Consolidated Financial Summary (for the six months ended September 30, 2021)Member of the Financial Accounting Standards FoundationOctober 29, 2021 Company Name: Stock Listings: Stock Code: Representative: Contact:Tokai Tokyo Financial Holdings, Inc.First sections of the Tokyo Stock Exchange and Nagoya Stock Exchange8616Ichirou Gouda, PresidentJunichi TakahashiGeneral Manager – Finance Planning DepartmentTelephone: +81-(0)3-3517-8391 URL:http://www.tokaitokyo-fh.jp/ Expected date for submission of quarterly report: Scheduled day of commencing dividend payment: Supplementary explanation documents for quarterly earnings: Yes Quarterly results briefing planned:November 15, 2021November 25, 2021Yes (for financial analysts and institutional investors)1. Consolidated Financial Results for the Six Months Ended September 30, 2021 (1) Consolidated Results of Operation (Figures in percentages denote the year-on-year change.)(Figures are rounded down to the nearest one million yen and those in parentheses are negative figures.)Operating revenueNet operating revenueOperating incomeOrdinary incomemillion yenmillion yenmillion yenSix months ended September 30,2021 September 30,2020 (Note) Comprehensive income40,54332,298 %25.512.839,42830,921 5,6543,180 Six-month period ended September 30, 2021: %27.511.6 %77.8－million yen 7,1134,025 %76.7－ 9,9102,698 %267.2318.5 10,215 million yen [221.8%]Profit attributable toowners of parentmillion yenSix-month period ended September 30, 2020: 3,174 million yen [-]Net income per shareDiluted net incomeper shareSix months endedSeptember 30,2021September 30,2020 (Note) We post no figure of diluted net income per share for the 2nd Quarter of FYE March 2021 as the Company has no potential stock that has yen 39.80－yen 39.9010.87 (Note) From the 1st Quarter of FYE March, 2022 the Company has made changes in the presentation method. Therefore, the operating income of dilution effect. previous year’s consolidated results of operation reflect that. (2) Consolidated Financial PositionTotal assetsNet assetsEquity ratioNet assets per shareAs ofSeptember 30,2021March 31,2021 million yen 1,521,6581,416,569 million yen 184,651172,684 % 11.311.7yen692.23666.65 (Reference) Shareholders’ equity September 30, 2021: 171,924 million yenMarch 31, 2021: 165,572 million yen2. Dividends(Base date)Fiscal year Ended March 31, 2021End offirst quarteryen－－End ofsecond quarteryen 8.00 10.00Dividend per shareEnd ofthird quarterEnd of yearAnnualyen － yen 14.00yen 22.00 Ending March 31, 2022 Ending March 31, 2022 (Forecast)(Note) 1) Revision to the dividend forecast that has been disclosed lastly: None－－－ 2) The dividend of 8.00 yen at the end of second quarter for the year ending March 31, 2021 includes commemorative dividend of 2.00 yen. 3) The dividend of 14.00 yen at the end of year for the year ended March 31, 2021 includes commemorative dividend of 2.00 yen. 4) Dividend forecast for the fiscal year ending March 31, 2022 has not been determined.3. Forecast of Consolidated Operating Results for Fiscal 2021 (from April 1, 2021 to March 31, 2022)The Group operates principally in the financial instruments business, and its operating results are likely to be affected by market fluctuations.Due to such nature of its business and consequential difficulty in predicting its performance, the Group does not disclose the forecast of operatingresults.* Notes(1) Important Changes in Subsidiaries during the Term (Changes Pursuant to the Subsidiaries that Lead to a Change in the Scope of Consolidation): Yes New : 2 companies (ACE Securities Co.,Ltd. , Maruhachi Securities Co.,Ltd. ) Exclusion : None(2) Application of Special Accounting Treatments in Preparing Quarterly Consolidated Financial Statements: None(3) Changes in Accounting Policies or Estimates and Retrospective Restatements 1) Changes in accounting policies in accordance with revision of accounting standards: Yes 2) Changes in accounting policies other than item 1) above: None 3) Change in accounting estimates: None 4) Retrospective restatements: None (4) Number of Shares Issued (Common Stock) 1) Number of shares issued at the end of the term including treasury shares As of September 30, 2021:260,582,115 As of March 31, 2021:260,582,115 2) Number of treasury shares at the end of the term As of September 30, 2021:12,219,364 As of March 31, 2021:12,218,314 3) Average number of shares outstanding (for the six months) Six months ended September 30, 2021: 248,363,202 Six months ended September 30, 2020: 248,365,274 * This consolidated financial summary is not subject to certified public accountant’s or audit corporation’s review. * Note to proper use of forecast of operating results and other special remarks Dividends for the fiscal year ending March 31, 2022 have not been determined because it is difficult to forecast operating results, as described similarly in “3.Forecast of Consolidated Operating