Slide 1: Financial Results for 2Q of Fiscal Year Ending March 31, 2015
October 30, 2014 (TSE 1st Section: 8698) Financial Results for 2Q of Fiscal Year Ending March 31, 2015 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 co
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. Corporate Strategy Highlights p. 3 - p.14 II. Mid- & Long-term Strategy “Global Vision” p.15 - p.18 III. Consolidated Performance Highlights p.19 - p.25 IV. Segment Performance Highlights p.26 - p.33 V. Group Overview p.34 - p.
Slide 4: I. Corporate Strategy Highlights
I. Corporate Strategy Highlights II. Mid- & Long-term strategy “Global Vision” III. Consolidated Performance Highlights IV. Segment Performance Highlights V. Group Overview 3
Slide 5: Basic Policy
Basic Policy U.S. segment: Selection and concentration Concentrate management resources on business that utilizes our competitive trading platform. Promote cost-cutting and rebuild revenue streams Japan segment: Expansion of core revenue While maintaining our current customer base, acquire activ
Slide 6: Latest management initiatives in U.S.
Latest management initiatives in U.S. Selection and concentration of U.S. business – rebuild revenue streams Established and implemented cost-cutting plan Reevaluated our development structure and data center costs and promoted greater efficiency of our business operations Further development of
Slide 7: U.S. Segment Background of selection and concentration (1)
U.S. Segment Background of selection and concentration (1) TradeStation has two major revenue resources: commissions and financial income from the management of customers’ deposit. After the acquisition of TradeStation in June 2011, the revenue environment has been sluggish with lower market volatil
Slide 8: U.S. Segment Background of selection and concentration (2)
U.S. Segment Background of selection and concentration (2) With a steady increase in customer assets and the number of accounts, TradeStation remains competitive. TradeStation regards its brokerage business primarily of equities as its core revenue source, and plans to increase option trading, which
Slide 9: U.S. Segment Background of selection and concentration (3)
U.S. Segment Background of selection and concentration (3) While the forward short-term rates implied in the current yield curve are high, there is the risk of disinflation, in terms of interest income from managing customers’ cash in custody, we are considering an interest swap contract that partia
Slide 10: Transferred MT4 (FX business) and consolidated the services to acquire customers
Transferred MT4 (FX business) and consolidated the services to acquire customers - In the midst of lower currency volatility and excessive competition and concerns about future business profitability, we transferred MT4 retail accounts offered under the name of IBFX to FXCM Holdings, LLC and consoli
Slide 11: Continuous investment for sustainable growth
Continuous investment for sustainable growth Creating a unique business model under “Global Vision”, our mid- to long-term (FYE Mar. 2012 – FYE Mar. 2018) business (mil yen) Consolidated operating revenue (*) 60,000 50,000 Goal is to expand 40,000 customer base and revenue with the 30,000 tripolar b
Slide 12: Core revenue source: online brokerage for retail investors
Core revenue source: online brokerage for retail investors Our highly competitive equity brokerage business in Japan, the U.S. & China (H.K.) will continue to be our core revenue stream while we expand into B2B business 【B2C】 Offer online financial services for retail investors in Japan, the U.S. an
Slide 13: Shareholders' return
Shareholders’ return Maintain dividend payout policy. Interim dividend per share is based on 1% of annual DOE: 1.20 yen - Pay out dividends in the amount to be determined by referencing the higher of 50% of dividend ratio of net income attributable to owners of the Company or 1% of annual DOE (divid
Slide 14: Operating Revenue: 60% Japan, 40% the U.S.
