Ending March 31, 2014

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 Sheets

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, 2014
Thousands of
U.S.dollars (note)Millions of yen
2014

2013

(4/1/13 ～ 3/31/14)

2014(4/1/12 ～ 3/31/13)(4/1/13 ～ 3/31/14)

Operating revenues  …………………………

¥ 101,386¥ 78,664$ 985,095

Operating income ……………………………

32,73018,116

318,014

Net income ……………………………………

17,27914,308167,888

Total assets ……………………………………

613,135

723,384

5,957,394

Net assets  ……………………………………

152,840

133,572

1,485,037

Per share of common stock

Yen

U.S.dollars(note)

Basic net income  ……………………………

¥ 87.24¥ 72.22$ 0.85

Cash dividends applicable to the year  ……

25.00

20.00

0.24

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, 2014, which was ¥102.92 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

'10 '11 '12 '13 '14'10 '11 '12 '13 '14'10 '11 '12 '13 '14

2'10 '11 '12 '13 '14

Management Policy
Okasan Securities Group Inc. and Consolidated Subsidiaries
1. Basic management policy for the Company
As a joint-stock company, Okasan Securities Group Inc. implements group management that encompasses its
Japanese and overseas subsidiaries, and strives to be a company that enjoys the trust of clients, shareholders
and the market via continuing expansion in enterprise value based on the provision of investment services
centring 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
During last fiscal year, which marked the 90th anniversary of establishment, the company undertook special
initiatives such as the construction of the Okasan Securities Group Tsu Building at the location of its first office,as well as the opening of a trading room at the Muromachi head office of Okasan Securities, a key subsidiary.
Under the new management team formed when our new CEO took office in April 2014, the company positions
the next three years as an important period during which it aims to make significant progress ahead of the 95th
and 100th anniversaries of its establishment, and has therefore drawn up a new medium-term business plan.
Under the new medium-term business plan, the company aims to increase enterprise value as a body of
professional investment advisors to improve management structure in order to ensure stable growth in any
environment, by directly leveraging its “Customer First” management philosophy.
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, andaim to put customer interests first.

3

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
Given the increasing globalization of the world economy and the development of advanced and diversified
financial products, needs for investment advice grew considerably. At the same time, the emergence ofspecialist internet brokerages and the expansion of the securities businesses of the megabanks caused
competition in the securities industry to intensify.
In this environment, the Company believes that the leveraging of each group company’s business strengths
to establish the infrastructure to rapidly and accurately respond to the increasingly diverse asset management
needs of individual investors is an important management issue. Based on the management philosophy of
the “Customer First” the company is implementing its new medium-term business plan, aiming to expand thefoundations of the business via the pursuit of clients’ interests, and thereby drive continuing growth in enterprisevalue.

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 weface the challenges of a rapidly changing business landscape, we have undertaken to deliver such solutions
so as to speed up the decision-making process and to enhance efficiency of the managerial and supervisorysystems.
(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 8 directors, which enables it to make a quick decision by being small in number.
We have introduced the operating officer system, clarifying the roles of the Board of Directors, which makes
management decisions and supervises management, and executive officers, who are in charge of businessexecution, to strengthen the business management of the Group. The Board of executive officers consists of 15

4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
As regards the structure of the management monitoring, out of 5 auditors in total that includes 2 statutory
auditors, 3 are outside auditors. Auditors constitute an auditors’ meeting, decide on auditing policies according
to laws and regulations and articles of incorporation based on the rules of auditors’ meeting, and make up
audit opinions from the reports of auditors. And through attending the Board of Directors and other important
meetings etc., hearing the Board of Directors and looking through important approved documents etc., they
oversee the process of decision making at the Board of Directors and the state of business execution of
directors. In addition, they are trying to implement a proper auditing in cooperation with independent auditors
and the divisions in charge of internal auditing.
Okasan Securities Group Inc. entered into an agreement with the 3 outside auditors to limit their liabilities
under Article 423, Paragraph 1 of the Companies Act to the amount provided by laws and ordinances.
(4) Internal auditing structure
As part of efforts to contribute to secure appropriate business operations such as reducing management risks
and preventing wrongdoings, we set up internally the auditing division and assigned six staff there. The auditing division makes up an audit plan in each fiscal year, periodically implements an on-the-spot audit based on
the plan and inspects documents when necessary. The results of auditing are reported to 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, 2014

Ⅰ. Analysis of operating results
During the fiscal year, the Japanese economy enjoyed a steady underlying recovery. Personal consumption andhousing investment remained firm, while the employment environment improved, and there was an increasingly
clear recovery in capital investment thanks to improvement in corporate earnings. The outlook was more cautious
in the second half of the fiscal year, ahead of the rise in the consumption tax, but the increase in the consumer
price index (overall index excluding fresh food) has remained firmly above 1% year on year since November, so
conditions continued to indicate an end to deflation.
In the forex market, the depreciation of the yen accelerated after the Bank of Japan introduced its quantitative andqualitative easing policy in early April. The dollar/yen rate rose to around ¥105/$ at year-end, because of the Federal Reserve Board decision to taper its quantitative easing in December. The strength of the US economy has
continued to support the US dollar since the beginning of 2014, despite concern regarding developing economies,
and the exchange rate ended the fiscal year at ¥103/$. The euro-yen rate has continued to rise as measures
aimed at solving Europe’s fiscal problems have come to an end and economies bottomed, and ended the fiscal
year at around ¥142/€.
The equity market rose to close to 16,000 on the Nikkei 225 in late May, as it responded positively to yen depreciation, but it subsequently corrected and remained in the 13,000–15,000 range. Towards the end of the year,
however, it gradually priced in expectations for recovery in the world economy, rising to a fiscal year high of morethan 16,000. Since the beginning of 2014, however, the deteriorating situation in the Ukraine and concern about
economic slowdown in Japan following the consumption tax hike have caused another market correction, and the
Nikkei 225 ended the fiscal year at 14,827.83, up 19.6% over the year.
In the bond market, yields remained stable at low levels throughout the fiscal year, thanks to support from accommodative monetary policy by the Bank of Japan. Expectations for increase in prices were heightened by the implementation of dramatic monetary easing, and the yield on the 10-year Japanese government bond rose to 1% at
one stage in late May, but it declined gradually thereafter, as bond buying by the Bank of Japan ensured a favourable supply-demand environment. The 10-year government bond yield ended the fiscal year at 0.640%.
In this environment, Okasan Securities Co., Ltd., the core company in the group, transferred its Tsu branch to the
newly completed Okasan Securities Group Tsu Building in Tsu City, Mie Prefecture, which is where the company
was founded, and significantly upgraded branch functions. The establishment of the Muromachi Trading Roomat the Muromachi head office (Nihonbashi Muromachi, Chuo-ku, Tokyo) also improved trading functionality. The
Company also began broadcasting its own investment information programing live to each of its branches, as it
built new information distribution infrastructure.
The group’s specialist online brokerage Okasan Online Securities Co., Ltd., undertook a complete renewal of its
futures and options trading system, and improved trading functionality for smart phones, as well as leveraging
group resources to improve information distribution.
Okasan Asset Management Co., Ltd. implemented flexible management attuned to change in the market, information distribution and product provision, actively supporting the sales efforts of marketing agents, and pursuing
growth in assets under management.
As a result of the above, operating revenues grew 28.9% year on year to ¥101,386 million in the fiscal year, with
net operating revenues rising 29.6% to ¥99,989 million. SG&A expenses were 14.0% higher year on year at¥67,259 million, net income was higher by 20.8% at ¥17,279 million.

61. Fees and commissions received
Fees and commissions received grew 41.5% year on year to ¥69,991 million. The main breakdown was asfollows.
(1) Brokerage commissions
Average daily trading volume on the First Section of the Tokyo Stock Exchange (Japanese common shares) was
3,459 million shares, up 40.3% year on year, while turnover increased 92.5% to ¥2,887 billion. In this environment,
equity brokerage commissions rose 90.6% year on year to ¥27,876 million, thanks to the recovery in the equity
market. Bond brokerage commissions were down 23.8% year on year to ¥16 million, while other brokerage commissions declined 11.0% to ¥620 million, and total brokerage commissions grew 85.8% to ¥28,512 million.
(2) U nderwriting fees, selling concessions, and commissions on solicitation for sales of financial
instruments to specified investors and others
During the fiscal year under review, the Company successfully increased the number of underwritten deals bothfor public offerings of already listed stocks and for initial public offerings from the preceding fiscal year, thanks toeconomic recovery and gains by the equity market. As a result, commissions on equity rose 17.8% year on yearto ¥383 million. In bond underwriting, the Company served as administrative managers and/or lead managers for
issues of government guaranteed bonds, municipal bonds and corporate bonds, as well as activated the role as a
key underwriter of bonds issued under the fiscal investments and loan program, with commissions on bonds rising
57.8% year on year to ¥142 million.
As a result of the above, total underwriting fees and selling concessions, and commissions on the sale of financial
instruments to specific investors and other rose 26.5% year on year, to ¥525 million.
(3) Administrative charges on offering, selling and solicitation for sales of financial instruments tospecified investors, and other fees and commissions received
During the fiscal year, the Company adapted its product strategy to address changes in market conditions resulting from the tapering of quantitative easing in the US as the economy there recovered. It focused on the sale offoreign equity funds, including funds that center on biotechnology and healthcare, which are one long-term market
highlight. In light of the equity market correction since the beginning of the calendar year 2014, the Company also
worked on marketing funds investing in high-yield European bonds and high-yield short-term US notes.
As a result of the expansion of the product lineup and efforts to increase assets under custody throughout the fiscal year, administrative charges on offering, selling and solicitation for sales of financial instruments to specified investors rose 17.7% year on year to ¥25,431 million. Other fees and commissions received, including trust fees oninvestment trusts, and commissions on foreign exchange margin trading and insurance products sold, increased
28.4% year on year to ¥15,523 million.
Fees and commissions received
Breakdown by category
Fees and commissions
received
Brokerage commissions

