Results presentation. Year ended 31 March 2016

Transcription

1 Results presentation Year ended 31 March 2016

2 Introduction Peter Cruddas - Group Chief Executive Officer

3 Introduction Key Highlights Successful IPO Strong growth across all key metrics and significant progress on all strategic initiatives Number of trades up 50%, value of trades up 27% Revenue per active client (RPC) up 4% to 2,828 Underlying EPS up 23% to 18.0 pence Final dividend of 5.36 pence; total dividend of 8.93 pence (10.72 pence including special dividend) Strong cash position to facilitate growth with a robust balance sheet and regulatory capital position Confident of meeting targets Analyst presentation ǀ Pg 3

4 Financials Grant Foley -Group CFO

5 KPIs Strong underlying growth Active clients 1 and Revenue per active client 2 ( ) 2,828 2,716 2,374 57,329 50,303 48,006 Turnover ( bn) and Trades (m) ,071 1,626 1,351 Net operating income 3 ( m) % % Active clients¹ Revenue per client² Turnover ( bn) Trades (m) Profit Before Tax ( m and margin) Profit after tax ( m) Dividends per share and Basic EPS (pence) +61% % % % % % 37% Underlying PBT² ( m) Statutory PBT ( m) Underlying PBT margin Underlying Profit After Tax⁵ ( m) Profit After Tax ( m) 1. Active clients represent those individual clients who have traded with or held CFD or spread bet positions with CMC Markets on at least one occasion during the financial year. 2. Trading revenue generated from CFD and spread bet active clients. 3. Net operating income represents total revenue after rebates payable to introducing partners who are not themselves trading counterparties and betting levies. 4. Underlying PBT represents PBT before exceptional items. 5. Based on implied tax payable excluding exceptional items Analyst presentation ǀ Pg Special dividend per share Dividend per share Basic EPS

6 Income statement Increasing revenue generated from growing client base Strong net operating income growth driven by increase in active client numbers and trading activity New Countdowns product successfully launched globally during the year, generating revenues of 4.3m Controlled cost increase with investment in key areas of the business to drive growth initiatives Underlying PBT growth of 20% Continuing investment in business has not been to the detriment of underlying PBT margin Group ( m) 2016 H1 H2 Full Year 2015 YoY % Net operating income % Operating expenses (49.1) (51.1) (100.2) (83.9) (19%) Depreciation, amortisation and finance costs (3.6) (3.2) (6.8) (7.8) 13% Underlying Profit before tax % Other income Exceptional costs (1.3) (10.8) (12.1) (8.4) (43%) Profit before taxation % Underlying Profit after tax % Profit after tax % 1. Net operating income represents total revenue after rebates payable to introducing partners who are not themselves trading counterparties and betting levies. 2. Underlying PBT represents PBT before exceptional items. 3. Based on implied tax payable excluding exceptional items Analyst presentation ǀ Pg 6

7 Net operating income Breakdown by product Group ( m) YoY % CFD and spread bet (including binaries) net revenue % Stockbroking % Interest income (17%) Turnover 1 and trades 2,500 2, Sundry income 0.2 (0.2) - Net operating income % Growth in CFD and spread bet revenue driven by increase in active clients and trading activity Turnover ( bn) 1,500 1, Trades (m) Countdowns released 20 th July 2015, providing 4.3m revenue Stockbroking remained relatively consistent despite the backdrop of a weaker Australian dollar Lower interest income as a result of reduction in interest rates in Australia Performance aided by higher levels of market volatility 0 0 Turnover Trades 1. Turnover represents the notional value of client trades. Analyst presentation ǀ Pg 7

8 Net revenue 1 bridge ( m) Existing clients: ( 10.9m) (17.5) New and returning clients: 36.5m 2015 Net revenue Existing clients trading more Existing clients stopped trading Returning clients New clients 2016 Net revenue 1. Net revenue generated from CFD and spread bet active clients, including Countdowns, after the impact of rebates and levies. Analyst presentation ǀ Pg 8

9 Retail volume rebate 1 bridge ( m) Existing clients: 1.4m (0.5) New and returning clients: 2.1m 2015 retail rebate Existing clients trading more Existing clients stopped trading Returning clients New clients 2016 retail rebate 1. Revenue is presented net of volume rebates in the financial statements. Analyst presentation ǀ Pg 9

