(Alliance News) - CMC Markets PLC on Thursday reported a second year of record profit as surging clients numbers boosted trading income, leading to sharp dividend hike.
Shares in CMC, which provides spread betting and contracts-for-difference trading, were 1.3% higher in London on Thursday morning at 495.51 pence each.
In the financial year that ended March 31, CMC's pretax profit more than doubled to GBP224.0 million from GBP98.7 million the year before. Profit after tax surged to a consecutive annual record of GBP178.1 million from GBP86.9 million the year before.
Net operating income jumped 63% year on year to GBP409.8 million from GBP252.0 million.
CMC doubled its shareholder payout as a result of the surging profit. The annual dividend was improved to 30.6 pence from 15.0p in financial 2020, following the declaration of a 21.43p final dividend. CMC said it remains committed to paying a total dividend of 50% of profit after tax.
Chief Executive Peter Cruddas said he was "delighted" with CMC's record performance. "The performance in 2021, building on a strong performance in 2020, is a result of the group's unwavering focus on our strategic initiatives."
He continued: "This has delivered increased diversification of group revenues and improved CFD client income retention. Active client numbers have also increased substantially, primarily as a result of Covid-19 related volatility and heightened levels of interest in the financial markets, but our strategy allows us to attract and retain these new clients. The growing contribution of [business-to-business] revenues is also particularly pleasing and will continue to be an important part of our strategy going forward."
CFD gross client income surged 39% to GBP335.3 million, with CFD net trading revenue up 63% to GBP349.2 million.
CFD active clients increased 34% to 76,591 from 57,202. CMC noted its Stockbroking active clients rose 28% to 232,053 from 181,630.
Stockbroking net trading revenue increased 72% to GBP54.8 million from GBP31.8 million.
Looking ahead, CMC said its existing clients level is "likely to be sustainable", believing the characteristics of clients on-boarded during the recent year are comparable to its current high-value client base, with longevity and trading activity at similar levels to prior clients.
"The monthly active client base has remained strong at the start of [financial] 2022 representing ongoing trading appetite, however client trading activity has moderated from prior elevated levels," CMC said.
But the firm continues to have confidence in the "robust" underlying performance of its business.
As a result, it remains confident in achieving net operating income in excess of GBP330 million for financial 2022, which would be down from GBP409.8 million in financial 2021.
"CMC continues to provide clients with market leading trading platforms and client service, even during periods of extreme volatility and trading activity, holding true to our values. This technological excellence provides the group with a solid foundation on which to serve current and future clients, along with the expertise to continue to invest in new products that will deliver sustainable growth," Chief Executive Cruddas added.
By Paul McGowan; paulmcgowan@alliancenews.com
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CMC Markets (CMCX)