Cmc Markets Plc · LSE:CMCX
Cmc Markets — H1 2021 Earnings Presentation
38 slides from Cmc Markets's earnings presentation, Nov 19, 2020
Slide 1: Half year ended 30 September 2020
Half year ended 30 September 2020 19 November 2020
Slide 2: Introduction: Today's presenters
Introduction Today’s presenters PETER CRUDDAS Chief Executive Officer EUAN MARSHALL Chief Financial Officer DAVID FINEBERG Deputy Chief Executive Officer MATTHEW LEWIS Head of APAC & Canada 2
Slide 3: H1 2021 highlights
H1 2021 highlights Achieving a record first half whilst investing in future value • Record first half delivered • 126% increase in net operating income to £230.9m, driven by: • 68% increase in CFD gross client income, representing increased client trading and continued demand for our offering, with
Slide 4: Financial performance
Financial performance Euan Marshall, CFO Cnic
Slide 5: KPIs
KPIs Significant improvement across all KPIs Active clients¹ and Revenue per active client² (RPC) CFD gross client income³ (£m) and retention (%) Net operating income4 (£m) 3,392 115% 200.4 94% 2,595 82% 2,047 1,413 58% 129.4 1,162 44% 173.6 85.1 230.9 59,082 137.1 63.1 47.1 49,815 108.7 107.4 103.5
Slide 6: Income statement
Income statement Record H1 performance delivered Group (£m) H1 2021 H1 2020 YoY % Net operating income • CFD net trading revenue increase of 135% (£115.3m), with CFD and spread bet net trading revenue¹ 200.4 85.1 135% significant growth in all regions Stockbroking net trading revenue 26.3 14.5 82% •
Slide 7: Operating cost bridge
Operating cost¹ bridge Higher costs as a result of market conditions and strategic investment £10.0m increase driven by £4.3m increase primarily driven by heightened client interest and investment in strategic projects trading activity 0.8 1.0 2.5 1.1 0.3 1.0 4.5 0.5 0.9 1.0 2.2 5.5 80.4 81.4 79.3 7
Slide 8: Liquidity and regulatory capital
Liquidity and regulatory capital Strong liquidity position retained Regulatory Capital Regulatory capital • CET1 up £55.7m due to the addition of H1 profits less foreseeable dividends Group (£m) H1 2021 FY 2020 • Capital ratio of 27.3% (FY20: 23.3%) Core Equity Tier 1 Capital1 303.3 247.6 Less: inta
Slide 9: Client trading and regulation
Client trading and regulation David Fineberg, Deputy CEO Cnic
Slide 10: CFD client income
CFD client income Increased client activity and exceptional client income retention drive results 2019 2020 2021 H1 2021 vs H1 2020 £m H1 H2 FY19 H1 H2 FY20 H1 £m % Gross CFD client income¹ 108.7 107.4 216.1 103.5 137.1 240.6 173.6 70.1 68% Rebates and levies (11.1) (9.7) (20.8) (7.5) (9.0) (16.5) (
Slide 11: 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 H1 client income driven by increase in active clients and illiquidity in underlying mar
Slide 12: Other regulatory matters
Other regulatory matters Staying ahead of regulatory change • Regulatory update • Australia: In October, ASIC announced the scope and timing of product intervention measures applicable to the issuance and distributions of CFDs to retail clients • Measures are to be implemented from 29 March 2021 • L
Slide 13: Stockbroking update
13 Stockbroking update Matthew Lewis, Head of APAC & Canada Cnic
Slide 14: Stockbroking net trading revenue
Stockbroking Continued growth and favourable market conditions lead to record results 25 • H1 2021 Stockbroking net revenue is 82% or £11.8m higher Net Trading Revenue (AUD m) 20 year on year as a result of continued growth across the business 15 • The ANZ Bank white label partnership continues to 1
Slide 15: Stockbroking
Stockbroking Opportunity for further growth through platform enhancements Revenue per client (AUD) • Stockbroking continued to expand on its market leading international offering through: 300 • Introduction of zero brokerage across four major international markets for CMC retail clients 250 • Additi
Slide 16: Financial outlook
16 Financial outlook Euan Marshall, CFO Cnic
Slide 17: FY21 financial outlook
FY21 financial outlook • Net operating income • Current trading conditions: • Active client numbers remain resilient despite reduction in market volatility. As a result, client income remains in well excess of the same period in the prior year but below H1 averages • Similarly, Stockbroking performa
Slide 18: Strategic update
18 Strategic update Peter Cruddas, CEO Cnic
Slide 19: Strategic update: investing in technology for growth
Strategic update We have always invested in our technology for growth Mobile app ANZ Bank white Investment in launched for label partnership low latency More to come iPhone deal completed infrastructure 2021 2010 2018 2020 onwards 2012 2019 2021 Next Generation CMC Pro platform FX Spot product to pl
Slide 20: Strategic update: continued investment, focus on technology
