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CMC Markets plc Annual Report and Financial Statements 2024
Annual Report and
Financial Statements
2024
CMC Markets plc
Strategic report
1 Our strategic roadmap
2 At a glance
3 Our business
4 Our product oering
6 Operational and financial highlights
7 Investment case
8 Chairman’s statement
10 Market overview
12 Business model
14 Chief Executive Ocer’s statement
18 Our strategy
20 Key performance indicators
23 Section 172 statement
25 Stakeholder engagement
28 Technology and innovation
32 Sustainability
42 TCFD
52 Financial review
59 Risk management
61 Principal risks
CMC is a leading global provider of
online trading and investing, with a
comprehensive retail, B2B
andinstitutional oering.
The business was started in
1989with a simple ethos: to make
financial marketstruly accessible
for investors. Thisfundamental
belief remains at the heartof
everything wedo at CMC Markets
and staying true to that has been
pivotaltoour success.
See more at www.cmcmarkets.com
Governance
70 Chairman’s governance overview
72 Board of Directors
75 Corporate governance
83 Group Audit Committee report
87 Group Risk Committee report
90 Nomination Committee report
94 Remuneration Committee report
115 Directors’ report
Financial statements
120 Independent auditor’s report
129 Consolidated income statement
130 Consolidated statement of
comprehensive income
131 Consolidated statement of
financialposition
132 Parent company statement of
financialposition
133 Consolidated statement of
changesinequity
134 Parent company statement of
changesinequity
135 Consolidated and parent company
statements of cashflows
136 Notes to the consolidated and parent
company financial statements
Shareholder information
174 Shareholder information
180 Appendices
Our vision
To create an environment
foryour financial needs
Our purpose
To constantly maintain
asuperior and unrivalled
technology experience
forourclients
Our strategic pillars
01
Trading platform
productdiversification
02
Investment in business-to-business
(“B2B”) technologycapability
03
Expansion of Invest platforms
and institutional oering
Our sustainability pillars
01
ClientPositive
02
Change Positive
03
Platform Positive
04
People Positive
05
Planet Positive
The things we live by
– We stand with our clients
– We are human
– We take ownership
– We are bold
– We work as a team
– We keep it simple
– We focus on impact
See more on page 18
Our strategic roadmap
See more on page 19 See more on page 19
See more on page 33 See more on page 34 See more on page 35 See more on page 38See more on page 33
Strategic report Governance Financial statements Shareholder information
CMC Markets plc – 1
Annual Report and Financial Statements 2024
sss czz
At a glance
1 Active clients represent those individual clients which have traded with or held CFD or spread bet positions or which traded on the Invest platform on at least one occasion during the financial year.
With a presence in 14 oces located
inmajor financial centres around the
world, CMC Markets operates on a
hub-and-spoke model.
The Company’s headquarters are
based in London, while Germany
serves as the hub for our European
operations, and Sydney acts as the
hub to support the Asia Pacific &
Canada (“APAC & Canada”) region.
Continents
4
Countries
12
Oces
14
Our client base
Total active clients
1
266,870
CMC attracts a diverse range of
institutional and retail clients across
both our trading and investing
platforms. Regardless of client type,
we uphold our high standards of
protection and suitability, to ensure
every client receives the same level
ofservice excellence.
Our new investing platforms provide
the Group with access to a cohort
ofclients in new geographies, with
theaim of providing clients with
opportunities for long-term investment
as another avenue to building
financialsecurity.
Our geographical reach
B2B/B2C split of active clientsBreakdown of NOI
A Trading – 51,250
B Investing – 168,760
A Trading – 4,044
B Investing – 42,816
A Trading – 55,294
B Investing – 211,576
Refer to net revenue on Page 53
A Trading net revenue – £259.1m
B Investing net revenue – £34.0m
C Interest income – £35.0m
D Other income – £4.7m
B2C
A
B
B2B
A
B
Totals
A
B
A
B
C
D
2 – CMC Markets plc
Annual Report and Financial Statements 2024
sss czz
Products
Contracts for dierence (“CFDs”) Spread betting Technology-driven liquidity solution
Outsourced trading platform technology Stockbroking Options
Trading
We are committed to expanding our product
range in order to improve functionality for our
clients. With over 10,000 products currently
available through our trading platforms,
we aim to provide the most ecient pricing
structure possible. Our pricing system
undergoes continuous evolution to ensure
sophistication and minimise latency. We
use high precision clock time-stamping
at multiple points throughout the system
to measure latency in microseconds and
monitor itin real time. Our focus on best
execution enables us to set high standards
for execution quality.
