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FORM 6-K
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
Commission File Number: 1-15270
For the month of December 2003.
Total number of pages: 21.
The exhibit index is located on page 2.
NOMURA HOLDINGS, INC.
(Translation of registrant’s name into English)
9-1, Nihonbashi 1-chome
Chuo-ku, Tokyo 103-8645
Japan
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-
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Information furnished on this form:
| Exhibit Number |
Page Number | |
| 1. [(English Translation) The 100th Semi-annual Information] |
4 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| NOMURA HOLDINGS, INC. | ||
| By: |
/s/ MASANORI ITATANI | |
| Masanori Itatani Senior Managing Director | ||
Date: December 12, 2003
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2003.9
To Our Shareholders
Semi-annual Information
2003.4.1-2003.9.30
NOMURA HOLDINGS, INC.
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To Our Shareholders
It gives me great pleasure to present the 100th Semi-annual Operating Results of Nomura Holdings, Inc.
During the first half of the year we continued to face harsh business conditions, but the stock market picked up slightly towards the end of the period on the back of a partial recovery of corporate results. Based on accounting principles generally accepted in the United States (US GAAP), consolidated net revenue was 414.8 billion yen, consolidated income before income taxes stood at 159.3 billion yen and consolidated net income was 86.7 billion yen. As a result, ROE was 10.4%.
During the period, Nomura decided to introduce an interim dividend system and the interim dividend payable to the Company’s shareholders for the six months ended September 30, 2003 was 7.5 yen per share.
Though the future business climate remains unpredictable, there are growing signs that Japan’s real economy is turning around. This can be seen in the return to positive economic growth since last year as well as upbeat corporate results. Furthermore, simplification of the dividend tax system and a reduced taxation rate as well as the introduction of defined contribution pension plans and Japanese government bonds for individual investors are preparing the way for greater capital market participation by individuals. Against this backdrop, Nomura aims to respond flexibly to its customers’ diversified needs through effective capital market-based solutions.
Nomura adopted the Committee System following approval at the 99th Ordinary General Meeting of Shareholders this June. This move allowed us to separate management and oversight functions, and many of the powers to conduct business have been delegated to executive officers. We have also established three committees, the Nomination Committee, the Audit Committee and the Compensation Committee, each of which is made up of a majority of outside directors.
Under this new structure, Nomura will be able to make quicker and more transparent management decisions. At the same time, it will also enable us to consolidate the Group’s collective strengths in our quest to consistently grow corporate value while at the same time contributing positively to Japan’s economic structural reforms and expansion of its securities markets.
As always, Nomura Group looks forward to your continued support.
December 2003
President & CEO
Nobuyuki Koga
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Basic Management Policy
The vision of the Nomura Group (Nomura Holdings, Inc. (the “Company”) and its domestic and overseas consolidated subsidiaries, except for companies invested through merchant banking activities) is to enhance its position as a “globally competitive Japanese financial services group.” The Company will seek to realize this vision by strengthening the Group’s franchise in domestic securities markets that have a high growth potential and by consolidating the Group’s comprehensive capabilities around the globe.
As a management target, the Company intends to maintain an average consolidated return on equity of 10 to 15% over the medium- to long-term.
Structure of Business Operations
In executing the business operations, the Nomura Group focuses on business lines, which are linked globally, rather than individual legal entities. The Group’s business lines are comprised of three lines: Domestic Retail, Global Wholesale and Asset Management, and Global Wholesale consists of Fixed Income, Equity, Investment Banking and Merchant Banking.
The Company allocates management resources to the business lines after examining their business plans and budgets. Each business line operates within the management resources allocated, and the Company monitors the results closely.
To establish a strong business portfolio, the Nomura Group will enhance the professional skills of each business line, to which it delegates an appropriate level of authority to execute business, and strengthen linkages among business lines to take full advantage of the Group’s global capabilities.
Management Strategy of Each Business Line
While there remain many cautious views on Japan’s economy and securities markets, some indications of economic recovery can be found, such as growth of real gross domestic products and favorable changes in corporate profits. In this environment, the Nomura Group will analyze various customer needs, combine its accumulated experience and expertise both at home and abroad and develop products so that it can provide creative solutions to customers through capital markets. The strategies of each business line are as follows.
With regards to Domestic Retail, the Nomura Group will enhance its flexibility and capacity to quickly supply domestic and overseas products based on the specific needs of each customer. Through providing the best financial services, the Group seeks to increase customers’ assets entrusted to it. In addition, the Group will continue its efforts to broaden individual investors’ participation in the securities markets by supporting capital market lectures at colleges and universities and investor education programs in local communities.
In Global Wholesale, the Nomura Group will flexibly respond to changes in the business environment and exploit expanding business opportunities. The Group will promote a globalization strategy through providing solutions to various needs of customers, such as advice on mergers and acquisitions, industrial revitalization, securitization and trading for asset liquidation.
Regarding Asset Management, the Nomura Group aims to improve investment performance through generating medium to long-term value-added by strengthening research functions. In addition, while expanding the marketing channels and enhancing the product development capabilities, the Group endeavors to increase assets under management and revenues. In regards to the defined contribution pension plan business, the Group will broaden its customer base through enhancing the offering of integrated services ranging from consulting for plan implementation to supply of products.
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Corporate Governance Structure
The Company has attached on great importance to business management in order to maximize shareholders’ value and taken a series of measures to enhance corporate governance. The Company has adopted the Committee System following amendments to the Articles of Incorporation at the General Meeting of Shareholders held in June.
