Mizuho Securities : Summary of Consolidated Financial Statements for the Fiscal Year Ended March 31, 2016 Under Japanese GAAP(PDF/401KB)

e29a6468-3989-4e5c-a395-d62d25a7f0c3.pdf

April 28, 2016‌

Summary of Consolidated Financial Statements for the Fiscal Year Ended March 31, 2016 Under Japanese GAAP

Company's name: Mizuho Securities Co., Ltd.	URL: http://www.mizuho-sc.com/
Representative: Tatsufumi Sakai, President
Contact: Akio Arai, General Manager of Accounting Dept. on +81 3-5208-3210
Preparation of supplemental explanatory documents: Yes
Holding of presentation meeting: No

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2016 (April 1, 2015 to March 31, 2016)

   (Amounts are rounded down to the nearest millions of yen)

   (Note) Comprehensive income:	Year ended March 31, 2016:	51,161 million yen	(-34.5%)
   Year ended March 31, 2015:	78,088 million yen	(38.0%)

2. Consolidated operating results (Percentage figures represent year-on-year changes)

   Operating revenues		Net operating revenues		Operating income		Ordinary income
   Year ended March 31, 2016	millions of yen	%	millions of yen	%	millions of yen	%	millions of yen	%
   	471,949	6.9	415,245	5.0	85,612	1.5	85,429	(1.2)
   Year ended March 31, 2015	441,331	20.0	395,552	22.4	84,384	108.1	86,477	100.4

   Net income attributable to owners of parent		Net income per share	Net income per share - fully diluted	Return on Equity
   Year ended March 31, 2016	millions of yen	%	yen	yen	%
   	61,168	4.3	30.36	―	8.8
   Year ended March 31, 2015	58,652	14.4	29.11	―	8.9

   Total assets	Net assets	Equity ratio	Net assets per share
   March 31, 2016	millions of yen	millions of yen	%	yen
   	20,659,503	739,645	3.5	354.51
   March 31, 2015	21,048,338	706,160	3.2	338.26

   Reference: Equity in net earnings of affiliated companies:	Year ended March 31, 2016: Year ended March 31, 2015:	44 million yen 32 million yen
   (2) Consolidated financial positions

   Reference: Equity (i.e. "Shareholders' equity" and "Accumulated other comprehensive income"):

   March 31, 2016:	714,377 million yen
   March 31, 2015:	681,629 million yen

3. Notes

4. Changes in significant subsidiaries (changes in specified subsidiaries accompanying changes in the scope of consolidation) during the period: None

5. Changes in accounting policies, estimates, and restatements:

6. Changes in accounting policies in accordance with revisions of accounting standards: Yes

7. Changes other than 1) above: None

8. Changes in accounting estimates: None

9. Restatements: None

   (Note) For further information, please refer to in "6. Changes in accounting policies" on page 11.

10. Number of outstanding shares (common stock)

11. Number of shares issued at end of the period (including treasury stock): March 31, 2016: 2,015,102,652 shares

    March 31, 2015: 2,015,102,652 shares

12. Number of treasury stock at end of the period:

    March 31, 2016: ― shares

    March 31, 2015: ― shares

13. Average number of outstanding shares for the period:

14. March 31, 2016: 2,015,102,652 shares

    March 31, 2015: 2,015,102,652 shares

    • Note on the status of audit procedures

      This summary of financial statements is exempt from the audit procedures based on the "Financial Instruments and Exchange Act."

    • Other important matters Not applicable

    I.	Consolidated Financial Statements	p.2
    1. Consolidated Balance Sheets	p.2
    2. Consolidated Statements of Income and Comprehensive Income	p.5
    3. Consolidated Statements of Changes in Shareholders' Equity	p.7

15. Note on the going-concern assumption

16. Significant accounting policies in the preparation of consolidated financial statements

17. Changes in accounting policies

18. Notes to Consolidated Financial Statements (Consolidated Balance Sheets)

(Consolidated Statements of Changes in Shareholders' Equity) (Per share information)

p.9

p.9 p.11 p.12 p.12 p.12 p.13

Ⅱ.

Supplemental Information (Consolidated)

p.14

1. Commissions

2. Net gain on trading

3. Consolidated Capital Adequacy Requirement Ratio

4. Quarterly Consolidated Statements of Income

p.14 p.14 p.15 p.16

Ⅲ.

Non-consolidated Financial Statements

p.17

1. Non-consolidated Balance Sheets

p.17

2. Non-consolidated Statements of Income

p.20

3. Non-consolidated Statements of Changes in Shareholders' Equity

p.21

4. Note on the going-concern assumption

p.23

Ⅳ.

Supplemental Information (Non-consolidated)

p.23

Capital adequacy requirement ratio

p.23

APPENDIX [INDEX]
1. Consolidated Financial Statements
2. Consolidated Balance Sheets

   (Millions of yen)

