Monex Group, Inc. · TSE:8698
Monex — Q1 FY2014 Earnings Presentation
58 slides from Monex's earnings presentation, Jul 31, 2013
Slide 1: Financial Results of 1Q of Fiscal Year Ending March 31, 2014
July 31, 2013 (TSE 1st Section: 8698) Financial Results of 1Q 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 consol
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 level of services” 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> Global Largest Retail Growth New Our Current Revenue Driver Customer Investor Market Potential Base Initiative Japan U.S. China (H.K.) FX B2B Benefiting fully on our high EBITDA (*2) nearly operat
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 (Comparison with the previous quarter) - Huge QoQ increase; topline being x1.3, bottom line being x2.2 Total operating revenue after deducting financial expenses: JPY 15,668 million (+ 29%) Quarterly net income attributable to owners of the Company: JPY 5,144
Slide 10: Japan Segment Business Highlights
Japan Segment Business Highlights Our online broker subsidiary, Monex, Inc., capitalized on the booming Japan stock market ◆Japan Segment Results ◆ Comparative Revenue Growth among 5 Top Online Brokers in Japan (mil. yen) OPM 59% +54% (vs 4Q of FYE QoQ (vs 4Q of FYE Mar. 2013) Mar. 2013) +54% +352%
Slide 11: 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 (b) Net interest income: A portion of the net in
Slide 12: U.S. Segment Business Highlights (2)
U.S. Segment Business Highlights (2) ■ Profitability improvement： improvement of EBITDA of U.S. ◆TradeStation Quarterly Revenues (USD mil.) business segment close to breakeven (*1) 40 200,000 Total Revenue 17% ・ Increase in Brokerage Commissions due to continued increase increase QoQ 35 in DARTs Oth
Slide 13: Global FX Business Highlights
Global FX Business Highlights ■ Increase in revenue per lot (*) from integrating the two ◆Quarterly Global FX Revenue U.S. FX business lines （USD thousands） → Further improvement in revenue per lot is expected 30,000 when our Japanese volume is integrated into our U.S. 25,984 24,468 volume 25,000 ■
Slide 14: Management Highlights
Management Highlights Continuing Commitment to our Shareholders - Increased dividend payout ratio from 30% to 50% (applicable from FYE March 2014) (announced in June 2013) a fully global financial institution - Completed share buyback (approx. 4% of outstanding shares, or Actions taken in achieving
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 (mil yen) 1Q of FYE Mar. 2013 2Q of FYE Mar. 2013 3Q of FYE Mar. 2013 1Q of FYE Mar. 2014 4Q of FYE Mar. 2013 18,000 Total operating revenue after deducting financial expenses 15,668 16,000 The amount equivalent to operating income 14,000 12,
Slide 17: Financial Summary: 4Q FYE Mar. 2013 vs. 1Q FYE Mar. 2014 (1)
Financial Summary: 4Q of FYE Mar. 2013 vs. 1Q of FYE Mar. 2014 (1) (million yen, %) 4Q of FYE Mar. 2013 1Q of FYE Mar. 2014 Fluctuation (%) (Jan. to Mar. 2013 ） (Apr. to Jun. 2013） Total revenue 17,557 19,171 +9.2% Total expense 12,152 10,765 -11.4% Quarterly income before income taxes 5,405 8,407 +
Slide 18: Financial Summary: 4Q FYE Mar. 2013 vs. 1Q FYE Mar. 2014 (2)
Financial Summary: 4Q of FYE Mar. 2013 vs. 1Q of FYE Mar. 2014 (2) By local segment (million yen, %) Japan U.S. China 4Q of 1Q of 4Q of 1Q of 4Q of 1Q 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 19: Major Increase/Decrease Factors of Revenue and SG&A (QoQ Comparison)
Major Increase/Decrease Factors of Revenue and SG&A (QoQ Comparison) ■ Total operating revenue after deducting financial ■ Selling, general & administrative expenses expenses ◆ Commission increased due to the brisk market ◆ Transaction-related variable costs increased due to condition in Japan the b
Slide 20: Financial Summary: 1Q FYE Mar. 2013 vs. 1Q FYE Mar. 2014 (1)
Financial Summary: 1Q of FYE Mar. 2013 vs. 1Q of FYE Mar. 2014 (1) (million yen, %) FYE Mar. 2013 FYE Mar. 2014 Fluctuation (%) (Apr. to Jun. 2012) (Apr. to Jun. 2013) Total revenue 8,223 19,171 +133.2% Total expense 7,950 10,765 +35.4% Quarterly income before income taxes 273 8,407 +2,979.6% Income
Slide 21: Financial Summary: 1Q FYE Mar. 2013 vs. 1Q FYE Mar. 2014 (2)
Financial Summary: 1Q of FYE Mar. 2013 vs. 1Q of FYE Mar. 2014 (2) By local segment (million yen, %) Japan U.S. China 1Q of 1Q of 1Q of 1Q of 1Q of 1Q 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 Comparison)
Major Increase/Decrease Factors of Revenue and SG&A (YoY Comparison) ■ Total operating revenue after deducting financial ■ Selling, general & administrative expenses expenses ◆ Commission increased due to the brisk market ◆ Transaction-related variable costs increased due to condition in Japan the b
Slide 23: Summary of statement of financial position
Summary of statement of financial position ◆ Summary of statement of financial position as of June 30, 2013 (*1) Non-current type assets (investment value of risk assets) Assets Liabilities JPY 812.6 bn JPY 735.3 bn Property, plant and equipment JPY 1.6 bn Major assets: Major liabilities: Intangible
Slide 24: Distribution of Revenue and SG&A by Local Segment & Items
Distribution of Revenue and SG&A by Local Segment & Items ■1Q of FYE March 2014 ◆ Operating revenue after deducting financial expenses ◆ SG&A by local segment & cost items by local segment and product lines Data processing fees are significant because majority Others of system development is outsour
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 Tech- TradeStation to increase earnings efficiency nology and to expand revenue opportunities IT Manage- System ment First-class Expansion to ROW Japan U.S. China worldwide B2B business customer customer customer Products HR base base
Slide 27: Plan to achieve Global Vision - Roadmap
