Cmc Markets Plc · LSE:CMCX
Cmc Markets — FY2020 Earnings Presentation
40 slides from Cmc Markets's earnings presentation, Jun 11, 2020
Slide 1: Year ended 31 March 2020
Year ended 31 March 2020 11 June 2020
Slide 2: Today's presenters
Introduction Today’s presenters Peter Cruddas Euan Marshall Dave Fineberg Matthew Lewis Chief Executive Officer Chief Financial Officer Deputy Chief Executive Head of APAC & Canada Officer 2
Slide 3: COVID-19 update and FY20 highlights
Introduction COVID-19 update and FY20 highlights COVID-19 Update • Swift response to the pandemic, with a smooth transition to remote working for all staff and with key processes unaffected • The Group’s CFD platform continued to perform extremely well, with best-in-class availability and execution
Slide 4: Financial performance
Financial performance Euan Marshall, CFO Cnic
Slide 5: KPIs
KPIs Improvement across all KPIs drives strong results gross CFD net client client income¹ income¹ (£m) (£m) andand retention retention (%)(%) income²4 (£m) Net operating income Active clients³ and Revenue per active client4 (RPC) 89% £3,750 73% £2,964 51% £2,068 252.0 241.1 240.6 59,165 57,202 187.
Slide 6: Income statement
Income statement Operational leverage results in significant increase in PBT Group (£m) 2020 2019 YoY % Net operating income CFD and spread bet net trading revenue¹ 214.5 110.2 95% • 95% increase in CFD net trading revenue to £214.5m Stockbroking net trading revenue 31.8 15.5 106% • Driven by improv
Slide 7: Operating expenses
Operating expenses Cost increases driven by Q4 activity and higher variable remuneration Group (£m) 2020 2019 YoY % Net staff costs (excl. variable remuneration) 53.8 49.1 (10%) • Operating expense¹ increase of £16.8m (14%) IT costs 21.5 20.0 (7%) • Net staff costs (excl. variable remuneration) incr
Slide 8: Liquidity and regulatory capital
Liquidity and regulatory capital A strong foundation for ongoing investment and growth Regulatory capital Regulatory capital • Capital ratio of 23.3% (FY19: 17.4%) Group (£m) 2020 2019 • Higher capital ratio driven by an increase in capital resources and lower Core Equity Tier 1 Capital1 247.6 203.1
Slide 9: FY21 financial outlook
FY21 financial outlook Net operating income expected to exceed current consensus • Net operating income • Current trading conditions: • FY21 to-date: Market activity has resulted in gross CFD client income in the region of double that experienced in the same period last year • Client income retentio
Slide 10: FY21 financial outlook: other assumptions
FY21 financial outlook Other assumptions • Operating costs • Excluding variable remuneration, costs are projected to be slightly higher year-on-year driven by higher marketing spend • Investment in technology staff and IT infrastructure expected to be largely offset by capitalisation of development
Slide 11: Client trading, market conditions and COVID-19 update
Client trading, market conditions and COVID-19 update David Fineberg, Deputy CEO Cnic
Slide 12: CFD client income
CFD client income 95% increase in net CFD trading revenue year-on-year 2019 2020 FY20 vs FY19 £m H1 H2 FY19 H1 H2 FY20 £ % Gross CFD client income¹ 108.7 107.4 216.1 103.5 137.1 240.6 24.5 11% Rebates and levies (11.1) (9.7) (20.8) (7.5) (9.0) (16.5) 4.2 20% Net CFD client income 97.6 97.7 195.3 96.
