Financial Results Financial Results 3Q of Fiscal Year Ending March 31, 2005 3Q of Fiscal Year Ending March 31, 2005 January 21, 2005 January 21, 2005 This is an English translation of Japanese presentation material prepared for IR conference held on the above date; it includes the information on non-consolidated financial summary under Japanese GAAP for the third quarter of 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 1. Financial Results and Business Overview 2. Business Model and Future Development Financial Summary ■ ・ ・ ・ 18 ■ 3Q of FYE Mar. 31, 2004 vs. 3Q of FYE Mar. 31, 2005 (in 9 months) 3 Mission Statements ■ ■ ・ ・ ・ 19 2Q of FYE Mar. 31, 2005 vs. 3Q of FYE Mar. 31, 2005 (in 3 months) 4 Current and Future Business Models ■ ・ ・ ・ 20 ■ ・ ・ ・ 5 Analysis on Revenues and Expenses per Customers’ Assets Financial Highlights (Quarterly Basis) ■ ・ ・ ・ 21 ■ Securities Intermediary Business Net Operating Revenues ・ ・ ・ vs. Selling, General and Administrative Expenses 6 ■ ・ ・ ・ 22 Unique Services Comparison with Others ■ ・ ・ ・ 23 Alternative Investments Fund Business ■ ・ ・ ・ ■ ・ ・ ・ 24 7 Retail Trading Value & Equity Brokerage Commissions Effects of Business Merger ■ ・ ・ ・ ■ ・ ・ ・ 25 Individual Investors Trend 8 Shareholders and Business Partners ■ ・ ・ ・ 9 Customers’ Assets in Custody per Accounts Business Overview ■ ・ ・ ・ 10 Brokerage Business ■ ・ ・ ・ 11 Underwriting Business ■ ・ ・ ・ 12 Mutual Funds Business ■ ・ ・ ・ 13 FX Business FX Business ■ ・ ・ ・ 14 Fixed Income Business ■ ・ ・ ・ 15 Product Line 1 ■ ・ ・ ・ 16 Investors Education
1. Financial Results and Business Overview 2. Business Model and Future Development 2
Financial Summary: 3Q of FYE Mar. 31, 2004 vs. 3Q of FYE Mar. 31, 2005 (in 9 months) (in million yen, %) 3Q of FYE Mar. 2004 3Q of FYE Mar. 2005 Change (Apr. 2003-Dec. 2003 ） (Apr. 2004-Dec. 2004) 52.0% Operating Revenues 9,991 15,183 50.6% Net Operating Revenues 9,530 14,349 34.6% SG&A 6,256 8,419 81.1% Operating Income 3,274 5,929 78.4% Ordinary Income 3,282 5,858 77.8% Net Income 2,978 5,295 (in million yen, %) 3Q of FYE Mar. 2004 3Q of FYE Mar. 2005 Change （ as of Dec. 31, 2003 ） （ as of Dec. 31, 2004 ） 52.5% Total Assets 121,187 184,837 36.0% Net Assets 20,602 28,014 – Capital Adequacy Ratio 574.5% 503.7% 87.5% Cash and Deposits 14,751 27,665 Please note that, unless otherwise stated, the figures in this material show the consolidated figures of MBH and its group companies (i.e. 3 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.
Financial Summary: 2Q of FYE Mar. 31, 2005 vs. 3Q of FYE Mar. 31, 2005 (in 3 months) (in million yen, %) 2Q of FYE Mar. 2005 3Q of FYE Mar. 2005 Change (Jul. 2004-Sep. 2004) (Oct. 2004-Dec. 2004) 7.9% Operating Revenues 4,530 4,887 6.6% Net Operating Revenues 4,312 4,596 -5.9% SG&A 2,892 2,721 32.0% Operating Income 1,420 1,875 40.1% Ordinary Income 1,338 1,874 -42.0% * Net Income 1,749 1,014 *The net income in 2Q of FYE Mar. 2005 increased due to the recognition of deferred tax assets. This deferred tax assets was attributable to the loss carried forward. (in million yen, %) 2Q of FYE Mar. 2005 3Q of FYE Mar. 2005 Change （ as of Sep. 30, 2004 ） （ as of Dec. 31, 2004 ） -6.5% Total Assets 197,755 184,837 3.9% Net Assets 26,959 28,014 – Capital Adequacy Ratio 531.2% 503.7% -28.3% Cash and Deposits 38,566 27,665 4
Financial Summary: Financial Highlights (Quarterly Basis) Selling, General and Administrative Expenses Net Operating Revenues (in million yen) (in million yen) 6,000 5,440 6,000 4,907 4,596 5,000 5,000 4,312 3,644 3,698 4,000 4,000 2,892 2,806 2,721 2,703 2,278 3,000 2,109 3,000 2,000 2,000 1,000 1,000 0 0 FYE Mar. 2004 FYE Mar. 2005 FYE Mar. 2004 FYE Mar. 2005 2Q 3Q 4Q 1Q 2Q 3Q 2Q 3Q 4Q 1Q 2Q 3Q ROE (annualized) Ordinary Income (in million yen) (%) 3,000 50% 2,645 40% 2,201 2,500 40% 32% 1,874 29% 2,000 26% 26% 1,539 30% 1,424 1,338 1,500 20% 14% 1,000 10% 500 0 0% FYE Mar. 2004 FYE Mar. 2005 FYE Mar. 2004 FYE Mar. 2005 5 2Q 3Q 4Q 1Q 2Q 3Q 2Q 3Q 4Q 1Q 2Q 3Q
