REG - CMC Markets Plc - Interim Results
21/11/2024 07:00
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RNS Number : 0401N CMC Markets Plc 21 November 2024
CMC MARKETS PLC
("CMC" or the "Group")
Interim results for the half year ended 30 September 2024
Strategy delivering enhanced profitability and margins
Summary Financials
30 September 30 September Change
2024 2023 %
Net operating income (£m) 177.4 122.6 45%
Trading net revenue (£m) 131.3 87.4 50%
Investing net revenue (£m) 19.9 16.8 19%
Interest income (£m) 23.4 16.1 46%
Other operating income (£m) 2.8 2.3 22%
Profit / (loss) before tax (£m) 49.6 (2.0) -
Profit / (loss) before tax margin (%) 28% (2%) 30ppts
Basic earnings per share (pence) 12.8 (0.8) -
Ordinary dividend per share (pence) 3.10 1.00 210%
Note: Net operating income represents total revenue net of commissions and
levies. Trading net revenue represents gross trading income net of rebates and
levies. Investing net revenue represents stockbroking and related services
revenue net of rebates. Profit / (loss) before tax margin % is calculated as
profit before tax as a percentage of net operating income.
Financial Highlights
· Net operating income of £177.4 million, up 45% year-on-year (H1
2024: £122.6 million), reflecting continued growth across the institutional
segment and an increase in client trading activity.
· H1 2025 trading net revenue was £131.3 million, up 50% year-on-year
(H1 2024: £87.4 million) with strong performance across both our
institutional and retail segments.
· Investing net revenue was £19.9 million, up 19% year-on-year (H1
2024: £16.8 million), driven by a strong performance in international
equities.
· Interest income of £23.4 million (H1 2024: £16.1 million), up 46%,
driven by the continued benefit of elevated global interest rates driving
income from client cash balances and a strong performance by our newly
established Treasury Management and Capital Markets Division.
· Operating costs for H1 2025, excluding variable remuneration, were
£111.4 million (H1 2024: £121.9 million), down 9%, as the Group maintains a
sharp focus on costs to drive profit margin expansion.
· Regulatory total Own Funds Requirements (OFR) ratio of 433%(1) (31
March 2024: 312%) and net available liquidity of £246.6 million (31 March
2024: £192.2 million).
· Significant increase in profitability year-on-year with profit
before tax of £49.6 million, up from a prior year loss of £2.0 million and
reflecting the combination of robust net operating income and disciplined cost
management.
· Interim dividend up 210% to 3.10 pence per share (H1 2024: 1.00
pence).
1. Amount includes yet to be verified half year profits, less proposed
interim dividend.
Operational Highlights
· Strengthened and established new key relationships, highlighted by
securing recent partnerships with Revolut and ASB Bank in New Zealand.
· Client onboarding has begun with Revolut following a soft launch
earlier in the year, with a steady rise in the number of clients actively
trading.
· Recently announced partnership with ASB Bank to provide
market-leading technology, customer service and execution via ASB-branded web
and mobile platform, including full integration with ASB Bank's technology
stack.
· Continued focus on diversification, expansion and innovation to
drive the business forward. B2B and institutional segment continues to be a
key driver of our growth with a healthy pipeline of opportunities.
· Further enhancement of our service offering across platforms with
the expansion of cash equities and options products, and Cash ISAs to be
launched imminently on CMC Invest. Additional product upgrades are on track
for delivery in H2 2025.
Outlook
· Management maintaining pragmatic approach to investment with a focus
on profit margin expansion, whilst continuing to explore and invest in
opportunities for incremental growth.
· Remain confident in delivering on guidance set out at the beginning
of the year, with net operating income forecast to be in line with external
market expectations.(1)
· Operating cost guidance for FY 2025 remains unchanged at £225
million, excluding variable remuneration and non-recurring charges.
1. External market consensus for year ending 31 March 2025 is net
operating income of £332.9 million.
Lord Cruddas, Chief Executive Officer, commented:
"I am delighted that CMC has delivered another strong performance in the first
half, with pleasing results across our business driven by our commitment to
technological innovation. Flagship partnerships with Revolut and ASB Bank
highlight our success in the B2B space, and our diversified product offering,
including the expansion of cash equities and options offerings, and the
upcoming launch of cash ISAs in the UK, is deepening our relationship with our
clients and supporting strong top line growth.
As we announced in the previous financial year, CMC has reached the peak of
the investment cycle and whilst we continue to invest in the business, we are
taking a disciplined approach, and we remain laser focused on driving further
efficiencies across our global operations as we continue to leverage our scale
and technology. We remain confident in meeting the guidance set earlier this
year, with net operating income expected to be in line with market consensus,
supported by a strong pipeline of B2B partnerships and ongoing product
expansion and diversification.
My thanks to our dedicated team and clients for their continued trust and
support, and we look forward to building on the successes of H1 in the
remainder of this year."
Webcast:
An analyst and investor presentation will be held on 21st November 2024 at
9:00am UK time. Participants need to register using the link below.
CMC Markets PLC Half Year Results | SparkLive | LSEG
(https://sparklive.lseg.com/CMCMarkets/events/86031004-1fce-4ea1-9f4a-f1465554dfa0/cmc-markets-plc-half-year-results)
Forthcoming announcement dates:
23 January
2025
Q3 2025 Trading Update
5 June 2025
FY 2025 Results
Enquiries
CMC Markets
Plc
Albert Soleiman, Chief Financial
Officer
investor.relations@cmcmarkets.com
Camarco
cmc@camarco.co.uk
Geoffrey Pelham-Lane
+44 (0) 7733 124 226
Jennifer Renwick
+44 (0)
7928 471 013
Alex
Campbell
+44 (0) 7710 230 545
Forward looking statements
This trading update may include statements that are forward looking in nature.
Forward looking statements involve known and unknown risks, assumptions,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Group to be materially different from any
future results, performance or achievements expressed or implied by such
forward looking statements. Except as required by the Listing Rules and
applicable law, the Group undertakes no obligation to update, revise or change
any forward-looking statements to reflect events or developments occurring
after the date such statements are published.
Notes to Editors
CMC Markets Plc ("CMC"), whose shares are listed on the London Stock Exchange
under the ticker CMCX (LEI: 213800VB75KAZBFH5U07), was established in 1989 and
is now one of the world's leading online financial trading and investing
businesses. The Company serves retail and institutional clients through
regulated offices and branches in 12 countries with a significant presence in
the UK, Australia, Germany and Singapore. CMC Markets offers an award-winning,
online and mobile platform, enabling clients to trade and in invest in over
12,000 financial instruments across shares, indices, foreign currencies,
commodities and treasuries through contracts for difference ("CFDs"),
financial spread bets (in the UK and Ireland only) and, in Australia,
Singapore and the UK, access stockbroking services. More information is
available at https://www.cmcmarkets.com/group.
CEO Statement
It has been another half of strong financial performance and operational
success for CMC Markets as our relentless focus on technological innovation
continues to yield impressive results. During the period, we secured
high-profile partnerships, including agreements with Revolut and ASB Bank,
continuing our focus on the valuable B2B segment. In addition to this, our
ongoing diversification strategy through expansion of our product offering,
and consistent levels of client trading activity all put us in a strong
position to deliver long-term value for shareholders.
Financial performance
Financial performance in the half year has been particularly strong. Net
operating income of £177.4 million marks a 45% increase on the prior year (H1
2024: £122.6 million) and was underpinned by strong growth in our
institutional business and increased trading activity across key asset
classes.
Operating costs, excluding variable remuneration, were £111.4 million (H1
2024: £121.9 million), down 9% year-on-year, testament to the hard work of
the team in driving efficiencies across the business, capitalising on our
scale and operating model to grow profit margins. This has led to profit
before tax of £49.6 million, which compares to a loss of £2.0 million in H1
2024, and a dividend of 3.10 pence per share (H1 2024: 1.0 pence), up 210% on
the prior year.
Operational progress and B2B partnerships
Our strategic focus on diversification and expansion continues to drive the
business forward, with the B2B segment that consists of partnerships and
institutional relationships remaining a major catalyst of our growth. Over the
past year, I have visited all our overseas offices to engage with potential
clients and our global teams. This has included my most recent visit to
Auckland, my second trip to the city within the year, to sign the ASB Bank
transaction. I also met with the CEO of NZX, New Zealand's stock exchange, to
confirm our application to become a market participant and member of the
exchange, further solidifying our footprint in New Zealand's financial
landscape and highlighting our dedication to fostering high-value
relationships in the region. The white-label partnership with ASB Bank will
see their customers benefit from our market-leading technology, customer
service, and execution capabilities via a fully ASB-branded web and mobile
platform which will seamlessly integrate with ASB Bank's existing technology
stack. H1 has also seen the beginning of our partnership with Revolut, where
we are making steady progress in onboarding new clients following a successful
soft launch. As I have said before, when major global banks and financial
institutions trust our technology to serve their clients, it is the strongest
endorsement of our business.
On the product front, we have continued to expand our offering in the first
half of the year. Widening our products and services is key to building longer
term relationships with our clients and we have made good progress with
enhancements to our cash equities and options products, as well as the
imminent launch of cash ISAs in the UK. These initiatives align with our goal
of delivering a comprehensive multi-asset platform, resulting in greater share
of wallet from clients and further cementing CMC's reputation as a leading B2B
fintech provider.
