nomura international plc annual report

Department name

Nomura International plc Annual Report 31 March 2005

Company Registered Number 1550505

Nomura International plc

YEAR ENDED 31 MARCH 2005

DIRECTORS’ REPORT

The directors present their report and the financial statements for the year ended 31st March 2005. REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS The company’s principal activity is broking and dealing in securities and includes:

Trading and sales in fixed income and equity products, including related derivatives Investment banking services Asset and principal finance business Corporate finance and private equity

The company has a branch sales office in Spain. Subsequent to the 31st March 2005, the company has established a representative office in Vienna. The company will continue to concentrate on and expand its present activities. No significant change in the nature of these activities is foreseen. These financial statements have been prepared on a company only basis and do not include the results and net assets of the company’s subsidiary undertakings. Transactions and balances with the company’s related parties are set out in note 22 to the financial statements. RESULTS AND DIVIDEND The results for the year are set out on page 5. No interim dividends were paid (2004: £nil). The directors do not recommend the payment of a final dividend (2004: £nil). The loss after dividends transferred from reserves for the year amounted to £140,837,000 (2004: loss £30,562,000). FIXED ASSETS Movements in fixed assets are shown in note 6 to the financial statements. Additions in the year relate to the ongoing refurbishment of the company’s main business premises. DIRECTORS AND THEIR INTERESTS The directors during all or part of the year were: Yugo Ishida Director (President from 1 April 2005) Hiromi Yamaji Resigned as director 5 April 2005 Lord Marshall of Knightsbridge Chairman (Non-executive director appointed 1 October 2004) Sir Peter Walters Non-executive director (appointed 30 April 2004) Masanori Itatani Non-executive director (appointed 30 April 2004) Masafumi Nakada Non-executive director (appointed 11 April 2005) Akira Maruyama Non-executive director (appointed 30 April 2004, resigned 1 April 2005) David Farrant Director (resigned 30 April 2004)

Annual Report Page 1 of 36


Yasushi Ii Director (resigned 30 April 2004) David Benson Director (resigned 30 April 2004) Zenji Nakamura Director (resigned 30 April 2004) Hideki Miyazaki Director (resigned 30 April 2004) No director had any beneficial interest in the share capital of the company during the year. EMPLOYEES The company operates an equal opportunities policy. The company have taken great steps to ensure all employees are aware of their obligations in ensuring that the environment remains an atmosphere conducive to good working and high performance. The company’s aim is to ensure each and every individual is shown respect, treated fairly and courteously and has equal access to further opportunity and reward based on contribution to the company. Full internal communication and access to training and development opportunities support this philosophy. The company is committed to taking positive action to promote equality of opportunity, which includes provision for disabled people and those whose have become disabled while employed by the company. The company’s recruitment, training and promotion procedures are all based on the requirements of a particular position. DONATIONS No political donations were made during the year (2004: £nil). Charitable donations of £98,200 (2004: £54,634) have been made. CREDITORS’ PAYMENT POLICY The company does not follow any code or standard on payment practice with its suppliers but it is the policy of the company to agree terms of payment when orders for goods or services are placed and to pay in accordance with those terms. Trade creditor days as at 31st March 2005 were 14 (2004: 14). AUDITORS The Auditors, Ernst & Young LLP, have expressed their willingness to continue in office and a resolution re-appointing them as Auditors and authorising the Directors to determine their remuneration will be proposed at the Annual General Meeting. BY ORDER OF THE BOARD Fergus H Speight [signed] Secretary 14th June 2005



YEAR ENDED 31 MARCH 2005 STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS Company law requires the directors to prepare financial statements for each financial year that give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing those financial statements the directors are required to:

select suitable accounting policies and apply them consistently make judgements and estimates that are reasonable and prudent state whether applicable accounting standards have been followed, subject to any material

departures disclosed and explained in the financial statements prepare the financial statements on a going concern basis, unless it is inappropriate to presume that

the company will continue in business The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.



YEAR ENDED 31 MARCH 2005 INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF NOMURA INTERNATIONAL PLC We have audited the company’s financial statements for the year ended 31 March 2005, which comprise the Profit and Loss Account, Reconciliation of Shareholders' Funds, Balance Sheet and the related notes 1 to 24. These financial statements have been prepared on the basis of the accounting policies set out therein. This report is made solely to the company's members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS As described in the Statement of Directors' Responsibilities the company's directors are responsible for the preparation of the financial statements in accordance with applicable United Kingdom law and accounting standards. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and United Kingdom Auditing Standards. We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors' Report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and transactions with the company is not disclosed. We read the Directors' Report and consider the implications for our report if we become aware of any apparent misstatements within it. BASIS OF AUDIT OPINION We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. OPINION In our opinion the financial statements give a true and fair view of the state of affairs of the company as at 31 March 2005 and of the loss of the company for the year then ended and have been properly prepared in accordance with the Companies Act 1985. Ernst & Young LLP [signed] Ernst & Young LLP Registered Auditor London 14th June 2005



PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 MARCH 2005

Year ended Year ended 31 March 2005 31 March 2004Note £’000 £’000 £’000 £’000 1(c), 2 TRADING PROFIT 252,586 202,271 1(d) Interest receivable and similar income 717,473 519,2081(d) Interest payable and similar charges (675,545) (435,510) Net interest receivable and similar income 41,928 83,698 General and administrative expenses (398,795) (321,837) OPERATING LOSS (104,281) (35,868) Profit on disposal of fixed asset investments 4,938 - Dividends from fixed asset investments 650 - Interest payable on subordinated

borrowings

(4,161)

(5,262) 3 LOSS ON ORDINARY ACTIVITIES

BEFORE TAXATION

(102,854)

(41,130) 5 Tax on loss on ordinary activities (37,983) 10,568 LOSS ON ORDINARY ACTIVITIES

AFTER TAXATION

(140,837)

(30,562) Dividends on equity shares - -

RETAINED LOSS FOR THE YEAR

(140,837)

(30,562)

All profits and losses noted above are derived from continuing activities. There are no recognised gains or losses other than the loss attributable to the shareholders of the company as disclosed above. The notes on pages 8 to 36 form part of these financial statements.



RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS FOR THE YEAR ENDED 31 MARCH 2005

2005 2004 £’000 £’000 Total recognised gains and losses relating to year (140,837) (30,562) Net reduction in shareholders’ funds (140,837) (30,562) Opening shareholders’ funds 890,350 920,912 Closing shareholders’ funds 749,513 890,350

The notes on pages 8 to 36 form part of these financial statements.



BALANCE SHEET - 31 MARCH 2005

Note 2005 2005 2004 2004 £’000 £’000 £’000 £’000 FIXED ASSETS 6 Tangible assets 61,927 50,462 7 Investments 9,448 10,423 71,375 60,885 CURRENT ASSETS 8 Inventory - securities long positions

and other financial instruments 16,066,990

16,702,829 9 Debtors 32,851,161 30,034,98711 Investments - time deposits 1,905,340 1,531,69311 Cash at bank and in hand 68,456 54,722 50,891,947 48,324,23112 CREDITORS (amounts falling due

within one year) (49,539,201)

(47,161,830) NET CURRENT ASSETS 1,352,746 1,162,401 TOTAL ASSETS LESS CURRENT

LIABILITIES 1,424,121

1,223,286 CREDITORS (amounts falling due

after more than one year)

13 Subordinated debt (625,738) (284,066) 14 Provisions for liabilities and

charges (48,870) (48,870)

NET ASSETS 749,513 890,350 CAPITAL AND RESERVES 15 Called up share capital 668,621 668,62116 Capital redemption reserve 121,612 121,61216 Profit and loss account (40,720) 100,117 SHAREHOLDERS’ FUNDS - Equity 749,513 890,350

APPROVED BY THE BOARD ON: 14th June 2005 Yugo Ishida [signed] Director The notes on pages 8 to 36 form part of these financial statements.



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 1. ACCOUNTING POLICIES (a) Basis of Accounting The financial statements have been prepared on a going concern basis and in accordance with

applicable Accounting Standards under the historical cost convention, as modified by the inclusion of trading securities at market value as defined in Note f(i) below. In so far as the valuation of these positions at market value represents a departure from the accounting and disclosure requirements of the Companies Act 1985, the directors consider it necessary for the financial statements to show a true and fair view. The effects of this departure have not been disclosed since, along with companies in a similar business, the company does not retain records on a historical cost basis, which would provide reasonable quantification.

The company has taken advantage of the exemption contained within the Companies Act 1985 from

having to prepare consolidated financial statements since it is a wholly owned subsidiary of Nomura Europe Holdings plc, a company registered in the UK. These financial statements have been prepared on a company only basis.

Provisions for liabilities and charges in relation to the company’s contingent liability has been disclosed on the face of the balance sheet and the comparative figures have been amended accordingly.

(b) Trade Recognition Transactions in securities are accounted for on a trade date basis. (c) Trading Profit Net trading profit comprises broking, management and underwriting commission from the primary

market, broking commission and dealing profit from the secondary market and income derived from private equity business. Costs directly attributable to trading are treated as a deduction from trading profit to more fairly represent dealing profit and commission sharing agreements.

(d) Interest Receivable and Similar Income/Interest Payable and Similar Charges

Interest receivable and payable includes dividends and interest paid and earned on securities positions, securities bought and sold under repurchase agreements and amounts receivable and payable on bank deposits and bank borrowings.

(e) Foreign Currencies All monetary assets and liabilities in foreign currencies are expressed in Sterling at rates of exchange

ruling on the balance sheet date. Translation differences arising from the application of closing rates of exchange are, together with exchange profits and losses which arise from normal trading activities, included in the profit and loss account. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction or at the contracted rate if the transaction is covered by forward foreign currency contracts.



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 1. ACCOUNTING POLICIES (CONTINUED) (f) Asset Valuations (i) Trading Securities

In order to present a true and fair view of the state of affairs and results of the company, and in accordance with market practice, trading securities have been valued at market value. The aggregate book quantities resulting from trading activities of individual securities giving rise to net bought or net sold positions have been dealt with as long or short positions respectively.

Private equity investments are held at the lower of cost and net realisable value, which is considered to reflect fair value given the size and liquidity of the positions. Asset and principal finance investments are stated at original cost plus accrued interest less amounts written off where there has been an impairment in value.

(g) Derivatives

Derivative instruments, as detailed in note 16, are used for trading and risk management purposes. Derivatives are measured at market or fair value, which are determined using independent price sources and industry standard modelling techniques where appropriate. In the ordinary course of business the resultant profits and losses from trading and risk management are included in trading profits. There may be circumstances, determined by specific transactions, where profits or losses on derivative contracts used for hedging may not be recognised in current trading profits but are deferred within other assets or liabilities and recognised when the cash flows that the hedges relate to occur. Assets and liabilities resulting from gains or losses on derivative and foreign exchange contracts are reported within inventory, reduced by the effects of qualifying netting agreements with counterparties.

(h) Securities Sold or Borrowed Under Repurchase Agreements

The company enters into agreements with counterparties for them to sell to the company certain securities and then repurchase them at a later date. These securities are excluded from the company’s balance sheet and the amount paid by the company is shown in debtors as collateral paid for securities purchased under agreements to resell.

The company also enters into agreements to sell certain securities to counterparties and then repurchase them at a later date. These securities are retained on the company’s balance sheet and the amount received by the company is shown within creditors as collateral received for securities sold under agreements to repurchase.

(i) Depreciation Depreciation rates are selected based on expected useful economic lives of the assets, taking into

account the expected rate of technological developments, market requirements and expected use of the assets. The selected rates are regularly reviewed to ensure they remain appropriate to the company and company’s circumstances. Fixed assets are currently depreciated on a straight-line basis in order to write off their cost over their expected useful economic lives as follows:

Long leasehold property Over the life of the lease

Furniture, equipment and software Five to ten years

Construction in progress Not depreciated until completed and transferred to asset categories above

The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 1. ACCOUNTING POLICIES (CONTINUED) (j) Pension Costs The pension cost relating to the company’s final salary section of the plan is assessed in accordance

with the advice of a qualified actuary using the projected unit method. Variations from the regular cost are spread over the average remaining service lives of current employees. The pension cost relating to the company’s contributions for the money purchase section of the plan is the actual contributions payable. The contributions are based on a percentage of salary, which is linked to relevant age bandings. Whilst the Accounting Standards Board has delayed the full implementation of FRS17, the transitional disclosure requirements under the standard are included in these financial statements.

