CMC Markets plc
Annual Report and
Financial Statements
2023
Focus on:
Our diverse
offering
Throughout this report we focus on how
we are delivering on the Group’s strategy
of diversifying revenue in both our trading
and investing businesses. This includes
delivery of new investing platforms in the
UK and Singapore along with additional
products for institutional clients
within trading.
Strategic report
CMC is a leading global provider of
online trading and investing, with a
comprehensive retail, professional
and institutional offering.
The business was started in 1989
with a simple ethos: to make financial
markets truly accessible for investors.
This fundamental belief remains at the
heart of everything we do at CMC
Markets and staying true to that has
been pivotal to our success.
See more at www.cmcmarkets.com
Strategic report
Our strategic roadmap
2
At a glance
3
Our product offering
4
Our business
5
Operational highlights
6
Investment case
7
Chairman’s statement
8
10 Market overview
Business model
12
Section 172 statement
14
Stakeholder engagement
16
20 Chief Executive Officer’s statement
24 Our strategy
Key performance indicators
26
29 Technology and innovation
34 Sustainability
49 Group non-financial information
50
statement
Task Force on Climate-Related Financial
Disclosures
Financial review
Risk management
60
67
68 Principal risks
Corporate governance
74 Chairman’s governance overview
76 Board of Directors
79 Corporate governance
87 Group Audit Committee report
91 Group Risk Committee report
94 Nomination Committee report
98 Remuneration Committee report
119 Directors’ report
Financial Statements
Independent auditor’s report
124
133 Consolidated income statement
134 Consolidated statement of
comprehensive income
135 Consolidated statement of
financial position
136 Parent company statement of
financial position
137 Consolidated statement of changes
in equity
138 Parent company statement of changes
in equity
139 Consolidated and parent company
statements of cash flows
140 Notes to the consolidated and parent
company financial statements
Shareholder information
183 Shareholder information
188 Appendices
1 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Our strategic roadmap
Our vision
To create an environment
for your financial needs
Our strategic pillars
Our purpose
To constantly maintain
a superior and unrivalled
technology experience
for our clients
01
02
03
Trading platform product
diversification
See more on page 24
Investment in Business to
Business (“B2B”) technology
capability
See more on page 25
Expansion of invest platforms
and institutional offering
See more on page 25
Our sustainability pillars
01
Client
Positive
02
Platform
Positive
03
People
Positive
04
Change
Positive
05
Planet
Positive
See more on page 36
See more on page 38
See more on page 42
See more on page 39
See more on page 45
The things we live by
We stand with our clients, We are human,
We take ownership, We are bold, We work as a team,
We keep it simple, We focus on impact
2 – CMC Markets plc
Annual Report and Financial Statements 2023
At a glance
Our client base
Our geographical reach
Total active clients4
277,047
CMC attracts a diverse range of
institutional and retail clients across both
our trading and investing platforms. In
addition, our new and forthcoming
investing platforms provide the Group
with access to a cohort of clients in new
geographies, with the aim of providing
clients with opportunities for long-term
investment as another avenue to
building financial security.
As we expand into new markets, we
expect to welcome a new cohort of
clients with whom we aim to establish
enduring partnerships. Regardless of
client type, we uphold our high
standards of protection and suitability
to ensure every client receives the
same level of service excellence.
Continents
4
Countries
12
Offices
14
With a presence in 14 offices located in
major financial centres around the
world, CMC Markets operates on a
hub-and-spoke model. The company’s
headquarters are based in London,
while Germany serves as the hub for
our European operations, and Sydney
acts as the hub to support the Asia
Pacific & Canada (“APAC &
Canada”) region.
CMC will imminently launch a new
investment platform in Singapore, has
expanded our office in Dubai and we
are exploring the possibility of launching
additional investing platforms in more
jurisdictions in the coming year.
B
A
D
Net
revenue1 by
client base
1616+
A – Trading B2B2 – 22%
B – Investing B2B – 9%
C – Trading B2C3 – 64%
D – Investing B2C – 5%
C
A
C
Net
revenue1 by
region
C – APAC & Canada – 49%2828+
A – UK – 32%
B – Europe – 19%
B
1 CFD and spread bet gross client income net of rebates, levies and risk management gains or losses and stockbroking revenue net of rebates.
2 Business to business (“B2B”) – revenue from institutional clients and partnerships.
3 Business to consumer (“B2C”) – revenue from retail and professional clients.
4 Active clients represent those individual clients which have traded with or held CFD or spread bet positions or which traded on the Invest platform on at least one occasion during the financial year.
Read more about net revenue on page 62
3 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information+
16
16
+
+
56
56
+
+
M
M
+
14
14
+
+
67
+
3
67
+
3
+
+
M
M
Our product offering
A
B
C
Contracts for difference
(“CFDs”)
A financial derivative product which
allows clients to speculate on price
changes in an underlying financial asset,
without certain costs and limitations
associated with physical ownership.
See more at www.cmcmarkets.com
Spread betting
A product available exclusively to
residents in the UK and Ireland which
is similar in many aspects to our
CFD product.
See more at www.cmcmarkets.com
Technology-driven
liquidity solution
Under our B2B arm, CMC Connect acts
as a non-bank liquidity provider offering
access to a wide range of asset classes
including Spot FX, the global institutional
standard in FX trading, exchange traded
funds (“ETFs”) and cash equities, which
are due to be released during 2024. For
larger institutions, we are able to offer
bespoke solutions to help facilitate and
access multi-asset class liquidity.
D
E
F
Outsourced trading
platform technology
We outsource our platform technology
to clients also under the CMC Connect
brand, where our award-winning CMC
trading platform can be fully customised
under a white-label partnership or
alternatively under a neutrally branded
platform for regulated entities looking to
introduce clients or trade on their behalf.
4 – CMC Markets plc
Annual Report and Financial Statements 2023
Stockbroking
Our Australian stockbroking business
offers our clients the opportunity to
trade Australian shares and international
shares from over 35 listing exchanges
in over 16 countries. This has been
supported through the launch of a fully
functional native mobile application
offering a variety of instruments including
shares, options, managed funds,
warrants and ETFs.
Our UK business currently offers General
Investment Accounts (“GIAs”) and
Stocks and Shares ISAs with access to a
range of US and UK stocks, with mutual
funds and Self-Invested Pension Plans
(“SIPPs”) being launched shortly. The
Group also plans to launch CMC Invest
within Singapore imminently.
Options
The addition of options on CMC’s trading
platforms will bring added benefits to
our clients. New derivative products will
provide more flexibility to manage risks
and volatility compared to traditional
CFD and stock trading. Options and
other derivative products have the ability
to enhance portfolio diversification and
reduce and manage risk compared to
many other financial instruments. Lastly,
the global options market is significant,
and the addition of these products has
the potential to be a significant revenue
generator for CMC and its stakeholders.
Our business
Trading
We are committed to expanding the range of
our products in order to improve functionality
for our clients. With over 10,000 products
currently available through our trading
platforms, we aim to provide the most efficient
pricing structure possible. Our pricing system
undergoes continuous evolution to ensure
sophistication and minimise latency. We
use high precision clock time-stamping
at multiple points throughout the system
to measure latency in microseconds and
monitor it in real time. Our internal reporting
on best execution enables us to set high
standards for execution quality.
We prioritise internal risk management
by storing trade and risk data in a high
frequency tick database. This enables us
to record all stages of the risk management
system, ensuring that client order flow is
managed efficiently.
To achieve this, we have large quantitative
analytics and data science teams that
develop the hardware and software
components of our analytics environment.
Data science and machine learning models
also play a crucial role in our real-time and
offline decision-making processes.
Our ultimate goal is to offer our
clients market-leading access to liquidity,
alongside a best-in-class and resilient
platform across all aspects of our offering.
See more on page 12
Products utilised
A
B
C
D
Investing
We see significant growth potential
across global investment platforms due
to secular shifts in investment trends,
and we are expanding our investing
businesses to capitalise on these
opportunities. Following the success
of our Australian stockbroking business,
we launched our Invest UK platform
in April 2022 to tap into the growing
market for self-managed investing. This
is complemented with the imminent
launch of our Invest Singapore offering.
These strategic moves will help us to
establish more balanced and diversified
income streams for the Group over time.
See more on page 12
Institutional
Our institutional clients are served by both
the trading and investing businesses.
Through our CMC Connect brand we
offer technology-backed solutions to
mid-sized and large financial institutions
in addition to our retail services. CMC
is already a trusted service provider
for execution, clearing, and settlement
services to several Australian financial
service licensees.
Our B2B partnership directive will expand
to all our existing and new geographies
over the next 12 months. With growth
from our investing operations, we are
strategically positioning our business
to leverage some of the fastest growing
trends in trading and investing.
Our continued development work to
connect to multiple Electronic Crossing
Networks (“ECNs”) and the deployment
of a competitive FX Spot product now
allow for significant growth in this asset
class. In 2023 CMC Markets delivered
a 95% uptick in B2B volumes versus the
prior year.
See more on page 12
Products utilised
E
F
Products utilised
A
B
C
D
E
F
Sustainability
Our Tomorrow: taking a positive position
Our goal at CMC Markets is to align with the global capital markets’ movement towards a sustainable future. We aim to achieve this by offering responsible
and innovative technological solutions that prioritise the protection, education, and inspiration of both our people and clients to invest for the future.
See more on page 34
5 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Operational highlights
– Whilst annual trading client numbers are down 9% from
2022, monthly active clients are up 25% compared to
pre-pandemic levels.
– Operational resilience remains high, with trading
platform uptime of 99.97% and investing platform
uptime of 99.93%.
– Retention of trading client income6 of 77% (2022: 80%).
– Trading revenue per active client up £393 (11%)
– Continued to enhance the product offering within the
CMC Invest UK platform, with future developments on
track for release during 2024.
– Investment in the institutional business, through
enhancements to Spot FX including the launch of Give-
Ups, has resulted in a 95% increase in notional volumes.
to £3,968.
– B2B represents 31% of net revenue at £83.4 million.
Read more about net revenue and our financial measures on page 60
Financial highlights
Net operating income1
£288.4m
23
22
21
£288.4m
£281.9m
£409.8m
Statutory profit before tax7
Trading active clients2
£52.2m
£52.2m
£91.5m
23
22
21
58,737
23
22
21
£223.3m
58,737
64,243
76,591
Trading platform uptime
Investing active clients2
Trading revenue per active client3
99.97%
218,310
£3,968
23
22
21
99.97%
99.95%
99.95%
23
22
21
218,310
246,120
232,053
23
22
21
£3,968
£3,575
£4,560
Trading gross client income4
Basic earnings per sharey7
Ordinary dividend per share5
£303.5m
14.7p
23
22
21
£303.5m
£288.5m
£335.3m
23
22
21
14.7p
24.6p
61.3p
7.40p
7.40p
12.38p
23
22
21
30.63p
1
2
3
4
5
6
Net operating income represents total revenue net of introducing partner commissions and spread betting levies.
Active clients represent those individual clients who traded or held positions on the Next Generation platforms or traded on the Invest platforms on at least one occasion during the financial year.
Net revenue generated from CFD and spread bet active clients. A reconciliation of revenue alternative performance measures (“APMs”) to the Group’s primary statements can be found on page 188.
Spreads, financing and commissions on CFD and spread bet client trades.
Ordinary dividends paid/proposed relating to the financial year.
The percentage of CFD and spread bet gross client income retained after rebates and gains or losses from risk management activities.
7 2022 and 2021 figures restated. Refer to note 33 for more information on 2022 restatement.
6 – CMC Markets plc
Annual Report and Financial Statements 2023
Investment case
Award-winning
platforms
See more on pages 29 to 33
10,000+
financial instruments traded across
the CFD platform and over 40,000
instruments within Invest Australia
The demands of our clients continue to evolve. Our purpose
is to constantly maintain a superior and unrivalled technology
experience for our clients. Continuous investment in our
proprietary technology across both our trading and investing
platforms allows us to offer a wide suite of products. Our online
and mobile platforms are continuously ranked as best-in-class by
our clients.
Our diverse
product offering
16%
See more on page 4
share of Australian stockbroking market1
Launch of the Invest UK business.
Accessing a UK D2C market with some
£287 billion2 of AuA
We are investing to diversify by offering new products and
functionality across both our trading and investing platforms.
CFD and spread bet revenue remains at the core of what we
do. This is balanced with a world-class investing business in
Australia. Similarly, the launch of CMC Invest UK, the new UK
investment platform, underpins our expansion into the high growth
opportunities being seen across all of our geographies and meets
client demands.
Our geographical
reach
See more on page 3
49%
of net revenue generated outside the UK
and Europe regions
Our global technology platforms allow access for retail,
professional and institutional clients through regulated offices and
branches in 12 countries, with a significant presence in the UK,
Australia, Germany and Singapore.
Our client
focus
See more on page 16
277,047
58,737 trading active clients and 218,310
investing active clients
Our clients are at the heart of what we do, and their input is
intrinsic to improving our business processes across product
development, marketing and client services as we tailor new
developments and target improvements. We employ and train
high quality client services staff to ensure best-in-class client
service. Platform resilience and user experience are at the core of
all developments and upgrades we deploy.
Our Tomorrow
See more on pages 34 to 48 5
core sustainability pillars
In the previous year, we unveiled the Group’s sustainability
strategy, encompassing five strategic pillars designed to address
the material issues identified in our comprehensive materiality
assessment. This year, our primary emphasis was on establishing
specific goals and objectives related to these material issues. We
diligently identified operational and performance targets, along
with appropriate metrics, and gained a deeper understanding of
our existing data sets within these domains.
1 ASX and Chi-X combined trading statistics – IRESS.
2 Platforum data February 2023.
7 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Chairman’s statement
Diversification and
growth strategy
creating the
foundations for a
stronger business
over the longer term.
We are investing for
the future
Our continued focus on innovation and agile
response to technology development has allowed
us to expand our offerings to the benefit of our
clients. We have invested heavily in our people
and technology in order to fulfil our growth and
diversification plans and provide our clients
with products and platforms that meet their
requirements and expectations.
8 – CMC Markets plc
Annual Report and Financial Statements 2023
The Board’s strategy of income diversification through adapting and building
on our superior technology continues to develop. Whilst many of the benefits
of this diversification will only be seen over the longer term, it is becoming more
apparent as we continue to develop our offering how our business will change
to the benefit of our stakeholders over time.
We have maintained an ongoing dialogue with our clients and gathered their
feedback in order to develop further our products and platforms. Our staff
continue to be pivotal to both this development and our growth strategy. As
well as continuing to invest in our current people, enhancing engagement
processes and career development practices, we have invested in additional
resources in order to ensure we are able to continue to adapt at the correct
pace to achieve our growth plans.
Results and dividend
Net operating income rose 2% to £288.4 million in the year, following a more
challenging environment in the final quarter of 2023 with lower monetisation
of client trading activity and increasing costs arising from the fulfilment of our
growth strategy.
Profit after tax for the year was £41.4 million. The Board recommends a final
dividend of 3.90 pence per share which results in a total dividend payment of
7.40 pence for the year, equal to 50% of profit after tax.
Board
As discussed in the 2022 Annual Report and Financial Statements, we
were sorry to lose Clare Salmon from the Board during the year. We were
however delighted to welcome both Susanne Chishti and Clare Francis to the
Board during the course of the year. Susanne is our Non-Executive Director
responsible for workforce engagement, and Clare is Chair of the Group Risk
Committee and our Director responsible for Consumer Duty.
People and stakeholders
Our workforce is our most valuable resource, and their efforts towards fulfilling
our strategic goals in diversifying our business have resulted in solid progress
across all business areas working towards that goal.
Our people strategy this last year has become a much more prominent
item in Board and relevant Board Committee meetings. The scope of the
work undertaken by Susanne as our designated Non-Executive Director
responsible for workforce engagement is set out on page 86.
Our focus of expanding our product offering across our core trading and investing
platforms has led to our workforce growing by 28% over the past year.
Additionally, attracting the best talent helps to drive innovation and technology
development, which is critical in today’s fast-paced business environment.
The Board would like to express gratitude to all our employees for their
significant contributions.
Sustainable based growth
Sustainability is an essential factor in the decision-making process for financial
institutions that aim to achieve long-term growth. Integrating sustainability
into business strategies helps financial institutions to reduce risks, increase
opportunities, and enhance their reputation.
“ Our diversification strategy,
whilst creating short-term
pressures on resources and
returns because of associated
costs, will put the Group in a
strong position for the longer
term. This will be achieved
through an increased product
range, the full roll-out of the new
investment platform and the
expansion of our international
business.”
At CMC we recognise that customers and investors are increasingly
demanding that businesses prioritise sustainability, and financial institutions
that fail to do so may face reputational damage or loss of business. Read more
in our Sustainability section on pages 34 to 48.
Outlook
We will continue our diversification strategy and seek growth into new
products and geographies. The business is evolving at pace and investment
will continue in partnership with our clients in order to maximise opportunities
as they arise.
The Board recognises that this rapid period of growth does place pressure
on our resources. The Board regularly discusses the risks and opportunities
surrounding our strategy and this will continue to be a key area of consideration
over the coming year as our growth plan continues to develop at pace.
The Board will also be carefully monitoring volatility in financial markets and
ensuring that the Group is prepared to deal with any unexpected events and
taking note of certain market events creating uncertainty in recent months.
We have made significant investments in our infrastructure in order to ensure
we have a stable foundation on which to continue to grow and maintain
our resilience.
James Richards
Chairman
13 June 2023
9 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Market overview
Leading the
market through
technology and
diversification
Whilst the Group currently generates the majority
of its revenue from retail trading products, our
strategy to diversify has accelerated during the
year with a range of new product offerings within
both our investing and trading businesses. Group
revenues are split between our three regions, the
UK, Europe and APAC & Canada.
1
Investment Trends September 2022 - Singapore Online Investing Report.
2 https://www.gov.uk/government/statistics/annual-savings-statistics-2022/commentary-
for-annual-savings-statistics-june-2022
10 – CMC Markets plc
Annual Report and Financial Statements 2023
Group
Key market driver
Global interest rate environment
The period saw central banks in the majority of the Group’s markets raise
interest rates steeply from the historically low levels seen in recent years.
Our response
The environment of rising interest rates, combined with a high inflationary
environment, has resulted in changes in client appetite to trade in certain
asset classes, most significantly in investing products, where investors
have reduced their activity given the uncertain economic outlook.
This change in client behaviour has been offset by significant increases
in interest income for the Group, as operational and client cash balances
have been optimised to ensure appropriate returns on balances held.
The Group offers clients a diverse range of products across its
businesses and is investing significantly to enhance this offering further.
This broad offering enables clients to maintain all their financial needs in
multiple macroeconomic environments.
Key market driver
Inflation
The period saw a continuation of the highly inflationary environment in the
majority of markets that began to emerge towards the end of 2021.
Our response
The inflationary environment has had an impact on the Group’s staff
expenses, driven by the need to attract and retain key talent in an
inflationary environment with unemployment at historically low levels.
Non-staff expenses have also been impacted through increases in
energy costs along with suppliers passing on the impacts of inflation on
their cost base.
Key market driver
Scale
Operating at scale has significant benefits to the Group, with further
opportunities for risk management enhancements in the trading business
and improved revenue within investing.
Our response
The clients onboarded during the ‘meme stock’ period in Q4 2021 have
seen a slightly higher attrition rate compared to other cohorts. However,
client levels remain broadly 25% higher than those seen in the pre-
COVID-19 period.
The Group continues to enhance its product offering to both retail and
institutional clients and is confident that it can continue to grow its client
base whilst benefiting from revenue diversity.
Investing
Key market driver
Volatility
Our response
Trading
Key market driver
Regulatory change
another five years, until 23 May 2027.
The year saw periods of elevated volatility within markets, with the
In April 2022, ASIC extended its product intervention order for CFDs,
majority of major stock indices declining over the period.
which imposes conditions on the issue and distribution of CFDs for
Despite the challenging environment for investing, CMC Invest
Our response
remains committed to supporting our clients in identifying investment
This extension has provided greater regulatory visibility for the Group,
opportunities through our innovative tools and resources. In Australia, we
ensuring that it can continue to operate within the regulatory framework
are proud to offer our clients access to our award-winning mobile app,
while growing its business.
cutting-edge algorithmic trading, and enriched educational content, all
designed to help investors make informed decisions in uncertain times.
The Group maintains engagement with regulators, to ensure that we are
compliant across all jurisdictions we operate within. We consistently strive
to ensure our approach is market leading, whilst also allowing the Group
to be involved in shaping future regulations within the sector.
The Group continues to be supportive of regulatory change that moves
towards a globally consistent regulatory environment.
Key market driver
Market size and share
Key market driver
Volatility
An independent report in Australia shows a rise in online cash equities
The year saw periods of increased volatility within markets, particularly
transactions completed by 1.51 million individuals in the past 12 months,
within commodities, with the majority of major stock indices declining
compared to 1.47 million in May 2022. The addressable market within the
over the period.
UK and Singapore is substantial with more than 300,0001 online investors
in Singapore and 3.5 million2 Stocks and Shares ISA holders in the UK.
Our response
Our response
Higher volatility results in increased trading activity from both existing clients
trading more frequently and new or previously inactive clients starting to
During the year, ANZ Bank clients successfully transitioned to the CMC
trade. However, short bursts of market activity which result in high velocity
Invest brand and our award-winning CMC rate card, leading to a 44%
movements in the products that we offer are not necessarily beneficial to
reduction in brokerage rates for former ANZ clients. This boosted our
our clients or the Group. Aside from notifying clients of changing levels of
brand awareness and consolidated our position as Australia’s second-
market activity in a timely manner through a flexible marketing strategy, the
largest retail broker with 16% of market share. We strategically positioned
Group can have little influence on capitalising more or less than competitors
our offering for the future by implementing a targeted retail pricing strategy
during short-term periods of raised market volatility.
that improved our mobile offering, and introduced extended-hours
trading on the US market.
We have recently launched our UK, and will imminently launch the
Singapore, Invest platforms to capture a portion of the significant
addressable client numbers within those markets.
Key market driver
Seasonality
In Australia the traditionally strong August and February earning seasons
have been muted due to a renewed focus on costs and prudence in
dividend distributions, dampening the appetite for equity investment.
Group
Key market driver
Global interest rate environment
The period saw central banks in the majority of the Group’s markets raise
interest rates steeply from the historically low levels seen in recent years.
Our response
The environment of rising interest rates, combined with a high inflationary
environment, has resulted in changes in client appetite to trade in certain
asset classes, most significantly in investing products, where investors
have reduced their activity given the uncertain economic outlook.
This change in client behaviour has been offset by significant increases
in interest income for the Group, as operational and client cash balances
have been optimised to ensure appropriate returns on balances held.
The Group offers clients a diverse range of products across its
businesses and is investing significantly to enhance this offering further.
This broad offering enables clients to maintain all their financial needs in
multiple macroeconomic environments.
Key market driver
Inflation
Our response
The period saw a continuation of the highly inflationary environment in the
majority of markets that began to emerge towards the end of 2021.
The inflationary environment has had an impact on the Group’s staff
expenses, driven by the need to attract and retain key talent in an
inflationary environment with unemployment at historically low levels.
Non-staff expenses have also been impacted through increases in
energy costs along with suppliers passing on the impacts of inflation on
their cost base.
Key market driver
Scale
Operating at scale has significant benefits to the Group, with further
opportunities for risk management enhancements in the trading business
and improved revenue within investing.
Our response
The clients onboarded during the ‘meme stock’ period in Q4 2021 have
seen a slightly higher attrition rate compared to other cohorts. However,
client levels remain broadly 25% higher than those seen in the pre-
COVID-19 period.
The Group continues to enhance its product offering to both retail and
institutional clients and is confident that it can continue to grow its client
base whilst benefiting from revenue diversity.
Investing
Trading
Key market driver
Regulatory change
In April 2022, ASIC extended its product intervention order for CFDs,
which imposes conditions on the issue and distribution of CFDs for
another five years, until 23 May 2027.
Our response
This extension has provided greater regulatory visibility for the Group,
ensuring that it can continue to operate within the regulatory framework
while growing its business.
The Group maintains engagement with regulators, to ensure that we are
compliant across all jurisdictions we operate within. We consistently strive
to ensure our approach is market leading, whilst also allowing the Group
to be involved in shaping future regulations within the sector.
The Group continues to be supportive of regulatory change that moves
towards a globally consistent regulatory environment.
Key market driver
Volatility
The year saw periods of increased volatility within markets, particularly
within commodities, with the majority of major stock indices declining
over the period.
Our response
Higher volatility results in increased trading activity from both existing clients
trading more frequently and new or previously inactive clients starting to
trade. However, short bursts of market activity which result in high velocity
movements in the products that we offer are not necessarily beneficial to
our clients or the Group. Aside from notifying clients of changing levels of
market activity in a timely manner through a flexible marketing strategy, the
Group can have little influence on capitalising more or less than competitors
during short-term periods of raised market volatility.
Key market driver
Volatility
The year saw periods of elevated volatility within markets, with the
majority of major stock indices declining over the period.
Our response
Despite the challenging environment for investing, CMC Invest
remains committed to supporting our clients in identifying investment
opportunities through our innovative tools and resources. In Australia, we
are proud to offer our clients access to our award-winning mobile app,
cutting-edge algorithmic trading, and enriched educational content, all
designed to help investors make informed decisions in uncertain times.
Key market driver
Market size and share
An independent report in Australia shows a rise in online cash equities
transactions completed by 1.51 million individuals in the past 12 months,
compared to 1.47 million in May 2022. The addressable market within the
UK and Singapore is substantial with more than 300,0001 online investors
in Singapore and 3.5 million2 Stocks and Shares ISA holders in the UK.
Our response
During the year, ANZ Bank clients successfully transitioned to the CMC
Invest brand and our award-winning CMC rate card, leading to a 44%
reduction in brokerage rates for former ANZ clients. This boosted our
brand awareness and consolidated our position as Australia’s second-
largest retail broker with 16% of market share. We strategically positioned
our offering for the future by implementing a targeted retail pricing strategy
that improved our mobile offering, and introduced extended-hours
trading on the US market.
We have recently launched our UK, and will imminently launch the
Singapore, Invest platforms to capture a portion of the significant
addressable client numbers within those markets.
Key market driver
Seasonality
In Australia the traditionally strong August and February earning seasons
have been muted due to a renewed focus on costs and prudence in
dividend distributions, dampening the appetite for equity investment.
11 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Business model
The best trading and investing experience
Our business enablers
Our client offering
Technology and product
Technology and product has always been key to the
success of CMC Markets and this has won the business
recognition as the leader in our industry for innovation
and service. Recognising that innovation is key to
retaining this reputation, the Group has continued to
invest significantly across the business to deliver new
products and offerings to our clients, with numerous new
products made available to clients during 2023.
See more on pages 29 to 33
“Our Tomorrow: taking a positive
position” sustainability strategy
We launched our sustainability strategy in 2022 which
has shaped the sustainability activity for the Group
within 2023 and beyond. We have continued to drive a
sustainable business model through our five core pillars
which highlight how we protect, empower, innovate and
adapt to be a responsible business that is committed to
the needs of people and our planet.
See more on pages 34 to 48
Financial strength
We aim to maintain our secure capital and liquidity
structure, ensuring that it is appropriate for the
future growth and success of the Group. This
includes maintaining long-term levels of capital to
withstand the demands of fluctuations in the financial
markets and access to a healthy level of surplus liquid
resources in line with the size of our business and the
growth opportunities.
See more on pages 60 to 66
Risk management
The Group’s business activities naturally expose it to
strategic, financial and operational risks inherent in the
nature of the business it undertakes and the financial,
market and regulatory environments in which it operates.
The Group recognises the importance of understanding
and managing these risks and that it cannot place a cap
or limit on all of the risks to which the Group is exposed.
However, effective risk management ensures that risks
are managed to an acceptable level.
Our clients are at the heart of
everything that we do.
Institutional (business to business)
CMC Connect acts as a non-bank liquidity provider offering access to
a wide range of asset classes.
Trading
Contracts for
difference
Spread betting
White-label solutions
Multi-asset class
liquidity
Institutional
+
Retail
Investing
Invest platforms
(Australia, UK and Singapore)
White-label solutions
Retail (business to consumer)
CMC Markets provides clients access to a wide range of products
across both trading and investing.
Our technology platforms
See more on pages 67 to 73
Our superior platforms and technology, combined with our risk management, deliver a best-in-class
experience for our clients and partners.
Risk management
Our trade and risk systems generate real-time pricing, automate trade execution and optimise our risk
management process through better aggregation of client flows. They also bring scale and stability to our
platforms, especially during volatile market conditions. This enhances the client trading experience and
lessens the risk of price quotation outages.
See more on pages 67 to 73
12 – CMC Markets plc
Annual Report and Financial Statements 2023
Our clients are at the heart of
everything that we do.
Who our clients are:
What we offer them:
How we add value
– Sophisticated
– High value
– Experienced
– Cutting-edge technology
– Competitive pricing
– Excellent client services
– Diverse product suite
How we make money
Trading
Gross client income
£303.5m
Spreads
Revenue earned through maintaining a transactional
spread (the difference between the buy and sell price)
on CFD and spread bet products.
Commissions
These are charged on both CFD equity trades and
institutional DMA trades. Clients are either charged a
minimum commission or a percentage based on the
value of the trade.
Financing
Positions held by clients overnight may be subject
to financing costs, which can be positive or negative
depending on the direction of their holding and the
applicable financing rate.
Investing
£37.9m
Net revenue in Australia predominantly earned
through brokerage charged for the execution of
exchange traded products, options, warrants,
ETFs, managed funds, interest rate securities and
bonds. Further, we earn fees including FX revenue
on international shares, and equity capital markets
(“ECM”) income.
Read more about our investing strategy
in our CEO’s overview on pages 20 to 23
Rebates and levies
£(20.4m)
Volume-based rebates paid to professional, high value
retail and institutional clients and introducing brokers
on selected asset classes.
Risk management gains/(losses)
£(50.0m)
Revenue or losses from management of client
positions that the Group inherits. This consists of
gains or losses which accrue to the Group through
client positions and, secondly, the gains or losses
which accrue to the Group through the hedge
positions entered into by the Group, including
hedge transaction costs.
Retained client income
77%
The percentage of gross client income retained after
rebates and gains or losses from risk management
activities.
Interest income – trading
and investing
£13.9m
Interest income from the Group’s own cash and
client deposits.
Other income
£3.5m
Primarily income from charges on dormant
accounts and market data costs passed on to
B2B clients.
Shareholders
Dividend per share
7.40 pence
down 4.98 pence from 2022
Earnings per share
14.7 pence
down 9.9 pence from 2022
People
71%
employee engagement1
(2022: 66%)
21%
permanent employees with us
for over five years
Clients
66%
gross client income generated from
trading clients of tenure greater
than two years
14
awards for service
platform and technology
1
CultureAmp internal survey. Percentage of
employees with full engagement.
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Strategic reportGovernanceFinancial statementsShareholder information
Section 172 statement
Relationships with stakeholders
At CMC we understand our responsibilities towards all of our stakeholders.
We take these responsibilities seriously and continuously interact with all
partners with the aim of providing responsible and sustainable solutions for
all. More information on our engagement with stakeholders and the outcomes
over the financial year under review is included on pages 16 to 19.
The Directors are mindful of their duty under Section 172 of the Companies
Act 2006 (Section 172) to act in a way which they consider, in good faith,
is most likely to promote the success of the Company and its members
as a whole and, in doing so, consider the matters set out in Section 172 at
each meeting. This includes, amongst other things, having regard to wider
stakeholder interests when making decisions and considering the interests of
the various stakeholders.
Our stakeholders
Shareholders
Clients
People
Regulators
Local community
/charities
Suppliers
Environment
14 – CMC Markets plc
Annual Report and Financial Statements 2023
Key decisions
The key matters, and their impact on stakeholder interests, considered by the Board and/or management during the year are set out below:
Managed separation
Application for a licence
in Singapore
Three-year growth plan
and strategic priorities
Dividend
Sustainability strategy
and targets
Volatility in exchange
and interest rates
Whistleblowing
Consumer Duty
With the launch of CMC Invest in the UK, alongside a growing B2B platform
business, the Board undertook a strategic review to evaluate the merits of a
managed separation of the trading and investing businesses of the Group.
The review was consistent with the Board’s continuous evaluation of strategic
opportunities to maximise shareholder value. After due consideration it was
concluded that, given the strong commercial and operational synergies between
the trading and investing businesses, stakeholders’ interests would be best served
by ensuring that both businesses continue to operate within the current Group structure.
The Board agreed to apply for, and was pleased to be granted, a licence by the
regulatory authorities in Singapore to operate its Invest platform within the country.
The Board continues to look at other regions in which to expand as part of the
Group’s growth strategy.
The Group’s three-year growth plan, highlighted in the last Annual Report, was
discussed with senior management during the year and integrated into the people
and technology plans. Potential issues relating to ensuring the business was
appropriately resourced to complete the numerous projects arising from the plan
were considered and actions taken, including the opening of a Manchester office
and the expansion in Singapore. Despite difficult recruitment markets, we have
grown headcount in key areas during the year and restructured some key support
areas to ensure that we can manage our growth strategy. Recruitment markets
continue to cause us challenges in sourcing the right people and this is kept under
continuous review. The impact of the current inflationary pressures is also regularly
discussed by the Board.
In response to a regular theme of shareholder enquiry, the Board reviewed
whether the current dividend policy was appropriate and how it interacted with
the share buyback programme that had been introduced. It was agreed that no
changes would be made at present.
The Board recognises the importance of ensuring the sustainable growth of the
Group. Following recommendations from the Sustainability Committee, which
was set up in April 2022 by the business and is chaired by the Group Head of
Sustainability, the Board has set targets on how we intend to monitor and measure
sustainability metrics which will support our objectives. More information is
included in the sustainability section on pages 34 to 48.
The Board considered the impact on the Group and its clients of interest rate rises
and exchange rate volatility. It was concluded that in order to deliver an improved
outcome for customers, provide better value and build a competitive advantage,
CMC will pay interest on positive cash positions across its UK CFD and spread
betting trading platforms for eligible professional and Alpha customers from
1 March 2023.
A decision was taken to appoint an external provider to manage the Group’s
confidential whistleblowing helpline to ensure ongoing independence and better
facilitate confidentiality. More information can be found on page 79.
To reflect the changing needs of the Board in relation to the oversight and
governance of risk and the Group’s Consumer Duty obligations, the Board was
delighted to appoint a new Chair of the Group Risk Committee, Clare Francis,
who will also be our Consumer Duty Champion. The Board continues to monitor
progress of the work being done by the business to comply with its obligations.
Please also refer to the Group’s strategy and business model which is described throughout our Strategic report, how we manage risk (pages 67 to 73), our
sustainability section (pages 34 to 48) and our corporate governance report (pages 75 and 79 to 86) for further information.
15 – CMC Markets plc
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Strategic reportGovernanceFinancial statementsShareholder information
Stakeholder engagement
Clients
People
Why we engage
Going above and beyond to care for and protect our clients is a core
responsibility. Our continual engagement ensures that the Group
remains aware of, and therefore develops products that solve, protect
and satisfy, our clients’ needs.
How we engage
CMC actively engages with clients across a range of channels,
including our client service, sales and product teams, client events
and our trading publication, Opto. Our digital transformation
programme has also resulted in further emphasis on user experience
research with clients, which directly inputs into improvements that
can be made to our product and proposition. Marketing is carried
out in a responsible way, making sure trading and investment
product opportunities are continually evolving, and a new wave of
self-directed investors opens new market segments for CMC.
Board oversight
The Board receives regular updates from management on client
satisfaction and feedback metrics. Any issues are discussed with the
Executives with a view to seeking to improve customer outcomes.
The Board has appointed Clare Francis as the Group’s Consumer
Duty Champion.
Outcomes
As previously reported, the launch of CMC Invest UK provided a
great opportunity for the Group to offer greener and more socially
orientated investing products. It also allowed us to consider and
discuss with the Board the target audience, customer experience
and expectations, platform availability and transparency and ease
of use. This goes alongside continual engagement with our trading
clients with the aim of improving the user experience for all of
our clients.
During the year, our engagement with certain clients allowed us to
make adaptations to the benefit of all of our clients. This evidences
the versatility of our platform in being able to respond to different
client profiles and adapt accordingly.
16 – CMC Markets plc
Annual Report and Financial Statements 2023
Why we engage
Our employees define our culture and values. Fostering an engaged
workforce is central to our strategy, enabling us to deliver the
exceptional service that keeps us at the forefront of our markets.
Providing a rewarding and safe working environment for our
employees is a vital outcome we strive to achieve. Every employee
needs to be given the tools to excel within a dynamic environment.
Nurturing a diverse and responsible workforce will allow us to achieve our
business objectives with the expected levels of integrity and focus we expect.
How we engage
Our future success depends on nurturing and enhancing an
environment that reflects our diverse client base and where employees
can reach their full potential. Our employee engagement is driven
through numerous channels. This includes team meetings or one on
ones, and formally through the designated Non-Executive Director with
responsibility for workforce engagement. We hold a twice-yearly global
survey with follow-up focus groups to better understand the results
and monthly “town hall” style forums to enable purposeful engagement
between management and employees.
The business has adopted some key employee engagement practices
that enhance connections across the Group, with diversity, equity and
inclusion being at the forefront of our practices. These are championed
by our Sustainability and HR teams and are described within the
Sustainability section on pages 42 and 43.
Board oversight
The Nomination Committee (“NomCo”) receives regular updates from
the Global Head of HR on various HR metrics and employee issues and
the outcome of employee surveys. The designated Non-Executive
Director for workforce engagement holds regular sessions with
employees and reports back to the NomCo with the feedback from
these. More information on the key focus of the engagement via this
route is included on page 86.
During the current reporting period the Group Risk Committee has
considered the impact of current difficult recruitment markets on the
resourcing of the business during a period of concentrated growth.
Outcomes
The formal senior management communication calendar that was
developed in the last reporting period to promote diversity, wellbeing
and inclusion in the workplace has continued. Further HR initiatives are
described in the Sustainability section on pages 42 and 43.
2023 saw an improvement versus the very difficult recruitment markets
of 2022, where there were challenges because of competition for good
candidates and significant increases in salary expectations. CMC was
able to capitalise on the workforce reductions experienced by other
technology focused corporates, which helped drive additions to staff
numbers. The internal recruitment team established in 2022 also helps
us overcome the issues seen. Nevertheless, CMC still recognises that
buoyant recruitment markets and increasing staff costs will continue to
be a challenge for us as we move through 2024.
Regulators
Suppliers
Why we engage
Engagement with regulators is key to ensuring that we are fully
compliant across all jurisdictions within which we operate. We are
taking steps to ensure our approach is market leading, whilst also
allowing the Group to participate in shaping future regulations within
the sector when approached by the regulators.
How we engage
We engage in open and active dialogue with regulators, seeking
opportunities to share the wealth of data we have available to help
inform them in their decision making. We ensure our actions are at the
minimum consistent with regulatory expectations. Our commitment
to upholding high standards of regulatory compliance and
aligning our interests with clients involves consistent dialogue with
regulators across all jurisdictions. We believe we have forged strong
partnerships with our regulators to responsibly benefit the operating
environment for all.
Board oversight
The Board and/or the relevant Board Committee receives regular
updates from management on the Group’s compliance with
its regulatory obligations and certain communications with the
regulators in each region in which we operate.
Outcomes
During the year, we have responded to a number of regulatory
consultations and guidance, and changed our operations where
appropriate in response, such as:
– UK: FCA guidance on consumer protection, anti-money
laundering controls and CFDs;
– Spain: CNMV consultation on further CFD intervention measures;
– Australia: ASIC consultations in relation to technical and
operational resilience, alternative trading venues during a market
outage and dispute resolution report; and
– Germany: response to the BaFin request for information on cross-
border activities.
– Singapore: following engagement with the Monetary Authority
of Singapore, the Group was successful in obtaining a licence to
operate in the region.
Why we engage
We expect all our suppliers to demonstrate the same integrity
and accountability as we do to our clients. Engagement with
suppliers which perform any critical or material outsourced
service also ensures that we remain compliant with European
Banking Authority (“EBA”) requirements. We take a zero tolerance
approach to modern slavery and human trafficking, as reflected
in our Modern Slavery Statement (available on our website at
www.cmcmarketsplc.com/footer/modern-slavery-statement/) and
our Group Anti-Slavery Policy, and are committed to acting ethically
and with integrity in all our business relationships. A working group
of relevant individuals from across the business meets regularly to
review controls and procedures and assess their effectiveness.
How we engage
Open and frequent communication is critical in maintaining strong
relationships with all our suppliers. All business partners follow a
mandatory procurement process to review the external market
and complete a robust evaluation of all available options. Once
a supplier is appointed, regular direct engagement between the
business owner and supplier is maintained through our Supplier
Management Programme (which sets out how we interact with our
suppliers and vendor management). As part of the Procurement
process, all suppliers are categorised, within our OneTrust tool,
according to the how critical the service or goods provided are to the
Group’s ability to service its clients. This categorisation determines
the frequency of interaction and level of engagement between CMC
relationship owners and the suppliers. We are continually enhancing
this framework to ensure we are always abreast of all relevant
supplier issues or concerns and over the next year there will be a
focus on a roadmap to determine the scope and frequency of our risk
assessments and monitoring activities for suppliers.
Board oversight
The Board relies on the Executives to manage the relationship with
suppliers on a day-to-day basis. Any significant new relationships will
be approved by the Board, which will also receive information on any
issues with current material outsourced services suppliers.
Outcomes
Our robust governance process allows the Group to select the best
supplier for the business and ultimately our clients. Our considered
approach also allows us to treat vendors with respect and prioritise
collaboration and value generation to mutually benefit all parties,
whilst remaining compliant with all relevant regulations. Regular
reporting is produced to ensure that our average time to pay invoices
is in line with our standard supplier payment terms of 30 days. This
ensures that all suppliers are treated fairly and receive payment for
services or goods provided in a timely manner.
17 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information
Stakeholder engagement continued
Shareholders
Local community/charities
Why we engage
We recognise the importance of supporting our communities
through initiatives with our charity partners.
How we engage
We have an ongoing charity programme that promotes the work of
the charity partners that we have committed to support. Our charity
programme has developed beyond financial support to a fuller
engagement programme for our employees as we see a greater
appetite for groups to get together and we can do this with purpose.
The charity programme is led by our sustainability team and our goal
is to align our charity partners with the Our Tomorrow strategy. We
promote our charity actions using a charity champions network, a self
nominated group of employees from across our regional offices who
help with fundraising and volunteering.
Board oversight
The Board promotes the support of local charities in all our global
offices. The sustainability strategy set out in the Sustainability section
of the Annual Report is approved by the Board.
Outcomes
The Group and its staff have been involved in various charitable
initiatives, with more detail included in the Sustainability section on
pages 44 and 45.
Our employees have made use of the pound for pound matching
scheme offered by the Group and we have seen an increase of use
of the volunteer day, an extra day of annual leave for purpose-driven
volunteering activity.
Why we engage
Our shareholders’ support is paramount to our success and listening
to them is a critical part of making sure our business is successful in
the long term.
How we engage
Active engagement with current and prospective shareholders
continues throughout the year. Our team communicates the
Group’s strategy and performance as well as understanding the
issues that are most important to them. The adoption of technology
continues to improve the efficiency of our engagement. We offer
regular trading updates, half and full year presentations, the Annual
Report and Financial Statements, our Annual General Meeting and
a comprehensive Investor Relations section of our website, as well
as active virtual media channels. We have a schedule of shareholder
meetings and roadshows, giving our stakeholders access to the
investor relations and management teams. The Chairs of the
Board and its Committees are also available to meet with major
shareholders to discuss relevant issues.
Board oversight
Shareholder feedback and details of any major movements in our
shareholders are embedded within our regular Board meetings and
are integral to our decision-making process.
Outcomes
Many of our shareholders have been with us since our initial public
offering in 2016. The regular, open and constructive dialogue with
investors promotes confidence in the Group’s strategy, resulting
in a strong share register built on long-term relationships, whilst
also ensuring our continued access to potential additional capital
and liquidity.
Our Chairman and Chair of the Remuneration Committee met with
shareholders on numerous occasions during the year. We offered
meetings with the Chairman and other Non-Executive Directors in
order to gather views from our significant shareholders and in May
2023 our Chairman and Senior Independent Director had meetings
with those shareholders who had expressed an interest. More
information is included on page 85.
In response to shareholder feedback on the Group’s capital
management, a share buyback programme operated during the year
– more information on which can be found on page 120.
18 – CMC Markets plc
Annual Report and Financial Statements 2023
Environment
Why we engage
CMC recognises that the Group has a duty to help improve the
ecosystem in which we operate and ensure we have a positive
impact on the planet and the people within our communities. We
launched the Our Tomorrow sustainability strategy in 2022 which
encapsulates our commitments and how we have aligned to our core
values. Our sustainability strategy can be found on pages 34 to 48.
How we engage
We have undertaken an internal review of the Group’s Scope
1, 2 and 3 emissions and how we will seek to reduce our
impact on the environment. More information is included in the
Sustainability section.
Board oversight
The Board has considered the appropriate sustainability targets
during the year under review, which includes ensuring that we can
collate baseline emission data in order to fully understand the Group’s
carbon footprint. This will then allow us to set targets to seek to meet
net zero goals and align to the Paris Agreement. The Sustainability
section sets out details of our Planet Positive initiatives and data on
our greenhouse gas emissions.
Outcomes
We have reported against the Task Force on Climate-Related
Financial Disclosures requirements and have adopted a deeper
methodology and scenario analysis this year. Our sustainability
findings/targets will be published in due course.
We remain committed to having a positive impact on the planet.
Product development
Making the Leap Insight Day
Haven House Gardening Day
19 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information
Chief Executive Officer’s statement
CMC’s evolution
has reached a
pivot point
Since pioneering online trading over 30 years
ago, CMC continues to innovate and respond to
market changes and challenges.
Today the Group boasts a broad financial
services offering spanning the globe. Through our
new API ecosystem we can add new products
and markets quickly, for our B2B and B2C clients.
We believe this breadth and level of flexibility,
through one industry standard connection
protocol, will be the best-in-class B2B and B2C
financial services platform on the market.
20 – CMC Markets plc
Annual Report and Financial Statements 2023
During the past year, we have made progress to refine and deliver our
diversification strategy. We have improved our product range across our core
trading CFD and spread bet businesses, offering our clients access to a wider
range of financial instruments through our award-winning platforms. We have
leveraged our existing technology to launch the new investment platform in
the UK, with Singapore to follow imminently, as well as expanding our office in
Dubai to support the rapid growth we are seeing in our institutional business.
Our Invest UK platform, which launched to the general public in September
2022, has delivered a number of milestones this year, with the current offering
now including equities, ETFs, ESG screening and flexible ISAs. Expansion into
mutual funds and SIPPs will shortly follow. We see significant potential in the
UK market, including great B2B opportunities, and while D2C client numbers
are currently low given the recent launch, we expect these to grow significantly
over the coming years.
In Australia, we have successfully migrated the Share Investing client base
of ANZ, which involved over 600,000 clients with total assets exceeding
AUD$37 billion.
Whilst market activity had been lower over the past year, the migrated
clients will place CMC in a stronger position to deliver enhanced access to
improved mobile apps, education tools and resources, and lower brokerage
commissions across four major international markets and the local
Australian market.
Institutional offering expansion via CMC Connect
In our institutional trading business, we continue to grow volumes as a non-bank
liquidity provider and are successfully forging new trading relationships across
the globe. We provide global market access to our clients, enabling them
to realise their revenue potential through multi-asset liquidity provision and
award-winning trading technology.
Focus on:
FX – the story in numbers
Continued development work to connect to multiple Electronic
Crossing Networks (“ECNs”) and the deployment of a
competitive FX product now allow for significant growth in this
asset class. In 2023 CMC Markets delivered a 95% uptick in
total B2B notional volumes versus the prior year, with FX being a
significant contributor.
See more at www.cmcmarkets.com
Our strategy is based on leveraging our technology to facilitate growth
through B2B expansion. By partnering with our clients directly we are able
to offer them access to our deep liquidity, products, and technology stacks.
We have already proven our ability to deliver in Australia, evidenced by the
Australia and New Zealand Banking Group Limited (“ANZ”) relationship, with
an extensive network of B2B partnerships in CMC Invest Australia.
CMC and our B2B partners typically benefit from shared resources and
expertise, which can lead to cost savings and improved operational efficiency.
Fostering additional B2B partnerships is front and centre in our strategy to
achieve sustainable long-term growth.
Trading business investment and expansion
We continue to invest in our trading platforms, and we will be launching cash
equities and options across our various platforms over the next six months
to allow our clients better opportunities to trade or hedge existing portfolio
positions. Over the course of the next 12 months, we plan to introduce a new
multi-asset platform capable of trading a much wider range of instruments
over and above our traditional CFD and spread betting asset classes.
Investing business expansion
Our focus on the self-directed investment platform space continues, offering
improved technology, and client experience, with lower transaction costs
and fees. In addition to the successful release of our Invest UK platform, our
CMC Invest brand has been rolled out to our existing Australian stockbroking
business and I am pleased to announce that we will be imminently launching
our CMC Invest Singapore offering as well. In Singapore, CMC Invest will
initially offer equities, exchange-traded funds, options, and futures building
on the offering in Australia. The UK D2C market represents a significant
opportunity, with aggregate assets under administration (“AuA”) standing at
c.£290 billion1 even after weaker capital markets seen over 2022.
“ Our strategy is based on
leveraging our technology to
facilitate growth through B2B
expansion. By partnering with
our clients directly we are able
to offer our clients access to our
deep liquidity, products, and
technology stacks.”
Lord Cruddas
Chief Executive Officer
1 Platforum February 2023.
21 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information
Chief Executive Officer’s statement continued
Institutional offering expansion via CMC Connect-
continued
Through our CMC Connect brand, we offer larger institutions the ability to develop
a white-label trading proposition for their client base. This can be custom-built
in a bespoke fashion to best suit the needs of our partners. By combining both
our natural client order flow and a range of external pricing sources we can
offer consistent liquidity, market depth and best execution.
Technology at our core
CMC has been a pioneer of platform technology, providing technology-backed
solutions for B2C and B2B clients and partners for over 30 years. This gives us
the scale, leverage, and agility to launch new platforms and enter new markets
rapidly, as well as drive down transaction costs.
At CMC, we continue to embrace innovative technologies and new ways
of working to deliver our digital transformation. We have demonstrated our
ability to deliver complex work programmes in the recent delivery of our CMC
Invest UK platform, but this is just one example where our internal technology
development team continue to excel.
Through our new API ecosystem we can add new products and markets
quickly for our B2B and B2C clients. We believe this breadth and level of
flexibility through one industry standard connection protocol, will be the best-
in-class B2B and B2C financial services platform on the market. Importantly,
it will also allow the Group to grow and add new products quickly so we can
expand into different markets around the world.
Our experience gained from the launch of our Invest UK offering will also
accelerate the delivery of additional functionality across both our existing
trading and institutional business over the coming year. One example is
that the Group is now in a strong position to offer cash equities on the Next
Generation platform to institutional clients.
Our product development is augmented with the use of cloud technology
through our strategic partner Amazon Web Services (“AWS”) that provides
the foundations for rapid cost-effective delivery of our growth plans. Through
its cloud platform, CMC can take advantage of the scale, elasticity and reduced
operational burden offered by AWS to deliver an improved customer
experience faster and with greater stability.
Financial performance
Over the past 12 months global markets have been volatile, influenced by
a variety of factors, including the recovery from the COVID-19 pandemic,
geopolitical developments, and shifting economic policies particularly in the
adjustment to rising inflation and interest rates.
Activity across our platforms reflected these trends. The trading business
benefited from the volatility seen in global FX rates whilst on the other hand
activity was lower in our Invest Australia business with lower client activity
than had been seen in the prior year, primarily driven by the reversal seen in
global equity markets from the peaks of 2021. Nevertheless, complementing
the volatility on global exchange rates, commodity price fluctuations also
presented a significant opportunity for our clients. Our wide-ranging, and
expanding, product offering across both our trading and investing business
gives me confidence in our ability to deliver returns for shareholders
regardless of the wider macroeconomic environment.
Interest income increased substantially in the period at £13.9 million (versus
£0.8 million in 2022) due to increases in global interest rates and resulting
income from client and own cash balances. Overall, the Group net operating
income increased 2% versus the prior period, to £288.4 million. The Group’s
total cost base increased by 24% from £190.41 million to £236.2 million during the
year, mainly because of the significant investments in people and technology to
deliver our diversification and growth strategy.
1 2022 figure restated, refer to note 33 for more information.
2 A definition of net available liquidity can be found on page 65.
22 – CMC Markets plc
Annual Report and Financial Statements 2023
Variable remuneration increased by £0.63 million to £16.7 million reflecting
the increase in staff over the period. Profit before tax at £52.2 million was
£39.31 million lower than the previous year. Our dividend policy remains
unchanged, at 50% of profit after tax, therefore resulting in a proposed final
dividend per share of 3.90 pence.
Despite market volatility, the Group’s underlying fundamentals remain strong
in the trading business. The Group’s strategy of targeting and retaining higher
value, sophisticated clients continues to prove successful, with client money
levels remaining close to record highs seen in the prior year, an encouraging
indicator of future investing potential.
The number of active clients within Invest Australia has decreased by 12%
to 216,665, with B2C clients increasing by 120% to 123,681, and B2B clients
decreasing by 51% to 92,984. Active clients within the trading business
decreased by 9% to 58,737 but monthly average active clients remain 25%
above pre-COVID-19 levels.
The Group’s balance sheet reflects its strong financial position, with net available
liquidity2 of £239.2 million and a regulatory own funds requirement ratio (“OFR”)
of 369% at year end. This compares with £245.9 million and a regulatory OFR
ratio of 489% at year end 2022.
Regulatory change
The regulatory framework has proved to be stable over the past 12 months.
The last meaningful change occurred on 29 March 2021, when ASIC
implemented measures regarding CFDs. These measures helped to
harmonise regulatory conditions globally, allowing the Group to focus on
growing its business. As expected, the new measures have reduced the
notional value of retail client trading in Australia and, combined with lower
market volatility, resulted in less active client trading than in the prior period.
In April 2022, ASIC extended its product intervention order for CFDs, which
imposes conditions on the issue and distribution of CFDs for another five
years, until 23 May 2027. This extension has provided greater regulatory
visibility for the Group, ensuring that it can continue to operate within the
regulatory framework while growing its business.
People and sustainability
As the focus on sustainability continues to shape the financial markets,
our objective is to equip our clients and employees with the necessary
resources and knowledge to make responsible and confident investment
decisions. We recognise and embrace the responsibility bestowed upon
the finance industry to contribute to the world-wide sustainability efforts.
Furthermore, we understand that incorporating sustainable practices
can bring tangible business benefits. These advantages not only bolster
the long-term sustainability of the Group but also empower us to fulfil our
mission of delivering our clients an unmatched technology-driven investment
experience, along with exceptional access to capital markets.
Clients
At the core of our business, we prioritise our clients and their satisfaction.
We remain committed to developing our platforms and investing in innovation
to ensure that our user experience remains industry leading, promoting client
retention and lifetime value. We are pleased to welcome over 600,000 new
clients to our Invest Australia business now fully transitioned from ANZ Share
Investing, and we look forward to providing them with new functionality and an
enhanced experience.
Furthermore, we have already embarked on partnering with new investors
over the long term through our Invest UK and Singapore platforms, aiming
to help them achieve prosperity at every stage of their investment journey.
3 2022 figures restated to include social taxes on annual discretionary bonus within
variable remuneration.
Share buyback programme
On 15 March 2022, the Company initiated a share buyback programme of
up to £30 million, demonstrating its strong capital position and consideration
of ongoing investment requirements for the business. This buyback
programme was part of the Group’s balanced approach to shareholder
returns, in conjunction with the current dividend policy and was completed on
17 October 2022.
Dividend
The Board has proposed a final dividend payment of £10.9 million, which
equates to 3.90 pence per share (compared to 8.88 pence in 2022), resulting
in a total dividend payment of 7.40 pence per share for the year (compared
to 12.38 pence in 2022). This amount represents 50% of profit after tax, in
accordance with Group policy. This policy results in sharing the benefits of
profitable growth to shareholders through a distribution alongside retaining
an equal amount of profits in the business, which are largely equivalent to cash
generation, to invest in future growth. The Group Board considers the liquidity
and regulatory capital risks associated with paying a dividend in accordance
with the policy through the review of and consideration of stress scenarios.
Outlook
We acknowledge the current uncertainty prevailing not only in the financial
markets but also in various sectors and industries. Our experience in the
past few years has reinforced the importance of being prepared for the
unexpected and the extraordinary.
Our platforms have demonstrated their ability to continue servicing clients
robustly even in extreme market volatility, and, as a result, we have earned trust
and a reputation for stability.
Over the past year we have made significant investments in our infrastructure,
which have served us well and will continue to do so, providing a solid
foundation for us to explore future opportunities.
Our performance this year reflects our focus on our trading and investment
businesses and ongoing success with B2B technology partnerships. We have
a large addressable market, and we see an enormous opportunity to grow
with a more predictable and stable revenue stream.
As we continue to evolve and expand our investment offering, we are
leveraging our technology to enter new markets and geographies.
We are looking forward to updating investors on our strategy’s short-term
and long-term expansion.
Lord Cruddas
Chief Executive Officer
13 June 2023
Q&A: The vision of future trading and
investment platforms
Q
A
Q
A
In one sentence how do you envision the evolution and
purpose of trading and investing platforms over the
coming years?
To succeed in the future, trading and investing platforms will
need to allow clients to trade the full gambit of instruments,
including equities, options, commodities, funds and
currencies within one multi-asset environment all through a
single point of entry.
What changes at CMC are being planned in order to fulfil
these needs?
By developing our own multi-asset platform, we will be
able to implement our diversification strategy effectively.
Our platform is designed to offer a broad range of financial
products that will also over time allow us to fulfil our
B2B ambitions.
Q What is your target market for this expansion?
A
Q
A
We will target a global market, considering regional-specific
offerings including local stocks and shares and operating
via upstream prime brokers. Our client focus is on family
office and wealth management sectors including asset
managers, hedge funds and private banks. This includes
investment banks with underlying private clients as well.
What’s the strategy around team expansion and marketing
to achieve these goals?
We are building out teams in local markets comprising sales
people who speak the native language and are sensitive
to cultural requirements, coupled with specific skill sets to
rapidly infiltrate the market. Marketing will be focused to
carve out a significant budget to deliver specific goals and
collaborate with our partners through targeted road shows
and research releases.
Q What do you see as CMC’s core strengths to delivery?
A
Our strength lies in the fact that CMC has been building
and owning all its technology for the past 30 years.
This, coupled with our enduring prime broking relationships
and risk management systems, allows us to adapt and
progress at a faster pace compared to our competitors.
Moving forward, this technological advantage will enable
us to broaden our reach and provide what we envision as
the ultimate multi-asset investment platform of the future.
Our goal is to bring fintech to the mid markets that we
consider to be underserved and facilitate market access for
all participants.
23 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Our strategy
01
Our focus
for 2024
Over the past year, we have made significant
strides in defining and executing our
diversification strategy. Our target to grow
net operating income by 30% over the next
three years is unchanged. This requires new
investment, but the benefits of this will be seen
with our expectation of PBT margin expansion
from 2025.
Our growth strategy is built on three core pillars.
Firstly, we will focus on delivering ongoing
product diversification and development of a
multi-asset interface across our core trading
business. This allows us to offer our clients a
significant increase in asset classes available to
trade, broadening their options whilst deepening
our engagement with them to capture a larger
share of their trading volumes.
Secondly, we continue to invest in our technology
to drive expansion via B2B partnerships. Key
to this is the development of our new open API
eco-system. Expanding our B2B partnerships is
central to our strategy, as it enables us to achieve
sustainable long-term growth.
Thirdly, we continue to open up new markets
via our investing and institutional businesses.
Shifting our focus towards helping our
clients create wealth over the longer term
is core to our strategy. In the same vein,
we recognise substantial prospects in our
institutional business, where we are steadily
expanding volumes as a non-bank liquidity
provider and actively creating fresh trading
partnerships worldwide.
1 Platforum February 2023.
24 – CMC Markets plc
Annual Report and Financial Statements 2023
Trading platform product diversification
Investment in B2B technology capability
Opportunity
Our initial priority is to concentrate on providing continual product
diversification and developing a multi-asset interface within our core
trading business. This will enable us to furnish our clients with access to a
broader range of asset classes, thereby strengthening our engagement
and capturing a greater proportion of their trading volumes. Whilst CMC
has traditionally been reliant on CFDs and spread betting, with a large
Invest business in Australia, the imminent addition of cash equities,
options and other financial instruments throughout the coming year will
make our offering even more relevant to the new cohort of clients we
are attracting.
Priorities for 2023/24
– We will continue to invest in our platform that is both responsive and
driven by insights, with a focus on facilitating client learning and growth
in small steps.
– We will continuously improve the delivery of new services that better
equip our clients to manage their performance and take advantage of
market opportunities.
– We will expand our product range across our platforms to enhance our
support for our clients’ investment portfolios and increase our share of
their wallet.
• These include cash equities, index options, cryptocurrencies and a
wider range of money market investment products.
– We will continue to focus our marketing spend on premium clients.
– We will drive geographical growth of our trading platforms in unison
with our institutional and invest platforms.
Technological evolution in 2023/24
– Investing in proprietary technology is crucial to meeting clients’ evolving
demands and regulatory requirements. CMC’s distinctive approach of
owning and developing our technology opens up significant opportunities
for future expansion, which is a defining feature of our growth strategy for
our traditional trading business.
– As a key element of its broader technology strategy, CMC is
transforming the API layer through the use of cloud and the latest
“DevOps” practices to facilitate the faster introduction of new products
across our trading front ends.
– To improve our clients’ overall experience, we are dedicated to
maintaining high platform availability and implementing continual
improvements to performance.
Progress against 2022/23 objectives
– Monthly client numbers in our trading business have declined
from record highs but importantly are still up 25% versus
pre-pandemic levels.
– The Group continued to win numerous awards for client service and
– Successfully transitioned over 600,000 of ANZ Bank’s Share Investing
products throughout the year.
Expansion of invest platforms and institutional
Expansion of invest platforms and institutional
offering
offering
Opportunity
Opportunity
To achieve sustainable long-term growth, our strategy involves
harnessing our technology to facilitate expansion through B2B
Central to our strategy is a shift towards enabling our clients to generate
long-term wealth through our investing platforms. We believe that the self-
partnerships. Direct collaboration with our clients enables us to provide
directed investment platform sector offers substantial growth potential
them with access to our extensive liquidity, product and technology
particularly in the UK but also Singapore. In the same vein, we see major
stacks. Through the launch of our new Group-wide open API ecosystem,
prospects in our institutional trading unit, as we persistently augment our
with shared resources and expertise, CMC and our B2B partners can
volumes as a non-bank liquidity provider and forge fresh trading alliances
enjoy cost savings and improved operational efficiency.
across the globe.
Priorities for 2023/24
Priorities for 2023/24
– We will persist in developing new B2B partnerships within Invest
– Invest: We will expand the development of our Invest platforms across
Australia, building on the success of our historical ANZ Bank
partnership and the extensive network of B2B partnerships we
already have.
Australia, Singapore and the UK. The UK D2C market still poses a
significant opportunity, with aggregate AuA standing at c.£290 billion¹
even after weaker capital markets seen over 2022.
– We will continue to evolve our existing product offering to cater to larger
– Institutional: We will invest in our institutional offering to upgrade our
institutions, resulting in greater revenue returns. Furthermore, we will
product suite, thereby establishing CMC Connect as a technical
enhance our ECN connectivity to access a vast electronic market,
innovator and institutional contender for price and liquidity construction.
strengthening our position as the go-to non-bank liquidity provider in
the B2B market.
– We will utilise the development of our open API technology to pursue
new white-label opportunities across both our trading and investing
business lines. This includes work towards a new multi-asset platform
capable of delivering bespoke white-label solutions to our clients.
– Institutional: We will deliver the regional expansion of our institutional
offering via our Dubai office and dedicated sales teams.
– Institutional: We will deliver a physical asset class solution to provide
access to new products and functionality, featuring best-in-class
technology for a market seeking a wider range of investment products.
In addition, we will expand our instrument range to meet all market
– We will continuously improve the delivery of new services that better
liquidity requirements, including cash equities, ETFs, and other
equip our clients to manage their performance and take advantage of
financial instruments.
market opportunities.
– Institutional: We will continue to invest in our technology and overall client
experience, with the aim of improved functionality with lower transaction
costs and fees.
Technological evolution in 2023/24
Technological evolution in 2023/24
– We aim to enhance our core multi-asset capabilities to provide an
– In the institutional space, our objective is to establish CMC Connect as
unparalleled and diverse trading experience for our expanding target
a comprehensive fintech solution and non-bank liquidity provider.
market across all platforms, whether trading or investing, including B2B
capabilities on all platforms.
– Additionally, we will continue to invest in our people and technology,
with our London and Sydney offices concentrating on developing all
new platform features based on our technology offerings.
– We will establish new ways of working across our traditional trading
and growing investing and institutional businesses to accelerate
product delivery, improve organisational learning, and incrementally
increase the value we provide to our clients.
– Deliver ongoing technological enhancements within the institutional
and investing businesses to provide B2B capability.
– We will enhance recently added new products, such as FX give-ups,
and our ECN connectivity to further cement our position.
– We will also strive to enhance our technology stack to drive brand and
product awareness across all channels and distribution outlets across
both our investing and institutional platforms.
Progress against 2022/23 objectives
Progress against 2022/23 objectives
– Continued to deliver numerous user experience and technological
– Institutional revenue targets and expectations were exceeded in 2023.
improvements to our customer onboarding processes across our
global retail, institutional and investing businesses.
clients to CMC’s client base.
– Succeeded in delivering the first give-up trades with FX spot.
– Successfully expanded the Singapore office ahead of Invest launch.
– Invest UK delivered significant expansion in its products including
Equities, ETFs, ESG screening and flexible ISAs.
– Accelerated growth in the FX market with a marketing strategy to build
client groups across increasing geographies.
– Successfully continued advancements as a non-bank liquidity provider
in the spot market.
Opportunity
Our initial priority is to concentrate on providing continual product
diversification and developing a multi-asset interface within our core
trading business. This will enable us to furnish our clients with access to a
broader range of asset classes, thereby strengthening our engagement
and capturing a greater proportion of their trading volumes. Whilst CMC
has traditionally been reliant on CFDs and spread betting, with a large
Invest business in Australia, the imminent addition of cash equities,
options and other financial instruments throughout the coming year will
make our offering even more relevant to the new cohort of clients we
are attracting.
Priorities for 2023/24
– We will continue to invest in our platform that is both responsive and
driven by insights, with a focus on facilitating client learning and growth
in small steps.
– We will continuously improve the delivery of new services that better
equip our clients to manage their performance and take advantage of
market opportunities.
– We will expand our product range across our platforms to enhance our
support for our clients’ investment portfolios and increase our share of
their wallet.
• These include cash equities, index options, cryptocurrencies and a
wider range of money market investment products.
– We will continue to focus our marketing spend on premium clients.
– We will drive geographical growth of our trading platforms in unison
with our institutional and invest platforms.
