FYE 03/2002 3Q Financial Results FYE 03/2002 FYE 03/2002 FYE - - PowerPoint PPT Presentation

Monex, Inc

FYE 03/2002 FYE 03/2002 FYE 03/2002 FYE 03/2002 FYE 03/2002 FYE 03/2002 FYE 03/2002 FYE 03/2002 3Q Financial Results 3Q Financial Results 3Q Financial Results 3Q Financial Results 3Q Financial Results 3Q Financial Results 3Q Financial Results 3Q Financial Results

Forward-looking Statements Statements made at this presentation and in this material include forward-looking statements that are based on our current expectations, assumptions, estimates and projections about our business and the industry. These forward-looking statements are subject to various risks and

• uncertainties. These statements discuss future expectations and plans, identify strategies, contain projections of results of operations and of our

financial condition, and state other “forward-looking” information. Known and unknown risks, uncertainties and other factors could cause the actual results to differ materially from expected results contained in any forward-looking statements. Potential risks and uncertainties include, without limitation, our ability to continue to attract and retain customers and their assets; our ability to make our operations profitable; changes in the demand for brokerage services in Japan; our ability to continue to expand and maintain our computers and electronic systems and to avoid failures of these systems; and our ability to maintain our relationship with our founding shareholders. This does not correspond to US GAAP.

January 2002

1

Monex, Inc

FY 3/2002 Financial Summary FY 3/2002 Financial Summary FY 3/2002 Financial Summary FY 3/2002 Financial Summary

(million Yen） ） ） ）

FY 3/2001 FY3/2002 Apr.-Dec. Total Apr.-Dec. Total % chg

Operating Revenue 2,246 2,486 +10.7% (Commission Revenue） 2,216 2,422 +9.3% Operating Expense 2,787 3,373 +21.0% Operating Loss 540 887

• Ordinary Loss

651 852

• Net Loss

688 921

• * P/L of Saison Securities is not included.

(million Yen） ） ） ）

Total Assets 11,193 13,154 +17.5% Shareholders' Equity 10,009 10,803 +7.9% Capital Adequacy Ratio 1257.9% 931.6%

2

Monex, Inc

FY 3/2002 Third Quarter Financial Summary FY 3/2002 Third Quarter Financial Summary FY 3/2002 Third Quarter Financial Summary FY 3/2002 Third Quarter Financial Summary

(million Yen） ） ） ）

FY 3/2001 FY3/2002 3Q 3Q % chg

Operating Revenue 748 779 +4.1% (Commission Revenue） 743 762 +2.6% Operating Expense 923 1,217 31.7% Operating Loss 175 437

• Ordinary Loss

176 435

• Net Loss

187 452

• (million Yen）

） ） ）

FY 3/2002 FY3/2002 2Q 3Q % chg

Operating Revenue 764 779 +1.9% (Commission Revenue） 756 762 +0.9% Operating Expense 1,182 1,217 +2.9% Operating Loss 417 437

• Ordinary Loss

414 435

• Net Loss

427 452

• Year on Year

Quarter on Quarter

3

Monex, Inc

Operating Revenue vs. Sales and General Administrative Expenses Operating Revenue vs. Sales and General Administrative Expenses Operating Revenue vs. Sales and General Administrative Expenses Operating Revenue vs. Sales and General Administrative Expenses

FEY 03/2001 FEY 03/2002 1Q 2Q 3Q 4Q 1Q 2Q 3Q Operating Revenue (1) 647 850 748 752 942 764 779 Sales and Administrative Expenses (2) 848 1,015 923 891 974 1,182 1,217 (1) / (2) 76% 84% 81% 84% 97% 65% 64%

Revenue Breakdown

90.7% 71.5% 77.8% 89.2% 84.4% 86.9% 89.6% 5.5% 5.7% 4.2% 7.0% 8.4% 6.0% 6.4% 2.4% 19.8% 9.0% 12.8% 0.9% 1.5% 3.8% 2.5% 2.2% 2.4% 3.6% 1.0% 2.7% 2.1%

