TIDMCMCX
RNS Number : 5282C
CMC Markets Plc
13 June 2023
13 June 2023
CMC MARKETS PLC
("CMC" or the "Company")
Final results for the year ended 31 March 2023
Net operating income a new record high outside of the pandemic
period, in line with guidance
Building a best-in-class, one stop financial trading and
investment services platform
For the year ended 31 March 2023 31 March 2022 Change %
Net operating income (GBP
million) 288.4 281.9 2%
Trading net revenue (GBP
million) 233.1 229.6 1%
Investing net revenue (GBP
million) 37.9 48.0 (21%)
Interest income (GBP million) 13.9 0.8 1,569%
Other operating income (GBP
million) 3.5 3.5 -
Profit before tax (GBP million) 52.2 91.5 (43%)
Basic earnings per share (pence) 14.7 24.6 (40%)
Dividend per share (pence) 7.4 12.4 (40%)
==================================== ============== ============== =========
Trading gross client income
(GBP million) 303.5 288.5 5%
Trading client income retention 77% 80% (3%)
Trading active clients (numbers) 58,737 64,243 (9%)
Trading revenue per active
client (GBP) 3,968 3,575 11%
------------------------------------ -------------- -------------- ---------
Investing active clients (numbers) 218,310 246,120 (11%)
------------------------------------ -------------- -------------- ---------
Notes:
- Net operating income represents total revenue net of
introducing partner commissions and levies
- Trading net revenue represents CFD and spread bet gross client
income net of rebates, levies and risk management gains or
losses
- Investing net revenue represents stockbroking revenue net of rebates
- Trading gross client income represents spreads, financing and
commissions charged to clients (client transaction costs)
- Trading active clients represent those individual clients who
have traded with or held a CFD or spread bet position on at least
one occasion during the 12-month period
- Trading revenue per active client represents trading net
revenue from active clients after deducting rebates and levies
- Investing active clients represent those individual clients
who have traded on at least one occasion during the period
- 2022 figures restated - more information is available within
note 33 of the 2023 Annual Report and Financial Statements.
Highlights
-- Net operating income of GBP288 million, in line with new
guidance issued on 27 March 2023 and up 2% year over year, a new
record high outside of the COVID-19 period. Trading net revenue up
1% versus 2022, with interest income up significantly, offset by
weaker investing net revenue due to subdued market conditions.
-- Significant milestones achieved this year include the launch
and expansion of the CMC Invest UK offering, regulatory approval
for the imminent launch of CMC Invest Singapore, a larger office in
Dubai as part of our institutional expansion, upgrades to our
existing trading platforms and the successful transfer of over
600,000 ANZ Share Investing clients, with total assets in excess of
AUD$37 billion to CMC.
-- 2023 operating expenses excluding variable remuneration
increased by 26% to GBP217 million, reflecting the investment in
people and technology to support the ongoing strategic growth
initiatives.
-- Profit before tax of GBP52 million (2022: GBP91 million).
-- Underlying liquidity remains strong. Regulatory OFR ratio of
369%. Net available liquidity remained broadly flat at GBP239
million (2022: GBP246 million).
Outlook and dividend
-- Growth outlook: Quiet market conditions in the first two and
a half months of 2024 have resulted in client trading activity
being down 15-20%, which in turn is expected to negatively impact
Q1 2024 net operating income. Expectations of the underlying 30%
net operating income growth from 2022 to 2025 remain unchanged,
with growth in the existing business driven by ongoing strength of
underlying KPIs including client money AUM, new product delivery
and assuming a return to normalised market conditions.
-- Strategy: We will focus on delivering ongoing product
diversification and development of a multi-asset interface across
our core trading business. We continue to invest in our technology
to drive expansion towards B2B partnerships and to open up new
markets via our investing and institutional businesses.
-- Costs: Our 2024 investment plans are expected to increase
operating expenses excluding variable remuneration to approximately
GBP240 million. Employee numbers are expected to peak in 2024
following successful hiring of additional staff over the past 12
months. Operating cost expansion is expected to slow in 2025 after
two years of significant investment combined with ongoing cost
efficiency initiatives.
-- Trading: Our priority for 2024 is to expand our product
range, thereby enhancing our support for our clients' trading and
investment portfolios and increasing our share of their wallet.
These include cash equities, index options, listed futures,
cryptocurrencies and a wider range of investment products.
-- Technology: Enhancements planned for the following 12 months
are set to facilitate expansion through B2B partnerships and full
delivery of our API infrastructure. Through shared resources and
expertise, CMC and our B2B partners are expected to benefit from
cost savings and improved operational efficiency.
-- Investing: We will expand the development of our Invest
platforms across Australia, Singapore and the UK. The UK D2C market
continues to pose a significant opportunity, with aggregate AuA
standing at c.GBP290 billion(1) even after weaker capital markets
seen over 2022.
-- Institutional expansion: We will invest in our institutional
offering to upgrade our product suite. Over the next 12-18 months
we will deliver the regional expansion of our institutional
offering via our expanded Dubai office and dedicated sales teams
aimed at partnering with large institutional flow aggregators.
-- Dividend: The Board recommends a final dividend of 3.90 pence
per share (2022: 8.88 pence) resulting in a total dividend payment
for the year of 7.40 pence per share (2022: 12.38 pence).
Lord Cruddas, Chief Executive Officer commented:
"Since pioneering online trading over 30 years ago, CMC
continues to innovate and respond to market changes and challenges.
Today the Group boasts a broad financial services offering spanning
the globe. Through our new API ecosystem we can add new products
and markets quickly, for both our B2B and B2C clients. We believe
this breadth and level of flexibility, through one industry
standard connection protocol, will be the best-in-class B2B and B2C
financial services platform on the market.
During the past year, we have made progress to refine and
deliver our diversification strategy. We have improved our product
range across our core trading CFD and spread bet businesses,
offering our clients access to a wider range of financial
instruments through our award-winning platforms. We have leveraged
our existing technology to launch a new investment platform in the
UK, with a Singapore platform launching imminently, as well as
opening a new office in Dubai to support the rapid growth we are
seeing in our institutional business.
Through our new API ecosystem we are leveraging our technology
to facilitate growth through B2B expansion. By partnering with our
clients directly we are able to offer access to our deep liquidity,
products, and technology stacks. Fostering additional B2B
partnerships is front and centre in our strategy to achieve
sustainable long-term growth.
CMC is changing quickly. Investment in our trading platforms
continues and over the coming six months we're positioned to launch
cash equities, options and listed futures across our various
platforms to allow our clients better opportunities to trade or
hedge existing portfolio positions. Invest UK will be launching
SIPPs and mutual funds, whilst Invest Singapore will initially
offer equities, ETFs, options and futures. Additionally, over the
course of the next 12 months, we plan to introduce a new
multi-asset platform capable of trading a much wider range of
instruments. I look forward to updating you later this year on
further progress."
(1) Platforum February 2023.
Analyst and Investor Presentation
A presentation will be held for equity analysts and investors
today at 10.30 a.m. (BST) A live video webcast of the presentation
will be available via the following link: Participants need to
submit the registration form to access the webcast ; Register for
Webcast
Alternatively, you can register for the conference call by
registering via the following link ; Register Conference Call
Annual Report and Financial Statements
A copy of the Company's Annual Report and Financial Statements
for the year ended 31 March 2023 (the "2023 Annual Report and
Financial Statements") is available within the Investor Relations
section of the Company website here; Annual Report
In compliance with The Disclosure Guidance and Transparency
Rules (DTR) 6.3.5, the information in the document below is
extracted from the Company's 2023 Annual Report and Financial
Statements. This material is not a substitute for reading the 2023
Annual Report and Financial Statements in full and any page numbers
and cross references in the extracted information below refer to
page numbers and cross-references in the 2023 Annual Report and
Financial Statements.
Forthcoming announcement dates
Thursday 27 July 2023 Q1 2023 trading update
Thursday 5 October 2023 H1 2023 pre-close trading update
Forward Looking Statements
This announcement and Appendix may include statements that are
forward looking in nature. Forward looking statements involve known
and unknown risks, assumptions, uncertainties and other factors
which may cause the actual results, performance or achievements of
the Group to be materially different from any future results,
performance or achievements expressed or implied by such forward
looking statements. Except as required by the Listing Rules and
applicable law, the Group undertakes no obligation to update,
revise or change any forward looking statements to reflect events
or developments occurring after the date such statements are
published.
MAR disclosure statement
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
Enquiries
CMC Markets Plc
James Cartwright, Chief Operating Officer
Euan Marshall, Chief Financial Officer
investor.relations@cmcmarkets.com
Media enquiries
Camarco
Geoffrey Pelham-Lane / Jennifer Renwick Tel: 020 3757 4994
Notes to Editors
CMC Markets plc ("CMC"), whose shares are listed on the London
Stock Exchange under the ticker CMCX (LEI: 213800VB75KAZBFH5U07),
was established in 1989 and is now one of the world's leading
online financial trading businesses. The company serves retail and
institutional clients through regulated offices and branches in 12
countries, with a significant presence in the UK, Australia,
Germany and Singapore. The Group offers an award-winning, online
and mobile trading platform, enabling clients to trade over 10,000
financial instruments across shares, indices, foreign currencies,
commodities and treasuries through contracts for difference
("CFDs") and financial spread bets (in the UK and Ireland only).
Clients can also place financial binary bets through Countdowns
and, in Australia and the UK, access stockbroking services. More
information is available at http://www.cmcmarkets.com/group/
CHAIRMAN'S STATEMENT
The Board's strategy of income diversification through adapting
and building on our superior technology continues to develop.
Whilst many of the benefits of this diversification will only be
seen over the longer term, it is becoming more apparent as we
continue to develop our offering how our business will change to
the benefit of our stakeholders over time.
We have maintained an ongoing dialogue with our clients and
gathered their feedback in order to develop further our products
and platforms. Our staff continue to be pivotal to both this
development and our growth strategy. As well as continuing to
invest in our current people, enhancing engagement processes and
career development practices, we have invested in additional
resources in order to ensure we are able to continue to adapt at
the correct pace to achieve our growth plans.
Results and dividend
Net operating income rose 2% to GBP288.4 million in the year,
following a more challenging environment in the final quarter of
2023 with lower monetisation of client trading activity and
increasing costs arising from the fulfilment of our growth
strategy.
Profit after tax for the year was GBP41.4 million. The Board
recommends a final dividend of 3.90 pence per share which results
in a total dividend payment of 7.40 pence for the year, equal to
50% of profit after tax.
Board
As discussed in the 2022 Annual Report and Financial Statements,
we were sorry to lose Clare Salmon from the Board during the year.
We were however delighted to welcome both Susanne Chishti and Clare
Francis to the Board during the course of the year. Susanne is our
Non-Executive Director responsible for workforce engagement, and
Clare is Chair of the Group Risk Committee and our Director
responsible for Consumer Duty.
People and stakeholders
Our workforce is our most valuable resource, and their efforts
towards fulfilling our strategic goals in diversifying our business
have resulted in solid progress across all business areas working
towards that goal.
Our people strategy this last year has become a much more
prominent item in Board and relevant Board Committee meetings. The
scope of the work undertaken by Susanne as our designated
Non-Executive Director responsible for workforce engagement is set
out on page 86 of the 2023 Annual Report and Financial
Statements.
The Board would like to express gratitude to all our employees
for their significant contributions.
Sustainable growth
Sustainability is an essential factor in the decision-making
process for financial institutions that aim to achieve long-term
growth. Integrating sustainability into business strategies helps
financial institutions to reduce risks, increase opportunities, and
enhance their reputation.
At CMC we recognise that customers and investors are
increasingly demanding that businesses prioritise sustainability,
and financial institutions that fail to do so may face reputational
damage or loss of business. Read more in our Sustainability section
on pages 34 to 48 of the 2023 Annual Report and Financial
Statements.