Results for Fiscal 2021.” * How to view supplementary explanation documents for quarterly earnings Supplementary explanation documents for quarterly earnings will be available on both Timely Disclosure network and our website on Friday, October 29, 2021.Accompanying Materials – Contents 1. Qualitative Information for the Six Months Ended September 30, 2021 ··············································· 2 (1) Review of Operating Results ····························································································· 2 (2) Review of the Financial Statements ····················································································· 7 (3) Explanation of Forecasts Such as Consolidated Financial Forecasts ··············································· 8 2. Consolidated Financial Statements ······························································································ 9 (1) Consolidated Balance Sheets ····························································································· 9 (2) Consolidated Statements of Income and Comprehensive Income ·················································· 11 (3) Notes to Quarterly Consolidated Financial Statements ··························································· 14 (Notes on Going Concern Assumption) ············································································· 14 (Notes for Material Changes in Shareholders’ Equity) ··························································· 14 (Changes in accounting policies) ······················································································· 14 (Additional information) ································································································ 14 3. Supplementary Information ····································································································· 16 (1) Breakdown of Commission Received and Net Trading Income ···················································· 16 (2) Comparative Quarterly Consolidated Statements of Income ························································ 17 – 1 -1. Qualitative Information for the Six Months Ended September 30, 2021 (1) Review of Operating Results Japanese Economy: During the period under review (April 1, 2021, to September 30, 2021), the recovery of consumer spending remained weak as the Government had announced the extension of the state of emergency together with the expansion of applicable geographic areas in response to a rapid spread of corona virus infections. On the supply side, various manufacturers, most notably automakers, were forced to slash production because of a global shortage of their parts, including microchips among other things. The picture, however, was not entirely bleak: Hopes of economic reopening rose when the Government announced that it would fully lift the state of emergency by the end of September in view of the success of the vaccine rollout and the resulting significant reduction of newly infected cases. Moreover, markets showed confidence in Kishida’s new economic policy. As such, the path appears prepared for the nation’s economic normalization. Looking Abroad: Overseas markets continued to recover as economies reopened thanks to the global vaccine rollout. However, with demand rapidly recovering amid economic normalization, supply-chain problems emerged. The problems, which include parts shortages, rising costs of goods, transportation, labor, energy, and logistics delays, threaten to hold back further economic recovery, particularly in developed economies. Another concern is the threat of prolonged rises in inflation. Thus, the global outlook hinges now on how soon the supply-chain problems and inflation will abate. Japanese Stock Market: Starting at around ¥29,400 in April, the Nikkei Stock Average slackened during the summer amid rising infections and a slow vaccine rollout, dipping to a yearly low of ¥26,954 in August. The Nikkei then rebounded due to the above-stated reopening of the economy. Further, at the beginning of September, the Nikkei’s rise accelerated when Yoshihide Suga announced his resignation as prime minister. By the middle of the month, the Nikkei topped the ¥30,000 mark, recording, along with the Tokyo Stock Price Index, a roughly 31-year high. Toward the end of the month, the Nikkei dipped below the ¥30,000 mark in response to, among other things, problems in China’s real estate market and a slump in the U.S. stock market. It ended the month upwards of ¥29,400. For the April–September period, the average daily transaction volume in the First Section of the Tokyo Stock Exchange was ¥2,971.1 billion, higher than the figure for the same period of the previous fiscal year, which was ¥2,599.3 billion. Japanese Bond Market: The yield on 10-year JGB, the indicator of long-term interest rates, started at 0.12% in April. On August 4, the