80

Equities

60

40

20

30

2013<B>

Ratio(4/1/12 ～ 3/31/13)<A>/<B>¥ 28,512¥ 15,344

185.8

27,876

14,626

190.6

16

21

76.2

Others

620

697

89.0

Underwriting fees and selling concessions

525

415

126.5

Equities

383

325

117.8

Bonds

142

90

157.8

25,431

21,607117.7

15,52312,090128.4¥ 69,991¥ 49,456

141.5

Other commissions

Trading profits

2014<A>(4/1/13 ～ 3/31/14)

Bonds

Placement commissions'10 '11 '12 '13 '14(Millions of yen except percentage)

Total

7

(Millions of yen except percentage)

Breakdown by product

Equities

2014<A>

2013<B>

Ratio(4/1/13 ～ 3/31/14)(4/1/12 ～ 3/31/13)<A>/<B>¥ 28,572¥ 15,221

187.7

302

228

132.5
121.9

Fees and commissions
received

Investment trusts

39,94232,75680

Others

1,175

1,251

93.9

Total

¥ 69,991¥ 49,456

141.5

Bonds

60

2. Trading profits
40
Equitymarkets in Japan, the US and Europe performed strongly during the fiscal year, thanks mainly to monetaryeasing by the Bank of Japan and economic recovery in the US. US equity brokerage volumes were therefore
20
strong,while Japanese equity trading also contributed, with total profits on equity trading rising 24.2% year on

year to ¥15,236 million. Foreign bond trading profits declined in reaction to the strength of the previous fiscal year,
and'10total
trading'11bond'12 '13'14 profits decreased 11.7% year on year, to ¥12,705 million.
Including the above, and other trading losses of ¥278 million (compared with losses of ¥593 million the previous
fiscal year), total trading profits were ¥27,663 million, up 6.2% year on year.
Trading profits
Trading profits

30

20

10

(Millions of yen except percentage)

2014<A>

2013<B>

Ratio(4/1/13 ～ 3/31/14)(4/1/12 ～ 3/31/13)<A>/<B>

Equities¥ 15,236¥ 12,264

124.2

Bonds

12,705

14,384

88.3

Others

-278

-593

-

¥ 27,663¥ 26,055

106.2

Total

'10 '11 '12 '13 '14

3. Net financial income
Financial income grew 33.0% year on year to ¥2,947 million, while financial expenses decreased 8.5% to ¥1,397
million, so net financial income rose 125.0% to ¥1,550 million.
4. Other operating income
Other operating income other than that related to the financial products transaction business and incidental operations declined 16.2% year on year to ¥785 million.
5. Selling, general and administrative expenses
Selling, general and administrative expenses grew 14.0% year on year to ¥67,259 million, mainly because of increase in personnel and transaction related expenses.
6. Other income (expenses)
The Company posted other expenses of ¥1,149 million, compared to other income of ¥1,301 million in the previous fiscal year, due to write-offs/capital losses on intangible fixed assets such as software and transfers to reserves against financial instrument trading.

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 above policy, the company raised the dividend for the fiscal year by ¥5 to ¥25 per share.

Ⅱ . Analysis of financial position
1. Assets, liabilities and net assets
Consolidated total assets at the fiscal year-end were ¥613,135 million, down ¥110,249 million year on year. Thiswas mainly due to declines of ¥63,872 million in trading assets, ¥34,878 million in receivables on collateralized
securities transactions, and ¥20,237 million in receivables arising from unsettled trades.
Liabilities declined ¥129,517 million year on year to ¥460,295 million. This was mainly due to declines of ¥107,389
million in payables on collateralized securities transactions, ¥17,146 million in short-term borrowings, and ¥14,885
million in trading liabilities.
Net assets grew ¥19,268 million year on year to ¥152,840 million. This was mainly because of increases of¥13,378 million in retained earnings, ¥2,656 million in unrealized gains on available-for-sale securities, and ¥2,661
million in minority interests.
2. Cash flows
Cash and deposits at the end of the consolidated fiscal year were ¥45,436 million, up ¥5,896 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 ¥35,316 million. This was mainly because of ¥75,761 million change
in trading assets, cash inflow of ¥31,581 million due to increase in income before income taxes and minority interests, and a cash outflow of ¥72,511 million due to net change in receivables/payables on collateralized securities
transactions.
< Cash flows from investing activities >Cash outflows due to investing activities were ¥4,743 million. The main factors were a cash inflow of ¥5,800 million due to the sale of short-term investments, a cash outflow of ¥4,626 million due to the acquisition of intangible
assets, a cash outflow of ¥3,900 million due to the purchase of short-term investments, and a cash outflow of¥3,034 million due to the acquisition of property and equipment.
< Cash flows from financing activities >Cash outflow due to financing activities was ¥25,000 million. This was mainly due to ¥18,832 million net change inshort-term borrowings, and a cash outflow of ¥3,901 million due to the dividend payment.

9

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Balance Sheet ─ March 31, 2014
Thousands of
U.S. dollars(note 3)2014

Millions of yen
2014
ASSETS
Current assets:
Cash on hand and in banks (notes 10 and 21)
Cash segregated as deposits for customers andothersTrading assets (notes 4 and 10)
Receivables arising from unsettled trades
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¥

49,4672013¥

44,508$

480,635

56,744
213,987
61,60465,341
277,859
20,23755,335551,341
2,079,159
598,562

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

185,257
3,204
1,765
8,531
(15)

1,461,125
10,68817,04280,723(165)

Total current assets

543,326

662,022

5,279,110

Property and equipment, net of accumulated
depreciation of ¥11,743 million ($114,098
thousand) in 2014 and ¥11,718 million in 2013
(note 10)

19,077

16,498185,358

Intangible assets, net

8,306

7,705

80,703

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

35,702
3,103
1,839
3,660
(1,878)30,185
3,256
1,901
4,220
(2,403)346,891
30,15017,86835,561(18,247)

42,42637,159412,223

Total investments and other assets
TOTAL

¥

See accompanying notes to consolidated financial statements.

10613,135¥

723,384$

5,957,394

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Balance Sheet ─ (Continued) ─ March 31, 2014

2014

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

Millions of yen

144,688
6,536
14,954¥

Thousands of
U.S. dollars(note 3)
2014

2013
159,573
19,339$1,405,830
63,506145,297

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

131,651
29,98733,348176,024
4,232
7,176
561,330

235,736
283,589
347,882
1,543,704
91,83874,864
4,192,246

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

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

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

81,76314,001
67,34364,41929,975257,501

Financial instruments transactions reserve (note 14)
Total liabilities

2,327
460,295

1,677
589,812

22,6104,472,357

18,59012,91391,223

18,59012,913
77,845

180,626
125,466
886,349(3,701)
119,025(3,637)
105,711(35,960)
1,156,481

Net assets
Shareholders' equity (note 15):
Common stockAuthorized ─ 750,000,000 shares in 2014 and2013
Issued ─ 208,214,969 shares in 2014 and 2013
Capital surplus
Retained earnings
Treasury stock, at cost, 10,178,729 shares in 2014
and 10,112,670 shares in 2013
Total shareholders' equity
Accumulated other comprehensive income (loss):Unrealized 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
income

9,180
371
(144)
339

6,524
371
(442)
-

89,195
3,605(1,399)
3,294

9,746

6,453

94,695

Minority interests

24,06921,408233,861

152,840

133,572

1,485,037

Total net assets
Commitments and contingencies (note 22)
TOTAL

¥

See accompanying notes to consolidated financial statements.