   As of March 31, 2015	As of March 31, 2016
   Assets
   Current assets
   Cash and bank deposits	447,202	468,021
   Cash segregated as deposits for customers and others	159,285	175,926
   Trading assets	5,858,340	7,587,509
   Trading securities and others	4,108,556	4,595,554
   Derivatives	1,749,783	2,991,955
   Receivables - unsettled trades	542,175	153,682
   Operating investment securities	55,508	39,886
   Operating loans receivable	14,303	13,835
   Receivables related to margin transactions	77,486	101,224
   Loans receivable under margin transactions	53,331	56,392
   Cash collateral for borrowed securities under margin transactions	24,155	44,832
   Collateralized short-term financing agreements-receivable	13,123,583	11,144,682
   Deposits paid for securities borrowed	4,047,550	3,698,505
   Securities purchased under agreements to resell	9,076,033	7,446,177
   Advances paid	2,756	2,044
   Securities: fail to deliver	28,452	119,202
   Short-term loans receivable	6,800	6,058
   Securities	5,811	6,831
   Deferred tax assets	24,896	13,045
   Other current assets	448,064	586,598
   Less: Allowance for doubtful accounts	(93)	(87)
   Total current assets	20,794,574	20,418,463
   Noncurrent assets
   Property and equipment	39,633	41,564
   Buildings	12,613	15,260
   Equipment	8,990	9,717
   Land	17,425	16,184
   Leased assets	604	401
   Intangible assets	89,326	93,390
   Software	44,140	53,509
   Customer related assets	43,785	38,771
   Other	1,400	1,110
   Investments and other assets	124,803	106,084
   Investment securities	78,149	68,605
   Long-term loans receivable	112	83
   Long-term guarantee deposits	13,769	13,432
   Net defined benefit asset	23,342	16,745
   Deferred tax assets	758	1,035
   Other	13,732	9,820
   Less: Allowance for doubtful accounts	(5,061)	(3,638)
   Total noncurrent assets	253,763	241,039
   Total assets	21,048,338	20,659,503

   (Millions of yen)

   As of March 31, 2015	As of March 31, 2016
   Liabilities‌
   Current liabilities
   Trading liabilities	4,858,549	5,550,897
   Trading securities and others	3,190,401	2,630,040
   Derivatives	1,668,148	2,920,857
   Payables related to margin transactions	34,980	42,887
   Borrowings on margin transactions	9,240	11,390
   Cash collateral for loaned securities under margin transactions	25,739	31,496
   Collateralized short-term financing agreements-payable	11,980,429	11,151,298
   Deposits received for securities loaned	1,416,402	1,908,957
   Securities sold under agreements to repurchase	10,564,026	9,242,340
   Deposits received	189,288	164,745
   Guarantee deposits received	529,112	525,163
   Securities: fail to receive	28,627	17,012
   Short-term borrowings	788,896	619,650
   Commercial paper	456,500	513,700
   Bonds and notes due within one year	179,556	143,009
   Lease obligations	415	662
   Income taxes payable	11,025	7,126
   Deferred tax liabilities	―	3
   Accrued employees' bonuses	31,206	32,077
   Provision for variable compensation	―	790
   Provision for bonus point redemption	783	623
   Other current liabilities	72,307	71,361
   Total current liabilities	19,161,679	18,841,010
   Noncurrent liabilities
   Bonds and notes	603,908	620,666
   Long-term borrowings	524,000	409,400
   Lease obligations	1,353	858
   Deferred tax liabilities	25,497	22,320
   Provision for directors' retirement benefits	283	290
   Provision for executive officers' retirement benefits	143	186
   Net defined benefit liability	18,557	20,764
   Other noncurrent liabilities	5,144	2,335
   Total noncurrent liabilities	1,178,889	1,076,822
   Statutory reserves
   Reserve for financial instruments transaction liabilities	1,607	2,024
   Total statutory reserves	1,607	2,024
   Total liabilities	20,342,177	19,919,857

   (Millions of yen)

   As of March 31, 2015	As of March 31, 2016
   Net assets
   Shareholders' equity
   Common stock	125,167	125,167
   Capital surplus	359,999	358,874
   Retained earnings	227,145	272,310
   Total shareholders' equity	712,312	756,352
   Accumulated other comprehensive income (loss)
   Net unrealized gains on (operating) investment securities, net of tax	24,854	21,115
   Foreign currency translation adjustments	(63,399)	(64,240)
   Remeasurement of defined benefit plans	7,862	1,149
   Total accumulated other comprehensive income (loss)	(30,682)	(41,974)
   Non-controlling interests	24,531	25,268
   Total net assets	706,160	739,645
   Total liabilities and net assets	21,048,338	20,659,503

3. Consolidated Statements of Income and Comprehensive Income

   Consolidated Statements of Income

   (Millions of yen)

   Year ended March 31, 2015	Year ended March 31, 2016
   Operating revenues
   Commissions	228,582	244,155
   Brokerage commissions	65,771	60,234
   Underwriting and selling fees, and commissions from solicitation to qualifying investors	52,991	59,908
   Offering, selling, and other commissions and fees, and commissions from solicitation to qualifying investors	38,068	38,636
   Other commissions and fees	71,750	85,374
   Net gain on trading	122,100	128,133
   Net gain on operating investment securities	18,266	16,952
   Interest and dividend income	72,381	82,708
   Total operating revenues	441,331	471,949
   Interest expenses	45,778	56,704
   Net operating revenues	395,552	415,245
   Selling, general and administrative expenses	311,168	329,632
   Transaction-related expenses	64,386	74,943
   Personnel expenses	140,864	144,209
   Real estate expenses	34,444	34,699
   Administrative expenses	25,715	31,679
   Depreciation and amortization	23,632	24,129
   Taxes and dues	4,472	3,979
   Provision of allowance for doubtful accounts	451	(432)
   Other	17,200	16,424
   Operating income	84,384	85,612
   Non-operating income	3,402	3,435
   Non-operating expenses	1,309	3,619
   Ordinary income	86,477	85,429
   Extraordinary gain	698	13,617
   Gain on sales of noncurrent assets	89	48
   Gain on sales of investment securities	609	746
   Indemnity receipt from the erroneous stock order	―	12,822
   Extraordinary loss	2,573	3,424
   Loss on sales of noncurrent assets	―	12
   Loss on disposal of noncurrent assets	410	298
   Loss on sales of investment securities	76	92
   Loss on impairment of investment securities	10	62
   Loss on impairment of golf club membership	0	0
   Impairment losses	859	843
   Head office transfer cost	881	1,508
   Cost incurred in opening of joint branches	―	190
   Provision of reserve for financial instruments transaction liabilities	334	416
   Income before income taxes and non-controlling interests	84,602	95,621
   Income taxes - current	16,755	17,966
   Income taxes - deferred	6,705	13,886
   Total income taxes	23,461	31,853
   Net income	61,141	63,768
   Net income attributable to non-controlling interests	2,489	2,599
   Net income attributable to owners of parent	58,652	61,168

