Earnings Call: H1 2021

Nov 19, 2020

Ladies and gentlemen, welcome to the CMC Market H1 twenty twenty one Results Call. My name is Emma, and I will be the operator for your call this morning. We will not be taking questions via the webcast today. I will now hand you over to Peter Crudas, CEO. Please go ahead. Thank you very much. Good morning, everybody, and thank you for dialing into our results presentation for the half year ended 09/30/2020. We're on Slide two, by the way. We continue to have to meet in a virtual fashion. But as fun as it is, let us hope that we can all meet in person again for the full year results. Everyone, I'm sure, would like to see an end to the coronavirus pandemic. And like us all, I'm hoping that the positive developments on the vaccine continue, and we can return to living our lives in a more conventional fashion. For those that don't know me, I'm Peter Cruddles, Founder and CEO of CNC Markets. And as you will no doubt be aware, we will be talking through the investor presentation published to the CNC website this morning. With me today is David Feinberg, Deputy CEO Ewan Marshall, CFO and Matt Lewis, our Head of APAC in Canada and Matt's dialing in from Australia. I'm also pleased to introduce Brendan Thotson, who joined us as our CTO back in July, and Brendan will give you an overview of his initial impressions of what is obviously a very good business. I'd like to touch on what has been an unprecedented set of market conditions in the first half of the year. As usual, I will then pass to Ewan to cover the financials, and David will cover time trading and market conditions. And Matt from Australia will talk about our stockbroking business. I'll then finish on strategy before we open the lines for Q and A. If we go to Slide three, please. So starting on Page three, I'm delighted that we were able to this morning announce a record set of results for the first half of the year, with net operating income increasing 126% to GBP $231,000,000. Whilst COVID has clearly increased market volatility and enhanced these results, we have also seen strong underlying growth driven by our unwavering focus on strategic delivery. The strong performance across the group has seen CFE growth client income grow by 68% and the number of active clients grow by 42%. As you may have seen, we reported a client income retention percentage of 115% for the period. This was driven by a strong hedging performance as the benefits of the investment we have made in technology, specifically the ability to use analytics and data to make dynamic hedging decisions, were emphasized during this period of higher volumes and volatility. This is not a sustainable figure, but we expect to maintain a client income retention percentage of over 80%. These factors all combined to lead the group to report a profit before tax of £141,000,000 for the period, up a remarkable 369%. Could we not have granted that up you on the £370,000,000 but anyone on the same period last year? Coronavirus has undoubtedly helped this performance, but I'd like to take this opportunity to remind people of the strong performance in the period prior to the pandemic, and we believe we were well positioned to emerge the other side with an enhanced client base that would deliver long term value. The strong performance we have reported today means I am delighted to be able to announce an interim dividend of 9.2p. This balances the need to return capital to shareholders with the investment that is required to pursue the exciting developments that will drive our future growth. Finally, at CMC, our goal our goal is to provide a superior and unrivaled trading experience for our clients. Our continued investment in technology and personnel has allowed us to maintain a 99.7% uptime through a period of increased volatility as well as on boarding a record number of clients. In fact, unlike some other platforms, we did not have any outages and our clients were able to continue trading when the market experienced a surge in volume such as the result of the promising news on a potential vaccine, the Pfizer announcement. This reinforces the point I was making about our technology given us a market leading edge. With that, I will pass over to Ewan, who will be pleased to take you through the numbers in detail. Thank you, Peter, and good morning to everyone. Moving on to Slide five. As Peter has said, H1 was a record period for us where we have built upon an already solid, highly profitable business and delivered improvements across all of our KPIs. If we first look at the top left chart on Slide five, you will see growth we have seen in our active client numbers, up 19% in the last six months and 42% against H1 twenty twenty. This has been driven by an increase in continuous traders and new trading clients. Client acquisition has been particularly strong during the period with 14,000 new trading clients onboarded, which is well over double expectations of a normal six month period. Regarding the revenue per active clients, we have seen 66% rise against H1 last year, driven in past by an average 18% increase in income per client, and the remainder is due to higher client income retention. Moving on to the second graph, gross client income or the spreads, commissions and financing our clients pay. This increased 68% versus H1 last year. We've seen encouraging signs of the longevity and quality of the newly acquired cohorts, so we see gross client income likely to remain above H1 twenty twenty levels even if market conditions revert back closer towards normality. Our confidence comes from the ongoing strength of our platform offering. Client income retention at 115% was well ahead of our expectations and guidance of in excess of 80%, and David will talk through the drivers of this later. Moving