opinion of the retiring Certified Public Accountant engaged in audit concerning the matters stated in the audit
report, etc. or the internal control audit report with regard to the reason and background described in (5) above
We received responses that they had no particular opinion.
4) Audit fees
a. Compensation for Certified Public Accountants engaged in audit
(Millions of yen)
Category
Previous fiscal year Fiscal year under review
Compensation for
audit attestation
work
Remuneration for
non-audit services
Compensation for
audit attestation
work
Remuneration for
non-audit services
The Company 98 1 74 2
Consolidated
subsidiaries 45 2 45 1
Total 144 3 120 3
Compensation paid to Certified Public Accountants engaged in audit in the previous fiscal year represents
compensation paid to KPMG AZSA LLC.
Non-audit services for the Company and its consolidated subsidiaries in the fiscal year under review include work
conducted in relation to the provision of letters of comfort in connection with issuance of corporate bonds.
b. Compensation for organizations belonging to the same network (PricewaterhouseCoopers) as Certified Public
Accountants engaged in audit (excluding a.)
Category
Previous fiscal year Fiscal year under review
Compensation for
audit attestation
work
Remuneration for
non-audit services
Compensation for
audit attestation
work
Remuneration for
non-audit services
The Company - 2 - 40
Consolidated
subsidiaries - - - -
Total - 2 - 40
Compensation related to the previous fiscal year is for the same network (KPMG International) as KPMG AZSA
LLC, which is the previous Accounting Auditor.
The main content of the non-audit services for the Company is research and advisory services related to sustainability
projects.
c. Other significant compensation
Not applicable
d. Policy on determining the audit fee
The fee is decided as appropriate after considering factors including the time required for audit and the corporate
scale and characteristics of business.
e. Reason for the Audit & Supervisory Board’s consent of the compensation, etc. to the Accounting Auditor
The Audit & Supervisory Board has determined that compensation for the Accounting Auditor as proposed by the
Board of Directors is appropriate for maintaining and improving the quality of audits, upon confirming the time
57
required for audits and the compensation unit rate, and gave consent as provided for in Article 399, Paragraph 1
of the Companies Act based on the “Practical Guidelines for Audit & Supervisory Board Members Concerning
the Evaluation of Accounting Auditor and Formulation of Selection Standards” published by the Japan Audit &
Supervisory Board Members Association.
(4) Officer compensation, etc.
1) Policies related to deciding the amount or calculation method of officer compensation, etc.
Compensation system for officers
Compensation for Directors of the Company (excluding External Directors and non-residents of Japan) comprises
fixed basic compensation as well as performance-linked bonuses, which are based on the performance of the
Company for each fiscal year as a short term incentive, and performance-linked stock-based compensation (BIP
Trust) based on the medium- to long-term performance of the Company as a medium- to long-term incentive.
Compensation levels and the ratio of performance-linked compensation are confirmed each year by benchmarking
the officer compensation levels of similar-sized companies referring to data from officer compensation surveys
conducted by external research firms. External Directors and Audit & Supervisory Board Members will only receive
basic compensation based on their role and to ensure their independence.
The compensation levels and the ratio of performance-linked compensation have been revised to increase the portion
of performance-linked compensation. This revision was aimed at boosting motivation to contribute to improving
medium-to-long-term performance and corporate value in order to have officers share the interests with shareholders
and to strengthen management from a shareholder perspective.
Ratio up to the fiscal year ended March 31, 2019
Basic compensation : Performance-linked bonuses : Performance-linked stock-based compensation = 8 : 1 : 1
Ratio from the fiscal year ending March 31, 2020
Basic compensation : Performance-linked bonuses : Performance-linked stock-based compensation = 6 : 1 : 3
Methods, organizations, and procedures for deciding compensation
(i) Role and activities of the Nominating and Compensation Committee
The Nominating and Compensation Committee is put in place to improve the transparency and objectivity of the
deliberation process related to nomination of and compensation for Directors.
• The Nominating and Compensation Committee comprises at least three members, two or more of whom are,
in principle, External Directors.
• Members of the Nominating and Compensation Committee are to be appointed by resolution by the Board
of Directors.
• The Nominating and Compensation Committee shall be delegated authority from the Board of Directors to
discuss the following matters and make decisions regarding compensation upon comprehensively taking into
account the recipient’s level of responsibility in Group management and progress on the medium-term
management plan, and other factors. Compensation for Directors shall be within the confines of the
compensation systems and limits resolved at the general meeting of shareholders.
(a) Matters related to the compensation of individual Directors and Executive Officers
(b) Matters related to changes in compensation systems for Directors and Executive Officers
(c) Other matters for which the Board of Directors may seek counsel or delegate authority.
In the fiscal year ended March 31, 2020, the Nominating and Compensation Committee met four times. In May
2019, the committee discussed and decided on performance-linked bonuses for group executives. Discussions
and decisions were made in May 2020 regarding performance-linked compensation for External Directors for
the fiscal year ending March 31, 2020.
(ii) Activities of the Board of Directors related to deciding compensation
Discussions regarding the revision of officer compensation took place at a meeting of the Board of Directors held
in February 2019, and the final proposal for the revisions to officer compensation submitted at the Ordinary
General Meeting of Shareholders held on June 20, 2019, was discussed and approved at a meeting of the Board
of Directors held in May 2019.
58
Performance-linked compensation
(i) Performance-linked bonuses
Performance-linked bonuses are decided in accordance with the duties of each Director and with the goal of
increasing motivation for improving corporate performance on a single fiscal year basis. Performance-linked
coefficients are set based on the degree of accomplishment of targets for performance indicators in a given fiscal
year, and these coefficients are multiplied by the standard amount of compensation defined for each rank. For the
fiscal year ended March 31, 2020, EPS (published plan) was set as the target indicator to better share value with
shareholders and link them to corporate performance. The range of performance-linked coefficient has been
changed from 90% to 110% in the previous fiscal year to 0% to 200% depending on the degree of accomplishment
of the target.
☐ Calculation formula for performance-linked bonuses
Performance-linked bonuses = Rank-based standard amount × Performance-linked coefficient
• Target indicators and performance-linked coefficients
Target indicator Target
Performance
(bottom row: excluding
extraordinary factors)
Performance-linked
coefficient
Fiscal year ended
March 31, 2019
Consolidated operating
income ¥41.0 billion
¥41.2 billion
¥40.3 billion* 98% *
Fiscal year ending
March 31, 2020 EPS
¥127.20 ¥117.58 92%
Fiscal year ending
March 31, 2021 ¥130.00 － 0-200%
* The performance-linked coefficient for the fiscal year ended March 31, 2019 was calculated excluding gain on the transfer of
factoring accounts receivable and other extraordinary factors.
☐ Limit for performance-linked bonuses
• At the General Meeting of Shareholders held on June 29, 2016, the upper limit for performance-linked
bonuses (excluding bonuses paid to Directors that are also employees of the Company or Group companies)
to Directors (excluding External Directors) in a given fiscal year was set at ¥100 million.
(ii) Performance-linked stock-based compensation
In the fiscal year ended March 31, 2017, the Group introduced performance-linked stock-based compensation
(BIP Trust) to increase motivation to contribute to improved medium-to-long-term performance and corporate
value for the Company. Performance-linked stock-based compensation employs a scheme in which a trust fund
established through contribution by the Company is used to issue shares of the Company’s stock to Directors.
• Over the two-year period beginning with the fiscal year ending March 31, 2020, and ending with the fiscal
year ending March 31, 2021, Directors will be awarded points based on their rank at a set time each year.
These points will then be adjusted via a performance-linked coefficient within the range of 0% to 110%
determined based on the Company’s performance (EPS, ROE, and ROIC) and ESG indicators (selected based
on third party surveys to facilitate the promotion of co-creation sustainability management) in the fiscal year
ending March 31, 2021. Shares of the Company’s stock will then be allocated to each Director reflecting
their cumulative total of points post adjustment.
☐ Calculation formula for allocation of shares
Shares allocated = Cumulative points awarded based on rank × (Financial performance-linked coefficient + Non-
financial performance-linked coefficient)
• Target indicators and performance-linked coefficients
Target indicator Target Performance Performance-linked coefficient
Fiscal year
ending March
31, 2021
Financial
indicators
EPS ¥130 or more
－
100% if three targets accomplished 70% if two targets accomplished 30% if one target accomplished 0% if no targets accomplished
ROE 10.0% or more
ROIC 4.0% or more
Non-financial
indicators ESG indicators
Inclusion in DJSI World*
0% or 10%
* Dow Jones Sustainability World Index: An ESG index comprising companies selected through comprehensive evaluation in
the three areas of economic, environmental, and social factors from the perspective of long-term improvements to shareholder
value.
59
☐ Limit for performance-linked stock-based compensation
Upper limit for fund contributions from the Company
• At the General Meeting of Shareholders held on June 20, 2019, it was determined that the upper limit for
fund contributions from the Company under the performance-linked stock-based compensation scheme from
the fiscal year ending March 31, 2020, would be ¥200 million multiplied by the number of years in the given
allocation scheme period. Accordingly, the upper limit for the two-year period beginning with the fiscal year
ending March 31, 2020, and ending with the fiscal year ending March 31, 2021, will be ¥400 million.
Upper limit for shares, etc. of the Company’s stock acquired by Directors
• At the General Meeting of Shareholders held on June 20, 2019, it was determined that the upper limit for
shares of the Company’s stock acquired by Directors from the fiscal year ending March 31, 2020, would be
100,000 points (equivalent to 100,000 shares) multiplied by the number of years in the given allocation
scheme period. Accordingly, the upper limit for the two-year period beginning with the fiscal year ending
March 31, 2020, and ending with the fiscal year ending March 31, 2021, will be 200,000 points (equivalent
to 200,000 shares).
☐ Allocation of shares of the Company’s shares, etc. to Directors
• Directors that satisfy the beneficiary requirements will receive allocations of shares of the Company’s stock
in an amount equivalent to the allocated points, in principle, in June or later after the conclusion of the final
year of the allocation scheme period. At this time, applicable Directors will receive a number of shares of the
Company’s stock based on part of the allocated points, the remaining shares of the Company’s stock will be
appraised by the trust fund, and the applicable Directors will receive monetary payments in an amount
equivalent to the appraised liquidation value of shares. However, shares allocated under the first allocation
scheme period will be subject to a one-year transfer restriction period beginning with the date of issuance
during which the shares are prohibited from being transferred, used as collateral, or disposed of through other
means.
• Should it be decided to extend the allocation scheme period and maintain the trust fund, the number of years
of the extension shall be the number of years remaining in the Company’s current medium-term management
plan. Should a new allocation scheme period be established with a duration of two years, shares allocated
under this period will also be subject to a one-year transfer restriction period beginning with the date of
issuance.
☐ Clawback provisions
• The Group has instituted provisions that will enable it to seize the beneficiary rights to receive shares of the
Company’s stock to be allocated (malus) or to demand restitution in the form of monetary payments
equivalent to the value of allocated shares (clawback) should an applicable Director be found to have engaged
in serious misconduct or legal violations.
☐ Other compensation limits
• At the General Meeting of Shareholders held on June 27, 2012, the upper limit for basic compensation
(excluding salaries paid to Directors that are also employees of the Company or Group companies) to
Directors was set at ¥300 million.
• At the General Meeting of Shareholders held on April 28, 1987, the upper limit for monthly compensation
of Audit & Supervisory Board Members was set at ¥6 million. The amount of monthly compensation paid to
individual Audit & Supervisory Board Members is decided through discussion by the Audit & Supervisory
Board, in line with the upper limit set at the general meeting of shareholders.
60
2) Total compensation by officer classification and compensation type, and number of recipients (fiscal year ended
March 31, 2020)
Officer classification Total compensation
(Millions of yen)
Total compensation by type
(Millions of yen) Numbers of recipients Basic
compensation
Performance-
linked bonuses
Performance-linked stock-based
compensation
Directors (excluding External Directors)
171 150 21 － 5
Audit & Supervisory Board
Members (excluding External Audit & Supervisory Board Members)
34 34 － － 2
External Directors and
Audit & Supervisory Board
Members
45 45 － － 5
Notes: 1. On March 31, 2020, the number of Directors (excluding External Directors) was five, the number of Audit
& Supervisory Board Members (excluding External Audit & Supervisory Board Members) was two, and
the number of External Directors and External Audit & Supervisory Board Members was five. However,
the number of recipients in the table above includes one Director who retired following the end of the
term upon the conclusion of the Ordinary General Meeting of Shareholders held on June 20, 2019. In
addition, one Director who is not included in the number of recipients in the table above received
compensation from a subsidiary in the amount of ¥16 million.
2. The amount of performance-linked bonuses refers to the estimated amount to be paid in the fiscal year
under review.
3. There is no expense recorded for performance-linked stock-based compensation for the fiscal year under
review.
3) Total compensation on a consolidated basis by officer
This information is not stated since there were no individual whose total compensation on a consolidated basis
exceeded ¥100 million.
(5) Status of shares held
1) Standards and approach for the classification of shares for investment
The Company classifies shares for investment into those for pure investment and those for other purposes.
