Ending March 31, 2013

Okasan Securities Group is a stand-alone securities company group established in 1923.
Headed by the holding company, Okasan Securities Group Inc., it consists of nine domestic
companies and one overseas company. Okasan Securities Group is committed to a wide
spectrum of securities investment and asset management businesses, through a networkof six domestic and overseas securities firms centering on the core firm, Okasan Securities
Co., Ltd. It is also involved in asset-management business, such as investment trusts,
information-processing/system-development business, as well as office-support business,such as alternate back-office jobs.
Taking advantage of nurtured expertise since its inception, Okasan Securities Group
engages in unique and community-based "face to face" securities sales activities, and it also
provides a cutting-edge online trading environment. We are always ready to offer optimum
performances by way of highly sophisticated and professional investment and asset
management services, which include the development of innovative products, extensive andabundant market information, and high quality analyst information.

Corporate Profile

1

Consolidated Financial Highlights

2

Management Policy

3

Operating and Financial Review

5

Consolidated Balance Sheet

9

Consolidated Statement of Income

11

Consolidated Statement of Comprehensive Income

12

Consolidated Statement of Changes in Net Assets

13

Consolidated Statement of Cash Flows

16

Notes to Consolidated Financial Statements

17

Independent Auditors' Report

47

Reference Data
Okasan Securities Co.,Ltd.

Non-Consolidated Balance Sheet

49

Non-Consolidated Statement of Income

51

Corporate Data

52

1Consolidated Financial Highlights
Okasan Securities Group Inc. and consolidated Subsidiaries Years ended March 31, 20132012

Thousands of
U.S.dollars (note)2013

Millions of yen
2013(4/1/12 ～ 3/31/13)(4/1/11 ～ 3/31/12)(4/1/12 ～ 3/31/13)

Operating revenues  …………………………

¥ 78,664¥ 61,065$ 836,406

Operating income  ……………………………

18,116

3,152

192,621

Net income  ……………………………………

14,308984

152,132

Total assets ……………………………………

723,384

556,389

7,691,483

Net assets ………………………………………

133,572

112,016

1,420,223

Per share of common stock

Yen

U.S.dollars (note)

Basic net income ……………………………

¥ 72.22¥ 4.93$ 0.77

Cash dividends applicable to the year ……

20.00

5.00

0.21

Note: The translation of the yen amount into U.S.dollars is included solely for the convenience of the reader, using the prevailing exchange
rate at March 29, 2013, which was ¥94.05 to U.S. $1.

Operating revenues'09 '10 '11 '12 '13

Operating income

Net income'09 '10 '11 '12 '13'09 '10 '11 '12 '13

2

Net assets'09 '10 '11 '12 '13

Management Policy
Okasan Securities Group Inc. and Consolidated Subsidiaries
1. Basic management policy for the Company
The Company manages the corporate Group consisting of the Company, which is the holding company, andconsolidated subsidiaries in Japan and abroad. Through investment-related services, which have investmentbanking and asset management at their core, the Company aims to continue to increase corporate value and to
become a company that is trusted by customers, shareholders, and the market.

2. Basic policy on the distribution of profits and dividend for the term
The Company sees shareholder returns as an important management benchmark and would like to distributethe payout in consideration of the trends in earnings, while also taking into account the sustainability andcontinuity of a stable dividend.

3. Important management index
In rapidly changing market conditions, it is important to secure stable profits. Based on this understanding, we
consider return on equity (ROE) an important management index. We aim to achieve a stable consolidated ROEof 10% as a business objective.

4. Medium and long-term management strategy
Under the medium-term business plan that ran from April 2010 through March 2013 (FY2010–FY2012), theCompany aimed to establish a management structure that would enable it to increase its presence in themarkets and achieve sustainable growth by "providing the best quality products, information and service", and"establishing a securities marketing culture rooted in individual regions" under a basic philosophy of acting "in
the interests of each and every one of our clients," and with a focus on improving service quality.
In the final year of the medium term plan, Okasan Securities Co., Ltd. pushed forward with efforts to build astructure that would enable the provision of products and information "from a global perspective," by expanding
its range of products in investment trusts and foreign bonds, as well as expanding alliances in the Asian region
through new tie-ups with Korean and Taiwanese securities companies. In investment research, it also improved
its overseas research capabilities and began publishing a new investment research newsletter. Okasan Online
Securities Co., Ltd. strived to expand the customer base by completely re-engineering its OTC forex service,
as well as starting to provide new tools for automated forex trading, and futures and options trading for smart
phones. In IT systems, the new core securities operations system ODIN (Okasan Database Information Node),developed by Okasan Information Systems Co., Ltd., began full operations.

5. Challenges the Company should address
Given the increasing globalization of the world economy and the development of advanced and diversified
financial products, needs for investment advice grew considerably. At the same time, the emergence ofspecialist internet brokerages and the expansion of the securities businesses of the megabanks caused
competition in the securities industry to intensify.
In this environment, the Company believes that the leveraging of each group company's business strengths
to establish the infrastructure to rapidly and accurately respond to the increasingly diverse asset management
needs of individual investors is an important management issue. To do this, management has further refined the
product and information provision capabilities that are the lifeblood of a securities company, and is striving to
improve marketing and service infrastructure by hiring and training highly skilled staff. The Company also aims

3

to become the best advisory partner for its customers via regionally rooted marketing.
In 2013, the Company is celebrating 90 years since foundation, and wants to make this occasion a beachheadfor it's the future into its centennial. To do so, it is endeavoring to build better relationships with investors andshareholders alike, and expand its business under sound management policy.

6. Outline of corporate governance structure(1) Basic concepts regarding corporate governanceAs globalization progresses and a shift in management towards creation of enterprise value accelerates,
the importance of corporate governance is increasing. In response to this environmental change, weare committed to high standards of corporate governance as we regard it as one of our management
responsibilities. As we face the challenges of a rapidly changing business landscape, we have undertaken
to deliver such solutions so as to speed up the decision-making process and to enhance efficiency of the
managerial and supervisory systems.
(2) Structure of business execution
With regard to the structure of business execution, the Board of Directors as the supreme decision
making organ on management makes a decision on items provided in laws and regulations and articles
of incorporation and maps out plans of the management strategy of the Group and supervises them. The
President - CEO executes decisions of the Board of Directors and supervises overall management. The
Board of Directors consists of 7 directors, which enables it to make a quick decision by being small in
number.
We have introduced the operating officer system, clarifying the roles of the Board of Directors, which makes
management decisions and supervises management, and executive officers, who are in charge of businessexecution, to strengthen the business management of the Group. The Board of executive officers consistsof 12 such officers and, according to the basic management policies adopted in the Board of Directors,
deliberates on laying out specific policies and plans of business execution and other important managerial
subjects. In addition, we set up the "Group Strategic Management Meeting" and "Group Administrative
Management Meeting" as advisory bodies to the president-director, to realize the planning and decision of
uniform and flexible management strategies and the improvement in the administration of each of the Group
companies.
(3) Management monitoring structure
As regards the structure of the management monitoring, out of 6 auditors in total that includes 3 statutory
auditors, 3 are outside auditors. Auditors constitute an auditors' meeting, decide on auditing policies
according to laws and regulations and articles of incorporation based on the rules of auditors' meeting,and make up audit opinions from the reports of auditors. And through attending the Board of Directors
and other important meetings etc., hearing the Board of Directors and looking through important approved
documents etc., they oversee the process of decision making at the Board of Directors and the state ofbusiness execution of directors. In addition, they are trying to implement a proper auditing in cooperation
with independent auditors and the divisions in charge of internal auditing.
Okasan Securities Group Inc. entered into an agreement with the 3 outside auditors to limit their liabilities
under Article 423, Paragraph 1 of the Companies Act to the amount provided by laws and ordinances.
(4) Internal auditing structure
As part of efforts to contribute to secure appropriate business operations such as reducing management
risks and preventing wrongdoings, we set up internally the auditing division and assigned four staff there.
The auditing division makes up an audit plan in each fiscal year, periodically implements an on-the-spot
audit based on the plan and inspects documents when necessary. The results of auditing are reported to theBoard of Directors from the director in charge of auditing, in the form of the audit report.

4

Operating and Financial Review
Okasan Securities Group Inc. and Consolidated Subsidiaries Years ended March 31, 2013

Ⅰ．Analysis of operating results
In the fiscal year ended March 31, 2013 (hereinafter, the fiscal year), considerable uncertainty remained
regarding the economy, because of factors such as renewed debt problems in Europe, deterioration in theJapan-China relationship, rises in utilities costs and the increase in the consumption tax planned for April 2014.
However, expectations for monetary easing and fiscal stimulus after the change in government caused the yen
to weaken and the equity market to recover, and there were signs of recovery in personal consumption backed
by expectations for improvement in business sentiment, particularly among exporters.
In the second half of the fiscal year, the yen weakened from excessively high levels, thanks to expectations fordramatic monetary easing by the Bank of Japan (BoJ), the prospect of improvement in the US economy, andthe rectification of the previous excessive pessimism regarding the European economy. After spending mostof the first half in a narrow range centering on ¥78/$–¥80/$, the yen-dollar rate rose above ¥96/$ at one stagein March 2013 before finishing the fiscal year at ¥94/$–¥95/$. Against the euro, the yen weakened to ¥127/€–¥128/€ at one point in February, but subsequent concern regarding the problems of support for Greece andpolitical instability in Italy saw the euro weaken again to ¥120/€–¥121/€.
In the equity market, the Nikkei 225 fell below 10,000 at one point in early April 2012, on concern regarding theEuropean debt crisis, declining to a fiscal-year low of 8,295.63 (closing price) in early June. Subsequently, themarket was weighed down by weak corporate earnings in Japan and the yen's strength, trading in a 8,300–
9,300 range. However, the announcement of the dissolution of the Lower House of the Diet in mid-November
stimulated expectations for policies to end deflation under a new government, and the Japanese equities market
entered a sustained rally. The Nikkei 225 recovered to the level of before the 2008 Lehman shock in March
2013, and closed the fiscal year at 12,397.91, marking a gain of 23% over the year.
In the bond market, yields continued to decline over the whole fiscal year, thanks to support from the BoJ's
accommodative monetary policy. While the yield on the 10-year Japanese government bond (JGB) rose to morethan 1% early in the fiscal year, it began to decline in the first half due to concern regarding slowdown in the
global economy. In the second half, the yield on the 10-year JGB fell more quickly, thanks to expectations fordramatic easing in monetary policy, and closed the fiscal year at 0.56%.
In this environment, the core group company Okasan Securities Co., Ltd expanded its lineup of investment
trusts and foreign bonds in order to be able to meet increasingly diverse customer needs. It also expanded its
information dissemination infrastructure for individual investors, began publishing the investment information
newsletter Okasan Global Weekly, formed operational tie-ups with major Korean and Taiwanese securities
companies, developed quants indices, and strengthened investment information provision capabilities to
respond to change in the investment environment.
Okasan Online Securities, which specializes in internet trading, improved its service level by expanding therange of trading tools for smart phones, usage of which it expected to grow. It also grew its customer base, andworked to retain existing customers, through promotional campaigns and a positive response to the easing of
margin trading regulations.
Okasan Asset Management Co., Ltd. further built the infrastructure to allow for more flexible product provision
in reaction to change and to improve asset management capabilities. Its efforts to expand assets undermanagement via carefully tailoring sales support to individual sales agents resulted in growth in the net asset
value of investment trusts to an all-time high of ¥1,331.7 billion at the fiscal year-end.
As a result, operating revenues of the Company grew 28.8% year on year to ¥78,664 million in the fiscal
year, with net operating revenues also rising 29.7% to ¥77,136 million. As selling, general and administrative
expenses rose in a slower rate of 4.8% year on year to ¥59,020 million, net profit surged 1,354.3% year on year,to ¥14,308 million.