Plan to achieve “Global Vision”- Roadmap Measures Maximize synergy effects of global business assets ↓ - Products & service differentiation for revenue opportunities - In-house trading platform development for cost management Nov. 2012 Launched New US Equities Trading Service for Japan Achievements
Slide 28: Plan to reduce fixed-type costs
Measures to achieve “Global Vision” - Plan to reduce fixed-type costs Commenced “Fixed-type Cost Reduction Project” from FYE Mar. 2013 Goal Targeting annual cost reduction of JPY 2.69 billion by FYE Mar. 2017 (*1) -Replacement & internalization of trading systems to reduce systems related costs Meth
Slide 29: [Data] 1. 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 ◆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 Jun.30, 2011 Sep.30, 2011 Dec.3
Slide 31: Market and Transaction Data (2) – Number of Employees
Market and Transaction Data (2) – Number of Employees ◆ 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 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 Jun.30, 2013
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 3 major stock （thousand） （100 mil yen） exchanges and its equity trading values (100 mil yen ) Future
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 ) 70,000 Sales of Equity mutual Funds(no‐load) (left) 350,000 25,000 Sales of Equity mutual Funds
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 (e.g. Doctor) Corporation 35.0% All accounts 30.0% Accounts opened within a year Civil servant Self-employed Homemaker 30.0% 25.0% Male 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
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(*) （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 0 2Q
Slide 37: Market and Transaction Data (8) China Segment
Market and Transaction Data (8) China Segment - Monex Boom Securities ◆ Numbers of active accounts ◆ DARTs (as of the end of each quarter) 1,400 1,200 10,000 1,000 800 9,500 600 400 200 9,000 0 1Q of FYE 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 3Q of
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 Trading value Revenue （100mil $） Revenue（mil yen） （100mil yen） （thousand$） 2,000 150,000 10,000 Trading revenue(left) 1,000 Commissions(left) Tra
Slide 39: 2. 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 Commission received 4,178 3,898 4,530 7,761 10,763 Net trading income 1,651 1,290 1,547 2,486 2,821 Financial revenue 2,142 1,556 2,005 2,492 3,126 Other operating revenue 144 130 136 145 155 Total op
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 Brokerage commissions 3,109 2,794 3,485 6,288 9,174 Stocks and ETFs 1,979 1,857 2,440 5,028 7,533 Options and Futures 1,068 901 1,010 1,211
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 Transaction-related expenses 2,605 2,364 2,409 2,846 3,320 Commissions paid 959 867 948 1,045 1,332 Exchange and association dues 186 160
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 Other financial revenue 57 175 18 4,605 2,296 Gain on sales of investment securities - 160 16 4,604 2,291 Dividends income 43 - - - 3 Others 14 15 2 1 2 Other revenu
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 Japan U.S. China Japan U.S. China Japan U.S. China Japan U.S. China Japan U.S. China 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 Net
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 Japan U.S. China Japan U.S. China Japan U.S. China Japan U.S. China Japan U.S. China Brokerage commissions 1,726 1,339 48
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 Japan U.S. China Japan U.S. China Japan U.S. China Japan U.S. China Japan U.S. China Transaction-related expenses 1,193
Slide 48: U.S. Segment: Quarterly consolidated 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 Brokerage commissions 16,691 14,468 15,110 15,846 17,923 Stocks and ETFs 5,240 4,587 4,501 5,011 5,102 Options and Futures 11,451
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 Transaction-related expenses 17,400 15,905 15,064 15,172 15,910 Commissions paid 9,402 8,457 8,487 8,461 9,935 E
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 June 30, 2013 March 31, 2013 June 30, 2013 Cash and cash equivalents 51,193 83,409 Property and equipment 1,485 1,569 Cash segregated as deposits 349,837 389,844 Intangible assets 37,394 38,
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 June 30, 2013 March 31, 2013 June 30, 2013 Derivative liabilities 7,604 4,942 Common stock 10,394 10,394 Margin transaction liabilities 39,745 37,148 Additional-paid in capital
Slide 52: Consolidated statement of financial position (3)
Consolidated statement of financial position (3) ■Investments in securities (million yen) As of As of March 31, Fair value measurement Description June 30, 2013 2013 Investments in securities 18,551 14,999 Available-for-sale financial assets Quoted prices (unadjusted) in active markets See the detai
Slide 53: 3. 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 July 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 Se
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 Oki Matsumoto deve
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 - Monex Boom Securities (H.K.) Limited was founded as Boom Securities (H.K.) Limited, being the first in Asia Pacific to launch Internet
Slide 57: Investors' Guide (1)
Investors’ Guide (1) ■Efforts to pursue for shareholders’ return ■Shareholders & indicators per share ◆ Our Basic Policy for Shareholders’ Return ◆Major shareholders and shareholder breakdown (as of March 31, 2013) To provide return to shareholders based upon our business performance, while reservin
Slide 58: Investors' Guide (2)
Investors’ Guide (2) ■Enhancing Corporate Governance System ■Stock Split & Adoption of Share Unit System (Effective October 1, 2013) Transition to a “Company with Committees” Purpose of stock split and adoption of share unit (June 2013) system: ◆10 directors, 5 out of which are “outside & To conform