Slide 1: Financial Results of Fiscal Year Ended March 31, 2013
May 9, 2013 Financial Results of Fiscal Year Ended March 31, 2013 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 consolidated financial statements of Mo
Slide 2: Important Matters Concerning Product-related Risks
Important Matters Concerning Product-related Risks This material is 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 made
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: About accounting standard
About accounting standard We prepare consolidated financial statements for the year ended March 31, 2013 in accordance with International Financial Reporting Standards (IFRS). The numbers on this material are based on IFRS unless otherwise noted, the numbers mentioned as “JGAAP” are based on general
Slide 5: Table of Contents
Table of Contents Important Matters Concerning Product-related Risks p. 1 Our Business Principles p. 2 About accounting standard p. 3 Table of Contents p. 4 I. Who we are & our growth strategy p. 5 ～ p. 7 II. Financial Results p. 8 ～ p.19 III. Global Vision & Strategies p.20～ p.29 IV. Data p.30 Part
Slide 6: I. Who we are & our growth strategy
I. Who we are & our growth strategy II. Financial Results III. Global Vision & Strategies IV. Data V. Adopting IFRS 5
Slide 7: Who we are & Our goal
Who we are & Our goal ■ Our goal To become a truly global online financial service provider which empowers investors and traders worldwide to access global markets and best-of-breed products ■ Our growth strategy - “Global Vision” ■ Our core businesses & locations - Online brokerage & FX service - J
Slide 8: Our growth strategy – Global Vision
Our growth strategy – “Global Vision” (Refer to “III. Global Vision & Strategies” for details) Global Vision – Strategies for revenue growth & cost management - Inter-group synergetic use of competitive in-house-developed Global Trading Platform - Boost competitiveness with globalized product & serv
Slide 9: II. Financial Results
I. Who we are & our growth strategy II. Financial Results III. Global Vision & Strategies IV. Data V. Adopting IFRS 8
Slide 10: Major Business Activities this Quarter
Major Business Activities this Quarter For the 4th quarter of the fiscal year ended March 31, 2013 ◆New adoption of International Financial Reporting Standards (IFRS) Efforts from the aspects of accounting and finance toward the realization of Global Vision ◆The continuing rise in equity market of J
Slide 11: Trends of Quarterly Financial Results (FYE Mar. 31, 2013)
Trends of Quarterly Financial Results (FYE Mar. 31, 2013) ◆Consolidated Basis (mil yen) 1Q 2Q 3Q 4Q 14,000 Total operating revenue after deducting financial expenses 12,137 12,000 The amount equivalent to operating income 10,000 7,693 7,587 8,000 6,352 6,000 3,547 4,000 2,000 385 253 0 1Q 2Q 3Q 4Q ‐
Slide 12: Financial Summary: 3Q vs. 4Q of FYE Mar. 31, 2013 (1)
Financial Summary : 3Q of FYE Mar. 31, 2013 vs. 4Q of FYE Mar. 31, 2013 (in 3 months) (1) （in million yen, %） 3Q of FYE Mar. 31, 2013 4Q of FYE Mar. 31, 2013 Fluctuation (%) (Oct. 2012– Dec. 2012 ） (Jan. 2013– Mar. 2013） Total revenue 8,228 17,557 +113.4 ％ Total expense 7,962 12,152 +52.6 ％ Income b
Slide 13: Financial Summary: 3Q vs. 4Q of FYE Mar. 31, 2013 (2)
Financial Summary : 3Q of FYE Mar. 31, 2013 vs. 4Q of FYE Mar. 31, 2013 (in 3 months) (2) By each segment （in million yen, %） Japan U.S. China Fluctuation Fluctuation 3Q 4Q Fluctuation(%) 3Q 4Q 3Q 4Q (%) (%) Total revenue 5,305 14,029 +164.4％ 2,883 3,553 +23.2％ 93 130 +39.9％ Total expense 4,238 5,08
