Slide 1: Financial Results for the Fiscal Year Ended March 31, 2014
April 30, 2014 (TSE 1st Section: 8698) Financial Results for the Fiscal Year Ended March 31, 2014 This is an English translation of Japanese presentation material prepared in connection with the disclosure of the financial results of Monex Group, Inc. It includes information derived from the consoli
Slide 2: Our Business Principles
Our Business Principles "MONEX" stands for the future of finance, one step advanced from "MONEY" The Monex Group is aspiring to empower traders and investors worldwide with best of breed technology, education, service and financial professionalism to provide access to top financial markets globally
Slide 3: Table of Contents
Table of Contents Our Business Principles p. 1 Table of Contents p. 2 I. WHAT IS MONEX GROUP? p. 3 - p. 6 II. Business Highlights p. 7 - p.16 III. Business Strategy p.17 - p.22 IV. Financial Results p.23 - p.32 [Data] 1. Market & Transaction Data p.33 - p.43 2. Financial Data p.44 - p.59 3. Corporat
Slide 4: I. What Is Monex Group?
I. WHAT IS MONEX GROUP? II. Business Highlights III. Business Strategy IV. Financial Results [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 3
Slide 5: What Is Monex Group?
WHAT IS MONEX GROUP? “We are a global financial group focused on providing retail investors across the globe with access to financial services for institutional investors” Monex aims to boost corporate value with growing revenue & profit through developing global trading platforms with cutting-edge
Slide 6: Our Business Lines
Our Business Lines <B2C> Providing Online Financial Service for Retail Investors in Japan, U.S. & Hong Kong <B2B> Largest Retail Growth Global Monex’s Current Revenue Driver New Initiative Investor Market Potential Customer Base Japan U.S. China (H.K.) FX B2B Benefiting from our operating- Quarterly
Slide 7: Revenue Formation
Revenue Formation Japan U.S. China Current Rev. Driver of our Group World Largest Retail Investor Market Growth Potential (mil yen) (mil yen) (mil yen) Total Operating Rev. Income before income taxes 40,000 Total Operating Rev. 40,000 Total Operating Rev. Income before income taxes 40,000 Income bef
Slide 8: II. Business Highlights
I. WHAT IS MONEX GROUP? II. Business Highlights III. Business Strategy IV. Financial Results [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 7
Slide 9: Business Highlights
Business Highlights Quarterly EBITDA of U.S. seg. into black, and good performance under booming economy in Japan seg. ■ Business Highlights - FYE March 2014 recorded the highest in total operating revenue FYE Mar. 2014 (12 months) FYE Mar. 2014 YoY Total operating revenue: JPY 54,722 million +51.6%
Slide 10: Business Highlights Japan Segment (1)
Business Highlights Japan Segment (1) Maintains high-level equity brokerage commission share up to 3Q despite equity trading volume share competition ◆Japan segment results ◆Major online brokers & Monex (mil yen) (mil yen) 14,000 Total operating revenue after deducting financial expenses (a) (left)
Slide 11: Business Highlights Japan Segment (2)
Business Highlights Japan Segment (2) Taking advantage of active market supported by NISA and IPOs as well as gaining customers by offering strategic products and investment information ◆NISA accounts have steadily increased ◆ IPO underwriting maintains good performance: - Accounts opened: about 96,
Slide 12: Business Highlights U.S. Segment (1)
Business Highlights U.S. Segment (1) EBITDA into black in 4Q; Additional revenue from stocks & options initiatives and new B2B business ■EBITDA became positive in 4Q ◆Quarterly EBITDA (mil USD) - DARTs of each product increased by 10-20% in 4Q (QoQ) 5 as retail customers’ activity is recovering - Pr
Slide 13: Business Highlights U.S. Segment (2)
Business Highlights U.S. Segment (2) New revenue source contributing revenue; shows steady growth in revenue despite low volatility market ◆Quartely DARTs (*) & VIX(excluding FX) ■Revenue grows despite low volatility market - Revenue increased by 10% compared to 4Q FYE Mar. 120 DARTs(index,left) VIX
