Compagnie Financière Tradition: Revenue of CHF 837.5m; better trend than the IDB sector

Compagnie Financière Tradition /
Compagnie Financière Tradition: Revenue of CHF 837.5m; better trend than the IDB
sector
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Source: Globenewswire

Press Release
Lausanne,  13 March 2015

Revenue of CHF 837.5m; better trend than the IDB sector

Operating profit up, benefiting from costs reduction measures

Net profit Group share of CHF 27.7m; dividend increase to CHF 3.00

+———————————-+—–+—–+——————————-+
|  |  |  | |
| | | | Variation in constant|
|CHF m | 2014| 2013| currencies|
+———————————-+—–+—–+——————————-+
|Reported revenue |837.5|874.4| -3.5%|
+———————————-+—–+—–+——————————-+
|Operating profit | 41.2| 32.1| +31.1%|
+———————————-+—–+—–+——————————-+
|Operating margin | 4.9%| 3.7%|  |
+———————————-+—–+—–+——————————-+
|Net profit Group share | 27.7| 15.5| +82.7%|
+———————————-+—–+—–+——————————-+
|Consolidated equity Group share |341.7|282.0| +21.2 %|
+———————————-+—–+—–+——————————-+
|Adjusted* revenue |894.5|934.1| -3.4%|
+———————————-+—–+—–+——————————-+
|Adjusted underlying operating | | | |
|profit ** | 67.9| 60.0| +15.1%|
+———————————-+—–+—–+——————————-+
|Adjusted underlying operating | | | |
|margin | 7.6%| 6.4%|  |
+———————————-+—–+—–+——————————-+

* with proportionate consolidation method for joint ventures in line with the
Group management reports („Adjusted“).
** before amortisation of customer relationships and other exceptional costs and
income.

Overview
The Group still faced a challenging environment in 2014. After a slight decrease
of activity levels in the first quarter, market conditions deteriorated in the
second quarter and during the summer with low volatility on significant asset
classes as well as a continued evolving market structure as a result of
regulatory developments and related uncertainties, in particular regarding OTC
derivative markets. The market environment improved from the month of September
and the Group reported stronger revenues in the fourth quarter compared to the
equivalent quarter last year, which was negatively impacted by the introduction
of SEFs in the United States. In the context of the regulatory developments in
the United States, the Group successfully developed the activities and
positioning of Tradition SEF, especially through Trad-X, Tradition–s market
leading hybrid trading platform for interest rate swaps.

Against this backdrop, the Group posted consolidated revenue of CHF 837.5m
compared with CHF 874.4m in 2013, a decrease of 3.5% in constant currencies
which represents a better performance than that of the IDB sector. Activity
levels in the second half of the year were stronger compared with the equivalent
period in 2013, with consolidated adjusted revenue up 2.7% in constant
currencies. Operating profit for the year increased by 31.1% in constant
currencies to CHF 41.2m for a margin of 4.9% compared with CHF 32.1m and a
margin of 3.7% respectively in 2013, benefiting from costs reduction measures.

The Group remains focused on measures to adapt its cost base to this market
environment, through cutting fixed costs while increasing its flexibility. Since
2012, net savings of more than CHF 180m were achieved through fixed cost
reductions and this, with reorganisation costs well under control. The pay ratio
of brokers now stands at 57.7% of revenue, with variable remuneration accounting
for close to 44% of total pay.

At the same time, the Group continued its investments in technology, essential
to the deployment of its electronic broking strategy to develop hybrid trading
platforms using its proprietary technology. These platforms leverage innovative
functionalities covering multi-asset classes and have been designed as a logical
extension to Tradition–s voice broking services.  These substantial investments
have a negative impact on the Group–s short-term profitability but are critical
in order to fully benefit from opportunities driven by the regulatory
developments. Tradition–s industry award-winning platforms, Trad-X and ParFX,
are at the core of its electronic strategy.

Since the introduction of SEFs in October 2013 into the US marketplace as a
component part of the Dodd Frank Act, Trad-X has formed the backbone of
Tradition SEF–s Interest Rate Swap. Total USD IRS trading volumes since launch
in February 2013 exceeded CHF 1 trillion (single count).