51. Fees and commissions received
Fees and commissions received grew 23.8% year on year to ¥49,456 million. The main breakdown was asfollows.
（1） Brokerage commissions
Average daily trading volume on the First Section of the Tokyo Stock Exchange (Japanese common shares)
was 2,466 million shares, up 16.7% year on year, while turnover in value increased 14.9% to ¥1,499.8
billion. Given the strength of the domestic equities market, equity brokerage commissions grew 66.2% year
on year to ¥14,626 million. Bond brokerage commissions were up 15.6% year on year to ¥21 million, whileother brokerage commissions declined 34.6% to ¥697 million. As a result, total brokerage commissions grew
55.3% to ¥15,344 million.
（2） Underwriting fees, selling concessions, and commissions on solicitation for sales of financial
instruments to specified investors and others
As the Company was engaged in large initial public offerings and public offerings of already listed stocks,
the number and value of underwritten deals advanced this year, with commissions on equity increasing
490.7% year on year to ¥325 million. Commissions on bonds rose 35.9% year on year to ¥90 million, with
the Company acting as administrative managers and/or lead managers for issues of government guaranteedbonds, municipal bonds and corporate bonds, as well as a key underwriter of bonds issued under the
fiscal investments and loan program. As a result, total underwriting fees and selling concessions, andcommissions on the sale of financial instruments to specific investors and others, rose 242.9% year on year,to ¥415 million.
（3） A dministrative charges on offering, selling and solicitation for sales of financial instruments tospecified investors, and other fees and commissions received
Investment trust funds are the revenue drivers of this category.
The Company implemented a product strategy tailored to market conditions, as market environment
dramatically change in the second half of the fiscal year. In the first half, the Company focused on the
introduction of diversified funds that are less affected by change in the market, as well as on the sale ofexisting foreign bond funds. In the second half, the focus shifted to the introduction of Asian high-yield bondfunds, as well as the sale of existing funds that invest in J-REITs and equities in a specific ASEAN country.
As a result of growth in assets under custody due to the expansion of the product line-up throughout the
fiscal year, placement commissions grew 19.3% year on year, to ¥21,607 million. Other commissions edged
up 2.2% year on year to ¥12,090 million, thanks to efforts to boost sales of variable pension insurance,business insurance and other insurance products, as well as contribution of investment trust agency
commissions.

6

Fees and commissions received(Millions of yen except percentage)

Breakdown by category
2013<A>

Fees and commissions
received

2012<B>

Ratio(4/1/12 ～ 3/31/13)(4/1/11 ～ 3/31/12)¥ 15,344¥ 9,881155.3

14,626

8,798

166.2

Bonds

21

18

115.6

Others

697

1,065

65.4

Brokerage commissions
Equities

Underwriting fees and selling concessions<A>/<B>

415

121

342.9

Equities

325

55

590.7

Bonds

90

66

135.9

Placement commissions

21,607

18,110

119.3

Other commissions

12,09011,835102.2¥ 49,456¥ 39,947

123.8

Total

'09 '10 '11 '12 '13(Millions of yen except percentage)

Breakdown by product2013<A>(4/1/12 ～ 3/31/13)

Equities
Bonds

2012<B>(4/1/11 ～ 3/31/12)

Ratio<A>/<B>¥ 15,221¥ 9,148

166.4

228

203

112.1

Investment trusts

32,756

29,041

112.8

Others

1,251

1,555

80.5

Total

¥ 49,456¥ 39,947

123.8

2. Trading profits
A stronger equity market, coupled with a weaknening yen, enabled the Company to dramatically expand broking
and dealing of the US equities, while profits from Japanese equities also improved. As a result, profits on equity
trading grew 75.9% year on year, to ¥12,264 million. With domestic interest rates remaining low, the Company
continued to promote high-yield bonds denominated in emerging market currencies, as well as structured
bonds denominated in euro. These activities contributed to a 30.1% year on year rise in bond trading profits,
to ¥14,384 million. With other trading losses of ¥593 million, which compared with profits of ¥44 million in theprevious fiscal year, the Company earned total trading profits of ¥26,055 million, up 44.2% year on year.
(Millions of yen except percentage)

Trading profits
2013<A>(4/1/12 ～ 3/31/13)

2012<B>(4/1/11 ～ 3/31/12)

Ratio<A>/<B>

Equities¥ 12,264¥ 6,971

175.9

Bonds

14,384

11,058130.1

Others

-593

44

-

¥ 26,055¥ 18,073

144.2

Total

'09 '10 '11 '12 '13

3. Net financial income
Financial income grew 11.5% year on year to ¥2,216 million, while financial expenses fell 4.4% to ¥1,528
million, so net financial income rose 76.8% to ¥688 million.
4. Other operating income
Other operating income, excluding that related to the financial products transaction and incidental business,

7

declined 11.4% year on year to ¥937 million.
5. Selling, general and administrative expenses
Selling, general and administrative expenses increased 4.8% year on year to ¥59,020 million, mainly because ofincrease in personnel and transaction related expenses.
6. Other income (expenses)
Other income grew 64.7% year on year to ¥1,301 million, due mainly to increased gain on sale of investment securities.
7. Dividends
The Company sees shareholder returns as an important management benchmark and would like to distributethe payout in consideration of the trends in earnings, while also taking into account the sustainability andcontinuity of a stable dividend. Based on this policy, the Company plans to offer a normal dividend of ¥15 pershare for the the fiscal year.
Celebrating the 90th anniversary of foundation on April 4, 2013, however, the Company would like to additionally
pay a commemorative dividend of ¥5 per share and thank shareholders for their support. Thus, the proposed
dividend per share for the year ending March 2013 will amount ¥20, including the normal dividend.

Ⅱ．Analysis of financial position
1. Assets, liabilities and net assets
Consolidated total assets grew ¥166,995 million year on year to ¥723,384 million at the fiscal year-end. Thiswas due mainly to an increase of ¥92,191 million in trading assets, ¥22,591 million in cash segregated as
deposits for customers and others, ¥21,802 million in receivables on margin transactions, and ¥20,237 million inreceivables arising from unsettled trades.
Liabilities grew ¥145,439 million year on year to ¥589,812 million at the fiscal year-end. This was mainly due toan increase of ¥70,284 million in payables on collateralized securities transactions, ¥39,856 million in short-termborrowings, ¥11,649 million in deposits received and ¥10,352 million in guarantee deposits received.
Consequently, net assets grew ¥21,556 million year on year to ¥133,572 million at the fiscal year-end. Thiswas mainly due to an increase of ¥13,355 million in retained earnings and ¥5,960 million in unrealized gains onavailable-for-sale securities.
2. Cash flows
Cash and cash equivalents declined ¥1,482 million to ¥39,540 million at the fiscal year-end. Change in eachcash flow item is highlighted as follows.
<Cash flows from operating activities>
Cash outflows from operating activities were ¥36,185 million. The main factors were a cash inflow of ¥71,113
million due to change in in payables and receivables on collateralized securities transactions, and cash outflowsof ¥109,136 million due to change in trading assets/liabilities and ¥19,800 million due to an increase in deposits
segregated for customers.
<Cash flows from investing activities>
Cash outflows from investing activities were ¥3,036 million. The main factors were a cash inflow of ¥3,570
million due to revenue from the sale of short-term investments, and cash outflows of ¥2,997 million due topayment for short-term investments, ¥1,953 million due to acquisition of intangible assets, and ¥1,864 million
due to acquisition of shares of affiliates.
<Cash flows from financing activities>
Cash inflows from financing activities were ¥36,230 million. This was mainly attributed to an inflow of ¥37,972
million due to an increase in short-term borrowings.

8

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Balance Sheet ─ March 31, 2013

Thousands of
U.S. dollars(note 3)

Millions of yen
2013

2012

2013

ASSETS
Current assets:
Cash on hand and in banks (notes 10 and 21)¥

44,508¥45,898$473,238

Cash segregated as deposits for customers and others

65,34142,750694,747

Trading assets (notes 4 and 10)

277,859

185,668

2,954,375

Receivables arising from unsettled trades

20,237-215,173

Receivables on margin transactions (note 5)

55,33533,533588,357

Receivables on collateralized securities transactions (note 6)

185,257

186,087

1,969,771

Short-term investments (note 7)

3,204

3,566

34,067

Deferred income taxes (note 11)

1,765

854

18,767

Other current assets

8,531

6,951

90,707

Allowance for doubtful accounts

(15)

(3)

(159)

Total current assets

662,022505,304

7,039,043

Property and equipment, net of accumulated
depreciation of ¥11,718 million ( $124,593 thousand) in 2013 and¥11,115 million in 2012 (note 10)

16,49816,305

175,417

Intangible assets, net

7,705

8,400

81,925Investment securities (notes 7, 8 and 10)30,185

18,908

320,946

Long-term guarantee deposits

3,256

3,543

34,620

Deferred income taxes (note 11)

1,901

2,345

20,212

Investments and other assets:

Other

4,220

4,348

44,870Allowance for doubtful accounts(2,403)(2,764)(25,550)

37,15926,380395,098

Total investments and other assets
TOTAL

¥

See accompanying notes to consolidated financial statements.

9723,384¥

556,389$

7,691,483

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Balance Sheet ─ (Continued) ─ March 31, 2013

LIABILITIES AND NET ASSETS
Current liabilities:
Trading liabilities (note 4)
Payables arising from unsettled trades
Payables on margin transactions (notes 5 and 10)
Payables on collateralized securities transactions (note 6)
Deposits received
Guarantee deposits received
Short-term borrowings (notes 9 and 10)
Income tax payables (note 11)
Other current liabilities (notes 9,11 and 13)
Total current liabilities

2013

¥

Millions of yen

159,573
19,339131,651
29,98733,348176,024
4,232
7,176
561,330¥

Thousands of
U.S. dollars(note 3)
2013

2012

152,268
4,058
16,172
61,367
18,33822,996
136,168961
5,454
417,782$

1,696,683
205,625
1,399,798
318,841
354,577
1,871,600
44,99776,3005,968,421

Non-current liabilities:
Long-term borrowings (notes 9 and 10)
Lease liabilities (note 9)
Deferred income taxes (note 11)
Retirement and severance benefits (note 12)
Other non-current liabilities (note 13)
Total non-current liabilities

11,575
861
4,804
7,028
2,537
26,805

13,478
696
1,651
6,515
2,860
25,200123,073
9,155
51,07974,726
26,975
285,008

Financial instruments transactions reserve (note 14)
Total liabilities

1,677
589,8121,391
444,373

17,831
6,271,260

18,59012,913
77,845

18,59012,91164,490197,661
137,299827,698(3,637)
105,711(3,582)
92,409(38,671)
1,123,987

Accumulated other comprehensive income (loss):
Unrealized gain on available-for-sale securities (note 7)
Surplus on land revaluation (note 16)
Foreign currency translation adjustments
Total accumulated other comprehensive income

6,524
371
(442)
6,453

564
327
(840)
51

69,367
3,945(4,700)68,612

Minority interests

21,40819,556

227,624

133,572

112,016

1,420,223

Net assets
Shareholders' equity (note 15):
Common stock
Authorized − 750,000,000 shares in 2013 and 2012
Issued − 208,214,969 shares in 2013 and 2012
Capital surplus
Retained earnings
Treasury stock, at cost, 10,112,670 shares in 2013 and9,936,084 shares in 2012
Total shareholders' equity

Total net assets
Commitments and contingencies (note 22)
TOTAL

¥

See accompanying notes to consolidated financial statements.

10723,384¥

556,389$

7,691,483

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Statement of Income ─ Year ended March 31, 2013
Thousands of
U.S. dollars(note 3)

Millions of yen
2013

2012

2013

Operating revenues:
Commissions¥

49,456

Net gain on trading

26,055Interest and dividend income
Service fee and other revenues¥

39,947$525,848

18,073

277,033

2,216

1,988

23,562

937

1,057

9,963

78,66461,065

836,406

Interest expense

1,528

1,598

16,247

Net operating revenues

77,136

59,467820,159

Selling, general and administrative expenses (note18)

59,02056,315627,538

18,116

3,152

192,621

Operating income
Other income (expenses):Dividend income

576

509

6,124

Gain on sale of investment securities

741

208

7,879

Negative goodwill

396

279

4,211

Interest expense

(91)

(96)

(968)

Loss on devaluation of investment securities

(5)

(120)

(53)

Provision for financial instruments transactions reserve

(285)

(179)

(3,030)

Other, net

(31)

189

(330)

1,301

790

13,833

19,417

3,942

206,454

Current

5,405

2,165

57,470

Deferred(1,394)

209(14,822)

4,011

2,374

42,64815,406

1,568

163,806

1,098

584

11,674Income before income taxes and minority interests
Income taxes (note 11):

Income before minority interests
Minority interests
Net income¥

See accompanying notes to consolidated financial statements.

11

14,308¥984$

152,132

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income ─ Year ended March 31, 2013
Thousands of
U.S. dollars(note 3)

Millions of yen
2013
Income before minority interests

¥

2012

15,406

¥

2013

1,568

$

163,806

Other comprehensive income (loss) (note 19):
Unrealized gain on available-for-sale securities

7,475

Surplus on land revaluation
Foreign currency translation adjustments
Total other comprehensive income
Comprehensive income

479,479

-

229

-

398

(30)

4,232

7,873

203

83,711¥

23,279¥¥20,666

¥

1,771

$

247,517990$

219,734

Comprehensive income attributable to:
Owners of parent
Minority interests

2,613

See accompanying notes to consolidated financial statements.

