Ending March 31, 2015

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

6

Consolidated Balance Sheet

10

Consolidated Statement of Income

12

Consolidated Statement of Comprehensive Income

13

Consolidated Statement of Changes in Net Assets

14

Consolidated Statement of Cash Flows17

Notes to Consolidated Financial Statements

19

Independent Auditors' Report

51

Reference Data
Okasan Securities Co.,Ltd.

Non-Consolidated Balance Sheet

53

Non-Consolidated Statement of Income

55

Corporate Data

56

1

Consolidated Financial Highlights
Okasan Securities Group Inc. and consolidated Subsidiaries Years ended March 31, 2015
Thousands of
U.S.dollars (note)Millions of yen
2015

2014

(4/1/14 ～ 3/31/15)

2015(4/1/13 ～ 3/31/14)(4/1/14 ～ 3/31/15)

Operating revenues  …………………………

¥ 94,633¥ 101,386$ 787,493

Operating income ……………………………

26,29532,730218,815

Net income ……………………………………

14,10017,279117,334

Total assets ……………………………………

649,490

613,135

5,404,760

Net assets  ……………………………………

171,411

152,840

1,426,404

Per share of common stock

Yen

U.S.dollars(note)

Basic net income  ……………………………

¥ 71.20¥ 87.24$ 0.59Cash dividends applicable to the year  ……

25.00

25.00

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 31, 2015, which was ¥120.17 to U.S.$1.

Operating revenues
120

Operating income

Net income

35

Net assets

20

200

15

150

10

100

5

50

30

100

25

80

20
60
15
40

10

20

5

'11 '12 '13 '14 '15'11 '12 '13 '14 '15'11 '12 '13 '14 '15

2'11 '12 '13 '14 '15

Management Policy
Okasan Securities Group Inc. and Consolidated Subsidiaries
1. Basic management policy for the Company
Okasan Securities Group Inc. manages a corporate group comprised of itself, a holding company, and theGroup’s Japanese and overseas consolidated subsidiaries. The Group strives to strengthen enterprise value ina sustained manner through the provision of investment services centering on the securities business and asset
management.

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
ROE of 10% as a business objective.

4. Medium and long-term management strategy
With respect to policies for making significant progress ahead of the 95th and 100th anniversaries of its
establishment, the company has formulated and is currently implementing a medium-term business plan for
the three-year period from April 2014 to March 2017. Under this medium-term business plan and based on
its “Customer First” management philosophy, the company intends to increase enterprise value as a body of
professional investment advisors and to improve its management structure to ensure stable growth in any
environment.
In the consolidated fiscal year under review, the first year of the business plan, new presidents were appointed
at nine of the eleven companies in the Group, including Okasan Securities Group Inc. The new management
system reinforces group strengths. In March, to build networks transcending conventional group demarcations,memorandums of agreement concerning operational and capital alliances were signed with two companies
within the same industry. The Group will continue to qualitatively strengthen its sales capabilities and strive toenhance its operating foundations based on the pursuit of the customer’s interests.
Okasan Securities Group medium-term business plan
There will be no change in the management philosophy emphasizing the "Customer First" that the company
has followed since it was established. Different customers certainly have different needs, and customer
satisfaction means a variety of things, but we see the ultimate prioritization of the customer's interests byfocusing thoroughly on professionalism as our social mission.
To achieve this management philosophy, we train personnel to take "pride" in their work, and to create agroup of professionals formed from staff who do have such "pride."
As a result, we think it will be possible to improve Okasan Securities Group's enterprise value.
1. Period of plan
Three years starting April 2014 and ending March 2017
2. Management philosophy
Customer First In the role of professional advisors, we respond to a broad range of customer needs, and3

aim to put customer interests first.
3. Management objectives[Qualitative objectives](1) Aiming for a professional group of investment advisors.
(2) Being a company of even greater "pride" by thanks to satisfying work.
(3) Increase enterprise value as a result of (1) and (2) above, and thereby fulfil our responsibilities as alisted company.
[Quantitative objectives]
Achieve following numerical results as a result of pursuing customers' interests.
(1) Consolidated net assets of 200 billion yen (final year)(2) Consolidated ROE of 10% (consistently achieve)
By fully implementing the management philosophy and pursuing the management goals, the company aims toachieve as soon as possible before its 100th anniversary the goals of 1.0 million accounts and assets undercustody of ¥10trn.

5. Challenges the Company should address
From a global perspective, despite the global financial crisis, investment company assets have grown,
particularly at hedge funds. Their impact on financial markets has been amplified by the expansion ofderivatives and securitization products. With the financial economy far exceeding the real economy and with the
US moving away from monetary easing policies, uncertainty has grown with respect to future financial markets.
In Japan, the so-called “Abenomics,” the Abe administration’s package of policies, continues to lift the country
from its protracted period of deflation, boost corporate capital investment, and improve the outlook of individual
investors.
In this environment, the company sees an increasingly important societal role for the Group, who provides
optimal investment advice and financial products based on customer needs. The growing interest in investment
calls for efforts to build a strong brand in order to get support from a wide range of customers. The company will
formulate and implement various policies to this end. Policies granted special priority include reinforcing groupstrengths, strengthening governance, and qualitatively strengthening sales capabilities.
To reinforce group strengths, the company will expand its network of securities companies, pivoting on Okasan
Securities Co., Ltd. Strengthening governance is another key issue. The company is implementing policies
to continue improving the transparency of managerial decision-making and to strengthen control functions,
including modifying its structure to become a corporation with an Audit &Supervisory Committee meeting. To
qualitatively strengthen sales capabilities, under its “Customer First” management philosophy, the company willfurther develop and expand systems for rapidly and accurately responding to diverse investment needs, withthe goal of serving as a body of professional investment advisors. Based on these policies, the company will
strive to raise the enterprise value of the Group in a sustained manner.

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, theimportance of corporate governance is increasing. In response to this environmental change, we are 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 tospeed up the decision-making process and to enhance efficiency of the managerial and supervisory systems.

4(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 incorporationand 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 13 directors(including 5 Audit & Supervisory Committee Members), which enables it to make a quick
decision.
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 consists of 13
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 “Management Conference” to realize the planning of uniform and flexible management
strategies.
(3) Management monitoring structure
The structure of management monitoring is composed of five total Audit & Supervisory Committee Members,
including two statutory members and three outside directors. They make up the Audit & Supervisory Committee
and decide on auditing policies in accordance with laws and regulations and the company’s articles ofincorporation, based on the rules of Audit & Supervisory Committee Members. They will also work to formulate
audit opinions for the Audit & Supervisory Committee Members. Other member obligations include attendanceat meetings of the Board of Directors and other important meetings, interviews with directors (excluding
directors who are Audit & Supervisory Committee Members), and the duty to review important approval
documents in order to oversee decision-making by the Board of Directors and the state of business execution
by directors. In addition, Audit & Supervisory Committee Members work with independent auditors and thedivisions in charge of internal auditing to help ensure effective, appropriate audits. Okasan Securities Group
Inc. has entered into agreements with these five Audit & Supervisory Committee Members to curtail their
liabilities under Article 423, Paragraph 1 of the Companies Act, in accordance with Article 427, Paragraph 1 of
the Act, to the minimum level required under laws and regulations.
(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 six staff there. The auditing
division makes up an audit plan in each fiscal year, periodically implements an on-the-spot audit based on theplan and inspects documents when necessary. The results of auditing are reported to the Board of Directors
from the director in charge of auditing, in the form of the audit report.

5Operating and Financial Review
Okasan Securities Group Inc. and Consolidated Subsidiaries Years ended March 31, 2015

Ⅰ. Analysis of operating results
During the consolidated fiscal year under review, despite some slowing in the pace of improvement in personal
consumption, the overall Japanese economy maintained its course of recovery. Employment and the income environment improved, exports continued to recover, and capital investment registered moderate growth alongside
improved corporate earnings. At the same time, due to the impact of falling energy prices, the consumer priceindex (overall index excluding fresh food) decelerated to less than 0.5% year on year, excluding the impact of theconsumption tax hike.
In the forex market, a strong sense of deadlock in the dollar/yen rate persisted initially. From the latter part ofAugust, the yen began to depreciate against the dollar. Based on the Bank of Japan’s decision to implement additional easing in response to the Federal Reserve Board’s decision to end monetary easing in October, the yen’s
depreciation against the dollar accelerated still further. By March, the rate had risen temporarily to around ¥122/$.
Awareness of further monetary easing by the European Central Bank affected the euro-yen rate after the startof the new year, and that exchange rate ranged around ¥149/€ in early December. The yen had appreciated byMarch, when the European Central Bank began purchasing government bonds, falling to around ¥126/€.
The equity market at the start of the fiscal year went through a period of adjustments due to concerns about aslumping economy following the consumption tax hike. From the latter part of May, buying by domestic pension
funds underpinned stock prices and helped put the market on a course of recovery. Entering the second half ofthe year, selling increased at certain points due to apprehensions prompted by low global stock prices and overallanxiety concerning the economic outlook. However, additional easing by the Bank of Japan and expectations offurther policy development following the dissolution of the House of Representatives for a general election provided a tailwind. After the start of the new year, buying by overseas investors with a positive take on Japanese corporate reforms and other developments drove an increase in Japanese stocks. The Nikkei 225 ended the fiscal yearat ¥19,206.99, rising 29.5% over the year and breaking the ¥19,000-barrier for the first time in some fifteen years.
In the bond market, supported by monetary easing, yields declined moderately throughout the fiscal year. The decline in yields accelerated after the announcement of additional easing in October. In January, the 10-year government bond yield fell temporarily to a record-low of 0.195%. Any increase in yields thereafter remained limited, andthe 10-year government bond yield ended the fiscal year at 0.40%.
In this environment, Okasan Securities Co., Ltd., the core company in the Group, enhanced overseas alliances
through partnerships with an Australian securities company. It further strengthened its sales capabilities throughvarious initiatives, including opening the Nihonbashi Muromachi Branch, a new branch, with stronger links to head
office functions. At the same time, among other initiatives, Okasan Online Securities Co., Ltd., the Group’s specialist online brokerage, sought to improve services by upgrading order tools, enhancing the information provided toinvestors, and other means. Okasan Asset Management Co., Ltd. pursued flexible investment management in linewith market changes and provided timely information while pursuing growth in assets under management throughprompt provision of products tailored to investor needs.
Due to these efforts, the Group’s operating revenues in the consolidated fiscal year under review were ¥94,633
million (93.3% of the figure for the previous year), and net operating revenues were ¥93,403 million (93.4% of the
figure for the previous year). SG&A expenses were ¥67,108 million (99.8% of the figure for the previous year); operating income was ¥26,295 million (80.3% of the figure for the previous year); and net income was ¥14,100 million (81.6% of the figure for the previous year).

