４FinTech Segment Growth Strategies

33

MARUI GROUP’s FinTech

- Mission driven -

Finance × Technology

Financial Services for Everyone

Financial Inclusion

-Technology driven-

FinTech

34

MARUI GROUP’s Platform

Number of actual stores

23

Annual number of visiting customers

210 million

Ratio of active cardholders under 30

55%Cardholders

7.2million

Ratio of cardholders registered for Internet

services

86%

＊Figures from FY2020

Strength of FinTech

36

55％45％

MARUI GROUP

＊Active cardholders

【Ratio of revolving and installment payments attribute to installment sales account receivable (including factoring accounts receivable)】

63％

Whole industry Company B

25％

25％

75％

Whole industry

23％

77％

CompanyＡ

【 Distribution of cardholders by age 】

40s～ ～30s

・Realizing high earnings through high exposure to the younger generation

MARUI GROUP

＊Figures from FY2020

St re n g t h o f F i nTe c h ： O u r Cu sto m e r P ro f i l e

41％

37

・Although the ratio of revolving and installment payments attribute to installment sales accounts receivable is 63%, the ratio of bad debt write-offs is only 1.9%

・Established unique credit system, combining know-how accumulated since foundation and our IT expertise

63％ 41％ 25％

＊Figures from FY2020

Ratio ofbad debt

write-offs

3.1％

【Criteria of credit limit】

Age

Occupation

Income

UsageHistory

PaymentHistory

Age

Occupation

IncomeOth

er c

ompa

nies

MAR

UI G

ROU

P

Usage & payment evaluation

Increasing of credit limit

【Ratio of revolving and installment payments and bad debt write-offs attribute to installment sales account receivable

(including factoring accounts receivable)】

Ratio ofbad debt

write-offs

1.9％

Ratio ofbad debt

write-offs

0.9％

MARUI GROUP CompanyＡ Company B

St re n g t h o f F i nTe c h ： C re d i t co st a n d ex p e r t i s e

3813年度 14年度 15年度 16年度 17年度 18年度 19年度

19年度入会

18年度入会

17年度入会

16年度入会

15年度入会

14年度入会

CAGR

+90％ +90%

+44％ +13％

+30％ +10％

+22％ +8％

+18％ +6％

― ―FY18 Change

← Transaction

Enrollment year

・Achieved stable profit growth due to large increase in transaction amount of past enrollment members・The average annual growth rate of transactions from members enrolled in 2014 was 18%

St r e n g t h o f F i nTe c h ： C h a n g e o f t ra n s a c t i o n va l u e b y e n r o l l m e n t y e a r

FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

Time →

Enrollmentin FY19

Enrollmentin FY18

Enrollmentin FY17

Enrollmentin FY14

Enrollmentin FY15

Enrollmentin FY16

39

・High-value-added business model

I n d u st r y - Lea d i n g Le v e l o f O p e rat in g I n co m e p e r A ct i v e C a rd

[Cardholders] [Card Transactions] [ROIC]

[Operating Income per Active Card]

丸井Ｇ Ａ社 Ｂ社

丸井Ｇ Ａ社 Ｂ社

26.46million

丸井Ｇ Ａ社 Ｂ社

6.36million

26.92million

¥1,700billion

¥4,700billion

¥4,900 billion

丸井Ｇ Ａ社 Ｂ社

3.9%

1.1%2.2%

Revenue

￥23,400

Expenses￥16,900

Income￥6,500

￥14,300￥13,800

￥500￥10,600

￥8,200

￥2,400

MARUIGROUP

MARUIGROUP

MARUIGROUP

MARGROUP

CompanyA

CompanyB

CompanyA

CompanyA

CompanyB

CompanyB

Company A Company B

* Total for card shopping and cash advance transactions* Figures from FY2017, segment based

MARGROUP

40

I n d u st r y - Lea d i n g Leve l of C a rd i s s u a n ce n u m b e rs re l at i ve to s ho p reta i l t ra n s a ct i o n s