Outlook
We will continue our diversification strategy and seek growth
into new products and geographies. The business is evolving at pace
and investment will continue in partnership with our clients in
order to maximise opportunities as they arise.
The Board recognises that this rapid period of growth does place
pressure on our resources. The Board regularly discusses the risks
and opportunities surrounding our strategy and this will continue
to be a key area of consideration over the coming year as our
growth plan continues to develop at pace.
The Board will also be carefully monitoring volatility in
financial markets and ensuring that the Group is prepared to deal
with any unexpected events and taking note of certain market events
creating uncertainty in recent months. We have made significant
investments in our infrastructure in order to ensure we have a
stable foundation on which to continue to grow and maintain our
resilience.
James Richards
Chairman
13 June 2023
CEO REPORT
During the past year, we have made progress to refine and
deliver our diversification strategy. We have improved our product
range across our core trading CFD and spread bet businesses,
offering our clients access to a wider range of financial
instruments through our award-winning platforms. We have leveraged
our existing technology to launch the new investment platform in
the UK, with Singapore to follow imminently, as well as opening a
larger office in Dubai to support the rapid growth we are seeing in
our institutional business.
Our strategy is based on leveraging our technology to facilitate
growth through B2B expansion. By partnering with our clients
directly we are able to offer them access to our deep liquidity,
products, and technology stacks. We have already proven our ability
to deliver in Australia, evidenced by the Australia and New Zealand
Banking Group Limited ("ANZ") relationship, with an extensive
network of B2B partnerships in CMC Invest Australia.
CMC and our B2B partners typically benefit from shared resources
and expertise, which can lead to cost savings and improved
operational efficiency. Fostering additional B2B partnerships is
front and centre in our strategy to achieve sustainable long-term
growth.
Trading business investment and expansion
We continue to invest in our trading platforms, and we will be
launching cash equities and options across our various platforms
over the next six months to allow our clients better opportunities
to trade or hedge existing portfolio positions. Over the course of
the next 12 months, we plan to introduce a new multi-asset platform
capable of trading a much wider range of instruments over and above
our traditional CFD and spread betting asset classes.
Investing business expansion
Our focus on the self-directed investment platform space
continues, offering improved technology, and client experience,
with lower transaction costs and fees. In addition to the
successful release of our Invest UK platform, our CMC Invest brand
has been rolled out to our existing Australian stockbroking
business and I am pleased to announce that we will be imminently
launching our CMC Invest Singapore offering as well. In Singapore,
CMC Invest will initially offer equities, exchange-traded funds,
options, and futures building on the offering in Australia. The UK
D2C market represents a significant opportunity, with aggregate
assets under administration ("AuA") standing at c.GBP290 billion(1)
even after weaker capital markets seen over 2022.
Our Invest UK platform, which launched to the general public in
September 2022, has delivered a number of milestones this year,
with the current offering now including equities, ETFs, ESG
screening and flexible ISAs. Expansion into mutual funds and SIPPs
will shortly follow. We see significant potential in the UK market,
including great B2B opportunities, and while B2C client numbers are
currently low given the recent launch, we expect these to grow
significantly over the coming years.
In Australia, we have successfully migrated the Share Investing
client base of ANZ, which involved over 600,000 clients with total
assets exceeding AUD$37 billion.
Whilst market activity had been lower over the past year, the
migrated clients will place CMC in a stronger position to deliver
enhanced access to improved mobile apps, education tools and
resources, and lower brokerage commissions across four major
international markets and the local Australian market.
Institutional offering expansion via CMC Connect
In our institutional trading business, we continue to grow
volumes as a non-bank liquidity provider and are successfully
forging new trading relationships across the globe. We provide
global market access to our clients, enabling them to realise their
revenue potential through multi-asset liquidity provision and
award-winning trading technology.
Through our CMC Connect brand, we offer larger institutions the
ability to develop a white-label trading proposition for their
client base. This can be custom-built in a bespoke fashion to best
suit the needs of our partners. By combining both our natural
client order flow and a range of external pricing sources we can
offer consistent liquidity, market depth and best execution.
(1) Platforum February 2023.
Technology at our core
CMC has been a pioneer of platform technology, providing
technology-backed solutions for B2C and B2B clients and partners
for over 30 years. This gives us the scale, leverage, and agility
to launch new platforms and enter new markets rapidly, as well as
drive down transaction costs.
At CMC, we continue to embrace innovative technologies and new
ways of working to deliver our digital transformation. We have
demonstrated our ability to deliver complex work programmes in the
recent delivery of our CMC Invest UK platform, but this is just one
example where our internal technology development team continue to
excel.
Through our new API ecosystem, we can add new products and
markets quickly for our B2B and B2C clients. We believe this
breadth and level of flexibility through one industry standard
connection protocol, will be the best-in-class B2B and B2C
financial services platform on the market. Importantly, it will
also allow the Group to grow and add new products quickly so we can
expand into different markets around the world.
Our experience gained from the launch of our Invest UK offering
will also accelerate the delivery of additional functionality
across both our existing trading and institutional business over
the coming year. One example is that the Group is now in a strong
position to offer cash equities on the Next Generation platform to
institutional clients.
Our product development is augmented with the use of cloud
technology through our strategic partner Amazon Web Services
("AWS") that provides the foundations for rapid cost-effective
delivery of our growth plans. Through its cloud platform, CMC can
take advantage of the scale, elasticity and reduced operational
burden offered by AWS to deliver an improved customer experience
faster and with greater stability.
Financial performance
Over the past 12 months global markets have been volatile,
influenced by a variety of factors, including the recovery from the
COVID-19 pandemic, geopolitical developments, and shifting economic
policies particularly in the adjustment to rising inflation and
interest rates.
Activity across our platforms reflected these trends. The
trading business benefited from the volatility seen in global FX
rates whilst on the other hand activity was lower in our Invest
Australia business with lower client activity than had been seen in
the prior year, primarily driven by the reversal seen in global
equity markets from the peaks of 2021. Nevertheless, complementing
the volatility on global exchange rates, commodity price
fluctuations also presented a significant opportunity for our
clients. Our wide-ranging, and expanding, product offering across
both our trading and investing business gives me confidence in our
ability to deliver returns for shareholders regardless of the wider
macroeconomic environment.
Interest income increased substantially in the period at GBP13.9
million (versus GBP0.8 million in 2022) due to increases in global
interest rates and resulting income from client and own cash
balances. Overall, the Group net operating income increased 2%
versus the prior period, to GBP288.4 million. The Group's total
cost base increased by 24% from GBP190.4(1) million to GBP236.2
million during the year, mainly because of the significant
investments in people and technology to deliver our diversification
and growth strategy.
Variable remuneration increased by GBP0.6(3) million to GBP16.7
million reflecting the increase in staff over the period. Profit
before tax at GBP52.2 million was GBP39.3(1) million lower than the
previous year. Our dividend policy remains unchanged, at 50% of
profit after tax, therefore resulting in a proposed final dividend
per share of 3.90 pence.
Despite market volatility, the Group's underlying fundamentals
remain strong in the trading business. The Group's strategy of
targeting and retaining higher value, sophisticated clients
continues to prove successful, with client money levels remaining
close to record highs seen in the prior year, an encouraging
indicator of future investing potential.
The number of active clients within Invest Australia has
decreased by 12% to 216,665, with B2C clients increasing by 120% to
123,681, and B2B clients decreasing by 51% to 92,984. Active
clients within the trading business decreased by 9% to 58,737 but
monthly average active clients remain 25% above pre-COVID-19
levels.
(1) 2022 figure restated, refer to note 33 of the 2023 Annual
Report and Financial Statements for more information.
(2) A definition of net available liquidity can be found on page
65 of the 2023 Annual Report and Financial Statements.
(3) 2022 figures restated to include social taxes on annual
discretionary bonus within variable remuneration.
The Group's balance sheet reflects its strong financial
position, with net available liquidity(2) of GBP239.2 million and a
regulatory own funds requirement ratio ("OFR") of 369% at year end.
This compares with GBP245.9 million and a regulatory OFR ratio of
489% at year-end 2022.
Regulatory change
The regulatory framework has proved to be stable over the past
12 months. The last meaningful change occurred on 29 March 2021,
when ASIC implemented measures regarding CFDs. These measures
helped to harmonise regulatory conditions globally, allowing the
Group to focus on growing its business. As expected, the new
measures have 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 for
CFDs, which imposes conditions on the issue and distribution of
CFDs for another five years, until 23 May 2027. This extension has
provided greater regulatory visibility for the Group, ensuring that
it can continue to operate within the regulatory framework while
growing its business.
People and sustainability
As the focus on sustainability continues to shape the financial
markets, our objective is to equip our clients and employees with
the necessary resources and knowledge to make responsible and
confident investment decisions. We recognise and embrace the
responsibility bestowed upon the finance industry to contribute to
the world-wide sustainability efforts. Furthermore, we understand
that incorporating sustainable practices can bring tangible
business benefits. These advantages not only bolster the long-term
sustainability of the Group but also empower us to fulfil our
mission of delivering our clients an unmatched technology-driven
investment experience, along with exceptional access to capital
markets.
Clients
At the core of our business, we prioritise our clients and their
satisfaction. We remain committed to developing our platforms and
investing in innovation to ensure that our user experience remains
industry leading, promoting client retention and lifetime value. We
are pleased to welcome over 600,000 new clients to our Invest
Australia business now fully transitioned from ANZ Share Investing,
and we look forward to providing them with new functionality and an
enhanced experience.
Furthermore, we have already embarked on partnering with new
investors over the long term through our Invest UK and Singapore
platforms, aiming to help them achieve prosperity at every stage of
their investment journey.
Share buyback programme
On 15 March 2022, the Company initiated a share buyback
programme of up to GBP30 million, demonstrating its strong capital
position and consideration of ongoing investment requirements for
the business. This buyback programme was part of the Group's
balanced approach to shareholder returns, in conjunction with the
current dividend policy and was completed on 17 October 2022.
Dividend
The Board has proposed a final dividend payment of GBP10.9
million, which equates to 3.90 pence per share (compared to 8.88
pence in 2022), resulting in a total dividend payment of 7.40 pence
per share for the year (compared to 12.38 pence in 2022). This
amount represents 50% of profit after tax, in accordance with Group
policy. This policy results in sharing the benefits of profitable
growth to shareholders through a distribution alongside retaining
an equal amount of profits in the business, which are largely
equivalent to cash generation, to invest in future growth. The
Group Board considers the liquidity and regulatory capital risks
associated with paying a dividend in accordance with the policy
through the review of and consideration of stress scenarios.
Outlook
We acknowledge the current uncertainty prevailing not only in
the financial markets but also in various sectors and industries.
Our experience in the past few years has reinforced the importance
of being prepared for the unexpected and the extraordinary.
Our platforms have demonstrated their ability to continue
servicing clients robustly even in extreme market volatility, and,
as a result, we have earned trust and a reputation for
stability.
Over the past year we have made significant investments in our
infrastructure, which have served us well and will continue to do
so, providing a solid foundation for us to explore future
opportunities.
Our performance this year reflects our focus on our trading and
investment businesses and ongoing success with B2B technology
partnerships. We have a large addressable market, and we see an
enormous opportunity to grow with a more predictable and stable
revenue stream.
As we continue to evolve and expand our investment offering, we
are leveraging our technology to enter new markets and
geographies.
We are looking forward to updating investors on our strategy's
short-term and long-term expansion.
Lord Cruddas
Chief Executive Officer
13 June 2023
Financial review
Net operating income of GBP288.4 million increased by GBP6.5
million compared to 2022, driven by increased client income,
particularly in the institutional B2B channel, and a significant
increase in interest income as a result of global interest rate
rises. Operating expenses(1) increased by GBP45.6 million as a
result of the Group's significant investments in technology,
people, and product throughout the year along with the impact of
the elevated inflationary environment seen across all regions. This
resulted in a statutory profit before tax of GBP52.2 million
(2022(1): GBP91.5 million).
