Monex Group, Inc. · TSE:8698
Monex — Q3 FYE March 2014 Earnings Presentation
60 slides from Monex's earnings presentation, Jan 31, 2014
Slide 1: Financial Results of 3Q of Fiscal Year Ending March 31, 2014
January 31, 2014 (TSE 1st Section: 8698) Financial Results of 3Q 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: 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. WHAT IS MONEX GROUP? p. 3 - p. 6 II. Business Highlights p. 7 - p.15 III. Business Strategy p.16 - p.20 IV. Financial Results p.21 - p.30 [Data] 1. Market & Transaction Data p.31 - p.40 2. Financial Data p.41 - p.54 3. Corporat
Slide 4: I. What is Monex Group?
I. WHAT IS MONEX GROUP? II. Business Highlights III. Business Strategy IV. Financial Results [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 3
Slide 5: What is Monex Group?
WHAT IS MONEX GROUP? “We are a global financial group focused on providing retail investors across the globe with access to financial services for institutional investors” Monex aims to boost corporate value with growing revenue & profit through developing global trading platforms with cutting-edge
Slide 6: Our Business Lines
Our Business Lines <B2C> Online Financial Service for Retail Investors in Japan, U.S. & Hong Kong <B2B> Largest Retail Growth Global Monex’s Current Revenue Driver Customer Base New Initiative Investor Market Potential Japan U.S. China (H.K.) FX B2B Benefiting fully from our operating- EBITDA (*2) s
Slide 7: Revenue Formation
Revenue Formation Japan U.S. China Monex’s Current Revenue Driver Largest Retail Investor Market Growth Potential (mil yen) (mil yen) (mil yen) 1Q-3Q Total 1Q-3Q Quarterly income 40,000 Operating Rev. 40,000 1Q-3Q Total 1Q-3Q Quarterly income 40,000 1Q-3Q Total 1Q-3Q Quarterly income before income t
Slide 8: II. Business Highlights
I. WHAT IS MONEX GROUP? II. Business Highlights III. Business Strategy IV. Financial Results [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 7
Slide 9: Business Highlights
Business Highlights ■ Business Highlights - 3Q of FYE March 2014 (9 months) recorded the highest profit for total operating revenue and quarterly net income attributable to owners of the Company for 3Q financial result. • 3Q (9 months) 3Q FYE Mar. 2014 YoY Total operating revenue: JPY 42,668 million
Slide 10: Japan Segment Business Highlights (1)
Japan Segment Business Highlights (1) ■ Revenue increased compared to prior quarter ◆Japan Segment Results ◆ Comparative Revenue Growth among (mil yen) 5 Top Online Brokers in Japan Total operating revenue 14,000 after deducting financial 70% 400 Trends of brokerage commission for stocks expenses (a
Slide 11: Japan Segment Business Highlights (2)
Japan Segment Business Highlights (2) ■ Japan segment for October – December 2013 ◆ NISA (*1) accounts have steadily increased ◆ 18 IPO underwritings: Ranked No.3 (*1) (3Q of FYE March 2014) About 62,000 accounts opened as of December 31, 2013 The number of demands (=applications) for a symbol:
Slide 12: U.S. Segment Business Highlight (1)
U.S. Segment Business Highlight (1) ■ Realized new commission structures for active traders A) Commission from option trading increased along with the introduction of “Option Flat Fee”, a new commission structure for active, larger lot, option traders B) Commenced a new “Unbundled Equities” (“Maker
Slide 13: U.S. Segment Business Highlight (2)
U.S. Segment Business Highlight (2) ■ Net interest income comprised of: (A) interest income from finance management and (B) net interest income from loan management A) Depositing/investing of corporate cash and customer segregated cash in short-term deposits or U.S. Treasuries high correlation bet
Slide 14: U.S. Segment Business Highlight (3)
U.S. Segment Business Highlight (3) ■ Commission: High correlation between VIX and DARTs. Maintains profitability per trade despite low volatility ■ Accounts: 80,595; Customer Assets: 3.537 billion USD Steadily increasing ◆VIX and DARTs ◆Revenue per trade (index) (*) 100= DARTs (index) for 3Q of F
Slide 15: U.S. Segment Business Highlight (4) & Global FX Business Highlight
U.S. Segment Business Highlight (4) & Global FX Business Highlight ■ Appreciated by active traders DARTs share is 10%. Revenue per account is $1,336: far ahead of competitors ◆DARTs share among the U.S. online brokers ◆Commission revenue per account(*) compared to competitors (*) Annualized figure
Slide 16: China Segment Business Highlights
China Segment Business Highlights ■China Segment ◆Income from Boom’s equity trading increased (+39% in ◆Business development in mainland China & Hong Kong total operating income compared to 3Q of prior year) (mil HKD) Expands online brokerage business for retail investors mainly in 8 Total operati
Slide 17: III. Business Strategy
I. WHAT IS MONEX GROUP? II. Business Highlights III. Business Strategy IV. Financial Results [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 16
Slide 18: Global Vision --- Monex's mid- and long-term business strategy