on to the final graph along the top, the combination of CFD net revenue of GBP 200,000,000, stockbroking revenue, interest and sundry income gives us net operating income of GBP $231,000,000, an increase of 126% on H1 twenty twenty. Moving on to profit before tax on the bottom left. PBT increased to GBP 141,000,000 with the improvements in net operating income, demonstrating good operational leverage in the business. Profit after tax was GBP 111,000,000 with an effective tax rate of 21.5%. Finally, this resulted in earnings per share of GBP 38.3 per share. Moving on to the income statement on Slide six. As I've just mentioned, CFP and spread tax revenue was GBP 200,000,000, 1 hundred and 30 5 percent higher than the prior period. Our three regions have all seen revenue and client income growth of similar magnitude during the period. Our stockbroking business contributed an ever more meaningful revenue for the group. It was up 82% to GBP 26,000,000 with significant growth in both the CMC retail and ANZ Bank partnership businesses. Pete is excited to talk about some of these interesting things we are doing in this business and further drive value later in the presentation. For the group, operating excluding variable remuneration, are up 22% to GBP 79,000,000. I'll explain the drivers on the next slide. GBP margin increased from 29% to 61%, demonstrating the operational leverage in the business. Note that we've also disclosed our PBT for both the CFD and stockbroking businesses, which were GBP 130,000,000 and GBP 11,000,000 respectively. Moving on to operating expenses on Slide seven. For today's presentation, we've moved away from our usual view of operating expenses. This time, we wanted to focus on the fundamental drivers so you can better understand the many line items. We've categorized these into three main areas. Firstly, we have marketing. This is our increasing spend to require further clients in a period where there has been increased natural interest in our products and platforms. These costs have increased by GBP 5,500,000.0 or 84% against H1 last year and have resulted in an increase in acquisition of 186% in our CFD business and 133% in our retail stockbroking business. We, of course, focus our efforts on high value clients rather than just the number of acquired clients, and David will talk about this later. Note that this also doesn't take into account the increased client numbers in our B2B business, which we incurred no marketing costs to acquire. Secondly, we have had higher variable costs, which are linked to increases in client activity. These were around GBP 4,500,000.0 higher and consist mainly of bank charges, market data and stockbroking transactional costs. Finally, our other cost increases, which have mainly been focused on our strategic initiatives. This includes heavy investment in staff, which will drive forward our product and technology department during H1 and beyond. When you also take into account the capitalization of development costs, the overall increase in cost due to investments and BAU comes in at just over GBP 4,000,000. Finally, note that you can find our normal view of operating expenses in the appendix. Moving on to Slide eight. Let me talk you through the liquidity and regulatory capital position as of September 30. In summary, we have strengthened available liquidity, which allowed us to continue investing in and growing the business. The group's balance sheet and overall regulatory capital remained strong with a capital ratio of 27% and our core equity Tier one capital increased by GBP 56,000,000 as a result of our profit after tax and foreseeable dividends. Total available liquidity strengthened by just over GBP 100,000,000 during the period to GBP $378,000,000, reflecting mainly profits for the period and a higher available facility, less dividends paid. Net available liquidity increased by a smaller amount, 59,000,000, as a result of broker margin requirements returning to more normal levels as clients rebuilt their equity positions as markets recovered during the period. Overall, this leaves us in a strong position to continue to invest in large strategic projects, which we have ongoing. I'll now hand over to David. Thanks, Eun. As Eunice just talked us through, the first half was very strong financially and particularly within the CFD business. So I'll start my section by running through the CFD results in some more detail to help explain the drivers for this performance. Looking at slide 10, the table and chart shows the client income and net CFD trading revenue by half year comparing this year's results to last. The top line shows gross CFD client income, that is the spreads, financing and commissions clients pay to trade. This has seen a significant growth in the period as a result of continued coronavirus related volatility, which is acting as a call to action for our clients to trade, for significant numbers of new clients to onboard onto the platform and also continued strong underlying performance that we first reported in FY twenty twenty. These factors led to a 68% increase in gross client income compared to the same period last year, up to GBP 174,000,000. Our successful business model aims to maximize the capture of client transactional costs, the majority of which is spread, by minimizing the externalization cost of hedging whilst operating within the board approved risk appetite. This is achieved by balancing internalization with hedging at an instrument level. Our approach to managing market risk is optimized using extensive back testing and a sophisticated quantum data science analytics for use, such as decay mark out curves and static position concentration. This ensures we have no view on the future direction of the market, but focus only on analyzing the