[Translation] (Millions of Yen) Amount. Account. (Liabilities) Current liabilities 4,655. Short-term loans payable 1,000. Income taxes payable

Transcription

1 Financial Report for the 25th Business Year Marunouchi, Chiyoda-ku, Tokyo Citigroup Japan Holdings Corp. Anthony P. Della Pietra, Jr., Representative Director, President and CEO Balance Sheet (for the fiscal year ended March 31, 2015) Account Amount (Assets) Current assets Cash and deposits Short-term loans receivable Short-term loans receivable from subsidiaries and affiliates Accrued income Accounts receivable Others 104,262 9,931 30,000 62, ,302 6 Noncurrent assets 116,041 Property, plant and equipment 1 Furniture and fixtures 1 Intangible assets 0 Software 0 Investments and other assets 116,040 Stocks of subsidiaries and affiliates 93,090 Investments in capital of subsidiaries and affiliates 22,752 Long-term guarantee deposits 197 Long-term accounts receivable 449 Allowance for doubtful accounts (449) Total assets 220,

2 Account Amount (Liabilities) Current liabilities Short-term loans payable Income taxes payable Deposits received Guarantee deposits received Accrued expenses Accounts payable Provision for bonuses Noncurrent liabilities Long-term loans payable Other noncurrent liabilities Total liabilities 4,655 1, ,086 2, ,134 17, ,789 (Net assets) Shareholders' equity Capital stock Capital surplus Legal capital surplus Retained deficits Other retained deficits 198, ,000 3,583 3,583 (105,069) (105,069) Retained deficits brought forward (105,069) Total net assets Total liabilities and net assets 198, ,

3 Statement of Income (from April 1, 2014 to March 31, 2015) Operating revenue Account Commissions received from subsidiaries and affiliates Financial revenues from subsidiaries and affiliates Others Operating expenses Selling, general and administrative expenses Financial expenses Operating income (loss) Non-operating income Ordinary income (loss) Extraordinary loss Loss on valuation of stocks of subsidiaries and affiliates Loss on valuation of investments in capital of subsidiaries and affiliates Net income (loss) before income tax Income (benefits) taxes-current Income (benefits) taxes-deferred Net income (loss) Amount 38 1, ,836 1,214 60,211 11,174 1,946 4,051 (2,104) 51 (2,053) 71,385 (73,438) 24 (587) (72,875) - 3 -

4 Statement of Changes in Equity (from April 1, 2014 to March 31, 2015) Shareholders' equity Capital surplus Retained deficits Capital stock Legal capital surplus Other retained deficits Retained deficits brought forward Total shareholders' equity Total net assets Beginning balance 300,000 3,583 (32,194) 271, ,389 Changes in balances during the year Net loss (72,875) (72,875) (72,875) Total changes in balances during the year - - (72,875) (72,875) (72,875) Closing balance 300,000 3,583 (105,069) 198, ,

5 Notes to Financial Statements Financial statements of Citigroup Japan Holdings Corp. (hereafter referred to as the Company ) have been prepared in accordance with Ordinance on Company Accounting (Ministry of Justice Ordinance No.13, February 7, 2006). The amounts are presented in millions of Japanese yen and are rounded down to the nearest million yen. [Significant accounting policies] 1.Valuation of financial instruments (1)Investments in subsidiaries Carried at cost using the moving average method. (2)Derivatives Carried at fair value. 2.Depreciation and amortization (1)Property, plant and equipment The declining-balance method is applied. (2)Intangible assets The straight-line method is applied. The useful life of software is determined by the Company based on management s best estimate. 3.Allowance (1)Allowance for doubtful accounts To provide for possible losses from loans, the Company estimated provision for performing loans with a prospected loss rate based on historical loss experiences, and estimated provisions for non-performing loans using individually determined probable losses. (2)Provision for bonuses To provide for employees and directors bonus payments, the Company recorded estimated bonuses based on internal guideline, which are attribute to the respective fiscal year. 4.Accounting for hedge activities The Company enters into interest rate swap transaction in order to hedge interest rate volatility risk on its loans payable. The Company applies the special accounting treatment to interest rate swap as these interest rate swaps satisfied all the requirements. 5.Other significant matters that constitute basis for non-consolidated financial statements (1)Accounting for consumption taxes Consumption taxes are accounted for based on the tax exclusion method. (2)Adoption of consolidated taxation system The Company applies the consolidated taxation system in which the Company is a consolidated parent corporation

