Monex Group, Inc. · TSE:8698
Monex — 1H FYE March 2014 Earnings Presentation
57 slides from Monex's earnings presentation, Oct 31, 2013
Slide 1: Financial Results of 1H of Fiscal Year Ending March 31, 2014
October 31, 2013 (TSE 1st Section: 8698) Financial Results of 1H of Fiscal Year Ending 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 con
Slide 2: Important Matters Concerning Product-related Risks
Important Matters Concerning Product-related Risks This material is an explanatory material on the financial results of Monex Group, Inc. (“the Company”). The descriptions herein concerning the products, services, etc. which are handled by the Company’s group companies (“the Group Companies”), are m
Slide 3: 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 4: Table of Contents
Table of Contents Important Matters Concerning Product-related Risks p. 1 Our Business Principles p. 2 Table of Contents p. 3 I. WHAT IS MONEX GROUP? p. 4 - p. 6 II. Business Highlights p. 7 - p.13 III. Financial Results p.14 - p.23 IV. Our Growth Strategy – “Global Vision” p.24 - p.27 [Data] 1. Mar
Slide 5: I. What is Monex Group?
I. WHAT IS MONEX GROUP? II. Business Highlights III. Financial Results IV. Our Growth Strategy - “Global Vision” [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 4
Slide 6: What is Monex Group?
WHAT IS MONEX GROUP? “We are a global financial group focused on offering retail investors worldwide access to institutional levels of service” Open doors to top financial markets & products to retail investors with our best-of-breed technology, information, service & education 5
Slide 7: Our Business Lines
Our Business Lines <B2C> Online Financial Service for Retail Investors in Japan, U.S. & Hong Kong <B2B> Largest Retail Growth Global Our Current Revenue Driver Customer Base New Initiative Investor Market Potential Japan U.S. China (H.K.) FX B2B Benefiting fully from our high EBITDA (*2) showing a o
Slide 8: II. Business Highlights
I. WHAT IS MONEX GROUP? II. Business Highlights III. Financial Results IV. Our Growth Strategy - “Global Vision” [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 7
Slide 9: Business Highlights
Business Highlights ■ Business Highlights - 1H of FYE March 2014 recorded the highest revenue for the 1H financial result. 1H FYE Mar. 2014 YoY Total operating revenue after deducting financial expenses: JPY 27,085 million (+93%) Quarterly net income attributable to owners of the Company: JPY 6,715
Slide 10: Japan Segment Business Highlights (1)
Japan Segment Business Highlights (1) ■ Revenue increased compared to year-earlier quarter ◆Japan Segment Results ◆ Comparative Revenue Growth among (mil. yen) 5 Top Online Brokers in Japan 550 14,000 70% Total operating Trends of Brokerage Commission Index (excl. revenue after 500 futures & options
Slide 11: Japan Segment Business Highlights (2) / China Segment Business Highlights
Japan Segment Business Highlights (2) / China Segment Business Highlights ■ Japan & China segments for July – September, 2013 ◆ NISA (*) account opening applications steadily ◆ 5th largest number of IPO underwriting (2Q FYE March increased 2014) (*1) up to 45,000 as of October 1, 2013 The number of
Slide 12: U.S. Segment Business Highlights (1)
U.S. Segment Business Highlights (1) ■ The two revenue drivers of this segment are (a) brokerage commissions and (b) net interest income (a) Active traders are the main customer segment → Market volatility (VIX) is a reasonable indicator for our DARTs (Higher volatility, more DARTs) (b) Depositing/i
Slide 13: U.S. Segment Business Highlights (2)
U.S. Segment Business Highlights (2) ◆TradeStation Quarterly Total Operating Revenue after deducting ■ Profitability improvement： EBIDTA of U.S. business steadily recovers financial expenses Equities Options Futures Forex Interest revenue Other (*1) (USD mil.) 40 200,000 ・ Improvement in profitabili
Slide 14: Global FX Business Highlights