   Consolidated Statements of Comprehensive Income

   (Millions of yen)
   Year ended March 31, 2015	Year ended March 31, 2016
   Net income	61,141	63,768
   Other comprehensive income (loss)
   Net unrealized gains (losses) on (operating) investment securities, net of tax	9,079	(3,780)
   Foreign currency translation adjustments	3,861	(1,951)
   Remeasurement of defined benefit plans	4,005	(6,875)
   Share in other comprehensive income of affiliates accounted for using equity method	0	0
   Total other comprehensive income (loss)	16,946	(12,606)
   Comprehensive income	78,088	51,161
   (Breakdown)
   Attributable to:
   Owners of parent	73,563	49,876
   Non-controlling interests	4,524	1,285

4. Consolidated Statements of Changes in Shareholders' Equity

   Year ended March 31, 2015

   (Millions of yen)

   Shareholders' equity
   Common stock	Capital surplus	Retained earnings	Total shareholders' equity
   Balance at beginning of period	125,167	359,999	191,868	677,034
   Cumulative effect of changes in accounting policies	2,869	2,869
   Restated balance	125,167	359,999	194,737	679,903
   Changes during the period
   Dividends of surplus	(26,196)	(26,196)
   Net income attributable to owners of parent	58,652	58,652
   Changes in scope of consolidation	(47)	(47)
   Net changes of items other than shareholders' equity
   Total changes during the period	―	―	32,408	32,408
   Balance at end of period	125,167	359,999	227,145	712,312

   (Millions of yen)

   Accumulated other comprehensive income				Non-controlling interests	Total net assets
   Net unrealized gains on (operating) investment securities, net of tax	Foreign currency translation adjustments	Remeasurement of defined benefit plans	Total accumulated other comprehensive income (loss)
   Balance at beginning of period	15,938	(65,414)	3,881	(45,594)	20,522	651,962
   Cumulative effect of changes in accounting policies	122	2,992
   Restated balance	15,938	(65,414)	3,881	(45,594)	20,645	654,954
   Changes during the period
   Dividends of surplus	(26,196)
   Net income attributable to owners of parent	58,652
   Changes in scope of consolidation	(47)
   Net changes of items other than shareholders' equity	8,916	2,014	3,980	14,911	3,885	18,797
   Total changes during the period	8,916	2,014	3,980	14,911	3,885	51,206
   Balance at end of period	24,854	(63,399)	7,862	(30,682)	24,531	706,160

   Year ended March 31, 2016

   (Millions of yen)

   Shareholders' equity
   Common stock	Capital surplus	Retained earnings	Total shareholders' equity
   Balance at beginning of period	125,167	359,999	227,145	712,312
   Cumulative effect of changes in accounting policies	(1,124)	1,124	―
   Restated balance	125,167	358,874	228,269	712,312
   Changes during the period
   Dividends of surplus	(17,128)	(17,128)
   Net income attributable to owners of parent	61,168	61,168
   Net changes of items other than shareholders' equity
   Total changes during the period	―	―	44,040	44,040
   Balance at end of period	125,167	358,874	272,310	756,352

   (Millions of yen)

   Accumulated other comprehensive income				Non-controlling interests	Total net assets
   Net unrealized gains on (operating) investment securities, net of tax	Foreign currency translation adjustments	Remeasurement of defined benefit plans	Total accumulated other comprehensive income (loss)
   Balance at beginning of period	24,854	(63,399)	7,862	(30,682)	24,531	706,160
   Cumulative effect of changes in accounting policies	―
   Restated balance	24,854	(63,399)	7,862	(30,682)	24,531	706,160
   Changes during the period
   Dividends of surplus	(17,128)
   Net income attributable to owners of parent	61,168
   Net changes of items other than shareholders' equity	(3,738)	(840)	(6,712)	(11,292)	737	(10,555)
   Total changes during the period	(3,738)	(840)	(6,712)	(11,292)	737	33,484
   Balance at end of period	21,115	(64,240)	1,149	(41,974)	25,268	739,645

5. Note on the going-concern assumption

   Not applicable

6. Significant accounting policies in the preparation of consolidated financial statements

7. Scope of consolidation

   Mizuho Securities UK Holdings Ltd.

   Mizuho International plc

   Mizuho Bank (Switzerland) Ltd.

   Mizuho Securities USA Inc.

   Mizuho Securities Asia Limited

   Mizuho Securities (Singapore) Pte. Ltd.

   Mizuho Securities India Private Limited

   Mizuho Investment Consulting (Shanghai) Co., Ltd.

   Shinko Asset Management Co., Ltd.

   Mizuho Securities Principal Investment Co., Ltd.

   Basic Capital Management Ltd.

   Mizuho Securities Research & Consulting Co., Ltd.

   Japan Investor Relations and Investor Support, Inc.

   Nippon Securities Technology Co., Ltd.

   Mizuho Securities Business Services Co., Ltd.

   Mizuho Securities Property Management Co., Ltd.

   Mitsui Securities Co., Ltd.

   Other 2 companies

   Consolidated subsidiaries (19 subsidiaries) Major subsidiaries

   Excluded from the scope of consolidation:

   Mizuho International (Nominees) Limited

   Delphinus CDO 2007-1 Limited

   Neostella Capital Co., Ltd.

   Energy & Environment Investment, Inc.

   Mobile Internet Capital, Inc.

   The Neostella Capital No.1 Investment Business Limited Partnership

   Industrial Decisions, Inc.