FY01/1Q 2Q 3Q ４ ４ ４ ４Q FY02/1Q 2Q 3Q

Stock Brokarage Investment Trust Underwriting and Investment Banking Others 100%= 647 mio Yen 850 748 752 942 764 77 77 77 77 (million Yen)

647 647 647 647 850 850 850 850 748 748 748 748 752 752 752 752 942 942 942 942 764 764 764 764 779 779 779 779 201 201 201 201 164 164 164 164 175 175 175 175 139 139 139 139 417 417 417 417 437 437 437 437 848 848 848 848 1,015 1,015 1,015 1,015 923 923 923 923 891 891 891 891 974 974 974 974 1,182 1,182 1,182 1,182 1,217 1,217 1,217 1,217 31 31 31 31

200 400 600 800 1,000 1,200 1,400

Operating Revenue Operating Loss Commission paid Commuication and freight Information Expense Advertising Ex pense Mgmt and Employees salary

• Eequip. Furniture and Fixtures

Outsourcing Ex pense Other SG and A

(million Yen）

Breakdown of O.R. vs. SGA

4

Monex, Inc

Number of Customers Number of Customers Number of Customers Number of Customers’ ’ ’ ’ Accounts Accounts Accounts Accounts

14,638 24,376 33,676 39,422 45,691 51,310 56,594 63,417 69,056 79,488 86,902 91,789 94,936 100,146 103,960 107,107 110,423 113,945 116,952 120,154 168,061 171,985 175,289 178,415 181,458 183,616 185,671 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 99/10 99/11 99/12 00/01 00/02 00/03 00/04 00/05 00/06 00/07 00/08 00/09 00/10 00/11 00/12 01/01 01/02 01/03 01/04 01/05 01/06 01/07 01/08 01/09 01/10 01/11 01/12

5

Monex, Inc

Cost to Acquire Customers Cost to Acquire Customers Cost to Acquire Customers Cost to Acquire Customers’ ’ ’ ’ Accounts Accounts Accounts Accounts

Number of Customers' Accounts Acquired

5,000 10,000 15,000 20,000 25,000 FYE 03/2001 (Avg.） 2Q 4Q 2Q

Advertising Expense (thousand USD） ） ） ） 100 200 300 400 FYE 03/2001 (Avg.） 2Q 4Q 2Q USD/JPY@131.00

Advertising Expense per Account (USD/account) 5 10 15 20 25 FYE 03/2001 (Avg.） 2Q 4Q 2Q

USD/JPY@131.00

$18.4 $18.4 $18.4 $18.4 44,270 44,270 accounts accounts transferred from Saison transferred from Saison Securities are not Securities are not included in new included in new accounts acquired for 1Q accounts acquired for 1Q in FYE 03/2001. in FYE 03/2001. ! !Account acquiring Account acquiring cost has risen slightly cost has risen slightly due to the decrease in due to the decrease in total accounts acquired total accounts acquired in this period. in this period. ! !However, on back of However, on back of co co-

• marketing with

marketing with Credit Saison and Credit Saison and successful PR, we successful PR, we maintain much maintain much lower lower account acquiring cost account acquiring cost than industry average. than industry average.

6

Monex, Inc

Break Break Break Break-

• Even Analysis

Even Analysis Even Analysis Even Analysis – – – – Spreadsheet Spreadsheet Spreadsheet Spreadsheet

• 1. Divide major items of SG & A into 2 categories (1) Variable (trade volume and number of accounts base) and (2) Fixed.

