Marui Group Co Ltd Ord

We'd like to start the financial results briefing for the sixth month ended September 30th, 2023. Twenty-five minutes will be spent for presentation followed by Q&A. Let me introduce our presenters. First, Mr. Tato, Director, Managing Executive Officer and CFO, will give you a presentation about our results and business status. And our CEO, Mr. Aoi, will discuss the outlook of our business and progress to achieve our mid-term business plan. And to answer your questions, we have Saito-san, President and Representative Director, e-Postcard, and Mr. Aono. President and Representative Director, Marui Corporation Limited, and Ms. Kutsukake, General Manager, Investor Relations Department. Those will answer your questions. So first, CFO Mr. Kato will give you the overview of our financial results over the second quarter of fiscal year 2024, March.

I am Kato. I'll be talking about financial results and overview of each segment for Q2 of the year ending March 2034. First, the consolidated results. There are four major points. The total transaction volume exceeded 2 trillion for the first half, for the first time. Operating income was 18.7 billion yen, down 17% or 3.7 billion yen year-on-year. Excluding liquidated accounts receivable, actual operating income was down 1.2 billion yen. Then income was down 14% at 11.5 billion or 1.9 billion yen. year on year. Full year plan is now revised based on the progress in fintech. I'll explain more when I get to the fintech. This is the main financial indicators. Group total transaction was 2,172.5 billion yen, setting a new record high again. Fintech transaction increase made great contribution. Operating income exceeded the previous year by 3.7 billion at 18.7 billion yen. And from this fiscal year, we changed the timing of funding through liquidation of account receivable, which led to 2.5 billion yen drop in the first half. And excluding that impact, it was 1.2 billion yen drop. And factors for the drop will be explained at fintech segment. Net income was 11.5 billion yen down 1.9 billion yen year-on-year. If you had this... account receivable liquidation at the same time as previous year, net income would have been on par with the previous fiscal year. I will explain the factors affecting operating income. The operating income is ¥18.7 billion, down ¥7.3 billion year-on-year, excluding ¥-¥2.5 billion impact of liquidated accounts receivable. Actual drop was 1.2 billion yen. In breakdown, retailing saw 800 million yen increase, while fintech saw drop of 1.3 billion yen. Corporate eliminations were negative 700 million yen due to granting of stock to employees and other increase in human capital. Liquidation of accounts receivable is now explained. From this fiscal year, in order to improve capital efficiency and even out gain on transfer, we decided to do this liquidation every quarter instead of once in first half. Therefore, in this first half, it resulted in 2.5 billion drop for the full year. It will be done in Q3 and Q4. And when in last year, it was not done. In total, gain on transfer equivalent to the write-off is scheduled. Hardly any P&L impact is expected. And this is a segment income and revenue and operating income in retailing due to the end of directly managed private plant revenue dropped by 600 million yen. Operating income went up by 800 million yen. due to increasing revenue from tenants. In fintech, revenue increased by 9%, steady progress was done, but there was increasing expenses, and due to the extraordinary factors, even considering the liquidated accounts receivable, there was a drop of 1.3 billion yen. and retailing business and factors affecting operating income. Despite the negative 900 million yen impact in revenue due to the voluntary PV withdrawal, fixed-term tenant revenue increase and personnel expense decline resulted in 800 million yen increase in operating income to reach 2 billion yen. Factors affecting revenue from the fixed rental contract tenants in the fiscal year now operating floor space decreased and average monthly rent increased year-on-year resulting in 900 million grossing revenue. And this is a specific non-operating floor segment. It is now 8,700 Tsubo, way down from the 10,200 Tsubo yen, and average for the full year is expected to be reduced to 8,400 Tsubo. And there's a progress in stores that don't sell. Non-retailing tenant floor area composition went up by 2%. And so there has been steady progress in category conversion toward the plan of bringing up this floor composition to 70% in March 2026, fixed-term rental contract tenant, monthly use prices going up in line with the plan. Thank you very much. E-commerce transfer, we have increased hiring of professional talent further and enhanced efforts to increase the site visits and we will continue to grow the business. And with this, the retail segment is in the second half, forecast is shown here. In the first half, we had a growth of 800 million yen from second half, we expect. Revenue from tenants to increase further and also facility and other assets related expenses drop and the posting of sales promotion expenses to be carried over. So we expect to accomplish the planned 7 billion yen.

