Cmc Markets Plc · LSE:CMCX
Cmc Markets — FY2022 Earnings Presentation
44 slides from Cmc Markets's earnings presentation, Jun 9, 2022
Slide 1: Year ended 31 March 2022
Year ended 31 March 2022 9 June 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: 2022 highlights: repositioning for next phase of growth
2022 highlights: repositioning for next phase of growth Record performance outside pandemic restrictions and new growth initiatives on track • Net operating income of £282 million (2021: £410 million), a record performance outside of pandemic restrictions • Launching new strategy to grow net operati
Slide 4: Investing to diversify and accelerate growth
Investing to diversify and accelerate growth Our core three-year initiatives 2023 will be a year of investment in strategic initiatives, which aim to deliver future revenue growth for the Group and further diversification - particularly into the institutional and non-leveraged markets. Investment in
Slide 5: Financial performance
Financial performance Euan Marshall, CFO Cnic
Slide 6: KPIs
KPIs Record net operating income outside of pandemic-driven periods Net operating income¹ (£m) Net trading revenue mix 349.2 13% 14% 17% 229.6 214.5 409.8 87% 86% 83% 281.9 252.0 2020 2021 2022 2020 2021 2022 NOI (£m) Leveraged net revenue (£m) Leveraged Non-leveraged Profit / (loss) before tax (£m
Slide 7: Leveraged and non-leveraged business lines
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) 104% £4,560 89% £3,750 £3,575 80% Leveraged 549.4 546.6 76,591 335.3 64,243 288.5 240.6 339.8 57,202 2020 2021 2022 2020 2021 2022
Slide 8: Income statement
Income statement Sustained performance following exceptional prior year Net operating income Group (£m) 2022 2021 YoY % Leveraged net trading revenue 229.6 349.2 (34%) • Net operating income of £281.9m was a record outside of an exceptional prior year comparative Non-leveraged net trading revenue 48
Slide 9: Operating cost bridge
Operating cost¹ bridge Higher costs driven by investment in headcount to deliver growth strategy £7.9m increase in net staff costs driven by hires to assist with the delivery of strategic projects 2.4 2.3 0.9 1.6 5.3 3.7 1.7 2.3 1.6 2.6 173.1 173.1 173.1 172.2 170.5 167.8 165.2 164.1 163.6 161.8 161
Slide 10: Liquidity and regulatory capital
Liquidity and regulatory capital Strong liquidity position retained Regulatory Capital Regulatory capital • CET1 broadly flat due to inclusion of profit for the year, offset by share buyback Group (£m) 2022 2021 programme and interim and proposed dividends Core Equity Tier 1 Capital1 344.5 339.8 • I
Slide 11: Client trading and regulation
11 Client trading and regulation David Fineberg, Deputy CEO Cnic
Slide 12: Leveraged net trading revenue
Leveraged net trading revenue Gross client income well in excess of pre-pandemic levels 2021 2022 % variance (FY22 vs) £m H1 H2 FY21 H1 H2 FY22 FY21 FY20 Leveraged gross client income¹ 173.6 161.7 335.3 127.0 161.5 288.5 (14%) 20% Rebates and levies (10.1) (10.7) (20.8) (8.3) (12.3) (20.6) 1% (24%)
Slide 13: Retail 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 Retail client trading trends Sustained higher active client base 2022 • After periods of extreme volatility a
Slide 14: APAC non-leveraged update
14 APAC non-leveraged update Matthew Lewis, Head of APAC & Canada Cnic
Slide 15: CMC Invest Australia update
CMC Invest Australia update Record active clients and AuA Net trading revenue¹ 120.0 • Non-leveraged trading net revenue is 12% (£6.8m) lower year-on- 100.0 year, however up 51% vs pre-pandemic normalised levels 80.0 • Brokerage revenue down 13% against prior year AUD (m) 60.0 • FX revenue down 4% 4
Slide 16: CMC Invest Australia update
