Exhibit I-2

(English Language Translation)

This share exchange is made for the securities of a Japanese company. The share exchange is subject to disclosure requirements of Japan that are different from those of the United States. Financial statements included in the document, if any, have been prepared in accordance with foreign accounting standards that may not be comparable to the financial statements of United States companies. It may be difficult for you to enforce your rights and any claim you may have arising under U.S. federal securities laws, since the issuer is located in Japan, and some or all of its officers and directors are residents of Japan. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities laws. Furthermore, it may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities otherwise than under the share exchange, such as in open market or privately negotiated purchases.

Securities Code 3749

June 6, 2011

To the Shareholders:

1-6-1 Roppongi, Minato-ku, Tokyo

SBI VeriTrans Co., Ltd.

Representative Director:         Takashi Okita

Convocation Notice for the 15th Annual Meeting of Shareholders

We would like to express our thanks for your loyal patronage.

We wish to express our condolences to the victims of the Eastern Japan Earthquake.

We hereby notify you that the 15th annual meeting of shareholders will be held as follows, and we request your attendance.

Since you may exercise your voting rights in writing, if you are unable to attend on the day of the meeting, please study the reference materials for meeting of shareholders set forth herein. After indicating your approval or disapproval of the resolution on the enclosed voting rights proxy form, please return it so that it arrives no later than 5:45 PM, Monday, June 20, 2011.

Further Details:

1. Date and Time : 10:00 AM, Tuesday, June 21, 2011

2. Location: 2-4-3 Hirakawacho, Chiyoda-ku, Tokyo

 Hotel Le Port Kojimachi, 2nd Floor, Sapphire Room

3. Purpose of Meeting:

Matters for Reporting

1. The business report and consolidated financial statements for the 15th Accounting Period (from April 1, 2010 to March 31, 2011) and the audit report of the consolidated financial statements by the accounting auditor and board of company auditors

2. The report of financial statements for the 15th Accounting Period (from April 1, 2010 to March 31, 2011)

Matters for Resolution

Resolution 1 Approval of the Share Exchange Agreement with SBI Holdings, Inc.

Resolution 2 Disposition of Surplus [details omitted]

Resolution 3 Appointment of four company auditors [details omitted]

End

If you attend the meeting, please submit the enclosed voting rights proxy form at the meeting place reception desk.

Any revisions made to the reference materials for meeting of shareholders, the business report, financial statements or consolidated financial statements, will be posted to the Company’s website on the Internet (URL: http://www.veritrans.co.jp/)

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Reference Materials for Meeting of Shareholders

Resolution 1:     Approval of the Share Exchange Agreement with SBI Holdings, Inc.

SBI VeriTrans Co., Ltd. (hereinafter referred to as “SBI VeriTrans”) and its parent company SBI Holdings, Inc. (head office: Minato-ku, Tokyo; Representative Director and CEO: Yoshitaka Kitao; hereinafter referred to as “SBI Holdings”) announced today that at board meetings held on February 24, 2011, their respective boards of directors adopted resolutions to make SBI VeriTrans a wholly-owned subsidiary of SBI Holdings through a share exchange (kabushiki kokan; hereinafter referred to as the “Share Exchange”) subject to approval at this meeting of shareholders, and the two companies executed a share exchange agreement (hereinafter referred to as the “Share Exchange Agreement”). Therefore SBI VeriTrans would like to request your approval for the Share Exchange Agreement.

SBI VeriTrans will become a wholly-owned subsidiary of SBI Holdings on August 1, 2011, the day that the Share Exchange takes effect, and SBI VeriTrans shares will be delisted (the delisting date will be July 27, 2011). Since a simplified share exchange arrangement (kani kabushiki kokan) will be used pursuant to the provisions of Article 796, Paragraph 3 of the Companies Act, SBI Holdings does not require shareholder approval for the Share Exchange.

1.    Reasons for Implementing the Share Exchange

SBI VeriTrans was established as CyberCash K.K., the Japanese subsidiary of U.S.-based CyberCash, Inc., in 1997 to provide settlement services for Internet-based electronic transactions and provided various electronic transaction settlement services with a focus on credit card settlement services. The company changed its name to VeriTrans Co., Ltd. in 2002 (and later changed to SBI VeriTrans Co., Ltd. in 2005) and experienced steady expansion in the scope of its business supported by the growth of Japanese Internet markets and electronic commerce markets. In October 2004, the company listed its shares on the Hercules market of the Osaka Securities Exchange (currently the JASDAQ market of the Osaka Securities Exchange (Standard) (hereinafter referred to as “Osaka JASDAQ”).

The objectives of listing SBI VeriTrans’ shares were to raise name recognition and confidence in the company, boost creditworthiness with financial institutions including the credit card issuers that are SBI VeriTrans’s main trading partners, and recruit outstanding personnel. SBI VeriTrans also sought to take advantage of being a publicly-traded company to raise the funds necessary for developing systems that are compatible with various settlement methods and to make capital investments and corporate acquisitions for providing comprehensive services not limited to settlement services to electronic commerce (EC) businesses.

Following the listing of its shares, as initially planned, SBI VeriTrans developed systems that support a diverse range of settlement methods including credit card settlement as well as convenience store payments and electronic money settlement. SBI VeriTrans also developed and provided highly secure settlement services that do not require EC businesses to retain credit card information even before awareness of information security rose to today’s high levels, gaining the support of numerous EC businesses, particularly large corporations that have been involved in Internet commerce since the initial development of EC markets in Japan. At the same time, SBI VeriTrans pursued business and capital alliances with numerous service providers involved in EC related services and expanded the scope of its business to include information security services and advertising-related services so that it could provide comprehensive services not limited to settlement.

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Under these conditions, SBI VeriTrans has benefited from the continued growth of EC markets in Japan, and after the listing of its shares, both net sales and ordinary income have grown more than 10% annually and this trend is expected to continue over the short-term. As price competition unfolds among EC businesses, however, new settlement methods such as electronic money have begun to appear, and rising system investment and operating costs necessitated by such factors as stricter handling of credit card information are expected to put pressure on income. In response, SBI VeriTrans has put highest priority on increasing transaction volumes by expanding its overseas business with a focus on Asia, and will aim to raise more profits. In its Asian and overseas business, with the launch of the “VeriTrans Ginren Network Settlement Service” in January 2009, SBI VeriTrans entered the EC mall business, began providing various services for Chinese tourists traveling in Japan, offered advertising services to Chinese companies through its subsidiary, and launched a market research and consulting business. Given that the businesses that are expected to compete in the development of EC settlement services in Asia and other countries will in many cases be large banks or their subsidiaries that issue credit card supported by their large corporate scale and extensive managerial resources, it will be essential for SBI VeriTrans to raise its competitiveness by collaborating with SBI Holdings, its parent company, and with other SBI group companies and effectively using their managerial resources.

Meanwhile, SBI Holdings has achieved dramatic growth throughout the SBI Group by developing five core businesses—securities, banking, casualty insurance, life insurance (preparations are currently being made for establishment of this business), and settlement services the field in which SBI VeriTrans is active—and generating synergy effects among these core businesses. The SBI group aims to create a global financial ecosystem that employs in its overseas business the expertise gained in core business segments in Japan. Further expansion of Internet-based financial transactions is expected, and SBI Holdings believes that it can rapidly and efficiently incorporate SBI VeriTrans’ EC settlement systems and know-how into the SBI Group and create substantial synergy effects by making SBI VeriTrans a wholly-owned subsidiary and integrating its management.

Social and information environments have undergone major changes since SBI VeriTrans was first listed on Osaka Heracles in October 2004, bringing the business fields of SBI Holdings and SBI VeriTrans into close contact. SBI Holdings believes that by making SBI VeriTrans a wholly-owned subsidiary and integrating its management, it will be possible to raise the corporate value of both companies and to create systems that can respond promptly and precisely to changes in the business environment.

Under these circumstances, SBI Holdings and SBI VeriTrans carefully examined the best possible option available to them, giving maximum consideration to the effects on SBI VeriTrans shareholders.

As a result of that examination, the two companies determined that SBI VeriTrans’ becoming a wholly-owned subsidiary of SBI Holdings and integrating the two companies to maximize income through the development of overseas business is in the best possible option for the shareholders, customers, trading partners, and other stakeholders of both companies.

As a result of the Share Exchange, SBI VeriTrans will become a wholly-owned subsidiary of SBI Holdings on August 1, 2011, which is the effective date of the Share Exchange. Common shares of SBI VeriTrans will be delisted from Osaka JASDAQ on July 27, 2011 (the final trading day will be July 26, 2011) in accordance with the Osaka JASDAQ standards for delisting shares.

The objectives of the Share Exchange are as discussed in 1(1) above, and the delisting of SBI VeriTrans shares itself is not one of the objectives.

Even after SBI VeriTrans shares are delisted, the shares of SBI Holdings common stock to be allocated to holders of SBI VeriTrans common stock pursuant to the Share Exchange are listed on the First Sections of the Tokyo Stock Exchange, Inc. (hereinafter referred to as “Tokyo Stock Exchange”) and the Osaka Securities Exchange Co., Ltd. (hereinafter referred to as “Osaka Securities Exchange”), and it will be possible to trade those shares on the Tokyo Stock Exchange and the Osaka Securities Exchange even after the Share Exchange. Accordingly, we believe that this will ensure continued liquidity of the shares held by SBI VeriTrans shareholders.

SBI VeriTrans shareholders will be able to trade SBI VeriTrans shares on the Osaka JASDAQ as in the past until July 26, 2011 (scheduled), the final trading date.

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2.    Outline of the Share Exchange Agreement

Share Exchange Agreement (copy)

This SHARE EXCHANGE Agreement (this “Agreement”) is entered into by and between SBI Holdings, Inc. (“SBI Holdings”) and SBI VeriTrans Co., Ltd. (“SBI VeriTrans”) as of February 24, 2011.

Article 1 (Share Exchange)

1. Pursuant to the provisions of this Agreement, SBI Holdings and SBI VeriTrans shall carry out a share exchange (the “Share Exchange”) between themselves.

2. The share exchange wholly-owning parent company and the share exchange wholly-owned subsidiary in the Share Exchange are as follows:

(1) Share exchange wholly-owning parent company: SBI Holdings

Trade name: SBI Holdings, Inc.

Address: 1-6-1 Roppongi, Minato-ku, Tokyo

(2) Share exchange wholly-owned subsidiary: SBI VeriTrans

Trade name: SBI VeriTrans Co., Ltd.

Address: 1-6-1 Roppongi, Minato-ku, Tokyo

Article 2 (Shares to be Delivered in the Share Exchange)

1. In the implementation of the Share Exchange, SBI Holdings shall newly issue and deliver to the shareholders of SBI VeriTrans (excluding SBI Holdings) stated or recorded in the SBI VeriTrans shareholder register as of the time immediately prior to the Share Exchange coming into effect (the “Time of Record”) (hereinafter, “Shareholder(s) Subject to Allocation”), the number of shares of SBI Holdings common stock that is equal to the total number of shares of SBI VeriTrans common stock owned by Shareholders Subject to Allocation multiplied by 4.7, in exchange for their shares of SBI VeriTrans common stock.

2. In the implementation of the Share Exchange, SBI Holdings shall allocate to each Shareholder Subject to Allocation shares of SBI Holdings common stock at the rate of 4.7 shares of SBI Holdings common stock for every one share of SBI VeriTrans common stock.

3. If there are any fractional shares of less than one share in the number of shares of SBI Holdings common stock that must be delivered to Shareholders Subject to Allocation pursuant to the preceding two paragraphs, in accordance with the provisions of Article 234 of the Companies Act and other relevant laws and regulations, SBI Holdings shall sell the number of shares of SBI Holdings common stock that is equivalent to the sum of such fractions (if the sum contains a fraction of less than one, such fraction shall be rounded off), and deliver the proceeds of the sale to such shareholders in proportion to the fractions attributed to them.

Article 3 (Matters regarding Amounts of Capital and Reserves)

The amounts of capital and reserves of SBI Holdings to be increased through the Share Exchange are as follows:

(1) Capital: No increase in the amount of the capital.

(2) Capital reserves: An amount to be determined by SBI Holdings in accordance with Article 39, Paragraph 2 of the Ordinance on Company Accounting.

(3) Other capital surplus: An amount to be determined by SBI Holdings in accordance with Article 39, Paragraph 2 of the Ordinance on Company Accounting.

(4) Retained earnings reserves: No increase in the amount of the retained earnings reserves.

(5) Other retained earnings surplus: No increase in the amount of the other retained earnings surplus.

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Article 4 (Effective Date)

The day on which the Share Exchange comes into effect (the “Effective Date”) shall be August 1, 2011; provided, however, that if necessary due to procedural requirements with respect to the Share Exchange or other reasons, the Effective Date may be changed upon consultations and a written agreement by and between SBI Holdings and SBI VeriTrans.

Article 5 (Shareholders Meeting for Approval of Share Exchange Agreement)

1. SBI VeriTrans shall hold a shareholders meeting on or before June 30, 2011 and seek resolutions approving this Agreement and matters necessary for the Share Exchange; provided, however, that if necessary due to procedural requirements with respect to the Share Exchange or other reasons, the date of the meeting may be changed upon consultations and a written agreement by and between SBI Holdings and SBI VeriTrans.

2. Pursuant to the provisions of Article 796, Paragraph 3 of the Companies Act, SBI Holdings shall carry out the Share Exchange without obtaining approval of this Agreement by its shareholders meeting as stipulated in Article 795, Paragraph 1 of the Companies Act; provided, however, that if pursuant to the provisions of Article 796, Paragraph 4 of the Companies Act, the approval of this Agreement by a shareholders meeting of SBI Holdings becomes necessary, SBI Holdings shall hold a shareholders meeting on or before the day immediately preceding the Effective Date to seek resolutions approving this Agreement and matters necessary for the Share Exchange.

Article 6 (Management of Company Assets)

1. Unless otherwise provided herein, during the period between the execution of this Agreement and the Effective Date, SBI Holdings and SBI VeriTrans shall carry out their respective business operations and manage their respective assets with the due care of a good manager, and except in a case where merger, share exchange, company split, or other organizational restructuring is to be implemented at SBI Holdings or SBI VeriTrans using simplified restructuring procedures pursuant to the Companies Act, any act that may have a material impact on their assets or rights and obligations shall be implemented upon prior consultations and agreement by and between SBI Holdings and SBI VeriTrans.

2. Except in (a) cases where dividends are to be paid upon consultations and agreement by and between SBI Holdings and SBI VeriTrans pursuant to the preceding paragraph, and (b) cases where year-end dividends for the fiscal year ending March 2011, decided pursuant to their own respective dividend policies, are to be paid, after the execution of this Agreement, SBI Holdings and SBI VeriTrans shall not make any distribution of dividends of surplus where the relevant record date is any date prior to the Effective Date.

3. Pursuant to a resolution of a board of directors meeting held on or before the day immediately preceding the Effective Date, SBI VeriTrans shall cancel all treasury shares which SBI VeriTrans owns as of the date hereof and all treasury shares which SBI VeriTrans will own by the Time of Record (including those to be acquired upon the share purchase demand made by dissenting shareholders in connection with the Share Exchange).

Article 7 (Handling of Stock Options)

On or before the day immediately preceding the Effective Date, SBI VeriTrans shall extinguish, without payment of compensation, all stock options issued by SBI VeriTrans that have not yet been exercised, by (i) acquisition through the exercise of the call option and cancellation pursuant to a resolution of the board of directors, (ii) causing the holders of the stock options to waive their stock options, or (iii) other methods.

Article 8 (Changes to Conditions of Share Exchange and Termination of this Agreement)

1. If during the period between the execution of this Agreement and the Effective Date, (i) a material change occurs in the assets or financial conditions of SBI Holdings or SBI VeriTrans due to natural disaster or other events, (ii) a situation arises that will be a material impediment to the implementation of the Share Exchange, or (iii) attaining the objectives of this Agreement otherwise becomes infeasible, SBI Holdings or SBI VeriTrans, as the case may be, shall immediately notify the other party, and upon consultations and a written agreement by and between themselves, SBI Holdings and SBI VeriTrans may change the terms and conditions of the Share Exchange or terminate this Agreement and abort the Share Exchange.

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2. If pursuant to the provisions of Article 796, Paragraph 4 of the Companies Act, approval of this Agreement by a shareholders meeting of SBI Holdings becomes necessary, upon consultations and a written agreement by and between SBI Holdings and SBI VeriTrans, SBI Holdings and SBI VeriTrans may change the terms and conditions of the Share Exchange or terminate this Agreement and abort the Share Exchange.

Article 9 (Invalidation of this Agreement)

This Agreement shall become invalid if (i) resolutions approving this Agreement and matters necessary for the Share Exchange are not passed at a shareholders meeting of SBI Holdings or SBI VeriTrans as provided in Article 5 (in the case of SBI Holdings, limited to cases which fall under the proviso of Article 5, Paragraph 2), (ii) approval by competent governmental agencies or financial instruments exchanges or other procedures required by laws and regulations for the Share Exchange to become effective fail to be obtained or completed, or (iii) this Agreement is terminated and the Share Exchange is aborted in accordance with the provisions of the paragraphs of the preceding article. In such cases, neither SBI Holdings nor SBI VeriTrans may demand compensation for damage or any other compensation from the other party (excluding cases where there is willful misconduct or gross negligence on the part of the other party).

Article 10 (Taxes and Public Dues)

If by law or regulation any taxes or public dues are levied in relation to the Share Exchange, each party shall pay the taxes, etc. that such party is to bear in accordance with the relevant law or regulation.

Article 11 (Governing Law)

This Agreement shall be governed by and construed in accordance with the laws of Japan.

Article 12 (Matters not Stipulated Herein)

In addition to matters stipulated herein, matters not stipulated herein and other matters necessary for the Share Exchange shall be decided upon good faith consultations by and between SBI Holdings and SBI VeriTrans in accordance with the intentions of this Agreement.

Article 13 (Jurisdiction)

The Tokyo District Court shall be the exclusive court of first instance with respect to any disputes relating to this Agreement.

[Remainder of this page left intentionally blank]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate by placing their signatures and seals thereon, and each party shall retain one copy of the originals.

February 24, 2011

SBI Holdings :

SBI Holdings, Inc.

1-6-1 Roppongi, Minato-ku, Tokyo

Yoshitaka Kitao, Representative Director

SBI VeriTrans :

SBI VeriTrans Co., Ltd.

1-6-1 Roppongi, Minato-ku, Tokyo

Takashi Okita, Representative Director

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3.     Outline of the Contents pursuant to Article 184 of the Ordinance for Enforcement of the Companies Act

(1) Fairness of consideration for exchange

1) Total amount and allotment of consideration for exchange

To ensure that the Share Exchange is fair and appropriate, SBI Holdings and SBI VeriTrans each appointed an independent, third-party valuation organization. SBI Holdings appointed KPMG FAS Co., Ltd. and SBI VeriTrans appointed Ernst & Young Shinnihon Tax, and each requested that the respective valuation organizations determine an appropriate share exchange ratio and received reports on the results. The two companies then conducted consultations and negotiations in a careful manner based on the results of those determinations and agreed on the share exchange ratio.

(i) Summary of the Valuations by the Third-Party Valuation Organizations

(KPMG FAS Co., Ltd.)

Since SBI Holdings shares are traded on the First Sections of the Tokyo Stock Exchange and the Osaka Securities Exchange and SBI VeriTrans shares are traded on Osaka JASDAQ, thus both having a market price, KPMG FAS Co., Ltd. used the market price analysis method with respect to the common stock of both companies. KPMG FAS Co., Ltd. also performed calculations using the discounted cash flow method (hereinafter referred to as “DCF Method”) to reflect the status of future business activities of SBI VeriTrans.

With respect to the market price analysis method, KPMG FAS Co., Ltd. made calculations based on the ratios of the closing prices one month, three months, and six months before the calculation reference date (February 23, 2011).

The share exchange ratios (i.e., the number of shares of SBI Holdings common stock to be allocated for each one share of SBI VeriTrans common stock) calculated by KPMG FAS Co., Ltd. using each of these methods are set forth in the table below.

Calculation Method	Share Exchange Ratio Valuation Range
Market Price Analysis Method	3.63 - 4.74
DCF Method	5.33 - 6.71

When calculating the share exchange ratios above, KPMG FAS Co., Ltd. used information provided by SBI Holdings and SBI VeriTrans and publicly available information, assumed that the documents and information received were accurate and complete, and did not independently verify the accuracy or completeness of the documents and information. Further, KPMG FAS Co., Ltd. did not independently perform any valuation, appraisal, or assessment of the assets and liabilities (including off-book assets and liabilities and other contingent liabilities) of SBI Holdings, SBI VeriTrans, and their affiliates including analysis or valuation of individual assets or liabilities, and did not request a third-party organization to perform such appraisal or assessment. Further, KPMG FAS Co., Ltd. worked under the assumption that the financial forecasts were produced in a reasonable manner using the best available information and judgments at the time the forecasts were made.