We prioritise internal risk management by
storing trade and risk data in a high frequency
tick database. This enables us to record all stages
of the risk management system, ensuring that
client order flow is managed eciently.
To achieve this, we have large quantitative
analytics and data science teams that develop
the hardware and software components
of our analytics environment. Data science
and machine learning models also play
a crucial role in our real-time and oine
decision-making processes.
Our ultimate goal is to oer our clients
market-leading access to liquidity, alongside
a best-in-class and resilient platform across
all aspects of our oering.
See more on page 12
Investing
We see significant growth potential across
global investment platforms due to secular
shifts in investment trends, and we are
expanding our investing businesses to
capitalise on these opportunities.
See more on page 12
Institutional/B2B
Our institutional clients are served by both
the trading and investing businesses.
Through our CMC Connect brand we oer
technology-powered solutions to mid-sized
and large financial institutions. CMC is already
a trusted service provider for execution,
clearing, and settlement services to several
major Australian financial service businesses.
Our B2B partnerships are at the core of
our growth strategy and our oering to this
important segment will be bolstered by our
product diversification which will expand to
all our existing and new geographies over
the next 24 months. With growth from our
investing operations, we are strategically
positioning our business to leverage some
of the fastest growing trends in trading
andinvesting.
Our continued development work to
connect to multiple Electronic Crossing
Networks (“ECNs”) and the deployment of a
competitive FX Spot product now allow for
significant growth in this asset class.
See more on page 12
A B C D F
Products utilised
C
Products utilised
E F A B C D E F
Products utilised
Sustainability
Our Tomorrow: taking apositiveposition
Our goal at CMC Markets is to align with the global capital markets’ movement towards a sustainable future. We aim to achieve this by oering
responsible and innovative technological solutions that prioritise the protection, education, and inspiration of both our people and clients to invest
for the future.
See more on page 32
See page 4
A B C
D E F
Our business
Strategic report Governance Financial statements Shareholder information
CMC Markets plc – 3
Annual Report and Financial Statements 2024
Our product oering
A
Contracts for
dierence (“CFDs”)
A derivative product which allows clients to trade
using leverage in an underlying financial asset,
without certain costs and limitations associated
with ownership of the underlying asset.
B
Spread betting
A product available exclusively to residents
in the UK and Ireland enabling clients
to speculate on price movements in an
underlying financial asset.
C
Technology-driven
liquidity solution
Our institutional arm, CMC Connect acts as a
non-bank liquidity provider oering access to a
wide range of asset classes including Spot FX,
Indices, Commodities and cash equities. For
larger institutions, we are able to oer bespoke
solutions to help facilitate access across multiple
asset classes.
4 – CMC Markets plc
Annual Report and Financial Statements 2024
D
Trading platform
technology solution
We oer outsourced platform technology to
clients also under the CMC Connect brand, where
our award-winning CMC trading platform can be
fully customised under a white label partnership or
branded platform for regulated entities looking to
oer our products to their clients.
E
Stockbroking
Our Australian stockbroking business oers
our clients the ability to trade Australian shares
and international shares from over 35 stock
exchanges in over 16 countries. This has been
supported through the launch of a fully native
mobile application oering a variety of instruments
including shares, options, managed funds,
warrants and ETFs.
Our UK business currently oers General
Investment Accounts (“GIAs”) and Stocks and
Shares ISAs with access to a range of US and UK
stocks. SIPPs and mutual funds went live in April
2024. The Group has also launched CMC Invest
in Singapore.
F
Options
The addition of options on CMC’s trading platforms
will bring added benefits to our clients. New derivative
products will provide more flexibility to manage
risks and volatility compared to traditional CFD
and stock trading. Options have the ability to
enhance portfolio diversification and manage risk.
Options are a universally popular product andtheir
addition has the potential to be a significant
revenue generator forCMC in years to come.
Strategic report Governance Financial statements Shareholder information
CMC Markets plc – 5
Annual Report and Financial Statements 2024
Operational and financial highlights
– Trading revenue per active
client up £717 (18%) to £4,685.
– B2B represents 33% of Group
turnover¹ (2023: 30%).
– Continued investment in our
‘Invest’ branded stockbroking
propositions through
enhancements to the CMC
Invest Australia platform
including the release of crypto
trading, development of the
CMC Invest UK platform and the
release of CMC InvestSingapore.
