REG - CMC Markets Plc - Final results for the year ended 31 March 2024
20/06/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240620:nRST2004Ta&default-theme=true
RNS Number : 2004T CMC Markets Plc 20 June 2024
20 June 2024
CMC MARKETS PLC
("CMC" the "Group" or the "Company")
Final results for the year ended 31 March 2024
Net operating income at a post-COVID high. Adjusted profit before tax up 52%.
Cost efficiency programme in place to drive profit margin expansion.
Summary Financials
FY24 FY23 Change %
Net operating income (£m) 332.8 288.4 15%
Trading net revenue (£m) 259.1 233.1 11%
Investing net revenue (£m) 34.0 37.9 (10)%
Other income (£m) 39.7 17.4 128%
Adjusted profit before tax (£m) 80.0 52.6 52%
Profit before tax (£m) 63.3 52.2 21%
Basic earnings per share (pence) 16.7 14.7 14%
Ordinary dividend per share (pence) 8.3 7.4 12%
Note: Net operating income represents total revenue net of introducing partner
commissions and levies. Trading net revenue represents gross trading income
net of rebates, levies and risk management gains or losses. Investing net
revenue represents stockbroking and related services revenue net of rebates.
Adjusted profit before tax is adjusted for one-off costs relating to
impairment of intangible assets and global headcount restructuring.
Financial Highlights
· Net operating income of £332.8 million (FY23: £288.4 million), up
15%, marks a new record-high outside the COVID-19 pandemic period and was
driven by consistently strong performance throughout H2.
o Trading net revenue grew by 11%, to £259.1 million (FY23: £233.1
million), with strong performance in both the retail and institutional
segments of the business. Of our total trading net revenue, £74.8 million was
made up of fixed transactional income, which constitutes financing and
commissions. Institutional segment also continues to grow as a proportion of
overall net revenue.
o Investing net revenue 10% lower than prior year at £34.0 million (FY23:
£37.9 million) primarily driven by unfavourable movements in FX from a weaker
Australian Dollar. On a constant currency basis investing net revenue was 3%
lower year-on-year.
o Other income of £39.7 million (FY23: £17.4 million) up 128% due to
higher global interest rates driving income from client and own cash balances.
· Operating expenses(1), excluding variable remuneration, were £249.5
million (FY23: £217.2 million), including a non-recurring £12.3 million
impairment charge relating to internally-developed platforms for the UK Invest
and cash equities offerings and £4.3 million of one-off costs relating to
actions to reduce global headcount.
· Regulatory total Own Funds Requirements (OFR) ratio of 312% (FY23:
369%) and net available liquidity of £192.2 million (FY23: £184.2 million)
· Statutory profit before tax of £63.3 million (FY23: £52.2
million), up 21%, reflecting net operating income outperformance and steps
taken on costs.
· Adjusted profit before tax, excluding non-recurring costs, of
£80.0 million was up 52%.
· Final dividend of 7.3 pence per share (FY23: 3.9 pence), taking
the total dividend for the year to 8.3 pence per share (FY23: 7.4 pence), up
12% year-on-year.
(1) Including impairment of intangible assets
Operational Highlights
· Strong progress made to enhance operational efficiency with
ongoing cost review programme driving synergies across product and business
lines.
· Efficiency programme extending beyond costs to all areas of the
business such as our new centralised Treasury Management Division with the
launch of our global Treasury Management System focused on efficient cash
management, currency and liquidity optimisation.
· CMC Markets Connect brand, API ecosystem and world-leading
financial markets technology continues to underpin our growth and has proven
critical in growing our B2B and institutional offering with several major
client wins during the year and a strong pipeline of potential clients.
· Significantly bolstered product suite with the rollout of options
and addition of cash equities to our institutional offering, to expand this
valuable segment.
· Further development of investing platform with Invest UK rolling
out mutual funds and SIPPs post-financial year-end and the rollout of
cryptocurrencies for Invest Australia.
· Continued expansion across new geographies and markets with
launch of CMC Invest Singapore, a growing footprint in Middle East with DIFC
hub and renewed focus on strengthening the governance and capability of our
European operations as a lever for growth.
· Regional expansion further supported by Opto, our content and
thematic investing tool, which has over 100k subscribers, advanced API
infrastructure and recently finalised cash equities trading functionality,
which is set for imminent release.
Outlook
· Having reached the peak of the investment cycle, management
continues to seek opportunities to drive further cost efficiencies and deliver
margin expansion, whilst investing in significant opportunities for
incremental growth.
· Combined with new product launches and further technological
upgrades planned for FY25, we remain confident in the business' ability to
generate robust levels of income on a leaner cost base, resulting in improved
profit margins.
· Current trading proving encouraging with positive trends seen
early in the new fiscal year.
· Management is guiding to net operating income of between
£320-360 million in FY25 on a cost base, excluding variable remuneration and
non-recurring charges, of approximately £225 million.
Lord Cruddas, Chief Executive Officer, commented:
"Over the past year, a recovery in client trading combined with our
diversification strategy through B2B technology and an institutional first
approach has delivered strong growth and opened up many opportunities for the
company around the world.
"This strategy, based on continuous product launches and multiple application
connectivity through the CMC Markets Connect brand, means we are making great
strides in a huge market segment of B2B and institutional business, with
limited competition from our peers.
"Building on this strategy this year we will launch a fully integrated
multi-asset, multi-currency platform, underpinned by connectivity for B2B and
institutional clients, as well as for retail clients. This is bolstered by
new product launches including SIPPs, mutual funds (UK Invest), OTC
options, cash cryptos, fixed income, and with futures, and exchange-traded
options to come.
"CMC Markets Connect has added a new fintech dimension to our offering and
there is no higher endorsement of our company than when a major bank or
financial institution trusts our technology to deliver a service to their
valued clients.
"Institutional, B2B and multi-asset, multi-currency platforms, across all
brands is the future, and ours. We have built the infrastructure which will
allow us to significantly increase our growth potential whilst improving
profit margins through scale.
"It is going to be an exciting couple of years."
An analyst and investor presentation will be held on 20 June 2024 at 9:00am UK
time. Participants need to register using the link below.
Webcast:
CMC Markets plc Full Year 2024 Results
(https://www.lsegissuerservices.com/spark/CMCMarkets/events/2ab6b14f-f8a4-4e7d-ac97-3d592aa52aef/cmc-markets-plc-full-year-results)
Annual Report and Financial Statements
A copy of the Company's Annual Report and Financial Statements for the year
ended 31 March 2024 (the "2024 Annual Report and Financial Statements") is
available within the Investor Relations section of the Company website
at http://www.cmcmarketsplc.com.
In compliance with The Disclosure Guidance and Transparency Rules (DTR) 6.3.5,
the information in the document below is extracted from the Company's 2024
Annual Report and Financial Statements. This material is not a substitute for
reading the 2024 Annual Report and Financial Statements in full and any page
numbers and cross references in the extracted information below refer to page
numbers and cross-references in the 2024 Annual Report and Financial
Statements.
Forthcoming announcement dates:
25 July 2024 Q1 2025
Trading Update
21 November 2024 H1 2025 Interim
Results
Enquiries
CMC Markets
Plc
Albert Soleiman, Chief Financial
Officer
investor.relations@cmcmarkets.com
Camarco
Geoffrey
Pelham-Lane
+44 (0) 7733 124 226
Jennifer
Renwick
+44 (0) 7928 471 013
Alex
Campbell
+44 (0) 7710 230 545
Forward looking statements
This trading update may include statements that are forward looking in nature.
Forward looking statements involve known and unknown risks, assumptions,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Group to be materially different from any
future results, performance or achievements expressed or implied by such
forward looking statements. Except as required by the Listing Rules and
applicable law, the Group undertakes no obligation to update, revise or change
any forward-looking statements to reflect events or developments occurring
after the date such statements are published.
MAR disclosure statement
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.
Notes to Editors
CMC Markets Plc ("CMC"), whose shares are listed on the London Stock Exchange
under the ticker CMCX (LEI: 213800VB75KAZBFH5U07), was established in 1989 and
is now one of the world's leading online financial trading businesses. The
Company serves retail and institutional clients through regulated offices and
branches in 12 countries with a significant presence in the UK, Australia,
Germany and Singapore. CMC Markets offers an award-winning, online and mobile
trading platform, enabling clients to trade over 12,000 financial instruments
across shares, indices, foreign currencies, commodities and treasuries through
contracts for difference ("CFDs"), financial spread bets (in the UK and
Ireland only) and, in Australia, Singapore and the UK, access stockbroking
services. More information is available at http://www.cmcmarketsplc.com
(http://www.cmcmarketsplc.com) .
CHAIRMANS STATEMENT
The Board's strategy of diversification and placing a greater focus on
institutional clients and the B2B sector continues to build momentum. The
long-term investments we have made in our technology and our people will
continue to enhance our business performance and benefit our clients and other
stakeholders.
While we have given a greater focus to our institutional business, we of
course maintained investment in our retail business, launching our Invest
product in Singapore and continuing to enhance our Invest business in the UK.
We launched mutual funds on Invest UK as well as our SIPP product post
year-end, broadening the range of high-quality long-term investment products
for our UK retail customers. In addition to our product diversification, we
continue to pursue targeted geographical diversification, building on our
existing presence in Dubai and placing a renewed focus on governance and
capabilities in Europe to ensure a solid foundation for what is an attractive
growth region. Our staff continue to be instrumental to our growth and
diversification. As we announced earlier in the year, the Group has reached
the peak of its investment cycle and the Board and senior management conducted
two restructuring reviews, leading to the loss of around 15% of roles across
the Group. While it is always a matter of great regret when colleagues leave
the business, we are now better placed to deliver on our growth opportunities
and leverage our scale to grow profit margins, whilst continuing to invest in
our products and technology.
Results and dividend
Net operating income rose 15% to £332.8 million in the year, following
improved trading conditions in the second half of 2024, with increased client
trading activity and further momentum in our B2B businesses. Profit after tax
for the year was £46.9 million. The Board recommends a final dividend of 7.3
pence per share which results in a total dividend payment of 8.3 pence for
the year, in line with our dividend policy of 50% of profit after tax.
Board
The Board was delighted to approve the appointment of Albert Soleiman as CFO
in September 2023 following the resignation of Euan Marshall. Prior to his
appointment as CFO, Albert led the launch of our CMC Invest business in the UK
which is a key part of our diversification strategy and enables clients to
generate long-term wealth through our investing platforms. Albert's extensive
knowledge of the business made him the ideal choice as CFO.
Susanne Chishti has advised that she is not putting herself up for re-election
at the 2024 AGM. I would like to thank Susanne for her hard work and the
insight she has provided to the Board, particularly in relation to workforce
engagement matters, during her time as a Non-Executive Director. We wish her
well in her future endeavours.
People and stakeholders
Our workforce remains the bedrock for our business and the efforts of our
people enable us to deliver on our strategic goals and provide outstanding
service for our clients. The Board also considers our wider stakeholders and
the communities in which we operate, and during the year approved our
Community Impact 121 strategy, committing to making donations to charitable
causes and enabling staff volunteering.
We recognise, with the restructuring reviews and the resulting reduction in
roles, that this was a more difficult period for our people, and this is
discussed further in the Our Tomorrow section of the 2024 Annual Report and
Financial Statements.
The Board continues to place priority on developing and investing in our
people with Susanne Chishti having acted as our designated Non-Executive
Director responsible for workforce engagement. The scope of the work
undertaken by Susanne in this role is set out in the 2024 Annual Report and
Financial Statements.
The Board would like to express its gratitude to all CMC's employees for their
significant contributions throughout the year and particularly during the
period of heightened change.
