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CMC Markets plc
Annual Report and Financial Statements
2022
CMC Markets plc Annual Report and Financial Statements 2022
CMC is a leading global
providerof online trading
withacomprehensive
retail, professional and
institutionaloffering.
Strategic report
2 CMC at a glance
6 Highlights 2022
7 Investment case
8 Chairman’s statement
10 Our business model
12 Stakeholder engagement
14 Our markets
16 Chief Executive Officer’s statement
20 Our strategy
22 Key performance indicators
25 Technology and Innovation
28 Sustainability
40 TCFD
44 Financial review
50 Risk management
51 Principal risks
Corporate governance
58 Board of Directors
60 Governance report
69 Group Audit Committee report
73 Group Risk Committee report
75 Group Nomination Committee report
78 Directors’ Remuneration report
100 Directors’ report
Financial Statements
105 Independent auditors’ report
113 Consolidated income statement
114 Consolidated statement of
comprehensive income
115 Consolidated statement of
financialposition
116 Parent company statement of
financialposition
117 Consolidated and parent company
statements of changes in equity
118 Consolidated and parent company
statements of cash flows
119 Notes to the consolidated and parent
company Financial Statements
Shareholder information
159 Shareholder information
164 Appendices
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.
Read more at cmcmarketsplc.com
“ Our purpose
istoconstantly
maintain a superior
and unrivalled
technology
experience for
ourclients.”
Lord Cruddas
Founder and CEO
1
CMC Markets plc
Annual Report and Financial Statements 2022
CMC at a glance
Empowering our clients and providing
first-class access to the evolving
landscape of investing and trading
Listening to our clients’ demands is
integral to what we do. Our continued
investment in technology will facilitate
an ever-improving range of financial
products to satisfy these demands.
At CMC we continue to invest in the
diversification of our product offering,
in particular expanding our reach to
non-leveraged products across existing
and new geographies. We believe
this will benefit our clients as well as
support the needs of our stakeholders
in driving earnings and profitability for
the Group.
Bespoke solutions in a dynamic world
Societal shifts in technology and demographics are driving far-reaching
changes in how platform providers serve the new generation of trading and
investing clients. Our purpose is to constantly maintain a superior and
unrivalled bespoke technology experience to our clients.
Leveraged
Internal risk management
Trade and Risk data is stored in a high frequency
tick database, where we record all stages of the risk
management system. We have large Quantitative
Analytics and Data Science teams which build out
both the hardware and software side of the analytic
environment to ensure that client order flow is
managed in the most appropriate way. Data science
and machine learning models are playing an ever-increasing
role in our real-time and offline decision making. Our
aim is to continually provide market leading access
to liquidity to our clients, with best-in-class platform
resilience through every part of our of offering.
Improving product offering and
pricingefficiency
We continue to invest in the diversification of our
products to enhance functionality for our clients.
We already offer over 10,000 products over our
leveraged platforms. Delivering this with the most
efficient pricing structure is paramount. Our pricing
system is continually evolving both in terms of
sophistication and latency minimisation. Latency is
measured in microseconds using high accuracy clock
time-stamping at multiple points through the system,
with real-time monitoring. Best execution internal
reporting allows for the setting of high standards of
execution quality.
Read more on page 25
Strategic report
2
CMC Markets plc
Annual Report and Financial Statements 2022
Non-leveraged
Expansion in non-leveraged businesses
Secular shifts in investment trends present high
growth opportunities across non-leveraged investment
platforms globally. Building on the successes from
our Australian stockbroking business, the launch of
our UK non-leveraged platform in April 2022 allows
us to tap into the growth being seen in self-managed
investing. This will, over time, drive a more balanced and
diversified income stream for the Group.
Read more on page 26
Leveraged and non-leveraged
Technology-backed business to business
(“B2B”) offering
In addition to our retail offering we provide
technology-backed solutions to mid-sized and large
financial institutions. CMC already provides execution,
clearing and settlement services as a service provider
to a number of Australian financial service licensees.
Our business to business (“B2B”) partnership directive
will now be expanding across all our existing as well as
new geographies over the coming 12 months. Growth
from our non-leveraged operations will reposition our
business to the some of the fastest growing shifts in
trading and investing.
Our Tomorrow - taking a positive position
At CMC Markets, our vision is to unite with the global
capital markets shift towards a sustainable future, by
providing responsible and innovative technological
solutions that protect, educate and inspire our people
and clients to invest for the future.
Read more on page 28
Strategic report
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CMC Markets plc
Annual Report and Financial Statements 2022
Strategic report
The products we provide
Contracts for difference (“CFDs”)
A financial derivative product which allows
clients to speculate on price changes in
anunderlying financial asset, without certain
costs and limitations associated with
physical ownership. More information is
available on www.cmcmarkets.com.
Spread betting
A product available exclusively to
residents in the UK and Ireland which
is similar in many aspects to our CFD
product. More information is available
onwww.cmcmarkets.com.
Technology-driven liquidity solution
Under our B2B arm, CMC Markets Connect
acts as a non-bank liquidity provider offering
access to a wide range of asset classes
including Spot FX, the global institutional
standard in FX trading, cash equities and
ETFs. For larger institutions we are able to
offer bespoke solutions to help facilitate and
access multi-asset class liquidity.
Outsourced trading platform
technology
We outsource our platform technology to
clients also under the CMC Markets Connect
brand, where our award winning CMC trading
platform can be fully customised under a
white-label partnership or alternatively under
a neutrally branded platform for regulated
entities looking to introduce clients or trade
on their behalf.
Stockbroking
In our Australian stockbroking business
clients are offered the opportunity to trade
Australian shares and international shares
from over 41 exchanges in over 15 countries.
This has been supported through the launch
of a fully functional native mobile application
offering a variety of instruments including
shares, options, managed funds, warrants and
exchange traded funds (“ETFs”).
Non-leveraged
Building on the strength and success
oftheAustralian stockbroking business,
2022will mark CMC’s first move into the
non-leveraged business in the UK. Clients
willhave full access to international shares,
tax wrappers (ISAs and SIPPs), funds and
ETFs. Our aim is to provide our clients
sector-leading analytics and news content
aswell as opportunities to empower them
toinvest across a range of sustainable
andresponsible investment opportunities.
Thenew platform is based on the existing
technological excellence seen across the
existing leveraged business and will, in time,
have the potential to deliver a significant
newearnings stream for the Group.
CMC at a glance continued
£
Read more about our business model on page 10
Strategic report
4
CMC Markets plc
Annual Report and Financial Statements 2022
Our geographical reach
CMC Markets operates in 13 offices across many of the
world’s leading financial centres. The Group is built on
a hub-and-spoke model, with London being the Group’s
headquarters, Germany being the hub for our European
operations and Sydney being the secondary hub to support
the Asia Pacific & Canada (“APAC”) region. This approach
enables CMC to achieve the optimum balance between
operational gearing and efficiency. In addition, we plan to
launch a new investment platform in Singapore within a year,
as well as considering two other jurisdictions for launch the
following year.
UK 28%
Europe 16%
APAC & Canada 56%
Our client base
CMC attracts retail and elective professional clients to its
Next Generation platform and has a considerable proportion
of trading activity generated from institutional clients and
stockbroking clients.
Our shift into additional non-leveraged markets will also
bringa new wave of clients with which we hope to build
long-standing partnerships. All our clients are treated with the
high standards we set ourselves when it comes to protection
and suitability.
Leveraged B2B
2
16%
Non-leveraged B2B 14%
Leveraged B2C
3
67%
Non-leveraged B2C 3%
Read more about net trading revenue on page 44
1 CFD and spread bet gross client income net of rebates, levies and risk
management gains or losses and stockbroking revenue net of rebates.
2 Business to business (“B2B”) – revenue from institutional clients.
3 Business to consumer (“B2C”) – revenue from retail and professional clients.
4 Active clients represent those individual clients which have traded with or held CFD
or spread bet positions or which traded on the stockbroking platform on at least
one occasion during the financial year.
Continents
4
Countries
12
Offices
13
Total active clients
4
310,363

