Good morning, and thank you for joining CMC's Half-Year 2025 Results Presentation. On the call with me today is our Chief Financial Officer, Albert Soleiman, and Deputy Chief Executive Officer, David Fineberg. I will begin this morning's presentation with a brief overview of some of the key highlights from the half-year before handing over to Albert and David, who will cover the financial, operational, and strategic highlights in more detail.
I will then finish with a summary of our strategic outlook before we take your questions. It has been a strong start to the year for the Group, as our strategic focus on diversification and expansion continues to drive the business forward. Net operating income for the year is up 45% at GBP 177 million, and our profit before tax rose to GBP 49.6 million, with a significant year-on-year increase in our profits before tax margin, which came in at 28%.
This strong financial performance is extremely pleasing to see and is early evidence that our diversification strategy and focused efforts to improve margins and profitability are having good effect. This half-year has also been characterized by continued technological innovation, which has resulted in high-profile partnerships, including those with Revolut and ASB Bank. Our Revolut partnership has had a successful soft launch, and we are now live in three European countries with plans for future phase rollout to additional regions.
Over the past year, I have visited all of our overseas offices to engage with potential clients and our global teams, and this includes my recent visit to Auckland to sign the ASB Bank transaction, another high-profile client win for the business.
While in Auckland, I also met with the CEO of the New Zealand Stock Exchange to confirm our application to become a market participant and member of the exchange, further solidifying our footprint and highlighting our dedication to fostering high-value relationships in the region. From a product perspective, it has been another story of progress as we have enhanced our cash equities and options products, and we will be launching Cash ISAs in the U.K. imminently.
Finally, as we announced in the previous financial year, CMC has reached the peak of the investment cycle, and while we continue to invest in the business, we are taking a disciplined approach. Management remains laser-focused on further diversification of the business through a balanced investment approach with a view to delivering long-term shareholder value. We have made good progress in the half-year, but there's definitely more to do.
That's all from me for now, and I'm going to hand over to Albert, who is going to take you through our financial performance.
Thank you, Peter, and good morning, everyone. I would like to begin by turning to slide five, which looks at our Group financial metrics. Net operating income was £177.4 million for the half-year, which represents an increase of 45%. This was driven by continued growth across the institutional segment and an increase in client trading activity. Our net revenue mix remained broadly consistent with the levels seen through 2023 and 2024, with trading revenue continuing to account for the majority of our income at approximately 87% in GBP terms.
Our adjusted profit before tax was £49.6 million, with a profit before tax margin of 28%, reflecting our net operating income performance, strategic cost management, and disciplined approach to investment. Our earnings per share for the half was £12.8, up from a loss of £0.8 per share at H1 last year.
Turning now to look at our trading metrics on the next slide. Trading net revenue for the half was GBP 131 million, representing a 50% increase on prior year, with strong performance across both retail and institutional segments. Looking at the chart on the right-hand side of the slide, this growth has occurred alongside the ongoing expansion of the B2B segment.
As a reminder, this segment consists of partnerships and institutional relationships and remains a major catalyst of our growth. We have also seen an increase in revenue per client, which came in at GBP 2,984, up 60% on H1 last year, as we continue to attract and retain both institutional and higher net worth individuals. Turning now to look at the investing business.
Investing net revenue was 19% higher than in H1 last year at GBP 19.9 million, driven by increased client trading volumes in the Group's Australian broking arm, particularly in international equities. This has resulted in both additional foreign exchange fees and brokerage revenue. Improving levels of revenue have also been supported by an increase in assets under administration, which, as you can see from the graph on the right-hand side, has increased in the year to over GBP 41 billion.
Turning now to the income statement, which is on slide eight. Our strong net operating income performance was driven by a combination of factors. As mentioned on the previous slides, trading net revenue was up 50% year-on-year, and investing net revenue was also up 19% year-on-year. Interest income was up 46% as the Group continued to benefit from elevated global interest rates and our newly established Treasury Management division.