Under the Committee System, a company shall establish three committees: a nomination committee, an audit committee and a compensation committee, each of which has a majority of outside directors, and executive officers who execute business activities. Directors shall supervise business management through activities in three committees, etc. and executive officers shall execute business activities under the powers delegated by the board of directors. The Company determined to adopt the Committee System mainly from the following three reasons.
Firstly, the Company determined that the new Committee System is more functional that the old statutory auditor system because under the new system management oversight functions are separated from business operation functions unlike under the old system.
Secondly, as a result of the new structure under which many of the powers to execute business activities are delegated to executive officers by the board of directors, the Company can make quicker management decision on a consolidated basis.
Thirdly, the Company can further improve transparency through establishing three committees: a Nomination Committee, a Compensation Committee and an Audit Committee, each of which has a majority of outside directors.
Also, following the adoption of the Committee System, the Company has enhanced its internal control systems by increasing effectiveness of the audit by the Audit Committee, the majority of which are outside directors. The Company has taken the following three measures.
Firstly, the Company has directed non-executive but full-time directors (“Audit Mission Director”), who are very familiar with the business and organization of the Nomura Group, to support the audit of the Audit Committee, by sitting with important meetings or inspecting daily business operations.
Secondly, a director who is a member of the Audit Committee and an Audit Mission Director serve on the Internal Controls Committee which is charged with the task of discussing the Company’s internal controls and procedures. Moreover, the Company has maintained information flow from the Internal Audit Department to the Audit Committee and the Audit Mission Directors as well as to President & CEO.
Thirdly, the Company has established Office of Audit Committee to assist the activities of the Audit Committee and the Audit Mission Directors.
Under the above measures, the Company has established the structure under which the Audit Committee can fully monitor the effectiveness of internal controls and procedures of the entire Company.
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Structure for Business Execution
For the purpose of the efficient and proper business execution by executive officers, the Company has adopted the management structure under which the important matters out of the operational powers delegated to executive officers by the board of directors shall be determined and discussed in the Board of Executive Officers and the Executive Management Board.
The Board of Executive Officers composed of all twenty-seven executive officers is authorized to discuss and determine the annual business plan and budget and the allocation of the management resources of the Nomura Group.
The Executive Management Board consisting of ten executive officers, representative executive officers and executive officers appointed by the board of directors, is authorized to discuss and determine the basic management policy and important matters of the Nomura Group.
In addition, as described above, the Internal Controls Committee, which consists of six members, four executive officers including President & CEO and two directors including one outside director, is authorized to discuss matters concerning maintaining internal controls and procedures for the business of the Nomura Group and promoting proper corporate behavior.
Moreover, for the purpose of utilizing outside opinions for establishing the management strategy, the Company maintains the Advisory Board as a consulting body to the Executive Management Board and consults business managers of prestigious Japanese corporations. The Company will not adhere to its internal established ideas but will pursue efficient and proper management from multi-factored perspectives.
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Overview of the Nomura Group (as of December 12, 2003)
The Nomura Group is a financial service group consisting of Nomura Holdings, Inc. as a holding company and its domestic and overseas consolidated subsidiaries including Nomura Securities Co., Ltd. and Nomura Asset Management Co., Ltd.
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Results of Operations (Consolidated)
Financial Overview
The following table provides selected consolidated income statement information for the six months ended September 30, 2002 and 2003.
| Millions of yen |
||||||||
| For the six months ended |
||||||||
| September 30, 2002 |
September 30, 2003 |
|||||||
| Non-interest revenue |
¥ | 223,340 | ¥ | 355,498 | ||||
| Net interest revenue |
60,075 | 59,276 | ||||||
| Net revenue |
283,415 | 414,774 | ||||||
| Non-interest expenses |
242,778 | 255,523 | ||||||
| Income before income taxes |
40,637 | 159,251 | ||||||
| Income tax expense |
19,366 | 72,565 | ||||||
| Cumulative effect of accounting change (*1) |
109,799 | — | ||||||
| Net income |
¥ | 131,070 | ¥ | 86,686 | ||||
| Return on equity (ROE) (*2) |
9.1 | % | 10.4 | % | ||||
| (*1) | Cumulative effect of accounting change represents writing off the remaining unamortized negative goodwill associated with the additional acquisition of shares of Nomura Asset Management Co., Ltd. |
| (*2) | ROE for the interim period is calculated as below: |
(Income before cumulative effect of accounting change x 2 + Cumulative effect of accounting change, if any)
(Shareholders’ equity at the beginning of period + Shareholders’ equity at the end of period) / 2
We reported net revenue of ¥ 414,774 million for the six months ended September 30, 2003, an increase of 46% from ¥ 283,415 million for the six months ended September 30, 2002. Non-interest expenses were ¥ 255,523 million for the six months ended September 30, 2003, an increase of 5% from the same period in the prior year.
Income before income taxes and net income were ¥ 159,251 million and ¥ 86,686 million, respectively, for the six months ended September 30, 2003. This compares to income before income taxes and net income of ¥ 40,637 million and ¥ 131,070 million respectively for the same period in the prior year.
Total assets were ¥ 27.2 trillion at September 30, 2003, an increase of ¥ 6.1 trillion from March 31, 2003 and total shareholders’ equity increased by ¥ 63,220 million from March 31, 2003 to ¥ 1.7 trillion at September 30, 2003. Our return on equity was 10.4% for the six months ended September 30, 2003.
