28.2 FY (Reference) Investment profit and loss on equity method FY million yen FY million yen

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1 Member of the Financial Accounting Standards Foundation Consolidated Financial Summary For the Fiscal Year Ended March 31, 2007 April 27, 2007 Company name: Tokai Tokyo Securities Co., Ltd. Listings: first sections of the Tokyo Stock Exchange, Osaka Securities Exchange, and Nagoya Stock Exchange Stock code: 8616 URL: Representative: Title: President & CEO Name: Tateaki Ishida Contact: Title: Gneral Manager, Name: Masato Okajima Tel: Finance Department Planned date of general meeting of shareholders: June 28, 2007 Scheduled day of commencing dividend payment: June 29, 2007 Planned date for submission of financial reports: June 28, 2007 (Figures are rounded down to the nearest one million yen.) 1. Consolidated operating results for the year ended March 31, 2007 (from April 1, 2006 to March 31, 2007) (1) Consolidated operating results (Figures in percentages denote the year-on-year change) Operating revenue Net operating revenue Operating income Ordinary income Net income Million yen % Million yen % Million yen % Million yen % Million yen % FY , , , , , FY ,776 70,816 26,543 27,191 22,085 Net income per share Diluted net income Ordinary margin on Ordinary margin on Return on equity per share total assets operating revenue Yen Sen Yen Sen % % % FY FY (Reference) Investment profit and loss on equity method FY million yen FY million yen (2) Consolidated financial condition Total assets Net assets Equity ratio Net assets per share Million yen Million yen % Yen Sen FY , , FY , , (Reference) Shareholders' equity FY ,671 million yen FY ,273 million yen (3) Consolidated cash flows position Cash flows from Cash flows from Cash flows from operating activities investing activities financing activities Cash and cash equivalents Million yen Million yen Million yen Million yen FY ,964-5,303 25,390 37,653 FY ,569-2,218 45,731 35, Dividends Dividend per share (Base date) First half Second half Annual Total cash dividends (annual) Dividends payout (consolidated) Net assets dividend ratio (consolidated) Yen Sen Yen Sen Yen Sen Million yen % % FY , FY , (Notes) 1. The dividend for the second half of fiscal 2005 consisted of an ordinary dividend of 15 yen and a special dividend of 10 yen. 2. The dividend for the second half of fiscal 2006 consisted of an ordinary dividend of 7.5 yen and a special dividend of 2.5 yen. 3. Forecast consolidated operating results for fiscal 2007 (from April 1, 2007 to March 31, 2008) The performance of the securities business is influenced significantly by the market environment. The Company does not disclose estimated operating results, given the difficulties in forecasting performance. -1-

2 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary 4. Others (1) Important changes of subsidiaries during the term (changes of specified subsidiaries that lead to a change in the scope of consolidation): No (2) Changes in accounting principles and procedures and the presentation method, etc. of consolidated interim financial statements (those which are included in changes to important matters that will be the basis for preparing consolidated interim financial statements) 1) Changes associated with the revision of accounting principles, etc.: Yes 2) Changes other than 1): No (Note) For more details, please see Page 19, Significant Accounting Policies in the Preparation of the Consolidated Financial Statements. (3) Number of shares issued (common stock) 1) Number of shares issued at the end of the term including treasury stock (shares) FY ,582,115 FY ,582,115 2) Number of treasury stock at the end of the term (shares) FY ,116,929 FY ,516,232 (Note) For the number of shares that is the basis for the calculation of consolidated net income per share, please see Page 21, Per Share Information. (Reference) Non-consolidated financial results 1. Non-consolidated operating results for the year ended March 31, 2007 ( from April 1, 2006 to March 31, 2007) (1) Non-consolidated operating results (Figures in percentages denote the year-on-year change) Operating revenue Net operating revenue Operating income Ordinary income Net income Million yen % Million yen % Million yen % Million yen % Million yen % FY , , , , , FY ,647 68,738 25,686 26,257 21,946 Net income per share Diluted net income per share Return on equity Yen Sen Yen Sen % FY FY (2) Non-consolidated financial condition Total assets Net assets Equity ratio Net assets per share Capital adequacy ratio Million yen Million yen % Yen Sen % FY , , FY , , (Reference) Shareholders' equity FY ,514 million yen FY ,409 million yen 2. Forecast non-consolidated operating results for fiscal 2007 (from April 1, 2007 to March 31, 2008) The performance of the securities business is influenced significantly by the market environment. The Company does not disclose estimated operating results, given the difficulties in forecasting performance. -2-

