TIDMCMCX
RNS Number : 5300G
CMC Markets Plc
16 November 2022
16 November 2022
CMC MARKETS PLC
("CMC" or the "Company")
Interim results for the half year ended 30 September 2022
Net operating income 21% higher versus H1 2022.
Three year growth plan on track. CMC Invest successfully
launched in the UK, with Singapore to follow.
30 September 30 September
For the half year ended 2022 2021 Change
Net operating income (GBP million) 153.5 126.7 21%
Trading net revenue (GBP million) 128.4 101.0 27%
Investing net revenue (GBP million) 20.8 24.2 (14%)
Other income (GBP million) 4.3 1.5 173%
Profit before tax (GBP million) 36.6 36.0 1%
Basic earnings per share (pence) 10.2 9.6 6%
Dividend per share (pence) 3.50 3.50 -
=========================================== ============= ============= =======
Trading gross client income (GBP million) 154.9 127.0 22%
Trading client income retention 83% 80%
Trading active clients (numbers) 50,199 53,834 (7%)
Trading revenue per active client (GBP) 2,558 1,877 36%
------------------------------------------- ------------- ------------- -------
Investing active clients (numbers) 164,632 185,847 (11%)
------------------------------------------- ------------- ------------- -------
Notes:
- Net operating income represents total revenue net of
introducing partner commissions and levies
- Trading net revenue represents contracts for difference
("CFD") and spread bet gross client income net of rebates, levies
and risk management gains or losses
- Investing net revenue represents stockbroking revenue net of
rebates
- Trading gross client income represents spreads, financing and
commissions charged to clients (client transaction costs)
- Active clients represent those individual clients who have
traded with or held a CFD or spread bet position or who traded on
the stockbroking platform on at least one occasion during the
six-month period
- Trading revenue per active client represents total trading
revenue from trading active clients after deducting rebates and
levies
- A reconciliation of revenue alternative performance measures
("APMs") to the Group's primary statements can be found on page
34
H1 2023 Financial Highlights
-- Net operating income of GBP153.5 million (H1 2022: GBP126.7 million +21% yoy).
-- Trading net revenue was GBP128.4 million (H1 2022: GBP101.0 million +27% yoy).
-- Investing net revenue was GBP20.8 million (H1 2022: GBP24.2 million -14% yoy).
-- Operating costs (excluding variable remuneration) of GBP106.3
million (H1 2022: GBP83.1 million(1) +28% yoy) and GBP115.6 million
(H1 2022: GBP89.7 million(1) +29% yoy) including variable
remuneration. The majority of the cost increase reflects investment
for growth across CMC's investing and trading platforms.
-- Regulatory total capital ratio of 610% (FY 2022: 489%) and
net available liquidity of GBP254.2 million (FY 2022: GBP245.9
million).
-- Interim dividend of 3.50 pence per share (H1 2022: 3.50
pence) with a total dividend for the year expected to be in line
with policy at 50% of profit after tax.
Operational Highlights
-- Plans to grow Group net operating income by 30% over three
years based on the 2022 results and underlying conditions, remain
on track.
-- Significant development upgrades delivered across existing
trading platforms in H1 2023. These include enhanced FX liquidity
functionality, new trading analytics, new pricing functions and
enhanced onboarding initiatives. Further product upgrades on track
for delivery in H2 2023.
-- Expansion of CMC Invest continues. The recent launch of the
UK investment platform, CMC Invest UK , which will see new product
additions over the coming months, will be followed by the launch of
CMC Invest Singapore by the end of FY 2023. Further regional
expansion in New Zealand and Canada also being considered.
-- Trading active client figures decreased by 7% although all
regions saw an increase in revenue per client (+36% yoy) largely
due to higher client income along with an increase in client income
retention to 83% (H1 2022: 80%). CMC's marketing focus on premium
customers continues to act as a successful strategy for the
Group.
-- Operating cost guidance for FY 2023 remains unchanged at
GBP215 million excluding variable remuneration. Ongoing GBP
weakness and the rate of recruitment for the delivery of strategic
initiatives could result in higher costs.
1 30 September 2021 figures restated to include social taxes on
FY 2022 annual discretionary bonus to be within variable
remuneration
Lord Cruddas, Chief Executive Officer, commented:
"I am pleased to report another strong performance for the first
six months of the year. We saw an acceleration in activity across
FX and commodities in addition to the normal activity across our
index flow during a period of heightened focus on monetary policy
action around the globe and a pickup in market volatility and
trading volumes.
Against this backdrop, we are on track to deliver our three-year
expansion initiatives aimed at driving higher revenues and
diversifying our earnings. We remain committed to improving our
offering across our core trading CFD and spread bet businesses,
allowing our clients to access a wider range of products through
our award-winning platforms. In our Institutional trading business,
we continue to grow volumes as a non-bank liquidity provider in the
FX spot market. I am also pleased to have launched our new UK
investing business, CMC Invest UK . This move in the UK into
self-directed investing marks a significant milestone for us and
complements our already sector-leading stockbroking business in
Australia. CMC Invest UK will see significant new product additions
in coming months, enhancing the platform to include ISAs,
multi-currency accounts, mutual funds, and SIPPs. The UK wealth
market remains an attractive environment and we are on target to
offer retail investors a market-leading solution for long-term
investment and wealth creation.
I am also excited about the ongoing geographical expansion of
our offering into new regions like Singapore. We have committed to
launch CMC Invest Singapore by the end of FY 2023. This will
complement our already substantial business in Australia, where the
migration of the approximately 500,000 ANZ Share Investing client
base is set to be completed on time, by the end of this financial
year.
We are on a fast track to diversification, using our existing
platform technology to win B2B and B2C investing business. Our
strategic growth plans are on track and set to deliver significant
new business expansion as we introduce new products across our
retail, institutional and stockbroking businesses."
An analyst and investor presentation will be held on 16 November
2022 9:00am UK time. Participants need to register using the links
below to access the webcast.
Webcast:
https://www.lsegissuerservices.com/spark/CMCMarkets/events/fd562c32-760a-4137-a993-c9ada1ca9232
Conference Line:
https://cossprereg.btci.com/prereg/key.process?key=PFDJXXVAE
Forthcoming announcement dates
25 January 2023 Q3 2023 trading update
14 April 2023 FY 2023 pre-close update
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
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation ("MAR"). Upon the publication of this
announcement via Regulatory Information Service ("RIS"), this
inside information is considered to be in the public domain.
Enquiries
CMC Markets Plc
James Cartwright, Investor Relations
Euan Marshall, Chief Financial Officer
investor.relations@cmcmarkets.com
Camarco +44 (0) 20 3757 4980
Geoffrey Pelham-Lane
Jennifer Renwick
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 10,000
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 and the UK, access stockbroking services. More
information is available at http://www.cmcmarketsplc.com
CHIEF EXECUTIVE OFFICER'S REVIEW
Our strategy to expand and diversify the business into new asset
classes, including the launch of a new investment platform in the
UK and the development of a new investment platform in Singapore,
is on track. These new business additions are complemented by
continued investment in our established CFD and spread bet trading
businesses in line with our mission to constantly offer a superior
and unrivalled technology experience for our clients.
Financial performance
We closed the first six months with a pickup in market
volatility and client trading volumes driving an improvement in net
operating income versus last year. H1 2023 trading net revenue was
GBP128.4 million (H1 2022: GBP101.0 million), up 27% year-on-year.
H1 2023 investing net revenue, which currently relates exclusively
to CMC Invest Australia, was GBP20.8 million (H1 2022: GBP24.2
million), down 14% year-on-year driven by lower activity and
unfavourable market conditions resulting from the uncertainty
around the global economic outlook, inflationary pressures and the
resultant impact on interest rates.
Client trading assets under management ("AuM") finished at c.
GBP506 million, below the historical period-end record of c. GBP560
million but remaining at elevated levels compared to pre-COVID-19.
H1 2023 active trading clients were lower compared to H1 2022 (down
7% to 50,199), nevertheless all regions saw a significant increase
in revenue per client (up 36%) largely as a result of growth in
client income as well as improved client income retention to 83%
(H1 2022: 80%). Our marketing focus is set on positioning ourselves
and our platforms towards the premium customer segment. This
continues to play to our strengths.
In H1 2023 our Australian investing business, rebranded to CMC
Invest Australia, finished the period with a modest reduction in
assets under administration ("AuA") from historical record levels.
Net revenue decreased 14% driven by lower active clients and
unfavourable market conditions resulting in fewer investment
opportunities for clients. However, this was partially offset by a
significant increase (279% or GBP1.2m) in interest income driven by
higher interest rates. Overall activity remains elevated versus
pre-pandemic levels. The migration of approximately 500,0000
clients as part of the ANZ Share Investing acquisition is on track
and scheduled to finish in H2 this financial year.
