consolidated financial summary (for the year ended march ... · earnings presentation for the...

Consolidated Financial Summary (for the year ended March 31, 2012) April 27, 2012

Company name: Tokai Tokyo Financial Holdings, Inc. Listings: First sections of the Tokyo Stock Exchange, Osaka Securities Exchange, and Nagoya Stock Exchange Stock code: 8616 URL http://www.tokaitokyo-fh.jp/ Representative: Tateaki Ishida, President & CEO Contact: Toshiki Masui, General Manager – Finance Planning Department

Telephone: (03)3517-8391 Scheduled date for general meeting of shareholders: Scheduled date for filing securities report:

June 27, 2012 June 27, 2012

Scheduled day of commencing dividend payment: June 28, 2012 Earnings supplementary explanatory documents: Available Earnings presentation for the fiscal year: Available (for financial analysts and institutional investors)

(Figures are rounded down to the nearest one million yen and those in parentheses are negative figures.)

1. Consolidated Financial Results for the Year Ended March 31, 2012 (from April 1, 2011 to March 31, 2012) (1) Consolidated Results of Operations (Figures in percentages denote the year-on-year change.)

Operating revenue Net operating revenue Operating income Ordinary income Net income Year ended million yen % million yen % million yen % million yen % million yen %

March 31, 2012 52,631 0.4 50,756 (0.1) 3,363 8.9 5,077 5.6 2,545 (41.1)March 31, 2011 52,402 (10.4) 50,785 (11.1) 3,089 (70.6) 4,806 (60.0) 4,318 (39.7)

(Note) Consolidated comprehensive income: March 31, 2012: 2,348 million yen [(32.5%)] March 31, 2011: 3,480 million yen [51.4%]

Net income per share Diluted net income per share Return on equity Return on assets Operating income/

Operating revenue Year ended yen yen % % %

March 31, 2012 9.45 — 2.3 0.8 6.4March 31, 2011 15.50 — 3.8 0.7 5.9

(Reference)Investment profit on equity method March 31, 2012: 357 million yen March 31, 2011: 353 million yen (Note) We post no figure of diluted net income per share as the Company has no potential stock that has dilution effect.

(2) Consolidated Financial Position Total assets Net assets Equity ratio Net Assets per share

As of million yen million yen % yen

March 31, 2012 641,216 110,259 17.1 416.51March 31, 2011 664,376 113,015 17.0 407.26

(Reference) Shareholders’ equity March 31, 2012: 109,833 million yen March 31, 2011: 112,658 million yen

(3) Consolidated Cash Flows Position Cash flows from operation Cash flows from

investment Cash flows from financing Cash and cash equivalents

Year ended million yen million yen million yen million yen

March 31, 2012 (43,135) (1,469) 26,304 43,330March 31, 2011 (33,400) (3,498) 39,452 61,725

2. Dividends

Dividend per share

(Base date) End of first quarter

End of second quarter

End of third quarter End of year Annual

Total cash dividends (annual)

Dividends payout ratio (consolidated)

Net assets dividend

ratio (consolidated)

Fiscal year yen yen yen yen yen million yen % %

ended March 31, 2011 — 4.00 — 4.00 8.00 2,225 51.6 2.0ended March 31, 2012 — 4.00 — 4.00 8.00 2,120 84.7 1.9ending March 31, 2013 (Forecast)

— — — — — —

Member of the Financial Accounting Standards Foundation

3. Forecast of Consolidated Operating Results for Fiscal 2012 (from April 1, 2012 to March 31, 2013) The Group operates principally in the financial instruments business, and its operating results are likely to be affected by

market fluctuations. Due to such nature of its business and consequential difficulty in predicting its performance, the Group does not disclose the forecast of operating results.

4. Others (1) Important Changes in Subsidiaries during the Term (Changes Pursuant to the Subsidiaries that Lead to a Change in the

Scope of Consolidation): Yes New: 2 companies: (Company name): Tokai Tokyo Asia Renaissance Fund Limited Tokai Tokyo Asia Renaissance Master Fund Limited Exclusion: None (Note)Please see “Significant Basis of Presenting Consolidated Financial Statements” on Page 19 for details.

(2) Change in Accounting Policies or Estimates and Retrospective Restatements

1) Change in accounting policies in accordance with revision of accounting standards: None 2) Change in accounting policies other than item 1) above: None 3) Change in accounting estimates: None 4) Retrospective restatements: None

(3) Number of Shares Issued (Common Stock)

1) Number of shares issued at the end of the term including treasury stock (shares) March 31, 2012: 280,582,115 March 31, 2011: 280,582,115

2) Number of treasury stock at the end of the term (shares) March 31, 2012: 16,883,696 March 31, 2011: 3,956,944

3) Average number of shares outstanding FY2011: 269,295,667 FY2010: 278,648,232

(Note) For the number of shares that is the basis for the calculation of consolidated net income per share, please see “Per Share Information” on 3.

(Reference)

Non-consolidated Financial Results for the Year Ended March 31, 2012(from April 1, 2011 to March 31, 2012) (1) Non-consolidated Results of Operations (Figures in percentages denote the year-on-year change.)

Operating revenue Operating income Ordinary income Net income Year ended million yen % million yen % million yen % million yen %

March 31, 2012 3,749 (50.9) 1,908 (67.2) 2,430 (61.7) 1,569 (71.9)March 31, 2011 7,632 198.9 5,815 — 6,343 627.9 5,582 —

Net income per share Diluted net income per share

Year ended yen yenMarch 31, 2012 5.83 — March 31, 2011 20.03 —

(Note) We post no figure of diluted net income per share as the Company has no potential stock that has dilution effect.

(2) Non-consolidated Financial Position Total assets Net assets Equity ratio Net Assets per share

As of million yen million yen % yen

March 31, 2012 118,527 100,611 84.8 381.10March 31, 2011 112,892 104,326 92.4 376.92

(Reference) Shareholders’ equity March 31, 2012: 100,496 million yen March 31, 2011: 104,266 million yen

* Audit procedure implementation progress status This earnings report is exempt from audit procedure of the financial statements that is required under the Financial Instruments and Exchanges Act. At the time of the disclosure of this Consolidated Financial Summary, we have not finished audit procedure process.

* Note to proper use of forecast of operating results and other special remarks

Dividend payments for the fiscal year ending March 31, 2013 have not been determined because it is difficult to forecast operating results, similarly as described in “3. Forecast of Consolidated Operating Results for Fiscal 2012.”