• “Shares for investment for pure investment” refers to shares held for the purpose of generating income through
changes in share prices or dividends related to the shares.
• “Shares for investment for other purposes” refers to shares held for the purpose of maintaining or building
upon collaborative or transactional relationships that are strategically critical for improving the Group’s
corporate value.
2) Shares for investment for other purposes
a. Holding policies, method of verifying the rationality of holdings, and verification of the appropriateness of holding
specific issues at meetings of the Board of Directors, etc.
In principle, the Company will not engage in cross-shareholdings except for cases in which such holdings are deemed
necessary for maintaining or building upon collaborative or transactional relationships that are strategically critical
for improving corporate value. The Company regularly verifies the rationality of shareholdings and discloses an
overview of the content thereof after annual verification at meetings of the Board of Directors. Shares with
diminished rationality for holding will be sold in phases upon considering the status of the counterparty.
Furthermore, at a meeting of the Board of Directors held in February 2016, it was determined that the Company had
already established sufficiently strong business relationships with cross-shareholding counterparties, and it was
therefore decided to undertake a phased reduction in cross-shareholdings out of consideration for asset efficiency
and stock price fluctuation risks. Since then, the returns from each cross-shareholding have been verified at meetings
of the Board of Directors held in either July or August of each year. The extent to which holdings have been reduced
was confirmed at these meetings.
61
b. Number of issues held and their balance sheet amount
Number of issues Total balance sheet amount
(Millions of yen)
Unlisted shares 23 3,542
Other shares 10 12,493
Issues with increased number of shares in the fiscal year under review
Number of issues Total purchase amount for
increase in number of shares (Millions of yen)
Reason for increase in number of shares
Unlisted shares 10 3,012 Mainly for funding and investment for start-ups related to the creation of new businesses, etc.
Other shares － － －
Issues with decreased number of shares in the fiscal year under review
Number of issues Total proceeds from sale for decrease in number of shares
(Millions of yen)
Unlisted shares 2 0
Other shares － －
Note: Issues for which the number of shares has increased or decreased do not include fluctuations due to
initial public offering.
☐ Changes in the number of issues of listed shares held for purposes other than pure investment and the amount
recorded on the balance sheet
• Since December 2015, we have gradually reduced the number of issues and the amount held, but they
have increased due to new listing of two issues of unlisted shares in March 2020.
62
c. Information on the number of shares, balance sheet amounts, etc. of each issue of specified shares for investment
and deemed shareholdings
Specified shares for investment
Issue
Fiscal year under review
Previous fiscal year
Purpose and quantitative effect of holding*1, and reason for increase in
number of shares
Shares of the
Company held*2
Number of shares Number of shares
Balance sheet amount
(Millions of yen)
Balance sheet amount
(Millions of yen)
TOHO CO., LTD.
2,578,800 2,578,800 To facilitate smooth collaboration, as we have business relationship other than leasing of store buildings, such as the opening of GODZILLA STORE Tokyo at MARUI and issuance of GODZILLA EPOS cards
Yes 8,510 11,462
BASE, Inc. *4
1,261,200 － To facilitate smooth collaboration, as we have business relationship including the opening at MARUI of SHIBUYA BASE, which is a permanent physical shop for owners that opened online shops using BASE.
No 1,373 －
Mitsubishi UFJ Financial Group, Inc.
2,440,000 2,440,000 To facilitate smooth transactions with the major financial institution.
No *3 983 1,342
Nojima Corporation
460,000 460,000 To facilitate smooth collaboration, as we have business relationship including the opening of nojima stores at MARUI and issuance of nojima EPOS affiliated cards.
Yes 820 924
giftee, Inc. *5
500,000 － To facilitate smooth collaboration as we have business relationship in relation to gift services offered in the official EPOS card app.
No 643 －
The Chiba Bank, Ltd. 127,338 127,338 To facilitate smooth transactions with
the financial institution. Yes
60 76
WACOAL HOLDINGS CORP. 25,000 25,000 To facilitate smooth transactions
including the opening of stores at MARUI as tenants and purchasing.
No *3 58 68
Sumitomo Mitsui Financial Group, Inc.
15,025 15,025 To facilitate smooth transactions with the financial institution.
No *3 39 58
AEON CO., LTD. 2,000 2,000 To gather information on industry
trends, etc. No
4 4
Isetan Mitsukoshi Holdings Ltd. 340 340 To gather information on industry
trends, etc. No
0 0
Notes: 1. The quantitative effect of holding is not stated in order to protect the confidentiality of transactions with
the counterparty and other reasons.
For the issues above, at meetings of the Board of Directors held in August 2019 and August 2020, the
Company verified the status of revenue, including dividend yield, collaboration and business relationship,
and also confirmed the status of reduction in the total amount of holdings.
2. Information on whether or not shares of the Company are held is based on the shareholder register as of
March 31, 2020.
3. These counterparties do not hold shares of the Company, but their subsidiaries hold shares of the
Company.
4. BASE, Inc. was listed on October 25, 2019.
5. giftee, Inc. was listed on September 20, 2019.
63
“V. Financial Information” of the Annual Securities Report has been replaced by the Consolidated Financial Statements
prepared separately with commensurate information by making certain reclassifications and rearrangements in order to
present them in a form that is more familiar to readers outside Japan. The Consolidated Financial Statements have been
audited by PricewaterhouseCoopers Aarata LLC.
For details, please refer to “1. BASIS OF PRESENTATION” in the Notes to Consolidated Financial Statements.
64
〈Consolidated Financial Statements〉
Consolidated Balance Sheets
MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
As of March 31, 2019 and 2020
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Assets
Current assets:
Cash and deposits (Notes 23 and 25) ¥46,731 ¥40,839 $381,672
Notes and accounts receivable–trade (Note 25) 6,138 5,153 48,158
Accounts receivable–installment (Notes 6 and 25) 428,180 416,250 3,890,186
Operating loans (Notes 6,7 and 25) 137,473 139,313 1,301,990
Allowance for doubtful accounts (Note 25) (13,818) (16,106) (150,523)
557,974 544,610 5,089,813
Inventories 5,196 4,766 44,542
Other 30,476 36,550 341,588
Total current assets 640,379 626,766 5,857,626
Property and equipment (Note 30):
Land 103,044 103,542 967,682
Buildings and structures (Note 8) 63,285 61,751 577,112
Construction in progress 551 1,190 11,121
Other (Note 8) 8,189 8,281 77,392
Property and equipment, net 175,071 174,765 1,633,317
Investments and other assets:
Investment securities (Notes 10, 25 and 26) 22,172 27,388 255,962
Intangible assets 6,849 8,113 75,822
Leasehold and other deposits (Notes 24, 25) 31,895 30,912 288,897
Deferred tax assets (Note 28) 10,589 13,868 129,607
Other (Note 11) 3,238 4,153 38,813
Total investments and other assets 74,745 84,436 789,121
Total assets ¥890,196 ¥885,969 $8,280,084
The accompanying notes are an integral part of these consolidated financial statements.
65
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Liabilities
Current liabilities:
Accounts payable–trade (Note 25) ¥10,231 ¥7,145 $66,775
Short-term loans payable and current portion of long-term
loans payable (Notes 25 and 34) 71,632 102,335 956,401
Current portion of bonds payable (Notes 25 and 34) 30,000 15,000 140,186
Income taxes payable (Note 25) 8,211 10,724 100,224
Provision for bonuses 3,516 3,482 32,542
Provision for point card certificates 14,181 20,583 192,364
Provision for stock benefits (Note 5) 673 — —
Provision for loss on redemption of gift certificates 165 160 1,495
Other 57,765 54,996 513,981
Total current liabilities 196,376 214,425 2,003,971
Non-current liabilities:
Bonds payable (Notes 25 and 34) 85,000 90,000 841,121
Long-term loans payable (Notes 25, 27, and 34) 300,000 272,500 2,546,728
Deferred tax liabilities (Note 28) 3,470 1,884 17,607
Provision for loss on interest repayment 4,957 4,663 43,579
Provision for loss on guarantees 190 166 1,551
Asset retirement obligations (Note 29) 2,777 953 8,906
Other 12,672 11,045 103,224
Total non-current liabilities 409,067 381,212 3,562,728
Total liabilities 605,443 595,638 5,566,710
Contingent liabilities (Note 12)
Net assets (Note 21)
Shareholders’ equity:
Capital stock 35,920 35,920 335,700 Authorized: 1,400,000,000 shares of common stock
Issued: 223,660,417 shares as of March 31, 2019 and
223,660,417 shares as of March 31, 2020
Capital surplus 91,323 91,824 858,168
Retained earnings 166,858 180,522 1,687,121
Treasury stock 6,214,767 shares as of March 31, 2019 and
9,248,452 shares as of March 31, 2020 (12,327) (19,661) (183,747)
Total shareholders’ equity 281,774 288,606 2,697,252
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities 2,977 1,185 11,074
Deferred gains or losses on hedges 0 (0) (0)
Total accumulated other comprehensive income 2,977 1,185 11,074
Non-controlling interests — 538 5,028
Total net assets 284,752 290,330 2,713,364
Total liabilities and net assets ¥890,196 ¥885,969 $8,280,084
The accompanying notes are an integral part of these consolidated financial statements.
66
Consolidated Statements of Income
MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
For the fiscal years ended March 31, 2019 and 2020
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Revenue (Note 30) ¥251,415 ¥247,582 $2,313,850
Cost of sales (Notes 13 and 30) 60,913 51,916 485,196
Gross profit 190,502 195,666 1,828,654
Selling, general and administrative expenses
(Notes 14 and 30) 149,317 153,721 1,436,644
Operating income 41,184 41,944 392,000
Non-operating income (expenses):
Dividend income 229 225 2,102
Gain on donation of property and equipment 67 36 336
Gain on sale of property and equipment (Note 15) 1,754 — —
Gain on sale of investment securities 4 211 1,971
Infectious disease related costs (Note 18) — (410) (3,831)
Interest expenses (1,465) (1,330) (12,429)
Loss on retirement of property and equipment (Note 16) (1,337) (1,299) (12,140)
Loss on closing of stores (Note 17) (2,000) — —
Loss on valuation of investment securities (435) (126) (1,177)
Loss on valuation of shares of subsidiaries and affiliates — (1,010) (9,439)
Other, net (569) (832) (7,775)
(3,751) (4,535) (42,383)
Income before income taxes 37,433 37,408 349,607
Income taxes (Note 28)
Income taxes–current 12,301 16,048 149,981
Income taxes–deferred (228) (4,077) (38,102)
12,072 11,971 111,878
Net income 25,360 25,437 237,728
Net income attributable to non-controlling interests 18 40 373
Net income attributable to owners of parent ¥25,341 ¥25,396 $237,345
The accompanying notes are an integral part of these consolidated financial statements.
67
Consolidated Statements of Comprehensive Income
MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
For the fiscal years ended March 31, 2019 and 2020
Millions of yen
Thousands of U.S.
dollars (Note
1)
2019 2020 2020
Net income ¥25,360 ¥25,437 $237,728
Other comprehensive income (Note 20):
Valuation difference on available-for-sale securities 1,414 (1,792) (16,747)
Deferred gains or losses on hedges 1 (0) (0)
Total other comprehensive income 1,416 (1,792) (16,747)
Comprehensive income ¥26,776 ¥23,645 $220,981
Comprehensive income attributable to:
Owners of parent ¥26,757 ¥23,604 $220,598
Non-controlling interests 18 40 373
The accompanying notes are an integral part of these consolidated financial statements.
Yen U.S. dollars
(Note 1)
Per share data (Note 33) 2019 2020 2020
Net income per share:
Basic ¥115.99 ¥117.58 $1.09
Cash dividends 49.00 50.00 0.46
Net assets per share 1,309.53 1,351.57 12.63
The accompanying notes are an integral part of these consolidated financial statements.
