For its consolidated financial statements the TSE group accounts for 2 subsidiaries, Japan Securities Clearing Corporation (JSCC) and Tosho System Service (TSS), and equity accounting is applied to three other companies: Tosho Computer Systems (TCS), NSP Tsushin, and Japan Securities Depository Center (JASDEC). TCS was a subsidiary of TSE until February 2002 and its profit and loss until that time is reflected in the group's consolidated profit and loss statement. However, as TCS did not settle accounts when sold in February (the fiscal year ends in March) their results through March will be included in the group's figures and will be treated as though it were a subsidiary for the full year. On the balance sheet though, since TCS was no longer a subsidiary at the end of the year, TSE will utilize equity accounting when introducing TCS figures.
This year marks the first that TSE has produced consolidated financial statements as a stock company, which would preclude relative comparison with earlier periods. Therefore, non-consolidated results from the previous year will be used as a reference when explaining results from business operations.
Income from operations totaled 44.735 billion yen, which includes trading participant dues, listing fees, and revenue from information services for TSE non-consolidated activities, and also income from system development within TCS and TSS as well as income associated with the receipt and distribution of securities at JSCC. Furthermore operating costs, including subsidiaries' costs, totaled 42.982 billion yen, which produced the following: operating profit of 1.753 billion yen (compared to 1.38 billion yen on an unconsolidated basis last year) and a current profit of 2.296 billion yen (compared to 1.635 billion yen on an unconsolidated basis last year).
Sale of TSE's former subsidiary TCS increased extraordinary profit by 1.264 billion yen. Extraordinary losses reached 1.179 billion yen due to, among others, a change to the calculation method for severance packages given to former employees of TCS.
Net income before taxes for the consolidated group came to 1.959 billion yen (compared with a non-consolidated figure of 3.929 billion yen for the previous FY), and net income was 843 million yen (compared to a non-consolidated figure of 2.826 million yen for the previous FY).
Keeping in mind that TCS will is no longer a subsidiary of TSE, for the next fiscal year TSE expects to record, on a consolidated basis, 43 billion yen in operating profit, 2.4 billion yen in current profit, and 1.4 billion yen in net income.
Executive Appointments
At the time of TSE's demutualization, the terms of office of the selected board of directors and auditors was set to end at the first general meeting of shareholders held within a year after demutualization. These terms will therefore be fulfilled when TSE holds its first general meeting of shareholders on June 18. During the board of directors meeting on May 21, after careful examination by the nomination and remuneration committee, candidates were decided upon for both the board of directors and auditors. Candidates for representative directors as well as executive officers, to be chosen at the board of directors meeting following the general shareholders meeting, have been selected as well. For a list of the board of directors, auditors and executive officers, please visit: New Executive Appointments
Revision to Margin and Loan Transaction Regulations to allow REITs to be Targeted for Margin and Loan Transactions.
Since their introduction last year in the Tokyo market, REITS have enjoyed very favorable trading conditions, which has led TSE to consider them as good candidates to be included in the margin transaction framework. As the needs of investors to utilize REITs in margin trading has increased, and with a view to increase the activity on convenience of its exchange, TSE has therefore decided to introduce margin and loan transactions for REITs on its exchange. To do so, TSE must first revise the regulations concerning such transactions. TSE made these revisions, with prior approval received from the Financial Services Agency, on May 27. Margin trading on REITs will be available from early June.