61. Fees and commissions received
Fees and commissions received stood at ¥63,342 million (90.5% of the figure for the previous year). The main
breakdown was as follows.
(1) Brokerage commissions
Average daily trading volume on the First Section of the Tokyo Stock Exchange (Japanese common shares) was
2,856 million shares (82.6% of the figure for the previous year), while turnover was ¥2,663.9 billion (92.3% of the
figure for the previous year). In this environment, equity brokerage commissions were ¥18,954 million (68.0% of
the figure for the previous year). Bond brokerage commissions were ¥7 million (42.4% of the figure for the previous year), and other brokerage commissions amounted to ¥529 million (85.3% of the figure for the previous year).
Total brokerage commissions were ¥19,490 million (68.4% of the figure for the previous year).
(2) Underwriting fees, selling concessions, and commissions on solicitation for sales of financial
instruments to specified investors and others
During the fiscal year under review, the area of equity finance featured contributions from large-scale public offerings reflecting gains in the equity market. Okasan Securities Co., Ltd. took part as lead manager in initial public
offerings. In bond underwriting, the company served as lead manager for municipal and corporate bonds and took
an active role in underwriting major industrial bonds and government-guaranteed bonds. As a result, commissions
on equity were ¥313 million (81.9% of the figure for the previous year), while commissions on bonds totaled ¥141
million (99.1% of the figure for the previous year). Total underwriting fees, selling concessions, and commissions
on solicitation for sale of financial instruments to specific investors and others amounted to ¥454 million (86.6% of
the figure for the previous year).
(3) Administrative charges on offering, selling and solicitation for sales of financial instruments tospecified investors, and other fees and commissions received
With regard to administrative charges on offering, selling, and solicitation for sales of financial instruments to specific investors, and other fees and commissions received, the majority of revenue was accounted for by investment
trust-related fees.
During the fiscal year, the company enjoyed strong sales of equity funds, which benefited from rising equity prices
associated with global quantitative easing; funds investing in high-yield instruments; and related funds focused on
the yen’s depreciation against the dollar, based on expectations that the US would raise interest rates. The company also introduced some new funds, including a fund investing in the JPX-Nikkei Index 400. Due to these developments, administrative charges on offering, selling, and solicitation for sales of financial instruments to specificinvestors totaled ¥25,392 million (99.8% of the figure for the previous year). Other fees and commissions received,
including trust fees on investment trusts, amounted to ¥18,006 million (116.0% of the figure for the previous year).

Fees and commissions
received
80

Fees and commissions received
Breakdown by category

Brokerage commissions
Equities

60

40

20

'11 '12 '13 '14 '15

30

2014<B>

Ratio(4/1/14 ～ 3/31/15)(4/1/13 ～ 3/31/14)<A>/<B>¥ 19,490¥ 28,512

68.4

18,95427,876

68.0

Bonds

7

16

42.4

Others

529

620

85.3

Underwriting fees and selling concessions

454

525

86.6

Equities

313

383

81.9

Bonds

141

142

99.1

Placement commissions

25,39225,431

99.8

Other commissions

18,006

15,523116.0¥ 63,342¥ 69,991

90.5

Total

Trading profits(Millions of yen except percentage)

2015<A>

7

(Millions of yen except percentage)

Breakdown by product

Equities

2015<A>

2014<B>

Ratio(4/1/14 ～ 3/31/15)(4/1/13 ～ 3/31/14)<A>/<B>¥ 19,575¥ 28,572

68.5

344

302

114.0
105.8

Fees and commissions
received

Investment trusts

42,26439,94280

Others

1,159

1,175

98.7

Total

¥ 63,342¥ 69,991

90.5

Bonds

60

2. Trading profits
40
The
US economy remained solid in the fiscal year under review. While expanded monetary easing by central

banks in Japan and Europe and the increasing ratio of risk assets included in domestic pension funds buoyed20
equitymarkets both in Japan and abroad, US equity brokerage volumes remained steady. Total profits on equity

trading were ¥16,328 million (107.2% of the figure for the previous year), and total bond trading profits were
¥11,837of the figure for the previous year). Total trading profits, including other trading profits of'11 '12million'13 '14(93.2%'15¥16 million (loss of ¥278 million the previous year), were ¥28,181 million (101.9% of the figure for the previousyear).
Trading profits
Trading profits

30

20

10

(Millions of yen except percentage)

2015<A>

2014<B>

Ratio(4/1/14 ～ 3/31/15)(4/1/13 ～ 3/31/14)<A>/<B>

Equities¥ 16,328¥ 15,236

107.2

Bonds

11,837

12,705

93.2

Others

16

-278

-

¥ 28,181¥ 27,663

101.9

Total

'11 '12 '13 '14 '15

3. Net financial income
Financial income decreased 20.6% year on year to ¥2,340 million, while financial expenses decreased 12.0% to¥1,230 million, so net financial income decreased 28.4% to ¥1,110 million.
4. Other operating income
Other operating income other than that related to the financial products transaction business and incidental operations declined 1.9% year on year to ¥770 million.
5. Selling, general and administrative expenses
Selling, general and administrative expenses decreased 0.2% year on year to ¥67,108 million, mainly because of
decrease in personnel expenses.
6. Other income (expenses)
The Company posted other expenses of ¥814 million, compared to other expenses of ¥1,149 million in the previous fiscal year.

87. Dividends
The company sees shareholder returns as a critical management issue. Its basic policy is to maintain a stable dividend while distributing profits in line with earnings.
Based on the policies above, the company will pay a dividend for the fiscal year of ¥25 per share.

Ⅱ . Analysis of financial position
1. Assets, liabilities and net assets
Consolidated total assets at fiscal year-end grew ¥36,355 million to ¥649,490 million year on year. This was
mainly due to increases of ¥19,601 million in receivables on collateralized securities transactions, ¥6,866 million in
cash segregated as deposits, ¥6,347 million in investment securities, and ¥6,116 million in cash and deposits.
Liabilities increased ¥17,784 million year on year to ¥478,079 million. This was mainly due a decline of ¥54,083
million in short-term borrowings, which offset increases of ¥45,433 million in payables on collateralized securities
transactions, ¥12,931 million in payables arising from unsettled trades, ¥10,304 in deposits received, and ¥3,788
million in payables on margin transactions.
Net assets increased ¥18,571 million year on year to ¥171,411 million. This was mainly due to increases of ¥9,250
million in retained earnings, ¥5,294 million in unrealized gains on available-for-sale securities, and ¥3,143 million
in minority interests.

2. Cash flows
Cash and deposits (“cash” hereafter) at the end of the consolidated fiscal year were ¥50,566 million, up ¥5,130
million year on year.
Each cash flow item and factors affecting it were as follows.
< Cash flows from operating activities >Cash inflows from operating activities were ¥64,275 million. This was mainly due to cash inflows from an increaseof ¥25,481 million in income before income taxes and minority interests, a change of ¥25,833 million in receivables on collateralized securities transactions and payables on collateralized securities transactions, and a changeof ¥10,997 million in trading products.
< Cash flows from investing activities >Cash outflows due to investment activities were ¥806 million. This was mainly due to cash inflows of ¥4,500 million from the sale of marketable securities and ¥3,137 million from the sale of investment securities and cash outflows of ¥3,400 million from the purchase of marketable securities and ¥2,636 million from acquisition of intangible
fixed assets.
< Cash flows from financing activities >Cash outflows due to financing activities were ¥58,898 million. This was mainly due to cash inflows of ¥6,000 million from long-term borrowings and cash outflows of a net change of ¥55,110 million in short-term borrowings,¥4,874 million from dividend payments, and ¥4,270 million from the repayment of long-term borrowings

9

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Balance Sheet ─ March 31, 2015
Thousands of
U.S. dollars(note 3)2015

Millions of yen
2015
ASSETS
Current assets:
Cash on hand and in banks (notes 10 and 21)¥
Cash segregated as deposits for customers and others
Trading assets (notes 4 and 10)
Receivables on margin transactions (note 5)
Receivables on collateralized securities transactions(note 6)
Short-term investments (note 7)
Deferred income taxes (note 11)
Other current assets
Allowance for doubtful accounts

55,58363,610216,338
58,273

2014¥

49,46756,744
213,987
61,604$

462,536
529,334
1,800,266
484,921

169,980
503
1,377
8,030
(14)

150,379
1,100
1,754
8,308
(17)

1,414,496
4,186
11,45966,822(116)

573,680

543,326

4,773,904

Property and equipment, net of accumulated depreciationof ¥12,429 million ($103,428 thousand) in 2015 and¥11,743 million in 2014 (note 10)18,961

19,077

157,785

Intangible assets, net

7,585

8,306

63,119Investments and other assets:
Investment securities (notes 7, 8 and 10)
Long-term guarantee deposits
Assets for retirement benefits (note 12)
Deferred income taxes (note 11)
Other
Allowance for doubtful accounts

42,049
3,393
994
1,445
3,049
(1,666)35,702
3,103
1,839
3,660
(1,878)349,91228,235
8,272
12,02525,372(13,864)

49,26442,426

409,952

Total current assets

Total investments and other assets
TOTAL

¥

See accompanying notes to consolidated financial statements.