Operating costs for H1, excluding variable remuneration, were just over £111 million, down 9%, as the Group maintains a sharp focus on costs and a disciplined approach to investment to deliver robust profit margins going forward. Variable remuneration was up on last year, which is in line with the significantly improved levels of profitability. The result of the above is the profit before tax of £49.6 million and a PBT margin of 28%, both of which I've touched on earlier. Turning now to slide nine.
The Group's balance sheet and overall regulatory capital remained strong. Capital resources were broadly unchanged at £337 million, with increases in retained earnings for the year being offset by the final dividend distribution and certain fixed income investment deductions. The OFR ratio of 433% was up largely due to a reduction in own funds requirement.
On liquidity, our total available liquidity was broadly unchanged at £443 million, with increases in own funds offsetting a fall in non-segregated client and partner funds. Blocked cash levels have decreased while margin requirements at brokers were down in the year, which has resulted in a robust net available liquidity position as at 30 September of £246.6 million. This is up from £192 million at 31 March 2024. Finally, turning to the financial outlook on slide 10.
Looking ahead to H2, we are confident in delivering on guidance set out at the beginning of the year, with net operating income forecast to be in line with market expectations. As a management team, we intend to maintain a pragmatic approach to investment. This means balancing opportunities for growth with our focus on profit margins as we look to leverage the scale and the size of the business in the years ahead.
This financial performance will be achieved on a cost base in line with current guidance of approximately £225 million, which excludes variable remuneration. Our forecast effective tax rate is anticipated to be 28% for the year. This is all from me, and I would like now to hand over to Dave, who's going to talk about our strategic and operational progress.
Thank you, Albert, and good morning, everyone. I'm going to take you through the strategic and operational update that begins on slide 12 and looks at some of the significant developments we've seen within the half-year. From a product perspective, asset class expansion remains key to increasing the engagement with our clients and driving growth.
In order to meet our client demands to consolidate their wealth and hold into CMC, we need to ensure any product gaps are mitigated with investment today, providing growth for the future. During the period, we launched OTC options and spread bet options in the U.K. market, as well as international equities, with the expansion of this product into the Middle Eastern markets expected soon.
Technology upgrades have been done for our core multi-asset and multi-currency platform across Next Gen Web and native mobile platform, built on our Connect API and integrated for a new onboarding flow. Cash ISAs are also set to launch on Monday, 25 November, in the UK, and we look forward to rolling that product out to our clients in H2. In terms of technology, our global strategy continues to accelerate product delivery across the Group, with further expanding our cloud technology and API connectivity, which makes our infrastructure even more accessible to our partners.
Our robust and fully integrated support systems also bring further operational efficiencies, and this is critical to how we see the opportunity for margin expansion within the business as we continue to leverage our scale and size to drive the efficient operations.
Finally, from a geo and markets perspective, our Revolut partnership provides diversification across markets and geographies, with the number of clients live and actively trading increasing, while our recently announced deal with ASB Bank cementing our position as one of the leading Fintech providers in the APAC region.
During the period, we also successfully launched Opto, further supporting our regional expansion in the U.S. Opto offers curated solutions for selecting and managing investment portfolios. Its focus on building a differentiated, scalable wealth platform, rich in content, has resulted in a meaningful community in which we can engage with further as more products come online. As you can see, it's been a busy half-year with significant progress made, and the second half has more of the same.
I'd now like you to take a moment to explore our expanding B2B offering, as well as our recent partnerships with Revolut and the significant opportunities it presents for CMC. Starting with Revolut, for the full year, we committed to providing an update on the exciting partnerships, and I'm pleased to report that both parties remain highly engaged and optimistic about its potential. Since the soft launch earlier this year, progress has been steady, and we have seen a gradual increase in the number of clients actively trading.
A broader rollout is scheduled for December, with additional countries being onboarded in a continuous stream thereafter. Even with the limited set of countries included in the soft launch, we have already expanded this product suite significantly. Recently, we added over 3,000 equities, more commodities, metals, and crypto assets to the Revolut app.
