Compagnie Financiere Tradition Sa · SIX:CFT

Compagnie Financiere Tradition Sa — H1 2008 Earnings Presentation

36 slides from Compagnie Financiere Tradition Sa's earnings presentation, Sep 4, 2008

  1. Slide 1: 2008 First Half Results

    2008 First Half Results Zurich - 4 September 2008

  2. Slide 2: Agenda

    Agenda 1. Tradition at a glance 2. Industry dynamics 3. 2008 first half performance 4. CFT share on SWX 5. Strategic outlook 1

  3. Slide 3: 1. Tradition at a glance

    1. Tradition at a glance

  4. Slide 4: Roadmap based on long term view on the industry

    Roadmap based on long term view on the industry H1 2008 : solid growth • Turnover up • 31.8% in constant currency terms • 16.5% in current currency terms • Operating profit CHF 99.8m • Profit before tax CHF 103.4m • Net profit from continuing operations CHF 58.8m • Net profit group share CHF 46.5m S

  5. Slide 5: Tradition is the third largest Interdealer Broker in the world

    Tradition is the third largest Interdealer Broker (« IDB ») in the world One of the very few global leaders of the sector • Significant scale • Diverse sources of revenues across the three time zones • A global product offer covering exchange-traded and OTC instruments • Strong positioning in high-g

  6. Slide 6: IDBs play a critical role

    IDBs play a critical role Smoothing the process of price discovery Sourcing counterparty and bringing the various market participants together Showing liquidity and market depth Providing transparency Facilitating the development of the secondary market Primarily in the Over-the-Counter (OTC) market

  7. Slide 7: Key revenue drivers

    Key revenue drivers Revenue sources - Execution • Agency & Matched principal Drivers – Volumes + Market penetration • Macroeconomic performance/uncertainty • Interest rate movements • Budget imbalances, bond issuance, credit cycle • Markets volatility/liquidity • Emerging economies Growth in IDB rev

  8. Slide 8: Transactions volumes have grown substantially over time

    Transactions volumes have grown substantially over time ISDA - Market Survey BIS - Triennial Central Bank Survey Notional amounts outstanding at year end in USD bn Average daily turnover in April in USD bn 500 000 Global For eign Global OTC G R 400 000 yCA 3000 Exch ange m ar ket derivatives mar ket

  9. Slide 9: Tradition has a track record of organic growth and innovation

    Tradition has a track record of organic growth and innovation Founded in 1959 in Lausanne Listed on SWX since 1973 VIEL & Cie acquired Compagnie Financière Tradition in 1996 • 16.2% 1997 - 2007 CAGR in current terms • 17.1% 1997 - 2007 CAGR in 2007 constant currency terms 1,417 Turnover 1 ,144 1,1 3

  10. Slide 10: 2. Industry dynamics

    2. Industry dynamics Compagnie Financiére Tradilian

  11. Slide 11: Market structure driving strategic thinking

    Market structure driving strategic thinking IDBs Futures Brokers Focus on market evolution Increased visibility of the global leaders 5 players with revenues above $900m 2 players with revenues around $1.5bn Leading players in the transactional Their transactional services smaller in size value chai

  12. Slide 12: Space marked by demutualisation, consolidation and coopetition

    Space marked by demutualisation, consolidation and « coopetition » 1996 1999 2001 2003 2005 2007 1999 2000 2002 2004 2006 2008 VIEL & Cie Intercapital Exc o merges Tullett buys Tradition Icap Icap acquires Tullett is Collins GFI listed Icap buys EBS Icap buys GFI buys buys Tradition reverses into wi

  13. Slide 13: Short and long term impact of current environment

    Short and long term impact of current environment Unusual market conditions started last summer • Sharp fall in interbank confidence • Liquidity shortage • Extreme levels of volatility • > USD 500bn of write-downs • With additional to come • Europe representing 45% of the total Unprecedented combina

  14. Slide 14: 3. 2008 first half performance

    3. 2008 first half performance

  15. Slide 15: H1 2008 overview

    H1 2008 overview Turnover Expenses Operating Operating PBT Net profit Net profit profit margin from cont. group operations share +16.5% +15.4% +22.7% +12.0% +3.3% +18.9% 788.3 12.7% 12.0% 676.7 689.0 H 1 2007 596.9 H 1 2008 M C H F 99.8 103.4 81. 3 92.3 56.9 58.8 39.1 46.5 14

