March 2005 Interim Financial Conditions For the half-year ended - - PowerPoint PPT Presentation

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March 2005 Interim Financial Conditions

（ For the half-year ended September 30,2004）

SOFTBANK INVESTMENT CORPORATION October 26, 2004

The items in this document are provided by Softbank Investment Corporation as information related to its business strategy and not as an invitation to invest in Softbank stock or securities. Softbank does not guarantee the completeness of this document in terms of information and future business strategy. The content of this document is subject to revision or cancellation without warning.

1 . I n t e r i m C

• n

s

• l

i d a t e d A c c

• u

n t s

（ For the half-year ended September 30,2004）

Interim Consolidated Financial Performance

(Compared to Same Period of Previous Year)

(Unit: 1 million yen) (2004/4 (2004/4 to 2004/9) to 2004/9)

Profit of Current Term

３ ０ ， ２ ９ １ ８ ， ３ ８ ３ １ ０ ， １ １ ３

2005/3 2005/3 Interim Interim

７ ， ２ ３ ５

(2003/4 (2003/4 to 2003/9) to 2003/9)

2004/3 2004/3 Interim Interim

１ ， ８ ９ ６

Change from Change from previous year (%) previous year (%)

+311.3 +342.0 +452.0 +828.3

Sales

７ ， ３ ６ ５

Operating Profit Ordinary Profit

１ ， ８ ３ １ ７ ７ ９

* The interim performance for March 2003 contains the consolidated results from June to September of the former E＊ Trade K.K. * The interim performance for March 2003 does not contain the consolidated results of the World Nichiei Frontier Securities Co., Ltd., the Fides Securities Corporation, the Finance All Corporation, or any of their respective subsidiaries. * The results of E*Trade Korea Co., Ltd. and Swan Credit Co., Ltd. who became new consolidated subsidiaries before the end of the interim are included from the start of the term. The interim performance does not contain the results of Ace Securities Co., Ltd. and Morning Star Japan K.K.

2 . I n t e r i m C

• n

d i t i

• n

s b y S e g m e n t

( 1 ) A s s e t M a n a g e m e n t

Asset Management Highlights

• 2. Smooth investment climate for initial public offerings and M&A

The original estimate of 20 companies (January to December 2004) has been achieved.

・ Profits from selling IT fund stocks during the interim are nearly 26.4 billion yen.

・ From October 26 to the present time: IPO and M&A performance is 16 companies and listing approval performance is the two companies below.

• 1. Period of harvest for IT funds

There is a huge increase in stocks with unrealized profits. On the other hand, capital gains can be made through timely market selling.

• 2004/11/15 expected listing: Elpeda Memory Inc.
• 2004/11/25 expected listing: Kawaden Corporation
• 3. To establish a comprehensive investment structure from equity to

senior debt, SBI Capital Solutions was formed on August 4, 2004 and a 3.1 billion yen mezzanine fund was established.

IT Fund Harvest Period

6 7 6 5 7 9 2 9 5 5 1 9 6 3 1 6 4 6 6 5 2 8 2 6 1 , 5 5 2 2 7 2 2 2 5 1 3 2 3 2 2 3 1 4

1 6 8

2 4 6 8 1 , 1 , 2 1 , 4 1 , 6

( U n i t : 1 m i l l i

• n

y e n ) Book Value Net Assets + Unrealized Profit of Stocks at Current Value 1 , 2 9 8 b . y e n

Investment balance Cash+ cash equivalents

Unrealized gain of stock at current value Payment and fees in previous fiscal year

• Est. fees

45

• Mgt. fees

156 Total 20.1 b. yen

Book value net assets (172)

E*Trade Securities book value

(172)

2002/12 2003/3 2002/6 2003/12 2003/6 2004/6 9/30 to current

Current value of net assets and preceding-year payments/fees (1,298 + 201 = 1,499 b.) continues to be in balance with the original investment (1,505 b.)

Book Value Net Assets of IT Fund from September 30 to Present

5 7 9 7 5 1 1 4 1 5 5 1

5 1 ,

Gain/loss cause Gain/loss cause ・ ・ Investment Investment -

• 4.3 b.

4.3 b. ・ ・ Stock sales 19.9 b. Stock sales 19.9 b. ・ ・ Gain on stock sale 26.4 b. Gain on stock sale 26.4 b. ・ ・ Management fees Management fees -

• 1 b.

1 b.

Cash: Cash: +41 b. yen +41 b. yen

Investment balance: 17.2 b. yen decrease Investment balance: 17.2 b. yen decrease

Gain/loss cause Gain/loss cause ・ ・ Investment 4.3 b. Investment 4.3 b. ・ ・ Stock sales Stock sales -

• 19.9 b.

19.9 b. ・ ・ Stock valuation loss Stock valuation loss -

• 3.1 b.

3.1 b. ・ ・Reversal of valuation allowance 1.5 b. Reversal of valuation allowance 1.5 b.