Technological evolution in 2023/24
– Investing in proprietary technology is crucial to meeting clients’ evolving
demands and regulatory requirements. CMC’s distinctive approach of
owning and developing our technology opens up significant opportunities
for future expansion, which is a defining feature of our growth strategy for
our traditional trading business.
– As a key element of its broader technology strategy, CMC is
transforming the API layer through the use of cloud and the latest
“DevOps” practices to facilitate the faster introduction of new products
across our trading front ends.
– To improve our clients’ overall experience, we are dedicated to
maintaining high platform availability and implementing continual
improvements to performance.
Progress against 2022/23 objectives
– Monthly client numbers in our trading business have declined
from record highs but importantly are still up 25% versus
pre-pandemic levels.
products throughout the year.
Trading platform product diversification
Investment in B2B technology capability
Expansion of invest platforms and institutional
Expansion of invest platforms and institutional
offering
offering
02
03
Opportunity
To achieve sustainable long-term growth, our strategy involves
harnessing our technology to facilitate expansion through B2B
partnerships. Direct collaboration with our clients enables us to provide
them with access to our extensive liquidity, product and technology
stacks. Through the launch of our new Group-wide open API ecosystem,
with shared resources and expertise, CMC and our B2B partners can
enjoy cost savings and improved operational efficiency.
Opportunity
Central to our strategy is a shift towards enabling our clients to generate
long-term wealth through our investing platforms. We believe that the self-
directed investment platform sector offers substantial growth potential
particularly in the UK but also Singapore. In the same vein, we see major
prospects in our institutional trading unit, as we persistently augment our
volumes as a non-bank liquidity provider and forge fresh trading alliances
across the globe.
Priorities for 2023/24
– We will persist in developing new B2B partnerships within Invest
Australia, building on the success of our historical ANZ Bank
partnership and the extensive network of B2B partnerships we
already have.
– We will continue to evolve our existing product offering to cater to larger
institutions, resulting in greater revenue returns. Furthermore, we will
enhance our ECN connectivity to access a vast electronic market,
strengthening our position as the go-to non-bank liquidity provider in
the B2B market.
– We will utilise the development of our open API technology to pursue
new white-label opportunities across both our trading and investing
business lines. This includes work towards a new multi-asset platform
capable of delivering bespoke white-label solutions to our clients.
– We will continuously improve the delivery of new services that better
equip our clients to manage their performance and take advantage of
market opportunities.
Technological evolution in 2023/24
– We aim to enhance our core multi-asset capabilities to provide an
unparalleled and diverse trading experience for our expanding target
market across all platforms, whether trading or investing, including B2B
capabilities on all platforms.
– Additionally, we will continue to invest in our people and technology,
with our London and Sydney offices concentrating on developing all
new platform features based on our technology offerings.
– We will establish new ways of working across our traditional trading
and growing investing and institutional businesses to accelerate
product delivery, improve organisational learning, and incrementally
increase the value we provide to our clients.
Progress against 2022/23 objectives
– Continued to deliver numerous user experience and technological
improvements to our customer onboarding processes across our
global retail, institutional and investing businesses.
– The Group continued to win numerous awards for client service and
– Successfully transitioned over 600,000 of ANZ Bank’s Share Investing
clients to CMC’s client base.
– Succeeded in delivering the first give-up trades with FX spot.
Priorities for 2023/24
– Invest: We will expand the development of our Invest platforms across
Australia, Singapore and the UK. The UK D2C market still poses a
significant opportunity, with aggregate AuA standing at c.£290 billion¹
even after weaker capital markets seen over 2022.
– Institutional: We will invest in our institutional offering to upgrade our
product suite, thereby establishing CMC Connect as a technical
innovator and institutional contender for price and liquidity construction.
– Institutional: We will deliver the regional expansion of our institutional
offering via our Dubai office and dedicated sales teams.
– Institutional: We will deliver a physical asset class solution to provide
access to new products and functionality, featuring best-in-class
technology for a market seeking a wider range of investment products.
In addition, we will expand our instrument range to meet all market
liquidity requirements, including cash equities, ETFs, and other
financial instruments.
– Institutional: We will continue to invest in our technology and overall client
experience, with the aim of improved functionality with lower transaction
costs and fees.
Technological evolution in 2023/24
– In the institutional space, our objective is to establish CMC Connect as
a comprehensive fintech solution and non-bank liquidity provider.
– Deliver ongoing technological enhancements within the institutional
and investing businesses to provide B2B capability.
– We will enhance recently added new products, such as FX give-ups,
and our ECN connectivity to further cement our position.
– We will also strive to enhance our technology stack to drive brand and
product awareness across all channels and distribution outlets across
both our investing and institutional platforms.
Progress against 2022/23 objectives
– Institutional revenue targets and expectations were exceeded in 2023.
– Successfully expanded the Singapore office ahead of Invest launch.
– Invest UK delivered significant expansion in its products including
Equities, ETFs, ESG screening and flexible ISAs.
– Accelerated growth in the FX market with a marketing strategy to build
client groups across increasing geographies.
– Successfully continued advancements as a non-bank liquidity provider
in the spot market.
25 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Strategic report
Key performance indicators
Our Group KPIs monitor the delivery of long-term
value through a focus on client quality and
operating effectiveness.
Tracking our progress
Group KPIs
Net operating income
£288.4m
23
22
21
£288.4m
£281.9m
£409.8m
Statutory profit before tax1
£52.2m
£52.2m
£91.5m
23
22
21
Profit after tax1
£41.4m
£41.4m
£71.5m
23
22
21
Basic earnings per share
14.7p
14.7p
24.6p
23
22
21
£223.3m
£177.6m
61.3p
Ordinary dividend per share relating
to the financial year
7.40p
7.40p
12.38p
23
22
21
30.63p
KPI definition
This is a statutory measure, which represents
total revenue net of introducing partner
commissions and spread betting levies.
Why we measure
Key operating metric.
Link to strategy
1
2
3
4
5
6
KPI definition
This is a statutory measure, which comprises net
operating income less operating expenses and
interest expense.
Why we measure
Key operating metric.
Link to strategy
1
2
3
4
5
6
KPI definition
This is a statutory measure, which comprises
statutory profit before tax less tax expense.
Why we measure
Largest driver of shareholder equity and
Board-approved metric for calculating
dividend payable.
Link to strategy
1
2
3
4
5
6
KPI definition
This is a statutory measure, which is calculated
as earnings attributed to Ordinary Shareholders
divided by weighted average number of shares.
Why we measure
Key shareholder value metric.
Link to strategy
1
2
3
4
5
6
KPI definition
Any dividend declared, proposed or paid relating
to the financial year.
Why we measure
Key shareholder value metric.
Link to strategy
1
2
3
4
5
6
1 2022 and 2021 figures restated. Further information on the 2022 restatement can be found within note 33.
26 – CMC Markets plc
Annual Report and Financial Statements 2023
Key to strategy
1
Trading platform product diversification
2 Investment in B2B technology capability
3 Expansion of invest platforms and
institutional offering
See more on pages 24 to 25
Trading business KPIs
Gross client income
£303.5m
23
22
21
£303.5m
£288.5m
£335.3m
Trading active clients
58,737
23
22
21
58,737
64,243
76,591
Revenue per active client
£3,968
23
22
21
£3,968
£3,575
£4,560
Client income retained
77%
23
22
21
77%
80%
104%
Platform uptime
99.97%
23
22
21
99.97%
99.95%
99.95%
KPI definition
Spread, financing and commission fees charged
to CFD and spread bet clients. CFD net revenue
is the product of gross CFD and spread bet client
income, multiplied by client income retained.
A reconciliation of gross client income to the
Primary Statements is provided on page 188.
Why we measure
Used to measure the total income
generated from CFD and spread bet client
transaction charges.
Link to strategy
1
2
3
4
5
6
KPI definition
Individual clients who have traded or held CFD
or spread bet positions with CMC Markets on at
least one occasion during the financial year.
Why we measure
Representative of the continuing success of the
business in acquiring and retaining clients which
trade on a regular basis.
Link to strategy
1
2
3
4
5
6
KPI definition
Net revenue generated from CFD and spread
bet active clients, divided by the number of active
clients during the year.
Why we measure
High value clients are central to the Group’s
strategy and the growth in this figure is indicative
of the success in attracting and retaining
these clients.
Link to strategy
1
2
3
4
5
6
KPI definition
Percentage of gross client income retained after
rebates and gains and losses from risk
management.
Why we measure
Used to measure the success of the risk
management strategy of converting client
spread, financing and commissions charges to
trading net revenue.
KPI definition
The percentage of trading hours that clients
are able to trade on the Next Generation
CFD platform.
Link to strategy
1
2
3
4
5
6
Why we measure
The platform is at the core of our business – if
clients are unable to trade, the Group will be
unable to earn revenue. Maintaining a very
high uptime is key to the continued success of
the Group.
Link to strategy
1
2
3
4
5
6
27 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Key performance indicators continued
Investing business KPIs
Net revenue
£37.9m
23
22
21
£37.9m
£48.0m
£54.8m
KPI definition
Income received from brokerage and FX spread
on client trades, less rebates.
Why we measure
Revenue diversification and high value clients
are central to the Group’s strategy and the
growth in this figure is indicative of the success in
growing the invest business and attracting and
retaining high value clients.
Link to strategy
2
3
4
5
6
Investing active clients1
218,310
KPI definition
Individual clients who have traded on Invest
platforms on at least one occasion during the
financial year.
Why we measure
Representative of the continuing success of the
business in acquiring and retaining clients which
trade on a regular basis.
23
22
21
Platform uptime2
99.93%
23
22
21
218,310
246,120
232,053
99.93%
99.91%
99.80%
KPI definition
The percentage of trading hours that
clients are able to trade on the CMC Invest
Australia platform.
Link to strategy
2
3
4
5
6
Why we measure
The CMC Invest platforms are at the core of
our business – if clients are unable to trade,
the Group will be unable to earn revenue.
Maintaining a very high uptime is key to the
continued success of the Group.
Link to strategy
2
3
4
5
6
1
Includes CMC Invest UK active clients of 1,645.
2 Uptime represents CMC Invest Australia only. CMC Invest UK uptime of 99.95% in 2023, a combined statistic will be reported in 2024.
28 – CMC Markets plc
Annual Report and Financial Statements 2023
Technology and innovation
Technology strategy accelerates
CMC’s digital transformation and
product delivery
With digital transformation, CMC is
driving growth and diversification
through technology, and at the heart
of this effort is our technology strategy.
This strategy serves as the strong
foundation for all of our new product
development and ensures that our
existing technology estate continues
to receive the investment it deserves.
As a global initiative, CMC’s technology
strategy underpins the Group’s
expansion and diversification, making
it a crucial component of our overall
business strategy.
Reduction in 99th percentile
execution time1:
Trading
Invest Australia2
44%
35%
1 99th percentile execution time of all trades within the period.
2
Invest UK not included given no prior year comparator.
Global alignment delivering high standards
CMC’s technology strategy is rooted in a set of robust foundational technology
principles that serve as the cornerstone for the expanding technology teams.
These principles ensure that all individuals are aligned and moving forward at
a rapid pace. Such strong alignment fosters efficiency, encourages reuse, and
helps us maintain the highest standards.
Expansion of cloud technology
The use of cloud technology was a key accelerator in the delivery of
CMC’s Invest UK platform and its ongoing adoption, coupled with the latest
cloud engineering practices, is playing a growing part in CMC’s product
development roadmap across all business areas. CMC’s technology
principles promote adoption of cloud but recognise the value in on-premise
self-managed systems. We call this our hybrid-cloud model.
End-to-end investment
It is imperative that all technological aspects of a financial service business
receive ongoing investment. Neglecting to invest in core technology
platforms poses a significant risk. Ageing technology platforms are incapable
of supporting a fast-paced and expanding business, and this reality has
not escaped the attention of CMC’s leadership team. Consequently, the
technology teams are provided with the necessary investments not only for
new initiatives but also to continually update and modernise all areas of our
technology platforms.
Talent
People are the most valuable asset underpinning CMC’s technology. The
most talented technology staff want to work on fast-moving and progressive
technology platforms. The continued investment in technology, coupled with
adoption of new technology such as AWS cloud services, has allowed CMC to
attract and retain some of the most talented IT staff in London and Sydney.
29 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Technology and innovation continued
Close alignment with technological and product development
At CMC, technology is always developed with strong alignment and
collaboration with our product teams. Product development provides
numerous opportunities to advance our technology platforms, and identifying
these strong synergies between product development and technology
strategy is a highly effective approach. By working closely with our product
teams, we can leverage their expertise to drive innovation and progress in
our technology, resulting in a more cohesive and efficient overall approach
to business.
Operational excellence supporting leading-edge innovation
The diversification strategy and launch of the CMC Invest UK platform have
seen an increase in the breadth and scale of the Group’s platforms and
infrastructure. Despite this, the strong focus on operational resilience and
high standards of performance means that uptime across the platforms
remains strong. The trading platform achieved uptime in excess of 99.97%,
Invest UK 99.96% and Invest Australia 99.93%. Throughout the period, the
focus on performance and consistency of execution has remained critical
and the continued investment and improvement are reflected in a further
reduction in the 99th percentile execution time for both the trading and
Invest Australia platforms, down approximately 44% and 35% respectively
compared to last year. With the increasing breadth and diversity of products,
clients and geographies, the importance of continued operational excellence
is paramount. We continue to invest in our infrastructure, operations and
support to meet the growing demands and scale of the global business
and all of our clients.
Focus on:
Open Platform API
At the core of CMC’s trading platform technology lies its
API layer, which plays a critical role in connecting all visible
components of CMC’s platforms to its underlying core systems,
including the trading engine and pricing and risk technology.
As a key element of its broader technology strategy, CMC is
transforming this API layer through the use of cloud and the
latest “DevOps” practices to facilitate the faster introduction
of new products across both institutional and retail segments.
The “Open” aspect of CMC’s
Open API is of particular
significance, as it is designed
to be fully accessible not only
to CMC’s internal use, but
also to all of its counterparts,
providing them with direct
programmatic access to all of
CMC’s underlying products and
services. This openness also
extends over time to individual
customers, giving them full
access to their trading data and
empowering them with greater
control over their investments.
See more at www.cmcmarkets.com
30 – CMC Markets plc
Annual Report and Financial Statements 2023
Continued growth
from CMC Markets. For over 30 years, we
have operated in the financial services
industry, offering access to global markets
via our award-winning, multi-asset trading
technology, through API connectivity or a
white-label solution.
TCMC Connect is the institutional offering
C
E
N
N
O
C
The institutional business has continued to have a year of record growth, exceeding agreed targets, which
has set the tone for the new financial year.
As markets continue to evolve, we have continued to adapt. We have developed our institutional offering
further with the forthcoming inclusion of cash equities, ensuring we provide access to the assets we know
market participants need in order to provide an optimal trading environment. Once we have completed
development of the multi-asset trading platform during the coming year, CMC Connect will be able to
capitalise on the significant available opportunity and deliver revenue growth.
This continued expansion of our technology allows us to approach new client segments and differentiate
ourselves further.
Our multi-national and multi-lingual team based in London has been growing steadily and with a more mature
Spot FX product and the future inclusion of options, coupled with the imminent rollout of a cash equities
product for institutional clients, we are able to infiltrate more European markets and service the APAC &
Canada client base with a holistic trade offering.
Geographical expansion
We recently expanded our presence in Dubai to reflect our rapidly growing suite of products servicing the
market, whilst recognising that the Middle East, with a specific lens on Dubai, is becoming one of the central
financial hubs across the globe. Dubai is a city where many of our peers and competitors are now operating
and an area tipped for significant growth in the years ahead.
31 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information CMC Invest UK
The investment journey
with CMC Invest
CMC Invest UK’s mission is to empower every client to achieve their financial wellness. Launched to
the general public in September 2022, our strategy is to deliver a client focused proposition that is built
upon the technology and capabilities within the CMC Group, delivering an innovative investing solution
for our clients. Our complete end-to-end proprietary platform allows us to be nimble and agile when
addressing client needs, while also minimising our reliance on third-parties and passing those savings
on to our clients.
Early April 2022
Launch to
select clients
September 2022
Open to general public
August 2022
ETFs and Investment
Trusts added
December 2022
ESG ratings
December 2022
“Plus” tier subscription,
including flexible Stocks
and Shares ISA and USD
currency wallet
February 2023
Paperless, in-app
transfer process
with up-to-date
tracking status
32 – CMC Markets plc
Annual Report and Financial Statements 2023
Client-centric technology and innovation
Our focus on technology and innovation is based on the needs of our clients, who
are at the heart of our product roadmap prioritisation. Highlights of our client-
centric delivery are:
Straightforward and transparent subscription plans
Currently, we have two plans available to clients – Core and Plus. Premium
is expected to arrive later this year. All plans include zero commission and a
competitive 0.50% FX fee (where applicable).
Flexible Stocks and Shares ISA
While Stocks and Shares ISAs are a common offering across the investment
industry, flexible Stocks and Shares ISAs are not. We believe that if we can
deliver a better investment ISA for our clients with maximum flexibility, our
clients will have peace of mind that they will be able to access their funds when
they are needed without affecting their annual allowance.
In-app transfer process
Transferring assets can seem cumbersome with layers of manual and complex
processes. Our solution has been to build a fully digital process which can be
kicked off in as little as 30 seconds with clear and transparent status of where a
customer’s transfer stands – all within the app.
Straight through execution
Speed and reliability are no longer interchangeable when trading. Our clients
have both. They can view real-time quotes and trade seamlessly – due to our
technical control of the value chain over complex operational solutions.
ESG ratings and preferences setting
A continuing focus for clients is socially responsible investing. With our
comprehensive ESG tools (powered by Sustainalytics), clients can not only
view ESG ratings, scores, and business involvement areas, they are also
able to set preferences based on their individual values. When viewing an
investment, they will instantly see if the asset matches (or does not match)
their ESG values.
Core features (no charge)
– General Investment Account
– 3,000+ US stocks
– 100 UK large-cap stocks
– Popular ETFs
– ESG ratings and preferences setting
– Analyst ratings with price targets
– Limit orders (coming soon)
Plus features (£10 per month)
– All features in Core
– Flexible Stocks and Shares ISA
– USD currency wallet
– Additional large and mid-cap UK stocks
– 300+ ETFs and Investment Trusts
– Company fundamental analysis
– Mutual funds (coming soon)
Premium features (cost to be confirmed) –
coming soon
– All features in Core and Plus
– Self-Invested Personal Pension
– Additional benefits (to be confirmed)
“ Money is personal – how we earn it, spend it, and invest it.
CMC Invest is designed for today's investors, who want to
invest the way they choose, focusing on their individual
goals. It is about providing meaningful value, backed by
best-in-class execution.”
Albert Soleiman
Head of CMC Invest UK
33 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information
Sustainability
Our Tomorrow: taking a positive position
“ This has been an exciting year for the Group; we have
made strong progress in data collection, implementing
sustainable practices into the operations of the
business whilst developing the overall strategy and
mapping out our goals and objectives. Our ambition
remains focused on integrating sustainable practices
into all aspects and levels of our business to pave the
way for a positive future for us and our clients.”
Kelly Perry
Global Head of Sustainability
Last year we introduced the Group’s Our Tomorrow
sustainability strategy and its five core pillars structured to focus
delivery on our material environmental, social and governance
("ESG") risks. We have concentrated on obtaining a fuller
understanding of our current performance within these areas.
The Our Tomorrow strategy and five strategic pillars serve as
our framework for integrating sustainability throughout our
global business and outlines our commitment to safeguarding,
empowering, innovating, and adapting our responsible business
practices in a way that prioritises the wellbeing of our people
and planet.
We remain focused on equipping both our clients and
employees with the necessary tools to invest in a better future
and strive to achieve this by offering cutting-edge technological
solutions that protect, educate, and motivate our clients and
employees to invest in a way that has positive impacts now and
for the future. Our commitment to responsible practices and
values ensures that we are aligned with the world-wide shift
towards a sustainable future within capital markets.
As sustainability increasingly guides the financial markets, our
aim is to provide our clients and employees with the tools and
expertise needed to invest responsibly and with assurance. We
acknowledge and embrace the responsibility placed on the
finance industry to contribute to the global sustainability agenda,
none more so than in the critical battle against climate change.
Moreover, we understand that implementing sustainable
practices can yield tangible business advantages, which not
only support the Group's long-term viability but also enable
us to fulfil our mission of offering our clients an unparalleled
technology-driven investing experience, coupled with
exceptional access to capital markets.
34 – CMC Markets plc
Annual Report and Financial Statements 2023
2023 sustainability highlights
1 Aligned to the frameworks of the Global Reporting Initiative ("GRI") and
Sustainability Accounting Standards Board ("SASB") to build robust
performance measures into our strategy.
2 Pledged to support gender balance across the financial industry and became
signatories of HM Treasury’s Women in Finance Charter demonstrating
our commitment to building a more balanced and fairer industry.
3 Introduced Sustainalytics data into the CMC Invest UK platform, for
clients to obtain sustainability data on assets, then went one step further and
integrated tools for clients to set preferences and screen assets according
to sustainability values.
4 Evolved our HR capabilities by hiring dedicated diversity, equity and
inclusion and learning and development specialists in our London
and Sydney offices.
5 Established a sustainability subcommittee aligned to the five strategic pillars
to provide support to the Sustainability Committee and effectively embed the
goals and objectives of the Our Tomorrow strategy into the DNA of our business.
6 Introduced CMC’s ESG Academy, a targeted learning programme to
support the Sustainability Committee and subcommittee in developing their
understanding of sustainability topics.
7 Engaged with Normative, experts in carbon accounting, to support us on our
pathway to net zero and collected our first set of Scope 3 emissions data
for both 2022 and 2023.
8 Undertook a deeper analysis of our climate-related risks via scenario
analysis to enhance our understanding of our climate-related risks and our
climate-related disclosures in line with the Task Force on Climate-related
Financial Disclosures ("TCFD").
9 Nominated and shortlisted for a series of awards, IR Society Awards for
"Best Communications in Sustainability" and IR Magazine Awards for
"Best ESG Materiality Reporting", and were given a "Leading Light"
award from Making the Leap for our efforts in supporting social mobility.
Developing our strategy based on materiality
Last year, we conducted an extensive review of our material ESG risks, opportunities and impacts, with the results of this assessment laying the foundations for
our strategic approach. We adopted a multifaceted engagement programme involving key internal and external stakeholders and conducted industry research,
the results of which are summarised in the materiality matrix below. This matrix serves as a visual representation of the most significant topics for our business
and our stakeholders.
Manage
Maximise
CMC’s material risks:
15
7
10
12
14
9
16
18 19
20
17
2
1
3
4
5
6
11
13
8
1.
2.
Client care and protection
Leadership and governance
3. Organisational culture
4.
Incorporation of ESG factors into platforms
5. Diversity and inclusion
6. Talent development
7. Business ethics
8. Climate action
9. Professional integrity
10. Responsible marketing
11. Energy transition
12. Executive pay
13. Green finance
14. Carbon emissions
Monitor
Environment
Social
Governance
CMC’s risk/opportunity exposure
15.
Financial capability and inclusion
16. Employee wellbeing
17. Nature and biodiversity
18. Waste management
Mitigate
19.
Labour practices and human rights
20. Responsible procurement
The vertical axis represents the significance of the topics to our stakeholders, determined on the basis of interviews and surveys conducted with a
representative sample of our employees, clients, financiers, and shareholders. To assign impact, represented on the horizontal axis, we conducted a
thorough risk and opportunity assessment for each topic to understand our exposure to potential consequences or benefits.
We then validated the findings from this prioritisation exercise in workshops consisting of members of our senior leadership team. This matrix and the
sustainability strategy we have developed will guide our focus over the next few years and we will continue to assess materiality on an ongoing basis.
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s
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d
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h
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k
a
t
s
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t
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a
c
fi
n
g
S
i
i
s it i v e
o
Chan g e P
Client P
o
siti
v
Our five
sustainability
pillars
P
e
o
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l
e
P
o
s
i
t
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Planet Po s i t i v e
e
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Platfor
A year in review: over the last 12 months, we have taken significant actions to embed sustainability
into our decision-making processes and into the overall operations of our business. Kelly Perry,
Global Head of Sustainability, is at the forefront of our sustainability approach and ensuring engagement
with the Board, seeking input, obtaining approvals and providing regular updates on developments.
Kelly serves a crucial role in guiding the Board in our pursuit of sustainability practices and crafting
and developing the overarching strategy, setting goals and objectives for the Group, ensuring it is
aligned with corporate strategy, and overseeing its effective implementation.
We continued to work with our sustainability consultants, Ever Sustainable (part of Design Portfolio),
on defining relevant KPIs related to our material risks, being guided by the Global Reporting Initiative
("GRI") and Sustainability Accounting Standards Board ("SASB") voluntary standards, and meeting the
requirements of the Task Force for Climate Related Financial Disclosures ("TCFD") and Streamlined
Carbon and Energy Reporting (“SECR”).
Setting Our Tomorrow goals and objectives: our strategy development methodology provides
a consistent and transparent narrative to all stakeholders. We have set clear goals and objectives to
ensure a defined direction for individuals, teams, and the Group. However, we continue to remain agile
and innovative and allow for flexibility in adjusting our strategy and related targets if needed, whilst
keeping the overall objectives in mind.
35 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information
Sustainability continued
Using globally recognised frameworks we identified relevant KPIs and
established clear goals and objectives related to them. We also continue
to have active dialogue with internal and external stakeholders and gather
valuable feedback to help guide our strategic direction. Our goals and objectives
serve as guiding principles to help align efforts towards a common vision. We
have reviewed the industry recommended KPIs and identified areas to focus
on, which provided a framework to prioritise and focus our efforts.
As the strategy and implementation continues to evolve, so too does the
active collection of data to help us measure our progress and set realistic
but ambitious targets, against which we will track and disclose our progress
throughout the year. In defining our focus areas, we have also begun to review
data and consider stretching targets, which we believe will enable individuals
and teams to focus.
Our aim is to motivate individuals and having a coordinated effort ensures we
have established common expectations, and foster collaboration towards
shared goals. This year we have focused on implementing a structure for
measuring progress and success. It is key for us to measure performance
so it can be evaluated and we recognise the importance measuring tools
have in allowing for effective tracking of achievements and identifying areas
for improvement.
The Sustainability Committee and newly formed subcommittee are
accountable for the strategic direction and operational implementation
respectively and are proactive in taking actions across the five core pillars of
the Our Tomorrow strategy.
Client Positive
The collective collaboration of our entire ecosystem is crucial to
ensure the enduring success of the "Our Tomorrow" sustainability
strategy and to truly create a meaningful impact.
The interplay between the five strategic pillars is pivotal to the future success
of our business. To effectively serve our clients and prioritise the wellbeing of
our people, we acknowledge the significance of two key mechanisms. Firstly,
we recognise our responsibility in shaping a sustainable future by mitigating
the impacts of climate change and exploring ways to contribute to a low
carbon future. Secondly, we understand that robust governance and strong
leadership form the foundation of our sustainability approach. Consequently,
we are actively enhancing our oversight and understanding of sustainability at
the highest levels of the organisation.
Reporting against our strategy: we are committed to transparency
in our reporting and will share updates via reporting and our corporate
website, on our performance to provide stakeholders with a comprehensive
understanding of our sustainability progress. We evolved our strategy further
to include setting goals and objectives against our KPIs, highlighting our
performance and to lay out the roadmap for success. This iterative reporting
process allows us to track our progress, adapt our approach as needed, and
ensure that we are effectively embedding sustainability across our business.
Driving our efforts to being a market leader by protecting our clients and instilling confidence in their
investment decisions. Protecting with purpose.
Link to material risks within the materiality matrix:
1
4
10
15
The behaviour of markets is influenced by various factors, and it is important to acknowledge that market conditions are not always favourable. The Group
acknowledges the presence of risks and potential financial losses associated with our products and their potential impact on our clients. In addition to fulfilling
our regulatory obligations, we are actively pursuing an innovative approach to client protection, aiming to enhance their experience while ensuring that the Group
maintains alignment with global regulatory bodies. We continue to monitor our overall commitment to our client base experience.
Goal
Objective
Key performance indicator
FY22/23 performance
Ensure we provide clients with an exceptional
service and innovative platforms to meet their
investment needs.
Understand our clients'
current and future
investment needs.
Client satisfaction: Qualtrics
and Investment Trends
% scores.
– Upper quartile Net Promoter Score ("NPS")
for UK, Germany, Australia and Singapore.
Progress to date: we are tracking customer advocacy and brand awareness through market research. Qualtrics is a tool we use to measure brand awareness
and attribution. Investment Trends produces research we use to understand the dynamics of the market and CMC's performance in areas such as customer
satisfaction and advocacy. We also use quantitative measurement via our own platform and third-party data sets such as Google Trends.
Roadmap: we have implemented a tracking service to establish our performance baseline and aim to set a target to reach the top quartile in our industry. We will
also include sustainability themes within this data capture tool for measurement.
Supporting our clients through education: as our product range continues to expand and diversify, we acknowledge the evolving client base which presents
the Group with exciting new opportunities. The new wave of investors differs from our traditional investor profile, as they may have less financial literacy. However,
they possess a keen interest in engaging with our sector. We are fully committed to understanding how to best cater to the needs of these diverse and less
experienced investors, with a central focus on education.
To support this commitment, we have established a freely accessible Learning Hub on our website for all investors. This resource aims to assist new clients
in navigating the distinctions between spread betting, CFDs, and FX trading, as well as providing insights into key thematic trends in the market. Through this
initiative, we aim to empower investors with knowledge and help them make informed decisions.
36 – CMC Markets plc
Annual Report and Financial Statements 2023
Goal
Objective
Key performance indicator
FY22/23 performance
Provide clients with the tools to
expand their knowledge of CMC’s
trading and investing products with
an additional focus on sustainable
investing themes/products.
Develop an industry-leading
Learning Hub to support clients
which includes sustainable
investing themes.
Client protection and
financial literacy: number
and % of active customers
using financial literacy and
education tools.
– Our existing Learning Hub tracking tools have
changed to OneTrust privacy management in
line with GDPR compliance. This has changed
the way we track our data. We aim to provide
fuller performance data in future disclosures.
Progress to date: our freely available Learning Hub has been improved to include learning tools focused on trading strategies, CFDs and technical analysis in
the initial build.
Roadmap: our aim is to embed further operational actions and evolutions which will include, but are not limited to: setting out CMC’s principles of responsible
investing practices guide; developing an interactive suite of sustainability-themed financial literacy resources; and developing education tools to understand risks
related to online trading. The future will also see the development of more performance-related metrics and targets as we continue to advance our approach in
this area.
Responsible marketing: the Group’s Marketing Communications Policy outlines the guidelines and criteria that govern the content used in client
communications and financial promotions. It encompasses various aspects, including the nature of the content, the prominence given to specific information,
the presentation of data, and the inclusion of necessary disclosures or risk warnings. This policy ensures that our marketing communications maintain high
standards of transparency, accuracy, and compliance with applicable regulations. By adhering to these guidelines, we aim to provide clients with clear and
reliable information, enabling them to make well-informed decisions regarding our products and services.
Data privacy: our data privacy team aims to mitigate risks and create a global framework for data privacy-compliant business operations. The team helps to train
our employees to handle data responsibly and with clear accountability. It safeguards the Group by providing data privacy risk assurance and compliance with
relevant data privacy laws globally. Protecting our clients' digital assets and personal information is fundamental to the products we offer. We aim to minimise our
susceptibility to data breaches, ensuring our customers trust us to keep their data safe. This safeguarding aligns us to our sustainability objectives. Learn more
about the global structure on: https://www.cmcmarkets.com/en-gb/privacy.
Consumer Duty: the FCA’s Consumer Duty Regulation has given CMC the chance to analyse and review the retail client journey to determine whether our clients are
receiving good outcomes. This involves providing evidence that we are acting in good faith, avoid causing foreseeable harm and enabling clients to pursue their financial
objectives. CMC’s Consumer Duty programme is anchored across the culture of the organisation.
Goal
Objective
Key performance indicator
FY22/23 performance
Ensure we meet or
exceed regulatory
requirements to protect
our clients.
Aim to be industry
leaders in addressing
our commitments with
the regulators.
Client protection and regulatory
compliance: the most appropriate metric is
currently being determined.
– Preparation for the UK Consumer Duty
requirements. We are focusing on the UK market
and as we evolve our product line the requirements
of Consumer Duty will be rolled out globally.
Progress to date: aligned to consumer duty, business functions have worked collaboratively to assess and enhance areas such as product governance, client
onboarding, the assessment of fair value pricing and the identification of vulnerability characteristics in our retail client base. This work aims to build out the
required infrastructure to enable CMC to manage retail client outcomes effectively and will be underpinned by data-led monitoring and ongoing review. We have
also reviewed the storage of CMC physical records in conjunction with data privacy record management archiving at our data back-up centre.
Roadmap: we identified a need to collate baseline data, implement a tracking system and measure against industry benchmarks to set our performance targets.
We aim to be in a position to disclose on data privacy breaches across our investment and trading platform.
Case study: Client Positive
Building trading competency through content and exciting initiatives: our content
strategy has focused on educating users, uncovering trading opportunities and providing
insights and strategies from our in-house analysts and content team and top experts on
Wall Street. Through these partnerships, we offer in-depth analysis of market trends and
highlight trading opportunities in volatile environments. We have also been educating our
clients through regular updates to our Learning Hub on the Company website, authoring
trading guides and using experts to cover topics such as the correlation between different
financial instruments. Additionally, we provide educational resources to teach clients new
trading methods and strategies. A good example of how we provide educational resources
is through hosting a webinar for clients on how to know when markets are overbought
versus oversold, thereby aiding clients to better time their market entry and exits.
37 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Sustainability continued
Platform Positive
Pioneering innovative and sustainable investment products to solve our clients’ current
and future needs with platforms for good.
Link to material risks within the materiality matrix:
4
5
13
The landscape of investment products continues to evolve and we are actively embracing this change, exploring opportunities in sustainable investment and
expanding our range of investment products and platforms to provide our clients with more options to direct their investment capital to assets that prioritise ESG
and sustainability.
Integrating sustainability-themed products and services: our primary focus in evaluating these opportunities is to ensure authenticity and credibility. We are
committed to offering our clients an investment product suite that enables them to invest responsibly and understand the growing trends towards sustainable
investments. By prioritising authenticity and aligning with core sustainability principles, we aim to provide our clients with genuine and meaningful options for
making sustainable investment choices. This year we integrated Sustainalytics data into our CMC Invest UK platform. This enables clients to obtain sustainability
data on assets they are considering making investments in. We have also integrated tools for clients to set preferences and screen assets according to their own
sustainability preferences and values. Read more about our investments in technology and innovation on pages 29 to 33.
Goal
Objective
Key performance indicator
FY22/23 performance
Provide clients with the opportunity to invest in the net
zero transition and integrate ESG factors into platforms
designed with greener and more socially orientated
solutions for both the trading and investment businesses.
Leverage the growing
demand for green finance
to develop a unique niche in
the market.
ESG integration: number
of available products that
incorporate ESG factors.
– 89% of assets available on the CMC
Invest UK platform are powered by
Sustainalytics ESG data (3,421 assets
covered) as at end of 2023.
Progress to date: we made significant progress this year within the CMC Invest UK platform to integrate Sustainalytics sustainability data into individual assets
available on the platform and introduced sustainability screening tools.
Roadmap: our plan is to increase our sustainability-themed products and equities offering through the integration of ESG data across our platforms. We aim
to track client engagement with these evolving products and set targets. This exercise will be supported by tracking customer engagement and sustainable
investing patterns.
Case study: Platform Positive
Powering CMC Invest with data: to support our sustainability focused investors,
CMC Invest UK now offers an increased level of transparency and personalisation when
customers are reviewing potential opportunities. Upon viewing an asset in the app and in
partnership with Sustainalytics, investors can see its ESG risk score, potential categories
of controversy, and business involvement areas. Taking it a step further, investors are even
able to set preferences and screen assets according to their individual sustainability values,
such as avoiding animal testing, palm oil, or weapons. They can instantly view whether
an investment matches or does not match, their principles, enabling them to make more
informed decisions.
Investing in innovation and accessibility of our platforms: reviewing our trading and investment platforms through a diversity, equity, and inclusion ("DE&I")
lens is essential for us to gain a better understanding of the representation of our client base, and to ensure we are servicing a broad client demographic and
understanding their needs, perspectives, and experiences. This helps ensure that our platforms reflect the diversity of our audience and society.
Considering DE&I when evolving our platforms allows us to assess the accessibility of our online platforms for individuals from different backgrounds, abilities,
and identities. For example, studies show that 1 in 12 (8%) males and 1 in 200 (<1%) women are affected by colour vision deficiency ("CVD") or colour blindness
and the majority of those affected are red/green (trading up/trading down) CVD types. By identifying these patterns and addressing the barriers that may
hinder certain groups from fully engaging with our content and services, we can ensure we adapt our platforms to be more accessible to broader, more
diversified groups.
38 – CMC Markets plc
Annual Report and Financial Statements 2023
Goal
Objective
Key performance indicator
FY22/23 performance
Successfully integrate
sustainability factors into the client
experience and ensure platforms
are enhanced to meet a diversified
group of clients.
Develop a unique niche in
the market and leverage the
opportunity for the growing
diversified client base by
addressing DE&I gaps.
R&D investment in innovation
(products and platforms, e.g.
accessibility): the most appropriate metric
is in the process of being determined.
– Researched the Web Accessibility W3C
Principles as a measuring tool.
– Investment into platform accessibility research
with experts in the field.
Progress to date: we identified frameworks and operational build requirements to better enable accessibility across our platforms and we invested in our headcount by
hiring two specialists to support our platform focused DE&I agenda. We invested in web accessibility research with expert advisers in connection with National Inclusion
Week, providing colleagues with an opportunity to develop a deeper understanding of the importance of innovating technology towards accessibility.
Roadmap: this year we will measure against the Web Accessibility Initiative W3C Principles with a view to setting product development targets and increasing
our overall accessibility performance to reach a broader demographic. We will then implement tools to track and measure our progress to support our
transparency and disclosure in this area.
Change Positive
Leading by example and demonstrating integrity, forward thinking and accountability at every step.
Link to material risks within the materiality matrix:
2
3
5
6
9
12
19
We uphold the highest standards when conducting our business and strive to be industry leaders through our commitment to business ethics and professional integrity.
This commitment is reflected in our robust governance processes concerning our material sustainability risks, encompassing both risks and opportunities. Through
the establishment of the Sustainability Committee and recent subcommittee, the constituents provide strong governance processes and accountability, and
the business is able to demonstrate our commitment to addressing sustainability risks and integrating responsible practices into our business operations and
decision making.
Accountability and oversight of the Our Tomorrow strategy: last year we formed a dedicated Sustainability Committee, which consists of Board members
and senior business leaders from various regions and fosters a cross-functional and holistic approach to sustainability governance. Leading the Committee
is our Global Head of Sustainability, who ensures effective co-ordination and alignment of sustainability efforts across our organisation. We took this one step
further this year, by initiating a self-nominated sustainability subcommittee who expressed an interest in being advocates of change and joining the business on
the sustainability journey.
Purpose
– Provide strong governance of the sustainability strategy across the Group
– Effectively manage the risks in our operating environment
– Recognise and capture the opportunities presented
Responsibilities
– Approve strategic sustainability plans
– Provide updates/obtain feedback from the Board
– Approve sustainability practices
– Integration of Our Tomorrow into our global operations and decision making
– Bring together internal networks to deliver against sustainability goals
– Cross-functional transparency and collaboration
– Alignment with the regulatory requirements
– Define, deliver and measure KPIs
– Accountability of the Our Tomorrow strategy and performance
– Orient the Group’s triple bottom line: People, Planet, Profit
– Provide strategic direction to the subcommittee
Sustainability
Committee
Structure
– Board representation
– Committee members are cross-functional/cross-geography senior leaders
– Regular meetings throughout the year, to drive Our Tomorrow strategy
– Subcommittee formed to help deliver sustainability goals
– A permanent structure within CMC Markets
Sustainability subcommittee
– Broader employee collaboration to embed sustainable practices
into our DNA
– Proactive approach to sustainability matters
– Constituents are cross-functional/cross-geography to
drive implementation
– Provide updates on developments to Sustainability Committee
– Track and measure developments
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Strategic reportGovernanceFinancial statementsShareholder information Sustainability continued
Change Positive continued
Goal
Objective
Key performance indicator
FY22/23 performance
Lead by example
and ensure strong
governance of the Our
Tomorrow strategy.
Integrate sustainability objectives
for leadership roles across the
business and ensure there is
meaningful link to remuneration.
Accountability: % of the Board,
Sustainability Committee, Executive
Committee and senior management with
sustainability objectives embedded into
remuneration.
– DE&I objectives were set for all Executive Directors.
Performance against these objectives and the reward
allocated for achievement are summarised on pages
111 and 112 of the Directors Remuneration Report.
Progress to date: all Executive Directors were set a DE&I performance objective for 2023 and we saw an increase in senior female representation in our
London office.
Roadmap: we will be expanding Executive Director's objectives beyond DE&I to include the broader objectives of the Our Tomorrow strategy and a proportion
of their remuneration will be measured against progress; this will be conducted by the Remuneration Committee. The sustainability objectives will also be
cascaded to include members of the Sustainability Committee and senior management team. European offices will be introducing sustainability principles into
their organisational handbook. The Group will enhance its global Sustainability policy to incorporate the broader sustainability strategic approach and ensure our
employees have access and commit to the policy and our guiding principles.
Board diversity: we recognise that having a diversified Board with different backgrounds, perspectives and experiences leads to more robust discussions,
improved decision-making processes, and a wider range of innovative ideas and solutions. This leads to a more inclusive and balanced approach to governance.
A Board with a diversified make-up is better equipped to identify and mitigate potential risks. Diverse perspectives can uncover blind spots, challenge
assumptions, and consider a broader range of scenarios, leading to more effective risk management strategies. We are committed to enhancing stakeholder
trust and confidence in our business and know that when the Board reflects the diversity of the society it operates in, stakeholders are more likely to perceive the
Group as fair, inclusive, and responsive to their needs.
In many jurisdictions, promoting board diversity is encouraged or even mandated by regulations and governance codes. Having a diverse board helps
organisations meet these requirements and maintain a positive corporate reputation. Board diversity is an essential element of social responsibility. It
demonstrates a commitment to fairness, equality, and inclusivity, contributing to a more equitable society and promoting positive social change.
Goal
Objective
Key performance indicator
FY22/23 performance
Drive diversity at Board level
and leverage the benefits of
diversity of thought.
Increase Board diversity to ensure representation
from a gender and ethnicity perspective to align
with FCA current and future requirements.
Board diversity: gender
and ethnicity representation
at Board level.
– Female representation on the Board
increased from 25% to 33%.
– Our Non-Executive female representation
is now 60%.
Progress to date: we continue to ensure diversity is a consideration as we source new talent for the Board and we drive fair recruitment processes for any
available roles on the Board.
Roadmap: we note the targets set out by the Listing Rules and we acknowledge that we do not comply with these targets at present, as disclosed in the
Nomination Committee report on page 97. However, we will continue to ensure that full and proper consideration is given to gender and ethnic diversity as part
of the process for making appointments to the Board and keep our position in relation to appropriate targets under review. This year we will also focus on the
requirements outlined by the Women in Finance Charter to support gender growth into senior roles and track the diversity of Executive Director succession
candidates through our succession planning processes.
Upskilling at the top: CMC’s Board of Directors plays a critical role in setting the overall direction and strategy of the organisation, overseeing management,
and ensuring the Group operates in the best interests of its stakeholders. To effectively carry out these responsibilities, Board members need to possess the
knowledge, skills, and expertise necessary to make informed decisions and provide effective guidance. Learning and development programmes can provide
Board members with the opportunity to enhance their skills and knowledge in areas such as leadership, corporate governance, risk management, finance, and
strategy and this year we focused on providing tools for the Board, Executive Directors, Sustainability Committee and senior management to gain a greater
understanding of sustainability topics.
Goal
Objective
Key performance indicator FY22/23 performance
Increase knowledge and insights
on a broad range of topics and
trends related to the Our Tomorrow
strategy, to enhance connection
to the sustainability agenda and
effectiveness as leaders and align
with expectations of our industry
stakeholders.
Engage the senior level with
the facets of the Our Tomorrow
sustainability strategy, increasing
awareness and understanding of
sustainability principles, concepts,
and best practices.
Board, Executive
Committee,
Sustainability
Committee and senior
management learning
and education: number
of learning hours and
topics covered.
– Introduced sustainability education to the
Sustainability Committee and subcommittee in
November 2022.
– 10 sustainability topics covered, 108 learning hours
made available, average of 6 hours per person and a
12-month completion window.
40 – CMC Markets plc
Annual Report and Financial Statements 2023
Case study: Change Positive
Sustainability subcommittee and advocates of change: in
forming the sustainability subcommittee, we operated an application
process, for employees to demonstrate their appetite to be engaged with
CMC's Our Tomorrow sustainability direction. We received applications
from 6% of our global workforce. The Sustainability Committee reviewed
all applications and identified key individuals to be our sustainability
"trailblazers", who were then assigned to the five strategic pillars of the
sustainability strategy. Together the Sustainability Committee and
newly formed subcommittee make up 8% of our employees and these
individuals will be accountable for delivering against the goals and
objectives of the Our Tomorrow strategy.
Progress to date: this year we rolled out the ESG Academy, which made sustainability specific educational tools available to members of the Sustainability
Committee and subcommittee including a selection of the Executive Committee and senior managers. The topics covered related to climate risk, ESG data and
ratings, factors and reporting; additional topics included sustainable and responsible investing and ethics, culture and conduct.
Roadmap: this year we will focus on embedding a training schedule which includes modules relating to sustainable themes. This will be rolled out to our
Executive Directors, Sustainability Committee members and senior management and we will aim to track participation and evidence progress to set
performance targets. We will also be providing training on sustainability matters to our Non-Executive Directors as part of their annual training plan.
Goal
Objective
Key performance indicator
FY22/23 performance
Meet the expanding
requirements of TCFD.
Aligning our business to
the climate risk reporting
requirements of TCFD.
Understand climate risks and how to
mitigate those risks: set metrics and
targets by end of 2024 and publish.
– Compliant with 9 of 11 of the recommendations
of TCFD's 2021 guidance in accordance with
Listing Rule 9.8.6.
Progress to date: we made significant progress in understanding and assessing our climate risk, through the updates of our climate risk register and scenario
analysis. Find out more about our TCFD alignment and deeper analysis on pages 50 to 59.
Roadmap: this year we will be setting metrics and targets related to climate risk, as we are not ready to disclose on them without a deeper understanding of the
nature of these risks and their potential impacts to our business. Our aim is to address these final two of the 11 TCFD recommendations relating to metrics and
targets and update on our progress in our next disclosure.
Equal opportunities: we unequivocally reject any form of unlawful or unfair discrimination. When seeking talent, our commitment is to recruit the best individuals
from a wide range of applicants. We believe that all candidates deserve to be respected and valued for the contributions they bring to the Group. We are fully
committed to considering employment applications from individuals with disabilities and providing ongoing employment to current employees who may become
disabled during their tenure, whenever feasible. For those with disabilities seeking to join CMC Markets or existing employees who experience disabilities,
whether temporary or permanent, we strive to adapt the work environment and offer flexible work arrangements, training, and graduated back-to-work plans in
collaboration with occupational health.
Human rights: we uphold ethical business practices and are committed to promoting and protecting recognised human rights principles. The Group's stance
against slavery and human trafficking can be found in our dedicated statement, which is available on our website (www.cmcmarkets.com/group). We actively
monitor employee remuneration to ensure compliance with living wage requirements or their local equivalents.
A newly formed steering committee has been brought together to measure, monitor and enhance our approach to modern slavery. The committee meets
quarterly and consists of key stakeholders from legal, financial crime, sustainability, human resources, and compliance teams and is responsible for reviewing the
current effectiveness of our measures and enhancing our internal practices to mitigate our risk and exposure to modern slavery practices.
Anti-bribery and anti-corruption: the Group maintains a zero-tolerance approach towards bribery and inducements. We have implemented a comprehensive
anti-bribery and corruption policy that applies to all our global staff. This policy is overseen by the Heads of Compliance in the UK and Europe and is diligently
enforced by our financial crime team and compliance officers across our offices worldwide. In addition to this policy, we provide clear guidelines to our staff
regarding other important areas such as politically exposed persons ("PEPs"), gifts, entertainment, and expenses.
To ensure transparency and accountability, we have a Whistleblowing policy that allows any member of our staff to anonymously raise concerns related to bribery
or corruption. We take these concerns seriously and investigate them promptly and thoroughly. Our commitment to maintaining the highest ethical standards is
unwavering, and we actively promote a culture of integrity, honesty, and compliance throughout the Group.
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People Positive
Cultivating culture and fostering an inclusive and innovative workplace where everyone thrives.
Link to material risks within the materiality matrix:
3
5
6
16
The invaluable contribution of our people has been at the heart of CMC Markets' success. We recognise that our future accomplishments hinge on cultivating
and enriching an environment where our employees can fully realise their potential. This involves prioritising areas such as workforce diversity, talent development,
gender and equal pay of our workforce, and taking decisive steps to create a workplace where everyone can flourish, irrespective of their beliefs and identities.
The Group made significant progress across a number of core people metrics this year. In a challenging post-COVID-19 employment market, CMC successfully
grew its headcount by 28% to support its growth and transformation strategies. We delivered 68% of hires through our internal talent team or employee referral,
significantly reducing cost whilst improving the quality of the candidates we hired. Voluntary turnover decreased to 20% from 24% and employee engagement
improved from 66% in 2022 to 72% in 2023. Our focus on employee development and ensuring our reward structures are market aligned, saw over 200
employees benefiting from an internal promotion or developmental role change. We continue to evolve our HR model with dedicated resource to support learning and
development, DE&I and reward.
Workforce diversity, equity and inclusion ("DE&I"): we value diversity across the Group and this year we will focus on gender, ethnicity and disability. Our
diverse workforce brings together individuals with different backgrounds, experiences, and perspectives. This diversity of thought and ideas fosters innovation
and creativity within the Company and diverse teams are more likely to generate a wider range of ideas, challenge conventional thinking, and offer unique
solutions to problems. Teams composed of individuals with diverse backgrounds and perspectives approach problem solving and decision-making from various
angles. This diversity helps to identify blind spots, consider alternative viewpoints, and arrive at more well-rounded solutions and the different perspectives can
lead to better critical thinking and more effective problem-solving strategies.
We have seen a shift in the competitive job market towards prospective employees prioritising DE&I when considering potential employers. The Group values
and promotes diversity and we are attracting a wide pool of talented candidates. A diverse and inclusive workplace is essential for retaining our top talent, as
employees are more likely to stay in an environment where they feel respected, supported, and included.
Goal
Objective
Key performance indicator
FY22/23 performance
Foster an
inclusive
culture and
workplace for
all colleagues.
Adopt a proactive
DE&I strategy that
provides employees
with the tools
to reach their
potential.
Workforce diversity: gender,
ethnicity and disability: % of
employee diversity according to
gender, ethnicity and disability at
different levels of the organisation
including Executive Committee,
senior management and entire
workforce of the organisation.
– Overall global gender balance at CMC has remained stable at 29% female
and 71% male. We saw a 3% increase of female representation in the UK
which was offset by a decrease in APAC & Canada.
– Females in senior management roles improved from 11% (October 2022) to
20% (March 2023) using the FTSE Women Leaders Framework.
– Direct reports to Executive Directors: 6% self-identified as being from a
diverse ethnic background.
Progress to date: this year we made great strides in DE&I when we became signatories of the Women in Finance Charter
("WiFC") and launched a comprehensive programme to engage our workforce in developments in DE&I, these initiatives
included the launch of a new intranet portal, education and learning through guest speakers and panel discussions and
providing DE&I focused learning tools for National Inclusion Week and International Women’s Day. We also recruited DE&I
specialists in London and Sydney, who work closely with the business at all levels to ensure we achieve our diversity goals both
regionally and globally. We implemented a structured calendar to recognise and celebrate key moments throughout the year and
evolved our Employee Resource Group programme. This included our Women@CMC network, which this year launched a
mentoring programme for women in the UK and provided networking and professional development tools on topics such as:
managing limiting self-beliefs, financial wellbeing, and career planning. To improve the depth of our DE&I data we launched our
"Count me in" campaign and improved onboarding processes to maximise data capture upon joining our business.
Roadmap: we value all aspects of diversity and this year our focus areas will be gender, disability, and ethnicity. Our gender commitments are outlined by the
Women in Finance Charter. Our ethnicity focus will see us measure against the Investing in Ethnicity ("IIE") Maturity Matrix and develop an alignment strategy. Our
disability focus will see us measure against the Business Disability Forum ("BDF") Disability Smart Assessment and develop an alignment strategy. We will deliver
training to all employees to increase understanding of DE&I-related topics and build our reporting capability for DE&I-related metrics. We will also plan to report
against the Workplace Gender Equality Agency ("WGEA") in Australia and align with the requirements.
42 – CMC Markets plc
Annual Report and Financial Statements 2023
Case study: People Positive
HM Treasury's Women in Finance Charter("WiFC"): this year we
are proud to become signatories of WiFC and committed to work together
within the sector to build a more balanced and fair industry. We support
the Government's aspirations to see gender balance at all levels, within the
finance sector and concur that a balanced workforce is great for business, its
customers, profitability, workplace culture and more increasingly for investors.
Our ambition is to align with the requirements of the WiFC and support
the progression of women into senior roles with a focus on the executive
pipeline and mid-tier level. As defined by the Charter we will set gender-
related targets and implement a strategy for achieving these targets.
We commit to being transparent on our progress and to deliver against
these targets.
Publicly reporting our developments will drive change today and in the
future and hold the organisation accountable for meeting the requirements
of the Charter.
Our engagement score
71%an improvement of 5% on
our 2022 survey
Talent development: in the last four years our spending on learning and development has increased by 230% and
we are committed to employees' professional growth and advancement and giving employees opportunities to
learn new skills, acquire knowledge, and develop their talents. We have seen the benefits of this including reduced
employee turnover. Continuous learning and development enable our employees to stay updated on industry trends,
best practices, and emerging technologies, allowing them to contribute more effectively to the organisation's goals.
Ultimately, this leads to improved performance and increased productivity.
Over recent years we have we developed a multi-channel approach to learning and development with an emphasis
on technology-based delivery platforms and open access product and have gone one step further this year
by consolidating the delivery platform into Workday, our HR portal, so we have a single source of learning and
development data. We have also supported internal mobility and career progression and seen employees benefit
from an internal promotion or career move within CMC in 2023. We also expanded our junior talent schemes to include
graduates in technology development, technology production, legal and quant teams.
Goal
Objective
Key performance indicator
FY22/23 performance
Continually upskill our workforce, close knowledge gaps
and ensure employees possess the necessary skills
for our business to compete in the future and reduce
reliance on third-party advisers.
Adopt a targeted approach to training
and development of our talent to
demonstrate commitment to the
workforce and increase retention.
Talent development:
Investment in education and
training: average hours of
training per person.
– We invested 1%
of global payroll
into learning and
development.
Progress to date: we introduced career planning workshops and taster programmes in our APAC offices focused on the junior talent in our customer services
function. Our Women@CMC ERG group rolled out a mentor programme for its members which is now being evolved to provide a Group-wide programme. We
enhanced our technical provision with the introduction of industry recognised online resources such as Puralsight.
Roadmap: we will hire learning and development specialists in our main offices in London and Sydney to support enhancements to our junior talent and leadership
programmes to complement our management course. To underpin our graduate programme we will launch a paid internship programme and we will engage with our
charity partner, Making the Leap, to ensure we attract a diverse range of candidates and utilise the Social Mobility Index to benchmark our current position. We will
support employee career progression within our career framework. Specialist educational development areas will include sustainability, conduct and consumer duty.
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People Positive continued
Community engagement and impact: our commitment to sustainability extends beyond our business operations and into the communities where we operate.
Due to improvements in CMC's global charity programme, we have seen significant increase in fundraising and engagement with our carefully selected charity
partners. These enhancements have helped to shape a strong purpose led culture across the Group and we are proud of employees commitment to charitable
actions this year to support various communities including, but not limited to, driving social mobility and economic empowerment.
26%increase in volunteer days
Our European offices initiated their inaugural charity programme this year, with charity partners that closely align
with our sustainability goals. We identified a team of "Charity Champions" to support the delivery of the programme,
led by our Head of Europe. We selected six charity partners across three countries in much needed areas of
reforestation, gender employment support and career guidance for disadvantaged individuals. Our valuable
partnerships have engaged employees in various volunteering activities including tree planting, mentoring, career
guidance and fundraising.
Our UK offices continue to support economic empowerment and are in the third year of a three-year partnership with three charity partners focused on social
mobility from school age to young adults making their first steps into the professional world. As well as continuing to support our employees' choice charity, a
local hospice that supports individuals and their families through challenging times, we continue to support our partners through donations and fundraising
initiatives. This year we were delighted to see a significant increase in employees offering their time to volunteer with our charity partners through initiatives such
as gardening days, painting and decorating, business planning and career guidance.
Our APAC & Canada offices have a dedicated team of "Charity Champions" that develop and implement a yearly plan of initiatives which include many
volunteering opportunities such as providing food service for women who have experienced domestic abuse and supporting their independence and economic
empowerment. Our partners also provide support with numeracy through education and learning of young children.
Case study: People Positive
Economic empowerment: our commitment to sustainability extends
beyond our business operations and into the communities where we
operate and empowering individuals to have financial stability. This year
our Singapore office commenced a partnership with Sophia, Asia's
first and only female focused financial education platform to promote
financial literacy amongst young Singaporean women whose goal is to
make financial education accessible to all women and close the financial
literacy and investment gap. As part of the collaboration we sponsored
an education series including topics on making budgets, managing debt,
mindful spending, and the benefits of starting to invest early.
44 – CMC Markets plc
Annual Report and Financial Statements 2023
Goal
Objective
Key performance indicator
FY22/23 performance
Actively champion and support regional
charities, aligned to the Our Tomorrow
strategy across our global activity,
delivering a fair and strategic approach to
philanthropy and increase engagement
with charity partners.
Set an annual pledge against
profits to adopt a fair commitment
to charities and increase workforce
engagement with charity partners.
Community engagement:
% of annual profits
paid to charitable
organisations, aligned to the
Our Tomorrow strategy.
– 26% increased usage of volunteer days in
APAC & Canada in 2023 compared to 2022.
– 1,167% increased usage of volunteer days in
UK in 2023 compared to 2022.
Progress to date: this year we delivered a fuller programme of volunteering and fundraising opportunities. We launched a new charity programme across
Europe and began aligning our partnerships with the goals of the Our Tomorrow sustainability strategy. We also launched our "Charity Chronicle" newsletter and
intranet site as a way of enhancing our engagement with our workforce with the purpose led activity.
Roadmap: our focus will be on delivering a more robust structure to our community engagement programme, through resourcing and ensuring governance and
oversight aligns our charities and activity to the Our Tomorrow goals. We will set a pledge demonstrating our financial commitment each year and we will focus on
increasing employee engagement with charity partners.
Planet Positive
Understanding and mitigating our climate impacts and exploring opportunities to support
the transition to a greener economy.
Link to material risks within the materiality matrix:
8
11
14
18
We recognise that we have work to do to understand the full scale of our impacts on the environment and have committed to taking a leading role in the fintech
space to mitigate our environmental footprint, from finding ways to enhance our energy efficiency and reduce our carbon impacts, to embracing more holistic
ways of thinking about technology and electronic waste. As we continue to expand and grow our business, we are reviewing our office spaces and specifying the
need for green credentials and utilising data provided by BREEAM ratings, or local equivalents on the buildings we are considering, to inform our decision making.
This year we have been focused on developing a more comprehensive climate strategy and full greenhouse gas emissions inventory. As a fintech business we
recognise that our overall carbon footprint may not be as impactful as other sectors, however we remain committed to setting out our plan to mitigate climate
change and reduce our environmental impacts. We have set goals and objectives relating to absolute emissions, emissions intensity, and energy consumption
but also beyond, to identify how we might implement initiatives, and make strategic decisions to mitigate greenhouse gas emissions, promote sustainable
practices, and adapt to the effects of climate change.
As the first step in this journey has been to understand the Group’s current overall carbon footprint, we initiated a data collection project which expanded beyond
previous years Scope 1 and 2 emissions data to also include our Scope 3 emissions data. The Group believes we should focus beyond our own Company's direct
operations and encompass our entire supply chain. In addition to this, we are stepping up our commitment to the planet: our aim is to set net zero targets aligned to
international frameworks that limit global warming to a 1.5°C target for our own operations and well below 2°C for everything in our value chain.
In the future this will involve working with suppliers, contractors, and partners to encourage sustainable practices, reduce emissions, and promote responsible
sourcing. We know that collaboration and transparency throughout the value chain is crucial to effectively manage our environmental impacts and reduce the
carbon footprint associated with the products and services we provide.
This year we engaged Normative which has a team of climate experts to support our climate strategy and a carbon accounting engine which helps us to calculate,
report, and reduce our carbon emissions. Normative uses the Greenhouse Gas ("GHG") Protocol and a database of emissions factors to bring scientific accuracy
to emissions accounting. The GHG Protocol represents a comprehensive global standardised framework to measure and manage GHG emissions from private
and public sector operations, value chains, and mitigation actions and is compatible with our net zero journey.
Our calculation methodology: GHG emissions are calculated in alignment with records used to produce the consolidated Financial Statements for the
relevant accounting period. CMC's GHG footprint follows the operational control approach and if we operate and control an area, the associated emissions will
fall into Scope 1 or 2 and all other emissions fall into Scope 3. This year we have increased our reporting to cover Scope 3 emissions, using a hybrid method of
spend or activity data depending on the category and data availability.
We have made changes to our Scope categorisation, as we align with the GHG Protocol and calculate our Scope 3 emissions for the first time. Our gas consumption
has been recategorised from Scope 1 to Scope 2 due to the fact that we do not have operational control over the boilers in our multi-tenanted buildings. We do not
have a direct contract with the gas supplier in our London office and energy is paid through service fees to the landlord.
45 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Sustainability continued
Planet Positive continued
Another key recategorisation relates to our external datacentres which have moved from Scope 2 to Scope 3 upstream leased assets as it was established to
be a leased co-location data centre space. We confirm that the emissions are still included within Scope 3 data. Lastly the renewable energy percentage has
increased, as the London office has a 100% renewable contract, reducing our market-based Scope 2 emissions.
Our approach for any errors, updates, or restatements involves applying a threshold of 5%. In the event of an error or update identified in the prior period or
baseline, we will restate our GHG emissions if the error exceeds this threshold. Furthermore, we recognise the significance of acquisitions, disposals, and
changes within the Group from both a size and operations perspective. The figures below include emissions data from all global offices where data is available
and, in some cases, estimates are used to calculate usage where actual consumption figures are not available.
95%energy from renewable sources
Absolute emissions and emissions intensity: we have reviewed both absolute emissions intensity (e.g., reducing
emissions by a percentage) and intensity based (e.g. reducing emissions per unit of output). We have also focused on
reviewing energy efficiency and our use of renewable energy to prioritise energy efficiency measures that reduce our energy
consumption and associated emissions. This includes reviewing ways to implement energy-saving technologies, upgrading
infrastructure, identifying way to optimise processes, and promoting energy conservation among employees. Additionally,
we are building on our current purchasing from renewable energy sources to transition away from fossil fuels and further
reduce our carbon footprint.
Scope 2: to determine the carbon impacts for electricity we used
emissions factors from the Association of Issuing Bodies ("AIB"). Cooling
is regional/district-specific and is otherwise covered by electricity
databases. Gas consumption is included in Scope 2 and our external data
centres are included in Scope 3, in 2023. 2022 and base year 2015 figures
have been restated to reflect the recategorisations.
Scope 3: we used emission factors from the Department for Business,
Energy and Industrial Strategy’s (“BEIS”), now Department for Business
and Trade ("DBT"), for fuel and energy related activities, business travel
and waste generated in our operations, coupled with Exiobase, which is
an Environmentally-extended input-output analysis ("EEIO") model, for
capital goods, purchase goods and services, and upstream transportation
and distribution. External data centres are included in Scope 3 in 2023.
2022 figures have been restated to reflect this recategorisation.
Defining the three scopes of corporate emissions according to the GHG Protocol
CO2
CH2
N2O
HFCs
SF6
NF3
PFCs
Scope 2
Indirect emissions
Scope 3
Indirect emissions
Scope 1
Direct emissions
Scope 3
Indirect emissions
Purchased
electricity,
steam, heating
and cooling
for own use
Purchased goods
and services
Waste generated
in operations
Capital goods
Business travel
Fuel and energy-
related activities
Transportation
and distribution
Employee
commuting
Leased assets
Company
facilities
Company
vehicles
Transportation
and distribution
Processing of
sold products
Use of sold
products
End-of-life
treatment of
sold products
Leased assets
Franchises
Investments
Upstream activities
Reporting company
Downstream activities
Source: Normative Emissions Calculation Methodology Version 1.1 - Jan 2023: The three scopes of corporate emissions according to the GHG Protocol.
46 – CMC Markets plc
Annual Report and Financial Statements 2023
Goal
Objective
Key performance indicators
FY22/23 performance
Develop a climate
strategy that aligns to
the Paris Agreement
and join the pathway
to support the global
sustainability agenda.
Measure our Scope
3 emissions and set
a net zero science-
based target.
Emissions: total (absolute)
global greenhouse gas
emissions including direct
(Scope 1), energy indirect
(Scope 2) and other indirect
(Scope 3) emissions.
– Scope 2 increase from 258.4 tCO2e, in 2022 to 281.2 tCO2e in 2023 due to
higher non-renewables in the grid as a result of disruptions to global energy
supplies in 2023.
– Scope 3 increase from 9,858.3 tCO2e in 2022 to 12,219.7 tCO2e in 2023
primarily due to an increase in Group operating expenses in 2023.
Emissions intensity:
emissions intensity ratio (total
global emissions / net operating
income in tCO2e/£m).
– Emission intensity ratio increased to 43.3 tCO2e/£m in 2023 from
35.9 tCO2e/£m in 2022.
Progress to date: we engaged Normative, a carbon accounting and climate expert advisory team, to help develop our strategy, collected 2022 Scope 3
emissions and performed a review of Scope 1 and 2 emissions data. We are including climate and sustainability factors in key projects and procurement activity,
such as the selection and onboarding of our new global travel provider and the selection of our new data centre partner where 100% renewable energy and
strong sustainability strategy were a key part of the decision process. As part of the renovation of our office space in London, sustainability factors are being
taken into consideration from demolition to redecoration, lighting, sustainably sourced materials and recycling/upcycling.
Roadmap: we have ambitious targets for this year and aim to align and sign up to Tech Zero. We also aim to include sustainability principles in our tender, supplier
onboarding and due diligence process. We aim to set a net zero target following a full review of our emissions data for 2023.
Goal
Objective
Key performance indicator
FY22/23 performance
Move towards renewable
energy sources to power
our operations.
Drive down our Scope 1 and
2 emissions to align with net
zero ambitions.
Emissions consumption:
% of electricity consumption
from renewable sources.