・Taking our combined strength in “high card issuance ability” x “high profits per card”aiming to achieve top profits in the industry

EPOS

¥6,500

¥2,400

EPOS

2.4 people

0.6 people0.74 million

Approx. 2.0 million

EPOS

¥302.3 billion

Approx. ¥3.0 trillion

EPOS Company B

[Shop Retail Transactions] [Profit Per Card][New Cards IssuedPer Y1m Retail Sales]

[New Card Issued]

Company B Company B Company B

4x more new cards issuance relative to retail sales 2.7x more profit per cardholder

＊Note: Figures are our estimates based on public information）

×

＊Figures from 2017, segment based

41

Industry’s highest level of asset efficiency

・Comparison of ROIC and PER among credit card companies

-0.5

0.5

1.5

2.5

3.5

4.5

5.5

0.0 5.0 10.0 15.0 20.0 25.0 30.0

MARUI GROUP(FInTech)

Company A

Company B

ＥＣ Company C

Company D

Company E

ROIC（％）

PER

linear approximation curve

0（Note: Figures are our estimates based on public information, Stock price as of September 9, 2019, EPS forecasts for FY2020）

42

Nationwide Development of Credit Card Membership

・Expand e-commerce, service, and contents-related collaboration partner network・Leverage group’s know-how and human resources to expand

commercial facility collaboration partner network

Main Business Area（Tokyo / Kanagawa / Saitama）

(As of March 31, 2020)

Cardholders: 72,000,000 <Cardholders> (Thousands of people)

FY20% of total share

Age 39 and

Below

Main Business

Area1,940 27％ 24％

Others 1,610 22% 8％

Total 3,550 49% 12％

Age 40 and above 3,650 51% －

Total 7,200 100% －

43

C re d i t C a rd Re ce i va b l e s a n d R at i o o f O v e rd u e D e bt( M o re T h a n 9 0 D a y s O v e rd u e ) i n t h e U n i te d State s

・Generally speaking, the increase in the outstanding balance of bonds tend tolead to an increase in delinquency rate

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

400

600

800

1,000

03:Q

103

:Q3

04:Q

104

:Q3

05:Q

105

:Q3

06:Q

106

:Q3

07:Q

107

:Q3

08:Q

108

:Q3

09:Q

109

:Q3

10:Q

110

:Q3

11:Q

111

:Q3

12:Q

112

:Q3

13:Q

113

:Q3

14:Q

114

:Q3

15:Q

115

:Q3

16:Q

116

:Q3

17:Q

1

Balance of debts（Left）

Percentage of delinquency（Right）

（Billions of Dollars）

①LoanIncrease

②DelinquencyIncrease

③LoanControl

④DelinquencyDecrease

①LoanIncrease

②DelinquencyIncrease

44

Provision for Bad Debts

・Increases in provision for bad debts in conjunction with higher operating receivables, but stable ratio of bad debt write-offs of around 1%

（％）

13.012.0 11.6

10.07.5 6.8 5.9 6.4

7.7 7.39.6

12.314.4 162

3.4

4.3

3.9

3.2

3.43.1

2.3

1.8 1.7 1.6 1.5 1.61.8

1.9

0.0

1.0

2.0

3.0

4.0

0

100

200

300

07.3 08.3 09.3 10.3 11.3 12.3 13.3 14.3 15.3 16.3 17.3 18.3 19.3 20.3

（Billions of yen）555.6

■Provision for Bad Debts and Ratio of Bad Debt Write-Offs

Ratio of bad debt write-offs

(Operating receivables）

¥299.8 billion

(Provision for bad debts)

10

20

30

Fintech in Japan

46

G ro w t h S u sta i n a b i l i t y o f C re d i t C a rd B u s i n e s s : C o m pa r i s o n o f Pa y m e n t M et h o d s b y C o u n t r y

・Predominately cash used for payment in Japan, significant room for growth of credit card payments