68
Consolidated Statements of Changes in Net Assets
MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
For the fiscal years ended March 31, 2019 and 2020
Millions of yen
Shareholders’ equity Accumulated other comprehensive income
Non-controlling
interests
Total net
assets
Capital
stock
Capital
surplus
Retained
earnings
Treasury
stock Total
Valuation difference on
available-for-
sale securities
Deferred gains or
losses on
hedges Total
Balance as of April 1, 2018 ¥35,920 ¥91,307 ¥168,034 ¥(22,389) ¥272,872 ¥1,563 ¥(1) ¥1,561 ¥466 ¥274,900
Changes of items during period:
Dividends from surplus (9,452) (9,452) (9,452)
Net income attributable to owners
of parent 25,341 25,341 25,341
Purchase of treasury stock (7,002) (7,002) (7,002)
Disposal of treasury stock 0 0 0 0
Retirement of treasury stock (17,064) 17,064 — —
Transfer from retained earnings to
capital surplus 17,064 (17,064) — —
Change in ownership interest of
parent due to transactions with
non-controlling interests
15 15 15
Net changes of items other than
shareholders’ equity 1,414 1 1,416 (466) 949
Total changes of items during period — 15 (1,175) 10,062 8,902 1,414 1 1,416 (466) 9,852
Balance as of April 1, 2019 ¥35,920 ¥91,323 ¥166,858 ¥(12,327) ¥281,774 ¥2,977 ¥0 ¥2,977 — ¥284,752
Changes of items during period:
Dividends from surplus (11,731) (11,731) (11,731)
Net income attributable to
owners of parent 25,396 25,396 25,396
Purchase of treasury stock (7,886) (7,886) (7,886)
Disposal of treasury stock 0 552 552 552
Transfer from retained earnings
to capital surplus (0) 0 — —
Change in ownership interest of
parent due to transactions with
non-controlling interests
501 501 501
Net changes of items other than
shareholders’ equity (1,792) (0) (1,792) 538 (1,254)
Total changes of items during period — 501 13,664 (7,334) 6,831 (1,792) (0) (1,792) 538 5,577
Balance as of March 31, 2020 ¥35,920 ¥91,824 ¥180,522 ¥(19,661) ¥288,606 ¥1,185 ¥(0) ¥1,185 ¥538 ¥290,330
69
Thousands of U.S. dollars (Note 1)
Shareholders’ equity Accumulated other comprehensive income
Non-controlling interests
Total net assets
Capital stock
Capital surplus
Retained earnings
Treasury stock Total
Valuation
difference on
available-for-sale securities
Deferred
gains or
losses on hedges Total
Balance as of April 1, 2019 $335,700 $853,485 $1,559,420 $(115,205) $2,633,401 $27,822 $0 $27,822 $— $2,661,233
Changes of items during period:
Dividends from surplus (109,635) (109,635) (109,635)
Net income attributable to
owners of parent 237,345 237,345 237,345
Purchase of treasury stock (73,700) (73,700) (73,700)
Disposal of treasury stock 0 5,158 5,158 5,158
Transfer from retained earnings
to capital surplus (0) 0 — —
Change in ownership interest of
parent due to transactions with
non-controlling interests
4,682 4,682 4,682
Net changes of items other
than shareholders’ equity (16,747) (0) (16,747) 5,028 (11,719)
Total changes of items during period — 4,682 127,700 (68,542) 63,841 (16,747) (0) (16,747) 5,028 52,121
Balance as of March 31, 2020 $335,700 $858,168 $1,687,121 $(183,747) $2,697,252 $11,074 $(0) $11,074 $5,028 $2,713,364
The accompanying notes are an integral part of these consolidated financial statements.
70
Consolidated Statements of Cash Flows
MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
For the fiscal years ended March 31, 2019 and 2020
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Cash flows from operating activities:
Income before income taxes ¥37,433 ¥37,408 $349,607
Depreciation and amortization 9,911 9,191 85,897
Impairment loss 4 128 1,196
Increase (decrease) in provision for point card certificates 2,736 6,402 59,831
Increase (decrease) in provision for allowance for doubtful
accounts 1,975 2,288 21,383
Increase (decrease) in provision for loss on interest repayment (1,123) (294) (2,747)
Increase (decrease) in provision for bonuses (424) (34) (317)
Interest and dividend income (269) (240) (2,242)
Interest expenses 1,465 1,330 12,429
Loss (gain) on retirement of property and equipment 304 407 3,803
Loss (gain) on sale of property and equipment (1,754) — —
Loss (gain) on sale of investment securities 249 (211) (1,971)
Loss (gain) on valuation of investment securities 476 1,238 11,570
Decrease (increase) in notes and accounts receivable–trade 868 985 9,205
Decrease (increase) in accounts receivable–installment (26,150) 11,930 111,495
Decrease (increase) in operating loans 8,537 (1,840) (17,196)
Decrease (increase) in inventories 2,098 719 6,719
Increase (decrease) in accounts payable–trade (2,129) (3,086) (28,841)
Other, net 4,735 (12,831) (119,915)
Subtotal 38,944 53,493 499,934
Interest and dividend income received 237 233 2,177
Interest expenses paid (1,460) (1,342) (12,542)
Income taxes paid (11,344) (12,851) (120,102)
Income taxes refund 18 377 3,523
Net cash provided by (used in) operating activities 26,396 39,909 372,981
Cash flows from investing activities:
Purchase of property and equipment (8,788) (10,979) (102,607)
Proceeds from sale of property and equipment 2,702 6 56
Purchase of investment securities (6,009) (9,035) (84,439)
Proceeds from sale of investment securities 113 212 1,981
Payments for leasehold and other deposits (324) (25) (233)
Proceeds from collection of leasehold and other deposits 2,159 1,005 9,392
Other, net 914 (1,500) (14,018)
Net cash provided by (used in) investing activities (9,232) (20,315) (189,859)
Cash flows from financing activities:
Net increase (decrease) in short-term loans payable (14,698) 21,701 202,813
Proceeds from long-term loans payable 37,000 23,500 219,626
Repayments of long-term loans payable (31,000) (42,000) (392,523)
Proceeds from issuance of bonds 19,899 19,895 185,934
Redemption of bonds (10,000) (30,000) (280,373)
Purchase of treasury stock (7,009) (7,892) (73,757)
Cash dividends paid (Note 22) (9,452) (11,731) (109,635)
Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation (463) — —
Other, net (156) 1,039 9,710
Net cash provided by (used in) financing activities (15,880) (25,487) (238,196)
Net increase (decrease) in cash and cash equivalents 1,283 (5,892) (55,065)
Cash and cash equivalents at beginning of period 45,437 46,720 436,635
Cash and cash equivalents at end of period (Note 23) ¥46,720 ¥40,827 $381,560
The accompanying notes are an integral part of these consolidated financial statements.
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Notes to Consolidated Financial Statements
MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
As of and for the fiscal years ended March 31, 2019 and 2020
1. BASIS OF PRESENTATION
MARUI GROUP CO., LTD. (“the Company”) and its consolidated subsidiaries (collectively, “the Group”)
prepare the consolidated financial statements in accordance with the “Regulation on Terminology, Forms, and
Preparation Methods of Consolidated Financial Statements” (Ministry of Finance Order No. 28 of 1976).
The Group maintain their accounts and records in accordance with the provisions set forth in the Companies
Act of Japan and the Financial Instruments and Exchange Act of Japan, and in conformity with accounting
principles generally accepted in Japan, which are different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards.
These consolidated financial statements are audited by PricewaterhouseCoopers Aarata LLC based on the
provisions set forth in Article 193-2, Paragraph (1) of the Financial Instruments and Exchange Act in Japan,
then filed and issued domestically as the Security Report by sending to the Director-General of the Kanto
Finance Bureau.
The accompanying consolidated financial statements of the Group have been prepared by making certain
reclassifications and rearrangements to the aforementioned consolidated financial statements issued
domestically in order to present them in a form that is more familiar to readers outside Japan. In addition,
certain reclassifications have been made in the 2019 consolidated financial statements to conform to the
classifications used in 2020. These accompanying consolidated financial statements are also audited by
PricewaterhouseCoopers Aarata LLC on a voluntary basis.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which the
Company is incorporated and operates.
As permitted by the regulations under the Financial Instruments and Exchange Act of Japan, amounts of
less than one million yen have been omitted. As a result, the totals shown in the accompanying consolidated
financial statements in Japanese yen do not necessarily agree with the sums of the individual amounts.
The U.S. dollar amounts shown in the accompanying consolidated financial statements and notes thereto
were translated from the presented Japanese yen amounts into U.S. dollar amounts at the rate of ¥107 = $1, the
approximate rate of exchange at March 31, 2020, and were then rounded down to the nearest thousand. As a
result, the totals shown in the accompanying consolidated financial statements in U.S. dollars do not
necessarily agree with the sums of the individual amounts. This translation of Japanese yen amounts into U.S.
dollar amounts is included solely for the convenience of readers outside Japan. Such translation should not be
construed as a representation that Japanese yen could be converted into U.S. dollars at that or any other rate.
2. SIGNIFICANT ACCOUNTING POLICIES
(1) Principles of consolidation and accounting for investments in unconsolidated subsidiaries and
affiliates
The consolidated financial statements as of and for the fiscal years ended March 31, 2019 and 2020, include
the accounts of the Company and its nine significant subsidiaries.
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Under the control or influence concept, those companies in which the Company, either directly or
indirectly, is able to exercise control over operations are consolidated, and those companies over which the
Company has the ability to exercise significant influence are accounted for using the equity method. For the
fiscal years ended March 31, 2019 and 2020, there was no subsidiary or affiliate accounted for using the equity
method. Investments in the remaining unconsolidated subsidiaries and affiliates are stated at cost. If the equity
method of accounting was applied to the investments in these companies, the effect on the accompanying
consolidated financial statements would not be material.
All significant intercompany balances and transactions have been eliminated in consolidation.
The fiscal year-end of all consolidated subsidiaries is March 31, the same as that of the Company.
(2) Investment securities
Investment securities held by the Group are all classified as available-for-sale securities.
Available-for-sale securities with a determinable market value are stated at fair value based on the market
value at the balance sheet date, and valuation difference, net of applicable income taxes, are reported as a
separate component of net assets. Cost of securities sold is computed based on the moving-average method.
Available-for-sale securities without a determinable market value are stated at cost, principally determined by
the moving-average method.
Investments in unconsolidated subsidiaries and affiliates are stated at cost determined by the moving-
average method.
Investments in investment limited partnerships are stated at the net amount equivalent to the Company’s
ownership interest based on the latest financial statements available as of the reporting date stipulated in the
partnership agreement.
(3) Inventories
Inventories are measured at the lower of cost determined by the monthly weighted-average method or net
selling value.
(4) Depreciation and amortization
Property and equipment (excluding leased assets) are depreciated by the straight-line method.
Intangible assets are amortized by the straight-line method. Capitalized computer software costs for
internal use are amortized by the straight-line method over the estimated useful lives (within five years).
For finance leases that do not transfer ownership of the leased assets to the lessee, leased assets are
depreciated by the straight-line method over the lease terms with no residual value.
(5) Allowance for doubtful accounts
The allowance for doubtful accounts is stated at the amount determined based on the historical experience of
bad debt with respect to ordinary receivables (“general reserve”), plus an estimate of uncollectible amounts
determined by reference to specific doubtful receivables of customers experiencing financial difficulties
(“specific reserve”).
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(6) Provision for bonuses
The provision for bonuses is accrued at the fiscal year-end to which such bonuses are attributable.
(7) Provision for point card certificates
Credit card points are awarded to customers when they make purchases using EPOS cards and, upon request,
the Company will allow customers to use their accumulated credit card points for their payment.
The provision for point card certificates is accrued to the estimated amount required based on the balance
of credit card points awarded to cardholders outstanding at the fiscal year-end.
(8) Provision for loss on redemption of gift certificates
The monetary value of gift certificates and other certificates that have not been redeemed for a set period of
time after issuance is recognized as income. However, some gift certificates and other certificates can be
redeemed after the recognition of income.
The provision for loss on redemption of gift certificates is provided at the estimated amount to be
redeemed in the future based on historical experience.
(9) Provision for loss on interest repayment
The provision for loss on interest repayment is provided to the estimated amount of repayment claims on
consumer loan interests at the fiscal year-end.
(10) Provision for loss on guarantees
The provision for loss on guarantees is provided at the estimated amount of loss arising from the Group’s
guarantee obligations of customers’ liabilities in relation to loans to individuals from financial institutions with
which the Group has guarantee service arrangements.
(11) Provision for stock benefits
The provision for stock benefits is provided at the estimated amount for stock benefits to directors and
employees at the fiscal year-end in accordance with the internal rule for stock delivery.
(12) Basis for revenue recognition
The charges for installment sales and interest income on consumer loans are recognized on an accrual basis
based on the remaining loan balances.
(13) Cash and cash equivalents
In preparing the consolidated statements of cash flows, the Group considers cash on hand, readily available
deposits, and highly liquid short-term investments with maturities of three months or less when purchased that
are exposed to an insignificant risk of changes in value to be cash and cash equivalents.
(14) Consumption taxes
National and local consumption taxes are accounted for by the tax-excluded method. Non-deductible
consumption tax and other taxes imposed on fixed assets are recorded as expenses as incurred.
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3. ACCOUNTING STANDARD ISSUED BUT NOT YET APPLIED
The following standard and guidance were issued but not yet applied.
⚫ “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020)
⚫ “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30,
March 31, 2020)
(1) Overview
The above standard and guidance provide comprehensive principles for revenue recognition. Under the standard
and guidance, revenue is recognized by applying the following five steps.
Step 1: Identify contract(s) with customers
Step 2: Identify the performance obligations in the contract(s)
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract(s)
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
(2) Scheduled date of application
The Company plans to apply the aforementioned standard and guidance from the beginning of the fiscal year
ending March 31, 2022.
(3) Effect of application
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects
of this new standard and guidance on the consolidated financial statements.
⚫ “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019)
⚫ “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.