  16. Slide 16: Sustained organic growth

    Sustained organic growth Half year and yearly turnover in current currency terms 1600 1,417.1 1400 1200 1,144.4 1000 914.7 M 788.3 H2 C 800 H1 H 600 400 F 200 0 2005 2006 2007 2008 Sector overview H1 2008 YOY top line grow th rates – current currency terms 69.0% 53. 6% 31.8% 26.0% 21.1% 17.9% 21.5%

  17. Slide 17: Favourable market conditions for equity derivatives, commodities and rates

    Favourable market conditions for equity derivatives, commodities and rates Turnover by product – H1 2008 bridge H1 2008 1000 +34.2% 41.9% 900 +46.1% 40.7% M 800 +18.9% C H 700 F 600 500 6.3% 11.1% 400 H1 2007 ex er r r ve s es e r h te ov Fo no iv ot ra rn 38.4% at ur & t Tu iv es T s er ie er 7 08

  18. Slide 18: Top line engines in the three time zones

    Top line engines in the three time zones H1 2008 Turnover by region – H1 2008 bridge 9.7% 1000 3 5.0 % +30.4% 900 +47.6% 34 .3% 800 M +30.2% C 700 -3.1% H 21.0% F 600 500 400 H1 2007 07 s c x 08 m pe a 11.8% i fi re o 20 ic 20 ac ro Fo gd er P Eu 1 1 m in H a- H A 32.2% K l si ta d A n te ne ni ti U

  19. Slide 19: Operating profit increased by 22.7%

    Operating profit increased by 22.7% Half year operating profit Half year operating margin in current currency terms 120 15 % Ope ratin g profit Operating margin 100 99.8 14 % M 81.3 13 % C 80 H 62.9 12 .7% 12 % F 60 12 .0% 11 % 40 1 0.9% 10 % 20 9% 0 8% H1 2006 H1 2007 H1 2008 18

  20. Slide 20: Operating margin improved to 12.7%

    Operating margin improved to 12.7% Operating margin – H1 2008 bridge Operating profit – H1 2008 bridge 16% 130 +14.7 14% 1.1% 0.4% 12.7% 12.0% 110 +16.5 12% -0.6% -0.1% -5.7 99.8 -0.1% 10% +7.4 -14.4 90 81.3 M 8% C 70 H 6% F 4% 50 2% 30 0% as fi c HQ 7 pe x 8 00 re 00 as fi c 07 x 08 ci HQ ic pe ro

  21. Slide 21: Europe: positive impact of 2007 reorganisation

    Europe: positive impact of 2007 reorganisation P&L dynamics Regional positioning before HQ costs peer group overview – H1 2008 turnover 705 MCHF H1 2008 Variance vs H1 2007 512 M C 347 Turnover 347.0 +7.5% 294 H F Expenses 315.0 +7.3% H1 2008 H1 2007 IC AP (e) * Tu llett Traditi on GFI (gross Margin

  22. Slide 22: Americas: a solid performance

    Americas: a solid performance P&L dynamics Regional positioning before HQ costs peer group overview – H1 2008 turnover 610 MCHF H1 2008 Variance vs H1 2007 M C 342 Turnover 275.5 +26.5% 275 H 221 F Expenses 234.1 +26.3% H1 2008 H1 2007 IC AP (e) * Tu llett Traditi on GFI (gross Margin 15.0% 14.9% Pr

  23. Slide 23: Asia-Pacific: numerous medium term opportunities

    Asia-Pacific: numerous medium term opportunities P&L dynamics Regional positioning before HQ costs peer group overview – H1 2008 turnover MCHF H1 2008 Variance vs 192 H1 2007 166 M C 115 Turnover 165.8 +21.9% H F 56 Expenses 124.2 +16.1% H1 2008 H1 2007 IC AP (e) * Tu llett Traditi on GFI (gross Mar

  24. Slide 24: Continued focus on areas of progress

    Continued focus on areas of progress In % of turnover H1 2008 H1 2007 H1 2006 Compensation costs 66.7 67.0 67.5 Operational 58.7 59.1 60.2 Administrative 8.0 7.9 7.3 Variable part / compensation cost 53.0 46.5 42.1 Telecom & IS 4.9 5.5 6.5 T&E 5.2 5.2 5.3 Rent 1.5 1.6 1.7 Other operating expenses 7.