Sustainable-based growth
The Board is committed to putting in place the tools and capabilities for our
customers and employees to invest for a better future. Further information is
set out in the Our Tomorrow section of the 2024 Annual Report and Financial
Statements.
Outlook
The outlook for the Group remains positive as we continue to invest in the
business, develop the platforms and technologies that our clients want and
further improve our operational efficiency. We will continue to build on the
work undertaken to date to diversify the business to position it for future
opportunities and challenges. While there will continue to be potential for
uncertainty in the financial markets due to ongoing geopolitical events, the
Board will maintain its focus on positioning the business to navigate through
this period of volatility to the benefit of all our stakeholders.
James Richards
Chairman
20 June 2024
CEO Statement
Over the past year, CMC Markets has experienced exceptional growth, marked by
a strong financial performance, and continued technology advancements. Our
financial results, in particular our net operating income of £332.8 million
represents a record for the Group when excluding the COVID-19 impacted 2021.
Our profit before tax of £63.3 million was up 21%, reflecting the success of
our institutional first approach by leveraging our technology to partner with
major financial institutions. The recent announcement of our partnership with
Revolut, where our best-in-class technology will support their rapidly
expanding customers' investing needs, is not only a testament to the success
of this strategy but also opens significant opportunities for further
collaboration on a global scale.
This strategy has transformed and diversified the business into a provider of
financial technology solutions, facilitating platforms, multiple connectivity,
liquidity, trade execution and clearing across multiple venues as we partner
with major financial institutions. We have very little competition in this
institutional space. We are certainly not in competition with peers from the
retail CFD sector, and, because of our technology and offering, we have a
clear and long-standing competitive advantage that separates us from our
traditional peers in the retail market.
This is not something that has happened by accident, it has been part of our
business for over twenty years, but it is only recently that investors and
analysts have started to understand the diversity of our business model and
the scale it brings. As we gravitate further towards the fintech sector, this
is driving CMC towards a higher valuation multiple as we are increasingly
moving away from valuations associated with the retail CFD sector. A retail
CFD only platform is where CMC started, but that is not where we are today,
and it is not our future, and public markets are gradually beginning to
reflect this in our higher valuation.
We are already the second largest on-exchange stockbroker in Australia with
over $70 billion in AUA and over one million customer accounts and we are
regularly the number one options clearer on the Australian exchange. CMC Group
currently serves more than 400 institutions with marquee partnerships in all
our major geographies and a strong pipeline in our target countries. Our focus
is not only to seek out new partnerships but to also help our existing
partners realise the full potential of their businesses through new products
and access to various liquidity pools, thereby maximising returns for CMC and
our partners. We have the infrastructure and experience to continue our growth
in this huge market.
It has been an exciting year and I look forward to working with my superb team
over the coming years to add more value and growth to an already exciting
business.
Treasury Management and Capital Markets
Over the last couple of years, we have been building a Treasury Management and
Capital Markets Division; an area I have extensive experience in due to my
banking background. The development of this division has become necessary as
the Group continues to expand and diversify.
Today, we are managing substantial cash and currency balances, trade
settlements and multiple venue clearing. Our annual trade turnover is more
than US$4 trillion and growing, driven by our institutional business and new
product additions. We are managing a number of prime brokers, banking
relationships, exchanges, and partnerships all around the world. With offices
in 12 countries, a large stockbroking business, cash settlements, and
expanding B2B and institutional partnerships, we have become a
technology-based, multi-currency global organisation, which requires not just
a focus on technology but also on treasury management functionality.
As part of our Treasury Management Division, we have linked all our overseas
offices to a Treasury Management System ("TMS") to centralise all foreign
exchange ("FX") transactions and cash balances onto one real-time platform.
All currency and cash movements are centrally managed by the treasury team,
who then lock in FX profits, whilst also managing our cash with prime brokers,
banks, exchanges, and partners, to optimise capital market returns. This
ensures our cash and trade settlements are as efficient as possible, thereby
freeing up capital to invest. It is an amazing value add to the business and
generates additional income through optimisation and efficiency.
To be clear, this is not a risk book of business; it is capital markets and
interest rate optimisation. It is cash deployed effectively in the right
venues to earn the maximum return in the capital markets. Via the TMS platform
we can also centralise all cash foreign exchange exposures and settlements,
locking in currency exchange rates and optimising foreign exchange profits.
The treasury management team is there to optimise liquidity, settle trades and
optimise our cash flows. This has added great scale to the business and
additional incremental profits. In our financial accounts for FY24 we have a
record £39.7 million as other income. This includes interest income from the
higher interest rate environment but within that figure there are the
efficiencies of our TMS and the additional value this brings.
In the coming years we will provide a more granular breakdown as this side of
the business expands and matures. Treasury management is important and
necessary as we expand our B2B and institutional business, as well as our cash
product range. It will help us win more business and will help us to remain
competitive.
Financial performance
Financial performance in the year has been strong. Net operating income of
£332.8 million (FY23: £288.4 million) was up 15% with continued good
momentum across our B2B segment, and profit before tax for the year was £63.3
million, up 21% on FY23. Other income continued to benefit from higher global
interest rates, as well as our new centralised TMS.
Whilst operating expenses, excluding variable remuneration, are higher in the
year, much of this was driven by a non-recurring impairment charge and an
increase in net staff costs relating to the annualisation of higher headcount
levels for much of the year, as well as the higher termination costs resulting
from the reduction in global headcount.
Driving efficient performance throughout the business has been a central focus
over the course of FY24, and this includes the introduction of the
aforementioned TMS, but also extends to our disciplined focus on costs. As
announced at the half year, the business has reached the peak of its current
investment cycle and H2 saw us complete a cost review designed to rationalise
our cost base and drive synergies through our global operations. This includes
the merging of support functions, streamlining of reporting lines and greater
focus on our capital allocation, which will generate sustainable cost savings
from FY25 onwards.
We remain firmly committed to continued investment in our business and
technology platforms to maintain our competitive advantage. However, following
years of strong investment, we are now in a position to leverage our
operational strength to grow efficiently. We continue to see opportunities to
rationalise the cost base as we maintain our ongoing focus on delivering
sustainable cost savings.
Our financial performance in FY24 leaves the Group in a strong position and
has laid the foundation for another successful year ahead.
Delivering growth through diversification
Underpinning our growth agenda is our diversification strategy, which has
opened many opportunities for the business around the world. This strategy is
predicated on a rigorous programme of continuous product upgrades, a sustained
commitment to providing world-leading technology for our clients across all
business lines and further expansion of our reach across both new geographies
and markets.
Continuous product development
FY24 has seen CMC continue to diversify its product offering. Our approach,
which is on the focused expansion of asset classes to strengthen our levels of
engagement is critical in enabling us to continue to support our clients. This
includes the rollout of OTC options, with futures and exchange traded options
set to be delivered in H1 FY25. The addition of cash equities to our
institutional offering has allowed us to expand the services available to this
valuable segment. On UK Invest, we have added mutual funds in FY24, and SIPPs
post-financial year-end, as well as continued updates designed to enhance the
user experience. Invest Australia also expanded to offer cash
cryptocurrencies.
Sustained commitment to world-leading technology
Underpinning our continued product development is our unwavering commitment to
being a world-leader in financial markets technology. Our CMC Markets Connect
brand and API ecosystem is the foundation for our growth and expansion and the
power of this technology has proven critical in securing a number of large B2B
partners, such as Revolut. This builds on the already extensive network of
partnerships that we have in place and our ability to provide larger
institutions with complex, bespoke builds, cements us further as the partner
of choice and reinforces our deep understanding of the financial sector and
technical superiority. Elsewhere, we have launched our CMC Invest Singapore
platform, and we continue to enhance our connectivity to more execution
venues, ECNs, and client types across this vast electronic marketplace.
Looking to the future, we remain committed to a disciplined level of continued
investment over the medium-term, leveraging technology to drive innovation and
growth.
Expansion across new geographies and markets
A core aspect of our diversification strategy is expansion across new regions
and markets. In addition to the launch of Invest Singapore, we have also
expanded our operations in the Middle East with our subsidiary in Dubai's
International Financial Centre and we have placed a renewed emphasis on our
European operations, with a focus on strengthening the governance and
capability of this region as a lever for growth. Meanwhile, our content and
thematic investing tool, Opto, achieved significant milestones, notably the
completion of equities trading functionality, which is set to launch
imminently. Through continued and targeted regional expansion across the
world, CMC continues to unlock new opportunities, delivering sustained value
creation for shareholders.
Regulatory change
As we outlined as part of our half year results, updated regulations governing
Consumer Duty in the UK were enforced for financial services companies from 31
July 2023. These regulations are designed to establish a rigorous level of
consumer safeguarding in financial dealings. The integration of these
obligations within the Group has proven effective, and CMC remains committed
to refining its procedures post-implementation, while monitoring client
outcomes to try to ensure their ongoing financial goals are met.
CMC also intends to comply with the European Union's Digital Operational
Resilience Act, applicable from January 2025, which seeks to promote cyber
resilience by enhancing ICT risk management and cyber risk management across
financial services. Requirements include the reporting of major ICT-related
incidents, digital operational resilience testing, information sharing, and
measures and requirements related to the use of ICT third-party services.
People and sustainability
As the emphasis on sustainability continues to influence financial markets,
our goal is to empower both our clients and employees with the tools and
expertise needed to make informed and ethical choices, both in their
investments and in the workplace. We acknowledge and embrace the finance
industry's deep responsibility to support global sustainability initiatives
and appreciate the belief that integrating sustainable practices can yield
tangible advantages for our business.
Dividend
The Board has proposed a final dividend payment of £20.4 million, which
equates to 7.3 pence per share, resulting in a total dividend payment of 8.3
pence per share for the year. This is in line with the dividend policy of 50%
of profit after tax.
Outlook
With the launch of new product initiatives, further technological
advancements, and the expanding opportunities created by our diversification
strategy, combined with our programme to rationalise costs, we are confident
in the business' ability to generate robust levels of income on a leaner cost
base. This will drive an enhancement in profit margins in the year ahead.
Management is anticipating achieving net operating income of between £320-360
million in FY25, on a cost base, excluding variable remuneration and
non-recurring charges, of around £225 million.
I look forward to continued exciting profitable growth in the years to come.
Lord Cruddas
Chief Executive Officer
20 June 2024
Financial review
Summary income statement
£m FY24 FY23 Change Change %
Net operating income 332.8 288.4 44.4 15%
Adjusted operating expenses(1) (267.2) (233.9) (33.3) (14%)
Operating profit 65.6 54.5 11.1 20%
Loss on share of associates (0.3) - (0.3) -
Finance costs (2.0) (2.3) 0.3 16%
Profit before taxation 63.3 52.2 11.1 21%
PBT margin(2) 19.0% 18.1% 0.9%pts -
Profit after tax 46.9 41.4 5.5 13%
(p) FY24 FY23 Change Change %
Basic EPS 16.7 14.7 2.0 14%
Ordinary dividend per share(3) 8.3 7.4 0.9 12%
( )
(1) Including variable remuneration.
(2) Statutory profit before tax as a percentage of net operating income.
(3) Ordinary dividends paid/proposed relating to the financial year, based on
issued share capital as at 31 March of each financial year.
Summary
Net operating income of £332.8 million increased by £44.4 million (15%)
compared to 2023. This performance was driven by a strong performance in our
trading business in H2, and a 152% increase in interest income, largely as a
result of higher global interest rates on client and own cash balances.
Adjusted operating expenses, including variable remuneration, of £267.2
million increased by £33.3 million (14%), primarily due to higher staff costs
and an impairment of £12.3 million mainly relating to internally developed
platforms for the UK Invest and cash equities offerings.
This resulted in a statutory profit before tax of £63.3 million (2023: £52.2
million) and PBT margin of 19.0%, up from 18.1% in the prior year.