Main gains and losses Main gains and losses

2004/3/31 2004/3/31 2004/9/30 2004/9/30 Investment balance Cash Cash Investment balance

Book value net assets 1,130 Book value net assets 892

(Unit: yen)

Rate of Stock Market Price Increase for Rate of Stock Market Price Increase for Investee Investee Enterprises Listed from IT Fund Enterprises Listed from IT Fund

( (Unit: %) Unit: %)

( (Rate of price increase from the end of March 2003 to the closing Rate of price increase from the end of March 2003 to the closing price on September 30, 2004) price on September 30, 2004)

2 4

T O P I X J A S D A Q I N D E X I n v e s t m e n t f r

• m

I T F u n d

３ ０ ３ ０ ▲７ ▲７ ▲４ ▲４

* * Using the book balance for IT fund investment in each company (2 Using the book balance for IT fund investment in each company (2004/9/30), each percent 004/9/30), each percent change is given a weighted average. For an enterprise listed dur change is given a weighted average. For an enterprise listed during the interim, the percent ing the interim, the percent change from the public issued price is calculated. change from the public issued price is calculated.

Companies

57

(38 foreign) To Dec. 2003 From Jan. to Dec. 2004

20

(16 went public)

• 2004/7/1

2004/7/1 Amana Inc. Amana Inc.

• 2004/7/8 Netprice Ltd.

2004/7/8 Netprice Ltd.

• 2004/7/15 Funai Zaisan Consultants Co., Ltd.

2004/7/15 Funai Zaisan Consultants Co., Ltd.

• 2004/7/29 Sosei Co., Ltd.

2004/7/29 Sosei Co., Ltd.

• 2004/9/16 Nissin Servicer Co., Ltd.

2004/9/16 Nissin Servicer Co., Ltd.

• 2004/10/1 Flex Firm Ltd. (M&A)

2004/10/1 Flex Firm Ltd. (M&A)

• 2004/10/5 VeriTrans Inc.

2004/10/5 VeriTrans Inc.

• 2004/10/19 T.K. International Corporation

2004/10/19 T.K. International Corporation (M&A) (M&A)

The companies below received listing approval The companies below received listing approval

IPOs and M&As IPOs and M&As

• 2004/2/2

2004/2/2 World Nichiei Frontier Securities Co., Ltd. World Nichiei Frontier Securities Co., Ltd.

• 2004/2/27 Nexus Co., Ltd.

2004/2/27 Nexus Co., Ltd.

• 2004/3/3 IDU Co.

2004/3/3 IDU Co.

• 2004/3/26 Venture Revitalize Investment Inc.

2004/3/26 Venture Revitalize Investment Inc.

• 2004/4/15 WebPort Corporation (M&A)

2004/4/15 WebPort Corporation (M&A)

• 2004/5/27 Dip Corporation

2004/5/27 Dip Corporation

• 2004/6/4 Frameworx Inc.

2004/6/4 Frameworx Inc.

• 2004/6/18 Runsystem Inc.

2004/6/18 Runsystem Inc.

Since Jan. 2004, the following 16 companies have either gone thr Since Jan. 2004, the following 16 companies have either gone through an IPO or an M&A

• ugh an IPO or an M&A
• 2004/11/15

2004/11/15 expected listing: Elpeda Memory Inc. expected listing: Elpeda Memory Inc.

• 2004/11/25 expected listing: Kawaden Corporation

2004/11/25 expected listing: Kawaden Corporation

• Companies expecting an IPO undergo a five

Companies expecting an IPO undergo a five-

• stage investment evaluation based on examination meetings held w

stage investment evaluation based on examination meetings held weekly. The top

• eekly. The top

prospects are included here, but Softbank does not guarantee a p prospects are included here, but Softbank does not guarantee a prospective IPO company will go public. rospective IPO company will go public.

• The number of IPOs and M&As represent the ones that have already

The number of IPOs and M&As represent the ones that have already been transacted. been transacted.

Stock Price Increase of Newly Listed Investees in 2004

Investee Company Name

IPO period Public offering price (A) First price (B) Increase rate (%) (A/B) Closest stock price 2004/10/25 final price (C) Increase rate (%) (C/A)

Nexus Co., Ltd. Feb. 173,333 233,333 134.6 598,000 345.0 IDU Co. Mar. 40,000 82,000 205.0 171,000 427.5

Venture Revitalize Investment, Inc.

Mar. 9,850 10,250 104.1 8,080 82.0

Dip Corporation

May 200,000 400,000 200.0 230,000 115.0

Frameworx Inc.

Jun. 62,500 175,000 280.0 148,000 236.8

Runsystem Inc.

Jun. 216,667 600,000 276.9 407,000 187.8

Amana Inc.

Jul. 2,300 6,260 272.2 2,600 113.0

Netprice Ltd.

Jul. 283,333 1,536,667 542.4 660,000 232.9

Funai Zaisan Consultants Co., Ltd.

Jul. 1,860,000 3,760,000 202.2 3,140,000 168.8

Sosei Co., Ltd.

Jul. 800,000 800,000 100.0 453,000 56.6

Nissin Servicer Co., Ltd.

Sep. 900,000 1,840,000 204.4 1,300,000 144.4

VeriTrans Inc.

