INTL FCStone 2014 Annual Report Download - page 47

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INTL FCSTONE INC. Form 10K 31
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Financial Overview
e following table shows an overview of our financial results:
FINANCIAL OVERVIEW UNAUDITED
(in millions)
Year Ended September 30,
2014 % Change 2013 % Change 2012
Operating revenues $ 490.9 5% $ 468.2 4% $ 448.1
Transaction-based clearing expenses 108.5 (1)% 110.1 5% 105.3
Introducing broker commissions 49.9 23% 40.5 31% 31.0
Interest expense 10.5 33% 7.9 41% 5.6
Net operating revenues 322.0 4% 309.7 1% 306.2
Compensation and other expenses 296.0 3% 288.5 2% 283.7
Income from continuing operations, before tax $ 26.0 23% $ 21.2 (6)% $ 22.5
e selected data table below reflects key operating metrics used by management in evaluating our product lines, for the periods indicated:
Year Ended September 30,
2014 % Change 2013 % Change 2012
Volumes and Other Data:
Exchange-traded volume (contracts, 000’s) 93,566.6 (7)% 100,749.9 3% 97,349.6
OTC volume (contracts, 000’s) 1,342.1 8% 1,245.1 (23)% 1,619.6
Global payments (# of payments, 000’s) 191.5 36% 140.8 16% 121.7
Gold equivalent ounces traded (000’s) 79,127.1 (15)% 93,256.8 (28)% 129,140.1
Equity market-making (gross dollar volume, millions) $ 74,162.9 29% $ 57,705.8 126% $ 25,553.8
Foreign exchange prime brokerage volume
(U.S. notional, millions) $ 310,297.5 6% $ 292,526.7 (21)% $ 371,637.7
Average assets under management (U.S. dollar, millions) $ 530.9 15% $ 462.3 8% $ 428.6
Average customer segregated equity (millions) $ 1,789.9 7% $ 1,674.9 5% $ 1,592.7
Operating Revenues
Year Ended September 30, 2014 Compared to
Year Ended September 30, 2013
Operating revenues for fiscal 2014 and fiscal 2013 were $490.9 million
and $468.2 million, respectively. is $22.7 million, or 5%
increase in operating revenues primarily resulted from strong
revenue growth in our Commercial Hedging, Global Payments
and Securities segments. Operating revenues in the Commercial
Hedging and Securities segments increased $22.0 million and
$10.3 million, respectively, while Global Payments increased
$14.5 million, or 35%, over the prior year. ese increases were
partially offset by declines in our Physical Commodities and CES
segments of $6.2 million and $7.6 million, respectively. Also,
fiscal 2013 operating revenues included a $9.2 million realized gain
on the sale of shares of the LME and Kansas City Board of Trade.
Operating revenues in our Commercial Hedging segment increased
11% to $224.0 million, primarily as a result of a $15.6 million
increase in exchange-traded revenues driven by growth in growth
in the agricultural commodity and LME metals markets, as the
agricultural market conditions improved and our LME product
line expanded into the Far Eastern markets. Also contributing
to this growth was a $6.0 million increase in OTC revenues,
driven by growth in the energy and renewable fuels markets.
Operating revenues in our Global Payments segment increased
$14.5 million to $55.4 million in fiscal 2014, compared to
fiscal 2013, driven by a 36% increase in the number of global
payments made as we continue to be successful in adding and
on-boarding financial institutions to our electronic transaction
order system.
e increase in operating revenues in our Securities segment was
primarily a result of $5.2 million increase in asset management
revenues in Argentina, as well as a $3.9 million increase in debt
trading revenues. Debt trading revenues increased from continued
growth in our export financing business, as well as from increased
customer activity in the Latin American and Argentina markets.
Physical Commodity segment operating revenues decreased as
the result of a 15% decline in the number of ounces traded in
our precious metals product line, particularly in the Far Eastern
markets, as well as diminished customer activity in our physical
agricultural and energy business.
Operating revenues in our CES segment decreased as exchange-
traded commission and clearing fee revenues decreased
$1.1 million, primarily as a result of a 10% decline in exchange-
traded volumes and partially offset by an improvement in the
overall average commission rate per contract. In addition, operating
revenues in our customer prime brokerage product line declined
$6.5 million as a result of a narrowing of spreads in the foreign