Now we will begin the Marui IR Day 2021 of MARUI GROUP. Thank you very much for taking time out of your busy schedule to join us today. This IR Day is to share our views on current social trends and pre-financial information that is highly likely to be included in our financial announcements in the future. We are going to cover these three items on the slide. Today, we are reporting from the offices of MARUI GROUP headquarters and Misaki Capital. Let's get started. First, Mr. Aoi, President and Representative Director, will speak on the topic of BNPL and its impact on FinTech. Mr. Aoi, please. I'm Aoi, and I'll explain about BNPL and its impact on FinTech based on the comments and questions from our shareholders and investors. I'll cover these points in my presentation. First, why BNPL now? BNPL has started to gain attention due to a series of big acquisitions in this year. The first one was the acquisition of Afterpay by Square for about JPY 3 trillion. The other was the acquisition of Paidy of Japan by PayPal for about JPY 300 billion. In both cases, the acquisition price was almost double the valuation of the companies, and this suggests that their growth potential is highly appreciated. BNPL can be broadly divided into developed country type and developing country type, and I'll focus on developed country type BNPL in this presentation. Affirm, Klarna, and Afterpay are said to be the three leading companies to represent the developed country type, and the combined growth rate of the three companies over the past two years is approximately 130%. In addition, in the most recent quarter, Affirm recorded an astonishing growth as it increased the transactions by 84% and the number of affiliated merchants grew astonishingly by 1,400% from the previous fiscal year. As such, BNPL is considered to be the fastest-growing category in FinTech. On the other hand, the total transactions of the three companies last year was JPY 8 trillion compared to the transactions of Visa, which has the largest share of the credit card market at about JPY 1,200 trillion. Their transactions is only 0.7%. Having said that, its market is expected to grow more than 400% in five years. Next, what is BNPL? These are the features of BNPL. Its deferred payment is a payment with credit, which is basically the same credit as a single payment on a credit card. Its process is simple, and you can use it by just registering your email address and phone number. It is a digital native service that started out online and is suitable for use through apps and digital wallets. Like credit cards, it is a two-sided business with two points of contact, the consumer and the merchant. It stands out for its pursuit of customer success for both ends. In addition to these features, repayments can be made at convenience stores, and it is supported by the younger generation in Japan. Who are the users of BNPL? In this regard, we have received the following comments and questions from our shareholders and investors. That is, are the BNPL users mainly young Gen Z-ers, and isn't BNPL becoming popular because young people are moving away from credit cards? We examine these issues. Looking into the usage of BNPL by age group, it is used by many Gen Z-ers and Millennials indeed. What about credit cards? This slide shows changes in the number of new cardholders of EPOS Card. Comparing by age group, new cardholders in their 30s and older are increasing slowly, while those in their teens and 20s are growing steadily. It turns out that the theory that Gen Z-ers is moving away from credit cards does not apply, at least not to EPOS Card. We have also received the following comments and questions. Are BNPL users mainly people who don't have credit cards? When we examine this point as well, a surprising fact came to light. The charts on this page show the percentage of BNPL users who own credit cards. You can tell that about 90% of BNPL users in the U.S. and 70% in Japan are credit card holders. Aside from the developing country type, the main users of the developed country type BNPL are credit card holders. Why do credit card holders use the BNPL? In a survey of consumers, the following reasons were cited for using BNPL. Easy to apply for and use. Low interest rates and fees. No worries about overspending because it is a one-off debt. And less concern about security when using e-commerce sites. What can be read from this is that most of the reasons for using the BNPL are related to the negative aspects of credit cards. It is evident that BNPL is being used as a means to resolve the inconvenience and anxiety of credit cards. Next is the BNPL from the perspective of affiliated merchants. Why do merchants use the BNPL? Each company appeals to merchants on three points: increasing the conversion rate, increasing the average order value, and increasing the repeat purchase rate. By promoting these benefits to merchants, BNPL is able to earn high affiliate commissions from 3%-6%. This is equivalent to about twice the standard affiliate commissions for credit cards. By offering merchants the benefit of higher revenues, BNPL earns higher affiliate commissions than credit cards. This is in contrast to credit cards being under pressure to lower affiliate commissions. To summarize, BNPL has achieved rapid growth by specializing in growing online markets, becoming popular among consumers because it eliminates the negative aspects of credit cards, and offering merchants the advantage of improving profitability. Although the market is still small, it is clearly a threat to conventional credit cards and is expected to become a formidable competitor in the future. Next is the relationship between BNPL, credit cards, and MARUI GROUP. This chart shows the relationship between credit cards, BNPL, and MARUI GROUP in a positioning map. The horizontal axis indicates offline and online, and the vertical axis indicates customer success and economies of scale. When we compare the positioning of the three in this map, something interesting can be noticed. That is the similarity between BNPL and MARUI GROUP. While BNPL is growing by eliminating the negative aspects of credit cards, we also have achieved higher growth than the industry average by eliminating the negative aspects of credit cards. A typical example is the Gold Card with no annual fee, and we have other customer success-oriented services as well. Let me show you some specific examples. The first example is a service for customers who are concerned about overspending on their credit cards. BNPL provides a sense of security by making payment for each transaction and address such concerns. In our case, solutions are provided differently. Epos Lifestyle App, introduced in this April, offers a feature called Usage Alerts to all customers. For instance, when a customer wants to limit monthly spending to JPY 100,000, just set Usage Alerts at JPY 100,000. Then the customer will receive a push notification the moment the limit is reached. After introducing this service, the amount of spending has increased by 30% than before. We assume this is because customers who previously felt uneasy about not knowing how much they spent can now use credit cards with a sense of security. Next is crisis aversion function. This is designed to advise customers to avoid a trouble when unexpected expenses cause difficulties in the next payment, and it can be considered as a financing support for individual users. Customers can choose from flexible financing options and amounts to suit their circumstances, including installment payments or revolving payments to reschedule the payment to the next month or later, and online cash advances that transfer money to the account only to cover the shortfall for the current month payment. With the introduction of the service, revolving credit usage increased by 10% and installment payments usage increased by 30% comparing between before and after the service was introduced. Also, online cash advances have increased by 20%. Next, we are working on customer success for our merchants. The following is an explanatory document that EPOS Card uses when it asks tenants to solicit members at its business partner commercial facilities. Based on data from Marui stores, we are promoting the merits of using the EPOS Card, which improves the conversion rate, spend per purchase, and customer retention. You will notice that this is the exact same item that BNPL is promoting for merchants. Similar