Oct. 600,000 1,350,000 225.0 1,200,000 200.0

＊1 ＊1 ＊1 ＊1 ＊1 ＊1 ＊1

*1 Represents a value after taking a stock split into consideration. *2 For the four M&As, World Nichiei Frontier Securities Co., Ltd., WebPort Corporation, Flex Firm Ltd., and T.K. International Corporation all issued publicly offered stock.

• Avg. increase：

228.89％ Avg. increase： 192.50％

Performance of New Investee Listings in 2004 Performance of New Investee Listings in 2004

10.9 times 4.8 times Oct. VeriTrans Inc. 7.36 times 3.6 times Sep. Nissin Servicer Co., Ltd. 16.0 times 16.0 times Jul. Sosei Co., Ltd. 7.5 times 3.7 times Jul. Funai Zaisan Consultants Co., Ltd. 73.8 times 13.6 times Jul. Netprice Ltd. 10.4 times 3.8 times Jul. Amana Inc. 1.8 times 0.7 times Jun. Runsystem Inc. 3.5 times 1.3 times Jun. Frameworx Inc. 999.8 times 499.9 times May Dip Corporation 5.5 times 2.7 times Mar. IDU Co. 2.5 times 1.9 times Feb. Nexus Co., Ltd. First price/Fund book value Public offering price/Book value Public

• ffering

month Investee company name

Interim Investment Performance All Funds (1)

Investment centered on bio firms and later-stage companies that are likely IPOs

2004/4 to 2004/9

Domestic Overseas Total 13 4 17 (5) (1) (6) 79 16 95 (28) (1) (29)

• Numbers in parentheses represent figures for the same period last year (2003/4 to 2003/9）

.

• Of the total, 13 cases are new investments worth 4 billion yen (in 2003, 4 cases at 900 million yen）

and 4 cases are additional investment in investees worth 5.5 billion yen （ in 2003, 2 cases at 2 billion yen).

• For overseas cases, the yen conversion rate at the time of investment is used.

Quarterly Investment Performance (All Funds) (2)

２ ０ ０ ４ / 7 t

• ２

０ ０ ４ / 9

Domestic Overseas Total ９ ２ １ １ （ ２ ） （ １ ） （ ３ ） ２ ５ ５ ３ ０ （ ２ ５ ） （ １ ） （ ２ ６ ） Investment companies Investment (100 million yen)

• Numbers in parentheses represent figures for the same period last year (2003/7 to 2003/9）

.

• Of the total, 8 cases are new investments worth 2.2 billion yen (in 2003, 2 cases at 700 million yen）

and 8 cases are additional investments in investees worth 800 million yen （ in 2003, 1 cases at 1.9 billion yen).

• For overseas cases, the yen conversion rate at the time of investment is used.

New Funds for Enterprise Restructuring

Funds are raised for LBO, MBO, and enterprise restructuring using a variety of investment methods from senior debt to equity. Asset investment safety grouping Mezzanine

Equity

SBI Mezzanine Fund #1

Senior

SBI Capital investment area up to now SBI Capital Solutions investment area Investment method ・ DIP finance ・ High-yield bond ・ Subordinated loan ・ Preferred share

Buyout and restructuring fund management Mezzanine fund management Ｃ Ｏ Ｏ : Reiko Kinoshita （ Former CO of DIP finance at Tokyo Star Bank) (100% owned)

A pilot fund (specialized DIP finance fund worth 3.1 b. yen) and a mezzanine fund were established on 2004/8/23.

High

SBI Capital investment area up to now

Low

New Funds and DIP Finance

Investment performance SBI mezzanine fund #1 (All based on DIP finance)

Under corporate reorganization Under corporate reorganization Normal Under corporate reorganization Condition 2004/11 2004/10 2004/9 2004/8 Contract date Company B (metal working) Industrial company A (printing) Fuchi Kami Company B (metal working) Company name Nikkei Keizai Shimbun article from 2004/8/10

Four transactions were completed during the two-month period after the establishment of the fund (2004/8/23).

For the Fuchi Kami case, sufficient diligence and negotiation flexibility was exercised during the short six-day period leading up to signing the DIP finance contract.

(2) Brokerage and Investment Banking Business

Interim Securities Highlights

1) Rapid increase in user accounts for E*Trade Securities, which strengthens the earnings base 2) Increase in World Nichiei Frontier Securities earnings

・ Highlights include a big expansion in underwriting due to group synergies, improvement in financial revenues and expenses, which promotes a stable financial base, and progress in a shared network system for securities firms in the group.

3) Acquisition of a new securities firm

・ Ace Securities Co., Ltd., based in western Japan, and E*TRADE KOREA

Performance for each Securities Subsidiary

2004/4 to 2004/9

(Unit: Million yen) Operating revenue Ordinary income Net income

World Nichiei Frontier Securities

Total Total

5,871 1,901 2,110 19,244 6,660 4,665 12,143 4,650 2,446

E*Trade E*Trade

1 5 6 5 4

* The total represents a simple sum without deducting for transactions between each company.

E E-

• Trade Korea

Trade Korea ( (Reference) Reference) Ace Fides

1,074

4,252

1 4

691

105

956

Ace

* The value for E*TRADE KOREA was calculated at the exchange rate for 2004/9/30 (100 won = 9.64 yen).