Business Segments
Operating Results of Domestic Retail
| Millions of yen | ||||||
| For the six months ended | ||||||
| September 30, 2002 |
September 30, 2003 | |||||
| Non-interest revenue |
¥ | 122,573 | ¥ | 149,787 | ||
| Net interest revenue |
1,204 | 775 | ||||
| Net revenue |
123,777 | 150,562 | ||||
| Non-interest expenses |
108,429 | 111,117 | ||||
| Income before income taxes |
¥ | 15,348 | ¥ | 39,445 | ||
Domestic Retail has further strengthened its capabilities to provide personalized investment consultation services with customers in order to meet their various investment needs in the current low interest rate environment. Net revenue increased by 22% from ¥ 123,777 million for the six months ended September 30, 2002 to ¥ 150,562 million for the six months ended September 30, 2003. Non-interest expenses increased by 2% from ¥ 108,429 million for the six months ended September 30, 2002 to ¥ 111,117 million for the six months ended September 30, 2003. As a result, Income before income taxes increased by 157% from ¥ 15,348 million for the six months ended September 30, 2002 to ¥ 39,445 million for the six months ended September 30, 2003.
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Operating Results of Global Wholesale
| Millions of yen | ||||||
| For the six months ended | ||||||
| September 30, 2002 |
September 30, 2003 | |||||
| Non-interest revenue |
¥ | 97,645 | ¥ | 163,829 | ||
| Net interest revenue |
47,510 | 45,279 | ||||
| Net revenue |
145,155 | 209,108 | ||||
| Non-interest expenses |
99,707 | 113,756 | ||||
| Income before income taxes |
¥ | 45,448 | ¥ | 95,352 | ||
Global Wholesale has made an effort to manage its business portfolio based on global customers’ order-flow and Fixed Income and Equity increased net gain on trading. Net revenue increased by 44% from ¥ 145,155 million for the six months ended September 30, 2002 to ¥ 209,108 million for the six months ended September 30, 2003. Non-interest expenses increased by 14% from ¥ 99,707 million for the six months ended September 30, 2002 to ¥ 113,756 million for the six months ended September 30, 2003. As a result, Income before income taxes increased by 110% from ¥ 45,448 million for the six months ended September 30, 2002 to ¥ 95,352 million for the six months ended September 30, 2003.
Fixed Income
Net revenue increased by 45% from ¥ 76,363 million for the six months ended September 30, 2002 to ¥ 110,379 million for the six months ended September 30, 2003, mainly due to an increase in net gain on trading relating to foreign currency bonds. Non-interest expenses increased by 34% from ¥ 35,278 million for the six months ended September 30, 2002 to ¥ 47,367 million for the six months ended September 30, 2003. As a result, Income before income taxes increased by 53% from ¥ 41,085 million for the six months ended September 30, 2002 to ¥ 63,012 million for the six months ended September 30, 2003.
Equity
Net revenue increased by 39% from ¥ 42,770 million for the six months ended September 30, 2002 to ¥ 59,331 million for the six months ended September 30, 2003, mainly due to an increase in customers’ order-flow, such as block trading. Non-interest expenses increased by 9% from ¥ 32,670 million for the six months ended September 30, 2002 to ¥ 35,672 million for the six months ended September 30, 2003. As a result, Income before income taxes increased by 134% from ¥ 10,100 million for the six months ended September 30, 2002 to ¥ 23,659 million for the six months ended September 30, 2003.
Investment Banking
Net revenue for Investment Banking increased by 1% from ¥ 33,283 million for the six months ended September 30, 2002 to ¥ 33,476 million for the six months ended September 30, 2003, partly due to a revitalization in equity capital markets. Non-interest expenses for Investment Banking decreased by 7% from ¥ 27,487 million for the six months ended September 30, 2002 to ¥ 25,544 million for the six months ended September 30, 2003. As a result, Income before income taxes for Investment Banking increased by 37% from ¥ 5,796 million for the six months ended September 30, 2002 to ¥ 7,932 million for the six months ended September 30, 2003.
Merchant Banking
Net loss for Merchant Banking was ¥ 7,261 million for the six months ended September 30, 2002 and Net revenue for Merchant Banking was ¥ 5,922 million for the six months ended September 30, 2003, mainly due to gains from exit transactions and a rise in the fair value of investments. Non-interest expenses for Merchant Banking increased by 21% from ¥ 4,272 million for the six months ended September 30, 2002 to ¥ 5,173 million for the six months ended September 30, 2003. As a result, Loss before income taxes for Merchant Banking was ¥ 11,533 million for the six months ended September 30, 2002 and Income before income taxes for Merchant Banking was ¥ 749 million for the six months ended September 30, 2003.
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Operating Results of Asset Management
| Millions of yen |
||||||||
| For the six months ended |
||||||||
| September 30, 2002 |
September 30, 2003 |
|||||||
| Non-interest revenue |
¥ | 20,138 | ¥ | 15,231 | ||||
| Net interest (expense) revenue |
(32 | ) | 1,071 | |||||
| Net revenue |
20,106 | 16,302 | ||||||
| Non-interest expenses |
17,677 | 18,709 | ||||||
| Income (loss) before income taxes | ¥ | 2,429 | ¥ | (2,407 | ) | |||
Net revenue decreased by 19% from ¥ 20,106 million for the six months ended September 30, 2002 to ¥ 16,302 million for the six months ended September 30, 2003, due to a decrease in asset management and portfolio service fees reflecting declines in the outstanding balance of bond investment trusts. Non-interest expenses increased by 6% from ¥ 17,677 million for the six months ended September 30, 2002 to ¥ 18,709 million for the six months ended September 30, 2003, mainly due to a special withdrawal charge paid to the Japan Securities Dealers Employees Pension Fund by Nomura Asset Management Co., Ltd. As a result, Income before income taxes was ¥ 2,429 million for the six months ended September 30, 2002 and Loss before income taxes was ¥ 2,407 million for the six months ended September 30, 2003.