efforts are underway online. Co -creative investees, especially those in the subscription business, have a higher repeat purchase rate of credit card users than BNPL users, so we are promoting the use of EPOS Card through collaboration. This is the longer-term outlook for BNPL. The payment market is expected to change drastically in the next five to 10 years as e-commerce continues to grow and digital wallets is spreading at the same time. BNPL captures this trend as an opportunity, increases its presence in both online and offline payment market by optimization through DX, and in the future, it is expected to become a threat to credit cards. Next is the future direction based on the discussion so far. We have been able to achieve higher growth and profitability than the industry average by providing our customers with customer success-oriented credit through co-creation of credibility. In addition, through a business model merging Retailing and finance that has been in place since the company's inception, we have sought to solicit new cardholders and increase usage by providing tenants with customer success-oriented credit. From this perspective, we are closer to BNPL in terms of strategic positioning than to credit cards and can be said to be the original BNPL. In other words, the factors that are driving BNPL's growth correspond to opportunities rather than threats for us. On the other hand, because of its offline history, DX is behind BNPL. This is the threat to our company. Therefore, our future tasks are strengthening DX and improving UX to run fast through DX and to continue to provide superior UX. Through this, the evolution from credit cards to FinTech is the future direction. Specifically, we'll work to increase uptake of Lifestyle App and enhance UX. We'll increase number of users from 420,000 in September 2021 to 5 million in fiscal year ending March 31st, 2026. In addition, add EPOS BNPL service as an extended feature of the EPOS Card and enter the BNPL business. We'll continue to prepare for younger users in the anime business, for which demand is already apparent. In addition, we'll move into BNPL in collaboration with co-creative investees. We'll pursue cutting-edge DX and UX in collaboration with Gen Z startups. That is all from me. Thank you very much for your attention. We'll now start the Q&A session. Let me take the first question. Mr. Kanamori from Okasan Securities, please. This is Kanamori from Okasan Securities. Can you hear me? Yes. Okay. Thank you very much for the very interesting presentation. I'm not savvy about this area, so please bear with me if I ask you basic questions. In the later part of the presentation, you talked about the Lifestyle App, but could you elaborate more on it about what it is? This is my first question. Thank you for your question. I explained that we are developing a lifestyle app before, and this app was launched in April this year, and the customer registration and usage are currently underway. We haven't had a chance to explain about it so far, so covered it this time. We already have the Epos App for EPOS Card users for a long time. This was designed for addressing the most common inquiries from customers, such as the amount spent in the month, the credit limit, the credit amount left, the next payment date, and points accumulated so far. Customers can easily search for answers on this app. This time, we have upgraded this app to the Epos Lifestyle App, and it offers more than such a convenient search function and provides services related to the total spending habits of customers. For instance, I think I explained the strategy of maximizing our share in the household budget before. That is to divide customers' consumption into monthly variable expenses and fixed expenses. For example, we recommend customers to use credit card payment for their utilities or rent, and they can capture how much of them are paid by credit card or not, or how variable expenses are spent in the month. To put it another way, the more you use this Epos Lifestyle App, the more it will serve as a simple household accounts book for more convenience. It comes with such a feature for family finance management. The other one is the crisis aversion feature explained earlier, which supports personal financing on a monthly basis by its advice and simulation functions. It also has a function to alleviate concerns about overspending. These are the basics of the app. In addition to this, we also have a function called Epos Quest, which can be used like a game. EPOS has various services and for instance, it is difficult to explain 50 different services to customers, and customers cannot remember all of them. We offer UX that allows customers to become informed about each of these services in a game. With this function, customers can discover a service that suits their needs. For example, for customers who drive a car, we have Epos ETC card. Knowing such information will improve convenience in their use. This is used as a medium to connect our customers with us, as we expect this will increase EPOS Card usage. Thank you. I see. If that is the case, I think you probably need to make efforts to make those various functions you just mentioned widely known by customers further. Anyway, I suppose you will explain the details about it in a separate occasion. Here's my second question. In the end of the presentation, you said that you'd enter the BNPL business with co-creative investees as your future direction. I remember you already allocated a budget for investments, including for venture companies in your medium-term management plan. What is the size of the investment in BNPL you're planning now? Thank you for your question. There are about 30 startups that we have already invested in and are collaborating with. I can't tell you their names, but some of them have approached us to ask if we could cooperate with them to start BNPL services. We will examine the feasibility of such collaboration to enter into this new field. W hat is the total size of the investment for those 30 companies? Slightly over JPY 13 billion for startups alone. Okay. My last question is maybe a little off topic, but if you think about e-commerce, BNPL payments usage by Gen Z-ers and usage by the core customer base in the anime field that you're very much involved in, I think there is a high possibility that BNPL will be used as a payment method in commercial space on the so-called Metaverse, even though it is still in the experimental stage in Japan. As you continue to expand your experiential stores, I think it is possible that payment system on the Metaverse for both domestic and overseas customers will grow in Japan, in addition to the shopping at physical stores. What do you think about it? The Metaverse is a very interesting area, and it's already very popular globally in the field of games. Commerce will come into this area in the not too distant future, and actually it is already there in some cases. This is a subject we really want to study. It is said that transactions on the Metaverse will mainly use cryptocurrencies, so we want to study about it too. However, in terms of time frames, we assume BNPL is just in front of us in the form of EPOS BNPL service and collaboration with co-creative investees, as mentioned earlier. While payment and transactions by cryptocurrencies in the Metaverse is a little further down in the future. We would like to continue our research into this area. I understand. Thank you. That's all from me. Thank you very much. Next is Mr. Kawano from Goldman Sachs, please. This is Kawano. Can you hear me? Yes. Thank you very much for your presentation. I have two questions about BNPL. You said you'd enter BNPL business through collaboration with the co-creative investees, but do you mean you will make a full-scale entry to the field of BNPL? I assume Affirm, Afterpay, and Paidy had all made significant upfront investments before they grew to large businesses. Can you tell me what is the scale of business you intend to achieve? This is my first question. Thank you for your question. I suppose it's still difficult to decide the scale of business we want to achieve. First, we need to identify how and to what extent we can do by ourselves, or we are still at the stage where we are experimenting that how far we can sophisticate it and get close to cutting-edge technologies through collaboration with digital native startups. We want to think