– The institutional oering
continues to grow with the
release of cash equities trading,
with further product releases
planned in 2024.
– Ongoing operational resilience
demonstrated by theGroup-
wide platform uptime of 99.95%.
Read more about net revenue and our financial measures on page 53
1 Turnover reflects the notional value of client trades
2 Net operating income represents total revenue net of introducing partner commissions and spread betting levies.
3 Ordinary dividends paid/proposed relating to the financial year.
Net operating income
²
£332.8m
23
£288.4m
£281.9m
22
24 £332.8m
Statutory profit before tax
£63.3m
23
£52.2m
£91.5m
22
24 £63.3m
Group-wide platform uptime
99.95%
23
99.97%
99.95%
22
24 99.95%
Basic earnings per share
16.7p
23
14.7p
24.6p
22
24 16.7p
Ordinary dividend per share
3
8.30p
23
7.40p
12.38p
22
24 8.30p
6 – CMC Markets plc
Annual Report and Financial Statements 2024
Investment case
Award-winning
platforms
See more on pages 28 to 31
The demands of our clients continue to evolve. Ourgoal
is to constantly maintain a superior and unrivalled
trading experience for our clients. Continuous
investment in our proprietary technology across both
our trading and investing platforms allows us to oer
a wide suite of products. Our web-based and mobile
applications are continuously ranked amongst the best
in class by our clients.
Our diverse
product oering
See more on pages 4 and 5
We are investing to diversify our new products and
functionality across both our trading and investing
platforms. CFD trading remains at the core of what
we do. This is balanced with a world-class investing
business in Australia. Similarly, the launch of CMC Invest
Singapore, along with the release of CMC Invest UK
in FY23, underpins our expansion into the high growth
opportunities.
Our
geographical
reach
See more on page 2
Our global technology platforms allow access for retail,
professional and institutional clients through regulated
oces and branches in 12 countries, with a significant
presence in the UK, Australia, Germany and Singapore.
Our client
focus
See more on page 25
Our clients are at the heart of what we do, and their input
drives us to improve our business processes across
product development, marketing and client services as
we tailor new developments and target improvements.
We employ and develop high quality client services
sta to ensure best-in-class client service. Platform
resilience and user experience are at the core of all
developments and upgrades we deploy.
Our Tomorrow
See more on pages 32 to 41
Last year we introduced the Group’s Our Tomorrow
sustainability strategy and its five core pillars structured
to focus delivery on our material environmental, social
and governance (“ESG”) risks. Through this year we
have continued to follow the five sustainability pillar
approach, further details of which can be found in our
‘Sustainability’ section.
1 ASX and Chi-X combined trading statistics – IRESS.
12,000+
financial instruments traded across the
Next Generation platform and over 40,000
instruments within Invest Australia
16%
share of Australian stockbroking market
1
Launch of the Invest Singapore business,
providing clients access to 15 markets and
over 40,000 listed securities
56%
of net revenue generated outside the UK
and Europe regions
266,870
active clients across our trading and
investing businesses
5
core sustainability pillars
Strategic report Governance Financial statements Shareholder information
CMC Markets plc – 7
Annual Report and Financial Statements 2024
Our focus on diversification and enhancing
our B2B oering continues to build momentum
with clients and positions us to deliver on our
strategic vision.
The Board’s strategy of diversification and placing a greater focus on
institutional clients and the B2B sector continues to build momentum. The
long-term investments we have made in our technology and our people will
continue to enhance our business performance and benefit our clients and
other stakeholders.
While we have given a greater focus to our institutional business, we of
course maintained investment in our retail business, launching our Invest
product in Singapore and continuing to enhance our Invest business in the
UK. We launched mutual funds on Invest UK as well as our SIPP product
post year-end, broadening the range of high-quality long-term investment
products for our UK retail customers. In addition to our product diversification,
we continue to pursue targeted geographical diversification, building on our
existing presence in Dubai and placing a renewed focus on governance and
capabilities in Europe to ensure a solid foundation for what is an attractive
growth region. Our sta continue to be instrumental to our growth and
diversification. As we announced earlier in the year, the Group has reached
the peak of its investment cycle and the Board and senior management
conducted two restructuring reviews, leading to the loss of around 15% of roles
across the Group. While it is always a matter of great regret when colleagues
leave the business, we are now better placed to deliver on our growth
opportunities and leverage our scale to grow profit margins, whilst continuing
to invest in our products and technology.