yield hit a period low of zero, reflecting declining long-term interest rates in the U.S. and market pessimism in Japan’s economy caused by the declared state of emergency. With the yield hovering around the zero mark, a sense that bonds were overvalued emerged, prompting mixed trading. The jostling continued as the yield trended a little above zero. However, this situation changed once the Federal Open Market Committee (FOMC) signaled a hawkish direction at the end of its September meeting (held on the 21st and 22nd). Following this announcement, the U.S. long-term interest rate rose, topping the 1.5% mark. Likewise, the 10-year JGB trended upward, ending the September transaction at a yield of 0.065%. Foreign Exchange Market: The dollar-to-yen exchange rate opened in April at around 1 USD to 110 JPY. – 2 -The yen then rose against the dollar, topping 107 JPY to the dollar on April 23, amid the concern over the delay in economic normalization in the U.S. coupled with the predicted continuation of quantitative easing by the Federal Reserve. The dollar then rose against the yen as the U.S. saw continued improvements in economic indices and made progress in its vaccine rollout. On July 2, the dollar fetched 111 yen. Subsequently, the dollar trended between 109 and 110 yen until the FOMC’s announcement in September, which prompted higher U.S. interest rates. At the end of September, the dollar reached a period high of 112 yen. The Company’s Activity: In April 2021, we embarked on the final year of our five-year business plan, New Age’s Flag Bearer 5. Our focus of this year is to expand the business foundation of the Group. To that end, in addition to strengthening the earning capacity of Tokai Tokyo Securities, we are grappling with four future strategies advancing the following actions: 1) promoting Orque d’or Society and Orque d’or Ecosystem, 2) implementing support programs for regional banks, 3) establishing Tokai Tokyo Digital World, and 4) making the Great Platform a reality. These actions will accelerate our evolution into an innovative and comprehensive financial group that can meet the increasingly diverse and sophisticated needs of individual and corporate customers. In October, Tokai Tokyo Securities opened the Investment Advisory Department inside its Global Market Company Division. The new unit was formed to provide asset management services, including asset analysis and product suggestions, to “specified investors” (a legally defined category of professional investors, including regional banks). To help such clients manage their investments and attain their investment targets within their acceptable risk threshold, the team will combine rigorous research-based analysis with an ability to pitch and deliver compelling products to match the client’s needs. Last August, Tokai Tokyo Securities opened a new office, Jyoto Regional Hub Office and consolidated other offices in the east of the Greater Tokyo Area to strengthen its sales functions and improve the efficiency of management resource allocation in that region. Jyoto Regional Hub Office now serves as the main office, while others serve as its satellites. Better customer convenience and a slicker customer interface will help strengthen our consulting business. It will devote plenty of time to meeting with clients, giving us more opportunity to ascertain their needs and offer better solutions. One of our strategic priorities in New Age’s Flag Bearer 5 is to pursue M&A opportunities with industry peers. In May, Tokai Tokyo Securities gained full ownership of ACE Securities Co., Ltd., and we started discussions for completing a full merger (with ACE Securities as the merged entity and Tokai Tokyo Securities as the surviving entity). Having had agreed that the merger would occur in the first half of fiscal 2022, the parties settled on May 1, 2022 as the merger date. Through this merger, we will unlock synergies to expand and enhance our business foundation in Kansai area. Another strategic priority is to provide a support program for regional banks. In April, we concluded a comprehensive business partnership with The Tochigi Bank, Ltd., with whom we have a securities joint – 3 -venture. In August, we signed a memorandum of understanding (MoU) with Senshu Ikeda Holdings, Inc., to cooperate in providing services to corporate clients. We are pleased with the results of our partnerships with the said prominent regional banks, but we want to go further and break the mold of the conventional securities joint venture. Together with such partner banks, we will strengthen cooperation between the banks and securities firms to bolster the range of products and services that the joint venture firms can offer. This approach should lead to a stronger customer base and contribute to the social fabric of more local communities. In May, we signed an MoU and launched negotiations for a brokerage