Slide 14: Major Factors of Revenue and SG&A (Comparison with Previous Quarter)
Major Factors of Revenue and SG&A (Comparison with Previous Quarter) ■ Total operating revenue after deducting financial ■SG&A：Comparison with 3Q of FYE Mar. 31, 2013 expenses ：Comparison with 3Q of FYE Mar. 31, 2013 ◆ Commission increased due to the brisk market ◆ Variable cost such as Transaction-
Slide 15: Financial Summary: FYE Mar. 2012 vs. FYE Mar. 2013 (1)
Financial Summary : FYE Mar. 31, 2012 vs. FYE Mar. 31, 2013 (in 12 months) (1) （in million yen, %） FYE Mar. 31, 2012 FYE Mar. 31, 2013 Fluctuation (%) (Apr. 2011– Mar. 2012) (Apr. 2012– Mar. 2013) Total revenue 31,375 42,740 +36.2％ Total expense 28,707 35,742 +24.5％ Income before income taxes 2,668
Slide 16: Financial Summary: FYE Mar. 2012 vs. FYE Mar. 2013 (2)
Financial Summary : FYE Mar. 31, 2012 vs. FYE Mar. 31, 2013 (in 12 months) (2) By each segment （in million yen, %） Japan U.S. China Prior Current Prior Current Prior Current Fluctuation(%) Fluctuation(%) Fluctuation(%) Year Year Year Year Year Year Total revenue 22,343 30,791 +37.8％ 8,675 11,856 +36
Slide 17: Major Factors of Revenue and SG&A (Comparison with Last Fiscal Year)
Major Factors of Revenue and SG&A (Comparison with Last Fiscal Year) ■ Revenue：Comparison with FYE Mar. 31, 2012 ■ SG&A：Comparison with FYE Mar. 31, 2012 ◆ Commission increased due to the brisk market ◆ Increased due to the acquisition of TradeStation condition in Japan Increased by 4,299 million ye
Slide 18: Summary of statement of financial position
Summary of statement of financial position ◆Summary of statement of financial position as of March 31, 2013 （*1）Non-current type assets（investment value of risk assets） Assets Liabilities Property, plant and equipment JPY 1.5 bn JPY682.2 bn JPY602.5 bn Intangible assets (Goodwill) 17.1 bn （*2） Intan
Slide 19: Distribution of Revenue and SG&A by Regions & Items
Distribution of Revenue and SG&A by Regions & Items ■FYE March 31, 2013 (12 months) ◆Distribution of Operating revenue after deducting ◆ Distribution of SG&A financial expenses Others Data processing fees are significant because majority of system development is outsourced in Japan Financial Income
Slide 20: Distribution of Consolidated Personnel by Regions and Jobs
Distribution of Consolidated Personnel by Regions and Jobs ■As the end of March 31, 2013 (unit : person) The number of employees engaged in Technology is small because major of system development is outsourced in Japan Japan U.S. China segment segment segment Technology 4% Marketing Technology 38 30
Slide 21: III. Global Vision & Strategies
I. Who we are & our growth strategy II. Financial Results III. Global Vision & Strategies IV. Data V. Adopting IFRS 20
Slide 22: Global Vision – Ideal business model for growth
“Global Vision” – Ideal business model for growth ■ “Global Vision” – In-house development of Global Trading Platform An Image of Global Trading Platform - Drastically improve profitability - Achieve revenue growth China clients Japan clients U.S. clients Products & Services Products & Services Prod
Slide 23: Roadmap to achieve Global Vision
Roadmap to achieve “Global Vision” ■Roadmap for in-house development of Global Trading Platform and revenue increase & cost management FYE March 2013 (Achievements) FYE March 2014 FYE March 2015 FYE March 2016 ■ Equities trading platform developments: Reduce IT related costs & expand revenue opportu
Slide 24: Roadmap to achieve Global Vision: fixed-cost reduction plans