3 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary 1. Operating Results (1) Analysis of Operating Results (Operating results for fiscal 2006) During the consolidated fiscal year under review (from April 1, 2006 to March 31, 2007), the Japanese economy enjoyed continued GDP growth at a rate of 2%, making the current economic expansion period the longest in the postwar period, surpassing even the 57 months of the so-called Izanagi boom. With exports and capital investment buoyant, personal spending surged on improved employment conditions. This economic expansion was further fueled by the strengthening of the U.S. dollar against the Japanese yen, and record operating results announced by the corporate sector. Meanwhile, following the decision to end the quantitative monetary easing policy in March 2006, the Bank of Japan lifted its zero-interest rate policy in July Affected by overseas developments, including a decline in housing sales in the United States and the tightening of monetary policies in China and India, the pace of the Japanese economic expansion slowed moderately. Amid these conditions, stock markets generally remained steady. The Nikkei Stock Average recorded a new high of 17,563 on April 7, 2006, but temporarily declined to 14,045 on June 14, 2006, amid selling pressure from foreign and individual investors in the face of an increasingly tense international situation and a hike in U.S. interest rates. Since then, the stock market has regained its upward momentum thanks to a revival of foreign buying led by a decline in long-term interest rates, strong corporate performance, a pause in the rise in U.S. interest rates, buying interest driven by improved dividend yields, and speculative buying on the strength of M&A anticipation. The Nikkei Stock Average temporarily rose to 18,300 on February 26, 2007, and closed at 17,287 at the end of the fiscal year. The trading volume remained stagnant in the first half of the fiscal year under review, but it improved in the second half with daily trading value on the First Section of the Tokyo Stock Exchange reaching 4.8 trillion yen on February 28, The average daily turnover for the fiscal year under review was 2.6 trillion yen, exceeding the 2.2 trillion yen of the previous year. It was, however, noted that the participation of individual investors was not strong, as they were net sellers of 4.5 trillion yen over the year, while foreign investors were net buyers of 6.0 trillion yen. The bond market remained sluggish on anticipation that Bank of Japan was likely to lift its zero-interest rate regime following its decision to end the policy of quantitative monetary easing in March As a result, the yields on 10-year government bonds, the benchmark for long-term interest rates, temporarily rose to 2.005% on May 10. However, when the zero-interest rate policy was actually released and the call rate was raised to 0.25% on July 14, the bond market rallied, and the yields of 10-year government bond declined. instead, as the market had already discounted the news. Since then, with a decline in the U.S. long-term interest rates as the Federal Reserve Board has elected not to raise its rates since its last did so on June 29, and with weakened concerns over global inflation reflecting lower oil prices, long-term rates in Japan continued to fall through the rest of the fiscal year. Consequently, the yield on 10-year government bonds temporarily declined to 1.545% on March 22, On February 21, 2007, Bank of Japan raised interest rates once again, but the long-term rates did not rise as the market anticipated no subsequent rate rise would follow given the stable consumer price index. In this environment, on a consolidated basis the Group recorded total operating revenues of 63,765 million, down 11.2% from the previous year, net operating revenues of 62,400 million, down 11.9%, and selling, general and administrative expenses of 44,403 million, up 0.3%. Operating income declined 32.2% year-on-year to 17,997 million, and ordinary income declining 31.1% to 18,723 million. 3

4 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary (Commissions) In the fiscal year under review, commissions received were 47,422 million on a consolidated basis, down 10.7% from the previous year. The breakdown of the commissions received is as follows: (1) Brokerage On a consolidated basis, brokerage of stocks turnover stood at 3,934 million shares in the fiscal year under review, down 49.5% from the preceding year, with a value of 4,069.3 billion, down 29.4%. These declines are attributable to the slowdown in trading by individual investors. As a result, we booked overall brokerage of 24,956 million, down 32.9%, with equity brokerage of 24,865 million, down 32.9%. (2) Underwriting and sales On a consolidated basis, underwriting and sales for stocks were 845 million in the fiscal year under review, down 56.5% from the previous year, and such commissions for stocks and bonds were 1,078 million, down 46.8%. (3) Subscription and distribution and others Subscription and distribution commissions for the fiscal year under review stood at 12,964 million, up 62.9% from the previous year, on a consolidated basis and other commissions received were 8,423 million, up 41.4%. Most of which were attributable to subscription and distribution commissions and agency commissions from investment trusts. In relation to beneficiary certificates, the subscription and distribution commissions accounted for 12,789 million, up 64.5%, and agency commissions, 5,597 million, up 37.1%. (Trading profit and loss) In the fiscal year under review, gains on trading of bonds were 6,189 million yen, up 31.8% from the previous year, on a consolidated basis thanks to brisk sales of foreign currency-denominated bonds and structured notes. Meanwhile, gains on trading of stocks were 6,613 million, down 41.2%, reflecting sluggish trading of domestic stocks. As a result, gains on trading of stocks, bonds and others totaled 13,581 million, down 18.0%. (Financial income) In the fiscal year under review, financial revenues were 2,761 million, up 31.6% from the previous year, on a consolidated basis, thanks to an increase in interest income derived from margin trading. Meanwhile, financial expenses rose 42.1%, to 1,364 million reflecting an increase in interest expenses. Hence, the positive net financial balance was 1,396 million, up 22.8%. (Selling, general and administrative expenses) In the fiscal year under review, selling, general and administrative expenses accounted for 44,403 million, up 0.3% on a consolidated basis. Of the amount, trading-related expenses were 6,769 million, up 17.2%, with personnel expenses at 25,437 million, down 8.1%, real estate expenses at 5,461 million, rising 7.6%, and office expenses at 3,524 million, an increase of 10.1%. Depreciation expenses increased 91.8%, to 1,596 million, as a result of the change of the useful lives of extent software in line with the renewal of systems expected to take place in January