Operating costs
Operating costs for H1 2023, excluding variable remuneration,
were GBP106.3 million (H1 2022: GBP83.1 million). Operating cost
guidance for FY 2023 remains unchanged at GBP215 million excluding
variable remuneration. Currency fluctuations, in particular any
resumption in GBP weakness, would put pressure on non-GBP
denominated costs, but nevertheless would be expected to have a net
positive effect on profit due to non-GBP denominated revenue.
Investing (non-leveraged) business expansion update
CMC Invest UK was launched to the UK public on 30 September,
marking the first move for CMC into the UK's significant
self-directed investing market. It is a natural progression for the
Group, complementing our already market-leading stockbroking
business in Australia. New product additions in coming months will
include ISAs, multi-currency accounts, mutual funds, ESG investment
screening and SIPPs. Once this functionality is delivered, we will
continue to enhance and invest, providing unrivalled market access
to investors through the best technology at lower transactional
costs and fees compared to our competitors. We are confident that
we will be able to capture an increasing part of the available
market over time. As part of our UK growth strategy, we will also
deliver a full B2B offering, a strategy we have successfully
implemented in Australia which has resulted in CMC becoming the
second largest stockbroker in the country.
In Australia the migration of approximately 500,000 Share
Investing client accounts following the acquisition of the ANZ Bank
investing business continues and is expected to be completed by the
end of FY 2023. The CMC Invest Australia platform will offer these
new clients a wide range of additional benefits, including access
to enhanced market-leading mobile apps and complementary
educational tools and resources, as well as lower brokerage
commissions across four major international markets and the local
Australian market. Our platform offering continues to receive
accolades and I am proud to say our Australian stockbroking
business won the Canstar Broker of the Year award again in 2022;
the twelfth year in a row we have received this prestigious award.
At the same time, we continue to pursue growth through B2B
partnerships as well as investing and expanding our product
offering across the region, which will include physical
cryptocurrencies by the end of FY 2023.
We have ambitious plans to continue this expansion in various
other countries. The expansion of CMC Invest to our Singapore
office continues as planned. More than half of the Singaporean
population over the age of sixteen have investments in stocks and
equities, equating to around 1.5 million people, and over time the
platform will offer B2B and white label opportunities along with
the potential to allow further expansion into Asian markets.
Trading (leveraged) business expansion update
CMC is a pioneer of platform technology and boasts over 25 years
of experience in providing technology-backed solutions for B2C and
B2B clients and partners. This gives us scale, leverage, and the
ability to drive down transaction costs, as well as the ability to
launch new platforms and enter new markets quickly.
On our trading platforms, we continue to invest in new
enterprises to drive revenue growth. Our institutional business
continues to capture the significant growth we are seeing in global
FX trading where Spot FX represents some $2.1 trillion of average
daily volume according to recent Bank for International Settlements
data. The investment in our traditional business has intensified
over the past year and we are also working towards being able to
offer new trade types, routing, and custody options on a range of
asset classes. These include cash equities, physical
cryptocurrencies, and options.
This is a multi-phase programme with the first phase offering
our institutional customers the ability to trade physical equities
in the US market via the CMC Markets Connect platform and is due to
be delivered early in FY 2024. All this forms part of our focus to
diversify our client mix by both type and geography. It will also
benefit the expansion across other CMC Markets growth
strategies
Managed separation update
With the launch of CMC Invest, and its growing B2B platform
business, the Group boasts two strong underlying businesses,
trading and investing, each having robust growth prospects in
sizeable markets with excellent competitive positions. In this
context, on 15 November 2021 CMC Markets announced that it had
initiated a strategic review to evaluate the merits of a managed
separation of the trading and investing businesses of the Group.
The review was consistent with the Board's continuous evaluation of
strategic opportunities to maximise shareholder value.
The review has concluded that given the strong commercial and
operational synergies between the Trading and Investing businesses,
shareholder's interests would be best served by ensuring that both
businesses operate within the current Group structure for the time
being rather than by pursuing a planned separation at this
stage.
Regulation
The regulatory framework remains unchanged as reported at our FY
2022 results. The most recent significant change was the
intervention by the Australian Securities and Investments
Commission ("ASIC") relating to CFDs on 29 March 2021. This change
further harmonised the global regulatory environment, allowing us
to focus on growing our business in an industry where regulatory
arbitrage is reduced. In April 2022, ASIC extended its product
intervention order, imposing conditions on the issue and
distribution of CFDs for a further five years to 23 May 2027,
thereby improving regulatory visibility.
People and sustainability
Our people are core to our success and we have a strong team
across all our business units. We continue to invest in attracting
the best talent to our business to support the delivery of our core
strategic initiatives. Likewise, the Group understands it has a
duty to help improve the prospects and living environment for our
employees and the local community. Sustainability and social
awareness are part of our core values and culture. We continue to
develop our core KPIs associated with our sustainability strategy
"Our Tomorrow: taking a positive position". Further details of our
targets and goals will be presented within our FY 2023 Annual
Report and Financial Statements.
Share buyback programme
On 15 March 2022, the Company commenced a share buyback
programme of up to GBP30 million. The Board's decision to undertake
the buyback was underpinned by the Company's robust capital
position and after having considered the capital and liquidity
requirements for ongoing investment in the business. This buyback
programme formed part of a normal balanced approach to shareholder
returns alongside the current dividend policy. The share buyback
programme was completed on 17 October 2022.
Dividend
The Group is maintaining its dividend policy of paying 50% of
profit after tax. The Board has declared an interim dividend of
3.50 pence per share (H1 2022: 3.50 pence per share), with a view
to paying a final dividend in line with the Group's policy. The
interim dividend will be paid on 5 January 2023 to those members on
the register at the close of business on 2 December 2022.
Outlook
Our three-year growth plans remain unchanged and on track. New
business expansion is expected to grow net operating income by 30%
over the next three years based on the FY 2022 result and
underlying conditions, with expansion in profit margins expected
from FY 2024 onwards. The targeted growth is expected to be broadly
linear over that period. New growth investment will focus on
initiatives aiming to enhance functionality and capture a broader
share of wallet as we evolve our execution services and investment
platforms. As already discussed, we will continue to utilise our
technology to enter new markets and expand our investing offering.
The impact of this growth and diversification will reduce revenue
volatility in the medium term and grow pre-tax profit margins from
FY 2024.
In respect of operating costs, guidance for FY 2023 remains
unchanged at GBP215 million excluding variable remuneration.
Currency volatility still leads to some uncertainty over non-GBP
costs although any sustained GBP weakness would have a net positive
effect on profit due to non-GBP denominated revenue. We expect
inflationary pressures to persist in H2 and we continue to monitor
the rate of recruiting success for the delivery of core strategic
initiatives for the remainder of the year. Further expansion into
the institutional space and the geographic expansion of the
investment business is expected to cause some cost increases in FY
2024 when comparing against FY 2023.
OPERATING review
Summary
Net operating income increased by GBP26.8 million (21%) to
GBP153.5 million, with higher trading net revenue being driven by
increased client income, particularly through the B2B channel, as
well as increased interest income. This was partly offset by a
decrease in investing net revenue.
Trading net revenue increased by GBP27.4 million (27%) mainly
driven by an increase in client income. This was primarily driven
by an increase in client income from B2B clients, although it was
also positively impacted by heightened market volatility in H1 2023
compared to the prior year. Client income retention was also
slightly higher during the period at 83% (H1 2022: 80%). This
resulted in revenue per active client ("RPC") increasing by GBP681
(36%) to GBP2,558.
Trading active client numbers decreased by 7% in comparison to
H1 2022, although monthly active clients remain significantly above
pre-COVID-19 levels.
Investing net revenue is 14% lower at GBP20.8 million (H1 2022:
GBP24.2 million) driven by lower active clients and unfavourable
market conditions resulting from the uncertainty around the global
economic outlook, inflationary pressures and the resultant impact
on interest rates.
Interest income increased by GBP2.6m (719%) as a result of the
rise in global interest rates. The majority of the Group's interest
income is earned through our segregated client deposits, with
investing interest income growing by GBP1.2m (279%) compared to
prior year.
Statutory profit before tax was in line with the prior year at
GBP36.6 million (H1 2022: GBP36.0 million) with an increase in net
operating income offset by higher operating expenses as the Group
continues to invest in its strategic growth plans. Profit before
tax margin(1) decreased by 4.6% from 28.4% to 23.8%.
