Cmc Markets Plc · LSE:CMCX
Cmc Markets — H1 2022 Earnings Presentation
43 slides from Cmc Markets's earnings presentation, Nov 17, 2021
Slide 1: Half year ended 30 September 2021
Half year ended 30 September 2021 17 November 2021
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 2022 highlights
H1 2022 highlights Record highs for client numbers and AUM in non-leveraged; AUM in leveraged at period-end high • H1 2022 leveraged net trading revenue at £101.0 million (H1 2021: £200.4 million). Leveraged client income retention for the period at 80% with active client numbers at 53,834 down 9% v
Slide 4: Financial performance
Financial performance Euan Marshall, CFO Cnic
Slide 5: Business continues to strengthen
Business continues to strengthen Core KPIs significantly above pre-pandemic levels In September, we reduced FY 2022 net operating income guidance to settle between £250-280million. This was due to subdued market activity through to the end of August. However, underlying core metrics continue to show
Slide 6: KPIs
KPIs Normalisation versus strong prior year comparative; continued progress versus 2020 Net operating income¹ (£m) Net trading revenue mix 200.4 15% 12% 12% 16% 19% 148.8 129.4 101.0 85.1 85% 88% 88% 84% 81% 230.9 178.9 149.7 126.7 102.3 H1 H2 H1 H2 H1 H2 2020 2021 2022 2020 2021 2022 H1 NOI H2 NOI
Slide 7: KPIs
KPIs Leveraged and non-leveraged business lines Active clients¹ and revenue per active client² (RPC) Gross client income³ (£m) and retention (%) Client money (AUM) (£m) 3,392 115% 2,595 2,427 2,047 94% 92% 1,877 82% 80% 173.6 549.4 557.1 59,082 61,313 161.7 49,815 53,834 137.1 424.3 127.0 41,603 103
Slide 8: Income statement
Income statement Non-leveraged resilience Group (£m) H1 2022 H1 2021 YoY % Net operating income Leveraged net trading revenue¹ 101.0 200.4 (50%) • Leveraged net trading revenue decreased by 50% (£99.4m) following an exceptionally strong prior Non-leveraged net trading revenue 24.2 26.3 (8%) year com
Slide 9: Operating cost bridge
Operating cost¹ bridge Higher costs driven by investment in headcount £5.3m increase in net staff costs driven by hires to assist the delivery of strategic projects 1.3 0.9 0.9 4.0 1.2 0.6 1.4 2.4 83.4 83.7 83.7 82.4 1.5 0.4 79.1 78.4 77.8 77.9 76.5 75.5 75.0 75.0 H1 2021 Ma rketing Irrecoverable Ot
Slide 10: Liquidity and regulatory capital
Liquidity and regulatory capital Strong capital and liquidity position to support strategic growth Regulatory Capital Regulatory capital • CET1 up £13.3m due to the addition of H1 profits less foreseeable dividends Group (£m) H1 2022 FY 2021 • Intangible assets increased as a result of the transacti
Slide 11: Client trading and regulation
11 Client trading and regulation David Fineberg, Deputy CEO Cnic
Slide 12: Leveraged client income
Leveraged client income Gross client income well in excess of pre-pandemic levels 2020 2021 2022 H1 2022 vs H1 2021 £m H1 H2 FY20 H1 H2 FY21 H1 £m % Gross leveraged client income¹ 103.5 137.1 240.6 173.6 161.7 335.3 127.0 (46.5) (27%) Rebates and levies (7.5) (9.0) (16.5) (10.1) (10.7) (20.8) (8.3)
Slide 13: 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 Normalisation of gross client income per client with sustained higher actives 300 H1 20
Slide 14: Regulatory matters
Regulatory matters ASIC impact broadly in line with expectations Australia B2C: Value of client trades per client (rebased) 100 • The Australian regulator, ASIC, implemented intervention measures on 90 the sale and distribution of CFDs on 29 March 2021 80 70 • Monthly client activity from Australia
Slide 15: Non-leveraged update
15 Non-leveraged update Matthew Lewis, Head of APAC & Canada Cnic
Slide 16: Non-leveraged update: active clients remain elevated
