2008 Results Zurich - 19 March 2009

Transcription

1 2008 Results Zurich - 19 March 2009

2 Solid results in an unprecedented market environment 2008 performance at a glance Turnover EBITDA Operating profit Profit before tax Net profit group share +9.8% +22.3%* +11.3% -0.4% +14.3% +1.0% 1, ,417.1 Operating profit before amortisation and impairment of intangibles and exceptionals CHF 201.8m Margin 13.0% Margin 12.2% Margin 9.6% , ** ** *Constant exchange rate **Profit before tax and net profit group share excluding amortisation and impairment of intangibles and exceptionals amount respectively to CHF 218.7m and 100.1m 1

3 Solid results in an unprecedented market environment Strategy consistent over the years Critical size and global reach Diversification across geographies and asset classes Track record of organic growth Defensive balance sheet Small level of goodwill Net cash position A long term view of the industry An industry used to quickly adapt to changing customer needs Interdealer brokers (IDBs) play a critical role Cautious assumptions for 2009 Economic uncertainty remains, global slump challenges policies Condition of the banking system continues to be extremely difficult 2

4 Agenda Financial Review 2. Industry Dynamics 3. Strategic Outlook 3

5 Financial Review

6 Record revenues amidst high levels of volatility Half year and yearly turnover H1 H2 1, , , Growth drivers include Volatile markets Intermediary s role crucial in markets where there is little liquidity Focus on core business Competitive positioning in a large number of markets, currencies and instruments, including traditional segments Continued hiring of new brokers Year on year growth rates - Sector overview 41.6% Current Exchange Rates Constant Exchange Rates 40.6% 22.3% 25.2% 11.4% 9.8% 12.4% 5.1% 14.4% 5.3% -0.6% -1.4% 8.7% 4.0% 19.9% 4.4% CME CFT Deutsche Börse GFI ICAP (e) ICE L S E MarketAxess MF Global Nasdaq OMX NYSE Euronext Tullett Prebon ITG Interactive Brokers 5

7 Third largest IDB by revenue in the world Global positioning peer group 2008 turnover One of the very few global leaders A track record of organic growth 17% CAGR in constant terms 15% CAGR in current terms 2,992 2,295 Voice only 1,892 1,556 1,052 Current exchange rates Constant exchange rates* 1,417 1,556 1,280 ICAP (e) Tullett Prebon CFT GFI 1,144 1,025 Global positioning peer group Compounded growth rate 40% Tullett+Prebon* Tullett Prebon** ICAP (e) CFT GFI % % CAGR CAGR *Tullett acquired Prebon in revenues adjusted to include Tullett and Prebon revenues on a proforma basis.** revenues include Tullett revenues only (**) (*) At (**) IFRS since 2004 EBFL excluded in exclude discontinued activities 6

8 Active markets in equity derivatives, commodities and rates Product expertise across all asset classes Turnover by product 2008 bridge Rates Deposit, capital markets, forex, currency options, emerging markets All percentages based on calculations in constant currency terms +33.5% +22.0% 1600 Securities Futures and options, government bonds, credit derivatives, repos, equity derivatives, cash equities, emerging markets, other (property der., etc.) % 1200 Commodities Metals, oil, gas, electricity, coal, freight, green products, weather 2007 Rates Securities Commodities & other FX rates impact 2008 Turnover by product Mix development Turnover by product - Breakdown Rates Securities Commodities & other 100% 90% 80% 70% 60% 50% 40% Rates Securities Commodities & other 17.4% 18.0% 39.7% 42.8% % 20% 10% 42.9% 39.2% %

9 Engines in the three time zones 2008 key developments License in China Operations started in February 2009 Turnover by region 2008 bridge All percentages based on calculations in constant currency terms % % % % Continental Europe United Kingdom Americas Asia- Pacific FX rates impact 2008 Regional positioning peer group 2008 turnover Europe Am ericas As ia-pacific ICAP (e ) Tullett Prebon CFT GFI Turnover by region - Breakdown Continental Europe United Kingdom Americas Asia-Pacific 100% 90% 20.8% 21.6% 80% 70% 60% 32.9% 34.1% 50% 40% 30% 34.6% 34.7% 20% 10% 0% 11.7% 9.6%

