Cmc Markets Plc · LSE:CMCX
Cmc Markets — H1 2023 Earnings Presentation
37 slides from Cmc Markets's earnings presentation, Nov 16, 2022
Slide 1: Half year ended 30 September 2022
Half year ended 30 September 2022 16 November 2022
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: H1 2023 highlights
H1 2023 highlights Net operating income up 21% versus H1 2022; growth plans on track H1 2023 financial highlights • Net operating income of £153.5 million (H1 2022: £126.7 million, up 21%) • Trading net revenue was £128.4 million (H1 2022: £101.0 million, up 27%) • Investing net revenue was £20.8 mi
Slide 4: Financial performance
Financial performance Euan Marshall, CFO Cnic
Slide 5: KPIs
KPIs 21% increase in net operating income; ongoing investment in growth strategies Net operating income¹ (£m) Net revenue mix 200.4 12% 16% 19% 16% 14% 148.8 128.6 128.4 101.0 88% 84% 81% 84% 86% 230.9 178.9 155.2 153.5 126.7 H1 H2 H1 H2 H1 H2 2021 2022 2023 2021 2022 2023 H1 NOI H2 NOI Trading (lev
Slide 6: Trading and investing business lines KPIs
KPIs Trading and investing business lines Active clients¹ and revenue per active client² (RPC) Gross client income³ (£m) and retention (%) Client money (AuM) (£m) 3,392 115% 2,558 92% 2,427 2,446 83% 80% 80% 1,877 Trading 173.6 161.7 549.4 557.1 546.6 161.5 505.6 59,082 61,313 154.9 424.3 53,834 52,
Slide 7: Income statement
Income statement Higher net operating income; lower PBT margin driven by investment Group (£m) H1 2023 H1 2022 YoY % Net operating income Trading net revenue 128.4 101.0 27% • Net operating income of £153.5m was £26.8m (21%) higher than prior Investing net revenue 20.8 24.2 (14%) year, driven by a 2
Slide 8: Operating cost bridge
Operating cost¹ bridge Higher costs driven by investment to deliver growth £6.5m increase in net staff costs driven by strategic projects 1.8 (1.4) 2.9 3.2 4.0 1.2 1.4 2.1 3.6 105.9 106.3 106.3 103.0 4.4 99.8 94.7 95.9 93.3 91.2 87.5 83.1 83.1 H1 2022 Ma rketing FSCS levy IT costs FX variance Bank c
Slide 9: Liquidity and regulatory capital
Liquidity and regulatory capital Strong capital and liquidity position retained during period of strategic investment Regulatory capital Regulatory Capital Group (£m) H1 2023 FY 2022 • CET1 has increased slightly due to inclusion of profit for the year, offset by the proposed interim dividend Core E
Slide 10: Financial outlook
Financial outlook Building for ongoing revenue growth over the next three years • Net operating income • So far in H2, trading conditions across both the trading and investing businesses have been consistent with the first half • Strategic initiatives remain on track • We remain confident in our tar
Slide 11: Trading business update
11 Trading business update David Fineberg, Deputy CEO Cnic
Slide 12: Trading net revenue
Trading net revenue Higher gross client income drives increase 2021 2022 2023 H1 2023 vs H1 2022 £m H1 H2 FY21 H1 H2 FY22 H1 £m % Trading gross client income¹ 173.6 161.7 335.3 127.0 161.5 288.5 154.9 27.9 22% Rebates and levies (10.1) (10.7) (20.8) (8.3) (12.3) (20.6) (11.5) (3.2) (38%) Trading net
Slide 13: Trading business update: What we're working on
Trading business update What we’re working on Building-out the environment for all our clients' trading needs • Mobile UX in readiness for cash equities • Alpha proposition roll-out • MT4/5 enhancements • Trading analytics roll out Why are we doing this? • Product and revenue diversification • Grow
Slide 14: Investing business update (APAC)
14 Investing business update (APAC) Matthew Lewis, Head of APAC & Canada Cnic
Slide 15: CMC Invest Australia update
CMC Invest Australia update Performance remains significantly above pre-pandemic levels Net trading revenue¹ 50 • H1 net operating income is 9% lower year-on-year driven by: • Net trading revenue which was 14% (£3.4m) down year-on-year, however up 40 44% (£6.3m) vs pre-pandemic normalised levels AUD
Slide 16: CMC Invest Australia update: Investing for the future
CMC Invest Australia update Investing for the future AUA movement (AUD $bn) 0.7 1.0 2.9 • Significant progress made in H1 and looking ahead 2.0 (13.4) 2.7 to H2, we will: • Deliver ongoing platform enhancements • Complete the ANZ Share Investing client 80.2 74.8 70.7 migration • Launch new physical
Slide 17: Strategic update
17 Strategic update Lord Cruddas, CEO Cnic
Slide 18: Our seven core strategic initiatives and progress in FY23
Our seven core strategic initiatives and progress made so far in FY23 Summary of initiatives driving 30% revenue growth over the next three years 2023 Progress Seven core strategic initiatives Pricing initiatives Trading ü Price+ Trading ü FX active ü MT4 enhancements ANZ Share Investing client migr
Slide 19: Strong Institutional (B2B) growth
Strong Institutional (“B2B”) growth Clear opportunity ahead to take advantage of the significant global FX market Strong volume growth in B2B Where we are now: • H1 2023 volumes in the B2B trading business up >60% year-on-year. Recent growth trends sustained. $7.5 trillion traded • Expecting annual