What makes this relationship so exciting is the scale of Revolut's presence across Europe, as illustrated on the slide. Already, we have clients trading through the Revolut app in territories where CMC has no direct operations, underscoring the transformative potential of the partnership with a household Fintech name like Revolut, who has tens of millions of customers across Europe. The bulk of the technology build for this partnership is now complete, and as we scale, additional costs will be largely incremental and operational in nature.
Crucially, the API technology underpinning this partnership is not limited to Revolut. It is designed to be versatile, meaning we can deploy it to other opportunities should another neobank or fintech company wish to connect with our systems. This adaptability opens up significant future potential for similar partnerships and again highlights how there is a significant operational leverage opportunity within the business.
This partnership has always been designed with a long-term vision, and while there are no material revenues to report yet, we believe the breadth of our product suite and Revolut's extensive reach will inevitably deliver growth in months and years to come. It is a similar story when it comes to the work we've been doing on our FX spot offering. As a non-bank liquidity provider in a sizable FX spot market where trillions are traded every single day, we continue to advance our capabilities.
We launched our FX spot offering to clients just over a year ago, and already it is having a positive impact both from revenue and relationship perspective. It is helping us extract greater value from our existing partnerships whilst also opening new doors to new relationships. These include hedge funds, proprietary trading firms, regional banks, and many other clients who are now trading with us.
What is exciting is that many of these are entirely new businesses, opportunities we wouldn't have been able to pursue before this investment. This success is largely down to the quality of our pricing and liquidity, as well as our connections to ECNs. The technology investment in ultra-low-latency, robust pricing and liquidity services ensures that we can target growth in a cost-efficient manner.
While margins are lower, the opportunity is significant, and having invested approximately GBP 1 million in our FX spot capability, we are forecasting revenues of around GBP 6 million this financial year. As you can see from the slide, the trajectory is one-way. We reached over $1 billion in average daily volume in September of last year, and similar to Revolut, with the tech build now largely complete, future costs of our operations are incremental.
The Group's strategy of diversifying and intensifying its focus on instant clients and the B2B sector continues to gain momentum. And while we are starting to see some tangible results, we view that this is just the beginning. With that, I'm now going to hand you back to Peter to wrap things up.
Thank you, David. I would now like to wrap things up with our strategic outlook. CMC will maintain an institutional-first approach, which has delivered high-profile deals with Revolut and ASB Bank this financial year. Our strong pipeline of future opportunities provides room for further growth. We will also maintain our sharp focus on operational efficiency. This means keeping a keen eye on costs as well as leveraging our scale and technology to support profitability and margins.
We believe the combination of these will deliver long-term shareholder value, and as a business, we will be diligent in managing our investment needs with return to shareholders. I am really looking forward to what the second half has in store, and I would like to thank you all for your time today, and we will now open the lines for Q&A. Thank you.
If you are dialed into the call and wish to ask a question, please use the raised hand function at the bottom of your Zoom screen. If you are dialing in via phone, you can raise your hand using star nine, and unmute yourself by pressing star six. We will pause for a moment to assemble the queue. We will take our first question from Stuart Duncan from Peel Hunt. Please go ahead.
Good morning. Can you hear me?
Yeah.
I've got two questions, if that's okay. The first one is on the rollout of the technology and the relationships with third parties. I just wondered which countries you might be focusing on, obviously having done sort of Europe and then Australia and New Zealand with the existing relationships. And then just a sort of related question, whether there's any restrictions on building relationships with other parties in these countries as well.
And then the second question, as the business continues to shift towards B2B type relationships, how we should think about CATA requirements and, I guess, related to that, shareholder returns going forward as well. Thank you.
Hi, Stuart. Morning. Yeah, so I think, obviously, from our side, as you'll have seen in the slides, I know people are drawn to, obviously, the Revolut in Europe, but then also there's the ASB in New Zealand as well. They're just a testament to our geographical reach as it is today. But in terms of the business itself, we've got circa 400 partnerships across the different areas of the business. So we are not focused on one particular geography.