The Group saw a decrease in active clients across both its
trading and investing businesses in 2023. The decrease in investing
clients was a result of unfavourable market conditions for
long-term investors persisting throughout much of the year, leading
to lower overall client activity. On the trading side, the decrease
was largely driven by the cohort onboarded during the "meme stock"
period in the first calendar quarter of 2021. However, the Group's
continued focus on high value, sophisticated retail and
institutional clients resulted in higher client income year on
year. The Group also exited the year with significant prospects for
future client growth, with the development of the CMC Invest
platforms in the UK and Singapore along with a significant
expansion in our institutional product offering giving multiple
channels for both client acquisition and revenue per client
expansion.
Our ambitious digital transformation and technology investment
plan has made significant progress throughout 2023 with more
frequent product enhancements along with the retail launch of the
CMC Invest platform in the UK and the rollout of the platform in
Singapore on track for release imminently. The improvements to our
product offering within the institutional space has also seen an
immediate impact, with notional volumes in the B2B business up 95%
year on year and our ambition for ongoing 20%+ CAGR in volumes
remaining on track.
The Group Own Funds Ratio ("OFR") remains strong at 369%. Our
total available liquidity decreased to GBP414.1 million (2022:
GBP469.0 million) primarily due to the share buyback programme that
completed in October 2022. The strong liquidity and capital
position gives the Group an exceptional platform to continue
investing in its core strategic initiatives.
Summary income statement
GBPm 2023 2022 Change Change %
Net operating income 288.4 281.9 6.5 2%
Operating expenses(1) (233.9) (188.3) (45.6) (24%)
================================ ======== ======== ======== =========
Operating profit 54.5 93.6 (39.1) (42%)
Finance costs(1) (2.3) (2.1) (0.2) (7%)
================================ ======== ======== ======== =========
Profit before taxation(1) 52.2 91.5 (39.3) (43%)
================================ ======== ======== ======== =========
PBT margin (1,2) 18.1% 32.5% (14.4%) -
================================ ======== ======== ======== =========
Profit after tax(1) 41.4 71.5 (30.1) (42%)
================================ ======== ======== ======== =========
Pence 2023 2022 Change Change %
Basic EPS(1) 14.7 24.6 (9.9) (40%)
Ordinary dividend per share(3) 7.4 12.4 (5.0) (40%)
================================ ======== ======== ======== =========
Summary
Net operating income for the year increased by GBP6.5 million
(2%) to GBP288.4 million, primarily through a result of strong
growth in interest income and the institutional business, offset by
a decrease in revenue in the investing business. On the trading
side, increases in institutional volumes resulted in higher client
income, with retail client income remaining broadly flat despite an
overall drop in active clients, and risk management remaining
solid, albeit with client income retention falling slightly from
the levels seen in 2022. The investing business saw a decrease in
trading activity as a result of unfavourable market conditions
throughout the year. 2023 net operating income represents a record
for the Group when excluding the COVID-19 impacted 2021.
Total costs(1) have increased by GBP45.8 million (24%) to
GBP236.2 million, with the primary driver being investments in our
strategic initiatives resulting in higher personnel costs,
professional fees and technology costs. The high global
inflationary environment also impacted the cost base in all three
regions that the Group operates in.
Profit before tax(1)(,) (2) decreased to GBP52.2 million from
GBP91.5 million and PBT margin(1) (,2) decreased to 18.1% from
32.5%, reflecting the high level of operational gearing in the
business.
(1) 2022 figures restated - more information is available within
note 33 of the 2023 Annual Report and Financial Statements.
(2) Statutory profit before tax as a percentage of net operating
income.
(3) Ordinary dividends paid/proposed relating to the financial
year, based on issued share capital as at 31 March of each
financial year.
Net operating income overview
GBPm 2023 2022 Change %
Trading net revenue 233.1 229.6 1%
Investing net revenue (excl. interest income) 37.9 48.0 (21%)
=============================================== ====== ====== =========
Net revenue(1) 271.0 277.6 (2%)
Interest income 13.9 0.8 1,569%
Other operating income 3.5 3.5 -
=============================================== ====== ====== =========
Net operating income 288.4 281.9 2%
=============================================== ====== ====== =========
(1) CFD and spread bet gross client income net of rebates,
levies and risk management gains or losses and stockbroking revenue
net of rebates.
Trading net revenue increased by GBP3.5 million (1%) driven by
increases in gross client income being largely offset by client
income retention decreasing to 77%. The increase in gross client
income was a result of market volatility broadly remaining at
levels seen in H2 2022, resulting in higher levels of client
trading, despite an overall decrease in active clients. Client
income retention was lower during the period at 77% (2022: 80%) as
a result of a change in the mix of asset classes traded by clients.
This resulted in revenue per active client ("RPC") increasing by
GBP393 (11%) to GBP3,968.
Trading active client numbers decreased by 9% in comparison to
2022; however, monthly average active clients remain 25% above
pre-COVID-19 levels, demonstrating the structural shift in the
Group's client base.
Investing net revenue was 21% lower at GBP37.9 million (2022:
GBP48.0 million), with an unfavourable market environment resulting
from uncertainty around the global economic outlook, inflationary
pressures and the resultant impact on interest rates dampening
client activity.
B2B and B2C net trading revenue
2023 2022 Change %
GBPm B2C B2B Total B2C B2B Total B2C B2B Total
Trading net revenue 173.0 60.1 233.1 185.5 44.1 229.6 (7%) 36% 1%
Investing net
revenue 14.6 23.3 37.9 9.6 38.4 48.0 53% (39%) (21%)
====================== ===== ==== ===== ===== ==== ===== ==== ===== =====
Net revenue 187.6 83.4 271.0 195.1 82.5 277.6 (4%) 1% (2%)
====================== ===== ==== ===== ===== ==== ===== ==== ===== =====
B2C trading net revenue fell 7% due to decreases in active
clients and lower client income retention. The increase in B2B
revenue was a result of the enhancements to the institutional
product offering attracting new clients and higher trading levels
from current clients, with an associated increase in net
revenue.
The investing business saw a shift from B2B to B2C as a result
of the completion of the transfer of the ANZ Bank Share Investing
clients during the year.
Regional performance overview: trading
2023 2022 Change %
Net Gross Active RPC Net Gross Active RPC Net Gross Active RPCRPC
trading client Clients GBP trading client Clients GBP trading client Clients
revenue income revenue income revenue income(1)
GBPm GBPm(1) GBPm GBPm(1)
UK &
Ireland 88.8 114.8 14,717 6,035 78.8 107.1 16,264 4,848 12% 7% (10%) 24%
Europe 50.2 61.3 14,254 3,520 43.7 51.1 15,747 2,778 15% 20% (9%) 27%
========= ======== ======== ======== ====== ======== ======== ======== ====== ======== ========== ======== =======
UK &
Europe 139.0 176.1 28,971 4,797 122.5 158.2 32,011 3,827 13% 11% (9%) 25%
APAC
&
Canada 94.1 127.4 29,766 3,160 107.1 130.3 32,232 3,322 (12%) (2%) (8%) (5%)
========= ======== ======== ======== ====== ======== ======== ======== ====== ======== ========== ======== =======
Total 233.1 303.5 58,737 3,968 229.6 288.5 64,243 3,575 1% 5% (9%) 11%
========= ======== ======== ======== ====== ======== ======== ======== ====== ======== ========== ======== =======
(1) Spreads, financing and commissions on CFD client trades.
Trading
UK and Europe
Net revenue and client income grew by GBP16.5 million (13%) and
GBP17.8 million (11%) to GBP139.0 million and GBP176.0 million
respectively. This was despite a 9% (3,040) decrease in active
clients, resulting in RPC growth of 25% (GBP970).
UK
Client income increased by 7% against the prior year to GBP114.8
million (2022: GBP107.1 million), driven by growth in the B2B
business. The drop in active clients was predominantly driven by
the B2C business, which saw a commensurate drop in client
income.
Europe
Europe comprises offices in Austria, Germany, Norway, Poland and
Spain. Client income and net revenue grew by 20% (GBP10.2 million)
and 15% (GBP6.5 million) to GBP61.3 million and GBP50.2 million
respectively, driven by B2B growth. RPC increased by 27% to
GBP3,520 (2022: GBP2,778) due to the higher net revenue achievement
combined with a 9% (1,493) decrease in the number of active
clients.
APAC & Canada
Our APAC & Canada business services clients from our Sydney,
Auckland, Singapore, Toronto and Shanghai offices along with other
regions where we have no physical presence. Active clients were
down 8% to 29,766 (2022: 32,232); however, the region continues to
retain its high value client base resulting in a comparatively
smaller drop in client income of 2% to GBP127.4 million (2022:
GBP130.3 million).
Investing
Investing net revenue from the Invest Australia business fell
21% to GBP37.9 million (2022: GBP48.0 million) impacted by
heightened geopolitical uncertainties and the resultant
inflationary pressures, dampening investor appetite for cash
equities. Partially offsetting the impact was a material increase
in interest income at GBP6.5 million (2022: GBP0.9 million).
While active clients decreased 12% to 217k (2022: 246k), client
logins across all platforms were up 5%, indicating strong client
engagement and readiness to trade at the right market opportunity.
Further, AuA at AUD$73 billion, remained stable despite reduced
discretionary expenditure.
Interest income
Global interest rates, having remained at historically low
levels for many years, saw significant increases in all regions
from the second half of calendar year 2022, resulting in interest
income increasing to GBP13.9 million from GBP0.8 million in
2022.
The majority of the Group's interest income is earned through
our segregated client deposits in our UK, Australia, New Zealand
and Invest Australia subsidiaries. Our investing business generated
47% of the Group's interest income, with 53% being generated in our
trading business. The Group continually monitors its returns on
both own and segregated client deposits to ensure optimal
returns.
Expenses
Total costs(1) increased by GBP45.8 million (24%) to GBP236.2
million.
GBPm 2023 2022 Change %
---------------------------------------- ----- ----- --------
Net staff costs - fixed (excluding
variable remuneration)(1) 84.9 68.8 (23%)
IT costs 33.7 28.7 (17%)
Marketing costs 32.3 24.5 (32%)
Sales-related costs 6.0 2.8 (110%)
Premises costs(2) 5.7 4.5 (27%)
Legal and professional fees 8.6 8.6 -
Regulatory fees 9.4 5.6 (69%)
Depreciation and amortisation(2) 15.6 12.4 (26%)
Irrecoverable sales tax 3.0 2.8 (7%)
Other 18.0 13.5 (33%)
======================================== ===== ===== ========
Operating expenses excluding variable
remuneration(2) 217.2 172.2 (26%)
Variable remuneration(1) 16.7 16.1 (3%)
======================================== ===== ===== ========
Operating expenses including variable
remuneration(2) 233.9 188.3 (24%)
Interest(2) 2.3 2.1 (7%)
======================================== ===== ===== ========
Total costs(2) 236.2 190.4 (24%)
======================================== ===== ===== ========
Net staff costs
Net staff costs including variable remuneration increased
GBP16.7 million (20%) to GBP101.6 million following significant
investment across the business, particularly within technology,
marketing and product functions, to support the delivery of
strategic projects. The global inflationary environment and post
COVID-19 employment market also resulted in growth in gross pay
within certain areas of the business to ensure the Group continues
to remunerate staff in line with market rates to assist talent
retention within the organisation. Variable remuneration increased
in line with headcount growth, offset by reductions in the Group
discretionary bonus in line with performance.
GBPm 2023 2022 Change %
Gross staff costs excluding variable remuneration(1) 92.9 72.4 (28%)
Performance related pay(1) 14.5 13.7 (5%)
Share-based payments 2.2 2.4 8%
====================================================== ======= ====== =========
Total employee costs 109.6 88.5 (24%)
Contract staff costs 3.1 3.9 20%
Net capitalisation (11.1) (7.5) 48%
====================================================== ======= ====== =========
Net staff costs 101.6 84.9 (20%)
====================================================== ======= ====== =========
(1) 2022 figures restated to include social taxes for annual
discretionary bonus within variable remuneration. Social tax for
annual discretionary bonus were previously included within net
staff costs.