Slide 14: Business Highlights U.S. Segment (3)
Business Highlights U.S. Segment (3) Customer assets increasing; large opportunity to earn interest income from future interest rate rise ■ Net interest income comprised of : (A) interest income from investment management and (B) net interest income from loan management A) Depositing / investing of
Slide 15: Business Highlights U.S. Segment (4) & Global FX
Business Highlights U.S. Segment (4) & Global FX Ensure high-level commission revenue per account owing to active traders, TradeStation’s main customers ◆DARTs share among 5 U.S. major online brokers ◆Commission revenue per account compared to competitors (USD) 2,500 TradeStation 10% 2,000 E*Trade I
Slide 16: Business Highlights China Segment
Business Highlights China Segment Hong Kong business stable. Continue to pursue opportunities for business expansion in mainland China ◆Income from Monex Boom’s equity trading increased (+29% in brokerage commission YoY) (mil HKD) Brokerage commissions 8 6 4 2 0 1Q of FYE 2Q of FYE 3Q of FYE 4Q of F
Slide 17: Business Highlights After April 2014
Business Highlights After April 2014 Aims to offer future-minded online financial services with cutting-edge technology ◆ Alliance with Shizuoka Bank, Ltd. for exponential improvement of Monex’s financial service - Concluded Capital and Business Alliance agreement with Shizuoka Bank Co., Ltd. (April
Slide 18: III. Business Strategy
I. WHAT IS MONEX GROUP? II. Business Highlights III. Business Strategy IV. Financial Results [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 17
Slide 19: Global Vision: Mid- and Long-Term Business Strategy
Global Vision Monex’s mid- and long-term business strategy Globally pursues “mid- and long-term revenue increase” and “fixed-type cost reduction” “Global Vision” is a mid- and long-term business strategy which Monex Group, Inc. has promoted since FYE March 2012 with an aim towards “Globalization” an
Slide 20: Global Vision: Development of Products and Services
Global Vision Development of products and services for mid- and long-term revenue growth Pursues revenue growth by utilizing Monex group’s own resource - Differentiated products & services among group companies are developed and offered to retail investors - Besides the online brokerage business bas
Slide 21: Global Vision: Continuing Reduction of Fixed-Type Costs
Global Vision Continuing reduction of fixed-type costs Implementing fixed-type cost reduction by system internalization Aims to reduce fixed-type costs (*1) of 2.3 billion yen (*2) a year by FYE Mar. 2018 compared Goal to the basis for comparison (*3) (July 2013 in public) SG&A basis for comparison
Slide 22: Growth in Corporate Value and Shareholders' Return
Growth in corporate value and shareholders’ return ROE went 7.9pt up to 12.9%. Maintains dividend payout ratio of 50%, 18 yen dividend a year - Aim to improve ROE by increasing revenue through executing business strategy as well as controlling the equity at an appropriate level - Pay out dividends i
Slide 23: Corporate Governance and Disclosure
Corporate governance and Disclosure Global-standard organization and financial disclosure based on IFRSs ◆Company with Committees (June 2013-) ■Three Committees & Committee members (tentative) - Directors Candidates, 6 out of 11 are “outside & independent” *Names below with underlines: outside & ind
Slide 24: IV. Financial Results
I. WHAT IS MONEX GROUP? II. Business Highlights III. Business Strategy IV. Financial Results [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 23
Slide 25: Quarterly Financial Results
Quarterly Financial Results Total revenue of the U.S. seg. increased by 13% while Japan seg. decreased by 17% (QoQ) ■Consolidated Basis 1Q of FYE 2Q of FYE 3Q of FYE 4Q of FYE 1Q of FYE 2Q of FYE 3Q of FYE 4Q of FYE (mil yen) Mar. 2013 Mar. 2013 Mar. 2013 Mar. 2013 Mar. 2014 Mar. 2014 Mar. 2014 Mar.
