Cmc Markets Plc · LSE:CMCX
Cmc Markets — FY2023 Earnings Presentation
44 slides from Cmc Markets's earnings presentation, Jun 13, 2023
Slide 1: Year ended 31 March 2023
Year ended 31 March 2023 13 June 2023
Slide 2: Introduction: Today's presenters
Introduction Today’s presenters LORD CRUDDAS Chief Executive Officer EUAN MARSHALL Chief Financial Officer DAVID FINEBERG Deputy Chief Executive Officer MATTHEW LEWIS Head of APAC & Canada 2
Slide 3: Our strategic vision
Our strategic vision The future of CMC OUR VISION Investing to deliver the best-in-class one stop financial trading and investment services platform of the future 3
Slide 4: Our vision: The evolution of CMC is reaching a pivot point
Our vision: The evolution of CMC is reaching a pivot point Investing in people and technology to create the de-facto investment portal of the future Since pioneering the online trading industry 30 years ago, CMC continues to innovate and respond to client needs and challenges Investment in people &
Slide 5: Open API infrastructure is the platform for growth and expansion
Open API infrastructure is the platform for growth and expansion Our technology is at the heart of CMC Open API infrastructure will help to form best-in-class financial services platforms Connectivity Cloud approach Provide secure API access to all products to be built into all core products & servi
Slide 6: Focus areas
Focus areas Growth and increased diversification through B2C and B2B capability Trading B2B Invest (Institutional) Invest UK Australia Geographic Blockchain B2C & B2B B2B expansion Web 3.0 expansion expansion and new products Capital Invest Trading B2C markets Singapore New products B2B B2C & B2B (e
Slide 7: Financial performance
Financial performance Euan Marshall, CFO Cnic
Slide 8: KPIs
KPIs Record net operating income outside of pandemic-driven periods Net operating income¹ (£m) Net revenue mix 349.2 13% 14% 17% 14% 229.6 233.1 214.5 409.8 87% 86% 86% 83% 281.9 288.4 252.0 2020 2021 2022 2023 2020 2021 2022 2023 Trading net revenue Investing net revenue Net operating income (£m) T
Slide 9: KPIs: Trading and Investing business lines
KPIs Trading and Investing business lines Active clients¹ and revenue per active client² (RPC) Gross client income³ (£m) and retention (%) Client money (AuM) (£m) 104% £4,560 £3,968 £3,575 80% 77% Trading 76,591 335.3 549.4 546.6 549.4 288.5 303.5 64,243 58,737 2021 2022 2023 2021 2022 2023 2021 202
Slide 10: Income statement
Income statement Strong net operating income performance supporting investment in strategic initiatives Net operating income Group (£m) 2023 2022 YoY % Trading net revenue 233.1 229.6 1% • Net operating income of £288.4m was a record outside of the exceptional conditions seen in 2021 Investing net r
Slide 11: Operating cost bridge
Operating cost bridge Higher costs driven by new strategic initiatives and inflation +28% Headcount²: 1,205 • Increase in operating expenses¹ driven by 4 significant investment in growth and Headcount²: 942 diversification 17 • Investment spend driven by staff hired to 24 deliver strategic projects,
Slide 12: Liquidity and regulatory capital
Liquidity and regulatory capital Strong liquidity position retained Regulatory capital Regulatory Capital Group (£m) 2023 2022 • CET1 has increased slightly due to inclusion of profit for the year, offset by interim and proposed dividends Core Equity Tier 1 Capital1 363.1 344.5 Less: intangibles and
Slide 13: Cash generation and shareholder value
Cash generation and shareholder value Business well-positioned for growth Own funds utilisation since IPO 400.0 CMC’s cash position provides platform for growth • We continue to be a highly cash-generative 350.0 business with overall liquidity providing the platform to deliver new business expansion
Slide 14: Shareholder returns
Cash generation and shareholder value Shareholder returns 100.0 100% CMC growth with high cash return over the cycle • Dividend policy is to pay out 50% of profit after tax to 90.0 90% shareholders 80.0 80% • Significant dividends have been paid back to shareholders in recent years, following strong
Slide 15: Financial outlook: 2024 cost guidance