Disciplined investment and driving operational efficiency
Over the last 12 months the business has transitioned away from what was a
period of significant investment, to a clear focus on driving operational
efficiency within the business. By leveraging our scale and technology to
drive top-line growth, alongside operational synergies and cost control
measures, we have made significant progress. The introduction of our Treasury
Management System is just one example of how we are optimising our business
and generating incremental income through operational synergies and this
broader realignment is reflected in our financial results, supporting the
improvement seen in the half-year in diversification, profitability and
margins. Looking ahead, we will maintain a disciplined and balanced approach
to investment whilst continuing to drive efficiencies, always prioritising
long-term value for shareholders.
Dividend
The Board has proposed an interim dividend payment of 3.10 pence per share.
This is in line with the dividend policy of 50% of profit after tax.
Outlook
As outlined today, we are confident in delivering on the guidance set out at
the beginning of the year, with net operating income forecast to be in line
with external market expectations.(1) This is supported by a strong pipeline
of B2B partnerships, as well as our continued strategic product expansion and
diversification. We look forward to building on the successes of H1 in the
remainder of this year.
Lord Cruddas
Chief Executive Officer
21 November 2024
1. External market consensus for year ending 31 March 2025 is net operating
income of £332.9 million.
OPERATING review
Summary
£'million H1 2025 H2 2024 H1 2024 Year-on-year change
Net operating income 177.4 210.2 122.6 45%
Operating expenses (123.7) (136.6) (118.3) 5%
Impairment of intangible assets (0.2) (7.0) (5.3)
Operating profit / (loss) 53.5 66.6 (1.0) -
Loss on share of associate (0.2) (0.2) (0.1)
Impairment of associate (2.3) - -
Finance costs (1.4) (1.1) (0.9)
Profit/(loss) before taxation 49.6 65.3 (2.0) -
Taxation (14.3) (16.1) (0.4)
Profit/(loss) after tax 35.3 49.2 (2.4) -
Profit/(loss) before tax margin 28% 31% (2%) 30ppts
The Group reported a statutory profit before tax of £49.6 million in H1 2025,
reflecting a strong recovery from a loss of £2.0 million in H1 2024 and
maintaining strong momentum following the £65.3 million profit in H2
2024.This reflects the success of the Group's ongoing diversification
strategy, the continued growth of the B2B segment and sustained client trading
activity.
Growth was driven by strong trading volumes, particularly in the B2B client
segment, and improved trading performance due to favourable market conditions.
Investing net revenues were supported by higher assets under administration in
Australia aided by favourable exchange rate movements. The Group's performance
was further supported by disciplined cost management, with annual cost growth
contained at 5% and a 9% reduction achieved on a half-year basis. Excluding
variable remuneration, operating expenses were down 9% year-on-year and 13%
half-on-half.
We remain focused on profit margins, taking a disciplined and balanced
approach to investment whilst continuing to drive efficiencies across the
business.
Net operating income overview
£'million H1 2025 H2 2024 H1 2024 Year-on-year change
Trading net revenue 131.3 171.7 87.4 50%
Investing net revenue 19.9 17.2 16.8 18%
Total net revenue 151.2 188.9 104.2 45%
Interest income on own funds 9.5 5.3 5.9 60%
Income on client funds 13.9 13.6 10.2 36%
Other operating income 2.8 2.4 2.3 22%
Net operating income 177.4 210.2 122.6 45%
Net operating income increased by 45% to £177.4 million, led by growth in
institutional business and trading volumes across core asset classes.
Sequential half-on-half net operating income was down 16% due to an
exceptionally strong performance in the H2 2024 comparative.
Trading net revenue
Trading net revenue increased to £131.3 million from £87.4 million in H1
2024 driven by both increased client income and higher client income
retention. Performance remained strong across all geographies, including core
markets of the UK and APAC.
Active client numbers declined in comparison to H1 2024, although this was
offset by increased revenue per active client of £2,984, up 60% on H1 2024,
as we continued to attract and retain both institutional and higher net worth
individuals. This in part was aided by the performance of CMC Connect which
acts as a non-bank liquidity provider, offering access to a range of asset
classes.
During the period, we entered into a partnership with Revolut, which has been
test-launched in the Czech Republic, Denmark and Greece, with plans for
further expansion into additional countries in Europe later this year. Given
the recent launch and limited geographical coverage, the impact on B2B
revenues for the period is not significant. However, this partnership presents
an exciting opportunity for future revenue growth as well as increased
operational leverage given the limited incremental costs required to service
these customers.
Overall, B2B services now contribute 38% of trading volumes (H1 2024: 31%; H2
2024: 35%), reinforcing our focus on growing this business.
Investing net revenue
Investing net revenue was 18% and 16% higher than H1 2024 and H2 2024
respectively at £19.9 million (H1 2024: £16.8 million; H2 2024: £17.2
million) driven by increased client trading volumes in the Group's Australian
stockbroking arm resulting in both additional foreign exchange fees and
brokerage revenue.
Asset inflows increased our assets under administration to £41.1 billion,
solidifying our position as Australia's second-largest stockbroker. We are
optimistic that the growth in clients and balances will continue to see income
increase, aided by the rollout of new revenue-generating propositions
including the launch of stock lending, although we are witnessing strong
competition from both established providers and new entrants alike.
CMC Invest operations in the UK and Singapore continue to contribute a small
proportion to net revenue reflecting the infancy of these operations. During
the period, the Group has continued to invest in new features and will look to
launch additional products and functionality in the near-term. This includes
the launch of a FSCS-protected cash ISA product in the UK, which will have the
aim of attracting both newer, and wider, range of customers to the platform.
The Group has also reached an agreement with ASB Bank in New Zealand to
provide stockbroking services to their c1.5 million banking customers. This
deal underlines the continued execution of our strategy of growing our B2B
services and be the partner of choice in both our trading and investing
institutional offerings.
Interest income
The Group has continued to benefit from the higher interest rate environment,
with total interest income from both client and own funds of £23.4 million,
reflecting a 46% year-on-year increase and a 24% improvement from H2 2024 (H1
2024: £16.1 million; H2 2024: £18.9 million). Throughout the first half of
the year, we have focused on improving returns on our own balances to maintain
performance through our Treasury Management Systems as interest rates begin to
decline. As a result, interest income from client funds has decreased to 59%
of total interest income, down from 63% in H1 2024 and 72% in H2 2024.
However, with segregated client funds continuing to represent the majority of
the Group's cash balances, we expect this trend to gradually taper as rates
fall.
Operating expenses
£'million H1 2025 H2 2024 H1 2024 Year-on-year change
Net staff costs 59.0 65.3 53.2 11%
IT costs 22.4 20.5 19.2 17%
Sales and marketing 15.0 18.9 16.7 (10%)
Premises 2.5 3.2 3.4 (26%)
Legal and professional fees 7.0 7.4 6.6 6%
Regulatory fees 2.5 2.0 2.3 9%
Depreciation and amortisation 6.8 7.5 7.6 (11%)
Bank charges 1.9 2.9 2.2 (14%)
Irrecoverable sales tax 2.7 3.0 2.5 8%
Other 3.9 5.9 4.6 (15%)
Operating expenses 123.7 136.6 118.3 5%
Operating expenses were up 5% year-on-year to £123.7 million, impacted by
inflationary increases, IT investments, additional staffing to support ongoing
projects and increased variable remuneration following the improved Group
performance. Sequential half-on-half operating expenses have reduced by 9% as
the Group implemented tight control over staff costs and discretionary
spending, particularly in sales and marketing, while continuing to invest in
areas critical to long-term growth and efficiency.
Staff costs remain the biggest contributor to operating expenses and in the
current period we incurred costs of £59.0 million representing a 11% increase
year-on-year (H1 2024: £53.2 million) reflecting inflationary salary
increases and additional headcount to support the Group's growth and
operational projects over the past year. Sequential half-on-half staff costs
are down 10% from £65.3 million, primarily as a result of the reduction in
headcount undertaken at the end of 2024.
Non-staff costs have grown at a lower rate as we have implemented a
disciplined approach to cost management. IT costs remain the largest non-staff
cost component and have increased 17% year-on-year to £22.4 million (H1 2024:
£19.2 million), driven by higher investments in technology and increased
maintenance costs as we continued to enhance our systems for future
scalability.
Sales and marketing expenses fell by 10% year-on-year and 21% sequential
half-on-half to £15.0 million (H1 2024: £16.7 million; H2 2024: £18.9
million), reflecting a more targeted approach to marketing spend during the
period.
Legal and professional fees increased by 6% year-on-year to £7.0 million (H1
2024: £6.6 million; H2 2024: £7.4 million), driven by higher advisory and
project-related costs. Regulatory fees also rose by 9% to £2.5 million over
the same period (H1 2024: £2.3 million; H2 2024: £2.0 million).
Impairment of investments in associate
Due to the continued underperformance of the investment, combined with its
poor financial position and ongoing losses the Group fully wrote down its
investment in Strike X, a customer centric blockchain solutions business,
which was acquired in June 2023. Despite the impairment, the Group continues
to support Strike X and its strategic objectives.