1

Accompanying Materials – Contents 1. Operating Results······················································································································································2

(1) Analysis of Operating Results ··························································································································2 (2) Analysis of Financial Condition ·······················································································································3 (3) Basic Policy Concerning Profit Distribution and Dividend Payment for the Current

and Next Fiscal Years ·········································································································································4

2. Information on Group Companies ····························································································································4 3. Management Policy ················································································································································ 6

(1) Principal Management Policy···························································································································6 (2) Current Challenges ············································································································································ 6

4. Consolidated Financial Statements ···························································································································8

(1) Consolidated Balance Sheets····························································································································8 (2) Consolidated Statements of Operations and Consolidated Statements of

Comprehensive Income··································································································································10 (3) Consolidated Statements of Changes in Net Assets························································································13 (4) Consolidated Statements of Cash Flows·········································································································15 (5) Notes on Going Concern Assumption ············································································································17 (6) Significant basis of presenting consolidated financial statements··································································17 (7) Notes to Consolidated Financial Statements ··································································································19

(Consolidated Balance Sheets) ·······················································································································19 (Consolidated Statements of Comprehensive Income)······················································································20 (Consolidated Statements of Changes in Net Assets) ························································································20 (Consolidated Statements of Cash Flows) ····································································································21 (Segment information) ···································································································································21 (Per share information)····································································································································21 (Material subsequent events) ···························································································································22

5. Others······································································································································································23

(1) Breakdown of Commissions and Trading profit and loss···············································································23 (2) Comparative Quarterly Consolidated Statements of Operations ··································································· 24

2

1. Operating Results (1) Analysis of Operating Results

(Operating results for fiscal 2011) During the consolidated fiscal year under review (April 1, 2011 to March 31, 2012), the Japanese economy recovered moderately since May as supply chains that were once in disruption due to the Great East Japan Earthquake recovered more rapidly than expected. But, after the summer, the concerns over an economic slowdown grew facing such factors as monetary tightening in emerging countries, appreciating yen, floods in Thailand and worsening debt crisis in Europe as well. Then, from the year-end to the early months this year, domestic demand picked up assisted by such boosters as robust sales during year-end shopping season, activated reconstruction demand, resumption of tax incentive for Eco Cars. The outlook brightened further with the Quantitative Monetary Easing by the Bank of Japan in February 2012 as well as temporary lull in the debt crisis in Europe. However, the upward swing was not strong enough to sweep away uncertainties amid the adversities like announcement of downward corporate revenues primarily by export-oriented firms, and lasting months of trade deficits resulted from higher imports of fossil fuels for thermal power generation to replace halted nuclear power generation. Regarding the stock market, the Nikkei Stock Average, starting at the 9,700-yen level in April 2011, reached 10,207 yen on July 8, as restoration from the earthquake progressed and U.S. stock prices rose. However, as the financial crisis in Europe began worsening in July and as the U.S. dollar fell to the level of 75 yen toward the end of October 2011, the index plunged momentarily to 8,135 yen on November 25. Global stock markets then soared dramatically and restored confidence as the central banks of Japan, the United States and Europe each provided abundant liquidity to respective market. In Japan, following the announcement of the additional Quantitative Monetary Easing by the Bank of Japan on February 14, 2012, the appreciation of the yen eased and the Nikkei Average started rising and reached 10,255 yen on March 27 and closed the fiscal year at 10,083 yen. The daily average transaction value on the First Section of the Tokyo Stock Exchange during the full fiscal 2011 was ¥1,285.3 billion, down 16% from ¥1,532.4 billion in the previous fiscal year. On the other hand, the yield on the 10-year JGB, the benchmark for long-term interest rates in the bond markets, had continued to drop (meaning higher bond prices) since April 2011 when it was at 1.20%, reflecting economic deceleration and investors’ aversion to risk and it eventually slipped down to around 1.0% after August. Even into early 2012, investors remained risk averse in view of the yen appreciation and strong stock market and thus dragged the yield on the 10-year JGB to 0.985% by the end of the fiscal year. Under these circumstances, Tokai Tokyo Securities Co., Ltd. (hereinafter “Tokai Tokyo Securities”), the core company of the Group, opened “Premier Salon Toyota” in Toyota City, Aichi Prefecture, in July 2011 to attract affluent customers in the Mikawa region of the prefecture. Meanwhile, Tokai Tokyo Securities reviewed its branch network to streamline its sales operations, and closed the unmanned sales office located inside the Meglia Fujioka Store in July 2011 for better efficiency. Also, Tokai Tokyo Securities started a new financial instruments intermediary operation jointly with The Chukyo Bank, Ltd. (hereinafter, “Chukyo Bank”) in September 2011, whereas Chukyo Bank handles financial instruments such as foreign securities and structured bonds and we, Tokai Tokyo Securities, provide those products. Furthermore, in an alliance with Hoken No Madoguchi Group Inc., Tokai Tokyo Securities opened a special counter in April 2012 dedicated to offer insurance advice services inside its Shin-Urayasu Branch. Regarding systems, following the merger of Tokai Tokyo Securities and Toyota Financial Services Securities Corporation in April 2010, the systems of both companies used to be run separately in the beginning, but they were integrated in January 2012 into the one Tokai Tokyo Securities runs. This enables Tokai Tokyo Securities to improve customer services and help them cut cost and improve business efficiency.

In an alliance strategy (strategic partnerships), Nishi-Nippon City Tokai Tokyo Securities Co., Ltd., a company jointly established by the Company and The Nishi-Nippon City Bank, Ltd., opened the Kokura Satellite Booth (May 2011), Kurume Branch (June 2011) and Iizuka Branch (November 2011). Furthermore, Hamagin Tokai Tokyo Securities Co., Ltd., the company jointly established by the Company and The Bank of Yokohama, Ltd., set up the Mizonokuchi Branch and Consulting Booth Kamakura in October and November respectively. The Group implemented structural reforms effective April 1, 2012. In particular, Tokai Tokyo Securities abolished the Retail Sales Headquarters and Investment Banking Headquarters, and instead established headquarters for each region of Chubu, Higashi-nippon and Nishi-nippon to serve both retail and corporate customers altogether. In addition, the organization was changed in order to achieve the business plan “Ambitious 5” (April 2012 to March 2017) which started in April 2012, and the change includes setting up a Direct Channel Headquarters to handle mainly transactions via the Internet and through the call center. In summary, the Group’s consolidated operating results for the fiscal year ended March 31, 2012 were as follows: Operating revenue was ¥52,631 million, up 0.4% year on year; Net operating revenue stood at ¥50,756 million, a drop of 0.1% from the same period a year earlier; and Selling, general and administrative expenses were ¥47,392 million, a fall of 0.6% year on year. Therefore, operating income was ¥3,363 million, up 8.9% year on year;

3

ordinary income was ¥5,077 million, up 5.6%; and net income was ¥2,545 million, down 41.1%. (Commissions) In the consolidated fiscal year under review, commissions received declined 5.0% year on year, to ¥24,191 million, comprising the following: (i) Brokerage:

The stocks brokerage volume handled by Tokai Tokyo Securities, a consolidated subsidiary of the Company, was 2,361 million shares, a decline of 4.3% year on year, whereas the stock brokerage amount was ¥1,184.7 billion, a decline of 13.5% year on year. As a result, stock brokerage commissions earned by the Group were ¥5,922 million, a decrease of 23.1% year on year, whereas overall brokerage commissions were ¥6,006 million, a drop of 23.0% year on year.

(ii) Underwriting, sales, the solicitation of sales for specific investors, and others: Commissions for stocks from underwriting, sales, and the solicitation of sales for specific investors, and others recorded by the Group soared to ¥190 million, an increase of 734.0% year on year, attributable to commissions earned as lead manager in initial public offerings. Meanwhile, commissions for bonds from underwriting, sales, and the solicitation of sales for specific investors, and others amounted to ¥241 million, surging 30.0% year on year. Thus, total commissions in this category reached ¥431 million, a rise of 107.1% year on year.