11613,135¥

723,384$

5,957,394

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Statement of Income ─ Year ended March 31, 2014
Thousands of
U.S. dollars(note 3)2014

Millions of yen
2014
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
Negative goodwill
Interest expense
Impairment loss
Loss on sale and disposal of property andequipment and intangible assets
Loss on devaluation of investment securities
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

69,991
27,663
2,947
785
101,386
1,397
99,98967,25932,7302013¥

49,456
26,0552,216
937
78,664
1,528
77,13659,02018,116$680,052
268,782
28,634
7,627
985,095
13,573
971,522653,508
318,014

708
449
100
(96)
(146)

576
29
741
396
(91)
-

6,879
4,363
972
(933)
(1,419)(1,837)
(242)

(304)
(5)

(17,849)(2,351)(650)
565(1,149)

(285)
244
1,301

(6,316)
5,490(11,164)

31,581

19,417

306,850

12,267
107
12,374

5,405(1,394)
4,011

119,1891,040
120,229

19,207

15,406

186,621

1,928

1,098

18,733

17,279¥14,308$167,888

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income ─ Year ended March 31, 2014
Thousands of
U.S. dollars(note 3)2014

Millions of yen
2014
2013
Income before minority interests¥

Other comprehensive income (note 19):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Total other comprehensive income

19,207

¥

3,440
298
3,738

15,406

$

7,475
398
7,873

186,62133,424
2,895
36,319Comprehensive income¥

22,945¥23,279$222,940

Comprehensive income attributable to:
Owners of parent
Minority interests¥

20,233
2,712¥

20,666
2,613$

196,590
26,350See 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, 2014
Millions of yen
Shareholders’ equity
Commonstock
Balances at March 31, 2012¥

Changes arising during the year:
Increase of capital surplus
resulting from changes ininterest in consolidated
subsidiaries
Cash dividends
Net income
Reversal of surplus on land
revaluation
Purchase of treasury stock
Increase of treasury stock
resulting from changes ininterest in consolidated
subsidiaries
Net changes other thanshareholders’ equity
Total changes during the year¥

12,911¥64,490Total
shareholders’equityTreasurystock,
at costRetainedearnings¥(3,582)¥2

22

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

(14)

22
(14)

(41)

(41)

-

2

13,355(55)

13,302

18,59012,913

77,845(3,637)

105,711(3,901)
17,279(65)
113,314(3,901)
17,279¥92,4092(975)
14,308(975)
14,308

Balances at March 31, 2013

Balances at March 31, 2014

18,590Capitalsurplus18,590

¥

0

(0)

(65)
1

0

13,378(64)

12,913

14¥

91,223¥(3,701)¥

119,025

Millions of yen
Accumulated other comprehensive income (loss)
Unrealized
Total
Remeasure- accumulated
gain onForeignments
available-for Surplus onothercurrencyof defined comprehensive-saletranslation
land
securities revaluation adjustments benefit plans income (loss)
Balances at March 31, 2012

¥

564

¥

327

¥ (840)

¥

-

¥

51

Minority
interests

Total net
assets¥ 19,556¥ 112,016

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

5,960
5,960

44
44

398
398

-

6,402
6,402

1,852
1,852

8,254
21,556

Balances at March 31, 2013

6,524

371

(442)

-

6,453

21,408

133,572

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
Balances at March 31, 2014

2(975)
14,308
22
(14)

(41)

(3,901)
17,279
(65)
1
2,656
2,656
¥ 9,180

¥

-

298
298

339
339

3,293
3,293

2,661
2,661

5,954
19,268371¥ (144)¥ 339¥ 9,746¥ 24,069¥ 152,840

15

Thousands of U.S. dollars(note 3)
Shareholders’ equity
Commonstock
Balances at March 31, 2013$180,626

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
Balances at March 31, 2014

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
Balances at March 31, 2014

Capitalsurplus$125,466$

756,364

Total
shareholders'equityTreasurystock,
at costRetainedearnings$(35,338)$(37,903)167,888$

180,626$

1,027,118

0

(0)

(632)
10

(37,903)167,888
(632)
10

0

129,985(622)

129,363

125,466$

1,156,481

Thousands 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)

Minority
interests

Total net
assets$ 63,389$ 208,006$ 1,297,823$ 3,605$ (4,295)$$

886,349-$$(35,960)

62,699(37,903)167,888(632)
10
25,80625,806

-

2,896
2,896

$ 89,195$ 3,605$ (1,399)

See accompanying notes to consolidated financial statements.

16

3,294
3,294
$

3,294

$

31,99631,99625,85525,85557,851
187,214

94,695$ 233,861$ 1,485,037

Okasan Securities Group Inc. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows ─ Year ended March 31, 2014
Thousands of
U.S. dollars(note 3)

Millions of yen
2014

2013

2014

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

31,581¥

19,417$

306,850

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

4,044

Impairment loss

3,964

39,293

146

-

1,419

Interest and dividend income(3,660)(2,798)(35,562)Interest expense

1,494

1,619

14,516

Loss on sale and disposal of intangible assets

1,592

24

15,468Gain on sale of investment securities

(67)

(725)

(651)

Loss on devaluation of investment securities

242

5

2,351

Negative goodwill incurred
Decrease (increase) in deposits segregated for customer

-

(396)

-

8,560

(19,800)

83,17175,761(109,136)

736,115(10,625)(18,598)(103,236)(72,511)

71,113(704,538)(1,028)10,751(9,988)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
securities transactions
Increase (decrease) in deposits received
Decrease (increase) in short-term guarantee deposits

668

(548)

6,491

Increase (decrease) in guarantee deposits received

2,456

10,31723,863

Increase (decrease) in allowance for doubtful accounts

(524)

(355)

(5,091)

Increase (decrease) in liabilities for retirement benefits

(398)

512

(3,867)

Increase (decrease) in financial instruments transactions reserve

650

285

6,316

Other, net

1,994

(803)

19,37440,375(35,152)

392,294

Interest and dividend received

Sub-total

3,473

2,829

33,745Interest paid

(1,508)(1,613)(14,652)

Income taxes paid

(7,024)(2,249)(68,247)

35,316(36,185)

343,140

Payment for short-term investments(3,900)（2,997）(37,893)

Proceeds from sale of short-term investments

5,800

3,570

56,354

Payment for purchase of property and equipment(3,034)(731)(29,479)

Payment for intangible assets(4,626)(1,953)(44,948)

Payment for investment securities

(688)

(951)

(6,685)

Proceeds from sale of investment securities

565

1,668

5,490

Net cash provided by (used in) operating activities
Cash flows from investing activities:

Payment for investments in affiliates
Other, net
Net cash used in investing activities

17-(1,864)

-

1,140

222

11,077(4,743)(3,036)(46,084)

Cash flows from financing activities:
Increase (decrease) in short-term borrowings(18,832)

37,972(182,977)

Proceeds from long-term borrowings

-

825

-

Payments on long-term borrowings(1,502)(1,001)(14,594)

Proceeds from sale of treasury stock
Purchase of treasury stock
Dividends paid to shareholders
Dividends paid to minority shareholders of subsidiaries
Other, net
Net cash provided by (used in) financing activities

1

-

10

(65)

(14)

(632)

(3,901)(975)(37,903)

(49)

(36)

(476)

(652)

(541)

(6,335)(25,000)

36,230(242,907)

Effect of exchange rate changes on cash and cash equivalents

323

404

3,138

Net increase (decrease) in cash and cash equivalents

5,896(2,587)57,287

Cash and cash equivalents, beginning of year

39,54041,022

384,182

Increase in cash and cash equivalents from merger-

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

See accompanying notes to consolidated financial statements.

18

45,436

1,105¥

39,540$441,469

Notes to Consolidated Financial Statements
Okasan Securities Group Inc. and Consolidated Subsidiaries ─ Year ended March 31, 2014
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements include the accounts of Okasan Securities Group Inc.
(the“Company”) and its subsidiaries.
The Company and its domestic subsidiaries maintain their books of account and prepare their financial
statements in conformity with financial accounting standards of Japan, and its foreign subsidiary inconformity with those of the country of its domicile.
“Practical Solution on unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated
Financial Statements”(ASBJ Practical Issues Task Force (PITF) No. 18, May 17, 2006) requires that for the
preparation of consolidated financial statements, the accounting policies and procedures applied to a parent
company and its subsidiaries for similar transactions and events under similar circumstances should be
unified, in principle, and financial statements prepared by foreign subsidiaries in accordance with IFRSs
or the generally accepted accounting principles in the United States (U.S. GAAP) tentatively may be used
for the consolidation process, however, the items listed in the PITF should be adjusted in the consolidation
process so that net income is accounted for in accordance with Japan GAAP unless they are not material.
The Company made necessary modification to the consolidated financial statements according to the PITF.
The accompanying consolidated financial statements have been prepared in accordance with the provisions
set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations,and in conformity with accounting principles and practices generally accepted in Japan and applicable to
Japanese securities companies.
In preparing the accompanying consolidated financial statements, certain reclassifications have been madein the financial statements issued domestically in Japan in order to present them in a form which is morefamiliar to readers outside Japan. In addition, the notes to the consolidated financial statements include
information which is not required under accounting principles generally accepted in Japan but is presented
herein as additional information.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.	Consolidation − The consolidated financial statements include the accounts of the Company and its 10
subsidiaries. There are no affiliates accounted for by equity method at March 31, 2014.
The“Accounting Standards for Consolidation”require the control or influence concept for the
consolidation scope of subsidiaries and affiliates. Under the control or influence concept, a company inwhich the Company or its consolidated subsidiaries, directly or indirectly, are able to exercise control
over operations is fully consolidated, and a company over which the Company and/or its consolidated
subsidiaries have the ability to exercise significant influence is accounted for by the equity method.
Investments in affiliates are accounted for by the equity method. The difference between the cost andthe underlying net assets at the date of investments in subsidiaries or affiliates is allocated to identifiable
assets and liabilities based on fair market value at the date of investments. The unallocated portion of
the difference is recognized as goodwill or negative goodwill. Goodwill is amortized over its estimatedperiod of benefit on a straight-line basis and negative goodwill is amortized over the appropriate period
to reflect the investments, while immaterial goodwill or negative goodwill is charged to income whenincurred.
All significant intercompany balances and transactions have been eliminated in consolidation.