Other Operating Results
Other operating results include gain (loss) on investment securities, equity in earnings (losses) of affiliates and other financial adjustments. Please refer to Note to the consolidated financial information for a reconciliation of segment results to income statement information. Loss before income taxes in Other increased from ¥ 1,587 million for the six months ended September 30, 2002 to ¥ 5,861 million for the six months ended September 30, 2003.
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CONSOLIDATED BALANCE SHEET INFORMATION
(UNAUDITED)
| Millions of yen |
||||||||||||
| September 30, | March 31, | September 30, | ||||||||||
| 2002 |
2003 |
2003 |
||||||||||
| ASSETS | ||||||||||||
| Cash and cash deposits: |
||||||||||||
| Cash and cash equivalents |
¥ | 159,694 | ¥ | 491,237 | ¥ | 654,158 | ||||||
| Time deposits |
416,930 | 422,570 | 313,608 | |||||||||
| Deposits with stock exchanges and other segregated cash |
37,717 | 41,702 | 63,605 | |||||||||
| 614,341 | 955,509 | 1,031,371 | ||||||||||
| Loans and receivables: |
||||||||||||
| Loans receivable |
509,691 | 436,371 | 423,216 | |||||||||
| Receivables from customers |
173,539 | 404,388 | 505,251 | |||||||||
| Receivables from other than customers |
273,977 | 311,665 | 452,095 | |||||||||
| Receivables under resale agreements and securities borrowed transactions |
6,916,802 | 8,603,170 | 11,999,160 | |||||||||
| Securities pledged as collateral |
3,667,215 | 3,359,807 | 5,020,151 | |||||||||
| Allowance for doubtful accounts |
(18,812 | ) | (15,159 | ) | (6,789 | ) | ||||||
| 11,522,412 | 13,100,242 | 18,393,084 | ||||||||||
| Trading assets and private equity investments: |
||||||||||||
| Securities inventory |
4,794,443 | 5,152,393 | 5,966,971 | |||||||||
| Derivative contracts |
417,724 | 503,417 | 526,306 | |||||||||
| Private equity investments |
270,679 | 270,890 | 277,294 | |||||||||
| 5,482,846 | 5,926,700 | 6,770,571 | ||||||||||
| Other assets: |
||||||||||||
| Office buildings, land, equipment and facilities (net of accumulated depreciation and amortization of million at September 30, 2002, ¥ 177,374 million at March 31, 2003 and ¥ 173,713 million at September 30, 2003, respectively) |
181,359 | 184,868 | 180,891 | |||||||||
| Lease deposits |
77,842 | 65,211 | 71,964 | |||||||||
| Non-trading debt securities |
402,479 | 270,120 | 201,716 | |||||||||
| Investments in equity securities |
170,690 | 138,084 | 150,465 | |||||||||
| Investments in and advances to affiliated companies |
263,892 | 223,970 | 203,507 | |||||||||
| Deferred tax assets |
112,682 | 112,313 | 99,283 | |||||||||
| Other assets |
135,073 | 192,429 | 136,035 | |||||||||
| 1,344,017 | 1,186,995 | 1,043,861 | ||||||||||
| Total assets |
¥ | 18,963,616 | ¥ | 21,169,446 | ¥ | 27,238,887 | ||||||
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CONSOLIDATED BALANCE SHEET INFORMATION
(UNAUDITED)
| Millions of yen |
||||||||||||
| September 30, 2002 |
March 31, 2003 |
September 30, 2003 |
||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
| Payables, borrowings and deposits: |
||||||||||||
| Payables to customers |
¥ | 263,265 | ¥ | 180,565 | ¥ | 207,540 | ||||||
| Payables to other than customers |
193,430 | 384,910 | 415,765 | |||||||||
| Payables under repurchase agreements and securities loaned transactions |
9,728,958 | 10,952,135 | 13,695,818 | |||||||||
| Short-term borrowings |
1,813,442 | 1,497,468 | 1,429,608 | |||||||||
| Time and other deposits received |
196,611 | 256,184 | 301,516 | |||||||||
| 12,195,706 | 13,271,262 | 16,050,247 | ||||||||||
| Trading liabilities: |
||||||||||||
| Securities sold but not yet purchased |
2,538,738 | 3,401,715 | 6,427,291 | |||||||||
| Derivative contracts |
360,001 | 487,005 | 530,011 | |||||||||
| 2,898,739 | 3,888,720 | 6,957,302 | ||||||||||
| Other liabilities: |
||||||||||||
| Accrued income taxes |
19,024 | 28,608 | 58,269 | |||||||||
| Accrued pension and severance costs |
57,083 | 86,582 | 87,157 | |||||||||
| Other |
236,213 | 296,509 | 239,811 | |||||||||
| 312,320 | 411,699 | 385,237 | ||||||||||
| Long-term borrowings |
1,824,230 | 1,955,437 | 2,140,553 | |||||||||
| Total liabilities |
17,230,995 | 19,527,118 | 25,533,339 | |||||||||
| Commitments and contingencies (See Note) |
||||||||||||
| Shareholders’ equity: |
||||||||||||
| Common stock |
||||||||||||