If the opportunity presents itself and we can have inroads through technology, then that's where our focus is. We've previously spoken about the Middle East, about the investment there. We think that to be a good opportunity, very developed in terms of the products we offer. So that would obviously be an area of focus. But you've also got different areas of the business.
We've got Opto as well, which is obviously our content. So that is providing some inroads into the U.S., Australia with its stock broking, again, further opportunities. So we're optimistic.
Just to add to what David said, the business is evolving. We're leveraging off of technology that has evolved over many, many years. We first started writing internet trading technology in 1994, launched our first platform in October 1996, and we're really leveraging off of that technology, and there are no barriers to anybody that wants to use our technology, competitors, non-competitors, third parties.
We have nearly 400 different partnerships around the world. We have built this open API connection that allows people just to connect to our product suite and will provide pricing, liquidity, whatever you want, or you can keep the product flows yourselves, so this is an evolving, developing side of the business, and we have no barriers really to who we trade with, who we work with. We don't care.
Stuart, just on the second part of your second question, in terms of the capital, the business's capital position is quite strong. We're profitable, and we're confident that we can fund our current business and equally the growth opportunities we see. In terms of shareholder returns, obviously, we're focused on creating shareholder value in terms of increasing the enterprise value and the capital performance of our share price.
We do have a healthy dividend policy that we pay out a significant amount of profits, and that all fits in with our capital requirements. Obviously, capital and liquidity is one of our key strengths. I say it funds our growth, and it funds our new initiatives, and that's something that, as a business, hopefully, we are a business that generates quite a healthy amount of cash. We're debt-free, so we do control our own destiny in that regard.
Yeah. And just really to add what Albert's saying, if you think of the Revolut relationship, we don't own the clients, but we get the flows coming through. They are on board, and ultimately, at the end of the day, any exposure that we carry is net exposure. It's not gross exposure. So really, B2B business, technology-driven business, it's not only just a gateway.
If you stop and we put that slide in with Revolut, if you look at the distribution, there's potential business, and we're already seeing this through the soft launch. We're getting business from countries where we've never had a presence. And then when those trade flows come through, we can net them off because you've got different clients trading in different countries.
So it's a very efficient business model, and we don't have all the headache of onboarding and going through the client onboarding process because that's done by our partner. I mean, it's Nirvana, really, from our point of view. What we have to do is focus on technology, and that's what we do. We've got fantastic technology. And there's not a lot of competition out there for us.
The only competition we see are from software houses that give you a rate card. We've got a plug-and-play type operation here, software in a box. Tell us what products you want to add on there, and we'll add them. One day the market will wake up. They'll wake up to what we're doing around here, but we'll see.
That's great. Thank you very much.
Our next question comes from Ben Bathurst from RBC. Please unmute yourself and ask your question.
Morning, everyone. I've got questions in three areas if that's okay. Hopefully, you can hear me.
Yeah. Morning, Ben.
Great. Starting on cost, you've mentioned you'll remain focused on driving efficiencies. Obviously, relatively recently, you've carried out some initiatives, including the merger of support functions to reduce headcount. I wondered if you could give any clues around what form you think future efficiencies might take. And then secondly, on interest income, you've shown a step up in the first half, driven by an increase in income on your own funds.
Do you expect that level of income to be sustained into the second half? And then on Revolut, to what extent will the plans there, the future expansion into more countries in Europe, depend, do you think, on the success of the early rollouts that you've had? And I wondered, is there any plans to pull marketing expenditure into that relationship to drive an acceleration? And if so, is that a cost that you would share with Revolut?
Thanks, Ben. Let me pick up a point on cost. So as we flagged previously, we are taking a very disciplined approach to cost, and that evolves. So we went through that round of cuts that you referenced earlier on in the year. The look forward for us is continuing to find areas of efficiencies, but more around structural efficiencies. How can we get more out of our current operations by moving certain things around, by connecting things, by merging or aligning things?