5 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary (2) Analysis on financial conditions In the fiscal year under review, cash outflows from operating activities were 17,964 million yen on a consolidated basis. While income before income taxes and minority interests was 18,536 million, trading products (liabilities), net of payables related to margin transactions, and borrowings pledged by securities declined and corporate and other taxes increased. Cash outflows from investing activities were 5,303 million, reflecting the development of a branch network and IT-related investments. Cash inflows from financing activities were 25,390 million, attributable to a rise in borrowings and issuance of commercial paper. As a result, the balance of cash and cash equivalents was 37,653 million at the end of the fiscal year under review on a consolidated basis, rising 2,131 million from the previous year. The Company has signed commitment-line contracts totaling 35 billion yen (as of the end of March 2007) with financial institutions. (3) Basic policy on dividend distribution As the performance of the securities industry is significantly influenced by market conditions, the Company is bolstering retained earnings on profit sharing. It is the Company s basic dividend policy to pay consistent and appropriate dividends to the shareholders. Under this basic policy, the Company has adopted an interim dividend scheme from the fiscal year under review. 5

6 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary 2. Information on Group Companies. The Tokai Tokyo Securities Group consists of Tokai Tokyo Securities Co., Ltd., ten consolidated subsidiaries, two non-consolidated subsidiaries, and four affiliate companies. It primarily engages in trading and brokerage of securities, underwriting and sales of securities, subscription and distribution of securities, offering of private placement and other business related to securities. The Group provides an array of services to meet customer needs for the raising and investing of funds through its global networks, which link financial markets in Asia and Europe. Changes in consolidated subsidiaries during the fiscal year under review are as follows. Tokai Tokyo Investment Co., Ltd. Established in April 3, 2006 Tokai Tokyo Securities Europe Limited Established in January 24, 2007 TTI Chubu Venture No. 1 Investment Business Limited Partnership Established in May 31, 2006 TTI Growth Companies No.1 Investment Business Limited Partnership Established in February 1, 2007 Details of the operations of the Tokai Tokyo Securities Group are as follows. (Investment and Financial Services Business) Japan Tokai Tokyo Securities Co., Ltd. Utsunomiya Securities Co., Ltd. Asia Tokai Tokyo Securities (Asia) Ltd. Europe Tokai Tokyo Securities Europe Limited Tokai Tokyo Research Center Co., Ltd. (Information service business) Tokai Tokyo Services Co., Ltd. (Management of real estate lease, custody service and other businesses) Tokai Tokyo Investment Management Co., Ltd. (Investment advisory business) Tokai Tokyo Finance & Real Estate Co., Ltd. (Real-estate finance related business) YST-1 Tokutei Mokuteki Kaisha and one other company N-o Meiekiminami Yugen Kaisha and three other companies Tokai Tokyo Investment Co., Ltd. (Venture capital and investment in securities) TTI Chubu Venture No. 1 Investment Business Limited Partnership TTI Growth Companies No.1 Investment Business Limited Partnership (Note) 1. Each mark has the following meanings: consolidated subsidiary, non-consolidated subsidiary, affiliate company 2. Investment business limited partnerships are controlled by the executive authority. 6

7 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary 3. Management Policy (1) Principle Management Policy The Company aims to become The Premier House suggesting a superior securities company as representing our ultimate goal. To become The Premier House, we have developed three specific targets, namely to become a Solutions House that can always provide the optimum solutions to meet the needs of customers, a Community House that can contribute to local communities on which the Company is based, and a Premier that provides high quality products for customers. We are pursuing a number of specific initiatives to achieve these targets. (2) Management targets We have set the following three numerical targets as the vision of our three-year business plan: 1. Ordinary income of 40 billion yen or more in the final year of the three-year business plan 2. ROE of 10% or higher; 15% or higher in the final year of the three-year business plan 3. A credit rating of A or higher (3) Medium to Long Term Management Strategies To become a The Premier House at the earliest possible stage, we established and launched our Three-Year Business Plan - Innovation Jump Up 5 in April Under the plan, we are introducing comprehensive structural reforms by carrying out the following five specific strategies: 1. Reforming Corporate Governance and Corporate Culture 2. Reforming the Business Portfolio and Business Model 3. Reforming the Network 4. Reforming Products and Services 5. Reforming Roles and Productivity of Employees We are also executing other strategies to bolster the five reforms described above, namely IT strategies that include the renewal of the main system in January 2008, and alliance strategies that include business cooperation with the Yamaguchi Financial Group. (4) Current challenges Financial services and products have become increasingly diversified in recent years. With the anticipated introduction of the Financial Product Transaction Act in the current fiscal year, the pace of this diversification is likely to accelerate. In this environment, the importance of securities markets, which play a central role in the Japanese financial system, will increase. Consequently, the role of securities companies that support the securities markets will become more significant. We will carry out specific measures in accordance with these strategies to respond to the expectations and support of customers. All employees and directors are united in their commitment to improving the Company s performance. We will continue to strive to become a securities firm with a sound organization and financial strength, both of which are necessary to meet the needs of customers, namely a strong company, a company that can provide proposals and information that satisfy customers and that offers a workplace that motivates all employees, namely an exciting company, and a company that possesses extensive knowledge as a sophisticated financial institution and that can provide optimum services for customers, namely a learning company. 7