tie-up with Fidea Holdings Co., Ltd., a regional banking group based in Yamagata and Akita. The MoU execution and the subsequent negotiations with Fidea materialized in service contracts with The Shonai Bank, Ltd., and The Hokuto Bank, Ltd., concerning financial instruments intermediary services. Thus, Tokai Tokyo Securities started performing its contracted services in October. Through these partnerships, we will expand the regional coverage of our financial instrument brokerage. Additionally, in May, we invested ¥1 billion in Japan Platform of Industrial Transformation, Inc., (JPiX), an investment vehicle that Industrial Growth Platform, Inc. (IGPI) established to support local economic development. The purpose of this investment is to accelerate our efforts to revitalize local economies in cooperation with our joint securities ventures and the partners with whom we formed such joint ventures. JPiX’s endeavor to revitalize regional economies and our efforts to build a long-lasting and sustainable financial platform are mutually complementary elements to accomplish our vision of contributing to more local communities. We will step up our efforts to contribute to customers in local communities and regional economies by both contributing equity and sending our staff to them as well as working together to build the platform. We are pleased to report that we have gained recognition for our cutting-edge digital program and efforts to prepare infrastructure for remote working. In June, we were listed among the DX Stocks 2021 in a program run by the Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange. This listing marks a step up from last year when we were listed among the Noteworthy DX Companies 2020. It recognizes our commitment to a digital transformation, in which we use digital technology to revolutionize our business model and create new opportunities for growth and competitiveness. An example of this commitment is a project we named “Tokai Tokyo Digital World” under which we envision providing unique and innovative FinTech platforms. So far under this project, we have released an asset management application, “Okane no Compass”, from our subsidiary, Tokai Tokyo Digital Platform Co., Ltd., (formerly known as Money Compass Japan Co., Ltd.; the present name was adopted on October 25, 2021). We are about to launch a range of smartphone-based trading services, which will include security tokens, crypto-assets, a robo-advisor, small-change investing, and digital/community currencies. Our efforts on this front will help us meet the financial needs of regional banks and corporate clients. Our entire corporate Group strives to attain the Sustainable Development Goals (SDGs) listed in the U.N.’s 2030 Agenda. We established the SDGs Promotion Department in May 2020 and published the SDG Pledge in September of that year. Illustrating our commitment to environmental sustainability, we switched to renewable energy in our office in July this year. The switch was made under an agreement with the office landlord, Mitsui Fudosan Co., Ltd. – 4 – In a further step toward sustainability, we underwrote gender bond (social bond) and green bond in the role of co-manager for two programs. The former was issued by the Japan International Cooperation Agency in September. The latter was issued by the Tokyo Metropolitan Government in October. Our participation in these programs helps us contribute toward the resolution of social and environmental challenges to sustainability alongside our investors. In October, we endorsed the recommendations of the Task Force on Climate-related Financial Disclosures* (TFCD recommendations), being fully aware of the crucial importance of attaining SDGs as a member responsible for a financial and capital market. Recognizing the increasing threat of climate change around the world, we have committed to ascertaining more precisely the climate-related risks and opportunities on our businesses and to disclosing this information in line with the TCFD recommendations. Amid the ongoing pandemic, we prioritized anti-infection measures to safeguard the life and health of customers and ourselves at the Group. We maintained these measures even after the state of emergency was completely lifted at the end of September. We will continue to monitor the situation and act as necessary. In the period under review, our corporate strategy underwent no major changes. Our medium-term goals remain achieving a return on equity of 10%, ¥30 billion in ordinary income, and ¥10 trillion in assets in On April 4, 2022, the Tokyo Stock Exchange (TSE) will realign its trading markets into Prime (the top-tier market), Standard, and Growth. The TSE has informed us that our organization qualifies for listing on Prime. We will complete the application procedure and tighten corporate governance to ensure that we make *Task Force on Climate-related Financial