CMC Markets : FY 2024 full-year results Statement

20 June 2024

CMC MARKETS PLC

("CMC" the "Group" or the "Company")

Final results for the year ended 31 March 2024

Net operating income at a post-COVID high. Adjusted profit before tax up 52%.

Cost efficiency programme in place to drive profit margin expansion.

Summary Financials

	FY24	FY23	Change %
Net operating income (£m)	332.8	288.4	15%
Trading net revenue (£m)	259.1	233.1	11%
Investing net revenue (£m)	34.0	37.9	(10)%
Other income (£m)	39.7	17.4	128%
Adjusted profit before tax (£m)	80.0	52.6	52%
Profit before tax (£m)	63.3	52.2	21%
Basic earnings per share (pence)	16.7	14.7	14%
Ordinary dividend per share (pence)	8.3	7.4	12%

Note: Net operating income represents total revenue net of introducing partner commissions and levies. Trading net revenue represents gross trading income net of rebates, levies and risk management gains or losses. Investing net revenue represents stockbroking and related services revenue net of rebates. Adjusted profit before tax is adjusted for one-off costs relating to impairment of intangible assets and global headcount restructuring.

Financial Highlights

• Net operating income of £332.8 million (FY23: £288.4 million), up 15%, marks a new record-high outside the COVID-19 pandemic period and was driven by consistently strong performance throughout H2.

o Trading net revenue grew by 11%, to £259.1 million (FY23: £233.1 million), with strong performance in both the retail and institutional segments of the business. Of our total trading net revenue, £74.8 million was made up of fixed transactional income, which constitutes financing and commissions. Institutional segment also continues to grow as a proportion of overall net revenue.

o Investing net revenue 10% lower than prior year at £34.0 million (FY23: £37.9 million) primarily driven by unfavourable movements in FX from a weaker Australian Dollar. On a constant currency basis investing net revenue was 3% lower year-on-year.

o Other income of £39.7 million (FY23: £17.4 million) up 128% due to higher global interest rates driving income from client and own cash balances.

• Operating expenses1, excluding variable remuneration, were £249.5 million (FY23: £217.2 million), including a non-recurring £12.3 million impairment charge relating to internally- developed platforms for the UK Invest and cash equities offerings and £4.3 million of one-off costs relating to actions to reduce global headcount.

• Regulatory total Own Funds Requirements (OFR) ratio of 312% (FY23: 369%) and net available liquidity of £192.2 million (FY23: £184.2 million)

• Statutory profit before tax of £63.3 million (FY23: £52.2 million), up 21%, reflecting net operating income outperformance and steps taken on costs.

• Adjusted profit before tax, excluding non-recurring costs, of £80.0 million was up 52%.

• Final dividend of 7.3 pence per share (FY23: 3.9 pence), taking the total dividend for the year to 8.3 pence per share (FY23: 7.4 pence), up 12% year-on-year.

1 Including impairment of intangible assets.

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Operational Highlights

• Strong progress made to enhance operational efficiency with ongoing cost review programme driving synergies across product and business lines.
• Efficiency programme extending beyond costs to all areas of the business such as our new centralised Treasury Management Division with the launch of our global Treasury Management System focused on efficient cash management, currency and liquidity optimisation.
• CMC Markets Connect brand, API ecosystem and world-leading financial markets technology continues to underpin our growth and has proven critical in growing our B2B and institutional offering with several major client wins during the year and a strong pipeline of potential clients.
• Significantly bolstered product suite with the rollout of options and addition of cash equities to our institutional offering, to expand this valuable segment.
• Further development of investing platform with Invest UK rolling out mutual funds and SIPPs post- financial year-end and the rollout of cryptocurrencies for Invest Australia.
• Continued expansion across new geographies and markets with launch of CMC Invest Singapore, a growing footprint in Middle East with DIFC hub and renewed focus on strengthening the governance and capability of our European operations as a lever for growth.
• Regional expansion further supported by Opto, our content and thematic investing tool, which has over 100k subscribers, advanced API infrastructure and recently finalised cash equities trading functionality, which is set for imminent release.