Net operating income overview
For the half year ended 30 September 2022 30 September 2021 Change Change %
GBP million
Trading net revenue 128.4 101.0 27.4 27%
Investing net revenue 20.8 24.2 (3.4) (14%)
------------------------- ------------------ ------------------ ------- ---------
Total net revenue(2) 149.2 125.2 24.0 19%
Interest income 2.9 0.3 2.6 719%
Other operating income 1.4 1.2 0.2 13%
========================= ================== ================== ======= =========
Net operating income 153.5 126.7 26.8 21%
========================= ================== ================== ======= =========
B2B and B2C net revenue
For the half year 30 September 30 September
ended 2022 2021 Change
----------------------
GBP million B2C(3) B2B(4) Total B2C B2B Total B2C B2B Total
----------------------- ------- ------- ----- ----- ------ ------ ------ ------
Trading net revenue 92.3 36.1 128.4 85.0 16.0 101.0 9% 125% 27%
Investing net revenue 4.4 16.4 20.8 4.9 19.3 24.2 (11%) (15%) (14%)
Total net revenue 96.7 52.5 149.2 89.9 35.3 125.2 8% 49% 19%
======================= ======= ======= ====== ===== ===== ====== ====== ====== ======
(1) Statutory profit before tax as a percentage of net operating
income
(2) CFD and spread bet gross client income net of rebates,
levies and risk management gains or losses and stockbroking revenue
net of rebates
(3) Business to Consumer ("B2C") - revenue from retail and
professional clients
(4) Business to Business ("B2B") - revenue from institutional
clients
Regional performance overview: Trading (Leveraged) Business
For the
half
year 30 September 30 September
ended 2022 2021 Change
-------- --------------------------------------- --------------------------------------- ------------------------------------
Trading Gross Trading Gross
net client net client Trading Gross
revenue income(1) Active RPC revenue income(1) Active RPC net client Active
(GBPm) (GBPm) Clients (GBP) (GBPm) (GBPm) Clients (GBP) revenue income(1) Clients RPC
-------- -------- ---------- -------- ------- -------- ---------- -------- ------- -------- ---------- -------- ----
UK 54.5 61.3 12,576 4,333 34.5 47.6 13,590 2,543 58% 29% (7%) 70%
Europe 24.9 31.5 12,705 1,961 18.6 20.6 13,664 1,359 34% 53% (7%) 44%
-------- -------- ---------- -------- ------- -------- ---------- -------- ------- -------- ---------- -------- ----
UK &
Europe 79.4 92.8 25,281 3,141 53.1 68.2 27,254 1,946 50% 36% (7%) 61%
APAC &
Canada 49.0 62.1 24,918 1,968 47.9 58.8 26,580 1,802 2% 6% (6%) 9%
======== ======== ========== ======== ======= ======== ========== ======== ======= ======== ========== ======== ====
Total 128.4 154.9 50,199 2,558 101.0 127.0 53,834 1,877 27% 22% (7%) 36%
======== ======== ========== ======== ======= ======== ========== ======== ======= ======== ========== ======== ====
(1) Spreads, financing and commissions on CFD client trades.
All regions saw an increase in RPC largely as a result in growth
in client income against the prior year, but also due to improved
client income retention to 83% (H1 2022: 80%). Active client
figures reduced by a similar level in all regions.
UK
Active clients decreased by 7% to 12,576 (H1 2022: 13,590),
although remained significantly above pre-COVID-19 levels (H1 2020:
9,259). Gross client income increased by 29% to GBP61.3 million (H1
2022: GBP47.6 million) largely driven by growth in B2B trading,
whilst B2C client income also grew due to increased high value
client trading.
Revenue per active client increased by 70% to GBP4,333 (H1 2022:
GBP2,543) due to both higher gross client income and a slight
increase in client income retention leading to higher net
revenue.
Europe
Europe comprises offices in Austria, Germany, Norway, Poland and
Spain. Active client numbers were 7% lower than prior year,
although gross client income increased by 53% to GBP31.5 million as
a result of increased volume in both B2B and B2C trading,
particularly in smaller offices in the region.
As a result, revenue per active client increased by 44% to
GBP1,961 (H1 2022: GBP1,359) with higher gross client income and a
slight increase in client income retention leading to higher net
revenue.
APAC & Canada
Our APAC & Canada business services clients from our Sydney,
Auckland, Singapore, Toronto and Shanghai offices along with other
regions where we have no physical presence.
Active client numbers decreased by 6% to 24,918 (H1 2022:
26,580), however, activity remains materially above pre-COVID-19
levels (H1 2020: 18,479). Gross client income increased by 6% to
GBP62.1 million (H1 2022: GBP58.8 million), which in turn led to a
9% increase in revenue per client to GBP1,968 (H1 2022:
GBP1,802).
Investing (non-leveraged) performance overview
Investing net revenue
For the half year ended 30 September 2022 30 September 2021 Change Change %
GBP million
B2B net revenue 16.4 19.3 (2.9) (15%)
B2C net revenue 4.4 4.9 (0.5) (11%)
----------------------------- ------------------ ------------------ ------- ---------
Total investing net revenue 20.8 24.2 (3.4) (14%)
----------------------------- ------------------ ------------------ ------- ---------
Active clients
For the half year ended 30 September 2022 30 September 2021 Change %
B2C active clients 45,226 41,590 9%
B2B active clients 119,406 144,257 (17%)
Total investing active clients 164,632 185,847 (11%)
================================ ================== ================== =========
Investing net revenue decreased 14% driven by lower active
clients and unfavourable market conditions resulting in fewer
investment opportunities for clients. However, this was partially
offset by a significant increase (279% or GBP1.2m) in interest
income.
Operating expenses
For the half year ended 30 September 30 September Change
GBPm 2022 2021 %
---------------------------------------- ------------ ------------ ------
Net staff costs - fixed (excluding
variable remuneration)(1) 40.0 33.5 (19%)
IT costs 16.3 14.2 (15%)
Marketing costs 15.2 10.8 (41%)
Sales-related costs 2.1 0.9 (143%)
Premises costs 2.1 1.8 (17%)
Legal and professional fees 5.6 4.7 (20%)
Regulatory fees 7.0 3.2 (117%)
Depreciation and amortisation 7.3 6.4 (13%)
Other 10.7 7.6 (39%)
======================================== ============ ============ ======
Operating expenses excluding variable
remuneration 106.3 83.1 (28%)
Variable remuneration(1) 9. 3 6.6 (41%)
======================================== ============ ============ ======
Operating expenses including variable
remuneration 115.6 89.7 (29%)
Interest 1.3 1.0 (33%)
======================================== ============ ============ ======
Total costs 116.9 90.7 (29%)
======================================== ============ ============ ======
(1 30 September 2021 figures restated to include social taxes on
FY 2022 annual discretionary bonus to be within variable
remuneration.)
Operating expenses excluding variable remuneration increased by
GBP23.2 million (28%) to GBP106.3 million. This was driven by an
increase in staff costs (GBP6.5 million) as a result of significant
investment in technology and client services staff over the period,
and higher marketing costs (GBP4.4 million). The increase in
marketing was driven both by additional spend in the Australia
Invest business to replace the ANZ Bank acquisition funnel, and by
higher costs in the trading business against a prior year
comparative where less favourable market conditions meant there
were fewer opportunities for targeted marketing.
Regulatory fees increased by GBP3.8 million as a result of a
higher FSCS levy.
IT costs increased by GBP2.1 million due to higher market data
charges and investments in strategic projects. Sales-related costs
increased by GBP1.2 million (143%), primarily driven by the release
of provisions in H1 2022 which reduced the prior year
comparative.
Other expenses increased by GBP3.1m (39%) due to a number of
factors, the main drivers being higher bank charges, recruitment
costs and FX losses on balance sheet revaluation, partly offset by
lower irrecoverable sales taxes.
Variable remuneration increased to GBP9.3 million (H1 2022:
GBP6.6 million), primarily due to increases in headcount and a
lower discretionary bonus accrual percentage in H1 2022 due to
revenue performance in the period.
Taxation
The effective tax rate for H1 2023 was 20.8%, down from the H1
2022 effective tax rate, which was 22.7%. The effective tax rate
has decreased in the period due to a lower proportion of Group PBT
being generated in Australia, where the corporation tax rate is
higher.
Balance sheet and own funds
Intangible assets increased by GBP3.2 million to GBP33.5 million
(31 March 2022: GBP30.3 million) due to capitalisation of staff
costs related to technology projects, partially offset by
amortisation within the period.
Amounts due from brokers increased by GBP8.4 million to GBP204.5
million due to an increase in excess cash held at brokers.
Other assets decreased by GBP9.4 million to GBP4.1 million due
to a reduction in client cryptocurrency exposures driving a
corresponding drop in assets held at brokers for hedging
purposes.
Cash and cash equivalents decreased during the period, with a
cash outflow for the prior year final dividend of GBP25.3 million,
higher amounts held at brokers in the period and cash utilised for
the Group's share buy back purchases in the period (GBP25.0
million), being partially offset by cash inflows from the Group's
operating performance, resulting in a GBP35.7 million decrease.
Title transfer funds increased by GBP8.9 million, reflecting the
ongoing high levels of account funding by a small population of
mainly institutional clients.
Own funds decreased by GBP44.0 million to GBP326.0 million (31
March 2022: GBP369.9 million) during the six month period with the
decrease largely due to the payment of the final FY22 dividend and
funds utilised for the Group's share buy back programme.