10649,490¥

613,135$

5,404,760

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Balance Sheet ─ (Continued) ─ March 31, 2015

2015

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)
Deferred income taxes (note 11)
Other current liabilities (notes 9 and 13)
Total current liabilities¥

Millions of yen

145,106
19,466
18,742¥Thousands of
U.S. dollars(note 3)
2015

2014
144,688
6,536
14,954$

1,207,506
161,987
155,962

69,69539,491
36,679104,796
2,770
33
8,717
445,495

24,262
29,18735,804
158,878
9,452
7,705
431,466

579,970
328,626
305,226
872,065
23,051
275
72,5393,707,207

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

9,210
1,021
9,089
7,654
2,992
29,966

8,415
1,441
6,931
6,630
3,085
26,502

76,641
8,496
75,63563,69324,898249,363

Financial instruments transactions reserve (note 14)
Total liabilities

2,618
478,0792,327
460,295

21,786
3,978,356

18,59012,913
100,473

18,59012,91391,223

154,697
107,456
836,091(3,730)128,246(3,701)
119,025(31,039)
1,067,205

Net assets
Shareholders' equity (note 15):
Common stock
Authorized―750,000,000 shares in 2015 and 2014
Issued―208,214,969 shares in 2015 and 2014
Capital surplus
Retained earnings
Treasury stock, at cost, 10,211,055 shares in 2015
and 10,178,729 shares in 2014
Total shareholders' equity
Accumulated other comprehensive income (loss):
Unrealized gain on available-for-sale securities (note 7)
Surplus on land revaluation (note 16)
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive
income14,474
389
429
660

9,180
371
(144)
339

120,446
3,237
3,570
5,492

15,952

9,746

132,745

Minority interests

27,21324,069226,454

171,411

152,840

1,426,404

Total net assets
Commitments and contingencies (note 22)
TOTAL

¥

See accompanying notes to consolidated financial statements.

11649,490¥

613,135$

5,404,760

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Statement of Income ─ Year ended March 31, 2015
Thousands of
U.S. dollars(note 3)2015

Millions of yen
2015
Operating revenues:
Commissions
Net gain on trading
Interest and dividend income
Service fee and other revenues¥

Interest expense
Net operating revenues
Selling, general and administrative expenses (note 18)
Operating income
Other income (expenses):Dividend income
Reversal of allowance for doubtful accounts
Gain on sale of investment securities
Interest expense
Equity in lossses of affiliates
Impairment loss
Loss on sale and disposal of property and equipment
and intangible assets
Loss on sale of investment securities
Loss on devaluation of investment securities
Provision for liabilities for retirement benefits for
directors and corporate auditors
Provision for financial instruments transactions
reserve
Other, net
Income before income taxes and minority
interests
Income taxes (note 11):
Current
DeferredIncome before minority interests
Minority interests
Net income¥

See accompanying notes to consolidated financial statements.

12

2014

63,342
28,181
2,340
770
94,633
1,230
93,403
67,10826,295¥69,991
27,663
2,947
785
101,386
1,397
99,98967,25932,730$527,103
234,510
19,472
6,408
787,493
10,236
777,257
558,442
218,815

773
6
339
(96)
(10)
-

708
449
100
(96)
(146)

6,433
50
2,821
(799)
(83)
-

(700)
(58)
(58)

(1,837)(47)(242)(5,825)
(483)
(483)

(1,000)-(8,322)

(292)
282
(814)

(650)
612
(1,149)(2,430)2,347(6,774)25,481

31,581

212,041

9,040
617
9,657

12,267
107
12,37475,2275,134
80,361

15,824

19,207

131,680

1,724

1,928

14,346

14,100¥17,279$117,334

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income ─ Year ended March 31, 2015
Thousands of
U.S. dollars(note 3)2015

Millions of yen
2015
2014
Income before minority interests¥

Other comprehensive income (note 19):
Unrealized gain on available-for-sale securities
Surplus on land revaluation
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total other comprehensive income

15,824

¥

6,721
88
574
314
7,697

19,207

$

3,440
298
3,738

131,680

55,929
732
4,777
2,613
64,051

Comprehensive income¥

23,521¥

22,945$

195,731

Comprehensive income attributable to:
Owners of parent
Minority interests¥

20,313
3,208¥

20,2332,712$

169,036
26,695

See accompanying notes to consolidated financial statements.

13

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets ─ Year ended March 31, 2015
Millions of yen
Shareholders’ equity
Commonstock
Balances at March 31, 2013¥

Changes arising during the year:
Cash dividends
Net income
Purchase of treasury stock
Disposition of treasury stock
Net changes other thanshareholders’equity
Total changes during the year¥

12,913¥

77,845

Total
shareholders’equityTreasurystock,
at costRetainedearnings¥(3,637)¥(3,901)
17,279Balances at March 31, 2014
Cumulative effects of changes inaccounting policies
Restated balance at March 31,
2014
Changes arising during the year:
Cash dividends
Net income
Purchase of treasury stock
Disposition of treasury stockReversal of surplus on land
revaluation
Net changes other thanshareholders’equity
Total changes during the year
Balances at March 31, 2015

18,590Capitalsurplus

0

(0)

(65)
1

(3,901)
17,279
(65)
1

-

0

13,378(64)

13,314

18,59012,91391,223(3,701)

119,025

17
18,59012,91317

91,240(3,701)

119,042(29)
0(4,874)
14,100(29)
0(4,874)
14,1000(0)7¥

105,711

18,5900¥12,913

14

7

9,233
¥

100,473(29)¥(3,730)9,204¥

128,246

Balances at March 31, 2013

Millions of yen
Accumulated other comprehensive income (loss)
Unrealized
Total
Remeasuregain on
accumulated
Foreignments
available-for Surplus onothercurrencyof defined-salecomprehensive
translation
land
securities
revaluation adjustments benefit plans income (loss)

Minority
interests

Total net
assets¥ 6,524¥ 21,408¥ 133,572¥

371¥ (442)¥-¥ 6,453

Changes arising during the year:
Cash dividends
Net income
Purchase of treasury stock
Disposition of treasury stock
Net changes other thanshareholders’equity
Total changes during the year

2,656
2,656

-

298
298

339
339

3,293
3,293

2,661
2,661

5,954
19,268

Balances at March 31, 2014

9,180

371

(144)

339

9,746

24,069152,8401

18

24,070152,858

Cumulative effects of changes
in accounting policies
Restated balance at March 31,
2014
Changes arising during the year:
Cash dividends
Net income
Purchase of treasury stock
Disposition of treasury stockReversal of surplus on land
revaluation
Net changes other thanshareholders’equity
Total changes during the year
Balances at March 31, 2015

(3,901)
17,279
(65)
1

9,180

371

(144)

339

9,746

(4,874)
14,100
(29)
0
7
5,294
5,294
¥ 14,474

¥

18
18

573
573

321
321

6,206
6,206

3,143
3,143

9,349
18,553

389

¥ 429

¥ 660

¥ 15,952¥ 27,213¥ 171,411

15

Thousands of U.S. dollars(note 3)
Shareholders’ equity
Commonstock
Balances at March 31, 2014$

Cumulative effects of changes inaccounting policies
Restated balance at March 31,
2014
Changes arising during the year:
Cash dividends
Net income
Purchase of treasury stock
Disposition of treasury stockReversal of surplus on land
revaluation
Net changes other thanshareholders’equity
Total changes during the year
Balances at March 31, 2015

Balances at March 31, 2014
Cumulative effects of changes
in accounting policies
Restated balance at March 31,
2014
Changes arising during the year:
Cash dividends
Net income
Purchase of treasury stock
Disposition of treasury stockReversal of surplus on land
revaluation
Net changes other thanshareholders’equity
Total changes during the year
Balances at March 31, 2015

154,697

Capitalsurplus$107,456$

759,116

Total
shareholders'equityTreasurystock,
at costRetainedearnings$(30,798)$

990,471

142
154,697

107,456142

759,258(30,798)

990,613(241)
0(40,559)
117,334(241)
0(40,559)
117,33400
58$

154,6970

Minority
interests

Total net
assets$ 76,392$ 200,292 $ 1,271,865

3,087

$

(1,198)836,091

2,821

$

2,821

$

(31,039)

76,592Thousands of U.S. dollars(note 3)
Accumulated other comprehensive income (loss)
Total
Unrealized
accumulated
RemeasureForeign
gain onotherments
currency
available-for Surplus onof defined comprehensive
translation
-sale
land
securities
revaluation adjustments benefit plans income (loss)$ (1,198)

$

(241)

1,067,205$ 3,087

107,456

76,833$76,392$

58

81,102

81,1028

150

200,300

1,272,015(40,559)
117,334(241)
058

44,05444,054150
150$ 120,446$ 3,237

4,768
4,768
$

3,570

See accompanying notes to consolidated financial statements.

16

2,671
2,671
$

5,492

51,64351,643$

132,745

26,154
26,154

77,797
154,389$ 226,454 $ 1,426,404

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows ─ Year ended March 31, 2015
Thousands of
U.S. dollars(note 3)

Millions of yen
2015

2014

2015

Cash flows from operating activities:
Income before income taxes and minority interests¥

25,481¥

31,581$

212,041

Adjustments to reconcile income before income taxes and minority
interests to net cash provided by operating activities:
Depreciation and amortization

4,042

Impairment loss

4,044

33,636-146-

Interest and dividend income(3,119)(3,660)(25,955)

Interest expense

1,326

1,494

11,034

Loss on sale and disposal of intangible assets

621

1,592

5,168

Gain on sale of investment securities

(292)

(67)

(2,430)

58

242

483

(6,100)8,560(50,761)

10,99775,761

91,512

7,179(10,625)

59,740Loss on devaluation of investment securities
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 on collateralized

25,833(72,511)

214,970

Increase (decrease) in deposits received

securities transactions

9,972(1,028)82,982

Decrease (increase) in short-term guarantee deposits

734

668

6,108

Increase (decrease) in guarantee deposits received

874

2,456

7,273

Increase (decrease) in allowance for doubtful accounts

(215)

(524)

(1,789)

Increase (decrease) in liabilities for retirement benefits

59

(398)

491

Increase (decrease) in financial instruments transactions reserve

292

650

2,430

Other, net
Sub-total

348

1,994

2,896

78,09040,375649,829

Interest and dividend received

3,229

3,473

26,870Interest paid

(1,318)(1,508)(10,968)

Income taxes paid

(15,726)(7,024)(130,864)

64,27535,316534,867

Payment for short-term investments(3,400)(3,900)(28,293)

Proceeds from sale of short-term investments

4,500

5,800

37,447

Payment for purchase of property and equipment(1,039)(3,034)(8,646)

Payment for purchase of intangible assets(2,636)(4,626)(21,936)

Payment for purchase of investment securities

(748)

(688)

(6,225)

Proceeds from sale of investment securities

3,137

565

26,105

Payment for investments in affiliates

(20)

-

(166)

Other, net

(600)

1,140

(4,993)(806)(4,743)(6,707)

Net cash provided by operating activities
Cash flows from investing activities:

Net cash used in investing activities

17Cash flows from financing activities:(55,110)(18,832)(458,600)

Proceeds from long-term borrowings

Increase (decrease) in short-term borrowings

6,000

-

49,929Payments on long-term borrowings(4,270)(1,502)(35,533)

Proceeds from sale of treasury stock

0

1

0

Purchase of treasury stock
Dividends paid to shareholders

(29)

(65)

(241)

(4,874)(3,901)(40,559)

Dividends paid to minority shareholders of subsidiaries

(65)

(49)

(541)

Other, net

(550)

(652)

(4,577)(58,898)(25,000)(490,122)

Effect of exchange rate changes on cash and cash equivalents

Net cash used in financing activities

559

323

4,652

Net increase (decrease) in cash and cash equivalents

5,130

5,896

42,690Cash and cash equivalents, beginning of year

45,436

Cash and cash equivalents, end of year (note 21)¥

See accompanying notes to consolidated financial statements.