about the strategy for the next target by jumping into the BNPL business and experimenting or by co-creating with the existing BNPL players. Can I assume that you have quite a few things that can be leveraged for BNPL business, such as the credit system and various tenants? Yes, that is correct. Among Japanese credit cards, we have the best track record of offering credit to young customers, and our brand is well supported. So we assume much of this know-how can be utilized for BNPL. However, it is true that there are differences in governing business laws and systems, so we will not underestimate these factors and offer credit with robust risk control. Okay, thank you. My second question is, earlier you mentioned BNPL is used by many credit card holders, so they use BNPL even though they own credit cards. I think BNPL is used for the payment of not so expensive transactions, like JPY 4,000-JPY 6,000. With this tendency, do you think it's possible to separate the focus of credit cards on transactions of higher amounts and to focus on strengthening such higher amount segment in EPOS Card business? That is right. It is possible to make such a distinction in our business. Above all, our customers will use our services with such a distinction. For instance, in the earlier presentation, I showed you pie charts about percentages of credit card holders and users of four BNPL companies. It is 90% in the U.S. and 70% in Japan. I think this 20 percentage point of difference between the U.S. and Japan is probably because in the U.S. credit cards are mainly used for revolving payments, but in Japan, single payment is the main method of payment. In a sense, credit cards serve as BNPL by the single payment. I think that is reflected in this 20 percentage point of difference. In relation to compelling needs for BNPL, we have been receiving requests for deferred payment service for a long time from young customers at anime events, students, and customers who don't have credit cards. We know there is a need among those customers. For example, if they start to use EPOS through EPOS BNPL service, later we can invite them to use the EPOS Card when they turn 20 or graduate from university and start working, and increase the population of new EPOS Card holders. In that sense, we believe BNPL business has benefits for us. All right. I understood. Now let me go back to my first question. It is said that you're going to enter the BNPL business together with your co-creative investees. Does it mean you're going to work with multiple companies? I'm sorry, maybe it was a little difficult to understand. The BNPL service we are going to launch, which is tentatively called EPOS BNPL service, is to expand the domain, not as EPOS Card, but rather as EPOS Financial or FinTech. Also, we have another reason why we want to actively work with co-creative investees. Many of our co-creative investees are led by young people, and they are Gen Z-ers and Millennials in their 20s and 30s. They are digital natives and savvy about UX enabled by DX. We want to learn from them about the cutting edge of DX and UX through collaboration and the co-creation of BNPL. That is the reason we added this as the third point of our future direction. I understand. Thank you. Thank you very much. Now, let me move on to the next question. Ms. Kanamori of SMBC Nikko Securities. I'm Kanamori from SMBC Nikko Securities. I have two questions. My first question is also about deferred payment. I suppose there are other players that are already offering such a service in Japan. You mentioned that you'd try and see how you could build your deferred payment service, but do you think you can differentiate your service from those existing players? In the case of credit cards, while the basic functions remain the same, I think you have been creative in providing attentive services such as Usage Alerts and credit card bills for family members, as you mentioned earlier. Can you create such differentiators in your deferred payment service as well? This is my first question. Thank you for your question. I am not sure how far we can go to differentiate ourselves from the existing BNPL in Japan. Let me think how I should best answer that question. Well, this is our view. EPOS Card today functions as a credit card. As we are all aware, credit card requires a certain amount of time and effort in the membership approval process, such as personal identification. In contrast, I believe one of the biggest advantages of BNPL is that the service is available without going through this process. Another unique aspect of BNPL is that people of the age who are normally not cardholders are using the service or have a wish to use BNPL. Therefore, we position our offering as an expansion of the range of services that EPOS Card can provide beyond the credit card functions. The other aim, as I mentioned earlier, is to secure a pool of prospective customers who would potentially be future members of EPOS Card by expanding the range of service offerings. I hope that answers your question. Thank you very much. Let me move on to my second question. You mentioned that there is no impact on the acquisition of young cardholders at this point. As the market expands, I would like to confirm the future competitive landscape and potential future threat. What is the average unit amount of a single BNPL transaction? As was mentioned in the previous question, I'm assuming the service that will be the most exposed to the competition from BNPL is your cash advance service. Do you have the data on average value of one cash advance transaction? I guess for revolving credit, it's hard to calculate the per transaction amount because the user can change the revolving payment later. If you have analyzed affinity between the per transaction amount of a credit card a nd BNPL, I would be interested to learn. Our view is that we have been able to cover, to a great extent, the services that BNPL already provides through our existing offerings, such as the ones I explained earlier. Therefore, if more and more members become aware of our service through the new Epos App, the Lifestyle App, and if this becomes more widely known, the probability of those customers switching to BNPL will decrease in turn. Therefore, as I mentioned earlier, our new EPOS Pay Later service is designed as an entry point or a preliminary step for customers who do not yet have an EPOS Card. This is how we position the Pay Later service. I see. In terms of interest rate charges, I thought that the cash advance service was most exposed to the competition risk, but I understand that there is a difference between online and offline usage scenarios. Thank you very much. Thank you very much for the question. Thank you. We have received many questions, but due to time constraints, we would like to move on to the next topic. Thank you for your patience. Now, we would like to move on to the next agenda, the progress of Co-Creative Investment. On the topic of the progress of our Co-Creative Investment, today, I would like to report on the status of our collaboration with our co-creative investees, our initiatives with BASE and our initiatives with A2 Surugaya. I will present on the overall status of our collaboration with our co-creative investees. My name is Akikazu Aida, in charge of Co-Creative Investment. Let me briefly introduce myself. I have served in many different roles, including the president in a local subsidiary in Shanghai, China, as well as managing Hakata Marui, which we built through co-creation with our clients as a member of the opening preparation office to the first year of its operation. Later in 2017, I was appointed as the general manager of the corporate planning division and have been serving that role ever since. For our startup investment activities, I oversaw investment proposals and corporate planning when we began startup investment program, so I have been involved in investment proposals for a long time. Thank you for the opportunity to present our initiatives today. Co-Creative Investment does not only aim for financial returns, but also pursue synergies through collaboration with investees to create new businesses and value through the trinity framework of Retailing, FinTech, and Co-Creative Investment. Starting with the investment in one company in the fiscal year ended March 2017, we invested a cumulative total of JPY 22.3 billion in 29 companies leading up to the fiscal year ending