Tradition: H1 2015 Results 

• Operating profit up 35.6% to CHF 35.9m
• Increase of net profit Group share of 36.7% to CHF 21.8m
• Focus on Group performance management

Overview

The Group faced a varying market environment in the first six months of 2015. Activity levels were generally more stable although there were differences among the geographic regions and asset classes. The Group benefited from increased volatility in a number of markets while others remained under pressure from the prolonged low interest rates and a continued evolving market structure as a result of regulatory developments. 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 for the first six months of CHF 426.6m against CHF 425.4m in the first half of 2014, a rise of 0.3% at current exchange rates or 1.1% in constant currencies. After a first quarter rise of 2.8% compared with the equivalent period last year, consolidated revenue decrease 0.8% at constant exchange rates during the second quarter.

In this market environment, the Group remained focused on controlling costs by implementing measures to reduce fixed costs and increase flexibility, while minimising reorganisation costs. The pay ratio of brokers now stands at 57.0% of revenue, with variable remuneration accounting for close to 47% of total pay against 58.3% and 44% respectively for the same period last year. At the same time the Group maintained its investments in technology, essential to the deployment of its electronic broking strategy, even though these substantial investments have a negative impact on the Group’s short-term profitability.

Reported operating profit increased by 35.6% in constant currencies to CHF 35.9m for a margin of 8.4% compared with CHF 26.8m and a margin of 6.3% respectively in the first half of 2014.

Adjusted revenue

The Group’s adjusted consolidated revenue was CHF 457.2m compared with CHF 452.3m in 2014, a rise of 2.2% at constant exchange rates. The adjusted revenue from interdealer broking (IDB) business was up 1.1% in constant currencies with a significant rise in activity levels in the Asia-Pacific region and in commodities across all regions. Revenue from the online forex trading platform for retail investors in Japan, Gaitame.com, was up by 64.5% at constant exchange rates compared with first-half 2014.

Adjusted operating profit

The adjusted underlying operating profit (excluding net exceptional costs) was CHF 45.0m, compared with CHF 35.8m in the first half of 2014, up 28.3% in constant currencies. The adjusted underlying operating margin improved to 9.9% of consolidated revenue against 7.9% in the first half of 2014. The IDB adjusted underlying operating profit was up 19.9% in constant currencies to CHF 41.1m for a margin of 9.2% compared with 7.8% in the same period last year. Operating profit from Gaitame.com rose to CHF 3.9m compared with CHF 1.1m for the equivalent period a year ago.

Exceptional costs, mainly comprising legal and reorganisation costs, represented CHF 2.0m in the first half of 2015 against CHF 5.1m for the previous period. Net profit Consolidated net profit was CHF 25.0m compared with CHF 18.0m in 2014 with a Group share of CHF 21.8m against CHF 16.4m in 2014, an increase of 36.7% at constant exchange rates.

Outlook

The year-to-date adjusted revenue at end of August confirms the first half positive trend. Compagnie Financière Tradition will continue its focus on operational performance management.

Half year report

The 2015 half year report of Compagnie Financière Tradition SA is now available on the Company’s website.

Source: Compagnie Financiere Tradition

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