12

781

27,783

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets ─ Year ended March 31, 2013

Commonstock
Balances at March 31, 2011¥

Changes arising during the year:
Increase of capital surplus resulting fromchanges in interest in consolidated
subsidiaries
Cash dividends
Net income
Purchase of treasury stock
Disposition of treasury stock
Increase of treasury stock resulting fromchanges in interest in consolidated
subsidiaries
Net changes other than shareholders' equity
Total changes during the year¥

12,911¥64,496¥(2,850)Total
shareholders'equity¥1(1)Changes arising during the year:
Increase of capital surplus resulting fromchanges in interest in consolidated
subsidiaries
Cash dividends
Net income
Reversal of surplus on land revaluation
Purchase of treasury stock
Increase of treasury stock resulting fromchanges in interest in consolidated
subsidiaries
Net changes other than shareholders' equity
Total changes during the year

(1)

(707)
4

(989)
984
(707)
2

(29)

(29)

-

(0)

(6)

(732)

(738)

18,59012,91164,490(3,582)

92,4092

2(975)
14,30822¥

93,147

1
(989)
984

Balances at March 31, 2012

Balances at March 31, 2013

18,590CapitalsurplusMillions of yen
Shareholders' equity
Treasury
Retainedstock,
earnings
at cost18,59013

2¥

12,913

13,355¥77,845

¥

(14)

(975)
14,308
22
(14)

(41)

(41)

(55)

13,302(3,637)¥

105,711

Millions of yen
Accumulated other comprehensive income (loss)
Unrealized
Totalgain onaccumulated
Foreignavailableother
Surplus on
currency
for-salecomprehensive
landtranslation
securities
income (loss)
revaluation
adjustments
Balances at March 31, 2011

¥

586 ¥

270

¥

(811)

¥

45

Minority
interests¥

19,431

Total net
assets¥

112,623

Changes arising during the year:
Increase of capital surplus
resulting from changes ininterest in consolidated
subsidiaries
Cash dividends
Net income
Purchase of treasury stock
Disposition of treasury stock
Increase of treasury stock
resulting from changes ininterest in consolidated
subsidiaries
Net changes other thanshareholders' equity
Total changes during the year

(22)
(22)

57
57

(29)
(29)

6
6

125
125

131
(607)

Balances at March 31, 2012

564

327

(840)

51

19,556

112,016

1
(989)
984
(707)
2

(29)

Changes arising during the year:
Increase of capital surplus
resulting from changes ininterest in consolidated
subsidiaries
Cash dividends
Net income
Reversal of surplus on land
revaluation
Purchase of treasury stock
Increase of treasury stock
resulting from changes ininterest in consolidated
subsidiaries
Net changes other thanshareholders' equity
Total changes during the year
Balances at March 31, 2013

2(975)
14,308
22
(14)

(41)

¥

5,960
5,960

44
44

6,524 ¥

371

14

398
398
¥

(442)

6,402
6,402
¥

6,453

1,852
1,852
¥

21,408

8,254
21,556¥

133,572

Thousands of U.S. dollars(note 3)
Shareholders' equity
Commonstock
Balances at March 31, 2012$

197,661

Changes arising during the year:
Increase of capital surplus
resulting from changes ininterest in consolidated
subsidiaries
Cash dividends
Net income
Reversal of surplus on land
revaluation
Purchase of treasury stock
Increase of treasury stock
resulting from changes ininterest in consolidated
subsidiaries
Net changes other thanshareholders' equity
Total changes during the year
Balances at March 31, 2013

Capitalsurplus$Retainedearnings

137,278$685,699

21$

197,66121$

137,299

Treasurystock,
at cost$$Changes arising during the year:
Increase of capital surplus
resulting from changes ininterest in consolidated
subsidiaries
Cash dividends
Net income
Reversal of surplus on land
revaluation
Purchase of treasury stock
Increase of treasury stock
resulting from changes ininterest in consolidated
subsidiaries
Net changes other thanshareholders' equity
Total changes during the year
Balances at March 31, 2013

5,997

$

3,477

$

234

234

827,698(8,932)

982,552

21(10,367)
152,132$

Thousands of U.S. dollars(note 3)
Accumulated other comprehensive income (loss)
Unrealized
Totalgain onaccumulated
Foreignavailable-for- Surplus onothercurrencysale
landtranslation comprehensive
securities
revaluation adjustments income (loss)
Balances at March 31, 2012$

(10,367)
152,132

141,999$(38,086)

Total
shareholders'equity

$

542 $

(149)

(149)

(436)

(436)

(585)

141,435(38,671)$

1,123,987

Minority
interests
207,932

Total net
assets$1,191,026

21(10,367)
152,132
234
(149)

(436)
63,37063,370$69,367

468
468
$

3,945

4,232
4,232
$

See accompanying notes to consolidated financial statements.

15(4,700)$68,07068,07019,692
19,692

68,612 $227,624

87,762
229,197$

1,420,223

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows ─ Year ended March 31, 2013

Cash flows from operating activities:
Income before income taxes and minority interests¥
Adjustments to reconcile income before income taxes andminority interests to net cash provided by operating
activities:
Depreciation and amortization
Interest and dividend income
Interest expense
Gain on sale of investment securities
Loss on devaluation of investment securities
Negative goodwill incurred
Decrease (increase) in deposits segregated for customer
Decrease (increase) in trading assets and increase (decrease) intrading liabilities
Decrease (increase) in receivables on margin transactions andincrease (decrease) in payables on margin transactions
Decrease (increase) in receivables on collateralized securities
transactions and increase (decrease) in payables oncollateralized securities transactions
Increase (decrease) in deposits received
Decrease (increase) in short-term guarantee deposits
Increase (decrease) in guarantee deposits received
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in retirement and severance benefits
Increase (decrease) in financial instruments transactions reserve
Other, net
Sub-totalInterest and dividend received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Payment for short-term investments
Proceeds from sale of short-term investments
Payment for purchase of property and equipment
Payment for intangible assets
Payment for investment securities
Proceeds from sale of investment securities
Payment for investments in affiliates
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Payments on long-term borrowings
Purchase of treasury stock
Dividends paid to shareholders
Dividends paid to minority shareholders of subsidiaries
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Increase in cash and cash equivalents from merger
Cash and cash equivalents, end of year (note 21)

See accompanying notes to consolidated financial statements.

16¥

Thousands of
U.S. dollars(note 3)2013

Millions of yen
2013
2012
19,417

¥

3,942

$

206,454

3,964(2,798)
1,619
(725)
5
(396)
(19,800)

3,939(2,503)
1,694
(174)
120
(279)
5,200

42,148(29,750)
17,214(7,709)53(4,210)(210,526)(109,136)

264(1,160,404)(18,598)(538)(197,746)

71,113
10,751(548)
10,317
(355)
512
285
(779)
(35,152)
2,829(1,613)(2,249)(36,185)

13,777(1,830)(52)(4,391)
(657)
254
179
823
19,7682,404(1,680)(2,249)18,243756,119
114,312(5,827)
109,697(3,775)5,444
3,030(8,283)(373,759)
30,080(17,150)(23,913)(384,742)（2,997）
3,570(731)(1,953)(951)
1,668(1,864)
222(3,036)(3,896)
3,900
(474)
(960)
(617)
904
(368)
108
(1,403)(31,866)
37,959(7,772)(20,766)(10,112)
17,735(19,819)2,360(32,281)

37,972825(1,001)
(14)
(975)
(36)
(541)
36,230404(2,587)41,022
1,105
39,540(9,741)70(2,307)
(707)
(989)
(38)
(420)
(14,132)(26)
2,682
38,34041,022403,743
8,772(10,643)(149)(10,367)(383)(5,752)385,221
4,296(27,506)
436,172
11,749420,415¥$

Notes to Consolidated Financial Statements
Okasan Securities Group Inc. and Consolidated Subsidiaries ─ Year ended March 31, 2013
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements include the accounts of Okasan Securities Group Inc.
(the "Company") and its subsidiaries.
The Company and its domestic subsidiaries maintain their books of account and prepare their financial
statements in conformity with financial accounting standards of Japan, and its foreign subsidiary inconformity with those of the country of its domicile.
"Practical Solution on unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated
Financial Statements" (ASBJ Practical Issues Task Force (PITF) No. 18, May 17, 2006) requires that for the
preparation of consolidated financial statements, the accounting policies and procedures applied to a parent
company and its subsidiaries for similar transactions and events under similar circumstances should be
unified, in principle, and financial statements prepared by foreign subsidiaries in accordance with IFRSs
or the generally accepted accounting principles in the United States (U.S. GAAP) tentatively may be used
for the consolidation process, however, the items listed in the PITF should be adjusted in the consolidation
process so that net income is accounted for in accordance with Japan GAAP unless they are not material.
The Company made necessary modification to the consolidated financial statements according to the PITF.
The accompanying consolidated financial statements have been prepared in accordance with the provisions
set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations,and in conformity with accounting principles and practices generally accepted in Japan and applicable to
Japanese securities companies.
In preparing the accompanying consolidated financial statements, certain reclassifications have been madein the financial statements issued domestically in Japan in order to present them in a form which is morefamiliar to readers outside Japan. In addition, the notes to the consolidated financial statements include
information which is not required under accounting principles generally accepted in Japan but is presented
herein as additional information.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.	Consolidation − The consolidated financial statements include the accounts of the Company and its
10 subsidiaries. There are no affiliates accounted for by equity method at March 31, 2013. During
the year ended March 31, 2013, Shinwa Securities Co., Ltd. which had been accounted for by equity
method was extinguished through a merger with Marufuku Securities Co., Ltd. (See note 27. BUSINESSCOMBINATIONS)	The "Accounting Standards for Consolidation" require the control or influence concept for the
consolidation scope of subsidiaries and affiliates. Under the control or influence concept, a company inwhich the Company or its consolidated subsidiaries, directly or indirectly, are able to exercise control
over operations is fully consolidated, and a company over which the Company and/or its consolidated
subsidiaries have the ability to exercise significant influence is accounted for by the equity method.
Investments in affiliates are accounted for by the equity method. The difference between the cost andthe underlying net assets at the date of investments in subsidiaries or affiliates is allocated to identifiable
assets and liabilities based on fair market value at the date of investments. The unallocated portion of
the difference is recognized as goodwill or negative goodwill. Goodwill is amortized over its estimatedperiod of benefit on a straight-line basis and negative goodwill is amortized over the appropriate period
to reflect the investments, while immaterial goodwill or negative goodwill is charged to income when17

incurred.
	All significant intercompany balances and transactions have been eliminated in consolidation.

b.	Cash and cash equivalents − For the purposes of the statement of cash flows, the Company considers
all highly liquid investments with insignificant risk of changes in value which have maturities ofgenerally three months or less when purchased to be cash equivalents.
c.	Trading assets and liabilities − Trading assets and liabilities, including securities and financial
derivatives for trading purposes are recorded on a trade date basis at fair value. Revenues andexpenses related to trading securities transactions are recorded on a trade date basis. Changes in thefair values are reflected in "net gain on trading" in the accompanying consolidated statement of income.
Gains and losses arose from derivatives held or issued for trading purposes are also reported as "netgain on trading" in the accompanying consolidated statement of income, which includes realized gains
and losses as well as changes in the fair values of such instruments. Securities owned for non-trading
purposes, shown in the accompanying consolidated balance sheet as "Short-term investments" and"Investment securities" are discussed below.
d.	Securities − The Company examines the intent of holding securities for non-trading purposes, andclassifies those securities as (a) debt securities intended to be held to maturity ("held-to-maturity debt
securities"), (b) equity securities issued by an affiliated company and (c) all other securities not classified
in any of the above categories ("available-for-sale securities").
	Held-to-maturity debt securities are stated at amortized cost. Available-for-sale securities with market
value are stated at market, based on quoted market prices. Realized gains and losses on sale of suchsecurities are computed using the gross-average cost. Unrealized gains or losses on such securities, netof related taxes, are recorded in other accumulated comprehensive income. Debt securities classified
as "available-for-sale securities" for which fair value is not available are stated at the amortized cost.
Equity securities classified as "available-for-sale securities" for which market value is not available arestated at the gross-average cost.
e. 	Hedging transactions − The Company states derivative financial instruments at fair value andrecognize changes in the fair value as gains or losses unless derivative financial instruments are used
for hedging purposes. Valuation gains or losses on hedging instruments are mainly deferred as assets
or liabilities until the gains or losses on underlying hedged instruments are realized. The Company
and certain subsidiaries have entered into interest rate swap agreements for hedging interest rate
exposures. The difference in amounts to be paid or received on interest rate swap agreements is
recognized over the life of the agreement as an adjustment to interest expense.
f. Collateralized securities transactions − Collateralized securities transactions consist of securities
borrowed and loaned transactions and Gensaki transactions. Securities borrowed transactions
generally require the Company to provide the counterparty with collateral in the form of cash. And
securities loaned transactions, the Company generally receives collateral in the form of cash. The
Company monitors the market value of the securities borrowed or loaned and requires additional
cash, as necessary, to ensure that such transactions are adequately collateralized. Under the "Uniform
Accounting Standards of Securities Companies", securities borrowed and loaned transactions areaccounted for as financing transactions. Securities borrowed or loaned that are cash collateralized
are recorded at the amount of cash collateral advanced or received. Gensaki transactions originate
in the Japanese financial markets, and involve the selling ("Sell Gensaki")/purchasing ("Buy Gensaki")of commercial paper, certificates of deposit, Japanese government bonds and various other debt
securities to/from an institution wishing to make a short-term investment, with the Company agreeing
to repurchase/resell them from/to the institution on a specified date at a specified price. Under the"Accounting Standards for Financial Instruments", Gensaki transactions are accounted for as financing
transactions. Gensaki transactions are carried at their contractual amounts.
g.	Allowance for doubtful accounts − Allowance for doubtful accounts of the Company and its domestic
consolidated subsidiaries are provided on the estimated historical deterioration rate for normal accounts,