Taxation
The effective tax rate for the six months ended 30 September 2024 was 28.9%
compared to -18.4% and 24.6% in H1 2024 and H2 2024 respectively. The Group's
effective tax rate is higher than the UK statutory tax rate of 25% due to the
effect of profits being taxed in Australia and Germany where the tax rate is
higher than the UK rate and adjustments for discrete items.
Balance sheet
£'million 30 September 2024 31 March 2024 Change
Fixed assets 54.5 57.5 (5%)
Trade and other receivables 182.2 164.8 11%
Financial investments 109.0 50.9 114%
Amounts due from brokers 202.7 228.9 (11%)
Cash and cash equivalents 174.1 160.3 9%
Other assets 44.6 54.5 (18%)
Total assets 767.1 716.9 7%
Trade and other payables 297.6 272.8 9%
Obligations under repurchase agreements 28.9 - -
Lease liabilities 14.3 16.9 (15%)
Other liabilities 15.3 23.7 (35%)
Total liabilities 356.1 313.4 14%
Total equity 411.0 403.5 2%
Total equity and liabilities 767.1 716.9 7%
Fixed assets reduced 5% since the full year reflecting the fact the Group has
passed the peak of its investment cycle with amortisation and depreciation
exceeding capitalised spend, although the Group continues to invest in
maintaining and enhancing its proposition.
Financial investments increased 114% to £109.0 million (31 March 2024: £50.9
million) reflecting a strategic shift towards investment-grade corporate bonds
and credit-linked notes. This approach, implemented by the newly established
Treasury Management and Capital Markets Division, aims to achieve higher
yields compared to traditional cash holdings and gilts. Additionally, the use
of repurchase agreements has been introduced to further optimise returns.
Whilst these investments carry an increased level of risk, they within the
Group's existing market, liquidity, credit and counterparty risk appetites.
Despite this heightened focus on returns, the Group also saw an increase in
cash and cash equivalents during the period, driven by H1 profits, partially
offset by the payment of the prior year's final dividend. Additionally, the
Group's cash position benefited from a reduction in excess cash held with
brokers, which declined by 11% to £202.7 million from £228.9 million at
year-end.
Capital resources
As of 30 September 2024, the Group had total capital resources of £337.3
million(1) compared to £340.1 million as at 31 March 2024. This compares to
the Own Funds Requirement (OFR) of £77.9 million (31 March 2024: £109.0
million) giving an OFR ratio of 433%(1) (31 March 2024: 312%).
1. Amount includes yet to be verified half year profits, less proposed
interim dividend.
Liquidity
£'million 30 September 2024 31 March 2024 Change
Group funds 332.1 325.8 2%
Title transfer funds 110.9 119.6 (7%)
Total available liquidity 443.0 445.4 (1%)
Less: blocked cash (62.9) (68.5) (8%)
Less: initial margin requirement at brokers (133.5) (184.7) (28%)
Net available liquidity 246.6 192.2 28%
The Group's liquidity remains robust with net available liquidity as at 30
September 2024 of £246.6 million (31 March 2024: £192.2 million). The
increase in the first half of the year is due to an increase in Group funds
and a reduction in initial margin requirements held at brokers, offset by a
reduction in title transfer funds held.
The Group's available liquidity consists of assets that can be accessed on
short notice to meet additional liquidity needs, typically arising from
increases in broker margin requirements. Furthermore, the Group maintains
access to a committed facility of up to £55.0 million (31 March 2024: £55.0
million) to support margin needs with brokers.
Principal risks and uncertainties
Details of the Group's approach to risk management and its principal risks and
uncertainties were set out on pages 59 - 68 of the 2024 Group Annual Report
and Financial Statements (available on the Group website
https://www.cmcmarketsplc.com).
During the six months to 30 September 2024, there have been no changes to the
overall principal risk listing. The Group continues to categorise its
principal risks into three categories: business and strategic risks; financial
risks; and operational risks.
People risk, Regulatory and compliance risk, Business change risk, and
Information and data security risk were the top principal risks considered in
the 2024 Group Annual Report and Financial Statements, and we continue to be
exposed to those areas. The management of these risks is set out in note 30 to
the Financial Statements.
The Group, through its global presence, faces a variety of regulations and
legislative requirements, which we are committed to meeting to a high
standard. Consumer Duty remains a key focus as we continue to embed these
requirements within the Group's processes.
As we pursue strategic product and geographical diversification, business
change and project delivery risks remain naturally elevated. To address these
challenges, the Group actively incorporates capital and liquidity risk
management into its strategic planning, ensuring financial resilience is
maintained through this diversification. in parallel, we continually review
our project portfolio to ensure alignment with strategic objectives. The
Treasury Management and Capital Markets Division continues to evolve the
Group's liquidity and cash flow optimisation capabilities, which includes the
development of the Trading Management System and the expansion of the scope of
products in which it invests. Risk management practices associated with these
activities are continuously refined as the business expands and matures.
Given the online nature of the Group, we also maintain heightened vigilance
against cyber intrusions across our operations.
Our people are essential to delivering our purpose and strategy, and our
ability to attract and retain key talent is critical to our strategic goals
and business resilience. During this period, the Group completed the merger of
support functions across multiple business lines, streamlining reporting and
automating processes, which led to a planned reduction in global headcount.
The Group continues to monitor a range of people-related metrics.
RESPONSIBILITY STATEMENT
The Directors listed below (being all the Directors of CMC Markets plc)
confirm that to the best of our knowledge, these condensed consolidated
financial statements have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority and that the interim management report includes a
fair review of information required by DTR 4.2.7R and DTR 4.2.8R, namely:
· the interim management report includes a fair review of the
important events that have occurred during the first six months of the
financial year and their impact on the condensed consolidated financial
statements, together with a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
· material related party transactions in the first six months of
the financial year and any material changes in the related-party transactions
described in the last annual report.
Neither the Group nor the Directors accept any liability to any person in
relation to the interim results for the half year ended 30 September 2024,
except to the extent that such liability could arise under English law.
Accordingly, any liability to a person who has demonstrated reliance on any
untrue or misleading statement or omission shall be determined in accordance
with Section 90A and Schedule 10A of the Financial Services and Markets Act
2000.
By order of the Board of Directors
Lord
Cruddas
Chief Executive
Officer
21 November 2024
CMC Markets plc Board of Directors
Executive Directors
Lord Peter Cruddas (Chief Executive Officer)
David Fineberg (Deputy Chief Executive Officer)
Matthew Lewis (Head of Asia Pacific)
Albert Soleiman (Chief Financial Officer)
Non-Executive Directors
James Richards (Chair)
Sarah Ing
Paul Wainscott
Clare Francis
CONDENSED CONSOLIDATED INCOME STATEMENT
For the half year ended 30 September 2024
Half year ended
£ '000 Note 30 September 31 March 30 September
2024 2024 2023
Revenue 3 164,799 204,991 119,711
Interest income on own funds 9,536 5,304 5,942
Income on client funds 13,900 13,649 10,148
Total revenue 188,235 223,944 135,801
Introducing partner commissions and betting levies (10,883) (13,723) (13,239)
Net operating income 177,352 210,221 122,562
Operating expenses 4 (123,659) (136,579) (118,315)
Impairment of intangible assets 8 (233) (7,047) (5,275)
Operating profit / (loss) 53,460 66,595 (1,028)
Share of results of associate 11 (189) (192) (91)
Impairment of investments in associate 11 (2,328) - -
Finance costs (1,374) (1,075) (876)
Profit / (loss) before taxation 49,569 65,328 (1,995)
Taxation (14,308) (16,079) (368)
Profit / (loss) for the period attributable to owners of the parent 35,261 49,249 (2,363)
Earnings / (loss) per share
Basic earnings / (loss) per share (p) 6 12.8 17.6 (0.8)
Diluted earnings / (loss) per share (p) 6 12.8 17.6 (0.8)
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
For the half year ended 30 September 2024
Half year ended
£ '000 30 September 31 March 30 September
2024 2024 2023
Profit / (loss) for the period 35,261 49,249 (2,363)
Other comprehensive expense:
Items that may be subsequently reclassified to income statement
Gains recycled from equity to the income statement - 237 -
Currency translation differences (1,672) (2,882) (2,403)
Changes in the fair value of debt instruments at fair value through other 166 (58) 202
comprehensive income, net of tax
Other comprehensive expense for the period (1,506) (2,703) (2,201)
Total comprehensive income / (expense) for the period 33,755 46,546 (4,564)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 September 2024
£ '000 Note 30 September 2024 31 March 2024 30 September 2023
ASSETS
Non-current assets
Intangible assets 8 29,113 28,906 33,471
Property, plant and equipment 9 25,372 28,546 27,380
Deferred tax assets 6,869 6,177 3,963
Financial investments 14 22,121 32 33
Trade and other receivables 10 2,637 2,753 2,601
Investments in associate 11 - 2,517 2,709
Total non-current assets 86,112 68,931 70,157
Current assets
Trade and other receivables 10 179,523 162,056 92,099
Derivative financial instruments 12 28,781 31,627 16,216
Current tax recoverable 2,282 1,917 10,732
Other assets 13 6,780 12,258 2,247
Financial investments 14 86,877 50,889 28,289
Amounts due from brokers 202,675 228,882 184,127