KPMG FAS Co., Ltd. prepared the share exchange ratio results as a third-party valuation organization for the purpose of submission to the SBI Holdings Board of Directors for use by the SBI Holdings Board as reference information when determining the share exchange ratio. The calculation results are not an expression of opinion by KPMG FAS Co., Ltd. concerning the fairness of the share exchange ratio.

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(Ernst & Young Shinnihon Tax)

Ernst & Young Shinnihon Tax calculated the share exchange ratio using the market price analysis method since SBI VeriTrans shares are listed on Osaka JASDAQ and SBI Holdings shares are listed on the First Sections of the Tokyo Stock Exchange and the Osaka Securities Exchange and it believes that market price is a highly objective indicator of corporate value.

In addition, Ernst & Young Shinnihon Tax also performed the calculations by combining the market price analysis method with the comparable company comparison method and DCF Method to supplement and correct the market prices.

With respect to the market price analysis method, Ernst & Young Shinnihon Tax calculated the share exchange ratio based on the average closing prices of SBI VeriTrans and SBI Holdings shares one month, three months, and six months before the calculation reference date (January 31, 2011) and the volume weighted average price for one month before the calculation reference date.

Ernst & Young Shinnihon Tax noted that it would be necessary to use even more recent data to determine the share exchange ratio.

The numbers of shares of SBI Holdings common stock to be allocated for each share of SBI VeriTrans common stock calculated by Ernst & Young Shinnihon Tax using each of these methods are set forth in the table below.

Calculation Method	Share Exchange Ratio Valuation Range
Market Price Analysis Method, and Market Price Analysis Method combined with Similar Company Comparison Method and DCF Method	4.201 - 5.104

Ernst & Young Shinnihon Tax calculated the share exchange ratios using information provided by SBI Holdings and SBI VeriTrans and publicly available information. In performing the share exchange ratio calculations, Ernst & Young Shinnihon Tax relied on the information, and it did not independently verify the accuracy or completeness of those documents and information. Further, Ernst & Young Shinnihon Tax did not independently perform any valuation, appraisal, or assessment of the assets and liabilities (including off-book assets and liabilities and other contingent liabilities) of SBI VeriTrans and SBI Holdings, and did not request a third-party organization to perform such appraisal or assessment. Further, Ernst & Young Shinnihon Tax relied on forecasts and materials provided by the two companies with respect to forecasts of future income and cash flows.

Ernst & Young Shinnihon Tax prepared the share exchange ratio results as a third-party valuation organization for the purpose of submission to the SBI VeriTrans Board of Directors for use by the SBI VeriTrans Board as reference information when determining the share exchange ratio. The calculation results are not an expression of opinion by Ernst & Young Shinnihon Tax concerning the fairness of the share exchange ratio.

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(ii) Determinations by SBI Holdings and SBI VeriTrans

SBI Holdings and SBI VeriTrans carefully examined the share exchange ratio calculation results received from the third-party valuation organizations described above.

With respect to valuation method, since SBI Holdings shares are traded on the First Sections of the Tokyo Stock Exchange and the Osaka Securities Exchange, SBI VeriTrans shares are traded on Osaka JASDAQ, and therefore corporate value of both companies is considered to be objectively reflected in their market prices, so they determined that the most appropriate valuation method is the market price analysis method or the method that takes into consideration market prices.

Further, SBI Holdings and SBI VeriTrans conducted their investigations based on the valuation results using the market price analysis method by the third-party valuation organizations, took into consideration recent stock prices of both companies, considered the financial status, future outlooks and assets of both companies to make comprehensive determinations. As a result of careful consultation and negotiation, they determined that the share exchange ratio indicated above would be in the interests of the shareholders of both SBI Holdings and SBI VeriTrans, and their respective Board of Directors adopted resolutions determining the share exchange ratio for the Share Exchange on February 24, 2011.

If any material changes in the various conditions that serve as the basis for the calculations, the share exchange ratio may be subject to change through consultations between the two companies.

(iii) Relationship with the Valuation Organizations

KPMG FAS Co., Ltd., the third-party valuation organization appointed by SBI Holdings, and Ernst & Young Shinnihon Tax, the third-party valuation organization appointed by SBI VeriTrans, are both independent of SBI Holdings and SBI VeriTrans and are not their related parties.

2) Amount of capital and reserves of SBI Holdings to be increased through the share exchange

The amounts of capital and reserves of SBI Holdings to be increased through the Share Exchange are as follows.

(i) Capital: No increase in the amount of the capital.

(ii) Capital reserves: An amount to be determined by SBI Holdings in accordance with Article 39, Paragraph 2 of the Ordinance on Company Accounting.

(iii) Other capital surplus: An amount to be determined by SBI Holdings in accordance with Article 39, Paragraph 2 of the Ordinance on Company Accounting.

(iv) Retained earnings reserves: No increase in the amount of the retained earnings reserves.

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(v) Other retained earnings surplus: No increase in the amount of the other retained earnings surplus.

These increases are considered fair as they are intended to ensure a certain level of flexibility in SBI Holdings’ capital policy.

3) Reason for having chosen SBI Holdings’ shares as consideration for exchange

SBI VeriTrans settled on SBI Holdings’ shares as the consideration for exchange by comprehensively taking into account such factors as the continuous convertibility into money of the consideration for exchange because such shares are listed on the First Section of the Tokyo Stock Exchange and on the First Section of the Osaka Securities Exchange, and the potential for shareholders of SBI VeriTrans to enjoy the benefit of rising stock value due to the possible realization of the synergies of both corporations as a result of SBI VeriTrans’ becoming a wholly-owned subsidiary of SBI Holdings after the Share Exchange if shareholders of SBI VeriTrans receive such shares.

4) Matters taken to hold interest of shareholders harmless

SBI VeriTrans is a consolidated subsidiary of SBI Holdings, and the relationship between the two companies is as described below. Consequently, to ensure that the share exchange ratio is fair and appropriate, each company appointed an independent, third-party valuation organization to calculate the share exchange ratio. SBI Holdings appointed KPMG FAS Co., Ltd. and SBI VeriTrans appointed Ernst & Young Shinnihon Tax as the third-party valuation organizations. Each requested that the respective valuation organization calculate an appropriate share exchange ratio and they received reports on the results. The two companies then conducted investigations and consultations and negotiations in a careful manner to incorporate the results of those calculations and decided to implement the Share Exchange at the agreed share exchange ratio.

When considering the Share Exchange, SBI VeriTrans received an opinion letter from Toshihide Ito, its outside corporate auditor (independent officer) who does not have interests with controlling shareholders, to the effect that “the Share Exchange is not detrimental to the interests of minority shareholders” on February 23, 2011. SBI Holdings and SBI VeriTrans have not obtained fairness opinions from third-party valuation organizations concerning the fairness of the share exchange ratio. Concerning the investigation and determination of the share exchange ratio, SBI Holdings and SBI VeriTrans investigated and determined the share exchange ratio at their respective board of directors meetings with their outside corporate auditors in attendance. Since Yoshitaka Kitao who is a director of SBI VeriTrans also serves as SBI Holdings Representative Director, to avoid potential conflicts of interest, he did not participate in discussions or votes concerning the Share Exchange at any board of directors meetings of SBI Holdings or SBI VeriTrans held on February 24, 2011. Further, since SBI VeriTrans Representative Director Takashi Okita also serves as a director of SBI Holdings, to avoid potential conflicts of interest, he did not participate in discussions or votes concerning the Share Exchange at any board of directors meetings of SBI Holdings or SBI VeriTrans. The board of directors meeting of SBI VeriTrans held on February 24, 2011 adopted resolution of the Share Exchange by approval of all the directors in attendance at the discussions and votes. All the corporate auditors in attendance at the discussions expressed an opinion that they had no objection to the implementation of the Share Exchange by SBI VeriTrans.

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(2) Matters of reference related to the consideration for exchange

1) Articles of Incorporation of SBI Holdings

ARTICLES OF INCORPORATION (copy)

CHAPTER I

GENERAL PROVISIONS

(Company Name)

Article 1	The name of the Company shall be SBI Holdings Kabushiki Kaisha, which is expressed in English as SBI Holdings, Inc.
(Purposes)
Article 2	The purpose of the Company shall be to engage in the following business activities:
1.	Consultation services regarding general business management and initial public offerings of shares;
2.	Acquisition, holding and investment regarding securities;
3.	Investment and management regarding the property of investment partnerships;
4.	Offering and sale of interests in property of investment partnerships, and handling thereof;
5.	Intermediary activities in connection with business transfers, sale and purchase of assets, capital participations, business alliances and mergers by companies;
6.	Intermediary, brokerage and agent business for sale and purchase, etc. of securities;
7.	Undertakings of appraisal and calculation, and investigations of credit standing in relation to investments or financing;
8.	Sale and purchase of securities, etc. (including sale and purchase of securities, securities index futures, trading of securities options and trading of overseas market securities futures);
9.	Credit-giving activities, such as financing, guarantees, and purchases of receivables, and intermediary activities therefor;
10.	Financial services;
11.	Management consultancy services for various relevant companies;
12.	Agency activities for non-life insurance and solicitation activities relating to life insurance;
13.	Fee-charging employment placement business;
14.	Worker Dispatching Undertakings;
15.	Advertising business;
16.	Information providing business and information processing business;
17.	Sale and purchase, exchange, and borrowing and lending of real estate and intermediary activities therefor; and owning, administration and utilization of real estate;
18.	Development and maintenance of systems concerning online financial business;
19.	Mail order sales and intermediary activities for the provision of information;
20.	Marketing research, and the collection and analysis of various information;
21.	Planning, sale and purchase of information media for advertisements, and advertising agency business;
22.	Development, design, manufacture, rental, lease, sale, import and export of computers, and peripheral devices and software therefor;
23.	Production, publication and sale of various printed materials;
24.	Building lots and buildings transaction business pursuant to the Building Lots and Buildings Transaction Business Act;
25.	Owning, sale, purchase and undertakings of administration in relation to real estate, and real estate appraisal business;
26.	Real estate-related consultancy business;
27.	Research, planning, design, supervising and business plan preparation for real estate and construction projects; management concerning business operation; and consulting, contracting for work and undertakings therefor;
28.	Land development and creation;
29.	Building lot creation and allotment sale;
30.	Building lot development and creation business;
31.	Building design and supervising business;

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32.	Surveying business;
33.	Investment business pursuant to the Real Estate Specified Joint Enterprise Act;
34.	Services of scrutiny, market research, material collection and provision of investment information regarding real estate and receivables secured by real estate, etc.;
35.	Undertaking of administration work for receivables;
36.	Investment business;
37.	General lease business;
38.	Testing, and educational and training business regarding personnel development;
39.	Contracts for work of business processing, accounting processing, processing by electronic computer and various other industrial business processing;
40.	Currency exchange business;
41.	Internet-facilitated information providing services regarding housing loans and automobile loans, etc.;
42.	Internet-facilitated information search services regarding housing loans and automobile loans, etc.;
43.	Internet-facilitated acceptance of applications and brokerage services for contracts, and consulting services regarding housing loans and automobile loans, etc.;
44.	Document preparation business;
45.	Document delivery business;
46.	Services of providing computer systems to service providers who provide functions for application programs over the Internet;
47.	Services of providing functions for computer programs over the Internet;
48.	Development and sale of Internet-facilitated information systems;
49.	Calculation business;
50.	Sale and purchase of, and intermediary and management activities for, various memberships of golf clubs, gyms and resort condominiums, etc., discount coupons, air tickets, boarding tickets, and concerts and other entertainment tickets; and the issue and sale of prepaid cards;
51.	Collection, processing and sale of information;
52.	Development, operation, sale and management of information and telecommunication instruments and system software, and intermediary activities therefor;
53.	Research and planning for investment in shares, bonds and industrial development business;
54.	Intermediary activities concerning domestic and overseas investment;
55.	Consulting on (i) clerical mechanization and management rationalization, and (ii) efficient utilization of real estate;
56.	Sale and purchase, commissioned sale, import and export of antiques;
57.	Call center operation;
58.	Collection, planning and sale of merchandising-related information and materials;
59.	Bank agency service;
60.	Travel business;
61.	Undertaking (i) the holding of international and domestic conferences, and (ii) the planning, preparation and operation of various other events;
62.	Holding of seminars and consultancy business regarding travel, tourism and culture;
63.	Sale and brokerage of goods regarding travel;
64.	Management of hotels, Japanese-style hotels, eating facilities, cafés and tourist facilities;
65.	Planning, preparation and consultancy business related to the development of tourist sites;
66.	Type I financial instruments business, type II financial instruments business, investment management business, investment advisory and agency business, and financial instruments intermediary service set out in the Financial Instruments and Exchange Act;
67.	Other than the businesses described in the preceding paragraph, businesses that may be conducted under the Financial Instruments and Exchange Act;

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68.	Telecommunications business under the Telecommunications Business Law;
69.	Control and management of business activities of companies engaged in the following businesses and foreign companies engaged in equivalent businesses, through the acquisition or holding of their shares or interests:
	(1)         Intermediary activities in connection with business transfers, sale and purchase of assets, capital participations, business alliances and mergers by companies;
	(2)         Consultation services regarding general business management;
	(3)         Acquisition, holding, sale and purchase, investment and management regarding securities;
	(4)         Investment and management regarding the property of investment partnerships;
	(5)         Offering and sale of interests in property of investment partnerships, and handling thereof;
	(6)         Credit-giving activities, such as financing, guarantees, and purchases of receivables, and intermediary activities therefor;
	(7)         Accepting deposits or installment savings, making loans or discounting bills, and exchange transactions;
	(8)         Businesses incidental to the banking business in the preceding item such as guarantee of debts or acceptance of bills;
	(9)         Underwriting, dealing in public offering or secondary distribution, dealing in private placement, sale and purchase, and other businesses regarding securities such as national government bonds, municipal bonds, or government-guaranteed bonds;
	(10)      Businesses that may be conducted by banks under the Banking Act, the Secured Bonds Trust Act or any other laws;
	(11)      Agency activities for non-life insurance and solicitation activities relating to life insurance;
	(12)      Type I financial instruments business, type II financial instruments business, investment management business, investment advisory and agency business, and financial instruments intermediary service set out in the Financial Instruments and Exchange Act;
	(13)      Other than the businesses described in the preceding item, businesses that may be conducted under the Financial Instruments and Exchange Act;
	(14)      Sale and purchase of, undertakings of sale and purchase transaction for, and brokerage activities regarding listed products on markets established by exchanges to which the Commodity Exchange Act applies;
	(15)      Sale and purchase of, undertakings of sale and purchase transaction for, and brokerage, agent and intermediary activities relating to listed products on commodity markets established by overseas commodity exchanges;
	(16)      Sale and purchase, import, and export of mineral resources such as precious metals, nonferrous metals and rare metals, and energy resources such as oil and natural gases, and raw materials such as farm products, livestock products, marine products, sugar, crude rubber and synthetic rubber, and brokerage, intermediacy and agent activities therefor;
	(17)      Undertaking of clerical work regarding the lending of money and housing loans, and guarantee of debt;
	(18)      Owning, utilization, administration, lease, sale and purchase, exchange, intermediary activities and appraisal in relation to real estate, and undertakings thereof;
	(19)      Business regarding real estate specified joint enterprise;
	(20)      Creation, reclamation and dredging of land;
	(21)      Designing, supervising, contracts for work, consulting and implementation of construction activities for civil engineering, building, interior decoration and landscaping, etc.;

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(22)      Exhibition of model houses;

(23)      Planning, operation and undertaking of preparation of events, conferences and seminars;

(24)      Management of hotels, Japanese-style hotels, restaurants and cafés, and the owning, management, operation, and borrowing and lending of amusement facilities such as sporting facilities and recreation halls, etc.;

(25)      Sale and purchase of, undertakings of sale and purchase for, and intermediary activities for memberships regarding the use of hotels and sporting facilities, golf course memberships, and resort condominium memberships;

(26)      Information providing business and information processing business;

(27)      Marketing research, the collection and analysis of various information, and undertaking of calculation;

(28)      Undertaking of the reception and transmission of telephone signals;

(29)      Development, design, manufacture, sale, import and export of computers, and peripheral devices and software therefor; and provision of services and consultation on their utilization;

(30)      Undertaking public relations and information releases for company activities, and planning and preparation for internet websites;

(31)      Planning, sale and purchase of information media for advertisements, and advertising agency business;

(32)      Production, publication and sale of various printed materials;

(33)      Translation business;

(34)      Worker dispatching undertakings;

(35)      Mail order sales;

(36)      Sale of daily necessities and miscellaneous goods, furniture, sports goods and gardening goods;

(37)      Sale of cigarettes, revenue stamps, stamps, foods, liquor and soft drinks;

(38)      Planning, production, operation and undertaking of various events;

(39)      Sale and purchase, commissioned sale, import and export of antiques;

(40)      Management, collection, and purchase of specified monetary claims;

(41)      Factoring services for non-specified monetary claims;

(42)      Money collection service;

(43)      Clerical work of the companies such as the companies that are engaged in purchasing of receivables;

(44)      Research, planning, design, supervising and business plan preparation for real estate and construction projects; management concerning business operation; and consulting, contracting for work and undertakings therefor;

(45)      Civil engineering and construction work business;

(46)      Land development and creation;

(47)      Building lot creation and allotment sale;

(48)      Building lot development and allotment sale;

(49)      Building design and supervising business;

(50)      Surveying business;

(51)      Services of scrutiny, market research, material collection and provision of investment information regarding real estate and receivables secured by real estate, etc.;

(52)      Production and distribution business of audio, video and films;

(53)      Planning and production of musical recordings; acquisition, transfer, lending, management and development of methods for utilization of property rights such as musical copyrights; and the planning and production of films;

(54)      Internet service provider business;

(55)      Product development, manufacture, wholesale, sale, import and export of health appliances, beauty equipment and athletic equipment, etc.;

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(56)      Research and development, manufacture, wholesale, sale, import and export of cosmetics, perfume, soap, hair-growth medicine, shampoo, conditioner and nutritional supplements;

(57)      Processing, wholesale, sale, import and export of gems and precious metal products;

(58)      Planning, development, manufacture, wholesale, sale, import and export of toys, dolls, stationery, clothing, fashion goods, textile products for clothing, key chains, musical instruments, stuffed animals, convenience goods, tableware and pottery;

(59)      Product planning for and manufacture of women’s wear, men’s wear, children’s wear and bags;

(60)      Planning and operation of gyms, esthetic salons and hair salons;

(61)      Beauty consulting business;

(62)      Planning, development and sale of bags and bag-like goods;

(63)      Planning, development and sale of food and beverages such as snacks and soft drinks;

(64)      Internet-facilitated information providing services regarding housing loans and automobile loans, etc.;

(65)      Internet-facilitated information search services regarding housing loans and automobile loans, etc.;

(66)      Internet-facilitated acceptance of applications and brokerage services for contracts, and consulting services regarding housing loans and automobile loans, etc.;

(67)      Document preparation business;

(68)      Document delivery business;

(69)      Currency exchange business;

(70)      Intermediary activities concerning domestic and overseas investment;

(71)      Services of providing computer systems to service providers who provide functions for application programs over the Internet;

(72)      Services of providing functions for computer programs over the Internet;

(73)      Development and sale of Internet-facilitated information systems;

(74)      Advancing housing loans and related intermediary activities;

(75)      Credit card business;

(76)      Financial services;

(77)      Credit investigation business;

(78)      Calculation work;

(79)      General lease business and agent business therefor;

(80)      Record keeping for account receivables and bills;

(81)      Sale and purchase of and intermediary and management activities for various memberships of golf clubs, gyms and resort condominiums, etc., discount coupons, air tickets, boarding tickets, and concerts and other entertainment tickets; and the issue and sale of prepaid cards;

(82)      Collection, processing and sale of information;

(83)      Development, operation, sale and management of information and telecommunication instruments and system software, and intermediary activities therefor;

(84)      Undertakings of appraisal and calculation, and investigations of credit standing in relation to investments or financing;

(85)      Research and planning for investment in shares, bonds and industrial development business;

(86)      Consulting on (i) clerical mechanization and management rationalization, and (ii) efficient utilization of real estate;

(87)      Call center operation;

(88)      Collection, planning and sale of merchandising-related information and materials;

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(89)      Acquisition, planning and development of methods for utilization, preservation, use and disposition of intellectual property rights such as copyrights and patent rights, know-how, system technology and other software, and brokerage therefor;

(90)      Movables-related lease business;

(91)      Planning, operation and holding of events;

(92)      Bank agency service;

(93)      Non-life insurance business;

(94)      Life insurance business;

(95)      Businesses incidental to the preceding two items such as agency activities regarding service or clerical work, related to the insurance business of other insurance companies (including foreign insurers) or guarantee of debts;

(96)      Other than the preceding three items, businesses which a non-life insurance company or a life insurance company may conduct under the Insurance Business Act or other related laws;