Ｓ Ｂ Ｉ Securities Business Scale

(2004/9/30 to present)

Total Total

628,395 47,407 132.3 b. yen

Ｅ Ｅ * *Ｔ Ｒ Ａ Ｄ Ｅ Ｔ Ｒ Ａ Ｄ Ｅ Ｋ Ｏ Ｒ Ｅ Ａ

World Nichiei World Nichiei Frontier

Ace Ace

* The daily average value of trading represents the average value for each working over a one month period during 2004/9.

E*Trade E*Trade

Fides Fides

Frontier

Ｋ Ｏ Ｒ Ｅ Ａ

Securities accounts Margin trading accounts

2.9 b. yen 53,748 710 452,493 61,865 59,579 2,080 1,317 44,010

• Daily average

Value of trading

6.7 b. yen 1.8 b. yen 120.9 b. yen

• * The value for E*TRADE KOREA was calculated at the exchange rate for 2004/9/30 (100 won = 9.64 yen).

E*Trade Performance

(Unit: Million yen)

Operating revenue Operating income Ordinary income Net income

(2004/4 (2004/4 to 2004/9) to 2004/9) 2005/3 2005/3 Interim Interim （ （ 2003/4 2003/4 to 2003/9) to 2003/9) 2004/3 2004/3 Interim Interim

12,143 4,620 4,650 2,446

Compared to same Compared to same period in previous period in previous year (%) year (%)

+103.8 5,959 1,601 +188.6 +186.2 1,625 750 +226.1

* The results up to 2003/5 are not included in the SBI’s consolidated performance.

E*Trade User Account Trend

The number of accounts is steadily increasing, especially from the start of 2004.

5 , 1 , 1 5 , 2 , 2 5 , 3 , 3 5 , 4 , 4 5 , 5 ,

4 月 5 月 6 月 7 月 8 月 9 月 1 月 1 1 月 1 2 月 1 月 2 月 3 月 4 月 5 月 6 月 7 月 8 月 9 月

(Accounts)

(2003/4 to 2004/9)

452,493

E*Trade New User Accounts Trend

E*Trade acquired more new accounts in a half year than in all of the previous year, surpassing 100,000 new accounts.

1 4 , 2 8 2 4 , 9 1 2 3 6 , 4 8 9 7 , 9 6 2 1 , 5 4 3 4 7 , 4 4 3 5 3 , 1 2 2 , 5 4 2

5 , 1 , １ Ｑ ２ Ｑ ３ Ｑ ４ Ｑ T

• t

a l

• f

y e a r １ Ｑ ２ Ｑ T

• t

a l

• f

H a l f y e a r

(New accounts)

2004/3 2005/3

World Nichiei Frontier (1)

Performance

(Unit: Million yen)

(2004/4 (2004/4 to 2004/9) to 2004/9)

2005/3 /3 Interim Interim

5,871 1,747 1,901 2,110

2004/3 Interim

Compared to same Compared to same period in previous period in previous year (%) year (%)

(2003/4 (2003/4 to 2003/9) to 2003/9)

Operating revenue

4,932 +19.0

Operating income

+64.8 1,060

Ordinary income

+68.9 1,125 +75.5 1,202

Net income

* For March 2004, World Nichiei Securities performance is represented.

World Nichiei Frontier (2)

Increasing commissions from sales and underwriting due to group synergies

1 1 1 1 5 2 6

3 6 9 1 2 2 4 / 3 I n t e r i m 2 5 / 3 I n t e r i m

37

(Million yen)

209.0% increase over previous year

115

Bonds Stocks

Stock Underwriting IPO 3 PO, 2nd.

• ffering

1 Total 4 Category S t

• c

k U n d e r w r i t i n g SBI investees I P O 1 1 7 P O , 2 n d . O f f e r i n g 2 1 T

• t

a l 1 3 8 C a t e g

• r

y

World Nichiei Frontier (3)

Improvement in financial profit compared to the same period of the previous year

2 4 6 8 1 1 2 1 4 1 6 2 4 2 5

301.8％ increase

Million yen

167 41

Financial profit = Revenue - Expenses

Interim Interim

World Nichiei Frontier (4)

Raising the net worth regulation ratio

255

• 1

4 5 6 8 9 4 6 7 6

• 1

2 4 8 1 3 5 6 3 1 2 1

• 9

3 3 1 3 8 6 3 1 2 1

• 5

5 1 1 5 2 2 5 3 3 5 4

3 / 9 e n d 4 / 3 e n d 4 / 9 e n d

S t

• c

k c a p i t a l i z a t i

• n

C a p i t a l s u r p l u s E a r n e d s u r p l u s E s t i m a t e v a r i a n c e T r e a s u r y s t

• c

k

354 346

100 million yen Maintaining financial health

(466.8%) (617.6%) (Net worth regulation ratio) (Unit: 100 million yen) (409.2%)

Retained Earnings Unrealized gain/loss or securities +300 million yen

• 1.5 b. yen
• 700 million yen

Treasury stock decrease +300 million yen

Ace Securities (1)

Ace stock acquisition and consolidated processing

Net assets as of 2004/9 end (Consolidated base) 14.4 b. yen

Book value per share of Ace stock

Issued stock (Excluding treasury stock) 36,855,358 shares

Stock acquisition

@391 yen

Value per share of Ace Securities stock take-over-bid

@215 yen

The purchase price per share of acquired stock is a book-value per share around

0.55 times

Consolidated processing

From the consent acquisition at the end of September, Ace profit and loss is added to the SBI consolidated profit and loss from October. SBI took a conservative approach in advance of starting consolidated treatment. 4.9 billion yen of contingent Liabilities were recognized on consolidated balance sheet. The difference between the acquisition amount and the consolidatednet assets (after equity considerations), which is around 400 million yen, was completely expensed during this term.