March 2021 and aim to invest a cumulative total of JPY 43 billion in approximately 70 companies by fiscal year ending March 2026. Initially, we started with four people who also had concurrent positions, and we have accumulated knowhow by making investment proposals with the advice of venture capitalists who have invested in LPs. Through our mid-hire recruiting program, people with investment background have joined, and we are now a team of 28 people. We have also evolved our investment themes in line with the company's strategy. To ensure the success of open innovation, last fiscal year we have formed a Co-Creation team to promote collaboration. Depending on the nature of the collaboration, staff with the necessary skills are selected from each group company and assigned to the team, which is led by an executive officer who can exert strong leadership beyond the organizational boundaries of the group. We are currently promoting the project with 24 teams and 212 members. We have dialogues with management at least once a month to ensure the promotion of collaboration. Today, we would like to share with you the Co-Creation team's efforts with BASE and Surugaya A2, with whom we are making great progress in collaboration. The actual members of the Co-Creation team will be presenting today. I'm Kinoshita, and I work for both the BASE Co-Creation team and the e-commerce department of Marui Company Limited. I joined the company in 2006 and have been working at EPOS Card as well as in Retailing. I have been on maternity leave and parental leave since 2019 and returned to work in April this year, and I'm working in my current position with shorter hours. First, I would like to introduce the members of the MARUI GROUP involved in co-creation with BASE. In our co-creation efforts, we are working on a dual role structure with their core business in order to gather diverse members from the fields of Retailing and FinTech, as well as related systems. Currently, there are 11 members ranging from executive officers to staff in terms of positions as well as affiliations. Next, I would like to introduce BASE. In 2012, BASE released BASE, a so-called storefront platform that allows individuals to have their own online stores with their own signboards. This is a service where anyone can easily open online stores and settle payment function, and is the number one platform in Japan with a total of 1.6 million stores. BASE is also developing services in the field of payments. For example, Pay ID is a payment account that can be used when shopping at BASE stores. BASE revamped the application in November, creating a smooth ID payment and introducing new stores via the app. BASE has achieved growth through the development and expansion of these services. This chart shows the GMV distributed by the BASE business, and the MARUI GROUP began collaborating with BASE in 2017, which is two years before the company was listed and has invested in the company since 2018. The Co-Creation team was then established as the stay-at-home consumption was boosted and grew rapidly. This is the mission of both companies, and we believe that BASE's vision of opening up payments to people all over the world and Marui's vision of a society that offers happiness to all will lead to build a society where everyone has their very own economic zone, and to provide opportunities for every individual to thrive and excel. We believe that both visions exactly match in terms of the co-creation vision, empowerment of individuals and support for small businesses. About supporting small businesses, for example, by opening a pop-up store at Marui, BASE will be able to increase its popularity and options for business partners to open stores, leading to the expansion and growth of the owner. For the MARUI GROUP, this will contribute to earnings contribution to main business by increasing number of pop-up shops openings and encouraging more customers to sign up for EPOS Card, as well as providing a return on investment. Furthermore, initiatives such as opening pop-up stores are in line with the needs of BASE store owners. According to a survey, more than 60% of owners are willing to open real pop-up store, but about 70% have no experience. The development of this pop-up store will lead to the success of the store owners that BASE is focusing on. In order to accelerate this initiative, we have relocated the pop-up store from Shibuya Marui, which originally had a floor space of about 6 tsubo, to the first floor of Modi, where we have expanded to a floor space of 23 tsubo. The new Shibuya BASE opened in June this year, which is the largest flagship shop among the BASE pop-up stores. Store owners are also cooperating with us to promote membership in EPOS Card, and we are also issuing collaboration cards with some owners. As the first collaboration card, we started issuing collaboration cards with NieR Clothing, an apparel brand that is immensely popular within BASE, along with the pop-up shop opening in July. This card has been enrolled mainly by young people, and is expected to have a long-lasting relationship with them. Among the cards already issued by EPOS Cards tailored to each individual's interest, there is a collaboration card with many core fans of anime games, et cetera. The LTV of this card is about 900% higher than that of the standard card. NieR also has a large core fan base and we expect a similar scale. We also believe that Shibuya BASE is an initiative that will lead to one of the MARUI GROUP's stated impacts, working together to bring happiness to individuals. The owners of the stores were happy to meet the fans who support them. Owners told us that customer voice could be used in their product development. Fans enjoyed talking with the store staff, and some even took commemorative photos with them. Owners are also pleased with the support provided by Marui staff in creating a sales floor and checking out of the cash register. This is a manga about how the owner, who is a manga artist of Tooth Comic, sold character goods at Shibuya BASE. As you can see in the third scene, the Marui staff was able to assist the artist when they were having trouble with the daily checkout process. The staff was thrilled to see them express their gratitude in the form of a cartoon and post it on their SNS. Thanks to your support, Shibuya BASE is doing well, and since its launch on June 24th, the number of new cardholders has reached 1,500, which is equivalent to approximately 30% of all cards issued at the entire Shibuya MODI. Sales per square meter were also strong, at 90% higher than the average for Marui stores. In addition, we are planning to issue a new collaboration card next year. Together with the EPOS Card at the pop-up stores and existing NieR card, we expect enrollment of 3,000 new cardholders in the first year of BASE, 50% higher than our initial plan. This is equal to the number of new cards issued at Shibuya MODI in FY 2019. Here are some of the future initiatives that we are considering. First of all, we are considering opening our second BASE store in Namba Marui. Namba Marui is a store with great potential as it ranks first in all Marui stores in the number of new EPOS Card holders. We expect that EPOS new cardholders will be 5,000 at the pop-up stores by FY 2025. The second is a collaboration with Pay ID. We are currently exploring potential for both companies through mutual customer referrals between the 7.5 million Pay ID members and EPOS Card holders. Based on the above initiatives, I would like to explain the business model of co-creation again. As you can see here, it consists of a three-tiered inverted triangle consisting of Retailing, FinTech, and Co-Creative Investment. In line with our efforts with BASE, regarding Retailing, we opened pop-up store in Marui stores. Regarding FinTech, we expanded the LTV of cards by issuing collaboration cards. Regarding Co-Creative Investment, MARUI GROUP has invested since 2018. In this way, we have established a trending business model of having financial return as the second-largest shareholder in substance. Last but not least, I believe that this co-creation initiative with BASE will help realize one of the MARUI GROUP's impacts, work together to bring happiness to individuals. For business, this empowerment and small business assistance will support self-actualization of individuals. For customers, collaboration cards and pop-up events will support individuals