Net operating income overview
£m FY24 FY23 Change %
Trading net revenue 259.1 233.1 11%
Investing net revenue (excl. interest income) 34.0 37.9 (10)%
Net revenue(1) 293.1 271.0 8%
Interest income 35.0 13.9 152%
Other operating income 4.7 3.5 34%
Net operating income 332.8 288.4 15%
(1) CFD and spread bet revenue net of rebates and levies and stockbroking
revenue net of rebates.
Trading performance overview
FY24 FY23 Change %
Trading net revenue (£m) 259.1 233.1 11%
Trading revenue per active client (£) £4,685 £3,968 18%
( )
Trading net revenue increased by £26.0 million, representing an 11% increase
against the prior year due to a strong second half performance, driving an
increase in revenue per active client of £717 (18%) to £4,685. Revenue per
active client was a record high level, reflecting the growing proportion of
trading volumes generated by high-value, institutional clients.
Investing performance overview
FY24 FY23 Change %
Net revenue (£m) Active Clients¹ Net revenue (£m) Active Clients¹ Net revenue (£m) Active
Clients
B2C 24.4 168,760 14.6 125,326 67% 35%
B2B 9.6 42,816 23.3 92,984 (59%) (54%)
Total 34.0 211,576 37.9 218,310 (10%) (3%)
(1) ANZ customers are classified as B2B prior to integration in March 2023.
Post integration, they are managed as CMC Retail customers and classified as
B2C
Investing net revenue was 10% lower at £34.0 million (FY23: £37.9 million),
primarily driven by a £2.9 million unfavourable FX movement from a weaker
Australian dollar. Underlying performance on a constant currency basis was 3%
lower than the prior year, as weaker domestic trading was largely offset by
stronger international trading and the introduction of physical crypto trading
for retail customers, with the second half of the year seeing stronger trading
activities, particularly in Q4.
Interest income
Interest income increased by £21.1 million, representing a 152% increase, to
£35.0 million driven predominantly by elevated base rates and higher
non-segregated fund balances.
The majority of the Group's interest income is earned through our segregated
client deposits in our UK, Australia, New Zealand and Invest Australia
subsidiaries. Our investing business generated 31% of the Group's interest
income, with 69% being generated in our trading business. The Group
continually monitors its returns on both own and segregated client deposits to
ensure optimal returns.
Expenses
Total costs increased by £33.3 million (14%) to £269.5 million.
£m FY24 FY23 Change %
Net staff costs - fixed (excluding variable remuneration) 100.8 84.9 (19%)
IT costs 39.7 33.7 (18%)
Marketing costs 31.1 32.3 4%
Sales-related costs 4.5 6.0 25%
Premises costs 6.7 5.7 (17%)
Legal and professional fees 13.9 8.6 (62%)
Regulatory fees 4.3 9.4 54%
Depreciation and amortisation(1) 27.4 15.6 (75%)
Irrecoverable sales tax 5.5 3.0 (97%)
Other 15.6 18.0 14%
Adjusted operating expenses excluding variable remuneration 249.5 217.2 (15%)
Variable remuneration 17.7 16.7 (6%)
Adjusted operating expenses including variable remuneration 267.2 233.9 (14%)
Loss on share of associates 0.3 - -
Interest 2.0 2.3 16%
Total costs 269.5 236.2 (14%)
1 Including impairment of intangible asset costs.
Net staff costs
Net staff costs, including variable remuneration, increased £16.9 million
(17%) to £118.5 million. This was driven by the annualisation of higher
headcount levels for much of the year, along with increases in gross pay
within certain areas of the business to ensure the Group continues to
remunerate staff in line with market rates to assist talent retention within
the organisation, as well as the higher termination costs resulting from the
reduction in global headcount.
Variable remuneration increased in light of strong Group financial performance
in the year.
£m FY24 FY23 Change %
Gross staff costs, excluding variable remuneration 110.7 92.9 (19%)
Performance related pay 14.9 14.5 (3%)
Share-based payments 2.8 2.2 (24%)
Total employee costs 128.4 109.6 (17%)
Contract staff costs 1.7 3.1 45%
Net capitalisation (11.6) (11.1) 5%
Net staff costs 118.5 101.6 (17%)
Depreciation and amortisation costs
Depreciation and amortisation have increased by £11.8 million (75%) to
£27.4 million, primarily due to the impairment of internally-developed
trading platforms for the invest platform and cash equities offerings.
Sales-related costs
Sales-related costs decreased by £1.5 million (25%) to £4.5 million driven
by lower transactional costs in Invest Australia as a result of the lower
volumes traded by clients, and lower levels of promotional and compensation
payments.
Marketing costs
Marketing costs reduced to £31.1 million, down 4%, reflective of the more
cautious approach we have taken with regard to marketing spend in the last
year as we have focused our attention on product development and expansion
across our platforms.
IT costs
IT costs increased by £6.0 million (18%) to £39.7 million, primarily as a
result of our expanded product offering, higher software costs and an increase
in market data costs. Inflationary pressures in light of the wider global
environment also contributed significantly to these cost increases.
Legal & Professional fees
Legal and professional fees increased by £5.3 million (62%), primarily driven
by an increase in consultancy fees, along with smaller increases in legal and
audit fees.
Regulatory fees
Regulatory fees decreased by £5.1 million (54%) primarily as a result of a
lower FSCS levy.
Premises costs
Premises costs increased £1.0 million (17%) due to higher utility costs,
service charges and additional rent costs driven by the new office in Dubai,
partially offset by lower rates.
Irrecoverable Sales Tax
Irrecoverable sales tax increased by £2.5 million (97%) mainly due to a
non-recurring VAT refund received in the prior year.
Other expenses
Other expenses decreased by £2.4 million (14%) mainly due to lower
recruitment fees as a result of the high level of new hires in the prior year.
Taxation
The effective tax rate for 2024 was 26.0%, up from the 2023 effective tax
rate, which was 20.6%. This increase in the effective tax rate was mainly due
to the increase in the UK corporate tax rate.
Profit after tax for the year
The increase in profit after tax for the year of £5.5 million (13%) was due
to higher levels of net operating income being partially offset by an increase
in expenses, including the one-off impairment charge and non-recurring costs
relating to the global headcount reduction.
Dividend
Dividends of £13.7 million were paid during the year (2023: £35.0 million),
with £10.9 million relating to a final dividend for the prior year paid in
August 2023, and £2.8 million relating to an interim dividend paid in January
2024 relating to current year performance. The Group has proposed a final
ordinary dividend of 7.30 pence per share (2023: 3.90 pence per share).
Non-Statutory Summary Group Balance Sheet
£m FY24 FY23
Intangible assets 28.9 35.3
Property, plant and equipment 15.3 14.1
Net lease liability (3.0) (2.7)
Fixed Assets 41.2 46.7
Cash and cash equivalents 160.3 146.2
Net amounts due from brokers 221.9 179.2
Financial investments 50.9 30.6
Other assets 12.3 2.0
Net derivative financial instruments - 1.1
Title transfer funds (119.6) (49.4)
Own Funds 325.8 309.7
Working capital 31.4 8.2
Net tax (payable) / receivable (0.2) 8.6
Investment in associates 2.4 -
Deferred tax net asset 2.9 0.8
Net Assets 403.5 374.0
The table above is a non-statutory view of the Group Balance Sheet and line
names do not necessarily have their statutory meanings. A reconciliation to
the primary statements can be found on page 180 in the 2024 Annual Report and
Financial Statements.
Fixed assets
Intangible assets decreased by £6.4 million to £28.9 million (2023: £35.3
million) which is predominantly a result of the impairment of intangible
assets.
Own funds
Net amounts due from brokers relate to cash held at brokers either for initial
margin or balances in excess of this for cash management purposes. The
increase in client trading exposures throughout the year, particularly in
equities and bullion, resulted in increases in holdings at brokers for hedging
purposes.
Cash and cash equivalents have increased during the year primarily as a result
of an increase in non-segregated balances and operating cash inflow. Financial
investments mainly relate to UK government securities and short-term financial
investments.
Title transfer funds increased by £70.2 million, which reflects high levels
of account funding by a small population of mainly institutional clients.
Working capital
The £23.2 million increase in working capital requirements year on year is
primarily the result of movements in stockbroking receivables and payables
arising from clients' trading that is yet to settle at the period end.
Net tax receivable
Tax moved to a broadly flat position due to the utilisation of receivables
during the year.
Deferred tax net asset
Deferred net tax assets increased to £2.9 million over the period, due to a
true up of deferred tax in the UK.
Impact of climate risk
We have assessed the impact of climate risk on our balance sheet and have
concluded that there is no material impact on the Financial Statements for the
year ended 31 March 2024.
Regulatory capital resources
The Group and its UK regulated subsidiaries fall into scope of the FCA's
Investment Firms Prudential Regime ("IFPR"), with the Group's German
subsidiary, CMC Markets Germany GmbH, subject to the provisions of the
Investment Firms Regulation and Directive ("IFR/IFD").
The Group's total capital resources increased to £340.1 million (2023:
£326.8 million) with increases in retained earnings for the year being partly
offset by the proposed final dividend distribution. In accordance with the
IFPR all deferred tax assets must now be fully deducted from common equity
tier 1 capital ("CET1 capital").
At 31 March 2024 the Group had a total OFR ratio of 312%, down from 369% in
2023. This is a result of an increase in own fund requirements to £109.0
million (2023: £88.6 million).
The following table summarises the Group's capital adequacy position at the
year end. The Group's approach to capital management is described in note 30
in the 2024 Annual Report and Financial Statements.
£m FY24 FY23
CET1 capital¹ 383.1 363.1
Less: regulatory deduction(2) (43.0) (36.3)
Total capital resources after relevant deductions 340.1 326.8
Own funds requirements ("OFR")(3) 109.0 88.6
Total OFR ratio (%)(4) 312% 369%
(1) Total audited capital resources as at the end of the financial year of
£403.5 million, less proposed dividends.
(2) In accordance with the IFPR, all deferred tax assets must be fully
deducted from CET1 capital. Deferred tax assets are the net of assets and
liabilities shown in note 14 of the 2024 Annual Report and Financial
Statements.
(3) The minimum capital requirement in accordance with MIFIDPRU 4.3.
(4) The OFR ratio represents CET1 capital as a percentage of OFR.
Liquidity
The Group has access to the following sources of liquidity that make up
total available liquidity:
· Own funds: The primary source of liquidity for the Group. It
represents the funds that the business has generated historically, including
any unrealised gains/losses on open hedging positions. All cash held on behalf
of segregated clients is excluded. Own funds consist mainly of cash and cash
equivalents. They also include investments in UK government securities,
short-term financial investments, amounts due from brokers and amounts
receivable/payable on the Group's derivative financial instruments. For more
details refer to note 30 of the 2024 Annual Report and Financial Statements.
· Title transfer funds ("TTFs"): This represents funds received
from professional clients and eligible counterparties (as defined in the FCA
Handbook) that are held under a title transfer collateral agreement ("TTCA"),
a means by which a professional client or eligible counterparty may agree that
full ownership of such funds is unconditionally transferred to the Group. The
Group does not require clients to sign a TTCA in order to be treated as a
professional client and as a result their funds remain segregated. The Group
considers these funds as an ancillary source of liquidity.
The Group also has access to a committed facility of up to £55.0 million
(2023: £55.0 million) in order to fund any potential fluctuations in margins
required to be posted at brokers to support the risk management strategy. The
facility consists of a one-year term facility of £27.5 million (2023: £27.5
million) and a three-year term facility of £27.5 million (2023: £27.5
million). The maximum amount of the facility available at any one time is
dependent upon the initial margin requirements at brokers and margin received
from clients. There was no drawdown on the facility as at 31 March 2024 (2023:
£nil).