19

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

20

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.
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 applied“Accounting Standard for Retirement Benefits”(ASBJ Standard No. 26 on May
17, 2012) and“Guidance on Accounting Standard for Retirement Benefits”(ASBJ Guidance No.25 on
May 17, 2012) from this current fiscal year, except for the provisions as described in paragraph 35 of“Accounting Standard for Retirement Benefits”and paragraph 67 of“Guidance on Accounting Standard
for Retirement Benefits”. The Company has recorded the amount of retirement benefit obligations
after deducting pension plan assets as liabilities for retirement benefits, and unrecognized actuarial
differences are recorded as liabilities for retirement benefits.
Concerning the application of the Accounting Standard for Retirement Benefit, based on the provisional
treatment set out Section 37 of the accounting standards, the effects of such changes at March 31,
2014 have been adjusted in remeasurements of defined benefit plans through accumulated othercomprehensive income.
As a result, the Company recorded liabilities for retirement benefits of ¥5,190 million ($50,428 thousand)at March 31, 2014. And accumulated other comprehensive income increased by ¥338 million ($3,284
thousand) and minority interests decreased by ¥2 million ($19 thousand). And the net income per shareis increased by ¥1.71 ($0.02).
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 to21

apply to taxable income in the years in which those temporary difference are expected to be recoveredor settled, and the effect on deferred tax assets and liabilities of a change in tax rates is recognized inincome in the period that includes the enactment date.
The Company has filed consolidated tax returns in Japan.

m.	Foreign currency transactions − Under the“Accounting Standards for Foreign Currency
Transactions,”receivables and payables denominated in foreign currencies are translated into yen at
the rate of exchange as of the balance sheet dates and gains or losses resulting from the translation offoreign currencies are credited or charged to income. Assets and liabilities, and revenues and expensesof an overseas subsidiary are translated into yen at the rate of exchange as of the balance sheet dates,
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, 2014.
p.	New accounting pronouncements not yet adopted − On May 17, 2012, the ASBJ issued ASBJ
Statement No.26,“Accounting Standard for Retirement Benefits”and ASBJ Guidance No.25,“Guidanceon Accounting Standard for Retirement Benefits,”which replaced the Accounting Standard for
Retirement Benefits that had been issued by the Business Accounting Council in 1998 and the otherrelated guidance.
The Company expects to apply the revised accounting standard regarding the amendment of thecalculation method for present value of defined benefit obligations and current service costs from the
beginning of the fiscal year ending March 31, 2015. Because the provisional treatment is set out in theaccounting standard, it is not required to be adopted retroactively.
The effect of adoption of this revised accounting standard 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 the reader,using the prevailing exchange rate at March 31, 2014, which was ¥102.92 to U.S. $1.
The convenience translations should not be construed as representations that the yen amounts have been,
could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.

22

4. TRADING ASSETS AND LIABILITIES
Trading assets and trading liabilities at March 31, 2014 and 2013 consist of the following:

Millions of yen
2014
2013
Trading assets:
Equity securities and warrants
Government, corporate and other bonds
Derivatives¥¥

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

¥

¥

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

Thousands of
U.S. dollars
2014

2,204
275,58273
277,859$

937
158,617
19
159,573$$$

18,9082,060,066
185
2,079,159

6,704
1,398,621
505
1,405,830

5. MARGIN TRANSACTIONS
Margin transactions at March 31, 2014 and 2013 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
2014
2013

Thousands of
U.S. dollars
2014¥

58,968¥49,854$572,950¥

2,636
61,604¥

5,481
55,335$25,612598,562

¥
¥

9,314
5,640
14,954¥¥

9,276
10,063
19,339$$90,49754,800145,297

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, 2014 and 2013 consist of the following:

Assets:Cash collateral for securities borrowed
Liabilities:
Cash collateral for securities loaned
Sell Gensaki transactions

Millions of yen
2014
2013

Thousands of
U.S. dollars
2014¥

150,379¥

185,257$

1,461,125¥

24,262
24,262¥

126,651
5,000
131,651$

235,736
235,736

¥

23

¥

$

7. SECURITIES FOR NON-TRADING PURPOSES
Acquisition cost, balance sheet amount, gross unrealized gain and gross unrealized loss of available-for-salesecurities with fair value at March 31, 2014 and 2013 is summarized as follows:
Millions of yen
Gross
Gross
unrealized
unrealized
loss
gain

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

¥
¥

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

¥

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

¥
¥

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

¥

¥

1,100
1,100
12,513322
1,140
13,975

2,999
200
3,199
12,687299
759
13,745

¥
¥
¥

¥

¥
¥
¥

¥

$
$

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

$

$

10,688
10,688
121,580
3,128
11,077
135,785

18,3748
59
18,44128
28
13,21513
40
13,268

¥
¥
¥

¥

¥
¥
¥

¥

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

(27)
(27)
(441)
(24)
(465)

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

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

0
0

$
$
$

$

0
0
178,52778
573
179,178

$
$
$

$

(0)
(0)
(2,186)(602)(2,788)

Balancesheet amount

¥
¥
¥

¥

¥
¥
¥

¥

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

2,999
201
3,200
25,461
312
775
26,548

Balancesheet amount

$
$
$

$

10,688
10,688297,9213,206
11,048312,175

Securities classified as available-for-sale securities for which fair value is not available are unlisted equity
securities amounting to ¥3,544 million ($34,435 thousand) and ¥3,504 million, and investments in limited
partnership and similar partnership amounting to ¥30 million ($291 thousand) and ¥136 million at March 31,
2014 and 2013, respectively.

24

For the years ended March 31, 2014 and 2013, 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, 2014
Equity securities
Government, corporate and other bonds
Other

¥

126
5,800
439
6,365

¥
March 31, 2013
Equity securities
Government, corporate and other bonds
Other

Gross realized
gains

¥

¥

¥

51
63
114

¥

1,042
3,300
896
5,238

Gross realized
losses

¥

¥

¥

697
63
760

¥

(0)
(47)
(47)

¥

(34)
(34)

¥

Thousands of U.S. dollars
Proceeds fromsales ofavailable-for-sale
Gross realized
Gross realized
securities
gains
lossesMarch 31, 2014
Equity securities
Government, corporate and other bonds
Other

$

1,224
56,355
4,265
61,844

$

$

496
612
1,108

$

$

(0)
(457)
(457)

$

8. INVESTMENTS IN AN AFFILIATEThe aggregate carrying amount of investments in an affiliate at March 31, 2014 and 2013 are ¥47 million ($457
thousand) and ¥22 million, respectively.
9. BORROWINGS
The weighted-average interest rates applicable to the short-term borrowings are 0.50% and 0.51% at March
31, 2014 and 2013, respectively.
Long-term borrowings at March 31, 2014 and 2013 consist of the following:Thousands of
U.S. dollars
2014

Millions of yen
2014
2013
Borrowings, maturing in installments through 2017;
bearing weighted average interest of 2.36% at March 31,
2014
Borrowings, maturing in installments through 2016;
bearing weighted average interest of 2.61% at March 31,
2013¥

Less current installments¥

25

13,735¥-$

133,453-

15,238

-

5,320

3,663

51,6908,415¥

11,575$

81,763

Lease liabilities at March 31, 2014 and 2013 consist of the following:Thousands of
U.S. dollars
2014

Millions of yen
2014
2013
Lease liabilities maturing in installments through 2021;
bearing weighted average interest of 3.17% at March 31,
2014
Lease liabilities maturing in installments through 2019;
bearing weighted average interest of 3.04% at March 31,
2013

¥

1,988

Less current installments
¥

¥

-

$

19,316

­-

1,309

-

547

448

5,315

1,441

¥

861

$

14,001(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
2014
2013
Long-term borrowings
Current installments of long-term borrowings

¥

2,775
3,950

¥

6,725
1,175

Thousands of
U.S. dollars
2014$

26,96338,379Annual maturities of borrowings after March 31, 2015, are as follows:
Millions ofyenYear ending March 31
2016
2017
2018
2019

¥

6,255
2,160
-

Thousands of
U.S. dollars$

60,77520,987-

Annual maturities of lease liabilities after March 31, 2015, are as follows:
Millions ofyenYear ending March 31
2016
2017
2018
2019

¥

498
452
335
143

Thousands of
U.S. dollars
$

4,839
4,392
3,255
1,389

To meet its liquidity needs stably and expeditiously and to strengthen financial operations, the Company
established a commitment line of ¥21,000 million ($204,042 thousand) with 7 financial institutions at both
March 31, 2014 and 2013, respectively.