(2) 2022 figures restated - more information is available within
note 33 in the 2023 Annual Report and Financial Statements.
Depreciation and amortisation costs
Depreciation and amortisation have increased by GBP3.2 million
(26%) to GBP15.6 million, primarily due to amortisation of staff
development costs which were capitalised at the end of the previous
financial year and increased depreciation and amortisation of IT
assets delivering the product roadmap.
Marketing costs
Marketing costs increased by GBP7.8 million (32%) to GBP32.3
million driven by GBP2.6 million of marketing for the new Invest UK
platform, GBP2.4 million of additional marketing within Invest
Australia and increased spend across all regions within the trading
business.
Sales-related costs
Sales-related costs increased by GBP3.2 million (110%) to GBP6.0
million primarily due to a release of provisions for client
complaints within 2022 and additional client-related costs during
the year following the relaxing of COVID-19 restrictions.
IT costs
IT costs increased by GBP5.0 million (17%) to GBP33.7 million as
a result of a larger IT systems footprint given the expanded
product offering.
Regulatory fees
Regulatory fees increased by GBP3.8 million (69%) primarily as a
result of a higher FSCS levy.
Premises costs
Premises costs increased GBP1.2 million (27%) due to global
inflationary pressures, predominantly across utilities.
Other expenses
Other costs increased due to a number of factors, with the main
drivers being FX losses on balance sheet revaluation and higher
bank charges being partially offset by lower bad debt charges.
Taxation
The effective tax rate for 2023 was 20.6%, down from the 2022
effective tax rate, which was 21.9%. The effective tax rate has
decreased in the period due to a lower proportion of Group PBT
being generated in Australia, where the corporation tax rate is
higher than the UK.
Profit after tax for the year
The decrease in profit after tax for the year of GBP30.1 million
(42%) was due to higher net operating income being offset by
increases in expenses incurred as part of the investment roadmap
and the impacts of the global inflationary environment.
Dividend
Dividends of GBP35.0 million were paid during the year (2022:
GBP72.6 million), with GBP25.3 million relating to a final dividend
for the prior year paid in August 2022, and a GBP9.8 million
interim dividend paid in January 2023 relating to current year
performance. The Group has proposed a final ordinary dividend of
3.90 pence per share (2022: 8.88 pence per share).
Non-Statutory Summary Group Balance Sheet
GBPm - 2023 2022
Intangible assets 35.3 30.4
Property, plant and equipment 14.1 13.0
Net lease liability (2.7) (4.1)
-------------------------------------- ------- -------
Fixed Assets 46.7 39.3
Cash and cash equivalents 146.2 176.6
Net amounts due from brokers 179.3 196.5
Financial investments 30.6 27.9
Other assets 2.0 13.4
Net derivative financial instruments 1.1 (0.4)
Title transfer funds (49.5) (44.1)
-------------------------------------- ------- -------
Own Funds 309.7 369.9
Working capital 8.2 (43.0)
Net tax (payable) / receivable 8.6 -
Deferred tax net asset 0.8 2.7
-------------------------------------- ------- -------
Net Assets 374.0 368.9
====================================== ======= =======
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 188 in the 2023 Annual Report and Financial Statements.
2022 figures restated, more information is available within note
33 of the 2023 Annual Report and Financial Statements.
Fixed assets
Intangible assets increased by GBP4.9 million to GBP35.3 million
(2022: GBP30.4 million) as a result of the capitalisation of
internal resource dedicated to the development of new products and
functionality in 2023.
Net lease liability decreased by GBP1.4 million during the year
due to the net length of lease contracts being lower at the end of
2023 than the prior year.
Own funds
Net 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 decreased during the year
primarily as a result of the Group's share buyback scheme that
commenced in March 2022 and completed in October 2022 and GBP9.0
million payments to ANZ Bank to complete the transition of its
Share Investing clients, partially offset by the Group's operating
performance, in addition to the Group holding less cash at our
brokers for margining purposes.
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 GBP5.4 million, reflecting the
high levels of account funding by a small population of mainly
institutional clients.
Working capital
The GBP51.2 million decrease in working capital requirements
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 stockbroking payables yet to settle at the prior year
end.
Net tax receivable
Tax moved to a net receivable position due to overpayments in
the UK and 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 2023.
Regulatory capital resources
The Group and its UK regulated subsidiaries fall into scope of
the FCA's Investment Firms Prudential Regime ("IFPR"), with the
Group's German subsidiary, CMC Markets Germany GmbH, subject to the
provisions of the Investment Firms Regulation and Directive
("IFR/IFD").
The Group's total capital resources increased to GBP326.8
million (2022: GBP311.5 million) with increases in 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 ("CET1 capital").
At 31 March 2023 the Group had a total OFR ratio of 369%, down
from 489% in 2022 as a result of an increase in own funds
requirements.
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 in the 2023 Annual Report and
Financial Statements.
GBPm 2023 2022
CET1 capital(1) 363.1 344.5
Less: intangibles and net deferred tax assets(2) (36.3) (33.0)
=================================================== ======= =======
Total capital resources after relevant deductions 326.8 311.5
=================================================== ======= =======
Own funds requirements ("OFR")(3) 88.6 63.6
=================================================== ======= =======
Total OFR ratio (%)(4) 369% 489%
=================================================== ======= =======
(1) Total audited capital resources as at the end of the
financial year of GBP374.0 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 of the 2023 Annual
Report and Financial Statements.
(3) The minimum capital requirement in accordance with MIFIDPRU
4.3.
(4) The OFR ratio represents CET1 capital as a percentage of OFR
.
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, 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 30 of the
2023 Annual Report and Financial Statements.
-- 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 GBP55.0 million (2022:
GBP55.0 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 GBP27.5 million (2022: GBP27.5 million) and a
three-year term facility of GBP27.5 million (2022: GBP27.5
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 as at 31 March 2023 (2022: GBPnil).
The Group's use of total available liquidity resources consists
of:
-- Blocked cash: Amounts held for operational purposes to meet
the requirements of local regulators and exchanges, in addition to
liquidity in subsidiaries in excess of local segregated client
requirements to meet potential future client requirements. Cash
committed to the purchase of shares within a buyback programme is
also classified as blocked cash. This was GBPnil at 31 March 2023
(2022: GBP28.0 million).
-- 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 by GBP60.2 million to GBP309.7 million
(2022: GBP369.9 million).
GBPm 2023 2022
Own funds 309.7 369.9
Title transfer funds 49.4 44.1
Available committed facility 55.0 55.0
============================================ ======== ========
Total available liquidity 414.1 469.0
Less: blocked cash (68.8) (103.1)
Less: initial margin requirement at broker (106.1) (120.0)
============================================ ======== ========
Net available liquidity 239.2 245.9
============================================ ======== ========
Of which: held as liquid asset requirement 30.6 27.9
============================================ ======== ========
Client money
Total segregated client money held by the Group for trading
clients was GBP549.4 million at 31 March 2023 (2022: GBP546.6
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 and assets 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 79 to 86 of the 2023 Annual Report and
Financial Statements.
Viability statement
The Directors of the Company have considered the Group's current
financial position and future prospects and have a reasonable
expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the period of the
assessment. In reaching this conclusion, both the prospects and
viability considerations have been assessed.
Long-term prospects
During the year the Group's risk management has continued to be
optimised and strategic initiatives have progressed well, with the
launch of the Invest UK platform to retail clients during the year,
Invest Singapore remaining on track for delivery in early 2024 and
improvements to the Group's institutional product offering being
rolled out throughout the year. This diversification into new
geographies and products is anticipated to help the Group achieve
its target of 30% revenue growth over the next three years. On this
basis, the Group maintains its belief that it will continue to
demonstrate delivery of sufficient cash generation to support
operations.
Conservative expectations of future business prospects through
delivery of the Group strategy (see pages 24 and 25 of the 2023
Annual Report and Financial Statements) are presented to the Board
through the budget process. The annual budget process consists of a
detailed bottom-up process with a 12-month outlook which involves
input from all relevant functional and regional heads. This
includes a collection of resource assumptions required to deliver
the Group strategy and associated revenue impacts with
consideration of key risks. This is used in conjunction with
external assumptions such as a region-by-region review of the
regulatory environment and incorporation of any anticipated
regulatory changes, revenue modelling, market volatility, interest
rates and industry growth that could materially impact the
business. The process also covers liquidity and capital planning
and, in addition to the granular budget, a three-year outlook is
prepared using assumptions on industry growth, the effects of
regulatory change, revenue growth from strategic initiatives and
cost growth required to support initiatives. The budget was
reviewed and approved by the Board at the March 2023 Board meeting.
The process for ongoing review and monitoring of risks is outlined
in the Risk Management section of the 2023 Annual Report and
Financial Statements (pages 67 to 73). The Board approved budget is
then used to set targets across the Group.
The Directors concluded that three years is an appropriate
period over which to provide a viability statement as this is the
longest period over which the Board reviews the success of Group
strategic projections and this timeline is also aligned with the
period over which internal stress testing occurs.
Viability
The Group performs regular stress testing scenarios. Available
liquidity and capital adequacy are central to understanding the
Group's viability and stress scenarios, such as adverse market
conditions and adverse regulatory change, and are considered in the
Group's Internal Capital Adequacy and Risk Assessment ("ICARA")
document, which is shared with the FCA on request. The results of
the stress testing showed that, due to the robustness of the
business, the Group would be able to withstand scenarios, including
combined scenarios across multiple principal risks, over the
financial planning period by taking management actions that have
been identified within the scenario stress tests.
The Group's revenue, which is driven by client transaction fees
and interest income on both own and client funds, has seen
increases resulting from client trading activity and increases in
global interest rates during the year, despite lower overall active
client numbers. Projections of the Group's revenue have included
revenue benefits from new product releases over the three-year
period, which will serve to reduce risks to the Group's viability
as a result of increased revenue diversity. In addition,
conservative estimates of market volatility were assumed for the
current businesses over the three-year period. Projections also
include assumptions on interest rates that are derived from central
bank rate forecasts, where available. No significant changes to
regulatory capital and liquidity requirements have been assumed
over the forecasting period.
In addition to considering the above, the Group also monitors
performance against pre-defined budget expectations and risk
indicators, along with strategic progress updates, which provide
early warning to the Board, allowing management action to be taken
where required including the assessment of new opportunities.
The Directors have no reason to believe that the Group will not
be viable over a longer period, given existing and known future
changes to relevant regulations.
Going concern
The Group satisfies its ongoing working capital requirements
through its available liquid assets. The Group's liquid assets
exclude any funds held in segregated client money accounts. In
assessing whether it is appropriate to adopt the going concern
basis in preparing the Financial Statements, the Directors
considered the resilience of the Group, taking account of its
liquidity position and cash generation, the adequacy of capital
resources, the availability of external credit facilities and the
associated financial covenants, stress testing of liquidity and
capital adequacy that take into account the principal risks faced
by the business. Further details of these principal risks and how
they are mitigated and managed are documented in the Risk
Management section on page 67 of the 2023 Annual Report and
Financial Statements.
Having given due consideration to the nature of the Group's
business, and risks emerging or becoming more prominent, the
Directors consider that the Company and the Group are going
concerns and the Financial Statements are prepared on that
basis.
Euan Marshall
Chief Financial Officer
13 June 2023
PRINCIPAL RISKS
The Group's business activities naturally expose it to
strategic, financial and operational risks which are 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.
To assist the Board in discharging its responsibilities, it has
in place a Risk Management Framework to support identification,
mitigation and management of risk exposures. The Group regularly
reviews the risk framework, risk capabilities and tools to maintain
effective ongoing risk management to ensure it remains commensurate
with current operations alongside its aspirations and
diversification objectives.