Outlook

• Having reached the peak of the investment cycle, management continues to seek opportunities to drive further cost efficiencies and deliver margin expansion, whilst investing in significant opportunities for incremental growth.
• Combined with new product launches and further technological upgrades planned for FY25, we remain confident in the business' ability to generate robust levels of income on a leaner cost base, resulting in improved profit margins.
• Current trading proving encouraging with positive trends seen early in the new fiscal year.
• Management is guiding to net operating income of between £320-360 million in FY25 on a cost base, excluding variable remuneration and non-recurring charges, of approximately £225 million.

Lord Cruddas, Chief Executive Officer, commented:

"Over the past year, a recovery in client trading combined with our diversification strategy through B2B technology and an institutional first approach has delivered strong growth and opened up many opportunities for the company around the world.

"This strategy, based on continuous product launches and multiple application connectivity through the CMC Markets Connect brand, means we are making great strides in a huge market segment of B2B and institutional business, with limited competition from our peers.

"Building on this strategy this year we will launch a fully integrated multi-asset,multi-currency platform, underpinned by connectivity for B2B and institutional clients, as well as for retail clients. This is bolstered by new product launches including SIPPs, mutual funds (UK Invest), OTC options, cash cryptos, fixed income, and with futures, and exchange-traded options to come.

"CMC Markets Connect has added a new fintech dimension to our offering and there is no higher endorsement of our company than when a major bank or financial institution trusts our technology to deliver a service to their valued clients.

"Institutional, B2B and multi-asset,multi-currency platforms, across all brands is the future, and ours. We have built the infrastructure which will allow us to significantly increase our growth potential whilst improving profit margins through scale.

"It is going to be an exciting couple of years."

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An analyst and investor presentation will be held on 20 June 2024 at 9:00am UK time. Participants need to register using the link below.

Webcast:

CMC Markets plc Full Year 2024 Results

Annual Report and Financial Statements

A copy of the Company's Annual Report and Financial Statements for the year ended 31 March 2024 (the "2024 Annual Report and Financial Statements") is available within the Investor Relations section of the Company website at http://www.cmcmarketsplc.com.

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 2024 Annual Report and Financial Statements. This material is not a substitute for reading the 2024 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 2024 Annual Report and Financial Statements.

Forthcoming announcement dates:

25	July 2024	Q1 2025 Trading Update
21	November 2024	H1 2025 Interim Results
Enquiries
CMC Markets Plc
Albert Soleiman, Chief Financial Officer	[e-mail]
Camarco
Geoffrey Pelham-Lane		[phone]
Jennifer Renwick		[phone]
Alex Campbell		[phone]

Forward looking statements

This trading update may include statements that are forward looking in nature. Forward looking statements involve known and unknown risks, assumptions, uncertainties and other factors which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Except as required by the Listing Rules and applicable law, the Group undertakes no obligation to update, revise or change any forward-looking statements to reflect events or developments occurring after the date such statements are published.

MAR disclosure statement

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.

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Notes to Editors

CMC Markets Plc ("CMC"), whose shares are listed on the London Stock Exchange under the ticker CMCX (LEI: 213800VB75KAZBFH5U07), was established in 1989 and is now one of the world's leading online financial trading businesses. The Company serves retail and institutional clients through regulated offices and branches in 12 countries with a significant presence in the UK, Australia, Germany and Singapore. CMC Markets offers an award-winning, online and mobile trading platform, enabling clients to trade over 12,000 financial instruments across shares, indices, foreign currencies, commodities and treasuries through contracts for difference ("CFDs"), financial spread bets (in the UK and Ireland only) and, in Australia, Singapore and the UK, access stockbroking services. More information is available at http://www.cmcmarketsplc.com.

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CHAIRMANS STATEMENT

The Board's strategy of diversification and placing a greater focus on institutional clients and the B2B sector continues to build momentum. The long-term investments we have made in our technology and our people will continue to enhance our business performance and benefit our clients and other stakeholders.