Strategic update Continued investment across the business, with a focus on technology Average headcount 350 • Significant, ongoing investment in headcount across the 300 business to support the delivery of strategic projects 250 • Key areas of investment have been technology and quantitative analysi
Slide 21: Strategic update: Institutional
Strategic update Institutional • We continue to invest and see a significant opportunity in B2B business • 15 new relationships onboarded in H1 2021 • Investment in B2B sales team • Latency improvements made during H1 2020 • FX Spot product to be launched in H2 • New CMC Markets Connect branding for
Slide 22: Strategic update: Stockbroking
Strategic update Stockbroking Stockbroking active clients • Our technology showed its strength and scalability through the 140,000 ANZ white label partnership deal 120,000 • Largest client migration in ASX history • Over 120,000 active clients in H1 2021, and over $50bn in 100,000 assets under manag
Slide 23: Strategic outlook
Strategic update Strategic outlook • The Group continues to deliver on strategic initiatives, and maintains a healthy pipeline of projects that will add revenue streams through product, channel and geographical diversification • We continue to invest in both our technology and personnel to drive fut
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) 2019 2020 2021 H1 H2 Full year H1 H2 Full year H1 UK 41.5 41.8 83.3 37.4 49.0 86.4 63.3 Europe 24.2 19.0 43.2 17.1 26.5 43.6 28.3 APAC & Canada 43.0 46.6 89.6 49.0 61.6 110.6 82.0 Total 108.7 107.4 216.1 103.5 137.1 240.6 173.6 CFD n
Slide 27: ESMA client trading
Appendix 2 ESMA client trading CFD net trading revenue (£m) 2019 2020 2021 H1 H2 Full year H1 H2 Full year H1 ESMA Professional 19.6 27.6 32.5 60.1 44.8 ESMA Retail 10.9 18.0 32.5 50.5 60.3 Total ESMA Region 43.9 30.5 74.4 45.6 65.0 110.6 105.1 Active clients 2019 2020 2021 H1 H2 Full year H1 H2 Ful
Slide 28: Stockbroking KPIs
Appendix 3 Stockbroking KPIs Net brokerage¹ (AUD m) 2019 2020 2021 H1 H2 Full year H1 H2 Full year H1 ANZ Bank white label 1.4 11.0 12.4 13.9 17.8 31.7 25.9 St. George white label 0.8 1.7 2.4 2.1 2.8 4.9 4.0 CMC Retail 3.5 3.4 6.9 4.3 5.1 9.4 7.6 CMC Partners 2.4 2.2 4.7 2.9 3.2 6.1 3.5 Total 8.0 18
Slide 29: Institutional (B2B) and retail (B2C) revenue
Appendix 4 Institutional (“B2B”) and retail (“B2C”) revenue H1 2021 H1 2020 Growth (£m) Growth (%) Net trading revenue (£m) B2C B2B Total B2C B2B Total B2C B2B Total B2C B2B Total CFD & spread bet net revenue 183.0 17.4 200.4 69.0 16.1 85.1 114.0 1.3 115.3 165% 8% 135% Stockbroking net revenue 4.8 2
Slide 30: Revenue composition
Appendix 5 Revenue composition H1 2021 CFD and Stockbroking revenue1 by asset class H1 2020 CFD and Stockbroking revenue1 by asset class Binary options Shares Shares 1% Stockbroking 6% 9% Binary options Stockbroking 12% FX² 2% 15% Treasury 7% 0% FX² Commodity 18% 16% Index Index 46% 58% Treasury 1%
Slide 31: Income statement
Appendix 6 Income statement Group (£m) H1 2021 H1 2020 YoY % Total revenue 256.1 124.9 105% Rebates & levies (25.2) (22.6) (12%) Net operating income1 230.9 102.3 126% Operating expenses (88.9) (71.2) 25% Finance costs (0.9) (1.0) 13% Profit before taxation 141.1 30.1 369% Taxation (30.3) (2.6) (1,0
Slide 32: Operating expenses breakdown
Appendix 7 Operating expenses breakdown Group (£m) H1 2021 H1 2020 YoY % Net staff costs (excl. variable remuneration) 28.8 26.7 (8%) • Operating expense¹ increase of £14.3m (22%) largely driven by variable costs which increase in line with client IT costs 12.7 10.5 (20%) trading activity Sales and
Slide 33: Balance sheet
Appendix 8 Balance sheet 30 September 2020 Group (£m) 31 March 2020 Variance % (unaudited) Non-current assets Intangible assets 8.4 4.6 83% Property, plant and equipment 28.8 28.1 2% Deferred tax assets 8.7 16.5 (48%) Trade and other receivables 2.5 2.3 12% Total non-current assets 48.4 51.5 (6%) Cu
Slide 34: Own funds flow statement
Appendix 9 Own funds flow statement Group (£m) H1 2021 H1 2020 YoY % Operating activities Profit before tax 141.1 30.1 369% Adjustments for: Finance costs 0.9 1.0 (13%) Depreciation and amortisation 5.5 5.8 (6%) Other non-cash adjustments (2.9) 1.0 (418%) Tax paid (13.6) (6.5) (111%) Own funds gener
Slide 35: Client assets and prime broker requirements
Appendix 10 Client assets and prime broker requirements Client assets under management (£m) Broker margin requirements (£m) 440 180 420 160 Max - £134m 400 140 Max - £124m 380 120 Max - 100m 360 100 Max - £85m 340 80 320 60 300 40 280 20 260 0 35
Slide 36: Half yearly client churn
Appendix 11 Half yearly client churn (‘000s) 5 5 7 14 3 3 7 8 5 6 4 9 5 5 37 40 36 36 34 32 32 (9) (7) (12) (11) (11) (13) (10) H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 H1 2021 Continuous New trader Reactivated Stopped trading 36
Slide 37: 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
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