Cmc Markets Plc · LSE:CMCX
Cmc Markets — FY2021 Earnings Presentation
41 slides from Cmc Markets's earnings presentation, Jun 10, 2021
Slide 1: Year ended 31 March 2021
Year ended 31 March 2021 10 June 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: 2021 highlights
2021 highlights Delivering record profits whilst evolving the business • Net operating income growth of 63% to £409.8m • CFD gross client income increase of 39%, underpinned by a 34% increase in annual active clients with volatility providing trading opportunities • CFD revenue per client up 22% to
Slide 4: 2021 overview
2021 overview Delivering a bespoke proposition that is constantly evolving Continuous improvements to platform functionality to enhance client service and remain a market leader Technology and operational excellence • Providing uninterrupted access to the financial markets • Continually improving th
Slide 5: Financial performance
Financial performance Euan Marshall, CFO Cnic
Slide 6: KPIs
KPIs Record year across all key metrics Active clients¹ and Revenue per active client² (RPC) CFD gross client income³ (£m) and retention (%) Stockbroking net trading revenue (£m) and active clients 232 £4,560 104% 89% £3,750 182 51% £2,068 76,591 54.8 335.3 123 216.1 240.6 31.8 57,202 53,308 15.5 20
Slide 7: Income statement
Income statement Record performance delivered Net operating income Group (£m) 2021 2020 YoY % • 63% (£134.7m) increase in CFD net trading revenue, with CFD and spread bet net trading revenue¹ 349.2 214.5 63% significant growth in all regions Stockbroking net trading revenue 54.8 31.8 72% • Gross CFD
Slide 8: Operating cost bridge
Operating cost¹ bridge Higher costs driven by increased client interest and strategic investment £15.9m increase driven by heightened £14.6m increase primarily driven by client interest and trading activity investment in strategic projects 1.5 0.7 4.2 1.4 2.1 0.5 2.6 12.8 0.7 2.0 2.1 2.8 9.7 170.7 1
Slide 9: Liquidity and regulatory capital
Liquidity and regulatory capital Strong liquidity position retained Regulatory capital Regulatory Capital Group (£m) 2021 2020 • CET1 up £90.6m due increase in capital reserves less foreseeable dividends • Capital ratio of 20.5% (2020: 23.3%) Core Equity Tier 1 Capital1 338.2 247.6 Less: intangibles
Slide 10: Client trading and regulation
10 Client trading and regulation David Fineberg, Deputy CEO Cnic
Slide 11: CFD client income
CFD client income Increased client activity and exceptional client income retention drive results 2020 2021 2021 vs 2020 £m H1 H2 FY20 H1 H2 FY21 £m % Gross CFD client income¹ 103.5 137.1 240.6 173.6 161.7 335.3 94.7 39% Rebates and levies (7.5) (9.0) (16.5) (10.1) (10.7) (20.8) (4.3) (26%) Net CFD
Slide 12: 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 Larger active client base drives future value 250 • After peaking at the height of the
Slide 13: Other regulatory matters
Other regulatory matters Regulatory uncertainty lifted • Regulatory update • Australia: Product intervention measures related to the issuance and distributions of CFDs to retail clients were implemented from 29 March 2021. As such, these measures have had an immaterial effect on 2021 results. The lo
Slide 14: Stockbroking update
14 Stockbroking update Matthew Lewis, Head of APAC & Canada Cnic
Slide 15: Stockbroking: record results
Stockbroking Record results driven by unprecedented growth and favourable market conditions 30 Net trading revenue² (AUD m) 25 • Stockbroking net revenue is 72% or £23.0m higher year-on-year as a result of continued strong growth in the market. 20 15 • Brokerage revenue up 68% year-on-year, FX reven
Slide 16: Stockbroking: user experience enhancements
Stockbroking User experience enhancements to drive future growth • Stockbroking continued to expand on its market-leading international offering Revenue per client (AUD) through: 450 • Introduction of zero brokerage across four major international markets for CMC Retail clients 400 • Addition of new
Slide 17: Financial outlook
17 Financial outlook Euan Marshall, CFO Cnic
Slide 18: FY22 financial outlook
FY22 financial outlook • Net operating income • The Group has confidence in the underlying performance of the business when market activity normalises, with client income retention expected to be in excess of 80% • We believe that current active client levels are likely to be sustainable, with new c
Slide 19: Strategic update
19 Strategic update Lord Cruddas, CEO Cnic
Slide 20: Strategic overview
Strategic overview Our goal is to constantly provide a superior and unrivalled trading experience for our clients Our scalable platforms offer a wide range of financial products…. Contracts for Multi-asset class Outsourced trading difference (”CFDs”) Stockbroking liquidity platform technology and sp
Slide 21: Strategic timeline
Strategic timeline The business was started in 1989 with a simple ethos: to make financial markets truly accessible for investors This belief remains at the heart of everything we do, and staying true to that has been pivotal to our success Previous areas of focus • Build white labelling solution 20
Slide 22: We are a technology-driven business