in pursuing their interests. That is all from me. Next, I would like to share with you our initiative with Surugaya. I am Hiroki Yoshida from the Surugaya Co-Creation Team. Let me quickly introduce myself. After working in the e-commerce department and anime department, I was seconded to A2 Incorporated, which manages the Surugaya business, and have been serving in the current position. I have been trained and mentored by President Sugiyama of A2, who is known as a dedicated and passionate business person, and I'm happy for this opportunity to present today. I am also delighted to introduce Rugonia, the mascot character of Surugaya. The team for promoting co-creation consists of a total of eight members with MARUI GROUP's Executive Officer, Mr. Aoki, as the leader, myself on secondment, and the members in charge of collaboration from the relevant departments. Since I can directly convey the intentions of the plan to the members responsible for the actual work, we are able to promote co-creation with speed. Next, I would like to give you an overview of Surugaya, a business operated by A2 Incorporated. Surugaya has achieved growth in the secondhand market, which is over JPY 2 trillion in size, focusing on hobby and e-commerce categories. The main business is the e-commerce site, surugaya.jp, and they have also been expanding the store footprints to 38 directly managed stores. According to Recycle Tsushin's ranking, Surugaya has been ranked number one in the industry in the hobby and internet category. In terms of sales, they have been expanding their growth since 2016 by entering the store business. In 2018, they started collaboration with the MARUI GROUP and their sales grew to JPY 29 billion in the most recent financial results. Surugaya's competitive advantage lies in this virtuous cycle system, which utilizes data to determine optimal purchase and sales prices through single item management. Through this cycle, they have established their position as the price leader in the industry. The co-creation of Surugaya and MARUI GROUP began with the store opening at Shinjuku Marui Annex in 2018, followed by a capital and business alliance in 2019. Since then, we have carried our initiatives in many aspects, including retail stores, FinTech, logistics, and e-commerce, among others. We have also built a strong alliance with the Co-Creation team in the anime department, enabling us to achieve the most advanced form of collaboration among our co-creative investees. With co-creation going this far, I sometimes wonder if I will ever be able to return to the MARUI GROUP. Now let me explain the details of our initiatives. Surugaya has been opening large-scale store every year at Marui as a major tenant, and currently there are five stores. The total floor space of the five stores is 1,100 tsubo, which is the fourth-largest among the business partners with stores at Marui. Now that we've come so far, we really want to be number one. On the opening day, we have enjoyed visits from a lot of enthusiastic customers. In July 2021, a store specializing in purchasing opened at Marui Family Mizunokuchi store. This store is not simply stores that don't sell, but as stores that buys, it is intended to make a great impact. Furthermore, the store operation is commissioned to Marui, and Marui's employees with excellent customer service skills are creating high value proposition by carrying out the purchase center operation. For logistics, Marui's group company, Moving Company Limited, provides commission logistics service that allows customers to purchase at Surugaya and pick up those items at Marui stores. This service has been very well received by customers who do not want their wives to find out that they have bought items that would seem unnecessary from the wife's perspective. These two initiatives have been very effective, serving as a touchpoint for Surugaya with new customers such as female customers who shop at Marui and are casual fans of anime but hesitant to go to Akihabara. Since the opening of the store in Shinjuku Marui Annex, Surugaya has been receiving an increasing number of offers from other retail facilities, which showcases that our joint initiatives have contributed to the enhancement of Surugaya's brand value. For Marui, having a major tenant with a passionate fan base on the upper floors not only contributes to income, but also greatly enhances the value of the facility. Next, let's switch gears to the FinTech topic. In January 2020, we began accepting applications for the Surugaya EPOS Card. One aspect that stands out is that the application coming through the e-commerce channel, the strength of Surugaya, is very high at 85%, which helped to steadily increase the number of cardholders even with COVID-19. We expect to reach 10,000 new cardholders in FY 2022. With dedicated fans signing up for the card. The LTV of the collaboration card with Surugaya is approximately 500% higher than the standard cards. Furthermore, the number of cardholders is expected to grow the fastest among the 11 partner cards and eight collaboration cards with co-creation partners. One of the reasons for the strong performance is the introduction of the EPOS Easy Payment service in May 2021. With the EPOS Easy Payment, customers can use the card immediately on the day of application on Surugaya's e-commerce site. They can use the Pay Later function right away, and the membership benefits can be used on the very first purchase. We introduced this service to cater to the passion of anime content fans who really want to buy the merchandise on the spot or fans who have worried that the item will be sold out if they had to wait for the credit card to arrive. Since the introduction of the easy EPOS payment service, the number of new applications per day has quadrupled and the transactions has increased by 50%. We have been working with GMO- to- date on the easy payment system, but this time we partnered with DGFT, a payment processing company, for the first time. We hope to use this as a foothold to expand our alliance with DGFT in the future. Next, I'd like to talk about the e-commerce collaboration. Taking advantage of Surugaya's excellent anime and hobby expertise, we have recently developed an anime mall for Marui, which pre-opened last month. The UI is very unique, with elements such as a search function that specializes in anime and games, among others. We are planning to add more stores and functions in the mall to expand sales. As future collaboration plans, we are considering a caravan of small scale events as part of our efforts to create eventful stores. In addition, we would like to promote collaboration to support individuals in pursuing their interests with specialized stores and events for dedicated fans in the categories such as radio controlled cars, collectible figures and trading cards. Through the above initiatives, co-creation with Surugaya has established a trinity business model of Retailing and FinTech and Co-Creative Investment. Lastly, there is the impact of co-creation with Surugaya. We would like to contribute to the realization of a circular economy through our secondary distribution efforts, support individuals in pursuing their interests through the power of anime and hobbies, and provide venues for co-creation through a joint development of systems. This was the report on the collaboration with Surugaya. This concludes our presentation on the progress of Co-Creative Investment. Thank you very much for your attention. We will now move on to the question and answer session. We would like to take the first question from Mr. Tsuda of Daiwa Securities. Thank you for taking my question. I have two questions. The first one is for Mr. Yoshida and Ms. Kinoshita. With Marui's culture of voluntary participation, I'm assuming that both of you are in your current role because you wish to lead these projects. I also believe that your business responsibilities today may be different from what you had imagined when you initially joined Marui. My question is, how do you think this will help you to grow and affect your future career development at Marui? 