The Group's use of total available liquidity resources consists of:
· Blocked cash: Amounts held for operational purposes to meet the
requirements of local regulators and exchanges, in addition to liquidity in
subsidiaries in excess of local segregated client requirements to meet
potential future client requirements.
· Initial margin requirement at broker: The total GBP equivalent
initial margin required by prime brokers to cover the Group's hedge derivative
and cryptocurrency positions.
Own funds have increased by £16.1 million to £325.8 million (2023: £309.7
million).
£m FY24 FY23
Own funds 325.8 309.7
Title transfer funds 119.6 49.4
Total available liquidity 445.4 359.1
Less: blocked cash (68.5) (68.8)
Less: initial margin requirement at broker (184.7) (106.1)
Net available liquidity 192.2 184.2
Client money
Total segregated client money held by the Group for trading clients was
£517.6 million at 31 March 2024 (2023: £549.4 million). Client money
represents the capacity for our clients to trade and offers an underlying
indication of the health of our client base.
Client money governance
The Group segregates all money and assets held by it on behalf of clients
excluding a small number of large clients which have entered a TTCA with the
firm. This is in accordance with, or exceeding, applicable client money
regulations in countries in which it operates. The majority of client money
requirements fall under the Client Assets Sourcebook ("CASS") rules of the FCA
in the UK, BaFin in Germany and ASIC in Australia. All segregated client funds
are held in dedicated client money bank accounts with major banks that meet
strict internal criteria and are held separately from the Group's own money.
The Group has comprehensive client money processes and procedures in place to
ensure client money is identified and protected at the earliest possible point
after receipt as well as governance structures which ensure such activities
are effective in protecting client money. The Group's governance structure is
explained further within the Governance section of our 2024 Annual Report and
Financial Statements.
Viability statement
The Directors of the Company have considered the Group's current financial
position and future prospects and are confident that the Group will be able to
continue in operation and meet its liabilities as they fall due over the
period of the assessment. In reaching this conclusion, both the prospects and
viability considerations have been assessed.
Long-term prospects
The Group has invested significantly in recent years in product development to
deliver future revenue diversification. This investment has culminated in
strong progress being made on strategic initiatives during the year with the
release of the Invest Singapore platform, as well as cash equities and options
products being launched on the Next Generation platform, all of which are
expected to support the growth and revenue diversification in upcoming years
along with the ongoing growth and improvement in monetisation of our
institutional offering. These releases represent the peak of this investment
cycle, with the Group taking action to reduce the cost base as announced in
February 2024 which is expected to support profit margin expansion in the
medium term. On this basis, the Group maintains its belief that it will
continue to demonstrate delivery of sufficient cash generation to support
operations.
Conservative expectations of future business prospects through delivery of the
Group strategy (see pages 18 and 19 of the 2024 Annual Report and Financial
Statements) are presented to the Board through the budget process. The annual
budget process consists of a detailed bottom-up process with a 12-month
outlook which involves input from all relevant functional and regional heads.
This includes a collection of resource assumptions required to deliver the
Group strategy and associated revenue impacts with consideration of key risks.
This is used in conjunction with external assumptions such as a
region-by-region review of the regulatory environment and incorporation of any
anticipated regulatory changes, revenue modelling, market volatility, interest
rates and industry growth that could materially impact the business. The
process also covers liquidity and capital planning and, in addition to the
granular budget, a three-year outlook is prepared using assumptions on
industry growth, the effects of regulatory change, revenue growth from
strategic initiatives and cost growth required to support initiatives. The
budget was reviewed and approved by the Board at the March 2024 Board meeting.
The process for ongoing review and monitoring of risks is outlined in the Risk
Management section of the 2024 Annual Report and Financial Statements (pages
59 to 68). The Board approved budget is then used to set targets across the
Group.
The Directors concluded that three years is an appropriate period over which
to provide a viability statement as this is the longest period over which the
Board reviews the success of Group strategic projections, and this timeline is
also aligned with the period over which internal stress testing occurs.
Viability
The Group performs regular stress testing scenarios. Available liquidity and
capital adequacy are central to understanding the Group's viability and stress
scenarios, such as adverse market conditions and adverse regulatory change,
and are considered in the Group's Internal Capital Adequacy and Risk
Assessment ("ICARA") document, which is shared with the FCA on request. The
results of the stress testing showed that, due to the robustness of the
business, the Group would be able to withstand scenarios, including combined
scenarios across multiple principal risks, over the financial planning period
by taking management actions that have been identified within the scenario
stress tests.
The Group's revenue, which is driven by client transaction fees and interest
income on both own and client funds, has seen increases resulting from the
monetisation of client trading activity and the annualised impact of increases
in global interest rates during the prior year, despite lower overall active
client numbers. Projections of the Group's revenue have included revenue
benefits from new product releases over the three-year period, which will
serve to reduce risks to the Group's viability as a result of increased
revenue diversity. In addition, conservative estimates of market volatility
were assumed for the current businesses over the three-year period.
Projections also include assumptions on interest rates that are derived from
central bank rate forecasts, where available. No significant changes to
regulatory capital and liquidity requirements have been assumed over the
forecasting period.
In addition to considering the above, the Group also monitors performance
against pre-defined budget expectations and risk indicator, which provide
early warning to the Board, allowing management action to be taken where
required including the assessment of new opportunities.
The Directors have no reason to believe that the Group will not be viable over
a longer period, given existing and known future changes to relevant
regulations.
Going concern
The Group satisfies its ongoing working capital requirements through its
available liquid assets. The Group's liquid assets exclude any funds held in
segregated client money accounts. In assessing whether it is appropriate to
adopt the going concern basis in preparing the Financial Statements, the
Directors considered the resilience of the Group, taking account of its
liquidity position and cash generation, the adequacy of capital resources, the
availability of external credit facilities and the associated financial
covenants, stress testing of liquidity and capital adequacy that take into
account the principal risks faced by the business. Further details of these
principal risks and how they are mitigated and managed are documented in the
Risk Management section on pages 59 to 68 of the 2024 Annual Report and
Financial Statements.
Having given due consideration to the nature of the Group's business, and
risks emerging or becoming more prominent, the Directors consider that the
Company and the Group are going concerns, and the Financial Statements are
prepared on that basis.
Albert Soleiman
Chief Financial Officer
20 June 2024
PRINCIPAL RISKS
The Group's business activities naturally expose it to strategic, financial
and operational risks which are inherent in the nature of the business it
undertakes and the financial, market and regulatory environments in which it
operates.
The Group recognises the importance of understanding and managing these risks
and that it cannot place a cap or limit on all of the risks to which it is
exposed. However, effective risk management ensures that risks are managed to
an acceptable level.
To assist the Board in discharging its responsibilities, it has in place an
Enterprise Risk Management ("ERM") framework to support identification,
mitigation and management of risk exposures in line with the Group's risk
appetite. The Group regularly reviews the ERM framework, risk tooling and
resources to ensure they remain effective to support the achievement of the
Group's strategic objectives and in line with market practices and regulatory
expectations.
There have been a number of improvements to the ERM framework during the year
including enhancements to risk monitoring and reporting, and the consequent
risk mitigation strategies. There have also been some organisational changes,
to better align our people to the needs of the Group.
The Board, through its Group Risk Committee, is ultimately responsible for the
implementation of an appropriate risk strategy and the main areas which it
encompasses are:
· identifying, evaluating and monitoring the principal and emerging
risks to which the Group is exposed;
· implementing the risk appetite of the Board in order to achieve
its strategic objectives; and
· establishing and maintaining governance, policies, systems and
controls to ensure the Group is operating within the stated risk appetite.
Risk management is acknowledged to be a core responsibility of all colleagues
at CMC and the oversight of risk and controls management is provided by
Management and Board Committees as well as the Group risk and compliance
functions.
The Group's ERM framework is designed to manage rather than eliminate risk, in
line with risk appetite, and follows the "three lines" model to ensure clear
risk ownership and accountability. Risk management and the implementation of
controls are the responsibility of the business teams which constitute the
first line. Oversight and guidance are provided primarily by the Group's risk
and compliance functions which constitute the second line, and third line
independent assurance is provided by the Group's internal audit function.
The Board has implemented a governance structure which is appropriate for the
operations of an online financial services group and is aligned to the
delivery of the Group's strategic objectives and product offering. The
structure is regularly reviewed and monitored, and any changes are subject to
Board approval. Furthermore, management considers root cause analysis to drive
resilient improvements to processes and procedures and to embed good corporate
governance throughout the Group.
The Board undertakes a robust assessment of the effectiveness of its risk
management and internal controls and reviews principal risks, emerging risks
and risk appetite on at least an annual basis.
The Group's risk appetite is an articulation of the nature and type of risks
that the Group is willing to accept, or wants to avoid, in order to achieve
its business objectives and strategy. This process is assessed as part of the
Board's review of the Group's Risk Appetite Statement ("RAS"), which is a
unified view of the Group's risk appetites and tolerances. It is important
that the integrated risk appetite remains in line with business strategy to
support the Group's strategic objectives. Risk appetite plays a key part in
the Group's risk, capital and liquidity management, with the setting of risk
appetites being an essential element in achieving effective risk control
across the Group and achieving positive client outcomes.
The Board has carried out an assessment of the emerging and principal risks
facing the Group, including those that would threaten its business model,
future performance, solvency, or liquidity. In FY23 we determined that climate
change was an emerging risk based on a climate risk assessment which concluded
that critical thresholds are not likely to be breached. Given the criteria
supporting that assessment have remained unchanged in FY24 we are comfortable
that climate change risk remains an emerging risk. More information is
available within the TCFD report on pages 42 to 51 of the 2024 Annual Report
and Financial Statements.
The principal risks reported here are those attracting the greatest focus, and
to which the Group has the largest exposure. The principal risks are linked to
risk appetite and key risk indicator ("KRI'') measures for reporting. In
assessing all risks, CMC considers the reputational impacts of risks
materialising and the impacts on its clients of negative publicity, and risks
to the achievement of business objectives. The following top principal risks
were considered, and they are:
· Regulatory and compliance risk: the Group is exposed to a
significant number of different regulations and legislation, which continues
to expand in line with our global footprint. During the year the most
significant change was the successful implementation of the FCA Consumer Duty.
Looking forward the key changes on the horizon include the introduction of new
Digital Operational Resilience Act ("DORA"). Enhancements within our business
change governance processes mean that regulatory projects within the Group are
appropriately prioritised to ensure compliance and ongoing process
improvement. We are actively managing a number of audit fundings in our German
subsidiary.
· Information and data security risk: cyber-criminal activity
continues to increase in sophistication, severity and frequency and attacks in
the form of ransomware and Distributed Denial of Service ("DDoS'') are
particularly relevant for the Group given the online nature of the business.
Dedicated specialist in house IT security resource, strong partnerships with
leading security vendors and continued improvement in internal controls and
governance help to mitigate the risk for CMC and its clients.
· Business change risk: as we continue to grow the business and
implement strategic change, project delivery risk naturally becomes
heightened. During the year a number of projects, including the launch of a
new OTC Options product, have concluded, reducing the pressure on the
business. Prioritisation of projects and the establishment of delivery pillars
with ring-fenced resources have helped maintain dedicated resource pools and
allocations to strategic projects.
· People risk: our people are the key to delivering on our purpose
and strategy. Failure in our ability to attract and retain key talent puts at
risk our strategic delivery and slows our velocity and our ability to maintain
our high service standards. There have been organisational changes during the
year to align our resource needs to the scale and priorities of the Group,
resulting in a reduction of the global headcount. This has been primarily
achieved by merging support functions across multiple business lines,
streamlining reporting lines and automating processes. Key people metrics
continue to be closely monitored as we still face a number of market
headwinds.