Disclosures: The TCFD was established in 2015 by the G20 Financial Stability Board in order to improve reporting of climate-related information. In 2017, the TCFD published recommendations for improving corporate disclosures of climate-related risks and opportunities and their potential financial impacts. custody. the listing. Operating Results: The Group’s consolidated operating results up to the period were as follows: All percentages shown below indicate year-on-year comparisons in this section (1). (Commission received) During the period under review, total commissions received increased 30.5%, to ¥19,147 million. (i) Commission to consignees: Total commissions to consignees earned by the Group increased 4.6%, to ¥7,035 million. Under this category, volume of stock brokered by Tokai Tokyo Securities decreased 15.8%, to 1,253 million shares, and value of stock brokered decreased 3.6%, to ¥2,669,600 million. However, because the Group has increased in size, commissions to consignees on stocks increased 3.9%, to ¥6,730 million. (ii) Commission for underwriting, secondary distribution and solicitation for selling and others for – 5 -professional investors: This item totaled ¥747 million, an increase of 55.2%. Under this category, commission earned by handling of stock totaled ¥408 million, an increase of 40.5%, while commission on bonds totaled ¥338 million, an increase of 77.7%. (iii) Fees for offering, secondary distribution and solicitation for selling and others for professional investors: This item totaled ¥5,470 million, an increase of 101.4%. Under this category, fees from beneficiary certificates increased 101.5% to ¥5,464 million, reflecting the larger number of group companies and higher sales of investment trusts by Tokai Tokyo Securities to individual customers. This item totaled ¥5,894 million, an increase of 24.1%. Under this category, agency commissions from investment trusts increased 69.4%, to ¥2,907 million, and insurance commissions increased 15.9%, to (iv) Other fees received: ¥1,699 million. (Net trading income) Net trading income totaled ¥17,582 million, an increase of 9.8%. Under this category, net trading income decreased 19.8%, to ¥8,936 million, and trading of bonds and foreign exchanges (primarily from foreign currency-denominated bonds and structure bonds) increased 77.5%, to ¥8,646 million. (Net financial revenue) Net financial revenue totaled ¥2,697 million, an 11-fold increase. Under this category, financial revenue increased 136.2%, to ¥3,813 million, while financial expenses decreased 19.0%, to ¥1,115 million. (Selling, general and administrative expenses) Selling, general and administrative expenses totaled ¥33,773 million, an increase of 21.7%. Under this category, trading-related expenses increased 36.4%, to ¥6,402 million, due to factors such as a higher number of group companies and an increased commission expenses resulting from a larger volume of foreign bond sales by joint securities ventures. The higher number of group companies also caused personnel costs to increase by 20.0%, to ¥16,085 million. Similarly, real estate expenses increased 14.8%, to 3,875 million, and office expenses increased 26.0%, to ¥4,100 million. (Non-operating income and expenses) Non-operating income totaled ¥1,614 million, an increase of 61.0%. Under this category, equity-method investments income totaled ¥957 million, while dividend income totaled ¥282 million. Non-operating expenses ¥155 million, a decrease of 1.3%. Under this category, loss on investments in investment partnerships totaled ¥115 million. – 6 -(Extraordinary income and losses) In the period under review, we recorded extraordinary income: primarily, ¥8,268 million in gain on negative goodwill realization following the full acquisition of ACE Securities. We also recorded extraordinary loss in conjunction with the said acquisition: ¥2,473 million as a result of reevaluation of ACE Securities shares owned by us. We reevaluated the subject shares as ACE Securities changed its status from our equity-method-affiliate to the wholly owned subsidiary. Consequently, in the period under review, operating revenue increased 25.5%, to ¥40,543 million; net operating revenue increased 27.5%, to ¥39,428 million; operating income increased 77.8%, to ¥5,654 million; ordinary income increased 76.7%, to ¥7,113 million; finally, profit attributable to owners of parent after deducting income taxes and others increased 267.2%, to ¥9,910 million. (2) Review of the Financial Statements All comparison shown below are with the end of the previous consolidated fiscal year in this section (2). (Assets) As of the end of the period under review, total assets amounted to ¥1,521,658 million, an increase of ¥105,089 million. Under this category, current assets increased ¥106,103 million to ¥1,448,780 million. The key contributors were margin transaction assets, which increased ¥55,727 million