Ace Securities (2)

Ace Securities Performance

(Unit: 1 million yen)

Operating revenue

4,252

(2004/4 (2004/4 to 2004/9) to 2004/9)

2005/3 Interim

740 691 956

2004/3 Interim

Compared to same Compared to same period in previous period in previous year (%) year (%)

(2003/4 (2003/4 to 2003/9) to 2003/9)

4,155 +2.3

Operating income

505 +46.5

Ordinary income

+12.6 613 +58.3 604

Net income

* The addition to SBI consolidated performance starts from October 2004.

(3) Financial Services

Interim Financial Services Highlights

1) Morningstar becomes a subsidiary From the consent acquisition at the end of September, Morningstar profit and loss is added to the SBI consolidated profit and loss from October. A consolidated adjustment account(goodwill) of 4.6 billion yen will have a 20-year amortization. Morning Star 3rd quarter 2004 performance Sales of 747 million yen and operating profit of １ ２ ９million yen. 2) VeriTrans, TechTank, and Inter-Eye become subsidiaries of Finance All Corporation (2004/9) On October 5, VeriTrans was listed on Hercules of the Osaka Securities Exchange. 3) Finance All Corporation achieved an operating profit of 1 billion yen on consolidated basis (Good Loan achieved profitability).

M

• r

n i n g s t a r P e r f

• r

m a n c e

(Unit: 1 million yen)

(2003/1 to 2003/9)

Sales

747

(2004/1 to 2004/9)

2004/12 2004/12 3

• 3rd. quarter
• rd. quarter

129 80 124

Compared to same Compared to same period in previous period in previous year (%) year (%)

2003/12 2003/12 3

• 3rd. quarter

. quarter

685 +9.2 75 +64.9

Operating income

96 +34.7

Ordinary income

42 +89.8

Net income

* The addition to SBI consolidated performance starts from October 2004.

Finance All Performance

* The SBI consolidated performance does not contain results before January 2004.

(2002/10 to 2003/9)

S a l e s 10,150

(2003/10 to 2004/9)

2004/9 2004/9 Operating income Ordinary income Net income

975 637 +236.6 +303.1 +885.1 241 297 64 １ ， ８ ０ ０

• １

， ２ ０ ０ 1,001

Compared to same Compared to same period in previous period in previous year (%) year (%)

(Unit: 1 million yen)

2003/9 2003/9

2005/9 2005/9 Full term performance Full term performance estimate estimate

7,577 １ ２ ， ０ ０ ０ + 3 4 .

３ ． Future Business Development

The SBI Group’s Seven Basic Strategies

Basic Strategy 1 Concentrate Corporate Value in SBI

Total corporate value of Softbank Finance Group

Tokyo/Osaka Exchanges 1st Section Tokyo/Osaka Exchanges 1st Section

Plan to concentrate corporate value from the latter part in this fiscal year

Subsidiaries under direct control of Softbank Finance

Pure holding company

Operating holding company

Equal Credit Corp.

Consolidate SBI Corporate Value

Concentrate direct subsidiaries of Softbank Finance into Softbank Investment.

Basic Strategy 2

Accelerate new IPOs and continue to expand Rapidly raise the level of Ｓ Ｂ Ｉ unrealized gain

～Future high-potential IPO candidates～

1) E-Commodity 2) Gomez 3) SBI CAPITAL 4) GOODLOAN 5) Ｅ ＊TRADE KOREA

Unrealized Gain of SBI’s Main Subsidiaries

(Unit: 100 million yen) * Consolidated book value 2003 3/31 2004 3/31 2004 3/10 2004 2/5 Unrealized gain Unrealized gain Unrealized gain Unrealized gain World Nichiei Frontier

• 134

240 52 47

Finance All

• 45

143 280 314

Morning Star

• 71
• ▲ 2

▲ 14

VeriTrans (FA subsidiary)

• 5
• 65

Total

255 383 330 412

Acquisition Value *

In the future, the Group will have over 10 public companies in addition to E*Trade, E-Commodity, Gomez, SBI Capital, Good Loan and E*Trade Korea.

1) E-Commodity Co., Ltd.