8 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary Consolidated Balance Sheets Category Assets FY2005 FY2006 (As of March 31, 2006) (As of March 31, 2007) Composition (%) Composition (%) Increase/ Decrease Amount (million yen) Current assets Cash and deposits 36,458 38,676 2,218 Cash segregated as deposits for regulatory purposes 30,492 25,396-5,095 Deposits segregated for customer 29,902 24,803-5,099 Others Trading assets 183, ,982-17,289 Trading securities and others 183, ,464-17,561 Derivative assets Receivables related to margin transactions 145, ,846-26,802 Customer margin loans 139, ,469-32,089 Cash deposits as collateral for securities borrowed 6,088 11,376 5,287 Collateralized short-term financing agreements 200, ,251-68,806 Cash deposits as collateral for securities borrowed 200, ,251-68,806 Advances Cash paid for subscription 2,941 4,751 1,809 Short-term guarantee money paid 2,271 2, Short-term loans receivable Accrued receipt Accrued revenue 3,233 2, Deferred tax assets-current 2,699 2, Others 1, Less: Allowance for doubtful accounts-current Total current assets 609, , ,056 Fixed assets Tangible fixed assets 9,532 10,657 1,125 Structures 2,595 2, Equipment and fixtures 1,415 2, Land 5,520 5,520 - Work in progress Intangible fixed assets 1,630 2, Investments and others 17,731 18, Investment securities 13,333 13, Long-term guarantee deposits 3,439 3, Others 1,761 2, Less: Allowance for doubtful accounts-non-current Total fixed assets 28, , ,730 Total assets 638, , ,325-8-

9 Current liabilities Trading liabilities Category Liabilities Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary FY2005 FY2006 (As of March 31, 2006) (As of March 31, 2007) Composition (%) Composition (%) Increase/ Decrease Amount (million yen) 145, ,977-26,331 Trading securities and others 144, ,637-26,344 Derivative liabilities Trading payables, net Payables related to margin transactions 9,821 19,091 9,269 69,361 34,263-35,097 Payable to securities finance companies 66,491 31,013-35,477 Proceeds of securities sold for customers accounts 2,870 3, Collateralized short-term financing agreements 158,637 78,410-80,227 Cash deposits as collateral for securities loaned 143,145 50,105-93,040 Payables related to gensaki transactions 15,491 28,304 12,812 Deposits received Cash deposits received as guarantee Short-term borrowings Short-term corporate bonds Income taxes payable Accrued bonuses Accrued bonuses for directors and executive officers Others Total current liabilities Fixed liabilities Long-term debt Deferred tax liabilities-non-current Retirement benefits Retirement benefits for directors and executive officers Consolidated adjustment account Negative goodwill Others Total fixed liabilities Statutory reserves Securities transaction liabilities reserve Total statutory reserves Total liabilities Minority interests 24,782 20,101-4,680 15,119 9,118-6,000 75, ,728 31,957 10,500 18,100 7,600 7,596 5,583-2,013 4,540 4, ,219 2,476-1, , , , , , ,012 1,012-1, , , , ,

10 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary Category Capital equity Common stock Capital surplus Retained earnings Net unrealized gain/loss on securities, net of tax effect Translation adjustments Treasury stock Total shareholders' equity Total liabilities, minority interests and shareholders' equity Net assets Shareholders' equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders' equity Valuation and translation adjustments Net unrealized gain/loss on securities, net of tax effect Translation adjustments Total valuation and translation adjustments Minority interests Total net assets Total liabilities and net assets FY2005 FY2006 (As of March 31, 2006) (As of March 31, 2007) Composition (%) Composition (%) Increase/ Decrease Amount (million yen) 36, , , , , , , , , , , , , , , ,

11 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary Category Consolidated Statements of Operations FY2005 From April 1, 2005 to March 31, 2006 Percentage (%) FY2006 From April 1, 2006 to March 31, 2007 Percentage (%) Operating revenues Commissions 53,110 47, Brokerage 37,167 24, Underwriting and sales 2,028 1, Subscription and distribution 7,957 12, Other commissions 5,956 8, Trading profit and loss 16,568 13, Interest and dividend income 2,097 2, Total operating revenues 71, , Interest expenses , , , Net operating revenues Selling, general and administrative expenses YoY change (%) Trading-related expenses 5,776 6, Personnel expenses 27,669 25, Occupancy and rental 5,074 5, Office expenses 3,200 3, Depreciation expenses 832 1, Taxes and public dues Allowance for doubtful accounts Others 977 1, Total selling, general and administrative expenses 44, , Operating income 26, , Non-operating income Amortization of consolidated adjustment account Amortization of negative goodwill Others Non-operating expenses Others Ordinary income 27, , Extraordinary gains Gains on sale of fixed assets Gains on sale of investment securities Gains on contribution of securities to retirement benefits 3, Reversal of securities transaction liabilities reserve Total extraordinary gains 3, Extraordinary losses Write-down of investment securities Loss on sale of fixed assets Loss on disposal of fixed assets Loss on impairment of fixed assets 3, Expenses for the consolidation of branches Contribution to the Securities Market Infrastructure Improvement Fund Provision for securities transaction liabilities Total extraordinary losses 4, Income before income taxes and minority interests Income taxes-current Income taxes-deferred Minority interests Net income 26, , ,376 7,311-3,297 4, , , ,