31, July 4, 2019)
⚫ “Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, July 4, 2019)
⚫ “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019)
⚫ “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance
No. 19, March 31, 2020)
(1) Overview
In order to improve comparability with international accounting standards, “Accounting Standard for Fair
Value Measurement” and the “Implementation Guidance on Accounting Standard for Fair Value Measurement”
(hereinafter referred to as “Fair Value Accounting Standards, etc.”) were developed, and guidance and other
rules were established with regard to the method for fair value measurement. Fair Value Accounting Standards,
etc. are applied to the fair values of the following items:
- Financial instruments included in the “Accounting Standard for Financial Instruments”
- Inventory held for trading purposes included in “Accounting Standard for Measurement of Inventories”
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In addition, the “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” was
revised, and notes were stipulated including the breakdown by level of fair values of financial instruments.
(2) Scheduled date of application
The Company plans to apply the aforementioned standards and guidance from the beginning of the fiscal year
ending March 31, 2022.
(3) Effect of application
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects
of these new standards and guidance on the consolidated financial statements.
⚫ “Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections”
(ASBJ Statement No. 24, March 31, 2020)
(1) Overview
The purpose of this accounting standard is to provide an overview of the principles and procedures for the
accounting treatment adopted in the event that related accounting standards, etc. are unclear.
(2) Scheduled date of application
The Company plans to apply the aforementioned standard from the end of the fiscal year ending March 31, 2021.
⚫ “Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31, March 31,
2020)
(1) Overview
The purpose of this accounting standard is to disclose information that contributes to the understanding of
financial statement users regarding items of the accounting estimates recorded in the financial statements for
the current fiscal year that have the risk of materially affecting the financial statements for the following fiscal
year.
(2) Scheduled date of application
The Company plans to apply the aforementioned standard from the end of the fiscal year ending March 31,
2021.
4. CHANGE IN PRESENTATION
Consolidated Statements of Income
The account “Financing expenses,” which was previously shown as a separate line item under “Non-operating
income (expenses),” was included in “Other, net” in the fiscal year ended March 31, 2020, as the monetary
impact on the consolidated financial statements was no longer significant. The reclassification was made to the
consolidated financial statements as of March 31, 2019, to conform to the current presentation.
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As a result, in the consolidated statement of income for the fiscal year ended March 31, 2019, the amounts of
¥153 million presented as “Financing expenses” under “Non-operating income (expenses)” was reclassified as
“Other, net”.
5. ADDITIONAL INFORMATION
Accounting treatment of expenses for credit card issuance
The Group’s credit card, issued by Epos Card Co., Ltd., improved security functions with an update to a new
type of IC chip, thereby further developing an environment for encouraging customers to use the credit cards
that offer further enhanced safety and security as their main card. Furthermore, with the potential to provide
optimal approaches based on card utilization for each individual customer with the introduction of a new
system, it became clear that promoting continuous utilization will provide future revenue acquisition, and an
increase in asset value for credit cards was recognized in the fourth quarter of the fiscal year under review. As
a result, although the Company previously recognized expenses for card issuance as expenses at the time of
issuance, expenses for card issuance arising from January 2020 onward are recognized as assets which are
depreciated over the effective period of the cards. As a result, operating income, ordinary income and income
before income taxes of the Company for the consolidated fiscal year under review increased by ¥489 million
($4,570 thousand) compared to when the previous method is used.
Accounting estimates for effects of COVID-19
The impact of COVID-19 on the Group can primarily be witnessed in the temporary closure and shortening of
business hours of Marui and Modi stores to prevent the spread of infection, sluggish store revenue due to
customers restraining from going out and decline in consumer sentiment, and delayed recovery in credit card
transactions. Throughout the affected period, the Group shortened business hours for about one month in
addition to closing stores for two to three months in the following consolidated fiscal year. After that, assuming
that the situation will gradually recover to conventional performance levels over the period from October 2020
at the earliest and October 2021 at the latest, the impact on each segment’s profit for the following
consolidated fiscal year is estimated to be a decrease of ¥3.0 billion ($28 million) to ¥9.0 billion ($84 million)
for the retailing segment and a decrease of ¥3.5 billion ($32 million) to ¥4.5 billion ($42 million) for the
FinTech segment. The Group has made accounting estimates that are based on a scenario that assumes a
conservative median in consideration of these figures. From this estimate of impact on profit and the
calculation of future cash flows based on certain assumptions, it was determined that there was no significant
impact of COVID-19 on impairment of noncurrent assets and the recoverability of deferred tax assets. In
addition, as a result of examining the risk of doubtful accounts in operating receivables (installment sales
accounts receivable and consumer loans outstanding operating loans), allowance for doubtful accounts
increased by ¥430 million ($4,018 thousand) in the current consolidated fiscal year. If the assumptions used in
the above estimates and future cash flow calculations change drastically, there is a possibility that the
Company’s financial condition and operating results for the following consolidated fiscal year may be
significantly affected.
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Officer Remuneration Board Incentive Plan Trust
The Company also has an incentive plan using the “Officer Remuneration Board Incentive Plan Trust (“BIP
Trust”)” to provide an incentive to (i) Directors and Executive Officers (excluding External Directors and non-
residents in Japan) of the Company and (ii) Directors of 11 subsidiaries of the Group (excluding External
Directors and non-residents in Japan; collectively, with the Directors and Executive Officers of the Company,
the “Executives”).
(1) Overview of the plan
The Company sets up a trust with the Executives who fulfill certain requirements as beneficiaries, by
contributing funds to acquire the Company’s stock. The trust acquires the Company’s own stock from the stock
market for the number of shares required for delivering to the Executives based on the prescribed internal rule
for stock delivery. Then, in accordance with the internal rule, the Company makes a delivery or payment of its
shares and cash equivalents to the amount obtained by converting a part of the shares into cash based on the
rank of each Executive and degree of achievement of the performance target.
The Company applies the “Practical Solution on Transactions of Delivering the Company’s Own Stock to
Employees, etc. through Trusts” (PITF No. 30, March 26, 2015) for the accounting treatment of the plan.
(2) The Company’s shares held at the trust
The Company’s shares held at the trust are carried at their book value at the trust (excluding incidental
expenses) and accounted for as treasury stock under net assets. The book value of applicable treasury stock is
¥683 million ($6,383 thousand) and the number of shares is 347,750 shares as of March 31, 2019 and 2020.
Stock Benefit Employee Stock Ownership Plan Trust
The Company has an incentive plan using the “Stock Benefit Employee Stock Ownership Plan Trust (“ESOP
Trust”)” to provide an incentive to the Group’s employees holding senior management positions (hereinafter
the “Senior Managers”), aiming to enhance their commitment to further improve the business performance and
corporate value over the medium-to-long term.
(1) Overview of the plan
The Company sets up a trust with the Senior Managers who fulfill certain requirements as beneficiaries, by
contributing funds to acquire the Company’s stock. The trust acquires the Company’s own stock from the stock
market for the number of shares required for delivering to the Senior Managers based on the prescribed
internal rule for stock delivery. Then, in accordance with the internal rule, the Company makes a delivery or
payment of its shares and cash equivalents to the amount obtained by converting a part of the shares into cash
based on the rank of each Senior Manager and degree of achievement of the performance target. The Company
applies the “Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees, etc.
through Trusts” (PITF No. 30, March 26, 2015) for the accounting treatment of the plan.
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(2) The Company’s shares held at the trust
The Company’s shares held at the trust are carried at their book value at the trust (excluding incidental
expenses) and accounted for as treasury stock under net assets. The book value of applicable treasury stock is
¥345 million ($3,224 thousand), and the number of shares is 197,434 shares as of March 31, 2019 and 2020.
MATTERS RELATED TO CONSOLIDATED BALANCE SHEETS
6. ACCOUNTS RECEIVABLE-INSTALLMENT
The following balances for receivables are securitized and are therefore excluded from the consolidated
balance sheets as of March 31, 2019 and 2020:
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Card shopping:
Lump sums receivable ¥79,920 ¥107,904 $1,008,448
Revolving receivable 26,164 60,486 565,289
Cash advance:
Revolving receivable 13,179 13,550 126,635
7. LOAN COMMITMENTS
Certain consolidated subsidiaries that operate in the credit card business provide cash advance services to
customers.
The unused balance of loans contingent with the loan commitments is as follows:
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Total loan limits ¥1,255,552 ¥1,331,778 $12,446,523
Amount executed as loans 150,652 152,863 1,428,626
Unused balance ¥1,104,900 ¥1,178,914 $11,017,887
The figures include amounts of receivables subject to securitization. Under the provisions of the loan
service contract, the Group is able to decline a loan request or decrease a loan limit when a customer’s
financial condition or other circumstances change. Thus, the total unused balance will not necessarily be
executed as loans.
8. REDUCTION ENTRY AMOUNT
As a result of the acceptance of national subsidies, the following reduction entry amount was deducted from
the acquisition cost of property and equipment.
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Reduction entry amount ¥66 ¥66 $616
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9. Acquisition price and accumulated depreciation of property, plant and equipment
The breakdown of the acquisition price and accumulated depreciation of property, plant and equipment that are
shown as net on the balance sheet are as follows:
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Buildings and structures ¥247,635 ¥248,241 $2,320,009
Accumulated depreciation (184,349) (186,489) (1,742,887)
Other 33,261 33,762 315,532
Accumulated depreciation (25,071) (25,481) (238,140)
10. INVESTMENTS IN STOCKS OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES
The balance of “Investment securities” includes the investments in stocks of unconsolidated subsidiaries and
affiliates as follows:
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Stocks of unconsolidated subsidiaries and affiliates ¥4,059 ¥4,949 $46,252
11. INVESTMENTS IN CAPITAL OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES
The balance of “Other” includes the investments in capital of unconsolidated subsidiaries and affiliates as
follows:
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Capital of unconsolidated subsidiaries and affiliates ¥132 ¥132 $1,233
12. CONTINGENT LIABILITIES
The Group has commitments to guarantee customers’ liabilities in relation to their personal loans from
financial institutions with which the Group has guarantee service arrangements.
As of March 31, 2019 and 2020, the amounts of the Group’s guarantee obligations were ¥22,217 million
and ¥19,829 million ($185,317 thousand), respectively.
MATTERS RELATED TO CONSOLIDATED STATEMENTS OF INCOME
13. COST OF SALES
For the fiscal years ended March 31, 2019 and 2020, cost of sales included the revaluation loss on inventories
in the amounts of ¥23 million and ¥34 million ($317 thousand), respectively.
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14. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the fiscal years ended March 31, 2019 and 2020, are as
follows:
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Advertisement ¥12,298 ¥7,545 $70,514
Provision for point card certificates 14,181 20,583 192,364
Provision for allowance for doubtful accounts 14,364 15,982 149,364
Salaries and allowances 30,869 29,484 275,551
Provision for bonuses 3,223 3,124 29,196
Commission expenses 13,679 16,009 149,616
Rent 15,501 15,552 145,345
Depreciation and amortization 8,614 7,861 73,467
Other 36,584 37,578 351,196
Total ¥149,317 ¥153,721 $1,436,644
The account “Commission expenses,” which was previously included in “Other” under “Selling, general and
administrative expenses,” was shown as a separate line item in the fiscal year ended March 31, 2020 due to an
increase in its monetary impact. The reclassification was made to the consolidated financial statements as of
March 31, 2019, to conform to the current presentation.
As a result, in the consolidated statement of income for the fiscal year ended March 31, 2019, the
amount of ¥50,264 million presented as “Other” under “Selling, general and administrative expenses” was
reclassified as “Commission expenses” and “Other” in the amounts of ¥13,679 million and ¥36,584 million,
respectively.
15. GAIN ON SALE OF PROPERTY AND EQUIPMENT
Gain on sale of property and equipment for the fiscal years ended March 31, 2019 and 2020, consisted of the
following:
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Land, etc. ¥1,754 — $—
Total ¥1,754 — $—
16. LOSS ON RETIREMENT OF PROPERTY AND EQUIPMENT
Loss on retirement of property and equipment for the fiscal years ended March 31, 2019 and 2020, consisted
of the following:
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Buildings and structures ¥192 ¥338 $3,158
Furniture and fixtures, etc. 1,145 961 8,981
Total ¥1,337 ¥1,299 $12,140
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17. LOSS ON CLOSING OF STORES
Loss on closing of stores for the fiscal years ended March 31, 2019 and 2020, consisted of the following:
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Restoration costs,etc. ¥2,000 — $—
Total ¥2,000 — $—
18. INFECTIOUS DISEASE RELATED COSTS
Infectious disease related costs include fixed costs, such as rent and depreciation that were reclassified from
selling, general and administrative expenses to extraordinary losses during the suspension of operations at
stores.
19. IMPAIRMENT LOSS
The Group recognized the amount of impairment loss on the following asset groups and included it in “Other,
net” under “Non-operating income (expenses).
The impairment loss recognized for the fiscal year ended March 31, 2019, is as follows:
Use Location Type of assets Millions of yen Thousands of U.S.
dollars (Note 1)
Stores Kyoto Marui
Kyoto, Kyoto Buildings ¥4 $37
Total ¥4 $37
The Group recognized the amount of impairment loss on the following asset groups and included it in “Other,
net” under “Non-operating income (expenses)”.