Non-leveraged update Active clients remain elevated following record year 30.0 Net trading revenue¹ • Non-leveraged trading net revenue is 8% (£2.1m) 25.0 lower year-on-year, following a record performance 20.0 year 15.0 AUD (m) • Brokerage revenue down 11% 10.0 • FX revenue up 20% 5.0 - • Active cl
Slide 17: Non-leveraged update: a pedigree of growth and innovation
Non-leveraged update A pedigree of growth and innovation AUA movement (£bn) 1 • The business continued to expand on its market leading 1 offering: 1 5 40 38 32 • Mobile and iPad App (iOS and Android) • New ‘look and feel’ UX • Trading strategies • Looking ahead to H2, we see further value and growth
Slide 18: ANZ Share Investing acquisition
ANZ Share Investing acquisition CMC acquires approximately 500,000 clients with assets in excess of $45 billion • In September, CMC signed an agreement with ANZ to transition their share trading client base to CMC. • It is anticipated to take 12 to 18 months to fully transition clients. • Post trans
Slide 19: Financial outlook
19 Financial outlook Euan Marshall, CFO Cnic
Slide 20: FY22 financial outlook
FY22 financial outlook Guidance re-iterated • Net operating income • Current trading conditions: • Fundamentals of the leveraged business remain strong: • Monthly active client numbers continue to remain around one third above the levels pre-pandemic • Client AUM remains around record levels • Activ
Slide 21: Strategic outlook and UK non-leveraged platform launch
Strategic outlook and UK non-leveraged platform launch Lord Cruddas, CEO Cnic
Slide 22: Reviewing strategic non-leveraged and leveraged business separation
Reviewing strategic non-leveraged and leveraged business separation Board to evaluate a prospective managed separation of the Group • On 10 June 2021 the Group announced with its full year 2021 results that as part of its strategy beyond leveraged trading (CFDs, it will be launching its new UK inves
Slide 23: Repositioning CMC
Repositioning CMC Significant benefits of repositioning towards non-leveraged products Non-leveraged Operational risk Plays to CMC’s Reduces wealth reduction Opportunity for Increases technology volatility in management greater product offering Reduced risk of strengths and earnings to growth trend
Slide 24: Market size and structure of UK D2C opportunity
Market size and structure of UK D2C opportunity Direct platform AUA growth has averaged over 16% p.a. since 2008¹ • UK direct platform AUA increased by 18% in the six UK D2C Platform AUA1 months to 31 March 2021 to £289.1bn, and has grown by over 16% p.a. since 2008 £350bn • Total share dealing volu
Slide 25: CMC to provide a multi-asset solution
CMC to provide a multi-asset solution Investors require a broad product offering What new investors are interested in… Currently invest in Considering investing in • New investors seek a multi-functional mobile platform covering both traditional and new Shares 49% 24% asset classes Cryptocurrency 41
Slide 26: CMC Markets' differentiators
CMC Markets’ differentiators Building on our existing strengths Built award-winning Deep access to markets platforms Built renowned trading app Front-end development through existing risk (Market Maker followed by Proven D2C and B2B expertise management systems and PB Next Generation) capabilities r
Slide 27: Evolution of CMC Invest in Australia
Evolution of CMC Invest in Australia A history of innovation and a pedigree of B2B partnerships Signed major agreement to transition ANZ customer base to CMC including approx. 500k customers and AUD$45bn AUM Rebranded to CMC Invest • ANZ customer migration • On-boarding efficiencies • New “look and
Slide 28: UK non-leveraged platform launch
UK non-leveraged platform launch Waiting lists to be launched imminently 28
Slide 29: Q&A
Q&A Cnic
Slide 30: Appendices