While we have given a greater focus to our institutional business, we of course maintained investment in our retail business, launching our Invest product in Singapore and continuing to enhance our Invest business in the UK. We launched mutual funds on Invest UK as well as our SIPP product post year- end, broadening the range of high-qualitylong-term investment products for our UK retail customers. In addition to our product diversification, we continue to pursue targeted geographical diversification, building on our existing presence in Dubai and placing a renewed focus on governance and capabilities in Europe to ensure a solid foundation for what is an attractive growth region. Our staff continue to be instrumental to our growth and diversification. As we announced earlier in the year, the Group has reached the peak of its investment cycle and the Board and senior management conducted two restructuring reviews, leading to the loss of around 15% of roles across the Group. While it is always a matter of great regret when colleagues leave the business, we are now better placed to deliver on our growth opportunities and leverage our scale to grow profit margins, whilst continuing to invest in our products and technology.

Results and dividend

Net operating income rose 15% to £332.8 million in the year, following improved trading conditions in the second half of 2024, with increased client trading activity and further momentum in our B2B businesses. Profit after tax for the year was £46.9 million. The Board recommends a final dividend of

7.3 pence per share which results in a total dividend payment of 8.3 pence for the year, in line with our dividend policy of 50% of profit after tax.

Board

The Board was delighted to approve the appointment of Albert Soleiman as CFO in September 2023 following the resignation of Euan Marshall. Prior to his appointment as CFO, Albert led the launch of our CMC Invest business in the UK which is a key part of our diversification strategy and enables clients to generate long-term wealth through our investing platforms. Albert's extensive knowledge of the business made him the ideal choice as CFO.

Susanne Chishti has advised that she is not putting herself up for re-election at the 2024 AGM. I would like to thank Susanne for her hard work and the insight she has provided to the Board, particularly in relation to workforce engagement matters, during her time as a Non-Executive Director. We wish her well in her future endeavours.

People and stakeholders

Our workforce remains the bedrock for our business and the efforts of our people enable us to deliver on our strategic goals and provide outstanding service for our clients. The Board also considers our wider stakeholders and the communities in which we operate, and during the year approved our Community Impact 121 strategy, committing to making donations to charitable causes and enabling staff volunteering.

We recognise, with the restructuring reviews and the resulting reduction in roles, that this was a more difficult period for our people, and this is discussed further in the Our Tomorrow section of the 2024 Annual Report and Financial Statements.

The Board continues to place priority on developing and investing in our people with Susanne Chishti having acted as our designated Non-Executive Director responsible for workforce engagement. The scope of the work undertaken by Susanne in this role is set out in the 2024 Annual Report and Financial Statements.

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The Board would like to express its gratitude to all CMC's employees for their significant contributions throughout the year and particularly during the period of heightened change.

Sustainable-based growth

The Board is committed to putting in place the tools and capabilities for our customers and employees to invest for a better future. Further information is set out in the Our Tomorrow section of the 2024 Annual Report and Financial Statements.

Outlook

The outlook for the Group remains positive as we continue to invest in the business, develop the platforms and technologies that our clients want and further improve our operational efficiency. We will continue to build on the work undertaken to date to diversify the business to position it for future opportunities and challenges. While there will continue to be potential for uncertainty in the financial markets due to ongoing geopolitical events, the Board will maintain its focus on positioning the business to navigate through this period of volatility to the benefit of all our stakeholders.

James Richards

Chairman

20 June 2024

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CEO STATEMENT

Over the past year, CMC Markets has experienced exceptional growth, marked by a strong financial performance, and continued technology advancements. Our financial results, in particular our net operating income of £332.8 million represents a record for the Group when excluding the COVID-19 impacted 2021. Our profit before tax of £63.3 million was up 21%, reflecting the success of our institutional first approach by leveraging our technology to partner with major financial institutions. The recent announcement of our partnership with Revolut, where our best-in-class technology will support their rapidly expanding customers' investing needs, is not only a testament to the success of this strategy but also opens significant opportunities for further collaboration on a global scale.

This strategy has transformed and diversified the business into a provider of financial technology solutions, facilitating platforms, multiple connectivity, liquidity, trade execution and clearing across multiple venues as we partner with major financial institutions. We have very little competition in this institutional space. We are certainly not in competition with peers from the retail CFD sector, and, because of our technology and offering, we have a clear and long-standing competitive advantage that separates us from our traditional peers in the retail market.