(k) Deferred Taxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at

the balance sheet date where transactions or events that result in an obligation to pay more tax or a right to pay less tax in the future have occurred at the balance sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are the differences between the company’s taxable profits and its results as stated in the financial statements, which are capable of reversal in one or more subsequent periods.

Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which the timing differences are expected to reverse based on tax rates and laws that have been enacted or substantively enacted at the balance sheet date.

(l) Operating Leases Rental costs under operating leases are charged to the profit and loss account on a straight-line basis

over the period of the lease. (m) Cash flow Statement The company has taken advantage of the exemption under FRS 1 (revised) and has not produced a

cash flow statement, since the company has more than 90% of its voting rights controlled by Nomura Holdings Inc. in whose publicly available financial statements it is consolidated.



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 2. SEGMENTAL INFORMATION The whole of the company’s trading profit and loss before taxation is derived from broking and dealing

in securities, comprising trading and sales in fixed income and equity products and related derivatives, investment banking services, principal, corporate and asset finance and private equity, to which all net assets are attributable. Substantially all of the company’s trading profit originates in the UK and is attributable to the following revenue streams: Year ended Year ended 31 March 2005 31 March 2004 £’000 £’000 Net fees and commissions * 156,791 145,256Principal transactions ** 123,532 79,171Less: attributable transaction expenses (27,737) (22,156) Trading profit

252,586 202,271

* - ‘Net fees and commissions’ includes gains, losses and fees, net of syndication expenses arising from securities offerings in which the company acts as an underwriter or agent, and fees earned from providing financial advisory services. Such revenues do not include revenues from secondary trading activities which are included in ‘Principal transactions’. Commissions arising from broking securities are also included ** - ‘Principal transactions’ includes realised and unrealised gains and losses from proprietary trading activities, asset finance, customer trading activities and profits on disposals of related party investments (note 21).

3. LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION Loss on ordinary activities before tax for the company is stated after charging/(crediting):

Year ended Year ended 31 March 2005 31 March 2004 £’000 £’000 Wages, salaries and other personnel costs 217,587 184,043Social security costs 24,489 23,698Pension costs – defined benefit 1,439 1,495Pension costs – defined contribution 5,608 4,669Depreciation 7,680 7,255Write down on impairment review of fixed assets - 3,074Auditors' remuneration including expenses - audit 405 265 - non audit 209 307Operating lease costs - buildings 15,753 15,753 - other 323 398Interest receivable from group undertakings (141,661) (74,868)Interest payable - group undertakings 44,902 31,210Interest payable - bank loans and overdrafts * 1,088 491Interest payable - long-term loans * - 2,608* - excludes payables to group undertakings



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 4. PENSIONS SSAP 24 Disclosures The company operates a pension scheme covering 97% (2004: 97%) of employees. The scheme is

made up of two sections, a defined benefit section and a money purchase section. Staff are not required to make contributions for basic pensions.

The pension costs for the defined benefit scheme are determined with the advice of independent

qualified actuaries on the basis of triennial valuations using the projected unit method. The result of the most recent valuation, which was conducted as at 31 March 2004, is as follows:

Main assumptions % per annum Investment return - pre retirement 6.70%Investment return - post retirement 5.30%Rate of salary growth 3.90%Rate of pension increases – pre 6 April 97 0.00%Rate of pension increases – post 6 April 97 2.90%

Market value of scheme’s assets (£’000) 56,792 Level of funding, being the actuarial value of assets expressed as a percentage of the benefits accrued to members 76%

FRS 17 Disclosures (see note 1(j)) A full actuarial valuation of the defined benefit scheme was undertaken at 31 March 2004 and

updated to 31 March 2005 by William M Mercer Limited, a qualified independent actuary. The contribution rates for the defined benefit scheme during the current year were 24.5% (2004:

24.5%). Under the projected unit method the current service cost will increase as members approach

retirement. The major assumptions used by the actuary to calculate the FRS17 figures are set out below:

31 March 2005

31 March 2004

31 March 2003

% % % Rate of increase in salaries 3.90% 4.90% 4.50%Rate of increase in pensions in payment 2.90% 2.90% 2.50%Discount rate applied to scheme liabilities 5.40% 5.50% 5.40%Inflation assumption 2.90% 2.90% 2.50%



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 4. PENSIONS (CONTINUED) The assets in the scheme and the expected long-term rates of return were:

31 March 2005 31 March 2004 31 March 2003 % £’000 % £’000 % £’000Equities 6.45% 64,372 6.50% 55,703 6.35% 42,289Others 4.50% 591 3.75% 951 3.50% 1,423Market value of assets 64,963 56,654 43,712Present value of scheme liabilities (90,789)

(97,812)

(86,426)

Deficit in the scheme (25,826) (41,158) (42,714)Deferred tax asset 7,748 12,347 12,814Net pension liability (18,078) (28,811) (29,900)

The amount that would be charged to operating profit under FRS17 is set out below:

31 March 2005

31 March 2004

£’000 £’000 Current service cost 1,536 1,185Past service cost 162 -Expected return on pension scheme assets (3,680) (2,693)Interest on pension scheme liabilities 5,395 4,674 3,413 3,166

Analysis of movements in deficit during the year:

31 March 2005

31 March 2004

£’000 £’000 Deficit in scheme at beginning of year (41,158) (42,714)Current service cost (1,536) (1,185)Past service cost (162) -Expected return on pension scheme assets 3,680 2,693Interest on pension scheme liabilities (5,395) (4,674)Contributions 1,711 1,230Actuarial gain/(loss) 17,034 3,492Deficit in scheme at end of year (25,826) (41,158)



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 4. PENSIONS (CONTINUED)

The amounts under FRS17 that would be recognised in the Statement of Total Recognised Gains and Losses (STRGL) for the year are set out below: 31 March

200531 March

2004 £’000 £’000 Actual return less expected return on pension scheme assets 4,048 9,944Experience gains and losses arising on pension scheme liabilities

2,580 (113)