The impairment loss recognized for the fiscal year ended March 31, 2020, is as follows:
Use Location Type of assets Millions of yen Thousands of U.S.
dollars (Note 1)
Rental
properties, etc. Shinjuku-ku, Tokyo, etc. Buildings ¥128 $1,196
Total ¥128 $1,196
The Group has categorized its fixed assets by either store or rental property, which is the minimum cash-
generating unit. The carrying value of each asset group is written down to its respective recoverable amount
and in doing so is recognized as an impairment loss.
The Group estimated the recoverable amount of each asset group based on value in use or fair value less
costs to sell. If a store reports continuous operating losses, the Group evaluates that the value in use of the
store is zero since positive cash flows cannot be expected in the future. If a store is planned to be closed or
disposed of, the Group evaluates that the fair value less costs to sell is zero.
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20. MATTERS RELATED TO CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Valuation difference on available-for-sale securities:
Amounts incurred for the year ¥1,778 ¥(2,580) $(24,112)
Reclassification adjustments 250 — —
Before tax effect adjustment 2,028 (2,580) (24,112)
Tax effect (614) 788 7,364
Valuation difference on available-for-sale securities 1,414 (1,792) (16,747)
Deferred gains or losses on hedges:
Amounts incurred for the year 2 (0) (0)
Tax effect (0) 0 0
Deferred gains or losses on hedges 1 (0) (0)
Total other comprehensive income ¥1,416 ¥(1,792) $(16,747)
MATTERS RELATED TO CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
21. CLASS & NUMBER OF SHARES ISSUED AND OUTSTANDING AND TREASURY STOCK
The following table summarizes the number of shares of common stock, issued and outstanding, and treasury
stock:
Number of shares
2019 2020
Common stock, issued and outstanding:
At the beginning of the year 233,660,417 223,660,417
Decrease due to retirement of treasury stock (10,000,000) —
At the end of the year 223,660,417 223,660,417
Treasury stock:
At the beginning of the year 13,269,506 6,214,767
Increase due to purchase of treasury stock in the stock market 2,944,300 2,990,000
Increase due to the acquisition of treasury stock in relation to the
Officer Remuneration Board Incentive Plan Trust (“BIP Trust”)
and the Stock Benefit Employee Stock Ownership Plan Trust
(“ESOP Trust”)
— 441,800
Increase due to purchase of odd lot shares 962 874
Decrease due to retirement of treasury stock (10,000,000) —
Decrease due to the provision of the treasury stock in relation to
the BIP Trust and the ESOP Trust — (398,916)
Decrease due to sale of stock to odd lot shareholders (1) (73)
At the end of the year 6,214,767 9,248,452
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22. DIVIDENDS
The following tables summarize the dividends paid for the fiscal years ended March 31, 2019 and 2020:
2019
Resolution Class of share
Total amount of
dividends
Dividends per
share
Record date Effective date (Millions of yen) (Yen)
Ordinary General
Meeting of
Shareholders held on
June 25, 2018
Common stock ¥4,417 ¥20 March 31, 2018 June 26, 2018
Board of Directors’
meeting held on
November 8, 2018
Common stock 5,034 23 September 30,
2018
December 4,
2018
Notes: 1 The amount of dividends resolved at the Ordinary General Meeting of Shareholders held on June
25, 2018, includes ¥10 million of dividends for the BIP Trust and ESOP Trust.
2 The amount of dividends resolved at the Board of Directors’ meeting held on November 8, 2018,
includes ¥11 million of dividends for the BIP Trust and ESOP Trust.
2020
Resolution
Class of
share
Total amount of dividends Dividends per share
Record
date
Effective
date (Millions of yen)
(Thousands of
U.S. dollars)
(Note 1) (Yen)
(U.S. dollars)
(Note 1)
Ordinary General
Meeting of
Shareholders held on
June 20, 2019
Common
stock ¥5,666 $52,953 ¥26 $0.24
March 31,
2019
June 21,
2019
Board of Directors’
meeting held on
November 7, 2019
Common
stock 6,065 56,682 28 0.26
September
30, 2019
December
4, 2019
Notes: 1 The amount of dividends resolved at the Ordinary General Meeting of Shareholders held on June
20, 2019, includes ¥13 million ($121 thousand) of dividends for the BIP Trust and ESOP Trust.
2 The amount of dividends resolved at the Board of Directors’ meeting held on November 7, 2019,
includes ¥15 million ($140 thousand) of dividends for the BIP Trust and ESOP Trust.
Dividends with a record date during the fiscal year ended March 31, 2020, but with an effective date
subsequent to the fiscal year ended March 31, 2020, are as follows:
Resolution
Class of
share
Total amount of dividends
Source
Dividends per share
Record
date
Effective
date (Millions of yen)
(Thousands of
U.S. dollars)
(Note 1) (Yen)
(U.S.
dollars)
(Note 1)
Ordinary
General
Meeting of
Shareholders
held on June
29, 2020
Common
stock ¥4,729 $44,196
Retained
earnings ¥22 $0.20
March
31, 2020
June 30
2020
Note: The amount of dividends resolved at the Ordinary General Meeting of Shareholders held on June 29,
2020, includes ¥11 million ($102 thousand) of dividends for the BIP Trust and ESOP Trust.
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23. MATTERS RELATED TO CONSOLIDATED STATEMENTS OF CASH FLOWS
Reconciliations of cash and cash equivalents in the consolidated statements of cash flows to accounts and
amounts in the accompanying consolidated balance sheets as of March 31, 2019 and 2020, are as follows:
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Cash and deposits ¥46,731 ¥40,839 $381,672
Time deposits with maturity in excess of three months (11) (11) (102)
Cash and cash equivalents ¥46,720 ¥40,827 $381,560
24. LEASES
(As a Lessee)
The Group capitalizes leased assets under finance leases that do not transfer ownership. These assets mainly
comprise buildings and properties in connection with the Retailing segment.
The future minimum lease payments under non-cancellable operating leases are as follows:
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Within one year ¥3,328 ¥2,884 $26,953
Over one year 14,543 12,215 114,158
Total ¥17,872 ¥15,100 $141,121
(As a Lessor)
The future minimum lease receipts under non-cancellable operating leases are as follows:
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Within one year ¥7,303 ¥6,474 $60,504
Over one year 4,907 3,450 32,242
Total ¥12,211 ¥9,924 $92,747
25. FINANCIAL INSTRUMENTS
(1) Status of financial instruments
(a) Policy on financial instruments
- The Group is a corporate group that provides customers of a wide range of ages with rich lifecycle by
engaging in operations integrating retailing and FinTech. In the FinTech segment, operating receivables
(accounts receivable-installment and operating loans) increased owing to a growth in card shopping
transactions and stable handling of cash advance. The Group properly conducts credit control based on the
belief, which has been nurtured since its foundation, that “creditability should be built together with
customers.”
- The amount of funds procured has been increasing due to continuously growing demand for funds as the
FinTech segment grows. We proceed with the fund procurement with utmost priority on financial security.
The Group utilizes derivative transactions only to avoid risks, including the interest rate fluctuation risk on
loans, and does not use them for speculative purposes.
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- With regard to growth investments, we aim to build a new business model based on the trinity combining
“Retailing” and “FinTech” with “Co-Creation Investment.” We will mitigate investment risks and increase
returns by realizing “Co-Creation” through combining the businesses and human resources of the Group with
intangible assets such as know-how and skills of its investees. In addition, we will not engage in cross-
shareholdings, in principle, except for cases in which such holdings are deemed necessary for maintaining or
building upon collaborative or transactional relationships that are strategically critical for improving
corporate value. The Group has decided to undertake a phased reduction in cross-shareholdings with
counterparts with which it has already established sufficiently strong business relationships, out of
consideration for asset efficiency and stock price fluctuation risks.
(b) Financial instruments, their risks, and the risk management system
- Accounts receivable-installment and operating loans, which are the Group’s major operating receivables, are
generated from the use of EPOS cards such as card shopping transactions and cash advances. These
receivables involve credit risks such as delay in payment or bad debt if a customer fails to perform its
obligations in compliance with the contract. In accordance with the internal risk management rules, the
Group mitigates such risk by monitoring and evaluating the credit status of each customer by means of third-
party personal credit information agencies and the Group’s own credit monitoring system.
- Fund procurement may be constrained if financial markets fall into turmoil, the Group’s business
performance significantly deteriorates, or its credit worthiness suddenly declines. There are liquidity risks
that the Group cannot raise sufficient funds, and may fall short of funds necessary for each business or may
not be able to repay loans or corporate bonds, etc. on the due date of repayment or redemption. Furthermore,
there are interest rate fluctuation risks that the procurement interest rates fluctuate depending on the market
environment and other factors, resulting in higher procurement costs.
Amid FinTech projected to grow, demand for funds will continue to expand and the risk concerning fund
procurement will increase in the future. Therefore, the Group takes the following measures from the
perspectives of safety and cost.
- We seek to maintain a level of interest-bearing debt that is equivalent to around 90% of operating
receivables, considering a decline in financial security due to an increase in debts.
- We diversify our fund procurement methods by indirectly procuring funds from financial institutions,
directly procuring funds through issuance of bonds and commercial papers, as well as liquidating
operating receivables. We also strike a balance among procurement menus.
- In order to cope with the risk of refinancing the funds, we maintain consistent levels of annual
repayment and/or redemption amounts by controlling the years of procurement, and have established a
backup system mainly by executing commitment line contracts and establishing overdraft facilities with
financial institutions for such amounts.
- As for the interest rate of funds procured, we curb a sharp increase in procurement costs due to the
fluctuations in market interest rates by maintaining the structure of fixed interest rates at a certain rate of
50% to 60%.
- Investment securities primarily consist of shares issued by companies with which the Group has business
relationships and shares obtained through “Co-Creation Investment” which is to invest in growing
companies. These securities entail both the credit risk of the issuers and the market risk due to market price
86
fluctuations. With regard to “Co-Creation Investment,” the Group makes investment decisions after checking
profitability including not only financial returns but also collaborative returns to be generated from
collaboration with the Group. Also, the Group mitigates risks by regularly monitoring the fair value and the
financial condition, etc. of the counterparties as well as by selling in phases shares with diminished
rationality for holding upon considering the transaction relationship with the counterparties.
(c) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on the market price, and when no market price exists, a
rationally calculated amount is used. The calculation of such prices rests on variable factors, and therefore such
prices may change depending on different assumptions and factors used.
(2) Estimated fair value of financial instruments
Carrying value, fair value, and the difference between them as of March 31, 2019 and 2020, are summarized
below. Financial instruments for which the fair value is extremely difficult to determine are excluded from the
following table (See Note 2 below).
Millions of yen
2019 2020
Carrying value Fair value Difference Carrying value Fair value Difference
(1) Cash and deposits ¥46,731 ¥46,731 ¥― ¥40,839 ¥40,839 ¥―
(2) Notes and accounts receivable–trade 6,138 6,138 ― 5,153 5,153 ―
(3) Accounts receivable–installment 428,180 416,250
Allowance for doubtful accounts*1 (9,565) (11,145)
418,615 469,541 50,925 405,104 450,830 45,725
(4) Operating loans 137,473 139,313
Allowance for doubtful accounts*2 (3,058) (3,407)
134,414 152,121 17,706 135,906 153,450 17,544
(5) Investment securities:
Available-for-sale securities 14,630 14,630 ― 13,513 13,513 ―
(6) Leasehold and other deposits 5,334 5,388 54 4,833 4,848 15
Assets, total ¥625,865 ¥694,552 ¥68,686 ¥605,350 ¥668,635 ¥63,284
(1) Accounts payable–trade ¥10,231 ¥10,231 ¥― ¥7,145 ¥7,145 ¥―
(2) Short-term loans payable and
current portion of long-term loans
payable
71,632 71,632 ― 102,335 102,335 ―
(3) Current portion of bonds payable 30,000 30,000 ― 15,000 15,000 ―
(4) Income taxes payable 8,211 8,211 ― 10,724 10,724 ―
(5) Bonds payable 85,000 85,230 230 90,000 89,491 (508)
(6) Long-term loans payable 300,000 299,745 (254) 272,500 272,279 (220)
Liabilities, total ¥505,075 ¥505,051 ¥(24) ¥497,704 ¥496,975 ¥(729)
*1 The amount presents the total of general reserve and specific reserve for accounts receivable–installment.
*2 The amount presents the total of general reserve and specific reserve for operating loans.
87
Thousands of U.S. dollars (Note 1)
2020
Carrying value Fair value Difference
(1) Cash and deposits $381,672 $381,672 $―
(2) Notes and accounts receivable–trade 48,158 48,158 ―
(3) Accounts receivable–installment 3,890,186
Allowance for doubtful accounts (104,158)
3,786,018 4,213,364 427,336
(4) Operating loans 1,301,990
Allowance for doubtful accounts (31,841)
1,270,149 1,434,112 163,962
(5) Investment securities:
Available-for-sale securities 126,289 126,289 ―
(6) Leasehold and other deposits 45,168 45,308 140
Assets, total $5,657,476 $6,248,925 $591,439
(1) Accounts payable–trade $66,775 $66,775 $―
(2) Short-term loans payable and
current portion of long-term loans
payable
956,401 956,401 ―
(3) Current portion of bonds payable 140,186 140,186 ―
(4) Income taxes payable 100,224 100,224 ―
(5) Bonds payable 841,121 836,364 (4,747)
(6) Long-term loans payable 2,546,728 2,544,663 (2,056)
Liabilities, total $4,651,439 $4,644,626 $(6,813)
Notes: 1 Calculation method for fair value of financial instruments and information on securities and
derivative transactions
Assets:
(1) Cash and deposits and (2) Notes and accounts receivable–trade
The fair value approximates their carrying value because of their short maturities.