– Energy from renewable sources moves from 91% in 2022 to
95% in 2023.
Progress to date: we performed a review of our global office energy use and collated data for 2023.
Roadmap: our focus will be on collating all energy supply data from across our global offices (where available). We will set a pledge that ensures we drive down
energy sources from fossil fuels. Following a review of our full renewable energy source data, we aim to set a renewable energy target.
Reporting and disclosure: we will continue to provide transparent reporting and disclosure of our environmental performance and progress towards our
climate goals. This involves measuring and monitoring of key performance indicators, tracking emissions, and reporting on our climate initiatives. We will continue
to align with the voluntary reporting frameworks of SASB and GRI and utilise the carbon accounting tools of the GHG Protocol and report against the Task Force
on Climate-related Financial Disclosures ("TCFD") to communicate our climate actions to stakeholders.
Case study: Planet Positive
Launching our climate strategy: as part of the lead up to World Earth Day,
we hosted a panel discussion moderated by the Group CFO and Global Head of
Sustainability alongside the COO of Normative, the Group’s carbon accounting
experts, and Ever Sustainable’s senior sustainability consultant. Both Normative
and Ever Sustainable have been engaged by the Group to support our carbon data
collection and climate strategy. The purpose of the panel was to raise awareness of the
Group’s commitment to the planet and inform employees of the Group’s progress and
continued steps to reduce its carbon footprint. We recognise the importance of taking
our employees on the carbon reduction journey as everyone needs to play their part in
a sustainable future.
47 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Sustainability continued
Greenhouse gas emissions by scope
Scope 1: direct greenhouse emissions that occur from sources that are controlled or
owned by an organisation
Scope 2: indirect market-based emissions from utility companies, such as electricity,
heat, cooling and suppliers of steam2
Scope 3 indirect value chain greenhouse gas emissions except scope 2 categories,
upstream and downstream
Total global emissions: sum of emissions of various gases
Net operating income
Headcount
Intensity ratio (total global emissions/net operating income)
Intensity ratio (total global emissions/employee)
Renewable % for electricity
Unit
tCO2e
kWh
tCO2e
kWh
tCO2e
tCO2e
kWh
£m
number
tCO2e/£m
tCO2e/HC
Year ended
31 March 2023
Year ended
31 March 20221
—
—
—
—
Year ended
31 March 2015
(base year)1
—
—
281.2
4,051,055.5
258.4
3,884,452.6
3,560.4
5,940,440.0
12,219.7
9,858.3
—
12,500.9
4,051,055.5
10,116.7
3,884,452.6
3,560.4
5,940,440.0
288.4
1,087.0
43.3
11.5
95%
281.9
917.0
35.9
11.0
91%
143.6
473.0
24.8
7.5
—
1 2022 and base year emission data has been restated to reflect the reclassification of gas consumption, moved from Scope 1 to Scope 2 and external datacentres, moved from Scope 2 to Scope 3.
Scope 3 data for 2022 has been calculated retrospectively. Please refer to calculation methodology on pages 45 to 46 for more information on the re-classifications.
2 To align with GHG Protocol we have included district cooling data in 2023 and we recalculated our gas consumption for our London office using a m2 basis.
Global energy consumption by location in kWh
UK
Rest of the World
Total
Global energy emissions by location in tCO₂e
UK
Rest of the World
Total
Year ended
31 March 23
Year ended
31 March 23 (%)
Year ended
31 March 22
Year ended
31 March 22 (%)
3,406,794.0
644,261.5
86%
14%
3,440,751.5
443,701.0
4,051,055.5
100%
3,884,452.5
89%
11%
100%
Year ended
31 March 23
Year ended
31 March 23 (%)
Year ended
31 March 22
Year ended
31 March 22 (%)
4,901.6
7,599.3
12,500.9
64%
36%
100%
4,400.0
5,716.7
10,116.7
43%
57%
100%
B
Global energy emissions (tCo2e) by scope
A – Scope 1 / 0%
B – Scope 2 / 2%
C – Scope 3 / 98%22+
C
48 – CMC Markets plc
Annual Report and Financial Statements 2023
98
+
+
98
+
M
M
Group non-financial information statement
Set out below is the information required by Sections 414CA and 414CB of the Companies Act 2006 (the “Act”) necessary for an understanding of the Group’s
development, performance and position in relation to the matters set out in the table below.
Reporting requirement
Group policies and statements
Commentary, outcomes and KPIs
Environmental matters
Employees
Social matters
Human rights
Anti-corruption and
anti-bribery matters
Principal risks
Business model
Non-financial key
performance indicators
– Health and Safety Policy
– Travel and Entertainment Policy
– Equal Opportunity Policy
– Anti-Harassment and Bullying Policy
– Physical Security Policy
– UK Sabbatical Policy
– Diversity and Inclusion Statement and Policy
– Board Diversity Policy
– Flexible Working Policy
– Equal Opportunity Policy
– UK Sabbatical Policy
– Diversity and Inclusion Statement and Policy
– Board Diversity Policy
– Equal Opportunity Policy
– Anti-Harassment and Bullying
– Physical Security Policy
– UK Sabbatical Policy
– Diversity and Inclusion Statement and Policy
– Board Diversity Policy
– Flexible Working Policy
– Group Anti-Bribery and Corruption Policy
– Group AML Policy
– Group Financial Sanctions Policy
– Group Politically Exposed Persons Policy
– Group Anti-Slavery Policy
– Modern Slavery Statement
Sustainability section pages 34 to 48
Sustainability section pages 34 to 48
Nomination Committee section pages 94 to 97
Sustainability section pages 34 to 48
Nomination Committee section pages 94 to 97
Sustainability section pages 34 to 48
Nomination Committee section pages 94 to 97
Stakeholder engagement section pages 16 to 19
Risk management section pages 67 to 73
Our business model section pages 12 to 13
Key performance indicators section pages 26 to 28
49 – CMC Markets plc
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Strategic reportGovernanceFinancial statementsShareholder information Strategic report
TCFD
Task Force on Climate-Related
Financial Disclosures (“TCFD”)
CMC acknowledges the systemic challenges posed by the climate crisis to
business and society. We also know that we have a role to play in mitigating
our own impacts on the climate whilst ensuring the resilience of our business.
CMC reported against the recommendations of the TCFD for the first time in
our 2022 Annual Report and Financial Statements. This year, we continue to
enhance our approach to understanding and managing climate-related risks
and opportunities in line with the TCFD’s 2021 implementation guidance. In
accordance with Listing Rule 9.8.6 R, the climate-related financial disclosures
are consistent with 9 out of 11 of the TCFD recommended disclosures. Where
we are not yet compliant (recommendations 9 and 11 relating to metrics and
targets), we explain our position and forward-looking plan in the relevant sections
below. We will continue to refine our approach to build resilience against the
potential physical and transition risks of climate change whilst also identifying
ways to reduce the Group’s impacts on the planet.
Governance
The Board oversees the Group’s Our Tomorrow sustainability strategy, which
encompasses oversight of the risks and opportunities of the climate crisis.
The Board receives updates on the Our Tomorrow strategy at least three
times each year and approves relevant KPIs and targets, including those
related to climate change. In 2023 the Board considered sustainability matters
at four meetings, receiving updates on the Group’s progress to implement its
sustainability strategy and the establishment of the Sustainability Committee
and its subcommittee and to discuss or approve the KPIs against which
progress of the strategy will be measured and reported against.
This year we appointed a Chief Risk Officer (“CRO”) who brings experience in
implementing environmental,social and governance (“ESG”) capabilities. The
CRO is a member of the Sustainability Committee and will provide oversight
on climate changes risks to which the firm is exposed.
The Board relays its thinking on climate-related risks and opportunities and
is informed about CMC’s performance against climate-related initiatives
and targets via the Sustainability Committee. The Sustainability Committee
reports up to the Board at least three times annually in accordance with
its terms of reference. The Sustainability Committee includes two Board
members, the Chief Financial Officer and Head of Asia Pacific & Canada, who
represent the Board’s position on climate-related topics and in turn act as
advocates for the priorities of the Committee at the Board level.
The Sustainability Committee is chaired by CMC’s Global Head of Sustainability,
whose mandate includes the assessment and management of CMC
Markets’ sustainability risks and opportunities, including the impacts of climate
change. Committee membership is comprised of a cross-functional team
of senior management, including the above-mentioned Board members.
The Sustainability Committee provides the forum through which the Global
Head of Sustainability keeps senior management abreast of climate-related
initiatives and progress. For more details about the responsibilities of the
Sustainability Committee, see page 51.
A subcommittee specifically dedicated to the Planet Positive pillar of the
Our Tomorrow strategy is charged with helping the Committee embed the
goals and objectives of the Our Tomorrow strategy into the operations of
the business. In addition, a TCFD working group including representatives
from across different departments is convened to participate in climate risk
assessment exercises including climate scenario analysis.
The Board and relevant Committees consider climate-related issues when
considering its decisions and guiding major plans of action that could affect
the climate impact aspirations of the Planet Positive pillar of the Our Tomorrow
sustainability strategy. It also considers the risk and opportunities that climate
change impacts have on its operations.
50 – CMC Markets plc
Annual Report and Financial Statements 2023
CMC’s governance of climate risks and opportunities
The Board
Provides oversight of the Group’s Our Tomorrow sustainability strategy, which encompasses monitoring KPIs and targets for climate-related risks and
opportunities and approving the contents of this TCFD Statement.
Group Audit Committee
Group Risk Committee
Nomination Committee
Remuneration Committee
The Committee ensures an
independent review of reporting
on climate change risks within
this TCFD Statement as part of its
consideration of the Annual Report
and Financial Statements.
The Committee receives reports from
the Executives on the principal risks to
the business and reviews the TCFD
Statement in order to make a
recommendation on its approval
to the Board.
The Committee considers the balance
of skills on the Board and ensures that
any gaps are identified and considered
when new Board members are
appointed and when any training
needs for existing Non-Executive
Directors are discussed. This will
include consideration of the
knowledge required by the Board in
relation to sustainability matters.
The Committee considers the
performance of the Executive
Directors against performance
metrics which are linked to
remuneration packages. This
includes sustainability KPIs in
performance targets.
Sustainability Committee
Planet Positive subcommittee
TCFD working group
The Committee is responsible for the delivery of
the Planet Positive KPIs including climate-related
goals and objectives as well as tracking the data
needed for reporting.
The TCFD working group is convened to support
climate risk assessment and to develop a
decision-useful disclosure.
The Committee ensures robust governance
of the Our Tomorrow strategy and provides
transparency to the Board on sustainability
considerations and developments, including,
but not limited to, alignment with regulatory
requirements, managing and identifying the
risk and opportunities in our operating
environment and providing strategic direction
to the subcommittees, and oversees the
implementation of sustainability initiatives
and the climate strategy, including climate
mitigation and resilience.
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Risk management
A key focus of the Group’s climate change agenda this year was to improve
our approach to identifying, assessing and managing climate-related risks
that could impact our business. In addition to reviewing our identification and
assessment methodologies, we conducted more rigorous climate scenario
analysis to test the Group’s strategic resilience over the short, medium and
long term. The Group also deepened alignment with existing risk management
approaches within the business with the hiring of a CRO who will support the
business in continuing to improve the integration of climate-related risks into the
Group’s overarching risk management procedures. On pages 54 to 57 in our
summarised risk register, we provide further detail on how we manage each
identified risk.
Risk identification and assessment
Building on last year’s work to identify climate risks, in 2023 the Group
conducted a review of our register of identified climate risks and the Group’s
approach to climate risk assessment. With the support of external consultants
from Ever Sustainable, this exercise included:
– research to enhance existing intelligence on industry and
geographical considerations;
– mapping climate risks to our identified principal risks to better understand
the interplay with our core business risks; and
– conducting internal interviews with stakeholders from departments
across the business.
Additionally, we defined clear time horizons to assess climate-related
risks and identified potential metrics to support the monitoring of risks
in accordance with the TCFD’s guidance on cross-sector metrics. We
undertook this exercise in order to:
– enhance our understanding of the climate risks facing our business;
– determine whether any changes to the materiality of identified risks
had occurred;
– uncover whether new climate-related risks had been identified;
– devise stronger monitoring capabilities for the identified risks;
– review and enhance our approach to integrating climate-related risks into
the Group’s enterprise risk management systems; and
– enhance our understanding of the key risks to be assessed in climate
scenario analysis.
The risk review led to several changes to our climate risk assessment
methodology. We streamlined the overarching risk identification taxonomy
used to assess CMC’s climate-related risks from four categories
(physical, transition, liability and transboundary) to two (physical and
transition), which achieves greater consistency with the climate disclosure
standards adopted by our industry. We also elected to consolidate our
twelve identified risks to nine risks, which further supports alignment to
recognised climate risks impacting our industry and improves consistency
with CMC’s internal risk language. We disclose these risks and their
potential impacts on pages 54 to 57.
Risk assessment and prioritisation
A more granular risk prioritisation methodology was applied to improve our
assessment of climate-related risks. The risk assessment criteria align closely
to the Group’s risk evaluation matrices in order to enhance integration with
the Group’s overarching risk management systems and the judgements
and estimates applied in our Financial Statements. The likelihood assessment
reflects the probability of the risk crystallising over the assessed time period,
taking into account industry and geographical considerations. The impact
assessment reflects the potential financial losses incurred if the risk were
to be realised.
We acknowledge the novelty of climate-related risks, which makes it challenging
to define precise financial impacts for the business and will continue to iterate
its assessment criteria as greater understanding of financial implications at
the entity level become known. At present, we have adopted the threshold
defined for a critical financial impact as greater than £5 million, which aligns
approximately to Group risk appetite as at year end.
At this time, the Group has deemed that the potential impacts of climate-related
risks do not surpass this threshold and are not expected to over the next three
years, the period over which we provide a viability statement. We have therefore
determined that no action currently need be taken to adjust our Financial
Statements and regard these disclosures to be consistent with the information
contained herein. Additionally, we have determined that climate change will
remain categorised as an emerging risk rather than a principal risk due to the
result of the current assessment which concluded that critical thresholds are not
expected to breach. We will continue to monitor this designation closely as we
enhance the Enterprise Risk Management Framework (“ERM”). See page 67 for
more details on emerging risks.
52 – CMC Markets plc
Annual Report and Financial Statements 2023
Impact
Minor
Important
Significant
Major
Critical
£0 to £50k
£50k to £250k
£250k to £2m
£2m to £5m
>£5m
Risk assessment criteria
Highly possible
>80%
d
o
o
h
i
l
e
k
L
i
Possible
40-80%
Unlikely
20-40%
Remote
10-20%
Very remote
<10%
Very high
High
Medium
Low
Very low
Strategy
The Group identified and assessed climate risks and opportunities to understand their potential impact on different areas of our business and the Group’s
strategy over the short, medium and long term. These time horizons align with our business and financial planning timelines, including our viability assessment
period as noted above, as well as the timelines defined by others in our industry. These time horizons are defined as short term (2023-25), medium term (2026-
2035) and long term (2036+).
Different areas of the business including HR, facilities, technology, procurement, finance and operations are all considered as part of the risk assessment process.
Our assessment of the potential consequences to different business units is captured through our mapping of each climate risk to the Group’s principal risks.
Over the short, medium and long term, the Group’s technology department represents the portion of the business with the greatest exposure to both physical
and transition risk. The Group’s HR and facilities departments are limited in their exposure in the short term, although in the medium to long term, physical risk
exposure is likely to increase.
Additionally, the Group monitors variations in the potential climate risks across the geographic locations of the Group’s operations and markets, including the UK,
Europe, and APAC & Canada. The Group has determined that its exposure to physical risk is most critical in the Asia Pacific & Canada region over the medium
and long term. We will continue to monitor our exposure carefully and consider more granular assessment of our business units and geographical exposure as
appropriate. The results of our assessment of the potential impact and likelihood of our identified climate risks across three climate scenarios is disclosed in the
tables on pages 58 and 59.
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TCFD continued
Strategy continued
Summary of CMC’s climate risk register
Physical risks – Floods and storms
Risk/opportunity description: the risk of floods, storms, and other extreme weather events causing damage to premises/other physical assets
and/or wider infrastructure on which we are reliant, and disrupting operations.
Mapping to principal risks
Potential financial impacts
– Business continuity and disaster recovery risk
– Information technology and infrastructure risk
– Procurement and outsourcing risk
– Revenue losses linked to outages or loss of technical services that
affect client relationships and trust in CMC’s platforms and products.
– Increased costs through damage repair, asset replacement or data
service provision if providers are forced to invest more in adaptation and
resilience measures.
CMC’s response: we will continue to monitor the exposure of its assets and geographies to extreme weather events. As new facilities and data
service providers are introduced to the business, climate considerations will be increasingly embedded into decision-making processes.
Physical risks – Heatwaves
Risk/opportunity description: the risk of extreme heat disrupting operations through damage to premises/other physical assets and/or wider
infrastructure on which we are reliant, or affecting the physical safety and security of our people.
Mapping to principal risks
Potential financial impacts
– Business continuity and disaster recovery risk
– Information technology and infrastructure risk
– People risk
– Procurement and outsourcing risk
– Revenue losses linked to outages or loss of technical services that
affect client relationships and trust in our platforms and products.
– Increased costs for energy (including outsourced services) to
keep key equipment and premises cool and employee absences or
productivity losses.
CMC’s response: the Group will continue to monitor the exposure of its assets and geographies to heat stress. In particular, we will look to embed
consideration of the exposure of our digital infrastructure and location of data centres as we make procurement decisions in the medium to long term.
Transition risks – Technology (energy)
Risk/opportunity description: the risk of rising energy prices and unstable energy supplies increasing our costs and disrupting our services.
Mapping to principal risks
Potential financial impacts
– Information technology and infrastructure risk
– Procurement and outsourcing risk
– Revenue losses linked to disruption to energy supply could result in the
loss of technical services affecting client relationships and trust in CMC’s
platforms and products.
– Increased costs for running business operations and outsourced
data services.
CMC’s response: the business continuity team held an incident response exercise to prepare for a real-life major incident, in response to the energy
crisis. These learnings will inform our ongoing approach to preparing for potential energy insecurity.
54 – CMC Markets plc
Annual Report and Financial Statements 2023
Transition risks – Regulatory and compliance
Risk/opportunity description: the risk that climate-related policy may affect business expansion, current product or service offerings and
business operations.
Mapping to principal risks
– Preparedness for regulatory change
– Regulatory and compliance risk
– Tax and financial reporting
Potential financial impacts
Increased costs and/or reduced revenues through:
– additional resources to meet new regulatory requirements or disclosures;
– fines in the event of non-compliance;
– restrictions to product offerings; and
– taxes to fund national climate policies.
CMC’s response: we continue to monitor the evolving regulatory environment closely.
Transition risks – Reputational
Risk/opportunity description: the risk that stakeholders perceive that our response to climate change is insufficient or inaccurate, leading to
reputational damage.
Mapping to principal risks
– Reputational risk
– People risk
– Procurement and outsourcing risk
Potential financial impacts
– Decreasing revenues as customers leave for more climate-friendly
competitors.
– Increased costs and/or reduced access to capital through damaged
relationships with investors and banks.
– Increased costs through heightened employee recruitment and
retention challenges.
CMC’s response: through the Our Tomorrow sustainability strategy, we are increasing our engagement with key stakeholders to better understand
their priorities and ensure we are addressing any concerns.
Transition risks – Market
Risk/opportunity description: the risk that product/service offerings don’t align with evolving customer preferences or that climate-related
factors negatively affect the value of assets on our platform, impacting revenues and profits.
Mapping to principal risks
– Strategic/business model risk
Potential financial impacts
– Reduced revenues and profitability linked to declining customer
demand for products and services.
– Increased costs of R&D into products or services that support the low
carbon transition
CMC’s response: ongoing diversification of our product offering and client base helps to de-risk our exposure. The Group is investing in the
integration of ESG considerations into its products and platforms to ensure our offering is aligned with the trajectory of consumer demand.
55 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information TCFD continued
Strategy continued
Summary of CMC’s climate risk register continued
Transition risks – Litigation
Risk/opportunity description: the risk that a perceived failure on behalf of the Group to consider, mitigate or adapt to the risks associated with
climate change results in litigation.
Mapping to principal risks
– Legal risks
– Reputational risk
Potential financial impacts
– Increased costs through legal fees and settlements to cover the costs
of litigation.
– Reduced revenues as reputation and brand equity are damaged.
CMC’s response: we monitor our regulatory requirements closely to ensure our exposure to litigation remains minimal.
Transition risks – Investment
Risk/opportunity description: the risk that our business becomes less attractive to investors as a result of our approach to managing climate
risks or that climate risks affect the value of our investments.
Mapping to principal risks
– Market risk
CMC’s response
Potential financial impacts
– Reduced capital inflows as a result of impacts on investment attractiveness.
– Reduced investment returns as climate factors impact the value
of investments.
The Global Head of Sustainability has developed a holistic strategy for addressing sustainability topics including climate change to better address
the concerns of investors and to bolster our risk management systems to account for climate risk.
Transition risks – Cost of capital
Risk/opportunity description : the risk of rising costs to the business as a result of increasing borrowing rates and/or insurance premia due to
climate-related factors.
Mapping to principal risks
– Insurance risk
Potential financial impacts
– Increased cost of borrowing affecting investment in the business and
its development.
– Rising cost of insurance premiums and/or losses resulting from
unpaid insurance claims will increase the running costs of operations.
CMC’s response: we are a low debt business and regularly engage with banking counterparties to understand their expectations and forward-
looking plans.
Opportunities – Climate-related products and services
Risk/opportunity description: the opportunity to provide financial products that help our client base to invest in the energy transition and
climate-friendly investments.
Mapping to principal risks
– Reputational risk
– Strategic/business model risk
Potential financial impacts
– Increased revenue from new clients that are attracted to the platform
due to its ESG capabilities.
CMC’s response: we have introduced ESG filters within our investment platforms that allow clients to access climate-friendly investments.
56 – CMC Markets plc
Annual Report and Financial Statements 2023
Opportunities – Enhanced stakeholder relationships
Risk/opportunity description: through proactive action on climate-related issues, we can enjoy reputational benefits with its employees,
customers and investors as leaders on climate action in the financial services sector.
Mapping to principal risks
– Reputational risk
– Strategic/business model risk
Potential financial impacts
– Enhanced access to capital through positive investor relationships.
– Increased revenue through improved productivity and innovation
through engagement with employees.
– Increased revenue from new clients attracted to the platform for its
positive climate reputation.
CMC’s response: we are taking proactive action to improve our climate-related credentials and we proactively engage with employees, investors
and other stakeholders.
Evaluating resilience with climate scenario analysis
To enhance the Group’s understanding of our exposure to identified climate risks and to assess our strategic resilience, we conducted a climate scenario
analysis exercise facilitated by external consultants for three distinct scenarios. The parameters used to define the scenarios are summarised in the table.
Parameter
Selection
Rationale
Scenario source
Network for Greening the Financial System (“NGFS”)
Climate Scenarios for central banks and supervisors
(Phase III) 2022
– The NGFS has the most comprehensive coverage of
risks and opportunities for the financial sector.
– Brings together the complex dynamics of the energy,
economy and climate systems – including a strong
focus on policy and technology variables – and so has
strong alignment with CMC’s driving forces.
– Phase III scenarios were published in late 2022 and take
account of latest trends, data and developments.
Base scenarios
1.50C – Net Zero 2050 Scenario (“NZ”) – transition risk
– The NZ Scenario is the most ambitious scenario and
closely aligned with the Paris Agreement.
1.60C – Delayed Transition Scenario (“DTS”) –
transition risk
– DTS provides a middle-ground to test higher transition
and physical risks than NZ.
30C+ – Current Policies (“CP”) – physical risk
Timeframe
Short term: 2023–2025
Medium term: 2026–2035
Long term: 2036–2050
Geographies
Global with basic focus on Australasia and Europe/UK
as benchmark markets
– CP is the least ambitious scenario, assuming warming in
line with current policy measures, giving a sense of what
“business as usual” would mean for CMC.
– The world needs to halve emissions by 2030 in order
to reach net zero by 2050 and therefore limit the global
rise in temperature by 1.50C above pre-industrial
levels by 2100.
– As this was the first time the Group has conducted a
rigorous scenario analysis exercise, the focus has been
kept broad to identify significant areas of risk and inform
whether more tailored geographical focus is necessary
moving forward.
57 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information TCFD continued
To craft the scenarios, narratives were constructed based on assumptions of
how overarching dimensions would develop policy, technology, energy, industry
macroeconomic, social and environment. These dimensions were mapped to
our climate risk register to help focus the content of the scenarios to risks with
higher ongoing risk ratings; however, the focus of this exercise was kept broad to
encompass the full register of risks. In doing so, we aimed to further enhance our
understanding of the identified risks. Using the revised climate risk assessment
criteria and as part of the climate scenario exercise, we assessed each of our
identified climate risks across the short, medium and long term for each of the
assessed scenarios, as shown in the tables below.
Net zero 2050
Key characteristics
– Temperature: below 2°C
– GDP: -3% by 2030 and -4% by 2050
– Risk level: Physical risks are relatively low, but transition risks
are higher
– Policy implementation level: immediate and stringent but orderly
with low regional variation
Strategic impact
Considering higher carbon prices, clients in the APAC & Canada region
may reduce trading on our investment platform as the economy adjusts
given the region’s emphasis on heavy industry. High inflation may also lead
to increased staff overheads, and high interest rates may initially reduce
trading activities if cash is preferred as a more stable alternative to markets
initially. Initial periods of high volatility and market instability would likely have
a positive impact on the Group’s trading business.
Risk category
Risk
Short
Medium
Long
Physical risk
Transitional risk
Floods and storms
Heatwaves
Technology risk (energy)
Regulatory and compliance risk
Reputation risk
Market risk
Litigation risk
Investment risk
Cost of capital risk
Delayed transition
Key characteristics
– Temperature: below 2°C
– GDP: -2% by 2030 and -6% by 2050
– Risk level: higher Physical and transition risks over the medium
and long term
– Policy implementation level: delayed until 2030, then sudden, with
high regional variation
Strategic impact
We would expect to increase our need for liquidity in the medium term for its
institutional businesses in anticipation of customers sitting on cash to ride
out a period of market volatility and uncertainty. Our trading business would
likely benefit from increased volatility in the marketplace.
Risk category
Risk
Short
Medium
Long
Physical risk
Transitional risk
Floods and storms
Heatwaves
Technology risk (energy)
Regulatory and compliance risk
Reputation risk
Market risk
Litigation risk
Investment risk
Cost of capital risk
58 – CMC Markets plc
Annual Report and Financial Statements 2023
Current policies
Key characteristics
– Temperature: +3°C
– GDP: -3% by 2030 and -8% by 2050 (up to -20% by 2100)
– Risk level: substantial physical risks over the medium and long term
– Policy implementation level: low; assumes that only currently
implemented policies are preserved
Strategic impact
Short-term impact is likely to be limited. As physical climate stress increases
in the medium and longer term, the Group’s technology infrastructure could
be increasingly exposed to heat-related stress in particular. The Australian
market would likely be exposed as dampening GDP prospects decreased
the appeal of the Group’s investing platform.
Risk category
Risk
Short
Medium
Long
Physical risk
Transitional risk
Floods and storms
Heatwaves
Technology risk (energy)
Regulatory and compliance risk
Reputation risk
Market risk
Litigation risk
Investment risk
Cost of capital risk
A workshop was held comprised of the TCFD working group, a cross-functional
group of individuals representing senior team members. Each scenario was
presented and interrogated to assess the potential impacts on the Group’s
strategic resilience. Based on the resulting risk heat map, additional exercises
were devised for each of the three scenarios and tailored to the time periods
where our climate risk exposure was greatest for each scenario.
The Group’s trading business is unlikely to be negatively impacted and may
in fact benefit from periods of volatility across the different scenarios. The
investing platform may experience more duress if sluggish markets and real
economy growth translate into less disposable income among our client
base in geographies that are hit harder by physical and transition risks.
APAC & Canada has been identified as the region most likely to be impacted,
according to our desktop assessment of core geographies and future
scenario analysis exercises will be tailored to this region to explore how these
challenges may unfold. Diversification of geographical exposure and client
base was identified as the fundamental mitigating action that can be taken to
increase climate resilience, a strategy already in place. Overall, we believe our
strategy remains resilient in all three scenarios, with impacts likely to be negligible.
Metrics and targets
We have made progress to improve our data capabilities when it comes to
climate change and its impact on the environment. This year, we began to
define our Scope 3 emissions as we strive towards setting net zero goals and
will be reviewing our options to align with Science Based Targets Initiative
(“SBTi”) in 2024. Our first step to setting ambitious goals has been to obtain a
better understanding of the Group’s carbon profile. Information on our Scope
1, 2 and 3 data definition, our carbon accounting methodology and current
carbon profile can be found on pages 45 to 48.
While we have made significant progress this year in understanding and
assessing our climate risks through the updates to our climate risk register and
scenario analysis, we are not yet ready to disclose metrics and targets related
to these risks. We are quickly progressing our understanding of the nature
of these risks and their potential impacts to our business through the TCFD
working group; however, this process is ongoing and essential in identifying
meaningful metrics, putting processes in place to collect data and setting
targets against these. We have established this as a key operational goal for
this year to progress the monitoring and management of our climate-related
risks and will update on our progress in our next disclosure.
59 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Financial review
Accelerating
investment to
grow and
diversify the
business
The Group accelerated investment in its core
strategic initiatives to drive diversification in 2023 and
beyond. Significant upgrades to existing trading and
investing platforms have been delivered, including
expanding the product offering within CMC Invest
UK. We remain on track for delivery of further product
and functionality upgrades throughout 2024.
“ The Group continues to have
a strong liquidity and capital
position. This has allowed the
Group to be flexible in investing
in new and existing initiatives
throughout the year.”
Euan Marshall
Chief Financial Officer
60 – CMC Markets plc
Annual Report and Financial Statements 2023
Net operating income of £288.4 million increased by £6.5 million compared
to 2022, driven by increased client income, particularly in the institutional
B2B channel, and a significant increase in interest income as a result of
global interest rate rises. Operating expenses1 increased by £45.6 million
as a result of the Group’s significant investments in technology, people, and
product throughout the year along with the impact of the elevated inflationary
environment seen across all regions. This resulted in a statutory profit before
tax of £52.2 million (20221: £91.5 million).
Our ambitious digital transformation and technology investment plan has
made significant progress throughout 2023 with more frequent product
enhancements along with the retail launch of the CMC Invest platform in the
UK and the rollout of the platform in Singapore on track for release imminently.
The improvements to our product offering within the institutional space has
also seen an immediate impact, with notional volumes in the B2B business
up 95% year on year and our ambition for ongoing 20%+ CAGR in volumes
remaining on track.
The Group saw a decrease in active clients across both its trading and
investing businesses in 2023. The decrease in investing clients was a result of
unfavourable market conditions for long-term investors persisting throughout
much of the year, leading to lower overall client activity. On the trading side,
the decrease was largely driven by the cohort onboarded during the “meme
stock” period in the first calendar quarter of 2021. However the Group’s
continued focus on high value, sophisticated retail and institutional clients
resulted in higher client income year on year. The Group also exited the year
with significant prospects for future client growth, with the development of
the CMC Invest platforms in the UK and Singapore along with a significant
expansion in our institutional product offering giving multiple channels for both
client acquisition and revenue per client expansion.
The Group Own Funds Ratio (“OFR”) remains strong at 369%. Our total available
liquidity decreased to £414.1 million (2022: £469.0 million) primarily due to the share
buy back programme that completed in October 2022. The strong liquidity and
capital position gives the Group an exceptional platform to continue investing in its
core strategic initiatives.
Summary Income Statement
Net operating income
Operating expenses1
Operating profit1
Finance costs1
Profit before tax1
Profit before tax margin1,2
Profit after tax1
Basic EPS1
Ordinary dividend per share3
2023
£m
288.4
(233.9)
54.5
(2.3)
52.2
18.1%
41.4
2023
Pence
14.7
7.4
2022
£m
281.9
(188.3)
93.6
(2.1)
91.5
32.5%
71.5
2022
Pence
24.6
12.4
Change
£m
Change
%
6.5
(45.6)
(39.1)
(0.2)
(39.3)
(14.4%)
(30.1)
Variance
Pence
(9.9)
(5.0)
2%
(24%)
(42%)
(7%)
(43%)
—
(42%)
Variance
%
(40%)
(40%)
Summary
Net operating income for the year increased by £6.5 million (2%) to £288.4 million, primarily through a result of strong growth in interest income and the
institutional business, offset by a decrease in revenue in the investing business. On the trading side, increases in institutional volumes resulted in higher client
income, with retail client income remaining broadly flat despite an overall drop in active clients, and risk management remaining solid, albeit with client income
retention falling slightly from the levels seen in 2022. The investing business saw a decrease in trading activity as a result of unfavourable market conditions
throughout the year. 2023 net operating income represents a record for the Group when excluding the COVID-19 impacted 2021.
Total costs1 have increased by £45.8 million (24%) to £236.2 million, with the primary driver being investments in our strategic initiatives resulting in higher
personnel costs, professional fees and technology costs. The high global inflationary environment also impacted the cost base in all three regions that the Group
operates in.
Profit before tax1 decreased to £52.2 million from £91.5 million and PBT margin1,2 decreased to 18.1% from 32.5%, reflecting the high level of operational gearing in
the business.
1 2022 figures restated - more information is available within note 33.
2 Statutory profit before tax as a percentage of net operating income.
3 Ordinary dividends paid/proposed relating to the financial year, based on issued share capital as at 31 March of each financial year.
61 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Financial review continued
Net operating income overview
Trading net revenue
Investing net revenue (excl. interest income)
Net revenue¹
Interest income
Other operating income
Net operating income
2023
£m
233.1
37.9
271.0
13.9
3.5
288.4
2022
£m
229.6
48.0
277.6
0.8
3.5
281.9
Change
1%
(21%)
(2%)
1,569%
—
2%
1 CFD and spread bet gross client income net of rebates, levies and risk management gains or losses and stockbroking revenue net of rebates.
Trading net revenue increased by £3.5 million (1%) driven by increases in gross client income being largely offset by client income retention decreasing to 77%.
The increase in gross client income was a result of market volatility broadly remaining at levels seen in H2 2022, resulting in higher levels of client trading, despite
an overall decrease in active clients. Client income retention was lower during the period at 77% (2022: 80%) as a result of a change in the mix of asset classes
traded by clients. This resulted in revenue per active client (“RPC”) increasing by £393 (11%) to £3,968.
Trading active client numbers decreased by 9% in comparison to 2022; however, monthly average active clients remain 25% above pre-COVID-19 levels,
demonstrating the structural shift in the Group’s client base.
Investing net revenue was 21% lower at £37.9 million (2022: £48.0 million), with an unfavourable market environment resulting from uncertainty around the global
economic outlook, inflationary pressures and the resultant impact on interest rates dampening client activity.
B2B and B2C net revenue
Trading net revenue
Investing net revenue
Net revenue
2023
£m
B2B
60.1
23.3
83.4
B2C
173.0
14.6
187.6
Total
233.1
37.9
271.0
B2C
185.5
9.6
195.1
2022
£m
B2B
44.1
38.4
82.5
Total
229.6
48.0
277.6
% change
B2B
36%
(39%)
1%
B2C
(7%)
53%
(4%)
Total
1%
(21%)
(2%)
B2C trading net revenue fell 7% due to decreases in active clients and lower client income retention. The increase in B2B revenue was a result of the
enhancements to the institutional product offering attracting new clients and higher trading levels from current clients, with an associated increase in net revenue.
The investing business saw a shift from B2B to B2C as a result of the completion of the transfer of the ANZ Bank Share Investing clients during the year.
Regional performance overview: trading
Net
revenue
£m
UK & Ireland
Europe
88.8
50.2
2023
Client
income 1
£m
114.8
61.3
Active
clients
14,717
14,254
RPC
£
6,035
3,520
Net
revenue
£m
78.8
43.7
2022
Client
income 1
£m
107.1
51.1
Active
clients
16,264
15,747
RPC
£
4,848
2,778
Net
revenue
£m
12%
15%
% change
Client
income 1
£m
7%
20%
Active
clients
(10%)
(9%)
RPC
24%
27%
139.0
176.1
28,971
4,797
122.5
158.2
32,011
3,827
13%
11%
(9%)
25%
UK &
Europe
APAC &
Canada
(2%)
5%
(8%)
(9%)
(5%)
11%
94.1
127.4
29,766
3,160
107.1
130.3
32,232
3,322
(12%)
Total
233.1
303.5
58,737
3,968
229.6
288.5
64,243
3,575
1%
1 Spreads, financing and commissions on CFD and spread bet client trades.
62 – CMC Markets plc
Annual Report and Financial Statements 2023
Trading
UK & Europe
Net revenue and client income grew by £16.5 million (13%) and £17.8 million
(11%) to £139.0 million and £176.0 million respectively. This was despite a 9%
(3,040) decrease in active clients, resulting in RPC growth of 25% (£970).
UK & Ireland
Client income increased by 7% against the prior year to £114.8 million (2022:
£107.1 million), driven by growth in the B2B business. The drop in active clients
was predominantly driven by the B2C business, which saw a commensurate
drop in client income.
Europe
Europe comprises offices in Austria, Germany, Norway, Poland and Spain.
Client income and net revenue grew by 20% (£10.2 million) and 15%
(£6.5 million) to £61.3 million and £50.2 million respectively, driven by B2B
growth. RPC increased by 27% to £3,520 (2022: £2,778) due to the higher net
revenue achievement combined with a 9% (1,493) decrease in the number of
active clients.
APAC & Canada
Our APAC & Canada business services clients from our Sydney, Auckland,
Singapore, Toronto and Shanghai offices along with other regions where
we have no physical presence. Active clients were down 8% to 29,766
(2022: 32,232); however, the region continues to retain its high value client
base resulting in a comparatively smaller drop in client income of 2% to
£127.4 million (2022: £130.3 million).
Investing
Investing net revenue from the Invest Australia business fell 21% to
£37.9 million (2022: £48.0 million) impacted by heightened geopolitical
uncertainties and the resultant inflationary pressures, dampening investor
appetite for cash equities. Partially offsetting the impact was a material
increase in interest income at £6.5 million (2022: £0.9 million).
While active clients decreased 12% to 217k (2022: 246k), client logins across
all platforms were up 5%, indicating strong client engagement and readiness
to trade at the right market opportunity. Further, AuA at AUD$73 billion,
remained stable despite reduced discretionary expenditure.
Interest income
Global interest rates, having remained at historically low levels for many
years, saw significant increases in all regions from the second half of calendar
year 2022, resulting in interest income increasing to £13.9 million from
£0.8 million in 2022.
The majority of the Group’s interest income is earned through our segregated
client deposits in our UK, Australia, New Zealand and Invest Australia subsidiaries.
Our investing business generated 47% of the Group’s interest income,
with 53% being generated in our trading business. The Group continually
monitors its returns on both own and segregated client deposits to ensure
optimal returns.
Expenses
Total costs2 increased by £45.8 million (24%) to £236.2 million.
Net staff costs – fixed (excluding variable remuneration)1
IT costs
Marketing costs
Sales-related costs
Premises costs
Legal and professional fees
Regulatory fees
Depreciation and amortisation2
Irrecoverable sales tax
Other
Operating expenses excluding variable remuneration2
Variable remuneration1
Operating expenses including variable remuneration2
Interest2
2023
£m
84.9
33.7
32.3
6.0
5.7
8.6
9.4
15.6
3.0
18.0
217.2
16.7
233.9
2.3
2022
£m
68.8
28.7
24.5
2.8
4.5
8.6
5.6
12.4
2.8
13.5
172.2
16.1
188.3
2.1
Total costs2
236.2
190.4
Net staff costs
Net staff costs including variable remuneration increased £16.7 million
(20%) to £101.6 million following significant investment across the business,
particularly within technology, marketing and product functions, to support the
delivery of strategic projects. The global inflationary environment and post-
COVID-19 employment market also resulted in growth in gross pay within
certain areas of the business to ensure the Group continues to remunerate
staff in line with market rates to assist talent retention within the organisation.
Variable remuneration increased in line with headcount growth, offset by
reductions in the Group discretionary bonus in line with performance.
Gross staff costs excluding variable remuneration1
Performance-related pay1
Share-based payments (note 31)
Total employee costs
Contract staff costs
Net capitalisation
Net staff costs
2023
£m
92.9
14.5
2.2
109.6
3.1
(11.1)
2022
£m
72.4
13.7
2.4
88.5
3.9
(7.5)
101.6
84.9
1 2022 figures restated to include social taxes for annual discretionary bonus within variable
remuneration. Social tax for annual discretionary bonus were previously included within net
staff costs.
2 2022 figures restated - more information is available within note 33.
63 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Non-statutory summary Group Balance Sheet
Intangible assets
Property, plant and equipment
Net lease liability
Fixed assets
Cash and cash equivalents
Net amounts due from brokers
Financial investments
Other assets
Net derivative financial instruments
Title transfer funds
Net tax receivable/(payable)
Deferred tax net asset
Net assets
2023
£m
35.3
14.1
(2.7)
46.7
146.2
179.3
30.6
2.0
1.1
(49.5)
2022
£m
30.4
13.0
(4.1)
39.3
176.6
196.5
27.9
13.4
(0.4)
(44.1)
309.7
369.9
8.2
8.6
0.8
(43.0)
—
2.7
374.0
368.9
The table above is a non-statutory view of the Group Balance Sheet and line names do not
necessarily have their statutory meanings. A reconciliation to the primary statements can be
found on page 188.
Fixed assets
Intangible assets increased by £4.9 million to £35.3 million (2022:
£30.4 million) as a result of the capitalisation of internal resource dedicated
to the development of new products and functionality in 2023.
Net lease liability decreased by £1.4 million during the year due to the net
length of lease contracts being lower at the end of 2023 than the prior year.
Own funds
Net amounts due from brokers relate to cash held at brokers either for
initial margin or balances in excess of this for cash management purposes.
The reduced client trading exposures throughout the year, particularly in
equities, resulted in decreases in holdings at brokers for hedging purposes.
Cash and cash equivalents have decreased during the year primarily as a result
of the Group’s share buyback scheme that commenced in March 2022 and
completed in October 2022 and £9.0 million payments to ANZ Bank to complete
the transition of its Share Investing clients, partially offset by the Group’s operating
performance, in addition to the Group holding less cash at our brokers for
margining purposes.
Financial investments mainly relate to eligible assets held by the Group as core
liquid assets used to meet Group regulatory liquidity requirements.
Title transfer funds increased by £5.4 million, reflecting the high levels of
account funding by a small population of mainly institutional clients.
IT costs
IT costs increased by £5.0 million (17%) to £33.7 million as a result of a larger
IT systems footprint given the expanded product offering.
Own funds
Working capital
Financial review continued
Expenses continued
Depreciation and amortisation costs
Depreciation and amortisation have increased by £3.2 million (26%) to
£15.6 million, primarily due to amortisation of staff development costs which
were capitalised at the end of the previous financial year and increased
depreciation and amortisation of IT assets delivering the product roadmap.
Marketing costs
Marketing costs increased by £7.8 million (32%) to £32.3 million driven
by £2.6 million of marketing for the new Invest UK platform, £2.4 million of
additional marketing within Invest Australia and increased spend across all
regions within the trading business.
Sales-related costs
Sales-related costs increased by £3.2 million (110%) to £6.0 million primarily
due to a release of provisions for client complaints within 2022 and additional
client-related costs during the year following the relaxing of COVID-19 restrictions.
Regulatory fees
Regulatory fees increased by £3.8 million (69%) primarily as a result of a higher
FSCS levy.
Premises costs
Premises costs increased £1.2 million (27%) due to global inflationary
pressures, predominantly across utilities.
Other expenses
Other costs increased due to a number of factors, with the main drivers being
FX losses on balance sheet revaluation and higher recruitment fees being
partially offset by lower bad debt charges.
Taxation
The effective tax rate for 2023 was 20.6%, down from the 2022 effective tax
rate, which was 21.9%. The effective tax rate has decreased in the period due
to a lower proportion of Group PBT being generated in Australia, where the
corporation tax rate is higher than the UK.
Profit after tax for the year
The decrease in profit after tax for the year of £30.1 million (42%) was due to
higher net operating income being offset by increases in expenses incurred
as part of the investment roadmap and the impacts of the global inflationary
environment.
Dividend
Dividends of £35.0 million were paid during the year (2022: £72.6 million), with
£25.3 million relating to a final dividend for the prior year paid in August 2022,
and a £9.8 million interim dividend paid in January 2023 relating to current
year performance. The Group has proposed a final ordinary dividend of
3.90 pence per share (2022: 8.88 pence per share).
64 – CMC Markets plc
Annual Report and Financial Statements 2023
Working capital
The £51.2 million decrease in working capital requirements year on year is
primarily as a result of the increased market volatility in Q4 of the prior year,
which significantly increased the value of stockbroking payables yet to settle
at the prior year end.
Net tax receivable
Tax moved to a net receivable position due to overpayments in the UK
and Australia.
Deferred tax net asset
Deferred net tax assets decreased as a result of accelerated research and
development tax deductions in the UK and Australia.
Impact of climate risk
We have assessed the impact of climate risk on our balance sheet and have
concluded that there is no material impact on the Financial Statements for the
year ended 31 March 2023.
Regulatory capital resources
The Group and its UK regulated subsidiaries fall into scope of the FCA’s
Investment Firms Prudential Regime (“IFPR”), with the Group’s German
subsidiary, CMC Markets Germany GmbH, subject to the provisions of the
Investment Firms Regulation and Directive (“IFR/IFD”).
The Group’s total capital resources increased to £326.8 million (2022: £311.5 million)
with increases in retained earnings for the year being partly offset by the
interim and proposed final dividend distribution. In accordance with the IFPR all
deferred tax assets must now be fully deducted from core equity tier 1 capital
(“CET1 capital”).
At 31 March 2023 the Group had a total OFR ratio of 369%, down from 489%
in 2022 as a result of an increase in own funds requirements.
The following table summarises the Group’s capital adequacy position at the
year end. The Group’s approach to capital management is described in note
30 to the Financial Statements.
CET1 capital¹
Less: intangibles and net deferred tax assets2
Total capital resources after relevant deductions
Own funds requirements (“OFR”)3
Total OFR ratio (%)⁴
2023
£m
363.1
(36.3)
326.8
88.6
369%
2022
£m
344.5
(33.0)
311.5
63.6
489%
Liquidity
The Group has access to the following sources of liquidity that make up total
available liquidity:
– Own funds: The primary source of liquidity for the Group. It represents the funds
that the business has generated historically, including any unrealised gains/
losses on open hedging positions. All cash held on behalf of segregated clients
is excluded. Own funds consist mainly of cash and cash equivalents. They also
include investments in UK government securities, of which the majority are
held to meet the Group’s regulatory liquidity requirements, short-term financial
investments, amounts due from brokers and amounts receivable/payable on
the Group’s derivative financial instruments. For more details refer to note 29
of the Financial Statements.
– 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 does not require clients to sign a TTCA in order
to be treated as a professional client and as a result their funds remain
segregated. The Group considers these funds as an ancillary source of
liquidity and places no reliance on them for its stability.
– Available committed facility (off-balance sheet liquidity): The Group has
access to a facility of up to £55.0 million (2022: £55.0 million) in order to
fund any potential fluctuations in margins required to be posted at brokers
to support the risk management strategy. The facility consists of a one-year
term facility of £27.5 million (2022: £27.5 million) and a three-year term
facility of £27.5 million (2022: £27.5 million). 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. There was no
drawdown on the facility as at 31 March 2023 (2022: £nil).
The Group’s use of total available liquidity resources consists of:
– Blocked cash: Amounts held for operational purposes to meet the
requirements of local regulators and exchanges, in addition to liquidity in
subsidiaries in excess of local segregated client requirements to meet
potential future client requirements. Cash committed to the purchase of
shares within a buyback programme is also classified as blocked cash. This
was £nil at 31 March 2023 (2022: £28.0 million).
– Initial margin requirement at broker: The total GBP equivalent initial margin
required by prime brokers to cover the Group’s hedge derivative and
cryptocurrency positions.
1 Total audited capital resources as at the end of the financial year of £374.0 million, less
Own funds have decreased by £60.2 million to £309.7 million (2022: £369.9 million).
proposed dividends.
2
In accordance with the IFPR, all deferred tax assets must be fully deducted from CET1
capital. Deferred tax assets are the net of assets and liabilities shown in note 14.
3 The minimum capital requirement in accordance with MIFIDPRU 4.3.
4 The OFR ratio represents CET1 capital as a percentage of OFR.
Own funds
Title transfer funds
Available committed facility
Total available liquidity
Less: blocked cash
Less: initial margin requirement at broker
Net available liquidity
Of which: held as liquid asset requirement
2023
£m
309.7
49.4
55.0
414.1
(68.8)
(106.1)
2022
£m
369.9
44.1
55.0
469.0
(103.1)
(120.0)
239.2
245.9
30.6
27.9
65 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Financial review continued
Client money
Total segregated client money held by the Group for trading clients was
£549.4 million at 31 March 2023 (2022: £546.6 million).
Client money represents the capacity for our clients to trade and offers an
underlying indication of the health of our client base.
Client money governance
The Group segregates all money and assets held by it on behalf of clients
excluding a small number of large clients which have entered a TTCA with
the firm. This is in accordance with or exceeding applicable client money
regulations in countries in which it operates. The majority of client money
requirements fall under the Client Assets Sourcebook (“CASS”) rules of the
FCA in the UK, BaFin in Germany and ASIC in Australia. All segregated client
funds are held in dedicated client money bank accounts with major banks
that meet strict internal criteria and are held separately from the Group’s
own money.
The Group has comprehensive client money processes and procedures in
place to ensure client money is identified and protected at the earliest possible
point after receipt as well as governance structures which ensure such
activities are effective in protecting client money. The Group’s governance
structure is explained further on pages 79 to 86.
Viability statement
The Directors of the Company have considered the Group’s current financial
position and future prospects and have a reasonable expectation that the
Group will be able to continue in operation and meet its liabilities as they fall
due over the period of the assessment. In reaching this conclusion, both the
prospects and viability considerations have been assessed.
Long-term prospects
During the year the Group’s risk management has continued to be optimised
and strategic initiatives have progressed well, with the launch of the Invest
UK platform to retail clients during the year, Invest Singapore remaining on
track for delivery in early 2024 and improvements to the Group’s institutional
product offering being rolled out throughout the year. This diversification
into new geographies and products is anticipated to help the Group achieve
its target of 30% revenue growth over the next three years. On this basis,
the Group maintains its belief that it will continue to demonstrate delivery of
sufficient cash generation to support operations.
Conservative expectations of future business prospects through delivery
of the Group strategy (see pages 24 and 25) are presented to the Board
through the budget process. The annual budget process consists of a
detailed bottom-up process with a 12-month outlook which involves input
from all relevant functional and regional heads. This includes a collection of
resource assumptions required to deliver the Group strategy and associated
revenue impacts with consideration of key risks. This is used in conjunction
with external assumptions such as a region-by-region review of the regulatory
environment and incorporation of any anticipated regulatory changes,
revenue modelling, market volatility, interest rates and industry growth that
could materially impact the business. The process also covers liquidity and
capital planning and, in addition to the granular budget, a three-year outlook
is prepared using assumptions on industry growth, the effects of regulatory
change, revenue growth from strategic initiatives and cost growth required
to support initiatives. The budget was reviewed and approved by the Board
at the March 2023 Board meeting. The process for ongoing review and
monitoring of risks is outlined in the Risk Management section of this report
(pages 67 to 73). The Board approved budget is then used to set targets
across the Group.
The Directors concluded that three years is an appropriate period over which
to provide a viability statement as this is the longest period over which the
Board reviews the success of Group strategic projections and this timeline is
also aligned with the period over which internal stress testing occurs.
66 – CMC Markets plc
Annual Report and Financial Statements 2023
Viability
The Group performs regular stress testing scenarios. Available liquidity
and capital adequacy are central to understanding the Group’s viability and
stress scenarios, such as adverse market conditions and adverse regulatory
change, and are considered in the Group’s Internal Capital Adequacy and
Risk Assessment (“ICARA”) document, which is shared with the FCA on
request. The results of the stress testing showed that, due to the robustness
of the business, the Group would be able to withstand scenarios, including
combined scenarios across multiple principal risks, over the financial planning
period by taking management actions that have been identified within the
scenario stress tests.
The Group’s revenue, which is driven by client transaction fees and interest
income on both own and client funds, has seen increases resulting from client
trading activity and increases in global interest rates during the year, despite
lower overall active client numbers. Projections of the Group’s revenue have
included revenue benefits from new product releases over the three-year
period, which will serve to reduce risks to the Group’s viability as a result of
increased revenue diversity. In addition, conservative estimates of market
volatility were assumed for the current businesses over the three-year period.
Projections also include assumptions on interest rates that are derived
from central bank rate forecasts, where available. No significant changes to
regulatory capital and liquidity requirements have been assumed over the
forecasting period.
In addition to considering the above, the Group also monitors performance
against pre-defined budget expectations and risk indicators, along with
strategic progress updates, which provide early warning to the Board, allowing
management action to be taken where required including the assessment of
new opportunities.
The Directors have no reason to believe that the Group will not be viable over a
longer period, given existing and known future changes to relevant regulations.
Going concern
The Group satisfies its ongoing working capital requirements through its
available liquid assets. The Group’s liquid assets exclude any funds held in
segregated client money accounts. In assessing whether it is appropriate
to adopt the going concern basis in preparing the Financial Statements,
the Directors considered the resilience of the Group, taking account of its
liquidity position and cash generation, the adequacy of capital resources, the
availability of external credit facilities and the associated financial covenants,
stress testing of liquidity and capital adequacy that take into account the
principal risks faced by the business. Further details of these principal risks
and how they are mitigated and managed are documented in the Risk
Management section on page 67.
Having given due consideration to the nature of the Group’s business, and
risks emerging or becoming more prominent, the Directors consider that the
Company and the Group are going concerns and the Financial Statements
are prepared on that basis.
Euan Marshall
Chief Financial Officer
13 June 2023
Risk management
1
Board
Our Risk Management Framework enables a consistent
approach to the identification, mitigation and management
of risks, which is essential to achieve our strategic objectives.
The Group’s business activities naturally expose it to strategic, financial and
operational risks which are inherent in the nature of the business it undertakes and
the financial, market and regulatory environments in which it operates. The Group
recognises the importance of understanding and managing these risks and that
it cannot place a cap or limit on all of the risks to which it is exposed. However,
effective risk management ensures that risks are managed to an acceptable level.
To assist the Board in discharging its responsibilities, it has in place a
Risk Management Framework to support identification, mitigation and
management of risk exposures. The Group regularly reviews the risk
framework, risk capabilities and tools to maintain effective ongoing risk
management to ensure it remains commensurate with current operations
alongside its aspirations and diversification objectives.
During the period, an external review was commissioned of the Group’s ERM
Framework and several recommendations for improvement were made
which are being taken forward by the business. Heightened monitoring was in
place during periods of market volatility and, although the Group was not
materially impacted, lessons learnt were identified and will be actioned
accordingly.
The Board, through its Group Risk Committee, is ultimately responsible for
the implementation of an appropriate risk strategy and the main areas which it
encompasses are:
– identifying, evaluating and monitoring the principal and emerging risks to
which the Group is exposed;
– implementing the risk appetite of the Board in order to achieve its strategic
objectives; and
– establishing and maintaining governance, policies, systems and controls to
ensure the Group is operating within the stated risk appetite.
Risk management is acknowledged to be a core responsibility of all
colleagues at CMC and the oversight of risk and controls management is
provided by Management and Board Committees as well as the Group risk
and compliance functions.
The Group’s risk management and internal controls framework is designed to
manage rather than eliminate risk and follows the “three lines of defence” model.
Risk management and the implementation of controls is the responsibility
of the business teams which constitute the first line. Oversight and guidance
is provided primarily by the Group’s risk and compliance functions which
constitute the second line, and third line independent assurance is provided
by the Group’s internal audit function. This construct ensures that the Group is
effectively identifying, managing and reporting its risks.
The Board has implemented a governance structure which is appropriate
for the operations of an online financial services group and is aligned to the
delivery of the Group’s strategic objectives including its diversification into
investing businesses. The structure is regularly reviewed and monitored
and any changes are subject to Board approval. Furthermore, management
regularly considers updates to the processes and procedures to embed good
corporate governance throughout the Group.
The Board undertakes a robust assessment of the principal risks and emerging risks
facing the Group as well as a review of risk appetite on at least an annual basis.
The Group’s risk appetite is an articulation of the nature and type of risks that
the Group is willing to accept, or wants to avoid, in order to achieve its business
objectives and strategy. This process is assessed as part of the Board’s
review of the Group’s Risk Appetite Statement (“RAS”) which is a unified view
of the Group’s risk appetites and tolerances. It is important that the integrated
risk appetite remains in line with business strategy to support the Group’s
strategic objectives. Risk appetite plays a key part in the Group’s risk, capital
Executive Committees
– Execution of Board’s risk strategy including risk appetite.
Risk and control functions
– Comprised of compliance, financial crime, financial risk,
liquidity risk and operational risk. In addition, legal, finance,
data privacy and security functions are also considered as
part of the control functions within the Group.
Business functions
– Identify, own, assess and manage risks. Design,
implement and monitor suitable controls, issue
management, KRI and risk appetite reporting.
and liquidity management, with the setting of risk appetites being an essential
element in achieving effective risk control across the Group and achieving
positive client outcomes.
The Board has carried out an assessment of the emerging and principal
risks facing the Group, including those that would threaten its business
model, future performance, solvency, or liquidity. We have determined that
climate change will remain categorised as an emerging risk due to the result
of the current assessment which concluded that critical thresholds are not
expected to breach. More information is available within the TCFD report on
pages 50 to 59.
The principal risks reported here are those attracting the greatest focus, and
to which the Group has the largest exposure. The principal risks are linked to
risk appetite and key risk indicator (“KRI’’) measures for reporting. In assessing
all risks, CMC considers the reputational impacts of risks materialising and
the impacts on its clients, of negative publicity, and risks to the achievement of
business objectives. The following top principal risks were considered, their
management is set out in note 30 to the Financial Statements, and they are:
– Regulatory and compliance risk: there has been an increasing conduct
focus on the sector from various regulators globally. CMC must meet
regulatory expectations including delivering in line with the upcoming
FCA Consumer Duty regime to help ensure the right outcomes for
clients and in that regard the Group has established a project to deliver
the regulation. The Group’s approach to regulatory horizon scanning
continues to be strengthened to ensure we keep abreast of key regulatory
changes. Regulatory projects within the Group remain prioritised to ensure
compliance and ongoing process improvement.
– Business change risk: as we continue to grow the business and implement
strategic change, project delivery risk naturally becomes heightened. Some
challenges have included project pipeline build-up and rapid re-prioritisation;
however, the establishment of delivery pillars with ring-fenced resources has
helped maintain dedicated resource pools and allocations to strategic projects.
– People risk: our people are the key to delivering on our purpose and
strategy. Failure in our ability to attract and retain key talent puts at risk our
strategic delivery and slows our velocity and our ability to maintain our high
service standards. While a number of key people metrics are positive (e.g.
retention rates and number of open vacancies), we still face a number of
market headwinds and continue to monitor in this regard.
– Information and data security risk: cyber-criminal activity continues to
increase in sophistication, severity and frequency and attacks in the form
of ransomware and Distributed Denial of Service (“DDoS’’) are particularly
relevant for the Group given the online nature of the business. Dedicated
specialist in-house IT security resource, strong partnerships with leading
security vendors and continued improvement to internal controls and
governance help to mitigate the risk to CMC.
Further information on the structure and workings of the Board and
Management Committees is included in the Corporate governance report on
pages 79 to 118.
67 – CMC Markets plc
Annual Report and Financial Statements 2023
234Strategic reportGovernance Principal risks
The Board has considered the following principal risks in arriving at its viability statement.
Business and strategic risks
Acquisitions and disposals risk
Description
The risk that mergers, acquisitions, disposals
or other partnership arrangements made by
the Group do not achieve the stated strategic
objectives or that they give rise to ongoing or
previously unidentified liabilities.
Strategic/business model risk
Description
The risk of an adverse impact resulting from the
Group’s strategic decision making as well as
failure to exploit strengths or take opportunities.
It is a risk which may cause damage or loss,
financial or otherwise, to the Group as a whole.
Preparedness for regulatory change risk
Description
The risk that changes to the regulatory
framework the Group operates in impact the
Group’s performance.
Such changes could result in the Group’s product
offering becoming less profitable, more difficult to
offer to clients, or an outright ban on the product
offering in one or more of the countries where the
Group operates.
Reputational risk
Description
The risk of damage to the Group’s brand or
standing with shareholders, regulators, existing
and potential clients, the industry and the
public at large.
Management and mitigation
– Robust corporate governance structure including strong challenge from independent
Non-Executive Directors.
– Group Head of Corporate Development appointed ensuring alignment of business and strategic risk.
– Vigorous and independent due diligence process.
– Align and manage the businesses to Group strategy as soon as possible after acquisition.
Management and mitigation
– Strong governance framework established including five independent Non-Executive Directors
including the Chairman sitting on the Board.
– Robust governance, challenge and oversight from independent Non-Executive Directors.
– Managing the Group in line with the agreed strategy, policies and risk appetite.
Management and mitigation
– Active dialogue with regulators, the auditor, consultants and industry bodies.
– Monitoring of market and regulator sentiment towards the product offering by way of ongoing horizon
scanning (utilised via an automatic screening tool as well as monthly key stakeholder meetings).
– Monitoring by, and advice from, compliance department on impact of actual and possible
regulatory change.
– A business model and proprietary technology that are responsive to changes in regulatory requirements.
Management and mitigation
– The Group is conservative in its approach to reputational risk and operates robust controls to ensure
significant risks to its brand and standing are appropriately mitigated.
– Proactive engagement with the Group’s regulators and active participation with trade and industry
bodies as well as positive development of media relations with strictly controlled media contact.
– Systems and controls (including brand tracking) to ensure we continue to offer a good service to
clients and quick and effective response to address any potential issues.
68 – CMC Markets plc
Annual Report and Financial Statements 2023
Financial risks
Credit and counterparty risks
Description
The risk of losses arising from a
counterparty failing to meet its
obligations as they fall due.
Management and mitigation
– The Group’s management of client counterparty risk is significantly aided by automated liquidation
functionality. This is where the client positions are reduced should the total equity of the account fall below a
pre-defined percentage of the required margin for the portfolio held.
– Tiered margin requires clients to hold more collateral against bigger or higher risk positions.
– Mobile phone access allowing clients to manage their portfolios on the move.
– Guaranteed stop loss orders allow clients to remove their chance of debt from their position(s).
– Position limits which can be implemented on an instrument and client level. The instrument level enables the
Group to control the total exposure the Group takes on in a single instrument. At a client level this ensures that
the client can only reach a pre-defined size in any one instrument.
– Monitoring and reporting counterparty exposures against policy limits.
– Monitoring the creditworthiness of counterparties by observing and reporting key quantitative metrics
(including, where available: share price; relative performance against index; CDS spreads; volatility skew; and
credit ratings), as well as qualitatively, by reviewing industry commentary.
Insurance risks
Description
The risk that an insurance claim by the
Group is declined (in full or in part) or
there is insufficient insurance coverage.
Tax and financial reporting
Description
The risk that financial, statutory or
regulatory reports including VAT and
similar taxes are submitted late, are
incomplete or are inaccurate.
Management and mitigation
– Use of a reputable insurance broker who ensures cover is placed with financially secure insurers.
– Annual review of all policies to ensure comprehensive levels of cover are maintained.
– Rigorous claim management procedures are in place with the broker.
– Full engagement with relevant business areas regarding risk and coverage requirements and related
disclosure to brokers and insurers.
Management and mitigation
– Robust process of checking and oversight in place to ensure accuracy.
– Knowledgeable and experienced staff undertake and overview the relevant processes.
69 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Principal risks continued
Financial risks continued
Liquidity risk
Description
The risk that there is insufficient available
liquidity to meet the liabilities of the
Group as they fall due.
Management and mitigation
– Risk management is carried out by a central LRM team under policies approved by the Board and in line
with the FCA’s Investment Firms Prudential Regime (“IFPR”). The Group utilises a combination of liquidity
forecasting and stress testing to identify any potential liquidity risks under both normal and stressed
conditions.
– The provision of timely daily, weekly and monthly liquidity reporting and real-time broker margin requirements
to enable strong management and control of liquidity resources.
– Maintaining regulatory and Board approved buffers and managing liquidity to a series of Board approved
metrics and key risk indicators.
– A committed bank facility of up to £55 million is in place (access to the facility is tested regularly) and provides a
means to meet its liabilities, including funding broker margin, if CMC’s own on balance sheet liquidity resources
are insufficient at a point in time.
– A formal Contingency Funding Plan (“CFP”) is in place that is designed to aid senior management to assess
and prioritise actions in a liquidity stress scenario.
Management and mitigation
– Trading risk management monitors and manages the exposures it inherits from clients on a real-time basis and
in accordance with Board-approved appetite.
– The Group predominantly acts as a market maker in linear, highly liquid financial instruments in which it can
easily reduce market risk exposure through its prime broker arrangements. This significantly reduces the
Group’s revenue sensitivity to individual asset classes and instruments.
– Financial risk management runs stress scenarios on the residual portfolio, comprising a number of single
and combined company-specific and market-wide events in order to assess potential financial and capital
adequacy impacts to ensure the Group can withstand severe moves in the risk drivers to which it is exposed.
Management and mitigation
– Governance process in place for all business change programmes with Executive and Board oversight
and scrutiny.
– Key users engaged in development and testing of all key change programmes.
– Significant post-implementation support, monitoring and review procedures in place for all change programmes.
– Strategic benefits and delivery of change agenda communicated to employees.
Market risk
Description
The risk that the value of our residual
portfolio will decrease due to changes
in market risk factors. The three
standard market risk factors are price
moves, interest rates and foreign
exchange rates.
Operational risks
Business change risk
Description
The risk that business change projects
are ineffective, fail to deliver stated
objectives, or result in resources being
stretched to the detriment of business-
as-usual activities.
Business continuity and disaster recovery risk
Description
The risk that a business continuity event
or system failure results in a reduced
ability or inability to perform core
business activities or processes.
Management and mitigation
– Multiple data centres and systems to ensure core business activities and processes are resilient to
individual failures.
– Remote access systems to enable staff to work from home or other locations. in the event of a disaster
recovery or business continuity requirement.
– Periodic testing of business continuity processes and disaster recovery.
– Robust incident management processes and policies to ensure prompt response to significant systems
failures or interruptions.
70 – CMC Markets plc
Annual Report and Financial Statements 2023
Operational risks continued
Financial crime risk
Description
The risk that the Group is not committed
to combatting financial crime and
ensuring that our platform and products
are not used for the purpose of money
laundering, terrorism financing, anti-
bribery and corruption, market abuse,
fraud or sanctions evasion.
Management and mitigation
– Establishing and maintaining a risk-based approach towards assessing and managing the money laundering,
terrorism financing, anti-bribery and corruption, market abuse, fraud or sanctions evasion risks to the Group.