Roadmap to achieve “Global Vision” ■Plans to reduce fixed-type costs (JPY, show cost decrease by – [minus] and increase by + [plus]) (i) 4 times the actual figures for 4Q of FYE March 2012 and (ii) 4 times the actual figures for 4Q of FYE March 2013 were used as the comparison base amounts to calcul
Slide 25: Roadmap to achieve Global Vision: boosting revenues
Roadmap to achieve “Global Vision” ■ Roadmap for boosting revenues FYE March 2013 Expand customer asset Win competitors’ clients Future Plans (Achievements) Construct competitive business platform / Create demands US equities - Introduced TradeStation US equities - Offer trade signal service trading
Slide 26: Achievements toward realization of Global Vision
Achievements toward realization of “Global Vision” US equities trading platform (Monex, Inc.) ■ In-house-development of Global Trading Platform and globalization of product & service line-ups Renewal of US Equities Trading Platform (Japan) In Nov. 2012, Monex, Inc. started offering US equities tradi
Slide 27: Japan Segment (Monex, Inc. – online brokerage business)
Japan Segment (Monex, Inc. – online brokerage business) ■ “Abenomics” and money market relaxation by Bank of Japan backed up the booming market; gave a big boost to trades by retail investors and increased number of online/offline seminar participants April 2013: - Customers’ assets in custody excee
Slide 28: U.S. Segment (TradeStation group)
U.S. Segment (TradeStation group) ■ DARTs (Daily Average Revenue Trades) changed its trend to pick up slowly though low volatility and interest rates in the US market continued ■ Achievements April 2013: - Started offering new trading app for iPad - Launched beta version of new market information se
Slide 29: China Segment
China Segment ■ Mainland China Cultivating business opportunities through Beijing Representative Office of Monex, Inc.; seeking for possible collaborations with Chinese brokerage firms & exploiting introduction of trading software and technologies of TradeStation (U.S.) into China ■ Hong Kong Tradin
Slide 30: Global FX Business
Global FX Business ■ Japan FX Business (Monex, Inc. & Monex FX, Inc.) - Trading volume and revenue surged partly due to depreciation of yen and higher volatility - Achieved cost reduction by integrating forex operations in Japan; customer accounts and services at Monex FX, Inc. have been transferred
Slide 31: IV. Data
I. Who we are & our growth strategy II. Financial Results III. Global Vision & Strategies IV. Data V. Adopting IFRS 30
Slide 32: IV. DATA
IV．DATA Part 1 Market and Transaction Data Part 2 Financial Data Part 3 Corporate Data 31
Slide 33: Market and Transaction Data (1)
Market and Transaction Data (1) ◆Assets in custody (million yen ) 3,500,000 Japan Segment U.S. Segment China Segment 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 Ma r.31, 2011 Jun.30, 2011 Sep.30, 2011 Dec.31, 2011 Ma r.31, 2012 Ju
Slide 34: Market and Transaction Data (2)
Market and Transaction Data (2) ◆ Employees (person） 1,000 Japan Segment U.S. Segment China Segment 500 0 As of As of As of As of As of As of As of As of As of Ma r.31, 2011 Jun.30, 2011 Sep.30, 2011 Dec.31, 2011 Ma r.31, 2012 Jun.30, 2012 Sep.30, 2012 Dec.31, 2012 Ma r.31, 2013 (Unit: person） FYE M
Slide 35: Market and Transaction Data (3) Japan Segment - Monex, Inc.
Market and Transaction Data (3) Japan Segment - Monex, Inc. ◆Market share and value of equity trading ◆ Breakdown of DARTs and market trading value （thousand） Future and Option (left) （100 mil yen） (100 mil yen ) (%) 180 14,000 1,000 Equity trading value of Monex, Inc.(left） 10.0 Equity DARTs (left)
Slide 36: Market and Transaction Data (4) Japan Segment - Monex, Inc.