(97)      Consulting on, and implementation of, lectures and seminars related to management, international affairs, economy, politics and social issues;

(98)      Distribution services for providing information related to management, international affairs, economy, politics and social issues;

(99)      Undertakings of training for cultivation of human resources;

(100)    Lectures on business administration, economics, human studies, accounting and other studies over the Internet and intra-company information systems, and attendance management, curriculum management, implementation of exams and performance management for the students;

(101)    Planning and operation of events, lectures, study sessions, exams and other events;

(102)    Implementation of training aiming at the development of professional aptitude and ability of human resources;

(103)    Management of schools under the Act on the Special Zones for Structural Reform;

(104)    Conversion of TV programs and know-how regarding education and instruction on business administration, economics, human studies, accounting and other studies into media such as video tapes, compact discs, mini discs, digital video discs, books and internet distribution, and sale thereof;

(105)    Planning, creation, sale and operation of internet distribution and intra-company information systems;

(106)    Planning and sale of know-how regarding education and instruction on business administration, economics, human studies, accounting and other studies;

(107)    Giving advice, instruction and support on the establishment and management of businesses;

(108)    Research, development, operation and consulting on lecture systems using a combination of broadcasting and video tapes, compact discs, mini discs, digital video discs, books, internet distribution with the Internet;

(109)    Research, development, operation and consulting on lecture systems using a combination of communication networks with face-to-face collective education;

(110)    Broadcast programming business under the Broadcasting Act;

(111)    Planning, creation and sale of TV programs;

(112)    Lease and management of seminar rooms;

(113)    Travel business;

(114)    Undertaking of (i) holding of international and domestic conferences, and (ii) planning, preparation and operation of other various events;

(115)    Consultancy business related to travel, tourism and culture;

(116)    Sale and brokerage of goods regarding travel;

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	(117)    Planning, preparation and consultancy business related to the development of tourist sites;
	(118)    Research and development, design, manufacture, sale, and import and export of pharmaceuticals, medical machines and devices, and medical tools;
	(119)    Telecommunications business under the Telecommunications Business Law; and
	(120)    Any other business activities other than those listed above.
70.	Otherbusinesses incidental or related to any of the preceding paragraphs; and
71.	Any other business activities other than those listed above.
(Location of Head Office)
Article 3	The  head office of the Company shall be located in Minato-ku, Tokyo.
(Bodies)
Article 4	The  Company shall have the following governing bodies, in addition to a Shareholders Meeting and Directors:
	(1)    Board of Directors;
	(2)    Statutory Auditors;
	(3)    Board of Statutory Auditors; and
	(4)    Accounting Auditors.
(Method of Public Notice)
Article 5	The Company shall use electronic public notice for making its public notices. However, public notices of the Company are published in the Nihon Keizai Shimbun if it is impossible to use electronic public notice due to an accident or any other unavoidable reason.
CHAPTER II SHARES
(Total Number of Shares Authorized to be Issued)
Article 6	The  total number of shares authorized to be issued by the Company shall be 34,169,000.
(Acquisition of the Company’s Shares)
Article 7	The Company may acquire its own shares through a Board of Directors’ resolution, in accordance with Article 165, Paragraph 2 of the Companies Act, by way of the market transactions and other transactions stipulated in Article 165, Paragraph 1 of the Companies Act.
(Administrator of Shareholder Registry)
Article 8	The Company shall establish an administrator of the Shareholder Registry concerning the handling of shares and share purchase warrants.
2.	The administrator of the Shareholder Registry and its site for the handling of shares and share purchase warrants shall be determined by a resolution of the Board of Directors and announced by public notice.
3.	Preparation and retention of the Company’s Shareholder Registry and the Registry of Share Purchase Warrants, and other matters related to the Company’s Shareholder Registry and the Registry of Share Purchase Warrants shall be delegated to the administrator of the Shareholder Registry, and are not to be conducted by the Company.
(Rules Concerning Handling of Shares)
Article 9	The exercise of rights by the shareholders and the holders of share purchase warrants of the Company, and the handling and any charges regarding shares and share purchase warrants shall be subject to the Rules Concerning Handling of Shares to be determined by the Board of Directors, in addition to laws and regulations or the Articles of Incorporation.
(Record Date)
Article 10	The Company shall treat a shareholder who is stated or recorded in the final Shareholder Registry and who holds voting right(s) on the last day of each business year, as a shareholder who can exercise shareholders’ rights in the Ordinary Shareholders’ Meeting for that business year.

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CHAPTER III
SHAREHOLDERS MEETING
(Convocation)
Article 11	An Ordinary Shareholders Meeting of the Company shall be convened within three (3) months after the day following the last day of each business year, and an Extraordinary Shareholders Meeting shall be convened from time to time as necessary.
2.	Unless otherwise provided by laws or regulations, a Shareholders Meeting shall be convened by a resolution of the Board of Directors.
(Convenor and Chairperson of the Shareholders Meeting)
Article 12	A Director who is determined in advance by the Board of Directors shall convene the Shareholders Meeting and shall act as the Chairperson at the meeting. If such Director is unable to so act or is absent, then another Director shall act in his or her place in accordance with the order of priority predetermined by the Board of Directors.
(Online Disclosure of Reference Materials for Shareholders Meeting and Other Materials)
Article 13	The Company may, when convening a Shareholders Meeting, disclose information relating to matters to be provided or indicated in the reference materials for a Shareholders Meeting, business reports, financial statements, and consolidated financial statements (including accounting audit reports or audit reports relating to these consolidated financial statements) using the Internet, in accordance with the provisions of the applicable Ordinance of Ministry of Justice.
(Method of Resolution)
Article 14	Unless otherwise provided by laws or regulations or by the Articles of Incorporation, resolutions of the Shareholders Meeting shall be made by a majority of the voting rights of the Shareholders present who are entitled to exercise their voting rights.
2.	A resolution of the Shareholders Meeting under Article 309, Paragraph 2 of the Companies Act shall be made by at least two-thirds (2/3) of the voting rights of the Shareholders present at a meeting where the Shareholders holding at least one-third (1/3) of the voting rights of the Shareholders who are entitled to exercise their voting rights are present.
(Proxy Vote)
Article 15	A Shareholder may exercise his or her voting rights by proxy through another shareholder who has voting rights in the Company. In this case, the Shareholder or his or her proxy must submit a document proving such authority to the Company at each Shareholders Meeting.
CHAPTER IV DIRECTORS, REPRESENTATIVE DIRECTOR AND BOARD OF DIRECTORS MEETINGS
(Number of Directors)
Article 16	The Company shall have not more than nineteen (19) Directors.
(Election of Directors)
Article 17	The Directors of the Company shall be elected by a resolution of the Shareholders Meeting. The resolution shall be made by a majority of the voting rights of the Shareholders present at a meeting where the Shareholders holding at least one-third (1/3) of the voting rights of the Shareholders who are entitled to exercise their voting rights are present.
2.	Cumulative voting for the election of Directors shall not apply.
(Term of Office of Directors)
Article 18	The term of office of a Director shall expire at the close of the Ordinary Shareholders Meeting held in respect of the last business year ending within the one (1) year period following his or her election.

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2.	The term of office of a Director elected (i) as a substitute for a Director who retired from office prior to the expiration of the term of office, or (ii) due to an increase in the number of Directors, shall expire at the expiration of the remaining term of office of the other Directors then in office.
(Representative Director)
Article 19	The Representative Director shall be appointed by a resolution of the Board of Directors.
(Board of Directors)
Article 20	A Director determined in advance by the Board of Directors shall convene a meeting of the Board of Directors and shall act as the chairperson of the meeting. If such Director is unable to so act or is absent, then another Director shall act in his or her place in accordance with the order of priority predetermined by the Board of Directors.
2.	Notice of convocation of a meeting of the Board of Directors shall be sent to each Director and Statutory Auditor at least three (3) days before the scheduled date of such meeting; however, such period may be shortened in cases of urgency, and the convocation procedures may be omitted if the consent of all Directors and Statutory Auditors is obtained.
3.	A resolution of the Board of Directors shall be made by a majority of the Directors present at a meeting where the majority of the Directors entitled to participate in votes are present.
4.	In cases where Directors submit a proposal with respect to a matter which is the purpose of the resolution of a meeting of the Board of Directors, if all Directors who are entitled to participate in votes with respect to such matter manifest their intention to agree to such proposal in writing or by means of electromagnetic records and any Statutory Auditor does not state his or her objections, then it shall be deemed that the resolution to approve such proposal at the meeting of the Board of Directors has been made.c
5.	Matters concerning the Board of Directors including the operation thereof shall be as set forth in the Regulations of the Board of Directors to be adopted by the Board of Directors, in addition to being subject to laws and regulations and the Articles of Incorporation.
(Compensation and Other Benefits for Directors)
Article 21	Financial benefits received from the Company as a consideration for the execution of the duties such as compensation and bonuses (“Compensation and Other Benefits”) of Directors shall be determined by a resolution of the Shareholders Meeting.
(Exemption of Liability of Directors)
Article 22	Pursuant to the provision of Article 426, Paragraph 1 of the Companies Act, the Company may exempt Directors (including former Directors) from liabilities as set forth in Article 423, Paragraph 1 of the Companies Act to the extent permissible by laws and regulations, by way of a resolution of the Board of Directors.
2.	Pursuant to the provision of Article 427, Paragraph 1 of the Companies Act, the Company may enter into an agreement with an External Director to the effect that the liability for damages under Article 423, Paragraph 1 of the Companies Act shall be limited; however, the maximum amount of liability under the agreement shall be the higher amount of either the amount not less than one million (1,000,000) yen provided in advance, or the amount as set forth in relevant laws and regulations.

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CHAPTER V
STATUTORY AUDITORS AND BOARD OF STATUTORY AUDITORS
(Number of Statutory Auditors)
Article 23	The Company shall have at least three (3) Statutory Auditors.
(Election of Statutory Auditors)
Article 24	The Statutory Auditors of the Company shall be elected by a resolution of the Shareholders Meeting. The resolution shall be made by a majority of the voting rights of the Shareholders present at a meeting where the Shareholders holding at least one-third (1/3) of the voting rights of the Shareholders who are entitled to exercise their voting rights are present.
(Term of Office of the Statutory Auditors)
Article 25	The term of office of a Statutory Auditor shall expire at the close of the Ordinary Shareholders Meeting held in respect of the last business year ending within the four (4) year period following his or her election.
2.	The term of office of a Statutory Auditor elected as the substitute for a Statutory Auditor who retired from office prior to the expiration of the term of office shall expire at the expiration of the remaining term of office of the Statutory Auditor who retired from office.
(Full-Time Statutory Auditors)
Article 26	The Board of Statutory Auditors shall appoint at least one (1) full-time Statutory Auditor from among the Statutory Auditors.
(The Board of Statutory Auditors)
Article 27	Notice of convocation of a meeting of the Board of Statutory Auditors shall be sent to each Statutory Auditor at least three (3) days before the scheduled date of such meeting; however, such period may be shortened in cases of urgency, and the convocation procedures may be omitted if the consent of all Statutory Auditors is obtained.
2.	Matters concerning the Board of Statutory Auditors including the operation thereof shall be as set forth in the Regulations of the Board of Statutory Auditors to be adopted by the Board of Statutory Auditors in addition to being subject to laws and regulations and the Articles of Incorporation.
(Compensation and Other Benefits for Statutory Auditors)
Article 28	The Compensation and Other Benefits for Statutory Auditors shall be determined by a resolution of a Shareholders Meeting.
(Exemption of Liability of Statutory Auditors)
Article 29	Pursuant to the provision of Article 426, Paragraph 1 of the Companies Act, the Company may exempt Statutory Auditors (including former Statutory Auditors) from liabilities as set forth in Article 423, Paragraph 1 of the Companies Act to the extent permissible by laws and regulations, by way of a resolution of the Board of Directors.
2.	Pursuant to the provision of Article 427, Paragraph 1 of the Companies Act, the Company may enter into an agreement with an External Statutory Auditor to the effect that the liability for damages under Article 423, Paragraph 1 of the Companies Act shall be limited; however, the maximum amount of liability under the agreement shall be the higher amount of either the amount not less than one million (1,000,000) yen provided in advance, or the amount as set forth in relevant laws and regulations.

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CHAPTER VI ACCOUNTING (Business Year)
Article 30	The business year of the Company shall commence on April 1 of each year and end on March 31 of the following year.
(Dividends from Surplus, Etc.)
Article 31	Unless otherwise provided by laws or regulations, the Company may implement matters set forth in each item of Article 459, Paragraph 1 of the Companies Act, such as dividends from surplus, by a resolution of the Board of Directors.
2.	The record date for year-end dividends of the Company shall be March 31 of each year.
3.	The record date for interim dividends of the Company shall be September 30 of each year.
4.	In addition to the foregoing two paragraphs, the Company may pay dividends from any surplus by setting a record date.
(Exercise Period of Dividends from Surplus)

Article 32 The Company shall be released from any obligation to pay dividends from surplus which have not been claimed after the lapse of three (3) full years from the day on which such payment was made available. Furthermore, no interest shall accrue on dividends from surplus.

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2) Matters regarding the methods for converting the consideration for exchange into money

SBI Holdings’ shares are currently traded on the First Section of the Tokyo Stock Exchange and the First Section of the Osaka Securities Exchange. SBI Holdings’ shares can be traded through ordinary securities companies.

3) Matters regarding the market price of the consideration for exchange

The movement of the prices of SBI Holdings’ shares for the past six-month period (until April 2011) quoted on the Tokyo Stock Exchange is indicated in the table below. You may view the recent stock prices of SBI Holdings’ shares, for example, at the Tokyo Stock Exchange website (http://www.tse.or.jp/).

Monthly variation	November, 2010		December, 2010		January, 2011		February, 2011		March, 2011		April, 2011
Maximum (Yen)		11,680		12,590		13,190		13,920		13,190		9,940
Minimum (Yen)		9,420		11,340		10,950		10,920		9,160		8,150

(3) Details of the financial statements pertaining to the final fiscal year of SBI Holdings

Please see attached “reference materials for the 15th annual meeting of shareholders (extra).”

(4) Disposition, etc. of material property of the parties to the Share Exchange after the last day of the final fiscal year

Not applicable.

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Reference Materials for the 15th Annual Meeting of Shareholders

Extra for Resolution 1

Financial Statements, etc. of SBI Holdings, Inc.

• Business Report (from April 1,2010 to March 31, 2011)

• Consolidated Balance Sheet (as at March 31, 2011)

• Consolidated Statement of Operations (from April 1,2010 to March 31, 2011)

• Consolidated Statement of Changes in Net Assets (from April 1,2010 to March 31, 2011)

• Notes to the Consolidated Financial Statements

• Balance Sheet (as at March 31, 2011)

• Statement of Operations (from April 1,2010 to March 31, 2011)

• Statement of Changes in Net Assets (from April 1,2010 to March 31, 2011)

• Notes to the Financial Statements

• Audit Report Concerning Consolidated Financial Statements

• Audit Report Concerning Non-Consolidated Financial Statements

• Report by the Board of Corporate Auditors

SBI VeriTrans Co., Ltd.

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Attachment

Business Report

(April 1, 2010 to March 31, 2011)

I. GROUP

1. BUSINESS IN THE CONSOLIDATED FISCAL YEAR ENDED MARCH 31, 2011

(1) Progress of Business and Results

During the consolidated fiscal year ended March 31, 2011, while Japan’s economic environment remained severe with a continuing high unemployment rate, there were signs of partial recovery as consumer spending strengthened in some segments and corporate performance partially improved primarily among companies positioned to achieve growth overseas, especially Asia. However, the Great East Japan Earthquake in March 2011 caused production and consumption activities to rapidly weaken through the fiscal year-end, and there are serious concerns that the aftermath of the disaster will linger going forward.

Stock market conditions that significantly impact investment and securities-related businesses remained generally weak in Japan although the market began to look upward after hitting the bottom in the second quarter of the fiscal year. After the March earthquake, however, the stock market was considerably shaken and the Nikkei Stock Average as of the fiscal year-end fell 12% year-on-year. Individual stock brokerage trading value declined 16% from a year before. Meanwhile, emerging stock markets with high growth potential remained relatively strong despite showing signs of instability at times caused by global conditions, and there was much activity in terms of new listings on the markets.

In the operating environment surrounding the Internet financial services business, consumers continued to be increasingly aware of the merit in utilizing Internet financial services as they sought the most advantageous conditions available in pursuing financial transactions to protect their livelihood. Consequently, the business remained strong with face-to-face transactions shifting to online transactions. We recognize that the market will demonstrate vigorous growth also going forward despite the intensifying competition expected.

The Group’s core businesses are the Asset Management Business primarily involving the operation of funds both inside and outside Japan, the Brokerage & Investment Banking Business centered on the securities business, the Financial Services Business offering a wide range of financial services, and the Housing and Real Estate Business mainly involving housing loans and real estate investments. The Group is committed to creating more innovative services and businesses for our customers and investors and maximizing corporate value, which represents the aggregate of customer value, shareholder value, and human capital value.

The performance for the consolidated fiscal year ended March 31, 2011 resulted in net sales of ¥141,081 million (a 13.3% year-on-year increase), operating income of ¥8,932 million (a 160.3% year-on-year increase), ordinary income of ¥3,525 million (a 216.8% year-on-year increase), and net income of ¥4,534 million (a 93.0% year-on-year increase).

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Principal Contents of Each Business Segment

- Asset Management Business

Asset Management Business primarily consists of fund management and investment in Internet technology, biotechnology, environment and energy, and financial-related venture companies inside and outside Japan; these activities are mainly carried out by the Company, SBI Investment Co., Ltd., and SBI CAPITAL Co., Ltd.

- Brokerage and Investment Banking Business

Brokerage and Investment Banking Business primarily consists of financial businesses, such as entrustment of securities trading, underwriting and offering for sale of IPO shares, offering for subscription or sale of stocks, foreign exchange margin trading, and other financial instrument trading business; these activities are mainly carried out by SBI SECURITIES Co., Ltd. and SBI Liquidity Market Co., Ltd.

- Financial Services Business

Financial Services Business primarily consists of a wide range of financial-related businesses, such as property and non-life insurance business, businesses for providing online settlement services for EC business operators, and the provision of information regarding financial instruments; these activities are mainly carried out by the Company, SBI Insurance Co., Ltd., SBI VeriTrans Co., Ltd., and Morningstar Japan K.K.

- Housing and Real Estate Business

Housing and Real Estate Business primarily consists of developing and trading of investment property, financing business related to the granting of mortgage loans, operating web sites related to the provision of intermediate services, comparisons, and real estate appraisal services; these activities are mainly carried out by the Company, SBI Life Living Co., Ltd., and SBI Mortgage Co., Ltd.

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Outline of Each Business Segment

	(millions of yen)
	Reportable segment											Others (Note 2)			Total
	Asset Management Business		Brokerage & Investment Banking Business		Financial Services Business			Housing and Real Estate Business		Sub-total
Net Sales
Revenue from customers		30,699		45,374		28,364			23,464		127,903		13,178			141,081
Inter-segment revenue		1		2,498		2,165			3		4,669		2,453			7,122
Total		30,701		47,873		30,530			23,467		132,573		15,631			148,204
Segment operating income (loss)		9,577		6,123		(536	)		3,370		18,534		(1,832	)		16,702

(Note)

1. Amounts are rounded down to the nearest million Japanese yen.

2. Business segments classified as “Others” are segments that have been determined to be not reportable and consist of system-related businesses, drug-discovery businesses, and garment businesses.

3. Differences from the operating income of consolidated statements of operations are as follows.

Total of reportable segments	18,534
Losses of “Others”	(1,832	)
Elimination among segments	(1,765	)
Headquarters expenses	(6,004	)
Operating income of consolidated statements of operations	8,932

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(i) Asset Management Business

In the Asset Management Business, net sales come from two major business categories, namely the Investment in Securities Business and the Investment Advisory Services/Other Businesses.

(Investment in Securities Business)

The Group invests in venture companies in various industries both inside and outside Japan, such as IT, biotechnology, environment and energy, and financial sectors. Revenues come from two main sources in the investment in securities business: (1) “revenue from operational investment securities”, which is derived from the sale of operational investment securities held for the purpose of securing capital gains, and (2) “fees from funds”, which are revenues composed of fund establishment fees, fund management fees, and success fees. When the Company or its consolidated subsidiaries invest in a fund operated by the Group, all net sales from the funds under the scope of consolidation, including the revenues corresponding to the stakes of other investors, are booked as revenue from operational investment securities.

In the consolidated fiscal year ended March 31, 2011, revenue from operational investment securities increased 68.5% year-on-year to ¥27,127 million. This primarily reflected revenues of overseas funds, such as New Horizon Fund, L.P. Revenue from fees from funds amounted to ¥1,348 million (up 6.1% year-on-year), which primarily reflected management fees from SBI BROADBAND CAPITAL Silent Partnership and the SBI BB Media Investment Limited Partnership.