18

and based on specifically assessed amounts for doubtful accounts. An overseas consolidated subsidiary
provides specifically assessed amount for doubtful accounts.

h.	Property and equipment − Property and equipment are stated at cost. Depreciation of property
and equipment of the Company and its domestic consolidated subsidiaries is computed substantiallyby the declining-balance method at rates based on the estimated useful lives of the assets, while thestraight-line method is applied to buildings purchased in Japan after April 1, 1998. And in an overseas
subsidiary, depreciation is computed by the straight-line method.
	In accordance with the amendment of the Corporation Tax Act, effective from the year ended March
31, 2013, the Company and its domestic consolidated subsidiaries have changed their depreciation
method for property and equipment acquired on or after April 1, 2012. This change has no material
impact on income.
	The range of useful lives is principally from 3 to 50 years for buildings and from 3 to 15 years forequipment.
i.	Intangible assets − Intangible assets are carried at cost less amortization. Software for internal use isamortized under straight-line method based on internally estimated useful life (5 years). Amortization ofother intangible assets is calculated by the straight-line method at rates based on the estimated useful
lives of respective assets.
j.	Retirement and severance benefits − The Company and its domestic consolidated subsidiaries havecontributory and noncontributory pension plans, and unfunded retirement and severance plans toprovide retirement and severance benefits to substantially all employees.
	Under the "Accounting Standards for Retirement Benefits", provisions for defined benefit retirement
and pension plans have been made in the accompanying consolidated financial statements based on
the present value of the projected future retirement and severance benefits attributable to employee
services rendered by the end of the year, less amounts funded under contributory and noncontributory
pension plans.
	The Company and its domestic consolidated subsidiaries have unfunded defined benefit pension plansfor directors and corporate auditors. The provision for the plans has been made in the accompanying
consolidated financial statements for vested benefits to which directors and corporate auditors areentitled if they were to retire and sever immediately at the balance sheet date.
k.	Leases − Leased assets related to finance lease transactions without title transfer are depreciated on astraight-line basis, with the lease periods as their useful lives and no residual value. Regarding financeleases transactions without title transfer for which the starting date for the lease transactions is prior to
March 31, 2008, the Company and its domestic consolidated subsidiaries have continued recognize lease
payments as expenses.
l.	Income taxes − Income taxes in Japan applicable to the Company and its domestic consolidated
subsidiaries consist of corporate tax, inhabitant tax and business tax.
	The "Accounting Standards for Income Taxes" require that deferred income taxes be accounted forunder the asset and liability method. Deferred tax assets and liabilities are recognized for the expected
future tax consequences of events that have been included on the financial statements or tax return.
Under this method, deferred tax assets and liabilities are measured using enacted tax rates expected toapply to taxable income in the years in which those temporary difference are expected to be recoveredor settled, and the effect on deferred tax assets and liabilities of a change in tax rates is recognized inincome in the period that includes the enactment date.
	The Company has filed consolidated tax returns in Japan.
m.	Foreign currency transactions − Under the "Accounting Standards for Foreign Currency
Transactions," receivables and payables denominated in foreign currencies are translated into yen at
the rate of exchange as of the balance sheet dates and gains or losses resulting from the translation offoreign currencies are credited or charged to income. Assets and liabilities, and revenues and expensesof an overseas subsidiary are translated into yen at the rate of exchange as of the balance sheet dates,19

a comprehensive adjustment resulting from translation is presented as "Foreign currency translation
adjustments" in a component of net assets.

n.	Asset retirement obligations − The Company recognizes an asset retirement obligation which
is a statutory or similar obligation with regard to the removal of assets as a liability. An asset
retirement obligation is recognized as a liability at the time that the asset is incurred by its acquisition,
construction, development or ordinary use. When an asset retirement obligation is recognized as aliability, the asset retirement cost corresponding to it is included in the cost of the relevant asset by thesame amount.
o.	Reclassifications − Certain reclassifications have been made to the prior years' consolidated financial
statements to conform to the presentation used in consolidated statements as of and for the year ended
March 31, 2013.
p.	New accounting pronouncements not yet adopted − On May 17, 2012, the ASBJ issued ASBJ
Statement No. 26, "Accounting Standard for Retirement Benefits" and ASBJ Guidance No. 25 "Guidanceon Accounting Standard for Retirement Benefits," which replaced the "Accounting Standard for
Retirement Benefits" that had been issued by the Business Accounting Council in 1998.
	Major changes are as follows:	(a) Treatment in the balance sheet	Under the revised accounting standard, actuarial gains and losses and past service costs that are yet
to be recognized in profit or loss shall be recognized within equity (accumulated other comprehensive
income), after adjusting for tax effects, and the deficit or surplus shall be recognized as a liability orasset.
	(b) Treatment in the statement of income and the statement of comprehensive income	Actuarial gains and losses and past service costs that arose in the current period and yet to berecognized in profit or loss shall be included in other comprehensive income and actuarial gains andlosses and past service costs that were recognized in other comprehensive income in prior periods andthen recognized in profit or loss in the current period shall be treated as reclassification adjustments.
	The Company expects to apply the revised accounting standard from the year beginning on April 1,2013 and is in the process of measuring the effects of applying the revised accounting standard.

3. BASIS OF FINANCIAL STATEMENT TRANSLATION
The translations of the yen amounts into U.S. dollars are included solely for the convenience of the reader,using the prevailing exchange rate at March 29, 2013, which was ¥94.05 to U.S. $1.
The convenience translations should not be construed as representations that the yen amounts have been,
could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.

20

4. TRADING ASSETS AND LIABILITIES
Trading assets and trading liabilities at March 31, 2013 and 2012 consist of the following:Thousands of
U.S. dollars

Millions of yen
2013

2012

2013

Trading assets:
Equity securities and warrants

¥

2,204

Government, corporate and other bonds

1,327

$

23,434

180,313

-

3,998

-

73

30

776

Commercial paper and certificates of deposit
Derivatives¥¥

275,582

277,859¥937¥

2,930,165

185,668$940$

2,954,375

Trading liabilities:
Equity securities and warrants¥

Government, corporate and other bonds

147,312

-

3,999

-

19

17

202

Commercial paper and certificates of deposit
Derivatives
¥

9,963

158,617

159,573¥

152,268

1,686,518$

1,696,683

5. MARGIN TRANSACTIONS
Margin transactions at March 31, 2013 and 2012 consist of the following:Thousands of
U.S. dollars

Millions of yen
2013

2012

2013

Assets:Loans receivable from customers¥

Cash deposits as collateral for securities borrowed fromsecurities finance companies

49,854¥

5,481¥

55,335

26,164$

7,369¥

530,080
58,27733,533

$

4,300

$

588,357

Liabilities:
Borrowings from securities finance companies¥

Proceeds from securities sold for customers' accounts

9,276

¥

10,063¥

19,33911,872¥

16,172

98,629106,996$205,625

Loans receivable from customers are stated at amounts equal to the purchase price of the relevant
securities, which are collateralized by customers' securities and customers' deposits in the form of cash
or securities. Proceeds from securities sold for customers' accounts are stated at the sales prices of therelevant securities on the respective transaction dates.

21

6. COLLATERALIZED SECURITIES TRANSACTIONSCollateralized securities transactions at March 31, 2013 and 2012 consist of the following:Thousands of
U.S. dollars

Millions of yen
2013

2012

2013

Assets:Cash collateral for securities borrowed¥

185,257¥

186,087$

1,969,771¥

126,651¥

61,367$

1,346,635¥

131,651¥

61,367$

1,399,798

Liabilities:
Cash collateral for securities loaned
Sell Gensaki transactions

5,000

-

53,163

7. SECURITIES FOR NON-TRADING PURPOSES
Acquisition cost, balance sheet amount, gross unrealized gain and gross unrealized loss of available-for-salesecurities with fair value at March 31, 2013 and 2012 is summarized as follows:

Millions of yen
Acquisition
cost

Gross
unrealized gainGrossunrealized loss

Balance sheet
amount¥¥¥

At March 31, 2013
Current:
Government, corporate and other bonds

¥

2,999

Other

200

28

(27)

2,999
201

¥

3,199

¥

28

¥

(27)

¥

3,200

¥

12,687¥

13,215

¥

(441)

¥

25,461

Non-current:
Equity securities
Government, corporate and other bonds

299

13

-

312

Other

759

40

(24)

775

¥

13,745¥

13,268

¥

¥

3,298

¥

-

¥

(465)

¥

26,548

-

¥

3,298

At March 31, 2012
Current:
Government, corporate and other bonds
Other

270

-

(2)

268

¥

3,568

¥

-

¥

(2)

¥

3,566

¥

11,581

¥

3,571

¥

(2,285)¥

12,867

Non-current:
Equity securities
Government, corporate and other bonds

298

16

-

314

Other

759

13

(29)

743

¥

12,638

22

¥

3,600

¥

(2,314)¥

13,924

Thousands of U.S. dollars
Acquisition
cost

Gross
unrealized gainGrossunrealized loss$$

Balance sheet
amount

At March 31, 2013
Current:
Government, corporate and other bonds

$

Other

31,887
2,127

-

-

297

$

31,887

(287)

2,137

$

34,014

$

297

$

(287)

$

34,024$

134,896$

140,511$(4,689)$270,718

Non-current:
Equity securities
Government, corporate and other bonds

3,179

138

-

3,317

Other

8,070

425

(255)

8,240

$

146,145$

141,074$(4,944)$282,275

Securities classified as available-for-sale securities for which fair value is not available are unlisted equity
securities amounting to ¥3,504 million ( $37,257 thousand) and ¥4,813 million, and investments in limited
partnership and similar partnership amounting to ¥136 million ( $1,446 thousand) and ¥171 million at March
31, 2013 and 2012, respectively.
For the years ended March 31, 2013 and 2012, proceeds from sales of available-for-sale securities, grossrealized gains and gross realized losses are as follows:
Millions of yen
Proceeds fromsales ofavailable-for-salesecurities

Gross realized
gains

Gross realized
lossesMarch 31, 2013
Equity securities¥

Government, corporate and other bonds

1,042

¥

3,300

Other

697

¥

-

896

-

63

(34)

¥

5,238

¥

760

¥

(34)

¥

60

¥

54

¥

(2)

March 31, 2012
Equity securities
Government, corporate and other bonds

3,900

-

-

Other

844

154

(32)

¥

4,804

¥

208

¥

(34)

Thousands of U.S. dollars
Proceeds fromsales ofavailable-for-salesecurities

Gross realized
gains

Gross realized
lossesMarch 31, 2013
Equity securities$

11,079

$

7,411

$

-

Government, corporate and other bonds

35,088

-

-

Other

9,527

670

(362)

$

23

55,694

$

8,081

$

(362)

8. INVESTMENTS IN AN AFFILIATEThe aggregate carrying amount of investments in an affiliate at March 31, 2013 and 2012 are ¥22 million( $234 thousand) and ¥22 million, respectively.