12 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary Consolidated Statements of Capital Surplus and Retained Earnings From April 1, 2005 to March 31, 2006 Category Capital surplus Beginning balance of capital surplus 37,635 Decrease in capital surplus 49 Net loss on sales of treasury stock 49 Ending balance of capital surplus 37,586 Retained earnings Beginning balance of retained earnings 16,968 Increase in retained earnings 22,085 Net income 22,085 Decrease in retained earnings 2,866 Cash dividends paid 2,764 Bonuses to directors 102 Ending balance of retained earnings 36,

13 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary Consolidated Statements of Changes in Net Assets From April 1, 2006 to March 31, 2007 (Unit: million yen) Shareholders equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders equity Beginning balance as of Mar. 31, ,000 37,586 36,187-4, ,564 Changes of items Dividends , ,881 Director s bonuses paid from retained earnings Net income ,668-10,668 Acquisition of treasury stock ,429-5,429 Disposal of treasury stock Net changes of items other than shareholers equity Total changes of items ,497-5,424-3,929 Ending balance as of Mar. 31, ,000 37,584 37,684-9, ,634 Valuation and translation adjustments Net unrealized gain/loss on securities, net of tax effect Translation adjustments Total valuation and translation adjustments Minority interests Total net assets Beginning balance as of Mar. 31, , , ,524 Changes of items Dividends ,881 Director s bonuses paid from retained earnings Net income ,668 Acquisition of treasury stock ,429 Disposal of treasury stock Net changes of items other than shareholders equity Total changes of items ,625 Ending balance as of Mar. 31, , , ,

14 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary Consolidated Statements of Cash Flows FY2005 From April 1, 2005 to Marcn 31, 2006 FY2006 From April 1, 2006 to Marcn 31, Cash flows from operating activities Income before income taxes and others 26,225 18,536 Depreciation 832 1,596 Amortization of consolidated adjustment account Amortization of negative goodwill Increase/decrease in allowance for retirement benefits Increase/decrease in allowance for retirement benefits for directors and executive officers 29 3 Allowance for doubtful accounts Interest and dividend income - 2,280-3,023 Interest expenses 960 1,364 Adjustment of extraordinary gains/losses items Write-down of investment securities Gain on sale of investment securities Gains on contribution of securities to retirement benefits - 3,168 Gain/loss on sale of fixed assets 220 Loss on disposal of fixed assets Loss on impairment of fixed assets 3,936 Expenses for the consolidation of branches 77 Increase/decrease in asset items Deposits segregated for customer - 7,590 5,098 Cash paid for subscription - 1,840-1,809 Trading assets - 53,095 17,189 Receivables related to margin transactions - 65,405 26,802 Receivables on collateralized short-term financing agreements - 56,564 68,806 Others - 2, Increase/decrease in liability items Deposits received 8,052-4,684 Trading liabilities 32,484-26,331 Net of payables related to margin transactions 15,884-35,097 Collateralized short-term financing agreement 53,247-80,227 Cash deposits received as a guarantee 7,473-6,000 Others 8,551 7,310 Bonuses to directors and executive officers Subtotal - 35,550-10,384 Interest and dividend received 2,045 3,068 Interest paid ,422 Income taxes refunded (paid) ,225 Net cash flows provided by (used in) operating activities - 34,569-17,

15 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary FY2005 From April 1, 2005 to Marcn 31, 2006 FY2006 From April 1, 2006 to Marcn 31, Cash flows from investing activities Payments for purchase of tangible fixed assets ,022 Proceeds from sale of tangible fixed assets 45 Payments for purchase of intangible fixed assets - 1,158-1,657 Proceeds from sale of intangible fixed assets Payments for purchase of investment securities - 1,944-1,372 Proceeds from sale of investment securities 1, Payments for purchase of subsidiary's stock - 24 Payments for deposit of long-term guarantee deposits Proceeds from collection of long-term guarantee deposits Others Net cash flows provided by (used in) investing activities - 2,218-5, Cash flows from financing activities Increase/decrease in short-term borrowings 39,583 31,953 Proceeds from long-term debt 150 Proceeds from issue of short-term corporate bonds 19, ,700 Payments for redemption of short-term corporate bonds - 8, ,100 Proceeds from sale of treasury stocks 86 Payments for acquisition of treasury stocks - 1,671-5,377 Proceeds and payments for sale and purchase of fractional shares (net amount) - 49 Dividends paid - 2,764-8,881 Dividends paid to minority shareholders Net cash flows provided by (used in) financing activities 45,731 25, Effect of exchange rate changes on cash and cash equivalents Net change in cash and cash equivalents 9,054 2, Cash and cash equivalents at beginning of term 26,467 35, Cash and cash equivalents at end of term 35,521 37,

