Results presentation Year ended 31 March 2018
Agenda 1 Key highlights 2 Financials 3 Regulation and outlook 4 Strategy 5 Q&A 2018 Analyst presentation ǀ Pg 2
Key highlights Active clients NOI RPC 59,165 (-2%) £187.1m (+16%) £2,964 (+18%) (FY17: 60,082) (FY17: £2,517) (FY17: £160.8m) Slight fall following Growth in both the retail Growth in institutional targeted marketing and institutional business and premium strategy and one-off business client focus political events in the prior year Institutional Final dividend High value clients 8.93 pence • CFD net revenue growth of 38% (FY17: 8.93 pence) Premium clients • ANZ Bank white label generated 79% of net Dividend maintained at stockbroking CFD and spread bet prior year level partnership on track revenue in 2018 for September retail go live 2018 Analyst presentation ǀ Pg 3
CMC Markets continues to make strong strategic progress Delivering on strategic initiatives and positioning the Group post ESMA changes Growth initiative Highlights ü Leading the UK industry in client satisfaction ¹ 1 Established markets ü Maintained market-leading position in Germany ² and increased market share in Australia ³ ü New China education office⁴ launched in October 2017 2 Geographic expansion ü Expansion planned in Middle East during the next financial year ü New digital framework rolled out, enabling greater scale and targeting efficiencies across paid media 3 Digital initiatives ü Increasing proportion of spend through digital channels; 59% in 2018 compared to 46% in 2017 ü FX Prime functionality launched May 2017 Maintain a competitive and 4 compliant product offering ü Professional offering released (CMC Pro) ü ANZ Bank stockbroking transaction passed its first major milestone in March 2018 and remains on track for delivery in September 2018 5 Institutional offering ü CFD net revenue up 38%, value of client trades up 50% 1. Investment Trends May 2017 UK Leveraged Trading Report. 2. Investment Trends May 2018 Germany CFD & FX Report. 3. Investment Trends May 2017 Australia CFD Report. 4. China business is onboarded and serviced through Australia. 2018 Analyst presentation ǀ Pg 4
Agenda 1 Key highlights 2 Financials 3 Regulation and outlook 4 Strategy 5 Q&A 2018 Analyst presentation ǀ Pg 5
KPIs High value client focus continuing to drive success Active clients 1 and Revenue per active client (RPC) 2 (£) Net operating income 3 (£m) Turnover (£bn) and Trades (m) 2,964 68.4 2,828 66.8 2,517 62.7 187.1 2,587 60,082 59,165 2,071 169.4 2,016 57,329 160.8 2016 2017 2018 2016 2017 2018 2016 2017 2018 Active clients Revenue per active client Value of trades (£bn) Number of trades (m) Underlying Profit Before Tax 4 (£m and margin) Basic EPS and dividend per share (pence) Profit after tax (£m) 36.8% 17.3 15.1 32.1% 30.1% 13.7 9.0 1.79 49.7 60.1 8.93 8.93 8.93 53.4 42.5 48.5 39.2 2016 2017 2018 2016 2017 2018 2016 2017 2018 PBT (£m) Underlying PBT⁴ Underlying PBT margin Special dividend per share Dividend per share Basic EPS 1. Active clients represent those individual clients who have traded with or held CFD or spread bet positions with CMC Markets on at least one occasion during the period. 2. Average trading revenue generated from CFD and spread bet active clients. 3. Net operating income represents total revenue net of introducing partner commissions and spread betting levies. 4. Underlying PBT represents PBT before exceptional items. 2018 Analyst presentation ǀ Pg 6
Income statement Operationally leveraged business with revenue growth reflected in profit Net operating income Group (£m) 2018 2017 YoY % CFD and spread bet (incl § More normalised market conditions and growing institutional 175.4 151.3 16% binaries) net revenue business driving CFD revenue growth Stockbroking 8.5 7.8 9% § Trading volumes up 28% against prior year Interest income 2.1 1.7 22% § FX trading volumes up 24% (£182.1bn) and Indices up 35% (£393.1bn) Sundry income 1.1 - - § Sundry income relates to exchange fees recovered from Net operating income 1 187.1 160.8 16% institutional clients and research and development tax credit Operating expenses (125.9) (111.6) (13%) Finance costs (1.1) (0.7) (60%) Operating expenses Profit before taxation 60.1 48.5 24% PBT margin 32.1% 30.1% § Core operating costs of the business remain well controlled with increases driven by: o annual salary increases Tax (10.5) (9.3) (11%) o higher discretionary performance incentives Profit after tax 49.7 39.2 27% § Investment in stockbroking business contributed £2.0m additional operating costs § More targeted marketing strategy resulted in lower marketing spend § PBT margin increased to 32.1% 1. Net operating income represents total revenue net of introducing partner commissions and spread betting levies 2018 Analyst presentation ǀ Pg 7