10 Complementary dynamics across regions CAGR 19% Americas: America invested for the future on the back of a good 2007 performance USA, Argentina, Chile, Columbia, Mexico M C H F Turnover M C H F Europe: UK, France, Belgium, Denmark, Germany, Italy, Luxembourg, Portugal, Russia, Switzerland Middle East / Africa: Dubai, South Africa CAGR 14% Turnover M C H F Major achievement in the UK CAGR 19% Asia has expanded its product range M C H F Turnover Asia-Pacific: Japan, China Mainland, China Hong Kong, India, Malaysia, Singapore, South Korea, Australia, Philippines 9

11 Reasonable progress on operating performance excluding special charges Operating profit before amortisation and impairment of intangibles and exceptionals of CHF 201.8m Before amortisation and impairment of intangibles and exceptionals Amortisation and impairment of intangibles Exceptionals Total Ebitda of CHF 189.5m, up 11.3% year on year Operating profit of CHF 149.4m, down 0.4% year on year Amortisation and impairment of intangibles primarily relate to investments made in 2008 Contained impact of market dislocation since September Continued focus on productivity, now close to CHF 1m Turnover 1, ,1 Net operating expenses 1, ,366.6 EBITDA EBITDA margin % % Ebitda Ebitda m argin Operating profit Operating m argin 14% 12% 10% Amortisation & assets depreciation % 6% Operating profit Operating margin % % % 2% % 10

12 Efforts to operate more efficiently step by step extending across entire business Key operating ratios Operating profit and margin 2008 bridge 240,0 220, In % of turnover ,0 180, Compensation costs Operational ,0 140, Administrative Variable/total , Europe Americas Asia Pacific HQ Special charges* FX rates impact 2008 Telecom & market data % Travel/Business/Marketing Rent Other operating expenses % 12% 10% 8% 6% 10.6% +0.7% +1.3% +0.1% +0.1% -3.4% +0.2% 9.6% Number of brokers 1,556 1,429 4% 2% Total staff 2,434 2,230 0% 2007 Europe Americas Asia-Pacific HQ Special charges* FX rates impact 2008 *Special charges include amortisation and impairment of intangibles and exceptionals 11

13 Net profit group share CHF 85.5m Operating profit Profit before tax Net profit group share Net financial income Share of profit from equity participation Profit before tax Income tax Profit from continuing operations After tax results from discontinued operations Profit for the period * Net profit group share *Excluding sale of building 12

14 Balance sheet reflecting organic growth strategy Book value per share of CHF 50.7 Balance sheet structure peer group Intangible assets amount to CHF 103.5m of which 44.8m is goodwill CFT Total intangibles Thereof goodwill Tangible shareholders equity at CHF 237.2m Tullett Prebon ICAP GFI In % of shareholders equity 0% 50% 100% 150% 200% Shareholders equity Total Group share

15 Net cash position and limited leverage enhance CFT competitive position Cash and leverage peer group Debt/Ebitda Net cash/ebitda Net debt/ebitda ICAP Cash & cash equivalents Tullett Prebon CFT Financial fair value GFI Short term financial debt * Gross debt Net cash Net debt Long term financial debt * ICAP Adjustments linked to variances in AH & MP activities Tullett Prebon CFT Net funds adjusted GFI *Including obligations under finance leases and excluding debt linked to matched principal activities 14

16 2. Industry Dynamics

17 2008 marked by an exceptional series of events Aug to Oct 07 Liquidity crisis Central banks intervening through rates and cash injections Q1 08 Q1 and Q2 08 Continuing credit crunch First evidence of bankruptcy risks in March Central banks favour ad hoc solutions Q2 08 September 08 Q1 09 Nature of crisis changes Confidence crisis (Lehman, too big too fail concept) Bank run Central banks accelerate interest cuts and extend accepted collaterals States start to directly intervene From financial crisis to economic recession Central Banks create new monetary instruments to help and even supplement banks Plans focus on economy stimulus Q3 08 Q4 08 Q1 09 Source: Bloomberg 16