Cash and cash equivalents 15 174,055 160,300 176,836
Total current assets 680,973 647,929 510,546
TOTAL ASSETS 767,085 716,860 580,703
LIABILITIES
Current liabilities
Trade and other payables 16 297,626 272,811 185,544
Amounts due to brokers 560 6,982 11,120
Derivative financial instruments 12 5,629 7,074 2,384
Obligations under repurchase agreements 17 28,923 - -
Lease liabilities 18 3,765 4,915 5,006
Current tax payable 3,991 2,147 389
Provisions 19 1,844 3,937 1,025
Total current liabilities 342,338 297,866 205,468
Non-current liabilities
Lease liabilities 18 10,579 12,000 12,307
Deferred tax liabilities 3,178 3,244 3,393
Provisions 19 8 257 150
Total non-current liabilities 13,765 15,501 15,850
TOTAL LIABILITIES 356,103 313,367 221,318
EQUITY
Equity attributable to owners of the Company
Share capital 70,573 70,573 70,573
Share premium 46,236 46,236 46,236
Capital redemption reserve 2,901 2,901 2,901
Own shares held in trust (11,149) (2,589) (1,015)
Other reserves (56,945) (55,439) (52,736)
Retained earnings 359,366 341,811 293,426
Total equity 410,982 403,493 359,385
TOTAL EQUITY AND LIABILITIES 767,085 716,860 580,703
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the half year ended 30 September 2024
£ '000 Share capital Share premium Capital redem-ption reserve Own shares held in trust Other reserves Retained earnings Total equity
At the 31 March 2023 70,573 46,236 2,901 (1,509) (50,535) 306,349 374,015
Loss for the period - - - - - (2,363) (2,363)
Currency translation differences - - - - (2,403) - (2,403)
Changes in the fair value of debt instruments at fair value through other - - - - 202 - 202
comprehensive income, net of tax
Total comprehensive expense for the period - - - - (2,201) (2,363) (4,564)
Acquisition of own shares held in trust - - - (152) - - (152)
Utilisation of own shares held in trust - - - 646 - - 646
Share-based payments - - - - - 336 336
Dividends - - - - - (10,895) (10,895)
At the 30 September 2023 70,573 46,236 2,901 (1,015) (52,736) 293,426 359,385
Profit for the period - - - - - 49,249 49,249
Gains recycled from equity to the income statement - - - - 237 - 237
Currency translation differences - - - - (2,882) - (2,882)
Changes in the fair value of debt instruments at fair value through other - - - - (58) - (58)
comprehensive income, net of tax
Total comprehensive income for the period - - - - (2,703) 49,249 46,546
Acquisition of own shares held in trust - - - (1,636) - - (1,636)
Utilisation of own shares held in trust - - - 62 - - 62
Share-based payments - - - - - 1,052 1,052
Tax on share-based payments - - - - - 876 876
Dividends - - - - - (2,793) (2,793)
At the 31 March 2024 70,573 46,236 2,901 (2,589) (55,439) 341,811 403,493
Profit for the period - - - - - 35,261 35,261
Currency translation differences - - - - (1,672) - (1,672)
Changes in the fair value of debt instruments at fair value through other - - - - 166 - 166
comprehensive income, net of tax
Total comprehensive income for the period - - - - (1,506) 35,261 33,755
Acquisition of own shares held in trust - - - (9,046) - - (9,046)
Utilisation of own shares held in trust - - - 486 - - 486
Share-based payments - - - - - 1,303 1,303
Tax on share-based payments - - - - - 1,167 1,167
Dividends - - - - - (20,176) (20,176)
At the 30 September 2024 70,573 46,236 2,901 (11,149) (56,945) 359,366 410,982
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the half year ended 30 September 2024
Half year ended
£ '000 30 September 31 March 30 September
2024 2024 2023
Cash flows from operating activities
Cash generated from operations 20 52,218 13,062 44,077
Interest income on own funds 8,770 4,274 5,428
Income on client funds 13,988 14,880 8,917
Finance costs (1,343) (1,075) (876)
Tax paid (12,463) (6,601) (2,001)
Net cash generated from operating activities 61,170 24,540 55,545
Cash flows from investing activities
Purchase of property, plant and equipment (1,716) (4,667) (2,965)
Investment in intangible assets (2,603) (5,444) (6,800)
Purchase of investments in associate - - (2,800)
Purchase of financial investments (144,179) (70,193) (25,219)
Proceeds from maturity of financial investments and coupon receipts 106,630 48,395 28,121
Net cash used in investing activities (41,868) (31,909) (9,663)
Cash flows from financing activities
Amounts received on repurchase agreements 58,180 - -
Amounts paid on repurchase agreements (29,288) - -
Principal elements of lease payments (2,710) (2,707) (2,824)
Acquisition of own shares (9,046) (1,636) (152)
Dividends paid (20,176) (2,793) (10,895)
Net cash used in financing activities (3,040) (7,136) (13,871)
Net increase/(decrease) in cash and cash equivalents 16,262 (14,505) 32,011
Cash and cash equivalents at the beginning of the period 160,300 176,836 146,218
Effect of foreign exchange rate changes (2,507) (2,031) (1,393)
Cash and cash equivalents at the end of the period 174,055 160,300 176,836
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the half year ended 30 September 2024
1. Basis of preparation
Basis of accounting and accounting policies
The condensed consolidated financial statements have been prepared in
accordance with UK adopted International Accounting Standard 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority. The condensed consolidated
financial statements do not constitute statutory accounts within the meaning
of Section 434 of the Companies Act 2006. Within the notes to the condensed
consolidated financial statements, all current and comparative data covering
periods to (or as at) 30 September is unaudited.
The Group's statutory financial statements for the year ended 31 March 2024
have been prepared in accordance with UK-adopted international accounting
standards in conformity with the requirements of the Companies Act 2006 and
the disclosure guidance and transparency rules sourcebook of the United
Kingdom's Financial Conduct Authority. These financial statements have been
delivered to the Registrar of Companies. The auditors' opinion on those
financial statements was unqualified and did not contain a statement made
under Section 498 of the Companies Act 2006. The 31 March 2024 balances
presented in these condensed consolidated financial statements are from those
financial statements and are audited.
The accounting policies and methods of computation applied in these condensed
consolidated financial statements are consistent with those applied in the
Group's statutory financial statements for the year ended 31 March 2024. The
condensed consolidated financial statements should be read in conjunction with
the statutory financial statements for the year ended 31 March 2024.
During the period, the Group expanded its financial activities by purchasing
credit-linked notes and entering into repurchase agreements for the first
time, both of which are accounted for in line with the Group's established
financial instruments policy.
· Credit-linked notes
Credit linked notes are initially recognised at fair value on the date of
acquisition. As the notes do not meet the requirements of solely payments of
principal and interest (SPPI) under IFRS 9 they are subsequent measurement at
fair value through profit or loss. Changes in fair value are recognized in the
income statement as they arise.
· Obligations under repurchase agreements
Obligations under repurchase agreements are treated as collateralised
borrowing arrangements and measured at amortised cost. Securities sold under
these agreements remain on the balance sheet, with a corresponding liability
recognised for the cash received. The difference between the sale price and
repurchase price is recognised as interest expense over the term of the
agreement, using the effective interest rate method.
In addition to the above, the Group purchased additional corporate bonds
during the period. In line with the Group's financial instruments policy,
these bonds have been classified as Fair Value through Other Comprehensive
Income (FVOCI) where meet the SPPI requirements. Where bonds do not meet the
SPPI requirements these have been classified as Fair Value through Profit or
Loss (FVPL).
The condensed consolidated financial statements have been prepared under the
historical cost convention, except in the case of Financial instruments at
FVPL and Financial instruments at FVOCI. The financial information is rounded
to the nearest thousand, except where otherwise indicated.
Future accounting developments
The Group did not implement the requirements of any standards or
interpretations that were in issue but were not required to be adopted by the
Group at the half year. No other Standards or Interpretations have been issued
that are expected to have a material impact on the Group's financial
statements.
Critical accounting judgements
The preparation of condensed consolidated financial statements in conformity
with IFRS requires the use of certain significant accounting judgements. The
areas involving a higher degree of judgement as at, or for the six months
ended, 30 September 2024 are:
· Contingent liabilities
A key judgement applied in preparing these financial statements is the
evaluation of the accounting treatment of the matters described in Note 24
(Contingent Liabilities). This includes the assessment of whether a present
obligation exists and where it does, estimating the likelihood, timing, and
amount of any associated outflows. In evaluating whether a provision is
required and can be reliably estimated, we consult relevant experts, where
necessary and continuously reassess our decisions. In the initial stages of
legal, tax and regulatory matters, it is often not possible to reliably
estimate the outcome, and in such cases, no provision is made. However, we
provide additional disclosures with further details on these matters.
· Accounting for cryptocurrencies
The Group has recognised £6,780,000 (31 March 2024: £12,258,000; 30
September 2023: £2,247,000) of cryptocurrency assets and rights to
cryptocurrency assets on its Statement of Financial Position as at 30
September 2024. These assets are used for hedging purposes and held for sale
in the ordinary course of business. A judgement has been made to apply the
measurement principles of IFRS 13 "Fair value measurement" in accounting for
these assets. The assets are presented as 'Other assets' on the Condensed
Consolidated Statement of Financial Position.