   Other 6 companies

8. Matters concerning the application of equity method Equity-method affiliates (11 affiliates)

   Newly applied:

   MIC Innovation Ⅳ Limited Liability Fund

   EEI Smart Energy Investment Limited Partnership

9. Matters related to the period of consolidated subsidiaries

   The closing dates of consolidated subsidiaries are as follows: March 31, 2016 18 subsidiaries

   December 31, 2015 1 subsidiary

   For a consolidated subsidiary with different closing date to the consolidated closing date, financial statements as of the subsidiary's closing date are used. However, for important transactions that took place between the closing date of the company and the consolidated closing date, adjustments necessary for the consolidation are performed.

   In addition, Mizuho Securities India Private Limited changed its closing date from December 31 to March 31, the same date as consolidated closing date, in this fiscal year. Thus, the financial period of this subsidiary in this fiscal year was extended to 15months. The impact of this change of the closing date is insignificant on consolidated financial statements.

10. Matters related to the accounting policies

12. Valuation method for significant assets

13. Valuation method for securities classed as trading products (securities held for trading purpose):

    Securities and derivative contracts classed as trading products and held by the Mizuho Securities Co., Ltd (hereinafter, the "Company") and its subsidiaries are recorded at fair value.

14. Valuation method for securities not classed as trading products:

    The following valuation methods are applied to securities that are not held for trading purposes:

15. Bonds that are to be held to maturity

    The amortized cost (straight-line) method is used.

16. Other securities

    Other securities with fair value:

    Those are recorded at fair value on the consolidated balance sheets. Differences between the cost, using the moving average method, and fair value are recorded as net unrealized gains (or losses) on investment securities.

    Other securities those are difficult to calculate fair value: Those are recorded at cost using moving average method.

    Moreover, with regard to contributions to investment business limited partnerships and similar partnerships (according to Article 2, Paragraph 2 of the Financial Instruments and Exchange Act, such contributions are regarded as negotiable securities), the Company mainly uses, as the book value, the value of its holdings of partnership assets as designated on the partnership's most recent statement of accounts that the Company is able to obtain as of the day - stipulated in the partnership agreement - on which the latest statement of accounts is reported. With regard to profit and loss obtained from the operations of the partnership, etc., the Company uses a method whereby the Company records the value of its holdings.

17. Depreciation methods used for significant depreciable assets

18. Property and equipment (excluding the leased assets)

    Both the Company and domestic consolidated subsidiaries mainly use declining-balance method.

    However, buildings acquired after 1 April 1998 (excluding the equipment, etc. they contain) are depreciated using the straight-line method.

19. Intangible assets and long-term prepaid expenses The straight-line method is mainly used.

    Moreover, software for own use is depreciated using a straight-line method determined by the duration of its potential internal use (up to 5 years).

20. Leased Assets

    Depreciation of assets under financing leases other than those for which the ownership of the leased property transfers to the lessee is calculated on declining-balance method over the period equal to lease period with the residual value of nil.

21. Accounting standards for significant reserves and allowances

22. Allowance for doubtful accounts

    In preparation for possible loss from bad debt in loans and receivables, etc., allowance for general receivables is provided based on the ratio of past loss experience and also specific receivables such as non-recoverable receivables is provided for the estimated uncollectible amounts after reviewing collectability of receivables individually.

23. Accrued employees' bonuses

    To prepare for the payment of bonuses to employees, the Company calculates the estimated value of future payments and charges an appropriate portion of this obligation to the period.

24. Provision for variable compensation

    To prepare for the payments of performance payments and stock compensation to be paid as variable compensation within compensation for directors and executive officers of Mizuho Securities Co., Ltd., the estimated payment based on the standard amount regarding variable compensation of this consolidated fiscal year has been recorded.

25. Provision for bonus point redemption

    To prepare for the cost burden for use of the Mizuho Point Service in the future, the expected required amount is calculated for this period based on the usage rate.

26. Provision for directors' retirement benefits

    To prepare for the payment of retirement benefits for directors, the necessary amount for the end of this period is recorded in accordance with the in-house regulations.

27. Provision for executive officers' retirement benefits

    To prepare for the payment of retirement benefits for executive officers, the necessary amount for the end of this period is recorded in accordance with the in-house regulations.

28. Reserve for financial instruments transaction liabilities

    Reserve for financial instruments transaction liabilities is provided for potential loss from accidents in security transactions in accordance with Article 46, Paragraph 5 of the Financial Instruments and Exchange Act, and Article 175 of "Cabinet Office Ordinance on the Financial Instruments and Exchange Business".

29. Accounting for retirement benefits

30. Allocation of expected benefit payments

    When calculating retirement benefits, the benefit formula method is used to allocate expected benefit payments to the period until this fiscal year end. Under the straight-line method for the retirement benefit payments calculation, the expected benefit divided by the total service years would be deemed as arising in each period.

31. Actuarial differences and prior service cost

    Prior service cost is charged to expenses using the lump-sum or the straight-line method based on determined years (10 years) within average remaining service year of the employees when incurred.

    Actuarial differences are also charged to expenses from the following fiscal year using the straight-line method based on determined years (10 years) within average remaining service year of the employees when incurred.

32. ) Standards for translating significant assets or liabilities denominated in foreign currencies into Japanese yen

    Foreign currency denominated claims and obligations are translated into Japanese yen at the spot rate prevailing on the closing day of this period. Currency translation losses or gains are recorded on the statements of operations as such.

    The assets, liabilities, revenues, and expenses of foreign subsidiaries are also translated into Japanese yen at the spot rate prevailing on the closing day of this period. Any translation losses or gains are recorded in the net assets under the account "Foreign currency translation adjustments" and "Non-controlling interests".

