Slide 1: Financial Results for Fiscal Year Ended March 31, 2017
April 28, 2017 (TSE 1st Section: 8698) Financial Results for Fiscal Year Ended March 31, 2017 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 Always a step ahead of the “Y” in "MONEY," our name MONEX symbolizes our position as a forerunner in finance. In the face of an ever-changing future, the Monex Group utilizes state-of-the-art IT technologies and world-class financial expertise to design innovative ways of man
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.35 Appendix. Group Overview p.36 - p.46 2
Slide 4: I. Highlights
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Strategy “Global Vision” Appendix. Group Overview 3
Slide 5: Management's recognition of the current business situation
Management’s recognition of the current business situation Realized technical modernization and internalization at each segment globally Expand customer base and increase revenue and profit at every location Develop new business areas beyond the brokerage business ・Fixed-type cost will decrease by a
Slide 6: Highlights FYE Mar. 2017 (12 months)
Highlights FYE Mar. 2017 (12 months) Profit decreased due to the costs to migrate Japan’s backbone system Segment profit of JPY 1,768M, which is 70% decrease YoY in FYE Mar. 2017, due Japan segment to decrease in stock and FX trading volume and increase in costs for parallel operation of backbone sy
Slide 7: Consolidated performance of FYE Mar. 2017
Highlights FYE Mar. 2017 (12 months) ■Consolidated performance of FYE Mar. 2017 ◆Total operating revenue after deducting financial expenses and profit attributable to owners of the Company (JPY million) Total operating revenue after deducting financial expenses Consolidated 60,000 Profit attributabl
Slide 8: Operating revenue and segment profit: US and Asia-Pacific
Highlights FYE Mar. 2017 (12 months) ◆Total operating revenue after deducting financial expenses and cost of sales, and segment profit Total operating revenue after deducting financial expenses and cost of sales (JPY million) US 20,000 Segment profit 18,541 14,637 15,616 15,000 13,243 10,134 10,000
Slide 9: Highlights 4Q FYE Mar. 2017 (3 months)
Highlights 4Q FYE Mar. 2017 (3 months) Profit decreased by the costs to migrate Japan’s backbone system Segment profit of JPY 255M in 4Q (3 months), which is a decrease by Japan segment 64% QoQ, due to the parallel operation and temporary costs regarding migration of the backbone system Segment prof
Slide 10: Consolidated performance of 4Q FYE Mar. 2017
Highlights 4Q FYE Mar. 2017 (3 months) ■Consolidated performance of 4Q FYE Mar. 2017 ◆Total operating revenue after deducting financial expenses and quarterly profit attributable to owners of the Company Total operating revenue after deducting financial expenses (JPY million) Quarterly profit attrib
Slide 11: 4Q segment performance: US and Asia-Pacific
Highlights 4Q FYE Mar. 2017 (3 months) ◆Total operating revenue after deducting financial expenses and cost of sales and segment profit (JPY million) US Total operating revenue after deducting financial expenses and cost of sales Segment profit 6,000 4,336 5,071 4,565 4,569 4,091 3,976 3,677 3,849 4
Slide 12: II. Consolidated Performance
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Strategy “Global Vision” Appendix. Group Overview 11
Slide 13: YoY Comparison (12 months) Consolidated Performance
YoY Comparison (12 months) Consolidated Performance (JPY million) FYE Mar. 2016 FYE Mar. 2017 Change (Apr. 2015 - (Apr. 2016 - Variance Reference (%) Mar. 2016) Mar. 2017) Total operating revenue after P14: Analysis of Japan segment 49,642 41,852 -7,790 -15.7% deducting financial expenses P16: Analy
Slide 14: YoY Comparison (12 months) Segment Performance
YoY Comparison (12 months) Segment Performance (JPY million) Japan US Asia Pacific Change Change Change 2016/3 2017/3 2016/3 2017/3 2016/3 2017/3 (%) (%) (%) Total operating revenue after deducting financial expenses 31,822 26,692 -16.1% 18,541 15,616 -15.8% 830 707 -14.8% and cost of sales SG&A 23,
Slide 15: YoY Analysis: Operating Revenue (Japan)
YoY Comparison (12 months) Analysis: Operating Revenue Japan：Revenue decreased due to lower trading volume of stocks and FX ■ Total operating revenue after deducting financial expenses and cost of sales (compared to Apr. 2015 - Mar. 2016) （JPY million） 35,000 31,822 Total operating revenue after ded
