Cmc Markets Plc · LSE:CMCX
Cmc Markets — H1 FY2020 Earnings Presentation
30 slides from Cmc Markets's earnings presentation, Nov 21, 2019
Slide 1: Half year ended 30 September 2019
Half year ended 30 September 2019 21 November 2019
Slide 2: Introduction
Introduction Peter Cruddas, CEO Financial performance: Euan Marshall, CFO Client trading and regulation: David Fineberg, Deputy CEO Strategic update: Peter Cruddas, CEO Cnic
Slide 3: Growth driven by higher revenue per client and technology partnerships
Growth driven by higher revenue per client and technology partnerships Diversifying through technology • Strong first half, with PBT of £30.1m driven by a 45% increase in net operating income • Significantly improved CFD revenue performance through higher retention of client income following changes
Slide 4: Financial performance
Financial performance Euan Marshall, CFO Cnic
Slide 5: KPIs
KPIs Return to strong profitability CFD net client income¹ (£m) and retention (%) income²4 (£m) Net operating income Active clients³ and Revenue per active client4 (RPC) 90.8 82% 84.6 85.1 2,047 1,814 1,874 74% 72% 1,413 58% 63.1 1,162 44% 47.1 102.3 113.9 89.6 97.5 46,634 48,432 44,697 103.8 70.6 4
Slide 6: Income statement
Income statement Growth across both the CFD and stockbroking businesses Group (£m) H1 2020 H1 2019 YoY % Net operating income CFD and spread bet net revenue¹ 85.1 63.1 35% • CFD net revenue increase of 35% (£22.0m) Stockbroking net revenue 14.5 5.5 164% • Net CFD client income slightly lower than H1
Slide 7: Institutional (B2B) and retail (B2C) revenue
Institutional (“B2B”) and retail (“B2C”) revenue Growing revenue from technology partnerships diversifying revenue streams H1 2020 H1 2019 Growth (£m) Growth (%) Net trading revenue (£m) B2C B2B Total B2C B2B Total B2C B2B Total B2C B2B Total CFD & spread bet net revenue 69.0 16.1 85.1 49.1 14.0 63.
Slide 8: Operating expenses
Operating expenses Cost increase driven by growing Stockbroking business and variable remuneration Group (£m) H1 2020 H1 2019 YoY % • Operating expense¹ increase of £4.0m (7%) driven by the Net staff costs (excl. variable remuneration) 26.7 23.5 14% enlarged Stockbroking business, where costs were £
Slide 9: Liquidity and regulatory capital
Liquidity and regulatory capital Regulatory capital Regulatory Capital Group (£m) H1 2020 FY 2019 • CET1 up £19.3m due to profit after tax less declared dividend Core Equity Tier 1 Capital1 222.4 203.1 • Capital ratio of 18.0% (FY19: 17.4%) Less: intangibles and deferred tax assets (13.7) (10.5) Liq
Slide 10: Client trading and regulation
10 Client trading and regulation David Fineberg, Deputy CEO Cnic
Slide 11: Risk management approach
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 Risk management approach • CMC aims to optimise the percentage of client transaction fees (“client income”) t
Slide 12: CFD client income
CFD client income 2018 2019 2020 Variance (%) £m H1 H2 H1 H2 H1 Var vs H1 Var vs H2 Gross CFD client income¹ 114.8 126.4 108.7 107.3 103.5 (5%) (4%) Rebates and levies (11.0) (12.5) (11.1) (9.6) (7.5) 32% 21% Net CFD client income 103.8 113.9 97.6 97.7 96.0 (2%) (2%) Client (profits) / losses (1.1)
Slide 13: Other regulatory matters
Other regulatory matters Staying ahead of regulatory change • Regulatory update • Australia: ASIC were granted intervention powers in April 2019, similar to those given to ESMA • A consultation period is currently underway, with the proposed intervention measures broadly in line with those imposed b