Further information on the structure and workings of the Board and Management
Committees is included in the Corporate Governance report of the 2024 Annual
Report and Financial Statements.
Principal Risk Risk Risk Description, Exposure & Appetite Risk Management and Mitigation
Business and Strategic Risks Strategic Risk Strategic risk is the potential threat the Group could face that could affect We remain within our appetite by taking the following actions:
its ability to perform and execute its business strategy. It includes risks
that can result from decisions made by the Board of Directors concerning the · Robust governance, challenge and oversight from independent
products or the services the Group provides. Non-Executive Directors
CMC is exposed to, and has appetite for, strategic risk through the definition · Ensuring significant new initiatives align to the corporate
or execution of our strategic initiatives where there is the risk of failing strategy
to successfully deliver what we set out to achieve.
· Assessing the risks associated with strategic initiatives
As part of our strategic risk, CMC is exposed to potential damage to our brand
and reputation with the market, clients and regulators. Failure to manage · Establishing accountable owners to ensure successful delivery of
reputational risks will have a significant impact on our ability to implement initiatives and appropriate risk mitigations are in place
our strategic plan.
· Ensuring all material products and strategic initiatives go
During the year, enhanced focus on our key strategic priorities has through the product governance process with approval by the Board
strengthened how we deliver on our strategic goals.
Financial Risks Market The risk that the value of our residual portfolio will decrease due to changes We remain within our appetite by taking the following actions:
in market risk factors. The three standard market risk factors are price
Risk moves, interest rates and foreign exchange rates. · Trading risk management monitors and manages the exposures it
inherits from clients on a real- time basis and in accordance with
CMC is exposed to financial risks due to the nature of our business as an Board-approved appetite
online trading provider for various products. We act as a principal to our
clients, predominantly across CFD and spread bet trades, exposing us to a · The Group predominantly acts as a market maker in linear, highly
substantial amount of market risk and liquidity risk. liquid financial instruments in which it can easily reduce market risk
exposure through its prime broker arrangements. This significantly reduces the
We have appetite to retain some market risk, balanced with low appetite for Group's revenue sensitivity to individual asset classes and instruments
liquidity and capital risk.
· Financial risk management runs stress scenarios on the residual
portfolio, comprising a number of single and combined Company-specific and
market-wide events in order to assess potential financial and capital adequacy
impacts to ensure the Group can withstand severe moves in the risk drivers to
which it is exposed
· Implementation of aggregate stop loss level at global and asset
class level to mitigate the impact of extreme market shocks
· Monitoring the cost of funding requirements from a liquidity
perspective where we are actively managing market risk
Financial Risks Liquidity Risks The risk that there is insufficient liquidity available to meet the We minimise our exposure to and impacts of liquidity risk by:
liabilities of the Group as they fall due or can only secure required
liquidity at excessive cost. Principle:
CMC is exposed to Liquidity Risk through our principal business, in particular · Modelling our liquidity requirements on a forward-looking basis
our payments (margin calls) to prime brokers to effect our hedging strategies, both under normal conditions as well as under stress conditions to ensure the
and when there are unfunded commitments in the matched principal business Group can meet its obligations
(e.g. failed settlements) or obligations to lodge margins with central
counterparty clearing house to cover client cash and derivative trading · Maintaining adequate amounts of unencumbered, high quality liquid
obligations. assets and diversified funding sources
We have low appetite for liquidity risk and during the year we have continued · Establishing a liquidity facility to draw on if needed with
to develop our framework, which includes the implementation of a revised appropriate analysis and modelling
stress testing model.
· Arranging contingency funding levers in certain scenarios up to
and including orderly wind down
· Monitoring market conditions to ensure the liquidity impact of
significant market moves aligned to client positions is able to be met
Matched Principle and Exchange traded:
· We only offer assets that are liquid as determined by our asset
suitability assessment.
· Producing daily cash position reports that show surplus
liquidity, unencumbered liquidity and short-term forecasts
· Perform stress testing to ensure the Group has sufficient
liquidity to meet its ongoing business requirements under normal conditions as
well as periods of stress (forecast for 15 months)
Financial Risks Credit & Counter -party Risk The risk of losses arising from a counterparty failing to meet its obligations We manage our exposure to credit risk by:
as they fall due.
· Applying sufficient margins, including a tiered margin structure,
CMC is exposed to credit and counterparty risk from its clients as well as to manage positions that are deemed riskier
from the financial institutions with which it operates.
· Utilising our liquidation feature to reduce exposure when the
We have limited appetite for credit and counterparty risk, which we manage client total equity falls below a pre- defined percentage of the required
through our mitigants and controls. margin for the portfolio held
2023 saw a banking crisis in the US with the collapse of several regional · Guaranteed stop loss orders allow clients to remove their chance
banks. Although CMC was not impacted by these events, credit risk exposure of debt from their position(s)
management continues to be a focus, and over the year we have made significant
improvements to our stress testing modelling. · Setting limits and utilising our potential credit risk exposure
models to stress and quantify counterparty client credit risk exposure across
CFDs and Spreadbet
· Reviewing credit worthiness of the counterparties at least
annually
· Managing our exposure to concentration risk with external hedge
counterparties such as PBs, where we have at least two per asset class
· Seeking to work with counterparties that hold investment grade
credit rating, setting limits and monitoring exposures daily
· Establishing intermediary limits and monitoring them daily to
report and escalate large exposures
Financial Risks Insurance Risk Risk of failure in insurance for risks and perils that the insurance company We mitigate our exposure by:
has agreed to provide indemnity for.
· Use of a reputable insurance broker which ensures cover is placed
CMC is exposed to insurance risk where we have an insurable risk event that is with financially secure insurers
either not included in Group insurance or where the insurance provider has
justifiable reason to not pay out on the event. · Adhering to rigorous claim management procedures with our brokers
We have limited appetite for insurance risk. Due to uncertainties associated · Operating a risk-based approach to identify insurable risks
with Crypto insurance that affects the cost of insurance, the Group does not across relevant departments
include crypto within our insurance.
· Full engagement with relevant business areas regarding risk and
coverage requirements and related disclosure to brokers and insurers
Operational Risks Business Disruption & Resilience Risk of inability to maintain and restore essential functions of the business. We limit our exposure to business disruption by:
Our extensive use of a wide range of technology, people and third-party · Multiple data centres and systems to ensure core business
providers, as well as our physical presence across the globe, exposes us to a activities and processes are resilient to individual failures
variety of internal and external events that can cause business disruption.
This ranges from cyberattacks and technology failures to human errors and · Periodic testing of business continuity processes and disaster
physical damage to our facilities that can impact on our ability to deliver recovery
important business services to clients.
· Clear identification of our critical business services with
We have low appetite for business disruption and resilience and implement defined impact tolerances for each critical business service
strong monitoring and controls to ensure we continue to deliver services to
our clients. During the year we have faced both voluntary and involuntary · Ensuring an effective contingency plan is in place, including
staff turnover which is now stable following management action. This has been where we have key person dependencies for critical business activities and
noted as a key risk in the Risk Management Report; ongoing process functions
developments will further reduce the potential impact of underlying drivers.
· Implementing a consistent and Group-wide approach to the
reporting and management of incidents, in line with our Incident Management
Policy and Group Crisis Communication Manual
· Developing overarching strategies to recover from incidents and
ensuring senior management is sufficiently knowledgeable and prepared in case
of an incident
Operational Risks Internal Fraud The risk of fraud attempted or perpetrated by an internal party (or parties) We minimise our exposure to internal fraud risk by:
against our organisation, our customers or our suppliers, including instances
where an employee is acting in collusion with external parties. · Establishing a stringent screening processes and background
checks when on boarding new employees as well as adhering to local screening
CMC is exposed to internal fraud risks where employees have access to systems requirements within the geographies we operate in
and physical/ electronic assets belonging to CMC or access to client data and
assets. · Detecting unauthorised trading through trade surveillance reports
to prevent internal trade manipulation
We have no appetite for fraud and will take prompt action if it does occur.
· Segregating payment system administration, payment creation and
payment authorisation to prevent internal payment fraud
· Prompt identification and investigation of fraud cases such that
any harm done to clients can be effectively remediated
Operational Risks External Fraud The risk of fraud attempted or perpetrated against our organisation or our We minimise our exposure to external fraud risk by:
customers, by an external party (i.e. a party without a direct relationship to
the Group) without the involvement of an employee or affiliate of the · Timely reporting and escalation of fraud cases to internal and
organisation. external stakeholders to support the recovery of losses.
CMC is exposed to fraudsters due to our large online presence as a financial · Ensuring we only do business with suitable third parties that can
organisation. Our engagement with multiple third parties also exposes us to operate appropriate controls against the risk of fraud.
external fraud risk where third parties could potentially engage in fraudulent
activity. · Prompt identification and investigation of fraud cases such that
any harm done to clients can be effectively remediated.
We have no appetite for fraud and will take prompt action if it does occur.
Operational Risks Physical Security & Safety The risk of damage or theft to the Group's physical assets, client assets, or We minimise our exposure to physical security and safety risks by:
public assets, for which the Group is liable, and injury to the Group's
employees or affiliates. · Implementing layers of security including physical access
controls across our office locations to prohibit unauthorised access
CMC is exposed to physical security and safety risk in all locations where we
have a physical presence, where either our employees, physical assets, or data · Implementing additional authorisation controls for buildings with
assets reside. more sensitive assets, such as a two-factor security measure for access to our
data centres
We have low appetite for material loss or damage to any firm or client assets,
including employees or affiliates. · Implementing health and safety assessments, including regulatory
risk assessments, occupational health assessments and fire drills
· Regular mandatory employee health and safety online training
Operational Risks Financial Crime The risk of money laundering, terrorist financing, sanctions violations, We mitigate our exposure to financial crime risk by:
bribery and corruption, and KYC failure.
· Establishing and maintaining risk- based Know Your Customer
CMC is exposed to financial crime risk as we are a financial institution ("KYC") procedures, including Enhanced Due Diligence ("EDD") for those
holding and processing a significant volume of client confidential information customers presenting higher risk, such as Politically Exposed Persons ("PEPs")
including client money and client assets. We are exposed to the risk of money
laundering as we deal with a broad range of clients and some of our · Establishing and maintaining risk-based systems for surveillance
relationships with clients are short term. and procedures to monitor ongoing customer activity
We have low appetite for instances of Financial Crime and implement · Improving procedures for reporting suspicious activity internally
preventative and detective controls to mitigate any potential exposure. To and to the relevant law enforcement authorities or regulators as appropriate
ensure we stay within our risk appetite, we are improving some monitoring
processes and investing in people and system enhancements. · Improving procedures relating to mitigation of risk derived from
clients that are repeat offenders of market abuse
· Maintaining a restricted list of individuals and legal entities
for which an account should not be opened
· Risk classifying customers or entities during onboarding,
allowing us to evaluate the risks associated with each new account
· Implementing appropriate systems and controls for transaction
monitoring to identify and block transactions that breach regulatory
guidelines and violate applicable sanctions laws
· Training and awareness for all employees.
Operational Risks Information, Security & Data Privacy The risk of information security incidents, including the loss, theft, misuse We minimise our exposure to information security and data privacy risks by:
of or unauthorised access to data/ information; this covers all types of data,
e.g., client data, employee data, and the organisation's proprietary data, and · Only storing data that is necessary and only for the purpose that
can include the failure to comply with rules concerning information security. is needed
CMC is exposed to information security and data privacy risk where we hold · Access controls based around least privileged access to ensure
large amounts of data electronically and in paper form that is confidential, everyone can only access information that they require
highly confidential or sensitive, including personally identifiable
information ("PII"). · Information classification to ensure data is accurately
classified and appropriately controlled
We have low appetite for loss or misuse of client, employee or firm
confidential information and minimise exposure through robust preventative · Physical security controls to prevent unauthorised access to
controls. buildings and sensitive area
· Implementing regular system access reviews across the business
Operational Risks Technology Risk The risk associated with the failure or outage of systems, including hardware, We minimise exposure to technology risk by:
software and networks.