In terms of our approach to investment, we take a very disciplined approach to that. We look at investment across the board, whether it's investment in new technology, new product, whether it's marketing spend, new relationships, whatever it was. And we apply a return on equity look-through to that investment, and we prioritize the ones that have the highest returns.
So cost-cutting in this sense now is to ensure that we are disciplined and we are capturing the most profitable opportunities, and that's the part where we lead into margin expansion. Where there's an opportunity to invest and spend, we'll do that as long as the returns and the revenue upside outweigh that spend.
So that's as it relates to cost. In terms of interest income, we are quite optimistic about how that looks in the second half. We do have all the positive ingredients that resulted in that outperformance in H1 in terms of the global interest rate backdrop. I know official rates have been coming down. What we've seen is bond yields have remained resilient despite that backdrop.
But equally, the other key ingredient that goes in there is the level of funds, both our own funds, as we can see, generated by the profitability of the business, as well as client funds as we increase the size of our client pool. We do that through our Treasury Management division, which we talked about in quite a bit of detail at the full year. And what that does is optimizes returns on our cash balances across the business. So as we look forward, as I say, we are confident that we can replicate that performance in the second half.
And I'll just add to what Albert said. Firstly, I'd like to say that Albert's coming to the company is a new finance director. He has a different approach, and he's refreshing for the company because what he's doing is he's setting the tone for the company from the ground upwards. So we are looking at cost from a position of strength and a position of success.
And Albert's view is that just because we're successful, just because we have big surplus funds, doesn't mean that we should spend them willy-nilly. So it's a really nice disciplined approach. And the good news is, and I want to say this on record, we have no heavy lifting to come. There's nothing down the road that we're preparing you all for because we've got to invest. We've constantly invested in technology over the last, well, since 1994.
As a company, we like to capitalize and pay off development costs on an ongoing basis. We're not carrying huge amounts on our balance sheet as well. New finance directors brought in a fresh new approach, and we're really responding to that. On the interest front, I think people have a very sort of polarized view about interest. They think interest rates are at 4%, 5%. Therefore, any cash you've got, you're going to make more money.
It's not real money. It doesn't really count. What we're doing is we're leveraging off of a multicurrency, multinational, multi-product, multi-institutional and partner relationships around the world. We've got physical, we've got cryptos, cash cryptos, we've got derivatives, swaps, all sorts of things going on. There is definitely outperformance in our Treasury Management Capital Markets division.
I think at the financial year-end, maybe we'll do a separate slide on that. But it's wrong to assume that we're making more money from interest because interest rates are higher. It's because we're more efficient. We have a centralized foreign exchange internal system where all flows are locked in, all spreads are captured.
If, for example, we charge spread plus 30 basis points to do a physical share deal in Australia, everything's centralized, everything's efficient. And we'll start to build our narrative around our treasury management division and capital markets division. And Dave can talk about Revolut because I'm going to the toilet.
I won't be long. Thanks for announcing that. So on the Revolut, so as you said before, this is a controlled rollout from their perspective. They're live in, obviously, countries so far. They control the rollout. They control the marketing. From our side, both parties remain highly engaged, and I think that's the key for us is that throughout this, they've been asking for more products. So we've given more equities, commodities, metals.
So from our technology perspective, we continue to add, and they will then control that rollout. And so we'll probably see more countries as we get towards sort of the next month or so, and then that will continue. But for us, like we said before, this is a longer-term relationship. It's not about big bang all across Europe today. It's a continuous rollout, continuous learning, continuous growth. On the marketing side, I think I've covered that.
They obviously control that. We get sight of it, but again, this is not a big bang marketing splurge.
Great. Very clear. Thank you.
Thanks, Ben.
If you wish to ask a question, please use the raised hand function at the bottom of your Zoom screen. If you are dialing in via phone, you can raise your hand using star nine, and unmute yourself by pressing star six. Our next question is from Vivek Raja from Shore Capital. Please go ahead.
Morning, chaps. I had three things I want to explore with you, please. Sorry, can you hear me all right?
Yeah. We're good.