9. BORROWINGS
The weighted-average interest rates applicable to the short-term borrowings are 0.51% and 0.61% at March
31, 2013 and 2012, respectively.
Long-term borrowings at March 31, 2013 and 2012 consist of the following:Thousands ofBorrowings, maturing in installments through 2016; bearing
weighted average interest of 2.61% at March 31, 2013
Borrowings, maturing in installments through 2016; bearing
weighted average interest of 2.64% at March 31, 2012

Millions of yen
2013
2012
¥

15,238Less current installments¥

U.S. dollars
2013

¥

-

$

162,020-

15,413

-

3,663

1,935

38,947

11,575¥

13,478$123,073

Lease liabilities at March 31, 2013 and 2012 consist of the following:

Lease liabilities maturing in installments through 2019; bearing
weighted average interest of 3.04% at March 31, 2013
Lease liabilities maturing in installments through 2017; bearing
weighted average interest of 3.38% at March 31, 2012

Thousands of
U.S. dollars
2013

Millions of yen
2013
2012
¥

1,309

¥

-

Less current installments

861

$

445
¥

696

13,918
-

1,141

448
¥

-

4,763
$

9,155

(1)	Current installments of long-term borrowings are included in short-term borrowings in theaccompanying balance sheet.
(2)	Long-term borrowings included subordinated borrowings provided in Article 176 of the "Cabinet Office
Ordinance Concerning Financial Instruments Business" (the Prime Minister's Office Ordinance No. 52,
2007) as follows:

Long-term borrowings
Current installments of long-term borrowings¥

Millions of Yen
2013
2012
6,725
¥
7,900
1,175
-

Thousands of
U.S. dollars
2013$
71,505
12,493

Millions ofyen

Thousands of
U.S. dollars

Annual maturities of borrowings after March 31, 2014, are as follows:Year ending March 31
2015
2016
2017
2018

¥

Annual maturities of lease liabilities after March 31, 2014, are as follows:

24

5,320
6,255
-

$

56,566
66,507-

Millions ofyenYear ending March 31
2015
2016
2017
2018

¥

326
277
193
60

Thousands of
U.S. dollars
$

3,466
2,945
2,052
638

To meet its liquidity needs stably and expeditiously and to strengthen financial operations, the Company
established a commitment line of ¥21,000 million ( $223,285thousand) with 7 financial institutions and ¥22,000
million with 8 financial institutions at March 31, 2013 and 2012, respectivery.
As is customary in Japan, both short-term and long-term bank borrowings are made under generalagreements which provide that security and guarantees for present and future indebtedness will be given
upon request of the bank, and that the bank shall have the right to offset cash deposits against obligations
that have become due or, in the event of default, against all obligations due the bank.

10. PLEDGED ASSETSAt March 31, 2013 and 2012, the carrying value of assets pledged is as follows:

Cash in banks
Trading assets
Property and equipment
Investment securities¥¥

Millions of Yen
2013
2012
3,761
¥
3,873
57,21525,033
8,616
9,475
18,537
11,413
88,129¥49,794

Thousands of
U.S. dollars
2013$
39,989608,347
91,611
197,097$
937,044

Millions of yen
2013
2012
68,759 ¥34,750
1,154
325
4,850
5,578
74,763 ¥40,653Thousands of
U.S. dollars
2013$
731,090
12,27051,568$794,928

Assets in the above table are pledged for the following liabilities:

Short-term borrowings
Borrowings from securities finance companies
Long-term borrowings¥¥

In addition to above, at March 31, 2013, trading assets, etc. amounting to ¥63,732 million ( $677,640
thousand) and investments securities amounting to ¥469 million ( $4,987 thousand) are deposited as
guarantee for settlement of trading accounts and securities borrowed, respectively. At March 31, 2012,
trading assets, etc. amounting to ¥59,551 million and investments securities amounting to ¥167 million
are deposited as guarantee for settlement of trading accounts and securities borrowed, respectively.
The fair value of the securities pledged as collateral at March 31, 2013 and 2012, except for those
disclosed in the above table, are as follows:25

Securities loaned on margin transactions
Securities pledged for borrowings on margin transactions
Securities loaned
Other

¥

¥

Millions of yen
2013
2012
10,957¥
12,585
8,487
4,382
126,488
61,24728,411
41,021
174,343¥
119,235

Thousands of
U.S. dollars
2013$
116,502
90,2391,344,902
302,084$
1,853,727

The fair value of the securities received as collateral at March 31, 2013 and 2012 are as follows:

Securities received on margin transactions
Securities borrowed
Securities pledged as collateral
Other

¥

¥

Millions of Yen
2013
2012
57,016¥25,343
190,130
191,039
45,67429,2185,479
7,530
298,299¥
253,130

Thousands of
U.S. dollars
2013$
606,2312,021,584
485,636
58,256$
3,171,707

11. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese corporate, inhabitant and businesstaxes based on income which, in the aggregate, resulted in a statutory tax rate of approximately 38.0％ and40.5% in 2013 and 2012, respectively.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred
tax assets and deferred tax liabilities at March 31, 2013 and 2012 are as follows:

Deferred tax assets:
Tax loss carryforwards
Retirement and severance benefits (employees)
Accrued bonuses
Allowance for doubtful accounts
Financial instruments transactions reserve
Accrued business tax
Retirement and severance benefits (directors and corporate
auditors)
Impairment loss
Asset retirement obligations
Loss on devaluation of investment securities
Loss on devaluation of golf memberships
Depreciation and amortization
Other

¥

Valuation allowance
Total
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Land revaluation excess
Other

Total

Net deferred tax assets (liabilities)¥

26

Thousands of
U.S. dollars
2013

Millions of yen
2013
2012
4,480
2,046
823
790
596
541

¥

3,162
1,887
601
889
494
116

$

47,63421,754
8,751
8,400
6,337
5,752

487
366
330
216
144
137
494
11,450(6,301)
5,149

456
363
324
244
142
142
299
9,119
(5,343)
3,776

5,178
3,892
3,509
2,297
1,531
1,457
5,252
121,744(66,996)
54,748(4,480)(1,605)(202)(6,287)(1,138)(448)(1,650)(181)(2,279)1,497(47,634)(17,066)(2,148)(66,848)(12,100)¥$

Net deferred tax assets at March 31, 2013 and 2012 are reflected in the accompanying consolidated balance
sheet under the following captions:

Current assets − Deferred income taxes
Investments and other assets − Deferred income taxes
Current liabilities − Other current liabilities
Non-current liabilities − Deferred income taxes¥¥

Millions of yen
2013
2012
1,765
¥
854
1,901
2,345
(51)
(4,804)(1,651)(1,138)¥
1,497

Thousands of
U.S. dollars
2013$
18,767
20,212(51,079)$(12,100)

A reconciliation of the statutory tax rate and the effective tax rate as a percentage of income before income
taxes and minority interests for the years ended March 31, 2013 and 2012 is as follows:
2013
38.0%
0.8
(0.8)
0.4
4.8
(20.8)(1.7)
20.7%

Statutory tax rate
Expenses not deductible for tax purposes
Income not credited for tax purposes
Per capita tax
Valuation allowance
Loss on devaluation of investments in affiliates
Decrease of deferred tax assets due to change in statutory tax rate
Other
Effective tax rate

2012
40.5%
4.0
(1.6)
2.1
8.0
9.8
(2.5)
60.3%

12.RETIREMENT AND PENSION PLANS
The Company and its domestic consolidated subsidiaries have defined benefit retirement and pension
plans, which consist of a defined contribution retirement and pension plan (Securities Omnibus DC OkasanPlan), a corporate defined benefit pension plan and an unfunded retirement and severance plan that provide
for lump-sum payment of benefits.
The funded status of retirement and pension plans at March 31, 2013 and 2012 consist of the followings:

Projected benefit obligations
Fair value of plan assets
Unrecognized actuarial gain
Amount recognized in the consolidated balance sheet¥¥

Millions of yen
2013
2012
(13,539)¥(13,719)
7,676
6,897
159
1,547
5,704
¥
(5,275)

Thousands of
U.S. dollars
2013$(143,955)
81,616
1,690$
60,649The components of net periodic benefit cost for the years ended March 2013 and 2012 are as follows:

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss¥

Contributions to the defined contribution plan
Net periodic benefit cost¥

Millions of yen
2013
2012
750
¥
560
127
238
(33)
(32)
481
221
1,325
987
184
181
1,509
¥
1,168

Assumptions used for the years ended March 31, 2013 and 2012 are set forth as follows:
2013
Straight-line
0.99%
0.5%
5 years

Periodic allocation method for projected benefit
Discount rate
Expected rate of return on plan assets
Recognition period of actuarial gain / loss

27

2012
Straight-line
0.99%
0.5%
5 years

Thousands of
U.S. dollars
2013
$
7,975
1,350
(351)
5,114
14,088
1,957$
16,045

Directors and corporate auditors are not covered by the plans described above. For such persons, theCompany and certain consolidated subsidiaries have unfunded defined benefit pension plans. Under theplans, directors and corporate auditors are entitled to lump-sum payments based on the current rate of
pay and length of service when they leave the Company. The Company and certain domestic consolidated
subsidiaries provide for the amount of vested benefits to which directors and corporate auditors are entitled
if they were to retire or sever immediately at the balance sheet date. The liability for retirement andseverance benefits related to these plans was ¥1,323 million ( $14,067 thousand) and ¥1,240 million at March
31, 2013 and 2012, respectively.

13. ASSET RETIREMENT OBLIGATIONS
The asset retirement obligation is based on estimated future restoration liabilities related to leasehold
contracts of branch offices and so on.
The obligation is calculated based on the estimated period of use of 2 to 58 years and discounted rate of
0.155% to 2.33% .
The following table provides the Company's total asset retirement obligation for the years ended March 31,
2013 and 2012:
Thousands of
U.S. dollars

Millions of yen
2013
Balance, beginning of year

¥

2012

580

¥

2013
532

$

6,167

Liabilities incurred by asset acquisition

21

37

223

Accretion expenses

11

11

117

Liabilities settled

(5)

-

(53)

Other decrease

(7)

-

(74)

Balance, end of year

¥

600

¥

580

$

6,380

14. FINANCIAL INSTRUMENTS TRANSACTIONS RESERVEThe Financial Instruments and Exchange Law of Japan requires a securities company to set aside areserve in proportion to its securities and other related trading or derivative transactions to cover possible
customer losses incurred by default of the securities company on securities or derivative transactions.
Financial instruments transactions reserve is calculated based on Article 46-5, Paragraph 1 of the Financial
Instruments and Exchange Law.

15. SHAREHOLDERS' EQUITYThe Companies Act provides that an amount equal to 10% of distributions from retained earnings paid by
the Company and its Japanese subsidiaries be appropriated as a legal reserve (a component of retained
earnings) or as additional paid-in capital (a component of capital surplus). No further appropriations are
required when the total amount of the additional paid-in capital and the legal reserve equals 25% of theirrespective stated capital. The Companies Act also provides that additional paid-in capital and legal reserve
are available for appropriations by the resolution of the shareholders. Balances of the legal reserve areincluded in retained earnings in the accompanying consolidated balance sheet.
Cash dividends and appropriations to the legal reserve charged to retained earnings for the years ended
March 31, 2013 and 2012 represent dividends paid out during those years and the related appropriations to
the legal reserve. The amount available for dividends is based on the amount recorded in the Company's
non-consolidated books of account in accordance with the Companies Act.

28

Dividends paid during the year ended March 31, 2012 which was approved by the General Meeting of
Shareholders held on June 29, 2011 are as follows:(a) Total dividends¥989 million(b) Cash dividends per common share¥5(c) Record date

March 31, 2011(d) Effective dateJune 30, 2011

Dividends paid during the year ended March 31, 2013 which was approved by the General Meeting of
Shareholders held on June 28, 2012 are as follows:(a) Total dividends¥975 million ( $10,367 thousand)(b) Cash dividends per common share¥5 ( $0.05)(c) Record date

March 31, 2012(d) Effective dateJune 29, 2012

Dividends to be paid after the balance sheet date but the record date for the payment belongs to the year
ended March 31, 2013 which was approved by the General Meeting of Shareholders held on June 27, 2013
are as follows:(a) Total dividends¥3,999 million ( $42,520 thousand)(b) Dividend source

Retained earnings(c) Cash dividends per common share¥20 ( $0.21)(d) Record date

March 31, 2013(e) Effective dateJune 28, 2013

16. SURPLUS ON LAND REVALUATIONAt March 31, 2002, a consolidated subsidiary revaluated its own land for business activities in accordancewith the "Law Concerning Land Revaluation" (the "Law") effective March 31, 1998. The net unrealized gain,
net of related taxes and minority interests, are reported as "Surplus on land revaluation" in a component of
net assets and the related deferred tax liabilities are included in non-current deferred income taxes.
Fair values of the land are determined based on the values specified in Article 2-1, 2-3 and 2-5 of the
Enforcement Ordinance of the Law concerning Land Revaluation.
The value of the land at March 31, 2013 decreased by ¥902 million ( $9,591 thousand) in comparison withthe book value of the land after the revaluation.

17. CAPITAL ADEQUACY REQUIREMENTS
In Japan, securities companies are subjected to risk-based capital adequacy rules established andadministered by the Financial Services Agency. Securities subsidiaries report their capital adequacy ratio
as defined pursuant to these rules. The authorities will take certain administrative measures if such ratio
declines below 140% . Capital adequacy ratios of Okasan Securities Co., Ltd. are 359.7% and 355.6% at
March 31, 2013 and 2012, respectively.