· Investing in our technology stack to ensure we provide resilient
CMC is exposed to extensive technology risk as a result of being a fintech platforms that our customers can rely on
company.
· Utilising systemic monitoring tools for identification of system
We have low appetite for failure or outage in our systems and minimise downtime or performance issues
exposure through robust preventative and detective controls.
· Ensuring adequate resources are available across IT production,
with coverage across regions to monitor functionality of our systems and
provide support to prevent and remediate any system downtime
· Planning and provision of sufficient system and infrastructure
capacity to allow for growth or spikes in client and market activity
· The provision of contingent capacity by the IT production team 24
hours a day, 5 days a week to support and remediate issues
Operational Risks Legal Risk The risk of errors in legal procedures and processes and breaches of CMC's We minimise our exposure to legal risk by:
legal obligations.
· Timely involvement of the legal and compliance departments in all
CMC is exposed to legal risk through contracting with clients, third parties, strategic initiatives, new products, and onboarding of suppliers and partners
and employees, where we may be exposed to legal liabilities, including (i.e. third-party intermediaries such as introducing brokers)
litigation, resulting from non-performance of obligations or breaches of
applicable law. · Avoiding and appropriately handling disputes that could
potentially escalate to legal disputes or litigation cases, including the
We have low appetite for failures in our legal processes or obligations. timely involvement of the legal department
· Ensuring all amendments to legal terms (including terms with
clients, partners and suppliers) are reviewed and approved by the legal
department and relevant stakeholders
Operational Risks Third-Party Risk Risk of failure to implement effective oversight over outsourced arrangements We maintain inventories of all third-party relationships with vendor
and other third-party relationships. classification that informs the level of control and oversight required, and
for our critical third parties, we will:
CMC is exposed to third-party risk as we contract with external third parties
for the provision of goods and services. CMC is also exposed to third-party · Implement robust onboarding and due diligence processes for third
outsourced providers and to internal outsourcing arrangements where our UK parties with SLAs in place for all critical outsourcing and vendor provisions
entity provides operational services to different legal entities.
· Perform quarterly service review meetings and Ml to monitor the
We have low appetite for failure by our third parties. The Group makes critical relationships with relevant external vendors
extensive use of intra-group outsourcing, which is an area in which we are
investing in processes to drive consistency and clarity. · Perform annual due diligence on critical vendors
Where we outsource processes, we will do this in line with the outsourcing
policy, we ensure that internal outsourcing arrangements deliver on the needs
of the affected legal entities through:
· Documented intra- group agreements with appropriate service level
agreements
· Adequate oversight arrangements, including monitoring and
reporting against service levels
Operational Risks People The risk of breaching employment legislation, mismanaging employee relations, We are proactive in limiting our exposure to people risk by:
and failing to ensure a safe work environment.
· Recruiting and retaining the best skilled staff for the job
At CMC, we align our people plan to our business strategy which results in regardless of gender, ethnicity, religion, etc.
expansion and contraction in line with delivery of strategic initiatives.
· Aligning our recruitment process globally where possible, whilst
abiding by local market practices, regulatory requirements and legislation
· Establishing diversity and inclusion targets within our people
plan to strive towards
Operational Risks Transaction Processing and Execution Failure to process, manage and execute transactions and / or processes (such We limit our exposure to transaction processing and execution risk by:
as change programme) correctly and / or appropriately.
· A high degree of straight through processing
CMC is exposed to transaction processing and execution risk throughout the
lifecycle of our client service provision and our hedging transactions. · Implementing operational process controls (manual processes and
manual intervention) such as four-eyed checks
Operational errors occur in the normal course of business, and it is not
possible or desirable to eliminate them all. However, we have low appetite to · Training our people on our processes and providing procedural
incur material loss as a result of failures in our processes and manage our documentation
exposure through robust processes and controls.
· Immediately rectifying any transaction processing issues as and
when they do occur
· Implementing a range of reconciliation controls to ensure timely
detection of errors
· Balancing the requirements of BAU activities and strategic
initiatives to maintain the timely delivery of projects
· Performing root cause analysis on any incidents for continuous
improvement
Operational Risks Compliance with Regulation & Legislation Failure to manage and comply with any legal or regulatory obligations. We minimise our exposure to compliance risk by:
The complex regulatory landscape that CMC operates across exposes CMC to · Taking a proportionate risk-based approach interpreting
regulatory and compliance risk. regulatory requirements by considering the financial and legal impact of our
decisions
We have no appetite for failure to meet our regulatory and legislative
obligations and always strive to comply with applicable laws and regulation. · Ensuring adequate resources that are appropriately trained and
To reflect our growing diversified business, we are investing in our European supervised
compliance and governance structures.
· Performing regular horizon scanning on new regulations/
In some instances, remediation has been identified and we are making legislation, including the assessment of the impact to our business
appropriate investment to ensure we maintain effective relationships and
deliver on regulatory expectations. · Performing clear analysis of regulation and legislation across
regions, particularly in evaluation of new initiatives
· Effective compliance oversight and advisory/technical guidance
provided to the business
· Comprehensive monitoring and surveillance programmes, policies
and procedures designed by compliance.
· Strong regulatory relations and regulatory horizon scanning,
planning and implementation
Operational Risks Conduct & Improper Business Practices Failure to act in accordance with customers' best interests, fair market We minimise our exposure to conduct risk and improper business practices by:
practices, and codes of conduct to deliver good outcomes.
· Setting standards of appropriate behaviour and business practice
We are exposed to conduct risk where staff do not adhere to our Group code of in our Group code of conduct that staff must adhere to
conduct policy.
· Monitoring the use of business systems, where permissible by law,
CMC seek to conduct our business to deliver suitable, fair and clear outcomes for the detection and prevention of crime or breaches of our code of conduct
for our customers and support the integrity of the markets in which we
operate. · Implementing stringent monitoring over the outcomes of Consumer
Duty, including Products and Services, Consumer Support, Price and Value and
Consumer Understanding, the standards for which are documented in our Consumer
Duty Policy and Best Execution Policy
· Establishing policies such as Whistleblowing, Anti-Harassment and
Grievance Policies to ensure all employees are treated with dignity and
respect and are encouraged to raise concerns wherever they witness unethical
behaviours
Operational Risks Statutory Reporting & Tax Risk of failing to meet statutory and regulatory reporting and tax payments/ We minimise our exposure to statutory reporting and tax risks by:
filing requirements.
· Performing horizon scanning to establish applicable local
CMC is exposed to the statutory reporting and tax laws requirements of the taxation laws and accounting rules for all the jurisdictions we operate
geographies we operate within.
· Maintaining constructive relationships with regulators and tax
We have low appetite for failures to meet our statutory and tax reporting authorities
requirements. We ensure that where we have financial exposures they are fully
accounted for and disclosed in our annual report and accounts. · Establishing robust processes for accurate and transparent
statutory reporting
Operational Risks Data Manage-ment The risk of failing to appropriately manage and maintain accurate data, as We minimise our exposure to data management risks by:
well as retaining and disposing of data in line with our internal policy and
regulatory requirement (data includes client data, employee data and the · Implementing controls on market data, including pricing checks
Group's proprietary data).
· Ensuring that data is of sufficient quality to meet business,
CMC is exposed to data management risk across the data lifecycle through the legal and regulatory requirements by deploying data validation techniques,
creation, consumption and recording of extensive data within our platforms, such as accuracy, formatting and consistency checks, e.g. defining what our
systems and accounting ledgers. key data is, the source and data quality characteristics
We have low appetite of losses resulting from poor data management. · Establishing documented procedures for the appropriate storing,
management and disposing of data
Operational Risks Model Risk The risk of incorrect model design, improper implementation of a correct We minimise our exposure to model risk by:
model, or inappropriate application of a correct model.
· Maintaining a model inventory for all models that captures model
CMC is exposed to model risks through the use of models to facilitate our limitations, model lifecycle, key stakeholders, model classification (tiering
financial risk processes, including liquidity projections, stress testing and based on complexity), and validation mark
capital calculations. Models are also used in our platforms to calculate
prices and spreads. · Validating tier 1 risk models at least annually to evaluate their
conceptual soundness and quality of outputs. The validation report is then
We seek to minimise errors resulting from models by implementing strong reviewed by either the Executive Risk Committee or the entity board of
governance over model design and change. directors
· Assessing our model risk as part of the yearly risk
identification and assessment ("RIA:') as required by the model risk policy
Outside appetite
· This is a new risk with the taxonomy. The group is in the process
of implementing the controls outlines in the new Model Risk Policy.
DIRECTORS' STATEMENT PURSUANT TO THE FCA'S DISCLOSURE GUIDANCE AND
TRANSPARENCY RULES
The directors are required by the Disclosure Guidance and Transparency Rules
to include a management report containing a fair review of the business and a
description of the principal risks and uncertainties facing the Group.
Each of the directors, whose names and functions are listed below, confirm to
the best of their knowledge that:
· the Group Financial Statements contained in the 2024 Annual
Report and Financial Statements have been prepared in accordance with
UK-adopted international accounting standards give a true and fair view of the
assets, liabilities and financial position and results of the Group and parent
company and of the profit of the Group;
· the Strategic Report contained in the 2024 Annual Report and
Financial Statements includes a fair review of the development and performance
of the business and the position of the parent company and the Group, together
with a description of the principal risks and uncertainties that they face;
and
· the 2024 Annual Report and Financial Statements, taken as a
whole, are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's performance, business model
and strategy.