Next is OP breakdown. Revenue and expenses were categorized into those linked to transaction, those that are not. Thanks to transaction growth, those linked to transaction went up by $2.6 billion. Those that are not linked to volume went up by $4 billion. Total revenue went up by $6.6 billion, but expenses went up by $7.6 billion. Therefore, operating profit excluding the liquidity. Receivables impact, the number was down by $1.3 billion to $23.5 billion. There are some factors such as margin fee and point expenses, which I will elaborate more later. First with margin fee, first half commission rate was 1.21%, down by 0.04% year-on-year. generating the impact of 500 million yen in the first half, out of which 0.02% is attributable to some merchants' rate cut, which was not baked into our midterm business plan. Therefore, the impact is not expected to linger. And also, companies are trying to expand the share of household finances that will continue to give impact on our business. And I Remaining 0.02% comes from travel, entertainment, recovery, as well as prepaid charge. And we reviewed point program systems, so prepaid charge impact is not going to repeat in the coming quarters. And regarding point expenses, we reviewed the calculation method of provision as a result. Expense went up by 800 million yen in the first half of this fiscal year, and this impact is not going to be repeated in the second half. And also prepaid card charge increased in order to gain points. As a result, point expenses went up by 200 million yen. So to respond to that, the company reviewed our point program in September. Therefore, there will be no impact in the second half. Excluding those one-off factors, it's fair to say that point expenses have been controlled within expectation. Lastly, I'd like to touch on commission fee and labor cost. In the first half, because of weaker yen, commission rate over transaction increased by 200 million yen year-on-year. and this side effects impact is likely to linger in the second half. Regarding labor costs, we reviewed retail format, and strategic reallocation has led to increase of 100 headcounts, and in the first half of this fiscal year, we increased the headcount by 80 people for the new businesses, and as a result, cost went up by 300 million. But there will be no more impact in the second half. And here are some one-off factors summary. The impact margin fee cut will linger to a certain extent, but there are other measures that would not be repeated. So excluding one-off factors, profit would increase by 2.9 billion, which is almost on par with pre-COVID level of 3 billion yen. Therefore, In mid-term business bond, we were expecting fintechs contribution to profit, and this trend will remain the same, no change with expectation. And a full year profit outlook is shown on this slide. Given the margin fee revenue, we decided to lower the guidance down to $43 billion. down by 3 billion. Next is about co-creative investment. In March 2025, 100 million was invested to startups. Another 100 million went to the fund. A total of 200 million yen worth of investment was made. Accumulated investment amount has now reached 27.2 billion since 2017 March. And as for co-creative it would contribute to the core business by 1.2 billion, out of which 700 went to retailing, 500 went to fintech. And 2023, March, we are expecting 5.5 billion. Next is about balance sheet. Operating receivable increased by 32.5 billion in March 2023, with that total asset to 1.7 billion yen. Next is capital allocation. Basic operating cash flow stood at 14.5 billion, out of which 7 billion was allocated to growth investment. 5.7 billion was allocated to dividend. Regarding expenses, the company invested 4.7 billion yen in human capitals, representing 800 million yen increase year-on-year, or 26% of total labor cost. Profit outlook by segment retailing profit is 7 billion in line with the plan. Fintech profit is down by 3 billion from the original guidance, down to 43 billion. Total company expenses, 8 billion, showing 500 million yen negative values due to expansion of capital, human capital investment. Consolidating OP will be revised down to 42 billion yen by 3.5 billion. Although three KPIs are likely to be behind our original plan, we are aiming at top-line, bottom-line growth. Regarding dividend, DOE stays at 8%, so DPS will stay the same at 101 yen. Lastly, I'd like to talk about full-year 2026 March. That is the last fiscal year of mid-term business plan. Again, for some merchants... lower commission rate is expected. I mean, impact will linger and new impacts will be reviewed. Therefore, we are expecting a negative 3 billion in variance against the original expectation. However, we believe that we can catch up with the following measures, so we are not going to change the guidance.