| Authorized—6,000,000,000 shares Issued—1,965,919,860 shares at September 30, 2002, March 31, 2003 and September 30, 2003 |
182,800 | 182,800 | 182,800 | |||||||||
| Additional paid-in capital |
151,066 | 151,328 | 153,491 | |||||||||
| Retained earnings |
1,447,291 | 1,407,028 | 1,479,150 | |||||||||
| Accumulated other comprehensive (loss) income |
||||||||||||
| Minimum pension liability adjustment |
(23,900 | ) | (41,558 | ) | (39,735 | ) | ||||||
| Cumulative translation adjustments |
(23,766 | ) | (22,329 | ) | (37,588 | ) | ||||||
| (47,666 | ) | (63,887 | ) | (77,323 | ) | |||||||
| 1,733,491 | 1,677,269 | 1,738,118 | ||||||||||
| Less—Common stock held in treasury, at cost—510,599 shares, 25,556,340 shares and 24,137,689 shares at September 30, 2002, March 31, 2003 and September 30, 2003, respectively |
(870 | ) | (34,941 | ) | (32,570 | ) | ||||||
| Total shareholders’ equity |
1,732,621 | 1,642,328 | 1,705,548 | |||||||||
| Total liabilities and shareholders’ equity |
¥ | 18,963,616 | ¥ | 21,169,446 | ¥ | 27,238,887 | ||||||
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CONSOLIDATED INCOME STATEMENT INFORMATION
(UNAUDITED)
| Millions of yen |
% Change |
Millions of yen |
||||||||||||
| For the six months ended |
For the year ended |
|||||||||||||
| September 30, 2002 (A) |
September 30, 2003 (B) |
(B-A)/(A) |
March 31, 2003 |
|||||||||||
| Revenue: |
||||||||||||||
| Commissions |
¥ | 80,776 | ¥ | 89,719 | 11.1 | % | ¥ | 141,640 | ||||||
| Fees from investment banking |
33,913 | 34,358 | 1.3 | 81,847 | ||||||||||
| Asset management and portfolio service fees |
46,095 | 30,757 | (33.3 | ) | 79,290 | |||||||||
| Net gain on trading |
66,149 | 147,529 | 123.0 | 172,308 | ||||||||||
| Interest and dividends |
206,913 | 217,880 | 5.3 | 401,924 | ||||||||||
| (Loss) gain on investments in equity securities |
(10,419 | ) | 31,769 | — | (41,288 | ) | ||||||||
| Gain (loss) on private equity investments |
(2,892 | ) | 6,598 | — | (14,391 | ) | ||||||||
| Other |
9,718 | 14,768 | 52.0 | 19,589 | ||||||||||
| Total revenue |
430,253 | 573,378 | 33.3 | 840,919 | ||||||||||
| Interest expense |
146,838 | 158,604 | 8.0 | 274,645 | ||||||||||
| Net revenue |
283,415 | 414,774 | 46.3 | 566,274 | ||||||||||
| Non-interest expenses: |
||||||||||||||
| Compensation and benefits |
121,283 | 133,589 | 10.1 | 244,167 | ||||||||||
| Commissions and floor brokerage |
10,030 | 9,529 | (5.0 | ) | 20,844 | |||||||||
| Information processing and communications |
37,409 | 38,410 | 2.7 | 77,389 | ||||||||||
| Occupancy and related depreciation |
29,100 | 26,825 | (7.8 | ) | 57,152 | |||||||||
| Business development expenses |
13,677 | 10,411 | (23.9 | ) | 24,361 | |||||||||
| Other |
31,279 | 36,759 | 17.5 | 94,952 | ||||||||||
| 242,778 | 255,523 | 5.2 | 518,865 | |||||||||||
| Income before income taxes and cumulative effect of accounting change |
40,637 | 159,251 | 291.9 | 47,409 | ||||||||||
| Income tax expense: |
||||||||||||||
| Current |
13,844 | 65,511 | 373.2 | 25,519 | ||||||||||
| Deferred |
5,522 | 7,054 | 27.7 | 11,776 | ||||||||||
| 19,366 | 72,565 | 274.7 | 37,295 | |||||||||||
| Income before cumulative effect of accounting change |
21,271 | 86,686 | 307.5 | 10,114 | ||||||||||
| Cumulative effect of accounting change |
109,799 | — | — | 109,799 | ||||||||||
| Net income |
¥ | 131,070 | ¥ | 86,686 | (33.9 | ) | ¥ | 119,913 | ||||||
| Per share of common stock: |
||||||||||||||
| Yen |
% Change |
Yen |
||||||||||||
| Basic- |
||||||||||||||
| Income before cumulative effect of accounting change |
¥ | 10.82 | ¥ | 44.71 | 313.2 | % | ¥ | 5.17 | ||||||
| Cumulative effect of accounting change |
55.86 | — | — | 56.09 | ||||||||||
| Net income |
¥ | 66.68 | ¥ | 44.71 | (32.9 | ) | ¥ | 61.26 | ||||||
| Diluted- |
||||||||||||||
| Income before cumulative effect of accounting change |
¥ | 10.82 | ¥ | 44.71 | 313.2 | ¥ | 5.17 | |||||||
| Cumulative effect of accounting change |
55.86 | — | — | 56.09 | ||||||||||
| Net income |
¥ | 66.68 | ¥ | 44.71 | (32.9 | ) | ¥ | 61.26 | ||||||
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NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
Basis of Financial Information:
The consolidated financial information includes the accounts of Nomura Holdings, Inc. (the “Company”) and other entities in which it has a controlling financial interest (The Company and other entities in which it has a controlling financial interest are collectively referred to as “Nomura”).