(Investment Advisory Services and Other Businesses)

Net sales from investment advisory services and other businesses declined 21.0% year-on-year to ¥2,225 million for the consolidated fiscal year ended March 31, 2011. Revenues mainly came from investment trust management fees and interest income from operational loans receivable.

(ii) Brokerage & Investment Banking Business

Net sales in the Brokerage & Investment Banking Business are derived mainly from brokerage commissions from securities transactions, underwriting and sales fees for initial public offerings, commissions from placement and sales of stock, and net trading income and financial revenue from spreads on foreign exchange margin transactions and the like.

In the consolidated fiscal year ended March 31, 2011, net sales in this business decreased 4.5% year-on year to ¥47,873 million, which was primarily generated by SBI SECURITIES Co., Ltd. and SBI Liquidity Market Co., Ltd.

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(iii) Financial Services Business

Net sales in the Financial Services Business are composed of revenues generated in the following business components: the Marketplace Business, the Financial Products Business, the Financial Solutions Business, and Other Businesses.

(Marketplace Business)

In this business, the Group operates various finance-related comparison websites such as “InsWeb”, an insurance portal site, and “E-LOAN”, to offer a marketplace of services that enable consumers to search and compare information on financial products and services online. In the consolidated fiscal year ended March 31, 2011, net sales in the Marketplace Business declined 0.6% year-on-year to ¥5,699 million, which were primarily generated by the Company.

(Financial Products Business)

In the Financial Products Business, we provide a wide range of financial products and services including credit card services, comprehensive leasing services, auto loans and guarantee services, management and collection of specified monetary claims, and receipt financing that involves medical care payment receivables factoring and provision of funds. In the consolidated fiscal year ended March 31, 2011, net sales in the Financial Products Business rose 9.9% year-on-year to ¥9,300 million. These revenues were generated by SBI Card Co., Ltd., SBI Lease Co., Ltd., SBI Credit Co., Ltd. (the former G-ONE Credit Services Co., Ltd.), SBI Servicer Co., Ltd., and SBI Receipt Co., Ltd.

(Financial Solutions Business)

In the Financial Solution Business, we mainly provide online settlement services for EC business operators and call center services for financial institutions. In the consolidated fiscal year ended March 31, 2011, net sales in this business rose 50.5% year-on-year to ¥8,309 million. This revenue was primarily generated by SBI VeriTrans Co., Ltd. and SBI Business Support Corp.

(Other Businesses)

In the category of Other Businesses, the Group is primarily engaged in the non-life insurance business, with the Internet being the key service channel, the business of providing online information on evaluations of financial products, particularly investment trusts, and other businesses. Net sales in this category increased 22.6% year-on-year to ¥7,220 million in the consolidated fiscal year ended March 31, 2011. Revenues were mainly generated by SBI Insurance Co., Ltd. and Morningstar Japan K.K.

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(iv) Housing and Real Estate Business

In the Housing and Real Estate Business, net sales come from the Real Estate Business, the Financial Real Estate Business and the Lifestyle Networks Business.

(Real Estate Business)

In the Real Estate Business, we are primarily engaged in the development and sale of properties for investment purposes, planning and design services associated with investment properties, and advisory services for constructions and real estate. In the consolidated fiscal year ended March 31, 2011, net sales rose 58.2% year-on-year to ¥10,320 million. This was primarily generated by the Company and SBI Life Living Co., Ltd.

(Financial Real Estate Business)

The Financial Real Estate Business involves provision of housing loans and real estate secured loans. Net sales in this business increased 27.8% from the previous consolidated fiscal year ended March 31, 2011 to ¥11,646 million. Revenues primarily come from SBI Mortgage Co., Ltd. and CEM Corporation.

(Lifestyle Networks Business)

In the Lifestyle Networks Business, we are mainly engaged in the operation of websites for online intermediary services and comparison and estimate services. Net sales for the consolidated fiscal year ended March 31, 2011 declined 1.3% year-on-year to ¥1,500 million.

Net sales by reportable business segment as indicated above are before eliminations of intersegment revenues.

(2) Capital Expenditure

The amount of capital expenditure for the consolidated fiscal year ended March 31, 2011 was ¥6,247 million.

The capital expenditure were mainly made in the following businesses.

(i) Brokerage and Investment Banking Business

A capital expenditure was made in the amount of ¥3,196 million focusing on enhancement of existing trading systems and software development to provide new services in order to smoothly respond to the increase in the number of orders caused by the increase in the number of customers as well as to provide the customers with expanded services.

(ii) Financial Services Business

A capital expenditure was made in the amount of ¥1,806 million focusing on the development of mobile-compliant functions and next generation settlement systems to improve customer satisfaction.

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(3) Financing

In the consolidated fiscal year ended March 31, 2011, the Company procured funds of ¥35,308 million through a public stock offering with a closing date of June 23, 2010. Also, the Company newly issued ¥70,000 million in unsecured short-term bonds under the MTN Program established on March 19, 2009. The Company redeemed ¥110,000 million in unsecured short-term bonds under the MTN Program during the consolidated fiscal year ended March 31, 2011, and the amount outstanding as of March 31, 2011 was ¥70,000 million.

2. TRENDS IN GROUP PROPERTY AND GAINS (LOSSES)

Classification		10th consolidated fiscal year		11th consolidated fiscal year			12th consolidated fiscal year		13th consolidated fiscal year (consolidated fiscal year ended March 31, 2011)
		April 1, 2007  to March 31, 2008		April 1, 2008 to March 31, 2009			April 1, 2009  to March 31, 2010		April 1, 2010  to March 31, 2011
Net Sales	(millions of yen)		222,567		130,922			124,541		141,081
Ordinary income	(millions of yen)		35,687		37			1,112		3,525
Net income	(millions of yen)		4,228		(18,375	)		2,350		4,534
Net income per share	(yen)		376.63		(1,232.48	)		140.30		236.09
Total assets	(millions of yen)		1,219,247		1,079,233			1,229,939		1,293,606
Net assets	(millions of yen)		387,766		419,338			428,615		456,982
Net assets per share	(yen)		21,438.08		21,129.47			21,424.02		19,610.64

(Note)  The numbers in brackets represent losses.

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3. IMPORTANT PARENT COMPANY AND SUBSIDIARIES

(1) Relationship with Parent Company

Not Applicable

(2) Important Subsidiaries

Business Segment	Business Description	Name	Ownership Ratio of Voting Rights or Investment Ratio (%) (Note 1)
Asset Management Business	Management and operation of investment partnerships	SBI Investment Co., Ltd.		100.0
		SBI BROADBAND CAPITAL Co., Ltd.		100.0
		SBI CAPITAL Co., Ltd.		100.0
		SBI Capital Solutions Co., Ltd.		100.0
	Investment in venture companies inside and outside Japan	SBI BROADBAND FUND No.1 LIMITED PARTNERSHIP		38.3
				(0.3	)
		SBI BB Mobile Investment LPS		35.3
				(0.9	)
		SBI Value Up Fund No.1 Limited Partnership		49.8
				(6.5	)
		SBI VEN HOLDINGS PTE. LTD.		100.0
		SBI KOREA HOLDINGS CO., LTD.		100.0
	Investment advisory and other businesses	SBI Asset Management Co., Ltd.		100.0
Brokerage & Investment Banking Business	Securities related businesses	SBI SECURITIES Co., Ltd.		100.0
		SBI Liquidity Market Co., Ltd.		100.0
		SBI Japannext Co., Ltd. (Note 2)		47.4
				(10.4	)
Financial Services Business	Financial products business	SBI Card Co., Ltd.		97.8
		SBI Lease Co., Ltd.		100.0
	Financial solutions business	SBI VeriTrans Co., Ltd. (Note 3)		43.2
	Other businesses	SBI Insurance Co., Ltd.		65.5
		Morningstar Japan K.K. (Note 4)		49.6
Housing and Real Estate Business	Real estate business	SBI Life Living Co., Ltd.		68.2
	Financial real estate business	SBI Mortgage Co., Ltd.		98.0
				(16.0	)
		CEM Corporation		79.7
				(57.1	)
	Lifestyle networks business	SBI Life Living Co., Ltd.		68.2
Other	System-related business, pharmaceutical business and other	SBI Net Systems Co., Ltd.		81.0
				(9.6	)
		SBI ALApromo Co., Ltd.		76.8
				(30.8	)

(Note)

1. In the “Ownership Ratio of Voting Rights or Investment Ratio” column, the investment ratio is presented for investment partnerships, etc. and the ownership ratio of voting rights for other subsidiaries. The numbers in brackets represent the indirect ownership ratio included.

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2. SBI Japannext Co., Ltd. is a company accounted for under the equity method.

3. The Company and SBI VeriTrans Co., Ltd. executed a share exchange agreement on February 24, 2011 to make SBI VeriTrans Co., Ltd. our wholly-owned subsidiary. SBI VeriTrans Co., Ltd. will become our wholly-owned subsidiary on August 1, 2011 subject to a resolution at the ordinary general meeting of shareholders of SBI VeriTrans Co., Ltd.

4. Morningstar Japan K.K. executed a share exchange with Gomez Consulting Co., Ltd. to make Gomez Consulting Co., Ltd. its wholly-owned subsidiary on April 22, 2011.

5. From the fiscal year ended March 31, 2011, SBI ALApromo Co., Ltd. was added to, and SOFT TREND CAPITAL Corp., Softbank Internet Fund, Gomez Consulting Co., Ltd., Autoc one K.K., SBI Business Support Corp. and HOMEOSTYLE Inc. were excluded from, the important subsidiaries of the Company.

4. MANAGEMENT ISSUES

The Group has completed the creation of a business structure in Japan as a comprehensive financial conglomerate centered on Internet-based financial services. Overseas, the Group has been rapidly expanding its investment business and establishing an investment framework primarily in Asian countries with remarkable growth. Going forward, we will aggressively promote further expansion of our overseas investment business and provide local foreign financial institutions we invest in with innovative know-how about Internet financial services fostered through our businesses in Japan. By doing so, we expect to become a comprehensive financial group that can make contributions globally with a focus in Asia.

The Company became the first listed company in Japan to be listed on the Main Board market of the Hong Kong Exchanges and Clearing on April 14, 2011. We will maximize this opportunity to enhance our credibility and recognition in Asia to further develop the Group’s businesses.

In Japan, we will accelerate growth as a provider of diverse low-cost, high-quality financial products and services by effectively taking into account the growing sentiment among consumers to cut back on their spending and the increased use of the Internet for executing various financial transactions, and we will also further encourage synergistic effects among businesses we have developed in the Group.

In the Asset Management Business, we recognize as a high priority the expansion of our investments in emerging countries, primarily in Asia, and the establishment of an effective investment system. The Company will pursue setting up funds jointly with our leading local partners while monitoring the economic conditions of such countries as we continue to push establishment and penetration of our global network. We pursue private equity investment by identifying targets and concentrating our investments in growth areas with the aim of contributing to developing industries while benefiting from high investment performance. In the future, the Group will continue to invest in four key areas of IT, biotechnology, environment and energy, and finance. In the financial sectors, we will transfer the know-how of the Group and pursue direct investment in overseas financial institutions by which we can expect to enhance the value of corporations we invest in. The Group will also invest in and finance corporations of varying sizes and in different phases of development through operating buy-out and mezzanine funds. In undertaking these business activities, the Group will strive for further growth by continuing to aggressively utilize the resources both inside and outside of the Group and heightening the performance of the funds we operate as we swiftly improve the corporate value of companies we invest in.

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In the Brokerage & Investment Banking Business, we will aim to achieve greater growth even in the unstable environment of the Japanese stock markets. SBI SECURITIES Co., Ltd. will continue to expand its overseas product lineups and strengthen foreign exchange transactions and further enhance its call center operations that receive high recognition from evaluating agencies in heightening its service level even more. We will also promote integration of “online” and “real” channels and actively make use of the intermediary business to continue expanding the face-to-face channel while achieving effective cost reductions. Furthermore, with the aim of maximizing synergies within the financial conglomerate, the Company will take a firmer grip on financial companies in the Group, in particular on SBI Sumishin Net Bank, Ltd., to develop the Group’s Internet-based one-stop financial service system. In the consolidated fiscal year ended March 31, 2011, the highly public PTS (proprietary trading system) operated by SBI Japannext Co., Ltd. realized a considerable increase in trading value. Going forward, we will aim to handle greater trading value by primarily increasing participants and improving liquidity. SBI Liquidity Market Co., Ltd., which began operation in November 2008, provides liquidity and market infrastructure for FX transactions to SBI SECURITIES Co., Ltd. The firm will make improvements to the transaction environment, enhance liquidity, as well as provide services to parties outside of the Group with the aim of further diversifying sources of revenue in this business.

In the Financial Services Business, we established SBI Sumishin Net Bank, Ltd., SBI Insurance Co., Ltd., and other new companies in 2007 and 2008 for undertaking new businesses in our aim to build an earning structure that does not depend solely on stock markets. It is our key objective to further develop these businesses by encouraging stronger synergistic effects among Group companies. In the Marketplace Business centered on operation of comparison websites such as “InsWeb”, an insurance portal site, and “E-LOAN”, we must continue to expand our service lineups including enhancing content and improving functions. Additionally, in striving for higher growth, we see a need to push development of Morningstar Japan K.K., which continues to expand its services and channels offered, supported by growing asset management needs, and SBI VeriTrans Co., Ltd., which has begun moving ahead with its Chinese business against a backdrop of expansion in the EC and credit card markets.

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In the Housing and Real Estate Business, we will pursue real estate development while monitoring market conditions, through making efforts to capture business opportunities and to diversify and stabilize revenues. In the financial real estate category, SBI Mortgage Co., Ltd. has established its own brand as a provider of housing loans with low, all-term fixed interest rates. We will continue to enhance “SBI Money Plaza”, a franchise-based face-to-face channel to continue attracting customers and increasing loan drawdowns. In the lifestyle networks business category under this Business, we are determined to focus our efforts in operating brokering sites to provide useful, attractive services that assist consumers at every stage and for every major event in their lives.

With a view to taking a big step forward in our overseas business activities by further encouraging synergies among companies within the Group, we will pursue our “Pentagon Management” strategy for the financial services business as follows.

1. Position businesses from the Group’s financial business ecosystem as five core businesses, namely securities, banking, non-life insurance, life insurance, and payment settlement services

2. Aim for exponential growth of the overall Group by driving interactions and encouraging synergistic effects among core businesses

3. With each of the core businesses in the center, place related companies and businesses as support functions around the businesses, and persist in promoting synergies among the core business to differentiate the Group from competing companies and to stretch growth

4. Expand SBI Money Plaza and other “real” channels nationwide as the infrastructure business that accelerates growth of the five core businesses and promote harmony between “online” and “real” channels, and simultaneously provide a selection of competitive products to customers by taking a “neutral position” regardless of being inside or outside the Group to become “Japan’s largest financial products distributor”

5. Transfer the systems and know-how of the Group’s core businesses accumulated in Japan to emerging countries in accordance with those countries’ phase of economic development to develop the financial services business in those countries

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Furthermore, in July 2010, the Group launched a concept called the “Brilliant Cut Initiative”.

In this initiative, the Group companies and businesses are modeled on the facets of a diamond, namely a “58 brilliant-cut diamond”, known to be the brightest and the most beautiful with each of the facets giving the best shine when cut this way. The 58 major companies and business entities of the Group’s business ecosystem reflect the 58 facets of a brilliant-cut diamond, which together shine most beautifully as one. With the aim of reflecting the most brilliant shine as a Group, we will pursue the “brilliant-cut” initiative in shifting our management emphasis from the traditional group-wide expansion to profitability.

Under the “brilliant-cut” strategy, we will pursue the following three basic policies in the next three years.

Companies and businesses in the black:

Further expand profits through the pursuit of mutual synergies

Companies and businesses in the red:

Aim to be in the black within the next three years (for companies newly founded in the future, in three years after establishment) by making effective use of Group resources and more aggressively pursuing Group-wide synergies

* Any company or business not expected to be in the black will be liquidated sold as a general rule.

— New establishments: With the exception of companies currently in the process of being founded, no new company will be established

— Acquisition: Limited only to profitable companies and cases that can be expected to promote strong synergies with the existing companies in the Group’s business ecosystem

The Group recognizes that continuous enhancement of human resources is an essential Group-wide initiative. It has become increasingly important to secure highly competent individuals that support the rapid expansion of our businesses and to continue developing the skills of our employees. For this purpose, we have been exerting greater efforts in hiring excellent individuals who are willing to share the management philosophy of the Group as well as recruiting university graduates to secure human capital for passing on the Group’s unique corporate culture from one generation of employees to the next. The initiative of recruiting university graduates that began in April 2006 has resulted in individuals with the potential to advance to senior executive positions already contributing strongly in key positions of the organization. We will continue to secure highly competent and global-oriented human resources and promote career development of our staff in pursuing perpetual growth and development of the Group.

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5. PRINCIPAL BUSINESS DESCRIPTION OF THE GROUP (as of March 31, 2011)

Comprehensive financial services with the Asset Management Business, Brokerage & Investment Banking Business, Financial Services Business and Housing and Real Estate Business as core businesses

6. PRINCIPAL PLACE OF BUSINESS OF THE GROUP (as of March 31, 2011)

Tokyo:	The Company and headquarters of the important subsidiaries
Hong Kong:	SBI Hong Kong Co., Limited
Singapore:	SBI VEN CAPITAL PTE. LTD.

7. EMPLOYEES OF THE GROUP (as of March 31, 2011)

Business Segment	Number of Employees
Asset Management Business		174
Brokerage & Investment Banking Business		635
Financial Services Business		1,363
Housing and Real Estate Business		363
Other		710
Company-wide (Common)		152
Total		3,397

(Note)

1. The number of employees represents the number of employed workers and is stated in relation to each business segment.

2. The number of employees increased by 349 over the previous year mainly due to SBI Credit Co., Ltd.’s becoming a consolidated subsidiary and the increase of employees of SBI Business Support Corp. and SBI Insurance Co., Ltd.

3. The company-wide (common) employees belong to the administrative or other divisions of the Company.

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8. PRINCIPAL LENDER (as of March 31, 2011)

Lender	Loan of Balance
	(millions of yen)
Mizuho Corporate Bank, Ltd.		35,930
Syndicate loan for which Mizuho Corporate Bank, Ltd. is an arranger		23,500

9. POLICY ON DETERMINATION OF DIVIDENDS FROM SURPLUS

The Company will make decisions regarding distributions to the shareholders based on a comprehensive view of consolidated business performance and other factors including the Group companies.

With respect to dividends from surplus, the basic profit distribution policy of the Company is to target a payout ratio of 20% to 50% of its consolidated net income on a once annual year-end dividend payment. Based on a general rule to provide a dividend of at least 20%, the Company will aim to increase the payout ratio up to 50% if it decides, based on comprehensive consideration taking into account projections of future business conditions, that a higher distribution is possible while securing sufficient retained earnings for sustainable growth.

In accordance with this policy, the ordinary dividend per share for the consolidated fiscal year ended March 31, 2011 was set at ¥100. In addition, a dividend of ¥20 commemorating our listing on the Hong Kong Exchanges and Clearing in April 2011 (listing of Hong Kong Depository Receipts sourced by the shares of common stock of the Company on the Main Board of the Hong Kong Exchanges and Clearing) was decided, resulting in an annual dividend of ¥120 per share as at the end of the consolidated fiscal year.

II. COMPANY

1. SHARES (as of March 31, 2011)

(1)	Total Number of Shares Authorized for Issue	34,169,000 shares
(2)	Total Number of Outstanding Shares	19,944,018 shares (including 14,621 shares of treasury stock)
(3)	Number of Shareholders	191,631 shareholders

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(4) Major Shareholders

Major Shareholder	Number of Shares Held		Percentage of Shares Held
	shares		%
CBNY-ORBIS FUNDS		1,747,538		8.7
CBNY-ORBIS SICAV		1,198,102		6.0
Japan Trustee Services Bank, Ltd. (Trust account)		894,578		4.4
The Master Trust Bank of Japan, Ltd. (Trust account)		755,375		3.7
BNY GCM CLIENT ACCOUNT J PRD AC ISG (FE-AC)		517,817		2.5
Merrill Lynch Japan Securities Co., Ltd.		406,412		2.0
SAJAP		376,628		1.8
UBS AG LONDON A/C IPB SEGREGATED CLIENT ACCOUNT		328,191		1.6
Yoshitaka Kitao		323,626		1.6
BARCLAYS BANK PLC SUB-ACCOUNT BARCLAYS CAPITAL SECURITIES LIMITED SBL/PB		303,539		1.5

(Note)   The percentage of shares held is calculated upon deducting the treasury stock.

(5) Other Important Matters Concerning Shares

The Company has issued 3,112,000 new shares through a public stock offering with a closing date of June 23, 2010.