Net trading
revenue
1
by
region
Net trading
revenue by
client base
Strategic report
5
CMC Markets plc
Annual Report and Financial Statements 2022
Highlights 2022
Net operating income
1
£281.9m
21
£409.8m
£252.0m
20
22
£281.9m
Statutory profit before tax
£92.1m
£224.0m
£98.7m
22
£92.1m
21
20
Leveraged active clients
2
64,243
21
20
76,591
57,202
22
64,243
Leveraged platform uptime
99.95%
99.95
99.95
99.95
21
20
22
Non-leveraged active clients
2
246,120
232,053
181,630
246,120
21
20
22
Leveraged revenue per active client
3
£3,575
£3,750
21
20
£4,560
22 £3,575
Basic earnings per share
24.8p
30.1p
21
20
61.5p
2.0
22
24.8
Ordinary dividend per share
5
12.38p
15.03p
2.0
21
20
30.63p
2.0
22 12.38
£240.6m
Gross leveraged client income
4
£288.5m
21
20
£335.3m
22
£288.5m
Focusing on high value clients and
diversifying the business
Operational highlights
• Whilst annual leveraged client
numbers are down 16% from 2021,
monthly active clients are up a third
compared to pre-pandemic levels.
• Non-leveraged active client numbers
increased 6%, a new record.
• Retention of CFD client income
6
of80%.
• Released CMC Invest platform in
the UK in April 2022, a significant
development for the Group which
represents a milestone in its
expansion into additional non-
leveraged businesses.
• Operational resilience remains high,
with leveraged platform uptime
of99.95%.
• Stockbroking business finished
2022 with record period-end Assets
under Administration (“AuA”).
• Leveraged revenue per active client
down £985 (22%) to £3,575.
• B2B represents 30% of net trading
revenue at £82.5 million.
Financial highlights
1 Net operating income represents total
revenue net of introducing partner
commissions and spread betting levies.
2 Active clients represent those individual
clients who have traded with or held CFD or
spread bet positions or who traded on the
stockbroking platform on at least one
occasion during the financial year.
3 Net trading revenue generated from CFD and
spread bet active clients. A reconciliation of
revenue alternative performance measures
(“APMs”) to the Group’s primary statements
can be found on page 164.
4 Spreads, financing and commissions on CFD
client trades.
5 Ordinary dividends paid/proposed relating to
the financial year.
6 The percentage of CFD gross client income
retained after rebates and gains or losses
from risk management activities.
Read more about net trading
revenue and our financial
measures on page 44
Strategic report
6
CMC Markets plc
Annual Report and Financial Statements 2022
Investment case
CMC Markets:
five reasons to invest
Our diverse
product
offering
15%
share of Australian
stockbroking market
1
Launch of the UK non-
leveraged business. Accessing
a UK D2C market with some
£320billion
2
of AuA
We’re investing to diversify by offering new products and
functionality across both our leveraged and non-leveraged
platforms. CFD and spread bet revenue remains at the core of
what we do. This is balanced with a world-class stockbroking
business in Australia. Similarly, the launch of CMC Invest, the
new UK investment platform, underpins our expansion into
the high growth opportunities being seen across all of our
geographies and meets client demands.
Read more about
our product offering
on pages 25 to 27
Our
geographical
reach
56%
of net trading revenue
generated outside the UK
andEurope regions
Our global technology platforms allow access for retail,
professional and institutional clients through regulated
offices and branches in 12 countries, with a significant
presence in the UK, Australia, Germany and Singapore.
The agreement to transition Australia and New Zealand
Banking Group Limited’s (“ANZ’s”) Share Investing client base
to CMC for AUD$25 million was agreed during the year. The
transaction involves the transition of approximately 500,000
ANZ Share Investing clients, with total assets in excess of
AUD$43 billion.
Read more about
our geographical
diversity on
page 5
Our
Tomorrow
Read more about
our sustainability
framework on
pages 28 to 39
We are proud to introduce our new sustainability strategy:
“Our Tomorrow: taking a positive position”, that will shape
the next few years of sustainability activity for the Group.
“Our Tomorrow” describes how we seek to embed
sustainability across the business. We have identified five
core pillars that are our areas of focus which highlight
how we protect, empower, innovate and adapt to be a
responsible business that is committed to the needs of
people and our planet.
5
core sustainability pillars
Our client
focus
Read more about
our client service on
pages 25 to 27
Our clients are at the heart of what we do, and their input
is intrinsic to improving our business processes across
product development, marketing and client services as
we tailor new developments and target improvements. We
employ and train high quality client services staff to ensure
best-in-class client service. Platform resilience and user
experience is at the core of all developments and upgrades
we deploy.
310,363
64,243 leveraged active
clients and 246,120
non-leveraged active clients
1 ASX and Chi-X combined trading statistics – IRESS.
2 Platforum data February 2022.
Read more about
our technology on
pages 25 to 27
The demands of our clients continue to evolve. Our purpose
is to constantly maintain a superior and unrivalled technology
experience for our clients. Continuous investment in our
proprietary technology across both our leveraged and
non-leveraged platforms allows us to offer a wide suite of
products. Our online and mobile platforms are continuously
ranked as best-in-class from our clients.
10,000+
financial instruments traded
across the CFD platform
and over 40,000 instruments
within stockbroking
Award
winning
platforms
Strategic report
7
CMC Markets plc
Annual Report and Financial Statements 2022
Strategic report
Chairman’s statement
Our strategic investments in technology,
client service, professional andinstitutional
clients and income diversification through
new products, have led to a strong financial
performance in 2022. This performance,
along with the launch of the CMC Invest
platform in the UK, providesthe Group
with a strong base from whichwecan
continue tofocus on innovation and agile
andresponsivetechnologydevelopment.
Our resilient strategy delivers
a record year for the Group
“ The benefits of the Group’s strategy are becoming
more apparent. Through engagement with clients
and the expertise of our staff, the Group is
continuing to develop clear opportunities for
significant growth within all of our markets.”
James Richards
Chairman
The Board’s clear vision of the Group’s strategy of income
diversification through adapting and building on our superior
technology is starting to crystallise. The benefits of the Group’s
strategy are becoming more apparent. Through engagement with
clients and the expertise of our staff, the Group is continuing to
develop clear opportunities for significant growth within all of
our markets.
Throughout all parts of the product development process, we engage
with clients to provide input into improvements that can be made to
our products and propositions. In addition, we have made significant
progress on initiatives to improve staff engagement. The combination
of engaged clients and employees results in a robust and agile
business focusing on medium to long-term value generation, which
supports our purpose, values and strategy.
Results and dividend
Net operating income fell 31% to £281.9 million; however, when
excluding the exceptional COVID-19 affected 2021, the Group
generated an increase in net operating income of 12% on 2020.
This is a strong result for the Group, as it represents a record year
outside of 2021.
The strong net operating income performance has generated profits
after tax of £72.0 million. The Board recommends a final dividend of
8.88 pence per share which results in a total dividend payment of
50% of profits after tax.
Strategic report
8
CMC Markets plc
Annual Report and Financial Statements 2022
Outlook
Our focus on improving and building on our existing technology
underpins our strategy of exploiting our existing leveraged technology
with both new and improved products and expanding into new
geographies in our non-leveraged business.
The strengths and robustness of our technology have been demonstrated
through the white-label agreement for Australia and New Zealand
Banking Group Limited (“ANZ”), culminating in the announcement of
the acquisition of its Share Investing clients.
The strategy also forms the foundation for the launch of our new UK
non-leveraged investment platform in April 2022. The new platform
is being rolled out to the market over the coming year and augurs
well for the Group’s future. Our clear focus on revenue diversification
will continue throughout the coming year as will our assessment
of how best to address the realisation of future value for the two
broadly different businesses, namely leveraged and non-leveraged,
bothunderpinned by our technology.
James Richards
Chairman
8 June 2022
Board and governance
As discussed in the 2021 Annual Report and Financial Statements, the
Board conducted an internal governance review in 2021, resulting in
the appointment of external advisers, Independent Audit, in January
2021. This review was concluded within 2022, resulting in very positive
changes to the information the Board receives, improvements in the
scope of the Nomination Committee including greater involvement in
people strategy, and improvements in ownership and presentation of
the Group’s risk information. More information on the changes can be
found on pages 66, 74 and 76.
We are sorry to lose Clare Salmon, who is not putting herself up for
re-election this year, but also welcome Susanne Chishti, who brings
a diverse view of developments and trends in the wider consumer
technology environment. We are also seeking, via agents, a further
Non-Executive Director to cover the gap left by Clare’s departure,
further details of which can be found on page 76 of the Nomination
Committee report.
People and stakeholders
Our staff are our greatest asset and their work on delivering against
our strategic initiatives has driven the strong performance across
all business lines, along with delivering new products and features
to communicated timescales. On behalf of the Board, I would like to
thank them all for their considerable contribution.
In addition, our staff have shown incredible resilience and flexibility
when faced with travel and work restrictions caused by the COVID-19
pandemic, and have continued to do so throughout this year. No staff
were furloughed and the Group did not request any government
COVID–19 assistance. More details of what we have been doing are
presented in the Sustainability section of the report.
Financial Reporting Council
During the year to 31 March 2022 the Board received
correspondence from the Financial Reporting Council (“FRC”)
concerning a potential unlawful dividend payment in respect of the
payment of the 2021 interim dividend. On further investigation by the
Company it was concluded that similar questions had arisen in some
prior years. Details of this and the rectification process for addressing
these issues are set out on page 101 in the Directors’ Report. The
Company has made certain changes to internal processes to ensure
that these irregularities do not arise again.
Strategic report
9
CMC Markets plc
Annual Report and Financial Statements 2022
Our business model
The best trading experience
Our business enablers Our client offering
1. Technology and product
Technology and product has always been key to
the success of CMC Markets and this has won
the business recognition as the 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
offerings to our clients, with a significant
milestone achieved in the launch of CMC Invest
in the UK in April 2022.
For more information see pages 25 to 27
2. “Our Tomorrow: taking a positive
position” sustainability strategy
This year we are proud to launch the new
sustainability strategy that will shape the next few
years of sustainability activity for the Group.
“OurTomorrow” describes how we seek to
embed sustainability across the business.
Wehave identified five core pillars that are our
areas of focus which highlight how we protect,
empower, innovate and adapt to be a responsible
business that is committed to the needs of
people and our planet.
For more information see pages 28 to 39
3. 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 long-term levels of
capital to withstand the demands of fluctuations
in the financial markets and access to a healthy
level of surplus liquid resources in line with the
size of our business and the growth opportunities.
For more information see pages 44 to 49
4. 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 the Group is exposed. However,
effective risk management ensures that risks are
managed to an acceptable level.
For more information see pages 50 to 56
Our clients are at the heart of everything that we do.
For more information see page 25
Technology platforms and risk management
Our superior platforms and technology, combined with our risk management,
deliver a best-in-class trading experience for our clients and partners.
Our trade and risk systems generate real-time pricing, automate trade
execution and optimise our risk management process through better
aggregation of client flows. They also bring scale and stability to our platforms,
especially during volatile market conditions. This enhances theclient trading
experience and lessens the risk of price quotation outages.
Technology platform
Who our clients are:
• Sophisticated
• High value
• Experienced
What we offer them:
• Cutting-edge technology
• Competitive pricing
• Excellent client services
Strategic report
10
CMC Markets plc
Annual Report and Financial Statements 2022
Leveraged
Contracts for
difference
Spread betting
White-label solutions
Multi-asset class
liquidity
Non-leveraged
Stockbroking
(UK and Australia)
White-label solutions
Business to
business
+
Business to
consumer
Our client offering How we make money
Leveraged
£48.0m
Net trading revenue, 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, interest on deposits,
and equity capital markets (“ECM”) income.
Other income – leveraged and non-leveraged
£4.3m
Mainly consists of interest income from client deposits, rental income and dormancy charges
Non-leveraged
How we add value
Clients
57%
gross client income generated from
leveraged clients oftenure greater
than two years
13
awards for service
platform and technology
Shareholders
Dividend per share
12.38 pence
down 18.25 pence from 2021
Earnings per share
24.8 pence
down 36.7 pence from 2021
People
66%
employee engagement
1
(2021: 61%)
24%
permanent employees with us for over
five years
Gross leveraged client income
£288.5m
Spreads
Revenue earned through maintaining a
transactional spread (the difference 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
£(20.6m)
Volume-based rebates paid to professional,
high value retail and institutional clients and
introducing brokers on selected asset classes.
Risk management gains/(losses)
£(38.3m)
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.
Retained client income
80%
The percentage of CFD gross client income
retained after rebates and gains or losses
from risk management activities.
Read more about our
non-leveraged work in our
technology section on page 26
Read more about our
non-leveraged strategy in
our CEO’s overview on page 17
1 CultureAmp internal survey. Percentage of
employees with full engagement.
Strategic report
11
CMC Markets plc
Annual Report and Financial Statements 2022
Client supplied
Client supplied
Engagement with stakeholders:
ourfuture-focused culture
Clients People Regulators Suppliers Shareholders Local community
Why we engage
Going above and beyond to care
for and protect our clients is a
core responsibility. This means
wecontinually strive to engage
with them across multiple points
of contact to ensure the Group
remains aware of, and therefore
develops products that solve,
protect and satisfy, our
clients’needs.
Our employees define our culture
and values. Fostering an engaged
workforce is central to our
strategy, enabling us to deliver
theexceptional service that keep
us at the forefront of our markets.
Providing a rewarding and safe
working environment for our
employees is a vital outcome we
strive to achieve. Every employee
needs to be given the tools to excel
within a dynamic environment.
Nurturing a diverse and
responsible workforce will allow us
to achieve our business objectives
with the expected levels of
integrity and focus we expect.
Engagement with regulators is
keyto ensuring that we are fully
compliant across all jurisdictions
we operate within. We’re taking
steps to ensure our approach is
market leading, whilst also allowing
the Group to be involved in
shaping future regulations within
the sector.
We expect all our suppliers to
demonstrate the same integrity
and accountability as we do to
our clients. Engagement with
suppliers which perform any
critical or material outsourced
service also ensures that we
remain compliant with European
Banking Authority (“EBA”)
requirements. We take a
zero-tolerance approach to
modern slavery and human
trafficking, which is reflected in
our Modern Slavery Statement
and our Group Anti-Slavery
Policy, and are committed to
acting ethically and with integrity
in all our business relationships.
Active engagement with current
and prospective shareholders
continues throughout the year.
Our teamcommunicates the
Group’s strategy and
performance, as well as
understanding the issues that
are most important to them.
Our shareholders’ support is
paramount to our success and
listening to our shareholders is a
critical part of making sure our
business is successful for the
long term.
CMC recognises that the
Group has a duty to help
improve the prospects and
living environment of the local
community. Sustainability and
social awareness are part of
ourcore values and culture.
Engagement with the
community is another way we
seek to act in the best interests
of all our stakeholders.
How we engage
CMC actively engages with clients
across a range of channels such as
our client service, sales and
product teams, in addition to client
events and our trading magazine
Opto. Our digital transformation
programme has also resulted
infurther emphasis on user
experience research with
clients,which directly inputs into
improvements that can be made
to our product and proposition.
Marketing is carried out in a
responsible way, making sure
investment product opportunities
are evolving all the time, and a new
wave of self-directed investors
opens new market segments
forCMC.
Our future success depends
onnurturing and enhancing an
environment that reflects our
diverse client base and where
employees can reach their full
potential. Our employee
engagement is driven through
numerous channels. This includes
team meetings or one-on-ones,
and formally through the designated
Non-Executive Director with
responsibility for employee
engagement. We hold a twice-
yearly global survey with follow-up
focus groups to better understand
the results and “town hall” style
forums to enable purposeful
engagement between
management and employees.
We engage in open and active
dialogue with regulators, seeking
opportunities to share the wealth
ofdata we have available tohelp
inform them in their decision
making. We ensure our actions
areat the minimum consistent
with, and frequently go beyond,
regulatory expectations. During
the year, we have responded to a
number of consultations launched
by the regulator covering areas
such as consumer protections.
Open and frequent
communication is critical in
maintaining strong relationships
with all our suppliers. All
business partners follow a
mandatory procurement
process, which was refreshed
during the year, to review the
external market and complete a
robust evaluation of all available
options. Once a supplier is
engaged, regular direct
engagement between the
business owner and supplier is
maintained through our Supplier
Relationship Programme.
The adoption of technology
continues to improve the
efficiency of our engagement.
We offer regular trading updates,
half and full year presentations,
the Annual Report and Financial
Statements, our AGM, and a
comprehensive Investor
Relations section of the website
as well as active virtual media
channels. We have an active
schedule of shareholder
meetings and roadshows, giving
our stakeholders access to the
Investor Relations and
Management teams. Shareholder
feedback and details of any
major movement in our
shareholder list are embedded
within our regular Board
meetings and are integral to our
decision making process.
The Board promotes the
support of local charities
through our staff in all our
global offices.
We promote a Charity
Champions scheme. Staff from
around the offices volunteer to
be the Charity Champion for
their group. They then engage
with colleagues to select
charities or charitable causes to
be considered for the Charity
of the Year which receives a
corporate donation from the
Group in addition to fundraising
and employee engagement
opportunities throughout
theyear.
Outcomes
2022 marks the first move into
theUK non-leveraged market with
CMC Invest. This move facilitates
the opportunity to offer greener
and more socially orientated
trading products, and to explore
how to meet the needs of a more
diverse cohort of investors.
Throughout the year the Board
received regular updates on
CMCInvest and discussed target
audience, customer experience
expectations and platform
availability, transparency and
easeof use.
A formal senior management
communication calendar has been
developed to promote diversity,
wellbeing and inclusion in the
workplace. The Board and the
Nomination Committee discussed
the outcomes from the workforce
engagement activities that took
place during the year and decided
to incorporate oversight of the
Group’s overall people strategy
into the Committee’s remit.
Further details can be found on
page 77.
Our commitment to upholding
highstandards of regulatory
compliance and aligning our
interests with clients involves
consistent dialogue with regulators
across all jurisdictions. We believe
we have forged strong partnerships
with our regulators to responsibly
benefit the operating environment
for all.
Our robust governance process
allows the Group to select the
bestsupplier for the business
andultimately our clients. Our
considered approach also
allows us to treat vendors with
respect and prioritise
collaboration and value
generation to mutually
benefitall parties, whilst
remainingcompliant with
allrelevant regulations.
Many of our shareholders have
been with us since our initial
public offering in 2016. The
regular, open and constructive
dialogue with investors
promotes confidence in the
Group’s strategy, resulting in a
strong share register built on
long-term relationships, whilst
also ensuring our continued
access to potential capital
andliquidity.
Thousands of young people
have been supported through
the charitable actions and
donations from both the Group
and its staff.
Our employees have made use
of the pound-for-pound
matching scheme offered by
the Group and also the
opportunity to help a charity or
charitable cause with an extra
day of charitable annual leave.
At CMC we know that our business has responsibilities towards all of our stakeholders.
We take these responsibilities seriously and continuously interact with all partners with
the aim of providing responsible and sustainable solutions for all.
Stakeholder engagement
Strategic report
12
CMC Markets plc
Annual Report and Financial Statements 2022
Clients People Regulators Suppliers Shareholders Local community
Why we engage
Going above and beyond to care
for and protect our clients is a
core responsibility. This means
wecontinually strive to engage
with them across multiple points
of contact to ensure the Group
remains aware of, and therefore
develops products that solve,
protect and satisfy, our
clients’needs.
Our employees define our culture
and values. Fostering an engaged
workforce is central to our
strategy, enabling us to deliver
theexceptional service that keep
us at the forefront of our markets.
Providing a rewarding and safe
working environment for our
employees is a vital outcome we
strive to achieve. Every employee
needs to be given the tools to excel
within a dynamic environment.
Nurturing a diverse and
responsible workforce will allow us
to achieve our business objectives
with the expected levels of
integrity and focus we expect.
Engagement with regulators is
keyto ensuring that we are fully
compliant across all jurisdictions
we operate within. We’re taking
steps to ensure our approach is
market leading, whilst also allowing
the Group to be involved in
shaping future regulations within
the sector.
We expect all our suppliers to
demonstrate the same integrity
and accountability as we do to
our clients. Engagement with
suppliers which perform any
critical or material outsourced
service also ensures that we
remain compliant with European
Banking Authority (“EBA”)
requirements. We take a
zero-tolerance approach to
modern slavery and human
trafficking, which is reflected in
our Modern Slavery Statement
and our Group Anti-Slavery
Policy, and are committed to
acting ethically and with integrity
in all our business relationships.
Active engagement with current
and prospective shareholders
continues throughout the year.
Our teamcommunicates the
Group’s strategy and
performance, as well as
understanding the issues that
are most important to them.
Our shareholders’ support is
paramount to our success and
listening to our shareholders is a
critical part of making sure our
business is successful for the
long term.
CMC recognises that the
Group has a duty to help
improve the prospects and
living environment of the local
community. Sustainability and
social awareness are part of
ourcore values and culture.
Engagement with the
community is another way we
seek to act in the best interests
of all our stakeholders.
How we engage
CMC actively engages with clients
across a range of channels such as
our client service, sales and
product teams, in addition to client
events and our trading magazine
Opto. Our digital transformation
programme has also resulted
infurther emphasis on user
experience research with
clients,which directly inputs into
improvements that can be made
to our product and proposition.
Marketing is carried out in a
responsible way, making sure
investment product opportunities
are evolving all the time, and a new
wave of self-directed investors
opens new market segments
forCMC.
Our future success depends
onnurturing and enhancing an
environment that reflects our
diverse client base and where
employees can reach their full
potential. Our employee
engagement is driven through
numerous channels. This includes
team meetings or one-on-ones,
and formally through the designated
Non-Executive Director with
responsibility for employee
engagement. We hold a twice-
yearly global survey with follow-up
focus groups to better understand
the results and “town hall” style
forums to enable purposeful
engagement between
management and employees.
We engage in open and active
dialogue with regulators, seeking
opportunities to share the wealth
ofdata we have available tohelp
inform them in their decision
making. We ensure our actions
areat the minimum consistent
with, and frequently go beyond,
regulatory expectations. During
the year, we have responded to a
number of consultations launched
by the regulator covering areas
such as consumer protections.
Open and frequent
communication is critical in
maintaining strong relationships
with all our suppliers. All
business partners follow a
mandatory procurement
process, which was refreshed
during the year, to review the
external market and complete a
robust evaluation of all available
options. Once a supplier is
engaged, regular direct
engagement between the
business owner and supplier is
maintained through our Supplier
Relationship Programme.
The adoption of technology
continues to improve the
efficiency of our engagement.
We offer regular trading updates,
half and full year presentations,
the Annual Report and Financial
Statements, our AGM, and a
comprehensive Investor
Relations section of the website
as well as active virtual media
channels. We have an active
schedule of shareholder
meetings and roadshows, giving
our stakeholders access to the
Investor Relations and
Management teams. Shareholder
feedback and details of any
major movement in our
shareholder list are embedded
within our regular Board
meetings and are integral to our
decision making process.
The Board promotes the
support of local charities
through our staff in all our
global offices.
We promote a Charity
Champions scheme. Staff from
around the offices volunteer to
be the Charity Champion for
their group. They then engage
with colleagues to select
charities or charitable causes to
be considered for the Charity
of the Year which receives a
corporate donation from the
Group in addition to fundraising
and employee engagement
opportunities throughout
theyear.
Outcomes
2022 marks the first move into
theUK non-leveraged market with
CMC Invest. This move facilitates
the opportunity to offer greener
and more socially orientated
trading products, and to explore
how to meet the needs of a more
diverse cohort of investors.
Throughout the year the Board
received regular updates on
CMCInvest and discussed target
audience, customer experience
expectations and platform
availability, transparency and
easeof use.
A formal senior management
communication calendar has been
developed to promote diversity,
wellbeing and inclusion in the
workplace. The Board and the
Nomination Committee discussed
the outcomes from the workforce
engagement activities that took
place during the year and decided
to incorporate oversight of the
Group’s overall people strategy
into the Committee’s remit.
Further details can be found on
page 77.
Our commitment to upholding
highstandards of regulatory
compliance and aligning our
interests with clients involves
consistent dialogue with regulators
across all jurisdictions. We believe
we have forged strong partnerships
with our regulators to responsibly
benefit the operating environment
for all.
Our robust governance process
allows the Group to select the
bestsupplier for the business
andultimately our clients. Our
considered approach also
allows us to treat vendors with
respect and prioritise
collaboration and value
generation to mutually
benefitall parties, whilst
remainingcompliant with
allrelevant regulations.
Many of our shareholders have
been with us since our initial
public offering in 2016. The
regular, open and constructive
dialogue with investors
promotes confidence in the
Group’s strategy, resulting in a
strong share register built on
long-term relationships, whilst
also ensuring our continued
access to potential capital
andliquidity.
Thousands of young people
have been supported through
the charitable actions and
donations from both the Group
and its staff.
Our employees have made use
of the pound-for-pound
matching scheme offered by
the Group and also the
opportunity to help a charity or
charitable cause with an extra
day of charitable annual leave.
Section 172
Engaging
with our
stakeholders
The Board considers the
interests of the Group’s
employees and other
stakeholders, including the
impact of its activities on the
local community, environment,
suppliers and clients, when
making decisions. The Board,
acting fairly between members
and acting in good faith,
considers what is most likely
to promote the success of the
Group for its shareholders in
the long term.
Read more about:
• the Group’s goals, strategy and
business model in the Strategic
report on pages 2 to 56;
• how we manage risks on pages
50 to 56;
• our impact on the environment
on pages 28 to 43; and
• corporate governance on
pages 58 to 104.
Strategic report
13
CMC Markets plc
Annual Report and Financial Statements 2022
Leading the market through
technology and diversification
Whilst the Group currently generates the majority of its revenue from leveraged
products, our revenue is continuing to diversify, with the non-leveraged business
growing year on year and set for further growth following the launch of the CMC
Invest non-leveraged platform in the UK in April 2022. Group revenues are split
between our three regions, the UK, Europe and APAC & Canada.
Key market driver Our response
Group
COVID-19
COVID-19 continued to cause significant disruption to
people’s lives and markets across the globe, albeit to a lesser
extent to that seen in the prior financial year.
The Group’s infrastructure continued to allow employees to work from home during
the pandemic, whilst maintaining the trading platform’s consistently high availability
rate and low trade execution times. Significant investment was made to ensure all
ofthe Group’s offices were COVID-19 secure. This continues to work well, with
individual offices adopting a tailored approach according to local regulations.
Russia/Ukraine war
The significant escalation of tensions between Russia and
Ukraine, culminating in a Russian invasion in February 2022,
continues to result in sanctions from governments in many
markets and volatility across multiple asset classes.
The Group has immaterial exposures to the Russian market both from a currency
and stock/index basis. The Group is compliant with all governmental sanctions, has
no employees operating within Russia or Ukraine, has acted to close any Russia-
based accounts and has also assessed our suppliers to ensure any critical services
provided to the Group were not adversely impacted.
Leveraged: CFD and spread bet
Volatility
Volatility in the financial markets undoubtedly acts as a call
toaction for the Group’s leveraged and non-leveraged target
market. The continuation of the COVID-19 pandemic, albeit
ata reduced level compared to the prior year, resulted in
periods of volatility across all asset classes. The Russia/
Ukraine war also resulted in volatility in late February and
March 2022.
Higher volatility results in increased trading activity from both existing clients
trading more frequently and new or previously inactive clients starting to trade.
However, short bursts of market activity which result in high velocity movements in
the products that we offer 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.
ASIC
The Australian regulator, ASIC, implemented new regulatory
measures from 29 March 2021. The measures are broadly
similar to those implemented by ESMA in August 2018
andinclude:
• prohibition of the issue and distribution of OTC binary
options to retail clients;
• implementation of CFD leverage ratio limits;
• protection against negative balances;
• standardised approach to the automatic close-out of retail
client positions;
• enhanced transparency of CFD pricing, execution, costs
and risks; and
• prohibition on firms offering monetary and non-monetary
benefits to retail investors.
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.
The Group continues to be supportive of regulatory change that moves towards
aglobally consistent regulatory environment.
Given that CMC was already compliant with several of the proposed measures as
aGroup standard, it was well prepared for the changes and was able to draw from
experience gained during the ESMA measures implemented in 2018.
The Group engaged with selected clients in advance of the proposed changes,
withsome electing to opt up to ensure that their leverage limits are not affected.
The impact of the change was broadly in line with Group expectations, with
retailclient numbers down 18% and turnover per retail client at ~18% of the
pre-intervention levels.
Our markets
Strategic report
14
CMC Markets plc
Annual Report and Financial Statements 2022
Key market driver Our response
Non-leveraged: stockbroking
Volatility
The elevated trading activity seen during 2021 induced by the volatility seen around COVID-19 and
social media-driven interest moderated during the year. However, the business saw increased
volatility-driven trading activity in the fourth quarter of the year, particularly around the geopolitical
uncertainty caused by the Russia/Ukraine war.
While clients enjoy the trading opportunities that volatility can present, excessive volatility can be seen
as not conducive for investors and a certain proportion will likely therefore be passive. In these
uncertain times, CMC stockbroking will continue to assist clients to identify investment opportunities
through leading tools including our award winning mobile app, algorithmic trading and enhanced
educational content.
Low cash interest rate
The historically low rate environment persisted through the period and continues to drive investors
towards higher yield asset classes including equities. This is forecast to change over the coming
period with interest rate increases seen for the first time in many years.
This, combined with a high inflationary environment, will likely see a rotation of assets. We stand ready
to support our clients by offering them the opportunity to invest in a wide range of sectors across
both local and international equities via our leading offering which, as the most comprehensive in
Australian retail broking, includes access to ASX, Chi-X and 41 exchanges in 15 international markets.
Market size and share
An independent report suggests that the Australian online investment market continued to grow
during 2022 and CMC, in combination with the ANZ Bank white-label partnership, has a combined
retail market share in the region of 15%. As a result, we continue to maintain our position as the
second largest retail broker in Australia with over 245,000 active clients (approximately one-third
above pre-pandemic levels) and are the largest provider of white-label broking services in the country
with record AuA of c. $80 billion.
Towards the end of the year, we strategically positioned our offering for the future through a targeted
retail pricing strategy, further enhancements to our mobile offering and the rollout of extended hours
trading on the US market to cater to the fastest growing segment in the market, namely millennials.
Additionally, we plan to finish the transition of ANZ Bank clients to our core retail offering in H2 2023
which will see us have the ability to offer more products and to better control the end-to-end client
journey, elevate our brand and consolidate our position as number two in Australia with approximately
another 500,000 customers under the CMC Invest brand.
Seasonality
Earnings season is a major driver of activity and as a result strong months are generally seen in both
August and February.
Market conditions
The clients we onboarded during the COVID-19 and social trading periods have remained more
actively engaged against historical trends and more likely to engage with our higher margin
international shares product.
With the expectation of somewhat moderated markets compared to that seen during COVID-19, we
offer attractive pricing in over 40,000 instruments to allow clients to capitalise on any market conditions.
1 Source: ASX and Chi-X Combined Trading Statistics – IRESS.
Strategic report
15
CMC Markets plc
Annual Report and Financial Statements 2022
Chief Executive Officer’s statement
Investing for the future
Over the last year we have taken steps to define the strategic
direction and diversification of the Group, building on our existing
technology to launch new investment platforms that will unlock
significant shareholder value and challenge the existing client
transaction fee cost structures.
There is significant opportunity and growth potential in the self-directed
investment platform space, especially in the UK, not just for improved
technology and client experience but also transaction costs and fees.
We believe commissions, execution spreads and custodial fees are
too high and too expensive for retail investors. We will utilise our
platform technology, including pricing and execution, to drive down
thetransaction costs of investments for retail clients, just like we did
in Australia, where we are the number two investment platform for
retailinvestors.
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.
For example, our new UK investment platform, CMC Invest, was
launched ahead of time and on budget. It was launched to our UK
staff in April 2022 and will be available to the broader market over
thecoming summer months.
It will include physical shares, multi-currency accounts, tax wrapper
products and third-party funds, cryptocurrencies and, in due course,
afull B2B offering.
In addition, we continue to look at expanding our non-leveraged
geographical diversification and we have recently announced we plan
to launch a new investment platform in Singapore within the next year,
as well as considering two other jurisdictions for launch in 2024.
“We continue 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.
This follows the success of our investment
platform in Australia with the migration of over
500,000 investing client accounts through
partnerships (B2B) and the acquisition of the
ANZ Bank investing business.
We have ambitious plans to continue this
expansion in various other countries and I look
forward to updating investors as the strategy
expands over the short and long term.”
A new record year for CMC Group
outside of the pandemic period
“ I am delighted to report another year of strong
performance from both a strategic and financial
standpoint.Outside of the COVID-19 impacted prior
year, this is a record net operating income result for
the Group. The performance reflects the ongoing
success of our technology and partnerships (B2B)
andour continued investment in leveraged
andnon-leveraged platforms.”
Lord Cruddas
Chief Executive Officer
Strategic report
16
CMC Markets plc
Annual Report and Financial Statements 2022
As part of CMC’s strategy, we announced the acquisition of Australia
and New Zealand Banking Group Limited’s (“ANZ’s”) Share Investing
client base during the year. The transaction involved the acquisition of
approximately 500,000 ANZ Share Investing clients, withtotal assets in
excess of AUD$43 billion.
The CMC platform will offer ANZ clients a wide range of additional
benefits; these include access to enhanced market-leading mobile
apps and complementary education tools and resources, as well as
lower brokerage commissions across four major international markets
and the local Australian market.
The Group continues to progress the transition of clients, which is
expected to complete in the next 12 months.
Because of the growing diversification of the Group the Board has
begun an evaluation of the merits of a managed separation of its
leveraged and non-leveraged divisions to unlock further shareholder
value. This process is being led by the Chairman and the Board and
they will update investors later in the year.
Financial performance
As expected, against an extremely strong prior period, revenues
across our leveraged retail (B2C) businesses declined, compared to
the COVID-19 period.
In our non-leveraged business, revenues remained less volatile. Client
income retention remained strong, and the stockbroking business
continued to see growth in active clients and contributed a material
level of revenue and profitability for the Group.
Overall, Group net operating income decreased 31% versus the
prior period, to £281.9 million, but increased 12% versus 2020
(£252.0 million).
The Group’s cost base excluding variable remuneration increased by
3% to £173.1 million during the year, mainly as a result of the significant
investments in people and technology and increased marketing
spend to attract new clients.
Variable remuneration decreased by £1.7 million to £14.5 million
following the record performance and associated remuneration last
year. Overall, total costs increased by 2% to £189.8 million.
Against an exceptional prior year comparator, profit before tax at £92.1
million was £131.9 million lower than the previous year, and £6.6 million
lower than 2020. Our dividend policy remains unchanged, at 50% of
profit after tax, therefore resulting in a proposed final dividend per
share of 8.88 pence.
The underlying fundamentals of the business remain well supported;
we continue to target and retain higher value, sophisticated clients
and we have seen levels of client money, which are an indicator of
future trading potential, remain close to the record levels seen in the
prior year. Stockbroking active clients increased 6% to 246,120. Of this
increase, stockbroking B2C clients increased 21% to 56,205, with B2B
increasing by 2% to 189,915.
The balance sheet continues to reflect the strong financial position of
the Group. At the end of the year, the Group’s net available liquidity
was £245.9 million and the regulatory OFR ratio was 489%.
Q&A: The evolution of
investment platforms
Q What are the biggest challenges and opportunities faced by
CMC in respect of the evolution of investing trends?
A Investment markets are becoming increasingly competitive
with various client acquisition strategies being employed.
A fintech revolution, combined with structural social and
demographic shifts, is changing the way people invest for
good. This dramatic shift poses a significant opportunity for
CMC to utilise its technological strength to lead and expand
into these new high growth markets.
Q What are the major changes being seen in how investors are
looking to access global capital markets?
A Mobile digital delivery will dominate the next generation
of investment platforms, providing safe and secure access
to capital markets. Over time, digital delivery will steadily
replace face-to-face consultation. The future lies with cloud-
based services and personalisation. We also believe the
existing platform suite in the market isn’t fully servicing the
growing population of tech-savvy individuals that demand
frictionless onboarding, transferring and cost-effective
management of their wealth.
Q One of the core strategies for CMC is the diversification into
non-leveraged businesses. Why is this important?
A Frictionless investing and the rise of a wealthier population
are driving the structural growth in self-managed wealth.
The biggest change being seen is the shift away from
institutional to retail participation: the “democratisation” of
investing. In the UK the trends are some of the strongest –
UK direct platform AuA has increased by over 16% p.a. since
2008 and is now standing at some £320 billion. This is a
significant growth opportunity for CMC Invest to capture.
Q How do CMC’s platforms differentiate themselves in what is
a very competitive marketplace?
A CMC has a 30-year history of building and owning all
of its technology. This has been shown in our ability to
deliver award winning platforms across both our leveraged
and non-leveraged businesses. This, combined with
our long-standing prime broking relationships and risk
management systems, allows us to evolve and move faster
relative to our competition. A recent example of this has
been the launch of our new UK non-leveraged platform
that was delivered ahead of schedule and on budget.
Looking forward, this technological edge will also allow
us to expand geographically – we will be launching a new
investment platform in Singapore within a year, as well as
consideringtwo other jurisdictions for launch next year
as we continue to diversify and expand our geographic
footprint throughtechnology.
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CMC Markets plc
Annual Report and Financial Statements 2022
Regulatory change
The Australian Securities and Investments Commission (“ASIC”)
implemented measures relating to CFDs on 29 March 2021. After the
introduction of these new measures, regulatory conditions are now
more harmonised globally and we can continue to focus on growing
our business in an industry where regulatory arbitrage is reduced.
Asanticipated, the changes reduced the notional value of retail client
trading in Australia and, combined with lower market volatility, resulted
in less active client trading than in the prior period. 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 crucial to our success, and I continue to be impressed
by their hard work and dedication. We have a very strong team
across all our business units and on behalf of the Board I would like
tothank all of our people for their commitment, especially through
theCOVID-19pandemic.
How we as a business and our people interact with each other, the
environment and society is important. CMC recognises that the Group
has a duty to help improve the prospects and living environment of the
local community. Sustainability and social awareness are part of our
core values and culture. I’m proud of the launch of our “Our Tomorrow:
taking a positive position” strategy, detailing the five core pillars of what
we stand for at CMC from a sustainability perspective.
Chief Executive Officer’s statement continued
“ The underlying fundamentals of the
business remain well supported; we
continue to target and retain higher
value, sophisticated clients.”
Lord Cruddas
Chief Executive Officer
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CMC Markets plc
Annual Report and Financial Statements 2022
Clients
Our clients are at the heart of everything we do as we continue to
develop our platforms, innovate and invest to ensure that our user
experience is industry leading as we drive client retention and lifetime
value. On top of our continued focus on our leveraged clients, I
am pleased to welcome approximately 500,000 new clients to our
Australian stockbroking business as they transition from ANZ Share
Invest and look forward to offering them new functionality and an
enhanced experience.
I also look forward to welcoming new clients to our UK non-leveraged
wealth platform, where we will strive to partner with new investors
over the longer term to help them achieve prosperity at every stage
of their lives.
Share buyback programme
On 15 March 2022, the Company commenced a share buyback
programme of up to £30 million. The Board’s decision to undertake
the buyback was underpinned by the Company’s robust capital
position and having considered the capital and liquidity requirements
for ongoing investment in the business. This buyback programme
forms part of a normal balanced approach to shareholder returns
alongside the current dividend policy. The share buyback programme
is progressing well and remains on track to be completed no later
than 30 June 2023.
Dividend
The Board recommends a final dividend payment of £25.8 million.
This is 8.88 pence per share (2021: 21.43 pence), resulting in a total
dividend payment for the year of 12.38 pence per share (2021: 30.63
pence). This represents a payment of 50% of profit after tax, in line
with policy. The Board believes that this is an appropriate payment
for the year after considering both the Group’s capital and liquidity
position and forecast requirements in the year ahead to support
business growth.
Outlook
We continue to see a lot of uncertainty, not just in the financial
markets, but across all sectors and industries. If recent years have
taught us anything it is that we must be prepared for the unexpected
and the extraordinary.
Our platforms have demonstrated that in periods of extreme volatility,
they are able to continue servicing clients robustly, enabling us to
gain trust and a reputation of stability. The investments made in our
infrastructure have served us well and will continue to do so, providing
a solid foundation upon which we can look to take advantage of
futureopportunities.
This year’s performance reflects the ongoing success of our B2B
technology partnerships and focus across our leveraged and
non-leveraged businesses.
With a large addressable market, in terms of both client numbers
and AuA, there is a huge opportunity for us to grow with a more
predictable and stable revenue stream.
This business continues to change as we look to utilise our
technology to enter new markets and new geographies and expand
ournon-leveraged offering. I look forward to updating investors
asthestrategy expands over both the short and long term.
Lord Cruddas
Chief Executive Officer
8 June 2022
CMC transitioning approximately 500,000 Share
Investing clients from ANZ Bank
• In September 2021 CMC announced the transition of
Australia and New Zealand Banking Group Limited’s
(“ANZ’s”) Share Invest client base to CMC for a sum of
AUD$25 million.
• The transaction involves the transition of approximately
500,000 Share Investing clients, with total assets in excess
of AUD$43 billion. The transaction is another significant step
in the ongoing diversification of the Group’s global business
and in the Australian market at a time when we are seeing
elevated demand for retail stockbroking services.
• With this transaction, the existing white-label technology
partnership, which has seen CMC’s trading technology
power ANZ’s Share Invest business since 2018, will come
to an end. The existing white-label partnership generated
£24.8million in net trading revenue for CMC in 2022.
• The CMC platform will offer clients a wide range of
additional benefits currently unavailable with ANZ. These
include access to enhanced, market-leading mobile apps and
complementary education tools and resources.
• Following the transition, ANZ Share Invest clients will
benefit from lower brokerage charges across four major
international markets and the local Australian market and
will give CMC the opportunity to drive greater value from
its enlarged client base. The transaction further establishes
CMC as a financial technology leader in the Australian
market and removes the uncertainty around the finite term
of the existing ANZ white-label partnership.
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CMC Markets plc
Annual Report and Financial Statements 2022
Our focus
for 2023
The significant achievements
made with the initiatives during
2022 place us in an excellent
position to continue to deliver
throughout 2023, thereby
deriving future value for, and
accelerating the diversification
of,the Group.
For the year ahead, we are
reinvigorating the focus on
ourthree core initiatives of
established markets, client
journey optimisation and
institutional offering. 2023
bringswith it a new business
linefollowing the launch of our
UK non-leveraged platform.
Thiswill augment the sustained
delivery of expansion in our
established markets, aswell as
ultimately bring opportunities to
our institutional business and
further potential partnerships.
In addition, we will be launching
anew investment platform in
Singapore within a year, as
wellas considering two other
jurisdictions for launch as we
continue to diversify and expand
our geographic footprint through
technology, our leveraged
institutional offering, and our
non-leveraged platforms.
Our strategy
1
Established markets
Opportunity
The established markets of the UK, Australia and Germany generate a
significant part of the Group’s revenue and, given the size and development
ofthe markets, they also offer the greatest absolute growth opportunities.
Thismeans that we continue to focus on developing brand and product
awareness with the aim of becoming the choice provider to new clients
acrossour high growth markets. We also continue to invest to make sure
weoffer the premium proposition with the financial strength required to
attract clients from competitors.
Priorities for 2022/23
• UK: Growth in net trading revenue generated from active professional
clients and high value retail clients. Significant opportunities exist to improve
our product offering to attract profitable partnerships across our retail and
institutional client base.
• Australia: Deliver on the transition of ANZ’s Share Investing client base.
The transaction announced in September 2021 involves the transition of
approximately 500,000 ANZ Share Investing clients, with total assets in
excess of AUD$43 billion.
• Non-leveraged expansion: The Group is focused on the rollout of its non-
leveraged platform which will offer trading and investment products in the
UK with an ambition to rollout across other geographies. Significant additional
features are expected to be rolled out over the coming 12 months to attract
clients across the generational shift to self-managed investment platforms.
This diversification will reposition CMC’s focus over time to drive profitability
and accelerated growth.
Technological evolution in 2022/23
• Proprietary technology investment will meet clients’ new demands and
regulatory requirements. CMC’s differentiated focus on self-owned and
developed technology brings with it significant opportunities for future
expansion. Thiscontinues to define CMC’s unique growth strategies in both
our leveraged and non-leveraged businesses.
• Continue to develop new products in response to client demand across
leveraged, stockbroking and UK non-leveraged platforms. These include global
equities, funds, options, cryptocurrencies, foreign exchange and tax wrappers as
well as opportunities for our clients to invest in a responsible and sustainable way.
• High platform availability maintained and continual reductions to latency
implemented, improving our clients’ overall experience.
Progress against 2021/22 objectives
• Monthly client numbers in our leveraged business continue to remain close
to record highs and importantly are still up 33% versus pre-pandemic levels.
• Non-leveraged underlying active client numbers are up c 36% versus
pre-pandemic levels. Client non-leveraged AuA reached a new record
highat AUD$80.2 billion during the year, up 72% versus pre-pandemic levels.
• The Group continued to win numerous awards for client service and
products throughout the year.
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CMC Markets plc
Annual Report and Financial Statements 2022
2
3
Priorities for 2022/23
• Continue to invest in a responsive, insight-driven platform that is
optimised for incremental client learning and growth.
• Iterate delivery on new services that better support our clients to
manage their performance and harness market opportunities.
• Build out our product range across our platforms to better support
clients’ investment portfolio and grow share of customer wallet.
Priorities for 2022/23
• Deliver an infrastructure upgrade that will elevate CMC Connect
asatechnical innovator and institutional contender for price and
liquidity construction.
• Evolve the current product offering to operate with larger institutions
resulting in greater revenue returns.
• Enhance our ECN connectivity, providing access to a vast electronic
market to further cement ourselves in the B2B space as the go-to
non-bank liquidity provider.
• Develop a physical asset class solution allowing access to new products
and functionality, offering best-in-class technology to a marketlooking
for an increasing range of investment products.
• Expand the range of instruments on offer to meet all market liquidity
needs, including cash equities, ETFs and other financial instruments.
• Continue to elevate the CMC Connect brand throughout the financial
sector, utilising our award winning product suite to gain recognition as
the industry benchmark.
Technological evolution in 2022/23
• Building core multi asset capability that will enable us to deliver a
more diverse and peerless trading experience to our expanding target
market across leveraged and non-leveraged platforms, including B2B
capabilities across all platforms.
• Continue to invest in people and technology. Our main offices in
London and Australia focus on the development of all new platform
features orientated around the value proposition we offer across our
technology offering. This will soon be bolstered with the opening of
our Manchester office in the UK.
• Establishing new ways of working across both our traditional leveraged
and growing non-leveraged businesses to increase the velocity of
product delivery, organisational learning, and incremental value we
deliver to our clients.
Technological evolution in 2022/23
• Position CMC Connect as a full service fintech solution and non-bank
liquidity provider.
• New products; FX give ups and ECN connectivity (Electronic
Communication Network) enhancements.
• Drive brand and product awareness across all channels and
distributionchannels.
Progress against 2021/22 objectives
• Continued to deliver numerous user experience and technological
improvements to our customer onboarding processes across our global
retail, institutional and non-leveraged businesses.
• Developed new services and data capabilities that better support
ourclients to manage their performance.
Progress against 2021/22 objectives
• Exceeded revenue targets and expectations for 2022.
• Accelerated growth in the FX market with marketing strategy to build
client groups across increasing geographies.
• Successfully continued advancements as a non-bank liquidity provider
in the spot market.
Client journey optimisation
Opportunity
We continue to lead the way in providing a best-in-class client trading
experience and generating high levels of customer satisfaction with our
products and service. We believe there is a sizeable opportunity to build
on this strength and drive greater longevity and advocacy from our client
base. We are focused on solving our clients’ problems and supporting
them on their trading journey. This will enable the Group to further
improve its capability to attract, build and retain a high quality client base.
Institutional offering
Opportunity
CMC Connect, the institutional offering from CMC Markets, looks to
accelerate functionality over the next year following major technical
advances to its connectivity and current product offering. Steep growth
trajectory is predicted across trading volumes and the client base
resulting in major elevation of the CMC Connect brand.
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CMC Markets plc
Annual Report and Financial Statements 2022
Key performance indicators
Group KPIs
Tracking our progress
Our Group KPIs monitor the delivery of long-term value through a focus
on client quality and operating effectiveness.
In the 2021 report, the Group unveiled its plans to develop a non-leveraged platform in the UK. As a result, we have reviewed
the most appropriate metrics to illustrate the performance of the business and feel it is the right time to provide Group-level
metrics but also a split of performance of both the leveraged and non-leveraged businesses as a whole.
KPI definition
This is a statutory measure,
which represents total
revenue net of introducing
partner commissions and
spread betting levies.
Why we measure
Key operating metric.
Net operating income
£281.9m
£252.0m
21
20
£409.8m
22
£281.9m
Link to strategy
1 2 3
KPI definition
This is a statutory measure,
which comprises net
operating income less
operating expenses and
interest expense.
Why we measure
Key operating metric.
Statutory profit before tax
£92.1m
21
20
£224.0m
£98.7m
22
£92.1m
Link to strategy
1 2 3
Profit after tax
£72.0m
£178.1m
£86.9m
£72.0m
21
20
22
KPI definition
This is a statutory measure,
which comprises statutory
profit before tax less
taxexpense.
Why we measure
Largest driver of
shareholder equity and
Board-approved metric for
calculating dividend payable.
Link to strategy
1 2 3
KPI definition
This is a statutory measure,
which is calculated as
earnings attributed to
Ordinary Shareholders
divided by weighted average
number of shares.
Why we measure
Key shareholder
valuemetric.
Basic earnings per share
24.8p
30.1p
2.0
21
20
61.5p
2.0
22
24.8p
Link to strategy
1 2 3
KPI definition
Any dividend declared,
proposed or paid relating to
the financial year.
Why we measure
Key shareholder
valuemetric.
Ordinary dividend per share
relating to the financial year
12.38p
15.03p
2.0
21
20
30.63p
2.0
22
12.38p
Link to strategy
1 2 3
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CMC Markets plc
Annual Report and Financial Statements 2022
Leveraged KPIs
KPI definition
Spread, financing and
commission fees charged to
CFD and spread bet clients.
CFD net trading revenue is the
product of gross CFD client
income, multiplied by client
income retained.
A reconciliation of gross client
income to the Primary Statements
is provided on page 164.
Why we measure
Used to measure the total
income generated from CFD
client transaction charges.
Gross client income
£288.5m
21
£335.3m
£240.6m
20
22
£288.5m
Link to strategy
1 2 3
Strategy key
1
Established markets
2
Client journey optimisation
•
3
Institutional offering
KPI definition
Individual clients who have
traded or held CFD or spread
bet positions with CMC Markets
on at least one occasion during
the financial year.
Why we measure
Representative of the continuing
success of the business in
acquiring and retaining clients
which trade on a regular basis.
Link to strategy
1 2 3
Active clients
64,243
76,591
57,202
22
64,243
21
20
KPI definition
Percentage of gross CFD
clientincome retained after
rebates and gains and losses
from risk management.
Why we measure
Used to measure the success
ofthe risk management
strategyof converting client
spread, financing and
commissions charges to
CFDnet trading revenue.
Link to strategy
1 2 3
Client income retained
80%
104%
89%
22
80%
21
20
Revenue per active client
£3,575
£4,560
£3,750
22
£3,575
21
20
Link to strategy
1 2 3
KPI definition
Net trading revenue generated
from CFD and spread bet active
clients, divided by the number of
active clients during the year.
Why we measure
High value clients are central to
the Group’s strategy and the
growth in this figure is indicative
of the success in attracting and
retaining these clients.
Platform uptime
99.95%
99.95%
99.95%
22
99.95%
21
20
Link to strategy
1 2 3
KPI definition
The percentage of trading hours
that clients are able to trade on
the CFD platform.
Why we measure
The CFD platform is at the core
of our business – if clients are
unable to trade, the Group will
be unable to earn revenue.
Maintaining a very high uptime is
key to the continued success of
the Group.
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CMC Markets plc
Annual Report and Financial Statements 2022
Non-leveraged KPIs
KPI definition
Income received from brokerage
and FX spread on client trades,
less rebates.
Why we measure
Revenue diversification and high
value clients are central to the
Group’s strategy and the growth
in this figure is indicative of the
success in growing the
stockbroking business and
attracting and retaining high
value clients.
Link to strategy
1 2 3
Net trading revenue
£48.0m
£31.8m
£54.8m21
20
22
£48.0m
KPI definition
Individual clients who have
traded on the stockbroking
platform on at least one
occasion during the financial
year.
Why we measure
Representative of the continuing
success of the business in
acquiring and retaining clients
which trade on a regular basis.
Link to strategy
1 2 3
Active clients
246,120
20
181,630
21
232,053
22
246,120
KPI definition
The percentage of trading hours
that clients are able to trade on
the stockbroking platform.
Why we measure
The stockbroking platform is at
the core of our business – if
clients are unable to trade, the
Group will be unable to earn
revenue. Maintaining a very high
uptime is key to the continued
success of the Group.
Link to strategy
1 2 3
Platform uptime
99.91%
21
20
99.80%
99.95%
22
99.91%
Key performance indicators continued
Strategic report
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CMC Markets plc
Annual Report and Financial Statements 2022
New technologies and new ways of working
borne out of our digital transformation
programme have been the main contributing
factor in accelerating the delivery of our new
UK investment platform. The build is a highly
complex work programme requiring strong
collaboration across IT and every business unit,
meaning the programme impacts almost every
team in the UK in some way.
Technology and innovation
Digital transformation
accelerates building our new
UK investment platform
The delivery of the platform on time and on budget is particularly
pleasing given projects of this scale are notorious for overrunning
due to friction in the delivery process, delays caused by poor
decision making and disjointed technical design decisions. At the
heart of these issues is often the use of unsuitable and outdated
working practices. Our digital transformation programme has allowed
us to combine new skills and ways of working with new technology
capabilities to allow us to tackle a programme of this size and complexity
and execute at pace, delivering a great product outcome for our clients.
Cross-functional product-led teams
Strong collaboration alongside fluid and effective communication are
critical when building complex platforms at pace. Teams need a wide
range of skill-sets and a high level of autonomy, and our new “squad”
model has given us that. We have created our new UK investment
platform using cross-functional (multi-disciplined) teams, always
product led with a clear line of sight to our clients. We keep the
customer in mind throughout our build process, creating a rapid
feedback loop from customer research to the development team.
Cloud technology
Cloud technology, delivered through our strategic partner Amazon
Web Services (“AWS”), has provided the foundations for creating our
new investment platform. To leverage cloud technology effectively
weneeded an entirely new approach to architecture and design.
Thetransformation programme brought the required skills into the
organisation, as well as the foundations of our AWS technology
ecosystem, meaning we could hit the ground running. Cloud
technologies allow us to more rapidly build and deploy changes to our
system, using concepts such as infrastructure-as-code and serverless
architecture. We have been able to reduce dependencies on traditional
infrastructure support teams, reducing hand-offs in our development
processes, thereby accelerating ourdevelopment timelines.
You build it, you run it!
The implementation of cross-functional squads, coupled with the
adoption of cloud technology, has brought a whole new level of
empowerment to our delivery teams through what we refer to as
“build and run”. This is a powerful concept that demands a high level
of discipline and skill from all members of the team, but rewards them
with the highest level of autonomy. The teams building our new
investment product can rapidly implement change, taking feedback
from a customer and delivering the required change, with minimal
support required from outside the team. This has been embedded
inour teams from the inception of the project, and will allow us to
scale our teams and rapidly expand our product in line with
customerdemand.
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CMC Markets plc
Annual Report and Financial Statements 2022
Non-leveraged UK
CMC Invest development
We proudly launched our UK investment platform, CMC Invest, in
April 2022 on an invitation-only basis. Further enhancements and
features are scheduled in phased releases through the rest of the
year, with a wider market release on track for the second half of
the calendar year.
The prioritisation of our product roadmap is guided by one of our
core Company values – put our clients first. Throughout the launch
year and beyond, we will continue to proactively engage clients
and create a dialogue to better understand their investing habits,
to then bring forward an investing platform tailored to their needs.
The genesis of the product was borne out of client feedback and
market research that identified a gap in the UK investment market.
While there are many options for an investment platform, there is a
lack of a credible alternative that is fully aligned to clients’ needs
and financial goals.
This was the catalyst for our mandate: challenge the status quo
and create a transparent platform, business model and pricing
structure that better support clients’ self-directed investment
needs and their long-term success.
To scope the product we took a fundamental approach to
analysing the UK investment market and built up our understanding
of clients’ pain points and expectations, whilst leveraging CMC’s
expertise in technology and building investment platforms to hone
our product designs and solutions.
A significant part of our effort has been focusing on establishing
the platform to build and iterate successful feature sets. We have
mobilised several cross-functional squads that are dedicated to
building out the investment product with the singular goal of
creating the greatest value for our clients. The investment platform
is built using scalable cloud-based technology and processes that
enable us to release new features continuously in a secure and
highly automated manner. This means we can react quickly to
client feedback within hours rather than days or weeks. The teams
are accountable for outcomes (as opposed to output) focused on
areas such as client adoption, retention and advocacy. We are
committed to our mission of inspiring and guiding our clients to
realise their financial goals, which means we have made them an
intrinsic part of the product development process. To this end, we
have also been honing our product development practices to
expedite the gathering, organisation and utilisation of client feedback
and construct a framework where our clients become an extension
of our product team.
We are proud to have delivered the first iteration of the new
investment platform in under a year, demonstrating the immense
capability within CMC Markets and the strength of the team. The
first delivery of the platform includes core features, e.g. General
Investment Accounts (“GIAs”), UK and US share dealing, watchlists
and paperless forms, but, more importantly, we have also set up
the framework for rapid development and introduction of new
capabilities that will better support CMC’s clients to achieve their
investment goals.
Technology and innovation continued
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CMC Markets plc
Annual Report and Financial Statements 2022
Non-leveraged Australia
Client journey optimisation
The Australian non-leveraged business started its
transformation to an agile, cross-functional squad model
around 18 months ago, with the aim to align our product and
development teams with key areas across the client journey.
The Mobile squad started us off in 2021 and went on to
develop powerful new mobile and tablet apps for our iOS
and Android users. The success of these apps can be seen
in our app ratings which stand at or above 4.5/5 at the end
of March 2022.
We continued this transformation in 2021/22 with the
addition of a new Account Management squad whose initial
focus was on redesigning our application process for new
clients. This aligned to one of the Group’s key focus areas in
2022 of optimising the client journey and was designed to
simplify the user experience, automate manual processes
and speed up application and account creation times so
clients could start investing sooner.
The project started with a comprehensive research phase
looking at modern application designs and user flows,
reviewing our internal processes and speaking with key
stakeholders to gather requirements. Once the results were
collated and reviewed, the initial concept design was
developed and tested with our new CMC focus group.
Thefeedback from these sessions resulted in a number
ofchanges to optimise the user experience further before
being passed to the squad developers to commence
thebuild.
In addition to a new modern design, the development team
built the new application using scalable cloud-based
technology, allowing us to instantaneously scale our IT
infrastructure to serve more clients. We’re leveraging cloud
services to release new features continuously in a secure
and automated manner.
The new individual application went live at the end of calendar
year 2021 to a small percentage of new clients which enabled
us to test the end-to-end process, identify any issues and
iteratively update where necessary. The full rollout of the
application process is planned for early 2023, before
switching our focus to white-label variants, non-individual
accounts and some key account management enhancements.
Reduction in 99th percentile
execution time
Leveraged
69%
Non-leveraged
71%
Operational excellence supporting
leadingedgeinnovation
The Group’s infrastructure remained extremely resilient throughout
2022 with the leveraged and non-leveraged platforms again achieving
uptime of 99.95% and 99.91% respectively, throughout the year, despite
periods of elevated volatility driven by COVID-19 and geopolitical
events. Once again, our technology has been core to providing our
clients with uninterrupted access to the financial markets. We are
continuing to improve the consistency and speed of execution for all
clients with the 99th percentile execution time down approximately
70% compared to the same time last year for both leveraged and
non-leveraged businesses. We recognise that we need to be
constantly evolving and innovating to ensure we remain at the leading
edge of our industry and have continued to invest significantly
throughout the year to ensure this is the case.
Putting clients’ needs at the core of our strategy
Our product strategy is based on understanding and eliciting these
needs from our clients and delivering personalised experiences
supporting their key journeys with CMC. We believe that understanding
what our clients need and when they need it will underpin clients’
long-term relationships with us through enabling their long-term
success. This has been demonstrated through the constant client
engagement during the CMC Invest build, resulting in the Group
building a detailed understanding of their investing habits and
therefore building a platform tailored around their needs.
1 Leveraged percentage represents reduction in Q4 2022, following changes made during
thequarter.
Read more about our client journey
optimisation strategy on page 20
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CMC Markets plc
Annual Report and Financial Statements 2022
Introducing our new focus
on sustainability
Sustainability
At CMC Markets, we empower our people
and clients with the means to invest in a
positive tomorrow by providing responsible
and innovative technological solutions that
protect, educate and inspire our people and
clients to invest for the future. This ensures
that we are aligned with the global capital
markets shift towards asustainable future.
At a time when sustainability is leading the direction of the financial
markets, our mission is to empower our people and clients with the
knowledge to invest responsibly and with confidence. We are
cognisant and embracing of the mandate handed to the finance
industry to support the global sustainability agenda including the
critical fight against climate change. We also recognise that adopting
practices through a sustainability lens will have real business benefits
that support the longevity of the Group and aid in the delivery of our
purpose to provide our clients with a first-class technology-backed
investing experience with unrivalled access tocapital markets.
Over the last year we’ve taken decisive steps towards embedding a
greater focus on sustainability within our organisation. We welcomed
Kelly Perry as our new Group Head of Sustainability, a newly created
senior position that sits within our corporate team with Board exposure.
Kelly will play a vital role in advising our Board throughout our
sustainability journey, developing the overall strategy and ensuring
successful implementation into the overall operations of the Group.
Introducing our new strategy:
"Our Tomorrow: taking a positiveposition"
Over the past year, we have worked closely with a team of
sustainability consultants, Design Portfolio, to support a number
ofworkstreams, including preparation to meet the requirements
ofthe TCFD (read our disclosure on pages 40 to 43) and the
facilitation of ourfirst materiality assessment. Following the
prioritisation of the sustainability topics that matter most to our
business, we are proud to launch the new sustainability strategy that
will shape the next few years of activity for the Group: "Our Tomorrow:
taking a positive position".
This coming year we are committed to embedding the new strategy
across the business and, moving forward, our priority will be to
determine key performance indicators and targets to measure and
monitor our progress against "Our Tomorrow". We intend to report
frequently against the development of this strategy and our performance
and engage internal and external stakeholders to support our work in
this area.
"Our Tomorrow" describes how we seek to embed sustainability
across the business. We have identified five core strategic priorities
that are our areas of focus, which highlight how we protect, empower,
innovate and adapt to be a responsible business that is committed to
the needs of our people and our planet. How these five strategic
priorities interact is key to the success of the future of ourbusiness.
To deliver for our clients and for our people, we recognise two key
mechanisms: firstly, the role we have to play towards a sustainable
future including mitigating the consequences of climate change and
better understanding how we can contribute to a low carbon
future;and secondly, how having robust governance and leadership
underpins our approach to sustainability, and we are taking steps to
enhance our oversight and understanding of sustainability at the
highest levels.
Strategic report
28
CMC Markets plc
Annual Report and Financial Statements 2022
“ Upon joining CMC this year, I have been encouraged
to see the steps the Group has taken towards being a
sustainable business. I am delighted to launch CMC's
"Our Tomorrow" sustainability strategy, which
demonstrates our ambitions to embed sustainability
practices into the overall business and operations for
a more positive future. This is an exciting time for the
Group and we recognise that being a responsible
business is not the work of any one individual, but
that we all have an important role to play.”
Kelly Perry
Group Head
ofSustainability
Our entire ecosystem needs to come together to ensure the ongoing success of
"Our Tomorrow" and to really make an impact, as demonstrated below:
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Client
positive
protecting our
clients and instilling
confidence in
their investment
decisions.
Protecting with
purpose
Platform
positive
pioneering
innovative and
sustainable products
to solve our clients
current and future
needs with
platforms for
good
Strategic report
29
CMC Markets plc
Annual Report and Financial Statements 2022
Sustainability continued
Grounding our strategy
in materiality
A comprehensive materiality assessment has provided the building blocks to our strategic approach.
Through a multifaceted engagement programme with key internal and external stakeholders, industry
research and market analysis, we developed the materiality matrix shown below to visualise the topics that
matter most to the business.
Materiality matrix
The vertical axis represents the significance of the topics to our stakeholders, determined on the basis of
interviews and surveys conducted with a representative sample of our employees, clients, financiers, and
shareholders. To assign the impact score shown on the horizontal axis, we conducted a risk and opportunity
mapping exercise for each topic to understand our exposure to potential consequences or benefits.
We validated the findings from a prioritisation exercise in workshops consisting of members of our senior
leadership team. This matrix and the sustainability strategy we have developed will guide our focus for the
next few years and we will continue to track materiality.
CMC’s material issues:
1. Client care and protection
2. Leadership and
governance
3. Organisational culture
4. Incorporation of ESG
factors into platform
5. Diversity and inclusion
6. Talent development
7. Business ethics
8. Climate action
9. Professional integrity
10. Responsible marketing
11. Energy transition
12. Executive pay
13. Green finance
14. Carbon emissions
15. Financial capability and
inclusion
16. Employee wellbeing
17. Nature and biodiversity
18. Waste management
19. Labour practices and
human rights
20. Responsible procurement
Environment
Social
Governance
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18 19
20
Manage
CMC’s risk/opportunity exposure
Monitor
Maximise
Mitigate
Significance to stakeholders
Strategic report
30
CMC Markets plc
Annual Report and Financial Statements 2022
Reporting against
ourstrategy
Outlined below, we share our performance
against our new five pillar strategy over the past
year, and our plans for the future.
1 – Client positive
Driving our efforts to being a market leader by
protecting our clients and instilling confidence in
their investment decisions. Protecting with purpose.
There are many contributing factors that impact the behaviour of the
markets which inevitably means it is not upside all the time. The
Group recognises that risks and potential financial losses are inherent
to our products and how they can impact our clients. Beyond our
regulatory obligations, we are exploring a market leading approach to
client protection, optimising their experience while ensuring the
Group remains aligned with global regulatory bodies.
Supporting our clients through education
As we continue to develop and diversify our products, we recognise
that our retail client base is also evolving to reflect broader and more
diverse demographics. This presents exciting new opportunities for
the Group and the new wave of investors is fundamentally different
from our traditional investor; they are demonstrating less financial
literacy
1
and despite this they have an appetite to engage in our
sector. We are committed to examining how best to meet the needs
of the more diverse and less experienced investors and we
areputting education at the centre of our approach.
We have a freely available Learning Hub for all investors on our website
to help new clients navigate the difference between spreadbetting,
CFDs and FX trading including key thematic trends in the market.
Responsible marketing
The Marketing Communications Policy sets out the standards that
apply to the content used in client communications and financial
promotions, covering the nature of the content, prominence of
certain information, presentation of data and whether it is necessary
to add disclosures or risk warnings.
Read more about our commitment to client journey
optimisation on page 20
2 – Platform positive
Pioneering innovative and sustainable products
tosolve our clients’ current and future needs
withplatforms for good.
Investment products are evolving all the time, and we continue to tap
into this changing landscape. We have recently expanded our UK
investment product suite into a non-leveraged investment platform
and we are exploring sustainable product opportunities, in the spirit
of the EU’s Sustainable Finance Disclosure Regulation (“SFDR”) and
the UK’s forthcoming Sustainability Disclosure Requirements (“SDR”)
regimes. Our priority as we review these opportunities is to ensure
that these assertions are authentic. We will strive to offer our clients a
product suite that allows clients toinvest responsibly and understand
the trends towards sustainable investments.
Read more about our investments in technology and innovation
to support better client experiences on page 25
Sustainability highlights
A summary of achievements that have been critical for
improving our approach to sustainability:
• Completed our first ever materiality assessment, which
supported the development of our brand-new sustainability
strategy, "Our Tomorrow: taking a positive position".
• Welcomed our new Group Head of Sustainability, Kelly Perry,
who will oversee the development and implementation of
"Our Tomorrow".
• Convened the Sustainability Committee, a group of senior
leaders that will help to drive the adoption of "Our Tomorrow"
across the business.
• Conducted a survey of our employees to gain their views
and feedback on the key sustainability topics that matter
most to them.
• Commissioned a review of diversity and inclusion within the
business to inform our understanding of our employee
community and develop a roadmap for growth.
• Undertook a deeper analysis of our climate-related risks and
impacts as part of a workstream to produce our first
disclosure in line with the recommendations of the TCFD.
1 https://www.fca.org.uk/publication/research/understanding-self-directed-investors.pdf
Strategic report
31
CMC Markets plc
Annual Report and Financial Statements 2022
Sustainability continued
3 – People positive
Cultivating culture and fostering an inclusive and
innovative workplace where everyone thrives.
Our people have always been core to the success of CMC Markets,
and this year we could not be prouder as our teams, in all locations,
rose to the challenges that were presented to them. Our future
success depends on nurturing and enhancing an environment where
our employees can reach their potential, championing talent
development, promoting our employees’ mental health and wellness,
and taking clear action to make CMC Markets a place where
everyone thrives, regardless of beliefs and identities.
Diversity and inclusion
Having an environment where all employees feel included and valued
is important to us and as our business grows we acknowledge that
there is more we can do to ensure thiscontinues to be fully
embedded in the culture of the organisation. This year the Group has
built on the relationships with organisations such as Inclusive
Employer and EveryWoman.
Inclusive Employer has delivered six virtual workshops with an
average of 220 attendees at each live session. The workshops have
covered topics from introductory overviews to introducing allyship,
alongside more in-depth topics such as an introduction to neurodiversity
inclusion. These workshops have provided learning opportunities,
encouraged and supported colleagues to connect and open
dialogues on inclusion topics.
Following the growth and success of our Women@CMC programme
in the APACregion, the programme was rolled out in the UK and
Europe in January 2022. This has helped to connect women across
five different geographies through topic-based development
workshops and networking, supported by the Group’s relationship
with EveryWoman.
The Group’s focus on gender balance, supported by Board andsenior
management, has led to reviews of processesand policies across the
business to ensure they are suitably diverse and inclusive. This has
led to the following changes in the year:
• parental leave policies were reviewed and enhanced to further
support working parents across the Group. Changes to our
maternity pay provision mean we are now in the upper quartile
formaternity pay in the UK; and
• creation of an internal Talent Acquisition team has allowed the
Group to shape recruitment processes to support a more diverse
pool of applicants to ensure:
• job descriptions are diverse and inclusive;
• working patterns and hybrid working are more accessible; and
• line managers are supported through recruitment activities.
The things we live by
Throughout 2022 employee engagement surveys helped
us capture what it means to work at CMC and understand
how employees feel whilst at work. We have used these
learnings to underpin recruitment practices, and provide
quality content on our website and social media pages to
helps us recruit employees aligned to our ways of working
and give a framework for personal development discussions.
We stand with our clients
We are as passionate about trading as our
clients, and we’re here to help them make the
most of every opportunity. Weput our
clients at the centre of everything we do.
We are human
We’re personable and approachable. We
know thevalue of direct interaction and
make ourselves available to talkinperson.
We take ownership
We make decisions as accountable
individuals, not ascommittees. We do
ourresearch and listen with intent to
driveimprovements.
We are bold
We’re not afraid to challenge ourselves or the
status quo and we’re always looking for ways
toimprove. If things don’t work, we learn,
iterate and succeed.
We work as a team
We’re inclusive, welcoming andencourage
collaboration. We work together across
boundaries and don’t have time for egos.
We keep it simple
In a complex industry, wealways strive
tokeep things assimple as possible.
We’rehonest, reliable and straight talking.
We focus on impact
We focus on solving the most important
problems that will deliver the biggest impact.
Weuse our time and money wisely and stay
focused on the end goal.
Strategic report
32
CMC Markets plc
Annual Report and Financial Statements 2022
This year the Group engaged a diversity and inclusion consultant to
provide an external view and to help develop the Group’s diversity
and inclusion strategy going forward. As a Group we want to build on
the foundations of everyday diversity and inclusion practices through
training, development of policies and practices and embedding a diverse
and inclusive culture where employees have the tools to thrive. The
strategy will include metric-driven objectives for all senior managers
to encourage more inclusive practices, particularly in the areas of
(butnot limited to) gender, BAME, disability and socio-economic.
Gender pay remains important to the Group and, whilst our published
gender pay gap in the UK is 24% as of 5 April 2021, our ongoing
monitoring shows that as of March 2022 we have improved to 14%.
We continue to drive improvement in this area and measure our
progress with real-time metrics and a more robust grading structure
to ensure the headline metrics are underpinned by local practice.
Learning and development
Employee development has continued to be a focus over the lastyear
as we launched a global learning management system. This tool aims
to become a centralised hub for learning and development. Along
with CMC mandatory training, this hub provides learning access to a
number of partnered resources such as Intuition, LinkedIn Learning,
Pluralsight and MBL, whose remote learning solutions have been
invaluable during the pandemic. We have reintroduced some
face-to-face learning with the delivery of Management Essentials
training to the majority of our line managers in the UK and Europe.
The Group recognises the value in developing and supporting growth
in its employees with tools in place to; support employees, analyse
the needs within the business, and having a comprehensive and
structured approach to learning strategies. We aim to continue
building on the learning and development culture and embed the
value of this within teams as well as at individual level.
Senior Managers and Certification Regime
The Group continues to be fully aligned with the FCA’s Senior Managers
and Certification Regime, and other similar regulations globally. As a
result of theunderlying philosophy to work closely with all regulators
and adopting the highest standards globally, the business adopted
Group conduct requirements across all our offices. A Conduct, Fitness
and Propriety Panel (“CFPP”) has been formed to bring together key
stakeholders globally to discuss matters and ensure consistency,
reporting and policy applications across the Group. The Group has
continued to ensure appropriate training is provided, both internally
and via external providers, on the conduct rules and other regulatory
matters and best practice guidance.
1 Employees of the Group
excluding contractors as at
31March 2022.
2 Direct reports of Executive Directors
in non administrative roles.
All employees

