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CMC Markets PLC on Thursday expressed its determination to use its technology to enter new markets and expand its non-leveraged offering, as the online trading platform posted a sharp drop in annual profit.
CMC Markets shares were down 13% at 262.76 pence each on Thursday morning in London.
For the financial year that ended March 31, net operating income was down 31% to £281.9 million from £409.8 million in financial 2021 and pretax profit plunged to £92.1 million from £224.0 million.
CMC said it saw a decrease in market volatility, particularly in the first half, compared to ‘exceptional’ levels seen in 2021. This resulted in lower client trading activity and lower client income retention throughout the period which hurt leveraged and non-leveraged businesses, it explained.
Leveraged net trading revenue slumped 34% to £229.6 million from £349.2 million, as client income retention fell to 80% from 104%. Leveraged active clients were down to 64,243 from 76,591 year on year.
In addition, total operating expenses have increased by £3.6 million to £187.6 million, with the main driver being investments in strategic initiatives resulting in higher personnel, professional fees and technology costs. CMC noted these investments will see financial 2023 operating costs rise to about £205 million.
Chief Executive Officer Peter Cruddas said: ‘The business is evolving. We continue to improve and grow our existing leveraged business whilst at the same time utilising our technology to enter new markets and expand our non-leveraged offering.’
The contract-for-difference provider declared a final dividend of 8.9 pence per share, down from 21.4p per share a year ago. This resulted in a total dividend of 12.4 pence for financial 2022, cut by 60% from 30.6p paid out in 2021.
Looking ahead, the company said it would focus on revenue diversification and how best to address the realisation of future value for the leveraged and non-leveraged businesses, both of which underpin CMC's technology. As part of this, CMC expects its new business expansion to grow net operating income by 30% over next three years.
Chair James Richards added: ‘The strategy also forms the foundation for the launch of our new UK non-leveraged investment platform in April 2022. The new platform is being rolled out to the market over the coming year and augurs well for the group's future.
‘Our clear focus on revenue diversification will continue throughout the coming year as will our assessment of how best to address the realisation of future value for the two broadly different businesses, namely leveraged and non-leveraged, both underpinned by our technology.’
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