E-Commodity IPO Preparations

E-Commodity Co., Ltd. Stock capitalization: 1.434 billion yen. Business content： Online stock futures transactions. Established 2000/10/13

The only dedicated online stock futures transaction com

• Increase capital by 450 million yen in advance of IPO

Current E-Commodity

Tokyo Commodity Exchange

2004/10/15 Apply to METI and MAFF for commission merchant approval

Tokyo Grain Exchange

Central Japan Commodity Exchange (Introducing commodity exchange broker)

E-Commodity after application approval

Tokyo Commodity Exchange

Tokyo Grain Exchange

(Precious metals, oil, rubber, aluminum) Central Japan Commodity Exchange Agriculture products, sugar (Oil)

(Commissioned broker)

Osaka Mercantile Exchange

(Source: Nikkan Kogyo Shmbun, 2004/10/21

2004/10/21 Article in Nikkan Kogyo Shiｍbun

Commodity markets after change application approval

Commissioned broker

• 14.5

85.5

Before capital increase

20.2 11.6 68.2

fter capital increase

Trifo Inc. (Old name: Tayo General) Softbank Investment Corporation Softbank Internet Technology Fund #2 Stockholder

A *

Unit: % ・ Acquisition of commissioned broker qualification before IPO

* Explicit base share

Commissions and Stock Futures Sector Trend

Entire sector

(The number of contracts per month is converted to an annual basis.)

(Source: Association of Compensation Fund for Consigned Liabilities in Commodity Futures (Source: Factual Futures)

・ Sector scale

・ Commission comparison Clients 18,042 21,519 24,470 Contracts 6,442,272 9,491,292 12,324,924 2002/9 2003/9 2004/9

22,000 clients 11.4 million contr.

16,000 clients 8.2 million contr. 19,000 clients 9.8 million contr. 13,000 clients 6.6 million contr. 10,000 clients 5 million contr.

Clients 111,820 114,075 110,413 Contracts 139,810,652 147,894,052 137,819,632 FY2001 FY2002 FY2003

114,000 clients 147 million contr.

113,000 clients 144 million contr. 112,000 clients 141 million contr 111,000 clients 138 million contr. 110,000 clients 135 million contr. 109,000 clients 132 million contr.

Online transactions

8,000 yen Rubber (Tokyo) 6,600 yen Corn (Tokyo) 6,600 yen Soybean (Tokyo) 10,400 yen Gold (Tokyo) 1,050 yen / 4,724 yen 7,600 yen Gasoline (Tokyo) E-Commodity (self/support) Regular commission （ against sales）

Self commission is around 12% of regular commission. After liberalization, there will be ample opportunity to acquire customers.

2) Gomez Japan K.K.

Gomez IPO Preparations

Gomez Japan K.K. Stock capitalization: 300 million yen. Business content: Website evaluation, advisory service

(Established 2001/3/22)

・ Capital movements inside Morningstar in preparation of the Gomez IPO.

65％ owned 100％ owned 100％ owned 96.35％ owned 100％ owned

Change: 2004/9/28

(Separately, 3.65% owned by IT #2)

100％出資

・ Market climate for Gomez

With internet dispersion to household over 50% for the first time, easy-to- navigate e-commerce sites are in great demand. Future business development

・ Content business ・ Research services ・ Education services ・ Support services

Gomez now Transition to a total internet support enterprise E-commerce consulting enterprise

Gomez Performance Trend

(100 million yen)

36 31 15 18

Net income

61 53 28 32

Ordinary income

162 162 133 70

Sales FY 2004 3rd Q

(2004/1 to 2004/9)

FY 2003 FY 2002 FY 2001

The figures above have not been audited by an audit firm.

3) SBI CAPITAL Co.,Ltd.

SBI Capital (1)

SBI Capital Performance –Kawaden listing approval-

・ Revitalization path

2000/9 Apply for application of Corporate Reorganization Law 2001/8 Use investments from SBI/LBO Fund #1（ Operating member: SBI Capital) 2002/7 Once all debt is cleared, finish reorganization procedures 2004/6 Record consecutive profits for three periods and prepare for re-listing 2004/10 Obtain JASDAQ listing approval (Listing plan: 11/25)

Risk capital and refinance support Dispatch executives and give management support Build new corporate governance system

SBI/LBO Fund #1

Kawaden

(Source: Top page, Nikkei Keizai Shimbun, 2004/10/20)

First Re-listing under Corporate Reorganization Law

Nikkei Keizai Shimbun article from 2004/10/20

・ Support content

Based on SBI/LBO Fund #1, pursue a profit optimization policy, and achieve consecutive profits for the next three periods by lowering cost through reductions in sales and administration expenses. Under the bankruptcy period, various buyout funds will help prevent personnel reductions

・ Recent restructured companies that are listed and re-listed companies

Corporate Reorganization Law Corporate Rehabilitation Law Corporate Rehabilitation Law

Applied law

4 yrs. 2 m. 6 yrs.10 m. 12 yrs. 2 m.

Time until re-listing

2004/11/25, JASDAQ (planned) 2004/7/30, Tokyo Stock Exchange,

• Sec. 2

2004//7/6, JASDAQ

Listing period/Market

SBI Capital Aeon Mitsubishi Corporation

Support company

２ ０ ０ ０ /９ １ ９ ９ ７ /９ １ ９ ９ ２ /５

Bankruptcy date Name

SHOEI Kawaden Maxvalu Tokai

SBI Capital (2)

SBI/LBO Fund No.1 Yield

Cash Investment balance Unrealized profit Estimate of stock with quoted value Kawaden estimated Unrealized gain Actual profit (Oct.)

