INTL FCStone 2005 Annual Report Download - page 6

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sovereign, corporate and bank bonds that trade worldwide on an OTC basis. Through its customer
relationships, the Company periodically identifies opportunities to arrange, purchase or sell negotiable
emerging market debt, which may be documented by promissory notes, bills of exchange, loan
agreements, accounts receivable and other types of debt instruments.
During 2005, we added a new debt capital markets team based in Florida, New York and London to
expand our capital markets origination, structuring and distribution capability. This team focuses on
private debt placements for financial institutions based in Eastern Europe, Latin America and the
Caribbean. The ability to offer our institutional customers attractive investment opportunities as well as
trading and execution capabilities in these less liquid markets should enhance and grow these
relationships.
International debt capital markets recorded revenues of $2.4 million for 2005 compared to $2.6 million
in 2004, down 8%. We completed a number of placements during fiscal 2005 and currently have a
number of mandates in the pipeline. The growth of the capital markets business is anticipated to be a
key driver of revenue in this business.
Foreign Exchange/Commodities Trading: INTL Global Currencies, our London-based subsidiary,
provides treasury and foreign exchange services to over 275 charitable and governmental aid
organizations, as well as a large number of corporations around the world. We trade over 100
currencies and specialize in smaller, more difficult emerging markets where there is limited liquidity.
Our commodities trading business provides metals producers, consumers, recyclers and investors with
physical trading in precious and base metals and sophisticated hedging products, including
combinations of buying and selling puts and calls. In February 2005 we expanded into platinum group
metals and in October 2005 we recruited a very experienced team of base metals traders based in
New York. The team will initially focus on trading physical lead and thereafter expand into other base
metals, both physical metals and exchange traded instruments.
Revenues for 2005 were $10.5 million compared to $2.6 million in 2004 (or an increase of 311%). This
level of revenues significantly exceeded our expectations. We anticipate that the commodities business
will be separately reported as a business segment in fiscal 2006.
Asset Management: INTL Consilium, a joint venture formed in May 2004, is an SEC registered
investment advisor. INTL Consilium is focused on building an asset management business by applying
an absolute return philosophy to niche markets where its expertise should allow superior risk adjusted
returns to be extracted for our investors. In early July 2004 INTL Consilium launched the INTL
Consilium Emerging Market Absolute Return Fund, which at September 30, 2005 had over $117
million in assets under management. Over time, INTL Consilium will be looking to add additional
products in line with the overall theme and strategy outlined. Asset management is a key part of our
long-term strategy, providing higher quality earnings to complement our existing trading activities.
The INTL Consilium Emerging Market Absolute Return Fund posted gains in 12 consecutive months
and a net return of 9.0 % for fiscal 2005. During the year INTL Consilium was appointed as investment
advisor to a large institution with an established distribution capability in Latin America and Europe.