Japan United States South Korea

Cash

Banktransfers

Prepaid cards, e-money

Creditcards

52％

16％

17％ 15％

Checks

28％

70％

Creditcards

Debitcards

Cash

24％

■Distribution of Payment Methods by Country

* Calculated by MARUI GROUP based on data from the Ministry of Economy, Trade and Industry; Mitsubishi Research Institute, Inc.;and the Japan Consumer Credit Association

472008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

CAGR＋６％

CAGR＋７％

Shift to Cashless Payments

・Japanese government sets policy target of 40% cashless payment settlement ratio by 2027 to promote FinTech advance

18％

12％

40％■Cashless Payment Settlement Trends

*Source: Cabinet Office FY2016 National Statistics Annual Report, Future Investment Policy 2017

48

M i d to Lo n g -Te r m C o n s u m pt i o n O u t l o o k a n d C a s h l e s s Pa y m e n t Tre n d s

・Card shopping transactions seeing 7% GAGR, despite flat household spending levels. Further increase expected given government’s cashless payment infrastructure installation drive to 2020

Householdspending

■Card Shopping Transactions

¥50,000BillionCAGR

＋7％

49

Market Trends by Payment Option

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

Small stores

Small sum(Less than ¥5,000)

Large-scale stores(Chain stores)

Large sum

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

Area in which smartphone payments may replace other options going forward

EPOS Pay start !

Increased use of credit cards through contactless payment via smartphones

Epos CardTransaction volume

211% YoY(FY2020)

Prepaid cards/e-moneyApprox. 1 million payment terminals

Approx. ¥90 trillion Approx.

¥10 trillion

Approx. ¥60 trillion

Cash

Credit cardsApprox. 10 million payment terminalsCash

Approx. ¥40 trillion

Current status and future initiatives

51

0

5

10

15

16.3 17.3 18.3 19.3 20.3FY16FY17FY18FY16 FY17

Anime Collaboration Card

・ Issuance of new cards through Animation Collaboration Card expanded ・ Contributed ¥1.3 billion to the Group's operating income in the 5 years since

the start of the animation business

New Cards Issued in FY2020810,000

Anime collaboration cards132,000 (16% of total)

劇場版「Fate/stay night」[Heaven's Feel]©T・U・F

TM & © TOHO CO., LTD. © 2019 Legendary. TM & © TOHO CO., LTD.

©尾田栄一郎／集英社・フジテレビ・東映アニメーション

1.1

（Billions of yen）

0.5

0.20.1

■Contributions to Consolidated Operating Income■Anime Collaboration Cards・Favorable performance of anime collaboration cards,

number of issued cards rises to 132,000

FY18 FY19

0.5

1.0

1.5 1.3

FY20

52

Outlook for Rent Guarantee Services Operations

・Rapid growth to be achieved with highly unique business model

1.11.6

2.22.8

3.6

0

20

40

60

80

100

120

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

Average annual growth rate

over past five years

＋31%6.5

8.3

(Billions of yen)

4.9

■Revenue from Rent Guarantee Services■MARUI GROUP’s Strengths

Epos Card Rivals

Points accrued by paying rent ○ －

Operations Operation integrated with credit cards －

Systems Customized

Reliability Trustworthiness ofMARUI GROUP

(Developed in-house)

(Only top 4 specialists listed)

Built to desiredspecifications

Small to medium-sized companies

(Development outsourced)

Swift participation in market serving non-Japanese residents of Japan through investment in GTN

More than ¥10.0 billion

10

8

6

4

2

53

Newcards

80,000

22

65

83

138

127 129136 133

127

0

50

100

150

0

20

40

60

80

100

120

15.3 16.3 17.3 18.3 19.3 20.3FY2015 FY2016 FY2017 FY2018 FY2019 FY2020

S tatus of Rent G uarantee

■Revenue trends

・Sales has steadily increased due to the contribution of strategic partners, despite not achieving plans mainly due to the impact of COVID-19

