Performance Summary & Business Update FYE March 2019 May 2019 - PowerPoint PPT Presentation

Performance Summary & Business Update FYE March 2019 May 2019

Contents I. Performance Summary 2 II. Progress on Focused Project 10 III. Business Environment and Our Actions 22 IV. Capital Policy 31 * Unless otherwise specified, the numerical data we quote here were all compiled as consolidated figures of the Tokai Tokyo Financial Holdings, Inc. 1

I. Performance Summary

I. Performance Summary Financial Results under Market Trend (Yen) (Point) Nikkei 225 SP500 24,000 3,000 （ LHS ） （ RHS ） 2,800 2,600 20,000 2,400 2,200 16,000 2,000 1,800 ¥11.16 billion gain of negative goodwill 12,000 1,600 by acquiring Takagi Securities Net income Operating revenue, Ordinary income (Million Yen) (Million Yen ） 50,000 25,000 Operating revenue Ordinary income Net Income 40,000 20,000 30,000 15,000 20,000 10,000 10,000 5,000 0 0 ‐10,000 ‐5,000 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H FYE FYE FYE FYE FYE FYE Mar 2013 Mar 2015 Mar 2016 Mar 2017 Mar 2018 Mar 2019 3

I. Performance Summary Analysis of Revenue and Income Sources – How Are We Earning? Breakdown of ordinary income sources including Breakdown of operating revenue sources including the affiliates’ figures on pro‐rata basis* 1 the affiliates’ figures on pro‐rata basis* 1, 2 (FYE March 2019, operating revenue 64,772 Million Yen) (FYE March 2019, ordinary income 932 Million Yen ) JV6 companies ETERNAL +Ace TTSC 13% ＆ Mebius 75% FH + other 1% Subsidiaries 3% ETERNAL ＆ Mebius Dividend 3% Income Takagi Securities TTSC Retail Company 27% 6% 35% 38% Other 2% Market & Products Wealth 24% Management JV6 companies 4% Next Generation +Ace Business FH + other 21% Corporate Sales 3% Subsidiaries 5% Corporate Finance 【 Retail Segment 】 13% 2% 42% 【 Non‐retail Segment 】 33% * 2 Figures of Takagi Securities are excluded from this * 1 The charts present images of the Group’s revenue chart due to their ordinary losses. and income sources in FYE Mar 2019, which, unlike the consolidated P/L, include affiliates’ both figures on pro‐rata basis. 4

I. Performance Summary Business Environment and Negative Factors in FYE March 2019 Japan equity Structured Capital market US equity bonds unrest Turnaround delay at the Advance investment acquired companies ‐ FinTech ‐ Takagi Sec. ‐ Office relocation ‐ ETERNAL (Orque d’or Salon Tokyo, ‐ Pinnacle Tokyo HQ of Retail Div., Fund Investment Market Div.) 5

I. Performance Summary Analysis Ordinary income of Tokai Tokyo Securities over the 2 fiscal years FYE March 2018 FYE March 2019 (Million Yen) 1Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total （百万円） Total revenues 16,874 17,890 20,346 18,567 73,679 15,374 15,413 12,463 12,700 55,952 Retail Segment 10,300 10,085 11,890 10,721 42,996 8,943 8,061 6,670 7,445 31,119 Market & Products 5,126 6,070 6,774 6,235 24,204 5,070 5,587 3,861 3,346 17,864 Corporate Sales & Corporate 934 910 1,129 963 3,936 961 1,045 1,439 1,056 4,501 Finance Institutional Sales 255 259 278 292 1,085 274 280 345 289 1,188 Financial expenses 813 713 860 694 3,081 797 695 715 720 2,928 Total SG&A expenses 12,381 13,026 13,285 13,185 51,878 13,099 12,854 12,755 12,495 51,204 Trading‐related expenses 2,513 2,722 3,080 2,723 11,039 2,569 2,415 2,417 2,179 9,581 Personnel expenses 4,366 4,813 4,740 4,877 18,797 4,591 4,629 4,517 4,441 18,181 Real estate expenses & 3,713 3,801 3,739 3,819 15,073 3,731 3,717 3,760 3,756 14,964 office cost & depreciation Other 1,787 1,688 1,725 1,765 6,967 2,207 2,092 2,058 2,116 8,476 Ordinary income 3,811 4,284 6,307 4,788 19,192 1,598 1,982 ‐898 ‐432 2,250 * Excluding costs for the office relocation effective Jan 2019 6

I. Performance Summary Analysis Ordinary income of Takagi Securities, and other subsidiaries & affiliates over the 2 fiscal years FYE March 2018 FYE March 2019 (Million Yen) 1Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total （百万円） (Ordinary income) Takagi Securities ‐393 ‐390 142 12 ‐628 ‐117 ‐270 ‐545 ‐498 ‐1,432 Six joint venture securities companies* 428 440 820 523 2,213 358 196 ‐93 ‐144 317 Other subsidiaries and affiliates 190 219 335 322 1,067 145 153 ‐676 322 ‐52 Total 225 269 1,297 857 2,652 386 79 ‐1,314 ‐320 ‐1,167 * Ordinary income of joint ventures securities companies multiplied by our shareholding ratio (40%) Advance investments effect over the 2 fiscal years FYE March 2018 FYE March 2019 （百万円） (Million Yen) 1Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total Money Design *1 ‐ ‐ ‐ ‐ ‐ ‐ ‐149 ‐180 ‐187 ‐517 ETERNAL etc. *2 ‐65 ‐116 ‐62 53 ‐194 ‐181 ‐122 19 ‐11 ‐296 Subtotal ‐65 ‐116 ‐62 53 ‐194 ‐181 ‐271 ‐161 ‐198 ‐813 Office relocation costs ( Real estate expenses and depreciation) ‐ ‐ ‐332 ‐332 ‐579 ‐1,244 Total ‐65 ‐116 ‐62 53 ‐194 ‐181 ‐603 ‐493 ‐777 ‐2,057 *1 Sum of equity method investment profit & loss, and amortization of goodwill for Money Design *2 Sum of ordinary income and amortization of goodwill for Eternal etc. 7