Male 658
Female 265
Board of Directors

Male 6
Female 2
Senior management

Male 31
Female 3
Strategic report
33
CMC Markets plc
Annual Report and Financial Statements 2022
3 – People positive continued
Employee engagement
We recognise that engaged employees make better decisions for our
business and customers because; they understand more, are more
productive because they like what they do, and innovate more
because they want the business to succeed. As we navigate a new
landscape of how people communicate, adapting is essential, and we
have focused on ensuring we can provide engaging and informative
tools that are effective and provide transparency.
We continue to enhance our communications with employees and
understand the need to modernise and adopt best practices to be
more relevant, timely and engaging for our workforce. Having the right
culture, policies and practices in place is key to ensuring employees
have the tools and optimal processes to maximise their contribution.
We offer an employee experience platform which captures survey
results in real time along with the Group’s response to feedback
received. The tool creates an open feedback channel for employees
to communicate with the Executive Leadership team, helping us
understand our employees better and turn feedback into positive,
sustainable change that boosts performance levels.
We regularly communicate with employees at all levels through
multiple channels and with the support of our Non-Executive Directors,
who have responsibility to oversee engagement with employees. We
aim to ensure employees understand any challenges, opportunities,
and risks presented to the business through regular town halls.
Our new employee experience platform, Culture Amp, was launched
in 2021. The current year survey results identified a number of
opportunities for development and, in response, the business has
implemented the following global communication, social and
engagement initiatives:
• monthly business and strategy updates delivered by
ExecutiveDirectors;
• reinstatement of quarterly "meet the Directors" forum for new
joiners, temporarily suspending during COVID-19;
• engagement with our Non-Executive Directors to provide feedback
and hear insights;
• launch of Women@CMC programme;
• revisions to our work from home approach; and
• implementation of an anonymous feedback tool that is forwarded
directly to Executive Directors.
Overall full engagement was recorded at 66% during our global pulse
survey for 2022 (conducted in January 2022), increasing from the
61%recorded during our 2021 global annual survey (conducted in
July2021), and 59% during our 2021 global pulse survey (conducted
inJanuary 2021). In previous years we have highlighted Average
Engagement but can no longer report that metric. Full Engagement
isbased on the number of employees who agree or strongly agree
with all five core engagement measures.
Engagement data
Our engagement score
Current
66%
2022 global pulse
engagement survey
How we compared based on:
Previous
+5%
2021 global
engagement survey
Score: 61%
Benchmark
-6%
Fintech 2021
Score: 72%
Sustainability continued
Strategic report
34
CMC Markets plc
Annual Report and Financial Statements 2022
Talent attraction and retention
Voluntary employee turnover at CMC has increased this year to 24%
(15% in 2021). Like all industries, the increase was prompted by our
core markets for talent reopening as COVID-19 restrictions were
lifted. The APAC region, and Australia in particular, have been
impacted by the closure of borders significantly reducing the
available talent pool. To manage these challenges we have increased
our talent acquisition resources, tactically reviewed reward in key
functions and focused on internal development where appropriate. As
a result, 72employees have been successful in securing a new
opportunity orgreater responsibility internally.
Despite pandemic challenges, 2022 has been a year of growth with
our headcount increasing by 44 globally, principally in our technology
functions as we develop new products and features, and in our support
functions as we prepared for the launch of the UK non-leveraged
investment platform and broaden our appeal to our institutional client
base. To continue to support our planned headcount growth for 2023
we are looking toexpand our physical footprint in the UK by opening
an office in Manchester, initially focused on increasing our talent
pools for technology skills and similar initiatives are being explored
inSydney.
Reward and benefits
The Group offers a highly competitive reward package and we continually
review our employee proposition to align it to the external market.
This is key to delivering on our hiring plans and motivating our
existing employees.
Senior management and critical talent have equity incentives and all
UK employees have the opportunity to contribute to a Share
Incentive Plan. At the year end, 29% of our London workforce were
participating in the scheme. Similar equity or cash-equivalent
schemes are also available globally.
Health and wellbeing
The health and safety of the Group’s employees and visitors is of
primary importance and we are creating and maintaining a safe and
healthy working environment. Health and safety audits and risk
assessments are carried out regularly. We have ensured our offices
exceed all government and health authority guidance to create
COVID-19 safe environments.
COVID-19 has continued to play a role in our people-related activities:
ensure employees remain healthy, support mental wellbeing and
manage increasing retention challenges as the pandemic restrictions
are eased. All our offices have successfully re-opened when
permitted, followed local guidance and implemented effective
COVID-19 secure protocols. Business performance has remained
strong during times when offices have been closed to employees,
reflecting theinvestment made in our systems and processes to
enable home-working and the commitment of our people to continue
to driveCMC forward. Asaresult of these developments, we have
been able to close one business continuity site in the UK and develop
our Sydney site as agrowth location from our main office in
Barangaroo. Wehave launched a"Living with COVID-19" policy,
retaining the core elements of the COVID-19 secure plan including
free testing to continue to support allemployees as each location
transitions away from full COVID-19precautions.
Engaging with our communities
The Group continues to promote the support of local charities across
our global offices and recognises the importance of increasing this
support as charities have been heavily impacted by the COVID-19
pandemic. Staff are encouraged to engage with charities, using the
Group’s corporate volunteer days scheme which is available to all
staff wishing to volunteer with charities. We also continue to support
staff with our Company matched fundraising scheme.
The Group’s charity team have been directly engaged with our
charity partners throughout the pandemic and in London we are in
the second year of our three-year charity support partnership that
will strengthen interactions and impact on children from primary
school age, through to taking their first steps into the
professionalworld.
As CMC transitioned to an agile working environment during the
COVID-19 pandemic we upgraded our tech equipment for all
employees, allowing us to be in a position to repurpose/rebuild
surplus equipment and donate these assets (PCs, monitors,
keyboards and accessories), and this is an ongoing initiative
whichissupporting a number of different charities.
Strategic report
35
CMC Markets plc
Annual Report and Financial Statements 2022
4 – Change positive
Leading by example and demonstrating integrity,
forward thinking and accountability at every step.
We conduct our business to the highest standards and seek to lead
the industry through our strong commitment to business ethics and
professional integrity. This will manifest itself in strong governance
processes around our material sustainability issues, including both
risks and opportunities. To oversee and guide our approach, we have
established a Sustainability Committee, a cross-functional team
comprising Board members and business leaders from across our
geographies which will be led by our Group Head of Sustainability.
Equal opportunities
The Group highly values the differences and creativity that a diverse
workforce brings and is committed to recruiting, developing and
retaining a world-class team irrespective of ethnicities, nationalities,
sexual orientation, gender identity, beliefs, religions, cultures or
physical abilities. We seek to establish a culture that values
meritocracy, openness, fairness and transparency.
We affirm that we will not tolerate any form of unlawful and unfair
discrimination. In searching for talent, the commitment is always to
recruit the best from the broadest applicant pool. All candidates have
the right to expect that they will be respected and valued for the
contribution that they bring to the Group.
We are committed to giving full consideration to applications for
employment from disabled persons as well as providing continuing
employment to existing employees who become disabled during
their employment where practicable. For those disabled persons
looking to join CMC Markets or any existing employees who become
disabled, whether temporarily or permanently, we work to adapt the
working environment and where possible offer flexible working,
training and graduated back-to-work plans in conjunction with
occupational health to ensure genuine opportunity for all and the
retention of employees.
Human rights
We conduct business in an ethical manner and adhere to policies
which support recognised human rights principles. The Group
anti-slavery and human trafficking statement can be found on the
Group website (www.cmcmarkets.com/group). We actively monitor
employee remuneration to ensure we meet all living wage
requirements or the local equivalent.
Anti-bribery and anti-corruption
The Group does not tolerate any form of bribery or inducements
andit has an anti-bribery and corruption policy which is applicable
toall global staff. The policy is owned by the Heads of Compliance of
the UKand Europe, and is implemented by the financial crime team
andcompliance officers in offices across the Group. In conjunction
with this policy, the Group also provides clear guidance to staff on
other policies related to politically exposed persons (“PEPs”), gifts,
entertainment and expenses. Should any member of staff like to
anonymously raise bribery or corruption concerns they are also
ableto do this in accordance with the Group Whistleblowing policy.
Purpose
• Good governance for the Group
• Effectively manage the risks in our operating environment
• Recognise and capture the opportunities that are presented
• Ensure integration of Our Tomorrow into our global business
• Cross-functional transparency and "connecting the dots"
• Ensure alignment with the regulatoryrequirements
• Work across all operations to orient the Group’s
triplebottom line: People, Planet, Profit
Structure
• Permanent structure within CMC
• Board representation required
• Constituents should be cross-functional/cross-
geographybusiness leaders
• Regular monthly meetings to drive Our Tomorrow strategy
• Form a subcommittee of sustainability champions to help
deliversustainabilitygoals
Sustainability
Committee
Responsibilities
• Approve strategic sustainability plans
• Provide updates/obtain feedback from Board
• Approve sustainability practices: framework,
reporting, and other activities
• Globalise our sustainability strategy
• Bring together internal networks
• Define, deliver and measure KPIs
• Accountability of Our Tomorrow strategy and
performance of the business
Sustainability champions (subcommittee)
• Strategic direction provided by
SustainabilityCommittee
• Broader employee engagement and embedding
intoour DNA
• Champions who are impassioned by
sustainabilitymatters
• Constituents should be cross functional/cross
geography to drive implementation
• Proactive/doers
• Track and measure developments/datacapture
Sustainability continued
Strategic report
36
CMC Markets plc
Annual Report and Financial Statements 2022
5 – Planet positive
Understanding and mitigating our climate impacts
and exploring opportunities to support the transition
to a greener economy.
We have more work to do to understand the full scale of our impacts
on the environment. CMC Markets is committed to taking a leading
role in the fintech space to mitigate our environmental footprint, from
finding ways to enhance our energy efficiency and reduce our
impacts on the climate, to embracing more circular ways of thinking
about technology and electronic waste. We have mapped out our
climate-related risks and opportunities this year as part of our TCFD
disclosure, which can be read in detail on page 40.
Offices and facilities
As we continue to expand and grow our business we are looking at
more sustainable office spaces, specifying the need for green
credentials and utilising data provided by BREEAM ratings or local
equivalents on the buildings we are considering, to inform our
decision making.
Greenhouse gas emissions (“GHG’s”)
GHG’s are calculated in alignment with records used for the
production of the consolidated Financial Statements for the relevant
accounting period. We have used emission factors from the
Department for Business, Energy and Industrial Strategy’s (“BEIS”)
“Greenhouse gas reporting: conversion factors 2021” to calculate our
Scope 1 emissions and have determined the Scope 2 electricity
impacts for electricity from the International Energy Agency (“IEA”)
emission factors. All emissions required under the Companies Act
2006 are included except where stated and include Scope 1 (direct
emissions from gas consumption) and Scope 2 (indirect emissions
from purchased electricity) emissions but exclude Scope 3 (other
emissions from business travel and waste) emissions. Diesel usage
forbackup generators at one office location has been excluded
fromthe report given that it is not material to our carbon emissions.
The figures include emissions from all global offices. In some cases
estimates are used to calculate usage where actual consumption
figures are not available, such as gas consumption in an office and
electricity consumption in a data centre, in the UK.
The running of our two UK data centres accounts for the majority
ofthe Group’s electricity usage, and we continue to look for
opportunities to improve their efficiency and performance. The
Group’s intensity ratio increased due to a decrease in net operating
income, despite emissions reducing by 9%.
Total emissions (tCO
2
e)
year ended 31 March 2022
Total emissions (tCO
2
e)
year ended 31 March 2021
Gas 7%
Electricity 93%
Gas 7%
Electricity 93%
Strategic report
37
CMC Markets plc
Annual Report and Financial Statements 2022
Global energy consumption by location inkWh
Year ended
 March 
(in kWh)
Year ended
 March 
Percentage
UK ,, .%
Rest of theWorld , .%
Total ,, .%
Global energy emissions by location intCOe
Year ended
 March 
(in tCOe)
Year ended
 March 
Percentage
UK ,. .%
Rest of theWorld . .%
Total ,. .%
Sustainability continued
Greenhouse Gas Emissions by Scope
Unit
Year ended
 March 
Year ended
 March 
Year ended
 March 
(base year)
Scope 1
Gas consumption tCOe . . .
kWh , , ,
Scope 2
Electricity consumption tCOe ,. ,. ,.
kWh ,, ,, ,,
Total global emissions tCOe ,. ,. ,.
kWh ,, ,, ,,
Net operating income £m . . .
Headcount number   
Intensity ratio (total global emissions/net operating income) tCOe/£m . . .
Intensity ratio (total global emissions/employee) tCOe/HC . . .
Group global emissions per
employee (tCOe YoY)
19%
Group global emissions
(tCOe YoY)
9%
5 – Planet positive continued
Strategic report
38
CMC Markets plc
Annual Report and Financial Statements 2022
Group non-financial information statement
Set out below is the information required by Sections 414CA and 414CB of the Companies Act 2006 (the "Act”) necessary for an understanding
of the Group’s development, performance and position in relation to the matters set out in the table below.
Reporting requirement Group policies and statements Commentary, outcomes and KPIs
Environmental matters
• Health and Safety Policy
• Travel and Entertainment Policy
Stakeholder engagement pages 12 to 13
Sustainability section pages 28 to 39
Employees
• Equal Opportunity Policy
• Anti-Harassment and Bullying Policy
• Physical Security Policy
• UK Sabbatical Policy
• Diversity and Inclusion Statement and Policy
• Board Diversity Policy
• Flexible Working Policy
Sustainability section pages 28 to 39
Nomination Committee section pages 75 to 77
Social matters
• Equal Opportunity Policy
• UK Sabbatical Policy
• Diversity and Inclusion Statement and Policy
• Board Diversity Policy
Sustainability section pages 28 to 39
Nomination Committee section pages 75 to 77
Human Rights
• Equal Opportunity Policy
• Anti-Harassment and Bullying
• Physical Security Policy
• UK Sabbatical Policy
• Diversity and Inclusion Statement and Policy
• Board Diversity Policy
• Flexible Working Policy
Sustainability section pages 28 to 39
Nomination Committee section pages 75 to 77
Anti-corruption and
anti-bribery matters
• Group Anti-Bribery and Corruption Policy
• Group AML Policy
• Group Financial Sanctions Policy
• Group Politically Exposed Persons Policy
• Group Anti-Slavery Policy
• Modern Slavery Statement
Sustainability section pages 28 to 39
Principal risks
Risk management section pages 50 to 56
Business model
Our business model section pages 10 to 11
Non-financial key
performance indicators
Key performance indicators section
pages22to24
Strategic report
39
CMC Markets plc
Annual Report and Financial Statements 2022
Taskforce on Climate-related
Financial Disclosures
Climate change poses a complex and
unprecedented challenge to humanity, and
financial markets have a clear role to play in
helping the world to mitigate the consequences
of emissions and to adapt to a warming planet.
Our industry is also at the early stages of
understanding and assessing how climate
change may destabilise and disrupt the finance
sector in unpredictable ways. We therefore
welcome the recommendations of the
Taskforce on Climate-related Financial
Disclosures (“TCFD”) as a valuable tool that
supports knowledge building in our sector in
the face of an uncertain future.
The Group has made significant strides towards incorporating
consideration for climate-related risks into our strategic and financial
planning processes. With the support of external sustainability consultancy
Design Portfolio, we convened a working group dedicated to
jump-starting our approach to TCFD, consisting of cross-departmental
senior colleagues representing the investor relations, sustainability,
and finance teams. This disclosure represents a summation of the
initial stages of this work, which we believe are consistent with the
TCFD framework, with the exception of Scope 3 emissions and
metrics and targets, with plans for alignment disclosed within this
section. We look forward to updating our stakeholders on our new
climate-related activities and initiatives in the next reporting cycle.
Governance
The Board, which takes ultimate responsibility for overseeing the risks
and opportunities presented by climate change, also approved the
Group’s new sustainability strategy, "Our Tomorrow: taking a better
position", to establish the Group’s key areas of focus across the
universe of sustainability topics and will continue to feed into efforts
to define key initiatives and set targets over the course of 2023.
We plan to develop a set of metrics as part of our strong strategic
steer towards sustainability that will serve as KPIs for the Board and
will provide more details on these in due course. We plan to monitor
progress and steer future objectives, including those related to
mitigating the Group’s impact on the climate. Climate considerations
will be a key focus for us as we evolve our strategy and engage with
the Board through our Sustainability Committee. Read more about
our new sustainability strategy on page 28.
The Board relays its thinking on climate-related risks and opportunities
to management via the newly convened Sustainability Committee,
chaired by our Group Head of Sustainability. The assessment and
management of CMC Markets’ sustainability risks and opportunities
are encompassed by the Group Head of Sustainability’s mandate,
including the impacts of climate change. The Sustainability Committee
consists of a cross-functional senior management team and has
representation from the Group’s Board including the Deputy Chief
Executive Officer, Chief Financial Officer and Group Head of APAC &
Canada, who also will represent the sustainability agenda at Board
level, demonstrating the importance of climate considerations to the
Group and the commitment we have to ensure an effective impact in
our change efforts and integration of sustainability best practices
across the business including the implementation of TCFD. The
Sustainability Committee provides the forum through which the
Group Head of Sustainability keeps senior management abreast of
climate-related initiatives and progress against detailed KPIs will be
mapped out and disclosed in due course. For more details about the
responsibilities of the Sustainability Committee and its role in
assessing and managing ESG risks and opportunities, see page 36.
TCFD
GettyImages-1257716141.pdf
Strategic report
40
CMC Markets plc
Annual Report and Financial Statements 2022
Strategy and risk management
Over the past year we undertook a detailed study to map our
climate-related risks and opportunities to support our TCFD
disclosure and wider climate change strategic approach.
At CMC Markets, we evaluate climate-related risks across two key
dimensions. First, we look at the climate crisis through the lens of
both risk and opportunity. We are working to better understand the
potential financial impacts of climate on our business, and we also
see opportunity within our industry to support the transition to a
greener economy. Second, we adopt a double-materiality lens
thatacknowledges the impacts of our business activities on the
environment, and the potential financial consequences of climate
riskon our business model.
Mapping the potential impacts
ofclimate-related
risksandopportunities
With the support of our specialist
consultants, the Group undertook a
climate risk mapping exercise to identify
and assess the potential exposure of the
business to both climate-related risks
and opportunities. We evaluated
recognised registers of possible climate
risks to develop our own internal
register of 12 climate-related issues that
could impact the Group over a relatively
near-term time horizon, categorised
across four categories including:
Physical risks:
Chronic and acute disruptions due to
the increased intensity and frequency
of extreme weather events, changes
in temperature, and other
consequences of climate change.
Liability risks:
Growing possibility of litigation
resulting from action or inaction in
response to climate-related risks
perpetuated by the Group’s activities.
Transition risks:
The policy, technological and market
shifts that may occur as the world
endeavours to move towards a low
carbon economy.
Transboundary risks:
Systemic consequences of the
climatecrisis that transcend national
boundaries and are the culmination of
several intersecting climate-related risks.
Strategic report
41
CMC Markets plc
Annual Report and Financial Statements 2022
New competitive pressures
Transition risk
Description
Companies around the globe are experiencing pressure from
customers, investors and regulators to be more sustainable. The
finance sector has seen unprecedented growth in new platforms,
tools and products to meet demand for investment products that
align with the goals of the Paris Agreement. If the Group fails to
respond to this trend, we may experience decreased demand and
the loss of customers to new innovations in green finance.
Potential financial impacts
Revenue: Revenues decline as client expectations evolve to favour
investment platforms and products oriented towards the green economy.
Cost of capital: Equity investors seek competitors innovating in the
green finance space.
Reputation
Transition risk
Description
Clients, investors, employees and communities increasingly
expectto see more definitive action on climate from the
privatesector. Should the Group fail to articulate and act on a
strategy todecarbonise, we may increasingly face action from
keystakeholders.
Potential financial impacts
Cost of capital: Equity investors seek more climate-friendly
businesses for their portfolio.
Revenue: Customers leave the platform for more environmentally
friendly competitors.
OpEx: Talent attraction and retention objectives are impeded due to
employee objections to the organisation’s climate practices.
Global cost of borrowing
Transboundary risk
Description
The cost of borrowing may increase for companies as lenders shift
from a "carrot" to a "stick" approach in assessing ESG-related
criteria in the provisions of loans, including climate performance.
This could impact the cost of the Group’s committed facility of
£55 million.
Potential financial impacts
Cost of capital: Debt and credit facilities become more expensive,
impeding business development.
Floods and storms
Physical risk
Description
Floods, storms and extreme weather can cause damage to
buildings and other physical assets, disrupting business continuity.
Key geographies for the Group are already experiencing extreme
weather events like these that have been linked to climate change.
Potential financial impacts
Asset book value: Due to damages caused by extreme weather events.
Revenue: Disruption of business activity should key equipment be
forced out of commission.
Strategy and risk management continued
Across these four categories, we assessed the magnitude and
likelihood of each issue to determine which topics present the
greatest threat or opportunity to the Group in terms of the potential
financial impact on our key resources and relationships such as our
people, IT hardware, stakeholder relationships and intellectual
property. Using the International <IR> Framework’s thinking on
capitals as stores of value, where possible we assigned quantitative
values to our core capitals. This helped us to contextualise the
financial value that could be exposed to climate-related impacts.
Transition risk emerged as the risk category where the Group’s strategy
has the greatest exposure, particularly in relation to key stakeholder
relationships such as our people, clients and investors. We highlight
the top four risks we have identified as most relevant to ourbusiness
over a short to mid-term time horizon in the table shown here.
The results from this exercise were plotted into a series of internal
matrices to illustrate trends in the exposure of our categories and
capitals. Although the Group’s overall exposure was found to be
relatively low in the near term, moving forward we will use the initial
TCFD continued
Strategic report
42
CMC Markets plc
Annual Report and Financial Statements 2022
findings from the risk mapping exercise to refine our methodology
further, to probe deeper into potential impacts and to monitor the
continued exposure of our strategy, assets and markets to
climate-related risks and opportunities.
Undertaking early-stage scenario analysis
We intend to undertake further scenario analysis to evaluate the
resilience of the business and to gain better insight into the potential
impacts on our assets, markets and strategy over longer time horizons.
We initially started this exercise with three internal scenario narratives
as part of this process, building on our work to define our key
climate-related risks and opportunities. The first describes a
disorderly energy transition to net zero, the second envisions an
orderly pathway to net zero and the third assumes that only current
climate policies are continued.
Against the latter scenario, we have begun to quantify the impacts of
physical climate change on our business by evaluating historical
trading activity data in instances of extreme heat and storms, using
recent examples in regions where we have a presence, for example
flooding in Germany, heatwaves in the UK and bushfires in Australia
over the past decade, as proxies. No meaningful trends in the data
have yet been determined, but we will continue torefine our
approach and look forward to sharing a more comprehensive report
on the findings from our analysis in due course.
Embracing climate-related opportunities
Many of the themes that arise from mapping our climate-related risks
also manifest as strategic opportunities. We are currently in the
process of understanding how best to address new competitive
pressures and to enhance our reputation with stakeholders through the
development of new products and enhancements to our platforms.
As we grow the non-leveraged side of our business, we expect to see
rising demand from our retail clients for more tools and better information
related to the climate-related impacts of their investments. While we
are excited to explore what role we might be able to play in the realm
of green finance, we are also conscious of growing regulatory pressure
to ensure green financial products are impactful and transparent. We
will keep this at the forefront of our decision making to ensure any
claims we make about our products and platforms are authentic.
Read more about how we are thinking about adopting
asustainability lens to product innovation on page 31
Setting a clear strategy to address our climate impacts
CMC Markets is also conscious that it has a role to play
inmitigatingits impacts on the climate. Our climate change
workstreams are informing and supporting our ambitions to better
understand our environmental impacts and how we can contribute
toa low carbon future.
Within the context of our "Our Tomorrow" strategy, we are in the
process of setting out a roadmap to determine our internal
decarbonisation strategy. We look forward to sharing greater details
about our approach and future targets by the next reporting cycle.
Learn more about our current initiatives to
reduceouremissions on page 37
Adopting an enhanced approach to risk management
We aim to integrate stronger consideration for sustainability issues
into our risk management in alignment with our new sustainability
strategy, "Our Tomorrow". This includes consideration for climate
change and the potential climate-related impacts identified through
the risk mapping exercise described earlier in this disclosure. As we
progress in the adoption of an ERM approach, we will seek to streamline
our register of 12 climate-related risks into our refreshed risk
management approach. At present, there are no plans to introduce
climate change as a principal risk to the business, given early
assessments that the risks are low to the Group. However, we will
continue to enhance our understanding of how climate-related
impacts interact with existing risks such as regulatory and
compliance risk.
Learn more about our Group-level approach
toriskmanagement on page 50
Metrics and targets
Our approach to climate risk mapping assigns a rating to each risk
according to likelihood and magnitude based on qualitative observations.
As such, we do not currently have a formal quantitative methodology
to measure our climate-related risks or opportunities. However, as we
build our capacity to measure and monitor carbon emissions across
our operations and look to embed climate risks into our new ERM
framework, we will also evaluate which formal metrics and indicators
will best help us to monitor our progress.
We will also look to set dedicated KPIs and targets against any
initiatives to realise climate-related opportunities. In terms of
mitigating our impacts on the climate, we look forward to introducing
more granular emissions targets aligned with the Paris Agreement
going forward.
We currently disclose our entity-level emissions on page 38. This
includes our Scope 1 and 2 emissions, but currently excludes Scope 3.
We recognise that Scope 3 emission reporting is becoming a higher
priority for our stakeholders and plan to consider enhancing our
disclosures as our strategy develops.
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CMC Markets plc
Annual Report and Financial Statements 2022
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CMC Markets plc
Annual Report and Financial Statements 2022
Financial review
Continued investment to grow
and diversify the business
“ The Group performed very well throughout the year and
continues to be in a strong financial position from a liquidity
and capital standpoint. This provides us with the confidence
that the Group can both capitalise on future opportunities
as they arise and continue to invest in our technology.”
Euan Marshall
Chief Financial Officer
2022 saw a significant decrease in market
activity, particularly during H1, from the
exceptional levels seen during 2021. Whilst
thishas resulted in lower net operating income
for the Group, we are inastronger position
when comparing to pre-pandemic performance.
This has been driven primarily by the material
increase in sustained monthly active leveraged
and non-leveraged clients when compared
to2020.
Decreased market volatility, and the resulting lower client trading
activity across both the leveraged and non-leveraged businesses,
combined with lower client income retention compared to the
exceptional levels seen in 2021, resulted in 2022 net operating
incomeof £281.9 million. This, combined with a moderate increase
inoperating expenses from investment in technology and product,
resulted in a statutory profit before tax of £92.1 million (2021:
£224.0million). Whilst net operating income and profit before tax
havereduced from 2021, the performance of the Group in 2022
wasstrong compared to pre-COVID-19 levels and is a record net
operating income year when excluding the COVID-19 influenced 2021
results. The overall health of the Group remains exceptionally strong,
with the step-change in active client numbers achieved in 2021
continuing in both our leveraged and non-leveraged businesses
throughout the year, combined with client AuM and AuA reaching
record highs, providing a solid base of future profitability and growth
for the Group.
The cohort of clients onboarded during the pandemic displays similar
characteristics, including quality and tenure, to those of prior client
cohorts, giving the Group confidence of retaining this ongoing stronger
and larger client base into the medium term. This, in conjunction with
the agreed acquisition of ANZ Bank Share Investing clients in the
Australian non-leveraged business, the launch of our CMC Invest
platform in the UK and the ongoing focus on improving our institutional
product offering, sees the Group exiting the year with significant
prospects for diversified growth.
Whilst total capital resources decreased to £311.5 million (2021:
£323.1million) as a result of the increase in intangible assets and
proposed capital distributions to shareholders, the Group OFR
ratioremains strong at 489%. Our total available liquidity increased
to£469.0 million (2021: £456.1 million) primarily due to cash generated
from operations. This healthy capital and liquidity position is reflected
in the launch of the £30 million share buyback programme in March
2022. The buyback programme should be considered as part of a
normal balanced approach to shareholder returns alongside the
current dividend policy, which is unchanged.
The ambitious digital transformation and technology investment
planwe embarked upon during 2021 has made significant progress
throughout 2022 with more frequent product enhancements along
with the new CMC Invest platform launched in the UK in April 2022.
Our non-leveraged business presents a significant growth opportunity
for the Group, and we will continue to invest in the product and
platform, both in the UK and in other geographies, over the coming
years. In addition, there are still significant areas of opportunity for
optimisation and enhancement within the leveraged business,
particularly for our institutional business, and investment will
continuein technology and product throughout 2023.
Strategic report
45
CMC Markets plc
Annual Report and Financial Statements 2022
Summary Income Statement

£m

£m
Change
£m
Change
%
Net operating income . . (.) (%)
Operating expenses (.) (.) (.) (%)
Operating profit . . (.) (%)
Finance costs (.) (.) (.) (%)
Profit before tax . . (.) (%)
Profit before tax margin
1
.% .% (.%) —
Profit after tax . . (.) (%)

Pence

Pence
Variance
Pence
Variance
%
Basic EPS . . (.) (%)
Ordinary dividend per share
. . (.) (%)
1 Statutory profit before tax as a percentage of net operating income.
2 Ordinary dividends paid/proposed relating to the financial year, based on issued share capital as at 31 March of each financial year.
Summary
Net operating income for the year decreased by £127.9 million (31%) to £281.9 million, with a decrease in market volatility, particularly in H1,
compared to exceptional levels seen in 2021 resulting in lower client trading activity and lower client income retention throughout the period.
This lower volatility and trading activity impacted both the leveraged and non-leveraged businesses. The net operating income represents a
record for the Group when excluding the COVID-19 impacted 2021.
Total operating expenses have increased by £3.6 million (2%) to £187.6 million, with the main driver being investments in our strategic initiatives
resulting in higher personnel, professional fees and technology costs. These increases have been partially offset by lower sales-related costs.
Profit before tax decreased to £92.1 million from £224.0 million and PBT margin decreased to 32.7% from 54.7%, reflecting the high level of
operational gearing in the business.
Net operating income overview

£m

£m Change
Leveraged net trading revenue . . (%)
Non-leveraged net trading revenue (excl. interest income) . . (%)
Net trading revenue
1
. . (%)
Interest income . . %
Other operating income . . (%)
Net operating income . . (%)
1 CFD and spread bet gross client income net of rebates, levies and risk management gains or losses and stockbroking revenue net of rebates.
Leveraged net trading revenue decreased by £119.6 million (34%) driven by decreases in both gross client income and client income retention.
The reduction in gross client income was a result of the significant volatility in the market in 2021 resulting in exceptionally high client trading
activity, with the majority of 2022 returning to more normalised levels. Client income retention was lower during the period at 80% (2021: 104%)
as a result of a change in the mix of asset classes traded by clients and lower natural hedging of flow within indices. This resulted in revenue per
active client (“RPC”) decreasing by £985 (22%) to £3,575.
Leveraged active client numbers decreased by 16% in comparison to 2021; however, monthly active clients remain significantly above
pre-COVID-19 levels, demonstrating the structural shift in the Group’s client base.
Non-leveraged net trading revenue was 12% lower at £48.0 million (2021: £54.8 million), with decreased client trading activity during the less
volatile market environment offset by an active client base which was 6% larger than 2021 and 36% higher than 2020.
Strategic report
46
CMC Markets plc
Annual Report and Financial Statements 2022
B2B and B2C net trading revenue

£m

£m % change
BC BB Total BC BB Total BC BB Total
Leveraged net trading revenue . . . . . . (%) % (%)
Non-leveraged net trading revenue . . . . . . (%) (%) (%)
Net trading revenue . . . . . . (%) (%) (%)
The lower trading activity across the Group was reflected within both our B2C and B2B businesses, with year-on-year decreases in net trading
revenue of 34% and 12% respectively. Whilst the leveraged B2C business saw the largest fall in revenue of 40%, the non-leveraged business
experienced a comparatively lower fall of 8% and the leveraged B2B business revenue grew 5%, demonstrating the progress the Group
continues to make in its strategic direction.
Regional performance overview: leveraged
  % change
Net
trading
revenue
£m
Gross
client
income
£m
Active
clients
RPC
£
Net
trading
revenue
£m
Gross
client
income
£m
Active
clients
RPC
£
Net
trading
revenue
Gross
client
income
Active
clients RPC
UK . . , , . . , , (%) (%) (%) (%)
Europe . . , , . . , , (%) (%) (%) (%)
UK &
Europe . . , , . . , , (%) (%) (%) (%)
APAC &
Canada . . , , . . , , (%) (%) (%) (%)
Total . . , , . . , , (%) (%) (%) (%)
1 Spreads, financing and commissions on CFD client trades.
Financial review continued
Leveraged
UK and Europe
Gross client income fell by £18.7 million (11%) and RPC decreased by
£803 (17%), with active clients decreasing by 21%.
UK
The number of active clients in the region decreased by 19% to 16,264
(2021: 20,077), in turn driving a gross client income reduction of 13%
against the prior year to £107.1 million (2021: £123.2 million). The
decreases were predominantly driven by the B2C business.
Europe
Europe comprises offices in Austria, Germany, Norway, Poland
andSpain. Gross client income decreased 5% to £51.1 million
(2021:£53.7 million), driven by reduced client trading in the less
volatile market environment. RPC also fell by 13% to £2,778
(2021:£3,197). Thenumber of active clients decreased 22% to 15,747
(2021:20,280).
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. Gross client income
decreased by 18% to £130.3 million (2021: £158.4 million), primarily
driven by decreased active clients and lower market activity
throughout the year. Active clients were down 11% to 32,232
(2021:36,234). Performance in the region was impacted by the
regulatory intervention by ASIC in Australia at the start of the
year,aswell as the wider decrease in market volatility.
Non-leveraged
The non-leveraged Australian business delivered a very strong top
line performance, continuing the momentum from a record year in
2021. While revenue fell 12% to £48.0 million (2021: £54.8 million) due
tomore normalised market conditions, the underlying key health
metrics of the business continue to achieve new heights. The
business finished 2022 with record AuA, up 16% to AUD$80.2 billion
(2021: AUD$69.4 billion), while active clients continued to increase,
up6% to 246,120 (2021: 232,053).
Interest income
Global interest rates remained at historically low levels despite
moderate increases in Q4 2022, with interest income remaining
broadly flat, up 12% to £0.8 million (2021: £0.7 million). The majority
ofthe Group’s interest income is earned through our segregated
client deposits in our UK, Australia, New Zealand and
stockbrokingsubsidiaries.
Strategic report
47
CMC Markets plc
Annual Report and Financial Statements 2022
Expenses
Total costs increased by £4.0 million (2%) to £189.8 million.

£m

£m
Net staff costs – fixed (excluding variable
remuneration) . .
IT costs . .
Marketing costs . .
Sales-related costs . .
Premises costs . .
Legal and professional fees . .
Regulatory fees . .
Depreciation and amortisation . .
Irrecoverable sales tax . .
Other . .
Operating expenses excluding variable
remuneration . .
Variable remuneration . .
Operating expenses including variable
remuneration . .
Interest . .
Total costs . .
Net staff costs
Net staff costs including variable remuneration increased £6.2 million
(8%) to £84.9 million following significant investment across the business,
particularly within technology, marketing and product functions, to
support the delivery of strategic projects. Variable remuneration
decreased due to the Group performance resulting in lower
performance-related pay.

£m

£m
Gross staff costs excluding variable
remuneration . .
Performance-related pay . .
Share-based payments (note 31) . .
Total employee costs . .
Contract staff costs . .
Net capitalisation (.) (.)
Net staff costs . .
Depreciation and amortisation costs
Depreciation and amortisation have increased by £1.7 million (15%)
to£12.9 million, primarily due to the depreciation of additional office
space in London and the amortisation of staff development costs
which were capitalised at the end of the previous financial year.
Irrecoverable sales tax
Irrecoverable sales tax costs decreased £3.7 million (57%) to
£2.8million as a result of a one-off tax recovery and ongoing
lowerirrecoverable VAT in the UK.
Other expenses
Sales-related costs decreased by £3.0 million (51%), primarily
drivenby the release of provisions made in the prior year for
clientcompensation.
Legal and professional fees increased £1.4 million (18%), primarily
driven by external consultants who have been engaged to advise on
the delivery of various strategic projects during the year.
Premises costs decreased £0.5 million (12%) due to the rental of temporary
additional office space within London in 2021. This was replaced with
permanent space at the start of the financial year to accommodate
growth in headcount.
Other costs decreased due to a number of factors, with the main
drivers being lower bad debt and higher FX gains on balance sheet
revaluation, offset by higher bank charges.
Taxation
The effective tax rate for 2022 was 21.9%, up from the 2021 effective
tax rate, which was 20.5%. The effective tax rate has increased in the
period due as a result of a higher proportion of the Group’s taxable
profits earned outside of the UK, and so taxed at a higher corporate
tax rate than the UK’s 19%, notably Australia at 30%.
Profit after tax for the year
The decrease in profit after tax for the year of £106.1 million (60%) was
due to lower net operating income and the operational gearing in
thebusiness.
Dividend
Dividends of £72.6 million were paid during the year (2021: £62.1 million),
with £62.4 million relating to a final dividend for the prior year paid
inSeptember 2021, and a £10.2 million interim dividend paid in
December 2021 relating to current year performance. The Group
hasproposed a final ordinary dividend of 8.88 pence per share (2021:
21.43 pence per share).
Non-statutory summary Group Balance Sheet

£m

£m
Intangible assets . .
Property, plant and equipment . .
Net lease liability (.) (.)
Fixed assets . .
Cash and cash equivalents . .
Amounts due from brokers . .
Financial investments . .
Other assets . —
Net derivative financial instruments — .
Title transfer funds (.) (.)
Own funds . .
Working capital (.) .
Tax (payable)/receivable (.) .
Deferred tax net asset . .
Net assets . .
The table above is a non-statutory view of the Group Balance Sheet and line names
do not necessarily have their statutory meanings. A reconciliation to the primary
statements can be found on page 164.
Strategic report
48
CMC Markets plc
Annual Report and Financial Statements 2022
Financial review continued
Fixed assets
Intangible assets increased by £20.1 million to £30.4 million (2021:
£10.3million) as a result of the transaction with ANZ Bank to transition
approximately 500,000 Share Investing clients to CMC (AUD$25million)
in addition to the capitalisation of internal resource dedicated to the
development of new products and functionality in2022.
Net lease liability decreased by £1.7 million during the year due to the
net length of lease contracts being lower at the end of 2022 than the
prior year.
Own funds
Amounts due from brokers relate to cash held at brokers either for
initial margin or balances in excess of this for cash management
purposes. The reduced client trading exposures throughout the year,
particularly in equities, resulted in decreases in holdings at brokers for
hedging purposes.
Cash and cash equivalents have increased during the year as a result
of the Group’s operating performance, in addition to the Group
holding less cash at our brokers for margining purposes resulting in
associated increases in own cash.
Financial investments mainly relate to eligible assets held by the
Group as core liquid assets used to meet Group regulatory
liquidityrequirements.
Title transfer funds increased by £13.4 million, reflecting the high levels
of account funding by a small population of mainly institutional clients.
Working capital
The decrease year on year is primarily as a result of the increased
market volatility in Q4 of the prior year, which significantly increased
the value of the stockbroking receivables yet to settle at the prior
year end.
Tax payable
Tax moved to a payable position due to underpayments in Australia.
Deferred tax net asset
Deferred net tax assets decreased as a result of accelerated research
and development tax deductions in the UK and Australia.
Impact of climate risk
We have assessed the impact of climate risk on our balance sheet
and have concluded that there is no material impact on the Financial
Statements for the year ended 31 March 2022.
Regulatory capital resources
For the year under review, the Group was supervised on a
consolidated basis by the FCA. The Group maintained a capital
surplus over the regulatory requirement at all times.
For the period to 31 December 2021, the Group and its UK regulated
subsidiaries were subject to CRD IV, comprising the Capital
Requirements Directive (“CRD”) and the Capital Requirements
Regulation (“CRR”).
From 1 January 2022 the Group and its UK regulated subsidiaries
became subject to the Investment Firm Prudential Regime (“IFPR”)
astransposed into the FCA’s MIFIDPRU handbook. A new legislative
package, the Investment Firm Regulation and Directive (“IFR/IFD”), was
also introduced in Europe that became directly applicable to Member
States from 26 June 2021. Both regimes have been designed to be
more tailored towards investment firms and have led to changes in
the treatment of capital, remuneration requirements, governance and
transparency provisions. The UK played an instrumental role in the
introduction of IFR/IFD and the IFPR has been designed to achieve
similar outcomes, albeit tailored where necessary to reflect the
structure of the UK market and how it operates.
The Group and its UK regulated subsidiaries fall into scope of the
IFPR, with the Group’s German subsidiary, CMC Markets Germany
GmbH, subject to the provisions of IFR/IFD.
On a like for like basis, the Group’s total capital resources decreased
to £311.5 million (2021: £323.1 million) with retained earnings for the
year being partly offset by the interim and proposed final dividend
distribution. In accordance with the IFPR all deferred tax assets must
now be fully deducted from core equity Tier 1 capital.
At 31 March 2022 the Group had a total OFR ratio of 489% in
comparison to a capital ratio of 20.5% in 2021 (as calculated under the
CRR). The change in capital treatment under the IFPR has resulted in
revisions to the calculation of capital requirements and monitoring
metrics. In essence, the Group has a surplus of nearly 5 times the
regulatory minimum in comparison to 2021 when it was just over
2.5times the regulatory minimum in accordance with the CRR rules.
This is attributable to changes in methodology but also a decrease in
market risk exposure.
The following table summarises the Group’s capital adequacy position
at the year end. The Group’s approach to capital management is
described in note 30 to the Financial Statements.

£m

£m
Core equity Tier 1 capital (“CET1 capital”) . .
Less: intangibles and net deferred tax assets
2
(.) (.)
Total capital resources after relevant
deductions . .
Own funds requirements (“OFR”)
3
. .
Total OFR ratio (%) % %
1 Total audited capital resources as at the end of the financial year of £370.4 million,
less proposeddividends.
2 In accordance with the IFPR, all deferred tax assets must be fully deducted from
CET1 capital. Deferred tax assets are the net of assets and liabilities shown in note 14.
3 The minimum capital requirement in accordance with MIFIDPRU 4.3.
4 The OFR ratio represents CET1 capital as a percentage of OFR.
Strategic report
49
CMC Markets plc
Annual Report and Financial Statements 2022
Liquidity
The Group has access to the following sources of liquidity that make
up total available liquidity:
• Own funds: The primary source of liquidity for the Group. It
represents the funds that the business has generated historically,
including any unrealised gains/losses on open hedging positions.
Allcash held on behalf of segregated clients is excluded. Own funds
consist mainly of cash and cash equivalents. They also include
investments in UK government securities, of which the majority are
held to meet the Group’s regulatory liquidity requirements.
• Title transfer funds (“TTFs”): This represents funds received from
professional clients and eligible counterparties (as defined in the
FCA Handbook) that are held under a title transfer collateral
agreement (“TTCA”), a means by which a professional client or
eligible counterparty may agree that full ownership of such funds is
unconditionally transferred to the Group. The Group does not
require clients to sign a TTCA in order to be treated as a professional
client and as a result their funds remain segregated. The Group
considers these funds as an ancillary source of liquidity and places
no reliance on them for its stability.
• Available committed facility (off-balance sheet liquidity): The Group
has access to a facility of up to £55.0 million (2021: £55.0 million)
inorder to fund any potential fluctuations in margins required to
beposted at brokers to support the risk management strategy.
Thefacility consists of a one-year term facility of £27.5 million
(2021: £27.5 million) and a three-year term facility of £27.5 million
(2021: £27.5 million). The maximum amount of the facility available at
any one time is dependent upon the initial margin requirements at
brokers and margin received from clients. There was no drawdown
on the facility at 31 March 2022 (2021: £nil).
The Group’s use of total available liquidity resources consists of:
• Blocked cash: Amounts held to meet the requirements of local
regulators and exchanges, in addition to amounts held at overseas
subsidiaries in excess of local segregated client requirements to
meet potential future client requirements. Cash committed to the
purchase of shares within the current buyback programme is
alsoclassified as blocked cash. This was £28.0 million at 31 March
2022 (2021: £nil).
• Initial margin requirement at broker: The total GBP equivalent initial
margin required by prime brokers to cover the Group’s hedge
derivative and cryptocurrency positions.
Own funds have decreased slightly to £369.9 million (2021: £370.4 million).
Own funds include short-term financial investments, amounts due
from brokers and amounts receivable/payable on the Group’s
derivative financial instruments. For more details refer to note 29
ofthe Financial Statements.