29

18. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Major elements of selling, general and administrative expenses for the years ended March 31, 2013 and2012 are summarized as follows:

Commissions and brokerage
Employees' compensation and benefits
Occupancy and rental
Data processing and office supplies
Depreciation and amortization
Taxes other than income taxes
Provision for doubtful accounts
Other

Millions of yen
2013
2012
10,967¥
10,30430,042
27,643
5,801
6,037
5,148
5,306
3,964
3,939
620
537
38
(6)
2,440
2,555
59,020¥56,315¥¥

Thousands of
U.S. dollars
2013$
116,608
319,426
61,68054,73742,147
6,592
404
25,944$
627,538

19. OTHER COMPREHENSIVE INCOME
The reclassification adjustment and the related income tax effects allocated to each component of othercomprehensive income (loss) for the years ended March 31, 2013 and 2012 are as follows:
Thousands of
U.S. dollars
2013

Millions of yen
2013
2012

Net unrealized holding gain on other securities:
Arising during the year
Reclassification adjustment
Before tax amountTax benefit (expense)
Net-of-tax amount¥

11,843(343)
11,500(4,025)
7,475

Surplus on land revaluation:
Tax benefit
Foreign currency translation adjustments:
Arising during the year
Total other comprehensive income

¥

¥

(35)
(21)
(56)
60
4

$

125,922(3,647)122,275(42,796)
79,479

-

229

-

398

(30)

4,232

7,873

¥

203

$

83,711

20. PER SHARE INFORMATION(a) Net Income per Share
Basic net income per share, and reconciliation of the numbers and the amounts used in the basic net income
per share computations for the years ended March 31, 2013 and 2012 are as follows:
Yen
Basic net income per share¥

Net income
Net income not applicable to common shareholders
Net income applicable to common shareholders

¥
¥

30

2012
4.93

U.S. dollars
2013
$
0.77

Millions of yen
2013
2012
14,308¥984
14,308¥984

Thousands of
U.S. dollars
2013$
152,132$
152,132

2013
72.22

¥

Number of shares(Thousand)
2013
2012
Weighted average number of shares outstanding on which basic
net income per share is calculated

198,120

199,569(b) Net Assets per Share
Net assets per share, and reconciliation of the numbers and the amounts used in the net assets per sharecomputations at March 31, 2013 and 2012 are as follows:Yen
Net assets per share

Total net assets
Amount deducted from total net assets:
Minority interests
Net assets applicable to common stockholders¥

2013
566.192012
466.31

U.S. dollars
2013
$
6.02

¥

Millions of yen
2013
2012
133,572¥
112,016

Thousands of
U.S. dollars
2013$
1,420,223¥

21,408112,164$¥

19,556
92,460¥227,624
1,192,599

Number of shares(Thousand)
2013
2012
Number of shares outstanding at the end of year on which net
assets per share is calculated

198,102198,278

21. SUPPLEMENTARY CASH FLOW INFORMATION(a) Reconciliation between "Cash on hand and in banks" in the accompanying consolidated balance sheet and"Cash and cash equivalents" in the accompanying consolidated statement of cash flows at March 31, 2013
and 2012 are as follows:

Cash on hand and in banks
Time deposits that have maturities of over three months when
acquired
Cash and cash equivalents¥

Millions of yen
2013
2012
44,508¥45,898

Thousands of
U.S. dollars
2013$
473,238¥(4,968)39,540$¥(4,876)41,022(52,823)
42,0415(b) Assets and liabilities of Shinwa Securities Co., Ltd. which was merged with the consolidated subsidiary,
Marufuku Securities Co., Ltd. are as follows:
Millions of
yen
¥
2,905
209
¥
3,114
¥
1,349
15
¥
1,364

Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities

31

Thousands of
U.S. dollars$
30,8882,222
33,11014,343160$
14,503

22. COMMITMENTS AND CONTINGENCIESAt March 31, 2013 and 2012, the Company and certain subsidiaries have guaranteed approximately ¥87
million ( $925 thousand) and ¥108 million of employee mortgage loans to financial institutions, respectively.
If an employee defaults on his/her loan payments, the Company and/or certain subsidiaries are required toperform under the guarantee.

23. LEASES(a) Finance Lease
Acquisition cost, accumulated depreciation and net carrying amount of leased assets, if they had been
capitalized at March 31, 2013 and 2012 are as follows, which would have been reflected in the consolidatedbalance sheet if finance lease accounting had been applied to the finance leases currently accounted for as
operating leases:
Millions of yen
2013

2012

Acquisition cost
Accumulated depreciation
Net carrying amount

Furniture
andFixtures
¥
227
220
¥
7

Acquisition cost
Accumulated depreciation
Net carrying amountThousands of U.S. dollars
2013
Furniture
andFixtures
SoftwareTotal$
2,413 $
- $
2,413
2,339
2,339
$
74 $
- $
74

Software
¥
¥

Total
227
220
¥
7
¥

Furniture
andFixtures
¥
564
489
¥
75

Software
360
344
¥
16
¥

Total
924
833
¥
91
¥

* Furniture and fixtures is classified as a property and equipment and software is classified as an intangible
asset in the accompanying consolidated balance sheet.
Future minimum payments required under finance leases at March 31, 2013 and 2012 are as follows:

Due within one year
Due after one year¥¥

Millions of yen
2013
2012
8
¥
94
8
8
¥
102

Thousands of
U.S. dollars
2013
$
85
$
85

Lease payments, depreciation equivalents and interest expense equivalents for the years ended March 31,
2013 and 2012 are as follows:

Lease payments
Depreciation equivalents
Interest expense equivalents¥

Millions of yen
2013
2012
89
¥
241
77
215
2
9

Thousands of
U.S. dollars
2013
$
946
819
21

Depreciation equivalents and interest expense equivalents are computed by the straight-line method andthe interest method, respectively.

32

(b) Operating Lease
Future minimum lease payments required under noncancellable operating leases as of March 31, 2013 and2012 are as follows:

Within one year
Over one year¥¥

Millions of yen
2013
2012
788
¥
556
2,138
2,043
2,926
¥
2,599

Thousands of
U.S. dollars
2013
$
8,378
22,733$
31,11124.	FINANCIAL INSTRUMENTS
Conditions of Financial instruments(1) Management policy
The Company and subsidiaries (the "Group") primary engages in financial instruments trading business,
which include trading in securities, brokerage for trading in securities, underwriting and distribution of
securities, public offering and secondary distribution of securities and private offering of securities. For
the above mentioned business, the Group uses its own resources and finances funds through bank loans
and call money etc.
The Group makes short-term deposits and loans for margin transaction, and operates securities trading
for the Group own accounts for fund management purposes.
Regarding the trading business, the Group works to do brokerage for trading in securities smoothly andcontribute to a sound market system in an Exchange transaction, and works to make fair prices andtransact smoothly in a Non-Exchange transaction.
Regarding the derivative financial instruments, the Group uses interest rate swaps to hedge futurefluctuations of interest rates and does not enter into interest rate swaps for trading or speculative
purposes.
(2) Financial instruments and risks
The main financial assets of the Group consist of cash on hand and in banks, cash segregated as deposits
for customers and others, trading assets, receivables on margin transactions, receivables on collateralized
securities transactions and investment securities.
The cash in banks are exposed to credit risk of banks. Most of cash segregated as deposits forcustomers and others are cash segregated as deposits for customers, and are segregated from the Groupown assets and trusted to banks in accordance with the Japanese Financial Instruments and Exchange
Law. The trusted funds are secured by the Trust Act.
Trading position is made for meeting customers' various needs, complementing the market and hedging
the position. Such trading involves market and counterparty risks which possibly effect on the financial
position of the Group. Market risk is the risk arising from future changes in the market values of
securities, interest rates and foreign currency exchange rates, and counterparty risk is the risk arisingfrom default by the counterparty.
Receivables on margin transactions consist of loans receivable from customers and cash deposits as
collateral for securities borrowed from securities finance companies, and are exposed to credit riskof counterparties. Receivables on collateralized securities transactions consist of cash collateral for
securities borrowed, and are exposed to counterparty risk. Investment securities are exposed to issuer's
credit risk and market risk.
The main financial liabilities of the Group consist of trading liabilities, payables on margin transactions,payables on collateralized securities transactions, deposits received, guarantee deposits received andborrowings.
Payables on margin transactions consist of borrowings from securities finance companies and proceedsfrom securities sold for customers' accounts. Payables on collateralized securities transactions consist of
cash collateral for securities loaned and are received as collateral for a loan of bonds such as government
bonds. Deposit received is temporary unsettled amount arising from transaction with customers.
Guarantee deposits received is deposit received for margin transactions from customers. Part offinancial liabilities, such as borrowings, are exposed to liquidity risk that is the risk for the Group not to33

make a payment on due date. The borrowings with variable interest rate are exposed to interest rate
fluctuation risk.
The Group uses derivative financial instruments as part of asset and liability management. For trading
purpose, the Group uses derivatives listed on exchange such as stock index futures and bond futures,
as well as over-the-counter derivatives such as forward foreign exchange transactions. For non-trading
purpose, the Group uses interest rate swaps. Interest rate swaps are used to hedge future cash flow
fluctuation arising from interest rate fluctuations on the borrowings. The difference in amounts to be
paid or received on interest rate swaps is recognized over the life of the agreements as an adjustment
to interest expense, if the agreements meet certain hedging criteria ("exceptional accounting method").
Interest rate swaps are exposed to interest rate fluctuation risk, however, counterparties are limited to
the lender.
(3) Financial instruments risk management
The Group maintains appropriate risk management and control measures in order to maintain the Groupfinancial stability and to effectively use the Group business resources.
The Company controls its purchases, sales and market risk of investment securities in accordance withinvestment securities management rules.
Okasan Securities Co., Ltd., our core firm, controls market fluctuation risk principally through position
limits, and counterparty risk principally through credit limits by each financial instrument. Primarily,
trading department checks the position and the gain or loss. Secondarily, risk control department
ascertains the position and the assessed risks reported by the trading department, and supervise theposition.
Proprietary position at every month end is stress tested based on the scenario of 10% decrease instocks and 100 basis points increase in interest rates for bonds, and effect of an expected loss on capital
adequacy ratio is reported to Financial Service Agency. The stress test indicates that the expected lossis ¥1,145 million ( $12,174 thousand) as of March 31, 2013.
In order to reduce the risks, receivables on margin transactions are controlled by daily credit
management through setup of inception criteria for margin transactions and limits for open interest,
deposits reception when market fluctuates in accordance with customer management rules. Liquidity
risk is controlled based on fund management plan in accordance with liquidity risk management rules.
The Group also makes contingency plan to mitigate liquidity crisis.
Securities subsidiaries other than Okasan Securities Co., Ltd. also maintain appropriate risk controls.
(4) Supplemental explanation regarding fair value of financial instruments
The contract amount of the derivative transactions does not represent the risk of the derivativetransactions.
Fair value of financial instruments
The carrying amounts on the consolidated balance sheet, fair value, and differences as of March 31, 2013
and 2012 are as follows.
Financial instruments, of which it is extremely difficult to measure the fair value, are not included. (Pleasesee"(2) Financial instruments of which the fair value is extremely difficult to measure".)34

Millions of yen
2013
Carrying
value

2012

Fair value

Differences¥¥

Carrying
value

Fair value

Differences¥¥

Assets:Cash on hand and in banks¥

Cash segregated as deposits forcustomers and others

44,50844,508-¥ 45,898

45,898-65,341

65,341-42,75042,750-

Trading securities

277,786

277,786-

185,638

185,638-

Available-for-sale securities

29,74929,749-17,49017,490-

Trading assets, short-term
investments and investment securities

Receivables arising from unsettled
trades

20,237

20,237----

Receivables on margin transactions

55,33555,335-33,53333,533-

Receivables on collateralized securities
transactions

185,257

185,257-

186,087

186,087

-

4,203

4,203

-

3,475

3,475

-

¥

682,416¥ 682,416¥-¥ 514,871¥

514,871¥¥

159,553¥ 159,553¥-¥ 152,251¥

152,251

¥

-

-

-

4,058

4,058

-

Payables on margin transactions

19,33919,339-16,172

16,172-

Payables on collateralized securities
transactions

131,651

131,651-

61,36761,367-

Short-term guarantee deposits
Total

-

Liabilities:
Trading liabilities
Trading securities
Payables arising from unsettled trades-

Deposits received

29,98729,987-

18,33818,338-

Guarantee deposits received

33,34833,348-22,99622,996-

Short-term borrowings

176,024

176,036

12

136,168

136,194

26

Long-term borrowings

11,575

11,683108

13,47813,640162¥ 561,597¥

120¥ 424,828¥

425,016

¥

188

¥

¥

-

¥

¥

13

¥

-

Total

¥

561,477

Derivative transactions

¥

54

54

35

13

Thousands of U.S. dollars
2013
Carrying
value

Fair value

Differences

Assets:Cash on hand and in banks$

Cash segregated as deposits forcustomers and others

473,238$

473,238$-

694,747

694,747

Trading securities

2,953,599

2,953,599-

Available-for-sale securities

316,311316,311-

Receivables arising from unsettled
trades215,173

215,173-

Receivables on margin transactions

588,357

588,357-

Receivables on collateralized securities
transactions

1,969,771

1,969,771-

44,68944,689-$ 7,255,885$ 7,255,885$-$ 1,696,470$ 1,696,470$-

Payables arising from unsettled trades

205,625

205,625-

Payables on margin transactions

1,399,798

1,399,798-

Trading assets, short-term
investments and investment securities

Short-term guarantee deposits
Total
Liabilities:
Trading liabilities
Trading securities

Payables on collateralized securities
transactions
Deposits received

-

-

-

318,841

318,841-

Guarantee deposits received

354,577354,577-

Short-term borrowings

1,871,600

1,871,728

128

Long-term borrowings

123,073

124,221

1,148

Total

$ 5,969,984$ 5,971,260

$

1,276

Derivative transactions

$

$

$

-

574

574

* Derivative receivables and payables are on net basis. Items that are net payables are shown in parenthesis.

