Business
CMC Markets : H1 2025 Results Presentation
CMC Markets : H1 2025 Results
About this update from Cmc Markets Plc
CMC MARKETS PLC 133 HOUNDSDITCH, +44 (0)20 7170 8200 CMCMARKETS.COM/GROUP LONDON, EC3A 7BX Results Presentation Half year ended 30 September 2024 21 November 2024 Introduction Today's Presenters Lord Peter Cruddas Chief Executive Officer Albert Soleiman Chief Financial Officer David Fineberg Deputy Chief Executive Officer Key Highlights Operational delivery driving revenue, margin and profit growth Strong financial performance with net operating income up 45%, driven by growth in our institutional business and increased trading across key assets Improved profitability with disciplined cost management boosting margins; profit before tax rose to £49.6 million with a robust profit before tax margin of 28% Continued technological innovation has led to high-profile partnerships , including Revolut and ASB Bank Successful soft launch of Revolut platform live in three European countries, with plans for phased rollout to additional regions Expanded product offerings with enhancements to cash equities and options, alongside upcoming launch of cash ISAs in the UK Management remains focused on further diversification of the business, through a balanced investment approach, with a view to delivering long-term shareholder value H1 2025 Results Presentation | 3 Financial update Albert Soleiman Chief Financial Officer Group Financial Metrics Strong financial performance demonstrating early success of diversification strategy Net operating income¹ (£m) FY23 FY24 H125 Net revenue mix 14% 9% 13% 86% 91% 87% FY23 FY24 H125 Trading net revenue Investing net revenue Profit before tax (£m) & profit before tax margin 2 (%) 31% 28% 24% 12% 65.3 36.6 (2)% 49.6 15.6 (2.0) FY23 FY24 H125 H1 H2 Basic earnings per share (p) FY23 FY24 H125 Net operating income represents total revenue net of introducing partner commissions and spread betting levies. Profit / (loss) before tax margin % is calculated as profit before tax as a percentage of net operating income. Half-on-half profit before tax margins showing small reduction, but year-on-year demonstrating strong growth. H1 2025 Results Presentation | 5 Financial Metrics: Trading Significant increase in net revenue, with strong performance across both B2C and B2B segments Trading net revenue (£m) Proportionate B2C/B2B split of turnover 2 30% 29% 31% 35% 38% FY23 FY24 H125 Revenue per active client 1 (£) 3,730 2,558 2,984 2,177 1,867 FY23 FY24 H125 H1 H2 70% 71% 69% 65% 62% H123 H223 H124 H224 H125 B2C B2B Active clients represent those individual clients who have traded with or held CFD or spread bet positions with CMC Markets or who traded on the stockbroking platform on at least one occasion during the period. Turnover represents the notional value of client trades. H1 2025 Results Presentation | 6 Financial Metrics: Investing Stronger investing performance supported by increase in AuA Investing net revenue (£m) FY23 FY24 H125 Investing net revenue: B2C and B2B mix 1 FY23 FY24 H125 B2B B2C Assets under administration (£bn) 41.1 40.5 40.5 39.6 37.7 FY23 FY24 H125 H1 H2 H1 2025 Results Presentation | 7 1. Shift in client mix from H2 2023 is driven by the migration of the ANZ Share Investing client base to CMC. Before migration, revenue from these clients was classified as B2B; subsequently, these clients are classified as B2C. Income Statement Group (£m) Trading net revenue Investing net revenue Interest income Other operating income Net operating income¹ Operating costs 2 Variable remuneration 3 Finance costs Loss on share and impairment of associates Profit / (loss) before taxation Profit / (loss) before tax margin 4 H1 2025 H1 2024 YoY % 131.3 87.4 50% 19.9 16.8 19% 23.4 16.1 46% 2.8 2.3 22% 177.4 122.6 45% (111.4) (121.9) 9% (12.5) (1.7) (>100%) (1.4) (0.9) (57%) (2.5) (0.1) (>100%) 49.6 (2.0) n/a 27.9% (1.6)% n/a Net operating income Net operating income of £177.4 million, up 45% (H1 2024: £122.6 million) and driven by: Strong performance in our trading business, with net revenue up 50% to £131.3 million (H1 2024: £87.4 million); Investing net revenue 19% higher at £19.9 million (H1 2024: £16.8 million) with strong performance driven by stronger trading of international equities; and Interest income up 46%, to £23.4 million (H1 2024: £16.1 million) as we continued to benefit from elevated global interest rates and a strong performance by our newly established treasury management division Operating costs Operating costs excluding variable remuneration, were £111.4 million (H1 2024: £121.9 million), down 9%, as the Group maintains a sharp focus on costs and disciplined approach to investment Variable remuneration higher in the period in line with improved levels of profitability Profitability Tax (14.3) (0.4) n/a Profit / (loss) after tax 35.3 (2.4) n/a Net operating income represents total revenue net of commissions and levies. Excludes variable remuneration. Includes share-based payments. Profit / (loss) before tax margin % is calculated as profit before tax as a percentage of net operating income. Strong net operating income performance and disciplined cost management driving increase in profitability and margins, with profit before tax of £49.6 million Profit before tax margin of 27.9%, up from (1.6)% at H1 2024 H1 2025 Results Presentation | 8 Liquidity & Regulatory Capital Regulatory capital Group (£m) Sep-24 Mar-24 Capital resources before regulatory adjustments 1 412.3 383.1 Less: regulatory adjustments (75.0) (43.0) Captial resources after regulatory adjustments 337.3 340.1 Own funds requirements² ("OFR") 77.9 109.0 OFR ratio % ³ 433% 312% Regulatory Capital Capital resources were broadly unchanged at £337.3 million with increases in retained earnings for the year being partially offset by the FY24 final dividend distribution and certain fixed income investment deductions The OFR ratio of 433% increased from 312% largely due to a reduction in own funds requirements Net available liquidity Group (£m) Sep-24 Mar-24 Own funds 332.1 325.8 Non-segregated client and partner funds 110.9 119.6 Total available liquidity 443.0 445.4 Blocked cash ⁴ (62.9) (68.5) Initial margin requirement at broker (133.5) (184.7) Net available liquidity 246.6 192.2 Liquidity Increase in own funds to £332.1m driven by profits for the year, offset by dividend payments and movements in working capital Resulting in an overall increase in net available liquidity due to the increase in own funds and a decrease in initial margin Common Equity Tier 1 capital - total audited capital resources and profits as at the end of the financial period, less foreseeable dividends. The minimum capital requirement in accordance with MIDIFPRU 4.3. The OFR ratio represents capital resources after regulatory adjustments as a percentage of OFR. Blocked cash relates to cash needed to support regulatory and overseas subsidiaries operational requirements. H1 2025 Results Presentation | 9 Financial Outlook Net operating income: Remain confident in delivering on guidance set out at the beginning of the year, with net operating income forecast to be in line with external market expectations 1 Remain focused on profit margins by leveraging our size and scale, driving further efficiencies and maintaining a disciplined and balanced approach to investment Operating costs: • • Ongoing programme to deliver synergies and drive further cost efficiencies across business lines Continue to expect operating costs, excluding variable remuneration and non-recurring charges, of around £225 million in FY25 FY25 effective tax rate expected to be consistent with FY24 at 28% 1. External market consensus for year ending 31 March 2025 is net operating income of £332.9 million. H1 2025 Results Presentation | 10