Financial outlook 2024 cost guidance 4 Operating expenses¹ 12 • Majority of headcount investment is now completed to support strategic initiatives, 15 with headcount growth now moderating. However, it will remain above 2023 year- end levels • Cost efficiencies being implemented in parallel with stra
Slide 16: Financial outlook: Three-year growth plans on track
Financial outlook Three-year growth plans on track Net operating income: o The first two and a half months of 2024 we have experienced subdued client trading activity that has been down 15- 20% due to quiet market conditions. This is expected to negatively impact Q1 net operating income o The Group
Slide 17: Trading business update
17 Trading business update David Fineberg, Deputy CEO Cnic
Slide 18: Trading net revenue
Trading net revenue Gross client income remains at higher levels post-pandemic 2022 2023 Variance £m H1 H2 FY22 H1 H2 FY23 £ % Trading gross client income¹ 127.0 161.5 288.5 154.9 148.6 303.5 15.0 5% Rebates and levies (8.3) (12.3) (20.6) (11.5) (8.9) (20.4) 0.2 2% Trading net client income 118.7 14
Slide 19: Trading business update: Growth in our B2B business
Trading business update Growth in our B2B business Client income breakdown • FX Spot product successfully released during 2023, 17% 19% 18% expanding our product suite for institutional (B2B) clients 22% 26% 26% • As a result of our ongoing focus on growing our institutional business, an increasing
Slide 20: Investing business update (APAC)
20 Investing business update (APAC) Matthew Lewis, Head of APAC & Canada Cnic
Slide 21: CMC Invest Australia update
CMC Invest Australia update Macroeconomic and geopolitical risks driving volatile year; performance strengthening in Q4 Net trading revenue 1,2 120.0 Financial performance: 100.0 • Net operating income is 9% lower year-on-year driven by: 80.0 AUD (m) • Investing net revenue is 21% (£10.1m) lower yea
Slide 22: CMC Invest - APAC update
CMC Invest - APAC update Invest Singapore to launch imminently Assets under Administration: AuA movement (AUD $bn) • AuA at AUD $73bn; stable despite macroeconomic and geopolitical headwinds 1.0 2.9 (13.4) Achievements in H2: 0.3 2.9 • ANZ retail book successfully integrated to CMC, consolidating (0
Slide 23: CMC Invest: Strategic expansion on track
CMC Invest: Strategic expansion on track Building on the success of APAC • Invest Australia: AuA at AUD $73bn • Invest UK: Near £300 billion target addressable market¹ • Invest Singapore: Imminent launch 23 1. Platforum – UK D2C Market Overview – February 2023
Slide 24: Strategic summary and outlook
24 Strategic summary and outlook Lord Cruddas, CEO Cnic
Slide 25: New core initiatives: CMC Options
New core initiatives CMC Options – Options are the fastest growing product in today’s market place Why Options? • #1 provider in exchange traded options Australia • Most requested product by our existing clients • The fastest growing product in the marketplace • Average 2023 market volumes are aroun
Slide 26: Our vision and 2023 highlights
Our vision and 2023 highlights Delivering a broad financial services offering spanning the globe Record numbers: 2023 was a record net operating income result outside of pandemic-driven periods Cash return with growth: We’re continuing to invest to diversify and grow our business with cash return to
Slide 27: Three year growth target on track and extending to 2026
Three year growth target on track and extending to 2026 Sustained forecast growth in net operating income Target to diversify and deliver sustained growth in net operating income Net operating income (£m) 400 • Growth: 3-year growth plan to 350 Institutional increase net operating income by 30% busi
Slide 28: Q&A
Q&A Cnic
Slide 29: Appendices
Appendices Cnic
Slide 30: Appendix 1: Our Tomorrow
Appendix 1: Our Tomorrow Taking a positive position In 2022 we introduced the Group’s Our Tomorrow sustainability strategy and its five core pillars structured to focus delivery on our material environmental, social and governance ("ESG") risks • Extensive review of material ESG risks, opportunities
Slide 31: Appendix 1: Our Tomorrow (cont.)