£m

£m
Own funds . .
Title transfer funds . .
Available committedfacility . .
Total available liquidity . .
Less: blocked cash (.) (.)
Less: initial margin requirement at broker (.) (.)
Net available liquidity . .
Of which: held as liquid asset requirement . .
Client money
Total segregated client money held by the Group for leveraged
clients was £546.6 million at 31 March 2021 (2021: £549.4 million).
Client money represents the capacity for our clients to trade and
offers an underlying indication of the health of our client base.
Client money governance
The Group segregates all money held by it on behalf of clients
excluding a small number of large clients which have entered a TTCA
with the firm. This is in accordance with or exceeding applicable client
money regulations in countries in which it operates. The majority of
client money requirements fall under the Client Assets Sourcebook
(“CASS”) rules of the FCA in the UK, BaFin in Germany and ASIC in
Australia. All segregated client funds are held in dedicated client
money bank accounts with major banks that meet strict internal
criteria and are held separately from the Group’s own money.
The Group has comprehensive client money processes and
procedures in place to ensure client money is identified and
protected at the earliest possible point after receipt as well as
governance structures which ensure such activities are effective
inprotecting client money. The Group’s governance structure is
explained further on pages 60 to 68.
Euan Marshall
Chief Financial Officer
8 June 2022
Risk management
Effective risk
management
Effective risk management is crucial to the
Group’s ongoing success and is embedded
across the organisation, ensuring key risks are
identified and effectively managed.
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, effective risk management ensures
that risks are managed to an acceptable level. The Board, through its
Group Risk Committee, is ultimately responsible for the implementation
of an appropriate risk strategy, which has been achieved using an
integrated Risk Management Framework. The main areas covered by the
Risk Management Framework are:
• identifying, evaluating and monitoring the principal risks to which
the Group is exposed;
• setting the risk appetite of the Board in order to achieve its
strategic objectives; and
• establishing and maintaining governance, policies, systems and
controls to ensure the Group is operating within the stated
riskappetite.
The Board has put in place a governance structure which is appropriate
for the operations of an online retail financial services group and is
aligned to the delivery of the Group’s strategic objectives including its
diversification into non-leveraged businesses. The structure is regularly
reviewed and monitored and any changes are subject to Board
approval. Furthermore, management regularly considers updates to the
processes and procedures to embed good corporate governance
throughout the Group. As part of the Group Risk Management
Framework, the business is subject to independent assurance by
internal audit (third line of defence). The use of independent
compliance monitoring, risk reviews (second line of defence) and risk
and control self-assessments (first line of defence) provides additional
support to the integrated assurance programme and ensures that the
Group is effectively identifying, managing and reporting its risks. The
Group continues to make enhancements to its Risk Management
Framework and governance to provide a more structured approach to
identifying and managing the risks to which it is exposed to ensure the
Group’s risk management is commensurate to its current operations
alongside its aspirations and diversification. The Board annually
undertakes a robust assessment of the principal risks facing the Group.
The Group has always had an understanding of the importance of the
importance of ESG, evidenced by governance review conducted by
Independent Audit in respect to Governance and, in turn, the Group is
in the process of evolving its framework to a more pure adoption of
Enterprise Risk Management framework to support the diversification
of its business whilst maintaining its level of oversight and control.
Top and emerging risks are those that would threaten the Group's
business model, future performance, solvency or liquidity. They form
either a subset ofone or multiple principal risks, their management is
set out in note 30 to the Financial Statements and they are:
• COVID-19: The primary risk faced was from a resilience perspective;
the Group has put significant measures in place which have proven
to be robust and continues to actively monitor the situation.
• Climate change risk: A summary of the process undertaken to assess
the risks of climate change on the Group is detailed within pages 40
to 43, with the conclusion that they are not material.
• People risk: changing expectations regarding the office working
environment and flexible working in combination with skills
shortages have given rise to heightened staff acquisition and
retention risk. Numerous measures have been put in place during
the year to continue to attract and retain talent including changes
to policies and remuneration reviews. The risk continues to be
heightened.
• Market risk management: The Group’s risk management is
constantly reviewed to ensure it is optimised and as efficient as
possible. For more information on market risk management and
mitigation see page 53.
Further information on the structure and workings of the Board and
Management Committees is included in the Corporate governance
report on pages 60 to 68.
1
Board
2
Executive Committees
Execution of Board’s risk strategy including riskappetite.
3
Risk and control functions
Comprise compliance, financial crime, financial risk
(including liquidity risk management) and operational risk.
In addition, legal, finance, data privacy and security
functions are also considered as part of the control
functions within the Group.
4
Business functions
Identify, own, assess and manage risks. Design, implement
and monitor suitable controls, issue management, KRI and
risk appetite reporting.
2
3
4
1
Strategic report
50
CMC Markets plc
Annual Report and Financial Statements 2022
Principal risks
Principal risks
Business and strategic risks
Acquisitions and disposals risk
Description
The risk that mergers,
acquisitions, disposals or other
partnership arrangements made
by the Group do not achieve the
stated strategic objectives or
that they give rise to ongoing or
previously unidentified liabilities.
Management and mitigation
• Robust corporate governance structure including strong challenge from independent
Non-ExecutiveDirectors.
• Vigorous and independent due diligence process.
• Aligning and managing the businesses with Group strategy as soon as possible after acquisition.
Strategic/business modelrisk
Description
The risk of an adverse impact
resulting from the Group’s
strategic decision making as well
as failure to exploit strengths or
take opportunities. It is a risk
which may cause damage or
loss, financial or otherwise, to
the Group as a whole.
Management and mitigation
• Strong governance framework established including three independent Non-Executive Directors
andthe Chairman sitting on the Board.
• Robust governance, challenge and oversight from independent Non-Executive Directors.
• Managing the Group in line with the agreed strategy, policies and risk appetite.
Preparedness forregulatory change risk
Description
The risk that changes to
theregulatory framework the
Group operates in impact the
Group’s performance.
Such changes could result in
theGroup’s product offering
becoming less profitable, more
difficult to offer to clients, or an
outright ban on the product
offering in oneor more of
thecountries where the
Groupoperates.
Management and mitigation
• Active dialogue with regulators and industry bodies.
• Monitoring of market and regulator sentiment towards the product offering.
• Monitoring by and advice from compliance department on impact of actual and possible
regulatorychange.
• A business model and proprietary technology that are responsive to changes in
regulatoryrequirements.
Reputational risk
Description
The risk of damage to the
Group’s brand or standing with
shareholders, regulators, existing
and potential clients, the industry
and the public at large.
Management and mitigation
• The Group is conservative in its approach to reputational risk and operates robust controls to ensure
significant risks to its brand and standing are appropriately mitigated.
• Examples include:
• proactive engagement with the Group’s regulators and active participation with trade and industry
bodies and positive development of media relations with strictly controlled media contact; and
• systems and controls to ensure we continue to offer a good service to clients and quick and
effective response to address any potential issues.
Strategic report
51
CMC Markets plc
Annual Report and Financial Statements 2022
Financial risks
Credit and counterparty risks
Description
The risk of losses arising from a
counterparty failing to meet its
obligations as they fall due.
Management and mitigation
Client counterparty risk
The Group’s management of client counterparty risk is significantly aided by the automated liquidation
functionality. This is where the client positions are reduced should the total equity of the account fall
below a pre-defined percentage of the required margin for the portfolio held.
Other platform functionality mitigates risk further:
• tiered margin requires clients to hold more collateral against bigger or higher risk positions;
• mobile phone access allowing clients to manage their portfolios on the move;
• guaranteed stop loss orders allow clients to remove their chance of debt from their position(s); and
• position limits can be implemented on an instrument and client level. The instrument level enables
the Group to control the total exposure the Group takes on in a single instrument. At a client level
this ensures that the client can only reach a pre-defined size in any one instrument.
In relevant jurisdictions, CMC offers negative balance protection to retail clients limiting the liability of
a retail investor to the funds held in their trading account.
However, after mitigations, there is a residual risk that the Group could incur losses relating to clients
(excluding negative balance protection accounts) moving into debit balances if there is a market gap.
Financial institution credit risk
Risk management is carried out by a central liquidity risk management (“LRM”) team under the
Counterparty Concentration Risk Policy.
Mitigation is achieved by:
• monitoring concentration levels to counterparties and reporting these internally/externally on a
monthly/quarterly basis; and
• monitoring the credit ratings and credit default swap (“CDS”) spreads of counterparties and
reporting internally on a weekly basis.
Insurance risks
Description
The risk that an insurance claim
by the Group is declined (in full
or in part) or there is insufficient
insurance coverage.
Management and mitigation
• Use of a reputable insurance broker which ensures cover is placed with financially secure insurers.
• Comprehensive levels of cover maintained.
• Rigorous claim management procedures are in place with the broker.
• Full engagement with relevant business areas regarding risk and coverage requirements and related
disclosure to brokers and insurers.
The Board’s appetite for uninsured risk is low and as a result the Group has put in place established
comprehensive levels of insurance cover.
Tax and financial reporting
Description
The risk that financial, statutory
or regulatory reports including
VAT and similar taxes are
submitted late, incomplete or
areinaccurate.
Management and mitigation
• Robust process of checking and oversight in place to ensureaccuracy.
• Knowledgeable and experienced staff undertake and overview the relevant processes.
Principal risks continued
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Annual Report and Financial Statements 2022
Liquidity risk
Description
The risk that there is insufficient
available liquidity to meet the
liabilities of the Group as they
fall due.
Management and mitigation
• Risk management is carried out by a central LRM team under policies approved by the Board and
in line with the FCA’s Investment Firms Prudential Regime (“IFPR”). The Group utilises a combination
of liquidity forecasting and stress testing to identify any potential liquidity risks under both normal
and stressed conditions. The forecasting and stress testing fully incorporates the impact of all
liquidity regulations in force in eachjurisdiction that the Group operates in and any other
impediments to the free movement of liquidity around the Group.
Risk is mitigated by:
• the provision of timely daily, weekly and monthly liquidity reporting and real-time broker margin
requirements to enable strong management and control of liquidity resources;
• maintaining regulatory and Board-approved buffers;
• managing liquidity to a series of Board-approved metrics and keyrisk indicators;
• a committed bank facility of up to £55.0 million to meet short-term liquidity obligations to broker
counterparties in the event that the Group does not have sufficient access to its own cash; and
• a formal Contingency Funding Plan (“CFP”) is in place that is designed to aid senior management to
assess and prioritise actions in a liquidity stress scenario.
Market risk
Description
The risk that the value of our
residual portfolio will decrease
due to changes in market risk
factors. The three standard
market risk factors are price
moves, interest rates and foreign
exchange rates.
Management and mitigation
• Trading risk management monitors and manages the exposures it inherits from clients on a
real-time basis and in accordance with Board-approved appetite.
• The Group predominantly acts as a market maker in linear, highly liquid financial instruments in
which it can easily reduce market risk exposure through its prime broker (“PB”) arrangements. This
significantly reduces the Group’s revenue sensitivity to individual asset classes and instruments.
• Financial risk management runs stress scenarios on the residual portfolio, comprising a number of
single and combined Company-specific and market-wide events in order to assess potential
financial and capital adequacy impacts to ensure the Group can withstand severe moves in the risk
drivers it is exposed to.
Operational risks
Business change risk
Description
The risk that business change
projects are ineffective, fail to
deliver stated objectives, or
result in resources being
stretched to the detriment of
business-as-usual activities.
Management and mitigation
• Governance process in place for all business change programmes with Executive and Board
oversight and scrutiny.
• Key users engaged in development and testing of all key changeprogrammes.
• Significant post-implementation support, monitoring and review procedures in place for all
changeprogrammes.
• Strategic benefits and delivery of change agenda communicated to employees.
Business continuity anddisaster recoveryrisk
Description
The risk that a business
continuity event or system
failure results in a reduced ability
or inability to perform core
business activities or processes.
Management and mitigation
• Multiple data centres and systems to ensure core business activities and processes are resilient to
individual failures.
• Remote access systems to enable staff to work from home or other locations inthe event of a
disaster recovery or business continuity requirement.
• Periodic testing of business continuity processes and disasterrecovery.
• Robust incident management processes and policies to ensure prompt response to significant
systems failures or interruptions.
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CMC Markets plc
Annual Report and Financial Statements 2022
Principal risks continued
Operational risks continued
Financial crimerisk
Description
The risk that the Group is not
committed to combatting
financial crime and ensuring that
our platform and products are
not used for the purpose of
money laundering, sanctions
evasion or terrorism financing.
Management and mitigation
Adherence with applicable laws and regulations regarding anti-money laundering (“AML”), counter
terrorism financing (“CTF”), sanctions and anti-bribery and corruption is mandatory and fundamental to
our AML/CTF framework. We have strict and transparent standards and we continuously strengthen our
processes to ensure compliance with applicable laws and regulations. CMC Markets reserves the right
to reject any client, payment, or business that is not consistent with our risk appetite. This risk is further
mitigated by:
• establishing and maintaining a risk-based approach towards assessing and managing the money
laundering and terrorist financing risks to the Group;
• establishing and maintaining risk-based know your customer (“KYC”) procedures, including
enhanced due diligence (“EDD”) for those customers presenting higher risk, such as politically
exposed persons (“PEPs”);
• establishing and maintaining risk-based systems for surveillance and procedures to monitor
ongoing customer activity;
• procedures for reporting suspicious activity internally and to the relevant law enforcement
authorities or regulators as appropriate;
• maintenance of appropriate records for the minimum prescribed record keeping periods;
• training and awareness for all employees;
• provision of appropriate MI and reporting to senior management on the Group’s compliance with
the requirements; and
• oversight of Group entities for financial crime in line with the Group AML/CTF oversight framework.
Information and data security risk
Description
The risk of unauthorised access
to, or external disclosure of,
client or Company information,
including those caused by
cyberattacks.
Management and mitigation
• Dedicated information security and data protection expertise within the Group.
• Technical and procedural controls implemented to minimise the occurrence or impact of
information security and data protectionbreaches.
• Access to information and systems only provided on a “need-to-know” and “least privilege” basis
consistent with the user’s role and also requires the appropriate authorisation.
• Regular system access reviews implemented across the business.
Information technology and infrastructure risk
Description
The risk of loss of technology
services due to loss of data,
system or data centre or failure
of a third party to restore
services in a timely manner.
Management and mitigation
• Continuous investment in increased functionality, capacity and responsiveness of systems and
infrastructure, including investment in software that monitors and assists in the detection and
prevention of cyber attacks.
• Software design methodologies, project management and testing regimes to minimise
implementation and operational risks.
• Constant monitoring of systems performance and, in the event of any operational issues, changes
to processes are implemented to mitigate future concerns.
• Operation of resilient data centres to support each platform (twoin the UK to support Next
Generation and two in Australia to support stockbroking).
• Systems and data centres designed for high availability and data integrity enabling continuous
service to clients in the event of individual component failure or larger system failures.
• Dedicated Support and Infrastructure teams to manage key production systems. Segregation
ofduties between Development and Production Support teams where possible to limit
development access to production systems.
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CMC Markets plc
Annual Report and Financial Statements 2022
Legal (commercial/litigation) risks
Description
The risk that disputes deteriorate
into litigation.
Management and mitigation
• Compliance with legal and regulatory requirements including relevant codes of practice.
• Early engagement with legal advisers and other risk managers.
• Appropriately managed complaints which have a legal/litigious aspect.
• An early assessment of the impact and implementation of changes in the law.
Operations (processing) risk
Description
The risk that the design or
execution of business processes
is inadequate or fails to deliver
an expected level of service
andprotection to client or
Company assets.
Management and mitigation
• Investment in system development and upgrades to improve process automation.
• Enhanced staff training and oversight in key business processingareas.
• Monitoring and robust analysis of errors and losses and underlying causes.
Procurement and outsourcing risk
Description
The risk that third-party
organisations inadequately
perform, or fail to provide or
perform the outsourced
activities or contractual
obligations to the standards
required by the Group.
Management and mitigation
• Responsibility for procurement, vendor management and general outsourcing owned by the Chief
Financial Officer under the Senior Managers and Certification Regime, with the accountability to
ensure compliance to the Group procurement process and completion of key activities, based on
the risk profile of the service required by the organisation.
• Outsourcing only employed where there is a strategic gain in resource or experience, which is not
available in house.
• Due diligence performed on service supplier ahead of outsourcing being agreed.
• Service-level agreements in place and regular monitoring of performance undertaken.
People risk
Description
The risk of loss of key staff, having
insufficient skilled and motivated
resources available or failing to
operate people-related processes
to an appropriate standard.
Management and mitigation
• The Board has directed that the Group maintains active People, Succession and Resource Plans
forthe Group and all key individuals and teams, which will mitigate some of the risk of loss of key
persons. It will adopt policies and strategies commensurate with its objectives of:
• attracting and nurturing the best staff;
• retaining and motivating key individuals;
• managing employee-related risks;
• achieving a high level of employee engagement;
• developing personnel capabilities;
• optimising continuous professional development; and
• achieving a reputation as a good employer with an equitable remuneration policy.
Strategic report
55
CMC Markets plc
Annual Report and Financial Statements 2022
Principal risks continued
Operational risks continued
Regulatory and compliance risk
Description
The risk of regulatory sanction
or legal proceedings as a result
of failure to comply with
regulatory, statutory or fiduciary
requirements or as a result of a
defectivetransaction.
Management and mitigation
• Internal audit outsourced to an independent third-party professional services firm.
• Effective compliance oversight and advisory/technical guidance provided to the business.
• Comprehensive monitoring and surveillance programmes, policies and procedures designed
bycompliance.
• Strong regulatory relations and regulatory horizon scanning, planning and implementation.
• Controls for appointment and approval of staff holding a senior management or certified function
and annual declarations to establish ongoing fitness and propriety.
• Governance and reporting of regulatory risks through the Risk Management Committee, Group
Audit Committee and Group Risk Committee.
• Robust anti-money laundering controls, client due diligence and sanctions checking.
Conduct risk
Description
The risk that through our culture,
behaviours or practices we fail
to meet the reasonable
expectations of our customers,
shareholders or regulators.
Management and mitigation
• The Treating Customers Fairly (“TCF”) and Conduct Committee iscomprised of senior management
and subject matter experts; it convenes regularly to evaluate and challenge the TCF MI alongside
any emerging issues or incidents which could impact client fairness. It reports to the Board via the
Risk Management Committee (“RMC”) which is also charged with approving the TCFPolicy.
• Also, the Conduct, Fitness and Propriety Panel is chaired by global HR, with Deputy CEO as well as
global and regional HR and compliance membership. The Committee discusses specific conduct-
related matters, including any serious concerns raised in the TCF Committee, breaches of the
Code of Conduct, serious complaints specific to an employee or any concerns with a Certified or
Senior Manager Function.
• APAC has a Conduct Committee for the region, nominated jointly by the APAC and stockbroking
Boards. It aims to ensure a customer-centric perspective in how CMC goes about compliance
obligations and business activities to ensure we are delivering good customer outcomes. It is
chairedby the Head of HR APAC and consists of Board representatives across the region as well
asthe Head of APAC Commercial. Accordingly, governance structures, control mechanisms and
organisational culture should be sufficiently relevant, suitable and sustainable to support good
organisational conduct.
Client money segregation risk
The risk that the Group fails to
implement adequate controls and
processes to ensure that client
money is segregated in accordance
with applicable regulations.
• The Client Money and Asset Protection Committee ("CMAPC"), which reports into the RMC, is a
fundamental part oftheGroup’s client money governance and oversight procedures. The CMAPC
is chaired by the ChiefFinancial Officer, an FCA-approved person, who is responsible for
overseeing the controls andprocedures in place to protect client money.
• The Committee is comprised of senior management from across the Group which oversees
functions which impact client money. The CMAPC forms a key part of the oversight of client
money in addition to compliance and internal audit.
The Strategic report was approved by the Board on 8 June 2022.
On behalf of the Board
Euan Marshall
Chief Financial Officer
8 June 2022
Strategic report
56
CMC Markets plc
Annual Report and Financial Statements 2022
Corporate governance
57
CMC Markets plc
Annual Report and Financial Statements 2022
Corporate
governance
58 Board of Directors
60 Governance report
69 Group Audit Committee report
73 Group Risk Committee report
75 Group Nomination Committee report
78 Directors’ remuneration report
100 Directors’ report
Corporate governance
Board of Directors
The role of the Board
This section of the Annual Report and Financial Statements sets out the Group governance structure and the role of the Board of Directors.
The Board provides entrepreneurial leadership and strategic oversight in relation to the long-term, sustainable success of the Company.
TheBoard, taking account of relevant stakeholder interests, is responsible for the establishment of the Group’s purpose, values and strategy
and has oversight of implementation within necessary financial, human resources and cultural frameworks.
The Board has ultimate responsibility to prepare the Annual Report and Financial Statements and to ensure that appropriate internal controls
and risk management systems are in place in order to assess, manage and mitigate risk.
The Board delegates the in-depth review and monitoring of internal controls and risk management to the Group Audit Committee and
Group Risk Committee respectively.
The terms of reference of these Board Committees (and the Remuneration and Nomination Committees) are available on the CMC
Marketsplc Group website (https://www.cmcmarketsplc.com/investors/corporate-governance/committees/).
Committee membership
A
Group Audit Committee
R
Remuneration Committee
G
Group Risk Committee
M
Risk Management Committee
N
Nomination Committee
E
Executive Committee
Chairman
James Richards
Chairman
Lord Peter Cruddas
Chief Executive Officer
Paul Wainscott
Senior Independent Director
Appointment
1 April 2015
Committee membership
G R N
Skills and experience
James joined the Group as a Non-Executive Director
in April 2015 and was appointed as Chairman with
effect from 1January 2018 and Chair of the
Nomination Committee from 31January 2018.
He has previously held positions as Chair of the
Remuneration Committee and been a member of
the Nomination Committee, Group Risk Committee
and Group Audit Committee. James was admitted
to the roll of solicitors in England and Wales
in 1984 and in the Republic of Ireland in 2012.
James was a partner at Dillon Eustace, a law firm
specialising in financial services in Ireland (2012
to 2016). Prior to this he was a finance partner at
Travers Smith LLP for 14 years. Having occupied
various senior positions within leading law firms,
James has extensive experience in derivatives,
debt capital markets and structured finance
working with major corporates, central banks
andgovernmentalorganisations.
No external appointments
Appointment
3 June 2004
Committee membership
E
Skills and experience
Peter founded the Group and became its Chief
Executive Officer in 1989. Peter held this role until
October 2007, and again between July 2009 and
June 2010. Between 2003 and March 2013, he
also served as the Group’s Executive Chairman.
InMarch 2013, he once again became the Group’s
Chief Executive Officer and is responsible for
running theGroup on a day-to-day basis. Prior
to founding the Group, Peterwas chief dealer
and globalgroup treasury adviser atS.C.F. Equity
Services, where hewas responsible for all the
activities of a dealing room whose principal
activities were trading in futures and options in
currencies, precious metals, commodities and
spotforwards on foreign exchange and bullion.
Current external appointments
The Peter Cruddas
Foundation
Finada Limited
Member of the UK
House of Lords
Appointment
19 October 2017
Committee membership
G RA N
Skills and experience
Paul joined the Group as an independent Non-
Executive Director in October 2017 and acts as the
Group’s Senior Independent Director. Paul served
as finance director at the Peel Group for 27years
until March 2018. During his time at the Peel Group,
Paul gained wide experience at both board level
and in several different business sectors, including
real estate, transport, media andutilities.
No external appointments
Corporate governance
58
CMC Markets plc
Annual Report and Financial Statements 2022
Board of Directors
Clare Salmon
Independent Non-Executive Director
Matthew Lewis
Head of Asia Pacific & Canada
David Fineberg
Deputy Chief Executive Officer
Susanne Chishti
Independent Non-Executive Director
Sarah Ing
Independent Non-Executive Director
Euan Marshall
Chief Financial Officer
Appointment
14 September 2017
Committee membership
G RA N
Skills and experience
Sarah joined the Group as a Non-Executive
Director in September 2017. She has over 30years’
experience in accountancy, investment banking and
fund management, including time with HSBC and
UBS. She is a Chartered Accountant and was a top-
rated equity research analyst covering the general
financials sector. Sarah also founded and ran a
hedge fund investment managementbusiness.
Sarah is also a non-executive director of Marex
Group plc, XPS Pensions Group plc and Gresham
House plc. At Marex Group plc she chairs the audit
and compliance committee and is a member of
the remuneration and risk committees. At XPS
Pensions Group plc she sits on the audit and risk,
remuneration and nomination committees and
chairs the sustainability committee. At Gresham
House plc, Sarah is also chair of the audit
committee and is a member of the nomination,
remuneration and sustainability committees.
Current external appointments
XPS Pensions
Group plc
Marex Group plc
Gresham House plc
Appointment
1 November 2019
Committee membership
E
M
Skills and experience
Euan joined the Group in November 2011 and
he has held a variety of roles across the finance
function, including Group Head of Finance.
Hewas appointed as Chief Financial Officer in
November 2019, where he is responsible for the
management of all finance functions globally
and investor relations. Euan has been a member
of the Chartered Institute of Management
Accountants since 2005 and has over 20 years’
experience working in financial services and
business consulting including at Barclays, HSBC
and Deloitte. Euan holds a BSc in Economics
fromtheUniversity of Nottingham.
No external appointments
Appointment
2 October 2017
Committee membership
G RA N
Skills and experience
Clare joined the Group as a Non-Executive
Director in October 2017. She has held a broad
variety of international leadership roles with
board-level experience across a range of
service businesses. These have included the
AA, RSA, Vodafone, ITV, Prudential, Royal London
and Amigo Holdings PLC. Clare is also an
experienced non-executive director having spent
six years on the board of Alliance Trust Plc, and
was CEO of the British Equestrian Federation.
Current external appointments
GS Yacht Charters LLP
Scottish Widows Independent
Governance Committee
Bank of Ireland (UK) PLC
Appointment
1 November 2019
Committee membership
E M
Skills and experience
Matthew joined the Group in September 2005
and has held a variety of roles including Senior
Dealer, Head of Eastern Equities, Headof Sales
Trading ANZ, Head of Trading Eastern Region and
Director of Asia. In his current role as the Head
of Asia Pacific &Canada, he is responsible for
implementing the Group’s business strategies
across the APAC & Canada region for both the
retail and wholesale CFD and foreign exchange
business. He is also responsible for the Group’s
stockbroking business. Prior to joining the Group,
Matthew worked for Commonwealth Securities,
Australia’s largest provider of financial services,
dealing in equities, before moving into derivatives
as an options trader and warrants representative.
Matthew has over 20 years’ experience in financial
services and holds a Bachelor of Economics from
the University of Sydney.
No external appointments
Appointment
1 January 2014
Committee membership
E M
Skills and experience
David joined the Group in November 1997
working on the trading desk and developed
the Group’s multi-asset CFD and spread
bet dealing desk. As a senior dealer he was
responsible for managing the UK and US equity
books. Between April 2007 and September
2012, he was the Group’s Western Head of
Trading, covering all asset classes for the
western region. In September 2012 David
was appointed to the role of Group Head of
Trading and in January 2014 was appointed
as the Group Director of Trading with overall
responsibility for the trading and pricing
strategies andactivities across the Group.
InJune 2017 his role further expanded when he
became Group Commercial Director andthen
in April 2019 he was promoted to the position
of Deputy Chief Executive Officer.
No external appointments
Appointment
1 June 2022
Committee membership
G RA N
Skills and experience
Susanne joined the Group as a Non-Executive
Director in June 2022. She started her career
working for a fintech company in Silicon Valley.
She has 25 years’ experience in financial
technology (fintech), banking, investment
management and consulting, including time with
Deutsche Bank, Lloyd’s Banking Group, Morgan
Stanley Investment Management and Accenture.
Susanne is currently the CEO of FINTECH
Circle, Europe’s first fintech community focused
on investments, innovation, and education, and the
co-author of seven fintech books published by Wiley.
She is often invited to share her fintech thought
leadership at international fintech conferences
andasa judge at fintech competitions.
Current external appointments
FINTECH Circle
Crown Agents
Bank Limited
JLG Group PLC
LenderWize Limited
Corporate governance
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CMC Markets plc
Annual Report and Financial Statements 2022
Corporate governance
60
CMC Markets plc
Annual Report and Financial Statements 2022
Governance report
Introduction to corporate
governance
“ TheBoard continues to recognise that
aneffective governance framework is
fundamental in ensuring the Group’s
abilityto deliver long-term value for
ourshareholders and stakeholders.”
James Richards
Chairman
in respect of the approach adopted by the Company to the
application of:
• Provision 11 of the Code, which requires that the Board
shouldinclude an appropriate combination of Executive and
Non-Executive Directors, a full explanation of the Company’s
compliance is provided on pages 61 and 66; and,
• Provision 25 of the Code, and specifically the requirement for a
board committee comprised of independent directors to review
the company’s internal financial controls and internal control
and risk management systems, the Group Risk Committee’s
composition has not met this requirement for the year. Further
explanation is provided on page 73 of the Group Risk Committee
Report. The recent and anticipated director appointments
referenced on page 66 will facilitate the re-consideration of
the Group Risk Committee composition in the forthcoming
financial year.
As advised in last year’s Annual Report, Independent Audit
(https://www.independentaudit.com/) was appointed in January 2021
to undertake an in-depth review of the operation of the Board and
its Committees, and its report was presented to the Board at its
meeting in June 2021. This governance review afforded the Board an
opportunity to reconsider its approach to governance and implement
new processes designed to enhance its operation, details of which
are set out in Accountability under Board evaluation on page 66
and in the Group Risk Committee report on page 73 and in the
Nomination Committee report on page 75.
Dear shareholders,
On behalf of the Board, I am pleased to present the Group Corporate
governance report for the year ended 31 March 2022. The Board
continues to recognise that an effective governance framework is
fundamental in ensuring the Group’s ability to deliver on its strategy
and ensure long-term value for our shareholders and stakeholders.
COVID-19
The financial year under review saw the consequences of COVID-19
continue to have an effect on business. The Board oversaw
proactive planning and agile responses to the various government
announcements affecting the business globally and related
developments throughout the year including in relation to the lifting
of relevant restrictions.
UK Corporate Governance Code
As a company listed on the Main Market of the London Stock
Exchange, CMC Markets plc has applied the Principles as set out in
the 2018 UK Corporate Governance Code published by the Financial
Reporting Council (“FRC”) and available at www.frc.org.uk (the “Code”)
for the financial year ended 31 March 2022.
Corporate governance
61
CMC Markets plc
Annual Report and Financial Statements 2022
Board composition
It is critical that the Board has the right composition, so it can provide
balanced leadership for the Group and the independent discharge
of its duties to shareholders. This relies on the Board having the right
balance of skills and experience and objectivity, as well as a good
working knowledge of the Group’s business.
As advised in last year’s Annual Report, the various technological
advances, product enhancements and development of the Group’s
non-leveraged product offering, had led the Board to hold off
appointing a further Non-Executive Director during 2022. However,
we can now confirm that Susanne Chishti has been appointed
to the Group Board as a Non-Executive Director effective as of
1 June 2022. Susanne brings a wealth of technology and fund
experience to the Board’s composition and outlook and will be able to
contribute effectively based on her significant experience within the
technology sector.
As was announced on 28 April 2022 Clare Salmon is not putting
herself up for re-election at this year’s AGM. I would like to thank
Clare very much for her hard work, insight and guidance during her
time as a Non-Executive Director.
The Board is now in the process of looking for suitable candidates
for appointment as a further Non-Executive Director. Further detail
in relation to the selection process is provided on page 76 in the
Nomination Committee report.
Board effectiveness
The balance of skills, experience and independence of the Board and
individual Directors is subject to ongoing review by the Nomination
Committee. It was further considered by the governance review
undertaken by Independent Audit, as referenced above in relation to
the Board’s composition.
All Directors received computer and screen-based training
on relevant financial services matters with emphasis on the
responsibilities with regard to regulation and compliance and have
access to other know-how resources and education programmes
offered by third-party service providers with whom the Group has
established relevant links.
A programme of technical business briefings related to CMC’s
business portfolio is being prepared for 2023.
Stakeholder engagement
Mindful of relevant obligations under the Code, stakeholder
engagement has been a further consideration for the Board this
year and we will continue to develop relevant relationships for the
benefit of the Company. A regular update in relation to stakeholder
engagement is now a feature of Board papers and ongoing governance
consideration and has seen matters such as flexible working, charity
contributions, investor experience and ESG strategy being considered.
Shareholder engagement
As Chairman, I am responsible for the effective communication
between shareholders and the Company and for ensuring the Board
understands the views of major shareholders. Regular investor
relations reports are distributed to the Board and considered at
Board meetings.
Directors regularly meet with a cross-section of the Company’s
shareholders to ensure an ongoing dialogue is maintained and
report to the Board on the feedback received from shareholders.
Furthermore, correspondence is conducted with shareholders during
the course of the year on a number of fronts. I will also always make
myself available to meet any of our shareholders who wish to discuss
matters regarding the Company.
I am looking forward to the forthcoming year as the Group seeks
to grow and continue to deliver on its strategy and technology in
relation to established markets in the leveraged and non-leveraged
space, client journey optimisation and its institutional offering.
James Richards
Chairman
8 June 2022
Corporate governance
62
CMC Markets plc
Annual Report and Financial Statements 2022
Board leadership and purpose
The Board provides entrepreneurial leadership and oversight of
the delivery of strategic objectives and the long-term, sustainable
success of the Company, taking into account stakeholder priorities
and employee engagement feedback.
Further, with regard to the setting of strategy the Board has considered
the diversification of the Company’s product offerings to ensure a
robust range of products designed to be successful within a changing
regulatory environment and appealing to changing stakeholder
requirements, with the objective of preserving long-term value.
Stakeholder and employee-related matters form part of the Board’s
decision making processes, facilitated by the investment in employee
engagement surveys, the work of the Designated Non-Executive
Director for Employee Engagement, ongoing shareholder dialogue
and market feedback.
To evidence this:
• the Board has considered a number of employee-related responses
to the post-pandemic restrictions working environment, including
more flexible working arrangements, market-based remuneration
benchmarking and investment in efficient collaborative work
platforms, all encompassed within a People Strategy regularly
discussed by the Nomination Committee;
• the Board has considered capital distribution initiatives in response
to a regular theme of shareholder enquiry, resulting in share buy
back announcements on 2 March and 15 March 2022;
• a number of strategies within the Nomination Committee have
been considered by the Board, including in relation to ESG and
diversity and inclusion (“D&I”), responding to shareholder interests
and advocacy, leading to a number of Board decisions, including,
for instance, the taking on of a new energy efficient leased space
in Barangaroo, Sydney in Australia, the recruitment of a Group
Head of Sustainability and working with a D&I consultant;
Board composition
Corporate governance: member meeting attendance
Board Group Audit Group Risk Nomination Remuneration
Name Position meetings Committee Committee Committee Committee
James Richards Chairman 10(10) — 4(4) 5(5) 8(8)
Paul Wainscott Senior Independent Director 9(10) 8(8) 4(4) 5(5) 8(8)
Sarah Ing Independent Non-Executive Director 10(10) 8(8) 4(4) 5(5) 8(8)
Clare Salmon Independent Non-Executive Director 9(10) 8(8) 4(4) 5(5) 8(8)
Lord Cruddas Chief Executive Officer 10(10) — — — —
David Fineberg Deputy Chief Executive Officer 10(10) — — — —
Euan Marshall Chief Financial Officer 10(10) — — — —
Matthew Lewis Head of Asia Pacific & Canada 8(10) — — — —
Governance report continued
• the UK CMC Invest offering, developed as a major strategic
initiative, in line with market sentiment in search of an accessible
retail investment platform; and,
• Board consideration of various charitable initiatives, including, the
CMC Charity of the Year nomination process, appointment of
Charity Champions and ad hoc charity and community campaigns,
as well as Company sponsored volunteering schemes.
Consistent with the diversification of the Company’s product
offerings, the Board’s strategy has addressed leveraged and non-
leveraged initiatives. In the leveraged space, the Board has continued
to oversee the strategic focus on established markets, client journey
optimisation and its institutional offering through an innovative and
resilient set of technological solutions. In CMC Markets Invest the
Group has launched a non-leveraged UK retail investment platform.
The Board’s leadership includes an awareness of the importance
of a working culture which promotes inclusion and acceptance of
differing approaches to facilitating the successful delivery of strategic
projects and initiatives. Again flowing from Board discussions and
more focused consideration at Nomination Committee meetings,
Directors have overseen an internal shift towards improved
engagement on initiatives relating to diversity and inclusion, including
an ongoing programme of training facilitated by Inclusive Employers
(https://www.inclusiveemployers.co.uk/about/) establishing internal
interest groups e.g. Women at CMC, engagement with industry
groups e.g. the Investing and Saving Alliance (TISA), and development
of flexible working and platform based collaborative work tools.
Diversity and inclusion have informed departmental and Group-
wide discussions. The Board is able to monitor progress in relation
to such initiatives through six-monthly employee engagement
surveys (facilitated by CultureAmp (https://www.cultureamp.com/)
an independent third party dedicated to providing employee
engagement tools and insights to enable an organisation to build
a category-defining culture) and feedback from the programme of
meetings undertaken by the Non-Executive Director with Designated
Responsibility for Employee Engagement.
Corporate governance
63
CMC Markets plc
Annual Report and Financial Statements 2022
Separate to these new initiatives the Group has an established
process in relation to the reporting and processing of employee-
related issues. Within a structure ultimately overseen by the Board,
any employee can raise a matter of concern at any time through
day-to-day management reports or whistleblower channels as
appropriate. The Board receives a Whistleblowing Report annually
which will highlight matters raised through the appropriate
whistleblowing channels and any updates to the whistleblowing
procedures and Group policy.
The Board recognises the importance of an understanding of
employee engagement and the prevailing Group culture to
ensure alignment with delivery on strategy in a way that ensures
acommitment to the Group’s values.
Matters reserved for the Board
It is recognised that certain matters cannot, or should not, be
delegated and the Board has adopted a schedule of matters
reserved for Boardconsideration and approval. The matters
reserved for the Board fall into the following areas:
• strategy and management;
• structure and capital;
• financial reporting and controls;
• internal controls and risk management;
• contracts;
• communications;
• Board membership and other appointments;
• remuneration;
• delegation of authority;
• corporate governance matters;
• policies;
• political and charitable donations;
• appointment of principal professional advisers;
• material litigation;
• whistleblowing;
• pension schemes; and
• insurance.
The schedule of matters reserved for the Board is
available on the CMC Markets plc Group website,
https://www.cmcmarketsplc.com/investors/
corporate-governance/.
Governance report continued
Corporate governance
64
CMC Markets plc
Annual Report and Financial Statements 2022
Division of
responsibilities
Responsibilities of the Chairman include:
• leadership of the Board and ensuring open and effectivecommunication between the Executive and Non-Executive Directors;
• ensuring Board meetings are effective by setting appropriate and relevant agenda items, creating an atmosphere whereby all
Directors are engaged and freetoenter healthy and constructive debate;
• ensuring effective communication between major shareholders and the Board;
• overseeing each Director’s induction and ongoing training;and
• leadership of the Board effectiveness process through hisrole as Chair of the Nomination Committee.
Responsibilities of the CEO include:
• day-to-day management of the Group’s business andimplementation of the Board-approved strategy;
• acting as Chair of the Executive Committee and leading the senior management team in devising and reviewing Group development
for consideration by the Board;
• responsibility for the operations and results of the Group;and
• promoting the Group’s culture and standards.
Responsibilities of the Senior Independent Director
(“SID”) include:
• acting as a sounding board for the Chairman and serving
asan intermediary for the other Directors as necessary;
• acting as lead independent Non-Executive Director;
• leading the Non-Executive Directors in the performance
evaluation of the Chairman, with input from the Executive
Directors; and
• being available to shareholders in the event that the
Chairman, Chief Executive Officer or other Executive
Directors are unavailable.
Responsibilities of the Non-Executive Directors include:
• constructively challenging management proposals
andproviding advice in line with their respective skills
andexperience;
• helping develop proposals on strategy;
• having a prime role in appointing and, where necessary,
removing Executive Directors; and
• having an integral role in succession planning.
Senior Independent Director
Non-Executive Directors
Chairman
CEO
The roles of the Chairman and Chief Executive Officer (“CEO”) are separate,
clearly defined in writing and agreed by the Board.
Corporate governance
65
CMC Markets plc
Annual Report and Financial Statements 2022
Governance structures as at 31 March 2022
Activities of the Board
The Board has a comprehensive meeting planner for the next 12 months that ensures all matters for Board consideration
are presented and considered in a timely manner.
Key areas of focus during this financial year were:
• consideration and approval of the Annual Report and Financial
Statements and half year results and interim dividend approvals;
• ongoing monitoring of the effect of COVID-19 restrictions on the
operation of CMC platforms and products;
• issuance of shares to the EBT;
• approval of Group property management issues and Group
Boardappointments;
• employee engagement survey results review;
• review of CMC Markets plc governance arrangements and results
of the Independent Audit governance review;
• consideration of intra-Group outsourcing and service arrangements;
• the development and launch of new products, including the
development of a retail investment platform;
• risk management and risk appetite;
• the review and approval of ICAAP, ILAA and other
regulatorydocuments;
• oversight of CASS reporting and compliance;
• oversight of the transition to Enhanced Firm status under
theSMCR at relevant UK regulated Group entities;
• stakeholder engagement;
• consideration and approval of a share buy back programme;
• approval of Board policies, e.g. whistleblowing;
• evaluation of a managed separation of leveraged and
non-leveraged businesses; and
• Insurance renewal arrangements andapprovals.
Group Board
Group
Audit Committee
Group
Risk Committee
Risk Management
Committee
Internal
assurance
Independent
Assurance
External auditors
Group internal
audit
Group
Remuneration
Committee
Group
Nomination
Committee
Executive
Committee
Project
Management
Committee
Treating Customers
Fairly and
Conduct Committee
Client Money
Review
Group Committee
Management Committee
Internal assurance
Independent assurance
Direct reporting line
Reporting line for certain matters
Board/Board Committee
Senior Management Committee
Corporate governance
66
CMC Markets plc
Annual Report and Financial Statements 2022
Election of Directors
The 2022 AGM will be held at 10.00 a.m. on 28 July 2022 at
133Houndsditch, London EC3A 7BX.
Following recommendations from the Nomination Committee and review
by the Chairman, the Board considers that all Directors continue to
be effective, remain committed to their roles and have sufficient time
available to perform their duties. In accordance with the Company’s
Articles of Association, other than Clare Salmon, all Directors will seek
re-election at the Company’s 2022 AGM, which will be set out in the
Notice of AGM.
Conflicts of interest
The Company’s Articles of Association, in line with the Companies
Act 2006, allow the Board to authorise any potential conflicts of
interest that may arise and impose limits or conditions as appropriate.