Global FX Business Highlights ■ Increase in revenue per lot (*) by integrating FX flows of two US ◆Quarterly Global FX Revenue entities since this fiscal year （USD thousands） 30,000 → Further improvement in revenue per lot is expected 25,984 when our Japanese volume is integrated into our U.S. 24,46
Slide 15: III. Financial Results
I. WHAT IS MONEX GROUP? II. Business Highlights III. Financial Results IV. Our Growth Strategy - “Global Vision” [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 14
Slide 16: Trends of Quarterly Financial Results
Trends of Quarterly Financial Results ◆Consolidated Basis 1Q of FYE 2Q of FYE 3Q of FYE 4Q of FYE 1Q of FYE 2Q of FYE (mil yen) Mar. 2013 Mar. 2013 Mar. 2013 Mar. 2013 Mar. 2014 Mar. 2014 18,000 Total operating revenue after deducting financial expenses 15,668 16,000 The amount equivalent to operati
Slide 17: Financial Summary: 1Q vs. 2Q FYE Mar. 2014 (1)
Financial Summary: 1Q of FYE Mar. 2014 vs. 2Q of FYE Mar. 2014 (1) (million yen, %) 1Q of FYE Mar. 2014 2Q of FYE Mar. 2014 Fluctuation (%) (Apr. to Jun. 2013） (Jul. to Sep. 2013） Total revenue 19,171 12,421 -35.2% Total expense 10,765 9,750 -9.4% Quarterly income before income taxes 8,407 2,671 -68
Slide 18: Financial Summary: 1Q vs. 2Q FYE Mar. 2014 (2)
Financial Summary: 1Q of FYE Mar. 2014 vs. 2Q of FYE Mar. 2014 (2) By local segment (million yen, %) Japan U.S. China 1Q of 2Q of 1Q of 2Q of 1Q of 2Q of Fluctuation Fluctuation Fluctuation FYE Mar. FYE Mar. FYE Mar. FYE Mar. FYE Mar. FYE Mar. (%) (%) (%) 2014 2014 2014 2014 2014 2014 Total revenue
Slide 19: Major Increase/Decrease Factors of Revenue and SG&A (QoQ)
Major Increase/Decrease Factors of Revenue and SG&A (QoQ Comparison) ■ Total operating revenue after deducting financial expenses ■ Selling, general & administrative expenses (Comparison with April to June of FYE March 2014) (Comparison with April to June of FYE March 2014) ◆Commission decreased due
Slide 20: Financial Summary: 1H FYE Mar. 2013 vs. 1H FYE Mar. 2014 (1)
Financial Summary: 1H of FYE Mar. 2013 vs. 1H of FYE Mar. 2014 (1) (million yen, %) 1H of FYE Mar. 2013 1H of FYE Mar. 2014 Fluctuation (%) (Apr. to Sep. 2012) (Apr. to Sep. 2013) Total revenue 16,956 31,593 +86.3% Total expense 15,628 20,515 +31.3% Quarterly income before income taxes 1,328 11,078
Slide 21: Financial Summary: 1H FYE Mar. 2013 vs. 1H FYE Mar. 2014 (2)
Financial Summary: 1H of FYE Mar. 2013 vs. 1H of FYE Mar. 2014 (2) By local segment (million yen, %) Japan U.S. China 1H of 1H of 1H of 1H of 1H of 1H of Fluctuation Fluctuation Fluctuation FYE Mar. FYE Mar. FYE Mar. FYE Mar. FYE Mar. FYE Mar. (%) (%) (%) 2013 2014 2013 2014 2013 2014 Total revenue
Slide 22: Major Increase/Decrease Factors of Revenue and SG&A (YoY)
Major Increase/Decrease Factors of Revenue and SG&A (YoY Comparison) ■ Total operating revenue after deducting financial expenses ■ Selling, general & administrative expenses (Comparison with April to September FYE March 2013) (Comparison with April to September FYE March 2013) ◆Commission increased
Slide 23: Summary of statement of financial position
Summary of statement of financial position ◆ Summary of statement of financial position as of September 30, 2013 Assets Liabilities (*1) Non-current type assets JPY 812.1 bn JPY 733.3 bn Property, plant and equipment JPY 1.7 bn Major assets: Intangible assets (Goodwill) JPY 17.5 bn (*2) Major liabil
Slide 24: Distribution of Revenue and SG&A by Local Segment & Items
Distribution of Revenue and SG&A by Local Segment & Items ■1H of FYE March 2014(6 months) ◆Operating revenue after deducting financial expenses ◆ SG&A by local segment & cost items by local segment and product lines Larger percentage of system related costs in Japan is due to outsourcing expenses Fi
Slide 25: IV. Our Growth Strategy - Global Vision
I. WHAT IS MONEX GROUP? II. Business Highlights III. Financial Results IV. Our Growth Strategy - “Global Vision” [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 24
Slide 26: Concept Global Vision