(iii) Subscription, distribution, the solicitation of sales for specific investors, and others: Commissions for investment trusts in this category stood at ¥11,694 million, up 2.0% year on year. Total commissions in this category reached ¥11,704 million, an increase of 2.0% year on year.

(iv) Other commissions received:

Other commissions received were ¥6,048 million, an increase of 1.2% year on year. This amount was attributable mostly to agency commissions from investment trusts, which achieved ¥4,549 million, up 1.8% year on year, and insurance commissions that amounted to ¥570 million, a rise of 5.9% year on year.

(Trading profit and loss) In the consolidated fiscal year under review, gains on the trading of shares was ¥9,357 million, an increase of 5.6% year on year, reflecting strong trading activities of foreign stocks continuing from the previous fiscal year, whereas gains on the trading of bonds and currencies was ¥16,235 million, a rise of 7.9%. As a result, trading profit totaled ¥25,593 million, an increase of 7.0% year on year. (Net financial revenues) In the consolidated fiscal year under review, financial revenues were ¥2,846 million, down 6.1% year on year. Meanwhile, financial expenses increased 15.9%, to ¥1,875 million, resulting in a Net profitable financial revenues of ¥971 million, down 31.3% year on year. (Selling, general and administrative expenses) Selling, general and administrative expenses for the consolidated fiscal year under review were ¥47,392 million, down 0.6% year on year. Of that amount, transaction-related expenses amounted to ¥8,451 million, down 8.3%; personnel expenses remained at ¥22,708 million, a decrease of 1.1% year on year; occupancy and rental expenses dropped 1.5% year on year, to ¥5,959 million; office expenses increased 15.8% year on year, to ¥5,803 million; and depreciation rose 2.9%, to ¥2,802 million. (2) Analysis of Financial Condition (Assets) Current assets decreased ¥20,519 million from the end of the previous consolidated fiscal year, to ¥603,235 million. This net result was primarily attributable, on one hand, to increases of ¥21,646 million and ¥26,772 million in trading assets and net trading payables (assets) respectively and, the other, to decreases of ¥18,541 million in cash and deposits, ¥35,209 million in collateralized short-term financing agreements, ¥5,611 million in receivables related to margin transactions and ¥6,752 million in short-term guarantee money deposits. Fixed assets decreased ¥2,640 million from a year earlier, to ¥37,981 million. As a result, total assets decreased ¥23,159 million from the end of the previous consolidated fiscal year, to ¥641,216 million. (Liabilities) Current liabilities decreased ¥20,804 million from the end of the previous consolidated fiscal year, to ¥524,571 million. This was mainly attributable to the decreases of ¥12,464 million, ¥29,044 million and ¥10,279 million in trading liabilities, collateralized short-term financing agreements and deposits, respectively, despite an increase of ¥31,412 million in short-term borrowings. As a result, total liabilities shrank ¥20,404 million from the end of the previous consolidated fiscal year, to ¥530,956

4

million. (Net assets) Net assets decreased ¥2,755 million from the end of the previous consolidated fiscal year, to ¥110,259 million. This was primarily attributable to an increase of ¥373 million in retained earnings, while treasury stock increased ¥2,985 million (a decrease in net assets). (Cash flows) Net cash flows from operation were minus ¥43,135 million. This was primarily the net result of the following factors: Inflows of ¥25,575 million from a decrease in collateralized short-term financing agreements–receivable against outflows of ¥21,646 million from an increase in trading assets, ¥12,464 million from a decrease in trading liabilities, ¥19,409 million from a decrease in collateralized short-term financing agreements, and ¥10,261 million from a decrease in deposits. Cash flows from investing activities were minus ¥1,469 million, mainly reflecting the purchase of intangible fixed assets, and others. Cash flows from financing activities were ¥26,304 million, principally attributable to proceeds from short-term borrowings. As a result, the balance of cash and cash equivalents decreased ¥18,394 million from the previous year, to ¥43,330 million at the end of the fiscal year under review on a consolidated basis. (3) Basic Policy Concerning Profit Distribution and Dividend Payment for the Current and Next Fiscal Years The operating performance of the financial instruments business, in which the Group is primarily engaged, tends to be affected by market trends. Consequently, the Group emphasizes increasing retained earnings in order to distribute profits, and its dividend policy is to return profits to shareholders in a steady and appropriate manner. The Company’s basic policy on the frequency of dividend payments is to pay dividends twice in each fiscal year, the one as an interim dividend and the other as a year-end one. The interim dividend payment is decided by the Board of Directors and the year-end one is decided at a general meeting of shareholders. The Company’s Articles of Incorporation stipulate that the Company may pay interim dividends in accordance with the provisions of Article 454, Paragraph 5, of the Companies Act. 2. Information on Group Companies Tokai Tokyo Financial Group consists of Tokai Tokyo Financial Holdings, Inc., 22 consolidated subsidiaries and three affiliates. The Group primarily engages in the trading and brokerage of securities, the underwriting and sale of securities, the subscription and distribution of securities, the offering of private placements and other financial instruments businesses together with those related thereof. The Group provides a broad array of services to meet customer needs for fund-raising and investment purposes through its global networks, which link financial markets in Asia, Europe, and the United States. Changes in consolidated subsidiaries during the consolidated fiscal year under review are as follows:

August 2011: The following two companies were added as consolidated subsidiaries: Tokai Tokyo Asia Renaissance Fund Limited

Tokai Tokyo Asia Renaissance Master Fund Limited December 2011: TTI Growth Companies No.1 Investment Limited Partnership was excluded from the scope of

consolidation as it was dissolved and liquidated. February 2012: General incorporated association YST (this is different from the entity of the same trade name as a

non-consolidated subsidiary) was newly added as a non-consolidated subsidiary. February 2012: TTAM Residence Limited Liability Company was added as a new consolidated subsidiary. March 2012: The following two companies were newly added as non-consolidated subsidiaries:

Tokai Tokyo Japan Phoenix Fund Limited Tokai Tokyo Japan Phoenix Master Fund Limited

5

The Group’s structure is summarized in the chart below:

(Investment and financial services business)

(Other related businesses)

Tokai Tokyo Financial Holdings, Inc.

(Subsidiaries) Tokai Tokyo Securities Co., Ltd. Utsunomiya Securities Co., Ltd. Tokai Tokyo Asset Management Co., Ltd. Tokai Tokyo-Sumishin Wealth Partners & Consulting Co., Ltd. Tokai Tokyo Investment Co., Ltd.

(Affiliates) YM Securities Co., Ltd. Hamagin Tokai Tokyo Securities Co., Ltd. Nishi-Nippon City Tokai Tokyo Securities Co., Ltd.

(Subsidiaries) Tokai Tokyo Securities (Asia) Ltd.- Hong Kong Tokai Tokyo Investment Management Singapore Pte. Ltd.

(Subsidiaries) Tokai Tokyo Securities Europe Limited

Japan

(Subsidiaries) Tokai Tokyo Research Center Co., Ltd. Tokai Tokyo Services Co., Ltd. Tokai Tokyo Business Service Co., Ltd. Tokai Tokyo Academy Co., Ltd. Tokai Tokyo Securities (USA), Inc.

and 9 other companies

Asia

Europe

6

3. Management Policy (1) Principal Management Policy

In April 2009, the Group commenced a “Three-Year Business Plan—TT Revolution.” As the second stage of its efforts to become “The Premier House,” it aimed to evolve further into a financial services group with a securities firm at its core that can survive amid challenging economic and competitive environments. With the completion of “TT Revolution” in March 2012, we started a new business plan, “Ambitious 5,” in April 2012.