– Establishing and maintaining risk- based Know Your Customer (“KYC”) procedures, including Enhanced Due
Diligence (“EDD”) for those customers presenting higher risk, such as Politically Exposed Persons (“PEPs”).
– Establishing and maintaining risk-based systems for surveillance and procedures to monitor ongoing
customer activity.
– Procedures for reporting suspicious activity internally and to the relevant law enforcement authorities or
regulators as appropriate.
– Establishing and maintaining procedures relating to mitigation of risk derived from clients that are repeat
offenders of market abuse.
– Maintenance of appropriate records for the minimum prescribed record keeping periods.
– Training and awareness for all employees.
– Provision of appropriate MI and reporting to senior management of the Group’s compliance with the requirements.
– Oversight of Group entities for financial crime in line with the Group Anti Money Laundering / CTF
oversight framework.
Information and data security risk
Description
The risk of unauthorised access to or
external disclosure of client or Company
information, including those caused by
cyber attacks.
Management and mitigation
– Dedicated information security and data protection expertise within the Group.
– Technical and procedural controls implemented to minimise the occurrence or impact of information security
and data protection breaches.
– Access to information and systems only provided on a “need-to-know” and “least privilege” basis consistent
with the user’s role and also requires the appropriate authorisation.
– Regular system access reviews implemented across the business.
Information technology and infrastructure risk
Description
The risk of loss of technology services
due to loss of data, system or data
centre or failure of a third party to restore
services in a timely manner.
Management and mitigation
– Continuous investment in increased functionality, capacity and responsiveness of systems and infrastructure,
including investment in software that monitors and assists in the detection and prevention of cyber attacks.
– Software design methodologies, project management and testing regimes to minimise implementation and
operational risks.
– Constant monitoring of systems performance and, in the event of any operational issues, changes to
processes are implemented to mitigate future concerns.
– Operation of resilient data centres to support each platform.
– Systems and data centres designed for high availability and data integrity enabling continuous service to
clients in the event of individual component failure or larger system failures.
– Dedicated Support and Infrastructure teams to manage key production systems. Segregation of duties
between development and production support teams where possible to limit development access to
production systems.
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Strategic reportGovernanceFinancial statementsShareholder information Principal risks continued
Operational risks continued
Legal (commercial/litigation) risks
Description
The risk that disputes lead to
litigation proceedings.
Management and mitigation
– Compliance with legal and regulatory requirements including relevant codes of practice.
– Early engagement with legal advisers and other risk managers, and where appropriate external counsel.
– Appropriately managed complaints which have a legal/litigious aspect.
– An early assessment of the impact and implementation of changes in the law.
Operations (processing) risk
Description
The risk that the design or execution
of business processes is inadequate
or fails to deliver an expected level
of service and protection to client or
Company assets.
Management and mitigation
– Investment in system development and upgrades to improve process automation.
– Implementation of robust, preventative controls and processes as required.
– Enhanced staff training and oversight in key business processing areas.
– Monitoring and robust analysis of errors and losses and underlying causes.
Procurement and outsourcing risk
Description
The risk of third-party organisations
inadequately performing, or failing to
provide or perform the outsourced
activities or contractual obligations to the
standards required by the Group.
Management and mitigation
– Responsibility for procurement, vendor management and general outsourcing owned by the Chief Financial
Officer under the Senior Managers and Certification Regime, with the accountability to ensure compliance
to the Group procurement process and completion of key activities, based on the risk profile of the service
required by the organisation.
– Outsourcing only employed where there is a strategic gain in resource or experience, which is not
available in house.
– Outsourcing arrangements require assessment as to their materiality to the business. Material outsourcing
arrangements need to be reported to the FCA.
– Due diligence performed on service supplier ahead of outsourcing being agreed.
– Service level agreements in place and regular monitoring of performance undertaken.
People risk
Description
The risk of loss of key staff having
insufficient skilled and motivated
resources available or failing to operate
people related processes to an
appropriate standard.
Management and mitigation
– The Board has directed that the Group maintains active People, Succession and Resource Plans for the
Group and all key individuals and teams, which will mitigate some of the risk of loss of key persons. It will adopt
policies and strategies commensurate with its objectives of:
• attracting and nurturing the best staff;
•
retaining and motivating key individuals;
• managing employee related risks;
• achieving a high level of employee engagement;
• developing personnel capabilities;
• optimising continuous professional development; and
• achieving a reputation as a good employer with an equitable remuneration policy.
72 – CMC Markets plc
Annual Report and Financial Statements 2023
Operational risks continued
Regulatory and compliance risk
Description
The risk of regulatory sanction or legal
proceedings as a result of failure to
comply with regulatory, statutory or
fiduciary requirements or as a result
of a defective transaction.
Conduct risk
Description
The risk that through our culture,
behaviours or practices we fail to meet
the reasonable expectations of our
customers, shareholders or regulators.
Client money segregation risk
The risk that the Group fails to implement
adequate controls and processes to
ensure that client money and assets
are segregated in accordance with
applicable regulations.
Management and mitigation
– Internal audit outsourced to an independent third-party professional services firm.
– Effective compliance oversight and advisory/technical guidance provided to the business.
– Comprehensive monitoring and surveillance programmes, policies and procedures designed by compliance.
– Strong regulatory relations and regulatory horizon scanning, planning and implementation.
– Controls for appointment and approval of staff holding a senior management or certified function and annual
declarations to establish ongoing fitness and propriety.
– Governance and reporting of regulatory risks through Group and local Boards, the Group Audit Committee
and the Group Risk Committee.
– Robust anti-money laundering controls, client due diligence and sanctions checking.
Management and mitigation
– Treating Customers Fairly (“TCF”) and Conduct Committees are in place across the Group.
– Robust Management Information focusing on good client outcomes.
– Effective conduct policy ensuring conduct-related matters, including any serious concerns, breaches of the
Group or local Codes of Conduct, serious complaints specific to an employee or any concerns with a senior
management or certified function are addressed.
– The Client Money and Asset Protection Committee (“CMAPC”) is a fundamental part of the Group’s client
money and assets governance framework.
– Robust Client Money and Asset Protection policy.
– Comprehensive Client Money resolution pack.
73 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Corporate governance
Chairman’s governance overview
Our governance
reviews and
Board changes
have enhanced
our governance
framework
The Board continues to recognise that an effective
governance framework is fundamental in ensuring
the Group’s ability to deliver long-term value for
our shareholders and stakeholders.
74 – CMC Markets plc
Annual Report and Financial Statements 2023
Dear shareholder,
On behalf of the Board, I am pleased to present the Group’s Governance
report for the year ended 31 March 2023. The Board continues to recognise
that effective governance is key to the successful delivery of the Group’s
strategy and long-term sustainable success, and ensuring value for our
shareholders and stakeholders.
As previously reported, in conjunction with Independent Audit Limited we
undertook a governance review in 2022 – the work started last year to
improve our governance processes has continued through the year. We
have made changes to our Board, the number of meetings held, types of
matters being discussed and have reviewed the content of the papers being
presented to the Board.
We instructed an external review of our ERM framework and the governance
processes in place to monitor risk. Although this process highlighted
that our framework is comparable to our peers it also provided some
recommendations to be considered as part of our ongoing aim of improving
our practices and processes. We have made a good start over the latter part
of the year to move forward with our improvements, which will really start
to accelerate following the appointment of Tracy Costello as our Chief Risk
Officer in February 2023. She will, in conjunction with our new Group Risk
Committee Chair, help drive forward the recommendations from the external
enterprise risk framework review. We have also continued our ongoing
programme of internal controls improvements, both in relation to areas
previously identified and to ensure we are well placed to be able to comply
with new requirements. These are discussed in more detail in the report of the
Group Audit Committee.
UK Corporate Governance Code
As a company listed on the Main Market of the London Stock Exchange, CMC
Markets plc is subject to the principles and Provisions of the UK Corporate
Governance Code 2018 (the “Code”) published by the Financial Reporting
Council (“FRC”) and available at www.frc.org.uk.
For the financial year ended 31 March 2023, the Board considers that the
Company complied with the principles and Provisions of the Code throughout
the period, with the exception of:
– Provision 11, which requires that at least half the board, excluding the
chair, should be non-executive directors whom the board considers to be
independent. Whilst the Board’s composition did not meet this requirement
for the full year, this has been corrected by the year end. As advised in
last year’s Annual Report, in the prior year with the Group considering
its diversification strategy and the shape of the business, the Board held
off appointing further Non-Executive Directors whilst these issues were
clarified internally and progress in the diversification was evident.
The Governance report and individual Committee reports on pages 79 to
118 sets out the ways in which the Company has applied the principles and
complied with the Provisions of the Code and describes the activities of the
Board and its Committees and the matters they have considered during the
financial year.
Leadership
It is critical that the Board has the right composition, so it can provide
balanced leadership for the Group and the independent discharge of its
duties to shareholders. This relies on the Board having the right balance of
skills, experience and objectivity, as well as a good working knowledge of the
Group’s business.
During the year we welcomed Susanne Chishti to the Board as a Non-Executive
Director (effective as of 1 June 2022). Susanne has brought a wealth of
technology and fund experience to the Board’s composition.
Clare Francis joined the Board as a Non-Executive Director with effect from
19 December 2022 and she brings extensive knowledge of risk management
frameworks and financial services.
These appointments have added to the diversity of the Board in terms of
experience and viewpoints and both new Directors are already having a
beneficial effect on the governance of the Group. Their appointments also
means that 60% of the Non-Executive Directors are female.
Board biographies can be found on pages 76 to 78. More details on Board
changes, our assessment of the balance of leadership skills and experience,
and our talent and succession planning processes, can be found in the
Nomination Committee report on pages 94 to 97.
The balance of skills, experience and independence of the Board and individual
Directors is subject to ongoing review by the Nomination Committee.
ESG and sustainability
The Board has spent time, with support from the Sustainability Committee,
over the past year reviewing its ESG policies and practices and how it can
improve and set KPIs and targets to ensure that the Group is sustainable over
the longer term and consider how its operations impact its stakeholders. More
information is included in the Sustainability section on pages 34 to 48.
Stakeholder engagement
Our stakeholders are essential to the success of the Group and the Board
recognises the importance of engagement with them. The Section 172
statement, our summary of engagement with stakeholders on pages 14 to 19
and the statements on pages 85 and 86 of the Governance report provide
more details in relation to how the Group has managed this in the year
under review.
As Chairman, I am responsible for the effective communication between
shareholders and the Company and for ensuring the Board understands
the views of major shareholders and I will also always make myself available
to meet any of our shareholders who wish to discuss matters regarding the
Company. To that end I have, with the Senior Independent Director, met with
a number of shareholders of the course of the last 12 months. The principal
communication with private shareholders is through our full year and interim
results announcements, ad hoc updates, the Annual Report and our Annual
General Meeting (“AGM”). We are holding our AGM on Thursday 27 July 2023
and hope that our shareholders will attend. My fellow Directors and I will
be available to answer any questions that shareholders may have about
the Company.
Priorities for the year ahead
The Group is continuing to grow and it will be important to ensure that the
governance practices and processes in place are aligned to the changing
requirements of the Group. We have made changes to our senior leadership
team and Board which will support this and we will continue to review and
develop what we do and what information we receive from management in
order to allow us to discharge our duties appropriately.
James Richards
Chairman
13 June 2023
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Strategic reportGovernanceFinancial statementsShareholder information Board of Directors
James Richards
Independent Chairman
Appointment
1 April 2015
Committee membership
G R N
Skills and experience
James joined the Group as a Non-
Executive Director in April 2015 and
was appointed as Chairman with
effect from 1 January 2018 and Chair
of the Nomination Committee from
31 January 2018.
He has previously held positions
as Chair of the Remuneration
Committee, interim Chair of the
Group Risk Committee and been
a member of the Nomination
Committee and Group Audit
Committee. James was admitted to
the roll of solicitors in England and
Wales in 1984 and in the Republic
of Ireland in 2012. James was a
partner at Dillon Eustace, a law firm
specialising in financial services in
Ireland (2012 to 2016). Prior to this
he was a finance partner at Travers
Smith LLP for 14 years. Having
occupied various senior positions
within leading law firms, James has
extensive experience in derivatives,
debt capital markets and structured
finance and his leadership skills are
key to the long-term sustainability of
the Group.
Current external appointments
None
Lord Peter Cruddas
Chief Executive Officer
Appointment
3 June 2004
Committee membership
E
Skills and experience
Peter founded the Group and
became its Chief Executive Officer
in 1989. Peter held this role until
October 2007, and again between
July 2009 and June 2010. Between
2003 and March 2013, he also
served as the Group’s Executive
Chairman. In March 2013, he
once again became the Group’s
Chief Executive Officer and is
responsible for running the Group
on a day-to-day basis. Prior to
founding the Group, Peter was chief
dealer and global group treasury
adviser at S.C.F. Equity Services,
where he was responsible for all the
activities of a dealing room whose
principal activities were trading in
futures and options in currencies,
precious metals, commodities
and spot forwards on foreign
exchange and bullion. His continued
entrepreneurial leadership is
important to the long-term growth
and sustainability of the Group.
Current external appointments
– The Peter Cruddas Foundation
– director
– Finada Limited – director
– UK House of Lords – member
Paul Wainscott
Senior Independent
Director
Appointment
19 October 2017
Committee membership
A G R N
Skills and experience
Paul joined the Group as an
independent Non-Executive
Director in October 2017 and acts
as the Group’s Senior Independent
Director. Paul served as finance
director at the Peel Group for 27
years until March 2018. During his
time at the Peel Group, Paul gained
wide experience at board level and
in several different business sectors,
including real estate, transport,
media and utilities. Paul’s financial
experience, gained via a variety of
sectors, is key to his contributions
and to the long-term sustainability of
the Group.
Current external appointments
None
Committee membership
A Group Audit Committee
M Executive Risk Committee
E Executive Committee
R Remuneration Committee
N Nomination Committee
Chairman
G Group Risk Committee
76 – CMC Markets plc
Annual Report and Financial Statements 2023
Sarah Ing
Independent
Non-Executive
Director
Appointment
14 September 2017
Committee membership
A G R N
Clare Francis
Independent
Non-Executive
Director
Appointment
19 December 2022
Committee membership
A G R N
Other responsibilities:
Consumer Duty Champion
Susanne Chishti
Independent
Non-Executive
Director
Appointment
1 June 2022
Committee membership
A G R N
Other responsibilities:
Non-Executive Director for workforce
engagement.
Skills and experience
Sarah joined the Group as a Non-
Executive Director in September
2017. She has over 30 years’
experience in accountancy,
investment banking and fund
management, including time with
HSBC and UBS. She is a chartered
accountant and was a top-rated
equity research analyst covering
the general financials sector. Sarah
also founded and ran a hedge fund
investment management business.
Sarah’s investment and financial
knowledge and the experience
she brings from her other plc
appointments add value to the
ongoing sustainability of the Group.
Current external appointments
– Marex Group plc – non-executive
director, chair of the audit and
compliance committee and
member of the remuneration and
risk committees
– XPS Pensions Group plc –
non-executive director, chair
of the sustainability and audit &
risk committees and member
of the remuneration and
nomination committees
– Gresham House plc –
non-executive director, chair of
the audit committee and member
of the nomination, remuneration and
sustainability committees
Skills and experience
Clare joined the Group as a Non-
Executive Director in December
2022. Having started her career
at NatWest, she has over 25 years’
experience operating at board level
in large companies in the UK and
overseas and has spent over 25
years in banking and markets. She
has experience in driving emerging
markets across Asia, Africa and
Americas. She is an honorary fellow
of the Association of Corporate
Treasurers and has sat on the
boards of AFME and BAB.
Clare was most recently the global
banking head of Europe, chief
executive of Standard Chartered
Bank UK and global head of
investors and insurance at Standard
Chartered Bank. Clare has also held
Skills and experience
Susanne joined the Group as a Non-
Executive Director in June 2022.
She started her career working for
a financial technology (“fintech”)
company in Silicon Valley. She has
25 years’ experience in fintech,
banking, investment management
and consulting, including time with
Deutsche Bank, Lloyd’s Banking
Group, Morgan Stanley Investment
Management and Accenture.
Susanne is the co-author of
seven fintech books published
by Wiley. She is often invited
to share her fintech thought
roles as head of global corporates/
international and global head of
financial market sales at Lloyd’s
Banking Group and was head of
European financial market advisory
at HSBC. She has recently been
appointed as a senior adviser to
Provenance Blockchain which will
provide insight into fintech and the
disruption of financial services.
Clare’s extensive global experience
and her input into the ongoing
improvements to the Group’s risk
and internal controls management is
key to the long-term sustainability of
the Group.
Current external appointments
– Department of International Trade
TAG – board member
– Infrastructure Exports: UK –
board member
leadership at international fintech
conferences and as a judge at
fintech competitions. Her extensive
knowledge of the fintech sector
and experience of advising on
leadership and engagement matters
are invaluable to the long-term
sustainability of the Group.
Current external appointments
– FINTECH Circle – chief
executive officer
– Crown Agents Bank Limited –
non-executive director
– Cab tech Hold Co Limited –
non-executive director
77 – CMC Markets plc
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Euan Marshall
Chief Financial Officer
Appointment
1 November 2019
Committee membership
E M
Matthew Lewis
Head of Asia Pacific &
Canada
Appointment
1 November 2019
Committee membership
E M
David Fineberg
Deputy Chief Executive
Officer
Appointment
1 January 2014
Committee membership
E M
Skills and experience
Euan joined the Group in November
2011 and he has held a variety of
roles across the finance function,
including Group Head of Finance.
He was appointed as Chief Financial
Officer in November 2019, where he
is responsible for the management
of all finance functions globally and
investor relations. Euan has been a
member of the Chartered Institute
of Management Accountants
since 2005 and has over 20 years’
experience working in financial
services and business consulting
including at Barclays, HSBC and
Deloitte. Euan holds a BSc in
Skills and experience
Matthew joined the Group in
September 2005 and has held a
variety of roles including Senior
Dealer, Head of Eastern Equities,
Head of Sales Trading ANZ, Head of
Trading Eastern Region and Director
of Asia. In his current role as the
Head of Asia Pacific & Canada, he
is responsible for implementing the
Group’s business strategies across
the APAC & Canada region for both
the retail and wholesale CFD and
foreign exchange business. He is
also responsible for the Group’s
Invest Australia business. Prior to
joining the Group, Matthew worked
for Commonwealth Securities,
Economics from the University
of Nottingham.
Euan’s knowledge of the Group’s
operations globally and his
understanding of the regulatory
environment it operates in are key to
ensuring the long-term sustainability
of the Group.
Current external appointments
None
Australia’s largest provider of
financial services, dealing in equities,
before moving into derivatives as
an options trader and warrants
representative. Matthew has over
20 years’ experience in financial
services and holds a Bachelor of
Economics from the University
of Sydney.
Matthew’s understanding of the
APAC business and its growth
and development is important
to the long-term sustainability of
the Group.
Current external appointments
None
Skills and experience
David joined the Group in November
1997 working on the trading desk
and developing the Group’s multi-
asset CFD and spread bet dealing
desk. As a Senior Dealer he was
responsible for managing the UK
and US equity books. Between
April 2007 and September 2012, he
was the Group’s Western Head of
Trading, covering all asset classes
for the western region. In September
2012 David was appointed to the
role of Group Head of Trading and
in January 2014 was appointed as
the Group Director of Trading with
overall responsibility for the trading
and pricing strategies and activities
across the Group.
In June 2017 his role further
expanded when he became Group
Commercial Director and then
in April 2019 he was promoted
to the position of Deputy Chief
Executive Officer.
David’s in-depth knowledge of the
business and the opportunities
for growth and evolving strategy
are important to the long-term
sustainability of the Group.
Current external appointments
None
Committee membership
A Group Audit Committee
M Executive Risk Committee
E Executive Committee
R Remuneration Committee
N Nomination Committee
Chairman
G Group Risk Committee
78 – CMC Markets plc
Annual Report and Financial Statements 2023
Corporate governance
The Board
The role of the Board
The Board provides entrepreneurial leadership and strategic oversight in
relation to the long-term, sustainable success of the Company.
The Board, taking account of relevant stakeholder interests, is responsible
for the establishment of the Group’s purpose, values and strategy and has
oversight of implementation within necessary financial, human resources and
cultural frameworks.
The Board has ultimate responsibility to prepare the Annual Report and
Financial Statements and to ensure that appropriate internal controls and risk
management systems are in place in order to assess, manage and mitigate risk.
The Board delegates the in-depth review and monitoring of internal controls
and risk management to the Group Audit Committee and Group Risk
Committee respectively.
The terms of reference of these Board Committees (and the Remuneration
and Nomination Committees) are available on the CMC Markets plc Group
website (https://www.cmcmarketsplc.com/investors/corporate-
governance/committees/).
Board leadership and purpose
The Board provides entrepreneurial leadership and oversight of the
delivery of strategic objectives and the long-term, sustainable success
of the Company, taking into account stakeholder priorities and employee
engagement feedback.
The Board considers any diversification of the Company’s product offerings
to ensure a robust range of products designed to be successful within a
changing regulatory environment and appeal to changing stakeholder
requirements, with the objective of preserving long-term value.
Stakeholder and employee-related matters form part of the Board’s decision
making processes, facilitated by the investment in employee engagement
Board composition
surveys, the work of the Designated Non-Executive Director for workforce
engagement, ongoing shareholder dialogue and market feedback.
Our Section 172 statement on pages 14 and 15 and the separate reports of
the various Board Committees provide more detail on how the Board and its
Committees have discharged their duties during the year. The Sustainability
section on pages 34 to 48 sets out the work being done by the Group in relation
to sustainability matters and the Strategic report on pages 2 to 73 provides more
detail on some of the activities to continue the diversification of the business and
implement strategy and cultural initiatives. The Board’s leadership recognises
the importance of a working culture which promotes inclusion and acceptance
of differing approaches to facilitating the successful delivery of strategic projects
and initiatives. We have a future focused culture with a goal to constantly maintain
a superior and unrivalled technology experience for our clients which is aligned to
our purpose, values and strategy. To support this it is important that our staff are
engaged with this goal and have the knowledge to ensure they are motivated to
provide a good client experience. Our Section 172 statement, engagement with
stakeholder engagement section and Sustainability section provide information
on some of the initiatives undertaken throughout the year to engage with
employees and embed our cultural values throughout the organisation.
The Group has an established process in relation to the reporting and
processing of employee-related issues. Within a structure ultimately overseen
by the Board, any employee can raise a matter of concern at any time through
day-to-day management reports or whistleblower channels as appropriate.
The Board receives a whistleblowing report annually which will highlight
matters raised and any updates to the whistleblowing procedures and Group
policy. During the year the whistleblowing process was enhanced by the
appointment of a vendor, Safecall, to allow any concerns to be raised via an
independent channel.
The Board recognises the importance of understanding employee
engagement and the prevailing Group culture to enable alignment with
delivery on strategy in a way that ensures a commitment to the Group’s values.
The Directors who held office during the financial year, and their attendance at scheduled meetings, is shown below.
Name
Position
Board
meetings
Group Audit
Committee
Group Risk
Committee
Nomination
Committee
Remuneration
Committee
Number of meetings
James Richards
Susanne Chishti1
Clare Francis2
Sarah Ing
Clare Salmon3
Paul Wainscott4
Lord Cruddas
David Fineberg
Matthew Lewis
Euan Marshall
Chairman
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Senior Independent Director
Chief Executive Officer
Deputy Chief Executive Officer
Head of Asia Pacific & Canada
Chief Financial Officer
6
6(6)
5(5)
2(2)
6(6)
2(2)
6(6)
6(6)
6(6)
6(6)
6(6)
6
—
5(5)
2(2)
6(6)
1(2)
6(6)
—
—
—
—
6
6(6)
5(5)
2(2)
6(6)
2(2)
4(6)
—
—
—
—
5
5(5)
3(3)
1(1)
5(5)
2(2)
4(5)
—
—
—
—
7
7(7)
5(5)
3(3)
7(7)
2(2)
7(7)
—
—
—
—
The figures in brackets denote the number of meetings the Director was eligible to attend.
1 Susanne Chishti was appointed with effect from 1 June 2022.
2 Clare Francis was appointed with effect from 19 December 2022.
3 Clare Salmon retired with effect from 28 July 2022.
4 Paul Wainscott was unable to attend meetings due to prior commitments when meetings were convened or moved at short notice.
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The Board continued
Board composition continued
Board balance
The Board also met on various occasions on an ad hoc basis throughout the
year to discuss matters such as potential investments, final and interim results,
dividends and the appointment of a new NED. Attendance at these ad hoc
meetings is not included in the table on page 79.
Activities of the Board
The Board has a comprehensive meeting planner that ensures all matters for
Board consideration are presented and reviewed in a timely manner.
Key areas of focus during this financial year were:
– consideration and approval of the Annual Report and Financial Statements,
half year results and interim dividend approvals;
– issuance of shares to the Employee Benefit Trust;
– approval of Group property management issues and Group Board appointments;
– employee engagement survey results review;
– ongoing review of CMC Markets plc governance arrangements;
– consideration of intra-group outsourcing and service arrangements;
– the development and launch of new products and expansion into
new regions;
– risk management and risk appetite;
– the review and approval of ICARA and other regulatory documents;
Provision 11 of the Code recommends that at least half of the Board, excluding
the Chairman, be independent Non-Executive Directors. As shown in the
table below, the Company was not compliant with this Provision during
part of the year under review but took steps to rectify this position and is
currently compliant.
Position
Period
Compliance status
ED1
NED2
Impacting event
1 April 2022 –
31 May 2022
Non-compliant
4
3
Non-compliant while
additional NED search
undertaken
1 June 2022 –
28 July 2022
29 July 2022 –
18 December
2022
19 December
2022 – 31 March
2023
Compliant
Non-compliant
4
4
4
3
Susanne Chishti appointed
on 1 June 2022
Clare Salmon retired on
28 July 2022
Compliant
4
4
Clare Francis appointed on
19 December 2022
1 Executive Directors.
2 Non-Executive Directors excluding the Chairman.
– oversight of CASS reporting and compliance;
Board support
– ongoing oversight of the transition to Enhanced Firm status under the
SMCR at relevant UK regulated Group entities;
– stakeholder engagement;
– approval of Board policies, e.g. whistleblowing;
– consideration of sustainability strategy, targets and KPIs;
– assessment of the impact on the Group of the FCA’s consumer duty regulations;
– evaluation of a potential managed separation of the trading and investing
businesses; and
– insurance renewal arrangements and approvals.
Some of the key decisions made by the Board impacting stakeholders during
the year are described in the Section 172 statement on pages 14 and 15.
The Board operates in accordance with the provisions of the Articles
of Association and established processes and approved policies, as
appropriate, and has access to relevant resources as required.
Each Director has access to the Company Secretary, who is responsible
for advising the Board on governance matters and supporting the efficient
functioning of the Board and its Committees. The Company Secretary
provides meeting papers to Directors in a timely manner to allow for conducive
and effective Board and Board Committee meetings and attends all Board
and Committee meetings in order to provide appropriate advice on corporate
governance and matters of procedure. The appointment and removal of the
Company Secretary is a matter for the Board.
As stated in each of the Board Committees’ terms of reference, the Directors
may take independent professional advice at the Company’s expense.
80 – CMC Markets plc
Annual Report and Financial Statements 2023
Matters reserved for the Board
It is recognised that certain matters cannot, or should not, be
delegated and the Board has adopted a schedule of matters
reserved for Board consideration and approval. The matters
reserved for the Board fall into the following areas:
– strategy and management;
– structure and capital;
– financial reporting and controls;
– internal controls and risk management;
– contracts;
– communications;
– Board membership and other appointments;
– remuneration;
– delegation of authority;
– corporate governance matters;
– policies;
– political and charitable donations;
– appointment of principal professional advisers;
– material litigation;
– whistleblowing;
– Modern Slavery Act statement;
– pension schemes; and
– insurance.
The schedule of matters reserved for the Board is
available on the CMC Markets plc Group website,
https://www.cmcmarketsplc.com/investors/
corporate-governance.
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Division of responsibilities
The roles of the Chairman and Chief Executive Officer (“CEO”) are separate, clearly defined in writing
and agreed by the Board.
Chairman
Responsibilities of the Chairman include:
– leadership of the Board, with responsibility for its overall effectiveness in directing the Company, and ensuring open and effective communication
between the Executive and Non-Executive Directors;
– ensuring Directors receive accurate, timely and clear information and that Board meetings are effective by setting appropriate and relevant agenda
items, creating an atmosphere whereby all Directors are engaged and free to enter healthy and constructive debate;
– ensuring effective communication between major shareholders and the Board;
– overseeing each Director’s induction and ongoing training; and
– leadership of the Board effectiveness process through his role as Chair of the Nomination Committee.
CEO
Responsibilities of the CEO include:
– day-to-day management of the Group’s business and implementation of the Board-approved strategy;
– acting as Chair of the Executive Committee and leading the senior management team in devising and reviewing Group development for
consideration by the Board;
– responsibility for the operations and results of the Group; and
– promoting the Group’s values, culture and standards.
Senior Independent Director
Non-Executive Directors
Responsibilities of the Senior Independent
Director include:
Responsibilities of the Non-Executive
Directors include:
– acting as a sounding board for the Chairman and serving as an
– providing strategic guidance and constructively challenging
intermediary for the other Directors as necessary;
– acting as lead independent Non-Executive Director;
– leading the Non-Executive Directors in the performance
evaluation of the Chairman, with input from the Executive
Directors; and
management proposals and providing advice in line with their
respective skills and experience;
– helping to develop proposals on strategy;
– reviewing the performance of management and individual
Executive Directors against agreed performance objectives;
– being available to shareholders in the event that the Chairman,
– having a prime role in appointing and, where necessary,
Chief Executive Officer or other Executive Directors are unavailable.
removing Executive Directors; and
– having an integral role in succession planning.
82 – CMC Markets plc
Annual Report and Financial Statements 2023
Governance structure as at 31 March 2023
Independent
Assurance
Group Board
Group Audit
Committee
Group Risk
Committee
Nomination
Committee
Remuneration
Committee
Regulated
Subsidiaries
Internal
Assurance
Executive
Committee
Sustainability
Committee
Executive Risk
Committee
External Auditor
Group Internal
Audit
Treating Customers
Fairly and Conduct
Committee
Client
Money and Asset
Protection Committee
Programme
Management
Committee
Board/Board Committee
Senior Management Committee
Management Committee
Subsidiaries
Internal assurance
Independent assurance
Direct reporting line
Reporting line for certain matters
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Accountability
Election and re-election of Directors
Directors’ induction, training and evaluation
The 2023 Annual General Meeting (“AGM”) will be held at 10.00 am on 27 July
2023 at 133 Houndsditch, London EC3A 7BX.
Directors newly appointed to the Board are required to submit themselves
for election by shareholders at the AGM following their appointment. In
accordance with the Code, all other current Directors will offer themselves for
re-election at the forthcoming AGM.
Following recommendations from the Nomination Committee and review by
the Chairman, the Board considers that all Directors continue to be effective,
remain committed to their roles and have sufficient time available to perform
their duties. Biographies for each Director, which set out the reasons why the
Board believes each Director’s contribution is, and continues to be, important
to the Group’s long-term sustainable success, are available on pages 76 to 78.
Chairman’s tenure
James Richards was appointed to the Board on 1 April 2015 and will have
therefore served on the Board for nine years with effect from 1 April 2024.
Out of these nine years, he served for two years and nine months as a
Non-Executive Director and will have served six years and three months
as Chairman.
Having regard to the Provisions of the UK Corporate Governance Code, the
Nomination Committee, led by the Senior Independent Director, met without
James present in May 2023 to discuss the Chairman’s succession.
In line with a recommendation from our major shareholder and CEO, the
Committee considered, and agreed to recommend to the Board, that James’
appointment to the Board and as Group Chairman be extended until the
close of the AGM in 2025 in order to provide continuity while we navigate
through our diversification strategy, increase our product range and expand
our institutional business. This proposal was approved by the Board and
a resolution in relation to James’ re-election will therefore be presented to
shareholders for approval at both the 2023 and 2024 AGMs.
The Committee will continue to consider succession plans for the Chairman,
James’ tenure and his membership of various Committees in line with the
Provisions of the Code, with relevant disclosures in relation to the ongoing
position made in next year’s Annual Report.
Independence of Non-Executive Directors and
time commitment
The Board carries out a review of the independence of its Non-Executive
Directors on an annual basis and considers each of the Non-Executive
Directors, including the Chairman, to be independent in character and
judgement. Each Director is aware of the need to allocate sufficient time
to the Company in order to fulfil their responsibilities and is notified of all
scheduled Board and Board Committee meetings. Non-Executive Directors
are expected to obtain the agreement of the Chairman before accepting
additional commitments that might affect the time they are able to devote to
their role in the Company.
On appointment, new Directors receive a comprehensive and formal
induction, which is facilitated by the Company Secretary in consultation with
the Chairman.
The Nomination Committee ensures that an annual evaluation of the Board,
Board Committees and individual Directors is undertaken. More information is
provided in the Nomination Committee report on page 99.
The Board regularly updates a skills assessment for the Non-Executive
Directors which, together with any observations made as part of the Board
evaluation process, is used by the Company to tailor induction meetings and
training requirements for each Director. One-to-one meetings are arranged
between the Director and the management teams in relevant areas of
the business as part of the induction. This allows an incoming Director to
familiarise themselves with the management team and their respective roles
and responsibilities and to gain a greater understanding and awareness of
the firm’s business and the industry in which it operates. These meetings also
provide an opportunity for new Directors to discuss the business strategy
and model, risk management, governance and controls, the requirements of
the regulatory framework and the culture of the Group. These meetings and
training arrangements form a key part of the learning and development plan.
Non-Executive Directors attend internally and externally facilitated training
sessions and have access to online and digital platform-based training and
information resources, including on relevant financial services matters with
emphasis on responsibilities with regard to regulation and compliance. They
also have access to other knowledge resources and education programmes
offered by third-party service providers with which the Group has established
relevant links. A programme of technical business briefings related to CMC’s
business is being prepared for 2024.
Board responsibilities in relation to the Annual Report
and Financial Statements
The Board has ultimate responsibility for reviewing and approving the Annual
Report and Financial Statements and it has considered and endorsed the
arrangements enabling it to confirm that the Annual Report and Financial
Statements, taken as a whole, is fair, balanced and understandable and
that it provides the information necessary for shareholders to assess the
Company’s position and performance, business model and strategy. With the
assistance of the Group Audit Committee, the Board ensured that sufficient
time and resources were available to encompass the disclosure requirements
to which the Group is subject and that the Annual Report and Financial
Statements met all relevant disclosure requirements.
The Board believes in the governance principles of being open, transparent
and compliant with the Principles of the Code. Following review by the
Group Audit Committee, which considered the processes and controls in
place for the preparation and verification of the Annual Report and Financial
Statements, the Board concluded that the Annual Report and Financial
Statements contained the necessary information for shareholders to assess
the Company’s performance, strategy and overall business model.
84 – CMC Markets plc
Annual Report and Financial Statements 2023
Group Audit Committee
The Group Audit Committee has been delegated responsibility for the
monitoring and oversight of the external and internal audit and financial
internal controls. The Committee’s responsibilities, main activities and
priorities for the next reporting cycle are set out on pages 87 to 90.
Group Risk Committee
The Group Risk Committee has been delegated responsibility for
the monitoring and oversight of risk management, mitigation and
recommendation for and approval of the risk appetite to the Board. The
Committee’s responsibilities, main activities and priorities for the coming year
are set out on pages 91 to 93.
Shareholder engagement
The Board recognises the importance of good communication with
shareholders. Board members regularly meet with a cross-section of the
Company’s shareholders to ensure that the Group strategy takes due
consideration of shareholder views.
The investor relations and management teams are in regular contact with
shareholders through a programme of shareholder meetings and roadshows.
During the year there were a number of meetings with significant shareholders
and potential investors to ensure the Board was regularly apprised of
shareholder sentiment and shareholder correspondence was also shared
with the Board as appropriate. Investor relations reports are distributed to the
Board and considered at each Board meeting.
In addition to meetings held between our Executive Directors and the
Chairman and Chair of the Remuneration Committee on an ad hoc basis
during the year, subsequent to the year end we offered major shareholders
the opportunity to meet with our Chairman and other Non-Executive
Directors. Two shareholders expressed an interest to meet in May 2023, and
the feedback from these meetings will be discussed with the wider Board to
consider whether there are any matters to be addressed.
The principal communication method with private investors is through our final
results, half year report, any ad hoc market announcements and the AGM.
At the AGM separate resolutions are proposed for each item of business
presented to shareholders for approval, with voting conducted by a poll. All
valid proxy appointment forms are recorded and counted and information
regarding votes is published on the Company’s website. The Notice is posted
to shareholders at least 21 days before the date of the AGM.
Should a significant proportion of the votes cast be against any resolution, the
Company is required to explain when announcing the results what action it
will take to understand why this has been the result. There were no significant
votes against any of the resolutions put to shareholders at the 2022 AGM.
In accordance with the Companies Act 2006, members representing at least
5% of the voting rights, or at least 100 members having a right to vote, can
requisition the Board to circulate a resolution or statement in relation to the
AGM to members.
Our Stakeholder engagement report on pages 16 to 19 sets out some other
engagement methods with shareholders and how their views impact Board
discussions and decisions.
2022/23 key shareholder events
June 2022
2022 full-year results
July 2022
Q1 2023 trading update and Annual General Meeting 2022
October 2022
H1 2023 pre-close trading update
November 2022
H1 2023 interim results
January 2023
Q3 2023 trading update
March 2023
Pre-close trading update
Stakeholder engagement
The Board recognises its various legal, fiduciary, statutory and governance
obligations and duties in relation to stakeholder engagement, including those
specified in the Principles and Provisions of the Code and its duty to promote the
success of the Company under Section 172 of the Companies Act 2006. The
Board receives regular stakeholder engagement updates in the Board papers
on stakeholder engagement, including in the Board papers provided to facilitate
Board decision making. Please also see the Stakeholder engagement section
on pages 16 to 19 for a summary of the Group’s stakeholders, the engagement
that has taken place during the year and its impact on decision making. The
Sustainability section on pages 34 to 48 provides further details of engagement
with our key stakeholders regarding responding to stakeholders’ needs.
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Accountability continued
Employee engagement
Susanne Chishti is our designated Non-Executive Director for workforce
engagement with responsibility for engaging with (and overseeing
engagement with) the Group’s employees to discern the views of the
workforce and report back to the Nomination Committee regularly. Susanne
also plays an active role in ensuring the views of the workforce are, within
the matters reserved for the Board and the Nomination Committee terms
of reference, considered as part of Board and Committee discussions and
decision making. She brings over 25 years of industry expertise including at
board level, with a strong focus on governance.
During the year, the workforce engagement activities focused on by Susanne
for the Group included:
– hosting female talent focus group sessions;
– being involved in Women@CMC initiatives;
– hosting a career webinar in the APAC region;
– working with the Group Head of Sustainability to promote sustainability
priorities, including diversity, equity and inclusion;
– being a panellist during a diversity and inclusion week;
– providing a new year 2023 video message to all global employees thanking
them for their hard work and introducing the bi-annual pulse survey;
– meeting with employees to seek further feedback on responses to the
pulse survey;
– visiting the Vienna office to engage with employees in that region;
– meeting with new joiners as part of the “Meet the Exec Team” initiative;
– celebrating the success of employees and key initiatives both in private and
in public; and
– setting up an “Ask the NED” channel, an anonymous way of engaging with
her on any employee matters.
Initiatives to reflect feedback from the workforce engagement
processes include:
– the Group flexible working policy now applies to all employees, not only
to parents;
– the career development structure and competency framework provide
clearer career paths, transparency around skills required for promotional
opportunities and better publication of opportunities to progress;
The Board believes this engagement mechanism has worked well during
the year and that it continues to be an effective way of ensuring direct and
independent Board understanding of the views of the workforce.
The Nomination Committee reviews and considers the results of the various
employee engagement and pulse surveys undertaken throughout the year
and reports to the Board accordingly.
The Board has considered a number of employee-related initiatives during the
year as set out in the Sustainability section on pages 42 and 43.
Internal control and risk management systems over
financial reporting
The Group has an internal control framework and risk management systems,
as set out below, in place to ensure that the financial information produced
is accurate, reliable and timely such that it can be used by all stakeholders to
monitor performance and aid effective decision making.
– Expertise: The utilisation of appropriately qualified and experienced
colleagues, and regular knowledge sharing within the team.
– Forecasting and budgeting: The Group has a detailed forecasting and
budgeting process in place that is well embedded across the Group.
– Financial accounting and reporting: The finance team produce Group
consolidated accounts on a monthly basis. There are full reconciliation
and reporting processes in place to ensure that any issues are identified
and resolved in a timely manner. Detailed reconciliations are completed
between the trading systems and the general ledger to ensure completeness.
– Management reporting: The Group has a detailed suite of management
information (“MI”) that is prepared, daily, weekly, monthly and quarterly. This
MI was prepared and improved throughout the year to reflect appropriate
measurements as the business has changed.
– Tax: The Group has a formal tax strategy, reviewed and approved annually
by the Group Audit Committee, in addition to monthly tax compliance
monitoring, quarterly attestations with items raised within the Group’s Tax
Risk Committee.
– Segregation of duties: Appropriate segregation of duties to ensure that no
individual controls the end-to-end process;
– IT environment: The Group is heavily reliant on its IT systems and has
procedures and controls to ensure that they are operational and accessible
at all times. There have been no IT issues in the year that could impact the
financial reporting of the Group.
– more educational support to be provided to employees, with the introduction
of training champions and transparency on the training available; and
– a Group-wide mentoring scheme has been introduced across all regions.
Information on the Group’s risk management systems and how the Board
oversees risk management is detailed in the risk management section on
pages 67 to 73.
James Richards
Chairman
13 June 2023
86 – CMC Markets plc
Annual Report and Financial Statements 2023
Group Audit Committee report
Paul Wainscott
Senior Independent Director and
Chair of the Group Audit Committee
Members and attendance
Paul Wainscott
Committee Chair
Susanne Chishti
Independent Non-Executive Director
Clare Francis
Independent Non-Executive Director
Sarah Ing
Independent Non-Executive Director
Attended meeting
Did not attend a meeting held during tenure
Dear shareholder,
As Chair of the Group Audit Committee (the “Committee”) I am pleased to
present the Group Audit Committee report for the year ended 31 March 2023.
The Committee is the independent Board Committee that assesses and has
independent oversight of financial reporting and the effectiveness of internal
control systems. This report summarises the activities, key responsibilities and
future focus of the Committee.
Principal responsibilities of the Group Audit Committee
The Committee operates within agreed terms of reference, which outline the
key responsibilities of the Committee.
The Committee’s terms of reference can be found on the Group’s website:
https://www.cmcmarketsplc.com/investors/corporate-governance/committees/.
In accordance with the terms of reference the Committee is required to
evaluate its own performance. In the year under review this was done as part
of the wider Board and Committee evaluation, as described on page 96.
Areas of focus in 2022/23
The Committee’s main responsibilities, in compliance with the requirements of
the Code, were as follows:
– to monitor the integrity of the Financial Statements of the Group;
– to consider any material information presented within the Financial
Statements insofar as it relates to audit and to review the final and half year
results before making recommendations to the Board on their contents and
whether they are fair, balanced and understandable;
– to review and report to the Board on significant financial reporting issues
and judgements;
– to assess the adequacy and effectiveness of the Group’s internal control
systems and identify, assess, manage and monitor financial reporting risks
and report to the Board on any key findings;
– to review on an annual basis the procedures for detecting fraud and
financial crime;
– to review the tax strategy of the Group;
– to review and approve the internal audit charter and annual internal
audit plan;
– to review the findings of all internal audit reports, make recommendations
as appropriate and monitor resolution plans;
– to review the performance of the internal audit function and consider the
structure of the function;
– to review the effectiveness and independence of the Company’s
external auditor including appointment, reappointment, removal and the
remuneration of the external auditor;
– to oversee the transition to the new external auditor and review any findings
that arose;
– to review and approve the policy on the provision of non-audit services by
the auditor; and
– to review the findings of the external auditor and how any challenges made
to management, and responses to such challenges, have been dealt with,
including in relation to key judgements.
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Composition and advisers
The Committee is chaired by Paul Wainscott with Susanne Chishti (from
1 June 2022), Clare Francis (from 19 December 2022) and Sarah Ing as
members. The Committee is considered independent to management and
the members are all independent Non-Executive Directors.
The Code requires the inclusion on the Committee of at least one member
determined by the Board as having recent and relevant financial experience.
The Committee Chair is considered to continue to fulfil this requirement. The
Committee as a whole has competence in relation to the trading, investing and
institutional business sectors in which the Company operates.
The Committee held six meetings during the financial year. The key activities
and discussion points are outlined in the relevant section of this Committee
report. Committee attendance is presented on page 79.
The Group Chairman, Chief Executive Officer, Deputy Chief Executive
Officer, Chief Financial Officer, Head of Asia Pacific & Canada, Group Head of
Finance, Chief Risk Officer, Company Secretary and Group Head of Financial
Crime & UK Money Laundering Reporting Officer attend Committee meetings
by invitation. Representatives of Deloitte LLP (“Deloitte”), the external auditor,
and Grant Thornton LLP, the internal auditors, attend the Committee meetings
by standing invitation. Representatives of PricewaterhouseCoopers LLP
(“PwC”) also attended a meeting in May 2022 in their capacity as statutory
auditor for the year ended 31 March 2022.
Internal audit
The Group’s internal audit function is externally facilitated by Grant Thornton
LLP. The internal audit function has a reporting line to the Committee and has
direct access to the Committee Chair and each Committee member. The
Committee reviews all internal audit reports, follows up verification reports
on any findings identified by internal audit, and annually approves the internal
audit plan and charter.
Representatives of the internal auditors attend each meeting where internal
audit reports are presented. The Committee regularly discusses with them
progress against the internal audit plan and any open audit actions. This
allows the Committee to review the effectiveness of the internal audit function
on a continual basis over the course of the year. The Committee has agreed
that the internal audit process could be enhanced by the appointment of a
dedicated internal resource to manage the relationship with the external third
line services provider and this will be taken forward over the course of 2024.
External auditor
The Committee considers the reappointment of the external auditor annually
and such consideration includes review of the independence of the external
auditor and assessment of the auditor’s performance.
As previously reported, the Group conducted a competitive tender process
in relation to the provision of audit services in the year ended 31 March 2022.
Shareholders approved the appointment of Deloitte as the Group’s external
auditor at the Annual General Meeting held on 28 July 2022. Fiona Walker is
the audit partner at Deloitte.
The Group confirms that it has complied with the provisions of the CMA Order
in respect of The Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014.
The Committee, in line with Financial Reporting Council (“FRC”) guidance,
continues to review the qualification, expertise, resources, effectiveness and
independence of the external auditor.
These matters were considered in detail as part of the audit tender process
and have continued to be monitored subsequently. The Committee has
received reports throughout the year on the progress of the transition from
PwC to Deloitte along with the preparations made by Deloitte to complete the
half year review and full audit in relation to the year ended 31 March 2023. As part
of the transition, Deloitte challenged management on a number of accounting
judgements which were then discussed with the Committee. Following discussion
of the final audit report for the year, the level of appropriate challenge, and the
interactions with management and the Board, the Committee believes that the
audit has been effective for the year under review and has recommended the
reappointment of Deloitte as statutory auditor.
The Committee continues to believe that Deloitte are independent by virtue of
the level of non-audit fees, procedures in place in relation to the employment
of ex-employees of the auditor, the internal processes and policies in place
at Deloitte to avoid conflicts and the nature of discussions held between the
Committee and Deloitte without representatives of management present.
The Group’s audit and other services fees are disclosed in note 8 of the Financial
Statements. Other services fees include the controls opinion relating to the
Group’s processes and controls over client money segregation, compliance
with The Capital Requirements (Country-by-Country Reporting) Regulations
2013 and the mandatory regulatory audit of the Group’s German subsidiary.
Non-audit services policy
The Group has a number of relationships with independent advisory and
assurance firms which provide alternatives to using the external auditor.
During the year ended 31 March 2023, PwC and Deloitte provided non-audit
services to the Group. However, all services provided fall under categories
explicitly permitted under the FRC 2019 Ethical Standard.
In order to ensure compliance with the Ethical Standard issued by the FRC
regarding the requirement for safeguarding independence of the external
auditor, the Committee has in place a formal policy governing the engagement
of the auditor to provide non-audit services, which was reviewed and
reapproved in March 2023. The Committee approves any significant non-
audit services and fees and receives details of any other non-audit spend
approved by the Chief Financial Officer and/or Committee Chair by way of
delegated authority by the Committee.
Priorities for financial year 2024
The Committee will continue to ensure that all relevant accounting practices
and disclosures are adhered to and that the work being done to improve
controls around these obligations promote a strong culture of disclosure
and transparency.
The Committee will oversee the work being done to ensure the Group can
comply with the Department for Business, Energy and Industrial Strategy’s,
now the Department for Business and Trade (“DBT”), recommendations
in relation to restoring trust in audit and corporate governance (the “DBT
recommendations”). Although the final scope and required reporting period
from which compliance is required has yet to be confirmed, it is anticipated that
it will be required to be in place from the reporting period starting 1 April 2025.
As a result, the Group has commenced a project based on the draft scope
to have requirements and monitoring of compliance in place from that date.
Initial steps taken during the year to reach compliance within the anticipated
timeframe included a financial reporting controls current state assessment
conducted by an external adviser.
The enhancement of the Group’s internal audit capabilities through the
appointment of a dedicated internal resource who will manage the relationship
with the external third line services provider will also be a key focus during the
financial year.
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Annual Report and Financial Statements 2023
Main activities during the financial year
Agendas for scheduled Committee meetings are based on a pre-agreed annual meeting planner to ensure that the Committee fulfils its responsibilities in line with
its terms of reference and regulatory obligations.
At each scheduled meeting the Committee:
– Receives a report from the Chief Financial
Officer on the year to date financial
performance of the Group.
– Receives an update on current and planned
internal audits and any internal audit issues
highlighted in completed audit reports.
– Receives a Group tax update.
– Receives an update on significant
accounting judgements.
– In 2022/2023, received an update on the
transition of external audit services.
May 2022
– Considered the year-end audit report
presented by the external auditor and
discussed the audit with the lead audit partner,
including relevant significant audit and
accounting matters. In line with the Committee
terms of reference, the Committee met with
the Group auditor without management or the
Executive Directors present.
– Reviewed the Annual Report and Financial
– Recommended the appointment of Deloitte
Statements, including the specific
disclosures such as going concern, viability
and risk management, fair, balanced and
understandable and internal controls reporting,
for recommendation to the Board.
– Discussed non-audit fees.
– Discussed with the auditor the accounting
treatment of the Group’s cryptocurrency
balances, impairments of intangible assets and
the share buyback.
as Group auditor.
– Discussed the work being undertaken
to ensure an orderly transition to the new
external auditor.
– Considered the effectiveness of the internal
control framework.
July 2022
– Considered the draft Q1 trading update and
recommended to the Board for approval.
– Considered revised procedures and checklists
in relation to dividend approvals.
– Reviewed the annual report from the Money
Laundering Reporting Officer (“MLRO”).
September 2022
– Considered and approved the Tax Strategy
– Discussed the UK government’s initial
– Considered 2022 audit scope changes.
and Policy.
response to the DBT consultation and the
impact on the Group.
November 2022
– Considered the half-year audit report
presented by the external auditor and
discussed the report with the lead audit
partner, specifically in relation to certain
accounting judgements and disclosures and
impairment reviews undertaken as part of
Deloitte’s first audit review of the Group.
– Reviewed the interim results, including
consideration of going concern, risk
management and internal controls reporting
for recommendation to the Board.
– Agreed the management representation letter
and audit plan, noting that the audit fee and
engagement letter had been approved as part
of the audit tender process in the previous
reporting period.
– Received an update in relation to non-audit
services and fees.
– Considered correspondence from the FCA in
relation to anti-money laundering controls and
management’s response.
January 2023
– Considered the Q3 trading update and
recommended to the Board for approval.
– Discussed the current position in relation to
the contingent liability relating to UK banking
surcharge tax as described in note 35 to
the accounts.
March 2023
– Considered an update on the progress
of the year-end audit presented by the
external auditor.
– Considered accounting treatment adjustments
– Reviewed the non-audit services policy.
discussed with the external auditor.
– Approved the internal audit plan and internal
– Discussed the control environment with the
audit charter.
external auditor.
– Reviewed the terms of reference of the Committee.
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Role of the Committee
Responsibilities discharged
Conclusion or action taken
Going concern and long-term viability
It is required that the Directors make statements
in the Annual Report as to the going concern and
longer-term viability of the Group.
Control improvements and remediation
The Group continued its work to improve its internal
controls which was started in 2022 and considered
the additional requirements to be imposed on the
Group arising from the DBT recommendations.
Share buyback programme
A share buyback programme was launched in
March 2022, for an aggregate purchase price of up
to £30 million.
Appointment of new external auditor
The Committee closely monitored the transition of
the external audit work from PwC to Deloitte.
The Committee reviewed reports from
management that assessed the impact of various
stress tests and longer-term business risks to
determine how the Group would be able to remain
viable through periods of liquidity or capital stress.
Following challenge of management on the
individual scenarios and impacts thereof, the
Committee agreed to recommend the going
concern and viability statement to the Board
for approval.
The Committee requested detailed and regular
progress updates from management in relation
to the improvement of internal controls arising
from issues raised as part of the 2022 external
audit, the 2023 interim review and the DBT
recommendations.
The Committee requested to be kept informed
on the project to improve internal controls and
continues to monitor progress.
The Committee reviewed with the new auditor the
accounting treatment of the buyback programme
and its impact on the Group’s capital, liquidity and
Financial Statements.
The Committee concluded that for the year
under review the accounting treatment of the
programme, which was in line with the prior period,
was appropriate.
The Committee received updates from both PwC
and Deloitte on the work being done to transition to
the new auditor over the course of the 2022 audit,
and from Deloitte subsequently in relation to its
work to prepare for the 2023 audit.
The Committee concluded that the transition from
PwC to Deloitte had been conducted appropriately
and the interim review work done by Deloitte had
evidenced their understanding of the Group. It was
felt that there has been the appropriate level of
challenge in relation to the final audit for 2023.
Review of Interim Results and Annual Report and Financial Statements
The Committee is responsible for considering
the Annual Report and Financial Statements
and providing challenge to management and
the external auditor on significant accounting
judgements and treatments.
The Committee considered disclosures made in
the 2023 Annual Report and Financial Statements
and discussed significant areas with management
and the external auditor.
The two main areas of significant risk considered
by the Committee were the capitalisation and
impairment assessment of the CMC Invest UK
intangible asset and management override of
controls. A number of areas of audit focus were
also discussed including the accounting of
intangibles resulting from the migration of ANZ
Bank clients to CMC Invest Australia and the UK
Banking Surcharge exemption. There was also
material discussion and consequent approval
regarding prior period re-statements for the Group
and Company which the incoming statutory
auditor, Deloitte LLP identified.
Paul Wainscott
Senior Independent Director and
Chair of the Group Audit Committee
13 June 2023
90 – CMC Markets plc
Annual Report and Financial Statements 2023
Group Risk Committee report
Clare Francis
Independent Non-Executive Director and Chair
of the Group Risk Committee
Members and attendance
Clare Francis
Committee Chair
Susanne Chishti
Independent Non-Executive Director
Sarah Ing
Independent
Non-Executive Director
James Richards
Independent Group Chairman
Paul Wainscott
Independent Non-Executive Director
Attended meeting
Did not attend a meeting held during tenure
Dear shareholder,
Having joined the Board in December 2022, and taken the role of the Chair of
the Group Risk Committee (the “Committee”) in January 2023, I am pleased to
present the Group Risk Committee report for the year ended 31 March 2023.
The responsibility for the Group’s Risk Management Framework and
agreeing the appropriate risk appetite sits with the Board. The Committee
assists the Board in its oversight of risk within the Group, with a particular
focus on reviewing and advising the Board on changes to the Group’s risk
appetite, advising on risk strategy and monitoring the effectiveness of, and
improvements being made to, the Group’s Risk Management Framework.
The Committee ensures that a robust risk culture continues to be embedded
across the business and actively monitors and discusses the latest risk and
regulatory developments affecting the Group.
The Group’s approach to risk management and how it evaluates and
manages the principal risks and uncertainties the Group faces are set out
within the risk management section of the Strategic report as detailed on
pages 67 to 73.
The Committee has considered the potential impacts of challenges arising from
the external environment on the business, including geopolitical events, increasing
inflationary pressures and interest rates and recent volatility in financial markets. It
has discussed with management its responses to these challenges and, although
ongoing vigilance is important, the Committee is cautiously optimistic about the
Group’s abilities to navigate current difficult markets.
Consumer Duty has also been a key focus for the Committee over the
year, following the FCA’s publication of its final rules intended to set higher
and clearer standards of consumer protection across financial services.
The Committee has received regular updates on the Group’s Consumer
Duty implementation plan and monitored progress of the project to deliver
compliance with obligations.
The Committee has also considered the results of an external review of the
Group’s enterprise risk management (“ERM”) framework, monitored changes
in the regulatory landscape and reviewed and made recommendations to
the Board in respect of the Group’s Internal Capital and Risk Assessment
(“ICARA”), Internal Capital and Risk Assessment (Liquidity) (“ICARA(L)”) and
Contingency Funding Plan (“CFP”).
On behalf of the Committee, thanks are extended to Clare Salmon, who
stepped down as Committee Chair in July 2022, for her hard work and valued
contributions, and to James Richards for acting as Interim Committee Chair
until January 2023.
Principal responsibilities of the Group Risk Committee
The Committee assists the Board in its oversight of risk within the Group, with
particular focus on the Group’s risk appetite, risk profile and the effectiveness
of the Group’s Risk Management Framework.
The key responsibilities of the Committee include:
– monitoring the Group’s risk appetite, tolerance and strategy;
– review and recommendation of the Risk Appetite Statement and Risk
Management Framework;
– provision of advice and recommendations to the Board to assist in Board
decision making in relation to risk appetite and risk management;
– oversight of financial and liquidity risks including the responsibilities of the
risk management functions;
– review, challenge and recommendation to the Board with regard to the
Group ICARA, ICARA(L) and CFP;
– oversight of, and recommendations to the Board on, current risk exposures
and future risk strategy;
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Principal responsibilities of the Group Risk Committee
continued
– consideration of the Group’s principal and emerging risks and related
disclosures in the Annual Report and Financial Statements, including
the risk and opportunities arising from climate change disclosed in the
TCFD statement;
– review of the risks associated with proposed strategic transactions;
– approval of the annual risk plan;
– consideration of the Group’s compliance framework;
– review of risk taking by Directors and senior management as it impacts their
remuneration incentives; and
– consideration of the Group’s compliance with regulations and how
management acts on any new obligations.
The Committee’s terms of reference can be found on the Group’s website
(www.cmcmarkets.com/group/committees/).
Composition and attendance
The Committee is chaired by Clare Francis (from the conclusion of the
Committee meeting on 19 January 2023) with James Richards, Susanne
Chishti (from 1 June 2022), Sarah Ing and Paul Wainscott as members, all of
whom are considered independent. Clare Salmon was Committee Chair
until 28 July 2022. Thereafter James Richards stepped into the role of Interim
Committee Chair until Clare Francis stepped into the role, following a period
of handover.
The Committee met six times during the year under review and attendance for
the members is shown on page 79.
The Chief Executive Officer, Deputy Chief Executive Officer, Chief Financial
Officer, Head of Asia Pacific & Canada, Chief Risk Officer, and Company
Secretary attend Committee meetings by standing invitation. Representatives
from other areas of the business attend the Committee meetings by invitation
as appropriate to the matter under consideration. The Committee Chair
also holds regular individual meetings with the Chief Risk Officer, Heads of
Compliance, the Company Secretary and other relevant members of the
executive and senior management teams. During the year the Committee
Chair also met with Grant Thornton UK LLP, to which third-line internal audit
services are outsourced, and the external auditor, Deloitte LLP.
Operation of the Committee
An annual Committee calendar is maintained, which is aligned with the
Committee’s terms of reference. The Chair of the Committee is supported in
preparing meeting agendas by the Company Secretary and Chief Risk Officer.
Following each Committee meeting, the Committee Chair reports to the
Board on its proceedings and the matters within its duties and responsibilities,
and makes recommendations to the Board and to other Board Committees,
as appropriate.
At management level, the Group has established an Executive Risk
Committee (“ERC”) within the Group’s governance framework as part of
our continuous improvement of the risk management process. Reporting to
the Executive Committee, the purpose of the ERC is to assist the Executive
Directors and the Chief Risk Officer in identifying and synthesising the Group’s
risks. These risks are then presented to the Committee for review by the Chief
Risk Officer, as second line of defence, and the Executive Directors, as first line
of defence.
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Annual Report and Financial Statements 2023
Main activities during the financial year
During the year, the Committee’s key activities included:
May 2022
– Review and recommendation of Risk Appetite Statement
and Risk Management Framework.
– Robust assessment of the Group’s principal and
emerging risks.
– Annual review of effectiveness of the Group’s risk
management and internal control systems.
– Review of Annual Report and Accounts risk disclosures.
– Update on annual risk plan.
July 2022
– Update on actions following the Group Governance Review
in relation to risk.
– Review of the potential impact and measures taken in
respect of the Ukraine conflict.
– Consideration of Consumer Duty implementation programme.
– Review of the Contingency Funding Plan.
September 2022
– Review and recommendation of Group internal capital and
risk assessment.
– Review of annual notional position limits summary report.
– Consideration of management’s assessment of the impact
on the business identified as part of the Consumer Duty
implementation programme.
November 2022
– Update on ERM framework review.
– Review and recommendation of principal and risks for the
half year.
January 2023
– Received the final ERM framework review report.
– Consideration of Consumer Duty implementation programme.
March 2023
– Update on ERM framework review.
– Pre-year-end discussion of principal and emerging risks.
– Update on Consumer Duty implementation programme.
– Review of proposed Committee annual planner.
– Consideration of lessons learnt from market turmoil in
March 2023 and a programme of planned actions for further
enhancement of processes.
Group Governance Review
Regulatory compliance
The Committee considers regulatory changes that will have a significant
impact on the Group. In the year under review, this included the
implementation of the FCA Consumer Duty and the FCA’s Contracts for
Difference strategy.
Priorities for financial year 2023/24
In the year ahead the Committee will focus on further enhancing the Group’s
risk management systems and continuing to ensure that a robust risk culture
remains in place across the business. The Committee Chair and new Chief
Risk Officer will play a pivotal role in enhancing our risk and internal control
processes and ensuring that the recommendations of the external report
on the Group’s ERM framework are taken forward as appropriate. This will
include the development of how we look at conduct risk as we continue to
work through the implementation of Consumer Duty. The Committee will
undertake deep dives on areas of specific risk to inform its deliberations, which
are likely to include more detailed consideration of anti-money laundering
processes, operational risk resilience and risks related to climate change, data
privacy/security, new products and fraud, together with the models used to
monitor these.
It is anticipated that the challenging economic environment, geopolitical
issues and market volatility will continue in the year ahead. The Committee will
remain highly vigilant in monitoring the impact on the Group.
The Committee will continue to take an active role in advising the Board on risk
matters and monitoring the risks associated with regulatory change and the
impact that any changes could have on the Group.
Clare Francis
Independent Non-Executive Director and Chair of the Group Risk Committee
13 June 2023
As disclosed in last year’s report, following the Group Governance Review
undertaken by Independent Audit Limited in 2021, which included a review
of the Group’s risk management systems, several recommendations were
made in respect of the Group’s risk oversight, information and governance
framework. Work has continued during the year to address the topics raised
by the Governance Review, and the Board additionally commissioned
an external assessment of the Group’s ERM framework. The Committee
continues to encourage the enhancement of the Group’s risk framework,
aligned to the scale and complexity of a Group of our size. The findings of
the review were reported to the Committee in January 2023 and whilst
it was highlighted that our ERM was comparable to our peers, several
recommendations were made which built on the themes arising from the
Governance Review.
The main areas of focus include:
– continued evolution of the Group’s governance structure;
– further development and embedding of the three lines of defence model
and associated processes and reporting frameworks;
– enhancement of risk identification, assessment and reporting techniques
with consideration to be given to the implementation of a Group
governance, risk and compliance tool to support the creation of a single
source for risk data, risk events and issues, risk appetite monitoring and
reporting; and
– promotion of risk culture as an underpin to the delivery of the Group strategy.
The Committee has discussed these areas of focus and management’s action
plan on how it proposes to address them and will be kept abreast of progress.
Risk appetite and exposure
As part of its oversight of current risk exposures and future risk appetite and
strategy, the Committee reviews the risks associated with proposed strategic
transactions and the effectiveness of risk mitigation and monitoring processes.
Throughout the year the Committee has monitored the Group’s top risks
and emerging risks. The Committee routinely invites members of the senior
management team to present an overview of the risk management practice
and receives updates on key issues. In the financial year ended 31 March
2023 the Committee specifically discussed people risk, project delivery risk,
cyber risk and regulatory risk. The Committee reviewed proposed changes
to the Group risk appetite statement and Risk Management Framework
and made recommendations for Board approval of both documents. The
Committee recommended the Group’s ICARA, ICARA(L) and CFP to the
Board for approval.
Risk management and internal controls
The Group continues to invest in risk management systems and internal
controls and challenges the business to improve and enhance the Risk
Management Framework.
The Committee confirmed at its May 2023 meeting, acting as a Committee
of the Board, that it was satisfied that the Group’s risk management systems
and internal controls were effective. This assessment was based on feedback
from the Chief Risk Officer, the external and internal auditor and the external
ERM review.
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Strategic reportGovernanceFinancial statementsShareholder information Nomination Committee report
James Richards
Chairman and Chair of the
Nomination Committee
Members and attendance
James Richards
Committee Chair
Susanne Chishti
Independent Non-Executive Director
Clare Francis
Independent Non-Executive Director
Sarah Ing
Dear shareholder,
I am pleased to present the Nomination Committee (the “Committee”)
report which summarises the work of the Committee during the year ended
31 March 2023.
Throughout this period the Committee has continued its review of the
composition of the Board and succession planning at both Board and senior
management level, with changes made which will support the growth of the
business and strengthen our controls and risk processes.
Further information on our activities and our priorities for the next year are
provided on the following pages.
Principal responsibilities of the Nomination Committee
The Committee is responsible for keeping under review the composition of
the Board and senior management, succession planning, appointments to the
Board, the Board evaluation process, and the Group’s People Strategy.
Key roles and responsibilities of the Committee include:
– to evaluate and review the structure, size and composition of the Board
including the balance of skills, knowledge, experience and diversity of the
Board and keep under review the leadership needs of the Company to
ensure its continued ability to compete effectively in the marketplace;
– to ensure plans are in place for both an orderly and emergency succession
in relation to the Board and senior management and oversee the
development of a diverse pipeline for succession, taking into account
the challenges and opportunities facing the Company and the skills and
expertise needed in the future;
– to identify and nominate suitable candidates for appointment to the Board
including evaluating the balance of skills, knowledge and diversity on the Board
and preparing a description of the role required for a particular appointment;
– to oversee the Board evaluation process and, in analysing the results of
the evaluation, identify whether there are any skill gaps or opportunities to
strengthen the Board;
Independent Non-Executive Director
– to assess the Board Directors’ conflicts of interest;
Paul Wainscott
Independent Non-Executive Director
Attended meeting
Did not attend meeting held during tenure
– to assess and keep under review the independence, time commitment and
engagement of each of the Non-Executive Directors; and
– to oversee the Group’s People Strategy including talent management,
diversity and inclusion and workforce engagement.