Our long-term investments and
focus on institutional clients
andthe business-to-business
market segment are beginning
to deliver for the Group
The long-term investments we
have made in our technology
andour people will continue to
enhance our business
performance and benefit our
clients and other stakeholders.”
James Richards
Chairman
Chairman’s statement
8 – CMC Markets plc
Annual Report and Financial Statements 2024
Results and dividend
Net operating income rose 15% to £332.8 million in the year, following
improved trading conditions in the second half of 2024, with increased client
trading activity and further momentum in our B2B businesses. Profit after tax
for the year was £46.9 million. The Board recommends a final dividend of 7.3
pence per share which results in a total dividend payment of 8.3 pence for the
year, in line with our dividend policy of 50% of profit after tax.
Board
The Board was delighted to approve the appointment of Albert Soleiman as
CFO in September 2023 following the resignation of Euan Marshall. Prior to
his appointment as CFO, Albert led the launch of our CMC Invest business in
the UK which is a key part of our diversification strategy and enables clients to
generate long-term wealth through our investing platforms. Albert’s extensive
knowledge of the business made him the ideal choice as CFO.
Susanne Chishti has advised that she is not putting herself up for re-election
at the 2024 AGM. I would like to thank Susanne for her hard work and the
insight she has provided to the Board, particularly in relation to workforce
engagement matters, during her time as a Non-Executive Director. We wish
her well in her future endeavours.
People and stakeholders
Our workforce remains the bedrock for our business and the eorts of our
people enable us to deliver on our strategic goals and provide outstanding
service for our clients. The Board also considers our wider stakeholders
and the communities in which we operate, and during the year approved our
Community Impact 121 strategy, committing to making donations to charitable
causes and enabling sta volunteering.
We recognise, with the restructuring reviews and the resulting reduction in
roles, that this was a more dicult period for our people, and this is discussed
further in the Our Tomorrow section of the 2024 Annual Report and Financial
Statements.
The Board continues to place priority on developing and investing in our
people with Susanne Chishti having acted as our designated Non-Executive
Director responsible for workforce engagement. The scope of the work
undertaken by Susanne in this role is set out in the 2024 Annual Report and
Financial Statements.
The Board would like to express its gratitude to all CMC’s employees for
their significant contributions throughout the year and particularly during the
period of heightened change.
Sustainable-based growth
The Board is committed to putting in place the tools and capabilities for our
customers and employees to invest for a better future. Further information is
set out in the Our Tomorrow section of the 2024 Annual Report and Financial
Statements.
Outlook
The outlook for the Group remains positive as we continue to invest in the
business, develop the platforms and technologies that our clients want and
further improve our operational eciency. We will continue to build on the
work undertaken to date to diversify the business to position it for future
opportunities and challenges. While there will continue to be potential for
uncertainty in the financial markets due to ongoing geopolitical events, the
Board will maintain its focus on positioning the business to navigate through
this period of volatility to the benefit of all our stakeholders.
James Richards
Chairman
20 June 2024
Strategic report Governance Financial statements Shareholder information
CMC Markets plc – 9
Annual Report and Financial Statements 2024
Market overview
Whilst the Group currently generates the majority
of its revenue from retail trading products, our
strategy to diversify has accelerated during the
year with a range of new product oerings within
both our investing and trading businesses. Group
revenues are split between our three regions, the
UK, Europe and APAC & Canada.
Leading the
marketthrough
technology and
diversification
Group
Key market driver
Global interest rate
environment
Interest rates have remained high across the Group’s primary
markets after the aggressive hikes seen in the previous
financial year.
Our response
Despite higher rates, revenue from our core business has
remained strong, coupled with a significant increase in interest
income as the Group continues to benefit from a robust cash
position that is actively optimised to enhance returns.
The Group pays interest to clients on cash balances held in
GIAs and ISAs and continues to invest in its oerings to help
clients navigate the markets in all environments.
Key market driver
Inflation
The period saw a reduction in inflation to the lowest levels since
February 2022; however, prices for our inputs remain elevated.
Our response
As outlined previously, the firm has implemented a company
wide cost review programme. As part of this program we are
reviewing all supplier relationships and purchasing practices to
find eciencies and deliver sustainable costs savings.
Suppliers are also passing on inflationary costs but we remain
diligent in challenging and driving eciencies within the Group.
Key market driver
Scale
Operating at scale has significant benefits to the Group,
providing further opportunities for risk management
enhancements in the trading business and improved
operational leverage across our business.