18

50,56639,540¥45,436

378,097$

420,787

Notes to Consolidated Financial Statements
Okasan Securities Group Inc. and Consolidated Subsidiaries ─ Year ended March 31, 2015
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.	Consoridation − The consolidated financial statements include the accounts of the Company and its
10 subsidiaries. One affiliate is accounted for by equity method at March 31, 2015. The“AccountingStandards for Consolidation”require the control or influence concept for the consolidation scope ofsubsidiaries and affiliates. Under the control or influence concept, a company in which 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 theability to exercise significant influence is accounted for by the equity method. Investments in affiliates
are accounted for by the equity method.
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 and19expenses 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,
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.

20	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 − Liabilities for retirement benefits are provided mainly at
an amount calculated based on the retirement benefit obligation and the fair value of the pension
plan assets at the balance sheet dates, as adjusted for the unrecognized actuarial gain or loss andunrecognized prior service benefit or cost. The retirement benefit obligation is attributed to eachperiod by the straight-line method over the estimated years of services of the eligible employees.
Actuarial gain or loss is amortized in the subsequent year that it occurs by the straight-line method
within the average remaining years of service of the employees. Prior service benefit or cost isamortized beginning the year it is incurred by the straight-line method within the average remaining
years of service of the employees.
	The Company has applied ASBJ Statement No. 26 Accounting Standard for Retirement Benefits(released on March 26, 2015, hereinafter the“Standard”) and ASBJ Guidance No. 25 Guidance on
Accounting Standard for Retirement Benefits (released on May 17, 2012, hereinafter the“Guidance”)
effective from the year ended March 31, 2015, in accordance with the provisions stated in Paragraph 35of the Standard and Paragraph 67 of the Guidance.
	In applying these accounting standards, the method for attributing projected benefits to periods has
been changed from the straight-line basis to the benefit formula basis, and the method for determining
the discount rate has been changed to use a single weighted-average discount rate that reflects theperiods until the expected payment of retirement benefits and the amount of projected benefits every
such period.
	According to the transitional treatment provided in Paragraph 37 of the Standard, the effect of changing
the method for calculating retirement benefit obligations and service costs was recognized by adjustingretained earnings at the beginning of the year ended March 31, 2015.
	As a result, liabilities for retirement benefits decreased ¥28 million ($233 thousand) and retained
earnings increased ¥18 million ($150 thousand) at the beginning of the year ended March 31, 2015. The
effect of this change on consolidated operating income and income before income taxes and minority
interests for the year ended March 31, 2015 is immaterial. As of and for the year ended March 31, 2015,
the effect of this change on net income per share and net assets per share is immaterial.
	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 in21

income 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 at 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 at the balance sheet dates,
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, 2015.
p.	New accounting pronouncements not yet adopted − “Accounting Standard for Business
Combinations”(ASBJ Statement No. 21),“Accounting Standard for Consolidated Financial Statements”(ASBJ Statement No. 22),“Accounting Standard for Business Divestitures”(ASBJ Statement No. 7)
and other related standards and implementation guidance were revised on September 13, 2013. The
Company is scheduled to apply these accounting standards from the beginning of the year ending
March 31, 2016.
In accordance with these revisions, the following accounting policies of the Company will be changed.
	- the treatment of the parent company’s changes in equity of its subsidiary while the parent company’scontrol is continuing because of additional acquisition of shares of the subsidiary	- the treatment of acquisition-related expenses
	- the presentation of net income and the change from minority interests to non-controlling interests	- the treatment of provisional accounting	The effect of adoption of these revised accounting standards is now under assessment at the time of
preparation of the accompanying consolidated financial statements.

3. BASIS OF FINANCIAL STATEMENT TRANSLATION	The translations of the yen amounts into U.S. dollars are included solely for the convenience of thereader, using the prevailing exchange rate at March 31, 2015, which was ¥120.17 to U.S. $1.
	The convenience translations should not be construed as representations that the yen amounts havebeen, could have been, or could in the future be, converted into U.S. dollars at this or any other rate ofexchange.

22

4. TRADING ASSETS AND LIABILITIES
Trading assets and trading liabilities at March 31, 2015 and 2014 consist of the following:

Millions of yen
2015
2014
Trading assets:
Equity securities and warrants
Government, corporate and other bonds
Derivatives¥¥

Trading liabilities:
Equity securities and warrants
Government, corporate and other bonds
Derivatives

¥

¥

1,943
214,31976
216,338¥819
144,2843
145,106¥¥¥

Thousands of
U.S. dollars
2015

1,946
212,02219
213,987$690
143,946
52
144,688$$$

16,1691,783,465
632
1,800,266

6,815
1,200,666
25
1,207,506

5. MARGIN TRANSACTIONS
Margin transactions at March 31, 2015 and 2014 consist of the following:

Assets:Loans receivable from customers
Cash deposits as collateral for securities borrowed fromsecurities finance companies
Liabilities:
Borrowings from securities finance companies
Proceeds from securities sold for customers’ accounts

Millions of yen
2015
2014

Thousands of
U.S. dollars
2015¥

54,678¥58,968$455,005¥

3,595
58,273¥

2,636
61,604$29,916484,921¥¥

10,531
8,211
18,742

¥
¥

9,314
5,640
14,954$$

87,634
68,328
155,962

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.
6. COLLATERALIZED SECURITIES TRANSACTIONSCollateralized securities transactions at March 31, 2015 and 2014 consist of the following:
Millions of yen
2015
2014

Thousands of
U.S. dollars
2015

Assets:Cash collateral for securities borrowed¥

169,980¥

150,379$

1,414,496

Liabilities:
Cash collateral for securities loaned¥

69,695¥24,262$579,97023

7. SECURITIES FOR NON-TRADING PURPOSES
Balance sheet amount, fair value, gross unrealized gain and gross unrealized loss of held-to-maturity debt
securities with fair value at March 31, 2015 are summarized as follows:
Millions of yen
Gross
Gross
unrealized
unrealized
loss
gain

Balancesheet amountGovernment, corporate and other bonds

¥

54

¥

$

449

¥

6

¥

Thousands of U.S. dollars
Gross
Gross
unrealized
unrealized
loss
gain

Balancesheet amountGovernment, corporate and other bonds-

Fair value

$

-

$

50

48

Fair value$

399

Acquisition cost, balance sheet amount, gross unrealized gain and gross unrealized loss of available-for-salesecurities with fair value at March 31, 2015 and 2014 are summarized as follows:
Millions of yen
Gross
Gross
unrealized
unrealized
loss
gain

Acquisition
cost
At March 31, 2015
Current:
Government, corporate and other bonds
Other

¥
¥

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

¥

¥
At March 31, 2014
Current:
Government, corporate and other bonds
Other

¥
¥

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

¥

¥

24

300
143
443
12,604745
13,3491,100
1,100
12,513322
1,140
13,975

¥
¥
¥

¥

¥
¥
¥

¥

3
57
60
27,06798
27,1650018,3748
59
18,441

¥
¥
¥

¥

¥
¥
¥

¥

(16)
(34)
(50)

(0)
(0)
(225)
(62)
(287)

Balancesheet amount

¥
¥
¥

¥

¥
¥
¥

¥

303
200
503
39,655809
40,464

1,100
1,100
30,662330
1,137
32,129

Thousands of U.S. dollars
Gross
Gross
unrealized
unrealized
loss
gain

Acquisition
cost
At March 31, 2015
Current:
Government, corporate and other bonds
Other

$

2,497
1,190
3,687

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

$

104,885
6,200
111,085

$

$

25
474
499

$
$

$

225,239815
226,054

$

-

$
$

(133)
(283)
(416)

$

Balancesheet amount

$
$
$

$

2,522
1,664
4,186
329,991
6,732
336,723

Securities classified as available-for-sale securities for which fair value is not available are unlisted equity
securities amounting to ¥1,523 million ($12,674 thousand) and ¥3,544 million, and investments in limited
partnership and similar partnership amounting to ¥18 million ($150 thousand) and ¥30 million at March 31,
2015 and 2014, respectively.
For the years ended March 31, 2015 and 2014, 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
March 31, 2015
Equity securities
Government, corporate and other bonds
Other

¥

¥
March 31, 2014
Equity securities
Government, corporate and other bonds
Other

¥

¥

2,617
4,500
520
7,637
126
5,800
439
6,365

Gross realized
gains
¥

¥
¥

¥

299
51
350
51
63
114

Gross realized
losses
¥

¥
¥

¥

(41)
(17)
(58)
(0)
(47)
(47)

Thousands of U.S. dollars
Proceeds from
Gross realized
Gross realized
sales ofgains
lossesavailable-for-salesecurities
March 31, 2015
Equity securities
Government, corporate and other bonds
Other

$

$

25

21,77837,447
4,327
63,552

$

$

2,488
425
2,913

$

$

(341)
(142)
(483)