After excluding one-time cost, Outsourcing Expenses are divided into three categories. FYE 03/2001 FYE 03/2002

Major Items of SG and A

Variable / Fixed 1Q 2Q 3Q 4Q 1Q 2Q 3Q Commisons Paid Variable (based on trading volume) 146 126 32 22 34 34 42 Exchange and Association fees Fixed 12 17 22 19 24 22 22 Communications and Freights Variable (based on trading volume) 66 76 69 59 75 79 87 Expense to acquire information Vairable (based on number of accounts) 57 81 67 72 78 79 122 Advertising Expense Fixed 23 42 23 6 16 17 17 Directors' remuneration Fixed 2 7 7 7 7 7 7 Employees salaries Fixed 95 107 109 103 93 143 141 Equipment, Furniture and Fixture Variable (based on number of accounts) 157 200 231 250 250 285 306 Outsourcing Expense (1) Fixed (30%) 71 78 80 82 83 97 107 Outsourcing Expense (2) Variable (20%: based on trading volume) 47 52 53 54 56 64 71 Outsourcing Expense (3) Variable (50%: based on number of accounts) 118 130 133 136 139 162 178 Outsourcing Expense (4) One-time Expense 79 14 Amortization of Goodwill Fixed 10 10 10 10 10 10 10 Variable Cost (based on trading volume) （A) 259 254 154 135 165 179 201 Variable Cost (based on # of accounts) （B) 332 411 431 458 467 527 607 Fixed Cost (+ one-time cost) （C) 213 261 251 227 233 377 320 Total SGA (major items listed above) 803 926 835 820 865 1,085 1,129 Ratio to Total SGA (total of major item of SGA / total SGA) 95% 91% 90% 92% 88% 92% 93% ２． ２． ２． ２．Brokerage Commision takes major portion in Operating Revenue Brokerage Commision 587 607 582 671 795 664 698 Operating Revenue 647 850 748 752 942 764 779 Brokerage Commision/Operating Revenue 91% 71% 78% 89% 84% 87% 90% ３． ３． ３． ３．Calculate Variable cost per trade Quarterly Trading Volume (Daily Trading Volume x Business Day /1000) (D) 369 414 378 441 518 441 465 Average Commision / Trade (Yen) 1,591 1,466 1,540 1,522 1,531 1,506 1,501 Variable (based on trading volume) / Trade （A）/（D) (Yen） 702 614 407 307 317 406 432 Average Commission per Trade - Variable (based on trading volume) per Trade (Yen） 889 853 1,132 1,215 1,214 1,100 1,069 ４． ４． ４． ４．Calculation of estimated Break-Even point to cover both Fixed cost and Variable cost based on number of accounts Break-even Point Estimate (Quaterly) ('000 trades) 612 788 601 564 577 822 867 Break-even Point Estimate (Monthly) ('000 trades) 204 263 200 188 195 274 289

7

Monex, Inc

Break Break Break Break-

• Even Analysis

Even Analysis Even Analysis Even Analysis – – – – Number of Trade Number of Trade Number of Trade Number of Trade

213 261 251 227 233 377 320 332 411 431 458 467 607 527 612 601 564 577 822 867 369 414 378 465 788 441 441 518 500 1,000 1,500 2,000 FY2001/3 １Q ２Q ３Q ４Q FY2002/3 １Q 2Q 200 400 600 800 1,000

Fixed Cost (one-time cost incld.) Variable cost based on # of accounts # of trade needed to break-even Acutal # of trade done

Number of Trade ('000）

Cost

（Million Yen）

2 2Q: One Q: One-

• time cost and

time cost and fixed cost rose due to fixed cost rose due to strategic investments and strategic investments and merger effect. merger effect. 3 3Q: In line with the increase Q: In line with the increase in the number of clients in the number of clients’ ’ accounts, (1) Lease accounts, (1) Lease Expenses, (2) System Expenses, (2) System Maintenance Cost, and (3) Maintenance Cost, and (3) Variable Cost based on the Variable Cost based on the number of accounts number of accounts increased increased The number of employees The number of employees slightly increased slightly increased Rise in information cost due Rise in information cost due to the improvement of to the improvement of information services information services

8

Monex, Inc

Break Break Break Break-

• Even Analysis

Even Analysis Even Analysis Even Analysis – – – – Executed Deal Ratio Executed Deal Ratio Executed Deal Ratio Executed Deal Ratio

(B/E Executed Deal Ratio) = (B/E number of Executed Deals) / (Number of Accounts) (Actual Executed Deal Ratio) = (Actual number of Executed Deals) / (Number of Accounts)

B/E Executed Deal Ratio and Nikkei 225 Avg.