Changes in assumptions underlying the present value of the pension scheme liabilities 10,406 (6,339)Actuarial gain recognised in STRGL 17,034 3,492

The effects of the FRS17 pension liability on the net assets and reserves of the Company are set out

below: 31 March

200531 March

2004 £’000 £’000Net assets Net assets 749,513 890,350FRS17 net pension liability (18,078) (28,811)Net assets including FRS17 pension liability 731,435 861,539

31 March

200531 March

2004 £’000 £’000Reserves Profit and loss account (40,720) 100,117FRS17 net pension liability (18,078) (28,811)Profit and loss account including FRS17 pension liability (58,798) 71,306

FRS17 requires that a history of amounts that would be recognised in the Statement of Total Recognised Gains and Losses (STRGL) be disclosed as set out below :

31 March 2005 % £’000Difference between expected and actual return on pension scheme assets

6.20% (a) 4,048

Experience gains and losses on pension scheme liabilities 2.80% (b) 2,580Total amount recognised in STRGL 18.80% (b) 17,034



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 4. PENSIONS (CONTINUED)

31 March 2004 % £’000Difference between expected and actual return on pension scheme assets

17.60% (a) 9,944

Experience gains and losses on pension scheme liabilities 0.10% (b) (113)Total amount recognised in STRGL 3.60% (b) 3,492 31 March 2003 % £’000Difference between expected and actual return on pension scheme assets

52.80% (a) (23,079)

Experience gains and losses on pension scheme liabilities 5.57% (b) 4,818Total amount recognised in STRGL 35.96% (b) (31,077) (a): Percentage based on scheme assets (b): Percentage based on present value of pension scheme liabilities

5. TAX ON LOSS ON ORDINARY ACTIVITIES

(a) TAX CHARGE/(CREDIT) Year ended Year ended 31 March 2005 31 March 2004 £’000 £’000 UK corporation tax credit at 30% (2004: 30%) (52,356) (11,249)Tax (over)/under provided in previous years (3,085) 2,742 (55,441) (8,507) Overseas taxation credits - (61)Deferred taxation charge/(credit) (see note 10) 93,424 (2,000) Total current tax charge/(credit) for the year 37,983 (10,568)



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 5. TAX ON LOSS ON ORDINARY ACTIVITIES (CONT)

(b) RECONCILIATION OF CORPORATION TAX CREDIT

Year ended Year ended

31 March 2005 31 March 2004 £’000

£’000

Net loss before tax (102,854) (41,130)

UK Corporate tax credit at 30% (2004: 30%) (30,856) (12,339)

Effects of: Expenses not deductible for tax purposes 1,039 537Revenues deductible for tax purposes (1,004) -Timing differences - Tangible Fixed Assets (1,452) (1,674)- Deferred Income (20,757) -- Unrealised profit on inventory 7,792 4,118- General provisions (7,118) (1,859)- Others - (50)Tax (over)/under provided in previous years (3,085) 2,742Overseas tax credits - 18 Current corporation tax credit for the year

(55,441) (8,507)



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 6. TANGIBLE FIXED ASSETS

Construction Furniture, In Long Equipment, Progress Leasehold & Software TotalCost £’000 £’000 £’000 £’000 At 1st April 2004 15,734 7,576 97,677 120,987Transfers (13,451) - 13,451 -Additions 18,944 - 198 19,142Disposals - - (254) (254)FX Revaluation - - 7 7 At 31st March 2005 21,227 7,576 111,079 139,882 Depreciation At 1st April 2004 - 1,397 69,128 70,525Charged during year - 101 7,579 7,680Disposals - - (254) (254)FX Revaluation - - 4 4 At 31st March 2005 - 1,498 76,457 77,955 Net book value At 31st March 2005 21,227 6,078 34,622 61,927 At 31st March 2004 15,734 6,179 28,549 50,462



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 7. FIXED ASSET INVESTMENTS

Investment in Investment in Subsidiary Fellow Subsidiary OtherCost Undertakings Undertakings (unlisted) Total £’000 £’000 £’000 £’000 At 1st April 2004 11,131 77 3,703 14,911Additions 5 - 289 294Disposals (357) - (1,603) (1,960) At 31st March 2005 10,779 77 2,389 13,245

Provisions At 1st April 2004 3,004 - 1,484 4,488Provided during year - - - -Disposal (291) - (400) (691) At 31st March 2005 2,713 - 1,084 3,797

Net book value At 31st March 2005 8,066 77 1,305 9,448 At 31st March 2004 8,127 77 2,219 10,423

The investment in subsidiary undertakings represents the following:

Name of subsidiary

Shares/voting

rights held

Country of incorporation and

registration Principal business Nomura International Leasing Limited 100% Ireland Asset leasingNomura Nominees Limited 100% England DormantNomura Gilts Limited 100% England DormantNomura Properties Management Services Limited 100%

England Dormant

IBJ Nomura Financial Products (UK) plc*

100% England Dormant

Nomura Investments (AH) Limited 100% Guernsey InvestmentNomura Employment Services (Isle of Man) Limited 100%

Isle of Man Employment services

Opsclear Limited 100% England InvestmentNomura Phase4 Ventures Limited 100% England Investment manager

* - currently in members voluntary liquidation



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 7. FIXED ASSET INVESTMENTS (CONTINUED)

Through Nomura Phase4 Ventures Limited, the company controls the following entity: Name of subsidiary

Shares/voting

rights held

Country of incorporation and

registration Principal business Nomura Phase4 Ventures GP Limited 100% England Investment manager

During the year the company acquired 100% of the issued share capital at par, which consists of

5,000 ordinary shares at £1 each in Nomura Phase4 Ventures Limited, an investment management entity.

On 31 March 2005 the company sold its investment in Murana Investment Services N.V., a wholly

owned subsidiary incorporated in Netherlands Antillies, for a consideration of EUR 93,000. The consideration was based on the net asset value of the investment and therefore no gain or loss has been recognised.