26

As is customary in Japan, both short-term and long-term bank borrowings are made under generalagreements which provide that security and guarantees for present and future indebtedness will be given
upon request of the bank, and that the bank shall have the right to offset cash deposits against obligations
that have become due or, in the event of default, against all obligations due the bank.
10. PLEDGED ASSETSAt March 31, 2014 and 2013, the carrying value of assets pledged is as follows:
Millions of Yen
2014
2013
Cash in banks
Trading assets
Property and equipment
Investment securities

¥

¥

2,115
52,7798,060
19,70982,663¥¥

3,761
57,2158,616
18,537
88,129Thousands of
U.S. dollars
2014
$

$

20,550512,816
78,313
191,498
803,177

Assets in the above table are pledged for the following liabilities:
Millions of yen
2014
2013
Short-term borrowings
Borrowings from securities finance companies
Long-term borrowings¥¥

61,4091,802
5,640
68,851¥¥68,7591,154
4,850
74,763Thousands of
U.S. dollars
2014
$

$

596,667
17,50954,800668,976

In addition to above, at March 31, 2014, trading assets, etc. amounting to ¥65,015 million ($631,704 thousand)and investments securities amounting to ¥45 million ($437 thousand) are deposited as guarantee forsettlement of trading accounts and securities borrowed, respectively. At March 31, 2013, trading assets,etc. amounting to ¥63,732 million and investments securities amounting to ¥469 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, 2014 and 2013, except for those disclosed
in the above table, are as follows:
Millions of yen
2014
2013
Securities loaned on margin transactions
Securities pledged for borrowings on margin transactions
Securities loaned
Other

¥

¥

5,945
9,773
24,246
24,50464,468¥¥

10,957
8,487
126,488
28,411
174,343

Thousands of
U.S. dollars
2014
$

$

57,763
94,957
235,581
238,088626,389

The fair value of the securities received as collateral at March 31, 2014 and 2013 are as follows:
Millions of Yen
2014
2013
Securities received on margin transactions
Securities borrowed
Securities pledged as collateral
Other

¥

¥

27

52,732
155,11258,0183,536
269,398¥¥

57,016
190,130
45,674
5,479
298,299

Thousands of
U.S. dollars
2014
$

$

512,359
1,507,112
563,720
34,3572,617,548

11. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese corporate, inhabitant and businesstaxes based on income which, in the aggregate, resulted in a statutory tax rate of approximately 38.0％ in2014 and 2013.
Following the promulgation of the law“Partial Amendment of the Income Tax Act, etc.”(Act No.10 of2014) on March 31, 2014, special reconstruction corporation tax will not be imposed from the consolidated
fiscal years beginning on or after April 1, 2014. And following the promulgation of the law“Local
Corporation Tax”(Act No.11 of 2014) on March 31, 2014, local corporation tax will be imposed from theconsolidated fiscal years beginning on or after October 1, 2014.
As a result, the amount of deferred tax assets (the amount after offsetting deferred tax liabilities) decreasedby ¥192 million ($1,866 thousand) and income taxes-deferred for the current year increased by ¥192 million($1,866 thousand) and unrealized gain on available-for-sale securities increased by ¥0 million ($0 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, 2014 and 2013 are as follows:
Thousands of
U.S. dollars
2014

Millions of yen
2014
2013
Deferred tax assets:
Tax loss carryforwards
Liabilities for retirement benefits (employees)
Financial instruments transactions reserve
Accrued bonuses
Accrued business tax
Allowance for doubtful accounts
Liabilities for retirement benefits (directors andcorporate auditors)
Impairment loss
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

¥

28

4,237
1,843
827
772
714
606

¥

4,480
2,046
596
823
541
790

$

41,16817,907
8,035
7,501
6,937
5,888

511
416
354
300
137
135
477
11,329(6,418)
4,911

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

4,965
4,042
3,440
2,915
1,331
1,312
4,635
110,076(62,359)
47,717(6,390)(1,605)(254)(8,249)(3,338)(4,480)(1,605)(202)(6,287)(1,138)(62,087)(15,595)(2,468)(80,150)(32,433)¥$

Net deferred tax assets at March 31, 2014 and 2013 are reflected in the accompanying consolidated balance
sheet under the following captions:Thousands of
U.S. dollars
2014

Millions of yen
2014
2013
Current assets – Deferred income taxes
Investments and other assets – Deferred income taxes
Non-current liabilities – Deferred income taxes

¥

¥

1,754
1,839
(6,931)(3,338)

¥

¥

1,765
1,901
(4,804)(1,138)$$17,042
17,868(67,343)(32,433)

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, 2013 was as follows:
2013
Statutory tax rate
Expenses not deductible for tax purposes
Income not credited for tax purposes
Per capita tax
Valuation allowance
Loss on devaluation of investments in affiliates
Other
Effective tax rate

38.0%
0.8
(0.8)
0.4
4.8
(20.8)(1.7)
20.7%

The reconciliation of the statutory tax rate and the effective tax rate for the year ended March 31, 2014 is
not subject to disclosure because the difference between the rates does not exceed 5% of the statutory tax
rate.
12. RETIREMENT AND PENSION PLANS
March 31, 2014
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.
Followings are the information of defined benefit plans at March 31, 2014 and for the year then ended.
(1) Reconciliation of changes in retirement benefit obligation
Millions ofyen
Retirement benefit obligation at beginning of year
Service cost
Interest cost
Actuarial gain and loss
Benefits paid
Retirement benefit obligation at end of year¥¥

13,539
654
126
20
(745)
13,594

Thousands of
U.S. dollars$$

131,549
6,355
1,224
194
(7,239)132,083

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.

29

(2) Reconciliation of changes in plan assets
Millions ofyenPlan assets at beginning of year
Expected return on plan assets
Actuarial gain and loss
Employer contributions
Benefits paid
Plan assets at end of year

¥

¥

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

Thousands of
U.S. dollars$$

74,582
350
5,121
5,373
(3,770)81,656(3) Reconciliation between net of retirement benefit obligation and plan assets, and liability or asset for
retirement benefits recognized in consolidated balance sheet
Millions ofyenFunded retirement benefit obligation
Plan assets¥

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

¥

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

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

¥
¥

5,190
5,190

Thousands of
U.S. dollars$$

82,044(81,655)
389
50,03950,428$$50,42850,428(4) The components of retirement benefit expenses
Millions ofyenService cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Retirement benefit expenses

¥

¥

654
126
(37)
173
916

Thousands of
U.S. dollars
$

$

6,355
1,224
(360)
1,681
8,900

(5) Remeasurements of retirement benefit plans before related tax effects
Millions ofyen
Unrecognized actuarial loss
Retirement benefit obligation at end of year

¥
¥

521
521

Thousands of
U.S. dollars
$
$

5,062
5,062

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

40 %
37
20
3
100 %

30

(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.
(6) Basis for calculation of actuarial assumptions
The assumptions used in accounting for the above plans at March 31, 2014 are as follows:(a) Discount rate
0.64%(b) Long-term expected rate of return 0.50%
The amount to be paid by the Company and consolidated subsidiaries to the defined contribution plans was¥190 million ($1,846 thousand) for the year ended March 31, 2014.
March 31, 2013
The Company and its domestic consolidated subsidiaries have defined benefit retirement and pension plans,
which consist of a defined contribution retirement and pension plan (Securities Omnibus DC Okasan Plan),a corporate defined benefit pension plan and an unfunded retirement and severance plan that provide forlump-sum payment of benefits.
The funded status of retirement and pension plans at March 31, 2013 consisted of the followings:
Millions ofyen
Projected benefit obligations
Fair value of plan assets
Unrecognized actuarial gain
Amount recognized in the consolidated balance sheet¥(13,539)
7,676
159(5,704)¥The components of retirement benefit expenses for the year ended March 2013 were as follows:
Millions ofyenService cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss¥

Contributions to the defined contribution plan
Retirement benefit expenses

¥

750
127
(33)
481
1,325
184
1,509

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

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

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 are entitled
if they were to retire or sever immediately at the balance sheet date. The liabilities for retirement andseverance benefits related to these plans was ¥1,440 million ($13,991 thousand) and ¥1,323 million at March
31, 2014 and 2013, respectively.

31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
0.035% to 2.33%.
The following table provides the Company’s total asset retirement obligation for the years ended March 31,
2014 and 2013:
Millions of yen
2014
2013
Balance, beginning of year
Liabilities incurred by asset acquisition
Accretion expenses
Liabilities settled
Other increase (decrease)
Balance, end of year

¥

¥

600
108
12
(101)
14
633

¥

¥

580
21
11
(5)
(7)
600

Thousands of
U.S. dollars
2014
$

$

5,830
1,049
116
(981)
136
6,150

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, 2014 and 2013 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, 2013 which was approved by the General Meeting of
Shareholders held on June 28, 2012 are as follows:(a) Total dividends(b) Cash dividends per common share(c) Record date(d) Effective date¥975 million¥5
March 31, 2012
June 29, 2012

Cash dividends for treasury stock held by subsidiaries of ¥25 million were excluded from the above table.
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)
(b)
(c)
(d)

Total dividends
Cash dividends per common share
Record date
Effective date

¥3,901 million ($37,903 thousand)¥20 ($0.19)
March 31, 2013
June 28, 201332

Cash dividends for treasury stock held by subsidiaries of ¥98 million ($952 thousand) were excluded fromthe above table.
Dividends to be paid after the balance sheet date but the record date for the payment belongs to the year
ended March 31, 2014 which was approved by the General Meeting of Shareholders held on June 27, 2014
are as follows:
(a)
(b)
(c)
(d)
(e)