(3) Accounts receivable–installment and (4) Operating loans
The fair value is determined as their present value by discounting, using the risk-free rate, future
cash flows adjusted for their credit risk identified in the credit control process. With regard to
doughtful receivables and loans, allowance for doubtful accounts is estimated based on the
present value of their estimated future cash flows. The fair value approximates the amount of
carrying value less allowance for doubtful accounts. Thus, the amount of carrying value less
allowance for doubtful accounts is used as fair value.
(5) Investment securities
The fair value is based on quotes on an exchange.
(6) Leasehold and other deposits
88
The fair value is determined as their present value by discounting future cash flows at the risk-
free rate adjusted for credit risk premium. The amount includes the current portion of leasehold
and other deposits.
Liabilities:
(1) Accounts payable–trade, (2) Short-term loans payable and current portion of long-term loans
payable, (3) Current portion of bonds payable, and (4) Income taxes payable
The fair value approximates their carrying value because of their short maturities.
(5) Bonds payable
The fair value is based on the present value calculated by discounting the sum of principal and
interests using an interest rate, for which credit risk and redemption periods are taken into
account.
(6) Long-term loans payable
The carrying value of long-term loans payable with a floating interest rate approximates its fair
value since the interest rate reflects the market rate in the short term. Thus, carrying value is used
as its fair value. The fair value of long-term loans payable with fixed interest rates is calculated
by discounting the sum of principal and interests using an interest rate that would be applied to
similar new borrowings.
Derivative transactions
See Note 27, “DERIVATIVE TRANSACTIONS,” for details.
2 Financial instruments whose fair value is extremely difficult to determine
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Unlisted stocks ¥5,805 ¥8,492 $79,364
Contributions to investment limited partnerships 1,735 2,452 22,915
Contributions to limited liability companies ― 2,429 22,700
Unlisted bonds ― 499 4,663
Part of security deposits 27,263 26,797 250,439
The items above are not included in (5) Investment securities or (6) Leasehold and other deposits in
the table on page 24-26 as it is extremely difficult to determine the fair value since there were no market
prices available and their future cash flows cannot be estimated.
89
3 Redemption schedule for monetary claims and securities with maturities
Millions of yen
2019
Due in one year
or less
Due after one
year through
five years
Due after five
years through
ten years
Due after ten
years
Cash and deposits ¥46,731 ¥― ¥― ¥―
Notes and accounts receivable–trade 6,138 ― ― ―
Accounts receivable–installment 258,355 105,417 35,520 28,886
Operating loans 72,991 64,336 97 48
Leasehold and other deposits 684 2,667 1,083 899
Total ¥384,901 ¥172,421 ¥36,701 ¥29,834
Millions of yen
2020
Due in one year
or less
Due after one
year through
five years
Due after five
years through
ten years
Due after ten
years
Cash and deposits ¥40,839 ¥― ¥― ¥―
Notes and accounts receivable–trade 5,153 ― ― ―
Accounts receivable–installment 271,614 77,044 36,968 30,622
Operating loans 75,834 63,349 84 45
Leasehold and other deposits 1,524 1,400 1,008 899
Total ¥394,965 ¥141,794 ¥38,061 ¥31,568
Thousands of U.S. dollars (Note 1)
2020
Due in one year
or less
Due after one
year through
five years
Due after five
years through
ten years
Due after ten
years
Cash and deposits $381,672 $― $― $―
Notes and accounts receivable–trade 48,158 ― ― ―
Accounts receivable–installment 2,538,448 720,037 345,495 286,186
Operating loans 708,728 592,046 785 420
Leasehold and other deposits 14,242 13,084 9,420 8,401
Total $3,691,261 $1,325,177 $355,710 $295,028
See Note 34, “SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBT,” for the schedule of
aggregate annual maturities of long-term debt.
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26. INVESTMENT SECURITIES
(1)Information on available-for-sale securities as of March 31, 2019 and 2020, is as follows:
Millions of yen
2019 2020
Carrying
value
Acquisition
cost Difference
Carrying
value
Acquisition
cost Difference
Carrying value exceeding acquisition cost:
Stocks ¥13,154 ¥8,632 ¥4,522 ¥12,061 ¥9,655 ¥2,406
Subtotal 13,154 8,632 4,522 12,061 9,655 2,406
Carrying value not exceeding acquisition cost:
Stocks 1,476 1,703 (226) 1,451 2,110 (658)
Subtotal 1,476 1,703 (226) 1,451 2,110 (658)
Total ¥14,630 ¥10,335 ¥4,295 ¥13,513 ¥11,766 ¥1,747
Thousands of U.S. dollars (Note 1)
2020
Carrying
value
Acquisition
cost Difference
Carrying value exceeding acquisition cost:
Stocks $112,719 $90,233 $22,485
Subtotal 112,719 90,233 22,485
Carrying value not exceeding acquisition cost:
Stocks 13,560 19,719 (6,149)
Subtotal 13,560 19,719 (6,149)
Total $126,289 $109,962 $16,327
Unlisted stocks in the amount of ¥1,746 million and ¥3,543 million ($33,112 thousand) as of March 31,
2019 and 2020, respectively, contributions to limited liability companies in the amount of ¥2,429 million
($22,700 thousand) as of March 31, 2020, contributions to investment limited partnerships in the amount of
¥1,735 million and ¥2,452 million ($22,915 thousand) as of March 31, 2019 and 2020, and unlisted bonds in
the amount of ¥499 million ($4,663 thousand) as of March 31, 2020 are not included in the table above as it
is extremely difficult to determine the fair value since their market price is not readily available and their
future cash flows cannot be estimated.
(2)Information on sale of available-for-sale securities for the fiscal years ended March 31, 2019 and 2020, is as
follows:
Millions of yen
2019 2020
Proceeds
from sales Gains Losses
Proceeds
from sales Gains Losses
Stocks ¥104 ¥4 ¥253 ¥211 ¥211 ¥0
Total ¥104 ¥4 ¥253 ¥211 ¥211 ¥0
Thousands of U.S. dollars (Note 1)
2020
Proceeds
from sales Gains Losses
Stocks $1,971 $1,971 $0
Total $1,971 $1,971 $0
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(3) For the fiscal years ended March 31, 2019 and 2020, the disclosure of impairment loss on investment
securities was omitted due to insignificance of the amount. When the fair value of investment securities
declines by 30% to 50%, the Group recognizes an impairment loss after comprehensively evaluating the
recoverability of the market price.
27. DERIVATIVE TRANSACTIONS
For the fiscal years ended March 31, 2019 and 2020, the Group’s derivative transactions were limited to
interest rate swaps that qualified for hedge accounting and met the requirements for the special accounting
treatment for interest rate swaps as described below. There were no derivative transactions for which hedge
accounting was not applied.
Hedge accounting method: Special treatment for interest rate swaps
Type of derivative transactions: Interest rate swaps, receive floating/pay fixed
Hedged item: Long-term loans payable
Millions of yen
2019 2020
Contract amount Contract amount
Total Due after one year Fair value Total Due after one year Fair value
¥10,000 ¥― * ¥― ¥― *
Thousands of U.S. dollars (Note 1)
2020
Contract amount
Total Due after one year Fair value
$― $― *
* Interest rate swaps under the special accounting treatment are accounted for as an integral component of the long-term
loans payable designated as hedged items. Thus, their fair value is included in that of long-term loans payable.
92
28. DEFERRED TAX ACCOUNTING
Major components of deferred tax assets and deferred tax liabilities as of March 31, 2019 and 2020, are as
follows:
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Deferred tax assets:
Depreciation ¥5,257 ¥5,034 $47,046
Impairment loss 3,196 3,028 28,299
Provision for loss on interest repayment 1,516 1,426 13,327
Provision for point card certificates 4,164 6,052 56,560
Net unrealized loss on non-current assets 1,048 1,138 10,635
Provision for bonuses 1,088 1,146 10,710
Net operating loss carried forward 1,051 558 5,214
Other 8,110 8,889 83,074
Subtotal 25,433 27,277 254,925
Valuation allowance (5,815) (5,759) (53,822)
Total deferred tax assets ¥19,617 ¥21,518 $201,102
Deferred tax liabilities:
Reserve for special account for advanced depreciation
of non-current assets ¥10,891 ¥8,802 $82,261
Valuation difference on available-for-sale securities 1,314 526 4,915
Other 293 204 1,906
Total deferred tax liabilities ¥12,498 ¥9,533 $89,093
Deferred tax assets, net ¥7,119 ¥11,984 $112,000
Income taxes consist of corporation tax, inhabitants’ tax, and enterprise tax. Reconciliations between the
statutory tax rate and the effective tax rate reflected in the consolidated statements of income are as follows:
2019 2020
Statutory tax rate 30.6% ―%
Adjustments:
Permanent differences such as entertainment
expenses, etc. 0.2 ―
Permanent differences such as dividends, etc. (0.0) ―
Change in valuation allowance 0.5 ―
Inhabitants’ tax 0.4 ―
Difference in tax rates of consolidated subsidiaries 0.2 ―
Other 0.4 ―
Effective tax rate 32.3% ―
* For the fiscal year ended March 31, 2020, the difference between the statutory tax rate and effective tax
rate is not more than 5% of the statutory tax rate, and therefore notes are omitted.
29. ASSET RETIREMENT OBLIGATIONS
(1) Asset retirement obligations recognized on the consolidated balance sheets
The Group’s asset retirement obligations mainly include the cost of restoring the store sites to their original
condition under the real estate lease contracts of stores. The Group calculated its asset retirement obligations
by assuming the lease period as the expected period of use and applying discount rates of 0.00% to 1.38%.
93
The Company changed the estimate of the asset retirement obligation to recognize an additional ¥1,600
million ($14,953 thousand) for the fiscal year ended March 31, 2019 and a negative ¥547 million ($5,112
thousand) for the fiscal year ended March 31, 2020, respectively, of the asset retirement obligation due to a
change in estimate mainly because the amount of costs required at the time of retirement of certain assets
became determinable. Asset retirement obligations as of March 31, 2019 and 2020, consist of the following:
Asset retirement obligations as of March 31, 2019 and 2020, consist of the following:
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Beginning balance ¥897 ¥2,779 $25,971
Increase due to acquisition of property and equipment 301 ― ―
Increase (decrease) due to change in estimate 1,600 (547) (5,112)
Adjustments due to passage of time 4 4 37
Decrease due to fulfillment of obligation (24) (2) (18)
Ending balance ¥2,779 ¥2,233 $20,869
30. INVESTMENT AND RENTAL PROPERTY
Certain consolidated subsidiaries hold commercial properties, including land, for rental in the Tokyo
metropolitan area and other areas. The net rental income in connection with these properties for the fiscal years
ended March 31, 2019 and 2020, was ¥18,168 million and ¥20,179 million ($188,588 thousand), respectively.
The rental income was included in “Revenue” and the associated rental expenses were included in “Cost of
sales” and “Selling, general and administrative expenses.” The carrying value and the fair value of such assets
are as follows:
Millions of yen Thousands of U.S.
dollars (Note 1)
2019 2020 2020
Carrying value*1:
Beginning balance ¥103,928 ¥116,134 $1,085,364
Changes during the year*2 12,205 291 2,719
Ending balance ¥116,134 ¥116,426 $1,088,093
Fair value*3 ¥251,003 ¥239,656 $2,239,775
*1 Carrying value represents the amount on the consolidated balance sheets that is carried at the acquisition cost less
accumulated depreciation.
*2 Major items are the increases due to reclassification of holding purposes of properties in the amount of ¥12,897 million for
the fiscal year ended March 31, 2019, and due to an increase of assets in the amount of ¥1,403 million ($13,112 thousand)
for the fiscal year ended March 31, 2020.
*3 Fair value is basically based on the appraised value provided by third-party real estate appraisers.
94
31. SEGMENT INFORMATION
(1) Overview of reportable segments
The Group defines its reportable segments as a component of the Group for which separate financial
information is available and whose operating results are regularly evaluated by the Board of Directors to make
decisions about how resources are to be allocated among the Group and assess their performance.
The Group consists of the following two reportable segments identified by products and services:
“Retailing” and “FinTech.”
The Retailing segment engages in management of commercial property rental, retailing operations of
clothes and accessories, space production, advertising, apparel distribution, and management of buildings and
other facilities. The FinTech segment engages in the credit card services, the consumer loans, and the rent
guarantee businesses; IT systems; and real estate rental.
In addition, Geographical information and information about major customers, as required by the
accounting principles and practices generally accepted in Japan, are omitted since our business primarily
operates in Japan and there is no particular customer to whom revenue exceeds 10% of the total
revenue recorded in the consolidated statements of income.