to ¥156,177 million, and loans secured by securities, which increased ¥35,624 million to ¥443,453 million. Partially offsetting these increases were cash segregated as deposits, which decreased ¥5,698 million, to ¥77,923 million, and advances paid, which decreased ¥7,831 million, to ¥563 million. Non-current assets decreased ¥1,014 million to ¥72,878 million. The main factor was investment securities, which decreased ¥5,472 million to ¥42,682 million. (Liabilities) million, to ¥16,895 million. (Net assets) Total liabilities as of the end of the period under review increased ¥93,121 million to ¥1,337,006 million. Under this category, current liabilities increased ¥84,057 million to ¥1,227,130 million. The main increases were in short-term borrowings, which increased ¥32,268 million, to ¥277,055 million, and borrowings secured by securities, which increased ¥28,940 million, to ¥397,611 million. Partially offsetting these increases was trading products, which decreased ¥11,670 million, to ¥367,622 million. Non-current liabilities increased ¥8,998 million, to ¥109,175 million. The main factor was bonds payable, which increased ¥5,031 In the period under review, total net assets amounted to ¥184,651 million, an increase of ¥11,967 million. Under this category, non-controlling interests increased ¥5,586 million, to ¥12,256 million, and retained earnings increased ¥6,433 million, to ¥113,824 million. – 7 -(3) Explanation About Consolidated Forecasts and other Forward-Looking Statements The Group operates principally in the financial instruments business, and its operating results are likely to be affected by market fluctuations. Because of the nature of its business and the consequent difficulty in predicting its future performance, the Company does not disclose forecasts of operating results. – 8 -Consolidated Financial Statements(1) Consolidated Balance SheetsAssetsCurrent assetsCash and depositsCash segregated as depositsCash segregated as deposits for customersCash segregated as deposits for othersTrading productsTrading securities and otherDerivativesMargin transaction assetsLoans on margin transactionsCash collateral pledged for securities borrowing on margintransactionsLoans secured by securitiesCash collateral pledged for securities borrowedLoans on Gensaki transactionsAdvances paidShort-term guarantee depositsShort-term loans receivableAccrued incomeOtherAllowance for doubtful accountsTotal current assetsNon-current assetsProperty, plant and equipmentIntangible assetsInvestments and other assetsInvestment securitiesLong-term guarantee depositsDeferred tax assetsRetirement benefit assetOtherAllowance for doubtful accountsTotal non-current assetsTotal assets(Unit: million yen)As ofMarch 31, 2021As ofSeptember 30, 202183,58983,62280,8002,821588,098583,3914,706100,45034,36266,087407,82928,756379,0728,39537,91514,4924,18914,196(101)1,342,67610,7405,59457,55748,1553,862354,4461,423(364)73,8931,416,56982,54677,92374,9003,023585,984581,0714,912156,17747,100109,077443,45349,818393,63456362,59425,0685,1399,435(105)1,448,78010,9516,40955,51642,6825,484686,3071,329(355)72,8781,521,658 – 9 -LiabilitiesCurrent liabilitiesTrading productsTrading securities and otherDerivativesTrade date accrualMargin transaction liabilitiesBorrowings on margin transactionsCash received for securities lending on margin transactionsBorrowings secured by securitiesCash received on debt credit transaction of securitiesBorrowings on Gensaki transactionsDeposits receivedGuarantee deposits receivedShort-term borrowingsShort-term bonds payableCurrent portion of bonds payableIncome taxes payableProvision for bonusesProvision for directors’ bonusesOtherTotal current liabilitiesNon-current liabilitiesBonds payableLong-term borrowingsDeferred tax liabilitiesProvision for retirement benefits for directors (and other officers)Retirement benefit liabilityOtherTotal non-current liabilitiesReserves under special lawsReserve for financial instruments transaction liabilitiesTotal reserves under special lawsTotal liabilitiesNet assetsShareholders’ equityShare capitalCapital surplusRetained earningsTreasury sharesTotal shareholders’ equityAccumulated other comprehensive incomeValuation difference on available-for-sale securitiesForeign currency translation adjustmentRemeasurements of defined benefit plansTotal accumulated other comprehensive incomeShare acquisition rightsNon-controlling interestsTotal net assetsTotal liabilities and net assets (Unit: million yen)As ofMarch 31, 2021As ofSeptember 30, 2021379,293370,3718,9219,24011,5559,1282,426368,6714,123364,54772,41912,626244,78616,00017,5102,4142,283576,2141,143,07311,86384,2001,290921632,566100,1766356351,243,88436,00024,587107,390(5,292)162,6851,490(571)1,9672,8864426,669172,6841,416,569367,622356,92010,70214,80615,81513,4692,345397,61137,393360,21792,57814,785277,05516,00020,1549772,214267,4821,227,13016,89587,6001,8791022232,475109,1757017011,337,00636,00024,587113,824(5,293)169,1181,234(159)1,7302,80547112,256184,6511,521,658- 