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

¥4,997million ($48,552 thousand)
Retained earnings¥25 ($0.24)
March 31, 2014
June 30, 201416. 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, 2014 decreased by ¥901 million ($8,754 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 394.8% and 359.7% at March
31, 2014 and 2013, respectively.
18. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Major elements of selling, general and administrative expenses for the years ended March 31, 2014 and2013 are summarized as follows:
Millions of yen
2014
2013
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

¥

¥

33

13,327
34,840
6,154
4,951
4,044
727
(1)
3,217
67,259¥¥10,96730,042
5,801
5,148
3,964
620
38
2,440
59,020Thousands of
U.S. dollars
2014
$

$

129,489
338,516
59,794
48,10539,2937,064(10)
31,257
653,508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, 2014 and 2013 are as follows:
Millions of yen
2014
2013
Net unrealized holding gain on other securities:
Arising during the year
Reclassification adjustment
Before tax amountTax benefit (expense)
Net-of-tax amount¥Foreign currency translation adjustments:
Arising during the year

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

¥

298

Total other comprehensive income

¥

3,738

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

Thousands of
U.S. dollars
2014
$

398
¥

7,873

50,175
1,797
51,972(18,548)
33,424

2,895$

36,31920. 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, 2014 and 2013 are as follows:
Yen
2014
Basic net income per share

¥

87.24

2013
¥

72.22

Millions of yen
2014
2013
Net income
Net income not applicable to common shareholders
Net income applicable to common shareholders¥¥

17,27917,279¥¥14,30814,308

Number of shares(Thousand)
2014
2013
Weighted average number of shares outstanding on whichbasic net income per share is calculated

34

198,058

U.S. dollars
2014

198,120$

0.85

Thousands of
U.S. dollars
2014
$
$

167,888
167,888

(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, 2014 and 2013 are as follows:
Yen
2014
Net assets per share¥

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

650.24

U.S. dollars
2014

2013
¥

566.19$

6.32

Millions of yen
2014
2013

Thousands of
U.S. dollars
2014¥

152,840¥

133,572$

1,485,037¥

24,069128,771¥

21,408112,164$

233,861
1,251,176

Number of shares(Thousand)
2014
2013
Number of shares outstanding at the end of year on which
net assets per share is calculated

198,036

198,102

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, 2014
and 2013 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
2014
2013

Thousands of
U.S. dollars
2014¥

49,467¥44,508$

480,635¥(4,031)45,436¥(4,968)39,540$(39,166)
441,469

22. COMMITMENTS AND CONTINGENCIESAt March 31, 2014 and 2013, the Company and certain subsidiaries have guaranteed approximately ¥24
million ($233 thousand) and ¥87 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.

3523. LEASES(a) Finance Lease
Acquisition cost, accumulated depreciation and net carrying amount of leased assets, if they had been
capitalized at March 31, 2014 and 2013 are as follows, which would have been reflected in the consolidatedbalance sheet if finance lease accounting had been applied to the finance leases currently accounted for as
operating leases:
Millions of yen
2014

Acquisition cost
Accumulated depreciation
Net carrying amount2013

Furniture
andFixtures

Software

¥

¥

¥

-

¥

-

Total
¥

-

¥

Furniture
andFixtures

Software

¥

¥

227
220
7

¥

-

¥

Total
¥
¥

227
220
7

Thousands of U.S. dollars
2014
Furniture
andFixtures
SoftwareTotal
Acquisition cost
Accumulated depreciation
Net carrying amount

$
$

-

$

-

$

$

-

$

* Furniture and fixtures is classified as a property and equipment and software is classified as an intangible
asset in the accompanying consolidated balance sheet.
Future minimum payments required under finance leases at March 31, 2014 and 2013 are as follows:
Thousands of
U.S. dollars
2014

Millions of yen
2014
2013
Due within one year
Due after one year

¥
¥

-

¥
¥

8
8

$

-

$

Lease payments, depreciation equivalents and interest expense equivalents for the years ended March 31,
2014 and 2013 are as follows:
Thousands of
U.S. dollars
2014

Millions of yen
2014
2013
Lease payments
Depreciation equivalents
Interest expense equivalents

¥

8
7
0

¥

89
77
2

$

78
68
0

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

36

(b) Operating Lease
Future minimum lease payments required under noncancellable operating leases as of March 31, 2014 and2013 are as follows:
Millions of yen
2014
2013
Within one year
Over one year

¥
¥

855
1,291
2,146

¥
¥

788
2,138
2,926

Thousands of
U.S. dollars
2014
$
$

8,307
12,54420,851

24. FINANCIAL INSTRUMENTS
Conditions of Financial instruments(1) Management policy
The Company and subsidiaries (the“Group”) primary engages in financial instruments trading business,
which include trading in securities, brokerage for trading in securities, underwriting and distribution of
securities, public offering and secondary distribution of securities and private offering of securities. For
the above mentioned business, the Group uses its own resources and finances funds through bank loans
and call money etc.
The Group makes short-term deposits and loans for margin transaction, and operates securities trading
for the Group own accounts for fund management purposes.
Regarding the trading business, the Group works to do brokerage for trading in securities smoothly andcontribute to a sound market system in an Exchange transaction, and works to make fair prices andtransact smoothly in a Non-Exchange transaction.
Regarding the derivative financial instruments, the Group uses interest rate swaps to hedge futurefluctuations of interest rates and does not enter into interest rate swaps for trading or speculative
purposes.
(2) Financial instruments and risks
The main financial assets of the Group consist of cash on hand and in banks, cash segregated as deposits
for customers and others, trading assets, receivables on margin transactions, receivables on collateralized
securities transactions and investment securities.
The cash in banks are exposed to credit risk of banks. Most of cash segregated as deposits forcustomers and others are cash segregated as deposits for customers, and are segregated from the Groupown assets and trusted to banks in accordance with the Japanese Financial Instruments and Exchange
Law. The trusted funds are secured by the Trust Act.
Trading position is made for meeting customers’ various needs, complementing the market and hedging
the position. Such trading involves market and counterparty risks which possibly effect on the financial
position of the Group. Market risk is the risk arising from future changes in the market values of
securities, interest rates and foreign currency exchange rates, and counterparty risk is the risk arisingfrom default by the counterparty.
Receivables on margin transactions consist of loans receivable from customers and cash deposits as
collateral for securities borrowed from securities finance companies, and are exposed to credit riskof counterparties. Receivables on collateralized securities transactions consist of cash collateral for
securities borrowed, and are exposed to counterparty risk. Investment securities are exposed to issuer’s
credit risk and market risk.
The main financial liabilities of the Group consist of trading liabilities, payables on margin transactions,payables on collateralized securities transactions, deposits received, guarantee deposits received andborrowings.
Payables on margin transactions consist of borrowings from securities finance companies and proceedsfrom securities sold for customers’ accounts. Payables on collateralized securities transactions consist of
cash collateral for securities loaned and are received as collateral for a loan of bonds such as government
bonds. Deposit received is temporary unsettled amount arising from transaction with customers.
Guarantee deposits received is deposit received for margin transactions from customers. Part offinancial liabilities, such as borrowings, are exposed to liquidity risk that is the risk for the Group not tomake a payment on due date. The borrowings with variable interest rate are exposed to interest rate37

fluctuation risk.
The Group uses derivative financial instruments as part of asset and liability management. For trading
purpose, the Group uses derivatives listed on exchange such as stock index futures and bond futures,
as well as over-the-counter derivatives such as forward foreign exchange transactions. For non-trading
purpose, the Group uses interest rate swaps. Interest rate swaps are used to hedge future cash flow
fluctuation arising from interest rate fluctuations on the borrowings. The difference in amounts to be
paid or received on interest rate swaps is recognized over the life of the agreements as an adjustment
to interest expense, if the agreements meet certain hedging criteria “exceptional(
accounting method”).
Interest rate swaps are exposed to interest rate fluctuation risk, however, counterparties are limited to
the lender.
(3) Financial instruments risk management
The Group maintains appropriate risk management and control measures in order to maintain the Groupfinancial stability and to effectively use the Group business resources.
The Company controls its purchases, sales and market risk of investment securities in accordance withinvestment securities management rules.
Okasan Securities Co., Ltd., our core firm, controls market fluctuation risk principally through position
limits, and counterparty risk principally through credit limits by each financial instrument. Primarily,
trading department checks the position and the gain or loss. Secondarily, risk control department
ascertains the position and the assessed risks reported by the trading department, and supervise theposition.
Proprietary position at every month end is stress tested based on the scenario of 10% decrease instocks and 100 basis points increase in interest rates for bonds, and effect of an expected loss on capital
adequacy ratio is reported to Financial Service Agency. The stress test indicates that the expected lossis ¥136 million ($1,321 thousand) as of March 31, 2014.
In order to reduce the risks, receivables on margin transactions are controlled by daily credit
management through setup of inception criteria for margin transactions and limits for open interest,
deposits reception when market fluctuates in accordance with customer management rules. Liquidity
risk is controlled based on fund management plan in accordance with liquidity risk management rules.
The Group also makes contingency plan to mitigate liquidity crisis.
Securities subsidiaries other than Okasan Securities Co., Ltd. also maintain appropriate risk controls.
(4) Supplemental explanation regarding fair value of financial instruments
The contract amount of the derivative transactions does not represent the risk of the derivativetransactions.
Fair value of financial instruments
The carrying amounts on the consolidated balance sheet, fair value, and differences as of March 31, 2014
and 2013 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”.)