The Board has a formal process for the Directors to disclose any
conflicts of interest and any decision of the Board to authorise a
conflict of interest is only effective if it is agreed without the conflicted
Director(s) voting or without their votes being counted. In making
such a decision, the Directors must act in a way they consider in
good faith will be most likely to promote the success of the Group.
Independence of Non-Executive Directors and
timecommitment
Each of the Non-Executive Directors is considered to be independent.
Each Director is aware of the need to allocate sufficient time to the
Company in order to fulfil their responsibilities and is notified of all
scheduled Board and Board Committee meetings.
Board independence
For the financial year ended 31 March 2022 the Board composition
did not comply with the requirements of Provision 11 regarding at
least half of the Board, excluding the Chairman, being independent
Non-Executive Directors. However, this position remained under
consideration through the year as thought was given to suitable
Non-Executive Director appointees with experience to complement
the diversification of the Group’s business. As has been confirmed on
page 61, Susanne Chishti has been appointed to the Group Board as a
Non-Executive Director effective as of 1 June 2022.
Therefore, for the period 1 June 2022 to date of AGM on 28 July
2022 the Board’s composition will have met the requirements of
Provision 11. However, as a result of Clare Salmon’s decision not to
stand for re-election, the Board will no longer meet the requirements
of Provision 11, subsequent to the AGM, and steps will be taken to
appoint a successor as detailed on page 76 of the Nomination
Committee report.
Directors’ induction
A formal procedure for Director induction and ongoing training is in
place. As part of a new Director’s onboarding, a skills gap analysis and
Learning and Development plan is created. The skills assessment is
used by the Company to tailor induction meetings and training
requirements for all new Directors. One-on-one meetings are
organised between the Director and the management team in relevant
areas of the business to allow an incoming Director to familiarise
themselves with the management team and their respective roles and
responsibilities and to gain a greater understanding and awareness of
the industry in which the firm operates. These meetings also facilitate
an opportunity for new Directors to discuss the business strategy
and model, risk management, governance and controls and the
requirements of the regulatory framework. These meetings and training
arrangements form a key part of the Learning and Development Plan.
Non-Executive Directors attended internally and externally facilitated
training sessions and have access to online and digital platform-based
training and information resources.
Board support
The Board operates in accordance with the provisions of the Articles
of Association and established processes and approved policies,
as appropriate, and has access to relevant resources as required.
Each Director has access to the Company Secretariat Department
for advice and related services. The Company Secretary provides
meeting papers to Directors in a timely manner to allow for conducive
and effective Board and Board Committee meetings.
As stated in each of the Board Committees’ terms of reference
and the Company’s Articles of Association, the Directors may take
independent professional advice at the Company’s expense.
Board evaluation
As advised in last year’s Annual Report, Independent Audit was
commissioned to undertake a review of governance arrangements
which concluded over the first two quarters of 2021 with a report
provided to the June 2021 Board meeting.
During the course of the evaluation, Independent Audit met with
Non-Executive and Executive Directors and members of the senior
management team, as well as reviewing previous Board, Board
Committee and Management Committee materials.
The evaluation reported on a number of Board and governance
issues, but was ultimately strategy centric with a view to ensuring that
Board and Committee business was designed to effectively discharge
strategic responsibilities; the review also included a discrete focus on
risk and its inter-relationship with strategy.
The review focused on the Board’s role in the articulation of strategy,
monitoring progress and ensuring focus; the role of Board papers
to support the Board’s strategic obligations; Board processes
and administration; education; compliance horizon scanning and
meetingstructuring.
As a result of the review, Board and Committee meeting frequency
and sequencing have been amended; meeting structures have been
modified with agendas effectively mapping to terms of business
and matters reserved; Board and Committee paper templates are
being developed; and senior management and delegated authority
structures re-considered to provide effective and purposeful support
to Board processes.
Accountability
Governance report continued
Corporate governance
67
CMC Markets plc
Annual Report and Financial Statements 2022
Board responsibilities in relation to the
AnnualReportand Accounts
The Board has ultimate responsibility for reviewing and approving
theAnnual Report and Financial Statements and it has considered
andendorsed the arrangements enabling it to confirm that the
Annual Report and Financial Statements, taken as a whole, is fair,
balanced and understandable and that it provides the information
necessary forshareholders to assess the Company’s position and
performance, business model and strategy. With the assistance of the
Group Audit Committee, the Board ensured that sufficient time and
resources were available to encompass the disclosure requirements
that the Group is subject to and that the Annual Report and Financial
Statements met all relevant disclosure requirements.
The Board believes in the governance principles of being open,
transparent and compliant with the Principles of the Code. Following
review by the Group Audit Committee, the Board considered and
agreed that the Annual Report and Financial Statements contained
the necessary information for shareholders to assess the Company’s
performance, strategy and overall business model.
Group Audit Committee
The Group Audit Committee has been delegated responsibility for
the monitoring and oversight of the external and internal audit of
internal controls. The Committee’s responsibilities, main activities and
priorities for the next reporting cycle are set out on pages 69 to 72.
Group Risk Committee
The Group Risk Committee has been delegated responsibility for
themonitoring and oversight of risk management, mitigation and
recommendation for and approval of the risk appetite to the Board.
The Committee’s responsibilities, main activities and priorities for the
coming year are set out on pages 73 and 74.
2021/22 Key shareholder events
June 2021
2021 full-year results
July 2021
Q1 2022 trading update and Annual General Meeting 2021
September 2021
Trading update
October 2021
H1 2022 pre-close trading update
November 2021
H1 2022 interim results
January 2022
Q3 2022 trading update
March 2022
Intention to launch share buyback programme 2022
pre-close trading update
Corporate governance
68
CMC Markets plc
Annual Report and Financial Statements 2022
Shareholder engagement
The Board recognises the importance of good communication with
shareholders. The Board maintains regular contact with a cross-section
of the Company’s shareholders to ensure that the Group strategy
takes due consideration of shareholder views.
During the year there were a number of meetings with significant
shareholders and potential investors to ensure the Board was regularly
apprised of shareholder sentiment and shareholder correspondence
was also shared with the Board as appropriate. Investor relation
reports are distributed to the Board and considered at each
Board meeting.
Stakeholder engagement
The Board recognises its various legal, fiduciary, statutory and
governance obligations and duties in relation to stakeholder
engagement, including
those specified in the Principles and Provisions of
the Code and Section 172
of the Companies Act 2006, and receives
regular stakeholder engagement updates in the Board papers. Please also
see the discussion on pages 12 and 13 regarding responding to
stakeholders’ needs and under Board Leadership and Purpose on
pages 62 and 63, and as mentioned elsewhere initiatives in relation to
the development of a non-leveraged trading platform, charitable
donations and capital redistribution planning.
Employee engagement
In relation to employee engagement, Clare Salmon is the designated
Non-Executive Director with responsibility to engage with (and oversee
engagement with) employees, and involve relevant views and experiences
in Board discussion and decision making (the “Designated Director”).
Clare draws on her considerable experience across a number of listed
and non-listed businesses in executive and non-executive positions of
communicating with stakeholders and raising relevant issues at Board
level. The Designated Director’s responsibility is to engage with (and
oversee engagement with) employees in ways that are most effective
in discerning relevant views and understanding related experiences. The
Board as a whole reviews and considers the results of the employee
engagement survey.
The Board has considered a number of employee-related initiatives
emerging in the wake of the COVID-19 pandemic (including in relation
to flexible working, salary benchmarking, collaborative work tools
and a related People Strategy) which have been discussed at length.
Clare has led and enhanced Board discussion across these initiatives
based upon the knowledge that she has built as the Designated
Director through regular engagement with employees across the
global business. Clare’s insight has been supplemented by informed
internal research, actual qualitative examples and real-time employee
engagement survey results.
In the discharge of their various legal, statutory and governance
obligations and duties, the Directors have endeavoured to act to
promote the success of the Group for the benefit of its members
as a whole, and in doing so have regard to the interests of its various
stakeholders. Details of the various stakeholder groups and their
associated engagement strategies are provided on pages 12 and
13. The Board ensures, in its discussion of relevant matters, that
stakeholder interests are considered in related discussions and
decision making processes, and inform policies and procedures.
Internal controls over financial reporting
The Group has an Internal Control Framework in place to ensure that
the financial information produced is accurate, reliable and timely
such that it can be used by all stakeholders to monitor performance
and aid effective decision making.
The internal control framework consists of:
• Forecasting and budgeting: The Group has a detailed forecasting and
budgeting process in place that is well embedded across the Group.
• Financial Accounting and Reporting: The finance team produce
Group consolidated accounts on a monthly basis, and the team
is well staffed with a good level of experience. There are full
reconciliation and reporting processes in place to ensure that
any issues are identified and resolved in a timely manner. Detailed
reconciliations are completed between the trading systems and
the general ledger to ensure completeness.
• Management reporting: The Group has a detailed suite of MI that
is prepared, daily, weekly, monthly and quarterly. This MI was
prepared and improved throughout the year to reflect appropriate
measurements as the business has changed.
• Tax: The Group has a formal tax strategy, reviewed and approved
annually by the Audit Committee, in addition to monthly tax
compliance monitoring, quarterly attestations with items raised
within the recently established Tax Risk Committee.
• IT environment: The Group is heavily reliant on its IT systems and
has systems and controls to ensure that they are operational and
accessible at all times. There have been no IT issues in the year
that could impact the financial reporting of the Group.
Governance report continued
Corporate governance
69
CMC Markets plc
Annual Report and Financial Statements 2022
Paul Wainscott,
Chair
Sarah Ing,
Independent
Non-Executive Director
Clare Salmon,
Independent
Non-Executive Director
Attended meeting
Did not attend
Paul Wainscott
Chair of the Group AuditCommittee
Members and attendance
Dear shareholders
As Chair of the Group Audit Committee (the“Committee”) I am
pleased to present the Group Audit Committee report.
The Committee is the independent BoardCommittee that assesses
and has independent oversight of financial reporting and the
effectiveness of internal control systems. This report summarises
theactivities, key responsibilities and future focus of the Committee.
Paul Wainscott
Senior Independent Director andChair of the Group Audit
Committee
8 June 2022
Principal responsibilities of the Group Audit Committee
The Committee operates within the agreed terms of reference, which
outline the key responsibilities of the Committee.
The Committee’s full terms of reference can be found on the
Group’s website: https://www.cmcmarketsplc.com/investors/
corporate-governance/committees/.
Areas of focus in 2021/22
The main responsibilities during the year, incompliance with the
requirements of theCode, were as follows:
• to monitor the integrity of the Financial Statements of the Group;
• to review and report to the Board on significant financial reporting
issues andjudgements;
• to assess the adequacy and effectiveness of the Group’s internal
control systems and report to the Board on any key findings;
• to review and approve the Internal Audit Charter and Annual Internal
Audit Plan;
• to review the findings of all internal audit reports, make
recommendations as appropriate and monitor resolution plans;
• to review the performance of the internal audit function;
• to review and make recommendations tothe Board on the
effectiveness and independence of the Company’s external
auditor including appointment, reappointment and removal
oftheexternalauditor;
• to co-ordinate the external auditor re-tender process and
recommendation for appointment for 2023 at the 2022 Annual
General Meeting; and,
• to review the findings of the externalauditor.
Group Audit Committee report
Corporate governance
70
CMC Markets plc
Annual Report and Financial Statements 2022
Group Audit Committee report continued
Composition and advisers
The Committee is chaired by Paul Wainscott with Sarah Ing,
ClareSalmon and, from 1 June 2022, Susanne Chishti as members.
The Committee is considered independent to management and the
members are all independent Non-Executive Directors.
The Code requires the inclusion on the Committee of at least one
member determined by the Board as having recent and relevant
financial experience. The Committee Chair is considered to
continueto fulfil this requirement. The Committee as a whole has
competence in relation to the leveraged and non-leveraged business
sectors in which the Company operates.
The Committee held eight meetings during the financial year. The key
activities and discussion points are outlined in the relevant section of
this Committee report.
The Chief Executive Officer, Deputy Chief Executive Officer,
ChiefFinancial Officer, Head of Asia Pacific & Canada, Group Head
ofFinance, Group Head of Risk, General Counsel & Company
Secretary, and Group Head of Financial Crime &UK Money
Laundering Reporting Officer attend Committee meetings by
invitation. The Group Chairman was invited to and attended all
meetings. Representatives from PricewaterhouseCoopers LLP
(“PwC”), the external auditor, and Grant Thornton LLP, the internal
auditors, attend the Committee meetings by standing invitation.
Further, subsequent to the conclusion of the auditor re-tender
process in September 2021, which resulted in Deloitte LLP being
recommended for appointment for 2023 at the 2022 Annual
General Meeting, representatives of Deloitte LLP have attended
Committeemeetings.
Committee attendance is presented on page 69.
Statement of internal controls andinternal audit
The Group’s internal audit function is externally facilitated by Grant
Thornton LLP. The internal audit function has a reporting line to the
Committee and has direct access to the Committee Chair and each
Committee member. The Committee reviews all internal audit reports,
follows up verification reports on any findings identified by internal
audit, and annually approves the Internal Audit Plan and Charter.
External auditor
The Committee considers the reappointment of the external auditor
annually and such consideration includes review of the independence
of the external auditor and assessment of the auditor’s performance.
As advised in last year’s Annual Report, upon the Company’s
entry to the FTSE 350 in 2021 the requirement to re-tender audit
arrangements following PwC’s external audit role for the Company
for a period of ten years was triggered. The Company initiated a re-
tender process in relation to the 2022 audit, but following discussions
with the Competition and Markets Authority (“CMA”) was given
permission to defer the re-tender process. The Group confirms that it
has complied with the provisions of the CMA Order in respect of The
Statutory Audit Services for Large Companies Market Investigation
(Mandatory Use of Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014.
The re-tender process was completed during 2022 in relation to
the 2023 external audit. At the conclusion of the re-tender process
the Board confirmed, on the recommendation of the Committee,
that Deloitte LLP be appointed the Group’s external auditor and a
resolution to this effect will be put before the shareholders at the
2022 AGM.
The Committee, in line with Financial Reporting Council (“FRC”)
guidance, continues to review the qualification, expertise, resources,
effectiveness and independence of the external auditor. The
Committee also reviews the appointment of staff from the external
auditor to positions within the Group (when necessary) and meets
with the external audit partner at least annually without Executive
management present.
The Group’s audit and other services fees are disclosed in note 8 of
the Financial Statements. Other services fees include the controls
opinion relating to the Group’s processes and controls over client
money segregation and compliance with The Capital Requirements
(Country-by-Country Reporting) Regulations 2013.
Non-audit services policy
The Group has a number of relationships with independent advisory
and assurance firms which provide alternatives to using PwC.
During the year ended 31 March 2022, PwC provided non-audit
services to the Group. However, all services provided fall under
categories explicitly permitted under the 2019 Ethical Standards.
In order to ensure compliance with the Ethical Standard issued by the
FRC regarding the requirement for safeguarding independence of the
external auditor, the Committee has in place a formal policy governing
the engagement of the auditor to provide non-audit services, which
was reviewed and reapproved in March 2022. TheCommittee
received a non-audit services report for review andapproval with the
nature of expenditure categorised by discretionary/non-discretionary
and incurred and proposed fees.
Priorities for financial year 2023
The Committee’s focus will continue to be to ensure that all relevant
accounting practices and disclosures are adhered to and that controls
around these obligations are successfully embedded with a strong
culture of disclosure and transparency.
There will be continued focus on internal systems of control and
particular focus will be paid to the results of upcoming internal audits.
For the forthcoming year significant attention will be paid to the
on-boarding of the new external auditor.
Corporate governance
71
CMC Markets plc
Annual Report and Financial Statements 2022
At each scheduled meeting the Committee:
• receives a report from the Chief Financial
Officer on the year-to-date financial
performance of the Group;
• receives an update on current and planned
internal audits and any internal audit issues
highlighted in completed audit reports;
• receives a Group tax update; and
• receives an update on significant
accounting judgements.
Main activities during the financial year
Agendas for scheduled Committee meetings are based on a pre-agreed annual meeting planner to ensure that the Committee fulfils its
responsibilities in line with its terms of reference and regulatory obligations.
July 2021
• Considered and approved the 2021 Internal
Audit Charter.
• Considered progress in relation to the
external auditor re-tender process
• Considered the external auditor evaluation in
respect of the 2021 financial year.
January 2022
• Considered the Q3 trading update and
recommended to the Board for approval.
• Discussed the potential need to reconsider
the current internal audit approach given the
increasing size of the Group.
• Considered industry approach to operational
resilience compliance.
• Received an update in relation to the external
auditor handover process.
March 2022
• Considered the update on year-end audit
presented by the external auditor.
• Considered the accounting and tax
considerations of the share buy
backprogramme.
• Considered the Group’s exposure to,
and control environment surrounding,
cryptocurrency holdings.
• Reviewed non-audit services policy.
• Considered FRC correspondence relating
to the lawfulness of the interim dividend
that had been paid during FY21. Further
detail in relation to this matter can be
found on page 101 of the Directors’ report.
May 2021
• Considered the year-end audit report
presented by the external auditor and
discussed the audit with the lead audit
partner, including relevant significant
audit and accounting matters. In line with
the Committee terms of reference, the
Committee met with the Group auditor
without management or the Executive
Directors present.
• Reviewed the Annual Report and Financial
Statements, including the specific
disclosures such as going concern,
viability and risk management, fair,
balanced and understandable and internal
controls reporting, for recommendation to
the Board.
• Discussed non-audit fees.
• Having considered the auditor’s
independence letter, concluded that
the auditor remained independent and
objective and recommended the auditor’s
reappointment to the Board.
• Reviewed the annual report from
the Money Laundering Reporting
Officer (“MLRO”).
November 2021
• Considered the half-year audit report
presented by the external auditor and
discussed the report with the lead
audit partner.
• Reviewed the interim results, including
consideration of going concern, risk
management and internal controls
reporting, for recommendation to the
Board. Agreed the annual Internal Audit
Plan for 2022. Agreed the external
auditor engagement letter, management
representation letter and Audit fee.
• Update in relation to non-audit
services and fees.
• Accounting treatment of the ANZ
transaction.
September 2021
• Considered and approved Tax Strategy
and Policy.
• Concluded the external auditor re-tender
process with a recommendation to the
Board in respect of the proposed auditor for
2023 to be considered at the 2022 Annual
General Meeting.
• Discussed FCA requirements in relation to
operational resilience within relevant regulated
Group companies.
Corporate governance
72
CMC Markets plc
Annual Report and Financial Statements 2022
Group Audit Committee report continued
Role of the Committee Responsibilities discharged Conclusion or action taken
Going concern and long-term viability
It is required that the Directors make
statements in the Annual Report as to the
going concern and longer-term viability of
the Group.
The Committee reviewed reports from
management that assessed the impact of
various stress tests and longer-term business
risks to determine how the Group would
be able to remain viable through periods of
liquidity or capital stress.
Following challenge of management on the
individual scenarios and impacts thereof, the
Committee agreed to recommend the Going
Concern and Viability Statement to the Board
for approval.
Re-tender of the Group’s external auditors
Following the Group’s entry to the FTSE
350 index in 2021, a re-tender, led by the
Committee Chair, was undertaken during
2022 for all external audit arrangements.
The Committee reviewed reports from the
Chair and management that detailed the
regulatory requirements and best practice
guidelines of an audit re-tender, along
with feedback from management on all
participating firms.
The Committee selected two firms, by
means of a balanced scorecard compiled by
the Chair and management, to participate in
a final presentation.
Following detailed consideration and
discussion, the Committee agreed to
recommend Deloitte LLP to the Board for
appointment as the Group’s external auditors
and consideration at the 2022 AGM.
Control improvements and remediation
The Group completed a number of
remediation and improvement activities to
its internal controls during 2022 which were
highlighted as part of the 2021 external audit.
The Committee requested detailed and
regular progress updates from management
with a view to gaining timely resolution.
The Committee requested to be kept
informed of all developments in the
remediation efforts.
The acquisition of Share Investing clients from Australia and New Zealand Banking Group Limited (“ANZ”)
The Group acquired approximately 500,000
Share Investing clients from ANZ, with a
phased transition and payment arrangement
over a 12-18 month period.
The Committee reviewed reports from
management that detailed the accounting
treatment of the acquisition.
The Committee concluded that the
accounting treatment of the acquisition
wasappropriate.
Continued client interest in cryptocurrencies
The Group has seen continued interest from
clients in the cryptocurrency asset class. This
led to ongoing focus on the cryptocurrency
counterparties that the Group hedges its
exposure with and the Group’s accounting
treatment of cryptocurrency assets.
The Committee reviewed reports from
management proposing an update to the
accounting policy on cryptocurrency assets
and the ongoing monitoring and assessment
of controls at cryptocurrency counterparties.
The Committee approved the change
in accounting policy and requested to
bekept abreast of any developments
withcryptocurrency counterparties
controlassessments.
Share buyback programme
A share buyback programme was launched in
March 2022, for an aggregate purchase price
of up to £30 million.
The Committee reviewed a report from
management detailing the proposed
accounting treatment of the buyback
programme and its impact on the Group’s
capital, liquidity and Financial Statements.
The Committee concluded that the
accounting treatment of the programme
wasappropriate.
Corporate governance
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Group Risk Committee report
Dear shareholder
As the Chair of the Group Risk Committee (the “Committee”) I am
pleased to present the Group Risk Committee report.
The Committee plays in important role in overseeing the operation
of the Group’s Risk Management Framework and risk appetite and
advises the Board on the Group’s risk strategy. The Committee
reviews, challenges and recommends for approval by the Board,
if it sees fit, the Group’s key processes and procedures which, for
the financial year ended 31 March 2022, included its Internal Capital
Adequacy Assessment Process (“ICAAP”), Individual Liquidity Adequacy
Assessment (“ILAA”) and Group Contingency Funding Plan (“CFP”).
The Committee ensures that a robust risk culture continues to be
embedded across the business and actively monitors and discusses
the latest risk and regulatory developments affecting the Group.
The principal areas of focus for the Committee during the year are
shown in this report.
Clare Salmon
Independent Non-Executive Director andChairoftheGroup
RiskCommittee
8 June 2022
Principal responsibilities of the Group Risk Committee
The main role and responsibilities of the Committee are:
• oversight of the Group’s risk appetite andtolerance;
• review and recommendation of the RiskAppetite Statement and
Risk Management Framework;
• provision of advice and recommendations to the Board to assist in
Board decision making in relation to risk appetite and risk management;
• oversight of financial and liquidity risks including the responsibilities
of the risk management functions;
• review, challenge and recommendation tothe Board with regard to
ICAAP, ILAA and the Group Contingency Funding Plan;
• oversight of, and recommendations to theBoard on, current risk
exposures andfuture risk strategy;
• review of the risks associated with proposed strategic transactions;
• review of the effectiveness of the Group’srisk systems;
• approval of the annual Risk Plan;
• approval of the annual Compliance Plan;and
• review of risk taking by Directors and senior management as it
impacts their remuneration incentives.
The Committee’s full terms of reference canbe found on the Group’s
website (www.cmcmarkets.com/group/committees).
The Committee has oversight of the Group’s risk management
processes as detailed on pages 50 to 56.
Composition
The Committee is chaired by Clare Salmon with James Richards, Sarah
Ing, Paul Wainscott and, from 1 June 2022, Susanne Chishti, as members,
all of whom were considered independent, or, in the case of James
Richards, considered independent on appointment. The Board believes
James Richards continues to demonstrate objective judgement.
Clare Salmon,
Chair
James Richards,
Chairman
Sarah Ing,
Independent
Non-Executive Director
Paul Wainscott,
Senior Independent Director
Attended meeting
Did not attend
Clare Salmon
Chair of the Group RiskCommittee
Members and attendance
Corporate governance
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Annual Report and Financial Statements 2022
Composition continued
The Committee held four meetings during the financial year.
Committee attendance is presented on page 73.
The Chief Executive Officer, Deputy Chief Executive Officer,
ChiefFinancial Officer, Head of Asia Pacific & Canada, Group Head
ofRisk, and General Counsel & Company Secretary attend Committee
meetings by standing invitation. Representatives from other areas
of the business attend the Committee meetings by invitation as
appropriate to the matter under consideration. The Committee
Chair also holds regular individual meetings with the Group Head of
Risk, the General Counsel & Company Secretary and other relevant
members of the Executive and SeniorManagement teams. During
the year the Committee Chair also met with our current auditor,
PricewaterhouseCoopers LLP, and the proposed auditor, Deloitte LLP.
Main activities during the financial year
• Review of outcomes of the Group governance review
• Review and recommendation of Risk Appetite Statement and Risk
Management Framework
• Review and recommendation of ILAA, ICAAP and CFP
• Review of annual risk plan
• Robust assessment of principal and emerging risks
• Received updates on proposed changes to the regulatory environment
• Compliance Plan approval
• Review of the potential impact of the Ukraine conflict
• Received update regarding post-Brexit compliance
• Review of adequacy of internal controls
Group governance review
As part of the Board evaluation process and wider review of the
Group’s governance arrangements, Independent Audit was appointed
in January 2021 to undertake a review of the Group’s risk management
systems. The review made several recommendations with regards to
the oversight of risk exercised by the Committee, the information that
the Committee receives on a regular basis and the role of the Risk
Management Committee within the Group’s governance framework.
The Committee also saw opportunities to enhance its focus on
operational, reputational and people risk in light of the Group’s potential
diversification plans and following volatile and unpredictable market
circumstances after pandemic restrictions were lifted. Additionally, the
Committee perceived the need to improve the quality of the Group’s
horizon scanning to ensure the Group is fully prepared for a broader
range of potential scenarios resulting from the volume of change that
had been seen both within the business and the external environment.
As a result of the outcomes of the review, the Chair of the Committee
has spent time with the Group Head of Risk to make a number of
changes to the categorisation, ownership and presentation of the
Group’s risk information and to ensure that the materiality of each risk
was linked in terms of materiality and probability to the Group’s three-
year business plan. The Committee has also sought guidance from
a range of external subject matter experts to support the change
process. This review has led us to consider the introduction of an
enhanced governance process to better identify risks and mitigations
which will be launched in the next financial year.
At management level, the role of the Risk Management Committee
within the Group’s governance framework has been reviewed and
a decision has been taken to set up an Executive Risk Committee
(“ERC”) as the management forum to discuss risk issues. The aim
of the ERC is to assist the Group Head of Risk and the Executive
Directors in identifying and synthesising the Group’s risks. These risks
are then presented to the Committee for review by the Group Head
of Risk, as second line of defence, and the Executive Directors, as first
line of defence. The ERC reports into the Executive Directors.
Risk appetite and exposure
The Committee has oversight of and makes recommendations to the
Board on current risk exposures and future risk appetite and strategy.
The Committee reviews the risks associated with proposed strategic
transactions and the effectiveness of risk mitigation and monitoring
processes. During the year the Committee received a presentation
from the Group Head of Risk on the potential risks arising from the
launch of a non-leveraged platform.
Throughout the year the Committee has monitored the Group’s top
and emerging risks. The Committee routinely asks business leaders
to present an overview of their risk management practice and
receives updates onkey issues. In the financial year ended 31 March
2022 updates were provided on post-Brexit compliance, management
of risks within the Group’s European business and a review of the
changes in the Group’s cryptocurrency asset exposure.
The Committee reviewed proposed changes to the Group Risk
Appetite Statement and Risk Management Framework and made
recommendations for Board approval of both documents. The
Committee recommended the Group’s ICAAP, ILAA and CFP to the
Board for approval.
Risk management and internal controls
The Group continues to invest in risk management and internal
controls and challenges the business to improve and enhance the
Risk Management Framework.
The Committee confirmed at its May 2022 meeting, acting as a
Committee of the Board, that it was satisfied that the Group’s risk
management and internal controls wereeffective.
Regulatory compliance
The Committee continued to closely monitor global regulatory
changes and the impact on the Group. During the year, the
Committee received updates on various regulatory issues including
the application of product intervention powers on the issuance and
distribution of binary options and CFDs to retail clients by ASIC and
the impact of the introduction of IFPR on the Group.
Priorities for financial year 2022/23
In the year ahead the Committee will focus on enhancing the Group’s
risk management systems and embedding the recommendations
arising from the Group governance review, including the newly
adopted approach to documenting the Group’s top risks and
mitigations. The Committee will continue to take an active role
in advising the Board on risk matters and monitoring the risks
associated with regulatory change and the impact that any changes
could have on the Group.
Group Risk Committee report continued
Corporate governance
75
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Group Nomination Committee report
Dear shareholder
I am pleased to present the Nomination Committee (the “Committee”)
report which summarises the work of the Committee during the year
ended 31March 2022.
Throughout this period the Committee has been the forum for
discussing the outcomes of the Group governance review, which was
completed by Independent Audit in June 2021, and its subsequent
implementation. Specifically for the Committee, the review has
resulted in changes to our remit, further details of which can be found
later in this report.
Additionally, we have spent time reviewing the composition of the
Board alongside succession planning at both Board and senior
management level, have reviewed the role of and received updates
from Clare Salmon, our Designated NED for workforce engagement,
and discussed future training needs of the Board.
Further information on our activities and our priorities for the next
year are provided on the following pages.
James Richards
Chairman and Chair of the Group NominationCommittee
8 June 2022
Principal responsibilities of the Nomination Committee
The main roles and responsibilities of the Committee are:
• to evaluate and review the structure, size and composition of the
Board including the balance of skills, knowledge, experience and
diversity of the Board and keep under review the leadership needs
of the organisation to ensure the continued ability to compete
effectively in the marketplace;
• to ensure plans are in place for orderly and emergency succession
plans in relation to the Board and senior management and oversee
the development of a diverse pipeline for succession, taking into
account the challenges and opportunities facing the Company and
the skills and expertise needed in the future;
• to identify and nominate suitable candidates for appointment to
the Board including evaluating the balance of skills, knowledge
and diversity on the Board and preparing a description of the role
required for a particular appointment;
• to oversee the Board evaluation process and, in analysing the
results of the evaluation, identify whether there are any skill gaps or
opportunities to strengthen the Board;
• to assess the Board Directors’ conflicts of interest;
• to assess and keep under review the independence, time commitment
and engagement of each of the Non-Executive Directors; and
• to oversee the Group’s People Strategy including talent
management, diversity and inclusion and workforce engagement.
The Committee’s full terms of reference are available on the Group’s
website: www.cmcmarkets.com/group/committees.
James Richards,
Chair
Paul Wainscott,
Senior Independent Director
Clare Salmon,
Independent
Non-Executive Director
Sarah Ing,
Independent
Non-Executive Director
Attended meeting
Did not attend
James Richards
Chair of the Group NominationCommittee
Members and attendance
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Group Nomination Committee report continued
Composition
The Committee is chaired by James Richards with Sarah Ing, Clare
Salmon, Paul Wainscott and, from 1 June 2022, Susanne Chishti as
members. The Committee is considered independent to management.
The Committee held five meetings during the financial year.
Committee attendance is presented on page 75.
The Committee has considered ongoing succession for the Board
and as part of this process it was agreed an additional Non-Executive
Director should be appointed. The Committee discussed the
current Board composition and balance of skills and noted that the
appointment of an additional Non-Executive Director with either
technology or regulatory experience would complement the existing
membership. Susanne Chishti was identified as a suitable potential
candidate with technology experience. Following an interview with
the Chairman, she was invited to meet the rest of the Board prior to
the Committee considering any recommendation being made to the
Board. Following this process, the Committee recommended and the
Board approved the appointment of Susanne Chishti with effect from
1 June 2022. She also joined the Audit, Nomination, Remuneration and
Risk Committees from this date. Susanne brings extensive fintech
knowledge alongside expertise in technology driven innovation
which will be highly beneficial as the Group continues to develop its
strategy and enhance its offering to clients.
On 28 April 2022 it was announced that Clare Salmon, Chair of the
Group Risk Committee, would retire as a Non-Executive Director
at the end of the Annual General Meeting on 28 July 2022. The
Chairman is leading the process for her successor and has appointed
The Inzito Partnership to assist with this search. The Inzito Partnership
does not have any connection with the Company or any individual
Directors other than to assist with Non-Executive appointments.
The search process is ongoing and we will announce any further
appointments in due course.
Governance review and implementation
As advised in last year’s Annual Report, Independent Audit was
commissioned to undertake a review of the Group’s governance
arrangements including how the Board operates as a whole, how it
agrees its priorities and the information it receives, which concluded
in the second half of 2021 with a report provided in June 2021. As
part of the review, Independent Audit met with individual members of
the Board, the General Counsel & Company Secretary and relevant
members of the senior management team. Independent Audit has no
other connection with the Company or any of the individual Directors.
As a result of the findings, the Committee undertook a comprehensive
review of its role and its terms of reference which were updated to
include additional responsibilities in relation to the Group’s People
Strategy, including talent management, diversity and inclusion,
and workforce engagement, the Board appointment process and
succession planning for both the Board and senior management team.
Main activities during the financial year
Agendas for scheduled Committee meetings are based
onapre-agreed annual meeting planner to ensure that the
Committee fulfils its responsibilities in line with its terms
ofreference and regulatory obligations.
May 2021
• NED time commitment and independence review
• Determination of Director re-election
September 2021
• Scope of role for designated NED for workforce
engagement and current engagement programme
• NED recruitment discussion
• Discussion on remit of Committee in light of
governance review results
December 2021
• Review of Committee terms of reference
• Update on workforce engagement programme
• Update on outcomes from the governance review
January 2022
• Update on CMC Markets UK plc move to designation
as Enhanced Firm
• Update on workforce engagement programme
• Update on Group People Strategy
• Board composition and update on NED recruitment
March 2022
• Board succession planning
• Senior management succession planning
• People Strategy discussion
• Board training
Corporate governance
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Annual Report and Financial Statements 2022
Diversity and inclusion
The Committee recognises the benefits of diversity, whilst ensuring
that appointments are based on merit when recruiting. The Board’s
Diversity Policy can be found on the CMC Markets plc Group
website and gender diversity statistics are presented on page 33.
The Group maintains a Diversity and Inclusion Statement and Policy.
The Committee is committed to reviewing the Group’s current and
proposed initiatives regarding diversity and inclusion through its
consideration of the overall People Strategy for the organisation.
Further details of how the Group has looked to further support
diversity and inclusion throughout the year can be found in the
Sustainability section on pages 28 to 39.
Governance review and implementation continued
At its September and December 2021 meetings the Committee
received progress updates on the implementation of the findings
of the governance review. Further details on the outcomes of the
governance review can be found on page 66.
People strategy
Throughout the year the Committee has discussed the Group’s
approach to workforce engagement, including the workforce
engagement methods set out in the Code, alongside the need to
implement a Group-wide People Strategy to address a number
of employee matters that had been raised in response to the
post-pandemic restrictions working environment. Additionally, the
Committee receivedupdates from Clare Salmon as the Designated
NED for workforce engagement and discussed the results arising
from various employee engagement and pulse surveys that had
taken place throughout the year. The main areas of focus highlighted
as a result of employee engagement activities that had taken place
acrossthe business included career progression and opportunities
for employees, flexible working arrangements, and diversity
andinclusion.
The Committee spent time with the Deputy CEO and the Group
Head of HR discussing the optimal way to design a comprehensive
People Strategy which was aligned with the Group’s strategy and
purpose and aligned with its values and also having due regard to the
environmental, social and governance initiatives being undertaken
by the Group and addressing matters raised by employees.
Theproposed People Strategy will be presented to the Committee
inthe first half of 2023.
Succession planning
In addition to its consideration of succession planning for the Board,
the Committee considered the senior management team at its
March meeting, taking into account the opportunities and challenges
facing the Group and the skills, experience and knowledge that will
be needed in the future. The Committee will continue to review
the succession plans in place and ensure that a diverse pipeline of
talented individuals is being developed across theorganisation.
Financial statements
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Annual Report and Financial Statements 2022
Independent auditors’ report
To the members of CMC Markets plc
Report on the audit of the financial statements
Opinion
In our opinion, CMC Markets plc’s group financial statements and parent company financial statements (the “financial statements”):
• give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 March 2022 and of the group’s profit and the
group’s and parent company’s cash flows for the year then ended;
• have been properly prepared in accordance with UK-adopted international accounting standards; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Financial Statements (the “Annual Report”), which comprise: the
Consolidated and Parent company statements of financial position as at 31 March 2022; the Consolidated income statement and Consolidated
statement of comprehensive income, the Consolidated and Parent company statements of changes in equity, and the Consolidated and Parent
company statements of cash flows for the year then ended; and the notes to the financial statements, which include a description of the
significant accounting policies.
Our opinion is consistent with our reporting to the Group Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under
ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in Note 8 to the financial statements, we have provided no non-audit services to the parent company or its
controlled undertakings in the period under audit.
Our audit approach
Overview
Audit scope
Group
• The group consists of a UK holding company with a number of subsidiary entities and branches containing the operating businesses of both
the UK and overseas territories.
• We determined the appropriate work to perform based on the consolidated balances of the group. The majority of the audit work was
performed by the group engagement team in London, including a full scope audit of the significant component CMC Markets UK Plc.
• The following entities were also determined to be significant components and were subject to full scope audits by component auditors PwC
Australia: CMC Markets Stockbroking Ltd and CMC Markets Asia Pacific Pty Ltd.
• Where a non-significant component comprised a significant proportion of one or more consolidated account balances, specific audit
procedures were performed over those account balances in those components.
Parent company
• The parent company audit was performed by the group engagement team in London.
Key audit matters
• Cryptocurrency assets (group).
• Carrying value of newly capitalised intangible assets under development (group).
• Investment in subsidiaries (parent company).
Materiality
• Overall group materiality: £4,605,000 (2021: £4,610,000) based on 5% of profit before tax.
• Overall parent company materiality: £1,708,000 (2021: £1,686,600) based on 1% of net assets.
• Performance materiality: £3,450,000 (2021: £3,455,000) (group) and £1,281,000 (2021: £1,264,900) (parent company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Financial statements
106
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Annual Report and Financial Statements 2022
Independent auditors’ report continued
To the members of CMC Markets plc
Report on the audit of the financial statements continued
Our audit approach continued
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The following were key audit matters last year, but are no longer considered to be key audit matters for the reasons set out below:
• Impact of COVID-19 (group and parent company) - The impact of COVID-19 on the operations and performance of the group and parent
company have lessened in the current year.
• Risk of fraud in revenue recognition (group) - The revenue stream to which this applied in the prior year, is immaterial in the current year.
The following are new key audit matters this year:
• Cryptocurrency assets (group)
• Carrying value of newly capitalised intangible assets under development (group)
• Investment in subsidiaries (parent company).
Key audit matter How our audit addressed the key audit matter
Cryptocurrency assets (group)
Accounting Policy - Page 119
Significant accounting judgements and estimates - Page 120
Disclosure - Note 18
In order to economically hedge cryptocurrency exposures
arising from client activity, the group holds cryptocurrency
assets. At year-end, the group held £13.4m of such assets,
with £12.5m of them at one custodian (“the Custodian”).
Owning cryptocurrency assets introduces particular financial
reporting risks, notably with regards to demonstrating the
existence and ownership of the cryptocurrency assets, with
some relevant controls operating at the Custodian.
The Custodian procures and provides the group with a
controls assurance report over the design and operation of
key controls at the Custodian, and an associated bridging
letter which addresses the period from the reference date
of the controls report to 31 March 2022.
The assurance opinion in the Custodian controls
report assumes the effective design and operation of
complementary controls at both CMC Markets (as the user
entity) and the Custodian’s subservicer (“the Subservicer”).
The complementary user entity controls (“CUECs”) within
CMC Markets include controls over access to the Custodian
account and periodic reconciliations between group and
Custodian records.
The complementary controls at the Subservicer include
certain technology access and change management
controls over the infrastructure provided by the Subservicer
to the Custodian. The Subservicer procures and provides
the group with a controls assurance report over the design
and operation of key controls at the Subservicer, and an
associated bridging letter which addresses the period from
the reference date of the controls report to 31 March 2022.
We performed the following controls testing regarding the cryptocurrency assets
held at the Custodian:
• Obtained and reviewed the Custodian controls assurance report and
associated bridging letter;
• Evaluated the design, implementation and operating effectiveness of relevant
complementary controls within CMC Markets; and
• Obtained and reviewed the Subservicer controls assurance report and
associated bridging letter.
We found that key controls were designed, implemented and operated effectively,
and therefore determined that we could place reliance on these key controls for
the purposes of our audit.
Our substantive audit testing over cryptocurrency assets held at the Custodian
included the following:
• Confirmation of cryptocurrency assets held at the Custodian;
• Testing the year-end reconciliation of CMC’s records to the Custodian;
• Testing the year-end valuation of a sample of cryptocurrency assets; and
• Evaluating the accounting treatment of the cryptocurrency assets.
Based on the work performed, we are satisfied that the cryptocurrency assets
have been appropriately recognised in the financial statements.
Financial statements
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Annual Report and Financial Statements 2022
Key audit matter How our audit addressed the key audit matter
Carrying value of newly capitalised intangible assets under
development (group)
Accounting Policy - Page 123
Significant accounting judgements and estimates - Page 121
Disclosure - Note 12
Strategic change in the business has included the acquisition
of customer relationships in Australia (£14.2m) and the
development of a new software platform in the UK (£6.1m).
These are capitalised as “Assets under development” and
judgement is required in determining the extent and timing
of the capitalisation.
As the assets were not yet in use at the year-end,
impairment assessments were required. These required
the estimation of future cashflows associated with these
new assets.
Customer relationships in Australia
The capitalised amount of £14.2m comprises the total consideration payable for