Slide 16: YoY Analysis: SG&A (Japan)
YoY Comparison (12 months) Analysis: SG&A Japan : System related costs increased because amotization started of Japanese equities trading platform and old/new backbone systems operated in parallel ■ SG&A (compared to Apr. 2015 - Mar. 2016) （JPY million） 25,050 25,000 23,320 1,740 SG&A Total +7.4% (
Slide 17: YoY Analysis: Operating Revenue (USD)
YoY Comparison (12 months) Analysis : Operating Revenue (USD) US：Revenue excluding the sale of FX business remains unchanged from the previous year. Enhancement of net financial income covers the decline in brokerage commission ■ Total operating revenue after deducting financial expenses and cost of
Slide 18: YoY Analysis: SG&A (USD)
YoY Comparison (12 months) Analysis : SG&A (USD) US：Commissions paid and other expenses decreased due to lower trading volume. Also compensation and benefits decreased excluding one-time expense such as severance payment ■SG&A (compared to Apr. 2015 - Mar. 2016) （USD thousand） 153,107 160,000 145,88
Slide 19: QoQ Comparison (3 months) Consolidated Performance
QoQ Comparison (3 months) Consolidated Performance （JPY million） 3Q FYE Mar. 2017 4Q FYE Mar. 2017 Change Variance Reference (Oct.-Dec. 2016) (Jan.-Mar. 2017) (%) Total operating revenue P20: Analysis of Japan segment after deducting financial 10,419 11,333 914 8.8% P22: Analysis of US segment (USD)
Slide 20: QoQ Comparison (3 months) Segment Performance
QoQ Comparison (3 months) Segment Performance (JPY million) Japan US Asia Pacific 2017/3 2017/3 Change 2017/3 2017/3 Change 2017/3 2017/3 Change 3Q 4Q (%) 3Q 4Q (%) 3Q 4Q (%) Total operating revenue after deducting financial expenses and 6,658 7,292 9.5% 3,849 4,114 6.9% 170 199 16.7% cost of sales
Slide 21: QoQ Analysis: Operating Revenue (Japan)
QoQ Comparison (3 months) Analysis: Operating Revenue Japan：Net financial Income improved ■Quarterly total operating revenue after deducting financial expenses and cost of sales （JPY million） 8,000 7,292 Quarterly total operating revenue after 7,103 deducting financial expenses and cost of 7,000 6,7
Slide 22: QoQ Analysis: SG&A (Japan)
QoQ Comparison (3 months) Analysis: SG&A Japan : System related expenses increased due to the parallel operation of old/new backbone systems throughout 4Q (3 months). SG&A from April 2017 will decrease to the amount in 4Q FYE Mar. 2016 See P27 for details of the future fixed-type costs ■Quarterly SG
Slide 23: QoQ Analysis: Operating Revenue (USD)
QoQ Comparison (3 months) Analysis : Operating Revenue (USD) US : Net financial income improved and Revenue from PFOF*1 increased ■Quarterly total operating revenue after deducting financial expenses and cost of sales （USD thousand） Total operating revenue after deducting 40,000 39,377 1,183 36,736
Slide 24: QoQ Analysis: SG&A (USD)
QoQ Comparison (3 months) Analysis : SG&A (USD) US : Temporary expenses excluded, SG&A remains almost unchanged from the previous quarter ■Quarterly SG&A （USD thousand） 45,000 40,774 SG&A Total +6.0% ( +2,048) 38,728 * figures in parenthesis is the variance from previous quarter 40,000 37,273 35,966
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, 2017 Assets Liabilities (*1) Non-current assets JPY 936.8
Slide 26: Shareholders' Return
Shareholders’ Return Aim to achieve a total return ratio (*1) of 75% on a multi-year basis by dividend and share buyback ◆Dividend per share and total return ratio ◆Return on Equity ratio Interim dividends per share(left) （yen） Year-end dividends per share(left) Total return ratio(right) 30 71.3% 82
Slide 27: III. Business Update
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Strategy “Global Vision” Appendix. Group Overview 26
Slide 28: Japan Segment (1) Migration to a new backbone system
Business Update Japan Segment (1) Migration to a new backbone system Fixed-type costs decreased by JPY 2.4B and cash flow improved by JPY 8.9B, driven by the termination of parallel operation of old/new backbone system ■Fixed-type costs (Costs decreased by JPY 2.4B, Cash flows from operating activit
Slide 29: Japan Segment (2) Customer base expansion
Business Update Japan Segment (2) Customer base expansion Unique products and services appeal to a wide customer base For all traders For active traders Backbone system, GALAXY Japanese stock trading platform, TradeStation - Foundation to expand customer base - Exceptional features that fulfill acti