The Group has also recognised £200,000 (31 March 2024: £200,000; 30
September 2023: £200,000) of cryptocurrency assets on its Statement of
Financial position as at 30 September 2024. These assets are not held for sale
in the ordinary course of business. A judgement has been made to apply the
measurement principles of IAS 38 "Intangible assets" in accounting for these
assets. The assets are presented within 'Intangible assets' on the Condensed
Consolidated Statement of Financial Position.
· Intangible assets
A key judgement has been applied in recognising of customer relationship
intangible assets on the Group's Statement of Financial Position. At 30
September 2024 these had a carrying amount of £10,065,000 (31 March 2024:
£10,767,000; 30 September 2023: £11,735,000). The Group applied the
recognition principles of IAS 38 "Intangible Assets" to account for these
assets and continues to measure them in accordance with this standard. These
assets relate to the 2021 transaction with Australia and New Zealand Banking
Group Limited ("ANZ") to transition its Share Investing client portfolio to
CMC for AUD$25 million.
Key sources of estimation uncertainty
The preparation of condensed consolidated financial statements in accordance
with IFRS requires the use of certain significant accounting estimates. The
area involving a higher degree of estimation uncertainty as at, or for the six
months ended, 30 September 2024 is:
· Recoverable amount of the Cash Equities Cash Generating Unit
(CGU)
Management undertakes a regular review of impairment indicators for its
non-current assets. As of 30 September 2024, indicators were identified
relating to the Group's Cash Equities CGU. An impairment test was conducted,
assessing the recoverable amount based on the CGU's value in use. This
resulted in headroom above the carrying amount, confirming that no impairment
was required (H1 2024: £5,275,000; H2 2024: £5,701,000).
While no impairment was recognised for the period, it is noted that a 5%
adverse movement in projected revenues would erode the headroom leading to an
impairment. Consequently, this area is considered a significant source of
estimation uncertainty in the preparation of the financial statements.
Going concern
The Group actively manages and assessed the capital and liquidity requirements
of operating subsidiaries to ensure appropriate financial resources. The Group
has a broad range of products and a geographically diversified business.
Consequently, the Directors believe that the Group is well placed to manage
its business risks in the context of the current economic outlook.
Accordingly, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future, a period of not less than 12 months from the date of this report. They
therefore continue to adopt the going concern basis in preparing these
condensed consolidated financial statements.
Seasonality of operations
The Directors consider that given the impact of market volatility and the
growth in overseas business there is no predictable seasonality to the Group's
operations.
2. Segmental reporting
The Group primarily operates by product line, given the unique economic
characteristics and distinct client purposes associated with each line.
Accordingly, the Group is divided into two main segments:
· Trading
· Investing
Trading segment
The Group's core business involves online trading, enabling clients to trade a
broad array of financial instruments for short-term investment and hedging
purposes. These instruments include contracts for difference (CFDs) and
financial spread betting across various assets, such as shares, indices,
foreign currencies, commodities, and treasuries. The Group also extends these
services to institutional partners through white label and introducing broker
arrangements. While CFDs are accessible globally, spread betting is available
exclusively in the UK and Ireland. Additionally, the trading segment includes
the Treasury Management and Capital Markets Division that invests surplus
liquidity to enhance yield.
Investing segment
To support clients' longer-term investment goals, the Group offers online
stockbroking services in Australia, the UK, and Singapore.
At the reporting date, management reviewed the appropriateness of the Group's
current operating segment disclosures and the information used by the Chief
Operating Decision Maker (CODM) to allocate resources and evaluate
performance. The Group's CODM is identified as the Board of Directors.
This segmentation aligns with the management information regularly presented
to the CODM. Revenue and operating expenses are attributed to the originating
segments, and the Group evaluates the financial performance of each segment
based on operating profit.
Half year ended 30 September 2024 Trading Investing Total
£ '000
Revenue 138,157 26,642 164,799
Interest income on own funds 8,890 646 9,536
Income on client funds 8,628 5,272 13,900
Total revenue 155,675 32,560 188,235
Introducing partner commissions and betting levies (4,104) (6,779) (10,883)
Net operating income 151,571 25,781 177,352
Operating expenses (99,161) (24,498) (123,659)
Impairment of intangible assets - (233) (233)
Operating profit 52,410 1,050 53,460
Share of results of associate (189) - (189)
Impairment of investments in associate (2,328) - (2,328)
Finance costs (1,371) (3) (1,374)
Profit before taxation 48,522 1,047 49,569
Half year ended 31 March 2024 Trading Investing Total
£ '000
Revenue 181,999 22,992 204,991
Interest income on own funds 4,488 816 5,304
Income on client funds 8,966 4,683 13,649
Total revenue 195,453 28,491 223,944
Introducing partner commissions and betting levies (7,930) (5,793) (13,723)
Net operating income 187,523 22,698 210,221
Operating expenses (112,641) (23,938) (136,579)
Impairment of intangible assets (2,298) (4,749) (7,047)
Operating profit / (loss) 72,584 (5,989) 66,595
Share of results of associates (193) - (193)
Finance costs (1,072) (3) (1,075)
Profit / (loss) before taxation 71,320 (5,992) 65,328
Half year ended 30 September 2023 Trading Investing Total
£ '000
Revenue 97,019 22,692 119,711
Interest income on own funds 5,142 800 5,942
Income on client funds 5,457 4,691 10,148
Total revenue 107,618 28,183 135,801
Introducing partner commissions and betting levies (7,303) (5,936) (13,239)
Net operating income 100,315 22,247 122,562
Operating expenses (87,886) (30,429) (118,315)
Impairment of intangible assets - (5,275) (5,275)
Operating profit / (loss) 12,429 (13,457) (1,028)
Share of results of associates (90) - (90)
Finance costs (875) (1) (876)
Profit / (loss) before taxation 11,463 (13,458) (1,995)
The measurement of net operating income for segmental analysis is consistent
with that in the income statement and is broken down by geographic location
below.
Half year ended
£ '000 30 September 31 March 30 September
2024 2024 2023
UK 51,871 57,922 34,410
Australia 57,455 62,313 47,112
Other countries 68,026 89,986 41,040
Total net operating income 177,352 210,221 122,562
The measurement of segment assets for segmental analysis is consistent with
that in the balance sheet. The total of non-current assets other than deferred
tax assets, broken down by location, is shown below.
£ '000 30 September 31 March 30 September
2024 2024 2023
UK 51,671 32,981 35,532
Australia 22,126 23,405 24,336
Other countries 5,446 6,368 6,326
Total 79,243 62,754 66,194
3. Revenue
Half year ended
£ '000 30 September 31 March 30 September
2024 2024 2023
Trading 135,405 179,574 94,735
Investing 26,637 22,995 22,689
Other 2,757 2,422 2,287
Revenue 164,799 204,991 119,711
Trading revenue represents CFD and Spread bet revenue (net of hedging costs)
accounted for in accordance with IFRS 9 "Financial Instruments". Investing
revenue represents stockbroking revenue accounted for in accordance with IFRS
15 "Revenue from Contracts with Customers".
4. Operating expenses
Half year ended
£ '000 30 September 31 March 30 September
2024 2024 2023
Net staff costs 59,026 65,261 53,208
IT costs 22,357 20,506 19,191
Sales and marketing 14,959 18,919 16,664
Premises 2,474 3,243 3,414
Legal and Professional fees 6,965 7,356 6,568
Regulatory fees 2,470 1,979 2,315
Depreciation and amortisation 6,833 7,475 7,626
Bank charges 1,925 2,862 2,193
Irrecoverable sales tax 2,674 3,033 2,513
Other 3,976 5,945 4,623
Operating expenses 123,659 136,579 118,315
The table above reflects the breakdown of operating expenses by the nature of
expense. It is shown net of amounts that have been capitalised.
5. Taxation
The effective tax rate for the six months ended 30 September 2024 was 28.9%
compared to the 6 months ended 30 September 2023 effective tax rate, which was
-18.4%. The Group's effective tax rate is higher than the UK statutory tax
rate of 25% due to the effect of profits being taxed in Australia and Germany
where the tax rate is higher than the UK rate and adjustments for discrete
items.
6. Earnings per share (EPS)
Basic EPS is calculated by dividing the earnings attributable to the equity
owners of the Company by the weighted average number of Ordinary Shares in
issue during each period, excluding those held in employee share trusts, which
are treated as cancelled.
For diluted earnings per share, the weighted average number of Ordinary Shares
in issue, excluding those held in employee share trusts, is adjusted to assume
conversion vesting of all dilutive potential weighted average Ordinary Shares
and that vesting is satisfied by the issue of new Ordinary Shares.
Half year ended
30 September 31 March 30 September
2024 2024 2023
Earnings/ (loss) attributable to ordinary shareholders (£ '000) 35,261 49,249 (2,363)
Weighted average number of shares used in the calculation of basic earnings 275,778 279,222 279,199
per share ('000)
Dilutive effect of share options ('000) - - -
Weighted average number of shares used in the calculation of diluted earnings 275,778 279,222 279,199
per share ('000)
Basic earnings / (loss) per share (p) 12.8 17.6 (0.8)
Diluted earnings / (loss) per share (p) 12.8 17.6 (0.8)
For all periods presented, no potentially dilutive weighted average ordinary
shares in respect of share awards and options in issue were included in the
calculation of diluted EPS.