2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 00-Apr 00-May 00-Jun 00-Jul 00-Aug 00-Sep 00-Oct 00-Nov 00-Dec 01-Jan 01-Feb 01-Mar 01-Apr 01-May 01-Jun 01-Jul 01-Aug 01-Sep 01-Oct 01-Nov 01-Dec

Nikkei 225 Avg

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0%

Executed Deal Ratio

Nikkei 225 Avg. B/E Executed Deal Ratio Actual Executed Deal Ratio

Due to merger with Saison sec. on Jun 30 Due to merger with Saison sec. on Jun 30.

9

Monex, Inc

Correlation w ith Market Correlation w ith Market Correlation w ith Market Correlation w ith Market

Individual Trading Volume at TSE and Monex Clients'Trading Volume at TSE (index April 2000 =100) 20 40 60 80 100 120 140 160 180 200 Apr-00 Jun-00 Aug-00 Oct-00 Dec-00 Feb-01 Apr-01 Jun-01 Aug-01 Oct-01 Dec-01 Individual Trading Volume at TSE Monex, Inc.

10

Monex, Inc

Monex Share Price vs. Nikkei 225 Monex Share Price vs. Nikkei 225 Monex Share Price vs. Nikkei 225 Monex Share Price vs. Nikkei 225

20 40 60 80 100 120 140 160 180 200 2000/8/4 2000/8/18 2000/9/1 2000/9/15 2000/9/29 2000/10/13 2000/10/27 2000/11/10 2000/11/24 2000/12/8 2000/12/22 2001/1/5 2001/1/19 2001/2/2 2001/2/16 2001/3/2 2001/3/16 2001/3/30 2001/4/13 2001/4/27 2001/5/11 2001/5/25 2001/6/8 2001/6/22 2001/7/6 2001/7/20 2001/8/3 2001/8/17 2001/8/31 2001/9/14 2001/9/28 2001/10/12 2001/10/26 2001/11/9 2001/11/23 2001/12/7 2001/12/21 2002/1/4

Monex Share (Aug. 4, 2000 closing price＝ ＝ ＝ ＝100） ） ） ） Nikkei 225 avg. index （ （ （ （Aug. 4, 2000 closing price=100） ） ） ）

Price Movement from Aug. 4, 2002 （as of Jan. 18, 2002） Monex (Based on IPO price） -39% Nikkei 225 Avg. Index -33% Monex Share Price vs. Nikkei 225 Average Index (August 4, 200 Monex Share Price vs. Nikkei 225 Average Index (August 4, 2000 as a base) 0 as a base)

11

Monex, Inc

Customers Customers Customers Customers’ ’ ’ ’ Asset in Custody Asset in Custody Asset in Custody Asset in Custody

Transfer from Saison Securities on June 30, 2001 Transfer from Saison Securities on June 30, 2001 91.4 billion Yen (Stocks 65 billion Yen) 91.4 billion Yen (Stocks 65 billion Yen) MRF Outstanding as of December 31, 2001 MRF Outstanding as of December 31, 2001 63 billion Yen 63 billion Yen Money inflow from customers has always exceeded outflow since th Money inflow from customers has always exceeded outflow since the first day of business e first day of business (excluding only 2 days.) (excluding only 2 days.)

2,745 2,745 2,745 2,745 3,030 3,030 3,030 3,030 1,306 1,306 1,306 1,306 1,938 1,938 1,938 1,938 2,459 2,459 2,459 2,459 2,451 2,451 2,451 2,451 2,919 2,919 2,919 2,919 4,184 4,184 4,184 4,184 3,745 3,745 3,745 3,745 4,021 4,021 4,021 4,021 3,185 3,185 3,185 3,185 1,911 1,911 1,911 1,911 1,924 1,924 1,924 1,924 1,510 1,510 1,510 1,510 1,021 1,021 1,021 1,021 2,226 2,226 2,226 2,226

