INTL FCStone 2014 Annual Report Download - page 6

Chairman’s Letter
Following several years of market turmoil and uncertainty, the conclusion of
FY2014 has been marked by improved market conditions, relatively encouraging
nancial results, and a renewed spirit of optimism about our organization’s future
and the efcacy of our long-term business strategy.
Nevertheless, the prevailing macro trends of ever-
increasing regulations, close-to-zero interest rates and
drifting commodity markets continued to weigh on our
business as it has on others in our sector.
In an illuminating interview in the Wall Street Journal,
Andrew Haldane of the Bank of England noted that
the goal of current nancial-services regulations has
become “to capture every raindrop rather than look
out for the thunderstorms.” This increasingly byzantine
regulatory environment requires that nancial
services rms such as ours continue to expand their
regulatory and compliance capabilities. Indeed,
regulation and compliance has now developed some
of the aspects of a growth industry. For example, the
sourcing, hiring and retention of compliance staff has
become steadily more challenging over the past year,
and we often found ourselves competing not only with
other rms but, incredibly, with our own regulators for
qualied personnel.
On the commercial side, interest rates in the
developed world remained close-to-zero, and there
seems to be little immediate prospect of this changing,
as the burden of maintaining a rather anemic global
recovery and avoiding deation is borne wholly by the
monetary authorities. Thus, even though our average
customer deposits grew to USD $2 billion in the fourth
quarter, interest earnings remained marginal. In
addition, the weakness of all major economies with
the exception of the U.S. seems to portend that the
commodity markets will struggle for the next year.
Despite these negative to neutral macro trends, I
am pleased to report your Company continued to
make progress, with operating revenues growing to
a record USD $490.9 million. This increase was driven
by strong revenue growth in our commercial hedging
and securities businesses. However, our star performer
was our global payments business, where revenues
increased by 35%. We also are encouraged by the
performance of our LME Metals business, which has
proven to be a strategically sound and remunerative
acquisition.
We continued to rene and restructure our
organization, and in 2014 completed the consolidation
of our U.K. subsidiaries into one nancial corporation
which can provide all nancial services to our client
base with the exception of deposit taking and fund
management. This has clear organizational benets
and also allows a more efcient use of our capital
resources.
Despite these achievements, our stock price in 2014
remained at levels approaching book value. As the
Company’s largest shareholders, your board is only too
well aware of this disappointing stock performance.
However, I am condent that, as our results continue
to improve, the market will begin to give a reasonable
valuation to a nancially stable, diversied and
growing nancial services company such as ours.
During the year, the board was expanded by the
appointment of Ed Grzybowski. Ed is an institutional
investor who served as chief investment ofcer of
TIAA-CREF, where he was responsible for investing
a portfolio of approximately half a trillion dollars
in assets. The condence displayed by such a
sophisticated investor in joining our team is, in my
view, a strong endorsement of our future growth and
prosperity.
In summary, 2014 was a year in which, despite difcult
market conditions, your Company delivered strong
internal growth, improved its organizational and
management structures and enhanced its competitive
position in an industry still recovering from the
shockwaves of the nancial crisis. I remain condent
these achievements will provide a strong basis for
continued growth in 2015 and thank our management
and employees for their continuing efforts and our
shareholders for their loyalty and support.
JOHN RADZIWILL
Non-Executive Chairman