Our response
Along with continued investment in our core infrastructure, the
diversification strategy ensures the group can obtain greater
share of wallet, by broadening the product range oered to our
clients. Our ability to leverage our existing technology platforms
and operational strength allows us to introduce new products
and services to our client base eciently thereby enhancing our
return on investments made.
10 – CMC Markets plc
Annual Report and Financial Statements 2024
Investing
Key market driver
Volatility
Unfavourable equity markets and the high cost of living
dampened demand for our Invest business in the first half of the
the year, however the turnaround in equity markets in H2 saw a
corresponding pick up in our Invest business.
Our response
Thematic investing continues to be a key interest for our clients
and with the growth in AI stocks and strong gains seen in the US
markets, clients were able to utilise our platform, products and
features to manage their portfolio. We continue to enrich the
tools and contents within our Invest oering to empower clients
to build wealth through all types of markets.
Key market driver
Market size and share
An independent report in Australia showed 1.2 million individuals
placed a trade online in the 12 months to November 2023
(previously 1.5 million). Singapore had 264,000 active online
investors in the 12 months to September 2023 and the
addressable market within the UK is attractive with 3.9 million
Stocks and Shares ISA holders.
Our response
During the year, we enabled cash crypto trading for
our customers in Australia, coinciding with the wider
investingcommunity’s growing interest in this asset class. This
enhancement within both our platform and award-winning
mobile app has further elevated our product oering and dierentiated
us from our peers. Additionally, by deploying strategies to boost brand
awareness, we have consolidated our position as Australia’s
second-largest retail broker, holding 16% market share.
We launched our Invest oering in Singapore earlier this year,
a gateway into the Southeast Asia markets where we aim to
replicate our Australian success in the retail and white label
space. In the UK Invest business, we continued to add new
assets to the platform, which included mutual funds and SIPPs.
Trading
Key market driver
Regulatory environment
In 2024 we have seen restrictions on the marketing of CFDs
inSpain and the first year of consumer duty in the UK.
Our response
The group maintains an open and transparent dialogue with
regulators to meet their expectations and that issues arising
are dealt with promptly. We consistently strive to ensure our
approach meets those regulatory expectations, whilst also
allowing the Group to be involved in shaping future regulations
within the sector.
The Group continues to be supportive of regulatory change
that strengthens a globally consistent regulatory environment.
Key market driver
Volatility
The year saw volatility continue to decline, reaching the lowest
level since 2019. However, the directional bias in the equities
market, bullion and commodity markets attracted interest
from clients.
Our response
Higher volatility results in increased trading activity from both
existing clients trading more frequently and new or previously
inactive clients starting to trade. The inverse is true in periods
of lower volatility, which can lead to a reduction in client trading
activity. However, short bursts of market activity which result in
high velocity movements in the products that we oer are not
necessarily beneficial to our clients or the Group. Aside from
notifying clients of changing levels of market activity in a timely
manner through a flexible marketing strategy, the Group can
have little influence on capitalising more or less than competitors
during short-term periods of raised market volatility.
Strategic report Governance Financial statements Shareholder information
CMC Markets plc – 11
Annual Report and Financial Statements 2024
Business model
Our client oering
Our clients are at the heart of
everything that we do.
Our business enablers
Technology and product
Technology and product have always been
key to the success of CMC Markets and this
has won the business recognition as a leader
in our industry for innovation and service.
Recognising that innovation is key to retaining
this reputation, the Group has continued
to invest significantly across the business
to deliver new products and oerings to
our clients.
See more on pages 28 to 31
Financial strength
We aim to maintain our secure capital
and liquidity structure, ensuring that it
is appropriate for the future growth and
successof the Group. This includes
maintaining sucient levels of capital to
withstand fluctuations in the financial markets
and access to a healthy level of surplus
liquid resources to capitalise on the growth
opportunities.
See more on pages 52 to 58
Risk management
The Group’s business activities naturally
expose it to strategic, financial and operational
risks inherent in the nature of the business
it undertakes and the financial, market and
regulatory environments in which it operates.
The Group recognises the importance of
understanding and managing these risks and
that it cannot place a cap or limit on all of the
risks to which it is exposed. However, eective
risk management ensures that risks are
mitigated to an acceptable level.
See more on pages 59 to 68
Our technology platforms
Our superior platforms and technology, combined with our risk management, deliver a best-in-class
experience for our clients and partners.