Principal risks and uncertainties
Details of the Group's approach to risk management and its
principal risks and uncertainties were set out on pages 50 to 56 of
the 2022 Group Annual Report and Financial Statements (available on
the Group website https://www.cmcmarketsplc.com ). During the six
months to 30 September 2022 and up to the date of approval of the
condensed consolidated financial statements, there have been no
significant changes to the Group's risk management framework. The
Group categorises its principal risks into three categories:
business and strategic risks; financial risks; and operational
risks. The Group's top and emerging risks, which form either a
subset of one or multiple principal risks within the three
principal risk categories, and continue to be at the forefront of
Group discussions over the remaining six months of the financial
year and beyond, are regulatory relations across the Group, people
risk, cyber risk and project delivery risk.
RESPONSIBILITY STATEMENT
The Directors listed below (being all the Directors of CMC
Markets plc) confirm that to the best of our knowledge, these
condensed consolidated financial statements have been prepared in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority and that the interim management report includes a
fair review of information required by DTR 4.2.7R and DTR 4.2.8R,
namely:
-- the interim management report includes a fair review of the
important events that have occurred during the first six months of
the financial year and their impact on the condensed consolidated
financial statements, together with a description of the principal
risks and uncertainties for the remaining six months of the
financial year; and
-- material related party transactions in the first six months
of the financial year and any material changes in the related-party
transactions described in the last annual report.
Neither the Group nor the Directors accept any liability to any
person in relation to the interim results for the half year ended
30 September 2022, except to the extent that such liability could
arise under English law. Accordingly, any liability to a person who
has demonstrated reliance on any untrue or misleading statement or
omission shall be determined in accordance with Section 90A and
Schedule 10A of the Financial Services and Markets Act 2000.
By order of the Board of Directors
Lord Cruddas
Chief Executive Officer
16 November 2022
CMC Markets plc Board of Directors
Executive Directors
Lord Peter Cruddas (Chief Executive Officer)
David Fineberg (Deputy Chief Executive Officer)
Matthew Lewis (Head of Asia Pacific and Canada)
Euan Marshall (Chief Financial Officer)
Non-Executive Directors
James Richards (Chairman)
Sarah Ing
Susanne Chishti
Paul Wainscott
CONDENSED CONSOLIDATED INCOME STATEMENT
For the half year ended 30 September 2022
GBP '000 Note 30 September 2022 30 September 2021
===== ==================
Revenue 3 171,559 148,767
Interest income 2,851 348
============================================================ ===== ================== ==================
Total revenue 174,410 149,115
Introducing partner commissions and betting levies (20,950) (22,377)
============================================================ ===== ================== ==================
Net operating income 2 153,460 126,738
Operating expenses 4 (115,485) (89,667)
Net impairment losses on financial assets (88) (21)
============================================================ ===== ================== ==================
Operating profit 37,887 37,050
Finance costs (1,330) (1,002)
============================================================ ===== ================== ==================
Profit before taxation 36,557 36,048
Taxation 5 (7,605) (8,173)
============================================================ ===== ================== ==================
Profit for the period attributable to owners of the parent 28,952 27,875
============================================================ ===== ================== ==================
Earnings per share
Basic earnings per share (p) 6 10.2 9.6p
============================================================ ===== ================== ==================
Diluted earnings per share (p) 6 10.1 9.6p
============================================================ ===== ================== ==================
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE
INCOME
For the half year ended 30 September 2022
GBP '000 30 September 2022 30 September 2021
==================
Profit for the period 28,952 27,875
Other comprehensive income/(expense):
Items that may be subsequently reclassified to income statement
(Loss)/Gain on net investment hedges, net of tax (86) 1,179
Gains recycled from equity to the income statement 269 -
Currency translation differences 2,696 (1,810)
Changes in the fair value of debt instruments at fair value through other
comprehensive income,
net of tax (527) (5)
============================================================================== ================== ==================
Other comprehensive income/(expense) for the period 2,352 (636)
============================================================================== ================== ==================
Total comprehensive income for the period 31,304 27,239
============================================================================== ================== ==================
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 September 2022
GBP'000 Note 30 September 2022 31 March 2022
===== ==================
ASSETS
Non-current assets
Intangible assets 8 33,512 30,328
Property, plant and equipment 9 25,075 24,941
Deferred tax assets 5,995 6,022
Financial investments 13 14,418 13,448
Trade and other receivables 10 2,260 1,797
================================== ===== ================== ==============
Total non-current assets 81,260 76,536
================================== ===== ================== ==============
Current assets
Trade and other receivables 10 128,544 156,917
Derivative financial instruments 11 6,142 2,359
Current tax recoverable 941 -
Other assets 12 4,065 13,443
Financial investments 13 13,127 14,497
Amounts due from brokers 204,502 196,117
Cash and cash equivalents 14 140,879 176,578
================================== ===== ================== ==============
Total current assets 498,200 559,911
================================== ===== ================== ==============
TOTAL ASSETS 579,460 636,447
================================== ===== ================== ==============
LIABILITIES
Current liabilities
Trade and other payables 15 176,381 215,853
Derivative financial instruments 11 4,166 2,362
Share buyback liability 2,303 27,264
Borrowings - 194
Lease liabilities 16 5,778 4,916
Current tax payable - 429
Provisions 336 369
================================== ===== ================== ==============
Total current liabilities 188,964 251,387
================================== ===== ================== ==============
Non-current liabilities
Lease liabilities 16 8,398 9,269
Deferred tax liabilities 2,901 3,309
Provisions 2,118 2,117
================================== ===== ================== ==============
Total non-current liabilities 13,417 14,695
================================== ===== ================== ==============
TOTAL LIABILITIES 202,381 266,082
================================== ===== ================== ==============
EQUITY
Share capital 70,832 73,193
Share premium 46,236 46,236
Capital redemption reserve 2,642 281
Own shares held in trust (599) (1,094)
Other reserves (48,667) (75,980)
Retained earnings 306,635 327,729
================================== ===== ================== ==============
Total equity 377,079 370,365
================================== ===== ================== ==============
TOTAL EQUITY AND LIABILITIES 579,460 636,447
================================== ===== ================== ==============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the half year ended 30 September 2022
Capital Own shares
Share Share redemp-tion held in Other Retained
GBP'000 capital premium reserve trust reserves earnings Total Equity
============= ============= ============ ============ ============= =============
At 31 March
2021 73,299 46,236 - (382) (49,334) 330,698 400,517
New shares
issued 175 - - - - - 175
Profit for the
period - - - - - 27,875 27,875
Other
comprehensive
expense for
the period - - - - (636) - (636)
Acquisition of
own shares
held in trust - - - (277) - - (277)
Utilisation of
own shares
held in trust - - - 218 - - 218
Share-based
payments - - - - - (1,107) (1,107)
Tax on
share-based
payments - - - - - 779 779
Dividends - - - - - (62,414) (62,414)
--------------- ------------- ------------- ------------ ------------ ------------- ------------- -------------
At 30
September
2021 73,474 46,236 - (441) (49,970) 295,831 365,130
--------------- ------------- ------------- ------------ ------------ ------------- ------------- -------------
At 31 March
2022 73,193 46,236 281 (1,094) (75,980) 327,729 370,365
Profit for the
year - - - - - 28,952 28,952
Other
comprehensive
income for
the period - - - - 2,352 - 2,352
Acquisition of
own shares
held in trust - - - (130) - - (130)
Utilisation of
own shares
held in trust - - - 625 - - 625
Share buyback (2,361) - 2,361 - 24,961 (24,961) -
Share-based
payments - - - - - 165 165
Dividends - - - - - (25,250) (25,250)
=============== ============= ============= ============ ============ ============= ============= =============
At 30
September
2022 70,832 46,236 2,642 (599) (48,667) 306,635 377,079
=============== ============= ============= ============ ============ ============= ============= =============
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the half year ended 30 September 2022
30 September
2021
30 September
GBP '000 Note 2022 (Restated)
====== ==============
Cash flows from operating activities
Cash generated from operations 17 37,437 92,198
Interest income 3,023 875
Finance costs (1,330) (985)
Tax paid (9,294) (7,051)
============================================ ====== ============== ==============
Net cash generated from operating
activities 29,836 85,037
============================================ ====== ============== ==============
Cash flows from investing activities
Purchase of property, plant and equipment (2,452) (2,340)
Investment in intangible assets (10,118) (3,593)
Purchase of financial investments (14,725) (14,805)
Proceeds from maturity of financial
investments and coupon receipts 14,414 14,255
(Outflow)/inflow on net investment
hedges (7) 1,361
============================================ ====== ============== ==============
Net cash used in investing activities (12,888) (5,122)
============================================ ====== ============== ==============
Cash flows from financing activities
Proceeds from borrowings - 9,999
Repayment of borrowings (194) (10,944)
Principal elements of lease payments (2,919) (3,038)
Acquisition of own shares (130) (102)
Payments for Share buyback (24,961) -
Dividends paid (25,250) (62,414)
Net cash used in financing activities (53,454) (66,499)
============================================ ====== ============== ==============
Net (decrease)/increase in cash and
cash equivalents (36,506) 13,416
Cash and cash equivalents at the beginning
of the period 176,578 118,921
Effect of foreign exchange rate changes 807 (718)
============================================ ====== ============== ==============
Cash and cash equivalents at the end
of the period 140,879 131,619
============================================ ====== ============== ==============
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the half year ended 30 September 2022
1. Basis of preparation
Basis of accounting and accounting policies
The condensed consolidated financial statements have been
prepared in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. The condensed consolidated financial
statements do not constitute statutory accounts within the meaning
of Section 434 of the Companies Act 2006. Within the notes to the
condensed consolidated financial statements, all current and
comparative data covering periods to (or as at) 30 September is
unaudited.