8. INVENTORY

2005 2004 £’000 £’000 Long positions: Equity securities 446,088 305,185Debt securities 14,825,135 15,309,653Derivatives 795,767 1,087,991 16,066,990 16,702,829 Short positions (note 12): Equity securities (794,455) (770,514)Debt securities (5,627,179) (7,643,042)Derivatives (715,965) (1,207,305)

(7,137,599) (9,620,861)

Included within derivative positions above are the following positions with fellow Nomura Holdings Inc. group undertakings: Long positions with group undertakings 192,750 354,877 Short positions with group undertakings (218,180) (409,634)



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 9. DEBTORS

2005 2004 £’000 £’000 Trade debtors 3,721,076 4,530,318Collateral paid for securities purchased under agreements to resell

21,478,671 18,465,859

Collateral paid for securities borrowed 7,144,231 6,360,377Broker balances 134,616 209,370Taxation recoverable 102,865 68,620Deferred taxation (see note 10) 24,564 117,988Accrued interest and dividends receivable 228,773 271,509Prepayments and accrued income 16,365 10,946

32,851,161 30,034,987

All debtors are receivable within one year, except as follows:

2005 2004 £’000 £’000

Deferred taxation (see note 10) 21,219 122,078

Included within debtor balances above are the following balances due from fellow Nomura Holdings Inc. group undertakings:

2005 2004 £’000 £’000

Trade debtors 62,720 760,207Collateral paid for securities purchased under agreements to resell

6,593,973 5,557,695

Collateral paid for securities borrowed 3,888,592 3,520,117Broker balances 10,664 7,036Accrued interest and dividends receivable 22,682 8,893 10,578,631 9,853,948



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 10. DEFERRED TAXATION 2005

£’000 2004£’000

Deferred income 16,471 108,131Unrealised P&L on securities - (7,792)Tangible fixed assets 3,970 5,267Other short-term timing differences

4,123 12,382

24,564 117,988

Deferred taxation is expected to reverse:

Within one year 3,345 (4,090)Greater than one year 21,219 122,078 Deferred taxation 24,564 117,988 Deferred taxation movements are:

2005 2004 £’000 £’000 £’000 £’000 At 1st April 117,988 115,988Timing differences (22,424) 2,000 Adjustments to recoverable amounts (71,000)

-

(93,424) 2,000 At 31st March (included in debtors see note 9)

24,564 117,988

Deferred taxation has been recognised at 30% (2004: 30%), being the rate at which the timing differences are expected to reverse. There is no unprovided deferred taxation in the company as at 31st March 2005 (2004: £nil). The asset is recognised on the basis that the directors believe that the company will have future profits against which the deferred tax asset can be recovered.



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 11. TIME DEPOSITS AND CASH AT BANK AND IN HAND

Time deposits and cash at bank and in hand include: 2005 2004 £’000 £’000

Time deposits with fellow Nomura Holdings Inc. group undertakings

1,088,427 781,823

Cash held with fellow Nomura Holdings Inc. group undertakings

5,057 14,373

12. CREDITORS (amounts falling due within one year)

2005 2004 £’000 £’000 Loans and overdrafts 2,819,388 2,712,988Trade creditors 3,436,112 4,123,127Commercial paper issued 85,424 84,437Collateral received for securities sold under agreements to repurchase

28,647,569 23,752,929

Collateral received for securities loaned 6,956,296 6,407,753Broker balances 46,990 25,283Other tax and social security payable 3,311 2,988Accrued interest and dividends payable 134,760 170,591Accruals and deferred income 241,752 216,400Trading securities - short positions (note 8) 7,137,599 9,620,861Subordinated debt (note 13) 30,000 44,473

49,539,201 47,161,830



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 12. CREDITORS (amounts falling due within one year) (CONT)

Included within creditor balances above are the following balances due to fellow Nomura Holdings Inc. group undertakings:

2005 2004 £’000 £’000

Loans and overdrafts 2,742,844 2,709,223Trade creditors 28,685 253,257Collateral received for securities sold under agreements to repurchase

292,382 234,602

Collateral received for securities loaned 1,695,577 2,358,404Broker balances 16,684 10,729Accrued interest and dividends payable 3,497 674Accruals and deferred income 42,327 34,561Trading securities - short positions (note 8) 218,180 409,634Subordinated debt (note 13) 30,000 44,473 5,070,176 6,055,557



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 13. SUBORDINATED DEBT

Repayment date 2005 2004 £’000 £’000

Short Term (included in note 12)

Nomura Europe Holdings plc 25th September 2004 - 44,473Nomura Bank International plc 15th June 2005 30,000 - 30,000 44,473 Long Term

Nomura Bank International plc 15th June 2005 - 30,000Nomura Europe Holdings plc 30th December 2007 123,606 -Nomura Europe Holdings plc 7th March 2008 98,885 -Nomura Europe Finance NV 26th September 2010 32,429 34,318Nomura Europe Holdings plc 8th January 2011 98,885 104,642Nomura Europe Holdings plc 27th September 2011 42,026 -Nomura Europe Holdings plc 7th November 2011* 14,832 15,696Nomura Europe Holdings plc 19th March 2012 121,134 -Nomura Europe Holdings plc 27th March 2012** 93,941 99,410 625,738 284,066

* Repayment date extended from 6th November 2007 ** Repayment date extended from 27th March 2009

The legal nature of the subordinated loans differs from that usually associated with debt. In a winding up of the company no amount will be paid in respect of the subordinated debt until all other creditors have been paid in full. In addition, the company must obtain consent from the Financial Services Authority to repay any of the subordinated loans before their contracted repayment date. The interest rates on the subordinated loans are based on local inter bank borrowing rates and include a margin to reflect the subordination. Rates are generally fixed quarterly. The rate of interest applicable to the loans with maturities greater than five years are as follows: Nomura Europe Finance NV 26th September 2010 LIBOR + 0.7% Nomura Europe Holdings plc 8th January 2011 LIBOR + 0.68% Nomura Europe Holdings plc 27th September 2011 LIBOR + 0.5% Nomura Europe Holdings plc 7th November 2011 LIBOR + 0.1975% Nomura Europe Holdings plc 19th March 2012 LIBOR + 0.51% Nomura Europe Holdings plc 27th March 2012 LIBOR + 0.81%



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 14. PROVISIONS FOR LIABILITIES AND CHARGES

2005 2004

£’000 £’000 At 1st April 48,870 48,870(Released)/provided during the year - - At 31st March 48,870 48,870

The Directors have made provisions which represent their best estimate of the cost of defending and settling certain claims which may take several years or more to resolve.