(2) Current Tasks (i) Three-Year Business Plan—“TT Revolution” (April 2009 to March 2012)

Under the Three-Year Business Plan—“TT Revolution,” the Group set specific numerical targets of 1) Assets under custody of ¥6 trillion (on a consolidated basis, including equity-method affiliates); and 2) ROE of 10% or higher on a consolidated basis. Also, the Group has established five key success factors as listed below, and promoted specific measures to achieve these numerical targets. Due to the significant negative impacts of the deteriorated market environment during the period of the business plan, the Group failed to attain all the numerical targets, while achieving various positive results toward the completion of the key success factors.

i. Growth: The Group started operation of Nishi-Nippon City Tokai Tokyo Securities Co., Ltd.

in alliance with The Nishi-Nippon City Bank, Ltd.; developed an intermediary business of financial instruments with The Chukyo Bank, Ltd.; and entered into a business alliance with Religare Enterprises Limited of India.

ii. Productivity: The Group took measures to improve the productivity of younger employees, reviewed and improved unproductive sectors, and reinforced its sales staff.

iii. Customer loyalty: Targets for customer loyalty were set by all the outlets of Tokai Tokyo Securities, and efforts were made to attain those targets. Also, we conducted a questionnaire survey of our customers, and reflected the results in our sales activities.

iv. Communication: The Group endeavored to improve its corporate value and organizational capabilities by implementing a range of communication measures through public relations and investor relations activities, seminars, and the like for various stakeholders, including shareholders, customers, local communities, and employees.

v. Super community house: The Group focused on further strengthening its connections with local customers by reinforcing its outlet network, cooperating in community events of the Chubu region, organizing seminars, and promoting community-based sales activities through the aforementioned business alliances with regional banks.

(ii) New Business Plan “Ambitious 5” (April 2012 to March 2017)

Under the new business plan “Ambitious 5,” the Group will continue to focus on reinforcing the business foundation in its operation areas centered on the Chubu region. Also, we aim to become the “Leading Player in Asia” by further developing and utilizing the infrastructure and functions required for the securities business, which were enhanced under the “TT Revolution” business plan, and by establishing a business model for the future.

i. Community & “The Middle” (Specializing in strategic regions and customers):

The Group is to formulate sales strategies reflecting the characteristics of each area, to expand business bases and establish a dominant presence in the Chubu region as our home market. The priority target customers are “The Middle” (medium-sized firms, business owners) and “The Class” (affluent customers), and we will focus on developing and expanding such customer bases.

ii. Alliance & Platform (Aggressive expansion of business base): By further expanding and reinforcing the platform (the infrastructure and functions,

etc., required for the securities business) that we have enhanced through the past alliance strategies, and by providing such platform to companies jointly established with new alliance partners, acquired companies, and peer companies in the industry, the Group aims to include them as Group companies or companies having a close relationship, strengthening the business base of the Group as a whole and expanding revenues through reinforcing product supply.

iii. Expertise (Know-how): The Group will enhance the skills of its sales staff and improve the support system

for sales staff, while further enhancing the competitiveness of our products by raising our ability to develop proprietary products. Furthermore, we will reinforce our ability to propose customer solutions regarding inheritance and succession of business as

7

well other subjects of customer’s interest. . iv. Humanity (A company with a human touch):

The Group will introduce a new sales system focusing on teamwork (team system and team evaluation system), and cultivate corporate culture with a human touch by promoting individual diversity (utilizing personnel of diverse backgrounds). In addition, by improving its learning environment and training systems, the Group will strongly support and make utmost use of the upgraded skill of individual who voluntarily wishes to enhance his or her own capability.

v. Risk management (Enhancing capability to address risks): The Group will improve the system to address various risks by reinforcing its risk

management, compliance and financial base.

(iii) Power shortage countermeasures Following the suspension of operation of the nation’s nuclear plants, we were requested to save power in some of the service areas of certain electric power companies during the summer and winter when demand for electric power was high. By making utmost efforts in line with our own power-saving plan, we were able to attain the power-saving target. We are determined to cut energy consumption by continuing the power-saving efforts.

FY 2012 and onward, we continue to improve our corporate value by working in accordance with the new business plan “Ambitious 5.” (end)

8

4. Consolidated Financial Statements

(1) Consolidated Balance Sheets (Unit: million yen)

As of March 31, 2011 As of March 31, 2012Assets

Current assets Cash and deposits 62,243 43,701 Cash segregated as deposits 19,094 18,394

Deposits segregated for customer 17,704 16,805 Others 1,389 1,589

Trading assets 176,823 198,470 Trading securities and others 172,240 181,580 Derivative assets 4,583 16,890

Trading receivables, net 1,748 28,520 Receivables related to margin transactions 30,017 24,405

Customer margin loans 18,803 15,889 Cash deposits as collateral for securities borrowed 11,213 8,515

Collateralized short-term financing agreements 314,071 278,862 Cash deposits as collateral for securities borrowed 234,167 221,156 Receivables related to gensaki transactions 79,904 57,706

Advances 246 67 Cash paid for subscription 316 224 Short-term guarantee money paid 13,079 6,326 Short-term loans receivable 135 60 Securities 100 100 Accrued revenue 1,779 1,742 Deferred tax assets-current 1,644 1,000 Others 2,490 1,376 Less: Allowance for doubtful accounts-current (36) (18) Total current assets 623,754 603,235

Fixed assets Tangible fixed assets 9,323 8,805

Structures 2,466 2,274 Equipment and fixtures 1,531 1,205 Land 5,325 5,325 Construction in progress 0 —

Intangible fixed assets 5,126 4,325 Software 4,982 4,182 Telephone subscription right 144 143

Investments and others 26,170 24,850 Investment securities 15,898 15,297 Long-term guarantee deposits 2,479 2,096 Deferred tax assets-non-current 1,275 1,137 Others 7,707 7,490 Less: Allowance for doubtful accounts-non-current (1,190) (1,171)

Total fixed assets 40,621 37,981 Total assets 664,376 641,216

9

(Unit: million yen)

As of March 31, 2011 As of March 31, 2012

Liabilities Current liabilities

Trading liabilities 123,646 111,181 Trading securities and others 121,188 99,190 Derivative liabilities 2,457 11,990

Payables related to margin transactions 9,284 12,320 Payable to securities finance companies 7,525 9,686 Proceeds of securities sold for customers' accounts 1,759 2,634

Collateralized short-term financing agreements 172,171 143,126 Cash deposits as collateral for securities loaned 59,501 31,357 Payables related to gensaki transactions 112,669 111,769

Deposits received 24,522 14,242 Cash deposits received as guarantee 6,633 4,561 Short-term borrowings 186,833 218,246 Short-term corporate bonds 9,000 6,500 Current portion of corporate bonds 7,694 9,387 Income taxes payable 272 1,249 Accrued bonuses 1,814 1,684 Accrued bonuses for directors and executive officers 25 18 Others 3,477 2,053 Total current liabilities 545,376 524,571