8. INVESTMENTS IN AN AFFILIATEThe aggregate carrying amount of investments in affiliates at March 31, 2015 and 2014 are ¥57 million ($474
thousand) and ¥47 million, respectively.
9. BORROWINGS
The weighted-average interest rates applicable to the short-term borrowings are 0.68% and 0.50% at March
31, 2015 and 2014, respectively.
Long-term borrowings at March 31, 2015 and 2014 consist of the following:Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Borrowings, maturing in installments through 2020;
bearing weighted average interest of 2.53% at March 31,
2015
Borrowings, maturing in installments through 2017;
bearing weighted average interest of 2.36% at March 31,
2014¥

15,465Less current installments
¥

¥

-

$

128,692-

13,735

-

6,255

5,320

52,051

9,210

¥

8,415

$

76,641

Lease liabilities at March 31, 2015 and 2014 consist of the following:Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Lease liabilities maturing in installments through 2021;
bearing weighted average interest of 3.16% at March 31,
2015
Lease liabilities maturing in installments through 2021;
bearing weighted average interest of 3.17% at March 31,
2014¥

Less current installments
¥

26

1,552

¥

-

$

12,915

­-

1,988

-

531

547

4,419

1,021

¥

1,441

$

8,496

(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:
Millions of Yen
2015
2014
Long-term borrowings
Current installments of long-term borrowings

¥

6,000
2,775

¥

2,775
3,950

Thousands of
U.S. dollars
2015$

49,92923,092

Annual maturities of borrowings after March 31, 2016, are as follows:
Millions ofyenYear ending March 31
2017
2018
2019
2020

¥

1,000
2,210
2,000
4,000

Thousands of
U.S. dollars$

8,322
18,391
16,64333,286

Annual maturities of lease liabilities after March 31, 2016, are as follows:
Millions ofyenYear ending March 31
2017
2018
2019
2020

¥

472
356
168
19

Thousands of
U.S. dollars
$

3,928
2,962
1,398
158

To meet its liquidity needs stably and expeditiously and to strengthen financial operations, the Company
established a commitment line of ¥21,000 million ($174,752 thousand) with 7 financial institutions at both
March 31, 2015 and 2014, respectively.
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.

27

10. PLEDGED ASSETSAt March 31, 2015 and 2014, the carrying value of assets pledged is as follows:
Millions of Yen
2015
2014
Cash in banks
Trading assets
Property and equipment
Investment securities

¥

¥

2,214
7,049
7,911
23,93941,113¥¥

2,115
52,7798,060
19,70982,663Thousands of
U.S. dollars
2015
$

$

18,42458,65965,832
199,209342,124

Assets in the above table are pledged for the following liabilities:
Millions of yen
2015
2014
Short-term borrowings
Borrowings from securities finance companies
Long-term borrowings¥¥

19,431
4,772
3,210
27,413¥¥

61,4091,802
5,640
68,851Thousands of
U.S. dollars
2015
$

$

161,696
39,71026,712
228,118

In addition to above, at March 31, 2015, trading assets, etc. amounting to ¥70,834 million ($589,448 thousand)and investments securities amounting to ¥204 million ($1,698 thousand) are deposited as guarantee forsettlement of trading accounts and securities borrowed, respectively. At March 31, 2014, trading assets,etc. amounting to ¥65,015 million and investments securities amounting to ¥45 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, 2015 and 2014, except for those disclosed
in the above table, are as follows:
Millions of yen
2015
2014
Securities loaned on margin transactions
Securities pledged for borrowings on margin transactions
Securities loaned
Other

¥

¥

8,627
10,63469,50931,828120,598

¥

¥

5,945
9,773
24,246
24,50464,468

Thousands of
U.S. dollars
2015
$

$

71,79088,492
578,422
264,858
1,003,562

The fair value of the securities received as collateral at March 31, 2015 and 2014 are as follows:
Millions of Yen
2015
2014
Securities received on margin transactions
Securities borrowed
Securities pledged as collateral
Other

¥

¥

28

52,533
174,377
59,8784,276
291,064¥¥

52,732
155,11258,0183,536
269,398

Thousands of
U.S. dollars
2015
$

$

437,156
1,451,086
498,277
35,5832,422,102

11. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese corporate, inhabitant and businesstaxes based on income.
Following the promulgation of the law“Partial Amendment of the Income Tax Act, etc.”(Act No.9 of 2015)
and“Partial Amendment of the Local Tax Act, etc.”(Act No.2 of 2015) on March 31, 2015, the effective
statutory tax rate is to be lowered from the year beginning on or after April 1, 2015.
As a result of the change in tax rates, the amount of deferred tax assets (the amount after offsetting
deferred tax liabilities) decreased by ¥488 million ($4,061 thousand) and income taxes-deferred for thecurrent year increased by ¥401 million ($3,337 thousand), unrealized gain on available-for-sale securities
increased by ¥859 million ($7,148 thousand) and remeasurements of defined benefit plans increased by ¥31
million ($258 thousand).
And deferred tax liabilities on land revaluation excess decreased by ¥88 million ($732 thousand) and surplus
on land revaluation increased by the same amount.
In addition, due to the revision of the carry-forward system of the net operating losses, the amount of net
operating losses that can be deducted has been limited to the equivalent of 65% of taxable income before
such deductions from the year beginning on April 1, 2015 through the year beginning on April 1, 2016,
while the amount of net operating losses that can be deducted has been limited to the equivalent of 50%
of taxable income before such deductions on or after the year beginning on April 1, 2017. As a result of
the revision, the amount of deferred tax assets decreased by ¥96 million ($799 thousand) and income taxesdeferred for the current year increased by ¥96 million ($799 thousand).
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred
tax assets and deferred tax liabilities at March 31, 2015 and 2014 are as follows:
Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Deferred tax assets:
Tax loss carryforwards
Liabilities for retirement benefits (employees)
Financial instruments transactions reserve
Accrued bonuses
Liabilities for retirement benefits (directors andcorporate auditors)
Allowance for doubtful accounts
Impairment loss
Accrued business tax
Asset retirement obligations
Loss on devaluation of investment securities
Depreciation and amortization
Loss on devaluation of golf memberships
Other

¥

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

¥

29

3,304
1,415
845
785

¥

4,237
1,843
827
772

$

27,494
11,775
7,032
6,532

765
506
362
299
279
241
186
114
545
9,646
(5,487)
4,159

511
606
389
714
354
300
164
135
477
11,329(6,418)
4,911

6,366
4,211
3,012
2,488
2,322
2,006
1,548
949
4,535
80,270(45,661)
34,609(8,694)(1,503)(262)(10,459)(6,300)(6,390)(1,605)(254)(8,249)(3,338)(72,348)(12,507)(2,180)(87,035)(52,426)¥$

Net deferred tax assets at March 31, 2015 and 2014 are reflected in the accompanying consolidated balance
sheet under the following captions:Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Current assets – Deferred income taxes
Investments and other assets – Deferred income taxes
Current liabilities – Deferred income taxes
Non-current liabilities – Deferred income taxes

¥

¥

1,377
1,445
(33)
(9,089)(6,300)

¥

1,754
1,839
(6,931)(3,338)¥$$11,45912,025(275)(75,635)(52,426)

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 year ended March 31, 2015 is as follows:
2015
Statutory tax rate
Expenses not deductible for tax purposes
Income not credited for tax purposes
Per capita tax
Valuation allowance
Adjustments of deferred tax assets due to change in tax rate
Expiration of tax loss carryforwards
Tax credits for salary increase
Other
Effective tax rate

35.5%
0.6
(0.3)
0.3
(1.0)
1.6
2.4
(2.0)
0.8
37.9%

The reconciliation of the statutory tax rate and the effective tax rate for the year ended March 31, 2014
was not subject to disclosure because the difference between the rates does not exceed 5% of the statutory
tax rate.
12. RETIREMENT AND PENSION PLANS
The Company and its domestic consolidated subsidiaries have a defined contribution retirement andpension plan (Securities Omnibus DC Okasan Plan), a corporate defined benefit pension plan and an
unfunded retirement and severance plan that provide for lump-sum payment of benefits.
Defined benefit plans
Followings are the information of defined benefit plans at March 31, 2015 and 2014 and for the years thenended.
(1) Reconciliation of changes in retirement benefit obligation
Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Retirement benefit obligation at beginning of year
Cumulative effects of changes in accounting policies
Restated balance at beginning of year
Service cost
Interest cost
Actuarial gain and loss
Benefits paid
Retirement benefit obligation at end of year

¥

¥

30

13,594(28)
13,566
633
83
333
(885)
13,730¥¥13,53913,539
654
126
20
(745)
13,594$$

113,123(233)
112,890
5,268
691
2,771
(7,365)
114,255

Note: 1. Certain consolidated subsidiaries adopt the simplified method for calculation of retirement benefit
obligation
2. Retirement benefit expenses of the consolidated subsidiaries adopted the simplified method areincluded in above service cost.

(2) Reconciliation of changes in plan assets
Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Plan assets at beginning of year
Expected return on plan assets
Actuarial gain and loss
Employer contributions
Benefits paid
Plan assets at end of year

¥

¥

8,404
40
897
564
(502)
9,403

¥

¥

7,676
36
527
553
(388)
8,404

$

$

69,934
333
7,464
4,693
(4,177)
78,247(3) Reconciliation between net of retirement benefit obligation and plan assets, and liability or asset for
retirement benefits recognized in consolidated balance sheet
Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Funded retirement benefit obligation
Plan assets¥

Unfunded retirement benefit obligation
Net of liabilities and assets for retirement benefits¥

Liabilities for retirement benefits
Assets for retirement benefits
Net of liabilities and assets for retirement benefits

¥
¥

8,409
(9,403)
(994)
5,321
4,327
5,321
994
4,327

¥

¥
¥
¥

8,444
(8,404)
40
5,150
5,190
5,190
5,190

$

$
$
$

69,976(78,248)(8,272)
44,27936,00744,2798,272
36,007(4) The components of retirement benefit expenses
Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss (gain)
Retirement benefit expenses

¥

¥

633
82
(40)
(124)
551

¥

¥

654
126
(37)
173
916

$

$

5,268
682
(333)
(1,032)
4,585(5) Remeasurements of retirement benefit plans before related tax effects
Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Actuarial loss

¥

31

440

¥

-

$

3,661

(6) Accumulated remeasurements of retirement benefit plans before related tax effects
Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Unrecognized actuarial loss

¥

961

¥

521

$

7,997

(7) Plan assets(a) Percentage by major category of plan assets
2015
Equity securities
General accountDebt securities
Other
Total

42%
34
21
3
100%

2014
40%
37
20
3
100%

(b) Determination procedure of long-term expected rate of return
In determining long-term expected rate of return on plan assets, the Company considers the current
portfolio of plans assets, actual performance result, investment policy and market trend.
(8) Basis for calculation of actuarial assumptions
The assumptions used in accounting for the above plans at March 31, 2015 and 2014 are as follows:
2015(a) Discount rate(b) Long-term expected rate of return

0.41%
0.50%

2014
0.64%
0.50%

Defined contribution plans
The amount to be paid by the Company and consolidated subsidiaries to the defined contribution plans is¥192 million ($1,598 thousand) and ¥190 million for the years ended March 31, 2015 and 2014, respectively.
Retirement benefits for directors and corporate auditors
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 areentitled if they were to retire or sever immediately at the balance sheet date. For the year ended March
31, 2015, the Company decided to pay a merit bonus of ¥1,000 million ($8,322 thousand) for Mr. Seiichi Kato,
Director subject to the approval by the Shareholders’Meeting because he made a great contribution indeveloping the Company’s business for a long time, and charged to income as other expense. The liabilities
for retirement and severance benefits related to these plans is ¥2,334 million ($19,422 thousand) and ¥1,440
million at March 31, 2015 and 2014, respectively.