33. ) Method of significant hedge accounting

34. Gains or losses resulting from forward foreign exchange transactions entered to hedge the exchange-rate risk of

    foreign-currency-dominated equity investments in subsidiaries, to the extent effective, are included in the foreign exchange translation adjustments in net assets.

35. The method of fair value hedge is applied for foreign borrowing exposures in order to minimize the risk of exchange-rate fluctuations for foreign-currency-denominated securities and others.

36. The method of fair value hedge is applied for forward foreign exchange transactions in order to minimize the risk of exchange-rate fluctuations for foreign-currency-denominated investment securities.

37. A special disposition method is applied for interest-rate swap agreements, which are adopted to reduce interest-rate risks of subordinated borrowings, under a condition that these agreements meet the requirements of the method.

38. Accounting for consumption tax The tax exclusion method is applied.

40. Changes in accounting policies

    (Application of "Revised Accounting Standard for Business Combinations", etc.)

    The Company has applied "Revised Accounting Standard for Business Combinations (ASBJ Statement No. 21, September 13, 2013) (hereinafter, the "Business Combinations Accounting Standard"), "Revised Accounting Standard for Consolidated Financial Statements (ASBJ Statement No. 22, September 13, 2013) (hereinafter, the "Consolidation Accounting Standard"), "Revised Accounting Standard for Business Divestitures" (ASBJ Statement No. 7, September 13, 2013) (hereinafter, the "Business Divestitures Accounting Standard" ) and other standards from this consolidated fiscal year. Accordingly, the accounting methods have been changed to record the difference arising from changes in equity in subsidiaries which the Company continues to control as capital surplus, and to record business acquisition costs as expenses for the fiscal year in which incurred. In addition, regarding business combinations occurring on or after April 1, 2015, the accounting method has been changed to retroactively reflect adjustments to the amount allocated to acquisition costs arising from the finalization of the provisional accounting treatment on the consolidated financial statements in which the business combination occurs. Furthermore, presentation of Net Income and others has been changed and presentation of Minority Interests has been changed to Non-controlling Interests. In order to reflect the changes in presentation of financial statements, reclassification was made accordingly in the consolidated financial statements for the fiscal year ended March 31, 2015.

    The Business Combinations Accounting Standard and other standards have been applied in accordance with the transitional treatment set forth in Article 58-2 (3) of the Business Combinations Accounting Standard, Article 44-5 (3) of the Consolidation Accounting Standard and Article 57-4 (3) of the Business Divestitures Accounting Standard. The cumulative effects arising from the retroactive application of these new accounting policies to all the previous fiscal years were added to or deducted from capital surplus and retained earnings as of April 1, 2015.

    As a result, Capital Surplus decreased by 1,124 million yen and Retained Earnings increased by 1,124 million yen as of April 1, 2015. In addition, the impact of applying these accounting standards to Net Income for this fiscal year is nil.

41. Notes to Consolidated Financial Statements

(Consolidated Balance Sheets)	Year ended March 31, 2015	Year ended March 31, 2016
(Millions of yen)
1. Accumulated depreciation deducted from property and equipment	56,573	55,672
2. Obligations under guarantees	176	148
(potential guarantee obligation)	(83)	(55)

In accordance with Report No. 61 of the Auditing Committee of the Japanese Institute of Certified Public Accountants, titled "Auditing Procedures Concerning the Accounting for Guarantee Obligations and Quasi-Guarantees," those obligations of the Company deemed to cause the Company to be held liable as a guarantor are to be treated as quasi-guarantees and stated in notes.

3. The balance for affiliate companies is as follows:

March 31, 2015	March 31, 2016
(Millions of yen)
Investment Securities	481	521

(Consolidated Statements of Changes in Shareholders' Equity)

Fiscal Year Ended March 31, 2015 (April 1, 2014 - March 31, 2015)

	Shares at April 1, 2014	Shares increased in this year	Shares decreased in this year	Shares at March 31, 2015
Shares outstanding	2,015,102	―	―	2,015,102
Common stock
Total	2,015,102	―	―	2,015,102

1. Matters related to outstanding shares

2. Matters related to treasury stock Not applicable

Fiscal Year Ended March 31, 2016 (April 1, 2015 - March 31, 2016)

	Shares at April 1, 2015	Shares increased in this year	Shares decreased in this year	Shares at March 31, 2016
Shares outstanding	2,015,102	―	―	2,015,102
Common stock
Total	2,015,102	―	―	2,015,102

1. Matters related to outstanding shares

2. Matters related to treasury stock Not applicable

(Thousands of shares)

(Thousands of shares)

(Per share information)

(Yen)

Year ended March 31, 2015		Year ended March 31, 2016
Net assets per share	338.26	Net assets per share	354.51
Net income per share	29.11	Net income per share	30.36

(Notes)

1. Net income per share (diluted) was not shown due to no potential securities.

2. Net income per share was calculated based on the following:

Year ended March 31, 2015	Year ended March 31, 2016
Net income attributable to owners of parent (Millions of yen)	58,652	61,168
Amount not attributable to common stock shareholders (Millions of yen)	―	―
Net income attributable to common stock owners of parent (Millions of yen)	58,652	61,168
Average number of common shares outstanding (Thousands of shares)	2,015,102	2,015,102

Ⅱ. Supplemental Information (Consolidated)

1. Commissions

   	Year ended March 31, 2015	Year ended March 31, 2016	Increase/(Decrease)
   			Amount	Percentage (%)
   Brokerage commissions	65,771	60,234	(5,536)	(8.4)
   Equities	48,154	43,206	(4,948)	(10.3)
   Bonds	16,957	16,103	(853)	(5.0)
   Underwriting and selling fees, and commissions from solicitation to qualifying investors	52,991	59,908	6,917	13.1
   Equities	15,368	21,409	6,040	39.3
   Bonds	37,444	38,172	727	1.9
   Offering, selling, and other commissions and fees, and commissions from solicitation to qualifying investors	38,068	38,636	567	1.5
   Other commissions and fees	71,750	85,374	13,623	19.0
   Total	228,582	244,155	15,572	6.8