Now, future directions and medium-term management plan achievement prospect will be given by President Mr. Aoi. Aoi speaking. I will be talking about future directions and the forecast for medium-term management plan. We are halfway through in the second quarter through the current medium-term management plan. In the first half, the result was challenging, but we still have the remaining half to go, so we want to have a solid recovery to accomplish the original plan. So going forward, we will partially revise the plan and move up the execution of new growth strategies. There are three following points. First one, personal plan review and improvement of human productivity. Second, cost tailored to each individual interest as a new growth strategy. And third, review of new business co-creative reinvestment. First, personal plan review and improvement of human productivity. Per capita productivity through the business structure transformation from the retailing focus to fintech focus since year ended March 2015 still increased by 1.5 times for the past 10 years. However, on the other hand, in fintech, per capita productivity during the same period, despite the transaction going up four times from 1.1 trillion yen to 4.3 trillion yen, remained only 1.1 times only, a slight improvement. One of the factors behind the stalled growth in fintech productivity was reallocation of talent associated with the business structure transformation. The headcount in fintech was 1,300 as of April 2014, but for the subsequent 10 years, every year, about 140 people were reallocated from retail industry. to FinTech, resulting in a total expected headcount of 2,700 in March 2024. Reallocation of personnel was done in the form of upfront investment, a faster than increase in the scale of business in FinTech. However, in the previous fiscal year, the group business structure transformation was completed and so was the reallocation of personnel. Therefore, going forward, personnel assigned in an upfront investment manner can now contribute to real revenue and thus expected to significantly improve productivity. Therefore, we will review the personnel plan. In medium-term management plan, originally, we had expected increase of 100 people every year in fintech with business expansion after March 2025, but this will be revised to plus minus zero. So the impact on the cost of the final year of medium-term management plan is expected to be about 1 billion yen. With efficiency improvement by DX, per capita productivity is expected to be increased to 36 million yen in March 2026 and 47 million yen or 1.6 times in March 2029. Now, the cards tailored to each individual interest as a new growth strategy. In fintech so far, gold card with no annual membership fee, a unique business model, has been growth engine to achieve annual growth rate of 16%, which is quite high. Following the gold cards, in recent years, a potential second growth engine, new cards, has emerged. That is, cards tailored to each individual interest. The number of holders of cards tailored to each individual interest among new sign-ups has been increasing year by year and expected to reach 40% in March 2024. And LTV of cards tailored to each individual interest is two to seven-fold higher than general cards, approaching LTV of gold cards potentially. Currently, 60 different types have been issued, and membership has reached 780,000. Members per plan is 110,000 at the largest and 600,000 at the smallest.

The number of plans has increased dramatically over the past few years. Back in 2015 to 2019, we used to have two to three plans per year. But with the introduction of print-on-demand in 2022, last year we had 16. This year, we are expecting to enjoy 23 plans. There are several reasons behind the increase of number of plans. First is not just fintech, but also retailing and co-creating investment group as a whole. is engaged in development. In reality, retailing came up with 26 and fintech came up with 27, almost on par. Partly because anime business was included in retailing, but e-commerce and stores are involved in development. And also with co-creating investment, business partners and Marie are working together to develop collaboration card. So we are going beyond business boundaries to develop different types of cards. And second is to do with motivation by employees. If we leverage individual's interest, Employees' motivation will increase, and as a result, if they see their work are resonant with what customers' interest, they think that it's rewarding and drive development. And also, we have a corporate culture to encourage people to take a challenge. In the past, because of higher printing costs, $5,000 was a lower limit to print. But thanks to print-on-demand, there is no such restriction for employees. The risk to fail became lower, so it's easier for them to make a proposal and take a challenge. And for our target, we'd like to nurture a culture to allow people to make mistakes and promote to take challenges. If 5,000 people can leverage their skills, interest and develop their individual cars, we may be able to come up with 5,000 different types of cars. But even if we have more plans, we need to acquire members. Otherwise, it does not make sense. We do have unique strengths and resources that other companies cannot copy. That is events that can be held in our stores to attract traffic. And also we do have a capability to attract members. which we nurtured in a retailing business, we developed eventful stores that are generating synergy. As a result, 70% of new applicants choose cars tailored to each individual's interest. And also customers who participate in events talk about us with social media that bring online new applications from an area where there are no stores. Next is cars tailored to individual interests. converting them into main cart. In the past, or traditionally, we encourage existing cart holders to switch to gold cart. But tailored carts have a strong intention to use their tailored cart as main cart. So a lot of people decided not to convert into gold card. As a result, upper usage limit stays the same. So their tailored cards cannot be used as main cards. But moving forward without shifting to gold card, we allow customers to use their tailored card as main card. We allow them to increase on the upper limit of usage. So again, cards tailored to each individual interest would bring 2 to 3 billion yen worth of profit contribution by the last year mid-term business plan. Next is about co-creative investment and new businesses. First, about new businesses. Last year, we decided to take another look at what we have. Instead of a zero-from-scratch approach, we introduced