The Committee’s full terms of reference are available on the Group’s website:
www.cmcmarkets.com/group/committees.
94 – CMC Markets plc
Annual Report and Financial Statements 2023
Composition and attendance
The Committee is chaired by James Richards with Susanne Chishti (from
1 June 2022), Clare Francis (from 19 December 2022), Sarah Ing and Paul
Wainscott as members. All of the Committee’s members are considered
independent Non-Executive Directors, including the Chairman.
The Committee met six times during the year under review and attendance
levels for the members is shown on page 79. In addition to the members of the
Committee, the Chief Executive Officer, Deputy Chief Executive Officer, Chief
Financial Officer, Company Secretary and Head of Human Resources attend
by invitation when it is considered appropriate.
Board appointments
The Committee leads the process to consider Board appointments and
makes recommendations to the Board once appropriate candidates have
been found. The Committee will review the process for recruitment, including
whether an external search agency will be used, the role specification and
capabilities required for the role (taking into account the current balance of
skills and experience on the Board) and potential candidates both inside and
outside the organisation, ensuring a diverse pool of candidates is considered.
The Committee will also manage the structure of the interview process,
referencing requirements and engagement with the Board and other Board
Committees as appropriate.
During the period, the Committee recommended and the Board approved the
appointment of Susanne Chishti with effect from 1 June 2022, which appointment
was subsequently approved by shareholders at the 2022 AGM. Susanne
also joined the Audit, Nomination, Remuneration and Risk Committees and
has been appointed as the Non-Executive Director (“NED”) for workforce
engagement for the Group. Susanne brings extensive fintech knowledge
alongside expertise in technology driven innovation which will be highly
beneficial as the Group continues to develop its strategy and enhance its
offering to clients.
As a result of Clare Salmon’s decision to step down from the Board at the
conclusion of the 2022 Annual General Meeting (“AGM”), and consequently
as Chair of the Risk Committee, the Committee instigated the process to find
a successor. The search focused on seeking someone with risk management
and financial services experience. The Inzito Partnership, which has no
connection with the Group or individual Directors, was appointed to assist with
the search for candidates. Clare Francis was identified as a suitable candidate
and following an interview with the Chairman and the Senior Independent
Director, she was invited to meet the rest of the Board prior to the Committee
considering any recommendation being made to the Board. Following
this process, the Committee recommended and the Board approved the
appointment of Clare Francis with effect from 19 December 2022. Clare also
became Chair of the Group Risk Committee, the Consumer Duty Champion
for the Group and a member of the Audit, Nomination and Remuneration
Committees. From her senior executive experience in the UK banking
industry, Clare brings extensive knowledge of risk management frameworks
and financial services to CMC. Shareholders will be asked to approve her
appointment at the 2023 AGM.
Shareholders have the opportunity to annually vote on resolutions proposing
each Director for re-election (or election if they have joined the Board since
the last AGM) at the AGM. Details of the Directors standing for election/re-
election at the 2023 AGM are included in the notice of AGM, and information
on each Director’s contribution to the Group is included in their biography
on pages 76 to 78 of this report. The Committee considers whether to
recommend Directors for election or re-election and has done so in relation to
all Directors standing at the 2023 AGM, including the Chairman who will have
served nine years in April 2024 (see page 84 for more information).
Main activities during the financial year
Agendas for scheduled Committee meetings are based on a
pre-agreed annual meeting planner to ensure that the Committee
fulfils its responsibilities in line with its terms of reference and
regulatory obligations.
May 2022
– Consideration of the report on diversity and inclusion.
– Considered Non-Executive Director (“NED”) recruitment.
– Considered NED time commitment and independence.
– Determined Directors’ eligibility for re-election.
June 2022
– Considered NED recruitment.
September 2022
– Considered the results of the annual employee
engagement survey.
– Discussed Group people strategy.
– Received an update on NED recruitment.
– Received an update from the Designated NED for workforce
engagement and considered the current engagement
programme.
– Reviewed the Group’s values statement.
November 2022
– Received an update from the Designated NED for
workforce engagement.
– Reviewed the Board diversity policy.
– Discussed NED recruitment.
– Received a Consumer Duty update.
January 2023
– Received an update on Group People Strategy.
– Considered the annual Board and Committee
evaluation process.
– Reviewed the Committee terms of reference.
Subsequent to the year end the Committee has also considered
a Board training programme and Board and senior management
succession planning.
95 – CMC Markets plc
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Strategic reportGovernanceFinancial statementsShareholder information Nomination Committee report continued
Board evaluation
Succession planning
The Committee is responsible for agreeing the annual Board performance
evaluation process, reviewing its results and reporting on the conclusions and
recommendations to the Board.
The Board considers succession planning at least annually, including the
tenure of Non-Executive Directors, the developing needs of the business and
any skills gaps to be filled in both the short and long term.
In compliance with the Code, an externally facilitated performance evaluation
of the Board and its Committees is carried out every three years. An externally
facilitated performance evaluation was carried out as part of the Group’s
Governance Review in 2021 by Independent Audit Limited, an independent
external consultant with no other connection with the Company. The next
externally facilitated evaluation is due to be carried out in 2024.
The Committee determined that this year’s review would be conducted internally
and led by the Chairman, supported by the Company Secretary. The format
of the process was a questionnaire completed by all Board members seeking
narrative answers on a number of specific questions relating to the operation
of the Board and its Committees and requesting a written self-evaluation from
each Non-Executive Director.
Based on the responses received, the Company Secretary prepared a
report which was discussed with the Chairman before being presented to
the Committee. The responses received were insightful and provided useful
feedback on the operation of the Board and its Committees, the topics that
should be a focus for 2024 and how the Board receives information from
management. A number of recommendations were made by the Committee
for consideration by the Board, which will be taken forward over the remainder
of 2023. Notwithstanding these recommendations, it was agreed that the
Board and its Committees were operating effectively.
The Committee discussed the performance and time commitment of each
Non-Executive Director and agreed that they all continued to make the
expected contribution to the Board and its Committees and no concerns were
raised in relation to their other commitments.
The Senior Independent Director led the Non-Executive Directors in evaluating
the performance of the Chairman at a meeting of the Nomination Committee
without James Richards present.The Nomination Committee recommended,
and the Board approved, the conclusion that the Chairman continued to
provide exemplary leadership to the Board.
People strategy
The Committee has worked closely with the Executives to consider the
Group’s People Strategy, which is designed to align with the Group’s overall
strategy, purpose and values and also has due regard to the environmental,
social and governance initiatives being undertaken by the Group and
matters raised by employees. There was a focus on ensuring that CMC is
a place where people want to work, with career progression and a good
working environment.
The Committee regularly receives updates from Susanne Chishti regarding
her activities as the NED for workforce engagement, and discusses the results
and key themes arising from various employee engagement and “pulse”
surveys that have taken place throughout the year. The main areas of focus
highlighted as a result of employee engagement activities that have taken
place across the business are included in the corporate governance section
on page 86.
The Committee continues to believe that the engagement methods used to
ensure that the Board is aware of the views of the wider workforce is effective
but does keep this under review and will seek to adapt it and include additional
engagement methods if it feels appropriate.
The Committee also considers the senior management team succession
plan periodically, taking into account the opportunities and challenges facing
the Group and the skills, experience and knowledge that will be needed in
the future.
Succession planning will be a key focus over the course of the remainder of
2023, with an emphasis on improving diversity in our pipeline.
The Committee met in May 2023 without James Richards in attendance to
discuss the succession of the Chairman, who will have served nine years in
April 2024. Out of those nine years, he served two years nine months as a
Non-Executive Director and will have served six years and three months as
Chairman. The Committee recommended to the Board, which in turn has
recommended to shareholders, the re-election of James at the 2023 AGM,
notwithstanding that his nine year tenure expires ahead of the 2024 AGM.
More information on the Company’s plans beyond this is included in the
Governance section on page 84.
Diversity, equity and inclusion
The Committee recognises the benefits of diversity, equity and inclusion
(“DE&I”). The CMC Markets plc Board diversity policy recognises the benefits
of having a diverse senior management team and sees increasing diversity
at a senior level as an essential element in maintaining an effective Board.
Our policy is to ensure that there is broad experience and diversity on the
Board. We consider diversity to include age, ethnicity, disability, gender, sexual
orientation and socio-economic and geographic backgrounds. Appointments
to the Board are made on merit, in the context of complimenting and
expanding the skills, knowledge and experience of the Board as a whole.
The Committee reviews and assesses Board composition on behalf of
the Board and recommends the appointment of new directors. The
Nomination Committee also oversees the conduct of the annual review of Board
effectiveness.
In order to maintain an appropriate range and balance of skills, experience and
background on the Board, the Nomination Committee considers the benefits
of all aspects of diversity including, but not limited to, those described above.
In identifying suitable candidates for appointment to the Board, the Nomination
Committee will consider candidates against objective criteria with due regard
for the benefits of the herein mentioned attributes and diversity on the Board.
As part of the annual performance evaluation of the effectiveness of the
Board, Committees and individual Directors, the Nomination Committee
considers the balance of skills, experience, independence and knowledge of
the CMC Group on the Board, and the diversity representation on the Board.
The Committee regularly discusses Board, senior management and
workforce diversity and how the Group’s position can be improved. It is
important that more is done to attract people into the fintech industry early in
their careers in order that our metrics can improve over the longer term which
will be of benefit to the Group and its strategy. More information on our DE&I
strategy and initiatives is included in the Sustainability section on page 40.
Our disclosures and statement on the diversity of our Board, senior
board positions and executive management in compliance with Listing
Rule 9.8.6R(9) and Listing Rule 14.3.33R (1) (the “New Rules”) are set out
on page 97:
96 – CMC Markets plc
Annual Report and Financial Statements 2023
The New Rules set the following targets:
– at least 40% of the board are women;
– at least one of the senior board positions (Chair, Chief Executive Officer
(“CEO”), Senior Independent Director (“SID”) or Chief Financial Officer
(“CFO”) is a woman); and
– at least one member of the board is from a minority ethnic background (which
is defined by reference to the categories recommended by the Office of
National Statistics (“ONS”) as coming from a non-white ethnic background).
The tables below show the data required to be presented by the New Rules.
This data shows that the Group is not currently in compliance with any of the
requirements. We recognise the importance of diversity and, whilst ensuring
that appointments continued to be based on merit, we gave full and proper
consideration to gender and racial diversity as part of the appointments
we made to the Board during the current financial year. Following these
appointments, 60% of the Non-Executive representation on the Board is
female. Our overall Board diversity is negatively impacted by the fact that we
have four male Executive Directors. We feel we currently have the right people
fulfilling these Executive roles and have to accept the impact on our diversity
statistics of having a larger Executive team than some of our peers when
making comparisons on our progress. Whilst we do not feel it appropriate
to set ourselves goals to comply with these targets at present, as Board
composition should be driven by the specific needs of the Group and any skill
gaps, we continually review our position on this. The Board is committed to
seeking to improve diversity and will continue to have regard to these matters
as part of our Board and senior management succession planning and
recruitment processes.
As referenced in the Sustainability section, we have committed to setting
measurable targets to increase the diversity of the wider workforce which
will help create a pipeline to improve senior executive diversity over time.
As at 31 March 2023, 347 (29%) of our workforce, excluding contractors,
were female.
Diversity data
Diversity data based on sex
Men
Women
Not specified/prefer not to say
Diversity data based on ethnic background
White British or other white (including minority-white groups)
Mixed/multiple ethnic groups
Asian/Asian British
Black/African/Caribbean/black British
Other ethnic group, including Arab
Not specified/prefer not to say
Notes:
1 All data is at 31 March 2023.
Number of
Board members
Percentage of
Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
6
3
—
66.67
33.33
—
4
—
—
28
7
—
80.00
20.00
—
Number of Board
members
Percentage of
Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
9
—
—
—
—
—
100.00
—
—
—
—
—
4
—
—
—
—
—
14
1
1
—
—
19
40.00
2.86
2.86
—
—
54.28
2 Executive management is represented by all direct reports of the Executive Directors in non-administrative roles.
3 Data is collected via self-reporting from employees on joining the Group by the completion of a questionnaire asking them to identify against various gender and ethnicity categories.
Priorities for financial year 2023/24
In the year ahead the Committee will focus on senior management succession and diversity, the people strategy, ensuring actions arising from the Board
evaluation are appropriately implemented and considering the succession of the Chairman.
James Richards
Chairman and Chair of the Nomination Committee
13 June 2023
97 – CMC Markets plc
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Strategic reportGovernanceFinancial statementsShareholder information Corporate governance
Remuneration Committee report
Dear shareholder,
As Chair of the Remuneration Committee, I am pleased to present the Directors’
remuneration report for the year ended 31 March 2023. This report comprises three
sections. First, my annual statement as Chair of the Remuneration Committee; second, the
Remuneration Policy which was approved by shareholders at the 2021 Annual General
Meeting (“AGM”); and third the Annual report on remuneration which sets out how the 2021
policy was implemented for the year ended 31 March 2023.
Remuneration in relation to the year ended 31 March 2023
Throughout the year, the Committee has given careful consideration to remuneration in the
context of the external environment and the Group’s performance. The outcomes for the
specific reward elements are as follows:
Base salary - No adjustments were made to the base salaries of the Executive Directors
during the year.
Combined Incentive Plan (“CIP”) Awards - The financial year ended 31 March 2023 was
the fourth year of the implementation of the CIP and the plan was assessed against Group
financial, strategic and individual performance targets, as approved by the Committee
as follows:
– 60% based on financial performance (earnings per share – threshold 15.4 pence, target
20.7 pence and maximum 25.7 pence);
– 30% based on strategic performance (a detailed disclosure of strategic objectives is
outlined in the table on pages 111 and 112); and
– 10% based on achievement of personal and mandatory risk objectives (a detailed
disclosure of personal objectives is outlined in the table of pages 111 and 112).
– As highlighted, the Group did not meet its EPS targets with a diluted EPS of 14.6 pence
against a minimum target of 15.4 pence, resulting in no award of this element of the Plan,
i.e. 60% of the maximum award.
To determine the overall outcomes under the CIP, the Committee also reviewed individual
Executive Directors’ performance against their strategic and personal objectives which
were set at the beginning of the year. The Committee assessed each Executive Director
against their strategic objectives and determined whether these had been partially met,
significantly met, materially met or met. Further details of the Group’s strategy are set out on
pages 24 to 25.
This resulted in the Committee awarding 36% of potential award to the Chief Executive
Officer (“CEO”) ; 35% to the Deputy CEO; 36% to the Chief Financial Officer (“CFO”) and
36% to the Head of Asia Pacific & Canada. Further details on how the Executive Directors
performed against their objectives can be found on pages 111 and 112.
The Committee has considered the formulaic outcome and determined that it was
appropriate, in light of the holistic performance of the Company and the experience of
shareholders and employees, and that no adjustments needed to be applied.
The 2023 awards comprise a 40% cash award and a 60% share award which was changed
to comply with the MIFIDPRU Remuneration code from a 45% cash award and a 55% share
award in 2022.
In previous years the CEO has only received the cash element of the Award. In the light of
the new prudential framework for UK MiFID investment companies and the MIFIDPRU
Remuneration Code, his award will now be split between cash and shares in line with the
other Executive Directors, albeit subject to a maximum award of 135% of salary.
Share Awards will be granted, post the release of the Group’s results for the year ending
31 March 2023. The share awards will be assessed against a performance underpin after a
further three-year period ending 31 March 2026 and, if the underpin is achieved, continue to
vest until 2028.
Sarah Ing
Independent Non-Executive Director and
Chair of the Group Remuneration Committee
Members and attendance
Sarah Ing
Committee Chair
Susanne Chishti
Independent Non-Executive Director
Clare Francis
Independent Non-Executive Director
James Richards
Independent Non-Executive Director
Paul Wainscott
Independent Non-Executive Director
Attended meeting
Did not attend a meeting held during tenure
98 – CMC Markets plc
Annual Report and Financial Statements 2023
Remuneration in relation to the year ended 31 March 2023
continued
During the year, the Committee assessed the performance underpin for CIP
share awards granted in 2020 over the three years ending 31 March 2023.
Taking into account an assessment of factors such as the Company’s Total
Shareholder Return (“TSR”) performance, aggregate profit levels and any
regulatory breaches over this period, the Committee determined that it was
appropriate to allow these shares to vest without any further adjustment.
Remuneration in relation to 2024
The Committee has decided to make salary adjustments for David Fineberg
and Matthew Lewis of 4.5% with effect from 1 June 2023. This adjustment is
below the average increase for the wider workforce of 5%. The Committee
decided not to adjust the salary for Peter Cruddas this year.
Euan Marshall was appointed to the role of CFO in late 2019. At that time his
remuneration arrangements were positioned relatively low compared to
market levels for comparable roles taking into account the promotion and
the developmental nature of his appointment. At that time the Committee
committed to continue to review positioning as he gained greater experience
in the role. With effect from 1 June 2023, the Committee has decided to apply
a one-off adjustment to his base salary level from £250,000 to £300,000 to
reflect his significant development in the role and contribution. It is anticipated
that future salary increases will generally be no greater than those for the
wider workforce. In respect of the coming year, his CIP maximum opportunity
will also be aligned to the 300% of base salary that is applicable for the Deputy
CEO and Head of Asia Pacific & Canada.
The Committee proposes to continue to use Group financial, strategic and
individual performance against targets for the 2024 financial year as the
basis on which the combined incentive will be awarded. The performance
measures applied to the CIP will be:
– 60% financial performance;
– 30% strategic performance; and
– 10% personal objectives.
In relation to the financial target, the Committee has ensured that a sufficiently
stretching range has been set by taking account of a number of internal and
external reference points and the impact of regulatory change. The target
range is considered commercially sensitive and so will be disclosed in next
year’s Annual Report. With regard to the strategic and personal objectives,
these will be evaluated based on quantitative measurable objectives in the
significant majority of cases. Again, these are considered commercially
sensitive so detailed disclosure of these quantitative performance measures
and associated outcomes will be included in the 2024 Annual Report and
Financial Statements.
In order to comply with the MIFIDPRU Remuneration Code, CIP awards will be
made 40% in cash and 60% in shares. The remuneration policy operated as
intended throughout the period.
Engagement with stakeholders
The Committee takes into consideration the guidelines of investor bodies
and shareholder views when determining remuneration and welcomes
feedback. We undertook an extensive consultation with our key institutional
shareholders and main proxy advisory bodies on the proposed 2021
Remuneration Policy and the comments we received in relation to key
elements of the policy such as pension alignment and post-employment
shareholder guidelines have helped shape the final policy approved at the
2021 AGM. This year we have not undertaken a formal consultation exercise
but continue to welcome constructive engagement with our shareholders.
The Remuneration Policy will again be put to shareholders at the AGM in 2024
and the Committee intends to engage with our shareholders in the coming
year as part of a review of our arrangements.
Workforce remuneration and engagement
The Committee is responsible for reviewing the Group’s wider employee
remuneration policies and how reward aligns to the culture of the Group.
During the year, the Committee discussed the bonus allocation and salary
reviews for the wider workforce, reviewed and agreed the Group’s approach
to long-term incentives beyond the Executive Directors, reviewed the Group’s
gender pay gap data and the steps that could be taken to close the existing
gap, and discussed the operation of and participation in the Group’s all-
employee share plan.
During the year, all employees have been given the opportunity to participate
in our twice-yearly engagement surveys and provide feedback on all topics,
including remuneration. In addition, the Committee has received an update
on the initiatives we have undertaken to support and develop employees and
managers throughout the year. Susanne Chishti is the designated Non-
Executive Director with responsibility to engage and oversee engagement
with our employees and more detail on her activities is included in the
Nomination Committee report on page 84.
I hope you find this report provides a clear understanding of the Committee’s
approach to remuneration and that you will be supportive of the resolutions
relating to remuneration at the 2023 AGM.
Sarah Ing
Independent Non-Executive Director and Chair of the Remuneration
Committee
13 June 2023
99 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Remuneration Committee report continued
Directors’ Remuneration Policy
This policy was reviewed in 2021 and approved by shareholders at the AGM held on 29 July 2021. The policy as approved can be viewed on the Company’s
website at https://www.cmcmarketsplc.com/investors/.
Policy table
The below table summarises the key components of the Remuneration Policy for the Executive Directors.
Purpose and link to strategy
Operation
Maximum opportunity
Performance measures
The policy is for base salary to be competitive.
In making this assessment the Committee has
regard for:
Executive Director salary increases will
normally be in line with those awarded to
the wider employee population.
Business performance
is considered in any
adjustment to base salary.
Base salary
To reflect the market value
of the role and individual’s
experience, responsibility
and contribution.
Increases may be above this level if
(i) there is an increase in scale, scope
or market comparability of the role
and/or (ii) where an Executive Director
has been promoted or has had a change
in responsibilities.
Where increases are awarded in excess
of the wider employee population, the
Committee will provide an explanation in
the relevant year’s Remuneration report.
Not applicable.
Aligned to the all employee maximum
employer contribution level, which
is currently 7% in the UK and 9.5%
in Australia. This is in alignment with
Provision 38 of the UK Corporate
Governance Code.
In line with HMRC permitted limits.
Not applicable.
Benefits may vary by role and individual
circumstances and are reviewed periodically
to ensure they remain competitive.
Not applicable.
The maximum value of the benefits is
unlikely to exceed 10% of salary.
– the individual’s role, responsibilities
and experience;
– business performance and the
external economic environment;
– salary levels for similar roles at
relevant comparators; and
– salary increases across the Group
payable in cash.
Salaries are reviewed on an annual basis, with any
increase normally taking effect from 1 June.
Pension
To provide competitive
retirement benefits.
Executive Directors participate in a defined
contribution pension scheme or may receive a cash
allowance in lieu.
Share Incentive Plan (“SIP”)
To encourage broad employee
share ownership.
In line with HMRC rules, Executive Directors are
entitled to participate in the SIP on the same terms
as other employees.
Benefits
To provide market
competitive benefits.
Benefits include life insurance, permanent health
insurance, private medical insurance, dental
insurance, health screening/assessment, critical
illness insurance, interest-free season ticket loans,
gym membership, eye tests, cycle to work, childcare
vouchers, dining card, travel insurance and club
membership.
Where appropriate, other benefits may be offered
including, but not limited to, allowances for
relocation and other expatriate benefits to perform
his or her role.
100 – CMC Markets plc
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Directors’ Remuneration Policy continued
Policy table continued
Purpose and link to strategy
Operation
Maximum opportunity
Performance measures
Combined incentive plan
(CIP)
To ensure that incentives
are fully aligned to the
Group’s strategy.
Participants in the CIP will include the
Executive Directors.
Executive Directors (excluding CEO):
Awards may be up to 300% of salary
delivered as follows:
– cash award: 135% salary (120% of
salary from 2023); and
– Deferred Shares 165% salary (180%
from 2023).
Current CEO:
In respect of the current CEO,
Peter Cruddas, awards may be made
only up to 135% of salary. From 2023 40%
of the award will be made in cash and
60% deferred into shares.
The value of an award will be determined based on
performance achieved in the previous financial year
against defined financial and strategic targets.
Performance conditions and targets are reviewed
prior to the start of the year to ensure they are
appropriate and stretching and reinforce the
business strategy. At the end of the year the
Committee determines the extent to which these
were achieved.
The award will be delivered as follows:
Cash award: 40% of the award will be settled in cash
as soon as practicable following the financial year.
Deferred Shares: 60% of the award will be deferred
into shares for up to five years following the financial
year. This portion of the award will vest subject to the
achievement of a three-year performance underpin
to ensure the deferred portion of the award is
warranted based on sustained success.
Subject to the achievement of the performance
underpin and continued service, the Deferred Share
portion of the award will vest over a period of at least
five years. For 2022/23, it is anticipated this will be
as follows, although the Committee will continue to
monitor both market and regulatory developments
in respect of vesting and holding periods and may
for future awards adjust the vesting schedule:
– 40% after three years;1
– 30% after four years;1 and
– 30% after five years.1
The Combined Incentive awards are discretionary.
Dividend equivalents may accrue on the Deferred
Share portion of the award and be paid on those
shares that vest.
Awards under the CIP are non-pensionable and
are subject to malus and clawback for a seven-year
period from grant in the event of a material financial
misstatement, gross misconduct, calculation error,
failure of risk management, material reputational
damage or any other circumstance the Committee
considers appropriate.
1
4, 5 and 6 years in total respectively allowing for the one-year
performance period to determine the deferred award amount.
Performance is assessed
against Group and individual
performance measures as
considered appropriate by the
Committee.
Financial performance will
account for at least 60% of an
award. For this portion, 25%
of the maximum would be
payable for performance at
Threshold level and 50% for
Target performance.
It is anticipated that the
performance measures
applied in 2022/23 will be:
– 60% financial: based on
achievement of absolute
earnings per share targets;
– 30% strategic: based on the
achievement of measurable
objectives against targets
relating to strategic
business development
milestones; and
– 10% personal objectives.
The Deferred Share
portion will vest subject to
a performance underpin
measured over a period of at
least three years starting from
the end of the year used to
determine the amount of the
award. The Committee will
review Group performance
over the relevant period, taking
into account factors such
as, a) the Company’s TSR
performance, b) aggregate
profit levels and c) any
regulatory breaches during the
period or any other such factor
that the Committee considers
appropriate which may include
personal performance of the
relevant Executive Director.
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Policy table continued
Purpose and link to strategy
Operation
Maximum opportunity
Performance measures
2015 Management
Equity Plan (“LTIP”)
To reinforce delivery
of sustained long-term
success, and align the interests
of participants with those of
shareholders.
In respect of Executive Directors, LTIP awards may
only be granted by the Remuneration Committee to
facilitate external recruitment – i.e. to be used as the
vehicle for buying out incentive awards forfeited on
leaving a previous employer as per the recruitment
policy set out below. Awards may consist of
performance shares (nil cost options or conditional
rights to receive shares) or market value options or
a combination of the two.
125% of salary in normal circumstances
and up to 200% of salary in exceptional
circumstances or an equivalent
economic value where an award is a
combination of shares and options.
Vesting for threshold performance
in respect of any performance share
awards is up to 25% of maximum.
LTIP awards normally vest after three years.
The Committee may extend the LTIP time horizon
by introducing a holding period of up to two
years, or by extending the vesting period, e.g. if
regulations require.
The number of performance shares and/or options
vesting is dependent on the degree to which any
performance conditions attached to the LTIP award
have been met over the performance period.
Dividend equivalents may accrue on performance
shares and be paid on those shares which vest.
The award levels and performance conditions are
reviewed in advance of grant to ensure they are
appropriate.
Awards under the LTIP are non-pensionable
and are subject to malus and clawback provisions
for a seven-year period from grant in the event of a
material financial misstatement, gross misconduct,
calculation error, failure of risk management, or in
any other circumstance the Committee considers
appropriate.
Awards will generally vest
subject to the Company’s
performance and continued
employment.
The Committee has flexibility
to adjust any performance
measures and weightings
in advance of each future
award cycle to ensure
they continue to support
delivery of the Company’s
strategy. Over the term of this
policy, performance will be
predominantly dependent on
financial, and/or share price-
related measures.
The Committee has flexibility
to adjust downwards the
formulaic outcome based on
its assessment of underlying
performance, and results
being achieved within the
Company’s risk appetite, over
the performance period.
Notes to the policy table
In addition to the elements of remuneration detailed in the policy table, any historical awards or commitments described in this report which were made prior to,
but due to be fulfilled after the approval and implementation of, the Remuneration Policy detailed in this report will be honoured.
Shareholding guidelines
Executive Directors are required to build up a holding of 200% of base annual salary. Executive Directors will be required to build up to this level over a period
of five years, starting from the date of our listing in 2016 for the Executive Directors who were in role at the time the 2018 Remuneration Policy was approved
and from the date of appointment for any recruits since that time or in future. Executive Directors will be expected to retain at least 50% of shares vesting (net of
tax) until the guideline level is achieved. For the purposes of satisfying the shareholding requirement, shares held by a connected person (e.g. a spouse) will be
considered to be included.
A post-employment shareholding requirement will apply of 200% of base annual salary (or the actual shareholding at date of exit if lower) for a period of two years
after leaving employment.
Dividend equivalents
Dividend equivalents are payable on the Deferred Share portion of the combined incentive.
Clawback and malus provisions
Awards under the CIP and LTIP will be subject to provisions that allow the Committee to withhold, reduce or require the repayment of awards after vesting if there
is found to have been: (a) material misstatement of the Company’s financial results, (b) gross misconduct on the part of the award holder, or (c) any other material
event as the Committee considers appropriate.
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Directors’ Remuneration Policy continued
Risk considerations
The Remuneration Policy is also designed to promote sound and effective risk management. The Remuneration Committee reviews and approves the
Remuneration Policy for all employees, including for Material Risk Takers and senior risk and compliance employees, to help ensure pay arrangements
encourage appropriate behaviour and compliance with the Company’s risk appetite. For example, all employees receive a salary which reflects their market
value, responsibilities and experience. An individual may only receive an annual incentive award if they operate within the risk appetite of the Company and
has demonstrated appropriate behaviour. Key senior managers are eligible for consideration of LTIP awards, with any vesting based on performance over at
least two years. The Committee has flexibility to adjust the formulaic outcome if the Company’s recorded performance is not a genuine reflection of underlying
business performance or if results were not achieved within the Company’s risk appetite. CIP awards are subject to malus and clawback for all participants in
various circumstances, including a failure of risk management. The Chief Financial Officer is closely involved in the remuneration process to ensure that both
Remuneration Policy and outcomes reinforce compliance with the Company’s risk appetite, including reporting independently to the Committee at least annually
on compliance with the risk appetite, on any notable risk events and on the behaviour of the Material Risk Takers.
Incentive plan discretions
The Committee will operate the Company’s incentive plans according to their respective rules and the Policy set out above, and in accordance with relevant
financial services regulations, the Listing Rules and HMRC rules where relevant.
Following amendments in 2019 the CIP specifically includes relevant clauses to ensure the Remuneration Committee are able to use their discretion to reduce the
value of a Cash Award or the number of Shares to a Share Award or the extent to which a Share Award will vest, to avoid an otherwise formulaic outcome.
In line with common market practice, the Committee retains discretion as to the operation and administration of these incentive plans, including:
– who participates;
– the timing of grant and/or payment;
– the size of an award and/or payment (within the plan limits approved by shareholders);
– the manner in which awards are settled;
– the choice of (and adjustment of) performance measures and targets in accordance with the Remuneration Policy set out above and the rules of each plan;
– in exceptional circumstances, amendment of any performance conditions applying to an award, provided the new performance conditions are considered fair
and reasonable, and are neither materially more nor materially less challenging than the original performance targets when set;
– discretion relating to the measurement of performance in the event of a variation of share capital, change of control, special dividend, distribution or any other
corporate event which may affect the current or future value of an award;
– determination of a good leaver (in addition to any specified categories) for incentive plan purposes, based on the rules of each plan and the appropriate
treatment under the plan rules; and
– adjustments required in certain circumstances (e.g. rights issues, share buybacks, special dividends, other corporate events, etc.).
Any use of the above discretions would, where relevant, be explained in the Annual report on remuneration. As appropriate, it might also be the subject of
consultation with the Company’s major shareholders.
Performance measurement selection
The Company’s incentive plans are designed to incentivise the achievement of demanding financial and business-related objectives, using a balance of
measures which could include absolute and relative performance measures, as appropriate, selected to support the Group’s key strategic priorities.
The CIP is designed to align the interests of our participants with the longer-term interests of the Company’s shareholders by rewarding them for delivering
sustained increases in shareholder value, within the Group’s risk appetite. CIP performance measures selected reinforce the Group’s strategy over the medium
to long term, and provide a balance of internal and external perspectives. The Committee has selected EPS as the primary measure as this is a widely accepted
measure of bottom-line financial performance and is well aligned with shareholder interests. Performance measures and targets are reviewed by the Committee
ahead of each performance period to ensure they are appropriately stretching and achievable over the performance period.
The CIP strengthens the alignment of pay with the measures of performance that are important in creating value for shareholders and also forms a strong
retention and motivation mechanism for Executives. The performance measures selected are a combination of financial performance, strategic performance
and individual objectives. The achievement of these performance measures will be reviewed by the Committee ahead of any award and the vesting of share
awards will be subject to the achievement of a performance underpin over the vesting period.
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Directors’ Remuneration Policy continued
Executive Directors’ remuneration scenarios
The charts below provide estimates of the potential future reward opportunity for each of the four Executive Directors, and the implied split between the different
elements of remuneration under three different performance scenarios: “Minimum”, “On target” and “Maximum”.
2,500
2,000
0
0
0
£
’
1,500
1,000
500
0
2,500
2,000
0
0
0
£
’
1,500
1,000
500
0
Peter Cruddas
703
100%
1,176
24%
16%
60%
1,648
34%
23%
43%
Minimum
On target
Maximum
2,498
34%
38%
28%
Maximum
with share
price growth
2,500
2,000
0
0
0
£
’
1,500
1,000
500
0
395
100%
Minimum
David Fineberg
1,434
44%
29%
27%
909
34%
23%
43%
On target
Maximum
1,749
54%
24%
22%
Maximum
with share
price growth
Fixed remuneration
CIP cash element
CIP share element
Fixed remuneration
CIP cash element
CIP share element
Euan Marshall
766
35%
24%
41%
1,216
44%
30%
26%
On target
Maximum
316
100%
Minimum
2,500
2,000
0
0
0
£
’
1,500
1,000
500
0
1,531
53%
26%
21%
Maximum
with share
price growth
Matthew Lewis
777
35%
23%
42%
1,227
44%
29%
27%
On target
Maximum
327
100%
Minimum
1,542
53%
26%
21%
Maximum
with share
price growth
Fixed remuneration
CIP cash element
CIP share element
Fixed remuneration
CIP cash element
CIP share element
Assumptions underlying each element of remuneration are provided in the table below.
Component
Fixed
Minimum
On target
Maximum
Base salary
Latest salary
Pension
Other benefits
Contribution applies to latest
salary
As presented as a single
figure on page 110
n/a
n/a
n/a
n/a
n/a
n/a
Combined incentive
No payment
50% of maximum
100% of maximum
Maximum with
share price growth
n/a
n/a
n/a
100% of maximum
with 50% growth in share
price
The column headed “Maximum with share price growth” is the maximum figure but including share price growth of 50% for any part of the CIP paid in shares.
Otherwise, the projected value of the deferred element of the combined incentive excludes the impact of share price growth and any potential dividend accrual.
Actual remuneration delivered, however, will be influenced by these factors. Deferred awards are subject to continuing employment.
104 – CMC Markets plc
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Directors’ Remuneration Policy continued
Remuneration Policy for new hires
In the case of hiring or appointing a new Executive Director, the Committee may make use of all the existing components of remuneration.
The salaries of new appointees will be determined by reference to their role and responsibilities, experience and skills, relevant market data, internal relativities
and their current salaries. New appointees will be eligible to receive a pension contribution or allowance and benefits and participate in the Company’s HMRC
approved all-employee Share Incentive Plan, in line with the Remuneration Policy.
New appointees will be entitled to participate in the CIP, as described in the policy table, with the relevant maximum being pro-rated to reflect the period served.
The Deferred Share portion of a new appointee’s combined incentive award will normally vest on the same terms as other Executive Directors, as described in the
policy table. Individual objectives will be tailored to the individual’s role.
In determining appropriate remuneration for a new Executive Director, the Committee will take into consideration all relevant factors (including quantum, nature
of remuneration and the jurisdiction from which the candidate was recruited) to ensure that the remuneration arrangements are appropriate and in the interests
of the Company and its shareholders. The Committee may consider it appropriate to “buy out” incentive arrangements forfeited by an Executive on leaving a
previous employer, and may exercise the discretion available under Listing Rule 9.4.2 if necessary. In doing so, the Committee will ensure that the value of any
buyout will as closely as possible mirror the expected value of awards forgone (taking into account progress against any performance conditions attached), and
take into consideration the timeframe, performance conditions attached and type of award foregone when constructing a buyout award. Buyout awards will be
subject to continued employment over the performance period.
In cases of appointing a new Executive Director by way of internal promotion, the Remuneration Committee will be consistent with the policy for external
appointees detailed above. Where an individual has contractual commitments made prior to their promotion to Executive Director level, the Company will
continue to honour these arrangements.
In the case of hiring or appointing a new Non-Executive Director, the Committee will follow the policy as set out in the table on page 107.
Service contracts
The Executive Directors are employed under contracts of employment with CMC Markets UK plc. The principal terms of the Executive Directors’ service
contracts are as follows:
Executive Director
Position
Effective date of contract
Notice period from
Company
Notice period from Director
Peter Cruddas
Euan Marshall
David Fineberg
Matthew Lewis
Chief Executive Officer
Chief Financial Officer
Deputy Chief Executive Officer
Head of Asia Pacific & Canada
1 February 2016
1 November 2019
1 February 2016
1 November 2019
12 months
12 months
6 months
6 months
6 months
6 months
6 months
6 months
The terms shown in the table above are in line with the Company policy of operating notice periods of up to nine months in the case of Executive Directors, except
for the CEO service contract which can have a notice period of up to 12 months. All employees including Executive Directors are subject to a six-month probation
period. The contracts have no fixed duration.
Executive Directors’ contracts are available to view at the Company’s registered office.
Letters of appointment are provided to the Chairman and Non-Executive Directors. Non-Executive Directors have letters of appointment which means that
they retire at each AGM and are put up for re-election at the AGM. Non-Executive Directors’ letters of appointment are available to view at the Company’s
registered office.
Non-Executive Directors are all on a three-month notice period, details of the effective date of Non-Executive Directors’ letters of appointment are set out below:
Non-Executive Director
Date of initial letter
James Richards
Sarah Ing
Clare Salmon1
Paul Wainscott
Susanne Chishti
Clare Francis
20 October 2014
7 July 2017
19 July 2017
11 July 2017
1 June 2022
14 December 2022
1 Clare Salmon resigned as a Non-Executive Director on 28 July 2022 .
Date of latest letter
16 February 2018
7 July 2017
19 July 2017
11 July 2017
1 June 2022
14 December 2022
Date of appointment
1 April 2015
14 September 2017
2 October 2017
19 October 2017
1 June 2022
19 December 2022
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Directors’ Remuneration Policy continued
Exit payment policy
The Company considers termination payments on a case-by-case basis, taking into account relevant contractual terms, the circumstances of the termination
and any applicable duty to mitigate. In such an event, the remuneration commitments in respect of Executive Directors’ contracts could amount to salary, benefits
in kind and pension rights during the notice period, together with payment in lieu of any accrued but untaken holiday leave, if applicable.
The Committee would apply general principles of mitigation to any payment made to a departing Executive Director and would honour previous commitments as
appropriate, considering each case on an individual basis.
The table below summarises how the awards under the Combined Incentive Plan and LTIP are typically treated in different leaver scenarios and on a change of
control. The Committee retains discretion on determining “good leaver” status, but it typically defines a “good leaver” in circumstances such as retirement with
agreement of the Board, ill health, injury or disability, death, statutory redundancy, or part of the business in which the individual is employed or engaged ceases to
be a member of the Group. Final treatment is subject to the Committee’s discretion.
Event
CIP
LTIP
Timing of vesting/award
Calculation of vesting/payment
“Good leaver”
On normal vesting date (or earlier
at the Committee’s discretion).
Unvested awards vest to the extent that any performance conditions
have been satisfied and are pro-rated to reflect the proportion of the
vesting period served.
“Bad leaver”
Unvested awards lapse.
Unvested awards lapse on cessation of employment.
Change of control1
On the date of the event.
“Good leaver”
On normal vesting date (or earlier
at the Committee’s discretion).
The Committee will determine the level of vesting taking account of
the extent to which performance conditions have been or are likely
to be satisfied and, unless the Committee decides otherwise, the
proportion of the vesting period served.
Unvested awards vest to the extent that any performance conditions
have been satisfied and are pro-rated to reflect the proportion of the
vesting period served.
“Bad leaver”
Unvested awards lapse.
Unvested awards lapse on cessation of employment.
Change of control1
On the date of the event.
The Committee will determine the level of vesting taking account of
the extent to which performance conditions have been or are likely
to be satisfied and, unless the Committee decides otherwise, the
proportion of the vesting period served.
1
In certain circumstances, the Committee may determine that any Deferred Share awards under the annual incentive and both unvested and any deferred awards under the LTIP and CIP will not vest on a
change of control and instead be replaced by an equivalent grant of a new award, as determined by the Committee, in the new company.
Upon exit or change of control, SIP awards will be treated in line with the approved plan rules.
If employment is terminated by the Company, the departing Executive Director may have a legal entitlement (under statute or otherwise) to additional amounts,
which would need to be met. In addition, the Committee retains discretion to settle other amounts reasonably due to the Executive Director, for example to
meet the legal fees incurred by the Executive Director in connection with the termination of employment, where the Company wishes to enter into a settlement
agreement (as provided for below) and, in which case, the individual is required to seek independent legal advice.
In certain circumstances, the Committee may approve new contractual arrangements with departing Executive Directors including (but not limited to) settlement,
confidentiality, restrictive covenants and/or consultancy arrangements. These will be used sparingly and only entered into where the Committee believes that it is
in the best interests of the Company and its shareholders to do so.
Consideration of conditions elsewhere in the Group
In making remuneration decisions, the Committee takes into account the pay and employment conditions of employees across the Group. In particular, the
Committee considers the range of base pay increases across the Company as a factor in determining the base salary increases for Executive Directors. The
Committee does not consult with employees on the Executive Directors’ Remuneration Policy nor does it use any remuneration comparison measurements.
Remuneration Policy for other employees
CMC Markets’ approach to annual salary reviews is consistent across the Group. All employees are eligible to participate in the annual incentive award scheme
or an equivalent scheme, with targets appropriate to their organisational level and business area. Key senior managers are also eligible for LTIP awards to further
support long-term alignment with shareholder interests.
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Annual Report and Financial Statements 2023
Directors’ Remuneration Policy continued
Consideration of shareholder views
The Committee is committed to an ongoing dialogue on Directors’ remuneration. It is the Remuneration Committee’s intention to consult with major shareholders
prior to any major changes to its Remuneration Policy.
Group’s Remuneration Policy for Chairman and Non-Executive Directors
The Board determines the Remuneration Policy and level of fees for the Non-Executive Directors, within the limits set out in the Articles of Association. The
Remuneration Committee recommends the Remuneration Policy and level of fees for the Chairman of the Board. The Group’s policy is:
Performance measures
Not applicable.
Purpose and link to strategy
Operation
Maximum opportunity
Fee increases are applied in line with the
outcome of the review.
Aggregate fees will not exceed the limit
approved by shareholders in the Articles of
Association which is currently £750,000.
Fees
To attract suitable
individuals with a broad
range of experience
and skills to oversee
shareholders’ interests and
Company strategy. Fees are
set to reflect market value of
the role and the individual’s
time commitment,
responsibility, performance
and contribution.
Annual fee for the Chairman
Annual base fee for the Non-Executive Directors.
Additional fees are paid to Non-Executive Directors
for additional services such as chairing a Board
Committee, performing the role of Senior Independent
Director, etc.
Fees are reviewed from time to time taking into account
time commitment, responsibilities, and fees paid
by companies of a similar size and complexity. Fee
increases are applied in line with the outcome of
the review.
Expenses
The Company may reimburse NEDs in cash for
reasonable expenses (including any tax due thereon)
incurred in carrying out their role.
Minor changes
The Committee may make minor amendments to the Policy set out above (for regulatory, exchange control, tax or administrative purposes or to take account of a
change in legislation) without requiring prior shareholder approval for that amendment.
Annual report on remuneration
Principal responsibilities of the Remuneration Committee
The Committee is responsible for determining the Remuneration Policy for the Executive Directors and ensuring that incentive payments are aligned to the
Company’s purpose, values and strategy in order to promote long-term sustainable success. The Committee is also responsible for setting the remuneration
of the Chairman of the Board, members of the Senior Leadership Team, including the Company Secretary, and overseeing the remuneration framework
and practices for the wider workforce.
The main role and responsibilities of the Remuneration Committee are:
– to review and agree appropriate Remuneration Policies which comply with all relevant regulations;
– to review and determine the remuneration of the Executive Directors and the senior management team having regard to remuneration of the wider CMC workforce;
– to review and ensure that incentive payments to Executive Directors are linked to the achievement of stretching financial performance and both strategic and
individual agreed objectives;
– to ensure that remuneration incentivises and retains key employees including the Executive Directors and senior management;
– to ensure that Executive remuneration is linked to the delivery of the long-term success of the Company;
– have oversight of the operation of remuneration arrangements across the CMC Group through regular review of “management” information including gender
related data;
– to review any major changes to employee benefit structures, including new share schemes, and ensure that shareholders are consulted, and the required
approval processes followed;
– to review the appropriateness of remuneration against the risk management strategy following advice from the Group Risk Committee; and
– to ensure all relevant regulations relating to Executive Director remuneration are adhered to.
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Annual report on remuneration continued
Committee composition, attendance and advisers
The Committee is chaired by Sarah Ing with James Richards, Paul Wainscott, Susanne Chishti (from 1 June 2022), and Clare Francis (from 19 December 2022) as
members, all of who are considered independent. Clare Salmon served on the Committee until 28 July 2022.
The Committee held seven scheduled meetings in the financial year, attendance by Committee members is shown on page 79.
During the year, the Committee was advised by independent remuneration consultants Willis Towers Watson (“WTW”) on various remuneration matters
including providing advice on all elements of remuneration for the Executive Directors, the Remuneration Policy and best-practice and market updates. WTW
is a member of the Remuneration Consultants Group (“RCG”) and is a signatory to the RCG’s Code of Conduct. It was confirmed that none of the Committee
members had any connection or conflicts of interest in regard to this appointment. Additional legal advice was sought from Tapestry Compliance Limited in
respect of the Group’s share-based plans.
The Chief Executive Officer, Deputy CEO, Chief Financial Officer and Head of Asia Pacific & Canada attend Committee meetings by invitation but do not attend to
take part in any discussions relating to their own remuneration. The Head of HR attends Committee meetings where appropriate to the matters being considered
including both Executive and wider workforce remuneration. No Director or employee is involved in discussions regarding their own pay.
Main activities during the financial year
May 2022
– Overview of corporate salary review and bonus
allocation for 2022
– Consideration of CIP and MEP performance conditions
– Senior management performance and consideration of
LTIP awards
– Reviewing the draft Directors’ Remuneration Report
– Consideration of Executive Director performance and CIP awards
– Indicative vesting of 2020 MEP awards
– Criteria for and identification of material risk takers
– Review of the Committee’s terms of reference
– Implications of the IFPR on the CEO’s remuneration and, in
particular, the split of his CIP awards between cash and shares
January 2023
– Considering the CEO performance objectives
– Approving the Group remuneration policy
– Consideration of the CIP performance underpin
– Consideration of remuneration matters arising from senior
hires and exits
– Receiving a progress update on Diversity & Inclusion
progress update
March 2023
– Consideration of fair pay analysis and gender pay
reporting 2022/23
– Discussion of the proposed bonus pool for 2023 and corporate
salary review
– Discussion on Executive Director performance
– Consideration of CIP performance underpin
– Review of Committee’s annual calendar
108 – CMC Markets plc
Annual Report and Financial Statements 2023
July 2022
– Approving the grant and vesting of Incentive schemes
– Approving 2023/24 Executive Director performance
objectives
November 2022
– Approving senior management performance
objectives 2023/24
– Receiving an update on market and governance
developments
– Considering diversity and inclusion targets
– Approving 2023/24 CEO performance objectives
– Receiving H1 2023 performance management update
– Approving the re-appointment of remuneration consultants
Febuary 2023
– Discussing the CIP performance underpin
– Considering LTIP vesting performance conditions and
vesting structure
– Discussing indicative performance review ratings for business
teams/senior staff
– Approving the Group remuneration policy
Annual report on remuneration continued
Compliance with the 2018 UK Corporate Governance Code
The Committee considers the Remuneration Policy and current practices to address the requirements contained within Provision 40 of the Code. As noted in the
Committee Chair’s statement, Susanne Chishti is the designated Non-Executive Director for engaging with the workforce on a variety of topics including remuneration.
Provision
How addressed
Clarity – remuneration arrangements should be transparent
and promote effective engagement with shareholders and
the workforce.
The Remuneration Policy is clearly disclosed in this report and the Committee has proactively
engaged with key institutional shareholders as part of the renewal process. The Committee
receives regular updates on market practice and has received updates on pay within the
wider workforce.
Simplicity – remuneration structures should avoid complexity
and their rationale and operation should be easy to understand.
The Committee aims for our arrangements to be as simple as possible by, for example,
operating a single combined incentive arrangement. Our aim is for disclosure in this report to
be easy to understand for our stakeholders.
Risk – remuneration arrangements should ensure reputational
and other risks from excessive rewards, and behavioural risks
that can arise from target-based incentive plans, are identified
and mitigated.
The Company’s discretionary incentive plans ensure the Committee has discretion to reduce
the size of awards and awards are subject to malus and clawback provisions. The Committee
has discretion to adjust formulaic outcomes if it does not consider them appropriate (see
policy pages 100 to 107).
Predictability – the range of possible reward values to individual
Directors and any other limits or discretions should be identified
and explained at the time of approving the policy.
Scenario charts for all Executive Directors are included in the Remuneration Policy and show
estimates of potential future reward opportunity and the implied split between the different
elements of remuneration under three different performance scenarios. The policy includes
an explanation of the discretions that can be exercised by the Committee.
Proportionality – the range of possible reward outcomes,
the delivery of strategy and the long-term performance of
the Company should be clear. Outcomes should not reward
poor performance.
Alignment to culture – incentive schemes should drive
behaviours consistent with Company purpose, values
and strategy.
A significant part of an Executive’s reward is linked to performance with a clear line of sight
between business performance and the delivery of shareholder value.
The incentive arrangements and the performance measures used are strongly aligned to
those that the Board considers when determining the success of the implementation of the
Company’s strategy. Please see pages 24 to 28 of this report for more information on the
Company’s strategy and key performance indicators.
The Remuneration Policy operated as intended in the year ending 31 March 2023 and the following section sets out the remuneration arrangements and
outcomes for the year ended 31 March 2023, and how the Committee intends the Remuneration Policy to apply during the year ending 31 March 2024.
The following pages have been prepared in accordance with Part 3 of The Large and Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 (as amended) and Rules 9.8.6 and 9.8.8 of the Listing Rules. The Directors’ remuneration report, excluding the Remuneration Policy, will be put
to an advisory shareholder vote at the Annual General Meeting on 27 July 2023.
109 – CMC Markets plc
Annual Report and Financial Statements 2023
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Annual report on remuneration continued
Single total figure of Executive Director remuneration (audited)
The table below sets out the single total figure of the remuneration received by each Executive Director who served during the years ending 31 March 2022 and 31
March 2023.
Benefits 1
£’000
Pension 4
£’000
Other 5
£’000
Total fixed
remuneration
£’000
Annual
incentives 2
£’000
Long-term
incentives 3
£’000
Total variable
remuneration
£’000
Name
Peter Cruddas7
David Fineberg
Euan Marshall
Matthew Lewis6
Year ended
31 March
2023
2022
2023
2022
2023
2022
2023
2022
Salary
£’000
700.0
700.0
350.0
350.0
250.0
250.0
288.2
297.0
3.0
3.0
1.7
1.7
1.7
1.7
0.4
0.5
—
—
30.8
24.5
13.2
13.2
13.3
12.7
—
—
1.8
1.8
1.8
1.8
—
—
703.0
703.0
384.3
378.0
266.7
266.7
301.9
310.2
137.6
155.2
148.2
165.4
72.5
69.2
131.4
146.8
—
—
159.2
926.5
31.6
—
59.1
332.5
Total
£’000
840.6
858.2
137.6
155.2
307.4
691.7
1,091.9
1,469.9
104.1
69.2
370.8
335.9
190.5
492.4
479.3
789.5
1 Benefits: taxable value of benefits received in the year by Executive Directors comprises private health insurance and club membership for Peter Cruddas and health insurance for David Fineberg, Euan Marshall and life
assurance for Matthew Lewis.
2 The total cash element of the CIP award earned in respect of performance during the relevant financial year.
3
The long-term incentive payment in 2023 to David Fineberg , Euan Marshall and Matthew Lewis relates to the vesting of the first tranche of the CIP award granted in 2020. The Remuneration Committee agreed
there were no factors prompting the application of the performance underpin therefore the first tranche will vest in full. Dividend equivalents are included in the figures. The value of the award was calculated
using the average closing share price in the last three months of 2023 of £2.34. The value attributable to share price growth is -£48,646, -£9,654 and -£18,073 for David Fineberg, Euan Marshall and Matthew
Lewis respectively. This was calculated using the grant price of £3.49 and the vesting price (share price as at date of award vest) of £2.34.
The long-term incentive payment in 2022 to David Fineberg and Matthew Lewis relates to the vesting of the November 2018 LTIP Performance Award. The majority of the performance targets were yielding a
total vesting of 97.3% of the granted shares. Dividend equivalents are included in the figures. The value attributable to share price growth is £458,093 and £175,456 for David Fineberg and Matthew Lewis
respectively. This was calculated using the grant price of £2.05 and the vesting price of £4.66.
4
Pension: during the year ended 31 March 2023, David Fineberg and Euan Marshall were eligible to receive a Company pension contribution of up to 7% of salary in line with the maximum contribution received
by employees across the Group. Matthew Lewis received contributions to the Superannuation plan in Australia. Peter Cruddas opted out of the plan and no compensation was provided. None of the Executive
Directors have a prospective right to a final salary pension by reference to years of qualifying service.
5
Share Incentive Plan: employees, including the Executive Directors, are entitled to participate in the SIP throughout the year; it allows employees and Directors to receive one matching share for every
partnership share purchased under the SIP up to the limits defined by HMRC. In 2023, 719 matching shares were allocated to David Fineberg , and 719 matching shares were allocated to Euan Marshall,
calculated on the dates of purchase. In 2022, 568 matching shares were allocated to David Fineberg, and 568 matching shares were allocated to Euan Marshall, calculated based on the dates of purchase.
The free and matching shares will be forfeited if, within three years from the date of grant, the individual leaves employment in certain circumstances. Peter Cruddas and Matthew Lewis do not participate in
the plan.
6 The decrease in salary for Matthew Lewis reflects prevailing exchange rates.
7 During the year £5,592.23 relating to a personal expense for Peter Cruddas was paid by CMC Markets UK plc due to an administrative error. This amount will be reimbursed.
CIP for the year ended 31 March 2023 (audited)
During the year ended 31 March 2023 the Executive Directors participated in the Combined Incentive Plan with a maximum opportunity of up to 135% of salary for
Peter Cruddas, CEO, up to 300% of salary for David Fineberg, Deputy CEO and Matthew Lewis, the Head of Asia Pacific & Canada, and up to 200% of salary for
Euan Marshall, the CFO.
In considering the combined incentive Cash Award and Share Award, together comprising the Award, due to the Executive Directors for the year ended 31 March
2023, the Committee reviewed Group earnings per share (“EPS”) against targets over the period.
Group financial performance measure
Financial performance measures account for 60% of the total award.
Measure
Group earnings per share (“EPS”)
Threshold
15.4 pence
Target
20.7 pence
Maximum
25.7 pence
Actual
14.6 pence
Whilst the Group has had another strong year diluted EPS was 14.6 pence against a threshold target of 15.4 pence, resulting in a 0% award from this element
of the Plan.
110 – CMC Markets plc
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Annual report on remuneration continued
CIP for the year ended 31 March 2023 (audited) continued
Group strategic and personal performance measures
Strategic performance measures account for 30% of the total award and personal measures account for 10% of the total award.
Chief Executive Officer strategic objectives (30%)
Score
Assessment
In line with the programme approved by the Board drive the delivery of all projects grow and CMC’s
investing products into new jurisdictions, meeting all relevant KPIs and financial metrics.
100% The launch of the Invest product in Singapore is due to be delivered on time and within
budget. Enhancements to the UK and existing APAC & Canada investing product suites
have also been delivered to a high standard.
Provide strategic leadership for the key project initiatives across CMC’s platform and product offering
including the provision of options and equities to Connect clients, and improved Treasury management
capabilities.
90% Strong progress has been on the majority of the initiatives many of which are now
generating enhanced revenues.
Drive CMC’s trading business to ensure levels of client retention and overall satisfaction are improved and
not impacted by the diversification of the business.
100% The Remuneration Committee has considered a number of measures including client
retention, Net Promoter, CSAT and Trust Pilot scores which confirm this objective has
been met.
Continue to evolve and develop the senior leadership team to reflect the increasing complexity and
strategic ambition of CMC.
75% Experienced hires have been made to support the delivery of the options and cash equity
products. Risk, compliance and legal have also improved their overall capabilities in line
with the planned increase in product complexity.
Jointly sponsor with the wider ED team, the development and delivery of a strategy to improve Diversity &
Inclusion and ESG across CMC.
75% Good progress has been made in the development of the strategies but further work is
now needed set tangible targets and a programme of initiatives to meet those targets.
Award for strategic objectives
Personal and mandatory risk objective (10%):
26%
Lead CMC Markets to deliver its vision and objectives by demonstrating leadership skills fully aligned
with CMC values, Ways of Working and conduct code.
100% Peter has continued to lead by example to deliver to the Company’s values, ways of
working and code of conduct.
Award for personal objective
Total for strategic and personal objectives (40%)
10%
36%
Deputy CEO strategic objectives (30%)
Score
Assessment
Lead the delivery of significant improvements in the quality of the client offering with the trading, investing
and premium proposition.
90% Strong progress has been made on the majority of the initiatives many of which are now
generating enhanced revenues.
Sponsor the establishment of the new office in Manchester.
100% Office is fully operational with six employees in place to date.
Establish a programme of continuous improvement for the institutional product offering.
With the CFO, jointly lead the Transformation programme globally.
With the wider Executive Director team lead a programme to align CMC to its strategic initiatives and core
product pillars.
Ensure CMC’s Net Promoter and Client Satisfaction scores are sustained to the following levels:
Threshold – maintain current position during 2023; On target – improve current position during 2023.
100% David has led a process to establish a comprehensive strategy to significantly expand
our institutional offering and the team has delivered record results once again in this
financial year.
75% Good progress has been made in establishing and prioritising the relevant initiatives for
CMC. The resourcing of squads is progressing well along with the aligning processes to a
digital approach.
75% Key functions have been aligned to each pillar and initiatives given dedicated resource
allocation and specific accountability. Good progress has been made in delivering the
Enterprise Risk Management Framework.
75% The Remuneration Committee has considered a number of measures including client
retention, Net Promoter score, CSAT and Trust pilot scores which confirm this objective
has been significantly met.
Jointly sponsor with the wider ED team, the development and delivery of a strategy to improve Diversity &
Inclusion and ESG across CMC.
75% Good progress has been made in the development of the strategies but further work is
now needed to set tangible targets and a programme of initiatives to meet those targets.
Award for strategic objectives
Personal and mandatory risk objective (10%):
25%
Lead CMC Markets to deliver its vision and objectives by demonstrating leadership skills fully aligned with
CMC values, Ways of Working and conduct code.
100% David has continued to lead by example to deliver to the Company’s values, ways of
working and code of conduct.
Award for personal objective
Total for strategic and personal objectives (40%)
10%
35%
111 – CMC Markets plc
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CIP for the year ended 31 March 2023 (audited) continued
Chief Financial Officer strategic objectives (30%)
Score
Assessment
Lead a programme to improve the performance monitoring of the strategic initiative
programme globally.
100% The programme has delivered a suite of metrics and reports by which strategic initiatives are
assessed and progress is monitored.
Deliver enhanced segmental cost reporting to better understand the prospective value generated
by each pillar of the business.
100% Significant improvements have been made to these processes leading to an enhanced
understanding of value generation business wide.
With the wider Executive Director team lead a programme to align CMC to its strategic initiatives
and core product pillars.
75% Key functions have been restructured to align to each pillar and initiatives given clearly resource
allocation and accountability. Good progress has been made in delivering the Enterprise Risk
Management Framework.
Lead the delivery of an enhanced Treasury management function for CMC.
100% Significant improvements made in client money, reporting and own fund utilisation. Programme of
further improvements is progressing.
With the Deputy CEO, jointly lead the Transformation programme globally.
75% Good progress has been made in establishing and prioritising the relevant initiatives for CMC. The
resourcing of squads is progressing well along with the aligning processes to a digital approach.
Jointly sponsor with the wider ED team, the development and delivery of a strategy to improve
Diversity & Inclusion and ESG across CMC.
75% Good progress has been made in the development of the strategies but further work is now needed
to set tangible targets and a programme of initiatives to meet those targets.
Award for strategic objectives
Personal and mandatory risk objective (10%):
26%
Lead CMC Markets to deliver its vision and objectives by demonstrating leadership skills fully
aligned with CMC values, Ways of Working and conduct code.
100% Euan has continued to lead by example to deliver to the Company’s values, ways of working and
code of conduct.
Award for personal objective
Total for strategic and personal objectives (40%)
10%
36%
Head of Asia Pacific & Canada strategic objectives (30%)
Score
Assessment
Lead the successful transition of the ANZ Share Investing customer base to CMC’s platform.
Lead the successful delivery of the Invest Singapore project.
Deliver significant improvements in the quality of the client offering in the APAC & Canada region.
100% Excellent progress has been made with this key transaction for CMC with Matthew successfully
leading the process. The programme is being delivered to time and budget, and meeting all the
relevant commercial performance measures.
90% Invest Singapore is due to be successfully delivered to time and budget and a soft launch process
has commenced.
100% Strong progress has been made on the all initiatives many of which are now generating enhanced
revenues. APAC & Canada now taking the lead on the global development and roll out of certain
products for example our MT4 product.
Lead the successful delivery of physical cryptocurrencies for Invest Australia.
90% Delivered to budget and time with a launch date scheduled for Q1.
Jointly sponsor with the wider ED team, the development and delivery of a strategy to improve
Diversity & Inclusion and ESG across CMC.
50% Good progress has been made in the development of the strategies but further work is now needed
set tangible targets and a programme of initiatives to meet those targets.
Ensure CMC’s Net Promoter Scores sustained to the following levels: Threshold – maintain
current position during 2022; On target – improve current position during 2023.
75% The Remuneration Committee has considered a number of measures including client retention,
Net Promoter score, CSAT and Trust pilot scores which confirm this objective has been
significantly met.
Award for strategic objectives
Personal and mandatory risk objective (10%):
26%
Lead CMC Markets to deliver its vision and objectives by demonstrating leadership skills fully
aligned with CMC values, Ways of Working and conduct code.
100% Matthew has continued to lead by example to deliver to the Company’s values, ways of working and
code of conduct.
Award for personal objective
Total for strategic and personal objectives (40%)
10%
36%
112 – CMC Markets plc
Annual Report and Financial Statements 2023
Annual report on remuneration continued
CIP for the year ended 31 March 2023 (audited) continued
Based on the outcomes against the performance targets the Committee recommended the following awards under the Combined Incentive Plan.
Executive Directors, Combined Incentive outcomes
Peter Cruddas
David Fineberg
Euan Marshall
Role
Chief Executive
Officer
Deputy Chief
Executive Officer
Chief Financial
Officer
Matthew Lewis
Head of Asia Pacific
& Canada
Max award
% salary
Overall outcome (%
of max opportunity)
Award
(as % salary)
Total award
(£’000)
(£’000)
% salary
135%
36.4%
49%
344.0
137.6
20%
(£’000)
206.4
% salary
29%
Cash award
Share award
300%
35.3%
106%
370.5
148.2
48%
222.3
58%
200%
36.3%
73%
181.3
72.5
29%
108.8
44%
300%
36.5%
110%
328.5
131.4
44%
197.1
66%
Vesting of awards under the CIP in the financial year ended 31 March 2023 (audited)
No awards made to any Executive Director under the LTIP which vested in the year.
Share awards granted in year (audited)
The table below provides details of the deferred element of the 2022 CIP.
Director
Peter Cruddas
David Fineberg
Euan Marshall
Matthew Lewis
Face value of award (£’000)
No. of shares awarded
155.2
165.3
68.1
146.8
67,560
71,981
30,115
63,901
Notes:
The awards were granted as conditional shares. The award share price was £2.808, calculated using the three-day average share price prior to the date of grant
of the award.
Awards vest at 40%, 30% and 30% after three, four and five years respectively and are subject to a performance underpin assessed at the end of three financial
years following the one-year performance period. The performance underpin will consist of a broad review of the performance of the business and will take into
account the Company’s three-year TSR performance, three-year aggregate profit levels and any regulatory breaches during the period. The Committee has
discretion to apply other factors.
Implementation in 2023/24
Salary
The Chief Executive Officer will not receive a pay rise with effect from 1 June 2023. David Fineberg and Matthew Lewis will receive 4.5% increase with effect from
1 June 2023. Euan Marshall will receive a 20% increase with effect from 1 June 2023 the rationale for which is detailed in the Remuneration Committee Chair’s
letter. The table below summarises these changes:
Name
Adjusted salary Percentage change
Previous salary
Role
Peter Cruddas
David Fineberg
Euan Marshall
Matthew Lewis
Chief Executive Officer
Deputy Chief Executive Officer
Chief Financial Officer
Head of Asia Pacific & Canada
£700,000
£350,000
£250,000
£300,000
£700,000
£365,750
£300,000
£313,500
—
4.5%
20.0%
4.5%
113 – CMC Markets plc
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Annual report on remuneration continued
Implementation in 2023/24 continued
Combined Incentive Plan
The Committee also proposes to continue to use Group financial, strategic and individual performance against targets for the 2023/24 financial year as the basis
on which the combined incentive will be awarded. The performance measures applied to the combined incentive will be:
– 60% financial;
– 30% strategic performance; and
– 10% personal objectives.
In relation to the financial target, the Committee has ensured that a sufficiently stretching range has been set by taking account of a number of internal and
external reference points and the impact of regulatory change. The target range will be disclosed in next year’s Annual Report and Financial Statements.
With regard to the strategic and personal objectives, these will be evaluated based on quantitative measurable objectives in the significant majority of cases.
The Directors believe that these performance measures are commercially sensitive therefore detailed disclosure of these outcomes will be included in the 2024
Annual Report and Financial Statements. The maximum awards achievable under the CIP for the 2024 will be 300% of salary for the CFO, Deputy CEO and
Head of APAC & Canada. For the CEO the maximum award achievable is 135% of salary.
Pension
With the exception of the CEO who does not currently participate in the scheme, the Executive Directors based in the UK can receive a pension contribution of 7%
of salary, or cash in lieu of pension (net employer costs). The Head of Asia Pacific & Canada receives Superannuation in Australia.
Share ownership and share interests (audited)
The Committee has adopted guidelines for Executive Directors and other senior Executives to encourage substantial long-term share ownership. Executive
Directors are expected to build and hold shares of at least 200% of salary and to retain at least 50% of shares vesting (net of tax) until the guideline is achieved.