Slide 26: Financial Summary: 3Q vs. 4Q FYE Mar. 2014 (1)
Financial Summary: 3Q of FYE Mar. 2014 vs. 4Q of FYE Mar. 2014 (1) (in 3 months) Total revenue decreased by 12% while quarterly net income decreased by 57% (QoQ) (million yen, %) 3Q of FYE Mar. 2014 4Q of FYE Mar. 2014 Fluctuation (%) (Oct. to Dec. 2013） (Jan. to Mar. 2014） Total revenue 13,545 11,9
Slide 27: Financial Summary: 3Q vs. 4Q FYE Mar. 2014 (2)
Financial Summary: 3Q of FYE Mar. 2014 vs. 4Q of FYE Mar. 2014 (2) (in 3 months) Total revenue of U.S. & China seg. increased while Japan seg. decreased By local segment (million yen, %) Japan U.S. China 3Q of 4Q of 3Q of 4Q of 3Q of 4Q of Fluctuation Fluctuation Fluctuation FYE Mar. FYE Mar. FYE Ma
Slide 28: Major Increase/Decrease Factors of Revenue and Expenses (QoQ)
Major Increase/Decrease Factors of Revenue and Expenses (QoQ Comparison) Revenue decreased due to quiet equity market (JPN), affected by fluctuation of revenue/expense items evaluated at every quarter-end ■ Total revenue ■ Total expenses (Comparison with Oct. to Dec. of FYE March 2014) (Comparison w
Slide 29: Financial Summary: FYE Mar. 2013 vs. FYE Mar. 2014 (1)
Financial Summary: FYE Mar. 2013 vs. FYE Mar. 2014 (1) Total revenue increased by 34%; total expenses increased by 12%; income before income taxes increased by 141% because of high operating leverage (million yen, %) FYE Mar. 2013 FYE Mar. 2014 Fluctuation (%) (Apr. 2012 to Mar. 2013） (Apr. 2013 to
Slide 30: Financial Summary: FYE Mar. 2013 vs. FYE Mar. 2014 (2)
Financial Summary: FYE Mar. 2013 vs. FYE Mar. 2014 (2) Realized high operating leverage in Japan and the U.S. By local segment (million yen, %) Japan U.S. China FYE Mar. FYE Mar. Fluctuation FYE Mar. FYE Mar. Fluctuation FYE Mar. FYE Mar. Fluctuation 2013 2014 (%) 2013 2014 (%) 2013 2014 (%) Total r
Slide 31: Major Increase/Decrease Factors of Revenue and Expenses (YoY)
Major Increase/Decrease Factors of Revenue and Expenses (YoY Comparison) Enjoy the brisk market conditions in Japan for the entire FYE Mar. 2014. Show recovery in the U.S. business performance ■ Total revenue (Comparison with FYE March 2013) ■ Total expenses (Comparison with FYE March 2013) ◆Commiss
Slide 32: Summary of Statement of Financial Position
Summary of Statement of Financial Position Establish solid financial basement with non-current type assets being smaller than net capital and enough cash capability ◆ Summary of consolidated statement of financial position as of March 31, 2014 Assets Liabilities (*1) Non-current type assets JPY 929.