a so-called entrepreneurship business development approach. As a result, some businesses... were cancelled and some businesses were integrated. So the number of new businesses went down from 11 to 6. So contribution coming from new business to a mid-term business plan will go down from 2 billion to 1 billion. And entrepreneurship business development status will be explained more in detail when we host IR Day. Next is about co-creative investment. So for we Having going after profit contribution to a core business and financial return, our policy will remain the same. However, in terms of operation, we are trying to increase the probability of success. First, in the initial investment phase, we place more importance on potentials for collaboration. So to that end, it is useful or practical to make an early investment in sheet or early stage, but the risk is high. So investment amount is likely to be small. But once enterprise value goes up and see possibility of exit, it's reasonable to make a bigger investment expecting higher financial returns. In the past, we used to wait for higher enterprise value to make an investment. As a result, investment amount is likely to be big. incur higher impairment loss. But moving forward, we would like to control the initial spending, controlling the amount around $50 million. And to invest $100 million or more as a result of a collaboration, we will spend money once we see a bigger possibility of exit. And as a result... investment amount will go down from 12 billion to 5 billion yen after the revision of our policy, and with that, impairment loss is likely to go down by 1.5 billion. So with that, profit contribution in terms of OP by March 2026 will be 3 to 4 billion, and extraordinarily loss will be down by 1.5 billion. With that, we believe that we can achieve our mid-term business plan.

Now we'd like to move to question and answer session. So the first question, Mr. Kanamori from Okasan Securities, please. Kanamori from Okasan Securities. So there's one question. There's one question. In fintech, the downward revision for fintech is what I like to ask about. You explained a lot. But in the first quarter, there was a forecast. And with that, the Merchant Commission reduction impact was, to a certain extent, taken into account. What you said back then is that the point policy would be reviewed, and in various initiatives, there will be improvements done. So I don't think directions have been changed. But in the first quarter, you had the forecast, but this revised forecast now, on page 25 in the FinTech, By water flow chart, what has changed how? Can you explain more about the change from the Q1? The revenue itself doesn't seem to have changed from the first quarter forecast, but expenses may have gone up from the initial forecast. So what are the reshuffling of the positive and negative factors coming to the conclusion of this downward revision? Saito speaking. Thank you very much for your question. So to your question, Mr. Kanamori, from the first quarter forecast and the four-year forecast has been changed from that. And what has changed? That was your question. And in terms of revenue and expenses, I'd like to explain. First on revenue, as was explained earlier, In the first half, based on the actual results in the first half, as described in the fact book, the transaction expected has been changed slightly. Why? Because in the first half, the prepaid charge type transaction has rapidly increased and merchant commission rate has decreased and point expenses has increased. So there was a double whammy. By reviewing this program, the transaction is expected to decline in the second half. That's what we had expected in this revision. And 116% was the plan in the original program. but we ended up with 115%, one percentage point down. So in the second half, including second half for the full year, 50 billion yen revision was done. So compared to the forecast in the first quarter, there was some slight decline in the revenue expected. And as for expenses, as you said, in the first quarter, there are various... or there was various cost reduction initiatives scheduled, and we have been steadily executing those. But what has mainly changed from the first quarter forecast is There are several folds, and the first one is point expenses. Compared to the end of first quarter, the prepaid point increase had not been taken into account in the first quarter forecast. So that was the increase in the point expense increase. And also in the foreign exchange expenses, we have thought that this would be the one-time effect in the first quarter, but now the yen is 150 yen to the dollar or more. So the expenses forecast has to be increased slightly. So there is some expense increase that we have come up with from the first quarter. So 3 billion yen decline was taken into account in the for your forecast well as for the prepaid cards the expenses for the prepaid card had not been taken into account but in the first quarter there were signs that were seen as a layman that's what I would assume so what about your thoughts on that Well, as for the point expenses, if you can take a look at that page, as you can see on the right bottom, if you can see the transaction for prepaid charge from the second half of last fiscal year, it has gradually going up. In the second half, last fiscal year, there was no conspicuous prominent increase. We had realized that there was an increase, but we didn't think that there would be some responses needed. But from the first quarter, there were some signs for a rapid increase. So based on the results of first quarter, we have taken this action. So as of the first quarter, there was some uncertainty about potential responses, so this was not taken into account. The merchants, some merchants fees decline. I think this would be maintained or you said that this will be maintained to a certain duration. So in the continued impact, there was a minus 100 million yen. Is this what you're talking about? Like for the next two to three years, there will be an impact of 200 million yen solely due to the merchant fee decline. Is that correct understanding? In the large-scale merchants, the terms and conditions were changed. So the impact will be continued for the next fiscal year and after next. So that impact has been translated into this number. Don't you think that this would also spread to other merchants? If you look back for the past 10 years in historical terms, the terms and conditions change for merchants had never dropped or reduced the total merchant fee rate. So we cannot say for sure, but this was a quite unique event. I'm sorry, I kept asking the same question. I'm sorry. Thank you.

