CMC Markets (AIM:CMC) today reported its final results for the year to 31 March, 2020 and a strong first quarter of 2021, with income skyrocketing 93% from the year before.
The group declared a final dividend for the year of 12.18p per share resulting in a total dividend of 15.03p per share, in line with its dividend policy of distributing 50% of profit after tax, providing investors with a welcome yield in excess of 6%.
CMC said the improved performance was down to a reshuffled risk management strategy which it describes as ‘crucial to the ongoing success of the group’ and a higher gross client income mainly as a result of high market volatility in the latter part of Q4 2020.
“The significant performance improvement in 2020 is a result of the Group's unwavering focus on our strategic initiatives,” said Peter Cruddas, Chief Executive Officer of CMC Markets.
The group’s stockbroking business saw significant revenue growth due to a combination of a full year of revenues for the ANZ Bank partnership, higher market volatility in Q4 and successful product launches.
CFD active client numbers increased by 3,894, or 7%, to 57,202, mainly due to high market volatility relating to the Covid-19 pandemic encouraging dormant clients to reactivate and new clients to onboard onto CMC’s platform.
Shares in CMC Markets were trading 17.47% higher at 233.5p on Thursday morning.
The increase in CFD net trading revenue has resulted in revenue per active client ("RPC") increasing by £1,682, or 81%, to £3,750.Total operating expenses increased by £28.2m, or 23%, to £151.3m due to an increase in variable remuneration of £11.4m due to the significant improvement in financial performance.
The online trading services provider said net operating income for the year increased by £121.2m, or 93%, to £252m, mainly due to a significantly improved CFD trading revenue performance through a higher retention of client income throughout the year.
Profit before tax at £98.7 million was £92.4m higher than the previous year. By period-end, CMC’s net available liquidity was £189.1m and the regulatory capital ratio was 23.3%.
“The heightened volatility and trading activity resulting from COVID-19 has continued into the first quarter of the financial year, and CMC continues to provide clients with market leading trading platforms and client service,” said Cruddas.
He added, “I am also confident that, once the financial world returns to more normal conditions, the Group will continue to build on the underlying growth that was being displayed prior to the pandemic."
Looking forward, CMC said a significant investment in technology development and infrastructure in its institutional business is expected to lead to a moderate increase in costs for the 2021 financial year.
CMC’s board confirmed that it remains committed to paying a total dividend going forward of 50% of profit after tax ‘given the strength of the balance sheet and confidence in strategic delivery.’
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