Final results for the year ended 31 March 2020

Net operating income up 93% to £252.0 million; Profit before tax £98.7 million; Strong start to Q1 2021

11 June 2020

  Year ended    
£ million (unless otherwise stated) 2020 2019 Change %
Net operating income 252.0 130.8 93%
Profit before tax 98.7 6.3 1,459%
Earnings per share (pence) 30.1p 2.0p 1,405%
Ordinary dividend per share (pence) 15p 2.0p 640%
CFD gross client income 240.6 68.4 11%
CFD net trading revenue 214.5 110.2 95%
CFD active clients (numbers) 57,202 53,308 7%
CFD revenue per active client (£) 3,750 2,068 81%
Stockbroking net trading revenue 31.8 15.5 106%

Notes:

- Net operating income represents total revenue net of introducing partners commissions and levies
- CFD gross client income represents spreads, financing and commissions charged to clients (client transaction costs)
- CFD net trading revenue represents CFD and spread bet gross client income net of rebates, levies and risk management gains or losses
- CFD active clients represent those individual clients who have traded with or held a CFD or spread bet position with CMC Markets on at least one occasion during the twelve-month period
- CFD revenue per active client represents total trading revenue from CFD and spread bet active clients after deducting rebates and levies

Response to COVID-19 pandemic

  • The Group reacted to the pandemic swiftly, with a smooth transition to remote working for 100% of our staff, with key processes unaffected.
  • The Group’s CFD platform continued to perform extremely well, with best in class availability and execution times being maintained during the extraordinarily high levels of trading activity within the underlying markets and exchanges.
  • The Group has not furloughed or reduced any of its permanent workforce, nor has it requested any government aid in any of its global locations as a response to the COVID-19 pandemic.

Highlights

  • Net operating income increased to £252.0 million, up £121.2 million (93%).
  • CFD revenue per active client up 81% to £3,750, primarily as a result of improved retention of CFD gross client income.
  • CFD active clients increased by 3,894 (7%), demonstrating the continuing attractiveness of the platform.
  • Stockbroking net trading revenue up 106% to £31.8m driven by a combination of a full year of revenues for the ANZ Bank partnership, higher market volatility in Q4 and successful product launches.
  • The Group continues to invest in its proprietary technology platforms to diversify its offering and generate value through institutional relationships.
    • This has been demonstrated by the success of the ANZ Bank white label partnership which has generated £22.3 million net revenue in 2020.
  • Operating expenses increased by 23% to £151.3 million, predominantly due to higher variable remuneration as a result of the significantly improved performance in FY20. Variable remuneration, whilst being significantly higher year on year, is in line with comparable prior years.
  • Operating expenses excluding variable remuneration up 14% to £137.3 million.
  • Profit before tax up 1,459% to £98.7 million (2019: £6.3 million).

Outlook and dividend

  • CFD gross client income at the start of the financial year has been around double that during the same period in the prior financial year and client income retention remains strong.
  • The Group has confidence in the underlying performance of the business when market activity becomes normalised, and in conjunction with further progress on its strategic initiatives, looks forward to continuing to generate business growth and value.
  • The Group’s significant investment in technology development and infrastructure in its institutional (“B2B”) business is expected to lead to a moderate increase in costs in the coming financial year.
  • It is anticipated that the Group effective tax rate will increase to above the UK corporate tax rate in the new financial year.
  • Final dividend for the year of 12.18 pence per share resulting in a total dividend of 15.03 pence per share, in line with the Group’s dividend policy of distributing 50% of profit after tax. Given the strength of the balance sheet and confidence in strategic delivery, the Board remains committed to paying a total dividend going forward of 50% of profit after tax.

Peter Cruddas, Chief Executive Officer commented:

“During these extraordinarily difficult times, I would like to take the opportunity to convey my sympathies to everyone who has been impacted by the COVID-19 pandemic. I am extremely proud of the resilience and dedication shown by all of my colleagues at CMC, who are contributing to ensuring that our clients are able to trade throughout a period of extraordinarily high volume and volatility in global markets.

The significant performance improvement in 2020 is a result of the Group’s unwavering focus on our strategic initiatives. This has delivered increased diversification of Group revenues, improved CFD client income retention and an increased number of active clients. The growing contribution of B2B revenues is also particularly pleasing and will continue to be an important part of our strategy going forward.

The heightened volatility and trading activity resulting from COVID-19 has continued into the first quarter of the financial year, and CMC continue to provide clients with market leading trading platforms and client service. I am also confident that, once the financial world returns to more normal conditions, the Group will continue to build on the underlying growth that was being displayed prior to the pandemic. This, in combination with our stable dividend policy and positive trading outlook, will enable CMC to continue to deliver considerable value to all of our stakeholders.”

Analyst and Investor Presentation

A presentation will be held for equity analysts and investors today at 10.30 a.m. (BST).
A live audio webcast of the presentation will be available via the following link:
https://webcasts.cmcmarkets.com/results/2020fullyear
Alternatively, you can dial into the presentation by registering via the following link
https://webcasts.cmcmarkets.com/results/2020fullyear/vip_connect

Annual Report and Financial Statements

A copy of the CMC Markets plc (the “Company”) Annual Report and Financial Statements for the year ending 31 March 2020 (the “2020 Annual Report and Financial Statements”) is available within the Investor Relations section of the Company website Results reports & Presentations

Pursuant to Listing Rule 9.6.1 the “Company” has submitted the 2020 Annual Report and Financial Statements to the National Storage Mechanism and will shortly be available for inspection at: www.hemscott.com/nsm.do

In compliance with The Disclosure and Transparency Rules (DTR) 6.3.5, the information in the document below is extracted from the Company’s 2020 Annual Report and Financial Statements. This material is not a substitute for reading the 2020 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 2020 Annual Report and Financial Statements.

Forthcoming announcement dates

Thursday 30 July Q1 2021 trading update
Thursday 8 October H1 2021 pre-close trading update

Enquiries

CMC Markets Plc  
Euan Marshall, Chief Financial Officer [email protected]

Media enquiries
Camarco

Geoffrey Pelham-Lane / Jennifer Renwick Tel: 020 3757 4994

Notes to Editors

CMC Markets plc ("CMC"), whose shares are listed on the London Stock Exchange under the ticker CMCX (LEI: 213800VB75KAZBFH5U07), was established in 1989 and is now one of the world's leading online financial trading businesses. The company serves retail and institutional clients through regulated offices and branches in 14 countries, with a significant presence in the UK, Australia, Germany and Singapore. The Group offers an award-winning, online and mobile trading platform, enabling clients to trade over 10,000 financial instruments across shares, indices, foreign currencies, commodities and treasuries through contracts for difference ("CFDs") and financial spread bets (in the UK and Ireland only). Clients can also place financial binary bets through Countdowns and, in Australia, access stockbroking services. More information is available on the CMC Markets Group website

Forward Looking Statements

This announcement and Appendix may include statements that are forward looking in nature. Forward looking statements involve known and unknown risks, assumptions, uncertainties and other factors which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Except as required by the Listing Rules and applicable law, the Group undertakes no obligation to update, revise or change any forward looking statements to reflect events or developments occurring after the date such statements are published.