(¥bn)

Revenue

YOY

(%)

■Status of strategic partners

No. ofnew

customers180,000

31% 34%

ABLE

3 major companies

12.0

10.0

8.0

6.0

4.0

2.02.2

6.5

8.3

FY2019FY2015 FY2016 FY2017 FY2018 FY2020

Sumitomo ForestryResidential

NATIONAL STUDENTS

INFORMATION CENTER (NASIC)

54

・Introduced rent guarantee for incoming tenants in coordination with Marui,expanding the business with new initiatives

New Init iat ive f or Rent G uarantee

Deposit(6 – 12 months of rent)

Incomingtenants

Fixed-term rental contracts

Until now

Guarantee fee(1 month of rent)

Rent guarantee contracts

From now

Start with Marui stores, and gradually expand the initiative to partner commercial facilities nationwide, after accumulating know-how

LightHeavyInitial burden on tenants

Deposit received (B/S) Revenue

55

2.83.6

4.9

6.5

8.3

0

50

100

150

200

250

16.3 17.3 18.3 19.3 20.3 21.3 22.3 23.3 24.3 25.3

・Taking the change in the environment due to COVID-19 as an opportunity, aim for revenue of ¥20.0 billion or higher in five years

Future Outlook f or Rent G uarantee

(¥bn)

Over900.0

Transactions(¥bn) 141.7 171.0 207.5 260.7 332.6

10.0 -

Over 20.0Tenant rent guaranteeAdvancement in real estate tech

Selection of guarantee companies25.0

20.0

15.0

10.0

5.0

FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025

56

M a x i m i z i n g S h a r e o f H o u s e h o l d F i n a n c e s : L o o k i n g B a c k o n F Y 2 0 2 0

Image of customer household finances

Bank transfersCash payments

Rent

Communications, utilities, etc.

Savings, investment

Food

Beauty, fashion

Rent

Recurring paymentsLeisure, learning

Congratulatory and other gifts

E-commerce

Transactions ¥249.3 bn (111%)

Transactions ¥332.6 bn (128%)

Transactions ¥353.7 bn (118%)

Transactions ¥58.0 bn (211%)

Smartphone payments

57

・General household finances have a high ratio of fixed payments through bank transfers, at around 60%, but EPOS cards have the opposite structure

C o m p a r i s o n o f E P O S C a r d S p e n d i n g w i t h G e n e r a l S p e n d i n g i n J a p a n

(Estimated by the Company based on Family Income and Expenditure Survey, Statistics Bureau of Japan)

General spending in Japan EPOS card

Bank transfers

Cash payments

77%

41%

23%

59%

58

M a x i m i z i n g S h a r e o f H o u s e h o l d F i n a n c e s : F u t u r e D i r e c t i o n

5 years ago

・Achieve both stable revenue and business growth by promoting the strategy of maximizing share of household finances

1 trillion

2.5 trillion

Over 4.0 trillion

FY2020 3 years later

Bank transfers

Cash payments

E-commerce 20% -

30% -E-commerce

14%

23%20%12%

59

Conversion of All Family Members into Cardholders

・Promote conversion of all family members into cardholders using EPOS FamilyGold cards to expand share of EPOS card payments in household finances

入会前（1人） 入会後（2人）

14％

¥1.2 million23％

＋¥800,000

Share of EPOS card payment

Annual income¥8.5 million

¥2.0 million

■Usage in Two-Person Household (Married Couple)■EPOS Family Gold cardholders・Conversion of all family members into Gold cardholders

through introduction by Gold cardholder・¥800,000 increase in household EPOS card usage

amount to represent 23% share of household finances

EPOS FamilyGold card

Before (one person) After (two persons)

Rival’s cars

EPOS FamilyGold card Standard EPOS

cardholder

Wife (Gold cardholders)