16 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary [Notes to consolidated financial statements] The consolidated financial statements of the Company are prepared in accordance with the Cabinet Office Ordinance Concerning Securities Companies (Prime Minister s Office Ordinance and Ministry of Finance Ordinance No. 32, 1998), and the Uniform Accounting Standards of Securities Companies (resolution of the Board of Directors of the Japan Securities Dealers Association, November 14, 1974), based on the Regulations Concerning the Terminology, Forms, and Preparation Methods of Consolidated Financial Statements (Ministry of Finance Ordinance No. 28, 1976; hereinafter referred to as the Regulations of Consolidated Financial Statements) and the provisions under Article 46 and 68 herein. [Basis of consolidated financial statements] 1. Scope of consolidation (1) Consolidated subsidiaries The following subsidiaries are consolidated: Consolidated subsidiaries: Ten companies (six companies in the previous year) Names of companies: Tokai Tokyo Securities (Asia) Ltd., Tokai Tokyo Research Center Co., Ltd., Utsunomiya Securities Co., Ltd., Tokai Tokyo Services Co., Ltd., Tokai Tokyo Investment Management Co., Ltd., Tokai Tokyo Finance & Real Estate Co., Ltd., Tokai Tokyo Investment Co., Ltd., Tokai Tokyo Securities Europe Limited, TTI Chubu Venture No. 1 Investment Business Limited Partnership, TTI Growth Companies No.1 Investment Business Limited Partnership Tokai Tokyo Investment Co., Ltd. and Tokai Tokyo Securities Europe Limited were established on April 3, 2006 and on January 24, 2007, respectively, as wholly owned subsidiaries of the Company and are included in the scope of consolidation from the fiscal year under review. TTI Chubu Venture No. 1 Investment Business Limited Partnership and TTI Growth Company No. 1 Investment Business Limited Partnership, which were established in the fiscal year, and in which Tokai Tokyo Investment Co., Ltd is an unlimited partner, are also included in the scope of consolidation from this term. (2) Major non-consolidated subsidiaries Non-consolidated subsidiaries: YST-1 Tokutei Mokuteki Kaisha and one other company Reason for exclusion from the scope of consolidation The non-consolidated subsidiaries are small companies, and aggregate total assets, sales, net income/loss (commensurate with equity), retained earnings (commensurate with equity), etc. do no have a significant influence on the consolidated financial statements. 2. Application of equity method Major non-consolidated subsidiaries and affiliate companies to which the equity method is not applied N-o Meiekiminami Yugen Kaisha and five other companies Reason why the equity method is not applied The non-consolidated subsidiaries and affiliate companies to which the equity method is not applied have only a slight influence on the consolidated financial statements, judging from their net income/loss (commensurate with equity), retained earnings (commensurate with equity), etc., and as a whole they are of little significance. 3. Fiscal period of subsidiaries The closing date for consolidated subsidiaries, namely, Tokai Tokyo Securities (Asia) Ltd., Tokai Tokyo Securities Europe Limited, TTI Chubu Venture No. 1 Investment Business Limited Partnership and TTI Growth Companies No.1 Investment 16

17 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary Business Limited Partnership is December 31, and that for the other six consolidated subsidiaries is March 31. For the subsidiaries with the fiscal year ending other than March 31, 2007, the financial statements for the relevant fiscal year are employed. 4. Accounting policies (1) Objectives and scope of trading The objectives of trading are to generate profits in the exchanges of securities by taking advantage of the short-term fluctuation or arbitrage of market prices, interest rates, currency value and other indexes, and to minimize losses that may be caused by the above transactions. The scope of these transactions includes trading of securities, securities index futures transactions, options transactions of securities and futures transaction of securities listed on the foreign exchanges. (2) Valuation of trading assets and liabilities Trading assets and liabilities, including securities and financial derivatives for trading purposes are recorded at fair value. (3) Valuation of non-trading assets and liabilities The valuation of non- trading assets and liabilities is recorded by the methods described below. Other securities Other securities with market values Other securities with market values are recorded in the consolidated balance sheets at market value, based on quoted market prices on the consolidated closing date. The difference between the cost, using the moving average method, and market value is recorded as net unrealized gains (or losses) on other securities, net of taxes in net assets on the balance sheets. Other securities with no fair value Other securities with no fair value are recorded at cost using the moving average method. (4) Depreciation of significant depreciable assets 1) Tangible fixed assets The declining-balance method is primarily applied to property and equipment. The Company and domestic consolidated subsidiaries calculate depreciation using the straight-line method for buildings (excluding facilities attached to buildings) acquired after April 1, ) Intangible fixed assets and long-term prepaid expenses Intangible fixed assets and long-term prepaid expenses are generally amortized under the straight-line method. The Company and domestic consolidated subsidiaries calculate amortization using the straight-line method for software for in-house use based on internal estimations of useful lives. (5) Accounting policies for significant provisions Allowance for doubtful accounts The Company provides an allowance for possible losses on doubtful accounts. For performing assets, an allowance is calculated based on a past loss experience. For non-performing assets, it is based on the management s assessment of the recoverability of the assets, and the amount expected to be irrecoverable is provided for. Accrued bonuses Accrued bonuses are appropriated for bonus payments to employees based on the estimated future payments computed by methods set out by the Company and domestic consolidated subsidiaries. Retirement benefits 17