Appendices Cnic
Slide 31: Selected KPIs by half year
Appendix 1 Selected KPIs by half year Leveraged gross client income (£m) 2020 2021 2022 H1 H2 Full year H1 H2 Full year H1 UK 37.4 49.0 86.4 63.3 59.9 123.2 47.6 Europe 17.1 26.5 43.6 28.3 25.4 53.7 20.6 APAC & Canada 49.0 61.6 110.6 82.0 76.4 158.4 58.8 Total 103.5 137.1 240.6 173.6 161.7 335.3 127
Slide 32: ESMA client trading
Appendix 2 ESMA client trading¹ Leveraged net trading revenue (£m) 2020 2021 2022 H1 H2 Full year H1 H2 Full year H1 ESMA Professional 27.6 32.5 60.1 44.8 45.2 90.0 31.0 ESMA Retail 18.0 32.5 50.5 60.3 36.5 96.8 22.1 Total ESMA Region 45.6 65.0 110.6 105.1 81.7 186.8 53.1 Active clients 2020 2021 20
Slide 33: Non-leveraged KPIs
Appendix 3 Non-leveraged KPIs Net brokerage¹ (AUD m) 2020 2021 2022 H1 H2 Full year H1 H2 Full year H1 ANZ Retail 11.2 15.1 26.3 23.5 23.9 47.4 20.2 CMC Retail 4.3 5.2 9.5 7.6 7.3 14.9 6.9 White label (incl. ex-ANZ Partners) 3.8 4.6 8.4 6.5 6.6 13.1 6.1 CMC Partners 3.9 4.0 7.9 3.4 3.5 6.9 3.6 Total
Slide 34: Institutional (B2B) and retail (B2C) revenue
Appendix 4 Institutional (“B2B”) and retail (“B2C”) revenue H1 2022 H1 2021 Growth (£m) Growth (%) Net trading revenue (£m) B2C B2B Total B2C B2B Total B2C B2B Total B2C B2B Total CFD & spread bet net revenue 85.0 16.0 101.0 183.0 17.4 200.4 (98.0) (1.4) (99.4) (54%) (8%) (50%) Stockbroking net reve
Slide 35: Revenue composition
Appendix 5 Revenue composition H1 2022 leveraged and non-leveraged revenue1 by asset class H1 2021 leveraged and non-leveraged revenue1 by asset class Stockbroking 12% Shares Binary options Shares 17% 1% 6% Binary options Stockbroking 1% 17% FX² Treasury 7% 0% FX² Commodity 20% Index 16% 29% Index 5
Slide 36: Income statement
Appendix 6 Income statement Group (£m) H1 2022 H1 2021 Total revenue 149.1 256.1 (42%) Rebates & levies (22.4) (25.2) (11%) Net operating income1 126.7 230.9 (45%) Operating expenses (89.7) (88.9) (1%) Finance costs (1.0) (0.9) (11%) Profit before taxation 36.0 141.1 (74%) Taxation (8.1) (30.3) 73%
Slide 37: Operating expenses breakdown
Appendix 7 Operating expenses breakdown Group (£m) H1 2022 H1 2021 YoY % • Operating expense¹ increase of £4.6m (6%) largely Net staff costs (excl. variable remuneration) 34.1 28.8 (18%) driven by net staff costs, which increased by 18% due to: IT costs 14.2 12.7 (12%) • Increase in salaries as a re
Slide 38: Balance sheet
Appendix 8 Balance sheet 30 September 2021 Group (£m) 31 March 2021 Variance % (unaudited) Non-current assets Intangible assets 25.9 10.3 151% Property, plant and equipment 26.6 26.1 2% Deferred tax assets 5.3 6.4 (17%) Trade and other receivables 1.8 1.8 (1%) Total non-current assets 59.6 44.6 34%
Slide 39: Own funds flow statement
Appendix 9 Own funds flow statement Group (£m) H1 2022 H1 2021 YoY % Operating activities Profit before tax 36.0 141.1 (74%) Adjustments for: Finance costs 1.0 0.9 11% Depreciation and amortisation 6.4 5.5 17% Other non-cash adjustments (2.0) (2.9) 26% Tax paid (7.1) (13.6) 48% Own funds generated f
Slide 40: Client assets and prime broker requirements
Appendix 10 Client assets and prime broker requirements Assets under management (AUM) or total client money (£m) Broker margin requirements (£m) 600 250 Max - £222m 550 200 500 450 150 Max - £198m Max - £124m 400 100 Max - £85m 350 50 300 250 0 8 9 0 1 18 19 20 21 -1 -1 -2 -2 8 9 0 1 18 19 20 21 p-
Slide 41: Half yearly client churn
Appendix 11 Half yearly client churn (‘000s) 4 5 3 13 7 14 7 3 6 4 5 9 5 5 44 44 40 36 34 32 32 (9) (7) (11) (10) (13) (15) (18) H1 2019 H2 2019 H1 2020 H2 2020 H1 2021 H2 2021 H1 2022 Continuous New trader Reactivated Stopped trading 41
Slide 42: 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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