Right. Thanks. Okay. The first one is your revenue guidance and what you've said in today's update about consensus. So it would suggest that you're sort of reiterating the revenue guidance, and consensus is sort of towards the bottom end of that. So call the range GBP 320 million-GBP 360 million. Consensus is roughly GBP 330 million.
And you're sort of blessing consensus today. So that would imply in the second half, a decline on the first half, and obviously, you've shown very strong growth. I wondered, first of all, could you sort of say what you did in Q1 and Q2 because you don't disclose that anymore in terms of revenue, just to get a sense of progression through the first half? Because I'm trying to get a sense of, having grown very strongly, particularly in the trading business, why we should expect a slowdown in the second half?
So that was the first question. The second question is, on the trading business, it's become quite hard to model this business given the split now between B2C and B2B and the strong growth in B2B. So I wondered, could you sort of tell us customer numbers by both segment and revenue per client so we could model that with sort of some higher level of accuracy? Really appreciate that. And then the third thing was CMC Invest. I just wondered where you've got to with CMC Invest UK and Singapore. And forgive me if it's in the disclosure. What have you achieved in terms of revenue, client, AUA? Thanks.
Okay. Thanks, Vivek. We'll try to answer all those in order. So in terms of our guidance, so we reconfirmed our guidance for the year, 320-360. The way that we approach it is that we look at this business, and we appreciate the fact that at our core, we are a trading business. There is no linear relationship. So trying to predict the future is always going to be a bit of a balancing act. We are confident in that range.
We're comfortable where market consensus are. I wouldn't look at that as a downgrade, more an acknowledgment of the fact that we've had a very strong first half. We've banked those results. We're trading in line with where we expect to in the second half. But there's a good four and a half months to go for the full year to conclude. So that's acknowledged in our range.
And again, our degree of comfort in where market consensus is. If there is anything further to update on that, we'll do that as we get closer to the end of the year and have more certainty in terms of what the outturn will look like. If there's anything to update, we'll absolutely do that at that point. So that's how we look at costs. Sorry, at revenue.
We'll go with the CMC Invest and not do the trading.
Can I just ask you, Albert, on the revenue, could you just maybe say what the Q1 and Q2 split for revenue was, please?
We don't split quarterly. What I can tell you is the business has performed strongly. You look at the key metrics that we focus on in terms of demand for our product, the level of client engagement. You look at client funds. We look at turnover activity. All those metrics remain healthy. If you look at client funds year on year, they're up 10%.
The reason we moved away from active client count and those historical metrics is that the business, to Peter's point earlier, is evolving. If we're telling you that our strategy is to prioritize B2B institutional, counting Revolut, for example, as a single client doesn't give you the correct assessment of that business because I would count as a client as one, Revolut would count as one, but clearly the value derived from those two relationships would vary significantly.
We've stood away from metrics that don't give a clear visibility into the performance of the business. Coming back to CMC Invest. That business, again, we look at it as cash equities globally. Obviously, Australia is the biggest and most established part of that. We have expanded our cash equities offering across the different platforms and to Dave's point earlier on in different jurisdictions.
We've widened our product side on the retail side. Cash ISAs, for example, are launching their soft launch this week and out next week. There is good progress being made on expanding that product range. But equally, it's powering our API layer, our institutional product offering as well. That's where we see that immediate short-term potential or near-term potential to reach scale using that, leveraging that investment.
We've touched on ASB earlier, and I'm sure Matt can cover it as questions arise on that, but that's a great example of how you can achieve scale through your technology by partnering with an established provider, and that's really the plan for our cash equities initiatives group wide.
Okay.
So in terms of the.
Sorry. CMC UK and Singapore, just wondered how you got with those?
In terms of the pure retail side, I mean, that's, again, early days. If you're just focused on the retail front end in those two jurisdictions, they're still early days, and we haven't split them out just yet.
Thanks. Thanks, chaps.
There are no further questions on the webinar. I will now hand over to management team for closing remarks.
Yeah. Okay. Just to say thank you for your interest and have a nice day.