Net revenue 1 bridge (£m) Increased existing client trading activity Existing clients: (£49.4m) 31.2 Existing clients: (£9.2m) (26.8) 5.8 (15.0) 36.5 2.1 (22.6) New and returning clients: 175.4 £33.3m 162.2 2.0 151.3 New and returning clients: £38.5m 2016 Net Existing clients Existing clients Returning clients New clients 2017 Net Existing clients Existing clients Returning clients New clients 2018 Net revenue¹ trading less not trading revenue¹ trading more not trading revenue¹ 1. Net revenue generated from CFD and spread bet active clients, including Countdowns and Digital 100s, after the impact of introducing partner commissions and spread betting levies 2018 Analyst presentation ǀ Pg 8
Clients Increasing number of long-term clients generating higher proportion of revenue 2018 Revenue ¹ by client tenure Client churn (000’s) 3 3 9% 0-6M 3 15 6-12M 19 19 10% 1-2Y 2-3YR 44% >3YR 42 39 35 23% 2017 (15) (18) (18) 10% 14% 2016 2017 2018 40% 15% Continuous traders New traders Reactivated Stopped trading 20% 15% § Increasing proportion of revenue is generated by longer tenure clients, 58% of revenue generated by clients who have been with the Group for two years or more (2017: 55%) § Consistent growth in the number of continuously trading clients § Recurring revenue: Clients onboarded during financial year 2015 have generated transactional value of £57.6 million in the subsequent 4 years at a marketing cost of £12.9 million, illustrating the importance of client longevity 1. Gross revenue generated from CFD and spread bet active clients, including Countdowns and Digital 100s, before the impact of introducing partner commissions and spread betting levies 2018 Analyst presentation ǀ Pg 9
Performance by region Strong revenue growth across all regions UK revenue bridge (£m) Europe revenue bridge (£m) +18% +12% 15.3 (4.4) 5.9 71.9 50.6 61.0 (0.6) 45.3 2017 Net revenue¹ Active clients² RPC³ 2018 Net revenue¹ 2017 Net revenue¹ Active clients² RPC³ 2018 Net revenue¹ APAC & Canada revenue bridge (£m) § Net revenue and RPC increased across all offices § Increase in revenue driven by clients trading higher volumes of Indices +18% and FX § UK number of active clients down due to the absence of major trading events such as the UK EU Referendum 7.0 § European active clients steady despite regulation changes in France and Germany 52.9 0.9 § APAC & Canada results largely driven by strong growth through China education offering 45.0 2017 Net revenue¹ Active clients² RPC³ 2018 Net revenue¹ 1. Net revenue generated from CFD and spread bet active clients, including Countdowns and Digital 100s, after the impact of introducing partner commissions and spread betting levies 2. Active clients represent those individual clients who have traded with or held CFD or spread bet positions with CMC Markets on at least one occasion during the financial year 3. Change in net revenue per active client 2018 Analyst presentation ǀ Pg 10
Operating costs Cost growth driven by higher discretionary spend and stockbroking investment § Operating expense increase of 13% Group (£m) 2018 2017 YoY % § Discretionary pay driving staff cost increase Net staff costs 57.9 49.4 17% ) § IT costs increased as a result of higher market data charges and maintenance costs IT costs 16.9 15.4 10% § Marketing costs decreased due to: Sales and marketing 20.6 21.8 (6%) o Land Rover BAR sponsorship ended in December Premises 6.2 5.2 19% o More targeted spending, with 59% of spend on digital marketing (2017: 46%) Legal and professional fees 4.0 3.5 14% § Higher premises costs due to rent increase in Australia and Regulatory fees 3.0 2.6 16% new China education office § Regulatory fees increased, with the 2017 comparative Depreciation and amortisation 6.8 5.8 17% influenced by a FSCS levy refund Other 10.5 7.9 31% § Other costs increased 31%, driven by increases in irrecoverable sales tax, bank charges and currency variance Total operating expenses 125.9 111.6 13% Average headcount 592 578 2% 2018 Analyst presentation ǀ Pg 11
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