Slide 30: Japan Segment (3) Monex, Inc.'s customer segment
Business Update Japan Segment (3) Monex, Inc.’s customer segment Higher active accounts ratio and higher customer assets per account compared with peers Margin trading ratio and brokerage commission revenue are promising area Increase revenue by acquiring trader-type customers while retaining our
Slide 31: Business Update US segment (1)
Business Update US segment (1) Achieved segment profit in two consecutive quarters despite the low volatility. Aim to expand customer base ■ Recognize segment profit despite the historically low VIX - Controlling fixed costs since 2Q - Increase in Payment for Order Flow (record high in 4Q) - Increas
Slide 32: Business Update US Segment (2)
Business Update US Segment (2) ■ Net financial income improved ◆Customers’ assets in custody ◆Net interest income *2 and US Federal Fund rate (USD million) Increase in customers’ assets in custody (USD million) （％） 5,000 35 5 Net interest income from investment(left) Customer Assets(Institutional) 3
Slide 33: Business Update Asia Pacific Segment
Business Update Asia Pacific Segment Keep seeking for business opportunities in Asia Pacific area ■ Will launch online securities business operation in Australia - Monex Securities Australia Pty Ltd will start its operation in the first half of FYE Mar. 2018 ■ Quarterly financial results of Monex Bo
Slide 34: IV. Mid- & Long-Term Strategy "Global Vision"
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Strategy “Global Vision” Appendix. Group Overview 33
Slide 35: Mid- & Long-Term Strategy "Global Vision"
Mid- & Long-Term Strategy “Global Vision” Completed development and internal use of the new backbone system which was the first prioritized project. Realized internalization and modernization of the system at each location globally. ■ Mid- and long-term revenue growth Measures Progress and Achieveme
Slide 36: Timeline of Mid- & Long-Term Strategy "Global Vision"
Timeline of Mid- & Long-Term Strategy “Global Vision” FYE Mar. 2013 FYE Mar. 2014 FYE Mar. 2015 FYE Mar. 2016 FYE Mar. 2017 Progress ●Nov. 2012 Upgraded U.S. equity service for Japanese customers Actions for mid- & Revenue Growth long-term revenue ●Dec. 2013 Started “Tokutei” accounts *1 for Japanes
Slide 37: Appendix. Group Overview
I. Highlights II. Consolidated Performance III. Business Update IV. Mid- & Long-Term Strategy “Global Vision” Appendix. Group Overview 36
Slide 38: 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 39: Group Overview – Continuous growth over years
Group Overview – Continuous growth over 15 years Japan: 1.70M accounts, US: 80K accounts, HK: 10K 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 40: Group Overview – Revenues, Costs, Employees by region
Group Overview－Revenues,Costs: 60% from Japan, 40% from US; 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 2% Others 4% Financial income 9% Commissions 1. Equities paid 8% 1.
Slide 41: Group Overview – Corporate value creation cycle
Group Overview－Corporate value creation cycle 40
Slide 42: Investments: Finance × IT × Retail Service
Continuing to create value from the viewpoint of Finance × IT × Retail Service * PFM=Personal Financial Management A pioneer of the FinTech community in Japan since the company’s establishment **DWM=Digital Wealth Management Investment DWM**/Robo-advisor Robo-advisor PFM* DWM**/Robo-advisor Program
Slide 43: 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 44: Monex Group structure
Monex Group (As of April 28, 2017) Listed Holding Company [Japan] [US/Europe] [Asia Pacific] Online Securities Company Monex International Limited Holding Company in Hong Kong TradeStation Group, Inc. Holding Company in the U.S. Monex, Inc. Comprehensive investment service provider Online Securities
Slide 45: 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 46: History of Monex Group
History of Monex Group Japan U.S. Asia Pacific 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 Inter
Slide 47: 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, 2017) FMR LLC (Fidelity) S
Slide 48: Changes of a Remuneration System / Acquiring own shares
Attachment Changes of a Remuneration System Acquiring own shares 【Overview】 【Purpose】 - A remuneration system for our Group’s - Allow flexible capital policies corresponding to management has been changed and restricted changes in the business environment stock remuneration system has been introduce