  25. Slide 25: Net profit group share up 18.9%

    Net profit group share up 18.9% Global positioning Half year net profit group share Peer group ov erv iew – H1 08 net profit group share grow th yoy 50 46.5 39.1 44.8%* 40 39.9% 40.5% 36.3% 30 28.2 M 24.9% C H 18.9% F 20 10 De utsc he ICAP Tulle tt CFT G FI Börse Pre bon Estimates from Reuters Knowl

  26. Slide 26: Net profit group share at CHF 46.5m

    Net profit group share at CHF 46.5m H1 2008 H1 2007 % change MCHF Operating prof it 99.8 81.3 +22.7 Net financial income -0.9 1.2 -177.5 Share of profit of equity accounted companies 4.5 9.8 -53.7 7.0m of non recurring profit in 2007 Prof it before tax 103.4 92.3 +12.0 Income tax -44.6 -35.4 +26.0 I

  27. Slide 27: Organic growth strategy reflected on the balance sheet

    Organic growth strategy reflected on the balance sheet Simplified consolidated balance sheet MCHF June 08 Dec 07 June 08 Dec 07 Shareholders’ equity 308.9 327.8 Of which Minority interests 42.3 36.0 Non-current assets 205.9 141.2 Non-current liabilities 37.2 41.2 Of which Financial debts 1.8 3.3 Of

  28. Slide 28: CHF 216.4m of adjusted net funds

    CHF 216.4m of adjusted net funds MCHF June 08 Dec 07 Cash & cash equivalents 343.3 331.1 Financial assets @ fair value 9.3 30.1 Short term financial debt * -146.4 -123.9 Long term financial debt * -1.8 -3.3 Net funds 204.4 234.0 Adjustments linked to variances in AH & MP activities 12.0 -9.4 Net fun

  29. Slide 29: 4. CFT share on SWX

    x< = Y”) c oO o _ © £ ”) _ LL O a

  30. Slide 30: Demonstrable track record on SWX

    Demonstrable track record on SWX Long term performance Sector overview since 30 Dec 2002 & 1997 As of 29 Aug. 2008 Ytd 6 months 12 months CFT -23% -18% -19% 5Y 10Y 28 oct 96* ICAP -35% -25% -3% CFT +132% +893% +3898% Tullett Prebon -6% -13% +6% GFI -52% -39% -37% SMI +56% +16% +92% Deutsche Börse -5

  31. Slide 31: 5. Strategic outlook

    5. Strategic outlook

  32. Slide 32: Priorities going forward

    Priorities going forward Continue to build size and scale Monitoring current market environment Balanced focus between growth & margin Address the minority interests gap at the right price Solid foundations for the future • Track record of organic growth • Sizeable market share • Exposure to fast-gr

  33. Slide 33: APPENDIX

    APPENDIX 4 Compagnie Financiére Tradilian

  34. Slide 34: Market volatilities

    5 15 25 35 0 10 20 Dec -05 F eb-06 F eb-06 Apr -06 Apr-06 Jun-06 VIX Source: Reuters J un-06 Source: Bloomberg Aug-06 A ug-06 $/€ Oct -06 $/JPY Oc t-06 D ec-06 Dec -06 F eb-07 F eb-07 Apr -07 Apr-07 Jun-07 J un-07 Equities Aug-07 A ug-07 historic volatilities Oct -07 Oc t-07 Foreign exchange D ec-07

  35. Slide 35: Trading volume

    Trading volume Exchange-traded derivatives Monthlyvolumes in m illion contracts CME Gr oup Eu rex ICE Fu tu res ( Eu rop e) 30 3 00 CME Group, Eurex 20 ICE Futures 2 00 10 1 00 0 0 Ma y Ma y Ma y N ov N ov July Sept Sept Jan 0 6 March Jan 0 7 March jan v-08 Jul Jul March Source: exchanges websites S

  36. Slide 36: FX rates

    FX rates vs CHF Closing rates Average rates Closing rates 30 June 2008 30 June 2008 29 August 2008 GBP 2.03 2.07 2.01 USD 1.02 1.05 1.10 EUR 1.61 1.61 1.62 35

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