Slide 1: Financial Results for Fiscal Year Ended March 31, 2016
April 28, 2016 (TSE 1st Section: 8698) Financial Results for Fiscal Year Ended March 31, 2016 This is an English translation of Japanese presentation materials prepared in connection with the disclosure of the financial results of Monex Group, Inc. It includes information derived from the consolidat
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. Highlights p.3 - p.10 II. Consolidated Performance p.11 - p.25 III. Business Update p.26 - p.32 IV. Mid- & Long-Term Strategy “Global Vision” p.33 - p.36 V. Topics p.37 - p.41 Appendix. Group Overview p. 42 - p.50 2
Slide 4: I. Highlights
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Strategy “Global Vision” V. Topics Appendix. Group Overview 3
Slide 5: Management's recognition of the current situation
Management’s recognition of the current situation Nearly completed investment for system globalization and internalization Entering the investment return and profit realization phase Launching our Launched “TradeStation” trading platform, in Japan, at the end of Mar. 2016, and started accepting acco
Slide 6: Highlights－FYE Mar. 2016 (12 months) (1)
Highlights－FYE Mar. 2016 (12 months) (1) ■Consolidated performance of FYE Mar. 2016 Revenues increased in all segments YoY. Japan and US segment had one-time expenses. ◆Total operating revenue after deducting financial expenses and profit attributable to owners of the Company Total operating revenue
Slide 7: Highlights－FYE Mar. 2016 (12 months) (2)
Highlights－FYE Mar. 2016 (12 months) (2) ■Consolidated performance of FYE Mar. 2016 ◆Total operating revenue after deducting financial expenses and cost of sales, profit attributable to owners of the Company （JPY million） Total operating revenue after deducting financial expenses and cost of sales 2
Slide 8: Highlights－FYE Mar. 2016 (12 months) (3)
Highlights－FYE Mar. 2016 (12 months) (3) ・Revenues went up, profit went down. FX & fixed income revenues increased by 16％ YoY Japan ・System related costs increased by 23％ due to parallel operation of new / old backbone segment brokerage system. JPY 2,451M of one-time expenses due to loss on the term
Slide 9: Highlights 4Q FYE Mar. 2016 (3 months) (1)
Highlights 4Q FYE Mar. 2016 (3 months) (1) ■Consolidated performance of 4Q FYE Mar. 2016 One-time expenses in Japan segment for 3Q, and in US segment for 4Q ◆Total operating revenue after deducting financial expenses and quarterly profit attributable to owners of the Company Total operating revenue
Slide 10: Highlights 4Q FYE Mar. 2016 (3 months) (2)
Highlights 4Q FYE Mar. 2016 (3 months) (2) ■Consolidated performance of 4Q FYE Mar. 2016 ◆Total operating revenue after deducting financial expenses and cost of sales, quarterly profit attributable to owners of the Company (JPY million) Total operating revenue after deducting financial expenses and
Slide 11: Highlights 4Q FYE Mar. 2016 (3 months) (3)
Highlights 4Q FYE Mar. 2016 (3 months) (3) ・Revenues went down. JPY 698 M of net profit(JPY 378 M of net loss for 3Q ). Revenue of FX Japan & fixed income grew QoQ, whereas net financial income decreased. segment ・ JPY 2,361 M of one-time expenses due to loss on the termination of an outsource contr
Slide 12: II. Consolidated Performance
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Strategy “Global Vision” V. Topics Appendix. Group Overview 11
Slide 13: YoY Comparison (12 months) Consolidated Performance
YoY Comparison (12 months) Consolidated Performance Revenues increased in all segments YoY, Japan and US had one-time expenses. (JPY million) FYE Mar. 2015 FYE Mar. 2016 Change (Apr. 2014 - (Apr. 2015 - Variance Note (%) Mar. 2015) Mar. 2016) Total operating revenue after Analysis of Japan segment:
Slide 14: YoY Comparison (12 months) Segment Performance
YoY Comparison (12 months) Segment Performance Japan had one-time expenses due to internalization of back bone brokerage system, US and China reduced deficit amounts. (JPY million) Japan US China Change Change Change 2015/3 2016/3 2015/3 2016/3 2015/3 2016/3 (%) (%) (%) Total operating revenue after