Thank you. We will take the next question. Next question comes from Takashi-san of Mizuho Securities. Takashi-san, over to you. Hi, this is Takashi with Mizuho. Thank you so much for sharing detailed information. So I'd like to ask a question to both present, first with retailing business. I know that our business is not with your expectation, all in all, but what is working particularly well? And where do you see some rooms for improvement or opportunities? And my question to Saito-san, as Aoi-san, CEO, mentioned, the company has to improve productivity And because of larger number of headcounts, the company struggled to improve productivity, I assume. So why productivity has not improved? Maybe you did not put much focus on that. But looking back, I'm looking at page 44. You are trying to improve productivity aggressively. So what kind of actions are you going to take to make that happen? And lastly, I'd like to ask our CEO. I know there are some challenges, but to achieve your midterm business plan, I know that the company has continued to fine-tune your plans to achieve your goal, but While it's been still a few months since previous IR day, you may not have a lot of update, but what's working well? Well, retailing and fintech and co-creative investment are enjoying bigger collaboration, I assume, but to achieve mid-term business plan, what is working well? and you are saying that you are determined to achieve your numerical target of midterm business plan, but in coming few years, there may be some external factors. Anything that you are paying particular attention to? So that's all for my question. Hi, this is in charge of retailing business. Thanks for your question. So two points. So we are in line with our plan, but what's working well and what are some opportunities to make further improvement? So regarding fixed term rental contract, I think that's working well. In order to achieve $7 billion or $12 billion, The engine for growth will be the increase of fixed-term rent. So to achieve seven, more than 2 billion yen revenue increase is expected coming from fixed-term, and we believe that we can achieve this as of the first half. And as for opportunities, as mentioned in the second part, We do have cars tailored to each individual's interest. That's something that we are going to focus on strengthening, not just for e-posts, but also for retailing. I think that's a big opportunity for retailing business. Cars, tailored cars, would help us to increase new customers. for retail business. Tailored card would bring new customers and also thanks to event revenue will increase that would increase the value of stores and increase rent accordingly. So strategy of tailored card would bring bigger opportunities to return business. Hi, this is Saito. Thanks for your question about fintechs productivity today. Productivity is hovering at lower level. What's my view on that and how to improve the situation? So to answer your questions, as mentioned, Marie groups Fintech to streamline retailing business. We allocated talents to higher productive business. Fintech has applied a law to make that happen. However, Without workplace, you cannot make the best use of talents. So while transforming retailing business, fintech business is trying to strengthen the nationwide business and strengthen sales capabilities. Well, we do have 40 business partners today, external business partners. So we have developed workplaces where we can leverage our talents. Fortunately, even if our people are engaged in retailing, We are able to issue cars in retail stores. There are a lot of Italians who are capable of retailing and fintech businesses. A lot of people are productive from day one. So as we continue to develop, we don't have enough talent, so we try to nurture our talents. And also regarding processing department, We are trying to make the best use of IT technology, but the transaction increased by four times. So we need talents for processing department. So we allocated people to back end as well. So how to improve productivity from now, to be honest, in terms of operations? I know that we have a relatively large number of headcounts. So first, the external card center operations. We are now dependent on our full-time employees, but shifting to external part-time operators, we can cut costs. And also regarding digital transformation, particularly for back-end, I think there is room for improvement. We can make the better use of digital technology. As we increase our transaction, we don't have to increase the headcount. So with that, we would like to improve our productivity. And also, let me answer your question as well. So, since we developed our midterm business plan, we'll have first phase was already completed, so we have second phase to go. So, what's working well, what's not working well? So, to point out what's been working well, as Takahashi-san mentioned, collaboration between retailing and fintech group is united to run a business. I think we are able to enjoy collaboration between different businesses. Again, designing and issuance of cards tailored to individual's interest is an example. that is originally that was originally fintech business you may think that other businesses don't have to do anything what we did not ask but people started to really get involved in this project to design and develop taylor cars voluntarily we are enjoying momentum so as a group we are united to really run our core business. I believe it's difficult for peers to copy. We are united to run our unique business. So I think that's an example that's working well, that makes me really happy. On