Slide 33: Total Operating Revenue and Total Expenses by Local Segment & Items
Total Operating Revenue and Total Expenses by Local Segment & Items Difference in customer base in Japan and the U.S. In Japan: equities represents large proportion of total revenue and in the U.S.: futures & options ■FYE March 2014(12 months) ◆Total operating revenue by local segment and ◆ SG&A by
Slide 34: Data: Market & Transaction Data
I. WHAT IS MONEX GROUP? II. Business Highlights III. Business Strategy IV. Financial Results [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 33
Slide 35: Market and Transaction Data (1) – Customers' Assets in Custody
Market and Transaction Data (1) – Customers’ Assets in Custody (mil yen ) Japan Segment U.S. Segment China Segment 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 As of As of As of As of As of As of As of As of As of Mar.31, 2012 Jun.30, 2012 Sep.30, 2012 Dec.31, 2012
Slide 36: Market and Transaction Data (2) – Number of Employees
Market and Transaction Data (2) – Number of Employees (person） Japan Segment U.S. Segment China Segment 1,000 500 0 As of As of As of As of As of As of As of As of As of Mar.31, 2012 Jun.30, 2012 Sep.30, 2012 Dec.31, 2012 Mar.31, 2013 Jun.30, 2013 Sep.30, 2013 Dec.31, 2013 Mar.31, 2014 (person） FYE
Slide 37: Market and Transaction Data (3) – Japan Segment Brokerage Accounts
Market and Transaction Data (3) – Japan Segment - Monex, Inc. (Brokerage account,etc.) ◆Number of total accounts & active accounts (account） Brokerage accounts Active accounts 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 4Q of FYE 1Q of FYE 2Q of FYE 3Q of FYE 4Q of FYE 1Q of FYE
Slide 38: Market and Transaction Data (4) – Japan Segment Equities
Market and Transaction Data (4) Japan Segment - Monex, Inc. (Equities) ◆Market share and value of equity trading ◆ Breakdown of DARTs and market trading value Monex’s share in retail trading value in 2 major stock exchanges and Futures and OptionsDARTs (per businessday）(left) （thousand） （100 mil yen
Slide 39: Market and Transaction Data (5) – Mutual Funds & Bonds
Market and Transaction Data (5) Japan Segment - Monex, Inc. (Mutual Funds & Bonds) ◆Mutual Funds (Sales and Balance) ◆Fixed Income Businesses (Sales of non-domestic bonds) Sales of Investment Trusts(no-load) (left) (mil yen ) (mil yen ) (mil yen ) Sales of Investment Trusts(load) (left) Monex Group'
Slide 40: Market and Transaction Data (6) – Customer Distribution
Market and Transaction Data (6) Japan Segment – Monex, Inc. (Customer distribution) ◆Active accounts by gender and age ◆Active accounts by occupation Professional Corporation (e.g. Doctor) All accounts Accounts opened within a year 35% 35% Homemaker Civil servant Self-employed 30% 30% Male worker Co
Slide 41: Market and Transaction Data (7) – Capital Adequacy Ratio
Market and Transaction Data (7) Japan Segment - Monex, Inc. (Capital Adequacy Ratio) ◆Capital adequacy ratio (mil yen) 60,000 600% Risk asset amount（left） Non-fixed capital （left） Capital adequacy ratio（right） 50,000 500% 40,000 400% 30,000 300% 20,000 200% 10,000 100% 0 0% As of As of As of As of A
Slide 42: Market and Transaction Data (8) – U.S. Segment TradeStation
Market and Transaction Data (8) U.S. Segment – TradeStation ◆ Breakdown of TradeStation DARTs and correlation with VIX(*) （thousand） Futures DARTs(left) Options DARTs(left) Equities DARTs(left) 140 Vix Avg. High(right) Vix Avg. Low(right) 25 120 20 100 80 15 60 10 40 5 20 0 0 4Q of FYE 1Q of FYE 2Q
Slide 43: Market and Transaction Data (9) – China Segment Monex Boom Securities
Market and Transaction Data (9) China Segment - Monex Boom Securities ◆ Numbers of active accounts ◆ DARTs (as of the end of each quarter) (account) 10,500 1,600 1,400 1,200 10,000 1,000 800 9,500 600 400 200 9,000 0 4Q of FYE 1Q of FYE 2Q of FYE 3Q of FYE 4Q of FYE 1Q of FYE 2Q of FYE 3Q of FYE 4Q