The consolidated financial information has been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The consolidated financial information as of and for the year ended March 31, 2003 has been derived from the audited March 31, 2003 consolidated financial statements included in the Company’s annual report filed with the Securities and Exchange Commission on Form 20-F. The interim consolidated financial information as of September 30, 2003 and 2002 and for the six-month periods then ended is unaudited; however, in the opinion of management, such information includes all adjustments, consisting only of normal and recurring items, necessary for a fair presentation. Certain footnote disclosures, including Nomura’s significant accounting policies, which are normally required under U.S. GAAP have been omitted. Accordingly, the unaudited interim financial information should be read in conjunction with the audited consolidated financial statements included in the Company’s annual report. The nature of Nomura business is such that the results of operations for any interim period are not necessarily indicative of the results for the entire fiscal year.
Credit and investment commitments and guarantees:
Commitments—
In connection with its banking/financing activities, Nomura has provided to counterparties through subsidiaries, commitments to extend credit, which generally have a fixed expiration date. In connection with its investment banking activities, Nomura has entered into agreements with customers under which Nomura has committed to underwrite notes that may be issued by the customers. The outstanding commitments under these agreements are included in commitments to extend credit. Nomura has also had commitments in connection with its merchant banking activities.
Contractual amounts of these commitments were as follows:
| Millions of yen | ||||||
| September 30, 2003 |
March 31, 2003 | |||||
| Commitments to extend credit and commitments in connection with merchant banking activities |
¥ | 156,965 | ¥ | 247,344 | ||
Guarantees—
Nomura enters into, in the normal course of its subsidiaries’ banking/financing activities, various guarantee arrangements with counterparties in the form of standby letters of credit and other guarantees, which generally have a fixed expiration date. In addition, Nomura enters into certain derivative contracts that meet the accounting definition of a guarantee under FIN No. 45. Contractual amounts of these guarantees, other than derivative contract, for which the fair values are recorded on the consolidated balance sheets at fair value, were as follows:
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| Millions of yen | ||||||
| September 30, 2003 |
March 31, 2003 | |||||
| Standby letters of credit and other guarantees |
¥ | 24,139 | ¥ | 49,449 | ||
Change in consolidated retained earnings:
| Millions of yen |
||||||||
| For the six months ended |
For the year ended |
|||||||
| September 30, 2003 |
March 31, 2003 |
|||||||
| Balance at beginning of period |
¥ | 1,407,028 | ¥ | 1,316,221 | ||||
| Net income |
86,686 | 119,913 | ||||||
| Dividends |
(14,564 | ) | (29,106 | ) | ||||
| Balance at end of period |
¥ | 1,479,150 | ¥ | 1,407,028 | ||||
Segment Information-Operating segment:
Business segments’ results are shown in the following table.
| Millions of yen | |||||||||||||||||
| Domestic Retail |
Global Wholesale |
Asset Management |
Other (Inc. elimination) |
Total | |||||||||||||
| Six months ended September 30, 2002 |
|||||||||||||||||
| Non-interest revenue |
¥ | 122,573 | ¥ | 97,645 | ¥ | 20,138 | ¥ | 2,956 | ¥ | 243,312 | |||||||
| Net interest revenue |
1,204 | 47,510 | (32 | ) | 11,393 | 60,075 | |||||||||||
| Net revenue |
123,777 | 145,155 | 20,106 | 14,349 | 303,387 | ||||||||||||
| Non-interest expenses |
108,429 | 99,707 | 17,677 | 15,936 | 241,749 | ||||||||||||
| Income (loss) before income taxes |
¥ | 15,348 | ¥ | 45,448 | ¥ | 2,429 | ¥ | (1,587 | ) | ¥ | 61,638 | ||||||
| Six months ended September 30, 2003 |
|||||||||||||||||
| Non-interest revenue |
¥ | 149,787 | ¥ | 163,829 | ¥ | 15,231 | ¥ | (10,637 | ) | ¥ | 318,210 | ||||||
| Net interest revenue |
775 | 45,279 | 1,071 | 12,151 | 59,276 | ||||||||||||
| Net revenue |
150,562 | 209,108 | 16,302 | 1,514 | 377,486 | ||||||||||||
| Non-interest expenses |
111,117 | 113,756 | 18,709 | 7,375 | 250,957 | ||||||||||||
| Income (loss) before income taxes |
¥ | 39,445 | ¥ | 95,352 | ¥ | (2,407 | ) | ¥ | (5,861 | ) | ¥ | 126,529 | |||||
| Change (%) | |||||||||||||||||
| Income (loss) before income taxes |
|||||||||||||||||
| Six months ended September 30, 2003 vs. 2002 |
157.0 | 109.8 | — | — | 105.3 | ||||||||||||
| Millions of yen | |||||||||||||||||
| Year ended March 31, 2003 |
|||||||||||||||||
| Non-interest revenue |
¥ | 246,938 | ¥ | 196,675 | ¥ | 34,828 | ¥ | (2,966 | ) | ¥ | 475,475 | ||||||
| Net interest revenue |
2,313 | 101,794 | 2,232 | 20,939 | 127,278 | ||||||||||||
| Net revenue |
249,251 | 298,469 | 37,060 | 17,973 | 602,753 | ||||||||||||
| Non-interest expenses |
213,562 | 207,436 | 33,866 | 58,678 | 513,542 | ||||||||||||
| Income (loss) before income taxes |
¥ | 35,689 | ¥ | 91,033 | ¥ | 3,194 | ¥ | (40,705 | ) | ¥ | 89,211 | ||||||
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Transactions between operating segments are recorded within segment results on commercial terms and conditions and are eliminated in the “Other” column.
