June 10, 2021 - UK publicly listed online trading firm CMC Markets has released its full-year results today, showing record profits of £224.0 million, an increase of 127% on the previous year.
· Net operating income increased to £409.8 million, up £157.8 million (63%).
· CFD revenue per active client up 22% to £4,560, driven by improved CFD client income retention.
· CFD active clients increased by 19,389 (34%) driven by our ongoing focus on high value, sophisticated, experienced global clients, and increased levels of interest in the financial markets from a new wave of clients.
· Stockbroking net trading revenue up 72% to £54.8m driven by higher client numbers (up 28%) and the increasing appeal of the international shares offering.
· Continued to offer clients highly resilient and performant platforms, which allowed clients to trade, and new clients to onboard, throughout periods of extremely high trading volumes and market volatility.
· Investment continued in proprietary technology platforms to diversify the offering, with new Dynamic Trading and Spot FX offerings launched in May and June 2021 respectively, along with a native mobile app for Stockbroking in March 2021.
· Operating expenses increased by 22% to £184.0 million, predominantly due to higher personnel costs as a result of recruitment to support ongoing strategic initiatives, increased marketing costs to capitalise on market opportunities, and trading related variable costs.
· Profit before tax up 127% to £224.0 million (2020: £98.7 million).
· Regulatory total capital ratio of 20.5% and net available liquidity of £210.6 million
Outlook and Dividend
The Group believes that existing active client levels are likely to be sustainable as the characteristics of clients onboarded during the year are comparable to our current high value client base, with longevity and trading activity at similar levels to prior cohorts.
· The monthly active client base has remained strong at the start of 2022 representing ongoing trading appetite, however client trading activity has moderated from prior elevated levels. Nevertheless, the Group continues to have confidence in the robust underlying performance of the business and in conjunction with further progress on its strategic initiatives, looks forward to continuing to generate long term business growth and value. As a result, the Board remains confident in achieving net operating income in excess of £330 million for 2022.
· The Group’s significant investment in technology development, including the build of a non-leveraged trading platform for UK clients, is expected to lead to a moderate increase in operating costs in the coming financial year.
· Final dividend of 21.43 pence per share (total dividend of 30.63 pence per share), in line with the dividend policy. The Board remains committed to paying a total dividend of 50% of profit after tax, balancing investing in long-term success and providing shareholders with superior returns.
Lord Cruddas, Chief Executive Officer, CMC Markets commented on the results: "“I am delighted with our record performance, which vindicates our strategy of continuing focus on high value clients and technology investment. I am tremendously proud of the resilience, flexibility and capability displayed by all of my colleagues at CMC and would like to personally thank them all for the commitment and passion with which they continue to deliver high levels of service to our clients.
The performance in 2021, building on a strong performance in 2020, is a result of the Group’s unwavering focus on our strategic initiatives. This has delivered increased diversification of Group revenues and improved CFD client income retention. Active client numbers have also increased substantially, primarily as a result of COVID-19 related volatility and heightened levels of interest in the financial markets, but our strategy allows us to attract and retain these new clients. The growing contribution of B2B revenues is also particularly pleasing and will continue to be an important part of our strategy going forward.
During the period we continued to recruit new staff and we did not request to participate in any Government financial support schemes. Our Digital Transformation Programme, led by our new Chief Technology Officer, Brendan Foxen, was initiated during the year and has started to make fantastic progress with the first ‘lighthouse’ project, our Dynamic Trading product, having launched in May 2021.
CMC continues to provide clients with market leading trading platforms and client service, even during periods of extreme volatility and trading activity, holding true to our values. This technological excellence provides the Group with a solid foundation on which to serve current and future clients, along with the expertise to continue to invest in new products that will deliver sustainable growth.”
A news report by Sky News yesterday revealed that CMC is planning to launch a new investment platform, to be branded CMC Wealth, could be launched by the end of this year, offering access to Self-Invested Pensions (SIPPs) ISAs and 3rd-party funds. This would see CMC taking on the market share of rivals such as Hargreaves Landsdowne, AJ Bell and Interactive Investor.
This is alluded to further in the Full Year report where Lord Cruddas comments on the new focus on non-leveraged trading: "Non-leveraged trading is also the fastest growing client acquisition area of the business; we opened over two times more non-leveraged client accounts in Australia than leveraged business across the whole Group during the year.
"As the Group continues to secure these transactions through technology, we continue to diversify the business through increasing non-leveraged revenue streams. In addition, within the next year, we will also be developing additional non-leveraged platforms targeting the investment community. We will provide detail about this later in the year as we continue the journey through the build process, but we are effectively leveraging off our existing platform technology in order to diversify into other markets and target more non-leveraged business. We are able to diversify this way because of the technology we have built and we are constantly looking at ways to enhance the platform technology to launch new products and services."
View the full final results document on the CMC Markets Connect page on LiquidityFinder. (Click on the CMC logo below to view the CMC Markets Connect page.)
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