10 Revenue per active client 1 (RPC) Growing active client base and RPC ,716 2,828 3,000 Active client growth across all regions Active clients (000's) , ,500 2,000 1,500 RPC ( ) Client growth has not reduced quality of clients with overall RPC up 4% to 2,828 RPC continues to be one of the highest in the industry Increased RPC after paying a record 10.5m to retail client in rebates 1, H1 RPC of 1,707 vs H2 RPC of 1, UK APAC & Canada Europe RPC ( ) 1. Trading revenue generated from CFD and spread bet active clients. Analyst presentation ǀ Pg 10

11 Revenue trend Increasing average daily revenue 1 Reducing loss days % 10.3% % 476 Average daily CFD and spread bet trading revenue ( 000s) CFD and spread bet loss days % 1. Revenue represents total trading revenue generated from CFD and Spread bet clients before the impact of Rebates & Levies. Analyst presentation ǀ Pg 11

12 Performance by region Revenue growth driven by increasing client numbers and quality UK revenue bridge ( m) Europe revenue bridge ( m) (0.7) Net revenue¹ Active client growth² RPC growth³ 2016 Net revenue¹ 2015 Net revenue¹ Active client growth² RPC growth³ 2016 Net revenue¹ APAC & Canada revenue bridge ( m) (1.5) 50.6 Strong growth in active clients across all regions RPC growth in UK driven by continuing to attract quality clients; our premium client proposition is now well established in the UK Good growth in Europe with active clients up 8%, offset by a fall in RPC due to an increased number of new clients in H2 Very strong active client growth in APAC & Canada up 23%, impact on RPC due to the number of actives increasing throughout the year 2015 Net revenue¹ Active client growth² RPC growth³ 2016 Net revenue¹ 1. Net revenue generated from CFD and spread bet active clients, including Countdowns, after the impact of rebates and levies. 2. Active clients represent those individual clients who have traded with or held CFD or spread bet positions with CMC Markets on at least one occasion during the financial year. 3. Change in net revenue per active client. Analyst presentation ǀ Pg 12

13 Customer lifecycle Improving client tenure Client tenure (in months) 2016 Revenue by client tenure % 21% 14% Client Tenure 0-6M 6-12M 1-2YR 2-3YR >3YR 2013 Standard Premium¹ 13% 17% Client churn 48,006 50,303 57,329 Positive client churn Typical client tenure of over 2½ years 48% of revenue was generated from clients that have been with CMC for over 2 years Continuous traders New traders Reactivated Stopped Trading 1. Premium clients are calculated based on internal revenue metrics. Analyst presentation ǀ Pg 13

14 Operating costs Controlled cost growth to support strategic focus Total underlying operating cost¹ increase of 19% driven by increasing headcount and marketing expenditure Increased headcount as part of investment in key areas to support growth initiatives Marketing spend has grown in line with NOI and remains within guidance of 10-12% Group ( m) H H2 Full Year 2015 YoY % % of NOI Net staff costs % 27% 28% IT costs % 7% 8% Sales and marketing % 11% 10% Premises (14%) 3% 4% Legal and Professional fees % 2% 2% Regulatory fees % 2% 1% Other % 7% 5% Total operating expenses before exceptional costs % 59% 58% Exceptional costs % 7% 6% Total operating expenses % 66% 64% 1. Operating costs excluding exceptional items. Analyst presentation ǀ Pg 14

15 Liquidity and regulatory capital Good cash generation and strong regulatory capital ratio Regulatory capital Group ( m) Core Tier 1 Capital Less: intangibles and deferred tax assets 2 (6.6) (6.4) Capital Resources Pillar 1 requirement Total risk exposure Capital ratio % 31.2% 27.9% Available liquidity Group ( m) YoY Own funds Non-segregated client and partner funds (5.6) Available committed facility (11.3) Total available liquidity Uses of Available liquidity Group ( m) YoY Total available liquidity Blocked cash⁵ (14.9) (14.9) - Internal Liquidity Buffer 6 (30.0) (30.0) - Initial margin requirement at broker (54.7) (52.8) (1.9) 1. Core Tier 1 capital total audited capital resources as at the end of the financial year, less proposed dividends. 2. Intangible and deferred tax asset deduction has been restated to reflect the impact of CRD IV on prior year and incudes audited results. 3. Pillar 1 requirement the minimum capital requirement required to adhere to CRD IV. 4. Total risk exposure the Pillar 1 requirement multiplied by 12.5, as set out by the FCA. 5. Blocked cash relates to cash needed to support regulatory and overseas subsidiaries operational requirements. 6. Internal Liquidity Buffer consistent at 30m. 7. Surplus total available liquidity is defined as the liquidity in excess of the Group s liquidity risk appetite and is the Group s key liquidity measure. Surplus total available liquidity Analyst presentation ǀ Pg 15