Market and Transaction Data (4) Japan Segment - Monex, Inc. ◆Mutual Fund（Sales and Balance） ◆Fixed Income Businesses（Sales） (mil yen ) (mil yen ) (mil yen ) 50,000 Sales of Equity mutual Funds(no load) (left) 300,000 16,000 Sales of Equity mutual Funds(load) (left) 250,000 14,000 40,000 Balance of E
Slide 37: Market and Transaction Data (5) Japan Segment - Monex, Inc.
Market and Transaction Data (5) Japan Segment - Monex,Inc. ◆Capital adequency ratio (mil yen ) 50,000 Risk asset amount（left） Not fixed capital （left） Capital adequacy ratio（right） 600% 40,000 500% 400% 30,000 300% 20,000 200% 10,000 100% 0 0% 4Q of FYE 1Q of FYE 2Q of FYE 3Q of FYE 4Q of FYE 1Q of
Slide 38: Market and Transaction Data (6) U.S. Segment - TradeStation group
Market and Transaction Data (6) U.S. Segment - TradeStation group ◆ Breakdown of TradeStation DARTs and correlation with VIX(*) （thousand） 180 35 Futures DARTs(left) Opti ons DARTs(left) Equi ties DARTs(left) 160 30 140 Vi x Avg. Hi gh(right) Vi x Avg. Low(ri ght) 25 120 100 20 80 15 60 10 40 5 20 0
Slide 39: Market and Transaction Data (7) China Segment - Monex Boom group
Market and Transaction Data (7) China Segment - Monex Boom group ◆ Numbers of active accounts ◆ DARTs 10,000 1,500 1,000 9,500 500 9,000 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 of FYE 0 Mar.31, Mar.31, Mar.31, Mar.31, Mar.31, Mar.31, Mar.31, Mar.31, Mar.31,
Slide 40: Market and Transaction Data (8) Global FX
Market and Transaction Data (8) Global FX ◆OTC business in Japan（Monex, Inc. and Monex FX, Inc.） ◆OTC business in U.S. (TradeStation) Trading volume Revenue（thousand$） Trading volume Revenue（mil yen） （100mil yen） Trading revenue（left） （100mil $） 2,000 100,000 8,000 1,000 Tradeing revenue(left) Tradi
Slide 41: IV. DATA
Ⅳ．DATA Part 1 Market and Transaction Data Part 2 Financial Data Part 3 Corporate Data 40
Slide 42: Quarterly Breakdown of Consolidated Statement of income
Financial summary： Quarterly Breakdown of Consolidated Statement of income Reclassified presentation of consolidated statement of income (in million yen) FYE March FYE March 31, 2013 31, 2012 1Q 2Q 3Q 4Q Total Brokerage commissions 13,047 3,109 2,794 3,485 6,288 15,676 Stocks and ETFs 9,094 1,979 1,
Slide 43: Quarterly Breakdown of Consolidated SG&A
Financial summary： Quarterly Breakdown of Consolidated SG&A The details of SG&A in consolidated statement of income (in million yen) FYE March FYE March 31, 2013 31, 2012 1Q 2Q 3Q 4Q Total Transaction-related expenses 8,787 2,605 2,364 2,409 2,846 10,223 Commissions paid 3,244 959 867 948 1,045 3,81
Slide 44: Quarterly Breakdown by Local Segments (Statement of income)
Financial Results：Quarterly Breakdown by Local Segments (Statement of income) Reclassified presentation of consolidated statement of income (in million yen) FYE March 31, 2013 FYE March 31, 2012 1Q 2Q 3Q 4Q Japan U.S. China Japan U.S. China Japan U.S. China Japan U.S. China Japan U.S. China Brokerag
Slide 45: Quarterly Breakdown by Local Segments (SG&A)
Financial Results： Quarterly Breakdown by Local Segments (SG&A) The details of SG&A in consolidated statement of income (in million yen) FYE March 31, 2013 FYE March 31, 2012 1Q 2Q 3Q 4Q Japan U.S. China Japan U.S. China Japan U.S. China Japan U.S. China Japan U.S. China Transaction-related expenses
Slide 46: Quarterly Breakdown of Consolidated Statement of income (JGAAP)
Financial summary： Quarterly Breakdown of Consolidated Statement of income (JGAAP) (in million yen) FYE March 31, 2012 FYE March 31, 2013 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Brokerage commissions 2,120 3,941 3,387 3,675 3,128 2,809 3,506 6,329 Stocks and ETFs 1,882 2,526 2,166 2,595 1,999 1,872 2,460 5,068 Opti