the other hand, regarding challenges, there are, of course, a lot of challenges to address, particularly in terms of external environment. New competitors are making a road into our domain. For example, when it comes to fintech business, conventional competitors are large retailers, credit cards. On top of that, we have emerging e-commerce players. Some are marketers, some are retailers, some are telecommunication, code payment, credit card issuance, emerging fintech players. They may be small, but they may grow fast. So we are seeing new fintech players making new inroads into our market one after another. So we have to keep our closer eye on the situation. We have to stay alert so that we can come up with unique strategies that cannot be copied by others. So looking back, a lesson we learned is that we have new businesses. Two billion yen contribution was expected during midterm business plan term. So we were excited about new businesses, but we struggled. Our strengths and resources should be maximized with what we call entrepreneurship business will be focused on from now on. So the size would be smaller, but we focus on businesses that are more likely to succeed. And regarding investment, we have a co-creative investment scheme. It's been seven years since we introduced this. We have gone through trials and errors. And as I mentioned, we now see some challenges. So we'd like to learn lessons from the past so that we can invest in area where we believe we can enjoy success. That's all. Well, so basically, So you have a midterm business plan or even beyond midterm business plan, you will continue to review your initiative. So that kind of attitude or policy will remain the same. Yeah, basically, as I mentioned, we believe that we can achieve the target. So please be rest assured. Thank you.

Thank you very much. Now I'd like to move to the next question. Mr. Tsuda from Daiwa Securities. Over to you. I have two questions. First one is a simple question. Slide 62. So there is an improvement effect. And with the review of new businesses, 200 million yen decline has not been included, it seems. Is there any particular reason for that? Yes. Kato actually explained in the first half, if the impact continues, then the impact on the final year of the medium-term management plan, from 2 billion to 1 billion is a contribution that we see from new businesses. So that minus 2 billion in fintech and minus 1 billion in forward-looking investments. So in total, 3 billion yen impact is expected. And then to what extent we can recover from here is what you actually refer to on slide 62. And these two operating income, this is at the operating income level. So productivity and cars tailored to each individual interest, 3 to 4 billion yen recovery is expected. And also further below, extraordinary profit or income or extraordinary loss of 1.5 billion. So the impairment loss will be reduced by 1.5 billion, right? In the new businesses. I'm sorry. So 3 to 4 billion yen, it should be assumed, right? So minus, so that's a negative effect. And then we should offset that, recover from there. That is what is written on slide 62. Okay, understood. Just for clarification. And the second question. The direction of medium-term management plan is quite solid, and what needs to be done is now being done, which is quite assuring. But if you look at the single-year performance in the previous year, you were short of a target, and now you are behind the downward revision. And there could be some one-time factor from the previous year that was visible. And because direction of medium term management plan is quite solid for the single year, the direction of the medium term management plan is a big direction. So risk factor inclusion and putting up the numbers, it seems that you are quite loose. And in this next fiscal year, maybe the traffic signal could change from yellow to red. So how do you look at the balance between the medium-term management plan as a whole and the single-year performance? Well, Kato speaking, you rightly said, so for the revision for this fiscal year, we have not taken into account fully the extraordinary factors, and that is the lesson that we've learned. And the actions taken were a bit delayed. So for this fiscal year, we had to revise the plan because we were not able to accomplish the original plan. But as we analyze more closely, we now realize that we can recover. So we have to be earlier to take action going forward. Well, for example, you explained this time, so it was assuring, but as for liquidation of accounts receivable, that was done in second quarter, and also that was also done, and that is going to be done throughout the year. That's the first time that we have heard about that. So at the time of the fiscal year, at the beginning of the fiscal year, if you know that, if you can disclose that earlier, that would be appreciated. What do you think? Well, for the liquidation of accounts receivable, the proceeds should be allocated to the new lending. So we had known that once a year would be inefficient, but gain was recorded in a large sum so that we had... that taken account but in the first quarter the cash advance receivables were liquidated and we found that capital efficiency was quite good so after the first quarter achievement we had decided that this would be divided into four times throughout the year and announce was delayed i'm sorry but Because of fund efficiency, we decided that we would do this every quarter from this fiscal year. Thank you. In the next fiscal year, I don't want you to say the same thing for three years consecutively. Please. Thank you.