Global Vision --- Monex’s mid- and long-term business strategy “Global Vision” is a mid- and long-term business strategy which Monex Group, Inc. has promoted since the fiscal year ended March 2013 where all employees under the group share and perform “Roadmap” “Globalization” and “Internalization” a
Slide 19: Global Vision --- Product & Service development
Global Vision --- Product & Service development for mid- and long-term revenue growth Differentiated products & services among group companies are developed and offered to retail investors Besides online brokerage business based in Japan, the U.S. and Hong Kong, Monex aims to increase mid- and long-
Slide 20: 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 21: Growth in corporate value and shareholders return
Growth in corporate value and shareholders return Improves ROE by increasing revenue by executing business strategy as well as controlling the equity at the appropriate level Pays out dividends in the amount to be determined by referencing the higher of 50% of dividend ratio of net income attrib
Slide 22: IV. Financial Results
I. WHAT IS MONEX GROUP? II. Business Highlights III. Business Strategy IV. Financial Results [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 21
Slide 23: 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 3Q of FYE (mil yen) Mar. 2013 Mar. 2013 Mar. 2013 Mar. 2013 Mar. 2014 Mar. 2014 Mar. 2014 25,000 Total revenue Quarterly income before income taxes 19,171 20,000 17,557 15,000 13,545
Slide 24: Financial Summary: 2Q vs. 3Q of FYE Mar. 2014 (1)
Financial Summary: 2Q of FYE Mar. 2014 vs. 3Q of FYE Mar. 2014 (1) (in 3 months) (million yen, %) 2Q of FYE Mar. 2014 3Q of FYE Mar. 2014 Fluctuation (%) (Jul. to Sep. 2013） (Oct. to Dec. 2013） Total revenue 12,421 13,545 9.1% Commission received 7,518 7,937 5.6% Net trading income 1,832 1,723 -5.9%
Slide 25: Financial Summary: 2Q vs. 3Q of FYE Mar. 2014 (2)
Financial Summary: 2Q of FYE Mar. 2014 vs. 3Q of FYE Mar. 2014 (2) (in 3 months) By local segment (million yen, %) Japan U.S. China 2Q of 3Q of 2Q of 3Q of 2Q of 3Q of Fluctuation Fluctuation Fluctuation FYE Mar. FYE Mar. FYE Mar. FYE Mar. FYE Mar. FYE Mar. (%) (%) (%) 2014 2014 2014 2014 2014 2014
Slide 26: Major Increase/Decrease Factors of Revenue and Expenses (QoQ Comparison)
Major Increase/Decrease Factors of Revenue and Expenses (QoQ Comparison) ■ Total revenue ■ Total expenses (Comparison with July to September of FYE March 2014) (Comparison with July to September of FYE March 2014) ◆Commission increased due to trading volume increase in ◆ Total costs decreased mainly
Slide 27: Financial Summary: 3Q FYE Mar. 2013 vs. 3Q FYE Mar. 2014 (1)
Financial Summary: 3Q of FYE Mar. 2013 vs. 3Q of FYE Mar. 2014 (1) (in 9 months) (million yen, %) 3Q of FYE Mar. 2013 3Q of FYE Mar. 2014 Fluctuation (%) (Apr. to Dec. 2012） (Apr. to Dec. 2013） Total revenue 25,184 45,102 79.1% Commission received 12,606 26,218 108.0% Net trading income 4,487 6,377
Slide 28: Financial Summary: 3Q FYE Mar. 2013 vs. 3Q FYE Mar. 2014 (2)
Financial Summary: 3Q of FYE Mar. 2013 vs. 3Q of FYE Mar. 2014 (2) (in 9 months) By local segment (million yen, %) Japan U.S. China 3Q of 3Q of 3Q of 3Q of 3Q of 3Q of Fluctuation Fluctuation Fluctuation FYE Mar. FYE Mar. FYE Mar. FYE Mar. FYE Mar. FYE Mar. (%) (%) (%) 2013 2014 2013 2014 2013 2014
Slide 29: Major Increase/Decrease Factors of Revenue and Expenses (YoY Comparison)
Major Increase/Decrease Factors of Revenue and Expenses (YoY Comparison) ■ Total revenue ■ Total expenses (Comparison with April to December FYE March 2013) (Comparison with April to December FYE March 2013) ◆Commission increased due to the brisk market condition in ◆ Total costs increased due to in
Slide 30: Summary of statement of financial position
Summary of statement of financial position ◆ Summary of statement of financial position as of December 31, 2013 Assets Liabilities (*1) Non-current type assets JPY 917.0 bn JPY 836.9 bn Property, plant and equipment JPY 1.7 bn Major assets: Intangible assets (Goodwill) JPY 18.3 bn (*2) Major liabili
Slide 31: Total Operating Revenue and Total Expenses by Local Segment & Items
Total Operating Revenue and Total Expenses by Local Segment & Items ■3Q of FYE March 2014(9 months) ◆Total operating revenue by local segment and ◆ SG&A by local segment & cost items product lines Larger percentage of system related costs in Japan is due to outsourcing expenses Others 2% (*) Financi
Slide 32: [Data] 1. Market & Transaction Data
I. WHAT IS MONEX GROUP? II. Business Highlights III. Business Strategy IV. Financial Results [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 31
Slide 33: 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 4,000,000 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 Dec.31, 2011 Mar.31, 2012 Jun.30, 2012 Sep.30, 2012
Slide 34: 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 Dec.31, 2011 Mar.31, 2012 Jun.30, 2012 Sep.30, 2012 Dec.31, 2012 Mar.31, 2013 Jun.30, 2013 Sep.30, 2013 Dec.31, 2013 (Unit: person
