11 June, 2020 -
Response to COVID-19 pandemic
• The Group reacted to the pandemic swiftly, with a smooth transition to remote working for 100% of our staff, with key processes unaffected.
• The Group’s CFD platform continued to perform extremely well, with best in class availability and execution times being maintained during the extraordinarily high levels of trading activity within the underlying markets and exchanges.
• The Group has not furloughed or reduced any of its permanent workforce, nor has it requested any government aid in any of its global locations as a response to the COVID-19 pandemic.
• Net operating income increased to £252.0 million, up £121.2 million (93%).
• CFD revenue per active client up 81% to £3,750, primarily as a result of improved retention of CFD gross client income.
• CFD active clients increased by 3,894 (7%), demonstrating the continuing attractiveness of the platform.
• Stockbroking net trading revenue up 106% to £31.8m driven by a combination of a full year of revenues for the ANZ Bank partnership, higher market volatility in Q4 and successful product launches.
• The Group continues to invest in its proprietary technology platforms to diversify its offering and generate value through institutional relationships. ― This has been demonstrated by the success of the ANZ Bank white label partnership which has generated £22.3 million net revenue in 2020.
• Operating expenses increased by 23% to £151.3 million, predominantly due to higher variable remuneration as a result of the significantly improved performance in FY20. Variable remuneration, whilst being significantly higher year on year, is in line with comparable prior years.
• Operating expenses excluding variable remuneration up 14% to £137.3 million.
• Profit before tax up 1,459% to £98.7 million (2019: £6.3 million).
Outlook and dividend
• CFD gross client income at the start of the financial year has been around double that during the same period in the prior financial year and client income retention remains strong.
• The Group has confidence in the underlying performance of the business when market activity becomes normalised, and in conjunction with further progress on its strategic initiatives, looks forward to continuing to generate business growth and value.
• The Group’s significant investment in technology development and infrastructure in its institutional (“B2B”) business is expected to lead to a moderate increase in costs in the coming financial year.
• It is anticipated that the Group effective tax rate will increase to above the UK corporate tax rate in the new financial year.
• Final dividend for the year of 12.18 pence per share resulting in a total dividend of 15.03 pence per share, in line with the Group’s dividend policy of distributing 50% of profit after tax. Given the strength of the balance sheet and confidence in strategic delivery, the Board remains committed to paying a total dividend going forward of 50% of profit after tax.
Peter Cruddas, Chief Executive Officer commented:
“During these extraordinarily difficult times, I would like to take the opportunity to convey my sympathies to everyone who has been impacted by the COVID-19 pandemic. I am extremely proud of the resilience and dedication shown by all of my colleagues at CMC, who are contributing to ensuring that our clients are able to trade throughout a period of extraordinarily high volume and volatility in global markets.
The significant performance improvement in 2020 is a result of the Group’s unwavering focus on our strategic initiatives. This has delivered increased diversification of Group revenues, improved CFD client income retention and an increased number of active clients. The growing contribution of B2B revenues is also particularly pleasing and will continue to be an important part of our strategy going forward.
The heightened volatility and trading activity resulting from COVID-19 has continued into the first quarter of the financial year, and CMC continue to provide clients with market leading trading platforms and client service. I am also confident that, once the financial world returns to more normal conditions, the Group will continue to build on the underlying growth that was being displayed prior to the pandemic. This, in combination with our stable dividend policy and positive trading outlook, will enable CMC to continue to deliver considerable value to all of our stakeholders.”
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