Children

Husband

60

S y n e r g i e s B e t w e e n Ex p a n s i o n o f S h a r e o f E P O S C a r d Pa y m e n t s i nH o u s e h o l d F i n a n ce s a n d C o n v e r s i o n o f A l l Fa m i l y M e m b e r s t o C a r d h o l d e r s

・Transaction volume growth to be achieved through benefits of expansion of share ofEPOS card payments in household finances and increase in cardholders

0

5

10

15

20

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 5910 20 30 40 50

17％ 22～25％

（％）

５ years×

Gold cardholders

3.7 million

（+1.6 million）

Assets with increased transaction value

¥800.0 billion

～¥1,000.0 billion

Share of household finances 12％ → 16％

50

100

150

200（thousand of people）

Card

hold

er

Share of household finances (% of annual household income represented by EPOS card payments)

61

Fo re ca sts fo r Tota l F i nTe c h S eg m e n t Tra n s a ct i o n s

・Total transactions of ¥5.0 trillion forecast in FY2024

10,000

20,000

30,000

40,000

50,000

FY19 FY20 FY21 FY22 FY23 FY24

（Billions of yen）

￥4.0trillion

■Total Transactions

￥1.0trillion

￥2.3trillion

￥2.7trillion

￥5.0 trillion or more

Benefits of strategy of maximizing share of EPOS card payments in

household finances4,000

3,000

2,000

1,000

62

B a c kg ro u n d : C o n ce r ns of Yo u n ge r G e n e rat i o n s a n d S o c i a l Tre n d s

■Breakdowns of Private Financial Assets by Type

26%15%

29%

12%

23%

31%

59%

52%

14% 24%

日本 アメリカ 英国Japan U.S. U.K.

（ ¥900 trillion ）

Cash / deposits

Insurance/ pensions

Stocks / trustsOther

■ Concerns of workforce members in their 20s

No. 1 Money 59％ No. 2 Work 41％No. 3 Marriage 32％

Source: Dentsu Communication Institute Inc., 2015

■ New Year’s resolutions of people aged 20 in January 2017

No. 1 Saving for the future 41％No. 2 Conserving money 34％No. 3 Healthy habits 30％

Source: Visa Worldwide Japan Co., Ltd.

■ Reason for lack of interest or unwillingness to engage in asset management and lending

No. 1 Perceived difficulty or lack of knowledge 60％

No. 2 Concern for losses 45％No. 3 Lack of monetary leeway 39％

Source: Asset management survey of EPOS cardholders, 2016

Address social issues by providing new asset formation services

Sources: Flow of funds data, Bank of Japan, 2016Progress and Assessment of the Strategic Directions and Priorities 2015–2016, Financial Services Agency, 2016

Financial Services Agency promoting asset formation using ¥900 trillion worth of cash and deposits

63

■ Services to Be Provided

Who Younger generations and everyone else

What Purchases of investment trusts applicable under Tsumitate NISA

How Credit payment via EPOS cards

■ Structure of Earnings

+ ＝

Japan’s first scheme for purchasing investment trusts with credit

Lifetime value of EPOS cards

Investmenttrust fees Group earnings

Target 1 million users and ¥1 trillion in balance of assets in 10 yearscommence operations in summer 2018

tsumiki Securities Co., Ltd.

64

tsumiki Securities Co., Ltd.

・Support from younger and first time investors won as anticipated・Application number of only 32,000 represents need to attract more customers

going forward

88% 73%

■Applications Received by tsumiki Securities 〈 Performance Data 〉over Period from September 2018 to March 2020

(Reference) Ratio of Applicants Aged 49 and Younger

Approx. 30% based on survey by The Investment Trusts Association

Approx. 60% at independent fund management companies

Approx. 40% at independent fund management companies

Aged 49 and younger

No experience

〈Distribution of Applicants by Age 〉 〈 Distribution of Applicants by Investment Experience 〉

(Reference) Ratio of Applicants with No Investment Experience

Performance Evaluation

Application number 32,000 ×

Active accounts 42% ✓

Average month investments ¥18,000 ✓