17th Nov 2021 09:58
(Alliance News) - CMC Markets PLC on Wednesday slashed its interim dividend in line with profit, following a much weaker performance compared to a year before, due to a fall in market volatility and activity, though results remained above two years ago.
Shares in the London-based online trading platform were down 5.3% at 257.00 pence on Wednesday in London, the worst performer in the FTSE 250 index.
For the six months ended September 30, CMC reported pretax profit of GBP36.0 million, a 74% fall from GBP141.1 million the same period a year before, as net operating income dropped 45% to GBP126.7 million from GBP230.9 million.
Compared to two years ago - before the Covid 19 pandemic, which gave fillip to online trading - pretax profit was up 20% and net operating income up 24%.
Profit performance was hurt by an increase in operating expenses excluding variable remuneration to GBP83.7 million from GBP79.1 million, with higher staff and IT costs reflecting CMC's investment in technology trading and product staff.
Leveraged gross client income dropped 27% year-on-year to GBP127.0 million from GBP173.6 million, as client income retention fell to 80% from 115%. However, CMC noted a 10% rise in non-leveraged active clients to 185,847 from 168,279.
CMC declared an interim dividend of 3.50 pence per share, down 62% from 9.20p a year prior.
"We are on a fast track to diversification, using our existing platform technology to win B2B and B2C non-leveraged business. This will be further boosted with the launch of our new UK investment platform planned in the early part of the next financial year, which will offer both B2C and B2B potential," said Chief Executive Officer Peter Cruddas.
On Monday, CMC had confirmed that it is in the "very early stages" of evaluating a separation of the group between leveraged and non-leveraged divisions.
"In line with this strategy, we believe it is right for us to evaluate the viability of separating the businesses in order to unlock the significant value within the current group structure. The board is expected to start this review before year end and complete it by June 2022. We will update on progress in due course," Cruddas said on Wednesday.
Looking ahead, CMC Markets reiterated its prior guidance for its current financial year, and expects net operating income for the year to be between GBP250 million and GBP280 million, reflecting a 32% to 39% fall from GBP409.8 million the year before, though in line with or higher than GBP252.0 million in financial 2020.
By Dayo Laniyan; [email protected]
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