Concept “Global Vision” Leveraging state-of-the art technology of Manage- TradeStation to improve profitability ment and to expand revenue opportunities Technology Talents World’s Best Japan U.S. China IT Quality Expansion to ROW customer customer customer Ideas base base base System B2B business Pr
Slide 27: Plan to achieve Global Vision - Roadmap
Plan to achieve “Global Vision” - Roadmap ・Improve profitability and increase revenue opportunities by developing global trading platforms Outline utilizing cutting-edge financial and information technology through maximization of group synergy and offering differentiated products and services to re
Slide 28: Roadmap to Global Vision - Progress of reduction of fixed-type costs
Roadmap to “Global Vision” – Progress of reduction of fixed-type costs Goal Commenced “Fixed-type Cost Reduction Project” from FYE Mar. 2013 (May 2013 in public) → Targeting annual cost reduction of JPY 2.69 billion by FYE Mar. 2017 (*1) - Replacement and internalization of trading systems to reduce
Slide 29: Data: Market & Transaction Data
I. WHAT IS MONEX GROUP? II. Business Highlights III. Financial Results IV. Our Growth Strategy - “Global Vision” [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 28
Slide 30: 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 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 Sep.30, 2011 Dec.31, 2011 Mar.31, 2012 Jun.30, 2012 Sep.30, 2
Slide 31: 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 Sep.30, 2011 Dec.31, 2011 Mar.31, 2012 Jun.30, 2012 Sep.30, 2012 Dec.31, 2012 Mar.31, 2013 Jun.30, 2013 Sep.30, 2013 (Unit: person
Slide 32: Market and Transaction Data (3) Japan Segment - Equities
Market and Transaction Data (3) 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 （thousands） （100 mil yen） its equity trading values (100mil yen ) (%) 25
Slide 33: Market and Transaction Data (4) Mutual Funds & Bonds
Market and Transaction Data (4) Japan Segment - Monex, Inc. (Mutual Funds & Bonds) ◆Mutual Funds (Sales and Balance) ◆Fixed Income Businesses (Sales of non-domestic bonds) (mil yen ) (mil yen ) (mil yen ) Sales of Equity mutual Funds(no-load) (left) 70,000 350,000 Sales of Equity mutual Funds(load)
Slide 34: Market and Transaction Data (5) Customer distribution
Market and Transaction Data (5) 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 35.0% 30.0% Homemaker Civil servant Self-employed Male 30.0% 25.0% w
Slide 35: Market and Transaction Data (6) Capital Adequacy Ratio
Market and Transaction Data (6) 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 36: Market and Transaction Data (7) U.S. Segment - TradeStation
Market and Transaction Data (7) U.S. Segment – TradeStation ◆ Breakdown of TradeStation DARTs and correlation with VIX(*) （thousands） Futures DARTs(left) Options DARTs(left) Equities DARTs(left) 180 35 160 Vix Avg. High(right) Vix Avg. Low(right) 30 140 25 120 100 20 80 15 60 10 40 5 20 0 0 2Q of FY
Slide 37: Market and Transaction Data (8) China Segment - Monex Boom Securities
Market and Transaction Data (8) China Segment - Monex Boom Securities ◆ Numbers of active accounts ◆ DARTs (as of the end of each quarter) 10,500 1,600 1,400 1,200 10,000 1,000 800 600 9,500 400 200 9,000 0 2Q of FYE 3Q of FYE 4Q of FYE 1Q of FYE 2Q of FYE 3Q of FYE 4Q of FYE 1Q of FYE 2Q of FYE 2Q
Slide 38: Market and Transaction Data (9) Global FX
Market and Transaction Data (9) Global FX ◆OTC FX business in Japan (Monex, Inc. and Monex FX, Inc.) ◆OTC FX business in U.S. (TradeStation) Trading value Revenue Trading value Revenue （USD 100mil） （mil yen） （100mil yen） (USD thousands） 2,000 150,000 10,000 Trading revenue(left) 1,000 Commissions(le
Slide 39: Data: Financial Data
I. WHAT IS MONEX GROUP? II. Business Highlights III. Financial Results IV. Our Growth Strategy - “Global Vision” [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 38
Slide 40: 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 41: Quarterly consolidated financial results