During the period, an external review was commissioned of the
Group's Enterprise Risk Management ("ERM") Framework and several
recommendations for improvement were made which are being taken
forward by the business. Heightened monitoring was in place during
periods of market volatility and, although the Group was not
materially impacted, lessons learnt were identified and will be
actioned accordingly.
The Board, through its Group Risk Committee, is ultimately
responsible for the implementation of an appropriate risk strategy
and the main areas which it encompasses are:
-- identifying, evaluating and monitoring the principal and
emerging risks to which the Group is exposed;
-- implementing 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.
Risk management is acknowledged to be a core responsibility of
all colleagues at CMC and the oversight of risk and controls
management is provided by Management and Board Committees as well
as the Group risk and compliance functions.
The Group's risk management and internal controls framework is
designed to manage rather than eliminate risk and follows the
"three lines of defence" model. Risk management and the
implementation of controls is the responsibility of the business
teams which constitute the first line. Oversight and guidance are
provided primarily by the Group's risk and compliance functions
which constitute the second line, and third line independent
assurance is provided by the Group's internal audit function. This
construct ensures that the Group is effectively identifying,
managing and reporting its risks.
The Board has implemented a governance structure which is
appropriate for the operations of an online financial services
group and is aligned to the delivery of the Group's strategic
objectives including its diversification into investing 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.
The Board undertakes a robust assessment of the principal risks
and emerging risks facing the Group as well as a review of risk
appetite on at least an annual basis.
The Group's risk appetite is an articulation of the nature and
type of risks that the Group is willing to accept, or wants to
avoid, in order to achieve its business objectives and strategy.
This process is assessed as part of the Board's review of the
Group's Risk Appetite Statement ("RAS") which is a unified view of
the Group's risk appetites and tolerances. It is important that the
integrated risk appetite remains in line with business strategy to
support the Group's strategic objectives. Risk appetite plays a key
part in the Group's risk, capital and liquidity management, with
the setting of risk appetites being an essential element in
achieving effective risk control across the Group and achieving
positive client outcomes.
The Board has carried out an assessment of the emerging and
principal risks facing the Group, including those that would
threaten its business model, future performance, solvency, or
liquidity. We have determined that climate change will remain
categorised as an emerging risk due to the result of the current
assessment which concluded that critical thresholds are not
expected to breach. More information is available within the TCFD
report on pages 50 to 59 of the 2023 Annual Report and Financial
Statements.
The principal risks reported here are those attracting the
greatest focus, and to which the Group has the largest exposure.
The principal risks are linked to risk appetite and key risk
indicator ("KRI") measures for reporting. In assessing all risks,
CMC considers the reputational impacts of risks materialising and
the impacts on its clients, of negative publicity, and risks to the
achievement of business objectives. The following top principal
risks were considered, their management is set out in note 30 to
the Financial Statements, and they are:
-- Regulatory and compliance risk: there has been an increasing
conduct focus on the sector from various regulators globally. CMC
must meet regulatory expectations including delivering in line with
the upcoming FCA Consumer Duty regime to help ensure the right
outcomes for clients and in that regard the Group has established a
project to deliver the regulation. The Group's approach to
regulatory horizon scanning continues to be strengthened to ensure
we keep abreast of key regulatory changes. Regulatory projects
within the Group remain prioritised to ensure compliance and
ongoing process improvement.
-- Business change risk: as we continue to grow the business and
implement strategic change, project delivery risk naturally becomes
heightened. Some challenges have included project pipeline build-up
and rapid re-prioritisation; however, the establishment of delivery
pillars with ring-fenced resources has helped maintain dedicated
resource pools and allocations to strategic projects.
-- People risk: our people are the key to delivering on our
purpose and strategy. Failure in our ability to attract and retain
key talent puts at risk our strategic delivery and slows our
velocity and our ability to maintain our high service standards.
While a number of key people metrics are positive (e.g. retention
rates and number of open vacancies), we still face a number of
market headwinds and continue to monitor in this regard.
-- Information and data security risk: cyber-criminal activity
continues to increase in sophistication, severity and frequency and
attacks in the form of ransomware and Distributed Denial of Service
("DDoS") are particularly relevant for the Group given the online
nature of the business. Dedicated specialist in-house IT security
resource, strong partnerships with leading security vendors and
continued improvement to internal controls and governance help to
mitigate the risk to CMC.
Further information on the structure and workings of the Board
and Management Committees is included in the corporate governance
report on pages 79 to 118 of the 2023 Annual Report and Financial
Statements.
Principal Risk Risk Description Management and mitigation
Business and Acquisitions The risk that
strategic risks and disposals mergers, * Robust corporate governance structure including
risk acquisitions, strong challenge from independent Non-Executive
disposals or Directors.
other partnership
arrangements made
by the * Group Head of Corporate Development appointed
Group do not ensuring alignment of business and strategic risk.
achieve the
stated strategic
objectives or * Vigorous and independent due diligence process.
that they give
rise to ongoing
or * Align and manage the businesses to Group strategy as
previously soon as possible after acquisition.
unidentified
liabilities.
================ ================== ==============================================================
Strategic / The risk of an
business model adverse impact * Strong governance framework established including
risk resulting from five independent Non-Executive Directors including
the Group's the Chairman sitting on the Board.
strategic
decision making
as well * Robust governance, challenge and oversight from
as failure to independent Non-Executive Directors.
exploit strengths
or take
opportunities. It * Managing the Group in line with the agreed strategy,
is a risk which policies and risk appetite.
may cause damage
or loss,
financial or
otherwise, to the
Group as a whole
================ ================== ==============================================================
Preparedness The risk that
for regulatory changes to the * Active dialogue with regulators, auditor, consultants
change risk regulatory and industry bodies.
framework the
Group operates in
impact the * Monitoring of market and regulator sentiment towards
Group's the product offering by way of ongoing horizon
performance. scanning (utilised via an automatic screening tool as
Such changes well as monthly key stakeholder meetings).
could result in
the Group's
product offering * Monitoring by, and advice from, compliance department
becoming less on impact of actual and possible regulatory change.
profitable, more
difficult
to offer to * A business model and proprietary technology that are
clients, or an responsive to changes in regulatory requirements.
outright ban on
the product
offering in one
or more of the
countries
where the Group
operates.
================ ================== ==============================================================
Reputational The risk of
risk damage to the * The Group is conservative in its approach to
Group's brand or reputational risk and operates robust controls to
standing with ensure significant risks to its brand and standing
shareholders, are appropriately mitigated.
regulators,
existing
and potential * Proactive engagement with the Group's regulators and
clients, the active participation with trade and industry bodies
industry and the as well as positive development of media relations
public at large. with strictly controlled media contact.
* Systems and controls (including brand tracking) to
ensure we continue to offer a good service to clients
and quick and effective response to address any
potential issues.
================ ================ ================== ==============================================================
Financial risks Credit and The risk of Client counterparty risk
counterparty losses arising * The Group's management of client counterparty risk is
risk from a significantly aided by automated liquidation
counterparty functionality. This is where the client positions are
failing to meet reduced should the total equity of the account fall
its obligations below a pre-defined percentage of the required margin
as they fall for the portfolio held.
due.
* 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).
* Position limits which 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.
* Monitoring and reporting counterparty exposures
against policy limits
* Monitoring the creditworthiness of counterparties by
observing and reporting key quantitative metrics
(including, where available: share price; relative
performance against index; CDS spreads; volatility
skew; and credit ratings), as well as qualitatively,
by reviewing industry commentary.
---------------- ================ ================== ==============================================================
Insurance risk The risk that an
insurance claim * Use of a reputable insurance broker who ensures cover
by the Group is is placed with financially secure insurers.
declined (in full
or in part) or
there is * Annual review of all policies to ensure comprehensive
insufficient levels of cover are maintained.
insurance
coverage.
* 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
---------------- ================ ================== ==============================================================
Tax and The risk that
financial financial, * Robust process of checking and oversight in place to
reporting risk statutory or ensure accuracy.
regulatory
reports including
VAT and similar * Knowledgeable and experienced staff undertake and
taxes are overview the relevant processes.
submitted late,
are incomplete or
are inaccurate.
================ ================== ==============================================================
Liquidity risk The risk that
there is * Risk management is carried out by a central LRM team
insufficient under policies approved by the Board and in line with
available the FCA's Investment Firms Prudential Regime
liquidity to meet ("IFPR"). The Group utilises a combination of
the liabilities liquidity forecasting and stress testing to identify
of the Group any potential liquidity risks under both normal and
as they fall due. stressed conditions.
* 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 and
managing liquidity to a series of Board approved
metrics and key risk indicators.
* A committed bank facility of up to GBP55 million is
in place (access to the facility is tested regularly)
and provides a means to meet its liabilities,
including funding broker margin, if CMC's own on
balance sheet liquidity resources are insufficient at
a point in time.
* 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.
For further information see note 30 to the 2023 Annual Report
and Financial Statements.
---------------- ================ ================== ==============================================================
Market risk The risk that the
value of our * Trading risk management monitors and manages the
residual exposures it inherits from clients on a real-time
portfolio will basis and in accordance with Board-approved appetite.
decrease due to
changes in market
risk * The Group predominantly acts as a market maker in
factors. The linear, highly liquid financial instruments in which
three standard it can easily reduce market risk exposure through its
market risk prime broker arrangements. This significantly reduces
factors are price the Group's revenue sensitivity to individual asset
moves, interest classes and instruments.
rates and foreign
exchange rates.
* 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 to which it is
exposed.
For further information see note 30 to the 2023 Annual Report
and Financial Statements.
================ ================ ================== ==============================================================
Operational Business change The risk that
risks risk business change * Governance process in place for all business change
projects are programmes with Executive and Board oversight and
ineffective, fail scrutiny.
to deliver stated
objectives,
or result in * Key users engaged in development and testing of all
resources being key change programmes.
stretched to the
detriment of
business-as-usual * Significant post-implementation support, monitoring
activities. and review procedures in place for all change
programmes.
* Strategic benefits and delivery of change agenda
communicated to employees.
---------------- ================ ================== ==============================================================
Business The risk that a
continuity and business * Multiple data centres and systems to ensure core
disaster continuity event business activities and processes are resilient to
recovery risk or system failure individual failures.
results in a
reduced ability
or * Remote access systems to enable staff to work from
inability to home or other locations. in the event of a disaster
perform core recovery or business continuity requirement.
business
activities or
processes. * 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.
---------------- ================ ================== ==============================================================
Financial crime The risk that the
risk Group is not * Establishing and maintaining a risk-based approach
committed to towards assessing and managing the money laundering,
combatting terrorism financing, anti-bribery and corruption,
financial crime market abuse, fraud or sanctions evasion risks to the
and ensuring that Group.
our
platform and
products are not * Establishing and maintaining risk- based Know Your
used for the Customer ("KYC") procedures, including Enhanced Due
purpose of money Diligence ("EDD") for those customers presenting
laundering, higher risk, such as Politically Exposed Persons
terrorism ("PEPs").
financing,
antibribery and
corruption, * Establishing and maintaining risk-based systems for
market abuse, surveillance and procedures to monitor ongoing
fraud or customer activity.
sanctions
evasion.
* Procedures for reporting suspicious activity
internally and to the relevant law enforcement
authorities or regulators as appropriate.
* Establishing and maintaining procedures relating to
mitigation of risk derived from clients that are
repeat offenders of market abuse.
* 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 of the Group's compliance with the
requirements
* Oversight of Group entities for financial crime in
line with the Group Anti Money Laundering / CTF
oversight framework.
================ ================== ==============================================================
Information and The risk of
data security unauthorised * Dedicated information security and data protection
risk access to or expertise within the Group
external
disclosure of
client or Company * Technical and procedural controls implemented to
information, minimise the occurrence or impact of information
including those security and data protection breaches.
caused by cyber
attacks.
