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CMC Markets targets 30% net operating income growth over three years

Published: 07:39 09 Jun 2022 BST

CMC Markets PLC -

CMC Markets PLC (LSE:CMCX) is targeting 30% net operating income growth over the next three years as it embarks on a new phase of diversification.

In its results for the year to the end of March 2022, the trading platform operator said its new UK non-leveraged investment platform (CMC Invest), which was launched in April, is being rolled out to the market over the coming year and augurs well for the group's future.

The year just ended saw revenue slide to £326.6mln from £462.0mln the year before but the company noted the preceding year was an exceptional one, characterised by inflated trading levels during the first year of the pandemic.

Leveraged net trading revenue was down by around a third to £229.6mln from £349.2mln the year before but was 7% higher than in the (pre-Covid) year before that.

Non-leveraged net trading revenue eased 12% to £48.0mln from £54.8mln the previous year but was 51% higher than in the year to the end of March 2020.

Net operating income of £282mln was at the top end of the company’s guidance range and a record performance outside of the pandemic restrictions.

New business expansion is expected to grow net operating income by 30% over the next three years based on the 2022 result and underlying conditions. The targeted growth is expected to be broadly linear over that period with benefits expected in 2023, CMC said.

Profit before tax fell to £94.3mln from £225.8mln in the prior year.

The board has recommended a final dividend of 8.88p, down from 21.43p the previous year, taking the full-year payout to 12.38p, down from the previous year’s bumper payment of 30.63p.

The group’s investment plans in the current fiscal year are expected to increase operating costs to about £205mln excluding variable remuneration, with more than two-thirds of the new investment going into people, product development and marketing.

“Excluding the exceptional COVID-19 impacted prior year, which due to market volatility saw unusually significant trading volumes, this is a record net operating income result for the group,” said Peter Cruddas, the group’s chief executive officer.

“Over the last year, we have taken steps to define the strategic direction and diversification of the group, building on our existing technology to launch a new investment platform that will unlock significant shareholder value and challenge the existing client transaction fee cost structures.

“There is significant opportunity and growth potential in the self‑directing investment platform space, especially in the UK, not just for improved technology but also transaction costs and fees. We believe commissions, execution spreads and custodial fees are too high and too expensive for retail investors. We will utilise our platform technology, including pricing and execution, to drive down the transaction costs of investments for retail clients, just like we did in Australia, where we are the number two investment platform for retail investors,” Lord Cruddas added.

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