10 or 20 years from now, as you assume more responsibilities in your career, how do you think your experience today will help you? I would be interested to hear your personal views. That will be my first question. The second question is for Mr. Aida. Today you kindly presented things that are working well, but if you were to point out any issues you may have, please share those with us. These are my two questions. Thank you for your question. This is Kinoshita, and I will start. Before joining Marui, I had a vague idea that I wanted to work in advertising and promotion, but when I joined the company, I was working on completely different assignments such as credit cards and online websites, which turned out to be great. The group companies really do a lot of different things, and you can change jobs and transfer to different departments. In addition, there are a variety of conferences, seminars, and many other programs offered. With a culture based on voluntary participation, one can actively take on many challenges. Being able to do so is a true appeal of the company, and it really helps to broaden my perspectives. Marui is a so-called large company, and BASE, although with a large market cap, it is still an early stage company. Were there any new findings in doing business with people from BASE? Yes. Marui employees engage in a wide variety of assignments, whereas at BASE many of them have a lot of specialized knowledge. I'm sure that some of them have been headhunted from different companies. There may be some things that we lack. For example, in the area of technology and learning from BASE people's knowledge and the business schemes have been very helpful, and I feel this way every day. Thank you very much for sharing that with us. This is Yoshida from A2. To respond to your question, I'm actually assigned to a position as I had hoped for. Originally, I was a merchandise buyer for the sports category, and in 2016 I was assigned to the anime department, and I actually like anime and hobby contents a lot. I was seconded to A2, so I feel that I am working in a place that I have a great affinity with. After being transferred to A2, this was my impression, and I will be very frank with my words. I think Marui is a company with a high level of awareness. Surugaya, on the other hand, has a culture of eagerness to strongly pursue profit generation. I believe there is a great synergy or complementary relationship between the two companies, and learning from both has been a great experience for my personal development. Mr. Sugiyama, the President and CEO of A2, loves to take on challenges, and he continues to expand the scope of his business. There is a finance department manager who works closely with him for managing the financing operation over the business. Being able to work so closely with key management people is extremely valuable for my future career, and I am learning a lot. I see. Thank you very much. This is Aida, and I would like to answer the second question. Mr. Tsuda, thank you very much for your question. On your question about the challenge, I personally believe there are two. I talked about the Co-Creation team as one of the things that is starting to go well. While the investment managers naturally communicate with the invested companies as part of their responsibility, the Co-Creation team is structured so that the members communicate with the counterpart in multilayered manner to enhance the corporate value of both parties. However, among the companies we have invested in so far, there have been a few limited cases where collaboration has not progressed due to the circumstances of the other party. Our communication has not been easy, making it difficult for both companies to achieve their expected goals. Therefore, I think it is very important to create a system that allows us to work together very closely, and that is one challenge. Second challenge implies a medium and long-term perspective. We currently have 28 members, some of whom have joined us from other companies, and they make great contributions. On the other hand, we have been building up our know-how since 2016, and I believe that we need to work on how much we can increase the depth of human resources we can invest in startups through Co-Creative Investment. At present, the focus is on domestic companies, but in the area of FinTech, for example, there is a possibility that we may be looking at opportunities to invest in overseas startups in the future. We need to work swiftly to formulate a robust organization to be able to address such opportunities. I hope that answers your question. Yes. Thank you very much. Thank you very much. Now, we would like to take the next question from Mr. Takahashi of Mizuho Securities. I am Takahashi from Mizuho Securities. Thank you very much for your detailed and thorough explanation. I have two questions. I'd like to take this great opportunity to ask the first question to Ms. Kinoshita and Mr. Yoshida. I was able to understand that this kind of co-creation is going very well, but I imagine that you must have had some challenges. It may be difficult to comment in front of Mr. Aoi, but if you have any thoughts about how things could have been done better if Marui had supported you in these areas or in different ways, please let me know. If not, that's fine, but I would be interested to hear your thoughts. Thank you for your question. First, on things that went very well, I can point out the speed of project approval or acceleration of the initiative. At the beginning of my presentation, I mentioned that 11 people from executive officers to staff members are participating in the project. In addition, members in the managerial position from various departments are also participating in the project, communicating very closely with the staff members. I feel that the speed of the project has been accelerated by involving members from multiple departments with different expertise and the expansion of internal and external networks. This is what is going well. On the other hand, difficulty is that since this is a collaborative effort, there are two hurdles that need to be overcome before the two companies can proceed with the initiatives, because agreement must be reached from both sides. We cannot move ahead just based on what we want to achieve, and it is not easy to find a way to build a win-win relationship. Having said that, I think that is the most important point, so that is what we are focusing on. Also, in terms of company support, I think we are being well supported. At this point, I feel the support is sufficient. Thank you very much. Thank you. My comments will be almost same as her. The reason for the successful collaboration is, first, that Co-Creation team. I, as a seconded member and a full member of the team, was fully able to communicate the intention of A2, and that led to the successful execution. As for the difficulty, when I talked with the non-Co-Creation team members, it was difficult to let them understand how we would create the win-win relationship and where Surugaya and Marui generate profit respectively, and how we make such business scheme. Marui people tend to prioritize profit of Marui, so I strive to appropriately translate the message, and I thought it was a job of the seconded member. As for the support by Marui, I was given the generous support through regular meetings, among others. I had a fulfilling experience. Thank you. My second question is for Mr. Aida. Co-Creation started with the rollout of Hakata store, and I assume you have gained substantial experience since then. You mentioned in the part of issues about the successful part and unsuccessful part. Today you are presenting strikingly successful cases, and I assume that there may be not so successful cases as well. When you expand the co-creation further, of course I assume some unsuccessful cases are inevitable, but would you share with us how you're going to increase the success rate? For example, can you give us any hints about conditions which would lead you to the success? Another question. I found the cases presented today were very interesting, and I thought if they were applied to Marui, it may improve Marui substantially. On the other hand, as Mr. Yoshida said, the slow progress of understanding would be highly likely. I think if you had a scheme to feed back the outstanding success case of co-creation to the business management of Marui, it would change Marui through virtuous cycle. I would like to have your thought on this. Thank you. Thank you for your question. As for the conditions for success, I can think of some. I think it is especially important to have the sufficient overlap between what startup that we invested and Marui would like to realize, and that is described