Slide 44: Market and Transaction Data (10) Global FX
Market and Transaction Data (10) Global FX ◆OTC FX business in Japan (Monex, Inc. and Monex FX, Inc.) ◆OTC FX business in U.S. (TradeStation) Revenue Trading value Revenue Trading value （mil yen） （100mil yen） (thousand USD） （100mil USD） 2,000 150,000 Trading revenue(left) Commissions(left) Tradeing
Slide 45: Data: Financial Data
I. WHAT IS MONEX GROUP? II. Business Highlights III. Business Strategy IV. Financial Results [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 44
Slide 46: Significant Impact of Difference between IFRSs and JGAAP
Significant impact of difference between IFRSs and JGAAP We started to adopt IFRSs to consolidated financial statements for FYE March 2013 to improve the international comparability of financial information, while we engage in business activities with a focus of 3 major locations (Japan, U.S. and Ch
Slide 47: Quarterly Consolidated Financial Results
Quarterly consolidated financial results (million yen) FYE March 2013 FYE March 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Commission received 4,178 3,898 4,530 7,761 10,763 7,518 7,937 7,324 Net trading income 1,651 1,290 1,547 2,486 2,821 1,832 1,723 1,634 Financial revenue 2,142 1,556 2,005 2,492 3,126 2,918 3
Slide 48: Consolidated Financial Results (Reclassified)
Consolidated financial results (Reclassified) Reclassified consolidated statement of income (million yen) Changes from FYE FYE March 2013 FYE March 2014 Fluctuation(%) Mar. 2013 Brokerage commissions 15,676 27,572 11,896 75.9% Stocks and ETFs 11,303 22,013 10,709 94.7% Options and Futures 4,189 5,42
Slide 49: Consolidated Financial Results (SG&A)
Consolidated financial results (SG&A) The details of SG&A in consolidated statement of income (million yen) Changes from FYE FYE March 2013 FYE March 2014 Mar. 2013 Fluctuation(%) Transaction-related expenses 10,223 12,235 2,012 19.7% Commissions paid 3,819 4,712 893 23.4% Exchange and association d
Slide 50: Quarterly Consolidated Financial Results (Reclassified)
Quarterly consolidated financial results (Reclassified) Reclassified consolidated statement of income (million yen) FYE March 2013 FYE March 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Brokerage commissions 3,109 2,794 3,485 6,288 9,174 6,123 6,463 5,812 Stocks and ETFs 1,979 1,857 2,440 5,028 7,533 4,848 5,195 4,
Slide 51: Quarterly Consolidated Financial Results (SG&A)
Quarterly consolidated financial results (SG&A) The details of SG&A in consolidated statement of income (million yen) FYE March 2013 FYE March 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Transaction-related expenses 2,605 2,364 2,409 2,846 3,320 2,939 2,953 3,023 Commissions paid 959 867 948 1,045 1,332 1,152 1,11
Slide 52: Quarterly Consolidated Financial Results (Other revenue and other expenses)
Quarterly consolidated financial results (Other revenue and other expenses) (million yen) FYE March 2013 FYE March 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Other financial revenue 57 175 18 4,605 2,296 4 116 -111 Gain on sales of investment securities - 160 16 4,604 2,288 - - - Dividends income 43 - - - 3 - - -
Slide 53: Quarterly Consolidated Financial Results by Local Segment
Quarterly consolidated financial results by local segment (million yen) FYE March 2013 FYE March 2014 3Q 4Q 1Q 2Q 3Q 4Q JPN U.S. CHN JPN U.S. CHN JPN U.S. CHN JPN U.S. CHN JPN U.S. CHN JPN U.S. CHN Commission received 2,749 1,730 55 5,699 1,988 85 8,323 2,360 94 5,284 2,165 80 5,574 2,288 95 4,759 2
Slide 54: Quarterly Results by Local Segment (Reclassified)
Quarterly consolidated financial results by local segment (Reclassified) Reclassified consolidated statement of income (million yen) FYE March 2013 FYE March 2014 3Q 4Q 1Q 2Q 3Q 4Q JPN U.S. CHN JPN U.S. CHN JPN U.S. CHN JPN U.S. CHN JPN U.S. CHN JPN U.S. CHN Brokerage commissions 2,187 1,247 55 4,76