The Group's statutory financial statements for the year ended 31
March 2022 have been prepared in accordance with UK-adopted
international accounting standards, including interpretations
issued by the IFRS Interpretations Committee and with the
requirements of the Companies Act 2006. These financial statements
have been delivered to the Registrar of Companies. The auditors'
opinion on those financial statements was unqualified and did not
contain a statement made under Section 498 of the Companies Act
2006. The 31 March 2022 balances presented in these condensed
consolidated financial statements are from those financial
statements and are audited.
The accounting policies and methods of computation applied in
these condensed consolidated financial statements are consistent
with those applied in the Group's statutory financial statements
for the year ended 31 March 2022. The condensed consolidated
financial statements should be read in conjunction with the
statutory financial statements for the year ended 31 March 2022. In
the year ending 31 March 2022 the consolidated financial statements
of the Group have been prepared in accordance with IFRS as adopted
by the UK Endorsement Board. This change in basis of preparation is
required by UK company law for the purpose of financial reporting
as a result of the UK's exit from the EU on 31 January 2020 and the
cessation of the transition period on 31 December 2020. This change
does not constitute a change in accounting policy but rather a
change in accounting framework. There is no impact on recognition,
measurement or disclosure between the two frameworks in the period
reported.
The condensed consolidated financial statements have been
prepared 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.
Future accounting developments
The Group did not implement the requirements of any Standards or
Interpretations that were in issue but were not required to be
adopted by the Group at the half year. No other Standards or
Interpretations have been issued that are expected to have an
impact on the Group's financial statements.
There is no material impact expected of reference rate reform
for the half year ended 30 September 2022 and will not lead to a
remeasurement gain or loss.
Significant accounting judgements and estimates
The preparation of condensed consolidated financial statements
in conformity with IFRS 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 condensed consolidated financial statements are:
Contingent liabilities
Judgement has been applied in evaluating the accounting
treatment of the specific matters described in Note 22 (Contingent
Liabilities), notably the probability of any obligation or future
payments arising.
Accounting for cryptocurrencies
The Group has recognised GBP4,065,000 (31 March 2022:
GBP13,443,000) of cryptocurrency assets and rights to
cryptocurrency assets on its Statement of Financial Position as at
30 September 2022. 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 Condensed Consolidated Statement
of Financial Position.
Intangible assets
The Group has recognised GBP14,322,000 (31 March 2022:
GBP14,237,000) of customer relationship intangible assets under
development on its Statement of Financial Position as at 30
September 2022 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$25m. A judgement has been
made to apply the recognition and measurement principles of IAS 38
Intangibles in accounting for these assets.
Key financial estimates
Intangible assets
The Group has recognised GBP9,712,000 (31 March 2022:
GBP6,054,000) of internally generated software in intangible assets
on its Statement of Financial Position as at 30 September 2022
relating to the development of UK CMC Invest trading platform. In
performing the interim impairment assessment, which concluded that
no impairment 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 UK CMC Invest
business. Relevant disclosures are provided in Note 8.
Going concern
The Group has considerable financial resources, a broad range of
products and a geographically diversified business. Consequently,
the Directors believe that the Group is well placed to manage its
business risks in the context of the current economic outlook.
Accordingly, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future, a period of not less than 12 months
from the date of this report. They therefore continue to adopt the
going concern basis in preparing these condensed consolidated
financial statements.
Seasonality of operations
The Directors consider that given the impact of market
volatility and the growth in overseas business there is no
predictable seasonality to the Group's operations.
2. Segmental reporting
The Group's principal business is providing leveraged online
retail financial services and providing its clients with the
ability to trade 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 and the Group
provides stockbroking services only in Australia. The Group's
business is generally managed on a geographical basis and for
management purposes, the Group is organised into four segments:
-- Trading - CFD and Spreadbet - UK and Ireland ("UK & IE");
-- Trading - CFD - Europe;
-- Trading - CFD - Australia, New Zealand and Singapore ("APAC") and Canada; and
-- Investing - Stockbroking - Australia
These segments are in line with the management information
received by the Chief Operating Decision Maker (CODM).
Revenues and segment operating expenses are allocated to the
segments that originated the transaction.
Operating expenses in the Central segment relate to costs that
are not directly related to activities in one region or are not
controlled by regional management. These centrally generated costs
are allocated to segments on an equitable basis, mainly based on
revenue, headcount or active client levels, or where central costs
are directly attributed to specific segments.
Trading Investing
==========
30 September 2022 UK & APAC
GBP '000 IE Europe & Canada Australia Central Total
========================== ========= ========= ========== ========== ==========
Revenue 57,794 25,894 55,924 31,947 - 171,559
Interest income 336 - 818 1,697 - 2,851
========================== ========= ========= ========== ========== ========== ==========
Total revenue 58,130 25,894 56,742 33,644 - 174,410
Introducing partner
commissions and betting
levies (2,500) (957) (6,375) (11,118) - (20,950)
========================== ========= ========= ========== ========== ========== ==========
Net operating income 55,630 24,937 50,367 22,526 - 153,460
Segment operating
expenses (12,994) (3,646) (12,657) (7,123) (79,153) (115,573)
========================== ========= ========= ========== ========== ========== ==========
Segment contribution 42,636 21,291 37,710 15,403 (79,153) 37,887
Allocation of central
operating expenses (25,086) (16,125) (22,881) (15,061) 79,153 -
========================== ========= ========= ========== ========== ========== ==========
Operating profit 17,550 5,166 14,829 342 - 37,887
Finance costs (303) (295) (99) (94) (539) (1,330)
Allocation of central
finance costs (269) (83) (187) - 539 -
========================== ========= ========= ========== ========== ========== ==========
Profit before taxation 16,978 4,788 14,543 248 - 36,557
========================== ========= ========= ========== ========== ========== ==========
Trading Investing
==========
30 September 2021 UK & APAC
GBP '000 IE Europe & Canada Australia Central Total
================================= ========= ========= ========== ========= =========
Revenue 39,361 19,200 52,574 37,632 - 148,767
Interest income (253) (1) 156 446 - 348
================================= ========= ========= ========== ========== ========= =========
Total revenue 39,108 19,199 52,730 38,078 - 149,115
Introducing partner commissions
and betting levies (4,244) (578) (4,181) (13,374) - (22,377)
================================= ========= ========= ========== ========== ========= =========
Net operating income 34,864 18,621 48,549 24,704 - 126,738
Segment operating expenses (8,680) (2,957) (11,939) (5,756) (60,356) (89,688)
================================= ========= ========= ========== ========== ========= =========
Segment contribution 26,184 15,664 36,610 18,948 (60,356) 37,050
Allocation of central
operating expenses (17,328) (14,737) (18,397) (9,894) 60,356 -
================================= ========= ========= ========== ========== ========= =========
Operating profit 8,856 927 18,213 9,054 - 37,050
Finance costs (250) (14) (103) (87) (548) (1,002)
Allocation of central
finance costs (237) (106) (205) - 548 -
================================= ========= ========= ========== ========== ========= =========
Profit before taxation 8,369 807 17,905 8,967 - 36,048
================================= ========= ========= ========== ========== ========= =========
The measurement of net operating income for segmental analysis
is consistent with that in the income statement.
The Group uses 'Segment contribution' to assess the financial
performance of each segment. Segment contribution comprises
operating profit for the period before finance costs, taxation and
an allocation of central operating expenses.
The measurement of segment assets for segmental analysis is
consistent with that in the balance sheet. The total non-current
assets other than deferred tax assets, broken down by location of
the assets, is shown below.