as impact in our medium-term management plan this time. As for the process to realize it, if what we'd like to achieve and the counterpart's idea differed, the ideas for the process for collaboration would not be aligned properly, and that will lead to unsuccessful result. Therefore, I cannot say, of course, that every case in the past was successful. In unsuccessful cases, although initially at the time of agreement overall future images were well aligned, later with a change of company policies, they may turn out to be unsuccessful. As I answered to the previous question before, it is extremely important to have overwhelming communication and sense of unity, sense of being in the same team rather than of different companies. As for the second question, how we expand the success case to the business, there are several initiatives. First, as for the entire company effort, we have a monthly Medium-Term Management Visionary Committee meeting which accepts voluntary participants, and that is open extensively having both of young and veteran participants. Through this meeting, we share successful cases of co-creation with employees. Currently, approximately 220 members belong to this Co-Creation team. I think it extremely important to expand the members who are engaged and let them bring back what they learned to their businesses and share them with their colleagues. All members of Co-Creation team are serving as team members concurrently. This concurrent working enables them to bring back the learnings to their workplace, and this is the in-house effort for sharing information. We understand. Thank you. Thank you very much. We received many questions, but due to time constraint, let us move to the next content. Next, we'd like to present the dialogue with external director. Mr. Nakagami, are you ready? Yes. Thank you. Next, Mr. Nakagami, the floor is yours. Thank you. Good evening, everyone. I am Nakagami of Misaki Capital. I was assigned as an external director of MARUI GROUP. As announced in November, I set up the strategy study committee serving as its chairperson. I'd like to show some slides. This is a brief self-introduction. After graduating university, I started my career in business consulting and devoted to the business for 20 years. In 20 years service, I did some good jobs. When management and consultants worked together in close collaboration, the company changed drastically and that led to value enhancement and boosted share price. I have been through those cases many times. I felt, well, the world is simpler than we expect, though some may not agree. If the company improved, its share price would go up. I decided to jump into the investment management business about 16 years ago. This is unusual career background, and let me reiterate, this time I was assigned as an external director of MARUI GROUP. I would appreciate your support and cooperation. Next slide, please. This shows a profile of Misaki Capital. On the right, the role of shareholder is described. Of course, it is important to earn returns through transaction, but to understand and support the management in the long-term view is more important than ever. As shown at the top, our concept is working shareholders. We make selective investment into limited number of companies with outstanding business and management capabilities and work together hard. Then the company would change, and its corporate value would go up, and the share price also would rise. This is a concept of our investment company. Next slide, please. Even before serving as an external director, I have continued dialogue with MARUI GROUP. We conducted behavior analysis of EPOS Card users based on our own research and had discussions on medium-term management plan of this time. I had talks in the Medium-Term Management Visionary Committee meetings as well. To function as an external director properly, I believe it essential to know MARUI GROUP well, and I have been visiting stores as well. Next slide, please. Referring to the long-term business performance of MARUI GROUP, I would like to discuss future issues. Net income and long-term earning trend is shown at the top. Good time continued. In the 1980s and at the beginning of 1990, the company hit the record high profit. After that, going through various events, the company has been through difficulties. Now it is growing again. As shown in the management history below, the first president started the business of furniture installment sales and decided a very large-scale investment of the time for Shinjuku store, among others. People in my generation share the real-time experience of series of young fashion, so-called DC brands, minor high-end apparel brands creation at the time of bubble economy. In the background, there was a shift into large stores, scrapping and consolidating small stores. With this, the company achieved sustained profit growth for 30 consecutive years. After the time of bubble burst, the company was in difficulty to some extent. Due to the provision for loss on interest payment for initial some years after the inauguration of the current President Aoi, I think he has been through very tough time. The company had a great business model overhaul, and as you all know, through transition to fixed-term rental contract, issuance of EPOS Card, and inclusion and stakeholder-focused management. Next slide, please. This slide shows my understanding. So far, MARUI GROUP has been operating two things, very unique Retailing business and unique card business in excellent manner. As for Retailing business, as mentioned before, large stores are in prime locations. The company produced tenants, DC brands, and customers with unique producing capabilities supporting their debuts. For young customers who are short of credit capacity, cards are issued, and customer satisfaction is enhanced through Gold Card, which enabled company to increase customers who use Marui card as main card. This was supported by unique organizational capability of MARUI GROUP. Neither of Retailing business or card business is separated, but they are organically linked, and that supported the success of MARUI GROUP. In each case, Marui has been successfully responding to the serious demands of that time. For example, at the inception of the business in the post-war period, when the furniture was not readily affordable, through installment sales, the company responded to the serious demands. When DC brands were to make drastic expansion, the company supported them. For the younger people who moved from rural areas and wanted to become fashionable in metropolitan cities, for such serious demands in a way which I also shared, the company responded very appropriately. Next slide, please. This slide shows the future strategic themes of MARUI GROUP, and this is exactly to be addressed by strategy study committee. So far, virtuous cycle existed between Retailing business and FinTech. As shown in the previous presentation, currently, Co-Creative Investment and investment for the future is a major business component. Therefore, including this third component, virtuous cycle should be created. I think this is a theme for MARUI GROUP. Each business has its own challenges, and the linkage among businesses might have challenges. In any case, MARUI GROUP will continue to explore new era as before. To that end, I would like to help developing unique, groundbreaking business approaches for MARUI GROUP. This concludes my presentation. Thank you, Mr. Nakagami. Let us move to Q&A session. Yes, please. First question is from Mr. Yamaoka of Nomura Securities. This is Yamaoka of Nomura Securities. Do you hear me well? Yes. As for the perspective from external director, on the final page seven, there was a phrase, "How to turn Co-Creative Investment and investment for the future entry barriers." As to how to make Co-Creative Investment and investment for the future differentiation factors, I'd like to have your thoughts. How do you see things actually, and how do you feel talking with people around you? Would you come back to the previous page? As you know, as a person engaged in investment business, I am fully aware that the investment business is difficult to serve as an entry barrier. Investment opportunity is ubiquitous, and we want to take investment opportunity, and to take opportunity is possible for anybody in a way. Therefore, it is difficult to make it an entry barrier, and I think this is exactly the theme