6 [Notes to Balance Sheet] 1.Accumulated depreciation of property, plant and equipment JPY 0 million 2.Monetary claims and monetary debts to the affiliates (Those balances shown separately on Balance Sheet are not included.) Short-term monetary claim JPY 2,273 million Long-term monetary claim JPY 108 million Short-term monetary debt JPY 2,503 million [Notes to Statement of Income] Volume of transaction with affiliate companies (Those balances shown separately on Statement of Income are not included.) Operating expenses JPY 285 million [Notes to Statement of Changes in Equity] 1.Shares issued as of the end of the fiscal year (Thousands of shares) Class of shares Beginning balance Increase Decrease Closing balance Common stock 24,033 24,033 Class A stock 7,402 7,402 2.Dividends (1)Dividends paid Not applicable. (2)Dividends with record dates within, but effective dates after the current fiscal year Not applicable. 3.Number and type of shares subject to share warrants (excluding those whose first date of exercise period has not commenced) as of the end of the current fiscal year. Not applicable

7 [Notes to accounting for income taxes] 1.Key components of deferred tax assets and deferred tax liabilities Key components of deferred tax assets are temporary difference in respect of the valuation of investments in subsidiaries and affiliates and loss carry-forwards. 2.Valuation allowance deducted from deferred tax assets JPY 150,380 million 3.Modifications of deferred tax assets and liabilities due to changes of corporate taxation rates According to the promulgation of the Law for Partial Amendment of the Income Tax Law, etc. (Law No. 9, 2015) and the Law for Partial Amendment of the Local Tax Law, etc. (Law No. 2, 2015) on March 31, 2015, the corporate income tax rate will be lowered from the fiscal years beginning on and after April 1, In conjunction with this change, the effective statutory tax rate used to measure deferred tax assets and deferred tax liabilities have changed for the timing differences expected to be resolved on the fiscal year beginning on April 1, 2015, and for the timing differences expected to be resolved on and after the fiscal years beginning on April 1, 2016, from the former 35.64% to 33.10% and 32.34%, respectively. The change will have no impact on the amount of deferred tax assets and deferred tax liabilities

8 [Notes to Financial Instruments] 1.Status of financial instruments (1)Policies on financial instruments The Company is engaged in investments and lending of funds to subsidiaries as a financial holding company. Temporary surplus funds are invested in negotiable deposits, etc. To meet the funding needs of those operations, the Company optimizes its finance through the use of secured and unsecured financing transactions in consideration of the nature of assets held. The Company conducts liquidity stress test and other liquidity monitoring based on the internal policy and monitors financing activities to ensure the Company meets the target set in the policy. The Company uses derivative transactions not for speculative purposes, but for hedging interest rate risks on loans payable. (2)Details of financial instruments and associated risks and risk management framework Although short-term loans receivable are exposed to the credit risk of the borrowers, they are all provided to subsidiaries and affiliates and are to be repaid in one year. Loans payable are exposed to interest rate risk and liquidity risk. The Company applies hedge accounting that designates loans payable as hedged items and interest rate swap as hedging instruments to hedge interest rate risks on certain loans payable. Evaluation of hedge effectiveness is omitted since such interest rate swaps meet the requirements for special treatment. Liquidity risks are managed in accordance with Regulation on liquidity risk management. (3)Supplementary explanations about matters concerning fair value of financial instruments Fair values of financial instruments are based on their market prices and, in cases where market prices are not available, rationally calculated values. Such prices have been calculated using certain assumptions, and may differ if calculated based on different assumptions. 2.Fair value of financial instruments The following table represents book values, fair values as well as differences as of March 31, Book Value Fair Value Difference (1) Cash and deposits 9,931 9,931 (2) Short-term loans receivable 30,000 30,000 (3) Short-term loans receivable from subsidiaries and affiliates 62,000 62,000 Total Assets 101, ,931 (1) Short-term loans payable 1, (2) Long-term loans payable 17,000 16, (3) Derivatives Total Liabilities 18,000 17,