Trading
Contracts for
dierence
Spread betting
White label solutions
Options
Cash equities
FX spot and give-ups
Investing
Invest platforms
(Australia, UK and Singapore)
White label solutions
Institutional
+
Retail
Institutional (business to business)
CMC Connect acts as a non-bank liquidity provider oering access to
a wide range of asset classes.
Retail (business to consumer)
CMC Markets provides clients access to a wide range of products
across both trading and investing platforms
The best trading and investing experience
12 – CMC Markets plc
Annual Report and Financial Statements 2024
Our client oering
Our clients are at the heart of
everything that we do.
How we make money
Trading net revenue
£259.1m
Spreads
Revenue earned through maintaining a
transactional spread (the dierence between
the buy and sell price) on CFD and spread
bet products.
Commissions
These are charged on both CFD equity trades
and institutional DMA trades. Clients are
either charged a minimum commission or a
percentage based on the value of the trade.
Financing
Positions held by clients overnight may be
subject to financing costs, which can be positive
or negative depending on the direction of their
holding and the applicable financing rate.
Rebates and levies
Volume-based rebates paid to professional,
high value retail and institutional clients and
introducing brokers on selected asset classes.
Risk management gains/(losses)
Revenue or losses from management of client
positions that the Group inherits. This consists
of gains or losses which accrue to the Group
through client positions and, secondly, the gains
or losses which accrue to the Group through
the hedge positions entered into by the Group,
including hedge transaction costs.
How we add value
Shareholders
Dividend per share
8.30 pence
up 0.90 pence from 2023
Earnings per share
16.7 pence
up 2 pence from 2023
People
24%
permanent employees with us
foroverfive years
Clients
61%
turnover¹ generated from trading clients
oftenure greater than two years
18
awards for service
platform and technology in 2023²
Interest income
£35.0m
Interest income from the Group’s own funds and
income on client funds.
1 Turnover reflects the notional value of client trades.
2 https://www.cmcmarkets.com/group/about-us
Investing
£34.0m
Net revenue in Australia predominantly earned through
brokerage charged for the execution of exchange
traded products, options, warrants, ETFs, managed
funds, interest rate securities and bonds. Further, we
earn fees including FX revenue on international shares
and equity capital markets (“ECM”) income.
Who our clients are:
– Sophisticated
– High value
– Experienced
What we oer them:
– Cutting-edge technology
– Competitive pricing
– Excellent client services
– Diverse product suite
Other income
£4.7m
Strategic report Governance Financial statements Shareholder information
CMC Markets plc – 13
Annual Report and Financial Statements 2024
Chief Executive Ocer’s
statement
Over the past year, CMC Markets has experienced exceptional growth,
marked by a strong financial performance, and continued technology
advancements. Our financial results, in particular our net operating income
of £332.8 million represents a record for the Group when excluding the
COVID-19 impacted 2021. Our profit before tax of £63.3 million was up
21%, reflecting the success of our institutional first approach by leveraging
our technology to partner with major financial institutions. The recent
announcement of our partnership with Revolut, where our best-in-class
technology will support their rapidly expanding customers’ investing needs, is
not only a testament to the success of this strategy but also opens significant
opportunities for further collaboration on a global scale.
This strategy has transformed and diversified the business into a provider
of financial technology solutions, facilitating platforms, multiple connectivity,
liquidity, trade execution and clearing across multiple venues as we partner
with major financial institutions. We have very little competition in this
institutional space. We are certainly not in competition with peers from the
retail CFD sector, and, because of our technology and oering, we have a
clear and long-standing competitive advantage that separates us from our
traditional peers in the retail market.
This is not something that has happened by accident, it has been part of
our business for over twenty years, but it is only recently that investors and
analysts have started to understand the diversity of our business model and
the scale it brings. As we gravitate further towards the fintech sector, this is
driving CMC towards a higher valuation multiple as we are increasingly moving
away from valuations associated with the retail CFD sector. A retail CFD only
platform is where CMC started, but that is not where we are today, and it is
not our future, and public markets are gradually beginning to reflect this in our
higher valuation.
Witnessing our
long-term
investments
come to fruitition
A central focus for the
management team and me
over2024 has been cost
management as we look
tobetter optimise our
performance and grow
profit margins.”