CMC Markets plc Board of Directors
James Richards (Independent Chairman)
Lord Peter Cruddas (Chief Executive Officer)
Paul Wainscott (Senior Independent Director)
Sarah Ing (Non-Executive Director)
Clare Francis (Non-Executive Director)
Susanne Chishti (Non-Executive Director)
Albert Soleiman (Chief Financial Officer)
Matthew Lewis (Head of Asia Pacific & Canada)
David Fineberg (Deputy Chief Executive Officer)
Consolidated income statement
For the year ended 31 March 2024
Note Year ended Year ended
£'000 31 March 2024 31 March 2023
Revenue 324,702 311,210
Interest income on own funds 11,246 4,761
Interest income on client funds 23,797 9,166
Total revenue 3 359,745 325,137
Introducing partner commissions and betting levies (26,962) (36,714)
Net operating income 2 332,783 288,423
Operating expenses 4 (254,894) (233,513)
Impairment of intangible assets (12,322) (432)
Operating profit 65,567 54,478
Share of results of associates (283) -
Finance costs (1,951) (2,315)
Profit before taxation 63,333 52,163
Taxation 5 (16,447) (10,724)
Profit for the year attributable to owners of the parent 46,886 41,439
Earnings per share
Basic earnings per share (p) 6 16.7 14.7
Diluted earnings per share (p) 6 16.7 14.6
Consolidated statement of comprehensive income
For the year ended 31 March 2024
Year ended Year ended
£'000 31 March 2024 31 March 2023
Profit for the year 46,886 41,439
Other comprehensive income / (expense):
Items that may be subsequently reclassified to income statement
Loss on net investment hedges, net of tax - (86)
Gains recycled from equity to the income statement 237 237
Currency translation differences (5,285) (1,760)
Changes in the fair value of debt instruments at fair value through other 144 (210)
comprehensive income, net of tax
Other comprehensive expense for the year (4,904) (1,819)
Total comprehensive income for the year attributable to owners of the parent 41,982 39,620
Consolidated statement of financial position
Company registration number: 05145017
At 31 March 2024
£'000 Note 31 March 2024 31 March 2023
ASSETS
Non-current assets
Intangible assets 8 28,906 35,342
Property, plant and equipment 9 28,546 22,771
Deferred tax assets 6,177 4,768
Financial investments 32 34
Trade and other receivables 10 2,753 2,666
Investment in associates 2,517 -
Total non-current assets 68,931 65,581
Current assets
Trade and other receivables 10 162,056 130,616
Derivative financial instruments 31,627 14,231
Current tax recoverable 1,917 9,066
Other assets 12,258 1,984
Financial investments 11 50,889 30,572
Amounts due from brokers 228,882 188,154
Cash and cash equivalents 12 160,300 146,218
Total current assets 647,929 520,841
TOTAL ASSETS 716,860 586,422
LIABILITIES
Current liabilities
Trade and other payables 13 272,811 182,284
Amounts due to brokers 6,982 8,927
Derivative financial instruments 7,074 2,033
Lease liabilities 14 4,915 5,590
Current tax payable 2,147 431
Provisions 3,937 815
Total current liabilities 297,866 200,080
Non-current liabilities
Lease liabilities 14 12,000 6,228
Deferred tax liabilities 3,244 4,012
Provisions 257 2,087
Total non-current liabilities 15,501 12,327
TOTAL LIABILITIES 313,367 212,407
EQUITY
Share capital 70,573 70,573
Share premium 46,236 46,236
Capital redemption reserve 2,901 2,901
Own shares held in trust (2,589) (1,509)
Other reserves (55,439) (50,535)
Retained earnings 341,811 306,349
Total equity 403,493 374,015
TOTAL EQUITY AND LIABILITIES 716,860 586,422
£'000 Share capital Share premium Capital redemp-tion reserve Own shares held in trust Other reserves Retained earnings Total equity
At 31 March 2022 73,193 46,236 281 (1,094) (75,980) 326,242 368,878
Profit for the year - - - - - 41,439 41,439
Loss on net investment hedges, net of tax - - - - (86) - (86)
Gains recycled from equity to the income statement - - - - 237 - 237
Currency translation differences - - - - (1,760) - (1,760)
Changes in the fair value of debt instruments at fair value through other - - - - (210) - (210)
comprehensive income, net of tax
Total comprehensive income for the year - - - - (1,819) 41,439 39,620
Acquisition of own shares held in trust - - - (1,106) - - (1,106)
Utilisation of own shares held in trust - - - 691 - - 691
Share buyback (2,620) - 2,620 - 27,264 (27,264) -
Share-based payments - - - - - 972 972
Dividends - - - - - (35,040) (35,040)
At 31 March 2023 70,573 46,236 2,901 (1,509) (50,535) 306,349 374,015
Profit for the year - - - - - 46,886 46,886
Gains recycled from equity to the income statement - - - - 237 - 237
Currency translation differences - - - - (5,285) - (5,285)
Changes in the fair value of debt instruments at fair value through other - - - - 144 - 144
comprehensive income, net of tax
Total comprehensive income for the year - - - - (4,904) 46,886 41,982
Acquisition of own shares held in trust - - - (1,788) - - (1,788)
Utilisation of own shares held in trust - - - 708 - - 708
Share-based payments - - - - - 1,388 1,388
Tax on share-based payments - - - - - 876 876
Dividends - - - - - (13,688) (13,688)
At 31 March 2024 70,573 46,236 2,901 (2,589) (55,439) 341,811 403,493
Consolidated statement of cash flows
For the year ended 31 March 2024
£'000 Note Year ended Year ended
31 March 2024 31 March 2023
Cash flows from operating activities
Cash generated from operations 15 57,139 76,584
Interest income 9,702 4,784
Income on client funds 23,797 9,166
Finance costs (1,951) (2,315)
Tax paid (8,602) (17,060)
Net cash generated from operating activities 80,085 71,159
Cash flows from investing activities
Purchase of property, plant and equipment (7,632) (7,091)
Investment in intangible assets (12,244) (21,130)
Purchase of financial investments (95,412) (17,345)
Proceeds from maturity of financial investments 76,516 14,415
Investment in associates (2,800) -
Outflow on net investment hedges - (8)
Net cash used in investing activities (41,572) (31,159)
Cash flows from financing activities
Repayment of borrowings - (1,194)
Proceeds from borrowings - 1,000
Principal elements of lease payments (5,531) (5,454)
Acquisition of own shares (1,788) (1,106)
Payments for share buyback - (27,264)
Dividends paid (13,688) (35,040)
Net cash used in financing activities (21,007) (69,058)
Net (decrease)/increase in cash and cash equivalents 17,506 (29,058)
Cash and cash equivalents at the beginning of the year 12 146,218 176,578
Effect of foreign exchange rate changes (3,424) (1,302)
Cash and cash equivalents at the end of the year 12 160,300 146,218
1. Basis of preparation
Basis of accounting
The consolidated Financial Statements of the Group have been prepared in
accordance with UK-adopted International Accounting Standards in conformity
with the requirements of the Companies Act 2006 and the Disclosure Guidance
and Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The Financial Statements have been prepared in accordance with the going
concern basis, under the historical cost convention, except in the case of
"Financial instruments at fair value through profit or loss ("FVPL")" and
"Financial instruments at fair value through other comprehensive income
("FVOCI")". The financial information is rounded to the nearest thousand
except where otherwise indicated.
The Company and Group's principal accounting policies adopted in the
preparation of these Financial Statements are set out in note 2 of the 2024
Annual Report and Financial Statements. These policies have been consistently
applied to all years presented, except for the adoption of the new accounting
policies relating to investment in associates and cryptocurrency assets held
as intangible assets and new and revised standards as set out below. The
Financial Statements presented are at and for the years ended 31 March 2024
and 31 March 2023. Financial annual years are referred to as 2024 and 2023 in
the Financial Statements.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of Financial Statements in conformity with IFRSs requires the
use of certain significant accounting judgements. It also requires management
to exercise its judgement in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgement or complexity, or
where assumptions and estimates are significant to the Consolidated Financial
Statements are:
Contingent liabilities
Judgement has been applied in evaluating the accounting treatment of the
specific matters described in note 34 (Contingent Liabilities) of the 2024
Annual Report and Financial Statements, notably the probability of any
obligation or future payments arising.
Accounting for cryptocurrencies
The Group has recognised £12,258,000 (31 March 2023: £1,984,000) of
cryptocurrency assets and rights to cryptocurrency assets on its Consolidated
Statement of Financial Position as at 31 March 2024. These assets are used for
hedging purposes and held for sale in the ordinary course of business. A
judgement has been made to apply the measurement principles of IFRS 13 "Fair
Value Measurement" in accounting for these assets. The assets are presented as
"other assets" on the Consolidated Statement of Financial Position. Please
refer to note 2 of the 2024 Annual Report and Financial Statements for the
other assets accounting policy.
Intangible assets
The Group has recognised £12,901,000 (31 March 2023: £13,550,000) of
customer relationship intangible on its Consolidated Statement of Financial
Position as at 31 March 2024 relating to the transaction with Australia and
New Zealand Banking Group Limited ("ANZ") to transition its portfolio of share
investing clients to CMC for AUD$25 million. A judgement has been made to
apply the recognition and measurement principles of IAS 38 "Intangible Assets"
in accounting for these assets.
Key financial estimates
The Group has recognised £11,706,000 (31 March 2023: £11,316,000) of
internally generated software in intangible assets on its Statement of
Financial Position as at 31 March 2024, including costs relating to the
development of platforms for CMC Invest UK and cash equity offerings (cash
equities cash-generating unit ('CGU')). In performing the impairment
assessment, which concluded that an impairment of £10,976,000 was required,
it was determined that the recoverable amount of the asset is a source of
estimation uncertainty which is sensitive to the estimated future revenues
from the cash equities CGU. We found the recoverable amount of the intangible
asset to have been based on reasonable, supportable assumptions. B2B revenue,
discount rates, cost per funded customer acquisition, customer retention
rates, average portfolio sizes and client trading volumes represent
significant source of estimation uncertainty. Relevant disclosure is included
in note 12 of the 2024 Annual Report and Financial Statements.
2. Segmental reporting
The Group's principal business is online trading, providing its clients with
the ability to trade a variety of financial products for short-term investment
and hedging purposes. These products include contracts for difference (CFD)
and financial spread betting on a range of underlying shares, indices, foreign
currencies, commodities and treasuries. The Group also makes these services
available to institutional partners through white label and introducing broker
arrangements. The Group's CFDs are traded worldwide; spread bets only in the
UK and Ireland.
In addition to this, the Group provides online stockbroking services to cater
for its clients longer term investment needs. These services are provided in
Australia, the UK and Singapore.
At the reporting date, management considered the appropriateness of the
Group's existing operating segment disclosures and the information which is
considered by the Chief Operating Decision Maker ("CODM") in allocating
resources and assessing performance. The Group's CODM has been identified
as the Board of Directors.
The Group's business is generally managed by product line, given the different
economic characteristics and the different purposes for which they are used by
clients. As a result, the Group is organised into two segments:
· Trading
· Investing
This presentation is consistent with management information regularly provided
to the CODM. Revenues and segment operating expenses are allocated to the
segments that originated the transaction, and the Group uses operating profit
to assess the financial performance of each segment.
Geographical splits of the Trading business in the prior period have been
aggregated into one segment but are not restated.
Year ended 31 March 2024 Trading Investing Total
£ '000
Revenue 279,018 45,684 324,702
Interest income on own funds 9,630 1,616 11,246
Income on client funds 14,423 9,374 23,797
Total revenue 303,071 56,674 359,745
Introducing partner commissions and betting levies (15,233) (11,729) (26,962)
Net operating income 287,838 44,945 332,783
Operating costs (200,527) (54,367) (254,894)
Impairment of intangible assets (2,298) (10,024) (12,322)
Operating profit / (loss) 85,013 (19,446) 65,567
Share of results of associates (283) - (283)
Finance costs (1,947) (4) (1,951)
Profit / (loss) before taxation 82,783 (19,450) 63,333
Year ended 31 March 2023 Trading Investing Total
£ '000
Revenue 255,528 55,682 311,210
Interest income on own funds 4,129 632 4,761
Income on client funds 3,262 5,904 9,166
Total revenue 262,919 62,218 325,137
Introducing partner commissions and betting levies (18,960) (17,754) (36,714)
Net operating income 243,959 44,464 288,423
Operating costs (188,164) (45,349) (233,513)
Impairment of intangible assets (432) - (432)
Operating profit / (loss) 55,363 (885) 54,478
Finance costs (2,136) (179) (2,315)
Profit / (loss) before taxation 53,227 (1,064) 52,163
The measurement of net operating income for segmental analysis is consistent
with that in the income statement and is broken down by geographic location
below.
£ '000 Year ended Year ended
31 March 2024 31 March 2023
UK 92,332 94,943
Australia 109,425 91,314
Other countries 131,026 102,166
Total net operating income 332,783 288,423
The Group does not derive more than 10% of revenue from any one single client.
The measurement of segment assets for segmental analysis is consistent with
that in the balance sheet. The total of non-current assets other than deferred
tax assets, broken down by location of the assets, is shown below:
£ '000 Year ended Year ended
31 March 2024 31 March 2023
UK 32,981 30,996
Australia 23,405 25,348
Other countries 6,368 4,469
Total non-current assets 62,754 60,813
3. Total revenue
Revenue
£'000 Year ended Year ended
31 March 2024 31 March 2023
Trading 274,309 252,012
Investing 45,684 55,687
Other 4,709 3,511
Total 324,702 311,210
Interest income on own funds
£'000 Year ended Year ended
31 March 2024 31 March 2023
Bank and broker interest(1) 9,661 4,316
Interest on financial investments 1,556 440
Other interest income 29 5
Total 11,246 4,761
(1) For better presentation, income on client funds have been presented
separately at the years ended 31 March 2024 and 31 March 2023, as below.