(2) Basis of measurement for the amounts of segment revenue, segment income or loss, segment assets,
and other items
The accounting policies of each reportable segment are consistent with those disclosed in Note 2,
“SIGNIFICANT ACCOUNTING POLICIES.”
Segment income is measured on the basis of operating income. Intersegment sales and transfers are
accounted for based on the prevailing market price.
Millions of yen
2019
Reportable segment Adjustment *1
Consolidated *2
Retailing FinTech Total
Revenue:
Outside customers ¥125,410 ¥126,005 ¥251,415 ¥― ¥251,415
Intersegment 6,270 2,296 8,567 (8,567) ―
Total ¥131,681 ¥128,301 ¥259,982 ¥(8,567) ¥251,415
Segment income ¥11,421 ¥35,018 ¥46,439 ¥(5,255) ¥41,184
Segment assets*3 ¥301,520 ¥622,712 ¥924,232 ¥(34,035) ¥890,196
Other items:
Depreciation and amortization ¥7,701 ¥1,765 ¥9,466 ¥444 ¥9,911
Increase in property and
equipment and intangible assets 6,882 3,025 9,908 (813) 9,094
*1 Adjustment to segment income consists of intersegment elimination of ¥2,278 million and corporate expenses of
¥(7,533) million that are not allocated to each reportable segment. Adjustment to segment assets mainly consists of
intersegment elimination of ¥(432,711) million and corporate assets of ¥399,889 million, which mainly present the
Company’s loans in connection with the Group’s cash management system.
*2 Segment income is reconciled to operating income in the consolidated statements of income.
*3 Fixed assets at stores are included in Retailing segment assets. However, stores are important touch points for acquiring
new customers based on the business model generating synergies by integrating “stores, cards, and the Web” of the
Group. Therefore, these assets also contribute to the Fintech segment income as locations for issuing EPOS cards.
95
Millions of yen
2020
Reportable segment Adjustment *1
Consolidated *2
Retailing FinTech Total
Revenue:
Outside customers ¥110,960 ¥136,622 ¥247,582 ¥― ¥247,582
Intersegment 5,311 2,923 8,235 (8,235) ―
Total ¥116,271 ¥139,546 ¥255,817 ¥(8,235) ¥247,582
Segment income ¥10,027 ¥38,399 ¥48,426 ¥(6,482) ¥41,944
Segment assets*3 ¥275,779 ¥622,438 ¥898,217 ¥(12,248) ¥885,969
Other items:
Depreciation and amortization ¥6,816 ¥1,897 ¥8,713 ¥477 ¥9,191
Increase in property and
equipment and intangible assets 8,311 3,448 11,759 (1,291) 10,468
Thousands of U.S. dollars (Note 1)
2020
Reportable segment Adjustment *1
Consolidated *2
Retailing FinTech Total
Revenue:
Outside customers $1,037,009 $1,276,841 $2,313,850 $― $2,313,850
Intersegment 49,635 27,317 76,962 (76,962) ―
Total $1,086,644 $1,304,168 $2,390,813 $(76,962) $2,313,850
Segment income $93,710 $358,869 $452,579 $(60,579) $392,000
Segment assets*3 $2,577,373 $5,817,177 $8,394,551 $(114,467) $8,280,084
Other items:
Depreciation and amortization $63,700 $17,728 $81,429 $4,457 $85,897
Increase in property and
equipment and intangible assets 77,672 32,224 109,897 (12,065) 97,831
*1 Adjustment to segment income consists of intersegment elimination of ¥2,334 million ($21,813 thousand) and corporate
expenses of ¥(8,816) million ($(82,392) thousand) that are not allocated to each reportable segment. Adjustment to
segment assets mainly consists of intersegment elimination of ¥(398,869) million ($(3,727,747) thousand) and corporate
assets of ¥389,314 million ($3,638,448 thousand), which mainly present the Company’s loans in connection with the
Group’s cash management system.
*2 Segment income is reconciled to operating income in the consolidated statements of income.
*3 Fixed assets at stores are included in Retailing segment assets. However, stores are important touch points for acquiring
new customers based on the business model generating synergies by integrating “stores, cards, and the Web” of the
Group. Therefore, these assets also contribute to the Fintech segment income as locations for issuing EPOS cards.
For the fiscal years ended March 31, 2019 and 2020, an impairment loss of ¥4 million and ¥128 million
($1,196 thousand), respectively, was reported by the Retailing segment.
96
32. RELATED PARTY INFORMATION
Related party information where directors and their close relatives substantially own a majority of the voting
rights is as follows:
2019
Name of
company Location
Capital (Millions of
yen) Business
Voting
rights Relationship Transaction
Amount (Millions of
yen)
Account
name
Balance (Millions of
yen)
Nakano Co., Ltd.
Shinjuku, Tokyo
¥10
Real estate rental
Direct 1.1%
Property rental
Concurrent
position as director
Property rental
¥47
Leasehold and other
deposits
¥41
Other current
liabilities
1
Seiwa Kogyo Co., Ltd.
Shinjuku, Tokyo
10
Real estate rental
Direct 0.8%
Property rental
Concurrent
position as director
Property rental
32
Leasehold and other
deposits
191
The monetary amounts above do not include consumption taxes. Terms and conditions for rental
agreements are determined similarly to those of third-party transactions.
2020
Name of
company Location
Capital (Millions of
yen) Business
Voting
rights Relationship Transaction
Amount (Millions of
yen)
Account
name
Balance (Millions of
yen)
Nakano Co., Ltd.
Shinjuku, Tokyo
¥10 ($93 thousand)
Real estate rental
Direct 1.1%
Property rental
Concurrent
position as director
Property rental
¥47 ($439 thousand)
Leasehold and other
deposits
¥41 ($383 thousand)
Other current
liabilities
1 ($9 thousand)
Seiwa Kogyo
Co., Ltd.
Shinjuku,
Tokyo
10
($93 thousand)
Real estate
rental
Direct
0.8%
Property
rental Concurrent
position as director
Property
rental
16
($149 thousand)
The monetary amounts above do not include consumption taxes. Terms and conditions for rental
agreements are determined similarly to those of third-party transactions.
33. PER SHARE INFORMATION
Net income per share, both basic and diluted, for the fiscal years ended March 31, 2019 and 2020, is as
follows:
Yen U.S. dollars
(Note 1)
2019 2020 2020
Net income per share ¥115.99 ¥117.58 $1.09
Thousands of shares
2019 2020
Weighted-average number of outstanding shares 218,488 216,001
Diluted earnings per share is not stated as there are no diluted shares.
Net income per share is computed based on the net income attributable to shareholders of common stock
and the weighted-average number of outstanding shares.
97
For the computation of net income per share, the number of shares held by BIP Trust and ESOP Trust is
deducted from the weighted-average number of outstanding shares (502 thousand shares and 479 thousand
shares for the fiscal years ended March 31, 2019 and 2020, respectively).
34. SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBT
Short-term loans payable and current portion of long-term loans payable as of March 31, 2019 and 2020,
consist of the following:
Millions of yen Thousands of
U.S. dollars
(Note 1)
2019 2020 2020
Short-term loans payable ¥29,632 ¥51,335 $479,766
Current portion of long-term loans payable 42,000 51,000 476,635
Total ¥71,632 ¥102,335 $956,401
Annual weighted-average interest rates of short-term loans payable were 0.27% and 0.25% and those of
current portion of long-term loans payable were 0.21% and 0.10% for the fiscal years ended March 31, 2019
and 2020, respectively.
Long-term debt as of March 31, 2019 and 2020, consists of the following:
Millions of yen Thousands of
U.S. dollars
(Note 1)
2019 2020 2020
0.26% long-term loans from banks and others due through 2029,
excluding current portion ¥300,000 ¥272,500 $2,546,728
22nd series unsecured 0.850% corporate bond, due 2019 5,000 ― ―
25th series unsecured 0.344% corporate bond, due 2019 10,000 ― ―
26th series unsecured 0.562% corporate bond, due 2021 10,000 10,000 93,457
27th series unsecured 0.337% corporate bond, due 2020 15,000 15,000 140,186
28th series unsecured 0.543% corporate bond, due 2022 10,000 10,000 93,457
29th series unsecured 0.050% corporate bond, due 2019 15,000 ― ―
30th series unsecured 0.130% corporate bond, due 2021 10,000 10,000 93,457
31st series unsecured 0.190% corporate bond, due 2022 10,000 10,000 93,457
32nd series unsecured 0.300% corporate bond, due 2024 10,000 10,000 93,457
33rd series unsecured 0.040% corporate bond, due 2021 10,000 10,000 93,457
34th series unsecured 0.190% corporate bond, due 2023
(Green bond) 10,000 10,000 93,457
35th series unsecured 0.170% corporate bond, due 2024 ― 10,000 93,457
36th series unsecured 0.250% corporate bond, due 2026 ― 10,000 93,457
Lease obligation 1,550 1,780 16,635
416,550 379,280 3,544,672
Less: Current portion of corporate bond and lease obligation 30,175 15,291 142,906
Total ¥386,375 ¥363,989 $3,401,766
98
The aggregate annual maturities of long-term debt subsequent to March 31, 2020, are as follows:
Millions of yen Thousands of U.S. dollars (Note 1)
Year ending March 31 Long-term loans
payable
Bonds
payable
Lease
obligation
Long-term loans
payable
Bonds
payable
Lease
obligation
2021 ¥51,000 ¥15,000 ¥291 $476,635 $140,186 $2,719
2022 37,000 30,000 241 345,794 280,373 2,252
2023 35,000 20,000 241 327,102 186,915 2,252
2024 32,600 10,000 241 304,672 93,457 2,252
2025 and thereafter 167,900 30,000 766 1,569,158 280,373 7,158
Total ¥323,500 ¥105,000 ¥1,780 $3,023,364 $981,308 $16,635
35. QUARTERLY FINANCIAL INFORMATION (Unaudited)
Cumulative period the 1st quarter the 2nd quarter the 3rd quarter Year-End
Revenue (million yen) ¥57,407 ¥125,489 ¥186,430 ¥247,582
Income before income taxes (million yen)
8,231 21,067 30,100 37,408
Net income attributable to owners of parent (million yen)
5,596 13,981 19,905 25,396
Net income per share (yen) 25.75 64.45 91.97 117.58
Each quarter the 1st quarter the 2nd quarter the 3rd quarter the 4th quarter
Net income per share (yen) ¥25.75 ¥38.73 ¥27.50 ¥25.58
PricewaterhouseCoopers Aarata LLC Otemachi Park Building, 1-1-1 Otemachi, Chiyoda-ku, Tokyo 100-0004, Japan T: +81 (3) 6212 6800, F: +81 (3) 6212 6801, www.pwc.com/jp/assurance
Independent Auditor’s Report To the Board of Directors of MARUI GROUP CO., LTD. Opinion We have audited the consolidated financial statements of MARUI GROUP CO., LTD. and its subsidiaries (the Group), which comprise the consolidated balance sheets as at March 31, 2020, and the consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of changes in net assets and consolidated statements of cash flows for the year then ended, and notes to the consolidated financial statements. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at March 31, 2020, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with accounting principles generally accepted in Japan. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Matter The consolidated financial statements of the Group for the year ended March 31, 2019 were audited by another firm of auditors whose report, dated on August 30, 2019, expressed an unmodified opinion on those statements. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern and disclosing, as applicable, matters related to going concern. Those charged with governance are responsible for overseeing the Group’s financial reporting process.