CMC Invest Australia update Continued expansion of product and geography AuA movement (AUD $bn) 2.7 2.7 3.8 80.2 1.7 74.8 • The business continues to expand and invest in its market leading 69.4 offering: • Extended hours US trading • Mobile and iPad App (iOS and Android) • Commenced complete UX red
Slide 17: ANZ Share Investing acquisition
ANZ Share Investing (“ANZSI”) acquisition CMC acquires over 500,000 clients with assets in excess of $43 billion • Client transition is on track and on budget. It is anticipated to finish by the end of 2023 • Post transition, CMC will be able to offer clients: • Attractive pricing • Products: • Mobi
Slide 18: CMC Invest Singapore
CMC Invest Singapore 5 in 10 Singaporeans hold equity investments with a further c.20% looking to enter the market¹ Opportunity: • More than half (52%) the population over the age of 16 have an investment in stock or equities. This equates to roughly 1.5 million people2 • Market size: 342,000 online
Slide 19: Strategic update
19 Strategic update Lord Cruddas, CEO Cnic
Slide 20: Seven core strategic initiatives
Seven core strategic initiatives Summary of initiatives driving growth for three-year plan Delivery timelines 2023 2024 2025 Product offering upgrades Leveraged Technology upgrades Pricing initiatives CMC Invest UK ANZ Share Investing client migration Non-leveraged Key CMC Invest Singapore • Multi-r
Slide 21: Repositioning CMC
Repositioning CMC Significant benefits of diversification of revenue streams, customer base and geography Operational risk Increases Non-leveraged Plays to CMC’s Reduces reduction Opportunity for product offering wealth technology volatility in greater across multiple management Reduced risk of stre
Slide 22: Three-year targets
Three-year targets 30% growth in net operating income Major areas of growth in the next three years will be the leveraged B2B and Net operating income (£m) non-leveraged businesses, in line with the Group’s strategy of long term 400 diversification and higher growth This will be achieved through: 35
Slide 23: Institutional (B2B) growth trends
Institutional (“B2B”) growth trends Marked growth opportunity ahead Where we are now: Leveraged B2B volumes • Leveraged B2B volumes up 60% year-on-year from existing product • Expecting 20% CAGR in B2B volumes going forward 2023 objectives: • Position CMC Connect as a full-service fintech solution a
Slide 24: Market size and structure of UK D2C opportunity
Market size and structure of UK D2C opportunity Direct platform AuA growth has grown >15% p.a. since 2008 UK D2C Platform AuA1 • UK direct platform AuA increased by 30% for the year to Sept 2021 to c.£320bn, and has grown by over £350bn 600% since 2008 • First time investors remain focused on shares
Slide 25: CMC Invest: UK non-leveraged platform
CMC Invest: UK non-leveraged platform Diversification of income streams towards non-leveraged • Looking to the year ahead, we will continue to develop the UK platform offering: • New simplified onboarding journey • ISAs / Tax wrappers • Further UX upgrades • Adding multi-currency accounts, funds and
Slide 26: Financial outlook and Sustainability
26 Financial outlook and Sustainability Euan Marshall, CFO Cnic
Slide 27: Financial outlook: investing for future growth
Financial outlook Investing for future growth Increased investment in 2023 to support future growth. The greatest proportion of investment is focused on growth delivery, namely; • Marketing: Developing our customer base and promoting new products and services. • New marketing initiatives in both lev
Slide 28: Financial outlook: building for ongoing revenue growth