Fixed liabilities

Corporate bonds — 130 Long-term borrowings 2,940 3,700 Retirement benefits 1,805 1,514 Retirement benefits for directors and executive officers 107 113 Negative goodwill 264 113 Others 697 648 Total fixed liabilities 5,814 6,219

Statutory reserves Financial product transaction liabilities reserve 170 165 Total statutory reserves 170 165

Total liabilities 551,360 530,956 Net assets

Shareholders' equity Common stock 36,000 36,000 Capital surplus 33,155 33,154 Retained earnings 46,805 47,178 Treasury stock (1,416) (4,402) Total shareholders' equity 114,543 111,930

Accumulated other comprehensive income Net unrealized gain/loss on securities, net of tax effect (1,088) (1,223) Translation adjustments (797) (873) Total accumulated other comprehensive income (1,885) (2,096)

Subscription rights to shares 59 114 Minority interests 297 310 Total net assets 113,015 110,259

Total liabilities and net assets 664,376 641,216

10

(2) Consolidated Statements of Operations and Comprehensive Income Consolidated Statements of Operations

(Unit: million yen) Year ended

March 31, 2011 Year ended

March 31, 2012 Operating revenues

Commissions 25,461 24,191 Brokerage 7,797 6,006 Underwriting, sales, the solicitation of sales for specific investors and others 208 431

Subscription, distribution, the solicitation of sales for specific investors, and others 11,480 11,704

Other commissions 5,974 6,048 Trading profit and loss 23,909 25,593 Financial revenues 3,031 2,846 Total operating revenues 52,402 52,631

Financial expenses 1,617 1,875 Net operating revenues 50,785 50,756 Selling, general and administrative expenses

Transaction-related expenses 9,220 8,451 Personnel expenses 22,970 22,708 Occupancy and rental 6,050 5,959 Office expenses 5,011 5,803 Depreciation expenses 2,724 2,802 Taxes and public dues 512 510 Others 1,205 1,157 Total selling, general and administrative expenses 47,695 47,392

Operating income 3,089 3,363 Non-operating income

Dividend income 448 407 Rent income 952 950 Amortization of negative goodwill 147 150 Investment profit on equity method 353 357 Others 169 213 Total non-operating income 2,071 2,078

Non-operating expenses Real estate rental costs 266 288 Others 87 75 Total non-operating expenses 354 364

Ordinary income 4,806 5,077

11

(Unit: million yen) Year ended


March 31, 2012 Extraordinary gains

Gains on sale of fixed assets 0 ― Gains on sale of investment securities 83 54 Gain on contribution of securities to retirement benefit trust ― 187 Reversal of financial product transaction liabilities reserve 136 4 Reversal of allowance for doubtful accounts 7 ― Gains on changes in equity 646 ― Gains on negative goodwill 12 ― Total extraordinary gains 888 247

Extraordinary losses Losses on valuation of securities 346 490 Losses on sale of investment securities 61 30 Losses on sale of fixed assets 22 — Loss on disposal of fixed assets 249 34 Effect of adoption of an accounting standard for asset retirement obligations 18 —

Provision for allowance for doubtful accounts 630 — Total extraordinary losses 1,330 555

Income before income taxes and minority interests 4,364 4,769 Income taxes-current 366 1,432 Income taxes-deferred (331) 781 Total income taxes 34 2,214 Income before minority interests 4,329 2,555 Minority interests 10 9 Net income 4,318 2,545

12

Consolidated Statements of Comprehensive Income (Unit: million yen)

Year ended March 31, 2011

Year ended March31, 2012

Income before minority interests 4,329 2,555 Other comprehensive income

Net unrealized gain/loss on securities, net of tax effect (686) (130) Translation adjustments (162) (76)

Total other comprehensive income (849) (206)

Comprehensive income 3,480 2,348

(Comprehensive income belonging to) Comprehensive income belonging to shareholders of parent company 3,470 2,333

Comprehensive income belonging to minority interests 9 14

13

(3) Consolidated Statements of Changes in Net Assets (Unit: million yen)



Shareholders’ equity Common stock

Balance as at the beginning of the fiscal year 36,000 36,000 Changes of items during the year

Total changes during the year ― ―

Ending balance as at the end of the fiscal year 36,000 36,000

Capital surplus

Balance as at the beginning of the fiscal year 33,155 33,155 Changes of items during the year

Disposal of treasury stock (0) (0)

Total changes during the year (0) (0)


Retained earnings Balance as at the beginning of the fiscal year 46,122 46,805 Changes of items during the year

Dividends (3,635) (2,172) Net income 4,318 2,545

Total changes during the year 683 373


Treasury stock Balance as at the beginning of the fiscal year (442) (1,416) Changes of items during the year

Acquisition of treasury stock (974) (2,986) Disposal of treasury stock 0 1

Total changes during the year (973) (2,985)

Ending balance as at the end of the fiscal year (1,416) (4,402)

Total shareholders’ equity Balance as at the beginning of the fiscal year 114,834 114,543 Changes of items during the year

Dividends (3,635) (2,172) Net income 4,318 2,545 Acquisition of treasury stock (974) (2,986) Disposal of treasury stock 0 0

Total changes during the year (290) (2,612)

Ending balance at the end of the fiscal year 114,543 111,930

14

(Unit: million yen)



Valuation and translation adjustments Net unrealized gain/loss on securities, net of tax effect

Balance as at the beginning of the fiscal year (402) (1,088) Changes of items during the year

(Net) changes in the items other than those of shareholders’ equity

(685)

(135)

Total changes during the year (685) (135) Ending balance as at the end of the fiscal year (1,088) (1,223)

Translation adjustments Balance as at the beginning of the fiscal year (634) (797) Changes of items during the year

(Net) changes in the items other than those of shareholders’ equity (162) (76)

Total changes during the year (162) (76) Ending balance as at the end of the fiscal year (797) (873)

Total accumulated other comprehensive income Balance as at the beginning of the fiscal year (1,037) (1,885) Changes of items during the year

(Net) changes in the items other than those of shareholders’ equity (848) (211)

Total changes during the year (848) (211) Ending balance as at the end of the fiscal year (1,885) (2,096)

Subscription rights to shares Balance as at the beginning of the fiscal year 20 59 Changes of items during the year

(Net) changes in the items other than those of shareholders’ equity

39

54

Total changes during the year 39 54 Ending balance as at the end of the fiscal year 59 114

Minority interests Balance as at the beginning of the fiscal year 308 297 Changes of items during the year

(Net) changes in the items other than those of shareholders’ equity (11) 13

Total changes during the year (11) 13 Ending balance as at the end of the fiscal year 297 310

Total net assets Balance as at the beginning of the fiscal year 114,126 113,015 Changes of items during the year

Dividends (3,635) (2,172) Net income 4,318 2,545 Acquisition of treasury stock (974) (2,986) Disposal of treasury stock 0 0 (Net) changes in the items other than those of shareholders’ equity

(820)

(142)

Total changes during the year (1,110) (2,755) Ending balance at the end of the fiscal year 113,015 110,259

15

(4) Consolidated Statements of Cash Flows

(Unit: million yen)