2 of 3
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in Japan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, while the purpose of the consolidated financial statement audit is not to express an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate whether the presentation and disclosures of the consolidated financial statements are in accordance with accounting principles generally accepted in Japan, the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
3 of 3
Convenience translation The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2020 are presented solely for convenience. Our audit also included the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 1 to the consolidated financial statements. Interest required to be disclosed by the Certified Public Accountants Act of Japan Our firm and its designated engagement partners do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
Naoaki Kobayashi Tatsuya Chiba
Designated Engagement Partner Certified Public Accountant
Designated Engagement Partner Certified Public Accountant
November 19, 2020
102
（For reference） 1) Non-Consolidated Balance Sheets (As of March 31, 2019 and 2020)
Millions of yen
2019 2020
Assets
Current assets
Cash and deposits
Short-term loans receivable from
subsidiaries and affiliates
Other
Allowance for doubtful accounts
Noncurrent assets
Property, plant and equipment
Buildings
Structures
Vehicles
Tools, furniture and fixtures
Construction in progress
Intangible assets
Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates
Investments in capital of
subsidiaries and affiliates
Deferred tax assets
Other
¥365,521 ¥341,469
25,667
311,328
4,505
(33)
412,698
1,465
15
1
20
1,343
84
77
411,155
21,418
382,414
132
6,963
227
32,012
330,824
2,718
(33)
407,013
1,400
16
1
26
1,355
―
51
405,562
17,418
381,529
132
6,222
260
Total assets ¥772,534 ¥754,167
*1
*1
*1
*1
103
Millions of yen
2019 2020
Liabilities
Current liabilities
Short-term loans payable
Current portion of bonds
Short-term loans payable to subsidiaries and affiliates
Accounts payable-other
Accrued expenses
Income taxes payable
Deposits received
Provision for bonuses
Provision for stock benefits
Other
Noncurrent liabilities
Bonds payable
Long-term loans payable
Other
¥185,469
71,500
30,000
81,352
769
527
109
207
279
240
483
385,067
85,000
300,000
67
¥194,200
102,200
15,000
74,567
695
465
218
197
326
―
531
362,567
90,000
272,500
67
Total liabilities 570,536 556,767
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 available-for-sale securities
199,270
35,920
91,307
91,307
84,368
8,980
75,388
(12,327)
2,728 2,728
196,451
35,920
91,307
91,307
88,883
8,980
79,903
(19,661)
948
948
Total net assets 201,998 197,399
Total liabilities and net assets ¥772,534 ¥754,167
*1
*1
*1
*1
*1
*1
104
2) Non-Consolidated Statements of Income (For the fiscal years ended March 31, 2019 and 2020)
Millions of yen
2019 2020
Operating revenue ¥17,345
¥23,507
Operating expenses 6,835 7,471
Operating income 10,510 16,036
Non-operating income 2,588 2,570
Interest income
Dividend income
2,302
225
2,318
220
Other
60 31
Non-operating expenses 1,739 1,673
Interest expenses 1,404 1,271
Other
335 402
Ordinary income
11,359 16,933
Extraordinary income 4 1,442
Gain on sales of investment securities 4 211
Gain on sales of shares of subsidiaries and affiliates ― 1,231
Gain on sales of noncurrent assets 0 ―
Extraordinary loss 689 1,404
Loss on sales of investment securities 253 0
Loss on valuation of investment securities
Loss on valuation of shares of subsidiaries and affiliates
435
―
126
1,010
Retirement lump-sum payment ― 267
Other 0 0
Income before income taxes
Total income taxes
10,675
239
16,971
725
Income taxes-current 272 681
Income taxes-deferred (33) 44
Net income ¥10,436 ¥16,246
*1 *1
*1, *2
*1 *1
*1 *1
*1, *2
105
3) Non-Consolidated Statements of Changes in Net Assets (From April 1, 2018 to March 31, 2019)
(Millions of yen) Shareholders’ equity
Capital
stock
Capital surplus Retained earnings
Legal
capital
surplus
Other
capital
surplus
Total
capital
surplus
Legal
retained
earnings
Other retained
earnings Total
retained
earnings Retained earnings
brought forward
Balance as of April 1, 2018 ¥35,920 ¥91,307 ¥－ ¥91,307 ¥8,980 ¥91,470 ¥100,450
Changes in the fiscal year:
Dividends (4,417) (4,417)
Dividends(Interim dividend) (5,034) (5,034)
Net income 10,436 10,436
Acquisition of treasury stock
Disposition of treasury stock 0 0
Cancellation of treasury stock (17,064) (17,064)
Transfer to capital surplus
from retained earnings 17,064 17,064 (17,064) (17,064)
Change in items other than
shareholders’ equity-net
Total changes in the fiscal
year － － － － － (16,081) (16,081)
Balance as of March 31, 2019 ¥35,920 ¥91,307 ¥－ ¥91,307 ¥8,980 ¥75,388 ¥84,368
(Millions of yen)
Shareholders’ equity Valuation and
translation adjustments
Total net assets Treasury
stock
Total shareholders’
equity
Valuation
difference on
available-for-
sale securities
Total valuation
and translation
adjustments
Balance as of April 1, 2018 ¥(22,389) ¥205,288 ¥1,449 ¥1,449 ¥206,738
Changes in the fiscal year:
Dividends (4,417)
(4,417)
Dividends(Interim dividend) (5,034) (5,034)
Net income 10,436 10,436
Acquisition of treasury stock (7,002) (7,002) (7,002)
Disposition of treasury stock 0 0 0
Cancellation of treasury stock 17,064 － －
Transfer to capital surplus
from retained earnings － －
Change in items other than
shareholders’ equity-net 1,278 1,278 1,278
Total changes in the fiscal year 10,062 (6,018) 1,278 1,278 (4,740)
Balance as of March 31, 2019 ¥ (12,327) ¥199,270 ¥2,728 ¥2,728 ¥201,998
106
(From April 1, 2019 to March 31, 2020)
(Millions of yen) Shareholders’ equity
Capital
stock
Capital surplus Retained earnings
Legal
capital
surplus
Other
capital
surplus
Total
capital
surplus
Legal
retained
earnings
Other retained
earnings Total
retained
earnings Retained earnings
brought forward
Balance as of April 1, 2019 ¥35,920 ¥91,307 ¥－ ¥91,307 ¥8,980 ¥75,388 ¥84,368
Changes in the fiscal year:
Dividends (5,666) (5,666)
Dividends(Interim dividend) (6,065) (6,065)
Net income 16,246 16,246
Acquisition of treasury stock
Disposition of treasury stock 0 0
Cancellation of treasury stock
Transfer to capital surplus
from retained earnings (0) (0) 0 0
Change in items other than
shareholders’ equity-net
Total changes in the fiscal
year － － － － － 4,514 4,514
Balance as of March 31, 2020 ¥35,920 ¥91,307 ¥－ ¥91,307 ¥8,980 ¥79,903 ¥88,883
(Millions of yen)
Shareholders’ equity Valuation and
translation adjustments
Total net assets Treasury
stock
Total shareholders’
equity
Valuation
difference on
available-for-
sale securities
Total valuation
and translation
adjustments
Balance as of April 1, 2019 ¥ (12,327) ¥199,270 ¥2,728 ¥2,728 ¥201,998
Changes in the fiscal year:
Dividends (5,666) (5,666)
Dividends(Interim dividend) (6,065) (6,065)
Net income 16,246 16,246
Acquisition of treasury stock (7,886) (7,886) (7,886)
Disposition of treasury stock 552 552 552
Cancellation of treasury stock － －
Transfer to capital surplus
from retained earnings － －
Change in items other than
shareholders’ equity-net (1,779) (1,779) (1,779)
Total changes in the fiscal year (7,334) (2,819) (1,779) (1,779) (4,598)
Balance as of March 31, 2020 ¥ (19,661) ¥196,451 ¥948 ¥948 ¥197,399
Amounts in these consolidated statements have been rounded down to the nearest unit.
107
Notes to Non-Consolidated Financial Statements
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 price
prevailing 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-average
method). Available-for-sale securities for which fair values are not available are mainly stated at cost
using the moving-average method. Investments in investment limited partnerships are stated at the net
value of equities based on the most recent financial statement available prepared according to the
financial reporting date specified in the respective partnership agreement.
2. Method of depreciation and amortization of noncurrent assets
(1) Property, plant and equipment
Property, plant and equipment are depreciated using the straight-line method.
(2) Intangible assets
Intangible assets are amortized using the straight-line method. Software for internal use, however, is
amortized using the straight-line method over the useful life estimated by the Company (not
exceeding five years).
3. Basis for recognizing allowances and provisions
(1) Allowance for doubtful accounts
The estimated uncollectible amounts are determined on the case-by-case analysis of recoverability
for receivables with default possibility.
(2) Provision for bonuses
The portion of estimated bonus payments that is incurred during the current fiscal year is recognized.
(3) Provision for stock benefits
To prepare for provision of the Company’s stock benefits to officers and employees pursuant to the
stock 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.
108
CHANGE IN PRESENTATION
Non-Consolidated Statements of Income
The account “Financing expenses,” which was previously shown as a separate line item under “Non-
operating income (expenses),” was included in “Other, net” in the fiscal year ended March 31, 2020, as the
monetary impact on the non-consolidated financial statements was no longer significant. The reclassification
was made to the non-consolidated financial statements for the fiscal year ended March 31, 2019, to conform
to the current presentation.
As a result, in the non-consolidated statement of income for the fiscal year ended March 31, 2019, the
amounts of ¥153 million presented as “Financing expenses” and ¥181 million presented as “Other, net” under
“Non-operating income (expenses)” were reclassified as “Other, net” in the amount of ¥335 million.
ADDITIONAL INFORMATION
Officer Remuneration Board Incentive Plan Trust
The description of the Officer Remuneration Board Incentive Plan Trust (“BIP Trust”) is identical to that in
“Notes to Consolidated Financial Statements, 6. ADDITIONAL INFORMATION” in the consolidated
financial statements, and is therefore omitted.
Stock Benefit Employee Stock Ownership Plan Trust
The description of the Stock Benefit Employee Stock Ownership Plan Trust is identical to that in “Notes to
Consolidated Financial Statements, 6. ADDITIONAL INFORMATION” in the consolidated financial
statements, and is therefore omitted.
MATTERS RELATED TO NON-CONSOLIDATED BALANCE SHEETS
1. MONETARY CLAIMS AND DEBTS
*1. The amounts of monetary claims and debts to subsidiaries and affiliates are as follows:
(Millions of yen)
2019 2020
Short-term monetary claims ¥331,048 ¥312,760
Short-term monetary debts 81,590 74,749
2. CONTINGENT LIABILITIES
The Group provides guarantees for unpaid funds to business partners of Epos Card Co., Ltd., a consolidated
subsidiary, as follows:
(Millions of yen)
2019 2020
¥18,872 ¥22,540
109
MATTERS RELATED TO NON-CONSOLIDATED STATEMENTS OF INCOME
1. TRANSACTION VOLUMES
*1. Transaction volumes with subsidiaries and affiliates for the fiscal years ended March 31, 2019 and 2020
are as follows:
(Millions of yen)
2019 2020
Transaction volumes of
operating transactions
Operating revenue ¥17,338 ¥23,505
Operating expenses 1,029 1,330
Transaction volumes of
non-operating transactions
2,338 2,357
2. OPERATING EXPENSES
*2. The main expenses and amounts recorded under operating expenses for the fiscal years ended March 31,
2019 and 2020 are as follows:
(Millions of yen)
2019 2020
Salaries and allowances ¥2,479 ¥2,697
Provision for bonuses 279 326
Outsourcing expenses 898 1,235
Commission expenses 868 935
Depreciation and amortization 72 77
INVESTMENT SECURITIES
The fair values of the stocks of subsidiaries and affiliates have been omitted, as it is extremely difficult to
determine the fair value since their market price is not readily available.
Balance sheet amounts of the stocks of subsidiaries and affiliates for which the fair values are extremely
difficult to determine are as follows:
(Millions of yen)
2019 2020
Stocks of subsidiaries ¥379,961 ¥381,556
Stocks of affiliates 1,568 857
Total ¥381,529 ¥382,414
110
DEFERRED TAX ACCOUNTING
1. Principal components of deferred tax assets and deferred tax liabilities
(Millions of yen)
2019 2020
(Deferred tax assets)
Impairment loss of
investment securities in
subsidiaries and affiliates
for restructuring
¥7,238
¥7,238
Other 2,859 3,107
Sub-total 10,097 10,345
Valuation allowance (2,671) (2,963)
Total
¥7,426
¥7,382
(Deferred tax liabilities)
Valuation difference on available-for-sale securities
¥1,204 ¥419
Total ¥1,204 ¥419
Net deferred tax assets ¥6,222 ¥6,963
2. Income taxes consist of corporation tax, inhabitants’ tax, and enterprise tax. Reconciliations between the
statutory tax rate and the effective tax rate reflected in the non-consolidated statements of income are as
follows:
2019 2020
Statutory tax rate 30.6 % 30.6 %
Adjustments:
Permanent differences such as
entertainment expenses, etc.
0.4 0.4
Permanent differences such as
dividends, etc.
(30.3 ) (28.5 )
Change in valuation allowance 1.4 1.7
Other 0.1 0.1
Effective tax rate 2.2 % 4.3 %
SUBSEQUENT EVENT
Not applicable.
111
4) SUPPLEMENTARY SCHEDULES
The schedule for property and equipment, etc. consists of the following:
(Millions of yen)
Asset type
Balance as
of April 1,
2019
Increase
during
period
Decrease
during
period
Amortization
during period
Balance as
of March
31, 2020
Accumulated
depreciation
Property and equipment
Buildings ¥124 ¥－ ¥－ ¥0 ¥124 ¥108
Structures 21 － － 0 21 19
Vehicles 34 － － 6 34 14
Tools, furniture and fixtures 2,059 10 12 21 2,057 713
Construction in progress － 84 － － 84 －
Total ¥2,239 ¥94 ¥12 ¥29 ¥2,321 ¥856
Intangible assets
Other ¥146 ¥40 ¥－ ¥13 ¥186 ¥108
Total ¥146 ¥40 ¥－ ¥13 ¥186 ¥108
Note: The balance as of April 1, 2019 and the balance as of March 31, 2020 are based on the acquisition
costs.
The schedule for allowances and provisions consists of the following:
(Millions of yen)
Balance as of April
1, 2019
Increase during
period
Decrease during
period
Balance as of March
31, 2020
Allowance for doubtful
accounts ¥33 ¥－ ¥0 ¥33
Provision for bonuses 279 326 279 326
Provision for stock
benefits 240 － 240 －
(2)MAJOR ASSETS AND LIABILITIES
The Group prepares consolidated financial statements, and details of the major assets and liabilities are
therefore omitted.
(3)OTHER
Not applicable.