This is not something that has happened by accident, it has been part of our business for over twenty years, but it is only recently that investors and analysts have started to understand the diversity of our business model and the scale it brings. As we gravitate further towards the fintech sector, this is driving CMC towards a higher valuation multiple as we are increasingly moving away from valuations associated with the retail CFD sector. A retail CFD only platform is where CMC started, but that is not where we are today, and it is not our future, and public markets are gradually beginning to reflect this in our higher valuation.

We are already the second largest on-exchange stockbroker in Australia with over $70 billion in AUA and over one million customer accounts and we are regularly the number one options clearer on the Australian exchange. CMC Group currently serves more than 400 institutions with marquee partnerships in all our major geographies and a strong pipeline in our target countries. Our focus is not only to seek out new partnerships but to also help our existing partners realise the full potential of their businesses through new products and access to various liquidity pools, thereby maximising returns for CMC and our partners. We have the infrastructure and experience to continue our growth in this huge market.

It has been an exciting year and I look forward to working with my superb team over the coming years to add more value and growth to an already exciting business.

Treasury Management and Capital Markets

Over the last couple of years, we have been building a Treasury Management and Capital Markets Division; an area I have extensive experience in due to my banking background. The development of this division has become necessary as the Group continues to expand and diversify.

Today, we are managing substantial cash and currency balances, trade settlements and multiple venue clearing. Our annual trade turnover is more than US$4 trillion and growing, driven by our institutional business and new product additions. We are managing a number of prime brokers, banking relationships, exchanges, and partnerships all around the world. With offices in 12 countries, a large stockbroking business, cash settlements, and expanding B2B and institutional partnerships, we have become a technology-based,multi-currency global organisation, which requires not just a focus on technology but also on treasury management functionality.

As part of our Treasury Management Division, we have linked all our overseas offices to a Treasury Management System ("TMS") to centralise all foreign exchange ("FX") transactions and cash balances onto one real-time platform. All currency and cash movements are centrally managed by the treasury team, who then lock in FX profits, whilst also managing our cash with prime brokers, banks, exchanges, and partners, to optimise capital market returns. This ensures our cash and trade settlements are as

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efficient as possible, thereby freeing up capital to invest. It is an amazing value add to the business and generates additional income through optimisation and efficiency.

To be clear, this is not a risk book of business; it is capital markets and interest rate optimisation. It is cash deployed effectively in the right venues to earn the maximum return in the capital markets. Via the TMS platform we can also centralise all cash foreign exchange exposures and settlements, locking in currency exchange rates and optimising foreign exchange profits.

The treasury management team is there to optimise liquidity, settle trades and optimise our cash flows. This has added great scale to the business and additional incremental profits. In our financial accounts for FY24 we have a record £39.7 million as other income. This includes interest income from the higher interest rate environment but within that figure there are the efficiencies of our TMS and the additional value this brings.

In the coming years we will provide a more granular breakdown as this side of the business expands and matures. Treasury management is important and necessary as we expand our B2B and institutional business, as well as our cash product range. It will help us win more business and will help us to remain competitive.

Financial performance

Financial performance in the year has been strong. Net operating income of £332.8 million (FY23: £288.4 million) was up 15% with continued good momentum across our B2B segment, and profit before tax for the year was £63.3 million, up 21% on FY23. Other income continued to benefit from higher global interest rates, as well as our new centralised TMS.

Whilst operating expenses, excluding variable remuneration, are higher in the year, much of this was driven by a non-recurring impairment charge and an increase in net staff costs relating to the annualisation of higher headcount levels for much of the year, as well as the higher termination costs resulting from the reduction in global headcount.

Driving efficient performance throughout the business has been a central focus over the course of FY24, and this includes the introduction of the aforementioned TMS, but also extends to our disciplined focus on costs. As announced at the half year, the business has reached the peak of its current investment cycle and H2 saw us complete a cost review designed to rationalise our cost base and drive synergies through our global operations. This includes the merging of support functions, streamlining of reporting lines and greater focus on our capital allocation, which will generate sustainable cost savings from FY25 onwards.

We remain firmly committed to continued investment in our business and technology platforms to maintain our competitive advantage. However, following years of strong investment, we are now in a position to leverage our operational strength to grow efficiently. We continue to see opportunities to rationalise the cost base as we maintain our ongoing focus on delivering sustainable cost savings.