15. SHARE CAPITAL

2005 Authorised Allotted and fully paid Number Number Consideration ’000 ’000 £’000 Sterling Ordinary shares of £1 each 450,000 312,407 312,407Yen Ordinary shares of ¥ 250 each 270,000 238,265 356,214Sterling Redeemable Convertible Participating Preference shares of £1 each 50,000

- -

668,621

2004 Authorised Allotted and fully paid Number Number Consideration ’000 ’000 £’000 Sterling Ordinary shares of £1 each 450,000 312,407 312,407Yen Ordinary shares of ¥250 each 270,000 238,265 356,214Sterling Redeemable Convertible Participating Preference shares of £1 each 50,000

- -

668,621

The Yen Ordinary shares of ¥250 each have all future rights and benefits based on a Sterling

exchange rate of 167.2202.



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 16. RESERVES

Capital

redemption reserve

Profit and loss

account £’000 £’000 At 1st April 2004 121,612 100,117Retained loss for the year - (140,837) At 31st March 2005 121,612 (40,720)

17. ROLE OF FINANCIAL INSTRUMENTS The company holds or issues financial instruments for two main purposes:

Trading Activities to facilitate the needs of its client base for trading purposes on its own account

Financing Activities to finance its operations to manage the interest rate and currency risk arising from its financing activities

In relation to the disclosures given below, the company has taken advantage of the exemption available under FRS13 for the exclusion of short-term debtors and creditors. A - Trading Activities Trading includes both customer-orientated activities and positions that are taken for the company’s own account. These two activities are managed together. To meet the expected needs of its client base the company maintains access to market liquidity, both by engaging in two way business with other market makers and by carrying an inventory of cash and derivatives products. The company also takes its own positions in the interest rate, credit, equity and foreign exchange markets based on expectations of future client demand and its own views on the future direction of markets. Products Traded: The financial instruments listed below are actively used by the company. They are used both to facilitate customer business, for own account trading as well as to manage risk. In the ordinary course of business these products are valued on a mark to market basis, with the resulting income being recorded in dealing profits.



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 17. ROLE OF FINANCIAL INSTRUMENTS (CONTINUED)

In addition, the resulting interest rate, credit, equity and foreign exchange risk that arises from activities in these products are captured by the Market Risk process, which is described in more detail in the Risk section below. Cash Products Government bonds, corporate bonds, asset backed bonds, convertible bonds and equities

Foreign Exchange Derivatives Forward FX contracts, currency swaps and currency options.

Interest Rate Derivatives Interest rate swaps, forward rate agreements, forwards, options and combinations of these

products. Equity Derivatives Single stock, basket and index swaps, options, warrants and combinations of these products.

Credit Derivatives Asset swaps, credit default swaps, credit options, credit baskets, credit linked notes,

collateralised debt obligations and combinations of these products. Risk Management Process: Within the company, the formal process for the management of Asset Risk Capital (ARC) is facilitated through the Capital Allocation Committee, which is a sub committee of the Financial Resources Committee. These committees are chaired by the President and Chief Financial Officer respectively. Day to day responsibility rests with the independent Risk Management function, the head of which reports to the president of Nomura International Plc and the global head of Risk Management in Tokyo. The Capital Allocation Committee approves and allocates ARC limits to strategies, desks and divisions of the company. ARC is the potential economic loss over a one-year horizon given a confidence interval of 97.7%. ARC captures market, liquidity, credit, event and operational risk. The ARC regime was introduced in April 2000 to provide a consistent group wide framework for performance evaluation and risk control.

ARC is an effective tool for performance evaluation and control but not for capital adequacy. In order to ensure capital adequacy, financial soundness is assessed under stressed conditions beyond the 97.7% confidence interval i.e. worst-case risk factor moves. Stress testing in Nomura International Plc is undertaken quarterly on the basis of historical scenario analysis. The primary mechanism for measuring and reporting market risk is VaR. The effectiveness of VaR is assessed by a comparison of actual daily trading gains/losses with the estimated VaR a process known as backtesting. VaR is only applied to those assets for which it provides a meaningful estimate of risk. Specifically VaR is not applied to private equity type of assets for which no transparent market exists.




Risk Reporting & Control is administered via the Management Information System (MIS). MIS provides daily financial indicators including profit and loss, VaR, ARC, inventory, regulatory capital, unsecured funding and all related limits. Monitoring is applied at all levels in the business hierarchy, specifically trading strategy, trading desk, division and firm wide.

The table below illustrates by major risk category the VaR during the financial year ended 31st March 05. It shows the highest, lowest and average VaR during the financial year:

2005 2004 Average High Low Average High Low £’000 £’000 £’000 £’000 £’000 £’000

Equity and Equity derivatives 3,527 5,338 1,478 5,336 7,410 2,676Bonds, Interest rate and Credit derivatives 3,801 6,575 2,125

3,411 6,439 1,521

Foreign exchange 33 51 23 57 92 18Total VAR * 5,829 7,386 3,954 6,842 9,689 5,023 * - The total VAR figure shown for the company as a whole is less than the arithmetic sum of the individual risk categories due

to the effects of diversification The company’s Investment Evaluation & Credit (IEC) function is responsible for managing credit risks to which the firm is exposed in the nature of its business. The IEC function is independent of the business areas and reports directly to the head of Risk Management and to the company president who also chairs the company’s Credit Committee.

Counterparty exposure is managed through a process of limit setting and exception reporting with credit policy setting the maximum exposure and tenor based on credit rating. The company uses a scale of internal ratings that mirrors the credit-rating agencies’ rating scales. Changes to credit policy are presented to the Risk Management Committee, as are all credit actions for the month. Derivative exposure is calculated using a statistical methodology and trades are booked against credit lines. Credit derivatives exposure is calculated taking into account the credit quality of the underlying issue and the counterparty. The company trades using market convention documentation and, where appropriate, credit enhancements will be added to the documentation. Principal investment decisions are taken by senior management under advice from, inter alia, the credit function. The IEC function undertakes due diligence for potential principal investments, current principal investments and underwriting positions that are being considered. They are also responsible for setting and monitoring inventory limits, which is done by setting maximum positions for issuers based on credit ratings.