Cash flows from operation Income before income taxes and minority interests 4,364 4,769 Depreciation 2,724 2,802 Amortization of negative goodwill (147) (150) Gain/loss on investment by the equity method (353) (357) Increase/decrease in allowance for retirement benefits 324 (290) Increase/decrease in allowance for retirement benefits for directors and executive officers 12 5

Allowance for doubtful accounts 622 (36) Interest and dividend income (3,481) (3,256) Interest expenses 1,617 1,875 Gains on negative goodwill (12) ― Gain/loss on revaluation of investment securities 346 490 Gain/loss on sale of investment securities (21) (24) Gain/loss on changes in equity (646) ― Gain/loss on sale of fixed assets 22 ― Loss on disposal of fixed assets 249 34 Gain/Loss on contribution of securities to retirement benefit trust ― (187) Effect of adoption of an accounting standard for asset retirement obligations 18 ―

Increase/decrease in deposits segregated for customers 779 899 Increase/decrease in cash paid for subscription (41) 92 Increase/decrease in trading assets 70,372 (21,646) Increase/decrease in trading liabilities 14,362 (12,464) Increase/decrease in receivables related to margin transactions 6,025 5,611 Increase/decrease in net of payables related to margin transactions 134 3,035

Increase/decrease in collateralized short-term financing agreements-receivable (87,558) 25,575

Increase/decrease in collateralized short-term financing agreements (32,282) (19,409)

Increase/decrease in deposit received 4,975 (10,261) Increase/decrease in cash deposit received as a guarantee 3,342 (2,072) Increase/decrease in other assets (8,114) (18,860) Increase/decrease in other liabilities (7,312) (207)

Subtotal (29,676) (44,034)

Interest and dividend received 3,504 3,343 Interest paid (1,570) (1,920) Income taxes refunded(paid) (5,657) (524)

Net cash flows provided by (used in) operating activities (33,400) (43,135)

16

(Unit: million yen)



Cash flows from investing activities Payments for purchase of tangible fixed assets (714) (357) Proceeds from sale of tangible fixed assets 12 0 Payments for purchase of intangible fixed assets (2,191) (1,274) Proceeds from sale of intangible fixed assets 1 ― Payments for purchase of investment securities (2,061) (203) Proceeds from sale of investment securities 248 163 Payments for acquisition of shares in subsidiaries (7) ― Payments for guarantee deposits (184) (47) Proceeds from collection of guarantee deposits 1,515 477 Others (116) (227)

Net cash flows provided by (used in ) investing activities (3,498) (1,469)

Cash flows from financing activities Net increase/decrease in short-term borrowings 36,228 31,416 Proceeds from long-term borrowings ― 3,700 Repayments from long-term borrowings (110) (2,940) Proceeds from issue of short-term corporate bonds 51,200 29,500 Payments for redemption of short-term corporate bonds (53,500) (32,000) Proceeds from issuance of corporate bonds 12,894 18,439 Payments for redemption of corporate bonds (5,200) (16,651) Payments for purchase of treasury stock (964) (2,982) Net increase/decrease in treasury stock (9) (3) Dividends paid (3,635) (2,172) Proceeds from payments from minority shareholders 2,550 ― Dividends paid to minority shareholders (0) (0)

Net cash flows provided by (used in) financing activities 39,452 26,304

Effect of exchange rate changes on cash and cash equivalents (216) (94)

Net changes in cash and cash equivalents 2,337 (18,394)

Cash and cash equivalents at the beginning of the term 62,521 61,725 Increase (or decrease) in cash and cash equivalents due to changes in the scope of consolidated subsidiaries (3,132) ―

Cash and cash equivalents at the end of the term 61,725 43,330

17

(5) Notes on going concern assumption Not applicable

(6) Significant basis of presenting consolidated financial statements

1) Scope of consolidation (i) Number of consolidated subsidiaries: 18 companies (As at the end of the consolidated fiscal year under review)

Principal consolidated subsidiaries: Tokai Tokyo Securities Co., Ltd. Utsunomiya Securities Co., Ltd. Tokai Tokyo Asset Management Co., Ltd. Tokai Tokyo-Sumishin Wealth Partners & Consulting Co., Ltd. Tokai Tokyo Investment Co., Ltd. Tokai Tokyo Research Center Co., Ltd. Tokai Tokyo Services Co., Ltd. Tokai Tokyo Business Service Co., Ltd. Tokai Tokyo Academy Co., Ltd. Tokai Tokyo Securities (Asia) LTD. Tokai Tokyo Securities Europe Limited Tokai Tokyo Securities (USA), Inc. Tokai Tokyo Investment Management Singapore pte., Ltd. TTI Chubu Venture No. 1 Investment Business Limited Partnership N-residence No. 1 Godo Kaisha (Limited Liability Company) TTAM Residence Godo Kaisha (Limited Liability Company) Tokai Tokyo Asia Renaissance Fund Limited Tokai Tokyo Asia Renaissance Master Fund Limited

Tokai Tokyo Asia Renaissance Fund Limited and its master fund, Tokai Tokyo Asia Renaissance Master Fund

Limited, have been included in the scope of consolidation since the Company’s consolidated subsidiary, Tokai Tokyo Securities Co., Ltd., paid investment funds into Tokai Tokyo Asia Renaissance Fund Limited in August 2011. These two companies are Specific Subsidiaries.

TTI Growth Companies No. 1 Investment Business Limited Partnership was excluded from the scope of consolidation as it was dissolved during the consolidated fiscal year under review and liquidated in December 2011.

TTAM Residence Godo Kaisha (Limited Liability Company) has been included in the scope of consolidation as it was established in February 2012.

(ii) Major non-consolidated subsidiary and its name, and other information

Non-consolidated subsidiary: General incorporated association YST and 3 other companies

Reason for its exclusion from consolidation: The four non-consolidated subsidiaries above are small in size, and their total assets, net sales, net income/loss

for the year (as prorated to the Company on an equity basis) and retained earnings (as prorated to the Company on an equity basis) are all immaterial to the consolidated financial statements.

2) Application of equity method

(i) Major affiliates to which the equity method is applied: 3 companies Affiliates to which the equity method is applied:

YM Securities Co., Ltd. Hamagin Tokai Tokyo Securities Co., Ltd. Nishi-Nippon City Tokai Tokyo Securities Co., Ltd.

(ii) Major non-consolidated subsidiaries and affiliates to which the equity method is not applied

YST General incorporated association and 3 other companies Reason why the equity method is not applied:

The above 4 stated non-consolidated subsidiaries to which the equity method is not applied have only slight influence on the consolidated financial statements in terms of their net income/loss (as prorated to the Company on equity basis), retained earnings (as prorated to the Company on equity basis). Also, they have no overall importance.

3) Fiscal period of consolidated subsidiaries

The closing date is December 31 for the seven consolidated subsidiaries that include Tokai Tokyo Securities (Asia) LTD., Tokai Tokyo Securities Europe Limited, Tokai Tokyo Securities (USA), Inc., Tokai Tokyo Investment

18

Management Singapore pte., Ltd., TTI Chubu Venture No. 1 Investment Business Limited Partnership, Tokai Tokyo Asia Renaissance Fund Limited and Tokai Tokyo Asia Renaissance Master Fund Limited. The closing date for N-residence No. 1 Godo Kaisha (Limited Liability Company) is March 15, and that for the other 10 consolidated subsidiaries is March 31. With respect to the subsidiaries with a fiscal year ending other than March 31, 2012, their financial statement closings were made as of each respective closing date for the consolidation after making the necessary consolidation adjustments regarding the significant matters that had taken place between such respective closing dates and the consolidated closing date.