Quarterly consolidated financial results (million yen) FYE March 2013 FYE March 2014 1Q 2Q 3Q 4Q 1Q 2Q Commission received 4,178 3,898 4,530 7,761 10,763 7,518 Net trading income 1,651 1,290 1,547 2,486 2,821 1,832 Financial revenue 2,142 1,556 2,005 2,492 3,126 2,918 Other operating revenue 144 130
Slide 42: 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 Brokerage commissions 3,109 2,794 3,485 6,288 9,174 6,123 Stocks and ETFs 1,979 1,857 2,440 5,028 7,533 4,848 Options and Futures 1,068
Slide 43: 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 Transaction-related expenses 2,605 2,364 2,409 2,846 3,320 2,939 Commissions paid 959 867 948 1,045 1,332 1,152 Exchange and associati
Slide 44: 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 Other financial revenue 57 175 18 4,605 2,296 4 Gain on sales of investment securities - 160 16 4,604 2,291 - Dividends income 43 - - - 3 - Others 14 15 2 1 2 4 O
Slide 45: Quarterly consolidated financial results by local segment
Quarterly consolidated financial results by local segment (million yen) FYE March 2013 FYE March 2014 1Q 2Q 3Q 4Q 1Q 2Q 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 2,306 1,828 48 2,226 1,627 47 2,749 1,730 55 5,699 1,988 85 8,323 2,360 94 5,284 2
Slide 46: 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 1Q 2Q 3Q 4Q 1Q 2Q 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 1,726 1,339 48 1,61
Slide 47: 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 1Q 2Q 3Q 4Q 1Q 2Q 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 1,193 1,396 27 1,10
Slide 48: U.S. Segment: Quarterly financial results (in USD)
U.S. Segment :Quarterly consolidated financial results (in USD) Reclassified consolidated statement of income (USD thousands) FYE March 2013 FYE March 2014 1Q 2Q 3Q 4Q 1Q 2Q Brokerage commissions 16,691 14,468 15,110 15,846 17,923 15,972 Stocks and ETFs 5,240 4,587 4,501 5,011 5,102 4,883 Options an
Slide 49: U.S. Segment: Quarterly 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 (USD thousands) FYE March 2013 FYE March 2014 1Q 2Q 3Q 4Q 1Q 2Q Transaction-related expenses 17,400 15,905 15,064 15,172 15,910 14,868 Commissions paid 9,402 8,457 8,487 8,4
Slide 50: 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 September 30, 2013 March 31, 2013 September 30, 2013 Cash and cash equivalents 51,193 84,420 Property and equipment 1,485 1,670 Cash segregated as deposits 349,837 403,189 Intangible assets
Slide 51: Consolidated statement of financial position (2)
Consolidated statement of financial position (2) ■Liabilities ■Equity (million yen) As of As of As of As of March 31, 2013 September 30, 2013 March 31, 2013 September 30, 2013 Derivative liabilities 7,604 6,543 Common stock 10,394 10,394 Margin transaction liabilities 39,745 34,828 Additional-paid i
Slide 52: Consolidated statement of financial position (3)
Consolidated statement of financial position (3) ■Investments in securities (million yen) As of As of Fair value measurement Description March 31, 2013 September 30, 2013 Investments in securities 18,551 7,821 Available-for-sale financial assets Quoted prices (unadjusted) in active markets for See t
Slide 53: Data: Corporate Data
I. WHAT IS MONEX GROUP? II. Business Highlights III. Financial Results IV. Our Growth Strategy - “Global Vision” [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 52
Slide 54: The Monex Group
The Monex Group (As of October 31, 2013) 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 Online Securities Company Monex, Inc. TradeStation
Slide 55: 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 56: 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 Interne
Slide 57: Investors' Guide
Investors’ Guide ■Efforts to pursue for shareholders’ return ■Shareholders & indicators per share ◆ Our Basic Policy for Shareholders’ Return ◆Major shareholders and shareholder breakdown To provide return to shareholders based upon our business (as of September 30, 2013) Securities companies 4.0% p
Monex Group — 1H FYE March 2014 Earnings Presentation on 6ix