Financial Summary: Net Operating Revenues vs. Selling, General and Administrative Expenses 5,440 (in million yen) 4,907 4,596 4,312 3,698 3,644 2,892 2,806 2,721 2,703 2,278 2,109 FYE Mar. 31, 2004 FYE Mar. 31, 2005 3Q 2Q 3Q 4Q 1Q 2Q Net Operating Revenues Selling, General and Administrative Expenses 1. The ratio of brokerage commission revenues over net operating revenues 56 Breakdown of 3Q of FYE Mar. 31, 2005 115 -1Q of FYE Mar. 2005: 79% 193 -2Q of FYE Mar. 2005: 73% 204 -3Q of FYE Mar. 2005: 72% 585 614 (21%) 2. Revenues excluding brokerage commissions are (13%) Net Operating Selling, General and 28% of total revenues and cover about 67% of 2,082 Revenues Administrative Expenses fixed cost. 307 (45%) 4,596 million yen 2,721 million yen (7%) 3. MBH break-even point is about 500 million TSE trading volume. This estimate is based on the following assumptions: Both the figures of 1,229 1,932 “Trading volume share on TSE” and “Revenues (27%) (71%) excluding brokerage commissions” remain the same as those of 3Q of FYE Mar. 31, 2005. Brokerage (Cash) Brokerage (Margin) Variable Cost 6 FX Net Financial Income Fixed Cost Mutual Funds IPO Others Temporary Cost
Comparison with Others: Retail Trading Value & Equity Brokerage Commissions First Half of FYE Mar. 31, 2005 ◆ Market Share of Trading Value (MBH vs. Matsui, E*trade, Rakuten and Kabu.com) 25 ％ E*trade Market Share of Trading Value E*trade Others 20 ％ 40 ％ Matsui 20 ％ Market Share of 15 ％ Trading Value Matsui Rakuten 14 ％ 10 ％ MBH Kabu.com Rakuten 5 ％ MBH 12 ％ 5 ％ Kabu.com 9 ％ FYE Mar. 2003 FYE Mar. 2004 FYE Mar. 2005 2Q 3Q 4Q 4Q 1Q 1Q 2Q Matsui E*trade Rakuten Kabu.com MBH ◆ Equity Brokerage Commissions <Reference> ◆ MB H vs. Nomura, Nikko Cordial and Daiwa (retail only) (MBH vs. Matsui, E*trade and Kabu.com) (in million yen) 8,000 First Half of FYE Mar. 31, 2005 Matsui Equity Brokerage Commissions MBH 6,000 Nomura 9 ％ E*trade 8 ％ Nikko Cordial 6 ％ 4,000 Market Share of MBH 6 ％ Trading Value Daiwa 2,000 Others Kabu.com 71 ％ 0 FYE Mar. 2003 FYE Mar. 2004 FYE Mar. 2005 2Q 4Q 3Q 4Q 1Q 1Q 2Q 3Q Matsui E*trade MBH Kabu.com 7 Source: Company IR data Note: Market share is that of trading value of TSE 1 st section, 2 nd section, Mothers and JASDAQ
Comparison with Others: Individual Investors Trend Trading Value Major Online Brokers vs. Major Full-line Brokers The trading value of major online brokers has The ratio of internet trading value has increased significantly since surpassed those of major full-line brokers. But, March 2003. More than 80% of individual investors choose internet more than 90% of individual assets are still trading at present. held by major full-line brokers. This means Source ： Japan Securities Dealers Association further success of online brokers depends on increasing customers’ assets in custody. 90.0% 84% 81% Trading Value Customers’ Assets in Custody 80.0% The ratio of Internet trading among all (Apr. 2003-Mar. 2004) (as of Mar. 31, 2004) trading value by individual investors 71% 9% 70.0% Major online 60.0% 43% brokers 57% 52% Major full-line 49% Major 55% brokers online 50.0% (retail only) Major full-line 43% brokers brokers (retail only) The ratio of Internet trading among all trading 40.0% 34% 91% by all investors including institutional, foreign and individual investors. 30.0% 25.3% 21.6% Major Online Brokers: MBH, Matsui, E*trade, 19% 17.6% Rakuten and Kabu.com 20.0% 10.5% 12.7% Major Full-line Brokers: Nomura, Nikko Cordial 9.1% 7.3% and Daiwa 6.3% 10.0% 3.6% Source: Company IR data 0.0% Sep. 2000 Mar. 2001 Sep. 2001 Mar. 2002 Sep. 2002 Mar. 2003 Sep. 2003 Mar. 2004 Sep. 2004 8
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