Slide 15: Analysis: Japan Segment Operating Revenue
YoY Comparison (12 months) Analysis: Japan Segment Operating Revenue Japan：Revenues increased due to higher stock and FX trading volumes ◆ Total operating revenue after deducting financial expenses and cost of sales (compared to Apr. 2014– Mar. 2015) （JPY million） Within () changes from FYE Mar.2015
Slide 16: Analysis: Japan Segment SG&A
YoY Comparison (12 months) Analysis: Japan Segment SG&A Japan : Expenses increased due to parallel operation of new / old backbone brokerage systems ◆ SG&A (compared to Apr. 2014 – Mar. 2015) （JPY million） Within () changes from FYE Mar.2015 Total +16.6％（+3,317） （JPY million） 25,000 23,320 Others（+4
Slide 17: Analysis: US Segment Operating Revenue (USD)
YoY Comparison (12 months) Analysis : US Segment Operating Revenue (USD) US：Net financial income improved and brokerage commissions increased due to higher volatility ◆ Total operating revenue after deducting financial expenses and cost of sales (compared to Apr. 2014 – Mar. 2015) （USD thousand） Wit
Slide 18: Analysis: US Segment SG&A (USD)
YoY Comparison (12 months) Analysis : US Segment SG&A (USD) US： One-time expenses for information expenses and compensation and benefits ◆ SG&A (compared to Apr. 2014 – Mar. 2015) （USD thousand） Within () changes from FYE Mar.2015 （USD thousand） Total 153,107 +0.9％（+1,354） 160,000 151,752 140,000 20
Slide 19: QoQ Comparison (3 months) Consolidated Performance
QoQ Comparison (3 months) Consolidated Performance One-time expenses in Japan segment for 3Q, and in US segment for 4Q （JPY million） 3Q FYE Mar. 2016 4Q FYE Mar. 2016 Change Variance Note (Oct. - Dec. 2015) (Jan. - Mar. 2016) (%) Total operating revenue after Analysis of Japan segment: P20 11,799 11
Slide 20: QoQ Comparison (3 months) Segment Performance
QoQ Comparison (3 months) Consolidated Performance US had a deficit due to USD 5.0 M one-time expenses for information expenses, compensation and benefits, and loss on business restructuring (JPY million) Japan US China 2016/3 2016/3 Change 2016/3 2016/3 Change 2016/3 2016/3 Change 3Q 4Q (%) 3Q 4Q (
Slide 21: QoQ Analysis: Japan Segment Operating Revenue
QoQ Comparison (3 months) Analysis: Japan Segment Operating Revenue Japan：FX & fixed income increased due to higher FX trading volumes ◆ Quarterly total operating revenue after deducting financial expenses and cost of sales (JPY million) Within () changes from prev. quarter （JPY million） 8,198 8,592
Slide 22: QoQ Analysis: Japan Segment SG&A
QoQ Comparison (3 months) Analysis: Japan Segment SG&A Japan : Expenses increased due to parallel operation of new / old backbone brokerage systems ◆ Quarterly SG&A（JPY million） Within () changes from prev. quarter Total +0.9％（+50） Others（+24） （JPY million） 5,774 5,848 5,824 5,874 Advertising expens
Slide 23: QoQ Analysis: US Segment Operating Revenue (USD)
QoQ Comparison (3 months) Analysis : US Segment Operating Revenue (USD) US : Revenues increased due to higher volatility ◆ Quarterly total operating revenue after deducting financial expenses and cost of sales （USD thousand） （USD thousand） Within () changes from prev. quarter 45,000 41,683 Total 40,
Slide 24: QoQ Analysis: US Segment SG&A (USD)
QoQ Comparison (3 months) Analysis : US Segment SG&A (USD) US：One-time expenses for information expenses and compensation and benefits ◆ Quarterly SG&A （USD thousand） Within () changes from prev. quarter （USD thousand） Total 45,000 +12.1％（+4,399） 39,097 40,774 40,000 36,351 36,375 Others（-372） 36,86
Slide 25: Summary of Statement of Financial Position
Summary of Statement of Financial Position The difference between “Net capital” and “Non-current assets” is the source of funds for investments and shareholders’ return ◆ Summary of consolidated statement of financial position as of March 31, 2016 Assets Liabilities (*1) Non-current assets JPY 888.1
Slide 26: Shareholders' Return