Strategic update We are a technology-driven business Ongoing investment Proprietary technology Capability Scalability Reliability Innovation Supporting an Increasing client Market-leading platform Data gathering, analysis expanding range of numbers and white label up-time, even in periods and master
Slide 23: Key differentiators
Strategic update Key differentiators There are a number of factors which differentiate CMC and drive our success: • Data and analytics inform our risk management decisions and allows us to maximise revenues • Continued focus on our high value client base, demonstrated through strong revenue per clie
Slide 24: Q&A
Q&A Cnic
Slide 25: Appendices
Appendices Cnic
Slide 26: Our values
Appendix 1 Our values Put our clients first Lead with quality Set the standards Our business is built Our commitment to quality We are clear, open and around our clients, we are is at the heart of our culture. honest with our clients, and proud to have long-lasting Whatever we do, we do it with each
Slide 27: What differentiates CMC
Appendix 2 What differentiates CMC Years of data intelligence feed into “TARDIS” underpins and generates real-time real-time automated trading pricing, automates trade execution and decisions optimises our risk management process Data Risk capability management The ability to capture greater Industr
Slide 28: Sustainability
Appendix 3 Sustainability • Key environmental impacts are from running our global offices and business travel • Our office in Sydney has the highest green energy rating in Australia Environmental • We have well-established waste management initiatives in place • Following the move to a flexible work
Slide 29: Selected KPIs by half year
Appendix 4 Selected KPIs by half year CFD gross client income (£m) 2019 2020 2021 H1 H2 Full year H1 H2 Full year H1 H2 Full year UK 41.5 41.8 83.3 37.4 49.0 86.4 63.3 59.9 123.2 Europe 24.2 19.0 43.2 17.1 26.5 43.6 28.3 25.4 53.7 APAC & Canada 43.0 46.6 89.6 49.0 61.6 110.6 82.0 76.4 158.4 Total 10
Slide 30: ESMA client trading
Appendix 5 ESMA client trading¹ CFD net trading revenue (£m) 2019 2020 2021 H1 H2 Full year H1 H2 Full year H1 H2 Full year ESMA Professional 19.6 27.6 32.5 60.1 44.8 45.2 90.0 ESMA Retail 10.9 18.0 32.5 50.5 60.3 36.5 96.8 Total ESMA Region 43.9 30.5 74.4 45.6 65.0 110.6 105.1 81.7 186.8 Active cli
Slide 31: Stockbroking KPIs
Appendix 6 Stockbroking KPIs Net brokerage¹ (AUD m) 2019 2020 2021 H1 H2 Full year H1 H2 Full year H1 H2 Full year ANZ Bank white label² 1.4 11.0 12.4 13.9 17.8 31.7 25.9 26.3 52.2 St. George white label 0.8 1.7 2.4 2.1 2.8 4.9 4.0 3.9 7.9 CMC Retail 3.5 3.4 6.9 4.3 5.1 9.4 7.6 7.2 14.8 CMC Partners
Slide 32: Institutional (B2B) and retail (B2C) revenue
Appendix 7 Institutional (“B2B”) and retail (“B2C”) revenue 2021 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 307.3 41.9 349.2 186.8 27.7 214.5 120.5 14.2 134.7 65% 51% 63% Stockbroking net revenue 10.4 44.4
Slide 33: Revenue composition
Appendix 8 Revenue composition 2021 CFD and Stockbroking revenue1 by asset class 2020 CFD and Stockbroking revenue1 by asset class Stockbroking 13% Binary options 1% Stockbroking Binary options 12% 2% FX² Treasury 8% 0% Index FX² 44% 18% Commodity Index 15% 51% Treasury Commodity Shares 1% 14% 13% S
Slide 34: Income statement
Appendix 9 Income statement Group (£m) 2021 2020 YoY % Total revenue 462.1 298.1 55% Rebates & levies (52.3) (46.1) (14%) Net operating income1 409.8 252.0 63% Operating expenses (184.0) (151.3) (22%) Finance costs (1.8) (2.0) 14% Profit before taxation 224.0 98.7 127% Taxation (45.9) (11.8) (291%)
Slide 35: Operating expenses breakdown
Appendix 10 Operating expenses breakdown Group (£m) 2021 2020 YoY % • Operating expense¹ increase of £30.5m (22%) driven both by Net staff costs (excl. variable remuneration) 62.5 53.8 (16%) variable costs related to heightened client trading activity, and IT costs 26.2 21.5 (22%) by strategic inves
Slide 36: Balance sheet
Appendix 11 Balance sheet Group (£m) 2021 2020 Variance % Non-current assets Intangible assets 10.3 4.6 125% Property, plant and equipment 26.1 28.1 (7%) Deferred tax assets 6.4 16.5 (61%) Trade and other receivables 1.8 2.3 (21%) Total non-current assets 44.6 51.5 (13%) Current assets Trade and oth
Slide 37: Own funds flow statement
Appendix 12 Own funds flow statement Group (£m) 2021 2020 YoY % Operating activities Profit before tax 224.0 98.7 127% Adjustments for: Finance costs 1.8 2.0 (14%) Depreciation and amortisation 11.2 11.0 3% Other non-cash adjustments (4.1) 3.4 (221%) Tax paid (33.6) (13.1) (157%) Own funds generated
Slide 38: Client assets and prime broker requirements
Appendix 13 Client assets and prime broker requirements Client assets under management (£m) Broker margin requirements (£m) 575 250 Max - £222m 550 525 200 500 475 450 150 425 Max - £124m 400 375 100 Max - £85m 350 325 50 300 275 250 0 8 9 0 1 18 19 20 8 9 0 1 18 19 20 -1 -1 -2 -2 -1 -1 -2 -2 p- p-
Slide 39: Yearly client churn
Appendix 14 Yearly client churn (‘000s) 6 27 3 6 10 14 40 44 37 (16) (13) (19) 2019 2020 2021 Continuous New trader Reactivated Stopped trading 39
Slide 40: 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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