CMC Markets plc

Good morning, everybody, and thank you for joining CMC's full year 2024 results presentation. On the call today is, apart from myself, is Dave Feinberg, Deputy CEO, Albert, Chief Financial Officer, Matt Lewis from Head of APAC and Canada, and Head of Capital Markets, Lawrence Booth. I will begin this morning's presentation with a brief overview of some of the operational and strategic successes from the year, before handing over to Albert, David, Matt and Lawrence, who will cover the financial and operational highlights in more detail. I will then finish with a summary of our strategic progress before we take your questions. Now, before we turn to slide three, I just want you to answer three questions that I often get asked. And they are, number one, am I going to retire? Number two, am I still committed to the business? And three, am I going to sell any shares? So here are the answers. No, I'm never going to retire. I repeat, I'm never going to retire. Yes, I'm still very much committed to the business and you will see that in today's presentations. No, I have not sold shares since 2016 and I have no plans to. And just one point really, if I live as long as Warren Buffett, I will work for CMC Markets for at least another 23 years. When I listed this business in 2016, I sold the minimum number of shares I could sell. And I have not sold any shares since and I do not plan to. I have never gained any of my shares. I didn't buy more shares when they were at their lows of around 80 pence. And I didn't sell any shares when they were at their highs above five pounds. Being an owner-run business, I believe, is a big advantage. I get things done. I cut through the crap and I'm definitely not woke. Since I banned working from home a year ago, our share prices tripled. Over the last year, we have cut overhead because I can spot wastage and by having people in the office, you can spot wastage immediately. My aim is to deliver value in the business, not just through higher profits, but through diversity, scale, technology, and new markets via B2B and B2C platforms. I'm still very ambitious and driven by the opportunities that exist for CMC market. And I will never dilute shareholders for a vanity acquisition, because if I dilute shareholders, then I dilute myself. My interests are aligned with all shareholders. We both have skin in the game. but I have the most. I've never allowed my custodian to lend my shares, thus avoiding short selling, even though it could mean that I could buy shares back at a lower price. I will always and always do my best to protect the company and all of its shareholders. I'm completely focused on driving up the value of the company. Today, we are approximately double the rating that we were three years ago and way ahead of our peer groups. I'm not interested in short-term gains to push up the bonus pot. Key staff have long-term shareables that best through loyalty and hard work. My wealth is aligned to theirs as we increase the value of the company and the shares become worth more. I believe it is better to have lower profits on a higher rating than higher profits on a lower rating. To me, it's all about value. Being a dominant shareholder CEO gives CMC Markets a massive competitive advantage because decisions get made and things get done. But behind me, I have a strong board and a strong chairman who is in the office every week and we speak every week. Whilst I am the CEO, we will constantly invest in our technology. This in the past has probably meant reduced profits, but I can think of three or four companies today that are struggling because they didn't invest in technology and they are paying the price. I'm in the office every day at 7.30 a.m. five days a week. This business has been good to me, but I have been good to it. One thing I've learned over three decades is that if you do the right thing and put the company first, then everything else falls into place and over a period of time, the rewards and value will be even greater. I love and I'm dedicated to this business and I'm going to take it to the next level and it won't take me until I get to Warren Buffett's age. So full year 24 has been a year of substantial operational progress and strong financial performance for CMC markets. Our financial performance in the year has been exceptionally strong with a record year of net operated income, excluding the COVID-19 affected 2021 period. It's not only reflects the dedication and hard work of our team, but also the successful implementation of our strategic vision, which has continued to transform our business away from a retail CFD provider and into a provider financial technology solutions. Our technology is our core competitive advantage and our API ecosystem and connectivity through our CMC Markets Connect brand is central to our institutional first position, helping us to secure a number of large B2B partnerships, such as that announced this week with Revolut. These technological developments have been underpinned by a program of continued product upgrades across all of our businesses, as well as our ongoing geographical expansion. Fall year 24 also saw the group complete a cost review designed to rationalise our cost base and drive synergies through our global operations. Those cost savings have been supported by operational developments designed to drive further efficiencies such as the establishment of a centralised treasury management division, something that I will cover in more detail later on. With our market leading technology, continued programme of product upgrades and increasingly lean cost base, CMC Markets is primed to deliver sustained profit margin expansion in the years ahead. And I'm going to hand over to Albert, who is going to take you through the financial performance in more detail.