2. Breakdown by items

   	Year ended March 31, 2015	Year ended March 31, 2016	Increase/(Decrease)
   			Amount	Percentage (%)
   Equities	65,204	70,557	5,352	8.2
   Bonds	61,339	64,924	3,585	5.8
   Beneficiary certificates	78,678	78,419	(258)	(0.3)
   Other	23,360	30,253	6,893	29.5
   Total	228,582	244,155	15,572	6.8

3. Breakdown by instruments

5. Net gain on trading

   (Millions of yen)

   (Millions of yen)

   (Millions of yen)

   	Year ended March 31, 2015	Year ended March 31, 2016	Increase/(Decrease)
   			Amount	Percentage (%)
   Equities, etc.	23,545	27,069	3,524	15.0
   Bonds, etc. ・Others	98,555	101,063	2,508	2.5
   Bonds, etc.	105,486	71,653	(33,832)	(32.1)
   Others	(6,930)	29,410	36,340	―
   Total	122,100	128,133	6,032	4.9

6. Consolidated Capital Adequacy Requirement Ratio

   (Millions of yen)

   As of March 31, 2015	As of March 31, 2016
   Basic items	Total capital (A)	656,294	699,225
   Supplemental items	Net unrealized gains on (operating) investment securities, net of tax, etc.	32,716	22,265
   	Reserve for financial instruments transaction liabilities, etc.	1,607	2,024
   	Allowance for doubtful accounts	71	68
   	Subordinated long-term borrowings	74,000	49,000
   	Subordinated short-term borrowings	271,000	256,000
   Total (B)		379,396	329,357
   Deducted assets	(C)	219,570	204,694
   Equity after deduction	(A) + (B) - (C) (D)	816,120	823,888
   Amount equivalent to risk	Amount equivalent to market risk	166,488	129,846
   	Amount equivalent to counterparty risk	61,967	51,713
   	Amount equivalent to fundamental risk	75,845	83,293
   Total (E)		304,302	264,853
   Capital adequacy requirement ratio (D)/(E) * 100		268.1%	311.0%

7. Quarterly Consolidated Statements of Income

   (Millions of yen)

   Fourth quarter ended March 2015	First quarter ended June 2015	Second quarter ended September 2015	Third quarter ended December 2015	Fourth quarter ended March 2016
   Jan. 1, 2015 - Mar. 31, 2015	Apr. 1, 2015 - Jun. 30, 2015	Jul. 1, 2015 - Sep. 30, 2015	Oct. 1, 2015 - Dec. 31, 2015	Jan. 1, 2016 - Mar. 31, 2016
   Operating revenues	125,026	120,985	116,042	118,787	116,133
   Commissions	66,969	65,118	59,870	64,781	54,385
   Brokerage commissions	18,284	16,319	14,595	15,995	13,324
   Equities	13,369	11,742	10,428	11,601	9,433
   Bonds	4,700	4,405	3,876	4,178	3,643
   Underwriting and selling fees, and commissions from solicitation to qualifying investors	17,117	14,451	15,315	16,707	13,434
   Equities	5,186	4,267	5,092	6,544	5,504
   Bonds	11,783	10,129	10,140	10,049	7,852
   Offering, selling, and other commissions and fees, and commissions from solicitation to qualifying investors	10,720	12,840	10,179	8,573	7,043
   Other commissions and fees	20,847	21,506	19,779	23,504	20,583
   Net gain on trading	30,551	32,036	29,716	28,024	38,356
   Equities, etc.	3,065	11,779	3,821	8,615	2,852
   Bonds, etc. ・Others	27,486	20,256	25,894	19,408	35,504
   Bonds, etc.	21,539	14,040	23,622	5,046	28,943
   Others	5,947	6,215	2,271	14,362	6,560
   Net gain (loss) on operating investment securities	6,269	5,630	8,387	3,655	(720)
   Interest and dividend income	21,236	18,200	18,068	22,326	24,112
   Interest expenses	12,933	11,677	13,430	15,655	15,940
   Net operating revenues	112,093	109,307	102,612	103,132	100,193
   Selling, general and administrative expenses	83,620	84,574	81,041	82,831	81,184
   Transaction-related expenses	17,508	18,491	18,761	18,791	18,898
   Personnel expenses	35,467	37,550	34,874	37,434	34,350
   Real estate expenses	9,073	8,664	8,584	8,479	8,970
   Administrative expenses	7,250	8,075	8,830	7,060	7,712
   Depreciation and amortization	6,972	5,669	5,999	5,984	6,476
   Taxes and dues	945	1,524	782	1,033	638
   Other	6,402	4,597	3,208	4,047	4,137
   Operating income	28,472	24,732	21,570	20,300	19,008
   Non-operating income	874	909	1,638	(88)	976
   Non-operating expenses	504	1,001	497	1,367	752
   Ordinary income	28,842	24,640	22,711	18,844	19,232
   Extraordinary gain	233	552	12,824	69	170
   Extraordinary loss	941	421	603	812	1,587
   Income before income taxes and non-controlling interests	28,134	24,771	34,933	18,101	17,815
   Income taxes - current	7,502	3,990	2,510	3,409	8,055
   Income taxes - deferred	2,919	3,702	9,670	2,498	(1,983)
   Net income	17,713	17,078	22,752	12,194	11,743
   Net income attributable to non-controlling interests	1,706	633	473	556	935
   Net income attributable to owners of parent	16,006	16,445	22,278	11,637	10,807

   Ⅲ. Non-consolidated Financial Statements

8. Non-consolidated Balance Sheets

   (Millions of yen)