(1) Fair value measurement of financial instruments
Assets:Cash on hand and in banks, Cash segregated as deposits for customers and others, Receivables arising fromunsettled trades, Receivables on margin transactions, Receivables on collateralized securities transactions andShort-term guarantee deposits
The carrying amount approximates fair value because of the short maturity of these instruments.
Trading assets, short-term investments and investment securities
The carrying amount approximates fair value because the carrying amount of equity securities, debt
securities and beneficiary certificates is calculated by quoted market price. Please see note 4. TRADINGASSETS AND LIABILITIES and see note 7. SECURITIES FOR NON-TRADING PURPOSES for
information by category.

36

Liabilities:
Trading liabilities
The carrying amount approximates fair value because the carrying amount of equity securities, debt
securities and beneficiary certificates is calculated by quoted market price. Please see note 4. TRADINGASSETS AND LIABILITIES for information by category.
Payables on margin transactions, Payables on collateralized securities transactions, Deposits received,
Guarantee deposits received and Short-term borrowings
The carrying amount approximates fair value because of the short maturity of these instruments. Fairvalue of current installments of long-term borrowings included in short-term borrowings is calculated as
below. (See Long-term borrowings.)
Long-term borrowings
The carrying amount of long-term borrowings with variable interest rate approximates fair value because
the fair value is reflected the fluctuation of interest market in a short period and credit status of theCompany does not change so much from when the Company borrowed. Fair value of long-term borrowings
with fixed interest rate is based on the present value of future cash flows of interest and principal
payments discounted using the current borrowing rate for similar borrowings of a comparable maturity.
Fair value of certain long-term borrowings with interest rate swaps for which exceptional accounting
method applied are based on the present value of future cash flows of interest and principal payments
discounted using the current borrowing rate for similar borrowings of a comparable maturity.
Derivative Transactions:
Please see note 25. DERIVATIVES.
(2) Financial instruments of which the fair value is extremely difficult to measure
Thousands of
U.S. dollars

Millions of yen
2013
Unlisted equity securities¥

Investments in limited partnership and similar partnership

3,504

2012
¥

136

Total

¥

3,640

2013

4,813

$

37,257$38,703

171
¥

4,984

1,446

(3) Projected future redemption of monetary claim and securities with maturities
March 31, 2013
Millions of yen
Due after
one yearthrough fiveyears

Due within
one year
Cash on hand and in banks¥

Cash segregated as deposits for customers
and others

44,508¥-Due after
five years
through ten
years
¥

-

Due after
ten years¥-

65,341

-

-

-

3,000

300

-

-

Trading assets, short-term investments andinvestment securities:
Available-for-sale securities withmaturities:
Debt securities:
Government bonds

201

569

5

-

Receivables on margin transactions

Other

55,335---

Receivables on collateralized securities
transactions

185,257

-

-

-

4,203

-

-

-

Short-term guarantee deposits¥

357,845

37

¥

869

¥

5

¥

-

Thousands of U.S. dollars
Due after
one yearthrough fiveyears

Due within
one year
Cash on hand and in banks$

473,238

Cash segregated as deposits for customers
and others$

Due after
five years
through ten
years

-

694,747-

31,8982,138

Receivables on margin transactions
Receivables on collateralized securities
transactions$

Due after
ten years

-

$

-

-

-

3,190

-

-

6,050

53

-

588,357---

1,969,771---

44,689---Trading assets, short-term investments andinvestment securities:
Available-for-sale securities withmaturities:
Debt securities:
Government bonds
Other

Short-term guarantee deposits$

3,804,838

$

9,240

$

53

¥

-

March 31, 2012
Millions of yen
Due after
one yearthrough fiveyears

Due within
one year
Cash on hand and in banks¥

Cash segregated as deposits forcustomers and others

45,898¥-Due after
five years
through ten
years
¥

-

Due after
ten years¥-

42,750

-

-

-

3,300

300

-

-

Trading assets, short-term investments
and investment securities:
Available-for-sale securities withmaturities:
Debt securities:
Government bonds

268

398

61

-

Receivables on margin transactions

Other

33,533---

Receivables on collateralized securities
transactions

186,087

-

-

-

3,476

-

-

-

Short-term guarantee deposits¥

315,312

38

¥

698

¥

61

¥

-

(4) The annual maturities of the long-term debt and other interest-bearing debt
March 31, 2013

Short-term borrowings
Long-term borrowings
Lease liabilities
Borrowings from securities financecompanies
Total

Short-term borrowings
Long-term borrowings
Lease liabilities
Borrowings from securities financecompanies
Total

Millions of yen
Due after Due after
Due after Due afterDue
one year two years three years four years
withinthroughthroughthrough through five Due after
one year two years three years four years
years
five years¥ 172,362 ¥
- ¥
- ¥
- ¥
- ¥
3,663
5,320
6,255
448
326
277
193
60
4
9,276
¥ 185,749 ¥

5,646 ¥

6,532

193 ¥

¥

60 ¥

4

Thousands of U.S. dollars
Due after Due after
Due after Due afterDue
one year two years three years four years
withinthroughthroughthrough through five Due after
one year two years three years four years
years
five years$ 1,832,664 $
- $
- $
- $
- $
38,94756,566
66,507
4,763
3,466
2,945
2,052
638
43
98,629$ 1,975,003 $60,032 $69,452$

2,052 $

638 $43March 31, 2012

Short-term borrowings
Long-term borrowings
Lease liabilities
Borrowings from securities financecompanies
Total

Millions of yen
Due after Due after
Due after Due afterDue
one year two years three years four years
withinthroughthroughthrough through five Due after
one year two years three years four years
years
five years¥ 134,233 ¥
- ¥
- ¥
- ¥
- ¥
1,935
3,622
4,151
5,705
445
311
186
136
52
11
4,300
¥ 140,913 ¥

3,933 ¥

4,337¥

5,841 ¥* Borrowings from securities finance companies are deemed to be settled within one year.

39

52 ¥

11

25. DERIVATIVES
Derivatives utilized for trading purposes
The contract or notional amounts and fair value of derivative financial instruments for trading purposes
held at March 31, 2013 and 2012 are summarized as follows:(1) Stocks
Millions of yen
2013
Contract
or notionalamounts Fair value
Stock index futures:
Written
Purchased
Stock index options:
Written
Purchased
Over-the-counter stock options:
Written
Purchased¥

Valuation
gain (loss)

3,191 ¥
2,131

(2) ¥
1

(2)
1

9
8

9
8

3
2

4
4
¥

2012
Contract
or notionalamounts Fair value¥

Valuation
gain (loss)

3,163 ¥
3,166

(4) ¥
(11)

(4)
(11)

(0)
0

-

-

-

(1)
2
(0)

3
1

2
2

1
1
(13)

¥

Thousands of U.S. dollars
2013
Contract
or notional
Valuationamounts Fair value gain (loss)
Stock index futures:
Written
Purchased
Stock index options:
Written
Purchased
Over-the-counter stock options:
Written
Purchased$

33,92922,658

$

(21)
11

$

(21)
11

96
85

96
85

(0)
0

31
21

42
42

(11)
21
(0)

$

The fair value of stock index futures and stock index options is computed using prices on the market. The
fair value of over-the-counter stock options is a reasonable and fair price which is computed based on fairvalue of underlying securities, volatility and interest.
Gain or loss on deemed settlement is disclosed in the "Fair value" column of stock index futures above.

40

(2) Bond
Millions of yen
2013

2012

Contract
or notionalamounts

Fair value¥¥

Valuation
gain (loss)

Contract
or notionalamounts

Fair value

Valuation
gain (loss)

¥

1

¥

¥

¥

¥

(3)

Bond futures:
Written
Purchased

1,310

1

5,095

(4)

(4)

-

-

8,654

8

8

¥

8

Thousands of U.S. dollars
2013
Contract
or notionalamounts

Fair value$$

Valuation
gain (loss)

Bond futures:
Written
Purchased

13,92911

54,173

$

11

(43)

(43)
$

(32)

The fair value of bond futures is computed using prices on the market. Gain or loss on deemed settlement isdisclosed in the "Fair value" column above.
(3) Foreign exchange
Millions of yen
2013

2012

Contract
or notionalamounts

Fair value¥¥

Valuation
gain (loss)

Contract
or notionalamounts

Fair value

Valuation
gain (loss)

¥

¥

¥

¥

Foreign exchange margin
trading:
Written:

312

(0)

(0)

-

-

-

Forward foreign exchange:
Written:Australian dollar

2,121

17

17

379

4

4

South Africa Rand

1,033

14

14

512

11

11

Mexican Peso

997

8

8

162

2

2

Russian ruble

876

14

14

-

-

-

Turkish lira

523

3

3

-

-

-

U.S. dollar

238

3

3

141

1

1

Other

226

2

2

116

1

¥

41

61

1
¥

18

Thousands of U.S. dollars
2013
Contract
or notionalamounts

Fair value$$

Valuation
gain (loss)

Foreign exchange margin
trading:
Written:

3,317

(0)

$

(0)

Forward foreign exchange:
Written:Australian dollar

22,552

181

181

South Africa Rand

10,984149

149

Mexican Peso

10,601

85

85

Russian ruble

9,314

149

149

Turkish lira

5,561

32

32

U.S. dollar

2,531

32

32

Other

2,403

21

21
$

649

The fair value of foreign exchange margin trading is computed using prices on the market. The fair value of
forward foreign exchange is based on the difference between the present value of future cash flows of receipt
amount and the present value of future cash flows of payment amount. Gain or loss on deemed settlement isdisclosed in the "Fair value" column of forward foreign exchange above.
Derivatives utilized for non-trading purposes
Derivative transactions to which hedge accounting are applied at March 31, 2013 and 2012 are summarized
as follows:
Contract or notional amounts
Thousands of
U.S. dollars

Millions of yen
Nature of transaction
Interest rate swaps:
Variable rate received for
fixed rate

2013

Hedged items
Long-term
borrowings

¥

2012

7,500

¥

7,500

2013

$

79,745*1	Hedge accounting method is the exceptional accounting method which is the difference in amounts
to be paid or received on interest rate swaps being recognized over the life of the agreements as an
adjustment to interest expense.
*2	Fair value of derivative financial instrument is included in fair value of the long-term borrowings ashedged items for certain long-term borrowings for which interest rate swap contracts are used to hedge
the interest rate fluctuations.
26. INVESTMENT AND RENTAL PROPERTY"Accounting Standard for Disclosures about Fair Value of Investment and Rental Property" (ASBJ
Statement No. 20, November 28, 2008) and its "Guidance on Accounting Standard for Disclosures about Fair
Value of Investment and Rental Property" (ASBJ Guidance No. 23, November 28, 2008) require to disclose
fair value of investment and rental property in the notes to financial statements.
The Company and certain consolidated subsidiaries own their rental office buildings, land etc (hereafter"rental property"). Income from the rental property is ¥155 million ( $1,648 thousand) and ¥171 million forthe years ended March 31, 2013 and 2012, respectively.