* 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 The risk of loss
technology and of technology * Continuous investment in increased functionality,
infrastructure services due to capacity and responsiveness of systems and
risk loss of data, infrastructure, including investment in software that
system or data monitors and assists in the detection and prevention
centre or failure of cyber attacks.
of a third party
to restore
services in a * Software design methodologies, project management and
timely manner. 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.
* 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.
---------------- ================ ================== ==============================================================
Legal The risk that
(commercial / disputes lead to * Compliance with legal and regulatory requirements
litigation) litigation including relevant codes of practice.
risks proceedings.
* Early engagement with legal advisers and other risk
managers, and where appropriate external counsel.
* Appropriately managed complaints which have a
legal/litigious aspect.
* An early assessment of the impact and implementation
of changes in the law.
---------------- ================ ================== ==============================================================
Operations The risk that the
(processing) design or * Investment in system development and upgrades to
risk execution of improve process automation.
business
processes is
inadequate or * Implementation of robust, preventative controls and
fails to deliver processes as required.
an expected level
of service and
protection to * Enhanced staff training and oversight in key business
client or Company processing areas.
assets
* Monitoring and robust analysis of errors and losses
and underlying causes.
================ ================== ==============================================================
Procurement and The risk of
outsourcing third-party * Responsibility for procurement, vendor management and
risk organisations general outsourcing owned by the Chief Financial
inadequately Officer under the Senior Managers and Certification
performing, or Regime, with the accountability to ensure compliance
failing to to the Group procurement process and completion of
provide or key activities, based on the risk profile of the
perform service required by the organisation.
the outsourced
activities or
contractual * Outsourcing only employed where there is a strategic
obligations to gain in resource or experience, which is not
the standards available in house.
required by the
Group.
* Outsourcing arrangements require assessment as to
their materiality to the business. Material
outsourcing arrangements need to be reported to the
FCA.
* Due diligence performed on service supplier ahead of
outsourcing being agreed.
* Service level agreements in place and regular
monitoring of performance undertaken.
================ ================== ==============================================================
People risk The risk of loss
of key staff, * The Board has directed that the Group maintains
having active People, Succession and Resource Plans for the
insufficient Group and all key individuals and teams, which will
skilled and mitigate some of the risk of loss of key persons. It
motivated will adopt policies and strategies commensurate with
resources its objectives of:
available
or failing to
operate people * attracting and nurturing the best staff;
related processes
to an appropriate
standard. * 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.
================ ================== ==============================================================
Regulatory and The risk of
compliance risk regulatory * Internal audit outsourced to an independent
sanction or legal third-party professional services firm.
proceedings as a
result of failure
to comply with * Effective compliance oversight and advisory/technical
regulatory, guidance provided to the business.
statutory or
fiduciary
requirements or * Comprehensive monitoring and surveillance programmes,
as a result of a policies and procedures designed by compliance.
defective
transaction.
* 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
Group and local Boards, the Group Audit Committee and
the Group Risk Committee.
* Robust anti-money laundering controls, client due
diligence and sanctions checking.
---------------- ================ ================== ==============================================================
Conduct risk The risk that
through our * Treating Customers Fairly ("TCF") and Conduct
culture, Committees are in place across the Group.
behaviours or
practices we fail
to meet the * Robust Management Information focusing on good client
reasonable outcomes.
expectations of
our customers,
shareholders or * Effective conduct policy ensuring conduct-related
regulators. matters, including any serious concerns, breaches of
the Group or local Codes of Conduct, serious
complaints specific to an employee or any concerns
with a senior management or certified function are
addressed
---------------- ================ ================== ==============================================================
Client money The risk that the
segregation Group fails to * The Client Money and Asset Protection Committee
risk implement ("CMAPC") is a fundamental part of the Group's client
adequate controls money and assets governance framework.
and processes to
ensure that
client money and * Robust Client Money and Asset Protection policy.
assets are
segregated in
accordance with * Comprehensive Client Money resolution pack.
applicable
regulations.
---------------- ================ ================== ==============================================================
DIRECTORS' STATEMENT PURSUANT TO THE FCA'S DISCLOSURE GUIDANCE
AND TRANSPARENCY RULES
The directors are required by the Disclosure Guidance and
Transparency Rules to include a management report containing a fair
review of the business and a description of the principal risks and
uncertainties facing the Group.
Each of the directors, whose names and functions are listed
below, confirm to the best of their knowledge that:
-- the Group Financial Statements contained in the 2023 Annual
Report and Financial Statements, which have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and international
financial reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union, give a true and
fair view of the assets, liabilities, financial position and
results of the Group;
-- the Strategic Report contained in the 2023 Annual Report and
Financial Statements includes a fair review of the development and
performance of the business and the position of the Company and the
Group, together with a description of the principal risks and
uncertainties that they face; and
-- the 2023 Annual Report and Financial Statements, taken as a
whole, are fair, balanced and understandable and provide the
information necessary for shareholders to assess the Company's
performance, business model and strategy.
CMC Markets plc Board of Directors
James Richards (Chairman)
Lord Cruddas (Chief Executive Officer)
David Fineberg (Deputy Chief Executive Officer)
Euan Marshall (Chief Financial Officer)
Matthew Lewis (Head of Asia Pacific & Canada)
Paul Wainscott (Senior Independent Director)
Sarah Ing (Non-Executive Director)
Susanne Chishti (Non-Executive Director)
Clare Francis (Non-Executive Director)
Consolidated income statement
For the year ended 31 March 2023
Year ended
Year ended 31 March 2022
GBP'000 Note 31 March 2023 (Restated)
===== ===============
Revenue 311,210 325,809
Net interest income 13,927 834
========================================================== ===== =============== ===============
Total revenue 3 325,137 326,643
Introducing partner commissions and betting levies (36,714) (44,693)
========================================================== ===== =============== ===============
Net operating income 2 288,423 281,950
Operating expenses 4 (233,945) (188,291)
Operating profit 54,478 93,659
Finance costs (2,315) (2,164)
========================================================== ===== =============== ===============
Profit before taxation 52,163 91,495
Taxation 5 (10,724) (20,016)
========================================================== ===== =============== ===============
Profit for the year attributable to owners of the parent 41,439 71,479
========================================================== ===== =============== ===============
Earnings per share
Basic earnings per share (p) 6 14.7 24.6
========================================================== ===== =============== ===============
Diluted earnings per share (p) 6 14.6 24.5
========================================================== ===== =============== ===============
Consolidated statement of comprehensive income
For the year ended 31 March 2023
Year ended
Year ended 31 March 2022
GBP'000 31 March 2023 (Restated)
===============
Profit for the year 41,439 71,479
==================================================================================== =============== ===============
Other comprehensive income / (expense):
Items that may be subsequently reclassified to income statement
Loss on net investment hedges, net of tax (86) (1,089)
Gains recycled from equity to the income statement 237 -
Currency translation differences (1,760) 1,761
Changes in the fair value of debt instruments at fair value through other
comprehensive income,
net of tax (210) (54)
Other comprehensive (expense) / income for the year (1,819) 618
==================================================================================== =============== ===============
Total comprehensive income for the year attributable to owners of the parent 39,620 72,097
==================================================================================== =============== ===============
Consolidated statement of financial position Company
registration number: 05145017
At 31 March 2023
31 March 2022
GBP'000 Note 31 March 2023 (Restated)
===== ==============
ASSETS
Non-current assets
Intangible assets 8 35,342 30,328
Property, plant and equipment 9 22,771 23,170
Deferred tax assets 4,768 6,022
Financial investments 34 13,448
Trade and other receivables 10 2,666 1,797
================================== ===== ============== ==============
Total non-current assets 65,581 74,765
================================== ===== ============== ==============
Current assets
Trade and other receivables 10 130,616 148,208
Derivative financial instruments 14,231 8,788
Current tax recoverable 9,066 1,649
Other assets 1,984 13,443
Financial investments 11 30,572 14,497
Amounts due from brokers 188,154 208,882
Cash and cash equivalents 12 146,218 176,578
================================== ===== ============== ==============
Total current assets 520,841 572,045
================================== ===== ============== ==============
TOTAL ASSETS 586,422 646,810
================================== ===== ============== ==============
LIABILITIES
Current liabilities
Trade and other payables 13 182,284 212,626
Amounts due to brokers 8,927 12,394
Derivative financial instruments 2,033 3,679
Share buyback liability - 27,264
Borrowings - 194
Lease liabilities 14 5,590 4,949
Current tax payable 431 1,729
Provisions 815 369
================================== ===== ============== ==============
Total current liabilities 200,080 263,204
================================== ===== ============== ==============
Non-current liabilities
Lease liabilities 14 6,228 9,302
Deferred tax liabilities 4,012 3,309
Provisions 2,087 2,117
================================== ===== ============== ==============
Total non-current liabilities 12,327 14,728
================================== ===== ============== ==============
TOTAL LIABILITIES 212,407 277,932
================================== ===== ============== ==============
EQUITY
Share capital 70,573 73,193
Share premium 46,236 46,236
Capital redemption reserve 2,901 281
Own shares held in trust (1,509) (1,094)
Other reserves (50,535) (75,980)
Retained earnings 306,349 326,242
================================== ===== ============== ==============
Total equity 374,015 368,878
================================== ===== ============== ==============
TOTAL EQUITY AND LIABILITIES 586,422 646,810
================================== ===== ============== ==============
Consolidated statement of changes in equity
For the year ended 31 March 2023
Capital Own shares
Share Share redemp-tion held in Other Retained
GBP'000 capital premium reserve trust reserves earnings Total equity
============= ============= ============ ============ ============= ============
At 31 March
2021 (As
previously
reported) 73,299 46,236 - (382) (49,334) 330,698 400,517
Correction of
errors - - - - - (968) (968)
---------------- ------------- ------------- ------------ ------------ ------------- ------------ -------------
At 1 April 2021
(Restated) 73,299 46,236 - (382) (49,334) 329,730 399,549
Profit for the
year - - - - - 71,479 71,479
Loss on net
investment
hedges, net of
tax - - - - (1,089) - (1,089)
Currency
translation
differences - - - - 1,761 - 1,761
Changes in the
fair value of
debt
instruments at
fair value
through other
comprehensive
income,
net of tax - - - - (54) - (54)
---------------- ------------- ------------- ------------ ------------ ------------- ------------ -------------
Total
comprehensive
income for the
year - - - - 618 71,479 72,097
---------------- ------------- ------------- ------------ ------------ ------------- ------------ -------------
New shares
issued 175 - - - - - 175
Acquisition of
own shares
held in trust - - - (1,006) - - (1,006)
Utilisation of
own shares
held in trust - - - 294 - - 294
Share buyback (281) - 281 - (27,264) (2,975) (30,239)
Share-based
payments - - - - - 59 59
Tax on
share-based
payments - - - - - 553 553
Dividends - - - - - (72,604) (72,604)
================ ============= ============= ============ ============ ============= ============ =============
At 31 March
2022
(Restated) 73,193 46,236 281 (1,094) (75,980) 326,242 368,878
Profit for the
year - - - - - 41,439 41,439
Loss on net
investment
hedges, net of
tax - - - - (86) - (86)
Gains recycled
from equity to
the income
statement - - - - 237 - 237
Currency
translation
differences - - - - (1,760) - (1,760)
Changes in the
fair value of
debt
instruments at
fair value
through other
comprehensive
income,
net of tax - - - - (210) - (210)
---------------- ------------- ------------- ------------ ------------ ------------- ------------ -------------
Total
comprehensive
income for the
year - - - - (1,819) 41,439 39,620
---------------- ------------- ------------- ------------ ------------ ------------- ------------ -------------
Acquisition of
own shares
held in trust - - - (1,106) - - (1,106)
Utilisation of
own shares
held in trust - - - 691 - - 691
Share buyback (2,620) - 2,620 - 27,264 (27,264) -
Share-based
payments - - - - - 972 972
Dividends - - - - - (35,040) (35,040)
================ ============= ============= ============ ============ ============= ============ =============
At 31 March
2023 70,573 46,236 2,901 (1,509) (50,535) 306,349 374,015
================ ============= ============= ============ ============ ============= ============ =============
Consolidated statement of cash flows
For the year ended 31 March 2023
Year ended
Year ended 31 March 2022
GBP'000 Note 31 March 2023 (Restated)
===== ===============
Cash flows from operating activities
Cash generated from operations 15 76,584 171,128
Interest income 13,950 1,742
Finance costs (2,315) (2,138)
Tax paid (17,060) (14,651)
======================================================== ===== =============== ===============
Net cash generated from operating activities 71,159 1 56,081
======================================================== ===== =============== ===============
Cash flows from investing activities
Purchase of property, plant and equipment (7,091) (3,500)
Investment in intangible assets (21,130) (12,313)
Purchase of financial investments (17,345) (28,337)
Proceeds from maturity of financial investments 14,415 27,511
Outflow on net investment hedges (8) (998)
Net cash used in investing activities (31,159) ( 17,637)
======================================================== ===== =============== ===============
Cash flows from financing activities
Repayment of borrowings (1,194) (10,945)
Proceeds from borrowings 1,000 10,000
Principal elements of lease payments (5,454) (4,808)
Acquisition of own shares (1,106) (831)
Payments for share buyback (27,264) (2,975)
Dividends paid (35,040) ( 72,604)
Net cash used in financing activities (69,058) ( 82,163)
======================================================== ===== =============== ===============
Net (decrease)/increase in cash and cash equivalents (29,058) 5 6,281
======================================================== ===== =============== ===============
Cash and cash equivalents at the beginning of the year 12 176 ,578 118,921
Effect of foreign exchange rate changes (1,302) 1,376
======================================================== ===== =============== ===============
Cash and cash equivalents at the end of the year 12 146,218 176,578
======================================================== ===== =============== ===============
1. Basis of preparation
Basis of accounting
The financial information set out herein does not constitute the
Group's statutory accounts for the years ended 31 March 2022 and
2023 but is derived from those financial statements. The Annual
Report and Financial Statements for the year ended 31 March 2022
have been delivered to the Registrar of Companies and those for the
year ended 31 March 2023 will be delivered following the Company's
Annual General Meeting to be held on 27 July 2023. The external
auditor has reported on those financial statements; its reports
were unqualified, did not draw attention to any matters by way of
emphasis without qualifying their report and did not contain
statements under s498(2) or (3) Companies Act 2006.