GBP '000 30 September 2022 31 March 2022
==================
UK 44,731 41,168
Australia 27,153 26,254
Other countries 3,380 3,092
========================== ================== ==============
Total non-current assets 75,264 70,514
========================== ================== ==============
3. Revenue
GBP '000 30 September 2022 30 September 2021
==================
Trading 138,258 110,035
Investing 31,952 37,540
Other 1,349 1,192
=========== ================== ==================
Revenue 171,559 148,767
=========== ================== ==================
Trading revenue (previously presented as leveraged revenue)
represents CFD and Spread bet revenue (net of hedging costs)
accounted for in accordance with IFRS 9 "Financial Instruments".
Investing revenue (previously presented as non-leveraged revenue)
represents stockbroking revenue accounted for in accordance with
IFRS 15 "Revenue from Contracts with Customers".
4. Operating Expenses
GBP '000 30 September 2022 30 September 2021
==================
Net staff costs 49,221 40,081
IT costs 16,324 14,156
Sales and marketing 17,325 11,653
Premises 2,061 1,754
Legal and Professional fees 5,601 4,654
Regulatory fees 7,044 3,240
Depreciation and amortisation 7,277 6,429
Bank charges 4,363 3,176
Irrecoverable sales tax 236 970
Other 6,183 3,554
================================================= ================== ==================
115,635 89,667
Capitalised internal software development costs (150) -
================================================= ================== ==================
Operating expenses 115,485 89,667
================================================= ================== ==================
5. Taxation
30 September 30 September
GBP '000 2022 2021
=============
Analysis of charge for the period:
Current tax
Current tax on profit for the period 7,954 7,462
Adjustments in respect of previous periods 29 -
=================================================== ============= =============
Total current tax 7,983 7,462
=================================================== ============= =============
Deferred tax
Origination and reversal of temporary differences (394) 1,049
Adjustments in respect of prior periods - (338)
Impact of change in tax rate 16 -
=================================================== ============= =============
Total deferred tax (378) 711
=================================================== ============= =============
Total tax 7,605 8,173
=================================================== ============= =============
The standard rate of UK corporation tax charged was 19% with
effect from 1 April 2017. Taxation outside the UK is calculated at
the rates prevailing in the respective jurisdictions. The effective
tax rate for the half year ended 30 September 2022 was 20.80% (Half
year ended 30 September 2021: 22.67%) differs from the standard
rate of corporation tax of 19% (half year ended 30 September 2021:
19%). The differences are explained below:
GBP '000 30 September 2022 30 September 2021
==================
Profit before taxation 36,557 36,048
============================================================================== ================== ==================
Profit multiplied by the standard rate of corporation tax in the UK of 19%
(30 September 2021:
19%) 6,946 6,849
Adjustment in respect of foreign tax rates 506 1,334
Adjustments in respect of prior periods 29 (338)
Impact of change in tax rate 16 126
Expenses not deductible for tax purposes 30 142
Income not subject to tax - (42)
Share awards 52 87
Tax losses for which no deferred tax asset recognised 16 -
Other differences 10 15
============================================================================== ================== ==================
Total tax 7,605 8,173
============================================================================== ================== ==================
GBP '000 30 September 2022 30 September 2021
===================
Tax on items recognised directly in Equity
Tax on share-based payments - (779)
============================================ =================== ==================
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 period 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 of all dilutive potential
weighted average ordinary shares, which consists of share options
granted to employees and shares issuable to client investors at
IPO.
GBP '000 30 September 2022 30 September 2021
==================
Earnings attributable to ordinary shareholders
(GBP '000) 28,952 27,875
================================================ ================== ==================
Weighted average number of shares used in the
calculation of basic earnings per share ('000) 285,048 290,669
Dilutive effect of share options ('000) 1,403 1,016
================================================ ================== ==================
Weighted average number of shares used in the
calculation of diluted earnings per share
('000) 286,451 291,685
================================================ ================== ==================
Basic earnings per share (p) 10.2p 9.6p
================================================ ================== ==================
Diluted earnings per share (p) 10.1p 9.6p
================================================ ================== ==================
For the half year ended 30 September 2022, 1,403,000 (H alf year
ended 30 September 2021: 1,016,000) potentially dilutive weighted
average ordinary shares in respect of share options in issue were
included in the calculation of diluted EPS.
7. Dividends
GBP '000 30 September 2022 30 September 2021
==================
Prior year final dividend of 8.88p per share (30 September 2021: 21.43p) 25,250 62,414
========================================================================== ================== ==================
An interim dividend for 2023 of 3.50p per share, amounting to
GBP9,830,000 has been approved by the board but has not been
included as a liability at 30 September 2022. The dividend will be
paid on 5 January 2023 to those members on the register at the
close of business on 2 December 2022.
8. Intangible assets
Trademarks
Computer and trading Client Assets
GBP '000 Goodwill software licences relationships under development Total
========= ========== ============= =============== ===================
At 31 March 2022
Cost 11,500 132,187 1,052 3,095 23,608 171,442
Accumulated amortisation (11,500) (125,612) (907) (3,095) - (141,114)
========================== ========= ========== ============= =============== =================== ==========
Carrying amount - 6,575 145 - 23,608 30,328
========================== ========= ========== ============= =============== =================== ==========
Half year ended 30 September 2022
Carrying amount
at the beginning
of the period - 6,575 145 - 23,608 30,328
Additions - 288 - - 4,911 5,199
Transfers - 10,375 - - (10,375) -
Amortisation charge - (2,086) (15) - - (2,101)
Foreign currency
translation - 9 - - 77 86
========================== ========= ========== ============= =============== =================== ==========
Carrying amount
at the end of the
period - 15,161 130 - 18,221 33,512
========================== ========= ========== ============= =============== =================== ==========
At 30 September
2022
Cost 11,500 143,001 1,056 3,113 18,221 176,891
Accumulated amortisation (11,500) (127,840) (926) (3,113) - (143,379)
========================== ========= ========== ============= =============== =================== ==========
Carrying amount - 15,161 130 - 18,221 33,512
========================== ========= ========== ============= =============== =================== ==========
Computer software includes capital development costs of
GBP26,487,000 relating to the Group's Next Generation trading
platform which has been fully amortised.
Impairment
Intangibles are tested for impairment if events or changes in
circumstances indicate that the carrying amount of the asset may
not be recoverable. Assets under development are tested annually.
There was no impairment identified in the period ended 30 September
2022 (year ended 31 March 2022: GBPnil).
Impairment sensitivity analysis
The recoverable amount of the asset under development relating
to the UK CMC Invest platform has been determined using
value-in-use discounted cashflow calculation. This uses the most
recent board-approved forecast results, a discount rate of 9.0% and
long-term growth rate (beyond the forecasting period) of 0%. The
carrying value of the net assets was GBP9,712,000 (31 March 2022:
GBP6,054,000).
The recoverable amount is sensitive to changes in forecast
revenues. A 2% reduction in projected revenues would determine a
recoverable amount equal to the carrying value of GBP9,712,000. A
12% reduction in projection would result in the full impairment of
the asset.
9. Property, Plant and Equipment
Furniture,
Leasehold fixtures Computer Right-of-use Construction
GBP '000 improvements and equipment hardware assets in progress Total
============== =============== ========== ============= =============
At 31 March 2022
Cost 16,883 8,922 37,375 24,557 - 87,737
Accumulated depreciation (13,521) (8,280) (28,359) (12,636) - (62,796)
========================== ============== =============== ========== ============= ============= =========
Carrying amount 3,362 642 9,016 11,921 - 24,941
========================== ============== =============== ========== ============= ============= =========
Half year ended 30 September 2022
Carrying amount
at the beginning
of the period 3,362 642 9,016 11,921 - 24,941
Additions 8 309 1,967 2,749 168 5,201
Transfers 23 - - - (23) -
Disposals (44) (9) (1) - - (54)
Depreciation charge (753) (206) (1,765) (2,452) - (5,176)
Foreign currency
translation 8 7 18 126 4 163
========================== ============== =============== ========== ============= ============= =========
Carrying amount
at the end of the
period 2,604 743 9,235 12,344 149 25,075
========================== ============== =============== ========== ============= ============= =========
At 30 September
2022
Cost 16,201 9,225 39,425 27,027 149 92,027
Accumulated depreciation (13,597) (8,482) (30,190) (14,683) - (66,952)
========================== ============== =============== ========== ============= ============= =========
Carrying amount 2,604 743 9,235 12,344 149 25,075
========================== ============== =============== ========== ============= ============= =========
10. Trade and other receivables
GBP '000 30 September 2022 31 March 2022
==================
Current
Gross trade receivables 27,553 15,256
Less: Loss allowance (6,293) (6,219)
========================== ================== ==============
Trade receivables 21,260 9,037
Prepayments 12,693 10,622
Accrued income 1,117 521
Stockbroking debtors 89,569 134,324
Other debtors 3,905 2,413
========================== ================== ==============
128,544 156,917
========================= ================== ==============
Non-current
Other debtors 2,260 1,797
========================== ================== ==============
Total 130,804 158,714
========================== ================== ==============
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 15).