Operating Revenue: 60% Japan, 40% the U.S. Globalization makes diversification of regional revenue base possible. Aim to establish business portfolio for revenue stabilization ◆Regional operating revenue & business diversification Others 2% Financial Revenue Equities 10% 30% FX 4% China 1% Options 5
Slide 15: SG&A and Employees
Globally control system related costs & personnel costs for our strategy Internalize systems and hire engineers as scheduled while controlling costs globally ◆SG&A by segment and by cost items ◆Employees by segment and by professions Technology Others 5% 5% （※） FX business System Marketing related c
Slide 16: II. Mid- & Long-term Strategy "Global Vision"
I. Corporate Strategy Highlights II. Mid- & Long-term strategy “Global Vision” III. Consolidated Performance Highlights IV. Segment Performance Highlights V. Group Overview 15
Slide 17: Global Vision: Monex's mid- and long-term business strategy
Global Vision Monex’s mid- and long-term business strategy Globally pursues “mid- and long-term revenue growth” 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” and
Slide 18: Timeline of mid- & long-term strategy "Global Vision"
Timeline of mid- & long-term strategy “Global Vision” FYE Mar. 2012 FYE Mar. 2013 FYE Mar. 2014 FYE Mar. 2015 FYE Mar. 2016 FYE Mar. 2017 Completed project Ongoing project June 2011 Acquired TradeStation ●Nov. 2012 Upgraded U.S. equity service for Japanese customers ●Dec. 2013 Started “Tokutei” acco
Slide 19: Focus of Global Vision
Focus of Global Vision ■ Mid- and long-term revenue growth - Differentiated products & services among group companies are developed and offered to retail investors - Diversify revenue sources by expansion of B2B business utilizing Monex’s own internalized system - Diversify revenue sources by geogra
Slide 20: III. Consolidated Performance Highlights
I. Corporate Strategy Highlights II. Mid- & Long-term strategy “Global Vision” III. Consolidated Performance Highlights IV. Segment Performance Highlights V. Group Overview 19
Slide 21: Business Highlights
Business Highlights Revenue increased QoQ both in Japan and the U.S. but loss on business restructuring recognized in the U.S. 2Q of FYE Mar. 2015 (3 months) 2Q FYE Mar. 2015 vs 1Q FYE Mar. 2015 Total revenue: JPY 12,135 million 11.3% Quarterly income before income taxes: JPY -578 million - 2Q of FY
Slide 22: Financial Summary: 1Q vs. 2Q of FYE Mar. 2015 (3 months)
Financial Summary: 1Q of FYE Mar. 2015 vs. 2Q of FYE Mar. 2015 (3 months) Total operating revenue increased by 11%; increased approximately 10% in all segments (mil yen, %) 1Q of FYE Mar. 2015 2Q of FYE Mar. 2015 Fluctuation (%) (Apr. to Jun. 2014） (Jul. to Sep. 2014） Total revenue 10,903 12,135 11.
Slide 23: Major Increase/Decrease Factors of Revenue and Expenses (QoQ Comparison)
Major Increase/Decrease Factors of Revenue and Expenses (QoQ Comparison) Revenue increased due to more transactions in equity market (Japan and the U.S.) ■ Total revenue ■ Total expenses (Comparison with Apr. to Jun. 2014) (Comparison with Apr. to Jun. 2014) ◆Total revenue increased mainly due to br
Slide 24: Financial Summary: 2Q FYE Mar. 2014 vs. 2Q FYE Mar. 2015 (6 months)
Financial Summary: 2Q of FYE Mar. 2014 vs. 2Q of FYE Mar. 2015 (6 months) Total operating revenue decreased by 22%; decreased by 31% in Japan, decreased by 3% in China and increased by 1% in the U.S. (mil yen, %) 2Q of FYE Mar. 2014 2Q of FYE Mar. 2015 Fluctuation(%) (Apr. to Sep. 2013） (Apr. to Sep
Slide 25: Major Increase/Decrease Factors of Revenue and Expenses (vs. 2Q FYE Mar. 2014)
Major Increase/Decrease Factors of Revenue and Expenses (vs. 2Q FYE Mar. 2014) Revenue decreased mainly due to the quiet equity and FX market (Japan and the U.S.) ■ Total revenue (Comparison with Apr. to Sep. 2013) ■ Total expenses (Comparison with Apr. to Sep. 2013) ◆Total revenue decreased due to
Slide 26: Summary of Statement of Financial Position
Summary of Statement of Financial Position Established solid financial position with non-current type assets being smaller than net capital and sufficient cash and investments ◆ Summary of consolidated statement of financial position as of September 30, 2014 Assets Liabilities (*1) Non-current type