18 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary The Company and domestic consolidated subsidiaries record an allowance for retirement benefits for employees based on actuarial retirement benefits and plan assets at the end of the consolidated fiscal year under review. Accrued bonuses for directors and executive officers An allowance is appropriated for bonus payments to directors and executive officers based on the estimated bonus payments. Retirement benefits for directors and executive officers The Company and domestic consolidated subsidiaries record an allowance for retirement benefits for directors and executive officers based on estimated future retirement benefits at the end of the consolidated fiscal year under review in accordance with the internal regulations of the Company and domestic consolidated companies. 18

19 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary (6) Accounting policies for statutory reserves Securities transaction liabilities reserves Securities transaction liabilities reserves are provided for potential losses from securities transactions based on the amount computed in accordance with the provisions set out in Article 35 of the Cabinet Office Ordinance Concerning Securities Companies based on the provisions set out in Article 51 of the Securities and Exchange Law. (7) Policies for the conversion of significant assets or liabilities in foreign currencies into yen The Company and domestic consolidated subsidiaries generally convert assets or liabilities in foreign currencies into yen at the spot exchange rate on the consolidated closing date and record the exchange difference as profits or losses. Assets, liabilities, revenues and expenses of overseas subsidiaries are converted into yen at the spot exchange rate on the consolidated closing date. The exchange difference is included in the translation adjustments of net assets. (8) Accounting for lease transactions Financial leases other than those for which the ownership of the leased property transfers to the lessee are primarily accounted for as ordinary rental transactions. (9) Accounting for consumption taxes Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes. 5. Valuation of assets and liabilities of consolidated subsidiaries All assets and liabilities of consolidated subsidiaries are valued at fair value as at the acquisition date. 6. Amortization of negative goodwill Negative goodwill is amortized on a straight-line basis over five years. 7. Consolidated statements of cash flows Cash and cash equivalents included in the consolidated statements of cash flows consist of cash on hand, current deposits and ordinary deposits which can be withdrawn on demand. [Notes to consolidated balance sheet] 1. Debt guarantees FY2005 FY million yen 52 million yen 19

20 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary [Notes to consolidated statement of changes in net assets] FY2006 (from April 1, 2006 to March 31, 2007) 1) Outstanding shares 2) Treasury stocks Type of Shares As of March 31, 2006 Increase Decrease As of March 31, 2007 Common stocks (shares) 285,582, ,582,115 Type of Shares As of March 31, 2006 Increase Decrease As of March 31, 2007 Common stocks (shares) 11,516,232 8,610,697 10,000 20,116,929 (Notes) 1. The increase in treasury stocks (common stocks) is attributable to the acquisition of 8,530,000 treasury stocks in accordance with the resolution of the Board of Directors based on the Articles of Incorporation, and the purchase of 80,697 fractional shares. 2. The decline in treasury stocks (common stocks) is attributable to the exercise of stock subscription rights (stock options) for 7,000 shares and the sale of 3,000 fractional shares. 3) Dividends i. Dividend amount The dividend amount has been resolved at the board of directors meeting held on June 29, 2006, as follows: - Dividends for Common stock (a) Total cash dividends (b) Dividend per share 6,851 million yen (c) Base date March 31, 2006 (d) Effective date June 30, yen (ordinary dividend: 15 yen, special dividend: 10 yen) The dividend amount has been resolved at the board of directors meeting held on October 27, 2006, as follows. - Common stock (a) Total cash dividends (b) Resource of dividends (c) Dividend per share 2,030 million yen Retained earnings 7.5 yen (d) Base date September 30, 2006 (e) Effective date December 1, 2006 ii. Dividends, the record date of which falls in the consolidated fiscal year under review with the effective date falling in the following year The following agenda will be proposed during the general shareholders meeting to be held on June 28, Common stock (a) Total cash dividends (b) Resource of dividends (c) Dividend per share 2,654 million yen Retained earnings (d) Base date March 31, 2007 (e) Effective date June 29, yen (ordinary dividend: 7.5 yen, special dividend: 2.5 yen) 20

21 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary [Notes to consolidated statements of cash flows] 1. Reconciliation for Cash and cash equivalents and Cash and deposits on the consolidated balance sheets (Million yen) FY2005 FY2006 Cash and deposits 36,458 38,676 Time deposits more than three months ,022 Cash and cash equivalents 35,521 37,653 [Change in the basis of consolidated financial statements] 1. From the consolidated fiscal year under review, the Company s financial statements have been prepared in accordance with the Accounting Standard for Presentation of Net Assets in the Balance Sheet (Accounting Standards Board of Japan (ASBJ) Statement No. 5, December 9, 2005) and Guidance on Accounting Standard for Presentation of Net Assets in the Balance Sheet (ASBJ Guidance No. 8, December 9, 2005). The Company s profits and losses are not impacted by this change. Shareholders equity by the former accounting standard is 103,671 million yen. 2. From the consolidated fiscal year under review, the Company has adopted the Accounting Standard for Directors Bonus (Accounting Standards Board of Japan (ASBJ) Statement No. 4, November 29, 2005). As a result, operating income, ordinary income and income before income taxes and minority interests declined by 219 million yen compared with the figures recorded by the former accounting standard. 21