Appendix 1: Our Tomorrow (cont.) Taking a positive position Our Tomorrow: key strategic developments in 2023 • Significant actions taken to embed sustainability into our decision- making processes and into the overall operations • Identified 15 KPIs linked to our 7 key material issues, providing us
Slide 32: Appendix 2: Strike X Technologies
Appendix 2: Strike X Technologies Blockchain partnership with StrikeX Strike X Technologies. The world is changing. • Web 3.0 is a part of all of our future and just simply cannot be ignored • Digital assets are here to stay, and the use cases are endless, from fractional ownership of real assets, a
Slide 33: Appendix 3: Trading business selected KPIs by half year
Appendix 3 Trading business: selected KPIs by half year Trading gross client income (£m) 2021 2022 2023 H1 H2 Full year H1 H2 Full year H1 H2 Full year UK 63.3 59.9 123.2 47.6 59.5 107.1 61.3 53.5 114.8 Europe 28.3 25.4 53.7 20.6 30.5 51.1 31.5 29.8 61.3 APAC & Canada 82.0 76.4 158.4 58.8 71.5 130.3
Slide 34: Appendix 4: Invest Australia business KPIs
Appendix 4 Invest Australia business KPIs Net brokerage¹ (AUD m) 2021 2022 2023 H1 H2 Full year H1 H2 Full year H1 H2 Full year ANZ Retail 23.5 23.9 47.4 20.2 20.1 40.3 15.9 3.1 19.0 CMC Retail 7.6 7.3 14.9 6.9 6.5 13.4 5.7 14.1 19.8 White label (incl. ex-ANZ Partners) 6.5 6.6 13.1 6.1 6.1 12.2 5.1
Slide 35: Appendix 5: Institutional (B2B) and retail (B2C) revenue
Appendix 5 Institutional (“B2B”) and retail (“B2C”) revenue 2023 2022 Growth (£m) Growth (%) Net trading revenue (£m) B2C B2B Total B2C B2B Total B2C B2B Total B2C B2B Total Trading net revenue 173.0 60.1 233.1 185.5 44.1 229.6 (12.5) 16.0 3.5 (7%) 36% 1% Investing net revenue 14.6 23.3 37.9 9.6 38.
Slide 36: Appendix 6: Revenue composition
Appendix 6 Revenue composition 2023 Trading and Investing net revenue1 by asset class 2022 Trading and Investing net revenue1 by asset class Binary options Investing 0% 14% Investing Binary options Index 17% 1% 28% FX² Index 9% 41% Treasury 0% FX² 18% Commodity 22% Shares Shares 19% Treasury Commodi
Slide 37: Appendix 7: Income statement
Appendix 7 Income statement Group (£m) 2023 2022² YoY % Total revenue 325.1 326.6 - Rebates & levies (36.7) (44.7) 18% Net operating income1 288.4 281.9 2% Operating expenses (233.9) (188.3) (24%) Finance costs (2.3) (2.1) (7%) Profit before taxation 52.2 91.5 (43%) Taxation (10.8) (20.0) 46% Profit
Slide 38: Appendix 8: Operating expenses breakdown
Appendix 8 Operating expenses breakdown • Operating expense¹ increase of £46.2m (27%) primarily Group (£m) 2023 2022⁴ YoY % driven by strategic investment Net staff costs (excl. variable remuneration) 84.9 68.8 (23%) • Net staff costs increased by £16.1m (23%) due to: IT costs 33.7 28.7 (17%) • Incr
Slide 39: Appendix 9: Balance sheet
Appendix 9 Balance sheet Group (£m) 2023 2022 Variance % Non-current assets Intangible assets 35.3 30.3 17% Property, plant and equipment 22.8 23.2 (2%) Deferred tax assets 4.8 6.0 (21%) Financial investments 0.0 13.5 (100%) Trade and other receivables 2.7 1.8 48% Total non-current assets 65.6 74.8
Slide 40: Appendix 10: Own funds flow statement
Appendix 10 Own funds flow statement Group (£m) 2023 2022 YoY % Operating activities Profit before tax 52.2 91.5 (43%) Adjustments for: Depreciation and amortisation 15.6 12.4 (26%) Other non-cash adjustments 1.7 (1.1) 245% Tax paid (17.1) (14.7) (16%) Own funds generated from operating activities 5
Slide 41: Appendix 11: Client assets and prime broker requirements
Appendix 11 Client assets and prime broker requirements Client money “AUM” (£m) Broker margin requirements (£m) 575 250 550 Max - £222m Max - £215m 525 200 500 475 450 Max - £138m 150 425 400 375 100 350 325 50 300 275 250 0 0 1 2 3 20 21 22 0 1 2 3 20 21 22 -2 -2 -2 -2 -2 -2 -2 -2 p- p- p- p- p- p-
Slide 42: Appendix 12: Yearly client churn
Appendix 12 Yearly client churn (‘000s) 5 2 27 3 14 11 48 45 44 (13) (19) (28) 2021 2022 2023 Continuous New trader Reactivated Stopped trading 42
Slide 43: 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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