2008 First Half Results Zurich - 4 September 2008
Agenda 1. Tradition at a glance 2. Industry dynamics 3. 2008 first half performance 4. CFT share on SWX 5. Strategic outlook 1
1. Tradition at a glance
Roadmap based on long term view on the industry � H1 2008 : solid growth • Turnover up • 31.8% in constant currency terms • 16.5% in current currency terms • Operating profit CHF 99.8m • Profit before tax CHF 103.4m • Net profit from continuing operations CHF 58.8m • Net profit group share CHF 46.5m � Strategic rationale • Critical size • Organic growth • Sound balance sheet • Attractive dividend policy � A fast evolving industry • Consolidation around global players • Structural changes in market structure • Short and medium term impact of the credit crisis 3
Tradition is the third largest Interdealer Broker (« IDB ») in the world � One of the very few global leaders of the sector • Significant scale • Diverse sources of revenues across the three time zones • A global product offer covering exchange-traded and OTC instruments • Strong positioning in high-growth derivatives markets Global positioning peer group overview – H1 2008 turnover* 1,507 M 970 788 C 573 H F ICAP (e) T ullett Prebon Tradition GFI *Turnover includes brokerage revenues net of clearing fees and information services GBP and USD translated in CHF at H1 2008 average exchange rates For ICAP, estimates from Reuter s Know ledge as of 12 August 2008 4
IDBs play a critical role � Smoothing the process of price discovery � Sourcing counterparty and bringing the various market participants together � Showing liquidity and market depth � Providing transparency � Facilitating the development of the secondary market � Primarily in the Over-the-Counter (OTC) markets • More recently expanding to exchange-traded instruments � Highly skilled and efficient execution capabilities � Holding no position in the market � Having an independent role � Earning commission for arranging trades at pre-agreed fees 5
Key revenue drivers � Revenue sources - Execution • Agency & Matched principal � Drivers – Volumes + Market penetration • Macroeconomic performance/uncertainty • Interest rate movements • Budget imbalances, bond issuance, credit cycle • Markets volatility/liquidity • Emerging economies Growth in IDB revenues • Financial innovation 10 ,0 9.3 • Technology 9 ,0 8.1 8 ,0 • Activity of new investor groups 7.0 7 ,0 6.0 6 ,0 5.4 USD bn 5.1 4.7 5 ,0 4.3 4.0 3.7 4 ,0 3 ,0 2 ,0 1 ,0 0 ,0 2000 2001 2002 2003 2004 2 005 20 06 20 07e 20 08e 200 9e Source: Celent 6
Transactions volumes have grown substantially over time BIS - Triennial Central Bank Survey ISDA - Market Survey Average daily turnover in April in USD bn Notional amounts outstanding at year end in USD bn 500 000 Global Foreign Global OTC Interest rates & Currency: 29% 10yCAGR 400 000 Exchange market derivatives market 3000 65% turnover turnover 62% 300 000 2000 200 000 100 000 1000 0 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 To tal IR and currency o utstan ding s T otal cred it defau lt swap o utstan ding s To tal equity d erivative o utstandin gs FIA – Growth in global futures and options trading McKinsey Global Institute In millions of contracts and annual growth rates Growth in the hedge fund industry 2000 8500 16000 30% 1800 7500 28% Assets under management 14000 1600 25% 6500 Number of funds 12000 1400 20% USD bn 5500 1200 10000 20% 1000 8000 4500 800 15% 6000 3500 600 4000 2500 10% 400 2000 1500 200 0 5% 0 500 2004 2005 2006 2007 Jan-May Jan-May 2007 2008 1990 1992 1994 1996 1998 2000 2002 2004 2006 2007 Q1 2008 7
Tradition has a track record of organic growth and innovation � Founded in 1959 in Lausanne � Listed on SWX since 1973 � VIEL & Cie acquired Compagnie Financière Tradition in 1996 • 16.2% 1997 - 2007 CAGR in current terms • 17.1% 1997 - 2007 CAGR in 2007 constant currency terms 1,417 1,417 1,417 1,417 Turnover 1 ,144 1,1 39 Cur rent ex change rates Consta nt exc ha nge r ate s* 91 8 M 9 15 8 92 8 82 85 0 C 813 7 92 786 78 0 788 H 727 700 F 6 45 536 497 45 5 222 222 222 222 385 361 31 4 2 91 21 8 1 995 199 6 19 97 19 98 19 99 20 00 2 001 200 2 200 3 20 04 (**) 2 005 20 06 2 007 H1 2 008 (*) At 31.12.2007 (**) IFRS since 2004 EBFL excluded in 2001 2005-2006-2007 exclude discontinued activities 8
2. Industry dynamics