Financial outlook Building for ongoing revenue growth over the next three years • Net operating income • Solid platform for growth with ongoing confidence in the underlying quality and longevity of the existing leveraged and non- leveraged client base • Initiatives will be delivering additional reve
Slide 29: Sustainability: Our Tomorrow
Sustainability Our Tomorrow Our Tomorrow: Taking a positive position We empower our people and clients with the means to invest in a positive tomorrow Providing responsible and innovative technological solutions that protect, educate and inspire our people and clients to invest for the future, to un
Slide 30: Q&A
Q&A Cnic
Slide 31: Appendices
Appendices Cnic
Slide 32: 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 H2 Full year UK 37.4 49.0 86.4 63.3 59.9 123.2 47.6 59.5 107.1 Europe 17.1 26.5 43.6 28.3 25.4 53.7 20.6 30.5 51.1 APAC & Canada 49.0 61.6 110.6 82.0 76.4 158.4 58.8 71.5 130.3
Slide 33: Non-leveraged KPIs
Appendix 2 Non-leveraged KPIs Net brokerage¹ (AUD m) 2020 2021 2022 H1 H2 Full year H1 H2 Full year H1 H2 Full year ANZ Retail 11.2 15.1 26.3 23.5 23.9 47.4 20.2 20.1 40.3 CMC Retail 4.3 5.2 9.5 7.6 7.3 14.9 6.9 6.5 13.4 White label (incl. ex-ANZ Partners) 3.8 4.6 8.4 6.5 6.6 13.1 6.1 6.1 12.2 CMC P
Slide 34: Institutional (B2B) and retail (B2C) revenue
Appendix 3 Institutional (“B2B”) and retail (“B2C”) revenue 2022 2021 Growth (£m) Growth (%) Net trading revenue (£m) B2C B2B Total B2C B2B Total B2C B2B Total B2C B2B Total Leveraged net revenue 185.5 44.1 229.6 307.3 41.9 349.2 (121.8) 2.2 (119.6) (40%) 5% (34%) Non-leveraged net revenue 9.6 38.4
Slide 35: Revenue composition
Appendix 4 Revenue composition 2022 leveraged and non-leveraged revenue1 by asset class 2021 leveraged and non-leveraged revenue1 by asset class Stockbroking 12% Binary options Stockbroking 1% Binary options Index 1% 17% 28% FX² Treasury 8% 0% FX² 18% Commodity Index 15% 51% Shares 19% Treasury Comm
Slide 36: Income statement
Appendix 5 Income statement Group (£m) 2022 2021 YoY % Total revenue 326.6 462.1 (29%) Rebates & levies (44.7) (52.3) 15% Net operating income1 281.9 409.8 (31%) Operating expenses (187.6) (184.0) (2%) Finance costs (2.2) (1.8) (24%) Profit before taxation 92.1 224.0 (59%) Taxation (20.1) (45.9) 56%
Slide 37: Operating expenses breakdown
Appendix 6 Operating expenses breakdown Group (£m) 2022 2021 YoY % • Operating expense¹ increase of £5.3m (3%) primarily Net staff costs (excl. variable remuneration) 70.4 62.5 (13%) driven by strategic investment IT costs 28.7 26.2 (10%) • Net staff costs increased by £7.9m (13%) due to: Sales and
Slide 38: Balance sheet
Appendix 7 Balance sheet Group (£m) 2022 2021 Variance % Non-current assets Intangible assets 30.3 10.3 194% Property, plant and equipment 24.9 26.1 (4%) Deferred tax assets 6.0 6.4 (5%) Financial investments 13.5 - - Trade and other receivables 1.8 1.8 0% Total non-current assets 76.5 44.6 72% Curr
Slide 39: Own funds flow statement
Appendix 8 Own funds flow statement Group (£m) 2022 2021 YoY % Operating activities Profit before tax 92.1 224.0 (59%) Adjustments for: Finance costs 2.2 1.8 24% Depreciation and amortisation 12.9 11.2 15% Other non-cash adjustments (1.1) (4.1) 72% Tax paid (14.7) (33.6) 56% Own funds generated from
Slide 40: 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 525 200 500 475 450 150 425 400 375 100 Max - £85m 350 325 50 300 275 250 0 9 0 1 2 19 20 21 9 0 1 2 19 20 21 -1 -2 -2 -2 -1 -2 -2 -2 p- p- p- p- p- p-
Slide 41: Yearly client churn
Appendix 10 Yearly client churn (‘000s) 6 2 27 6 14 14 48 44 37 (16) (13) (28) 2020 2021 2022 Continuous New trader Reactivated Stopped trading 41
Slide 42: 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. Leveraged Technology
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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