B - Financing Activities The responsibility for both financing the operations and managing any resulting interest rate and foreign exchange risk lies with the Treasury function. The Treasury function reports to the Chief Financial Officer and is fully independent of the trading activities. Working as part of the Global Treasury function, its primary responsibility is to pro-actively manage the liquidity and financing needs of the firm via a diversified financing programme, supported by a comprehensive and tested contingency plan. The Treasury function is not authorised to take positions for it’s own account and it is not judged on the basis of profit. The distribution of sources of funding and their maturity profile are actively managed in order to ensure access to funds and to avoid a concentration of funding at any one time or from any one source. The main funding sources used by the Treasury function include capital, bank borrowings, intercompany borrowings, long term debt, commercial paper, collateralised financing such as sale and repurchase agreements and committed credit facilities. Liquidity risk is controlled by a process that ensures that cumulative financing requirements are restricted to pre-set levels. To ensure that the company has sufficient reserves to guard against any unforeseen event, Treasury has to operate within an unsecured funding limit that is set at a level significantly below what is estimated to be available. In addition, a key operating principle of Treasury is to withstand market shocks for periods lasting up to one year without either issuing new unsecured financing or liquidating trading assets. This is achieved by maintaining sufficient long-term debt and equity to meet the cash capital requirements of all our assets and holding a global portfolio of cash and highly liquid securities that could be monetised through either sale or pledge to meet immediate requirements. During the course of Treasury’s financing activities, there is often a need to swap surplus flows in one currency into another, a process achieved using currency swap transactions. Similarly, financial futures are also occasionally used to mitigate any interest rate risk arising out of funding the group’s operations.




Interest rate profile of financial liabilities The interest rate profile of the financial liabilities of the company was:

31 March 2005

31 March 2004

Floating rate financial liabilities

Fixed rate financial liabilities Total

Floating rate financial liabilities

Fixed rate financial liabilities Total

£m £m £m £m £m £m Sterling 30 - 30 30 - 30Japanese Yen 630 - 630 298 - 298US Dollar - - - 2 - 2Euro 2 - 2 - - -Other 1 - 1 - - -

663 - 663 330 - 330

The local inter bank borrowing rate is the benchmark rate for determining interest payments on the floating rate financial liabilities. The floating rate financial liabilities comprise the following: subordinated loans and senior debt at rates fixed in advance for periods ranging from three to six

months bank overdrafts at prevailing rates

Interest rate profile of financial assets The company held the following financial assets in its financing activities:

2005 2004 £m £m Sterling cash deposits 3 2 Japanese Yen cash deposits 9 19 US Dollar cash deposits 34 20 Euro cash deposits 14 2 Other cash deposits 4 8

64 51 The cash deposits are all bank current accounts, which earn interest at prevailing rates.




Currency exposures The table below shows the company’s currency exposures that give rise to net non-trading currency gains and losses recognised in the profit and loss account. Such exposures comprise the monetary assets and monetary liabilities of the company that are not denominated in the operating currency of sterling. These exposures were as follows:

2005 2004 £m £mJapanese Yen - -US Dollar - 7Euro - 2Australian Dollar Other

-1

--

1 9

Currency exposures result from foreign currency profits and losses generated in the ordinary course of business. These exposures are eliminated at each month end based on initial profit and loss estimates. Any further exposures arising are eliminated at the earliest practicable opportunity after the month end. Maturity of financial liabilities The maturity profile of the company’s financial liabilities was as follows:

2005 2004 £m £mIn three months or less, or on demand 38 2In more than three months but not more than one year - 44In more than one year but not more than two years - 30In more than two years but not more than five years 222 115In more than five years 403 139

663 330

Borrowing facilities The company has various borrowing facilities available to it. The undrawn committed facilities available were as follows:

2005 2004 £m £mExpiring in one year or less 191 569Expiring in more than one year but not more than two years - -

191 569



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED)

17. ROLE OF FINANCIAL INSTRUMENTS (CONTINUED)

Fair values of financial assets and financial liabilities Set out below is a comparison by category of book values and fair values of the company’s financial assets and financial liabilities:

Book value Fair value Book value Fair value 2005 2005 2004 2004

£m £m £m £mFinancial instruments held or issued for trading purposes – long positions:

Equities 446 446 301 301Warrants - - 4 4Government bonds 9,212 9,212 9,012 9,012Bank and corporate bonds 4,789 4,789 3,908 3,908Convertible bonds 824 824 2,389 2,389Bond and equity derivatives 320 320 509 509Currency derivatives 320 320 398 398Interest rate derivatives 229 229 322 322Credit derivatives 113 113 99 99Provisions against derivatives (29) (29) (35) (35)Derivative netting under ISDA (151) (151) (193) (193) 16,073 16,073 16,714 16,714Represented by: Long inventory balances 16,067 16,067 16,703 16,703Amounts within broker balances 6 6 11 11


£m £m £m £mFinancial instruments held or issued for trading purposes – short positions:

Equities (643) (643) (543) (543)Warrants (152) (152) (227) (227)Government bonds (4,268) (4,268) (6,606) (6,606)Bank and corporate bonds (1,296) (1,296) (1,014) (1,014)Convertible bonds (63) (63) (23) (23)Bond and equity derivatives (228) (228) (317) (317)Currency derivatives (259) (259) (437) (437)Interest rate derivatives (275) (275) (378) (378)Credit derivatives (113) (113) (281) (281)Derivative netting under ISDA 151 151 193 193 (7,146) (7,146) (9,633) (9,633)Represented by: Short inventory balances (7,138) (7,138) (9,621) (9,621)Amounts within broker balances (8) (8) (12) (12)




Fair values of financial assets and financial liabilities (continued) All financial instruments held or issued for trading purposes are carried in the financial statements at fair value which is determined using market values, option pricing models or by discounting expected future cash flows at prevailing interest rates.