Slide 47: Quarterly Breakdown of Consolidated SG&A (JGAAP)
Financial summary： Quarterly Breakdown of Consolidated SG&A (JGAAP) (in million yen) FYE March 31, 2012 FYE March 31, 2013 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Transaction-related expenses 1,224 2,439 2,521 2,679 2,625 2,379 2,429 2,887 Commissions paid 238 1,038 1,034 933 958 867 948 1,045 Exchange and associat
Slide 48: IV. DATA
Ⅳ．DATA Part 1 Market and Transaction Data Part 2 Financial Data Part 3 Corporate Data 47
Slide 49: The Monex Group
The Monex Group Holding Company （As of May 9, 2013） [ China ] [ Japan ] [ US/EU ] Online Securities & FX Service Provider Monex International Limited Holding Company in Hong Kong TradeStation Group, Inc. Holding company in U.S. Online Securities Company Online Securities Company TradeStation Securit
Slide 50: 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 (major locations: Florida, Texas & Utah in USA) - Chairman & CEO: Oki Matsumoto Online securities group with award winning trading technology - Established in 200
Slide 51: 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 - Monex Boom Securities (H.K.) Limited was founded as Boom Securities (H.K.) Limited, being the first in Asia Pacific to launch Internet
Slide 52: Investors' Guide (1)
Investors’ Guide (1) ■Efforts to pursue for shareholders’ return ■Shareholders & indicators per share ◆ Basic policy for shareholders’ return: ◆Major shareholders and shareholder “To provide return to shareholders based upon its breakdown (as of March 31, 2013) business performance, while reserving
Slide 53: Investors' Guide (2)
Investors’ Guide (2) ■ Stock Split & Adoption of Share Unit System ■Transition to a “Company with Committees” (Effective on October 1, 2013） Plans to transit from a “Company with Board of Purpose of stock split and adoption of share unit Auditors” to a “Company with Committees” system: ◆ Purpose of
Slide 54: V. Adopting IFRS
I. Who we are & our growth strategy II. Financial Results III. Global Vision & Strategies IV. Data V. Adopting IFRS 53
Slide 55: Voluntary adoption of IFRS
Voluntary adoption of IFRS ■Consolidated financial statements for the year ended March 31, 2013 in accordance with IFRS ・We decided to voluntarily adopt IFRS to improve the international comparability of financial information, while we engage in business activities with a focus of 3 major locations
Slide 56: Consolidated statement of income for FYE March 31, 2012 and 2013
Consolidated statement of income for FYE March 31, 2012 and FYE March 31, 2013 (in million yen) FYE March 31, FYE March 31, FYE March 31, FYE March 31, 2012 2013 2012 2013 Commission received 17,030 20,367 Financial expenses 1,682 2,320 Net trading income 6,200 6,974 Selling, general and 26,060 30,3
Slide 57: Consolidated statement of financial position (1) Assets
Consolidated statement of financial position as of March 31, 2012 and 2013 (1) ■Assets (in million yen) As of As of As of As of March 31, 2012 March 31, 2013 March 31, 2012 March 31, 2013 Cash and deposits 39,788 51,193 Property, plant and equipment 1,759 1,485 Cash segregated as deposits 291,899 34
Slide 58: Consolidated statement of financial position (2) Liabilities and Equity
Consolidated statement of financial position as of March 31, 2012 and 2013 (2) ■Liabilities ■Equity (in million yen) As of As of As of As of March 31, 2012 March 31, 2013 March 31, 2012 March 31, 2013 Derivative liabilities 2,599 7,604 Capital stock 10,394 10,394 Margin transaction liabilities 27,82
Slide 59: Consolidated statement of financial position (3) Investments