While the financial information included in this announcement
has been prepared in accordance with the UK-adopted International
Accounting Standards in conformity with the requirements of the
Companies Act 2006 and the disclosure guidance and transparency
rules sourcebook of the United Kingdom's Financial Conduct
Authority for the periods presented, this announcement does not
itself contain sufficient information to comply with IFRSs.
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 Group's principal accounting policies adopted in the
preparation of these financial statements are consistent with those
of the previous financial year. The financial statements presented
are at and for the years ending 31 March 2023 and 31 March 2022.
Financial annual years are referred to as 2023, and 2022 in the
financial statements.
The financial information for the year ended 31 March 2022 has
been restated. See note 33 of the Group Financial Statements
contained in the 2023 Annual Report and Financial Statements for
more detail.
Significant accounting judgements
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. The areas involving a
higher degree of judgement or complexity, or where assumptions and
estimates are significant to the Consolidated Financial Statements
are:
Contingent liabilities
Judgement has been applied in evaluating the accounting
treatment of the specific matters described in note 35 of the 2023
Annual Report and Financial Statements (Contingent Liabilities),
notably the probability of any obligation or future payments
arising.
Accounting for cryptocurrencies
The Group has recognised GBP1,984,000 (31 March 2022:
GBP13,443,000) of cryptocurrency assets and rights to
cryptocurrency assets on its Statement of Financial Position as at
31 March 2023. 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. Please refer to Note 2 of the 2023 Annual
Report and Financial Statements for other assets accounting
policy.
Intangible assets
The Group has recognised GBP13,550,000 (31 March 2022:
GBP14,237,000) of customer relationship intangible on its Statement
of Financial Position as at 31 March 2023 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$25 million. A judgement has been made to apply the
recognition and measurement principles of IAS 38 "Intangibles" in
accounting for these assets.
Key financial estimates
The Group has recognised GBP11,316,000 (31 March 2022:
GBP7,965,000) of internally generated software in intangible assets
on its Statement of Financial Position as at 31 March 2023, of
which GBP5,016,000 (31 March 2022: GBP6,054,000) relates to the
development of CMC Invest UK 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 CMC Invest UK business. We
found the recoverable amount of the intangible asset to have been
based on reasonable, supportable assumptions. B2B revenue, discount
rates, useful economic life, cost per trading customer acquisition,
customer retention rates and average portfolio sizes represent
significant sources of estimation uncertainty. Relevant disclosure
is included in note 12 of the 2023 Annual Report and Financial
Statements.
2. Segmental reporting
The Group's principal business is providing leveraged online
retail financial services and providing its clients with the
ability to trade contracts for difference ("CFD") and financial
spread betting on a range of underlying shares, indices, foreign
currencies, commodities and treasuries. The Group also makes these
services available to institutional partners through white label
and introducing broker arrangements. The Group's CFDs are traded
worldwide; spread bets only in the UK and Ireland and the Group
provides stockbroking services only in Australia. The Group's
business is generally managed on a geographical basis and, for
management purposes, the Group is organised into four segments:
-- Trading - CFD and spread bet - UK and Ireland ("UK & IE");
-- Trading - CFD - Europe;
-- Trading - CFD - Australia, New Zealand and Singapore ("APAC") and Canada; and
-- Investing - Stockbroking - Australia
These segments are in line with the management information
received by the chief operating decision maker ("CODM"). Revenues
and segment operating expenses are allocated to the segments that
originated the transaction.
Operating expenses in the central segment relate to costs that
are not directly related to activities in one region or are not
controlled by regional management. These centrally generated costs
are allocated to segments on an equitable basis, mainly based on
revenue, headcount or active client levels, or where central costs
are directly attributed to specific segments. An impairment of
GBP432,000 relating to internally generated computer software
assets was recognised in trading segment in UK and Ireland during
the period.
Trading Investing
Year ended 31 March
2023 UK & APAC Trading
GBP '000 IE Europe & Canada total Australia Central Total
--------- --------- ---------- ---------- ---------- ---------- ----------
Revenue 98,579 50,620 106,329 255,528 55,682 - 311,210
Net interest income 3,762 239 3,390 7,391 6,536 - 13,927
======================== ========= ========= ========== ========== ========== ========== ==========
Total revenue 102,341 50,859 109,719 262,919 62,218 - 325,137
Introducing partner
commissions and
betting levies (7,398) (353) (11,209) (18,960) (17,754) - (36,714)
======================== ========= ========= ========== ========== ========== ========== ==========
Net operating income 94,943 50,506 98,510 243,959 44,464 - 288,423
Segment operating
expenses (28,147) (7,405) (26,459) (62,011) (14,282) (157,652) (233,945)
======================== ========= ========= ========== ========== ========== ========== ==========
Segment contribution 66,796 43,101 72,051 181,948 30,182 (157,652) 54,478
Allocation of central
operating expenses (48,075) (32,649) (45,861) (126,585) (31,067) 157,652 -
======================== ========= ========= ========== ========== ========== ========== ==========
Operating profit 18,721 10,452 26,190 55,363 (885) - 54,478
Finance costs (566) (331) (199) (1,096) (179) (1,040) (2,315)
Allocation of central
finance costs (513) (163) (364) (1,040) - 1,040 -
======================== ========= ========= ========== ========== ========== ========== ==========
Profit before taxation 17,642 9,958 25,627 53,227 (1,064) - 52,163
======================== ========= ========= ========== ========== ========== ========== ==========
Trading Investing
Year ended 31 March
2022
(Restated)
UK & APAC Trading
GBP '000 IE Europe & Canada total Australia Central Total
--------- --------- ---------- ---------- ----------- ---------- ----------
Revenue 87,168 45,312 118,911 251,391 74,418 - 325,809
Net interest income (413) - 335 (78) 912 - 834
======================== ========= ========= ========== ========== =========== ========== ==========
Total revenue 86,755 45,312 119,246 251,313 75,330 - 326,643
Introducing partner
commissions and
betting levies (6,277) (1,517) (10,527) (18,321) (26,372) - (44,693)
======================== ========= ========= ========== ========== =========== ========== ==========
Net operating income 80,478 43,795 108,719 232,992 48,958 - 281,950
Segment operating
expenses (19,421) (6,480) (22,755) (48,656) (10,422) (129,213) (188,291)
======================== ========= ========= ========== ========== =========== ========== ==========
Segment contribution 61,057 37,315 85,964 184,336 38,536 (129,213) 93,659
Allocation of central
operating expenses (35,527) (30,597) (40,689) (106,813) (22,400) 129,213 -
======================== ========= ========= ========== ========== =========== ========== ==========
Operating profit 25,530 6,718 45,275 77,523 16,136 - 93,659
Finance costs (419) (290) (195) (904) (168) (1,092) (2,164)
Allocation of central
finance costs (474) (207) (411) (1,092) - 1,092 -
======================== ========= ========= ========== ========== =========== ========== ==========
Profit before taxation 24,637 6,221 44,669 75,527 15,968 - 91,495
======================== ========= ========= ========== ========== =========== ========== ==========
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.
Year ended 31 March 2023 Year ended 31 March 2022
GBP '000 GBP '000
GBP '000 Trading Investing Total Trading Investing Total
============================ ======== ========== ======== ======== ========== ========
UK 94,943 - 94,943 80,478 - 80,478
Australia 46,850 44,464 91,314 49,020 48,958 97,978
Other countries 102,166 - 102,166 103,494 - 103,494
============================ ======== ========== ======== ======== ========== ========
Total net operating income 243,959 44,464 288,423 232,992 48,958 281,950
============================ ======== ========== ======== ======== ========== ========
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
Year ended 31 March 2022
GBP '000 31 March 2023 (Restated)
===============
UK 30,996 39,397
Australia 25,348 26,254
Other countries 4,469 3,092
========================== =============== ===============
Total non-current assets 60,813 68,743
========================== =============== ===============
3. Total revenue
Revenue
Year ended Year ended
GBP'000 31 March 2023 31 March 2022
===============
Trading 252,012 247,987
Investing 55,687 74,326
Other 3,511 3,496
=========== =============== ===============
Total 311,210 325,809
=========== =============== ===============
Net interest income
Year ended Year ended
GBP'000 31 March 2023 31 March 2022
===============
Bank and broker interest 13,482 825
Interest on financial investments 440 9
Other interest income 5 -
=================================== =============== ===============
Total 13,927 834
=================================== =============== ===============
The Group earns interest income from its own corporate funds and
from segregated client funds.
4. Operating expenses
Year ended
Year ended 31 March 2022
GBP'000 31 March 2023 (Restated)
===============
Net staff costs 101,560 84,862
IT costs 33,723 28,721
Sales and marketing 38,304 27,363
Premises 5,706 4,510
Legal and professional fees 8,605 8,568
Regulatory fees 9,436 5,576
Depreciation and amortisation 15,637 12,388
Bank charges 7,362 7,642
Irrecoverable sales tax 2,972 2,789
Other 10,810 6,344
================================================= =============== ===============
234,115 188,763
Capitalised internal software development costs (170) (472)
================================================= =============== ===============
Operating expenses 233,945 188,291
================================================= =============== ===============
The above presentation reflects the breakdown of operating
expenses by nature of expense.