2. SHARE OPTIONS

(1) Delivery of share options as consideration for the execution of duties and held by the Company officers (as of March 31, 2011)

Not Applicable

(2) Delivery of share options to employees as consideration for the execution of duties during the fiscal year ended March 31, 2011

Not Applicable

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3. COMPANY OFFICERS

(1) Directors and Corporate Auditors (as of March 31, 2011)

Position	Name	Responsibilities and Other Significant Concurrent Offices Held
Representative Director and CEO	Yoshitaka Kitao	Representative Director and Chairman of SBI SECURITIES Co., Ltd. Representative Director and CEO of SBI Investment Co., Ltd. Director and Chairman of Gomez Consulting Co., Ltd. Director and CEO of Morningstar Japan K.K. Director and CEO of SBI VeriTrans Co., Ltd. Director of SBI VEN HOLDINGS PTE. LTD. Director of SBI Hong Kong Co., Limited
Director and CFO	Yasutaro Sawada	Representative Director and Chairman of SBI Net Systems Co., Ltd. Director and CFO of SBI Investment Co., Ltd.
Director and Executive Officer	Kenji Hirai	General Manager of Overseas Business Administration Dept., Overseas Business Div. Director of SBI VEN HOLDINGS PTE. LTD. Director of SBI Hong Kong Co., Limited
Director and Executive Officer	Takashi Nakagawa	Representative Director and COO of SBI Investment Co., Ltd. Head of Fund Investments Overseas Business Div.
Director and Executive Officer	Tomoya Asakura	Representative Director and COO of Morningstar Japan K.K.
Director and Executive Officer	Takashi Okita	Representative Director, Executive Officer, and COO of SBI VeriTrans Co., Ltd. Representative Director and Co-CEO of SBI Research Co., Ltd. Representative Director and CEO of SBI Navi Co., Ltd.
Director and Executive Officer	Noriaki Maruyama	Representative Director and COO of SBI Mortgage Co., Ltd.
Director and Executive Officer	Shumpei Morita	Representative Director and President of SBI Business Solutions Co., Ltd. Outside Corporate Auditor of Gomez Consulting Co., Ltd.
Director	Taro Izuchi	Representative Director and President of SBI SECURITIES Co., Ltd.

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Position	Name	Responsibilities and Other Significant Concurrent Offices Held
Director	Hiroyoshi Kido	Representative Director and President of SBI Insurance Co., Ltd.
Director	Noriyoshi Kimura	Executive Officer and CTO of SBI Sumishin Net Bank, Ltd.
Director	Hiroshi Tasaka	Representative Director of SophiaBank Outside Director of LAWSON, INC. Professor of Tama University Graduate School Special Advisor to the Cabinet
Director	Masaki Yoshida	Representative Director and President of YOSHIDAMASAKI INC. Representative Director and Chairman of Watanabe Entertainment Co., Ltd. Outside Director of Giga Media Inc.
Director	Kiyoshi Nagano	Outside Corporate Auditor of Shin-Etsu Chemical Co., Ltd.
Director	Keiji Watanabe	Independent Outside Director of ASAHI KOGYOSHA CO., LTD. Outside Director of Funai Zaisan Consultants Co., Ltd.
Director	Takeshi Natsuno	Director of PIA Corporation Director of DWANGO Co., Ltd. Outside Director of SEGA SAMMY HOLDINGS INC. Outside Director of transcosmos inc. Outside Director of GREE, Inc.
Director	Akihiro Tamaki	Auditor of Essentia Co., Ltd. Representative Director of SiFA Co., Ltd. Outside Corporate Auditor of Avex Group Holdings Inc.
Standing Corporate Auditor	Susumu Watanabe
Corporate Auditor	Ryujiro Shimamoto	Outside Standing Corporate Auditor of SBI Sumishin Net Bank, Ltd. Corporate Auditor of SBI Lease Co., Ltd.
Corporate Auditor	Atsushi Fujii	Outside Corporate Auditor of SBI SECURITIES Co., Ltd. Corporate Auditor of SBI Investment Co., Ltd.
Corporate Auditor	Minoru Tada	Outside Standing Corporate Auditor of SBI SECURITIES Co., Ltd.

(Note)	1.      Directors Kiyoshi Nagano, Keiji Watanabe, Takeshi Natsuno, and Akihiro Tamaki are Outside Directors.
	2.      Corporate Auditors Susumu Watanabe and Ryujiro Shimamoto are Outside Corporate Auditors.
	3.      Corporate Auditors Susumu Watanabe, Ryujiro Shimamoto, and Minoru Tada have long years of experience in financial institutions, and Corporate Auditor Atsushi Fujii is qualified as a certified public accountant. All of these Corporate Auditors have a considerable degree of knowledge regarding finance and accounting.

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(2) Remuneration of Directors and Corporate Auditors

(i) Total Amount of Remuneration for the Fiscal Year ended March 31, 2011

Classification	Number of Officers Paid		Amount of Remuneration
Directors (Outside Directors included)		16 officers (4 officers)		¥190 million (¥45 million)
Corporate Auditors (Outside Corporate Auditors included)		3 officers (2 officers)		¥22 million (¥12 million)
Total (Outside Officers included)		19 officers (6 officers)		¥213 million (¥57 million)

(Note) The amount of remuneration of Directors does not include employee remuneration for any director who concurrently serves as an employee.

(ii) Total Amount of Executive Remuneration Received by Outside Officers from Subsidiaries

The total amount of remuneration received as an officer by the Outside Corporate Auditors from subsidiaries for which they concurrently serve as an officer in the fiscal year ended March 31, 2011 amounts to ¥1 million.

(3) Matters Regarding Outside Officers

(i) Relationship between the companies for which the Outside Officers hold significant concurrent offices and the Company

Position	Name	Significant Concurrent Office
Director	Kiyoshi Nagano	Outside Corporate Auditor of Shin-Etsu Chemical Co., Ltd.
Director	Keiji Watanabe	Independent Outside Director of ASAHI KOGYOSHA CO., LTD. Outside Director of Funai Zaisan Consultants Co., Ltd.
Director	Takeshi Natsuno	Director of PIA Corporation Director of DWANGO Co., Ltd. Outside Director of SEGA SAMMY HOLDINGS INC. Outside Director of transcosmos inc. Outside Director of GREE, Inc.
Director	Akihiro Tamaki	Auditor of Essentia Co., Ltd. Representative Director of SiFA Co., Ltd. Outside Corporate Auditor of Avex Group Holdings Inc.
Standing Corporate Auditor	Susumu Watanabe
Corporate Auditor	Ryujiro Shimamoto	Outside Standing Corporate Auditor of SBI Sumishin Net Bank, Ltd. Corporate Auditor of SBI Lease Co., Ltd.

(Note)	1.      SBI Lease Co., Ltd. is a subsidiary of the Company.
	2.      SBI Sumishin Net Bank, Ltd. is an affiliate of the Company.
	3.      There is no transaction or other relationship to be noted between other companies in which concurrent offices are held and the Company.

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(ii) Principal Activities in the Fiscal Year Ended March 31, 2011

- Attendance at the meetings of the Board of Directors and the Board of Corporate Auditors

		Meeting of Board of Directors (held 15 times)					Meeting of Board of Corporate Auditors (held 12 times)
		Number of Times Attended		Attendance Rate			Number of Times Attended		Attendance Rate
Director	Kiyoshi Nagano		11 times		91	%		—		—
Director	Keiji Watanabe		11 times		91	%		—		—
Director	Takeshi Natsuno		14 times		93	%		—		—
Director	Akihiro Tamaki		10 times		83	%		—		—
Standing Corporate Auditor	Susumu Watanabe		14 times		93	%		12 times		100	%
Corporate Auditor	Ryujiro Shimamoto		15 times		100	%		12 times		100	%

(Note)	1.	In addition to the meetings of the Board of Directors above, there were 2 written resolutions which are deemed to be resolutions of the Board of Directors in accordance with Article 370 of the Companies Act and Article 20 of the Company’s Articles of Incorporation.
	2.	Directors Kiyoshi Nagano, Keiji Watanabe, and Akihiro Tamaki appointed as a Director on June 29, 2010.
		Meetings of the Board of Directors were held 12 times on and after June 29, 2010 and the attendance ratio for the above directors represents the percentage against the number of times the meetings were held on and after that date.

- Statements at meetings of the Board of Directors and the Board of Corporate Auditors

Directors Kiyoshi Nagano, Keiji Watanabe, Takeshi Natsuno, and Akihiro Tamaki have, as Outside Directors, asked questions from time to time regarding matters to be reported or resolved and offered opinions as necessary from an external point of view at the meetings of the Board of Directors they attended.

Corporate Auditors Susumu Watanabe and Ryujiro Shimamoto have sufficiently fulfilled their auditing function by expressing their opinions from the perspective of whether the Directors’ performance of their duties and the decision-making process for resolutions of the Board of Directors are appropriate and based on reasonable and accurate understanding of facts during proceedings at the meetings of the Board of Directors. Also, they have made reports and actively offered opinions for every proceeding at the meetings of the Board of Corporate Auditors.

(iii) Outline of Contracts for Limitation of Liability

The Company has executed contracts for limitation of liability with Outside Directors Kiyoshi Nagano, Keiji Watanabe, Takeshi Natsuno, and Akihiro Tamaki to limit liability under Article 423, Paragraph 1 of the Companies Act to the extent of the higher amount of either ¥1,000,000 or the minimum liability amount stipulated by laws and regulations under Article 427, Paragraph 1 of the Companies Act and Article 22, Paragraph 2 of the Company’s Articles of Incorporation.

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4. ACCOUNTING AUDITOR

(1) Name     Deloitte Touche Tohmatsu LLC

(2) Amount of remuneration of Accounting Auditor for the Company’s fiscal year ended March 31, 2011

¥86 million

(3) Total amount of money and other property benefits to be paid by the Company and subsidiaries to Accounting Auditor

¥349 million

(Note)	1.	Since the audit agreement between the Company and the Accounting Auditor does not clearly distinguish between the amount of remuneration for auditing under the Companies Act and the amount of remuneration for auditing under the Financial Instruments and Exchange Act and it is also not possible to substantially distinguish between them, the amount in (2) above represents the total amount.
	2.	The Company paid the Accounting Auditor consideration for services relating to listings on the Main Board of the Hong Kong Exchanges and Clearing, which are services other than those set out in Article 2, Paragraph 1 of the Certified Public Accountant Act.
	3.	Six important subsidiaries of the Company are audited by auditors other than the Accounting Auditor of the Company.

(4) Policy on Determination of Removal or Disapproval of Reappointment

Upon obtaining the consent of, or based on a request from, the Board of Corporate Auditors, the Board of Directors shall make the removal or disapproval of reappointment of the Accounting Auditor a purpose of the general meeting of shareholders if the execution of duties of the Accounting Auditor is interfered with or in any other case where it is deemed necessary.

If the Accounting Auditor is deemed to fall under any item of Article 340, Paragraph 1 of the Companies Act, the Board of Corporate Auditors will remove the Accounting Auditor by consent of all Corporate Auditors. In that case, the Corporate Auditors elected by the Board of Corporate Auditors shall report the removal of the Accounting Auditor and the reason therefor at the first general meeting of shareholders convened after the removal.

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5. FRAMEWORKS FOR ENSURING PROPER EXECUTION OF BUSINESS OPERATIONS

Details of resolutions by the Board of Directors concerning frameworks in place at the end of the business year ended March 31, 2011 for ensuring that the Directors execute their duties in compliance with laws, regulations, and the Articles of Incorporation and for ensuring that other business operations of the Company are properly executed are set out below.

(1) Framework for Ensuring Execution of Duties by Directors and Employees are in Compliance with Laws and Regulations and Articles of Incorporation

(i) The Representative Director of the Company is responsible for making all managers and employees aware of the importance of compliance with laws and regulations, as well as ethical standards. Compliance and ethics are both vital aspects of operating within the Company’s Management Philosophy and Corporate Vision.

(ii) The Company facilitates close communication among the Directors, supervises the performance of the Representative Director, and prevents violations of laws, regulations, and the Articles of Incorporation by holding regular monthly meetings of the Board of Directors in accordance with the Board of Directors Regulations and by holding other extraordinary meetings of the Board of Directors as necessary.

(iii) Following a resolution by the Board of Directors, the Company appoints a Director to be responsible for compliance matters, establishes a Compliance Department that is directly managed by that Director, and causes that Director and department to identify compliance-related issues and problems relating to the Company. In addition, following a resolution by the Board of Directors the Company establishes an Internal Audit Department. The Internal Audit Department is an organizational unit independent from all business administration divisions and administrative divisions that comprehensively and objectively evaluates the appropriateness of the Company’s internal management structure, which involves compliance with laws and regulations, the appropriateness of operations and the proper management of internal controls, among other responsibilities. Also, recommendations are provided and follow-up measures are taken for the purpose of seeking improvement with respect to issues uncovered as a result of internal audits. Audits are conducted with the help of employees and, if necessary, external specialists.

The results of individual internal audits are reported promptly after completion of audits, and reports are provided to the Board of Directors through the Representative Director more than once every six months, in addition to regular reports to Corporate Auditors.

(iv) The Company has established a Whistleblower System for submitting reports directly to the Internal Audit Department and the Corporate Auditors, allowing Directors and employees to provide information concerning violations at the Company of laws, regulations, and the Articles of Incorporation as well as important facts discovered involving compliance.

(2) Framework for Data Storage and Management Relating to Execution of Duties by Directors

(i) The Company has, following a resolution by the Board of Directors, established document management regulations and stores and manages data relating to the execution of duties by the Directors by entering or recording that data on written documents or electromagnetic recordings (“Documents”).

(ii) Directors and Corporate Auditors may access Documents at any time.

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(3) Regulations for Managing Risk of Loss and Other Similar Frameworks

(i) The Company appoints a Director to be in charge of risk management in accordance with risk management and group risk management regulations established by the Board of Directors and has established the Risk Management Department to identify and properly evaluate and manage risks that may impede the execution of business operations or the attainment of our Management Philosophy and Corporate Vision.

(ii) If any management crisis comes to light, then the Company deals with that crisis in accordance with the Company’s crisis management regulations by (a) establishing a task force led by the Director responsible for risk management and (b) facilitating a structure that enables timely and appropriate sharing of information relating to the management crisis among the Director responsible for risk management, the managers in charge of the Risk Management Department, the General Affairs and Human Resources Departments, the Corporate Communications Departments, and the Legal and Compliance Departments, and other Directors and employees who require that information.

(4) Framework for Ensuring the Efficient Execution of Duties by Directors

(i) The Company determines allocation of duties following a resolution by the Board of Directors and clarifies the division of roles among the Directors.

(ii) The Company facilitates a data system that enables appropriate and prompt decision-making.

(iii) In principle, the Company holds regular monthly meetings of the Board of Directors and other extraordinary meetings of the Board of Directors as necessary, and in addition to solving problems that arise in each division in a timely and appropriate manner, makes the Directors aware of know-how gained from the problems solved. By doing so, the Company seeks to streamline execution of duties that Directors are responsible for while also streamlining operations throughout the Company as a whole.

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(5) Framework for Ensuring Proper Execution of Business Operations in Corporate Group Consisting of the Company and Subsidiaries

(i) Compliance conferences are held to provide an opportunity to exchange information about compliance for the entire corporate group. These gatherings identify compliance issues and problems, and confirm that business operations are conducted properly. The Director in charge of compliance and the Compliance Department hold these conferences along with compliance officers from companies belonging to the corporate group. These compliance conferences are promptly convened when a request for convocation is made from a company belonging to the corporate group.

(ii) If the Directors discover any material violation of laws, regulations, or the Articles of Incorporation or any other important facts relating to compliance with regard to a company belonging to the corporate group, they report this information to the Company’s Corporate Auditors, and the Corporate Auditor who takes receipt of that report notifies the corporate auditor of the company in relation to which those important facts were discovered.

(6) Framework Relating to Employees Assisting Duties of Corporate Auditors When Appointment of Those Employees is Requested by Corporate Auditors, and Matters Relating to Independence from Directors of Those Employees

When requested by a Corporate Auditor, the Company appoints, for a period determined in consultation with that Corporate Auditor, an employee who is nominated by the Internal Auditing Department as having knowledge that enables that employee to assist with the Corporate Auditor’s duties independent of the Directors’ chain of command. In this case, the opinions of the Corporate Auditor are respected with regard to personnel changes and evaluation in relation to that employee.

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(7) Framework for Reporting by Directors and Employees to Corporate Auditors and Framework for Other Types of Reporting to Corporate Auditors

(i) The Directors report to the Corporate Auditors in a timely and accurate manner when the Directors come to know of any of the following:

(a) any matter likely to cause significant damage to the Company;

(b) any important matter relating to management;

(c) any important matter relating to internal auditing;

(d) any material violation of laws, regulations, or the Articles of Incorporation; or

(e) any other matter judged an important matter by the Directors.

(ii) The Directors will provide the Corporate Auditors with prompt and detailed explanations of the matters (a) through (d) above when requested by the Corporate Auditors and must not refuse such a request unless the Directors have reasonable grounds for doing so.

(iii) The Company has established a Whistleblower System for submitting reports directly to the Corporate Auditors, enabling Directors and employees to provide information concerning violations of laws, regulations, and the Articles of Incorporation as well as important facts discovered involving compliance.

(8) Other Frameworks for Ensuring that Corporate Auditors Effectively Execute Audits

(i) The Company will cause the Company’s Representative Director to hold regular meetings with the Corporate Auditors for the purpose of sharing information regarding management-based issues and problems and, as necessary, facilitates sharing of information between Corporate Auditors and the Internal Auditing Department with the Accounting Auditor.

(ii) The meetings described in (8)(i) above are promptly convened by the Company when a request for convocation is made by a Corporate Auditor.

Details concerning the Group’s basic philosophy regarding exclusion of anti-social organizations and the implementation status of this philosophy are set out below.

With regard to measures for the exclusion of anti-social organizations, the Group declares in its code of conduct its intent to resolutely defy anti-social organizations and promotes awareness of this initiative by distributing, and by posting on the Company’s intranet, manuals for dealing with anti-social organizations in accordance with the “Guidelines for Enterprises to Prevent Damage Caused by Antisocial Forces”.

In addition the Company has facilitated an internal framework for strengthening collaborative efforts by establishing a department for carrying out anti-social organization exclusion initiatives and by sharing knowledge with the police, centers for eliminating anti-social organizations, lawyers, and other external professional institutions.

Efforts are also made to increase awareness of the requirement to cut off relationships with anti-social organizations, by carrying out training for managers and employees in the Group.