2002/4 end 2003/4 end 2004/4 end 2004/9 end

(Unit: 100 million yen)

Initial investment 5 billion yen

*1

*1 Already contains the estimated values, so those values are omitted in this column. *2 The estimated unrealized profit for Kawaden is 228,000, which is the value stated in the securities registration statement.

Accumulated dividend SBI/LBO Fund #1 Exit Performance

Kawaden (Re-listing)

• T. K. International (Stock swap)

(Transfer of operations from Kakiuchi Corporation) SBI Home Planner (Sold) (Transfer of operations from Sawako Corporation)

*2

1 4 2 2 1 1 3 3 2 5 3 6 2 2 5 1

Based on solid fund performance, an examination will begin on whether to issue of new shares.

4) GOODLOAN

GOODLOAN Performance

5 1 1 5 2 2 5 3 3 5 4 4 5 7 9 1 1 1 3 5 7 9 1 1 1 3 5 7 9 1 1 1 3 5 7 9

Home Loan Trend Home Loan Trend

15 14 13

(100 million yen)

16

４ ３ ４ ３ . .７ ７billion yen billion yen

・ 2003/10 to 2004/9 Sales: 960 million yen Ordinary income: 2004 million yen Net income: 203 million yen ・ 2002/10 to 2003/9 Sales: 329 million yen Ordinary income: ▲159 million yen Net income: ▲ 162 million yen

Achieved profitability during the past year

5) E*TRADE KOREA

E*TRADE KOREA Acquisition (2004/6)

15% 13% 87% 40% Fueled by an early capital increase and the acquisition of underwriting licenses, the goal is to change E*TRADE KOREA from an online securities company to a general securities company and issue new shares as early as possible. 10%

Others

35% E*TRADE KOREA E*TRADE KOREA

• Before acquisition -
• After acquisition -

General Securities Company ↓ IPO! General Securities Company ↓ IPO!

2.5 billion yen capital increase on 2004/9

Basic Strategy 3 Develop New Services for the Financial Sector

SBI Group’s New Concept for Consumers and Businesses

Services that can be transacted over the internet

90% 10%

Joint Holding Company

(planned)

Company Business loans, credit card

Swan Credit EQual Credit

Consumer loans Servicer New company

(planned)）

Business operations partners

Credia Nisshin Hikari Tsushin Aplus Japan Property Management Association Nexus Microbusiness Life Support F&M

• Business loan -
• Credit card-

Basic Strategy 4 Actively Invest in Non-Financial Sectors

Develop Non-Financial Sectors of Financial Marketplace

Concept: Use finance to move beyond the financial sector

ローン比較 保険比較 (Finance products) (Finance solutions) (Finance related services)

Insurance agency Loan agency Home loan Lease

Account management software development Account settlement solutions

(Financial sector)

・ Moving estimates ・ Piano purchase estimates ・ Rental server estimates ・ Flight ticket estimates

…

• General E-Marketplace -

New Softbank website New Softbank website

…

(Non-financial sector)

Open over 100 internet marketing channels based on main portal sites

Developing Non-Financial Sectors of Financial Marketplace

i) Acquired Inter-Eye Co., Ltd. in June 2004 and added five lifestyle-oriented websites. ii) Added six other websites related to financial and non-financial content.

3rd Q 4th Q From 2004/10 From 2004/10

Highly-reputed moving and cost estimate website Piano purchase and cost estimate website Cheap flight ticket and cost estimate website Rental server and cost estimate website Premium ticket distribution website Broadband comparison website Reform comparison website Business loan specialist and comparison website Select moving and cost estimate website Credit card specialist and comparison website

Five websites added when Enter-Eye became a complete subsidiary

Cashing comparison specialist website

Basic Strategy 5 Activate Bio Fund and Establish New Flagship Fund for the IT Sector

IT Fund Distribution and Extension

The operation expiration date of June 30, 2005 for the flagship Softbank Internet Technology Fund is approaching, but SBI is aiming for a two-year extension of operations.

SBI forecasts up to 15 IPOs or M&As in 2005 and expects fund assets to increase sufficiently to support this activity. The first distribution of profits is planned at the expiration date.

Profit distribution estimate: 30 to 50 billion yen

Broadband Fund Features

SBI Group SBI Group General VC Fund

SBI Broadband Capital #2

Anonymous investment partnership

Individual investors Institutional investors, businesses

Venture capital fund Venture capital fund

Minimum investment over 100 million yen is common, which limits the types of investors who can participate. The amount invest is small (1 million yen / unit) and investor privacy protection (anonymity) is present.

Only a limited number of investors can benefit from investing in an unlisted company. A large number of individual investor have a chance to invest in an unlisted company.

Broadband Fund Public Offering

SBI Broadband Capital Co., Ltd.

(Complete subsidiary)

SBI Broadband Capital #2

Silent Investment Partnership

SBI Broadband Capital

Silent Investment Partnership Operators

SBI Ventures Co., Ltd.