I. Performance Summary TTSC – Revenue Breakdown by Retail and Non‐Retail Divisions Foreign Equities Japan Equities Bonds Mutual Funds Other Foreign & FYE March 2019 Structured Bonds 1 H 2 H 1 H 2 H 1 H 2 H 1 H 2 H 1 H 2 H 1 H 2 H (Million Yen) Retail Division 5,887 3,347 3,926 3,167 1,390 1,113 1,321 1,103 4,425 4,795 1,378 1,694 Market Division 3,966 1,897 809 1,193 5,439 4,355 3,966 4,048 ‐ ‐ 442 395 from JVs 844 426 235 180 3,005 2,167 3,005 2,167 ‐ ‐ ‐ ‐ Corporate Sales Division 0 2 722 322 762 666 294 323 205 268 843 1,210 & Investment Banking Division Total 9,853 5,246 5,457 4,682 7,591 6,134 5,581 5,474 4,630 5,063 2,663 3,299 8

I. Performance Summary Analysis of Variable and Fixed Costs – Consolidated Basis Personnel expenses increased due to consolidation of group companies Excluding 40,000 Takagi Securities, ETERNAL & Pinnacle Total 33,562 35,000 Operational expenses (Variable) 31,647 31,909 31,296 System expenses (Variable) 28,942 29,350 Variable cost 28,117 30,000 27,460 27,588 26,951 26,04426,111 27,270 Trading‐related expenses (Variable ‐JV) 27,294 Trading‐related expenses (Variable‐ 25,000 others) Personnel expenses (Variable) (Million Yen) 20,000 Other Depreciation 15,000 Trading‐related expenses (Fixed) Fixed cost Occupancy and rental 10,000 Operational expenses (Fixed) 5,000 System expenses (Fixed) Personnel expenses (Fixed) 0 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H FYE FYE FYE FYE FYE FYE FYE Mar 2015 Mar 2016 Mar 2017 Mar 2018 Mar 2019 Mar 2018 Mar 2019 * Excluding data transfer expenses (office cost) for branch transfers to joint venture securities companies in 2Q and 4Q of FYE Mar 2018 9

II. Progress on Focused Projects

II. Progress on Focused Projects Takagi Securities FYE Mar 2018 FYE Mar 2019 For the 5 months ending Aug 2019 ( Million Yen) (Projection) 6,325 4,204 1,500 Operating revenue 7,117 5,739 2,500 SG&A expenses ‐628 ‐1,432 ‐1,000 Ordinary income 518 ‐421 First Sales Headquarters ‐548 ‐697 Second Sales Headquarters ‐1,110 ‐642 Toshin no Madoguchi (Mutual fund speciality store) 467 1,185 ‐50 Extraordinary income & loss and tax expense 782 663 Gain on sales of investment securities (consolidated) ‐516 ‐137 ‐50 Amortization ‐153 ‐598 Allowance for employee retirement benefits ‐6 Other 360 1,256 Tax effect 11,160 Gain on bargain purchase ‐738 Merger related system costs incurred at TTSC 10,999 ‐248 ‐1,788 8,964 Profit contribution for the Group 11

II. Progress on Focused Projects Juroku TT Securities Business commencement June 3 (Mon.), 2019 AUM JPY100B to be split from TTSC (as of the end of March 2019) No. of accounts 10,000 A/C to be split from TTSC (as of the end of March 2019) JPY3.5B (JPY2B as extraordinary income ） Value of split business 109 （ 56 ） No. of employees (including employees from TTFG) Branches HQ, Ohgaki, Tajimi, Nakatsugawa 12

II. Progress on Focused Projects Market Division (TTSC) Revenue breakdown by operational category Breakdown by customer flow source (Million Yen) Total Total (MillionYen) 16,000 Fund Revenue Other 12,000 Position Revenue Takagi, JVs & PF 14,000 10,653 13,132 Customer Revenue Flow 97 124 TTSC 10,000 9,265 11,423 12,000 11,358 2,355 8,652 139 165 10,615 8,322 111 1,928 10,000 2,962 8,000 2,006 6,516 8,110 6,553 7,804 5,304 8,000 199 201 5,831 6,000 4,846 5,396 1,289 2,078 6,000 3,428 10,653 3,322 4,000 9,265 8,652 8,322 4,000 6,553 5,831 2,000 4,038 3,962 3,471 2,000 3,143 2,924 2,508 0 0 ‐38 ‐43 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H ‐2,000 FYE Mar 2017 FYE Mar 2018 FYE Mar 2019 FYE Mar 2017 FYE Mar 2018 FYE Mar 2019 13