7. Dividends
Half year ended
£ '000 30 September 31 March 30 September
2024 2024 2023
Prior year final dividend of 7.3p per share 20,176 2,795 10,895
(31 March 2024: interim dividend of 1.0p,
30 September 2023: final dividend of 3.9p)
An interim dividend for 2025 of 3.1p per share, amounting to £8,549,000 has
been approved by the board but has not been included as a liability at 30
September 2024. The dividend will be paid on 9 January 2025 to those members
on the register at the close of business on 6 December 2024.
8. Intangible assets
£ '000 Goodwill Computer software Trade-marks and trading licences Client relation Crypto Assets under develop-ment Total
ships
currency assets
Cost 11,500 145,916 1,031 16,048 200 11,594 186,289
Accumulated amortisation and impairment (11,500) (134,948) (917) (4,313) - (1,140) (152,818)
Carrying amount at the 30 September 2023 - 10,968 114 11,735 200 10,454 33,471
Cost 11,500 151,048 1,019 15,705 200 9,507 188,979
Accumulated amortisation and impairment (11,500) (139,551) (923) (4,938) - (3,161) (160,073)
Carrying amount at the 31 March 2024 - 11,497 96 10,767 200 6,346 28,906
Cost 11,500 152,823 1,020 15,731 200 10,254 191,528
Accumulated amortisation and impairment (11,500) (140,914) (941) (5,666) - (3,394) (162,415)
Carrying amount at the 30 September 2024 - 11,909 79 10,065 200 6,860 29,113
£ '000 Goodwill Computer software Trade-marks and trading licences Client relation Crypto Assets under develop-ment Total
ships
currency assets
Carrying amount at the 31 March 2023 - 14,687 132 12,816 - 7,707 35,342
Additions - 303 - - 200 6,297 6,800
Transfers - 2,303 - - - (2,303) -
Amortisation charge - (2,142) (17) (731) - - (2,890)
Impairment charge - (4,135) - - - (1,140) (5,275)
Foreign currency translation - (48) (1) (350) - (107) (506)
Carrying amount at the 30 September 2023 - 10,968 114 11,735 200 10,454 33,471
Additions - 35 - - - 5,409 5,444
Transfers - 7,368 - - - (7,368) -
Amortisation charge - (1,811) (17) (725) - - (2,553)
Impairment charge - (5,026) - - - (2,021) (7,047)
Foreign currency translation - (37) (1) (243) - (128) (409)
Carrying amount at the 31 March 2024 - 11,497 96 10,767 200 6,346 28,906
Additions - 132 - - - 2,471 2,603
Transfers - 1,734 - - - (1,734) -
Disposals - (94) - - - - (94)
Amortisation charge - (1,363) (17) (721) - - (2,101)
Impairment charge - - - - - (233) (233)
Foreign currency translation - 3 - 19 - 10 32
Carrying amount at the 30 September 2024 - 11,909 79 10,065 200 6,860 29,113
Computer software includes capital development costs of £26,487,000 relating
to the Group's Next Generation trading platform which has been fully
amortised.
Impairment
Intangible assets are tested for impairment when events or changes in
circumstances indicate that their carrying amount may not be recoverable.
During the period, impairment indicators were identified for the Group's Cash
Equities CGU, which comprises assets related to the UK Invest platform and
assets developed for offering cash equities on the Next Generation platform.
However, the recoverable amount of the Cash Equities CGU was determined to
exceed its carrying value, and therefore, no impairment was recognised.
The recoverable amount of the CGU is measured using the value in use (VIU)
method. Key assumptions in the projections include B2B revenue, the cost of
acquiring D2C clients, average portfolio sizes for the UK Invest business, and
client trading volumes for cash equities through the Next Generation platform.
The most recent five-year board-approved forecast was used to estimate the
VIU, applying a discount rate of 9.7% and a long-term growth rate of 0% beyond
the forecast period. The recoverable amount was determined to be £7.9
million, exceeding the CGU's carrying value of £6.1 million. A 5% reduction
in projected revenues would lead to an impairment.
No impairment indicators were identified for any of the Group's other assets.
9. Property, plant and equipment
£ '000 Leasehold improvements Furniture, fixtures and equipment Computer hardware Right-of-use assets Construction in progress Total
Cost 16,997 9,568 44,206 28,681 37 99,489
Accumulated depreciation (14,225) (8,688) (33,624) (15,572) - (72,109)
Carrying amount at the 30 September 2023 2,772 880 10,582 13,109 37 27,380
Cost 16,542 9,829 45,502 30,320 - 102,193
Accumulated depreciation (12,471) (8,700) (35,394) (17,082) - (73,647)
Carrying amount at the 31 March 2024 4,071 1,129 10,108 13,238 - 28,546
Cost 16,789 10,226 46,473 30,169 - 103,657
Accumulated depreciation (13,119) (8,878) (37,356) (18,932) - (78,285)
Carrying amount at the 30 September 2024 3,670 1,348 9,117 11,237 - 25,372
£ '000 Leasehold improvements Furniture, fixtures and equipment Computer hardware Right-of-use assets Construction in progress Total
Carrying amount at the 31 March 2023 2,473 715 10,759 8,672 152 22,771
Additions 316 229 2,364 6,614 3 9,526
Transfers 482 82 (450) - (114) -
Depreciation charge (490) (137) (2,054) (2,055) - (4,736)
Foreign currency translation (9) (9) (37) (122) (4) (181)
Carrying amount at the 30 September 2023 2,772 880 10,582 13,109 37 27,380
Additions 2,690 418 1,415 2,973 (3) 7,493
Transfers (482) 7 511 - (36) -
Depreciation charge (646) (156) (2,109) (2,011) - (4,922)
Disposals (220) (1) (258) (705) - (1,184)
Foreign currency translation (43) (19) (33) (128) 2 (221)
Carrying amount at the 31 March 2024 4,071 1,129 10,108 13,238 - 28,546
Additions 296 423 997 3 - 1,719
Depreciation charge (654) (190) (1,975) (1,912) - (4,731)
Foreign currency translation (43) (14) (13) (92) - (162)
Carrying amount at the 30 September 2024 3,670 1,348 9,117 11,237 - 25,372
10. Trade and other receivables
£ '000 30 September 2024 31 March 2024 30 September 2023
Current
Gross trade receivables 6,378 9,936 7,236
Less: Loss allowance (3,826) (3,964) (4,658)
Trade receivables 2,552 5,972 2,578
Prepayments 16,463 13,552 15,976
Accrued income 3,917 3,778 3,682
Stockbroking debtors 149,605 126,339 64,313
Other debtors and advances 6,986 12,415 5,550
179,523 162,056 92,099
Non-current
Other debtors 2,637 2,753 2,601
Total 182,160 164,809 94,700
Trade receivables primarily comprise amounts due from clients. These amounts
are short term and do not contain a significant financing element. The Group
recognises expected credit losses on its trade receivables. These are measured
using the simplified approach permitted by IFRS 9, which requires expected
lifetime losses to be recognised from the initial recognition of the
receivables. Amounts are written off when there is no reasonable expectation
of recovery of the amount.
Stockbroking debtors consist of amounts receivable in respect of equity
security transactions executed on behalf of clients. A corresponding balance
is included within trade and other payables (refer to Note 16). These balances
arise from the Group's application of trade date accounting and represent
amounts in the process of being cleared between the client and the exchange at
the period end.
11. Investments in associate
The Group holds a 33% stake in Strike X Technologies ("Strike X"), a customer
centric blockchain solutions business, which was acquired in June 2023 for a
cost of £2,800,000.
The carrying amount of the investment has changed as follows in the reported
periods
Half year ended
£ '000 30 September 31 March 30 September
2024 2024 2023
At the beginning of the period 2,517 2,709 -
Additions - - 2,800
Losses for the period (189) (192) (91)
Impairment charge (2,328) - -
At the end of the period - 2,517 2,709
Due to the continued underperformance of the investment, combined with its
poor financial position and ongoing losses, an indicator of impairment was
identified as at 30 September 2024. Following an impairment assessment, the
Group concluded that the investment's recoverable amount was £nil, and the
full carrying value was written down. (No impairment indicators were noted for
the periods ended 30 September 2023 or 31 March 2024). Strike X is actively
seeking third-party capital through one of its subsidiaries to improve its
financial position. Despite the impairment, the Group continues to support
Strike X and its strategic objectives.
12. Derivative financial instruments
30 September 2024 31 March 2024 30 September 2023
Assets Notional amount Carrying Notional amount Carrying Notional amount Carrying
£m amount £m amount £m amount
£ '000 £ '000 £ '000
Held for trading
Client trading positions 304.9 28,781 394.0 31,627 94.1 16,057
Held for hedging
Forward foreign exchange contracts - economic hedges - - - - 60.6 159
Total 304.9 28,781 394.0 31,627 154.7 16,216
30 September 2024 31 March 2024 30 September 2023
Liabilities Notional amount Carrying Notional amount Carrying Notional amount Carrying
£m amount £m amount £m amount
£ '000 £ '000 £ '000
Held for trading
Client trading positions 151.4 (5,629) 181.4 (7,074) 53.9 (2,384)
Total 151.4 (5,629) 181.4 (7,074) 53.9 (2,384)
The Group provides CFDs and portfolio management services to clients across
multiple jurisdictions, ensuring the segregation of client funds in compliance
with the regulations of each respective jurisdiction. In one jurisdiction, the
Group is prohibited from segregating unrealised client profits or losses
within the pooled segregated client money bank accounts. Instead, segregation
occurs only upon realisation of these profits or losses. Client trading
positions at the period end reflect the unrealised positions held by clients
at that time.