flow that we inherit. The majority of the risk management gains seen in h one twenty twenty one is derived from positive hedging net gains. CMC's exposure to our clients' significant positive equity market returns in h one was matched with largely complete hedging at a static risk during that period. The profitable net hedge position resulted from the internalization of a proportion of certain high liquid instruments during the period of high volatility. Our clients maintain long and short positions across various assets and durations in order to generate net returns. While CMC makes decisions on hedging and internalization based on an instrument asset dynamics and their impact of the overall exposure to the firm. As such, certain market conditions can result in CMT's hedging activity producing positive hedge results at the same time as positive client market returns. While the specific market conditions in H1 have been supportive of these excess net hedging returns, we would expect the risk management net result to return to more normal in H2. We retained guidance that we expect to retain greater than 80% of client revenues going forward. Overall, these factors resulted in net CFD trading revenue increasing 135 to £200,000,000 Moving to slide 11 now. We have made significant investments during the period in technology and marketing, which has helped us attract new high value clients, which has been particularly important during COVID as more people look to trade. The chart at top of slide 11 illustrates the spike in gross client income during March, which coincided with the first lockdown of COVID nineteen. Whilst these levels were not sustainable in the longer term, we are pleased that the gross client income has reverted back to levels around 50% higher than pre COVID levels. The increase has been generated from a combination of inactive clients reactivating their accounts and new clients trading alongside our existing high value client base. In addition to a larger client base, illiquidity in the underlying market falls straight to the wider in the first few months of the financial year, which also contributed to the increase in client income. Whilst it's too early to read much into the longevity of new clients on boarded since COVID, the early indications are that these clients do not behave significantly different to our existing clients, with attrition rates and averages, broadly in line with historical cohorts. The level of client money, which is an indicator of future trading potential, also increased during the period by 25% or £85,000,000. We will continue to monitor the value of new clients, but we feel that we will emerge from this year with an expanded high quality client base. Moving on to regulation. It's worth reiterating what we said before. That is that regulation is a good thing, and it provides protection for those who need it and also provides a level playing field for all providers to operate within. There are a few things to update on, but there is nothing that will materially impact the business. On the October 23, ASIC released an announcement on new regulation measures surrounding CFDs for retail clients onboarding into Australia. The regulations will come into effect from the 03/29/2021 and will include changes to leverage ratio limits, margin closeout, negative balance detection, and promotional offers, all broadly in line with those imposed by ESMO in FY '19. We are supportive of ASIC's proposed changes and welcome the opportunity to work with ASIC during the consultation period to ensure the industry acts in the best interest of the Australian consumers. In summary, we are already compliant with the majority of the proposed measures and the leverage limits announced are in line with those implemented by ESMO. We are supportive of these changes. We don't believe they will have a material impact on the business and are pleased that we have clarity moving forward. We have not opened an offshore, office like other providers, and we as we choose to focus on driving the business in an industry of more closely harmonized regulations in our core markets. The UK ban on the sale of cryptocurrency CFDs to retail clients will have no real impact as it represents less than 1% of FY twenty twenty net CFD revenue. Finally, as a reminder on Brexit, we expect our German subsidiary will be our EEA hub post the end of this year. Thank you all for your time. I'll now hand you over to Matt Lewis. Thanks, Dave, and good morning, everyone. Today, I'm going to walk you through the performance of our stockbroking business. So if I can turn your attention to Slide 14. As you can see, stockbroking continues to grow and be a significant part of the region and overall group, making up 11% of the group's net operating income in H1. Carrying on the momentum from last year, we've experienced growth across all key metrics in the first half of this year, with net trading revenue up £11,800,000 or 82%. Unprecedented levels of acquisition that have not been seen since the early establishment of online share trading have underpinned the outperformance with circa 60,000 new clients onboarded and a 42 increase in actives during the period. In total terms, the stockbroking business now has in excess of 120,000 active customers, managing over AUD 49,000,000,000 in chess holdings and over AUD 7,000,000,000 in cash holdings. The success of our ANZ white label partnership continues to deliver and drive overall performance with net trading revenue up £9,200,000 or 93% in the first half. This is both a reflection of the strength of our white label partnership and increased client trading activity due to volatile markets and a sharp increase in acquisition. If I turn your attention to the graph on the top left hand side, you can see Q1 and Q2 