22 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary [Segment information] 1. Segment information by type of business The Company and its consolidated subsidiaries global activities include (i) trading in securities, (ii) brokerage of securities, (iii) underwriting and sales of securities, (iv) subscription and distribution of securities, and (v) private offering of securities. The Company and its consolidated subsidiaries generate revenues from the above activities that also involve financing and other services. Accordingly, the Company and its consolidated subsidiaries operate in a single industry segment, Investment and financial services. 2. Segment information by geographical area As Japan represented more than 90% of consolidated operating revenue and total assets for the fiscal year under review, segment information by geographical area was omitted. 3. Overseas operating revenue As overseas operating revenue accounts for less than 10% of consolidated operating revenue for the fiscal year under review, information about overseas operating revenue was omitted. [Lease transactions] The note regarding lease transactions is omitted because these transactions are considered to have low priority on this disclosure. [Transactions with related parties] The note regarding transactions with related parties is omitted because these transactions are considered to have low priority on this disclosure. [Deferred tax accounting] The note regarded deferred tax accounting is omitted because these transactions are considered to have low priority in this disclosure. [Securities] The note regarding securities is omitted because these transactions are considered to have low priority in this disclosure. [Derivative transactions] The note regarding derivative transactions is omitted because these transactions are considered to have low priority in this disclosure. [Retirement benefits] The note regarding retirement benefits is omitted because these transactions are considered to have low priority in this disclosure. 22

23 Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary Supplemental Information for Financial Summary of FY2006 (consolidated) 1. Commission received (1) By item (Unit: million yen) FY2005 FY2006 Yr/Yr % change Increase/Decrease Brokerage 37,167 24, % - 12,211 (Stock) ( 37,071 ) ( 24,865 ) ( 67.1 ) ( - 12,205 ) (Bond) ( 55 ) ( 44 ) ( 80.4 ) ( - 10 ) (Beneficiary certificates) ( 40 ) ( 45 ) ( ) ( 4 ) Underwriting and sales 2,028 1, (Stock) ( 1,945 ) ( 845 ) ( 43.5 ) ( - 1,100 ) (Bond) ( 82 ) ( 232 ) ( ) ( 149 ) Subscription and distribution 7,957 12, ,006 (Beneficiary certificates) ( 7,773 ) ( 12,789 ) ( ) ( 5,016 ) Other commissions 5,956 8, ,467 (Beneficiary certificates) ( 4,083 ) ( 5,597 ) ( ) ( 1,513 ) Total 53,110 47, ,687 (2) By product (Unit: million yen) FY2005 FY2006 Yr/Yr % change Increase/Decrease Stock 39,205 25, % - 13,212 Bond Beneficiary certificates 11,897 18, ,534 Others 1,601 2, Total 53,110 47, , Trading profit and loss (Unit: million yen) FY2005 FY2006 Yr/Yr % change Increase/Decrease Stock and other trading 11,252 6, % - 4,638 Bond and other trading 4,696 6, ,493 Other trading Total 16,568 13, ,

24 <<Rerference>> Tokai Tokyo Securities Co., Ltd. (8616) FY2006 Financial Summary Operating revenues Commissions Brokerage Quarterly Consolidated Statements of Operations 1Q 2Q 3Q 4Q Apr. 1, Jun. 30, 2006 Jul. 1, Sep. 30, 2006 Oct. 1, Dec. 31, 2006 Jan. 1, Mar. 31, 2007 (Unit: million yen) Total of FY2006 Apr. 1, 2006 Mar. 31, ,376 10,764 11,883 13,398 47,422 6,742 5,312 5,837 7,063 24,956 (Stock) 6,715 5,284 5,820 7,044 24,865 Underwriting and sales Subscription and distribution ,078 2,619 3,048 3,684 3,611 12,964 (Beneficiary certificates) 2,594 3,032 3,562 3,600 12,789 Other commissions 1,690 2,159 2,081 2,492 8,423 (Beneficiary certificates) 1,207 1,344 1,467 1,577 5,597 Trading profit and loss 2,193 2,929 4,410 4,048 13,581 (Stock and other) 876 1,019 2,614 2,102 6,613 (Bond and other) 1,134 1,657 1,743 1,653 6,189 Interest and dividend income ,761 Total operating revenues 14,191 14,335 17,028 18,209 63,765 Interest expenses ,364 Net operating revenues 13,919 13,994 16,677 17,808 62,400 Selling, general and administrative expenses Trading-related expenses 1,579 1,686 1,650 1,853 6,769 Personnel expenses 5,762 6,182 6,718 6,773 25,437 Occupancy and rental 1,250 1,411 1,353 1,445 5,461 Office expenses ,524 Depreciation expenses ,596 Taxes and public dues Allowance for doubtful accounts Others ,103 Total selling, general and administrative expenses 10,108 10,963 11,451 11,879 44,403 Operating income 3,811 3,031 5,225 5,928 17,997 Non-operating income Amortization of negative goodwill Others Non-operating expenses Others Ordinary income 4,072 3,135 5,464 6,051 18,723 Extraordinary gains Extraordinary losses Income before income taxes and minority interests 4,077 3,116 5,348 5,994 18,536 Income taxes-current 30 1,787 1,960 3,533 7,311 Income taxes-deferred 1, Minority interests Net income 2,418 1,825 3,135 3,289 10,