Segment Analysis

The Company reports its operating segments based on services provided to clients. The Company’s business activities are managed as operating segments and organized into reportable segments as follows:


•	Commercial Hedging (includes components Financial Agricultural (“Ag”) & Energy and LME Metals)


•	Global Payments


•	Securities (includes components Equity Capital Markets, Debt Capital Markets and Asset Management)


•	Physical Commodities (includes components Precious Metals and Physical Ag & Energy)


•	Clearing and Execution Services (includes components Exchange-Traded Futures & Options, FX Prime Brokerage, Correspondent Clearing, Independent Wealth Management, and Derivative Voice Brokerage)

The total revenues reported combine gross revenues for the physical commodities business for subsidiaries that are not broker-dealers and net revenues for all other businesses. In order to reflect the way that the Company’s management views the results, the table below also reflects the segment contribution to ‘operating revenues’, which is shown on the face of the condensed consolidated income statements and which is calculated by deducting physical commodities cost of sales from total revenues.

Segment data includes the profitability measure of net contribution by segment. Net contribution is one of the key measures used by management to assess the performance of each segment and for decisions regarding the allocation of the Company’s resources. Net contribution is calculated as revenue less direct cost of sales, transaction-based clearing expenses, variable compensation, introducing broker commissions, and interest expense. Variable compensation paid to risk management consultants/traders generally represents a fixed percentage of revenues generated, and in some cases, revenues generated less transaction-based clearing expenses, base salaries and an overhead allocation.

Segment data also includes segment income which is calculated as net contribution less non-variable direct expenses of the segment. These non-variable direct expenses include trader base compensation and benefits, operational employee compensation and benefits, communication and data services, business development, professional fees, bad debt expense and other direct expenses. Inter-segment revenues, expenses, receivables and payables are eliminated upon consolidation, except revenues and expenses related to foreign currency transactions undertaken on an arm’s length basis by the foreign exchange trading business for the securities business. The foreign exchange trading business competes for this business as it does any other business. If its rates are not competitive, the securities businesses buy or sell their foreign currency through other market participants.

On a recurring basis, the Company sweeps excess cash from certain U.S. operating segments to a centralized corporate treasury function in exchange for an intercompany receivable asset. The intercompany receivable asset is eliminated during consolidation, and therefore this practice may impact reported total assets between segments.

Information for the reportable segments is shown in accordance with the Segment Reporting Topic of the ASC as follows



	Three Months Ended March 31,						Six Months Ended March 31,
(in millions)	2020			2019			2020			2019
Total revenues:
Commercial Hedging	$	101.7		$	80.6		$	171.4		$	140.4
Global Payments	29.4			27.4			60.8			57.1
Securities	117.9			72.6			199.0			141.6
Physical Commodities	20,023.5			6,940.9			31,011.8			13,242.7
Clearing and Execution Services	96.5			73.6			172.4			168.8
Corporate Unallocated	4.0			4.1			9.2			7.0
Eliminations	(6.7		)	(7.0		)	(13.3		)	(13.2		)
Total	$	20,366.3		$	7,192.2		$	31,611.3		$	13,744.4
Operating revenues:
Commercial Hedging	$	101.7		$	80.6		$	171.4		$	140.4
Global Payments	29.4			27.4			60.8			57.1
Securities	117.9			72.6			199.0			141.6
Physical Commodities	24.0			19.8			44.1			34.1
Clearing and Execution Services	96.5			73.6			172.4			168.8
Corporate Unallocated	4.0			4.1			9.2			7.0
Eliminations	(6.7		)	(7.0		)	(13.3		)	(13.2		)
Total	$	366.8		$	271.1		$	643.6		$	535.8
Net operating revenues (loss):
Commercial Hedging	$	84.2		$	65.8		$	138.6		$	111.1
Global Payments	28.0			25.8			57.8			54.2
Securities	78.1			32.0			121.2			64.1
Physical Commodities	19.5			15.1			35.4			25.5
Clearing and Execution Services	37.1			31.0			67.1			68.5
Corporate Unallocated	(3.5		)	(4.5		)	(6.2		)	(9.2		)
Total	$	243.4		$	165.2		$	413.9		$	314.2
Net contribution:
(Revenues less cost of sales of physical commodities, transaction-based clearing expenses, variable compensation, introducing broker commissions and interest expense)
Commercial Hedging	$	59.1		$	49.3		$	97.9		$	79.9
Global Payments	22.6			21.0			46.4			44.1
Securities	50.5			20.1			77.9			41.9
Physical Commodities	13.8			11.5			25.1			18.6
Clearing and Execution Services	28.9			23.4			53.4			53.1
Total	$	174.9		$	125.3		$	300.7		$	237.6
Segment income:
(Net contribution less non-variable direct segment costs)
Commercial Hedging	$	35.8		$	30.2		$	57.3		$	43.5
Global Payments	17.2			15.8			36.1			34.4
Securities	38.4			11.8			55.1			27.8
Physical Commodities	9.6			7.8			17.2			13.7
Clearing and Execution Services	16.3			11.6			27.4			29.3
Total	$	117.3		$	77.2		$	193.1		$	148.7
Reconciliation of segment income to income before tax:
Segment income	$	117.3		$	77.2		$	193.1		$	148.7
Net costs not allocated to operating segments	61.2			51.7			115.4			98.8
Other gain	—			5.4			0.1			5.4
Income before tax	$	56.1		$	30.9		$	77.8		$	55.3

(in millions)	As of March 31, 2020			As of September 30, 2019
Total assets:
Commercial Hedging	$	2,309.7		$	2,041.0
Global Payments	298.0			278.3
Securities	5,109.4			5,219.1
Physical Commodities	458.1			357.8
Clearing and Execution Services	2,448.9			1,892.1
Corporate Unallocated	246.8			147.8
Total	$	10,870.9		$	9,936.1