Slide 35: 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 （thousand） （100 mil yen） its equity trading values (100mil yen ) (%) Fut
Slide 36: Market and Transaction Data (4) Japan Segment - 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 Monex Group's Bond Sales of Equity
Slide 37: 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% 35.0% Homemaker Civil servant Self-employed 30.0% 30.0% Male w
Slide 38: 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 39: 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） Futures DARTs(left) Options DARTs(left) Equities DARTs(left) 140 35 120 Vix Avg. High(right) Vix Avg. Low(right) 30 100 25 80 20 60 15 40 10 20 5 0 0 3Q of FYE 4Q of F
Slide 40: 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 9,500 600 400 200 9,000 0 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 FYE 3Q
Slide 41: 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 （100mil USD） （mil yen） （100mil yen） (thousand USD） 2,000 150,000 10,000 Trading revenue(left) 1,000 Commissions(lef
Slide 42: [Data] 2. Financial Data
I. WHAT IS MONEX GROUP? II. Business Highlights III. Business Strategy IV. Financial Results [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 41
Slide 43: 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 44: Quarterly consolidated financial results
Quarterly consolidated financial results (million yen) FYE March 2013 FYE March 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q Commission received 4,178 3,898 4,530 7,761 10,763 7,518 7,937 Net trading income 1,651 1,290 1,547 2,486 2,821 1,832 1,723 Financial revenue 2,142 1,556 2,005 2,492 3,126 2,918 3,579 Other oper
Slide 45: 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 3Q Brokerage commissions 3,109 2,794 3,485 6,288 9,174 6,123 6,463 Stocks and ETFs 1,979 1,857 2,440 5,028 7,533 4,848 5,195 Options and
Slide 46: 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 3Q Transaction-related expenses 2,605 2,364 2,409 2,846 3,320 2,939 2,953 Commissions paid 959 867 948 1,045 1,332 1,152 1,118 Exchang
Slide 47: 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 3Q Other financial revenue 57 175 18 4,605 2,296 4 116 Gain on sales of investment securities - 160 16 4,604 2,291 - -0 Dividends income 43 - - - 3 - - Gain or lo
Slide 48: Quarterly consolidated financial results by local segment
Quarterly consolidated financial results by local segment (million yen) FYE March 2013 FYE March 2014 2Q 3Q 4Q 1Q 2Q 3Q 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 2,226 1,627 47 2,749 1,730 55 5,699 1,988 85 8,323 2,360 94 5,284 2,165 80 5,574 2
Slide 49: Quarterly consolidated financial 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 2Q 3Q 4Q 1Q 2Q 3Q 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 1,618 1,132 47 2,18
Slide 50: Quarterly consolidated financial 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 2Q 3Q 4Q 1Q 2Q 3Q 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 1,105 1,245 23 1,12
Slide 51: U.S. Segment: Quarterly consolidated financial results (in USD)
U.S. Segment :Quarterly consolidated financial results (in USD) Reclassified consolidated statement of income (thousand USD) FYE March 2013 FYE March 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q Brokerage commissions 16,691 14,468 15,110 15,846 17,923 15,972 16,051 Stocks and ETFs 5,240 4,587 4,501 5,011 5,102 4,883 5
Slide 52: U.S. Segment: Quarterly consolidated financial results (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 (thousand USD) FYE March 2013 FYE March 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q Transaction-related expenses 17,400 15,905 15,064 15,172 15,910 14,868 14,164 Commissions paid 9,402 8,457
Slide 53: 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 December 31, 2013 March 31, 2013 December 31, 2013 Cash and cash equivalents 51,193 81,739 Property and equipment 1,485 1,689 Cash segregated as deposits 349,837 444,133 Intangible assets 37
Slide 54: 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 December 31, 2013 March 31, 2013 December 31, 2013 Derivative liabilities 7,604 8,662 Common stock 10,394 10,394 Margin transaction liabilities 39,745 38,399 Additional-paid in
Slide 55: 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 December 31, 2013 Investments in securities 18,551 8,034 Available-for-sale financial assets Quoted prices (unadjusted) in active markets for identi
Slide 56: [Data] 3. Corporate Data
I. WHAT IS MONEX GROUP? II. Business Highlights III. Business Strategy IV. Financial Results [Data] 1. Market & Transaction Data 2. Financial Data 3. Corporate Data 55
Slide 57: The Monex Group
The Monex Group (As of January 31 , 2014) 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. TradeStatio
Slide 58: 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 59: 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 60: 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 (as of September 30, 2013) Securities companies 4.0% To provide return to shareholders based upon our business p
Monex Group — Q3 FYE March 2014 Earnings Presentation on 6ix