32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 1 to 58 years and discounted rate of
0.034% to 2.33%.
The following table provides the Company’s total asset retirement obligation for the years ended March 31,
2015 and 2014:
Millions of yen
2015
2014
Balance, beginning of year
Liabilities incurred by asset acquisition
Accretion expenses
Liabilities settled
Other increase (decrease)
Balance, end of year

¥

¥

633
112
12
(66)
9
700

¥

¥

600
108
12
(101)
14
633

Thousands of
U.S. dollars
2015
$

$

5,267
932
100
(549)
75
5,825

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, 2015 and 2014 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.
Dividends paid during the year ended March 31, 2014 which was approved by the General Meeting of
Shareholders held on June 27, 2013 are as follows:(a) Total dividends(b) Cash dividends per common share(c) Record date(d) Effective date

¥3,901 million¥20
March 31, 2013
June 28, 2013

Cash dividends for treasury stock held by subsidiaries of ¥98 million were excluded from the above table.
Dividends paid during the year ended March 31, 2015 which was approved by the General Meeting of
Shareholders held on June 27, 2014 are as follows:

(a)
(b)
(c)
(d)

Total dividends
Cash dividends per common share
Record date
Effective date

¥4,874 million ($40,559 thousand)¥25 ($0.20)
March 31, 2014
June 30, 2014
Cash dividends for treasury stock held by subsidiaries of ¥122 million ($1,015 thousand) were excluded fromthe above table.

33

Dividends to be paid after the balance sheet date but the record date for the payment belongs to the year
ended March 31, 2015 which was approved by the General Meeting of Shareholders held on June 26, 2015
are as follows:

(a)
(b)
(c)
(d)
(e)

Total dividends
Dividend source
Cash dividends per common share
Record date
Effective date

¥4,996 million ($41,574 thousand)
Retained earnings¥25 ($0.20)
March 31, 2015
June 29, 201516. 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 acomponent 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, 2015 decreased by ¥883 million ($7,348 thousand) in comparison with thebook 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 467.3% and 394.8% at March
31, 2015 and 2014, respectively.
18. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Major elements of selling, general and administrative expenses for the years ended March 31, 2015 and2014 are summarized as follows:
Millions of yen
2015
2014
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

¥

¥

34

13,51834,440
6,159
5,083
4,042
754
(7)
3,119
67,108¥¥13,327
34,840
6,154
4,951
4,044
727
(1)
3,217
67,259Thousands of
U.S. dollars
2015
$

$

112,491
286,594
51,25242,29833,6366,274(58)
25,955558,44219. OTHER COMPREHENSIVE INCOME
The reclassification adjustment and the related income tax effects allocated to each component of othercomprehensive income for the years ended March 31, 2015 and 2014 are as follows:
Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Net unrealized holding gain on other securities:
Arising during the year
Reclassification adjustment
Before tax amountTax benefit (expense)
Net-of-tax amount

¥

9,297
(276)
9,021
(2,300)
6,721

¥

5,164
185
5,349
(1,909)3,440$

77,366(2,297)75,069(19,140)
55,929Surplus on land revaluation:
Tax benefit (expense)

88

-

732

Foreign currency translation adjustments:
Arising during the year

574

298

4,777

Remeasurements of defined benefit plans
Arising during the year
Reclassification adjustment
Before tax amountTax benefit (expense)
Net-of-tax amount

564
(124)
440
(126)
314

-

4,693
(1,032)
3,661(1,048)2,613

Total other comprehensive income

¥

7,697

¥

3,738

$

64,051

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, 2015 and 2014 are as follows:
Yen
2015
Basic net income per share

¥

71.20

¥

87.24

Millions of yen
2015
2014
Net income
Net income not applicable to common shareholders
Net income applicable to common shareholders¥¥

14,10014,100¥¥17,27917,279Number of shares(Thousand)
2015
2014
Weighted average number of shares outstanding on whichbasic net income per share is calculated

35

198,021

U.S. dollars
2015

2014

198,058$

0.59

Thousands of
U.S. dollars
2015
$
$

117,334
117,334

(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, 2015 and 2014 are as follows:
Yen
2015
Net assets per share¥

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

728.26

U.S. dollars
2015

2014
¥

650.24$

6.06

Millions of yen
2015
2014

Thousands of
U.S. dollars
2015¥

171,411¥

152,840$

1,426,404¥

27,213
144,198¥

24,069128,771$

226,454
1,199,950

Number of shares(Thousand)
2015
2014

Number of shares outstanding at the end of year on which
net assets per share is calculated

198,004

198,036

21. SUPPLEMENTARY CASH FLOW INFORMATION
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, 2015
and 2014 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
2015
2014

Thousands of
U.S. dollars
2015¥

55,583¥49,467$

462,536¥(5,017)50,566¥(4,031)45,436$(41,749)
420,787

22.COMMITMENTS AND CONTINGENCIESAt March 31, 2015 and 2014, the Company and certain subsidiaries have guaranteed approximately ¥18
million ($150 thousand) and ¥24 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.

36

23.LEASES(a) Finance Lease
The Company leases certain computer terminals, communication equipment and software under financeleases.
(b) Operating Lease
Future minimum lease payments required under noncancellable operating leases at March 31, 2015 and2014 are as follows:
Millions of yen
2015
2014
Within one year
Over one year

¥
¥

1,225
677
1,902

¥
¥

855
1,291
2,146

Thousands of
U.S. dollars
2015
$
$

10,194
5,634
15,82824. 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’scredit 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 of37

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 tomake 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.
The loss on proprietary trading position estimated by VaR is ¥339 million ($2,821 thousand) calculatedusing historical method (holding period: one day, confidence interval: 99%, observation period: 1,250
days) at March 31, 2015. The Company ascertained the reliability and validity of the model daily by
performing a comparison back-test of VaR and actual profit and loss.
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.

38Fair value of financial instruments
The carrying amounts on the consolidated balance sheet, fair value, and differences at March 31, 2015 and2014 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”.)
Millions of yen
2015

2014

Carrying
value

Carrying
Fair value

Differences

¥

¥

value

Fair value

Differences¥¥

Assets:Cash on hand and in banks¥

55,58355,583-¥49,46749,467-

Cash segregated as deposits forcustomers and others

63610

63,610-56,74456,744-

216,262

216,262-

213,968

213,968

-

54

49

(5)

-

-

-

Available-for-sale securities

40,96740,967-33,22833,228-

Receivables on margin transactions

58,27358,273-61,60461,604-

169,980

169,980-

150,379

150,379

-

2,802

2,802

-

3,536

3,536

-

¥ 607,531¥ 607,526¥(5)¥ 568,926¥ 568,926¥-¥ 145,103¥ 145,103¥-¥ 144,636¥ 144,636¥-

trades

19,466

19,466

-

6,536

6,536

-

Payables on margin transactions

18,742

18,742-

14,954

14,954-securities transactions

69,69569,695-24,262

24,262-

Deposits received

39,49139,491-

29,187

29,187-

Guarantee deposits received

36,67936,679-35,80435,804-

Short-term borrowings

104,796

104,825

29

158,878

158,8868

Long-term borrowings

9,210

9,401

191

8,415

8,473

58

Total

¥ 443,182¥ 443,402¥

220¥ 422,672¥ 422,738¥

66

Derivative transactions

¥

¥

¥

-

¥

¥

¥

-

Trading assets, short-term
investments and investment
securities
Trading securities
Held-to-maturity debt securities

Receivables on collateralized
securities transactions
Short-term guarantee deposits
Total
Liabilities:
Trading liabilities
Trading securities
Payables arising from unsettled

Payables on collateralized

73

73

39

(32)

(32)

Thousands of U.S. dollars
2015
Carrying
value

Fair value

Differences

462,536$$

Assets:Cash on hand and in banks$

462,536-

Cash segregated as deposits forcustomers and others

529,334

529,334-

1,799,634

1,799,634

-

449

407

(42)

Available-for-sale securities

340,909

340,909-

Receivables on margin transactions

484,921484,921-

1,414,496

1,414,496-

23,31723,317-$ 5,055,596$ 5,055,554

$

(42)

$ 1,207,481$ 1,207,481$-

trades161,987

161,987-

Payables on margin transactions

155,962

155,962-

securities transactions

579,970

579,970-

Deposits received

328,626

328,626-

Guarantee deposits received

305,226

305,226-

Short-term borrowings

872,065

872,306241

Long-term borrowings

76,641

78,231

1,590

Total

$ 3,687,958$ 3,689,789

$

1,831

Derivative transactions

$

$

$

-

Trading assets, short-term
investments and investment
securities
Trading securities
Held-to-maturity debt securities

Receivables on collateralized
securities transactions
Short-term guarantee deposits
Total
Liabilities:
Trading liabilities
Trading securities
Payables arising from unsettled