The fair value of derivative contracts are based on the market price of
comparable instruments at the balance sheet date. All derivative financial
instruments have a maturity of less than one year.
13. Other assets
Other assets are cryptocurrencies, which are owned and controlled by the Group
for the purpose of hedging the Group's exposure to clients' cryptocurrency
trading positions. As presented below, the Group holds cryptocurrencies on
exchange and in vault. Cryptocurrencies held in vaults are held in wallets
that have additional security features. The fair value of cryptocurrencies are
based on the market price of these instruments as at the balance sheet date.
Other assets are measured at fair value less costs to sell.
£ '000 30 September 2024 31 March 2024 30 September 2023
Exchange 5,869 10,382 910
Vaults 911 1,876 1,337
Total 6,780 12,258 2,247
14. Financial investments
£ '000 30 September 2024 31 March 2024 30 September 2023
Investment in debt instruments classified at FVOCI
UK Government securities 16,355 16,162 27,881
Corporate bonds 52,073 34,349 -
Investment in debt instruments classified at FVTPL
Corporate bonds 19,945 - -
Credit-linked notes 20,000 - -
Investment in equity securities mandatorily measured at FVTPL
Equity securities 625 410 441
Total 108,998 50,921 28,322
£ '000 30 September 2024 31 March 2024 30 September 2023
Analysis of financial investments
Non-current 22,121 32 33
Current 86,877 50,889 28,289
Total 108,998 50,921 28,322
During period the Group established a new Treasury Management and Capital
Markets Division to help drive increased returns on excess funds. As a result
of this the Group has increased its exposure to financial instruments
including investment-grade corporate bonds and credit-linked notes. Whilst
these investments carry an increased level of risk, they remain within the
Group's existing market, liquidity, credit and counterparty risk appetites.
The expected credit loss held against financial instruments classified as
FVOCI is immaterial (30 September 2023: immaterial; 31 March 2024:
immaterial).
15. Cash and cash equivalents
£ '000 30 September 2024 31 March 2024 30 September 2023
Cash and cash equivalents 174,055 160,300 176,836
Analysed as:
Cash at bank 76,866 134,683 149,161
Money market funds 97,189 25,617 27,675
Total 174,055 160,300 176,836
Cash and cash equivalents comprise of cash on hand and short-term deposits and
funds held in Money market funds. Cash and cash equivalents are short-term,
highly liquid investments that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes in value. The
expected credit loss held against cash and cash equivalent balances is
immaterial (30 September 2023: immaterial; 31 March 2024: immaterial).
16. Trade and other payables
£ '000 30 September 2024 31 March 2024 30 September 2023
Client payables 110,912 119,591 107,772
Tax and social security 1,020 759 737
Stockbroking creditors 133,217 116,029 55,058
Accruals and other creditors 32,477 36,432 21,977
Payables in respect of financial investments 20,000 - -
Total 297,626 272,811 185,544
Stockbroking creditors represent the amount payable in respect of equity and
securities transactions executed on behalf of clients with a corresponding
balance included within trade and other receivables (note 10).
17. Obligations under repurchase agreements
There are balances arising from repurchase transactions of £28,923,000. The
Group pledges assets for repurchase agreements which are generally conducted
under terms that are usual and customary for standard securitised borrowing
contracts. The fair value of the collateral provided under these agreements at
30 September 2024 was £31,836,000.
18. Lease liabilities
Half year ended
£ '000 30 September 2024 31 March 2024 30 September 2023
At the beginning of the period 16,915 17,313 11,818
Additions / modifications of new leases during the period 231 2,465 8,495
Interest expense 592 700 266
Lease payments made during the period (3,302) (3,407) (3,090)
Foreign currency translation (92) (156) (176)
At the end of the period 14,344 16,915 17,313
£ '000 30 September 2024 31 March 2024 30 September 2023
Analysis of lease liabilities
Non-current 10,579 12,000 12,307
Current 3,765 4,915 5,006
Total 14,344 16,915 17,313
19. Provisions
£ '000 Restructuring Property related Other Total
At the 31 March 2023 - 2,346 556 2,902
Additional provision 715 - 79 794
Utilisation of provision - - (398) (398)
Unutilised provision reversed - (1,955) (144) (2,099)
Translation - (11) (13) (24)
At the 30 September 2023 715 380 80 1,175
Additional provision 1,471 16 1,567 3,054
Utilisation of provision - - (9) (9)
Unutilised provision reversed - - (13) (13)
Translation - (10) (3) (13)
At the 31 March 2024 2,186 386 1,622 4,194
Additional provision - - 26 26
Utilisation of provision (2,186) (56) (13) (2,255)
Unutilised provision reversed - (73) - (73)
Translation - - (40) (40)
At the 30 September 2024 - 257 1,595 1,852
Restructuring
The restructuring provision relates to redundancies announced during the
half-year ended 31 March 2024. Following the completion of these restructuring
activities during the period, the provision was fully utilised.
Property related
Property-related provisions comprise amounts for dilapidations, which are been
capitalised as part of the cost of right-of-use asset and are subsequently
amortised over the life of the lease.
Other provisions
Other provisions include amounts set aside in the ordinary course of business,
including in respect of legal or regulatory matters. The recognition of these
provisions does not imply any admission of wrongdoing or legal liability.
20. Cash generated from operations
Half year ended
£ '000 30 September 31 March 30 September
2024 2024 2023
Cash flows from operating activities
Profit / (loss) before taxation 49,569 65,328 (1,995)
Adjustments for:
Impairment of investments in associate 2,328 - -
Interest income on own funds (9,536) (5,304) (5,942)
Income on client funds (13,900) (13,649) (10,148)
Finance costs 1,374 1,075 876
Depreciation of property, plant and equipment 4,731 4,922 4,736
Amortisation and impairment of intangible assets 2,334 9,600 8,165
Research and development tax credit - (497) -
Loss on disposal of property, plant and equipment and intangible assets 94 479 -
Share of after-tax results of associate 189 192 91
Share-based payment 1,785 1,117 975
Other non-cash movements including exchange rate movements 1,038 222 (409)
Changes in working capital:
(Increase) / decrease in trade and other receivables (16,970) (71,137) 39,956
Decrease / (increase) in amounts due from brokers 26,207 (44,755) 4,027
Decrease / (Increase) in other assets 5,478 (10,011) (263)
Increase in trade and other payables 4,820 87,322 3,198
(Decrease) / increase in amounts due to brokers (6,422) (4,138) 2,193
Decrease / (increase) in net derivative financial instrument assets 1,401 (10,721) (1,634)
(Decrease) / increase in provisions (2,302) 3,017 251
Cash generated from operations 52,218 13,062 44,077
21. Liquidity
The Group has access to the following liquidity resources that make up total
available liquidity:
· Group funds. Group funds on 30 September 2024 were £332,113,000
(31 March 2024: £325,788,000; 30 September 2023: £272,800,000). The
derivation of Group funds is shown in the table below.
· Title Transfer Funds (TTFs). This represents funds received from
professional clients and eligible counterparties (as defined in the FCA
Handbook) that are held under a Title Transfer Collateral Agreement (TTCA); a
means by which a professional client or eligible counterparty may agree that
full ownership of such funds is unconditionally transferred to the Group. The
Group considers these funds as an ancillary source of liquidity and places no
reliance on its stability.
Revolving credit facility
The Group has access to a syndicated revolving credit facility of up to £55.0
million (31 March 2024: £55.0 million; 30 September 2023: £55.0 million). No
drawdowns were made from the facility during the period (31 March 2024: £nil;
30 September 2023: £nil).This facility can only be used to meet broker margin
requirements of the Group. The maximum amount of the facility available at any
one time is dependent upon the initial margin requirements at brokers and
margin received from clients. The facility consists of a one-year term
facility of £27.5 million and a three year term facility of £27.5 million,
both of which were renewed in March 2024. Under the terms of the syndicated
revolving credit facility agreement, the Group is required to comply with
financial covenants covering minimum Tangible net worth and a minimum EBITDA:
Interest expense ratio for the Group at a consolidated level. The Group has
complied with all covenants throughout the reporting period.
The Group's use of total available liquidity resources consist of:
· Blocked cash. Amounts held to meet the requirements of local
market regulators and amounts held at overseas subsidiaries in excess of local
segregated client requirements to meet potential future client requirements.
· Initial margin requirement at broker. The total GBP equivalent
initial margin required by prime brokers to cover the Group's hedge derivative
positions.