Our financial performance in FY24 leaves the Group in a strong position and has laid the foundation for another successful year ahead.

Delivering growth through diversification

Underpinning our growth agenda is our diversification strategy, which has opened many opportunities for the business around the world. This strategy is predicated on a rigorous programme of continuous product upgrades, a sustained commitment to providing world-leading technology for our clients across all business lines and further expansion of our reach across both new geographies and markets.

Continuous product development

FY24 has seen CMC continue to diversify its product offering. Our approach, which is on the focused expansion of asset classes to strengthen our levels of engagement is critical in enabling us to continue to support our clients. This includes the rollout of OTC options, with futures and exchange traded options

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set to be delivered in H1 FY25. The addition of cash equities to our institutional offering has allowed us to expand the services available to this valuable segment. On UK Invest, we have added mutual funds in FY24, and SIPPs post-financialyear-end, as well as continued updates designed to enhance the user experience. Invest Australia also expanded to offer cash cryptocurrencies.

Sustained commitment to world-leading technology

Underpinning our continued product development is our unwavering commitment to being a world- leader in financial markets technology. Our CMC Markets Connect brand and API ecosystem is the foundation for our growth and expansion and the power of this technology has proven critical in securing a number of large B2B partners, such as Revolut. This builds on the already extensive network of partnerships that we have in place and our ability to provide larger institutions with complex, bespoke builds, cements us further as the partner of choice and reinforces our deep understanding of the financial sector and technical superiority. Elsewhere, we have launched our CMC Invest Singapore platform, and we continue to enhance our connectivity to more execution venues, ECNs, and client types across this vast electronic marketplace. Looking to the future, we remain committed to a disciplined level of continued investment over the medium-term, leveraging technology to drive innovation and growth.

Expansion across new geographies and markets

A core aspect of our diversification strategy is expansion across new regions and markets. In addition to the launch of Invest Singapore, we have also expanded our operations in the Middle East with our subsidiary in Dubai's International Financial Centre and we have placed a renewed emphasis on our European operations, with a focus on strengthening the governance and capability of this region as a lever for growth. Meanwhile, our content and thematic investing tool, Opto, achieved significant milestones, notably the completion of equities trading functionality, which is set to launch imminently. Through continued and targeted regional expansion across the world, CMC continues to unlock new opportunities, delivering sustained value creation for shareholders.

Regulatory change

As we outlined as part of our half year results, updated regulations governing Consumer Duty in the UK were enforced for financial services companies from 31 July 2023. These regulations are designed to establish a rigorous level of consumer safeguarding in financial dealings. The integration of these obligations within the Group has proven effective, and CMC remains committed to refining its procedures post-implementation, while monitoring client outcomes to try to ensure their ongoing financial goals are met.

CMC also intends to comply with the European Union's Digital Operational Resilience Act, applicable from January 2025, which seeks to promote cyber resilience by enhancing ICT risk management and cyber risk management across financial services. Requirements include the reporting of major ICT- related incidents, digital operational resilience testing, information sharing, and measures and requirements related to the use of ICT third-party services.

People and sustainability

As the emphasis on sustainability continues to influence financial markets, our goal is to empower both our clients and employees with the tools and expertise needed to make informed and ethical choices, both in their investments and in the workplace. We acknowledge and embrace the finance industry's deep responsibility to support global sustainability initiatives and appreciate the belief that integrating sustainable practices can yield tangible advantages for our business.

Dividend

The Board has proposed a final dividend payment of £20.4 million, which equates to 7.3 pence per share, resulting in a total dividend payment of 8.3 pence per share for the year. This is in line with the dividend policy of 50% of profit after tax.

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Outlook

With the launch of new product initiatives, further technological advancements, and the expanding opportunities created by our diversification strategy, combined with our programme to rationalise costs, we are confident in the business' ability to generate robust levels of income on a leaner cost base. This will drive an enhancement in profit margins in the year ahead. Management is anticipating achieving net operating income of between £320-360 million in FY25, on a cost base, excluding variable remuneration and non-recurring charges, of around £225 million.

I look forward to continued exciting profitable growth in the years to come.

Lord Cruddas

Chief Executive Officer

20 June 2024

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