The table below shows the interests of the Directors and connected persons in shares and the extent to which CMC Markets’ shareholding guidelines
are achieved.
Executive Directors
Peter Cruddas (including shares held by spouse)
David Fineberg1 (including shares held by spouse)
Euan Marshall1 (including shares held by spouse)
Matthew Lewis1 (including shares held by spouse)
Total share
interests at
31 March 2023
Number
Total share
interests
31 March 2023
as a % salary
Requirement
met
Unvested
awards
not subject to
performance
conditions 1
Unvested
awards
subject to
performance
conditions 2
174,149,738
43,736%
464,010
37,197
281,464
230%
23%
157%
Yes
Yes
No
No
—
2,798
4,458
1,437
67,560
336,956
112,305
221,110
1 David Fineberg and Euan Marshall have interests under the Share Incentive Plan subject to forfeiture for three years. Matthew Lewis has interests in the International Share Incentive Plan.
2 Unvested Deferred Share awards under made the CIP are included as unvested awards subject to performance conditions and do not count towards the total share interests.
David Fineberg and Euan Marshall have continued to participate in the Share Incentive Plan, each acquiring 172 matching shares and 172 partnership shares
during April and May.
There are no other changes to shareholdings between 31 March 2023 and 30 May 2023.
Total shareholder return (“TSR”) performance and CEO single figure
The below chart compares the total shareholder return (“TSR”) of the Company against the FTSE 250 Index based on £100 invested at listing (5 February 2016).
The FTSE 250 is used as the benchmark as CMC Markets is a constituent of this index.
CMC Markets
FTSE 250
)
0
0
1
o
t
d
e
s
a
b
e
r
(
n
r
u
t
e
r
r
e
d
o
h
e
r
a
h
s
l
l
a
t
o
T
280
240
200
160
120
80
40
0
31/03/2016
05/02/2016
31/03/2017
31/03/2018
31/03/2019
31/03/2020
31/03/2021
31/03/2022
31/03/2023
Source: DataStream
114 – CMC Markets plc
Annual Report and Financial Statements 2023
Annual report on remuneration continued
CEO pay history
Name
CEO single figure of
remuneration (£’000)
Annual incentive payout
(as % of maximum)
Long-term incentives
(as % of maximum)
Year ended
31 March 2016 1
Year ended
31 March 2017
Year ended
31 March 2018
Year ended
31 March 2019
Year ended
31 March 2020
Year ended
31 March 2021
Year ended
31 March 2022
Year ended
31 March 2023
739.9
412.8
845.8
434.4
1,048.5
1,459.4
858.2
840.6
100%
n/a
0%
n/a
83%
n/a
0%
n/a
100%
n/a
91%
n/a
37%
n/a
36%
n/a
1 CMC Markets plc listed on the London Stock Exchange on 5 February 2016; however the full-year single figure has been included here for the year ended 31 March 2016.
Percentage change in remuneration
The table below shows the annual percentage change in salary, taxable benefits and annual incentive for each Director with colleagues employed by the Group
who are also not Directors of the Group:
% Change in ED & NED remuneration
Salary/fees
2021
Taxable
benefits
Annual
incentive
Salary/fees
Executive Directors
Peter Cruddas
David Fineberg
Euan Marshall
Matthew Lewis³
Non-Executive Directors
James Richards
Paul Wainscott
Sarah Ing
Susanne Chishti4
Clare Francis5
Clare Salmon1
All employees2
34%
3%
0%
24%
18%
8%
8%
n/a
n/a
8%
5%
0%
7%
0%
0%
n/a
0%
n/a
n/a
n/a
n/a
0%
43%
0%
14%
18%
n/a
n/a
n/a
n/a
n/a
n/a
15%
18%
0%
0%
7%
11%
5%
5%
n/a
n/a
10%
8%
2022
Taxable
benefits
0%
0%
0%
0%
4,692%6
513%6
n/a
n/a
n/a
n/a
0%
Annual
incentive
Salary/fees
2023
Taxable
benefits
Annual
incentive
-60%
-61%
-64%
-60%
n/a
n/a
n/a
n/a
n/a
n/a
-5%
0%
0%
0%
-3%
0%
6%
4%
n/a
n/a
-66%
9%
0%
-3%
-3%
0%
72%
448%
n/a
n/a
n/a
n/a
0%
-11%
-10%
5%
-10%
n/a
n/a
n/a
n/a
n/a
n/a
-9%
1 Clare Salmon resigned as a Non-Executive Director on 28 July 2023 .
2
The employee figure relates to those “same store” employees i.e. those employed on 1 April 2022 and compares their salary then to 31 March 2023. Annual incentive figure is based on the corporate bonus
awards and does not reflect stock awarded to employees.
3 The salary decrease for Matthew Lewis is as a result of exchange rate movements.
4 Susanne Chishti was appointed on 1 June 2022.
5 Clare Francis was appointed on 19 December 2022.
6 The increase in taxable benefits reflects the limited travel allowed in 2021 due to the pandemic.
Pay ratio reporting
The Company is required to publish information on the pay ratio of the Group Chief Executive to UK employees. The table below sets out the ratio of the pay and
benefits of the median UK employee (P50) and those at the 25th (P25) and 75th (P75) percentile to the remuneration received by the Group Chief Executive
Officer. We have used “method A” as we believe it provides the most consistent and comparable outcomes. The ratios reflect all remuneration received by an
individual in respect of the relevant years, and includes salary, benefits, pension, and value received from incentive plans. Employee pay and benefits were
determined on 31 March 2023 using the same approach as used for the Single Total Figure. Pay ratios have remain unchanged for P50 and P75, with pay
increases within the P25 population during 2023 reducing the P25 ratio to 17:1 from 18:1.
Financial year
Methodology
P25 (lower quartile) pay ratio
P50 (median) pay ratio
P75 (upper quartile) pay ratio
Total remuneration
2023
2022
2021
2020
A
A
A
A
17:1
18:1
33:1
26:1
11:1
11:1
21:1
17:1
8:1
8:1
15:1
12:1
115 – CMC Markets plc
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Annual report on remuneration continued
Pay ratio reporting continued
The change in ratio in 2022 and 2023 compared to 2021 reflects the non-achievement of the financial objective under the CIP scheme. The change from 2022 to
2023 also reflects the reduction in the cash element of the award from 45% to 40%. Comparative employee reward elements are detailed below:
Total salary
Total remuneration
CEO
£’000
703.0
840.5
P25 (lower quartile)
£’000
44.3
48.6
P50 (median)
£’000
70.5
79.3
P75 (upper quartile)
£’000
90.5
108.2
Our principles for pay setting and progression in our wider workforce are the same as for our Executives, with total reward being sufficiently competitive to attract
and retain high calibre individuals without over-paying and providing the opportunity for individual development and career progression. The pay ratios reflect
how remuneration arrangements differ as accountability increases for more senior roles within the organisation, and in particular the ratios reflect the weighting
towards long-term value creation and alignment with shareholder interests for the CEO. Our employees received a presentation on how executive remuneration
aligns to that of the wider company in March 2022. This presentation will be given again in July 2023 to reflect our 2023 reward outcomes.
We are satisfied that the median pay ratio reported this year is consistent with our wider pay, reward and progression policies for employees. The median
reference employee has the opportunity for annual pay increases, annual performance payments and career progression.
Relative importance of spend on pay
The chart below illustrates the Group’s actual expenditure on shareholder distributions (including dividends and share buybacks) and total employee pay
expenditure for the financial years ended 31 March 2022 and 31 March 2023.
20% increase
m
£
110
100
90
80
70
60
50
40
30
20
10
0
25% increase
Employee remuneration
Distribution to shareholders
2022
2023
m
£
110
100
90
80
70
60
50
40
30
20
10
0
Dilution
The Company’s share schemes are funded through a combination of shares purchased in the market and new-issue shares, as appropriate. The Company
monitors the number of shares issued under these schemes, compared to the relevant dilution limits set by the Investment Association in respect of all share
plans (10% in any rolling ten-year period) and Executive share plans (5% in any rolling ten-year period).
Payments to past Directors and for loss of office (audited)
There were no payments to past Directors and for loss of office during the year.
Non-Executive Director remuneration
The table below sets out the remuneration for the Non-Executive Directors for the year ending 31 March 2023. The fees for the Chairman have not changed this
year. The Non-Executive Director fee has increased from £70,000 to £75,000 , the Committee Chair and SID fees increased from £10,000 to £15,000, and the
Workforce Engagement Non-Executive Director fee has increased from £7,500 to £10,000 to reflect the increased time commitment in fulfilling these roles for
CMC Markets . During the year an additional fee of £10,000 was approved for the new position of Non-Executive Director responsible for Consumer Duty.
Role
Chairman fee
Non-Executive Director fee
Committee Chairman additional fee
Workforce Engagement Director fee
Consumer Duty Non-Executive Director Fee
Senior Independent Director additional fee
The fees detailed above for 2023 will be unchanged for the year ending 31 March 2024.
116 – CMC Markets plc
Annual Report and Financial Statements 2023
£’000
210.0
75.0
15.0
10.0
10.0
15.0
Annual report on remuneration continued
External appointments
It is the Board’s policy to allow Executive Directors to take up external non-executive positions, subject to the prior approval of the Board. Any fee earned in
relation to outside appointments is retained by the Executive Director. Peter Cruddas was a Director of The Peter Cruddas Foundation, Finada Limited and
Crudd Investments Limited during the year ended 31 March 2023 and received no fees in relation to these appointments. No other Executive Director held any
outside appointments.
Single total figure of Non-Executive Director remuneration (audited)
The table below sets out the single total figure of the remuneration received by each Non-Executive Director who served during the year ended 31 March 2023.
The fees set out in the table below reflect the actual amounts paid during the year. The Non-Executive Directors do not receive any variable remuneration.
Remuneration comprises an annual fee for acting as a Chairman or Non-Executive Director of the Company. Additional fees are paid to Non-Executive Directors
in respect of service as Chair of the Group Audit, Group Risk or Remuneration Committees, Senior Independent Director, Workforce Engagement Non-
Executive Director and Consumer Duty Non-Executive Director.
Name
James Richards
Paul Wainscott
Clare Salmon3
Sarah Ing
Susanne Chishti4
Clare Francis5
Year ended
31 March
2023
2022
2023
2022
2023
2022
2023
2022
2023
2023
Base fee
£’000
210.0
210.0
71.7
70.0
25.3
73.7
71.7
70.0
60.0
21.6
Committee fee
£’000
SID fee
£’000
Stakeholder / Client
NED fee
£’000
—
—
11.7
10.0
3.3
10.0
11.7
10.0
—
3.8
—
—
8.3
5.0
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4.6
2.5
Benefits 1
£’000
20.6
12.0
8.4
1.5
—
—
—
—
—
0.5
Total 2
£’000
230.6
222.0
100.1
86.5
28.6
83.7
83.4
80.0
64.6
28.4
1
Non-Executive Directors are not entitled to benefits. Benefits (and any tax due thereon) relates to reimbursed travel expenses.
2 Non-Executive Directors are not entitled to receive share-based payments and no award of shares was granted to any NEDs during the period.
3 Clare Salmon resigned as a Non-Executive Director on the 28 July 2022. An error was made in implementing her final date of employment which caused an over payment. The over payment is being recovered
so these figures reflect the correct emoluments due.
4 Susanne Chishti was appointed on 1 June 2022.
5 Clare Francis was appointed on 19 December 2022.
Non-Executive Director share ownership and share interests (audited)
The table below shows the interests of the Non-Executive Directors and connected persons in shares.
Name
James Richards
Paul Wainscott
Clare Salmon1
Sarah Ing
Susanne Chishti
Clare Francis
1 Clare Salmon’s shareholding is up to her leaving date of 28 July 2022.
There are no other changes to shareholding between 31 March 2023 and 30 May 2023.
Ordinary Shares
held at
31 March 2022
Ordinary Shares
held at
31 March 2023
—
—
824
—
—
—
—
—
824
—
—
—
117 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Remuneration Committee report continued
Annual report on remuneration continued
The Remuneration Committee
During the year, the Committee sought internal support from the Executive Directors, who attended Committee meetings by invitation from the Chair. Advice was
sought on specific questions raised by the Committee and on matters relating to the performance and remuneration of senior managers. No Director was present
for any discussions that related directly to their own remuneration. The Company Secretary, or their deputy, attends each meeting as Secretary to the Committee.
Advisers to the Remuneration Committee
In undertaking its responsibilities, the Committee seeks independent external advice as necessary. Willis Towers Watson (“WTW”) have continued to
act as advisers to the Committee throughout the year. WTW were appointed in 2017 by the Committee following a review of advisers. WTW are voluntary
signatories to the Code of Conduct for Remuneration Consultants, which assures clients of independence and objectivity. Details of the Code can be found at
www.remunerationconsultantsgroup.com. During the year, WTW provided independent advice on a range of remuneration matters including current market
practice, benchmarking of Executive pay and incentive design. The fees paid to WTW in respect of work carried out, on a time and expenses basis, for the
Committee for the year under review totalled £46,500. The Committee is comfortable that the advice it has received has been objective and independent.In
addition to advising on Executive Director and senior management remuneration WTW are also the principle providers of market data for the wider employee
population in London and Sydney.
Statement of voting at the AGM
The Company AGM was held on 28 July 2022 where the Directors’ remuneration report were tabled. The result of the vote on these resolutions is set out below:
For
Against
Total votes cast
Withheld1
Remuneration Policy
(at 2021 AGM when the current
policy was approved)
% of votes
(excluding
withheld)
99.65
0.35
Number
of votes
261,580,649
913,806
262,494,455
55,779
Remuneration Report
(at 2022 AGM)
% of votes
(excluding
withheld)
Number
of votes
97.25
2.75
249,427,646
7,043,454
256,471,100
8,310
1 A vote withheld is not a vote in law and so is not counted for the purposes of the calculation of the proportion of votes “for” and “against” a resolution.
This report will be submitted to shareholders for approval at the AGM to be held on 27 July 2023.
Approved by the Board on 13 June 2023 and signed on its behalf by:
Sarah Ing
Independent Non-Executive Director and Chair of the Remuneration Committee
13 June 2023
118 – CMC Markets plc
Annual Report and Financial Statements 2023
Directors’ report
CMC Markets plc is a public limited company incorporated in England and
Wales under the Companies Act 2006 with registered number 05145017.
The Directors present their report, together with the consolidated Financial
Statements for the year ended 31 March 2023. For the purpose of the FRC’s
Disclosure Guidance and Transparency Rule (“DTR”) 4.1.8R, the Strategic
report is also the Management report for the year ended 31 March 2023.
The corporate governance sections that appear on pages 75 and 79 to 119,
together with this report of which they form part, fulfils the requirements of the
Corporate governance statement for the purpose of the DTRs.
Directors
With the exception of Clare Francis, all Directors will seek re-election at the
2023 Annual General Meeting (“AGM”) on Thursday 27 July 2023. Following
recommendation by the Nomination Committee, a Director may be appointed
to the Board by the Board of Directors and will then be put forward at the
following AGM for election by the shareholders. The Company’s Articles
of Association, available on the CMC Markets plc Group website, detail the
appointment and removal process for Directors. The Board approved the
appointment of Clare Francis with effect from 19 December 2022 and Clare
will seek election at the 2023 AGM. Clare Salmon retired from the Board on
28 July 2022. The Company has not adopted any special rules regarding the
appointment and replacement of Directors other than as provided for under
UK company law.
Details of Directors’ interests and conflicts
The Directors have a statutory duty to avoid conflicts of interest. The Board
has established a procedure to deal with any potential or actual conflicts
of interest and to ensure that all such interests are disclosed and, where
appropriate, authorised by the Board (with any limits or conditions imposed as
applicable) in accordance with the Articles of Association and the Companies
Act 2006. Details of all Directors’ conflicts of interest are recorded in a register
of conflicts which is maintained by the Company Secretary and all approvals
are formally minuted. Upon appointment, new Directors are advised of the
procedure for managing conflicts, which includes the notification of any actual
or potential conflicts or changes to the circumstances of any such conflicts.
Any decision of the Board to authorise a conflict of interest is only effective
if it is agreed without the conflicted Director(s) voting or without their votes
being counted. In making such a decision, the Directors must act in a way they
consider in good faith will be most likely to promote the success of the Group.
The management of potential conflicts has been operating in accordance
with the procedure throughout the year in review and subsequently. Details
of the current Directors’ interests in the Company’s shares and securities
can be found in the Directors’ remuneration report on pages 114 and 117 and
their biographies, including details of other directorships, are disclosed on
pages 76 to 78.
The Directors of the Company who were in office during the year and up to the
date of signing the Financial Statements were:
James Richards
Susanne Chishti
Lord Cruddas
David Fineberg
Clare Francis
Sarah Ing
Matthew Lewis
Euan Marshall
Clare Salmon
Paul Wainscott
Chairman
Non-Executive Director (appointed 1 June 2022)
Chief Executive Officer
Deputy Chief Executive Officer
Non-Executive Director (appointed 19 December 2022)
Non-Executive Director
Head of Asia Pacific & Canada
Chief Financial Officer
Non-Executive Director (retired on 28 July 2022)
Senior Independent Director
Directors’ indemnities
As permitted by the Articles of Association, the Company has granted
indemnities to each of its Directors and the Company Secretary to the extent
permitted by law.
A qualifying third-party indemnity provision as defined by Section 234 of
the Companies Act 2006 was in force throughout the last financial year and
remains in place in relation to certain losses and liabilities which the Directors
or Company Secretary may incur to third parties in connection with their
position in the Company or any associated company. The Company also
maintains appropriate insurance to cover Directors’ and Officers’ liability,
which is assessed annually and approved by the Board. No amount was paid
under the Directors’ and Officers’ liability insurance during the year.
Branch offices
CMC Markets plc does not have any overseas branches. Various subsidiaries
in the Group have overseas branches, as detailed in pages 186 to 187.
Strategic report
The Companies Act 2006 requires the Group to prepare a Strategic report,
which commences at the start of this Annual Report and Financial Statements
up to page 2. As permitted by Section 414C(11) of the Companies Act 2006,
some matters required to be included in the Directors’ report have instead
been included in the Strategic report. These disclosures are incorporated by
reference in the Directors’ report. The Strategic report includes information
on the Group’s operations and business model, going concern and viability,
review of the business throughout the year, anticipated future developments,
key performance indicators, principal risks and uncertainties, information
on stakeholder and employee engagement and the Board’s statement in
accordance with Section 172 of the Companies Act 2006. The use of financial
instruments is included in the report and further covered under note 29 to the
consolidated Financial Statements.
The Group’s vision is to be a global provider of online retail financial
services and to maintain its status as a pioneer of platform technology.
Its strategic objective is to provide long-term value to shareholders by
ensuring superior returns. This long-term success is generated through the
consistent and sustainable delivery of growth in revenue and improvement
to operating margins through operational excellence including product
innovation, geographical diversification, technology and services. The
strategic objectives to achieve this are also set out in the Strategic report on
pages 2 to 73.
Dividends
On 12 June 2023 , the Board recommended a final dividend of 3.90 pence
per Ordinary Share in respect of the full financial year ended 31 March 2023,
subject to shareholder approval at the 2023 AGM. If approved, the dividend
will be paid on 11 August 2023 to shareholders on the register of members at
the close of business on 14 July 2023. The shares will go ex-dividend on 13
July 2023. An interim dividend of 3.50 pence per Ordinary Share was paid on
5 January 2023 , bringing the total dividend for the year ended 31 March 2023
to 7.40 pence per Ordinary Share.
Further information on dividends is shown in note 11 of the Financial
Statements and is incorporated into this report by reference.
119 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Directors’ report continued
Share capital
Share capital and Directors’ powers
The Company’s share capital comprises Ordinary Shares of 25 pence
each and Deferred Shares of 25 pence each. At 31 March 2023, there were
279,815,463 Ordinary Shares (99.12% of the overall share capital) and
2,478,086 Deferred Shares (0.88% of the overall share capital) in issue.
The powers of the Directors, including in relation to the issue or buyback
of the Company’s shares, are set out in the Companies Act 2006 and the
Company’s constitution. The Directors were granted authority to issue and
allot Ordinary Shares and to buy back Ordinary Shares at the 2022 AGM.
Further information about share capital can be found in note 25 of the
Financial Statements.
Shareholders will be asked to renew these authorities in line with the latest
institutional shareholder guidelines at the 2023 AGM.
Ordinary Shares
The holders of Ordinary Shares are entitled to one vote per share at meetings
of the Company. All Ordinary Shares in issue in the Company rank equally
and carry the same voting rights and the same rights to receive dividends and
other distributions declared or paid by the Company. Throughout the year, the
Ordinary Shares were publicly listed on the London Stock Exchange and it
remains so as at the date of this report. There are no specific restrictions on the
size of a shareholding nor on the transfer of shares which are both governed
by the Articles of Association and prevailing law. The Directors are not aware
of any agreements between holders of the Company’s shares that may
result in restrictions on the transfer of shares or on voting rights. No person
has special rights of control over the Company’s share capital and all issued
shares are fully paid.
Shares held by the Employee Benefit Trust rank pari passu with the Ordinary
Shares and have no special rights. Voting rights and rights of acceptance of
any offer relating to the shares held in this trust rest with the trustees, who may
take account of any recommendation from the Company. Voting rights are not
exercisable by the employees on whose behalf the shares are held in trust.
Deferred Shares
The holders of Deferred Shares do not have the right to receive notice of any
general meeting of the Company nor the right to attend, speak or vote at any
such general meeting. The Deferred Shares have no rights to dividends and,
on a return of assets in a winding-up, entitle the holder only to the repayment
of the amounts paid upon such shares. The Deferred Shares may be
purchased at nominal value at the option of the Company by notice in writing
served on the holder of the Deferred Shares. No application has been made
or is currently intended to be made for the Deferred Shares to be admitted
to the Official List or to trade on the London Stock Exchange or any other
investment exchange.
On 2 March 2022 the Company announced its intention to launch a share
buyback programme (the “Buyback Programme”) as part of its approach
to shareholder returns. In light of the Company’s robust capital position and
having considered the ongoing investment in the business, the Board decided
to return excess capital to shareholders via the repurchase of Ordinary
Shares up to an aggregate purchase price of £30 million, subject to continuing
regulatory approval. Regulatory approval was obtained from the FCA and
the buyback programme launched on 15 March 2022. During the year ended
31 March 2023, the Company purchased and cancelled 10,478,456 of its
issued fully paid Ordinary Shares with a nominal value of £0.25 at an average
price paid of £2.60 (and £27,236,000 in aggregate). The share buyback
programme concluded on 17 October 2022 and as a result there have been no
purchases following year end.
Controlling Shareholder Disclosure
The Company entered into a Relationship Agreement with Lord Peter
and Fiona Cruddas (the “Controlling Shareholders”) on 26 January 2016,
the terms of which came into force on listing the Company to trade on the
Main Market of the London Stock Exchange. The principal purpose of the
Relationship Agreement is to ensure that the Company is capable at all times
of carrying on its business independently of the Controlling Shareholders
and their associates, that transactions and relationships with the Controlling
Shareholders and their associates are at arm’s length and on normal
commercial terms (subject to the rules on related party transactions in the
Listing Rules) and to ensure the Controlling Shareholders do not take any
action that would prevent the Company from complying with, or circumvent,
the Listing Rules. The Relationship Agreement will stay in effect until the earlier
of: (i) the Controlling Shareholders ceasing to own in aggregate an interest in
at least 10% or more of the Ordinary Shares in the Company (or an interest
which carries 10% or more of the aggregate voting rights in the Company from
time to time); or (ii) the Ordinary Shares ceasing to be listed on the premium
listing segment of the Official List and admitted to trading on the London Stock
Exchange’s Main Market for listed securities. The Company has complied with
the independence provisions included in the Relationship Agreement and, so
far as the Company is aware, such provisions have been complied with during
the period under review by the controlling shareholders and their associates.
Significant contracts and change of control
The Company has a large number of contractual arrangements which it
believes are essential to the business of the Company. These can be split
into three main categories, which are a committed bank facility, prime broker
arrangements, and market data and technology contracts. The committed
bank facility includes provisions which may, on a change of control, require any
outstanding borrowings to be repaid or result in termination of the facilities.
The Group’s share and incentive plans include usual provisions relating to
change of control. There are no agreements providing for compensation for
the Directors or employees on a change of control.
120 – CMC Markets plc
Annual Report and Financial Statements 2023
Statutory information contained elsewhere in the report
Information required to be part of this Directors’ report can be found elsewhere in the Annual Report as indicated below. These sections are deemed to be
incorporated by reference into the Directors’ report:
Information
Section 172 statement and stakeholder engagement (including clients and suppliers)
Employees (employment of disabled persons and employee engagement)
Employee share schemes
Financial risk management, objectives and policies
Future developments
Internal controls over financial reporting
Directors’ interests in shares of the Company
Related party transactions
Greenhouse gas emissions, energy consumption and energy efficiency action
TCFD disclosures
Disclosure table pursuant to Listing Rule LR 9.8.4C
Listing Rule
Information to be included
9.8.4(1)
Interest capitalised by Group.
9.8.4(2)
Unaudited financial information (LR 9.2.18R).
Disclosure
None.
None.
Location in Annual Report
Pages 14 to 19
Pages 42 to 45
Note 31, pages 174 to 176
Note 30, pages 167 to 174
Page 23
Page 86
Pages 114 and 117
Note 34, page 181
Page 48
Pages 50 to 59
9.8.4(4)
Long-term incentive scheme information involving Board Directors
(LR 9.4.3R).
Details can be found on pages 110 to 114 of the Directors’ remuneration
report.
9.8.4(5)
Waiver of emoluments by a Director.
9.8.4(6)
Waiver of future emoluments by a Director.
9.8.4(7)
Non-pre-emptive issues of equity for cash.
9.8.4(8)
Non-pre-emptive issues of equity for cash in relation to major
subsidiary undertakings.
None.
None.
None.
None.
9.8.4(9)
Listed company is a subsidiary of another company.
Not applicable.
9.8.4(10)
Contracts of significance involving a Director or a Controlling
Shareholder.
None, except for Lord Cruddas’ service contract.
9.8.4(11)
Contracts for the provision of services by a Controlling Shareholder. None, except for Lord Cruddas’ service contract.
9.8.4(12)
Shareholder waiver of dividends.
9.8.4(13)
Shareholder waiver of future dividends.
9.8.4(14)
Agreement with Controlling Shareholder.
Substantial shareholdings
Information provided to the Company by substantial shareholders pursuant
to the DTRs is published via a Regulatory Information Service and on the
Company’s website. The table below sets out details of the shareholdings of
Lord Peter Andrew Cruddas and Mrs Fiona Cruddas, and further provides
details of the interests in the voting rights of the Company’s Ordinary issued
share capital as at 31 March 2023, notified to the Company under DTR
5. Holdings may have changed since being notified to the Company as
notification of any change is not required until the next applicable threshold
is crossed.
The trustees of the CMC Markets plc Employee Share Trust have a dividend
waiver in place in respect of Ordinary Shares which are its beneficial property.
The trustees of the CMC Markets plc Employee Share Trust have a dividend
waiver in place in respect of Ordinary Shares which are its beneficial property.
See Controlling Shareholder Disclosure on page 120 of the Directors’
report.
Shareholder
As at 31 March 2023
Lord Peter Andrew Cruddas
Aberforth Partners LLP
Schroders Plc
Mrs Fiona Cruddas
Number of
voting rights
165,155,374
14,446,286
14,167,409
8,994,364
% of
voting rights
59.02
5.00
4.90
3.21
Between the year end and 6 June 2023 (being the latest practicable date)
there have been no changes notified to us in respect of these holdings.
The shareholdings of CMC Markets plc Directors are listed within the
Directors’ remuneration report on pages 114 and 117.
121 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Directors’ report continued
Articles of Association
Any amendments to the Company’s Articles of Association may only be made
by passing a special resolution at a general meeting of the shareholders of
the Company.
Research and development
The Group continues to invest in the development of the trading and investing
platforms in addition to maintaining existing infrastructure, with considerable
effort applied by the technical and software development teams. In addition,
the Group has capitalised development costs relating to new product
and functionality development. During the year development expenditure
amounting to £11.3 million has been capitalised (2022: £8.5 million).
Directors’ statement as to disclosure of information to auditor
The Directors who held office at the date of approval of this Directors’
report confirm that, so far as they each are aware, there is no relevant audit
information (being information needed by the external auditor in connection
with preparing their audit report) of which the Company’s external auditor is
unaware, and each Director has taken all the steps that he or she is obliged
to take as a Director in order to make himself/herself aware of any relevant
audit information and to establish that the Company’s auditor is aware of
that information. This confirmation is given pursuant to Section 418 of the
Companies Act 2006.
Independent auditor
In accordance with Section 489 and Section 492 of the Companies Act 2006,
resolutions to reappoint Deloitte LLP as the Company’s auditor and authorise
the Group Audit Committee to determine the auditor’s remuneration will be put
to the 2023 AGM.
Political donations
No political donations were made by the Company during the year.
Annual General Meeting
The 2023 AGM is to be held at 10.00 am. on Thursday 27 July 2023 at 133
Houndsditch, London EC3A 7BX.
Due to the Controlling Shareholder disclosure on page 120, the independent
shareholders’ voting results on the re-election of independent Non-Executive
Directors (excluding the Chairman) will be disclosed when the voting
results are published. Should the required percentage of the independent
shareholders’ vote to approve re-election not be achieved, then a further vote
will be held at a subsequent general meeting within the prescribed time period.
Events after the reporting period
of the Group and parent company and of the profit or loss of the Group for that
period. In preparing the Financial Statements, the Directors are required to:
– select suitable accounting policies and then apply them consistently;
– state whether applicable UK-adopted international accounting standards
have been followed, subject to any material departures disclosed and
explained in the Financial Statements;
– make judgements and accounting estimates that are reasonable and
prudent; and
– prepare the Financial Statements on the going concern basis unless it is
inappropriate to presume that the Group and parent company will continue
in business.
The Directors are also responsible for safeguarding the assets of the Group
and parent company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Group’s and parent company’s
transactions and disclose with reasonable accuracy at any time the financial
position of the Group and parent company and enable them to ensure that the
Financial Statements and the Directors’ remuneration report comply with the
Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the
parent company’s website. Legislation in the United Kingdom governing
the preparation and dissemination of Financial Statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual Report and Financial Statements,
taken as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group and parent
company’s position and performance, business model and strategy.
Each of the Directors, whose names and functions are listed on pages 76 to
78, confirm that, to the best of their knowledge:
– the Group and parent company Financial Statements, which have been
prepared in accordance with UK-adopted international accounting
standards, give a true and fair view of the assets, liabilities and financial
position of the Group and parent company, and of the profit of the
Group; and
– the Strategic report includes a fair review of the development and
performance of the business and the position of the Group and parent
company, together with a description of the principal risks and uncertainties
that it faces.
The Annual Report and Financial Statements were approved by the Board on
13 June 2023.
Details of events occurring subsequent to the year end are made in note 37.
By order of the Board
Statement of Directors’ responsibilities in respect of the
Financial Statements
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare Financial Statements for each
financial year. Under that law the Directors have prepared the Group and
the parent company Financial Statements in accordance with UK-adopted
international accounting standards.
Deborah Fish
Company Secretary
13 June 2023
Under company law the Directors must not approve the Financial Statements
unless they are satisfied that they give a true and fair view of the state of affairs
CMC Markets plc
Registered number: 05145017
122 – CMC Markets plc
Annual Report and Financial Statements 2023
Financial
statements
Financial statements
Independent auditor’s report
124
133 Consolidated income statement
134 Consolidated statement of comprehensive income
135 Consolidated statement of financial position
136 Parent company statement of financial position
137 Consolidated statement of changes in equity
138 Parent company statement of changes in equity
139 Consolidated and parent company statements of
cash flows
140 Notes to the consolidated and parent company
financial statements
Shareholder information
183 Shareholder information
188 Appendices
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Independent auditor’s report
To the members of CMC Markets plc
Report on the audit of the Financial Statements
1. Opinion
In our opinion the Financial Statements of CMC Markets plc (the “parent company”) and its subsidiaries (the “Group”):
– give a true and fair view of the state of the Group’s and of the parent company’s affairs as at 31 March 2023 and of the Group’s profit for the year then ended;
– the Group Financial Statements have been properly prepared in accordance with United Kingdom adopted international accounting standards and International
Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB);
– the parent company Financial Statements have been properly prepared in accordance with United Kingdom adopted international accounting standards and as
applied in accordance with the provisions of the Companies Act 2006; and
– the Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the Financial Statements which comprise:
– the Consolidated Income Statement;
– the Consolidated Statement of Comprehensive Income;
– the Consolidated Statement of Financial Position;
– the parent company Statement of Financial Position;
– the Consolidated and parent company Statements of Changes in Equity;
– the Consolidated and parent company Cash Flow Statements;
– the statement of significant accounting policies; and
– the related notes 1 to 37.
The financial reporting framework that has been applied in the preparation of the Group Financial Statements is applicable law, United Kingdom adopted
international accounting standards and IFRSs as issued by the IASB. The financial reporting framework that has been applied in the preparation of the parent
company Financial Statements is applicable law and United Kingdom adopted international accounting standards and as applied in accordance with the provisions
of the Companies Act 2006.
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are
further described in the auditor’s responsibilities for the audit of the Financial Statements section of our report.
We are independent of the Group and the parent company in accordance with the ethical requirements that are relevant to our audit of the Financial Statements
in the UK, including the Financial Reporting Council’s (“FRC’s”) Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. The non-audit services provided to the Group and parent company for the year are disclosed in note 8 to the
Financial Statements. We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical Standard to the Group or the parent company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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3. Summary of our audit approach
Key audit matters
The key audit matters identified in the current year are:
– the carrying value of intangible assets under development relating to CMC Invest; and
– presentation of positions with hedging counterparties.
Materiality
The materiality that we used for the Group Financial Statements was £2.6 million, determined on the basis of profit before tax
from continuing operations (“PBT”).
When planning the Group audit, we considered the risk of errors that may exist which, when aggregated, could exceed £2.6 million.
In order to reduce the risk of unidentified errors that could aggregate to this amount, we used a lower materiality, known as
performance materiality, of £1.82 million to identify the individual balances, classes of transaction and disclosures that were
subject to audit.
We asked the teams carrying out audit procedures over in-scope entities to perform their audit procedures to an assigned
materiality which reflects the magnitude of operations subject to audit.
Scoping
This is the first-year audit for Deloitte, having been appointed auditor of the Group and parent company for the year ended
31 March 2023.
Significant changes in our
approach
Our audit scoping is performed on the basis of financial significance and consideration of qualitative factors. Throughout
our transition and in order to gain a detailed understanding of the Group and parent company, we performed a number of
procedures, including but not limited to: understanding the business and its operating environment; performing walkthroughs
of key business process cycles; and carrying out reviews of the audit files of the predecessor auditor.
We have identified three financially-significant entities across the Group, which were subject to full-scope audit procedures
and six entities which are subject to audit procedures on specified account balances.
Our Group audit achieved a coverage of 99% of Group Total Assets, 99% of Group Revenue, and 98% of Group PBT across
management’s business segments.
Key audit matters:
‘Cryptocurrency assets (Group)’ and ‘Investment in subsidiaries (parent company)’ were considered key audit matters by the
predecessor auditor however we did not consider them to represent key audit matters for the current year audit. This is due to
enhancements in the control environment relating to cryptocurrency assets, and sufficient recoverable assets available in the
underlying subsidiaries of the parent company.
We have identified a new key audit matter for this year over the presentation of positions with hedging counterparties. The
right to offset positions requires compliance with International Accounting Standard 32: (“IAS 32”), including the interpretation
of supporting contractual documentation. The financial year 2022 comparative amounts were restated to present, on a gross
basis, positions which were previously offset.
4. Conclusions relating to going concern
In auditing the Financial Statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the Financial
Statements is appropriate.
Our evaluation of the directors’ assessment of the Group’s and parent company’s ability to continue to adopt the going concern basis of accounting included:
– obtaining an understanding of management’s evaluative process to arrive at their conclusion to prepare the Financial Statements on a going concern basis;
– with the involvement of our regulatory specialists, challenging the liquidity and capital stress testing assumptions used by management, including consideration of
management actions and whether applied stresses were reasonable in the context of the Group’s and parent company’s operating environment;
– assessing emerging operational and market risks facing the Group and parent company, including the impact of ongoing volatility in global financial markets;
– assessing the key assumptions supporting the Group’s and parent company’s latest budget forecasts;
– assessing the historical accuracy of forecasts prepared by management; and
– assessing the appropriateness of going concern disclosures made in the notes to the Financial Statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast
significant doubt on the Group’s and parent company’s ability to continue as a going concern for a period of at least 12 months from when the Financial Statements
are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the
Directors’ statement in the Financial Statements about whether the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
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5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements of the current period and
include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the
greatest effect on the overall audit strategy, the allocation of resources in the audit, and the direction of the efforts of the audit engagement team.
These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
5.1 Carrying value of intangible assets under development relating to CMC Invest
Key audit matter
description
The Group has capitalised a total of £12.1 million of intangible assets relating to the UK CMC Invest trading platform - a multi-year development
programme to build a full-service, non-leveraged, wealth management business in the UK (“CMC Invest”) (see note 12). The platform was officially
launched across the UK on 30 September 2022, and offered a limited number of products and features with a pipeline of new products and
features to be added over the coming months.
How the scope
of our audit
responded to
the key audit
matter
Capitalisation of expenditure on internally-generated intangible assets is subjective and involves judgement on the part of management in respect
of whether such expenditure qualifies for recognition in accordance with International Accounting Standard 38: Intangible Assets (“IAS 38”).
Capitalised expenditure comprises the time spent on the development of the intangible asset, by both internal staff and external contractors.
Furthermore, a high degree of management judgement is required to assess capitalised expenditures for impairment. This is due to challenges in
developing accurate forecasts to support value-in-use (“ViU”) assessments where the business is at a nascent stage. Given the subjective nature
of the key assumptions underpinning these forecasts and their unobservability with reference to available market data, we have deemed this to
be a key audit matter.
Discount rates, useful economic life, cost per trading customer acquisition, customer retention rates, average portfolio sizes and B2B revenues
represent significant sources of estimation uncertainty, as disclosed in note 1 on page 141.
This matter is also discussed in the Group Audit Committee report on pages 87 to 90.
We obtained a detailed understanding of the relevant controls established by the Group over the capitalisation of expenses relating to CMC
Invest, as well as the associated financial reporting processes. Our audit procedures in respect of capitalisation and impairment included the
following:
– an evaluation of whether costs were eligible for capitalisation, in accordance with IAS 38;
– an assessment of the appropriateness of the basis of measurement model supporting the ViU assessment;
– an evaluation of management’s valuation methodologies with reference to standard valuation practices;
– the development of independent estimates for the key inputs to the value-in-use calculation, which were compared against the inputs used by
management;
– involving our corporate finance specialist to apply specialist knowledge and audit procedures tailored for inherent valuation risk as
described above;
– obtaining an understanding of the methodology applied in management’s assessment of whether objective evidence of an impairment loss
exists; and
– an evaluation of the appropriateness of disclosures made in relation to CMC Invest.
Key observations We found the carrying value of the intangible asset to have been based on reasonable, supportable assumptions, noting that appropriate
disclosures are provided in the Financial Statements.
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5. Key audit matters continued
5.2 Presentation of positions with hedging counterparties
Key audit matter
description
As disclosed in note 30, the Group economically hedges its derivative exposure arising from open client positions by entering into trades with
several hedging counterparties (“Brokers”). The Group’s position versus each Broker consists of collateral and open trade equity (“unrealised
gains or losses across multiple contracts”), typically across multiple currencies.
These hedge trades are collateralised in accordance with underlying contractual documentation, consisting of International Swaps and
Derivatives Association (“ISDA”) agreements and their respective Credit Support Annexes (“CSAs”) which govern the relationship between CMC
and each respective Broker.
Per IAS 32: Financial Instruments – Presentation (“IAS 32”), paragraph 42, “a financial asset and a financial liability shall be offset, and the net
amount presented in the statement of financial position when, and only when, an entity:
(a) currently has a legally enforceable right to set off the recognised amounts; and
(b) intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.”
The evaluation of whether the IAS 32 offsetting criteria as set out above have been met requires management to interpret and apply the specific
terms of the underlying contractual documentation, as well as have an understanding of the operational realities in respect of settlement and the
posting or receiving of collateral payments. This evaluation will result in either gross or net presentation of these positions, which has a material
impact to the balance sheet.
Although management’s intent is to realise these positions on a net basis, they determined that the offsetting criterion outlined in (a), above
and in respect of positions with certain brokers, had not been met. The accounting treatment applied in previous years was, therefore, not in
accordance with IAS 32.
As a result, management have restated the financial year 2022 comparative amounts where previously-offset positions were required to be
presented on a gross basis with the impact of this restatement set out in note 33.
This matter is also discussed in the Group Audit Committee report on pages 87 to 90.
How the scope
of our audit
responded to the
key audit matter
We have performed the following procedures to evaluate whether the IAS 32 offsetting criteria as set out above have been met, and whether
offsetting is permissible:
– assessed the contractual documentation underpinning the Group’s relationship with each Broker, in place in the current and prior years, to
determine whether the Group has a legally-enforceable right to offset the underlying positions, and cash flows across multiple currencies;
– held discussions with management and, for each Broker relationship, evaluated the operational processes in place to determine
management’s intent in respect of gross or net settlement; and
– alongside our technical accounting specialists, held discussions with the Group’s in-house legal counsel to challenge management’s
interpretation of the terms of the underlying contractual documentation.
We also evaluated the appropriateness of disclosures in relation to the restatement of prior year comparative figures.
Key observations We found that the positions with hedging counterparties are presented appropriately, including the associated disclosures with respect to the
restatement of the prior year comparative figures. We have communicated a control deficiency to the Group Audit Committee around the need
to further enhance the process where the underlying contractual realities are assessed in accordance with IFRS.
6. Our application of materiality
Materiality
We define materiality as the magnitude of misstatement in the Financial Statements that makes it probable that the economic decisions of a reasonably
knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows:
Group Financial Statements
Parent company Financial Statements
Materiality
£2.6 million (2022 predecessor auditor: £4.6 million)
£1.68 million (2022 predecessor auditor: £1.7 million)
5% of PBT. This is consistent with the benchmark and threshold
applied in the prior year by the predecessor auditor.
Basis and
rationale for
determining
materiality
Rationale for the
benchmark
applied
PBT is an appropriate basis for materiality as the Group is profit-
orientated. This measure is considered significant to the users of the
Financial Statements as earnings are used to predict future share
price and the Group’s ability to make dividend distributions.
We have used 1% of Net Assets as the materiality benchmark as the
parent company of the Group primarily holds investments in
underlying subsidiaries.
This is consistent with the benchmark and threshold used in the prior
year by the predecessor auditor.
Net Assets is an appropriate basis for materiality as CMC Markets plc
is a holding company for the Group, therefore this measure would be
significant to the users of the Financial Statements.
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6. Our application of materiality continued
Materiality continued
PBT
PBT £52.20m
95+5
Group materiality
Group materiality £2.60m
Component materiality range
£1.30m to £2.50m
Audit Committee
reporting threshold
£0.13m
6.2 Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the
materiality for the Financial Statements as a whole.
Performance materiality
(% of materiality)
Basis and rationale for determining
performance materiality
Group Financial Statements
Parent company Financial Statements
70% (2022 predecessor auditor 75%) of Group materiality
70% (2022 predecessor auditor 75%) of parent
company materiality
In determining performance materiality, we considered the following factors:
– the fact that this is the first year of external audit being undertaken by Deloitte;
– the quality of the control environment and whether we were able to rely on controls;
– control observations identified by internal audit and the predecessor auditor; and
– the nature, volume and size of misstatements identified in the prior year audit.
6.3 Error reporting threshold
We agreed with the Group Audit Committee (“GAC”) that we would report to it all audit differences in excess of £130,000 (2022 predecessor auditor: £227,000),
as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the GAC on disclosure matters that we
identified when assessing the overall presentation of the Financial Statements.
7. An overview of the scope of our audit
7.1 Identification and scoping of Group entities
The scope of our Group audit was determined by obtaining an understanding of the Group and its environment, including Group-wide controls, our review of the
audit files of the predecessor auditor, and our assessment of the risks of material misstatement at the level of the Group Financial Statements. The Group comprises
several entities globally, and has operations in over 10 countries. As such, a portion of our audit planning effort was dedicated to ensuring that the scope of work
performed is appropriate in order to address the identified risks of material misstatement.
The factors that we considered when assessing the scope of the CMC Markets plc audit, and the level of work to be performed at the entities that are in scope for
Group reporting purposes, include the following:
– the nature of the Group and the parent company, how entities are organised, and the significant extent of centralisation of the control environment and the
processing of transactions across the Group;
– the financial significance of an entity to the Group’s PBT, Revenue and Total Assets, including consideration of the financial significance of specific account
balances or transactions;
– the effectiveness of the control environment and monitoring activities, including entity-level controls; and
– findings, observations and audit differences that we noted through review of the predecessor audit files.
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7. An overview of the scope of our audit continued
7.1 Identification and scoping of Group entities continued
As a result, we identified three financially-significant entities (2022 predecessor auditor: four entities) which are subject to full scope audit procedures. Our audit
procedures in respect of these entities were performed to a materiality in the range of £1.3m - £2.5m.
In addition, audit procedures on specified account account balances were performed across six entities which were not considered to be financially significant
(2022 predecessor auditor: 2 entities).
The remaining entities are not individually significant to the Group, and include a number of small, low risk entities and balances. On aggregate, these represent 2%
of Group PBT, 1% of Group Revenue and 1% of Group Total Assets. For these entities, we performed analytical reviews and undertook additional risk assessment
procedures. We also tested management’s Group-wide controls across these entities. We concluded that through these additional procedures, we have reduced
the audit risk of the detection of a material misstatement to a sufficiently low level.
Audit procedures were performed for entities subject to full-scope audit and audit of specified account balances by audit teams based in both the UK (Group audit
team) and Australia.
The audit of the Group consolidation is performed by the Group audit team. In addition, the Group audit team performed audit procedures over the Group’s global
trading Revenues (CFD), and the corresponding Trade Receivables.
7.2 Our consideration of the control environment
Our audit approach was to place reliance on management’s relevant controls where we found the controls to be designed and operating effectively. Our controls
testing procedures comprised an assessment of the design and implementation, and the testing of a sample of control iterations across the year to determine the
operating effectiveness, of each relevant control. These procedures consisted of a combination of enquiry, observation, inspection and re-performance.
In some situations, we were not able to take a controls reliance approach due to identified deficiencies in internal control, where insufficient mitigating or alternative
controls could instead be relied upon. In such situations, we adopted a non-controls reliant (i.e. fully substantive,) approach. All control deficiencies which we
considered to be significant were communicated to the GAC. Please refer to the Group Audit Committee report on pages 87 to 90. All other deficiencies were
communicated to management. For all deficiencies identified, we considered the impact on our audit plan and the need to adjust our audit approach accordingly.
The nature of the Group’s information technology (“IT”) environment is complex, and we scoped various the Group’s IT infrastructure according to their relevance to
the entity’s financial reporting process.
We planned to rely on the General IT controls (“GITCs”) associated with these systems, where these GITC were appropriately designed, implemented, and operating
effectively. To test the operating effectiveness of GITCs we worked alongside our IT specialists to perform testing on access security, change management, data
centre operations and network operations. In some instances, we identified GITCs did not operate effectively across the full year, requiring additional substantive
procedures to be performed in order to mitigate the risk, allowing us to maintain a controls-reliant approach in the impacted areas.
7.3 Our consideration of climate-related risks
In planning our audit, we have considered the impact of climate change on the Group’s operations and subsequent impact on its Financial Statements. The Group
sets out its assessment of the potential impact on pages 50 to 59 of the Strategic Report of the Annual Report.
We have held discussions with the Group to understand their:
– process for identifying affected operations, including governance and controls over this process, and the subsequent effect on the Group’s financial reporting; and
– long-term strategy to respond to climate change risks as they evolve, including the impact on the Group’s forecasts.
Our audit work involved:
– obtaining an understanding of management’s analysis, used to inform the Group’s climate risk assessment; and
– assessing the sufficiency and extent of disclosures in the Annual Report and the consistency between the Financial Statements and the remainder of the
Annual Report.
Or audit procedures require us to read and consider these disclosures, and to evaluate whether they are materially inconsistent with the Financial Statements or
knowledge obtained in the performance of our audit. We did not identify any such material inconsistencies as a result of these procedures.
7.4 Working with other auditors
The Group audit team are responsible for the scope and direction of the audit process and provide direct oversight, review, and coordination of our global audit
teams. We interacted regularly with each team during each stage of the audit and reviewed key working papers. We maintained continuous and open dialogue with
our global teams in addition to holding formal meetings so that we were fully aware of their progress and results of their procedures.
The Group audit team conducted in-person visits, in addition to remote communication, to exercise engagement and oversight with the Australian audit team. These
meetings included discussing the audit approach including risk assessments and any issues arising from the audit team’s work, meeting with local management, and
reviewing key audit working papers on higher and significant-risk areas to drive a consistent and high quality audit. In addition, a global planning meeting was held
virtually in September 2022, led by the Group audit team, partners and staff from full scope entity audit teams, as well audit teams responsible for testing in support of
local, statutory audits globally.
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8. Other information
The other information comprises the information included in the Annual Report other than the Financial Statements and our auditor’s report thereon. The Directors
are responsible for the other information contained within the Annual Report.
Our opinion on the Financial Statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express
any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or
our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in
the Financial Statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement, the Directors are responsible for the preparation of the Financial Statements and for being satisfied
that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of Financial Statements that are free
from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, the Directors are responsible for assessing the Group’s and the parent company’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 Group or
the parent company or to cease operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.
A further description of our responsibilities for the audit of the Financial Statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to
detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is
detailed below.
11.1 Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered
the following:
– the nature of the industry and sector, control environment and business performance including the design of the Group’s remuneration policies, key drivers for
Directors’ remuneration and bonus levels;
– the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or error that was approved by the Board on 31 May 2023;
– results of our enquiries of management, internal audit, Directors, and the Audit Committee about their own identification and assessment of the risks of
irregularities, including those that are specific to the Group’s sector;
– any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
• identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
• detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud
• the internal controls established to mitigate risks of fraud or non-compliance with laws and regulation.
– the matters discussed among the audit engagement team, including financially-significant entity audit teams, and relevant internal specialists, including tax,
valuations, and IT specialists regarding how and where fraud might occur in the Financial Statements and any potential indicators of fraud. These discussions also
involved fraud specialists with whom the engagement team discussed fraud schemes that had arisen in similar sectors and industries.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential
for fraud in the following areas:
– Carrying value of intangible assets under development relating to CMC Invest.
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11. Extent to which the audit was considered capable of detecting irregularities, including fraud continued
11.1 Identifying and assessing potential risks related to irregularities continued
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisions of those laws and regulations that had
a direct effect on the determination of material amounts and disclosures in the Financial Statements. The key laws and regulations we considered in this context
included the UK Companies Act, as well as those laws and regulations prevailing in each country in which we identified a full-scope entity.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the Financial Statements but compliance with which may be
fundamental to the Group’s ability to operate or to avoid a material penalty. These included the Group’s obligations under respective regulatory regimes, transaction
reporting, capital and liquidity requirements.
11.2 Audit response to risks identified
As a result of performing the above, we identified the carrying value of intangible assets under development relating to CMC Invest as a key audit matter related to the
potential risk of fraud. The key audit matters section of our report explains the matter in more and also describes the specific procedures we performed in response
to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
– reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations
described as having a direct effect on the Financial Statements;
– enquiring of management, the Audit Committee and external legal counsel concerning actual and potential litigation and claims;
– performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
– reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with relevant tax authorities and
regulatory bodies; and
– in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether
the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that
are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, including internal specialists and global
audit teams, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the strategic report and the directors’ report for the financial year for which the Financial Statements are prepared is consistent with the
Financial Statements; and
– the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent company and their environment obtained in the course of the audit, we have not
identified any material misstatements in the strategic report or the directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance
Statement relating to the Group’s compliance with the Provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially
consistent with the Financial Statements and our knowledge obtained during the audit:
– the Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out
on page 66;
– the Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate set out on page 66;
– the Directors’ statement on fair, balanced and understandable set out on page 84;
– the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 67;
– the section of the Annual Report that describes the review of effectiveness of risk management and internal control systems set out on page 86; and
– the section describing the work of the Audit Committee set out on pages 87 to 90.
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14. Matters on which we are required to report by exception
14.1 Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– we have not received all the information and explanations we require for our audit; or
– adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not
visited by us; or
– the Parent Company Financial Statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2 Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’ remuneration have not been made or the part of the
Directors’ remuneration report to be audited is not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1 Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by the members on 28 July 2022 to audit the Financial Statements for the year ending 31
March 2023 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 1 year.
15.2 Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with ISAs (UK).
16. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s 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 Company and the Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (“FCA”) Disclosure Guidance and Transparency Rule (“DTR”) 4.1.14R, these Financial Statements will form part of
the European Single Electronic Format (“ESEF”) prepared Annual Financial Report filed on the National Storage Mechanism of the UK FCA in accordance with the
ESEF Regulatory Technical Standard (“ESEF RTS”). This auditor report provides no assurance over whether the annual financial report has been prepared using the
single electronic format specified in the ESEF RTS.
Fiona Walker, FCA (Senior Statutory Auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
13 June 2023
132 – CMC Markets plc
Annual Report and Financial Statements 2023
Consolidated income statement
For the year ended 31 March 2023
GROUP
Revenue
Interest income
Total revenue
Introducing partner commissions and betting levies
Net operating income
Operating expenses
Operating profit
Finance costs
Profit before taxation
Taxation
Profit for the year attributable to owners of the parent
Earnings per share
Basic earnings per share
Diluted earnings per share
Year ended
31 March 2023
£’000
311,210
13,927
325,137
(36,714)
288,423
(233,945)
54,478
(2,315)
52,163
(10,724)
41,439
14.7p
14.6p
Year ended
31 March 2022
(Restated)
£’000
325,809
834
326,643
(44,693)
281,950
(188,291)
93,659
(2,164)
91,495
(20,016)
71,479
24.6p
24.5p
Note
4
3
5
7
8
9
10
10
As permitted by Section 408 of the Companies Act 2006, the Company has not presented its own income statement or statement of comprehensive income.
The Company had no other comprehensive income.
133 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information
Consolidated statement of comprehensive income
For the year ended 31 March 2023
GROUP
Profit for the year
Other comprehensive income/(expense):
Items that may be subsequently reclassified to income statement
Loss on net investment hedges, net of tax
Gains recycled from equity to the income statement
Currency translation differences
Changes in the fair value of debt instruments at fair value through other comprehensive income, net of tax
Other comprehensive (expense)/income for the year
Note
27
27
27
27
Year ended
31 March 2023
£’000
41,439
Year ended
31 March 2022
(Restated)
£’000
71,479
(86)
237
(1,760)
(210)
(1,819)
(1,089)
—
1,761
(54)
618
Total comprehensive income for the year attributable to owners of the parent
39,620
72,097
134 – CMC Markets plc
Annual Report and Financial Statements 2023
Consolidated statement of financial position
At 31 March 2023
GROUP
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax assets
Financial investments
Trade and other receivables
Total non-current assets
Current assets
Trade and other receivables
Derivative financial instruments
Current tax recoverable
Other assets
Financial investments
Amounts due from brokers
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Amounts due to brokers
Derivative financial instruments
Share buyback liability
Borrowings
Lease liabilities
Current tax payable
Provisions
Total current liabilities
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
EQUITY
Equity attributable to owners of the Company
Share capital
Share premium
Capital redemption reserve
Own shares held in trust
Other reserves
Retained earnings
Total equity
Total equity and liabilities
31 March 2023
Note
£’000
31 March 2022
(Restated)
£’000
12
13
14
19
16
16
17
18
19
20
21
17
22
23
24
23
14
24
25
25
25
26
27
35,342
22,771
4,768
34
2,666
65,581
130,616
14,231
9,066
1,984
30,572
188,154
146,218
520,841
586,422
182,284
8,927
2,033
—
—
5,590
431
815
30,328
23,170
6,022
13,448
1,797
74,765
148,208
8,788
1,649
13,443
14,497
208,882
176,578
572,045
646,810
212,626
12,394
3,679
27,264
194
4,949
1,729
369
200,080
263,204
6,228
4,012
2,087
12,327
9,302
3,309
2,117
14,728
212,407
277,932
70,573
46,236
2,901
(1,509)
(50,535)
306,349
374,015
586,422
73,193
46,236
281
(1,094)
(75,980)
326,242
368,878
646,810
The Financial Statements on pages 133 to 182 were approved by the Board of Directors on 13 June 2023 and signed on its behalf by:
Lord Cruddas
Chief Executive Officer
Euan Marshall
Chief Financial Officer
135 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information
Parent company statement of financial position
At 31 March 2023
Company registration number: 05145017
COMPANY
ASSETS
Non-current assets
Investment in subsidiary undertakings
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Share buyback liability
Total current liabilities
Total liabilities
EQUITY
Equity attributable to owners of the Company
Share capital
Share premium
Capital redemption reserve
Share buyback reserve
Own shares held in trust
Retained earnings at 1 April
Profit for the year attributable to the owners
Other changes in retained earnings
Retained earnings at 31 March
Total equity
Total equity and liabilities
31 March 2023
Note
£’000
31 March 2022
(Restated)
£’000
15
16
20
21
25
25
25
27
26
167,090
167,090
1,932
586
2,518
169,608
122
—
122
122
70,573
46,236
2,901
—
(1,509)
78,396
33,763
(60,874)
51,285
169,486
169,608
167,722
167,722
1,020
28,446
29,466
197,188
176
27,264
27,440
27,440
73,193
46,236
281
(27,264)
(1,094)
49,156
102,841
(73,601)
78,396
169,748
197,188
The Financial Statements on pages 133 to 182 were approved by the Board of Directors on 13 June 2023 and signed on its behalf by:
Lord Cruddas
Chief Executive Officer
Euan Marshall
Chief Financial Officer
136 – CMC Markets plc
Annual Report and Financial Statements 2023
Capital
redemption
reserve
£’000
Own shares
held in trust
£’000
Consolidated statement of changes in equity
For the year ended 31 March 2023
GROUP
Note
At 31 March 2021 (Reported)
Correction of errors
At 1 April 2021 (Restated)
Profit for the year
Loss on net investment hedges, net of tax
Currency translation differences
Changes in the fair value of debt instruments at
fair value through other comprehensive income,
net of tax
Total comprehensive income for the year
New shares issued
Acquisition of own shares held in trust
Utilisation of own shares held in trust
Share buyback
Share-based payments
Tax on share-based payments
Dividends
At 31 March 2022 (Restated)
Profit for the year
Loss on net investment hedges, net of tax
Gains recycled from equity to the income statement
Currency translation differences
Changes in the fair value of debt instruments at
fair value through other comprehensive income,
net of tax
Total comprehensive income for the year
Acquisition of own shares held in trust
Utilisation of own shares held in trust
Share buyback
Share-based payments
Dividends
26
26
25
11
26
26
25
11
Share
capital
£’000
73,299
—
73,299
—
—
—
—
—
175
—
—
(281)
—
—
—
73,193
—
—
—
—
—
—
—
—
(2,620)
—
—
Share
premium
£’000
46,236
—
46,236
—
—
—
—
—
—
—
—
—
—
—
—
46,236
—
—
—
—
—
—
—
—
—
—
—
At 31 March 2023
70,573
46,236
—
—
—
—
—
—
—
—
—
—
—
281
—
—
—
281
—
—
—
—
—
—
—
—
2,620
—
—
2,901
Other
reserves
£’000
(49,334)
—
(49,334)
—
(1,089)
1,761
(54)
618
—
—
—
(27,264)
—
—
—
(75,980)
—
(86)
237
(1,760)
Retained
earnings
£’000
330,698
(968)
329,730
71,479
—
—
Total
equity
£’000
400,517
(968)
399,549
71,479
(1,089)
1,761
—
(54)
71,479
72,097
—
—
—
(2,975)
59
553
(72,604)
326,242
41,439
—
—
—
175
(1,006)
294
(30,239)
59
553
(72,604)
368,878
41,439
(86)
237
(1,760)
(210)
—
(210)
(1,819)
41,439
39,620
—
—
27,264
—
—
—
—
(27,264)
972
(35,040)
(1,106)
691
—
972
(35,040)
(382)
—
(382)
—
—
—
—
—
—
(1,006)
294
—
—
—
—
(1,094)
—
—
—
—
—
—
(1,106)
691
—
—
—
(1,509)
(50,535)
306,349
374,015
137 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Capital
redemption
reserve
£’000
Share buyback
reserve
£’000
Own shares
held in trust
£’000
—
—
—
—
—
—
—
(27,264)
—
—
(382)
(382)
—
—
(1,006)
294
—
—
—
Retained
earnings
£’000
49,153
3
49,156
102,841
—
—
—
1,978
(2,975)
(72,604)
Total equity
£’000
168,688
(379)
168,309
102,841
175
(1,006)
294
1,978
(30,239)
(72,604)
(27,264)
(1,094)
78,396
169,748
—
—
—
—
27,264
—
—
(1,106)
691
—
—
—
33,763
—
—
1,430
(27,264)
(35,040)
33,763
(1,106)
691
1,430
—
(35,040)
—
(1,509)
51,285
169,486
—
—
—
—
—
—
—
281
—
281
—
—
—
—
2,620
—
2,901
Parent company statement of changes in equity
For the year ended 31 March 2023
COMPANY
At 31 March 2021 (Reported)
Correction of errors
At 1 April 2021 (Restated)
Profit and total comprehensive income
for the year
New shares issued
Acquisition of own shares held in trust
Utilisation of own shares held in trust
Share-based payments
Share buyback
Dividends
At 31 March 2022 (Restated)
Profit and total comprehensive income
for the year
Acquisition of own shares held in trust
Utilisation of own shares held in trust
Share-based payments
Share buyback
Dividends
Note
Share capital
£’000
Share premium
£’000
73,299
—
73,299
46,236
—
46,236
—
175
—
—
(281)
—
—
—
—
—
—
—
73,193
46,236
—
—
—
—
(2,620)
—
—
—
—
—
—
—
26
26
25
11
26
26
25
11
At 31 March 2023
70,573
46,236
138 – CMC Markets plc
Annual Report and Financial Statements 2023
Consolidated and parent company statements of cash flows
For the year ended 31 March 2023
GROUP
COMPANY
Year ended
31 March 2023
Note
£’000
Year ended
31 March 2022
(Restated)
£’000
Year ended
31 March 2023
£’000
Year ended
31 March 2022
(Restated)
£’000
Cash flows from operating activities
Cash generated from operations
Interest income
Finance costs
Tax paid
28
76,584
13,950
(2,315)
(17,060)
171,128
1,742
(2,138)
(14,651)
Net cash generated from operating activities
71,159
156,081
Cash flows from investing activities
Purchase of property, plant and equipment
Investment in intangible assets
Purchase of financial investments
Proceeds from maturity of financial investments
Outflow on net investment hedges
Amounts contributed by subsidiaries in relation to share based
payments
Dividends received
(7,091)
(21,130)
(17,345)
14,415
(8)
—
—
(3,500)
(12,313)
(28,337)
27,511
(998)
—
—
Net cash (used in)/generated from investing activities
(31,159)
(17,637)
Cash flows from financing activities
Repayment of borrowings
Proceeds from borrowings
Principal elements of lease payments
Acquisition of own shares
Payments for share buyback
Dividends paid
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of the year
20
20
(1,194)
1,000
(5,454)
(1,106)
(27,264)
(35,040)
(69,058)
(29,058)
176,578
(1.302)
(10,945)
10,000
(4,808)
(831)
(2,975)
(72,604)
(82,163)
56,281
118,921
1,376
607
—
(318)
—
289
—
—
—
—
—
1,001
34,260
35,261
—
—
—
(1,106)
(27,264)
(35,040)
13,921
—
(475)
—
13,446
—
—
—
—
—
1,030
103,617
104,647
(13,549)
—
—
(831)
(2,975)
(72,604)
(63,410)
(89,959)
(27,860)
28,446
—
28,134
312
—
28,446
146,218
176,578
586
Please refer to note 33 for more information on the restatement for the year ended 31 March 2022.
139 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information
Notes to the consolidated and parent company financial statements
For the year ended 31 March 2023
1. General information and basis of preparation
Corporate information
CMC Markets plc (the “Company”) is a public company limited by shares incorporated in the United Kingdom and domiciled in England and Wales under the
Companies Act 2006. The nature of the operations and principal activities of CMC Markets plc and its subsidiaries (collectively the “Group”) are set out in note 3.
Functional and presentation currency
Items included in the Financial Statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the
entity operates (the “functional currency”). The Group’s Financial Statements are presented in Sterling (GBP), which is the Company’s functional and the Group’s
presentation currency. Foreign operations are included in accordance with the policies set out in note 2.
Going concern
The Directors have prepared the Financial Statements on a going concern basis which requires the Directors to have a reasonable expectation that the Group has
adequate resources to continue in operational existence for a period of at least 12 months from the date of approval of the Financial Statements.
The Group has considerable financial resources, 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 reasonable expectation that the Group has adequate resources for that period and believe it is appropriate to adopt the going
concern basis in preparing the Financial Statements. Further details are set out in the Viability statement on page 66.
Basis of accounting
The Financial Statements of the Group and the Company 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.
The Financial Statements of the Group and the Company have been prepared in accordance with the going concern basis, under the historical cost convention,
except in the case of “Financial instruments at fair value through profit or loss (“FVPL”)” and “Financial instruments at fair value through other comprehensive income
(“FVOCI”)”. The financial information is rounded to the nearest thousand except where otherwise indicated.
The Company and Group’s principal accounting policies adopted in the preparation of these Financial Statements are set out in note 2 below. These policies have
been consistently applied to all years presented, with the exception of the adoption of the new and revised standards as set out below. The Financial Statements
presented are at and for the years ended 31 March 2023 and 31 March 2022. Financial annual years are referred to as 2023 and 2022 in the Financial Statements.
Application of new and revised accounting standards
The following standards and interpretations applied for the first time in the current financial year, but do not have a significant impact on the Financial Statements of
the Company and the Group:
Reference to the conceptual framework – Amendments to IFRS 3
Annual improvements to IFRS Standards 2018-2020
New accounting standards in issue but not yet effective
At the date of authorisation of the Financial Statements, the following new standards and interpretations relevant to the Company and the Group were in issue but not
yet effective and have not been applied to the Financial Statements:
IFRS 17 “Insurance Contracts”
Classification of Liabilities as Current or Non-current – Amendments to IAS 1
Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2
Definition of Accounting Estimate – Amendments to IAS 8
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12
The Directors do not expect that the adoption of the Standards listed above will have a material impact on the Financial Statements of the Company and the Group in
future periods.
Basis of consolidation
The Financial Statements incorporate the financial information of the Company and its subsidiaries. Subsidiaries are all entities over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power to direct the activities of the entity.