4) Accounting policies

(i) Objectives and scope of trading The objectives of trading are to generate profits in the exchanges of securities by taking advantage of the

short-term fluctuation or arbitrage of market prices, interest rates, currency value and other indexes, and to minimize losses that maybe caused by the above transactions. The scope of these transactions includes trading of securities, exchange-traded derivatives transactions, foreign-exchange-traded derivatives transactions, and over-the-counter derivatives transactions.

(ii) Valuation of trading assets and liabilities

Trading assets and liabilities, including securities and financial derivatives for trading purposes are recorded at current market value.

(iii) Valuation of non-trading assets and liabilities

The valuation of non-trading assets and liabilities is recorded by the policies and the methods described below. Other securities;

a) Other securities with market values Other securities with market values are recorded on the consolidated balance sheets at market value, based on

quoted market prices on the consolidated closing date. The valuation difference between the cost, using the moving average method, and market value is recorded directly as net increase or decrease in net assets on the balance sheets.

b) Other securities with no market value Other securities with no market value are recorded at cost using the moving average method.

(iv) Depreciation of significant depreciable assets

1) Tangible fixed assets (excluding lease assets): Tangible fixed assets are primarily amortized under the declining-balance method. However, the Company and its domestic consolidated subsidiaries use the straight-line method for buildings (excluding facilities attached to buildings) acquired on or after April 1, 1998.

2) Intangible fixed assets (excluding lease assets): Intangible fixed assets are primarily amortized under the straight-line method. However, software for in-house use is amortized under the straight-line method based on internal estimations of useful lives.

19

(v) Accounting policies for significant provisions Allowance for doubtful accounts:

The Company provides an allowance for possible losses on credit. For performing credit, an allowance is calculated based on the historical default rate. For loans with default possibility, it is based on the individual assessment of the recoverability of each receivable, and the amount expected to be irrecoverable is provided for.

Accrued bonuses: Accrued bonuses are appropriated for bonus payments to employees based on the estimated future payments computed by methods set out by the Company and its domestic consolidated subsidiaries.

Accrued bonuses for directors and executive officers: An allowance is appropriated for bonus payments to directors and executive officers based on the estimated future payments.

Retirement benefits: The Company and its domestic consolidated subsidiaries record an allowance for retirement benefits for employees which is recognized as having been incurred at the end of the consolidated fiscal year under review, based on an estimated amount of the liability for retirement benefits and plan assets at the end of the consolidated fiscal year under review. Actuarial differences are to be expensed from the following consolidated fiscal year using a straight-line method over the specific number of years (10 years) within the average remaining period of service of the employees when incurred. Prior service costs are expensed using the straight-line method over the specific number of years (10 years) proportionately within the average remaining period of service of the employees when incurred.

Retirement benefits for directors and executive officers: Some of the Company’s domestic consolidated subsidiaries record an allowance for retirement benefits for

directors and executive officers based on estimated future retirement benefits at the end of the consolidated fiscal year under review in accordance with their internal regulations.

(vi) Accounting policies for statutory reserves Financial product transaction liabilities reserve:

Financial product transaction liabilities reserve is appropriated for losses caused by transactions involving securities, derivatives, or other instruments. The amount recorded was calculated based on the provisions of Article 175 of the Cabinet Office Ordinance Concerning the Financial Instruments Business, etc. pursuant to the provisions of Article 46-5 of the Financial Instruments and Exchange Act.

(vii) Policies for the conversion of significant assets or liabilities in foreign currencies into yen The Company and its domestic consolidated subsidiaries primarily convert assets or liabilities in foreign

currencies into yen at the spot exchange rate on the consolidated closing date and record the exchange difference as profits or losses. Assets, liabilities, revenues and expenses of overseas subsidiaries are converted into yen at the spot exchange rate on the consolidated closing date. The exchange difference is included in the translation adjustments of net assets.

(viii) Accounting for consumption taxes

Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.

(ix) Scope of “Cash and cash equivalents” in consolidated cash flows statements Cash and cash equivalents included in the consolidated statements of cash flows consist of cash on hand, current

deposits, ordinary deposits and other which can be withdrawn on demand.

(Additional Information) (1) “Application of the Accounting Standard for Accounting Changes and Error Corrections” The Company applied the “Accounting Standard for Accounting Changes and Error Corrections (ASBJ Statement No. 24 of December 4, 2009) and “Guidance on Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Guidance No. 24 of December 4, 2009) to accounting changes and corrections of prior period errors made after the beginning of the year ended March 31, 2012. (2)“Adoption of Consolidated Tax Return System” Starting from the consolidated fiscal year under review, the Company and its six domestic wholly owned subsidiaries have adopted the consolidated tax return system under which the Company is the consolidated parent corporation.

(7) Notes to consolidated financial statements

(Consolidated Balance Sheets) Guarantee obligations

20

Year ended March 31, 2011 Year ended March 31, 20125 million yen 2 million yen

(Consolidated Statements of Comprehensive Income)

For the fiscal year ended March 31, 2012 Amount of recycling and tax effects attributable to other comprehensive income

Net unrealized gain/loss on securities, net of tax effect: Amount stated for the fiscal year under review (341 million yen) Recycling 211 million yen Before tax effect adjustment (130 million yen) Tax effect － million yen Net unrealized gain/loss on securities, net of tax effect (130 million yen)

Translation adjustments Amount stated for the fiscal year under review (76 million yen) Total other comprehensive income (206 million yen)

(Consolidated Statements of Changes in Net Assets)

FY2011 (from April 1, 2011 to March 31, 2012) 1) Outstanding shares

Type of Shares As of March 31, 2011 Increase Decrease As of March 31,

2012 Common stocks

(Shares) 280,582,115 — — 280,582,115

2) Treasury stocks

Type of Shares As of March 31, 2011 Increase Decrease As of March 31,

2012 Common stocks

(Shares) 3,956,944 12,930,119 3,367 16,883,696

(Notes) 1. The increase in treasury stocks (common stocks) is attributable to the acquisition of 12,911,000 treasury stocks in accordance with the resolution of the Board of Directors based as per the Articles of Incorporation, and the purchase of 19,119 fractional shares.

2. The decrease in treasury stocks (common stocks) is attributable to the sale of fractional shares. 3) Information regarding subscription rights to shares

Company Name Item Balance as of

March 31, 2012 (million yen)

The Company Stock options 114

Total 114

4) Dividends

(i) Dividend payment

Resolution Type of Shares

Total cash dividends

(million yen)

Dividendper share

(yen) Record date Effective date

June 29, 2011 General meeting of shareholders

Common stocks 1,106 4.00 March 31, 2011 June 30, 2011

October 28, 2011 Meeting of the Board of Director

Common stocks 1,065 4.00 September 30, 2011 December 1, 2011

21

(ii) Dividends, the record date of which falls in the consolidated fiscal year under review with the effective date falling in

the following fiscal year

Resolution Type of Shares

Resource of

Dividends

Total cash dividends

(million yen)

Dividendper share

(yen) Record date Effective

date

June 27, 2012 General meeting of shareholders

Common stocks

Retained Earnings 1,054 4.00 March 31,

2012 June 28,

2012

(Consolidated Statements of Cash Flows) 1) Reconciliation for “Cash and cash equivalents” and “Cash and deposits” on the consolidated balance sheets

(Unit: million yen)



Cash and deposits Time deposits to be matured in 3 months or longer

62,243 (517)

43,701 (370)

Cash and cash equivalents 61,725 43,330

(Segment information)

For the fiscal year ended March 31, 2011 As the Group operates within a single segment of the “Investment and financial services business,” we do not state segment information. For the fiscal year ended March 31, 2012 As the Group operates within a single segment of the “Investment and financial services business,” we do not state segment information.