Slide 20: CMC Invest UK: Our new UK platform
CMC Invest UK: Our new UK platform Launched in September 2022 What do we have on the platform now? Multi-currency accounts – beta launch ESG screening ISAs – beta launch What products will we have by the end of FY23? Mutual funds Transfers and subscriptions What’s to come in FY24? SIPPs Expanded mar
Slide 21: CMC Invest: Singapore
CMC Invest: Singapore Launching in March 2023 CMC Invest Singapore will launch with: • Equity market access to 16 global markets and over 40,000 instruments including: • ETFs • Subscription pricing model • New website • New onboarding journey – facial and digital recognition • New funding solution –
Slide 22: Three-year target remains on track
Three-year target remains on track 30% growth in net operating income In line with the Group’s strategy of long-term diversification and growth, our areas of Net Operating Income (£m) focus over the next three years are: 400 +30% 350 Institutional business expansion 300 250 Invest platform expansion
Slide 23: Q&A
Q&A Cnic
Slide 24: Appendices
Appendices Cnic
Slide 25: Trading (leveraged) KPIs by half year
Appendix 1 Trading (leveraged) KPIs by half year Trading gross client income (£m) 2021 2022 2023 H1 H2 Full year H1 H2 Full year H1 UK 63.3 59.9 123.2 47.6 59.5 107.1 61.3 Europe 28.3 25.4 53.7 20.6 30.5 51.1 31.5 APAC & Canada 82.0 76.4 158.4 58.8 71.5 130.3 62.1 Total 173.6 161.7 335.3 127.0 161.5
Slide 26: Investing (non-leveraged) KPIs by half year
Appendix 2 Investing (non-leveraged) KPIs by half year Net brokerage¹ (AUD m) 2021 2022 2023 H1 H2 Full year H1 H2 Full year H1 ANZ Retail 23.5 23.9 47.4 20.2 20.1 40.3 5.7 CMC Retail 7.6 7.3 14.9 6.9 6.5 13.4 15.9 White label (incl. ex-ANZ Partners) 6.5 6.6 13.1 6.1 6.1 12.2 5.1 CMC Partners 3.4 3.
Slide 27: Institutional (B2B) and retail (B2C) revenue
Appendix 3 Institutional (“B2B”) and retail (“B2C”) revenue H1 2023 H1 2022 Growth (£m) Growth (%) Net trading revenue (£m) B2C B2B Total B2C B2B Total B2C B2B Total B2C B2B Total Trading net revenue 92.3 36.1 128.4 85.0 16.0 101.0 7.3 20.1 27.4 9% 125% 27% Investing net revenue 4.4 16.4 20.8 4.9 19
Slide 28: Revenue composition
Appendix 4 Revenue composition H1 2023 net revenue1 by asset class H1 2022 net revenue1 by asset class Binary options 0% Stockbroking 14% Stockbroking Binary options 19% Index 1% 28% Index FX² 39% 17% FX 19% Treasury Shares 0% Commodity 16% 17% Shares Commodity 13% Treasury 16% 1% H1 2023 Trading ne
Slide 29: Income statement
Appendix 5 Income statement Group (£m) H1 2023 H1 2022 YoY % Total revenue 174.4 149.1 17% Introducing partner commissions and betting levies (20.9) (22.4) (6%) Net operating income1 153.5 126.7 21% Operating expenses (115.6) (89.7) (29%) Finance costs (1.3) (1.0) (33%) Profit before taxation 36.6 3
Slide 30: Operating expenses breakdown
Appendix 6 Operating expenses breakdown Group (£m) H1 2023 H1 2022 YoY % • Operating expense¹ increase of £23.2m (28%) Net staff costs (excl. variable remuneration)⁴ 40.0 33.5 (19%) • Net staff costs increased by £6.5m (19%) due to: IT costs 16.3 14.2 (15%) • Increase in salaries, driven by a higher
Slide 31: Balance sheet
Appendix 7 Balance sheet 30 September 2022 Group (£m) 31 March 2022 Variance % (unaudited) Non-current assets Intangible assets 33.5 30.3 10% Property, plant and equipment 25.1 24.9 1% Deferred tax assets 6.0 6.0 - Financial investments 14.4 13.5 7% Trade and other receivables 2.3 1.8 26% Total non-
Slide 32: Own funds flow statement
Appendix 8 Own funds flow statement Group (£m) H1 2023 FY 2022 YoY % Operating activities Profit before tax 36.6 92.1 (60%) Adjustments for: Finance costs 1.3 2.2 (39%) Depreciation and amortisation 7.3 12.9 (44%) Other non-cash adjustments 2.2 (1.1) 299% Tax paid (9.3) (14.7) 37% Own funds generate
Slide 33: Client assets and prime broker requirements
Appendix 9 Client assets and prime broker requirements Client money (“AUM” - £m) Broker margin requirements (£m) 575 250 550 Max - £222m Max - £215m 525 200 500 475 450 150 Max - £138m 425 400 375 100 Max - £85m 350 325 50 300 275 250 0 0 1 2 19 20 21 22 9 0 1 2 19 20 21 22 -2 -2 -2 -1 -2 -2 -2 p- p
Slide 34: Trading business: Half yearly client churn
Appendix 10 Trading business: Half yearly client churn (‘000s) 4 5 3 13 4 7 3 14 6 6 44 44 42 41 40 (10) (12) (11) (15) (18) H1 2021 H2 2021 H1 2022 H2 2022 H1 2023 Continuous trader New trader Reactivated Stopped trading 34
Slide 35: Summary of initiatives driving growth for three-year plan
Appendix 11 Summary of initiatives driving growth for three-year plan Region / office Description Product offering Delivering a technical solution which enhances our institutional offering through lower latency and additional All upgrades products such as FX Spot and physicals. Trading Technology Pr
Slide 36: 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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