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CONSOLIDATED BALANCE SHEET

SBI Holdings, Inc. (the “Company”) and Consolidated Subsidiaries (collectively the “Group”)

(Amounts are rounded down to the nearest millions of Japanese Yen)

	As at 31 March 2011
Assets
Current assets
Cash and deposits		150,268
Notes and accounts receivable-trade		10,658
Leases receivable and lease investment assets		16,166
Short-term investment securities		292
Cash segregated as deposits		347,865
Operational investment securities		141,881
Allowance for investment losses		(9,108	)
Operational loans receivable		27,905
Real estate inventories		16,812
Trading instruments		2,701
Margin transaction assets		250,399
Loans on margin transactions		229,301
Cash collateral pledged for securities borrowings on margin transactions		21,098
Short-term guarantee deposits		5,235
Deferred tax assets		14,243
Others		57,473
Allowance for doubtful accounts		(4,017	)
Total current assets		1,028,779
Non-current assets
Property and equipment
Buildings		12,668
Furniture and fixtures		1,426
Land		10,908
Others		3,427
Total property and equipment		28,431
Intangible assets
Software		13,378
Goodwill		126,297
Others		567
Total intangible assets		140,244

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	As at 31 March 2011
Investments and other assets
Investment securities		53,378
Deferred tax assets		12,830
Others		36,108
Allowance for doubtful accounts		(12,066	)
Total investments and other assets		90,250
Total non-current assets		258,926
Deferred charges
Stock issuance costs		152
Bonds issuance costs		32
Deferred operating costs under Article 113 of the Insurance Business Act		5,715
Total deferred charges		5,900
Total assets		1,293,606
Liabilities
Current liabilities
Short-term loans payable		97,164
Current portion of long-term loans payable		12,147
Current portion of bonds payable		70,060
Accrued income taxes		4,574
Advances received		1,953
Margin transaction liabilities		143,757
Borrowings on margin transactions		70,386
Cash received for securities lending on margin transactions		73,370
Loans payable secured by securities		61,797
Guarantee deposits received		309,134
Deposits from customers		37,819
Accrued expenses		3,202
Deferred tax liabilities		3,219
Provision for bonuses		79
Other provisions		448
Others		35,237
Total current liabilities		780,597
Non-current Liabilities
Bonds payable		540
Long-term loans payable		31,366
Deferred tax liabilities		424
Provision for retirement benefits		69
Other provisions		861
Others		17,567
Total non-current liabilities		50,828

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	As at 31  March 2011
Statutory reserves
Reserve for financial products transaction liabilities		5,196
Reserve for price fluctuation		0
Total statutory reserves		5,197
Total liabilities		836,623
Net assets
Shareholders’ equity
Capital stock		73,236
Capital surplus		236,920
Retained earnings		88,073
Treasury stock		(246	)
Total shareholders’ equity		397,983
Accumulated other comprehensive income (loss)
Unrealized losses on available-for-sale securities		(3,902	)
Deferred losses on hedges		(239	)
Foreign currency translation adjustments		(3,012	)
Total accumulated other comprehensive income (loss) .		(7,155	)
Stock acquisition rights		11
Minority interests		66,142
Total net assets		456,982
Total liabilities and net assets		1,293,606

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CONSOLIDATED STATEMENT OF OPERATIONS

SBI Holdings, Inc. and Consolidated Subsidiaries

(Amounts are rounded down to the nearest millions of Japanese Yen)

	Year ended 31 March  2011 (From 1 April 2010 to 31 March 2011)
Net sales		141,081
Cost of sales		67,535
Gross profit		73,546
Selling, general and administrative expenses		64,613
Operating income		8,932
Non-operating income
Interest income		402
Dividend income		191
Share of results of affiliates		163
Others		429
Total non-operating income		1,186
Non-operating expense
Interest expense		2,705
Amortization of stock issuance costs		50
Amortization of bond issuance costs		90
Amortization of deferred operating costs under Article 113 of the Insurance Business Act		952
Foreign exchange losses		1,349
Others		1,445
Total non-operating expense		6,593
Ordinary income		3,525
Extraordinary income
Gains on sales of investment securities		7,584
Reversal of allowance for doubtful accounts		68
Reversal of statutory reserves		2,022
Gains on the changes in interests in consolidated subsidiaries and equity method investees		63
Others		279
Total extraordinary income		10,018
Extraordinary expense
Losses on retirement of non-current assets		193
Impairment loss		861
Provision of allowance for doubtful accounts		3,848
Provision of statutory reserves		0
Losses on sales of investment securities		66
Losses on valuation of investment securities		556
Losses on the changes in equity interest in consolidated subsidiaries and equity method investees		23
Losses on disposal of subsidiaries and affiliates		635
Impact from applying the Accounting Standard of Asset Retirement Obligation		501
Others		1,425
Total extraordinary expense		8,113
Income before income taxes		5,430
Income taxes-current		(10,120	)
Income taxes-deferred		3,028
Total income taxes		(7,092	)
Loss before minority interests		(1,661	)
Minority interests in loss		(6,196	)
Net income		4,534

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CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

SBI Holdings, Inc. and Consolidated Subsidiaries

(Amounts are rounded down to the nearest millions of Japanese Yen)

	Year ended 31 March 2011 (From 1 April 2010 to 31 March 2011)
SHAREHOLDERS’ EQUITY
Capital stock
Balance at the end of previous year		55,284
Changes during the year
Issuance of new stock		17,952
Total changes during the year		17,952
Balance at the end of current year		73,236
Capital surplus
Balance at the end of previous year		218,968
Changes during the year
Issuance of new stock		17,952
Disposal of treasury stock		(0	)
Total changes during the year		17,951
Balance at the end of current year		236,920
Retained earnings
Balance at the end of previous year		87,276
Changes during the year
Dividends		(1,676	)
Net income		4,534
Decrease through a merger		(224	)
Adjustments due to change of scope of consolidation		(1,798	)
Adjustments due to change of scope of equity method		(37	)
Total changes during the year		797
Balance at the end of current year		88,073
Treasury stock
Balance at the end of previous year		(246	)
Changes during the year
Total changes during the year		—
Balance at the end of current year		(246	)

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	Year ended 31 March 2011 (From 1 April 2010 to 31 March 2011)
Total shareholders’ equity
Balance at the end of previous year		361,282
Changes during the year
Issuance of new stock		35,904
Dividends		(1,676	)
Net income		4,534
Decrease through a merger		(224	)
Adjustments due to change of scope of consolidation		(1,798	)
Adjustments due to change of scope of equity method		(37	)
Disposal of treasury stock		(0	)
Total changes during the year .		36,701
Balance at the end of current year		397,983
Accumulated other comprehensive income (loss)
Unrealized losses on available-for-sale securities
Balance at the end of previous year		(559	)
Changes during the year
Net changes other than shareholders’ equity		(3,343	)
Total changes during the year		(3,343	)
Balance at the end of current year		(3,902	)
Deferred gains (losses) on hedges
Balance at the end of previous year		14
Changes during the year
Net changes other than shareholders’ equity		(254	)
Total changes during the year		(254	)
Balance at the end of current year		(239	)
Foreign currency translation adjustments
Balance at the end of previous year		(1,506	)
Changes during the year
Net changes other than shareholders’ equity		(1,505	)
Total changes during the year		(1,505	)
Balance at the end of current year		(3,012	)

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	Year ended 31 March  2011 (From 1 April 2010 to 31 March 2011)
Total accumulated other comprehensive income (loss)
Balance at the end of previous year		(2,051	)
Changes during the year
Net changes other than shareholders’ equity		(5,104	)
Total changes during the year		(5,104	)
Balance at the end of current year		(7,155	)
Stock acquisition rights
Balance at the end of previous year		11
Changes during the year
Net changes other than shareholders’ equity		(0	)
Total changes during the year		(0	)
Balance at the end of current year		11
Minority interests
Balance at the end of previous year		69,372
Changes during the year
Net changes other than shareholders’ equity		(3,229	)
Total changes during the year		(3,229	)
Balance at the end of current year		66,142
Total net assets
Balance at the end of previous year		428,615
Changes during the year
Issuance of new stock		35,904
Dividends		(1,676	)
Net income		4,534
Decrease through a merger		(224	)
Adjustments due to change of scope of consolidation		(1,798	)
Adjustments due to change of scope of equity method		(37	)
Disposal of treasury stock		(0	)
Net changes other than shareholders’ equity		(8,333	)
Total changes during the year		28,367
Balance at the end of current year		456,982

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SIGNIFICANT ACCOUNTING POLICIES

1. SCOPE OF CONSOLIDATION

(1) Number of consolidated subsidiaries and name of major consolidated subsidiaries

• Number of consolidated subsidiaries: 112

• Name of major consolidated subsidiaries are listed in “3. IMPORTANT PARENT COMPANY AND SUBSIDIARIES” in the section “I. GROUP” of “Business Report”

As compared with the year ended 31 March 2010, there were 15 additions to and 6 exclusions from the scope of consolidation.

• Additions - 11 entities were newly established or acquired

- SBI Global Investment Co., Ltd.

- SBI-Jefferies Strategic Investments Asia Ltd.

- SBI-Jefferies Asia Fund L.P.

- SBI Ven Holdings Korea Co., Ltd.

- SBI Ven Capital Korea Co., Ltd.

- SBIH UK Limited

- SBI Credit Co., Ltd. (G-One Credit Service Co., Ltd. changed its company name to SBI Credit Co., Ltd. on 1 October 2010.) and 4 other entities

• Additions - 4 entities were newly consolidated due to the Group’s ability to exercise control

- SBI ALA promo Co., Ltd.

- SBI VEN CAPITAL PTE. LTD. and 2 other entities

• Deconsolidation - 2 entities were deconsolidated as a result of mergers

- E*GOLF Corporation

- SBI Futures Co., Ltd.

• Deconsolidation - 3 entities were deconsolidated due to liquidation

- SBI & TH (Beijing) Investment Advisory Co., Ltd.

- SBI Incubation Advisory Co., Ltd. and 1 other entity

• Deconsolidation - 1 entity was deconsolidated due to the adoption of the specific exemption for the small size entities.

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(2) Name of major non-consolidated subsidiaries and basis for exclusion from scope of consolidation

• Name of major non-consolidated subsidiaries:

- Searchina Co., Ltd.

- SBI Remit Co.,Ltd.

- SBI Phnom Penh Securities Co., Ltd.

• Basis for exclusion from scope of consolidation

Small size entities of which total assets, sales, and proportional share of net income and retained earnings are considered to be immaterial are excluded from consolidation.

(3) Name of entities not classified as subsidiaries despite the ownership of 50 percent or more of the voting power of the investees and basis for exclusion from scope of consolidation

• Name of the entities:

- NARUMIYA INTERNATIONAL Co., Ltd. and other entities.

• Basis for exclusion from scope of consolidation

These investments were made with purpose of fostering the development of venture capital portfolio companies. Since the purpose of these venture capital investments was not to control or to exert influence over the entities, the investments were excluded from the scope of consolidation.

2. APPLICATION OF EQUITY METHOD

(1) Number of non-consolidated subsidiaries subject to equity method: 1

Name of the entity:

- SBI Japannext Co., Ltd.

(2) Number of affiliates accounted for using equity method: 8

Name of major entities:

- SBI Sumishin Net Bank, Ltd.

- SOLXYZ Co., Ltd.

- SBI Investment Korea Co., Ltd. (KOREA TECHNOLOGY INVESTMENT CORPORATION changed its company name to SBI Investment Korea Co., Ltd. on 29 March 2011.)

As compared with the year ended 31 March 2010, there were 4 additions to and 1 exclusion from the scope of affiliates accounted for using equity method.

• 4 additions due to the increased influence

- SBI Investment Korea Co., Ltd.

and 3 other entities

• 1 exclusion due to the decrease in voting power after selling off its stocks

- Tozai Asset Management Co., Ltd.

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(3) Name of major non-consolidated subsidiaries and affiliates that are not accounted for using equity method and basis for not applying equity method

• Name of major entities:

- Searchina Co., Ltd.

- SBI Remit Co., Ltd.

- NEW HORIZON PARTNERS LTD.

• Basis for not applying equity method

Small size entities of which proportional share of net income and retained earnings are considered to be immaterial individually and collectively are not accounted for using equity method.

(4) Name of entities not classified as affiliates despite the ownership of 20 percent or more of the voting power of the investee but below 50 percent and basis for not applying equity method

• Name of major entities:

- Venture Revitalize Investment, Inc. and other entities

• Basis for not applying equity method

These investments were made with purpose of fostering the development of venture capital portfolio companies. Since the purpose of these venture capital investments was not to control or to exert influence over the entities, the investments were not accounted for using the equity method.

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3. SUMMARY OF ACCOUNTING POLICIES

(1) Valuation method of significant assets

• Trading instruments

Trading instruments, which are held for the purpose of earning capital gains in the near term, are reported at fair value, with the related unrealized gains and losses included in income.

• Available-for-sale securities (consist of investment securities and operational investment securities other than investments in funds), which are not classified as trading instruments

Listed securities

Listed securities are measured at fair value, with fair value gains and losses, net of applicable taxes, reported as “unrealized gains (losses) on available-for-sales securities”, a separate component of net assets. The cost of securities sold is determined based on the moving average cost method.

Unlisted securities

Unlisted securities are stated at cost less impairment, determined by the moving average cost method.

Available-for-sale securities held by certain overseas subsidiaries adopting International Financial Reporting Standards are measured at fair value.

• Investments in funds

For the investments in funds other than those included in the scope of consolidation, the Company’s proportionate share in the net assets of the funds are calculated based on the funds’ annual financial statements or interim financial statements and are presented as “Operational investment securities” (Current assets) or “Investment securities” (Non-current assets).

• Derivative contracts

Derivative contracts are measured at fair value.

• Real estate inventories

Real estate inventories are measured at the lower of cost or net realizable value.

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(2) Depreciation method of depreciable assets

• Property and equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment by the Company and its consolidated subsidiaries is computed using the declining-balance method over the estimated useful lives of assets while the straight-line method is applied to buildings acquired after 1 April 1998. The range of useful lives is principally from 5 to 50 years for buildings, and from 4 to 20 years for furniture and fixtures. Leased assets were depreciated by using straight-line method over the lease terms with residual value of zero.

• Intangible assets

Software used for internal purposes is amortized using the straight-line method over the estimated useful life of the software (5 years).

Software for sale is amortized using the straight-line method over the estimated saleable period of the software, which is 3 years or less.

Leased assets were depreciated by using straight-line method over the lease terms with residual value of zero.

(3) Recognition and measurement of significant provisions and allowances

• Allowance for investment losses

Allowance for investment losses for operational investment securities and investment securities are provided based on the estimated losses of the investments and the financial condition of the investees.

• Allowances for doubtful accounts

Allowance for doubtful accounts is provided based on the Group’s past credit loss experience and an evaluation of the recoverability of the outstanding receivables including notes and accounts receivable-trade, operational loans receivable, loans on margin transactions and other loans receivable.

• Provision for bonuses

Bonuses to employees are accrued at the balance sheet date.

• Employees’ retirement benefits

The Group recorded liabilities for employees’ retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date. The liabilities were recognized and measured by assuming all the employees voluntarily retired at the end of the year.

• Statutory reserve for securities transactions liabilities/financial products transactions

Pursuant to Article 46-5 of the Financial Instruments and Exchange Act, a statutory reserve is provided against possible losses resulting from execution errors related to securities business transactions. The amount is calculated in accordance with Article 175 of the “Cabinet Office Ordinance concerning Financial Instruments Business”.

• Statutory reserve for price fluctuation

Statutory reserve is provided against possible losses resulting from stock price fluctuations in accordance with Article 115 of the Insurance Business Act.

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(4) Recognition for net sales and cost of sales

• Net sales and cost of sales

The Group’s net sales primarily consist of revenue from operational investment securities, fees from funds, revenue from real estate business, and revenue from securities transactions. The costs of sales principally consist of the cost of operational investment securities, cost of real estate business, and the related provision of allowance for investment losses, if any.

• Revenue and cost of operational investment securities

Revenue from operational investment securities includes all of the revenue which is related to or generated by operational investment securities and securities held by funds. Cost of operational investment securities consists of the carrying value on the sale of operational investment securities and securities held by funds, and write down of operational investment securities and securities held by funds.

• Fees from funds

Fees from funds consist of establishment fees for fund organization, management fees, and success fees from funds which are not within the scope of consolidation and managed by the Group. Management fees from funds are recognized over the period of the fund management agreement. Establishment fees and success fees from funds are recognized when those revenue amounts are determined and the services are provided.

• Revenue from construction projects

When the total construction revenue, total construction costs and the stage of completion of the contract can be reliably measured at the balance sheet date, the percentage-of- completion method is applied. If the outcome of a construction contract cannot be reliably estimated at the balance sheet date, the completed contract method is applied.

• Revenue from securities transactions

Revenue from securities transactions primarily consists of brokerage commissions from securities transactions, fees from underwriting activities and offering of securities for initial public offerings and fees for placements and sales of securities.

• Revenue from finance lease transactions

Revenue and cost of finance lease transactions are recognized when payments are received.

• Financial charges and cost of funding

Financial charges and cost of funding, which consist of interest expense for margin trading transactions and costs from repurchase agreement transactions, etc. which are related to the investment banking businesses, are recorded as cost of sales. As for certain consolidated subsidiaries, interest expense other than financial charges is classified as interests related to operating assets (e.g. leases receivable and lease investment assets, etc.) or to non-operating assets. Interest expense (cost of funding) related to operating asset is classified as cost of sales. During the development of a project, interest expense related to long term and large scale real estate development is included in the cost of the real estate inventories.

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(5) Translations of significant assets and liabilities denominated in foreign currencies

Monetary assets and liabilities denominated in foreign currencies are translated into Japanese Yen using the exchange rates at the balance sheet date. The balance sheets of the consolidated foreign subsidiaries are translated into Japanese Yen using their exchange rate as at the balance sheet date except for net assets, which are translated at the historical rates. Revenue and expense accounts of consolidated foreign subsidiaries are translated into Japanese Yen using the average exchange rate of the year. Differences arising from such translation are shown as “Foreign currency translation adjustments”, as a separate component under “Net assets” except for the portion pertaining to the minority shareholders, which is included under “Minority interests” as a separate component under “Net assets”.

(6) Accounting for significant hedging transactions

Accounting for hedges

The Group applied deferred hedge accounting when certain criteria are met. Foreign currency forward contracts are used to hedge foreign currency exposures in the Group. Receivables, payables and investment securities denominated in foreign currencies are translated at the contracted rates if the forward contracts are qualified for hedge accounting. Interest rate swaps, which are qualified for hedge accounting and met the specific matching criteria, are not remeasured at market value. The differential paid or received under the swap agreements is recognized and included in interest expense or income.

Hedging instruments and hedged item

a. Hedging instruments and hedged item

Foreign exchange forward contracts and foreign currency denominated receivables and payables and investment securities.

b. Hedging instruments and hedged item

Interest rate swap contracts and interest expense for loans and bonds payable.

Hedging policy

a. For foreign currency-denominated transactions, the foreign currency forward contracts are used to hedge foreign currency exposures in the Group.

b. For interest expense on borrowing, interest rate swap contract is utilized to mitigate the volatility of interest rates.

Assessment of effectiveness between the hedging instrument and the hedged item

a. The Group does not assess hedge effectiveness of foreign exchange forward contracts which qualify for hedge accounting and meet specific matching criteria.

b. The Group assesses hedge effectiveness by comparing the cumulative changes in the fair value of the hedged items and cumulative changes in the hedging instruments during the period from commencement of hedging to the point of assessing effectiveness, based on changes in both amount and others. The Group does not assess hedge effectiveness of interest rate swaps which qualify for hedge accounting and meet specific matching criteria.

(7) Amortization of goodwill

Goodwill is amortized by straight-line method over the estimated useful life of goodwill. Goodwill is amortized over 20 years when its useful life cannot be reasonably estimated. Immaterial goodwill is charged/credited to consolidated statements of operations when incurred.

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(8) Other significant accounting policies for consolidated financial statements

 Accounting for investments in funds

For the investments in funds categorized as subsidiaries but not within the scope of consolidation, the Company’s proportionate share in the net assets and revenue/expenses of those funds are calculated based on the funds’ annual financial statements or semi-annual financial statements and are presented as “Investment securities” (Non-current assets) and revenue/expenses.

For the investments in funds held for operational investment purpose, which are not categorized as subsidiaries, the Company’s proportionate share in the net assets and revenue/expenses of those funds are calculated based on the funds’ annual financial statements or interim financial statements and are presented as “Operational investment securities” (Current assets) and revenue/expenses.

For the investment in funds other than those held for operational investment purpose, which are not categorized as subsidiaries, the Company’s proportionate share in the net assets and revenue/expenses of those funds are calculated based on the funds’ annual financial statements or interim financial statements and are presented as “Investment securities” (Non-current assets) and non-operating income/expenses.

‚ Deferred charges

• Stock issuance costs

Stock issuance costs are amortized over 3 years by using straight-line method.

• Bond issuance costs

Bond issuance costs are amortized over the bond term by using straight-line method.

• Deferred operating costs under Section 113 of the Insurance Business Act

The operating costs can be deferred and amortized within 10 years according to section 113 of the Insurance Business Act of Japan.

ƒ Accounting for consumption tax

The amounts in the Financial Information are presented without consumption or local consumption taxes.

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CHANGES IN SIGNIFICANT ACCOUNTING POLICIES

The Group has adopted “Accounting Standard for Asset Retirement Obligation” (ASBJ Statement No. 18 issued on 31 March 2008) and “Guidance for Accounting Standard for Asset Retirement Obligation” (ASBJ Guidance No. 21 issued on 31 March 2008). The operating income and ordinary income was decreased by ¥89 million and the income before income taxes was decreased by ¥591 million for the year ended 31 March 2011 as a result of the change.

The Group has adopted “Accounting Standard for Business Combinations” (ASBJ Statement No.21 issued on 26 December 2008), “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No.22 issued on 26 December 2008), “Partial amendments to Accounting Standard for Research and Development Costs” (ASBJ Statement No.23 issued on 26 December 2008), “Revised Accounting Standard for Business Divestitures” (ASBJ Statement No.7 (Revised 2008) issued on 26 December 2008), “Revised Accounting Standard for Equity Method of Accounting for Investments” (ASBJ Statement No.16 (Revised 2008) released on 26 December 2008) and “Revised Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ Guidance No.10 (Revised 2008) issued on 26 December 2008).

ADDITIONAL INFORMATION

Execution of Share Exchange Agreement

The Company and its consolidated subsidiary, SBI VeriTrans Co., Ltd. (“SBI VeriTrans”), announced that at board meetings held on 24 February 2011, their respective boards of directors approved to make SBI VeriTrans a wholly-owned subsidiary of the Company through a share exchange (the “Share Exchange”) subject to approval at SBI VeriTrans’ annual meeting of shareholders, and the two companies executed a share exchange agreement. Outline of the transactions is provided below.

1. Timetable for the Share Exchange

Record date of the annual shareholders meeting	31 March 2011
Annual shareholders meeting to approve share exchange (SBI VeriTrans)	21 June 2011 (scheduled)
Final trading date (SBI VeriTrans)	26 July 2011 (scheduled)
Share delisting date (SBI VeriTrans)	27 July 2011 (scheduled)
Share exchange date (effective date)	1 August 2011 (scheduled)

Note: The Company will implement the Share Exchange through the simplified share exchange arrangement pursuant to Article 796, Paragraph 3 of the Companies Act, and consequently, approval from its shareholders is not required.