thecustomer relationships being acquired. We evaluated the accounting treatment
on recognition and agreed the amount to the underlying contract.
The year-end impairment assessment determines the recoverable amount using
avalue-in-use calculation. Our testing of the assessment included the following:
• Identification of the key inputs and assumptions underpinning the forecast
revenues and costs;
• Evaluation of those key inputs and assumptions, including with reference to
historic performance;
• Evaluation of the discount rate used; and
• Testing the mathematical integrity of the calculation.
We found the recoverable amount to have been based on reasonable and
supportable assumptions.
Based on the work performed, we are satisfied that the asset has been
appropriately recognised in the financial statements.
New UK software platform
The capitalised amount of £6.1m comprises the estimated time spent on the
development of the asset, by both internal staff and external contractors.
Ourtesting of the capitalisation included the following:
• Evaluation of the judgement to capitalise the costs, based on the activities
being performed;
• Agreeing capitalised amounts to underlying support, including payroll
records; and
• Evaluation of the nature and estimated proportion of internal staff time
capitalised, including enquiry with a sample of project team members and
inspection of their employment contracts.
The year-end impairment assessment determined the recoverable amount using
a value-in-use calculation. Our testing of the assessment included the following;
• Identification of the key inputs and assumptions underpinning the forecast
revenues and costs;
• Evaluation of those key inputs and assumptions, including comparison to
industry and market information;
• With support of our valuations specialists, evaluation of the discount
rate used; and
• Testing the mathematical integrity of the calculation.
We found the recoverable amount to have been based on reasonable and
supportable assumptions, noting that total revenue is a major source of
estimation uncertainty requiring disclosure. We evaluated the relevant
disclosuresin Notes 1 and 12.
Based on the work performed, we are satisfied that the asset has been
appropriately recognised in the financial statements and that appropriate
disclosure has been made regarding the estimation uncertainty in determining
itsrecoverable amount.
Financial statements
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Independent auditors’ report continued
To the members of CMC Markets plc
Key audit matter How our audit addressed the key audit matter
Investment in subsidiaries (parent company)
Accounting Policy - Page 124
Disclosure - Note 15
The parent company has total investments in subsidiaries of
£169.0m, of which £167.7m is an investment in CMC Markets
Holdings Limited, the holding company that, via a series of
other holding companies, owns the operating entities of the
group. This investment is held at cost less any provision for
impairment.
Judgement is required to determine whether this investment
might be impaired. At the year-end, no impairment provision is
held against this investment.
We have evaluated management’s impairment assessment, noting that the
carrying value of the investment is supported by the recoverable amount
oftheunderlying operating companies.
Based on the work performed, we are satisfied that no impairment of the
parentcompany’s investment in CMC Markets Holdings Limited is required.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as
awhole, taking into account the structure of the group and the parent company, the accounting processes and controls, and the industry
inwhich they operate.
The group operates through a network of companies primarily in the UK, Europe and Asia Pacific each of which is considered to be a financial
reporting component. In establishing the overall approach to our audit of the financial statements, we determined the type of work that was
required to be performed over the components by us, as the group engagement team, or auditors from other PwC network firms operating
under our instruction (‘component auditors’).
Where the work was performed by component auditors, we determined the level of involvement we needed to have in their audit work to
beable to conclude whether sufficient appropriate audit evidence has been obtained as a basis for our opinion on the consolidated financial
statements as a whole. This included regular communication with the component auditors throughout the audit, the issuance of instructions,
areview of the results of their work and attendance at clearance meetings.
Any components which were considered individually financially significant in the context of the group’s consolidated financial statements
wereconsidered full scope audit components.
We considered the significance of other components in relation to primary statement account balances. We considered the presence of
any significant audit risks and other qualitative factors (including history of misstatements through fraud or error). Any component which was
not already included as a full scope audit component but was identified as being individually financially significant in respect of one or more
account balances was subject to specific audit procedures over those account balances.
All remaining components were subject to procedures which mitigated the risk of material misstatement including testing of entity level
controls, information technology general controls and group level analytical review procedures.
The parent company audit was performed by the group engagement team.
In planning and executing our audit, we considered the group’s governance framework and climate change risk assessment processes as
outlined in the Strategic Report. This, together with our own risk assessment, provided us with a good understanding of the potential impact
ofclimate change on the financial statements. Management has considered the potential impacts of climate change on the financial statements
and concluded that there is no risk of a material impact at the reporting date. That conclusion is consistent with our audit procedures.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the
financial statements as a whole.
Report on the audit of the financial statements continued
Our audit approach continued
Key audit matters continued
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Annual Report and Financial Statements 2022
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – group Financial statements – parent company
Overall materiality £4,605,000 (2021: £4,610,000). £1,708,000 (2021: £1,686,600).
How we determined it 5% of profit before tax 1% of net assets
Rationale for
benchmark applied
We set materiality as being 5% of profit before tax, which is a
typical approach for profit oriented groups like CMC Markets
plc. In the prior year, we used 1% of total revenues but now
consider 5% of profit before tax to be a more appropriate basis
due to normalisation of the group’s financial performance.
We have used net assets as the materiality benchmark
as the parent company of the group primarily holds
investments in its underlying subsidiaries. This is
consistent with the benchmark used in the prior year.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range
ofmateriality allocated across components was between £236,000 and £3,616,000.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the
nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes.
Ourperformance materiality was 75% (2021: 75%) of overall materiality, amounting to £3,450,000 (2021: £3,455,000) for the group financial
statements and £1,281,000 (2021: £1,264,900) for the parent company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation
risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Group Audit Committee that we would report to them misstatements identified during our audit above £227,000
(groupaudit) (2021: £230,000) and £85,000 (parent company audit) (2021: £84,300) as well as misstatements below those amounts that,
inourview, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and the parent company’s ability to continue to adopt the going concern basis
ofaccounting included:
• Evaluation of management’s going concern assessments;
• Evaluation of management’s financial forecasts and management’s stress testing of liquidity and regulatory capital, including the severity
ofthe stress scenarios and assumptions that were used; and
• Substantiation of liquid resources held by, and liquidity facilities available to, the group.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group’s and the parent company’s ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation
ofthe financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group’s and the parent
company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt
thegoing concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report
thereon. The directors are responsible for the other information, which includes reporting based on the Task Force on Climate-related Financial
Disclosures (TCFD) recommendations. Our opinion on the financial statements does not cover the other information and, accordingly, we do
not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to
be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to
conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on
the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report based on these responsibilities.
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110
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Annual Report and Financial Statements 2022
Independent auditors’ report continued
To the members of CMC Markets plc
Report on the audit of the financial statements continued
Reporting on other information continued
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act
2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as
described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report for the
year ended 31 March 2022 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we did
not identify any material misstatements in the Strategic Report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate
governance statement relating to the parent company’s compliance with the provisions of the UK Corporate Governance Code specified
for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the
Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to
add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an
explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of
accounting in preparing them, and their identification of any material uncertainties to the group’s and parent company’s ability to continue to
do so over a period of at least twelve months from the date of approval of the financial statements;
• The directors’ explanation as to their assessment of the group’s and parent company’s prospects, the period this assessment covers and why
the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the parent company will be able to continue in operation and
meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group was substantially less in scope than an audit and only
consisted of making inquiries and considering the directors’ process supporting their statement; checking that the statement is in alignment
with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial
statements and our knowledge and understanding of the group and parent company and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the
information necessary for the members to assess the group’s and parent company’s position, performance, business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
• The section of the Annual Report describing the work of the Group Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the parent company’s compliance
with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by
the auditors.
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111
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Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities in respect of the Financial Statements, the directors are responsible
for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and
fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’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 group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations
related to laws and regulations issued by the Financial Conduct Authority (“FCA”) (including the Listing Rules), UK tax legislation, and equivalent
local laws and regulations applicable to other countries the group operates in, and we considered the extent to which non-compliance might
have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial
statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the
financial statements (including the risk of override of controls), and determined that the principal risks were related to the potential for manual
journal entries being recorded in order to manipulate financial performance. The group engagement team shared this risk assessment with
the component auditors so that they could include appropriate audit procedures in response to such risks in their work. Audit procedures
performed by the group engagement team and/or component auditors included:
• Discussions with management and those charged with governance in relation to known or suspected instances of non-compliance with laws
and regulations and fraud;
• Reviewing key correspondence with regulators, such as the FCA, in relation to the group’s compliance with applicable regulations;
• Writing to external legal counsel to identify any instances of non-compliance with laws and regulations, and assessing their potential impact;
• Evaluation of the parent company’s actions to address the unlawful dividends declared and review of the related disclosures made in the
Directors’ Report;
• Identifying and testing what we considered to be higher risk manual journal entries, including backdated post close journals, journals created
and approved by the same person, journals posted to unusual account combinations and journals posted by infrequent users; and
• Incorporating unpredictability into the nature, timing and/or extent of our testing.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with
laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment
by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques.
However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to
target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a
conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the parent company’s members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior
consent in writing.
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112
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Annual Report and Financial Statements 2022
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from
branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Group Audit Committee, we were appointed by the members on 29 October 2009 to audit the financial
statements for the year ended 31 March 2010 and subsequent financial periods. The period of total uninterrupted engagement is 13 years,
covering the years ended 31 March 2010 to 31 March 2022.
Other matter
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements form part of
the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with the
ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual financial report has been
prepared using the single electronic format specified in the ESEF RTS.
Hamish Anderson (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
9 June 2022
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113
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Annual Report and Financial Statements 2022
Consolidated income statement
For the year ended 31 March 2022
GROUP Note
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Revenue 32 5,809 461 ,30 8
Interest income 834 74 6
Total revenue 4 3 26,643 462,054
Introducing partner commissions and betting levies (4 4 , 6 93) (52 , 2 8 8)
Net operating income 3 281,950 409, 7 66
Operating expenses 5 (189,1 31) (18 3 , 9 9 4)
Net impairment gains on financial assets 1,494 —
Operating profit 94 , 313 2 25 ,7 7 2
Finance costs 7 (2, 177) (1 ,76 2)
Profit before taxation 8 9 2 ,1 36 224 , 0 1 0
Taxation 9 (20,1 38) (4 5 , 9 0 3)
Profit for the year attributable to owners of the parent 71,998 178 ,1 07
Earnings per share
Basic earnings per share 10 24 . 8p 61.5p
Diluted earnings per share 10 24 .7p 61.2p
As permitted by Section 408 of the Companies Act 2006, the Company has not presented its own income statement or statement of
comprehensive income. The Company had no other comprehensive income.
Financial statements
114
CMC Markets plc
Annual Report and Financial Statements 2022
Consolidated statement of comprehensive income
For the year ended 31 March 2022
GROUP Note
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Profit for the year 71,998 178 ,1 07
Other comprehensive income/ (expense):
Items that may be subsequently reclassified to income statement
Loss on net investment hedges, net of tax 27 (1 ,089) (2 , 0 07)
Currency translation differences 27 1 ,761 4 ,563
Changes in the fair value of debt instruments at fair value through other comprehensive
income, net of tax 27 (54) (5 4)
Other comprehensive income for the year 618 2,5 02
Total comprehensive income for the year attributable to owners of the parent 72, 616 180,609
Financial statements
115
CMC Markets plc
Annual Report and Financial Statements 2022
Consolidated statement of financial position
At 31 March 2022
GROUP Note
31 March 2022
£’000
31 March 2021
£’000
ASSETS
Non-current assets
Intangible assets 12 30,328 10, 330
Property, plant and equipment 13 24,94 1 26 ,1 0 5
Deferred tax assets 14 6,022 6 , 370
Financial investments 19 13 , 4 4 8 —
Trade and other receivables 16 1 ,7 97 1, 800
Total non-current assets 76, 5 3 6 44,6 05
Current assets
Trade and other receivables 16 156 ,917 1 2 7, 1 1 9
Derivative financial instruments 17 2 ,3 59 3 , 24 1
Current tax recoverable — 1 , 74 9
Other assets 18 13 , 4 43 —
Financial investments 19 14,4 97 28 ,10 4
Amounts due from brokers 19 6 ,117 253,895
Cash and cash equivalents 20 176, 57 8 118 ,921
Total current assets 559 ,9 11 533,029
Total assets 6 3 6 , 4 47 57 7, 6 3 4
LIABILITIES
Current liabilities
Trade and other payables 21 215 ,8 53 152 , 25 3
Derivative financial instruments 17 2 , 362 3, 07 7
Share buyback liability 2 7, 2 6 4 —
Borrowings 22 194 945
Lease liabilities 23 4,916 4 , 599
Current tax payable 429 —
Provisions 24 369 1, 889
Total current liabilities 251, 3 87 1 62 ,76 3
Non-current liabilities
Borrowings 22 — 194
Lease liabilities 23 9, 269 1 0,7 27
Deferred tax liabilities 14 3,30 9 1 ,62 2
Provisions 24 2 ,117 1 , 811
Total non-current liabilities 14,6 95 14, 35 4
Total liabilities 266,082 177,117
EQUITY
Equity attributable to owners of the Company
Share capital 25 73 ,1 93 73 ,29 9
Share premium 25 4 6 , 236 46 , 236
Capital redemption reserve 25 281 —
Own shares held in trust 26 (1,094) (382)
Other reserves 27 (7 5,980) (49, 3 3 4)
Retained earnings 3 2 7, 7 2 9 330,698
Total equity 3 70,365 4 0 0, 517
Total equity and liabilities 6 3 6 , 4 47 57 7, 6 3 4
The Financial Statements on pages 113 to 158 were approved by the Board of Directors on 8 June 2022 and signed on its behalf by:
Lord Cruddas Euan Marshall
Chief Executive Officer Chief Financial Officer
Financial statements
116
CMC Markets plc
Annual Report and Financial Statements 2022
Parent company statement of financial position
At 31 March 2022
Company registration number: 05145017
COMPANY Note
31 March 2022
£’000
31 March 2021
£’000
ASSETS
Non-current assets
Investment in subsidiary undertakings 15 168,962 168,111
Total non-current assets 168,962 168,111
Current assets
Trade and other receivables 16 1,020 14,019
Cash and cash equivalents 20 28,263 167
Total current assets 29,283 14,186
Total assets 198,245 182,297
LIABILITIES
Current liabilities
Trade and other payables 21 143 60
Share buyback liability 27,264 —
Total current liabilities 27,407 60
Non-current liabilities
Borrowings 22 — 13,549
Total non-current liabilities — 13,549
Total liabilities 27,407 13,609
EQUITY
Equity attributable to owners of the Company
Share capital 25 73,193 73,299
Share premium 25 46,236 46,236
Capital redemption reserve 25 281 —
Share buyback reserve (27,264) —
At 1 April 49,153 48,527
Profit for the year attributable to the owners 102,550 61,140
Other changes in retained earnings (73,311) (60,514)
Retained earnings 78,392 49,153
Total equity 170,838 168,688
Total equity and liabilities 198,245 182,297
The Financial Statements on pages 113 to 158 were approved by the Board of Directors on 8 June 2022 and signed on its behalf by:
Lord Cruddas Euan Marshall
Chief Executive Officer Chief Financial Officer
Financial statements
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Annual Report and Financial Statements 2022
Consolidated and parent company statements of changes in equity
For the year ended 31 March 2022
GROUP Note
Share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Own shares
held in trust
£’000
Other
reserves
£’000
Retained
earnings
£’000
Total
equity
£’000
At 1 April 2020 72,8 99 4 6 , 23 6 — (43 3) (51,836) 2 1 6 , 013 282 , 879
New shares issued 400 — — — — — 400
Profit for the year — — — — — 1 78 , 1 07 1 78 , 107
Other comprehensive income for the year — — — — 2, 502 — 2,502
Acquisition of own shares held in trust 26 — — — (36 4) — — (36 4)
Utilisation of own shares held in trust 26 — — — 41 5 — — 415
Share-based payments — — — — — (2 , 45 8) (2, 4 58)
Tax on share-based payments — — — — — 1,1 6 4 1 ,16 4
Dividends 11 — — — — — (62 ,12 8) (6 2 ,128)
At 31 March 2021 73, 299 4 6, 236 — (382) (49 , 3 3 4) 330,698 40 0 , 517
New shares issued 175 — — — — — 175
Profit for the year — — — — — 71 ,998 7 1,998
Other comprehensive income for the year — — — — 618 — 618
Acquisition of own shares held in trust 26 — — — (1 ,0 0 6) — — (1 ,0 06)
Utilisation of own shares held in trust 26 — — — 294 — — 294
Share buyback 25 (2 81) — 281 — (2 7, 2 6 4) (2 , 975) (30, 239)
Share-based payments — — — — — 59 59
Tax on share-based payments — — — — — 553 553
Dividends 11 — — — — — (72 ,6 04) (72 ,6 04)
At 31 March 2022 73 ,1 93 46 , 23 6 281 (1,094) (7 5,980) 3 2 7, 7 2 9 370,365
Total equity is attributable to owners of the Company
COMPANY Note
Share capital
£’000
Share premium
£’000
Capital
redemption
reserve
£’000
Share buyback
reserve
£’000
Retained
earnings
£’000
Total equity
£’000
At 1 April 2020 72,899 46,236 — — 48,527 167,662
New shares issued 400 — — — — 400
Profit for the year — — — — 61,140 61,140
Share-based payments — — — — 1,621 1,621
Dividends — — — — (62,135) (62,135)
At 31 March 2021 73,299 46,236 — — 49,153 168,688
New shares issued 175 — — — — 175
Profit for the year — — — — 102,550 102,550
Share-based payments — — — — 2,272 2,272
Share buyback 25 (281) — 281 (27,264) (2,975) (30,239)
Dividends 11 — — — — (72,608) (72,608)
At 31 March 2022 73,193 46,236 281 (27,264) 78,392 170,838
Financial statements
118
CMC Markets plc
Annual Report and Financial Statements 2022
Consolidated and parent company statements of cash flows
For the year ended 31 March 2022
GROUP COMPANY
Note
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Cash flows from operating activities
Cash generated from operations 28 1 81 ,79 5 15 1, 30 0 12,784 754
Interest income 1 , 74 2 1 ,784 — 21
Tax paid (14,651) (33 ,620) — —
Net cash generated from operating activities 168,886 119,464 12,784 775
Cash flows from investing activities
Purchase of property, plant and equipment (3 , 50 0) (4 ,1 6 2) — —
Investment in intangible assets (21 , 813) (8,028) — —
Purchase of financial investments (28,337) (28 , 9 33) — —
Proceeds from maturity of financial investments 2 7, 5 1 1 25 ,176 — —
Outflow on net investment hedges (998) (1 ,76 1) — —
Investment in subsidiaries — — (1,030) (469)
Amounts contributed by subsidiaries in relation to share-
based payments — — 2,157 2,587
Dividends received — — 103,617 61,950
Net cash (used in)/generated from investing activities (2 7, 1 3 7) (1 7, 7 0 8) 104,744 64,068
Cash flows from financing activities
Repayment of borrowings (10,945) (5 1 ,19 0) (13,549) (2,700)
Proceeds from borrowings 10,000 50 ,000 — —
Principal elements of lease payments (5, 9 62) (6,057) — —
Proceeds from issue of Ordinary Shares — 80 175 400
Acquisition of own shares (831) (4 4) — —
Share buyback (2 , 975) — (2,975) —
Dividends paid (72 ,6 04) (6 2,1 28) (72,608) (62,135)
Finance costs paid (2 ,1 51) (1 , 74 9) (475) (351)
Net cash used in financing activities (85 ,46 8) (7 1,088) (89,432) (64,786)
Net increase in cash and cash equivalents 56, 281 30,668 28,096 57
Cash and cash equivalents at the beginning of the year 20 118,92 1 8 4 , 3 07 167 110
Effect of foreign exchange rate changes 1 , 376 3,946 — —
Cash and cash equivalents at the end of the year 20 176 , 578 118,92 1 28,263 167
Financial statements
119
CMC Markets plc
Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements
For the year ended 31 March 2022
1. General information and basis of preparation
Corporate information
CMC Markets plc (the “Company”) is a public company limited by shares incorporated in the United Kingdom and domiciled in England and Wales
under the Companies Act 2006. The nature of the operations and principal activities of CMC Markets plc and its subsidiaries (collectively the
“Group”) are set out in note 3.
Functional and presentation currency
Items included in the Financial Statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (the “functional currency”). The Group’s Financial Statements are presented in Sterling (GBP), which
is the Company’s functional and the Group’s presentation currency. Foreign operations are included in accordance with the policies set out
in note 2.
Going concern
The Directors have prepared the Financial Statements on a going concern basis which requires the Directors to have a reasonable expectation
that the Group has adequate resources to continue in operational existence for a period of at least 12 months from the date of approval of the
Financial Statements.
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 reasonable expectation that the Group has adequate resources for that period and believe it is appropriate
toadopt the going concern basis in preparing the Financial Statements. Further details are set out in the Viability statement on page 100.
Basis of accounting
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted International
Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. The Group transitioned to UK-adopted
International Accounting Standards in its Group financial statements on 1 April 2021. This change constitutes a change in accounting framework.
However, there is no impact on recognition, measurement or disclosure in the period reported as a result of the change in framework.
The financial statements of the Group have been prepared in accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting under those standards.
The Financial Statements have been prepared in accordance with the going concern basis, under the historical cost convention, except in the
case of “Financial instruments at fair value through profit or loss (“FVPL”)” and “Financial instruments at fair value through other comprehensive
income (“FVOCI”)”. The financial information is rounded to the nearest thousand except where otherwise indicated.
The Company and Group’s principal accounting policies adopted in the preparation of these Financial Statements are set out in note 2 below.
These policies have been consistently applied to all years presented, with the exception of the adoption of the new and revised standards as
set out below. The Financial Statements presented are at and for the years ended 31 March 2022 and 31 March 2021. Financial annual years are
referred to as 2022 and 2021 in the Financial Statements.
Application of new and revised accounting standards
The following standards and interpretations applied for the first time in the current financial year, but do not have a significant impact on the
financial statements of the Company and the Group:
Interest Rate Benchmark Reform Phase 2 – Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
Accounting policy – Other assets
Other assets represent cryptocurrencies controlled by the Group. The Group offers various cryptocurrency-related products that can be
traded on its platform. The Group purchases and sells cryptocurrencies as part of its hedging activity.
The Group holds cryptocurrency assets for trading in the ordinary course of its business, effectively acting as a commodity broker-dealer in
respect of the underlying cryptocurrency assets. In the prior period cryptocurrency assets were disclosed within “Amount due for brokers”
(31 March 2021: £1,520,000). The assets will continue to be measured at fair value less cost to sell with changes in valuation being recorded
within revenue in the income statement in the period in which they arise. Cryptocurrency assets are not financial instruments, and they are
categorised as non-financial assets.
Cryptocurrency assets continue to be held at fair value through profit and loss therefore the adoption of this accounting policy impacts
classification only. Other assets amount to £13,443,000 and are presented as a separate line in the consolidated statement of financial position.
The Statement of Financial Position has not been restated to reclassify the comparative, on grounds of materiality.
There is no further impact for the year ended 31 March 2022 and for the year ended 31 March 2021.
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Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
1. General information and basis of preparation continued
New accounting standards in issue but not yet effective
At the date of authorisation of the Financial Statements, the following new standards and interpretations relevant to the Company and the
Group were in issue but not yet effective and have not been applied to the Financial Statements:
IFRS 17 Insurance contracts
Reference to the Conceptual Framework – Amendments to IFRS 3
Annual Improvements to IFRS Standards 2019-2020
Classification of Liabilities as Current or Non-current – Amendments to IAS 1
Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2
Definition of Accounting Estimate – Amendments to IAS 8
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12
The Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the
Company and the Group in future periods.
Basis of consolidation
The Financial Statements incorporate the financial information of the Company and its subsidiaries. Subsidiaries are all entities over which the
Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its power to direct the activities of the entity.
CMC Markets plc became the ultimate holding company of the Group under a Group reorganisation in 2006. The pooling of interests method
of accounting was applied to the Group reorganisation as it fell outside the scope of IFRS 3 “Business Combinations”. The Directors adopted
the pooling of interests as they believed it best reflected the true nature of the Group. All other business combinations have been accounted
for by the acquisition method of accounting.
Under the acquisition method of accounting, the identifiable assets, liabilities and contingent liabilities of a subsidiary are measured initially at
their fair values at the date of acquisition, irrespective of the extent of any minority interest. The results of subsidiaries acquired or disposed
of during the year are included in the Consolidated Income Statement from the effective date of acquisition or up to the effective date of
disposal, as appropriate. Acquisition-related costs are expensed as incurred.
Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies used into line with those
adopted by the Group.
All inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Significant accounting judgements and estimates
The preparation of Financial Statements in conformity with IFRSs requires the use of certain significant accounting judgements. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies.
No significant estimates were used in the preparation of the financial statements. The judgements that have the most significant impact on the
presentation or measurement of items recorded in the Financial Statements are as follows:
Deferred taxes
The recognition and measurement of deferred tax assets involve significant judgment. The carrying amounts of deferred tax assets are
reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.
Contingent liabilities
Judgement has been applied in evaluating the accounting treatment of the specific matters described in Note 34 (Contingent Liabilities),
notably the probability of any obligation or future payments arising.
Accounting for cryptocurrencies
The Group has recognised £13,443,000 (31 March 2021: £1,520,000 in ‘’Amounts due from brokers’’) of cryptocurrency assets and rights to
cryptocurrency assets on its Statement of Financial Position as at 31 March 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 Consolidated Statement of Financial Position.
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1. General information and basis of preparation continued
Significant accounting judgements and estimates continued
Intangible assets
The Group has recognised £14,237,000 of intangible assets under development on its Statement of Financial Position as at 31 March 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.
The Group has recognised £6,054,000 of intangible assets under development on its Statement of Financial Position as at 31 March 2022
relating to the development of the UK CMC Invest trading platform. In performing the annual 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 disclosure is included in Note 12.
2. Summary of significant accounting policies
Total revenue
Revenue
Revenue comprises the fair value of the consideration received from the provision of online financial services in the ordinary course of the
Group’s activities, net of client rebates. Revenue is shown net of value added tax after eliminating sales within the Group.
The Group generates revenue principally from commissions, spreads and financing income associated with stockbroking and acting as a
spread bet and contract for difference market maker to its clients, and the transactions undertaken to hedge the resulting risks.
Leveraged – Contracts for difference (“CFD”) and spread bet
Revenue from CFD and spread bet represents:
• fees paid by clients for commission and funding charges in respect of the opening, holding and closing of financial spread bets and contracts
for difference, together with the spread and fair value gains and losses for the Group arising on client trading activity; and
• fees paid by the Group in commissions and funding charges arising in respect of hedging the risk associated with the client trading
activity and the Group’s currency exposures, together with the spread and fair value gains and losses incurred by the Group arising on
hedging activity.
Commission and funding charges are accounted for in accordance with IFRS15 “Revenue from Contracts with Customers”. Commission income
is earned and recognised when the trade is placed, and funding charges when an open position is held by a customer at 5:00pm New York time.
Spread and fair value gains and losses are accounted for in accordance with IFRS9 “Financial Instruments” and IFRS13 “Fair Value Measurement”.
Open client and hedging positions are fair valued on a daily basis and the unrealised gains and losses arising on this valuation are recognised
in revenue, alongside realised gains and losses on positions that have closed.
Non-leveraged – Stockbroking revenue from contracts with customers
Revenue from the provision of financial information and stockbroking services to third parties represents fee and commission income. The
Group recognises this revenue when the amount for the service can be determined and the performance obligation has been satisfied, this
leads to the revenue being recognised on the date of the Group providing the service to the client.
Other revenue from contracts with customers
Other revenue from the provision of financial information, dormancy fees and balance conversions are accounted for in accordance with
IFRS15 “Revenue from Contracts with Customers”.
Interest income
Total revenue also includes interest earned on the Group’s own funds, clients’ funds and broker trading deposits. Interest income is accrued
based on the effective interest rate method, by reference to the principal outstanding and at the interest rate applicable. In addition, the Group
earns interest income on UK Government securities held as financial investments, calculated using the effective interest method.
Finance lease income is allocated to accounting periods to reflect a constant periodic rate of return on the Group’s net investment
outstanding in respect of the leases. This is presented within other interest income.
Introducing partner commissions and betting levies
Commissions payable to introducing partners and spread betting levies are charged to the income statement when the associated revenue
is recognised and are disclosed as a deduction from total revenue in deriving net operating income. Betting levy is payable on net gains
generated from clients on spread betting and the Countdowns products.
Financial statements
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Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
2. Summary of significant accounting policies continued
Segmental reporting
The Group’s segmental information is disclosed in a manner consistent with the internal reporting provided to the chief operating decision
maker (“CODM”). The chief operating decision maker, who is responsible for allocating resources and assessing the performance of the
operating segments, has been identified as the CMC Markets plc Board. Operating segments that do not meet the quantitative thresholds
required by IFRS 8 are aggregated. The segments are subject to annual review and the comparatives restated to reflect any reclassifications
within the segmental reporting.
Share-based payment
The Group issues equity settled and cash settled share-based payments to certain employees.
Equity settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at date of grant.
The fair value determined at the grant date of the equity settled share-based payment is expensed on a straight-line basis over the vesting
period, based on the Group’s estimate of shares that will eventually vest. At each balance sheet date, the Group revises its estimate of the
number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision
of the original estimates, if any, is recognised in the income statement such that the cumulative expense reflects the revised estimate, with a
corresponding adjustment to the retained earnings.
The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations.
Cash settled share-based payments are measured at expected value at vesting date at least once per year, along with the likelihood of
meeting non-market-based vesting conditions and the number of shares that are expected to vest. The cost is recognised in the income
statement with a corresponding accrual.
Retirement benefit costs
A defined contribution plan is a post-employment benefit plan into which the Group pays fixed contributions to a third-party pension provider
and has no legal or constructive obligation to pay further amounts. Contributions are recognised as staff expenses in profit or loss in the years
during which related employee services are fulfilled.
The Group operates defined contribution pension schemes for its Directors and employees. The assets of the schemes are held separately
from those of the Group in independently administered funds.
Taxation
The tax expense represents the sum of tax currently payable and movements in deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the Consolidated
Income Statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items
that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates and laws that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between
the carrying amount of assets and liabilities in the financial information and the corresponding tax basis used in the computation of taxable
profit. In principle, deferred tax liabilities are recognised for all temporary differences and deferred tax assets are recognised to the extent that
it is probable that taxable profits will be available against which deductible temporary differences may be utilised. Deferred tax is calculated
using tax rates and laws enacted or substantively enacted by the balance sheet date and are expected to apply when the asset or liability
is settled.
Such assets and liabilities are not recognised if the temporary difference arises from the goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction, which affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able
to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
Current and deferred tax is charged or credited in the Consolidated Income Statement, except when it relates to items credited or charged
directly to equity, in which case the tax is also dealt with in equity.
Foreign currencies
Transactions denominated in currencies, other than the functional currency, are recorded at the rates of exchange prevailing on the date of the
transaction. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Gains and losses arising on retranslation are included in the income statement for the year, except for
exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognised directly in equity.
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2. Summary of significant accounting policies continued
Foreign currencies continued
On consolidation, the assets and liabilities of the Group’s overseas operations are translated at exchange rates prevailing on the balance sheet
date. Income and expense items are translated at the average exchange rates applicable to the relevant year. Exchange differences arising, if
any, are classified as equity and transferred to the Group’s translation reserve.
Such translation differences are recognised as income or expense in the year in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate.
Intangible assets
Goodwill
Goodwill represents the excess of the cost of acquisition over the fair value of the Group’s interest in the identifiable assets, liabilities and
contingent liabilities of a subsidiary, at the date of acquisition. Goodwill arising on the acquisition of subsidiaries is included within “intangible
assets” at cost less accumulated impairment losses.
Goodwill is tested for impairment annually. Any impairment is recognised immediately in the Consolidated Income Statement and is not
subsequently reversed. On disposal of a subsidiary, the attributed amount of goodwill, which has not been subject to impairment, is included in
the determination of the profit or loss on disposal.
Goodwill is allocated to cash-generating units for purposes of impairment testing. The allocation is made to those cash-generating units or
groups of cash-generating units that are expected to benefit from the business combination, identified according to business segment.
Computer software (purchased and developed)
Purchased software is recognised as an intangible asset at cost when acquired. Costs associated with maintaining computer software are
recognised as an expense as incurred. Costs directly attributable to internally developed software are recognised as an intangible asset only if
all of the following conditions are met:
• it is technically feasible to complete the software so that it will be available for use;
• management intends to complete the software and use it;
• there is an ability to use the software;
• it can be demonstrated how the software will generate probable future economic benefits;
• adequate technical, financial and other resources to complete the development and to use the software are available; and
• the expenditure attributable to the software during its development can be reliably measured.
Where the above conditions are not met, costs are expensed as incurred. Directly attributable costs that are capitalised include software
development and employee costs. Costs which have been recognised as an asset are amortised on a straight-line basis over the asset’s
estimated useful life from the point at which the asset is ready to use.
Trademarks and trading licences
Trademarks and trading licences that are separately acquired are capitalised at cost and those acquired from a business combination are
capitalised at the fair value at the date of acquisition. Amortisation is charged to the income statement on a straight-line basis over their
estimated useful lives.
Client relationships
The fair value attributable to client relationships acquired through a business combination is included as an intangible asset and amortised over
the estimated useful life on a straight-line basis. The fair value of client relationships is calculated at the date of acquisition on the basis of the
expected future cash flows to be generated from that asset. Separate values are not attributed to internally generated client relationships.
Following initial recognition, computer software, trademarks and trading licences and client relationships are carried at cost or initial fair value
less accumulated amortisation. Amortisation is provided on all intangible assets at rates calculated to write off the cost, less estimated residual
value based on prices prevailing at the balance sheet date, of each asset on a straight-line basis over its expected useful life as follows:
Item Amortisation policy
Computer software (purchased or developed) 3-10 years or life of licence
Trademarks and trading licences 10–20 years
Client relationships 14 years
Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis. Assets under
development are transferred to the relevant intangible asset class and amortised over their useful life from the point at which the asset is ready
to use. Assets under development are tested for impairment annually.
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Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
2. Summary of significant accounting policies continued
Property, plant and equipment
Property, plant and equipment (“PPE”) is stated at cost less accumulated depreciation and any recognised impairment loss. Cost includes the
original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is
provided on all PPE at rates calculated to write off the cost, less estimated residual value based on prices prevailing at the balance sheet date,
of each asset on a straight-line basis over its expected useful life as follows:
Item Depreciation policy
Furniture, fixtures and equipment 5 years
Computer hardware 5 years
Leasehold improvements 15 years or life of lease
The useful lives and residual values of the assets are assessed annually and may be adjusted depending on a number of factors. In reassessing
asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value
assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. Consideration is
also given to the extent of current profits and losses on the disposal of similar assets.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in the Consolidated Income Statement.
Investment in subsidiary undertakings
In the parent company statement of financial position, investment in subsidiary undertakings is stated at cost less any provision for impairment.
Impairment of assets
Assets subject to amortisation or depreciation are reviewed for impairment if events or changes in circumstances indicate that the carrying
amount of the asset may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any). Where the asset does not generate cashflows that are independent from other assets, the
Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less cost to sell and value in use. Value in use is the estimated discounted future cash flows
generated from the asset’s continued use, including those from its ultimate disposal. Net realisable value is the estimated amount at which an
asset can be disposed of, less any direct selling costs.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. Impairment losses are recognised as an expense immediately.
An assessment is made at each balance sheet date as to whether there is any indication that previously recognised impairment losses may no
longer exist or may have decreased. If such indication exists, the recoverable amount is estimated and previously recognised impairment losses
are reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss
was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot
exceed the carrying amount that would have been determined, had no impairment loss been recognised for the asset in prior years. A reversal
of an impairment loss is recognised as income immediately.
Financial instruments
Classification
The Group classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value (either through other comprehensive income (“OCI”), or through profit or loss); and
• those to be measured at amortised cost.
Measurement
At initial recognition, the Group measures all financial asset at its fair value plus, in the case of a financial asset measured through other
comprehensive income, transaction costs that are directly attributable to the acquisition of the financial asset. Regular way transactions are
recognised on trade date.
The Group subsequently measures cash and cash equivalents, amounts due from brokers and trade and other receivables at amortised cost.
The Group subsequently measures derivative financial instruments and financial investments at fair value.
Cash and cash equivalents
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.
Amounts due from brokers
Amounts due from brokers represent funds placed with hedging counterparties, a proportion of which are posted to meet broker margin
requirements. All derivatives used as hedges held for trading are margin traded. Assets or liabilities resulting from profits or losses on open
positions are recognised separately as derivative financial instruments.
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2. Summary of significant accounting policies continued
Other assets
Other assets represent cryptocurrencies controlled by the Group. The Group offers CFDs on cryptocurrencies as a product that can be
traded on its platform. As part of a wider hedging strategy, the Group purchases and sells cryptocurrencies to hedge the clients’ positions.
The Group holds cryptocurrency assets for trading in the ordinary course of its business, effectively acting as a commodity broker-dealer in
respect of the underlying cryptocurrency asset. The assets are recognised on trade date and measured at fair value with changes in valuation
being recorded in the income statement in the period in which they arise. Cryptocurrency assets are not financial instruments, and they are
categorised as non-financial assets.
Trade and other receivables
Trade receivables primarily comprise amounts due from clients and stockbroking settlement balances. They are short term in nature are
recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
Trade receivables are short term and do not contain a significant financing element and therefore expected credit losses are measured using
the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from the initial recognition of the
receivables. Amounts are written off when there is no reasonable expectation of recovery of the amount.
The expected loss model for these trade receivables has been built based on the levels of loss experienced, with due consideration given to
forward-looking information.
The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income
statement within other operating expenses. When a trade receivable is uncollectable, it is written off against the allowance account for trade
receivables. Subsequent recoveries of amounts previously written off are credited against other operating costs in the income statement.
The Group sub-leases some of its leased premises. Under IFRS 16, an intermediate lessor accounts for the head lease and the sub-lease as two
separate contracts. The intermediate lessor is required to classify the sub-lease as a finance or operating lease by reference to the right-of-
use asset arising from the head lease (and not by reference to the underlying asset as was the case under IAS 17). The Group, as a lessor, has
reclassified certain of its sub-lease agreements as finance leases and recognised a lease receivable equal to the net investment in the sub-
lease. This is presented within Other Debtors.
Financial investments
Under IFRS 9, financial assets that are debt instruments held in a business model that is achieved by both collecting contractual cash flows and
selling and that contain contractual terms that give rise on specified dates to cash flows that are SPPI are measured at FVOCI.
Financial investments are non-derivative financial assets and are recognised on a trade date basis. Financial investments are initially measured at
fair value plus directly related transactions costs. They are re-measured at fair value and changes are recognised in OCI until the assets are sold
or disposed of.
Interest income is calculated using the effective interest method on debt securities. Other net gains and losses are recognised in OCI. On
derecognition, gains and losses accumulated in OCI are reclassified to the income statement.
Derivative financial instruments
Derivative financial instruments, comprising index, commodities, foreign exchange and treasury futures and forward foreign exchange contracts,
are classified as “fair value through profit or loss” under IFRS 9, unless designated as accounting hedges. Derivatives not designated as