Shareholders’ Return Aim to achieve a total return ratio (*1) of 75% on a multi-year basis and an ROE 15% over the mid- and long-term ◆Dividend per share and total return ratio ◆Return on Equity ratio Interim dividends per share(left) Year-end dividends per share(left) （yen） Total return ratio(right
Slide 27: III. Business Update
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Strategy “Global Vision” V. Topics Appendix. Group Overview 26
Slide 28: Business Update Japan Segment (1)
Business Update Japan Segment (1) A solid customer base of investors who prefer asset building; Stable brokerage commission share ■Comparison of 5 major online brokers* ◆Customer assets per account ◆Stock brokerage commission share (from 3Q FYE Mar. 2007 to 3Q FYE Mar. 2016) (from 3Q FYE Mar. 2007 t
Slide 29: Business Update Japan Segment (2)
Business Update Japan Segment (2) Trading platform “TradeStation” in Japan to be introduced. Aim to acquire “traders” and higher commission share Aim to acquire traders, in addition to the conventional customer base of investors and build more stable customer base ◆Margin trading ratio out of stock
Slide 30: Business Update US Segment (1)
Business Update US Segment (1) Transform FX business structure : Sell retail FX accounts and focus on B2B offering platform ■Selling FX retail accounts to OANDA Tightening of regulations for retail FX business causes higher regulatory, compliance costs and lower profitability. With these environme
Slide 31: Business Update US Segment (2)
Business Update US Segment (2) Initiatives for continuous profitability ◆Quarterly profit attributable to owners of the Company ■Revenue increase initiatives Bottom line was in black, if one time expenses (additional 1. Interest rate swap to fix a part of future interest income from charge for marke
Slide 32: Business Update US Segment (3)
Business Update US Segment (3) ■ Net financial income improved by initiatives ◆Customers’ assets in custody ◆Net interest income (**) and US Federal Fund rate (USD million) Increase in customers’ assets in custody (*) (USD million) （％） 4,000 35 5 Customer Assets(Institutional) Net interest income fr
Slide 33: Business Update China Segment
Business Update China Segment Continuing the strategy to create a business opportunity while keeping a good balance with the risks in China ■ Quarterly Financial Results of Monex Boom Securities Stock trading value of 4Q (3 months) decreased by 6% QoQ. Brokerage commission revenue increased by 12%.
Slide 34: IV. Mid- & Long-Term Strategy “Global Vision”
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Strategy “Global Vision” V. Topics Appendix. Group Overview 33
Slide 35: Mid- & Long-Term Strategy “Global Vision”
Mid- & Long-Term Strategy “Global Vision” “Mid- and long-term revenue growth” and “Fixed-type cost reduction” by shifting system developments from outsourcing to in-house ■ Mid- and long-term revenue growth Measures Progress and Achievements Launching a trading platform for Japanese active traders L
Slide 36: Timeline of Mid- & Long-Term Strategy “Global Vision”
Timeline of Mid- & Long-Term Strategy “Global Vision” Completed project Ongoing project FYE Mar. 2013 FYE Mar. 2014 FYE Mar. 2015 FYE Mar. 2016 FYE Mar. 2017 FYE Mar. 2018 ●Nov. 2012 Upgraded U.S. equity service for Japanese customers Revenue Growth ●Dec. 2013 Started “Tokutei” accounts(*) for Japan
Slide 37: System investments under Global Vision
System investments under Global Vision System-related assets peak out at FYE Mar. 2017 getting lower from FYE Mar. 2018. (JPY million) System related Assets* of Monex, Inc. 25,000 20,000 15,000 10,000 5,000 0 2012/3 2013/3 2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 2020/3 Investment phase under Globa
Slide 38: V. Topics
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Strategy “Global Vision” V. Topics Appendix. Group Overview 37
Slide 39: Improvement of organizational structure / Proposals for AGM
Improvement of organizational structure and operating foundations aiming for revenue and profit growth/ Proposals for AGM Enhancement of the management Surplus appropriation - Proposal for execution system AGM(1) - To enhance and reinforce the management structure for - Year-end dividend for FYE Mar