10 -(2) Consolidated Statements of Income and Comprehensive IncomeConsolidated Statements of Income(Six months ended September 30)Operating revenueCommission receivedBrokerage commissionCommission for underwriting, secondary distribution andsolicitation for selling and others for professional investorsFee for offering, secondary distribution and solicitation forselling and others for professional investorsOther fees receivedNet trading incomeFinancial revenueTotal operating revenueFinancial expensesNet operating revenueSelling, general and administrative expensesTrading related expensesPersonnel expensesReal estate expensesOffice expensesDepreciationTaxes and duesProvision of allowance for doubtful accountsOtherTotal selling, general and administrative expensesOperating incomeNon-operating incomeDividend incomeShare of profit of entities accounted for using equity methodGain on investments in investment partnershipsOtherTotal non-operating incomeNon-operating expensesLoss on investments in investment partnershipsForeign exchange lossesOtherTotal non-operating expensesOrdinary incomeSix months endedSeptember 30, 2020Six months endedSeptember 30, 2021(Unit: million yen)14,6716,7234812,7164,75016,0121,61432,2981,37730,9214,69413,4003,3763,2531,516669682227,7403,1801723453811031,002145841574,02519,1477,0357475,4705,89417,5823,81340,5431,11539,4286,40216,0853,8754,1001,389901－1,01733,7735,654282957281921,6141156331557,113 – 11 -Reversal of reserve for financial instruments transaction liabilitiesExtraordinary incomeGain on sales of non-current assetsGain on sales of investment securitiesGain on bargain purchaseTotal extraordinary incomeExtraordinary lossesLoss on sales of investment securitiesLoss on valuation of investment securitiesLoss on change in equityLoss on step acquisitionsTotal extraordinary lossesIncome before income taxesIncome taxes-currentIncome taxes-deferredTotal income taxesProfitProfit attributable to non-controlling interestsProfit attributable to owners of parentProvision of reserve for financial instruments transaction liabilities(Unit: million yen)Six months endedSeptember 30, 2020Six months endedSeptember 30, 2021－1－1231242220－－－2223,927679937733,1544552,698661598,268－8,49587255362,47302,85412,7541,9285292,45710,2963869,910 – 12 -Consolidated Statements of Comprehensive Income(Six months ended September 30)ProfitOther comprehensive incomeValuation difference on available-for-sale securitiesForeign currency translation adjustmentRemeasurements of defined benefit plans, net of taxShare of other comprehensive income of entities accountedfor using equity methodTotal other comprehensive incomeComprehensive income(Comprehensive income attributable to)Owners of parentNon-controlling interests(Unit: million yen)Six months endedSeptember 30, 20203,154Six months endedSeptember 30, 202110,296339(207)(128)16193,1742,718455(257)411(237)1(81)10,2159,829385 – 13 – (3) Notes on Quarterly Consolidated Financial Statements (Notes on going-concern assumptions) Not applicable Not applicable (Notes on significant change (if any) in amount of shareholder equity) (Changes in accounting policies) (Application of revenue-recognition standard) As of the start of the first quarter, we now apply the ASBJ’s Accounting Standard for Revenue Recognition (Statement No. 29, March 31, 2020). Under this standard, the amount of consideration the Company will receive in exchange for promised goods or services is recognized as gross revenue at the point the goods or services are transferred to the customer. The main change concerns the recognition of points that we allocate when receiving fees from the customer. Before, we recognized such points as “trading-related expenses” under selling, general and administrative expenses. Now, we deduct the value of the points from “other fees” under operating revenue. In accordance with the transitional measure stipulated in the ASBJ statement in the proviso for section 84, the opening balance for retained earnings in the first quarter has been adjusted to account for the cumulative impact of retroactively applying the standard to previous periods. This adjustment has no impact on the opening balance. Application of the standard has only a negligible impact on the consolidated financial statements for the period under review. (Accounting standard for fair value measurement) As of the start of the first quarter, we now apply the ASBJ’s Accounting Standard for Fair Value Measurement (Statement No. 30, July 4, 2019). In accordance with the transitional measures stipulated in section 19 of the statement and in section 44-2 of the ASBJ’s Accounting Standard for Financial Instruments (Statement No. 10, July 4, 2019), the standard is applied only prospectively (not retroactively). The standard affects how we determine the fair value