2. Share Exchange Ratio

Company Name	The Company (Share Exchange Wholly-Owning Parent Company)			SBI VeriTrans (Share Exchange Wholly-Owned Subsidiary)
Share exchange ratio*1		1			4.7
Number of shares to be delivered for the Share Exchange		*	2

Note 1: Share Exchange Ratio

For every one share of SBI VeriTrans’ common share, 4.7 shares of the Company’s common share will be allocated and delivered (if any material changes in the various conditions that serve as the basis for the calculations, this share exchange ratio may be subject to change through consultations between the two companies). However, no shares will be allocated for the Share Exchange with respect to the shares of SBI VeriTrans’ common share held by the Company.

Note 2: Number of Shares to be Delivered for the Share Exchange

In the implementation of the Share Exchange, the Company will newly issue and deliver shares of the Company’s common share equal to the total number of shares of SBI VeriTrans’ common share owned by shareholders of SBI VeriTrans (excluding the Company) stated or recorded in the SBI VeriTrans’ shareholder register immediately prior to the Share Exchange coming into effect multiplied by 4.7.

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NOTES TO CONSOLIDATED BALANCE SHEETS

1. Pledged assets

Pledged assets consisted of the following:

	As at 31 March 2011
	(millions of Yen)
Cash and deposits		521
Notes and accounts receivable-trade		2,126
Operational investment securities		420
Operational loans receivable		3,206
Real estate inventories		747
Others-current assets		4,593
Buildings		4,570
Land		5,063
Investment securities		1,937
Total		23,188

The assets above were pledged as collateral for short-term loans payable of ¥9,038 million, current portion of long-term loans payable of ¥1,291 million, current portion of bonds payable of ¥60 million, long-term loans payable of ¥8,269 million, and bonds payable of ¥540 million.

2. Allowance for investment losses deducted directly from assets consisted of the following:

	As at 31 March 2011
	(millions of Yen)
Investments securities		300

3. Accumulated depreciation

	As at 31 March 2011
	(millions of Yen)
Property and equipment		8,074

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4. Provision for contingent losses

Credit guarantees

Guarantees for the debts owed to other financial institutions in the Group’s credit guarantee business are as follows:

	As at 31 March 2011
	(millions of Yen)
Guarantee of bank loans		18,234

5. Statutory reserves

As at 31 March 2011, reserve for the financial products transaction liabilities was provided in accordance with Article 46-5 of Japanese Financial Instruments and Exchange Act. Statutory reserve for price fluctuations was in accordance with Article 115 of the Insurance Business Act.

NOTES TO CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

1. Class and outstanding number of capital stock

	As at 31 March 2011
	(shares)
Common shares		19,944,018

2. Class and number of treasury stock

	As at 31 March 2011
	(shares)
Common shares		14,621

3. Dividends

(1) Dividend paid

Resolution of Board of Directors’ Meeting on 26 May 2010

•    Dividend amount	1,676 (millions of Yen)
•    Amount per share	100 (Yen)
•    Declared date	31 March 2010
•    Effective date	14 June 2010

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(2) Dividend whose declared date belonged to the year ended 31 March 2011, and effective date will be in the year ended 31 March 2012

Resolution of Board of Directors’ Meeting on 27 April 2011

•    Dividend amount	2,391 (millions of Yen)
•    Amount per share	120 (Yen)
•    Declared date	31 March 2011
•    Effective date	9 June 2011

4. Class and number of shares for stock acquisition rights

	As at 31 March 2011
	(shares)
Common shares		253,918.24

FINANCIAL INSTRUMENTS

1. Group policy and risk management system for financial instruments

The Group engages in a wide range of financial related businesses, such as investment business, fund management business, securities business, leasing business, loan business, credit card business and insurance businesses, to avoid excessive concentration of risk on specific entities or businesses. To operate these businesses, the Group raises funds by indirect financing such as bank borrowing, direct financing such as bond issuance and equity financing, and transaction with securities financing companies. The Group also considers the market environment and maintains an appropriate strategy for short and long term financing.

The Group and certain consolidated subsidiaries used derivative instruments, including foreign currency forward contracts, interest rate swaps, index futures and foreign currency spot contracts.

The Group entered into foreign currency forward contracts and interest swap transactions primarily to hedge foreign exchange risk and to manage its interest rate exposures on borrowings respectively. The Group does not hold or issue them for speculative purpose. Index futures were mainly daily trading under limited trading scale. Foreign currency spot contracts were entered into for managing the exposures on foreign currency brokerage transactions. The transaction was conducted with individually counterparties based on the Group’s “Position Management Rule.”

In order to maintain financial strength and appropriate operational procedures, the Company has risk management policies and group risk control rules approved by the Company’s board of directors. Under the policies, the Company assigns a risk management officer who is in charge of risk management and sets up a risk management department. The risk management department monitors the Group’s risk on timely basis, and identifies and analyzes credit risk, market risk, and liquidity risk to manage relevant risks integrally.

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2. Fair value of financial instruments

The tables below present the carrying amounts, the fair value of the financial instruments, and the difference between the carrying amounts and fair value. The tables below do not include assets and liabilities which cannot be measured at fair value due to difficulties in determining fair value (refer to Note 2).

		Carrying amount			Fair value		Difference
		(millions of Yen)			(millions of Yen)		(millions of Yen)
(1)	Cash and deposits		150,268			150,268		—
(2)	Notes and accounts receivable-trade		10,658			10,549		(108	)
(3)	Leases receivable and lease investment assets		16,166			16,300		134
(4)	Short-term investment securities, operational investment securities and investment securities
	Available-for-sale securities		60,546			60,546		—
	Securities in affiliates		5,068			3,314		(1,753	)
(5)	Cash segregated as deposits		347,865			347,865		—
(6)	Operational loans receivable		27,905
	Allowance for doubtful accounts (*1)		(896	)
			27,009			28,322		1,312
(7)	Trading instruments
	Trading securities		222			222		—
(8)	Margin transaction assets		250,399			250,399		—
(9)	Short-term guarantee deposits		5,235			5,235		—
	Assets, total		873,441			873,025		(415	)
		Carrying amount			Fair value		Difference
		(millions of Yen)			(millions of Yen)		(millions of Yen)
(1)	Short-term loans payable		97,164			97,164		—
(2)	Accrued income taxes		4,574			4,574		—
(3)	Margin transaction liabilities		143,757			143,757		—
(4)	Loans payable secured by securities		61,797			61,797		—
(5)	Guarantee deposits received		309,134			309,134		—
(6)	Deposits from customers		37,819			37,819		—
(7)	Bonds payable (*2)		70,600			70,600		—
(8)	Long-term loans payable (*3)		43,514			43,537		22
	Liabilities, total		768,362			768,385		22
	Derivatives (*4)		2,367			2,367		—

(*1) Includes general reserve and specific reserve for operational loans receivable.

(*2) Includes current-portion of bonds payable.

(*3) Includes current-portion of long term loans payable.

(*4) Receivables and payables arising from derivative transactions are stated at net value in the tables above.

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NOTES:

1. Calculation of fair value of financial instruments

Fair values of financial instruments are based on quoted market price. If quoted market price is not available, fair values are calculated with valuation techniques which are considered to be reasonable. As the fair value determination takes variable factors into consideration, such fair values may fluctuate by using different assumptions.

Assets

(1) Cash and deposits, (5) Cash segregated as deposits, and (9) Short-term guarantee deposits

The fair values are measured at the carrying values as they approximate the carrying values because of their short maturities.

(2) Notes and accounts receivable-trade

With respect to notes and accounts receivable with short maturities, fair values are measured at the carrying values as they approximate the carrying values.

The fair values of receivables settled over long-term period such as installment sales receivable are measured at the present value of the future cash inflow discounted at the discount rate considering government risk free rates and credit risk rates.

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(3) Leases receivable and lease investment assets

The fair values of leases receivable and lease investment assets are measured at the present value of the future cash inflow discounted at the discount rate considering government risk free rates and credit risk rates.

(4) Short-term investment securities, operational investment securities and investment securities and (7)Trading instruments

The fair values of equity securities are measured at the quoted market price of the stock exchange. The fair values of bonds are measured at the quoted market price of the stock exchange or the quoted price provided by financial institutions. The fair values of investment trusts are measured at the price quoted by financial institutions. The fair values of investments in funds are measured at the fair values of partnership net assets based on the Group’s percentage share in the contributed capital, if such fair values are available. Equity securities held by some overseas subsidiaries adopting International Financial Reporting Standards are measured at fair value.

(6) Operational loans receivable

The fair values of operational loans receivable are measured at the present value of the future cash inflows, which are classified into different types of receivables and discounted at the rate determined by reference to an appropriate index such as a government bond yield adjusted with relevant credit risk.

As the estimated credit losses are provided based on the individual assessment of recoverability of loans receivable held by certain consolidated subsidiaries with corporate restructuring business, the fair values are measured at the carrying values less allowance for doubtful accounts since they approximate the measured values.

(8) Margin transaction assets

With respect to receivables from customers of margin transaction assets, the fair values are measured at the carrying value as the interest rates of the loans are floating rate and reflect the market interest rate within a short period so that, unless the borrower’s credit condition changes significantly, the fair values are considered to approximate the carrying value.

Of these receivables, the fair values of those without set maturity date due to certain conditions such as the placing of a cap on the amount of loans which do not exceed the value of pledged assets, are measured at the carrying value. Based on the expected repayment term and the terms of interest, the fair values are considered to approximate the book values. With respect to cash deposits as collateral for securities borrowed of margin transaction assets, the fair values are measured at the carrying value as for their short maturities.

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Liabilities

The fair values of liabilities other than (7)Bonds payable and (8)Long-term loans payable are measured at the carrying values as they approximate the carrying values because of their short maturities.

(7) Bonds payable

With respect to bonds payable with maturity of within one year, the fair values are measured at the carrying values as they approximate the carrying values because of their short maturities.

With respect to bonds payable with maturity of over one year and floating interest rates, the fair values are measured at the carrying value as the interest rates of the debt reflect the market interest rate within a short period and as the credit condition of consolidated subsidiaries that obtained the debt are not expected to change significantly.

(8) Long-term loans payable

With respect to long-term debt with floating interest rates, the fair values are measured at the carrying value as the interest rates of the debt reflect the market interest rate within a short period and as the credit condition of consolidated subsidiaries that obtained the debt are not expected to change significantly.

With respect to long-term loans payable with fixed rate, the fair values are measured at the present value of the future cash outflows, where the sum of principal and interest at certain intervals, or the sum of principal and interest determined using interest swap rates for which the special hedge accounting treatment is used, is discounted at the discount rate that may be applicable for similar types of debt.

Derivatives

Fair value of foreign currency forward contract was stated on future exchange rate at balance sheet date, whereas fair value of foreign currency spot contracts was based on spot rate at the balance sheet date. Fair value of index futures was based on market closing price at the balance sheet date in each stock market. For certain loans payable for which interest rate swaps were used to hedge the interest-rate fluctuations, the fair values of derivative financial instruments were included in the fair value of loans payable as hedged items.

2. The following securities were stated at cost because the fair value could not be reliably determined. They were excluded from “Assets-(4) Short-term investment securities, operational investment securities and investment securities” of “Fair value of financial instruments”.

As at 31 March 2011 Classification	Carrying amount
	(millions of Yen)
Available-for-sale securities		91,543
Investments in subsidiaries and affiliates		38,395

The securities above were unlisted equity securities and investments in funds whose investments were mainly composed of unlisted equity securities.

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NOTES TO PER SHARE INFORMATION

	Year ended 31 March 2011
	Yen
Net assets per share		19,610.64
Net income per share		236.09

SUBSEQUENT EVENT

On 25 March 2011, the board of directors of the Company, in preparation for the Company’s listing on the main board of the Hong Kong Stock Exchange, approved an offering of depository receipts representing the Company’s common shares (the “HDRs”) in Hong Kong and certain other overseas markets excluding the United States and Canada (the “HDR offering”), the issuance and offering (the “Underlying Share Offering”) of common shares of the Company to be represented by the HDRs excluding common shares for the over-allotment (the “underlying original shares”), and the issuance and offering of common shares up to the number of shares (the “underlying shares”) represented by the over-allotment portion of the HDR offering (the “Over-allotment option”).

The outline of HDR offering and Underlying Share Offering are as stated below. Subsequently on 12 April 2011, the related capital payment of Underlying Share Offering was completed.

1. Method of offering

The underlying original shares will be issued to Daiwa Capital Markets Hong Kong Limited through a third-party allocation of 1,750,000 shares.

Daiwa Capital Markets Hong Kong Limited will then delivery these shares immediately to JPMorgan Chase Bank, N.A. (the “Depository Bank”)’s account which is the depository bank for the HDR offering. The shares will be held by the depositary bank as the underlying assets of the HDR offering. The issue price (offering price) of the underlying original shares is to be the same as the price to be paid for the shares, which is 10 times the price to be paid in for HDRs.

2. Class and number of underlying shares offered (Number of HDR offered)

1,750,000 common shares

(17,500,000 HDRs. Investors will receive HDRs in place of the underlying original shares. 1 HDR represents 1/10 of a common share.

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Furthermore, accompanied by the HDR offering, depending on the level of demand for the offering, the Company offers an over-allotment of up to 2,500,000 additional HDRs representing shares borrowed by Daiwa Capital Markets Hong Kong Limited from the Company’s shareholder through Daiwa Securities Capital Markets Co. Ltd. In connection with this over-allotment, the Company issues to Daiwa Capital Markets Hong Kong Limited up to 250,000 common shares through a third-party allocation.)

3. Issue price

HKD 777.20 per share

4. Total issue amount

HKD 1.36 billion (14.8 billions of yen)

5. Total issue amount transferred to capital

Capital stock 7.4 billions of yen

6. Purpose

The total amount raised through the Underlying Share Offering and the third-party allocation will go towards direct investment in growing companies in and out of Japan, funds established with partners in developing countries mainly in Asia and funds in Japan as self investment fund. The rest will be invested in financial subsidiaries which use the internet as their main channel (and related subsidiaries), as well as provided to overseas financial institutions in the form of investment and financing (including investment and financing made through subsidiaries.)

Notes: Conversion from Hong Kong dollars to Japanese yen is made at the exchange rate on the payment date.

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The outline of the Over-allotment option is as follows:

1. Class and number of shares offered

250,000 common shares

2. Issue price

HKD 777.20 per share

3. Total issue amount

HKD 194,300,000 (¥2,039 million)

4. Total issue amount transferred to capital

Capital stock HKD 97,150,000 (¥1,019 million)

5. Allotee

Daiwa Capital Markets Hong Kong Limited

6. Purpose

As stated “6. Purpose” in the “Outline of HDR offering and Underlying Share Offering”

Notes: Payment for the Over-allotment option was completed by Daiwa Capital Markets Hong Kong Limited on 9 May 2011.

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BALANCE SHEET

SBI Holdings, Inc. (the “Company”)

(Amounts are rounded down to the nearest millions of Japanese Yen)

	As at 31 March 2011
Assets
Current assets
Cash and deposits		10,903
Accounts receivable-trade		903
Accounts receivable-others		13,839
Real estate for sale		4,792
Real estate for sale in progress		6,244
Operational investment securities		27,210
Allowance for investment losses		(248	)
Short-term investment securities		11,000
Prepaid expenses		292
Operational loans receivable		120
Short-term loans receivable		51,875
Deferred tax assets		4,688
Others		5,016
Allowance for doubtful accounts		(1,668	)
Total current assets		134,970
Non-current assets
Property and equipment
Buildings		5,218
Furniture and fixtures		250
Vehicles		3
Land		2,757
Construction in progress		76
Total property and equipment		8,306
Intangible assets
Patents		7
Trade mark		24
Software		786
Telephone rights		5
Total intangible assets .		824

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	As at 31 March 2011
Investments and other assets
Stocks of subsidiaries and affiliates		328,229
Allowance for investment losses		(1,464	)
Investments in other securities of subsidiaries and affiliates		49,667
Investment securities		4,173
Investments in subsidiaries and affiliates other than equity securities		41
Long-term loans receivable from subsidiaries and affiliates		2,498
Long-term loans receivable from employees		535
Long-term prepaid expenses		115
Lease and guarantee deposits		1,696
Deferred tax assets		5,376
Others		10
Total investments and other assets		390,880
Total non-current assets		400,010
Deferred charges
Stock issuance costs		152
Bonds issuance costs		221
Total deferred charges		374
Total assets		535,355
Liabilities
Current liabilities
Short-term loans payable		138,768
Current portion of bonds payable		70,000
Accounts payable		857
Accrued expenses		271
Deposits received		223
Others		10
Total current liabilities		210,131
Non-current Liabilities
Asset retirement obligation		114
Long-term deposits received		5,353
Total non-current liabilities		5,468
Total liabilities		215,599

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	As at 31 March 2011
Net assets
Shareholders’ equity
Capital stock		73,236
Capital surplus
Legal capital surplus		114,716
Other capital surplus		101,179
Total capital surplus		215,896
Retained earnings
Other retained earnings
Retained earnings brought forward		40,849
Total retained earnings		40,849
Treasury stock		(246	)
Total shareholders’ equity		329,734
Valuation and translation adjustments
Unrealized losses on available-for-sale securities		(9,979	)
Total valuation and translation adjustments		(9,979	)
Total net assets		319,755
Total liabilities and net assets		535,355

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STATEMENT OF OPERATIONS

SBI Holdings, Inc.

(Amounts are rounded down to the nearest millions of Japanese Yen)

	Year ended 31 March 2011 (From 1 April 2010 to 31 March 2011)
Net sales		28,191
Cost of sales		16,118
Gross profit		12,072
Selling, general and administrative expenses		7,304
Operating income		4,767
Non-operating income
Interest income		1,781
Dividend income		57
Others		152
Total non-operating income		1,991
Non-operating expense
Interest expense		3,843
Amortization of bond issuance costs		611
Foreign exchange losses		438
Others		512
Total non-operating expense		5,405
Ordinary income		1,353
Extraordinary income
Gains on disposal of investment in subsidiaries and affiliates		16,471
Others		27
Total extraordinary income		16,499
Extraordinary expense
Losses on retirement of non-current assets		43
Losses on disposal of investment in subsidiaries and affiliates		2,078
Losses on valuation of investment in subsidiaries and affiliates		4,918
Losses on valuation of investment securities		26
Others		668
Total extraordinary expense		7,736
Income before income taxes		10,116
Income taxes-current		(4	)
Income taxes-deferred		(1,010	)
Total income taxes		(1,014	)
Net income		9,101

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STATEMENT OF CHANGES IN NET ASSETS

SBI Holdings, Inc.

(Amounts are rounded down to the nearest millions of Japanese Yen)

	Year ended 31 March 2011 (From 1 April 2010 to 31 March 2011)
SHAREHOLDERS’ EQUITY
Capital stock
Balance at the end of previous year		55,284
Changes during the year
Issuance of new stock		17,952
Total changes during the year		17,952
Balance at the end of current year		73,236
Capital surplus
Legal capital surplus
Balance at the end of previous year		96,764
Changes during the year
Issuance of new stock		17,952
Total changes during the year		17,952
Balance at the end of current year		114,716
Other capital surplus
Balance at the end of previous year		101,180
Changes during the year
Disposal of treasury stock		(0	)
Total changes during the year		(0	)
Balance at the end of current year		101,179
Total capital surplus
Balance at the end of previous year		197,944
Changes during the year
Issuance of new stock		17,952
Disposal of treasury stock		(0	)
Total changes during the year		17,951
Balance at the end of current year		215,896
Retained earnings
Other retained earnings
Retained earnings brought forward
Balance at the end of previous year		33,424
Changes during the year
Dividends		(1,676	)
Net income		9,101
Total changes during the year		7,424
Balance at the end of current year		40,849

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	Year ended 31 March  2011 (From 1 April 2010 to 31 March 2011)
Total retained earnings
Balance at the end of previous year		33,424
Changes during the year
Dividends		(1,676	)
Net income		9,101
Total changes during the year		7,424
Balance at the end of current year		40,849
Treasury stock
Balance at the end of previous year		(246	)
Balance at the end of current year		(246	)
Total shareholders’ equity
Balance at the end of previous year		286,405
Changes during the year
Issuance of new stock		35,904
Dividends		(1,676	)
Net income		9,101
Disposal of treasury stock		(0	)
Total changes during the year		43,328
Balance at the end of current year		329,734
Valuation and translation adjustments
Unrealized losses on available-for-sale securities
Balance at the end of previous year		(4,433	)
Changes during the year
Net changes other than shareholders’ equity		(5,546	)
Total changes during the year		(5,546	)
Balance at the end of current year		(9,979	)
Total valuation and translation adjustments
Balance at the end of previous year		(4,433	)
Changes during the year
Net changes other than shareholders’ equity		(5,546	)
Total changes during the year		(5,546	)
Balance at the end of current year		(9,979	)
Total net assets
Balance at the end of previous year		281,972
Changes during the year
Issuance of new stock		35,904
Dividends		(1,676	)
Net income		9,101
Disposal of treasury stock		(0	)
Net changes other than shareholders’ equity		(5,546	)
Total changes during the year		37,782
Balance at the end of current year		319,755

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NOTES TO THE FINANCIAL STATEMENTS

SIGNIFICANT ACCOUNTING POLICIES

1. Valuation method of significant assets

(1) Stocks of subsidiaries and affiliates

cost determined by the moving-average cost method

(2) Available-for-sale securities (including operational investment securities)

• Listed securities

Measured at fair value, with unrealized gains and losses, net of applicable taxes, reported as a separate component of net assets. The cost of securities sold is determined based on the moving average cost method.