CMC Markets plc became the ultimate holding company of the Group under a Group reorganisation in 2006. The pooling of interests method of accounting was applied
to the Group reorganisation as it fell outside the scope of IFRS 3 “Business Combinations”. The Directors adopted the pooling of interests as they believed it best reflected
the true nature of the Group. All other business combinations have been accounted for by the acquisition method of accounting.
Under the acquisition method of accounting, the identifiable assets, liabilities and contingent liabilities of a subsidiary are measured initially at their fair values at the date of
acquisition, irrespective of the extent of any minority interest. The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Income
Statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Acquisition-related costs are expensed as incurred.
Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies used into line with those adopted by the Group.
All inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
140 – CMC Markets plc
Annual Report and Financial Statements 2023
1. General information and basis of preparation continued
Significant accounting judgements and estimates
The preparation of Financial Statements in conformity with IFRSs requires the use of certain significant accounting judgements. It also requires management
to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or where
assumptions and estimates are significant to the Consolidated Financial Statements are:
Contingent liabilities
Judgement has been applied in evaluating the accounting treatment of the specific matters described in note 35 (Contingent Liabilities), notably the probability of any
obligation or future payments arising.
Accounting for cryptocurrencies
The Group has recognised £1,984,000 (31 March 2022: £13,443,000) of cryptocurrency assets and rights to cryptocurrency assets on its Statement of Financial
Position as at 31 March 2023. 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 Consolidated
Statement of Financial Position. Please refer to Note 2 for other assets accounting policy.
Intangible assets
The Group has recognised £13,550,000 (31 March 2022: £14,237,000) of customer relationship intangible on its Statement of Financial Position as at 31 March 2023
relating to the transaction with Australia and New Zealand Banking Group Limited (“ANZ’’) to transition its portfolio of Share Investing clients to CMC for AUD$25
million. A judgement has been made to apply the recognition and measurement principles of IAS 38 “Intangibles” in accounting for these assets.
Key financial estimates
The Group has recognised £11,316,000 (31 March 2022: £7,965,000) of internally generated software in intangible assets on its Statement of Financial Position
as at 31 March 2023, of which £5,016,000 (31 March 2022: £6,054,000) relates to the development of CMC Invest UK trading platform. In performing the annual
impairment assessment, which concluded that no impairment was required, it was determined that the recoverable amount of the asset is a source of estimation
uncertainty which is sensitive to the estimated future revenues from the CMC Invest UK business. We found the recoverable amount of the intangible asset to have
been based on reasonable, supportable assumptions. B2B revenue, discount rates, useful economic life, cost per trading customer acquisition, customer retention
rates and average portfolio sizes represent significant sources of estimation uncertainty. Relevant disclosure is included in note 12.
2. Summary of significant accounting policies
Total revenue
Revenue
Revenue comprises the fair value of the consideration received from the provision of online financial services in the ordinary course of the Group’s activities, net of
client rebates. Revenue is shown net of value added tax after eliminating sales within the Group.
The Group generates revenue principally from commissions, spreads and financing income associated with stockbroking and acting as a spread bet and contract
for difference market maker to its clients, and the transactions undertaken to hedge the resulting risks.
Trading – Contracts for difference (“CFD”) and spread bet
Revenue from CFD and spread bet represents:
– fees paid by clients for commission and funding charges in respect of the opening, holding and closing of financial spread bets and contracts for difference,
together with the spread and fair value gains and losses for the Group arising on client trading activity; less
– fees paid by the Group in commissions and funding charges arising in respect of hedging the risk associated with the client trading activity and the Group’s
currency exposures, together with the spread and fair value gains and losses incurred by the Group arising on hedging activity.
Spread, fair value gains and losses, commission and funding charges are accounted for in accordance with IFRS 9 “Financial Instruments” and IFRS 13 “Fair Value
Measurement”. Commission income is earned and recognised when the trade is placed, and funding charges when an open position is held by a customer at
5:00pm New York time. Open client and hedging positions are fair valued on a daily basis and the unrealised gains and losses arising on this valuation are recognised
in revenue, alongside realised gains and losses on positions that have closed.
Investing – Stockbroking revenue from contracts with customers
Revenue from the provision of financial information and stockbroking services to third parties represents fee and commission income. These are are accounted for
in accordance with IFRS 15 “Revenue from Contracts with Customers”. The Group recognises this revenue when the amount for the service can be determined and
the performance obligation has been satisfied, this leads to the revenue being recognised on the date of the Group providing the service to the client.
Other revenue from contracts with customers
Other revenue from the provision of financial information, dormancy fees and balance conversions are accounted for in accordance with IFRS 15 “Revenue from
Contracts with Customers”.
Interest income
Total revenue also includes interest earned on the Group’s own funds, Money market funds, clients’ funds and net broker trading deposits net of interest paid to clients
on their free cash balance. Interest income is accrued based on the effective interest rate method, by reference to the principal outstanding/free cash held and at
the interest rate applicable. In addition, the Group earns interest income on UK government securities held as financial investments, calculated using the effective
interest method.
141 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information 2. Summary of significant accounting policies continued
Total revenue continued
Interest income continued
Finance lease income is allocated to accounting periods to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the
leases. This is presented within other interest income.
Introducing partner commissions and betting levies
Commissions payable to introducing partners and spread betting levies are charged to the income statement when the associated revenue is recognised and are
disclosed as a deduction from total revenue in deriving net operating income. Betting levy is payable on net gains generated from clients on spread betting and the
Countdowns products.
Segmental reporting
The Group’s segmental information is disclosed in a manner consistent with the internal reporting provided to the chief operating decision maker (“CODM”). The
chief operating decision maker, who is responsible for allocating resources and assessing the performance of the operating segments, has been identified as the
CMC Markets plc Board. Operating segments that do not meet the quantitative thresholds required by IFRS 8 are aggregated. The segments are subject to annual
review and the comparatives restated to reflect any reclassifications within the segmental reporting.
Share-based payment
The Group issues equity settled and cash settled share-based payments to certain employees.
Equity settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at date of grant. The fair value
determined at the grant date of the equity settled share-based payment is expensed on a straight-line basis over the vesting period, based on the Group’s estimate
of shares that will eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of
the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the income statement such that the
cumulative expense reflects the revised estimate, with a corresponding adjustment to the retained earnings.
The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and
behavioural considerations.
Cash settled share-based payments are measured at expected value at vesting date at least once per year, along with the likelihood of meeting non-market-based
vesting conditions and the number of shares that are expected to vest. The cost is recognised in the income statement with a corresponding liability recorded.
Retirement benefit costs
A defined contribution plan is a post-employment benefit plan into which the Group pays fixed contributions to a third-party pension provider and has no legal or
constructive obligation to pay further amounts. Contributions are recognised as staff expenses in profit or loss in the years during which related employee services
are fulfilled.
The Group operates defined contribution pension schemes for its Directors and employees. The assets of the schemes are held separately from those of the Group
in independently administered funds.
Taxation
The tax expense represents the sum of tax currently payable and movements in deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the Consolidated Income Statement
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.
The Group’s liability for current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount
of assets and liabilities in the financial information and the corresponding tax basis used in the computation of taxable profit. In principle, deferred tax liabilities are
recognised for all temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences may be utilised. Deferred tax is calculated using tax rates and laws enacted or substantively enacted by the balance sheet date and
are expected to apply when the asset or liability is settled.
Such assets and liabilities are not recognised if the temporary difference arises from the goodwill or from the initial recognition (other than in a business combination)
of other assets and liabilities in a transaction, which affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal
of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
Current and deferred tax is charged or credited in the Consolidated Income Statement, except when it relates to items credited or charged directly to equity, in which
case the tax is also dealt with in equity.
142 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 2. Summary of significant accounting policies continued
Foreign currencies
Transactions denominated in currencies, other than the functional currency, are recorded at the rates of exchange prevailing on the date of the transaction. At each
balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains
and losses arising on retranslation are included in the income statement for the year, except for exchange differences arising on non-monetary assets and liabilities
where the changes in fair value are recognised directly in equity.
On consolidation, the assets and liabilities of the Group’s overseas operations are translated at exchange rates prevailing on the balance sheet date. Income
and expense items are translated at the average exchange rates applicable to the relevant year. Exchange differences arising, if any, are classified as equity and
transferred to the Group’s translation reserve.
Such translation differences are recognised as income or expense in the year in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
Intangible assets
Goodwill
Goodwill represents the excess of the cost of acquisition over the fair value of the Group’s interest in the identifiable assets, liabilities and contingent liabilities
of a subsidiary, at the date of acquisition. Goodwill arising on the acquisition of subsidiaries is included within “intangible assets” at cost less accumulated
impairment losses.
Goodwill is tested for impairment annually. Any impairment is recognised immediately in the Consolidated Income Statement and is not subsequently reversed. On
disposal of a subsidiary, the attributed amount of goodwill, which has not been subject to impairment, is included in the determination of the profit or loss on disposal.
Goodwill is allocated to cash-generating units for purposes of impairment testing. The allocation is made to those cash-generating units or groups of cash-
generating units that are expected to benefit from the business combination, identified according to business segment.
Computer software (purchased and developed)
Purchased software is recognised as an intangible asset at cost when acquired. Costs associated with maintaining computer software are recognised as an
expense as incurred. Costs directly attributable to internally developed software are recognised as an intangible asset only if all of the following conditions are met:
– it is technically feasible to complete the software so that it will be available for use;
– management intends to complete the software and use it;
– there is an ability to use the software;
– it can be demonstrated how the software will generate probable future economic benefits;
– adequate technical, financial and other resources to complete the development and to use the software are available; and
– the expenditure attributable to the software during its development can be reliably measured.
Where the above conditions are not met, costs are expensed as incurred. Directly attributable costs that are capitalised include contractor costs associated with the
development of software. Costs which have been recognised as an asset are amortised on a straight-line basis over the asset’s estimated useful life from the point at
which the asset is ready to use.
Trademarks and trading licences
Trademarks and trading licences that are separately acquired are capitalised at cost and those acquired from a business combination are capitalised at the fair value
at the date of acquisition. Amortisation is charged to the income statement on a straight-line basis over their estimated useful lives.
Client relationships
The fair value attributable to client relationships acquired through a business combination is included as an intangible asset and amortised over the estimated useful
life on a straight-line basis. The fair value of client relationships is calculated at the date of acquisition on the basis of the expected future cash flows to be generated
from that asset. Separate values are not attributed to internally generated client relationships.
Following initial recognition, computer software, trademarks and trading licences and client relationships are carried at cost or initial fair value less accumulated
amortisation. Amortisation is provided on all intangible assets at rates calculated to write off the cost, less estimated residual value based on prices prevailing at the
balance sheet date, of each asset on a straight-line basis over its expected useful life as follows:
Item
Computer software (purchased and developed)
Trademarks and trading licences
Client relationships
Amortisation policy
3–10 years or life of licence
10–20 years
10-14 years
Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis. Assets under development are transferred
to the relevant intangible asset class and amortised over their useful life from the point at which the asset is ready to use. Assets under development are tested for
impairment annually.
143 – CMC Markets plc
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Strategic reportGovernanceFinancial statementsShareholder information 2. Summary of significant accounting policies continued
Property, plant and equipment
Property, plant and equipment (“PPE”) is stated at cost less accumulated depreciation and any recognised impairment loss. Cost includes the original purchase
price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is provided on all PPE at rates calculated to
write off the cost, less estimated residual value based on prices prevailing at the balance sheet date, of each asset on a straight-line basis over its expected useful life
as follows:
Item
Furniture, fixtures and equipment
Computer hardware
Leasehold improvements
Depreciation policy
5 years
5 years
15 years or life of lease
The useful lives and residual values of the assets are assessed annually and may be adjusted depending on a number of factors. In reassessing asset lives, factors
such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as
future market conditions, the remaining life of the asset and projected disposal values. Consideration is also given to the extent of current profits and losses on the
disposal of similar assets.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset
and is recognised in the Consolidated Income Statement.
Investment in subsidiary undertakings
In the Parent Company Statement of Financial Position, investment in subsidiary undertakings is stated at cost less any provision for impairment.
Impairment of assets
Assets subject to amortisation or depreciation are reviewed for impairment if events or changes in circumstances indicate that the carrying amount of the asset
may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
The recoverable amount is the higher of fair value less cost to sell and value in use. Value in use is the estimated discounted future cash flows generated from the
asset’s continued use, including those from its ultimate disposal. Net realisable value is the estimated amount at which an asset can be disposed of, less any direct
selling costs.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount.
Impairment losses are recognised as an expense immediately.
An assessment is made at each balance sheet date as to whether there is any indication that previously recognised impairment losses may no longer exist or may
have decreased. If such indication exists, the recoverable amount is estimated and previously recognised impairment losses are reversed only if there has been a
change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of
the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, had no impairment
loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.
Financial instruments
Classification
The Group classifies its financial assets in the following measurement categories:
– those to be measured subsequently at fair value (either through other comprehensive income (“OCI”), or through profit or loss); and
– those to be measured at amortised cost.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset measured through other comprehensive income or at
amortised cost, transaction costs that are both incremental and directly attributable to the acquisition of the financial asset. Regular way transactions are recognised
on trade date.
The Group subsequently measures cash and cash equivalents, amounts due from brokers and trade and other receivables at amortised cost. The Group
subsequently measures derivative financial instruments at fair value through profit or loss, unless designated as instrument in an effective hedge accounting
relationship, and financial investments at fair value through other comprehensive income.
Derecognition of financial assets and liabilities
A financial asset or liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expired.
Cash and cash equivalents
Cash and cash equivalents comprises of cash on hand and short-term deposits. 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. This includes money market funds.
Amounts due from/due to brokers
Amounts due from/due to brokers represent funds placed with hedging counterparties, a proportion of which are posted to meet broker margin requirements.
All financial instruments used as hedges held for trading are margin traded. Assets or liabilities resulting from profits or losses on open positions are recognised
separately as derivative financial instruments, where IAS 32 offsetting criteria is not met.
144 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 2. Summary of significant accounting policies continued
Other assets
Other assets represent cryptocurrencies controlled by the Group. The Group offers CFDs on cryptocurrencies as a product that can be traded on its platform. As
part of a wider hedging strategy, the Group purchases and sells cryptocurrencies to hedge the clients’ positions.
The Group holds cryptocurrency assets for trading in the ordinary course of its business, effectively acting as a commodity broker-dealer in respect of the underlying
cryptocurrency asset. The assets are recognised on trade date and measured at fair value with changes in valuation being recorded in the income statement in the
period in which they arise. Cryptocurrency assets are not financial instruments, and they are categorised as non-financial assets.
Trade and other receivables
Trade receivables primarily comprise amounts due from clients and stockbroking settlement balances. They are short term in nature are recognised initially at fair
value and subsequently measured at amortised cost using the effective interest method, less an allowance for expected credit losses.
Trade receivables are short term and do not contain a significant financing element and therefore expected credit losses 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.
The expected loss model for these trade receivables has been built based on the levels of loss experienced, with due consideration given to forward-looking information.
The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement within
net impairment gains/(losses) on financial assets. When a trade receivable is uncollectable, it is written off against the allowance account for trade receivables.
Subsequent recoveries of amounts previously written off are credited against net impairment gains/(losses) in the income statement.
Financial investments
Under IFRS 9, financial assets that are debt instruments held in a business model that is achieved by both collecting contractual cash flows and selling and that
contain contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest (‘‘SPPI’’) are measured at FVOCI.
Financial investments in UK Government securities are non-derivative financial assets and are recognised on a trade date basis. These financial investments are
initially measured at fair value plus directly related transactions costs. They are re-measured at fair value. Interest calculated using the effective interest method is
recognised in the income statement. All other net gains and losses are recognised directly in other comprehensive income until the assets are sold or disposed of. On
derecognition, gains and losses accumulated in OCI are reclassified to the income statement.
Financial investments in Equity securities are non-derivative financial assets and are recognised on a trade date basis and are measured at FVTPL.
The Group recognises a charge for expected credit losses in the income statement. As financial investments are measured at fair value, the charge does not adjust
the carrying value of the asset, and this is reflected in other comprehensive income.
Derivative financial instruments
Derivative financial instruments, comprising index, commodities, foreign exchange and treasury futures and forward foreign exchange contracts, are classified as “fair
value through profit or loss” under IFRS 9, unless designated as accounting hedges. Derivatives are initially recognised at fair value. Subsequent to initial recognition,
changes in fair value of derivatives that are not designated as accounting hedges, and gains or losses on their settlement, are recognised in the income statement.
For accounting hedges, the Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk
management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an
ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The Group categorises certain derivatives as either:
Held for trading
The Group uses derivative financial instruments in order to economically hedge derivative exposures arising from open client positions, which are classified as
held for trading. All derivatives held for trading are carried in the statement of financial position at fair value with gains or losses recognised in revenue in the income
statement.
Held as hedges of net investments in foreign operations
Where a foreign currency derivative financial instrument is a formally designated accounting hedge of a net investment in a foreign operation, foreign exchange
differences arising on translation of the financial instrument are recognised in the net investment hedging reserve via other comprehensive income to the extent the
hedge is effective. The Group assesses the effectiveness of its net investment hedges based on fair value changes due to foreign exchange risk of its net assets and
the fair value changes of the relevant financial instrument. The gain or loss relating to the ineffective portion is recognised immediately in operating expenses in the
income statement. Accumulated gains and losses recorded in the net investment hedging reserve are recognised in operating costs in the income statement on
disposal of the foreign operation.
Economic hedges (held as hedges of monetary assets and liabilities, financial commitments or forecast transactions)
These are derivatives held to mitigate the foreign exchange risk on monetary assets and liabilities, financial commitments or forecast transactions. Where a derivative
financial instrument is used as an economic hedge of the foreign exchange exposure of a recognised monetary asset or liability, financial commitment or forecast
transaction, but does not meet the criteria to qualify for hedge accounting under IFRS, no hedge accounting is applied and any gain or loss resulting from changes in
fair value of the hedging instrument is recognised in operating costs in the income statement.
145 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information 2. Summary of significant accounting policies continued
Trade and other payables
Trade and other payables are not interest bearing and are stated at fair value on initial recognition and subsequently at amortised cost.
Leases
Under IFRS 16, when the Group is the lessee, it is required to recognise both:
– a lease liability, measured at the present value of remaining cash flows on the lease; and
– a right-of-use (ROU) asset, measured at the amount of the initial measurement of the lease liability, plus any lease payments made prior to commencement date
initial direct costs, and estimated costs of restoring the underlying asset to the condition required by the lease, less any lease incentives received.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the
lease is not readily determinable.
Subsequently, the lease liability will increase for the accrual of interest, resulting in a constant rate of return throughout the life of the lease, and reduce when the
payments are made. The right of use asset will amortise to the income statement over the life of the lease. The lease liability is remeasured when there is a change in
one of the following:
– future lease payments arising from a change in an index or rate;
– the Group’s estimate of the amount expected to be payable under a residual value guarantee; or
– the Group’s assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the ROU asset, or is recorded in the income statement if the
carrying amount of the ROU asset has been reduced to £nil.
On the Consolidated Statement of Financial Position, the ROU assets are included within property, plant and equipment.
The Group applies the short-term lease recognition exemption to its short-term leases (i.e. those leases that have a lease term of 12 months or less from the
commencement date). Lease payments on short-term leases are recognised as expense on a straight-line basis over the lease term.
Extension and termination options are included in a number of property leases in the Group. Management considers the facts and circumstances that may create an
economic incentive to exercise an extension or termination option in order to determine whether the lease term should include or exclude such options. Extension
or termination options are only included within the lease term if they are reasonably certain to be exercised in the case of extension options and not exercised in the
case of termination options.
The Group enters into lease agreements as a lessor with respect to some of its vehicles that it leases under head leases. When the Group is an intermediate lessor,
it accounts for the head lease and the sub-lease as two separate contracts. The sub-lease of vehicles is classified as a finance lease. Amounts due from the lessees
under finance leases are recognised as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting
periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.
Borrowings
All loans and borrowings are initially recognised at cost, being the fair value of the consideration received, net of issue costs associated with the borrowing. After
initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Amortised cost is
calculated by taking into account any issue costs, and any discount or premium on settlement.
Provisions
A provision is a liability of uncertain timing or amount that is recognised when the Group has a present obligation (legal or constructive) as a result of a past event
where it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to
settle the obligation at the balance sheet date and are discounted to present value where the effect is material. The increase in the provision due to the unwind of the
discount to present value over time is recognised as an interest expense.
Share capital
Ordinary and Deferred Shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
Own shares held in trusts
Shares held in trust by the Company for the purposes of employee share schemes are classified as a deduction from shareholders’ equity and are recognised at
cost. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of equity shares.
Capital redemption reserve
The capital redemption reserve was created for capital maintenance purposes as a result of the share buyback programme. When shares are repurchased out of the
Company’s profits, the amount by which the Company’s issued share capital is diminished must be transferred to the capital redemption reserve. This amount is the
nominal value of the shares bought back. See note 25.
146 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 2. Summary of significant accounting policies continued
Share buyback reserve
The share buyback reserve was created as a result of the share buyback programme and on inception of the contract amounted to the full value of the share
buyback programme plus directly attributed costs. As shares are repurchased, the share buyback reserve amount is reduced by the consideration paid for the
repurchased shares with a corresponding transaction recorded within retained earnings to reflect the consumption of distributable profits. See note 27.
Employee benefit trusts
Assets held in employee benefit trusts (“EBT”) are recognised as assets of the Group, until these vest unconditionally to identified employees. A full provision is made
in respect of assets held by the trust as there is an obligation to distribute these assets to the beneficiaries of the employee benefit trust.
The employee benefit trusts own equity shares in the Company. These investments in the Company’s own shares are held at cost and are included as a deduction
from equity attributable to the Company’s equity owners until such time as the shares are cancelled or transferred. Where such shares are subsequently transferred,
any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the
Company’s equity owners.
Client money
The Group holds money on behalf of clients in accordance with the Client Asset (“CASS”) rules of the FCA and other financial markets regulators in the countries in
which the Group operates. Segregated client funds comprise individual client balances which are pooled in segregated client money bank accounts. Segregated
client money bank accounts hold statutory trust status restricting the Group’s ability to use the monies and accordingly such amounts and are not recognised on the
Group’s Statement of Financial Position.
3. Segmental reporting
The Group’s principal business is providing leveraged online retail financial services and providing its clients with the ability to trade contracts for difference (“CFD”)
and financial spread betting on a range of underlying shares, indices, foreign currencies, commodities and treasuries. The Group also makes these services available
to institutional partners through white label and introducing broker arrangements. The Group’s CFDs are traded worldwide; spread bets only in the UK and Ireland
and the Group provides stockbroking services only in Australia. The Group’s business is generally managed on a geographical basis and, for management purposes,
the Group is organised into four segments:
– Trading – CFD and spread bet – UK and Ireland (“UK & IE”);
– Trading – CFD – Europe;
– Trading – CFD – Australia, New Zealand and Singapore (“APAC”) and Canada; and
– Investing – Stockbroking – Australia.
These segments are in line with the management information received by the chief operating decision maker (“CODM”). Revenues and segment operating
expenses are allocated to the segments that originated the transaction.
Operating expenses in the central segment relate to costs that are not directly related to activities in one region or are not controlled by regional management.
These centrally generated costs are allocated to segments on an equitable basis, mainly based on revenue, headcount or active client levels, or where central
costs are directly attributed to specific segments. An impairment of £432,000 relating to internally generated computer software assets was recognised in Trading
segment in UK and Ireland during the period.
UK & IE
£’000
98,579
3,762
102,341
(7,398)
94,943
(28,147)
GROUP
Revenue
Interest income
Total revenue
Introducing partner commissions
and betting levies
Net operating income
Segment operating expenses
Segment contribution
Allocation of central finance
operating expenses
Year ended 31 March 2023
Trading
Europe
£’000
50,620
239
50,859
APAC &
Canada
£’000
106,329
3,390
Trading total
£’000
255,528
7,391
109,719
262,919
Investing
Australia
£’000
55,682
6,536
62,218
(353)
(11,209)
(18,960)
(17,754)
Central
£’000
Group total
£’000
—
—
—
—
311,210
13,927
325,137
(36,714)
288,423
(233,945)
50,506
(7,405)
98,510
(26,459)
243,959
(62,011)
44,464
(14,282)
—
(157,652)
66,796
43,101
72,051
181,948
30,182
(157,652)
54,478
(48,075)
(32,649)
(45,861)
(126,585)
(31,067)
157,652
—
Operating profit / (loss)
18,721
10,452
26,190
55,363
Finance costs
Allocation of central finance costs
(566)
(513)
(331)
(163)
(199)
(364)
(1,096)
(1,040)
(885)
(179)
—
—
54,478
(1,040)
1,040
(2,315)
—
Profit / (loss) before taxation
17,642
9,958
25,627
53,227
(1,064)
—
52,163
147 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information 3. Segmental reporting continued
GROUP
Revenue
Interest income
Total revenue
Introducing partner commissions and betting levies
Net operating income
Segment operating expenses
Segment contribution
Allocation of central operating expenses
Year ended 31 March 2022 (Restated)
Trading
Europe
£’000
45,312
—
45,312
(1,517)
43,795
(6,480)
37,315
(30,597)
APAC &
Canada
£’000
118,911
335
119,246
(10,527)
108,719
(22,755)
85,964
(40,689)
Trading total
£’000
251,391
(78)
251,313
(18,321)
232,992
(48,656)
184,336
(106,813)
Investing
Australia
£’000
74,418
912
75,330
(26,372)
48,958
(10,422)
38,536
(22,400)
UK & IE
£’000
87,168
(413)
86,755
(6,277)
80,478
(19,421)
61,057
(35,527)
Central
£’000
—
—
—
—
—
(129,213)
(129,213)
129,213
Group total
£’000
325,809
834
326,643
(44,693)
281,950
(188,291)
93,659
—
Operating profit
25,530
6,718
45,275
77,523
16,136
—
93,659
Finance costs
Allocation of central finance costs
(419)
(474)
(290)
(207)
(195)
(411)
(904)
(1,092)
(168)
—
(1,092)
1,092
(2,164)
—
Profit before taxation
24,637
6,221
44,669
75,527
15,968
—
91,495
The measurement of net operating income for segmental analysis is consistent with that in the income statement and is broken down by geographic location and
business line below.
Year ended 31 March 2023
£’000
Year ended 31 March 2022
£’000
Net operating income by geography
Trading
Investing
Total
UK
Australia
Other countries
94,943
46,850
102,166
—
44,464
—
94,943
91,314
102,166
Total net operating income
243,959
44,464
288,423
Trading
80,478
49,020
103,494
232,992
Investing
—
48,958
—
48,958
Total
80,478
97,978
103,494
281,950
The Group uses “segment contribution” to assess the financial performance of each segment. Segment contribution comprises operating profit for the year before
finance costs and taxation and an allocation of central operating expenses.
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 and business line of the assets, is shown below.
UK
Australia
Other countries
Total non-current assets
4. Total revenue
Revenue
GROUP
Trading
Investing
Other
Total
Year ended 31
March 2023
£’000
Total
30,996
25,348
4,469
60,813
Year ended 31
March 2022
(Restated)
£’000
Total
39,397
26,254
3,092
68,743
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
252,012
55,687
3,511
247,987
74,326
3,496
311,210
325,809
Trading revenue (previously presented as leveraged revenue) represents CFD and spread bet revenue (net of hedging costs) accounted for in accordance with IFRS
9 “Financial Instruments’’. Investing revenue (previously presented as non-leveraged revenue) represents stockbroking revenue accounted for in accordance with
IFRS 15 “Revenue from Contracts with Customers’’.
148 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 4. Total revenue continued
Interest income
GROUP
Bank and broker interest
Interest on financial investments
Other interest income
Total
The Group earns interest income from its own corporate funds and from segregated client funds.
5. Operating expenses
GROUP
Net staff costs (note 6)
IT costs
Sales and marketing
Premises
Legal and professional fees
Regulatory fees
Depreciation and amortisation
Bank charges
Irrecoverable sales tax
Other
Capitalised internal software development costs
Operating expenses
The above presentation reflects the breakdown of operating expenses by nature of expense.
6. Employee information
The aggregate employment costs of staff and Directors were:
GROUP
Wages and salaries
Social security costs
Other pension costs
Share-based payments
Total Directors and employee costs
Contract staff costs
Capitalised internal software development costs
Net staff costs
Compensation of key management personnel is disclosed in note 34.
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
13,482
440
5
13,927
825
9
—
834
Year ended
31 March 2023
£’000
101,560
33,723
38,304
5,706
8,605
9,436
15,637
7,362
2,972
10,810
234,115
(170)
233,945
Year ended
31 March 2022
(Restated)
£’000
84,862
28,721
27,363
4,510
8,568
5,576
12,388
7,642
2,789
6,344
188,763
(472)
188,291
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
92,758
11,850
2,743
2,229
109,580
3,101
112,681
(11,121)
101,560
74,352
9,475
2,230
2,418
88,475
3,880
92,355
(7,493)
84,862
149 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information 6. Employee information continued
The monthly average number of Directors and employees of the Group during the year is set out below:
GROUP
By activity:
Key management
Client acquisition and maintenance
IT development and support
Global support functions
Total Directors and employees
Contract staff
Total staff
The Company had no employees during the current year or prior year.
7. Finance costs
GROUP
Interest and fees on bank borrowings
Interest on lease liabilities
Other finance costs
Total
8. Profit before taxation
GROUP
Profit before tax is stated after charging/(crediting):
Depreciation
Amortisation and impairment of intangible assets
Net foreign exchange gain/(loss)
Auditor’s remuneration for audit and other services (see below)
Fees payable to the Company’s auditor, Deloitte LLP (year ended 31 March 2022: PricewaterhouseCoopers LLP), were as follows:
GROUP
Audit services
Audit of CMC Markets plc’s Financial Statements
Audit of CMC Markets plc’s subsidiaries
Total audit fees
Non-audit services
Audit-related services
Total non-audit fees
Total fees
150 – CMC Markets plc
Annual Report and Financial Statements 2023
Year ended
31 March 2023
Number
Year ended
31 March 2022
Number
9
489
315
254
1,067
20
1,087
8
420
252
215
895
22
917
Year ended
31 March 2023
£’000
1,657
658
—
2,315
Year ended
31 March 2023
£’000
9,962
5,675
1,044
2,490
Year ended
31 March 2022
(Restated)
£’000
1,451
687
26
2,164
Year ended
31 March 2022
(Restated)
£’000
9,568
2,820
(1,179)
2,057
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
814
978
1,792
698
698
2,490
659
780
1,439
618
618
2,057
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023
Financial Statements
9. Taxation
GROUP
Analysis of charge for the year
Current tax:
Current tax on profit for the year
Adjustments in respect of previous years
Total current tax
Deferred tax:
Origination and reversal of temporary differences
Adjustments in respect of previous years
Impact of change in tax rate
Total deferred tax
Total tax
Year ended
31 March 2023
£’000
Year ended
31 March 2022
(Restated)
£’000
9,873
(991)
8,882
1,180
200
462
1,842
18,521
(465)
18,056
1,698
409
(147)
1,960
10,724
20,016
The standard rate of UK corporation tax charged was 19% with effect from 1 April 2017. Taxation outside the UK is calculated at the rates prevailing in the respective
jurisdictions. The effective tax rate of 20.56% (year ended 31 March 2022: 21.86%) differs from the standard rate of UK corporation tax of 19% (year ended 31 March
2022: 19%). The differences are explained below:
GROUP
Profit before taxation
Profit multiplied by the standard rate of corporation tax in the UK of 19% (year ended 31 March 2022: 19%)
Adjustment in respect of foreign tax rates
Adjustments in respect of previous years
Impact of change in tax rate
Expenses not deductible for tax purposes
Income not subject to tax
Recognition of previously unrecognised tax losses
Tax losses for which no deferred tax asset recognised
Other differences
Total tax
GROUP
Tax on items recognised directly in equity
Tax credit on share-based payments
10. Earnings per share (“EPS”)
Year ended
31 March 2023
£’000
52,163
9,911
1,205
(791)
462
49
—
(132)
173
(153)
Year ended
31 March 2022
(Restated)
£’000
91,495
17,384
2,500
(56)
(147)
291
(62)
—
(43)
149
10,724
20,016
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
—
553
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 year 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.
GROUP
Earnings attributable to Ordinary Shareholders (£’000)
Weighted average number of shares used in the calculation of basic EPS (’000)
Dilutive effect of share options (’000)
Weighted average number of shares used in the calculation of diluted EPS (’000)
Basic EPS
Diluted EPS
Year ended
31 March 2023
Year ended
31 March 2022
(Restated)
41,439
282,295
1,598
283,893
14.7p
14.6p
71,479
290,815
1,022
291,837
24.6p
24.5p
For the year ended 31 March 2023, 1,598,000 (year ended 31 March 2022: 1,022,000) potentially dilutive weighted average Ordinary Shares in respect of share
awards in issue were included in the calculation of diluted EPS.
151 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information
Notes to the consolidated and parent company financial statements continued
For the year ended 31 March 2023
11. Dividends
GROUP AND COMPANY
Declared and paid in each year
Final dividend for 2022 at 8.88p per share (2021: 21.43p)
Interim dividend for 2023 at 3.50p per share (2022: 3.50p)
Total
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
25,250
9,790
35,040
62,410
10,194
72,604
The final dividend for 2023 of 3.90 pence per share, amounting to £10,913,000 was proposed by the Board on 12 June 2023 and has not been included as a liability
at 31 March 2023. The dividend will be paid on 11 August 2023, following approval at the Company’s Annual General Meeting, to those members on the register at the
close of business on 14 July 2023. The dividends paid or declared in relation to the financial year are set out below:
GROUP AND COMPANY
Declared per share
Interim dividend
Final dividend
Total dividend
12. Intangible assets
GROUP
Cost
At 1 April 2021
Additions
Transfers
Disposals
Foreign currency translation
At 31 March 2022
Additions
Transfers
Foreign currency translation
At 31 March 2023
Accumulated amortisation and impairment
At 1 April 2021
Charge for the year
Disposals
Foreign currency translation
At 31 March 2022
Charge for the year
Impairment
Foreign currency translation
At 31 March 2023
Carrying amount
At 1 April 2021
At 31 March 2022
At 31 March 2023
Year ended
31 March 2023
Pence
Year ended
31 March 2022
Pence
3.50
3.90
7.40
3.50
8.88
12.38
Goodwill
£’000
11,500
—
—
—
—
11,500
—
—
—
Computer
software
£’000
Trademarks and
trading licences
£’000
Client
relationships
£’000
Assets under
development
£’000
125,995
77
5,246
—
869
132,187
291
12,803
(1,290)
1,397
—
—
(356)
11
1,052
23
—
(29)
2,995
—
—
—
100
3,095
—
14,103
(703)
6,148
21,736
(5,246)
—
970
23,608
11,316
(26,906)
(311)
Total
£’000
148,035
21,813
—
(356)
1,950
171,442
11,630
—
(2,333)
11,500
143,991
1,046
16,495
7,707
180,739
(11,500)
—
—
—
(11,500)
—
—
—
(122,075)
(2,773)
—
(764)
(125,612)
(4,441)
(432)
1,181
(11,500)
(129,304)
—
—
—
3,920
6,575
14,687
(1,135)
(47)
287
(12)
(907)
(34)
—
27
(914)
262
145
132
(2,995)
—
—
(100)
(3,095)
(768)
—
184
(3,679)
—
—
—
—
—
—
—
—
—
(137,705)
(2,820)
287
(876)
(141,114)
(5,243)
(432)
1,392
(145,397)
—
—
6,148
23,608
10,330
30,328
12,816
7,707
35,342
Computer software includes capitalised development costs of £26,487,000 relating to the Group’s Next Generation trading platform which has been fully amortised.
Research and Development expenditure recognised as expense during the year amounted to £893,344 (31 March 2022: £1,690,00). Client relationships include
the transaction with ANZ to transition its portfolio of Share Investing clients to CMC for AUD$25m, which has a remaining amortisation period of 8.5 years. During
the year ended 31 March 2023 the Group recorded an impairment of £432,000 (year ended 31 March 2022: £nil) relating to internally generated computer software
assets. The carrying value of the assets impaired at 1 April 2022 was £841,000, amortisation during the year ended 31 March 2023 was £409,000 until the date of
decommissioning the asset resulting in an impairment of £432,000. The impaired asset provided an enhanced functionality to the clients but this functionality was
removed from the Next Generation platform.
152 – CMC Markets plc
Annual Report and Financial Statements 2023
12. Intangible assets continued
Impairment
Intangibles are tested for impairment if events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Assets under
development are tested for impairment annually. Impairment of £432,000 was identified in the year ended 31 March 2023 (year ended 31 March 2022: £nil).
At 31 March 2023, the Group had no material capital commitments in respect of intangible assets (31 March 2022: £nil).
Impairment sensitivity analysis
The recoverable amount of the asset under development relating to the Invest UK platform has been determined using a value-in-use discounted cash flow
calculation. These cash flow projections use the most recent Board-approved forecast that cover a 10-year period, reflecting the longer useful expected life of the
asset based on comparable experiences the Group has in software development. A discount rate of 9.3% and long term growth rate (beyond the forecasting period)
of 0% has been used. The remaining amortisation period for this asset is 9.5 years.
The discount rates used to calculate the recoverable amount of the Invest UK platform is based on the Group post tax weighted average cost of capital (WACC).
The discount rate depends on a number of inputs reflecting the current market assessment of the time value of money, determined by external market information,
and inputs relating to the equity market and industry specific risks.
Projected revenues have been estimated using available market information and internal data. The key assumptions that drive the uncertainty of revenue are:
– Client acquisition, measured as marketing cost to acquire a trading customer
– Estimates of B2B revenues from white-label, Software as a Service deals and the provision of API technology
– Direct-to-consumer client behaviour measured through average portfolio size, average number of trades and customer retention rates
– Interest earned on client funds
A 6.0% reduction in forecast revenues would determine a recoverable amount equal to the carrying value of £11,676,000. A 17.3% reduction in forecast revenues
would result in the full impairment of the asset.
13. Property, plant and equipment
GROUP
Cost
At 31 March 2021 (Reported)
Correction of error
At 1 April 2021 (Restated)
Additions
Disposals
Foreign currency translation
At 31 March 2022 (Restated)
Additions
Reclassification
Disposals
Foreign currency translation
At 31 March 2023
Accumulated depreciation
At 31 March 2021 (Reported)
Correction of error
At 1 April 2021 (restated)
Charge for the year
Disposals
Foreign currency translation
At 31 March 2022 (restated)
Charge for the year
Disposals
Foreign currency translation
At 31 March 2023
Carrying amount
At 1 April 2021 (Restated)
At 31 March 2022 (Restated)
At 31 March 2023
Leasehold
improvements
£’000
Furniture,
fixtures and
equipment
£’000
Computer
hardware
£’000
Right-of-use
asset
£’000
Construction in
progress
£’000
19,273
—
19,273
106
(2,733)
237
16,883
722
36
(887)
(189)
16,565
(14,393)
—
(14,393)
(1,642)
2,736
(222)
(13,521)
(1,585)
839
175
9,656
—
9,656
198
(1,007)
75
8,922
479
18
(72)
(26)
9,321
(8,795)
—
(8,795)
(414)
1,001
(72)
(8,280)
(407)
59
22
36,249
—
36,249
3,196
(2,262)
192
37,375
5,788
—
(579)
(164)
19,146
(1,563)
17,583
4,213
(275)
324
21,845
2,872
—
(1,813)
(270)
42,420
22,634
(27,235)
—
(27,235)
(3,225)
2,248
(148)
(28,360)
(3,749)
340
108
(7,796)
429
(7,367)
(4,287)
181
(221)
(11,694)
(4,221)
1,801
152
(14,092)
(8,606)
(31,661)
(13,962)
4,880
3,362
2,473
861
642
715
9,014
9,015
10,759
10,216
10,151
8,672
—
—
—
—
—
—
—
211
(54)
—
(5)
152
—
—
—
—
—
—
—
—
—
—
—
—
—
152
Total
£’000
84,324
(1,563)
82,761
7,713
(6,277)
828
85,025
10,072
—
(3,351)
(654)
91,092
(58,219)
429
(57,790)
(9,568)
6,166
(663)
(61,855)
(9,962)
3,039
457
(68,321)
24,971
23,170
22,771
153 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information 13. Property, plant and equipment continued
The carrying amount of recognised right-of-use assets relate to the following types of assets:
GROUP
At 1 April 2021
Additions
Disposals
Charge for the year
Foreign currency translation
At 31 March 2022
Additions
Disposals
Charge for the year
Foreign currency translation
At 31 March 2023
Refer to note 23 for further details on lease liabilities.
14. Deferred tax
Computer
hardware
£’000
Leasehold
properties
£’000
305
—
—
(305)
—
—
—
—
—
—
—
10,216
4,213
(94)
(4,287)
103
10,151
2,872
(12)
(4,221)
(118)
8,672
Total
£’000
10,521
4,213
(94)
(4,592)
103
10,151
2,872
(12)
(4,221)
(118)
8,672
Deferred income taxes are calculated on all temporary differences under the liability method at the tax rate expected to apply when the deferred tax will crystallise.
The gross movement on deferred tax is as follows:
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
GROUP
At 1 April
Charge to income for the year
Charge to equity for the year
Change in tax rate
Foreign currency translation
At 31 March
The following table details the deferred tax assets and liabilities recognised by the Group and movements thereon during the year:
2,713
(1,380)
—
(462)
(115)
756
GROUP
At 1 April 2021
Charge to income for the year
Charge to equity for the year
Research and development tax credit
Foreign currency translation
At 31 March 2022
Charge to income for the year
Change in tax rate
Foreign currency translation
At 31 March 2023
Tax losses
£’000
Accelerated
capital
allowances
£’000
Other timing
differences
£’000
135
(41)
—
(1)
—
93
5
(7)
4
95
(2,352)
1,894
—
169
11
(278)
(1,590)
(192)
(22)
(2,082)
6,965
(3,961)
(135)
(21)
50
2,898
206
(263)
(96)
2,744
4,748
(2,108)
(135)
147
61
2,713
Total
£’000
4,748
(2,108)
(135)
147
61
2,713
(1,379)
(462)
(114)
756
The recognition of deferred tax assets is based upon whether it is more likely than not that sufficient and suitable taxable profits will be available in the future against
which the reversal of the temporary differences can be deducted. The recoverability of the Group’s deferred tax asset in respect of carry forward losses is based on
an assessment of the future levels of taxable profit expected to arise that can be offset against these losses. The Group’s expectations as to the level of future taxable
profits take into account the Group’s long-term financial and strategic plans and anticipated future tax adjusting items. In making this assessment, account is taken of
business plans including the Board-approved Group budget. Key budget assumptions are discussed in the Directors’ viability statement.
Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable.
As at 31 March 2023, the Group did not recognise deferred tax assets of £298,000 (year ended 31 March 2022: £181,000) in respect of losses amounting to
£1,540,000 (year ended 31 March 2022: £724,000). £520,000 (year ended 31 March 2022: £724,000) of the losses relates to the Group’s Information Internet
Limited subsidiary and £1,020,000 (year ended 31 March 2022: £0) of the losses relates to CMC Markets Singapore Invest Pte Ltd subsidiary. There is no time limit
on their utilisation.
154 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 14. Deferred tax continued
The Group has recognised a deferred tax asset of £95,000 (year ended 31 March 2022: £93,000) in respect of losses of £428,000 (year ended 31 March 2022:
£375,000). £321,000 (year ended 31 March 2022: £375,000) of the losses relates to the Group’s Information Internet Limited subsidiary and £107,000 (year ended 31
March 2022: £nil) of the losses relates to the Polish branch of the Group’s CMC Markets Germany GmbH subsidiary as at 31 March 2023.
On 5 March 2021 the UK government announced that from 1 April 2023 the Corporation Tax main rate will be increased from 19% to 25%. This was substantively
enacted on 24 May 2021. Deferred tax balances are reported at the substantively enacted corporation tax rate of 25%, the substantively enacted tax rate at the
balance sheet date.
15. Investment in subsidiary undertakings
COMPANY
At 1 April (Restated)
Capital contribution relating to share-based payments
Amounts contributed by subsidiaries in relation to share-based payments
At 31 March
Year ended
31 March 2023
£’000
167,722
2,121
(2,753)
167,090
Year ended
31 March 2022
(Restated)
£’000
167,607
2,272
(2,157)
167,722
The Company’s investments in its subsidiary undertakings is carried at cost lest accumulated provision for impairment. In determining the provision for impairment,
the carrying value of the investment is compared to the recoverable amount of the investment. The estimated recoverable amount of these investments is
determined based on an estimate of the fair value less costs to sell of the subsidiary undertaking or the value in use of the subsidiary undertaking, whichever is higher.
Investment in subsidiary undertakings are tested for impairment annually. Total provision for impairment recorded during the year ended 31 March 2023 was £nil
(year ended 31 March 2022 Restated: £nil).
The list below includes all of the Group’s direct and indirect subsidiaries as at 31 March 2023:
CMC Markets Holdings Ltd
CMC Markets UK Holdings Ltd
CMC Markets Investments Limited
CMC Markets Investments Nominee Limited
CMC Markets UK plc
Information Internet Ltd
CMC Spreadbet plc
CMC Markets Overseas Holdings Ltd
CMC Markets Asia Pacific Pty Ltd
CMC Markets Group Australia Pty Ltd
CMC Markets Stockbroking Ltd
CMC Markets Stockbroking Services Pty Ltd
CMC Markets Stockbroking Nominees Pty Ltd
CMC Markets Stockbroking Nominees (No. 2 Account) Pty Ltd
CMC Markets Canada Inc
CMC Markets NZ Ltd
CMC Markets Singapore Pte Ltd
CMC Markets Singapore Invest Pte Ltd
CMC Business Services (Shanghai) Limited
CMC Markets Germany GmbH
CMC Markets Middle East Ltd
Country of
incorporation
England
England
England
England
England
England
England
England
Australia
Australia
Australia
Australia
Australia
Australia
Canada
New Zealand
Singapore
Singapore
China
Germany
UAE
Principal activities
Held
Holding company
Holding company
Online investing
Nominee entity
Online trading
IT development
Financial spread betting
Holding company
Online trading
Holding company
Stockbroking
Employee services
Nominee entity
Nominee entity
Online trading
Online trading
Online trading
Online investing
Training and education
Online trading
Online trading
Directly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Indirectly
Please refer to pages 186 and 187 for the registered office addresses of the subsidiaries above.
All shareholdings are of Ordinary Shares. The issued share capital of all subsidiary undertakings is 100% owned, which also represents the proportion of the voting
rights in the subsidiary undertakings.
155 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information 15. Investment in subsidiary undertakings continued
The list below includes all of the Group’s employee benefit trusts as at 31 March 2023:
CMC Markets plc Employee Share Trust
CMC Markets plc UK Share Incentive Plan
CMC Markets plc (Discretionary Schemes) Employee Share Trust
16. Trade and other receivables
Current
Gross trade receivables
Less: loss allowance
Trade receivables
Amounts due from Group companies
Prepayments
Accrued income
Stockbroking debtors
Other debtors
Non-current
Other debtors
Total
Country of
incorporation
Jersey
England
England
GROUP
COMPANY
31 March 2023
£’000
8,721
(4,247)
4,474
—
14,985
2,335
105,103
3,719
130,616
31 March 2022
(Restated)
£’000
31 March 2023
£’000
31 March 2022
£’000
6,546
(6,219)
327
—
10,621
522
134,325
2,413
148,208
—
—
—
1,879
51
2
—
—
—
—
—
1,013
7
—
—
—
1,932
1,020
2,666
1,797
133,282
150,005
—
1,932
—
1,020
Stockbroking debtors represent the amount receivable in respect of equity security transactions executed on behalf of clients with a corresponding balance
included within trade and other payables (note 21).
All amounts due from Group companies in the Company Financial Statements are repayable on demand and are non-interest bearing.
At 31 March 2023 the Group has lease receivables amounting to £384,000 (31 March 2022: £nil). The Group is an intermediate lessor on these leases and has
recognised finance income of £5,000 during the year ended 31 March 2023 (year ended 31 March 2022: £nil).
17. Derivative financial instruments
Assets
GROUP
Held for trading
Client trading positions
Held for hedging
Forward foreign exchange contracts – economic hedges
Forward foreign exchange contracts – net investment hedges
Total
31 March 2023
Notional
amount
31 March 2023
Carrying
amount
£m
£’000
31 March 2022
Notional
amount
(Restated)
£m
31 March 2022
Carrying
amount
(Restated)
£’000
120.9
13,125
73.6
—
194.5
1,106
—
14,231
76.9
—
40.0
116.9
8,710
—
78
8,788
156 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023
17. Derivative financial instruments continued
Liabilities
GROUP
Held for trading
Client trading positions
Held for hedging
Forward foreign exchange contracts – economic hedges
Total
31 March 2023
Notional
amount
31 March 2023
Carrying
amount
£m
£’000
31 March 2022
Notional
amount
(Restated)
£m
31 March 2022
Carrying
amount
(Restated)
£’000
35.7
—
35.7
(2,033)
—
(2,033)
37.0
36.0
73.0
(3,227)
(452)
(3,679)
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 date of less than one year.
Held for trading
As described in note 30, the Group enters into derivative contracts in order to hedge its market price risk exposure arising from open client trading positions.
Held for hedging
The Group’s forward foreign exchange contracts are categorised as either economic or net investment hedges.
Economic hedges are held for the purpose of mitigating currency risk relating to transactional currency flows arising from earnings in foreign currencies but do not
meet the criteria for designation in a hedge accounting relationship. During the year ended 31 March 2023, £845,000 of net loss relating to economic hedges were
recognised in the consolidated income statement (year ended 31 March 2022: gains of £869,000).
The Group has designated a number of foreign exchange derivative contracts as hedges of the net investment in the Group’s foreign operations. At 31 March 2023,
£8,748,000 (31 March 2022: £8,662,000) of fair value losses were recorded in net investment hedging reserve within other reserves. At 31 March 2023, £6,304,000
(31 March 2022: £7,827,000) of fair value gains were recorded in the translation reserve within other reserves.
The net investment hedge programme closed at the end of April 2022. During the year ended 31 March 2023, fair value losses of £86,000 (year ended 31 March
2022: losses of £1,089,000) relating to net investment hedges were recognised in other comprehensive income. All changes in the fair value were treated as being
effective under IFRS 9 “Financial Instruments”; as a result there was no amount recognised directly in the income statement.
The maximum exposure to credit risk at the reporting date is the carrying value of the derivative assets at the balance sheet date.
The Group’s derivative positions are reported gross on the statement of financial position, as required by IAS 32 where the criteria for offset are not met.
18. Other assets
GROUP
Exchange
Vaults
Total
31 March 2023
£’000
31 March 2022
£’000
1,178
806
1,984
953
12,490
13,443
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. The fair value of cryptocurrencies are based on the market price of these instruments as at the balance sheet date.
As presented above, the Group holds cryptocurrencies on exchange and in vault. Cryptocurrencies held on vaults are held in a wallet that has additional security
features. Other assets are measured at fair value less costs to sell.
157 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information
19. Financial investments
GROUP
UK government securities
At 1 April
Purchase of securities
Maturity of securities and coupon receipts
Net accrued interest
Changes in the fair value of debt instruments at fair value through other comprehensive income
At 31 March
Equity securities
At 1 April
Impairment
Foreign currency translation
At 31 March
Total
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
27,875
17,345
(14,878)
440
(210)
30,572
70
(34)
(2)
34
28,037
28,337
(28,428)
(17)
(54)
27,875
67
—
3
70
30,606
27,945
The effective interest rates of UK government securities held at the year end range from 1.72% to 4.05% (31 March 2022: -0.19% to 1.72%).
GROUP
Analysis of financial investments
Non-current
Current
Total
31 March 2023
£’000
31 March 2022
£’000
34
30,572
30,606
13,448
14,497
27,945
Financial investments are shown as current assets when they have a maturity of less than one year and as non-current when they have a maturity of more than one
year. The majority of these UK government securities are held to meet the Group’s regulatory threshold requirements under IFPR. These UK government securities
are in Stage 1 and ECL is immaterial for the year ended 31 March 2023 (year ended 31 March 2022: £nil).
20. Cash and cash equivalents
Cash and cash equivalents
Analysed as:
Cash at bank
GROUP
COMPANY
31 March 2023
31 March 2022
31 March 2023
£’000
146,218
£’000
176,578
£’000
586
31 March 2022
(Restated)
£’000
28,446
146,218
176,578
586
28,446
Cash and cash equivalents comprises of cash on hand and short-term deposits. 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. This includes money market funds. While cash and cash
equivalents are also subject to the impairment requirements of IFRS 9, the ECL is immaterial for the year ended 31 March 2023 (year ended 31 March 2022: £nil).
Analysis of net cash
GROUP
Cash and cash equivalents
Borrowings
Share buyback liability
Lease liabilities
Net cash
158 – CMC Markets plc
Annual Report and Financial Statements 2023
31 March 2023
£’000
146,218
—
—
(11,818)
31 March 2022
(Restated)
£’000
176,578
(194)
(27,264)
(14,251)
134,400
134,869
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023
20. Cash and cash equivalents continued
GROUP
At 1 April 2021 (Restated)
Cash flows
Financing cash flows
Share buyback liability recognised
Inception/modification of leases
Foreign exchange adjustments
At 31 March 2022 (Restated)
Cash flows
Financing cash flows
Inception/modification of leases
Foreign exchange adjustments
At 31 March 2023
21. Trade and other payables
Client payables
Tax and social security
Stockbroking creditors
Accruals and other creditors
Total
Borrowings
£’000
(1,139)
—
945
—
—
—
(194)
—
194
—
—
Lease
liabilities
£’000
(15,387)
—
4,808
—
(3,510)
(162)
(14,251)
—
5,454
(3,223)
202
Share buyback
liability
£’000
Changes in
liabilities arising
from financing
£’000
Cash and cash
equivalents
£’000
—
—
2,975
(30,239)
—
—
(27,264)
—
27,264
—
—
(16,526)
—
8,728
(30,239)
(3,510)
(162)
(41,709)
—
32,912
(3,223)
202
118,921
56,281
—
—
1,376
176,578
(29,058)
—
—
(1,302)
Total
£’000
102,395
56,281
8,728
(30,239)
(3,510)
1,214
134,869
(29,058)
32,912
(3,223)
(1,100)
—
(11,818)
—
(11,818)
146,218
134,400
GROUP
COMPANY
31 March 2023
£’000
49,409
1,272
98,428
33,175
182,284
31 March 2022
(Restated)
£’000
44,133
2,242
123,875
42,376
212,626
31 March 2023
£’000
—
—
—
122
122
31 March 2022
(Restated)
£’000
—
—
—
176
176
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 16).
22. Borrowings
GROUP
Current
Other liabilities
Non-current
Other liabilities
Amount due to Group companies
Total
31 March 2023
£’000
31 March 2022
£’000
—
—
—
—
—
—
194
194
—
—
—
194
The fair value of financial liabilities is approximately equivalent to the book value shown above.
Bank loans
In March 2023, the syndicated revolving credit facility was renewed at a level of £55,000,000 (31 March 2022: £55,000,000) where £27,500,000 had a maturity
date of March 2024 and £27,500,000 had a maturity date of March 2026. This facility can only be used to meet broker margin requirements of the Group. The rate of
interest payable on any loans is the aggregate of the applicable margin and SONIA. Other fees such as commitment fees, legal fees and arrangement fees are also
payable on this facility (note 7).
No amount was outstanding on this facility at 31 March 2023 (31 March 2022: £nil).
All amounts due to Group companies in the Company financial statements are repayable on demand and are non-interest bearing.
159 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information
23. Leases liabilities
The Group leases several assets including leasehold properties and computer hardware to meet its operational business requirements. The average lease term is
2.6 years.
ROU asset balances relate to both leasehold properties and computer hardware. Refer to note 13 for a breakdown of the carrying amount of ROU assets.
The movements in lease liabilities during the year were as follows:
GROUP
At 1 April (Restated)
Additions/modifications of new leases during the year
Interest expense
Lease payments made during the year
Foreign currency translation
At 31 March
GROUP
Analysis of lease liabilities
Non-current
Current
Total
Year ended
31 March 2023
£’000
14,251
3,223
658
(6,112)
(202)
11,818
31 March 2023
£’000
6,228
5,590
11,818
Year ended
31 March 2022
(Restated)
£’000
15,386
3,510
687
(5,495)
163
14,251
31 March 2022
(Restated)
£’000
9,302
4,949
14,251
The lease payments for the year ended 31 March 2023 relating to short-term leases amounted to £402,000 (year ended 31 March 2022: £207,000).
As at 31 March 2023 the potential future undiscounted cash outflows that have not been included in the lease liability due to lack of reasonable certainty the lease
extension options might be exercised amounted to £nil (31 March 2022: £nil).
Refer to note 29 for maturity analysis of lease liabilities.
24. Provisions
GROUP
At 1 April 2021
Additional provision
Utilisation of provision
Currency translation
At 31 March 2022
Additional provision
Utilisation of provision
Currency translation
At 31 March 2023
Property
related
£’000
2,101
623
(326)
18
2,416
82
(143)
(9)
2,346
Other
£’000
1,599
—
(1,506)
(23)
70
856
(370)
—
556
Total
£’000
3,700
623
(1,832)
(5)
2,486
938
(513)
(9)
2,902
The property-related provisions include dilapidation provisions. Dilapidation provisions have been capitalised as part of cost of ROU assets and are amortised over
the term of the lease. These dilapidation provisions are utilised as and when the Group vacates a property and expenditure is incurred to restore the property to its
original condition.
The other provisions balance as at 31 March 2023 relates to provisions made for potential litigation associated with client complaints. The expected timing of
outflows is uncertain as at 31 March 2023. The other provisions balance as at 31 March 2022 predominantly related to provisions made for client complaints linked to
market volatility during Q1 2021.
160 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023
24. Provisions continued
GROUP
Analysis of total provisions
Current
Non-current
Total
25. Share capital, share premium and capital redemption reserve
GROUP AND COMPANY
Authorised
Ordinary Shares of 25p
Allotted, issued and fully paid
Ordinary Shares of 25p
Deferred Shares of 25p
Total
31 March 2023
£’000
31 March 2022
£’000
815
2,087
2,902
369
2,117
2,486
Number
£’000
31 March 2023
31 March 2022
31 March 2023
31 March 2022
400,000,000
400,000,000
100,000
100,000
279,815,463
2,478,086
290,293,919
2,478,086
282,293,549
292,772,005
69,953
620
70,573
72,573
620
73,193
Share class rights
The Company has two classes of shares, Ordinary and Deferred, neither of which carries a right to fixed income. Deferred Shares have no voting or dividend rights.
In the event of a winding-up, Ordinary Shares shall be repaid at nominal value plus £500,000 each in priority to Deferred Shares.
GROUP AND COMPANY
At 1 April 2021
New shares issued
Shares cancelled
At 31 March 2022
New shares issued
Shares cancelled
At 31 March 2023
GROUP AND COMPANY
At 1 April 2021
New shares issued
Shares cancelled
At 31 March 2022
New shares issued
Shares cancelled
At 31 March 2023
Ordinary Shares
Number
Deferred Shares
Number
Total
Number
290,717,473
700,000
(1,123,554)
2,478,086
—
—
293,195,559
700,000
(1,123,554)
290,293,919
—
(10,478,456)
292,772,005
2,478,086
—
—
— (10,478,456)
279,815,463
2,478,086
282,293,549
Ordinary Shares
£’000
Deferred Shares
£’000
Share premium
£’000
72,679
175
(281)
72,573
—
(2,620)
69,953
620
—
—
620
—
—
620
46,236
—
—
46,236
—
—
46,236
Capital
redemption
reserve
£’000
—
—
281
281
—
2,620
2,901
Total
£’000
119,535
175
—
119,710
—
—
119,710
Movements in share capital and premium
During the year ended 31 March 2023, no (year ended 31 March 2022: 700,000) shares with nominal value of 25 pence were issued to Employee Benefit Trusts (“EBTs”).
During the year ended 31 March 2023, 10,478,456 (year ended 31 March 2022: 1,123,554) shares with nominal value of 25 pence were cancelled pursuant to the share
buyback programme.
During the year ended 31 March 2023, no Ordinary Shares were converted to Deferred Shares in accordance with the terms of grant to employees who have now
left the Group (year ended 31 March 2022: nil).
Capital redemption reserve
On 14 March 2022, the Board approved a share buyback programme with up to £30.0 million to be returned to shareholders.
During the period starting 17 March 2022 and up to 19 October 2022, the Company repurchased and cancelled 11,602,010 Ordinary Shares with nominal value of
25 pence. The amount by which the Company’s share capital is diminished on the cancellation of the purchased shares is transferred to the capital redemption
reserve. This amounted to £2,619,614 for the year ended 31 March 2023.
161 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information 26. Own shares held in trust
GROUP AND COMPANY
Ordinary Shares of 25p
At 1 April 2021
Acquisition
Utilisation
At 31 March 2022
Acquisition
Utilisation
At 31 March 2023
Number
£’000
336,011
1,039,903
(722,299)
653,615
460,840
(408,688)
705,767
382
1,006
(294)
1,094
1,106
(691)
1,509
The shares are held by various EBTs for the purpose of encouraging or facilitating the holding of shares in the Company for the benefit of employees and the trustees
will apply the whole or part of the trust’s funds to facilitate dealing in shares by such beneficiaries.
27. Other reserves
GROUP
At 1 April 2021
Currency translation differences
Share buyback
Losses on net investment hedges
Losses on financial investments at FVOCI
At 31 March 2022
Currency translation differences
Share buyback
Gains recycled from equity to income statement
Losses on net investment hedges
Losses on financial investments at FVOCI
At 31 March 2023
Translation
reserve
£’000
Net investment
hedging reserve
£’000
FVOCI
reserve
£’000
6,066
1,761
—
—
—
7,827
(1,760)
—
237
—
—
6,304
(7,573)
—
—
(1,089)
—
(8,662)
—
—
—
(86)
—
(8,748)
(27)
—
—
—
(54)
(81)
—
—
—
—
(210)
(291)
Merger
reserve
£’000
(47,800)
—
—
—
—
(47,800)
—
—
—
—
—
(47,800)
Share
buyback
reserve
£’000
—
—
(27,264)
—
—
(27,264)
—
27,264
—
—
—
Total
£’000
(49,334)
1,761
(27,264)
(1,089)
(54)
(75,980)
(1,760)
27,264
237
(86)
(210)
—
(50,535)
Translation reserve
The translation reserve is comprised of translation differences on foreign currency net investments held by the Group.
Net investment hedging reserve
The net investment hedge programme closed at the end of April 2022. Overseas net investments are hedged using forward foreign exchange contracts. Gains and
losses on instruments used to hedge these overseas net investments are shown in the net investment hedging reserve. These instruments hedge balance sheet
translation risk, which is the risk of changes in reserves due to fluctuations in currency exchange rates. All changes in the fair value of these hedging instruments were
treated as being effective under IFRS 9 “Financial Instruments”.
FVOCI reserve
The Group holds certain UK government securities measured at FVOCI. Unrealised gains and losses arising from changes in the fair value of these financial assets
are recognised in the FVOCI reserve.
Merger reserve
The merger reserve arose following a corporate restructure in 2006 when a new holding company, CMC Markets plc, was created to bring all CMC companies
into the same corporate structure. The merger reserve represents the difference between the nominal value of the holding Company’s share capital and that of the
acquired companies.
Share buyback reserve
On 14 March 2022, the Board approved a share buyback programme with up to £30.0 million to be returned to shareholders. On inception of the contract, a financial
liability of £30,239,000 was established representing the financial liability for the full value of the share buyback programme plus directly attributable costs.
The share buyback reserve amount is reduced by the consideration paid for the repurchased shares with a corresponding transaction recorded within Retained
earnings to reflect the consumption of distributable profits. The share buyback reserve is presented in both the consolidate and parent company statements of
changes in equity.
The shares purchased and the average price paid per share for the year ended 31 March 2023 were as follows:
Year ended 31 March
Number of shares purchased
Aggregate purchase amount
Average price of shares purchased
2023
2022
162 – CMC Markets plc
Annual Report and Financial Statements 2023
10,478,456
1,123,554
£27,236,000
£2,975,000
£2.60
£2.65
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 28. Cash generated from/(used in) operations
Cash flows from operating activities
Profit before taxation
Adjustments for:
Interest income
Dividends received
Finance costs
Depreciation
Amortisation of intangible assets
Research and development tax credit
(Profit)/Loss on disposal of property, plant and equipment
Other non-cash movements including exchange rate movements
Share-based payment
Changes in working capital
Decrease /(Increase) in trade and other receivables
Decrease in amounts due from/due to brokers
Decrease /(Increase) in other assets
(Decrease)/Increase in trade and other payables1
Increase in net derivative financial instruments liabilities
Increase/(Decrease) in provisions
Cash generated from operations
GROUP
COMPANY
Year ended
31 March 2023
Year ended
31 March 2022
Year ended
31 March 2023
£’000
£’000
£’000
Year ended
31 March 2022
(Restated)
£’000
52,163
91,495
33,763
102,841
(13,927)
—
2,315
9,962
5,675
(651)
(27)
980
1,651
17,222
17,261
11,459
(20,792)
(7,167)
460
76,584
(834)
—
2,164
9,568
2,820
(743)
86
(681)
356
(18,492)
57,523
(13,443)
44,828
(1,705)
(1,814)
171,128
—
(34,260)
318
—
—
—
—
—
—
840
—
—
(54)
—
—
607
—
(103,617)
475
—
—
—
—
—
—
14,126
—
—
96
—
—
13,921
1
This change in working capital for the year ended 31 March 2023 is stated after offsetting a payment amounting to £9,500,000 made to Australia and New Zealand Banking Group Limited in relation to the portfolio of
share investing clients acquired during the year ended 31 March 2022.
29. Financial instruments
Analysis of financial instruments by category
The following tables analyse financial assets and liabilities in accordance with the categories of financial instruments on an IFRS 9 basis.
GROUP
Financial assets
Cash and cash equivalents
Financial investments
Amounts due from brokers
Derivative financial instruments
Trade and other receivables excluding non-financial assets
GROUP
Financial liabilities
Trade and other payables excluding non-financial liabilities
Amounts due to brokers
Derivative financial instruments
Lease liabilities
Assets
at FVOCI
£’000
—
30,572
—
—
—
30,572
31 March 2023
Assets
at FVPL
£’000
Assets at
amortised cost
£’000
—
34
—
14,231
—
146,218
—
188,154
—
117,905
Total
£’000
146,218
30,606
188,154
14,231
117,905
14,265
452,277
497,114
31 March 2023
Liabilities
at FVOCI
£’000
Liabilities
at FVPL
£’000
Liabilities at
amortised cost
£’000
—
—
(2,033)
—
(181,012)
(8,927)
—
(11,818)
—
—
—
—
—
Total
£’000
(181,012)
(8,927)
(2,033)
(11,818)
(2,033)
(201,757)
(203,790)
163 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information 29. Financial instruments continued
Analysis of financial instruments by category continued
GROUP
Financial assets
Cash and cash equivalents
Financial investments
Amounts due from brokers
Derivative financial instruments
Trade and other receivables excluding non-financial assets
GROUP
Financial liabilities
Trade and other payables excluding non-financial liabilities
Amounts due to brokers
Share buyback liability
Derivative financial instruments
Borrowings
Lease liabilities
Assets
at FVOCI
£’000
—
27,875
—
—
—
27,875
Liabilities
at FVOCI
£’000
—
—
—
—
—
—
—
31 March 2022 (Restated)
Assets
at FVPL
£’000
Assets at
amortised cost
£’000
176,578
—
208,882
—
139,383
—
70
—
8,788
—
8,858
Total
£’000
176,578
27,945
208,882
8,788
139,383
524,843
561,576
31 March 2022 (Restated)
Liabilities
at FVPL
£’000
Liabilities at
amortised cost
£’000
—
—
—
(3,679)
—
—
(210,384)
(12,394)
(27,264)
—
(194)
(14,251)
Total
£’000
(210,384)
(12,394)
(27,264)
(3,679)
(194)
(14,251)
(3,679)
(264,487)
(268,166)
The maximum exposure to credit risk at the reporting date is the fair value of the financial assets at the balance sheet date.