for Co-Creative Investment and investment for the future. Unlike financial investor like us, MARUI GROUP is a business investor as well. Not simply for the return to generate, but as an ideal business partner, MARUI GROUP with its Retailing business is highly appreciated, as is typically shown in the case of BASE and Surugaya. On the side of Marui, such good tenants increase customer traffic, so considerable synergy effect and the business benefit are observed. That serves as the entry barrier now, and will continue to serve as such. In investment business, sourcing of investment opportunity is critically important, and this is a source of differentiation. Now, presumably, MARUI GROUP is regarded as a very favorable business partner and investor for the young startup entrepreneurs. I think it is attributable for the efforts of President Aoi and his staffs. Sourcing can be the entry barrier. The corporate value enhancement can be also a unique entry barrier for MARUI GROUP. Very understood. Thank you. Thank you. Next question comes from Mr. Takahashi of Mizuho Securities. Thank you for taking my question again. Mr. Nakagami, thank you for your presentation. I have two questions. Firstly, as you mentioned before becoming external director, you had made in-depth analysis of MARUI GROUP and made proposals. But after becoming a director as a member inside the company, what were the things that became possible for you to do? It may be difficult for you to talk specifically, but did the things you can do as an external director as the one inside the company increase? This is my first question. Let me answer one by one. Information volume is strikingly different. I am now an insider. MARUI GROUP has been always very active and sincere in information disclosure, as you all know. Considerable data is available for the external parties. After becoming a Board member, information discussed in the board and those provided for the board are available, and that information increased substantially. Misaki Capital has capability to analyze information, and based on the rich information, we can make deeper research and analysis and provide feedback to the company. Since days of service is still limited, I cannot comment very specifically, but that is my thought at this moment. Thank you. Second question is for both Mr. Nakagami and President Aoi. I would like to ask about the distance between external directors and the company. From very capitalistic perspective, recently it was said that external directors existed simply to supervise the company. Marui believes the other way. Including the external directors, you are to enhance the corporate value of MARUI GROUP, and I fully agree with that idea. That said, still external director is external member. How do you think about the most appropriate distance? You may happen to be in the process of trials and errors, but I'd like to have brief comments from both of you, Mr. Nakagami and President Aoi. Thank you. Thank you for the question. As you exactly commented, how the governance should be, and that is being discussed globally. Actually, in Nikkei Shimbun evening edition tomorrow, my opinion will be posted in a column entitled as Crossroad, and it is about Board 3.0. Board 1.0 is so-called management board and advisory board, where supervision and execution were not clearly separated. The current monitoring board is Board 2.0. In Board 2.0 concept, supervision and execution are separated, and the Board is not engaged in execution. Ultimately, usually, the Board is only supervising, and at the time of trouble, it would have a meeting for dismissal and appointment of CEO. However, global governance authority already raised question for that idea. On this very point, I think I have agreement with MARUI GROUP and the President Aoi over the future direction. Rather than keeping the distance with external directors simply because they are external, put it simply, we think it better to work together to create strategy, bringing respective expertise and wisdom together to respond to the rapidly changing business environment. Investors have massive information, research and analysis capability, and a sense of urgency to feel the corporate value enhancement cannot be missed. Incorporating these three factors in the board, we will realize new Board 3.0, and that is connected to the movement this time. Is my understanding correct, Mr. Aoi? Thank you. Mr. Nakagami talked about Board 3.0, and we review almost the same thing from different perspective. For two years, stakeholder capitalism has been advocated globally, and we think that if that is applied to the management, it would be stakeholder management. Identifying six stakeholders, including future generations, we defined that our mission is to create common value through dialogue with all these stakeholders. Under such circumstances, this time we decided to invite a stakeholder in the Board, which is a core part to implement stakeholder management. By having a dialogue with a stakeholder, a shareholder, and an investor in the Board Meeting, we will strive to expand the overlapping part of respective profit and happiness, which would be in harmony and well-matching. We have been long creating value through various opportunities including IR day as today, one-on-one meeting, large and small meetings. This time, we have taken a bold step to move forward to invite the representative of a large shareholder, Mr. Nakagami, into the Board as a representative of the entire shareholders. For example, I explained BNPL today. On this topic, we received many questions and opinions from shareholders and investors regarding those, and we worked on them hard and replied with our views, and they are reflected in the management strategy. I'd like to do that in the Board Meeting as well, and hope to continue in dialogue with you. I'm convinced that they would be conducive to the benefit and happiness of the people other than shareholders as well. Thank you. Your company's initiatives are drawing great attention, not only by shareholders and investors, but by business as well. I believe you'll be able to continue to serve as a forerunner in many fields, including governance reform. Thank you very much. Thank you. Due to time constraint, I'd like to take the last question from Mr. Tsuda of Daiwa Securities. My question was very close to the second question of Mr. Takahashi. Since this is a precious opportunity, let me ask one question to Mr. Nakagami. I'm very encouraged by your joining the Board as an external director. I'd like to ask about the potential impediment of your serving as an external director being a major shareholder to your core business of investment. I think you made a bold decision to participate, but do you expect any demerit? Another question is about the wall between the position of investor and the position of external director of Marui. For example, if you cannot invest in the competitors of Marui, let us know about such cases. Theoretically, various demerits can be conceived. As mentioned at the beginning, Misaki invests in only 10+ companies being very selective, and the core of our business strategy is to be working shareholder. By being a part of the Board, I can be a working shareholder with more impact. I believe merit overrides demerit. Theoretically, as you asked, it is true that investment into head-to-head competitors is prohibited. As mentioned before, given the extremely selective investment of Misaki, that is not a major concern for us. Another theoretical demerit is a trading constraint. If you are not the Board member, you wouldn't have any constraint. There are some theoretical constraints if you join the Board. As for the Board 3.0 that I mentioned before, it has many case studies in the United States, and the legal framework is already completed in the U.S. Information control and the trading with information window and other schemes are already established. Joining the Board at this time, I consulted with legal firms in Japan and abroad. Basically, legal framework in the United States can be duly adjusted to the environment in Japan. Based on the adjusted framework, I reached agreement with MARUI GROUP, clearing all legal issues. Therefore, I'll be able to serve as a more powerful working shareholder. Thank you very much. Thank you. With this, I'd like to conclude Q&A session. Mr. Nakagami, thank you very much. Thank you, everyone. This concludes Marui IR Day 2023.