Thank you, Albert. Thank you, Peter, and good morning, everyone.

I would like to begin by turning to slide five, which looks at our key performance indicators. Before going through the numbers in detail, I would just like to bring to your attention some of the changes we have made to the presentation of our financial and business performance metrics. We signposted at the half-year results that we are looking into better aligning our KPIs to the strategic position of our business, which is increasingly moving away from being a predominantly retail CFD provider to a provider of fintech solutions. We have made this change and are no longer reporting metrics such as trading active clients and income retention, which are more reflective of the business performance historically, but are no longer relevant to give sufficient insight of how we view the performance of the organisation and our broader strategic goals. Turning to our financial performance, net operating income was £332.8 million, a 15% uplift on prior year. This was driven by a particularly strong performance in our trading business in the second half, with both retail and institutional segments performing well. Our net revenue mix remained broadly consistent with the levels seen through 2023, with trading revenue continuing to account for the majority of our income at approximately 88% in sterling terms. Our adjusted profit before tax was 80 million pounds, up 52% on prior year. However, once the one-off items such as impairment and restructuring costs were included, Profit before tax came in at over 63 million pounds, which is a reflection of the net operating income performance, along with the steps taken to streamline our cost base and drive efficiencies, which Peter will cover in more detail later. Our earnings per share for the year was 16.7 pence, up 14.7 pence per share for the same period last year. The four-year dividend is up 12% at 8.3 pence per share, reflecting a payout in line 50% of after-tax profits. The net operating income performance was driven by the strong performance in the trading business already mentioned, as well as 152% increase in interest income, offset somewhat by investing net revenue, which was down 10% in sterling terms, but only down 3% on a constant currency basis. While our profit before tax of 63.3 million pounds represents an increase of 21% year on year, On an adjusted basis and stripping out one-off costs relating to the impact of impairment of tangibles and restructuring costs related to our cost-cutting program, profit before tax grew to £18 million, an increase of 52% on prior year. Our adjusted operating expenses, which exclude variable remuneration, increased by approximately 15%. to £249.5 million, driven mainly by wage inflation and the non-recurring items I just mentioned. Variable remuneration was also up from last year in line with the stronger financial performance of the business. Our PBT margin came in at 19%, up 90 basis points a year. And this is a metric we are focused on improving going forward as we look to leverage our scale and drive efficiencies through the business. Group's balance sheet and overall regulatory capital remains strong. Capital resources increased to £340.1 million, with increases in retained earnings per year being partly offset by the proposed final dividend distribution. Our total OFR ratio is down in the year, 312%, but nevertheless remains a strong outturn and is reflective of the high levels of capital resources that exist within our business. Our total available liquidity increased to £445.4 million, with increases in both own funds and non-segregated client and partner funds. The latter was driven by a small number of high net worth institutional clients. Our block cash has remained broadly stable year on year, whilst margin requirements of brokers were up in the year due to the growth of client exposures and the resulting increase in our overall hedge position. net result is available liquidity of 192.2 million pounds which reflects the movements i've just outlined with the launch of new product initiatives further technological advancements and the expanding opportunities created by our diversification strategy combined with our program to rationalize costs we are confident in the business's ability to generate robust levels of income on a leader cost base whilst the potential for uncertainty in the financial markets remains the good momentum seen in H2 has continued and the business has made a solid start to full year 25. Having now reached the peak of the investment cycle, we will continue to seek opportunities to further drive cost efficiencies and leverage the scale of the business to deliver margin expansion while remaining committed to a disciplined level of investment over the medium term. We are therefore expecting to achieve net operating income between 320 to 360 million pounds in financial year 25, and a cost base excluding variable remuneration and non-recurring charges of approximately 225 million pounds. We are forecasting an effective tax rate of 26%, which is consistent with the prior year. With that, I would like to hand over to Matt, who's going to talk you through some of the work he and the team are doing in the invest business.