Slide 27: IV. Segment Performance Highlights
I. Corporate Strategy Highlights II. Mid- & Long-term strategy “Global Vision” III. Consolidated Performance Highlights IV. Segment Performance Highlights V. Group Overview 26
Slide 28: Segment Performance Highlights Japan Segment (1)
Segment Performance Highlights Japan Segment (1) Stock brokerage commissions share and margin balance share remain stable; Try to increase margin balance share ◆Stock brokerage commissions share of 5 major ◆Margin balance share of 5 major online brokers online brokers for the past 10 years (1Q FYE M
Slide 29: Segment Performance Highlights Japan Segment (2)
Segment Performance Highlights Japan Segment (2) Introduction of a competitive trading tool next fiscal year helps acquire active traders and expand revenue ■ Plan for expanding revenue Aim to expand revenue share by acquiring active traders - Develop a trading tool for active traders : Will launch
Slide 30: Segment Performance Highlights U.S. Segment (1)
Segment Performance Highlights U.S. Segment (1) Revenue levels off in continuous low volatility ◆ Quarterly EBITDA ■Increase in personnel expenses because the estimated (mil USD) 5 stock compensation fee was adjusted (USD 3.6 million) - Salaries and compensation for engineers are partly booked not i
Slide 31: Segment Performance Highlights U.S. Segment (2)
Segment Performance Highlights U.S. Segment (2) Customer assets, the sources of financial income, have increased ■Net interest income composed of : (A) interest income from investment management and (B) net interest income from loan management (A) Depositing / investing of corporate cash and custome
Slide 32: Segment Performance Highlights U.S. Segment (3)
Segment Performance Highlights U.S. Segment (3) TradeStation 9.5 launched in China; steadily establishing stable revenue stream ◆DARTs share among 5 U.S. major online brokers (*1) ■Progress of B2B business Korea TradeStation - TradeStation 9.5 launched in Korea in June 2014, through 9% E*Trade Shinh
Slide 33: Segment Performance Highlight China Segment
Segment Performance Highlight China Segment Gear up for deregulation of foreign capital companies and establishing solid ground to acquire customers in PRC ■ Flexibly promote measures in mainland China while controlling downside risks - Reorganize a new company aiming to acquire customers in mainlan
Slide 34: Performance Highlights Corporate activities
Performance Highlights Corporate activities Enhance corporate value; establish business base by reaching the world standard, offering new value and respecting diversity ◆Majority of the board is outside directors, ◆Capital & business alliance with Shizuoka Bank strengthening corporate governance - C
Slide 35: V. Group Overview
I. Corporate Strategy Highlights II. Mid- & Long-term strategy “Global Vision” III. Consolidated Performance Highlights IV. Segment Performance Highlights V. Group Overview 34
Slide 36: The Monex Group
The Monex Group (As of September 30, 2014) Listed Holding Company [Japan] [U.S./Europe] [China] Online Securities Company Monex International Limited Holding Company in Hong Kong TradeStation Group, Inc. Holding Company in the U.S. Online Securities Company Monex, Inc. Online Securities Company Comp
Slide 37: Corporate governance and disclosure
Corporate governance and disclosure Global-standard organization and financial disclosure based on IFRSs ■Company with committees - Adopted company with committees organizational structure in June 2013 - 6 directors out of 11 are outside and independent directors - Most of the outside directors have
Slide 38: 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 (HQ in Florida, the U.S.) - Chairman, Representative Executive Officer & CEO: Oki Matsumoto Online securities group with award winning trading technology developm
Slide 39: 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 40: Investors' Guide
Investors’ Guide ■Pursue shareholders’ return by improvement of ROE ■Shareholders & indicators per share ◆ Our basic policy for shareholders’ return ◆Major shareholders and shareholder breakdown (as of September 30, 2014) To provide return to shareholders based upon our business performance, while r