Consolidated statement of financial position as of March 31, 2012 and 2013 (3) ■Investments in securities (in million yen) As of As of Fair value measurement Description March 31, 2012 March 31, 2013 Investments in securities 22,144 18,551 Available-for-sale securities Quoted prices (unadjusted) in
Slide 60: Reclassification of Consolidated statement of income (JGAAP to IFRS)
Reclassification of Consolidated statement of income (from Japanese GAAP to IFRS) ■Japanese GAAP ■IFRS Operating revenue Operating revenue Financial expenses Other financial revenue Net operating revenue Other revenue Selling, general and administrative expenses Equity in earnings of affiliates Oper
Slide 61: Comparison of consolidated statement of income with JGAAP
Comparison of consolidated statement of income with JGAAP for FYE March 31, 2013 ■ Japanese GAAP (in million yen) ■IFRS (in million yen) Consolidated statements of income FYE March 31,2013 Consolidated statements of income FYE March 31,2013 Operating revenue 37,390 Operating revenue 36,090 Financial
Slide 62: Reconciliation of net income on consolidated statement of income
Reconciliation of net income on consolidated statement of income for FYE March 31, 2013 (in million yen) J GAAP Reclassification IFRS adoption IFRS Commission received 20,465 － -98 20,367 Commission received Net trading income 6,974 － － 6,974 Net trading income Net gain on trading of investment -9 9
Slide 63: Differences between JGAAP and IFRS (Operating revenue, Financial expenses)
Differences between JGAAP and IFRS for FYE March 2013 (Operating revenue, Financial expenses) (in million yen) Operating revenue (JGAAP) 37,390 GAAP differences Exchange of goods using of Monex points (deduction of commission received) -98 Offsetting of dividends paid and dividends received for stoc
Slide 64: Differences between JGAAP and IFRS (SG&A)
Differences between JGAAP and IFRS for FYE March 2013 (Selling, general and administrative expenses) (in million yen) Selling, general and administrative expenses (JGAAP) 31,490 GAAP differences Exchange of goods using of Monex points (reclassification from advertisement costs to deduction of commis
Slide 65: Differences between JGAAP and IFRS (Other financial revenue, other revenue)
Differences between JGAAP and IFRS for FYE March 2013 (Other financial revenue, other revenue) (in million yen) (JGAAP) － GAAP differences Interest income on Long –term Guarantee deposits 29 Reclassification Dividends income and interest income (Non-operating income) 46 Sales on investment securitie
Slide 66: Differences between JGAAP and IFRS (Other financial expenses, other expenses)
Differences between JGAAP and IFRS for FYE March 2013 (Other financial expenses, other expenses) (in million yen) (JGAAP) － GAAP differences Loss on valuation of investments in securities 17 Other 1 Reclassification Loss on sales of investment securities (Extraordinary loss) 25 Loss on valuation of
Slide 67: Differences between JGAAP and IFRS (Income before income taxes, income taxes)
Differences between JGAAP and IFRS for FYE March 2013 (Income before income taxes, income taxes) (in million yen) Income before income taxes (JGAAP) 7,463 GAAP differences Operating revenue -1,300 Financial expenses 1,512 Selling, general and administrative expenses 1,131 Equity in earnings of affil
Slide 68: Differences between JGAAP and IFRS (Net income attributable to owners)
Differences between JGAAP and IFRS for FYE March 2013 (Net income attributable to owners) (in million yen) Net income (JGAAP) 5,747 GAAP differences Income before income taxes -464 Income tax expense -1,382 Net income attributable to owners of the Company (IFRS) 3,901 67