The following table presents the major components of income/(loss) before income taxes in “Other”
| Millions of yen |
|||||||||
| For the six months ended |
For the year ended |
||||||||
| September 30, 2002 |
September 30, 2003 |
March 31, 2003 |
|||||||
| (Loss)/gain on undesignated hedging instruments |
(¥1,753 | ) | (¥11,680 | ) | ¥2,065 | ||||
| Gain/(loss) on investment securities |
10,892 | (556 | ) | (561 | ) | ||||
| Equity in income/(losses) of affiliates |
353 | 2,394 | (3,842 | ) | |||||
| Corporate items |
(678 | ) | (8,461 | ) | (9,356 | ) | |||
| Impairment loss on investment in an affiliated company |
— | — | (21,165 | ) | |||||
| Others |
(10,401 | ) | 12,442 | (7,846 | ) | ||||
| Total |
(¥1,587 | ) | (¥5,861 | ) | (¥40,705 | ) | |||
The table below presents a reconciliation of the combined segment information included in the table on the previous page to reported net revenue and income before income taxes and cumulative effect of accounting change in the consolidated income statement information.
| Millions of yen |
|||||||||
| For the six months ended |
For the year ended |
||||||||
| September 30, 2002 |
September 30, 2003 |
March 31, 2003 |
|||||||
| Net revenue |
¥303,387 | ¥377,486 | ¥602,753 | ||||||
| Unrealized (loss)/gain on investments in equity securities |
(21,675 | ) | 33,039 | (43,017 | ) | ||||
| Effect of consolidation/deconsolidation of the private equity investee companies |
1,703 | 4,249 | 6,538 | ||||||
| Consolidated net revenue |
¥283,415 | ¥414,774 | ¥566,274 | ||||||
| Income before income taxes |
¥61,638 | ¥126,529 | ¥89,211 | ||||||
| Unrealized (loss)/gain on investments in equity securities |
(21,675 | ) | 33,039 | (43,017 | ) | ||||
| Effect of consolidation/deconsolidation of the private equity investee companies |
674 | (317 | ) | 1,215 | |||||
| Consolidated income before income taxes and cumulative |
¥40,637 | ¥159,251 | ¥47,409 | ||||||
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“Commissions received” and “Net gain on trading” consist of the following:
Commissions received
| Millions of yen |
% Change |
Millions of yen | |||||||
| For the six months ended |
For the year ended | ||||||||
| September 30, 2002 (A) |
September 30, 2003 (B) |
(B-A)/(A) |
March 31, 2003 | ||||||
| Commissions |
¥ 80,776 | ¥ 89,719 | 11.1 | ¥141,640 | |||||
| Brokerage Commissions |
47,290 | 64,258 | 35.9 | 85,157 | |||||
| Commissions for Distribution of Investment Trust |
18,004 | 15,341 | (14.8 | ) | 30,507 | ||||
| Fees from Investment Banking |
33,913 | 34,358 | 1.3 | 81,847 | |||||
| Underwriting and Distribution |
25,611 | 27,865 | 8.8 | 62,365 | |||||
| M&A/Financial Advisory Fees |
7,163 | 6,424 | (10.3 | ) | 16,803 | ||||
| Asset Management and Portfolio Service Fees |
46,095 | 30,757 | (33.3 | ) | 79,290 | ||||
| Asset Management Fees |
41,461 | 25,759 | (37.9 | ) | 70,181 | ||||
| Total |
¥160,784 | ¥154,834 | (3.7 | ) | ¥302,777 | ||||
Net gain on trading
| Millions of yen |
% Change |
Millions of yen | |||||||
| For the six months ended |
For the year ended | ||||||||
| September 30, 2002 (A) |
September 30, 2003 (B) |
(B-A)/(A) |
March 31, 2003 | ||||||
| Merchant Banking |
¥ (2,246 | ) | ¥ 1,155 | — | ¥ 2,779 | ||||
| Equity Trading |
15,064 | 52,866 | 250.9 | 35,919 | |||||
| Fixed Income and Other Trading |
53,331 | 93,508 | 75.3 | 133,610 | |||||
| Total |
¥ 66,149 | ¥147,529 | 123.0 | ¥172,308 | |||||
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Non-Consolidated Balance Sheet (As of September 30, 2003)
| (Millions of yen) |
|||||||||
| September 30, 2002 |
March 31, 2003 |
September 30, 2003 |
|||||||
| ASSETS |
|||||||||
| Current Assets |
508,817 | 652,450 | 842,903 | ||||||
| Cash and cash deposits |
3,336 | 11,239 | 4,815 | ||||||
| Short-term loans receivable |
454,990 | 578,420 | 772,846 | ||||||
| Deferred tax assets |
19,705 | 9,260 | 8,924 | ||||||
| Other current assets |
31,316 | 54,242 | 56,320 | ||||||
| Allowance for doubtful accounts |
(531 | ) | (712 | ) | (3 | ) | |||
| Fixed Assets |
1,538,288 | 1,468,663 | 1,479,018 | ||||||
| Tangible fixed assets |
44,433 | 43,518 | 40,739 | ||||||
| Intangible assets |
60,572 | 66,494 | 66,545 | ||||||
| Investments and others |
