CMC Markets continues to innovate and respond to market changes and challenges

CMC Markets Plc (LON:CMCX) has today provided its final results for the year ended 31 March 2023.

Net operating income a new record high outside of the pandemic period, in line with guidance

Building a best-in-class, one stop financial trading and investment services platform

Notes:

–       Net operating income represents total revenue net of introducing partner commissions and levies

–       Trading net revenue represents CFD and spread bet gross client income net of rebates, levies and risk management gains or losses

–       Investing net revenue represents stockbroking revenue net of rebates

–       Trading gross client income represents spreads, financing and commissions charged to clients (client transaction costs)

–       Trading active clients represent those individual clients who have traded with or held a CFD or spread bet position on at least one occasion during the 12-month period

–       Trading revenue per active client represents trading net revenue from active clients after deducting rebates and levies

–       Investing active clients represent those individual clients who have traded on at least one occasion during the period

–       2022 figures restated – more information is available within note 33 of the 2023 Annual Report and Financial Statements.

Highlights

·      Net operating income of £288 million, in line with new guidance issued on 27 March 2023 and up 2% year over year, a new record high outside of the COVID-19 period. Trading net revenue up 1% versus 2022, with interest income up significantly, offset by weaker investing net revenue due to subdued market conditions.

·     Significant milestones achieved this year include the launch and expansion of the CMC Invest UK offering, regulatory approval for the imminent launch of CMC Invest Singapore, a larger office in Dubai as part of our institutional expansion, upgrades to our existing trading platforms and the successful transfer of over 600,000 ANZ Share Investing clients, with total assets in excess of AUD$37 billion to CMC.

·      2023 operating expenses excluding variable remuneration increased by 26% to £217 million, reflecting the investment in people and technology to support the ongoing strategic growth initiatives.

·      Profit before tax of £52 million (2022: £91 million).

·     Underlying liquidity remains strong. Regulatory OFR ratio of 369%. Net available liquidity remained broadly flat at £239 million (2022: £246 million).

Outlook and dividend

·      Growth outlook: Quiet market conditions in the first two and a half months of 2024 have resulted in client trading activity being down 15-20%, which in turn is expected to negatively impact Q1 2024 net operating income.  Expectations of the underlying 30% net operating income growth from 2022 to 2025 remain unchanged, with growth in the existing business driven by ongoing strength of underlying KPIs including client money AUM, new product delivery and assuming a return to normalised market conditions.

·    Strategy: We will focus on delivering ongoing product diversification and development of a multi-asset interface across our core trading business. We continue to invest in our technology to drive expansion towards B2B partnerships and to open up new markets via our investing and institutional businesses.

·   Costs: Our 2024 investment plans are expected to increase operating expenses excluding variable remuneration to approximately £240 million. Employee numbers are expected to peak in 2024 following successful hiring of additional staff over the past 12 months. Operating cost expansion is expected to slow in 2025 after two years of significant investment combined with ongoing cost efficiency initiatives.

·    Trading: Our priority for 2024 is to expand our product range, thereby enhancing our support for our clients’ trading and investment portfolios and increasing our share of their wallet. These include cash equities, index options, listed futures, cryptocurrencies and a wider range of investment products.

·    Technology: Enhancements planned for the following 12 months are set to facilitate expansion through B2B partnerships and full delivery of our API infrastructure. Through shared resources and expertise, CMC and our B2B partners are expected to benefit from cost savings and improved operational efficiency.

·      Investing: We will expand the development of our Invest platforms across Australia, Singapore and the UK. The UK D2C market continues to pose a significant opportunity, with aggregate AuA standing at c.£290 billion¹ even after weaker capital markets seen over 2022.

·    Institutional expansion: We will invest in our institutional offering to upgrade our product suite. Over the next 12-18 months we will deliver the regional expansion of our institutional offering via our expanded Dubai office and dedicated sales teams aimed at partnering with large institutional flow aggregators.

·     Dividend: The Board recommends a final dividend of 3.90 pence per share (2022: 8.88 pence) resulting in a total dividend payment for the year of 7.40 pence per share (2022: 12.38 pence).

Lord Cruddas, CMC Markets Chief Executive Officer commented:

“Since pioneering online trading over 30 years ago, CMC continues to innovate and respond to market changes and challenges. Today the Group boasts a broad financial services offering spanning the globe. Through our new API ecosystem we can add new products and markets quickly, for both our B2B and B2C clients. We believe this breadth and level of flexibility, through one industry standard connection protocol, will be the best-in-class B2B and B2C financial services platform on the market.

During the past year, we have made progress to refine and deliver our diversification strategy. We have improved our product range across our core trading CFD and spread bet businesses, offering our clients access to a wider range of financial instruments through our award-winning platforms. We have leveraged our existing technology to launch a new investment platform in the UK, with a Singapore platform launching imminently, as well as opening a new office in Dubai to support the rapid growth we are seeing in our institutional business.

Through our new API ecosystem we are leveraging our technology to facilitate growth through B2B expansion. By partnering with our clients directly we are able to offer access to our deep liquidity, products, and technology stacks. Fostering additional B2B partnerships is front and centre in our strategy to achieve sustainable long-term growth.

CMC is changing quickly. Investment in our trading platforms continues and over the coming six months we’re positioned to launch cash equities, options and listed futures across our various platforms to allow our clients better opportunities to trade or hedge existing portfolio positions. Invest UK will be launching SIPPs and mutual funds, whilst Invest Singapore will initially offer equities, ETFs, options and futures. Additionally, over the course of the next 12 months, we plan to introduce a new multi-asset platform capable of trading a much wider range of instruments. I look forward to updating you later this year on further progress.”

¹ Platforum February 2023.

Annual Report and Financial Statements

A copy of the Company’s Annual Report and Financial Statements for the year ended 31 March 2023 (the “2023 Annual Report and Financial Statements”) is available within the Investor Relations section of the Company website here; Annual Report

In compliance with The Disclosure Guidance and Transparency Rules (DTR) 6.3.5, the information in the document below is extracted from the Company’s 2023 Annual Report and Financial Statements. This material is not a substitute for reading the 2023 Annual Report and Financial Statements in full and any page numbers and cross references in the extracted information below refer to page numbers and cross-references in the 2023 Annual Report and Financial Statements.

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