Financial Results Financial Results Fiscal Year Ended March 31, 2005 Fiscal Year Ended March 31, 2005 April 25, 2005 April 25, 2005 This is an English translation of Japanese presentation material prepared for IR conference held on the above date; it includes the information on consolidated financial summary under Japanese GAAP for FYE March 2005. If there is any discrepancy between a statement in English and a statement in Japanese, the Japanese statement is always controlling. 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.
Table of Contents Table of Contents 1. Financial Results and Business Overview 2. Business Model and Future Development Financial Summary ■ ■ ・ ・ ・ 21 ・ ・ ・ 3 FYE Mar. 31, 2004 vs. FYE Mar. 31, 2005 Mission Statements ■ 3Q of FYE Mar. 31, 2005 vs. 4Q of FYE Mar. 31, 2005 ・ ・ ・ ■ ・ ・ ・ 22 4 Current and Future Business Models ■ ・ ・ ・ ■ ・ ・ ・ 23 5 Financial Highlights (Quarterly Basis) Acceleration of Alliances with Other Businesses ■ ■ ・ ・ ・ 24 Full Line Services and Products Net Operating Revenues ・ ・ ・ 6 vs. Selling, General and Administrative Expenses ■ ・ ・ ・ 25 Effects of Business Merger Comparison with Others ・ ・ ・ 26 ■ Monex Beans Group Overview ■ ・ ・ ・ Retail Trading Value & Equity Brokerage Commissions 7 ■ Message to Shareholders ・ ・ ・ 27 ■ ・ ・ ・ <Reference> Individual Investors Trend 8 ■ Financial Highlights (Quarterly Basis) ・ ・ ・ 9 Business Overview ■ ・ ・ ・ 10 Brokerage Business ■ ・ ・ ・ 11 Underwriting Business ■ ・ ・ ・ 12 Mutual Fund Business ■ ・ ・ ・ 13 FX Business ■ ・ ・ ・ 14 Fixed Income Business ■ ・ ・ ・ 15 Alternative Investment Funds Business ■ ・ ・ ・ 16 Original Services ■ ・ ・ ・ 17 Service Lineup ■ ・ ・ ・ 18 New Services ■ ・ ・ ・ 19 Investors Education 1
1. Financial Results and Business Overview 2. Business Model and Future Development 2
Financial Summary: FYE Mar. 31, 2004 vs. FYE Mar. 31, 2005 Financial Summary: FYE Mar. 31, 2004 vs. FYE Mar. 31, 2005 (in million yen, %) FYE Mar. 2004 FYE Mar. 2005 Change (Apr. 2003-Mar. 2004 ） (Apr. 2004-Mar. 2005) Operating Revenues 15,075 21,716 44.0% Net Operating Revenues 14,437 20,690 43.3% SG&A 8,960 11,424 27.5% Operating Income 5,477 9,266 69.2% Ordinary Income 5,484 9,180 67.4% Net Income 4,793 7,079 47.7% (in million yen, %) FYE Mar. 2004 FYE Mar. 2005 Change （ as of Mar. 31, 2004 ） （ as of Mar. 31, 2005 ） Total Assets 156,491 232,091 48.3% Net Assets 22,492 29,811 32.5% - Capital Adequacy Ratio 521.7% 470.6% Cash and Deposits 15,983 26,004 62.7% Please note that, unless otherwise stated, the figures in this material show the consolidated figures of MBH and its group companies (i.e. Monex and Nikko Beans) and those figures before 2Q of FYE Mar. 31, 2005 are the simple sums of those of Monex and Nikko Beans. All statements in this presentation material are based on this premise. 3
Financial Summary: 3Q of FYE Mar. 31, 2005 vs. 4Q of FYE Mar. 31, 2005 Financial Summary: 3Q of FYE Mar. 31, 2005 vs. 4Q of FYE Mar. 3 1, 2005 (in million yen, %) 3Q of FYE Mar. 2005 4Q of FYE Mar. 2005 Change (Oct. 2004-Dec. 2004) (Jan. 2005-Mar. 2005) Operating Revenues 4,887 6,533 33.7% Net Operating Revenues 4,596 6,340 37.9% SG&A 2,721 3,004 10.4% Operating Income 1,875 3,336 77.9% Ordinary Income 1,874 3,322 77.2% Net Income 1,014 1,784 75.9% (in million yen, %) 3Q of FYE Mar. 2005 4Q of FYE Mar. 2005 Change ( as of Dec. 31, 2004 ） (as of Mar. 31, 2005 ） Total Assets 184,837 232,091 25.6% Net Assets 28,014 29,811 6.4% - Capital Adequacy Ratio 503.7% 470.6% ▲ Cash and Deposits 27,665 26,004 6.0% 4