Payables on collateralized

607

607

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

40

(1) Fair value measurement of financial instruments
Assets:Cash on hand and in banks, Cash segregated as deposits for customers and others, Receivables on margintransactions, Receivables on collateralized securities transactions and Short-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.
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 arising from unsettled trades, 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 statusof the Company does not change so much from when the Company borrowed. Fair value of long-termborrowings with fixed interest rate is based on the present value of future cash flows of interest andprincipal 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
Millions of yen
2015
2014
Unlisted equity securities
Investments in limited partnership and similar partnership
Total

41

¥
¥

1,523
18
1,541

¥
¥

3,544
30
3,574

Thousands of
U.S. dollars
2015
$
$

12,674150
12,824

(3) Projected future redemption of monetary claim and securities with maturities
March 31, 2015
Millions of yen
Due after
Due after
five years
one yearthrough ten
through five
years
years

Due within
one year
Cash on hand and in banks
Cash segregated as deposits forcustomers and others
Trading assets, short-term investments
and investment securities:
Held-to-maturity debt securities:
Government bonds
Available-for-sale securities
with maturities:
Debt securities:
Government bonds
Other
Receivables on margintransactions
Receivables on collateralized
securities transactions
Short-term guarantee deposits¥¥

55,583¥-¥-Due after
ten years¥-

63,610

-

-

-

-

-

55

-

300
200

475

278

-

58,273---

169,980
2,802

-

-

-

350,748¥462,536$

2,918,765

¥

333

¥

Thousands of U.S. dollars
Due after
Due after
five years
one yearthrough ten
through five
years
years

Due within
one year
Cash on hand and in banks$
Cash segregated as deposits forcustomers and others
Trading assets, short-term investments
and investment securities:
Held-to-maturity debt securities:
Government bonds
Available-for-sale securities
with maturities:
Debt securities:
Government bonds
Other
Receivables on margintransactions
Receivables on collateralized
securities transactions
Short-term guarantee deposits

475

$

-

$

-

-

Due after
ten years$-

529,334

-

-

-

-

-

458

-

2,496
1,665

3,953

2,313

-

484,921---

1,414,496
23,317

-

-

-

42

$

3,953

$

2,771

$

-

March 31, 2014
Millions of yen
Due after
Due after
five years
one yearthrough ten
through five
years
years

Due within
one year
Cash on hand and in banks
Cash segregated as deposits forcustomers and others
Trading assets, short-term investments
and investment securities:
Available-for-sale securities
with maturities:
Debt securities:
Government bonds
Other
Receivables on margintransactions
Receivables on collateralized
securities transactions
Short-term guarantee deposits¥¥

49,467 ¥-

56,744

-

-

-

1,100
-

300
566

23
405

-

61,604---150,379
3,536

-

-

-

866 ¥

428 ¥

-

Due after
five years

322,830 ¥¥-Due after
ten years¥-(4) The annual maturities of the long-term debt and other interest-bearing debt
March 31, 2015
Due after
one yearthrough
two years

Millions of yen
Due after
Due after
three years
two years
throughthroughfour years
three years

Due after
four years
throughfive years

¥

¥

¥

Due
withinone year
Short-term borrowings
Long-term borrowings
Borrowings from securities
finance companies
Total

¥

98,541
6,255

10,531¥ 115,327$$

820,01452,051
87,634
959,699

1,000¥

Due after
one yearthrough
two years

Due
withinone year
Short-term borrowings
Long-term borrowings
Borrowings from securities
finance companies
Total

1,000

$

8,322
8,322

$

¥

2,210
2,210

¥

¥

2,000
2,000

18,391
18,391$$$

16,643
16,643

¥

4,000

¥

Thousands of U.S. dollars
Due after
Due after
three years
two years
throughthroughfour years
three years
$

4,000

33,28633,286$-¥

Due after
four years
throughfive years$-

Due after
five years$-$

March 31, 2014

Due
withinone year
Short-term borrowings
Long-term borrowings
Borrowings from securities
finance companies
Total

¥

¥

153,558
5,320
9,314
168,192

Due after
one yearthrough
two years
¥

¥

6,255
6,255

Millions of yen
Due after
Due after
three years
two years
throughthroughfour years
three years

Due after
four years
throughfive years

¥

¥

¥

-

¥

¥

2,160
2,160

¥

* Borrowings from securities finance companies are deemed to be settled within one year.

43-

Due after
five years¥¥-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, 2015 and 2014 are summarized as follows:(1) Stocks
Millions of yen
2015

2014

Contract ornotional
amounts Fair value
Stock index futures:
Written¥
Purchased
Stock index options:
Written
Purchased
Over-the-counter stock options:
Written
Purchased

1,289
1,621

¥

Valuation
gain (loss)

4 ¥
(1)

4
(1)

2
2

3
2

-

¥

Contract ornotional
amounts¥

Valuation
gain (loss)

Fair value

945 ¥
586

(5)
1

¥

(1)
0

6

2

(4)

2

12
5

16
16

(4)
11
(1)

¥

(5)
1

Thousands of U.S. dollars
2015
Contract ornotional
Valuationamounts
Fair value gain (loss)
Stock index futures:
Written
Purchased
Stock index options:
Written
Purchased$

10,726
13,489
17
17

$

33
(8)

$

25
17
$

33
(8)
(8)
0
17

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.

44

(2) Bond
Millions of yen
2015

2014

Contract ornotional
amounts Fair value
Bond futures:
Written
Purchased
Bond options:
Written
Purchased

¥

2,800
5,741

¥

3
0

3

Contract ornotional
amounts

Valuation
gain (loss)
¥

3
¥

3
0

¥

(0)
3

Valuation
gain (loss)

Fair value

1,301 ¥
11,283

(0)
(2)

-

-

¥

¥

(0)
(2)
(2)

Thousands of U.S. dollars
2015
Contract ornotional
Valuationamounts
Fair value gain (loss)
Bond futures:
Written
Purchased
Bond options:
Written
Purchased$

23,30047,774

$

25

25 $
0

25
0

25

0
25

$

The fair value of bond futures is computed using prices on the market. Gain or loss on deemed settlement
is disclosed in the“Fair value”column above.
(3) Foreign exchange
Millions of yen
2014
Contract ornotional
amounts
Foreign exchange margin trading:
Written:¥
Forward foreign exchange:
Written:Australian dollar
Mexican PesoSouth Africa Rand
Russian ruble
Turkish liraBrazilian real
Other

155

897
467
247
230
138
110
220

Valuation
gain (loss)

Fair value
¥

0

¥

0

¥

(7)
(6)
(6)
(0)
(4)
(4)
(2)
(29)

(7)
(6)
(6)
(0)
(4)
(4)
(2)

45

Millions of yen
2015
Contract ornotional
amounts
Foreign exchange margin trading:
Written:¥
Forward foreign exchange:
Written:Australian dollar
Brazilian real
Mexican Peso
U.S. dollar
New Zealand dollar
Turkish lira
Other

26

Valuation
gain (loss)

Fair value
¥

1,223
605
536
430
429
284
443

0

¥

0

¥

27
18
9
(3)
5
3
6
65

27
18
9
(3)
5
3
6

Thousands of U.S. dollars
2015
Contract ornotional
Valuationamounts
Fair value
gain (loss)
Foreign exchange margin trading:
Written:$
Forward foreign exchange:
Written:Australian dollar
Brazilian real
Mexican Peso
U.S. dollar
New Zealand dollar
Turkish lira
Other

216

$

10,177
5,035
4,460
3,578
3,570
2,363
3,686

0

$

0

$

225
150
75
(25)
41
25
50
541

225
150
75
(25)
41
25
50

The fair value of foreign exchange margin trading is computed using prices on the market. The fair valueof forward foreign exchange is based on the difference between the present value of future cash flows ofreceipt amount and the present value of future cash flows of payment amount. Gain or loss on deemed
settlement is disclosed 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, 2015 and 2014 are summarized
as follows:

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

Contract or notional amounts
Thousands ofMillions of yen
U.S. dollars
2015
2014
2015

Hedged items
Long-term
borrowings

¥

7,915

¥

4,965

$

65,865*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.

46

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 ¥133 million ($1,107 thousand) and ¥163 million forthe years ended March 31, 2015 and 2014, respectively.
The amounts recognized in the consolidated balance sheet and fair values related to the rental property are
as follows:
Millions of yen
2015
2014
Consolidated balance sheet amount:
Balance at beginning of the year
Increase/(decrease)
Balance at end of the year
Fair value

¥
¥

5,333
(22)
5,311

¥

5,359

¥

Thousands of
U.S. dollars
2015

¥

5,538
(205)
5,333

$
$

44,379(183)
44,196

¥

5,367

$

44,595The above fair value is based on real-estate appraisals, and is estimated by the Company.
27. BALANCES AND TRANSACTIONS WITH RELATED PARTY
The subsidiary of the Company purchased land at a price of ¥21 million ($175 thousand) from Mr. Seiichi
Kato, chairman of the Board of Directors who owns 0.1% shares of the Company during the year ended
March 31, 2015.
The transaction price is determined based on the appraisal value calculated by a real estate appraiser.
There were no related party transactions for the year ended March 31, 2014.
28. 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. “Assetmanagement business”renders investment management and investment advisory. “Support business”
renders information processing services, administrative support services, custodianship and temping
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.