of certain financial instruments. For example, in the case of bonds on offer, we now derived their fair value from their selling price, whereas before we derived it from the purchase price. (Additional information) (Change in presentation method) (Quarterly consolidated financial statements) Previously, employee housing expenses borne by the employee were inputted into the “rental income from buildings” entry under non-operating income. As of the start of the first quarter, they are now deducted from the “real estate expenses” entry under selling, general and administrative expenses. This new method was introduced in order to represent more accurately the financial realities of the employee welfare program. The change has been retroactively applied to the quarterly consolidated statements for the fiscal year ended March 2020. Previously, the statements had recorded ¥247 million in the “rental income from buildings” entry under non-operating income. Now, ¥241 million has been deducted from the “real estate – 14 -expenses” entry under selling, general and administrative expenses, and ¥6 million has been inputted into the “other” entry under non-operating income. – 15 -Supplementary Information(1) Breakdown of Commission Received and Net Trading Income① Commission received (ⅰ) By itemSix months endedSeptember 30,2020Six months endedSeptember 30,2021Increase(Decrease) (Unit: million yen)Yr/Yr % change4.6 %Brokerage commissionStocksBondsBeneficiary certificatesCommission for underwriting, secondarydistribution and solicitation for selling andothers for professional investors Stocks BondsFee for offering, secondary distributionand solicitation for selling and others forprofessional investors Beneficiary certificates Other fees received Beneficiary certificatesTotal14,67119,147Six months endedSeptember 30,2020Six months endedSeptember 30,2021Total14,67119,147Six months endedSeptember 30,2020Six months endedSeptember 30,202111,1414,87116,0128,9368,64617,582 (ⅱ) By product Stocks Bonds Others Beneficiary certificates② Net trading income Stocks Bonds and ForexTotal7,0356,730112937474083385,4705,4645,8942,9077,1923618,6652,9282,753101.4311249(2)642661171482,7521,1441,1914,475Increase(Decrease)3861474,008(65)4,475Increase(Decrease)(2,205)3,7751,5693.9(17.9)27.955.240.577.7101.524.169.430.568.786.1(2.2)30.5 (Unit: million yen)Yr/Yr % change5.7 % (Unit: million yen)Yr/Yr % change(19.8) %77.59.86,7236,480132294812901902,7162,7114,7501,7156,8052144,6572,994 – 16 – (2) Comparative Quarterly Consolidated Statements of IncomeFiscal 2020 (Unit: million yen)Fiscal 20212nd quarter3rd quarter4th quarter1st quarter2nd quarterJul. 1, 2020 -Sep. 30, 2020Oct. 1, 2020 -Dec. 31, 2020Jan. 1, 2021 -Mar. 31, 2021Apr. 1, 2021 -Jun. 30, 2021Jul. 1, 2021 -Sep. 30, 2021 Operating revenuesCommission receivedBrokerage commission (Stocks)Commission for underwriting, secondarydistribution and solicitation for selling andothers for professional investorsFee for offering, secondary distributionand solicitation for selling and others forprofessional investors (Beneficiary certificates)Other fees received (Beneficiary certificates)Net trading income (Stocks) (Bonds and Forex)Financial revenueTotal operating revenue Financial expenses Net operating revenueSelling, general and administrative expensesTrading related expensesPersonnel expensesReal estate expensesOffice expensesDepreciationTaxes and duesProvision of allowance for doubtfulaccountsOtherTotal selling, general and administrativeexpenses Operating profit Non-operating incomeShare of profit of entities accounted forusing equity methodOther Non-operating expensesOther Ordinary profit Extraordinary income Extraordinary losses Profit before income taxes Income taxes-current Income taxes-deferred Profit Profit attributable to non-controlling interests Profit attributable to owners of parent1,5341,6982,0462,8442,6268,4893,5713,5033282,0422,5421,0018,8915,6013,2891,97719,35842818,9292,7687,1751,7081,744893385432543,9551,6417538871701705,42689(232)5,7481,551(132)4,3293224,0079,5043,4853,3504362,8422,7381,4089,5875,0864,50088119,97352619,4473,2728,0131,9592,034690495－5002,48060534126323233,0618,4092,8278,6446018697,1721657,0079,6423,5493,3793112,6213,1551,4987,9953,8494,1452,93120,56958819,9803,1298,0711,9162,066699406－5173,1741,0096153931321324,05186264,1101,326(340)3,1232212,9028,0123,6403,5462661,6952,4079309,1045,6263,47858817,70551517,1902,7476,9251,7091,758776311273862,5495894929742423,096103483,15115702,5781902,3887,3273,0442,9843291,5342,4188848,7785,7543,02382816,93370916,2242,5466,8101,6761,59874336544312,0478263384881311312,742－92,7335572201,9551061,849 14,17614,64014,97416,96616,806 (Note) The Company has made changes in the presentation methods of ”Real estate expenses” and ” Other in the Non-operating income”since fiscal 2021. The quarterly consolidated financial statements for fiscal 2020 reflect these change.- 17 –