9 (Footnote 1) Fair value calculation methodology for financial instruments Assets (1) Cash and deposits, (2) Short-term loans receivable and (3) Short-term loans receivable from subsidiaries and affiliates Fair values of these items are considered to approximate the book value due to the short term of settlement period. Liabilities (1) Short-term loans payable and (2) Long-term loans payable Fair values of these items are defined to be the present value calculated by pricing model based on interest rates, transaction term, credit spread, etc. (3) Derivatives (i) Hedge accounting not applied Not applicable. (ii) Hedge accounting applied The contract amount or the amount equivalent to the principal set forth in the contract, etc. for each method of hedge accounting on the closing date are as follows: Method of hedge accounting Type of derivatives transactions Major hedged items Contract amount, etc. (More than one year) Fair value Calculation method of the fair value Special treatment of interest rate swap Interest rate swap Paid/fixed and received/floating Loans payable 4,000 (3,000) (*) As interest rate swaps subject to the special treatment of interest rate swap are accounted for as a single item with underlying hedged short-term loans payable and long-term loans payable, their fair values are included in those of short-term loans payable and long-term loans payable. (*) (Footnote 2) Book value of financial instruments which are extremely difficult to calculate their fair value Book Value Stocks of subsidiaries and affiliates 93,090 Investments in capital of subsidiaries and affiliates 22,752 Total 115,842 (*1) Stocks of subsidiaries and affiliates and investments in capital of subsidiaries and affiliates are not subject to disclosure of fair values as the market prices are not available and the fair values are deemed extremely difficult to determine. (*2) As a result of the revaluation of investments in subsidiaries and affiliates with reference to the prospect of their financial conditions and other factors, the Company reduced the book value of the investments in those whose valuations have substantially declined from their book value to their revaluated amounts. As a result, the Company reported as an extraordinary loss, comprising a 60,211 million yen loss on valuation of stocks of subsidiaries and affiliates and a 11,174 million yen loss on valuation of investments in capital of subsidiaries and affiliates

10 (Footnote 3) Repayment schedule of monetary claims and securities with maturities Less than More than 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years 1 year 5 years Cash and deposits 9,931 Short-term loans receivable 30,000 Short-term loans receivable from subsidiaries and affiliates 62,000 Total 101,931 (Footnote 4) Repayment schedule of borrowings Less than 1 year More than 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years 5 years Short-term loans payable 1,000 Long-term loans payable 1,000 16,000 Total 1,000 1,000 16,

11 [Notes to transactions with related parties] 1.Subsidiaries Company name Citigroup Japan Treasury G.K. Citigroup Services Japan Ltd. Percentage of voting right Direct 99% Indirect 1% Direct 100% Relationships with the related parties Lending of funds Interlocking board members Lending of funds Details of transactions Loan (Note 2) Repayment Interest received (Note 2) Loan (Note 2) Repayment Interest received Transaction amount (Note 1) 895, ,600 1,455 72,000 72,000 Accounts Short-term loans receivable Accrued income Short-term loans receivable Accrued income Balance at the fiscal year end (Note 1) 56, (Note 2) 172 The terms of transaction and policy for determination of the trade terms (Note 1) Consumption taxes are not included in Transaction amount and Balance at the fiscal year end. (Note 2) Lending rates are decided in consideration of market interest rate and other factors. The Company does not accept collaterals. 6, Subsidiaries of the Parent Company Company name Percentage of voting right Relationships with the related parties Details of transactions Transaction amount (Note 1) Accounts Balance at the fiscal year end (Note 1) Citigroup Global Markets Switzerland Holdings GmbH Borrowing of funds Interest paid (Note 2) 578 Long-term loans payable Accrued expense 14, Interlocking Loan (Note 2) 117,000 Short-term loans Citi Cards Japan. board members Repayment 87,000 receivable 30,000 Inc. Lending Interest received Accrued income 0 of funds (Note 2) 9 Borrowing (Note 2) 10,000 Short-term loans Citigroup Capital Borrowing of Repayment 10,000 payable Partners Japan Ltd. funds Interest paid (Note 2) 19 Accrued expense The terms of transaction and policy for determination of the trade terms (Note 1) Consumption taxes are not included in Transaction amount and Balance at the fiscal year end. (Note 2) Loan and Borrowing rates are decided in consideration of market interest rate. No collaterals are pledged

12 [Note to per-share information] 1.Net assets per share negative JPY 7, Calculation basis of net asset per share is as follows: Total net assets JPY 198,514 million Amount deducted from net assets JPY 370,134 million (Amount paid for Class A stock) (JPY 370,134 million) Net assets attributable to common stock negative JPY 171,619 million Number of common stocks used in net asset per share computation 24,033 thousand shares 2.Net loss per share for the year JPY 2, Calculation basis of net loss per share for the year is as follows: Net loss for the year JPY 72,875 million Net loss not attributable to common shareholders and equivalent JPY million Net loss attributable to common stock and equivalent JPY 72,875 million Average number of common stock and equivalent during the year 31,436 thousand shares (Common stock) (24,033 thousand shares) (Class A stock) (7,402 thousand shares) [Notes to subsequent events] Not applicable. [Notes to others] Not applicable