47

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, 2015 and 2014 are summarized as follows:

Securities
Operating revenues:
Revenues from third
partiesIntersegment revenues
Total

¥
¥

79,667
5,411
85,078Segment income¥

Segment assets
Segment liabilities
Others:Depreciation
Interest and dividend
incomeInterest expense
Equity in losses of anaffiliates
Investments in affiliates
Increase in property
and equipment andintangible assets

Millions of yen
2015
Reported segments
Assetmanagement
Support
Total

Adjustments Consolidated

¥

¥

¥

14,07014,070¥94,623
16,830¥ 111,453¥

10(16,830)¥ (16,820)

¥

¥

886
11,41912,305¥

94,633
94,63324,054

¥

1,570

¥

1,035

¥

26,659

¥

(364)

¥

26,295¥609,552¥

16,973¥28,579¥ 655,104¥(5,614)¥649,490¥492,661

¥

2,684

¥

16,995¥ 512,340¥ (34,261)¥

478,079

¥

689

¥

30

¥

3,048

¥

¥

¥

4,042

Segment income

¥

275

2,683
1,515

-

15
-

2,698
1,515

(358)
(285)

2,340
1,230

-

-

(10)
10

(10)
10

-

(10)
10

866

40

2,784

3,690

187

3,877

Adjustments

Consolidated

Millions of yen
2014
Reported segments
Assetmanagement
Support
Total

Securities
Operating revenues:
Revenues from third
partiesIntersegment revenues
Total

3,767

¥

88,125
5,747
93,872¥

30,630¥¥12,34812,348

¥

1,327

¥
¥

905
10,466
11,371¥ 101,378
16,213¥ 117,591¥

963¥ 32,920¥¥

8(16,213)(16,205)¥¥

101,386
101,386

¥

(190)

¥

32,730

Segment assets¥

574,242¥

15,108¥28,720¥ 618,070¥(4,935)¥613,135

Segment liabilities¥

470,454

¥

2,075

¥

17,969¥ 490,498¥(30,203)¥460,295

¥

794

¥

30

¥

2,964

¥

¥

256

¥

4,044

Others:Depreciation
Interest and dividend
incomeInterest expense
Increase in property
and equipment andintangible assets

3,788

3,473
1,861

-

16
-

3,489
1,861

(542)
(464)

2,947
1,397

2,074

15

5,684

7,773

1,350

9,123

48

Thousands of U.S. dollars
2015
Reported segments
Asset
Securities management
Support
Total
Adjustments

Consolidated

Operating revenues:
Revenues from third
partiesIntersegment revenues
Total

$

662,953
45,027
707,980$

117,084
117,084$

7,373
95,024102,397$

787,410140,051
927,461$83(140,051)(139,968)$

787,493
787,493

Segment income$

200,166$

13,065

$

8,613

$

221,844$(3,029)$218,815

Segment assets$ 5,072,414$

141,242$ 237,821$ 5,451,477$(46,717)$

5,404,760

Segment liabilities$ 4,099,700$

22,335$ 141,425$ 4,263,460$(285,104)$

3,978,356

$

$

250

$

$

$

2,289

$

33,636

Others:Depreciation
Interest and dividend
incomeInterest expense
Equity in losses of an affiliates
Investments in affiliates
Increase in property
and equipment andintangible assets

5,733

25,364

31,34722,326
12,607
-

-

125
(83)
83

22,451
12,607(83)
83(2,979)(2,371)-

19,472
10,236
(83)
83

7,207

333

23,16730,707

1,556

32,263

1. (1) Components of“Adjustments in segment income”are as follows:
Millions of yen
2015
2014
Elimination of intersegment transactions
Unallocated company-wide expenses

¥
¥

2,771
(3,135)
(364)

¥
¥

2,786
(2,976)(190)

Thousands of
U.S. dollars
2015
$
$

23,059(26,088)(3,029)Company-wide expenses are holding company’s expenses.
(2) Components of“Adjustments in segment assets”are as follows:

Elimination of intersegment balances
Unallocated company-wide assets¥¥

Millions of yen
2015
2014

Thousands of
U.S. dollars
2015(60,588)
54,974(5,614)$ (504,186)
457,469$ (46,717)¥¥(59,416)
54,481(4,935)Company-wide assets are holding company’s assets.
(3) Components of“Adjustments in segment liabilities”are as follows:

Elimination of intersegment balances
Unallocated company-wide liabilities¥¥

Millions of yen
2015
2014

Thousands of
U.S. dollars
2015(54,063)
19,802(34,261)$ (449,887)
164,783$ (285,104)¥¥(53,034)
22,831(30,203)

Company-wide liabilities are holding company’s liabilities.
2. Segment income is adjusted with operating income in the consolidated statement of income.

49

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
The information is not applicable for the year ended March 31, 2015.
The information for the year ended March 31, 2014 was as follows:

Securities
Impairment loss¥-

Millions of yen
2014
Reported segments
Assetmanagement
Support
Total

Adjustments

Consolidated

¥

¥

¥

-

¥

52

¥

52

94

146

Adjustments are holding company’s impairment loss.
Goodwill by reported segments
The information is not applicable for the years ended March 31, 2015 and 2014.
Negative goodwill incurred by reported segments
The information is not applicable for the years ended March 31, 2015 and 2014.
29. SUBSEQUENT EVENTThe Company resolved the abolishment of retirement benefits plans for directors and corporate auditors,
and the introduction of stock-based compensation stock option to be allotted to directors of the Company
and Okasan Securities Co., Ltd. at the General Meeting of Shareholders and the Board of Directors held on
June 26, 2015
A summary of information for the stock options is as follows:
1) Person to be granted the stock options: 6 directors of the Company and 23 directors of Okasan Securities
Co., Ltd., the Company’s subsidiary2) Stocks to be issued upon the exercise of the stock options: Common stocks3) Number of stock options granted: 129,400 shares (the number of shares for each stock options shall be
100)4) Exercise period: From July 14, 2015 to July 13, 2045

50

51

REFERENCE DATA

52

Okasan Securities Co., Ltd.
Balance Sheet ─ March 31, 2015
Thousands of
U.S. dollars
2015

Millions of yen
2015
ASSETS
Current assets:
Cash on hand and in banks
Cash segregated as deposits for customers andothersTrading assets
Receivables on margin transactions
Receivables on collateralized securities transactions
Short-term guarantee deposits
Deferred income taxes
Other current assets
Allowance for doubtful accounts

¥

2014

15,457¥

13,781$

128,626

22,444215,90948,318
169,980
1,913
1,080
2,786
(14)

20,384
213,775
55,629150,379
2,767
1,381
2,899
(17)

186,769
1,796,696
402,080
1,414,496
15,9198,987
23,184(116)

477,873

460,978

3,976,641

Property and equipment, net of accumulated
depreciation

2,633

2,361

21,911Intangible assets, net

304

341

2,530

Investments and other assets:
Investment securities
Securities in associated companies
Long-term guarantee deposits
Deferred income taxes
Other
Allowance for doubtful accounts

439
211
3,338
1,490
1,124
(809)

420
211
3,000
1,716
1,295
(923)

3,653
1,756
27,777
12,3999,354(6,732)

5,793

5,719

48,207

Total current assets

Total investments and other assets
TOTAL

¥

53

486,603¥469,399$

4,049,289

Okasan Securities Co., Ltd.
Balance Sheet ─ (Continued) ─ March 31, 2015
Thousands of
U.S. dollar
2015

Millions of yen
2015
LIABILITIES AND NET ASSETS
Current liabilities:
Trading liabilities
Payables arising from unsettled trades
Payables on margin transactions
Payables on collateralized securities transactions
Deposits received
Guarantee deposits received
Short-term borrowings
Income tax payables
Other current liabilities
Total current liabilities

¥

2014

145,103
20,36013,79469,69625,397
7,942
95,040
1,116
10,520388,968¥

144,678
7,147
13,787
24,262
19,715
9,418
151,215
2,553
12,648385,423$

1,207,481
169,427
114,787
579,978
211,342
66,090790,880
9,287
87,543
3,236,815

Non-current liabilities:
Long-term borrowings
Liabilities for retirement benefits
Other non-current liabilities
Total non-current liabilities

7,000
4,700
1,149
12,849

2,775
5,052
1,114
8,941

58,251
39,111
9,561
106,923

Financial instruments transactions reserve

1,461

1,281

12,158403,278395,645

3,355,896

5,000
29,20049,114
83,3145,000
29,20039,55173,751

41,608242,989
408,704
693,301

11

3

92

83,32573,754

693,393

Total liabilities
Net assets
Shareholder’s equity:
Common stock
Authorized―240,000 shares
Issued―100,000 shares in 2015 and 2014
Capital surplus
Retained earnings
Total shareholder’s equity
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities
Total net assets
TOTAL

¥

54

486,603¥469,399$

4,049,289

Okasan Securities Co., Ltd.
Statement of Income ─ Year ended March 31, 2015
Thousands of
U.S. dollar
2015

Millions of yen
2015
Operating revenues:
Commissions
Net gain on trading
Interest and dividend income¥

Interest expense
Net operating revenues
Selling, general and administrative expenses
Operating income
Other income (expenses):
Provision for financial instruments transactions
reserve
Other, net

Income before income taxes
Income taxes:
Current
Deferred

Net income

¥

55

2014

45,58927,0401,716
74,345
1,148
73,19750,63322,564¥53,19324,943
2,104
80,2401,371
78,86951,50727,362$

379,371
225,014
14,280618,665
9,553
609,112421,345
187,767

(181)
300
119

(367)
179
(188)

(1,506)
2,496
990

22,683

27,174

188,757

7,621
516
8,137

10,392
83
10,47563,4184,294
67,712

14,546¥

16,699$121,045

CORPORATE DATABOARD OF DIRECTORS(At July, 2015)(At July, 2015)

Company Name
OKASAN SECURITIES GROUP INC.

ChairmanSeiichi Kato
Vice Chairman
Tetsuo Kato
President
Hiroyuki Shinshiba
Senior Managing Director
Kazuhiko Nonaka
Director
Hiroyuki Shindo
Director
Mitsuru Tanaka
Director
Hiroyuki Murai
Director
Masahiro Hayakawa

Date of Establishment
August 25, 1944
Head Office
1-17-6 Nihonbashi, Chuo-ku,
Tokyo 103-8268, Japan
Muromachi Head Office2-2-1 Nihonbashi Muromachi, Chuo-ku,
Tokyo 103-0022, Japan
Phone Number+81-3-3272-2222

Audit & Supervisory Committee Members
Director
Tetsumi Iwaki
Director
Nobuyuki Natsume
Outside Director
Tetsuo Narukawa
Outside Director
Seishi Higo
Outside Director
Hirokazu Kono

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

ORGANIZATION CHART(At July, 2015)
General meeting of Shareholders
Board of Directors

Audit & Supervisory Committee

Audit & Supervisory Committee office
ChairmanVice Chairman
President

Management Conference

Committee of the Executive Officers
Group General Planning Dept.
Group Business Strategy Dept.
Corporate Planning Division

Group Affiliated Companies Administration Dept.
Group Public and Investors Relations Dept.
Group Information Technology Dept.
Group Compliance Dept.
Group Secretariat

Personnel Division

Group Personnel Planning Dept.
Group Treasury Planning Dept.

Administrative Division

Group General Affairs Dept.
Group Internal Control Promotion Office56