Net available liquidity
£ '000 30 September 2024 31 March 2024 30 September 2023
Cash and cash equivalents (net of bank overdraft) 174,055 160,300 176,836
Amount due from brokers 202,675 228,882 184,127
Other assets 6,780 12,258 2,247
Financial investments 108,998 50,921 28,322
Derivative financial instruments (excluding Client CFD positions) (current - - 159
assets)
492,508 452,361 391,691
Less: Title transfer funds (110,912) (119,591) (107,771)
Less: Amount due to brokers (560) (6,982) (11,120)
Less: Obligations under repurchase agreements (28,923) - -
Less: Payables in respect of financial investments (20,000) - -
Group Funds 332,113 325,788 272,800
Title transfer funds 110,912 119,591 107,771
Total Available liquidity 443,025 445,379 380,571
Less: Blocked cash (62,912) (68,411) (75,699)
Less: Initial margin requirement at broker (133,483) (184,734) (122,658)
Net available liquidity 246,630 192,234 182,214
The following Group Funds Flow Statement summarises the Group's generation of
own funds during each period and excludes all cash flows in relation to monies
held on behalf of clients.
Half year ended
£ '000 30 September 2024 31 March 2024 30 September 2023
Operating activities
Profit / (loss) before tax 49,569 65,328 (1,995)
Adjustments for:
Depreciation, amortisation and impairment 7,065 14,522 12,901
Other non-cash adjustments 5,284 2,577 (532)
Tax paid (12,463) (6,601) (2,001)
Group funds generated from operating activities 49,455 75,826 8,373
Movement in working capital (4,372) (3,560) (17,476)
Outflow from investing activities
Net purchase of property, plant and equipment and intangible assets (4,319) (10,111) (9,765)
Other outflow from investing activities - - (2,800)
Outflow from financing activities
Dividends paid (20,176) (2,793) (10,895)
Other outflow from financing activities (11,756) (4,343) (2,976)
Total outflow from investing and financing activities (36,251) (17,247) (26,436)
Increase / (decrease) in Group funds 8,832 55,019 (35,539)
Group funds at the beginning of the period 325,788 272,800 309,732
Effect of foreign exchange rate changes (2,507) (2,031) (1,393)
Group funds at the end of the period 332,113 325,788 272,800
22. Fair value measurement disclosures
IFRS 13 "Fair Value Measurement" requires the Group to classify its financial
assets and liabilities according to a hierarchy that reflects the
observability of significant market inputs. The three levels of the fair value
hierarchy are defined below:
· Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
· Level 2 - inputs other than quoted prices included within level 1
that are observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices); or
· Level 3 - inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs).
30 September 2024
£ '000 Level 1 Level 2 Level 3 Total
Financial investments 16,978 92,018 2 108,998
Derivative financial instruments (current assets) - 28,781 - 28,781
Derivative financial instruments (current liabilities) - (5,629) - (5,629)
16,978 115,170 2 132,150
31 March 2024
£ '000 Level 1 Level 2 Level 3 Total
Financial investments 50,889 - 32 50,921
Derivative financial instruments (current assets) - 31,627 - 31,627
Derivative financial instruments (current liabilities) - (7,074) - (7,074)
50,889 24,553 32 75,474
30 September 2023
£ '000 Level 1 Level 2 Level 3 Total
Financial investments 28,289 - 33 28,322
Derivative financial instruments (current assets) - 16,216 - 16,216
Derivative financial instruments (current liabilities) - (2,384) - (2,384)
28,289 13,832 33 42,154
Valuation techniques used to determine fair values of financial instruments
Specific valuation techniques used to value financial instruments include:
· the use of quoted market prices or dealer quotes for similar
instruments;
· for foreign currency forwards - forward exchange rates at the
balance sheet date.
Fair value of financial assets and liabilities measured at amortised cost
The fair value of the following financial assets and liabilities not held at
fair value approximates to their carrying value:
· Cash and cash equivalents
· Amounts due from/to brokers
· Trade and other receivables (financial assets only)
· Trade and other payables (financial liabilities only)
· Obligations under repurchase agreements
23. Related party transactions
The Group considers its key management personnel and persons connected with
them to be related parties. The Directors and members of the Executive
Committee are considered to be key management personnel for disclosure
purposes.
The basis of remuneration of key management personnel remains consistent with
that disclosed in the statutory financial statements for the Group as at and
for the year ended 31 March 2024.
In the half year ended 30 September 2024, the Group provided one member of key
management personnel a short-term loan of £400,000. The loan has been
provided on commercial terms.
There were no other transactions with key management personnel during the half
years ended 31 March 2024 and 30 September 2023.
24. Contingent liabilities
The Group's geographical reach exposes it to a high degree of uncertainty
regarding the interpretation of local regulatory, tax and legal matters in
each territory in which it has operations. In addition, the Group is party to
various contractual relationships that could result in non-performance claims
and other contractual breaches and from time to time is involved in disputes
as part of the ordinary course of business.
In certain instances, legal disputes can pose a have a significant financial
exposure, however the Group's manages these risks proactively to resolve
disputes and claims are usually resolved without any material loss. The Group
makes provision for claims where costs are likely to be incurred.
Where there are uncertainties regarding regulatory, tax and legal matters and
a provision has not been made, there are no contingent liabilities where the
Group considers any material adverse financial impact to be probable
Notice of class action lawsuit
The Group received notice of a class action lawsuit being brought against one
of its operating entities on 31 May 2022. Since then, the matter has
progressed through the court pleadings stage and has recently completed
discovery pursuant to current court orders. At this stage, an assessment to
determine the probability and size of financial outflow still cannot be
determined.
Open tax enquiries
The Group has open tax enquiries in relation to its European operations
arising from historical product launches and more routine enquires in its
Canadian entity. The potential outcome of these enquiries is ongoing and there
is no certainty whether there may be a financial cost to the Group.
Brexit approach
There is regulatory uncertainty regarding the Group's historical approach to
the use of reverse solicitation provisions allowing EEA clients to trade with
UK subsidiaries after 31 December 2020. The risk to the approach has now been
mitigated given the majority of EEA clients' activities with the UK subsidiary
ceased prior to 31 March 2021 and to date no further action has been taken by
any EEA regulator. Whilst it is possible that regulatory censure may result
from these matters, they are in their early stages and such an outcome is not
currently considered probable.
25. Subsequent events
ASB Bank partnership
On 1 November 2024 the Group announced it had entered a strategic partnership
with ASB Bank in New Zealand to provide ASB clients with access to the Group's
trading technology through an ASB-branded platform. As part of the agreement,
the Group will become a full participant in the NZX, the New Zealand Stock
Exchange.
Integration is expected to take between 12 and 18 months, with the associated
costs expected to be largely capitalised and revenue upside proving meaningful
in the context of the Group's Invest business. On an ongoing basis, the cost
impact is expected to be incremental as the Group leverages existing scale to
service the business.
INDEPENDENT REVIEW REPORT TO CMC MARKETS PLC
Conclusion
We have been engaged by the CMC Markets plc (the "Group") to review the
condensed set of financial statements in the half-yearly financial report for
the six months ended 30 September 2024 which comprises the Condensed
Consolidated Income Statement, the Condensed Consolidated Statement of Other
Comprehensive Income, the Condensed Consolidated Statement of Financial
Position, the Condensed Consolidated Statement of Changes in Equity, the
Condensed Consolidated Statement of Cash Flows and related notes 1 to 25.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2024 is not prepared,
in all material respects, in accordance with United Kingdom adopted
International Accounting Standard 34 and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim
financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim Financial
Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410; however future events or conditions may cause the entity to
cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the Group's ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for
expressing to the Group a conclusion on the condensed set of financial
statements in the half-yearly financial report. Our Conclusion, including our
Conclusion Relating to Going Concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the Group in accordance with ISRE (UK) 2410. Our
work has been undertaken so that we might state to the company those matters
we are required to state to it in an independent review report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Group, for our review work, for
this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
21 November 2024
Alternative performance measures
Reconciliation of trading net revenue
Half year ended
£ 'million Note 30 September 31 March 30 September
2024 2024 2023
Trading gross revenue 3 135.4 179.6 94.7
Client rebates introducing partner commissions and levies 2 (4.1) (7.9) (7.3)
Trading net revenue 131.3 171.7 87.4
Reconciliation of investing net revenue
Half year ended
£ 'million Note 30 September 31 March 30 September
2024 2024 2023
Investing gross revenue 3 26.6 23.0 22.7
Introducing partner commissions 2 (6.7) (5.8) (5.9)
Investing net revenue 19.9 17.2 16.8
Reconciliation of interest income
Half year ended
£ 'million 30 September 31 March 30 September
2024 2024 2023
Interest income on own funds 9.5 5.3 5.9
Income on client funds 13.9 13.6 10.2
Interest income 23.4 18.9 16.1
Reconciliation of trading net revenue, investing net revenue to net operating
income
Half year ended
£ 'million Note 30 September 31 March 30 September
2024 2024 2023
Trading net revenue 131.3 171.7 87.4
Investing net revenue 19.9 17.2 16.8
Other revenue 3 2.8 2.4 2.3
Interest income 23.4 19.0 16.1
Net operating income 177.4 210.2 122.6
Reconciliation of operating expenses
Half year ended
£ 'million Note 30 September 31 March 30 September
2024 2024 2023
Operating expenses 4 123.7 136.6 118.3
Impairment of intangible assets 8 0.2 7.0 5.3
Adjusted operating expenses 123.9 143.6 123.6
(including variable remuneration)
Variable remuneration (12.5) (16.0) (1.7)
Operating expenses excluding variable remuneration 111.4 127.6 121.9
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