Financial Summary: Financial Highlights (Quarterly Basis) Financial Summary: Financial Highlights (Quarterly Basis) Selling, General Net Operating Revenues (in million yen) (in million yen) and Administrative Expenses 6,340 7,000 7,000 6,000 5,440 6,000 4,907 4,596 5,000 5,000 4,312 3,698 4,000 4,000 3,004 2,892 2,721 2,806 2,703 3,000 3,000 2,278 2,000 2,000 1,000 1,000 0 0 FYE Mar. 2004 FYE Mar. 2005 FYE Mar. 2004 FYE Mar. 2005 3 Ｑ 4 Ｑ １ Ｑ 2 Ｑ 3 Ｑ 4 Ｑ 3 Ｑ 4 Ｑ 1 Ｑ 2 Ｑ 3 Ｑ 4 Ｑ ROE (annualized) Ordinary Income (in million yen) Return=No Tax Basis 3,322 → Return=After Tax Basis 3,500 with Carry-over Losses ← 50% 42% 3,000 2,645 40% 34% 2,500 2,201 1,874 27% 27% 30% 2,000 25% 1,424 1,338 1,500 20% 15% 1,000 10% 500 0 0% FYE Mar. 2005 FYE Mar. 2004 FYE Mar. 2005 FYE Mar. 2004 3 Ｑ 4 Ｑ １ Ｑ 2 Ｑ 3 Ｑ 4 Ｑ 3 Ｑ 4 Ｑ １ Ｑ 2 Ｑ 3 Ｑ 4 Ｑ 5
Financial Summary: Financial Summary: Net Operating Revenues vs. Selling, General and Administrative Expenses Net Operating Revenues vs. Selling, General and Administrative E xpenses Net Operating Revenues 724 468 1. The ratio of brokerage commission 291 274 470 revenues over net operating revenues 389 FYE Mar. 2004: 79% FYE Mar. 2005: 74% 1,068 2,432 2. Revenues excluding brokerage commissions are 26% of total revenues and cover about 863 70% of fixed cost. 1,411 FYE Mar. 2005 ※ ※ Break- -even Point Analysis even Point Analysis Break FYE Mar. 2004 10,099 20,690 million yen 14,437 million yen 7,683 TSE Trading Volume /business day 500 million shares million shares 3,692 500 5,263 ※ ※ This estimate is based on the following assumptions: “Trading volume share on TSE” and “Revenues excluding brokerage Cash Margin FX Financial Income Mutual Funds IPO Others commissions” remain the same figures as those of 4Q of FYE Mar. 31, 2005. Selling, General and Administrative Expenses 801 Temporary cost was borne due Temporary cost was borne due 2,983 to the merger to the merger 2,311 ↓ ↓ FYE Mar. 2005 FYE Mar. 2004 Reduction of system related Reduction of system related 11,424 million yen 8,960 million yen running cost is expected after the running cost is expected after the merger. (refer to P25) 6,649 merger. (refer to P25) 7,640 6 Variable Cost Fixed Cost Temporary Cost
Comparison with Others: Retail Trading Value & Equity Brokerage Commissions Retail Trading Value & Equity Brokerage Commissions Comparison with Others: Share of Trading Value in Domestic Market Equity Brokerage Commissions (in million yen) (%) 25 8,000 20 6,000 15 4,000 10 2,000 5 0 0 FYE MAR.2004 FYE MAR.2005 FYE MAR.2004 FYE MAR.2005 1 Ｑ 2 Ｑ 3 Ｑ 4 Ｑ １ Ｑ 2 Ｑ 3 Ｑ 4 Ｑ 1 Ｑ 2 Ｑ 3 Ｑ 4 Ｑ 1 Ｑ 2 Ｑ 3 Ｑ 4 Ｑ Monex Beans Matsui E*Trade Rakuten Monex Beans Matsui E*Trade Rakuten Kabu.com Kabu.com Nomura Nikko Cordial Daiwa Source: Company IR data Note: Market share is that of trading value of TSE 1 st section, 2 nd section, Mothers and JASDAQ 7
<Reference> Individual Investors Trend Individual Investors Trend Trading Value Major Online Brokers vs. Major Full-line Brokers The ratio of internet trading value has increased significantly since March 2003. More than 80% of individual investors choose internet trading at present. The trading value of major online brokers has Source ： surpassed those of major full-line brokers. But, Japan Securities Dealers Association more than 90% of individual assets are still 90.0% 84% held by major full-line brokers. This means 81% further success of online brokers depends on increasing customers’ assets in custody. 80.0% The ratio of Internet trading among all trading value by individual investors 71% Trading Value Customers’ Assets in Custody 70.0% (Apr. 2003-Mar. 2004) (as of Mar. 31, 2004) 9% 60.0% Major 52% online 49% 55% 43% brokers 57% 50.0% 43% Major full-line Major brokers online The ratio of Internet trading among all trading (retail only) Major full-line 40.0% brokers 34% by all investors including institutional, foreign brokers (retail only) and individual investors. 91% 30.0% 25.3% 21.6% 19% 17.6% 20.0% Major Online Brokers: Monex Beans, Matsui, 10.5% 12.7% E*trade, Rakuten and Kabu.com 9.1% 7.3% 6.3% 10.0% 3.6% Major Full-line Brokers: Nomura, Nikko Cordial and Daiwa 0.0% Sep. 2000 Mar. 2001 Sep. 2001 Mar. 2002 Sep. 2002 Mar. 2003 Sep. 2003 Mar. 2004 Sep. 2004 Source: Company IR data 8
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