18 Major themes through the crisis Structural changes in risk perception Impaired role of the largest institutions in the credit intermediation process That will require the traditional structure of money and capital markets to evolve Loss of confidence in major banking groups Greater government ownership and increased regulation Skepticism about the management of the crisis Uncertainty on macro-economic issues post crisis Growth pattern Inflation Public debt Retirement schemes Structural crisis leading to profound reshuffling of balance of power among Banks States 17

19 Market structure valuations significantly impacted in and year to date stock performance 2008 YTD 2009 as of 13/3/09 NITE IGG IBKR NDAQ ITG ICE IAP DB1Gn A new competitive landscape from a market capitalisation stand point /03/ /12/2007 Bn USD ICAP Tullett Prebon CFT GFI Major shifts in PEs CFT NYX CM E TLPR GFIG PE 08 (e) as of 7/1/08* PE 08 (e) as of 13/3/09 PE 09 (e) as of 7/1/08* PE 09 (e) as of 13/3/09 M F -100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% 120% 0 FCMs** Source: Citi. Price as of 13 March IDBs Exchanges Other Market Structure *CME Group before Nymex acquisition and Nasdaq before OMX acquisition **No PE 09(e) available for FCMs as of 7/1/08 18

20 IDBs have attractive features in their business model Both intermediaries and market places, a critical role in the market Adding value Serve as intermediaries which facilitate transactions between buyers and sellers in a wide variety of financial instruments Primarily in the over-the-counter (OTC) markets but in the process of expanding offerings in listed instruments Always Independent No conflict of interest Revenue growth driven by cyclical and structural factors In each location, expertise in local products for local clients within a global network Desks organised by market / instrument / currency Cyclical factors Structural factors Macroeconomic performance / uncertainty Interest rate movements Budget imbalances, bond issuance, credit cycle Market volatility / liquidity Emerging economies Financial innovation / regulation Technology Search for diversification, returns and risk management 19

21 IDBs comparatively well placed to take advantage of current market An industry used to quickly respond to clients needs Main customers are investment and commercial banks, in turn serving institutional and corporate clients Earn commissions from executing trades in a competitive arena Low transaction fee / high volume model No fixed costs for the clients Salesforces (front office) represent around 65% of total staff They can also help banks to plug holes in their teams A long established industry used to market cycles, competition with exchanges, product innovation, asset class expansion and new geographic boundaries OTC markets, including CDS markets, have proved to be resilient throughout the turbulences CDS management has been smooth and orderly according to the Senior Supervisors Group s survey released last week OTC markets are not generally well understood Perceptions that they are unregulated Perceptions that toxic assets and OTC markets are similar in nature On the back of a lack of knowledge and vested interests Decline of on-exchange traded volume in Q to the lowest levels in more than two years Interest rate contracts less than half levels of last year at Eurex and CME in February Quarterly data notional amounts (interest rate, equity index and foreign exchange contracts) Bn USD Q493 Q494 Q495 Q496 Q497 Q498 Q499 Q400 Q401 Q402 Q403 Q404 Q405 Q406 Q407 Q408 Source: BIS Quarterly Review Q

22 IDBs generally endorse the development of clearing services for OTC products Clearing through central counterparties (CCPs) already exist in energy markets, US cash bonds and repos, listed instruments, etc. Daily volumes of cleared trades at Clearport occasionally larger than on-exchange traded volumes Total Nymex volumes vs. Clearport volumes ADV, contracts in thousands NYM EX Total Cle arport Market potential is currently constrained by counterparty risk in key areas CCPs can both benefit IDBs and their clients Execution venues and clearing venues are distinct in nature Fair and open access to CCPs is of essence Jan-07 Mar-07 May-07 Jul-07 Sept-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sept-08 Nov-08 Jan-09 Source: exchange website 21