Income on client funds
£'000 Year ended Year ended
31 March 2024 31 March 2023
Income on client funds 23,797 9,166
Total 23,797 9,166
4. Operating expenses
Year ended Year ended
£'000 31 March 2024 31 March 2023
Net staff costs 118,469 101,560
IT costs 39,697 33,723
Sales and marketing 35,583 38,304
Premises 6,657 5,706
Legal and professional fees 13,937 8,605
Regulatory fees 4,294 9,436
Depreciation and amortisation 15,101 15,205
Bank charges 5,055 7,362
Irrecoverable sales tax 5,546 2,972
Other 10,568 10,810
254,907 233,683
Capitalised internal software development costs (13) (170)
Operating expenses 254,894 233,513
The above presentation reflects the breakdown of operating expenses by nature
of expense.
5. Taxation
£'000 Year ended Year ended
31 March 2024 31 March 2023
Analysis of charge for the year:
Current tax:
Current tax on profit for the year 18,839 9,873
Adjustments in respect of previous years (991) (991)
Total current tax 17,848 8,882
Deferred tax:
Origination and reversal of temporary differences (1,878) 1,180
Adjustments in respect of previous years 477 200
Impact of change in tax rate - 462
Total deferred tax (1,401) 1,842
Total tax 16,447 10,724
The standard rate of UK corporation tax charged was 25% with effect from 1
April 2023. Taxation outside the UK is calculated at the rates prevailing in
the respective jurisdictions. The effective tax rate for the year ended 31
March 2024 was 25.97% (year ended 31 March 2023: 20.56%) differs from the
standard rate of corporation tax of 25% (year ended 31 March 2023: 19%). The
differences are explained below:
£'000 Year ended Year ended
31 March 2024 31 March 2023
Profit before taxation 63,333 52,163
Profit multiplied by the standard rate of corp. tax in the UK of 25% (31 March 15,833 9,911
2023: 19%)
Adjustment in respect of foreign tax rates 743 1,205
Adjustments in respect of previous years (514) (791)
Impact of change in tax rate - 462
Expenses not deductible for tax purposes 319 (104)
Unrecognised tax losses 66 41
Total tax 16,447 10,724
£'000 Year ended Year ended
31 March 2024 31 March 2023
Tax on items recognised directly in equity
Tax credit on share-based payments (876) -
6. Earnings per share ("EPS")
Basic EPS is calculated by dividing the earnings attributable to the equity
owners of the Company by the weighted average number of Ordinary Shares in
issue during each year excluding those held in employee share trusts which are
treated as cancelled. For diluted earnings per share, the weighted average
number of Ordinary Shares in issue, excluding those held in employee share
trusts, is adjusted to assume conversion vesting of all dilutive potential
weighted average Ordinary Shares and that vesting is satisfied by the issue of
new Ordinary Shares.
£'000 Year ended Year ended
31 March 2024 31 March 2023
(Restated)
Earnings attributable to Ordinary Shareholders (£ '000) 46,886 41,439
Weighted average number of shares used in the calculation of basic EPS ('000) 279,962 282,295
Dilutive effect of share options ('000) - 1,598
Weighted average number of shares used in the calculation of diluted EPS 279,962 283,893
('000)
Basic EPS (p) 16.7 14.7
Diluted EPS (p) 16.7 14.6
For the year ended 31 March 2024, there are no (year ended 31 March 2023:
1,598,000) potentially dilutive weighted average Ordinary Shares in respect of
share awards in issue were included in the calculation of diluted EPS, as the
Group does not expect to issue any new shares to settle these share awards and
options.
7. Dividends
£'000 Year ended Year ended
31 March 2024 31 March 2023
Declared and paid in each year
Final dividend for 2023 at 3.90 per share (2022: 8.88p) 10,893 25,250
Interim dividend for 2024 at 1.00p per share (2023: 3.50p) 2,795 9,790
Total 13,688 35,040
The final dividend for 2024 of 7.30 pence per share, amounting to
£20,427,000, was proposed by the Board on 19 June 2024 and has not been
included as a liability at 31 March 2024. The dividend will be paid on 9
August 2024, following approval at the Company's Annual General Meeting, to
those members on the register at the close of business on 12 July 2024. The
dividends paid or declared in relation to the financial year are set out
below:
pence Year ended Year ended
31 March 2024 31 March 2023
Declared per share
Interim dividend 1.00 3.50
Final dividend 7.30 3.90
Total dividend 8.30 7.40
8. Intangible assets
£ '000 Goodwill Computer software Trade-marks and trading licences Client relation-ships Crypto-currency assets Assets under develop-ment Total
At 31 March 2023
Cost 11,500 143,991 1,046 16,495 - 7,707 180,739
Accumulated amortisation (11,500) (129,304) (914) (3,679) - - (145,397)
Carrying amount at - 14,687 132 12,816 - 7,707 35,342
31 March 2023
Additions - 338 - - 200 11,706 12,244
Transfers - 9,671 - - - (9,671) -
Amortisation charge - (3,953) (34) (1,456) - - (5,443)
Impairment - (9,161) - - - (3,161) (12,322)
Foreign currency translation - (85) (2) (593) - (235) (915)
Carrying amount at - 11,497 96 10,767 200 6,346 28,906
31 March 2024
At 31 March 2024
Cost 11,500 151,408 1,019 15,705 200 9,507 188,979
Accumulated amortisation (11,500) (139,551) (923) (4,938) - (3,161) (160,073)
Carrying amount - 11,497 96 10,767 200 6,346 28,906
9. Property, plant and equipment
£ '000 Leasehold improvements Furniture, fixtures and equipment Computer hardware Right-of-use assets Construction in progress Total
At 31 March 2023
Cost 16,565 9,321 42,420 22,634 152 91,092
Accumulated amortisation (14,092) (8,606) (31,661) (13,962) - (68,321)
Carrying amount at 2,473 715 10,759 8,672 152 22,771
31 March 2023
Additions 3,006 647 3,779 9,587 - 17,019
Reclassification - 89 61 - (150) -
Disposals (220) (1) (258) (705) - (1,184)
Depreciation charge (1,136) (293) (4,163) (4,066) - (9,658)
Foreign currency translation (52) (28) (70) (250) (2) (402)
Carrying amount at 4,071 1,129 10,108 13,238 - 28,546
31 March 2024
At 31 March 2024
Cost 16,542 9,829 45,502 30,320 - 102,193
Accumulated amortisation (12,471) (8,700) (35,394) (17,082) - (73,647)
Carrying amount at 31 March 2024 4,071 1,129 10,108 13,238 - 28,546
10. Trade and other receivables
£'000 31 March 2024 31 March 2023
Current
Gross trade receivables 9,936 8,721
Less: loss allowance (3,964) (4,247)
Trade receivables 5,972 4,474
Prepayments 13,552 14,985
Accrued income 3,778 2,335
Stockbroking debtors 126,339 105,103
Other debtors 12,415 3,719
162,056 130,616
Non-current
Other debtors 2,753 2,666
Total 164,809 133,282
Stockbroking debtors represent the amount receivable in respect of equity
security transactions executed on behalf of clients with a corresponding
balance included within trade and other payables (note 13).
At 31 March 2024 the Group has lease receivables amounting to £548,000 (31
March 2023: £384,000). The Group is an intermediate lessor on these leases
and has recognised finance income of £29,000 during the year ended 31 March
2024 (year ended 31 March 2023: £5,000).
11. Financial investments
£'000 31 March 2024 31 March 2023
Investment in debt instruments classified at FVOCI
UK government securities 16,162 30,572
Corporate bonds 34,349 -
Financial assets mandatorily measured at FVPL
Equity securities 410 34
Total 50,921 30,606
Analysis of financial investments
Non-current 32 34
Current 50,889 30,572
Total 50,921 30,606
12. Cash and cash equivalents
£'000 31 March 2024 31 March 2023
Cash and cash equivalents 160,300 146,218
Analysed as:
Cash at bank 160,300 146,218
Cash and cash equivalents comprise cash on hand and short-term deposits. Cash
and cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value. This includes money market funds.
While cash and cash equivalents are also subject to the impairment
requirements of IFRS 9, the ECL is immaterial for the year ended 31 March 2024
(year ended 31 March 2023: £nil).
13. Trade and other payables
£'000 31 March 2024 31 March 2023
Client payables 119,591 49,409
Tax and social security 759 1,272
Stockbroking creditors 116,029 98,428
Accruals and other creditors 36,432 33,175
Total 272,811 182,284
Stockbroking creditors represent the amount payable in respect of equity and
securities transactions executed on behalf of clients with a corresponding
balance included within trade and other receivables (note 10).
14. Lease liabilities
The Group leases several assets including leasehold properties and computer
hardware to meet its operational business requirements. The average lease term
is 2.8 years.
The movements in lease liabilities during the year were as follows:
£'000 31 March 2024 31 March 2023
At 1 April 11,818 14,251
Additions / modifications of new leases during the year 10,960 3,223
Interest expense 966 658
Lease payments made during the year (6,497) (6,112)
Foreign currency translation (332) (202)
At 31 March 16,915 11,818
£'000 31 March 2024 31 March 2023
Analysis of lease liabilities
Non-current 12,000 6,228
Current 4,915 5,590
Total 16,915 11,818
The lease payments for the year ended 31 March 2024 relating to short-term
leases amounted to £732,000 (year ended 31 March 2023: £402,000). As at 31
March 2024 the potential future undiscounted cash outflows that have not been
included in the lease liability due to lack of reasonable certainty the lease
extension options might be exercised amounted to £nil (31 March 2023: £nil).
Refer to note 29 of the 2024 Annual Report and Financial Statements for
maturity analysis of lease liabilities.
15. Cash generated from operations
£'000 Year ended Year ended
31 March 2024 31 March 2023
Cash flows from operating activities
Profit before taxation 63,333 52,163
Adjustments for:
Interest income (11,246) (4,761)
Income on client funds (23,797) (9,166)
Finance costs 1,951 2,315
Depreciation 9,658 9,962
Amortisation and impairment of intangible assets 17,765 5,675
Research and development tax credit (497) (651)
Share of results of associate 283 -
(Profit)/Loss on disposal of property, plant and equipment 479 (27)
Other non-cash movements including exchange rate movements (187) 980
Share-based payment 2,092 1,651
Changes in working capital
Decrease/(Increase) in trade and other receivables (31,181) 17,222
Decrease/(Increase) in amounts due from/due to brokers (42,673) 17,261
Decrease/(Increase) in other assets (10,274) 11,459
(Decrease)/Increase in trade and other payables(1) 90,520 (20,792)
Increase in net derivative financial instruments liabilities (12,355) (7,167)
Increase in provisions 3,268 460
Cash generated from operations 57,139 76,584
(1) This change in working capital for the year ended 31 March 2023 is stated
after offsetting a payment amounting to £9,500,000 made to the Australia and
New Zealand Banking Group Limited in relation to the portfolio of share
investing clients acquired during the year ended 31 March 2022.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR UROVRSRUNURRRecent news on CMC Markets
See all newsREG - CMC Markets Plc - Notice of AGM
AnnouncementREG - CMC Markets Plc - Directorate Change
AnnouncementREG - CMC Markets Plc - Dividend Declaration
AnnouncementREG - CMC Markets Plc - Final results for the year ended 31 March 2024
AnnouncementREG - CMC Markets Plc - Director/PDMR Shareholding
Announcement