Analysis of Business Performance and Financial Results

Business Overview
Fiscal 2007 Review
In the first half of the fiscal 2007, ended March 31,
2008, the corporate sector of the Japanese economy
benefited from buoyant external demand reported
good results. Capital investment maintained an
upward trend, while an improvement was also seenin the employment conditions. In the latter half,
however, the employment situation showed a lossof improvement momentum. By the fiscal year end,
faced with negative factors such as downside risks
in the U. S. economy, a surge in the price of crudeoil, and a sharp appreciation of the yen against theU. S. dollar, the corporate sector, which has been
the primary driver of growth, began to show signs
of weakness, and the recovery of the Japanese
economy eventually appears to be pausing.
In the Japanese securities markets, both thestock and corporate bond markets maintained
steady performance during the first six months in
response to solid fundamentals of the corporate sector. In the second half of the fiscal year, however,Japanese stock prices were affected by sparked
concerns in global financial markets in the wake of
the U. S. sub-prime loan crisis. The Nikkei Average
declined sharply, closing below the psychological¥12,000 level for the first time in two years andseven months.
Meanwhile, Tokyo Stock Exchange witnessed
active trading with average daily trading volume
of over two billion shares. Driven by the volume
growth, the number of shares handled by bookentry transfer system under JASDEC depository
and the custody balance increased steadily.

52 Japan Securities Depository Center, Inc. ANNUAL REPORT 2008

Financial Results
Operating Income
As a result, income from account transfer
operations, on a consolidated basis, posted ¥13,603
million (up 5.1% year-over-year). The custodybalance also increased steadily, and income fromcustody operations came to ¥5,781 million (up3.9% year-over-year). Operating income prior tocommission rebates was ¥28,027 million (up 8.2%year-over-year) and commission rebates amounted
to ¥2,005 million (down 40.0% year-over-year).
Consequently, operating income amounted to¥26,022 million (up 15.3% year-over-year).
Operating Expenses
Operating expenses for fiscal 2007 amounted to¥21,729 million (up 21.5% year-over-year), due
to an increase of cost for the dematerialization ofstock certificates, which requires upgrading ofcomputer systems.
As JASDEC provides securities clearing
and settlement infrastructure, the depreciation
expenses relating to system maintenance amounted
to ¥12,578 million, which accounted for 57.9% of
total operating expenses.
Net Income
Net income for fiscal 2007 amounted to ¥1,547
million (down 41.6% year-over-year). Earnings per
share was ¥182,082.62.

Financial Conditions
Total assets as of March 31, 2008, on a consolidated basis, were down by ¥1,197 million from theprevious year-end, to ¥54,839 million. This was
mainly due to a reduction in designated assets forclearing funds for deposited at our consolidated
subsidiary JASDEC DVP Clearing Corporation for
securing safe settlements under the DVP settlement
system, although tools and furniture, as well as
development of software in progress of dematerialization for stock certificate were increased. The
assets and liabilities pertaining to participants’funds are presented as designated assets for clearing
funds and deposits received for clearing funds,respectively. The balance was ¥29,884 million.
Net assets at the fiscal year-end stood at¥17,897 million, an increase of ¥1,207 million
year-over-year. This was mainly due to the increase
in retained earnings.
Net cash provided by operating activities
during this financial year, on a consolidated basis,came to ¥8,061 million, which includes income
before income taxes of ¥2,613 million, depreciation
and amortization of ¥5,604 million, and income tax
payments of ¥1,789 million.
Net cash used in investing activities amountedto ¥11,128 million, mainly as a result of capital
investment for system of dematerialization forstock certificates. Net cash provided by financing

activities amounted to ¥2,060 million, as cash
outflow on dividend payments was more than offset
by short-term bank borrowings.
As a result of the foregoing, cash and cash
equivalents as of the fiscal year-end stood at ¥1,816
million, down by ¥1,007 million from the previousyear.
As Japan’s only central securities depository,
JASDEC maintains stable development of financial
operation with sound financial conditions and asufficient level of operating cash flow, in order toachieve its public mission of providing reliable
and certain infrastructure of securities clearing andsettlement.

Financial results (on a consolidated basis)(Million yen)

Operating income
Income from operation(Million yen)
4,000

30,00026,022
21,74520,000Net income
Net income per share( Yen )
400,000

365,197.98(Million yen)

Total assets
Net assets

80,000 73,585

311,995.13

68,517

3,121

22,5593,000

300,000

2,651

19,00356,03760,00054,839182,082.62
2,000

200,000

40,000100,000

20,0007th ( businessterm ( 00

1,547
121,511.06

10,000

1,050
4,777

4,635

5th

6th

4,368

1,000

11,46014,352

16,68917,8976th

7th ( businessterm (1,80504th

7th ( businessterm (04th

5th

6th

4th

5th

Japan Securities Depository Center, Inc. ANNUAL REPORT 200853