£m £m £m £mPrimary financial instruments held or issued to finance the company’s operations:

Cash and short term deposits 1,969 1,970 1,583 1,584Collateral paid under agreements to resell/for securities borrowed 28,623 28,677

24,826 24,877

Short term borrowings (2,849) (2,850) (2,757) (2,758)Long term borrowings (626) (627) (284) (285)Collateral received under agreements to repurchase/for securities loaned (35,604) (35,639)

(30,161) (30,199)

Commercial paper issued (85) (85) (84) (84) Gains and losses on financial assets and financial liabilities held or issued for trading: The net gain from trading in financial assets and financial liabilities shown in the profit and loss account includes the following:

2005 2004 £m £mBond and equity derivatives 107 105Convertible bonds (104) 248Equities (83) (179)Warrants 155 74Government bonds 56 55Bank and corporate bonds (385) (283)Interest rate derivatives 183 43Currency derivatives (2) 10Credit derivatives 188 (35)

115 38

The information provided in the table above is shown on a pure product split basis, with no matching of the gains and losses on derivative contracts being offset against those on the underlying position. A significant amount of trading takes place on a strategy basis across a range of instruments and is managed accordingly.



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 18. OPERATING LEASE COMMITMENTS

The company was committed to making the following payments in respect of operating leases expiring:

2005 2005 2004 2004 Buildings Other Buildings Other £’000 £’000 £’000 £’000

Within one year - 62 - 240Within two to five years 3,680 2 770 105After five years 11,705 - 14,615 2

15,385 64 15,385 347 19. EMPLOYEES

The average number of persons employed by the company during the year and their location were as follows:

Year ended Year ended 31 March 2005 31 March 2004 Number Number Spain 6 4Czech Republic - 1United Kingdom 1,205 974

1,211 979 20. DIRECTORS' EMOLUMENTS Year ended Year ended

31 March 2005 31 March 2004 £’000 £’000 Salaries, allowances and taxable benefits 1,232 1,906Contribution to money purchase pension scheme 1 14Bonuses 111 1,993

1,344 3,913

One director (2004: 1) had retirement benefits accruing under a money purchase pension scheme. Retirement benefits accrued to one director (2004:1) under the company defined benefit pension scheme.

The highest paid director received emoluments of £782,496 (2004: £1,110,045) with no further pension contributions being made (2004: £13,797).



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED) 21. CAPITAL COMMITMENTS As at 31st March 2005 there were capital commitments of £3,433,783 relating to assets in the course

of construction (2004: £6,376,000). 22. RELATED PARTY TRANSACTIONS Profit and loss account As part of the company’s Merchant Banking operations, investments and financial arrangements are

made with certain companies for the purpose of holding investments. As a result of these arrangements, these companies become related parties.

During the year ended 31st March 2005, no underwriting fees (2004: £nil) were earned from debt re-financing, no fees (2004: £nil) were earned from re-structuring and £nil (2004: £nil) was earned from the interest income on loans financed. In addition, proceeds from investments wholly or partly disposed of during the year totalled £5.4m (2004: £6.1m). The amounts above were transacted with the following related parties;

31st March 2005 31st March 2004 Foamart Limited Foamart Limited St Martin’s Holdings II Limited Meymott Street Holdings Limited Security Village.com Limited Noble Street Holdings II Limited St Martin’s Holdings II Limited Tallis Street Holdings II Limited

Balance Sheet

Aggregate amounts due from related parties were as follows: 2005 2004

£m £mGross amount receivable 8.7 24.6Reserve against gross balance - (15.9) Net amount receivable 8.7 8.7 The amounts above were due from the following related parties:

31st March 2005 31st March 2004 Downing Holdings Limited Downing Holdings Limited Meymott Street Holdings Limited Foamart Limited Annington Development (Holdings) Limited Meymott Street Holdings Limited Annington Rentals (Holdings) Limited Security Village.com Limited Annington Homes Limited St Martin’s Holdings II Limited Annington Development (Holdings) Limited Annington Rentals (Holdings) Limited Annington Homes Limited



NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005 (CONTINUED)

22. RELATED PARTY TRANSACTIONS (CONTINUED)

No amounts were due to related parties as at 31st March 2005 (2004: £nil). The company has taken advantage of the exemption in FRS 8 from disclosing related party transactions with other entities included in the consolidated financial statements for Nomura Holdings Inc.

23. CONTINGENT LIABILITIES AND COMMITMENTS

In 1998 companies within the Nomura Group acquired approximately 46 per cent of the issued share capital in Investicni a postovni banka, a.s. (IPB), a Czech bank. On 16 June 2000, IPB was placed into forced administration. On 19 June 2000, IPB's entire business was transferred to Ceskoslovenska obchodni banka, a.s. (CSOB), another Czech bank. On 25 February 2002, CSOB commenced a legal action in the Czech courts against the company and others arising out of Nomura's investment in IPB and the sale by IPB of a Czech brewery. CSOB is seeking damages of up to USD629 million. The company’s directors have sought legal advice in connection with this claim and believe that the risk of loss to Nomura International plc arising from CSOB's claims is remote. At the balance sheet date, the company is subject to claims by the UK Tax Authorities in connection with employers national insurance contributions. Reserves have been established against this claim, which the company presently believes to be adequate. It is possible that further amounts may be incurred and the estimated range of the additional possible amount is between £0 and £54 million. The level of reserves will remain under review as more information in connection with the claims becomes available to the company. The company had commitments as at 31st March 2005 amounting to £76,767,350 (2004: £70,521,000) in respect of undrawn note issuance facilities, outstanding capital contributions on investments in partnership interests and performance guarantees. As part of its normal business practices the company also had commitments as at 31st March 2005 in respect of forward starting purchase and resale agreements with third parties.

24. ULTIMATE PARENT UNDERTAKING

The company’s ultimate parent undertaking and controlling party, and the parent that heads the largest group of undertakings for which consolidated financial statements are prepared, is Nomura Holdings Inc, incorporated in Japan. Copies of the group financial statements of Nomura Holdings Inc. may be obtained from 9-1, Nihonbashi 1-Chome, Chuo-ku, Tokyo 103-8645, Japan. The parent that heads the smallest group of undertakings for which consolidated financial statements are prepared is Nomura Europe Holdings plc, a company registered at Nomura House, 1 St. Martin’s-le-Grand, London EC1A 4NP, England.


Department name

Nomura International plc Nomura House 1 St Martin’s Le Grand London EC1A 4NP Tel. +44 (0) 20 7521 2000 www.nomura.com

nomura international plc annual report

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