23 Broader competitive landscape marked by demutualisation, consolidation and coopetition 22

24 Products dynamics and opportunities Reduced level of activity expected in 2009 General themes include lower level of trading on the back of de-leveraging, consolidation of customer base, pricing pressure, disruptive regulatory action in OTC markets Short and medium term positive factors Different patterns in each segment Markets expected to remain volatile Staff potentially moving from banks to IDBs January / February in line with the beginning of 2008 Early 2009 context relatively favorable for banks trading activities Structured Products FX Money markets Equities Equity derivatives Energy Listed Futures & Options Bonds Limited exposure for Tradition Abnormal volatility Emerging markets negatively impacted Counterparty risk Shifts in counterparties Price discovery key Long term investors do not restructure portfolios but need to hedge Swings favour banks arbitrage desks Need to hedge the gamma Index more active than single names Non-oil markets only slightly impacted Clearing becoming more dominant Bona fine guarantee Flight to quality Sharp increase in new issuance Abundance of mispriced securities Search for liquidity Flight to quality Negatively impacted Positively impacted 23

25 3. Strategic Outlook

26 2009 outlook Prepared to make the best out of a challenging year Closely monitoring market environment Focus on operational efficiency Global credit crisis will bring wholesale changes to the traditional inter-dealer market This will in turn foster an evolution of the IDB business Professional market information and execution will be rewarded Objective to also secure future competitiveness Remaining opportunistic by leveraging core strength to identify new opportunities to grow the business Solid foundations Track record of organic growth Sizeable market share Diversity of products & geographies Balanced strategy between growth, profit and quality of balance sheet 25

27 2008 Results Zurich - 19 March 2009

28 Appendix

29 Balance sheet Simplified consolidated balance sheet as of 31/12/08 Dec 08 Dec 07 Dec 08 Dec 07 Shareholders equity Of which Minority interests Non-current assets Non-current liabilities Of which Financial debts Of which Other fin. debts * Current assets 1, ,277.7 Current liabilities 1, ,055.2 Other short term assets Short term financial debts Receivables related to MP act Of which Financial debts Receivables related to AH act Of which Other fin.debts * Trade & other receivables Trade & other payables Financial assets at fair Value Payables related to MP act Cash & Cash equivalents Payables related to AH act Assets held for sale Liabilities held for sale TOTAL ASSETS 1, ,447.9 TOTAL LIABILITIES 1, ,447.9 Note: MP act. stands for Matched Principal activities AH act. stands for Account Holder activities * Relates to obligations under finance leases and debt linked to matched principal activities 28

30 Sources, definitions, FX rates and tickers Company Comments ICAP Estimate from Reuters Knowledge as of 11 March 2009 for ICAP FY09 revenues FY ends March 31 GFI Group Brokerage, analytics and market data revenues net of clearing fees Regional positioning: gross brokerage revenues CME Group Proforma legacy CME Group + Nymex Deutsche Börse Sales revenues London Stock Exchange Recalendarised - FY ends March 31 MF Global Revenues net of interest and transaction-based expenses. Recalendarised - FY ends March 31 Nasdaq OMX Group Revenues less liquidity rebates, brokerage, clearance and exchange fees NYSE Euronext Total revenues net of liquidity payments and routing and clearing fees USD EUR Source Company reports (unless specified otherwise) Balance sheets Icap as of 30/9/08, for CFT, GFI and Tullett Prebon as of 31/12/08 FX rates Revenues translated into CHF at 2008 average rates Balance sheet items translated into CHF at 31 December 2008 closing rates. Market caps translated into CHF at 13 March 2009 closing rates Vs CHF GBP Average rates Closing rates 31 Dec Closing rates 31 Dec Closing rates 13 Mar Company CME Group Compagnie Financière Tradition Deutsche Börse GFI Group ICAP IG Group IntercontinentalExchange Interactive Brokers Investment Technology Group Knight Capital Group London Stock Exchange MF Global Nasdaq OMX Group NYSE Euronext Tullett Prebon Ticker CME CFT DB1Gn GFIG IAP IGG ICE IBKR ITG NITE LSE MF NDAQ NYX TLPR 29