(Complete subsidiary) Unlimited liability partnership

SBI BROADBAND Fund No.1

Limited Partnership

SBI BROADBAND Fund No.2

Limited Partnership

Plan to raise 20 billion yen from individual investors Plan to raise 30 billion yen from businesses and financial institutions ＊

Japan Europe

U.S.

＊This fund is now being established.

(Sellers)

Silent Partnership

Contract

Operator

Amount

Investor

Investment

Investor

Amount

Investment target

Investor

Amount Amount

Investor

An silent partnership is a contract in which silent members give a specified amount of money to a fund

• perator. The operator has complete control over the investment money and distributes the profits to the members.

The contract is a negotiated document between silent members and the operator. Even if multiple contracts are present together, the silent members have no legal relationship among each other. The operator has ownership rights to the amount invested by the silent member and the silent member has the right of claim to the profits and the right of claim to repayment of investment. The operator has the sole right to manage the investment. The silent member has no authority to do so. For this silent partnership, a member cannot invest more than the specified amount so as to bear the burden of losses.

Biovision Life Science Fund #1

Operating member Biovision Capital Initial investment: 3.4 billion yen

Since its establishment ten months ago on December 24, 2003, 1.5 billion yen has been invested in nine medicinal chemistry-related bio-ventures.

Main investments

Introduce new drug candidate compounds and and develop them in the U.S. and in Europe. Ｍｅ ｄ ｉ ｃ ｉ Ｎ ｏ ｖ ａ , Ｉ ｎ ｃ . (USA) A medicinal chemistry venture that concentrates on optic nerve disease, including the retina. Develop remedies for bone and kidney diseases. Develop cancer antibody medical treatments. Business content Ａ ｃ ｏ ｌ ｏ ｇ ｉ ｘ , Ｉ ｎ ｃ . (USA) Y’ ｓ Therapeutics Ａ ｃ ｕ ｃ ｅ ｌ ａ , Ｉ ｎ ｃ . (USA) Name

The fund has invested in these five medicinal chemistry-related bio-venture businesses.

Newspaper Articles about Bio-Venture Investment Targets Main articles

MediciNova Inc. article Acologix article

Nihon Keizai Shimbun 2004/10/2 Nihon Keizai Shimbun 2004/9/11

(Source: Nihon Keizai Shimbun, 2004/10/2) (Source: Nihon Keizai Shimbun, 2004/10/2)

Basic Strategy 6 Actively Invest in China

Increasing Investment in China

On June 1, 2004, a new office for collecting information about investment opportunities in China was opened.

Establish joint venture of Investment trust. Establish joint venture of Investment trust. Form venture capital funds. Form venture capital funds. Transfer stock from Hong Kong and China. Transfer stock from Hong Kong and China. Support IPOs of Chinese companies in Japanese markets. Support IPOs of Chinese companies in Japanese markets.

Open an office in Beijing by the end

• f the current fiscal year.

Basic Strategy 7

Reduce the System and Backoffice Costs of Three Securities Companies

Joint System to Secure Price Negotiating Power Joint System to Secure Price Negotiating Power

• Central network control

Central network control

• In

In-

• house portal website

house portal website

• Common infrastructure

Common infrastructure -

• Joint information system

Joint information system

• Firewall

Firewall

Reduce cost Reduce cost Reduce cost

Improve system stability Improve Improve system stability system stability

Negotiating Power Negotiating Power

Improve office efficiency Improve office Improve office efficiency efficiency Strengthen security Strengthen Strengthen security security

Outside vendor A Outside vendor B Outside vendor C

Successful Network System Integration between World Nichiei Frontier and E*Trade

• Central network control

Central network control

• In

In-

• house portal website

house portal website

• Joint information system

Joint information system

• Firewall

Firewall

Common infrastructure

• Data center -

Internet Internet

Ｎ Ｒ Ｉ

(Nomura Research Institute)

Operations and management

• Broadband Tower, which is an SBI investment target, and E*Trade

share Tower’s iDC service. The infrastructure transfer from September to October went smoothly.

• The next phase is to examine how to integrate office and backoffice

systems.

• 4. Direct Contribution to Society

Direct Contribution to Society

Endowments to children’s social welfare corporations across Japan

After receiving the consent of nine special government ordinance cities and 39 districts, SBI plans to donate 167.1 million yen* (173 facilities) to child care centers and infant homes that are under local government jurisdiction.

(Million yen) Contribute to research on sudden infant death syndrome (SIDS) and purchase a respiratory arrest monitor. Purchase a transport vehicle for the center. Rebuild facility that was destroyed by fire. Upgrade old heating system and hot water supply boiler. Purpose of funds 1.2 2.0 20.0 15.4 Estimated amount Main endowment beneficiaries Child care center C, Okinawa Infant home A, Shizuoka Child care center B, Gifu Child care center A, Hokkaido

* Contributions come from group members ** who earn over 300 million yen of profit after tax deductions. Each participating member then donates 1% of its profit. (Each group member selects its donation destination.) ** Excluding the pure holding company Softbank Finance

http://www.sbinvestment.co.jp