Slide 40: Corporate Governance
Corporate Governance Establish global-standard corporate governance practices and emphasis on dialogue with retail/institutional investors Adoption of “company with three committees” structure - Highly effective executive management monitoring system - Adopted “company with committees” structure in
Slide 41: Broadening the retail investor base
Broadening the retail investor base Will begin offering wrap asset management services in summer 2016. Expecting to increase assets under management in the med- and long-term Total Cost less Financial Institutions, etc. Minimum Investment than 1％ （Banks, Stock brokers, Discretionary investment Other
Slide 42: Investments
Continuing to create value from the viewpoint of Finance × IT × Retail Service A pioneer of the FinTech community in Japan since the company’s establishment * PFM=Personal Financial Management **DWM=Digital Wealth Management Service Offerings (brokerage etc. Robo-advisor PFM* Investment information
Slide 43: Appendix. Group Overview
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Strategy “Global Vision” V. Topics Appendix. Group Overview 42
Slide 44: Group Overview – streams for Monex value
Group Overview – 3 streams for Monex value Three retail brands: “Monex”, “TradeStation”, and “BOOM” －Oki Matsumoto, a former partner at Goldman Sachs, established Monex and led the online brokerage industry as a pioneer in Japan Brand － Japan: “Monex” promotes long & diversified investment and is su
Slide 45: Group Overview – Continuous growth over years
Group Overview – Continuous growth over 15 years Japan: 1.64M accounts, US: 61K accounts, HK: 11K accounts. Monex has a global customer base Make efforts to continuously grow, with the online brokerage business for retail investors as our core business ◆Consolidated Operating Revenue (JPY millio
Slide 46: Group Overview－Revenues and employees breakdown
Group Overview－Revenues: 60% from Japan, 40% from U.S.; Employees: 40% in Japan, 60% in US or China ◆Total operating revenue after deducting financial expenses ◆SG&A by segment and by cost items by region and by business Others 6% Others 2% Financial income 7% Commissions 1. Equities paid 10% 2. Sys
Slide 47: Group Overview－Corporate value creation cycle
Group Overview－Corporate value creation cycle Business model United China Provide value to Japan States (Hong Kong) Business investment intended for sustainable stakeholders Global Vision High-quality customer base of Broaden the Capital markets Main 1 million active accounts customer customer Inves
Slide 48: Monex Group
Monex Group (As of April 28, 2016) Listed Holding Company [Japan] [U.S./Europe] [China] Online Securities Company Monex International Limited Holding Company in Hong Kong Online Securities Company TradeStation Group, Inc. Holding Company in the U.S. Monex, Inc. Comprehensive investment service provi
Slide 49: Overview of Monex Group and Main Subsidiary Companies
Overview of Monex Group and Main Subsidiary Companies ■ Monex Group, Inc. (Tokyo, Japan) TSE 1st Sec. Code: 8698 ■ TradeStation Group (HQ in Florida, U.S.) - Chairman, Representative Executive Officer, CEO: Oki Matsumoto Online securities group with award-winning trading technology development capab
Slide 50: History of Monex Group
History of Monex Group Japan U.S. China (Hong Kong) 1982 - TradeStation Technologies, Inc. is formed as Omega Research, Inc. 1997 - TradeStation stock lists on NASDAQ - Boom Securities (H.K.) Limited is founded (now Monex Boom Securities (H.K.) Limited), becoming the first in Asia Pacific to launch
Slide 51: Investors' Guide
Investors’ Guide ■Pursue returns to shareholders through ROE improvement ■Shareholders & indicators per share ◆ Our basic policy for shareholders’ return ◆Major shareholders and shareholder breakdown To provide returns to shareholders based on our business (as of March 31, 2016) performance, while r