11. Derivative financial instruments
30 September 30 September 2022 31 March 31 March
2022 Carrying 2022 2022
Notional amount Amount Notional amount Carrying amount
Assets GBPm GBP '000 GBPm GBP'000
================= ================== =================
Held for trading
Index, commodity, foreign,
cryptocurrency and treasury futures 165.1 1,794 97.5 1,774
Forward foreign exchange contracts 221.6 3,704 90.2 417
Held for hedging
Forward foreign exchange contracts -
economic hedges 21.2 644 14.0 78
Forward foreign exchange contracts -
net investment hedges - - 40.0 90
======================================= ================= ================== ================= =================
Total 407.9 6,142 241.7 2,359
======================================= ================= ================== ================= =================
30 September 30 September 2022 31 March 31 March
2022 Carrying 2022 2022
Notional amount Amount Notional amount Carrying amount
Liabilities GBPm GBP '000 GBPm GBP'000
================= ================== =================
Held for trading
Index, commodity, foreign,
cryptocurrency and treasury futures 133.1 (1,833) 107.6 (1,690)
Forward foreign exchange contracts 159.4 (1,122) 79.4 (131)
Held for hedging
Forward foreign exchange contracts -
economic hedges 35.8 (1,211) 36.0 (530)
Forward foreign exchange contracts -
net investment hedges - - 4.7 (11)
======================================= ================= ================== ================= =================
Total 328.3 (4,166) 227.7 (2,362)
======================================= ================= ================== ================= =================
The fair value of derivative contracts are based on the market
price of comparable instruments at the balance sheet date. All
derivative financial instruments have a maturity of less than one
year.
12. Other assets
Other assets are cryptocurrencies, which are owned and
controlled by the Group for the purpose of hedging the Group's
exposure to clients' cryptocurrency trading positions. The Group
holds cryptocurrencies on exchange and in vault as follows:
GBP '000 30 September 2022 31 March 2022
==================
Exchange 3,115 953
Vaults 950 12,490
=========== ================== ==============
4,065 13,443
========== ================== ==============
13. Financial investments
GBP '000 30 September 2022 31 March 2022
==================
UK Government securities:
At the beginning of the period / year 27,875 28,037
Purchase of securities 14,725 28,337
Maturity of securities and Coupon receipts (14,689) (28,428)
Accrued interest 103 (17)
Changes in the fair value of debt instruments at fair value through other
comprehensive income (527) (54)
================================================================================ ================== ==============
At the end of the period / year 27,487 27,875
================================================================================ ================== ==============
Equity securities:
At the beginning of the period / year 70 67
Changes in the fair value of equity instruments at fair value through profit
and loss (12) -
Foreign currency translation - 3
================================================================================ ================== ==============
At the end of the period / year 58 70
================================================================================ ================== ==============
Total 27,545 27,945
================================================================================ ================== ==============
GBP '000 30 September 2022 31 March 2022
==================
Analysis of financial investments
Non-current 14,418 13,448
Current 13,127 14,497
==================================== ================== ==============
Total 27,545 27,945
==================================== ================== ==============
Financial investments are shown as current assets when they have
a maturity of less than one year and as non-current when they have
a maturity of more than one year.
14. Cash and cash equivalents
GBP '000 30 September 2022 31 March 2022
==================
Cash and cash equivalents 140,879 176,578
============================ ================== ==============
Analysed as:
Cash at bank 140,879 176,578
---------------------------- ------------------ --------------
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.
15. Trade and other payables
GBP '000 30 September 2022 31 March 2022
==================
Client payables 56,798 47,360
Tax and social security 958 2,242
Stockbroking creditors 81,345 123,875
Accruals and other creditors 37,280 42,376
=============================== ================== ==============
176,381 215,853
============================== ================== ==============
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).
16. Lease liabilities
GBP '000 30 September 2022 31 March 2022
==================
At the beginning of the period / year 14,185 15,326
Additions / Modifications of new leases during the period / year 2,767 4,658
Interest expense 344 700
Lease payments made during the year (3,263) (6,662)
Foreign currency translation 143 163
=================================================================== ================== ==============
At the end of the period / year 14,176 14,185
=================================================================== ================== ==============
GBP '000 30 September 2022 31 March 2022
==================
Analysis of lease liabilities
Non-current 8,398 9,269
Current 5,778 4,916
================================ ================== ==============
Total 14,176 14,185
================================ ================== ==============
17. Cash generated from operations
30 September 2021
GBP '000 30 September 2022 (Restated)
==================
Cash flows from operating activities
Profit before taxation 36,557 36,048
Adjustments for:
Interest income (2,851) (348)
Finance costs 1,330 1,002
Depreciation 5,176 5,083
Amortisation of intangible assets 2,101 1,346
Profit on disposal of property, plant and equipment 54 -
Share-based payment 790 (886)
Other non-cash movements including exchange rate movements 2,014 (1,101)
Changes in working capital:
Decrease/(increase) in trade and other receivables and other assets 27,980 (1,391)
(Increase)/decrease in amounts due from brokers (8,385) 71,456
Decrease/(increase) in other assets 9,378 (34,024)
(Decrease)/increase in trade and other payables (34,553) 16,077
(Decrease)/increase in net derivative financial instruments liabilities (2,058) 81
Decrease in provisions (96) (1,145)
========================================================================= ================== ==================
Cash generated from operations 37,437 92,198
========================================================================= ================== ==================
18. Share buyback
On 14 March 2022, the Board approved a share buyback programme
with up to GBP30.0 million to be returned to shareholders. On this
date, a financial liability of GBP30,239,000 was established
representing the financial liability for the full value of the
share buyback programme plus directly attributable costs.
In H1 2023, the Group repurchased and cancelled 9,444,362 (H1
2022: nil) Ordinary Shares with nominal value 25 pence. The amount
by which the Company's share capital is diminished on the
cancellation of the purchased shares is transferred to the capital
redemption reserve. This amounted to GBP2,361,000 (H1 2022:
GBPnil).
The share buyback reserve amount, presented within Other
reserves is reduced by the consideration paid for the repurchased
shares with a corresponding transaction recorded within Retained
earnings to reflect the consumption of distributable profits. For
H1 2023, this amounted to GBP24,961,000 (H1 2022: GBPnil).
19. Liquidity
The Group has access to the following liquidity resources that
make up total available liquidity:
-- Own funds . Own funds are calculated in order to provide a
clear presentation of the Group's potential cash resources. Own
funds consist of cash and cash equivalents, amounts due from
brokers, other assets and also includes investments in UK
government securities, of which the majority are held to meet the
Group's regulatory liquidity requirements. Own funds also include
any unrealised gains / losses on open hedging positions and all
cash in the form of title transfer funds is excluded. Own funds on
30 September 2022 were GBP325,978,000 (31 March 2022:
GBP369,947,000).
-- 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
considers these funds as an ancillary source of liquidity and
places no reliance on its stability.
-- Available committed facility (off-balance sheet liquidity).
The Group has access to a syndicated revolving credit facility of
up to GBP55.0 million (31 March 2022: GBP55.0 million) in order to
fund any potential fluctuations in margins required to be posted at
brokers to support our risk management strategy. 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. The facility consists of a one year term facility of
GBP27.5 million and a three year term facility of GBP27.5 million,
both of which were renewed in March 2022. Under the terms of the
syndicated revolving credit facility agreement, the Group is
required to comply with financial covenants covering minimum
Tangible net worth and a minimum EBITDA: Interest expense ratio for
the Group at a consolidated level. The Group has complied with all
covenants throughout the reporting period.
The Group's use of total available liquidity resources consist
of:
-- Blocked cash. Amounts held to meet the requirements of local
market regulators and amounts held at overseas 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 positions.
Net available liquidity
30 September 31 March
GBP '000 2022 2022
=============
Cash and cash equivalents 140,879 176,578
Amount due from brokers 204,502 196,117
Other assets 4,065 13,443
Financial investments 27,545 27,945
Derivative financial instruments
(Current Assets) 6,142 2,359
========================================= ============= ==========
383,133 416,442
Less : Title transfer funds (52,989) (44,133)
Less: Derivative financial instruments
(Current Liabilities) (4,166) (2,362)
========================================= ============= ==========
Own Funds 325,978 369,947
Title transfer funds 52,989 44,133
Available committed facility 55,000 55,000
========================================= ============= ==========
Total Available liquidity 433,967 469,080
Less: Blocked cash (81,422) (103,089)
Less: Initial margin requirement
at broker (98,367) (120,078)
========================================= ============= ==========
Net available liquidity 254,178 245,913
========================================= ============= ==========
The following Own Funds Flow Statement summarises the Group's
generation of own funds during each period and excludes all cash
flows in relation to monies held on behalf of clients.