16 Capital allocation framework Strong cash generation Objectives Uses of free cash 1 Effective risk management Growing client activity 1 Hedging Increasing revenues 1,351 1,626 2, Increasing shareholder returns Turnover ( bn) Peak prime broker requirements ( m) Maintain a strong capital ratio 2 Shareholder returns Liquidity to withstand contingencies and take advantage of opportunities Own funds generated ( m) Dividends ( m) Special dividend ( m) Analyst presentation ǀ Pg 16

17 Key regulatory topics Dear CEO letter - February 2016 ESMA Task Force AMF potential restrictions MiFID II Analyst presentation ǀ Pg 17

18 Financial summary Strong revenue growth Increasing active quality clients Record level of client rebates Contribution from new products Countdowns generated 4.3 million in 8 months Focus on cost control Targeted investment in the business to drive future growth Final dividend of 15.4 million 5.36 pence per share Robust balance sheet Strong liquidity to facilitate future growth Capital ratio of 31% Analyst presentation ǀ Pg 18

19 Outlook Revenue Continue to target gross revenues of 250m by 2020 Equivalent to 220m net operating income Of which new products to generate 20m in the medium term Costs Staff costs Consistent as a percentage of net operating income LTIP costs expected to be a further 6m pa Technology costs expected to be 7% to 8% of net operating income Marketing to be 10% to 12% of net operating income as previously guided Analyst presentation ǀ Pg 19

20 Strategic Progress Peter Cruddas - Founder and CEO

21 Strategic objectives 5 pillars of strategic focus Initiative Objective FY16 progress A Established markets Seen as the choice provider by both new clients and switchers Improving client acquisition, quality and retention in UK Held leading market share in Australia 1 and Germany 2 B Digital marketing Improve effectiveness of digital marketing to drive client acquisition Increase in client acquisition through digital channels Conversion enablers being rolled out C Geographic expansion Grow developing regions, open new offices and explore potential opportunities elsewhere Poland office set up during the year Encouraging growth in developing regions D New products / developments Continue to drive new binaries proposition and evaluate other opportunities Countdowns released during the financial year Binaries also released in April E Institutional Next Gen platform to offer full white and grey label proposition White label offering released during the year API functionality released 1. Australia Investment Trends CFD and FX Reports, September Investment Trends April 2015 Germany CFD & FX Report. Analyst presentation ǀ Pg 21

22 Established markets Strong organic growth in established markets Active clients 1 and number of trades Highlights 40 UK Active clients (000's) Client trades (millions) UK Germany Australia Australia Germany Increase in primary market share² Retail client acquisition up 10% Retail client acquisition up 32% Number one ranking for high value CFD clients and number one market share for frequent trading FX clients in Australia 3 Market leading position 4 Video ID and verification introduced UK Australia Germany 1. Active clients represent those individual clients who have traded with or held CFD or spread bet positions with CMC Markets on at least one occasion during the financial year. 2. UK Investment Trends CFD Report, Oct Investment Trends June 2015 Australia CFD Report. 4. Investment Trends April 2015 Germany CFD & FX Report. Analyst presentation ǀ Pg 22

23 Digital progress 1 Natural search rankings improvements 1 2 Mobile focus driving apps downloads Number of keywords in top 5 position in natural search for UK 14,326 14,620 23,736 31,393 Aug 15 May 16 Q1 Q2 Q3 Q4 Number of app downloads 3 New device responsive website launched across all established markets 4 New device responsive application forms launched in Australia 1. This is natural search on google.co.uk for identified keywords in the UK SEO campaign. 2. App downloads across all markets. Analyst presentation ǀ Pg 23