5. Taxation
Year ended
Year ended 31 March 2022
GBP'000 31 March 2023 (Restated)
===============
Analysis of charge for the year:
Current tax:
Current tax on profit for the year 9,873 18,521
Adjustments in respect of previous years (991) (465)
=================================================== =============== ===============
Total current tax 8,882 18,056
=================================================== =============== ===============
Deferred tax:
Origination and reversal of temporary differences 1,180 1,698
Adjustments in respect of previous years 200 409
Impact of change in tax rate 462 (147)
=================================================== =============== ===============
Total deferred tax 1,842 1,960
=================================================== =============== ===============
Total tax 10,724 20,016
=================================================== =============== ===============
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 20.56% (year ended 31 March 2022: 21.86%) differs from
the standard rate of UK corporation tax of 19% (year ended 31 March
2022: 19%). The differences are explained below:
Year ended
Year ended 31 March 2022
GBP'000 31 March 2023 (Restated)
===============
Profit before taxation 52,163 91,495
==================================================================================== =============== ===============
Profit multiplied by the standard rate of corp. tax in the UK of 19% (31 March
2022: 19%) 9,911 17,384
Adjustment in respect of foreign tax rates 1,205 2,500
Adjustments in respect of previous years (791) (56)
Impact of change in tax rate 462 (147)
Expenses not deductible for tax purposes 49 291
Income not subject to tax - (62)
Recognition of previously unrecognised tax losses (132) -
Tax losses for which no deferred tax asset recognised 173 (43)
Other differences (153) 149
==================================================================================== =============== ===============
Total tax 10,724 20,016
==================================================================================== =============== ===============
Year ended Year ended
GBP'000 31 March 2023 31 March 2022
================
Tax on items recognised directly in Equity
Tax credit on share-based payments - 553
============================================ ================ ===============
6. Earnings per share ("EPS")
Basic EPS is calculated by dividing the earnings attributable to
the equity owners of the Company by the weighted average number of
Ordinary Shares in issue during each 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 conversion vesting of all dilutive
potential weighted average Ordinary Shares and that vesting is
satisfied by the issue of new Ordinary Shares.
Year ended Year ended
31 March 2023 31 March 2022
(Restated)
GBP'000 (Restated)
===============
Earnings attributable to Ordinary Shareholders (GBP '000) 41,439 71,479
================================================================================= =============== ===============
Weighted average number of shares used in the calculation of basic EPS ('000) 282,295 290,815
Dilutive effect of share options ('000) 1,598 1,022
================================================================================= =============== ===============
Weighted average number of shares used in the calculation of diluted EPS ('000) 283,893 291,837
================================================================================= =============== ===============
Basic EPS (p) 14.7 24.6
================================================================================= =============== ===============
Diluted EPS (p) 14.6 24.5
================================================================================= =============== ===============
For the year ended 31 March 2023, 1,598,000 (year ended 31 March
2022: 1,022,000) potentially dilutive weighted average Ordinary
Shares in respect of share awards in issue were included in the
calculation of diluted EPS.
7. Dividends
Year ended Year ended
GBP'000 31 March 2023 31 March 2022
===============
Declared and paid in each year
Final dividend for 2022 at 8.88 per share (2021: 21.43p) 25,250 62,410
Interim dividend for 2023 at 3.50p per share (2022: 3.50p) 9,790 10,194
============================================================ =============== ===============
Total 35,040 72,604
============================================================ =============== ===============
The final dividend for 2023 of 3.90 pence per share, amounting
to GBP10,913,000 was proposed by the Board on 12 June 2023 and has
not been included as a liability at 31 March 2023. The dividend
will be paid on 11 August 2023, following approval at the Company's
Annual General Meeting, to those members on the register at the
close of business on 14 July 2023. The dividends paid or declared
in relation to the financial year are set out below:
Year ended Year ended
pence 31 March 2023 31 March 2022
===============
Declared per share
Interim dividend 3.50 3.50
Final dividend 3.90 8.88
==================== =============== ===============
Total dividend 7 .40 1 2.38
==================== =============== ===============
8. Intangible assets
Trademarks and Client Assets under
GBP '000 Goodwill Computer software trading licences relationships development Total
========= ================== ================= ================= =================
At 31 March 2022
Cost 11,500 132,187 1,052 3,095 23,608 171,442
Accumulated
amortisation (11,500) (125,612) (907) (3,095) - (141,114)
------------------ --------- ------------------ ----------------- ----------------- ----------------- ----------
Carrying amount
at
31 March 2022 - 6,575 145 - 23,608 30,328
------------------ --------- ------------------ ----------------- ----------------- ----------------- ----------
Additions - 291 23 - 11,316 11,630
Transfers - 12,803 - 14,103 (26,906) -
Amortisation
charge - (4,441) (34) (768) - (5,243)
Impairment - (432) - - - (432)
Foreign currency
translation - (109) (2) (519) (311) (941)
------------------ --------- ------------------ ----------------- ----------------- ----------------- ----------
Carrying amount
at
31 March 2023 - 14,687 132 12,816 7,707 35,342
------------------ --------- ------------------ ----------------- ----------------- ----------------- ----------
At 31 March 2023
Cost 11,500 143,991 1,046 16,495 7,707 180,739
Accumulated
amortisation (11,500) (129,304) (914) (3,679) - (145,397)
------------------ --------- ------------------ ----------------- ----------------- ----------------- ----------
Carrying amount - 14,687 132 12,816 7,707 35,342
------------------ --------- ------------------ ----------------- ----------------- ----------------- ----------
9. Property, plant and equipment
Furniture,
Leasehold fixtures and Computer Right-of-use Construction in
GBP '000 improvements equipment hardware assets progress Total
================ ================ ================ ================ ================
At 31 March
2021 (As
previously
reported)
Cost 19,273 9,656 36,249 19,146 - 84.324
Accumulated
amortisation ( 14,393) ( 8,795) ( 27,235) ( 7,796) - ( 58,219)
Correction of
error - - - (1,134) - (1,134)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------
Carrying amount
at
1 April 2021
(Restated) 4,880 861 9,014 10,216 - 24,971
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------
Additions 106 198 3,196 4,213 - 7,713
Disposals 3 (6) (14) (94) - (111)
Depreciation
charge (1,642) (414) (3,225) (4,287) - (9,568)
Foreign
currency
translation 15 3 44 103 - 165
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------
Carrying amount
at
31 March 2022
(Restated) 3,362 642 9,015 10,151 - 23,170
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------
Additions 722 479 5,788 2,872 211 10,072
Disposals (48) (13) (239) (12) - (312)
Depreciation
charge (1,585) (407) (3,749) (4,221) - (9,962)
Foreign
currency
translation (14) (4) (56) (118) (5) (197)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------
Carrying amount
at
31 March 2023 2,473 715 10,759 8,672 152 22,771
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------
At 31 March
2023
Cost 16,565 9,321 42,420 22,634 152 91,092
Accumulated
amortisation (14,092) (8,606) (31,661) (13,962) - (68,321)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------
Carrying amount 2,473 715 10,759 8,672 152 22,771
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------
10. Trade and other receivables
31 March 2022
GBP'000 31 March 2023 (Restated)
==============
Current
Gross trade receivables 8,721 6,546
Less: loss allowance (4,247) (6,219)
========================= ============== ==============
Trade receivables 4,474 327
Prepayments 14,985 10,621
Accrued income 2,335 522
Stockbroking debtors 105,103 134,325
Other debtors 3,719 2,413
========================= ============== ==============
130,616 148,208
========================= ============== ==============
Non-current
Other debtors 2,666 1,797
========================= ============== ==============
Total 133,282 150,005
========================= ============== ==============
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 13).
At 31 March 2023 the Group has lease receivables amounting to
GBP384,000 (31 March 2022: GBPnil). The Group is an intermediate
lessor on these leases and has recognised finance income of
GBP5,000 during the year ended 31 March 2023 (year ended 31 March
2022: GBPnil).
11. Financial investments
GBP'000 31 March 2023 31 March 2022
==============
UK Government securities:
At 1 April 27,875 28,037
Purchase of securities 17,345 28,337
Maturity of securities and coupon receipts (14,878) (28,428)
Net accrued interest 440 (17)
Changes in the fair value of debt instruments at fair value through other
comprehensive income (210) (54)
====================================================================================== ============== ==============
At 31 March 30,572 27,875
====================================================================================== ============== ==============
Equity securities
At 1 April 70 67
Impairment (34) -
Foreign currency translation (2) 3
====================================================================================== ============== ==============
At 31 March 34 70
====================================================================================== ============== ==============
Total 30,606 27,945
====================================================================================== ============== ==============
Split as:
Non-current 34 13,448
Current 30,572 14,497
====================================================================================== ============== ==============
Total 30,606 27,945
====================================================================================== ============== ==============
12. Cash and cash equivalents
GBP'000 31 March 2023 31 March 2022
==============
Cash and cash equivalents 146,218 176,578
Analysed as:
Cash at bank 146,218 176,578
--------------------------- -------------- --------------
Cash and cash equivalents comprises of cash on hand and
short-term deposits. 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. This includes money market funds. 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 2023
(year ended 31 March 2022: GBPnil).
13. Trade and other payables
31 March 2022
GBP'000 31 March 2023 (Restated)
==============
Client payables 49,409 44,133
Tax and social security 1,272 2,242
Stockbroking creditors 98,428 123,875
Accruals and other creditors 33,175 42,376
============================== ============== ==============
Total 182,284 212,626
============================== ============== ==============
Stockbroking creditors represent the amount payable in respect
of equity and securities transactions executed on behalf of clients
with a corresponding balance included within trade and other
receivables (note 10).
14. Lease liabilities
The Group leases several assets including leasehold properties
and computer hardware to meet its operational business
requirements. The average lease term is 2.6 years.
The movements in lease liabilities during the year were as
follows:
31 March 2022
GBP'000 31 March 2023 (Restated)
--------------------------------------------------------- -------------- --------------
At 1 April (Restated) 14,251 15,386
Additions / modifications of new leases during the year 3,223 3,510
Interest expense 658 687
Lease payments made during the year (6,112) (5,495)
Foreign currency translation (202) 163
--------------------------------------------------------- -------------- --------------
At 31 March 11,818 14,251
--------------------------------------------------------- -------------- --------------
31 March 2022
GBP'000 31 March 2023 (Restated)
==============
Analysis of lease liabilities
Non-current 6,228 9,302
Current 5,590 4,949
------------------------------- -------------- --------------
Total 11,818 14,251
------------------------------- -------------- --------------
The lease payments for the year ended 31 March 2023 relating to
short-term leases amounted to GBP402,000 (year ended 31 March 2022:
GBP207,000)
As at 31 March 2023 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 GBPnil (31 March 2022: GBPnil).
Refer to note 29 of the 2023 Annual Report and Financial
Statements for maturity analysis of lease liabilities.
15. Cash generated from operations
Year ended Year ended
GBP'000 31 March 2023 31 March 2022
===============
Cash flows from operating activities
Profit before taxation 52,163 91,495
Adjustments for:
Interest income (13,927) (834)
Finance costs 2,315 2,164
Depreciation 9,962 9,568
Amortisation of intangible assets 5,675 2,820
Research and development tax credit (651) (743)
(Profit)/Loss on disposal of property, plant and equipment (27) 86
Other non-cash movements including exchange rate movements 980 (681)
Share-based payment 1,651 356
Changes in working capital
Decrease/(Increase) in trade and other receivables and other assets 17,222 (18,492)
Decrease in amounts due from/due to brokers 17,261 57,523
Decrease/(Increase) in other assets 11,459 (13,443)
(Decrease)/Increase in trade and other payables (20,792) 44,828
Increase in net derivative financial instruments liabilities (7,167) (1,705)
Increase/(Decrease) in provisions 460 (1,814)
===================================================================== =============== ===============
Cash generated from operations 76,584 171,128
===================================================================== =============== ===============
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FR GPUBWQUPWUAW
(END) Dow Jones Newswires
June 13, 2023 02:00 ET (06:00 GMT)
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