Slide 13: Client income retention %
we have a better book of business, lower leverage has limited the size of the exposure that clients are able to run up, so CMC is not inheriting huge positions that it needs to hedge against Quarterly performance Improved performance throughout FY20 100 100% 90 90% 80 80% Client income retention % G
Slide 14: Client trading trends
we have a better book of business, lower leverage has limited the size of the exposure that clients are able to run up, so CMC is not inheriting huge positions that it needs to hedge against Client trading trends Reactions to Q4 market volatility Gross client income (rebased)¹ • The final weeks of Q
Slide 15: COVID-19 update
we have a better book of business, lower leverage has limited the size of the exposure that clients are able to run up, so CMC is not inheriting huge positions that it needs to hedge against COVID-19 update Utilising our technology to look after our stakeholders Ensuring the safety Uninterrupted sup
Slide 16: Stockbroking update
16 Stockbroking update Matthew Lewis, Head of APAC & Canada Cnic
Slide 17: Stockbroking: first full year of ANZ partnership
we have a better book of business, lower leverage has limited the size of the exposure that clients are able to run up, so CMC is not inheriting huge positions that it needs to hedge against Stockbroking First full year of ANZ partnership deal delivers strong results 20 18 Net trading revenue (AUD m
Slide 18: Stockbroking: well-positioned for continued growth
we have a better book of business, lower leverage has limited the size of the exposure that clients are able to run up, so CMC is not inheriting huge positions that it needs to hedge against Stockbroking Well-positioned for continued growth • Following the completion of the ANZ partnership deal, CMC
Slide 19: Strategic update
19 Strategic update Peter Cruddas, CEO Cnic
Slide 20: Our values
Strategic update Our values Put our clients first Lead with quality Set the standards Our business is built Our commitment to quality We are clear, open and around our clients, we are is at the heart of our culture. honest with our clients, and proud to have long-lasting Whatever we do, we do it wit
Slide 21: Strategic update: achievements and initiatives
Strategic update The achievements made during 2020 place us in a strong position to deliver future value and diversification: Initiative update Underpinned by technology Established markets • Technology used to maximise the % of client income retained as revenue • Australia office generated net CFD
Slide 22: Developing our technology
Strategic update Developing our technology • FY21 will be a year of significant investment in our core pricing, risk management and trading infrastructure • Benefits: • Reduced latency and faster access to external connectivity • Co-location of core pricing, risk management and trading applications
Slide 23: Strategic update: summary
Strategic update The Group will continue to deliver underlying growth and considerable value to stakeholders 1. Strong results: Net operating income increase of 93% year-on-year 2. Stable dividend policy: We are committed to paying a minimum total dividend of 50% of profit after tax 3. Positive outl
Slide 24: Q&A
Q&A Cnic
Slide 25: Appendices
Appendices Cnic
Slide 26: Selected KPIs by half year
Appendix 1 Selected KPIs by half year CFD gross client income (£m) 2018 2019 2020 H1 H2 Full year H1 H2 Full year H1 H2 Full year UK 44.9 49.3 94.2 41.5 41.8 83.3 37.4 49.0 86.4 Europe 29.6 33.6 63.2 24.2 19.0 43.2 17.1 26.5 43.6 APAC & Canada 40.3 43.5 83.8 43.0 46.6 89.6 49.0 61.6 110.6 Total 114.