38Millions of yen
2014

2013

Carrying
value

Carrying
Fair value

Differences

¥

¥

value

Fair value

Differences¥¥

Assets:Cash on hand and in banks¥

49,46749,467-¥44,50844,508-Cash segregated as deposits forcustomers and others

56,74456,744-65,341

65,341

Trading securities

213,968

Available-for-sale securities

33,228-

213,968-

277,786

277,786-

33,228-29,74929,749----20,237

20,237-61,60461,604-55,33555,335-150,379

150,379-

185,257

185,257

-

3,536

3,536

-

4,203

4,203

-

¥ 568,926¥ 568,926¥-¥ 682,416¥ 682,416¥-¥ 144,636¥ 144,636¥-¥ 159,553¥ 159,553¥-

trades

6,536

6,536

-

-

-

-

Payables on margin transactions

14,954

14,954-

19,33919,339-securities transactions

24,262

24,262-

131,651

131,651-

Deposits received

29,187

29,187-29,98729,987-

Guarantee deposits received

35,80435,804-33,34833,348-

Short-term borrowings

158,878

158,8868

176,024

176,036

12

Long-term borrowings

8,415

8,473

58

11,575

11,683108

Total¥ 422,672¥ 422,738¥

66¥ 561,477¥ 561,597¥

120

Derivative transactions

¥

¥

¥

-

¥

¥

¥

-

Trading assets, short-term
investments and investment
securities

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

Payables on collateralized

(32)

(32)

39

54

54

Thousands of U.S. dollars
2014
Carrying
value

Fair value

Differences

480,635$$

Assets:Cash on hand and in banks$

480,635-

Cash segregated as deposits forcustomers and others

551,341

551,341-

Trading securities

2,078,974

2,078,974-

Available-for-sale securities

322,853

322,853

-

-

-

-

598,562598,562-

1,461,125

1,461,125-

34,35734,357-$ 5,527,847$ 5,527,847$-$ 1,405,324$ 1,405,324$-

trades63,506

63,506-

Payables on margin transactions

145,297

145,297-

securities transactions

235,736

235,736-

Deposits received

283,589

283,589-

Guarantee deposits received

347,882

347,882-

Short-term borrowings

1,543,704

1,543,782

78Long-term borrowings

81,76382,326563

Total$ 4,106,801$ 4,107,442$

641

Derivative transactions

$

$

$

-

Trading assets, short-term
investments and investment
securities

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

Payables on collateralized

(311)

(311)

* 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 arising fromunsettled trades, Receivables on margin transactions, 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
2014
2013
Unlisted equity securities
Investments in limited partnership and similar partnership
Total

41

¥
¥

3,544
30
3,574

¥
¥

3,504
136
3,640

Thousands of
U.S. dollars
2014
$
$

34,435291
34,726

(3) Projected future redemption of monetary claim and securities with maturities
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¥-¥-

Due after
ten years¥-

56,744

-

-

-

1,100
-

300
566

23
405

-

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

-

-

-

322,830¥

480,635$

3,136,708

¥

428

¥

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:
Available-for-sale securities
with maturities:
Debt securities:
Government bonds
Other
Receivables on margintransactions
Receivables on collateralized
securities transactions
Short-term guarantee deposits

866

$

-

$

-

-

Due after
ten years$-

551,341---

10,688
-

2,915
5,499

223
3,935

-

598,562---

1,461,125
34,357

-

-

-

42

$

8,414

$

4,158

$

-

March 31, 2013
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¥

44,508

¥

¥

-

¥

-

Due after
ten years¥-

65,341

-

-

-

3,000
201

300
569

5

-

55,335---

185,257
4,203

-

-

-

357,845

¥

869

¥

5

¥

-

Due after
five years(4) The annual maturities of the long-term debt and other interest-bearing debt
March 31, 2014
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¥ 153,558
5,320
9,314
¥ 168,192¥$ 1,492,013
51,69190,497$ 1,634,201

6,255

Due after
one yearthrough
two years

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

6,255

$

$

60,77560,775

43

¥

-

¥

¥

2,160
2,160

¥

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

$

-

$

$

20,987
20,987-¥-¥

Due after
four years
throughfive years
$

$

-

-

Due after
five years$$-

March 31, 2013

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

¥

¥

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

Due after
four years
throughfive years¥¥

Due after
one yearthrough
two years

172,362
3,663

¥

9,276
185,301

¥

5,320
5,320

¥

6,255
6,255

¥

-

¥

Due after
five years

-

¥

-

¥

-

¥

* Borrowings from securities finance companies are deemed to be settled within one year.
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, 2014 and 2013 are summarized as follows:(1) Stocks
Millions of yen
2014

2013

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

945
586

¥

Valuation
gain (loss)

(5) ¥
1

(5)
1

6

2

12
5

16
16
¥

9,182
5,694

$

(49)
10

$

(2) ¥
1

(2)
1

(4)

9
8

9
8

(0)
0

(4)
11
(1)

3
2

4
4

(1)
2
(0)

(49)
10

58

19

(39)

117
49

156
156

(39)
107
(10)

$

44

¥

Valuation
gain (loss)

Fair value

3,191 ¥
2,131

Thousands of U.S. dollars
2014
Contract ornotional
Valuationamounts
Fair value gain (loss)
Stock index futures:
Written$
Purchased
Stock index options:
Written
Purchased
Over-the-counter stock options:
Written
Purchased

Contract ornotional
amounts¥

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.
(2) Bond
Millions of yen
2014

2013

Contract ornotional
amounts Fair value
Bond futures:
Written
Purchased¥

1,301
11,283¥(0)(2)

Valuation
gain (loss)
¥
¥

(0)
(2)
(2)

Contract ornotional
amounts¥

Valuation
gain (loss)

Fair value

1,310 ¥
5,095

1 ¥
(4)
¥

1
(4)
(3)

Thousands of U.S. dollars
2014
Contract ornotional
Valuationamounts
Fair value gain (loss)
Bond futures:
Written
Purchased$

12,641
109,629

$

(0)
(19)

$
$

(0)
(19)
(19)

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

2013

Contract ornotional
amounts Fair value
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

¥

0

Valuation
gain (loss)
¥

0

¥

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

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

45

Contract ornotional
amounts

Fair value

¥

¥

312

2,121
997
1,033
876
523
464

(0)

Valuation
gain (loss)
¥

(0)

¥

17
8
14
14
3
5
61

17
8
14
14
3
5

Thousands of U.S. dollars
2014
Contract ornotional
Valuationamounts
Fair value
gain (loss)
Foreign exchange margin trading:
Written:$
Forward foreign exchange:
Written:Australian dollar
Mexican PesoSouth Africa Rand
Russian ruble
Turkish liraBrazilian real
Other

1,506

$

8,716
4,538
2,400
2,235
1,341
1,069
2,138

0

$

0

$

(68)
(58)
(58)
(0)
(39)
(39)
(20)
(282)

(68)
(58)
(58)
(0)
(39)
(39)
(20)

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, 2014 and 2013 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
2014
2013
2014

Hedged items
Long-term
borrowings

¥

4,965

¥

7,500

$

48,241*1	Hedge accounting method is the exceptional accounting method which is the difference in amounts
to be paid or received on interest rate swaps being recognized over the life of the agreements as an
adjustment to interest expense.
*2	Fair value of derivative financial instrument is included in fair value of the long-term borrowings ashedged items for certain long-term borrowings for which interest rate swap contracts are used to hedge
the interest rate fluctuations.
26. INVESTMENT AND RENTAL PROPERTY“Accounting Standard for Disclosures about Fair Value of Investment and Rental Property”(ASBJ
Statement No. 20, November 28, 2008) and its“Guidance on Accounting Standard for Disclosures about Fair
Value of Investment and Rental Property”(ASBJ Guidance No. 23, November 28, 2008) require to disclose
fair value of investment and rental property in the notes to financial statements.
The Company and certain consolidated subsidiaries own their rental office buildings, land etc (hereafter“rental property”). Income from the rental property is ¥163 million ($1,584 thousand) and ¥155 million forthe years ended March 31, 2014 and 2013, respectively.