Market structure driving strategic thinking IDBs Futures Brokers Focus on market evolution Increased visibility of the global leaders 5 players with revenues above $900m 2 players with revenues around $1.5bn Leading players in the transactional Their transactional services smaller in size value chain than that of global IDBs Continuously seeking scale in terms of products & geography O p p o r t u n i t i e s � Search for liquidity, absolute return & efficiency in risk transfer � Portfolio diversification & internationalisation � Emergence of new markets � Convergence/Consolidation Global themes Exchanges Consolidation rush New market power paradigm Unprecedented combination of CME/CBOT/NYMEX macroeconomic factors Deutsche Borse/ISE Impact of credit crisis LSE/Borsa - OMX/Nasdaq - Dubai Client segmentation High PE and market cap Electronification Search for efficiencies and ways to Diversification of business models enter the OTC space New cash equities execution venues 10
Space marked by demutualisation, consolidation and « coopetition » 1996 2001 2003 2005 2007 1999 2008 2006 2000 2002 1999 2004 VIEL & Cie Intercapital Exco merges Tullett buys Tradition Icap Icap acquires Tullett is Collins GFI listed Icap buys EBS Icap buys GFI buys buys Tradition reverses into with Garban Liberty JV partners Brokertec & acquired by Stewart buys Traiana Trayport CSTL CSTL Exco with First Brokers Collins Prebon Prebon buys Tradition buys approached demerges M&A acti vity Tullett Prebon Volbroker Stewart Marshall Finacor by VCs in ship acquires GFI buys broking Primex Tradition and M&A acti vity Amerexin the Icap for m in the energy US Icap submits ICAP buys FXO JV sector RIE Link Tullett Prebon (GFI/Icap) application acquires Tullett Prebon IDBs Chapdel aine and GFI i n merger tal ks Creditex merges with Creditrade Man Financial Refco listed Man Financial MF Global buys GNI and delisted buys R efco listed and Eurex US Calyon Fimat acquires Financial Futures Cube and Fimat announce merger Brokers CME buys Acquisition of Deutsche NYSE NYSE buys Imar exbuys CBOT LIFFE by Börse acquires Euronext Spectron Merger Euronext acquires Archi- CME buys CME acquires between Clearstream Ipo of paelago Swapstr eam CMA LSE&Borsa Euronext Ipo of CME Borsa and Banks ICE buys Nasdaq and Ipo of Euronext announce Creditex Exchanges Borse D ubai Deutsche partner to buy project CME acquires acquire OMX Börse MTS Turquoise NYMEX Deutsche Ipo of ICE Banks Borse announce acquires ISE projects ICE buys Chatham Rainbow, Four Seasons 11 & V10
Short and long term impact of current environment � Unusual market conditions started last summer • Sharp fall in interbank confidence • Liquidity shortage • Extreme levels of volatility • > USD 500bn of write-downs • With additional to come • Europe representing 45% of the total � Unprecedented combination of challenges • For financial institutions and governments • Urgent and dramatic need for a rapid and large recapitalisation of banks • Disposal of assets, new opportunities for cash rich financial institutions • New roles for central banks • Forced to intervene as liquidity supplier of « last resort » • Managing rescue operations • Rising structural inflation (record oil prices, rising commodity prices) • New geographical power distribution among financial players 12
3. 2008 first half performance
H1 2008 overview Turnover Expenses Operating Operating Net profit PBT Net profit profit margin from cont. group operations share +16.5% +15.4% +22.7% +12.0% +3.3% +18.9% 12.7% 788.3 12.0% 689.0 676.7 H1 2007 596.9 H1 2008 M C H F 103.4 99.8 92.3 81.3 58.8 56.9 46.5 39.1 14
Sustained organic growth Half year and yearly turnover in current currency terms 1600 1,417.1 1400 1,144.4 1200 914.7 1000 788.3 M H2 800 C H1 600 H 400 F 200 0 2005 2006 2007 2008 Sector overview H1 2008 YOY top line growth rates – current currency terms 69.0% 53.6% 31.8% 26.0% 21.5% 21.1% 17.9% 16.2% 16.5% 13.3% 13.6% 11.1% 11.6% 7.4% 4.8% -1.0% IC AP (est) Euro next Partners C ME Grou p CF T Deutsche ICE L S E MarketAxess MF Global IT G Interactive G FI Group Nasd aq Tullett Prebon Brokers Börse OMX N YSE BG C Current Exchange Rates Constant Exchange R ates Estimates from Reuters Knowl edge as of August 12 for half year figures for ICAP 15
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