Assets
at FVOCI
£’000
—
—
—
31 March 2023
Assets
at FVPL
£’000
Assets at
amortised cost
£’000
—
—
—
586
1,879
2,465
31 March 2023
Liabilities
at FVOCI
£’000
Liabilities
at FVPL
£’000
Liabilities at
amortised cost
£’000
—
—
Assets
at FVOCI
£’000
—
—
—
—
—
(122)
(122)
31 March 2022 (Restated)
Assets
at FVPL
£’000
Assets at
amortised cost
£’000
—
—
—
28,446
1,013
29,459
Total
£’000
586
1,879
2,465
Total
£’000
(122)
(122)
Total
£’000
28,446
1,013
29,459
COMPANY
Financial assets
Cash and cash equivalents
Trade and other receivables excluding non-financial assets
COMPANY
Financial liabilities
Trade and other payables excluding non-financial liabilities
COMPANY
Financial assets
Cash and cash equivalents
Trade and other receivables excluding non-financial assets
164 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 29. Financial instruments continued
Analysis of financial instruments by category continued
COMPANY
Financial liabilities
Share buyback liability
Trade and other payables excluding non-financial liabilities
Maturity analysis
GROUP
Financial assets
Cash and cash equivalents
Financial investments
Amounts due from brokers
Derivative financial instruments
Trade and other receivables excluding non-financial assets
Financial liabilities
Trade and other payables excluding non-financial liabilities
Amounts due to brokers
Derivative financial instruments
Lease liabilities
Net liquidity gap
GROUP
Financial assets
Cash and cash equivalents
Financial investments
Amounts due from brokers
Derivative financial instruments
Trade and other receivables excluding non-financial assets
Financial liabilities
Trade and other payables excluding non-financial liabilities
Share buyback liability
Amounts due to brokers
Derivative financial instruments
Borrowings
Lease liabilities
Net liquidity gap
Liabilities
at FVOCI
£’000
—
—
—
31 March 2022 (Restated)
Liabilities
at FVPL
£’000
Liabilities at
amortised cost
£’000
Total
£’000
—
—
—
(27,264)
(176)
(27,264)
(176)
(27,440)
(27,440)
On demand
£’000
Less than
three months
£’000
31 March 2023
Three months
to one year
£’000
146,218
34
188,154
13,125
113,283
460,814
(181,012)
(8,927)
(2,033)
—
(191,972)
268,842
—
—
—
1,106
2,465
3,571
—
—
—
(1,525)
(1,525)
2,046
—
15,330
—
—
495
15,825
—
—
—
(4,412)
(4,412)
11,413
31 March 2022 (Restated)
On demand
£’000
Less than
three months
£’000
Three months
to one year
£’000
176,578
70
208,882
8,710
135,655
529,895
(210,384)
(27,264)
(12,394)
(3,227)
—
—
(253,269)
276,626
—
—
—
78
1,810
1,888
—
—
—
(452)
—
(1,443)
(1,895)
(7)
—
14,837
—
—
354
15,191
—
—
—
—
(194)
(4,146)
(4,340)
10,851
After
one year
£’000
—
16,007
—
—
1,662
17,669
—
—
—
(8,041)
Total
£’000
146,218
31,371
188,154
14,231
117,905
497,879
(181,012)
(8,927)
(2,033)
(13,978)
(8,041)
(205,950)
9,628
291,929
After
one year
£’000
—
13,338
—
—
1,564
Total
£’000
176,578
28,245
208,882
8,788
139,383
14,902
561,876
—
—
—
—
—
(9,506)
(210,384)
(27,264)
(12,394)
(3,679)
(194)
(15,095)
(9,506)
(269,010)
5,396
292,866
The amounts disclosed in the table are the contractual undiscounted cash flows, including principal and interest payments, these amounts will not reconcile to the
amounts disclosed in the Statement of Financial Position.
Given that 93% of the Group’s financial assets are available on demand, there is no significant maturity risk as at 31 March 2023 (31 March 2022: 94%).
165 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information 29. Financial instruments continued
Maturity analysis continued
COMPANY
Financial assets
Cash and cash equivalents
Trade and other receivables excluding non-financial assets
Financial liabilities
Trade and other payables excluding non-financial liabilities
Share buyback liability
Net liquidity gap
COMPANY
Financial assets
Cash and cash equivalents
Trade and other receivables excluding non-financial assets
Financial liabilities
Trade and other payables excluding non-financial liabilities
Share buyback liability
Net liquidity gap
On demand
£’000
Less than
three months
£’000
31 March 2023
Three months
to one year
£’000
After
one year
£’000
586
1,879
2,465
(122)
—
(122)
2,343
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
31 March 2022 (Restated)
On demand
£’000
Less than
three months
£’000
Three months
to one year
£’000
After
one year
£’000
28,446
1,013
29,459
(176)
(27,264)
(27,440)
2,019
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Total
£’000
586
1,879
2,465
(122)
—
(122)
2,343
Total
£’000
28,446
1,013
29,459
(176)
(27,264)
(27,440)
2,019
Offseting financial instruments
The Group enters into various collateral arrangements with their counterparties. These agreements provide the Group with the right, in the ordinary course of
business and/ or in the event of a counterparty default (such as bankruptcy or a counterparty’s failure to pay or perform), to net a counterparty’s rights and obligations
under such agreement and, in the event of counterparty default, set off collateral held by the Group against the net amount owed by the counterparty. Certain
derivatives and broker balances, where the requirements of IAS 32 are met, are offset in the Group’s consolidated balance sheet. The Group transacts bilateral OTC
derivatives (OTC derivatives) mainly under International Swaps and Derivatives Association (ISDA) Master Agreements or under terms of business for CFD clients.
These agreements provide for the net settlement of all transactions under the agreement through a single payment. They allow the Group to offset balances from
derivative assets and liabilities as well as the receivables and payables to related cash collateral transacted with the same counterparty. Collateral for OTC derivatives
is received and provided in the form of cash. Such collateral may be subject to the standard industry terms of an ISDA Credit Support Annex. For derivatives
transacted with exchanges (exchange-traded derivatives), positive and negative P&L and related cash collateral may be offset if the terms of the rules and
regulations governing these exchanges and central clearing counterparties permit such netting and offset. Where no such agreements or terms exist or the Group
cannot demonstrate the intent to settle net, fair values are recorded on a gross basis, including any cross-currency exposure with the same counterparty.
Fair value estimation
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).
Valuation techniques
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.
There have been no changes to the fair value hierarchy or valuation techniques for any of the Group’s financial instruments held at fair value in the year (31 March 2022: none).
166 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 29. Financial instruments continued
Fair value estimation continued
The fair value of the Group’s financial assets and liabilities measured at amortised cost approximates their carrying amount.
GROUP
Financial investments
Derivative financial instruments (current assets)
Derivative financial instruments (current liabilities)
GROUP
Financial investments
Derivative financial instruments (current assets)
Derivative financial instruments (current liabilities)
30. Financial risk management
Level 1
£’000
30,572
—
—
30,572
Level 1
£’000
27,875
—
—
27,875
31 March 2023
Level 2
£’000
—
14,231
(2,033)
12,198
Level 3
£’000
34
—
—
34
31 March 2022 (Restated)
Level 2
£’000
—
8,788
(3,679)
5,109
Level 3
£’000
70
—
—
70
Total
£’000
30,606
14,231
(2,033)
42,804
Total
£’000
27,945
8,788
(3,679)
33,054
The Group’s day-to-day business activities naturally expose it to strategic, financial (including credit, counterparty, market and liquidity) and operational risks. The
Board accepts that it cannot place a cap or limit on all of the risks to which the Group is exposed to, however, effective risk management ensures that risks are
managed to an acceptable level. The Board is ultimately responsible for the implementation of an appropriate risk strategy, defining and communicating the Group’s
risk appetite, the establishment and maintenance of effective systems and controls, and continued monitoring of the adherence to Group policies. The Group has
adopted a standard risk process, through a five-step approach to risk management: risk identification; risk assessment; risk management; risk reporting; and risk
monitoring. The approach to managing risk within the business is governed by the Board-approved Risk Appetite Statement and Risk Management Framework.
The Board sets the strategy and the policies for managing these risks and delegates the monitoring and management of these risks to various Committees including
the Executive Risk Committee, which in turn reports to the Group Risk Committee.
The Group’s ICARA review document is prepared in accordance with the Investment Firm Prudential Regime (“IFPR”) that is articulated in the Financial Conduct
Authority’s (“FCA”) MIFIDPRU Prudential sourcebook. The ICARA process is designed to cover the identification, monitoring and mitigation of harms, business
model planning and forecasting, recovery and wind-down planning; and assessing the adequacy of financial resources.
Financial risks arising from financial instruments are categorised into market, credit, counterparty and liquidity risks which, together with how the Group categorises
and manages these risks, are described below.
Market risk
Market risk is defined as the risk that the value of our residual portfolio will decrease due to the change in market risk factors. The three standard market risk factors
are price moves, interest rates and foreign exchange rates.
Mitigation of market risk
The Group benefits from a number of factors which also reduce the volatility of its revenue and protect it from market shocks as follows:
– Natural mitigation of concentration
The Group acts as a market maker in over 10,000 cross asset class instruments, specifically equities, equity indices, commodities, treasuries, foreign exchange and
cryptocurrencies. Due to the high level of notional turnover there is a high level of internal crossing and natural aggregation across instruments and asset classes to
mitigate significant single instrument concentration risk within the portfolio.
– Natural aggregation
In the year ended 31 March 2023, the Group had over 58,000 trading active clients. This large international client base has a diverse range of trading strategies
resulting in the Group enjoying a high degree of natural aggregation between clients. This “portfolio effect” leads to a significant reduction in the Group’s net market
risk exposure.
– Ease of hedging
The Group predominantly acts as a market maker in linear, highly liquid financial instruments in which it can easily neutralise market risk exposure through its prime
broker (“PB”) arrangements. In order to avoid over-reliance on one arrangement the Group policy is to have two PBs per asset class. For instruments where there
is no equivalent underlying market (e.g. Countdowns) the Group controls its risk through setting prudent position/exposure limits. This is further augmented by
dealer monitoring and intervention, which can take the form of restricting the size offered or, if deemed necessary, restricting the clients’ ability to take a position in
an instrument.
167 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information 30. Financial risk management continued
Market risk continued
Market risk limits
Market risk exposures are managed in accordance with the Group’s Risk Appetite Statement and Group Risk Management Framework to ensure that the Group has
sufficient capital resources to support the calculated market risk capital requirement as well as staying within its risk appetite. The Group manages this component
under notional position limits that are set on an instrument and asset class level with overarching capital-based limits.
Client exposures can vary significantly over a short period of time and are highly dependent on underlying market conditions. The Group’s own funds requirements
(“OFR”) are calculated in accordance with the IFPR. The market risk OFR has increased compared to the prior year and remains within the Board-approved
risk appetite.
GROUP OFR
Asset class
Consolidated equities
Commodities
Fixed income and interest rates
Foreign exchange
Cryptocurrencies
31 March 2023
£’000
31 March 2022
£’000
38,872
6,562
677
21,806
589
68,506
20,284
7,586
2,062
14,222
551
44,705
Market price risk – stress testing
Group Financial Risk conducts market price risk stress testing on a daily basis to quantify the potential losses to which the Group is exposed to from adverse market
moves to its residual exposure. The residual exposure is derived by all products offered to clients, after taking into account the hedging performed by the Group in
accordance with the hedging strategy.
A range of risk measurement techniques are used including Value at Risk (“VaR”), Expected Shortfall (“ES”) and Stress-Testing models. The models are performed
for both likely and probable scenario as well as extreme stress scenario, where the stress factors simulate low probability high severity events to assess potential
losses from tail events.
The end-of-day market risk VaR model is performed using one day holding period with a 99% confidence interval with a 12 month lookback. A more severe stress is
also performed, based on maximum daily moves in the same lookback period.
In addition, for asset classes where the Group sees high intraday client turnover, stress testing is performed on intraday exposures by stressing the largest positions
during the trading session.
The VaR holding period is one day, therefore the model assumes exposure is maintained and does not take into account potential risk mitigation actions which the
desk can take by hedging the net exposure intraday. The stress factors are reviewed and updated periodically ensuring recent volatility is captured in the model.
The table below shows the end-of-day market risk VaR model results:
Market risk
31 March
2023
£’000
(18,284)
31 March
2022
£’000
(5,121)
Non-trading book interest rate risk
Interest rate risk arises from either less interest being earned or more being paid on interest-bearing assets and liabilities due to a change in the relevant floating rate.
Interest rate risk is felt by the Group through a limited number of channels: income on segregated client and own funds; debits on client balances that are over a pre-
defined threshold; an exposure to the credit market through liquidity money market funds; and changes to the value of fixed rate UK government securities held.
The sensitivity analysis performed is based on a reasonable and possible move in the floating rate by 1.00% upwards and 0.50% downwards.
This is summarised in the below table and reflects the Group’s view that in the current economic environment, interest rate volatility is unlikely to have a significant
impact on the profits of the Group.
168 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 30. Financial risk management continued
Market risk continued
Market price risk – stress testing continued
Changes in interest rate variables result in a decrease/increase in the fair value of fixed rate financial assets classified as fair value through OCI. This has no material
impact on the Group’s equity.
GROUP
Impact of
Profit after tax
Equity
GROUP
Impact of
Profit after tax
Equity
31 March 2023
Absolute
increase
£’000
Absolute
decrease
£’000
1.00% change 0.50% change
4,274
4,274
(2,572)
(2,572)
31 March 2022
Absolute
increase
£’000
Absolute
decrease
£’000
1.25% change
0.25% change
5,776
5,776
(990)
(990)
Non-trading book foreign exchange risk
Foreign exchange risk is the risk that the Group’s results are impacted by movements in foreign exchange rates.
CMC is exposed to foreign exchange risk in the form of transaction and translation exposure.
Transaction exposure is from holdings of cash and other current assets and liabilities in a currency other than the base currency of the entity. This risk is hedged each
month by the Treasury team according to a policy based on a cap and floor model, with gains/losses recognised in the income statement. Any foreign exchange
transaction exposures are hedged in accordance with Group Foreign Exchange Hedging Policy. Given the effectiveness of the hedging programme (Income
statement impact in year ended 31 March 2023: loss of £845,000 (year ended 31 March 2022: gain of £52,000), no sensitivity analysis has been performed. The
instruments used for economically hedging foreign exchange risk are derivative financial instruments and are reported as described in note 17.
Translation exposure occurs when the net assets of an entity are denominated in a foreign currency other than GBP, when the Consolidated Statement of Financial
Position is prepared.
Credit risk
Credit risk is the risk of losses arising from a counterparty failing to meet its obligations as they fall due. Credit risk is divided into credit, counterparty and settlement
risk. Below are the channels of credit risk the Group is exposed through:
– Financial Institutions (“FIs”); and
– Client.
Financial institution credit risk
The Group has relationships with a number of counterparties that provide prime brokerage and/or banking services (e.g. cash accounts, foreign exchange trading,
credit facilities, custodian services, etc.).
FI credit risk can be felt in the following ways:
– For FIs used as a bank and those as a broker, the Group does not receive the funds the FIs hold on the Group’s account.
– For FIs used as a prime broker, a default will result in a loss of any unrealised profits and could cause the need to re-hedge at a different broker at a different price.
– For FIs used as a cryptocurrency counterparty, the loss of physical assets.
169 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information 30. Financial risk management continued
Credit risk continued
Mitigation of FIs credit risk
To mitigate or avoid a credit loss:
– The Group maintains, where practical, a range of relationships to reduce over-reliance on a single FI – as detailed in the Group Counterparty Concentration
Risk Policy.
– The Group regularly monitors the credit worthiness of the Institutions that it is exposed to and reviews counterparties at least annually – as detailed in the Group
Hedge Counterparty Selection Policy.
Contractual losses can be reduced by the “close-out netting” conditions in the ISDA and broker agreements. If a specified event of default occurs, all transactions
or all of a given type are terminated and netted (i.e. set off against each other) at market value or, if otherwise specified in the contract or if it is not possible to obtain a
market value, at an amount equal to the loss suffered by the non-defaulting party in replacing the relevant contract.
In order to manage both credit and counterparty credit risk within appetite the Group sets internal limits. As defined in the Group’s policies the limits determine the
total balance that can be held with each rated FI, each unrated FI and each cryptocurrency counterparty. These limits are expressed as a maximum percentage of
capital, in the case of rated FIs, or a fixed amount for both unrated FIs and cryptocurrency counterparties. Liquidity Risk Management monitors the credit quality of all
FIs and cryptocurrency counterparties, by tracking the credit ratings issued by Standard & Poor’s and Fitch rating agencies, the credit default swap (“CDS”) spreads
determined in the CDS market, share price, performance against a relevant index, and other relevant metrics.
All rated FIs that the Group transacts with are of investment grade quality; however, no quantitative credit rating limits are set by the Group that FIs must exceed
because the choice of suitable FIs is finite and therefore setting minimum rating limits could lead to the possibility that no FIs are able to meet them. As an alternative,
the Group reviews negative rating action and large CDS spread widening to FIs on a case-by-case basis. Should an institution’s credit rating fall below investment
grade, the Risk Management Committee will be called and options discussed. Possible actions by the Group to reduce exposure to FIs depend on the nature of the
relationship and the practical availability of substitute FIs. Possible actions include the withdrawal of cash balances from a FI on a daily basis, switching a proportion of
hedge trading to another prime broker FI or ceasing all commercial activity with the FI.
The tables below present CMC Markets plc’s exposure to credit institutions (or similar) based on their long-term credit rating:
31 March 2023
Cash and cash
equivalents
£’000
Amounts due
from brokers
£’000
Other assets
£’000
52,744
37,138
41,361
14,975
—
—
182,951
5,203
146,218
188,154
—
—
—
1,984
1,984
31 March 2022 (Restated)
Cash and cash
equivalents
£’000
Amounts due
from brokers
£’000
Other assets
£’000
56,252
26,618
79,055
14,653
—
—
185,543
23,339
176,578
208,882
—
—
—
13,443
13,443
Net derivative
financial
instruments
£’000
—
—
1,106
11,092
12,198
Net derivative
financial
instruments
£’000
—
—
(373)
5,482
5,109
Total
£’000
52,744
37,138
225,418
33,254
348,554
Total
£’000
56,252
26,618
264,225
56,917
404,012
GROUP
AA+ to AA-
A+ to A-
BBB+ to BBB-
Unrated
GROUP
AA+ to AA-
A+ to A-
BBB+ to BBB-
Unrated
170 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 30. Financial risk management continued
Credit risk continued
Client counterparty risk
The Group’s CFD and spread bet business operates a real-time mark-to-market trading facility where clients are required to lodge collateral against positions, with
any profits and losses generated by the client credited and debited automatically to their account. As with any leveraged product offering, there is the potential for a
client to lose more than the collateral lodged.
Client counterparty risk captures the risk associated with a client defaulting on its obligations due to the Group. As the Group does not offer most of its retail clients
credit terms and has a robust liquidation process, client counterparty risk will in general only arise when markets and instruments gap and the movement in the value
of a client’s leveraged portfolio exceeds the value of the equity that the client has held at the Group leaving the client account in deficit.
“Negative balance protection” accounts do not pose counterparty risk to the Group as the maximum loss for this account type is limited to their account value.
Further to this the Group operates as a designated clearing broker in Australia, where trading is subject to a settlement process for financial products transacted on
the Australian Security Exchange and Chi-X Australia. As a result of this clearing process, the Group has settlement risk if a client or counterparty do not fulfil their
side of the agreement by failing to deliver the underlying stock or value of the contract. While international securities trading is further offered to clients, this trading is
predominantly fully vetted, which limits the settlement exposure generation.
Mitigation of client counterparty risk
– Liquidation process
This is the automated process of closing a client’s open position(s) if the account’s total equity is not enough to cover a predefined percentage of required margin
for the portfolio held.
– Pre-emptive processes are also in place where a client’s free equity (total equity less total margin requirement) becomes negative1. At this point the client’s account
is restricted from increasing their position and a notification is sent inviting them to review their account.
1 Clients in some regions may use limited risk accounts, where it is guaranteed that a client cannot move to a negative equity balance.
– Tiered margin
Tiered margins were implemented in September 2013 on the Next Generation platform. It enables the Group to set higher margin rates (therefore requiring a client
to lodge more collateral) against positions that are deemed to be more risky due to risk profile, which could be due to size relative to the underlying turnover, the
Group’s risk appetite or volatility of the instrument.
– Position limits
Position limits can be implemented on an instrument and client level. The instrument level enables the Group to control the total exposure the Group acquires in
a single instrument. At a client level this ensures that the client can only reach a pre-defined size in any one instrument or asset class. Additionally, a position limit
on an underlying instrument can be applied limiting the overall exposure that can be reached through different futures of the same underlying. For FX the client
position limits are based on Net Open Position (“NOP”) which limits the currency exposure a client can reached via different FX pairs.
Client counterparty risk stress testing
Group Financial Risk conducts client counterparty risk stress testing on a daily basis based on an internal model developed to assess the potential client
counterparty risk exposure. The Group’s stress testing is based on scenarios with different severity including stress factors which simulate low probability severe
events to assess potential impact.
Client receivables history
The Group determines expected credit losses for amounts due from clients, based on historic experience and forward looking considerations. The gain for the year
was £1,408,000 (year ended 31 March 2022: £575,000 expense), which amounts to 0.4% of total revenue (year ended 31 March 2022: 0.2%). During the year, trade
receivables of £1,615,000 were written off, which represented 0.5% of revenue (year ended 31 March 2022: £2,118,000, 0.7% of revenue).
The table below details the movement on the Group allowance for expected credit losses of trade receivables under the expected credit loss model:
GROUP
At the beginning of the year
Loss allowance on trade receivables (reversed)/provided
Trade receivables written off
At the end of the year
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
6,219
(357)
(1,615)
4,247
7,762
575
(2,118)
6,219
171 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information 30. Financial risk management continued
Credit risk continued
Debt ageing analysis
The Group seeks to minimise the effects of client debts on the Company’s profit and loss. Client debts are managed very early in their life cycle in order to minimise
the likelihood of them ageing. Debts that are past due carry an expected credit loss provision as set out in the table below:
GROUP
Less than one month
One to three months
Three to twelve months
Over twelve months
GROUP
Less than one month
One to three months
Three to twelve months
Over twelve months
31 March 2023
Debt
£’000
936
3,367
189
4,229
8,721
31 March 2022
Debt
£’000
221
200
371
5,754
6,546
Provision
£’000
23
11
146
4,066
4,247
Provision
£’000
28
81
366
5,744
6,219
The ECL on amounts due from brokers, accrued income and the Company’s trade and other receivables balances is immaterial in both current and prior years.
Please refer to note 19 for information on the ECL on UK government securities and note 20 for information on the ECL on cash and cash equivalents.
Liquidity risk
Liquidity risk is the risk that there is insufficient available liquidity to meet the obligations of the Group as they fall due.
Liquidity is managed centrally for the Group by the Treasury team. The Group utilises a combination of liquidity forecasting and stress testing (formally in the ICARA)
to ensure that it retains access to sufficient liquid resources under both normal and stressed conditions to meet its liabilities as they fall due. Liquidity forecasting
incorporates the impact of liquidity regulations in force in each jurisdiction that the Group is active in and other impediments to the free movement of liquidity around
the Group, including its own protocols on minimum liquidity to be retained by overseas entities.
Liquidity stress testing is performed quarterly using a range of firm-specific and market-wide scenarios that represent severe but plausible stress events that the
Group could be exposed to over the short and medium term. The Group ensures that the tests are commensurate to its current and future liquidity risk profile. Output
from the quarterly stress testing process is used to calibrate a series of limits and metrics which are monitored and reported to senior management daily. This
process seeks to ensure that the Group has appropriate sources of liquidity in place to meet its liabilities as they fall due under both “business as usual” and stressed
conditions. Due to the risk management strategy adopted and the changeable scale of the client trading book, the largest and most variable consumer of liquidity is
PB margin requirements. The collateral calls are met in cash from own funds but to ensure liquidity is available for extreme spikes, the Group has a committed bank
facility of £55.0 million to meet short-term liquidity obligations to PBs in the event that it does not have sufficient access to own cash and to leave a sufficient liquidity
buffer to cope with a stress event.
The Group does not actively engage in maturity transformation as part of its underlying business model and therefore maturity mismatch of assets and liabilities does
not represent a material liquidity risk. The maturity analysis tables are presented in note 29.
172 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 30. Financial risk management continued
Liquidity risk continued
Own funds
Own funds is a key measure the Group uses to monitor the overall level of liquidity available to the Group. Own funds includes investments in UK government
securities, the majority of which are held to meet the Group’s regulatory threshold requirements under IFPR. The derivation of own funds is shown in the table below:
GROUP
Cash and cash equivalents (net of bank overdraft)
Amount due from brokers
Other assets
Financial investments
Derivative financial instruments (excluding Client CFD positions) (current assets)
Less: title transfer funds
Less: Amount due to brokers
Less: derivative financial instruments (excluding Client CFD positions) (current liabilities)
Own funds
31 March 2023
£’000
146,218
188,154
1,984
30,606
1,106
368,068
(49,409)
(8,927)
—
31 March 2022
(Restated)
£’000
176,578
208,882
13,443
27,945
78
426,926
(44,133)
(12,394)
(452)
309,732
369,947
The following Own Funds Flow Statement summarises the Group’s generation of own funds during each year and excludes all cash flows in relation to monies
held on behalf of clients. Additionally, short-term financial investments, amounts due from brokers and amounts receivable/(payable) on the derivative financial
instruments have been included within “own funds” in order to provide a clear presentation of the Group’s potential cash resources.
GROUP
Operating activities
Profit before tax
Adjustments for:
Depreciation and amortisation
Other non-cash adjustments
Tax paid
Own funds generated from operating activities
Movement in working capital
Outflow from investing activities
Net purchase of property, plant and equipment and intangible assets
Other outflow from investing activities
Outflow from financing activities
Dividends paid
Share buyback
Other outflow from financing activities
Total outflow from investing and financing activities
(Decrease)/increase in own funds
Own funds at the beginning of the year
Effect of foreign exchange rate changes
Own funds at the end of the year
Capital management
The Group’s objectives for managing capital are as follows:
Year ended
31 March 2023
£’000
Year ended
31 March 2022
(Restated)
£’000
52,163
91,495
15,637
1,629
(17,060)
52,369
(13,995)
(28,221)
(8)
(35,040)
(27,264)
(6,754)
(97,287)
(58,913)
369,947
(1,302)
12,388
(1,124)
(14,651)
88,108
9,032
(15,813)
(998)
(72,604)
(2,975)
(6,584)
(98,974)
(1,834)
370,405
1,376
309,732
369,947
– to comply with the capital requirements set by the financial market regulators to which the Group is subject;
– to ensure that all Group entities are able to operate as going concerns and satisfy any minimum externally imposed capital requirements; and
– to ensure that the Group maintains a strong capital base to support the development of its business.
173 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information
30. Financial risk management continued
Capital management continued
The capital resources of the Group consist of equity, being share capital reduced by own shares held in trust, share premium, other reserves and retained earnings,
which at 31 March 2023 totalled £374,015,000 (31 March 2022 Restated: £368,878,000). The Group has been compliant with all applicable prudential regulatory
requirements to which it is subject throughout the year.
The Group’s ICARA review document, prepared in accordance with FCA requirements, is an ongoing assessment of CMC Markets plc’ risks and risk mitigation
strategies, to ensure that adequate financial resources are maintained against risks that the Group wishes to take to achieve its business objectives.
The outcome of the ICARA is presented as an Internal Capital and Liquidity Assessment document covering the Group. It is reviewed and approved by the Board on
an annual basis.
Disclosure documents have been prepared that contain relevant information regarding the Group’s FCA regulated entities’ capital adequacy, risk management
objectives and policies, governance and remuneration policies and practices. These are available on the CMC Markets plc website (www.cmcmarkets.com/group).
The Group’s country-by-country reporting disclosure is also available in the same location on the website.
31. Share-based payment
The Group operates both equity and cash settled share options schemes for certain employees including Directors.
Current awards have been granted under the terms of the Management Equity Plan 2015 (“2015 MEP”), the Combined Incentive Plan (“2018 CIP”), the UK Share
Incentive Plan (“UK SIP”) and the International Share Incentive Plan (“Australian SIP”). Equity settled schemes are offered to certain employees, including Executive
Directors in the UK and Australia and automatically vest on vest date subject to conditions described below for each scheme. Cash settled schemes are offered to
certain employees outside of the UK and Australia. Equity schemes for UK employees are settled net of employee taxes due. The rights of participants in the various
employee share schemes are governed by detailed terms, including in relation to arrangements which would apply in the event of a takeover.
Consolidated Income statement charge for share-based payments
The total costs relating to these schemes for the year ended 31 March 2023 was £2,229,000 (year ended 31 March 2022: £2,418,000).
For the year ended 31 March 2023 the charge relating to equity settled share-based payments was £2,123,000 (year ended 31 March 2022: £2,269,000) and the
charge relating to cash settled share-based payments was £106,000 (year ended 31 March 2022: £149,000).
No shares were gifted to employees during the year (year ended 31 March 2022: nil).
Current schemes
2015 MEP
Share awards granted under the 2015 MEP are predominantly equity settled, with the exception of certain participants that are cash settled. The awards granted
have been in the form of “non-market performance” awards. The Remuneration Committee approves any awards made under the 2015 MEP. Current schemes are:
– Long Term Incentive Plan: awards to senior management and critical staff, excluding Executive Directors. The awards have dividend equivalence where
additional shares will be awarded in place of dividends on vesting. The only vesting conditions of the 2020 and 2021 equity settled awards is that employees
remain employed by the Group, with the 2022 equity awards having a non-market performance condition of cumulative PBT over a three-year period in addition
to remaining employed by the Group. This was revised in May 2023, with the performance condition now being aligned to net operating income over the
same period.
The fair value of awards were calculated using the average of the share price three days prior to the grant date.
2018 CIP
Share awards granted to the Executive Directors under the 2018 CIP have been in the form of conditional awards and are equity settled. The Remuneration
Committee approves any awards made under the 2018 CIP. Shares awarded are deferred over a period of at least three years subject to a performance underpin.
The Committee will review Group performance over the relevant period, taking into account factors such as a) the Company’s TSR performance, b) aggregate profit
levels and c) any regulatory breaches during the period.
174 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 31. Share-based payment continued
Current schemes continued
2018 CIP continued
Share price
at award
349.2p
349.2p
349.2p
445.8p
445.8p
445.8p
280.8p
280.8p
280.8p
349.2p
445.8p
280.8p
Vesting date
20 July 2023
20 July 2024
20 July 2025
22 July 2024
21 July 2025
20 July 2026
14 July 2025
13 July 2026
12 July 2027
20 July 2022
20 July 2023
20 July 2025
At the start
of the year
104,779
78,584
78,581
114,418
85,813
85,813
—
—
—
492,440
442,513
—
Awarded
during the
year
—
—
—
—
—
—
93,422
70,067
70,067
—
—
1,515,656
Number
Forfeited
during the
year
—
—
—
—
—
—
—
—
—
(17,224)
(55,387)
(94,485)
Dividend
equivalent
awarded
during the
year
2,995
2,247
2,247
3,274
2,455
2,455
3,366
2,524
2,524
—
14,967
51,849
Exercised
during the
year
—
—
—
—
—
—
—
—
—
(475,216)
—
—
At the end
of the year
107,774
80,831
80,828
117,692
88,268
88,268
96,788
72,591
72,591
—
402,093
1,473,020
1,482,941
1,749,212
(167,096)
90,903
(475,216)
2,680,744
Scheme
Combined Incentive Plan
Combined Incentive Plan
Combined Incentive Plan
Combined Incentive Plan
Combined Incentive Plan
Combined Incentive Plan
Combined Incentive Plan
Combined Incentive Plan
Combined Incentive Plan
Long Term Incentive Plan
Long Term Incentive Plan
Long Term Incentive Plan
Total
The weighted average share price at exercise of awards was 292.0 pence and the weighted average exercise price of exercised awards for UK participants (346,736
shares) was £nil and for Australian participants (128,480 shares) was £nil. The weighted average remaining contractual life of share awards outstanding at 31 March 2023
was 2.0 years and the weighted average share price of awards granted during the period was 280.8 pence.
In addition, cash settled awards have been granted and vest in periods from April 2023 to July 2025. Balances of 32,484 awards, 55,792, 14,534 awards, 15,899 awards
and 206,402 awards in each of the five tranches remained at the end of the period, with a total carrying value of £197,000 as at 31 March 2023 (31 March 2022:
£369,000). All of these awards benefit from dividend equivalence. The value of these awards is the share price on the date these awards vest. The weighted average
remaining contractual life of share awards outstanding at 31 March 2023 was 1.7 years and the weighted average exercise price of exercised awards was £nil.
UK and Australia SIP awards
Shares awarded under the UK SIP scheme are held in trust in accordance with UK tax authority conditions and all shares awarded under the Australian scheme are
held in a UK trust. Employees are entitled to receive dividends in the form of additional shares on the shares held in trust as long as they remain employees.
UK employees are invited to subscribe for up to £1,800 of partnership shares relating to each tax year with the Company matching on a one-for-one basis. All matching
shares vest after three years should the employee remain employed by the Group for the term of the award.
Australian employees are invited to subscribe for up to the equivalent of £1,800 of investment shares with the Company matching on a one-for-one basis. Matching
shares for each scheme vest on the third anniversary after award date should the employee remain employed by the Group for the term of the award.
175 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information 31. Share-based payment continued
Current schemes continued
UK and Australia SIP awards continued
Country
of award
Award date
at award Vesting period/date
Share price
At the start
of the year
Awarded
during the
year
Number
Forfeited
during the
year
Exercised
during the
year
At the end
of the year
April 2019 to
March 2020
April 2020 to
March 2021
April 2021 to
March 2022
April 2022 to
March 2023
5 April 2019
5 April 2020
6 April 2021
6 April 2022
79.3p to
179.2p
194.6p to
425.2p
225.8p to
518.0p
219.0p to
313.6p
83.5p
201.0p
527.0p
270.0p
April 2022 to
March 2023
April 2023 to
March 2024
April 2024 to
March 2025
April 2025 to
March 2026
5 April 2022
5 April 2023
6 April 2024
8 April 2025
UK
UK
UK
UK
Australia
Australia
Australia
Australia
Total
94,226
48,924
73,513
—
6,432
3,179
2,904
—
—
—
—
104,159
—
—
—
3,175
(3,305)
(90,921)
—
(3,116)
(6,655)
(6,320)
—
(865)
(341)
(1)
—
—
—
(6,432)
—
—
—
45,808
66,858
97,839
—
2,314
2,563
3,174
229,178
107,334
(20,603)
(97,353)
218,556
The weighted share price at the exercise date of awards exercised during the year ended 31 March 2023 was 253.5 pence (year ended 31 March 2022:
366.9 pence).
The fair value of SIP awards is determined to be the share price at grant date without making adjustments for dividends as awardees are entitled to dividend
equivalents over the vesting period.
Movement in share options
1,947,449 new share awards were granted in the year ended 31 March 2023 (year ended 31 March 2022: 890,633) and these are detailed above in the current
schemes section. Movements in the number of share awards outstanding are as follows:
GROUP
At beginning of year
Awarded (including dividend equivalents)
Forfeited
Exercised
At end of year
32. Retirement benefit plans
Year ended
31 March 2023
Number
Year ended
31 March 2022
Number
1,712,119
1,947,449
(187,699)
(572,569)
2,038,686
890,633
(93,628)
(1,123,572)
2,899,300
1,712,119
A defined contribution plan is a post-employment benefit plan into which the Group pays fixed contributions to a third-party pension provider and has no legal or
constructive obligation to pay further amounts. Contributions are recognised as staff expenses in the income statement in the years during which related employee
services are fulfilled.
The Group operates defined contribution pension schemes for its Directors and employees. The assets of the schemes are held separately from those of the Group
in independently administered funds.
The pension charge for these plans for the year ended 31 March 2023 was £2,743,000 (year ended 31 March 2022: £2,230,000).
176 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 33. Correction of errors
The consolidated income statement for the year ended 31 March 2022, the consolidated statement of financial position as at 31 March 2022 and as at 1 April 2021
and consolidated statement of cash flows for the year ended 31 March 2022 have been restated for the following reasons:
1. The Group recorded certain amounts relating to levies payable on its UK properties as part of the lease liabilities and calculated the value of the right of use assets
accordingly at the inception of these leases. The statutory obligation to settle these levies rests with the Group and is not linked to the leases. The inclusion of these
levies as part of lease liabilities and right of use assets was recorded incorrectly and as a result the Consolidated income statement, Consolidated statement of
financial position and Consolidated statement of Cash flows have been restated.
2. IAS 32: Financial instruments: Presentation – Offsetting provisions
The Group has relationships with a number of FIs that provide brokerage services. The Group holds funds with these FIs in various currencies and enters into
contracts with these FIs which include derivative financial instruments. Upon review of the legal contracts entered into with these FIs it was concluded that the
criteria for offsetting a financial asset and a financial liability as set out in IAS 32 “Financial Instruments : Presentation” is not met for certain FIs. The Consolidated
statement of financial position has been restated to correct this error.
In addition, the Group has historically presented all its Current Tax recoverables / Current tax payables as a net figure on the Statement of Financial position at the
end of the year. This presentation is incorrect as the net amount presented represents amounts recoverable / payable from / to various tax authorities across the
jurisdictions where the Group operates. A Gross presentation is more accurate as individual amounts recoverable / payable from a tax authorities represents a
separate asset / liability.The Consolidated statement of financial position has been restated to correct this error.
3. The Group offers CFDs and portfolio services to its clients in various jurisdictions and segregates client funds in accordance with the rules set by various regulators
within these jurisdictions. In one jurisdiction the Group is not permitted to segregate unrealised client profits / losses in to the pooled segregated client money bank
accounts. Segregation only takes place once the profits / losses have realised. The Group has previously presented these unrealised client losses / profits within
Trade and other receivables or Trade and other payable respectively. As these unrealised profits / losses relate to derivative products, the correct presentation is
within Derivative financial instruments within Current assets and Current liabilities. The Consolidated statement of financial position has been restated to correct
this error.
4. The Group acquired a portfolio of Share Investing clients from Australia and New Zealand Banking Group Limited (“ANZ”) in a transaction amounting to
AUD$25.0 million (£13,317,000) during the year ended 31 March 2022. This investment in intangible assets was presented in the condensed consolidated
statement of cash flows as fully settled in cash during the year ended 31 March 2022. This transaction was presented incorrectly in the condensed consolidated
statement of cash flows as only a third of the amount was paid as at 31 March 2022 to settle the associated liability. Comparative periods have been restated to
reflect this correction in the tables below. All amounts due were settled as at 31 March 2023.
Consolidated income statement for the year ended 31 March 2022
GROUP
Operating expenses
Operating profit
Finance costs
Profit before taxation
Taxation
Profit for the year attributable to owners of the parent
Year end
31 March 2022
(Reported)
£’000
(187,637)
94,313
(2,177)
92,136
(20,138)
71,998
Restatement 1
£’000
(654)
(654)
13
(641)
122
(519)
Year end
31 March 2022
(Restated)
£’000
(188,291)
93,659
(2,164)
91,495
(20,016)
71,479
Please note we have reclassified the impairment line in the consolidated income statement for the year ended 31 March 2022 to operating expenses for
presentational purposes.
177 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information
Restatement 1
Restatement 2
Restatement 3
£’000
£’000
£’000
Year end
31 March 2022
(Restated)
£’000
Year end
31 March 2022
(Reported)
£’000
24,941
76,536
156,917
2,359
—
196,117
559,911
(1,771)
(1,771)
—
—
350
—
350
636,447
(1,421)
215,853
—
2,362
4,916
429
251,387
9,269
14,695
266,082
327,729
370,365
636,447
—
—
—
33
—
33
33
33
66
(1,487)
(1,487)
(1,421)
—
—
—
(2,280)
1,299
12,765
11,784
11,784
—
12,394
(1,910)
—
1,300
11,784
—
—
11,784
—
—
11,784
—
—
(8,709)
8,709
—
—
—
—
(3,227)
—
3,227
—
—
—
—
—
—
—
—
—
23,170
74,765
148,208
8,788
1,649
208,882
572,045
646,810
212,626
12,394
3,679
4,949
1,729
263,204
9,302
14,728
277,932
326,242
368,878
646,810
33. Correction of error continued
Consolidated statement of financial position as at 31 March 2022
Note
13
16
17
21
17
23
23
GROUP
Non-current assets
Property, plant and equipment
Total non-current assets
Current assets
Trade and other receivables
Derivatives financial instruments
Current tax recoverable
Amounts due from brokers
Total current assets
Total assets
Current liabilities
Trade and other payables
Amounts due to brokers
Derivatives financial instruments
Lease liabilities
Current tax payable
Total current liabilities
Non-current liabilities
Lease liabilities
Total non-current liabilities
Total liabilities
Equity
Retained earnings
Total equity
Total equity and liabilities
178 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 33. Correction of error continued
Consolidated statement of financial position as at 1 April 2021
As at 1 April 2021
(Reported)
£’000
Note
Restatement 1
Restatement 2
Restatement 3
£’000
£’000
£’000
As at 1 April 2021
(Restated)
£’000
GROUP
Non-current assets
Property, plant and equipment
Total non-current assets
Current assets
Trade and other receivables
Derivatives financial instruments
Current tax recoverable
Amounts due from brokers
Total current assets
Total assets
Current liabilities
Trade and other payables
Amounts due to brokers
Derivatives financial instruments
Lease liabilities
Current tax payable
Total current liabilities
Non-current liabilities
Lease liabilities
Total non-current liabilities
Total liabilities
Equity attributable to owners of the Company
Retained earnings
Total equity
Total equity and liabilities
Consolidated statement of cash flows for the year ended 31 March 2022
GROUP
Cash flows from operating activities
Cash generated from operations
Finance costs paid
Net cash generated from operating activities
Cash flows from investing activities
Investment in intangible assets
Net cash used in investing activities
Cash flows from financing activities
Principal elements of lease payments
Finance costs paid
Net cash used in financing activities
26,105
44,605
127,119
3,241
1,749
253,895
533,029
577,634
152,253
—
3,077
4,599
—
162,763
10,727
14,354
177,117
330,698
400,517
577,634
(1,134)
(1,134)
—
—
227
—
227
(907)
—
—
—
18
—
18
43
43
61
(968)
(968)
(907)
Note
28
—
—
—
(3,071)
257
13,911
11,097
11,097
—
13,796
(2,956)
—
257
11,097
—
—
—
—
2,599
6,044
—
—
8,643
8,643
6,044
—
2,599
—
—
8,643
—
—
24,971
43,471
129,718
6,214
2,233
267.806
552,996
596,467
158,297
13,796
2,720
4,617
257
182,521
10,770
14,397
11,097
8,643
196,918
—
—
—
—
329,730
399,549
11,097
8,643
596,467
Year end
31 March 2022
(Reported)
£’000
181,795
—
168,886
(21,813)
(27,137)
(5,962)
(2,151)
(85,468)
Restatements 1 and 4
£’000
(10,667)
(2,138)
(12,805)
9,500
9.500
1,154
2,151
3,305
Year end
31 March 2022
(Restated)
£’000
171,128
(2,138)
156,081
(12,313)
(17,637)
(4,808)
—
(82,163)
The above presentation of consolidated statement of cash flows includes a change in accounting policy whereby finance costs paid are presented within cash flows
from operating activities.
179 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information 33. Correction of error continued
The Parent company statement of financial position as at 31 March 2022 and as at 1 April 2021 and Parent company statement of cash flows for the year ended 31
March 2022 have been restated for the following reason:
5. The Company has Employee Benefit Trusts that hold shares on the behalf of employees for share based payment schemes and acts on the Company’s
instructions to distribute the shares to employees upon vesting. The application of look-through accounting for the relationship was incorrectly applied and as
a result comparatives periods have been restated to reflect this correction in the below tables. In addition, amounts contributed by subsidiaries in relation to
share-based payments was over-stated by £1,127,000 within the Parent company statement of cash flow. This error has been corrected and presented within
Restatement 5 below.
Parent company statement of financial position as at 31 March 2022
COMPANY
Non-current assets
Investment in subsidiary undertakings
Total non-current assets
Current assets
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Equity attributable to owners of the Company
Own shares held in trust
Retained earnings
Total equity
Total equity and liabilities
Parent company statement of financial position as at 1 April 2021
COMPANY
Non-current assets
Investment in subsidiary undertakings
Total non-current assets
Current assets
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Equity attributable to owners of the Company
Own shares held in trust
Retained earnings
Total equity
Total equity and liabilities
180 – CMC Markets plc
Annual Report and Financial Statements 2023
Note
15
20
21
26
Year end
31 March 2022
(Reported)
£’000
168,962
168,962
28,263
29,283
198,245
143
27,407
27,407
—
78,392
170,838
198,245
Restatement 5
£’000
(1,240)
(1,240)
183
183
(1,057)
33
33
33
(1,094)
4
(1,090)
(1,057)
Year end
31 March 2022
(Restated)
£’000
167,722
167,722
28,446
29,466
197,188
176
27,440
27,440
(1,094)
78,396
169,748
197,188
As at 1 April2021
(Reported)
£’000
Note
168,111
168,111
167
14,186
Restatement 5
£’000
(504)
(504)
145
145
As at 1 April 2021
(Restated)
£’000
167,607
167,607
312
14,331
182,297
(359)
181,938
60
60
13,609
—
49,153
168,688
182,297
20
20
20
(382)
3
(379)
(359)
80
80
13,629
(382)
49,156
168,309
181,938
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 33. Correction of error continued
Parent company statement of cash flow for the year ended 31 March 2022
COMPANY
Cash flows from operating activities
Cash generated from operations
Net cash generated from operating activities
Cash flows from investing activities
Investment in subsidiaries
Amounts contributed by subsidiaries in relation to share-based payments
Net cash generated from investing activities
Cash flows from financing activities
Proceeds from issue of Ordinary Shares
Acquisition of own shares
Dividends paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
34. Related party transactions
Company
The amounts outstanding with Group entities at year end were as follows:
COMPANY
Amounts due from subsidiaries
All amounts above are repayable on demand and are non-interest bearing.
Group
Transactions between the Group and its other related parties are disclosed below:
Compensation of key management personnel
GROUP
Key management compensation:
Short-term employee benefits
Post-employment benefits
Share-based payments
Aggregate remuneration of highest paid Director
Note
28
Year end
31 March 2022
(Reported)
£’000
Restatement 5
£’000
Year end
31 March 2022
(Restated)
£’000
12,784
12,309
(1,030)
2,157
104,744
175
—
(72,608)
(89,957)
28,096
167
28,263
1,137
1,137
1,030
(1,127)
(97)
(175)
(831)
4
13,921
13,446
—
1,030
104,647
—
(831)
(72,604)
(1,002)
(89,959)
38
145
183
28,134
312
28,446
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
1,879
1,013
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
2,620
57
609
3,286
871
2,599
50
462
3,111
858
Key management comprises the Board of CMC Markets plc only. Compensation of key management personnel is disclosed in the Directors’ remuneration report
on page 98.
During the year £5,592.23 relating to a personal expense for Lord Cruddas was paid by CMC Markets UK plc due to an administrative error. This amount will be
reimbursed.
Directors’ transactions
A number of the Directors have company credit cards and have, during the course of the year, used the company credit cards for personal expenses. All personal
expenses have been reimbursed by the Directors, with the exception of the item above.
There were no other transactions with Directors.
181 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information 35. Contingent liabilities
The Group operates in a number of jurisdictions around the world and as a result uncertainties exist regarding the interpretation of regulatory, tax and legal matters
in these territories. In addition, the Group engages in partnership contracts that could result in non-performance claims and from time-to-time is involved in disputes
during the ordinary course of business.
Sometimes legal disputes can have a financially significant face value, but the Group’s experience is that such claims are usually resolved without any material loss.
The Group provides 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 and 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. The scope of the claim is still being defined,
and there has been no material progress. As a result an assessment regarding the probability and size of financial outflow cannot be determined.
ANZ commitment
As at 31 March 2023, the Group had a commitment to the Australian and New Zealand Banking Group Limited (‘ANZ’) of up to AUD$25 million should ANZ have
recourse over the Group as a result of CMC Markets Stockbroking Limited not meeting certain obligations under its white label contractual arrangement with
ANZ. This commitment is classed as a contingent liability as neither the probability nor amount of any potential outflow could be determined. This commitment and
associated letter of credit which existed on 31 March 2023 was extinguished on 22 May 2023.
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. The
Group continues to engage with the regulatory authorities in the EEA markets where the UK subsidiary continued to service clients after 31 December 2020. 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.
UK banking surcharge
In the absence of them qualifying for a specific exemption, the Group’s regulated companies in the UK would be subject to the Bank Corporation Tax surcharge of 8%
on taxable profits over £25 million. The Group has concluded that the relevant entities meet the exemption requirements and therefore the related tax charge, which
would amount to £23.4 million (31 March 2022: £21.8 million) in respect of all relevant periods, has not been provided for. The Group’s position is supported by external
advice although it is possible that it could be challenged.
36. Ultimate controlling party
The Group’s ultimate controlling party is Lord Cruddas by virtue of his majority shareholding in CMC Markets plc.
37. Events after the reporting period
On 6 June 2023 a subsidiary of the Group made a £2.8 million investment in StrikeX Technologies, a technology start up focused on Web3-enabled software and
tokenisation technology.
182 – CMC Markets plc
Annual Report and Financial Statements 2023
Notes to the consolidated and parent company financial statements continuedFor the year ended 31 March 2023 Shareholder information
Shareholder information
Group history
CMC Markets plc began trading in 1989 as a foreign exchange broker, led by founder Lord Peter Cruddas. In 1996, the Group launched the world’s first online retail
forex trading platform, offering its clients the opportunity to take advantage of markets previously only accessible to institutional traders.
CMC Markets plc has since become a global leader in online trading. There have been a number of significant milestones for the Group over the past 30 years, as it
has expanded into new markets around the world and continues to promote innovation and new trading technology.
In 2000, CMC Markets plc expanded its business to become a CFD broker. A year later, the Group launched an online financial spread betting service, becoming
the first spread betting company to release the daily Rolling Cash® bet. The groundbreaking daily Rolling Cash® concept was to become an industry benchmark.
In 2002, CMC Markets plc opened its first overseas office in Sydney, launching into the Australian market as an online CFD and forex provider. By 2007, the Group
had expanded its global footprint with offices in New Zealand, Germany, Canada, Singapore and Sweden. Further global growth followed over the next few years,
with offices opened across Europe – and most recently in Poland, in 2015. The Group continued to grow its product offering during the year, following the launch of its
fixed-odds Countdowns product in 2015.
The Company successfully listed on the London Stock Exchange in February 2016. In April 2016 CMC Markets plc successfully introduced Digital 100s.
Further cementing its place as one of the industry leaders, the Group was awarded a number of important accolades during the year. In the 2016 Investment Trends
UK Leveraged Trading Report, which measures customer satisfaction, CMC Markets plc ranked first across 17 service categories among CFD traders. The Group
achieved the highest rating for overall satisfaction, mobile trading, platform features and charting in all three product segments of spread betting, CFD trading and FX.
Additional notable recognition came as the Company won Financial Services Provider of the Year for the fourth successive year, an award voted for by the readers of
Shares Magazine.
The Company also received Best CFD Broker for its burgeoning institutional offering, in line with one of its core strategic objectives.
The Company successfully completed the white label stockbroking partnership with ANZ Bank in Australia during 2018, representing the largest migration of client
accounts in Australian Stock Exchange history and making the Company the second largest retail stockbroker in the country.
In 2021 CMC Markets launched the dedicated institutional brand, CMC Connect, positioning the Company to service the ever-growing number of client types
interested in its products.
Timeline
1989 – CMC Markets plc begins operations in the UK
1996 – Launches the world’s first online retail FX trading platform
2000 – Starts offering CFDs in the UK
2001 – Launches online spread betting service in the UK
2002 – Opens first non-UK office in Sydney, Australia
2005 – Offices opened in Beijing, Canada and Germany
2007 – Singapore and Sweden offices opened; and Goldman Sachs purchases 10% stake
2008 – CMC Markets (Australia) starts offering a stockbroking service following the acquisition of local stockbroker Andrew West & Co
2010 – Next Generation platform is launched; offices opened in Italy and France; and spread betting iPhone app launched in the UK
2011 – CMC Markets plc wins Financial Services Provider of the Year (Shares Magazine)
2012 – Spread betting app for Android™ launched
2013 – CMC Markets plc wins 33 industry awards globally
2014 – CMC Markets plc celebrates 25 years of being a world leader in online trading
2015 – Countdowns launched; Poland and Austria offices opened; and Stockbroking Pro platform launched
2016 – CMC Markets plc lists on the London Stock Exchange, trading as CMCX; and Digital 100s launched
2018 – CMC Markets (Australia) completes the ANZ Bank white label stockbroking transaction
2019 – CMC Markets plc celebrates its 30th year and launches exclusive cryptocurrency, forex and commodity indices
2020 – CMC Markets plc releases dedicated institutional brand, CMC Connect
2022 – CMC Invest launched in the UK, offering stockbroking services to UK clients
183 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information For the year ended 31 March
2023
£m
2022 (Restated)
£m
2021 (Restated)
£m
288.4
(233.9)
54.5
(2.3)
52.2
(10.8)
41.4
281.9
(188.3)
93.6
(2.1)
91.5
(20.0)
71.5
409.8
(184.7)
225.1
(1.7)
223.3
(45.8)
177.6
2023
2022 (Restated)
2021 (Restated)
52.4
18.1
14.7
14.6
3.50
3.90
7.40
88.1
32.5
24.6
24.5
3.50
8.88
12.38
2023
3,968
58,737
2022
3,575
64,243
199.3
54.5
61.3
61.0
9.20
21.43
30.63
2021
4,560
76,591
2020
£m
252.0
(151.3)
100.7
(2.1)
98.7
(11.7)
86.9
2020
102.0
39.2
30.1
29.9
2.85
12.18
15.03
2019
£m
130.8
(123.1)
7.7
(1.4)
6.3
(0.5)
5.8
2019
8.2
4.8
2.0
2.0
1.35
0.68
2.03
2020
3,750
57,202
2019
2,068
53,308
Shareholder information continued
Five-year summary
Group income statement
Net operating income
Operating expenses
Operating profit
Finance costs
Profit before tax
Taxation
Profit after tax
Other metrics
Own funds generated from operations (£m)
Profit margin
PBT margin (%)
Earnings per share (“EPS”)
Basic EPS (pence)
Diluted EPS (pence)
Dividend per share
Interim dividend per share (pence)
Final dividend per share (pence)
Total ordinary dividend per share (pence)
Client metrics (unaudited)
Trading revenue per active client (£)
Trading number of active clients
184 – CMC Markets plc
Annual Report and Financial Statements 2023
Five-year summary continued
Group statement of financial position
At 31 March
2023
£m
2022 (Restated)
£m
2021 (Restated)
£m
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax assets
Financial investments
Trade and other receivables
Total non-current assets
Current assets
Trade and other receivables
Derivative financial instruments
Current tax recoverable
Financial investments
Other assets
Amounts due from brokers
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Amounts due to brokers
Derivative financial instruments
Share buyback liability
Borrowings
Lease liabilities
Current tax payable
Short-term provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Lease liabilities
Deferred tax liabilities
Long-term provisions
Total non-current liabilities
Total liabilities
EQUITY
Total equity
Total equity and liabilities
35.3
22.8
4.8
—
2.7
65.6
130.6
14.2
9.0
30.6
2.0
188.2
146.2
520.8
586.4
182.2
8.9
2.0
—
—
5.6
0.4
0.8
200.1
—
—
6.2
4.0
2.1
12.3
212.4
374.0
586.4
30.3
23.2
6.0
13.5
1.8
74.8
148.2
8.8
1.6
14.5
13.4
208.9
176.6
572.0
646.8
212.6
12.4
3.7
27.3
0.2
4.9
1.7
0.4
263.2
—
—
9.3
3.3
2.1
14.7
277.9
368.9
646.8
2020
£m
4.6
28.1
16.5
—
2.3
51.5
186.3
5.4
0.8
25.4
—
134.3
84.3
436.5
488.0
177.1
—
2.4
—
0.9
4.7
—
0.5
185.6
—
0.8
14.6
2.2
1.9
19.5
2019
£m
5.0
18.1
11.6
11.3
2.7
48.7
118.0
2.9
3.4
10.7
—
88.1
48.7
271.8
320.5
100.6
—
4.3
—
1.1
—
—
0.2
106.2
4.8
1.2
—
1.2
2.0
9.2
10.3
25.0
6.4
—
1.8
43.5
129.8
6.2
2.2
28.1
—
267.8
118.9
553.0
596.5
158.3
13.8
2.7
—
0.9
4.6
0.3
1.9
182.5
—
0.2
10.8
1.6
1.8
14.4
196.9
205.1
115.4
399.5
596.5
282.9
488.0
205.1
320.5
185 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Shareholder information continued
Proposed final dividend for the year ended 31 March 2023
Brokers
Ex-dividend date: Thursday 13 July 2023
Record date: Friday 14 July 2023
Last date to register DRIP instructions: Wednesday 26 July 2023
Dividend payment date: Friday 11 August 2023
Shareholders may request that their dividends be used to purchase further
shares in the Company via the Dividend Reinvestment Plan (“DRIP”). Requests
should be made via the registrars. Shareholders who have already opted to
have their dividends reinvested do not need to re-apply.
Peel Hunt LLP
100 Liverpool Street
London
EC2M 2AT
RBC Capital Markets
100 Bishopsgate
London
EC2N 4AA
Annual General Meeting (“AGM”)
Independent auditor
The 2023 AGM will be held at 10:00 a.m on Thursday 27 July 2023 at
133 Houndsditch, London EC3A 7BX.
Registrars/shareholder enquiries
Link Group can be contacted to deal with any questions regarding your
shareholding using the contact details listed below. Alternatively, you can
access www.cmcmarketsshares.co.uk, where you can view and manage all
aspects of your shareholding securely.
E: shareholderenquiries@linkgroup.co.uk
Deloitte LLP
1 New Street Square
London
EC4A 3HQ
Legal advisers
Linklaters LLP
One Silk Street
London
EC2Y 8HQ
Mail
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Phone
T: 0371 664 0300
Calls to 0371 664 0300 are charged at the standard geographic rate and will
vary by provider. Calls outside the United Kingdom are charged at the applicable
international rate. Phone lines are open between 09:00 – 17:30, Monday to
Friday excluding public holidays in England and Wales.
CMC Markets plc
133 Houndsditch
London
EC3A 7BX
United Kingdom
Registered number: 05145017
T: 020 7170 8200
Website: www.cmcmarkets.com
LEI: 213800VB75KAZBFH5U07
Company Secretary
Deborah Fish
Investor relations
Media relations advisers
Camarco
3rd Floor
Cannongate House
62-64 Cannon Street
London
EC4N 6AE
Global offices
UK – head office
CMC Markets plc, CMC Markets UK plc, CMC Spreadbet plc, CMC
Markets Holdings Ltd, CMC Markets UK Holdings Ltd, CMC Markets
Overseas Holdings Ltd, Information Internet Ltd, CMC Markets
Investments Ltd, CMC Markets Investments Nominee Ltd, CMC Markets
Ventures Limited, CMC Markets Holdings Ventures Limited
133 Houndsditch
London
EC3A 7BX
T: +44 (0)20 7170 8200
E: Info@cmcmarkets.com
www.cmcmarketsplc.com
Australia
CMC Markets Asia Pacific Pty Ltd, CMC Markets Stockbroking Ltd,
CMC Markets Group Australia Pty Ltd, CMC Markets Stockbroking
Nominees Pty Ltd, CMC Markets Stockbroking Nominees (No. 2 Account)
Pty Ltd, CMC Markets Stockbroking Services Pty Ltd, Branch of CMC
Markets UK plc
Level 20, Tower 3
International Towers
300 Barangaroo Avenue Sydney
NSW 2000
E: investor.relations@cmcmarkets.com
Website: www.cmcmarkets.com/group/investor-relations
T: 1300 303 888
T: +61 (0)2 8221 2100
E: support@cmcmarkets.com.au
E: brokingservice@cmcmarkets.com.au
www.cmcmarkets.com.au
186 – CMC Markets plc
Annual Report and Financial Statements 2023
Norway
CMC Markets Germany GmbH Filial Oslo Filial Oslo (Branch)
Fridtjof Nansens Plass 6
0160 Oslo
T: +47 22 01 97 02
E: info@cmcmarkets.no
www.cmcmarkets.no
Poland
CMC Markets Germany GmbH sp. z o.o. oddział w Polsce (Branch)
Emilii Plater 53
00-113 Warsaw
T: +48 22 160 5600
E: biuro@cmcmarkets.pl
www.cmcmarkets.pl
Singapore
CMC Markets Singapore Pte Limited
CMC Markets Singapore Invest Pte Limited
9 Raffles Place #30-02
Republic Plaza
Singapore 048619
T: 1800 559 6000 (local)
T: +65 6559 6000
E: info@cmcmarkets.com.sg
www.cmcmarkets.com.sg
Spain
CMC Markets Germany GmbH, Sucursal En Espana (Branch),
CMC Markets UK plc Sucursal en Espana (Branch)
Paseo de la Castellana 40
9th Floor
28046 Madrid
T:+34 911 140 700
E: info@cmcmarkets.es
www.cmcmarkets.es
UAE
CMC Markets Middle East Ltd
Unit 2903, Level 29,
ICD Brookfield Place
Dubai International Financial Centre
Dubai 507183
T: +04 401 9218
Austria
CMC Markets Germany, GmbH Zweigniederlassung Wien (Branch),
CMC Markets Zweigniederlassung Österreich (Branch)
Information Internet Limited (Branch)
The ICON Vienna, Wiedner Gürtel 13
Tower 24, 10th floor, 1100 Wien
T: +43 (0)1 532 1349 0
E: kundenservice@cmcmarkets.at
www.cmcmarkets.at
Canada
CMC Markets Canada Inc
Suite 2915
100 Adelaide Street West Toronto
Ontario M5H 1S3
T: +1 416 682 5000
E: info@cmcmarkets.ca
www.cmcmarkets.ca
China (Shanghai)
CMC Business Service (Shanghai) Limited
Room 3404, Floor 34
Shanghai Tower
No. 501, Middle Yincheng Road, Lujiazui Financial Center, Pudong District
Shanghai
T: (China toll free) 4008 168 888
E: support@cmcmarkets.com.au
www.cmcmarkets.com/zh
China (Beijing)
CMC Markets UK plc Beijing Representative office
F2-1(A) 1101 – 1202L
Level 11, Excel Center
No.6 Wu Dinghou Street
Xi Cheng District
Beijing 100033
T: +86 (0)10 8520 0021
www.cmcmarkets.cn
Germany
CMC Markets Germany GmbH
Garden Tower
Neue Mainzer Straße 46-50
60311 Frankfurt am Main
T: +49 (0)69 2222 44 000
E: kundenservice@cmcmarkets.de
www.cmcmarkets.de
New Zealand
CMC Markets NZ Ltd
Level 39
23 Albert Street
Auckland, 1010
T: +64 (0)9 359 1200
E: support@cmcmarkets.co.nz
187 – CMC Markets plc
Annual Report and Financial Statements 2023
Strategic reportGovernanceFinancial statementsShareholder information Appendices
Appendix: Alternative Performance Measures
a. Reconciliation of trading gross client income to trading net revenue
GROUP
Trading gross client income
Client rebates, introducing partner commissions and levies
Risk management gains / (losses)
Trading net revenue
b. Reconciliation of investing net revenue
GROUP
Investing gross revenue
Investing introducing partner commissions (note 3)
Investing net revenue
c. Reconciliation of trading gross client income to trading net revenue
GROUP
Trading net revenue (a)
Investing net revenue (b)
Other revenue (note 4)
Interest income (note 4)
Net operating income
Reconciliation of non-statutory summary Group Balance Sheet to primary statements
Fixed assets
GROUP
Intangible assets (note 12)
Property, plant and equipment (note 13)¹
Lease liabilities (note 23)¹
Lease debtors presented within other debtors presented (note 16)
Fixed assets
Fixed assets (rounded to £m)
Working capital
GROUP
Trade and other receivables (note 16)¹
Lease debtors presented within fixed assets above
Derivative financial instruments – client CFD positions (note 17)
Trade and other payables (note 21)
Share buyback liability (note 27)
Borrowings (note 22)
Provisions (note 24)¹
Title transfer funds²
Working capital
Working capital (rounded up to £m)
1 2022 figures restated. See note 33 for more detail.
2 Amounts deducted from ‘own funds’.
Deferred tax net asset
GROUP
Deferred tax assets (note 14)
Deferred tax liabilities (note 14)
Deferred tax net asset
Deferred tax net asset (rounded to £m)
188 – CMC Markets plc
Annual Report and Financial Statements 2023
2023
£m
303.5
(20.4)
(50.0)
233.1
2023
£m
55.7
(17.8)
37.9
2023
£m
233.1
37.9
3.5
13.9
288.4
March 23
£’000
35,342
22,771
(11,818)
392
46,687
46.7
March 23
£’000
133,282
(392)
13,125
(182,284)
—
—
(2,902)
49,409
8,205
8.2
March 23
£’000
4,768
(4,012)
756
0.8
2022
£m
288.5
(20.6)
(38.3)
229.6
2022
£m
74.4
(26.4)
48.0
2022
£m
229.6
48.0
3.5
0.8
281.9
March 22
£’000
30,328
23,170
(14,251)
—
39,247
39.3
March 22
£’000
150,005
—
8,710
(212,626)
(27,264)
(194)
(2,486)
44,133
(42,949)
(43.0)
March 22
£’000
6,022
(3,309)
2,713
2.7
CBP019231
CMC Markets plc’s commitment to environmental issues is reflected in this Annual Report, which has been printed on
Magno Satin and Symbol Matt, both FSC® certified materials.
This document was printed by Park Communications using its environmental print technology, which minimises the
impact of printing on the environment, with 99% of dry waste diverted from landfill. Both the printer and the paper mill are
registered to ISO 14001.
CMC Markets plc
133 Houndsditch
London EC3A 7BX
United Kingdom
T +44 (0)20 7170 8200
E info@cmcmarkets.com
www.cmcmarketsplc.com