1,000 1,000 1,000 1,000 2,000 2,000 2,000 2,000 3,000 3,000 3,000 3,000 4,000 4,000 4,000 4,000 5,000 5,000 5,000 5,000 6,000 6,000 6,000 6,000 7,000 7,000 7,000 7,000 8,000 8,000 8,000 8,000

2000年3月 2000年3月 2000年3月 2000年3月 6月 6月 6月 6月 9月 9月 9月 9月 12月 12月 12月 12月 2001年3月 2001年3月 2001年3月 2001年3月 6月 6月 6月 6月 9月 9月 9月 9月 12月 12月 12月 12月

Stocks IT (excl. MRF) MRF Others

9,000 11,000 13,000 15,000 17,000 19,000 21,000 MRF (quasi- cash) and Investment Trust

12

Monex, Inc

Investment Trust Business Investment Trust Business Investment Trust Business Investment Trust Business

7.6 8.2 11.6 11.0 10.3 9.5 10.3 10.7 10.6 8.2

421 307 405 760 792 646 643 839 773 470 13.0 14.6 30.1 29.5 13.9 30.2 31.0 30.5 30.0 28.7 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0

2001/3 2001/4 2001/5 2001/6 2001/7 2001/8 2001/9 2001/10 2001/11 2001/12

100 200 300 400 500 600 700 800 900 1,000

Domestic stock Investment Trust Domestic Bond Investment Trust Foreign Investment Trust Number of IT orders per day Number of accounts Outstanding (billion Yen）

Monthly Fixed Amount Purchase Oct. Nov. Dec.

Teigaku Tsumitate Number of orders

1,967 2,140 2,368

Direct withdrawal from MRF Monthly (million Yen)

38 42 49

Card de JIDO Tsumitate Number of orders

4,735 4,872 4,919

Withdrawal from bank account Monthly (million Yen)

91 94 111

13

Monex, Inc

Underw riting Business Underw riting Business Underw riting Business Underw riting Business

Expanding revenue Expanding revenue with keeping the cost at with keeping the cost at low level low level Aiming to raise Aiming to raise underwriting share, not underwriting share, not the number of deals the number of deals

16 5 15 7 2 4 6 8 10 12 14 16 18 FY 01/3 FY 02/3 1Q FY 02/3 2Q FY 02/3 3Q （issue） Monex Underwriting Monex Underwriting Monex Underwriting Monex Underwriting

Major issues and Major issues and Monex Monex’ ’s s share in coming quarter: share in coming quarter:

First deal as a lead First deal as a lead-

• manager

manager SOURCENEXT SOURCENEXT CORPORATION CORPORATION （ （ （ （ （ （ （ （40% 40%） ） ） ） ） ） ） ） Co Co-

• manager deal

manager deal Konami Computer Entertainment Japan Konami Computer Entertainment Japan （ （ （ （ （ （ （ （10% 10%） ） ） ） ） ） ） ） Others Others PIA CORPORATION PIA CORPORATION （ （ （ （ （ （ （ （10% 10%） ） ） ） ） ） ） ）

14

Monex, Inc

Basic Direction Basic Direction Basic Direction Basic Direction

" "Over Over-

• all account

all account – – to expand and to reinforce

to expand and to reinforce

" "Cash Management Account (Credit Card, ATM) Cash Management Account (Credit Card, ATM) Monex Monex ≪ ≪ ≪ ≪ ≪ ≪ ≪ ≪Saison Saison≫ ≫ ≫ ≫ ≫ ≫ ≫ ≫Card: Card: 11,806 cards issued as of Jan. 18, 2002 (issuance started in Jul 11,806 cards issued as of Jan. 18, 2002 (issuance started in July 2001) y 2001) " "Money Station (Account Aggregation) Money Station (Account Aggregation) " "Link Link-

• settlement (Connecting Money Transfer with banks)

settlement (Connecting Money Transfer with banks)

