- Replacement of TSE's Market Information System
- Revision of Interim Business Plan
- Notice regarding revision of expected dividends
- Revision of regulations following change of clearing organization for futures and options transactions
- TSE Community Meeting in Kobe
This system replacement will be undertaken with the goal of upgrading to a stable system infrastructure for market information reflecting the rapid increase in trading volume and number of orders that came with market recovery in spring of this year.
TSE executed system capability increases in order to respond to the delay of market information and other notices that occurred on July 3 of this year. In March of next year TSE plans to increase system capabilities to 9,160 transmissions a minute (twice the current capability) between the Equities Trading System and Market Information System.
However, based on recent numbers of orders, it will be necessary to increase system capabilities even further. After examining this situation, the Board of Directors decided at today's meeting to replace the overall Market Information System with a higher-grade system. This replacement will make it possible to enlarge system capabilities to 20,000 transmissions a minute.
Operations will begin in April of 2005 and the investment amount will be a total of 6.2 billion yen over five years.
Additionally, as announced on July 30 of this year, the Board also decided to make replacements to the Equity Trading System. At the time of the last announcement, operations were planned for January 2005, but taking into account the timing of the Market Information System replacements, this date has been changed to May 2005.
Revision of Interim Business Plan
TSE's interim business plan is revised every fiscal year on a rolling basis, and a new interim business plan was announced in February of this year. Though it is still the middle of the fiscal year, TSE has revised the plan's objectives of financial figures in order to conform the plan to recent changes in affairs.
Major reasons for the revision include increased equity trading value and amendments to TSE's investment plan.
Firstly, as a result of favorable turns in market conditions, trading value has risen to a high level exceeding predictions made in February of this year at the time of production of the interim business plan.
Additionally, the revised investment consists of large-scale system capability improvements in order to secure market reliability as market conditions recover, including Market Information System replacements and Equity Trading System replacements decided in July of this year.
In the consolidated objectives of financial figures for fiscal year 2005 in the new interim business plan, because average daily trading value for securities (forecasted) was increased from 860.0 billion yen (770.0 billion yen within trading hours, 90.0 billion yen outside trading hours) to 1 trillion yen, operating revenues were raised 1.1 billion yen from their initial value to 41.0 billion yen. Also, due to the increase of IT investment through fiscal year 2006 from 32.5 billion yen to 39.0 billion yen, operating expenses were raised 1.4 billion yen from their initial value to 36.5 billion yen. As a result, operating profits dropped 0.2 billion yen from initial forecasts to 4.5 billion yen.
Meanwhile, in the consolidated objectives of financial figures for fiscal year 2004, initial operating profits have been reduced substantially by 2.4 billion yen to 1.9 billion yen due to increases in depreciation and amortization of system investment.
Additionally, fiscal year 2004 total investment in the facilities investment plan was revised by adding 7.5 billion yen for a forecast of 19.0 billion yen. But due to the 15.8 billion yen in cash that TSE held at the end of September and increased cash flow from operations, the final cash flow for fiscal year will sufficiently cover the increased investment.
As stated above, fiscal year 2004 will see a notable decrease in profits due to increased provisional expenses for new system investment. However, this system investment was deemed an essential infrastructure improvement for stable market management. Also, this will not impair TSE's original profit performance, and it will be possible even after the revisions to secure a certain degree of profit. Therefore, there are no changes to TSE's goal of listing shares in fiscal year 2005, and the company will continue to work toward realizing that goal.
Next, regarding TSE's basic policy on returning profits to its shareholders, TSE has already announced that it will continue to divide the profits while considering financial stability, expansion of business opportunities and dividend yield, and that in order to secure material funds for stable and continuous dividends after TSE shares listed as well as for treasury stock acquisition, earnings retention will be prioritized until listing.
But looking at earnings retention, it is expected that contingent reserves and unappropriated profits will accumulate steadily to reach a level of 10.0 billion yen at the end of this period.
Accordingly, TSE has decided to distribute dividends at the end of this period.
Notice regarding revision of expected dividends
As explained in Section 2, "Revision of Interim Business Plan," because TSE up until now has taken a policy of prioritizing earnings retention until listing expected dividends for this period had not been determined. Expected dividends at the end of this term will be revised to 250 yen per share.
Revision of regulations following change of clearing organization for futures and options transactions
This regulation revision is to change the clearing organization for futures and options transactions from TSE to Japan Securities Clearing Corporation (JSCC) in order to improve convenience from the standpoint of trading participants. As already announced on September 24, the necessary procedures are already underway, and the change will take effect on February 2, 2004.
TSE Community Meeting in Kobe
TSE's community meetings began in Nagoya in January of last year. The eighth TSE community meeting will be held in Kobe on December 2 for local listed companies in Hyogo prefecture.