accounting hedges are initially recognised at fair value. Subsequent to initial recognition, changes in fair value of such derivatives and gains or
losses on their settlement are recognised in the income statement.
For accounting hedges, the Group documents at the inception of the transaction the relationship between hedging instruments and hedged
items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly
effective in offsetting changes in fair values or cash flows of hedged items.
The Group designates certain derivatives as either:
Held for trading
Derivatives classified as held for trading are included in this category. The Group uses derivative financial instruments in order to hedge
derivative exposures arising from open client positions, which are classified as held for trading. All derivatives held for trading are carried in the
statement of financial position at fair value with gains or losses recognised in revenue in the income statement.
Held as hedges of net investments in foreign operations
Where a foreign currency derivative financial instrument is a formally designated accounting hedge of a net investment in a foreign operation,
foreign exchange differences arising on translation of the financial instrument are recognised in the net investment hedging reserve via other
comprehensive income to the extent the hedge is effective. The Group assesses the effectiveness of its net investment hedges based on fair
value changes of its net assets and the fair value changes of the relevant financial instrument. The gain or loss relating to the ineffective portion
is recognised immediately in operating expenses in the income statement. Accumulated gains and losses recorded in the net investment
hedging reserve are recognised in operating costs in the income statement on disposal of the foreign operation.
Financial statements
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Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
2. Summary of significant accounting policies continued
Derivative financial instruments continued
Economic hedges (held as hedges of monetary assets and liabilities, financial commitments or forecast transactions)
These are derivatives held to mitigate the foreign exchange risk on monetary assets and liabilities, financial commitments or forecast
transactions. Where a derivative financial instrument is used as an economic hedge of the foreign exchange exposure of a recognised monetary
asset or liability, financial commitment or forecast transaction, but does not meet the criteria to qualify for hedge accounting under IFRS, no
hedge accounting is applied and any gain or loss resulting from changes in fair value of the hedging instrument is recognised in operating costs
in the income statement.
Trade and other payables
Trade and other payables are not interest bearing and are stated at fair value on initial recognition and subsequently at amortised cost.
Leases
Under IFRS 16, when the Group is the lessee, it is required to recognise both:
• a lease liability, measured at the present value of remaining cash flows on the lease; and
• a right of use (ROU) asset, measured at the amount of the initial measurement of the lease liability, plus any lease payments made prior to
commencement date initial direct costs, and estimated costs of restoring the underlying asset to the condition required by the lease, less
any lease incentives received.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the
interest rate implicit in the lease is not readily determinable.
Subsequently, the lease liability will increase for the accrual of interest, resulting in a constant rate of return throughout the life of the lease, and
reduce when the payments are made. The right of use asset will amortise to the income statement over the life of the lease. The lease liability is
remeasured when there is a change in one of the following:
• future lease payments arising from a change in an index or rate;
• the Group’s estimate of the amount expected to be payable under a residual value guarantee; or
• the Group’s assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the ROU asset, or is recorded in the
income statement if the carrying amount of the ROU asset has been reduced to nil.
On the consolidated statement of financial position, the ROU assets are included within property, plant and equipment.
The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months
or less from the commencement date). Lease payments on short-term leases are recognised as expense on a straight-line basis over the
lease term.
Extension and termination options are included in a number of property leases in the Group. Management considers the facts and
circumstances that may create an economic incentive to exercise an extension or termination option in order to determine whether the lease
term should include or exclude such options. Extension or termination options are only included within the lease term if they are reasonably
certain to be exercised in the case of extension options and not exercised in the case of termination options.
Borrowings
All loans and borrowings are initially recognised at cost, being the fair value of the consideration received, net of issue costs associated with
the borrowing. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective
interest rate method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
Provisions
A provision is a liability of uncertain timing or amount that is recognised when the Group has a present obligation (legal or constructive)
as a result of a past event where it is probable that the Group will be required to settle that obligation. Provisions are measured at the
Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date and are discounted to present value
where the effect is material. The increase in the provision due to the unwind of the discount to present value over time is recognised as an
interest expense.
Share capital
Ordinary and Deferred Shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
Own shares held in trusts
Shares held in trust by the Company for the purposes of employee share schemes are classified as a deduction from shareholders’ equity and
are recognised at cost. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of equity shares.
Financial statements
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2. Summary of significant accounting policies continued
Capital redemption reserve
The capital redemption reserve was created for capital maintenance purposes as a result of the share buyback programme. When shares are
repurchased out of the Company’s profits, the amount by which the Company’s issued share capital is diminished must be transferred to the
capital redemption reserve. This amount is the nominal value of the shares bought back. See note 25.
Share buyback reserve
The share buyback reserve was created as a result of the share buyback programme and on inception of the contract amounted to the full
value of the share buyback programme plus directly attributed costs. As shares are being repurchased, the share buyback reserve amount 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. See note 27.
Employee benefit trusts
Assets held in employee benefit trusts (“EBT”) are recognised as assets of the Group, until these vest unconditionally to identified employees. A full
provision is made in respect of assets held by the trust as there is an obligation to distribute these assets to the beneficiaries of the employee benefit trust.
The employee benefit trusts own equity shares in the Company. These investments in the Company’s own shares are held at cost and are
included as a deduction from equity attributable to the Company’s equity owners until such time as the shares are cancelled or transferred.
Where such shares are subsequently transferred, any consideration received, net of any directly attributable incremental transaction costs and
the related income tax effects, is included in equity attributable to the Company’s equity owners.
Client money
The Group holds money on behalf of clients in accordance with the Client Asset (“CASS”) rules of the FCA and other financial markets
regulators in the countries in which the Group operates. The amounts held on behalf of clients at the balance sheet date are stated in notes 20
and 21. Segregated client funds comprise individual client balances which are pooled in segregated client money bank accounts. Segregated
client money bank accounts hold statutory trust status restricting the Group’s ability to use the monies and accordingly such amounts and are
not recognised on the Group’s Statement of Financial Position.
3. Segmental reporting
The Group’s principal business is online retail financial services including stockbroking 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, whereas the financial spread betting products are only available to trade 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:
• Leveraged – CFD and spread bet – UK and Ireland (“UK & IE”);
• Leveraged – CFD – Europe;
• Leveraged – CFD – Australia, New Zealand and Singapore (“APAC”) and Canada; and
• Non-leveraged – Stockbroking – Australia.
These segments are in line with the management information received by the chief operating decision maker (“CODM”).
Revenues and costs are allocated to the segments that originated the transaction. Costs generated centrally 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.
Year ended 31 March 2022
Leveraged Non-leveraged
GROUP
UK & IE
£’000
Europe
£’000
APAC &
Canada
£’000
Australia
£’000
Central
£’000
Total
£’000
Segment revenue net of introducing partner
commissions and betting levies 80,891 43,795 108,384 48,046 — 281,116
Interest income (413) — 335 912 — 834
Net operating income 80,478 43,795 108,719 48,958 — 281,950
Segment operating expenses (18,767) (6,480) (22,755) (10,422) (129,213) (187,637)
Segment contribution 61,711 37,315 85,964 38,536 (129,213) 94,313
Allocation of central operating expenses (35,527) (30,597) (40,689) (22,400) 129,213 —
Operating profit 26,184 6,718 45,275 16,136 — 94,313
Finance costs (432) (290) (195) (168) (1,092) (2,177)
Allocation of central finance costs (474) (207) (411) — 1,092 —
Profit before taxation 25,278 6,221 44,669 15,968 — 92,136
Financial statements
128
CMC Markets plc
Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
3. Segmental reporting continued
Year ended 31 March 2021
Leveraged Non-leveraged
GROUP
UK & IE
£’000
Europe
£’000
APAC &
Canada
£’000
Australia
£’000
Central
£’000
Total
£’000
Segment revenue net of introducing partner
commissions and betting levies 125,947 65,035 163,236 54,802 — 409,020
Interest income (26) — 533 239 — 746
Net operating income 125,921 65,035 163,769 55,041 — 409,766
Segment operating expenses (19,909) (6,574) (21,950) (10,039) (125,522) (183,994)
Segment contribution 106,012 58,461 141,819 45,002 (125,522) 225,772
Allocation of central operating expenses (36,336) (30,393) (37,320) (21,473) 125,522 —
Operating profit 69,676 28,068 104,499 23,529 — 225,772
Finance costs (484) (36) (242) (213) (787) (1,762)
Allocation of central finance costs (331) (134) (322) — 787 —
Profit before taxation 68,861 27,898 103,935 23,316 — 224,010
The measurement of net operating income for segmental analysis is consistent with that in the income statement and is broken down by
geographic location and business line below.
Net operating income by geography
Year ended 31 March 2022
£’000
Year ended 31 March 2021
£’000
Leveraged Non-leveraged Total Leveraged Non-leveraged Total
UK 80,478 — 80,478 125,921 — 125,921
Australia 49,020 48,958 97,978 101,127 55,041 156,168
Other countries 103,494 — 103,494 127,677 — 127,677
Total net operating income 232,992 48,958 281,950 354,725 55,041 409,766
The Group uses “Segment contribution” to assess the financial performance of each segment. Segment contribution comprises operating
profit for the year before finance costs and 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 of non-current assets other
than deferred tax assets, broken down by location and business line of the assets, is shown below.
Year ended 31 March 2022
£’000
Year ended 31 March 2021
£’000
Leveraged Non-leveraged Total Leveraged Non-leveraged Total
UK 41,168 — 41,168 22,662 — 22,662
Australia 3,244 23,010 26,254 4,336 8,357 12,693
Other countries 3,092 — 3,092 2,880 — 2,880
Total non-current assets 47,504 23,010 70,514 29,878 8,357 38,235
4. Total revenue
Revenue
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Leveraged 247,987 373,006
Non-leveraged 74,326 83,310
Other revenue 3,496 4,992
Total 325,809 461,308
Leveraged revenue represents CFD and spread bet revenue. Non-leveraged revenue represents stockbroking revenue.
Financial statements
129
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Annual Report and Financial Statements 2022
4. Total revenue continued
Interest income
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Bank and broker interest 825 681
Interest on financial investments 9 43
Other interest income — 22
Total 834 746
The Group earns interest income from its own corporate funds and from segregated client funds.
5. Operating expenses
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Net staff costs (note 6) 84,862 78,653
IT costs 28,721 26,162
Sales and marketing 27,363 30,399
Premises 3,343 3,794
Legal and professional fees 8,568 7,234
Regulatory fees 5,576 5,002
Depreciation and amortisation 12,901 11,239
Irrecoverable sales tax 2,789 6,536
Other 15,480 15,017
189,603 184,036
Capitalised internal software development costs (472) (42)
Operating expenses 189,131 183,994
The above presentation reflects the breakdown of operating expenses by nature of expense.
6. Employee information
The aggregate employment costs of staff and Directors were:
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Wages and salaries 74,352 66,694
Social security costs 9,475 9,452
Other pension costs 2,230 1,916
Share-based payments 2,418 2,489
Total Directors and employee costs 88,475 80,551
Contract staff costs 3,880 3,243
92,355 83,794
Capitalised internal software development costs (7,493) (5,141)
Net staff costs 84,862 78,653
Compensation of key management personnel is disclosed in the Directors’ remuneration report on page 91.
Financial statements
130
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Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
6. Employee information continued
The monthly average number of Directors and employees of the Group during the year is set out below:
GROUP
Year ended
31 March 2022
Number
Year ended
31 March 2021
Number
By activity:
Key management 8 8
Client acquisition and maintenance 420 392
IT development and support 252 217
Global support functions 215 179
Total Directors and employees 895 796
Contract staff 22 22
Total staff 917 818
The Company had no employees during the current year or prior year.
7. Finance costs
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Interest and fees on bank borrowings 1,451 926
Interest on lease liabilities 700 818
Other finance costs 26 18
Total 2,177 1,762
8. Profit before taxation
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Profit before tax is stated after charging/(crediting):
Depreciation 10,081 9,254
Amortisation of intangible assets 2,820 1,985
Net foreign exchange gain (1,179) (222)
Auditors’ remuneration for audit and other services (see below) 2,057 1,975
Fees payable to the Company’s auditors, PricewaterhouseCoopers LLP, were as follows:
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Audit services
Audit of CMC Markets plc’s financial statements 659 681
Audit of CMC Markets plc’s subsidiaries 780 777
Total audit fees 1,439 1,458
Non-audit services
Audit-related services 618 517
Total non-audit fees 618 517
Total fees 2,057 1,975
Financial statements
131
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Annual Report and Financial Statements 2022
9. Taxation
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Analysis of charge for the year
Current tax:
Current tax on profit for the year 18,642 35,124
Adjustments in respect of previous years (465) (815)
Total current tax 18,177 34,309
Deferred tax:
Origination and reversal of temporary differences 1,699 11,508
Adjustments in respect of previous years 409 86
Impact of change in tax rate (147) —
Total deferred tax 1,961 11,594
Total tax 20,138 45,903
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 of 21.86% (year ended 31 March 2021: 20.49%) differs from the standard rate ofUK
corporation tax of 19% (year ended 31 March 2021: 19%). The differences are explained below:
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Profit before taxation 92,136 224,010
Profit multiplied by the standard rate of corporation tax in the UK of 19% (year ended 31 March 2021: 19%) 17,506 42,562
Adjustment in respect of foreign tax rates 2,500 3,918
Adjustments in respect of previous years (56) (729)
Impact of change in tax rate (147) 1
Expenses not deductible for tax purposes 291 415
Recognition of previously unrecognised tax losses — (678)
Other differences 44 414
Total tax 20,138 45,903
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Tax on items recognised directly in equity
Tax credit on share-based payments 553 1,164
10. Earnings per share (“EPS”)
Basic EPS is calculated by dividing the earnings attributable to the equity owners of the Company by the weighted average number of Ordinary
Shares in issue during each year excluding those held in employee share trusts which are treated as cancelled.
For diluted earnings per share, the weighted average number of Ordinary Shares in issue, excluding those held in employee share trusts, is adjusted
to assume vesting of all dilutive potential weighted average Ordinary Shares and that vesting is satisfied by the issue of new Ordinary Shares.
GROUP
Year ended
31 March 2022
Year ended
31 March 2021
Earnings attributable to ordinary shareholders (£’000) 71,998 178,107
Weighted average number of shares used in the calculation of basic EPS (’000) 290,815 289,677
Dilutive effect of share options (’000) 1,022 1,485
Weighted average number of shares used in the calculation of diluted EPS (’000) 291,837 291,162
Basic EPS 24.8p 61.5p
Diluted EPS 24.7p 61.2p
For the year ended 31 March 2022, 1,022,000 (year ended 31 March 2021: 1,485,000) potentially dilutive weighted average Ordinary Shares in
respect of share options in issue were included in the calculation of diluted EPS.
Financial statements
132
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Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
11. Dividends
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Declared and paid in each year
Final dividend for 2021 at 21.43p per share (2020: 12.18p) 62,410 35,393
Interim dividend for 2022 at 3.50p per share (2021: 9.20p) 10,194 26,735
Total 72,604 62,128
The final dividend for 2022 of 8.88 pence per share, amounting to £25,778,000 was proposed by the Board on 8 June 2022 and has not been
included as a liability at 31 March 2022. The dividend will be paid on 11 August 2022, following approval at the Company’s AGM, to those
members on the register at the close of business on 15 July 2022. The dividends paid or declared in relation to the financial year are set out below:
GROUP
Year ended
31 March 2022
Pence
Year ended
31 March 2021
Pence
Declared per share
Interim dividend 3.50 9.20
Final dividend 8.88 21.43
Total dividend 12.38 30.63
12. Intangible assets
GROUP
Goodwill
£’000
Computer
software
£’000
Trademarks and
trading licences
£’000
Client
relationships
£’000
Assets under
development
£’000
Total
£’000
Cost
At 1 April 2020 11,500 121,085 1,409 2,684 1,054 137,732
Additions — 2,678 — — 5,350 8,028
Transfers — 275 — — (275) —
Disposals — — (57) — (33) (90)
Research and development grant — (515) — — — (515)
Foreign currency translation — 2,472 45 311 52 2,880
At 31 March 2021 11,500 125,995 1,397 2,995 6,148 148,035
Additions — 77 — — 21,736 21,813
Transfers — 5,246 — — (5,246) —
Disposals — — (356) — — (356)
Foreign currency translation — 869 11 100 970 1,950
At 31 March 2022 11,500 132,187 1,052 3,095 23,608 171,442
Accumulated amortisation and impairment
At 1 April 2020 (11,500) (117,907) (1,053) (2,684) — (133,144)
Charge for the year — (1,945) (40) — — (1,985)
Foreign currency translation — (2,223) (42) (311) — (2,576)
At 31 March 2021 (11,500) (122,075) (1,135) (2,995) — (137,705)
Charge for the year — (2,773) (47) — — (2,820)
Disposals — — 287 — — 287
Foreign currency translation — (764) (12) (100) — (876)
At 31 March 2022 (11,500) (125,612) (907) (3,095) — (141,114)
Carrying amount
At 1 April 2020 — 3,178 356 — 1,054 4,588
At 31 March 2021 — 3,920 262 — 6,148 10,330
At 31 March 2022 — 6,575 145 — 23,608 30,328
Computer software includes capitalised development costs of £26,487,000 relating to the Group’s Next Generation trading platform which has
been fully amortised. Research and Development expenditure recognised as expense during the year amounted to £1,690,00 (31 March 2021: £824,000).
Financial statements
133
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Annual Report and Financial Statements 2022
12. Intangible assets continued
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 for impairment annually. There was no impairment identified in the year ended
31March2022 (year ended 31 March 2021: £nil).
At 31 March 2022, the Group had no material capital commitments in respect of intangible assets (31 March 2021: £nil).
Impairment sensitivity analysis
The recoverable amount of the asset under development relating to the UK CMC Invest platform has been determined using a value-in-use
discounted cashflow calculation. This uses the most recent board-approved forecast results, a discount rate of 7.7% and long term growth rate
(beyond the forecasting period) of 0%. The carrying value of the asset at 31 March 2022 was £6,054,000.
The recoverable amount is sensitive to changes in forecast revenues. A 4.5% reduction in forecast revenues would determine a recoverable
amount equal to the carrying value of £6,054,000. A 12% reduction in forecast revenues would result in the full impairment of the asset.
13. Property, plant and equipment
GROUP
Leasehold
improvements
£’000
Furniture,
fixtures and
equipment
£’000
Computer
hardware
£’000
Right-of-use
asset
£’000
Total
£’000
Cost
At 1 April 2020 18,600 9,807 31,008 17,657 77,072
Additions — 58 4,805 1,707 6,570
Disposals (43) (408) (12) (870) (1,333)
Foreign currency translation 716 199 448 652 2,015
At 31 March 2021 19,273 9,656 36,249 19,146 84,324
Additions 106 198 3,196 5,362 8,862
Disposals (2,733) (1,007) (2,262) (275) (6,277)
Foreign currency translation 237 75 192 324 828
At 31 March 2022 16,883 8,922 37,375 24,557 87,737
Accumulated depreciation
At 1 April 2020 (12,156) (8,523) (24,166) (4,089) (48,934)
Charge for the year (1,796) (554) (2,756) (4,148) (9,254)
Disposals 43 408 12 546 1,009
Foreign currency translation (484) (126) (325) (105) (1,040)
At 31 March 2021 (14,393) (8,795) (27,235) (7,796) (58,219)
Charge for the year (1,642) (414) (3,225) (4,800) (10,081)
Disposals 2,736 1,001 2,248 181 6,166
Foreign currency translation (222) (72) (147) (221) (662)
At 31 March 2022 (13,521) (8,280) (28,359) (12,636) (62,796)
Carrying amount
At 1 April 2019 6,444 1,284 6,842 13,568 28,138
At 31 March 2021 4,880 861 9,014 11,350 26,105
At 31 March 2022 3,362 642 9,016 11,921 24,941
The carrying amount of recognised right-of-use assets relate to the following types of assets:
Financial statements
134
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Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
13. Property, plant and equipment continued
GROUP
Computer
hardware
£’000
Leasehold
properties
£’000
Total
£’000
At 1 April 2020 914 12,654 13,568
Additions — 1,707 1,707
Disposals — (324) (324)
Charge for the year (609) (3,539) (4,148)
Foreign currency translation — 547 547
At 31 March 2021 305 11,045 11,350
Additions — 5,362 5,362
Disposals — (94) (94)
Charge for the year (305) (4,495) (4,800)
Foreign currency translation — 103 103
At 31 March 2022 — 11,921 11,921
Refer to note 23 for further details on lease liabilities.
14. Deferred tax
GROUP
31 March 2022
£’000
31 March 2021
£’000
Deferred tax assets to be recovered within 12 months 1,807 1,966
Deferred tax assets to be recovered after 12 months 4,215 4,404
6,022 6,370
Deferred tax liabilities to be settled within 12 months (993) (495)
Deferred tax liabilities to be settled after 12 months (2,316) (1,127)
(3,309) (1,622)
Net deferred tax asset 2,713 4,748
Deferred income taxes are calculated on all temporary differences under the liability method at the tax rate expected to apply when the
deferred tax will crystallise. The gross movement on deferred tax is as follows:
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
At 1 April 4,748 14,324
Charge to income for the year (2,108) (11,594)
Charge to equity for the year (135) (7)
Change in tax rate 147 —
Research and development tax credit — 310
Foreign currency translation 61 1,715
At 31 March 2,713 4,748
Financial statements
135
CMC Markets plc
Annual Report and Financial Statements 2022
14. Deferred tax continued
The following table details the deferred tax assets and liabilities recognised by the Group and movements thereon during the year:
GROUP
Tax losses
£’000
Accelerated
capital
allowances
£’000
Other timing
differences
£’000
Total
£’000
At 1 April 2020 6,415 689 7,220 14,324
Charge to income for the year (7,106) (3,317) (1,171) (11,594)
Charge to equity for the year — — (7) (7)
Research and development tax credit — — 310 310
Foreign currency translation 826 276 613 1,715
At 31 March 2021 135 (2,352) 6,965 4,748
Charge to income for the year (41) 1,894 (3,961) (2,108)
Charge to equity for the year — — (135) (135)
Research and development tax credit (1) 169 (21) 147
Foreign currency translation — 11 50 61
At 31 March 2022 93 (278) 2,898 2,713
The recognition of deferred tax assets is based upon whether it is more likely than not that sufficient and suitable taxable profits will be available
in the future against which the reversal of the temporary differences can be deducted. The recoverability of the Group’s deferred tax asset in
respect of carry forward losses is based on an assessment of the future levels of taxable profit expected to arise that can be offset against
these losses. The Group’s expectations as to the level of future taxable profits take into account the Group’s long-term financial and strategic
plans and anticipated future tax adjusting items. In making this assessment, account is taken of business plans including the Board-approved
Group budget. Key budget assumptions are discussed in the Directors’ viability statement.
Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future
taxable profits is probable. As at 31 March 2022 the Group did not recognise deferred tax assets of £181,000 (at 31 March 2021: £267,000) in
respect of losses amounting to £724,000 (year ended 31 March 2021: £1,068,000). These relate to the Group’s subsidiary, Information Internet Ltd
and there are no time limits on their utilisation.
The Group has recognised a deferred tax asset of £94,000 (at 31 March 2021: £95,000) in respect of losses of £375,000 (year ended 31 March 2021:
£380,000) in the Group’s subsidiary, Information Internet Ltd as at 31 March 2021.
A deferred tax asset of £nil (at 31 March 2021: £310,000) has arisen for the Group in respect of Research and Development tax credits arising in
Australia which have not been used due to the existence of tax losses. The credits are expected to be utilised in future.
On 5 March 2021 the UK government announced that from 1 April 2023 the Corporation Tax main rate will be increased from 19% to 25%. This
was substantively enacted on 24 May 2021. Deferred tax balances are reported at the substantively enacted tax rate of 25% at 31 March 2022.
Financial statements
136
CMC Markets plc
Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
15. Investment in subsidiary undertakings
COMPANY
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
At 1 April 168,111 169,023
Capital contribution relating to share-based payments 2,272 1,621
Amounts contributed by subsidiaries in relation to share-based payments (2,157) (2,587)
Investment 1,030 469
169,256 168,526
Impairment (294) (415)
At 31 March 168,962 168,111
The list below includes all of the Group’s direct and indirect subsidiaries as at 31 March 2022:
Country of
incorporation Principal activities Held
CMC Markets Holdings Ltd England Holding company Directly
CMC Markets UK Holdings Ltd England Holding company Indirectly
CMC Markets Investments Limited England Online trading Indirectly
CMC Markets Investments Nominee Limited England Online trading Indirectly
CMC Markets UK plc England Online trading Indirectly
Information Internet Ltd England IT development Indirectly
CMC Spreadbet plc England Financial spread betting Indirectly
CMC Markets Overseas Holdings Ltd England Holding company Indirectly
CMC Markets Asia Pacific Pty Ltd Australia Online trading Indirectly
CMC Markets Group Australia Pty Ltd Australia Holding company Indirectly
CMC Markets Stockbroking Ltd Australia Stockbroking Indirectly
CMC Markets Stockbroking Services Pty Ltd Australia Employee services Indirectly
CMC Markets Stockbroking Nominees Pty Ltd Australia Stockbroking nominee Indirectly
CMC Markets Stockbroking Nominees (No. 2 Account) Pty Ltd Australia Dormant Indirectly
CMC Markets Canada Inc Canada Online trading Indirectly
CMC Markets NZ Ltd New Zealand Online trading Indirectly
CMC Markets Singapore Pte Ltd Singapore Online trading Indirectly
CMC Business Services (Shanghai) Limited China Training and education Indirectly
CMC Markets Germany GmbH Germany Online trading Indirectly
CMC Markets Middle East Ltd UAE Online trading Indirectly
Please refer to pages 162 and 163 for the registered office addresses of the subsidiaries above.
All shareholdings are of Ordinary Shares. The issued share capital of all subsidiary undertakings is 100% owned, which also represents the
proportion of the voting rights in the subsidiary undertakings.
The list below includes all of the Group’s employee benefit trusts as at 31 March 2022:
Country of
incorporation
CMC Markets plc Employee Share Trust Jersey
CMC Markets plc UK Share Incentive Plan England
CMC Markets plc (Discretionary Schemes) Employee Share Trust England
Investment in subsidiary undertakings are tested for impairment annually. Total provision for impairment recorded during the year ended 31
March 2022 amounted to £294,000 (year ended 31 March 2021: £415,000).
Financial statements
137
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Annual Report and Financial Statements 2022
16. Trade and other receivables
GROUP COMPANY
31 March 2022
£’000
31 March 2021
£’000
31 March 2022
£’000
31 March 2021
£’000
Current
Gross trade receivables 15,256 9,103 — —
Less: provision for impairment of trade receivables (6,219) (7,762) — —
Trade receivables 9,037 1,341 — —
Amounts due from Group companies — — 1,013 159
Prepayments and accrued income 11,143 9,799 7 79
Stockbroking debtors 134,324 99,035 — —
Other debtors 2,413 16,944 — 13,781
156,917 127,119 1,020 14,019
Non-current
Other debtors 1,797 1,800 — —
Total 158,714 128,919 1,020 14,019
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 21).
As at 31 March 2021, the other debtors balance included a deposit of AUD$25,000,000 (£13,781,000) which was repaid as part of the transaction
with ANZ as described in note 1.
17. Derivative financial instruments
Assets
GROUP
31 March 2022
Notional
amount
£m
31 March 2022
Carrying
amount
£’000
31 March 2021
Notional
amount
£m
31 March 2021
Carrying
amount
£’000
Held for trading
Index, commodity, foreign exchange, cryptocurrency and treasury futures 97.5 1,774 198.1 2,058
Forward foreign exchange contracts 90.2 417 227.0 681
Held for hedging
Forward foreign exchange contracts – economic hedges 14.0 78 27.2 331
Forward foreign exchange contracts – net investment hedges 40.0 90 52.2 171
Total 241.7 2,359 504.5 3,241
Liabilities
GROUP
31 March 2022
Notional
amount
£m
31 March 2022
Carrying
amount
£’000
31 March 2021
Notional
amount
£m
31 March 2021
Carrying
amount
£’000
Held for trading
Index, commodity, foreign exchange, cryptocurrency and treasury futures 107.6 (1,690) 217.6 (2,409)
Forward foreign exchange contracts 79.4 (131) 38.1 (216)
Held for hedging
Forward foreign exchange contracts – economic hedges 36.0 (530) 48.6 (451)
Forward foreign exchange contracts – net investment hedges 4.7 (11) — (1)
Total 227.7 (2,362) 304.3 (3,077)
The fair value of derivative contracts and cryptocurrencies are based on the market price of comparable instruments at the balance sheet date.
All derivative financial instruments have a maturity date of less than one year.
Financial statements
138
CMC Markets plc
Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
17. Derivative financial instruments continued
Held for trading
As described in note 30, the Group enters into derivative contracts and holds cryptocurrencies in order to hedge its market price risk exposure
arising from open client positions.
Held for hedging
The Group’s forward foreign exchange contracts are designated as either economic or net investment hedges.
Economic hedges are held for the purpose of mitigating currency risk relating to transactional currency flows arising from earnings in foreign
currencies but do not meet the criteria for designation as hedges. During the year ended 31 March 2022, £869,000 of gains net of revaluation
gains or losses relating to economic hedges were recognised in the income statement (year ended 31 March 2021: gains of £328,000).
The Group has designated a number of foreign exchange derivative contracts as hedges of the net investment in the Group’s foreign
operations. At 31 March 2022, £8,662,000 (31 March 2021: £7,573,000) of fair value losses were recorded in net investment hedging reserve
within other reserves. At 31 March 2022, £7,827,000 (31 March 2021: £6,066,000) of fair value gains were recorded in the translation reserve within
other reserves.
During the year ended 31 March 2022, fair value losses of £1,089,000 (year ended 31 March 2021: losses of £2,007,000) relating to net investment
hedges were recognised in other comprehensive income. All changes in the fair value were treated as being effective under IFRS 9 “Financial
Instruments”; as a result there was no amount reclassified from the net investment hedging reserve or translation reserve into the income statement.
The maximum exposure to credit risk at the reporting date is the fair value of the derivative assets at the balance sheet date.
The Group’s derivative positions are reported gross on the statement of financial position, as required by IAS 32 where there are no offset
rights in place. There are no further netting arrangements or collateral posted which would impact the settlement of these balances.
18. Other assets
GROUP
31 March 2022
£’000
31 March 2021
£’000
Exchange 953 —
Vaults 12,490 —
Total 13,443 —
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 above.
19. Financial investments
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
UK government securities
At 1 April 28,037 25,385
Purchase of securities 28,337 28,933
Maturity of securities and coupon receipts (28,428) (26,256)
Net accrued interest (17) 29
Changes in the fair value of debt instruments at fair value through other comprehensive income (54) (54)
At 31 March 27,875 28,037
Equity securities
At 1 April 67 60
Foreign currency translation 3 7
At 31 March 70 67
Total 27,945 28,104
Financial statements
139
CMC Markets plc
Annual Report and Financial Statements 2022
19. Financial investments continued
The effective interest rates of UK government securities held at the year end range from -0.19% to 1.72% (31 March 2021: -0.20% to 1.70%).
GROUP
31 March 2022
£’000
31 March 2021
£’000
Analysis of financial investments
Non-current 13,448 —
Current 14,497 28,104
Total 27,945 28,104
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.
All of the Group’s UK government securities measured at FVOCI are considered to have low credit risk. These UK government securities are
held to meet the Group’s regulatory threshold requirements under IFPR. There was no impairment identified in the year ended 31 March 2022
(year ended 31 March 2021: £nil).
20. Cash and cash equivalents
GROUP COMPANY
31 March 2022
£’000
31 March 2021
£’000
31 March 2022
£’000
31 March 2021
£’000
Gross cash and cash equivalents 723,213 668,304 28,263 167
Less: client monies (546,635) (549,383) — —
Cash and cash equivalents 176,578 118,921 28,263 167
Analysed as:
Cash at bank 176,578 118,921 28,263 167
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.
Analysis of net cash
GROUP
31 March 2022
£’000
31 March 2021
£’000
Cash and cash equivalents 176,578 118,921
Borrowings (194) (1,139)
Lease liabilities (14,185) (15,326)
Net cash 162,199 102,456
GROUP Borrowings
Lease
liabilities Sub-total
Cash and cash
equivalents Total
At 1 April 2020 (1,631) (19,273) (20,904) 84,307 63,403
Financing cash flows 1,190 6,057 7,247 30,668 37,915
Inception/modification of leases and non-cash borrowings (698) (1,181) (1,879) — (1,879)
Foreign exchange adjustments — (929) (929) 3,946 3,017
At 31 March 2021 (1,139) (15,326) (16,465) 118,921 102,456
Financing cash flows 945 5,962 6,907 56,281 63,188
Inception/modification of leases — (4,658) (4,658) — (4,658)
Foreign exchange adjustments — (163) (163) 1,376 1,213
At 31 March 2022 (194) (14,185) (14,379) 176,578 162,199
Financial statements
140
CMC Markets plc
Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
21. Trade and other payables
GROUP COMPANY
31 March 2022
£’000
31 March 2021
£’000
31 March 2022
£’000
31 March 2021
£’000
Current
Gross trade payables 593,995 580,062 10 —
Less: client monies (546,635) (549,383) — —
Trade payables 47,360 30,679 10 —
Tax and social security 2,242 236 — —
Stockbroking creditors 123,875 89,091 — —
Accruals and other creditors 42,376 32,247 133 60
Total 215,853 152,253 143 60
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 16).
22. Borrowings
GROUP COMPANY
31 March 2022
£’000
31 March 2021
£’000
31 March 2022
£’000
31 March 2021
£’000
Current
Other liabilities 194 945 — —
194 945 — —
Non-current
Other liabilities — 194 — —
Amount due to Group companies — — — 13,549
— 194 — 13,549
Total 194 1,139 — 13,549
The fair value of financial liabilities is approximately equivalent to the book value shown above.
Bank loans
In March 2022 , the syndicated revolving credit facility was renewed at a level of £55,000,000 (31 March 2021: £55,000,000) where £27,500,000
had a maturity date of March 2023 and £27,500,000 had a maturity date of March 2025. This facility can only be used to meet broker margin
requirements of the Group. The rate of interest payable on any loans is the aggregate of the applicable margin and SONIA. Other fees such as
commitment fees, legal fees and arrangement fees are also payable on this facility (note 7).
No amount was outstanding on this facility at 31 March 2022 (31 March 2021: £nil).
Financial statements
141
CMC Markets plc
Annual Report and Financial Statements 2022
23. Lease liabilities
The Group leases several assets including leasehold properties and computer hardware to meet its operational business requirements.
Theaverage lease term is 2.1 years.
ROU asset balances relate to both leasehold properties and computer hardware. Refer to note 13 for a breakdown of the carrying amount ofROU assets.
The movements in lease liabilities during the year were as follows:
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
At 1 April 15,326 19,273
Additions 4,658 1,181
Interest expense 700 818
Lease payments made during the year (6,662) (6,875)
Foreign currency translation 163 929
At 31 March 14,185 15,326
GROUP
31 March 2022
£’000
31 March 2021
£’000
Analysis of lease liabilities
Non-current 9,269 10,727
Current
4,916
4,599
Total 14,185 15,326
The lease payments for the year ended 31 March 2022 relating to short-term leases amounted to £207,000 (year ended 31 March 2021: £748,000).
As at 31 March 2022 the potential future undiscounted cash outflows that have not been included in the lease liability due to lack of reasonable
certainty the lease extension options might be exercised amounted to £nil (31 March 2021: £nil).
Refer to note 29 for maturity analysis of lease liabilities.
24. Provisions
GROUP
EBT
commitments
£’000
Property
related
£’000
Other
£’000
Total
£’000
At 1 April 2020 122 1,958 394 2,474
Additional provision — 113 1,463 1,576
Utilisation of provision (122) (27) (258) (407)
Currency translation — 57 — 57
At 31 March 2021 — 2,101 1,599 3,700
Additional provision — 623 — 623
Utilisation of provision — (326) (1,506) (1,832)
Currency translation — 18 (23) (5)
At 31 March 2022 — 2,416 70 2,486
The provision relating to EBTs represents the obligation to distribute assets held in EBTs to beneficiaries.
The property-related provisions include dilapidation provisions. Dilapidation provisions have been capitalised as part of cost of ROU assets and
are amortised over the term of the lease. These dilapidation provisions are utilised as and when the Group vacates a property and expenditure
is incurred to restore the property to its original condition.
The other provisions balance on 31 March 2022 predominantly relates to provisions made for client complaints linked to market volatility
during Q1 2021.
GROUP
31 March 2022
£’000
31 March 2021
£’000
Analysis of total provisions
Current 369 1,889
Non-current 2,117 1,811
Total 2,486 3,700
Financial statements
142
CMC Markets plc
Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
25. Share capital, share premium and capital redemption reserve
Number £’000
GROUP AND COMPANY 31 March 2022 31 March 2021 31 March 2022 31 March 2021
Authorised
Ordinary Shares of 25p 400,000,000 400,000,000 100,000 100,000
Allotted, issued and fully paid
Ordinary Shares of 25p 290,293,919 290,717,473 72,573 72,679
Deferred Shares of 25p 2,478,086 2,478,086 620 620
Total 292,772,005 293,195,559 73,193 73,299
Share class rights
The Company has two classes of shares, Ordinary and Deferred, neither of which carries a right to fixed income. Deferred Shares have no voting or
dividend rights. In the event of a winding-up, Ordinary Shares shall be repaid at nominal value plus £500,000 each in priority to Deferred Shares.
GROUP AND COMPANY
Ordinary Shares
Number
Deferred Shares
Number
Total
Number
At 1 April 2020 289,117,473 2,478,086 291,595,559
New shares issued 1,600,000 — 1,600,000
At 31 March 2021 290,717,473 2,478,086 293,195,559
New shares issued 700,000 — 700,000
Shares cancelled (1,123,554) — (1,123,554)
At 31 March 2022 290,293,919 2,478,086 292,772,005
GROUP AND COMPANY
Ordinary Shares
£’000
Deferred Shares
£’000
Share premium
£’000
Capital
redemption
reserve
£’000
Total
£’000
At 1 April 2020 72,279 620 46,236 — 119,135
New shares issued 400 — — — 400
At 31 March 2021 72,679 620 46,236 — 119,535
New shares issued 175 — — — 175
Shares cancelled (281) — — 281 —
At 31 March 2022 72,573 620 46,236 281 119,710
Movements in share capital and premium
During the year ended 31 March 2022, 700,000 (year ended 31 March 2021: 1,600,000) shares with nominal value of 25 pence were issued to
Employee Benefit Trusts (EBTs).
During the year ended 31 March 2022, 1,123,554 (year ended 31 March 2021: nil) shares with nominal value of 25 pence were cancelled pursuant
to the share buyback programme.
During the year ended 31 March 2022, no Ordinary Shares were converted to Deferred Shares in accordance with the terms of grant to
employees who have now left the Group (year ended 31 March 2021: nil).
Capital redemption reserve
On 14 March 2022, the Board approved a share buyback programme with up to £30.0 million to be returned to shareholders.
During the period starting 17 March 2022 and up to 31 March 2022, the Company repurchased and cancelled 1,123,554 Ordinary Shares with
nominal value of 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 £281,000 for the year ended 31March 2022.
Financial statements
143
CMC Markets plc
Annual Report and Financial Statements 2022
26. Own shares held in trust
GROUP Number £’000
Ordinary Shares of 25p
At 1 April 2020 355,904 433
Acquisition 1,610,877 364
Utilisation (1,630,770) (415)
At 31 March 2021 336,011 382
Acquisition 1,039,903 1,006
Utilisation (722,299) (294)
At 31 March 2022 653,615 1,094
The shares are held by various EBTs for the purpose of encouraging or facilitating the holding of shares in the Company for the benefit of
employees and the trustees will apply the whole or part of the trust’s funds to facilitate dealing in shares by such beneficiaries.
27. Other reserves
GROUP
Translation
reserve
£’000
Net investment
hedging reserve
£’000
FVOCI
reserve
£’000
Merger
reserve
£’000
Share
buyback
reserve
£’000
Total
£’000
At 1 April 2020 1,503 (5,566) 27 (47,800) — (51,836)
Currency translation differences 4,563 — — — — 4,563
Losses on net investment hedges — (2,007) — — — (2,007)
Losses on financial investments at FVOCI — — (54) — — (54)
At 31 March 2021 6,066 (7,573) (27) (47,800) — (49,334)
Currency translation differences 1,761 — — — — 1,761
Share buyback — — — — (27,264) (27,264)
Losses on net investment hedges — (1,089) — — — (1,089)
Losses on financial investments at FVOCI — — (54) — — (54)
At 31 March 2022 7,827 (8,662) (81) (47,800) (27,264) (75,980)
Translation reserve
The translation reserve is comprised of translation differences on foreign currency net investments held by the Group.
Net investment hedging reserve
Overseas net investments are hedged using forward foreign exchange contracts. Gains and losses on instruments used to hedge these
overseas net investments are shown in the net investment hedging reserve. These instruments hedge balance sheet translation risk, which is
the risk of changes in reserves due to fluctuations in currency exchange rates. All changes in the fair value of these hedging instruments were
treated as being effective under IFRS 9 “Financial Instruments”.
FVOCI reserve
The Group holds certain UK government securities measured at FVOCI. For these investments, changes in fair value are accumulated within
the FVOCI reserve within other reserves. The accumulated changes in fair value are transferred to profit or loss when the investments are
derecognised or impaired.
Merger reserve
The merger reserve arose following a corporate restructure in 2005 when a new holding company, CMC Markets plc, was created to bring all
CMC companies into the same corporate structure. The merger reserve represents the difference between the nominal value of the holding
Company’s share capital and that of the acquired companies.
Financial statements
144
CMC Markets plc
Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
27. Other reserves continued
Share buyback reserve
On 14 March 2022, the Board approved a share buyback programme with up to £30.0 million to be returned to shareholders. On inception
of the contract, a financial liability of £30,239,000 was established representing the financial liability for the full value of the share buyback
programme plus directly attributable costs.
The share buyback reserve amount 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.
The shares purchased and the average price paid per share for the year ended 31 March 2022 were as follows:
Year ended 31 March Number of shares purchased Aggregate purchase amount Average price of shares purchased
2022 1,123,554 £2,975,000 £2.65
28. Cash generated from/(used in) operations
GROUP COMPANY
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Cash flows from operating activities
Profit before taxation 92,136 224,010 102,550 61,140
Adjustments for:
Interest income (834) (746) — (21)
Dividends received — — (103,617) (61,950)
Finance costs 2,177 1,762 475 648
Impairment of investment in subsidiaries — — 294 415
Depreciation 10,081 9,254 — —
Amortisation of intangible assets 2,820 1,985 — —
Research and development tax credit (743) (728) — —
Loss/(Profit) on disposal of property, plant and equipment 86 (109) — —
Other non-cash movements including exchange rate movements (681) (908) — —
Share-based payment 356 (2,045) — —
Changes in working capital
(Increase)/Decrease in trade and other receivables (29,800) 59,616 12,999 553
Decrease/(Increase) in amounts due from brokers 57,778 (119,619) — —
Increase in other assets (13,443) — — —
Increase/(Decrease) in trade and other payables 63,600 (24,932) 83 (31)
Decrease in net derivative financial instruments 76 2,574 — —
(Decrease)/Increase in provisions (1,814) 1,186 — —
Cash generated from operations 181,795 151,300 12,784 754
29. Financial instruments
Analysis of financial instruments by category
The following tables analyse financial assets and liabilities in accordance with the categories of financial instruments on an IFRS 9 basis.
31 March 2022
GROUP
Assets
at FVOCI
£’000
Assets
at FVPL
£’000
Assets at
amortised cost
£’000
Total
£’000
Financial assets
Cash and cash equivalents — — 176,578 176,578
Financial investments 27,875 70 — 27,945
Amounts due from brokers — — 196,117 196,117
Derivative financial instruments — 2,359 — 2,359
Trade and other receivables excluding non-financial assets — — 148,092 148,092
27,875 2,429 520,787 551,091
Financial statements
145
CMC Markets plc
Annual Report and Financial Statements 2022
29. Financial instruments continued
Analysis of financial instruments by category continued
31 March 2022
Liabilities
at FVOCI
£’000
Liabilities
at FVPL
£’000
Liabilities at
amortised cost
£’000
Total
£’000
Financial liabilities
Trade and other payables excluding non-financial liabilities — — (213,611) (213,611)
Share buyback liability — — (27,264) (27,264)
Derivative financial instruments — (2,362) — (2,362)
Borrowings — — (194) (194)
Lease liabilities — — (14,185) (14,185)
— (2,362) (255,254) (257,616)
31 March 2021
GROUP
Assets
at FVOCI
£’000
Assets
at FVPL
£’000
Assets at
amortised cost
£’000
Total
£’000
Financial assets
Cash and cash equivalents — — 118,921 118,921
Financial investments 28,037 67 — 28,104
Amounts due from brokers — 1,520 252,375 253,895
Derivative financial instruments — 3,241 — 3,241
Trade and other receivables excluding non-financial assets — — 119,617 119,617
28,037 4,828 490,913 523,778
31 March 2021
Liabilities
at FVOCI
£’000
Liabilities
at FVPL
£’000
Liabilities at
amortised cost
£’000
Total
£’000
Financial liabilities
Trade and other payables excluding non-financial liabilities — — (152,017) (152,017)
Derivative financial instruments — (3,077) — (3,077)
Borrowings — — (1,139) (1,139)
Lease liabilities — — (15,326) (15,326)
— (3,077) (168,482) (171,559)
Maturity analysis
31 March 2022
GROUP
On demand
£’000
Less than
three months
£’000
Three months
to one year
£’000
After
one year
£’000
Total
£’000
Financial assets
Cash and cash equivalents 176,578 — — — 176,578
Financial investments 70 — 14,837 13,338 28,245
Amounts due from brokers 196,117 — — — 196,117
Derivative financial instruments — 2,359 — — 2,359
Trade and other receivables 144,364 1,810 354 1,564 148,092
517,129 4,169 15,191 14,902 551,391
Financial liabilities
Trade and other payables (excluding non-financial) (213,611) — — — (213,611)
Share buyback liability (27,264) — — — (27,264)
Derivative financial instruments — (2,362) — — (2,362)
Borrowings — — (194) — (194)
Lease liabilities — (1,443) (4,146) (9,506) (15,095)
(240,875) (3,805) (4,340) (9,506) (258,526)
Net liquidity gap 276,254 364 10,851 5,396 292,865
Financial statements
146
CMC Markets plc
Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
29. Financial instruments continued
Maturity analysis continued
31 March 2021
GROUP
On demand
£’000
Less than
three months
£’000
Three months
to one year
£’000
After
one year
£’000
Total
£’000
Financial assets
Cash and cash equivalents 118,921 — — — 118,921
Financial investments 67 — 27,251 — 27,318
Amounts due from brokers 253,895 — — — 253,895
Derivative financial instruments — 3,241 — — 3,241
Trade and other receivables 101,553 14,589 1,674 1,800 119,616
474,436 17,830 28,925 1,800 522,991
Financial liabilities
Trade and other payables (excluding non-financial) (152,017) — — — (152,017)
Derivative financial instruments — (3,077) — — (3,077)
Borrowings — (42) (904) (194) (1,140)
Lease liabilities — (1,453) (3,660) (11,444) (16,557)
(152,017) (4,572) (4,564) (11,638) (172,791)
Net liquidity gap 322,419 13,258 24,361 (9,838) 350,200
The amounts disclosed in the table are the contractual undiscounted cash flows, including principal and interest payments, these amounts will
not reconcile to the amounts disclosed in the Statement of Financial Position.
Given that 94% of the Group’s financial assets are available on demand, there is no significant maturity risk as at 31 March 2022 (31 March 2021: 91%).
31 March 2022
COMPANY
On demand
£’000
Less than
three months
£’000
Three months
to one year
£’000
After
one year
£’000
Total
£’000
Financial assets
Cash and cash equivalents 28,263 — — — 28,263
Trade and other receivables 1,013 — — — 1,013
29,276 — — — 29,276
Financial liabilities
Trade and other payables (143) — — — (143)
Share buyback liability (27,264) — — — (27,264)
(27,407) — — — (27,407)
Net liquidity gap 1,869 — — — 1,869
31 March 2021
COMPANY
On demand
£’000
Less than
three months
£’000
Three months
to one year
£’000
After
one year
£’000
Total
£’000
Financial assets
Cash and cash equivalents 167 — — — 167
Trade and other receivables 159 13,781 — — 13,940
326 13,781 — — 14,107
Financial liabilities
Trade and other payables (60) — — — (60)
Borrowings — — — (13,549) (13,549)
(60) — — (13,549) (13,609)
Net liquidity gap 266 13,781 — (13,549) 498
Financial statements
147
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Annual Report and Financial Statements 2022
29. Financial instruments continued
Fair value estimation
The Group’s assets and liabilities that are measured at fair value are derivative financial instruments, financial investments in UK government
securities and equity securities. 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;