are our best performing quarters to date, with Q1 slightly higher than Q2 due to the higher volatility seen. Our core business, referred to as CMC Retail and Partners, also performed strongly with net trading revenue from our direct retail business up £2,600,000 or 58% compared to the same period last year. Driving this is our increased value proposition, combined with continuing favorable market conditions flagged earlier benefiting our CFD business and also driving asset allocation away from cash due to the low interest rate environment. The pie chart in the bottom left hand corner gives a breakdown of the different client channels, which make up our stockbroking revenue. ANZ and St. George are both Tier one bank white label partnerships. As a reminder, this is where the counterparty is able to use our platform and technology, but retain their own branding. Throughout the period, our partners team have successfully signed a number of new intermediaries, bringing the total we service to 160 partner relationships, including the majority of Tier two banking relationships in the country, plus a number of financial planners and advisory firms. Moving now on to Slide 15. In addition to the strong operating performance, we've maintained our position as the second largest retail stockbroker in Australia and the largest white label provider in the country. Externally, over the first half, CMC was awarded Money Magazine's Best Feature Packed Online Broker for the second consecutive year, which highlights the strength in our overall proposition and global pedigree. Moving your attention to the graph on the left hand side, we have continued to see growth in the value of our client base, with revenue per client, or RPC, increasing to record levels over the half year as the existing and new client base trade a wider range of products available, capturing a greater share of the investment wallet and helping to drive our best period on record. During the first half, we launched single sign on for tighter integration with our CFD platform. We also rolled out zero brokerage across four of our key international markets to retail clients, and we are the first established broker in Australia to do so. Our range of international markets has also grown and is now one of the most comprehensive offerings in Australia at 15 markets in total. Despite only just implementing, we've seen international turnover increase threefold when compared to overall activity. This is an area we expect to see continued growth and opportunity. Like the CFD business, core to the strategy and driving these increases across the metrics is our technology. Looking forward, we expect to continue our growth by improving on our already award winning offering by introducing and rolling out a suite of tools aimed at increasing customer success, including algorithmic trading, which should reduce client costs and facilitate better execution and model portfolios across domestic and international equities, both of which should continue to drive client engagement and offer a wider range of products to trade. With our stockbroking offering continuously expanding, we expect client activity to continue above pre COVID levels. Lastly, and as flagged in our full year results, we are also excited to launch a new stockbroking app, which we're expecting to go live in the back end of this financial year. Mobile is a growing selection driver and a channel we're expecting to help drive greater acquisition, retention and further solidify our offering as best in market. I'll now hand you back to Ewan to cover our financial outlook. Thanks, Matt. Let's look at Slide 17 on the financial outlook. Current trading conditions remain good, but well off their peaks in of March and April, so both the CFD and stockbroking platforms, monthly active client numbers also remain resilient at their recent high levels. This gives us encouraging signs regarding client longevity, both through the remainder of this year and also into future years, even as markets become less volatile. Client income retention is expected to be in excess of 80% in the future periods, but not at the levels seen in H1, as David has explained. As a result, the Board are confident in achieving net operating income in excess of GBP $370,000,000 for the year. As mentioned earlier, we are also investing heavily in our platform and technology, and this will bring revenue opportunities as we look forward beyond FY 2021. Pete is excited to talk to you more about this shortly. Operating costs excluding variable remuneration should be similar to H1 in H2. However, as I've shown, these are dependent somewhat on market activity and the opportunities this presents to vary short term spend for longer term benefit. Our effective tax rate should be in the region of 22% due to The UK and Australia being the regions of our main profit generating entities for the group. Finally, the group continues to maintain a strong liquidity profile evidenced by the increase of GBP 59,000,000 in net available liquidity. As a result, the Board remains committed to paying a total dividend for the year of 50% of profit after tax. That continues that concludes the financial outlook. I'll now hand over to Peter, who will cover the strategic update. Right. Thank you, Ewan. We are on Slide 19. Don't worry, Brendan's coming up next half. So you get a chance to read here. So we're on Slide 19, the technology timeline. So CMC is at its core a technology business, and we have always put investment in technology front and center. Looking at recent history, it can be seen we have been constantly striving to develop and improve our platforms with the aim of making financial markets truly accessible to our investors. This range is from our award winning mobile apps to ensure clients can