Slide 55: Quarterly Results by Local Segment (SG&A)
Quarterly consolidated financial results by local segment (SG&A) The details of SG&A in consolidated statement of income (million yen) FYE March 2013 FYE March 2014 3Q 4Q 1Q 2Q 3Q 4Q JPN U.S. CHN JPN U.S. CHN JPN U.S. CHN JPN U.S. CHN JPN U.S. CHN JPN U.S. CHN Transaction-related 1,126 1,246 29 1,42
Slide 56: U.S. Segment: Quarterly Consolidated Financial Results (in USD)
U.S. Segment :Quarterly consolidated financial results (in USD) Reclassified consolidated statement of income (thousand USD) FYE March 2013 FYE March 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Brokerage commissions 16,691 14,468 15,110 15,846 17,923 15,972 16,051 17,338 Stocks and ETFs 5,240 4,587 4,501 5,011 5,1
Slide 57: U.S. Segment: Quarterly Results (SG&A) (in USD)
U.S. Segment :Quarterly consolidated financial results (SG&A) (in USD) The details of SG&A in consolidated statement of income (thousand USD) FYE March 2013 FYE March 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Transaction-related expenses 17,400 15,905 15,064 15,172 15,910 14,868 14,164 15,051 Commissions paid 9,
Slide 58: Consolidated Statement of Financial Position (1)
Consolidated statement of financial position (1) ■Assets (million yen) As of As of As of As of March 31, 2013 March 31, 2014 March 31, 2013 March 31, 2014 Cash and cash equivalents 51,193 85,442 Property and equipment 1,485 1,579 Cash segregated as deposits 349,837 426,719 Intangible assets 37,394 4
Slide 59: Consolidated Statement of Financial Position (2)
Consolidated statement of financial position (2) (million yen) ■Liabilities ■Equity As of As of As of As of March 31, 2013 March 31, 2014 March 31, 2013 March 31, 2014 Derivative liabilities 7,604 7,378 Common stock 10,394 10,394 Margin transaction liabilities 39,745 36,308 Additional-paid in capita
Slide 60: Consolidated Statement of Financial Position (3)
Consolidated statement of financial position (3) ■Investments in securities (million yen) As of As of measurement method Description March 31, 2013 March 31, 2014 Investments in securities 18,551 8,390 Fair Value Through Profit or Loss Quoted prices (unadjusted) in active markets for identical (Leve
Slide 61: Data: Corporate Data
I. WHAT IS MONEX GROUP? II. Business Highlights III. Business Strategy IV. Financial Results [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 60
Slide 62: The Monex Group
The Monex Group (As of April 30, 2014) Holding Company [Japan] [U.S./Europe] [China] Online Securities & FX Company Monex International Limited Holding Company in Hong Kong TradeStation Group, Inc. Holding Company in U.S. Online Securities Company Monex, Inc. Comprehensive investment service provide
Slide 63: Introduction of Monex Group and Main Subsidiary Companies
Introduction of Monex Group and Main Subsidiary Companies ■ Monex Group, Inc. (Tokyo, Japan) TSE 1st Sec. Code: 8698 ■ TradeStation Group (Head Office in Florida, USA) - Chairman, Representative Executive Officer & CEO: Online securities group with award winning trading technology development Oki Ma
Slide 64: History of Monex Group
History of Monex Group Japan U.S. China (Hong Kong) 1982 - TradeStation Technologies, Inc. formed as Omega Research, Inc. 1997 - TradeStation stock listed on NASDAQ - Boom Securities (H.K.) Limited was founded (now Monex Boom Securities (H.K.) Limited, being the first in Asia Pacific to launch Inter
Slide 65: Investors' Guide
Investors’ Guide ■Efforts to pursue shareholders’ return ■Shareholders & indicators per share ◆ Our Basic Policy for Shareholders’ Return ◆Major shareholders and shareholder breakdown (as of March 31, 2014) Securities companies 3.9% To provide return to shareholders based upon our business performan