Slide 14: Strategic update
14 Strategic update Peter Cruddas, CEO Cnic
Slide 15: Strategic update
Strategic update We are beginning to see the benefits of refocusing our strategy, as demonstrated by H1 financial results Initiative update Underpinned by technology Established markets • Technology used to maximise the % of revenue retained • Strong base of client income • Proprietary technology ea
Slide 16: FY20 outlook
FY20 outlook Confident of increased profitability • Net operating income • Following strong CFD net revenue performance at the start of H2 2020, it is now expected that net operating income will be in excess of £180 million • We expect to see increased revenues due to: • Revised risk management stra
Slide 17: Q&A
Q&A Cnic
Slide 18: Appendices
Appendices Cnic
Slide 19: Selected KPIs by half year
Appendix 1 Selected KPIs by half year CFD net client income (£m) 2018 2019 2020 H1 H2 Full year H1 H2 Full year H1 UK 38.1 42.0 80.1 35.4 36.2 71.6 33.3 Europe 28.6 32.0 60.6 22.8 18.4 41.2 16.5 APAC & Canada 37.1 39.9 77.0 39.4 43.1 82.5 46.2 Total 103.8 113.9 217.7 97.6 97.7 195.3 96.0 CFD net rev
Slide 20: ESMA client trading
Appendix 2 ESMA client trading CFD net revenue (£m) H1 2019 H2 2019 H1 2020 Var % ESMA Professional 19.6 27.6 41% ESMA Retail 10.9 18.0 74% Total ESMA region 43.9 30.5 45.6 50% Active clients H1 2019 H2 2019 H1 2020 Var % ESMA Professional 2,095 2,002 (4%) ESMA Retail 21,202 21,122 - Total ESMA regi
Slide 21: Revenue composition
Appendix 3 Revenue composition H1 2020 CFD and Stockbroking revenue1 by asset class H1 2019 CFD and Stockbroking revenue1 by asset class Stockbroking Binary options 6% Shares 3% 9% Binary options Stockbroking Shares 2% 15% 16% FX² 17% FX² 18% Treasury 0% Index Commodity 46% 12% Treasury Index 1% 45%
Slide 22: Income statement
Appendix 4 Income statement Group (£m) H1 2020 H1 2019 YoY % Total revenue 124.9 84.2 48% Rebates & levies (22.6) (13.6) (66%) Net operating income1 102.3 70.6 45% Operating expenses (71.2) (62.7) (13%) Finance costs (1.0) (0.7) (49%) Profit before taxation 30.1 7.2 318% Taxation (2.6) 0.6 (536%) Pr
Slide 23: Balance sheet
Appendix 5 Balance sheet 30 September 2020 Group (£m) 31 March 2019 Variance % (unaudited) Non-current assets Intangible assets 4.5 5.0 (8%) Property, plant and equipment 30.7 18.1 69% Financial investments - 11.3 (100%) Deferred tax assets 14.7 11.6 26% Trade and other receivables 2.8 2.7 1% Total
Slide 24: Own funds flow statement
Appendix 6 Own funds flow statement Group (£m) H1 2020 H1 2019 YoY % Operating activities Profit before tax 30.1 7.2 318% Adjustments for: Finance costs 1.0 0.7 49% Depreciation and amortisation 5.8 3.5 67% Other non-cash adjustments 1.0 0.8 20% Tax paid (6.5) (4.6) (43%) Own funds generated from op
Slide 25: Client assets and prime broker requirements
Appendix 7 Client assets and prime broker requirements Client assets under management (£m) Broker margin requirements (£m) 360 180 340 160 Max - £134m 140 320 Max - £124m Max - £114m 120 300 100 280 Max - £82m 80 260 60 240 40 220 20 200 0 6 7 8 9 16 17 18 19 6 7 8 9 16 17 18 19 -1 -1 -1 -1 -1 -1 -1
Slide 26: Our institutional offering
Appendix 8 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 b
Slide 27: Criteria for professional designations
Appendix 9 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 28: 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 29: Slide 29
Slide 30: Trade your way
Trade your way