46

The amounts recognized in the consolidated balance sheet and fair values related to the rental property are
as follows:
Millions of yen
2014
2013
Consolidated balance sheet amount:
Balance at beginning of the year
Increase/(decrease)
Balance at end of the year¥

Fair value

¥

¥

5,538
(205)
5,333

¥

5,367

Thousands of
U.S. dollars
2014
$

¥

5,859
(321)
5,538

$

53,809(1,992)51,817

¥

5,420

$

52,147

The above fair value is based on real-estate appraisals, and is estimated by the Company.
27. BALANCES AND TRANSACTIONS WITH RELATED PARTY
The Company’ officer and the close relatives had a majority equity ownership in Tosei Co., Ltd. at March
31, 2013.
Transactions between the Company and Tosei Co., Ltd. for the year ended March 31, 2013 were summarized
as follows:
Millions of yen
Transactions:Purchases of shares of associated company¥

257

There are 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, 2014 and 2013 are summarized as follows:

Securities
Operating revenues:
Revenues from third
partiesIntersegment revenues
Total

¥
¥

88,125
5,747
93,872

Segment income¥

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

Millions of yen
2014
Reported segments
Assetmanagement
Support
Total

Adjustments Consolidated¥¥ 101,378
16,213¥ 117,591¥

8(16,213)¥ (16,205)¥¥

101,386
101,386¥

32,920

¥

(190)

¥

32,730¥¥12,34812,348¥905
10,466
11,371

30,630

¥

1,327

¥

963

¥

574,242¥

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

470,454

¥

2,075

¥

17,969¥ 490,498¥ (30,203)¥

460,295

¥

794

¥

30

¥

2,964

¥

¥

¥

4,044

¥
¥

256

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

Adjustments

Consolidated

Millions of yen
2013
Reported segments
Assetmanagement
Support
Total

Securities
Operating revenues:
Revenues from third
partiesIntersegment revenues
Total

3,788

68,0504,821
72,871

¥
¥

9,565
9,565

¥
¥

1,041
9,106
10,147¥ 78,656
13,927¥ 92,583¥¥

8(13,927)(13,919)¥¥

78,66478,664

Segment income¥

15,230

¥

569

¥

1,243

¥ 17,042

¥

1,074

¥

18,116

Segment assets¥

701,058¥

13,713¥

26,244¥ 741,015¥(17,631)¥723,384

Segment liabilities¥

614,574

¥

1,595

¥

15,019¥ 631,188¥(41,376)¥

589,812

¥

1,166

¥

36

¥

2,692

¥

¥

70

¥

3,964

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

3,894

2,633
1,858

-

5
-

2,638
1,858

(422)
(330)

2,216
1,528

443

5

2,529

2,977

513

3,490

48

Thousands of U.S. dollars
2014
Reported segments
Asset
Securities management
Support
Total
Adjustments

Consolidated

Operating revenues:
Revenues from third
partiesIntersegment revenues
Total

$

856,248
55,839912,087$

119,977
119,977$

8,793
101,691
110,484$

985,018
157,530
1,142,548$

77(157,530)(157,453)$

985,095
985,095

Segment income$

297,610$

12,893

$

9,357

$

319,860$(1,846)$

318,014Segment assets$ 5,579,499$

146,793$ 279,052$ 6,005,344$(47,950)$

5,957,394

Segment liabilities$ 4,571,065$

20,161$ 174,592$ 4,765,818$(293,461)$

4,472,357

$

$

291

$

$

$

2,488

$

39,293

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

7,715

28,79936,80533,74518,082-

155-

33,90018,082(5,266)(4,509)28,634
13,573

20,152

146

55,22775,525

13,11788,642

1. (1) Components of“Adjustments in segment income”are as follows:
Millions of yen
2014
2013
Elimination of intersegment transactions
Unallocated company-wide expenses

¥
¥

2,786
(2,976)
(190)

¥
¥

3,401
(2,327)
1,074

Thousands of
U.S. dollars
2014
$
$

27,070(28,916)(1,846)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
2014
2013

Thousands of
U.S. dollars
2014(59,416)
54,481(4,935)$ (577,303)
529,353$ (47,950)¥¥(64,092)
46,461(17,631)

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¥¥

Company-wide liabilities are holding company’s liabilities.

49

Millions of yen
2014
2013

Thousands of
U.S. dollars
2014(53,034)
22,831(30,203)$ (515,293)
221,832$ (293,461)¥¥(57,468)
16,092(41,376)2. Segment income is adjusted with operating income in the consolidated statement of income.
Related information
1. Information by products and services
Disclosures are omitted because operating revenues from third parties of a single product and service
are over 90% of operating revenues in the consolidated statement of income.
2. Geographical information(1) Operating revenues
Disclosures are omitted because operating revenues from customers in Japan are over 90% of
operating revenues in the consolidated statement of income.
(2) Property and equipment
Disclosures are omitted because property and equipment located in Japan are over 90% of
property and equipment in the consolidated balance sheet.
3. Information by major customers
Disclosures are omitted because no particular third party whose operating revenues are over 10% of
operating revenues in the consolidated statement of income exists.
Information of impairment loss on fixed assets by reported segments

Securities
Impairment loss¥-

Securities
Impairment loss$-

Millions of yen
2014
Reported segments
Assetmanagement
Support
Total

Adjustments

Consolidated

¥

¥

¥

-

¥

52

¥

52

94

146

Thousands of U.S. dollars
2014
Reported segments
Assetmanagement
Support
Total

Adjustments

Consolidated

$

$

$

-

$

505

$

505

914

1,419

Adjustments are holding company’s impairment loss.
Not applicable for the year ended March 31, 2013
Negative goodwill incurred by reported segments
Negative goodwill of ¥396 million which are not allocated to each reported segments were reported forthe year ended March 31, 2013. The negative goodwill occurred when the Company acquired additional
shares of its subsidiary. No negative goodwill has occurred for the year ended March 31, 2014.

50

51

REFERENCE DATA

52

Okasan Securities Co., Ltd.
Balance Sheet ─ March 31, 2014
Thousands of
U.S. dollars
2014

Millions of yen
2014
ASSETS
Current assets:
Cash on hand and in banks
Cash segregated as deposits for customers andothersTrading assets
Receivables arising from unsettled trades
Receivables on margin transactions
Receivables on collateralized securities transactions
Short-term guarantee deposits
Deferred income taxes
Other current assets
Allowance for doubtful accounts

¥

2013

13,781¥

11,928$133,900

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

29,363
277,375
19,27550,160185,257
3,281
1,405
2,780
(14)

198,057
2,077,099
540,507
1,461,125
26,885
13,41828,167(165)

460,978

580,8104,478,993

Property and equipment, net of accumulated
depreciation

2,361

1,944

22,940Intangible assets, net

341

365

3,313

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

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

411
211
3,058
1,780
1,285
(926)

4,081
2,050
29,14916,673
12,583(8,968)

5,719

5,819

55,568

Total current assets

Total investments and other assets
TOTAL

¥

53

469,399¥

588,938$

4,560,814

Okasan Securities Co., Ltd.
Balance Sheet ─ (Continued) ─ March 31, 2014
Thousands of
U.S. dollar
2014

Millions of yen
2014
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

¥

2013

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

159,485
18,022
131,650
19,417
14,441
158,940
2,048
10,076
514,079$

1,405,733
69,442
133,958
235,736
191,557
91,5081,469,248
24,806
122,892
3,744,880

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

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

7,725
5,160
1,012
13,897

26,96349,086
10,82486,873Financial instruments transactions reserve

1,281

914

12,446395,645528,890

3,844,199

5,000
29,20039,55173,751

5,000
29,20025,85260,052

48,581
283,716
384,289
716,586

3

(4)

29

73,75460,048716,615

Total liabilities
Net assets
Shareholder’s equity:
Common stock
Authorized―240,000 shares
Issued―100,000 shares in 2014 and 2013
Capital surplus
Retained earnings
Total shareholder’s equity
Accumulated other comprehensive income (loss):
Unrealized gain (loss) on available-for-salesecurities
Total net assets
TOTAL

¥

54

469,399¥

588,938$

4,560,814

Okasan Securities Co., Ltd.
Statement of Income ─ Year ended March 31, 2014
Thousands of
U.S. dollar
2014

Millions of yen
2014
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):Gain on sale of investment securities
Provision for financial instruments transactions
reserve
Other, net

Income before income taxes
Income taxes:
Current
Deferred

Net income

¥

55

2013

53,19324,943
2,104
80,2401,371
78,86951,50727,362¥37,541
23,865
1,673
63,0791,396
61,68347,434
14,249$516,839
242,353
20,443779,635
13,321
766,314500,457
265,857

-

60

-

(367)
179
(188)

(104)
325
281

(3,566)
1,739(1,827)

27,174

14,530264,030

10,392
83
10,475

6,704
(867)
5,837

100,972806
101,778

16,699

¥

8,693

$

162,252

CORPORATE DATABOARD OF DIRECTORS(At July, 2014)(At July, 2014)

Company Name
OKASAN SECURITIES GROUP INC.

ChairmanSeiichi Kato

Date of Establishment
August 25, 1944

Vice Chairman
Tetsuo Kato

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

President
Hiroyuki Shinshiba
Senior Managing Director
Kazuhiko Nonaka

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

Director
Hiroyuki Shindo
Mitsuru Tanaka
Hiroyuki Murai
Masahiro Hayakawa

Phone Number+81-3-3272-2222
Paid-in Capital
18,590 Million Yen

Audit & Supervisory Board Member
Tetsumi Iwaki
Nobuyuki Natsume
Tetsuo Narukawa
Seishi Higo
Hirokazu Kono

Subsidiaries
10 companies
Listed Stock Exchanges
Tokyo Stock Exchange
Nagoya Stock Exchange

ORGANIZATION CHART(At July, 2014)
General meeting of Shareholders
Audit & Supervisory Board Member
Audit & Supervisory Board
Board of Directors
ChairmanVice Chairman
President

Audit & Supervisory Board Members Office

Management Conference

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

Group Public and Investors Relations Dept.
Group Information Technology Dept.
Group Compliance Dept.
Group Secretariat
Group Personnel Planning Dept.
Group Treasury Planning Dept.

Administrative Division

Group General Affairs Dept.
Group Internal Control Promotion Office56