   As of March 31, 2015	As of March 31, 2016
   Assets
   Current assets
   Cash and bank deposits	320,613	283,049
   Cash segregated as deposits for customers and others	151,401	170,684
   Trading assets	4,184,018	5,990,021
   Trading securities and others	2,494,775	3,115,313
   Derivatives	1,689,243	2,874,707
   Receivables - unsettled trades	580,287	27,923
   Operating investment securities	17,516	19,010
   Operating loans receivable	3,240	3,100
   Receivables related to margin transactions	74,794	98,958
   Loans receivable under margin transactions	50,849	54,181
   Cash collateral for borrowed securities under margin transactions	23,945	44,776
   Collateralized short-term financing agreements-receivable	4,109,246	3,949,642
   Deposits paid for securities borrowed	4,060,231	3,718,958
   Securities purchased under agreements to resell	49,014	230,684
   Advances paid	189	107
   Advance payments for customers	169	53
   Advance payments for others	20	53
   Short-term guarantee deposits	208,013	370,794
   Securities: fail to deliver	25,582	11,937
   Variation margin paid	4,826	1,020
   Short-term loans receivable	46,084	50,711
   Advance payments	600	1,075
   Prepaid expenses	2,926	2,647
   Accounts receivable-other	4,527	2,520
   Accrued income	24,167	23,143
   Deferred tax assets	21,160	8,735
   Other current assets	6,091	3,112
   Less: Allowance for doubtful accounts	(12)	(16)
   Total current assets	9,785,276	11,018,181
   Noncurrent assets
   Property and equipment	15,678	14,540
   Buildings	6,283	5,899
   Equipment	6,374	7,054
   Land	2,419	1,186
   Leased assets	601	399
   Intangible assets	34,344	42,370
   Software	32,986	41,302
   House leasehold rights	75	65
   Telephone subscription rights	489	488
   Other intangible assets	792	514
   Investments and other assets	297,869	308,153
   Investment securities	51,981	46,491
   Investments in subsidiaries and affiliates	189,208	195,501
   Long-term loans receivable to subsidiaries and affiliates	16,112	31,759
   Long-term guarantee deposits	12,670	12,216
   Long-term prepaid expenses	5,172	4,076
   Prepaid pension cost	12,746	15,020
   Deferred tax assets	8,297	1,394
   Other	6,733	5,328
   Less: Allowance for doubtful accounts	(5,055)	(3,634)
   Total noncurrent assets	347,891	365,065
   Total assets	10,133,168	11,383,246

   (Millions of yen)

   As of March 31, 2015	As of March 31, 2016
   Liabilities
   Current liabilities
   Trading liabilities	3,909,239	4,445,062
   Trading securities and others	2,294,228	1,642,885
   Derivatives	1,615,010	2,802,176
   Payables related to margin transactions	33,922	42,278
   Borrowings on margin transactions	8,383	10,835
   Cash collateral for loaned securities under margin transactions	25,539	31,443
   Collateralized short-term financing agreements-payable	3,052,857	3,861,722
   Deposits received for securities loaned	1,417,601	1,909,797
   Securities sold under agreements to repurchase	1,635,255	1,951,925
   Deposits received	160,613	136,356
   Deposits from customers	104,521	115,985
   Deposits for subscription	538	―
   Deposits for others	55,553	20,371
   Guarantee deposits received	110,135	154,013
   Securities: fail to receive	8,685	4,271
   Short-term borrowings	626,792	479,403
   Commercial paper	456,500	513,700
   Bonds and notes due within one year	67,220	55,602
   Lease obligations	414	377
   Advances received	1,363	1,144
   Accounts payable-other	3,221	717
   Accrued expenses	24,301	26,266
   Income taxes payable	2,549	4,400
   Accrued employees' bonuses	14,757	13,217
   Provision for variable compensation	―	790
   Provision for bonus point redemption	783	623
   Other current liabilities	1,524	3,293
   Total current liabilities	8,474,880	9,743,240
   Noncurrent liabilities
   Bonds and notes	496,002	548,766
   Long-term borrowings	524,000	409,400
   Lease obligations	1,351	857
   Provision for retirement benefits	16,952	18,034
   Other noncurrent liabilities	2,431	1,885
   Total noncurrent liabilities	1,040,738	978,944
   Statutory reserves
   Reserve for financial instruments transaction liabilities	1,589	2,005
   Total statutory reserves	1,589	2,005
   Total liabilities	9,517,208	10,724,190

   (Millions of yen)

   As of March 31, 2015	As of March 31, 2016
   Net assets
   Shareholders' equity
   Common stock	125,167	125,167
   Capital surplus
   Additional paid - in capital	285,831	285,831
   Other capital surplus	95,817	95,817
   Total capital surpluses	381,649	381,649
   Retained earnings
   Other retained earnings
   Retained earnings brought forward	112,125	149,594
   Total retained earnings	112,125	149,594
   Total shareholders' equity	618,941	656,411
   Valuation and translation adjustments
   Net unrealized gains on (operating) investment securities, net of tax	24,524	21,626
   Net deferred gains or losses on hedges, net of tax	(27,505)	(18,982)
   Total valuation and translation adjustments	(2,981)	2,644
   Total net assets	615,960	659,056
   Total liabilities and net assets	10,133,168	11,383,246

9. Non-consolidated Statements of Income

   (Millions of yen)