(Per Share Information)

Year ended March 31, 2011 Year ended March 31, 2012 Net assets per share 407.26 yen Net assets per share 416.51 yenNet income per share 15.50 yen Net income per share 9.45yen

Diluted net income per share

We post no figure of diluted net income per share as the Company has no dilutive stock that has dilution effect.

Diluted net income per share

We post no figure of diluted net income per share as the Company has no dilutive stock that has dilution effect.

(Note)1. Net Assets per share are calculated on the following bases.



Total net assets (million yen) 113,015 110,259

Amount to be deducted from total net assets (million yen) 356 425

(Subscription rights to shares (million yen) (59) (114)(Minority interests (million yen) (297) (310)

Net assets associated with common stocks at the end of the year (million yen) 112,658 109,833

Number of common stocks at the end of the year, which was used for the calculation of net assets per share (thousand shares)

276,625 263,698

22

2. Net income per share and diluted net income per share are calculated on the following bases. Year ended


March 31, 2012 Net income per share

Net income (million yen) 4,318 2,545Amount not belonging to common stock (million yen) — —Net income belonging to common stock (million yen) 4,318 2,545Average number of common stocks outstanding during the year (thousand shares) 278,648 269,295

Diluted net income per share Adjusted net income (million yen) — —Increase in common stock (thousand shares) — —(Subscription rights to shares (thousand shares)) (—) (—)

The summary of dilutive stocks that are not included in calculation of diluted net income per share due to its lack of dilution effect

Category of dilutive stocks; Number of dilutive stocks to be caused by stock subscription rights, if exercised Series 1 stock subscription rights 667,000 shares Series 1 second stock subscription rights 100,000 shares Series 2 stock subscription rights 863,000 shares

Category of dilutive stocks; Number of dilutive stocks to be caused by stock subscription rights, if exercised Series 1 stock subscription rights 641,000 shares Series 1 second stock subscription rights 100,000 shares Series 2 stock subscription rights 853,000 shares Series 3 stock subscription rights 1,043,000 shares

(Note 1) The number of stock option is described in terms of number of shares. (Note 2) We post no figure of diluted net income per share as the Company has no dilutive stock that has dilution effect. (Material subsequent events) None

23

5. Others (1) Breakdown of Commissions and Trading Profit and Loss

1) Commission received (i) By item (Unit: million yen)


Year ended March 31, 2012 Yr/Yr % change

Brokerage 7,797 6,006 77.0%Stocks 7,701 5,922 76.9 Bonds 32 21 66.2 Beneficiary certificates 63 62 98.1

Underwriting, sales, solicitation of sales for specific investors, and others 208 431 207.1

Stocks 22 190 834.0 Bonds 185 241 130.0

Subscription, distribution, solicitation of sales for specific investors, and others 11,480 11,704 102.0

Beneficiary certificates 11,468 11,694 102.0 Other commissions 5,974 6,048 101.2

Beneficiary certificates 4,470 4,549 101.8

Total 25,461 24,191 95.0 (ii) By product (Unit: million yen) Year ended

March 31, 2011Year ended

March 31, 2012 Yr/Yr % change

Stocks 7,816 6,178 79.0%Bonds 254 296 116.8 Beneficiary certificates 16,002 16,306 101.9 Others 1,389 1,409 101.5

Total 25,461 24,191 95.0 2) Trading profit and loss (Unit: million yen)


Year ended March 31, 2012 Yr/Yr % change

Stocks 8,857 9,357 105.6%Bonds and Forex 15,052 16,235 107.9

Total 23,909 25,593 107.0

24

(2) Comparative Quarterly Consolidated Statements of Operations (Unit: million yen)

Fiscal 2011 1st quarter 2nd quarter 3rd quarter 4th quarter Total of

FY2011

Apr. 1, 2011 - Jun. 30, 2011

Jul. 1, 2011 - Sep. 30, 2011

Oct. 1, 2011 - Dec. 31, 2011

Jan. 1, 2012 - Mar. 31, 2012

Apr. 1, 2011 - Mar. 31, 2012

Operating revenues Commissions 5,927 5,694 5,116 7,453 24,191

Brokerage 1,480 1,443 1,121 1,960 6,006 (Stocks) 1,467 1,421 1,094 1,938 5,922

Underwriting, sales, solicitation of sales for specific investors, and others

83 65 181 100 431

Subscription, distribution, solicitation of sales for specific investors, and others

2,833 2,626 2,308 3,936 11,704

(Beneficiary certificates) 2,830 2,625 2,304 3,933 11,694 Other commissions 1,529 1,558 1,505 1,455 6,048

(Beneficiary certificates) 1,218 1,160 1,070 1,100 4,549 Trading profit and loss 6,401 5,440 5,933 7,817 25,593

(Stocks) 2,354 1,710 2,226 3,066 9,357 (Bonds and Forex) 4,047 3,729 3,707 4,750 16,235

Financial revenues 812 850 807 376 2,846 Total operating revenues 13,140 11,985 11,857 15,648 52,631

Financial expense 448 408 566 452 1,875 Net operating revenues 12,692 11,576 11,291 15,195 50,756

Selling, general and administrative expenses

Transaction-related expenses 2,163 2,065 1,945 2,277 8,451 Personnel expenses 5,718 5,609 5,617 5,763 22,708 Occupancy and rental 1,525 1,433 1,497 1,501 5,959 Office expenses 1,275 1,357 1,333 1,837 5,803 Depreciation expenses 684 733 671 713 2,802 Taxes and public dues 128 118 140 124 510 Provision of allowance for doubtful accounts 3 — — — —

Others 313 360 223 260 1,157 Total selling, general and administrative expenses 11,812 11,679 11,428 12,476 47,392

Operating income 880 (102) (137) 2,719 3,363 Non-operating income 574 434 402 669 2,078

Amortization of negative goodwill 37 37 37 37 150 Investment profit on equity method 115 53 62 126 357 Others 421 344 302 505 1,570

Non-operating expenses 75 80 74 134 364 Others 75 80 74 134 364

Ordinary income 1,379 251 191 3,254 5,077 Extraordinary gains 14 43 234 671 247 Extraordinary losses 556 690 5 19 555 Income before income taxes and minority interests 837 (394) 420 3,906 4,769

Income taxes-current 42 83 (5) 1,312 1,432 Income taxes-deferred 223 (269) 150 676 781 Income before minority interests 571 (208) 275 1,916 2,555 Minority interests 3 2 (0) 5 9 Net income 568 (211) 276 1,911 2,545

consolidated financial summary (for the year ended march ... · earnings presentation for the...

Documents