Lord Cruddas
Chief Executive Ocer
14 – CMC Markets plc
Annual Report and Financial Statements 2024
We are already the second largest on-exchange stockbroker in Australia with
over $70 billion in AUA and over one million customer accounts and we are
regularly the number one options clearer on the Australian exchange. CMC
Group currently serves more than 400 institutions with marquee partnerships
in all our major geographies and a strong pipeline in our target countries. Our
focus is not only to seek out new partnerships but to also help our existing
partners realise the full potential of their businesses through new products and
access to various liquidity pools, thereby maximising returns for CMC and our
partners. We have the infrastructure and experience to continue our growth in
this huge market.
It has been an exciting year and I look forward to working with my superb team
over the coming years to add more value and growth to an already exciting
business.
Treasury Management and Capital Markets
Over the last couple of years, we have been building a Treasury Management
and Capital Markets Division; an area I have extensive experience in due
to my banking background. The development of this division has become
necessary as the Group continues to expand and diversify.
Today, we are managing substantial cash and currency balances, trade
settlements and multiple venue clearing. Our annual trade turnover is more
than US$4 trillion and growing, driven by our institutional business and new
product additions. We are managing a number of prime brokers, banking
relationships, exchanges, and partnerships all around the world. With
oces in 12 countries, a large stockbroking business, cash settlements, and
expanding B2B and institutional partnerships, we have become a technology-
based, multi-currency global organisation, which requires not just a focus on
technology but also on treasury management functionality.
As part of our Treasury Management Division, we have linked all our overseas
oces to a Treasury Management System (“TMS”) to centralise all foreign
exchange (“FX”) transactions and cash balances onto one real-time platform.
All currency and cash movements are centrally managed by the treasury
team, who then lock in FX profits, whilst also managing our cash with prime
brokers, banks, exchanges, and partners, to optimise capital market returns.
This ensures our cash and trade settlements are as ecient as possible,
thereby freeing up capital to invest. It is an amazing value add to the business
and generates additional income through optimisation and eciency.
To be clear, this is not a risk book of business; it is capital markets and interest
rate optimisation. It is cash deployed eectively in the right venues to earn
the maximum return in the capital markets. Via the TMS platform we can also
centralise all cash foreign exchange exposures and settlements, locking in
currency exchange rates and optimising foreign exchange profits.
The treasury management team is there to optimise liquidity, settle trades
and optimise our cash flows. This has added great scale to the business and
additional incremental profits. In our financial accounts for FY24 we have a
record £39.7 million as other income. This includes interest income from the
higher interest rate environment but within that figure there are the eciencies
of our TMS and the additional value this brings.
In the coming years we will provide a more granular breakdown as this side of
the business expands and matures. Treasury management is important and
necessary as we expand our B2B and institutional business, as well as our
cash product range. It will help us win more business and will help us to remain
competitive.
Financial performance
Financial performance in the year has been strong. Net operating income
of £332.8 million (FY23: £288.4 million) was up 15% with continued good
momentum across our B2B segment, and profit before tax for the year was
£63.3 million, up 21% on FY23. Other income continued to benefit from higher
global interest rates, as well as our new centralised TMS.
Whilst operating expenses, excluding variable remuneration, are higher in the
year, much of this was driven by a non-recurring impairment charge and an
increase in net sta costs relating to the annualisation of higher headcount
levels for much of the year, as well as the higher termination costs resulting
from the reduction in global headcount.
Driving ecient performance throughout the business has been a central
focus over the course of FY24, and this includes the introduction of the
aforementioned TMS, but also extends to our disciplined focus on costs.
As announced at the half year, the business has reached the peak of its
current investment cycle and H2 saw us complete a cost review designed to
rationalise our cost base and drive synergies through our global operations.
This includes the merging of support functions, streamlining of reporting lines
and greater focus on our capital allocation, which will generate sustainable
cost savings from FY25 onwards.
We remain firmly committed to continued investment in our business and
technology platforms to maintain our competitive advantage. However,
following years of strong investment, we are now in a position to leverage our
operational strength to grow eciently. We continue to see opportunities
to rationalise the cost base as we maintain our ongoing focus on delivering
sustainable cost savings.
Our financial performance in FY24 leaves the Group in a strong position and
has laid the foundation for another successful year ahead.
Delivering growth through diversification
Underpinning our growth agenda is our diversification strategy, which has
opened many opportunities for the business around the world. This strategy
is predicated on a rigorous programme of continuous product upgrades, a
sustained commitment to providing world-leading technology for our clients
across all business lines and further expansion of our reach across both new
geographies and markets.