   Year ended March 31, 2015	Year ended March 31, 2016
   Operating revenues
   Commissions	146,782	155,617
   Brokerage commissions	33,795	30,728
   Underwriting and selling fees, and commissions from solicitation to qualifying investors	28,626	27,693
   Offering, selling, and other commissions and fees, and commissions from solicitation to qualifying investors	34,228	31,397
   Other commissions and fees	50,131	65,798
   Net gain on trading	117,865	130,230
   Net gain on operating investment securities	2,680	4,604
   Interest and dividend income	34,249	29,402
   Total operating revenues	301,578	319,855
   Interest expenses	26,850	27,552
   Net operating revenues	274,727	292,303
   Selling, general and administrative expenses	217,631	231,895
   Transaction-related expenses	45,154	51,176
   Personnel expenses	85,944	85,135
   Real estate expenses	25,634	26,042
   Administrative expenses	38,685	47,955
   Depreciation and amortization	15,065	14,929
   Taxes and dues	3,106	3,386
   Provision of allowance for doubtful accounts	431	(426)
   Other	3,608	3,695
   Operating income	57,096	60,407
   Non-operating income	4,720	8,055
   Non-operating expenses	581	1,357
   Ordinary income	61,235	67,105
   Extraordinary gain	588	13,436
   Gain on sales of noncurrent assets	89	48
   Gain on sales of investment securities	499	565
   Indemnity receipt from the erroneous stock order	―	12,822
   Extraordinary loss	2,530	2,464
   Loss on sales of noncurrent assets	―	8
   Loss on disposal of noncurrent assets	386	254
   Loss on sales of investment securities	46	26
   Loss on sales of investments in subsidiaries and affiliates	22	―
   Loss on impairment of investment securities	―	0
   Loss on impairment of investments in subsidiaries and affiliates	―	146
   Loss on impairment of golf club membership	0	0
   Impairment losses	858	843
   Head office transfer cost	881	577
   Cost incurred in opening of joint branches	―	192
   Provision of reserve for financial instruments transaction liabilities	334	416
   Income before income taxes	59,293	78,077
   Income taxes - current	4,485	6,915
   Income taxes - deferred	10,734	16,563
   Total income taxes	15,219	23,479
   Net income	44,073	54,598

10. Non-consolidated Statements of Changes in Shareholders' Equity

    Year ended March 31, 2015

    (Millions of yen)

    Shareholders' equity
    Common stock	Capital surplus			Retained earnings	Total Shareholders' equity
    	Additional paid-in capital	Other capital surplus	Total capital surplus	Other
    				retained earnings
    				Retained earnings
    				brought forward
    Balance at beginning of period	125,167	285,831	95,817	381,649	91,516	598,333
    Cumulative effect of changes in accounting policies	2,731	2,731
    Restated balance	125,167	285,831	95,817	381,649	94,247	601,064
    Changes during the period
    Dividends of surplus	(26,196)	(26,196)
    Net income	44,073	44,073
    Net changes of items other than shareholders' equity
    Total changes during the period	―	―	―	―	17,877	17,877
    Balance at end of period	125,167	285,831	95,817	381,649	112,125	618,941

    (Millions of yen)

    Valuation and translation adjustments			Total net assets
    Net unrealized gains on (operating) investment securities, net of tax	Net deferred hedge gain (loss), net of tax	Total valuation and translation adjustments
    Balance at beginning of period	16,865	(17,946)	(1,081)	597,251
    Cumulative effect of changes in accounting policies	2,731
    Restated balance	16,865	(17,946)	(1,081)	599,983
    Changes during the period
    Dividends of surplus	(26,196)
    Net income	44,073
    Net changes of items other than shareholders' equity	7,658	(9,558)	(1,899)	(1,899)
    Total changes during the period	7,658	(9,558)	(1,899)	15,977
    Balance at end of period	24,524	(27,505)	(2,981)	615,960

    Year ended March 31, 2016

    (Millions of yen)

    Shareholders' equity
    Common stock	Capital surplus			Retained earnings	Total Shareholders' equity
    	Additional paid-in capital	Other capital surplus	Total capital surplus	Other
    				retained earnings
    				Retained earnings
    				brought forward
    Balance at beginning of period	125,167	285,831	95,817	381,649	112,125	618,941
    Changes during the period
    Dividends of surplus	(17,128)	(17,128)
    Net income	54,598	54,598
    Net changes of items other than shareholders' equity
    Total changes during the period	―	―	―	―	37,469	37,469
    Balance at end of period	125,167	285,831	95,817	381,649	149,594	656,411

    (Millions of yen)

    Valuation and translation adjustments			Total net assets
    Net unrealized gains on (operating) investment securities, net of tax	Net deferred hedge gain (loss), net of tax	Total valuation and translation adjustments
    Balance at beginning of period	24,524	(27,505)	(2,981)	615,960
    Changes during the period
    Dividends of surplus	(17,128)
    Net income	54,598
    Net changes of items other than shareholders' equity	(2,897)	8,523	5,626	5,626
    Total changes during the period	(2,897)	8,523	5,626	43,095
    Balance at end of period	21,626	(18,982)	2,644	659,056

11. Note on the going-concern assumption

12. Not applicable

    IV. Supplemental Information (Non-consolidated) Capital adequacy requirement ratio

    (Millions of yen)

    As of March 31, 2015	As of March 31, 2016
    Basic items	Total capital (A)	601,813	638,275
    Supplemental items	Net unrealized gains on (operating) investment securities, net of tax, etc.	(2,981)	2,644
    	Reserve for financial instruments transaction liabilities, etc.	1,589	2,005
    	Allowance for doubtful accounts	11	13
    	Subordinated long-term borrowings	74,000	49,000
    	Subordinated short-term borrowings	271,000	256,000
    Total (B)		343,619	309,663
    Deducted assets	(C)	309,089	331,633
    Equity after deduction	(A) + (B) - (C) (D)	636,343	616,305
    Amount equivalent to risk	Amount equivalent to market risk	112,205	92,356
    	Amount equivalent to counterparty risk	32,234	29,077
    	Amount equivalent to fundamental risk	54,480	59,682
    Total (E)		198,920	181,116
    Capital adequacy requirement ratio (D)/(E) * 100		319.8%	340.2%