Okay, next. Kawano-san of Goldman Sachs. Kawano-san, over to you. Hi, this is Kawano speaking. Can you hear me? Yes. I have one question regarding fitting business. In the previous term, You said that the card membership cost increased because of different factors. You were not able to meet the guidance on this fiscal year. You were not able to meet your guidance. Seems like fintech profit has not been really growing over the past two years. That's a big picture. OTC was also saying that GMV was growing, but the profit is down. So it seems like industry as a whole is seeing the same challenge. I'm not sure if it's due to the acquisition cost or competition. Is it more difficult to generate profit in the entire industry? Well, for your company, I believe that you will enjoy growth from now on. But it might be difficult to achieve your expectation in terms of growth. I know it's kind of a big question. I would appreciate it if you could share your take. Thank you for your question. Hi, this is Saito. You are right, Kawano-san, last year. Well, the new card enjoyed the record high acquisition, so acquisition cost went up. And also, the rent recovery after COVID, we assumed, was aggressive. We are wrong. So that is why we failed to achieve the guidance. And in this fiscal year, as mentioned earlier, there were some one-off factors that were not baked into our original guidance. There were a lot of factors that we did not increase. So, Kawano-san, you said that fintech's business profitability is getting lower and lower. I understand your skepticism. So... As of the second quarter, what I would like to say is that profit structure itself has not really changed. Negative valence is attributable to one of factors. We decided to share details. More than 3 billion yen worth of profit increase is something that we would like to maintain. So our profit structure itself hasn't really changed to continue to enjoy growth. And we have been focusing on or trying to accelerate the focus on cars tailored to each individual interest to strengthen our profit structure. So this time, while of course we took it seriously, unfortunately we had to revise our guidance. But let me repeat that our profit structure itself has not really changed. I don't think return or profit structure has changed, but in comparison to the past three or four factors, you're likely to see different factors as an industry. I'm just wondering if it's getting more and more difficult to generate profit. Yeah, I'd like to add more comments. So, as Kawano-san mentioned, despite transaction growth, fintech business is seeing some challenges to generate profit. It's not unique to EPOS. You are concerned that industry as a whole is sharing the challenge. Well, in fact, we share the same challenge. We are concerned more than anybody else. That is why we did analysis in details. Well, some said that we were too optimistic, but increased card charges would increase not just point expenses, but transaction expenses also went up. And it took more time than we thought. That's a lesson we learned to identify that. So again, transaction is now going up to 4 trillion. We are aiming at 5 or 6 trillion. Now that we are 4 trillion year level, 0.1% change would impact a lot on our business. So we have to really be cautious But again, we scrutinized our business, and the conclusion that we have reached is that our basic profit structure has not changed. We have not identified any structural changes. And again, about cards tailored to each individual's interest. So we had idea. For some time, we decided to execute our strategy earlier. We can do that so there are more opportunities that we can tap, although we have not been able to cover everything today. But in terms of profit structure, we are excited about what's to come next. So at a later date, we'd like to share results and explain what we are capable of. That's all. Thank you for sharing details. Thank you.

Thank you very much. Are there any other questions? It seems that there are none. So we'd like to close Q&A with that. We'd like to close the financial results briefing. and we are asking you to fill out the questionnaire format. We are emailing you the URL that will bring you to the questionnaire form, so please help us with your input. Thank you very much for your attendance today.