31 March 2022
GBP '000 30 September 2022 (Restated)
=== ==================
Operating activities
Profit before tax 36,557 92,136
Adjustments for:
Finance costs 1,330 2,177
Depreciation and amortisation 7,277 12,901
Other non-cash adjustments 2,240 (1,124)
Tax paid (9,294) (14,651)
========================================================================== ================== ==============
Own funds generated from operating activities 38,110 91,439
========================================================================== ================== ==============
Movement in working capital (15,525) 9,887
========================================================================== ================== ==============
Outflow from investing activities
Net Purchase of property, plant and equipment and intangible assets (12,570) (16,668)
Other outflow from investing activities (7) (998)
Outflow from financing activities
Interest paid (1,330) (2,177)
Dividends paid (25,250) (72,604)
Payments for Share buyback (24,961) (2,975)
Other outflow from financing activities (3,243) (7,738)
========================================================================== ================== ==============
Total outflow from investing and financing activities (67,361) (103,160)
========================================================================== ================== ==============
Decrease in own funds (44,776) (1,834)
Own funds at the beginning of the period / year 369,947 370,405
Effect of foreign exchange rate changes 807 1,376
========================================================================== ================== ==============
Own funds at the end of the period / year 325,978 369,947
========================================================================== ================== ==============
20. Fair value measurement disclosures
The Group's assets and liabilities that are measured at fair
value are derivative financial instruments and financial
investments. The table below categorises those financial
instruments measured at fair value based on the following fair
value measurement hierarchy:
-- Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities; or
-- Level 2 - inputs other than quoted prices included within
level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from
prices); or
-- Level 3 - inputs for the asset or liability that are not
based on observable market data (that is, unobservable inputs)
30 September 2022
GBP '000 Level 1 Level 2 Level 3 Total
======== ======== ========
Financial investments 27,487 - 58 27,545
Derivative financial instruments (Current Assets) - 6,142 - 6,142
Derivative financial instruments (Current Liabilities) - (4,166) - (4,166)
27,487 1,976 58 29,521
======================================================== ======== ======== ======== ========
31 March 2022
GBP '000 Level 1 Level 2 Level 3 Total
======== ======== ========
Financial investments 27,875 - 70 27,945
Derivative financial instruments (Current Assets) - 2,359 - 2,359
Derivative financial instruments (Current Liabilities) - (2,362) - (2,362)
27,875 (3) 70 27,942
======================================================== ======== ======== ======== ========
Valuation techniques used to determine fair values of Derivative
Financial instruments
Specific valuation techniques used to value financial
instruments include:
-- the use of quoted market prices or dealer quotes for similar instruments; and
-- for foreign currency forwards - present value of future cash
flows based on the forward exchange rates at the balance sheet
date.
All of the resulting fair value estimates are included in level
2.
Fair value of financial assets and liabilities measured at
amortised cost
T he fair value of the following financial assets and
liabilities not held at fair value approximates to their carrying
value:
-- Cash and cash equivalents
-- Amounts due from brokers
-- Trade and other receivables
-- Trade and other payables
-- Share buyback liability
21. Related party transactions
There have been no significant changes to the nature of related
parties disclosed in the statutory financial statements for the
Group as at and for the year ended 31 March 2022. The basis of
remuneration of key management personnel remains consistent with
that disclosed in the statutory financial statements for the Group
as at and for the year ended 31 March 2022.
Directors' transactions
There were no director transactions during the half year ended
30 September 2022 and 30 September 2021.
22. Contingent liabilities
The Group operates in a number of jurisdictions around the world
and as a result uncertainties exist regarding the interpretation of
regulatory, tax and legal matters in these territories. In
addition, the Group engages in partnership contracts that could
result in non-performance claims and from time-to-time is involved
in disputes during the ordinary course of business.
Sometimes legal disputes can have a financially significant face
value, but the Group's experience is that such claims are usually
resolved without any material loss. The Group provides for claims
where costs are likely to be incurred.
Where there are uncertainties regarding regulatory, tax and
legal matters and a provision has not been made, there are no
contingent liabilities where the Group considers any material
adverse financial impact to be probable.
Since the publication of the annual report on 8 June 2022, there
have been no significant updates or developments, including to the
matter listed within the events after the reporting period note,
which would require additional disclosure within the interim
financial statements.
UK banking surcharge
In the absence of them qualifying for a specific exemption, the
Group's regulated companies in the UK would be subject to the Bank
Corporation Tax surcharge of 8% on taxable profits over GBP25.0
million. The group has concluded that the relevant entities meet
the exemption requirements and therefore the related tax charge,
which would amount to GBP22.7 million (31 March 2022: GBP21.8
million) in respect of all relevant periods, has not been provided
for. The Group's position is supported by external advice although
it is possible that it could be challenged.
Brexit approach
There is regulatory uncertainty regarding the Group's historical
approach to the use of reverse solicitation provisions allowing EEA
clients to trade with UK subsidiaries after 31 December 2020. The
risk to the approach has been mitigated given the majority of EEA
clients' activities with the UK subsidiary ceased prior to 31 March
2021. The Group continues to engage with the regulatory authorities
in the EEA markets where the UK subsidiary continued to service
clients after 31 December 2020. Whilst it is possible that
regulatory censure may result from these matters, such an outcome
is not currently considered probable.
23. Forward looking statements
This announcement 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.
24. Subsequent events
There are no events after the interim period that have not been
reflected in the condensed consolidated financial statements.
25. Correction of error
The Group acquired a portfolio of Share Investing clients from
Australia and New Zealand Banking Group Limited ("ANZ") in a
transaction amounting to AUD$25.0 million (GBP13,317,000) during
September 2021. This investment in intangible assets was presented
in the condensed consolidated statement of cash flows as having
been settled in cash during the period ended 30 September 2021.
This transaction was presented incorrectly in the condensed
consolidated statement of cash flows as no cash was paid as at 30
September 2021 to settle the associated liability. Comparative
periods have been restated to reflect this correction in the tables
below. Total settlements up to 30 September 2022 amounted to
AUD$16.7 million (GBP9,591,000).
a. Condensed consolidated statement of cash flows
30 September 30 September
2021 2021
Correction
GBP '000 Note (Reported) of error (Restated)
====== ============== ============
Cash flows from operating
activities
Cash generated from operations 17 105,515 (13,317) 92,198
Net cash generated from operating
activities 98,354 (13,317) 85,037
=================================== ====== ============== ============ ==============
Cash flows from investing
activities
Investment in intangible assets (16,910) 13,317 (3,593)
Net cash used in investing
activities (18,439) 13,317 (5,122)
=================================== ====== ============== ============ ==============
b. Cash generated from operations
30 September 2021 30 September 2021
GBP '000 (Reported) Correction of error (Restated)
================== ====================
Changes in working capital:
(Decrease)/increase in trade and other payables 29,394 (13,317) 16,077
Cash generated from operations 105,515 (13,317) 92,198
================================================= ================== ==================== ==================
INDEPENT REVIEW REPORT TO CMC MARKETS PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2022 which comprises the Consolidated
Interim Income Statement and the Consolidated Interim Statement of
Comprehensive Income, the Consolidated Interim Statement of
Financial Position, the Consolidated Interim Statement of Changes
in Equity, the Consolidated Interim Statement of Cash Flows and
related notes 1 to 25.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2022 is not prepared, in all material respects, in
accordance with United Kingdom adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council for use in the
United Kingdom (ISRE (UK) 2410). A review of interim financial
information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with United Kingdom adopted
international accounting standards. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with United Kingdom adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410; however future events or conditions
may cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are
responsible for expressing to the group a conclusion on the
condensed set of financial statements in the half-yearly financial
report. Our Conclusion, including our Conclusion Relating to Going
Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
ISRE (UK) 2410. Our work has been undertaken so that we might state
to the company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
15 November 2022
Appendix: Alternative performance measures
a. Reconciliation of trading gross client income to trading net revenue
GBPm 30 September 2022 30 September 2021
==================
Trading gross client income 154.9 127.0
Client rebates introducing partner commissions and levies (11.5) (8.3)
Risk management gains / (losses) (15.0) (17.7)
------------------------------------------------------------ ------------------ ------------------
Trading net revenue 128.4 101.0
------------------------------------------------------------ ------------------ ------------------
b. Reconciliation of investing net revenue
GBPm Note 30 September 2022 30 September 2021
===== ==================
Investing gross revenue 31.9 37.5
Introducing partner commissions 2 (11.1) (13.3)
--------------------------------- ----- ------------------ ------------------
Investing net revenue 20.8 24.2
--------------------------------- ----- ------------------ ------------------
c. Reconciliation of trading net revenue, investing net revenue to net operating income
GBPm Note 30 September 2022 30 September 2021
===== ==================
Trading net revenue (a) 128.4 101.0
Investing net revenue (b) 20.8 24.2
Other revenue 3 1.4 1.2
Interest income 2 2.9 0.3
--------------------------- ----- ------------------ ------------------
Net operating income 153.5 126.7
--------------------------- ----- ------------------ ------------------
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