24 Digital benefits 1 Cost per acquisition 1 (CPA) reducing towards target Mobile trading app driving client activity 2 60% % Mobile turnover % 50% 45% 40% 36% 41% 48% Number of trades (m) 35% 5 Medium term target 30% Mobile turnover % Mobile trades 0 Greater focus on digital and mobile spend Targeted activity in line with strategy Improving efficiencies Award winning mobile trading app 2 Trades and turnover via mobile continue to increase 1. Cost per new approved account, presented net of Land Rover BAR sponsorship cost. 2. Financial Times 2015 and Shares Magazine Analyst presentation ǀ Pg 24

25 Geographic expansion/developing regions France, Italy and Poland France and Italy Net revenue¹ ( m) ,500 2,000 1,500 1, France Italy France & Italy active clients Active clients France New management team in place 70% growth in value of trades during the year 35% increase in active clients 7% increase in revenue per active client Launch of grey label Partners functionality Italy New management team in place 18% increase in value of trades during the year 20% increase in active clients Poland Oct 2015 Nov 2015 Dec 2015 Jan 2016 Feb 2016 Mar 2016 Office opened in Q3 Steady growth in performance as foothold is taken in the region Monthly active clients Cumulative new accounts 1. Net revenue generated from CFD and spread bet active clients, including Countdowns after the impact of rebates and levies. Analyst presentation ǀ Pg 25

26 New products Countdowns released during FY16, Binaries launched April 2016 Countdowns performance Stage 1 - Countdowns Revenue¹ ( m) Trades (000 s) Product built entirely in house Launched 20 th July in UK, Australia and New Zealand, and all remaining offices (except Canada and Singapore) on 16 th November Simple and exciting way to trade the markets Steadily increasing active clients Stage 2 - Binaries Binaries released 25 th April Stage 3 - Future developments Expansion of binaries product planned for release during FY Committed to constant technological development to produce a strong pipeline of products - - Opportunities for partner expansion in new products Revenue Trades 1. Gross Countdowns revenue before the impact of rebates and levies. Analyst presentation ǀ Pg 26

27 Summary Clear strategy that is being delivered Strong revenue growth after record client rebates Good growth in active client numbers whilst still increasing revenue per active client Successful launch of Countdowns Continuing to invest for growth Strong liquidity to support growth Analyst presentation ǀ Pg 27

28 Questions

29 Appendices

30 Appendix 1 Selected KPIs by half year Net revenue 1 ( m) H1 H2 Full Year H1 H2 Full Year H1 H2 Full Year UK Europe APAC & Canada Total Active clients² H1 H2 Full Year H1 H2 Full Year H1 H2 Full Year UK 10,901 10,894 14,054 10,673 12,814 15,417 12,749 13,172 17,268 Europe 15,435 15,751 19,572 15,365 17,111 20,019 16,954 18,175 21,714 APAC & Canada 12,021 11,380 14,380 11,323 12,756 14,867 14,314 15,201 18,347 Total 38,357 38,025 48,006 37,361 42,681 50,303 44,017 46,548 57,329 Revenue per active client ( ) H1 H2 Full Year H1 H2 Full Year H1 H2 Full Year UK 1,437 1,624 2,373 1,812 2,283 3,152 2,314 2,548 3,652 Europe 1,361 1,572 2,338 1,288 1,499 2,269 1,302 1,455 2,234 APAC & Canada 1,564 1,411 2,424 1,442 2,058 2,864 1,646 1,781 2,760 Total 1,446 1,539 2,374 1,484 1,901 2,716 1,707 1,871 2, Net revenue represents total trading revenue generated from CFD and Spread bet clients after the impact of Rebates & Levies. 2. Active clients represent those individual clients who have traded with or held CFD or spread bet positions with CMC Markets on at least one occasion during the preceding 6 months for half year figures and 12 months for full year. Analyst presentation ǀ Pg 30

31 Appendix 2 Income statement Group ( m) H1 H H1 H YoY % Total revenue % Rebates & levies (10.2) (8.6) (18.8) (5.9) (8.3) (14.2) 32% Net operating income % Other income Operating expenses (49.1) (51.1) (100.2) (41.3) (42.6) (83.9) (19%) Exceptional costs (1.3) (10.8) (12.1) - (8.4) (8.4) (43%) Depreciation and amortisation (3.2) (2.8) (6.0) (3.2) (3.7) (6.9) 13% Finance costs (0.4) (0.4) (0.8) (0.4) (0.5) (0.9) 14% Profit before taxation % Underlying Profit before tax % Taxation (6.5) (4.4) (10.9) (2.6) (6.2) (8.8) (24%) Profit after tax % Underlying Profit after tax⁴ % Dividend per share p 88% Basic EPS p 22% 1. Net operating income represents total revenue after the impact of Rebates & Levies. 2. Underlying PBT represents PBT before exceptionals. 3. Trading revenue generated from CFD and spread bet active clients. 4. Based on implied tax payable excluding exceptional items Analyst presentation ǀ Pg 31