Strategic report Governance Financial statements Shareholder information
CMC Markets plc – 15
Annual Report and Financial Statements 2024
Continuous product development
FY24 has seen CMC continue to diversify its product oering. Our approach,
which is on the focused expansion of asset classes to strengthen our levels
of engagement is critical in enabling us to continue to support our clients. This
includes the rollout of OTC options, with futures and exchange traded options
set to be delivered in H1 FY25. The addition of cash equities to our institutional
oering has allowed us to expand the services available to this valuable
segment. On UK Invest, we have added mutual funds in FY24, and SIPPs post-
financial year-end, as well as continued updates designed to enhance the user
experience. Invest Australia also expanded to oer cash cryptocurrencies.
Sustained commitment to world-leading technology
Underpinning our continued product development is our unwavering commitment
to being a world-leader in financial markets technology. Our CMC Markets Connect
brand and API ecosystem is the foundation for our growth and expansion and
the power of this technology has proven critical in securing a number of large
B2B partners, such as Revolut. This builds on the already extensive network of
partnerships that we have in place and our ability to provide larger institutions with
complex, bespoke builds, cements us further as the partner of choice and reinforces
our deep understanding of the financial sector and technical superiority. Elsewhere,
we have launched our CMC Invest Singapore platform, and we continue to enhance
our connectivity to more execution venues, ECNs, and client types across this vast
electronic marketplace. Looking to the future, we remain committed to a disciplined
level of continued investment over the medium-term, leveraging technology to drive
innovation and growth.
Expansion across new geographies and markets
A core aspect of our diversification strategy is expansion across new regions
and markets. In addition to the launch of Invest Singapore, we have also
expanded our operations in the Middle East with our subsidiary in Dubai’s
International Financial Centre and we have placed a renewed emphasis on
our European operations, with a focus on strengthening the governance and
capability of this region as a lever for growth. Meanwhile, our content and
thematic investing tool, Opto, achieved significant milestones, notably the
completion of equities trading functionality, which is set to launch imminently.
Through continued and targeted regional expansion across the world, CMC
continues to unlock new opportunities, delivering sustained value creation for
shareholders.
Regulatory change
As we outlined as part of our half year results, updated regulations governing
Consumer Duty in the UK were enforced for financial services companies
from 31 July 2023. These regulations are designed to establish a rigorous
level of consumer safeguarding in financial dealings. The integration of
these obligations within the Group has proven eective, and CMC remains
committed to refining its procedures post-implementation, while monitoring
client outcomes to try to ensure their ongoing financial goals are met.
CMC also intends to comply with the European Union’s Digital Operational
Resilience Act, applicable from January 2025, which seeks to promote cyber
resilience by enhancing ICT risk management and cyber risk management
across financial services. Requirements include the reporting of major ICT-
related incidents, digital operational resilience testing, information sharing, and
measures and requirements related to the use of ICT third-party services.
People and sustainability
As the emphasis on sustainability continues to influence financial markets,
our goal is to empower both our clients and employees with the tools and
expertise needed to make informed and ethical choices, both in their
investments and in the workplace. We acknowledge and embrace the finance
industry’s deep responsibility to support global sustainability initiatives and
appreciate the belief that integrating sustainable practices can yield tangible
advantages for our business.
Dividend
The Board has proposed a final dividend payment of £20.4 million, which
equates to 7.3 pence per share, resulting in a total dividend payment of 8.3
pence per share for the year. This is in line with the dividend policy of 50% of
profit after tax.
Outlook
With the launch of new product initiatives, further technological advancements,
and the expanding opportunities created by our diversification strategy,
combined with our programme to rationalise costs, we are confident in the
business’ ability to generate robust levels of income on a leaner cost base. This
will drive an enhancement in profit margins in the year ahead. Management
is anticipating achieving net operating income of between £320-360 million
in FY25, on a cost base, excluding variable remuneration and non-recurring
charges, of around £225 million.
I look forward to continued exciting profitable growth in the years to come.
Lord Cruddas
Chief Executive Ocer
20 June 2024
Chief Executive Ocer’s statement continued
16 – CMC Markets plc
Annual Report and Financial Statements 2024
Underpinning our continued product
development is our unwavering commitment
to being a world leader in financial
markets technology. Our API ecosystem
is the foundation for our growth and
expansion and the power of our technology
has proven critical in securing a number of
large B2B partnership wins in the year.”
Lord Cruddas
Chief Executive Ocer
Strategic report Governance Financial statements Shareholder information
CMC Markets plc – 17
Annual Report and Financial Statements 2024