Slide 27: ESMA client trading
Appendix 2 ESMA client trading CFD net trading revenue (£m) H1 2019 H2 2019 H1 2020 H2 2020 ESMA Professional 19.6 27.6 32.5 ESMA Retail 10.9 18.0 32.5 Total ESMA region 43.9 30.5 45.6 65.0 Active clients H1 2019 H2 2019 H1 2020 H2 2020 ESMA Professional 2,095 2,002 2,046 ESMA Retail 21,202 21,122 2
Slide 28: Stockbroking KPIs
Appendix 3 Stockbroking KPIs Net trading revenue (AUD m) 2019 2020 H1 H2 Full year H1 H2 Full year ANZ Bank white label 1.4 11.0 12.4 13.9 17.8 31.7 St. George white label 0.8 1.7 2.4 2.1 2.8 4.9 CMC Retail 3.5 3.4 6.9 4.3 5.1 9.4 CMC Partners 2.4 2.2 4.7 2.9 3.2 6.1 Total 8.0 18.4 26.4 23.2 28.9 52
Slide 29: Revenue composition
Appendix 4 Revenue composition 2020 CFD and Stockbroking revenue1 by asset class 2019 CFD and Stockbroking revenue1 by asset class Stockbroking Stockbroking 13% 12% Binary options Binary options 2% 3% Index FX² 44% FX² 18% 14% Index Treasury 52% 1% Treasury Commodity 14% Commodity 1% 4% Shares Share
Slide 30: Institutional (B2B) and retail (B2C) revenue
Appendix 5 Institutional (“B2B”) and retail (“B2C”) revenue 2020 2019 Growth (£m) Growth (%) Net trading revenue (£m) B2C B2B Total B2C B2B Total B2C B2B Total B2C B2B Total CFD & spread bet net trading revenue 186.8 27.7 214.5 89.3 20.9 110.2 97.5 6.8 104.3 109% 32% 95% Stockbroking net trading rev
Slide 31: Income statement
Appendix 6 Income statement Group (£m) 2020 2019 YoY % Total revenue 298.1 165.9 80% Rebates & levies (46.1) (35.1) (31%) Net operating income1 252.0 130.8 93% Operating expenses (151.3) (123.1) (23%) Finance costs (2.0) (1.4) (42%) Profit before taxation 98.7 6.3 1,459% Taxation (11.7) (0.4) 2,490%
Slide 32: Balance sheet
Appendix 7 Balance sheet Group (£m) 2020 2019 Variance % Non-current assets Intangible assets 4.6 5.0 (8%) Property, plant and equipment 28.1 18.1 55% Financial investments - 11.3 (100%) Deferred tax assets 16.5 11.6 42% Trade and other receivables 2.3 2.7 (16%) Total non-current assets 51.5 48.7 6%
Slide 33: Own funds flow statement
Appendix 8 Own funds flow statement Group (£m) 2020 2019 YoY % Operating activities Profit before tax 98.7 6.3 1,459% Adjustments for: Finance costs 2.0 1.4 42% Depreciation and amortisation 11.0 7.3 50% Other non-cash adjustments 3.4 0.7 405% Tax paid (13.1) (7.6) (73%) Own funds generated from ope
Slide 34: Client assets and prime broker requirements
Appendix 9 Client assets and prime broker requirements Client assets under management (£m) Broker margin requirements (£m) 380 180 160 360 Max - £134m 140 Max - £124m 340 120 320 100 Max - £85m 300 80 60 280 40 260 20 240 0 34
Slide 35: Our institutional offering
Appendix 10 Our institutional offering 1 2 3 Liquidity services White label Grey label (Market access via API connection or Institutional User Interface) Clients Large banks and brokers Introducing brokers / managers Banks, brokers, hedge funds, trading desks “Own-branded” Introduce and/or trade on
Slide 36: Criteria for professional designations
Appendix 11 Criteria for professional designations Different regulators apply different criteria: Criteria No. of Leverage Region Evidence Designation criteria to limits (Regulator) required Wealth Experience Other fulfil apply from ≥ 1 year of relevant ≥ 10 trades of a significant Various - at UK &
Slide 37: Client churn
Appendix 12 Client churn Half yearly client churn Annual client churn 3 6 3 15 5 7 10 14 3 3 7 8 6 5 9 4 5 5 42 40 37 37 36 36 34 32 32 (18) (19) (16) (9) (7) (12) (11) (11) (13) H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 2018 2019 2020 Continuous New trader Reactivated Stopped trading Continuo
Slide 38: Disclaimer
Disclaimer Certain statements in this presentation constitute or may constitute forward-looking statements. Any statement in this presentation that is not a statement of historical fact including, without limitation, those regarding the Company’s future expectations, operations, financial performanc
Slide 39: Slide 39
Slide 40: Trade your way
Trade your way