• Unlisted securities

Stated at cost determined by the moving-average cost method

(3) Investment in Funds

For the investments in funds which are categorized as subsidiaries and consolidated, the Company’s proportionate share in the net assets of those funds are calculated based on the provisional financial statements of the funds as at the Company’s year end and are presented as “investments in other securities of subsidiaries and affiliates” (Non-current assets).

For the investments in funds which are categorized as subsidiaries and not within the scope of consolidation, the Company’s proportionate share in the net assets of those funds are calculated based on the funds’ annual financial statement or semi-annual financial statements and are presented as “investments in other securities of subsidiaries and affiliates” (Non-current assets).

For investment in funds which are not categorized as subsidiaries, the Company’s proportionate share in the net assets of those funds are calculated based on the funds’ annual financial statements or interim financial statements and are presented in “operational investment securities” (Current assets).

Shares of the Company’s subsidiaries and affiliates that are held by funds are included in “Stocks of subsidiaries and affiliates” (Non-current assets) based on the Company’s percentage of shares owned.

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(4) Real estate inventories for sale

Real estate inventories for sale are stated at cost determined by the specific identification method. Balance sheet account balance is measured at the lower of cost or net realizable value.

(5) Derivative contracts

Derivative contracts are measured at fair value.

2. Depreciation method of depreciable assets

(1) Property and equipment

Property and equipment are stated at cost less accumulated depreciation, while the straight-line method is applied to buildings. The range of useful lives is principally from 5 to 50 years for buildings, from 4 to 20 years for furniture and fixtures, and from 5 to 6 years for vehicles.

(2) Intangible assets

Intangible assets are amortized using the straight-line method. Software used for internal purposes is amortized using the straight- line method over the estimated useful life of the software (5 years).

3. Recognition and measurement of significant provisions and allowances

(1) Allowance for investment losses

Allowance for investment losses for operational investment securities and investment securities are provided based on the estimated losses of the investment and the financial condition of the investees.

(2) Allowance for doubtful accounts

Allowance for doubtful accounts is provided based on the Company’s past credit loss experience and an evaluation of the recoverability of the outstanding receivables including notes and accounts receivable-trade, and operational loans receivable.

4. Recognition for net sales and cost of sales

(1) Net sales and cost of sales

Net sales primarily consist of revenue from operational investment securities, revenue from real estate business, and revenue from dividend income. The costs of sales principally consist of the cost of operational investment securities, provision of allowance for investment losses and cost of real estate business.

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(2) Revenue and cost of operational investment securities

Revenue from operational investment securities consists of proceeds from the sales of operational investment securities and securities held by funds and interest and dividend income from these securities. Cost of operational investment securities consists of the cost of operational investment securities and securities held by funds, write down of operational investment securities and securities held by funds, and fees related to securities transactions.

(3) Dividend income

Dividends from subsidiaries and affiliates are recorded as dividend income which is included in net sales in the statement of operations.

5 Other significant accounting policies for financial statements

(1) Deferred charges

(a) Stock issuance costs

Stock issuance costs are amortized over 3 years by using the straight-line method.

(b) Bond issuance costs

Bond issuance costs are amortized over the bond term by using straight-line method.

(2) Translations of significant assets and liabilities denominated in foreign currencies

Monetary assets and liabilities denominated in foreign currencies are translated into Japanese Yen using the exchange rates at the balance sheet date. The resulting translation gain or loss is recognized in income.

(3) Accounting for significant hedging transactions

(a) Accounting for hedges

Foreign currency forward contracts are used to hedge foreign currency exposures and denominated in foreign currencies are translated at the contracted rates if the forward contracts are qualified for hedge accounting.

(b) Hedging instruments and hedged item

(i) Hedging instruments

Foreign exchange forward contracts

(ii) Hedged item

Foreign currency-denominated receivables and payables.

There were no foreign currency forward contracts outstanding at the end of the year.

(c) Hedging policy

For foreign currency denominated transactions, the foreign currency forward contracts are used to hedge foreign currency exposures.

(d) Assessment of effectiveness between the hedging instruments and the hedged items

The Company does not assess hedge effectiveness of foreign exchange forward contracts which qualify for hedge accounting and meet specific matching criteria.

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(4) Accounting for investments in funds

As for the investments in funds categorized as subsidiaries and are included in the scope of consolidation, the Company’s proportionate share in the net assets and revenue/expenses of those funds are calculated based on the provisional financial statements of the funds as at the Company’s year end and are presented as “Investment in other securities of subsidiaries and affiliates” (Non-current assets) and revenue/expenses. For the investment in funds categorized as subsidiaries but not within the scope of consolidation, the Company’s proportionate share in the net assets and revenue/expenses of those funds are calculated based on the funds’ annual financial statements or semi-annual financial statements and are presented as “Investments in other securities of subsidiaries and affiliates” (Non-current assets) and revenue/expenses. For investment in funds, which are not categorized as subsidiaries, the Company’s proportionate share in the net assets and revenue/expenses of those funds are calculated based on the funds’ annual financial statements or interim financial statements and are presented in “Operational investment securities” (Current assets) and revenue/expenses. The Company’s proportionate share of investments in subsidiaries or affiliates held by funds and related gains/losses from the sale are presented as “Stocks of subsidiaries and affiliates” (Non-current assets) and “Gains/losses on disposal of investment in subsidiaries and affiliates” (Extraordinary income/expense).

(5) Accounting for consumption tax

The amounts in the financial statements are presented without consumption or local consumption taxes. Nondeductible consumption taxes are recorded as selling, general and administrative expenses.

(6) Change in significant accounting policies

The company has adopted “Accounting Standard for Asset Retirement Obligation” (ASBJ Statement No. 18 issued on 31 March 2008) and “Guidance for Accounting Standard for Asset Retirement Obligation” (ASBJ Guidance No. 21 issued on 31 March 2008). The operating income and ordinary income was decreased by ¥8 million and the income before income taxes was decreased by ¥79 million for the year ended 31 March 2011 as a result of the change.

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ADDITIONAL INFORMATION

Execution of Share Exchange Agreement

The Company and its consolidated subsidiary, SBI VeriTrans Co., Ltd. (“SBI VeriTrans”), announced that at board meetings held on 24 February 2011, their respective boards of directors approved to make SBI VeriTrans a wholly-owned subsidiary of the Company through a share exchange subject to approval at SBI VeriTrans’ annual meeting of shareholders, and the two companies executed a share exchange agreement. Outline of the transactions are described in additional information in Notes to the consolidated financial statements.

NOTES TO BALANCE SHEETS

1. Pledged assets

Pledged assets consisted of the following:

	As at 31 March 2011
	(millions of Yen)
Stocks of subsidiaries and affiliates		154,592
Investment securities		1,896

The assets above were pledged as collateral for short-term loans payable of ¥80,900 million.

2. Accumulated depreciation

	As at 31 March 2011
	(millions of Yen)
Property and equipment		1,515

3. Contingent Liabilities:

(1) Guarantees for loans and foreign exchange forward contract of subsidiaries and affiliates ¥ 2,152 million

(2) Others

SBI Liquidity Market Co., Ltd. enters into banking cover deals to ensure liquidity in the foreign exchange margin trading. The Company guarantees the current and future obligation relating to this business which SBI Liquidity Market Co., Ltd. owes to counterparties. As at the end of the period, there are no outstanding obligations.

With respect to the currency margin transaction between SBI Liquidity Market Co., Ltd. and SBI SECURITIES Co., Ltd., a consolidated subsidiary of the Company linked to the foreign exchange margin tradings between SBI SECURITIES Co., Ltd., and its customers, the Company guarantees all obligations which SBI SECURITIES Co., Ltd. owes to SBI Liquidity Market Co., Ltd. As at the end of the period, there are no outstanding obligations.

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4. Assets and liabilities of subsidiaries and affiliates:

	As at 31 March 2011
	(millions of Yen)
(1)    Short-term receivables		77,458
(2)    Long-term receivables		2,502
(3)    Short-term payables		87,758
(4)    Long-term payables		4,821

NOTES TO STATEMENT OF OPERATIONS

Transactions with subsidiaries and affiliates

	(millions of Yen)
Sales		18,988
Purchases		3,419
Other transactions		16,848

NOTES TO STATEMENTS OF CHANGES IN NET ASSETS

Class and number of treasury stock

	As at 31 March 2011
	(shares)
Common shares		14,621

NOTES TO INCOME TAXES

Deferred tax assets are mainly due to losses on valuation of investment securities and tax loss carried forward, while deferred tax liabilities are mainly due to unrealized losses on available-for-sale securities.

NOTES TO LEASED NONCURRENT ASSETS

Other than recorded as noncurrent assets on the balance sheet, the Company uses office furniture and fixtures under finance lease agreements where the ownership is not transferred.

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RELATED PARTY TRANSACTIONS

Transactions with subsidiaries and affiliates

Type	Company name	Ownership (%)	Business or position	Transaction description	Amounts		Account name	Balance
					(millions of yen)			(millions of Yen)
Subsidiary	SBI Investment Co., Ltd.	100	Interlocking directors	Finance (*1)		12,800	Short-term loans receivable		8,300
Subsidiary	SBI Incubation Co., Ltd.	100 (Indirect : 79.8)	Interlocking directors	Finance (*1)		15,123	Short-term loans receivable		10,471
Subsidiary	e-Research Inc.	100	Interlocking directors	Underwriting of bond		22,000	Short-term investment securities		11,000
				Borrowing (*1)		9,000	Short-term loans payable		4,500
Subsidiary	SBI Card Co., Ltd.	97.8	Interlocking directors	Capital contribution		6,474	—		—
				Finance (*1)		27,512	Short-term loans receivable		9,066
Subsidiary	SBI Guarantee Co., Ltd.	100	—	Finance (*1)		7,424	Short-term loans receivable		447
Subsidiary	CEM Corporation	79.7 (Indirect : 57.1)	Interlocking directors	Finance (*1)		19,800	Short-term loans receivable		9,800
Subsidiary	SBI Liquidity Market Co., Ltd.	100	Interlocking directors	Borrowing (*1)		5,500	Short-term loans payable		2,000
Subsidiary	SBI KOREA HOLDINGS CO., LTD.	100	Interlocking directors	Capital contribution		7,110	—		—
Subsidiary	SBI VEN HOLDINGS PTE. LTD.	100	Interlocking directors	Capital contribution		11,127	—		—
				Finance (*1)		6,912	Short-term loans receivable		1,382
				Sales of Stocks of subsidiaries and affiliates (*2)		13,474	Accounts receivable-others		13,474
				Sale of operational investment securities (*3)		4,963	—		—
Affiliate	SBI Sumishin Net Bank, Ltd.	50	Interlocking directors	Capital contribution		5,999	—		—
Subsidiary	Alberich LLC	100 (Indirect : 100)	—	Finance (*1)		7,800	Short-term loans receivable		3,890
Subsidiary	SBI SECURITIES Co., Ltd.	100	Interlocking directors	Borrowing (*1)		345,600	Short-term loans payable		80,900
				Pledge of collateral (*4)		156,488	Stocks of subsidiaries and affiliates		154,592
							Investment securities		1,896

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Note:

(*1) The interest rate was determined based on the market interest rate.

(*2) The sale price of stocks of subsidiaries and affiliates was determined based on the share price calculated by independent third party.

(*3) The sale price of operational investment securities was determined based on the share price calculated by independent third party.

(*4) Stocks of subsidiaries and affiliates and investment securities were pledged for short-term loans payable to the subsidiary.

Transaction with the executives and main individual share holders

Type	Name	Ownership (%)	Business or position	Transaction description	Amounts (millions of Yen)	Account name	Balance (millions of Yen)
Director	Yoshitaka Kitao	(Ownership by the related party) Direct : 1.6	The Company’s Representative and CEO	Sales of Stocks of subsidiaries and affiliates	999	—	—

Note: The sale price of stocks of subsidiaries and affiliates was determined based on the share price calculated by independent third party.

NOTES TO PER SHARE INFORMATION

	Year ended 31 March 2011
	Yen
Net assets per share		16,044.40
Net income per share		473.84

SUBSEQUENT EVENT

On 25 March 2011, the board of directors of the Company, in preparation for the Company’s listing on the main board of the Hong Kong Stock Exchange, approved an offering of depository receipts representing the Company’s common shares (the “HDRs”) in Hong Kong and certain other overseas markets excluding the United States and Canada (the “HDR offering”), the issuance and offering (the “Underlying Share Offering”) of common shares of the Company to be represented by the HDRs excluding common shares for the over-allotment (the “underlying original shares”), and the issuance and offering of common shares up to the number of shares (the “underlying shares”) represented by the over-allotment portion of the HDR offering (the “Over-allotment option”).

The outline of HDR offering and Underlying Share Offering are as described in subsequent event in Notes to the consolidated financial statements.

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Audit Report Concerning Consolidated Financial Statements

(TRANSLATION)

Independent Auditors’ Report (certified copy)

INDEPENDENT AUDITORS’ REPORT

18 May 2011

To the Board of Directors of

SBI Holdings, Inc.:

Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:	Kiyoshi Matsuo
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:	Yasuyuki Onaka
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:	Kunikazu Awashima

Pursuant to the fourth paragraph of Article 444 of the Companies Act, we have audited the consolidated financial statements, namely, the consolidated balance sheet as of 31 March 2011 of SBI Holdings, Inc. (the “Company”) and consolidated subsidiaries, and the related consolidated statements of operations and changes in net assets, and the related notes for the fiscal year from 1 April 2010 to 31 March 2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company and consolidated subsidiaries as of 31 March 2011, and the consolidated results of their operations for the year then ended in conformity with accounting principles generally accepted in Japan.

As discussed in the Note on subsequent events, at the meeting held on 25 March 2011, the Board of Directors approved new share issuances and related offering of common shares in connection with the secondary listing of the Company’s Hong Kong Depositary Receipts on the Main Board of The Stock Exchange of Hong Kong Limited. The new share issuances through the offering were completed on 12 April 2011 and 9 May 2011.

Our firm and the engagement partners do not have any financial interest in the Company for which disclosure is required under the provisions of the Certified Public Accountants Act.

The above represents a translation, for convenience only, of the original report issued in the Japanese language.

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Audit Report Concerning Non-Consolidated Financial Statements

(TRANSLATION)

Independent Auditors’ Report (certified copy)

INDEPENDENT AUDITORS’ REPORT

18 May 2011

To the Board of Directors of

SBI Holdings, Inc.:

Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:	Kiyoshi Matsuo
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:	Yasuyuki Onaka
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:	Kunikazu Awashima

Pursuant to the first item, second paragraph of Article 436 of the Companies Act, we have audited the financial statements, namely, the balance sheet as of 31 March 2011 of SBI Holdings, Inc. (the “Company”) and the related statements of operations and changes in net assets, and the related notes for the 13th fiscal year from 1 April 2010 to 31 March 2011, and the accompanying supplemental schedules. These financial statements and the accompanying supplemental schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and the accompanying supplemental schedules. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and the accompanying supplemental schedules referred to above present fairly, in all material respects, the financial position of the Company as of 31 March 2011 and the results of its operations for the year then ended in conformity with accounting principles generally accepted in Japan.

As discussed in the Note on subsequent events, at the meeting held on 25 March

2011, the Board of Directors approved new share issuances and related offering of common shares in connection with the secondary listing of the Company’s Hong Kong Depositary Receipts on the Main Board of The Stock Exchange of Hong Kong Limited. The new share issuances through the offering were completed on 12 April

2011 and 9 May 2011.

Our firm and the engagement partners do not have any financial interest in the Company for which disclosure is required under the provisions of the Certified Public Accountants Act.

The above represents a translation, for convenience only, of the original report issued in the Japanese language.

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Report by the Board of Corporate Auditors

AUDIT REPORT

With respect to the directors’ performance of their duties during the 13th fiscal year (from April 1, 2010 to March 31, 2011), the Board of Corporate Auditors has prepared this audit report after deliberations based on the audit reports prepared by each Corporate Auditor, and hereby reports as follows.

1. Method and Contents of Audit by Each Corporate Auditor and Board of Corporate Auditors

The Board of Corporate Auditors has established the audit policies, assignment of duties, etc. and received a report from each Corporate Auditor regarding the status of implementation of their audits and results thereof. In addition, the Board of Corporate Auditors has received reports from the Directors and the Accounting Auditor regarding the status of performance of their duties, and requested explanations as necessary.

In conformity with the Corporate Auditors’ auditing standards established by the Board of Corporate Auditors, and in accordance with the audit policies and assignment of duties, etc., each of the Corporate Auditors endeavored to facilitate a mutual understanding with the directors, the internal audit division, and other employees, etc., endeavored to collect information and maintain and improve the audit environment, has attended the meetings of the Board of Directors and other important meetings, received reports on the status of performance of duties from the directors and other employees and requested explanations as necessary, examined important approval/decision documents, and inspected the status of the corporate affairs and assets at the Company’s head office.

Also, each Corporate Auditor monitored and inspected the status of (i) the contents of the Board of Directors’ resolutions regarding the development and maintenance of the system to ensure that the Directors’ performance of their duties described in the Business Report complied with all laws, regulations, and the Articles of Incorporation and other systems set out in Article 100, Paragraphs 1 and 3 of the Ordinance for Enforcement of the Companies Act of Japan as being necessary for ensuring the appropriateness of the corporate affairs of a joint stock company (kabushiki kaisha), and (ii) the systems (internal control systems) based on those resolutions. With respect to internal controls over financial reporting, the Board of Corporate Auditors has received reports regarding assessments and the status of auditing of such internal controls from the Directors, etc. and Deloitte Touche Tohmatsu LLC and requested explanations as necessary. With respect to subsidiaries, each Corporate Auditor endeavored to facilitate a mutual understanding and exchanged information with the directors and corporate auditors, etc. of each subsidiary and received from subsidiaries reports on their respective business as necessary. Based on the above-described methods, each Corporate Auditor examined the business report and the supplementary statements for the relevant fiscal year under consideration.

In addition, each Corporate Auditor monitored and verified whether the Accounting Auditor maintained its independence and properly conducted its audit, received a report from the Accounting Auditor on the status of their performance of duties, and requested explanations as necessary. Each Corporate Auditor was notified by the Accounting Auditor that it had established a “system to ensure that the performance of the duties of the Accounting Auditor was properly conducted” (the matters listed in the items of Article 131 of the Company Accounting Regulations) in accordance with the “Quality Control Standards for Audits” (Business Accounting Council on October 28, 2005), and requested explanations as necessary. Based on the above-described methods, each Corporate Auditor examined the Non-Consolidated Financial Statements (the balance sheets, the statements of operations, the statements of changes in net assets, and the related notes) and the supplementary statements, and the Consolidated Financial Statements (the consolidated balance sheets, the consolidated statements of operations, the consolidated statements of changes in net assets, and the related consolidated notes) for the fiscal year under consideration.

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2. Results of Audit

(1) Results of Audit of Business Report, etc.

(i) We acknowledge that the business report and the supplementary statements fairly present the status of the Company in conformity with the applicable laws, regulations, and the Articles of Incorporation.

(ii) We acknowledge that no misconduct or material fact constituting a violation of laws, regulations, or the Articles of Incorporation was found with respect to the Directors’ performance of their duties.

(iii) We acknowledge that the Board of Director’s resolutions with respect to the internal control systems are appropriate. We did not find any matter in the Business Report or the Directors’ performance of their duties concerning the internal control systems that requiring mentioning.

(2) Results of Audit of the Non-Consolidated Financial Statements and the Supplementary Statements

We acknowledge that the methods and results of audit performed by the Accounting Auditor, Deloitte Touche Tohmatsu LLC, are appropriate.

(3) Results of Audit of the Consolidated Financial Statements

We acknowledge that the methods and results of audit performed by the Accounting Auditor, Deloitte Touche Tohmatsu LLC, are appropriate.

May 23, 2011

The Board of Corporate Auditors of SBI Holdings, Inc.
Standing Corporate Auditor
(Outside Corporate Auditor):
Susumu Watanabe	(seal)
Outside Corporate Auditor:
Ryujiro Shimamoto	(seal)
Corporate Auditor:
Atsushi Fujii	(seal)
Corporate Auditor:
Minoru Tada	(seal)

-End-

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