" "Asset Planning Department Asset Planning Department

" "Proposing a better way of investing/managing individual financia Proposing a better way of investing/managing individual financial assets by l assets by discussing the structural problems in Japan (Bankruptcy of the g discussing the structural problems in Japan (Bankruptcy of the government,

• vernment,

Collapse of pension system, Lifting an embargo of guaranteeing b Collapse of pension system, Lifting an embargo of guaranteeing bank deposit, ank deposit, Japanese 401k plan etc) with clients Japanese 401k plan etc) with clients " "Establishing a better positioning as an Asset Gatherer for indiv Establishing a better positioning as an Asset Gatherer for individual assets idual assets

15

Monex, Inc

Core Competence = Enlarging the Scale Core Competence = Enlarging the Scale Core Competence = Enlarging the Scale Core Competence = Enlarging the Scale

" "Co Co-

• marketing with Credit Saison

marketing with Credit Saison " "Expanding Services and Contents Expanding Services and Contents

" "To reinforce information services To reinforce information services " "To connect Monex Nighter with more companies To connect Monex Nighter with more companies " "To expand the number of mini To expand the number of mini-

• stocks

stocks " "To strengthen a line To strengthen a line-

• up of Investment Trust

up of Investment Trust " "To correspond to simple tax return system To correspond to simple tax return system " "To study for wide To study for wide-

• range Risk hedging tools

range Risk hedging tools

(In addition to bear (In addition to bear-

• fund, study an introduction of margin

fund, study an introduction of margin trade etc. as a choice) trade etc. as a choice)

" "M & A M & A

16

Monex, Inc

For More Profitability For More Profitability For More Profitability For More Profitability -

• Possible Theme to Study

Possible Theme to Study Possible Theme to Study Possible Theme to Study

" "To pursue more profit and less cost by possible M & A To pursue more profit and less cost by possible M & A " "To charge to some part of Information Service To charge to some part of Information Service " "To activate existing accounts To activate existing accounts " "Underwriting business : more deals as a lead Underwriting business : more deals as a lead-

• manage

manage

17

Monex, Inc

Supplementary Explanation: Margin Supplementary Explanation: Margin Supplementary Explanation: Margin Supplementary Explanation: Margin Trade and Information Services Trade and Information Services Trade and Information Services Trade and Information Services

Is it reasonable to pursue Monex type of Margin Trade to provide Is it reasonable to pursue Monex type of Margin Trade to provide clients clients with a broader range of hedging tool? with a broader range of hedging tool?

From protecting clients From protecting clients’ ’ benefit point of view, we have provided a bear benefit point of view, we have provided a bear-

• fund

fund

• nly as a hedging tool. However, as the demand from the clients
• nly as a hedging tool. However, as the demand from the clients’

’ has been has been high, Monex will reevaluate the following points: high, Monex will reevaluate the following points:

" " Disparity and time Disparity and time-

• lag of information and a size of investment

lag of information and a size of investment " " The necessity and the effect of educating clients with investme The necessity and the effect of educating clients with investment and trading nt and trading " " Differences of price movement and event risk effects between in Differences of price movement and event risk effects between index fund and individual stocks dex fund and individual stocks " " The possibility of put option on index funds and/or individual The possibility of put option on index funds and/or individual stocks, and margin trade on ETF stocks, and margin trade on ETF

How can we match the expansion of clients How can we match the expansion of clients’ ’ accounts and the enrichment accounts and the enrichment

• f information services?
• f information services?

" "Which service should be the subject for charging? Which service should be the subject for charging? " "Possible method are: Possible method are:

" "When the amount of assets in custody becomes below the minimum r When the amount of assets in custody becomes below the minimum requirement equirement " "When the number of trades becomes below the minimum requirement When the number of trades becomes below the minimum requirement " "Simple and uniform charges Simple and uniform charges

http://www.monex.co.jp/ http://www.monex.co.jp/ http://www.monex.co.jp/ http://www.monex.co.jp/ http://www.monex.co.jp/ http://www.monex.co.jp/ http://www.monex.co.jp/ http://www.monex.co.jp/