INTL FCStone 2005 Annual Report Download - page 7

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For the 2005 fiscal year, the breakdown of gross revenue was as follows: international equity market-
making 46% (2004 — 76%), international debt capital markets 9% (2004 — 12%), foreign exchange/
commodities trading 40% (2004 — 12%) and asset management and other revenue 5% (2004 — 0%).
For the 2005 year, the breakdown of net contribution (after variable clearing fees and variable
performance bonuses) of our three reportable segments was as follows: international equity market-
making 36% (2004 — 69%), international debt capital markets 11% (2004 — 15%) and foreign
exchange/precious metals trading 53% (2004 — 16%).
As can be seen from the relative contributions by business, the sources of our gross revenue in 2005
were much better diversified than in 2004.
Risk Management
We are in the business of taking risks to provide our customers with efficient execution in markets
which may be relatively illiquid. We have a commitment to our shareholders, customers and employees
to manage these risks and to keep them within appropriate limits.
A noticeable feature over the last year has been the growth of our balance sheet. This growth partially
reflects our goal of leveraging our balance sheet more aggressively with borrowed money. Our total
assets have increased to $147 million in 2005 from $68 million in 2004.
This increased leverage implies an increased exposure to risk and requires an increased focus on risk
management. Three years ago we put in place the foundations of a comprehensive system and
methodology for managing and monitoring risk on an ongoing and real time basis. We continue to
remain disciplined and vigilant in ensuring that we maintain a culture of conservative risk management
throughout the organization.
Our Resources
The two critical resources that drive our business are intellectual and financial capital.
It is essential that we have professionals with significant experience in our chosen markets in order to
provide a value-added execution capability to our customers. During the fiscal year we added 14 new
members to our staff, which now numbers 67 in total. We believe that we have further strengthened
human capital both on the production and support side of our business. We continue to be on the
lookout for talented, entrepreneurial individuals looking to build businesses with us.
During the 2005 year we made considerable progress in obtaining appropriate bank lines to finance the
continued growth in our business. With increased access to bank funding, we believe we have
sufficient equity capital for the foreseeable future.
Corporate Governance
The Company is committed to the highest level of corporate governance and is satisfied that it has
made good progress towards being able to comply with Section 404 of the Sarbanes-Oxley Act, which
will become applicable to the Company in the 2007 fiscal year. A majority of our directors are
independent and all of the members of our Audit, Compensation and Nominating Committees are
independent. Details of these committees, biographies and charters are available at our corporate
website www.intlassets.com.
Our full corporate governance statement is included inside the back cover.