32 Appendix 3 Broker margins Daily margin requirement max requirement - 55m 2015 max requirement - 72m 2016 max requirement - 78m Broker margin requirement ( m) Range of 32.2m Range of 34.2m Range of 38.8m 10 0 Mar-13 Mar-14 Mar-15 Mar-16 Analyst presentation ǀ Pg 32

33 Appendix 4 Revenue composition 2016 CFD and Stockbroking revenue 1 by asset class 2015 CFD and Stockbroking revenue 1 by asset class Stockbroking 3% Countdowns 3% Treasury 0% FX 25% Shares 10% Index 48% Treasury 1% Stockbroking 4% FX 19% Commodity 15% Shares 12% Indices 49% Commodity 11% 2016 Net revenue 2 by region 2015 Net revenue 2 by region APAC & APAC & Canada Canada 31% 31% UK UK 36% 39% Europe 30% Europe 33% 1. CFD and Stockbroking revenue represents total revenue generated from CFD, Spread bet and stockbroking clients after the impact of Rebates & Levies. 2. Net revenue generated from CFD and spread bet active clients, including Countdowns after the impact of rebates and levies. Analyst presentation ǀ Pg 33

34 Appendix 5 Regional EBITDA¹ Regional EBITDA ( m) UK Europe APAC & Canada Regional EBITDA presented before the allocation of central costs. Analyst presentation ǀ Pg 34

35 Disclaimer Certain statements in this presentation constitute or may constitute forward-looking statements. Any statement in this presentation that is not a statement of historical fact including, without limitation, those regarding the Company s future expectations, operations, financial performance, financial condition and business is or may be a forward-looking statement. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected or implied in any forward-looking statement. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this presentation. As a result, you are cautioned not to place any reliance on such forward-looking statements. The forward-looking statements reflect knowledge and information available at the date of this presentation and the Company undertakes no obligation to update its view of such risks and uncertainties or to update the forward-looking statements contained herein. Nothing in this presentation should be construed as a profit forecast or profit estimate and no statement in this presentation should be interpreted to mean that the future earnings per share of the Company for current or future financial years will necessarily match or exceed the historical or published earnings per share of the Company. This communication is directed only at (i) persons having professional experience in matters relating to investments who fall within the definition of investment professionals in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001; or (ii) high net worth bodies corporate, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the Financial Services and Markets Act 2000 (Financial Promotion) Order Persons within the United Kingdom who receive this communication (other than those falling within (i) and (ii) above) should not rely on or act upon the contents of this communication. Nothing in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotion contained in the Financial Services and Markets Act This presentation has been furnished to you solely for information and may not be reproduced, redistributed or passed on to any other person, nor may it be published in whole or in part, for any other purpose. This presentation does not constitute or form part of, and should not be construed as, an offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities of CMC Markets PLC ( CMC, or the Company") in any jurisdiction nor should it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This presentation does not constitute a recommendation regarding the securities of CMC. Without limitation to the foregoing, these materials do not constitute an offer of securities for sale in the United States. Securities may not be offered or sold into the United States absent registration under the US Securities Act of 1933 or an exemption there from. CMC has not verified any of the information set out in this presentation. Without prejudice to the foregoing, neither CMC nor its associates nor any officer, director, employee or representative of any of them accepts any liability whatsoever for any loss however arising, directly or indirectly, from any reliance on this presentation or its contents. This presentation is not being issued, and is not for distribution in, the United States (with certain limited exceptions in accordance with the US Securities Act of 1933) or in any jurisdiction where such distribution is unlawful and is not for distribution to publications with a general circulation in the United States. Certain figures contained in this presentation, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this presentation may not conform exactly to the total figure given as percentage movements have been calculated from the underlying data before rounding. By attending or reading this presentation you agree to be bound by the foregoing limitations. Analyst presentation ǀ Pg 35