• 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).
31 March 2022
GROUP
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
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
31 March 2021
GROUP
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Financial investments 28,037 — 67 28,104
Derivative financial instruments (current assets) — 3,241 — 3,241
Derivative financial instruments (current liabilities) — (3,077) — (3,077)
Amounts due from brokers 1,520 — — 1,520
29,557 164 67 29,788
30. Financial risk management
The Group’s day-to-day business activities naturally expose it to strategic, financial (including credit, counterparty, market and liquidity) and
operational risks. The Board accepts that it cannot place a cap or limit on all of the risks to which the Group is exposed to, however, effective
risk management ensures that risks are managed to an acceptable level. The Board is ultimately responsible for the implementation of an
appropriate risk strategy, defining and communicating the Group’s risk appetite, the establishment and maintenance of effective systems and
controls, and continued monitoring of the adherence to Group policies. The Group has adopted a standard risk process, through a five-step
approach to risk management: risk identification; risk assessment; risk management; risk reporting; and risk monitoring. The approach to
managing risk within the business is governed by the Board-approved Risk Appetite Statement and Risk Management Framework.
The Board sets the strategy and the policies for managing these risks and delegates the monitoring and management of these risks to various
Committees including the Risk Management Committee, which in turn reports to the Group Risk Committee.
The Group’s ICAAP review document is prepared under the requirements set out in the Financial Conduct Authority (“FCA”) Rulebook in
accordance with CRD IV. From 1st January 2022, the Investment Firm Prudential Regime (“IFPR”) has become applicable for FCA regulated
investment firms. A key purpose of an ICAAP review document, and its successor the ICARA review document, is to inform a firm’s board of
the ongoing assessment of the firm’s risks, how the firm intends to mitigate those risks, and how much current and future capital and liquidity
isnecessary to hold against those risks. This is achieved by considering potential stresses as well as mitigating factors.
Financial risks arising from financial instruments are categorised into market, credit, counterparty and liquidity risks which, together with how
the Group categorises and manages these risks, are described below.
1 The Capital Requirements Directive (2013/36/EU) (“CRD”) and the Capital Requirements Regulation (575/2013) (“CRR”), called “CRD IV”.
Financial statements
148
CMC Markets plc
Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
30. Financial risk management continued
Market risk
Market risk is defined as the risk that the value of our residual portfolio will decrease due to the change in market risk factors. The three
standard market risk factors are price moves, interest rates and foreign exchange rates.
Mitigation of market risk
The Group benefits from a number of factors which also reduce the volatility of its revenue and protect it from market shocks as follows:
• Natural mitigation of concentration
The Group acts as a market maker in over 10,000 cross asset class instruments, specifically equities, equity indices, commodities, treasuries,
foreign exchange and cryptocurrencies. Due to the high level of notional turnover there is a high level of internal crossing and natural
aggregation across instruments and asset classes to mitigate significant single instrument concentration risk within the portfolio.
• Natural aggregation
In the year ended 31 March 2022 , the Group had over 64,000 Leveraged active clients. This large international client base has a diverse range
of trading strategies resulting in the Group enjoying a high degree of natural aggregation between clients. This “portfolio effect” leads to a
significant reduction in the Group’s net market risk exposure.
• Ease of hedging
The Group predominantly acts as a market maker in linear, highly liquid financial instruments in which it can easily neutralise market risk
exposure through its prime broker (“PB”) arrangements. In order to avoid over-reliance on one arrangement the Group policy is to have two PBs
per asset class. For instruments where there is no equivalent underlying market (e.g. Countdowns) the Group controls its risk through setting
prudent position/exposure limits. This is further augmented by dealer monitoring and intervention, which can take the form of restricting the
size offered or, if deemed necessary, restricting the clients’ ability to take a position in an instrument.
Market risk limits
Market risk exposures are managed in accordance with the Group’s Risk Appetite Statement and Group Risk Management Framework to
ensure that the Group has sufficient capital resources to support the calculated market risk capital requirement as well as staying within its risk
appetite. The Group manages this component under notional position limits that are set on an instrument and asset class level with overarching
capital-based limits.
Client exposures can vary significantly over a short period of time and are highly dependent on underlying market conditions. The Group’s own
funds requirements (“OFR”) are calculated in accordance with the IFPR. The Market Risk OFR has decreased compared to the prior year and
remains within the Board-approved risk appetite.
GROUP OFR
31 March 2022
£’000
31 March 2021
£’000
Asset class
Consolidated equities 20,284 29,462
Commodities 7,586 7,362
Fixed income and interest rates 2,062 1,067
Foreign exchange 14,222 18,090
Cryptocurrencies 551 6,140
44,705 62,121
Market price risk – stress testing
Group Financial Risk conducts market price risk stress testing on a daily basis. The stress testing approach is tailored according to the asset
class and the client behaviour to ensure the most suitable stress testing model is used. For example longer/shorter holding periods, intra-day
movements or end-of-day positions, historical volatility or Conditional Value at Risk (“CVaR”)/ Expected Tail Loss (“ETL”) (for severe market
movements). The Group not only runs likely and probable scenarios but also extreme case stress scenarios, where thestress factors simulate
low probability severe events to assess potential impact on capital adequacy.
Financial statements
149
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Annual Report and Financial Statements 2022
30. Financial risk management continued
Non-trading book interest rate risk
Interest rate risk arises from either less interest being earned or more being paid on interest-bearing assets and liabilities due to a change in the
relevant floating rate.
Interest rate risk is felt by the Group through a limited number of channels: income on segregated client and own funds; debits on client
balances that are over a pre-defined threshold; and changes to the value of fixed rate UK government securities held.
The sensitivity analysis performed is based on a reasonable and possible move in the floating rate by 1.25% upwards and 0.25% downwards.
Thisis in line with the Bank of England MPC’s projections.
This is summarised in the below table and reflects the Group’s view that in the current economic environment, interest rate volatility is unlikely
to have a significant impact on the profits of the Group.
Changes in interest rate variables result in a decrease/increase in the fair value of fixed rate financial assets classified as available for sale.
Thishas no material impact on the Group’s equity.
31 March 2022
GROUP
Absolute
increase
£’000
Absolute
decrease
£’000
Impact of 1.25%
change
0.25%
change
Profit after tax 5,776 (990)
Equity 5,776 (990)
31 March 2021
GROUP
Absolute
increase
£’000
Absolute
decrease
£’000
Impact of 0.50%
change
0.25%
change
Profit after tax 1,530 (671)
Equity 1,530 (671)
Non-trading book foreign exchange risk
Foreign exchange risk is the risk that the Group’s results are impacted by movements in foreign exchange rates.
CMC is exposed to foreign exchange risk in the form of transaction and translation exposure.
Transaction exposure is from holdings of cash and other current assets and liabilities in a currency other than the base currency of the entity.
This risk is hedged each month by the Liquidity Risk Management team according to a policy based on a cap and floor model, with gains/losses
recognised in the income statement. Any foreign exchange transaction exposures are hedged in accordance with Group Foreign Exchange
Hedging Policy. Given the effectiveness of the hedging programme (Income statement impact in year ended 31 March 2022: gain of £52,000
(year ended 31 March 2021: gain of £328,000), no sensitivity analysis has been performed. These “fair value hedges” are derivative financial
instruments and are reported as described in note 17.
Translation exposure occurs when the net assets of an entity are denominated in a foreign currency other than GBP, when the Consolidated
Statement of Financial Position is prepared. The Group hedges this exposure by using FX spot, forwards and swaps in relation to exposures
considered to have a potential material impact on the Group’s net assets and regulatory capital. The unhedged portion does not pose a
significant risk to the capital adequacy or to the ongoing profitability of the Group. The economic relationship between the hedged item and the
hedging instrument is determined using critical terms matching for the purpose of assessing hedge effectiveness. The Group Risk Management
Policy outlines the Group’s appetite to manage the translation exposure. The Dollar offset method is used to determine ineffectiveness.
At 31 March 2022, £8,662,000 (31 March 2021: £7,573,000) of fair value losses were recorded in net investment hedging reserve within other
reserves. At 31 March 2022, £7,827,000 (31 March 2021: £6,066,000) of fair value gains were recorded in translation reserve within other reserves.
During the year ended 31 March 2022, fair value losses of £1,089,000 (year ended 31 March 2021: losses of £2,007,000) relating to net investment
hedges were recognised in other comprehensive income. All changes in the fair value were treated as being effective under IFRS 9 “Financial
Instruments”; as a result there was no amount reclassified from the net investment hedging reserve or translation reserve into the income
statement. These “net investment hedges” are derivative financial instruments and are reported as described in note 17.
Financial statements
150
CMC Markets plc
Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
30. Financial risk management continued
Credit risk
Credit risk is the risk of losses arising from a counterparty failing to meet its obligations as they fall due. Credit risk is divided into credit,
counterparty and settlement risk. Below are the channels of credit risk the Group is exposed through:
• Financial Institutions (“FIs”); and
• Client.
Financial institution credit risk
The Group has relationships with a number of counterparties that provide prime brokerage and/or banking services (e.g. cash accounts, foreign
exchange trading, credit facilities, custodian services, etc.).
FI credit risk can be felt in the following ways:
• For FIs used as a bank and those as a broker, the Group does not receive the funds the FIs hold on the Group’s account.
• For FIs used as a prime broker, a default will result in a loss of any unrealised profits and could cause the need to re-hedge at a different
broker at a different price.
• For FIs used as a cryptocurrency counterparty, the loss of physical assets.
Mitigation of FIs credit risk
To mitigate or avoid a credit loss:
• The Group maintains, where practical, a range of relationships to reduce over-reliance on a single FI – as detailed in the Group Counterparty
Concentration Risk Policy.
• The Group regularly monitors the credit worthiness of the Institutions that it is exposed to and reviews counterparties at least annually –
asdetailed in the Group Hedge Counterparty Selection Policy.
Contractual losses can be reduced by the “close-out netting” conditions in the ISDA and broker agreements. If a specified event of default occurs, all
transactions or all of a given type are terminated and netted (i.e. set off against each other) at market value or, if otherwise specified in the contract or
if it is not possible to obtain a market value, at an amount equal to the loss suffered by the non-defaulting party in replacing the relevant contract.
In order to manage both credit and counterparty credit risk within appetite the Group sets internal limits. As defined in the Group’s policies the limits
determine the total balance that can be held with each rated FI, each unrated FI and each cryptocurrency counterparty. These limits are expressed
as a maximum percentage of capital, in the case of rated FIs, or a fixed amount for both unrated FIs and cryptocurrency counterparties. Liquidity Risk
Management monitors the credit quality of all FIs and cryptocurrency counterparties, by tracking the credit ratings issued by Standard & Poor’s and
Fitch rating agencies, the credit default swap (“CDS”) spreads determined in the CDS market, share price, performance against a relevant index, and
other relevant metrics.
All rated FIs that the Group transacts with are of investment grade quality; however, no quantitative credit rating limits are set by the Group that FIs
must exceed because the choice of suitable FIs is finite and therefore setting minimum rating limits could lead to the possibility that no FIs are able
to meet them. As an alternative, the Group reviews negative rating action and large CDS spread widening to FIs on a case-by-case basis. Should an
institution’s credit rating fall below investment grade, the Risk Management Committee will be called and options discussed. Possible actions by the
Group to reduce exposure to FIs depend on the nature of the relationship and the practical availability of substitute FIs. Possible actions include the
withdrawal of cash balances from a FI on a daily basis, switching a proportion of hedge trading to another prime broker FI or ceasing all commercial
activity with the FI.
The tables below present CMC Markets plc’s exposure to credit institutions (or similar) based on their long-term credit rating:
31 March 2022
GROUP
Cash and cash
equivalents
£’000
Amounts due
from brokers
£’000
Other assets
£’000
Net derivative
financial
instruments
£’000
Total
£’000
AA+ to AA- 56,252 — — — 56,252
A+ to A- 26,618 — — — 26,618
BBB+ to BBB- 79,055 172,771 — 5 251,831
Unrated 14,653 23,346 13,443 (8) 51,434
176,578 196,117 13,443 (3) 386,135
Financial statements
151
CMC Markets plc
Annual Report and Financial Statements 2022
30. Financial risk management continued
Credit risk continued
Mitigation of FIs credit risk continued
31 March 2021
GROUP
Cash and cash
equivalents
£’000
Amounts due
from brokers
£’000
Net derivative
financial
instruments
£’000
Total
£’000
AA+ to AA- 55,948 — — 55,948
A+ to A- 56,364 86,568 202 143,134
BBB+ to BBB- 3,796 115,805 (38) 119,563
Unrated 2,813 51,522 — 54,335
118,921 253,895 164 372,980
No cash balances or deposits with institutions were considered impaired (year ended 31 March 2021: £nil).
Client counterparty risk
The Group’s CFD and spread bet business operates a real-time mark-to-market leveraged trading facility where clients are required to lodge
collateral against positions, with any profits and losses generated by the client credited and debited automatically to their account. As with any
leveraged product offering, there is the potential for a client to lose more than the collateral lodged.
Client counterparty risk captures the risk associated with a client defaulting on its obligations due to the Group. As the Group does not offer
most of its retail clients credit terms and has a robust liquidation process, client counterparty risk will in general only arise when markets and
instruments gap and the movement in the value of a client’s leveraged portfolio exceeds the value of the equity that the client has held at the
Group leaving the client account in deficit.
“Negative balance protection” accounts do not pose counterparty risk to the Group as the maximum loss for this account type is limited to
their account value.
Further to this the Group operates as a designated clearing broker in Australia, where trading is subject to a settlement process for financial
products transacted on the Australian Security Exchange and Chi-X Australia. As a result of this clearing process, the Group has settlement
risk if a client or counterparty do not fulfil their side of the agreement by failing to deliver the underlying stock or value of the contract. While
international securities trading is further offered to clients, this trading is predominantly fully vetted, which limits the settlement exposure
generation.
Mitigation of client counterparty risk
• Liquidation process
This is the automated process of closing a client’s open position(s) if the account’s total equity is not enough to cover a predefined
percentage of required margin for the portfolio held.
Pre-emptive processes are also in place where a client’s free equity (total equity less total margin requirement) becomes negative
1
. At this
point the client’s account is restricted from increasing their position and a notification is sent inviting them to review their account.
1 Clients in some regions may use limited risk accounts, where it is guaranteed that a client cannot move to a negative equity balance.
• Tiered margin
Tiered margins were implemented in September 2013 on the Next Generation platform. It enables the Group to set higher margin rates
(therefore requiring a client to lodge more collateral) against positions that are deemed to be more risky due to risk profile, which could be
due to size relative to the underlying turnover, the Group’s risk appetite or volatility of the instrument.
• Position limits
Position limits can be implemented on an instrument and client level. The instrument level enables the Group to control the total exposure the
Group acquires in a single instrument. At a client level this ensures that the client can only reach a pre-defined size in any one instrument or
asset class. Additionally, a position limit on an underlying instrument can be applied limiting the overall exposure that can be reached through
different futures of the same underlying. For FX the client position limits are based on Net Open Position (“NOP”) which limits the currency
exposure a client can reached via different FX pairs.
Client counterparty risk stress testing
Group Financial Risk conducts client counterparty risk stress testing on a daily basis based on an internal model developed to assess the
potential client counterparty risk exposure. The Group’s stress testing is based on scenarios with different severity including stress factors
which simulate low probability severe events to assess potential impact.
Financial statements
152
CMC Markets plc
Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
30. Financial risk management continued
Credit risk continued
Client debt history
The Group determines expected credit losses for amounts due from clients, based on historic experience and forward looking considerations.
The charge for the year was £575,000 (year ended 31 March 2021: £3,042,000), which amounts to 0.2% of total revenue (year ended 31 March 2021:
0.6%). During the year, debts of £2,118,000 were written off, which represented 0.7% of revenue (year ended 31 March 2021: £1,133,000, 0.2%
of revenue).
The table below details the movement on the Group provision for impairment of trade receivables under the expected credit loss model:
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Opening provision 7,762 5,853
Net debt provided 575 3,042
Debt written off (2,118) (1,133)
Closing provision 6,219 7,762
Debt ageing analysis
The Group seeks to minimise the effects of client debts on the Company’s profit and loss. Client debts are managed very early in their life
cycle in order to minimise the likelihood of them ageing. Under the simplified approach, debts that are past due carry an expected credit loss
provision as set out in the table below:
31 March 2022
GROUP
Debt
£’000
Provision
£’000
Less than one month 221 28
One to three months 200 81
Three to twelve months 371 366
Over twelve months 5,749 5,744
6,541 6,219
31 March 2021
GROUP
Debt
£’000
Provision
£’000
Less than one month 175 42
One to three months 2,348 1,363
Three to twelve months 1,308 1,162
Over twelve months 5,272 5,195
9,103 7,762
UK government securities
All of the Group’s UK government securities measured at FVOCI are considered to have low credit risk. The majority of these UK government
securities are held to meet the Group’s regulatory threshold requirements under IFPR. These UK government are in Stage 1 and ECL is
immaterial for the year ended 31 March 2022 (year ended 31 March 2021: £nil).
Cash and cash equivalents
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the ECL is immaterial for the year ended 31 March 2022
(year ended 31 March 2021: £nil).
Financial statements
153
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Annual Report and Financial Statements 2022
30. Financial risk management continued
Liquidity risk
Liquidity risk is the risk that there is insufficient available liquidity to meet the obligations of the Group as they fall due.
Liquidity is managed centrally for the Group by the Treasury team. The Group utilises a combination of liquidity forecasting and stress testing
(formally documented in the Individual Liquidity Adequacy Assessment (“ILAA”) and its successor the ICARA) to ensure that it retains access to
sufficient liquid resources under both normal and stressed conditions to meet its liabilities as they fall due. Liquidity forecasting incorporates
the impact of liquidity regulations in force in each jurisdiction that the Group is active in and other impediments to the free movement of
liquidity around the Group, including its own protocols on minimum liquidity to be retained by overseas entities.
Liquidity stress testing is performed quarterly using a range of firm-specific and market-wide scenarios that represent severe but plausible
stress events that the Group could be exposed to over the short and medium term. The Group ensures that the tests are commensurate to its
current and future liquidity risk profile. Output from the quarterly stress testing process is used to calibrate a series of limits and metrics which
are monitored and reported to senior management daily. This process seeks to ensure that the Group has appropriate sources of liquidity
in place to meet its liabilities as they fall due under both “business as usual” and stressed conditions. Due to the risk management strategy
adopted and the changeable scale of the client trading book, the largest and most variable consumer of liquidity is PB margin requirements.
Thecollateral calls are met in cash from own funds but to ensure liquidity is available for extreme spikes, the Group has a committed bank
facility of £55.0 million to meet short-term liquidity obligations to PBs in the event that it does not have sufficient access to own cash and
toleave a sufficient liquidity buffer to cope with a stress event.
The Group does not actively engage in maturity transformation as part of its underlying business model and therefore maturity mismatch
ofassets and liabilities does not represent a material liquidity risk.
Own funds
Own funds is a key measure the Group uses to monitor the overall level of liquidity available to the Group. Own funds includes investments in
UK government securities, the majority of which are held to meet the Group’s regulatory threshold requirements under IFPR. The derivation of
own funds is shown in the table below:
GROUP
31 March 2022
£’000
31 March 2021
£’000
Cash and cash equivalents (net of bank overdraft) 176,578 118,921
Amount due from brokers 196,117 253,895
Other assets 13,443 —
Financial investments 27,945 28,104
Derivative financial instruments (current assets) 2,359 3,241
416,442 404,161
Less: title transfer funds (44,133) (30,679)
Less: derivative financial instruments (current liabilities) (2,362) (3,077)
Own funds 369,947 370,405
Financial statements
154
CMC Markets plc
Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
30. Financial risk management continued
Liquidity risk continued
Own funds continued
The following Own Funds Flow Statement summarises the Group’s generation of own funds during each year and excludes all cash flows in
relation to monies held on behalf of clients. Additionally, short-term financial investments, amounts due from brokers and amounts receivable/
(payable) on the derivative financial instruments have been included within “own funds” in order to provide a clear presentation of the Group’s
potential cash resources.
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Operating activities
Profit before tax 92,136 224,010
Adjustments for:
Finance costs 2,177 1,762
Depreciation and amortisation 12,901 11,239
Other non-cash adjustments (1,124) (4,083)
Tax paid (14,651) (33,620)
Own funds generated from operating activities 91,439 199,308
Movement in working capital 18,532 13,863
Outflow from investing activities
Net purchase of property, plant and equipment and intangible assets (25,313) (12,190)
Other outflow from investing activities (998) (1,761)
Outflow from financing activities
Proceeds from issue of Ordinary Shares — 80
Interest paid (2,177) (1,762)
Dividends paid (72,604) (62,128)
Share buyback (2,975) —
Other outflow from financing activities (7,738) (7,291)
Total outflow from investing and financing activities (111,805) (85,052)
(Decrease)/Increase in own funds (1,834) 128,119
Own funds at the beginning of the year 370,405 238,340
Effect of foreign exchange rate changes 1,376 3,946
Own funds at the end of the year 369,947 370,405
Capital management
The Group’s objectives for managing capital are as follows:
• to comply with the capital requirements set by the financial market regulators to which the Group is subject;
• to ensure that all Group entities are able to operate as going concerns and satisfy any minimum externally imposed capital requirements; and
• to ensure that the Group maintains a strong capital base to support the development of its business.
The capital resources of the Group consist of equity, being share capital reduced by own shares held in trust, share premium, other reserves
and retained earnings, which at 31 March 2022 totalled £370,365,000 (31 March 2021: £400,517,000). The Group has been compliant with all
applicable prudential regulatory requirements to which it is subject throughout the year.
The Group’s ICAAP review document, prepared under the requirements of the FCA and CRD IV, is an ongoing assessment of CMC Markets plc’
risks and risk mitigation strategies, to ensure that adequate capital is maintained against risks that the Group wishes to take to achieve its
business objectives. The Group is currently preparing the first iteration of its ICARA review document.
The outcome of the ICARA is presented as an Internal Capital and Liquidity Assessment document covering the Group. It is reviewed and
approved by the Board on an annual basis.
Further information on the Group’s management of regulatory capital was previously provided in the “Pillar 3 Disclosure” report, which is
available on the CMC Markets plc website (www.cmcmarkets.com/group). In accordance with the new IFPR rules, disclosure requirements are
now only applicable at a solo regulated entity level. These are also available on the Group’s website. The Group’s country-by-country reporting
disclosure is also available in the same location on the website.
Financial statements
155
CMC Markets plc
Annual Report and Financial Statements 2022
31. Share-based payment
The Group operates both equity and cash settled share options schemes for certain employees including Directors.
Current awards have been granted under the terms of the Management Equity Plan 2015 (“2015 MEP”), the Combined Incentive Plan (“2018 CIP”),
the UK Share Incentive Plan (“UK SIP”) and the International Share Incentive Plan (“Australian SIP”). Equity settled schemes are offered to certain
employees, including Executive Directors in the UK and Australia and automatically vest on vest date subject to conditions described below for
each scheme. Cash settled schemes are offered to certain employees outside of the UK and Australia. Equity schemes for UK employees are
settled net of employee taxes due. The rights of participants in the various employee share schemes are governed by detailed terms, including
in relation to arrangements which would apply in the event of a takeover.
Consolidated Income statement charge for share-based payments
The total costs relating to these schemes for the year ended 31 March 2022 was £2,418,000 (year ended 31 March 2021: £2,489,000).
For the year ended 31 March 2022 the charge relating to equity settled share-based payments was £2,269,000 (year ended 31 March 2021:
£1,620,000) and the charge relating to cash settled share-based payments was £149,000 (year ended 31 March 2021: £869,000).
No shares were gifted to employees during the year (year ended 31 March 2021: nil).
Current schemes
2015 MEP
Share options granted under the 2015 MEP are predominantly equity settled, with the exception of certain participants that are cash settled.
The options granted have been in the form of “non-market performance” awards. The Remuneration Committee approves any awards made
under the 2015 MEP. Current schemes are:
• Long Term Incentive Plan: awards to senior management and critical staff, excluding Executive Directors. The options have dividend
equivalence where additional shares will be awarded in place of dividends on vesting. The only vesting condition of the current equity settled
awards is that employees remain employed by the Group.
The fair value of awards were calculated using the average of the share price three days prior to the grant date.
2018 CIP
Share awards granted to the Executive Directors under the 2018 CIP have been in the form of conditional awards and are equity settled.
TheRemuneration Committee approves any awards made under the 2018 CIP. Shares awarded are deferred over a period of at least three
years subject to a performance underpin. The Committee will review Group performance over the relevant period, taking into account factors
such as a) the Company’s TSR performance, b) aggregate profit levels and c) any regulatory breaches during the period.
Financial statements
156
CMC Markets plc
Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
31. Share-based payment continued
Current schemes continued
Number
Scheme
Share price
at award Vesting date
At the start
of the year
Awarded
during the
year
Forfeited
during the
year
Dividend
equivalent
awarded
during the
year
Exercised
during the
year
At the end
of the year
Combined
Incentive Plan 349.2p 20 July 2023 97,893 — — 6,886 — 104,779
Combined
Incentive Plan 349.2p 20 July 2024 73,420 — — 5,164 — 78,584
Combined
Incentive Plan 349.2p 20 July 2025 73,417 — — 5,164 — 78,581
Combined
Incentive Plan 445.8p 22 July 2024 — 108,282 — 6,136 — 114,418
Combined
Incentive Plan 445.8p 21 July 2025 — 81,212 — 4,601 — 85,813
Combined
Incentive Plan 445.8p 20 July 2026 — 81,212 — 4,601 — 85,813
Executive
Retention
Scheme 204.7p 5 July 2021 208,416 — (9,590) — (198,826) —
Long Term
Incentive Plan 204.7p 5 July 2021 537,013 — (20,970) — (516,043) —
Long Term
Incentive Plan 87.8p 24 June 2021 312,512 — (502) — (312,010) —
Long Term
Incentive Plan 349.2p 20 July 2022 480,331 — (8,168) 30,190 (9,913) 492,440
Long Term
Incentive Plan 445.8p 20 July 2023 — 448,865 (34,397) 28,045 — 442,513
Total 1,783,002 719,571 (73,627) 90,787 (1,036,792) 1,482,941
The weighted average share price at exercise of options was 459.5 pence and the weighted average exercise price of exercised awards for
UK participants (881,714 shares) was £nil and for Australian participants (155,078 shares) was £nil. The weighted average remaining contractual
life of share options outstanding at 31 March 2021 was 1.5 years and the weighted average share price of awarded options during the period
was 445.8p.
In addition, cash settled awards have been granted and vest in periods from April 2022 to April 2024. Balances of 38,360 awards, 67,704, 36,064
awards, 63,643 awards and 16,193 awards in each of the four tranches remained at the end of the period, with a total carrying value of £369,000
as at 31 March 2022 (31 March 2021: £463,000). All of these awards benefit from dividend equivalence. The value of these awards is the share
price on the date these awards vest.
UK and Australia SIP awards
Shares awarded under the UK SIP scheme are held in trust in accordance with UK tax authority conditions and all shares awarded under the
Australian scheme are held in a UK trust. Employees are entitled to receive dividends in the form of additional shares on the shares held in trust
as long as they remain employees.
UK employees are invited to subscribe for up to £1,800 of partnership shares relating to each tax year with the Company matching on a one-for-
one basis. All matching shares vest after three years should the employee remain employed by the Group for the term of the award.
Australian employees are invited to subscribe for up to the equivalent of £1,800 of investment shares with the Company matching on a
one-for-one basis. Matching shares for each scheme vest on the third anniversary after award date should the employee remain employed
bythe Group for the term of the award.
Financial statements
157
CMC Markets plc
Annual Report and Financial Statements 2022
31. Share-based payment continued
Current schemes continued
Number
Country
of award Award date
Share price
at award
Vesting period/
date
At the start
of the year
Awarded
during the
year
Forfeited
during the
year
Exercised
during the
year
At the end
of the year
UK April 2018 to
March 2019
85.5p to
204.5p
April 2021 to
March 2022
85,880 — (3,129) (82,751) —
UK April 2019 to
March 2020
79.3p to
179.2p
April 2022 to
March 2023
100,643 — (6,417) — 94,226
UK April 2020 to
March 2021
194.6p to
425.2p
April 2023 to
March 2024
53,724 — (4,800) — 48,924
UK April 2021 to
March 2022
225.8p to
518.0p
April 2024 to
March 2025
— 77,371 (3,858) — 73,513
Australia 5 April 2018 178.2p 5 April 2021 4,029 — — (4,029) —
Australia 5 April 2019 83.5p 5 April 2022 8,229 — (1,797) — 6,432
Australia 5 April 2020 201.0p 5 April 2023 3,179 — — — 3,179
Australia 6 April 2021 527.0p 6 April 2024 — 2,904 — — 2,904
Total 255,684 80,275 (20,001) (86,780) 229,178
The weighted share price at the exercise date of options exercised during the year ended 31 March 2022 was 366.9 pence (year ended
31March 2021: 282.3 pence).
The fair value of SIP awards is determined to be the share price at grant date without making adjustments for dividends as awardees are
entitled to dividend equivalents over the vesting period.
Movement in share options
890,633 new share options were granted in the year ended 31 March 2022 (year ended 31 March 2021: 858,829) and these are detailed above
inthe current schemes section. Movements in the number of share options outstanding are as follows:
GROUP
Year ended
31 March 2022
Number
Year ended
31 March 2021
Number
At beginning of year 2,038,686 4,046,690
Awarded (including dividend equivalents) 890,633 858,829
Forfeited (93,628) (148,280)
Exercised (1,123,572) (2,718,553)
At end of year 1,712,119 2,038,686
32. Retirement benefit plans
A defined contribution plan is a post-employment benefit plan into which the Group pays fixed contributions to a third-party pension provider
and has no legal or constructive obligation to pay further amounts. Contributions are recognised as staff expenses in the income statement in
the years during which related employee services are fulfilled.
The Group operates defined contribution pension schemes for its Directors and employees. The assets of the schemes are held separately
from those of the Group in independently administered funds.
The pension charge for these plans for the year ended 31 March 2022 was £2,230,000 (year ended 31 March 2021: £1,916,000).
33. Related party transactions
Company
The amounts outstanding with Group entities at year end were as follows:
COMPANY
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Amounts due from subsidiaries 1,013 159
Amounts due to subsidiaries — (13,549)
Financial statements
158
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Annual Report and Financial Statements 2022
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2022
33. Related party transactions continued
Group
Transactions between the Group and its other related parties are disclosed below:
Compensation of key management personnel
GROUP
Year ended
31 March 2022
£’000
Year ended
31 March 2021
£’000
Key management compensation:
Short-term employee benefits 2,599 3,750
Post-employment benefits 50 60
Share-based payments 462 256
3,111 4,066
Aggregate remuneration of highest paid Director 858 1,460
Key management comprises the Board of CMC Markets plc only. Compensation of key management personnel is disclosed in the Directors’
remuneration report on page 91.
A related party transaction amounting to £818.40 took place between CMC Markets UK plc and Peter Cruddas Foundation relating to royalties
on books purchased.
Directors’ transactions
A number of the Directors have company credit cards and have, during the course of the year, used the company credit cards for personal
expenses. All personal expenses have been reimbursed by the Directors.
There were no other transactions with Directors.
34. 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 and there are no contingent
liabilities where the Group considers any material adverse financial impact to be probable.
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 now 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, they are in their early stages and such an outcome is not currently considered probable.
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 £25m. The Group has concluded that the relevant entities meet the exemption
requirements and therefore the related tax charge, which would amount to £21.8m (31 March 2021: £15.0m) 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.
35. Ultimate controlling party
The Group’s ultimate controlling party is Lord Cruddas by virtue of his majority shareholding in CMC Markets plc.
36. Events after the Reporting Period
On 31 May 2022, the Group received notice of a class action lawsuit being brought against one of its operating entities. The Group is currently
reviewing the statement of claim and at this time it is not possible to reliably estimate the possible financial effect, if any, on the Group.
In continuation of the buyback programme commenced in March 2022, during the period starting 1 April 2022 and up to 7 June 2022, the
Company repurchased and cancelled 3,480,149 Ordinary Shares with a nominal value of 25 pence for an aggregate purchase amount of
£9,744,000. The average price of shares purchased was £2.80.
Shareholder information
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Annual Report and Financial Statements 2022
Shareholder information
Group history
CMC Markets plc began trading in 1989 as a foreign exchange broker, led by founder Lord Peter Cruddas. In 1996, the Group launched the
world’s first online retail forex trading platform, offering its clients the opportunity to take advantage of markets previously only accessible to
institutional traders.
CMC Markets plc has since become a global leader in online trading. There have been a number of significant milestones for the Group over
the past 30 years, as it has expanded into new markets around the world and continues to promote innovation and new trading technology.
In 2000, CMC Markets plc expanded its business to become a CFD broker. A year later, the Group launched an online financial spread betting
service, becoming the first spread betting company to release the daily Rolling Cash® bet. The groundbreaking daily Rolling Cash® concept
was to become an industry benchmark. In 2002, CMC Markets plc opened its first overseas office in Sydney, launching into the Australian
market as an online CFD and forex provider. By 2007, the Group had expanded its global footprint with offices in New Zealand, Germany,
Canada, Singapore and Sweden. Further global growth followed over the next few years, with offices opened across Europe – and most
recently in Poland, in 2015. The Group continued to grow its product offering during the year, following the launch of its fixed-odds Countdowns
product in 2015.
The Company successfully listed on the London Stock Exchange in February 2016. In April 2016 CMC Markets plc successfully introduced
Digital 100s. Later in the year it unveiled Knock-Outs in Germany and Austria, as CMC Markets plc became the first CFD provider to offer the
product in Germany, reinforcing its position as a global leader in innovation.
Further cementing its place as one of the industry leaders, the Group was awarded a number of important accolades during the year. In the
2016 Investment Trends UK Leveraged Trading Report, which measures customer satisfaction, CMC Markets plc ranked first across 17 service
categories among CFD traders. The Group achieved the highest rating for overall satisfaction, mobile trading, platform features and charting in
all three product segments of spread betting, CFD trading and FX. Additional notable recognition came as the Company won Financial Services
Provider of the Year for the fourth successive year, an award voted for by the readers of Shares Magazine.
The Company also received Best CFD Broker for its burgeoning institutional offering, in line with one of its core strategic objectives.
The Company successfully completed the white label stockbroking partnership with ANZ Bank in Australia during 2018, representing the largest
migration of client accounts in Australian Stock Exchange history and making the Company the second largest retail stockbroker in the country.
In 2021 CMC Markets launched the dedicated institutional brand, CMC Connect, positioning the Company to service the ever-growing number
of client types interested in its products.
Timeline
1989 – CMC Markets plc begins operations in the UK
1996 – Launches the world’s first online retail FX trading platform
2000 – Starts offering CFDs in the UK
2001 – Launches online spread betting service in the UK
2002 – Opens first non-UK office in Sydney, Australia
2005 – Offices opened in Beijing, Canada and Germany
2007 – Singapore and Sweden offices opened; and Goldman Sachs purchases 10% stake
2008 – CMC Markets (Australia) starts offering a stockbroking service following the acquisition of local stockbroker Andrew West & Co
2010 – Next Generation platform is launched; offices opened in Italy and France; and spread betting iPhone app launched in the UK
2011 – CMC Markets plc wins Financial Services Provider of the Year (Shares Magazine)
2012 – Spread betting app for Android™ launched
2013 – CMC Markets plc wins 33 industry awards globally
2014 – CMC Markets plc celebrates 25 years of being a world leader in online trading
2015 – Countdowns launched; Poland and Austria offices opened; and Stockbroking Pro platform launched
2016 – CMC Markets plc lists on the London Stock Exchange, trading as CMCX; and Digital 100s and Knock-Outs launched
2018 – CMC Markets (Australia) completes the ANZ Bank white label stockbroking transaction
2019 – CMC Markets plc celebrates its 30th year and launches exclusive cryptocurrency, forex and commodity indices
2020 – CMC Markets plc releases dedicated institutional brand, CMC Connect
2022 – CMC Invest launched in the UK, offering stockbroking services to UK clients
Shareholder information
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Annual Report and Financial Statements 2022
Five-year summary
Group income statement
For the year ended 31 March
2022
£m
2021
£m
2020
£m
2019
£m
2018
£m
Net operating income 281.9 409.8 252.0 130.8 187.1
Operating expenses (187.6) (184.0) (151.3) (123.1) (125.9)
Operating profit 94.3 225.8 100.7 7.7 61.2
Finance costs (2.2) (1.8) (2.1) (1.4) (1.1)
Profit before tax 92.1 224.0 98.7 6.3 60.1
Taxation (20.1) (45.9) (11.7) (0.5) (10.4)
Profit after tax 72.0 178.1 86.9 5.8 49.7
Other metrics
2022 2021 2020 2019 2018
Own funds generated from operations (£m) 91.4 199.3 102.0 8.2 55.5
Profit margin
PBT margin (%) 32.7 54.7 39.2 4.8 32.1
Earnings per share (“EPS”)
Basic EPS (pence) 24.8 61.5 30.1 2.0 17.3
Diluted EPS (pence) 24.7 61.2 29.9 2.0 17.1
Dividend per share
Interim dividend per share (pence) 3.50 9.20 2.85 1.35 2.98
Final dividend per share (pence) 8.88 21.43 12.18 0.68 5.95
Total ordinary dividend per share (pence) 12.38 30.63 15.03 2.03 8.93
Client metrics (unaudited)
2022 2021 2020 2019 2018
Leveraged revenue per active client (£) 3,575 4,560 3,750 2,068 2,964
Leveraged number of active clients 64,243 76,591 57,202 53,308 59,165
Shareholder information
161
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Annual Report and Financial Statements 2022
Five-year summary continued
Group statement of financial position
At 31 March
2022
£m
2021
£m
2020
£m
2019
£m
2018
£m
ASSETS
Non-current assets
Intangible assets 30.3 10.3 4.6 5.0 4.4
Property, plant and equipment 24.9 26.1 28.1 18.1 20.7
Deferred tax assets 6.0 6.4 16.5 11.6 8.8
Financial investments 13.5 — — 11.3 10.8
Trade and other receivables 1.8 1.8 2.3 2.7 2.2
76.5 44.6 51.5 48.7 46.9
Current assets
Trade and other receivables 156.9 127.2 186.3 118.0 48.0
Derivative financial instruments 2.4 3.2 5.4 2.9 7.3
Current tax recoverable — 1.7 0.8 3.4 —
Financial investments 14.5 28.1 25.4 10.7 10.3
Other assets 13.4 — — — —
Amounts due from brokers 196.1 253.9 134.3 88.1 156.9
Cash and cash equivalents 176.6 118.9 84.3 48.7 60.5
559.9 533.0 436.5 271.8 283.0
Total assets 636.4 577.6 488.0 320.5 329.9
LIABILITIES
Current liabilities
Trade and other payables 215.8 152.3 177.1 100.6 91.8
Derivative financial instruments 2.4 3.1 2.4 4.3 3.9
Share buyback liability 27.3 — — — —
Borrowings 0.2 0.9 0.9 1.1 1.3
Lease liabilities 4.9 4.6 4.7 — —
Current tax payable 0.4 — — — 2.3
Short-term provisions 0.4 1.9 0.5 0.2 0.1
251.4 162.8 185.6 106.2 99.4
Non-current liabilities
Trade and other payables — — — 4.8 5.5
Borrowings — 0.2 0.8 1.2 2.3
Lease liabilities 9.2 10.7 14.6 — —
Deferred tax liabilities 3.3 1.6 2.2 1.2 0.7
Long-term provisions 2.1 1.8 1.9 2.0 2.0
14.6 14.3 19.5 9.2 10.5
Total liabilities 266.0 177.1 205.1 115.4 109.9
EQUITY
Total equity 370.4 400.5 282.9 205.1 220.0
Total equity and liabilities 636.4 577.6 488.0 320.5 329.9
Shareholder information continued
Shareholder information
162
CMC Markets plc
Annual Report and Financial Statements 2022
Proposed final dividend for the year ended
31March2022
Ex-dividend date: Thursday 14 July 2022
Record date: Friday 15 July 2022
Dividend payment date: Thursday 11 August 2022
Annual General Meeting
The 2022 AGM will be held at 10.00 a.m. on Thursday 28 July 2022 at
133Houndsditch, London EC3A 7BX.
Registrars/shareholder enquiries
Link Group can be contacted to deal with any questions regarding
your shareholding using the contact details listed below. Alternatively,
you can access www.cmcmarketsshares.co.uk, where you can view
and manage all aspects of your shareholding securely.
Email
shareholderenquiries@linkgroup.co.uk
Mail
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Phone
Tel: 0371 664 0300
Calls to 0371 664 0300 are charged at the standard geographic rate
and will vary by provider.
Calls outside the United Kingdom are charged at the applicable
international rate.
Phone lines are open between 09:00 – 17:30, Monday to Friday
excluding public holidays in England and Wales.
CMC Markets plc
133 Houndsditch
London
EC3A 7BX
United Kingdom
Registered number: 05145017
Tel: 020 7170 8200
Website: www.cmcmarkets.com
LEI: 213800VB75KAZBFH5U07
Company Secretary
Patrick Davis
Investor relations
Email: investor.relations@cmcmarkets.com
Website: www.cmcmarkets.com/group/investor-relations
Brokers
Peel Hunt LLP
100 Liverpool Street
London
EC2M 2AT
RBC Capital Markets
Riverbank House
2 Swan Lane
London
EC4R 3BF
Independent auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Legal advisers
Linklaters LLP
One Silk Street
London
EC2Y 8HQ
Media relations advisers
Camarco
107 Cheapside
London
EC2V 6DN
Global offices
UK – head office
CMC Markets plc, CMC Markets UK plc, CMC Spreadbet plc,
CMC Markets Holdings Ltd, CMC Markets UK Holdings Ltd, CMC
Markets Overseas Holdings Ltd, Information Internet Ltd, CMC
Markets Investments Ltd, CMC Markets Investments Nominee Ltd
133 Houndsditch
London
EC3A 7BX
T +44 (0)20 7170 8200
E info@cmcmarkets.com
www.cmcmarketsplc.com
Australia
CMC Markets Asia Pacific Pty Ltd, CMC Markets Stockbroking Ltd,
CMC Markets Group Australia Pty Ltd, CMC Markets Stockbroking
Nominees Pty Ltd, CMC Markets Stockbroking Nominees (No. 2
Account) Pty Ltd, CMC Markets Stockbroking Services Pty Ltd
Level 20, Tower 3
International Towers
300 Barangaroo Avenue
Sydney
NSW 2000
T 1300 303 888
T +61 (0)2 8221 2100
E support@cmcmarkets.com.au
brokingservice@cmcmarkets.com.au
www.cmcmarkets.com.au
Shareholder information
163
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Annual Report and Financial Statements 2022
Global offices continued
Austria
CMC Markets Germany GmbH Zweigniederlassung Wien
CMC Markets Zweigniederlassung Österreich
The ICON Vienna, Wiedner Gürtel 13
Tower 24, 10th floor
1100 Wien
T +43 (0)1 532 1349 0
E kundenservice@cmcmarkets.at
www.cmcmarkets.at
Canada
CMC Markets Canada Inc
Suite 2915
100 Adelaide Street West
Toronto
Ontario M5H 1S3
T +1 416 682 5000
E info@cmcmarkets.ca
www.cmcmarkets.ca
China (Shanghai)
CMC Business Service (Shanghai) Limited
Room 3404, Floor 34
Shanghai Tower
No. 501, Middle Yincheng Road
Lujiazui Financial Center
Pudong District
Shanghai
T (China toll free) 4008 168 888
E support@cmcmarkets.com.au
www.cmcmarkets.com/zh
China (Beijing)
CMC Markets UK plc
Beijing Representative Office
Unit 22, Room 1901, Tower E2
Oriental Plaza
No.1 East Chang An Avenue
Dong Cheng District
Beijing 100738
T +86 (0)10 8520 0021
www.cmcmarkets.cn
Germany
CMC Markets Germany GmbH
CMC Markets Niederlassung Frankfurt am Main der CMC
Markets UK plc
Garden Tower
Neue Mainzer Straße 46-50
60311 Frankfurt am Main
T +49 (0)69 2222 44 000
E kundenservice@cmcmarkets.de
www.cmcmarkets.de
New Zealand
CMC Markets NZ Ltd
Level 25
151 Queen Street
Auckland 1010
T +64 (0)9 359 1200
E info@cmcmarkets.co.nz
www.cmcmarkets.co.nz
Norway
CMC Markets Germany GmbH Filial Oslo
Filial Oslo
Fridtjof Nansens Plass 6
0160 Oslo
T +47 22 01 97 02
E info@cmcmarkets.no
www.cmcmarkets.no
Poland
CMC Markets Germany GmbH sp. z o.o. oddział w Polsce
CMC Markets UK Spółka Akcyjna Oddział w Polsce
Emilii Plater 53
00-113 Warsaw
T +48 22 160 5600
E biuro@cmcmarkets.pl
www.cmcmarkets.pl
Singapore
CMC Markets Singapore Pte Limited
CMC Markets Singapore Invest Pte Limited
9 Raffles Place #30-02
Republic Plaza
Singapore 048619
T 1800 559 6000 (local)
T +65 6559 6000
E info@cmcmarkets.com.sg
www.cmcmarkets.com.sg
Spain
CMC Markets Germany GmbH, Sucursal En Espana
CMC Markets UK plc Sucursal en Espana
Calle Serrano No 21
4th Floor
28001 Madrid
T +34 911 140 700
E info@cmcmarkets.es
www.cmcmarkets.es
UAE
CMC Markets Middle East Ltd
Unit GD-GB-00-15-BC-36-0 Level 15,
Gate Building
Dubai International Financial Centre
Dubai 507183
T +97143742818
Shareholder information continued
Shareholder information
164
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Annual Report and Financial Statements 2022
Appendix: Alternative Performance Measures
Reconciliation of gross client income to net operating income
GROUP
2022
£m
2021
£m
Gross client income 288.5 335.3
Rebates and levies (20.6) (20.8)
Net client income 267.9 314.5
Risk management gains/(losses) (38.3) 34.7
Leveraged net trading revenue 229.6 349.2
Non-leveraged net trading revenue 48.0 54.8
Other operating income 3.5 5.1
Revenue net of introducing partner commissions and betting levies (note 3) 281.1 409.1
Interest income 0.8 0.7
Net operating income 281.9 409.8
Reconciliation of non-statutory summary Group Balance Sheet to Primary Statements
Fixed assets
GROUP
Mar-22
£’000
Mar-21
£’000
Intangible assets (note 12) 30,328 10,330
Property, plant and equipment (note 13) 24,941 26,105
Lease liabilities (note 23) (14,185) (15,326)
Fixed assets 41,084 21,109
Fixed assets (rounded to £m) 41.1 21.1
Working Capital
GROUP
Mar-22
£’000
Mar-21
£’000
Trade and other receivables (note 16) 158,714 128,919
Trade and other payables (note 21) (215,853) (152,253)
Share buyback liability (note 25) (27,264) —
Borrowings (note 22) (194) (1,139)
Provisions (note 24) (2,486) (3,700)
Title transfer funds
1
44,133 30,679
Working Capital (42,950) 2,506
Working Capital (rounded up to £m) (43.0) 2.6
1 Amounts deducted from ‘own funds’.
Deferred tax net asset
GROUP
Mar-22
£’000
Mar-21
£’000
Deferred tax assets (note 14) 6,022 6,370
Deferred tax liabilities (note 14) (3,309) (1,622)
Deferred tax net asset 2,713 4,748
Deferred tax net asset (rounded to £m) 2.7 4.7
Appendices
CMC Markets plc’s commitment to environmental issues is reflected in this Annual Report,
which has been printed on Galerie Matt, an FSC® certified material.
This document was printed by Park Communications using its environmental print technology,
which minimises the impact of printing on the environment, with 99% of dry waste diverted
from landfill. Both the printer and the paper mill are registered to ISO 14001.
CBP012858
CMC Markets plc Annual Report and Financial Statements 2022
CMC Markets plc
133 Houndsditch
London EC3A 7BX
United Kingdom
T +44 (0)20 7170 8200
E info@cmcmarkets.com
www.cmcmarketsplc.com
CMC Markets plc Annual Report and Financial Statements 2022