Final results for the year ended 31 March 2022

2022 net operating income at top end of guidance. Embarking on new phase of diversification. Targeting 30% net operating income growth over three years.

For the year ended £ million (unless otherwise stated) 31 March 2022 31 March 2021 Change % 31 March 2020 Change %
Net operating income 281.9 409.8 (31%) 252.0 12%
Leveraged net trading revenue (£ million) 229.6 349.2  (34%) 214.5 7%
Non-leveraged net trading revenue (£ million) 48.0 54.8  (12%) 31.8 51%
Other income (£ million) 4.3 5.8  (25%) 5.7 (24%)
Profit before tax (£ million) 92.1 224.0  (59%) 98.7 (7%)
Basic earnings per share (pence) 24.8 61.5  (60%) 30.1 (18%)
Dividend per share (pence) 12.4 30.6  (60%) 15.0 (18%)
           
Leveraged gross client income (£ million) 288.5 335.3  (14%) 240.6 20%
Leveraged client income retention 80% 104%  (24%) 89% (9%)
Leveraged active clients (numbers) 64,243 76,591  (16%) 57,202 12%
Leveraged revenue per active client (£) 3,575 4,560  (22%) 3,750 (5%)
           
Non-leveraged active clients (numbers) 246,120 232,053 6% 181,630 36%

Notes:

  • Net operating income represents total revenue net of introducing partner commissions and levies
  • Leveraged net trading revenue represents CFD and spread bet gross client income net of rebates, levies and risk management gains or losses
  • Non-leveraged net trading revenue represents stockbroking revenue net of rebates
  • Leveraged gross client income represents spreads, financing and commissions charged to clients (client transaction costs)
  • Leveraged 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 12-month period
  • Leveraged revenue per active client represents leveraged net trading revenue from active clients after deducting rebates and levies

Highlights

  • Net operating income of £282 million is at the top end of guidance and a record performance outside of the pandemic restrictions.
  • Investment in growth initiatives is expected to result in a 30% increase in net operating income over the next three years. Benefits to be seen from 2023 and are set to deliver profit before tax margin expansion from 2024.
  • Operating expenses have increased by 2% to £188 million, primarily due to higher personnel costs to support the ongoing strategic initiatives, partly offset by lower sales costs.
  • Profit before tax of £92 million (2020: £224 million).
  • Underlying liquidity remains strong. Regulatory OFR ratio of 489%. Net available liquidity improvement to £246 million (2021: £211 million).
  • The £30 million share buyback commenced on 15th March. As of 7th June, the Company has repurchased and cancelled 4,603,703 Ordinary Shares with nominal value of 25 pence for an aggregate purchase amount of £12.7 million.

Outlook and dividend

  • Alongside our focus on delivering strong business performance in 2023 new business expansion is expected to grow net operating income by 30% over next three years based on the 2022 result and underlying conditions. The targeted growth is expected to be broadly linear over that period with benefits expected in 2023.
  • New investments will focus on seven core initiatives aiming to enhance functionality and capture the broader wallet share as we evolve our execution services and investment platforms. We will continue to utilise our technology to enter new markets and expand our non-leveraged offering. The impact will reduce revenue volatility and grow pre-tax profit margins from 2024.
  • Our 2023 investment plans are expected to increase operating costs to approximately £205 million excluding variable remuneration, underpinning the expected 30% growth in underlying net operating income by 2025 as well as longer-term growth from the UK non-leveraged business. Over two thirds of the new investment will be associated with people, product development and marketing. The rate of spending will be dependent on the Group’s ability to make additional personnel hires.
  • CMC Invest Australia continues to expand and invest in its market-leading offering, with reinvestment in mobile and a complete UX redesign. Singapore expansion is on track and planned for 2023.
  • CMC’s leveraged B2B offering continues to perform well, delivering 60% client income growth in 2022 versus 2021. CMC is expecting future 20% CAGR in B2B client income. B2B expansion continues to be a major growth pillar.
  • CMC Invest UK: the new UK non-leveraged platform has been successfully soft launched to staff and will be rolled out to new clients over coming months.
  • The Board recommends a final dividend of 8.88 pence per share (FY 2021: 21.43 pence), equating to £26 million, resulting in a total dividend payment for the year of 12.38 pence per share (FY 2021: 30.63 pence).

Lord Cruddas, Chief Executive Officer commented:

“I am delighted to report another year of impressive performance from both a strategic and financial standpoint. Excluding the exceptional COVID-19 impacted prior year, which due to market volatility saw unusually significant trading volumes, this is a record net operating income result for the Group.

Over the last year we have taken steps to define the strategic direction and diversification of the Group, building on our existing technology to launch a new investment platform that will unlock significant shareholder value and challenge the existing client transaction fee cost structures.

There is significant opportunity and growth potential in the self‑directing investment platform space, especially in the UK, not just for improved technology but also transaction costs and fees. We believe commissions, execution spreads and custodial fees are too high and too expensive for retail investors. We will utilise our platform technology, including pricing and execution, to drive down the transaction costs of investments for retail clients, just like we did in Australia, where we are the number two investment platform for retail investors.

The business is evolving. We continue to improve and grow our existing leveraged business whilst at the same time utilising our technology to enter new markets and expand our non-leveraged offering.

I look forward to providing further updates as the strategy expands over both the short and long-term.”

Analyst and Investor Presentation

A presentation will be held for equity analysts and investors today at 10.00 a.m. (BST), note questions will only be taken over the conference call line.

A live audio webcast of the presentation will be available via the following link: https://webcasts.cmcmarkets.com/results/2022fullyear

Alternatively, you can dial into the presentation by registering via the following link: https://webcasts.cmcmarkets.com/results/2022fullyear/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 2022 (the “2022 Annual Report and Financial Statements”) is available within the Investor Relations section of the Company website http://www.cmcmarkets.com/group/results/annual-reports

Pursuant to Listing Rule 9.6.1 the Company has submitted a PDF of the 2022 Annual Report and Financial Statements to the National Storage Mechanism which will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism. A version in single electronic reporting format will be uploaded in due course and the Company will make a further announcement when this is available.

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 2022 Annual Report and Financial Statements. This material is not a substitute for reading the 2022 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 2022 Annual Report and Financial Statements.

Forthcoming announcement dates

Friday 29 July 2022 Q1 2023 trading update
Friday 7 October 2022 H1 2023 pre-close trading update

Enquiries:

CMC Markets Plc  
James Cartwright, Investor Relations [email protected]
Euan Marshall, Chief Financial Officer [email protected]

Media enquiries:

Camarco  
Geoffrey Pelham-Lane / Jennifer Renwick 020 3757 4994

Notes to Editors

(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 12 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 at http://www.cmcmarkets.com/group/

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.