42

The amounts recognized in the consolidated balance sheet and fair values related to the rental property are
as follows:
Thousands of
U.S. dollars
2013

Millions of yen
2013
2012

Consolidated balance sheet amount:
Balance at beginning of the year
Increase/(decrease)
Balance at end of the year¥

Fair value

¥

¥

5,859
(321)
5,538

$

¥

5,953
(94)
5,859

$

62,297(3,413)58,884

¥

5,420

¥

5,422

$

57,629The above fair value is based on real-estate appraisals, and is estimated by the Company.
27. BUSINESS COMBINATIONSMarufuku Securities Co., Ltd. ("Marufuku Securities") acquired 3,056 thousand shares (82.1% of issued
shares) of Shinwa Securities Co., Ltd. ("Shinwa Securities") in July 2012. From that time, both companies
harmonized their investment information and merchandises and organized joint lecture meetings and joint
internal training sessions, and implemented measures for customer service improvement.
Marufuku Securities has branch offices around Niigata prefecture mainly in Nagaoka City. Shinwa
Securities does business and has a firm establishment in Niigata City. Through the merger of two
companies, both companies can operate more effectively and provide more high quality services tocustomers.
Business combination date was January 1, 2013 and under this business combination, Marufuku Securities
was the succeeding company and Shinwa Securities was the absorbed company. This business combination
was accounted for as a "transaction under common control" in accordance with the "Accounting Standards
for Business Combinations" (ASBJ Statement No. 21, December 26, 2008) and the "Guidance on AccountingStandard for Business Combinations and Accounting Standard for Business Divestures" (ASBJ Guidance No.
10, December 26, 2008).
28. BALANCES AND TRANSACTIONS WITH RELATED PARTY
The Company' officer and the close relatives have a majority equity ownership in Santo Co., Ltd. at March
31, 2013 and 2012.
Transactions between the Company and Santo Co., Ltd. for the years ended March 31, 2013 and 2012 aresummarized as follows:
Thousands of
U.S. dollars
2013

Millions of yen
2013
2012
Transactions:Purchases of shares of associated company

¥

257

¥

166

$

2,733

Transactions between the consolidated subsidiary of the Company and Santo Co., Ltd. for the year ended
March 31, 2012 are summarized as follows:
Millions of yen
Transactions:
Loan of securities

¥

43

558

29. SEGMENT INFORMATION"The Accounting Standard for Disclosures about Segments of an Enterprise and Related Information"(ASBJ Statement No.17, March 27, 2009) and "the Guidance on Accounting Standard for Disclosures about
Segments of an Enterprise and Related Information" (ASBJ Guidance No.20, March 21, 2008) adopt the
management approach. Disclosures about segments of an enterprise and related information should provide
proper information on the nature of various business activities in which it engages and the economic
environments in which it operates.
The reported segments of the Company are the business units for which the Company is able to obtainrespective financial information separately in order for the Board of Directors to conduct periodic
investigation to determine distribution of management resources and evaluate their business results.
"Securities business", "Asset management business" and "Support business" are the Company's reported
segments.
"Securities business" renders trading and brokerage for trading in securities, underwriting and distributionof securities, public offering and secondary distribution of securities and private offering of securities.
"Asset management business" renders investment management and investment advisory. "Support
business" renders information processing services, administrative support services, custodianship andtemping services, etc.
Segment operating revenues, income, assets, liabilities and others are calculated by accounting methods
similar to those employed to prepare the accompanying consolidated financial statements.
Segment income is calculated based on operating income in the consolidated statement of income.
Intersegment revenues and transfer are based on arms-length transactions.
Operating revenues, income, assets, liabilities and others by reported segments
The reported segment information for the Company and its consolidated subsidiaries for the years ended
March 31, 2013 and 2012 are summarized as follows:
Millions of yen
2013

Securities

Reported segments
Asset
Supportmanagement

Total

Adjustments

Consolidated

Operating revenues:
Revenues from third
parties¥Intersegment revenues

68,050

¥

4,821

9,565

¥

-

1,041

¥

9,106

78,656¥

13,927

8¥(13,927)

78,664-

Total¥

72,871

¥

9,565

¥

10,147¥

92,583¥(13,919)¥

78,664

Segment income¥

15,230

¥

569

¥

1,243

¥

17,042

¥

1,074

¥

18,116

Segment assets¥

701,058¥

13,713¥

26,244¥

741,015¥(17,631)¥723,384

Segment liabilities¥

614,574

¥

1,595

¥

15,019¥631,188¥(41,376)¥

589,812

¥

1,166

¥

36

¥

2,692

¥

3,894

¥

70

¥

3,964

Others:Depreciation
Financial income

2,633

-

5

2,638

(422)

2,216

Financial expenses

1,858

-

-

1,858

(330)

1,528

Increase in property
and equipment andintangible assets

443

5

2,529

2,977

513

3,490

44

Securities
Operating revenues:
Revenues from third
partiesIntersegment revenues
Total

¥

50,461
4,872
55,333

Segment income¥

Segment assets
Segment liabilities
Others:Depreciation
Financial income
Financial expenses
Increase in property
and equipment andintangible assets¥

Millions of yen
2012
Reported segments
Asset
SupportTotal
management

Adjustments

Consolidated

¥

¥

¥

¥

9,441
9,441

873

¥

¥

526,059

¥

¥

¥

1,155
8,590
9,745

412

¥

¥

12,088450,840

¥

1,281
2,450
1,967

¥

600

¥

¥

61,057
13,46274,519¥8(13,462)(13,454)¥

61,06561,065

1,063

¥

2,348

¥

804

¥

3,152

¥

24,901¥

563,048¥(6,659)¥556,389

1,056¥

14,944¥

466,840¥(22,467)¥

444,373

44
-

¥

2,508
-

¥

3,833
2,450
1,967

¥

106
(462)
(369)

¥

3,939
1,988
1,598

87

Securities

¥

1,698

2,385

88

2,473

Thousands of U.S. dollars
2013
Reported segments
Asset
Adjustments
SupportTotal
management

Consolidated

Operating revenues:
Revenues from third
partiesIntersegment revenues
Total

$

723,551
51,260774,811$

101,701
101,701$

11,06996,821
107,890$

836,321148,081984,402$85(148,081)(147,996)$

836,406
836,406

Segment income$

161,935

$

6,050

$

13,217$

181,202$

11,419$

192,621

Segment assets$ 7,454,099$

145,805$

279,043$ 7,878,947$(187,464)$ 7,691,483

Segment liabilities$ 6,534,545$

16,959$159,692$ 6,711,196$(439,936)$ 6,271,260

$

$

383
-

$

28,623
53
-

$

$

744
(4,487)(3,508)Others:Depreciation
Financial income
Financial expenses
Increase in property
and equipment andintangible assets

12,39827,996
19,7554,710

53

26,89041,40428,04919,75531,653

5,455$

42,14823,562
16,247
37,108

1. (1) Components of "Adjustments in segment income" are as follows:

Elimination of intersegment transactions
Unallocated company-wide expenses¥¥

Company-wide expenses are holding company's expenses.

45

Millions of yen
2013
2012
3,401 ¥
3,002
(2,327)(2,198)1,074 ¥
804

Thousands of
U.S. dollars
2013$
36,161(24,742)$
11,419(2) Components of "Adjustments in segment assets" are as follows:

Elimination of intersegment balances
Unallocated company-wide assets¥¥

Millions of yen
2013
2012
(64,092)¥(38,633)
46,461
31,974(17,631)¥(6,659)Thousands of
U.S. dollars
2013$(681,467)
494,003$(187,464)

Company-wide assets are holding company's assets.
(3) Components of "Adjustments in segment liabilities" are as follows:
Thousands of
U.S. dollars
2013

Millions of yen
2013
2012
Elimination of intersegment balances¥

Unallocated company-wide liabilities(57,468)¥

16,092¥(41,376)(38,174)$(611,037)$(439,936)

15,707¥(22,467)

171,101

Company-wide liabilities are holding company's liabilities.
2. Segment income is adjusted with operating income in the consolidated statement of income.
Related information
1.	Information by products and services
Disclosures are omitted because operating revenues from third parties of a single product and service
are over 90% of operating revenues in the consolidated statement of income.
2.

Geographical information(1)	Operating revenues
Disclosures are omitted because operating revenues from customers in Japan are over 90% of
operating revenues in the consolidated statement of income.
(2)	Property and equipment
Disclosures are omitted because property and equipment located in Japan are over 90% of property
and equipment in the consolidated balance sheet.

3.	Information by major customers
Disclosures are omitted because no particular third party whose operating revenues are over 10% of
operating revenues in the consolidated statement of income exists.
Information of impairment loss on fixed assets by reported segments
Not applicable
Negative goodwill incurred by reported segments
Negative goodwill of ¥396 million ( $4,211 thousand) and ¥279 million which are not allocated to eachreported segments are reported for the years ended March 31, 2013 and 2012, respectively. The negative
goodwill occurred when the Company acquired additional shares of its subsidiary.

46

47

REFERENCE DATA

48

Okasan Securities Co., Ltd.
Balance Sheet ─ March 31, 2013

Thousands of
U.S. dollars

Millions of yen
2013

2012

2013

ASSETS
Current assets:
Cash on hand and in banks¥

11,928¥14,159$126,826

Cash segregated as deposits for customers and others

29,363

16,062

312,206

Trading assets

277,375

185,657

2,949,229

Receivables arising from unsettled trades

19,275-204,944

Receivables on margin transactions

50,16031,109533,333

Receivables on collateralized securities transactions

185,257

186,087

1,969,772

Short-term guarantee deposits

3,281

2,973

34,886

Deferred income taxes

1,405

642

14,939Other current assets

2,780

2,494

29,559Allowance for doubtful accounts

(14)

(3)

(149)

Total current assets

580,810439,180

6,175,545

1,944

2,149

20,670

365

417

3,881

411

447

4,370

Property and equipment, net of accumulated depreciation
Intangible assets, net
Investments and other assets:
Investment securities
Securities in associated companies

211

211

2,243

Long-term guarantee deposits

3,058

3,539

32,515

Deferred income taxes

1,780

1,678

18,926

Other

1,285

1,479

13,663

Allowance for doubtful accounts(926)(1,071)(9,846)

5,819

6,283

61,871

Total investments and other assets
TOTAL

¥

49

588,938¥

448,029$

6,261,967

Okasan Securities Co., Ltd.
Balance Sheet ─ (Continued) ─ March 31, 2013
Thousands of
U.S. dollar

Millions of yen
2013

2012

2013

LIABILITIES AND NET ASSETS
Current liabilities:
Trading liabilities¥

Payables arising from unsettled trades

159,485¥

152,258$

1,695,747

-

4,803

-

Payables on margin transactions

18,022

15,146

191,621

Payables on collateralized securities transactions

131,650

61,367

1,399,787

Deposits received

19,417

11,829206,454

Guarantee deposits received

14,441

6,870

153,546

Short-term borrowings

158,940

123,465

1,689,952

Income tax payables

2,048

319

21,776

Other current liabilities

10,076

4,928

107,135

514,079

380,985

5,466,018

Long-term borrowings

7,725

7,900

82,137Retirement and severance benefits

5,160

4,845

54,865

Total current liabilities
Non-current liabilities:

Other non-current liabilities

1,012

1,139

10,760Total non-current liabilities

13,897

13,884

147,762

Financial instruments transactions reserve

914

809

9,718

528,890395,678

5,623,498

Total liabilities
Net assets
Shareholder's equity:
Common stock
Authorized − 240,000 shares
Issued − 100,000 shares in 2013 and 2012

5,000

5,000

53,163

Capital surplus

29,20029,200310,473

Retained earnings

25,852

18,159274,875

60,052

52,359638,511

(4)

(8)

(42)

60,04852,351

638,469

Total shareholder's equity
Accumulated other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities
Total net assets
TOTAL

¥

50

588,938¥

448,029$

6,261,967

Okasan Securities Co., Ltd.
Statement of Income ─ Year ended March 31, 2013
Thousands of
U.S. dollar

Millions of yen
2013

2012

2013

Operating revenues:
Commissions¥

Net gain on trading

37,541¥

23,865Interest and dividend income

29,234$

16,784399,160
253,748

1,673

1,537

17,78863,07947,555

670,696

Interest expense

1,396

1,440

14,843

Net operating revenues

61,683

46,115655,853

Selling, general and administrative expenses

47,43444,749504,349

Operating income

14,2491,366

151,504

Other income (expenses):Gain on sale of investment securities

60

102

638

Provision for financial instruments transactions reserve

(104)

(41)

(1,106)

Other, net

325

210

3,456

281

271

2,988

14,530

1,637

154,492

6,704

1,034

71,281(867)

65(9,219)

5,837

1,099

62,062

Income before income taxes
Income taxes:
Current
Deferred

Net income

¥

51

8,693

¥

538

$

92,430CORPORATE DATABOARD OF DIRECTORS(At July, 2013)(At July, 2013)

Company Name
OKASAN SECURITIES GROUP INC.

ChairmanSeiichi Kato

Date of Establishment
August 25, 1944

President
Tetsuo Kato

Head Office
1-17-6 Nihonbashi, Chuo-ku,
Tokyo 103-8268, Japan

Senior Managing Director
Hiroyuki Shinshiba
Kazuhiko Nonaka

Muromachi Head Office2-2-1 Nihonbashi Muromachi, Chuo-ku,
Tokyo 103-0022, Japan

Director
Kenichi Tanaka
Masanori Kanai
Hiroyuki Shindo

Phone Number+81-3-3272-2222

Statutory Auditors
Tetsumi Iwaki
Koichi Saku
Hirosuke Minami
Tokio Hiraragi
Yukihiro Asano
Takao Saga

Paid-in Capital
18,590 Million Yen
Subsidiaries
10 companies
Listed Stock Exchanges
Tokyo Stock Exchange
Nagoya Stock Exchange

ORGANIZATION CHART(At July, 2013)52