Revenue
The Group–s consolidated adjusted revenue was CHF 894.5m compared with CHF
934.1m in 2013, a decrease of 3.4% at constant exchange rates.

Adjusted revenue from IDB activity declined 3.1% in constant currencies with a
decrease in all asset classes but foreign exchange products and emerging
markets. However, results by asset classes varied according to the geographic
regions.

Operating profit
The adjusted underlying operating profit (excluding exceptional costs) was CHF
67.9m, compared with CHF 60.0m in 2013, an increase of 15.1% in constant
currencies. The adjusted underlying operating margin improved to 7.6% of
consolidated revenue against 6.4% in 2013. The IDB adjusted underlying operating
profit was up 22.3% in constant currencies to CHF 65.8m for a margin of 7.5%
compared with 6.0% in 2013.

Net exceptional costs of CHF 18.7m (2013: CHF 13.7m) comprise mainly legal and
reorganisation costs. In February 2015, the Group amicably resolved all disputes
with a competitor which dismissed and discontinued all pending proceedings.

Reported operating profit for the year was CHF 41.2m compared with CHF 32.1m in
2013, an increase of 31.1% in constant currencies for an operating margin of
4.9% against 3.7% in 2013.

Net profit
Consolidated net profit was CHF 32.0m compared with CHF 21.7m in 2013 with a
Group share of CHF 27.7m against CHF 15.5m in 2013, an increase of 82.7% at
constant exchange rates.

Balance sheet
After the acquisition of the entire shareholding of a minority shareholder in a
Japanese subsidiary in April, the Group concluded, in November, a new
partnership to broke Japanese derivatives. These operations positively impacted
equity attributable to shareholders of the parent by CHF 33.6m. Thus,
consolidated equity totalled CHF 354.1m at 31 December 2014, of which CHF
341.7m was attributable to shareholders of the parent (31 December 2013: CHF
282.0m), compared with a stock market capitalisation of some CHF 300m(1). The
Group–s share of equity, net of goodwill and other intangible assets from
acquisitions, is among the highest in the IDB industry.

Total adjusted cash, including financial assets at fair value, net of financial
debt, rose by CHF 43.8m to CHF 118.7m at 31 December 2014 (31 December 2013 :
CHF 74.9m), benefiting from an improvement in net adjusted cash flows from
operating activities.

Dividend
At the Annual General Meeting to be held on 22 May 2015, the Board will be
seeking shareholders– approval to pay a dividend of CHF 3.00 per share (yield
close to 6.5%(1)). Shareholders will be given the option of receiving their
payment in cash or in shares.

Outlook
Since the beginning of the year, the Group–s consolidated adjusted revenue is up
by more than 3% at constant exchange rates compared to the same period in 2014.
At this stage, it is still too early to confirm a real trend in the development
of the Group–s business. Nevertheless, the Group will continue to focus on the
control of its costs in order to increase its flexibility while maintaining its
investments in technologies.

(1) At 12 March 2015: CHF 46.15 per share

About COMPAGNIE FINANCIERE TRADITION SA

Compagnie Financière Tradition SA is one of the world–s largest interdealer
brokers in over-the-counter financial and commodity related products.
Represented in 28 countries, Compagnie Financière Tradition SA employs 2,200
people globally and provides broking services for a complete range of financial
products (money market products, bonds, interest rate, currency and credit
derivatives, equities, equity derivatives, interest rate futures and index
futures) and non-financial products (energy and environmental products, and
precious metals). Compagnie Financière Tradition SA (CFT) is listed on the SIX
Swiss Exchange.

For more information, please visit www.tradition.com.

MEDIA CONTACTS

Patrick Combes, President
Compagnie Financière Tradition SA
+41 (0)21 343 52 22
actionnaire@tradition.ch

Jeremy Nieckowski
Voxia communication
+41 (0)22 591 22 65
jeremy.nieckowski@voxia.ch

CFT_results 2014:
http://hugin.info/133362/R/1903195/676789.pdf

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Source: Compagnie Financière Tradition via GlobeNewswire
[HUG#1903195]