1,433,281 | 1,358,650 | 1,371,732 | ||||||
| Investment securities |
161,179 | 129,853 | 144,724 | ||||||
| Investments in subsidiaries and affiliates (at cost) |
1,025,489 | 1,096,164 | 1,107,838 | ||||||
| Long-term loans receivable from subsidiaries |
120,000 | — | — | ||||||
| Long-term guarantee deposits |
60,809 | 54,187 | 54,145 | ||||||
| Deferred tax assets |
48,483 | 61,326 | 45,372 | ||||||
| Other investments |
17,453 | 17,120 | 19,687 | ||||||
| Allowance for doubtful accounts |
(133 | ) | (1 | ) | (34 | ) | |||
| TOTAL ASSETS |
2,047,106 | 2,121,113 | 2,321,921 | ||||||
| LIABILITIES |
|||||||||
| Current Liabilities |
204,860 | 256,253 | 445,827 | ||||||
| Short-term borrowings |
— | 101,500 | 202,000 | ||||||
| Bond with maturity of less than one year |
28,641 | — | 2,631 | ||||||
| Payables to customers and others |
158,294 | 131,677 | 189,792 | ||||||
| Accrued income taxes |
1 | 1,596 | 32,090 | ||||||
| Other current liabilities |
17,924 | 21,479 | 19,313 | ||||||
| Long-term liabilities |
432,747 | 522,824 | 520,528 | ||||||
| Bonds payable |
62,631 | 122,631 | 120,000 | ||||||
| Long-term borrowings |
369,500 | 399,500 | 399,500 | ||||||
| Other long-term liabilities |
616 | 693 | 1,028 | ||||||
| TOTAL LIABILITIES |
637,607 | 779,077 | 966,356 | ||||||
| SHAREHOLDERS’ EQUITY |
|||||||||
| Common stock |
182,799 | 182,799 | 182,799 | ||||||
| Capital reserves |
112,504 | 112,504 | 114,303 | ||||||
| Additional paid-in capital |
112,504 | 112,504 | 112,504 | ||||||
| Other capital reserves |
— | — | 1,799 | ||||||
| Earned surplus |
1,089,019 | 1,065,929 | 1,055,710 | ||||||
| Earned surplus reserve |
81,858 | 81,858 | 81,858 | ||||||
| Voluntary reserve |
990,041 | 990,041 | 950,038 | ||||||
| Unappropriated retained earnings (deficit) |
17,119 | (5,969 | ) | 23,814 | |||||
| Net unrealized gain on investments |
26,045 | 14,211 | 33,788 | ||||||
| Treasury stock |
(870 | ) | (33,409 | ) | (31,037 | ) | |||
| TOTAL SHAREHOLDERS’ EQUITY |
1,409,498 | 1,342,035 | 1,355,565 | ||||||
| TOTAL LIABILITIES AND |
2,047,106 | 2,121,113 | 2,321,921 | ||||||
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Non-Consolidated Statement of Income (April 1, 2003—September 30, 2003)
| (Millions of yen) |
||||||||||||
| Six Months Ended September 30, 2002 (A) |
Six Months Ended September 30, 2003 (B) |
Comparison (B-A)/(A) |
Fiscal Year Ended March 31, 2003 |
|||||||||
| Operating revenue |
50,064 | 66,694 | 33.2 | % | 102,633 | |||||||
| Property and equipment fee revenue |
29,077 | 29,456 | 1.3 | 60,901 | ||||||||
| Rent revenue |
15,101 | 14,793 | (2.0 | ) | 30,796 | |||||||
| Royalty on trademark |
2,821 | 2,926 | 3.7 | 5,177 | ||||||||
| Dividend from subsidiaries and affiliates |
— | 16,420 | — | — | ||||||||
| Others |
2,806 | 3,097 | 10.4 | 5,355 | ||||||||
| Interest income |
257 | 0 | (99.9 | ) | 403 | |||||||
| Operating expenses |
44,948 | 46,089 | 2.5 | 92,596 | ||||||||
| Compensation and benefits |
481 | 332 | (31.0 | ) | 605 | |||||||
| Rental and maintenance |
16,558 | 15,956 | (3.6 | ) | 34,151 | |||||||
| Data processing and office supplies |
10,791 | 10,352 | (4.1 | ) | 21,844 | |||||||
| Depreciation and amortization |
11,479 | 12,999 | 13.2 | 24,080 | ||||||||
| Others |
3,913 | 4,274 | 9.2 | 8,256 | ||||||||
| Interest expenses |
1,724 | 2,174 | 26.1 | 3,657 | ||||||||
| Operating income |
5,116 | 20,605 | 302.8 | 10,036 | ||||||||
| Non-operating income |
2,659 | 1,285 | (51.6 | ) | 3,824 | |||||||
| Non-operating expenses |
534 | 139 | (73.9 | ) | 3,119 | |||||||
| Ordinary income |
7,240 | 21,751 | 200.4 | 10,742 | ||||||||
| Special profits |
12,210 | 3,033 | (75.2 | ) | 16,498 | |||||||
| Special losses |
934 | 3,187 | 241.2 | 44,773 | ||||||||
| Profit (loss) before income taxes |
18,517 | 21,597 | 16.6 | (17,531 | ) | |||||||
| Income taxes—current |
(19,579 | ) | (848 | ) | — | (39,527 | ) | |||||
| Income taxes—deferred |
27,832 | 3,238 | (88.4 | ) | 34,821 | |||||||
| Net profit (loss) |
10,264 | 19,207 | 87.1 | (12,825 | ) | |||||||
| Unappropriated retained earnings brought forward |
6,855 | 4,606 | (32.8 | ) | 6,855 | |||||||
| Unappropriated retained earnings (deficit) |
17,119 | 23,814 | 39.1 | (5,969 | ) | |||||||
21