trade wherever they are, our significant investment in the NextGen platform, which continues to receive ongoing improvements and win awards to this day and to our recent investments in low latency infrastructure and other features aimed at our institutional clients. With these milestones whilst these milestones show our past achievements and ability to deliver highly complex technology challenge, we continue to invest in our technology to ensure we always provide a superior and unrivaled online trading experience for our clients. We're now on Slide 20. So this is investments across the business. So moving on to Slide 20. We have talked to you a lot in the past about our investment in the technology platform. However, investment in technology is dependent on having the right people who know what products to invest in and how to harness the technology to deliver optimal returns for the business. To that end, we have added 68 staff, representing an increase of 35% in technology function this year, alongside an additional 16 staff, which is a 41% increase in quantitative analysis. We intend to continue this investment in H2 as we seek to maintain and expand our competitive advantage. The most high profile hire during the period was the appointment of Brendan Fotson as Chief Technology Officer. As you know, investment in technology is a key driver of value for CMC, and Brendan has a wealth of experience and expertise in helping businesses to innovate and utilize technology to accelerate growth. I'm delighted to have Brendan on board, and we are already seeing the significant benefits of having him with us. With the introduction over, I'll hand over to Brendan himself, who can give you a summary of his first impressions and plans for CMC. Brendan, over to you. Thanks a lot, Peter. Good morning, everyone. As Peter says, I'm Brendan Fox, I'm the CTO of CMC Markets. I've over twenty years experience in IT. My background is in software development and digital transformation in highly regulated industries such as financial services, the energy market, and health care. Prior to joining CMC Markets, I was CTO of a digital transformation startup called Contino and helped grow the business from 16 people to 400 people operating across The U. S, EMEA and APAC. And we were acquired in October 2019. It's my first impressions of CMC Markets. I've seen that a very well engineered and operated platform and that's evidenced by the stability and the performance of that platform over a high volatile period. I see a great engineering culture and capability. And what we'll be focusing in this initial period is in optimizing the time to market and speed of change. Our strategy, over the next few months and years is around a large scale digital transformation program. This is to really help us understand our customers even better and focusing on customer success and personalized experiences within the platform itself. This is going to be underpinned, by a broad IT transformation, which is looking across the whole technology and ways of working. And this is then facilitated by an organization change, which will be supported by the adoption of a new operating model, which is focused around the squads and capabilities that have a direct line for customers and are focusing on customer outcomes. The IT transformation itself, it's helped by, obviously, by technology. And we have recently agreed partnership agreements with AWS, an extension to the services that Microsoft provides by their GitHub operations and brand. We also have a data transformation. Some people are calling it a revolution. This is really an exciting part of the program itself because this really helps us to optimize not only the way that we work, but the way that we can provide personalized experiences and risk management capabilities into our customers. We have also established the CMC Labs. So CMC Labs is the ability for us to be able to see pioneer and get early concepts out to customers as quickly as possible so we can then iterate with direct feedback with real working software. This is going to operate both at large scale and at small scale in terms of the products and how we can innovate and iterate on those particular features. To assist with this program, we formed the Transformation Squad. This is a cohort of experts that I've worked with previously over the years. They come from a consulting and engineering background, and this is to help effectively us scale and help the existing business adopt these new ways of workings and technology. I'm just going to finish off with some early wins that we've had in the four months since I've been here. So we've effectively gone live with our first product. This is within a six week build period. This would traditionally take between six and nine months in the existing business. And we've got this actually working, delivered in live, hidden behind the feature This enables us now to disaggregate the platform, enable us to have lots of parallel work streams that are all going into the overall customer experience and also enables us to personalize that based on what we know of the customer. As I mentioned, we've got a partnership with AWS and these new products that are coming out from the existing business and by our labs division will be deployed into that environment across a hybrid solution. And just to finish off, we've also had a completely new concept that we developed with small set of customers. And one of the final questions we were showcasing this event was what would happen if we took this new product away from you? How disappointed would you be from a scale of one to 10? The first person said 10 and the second person said nine. So it feels like we're onto something good with our ability to understand our customers' needs. On that basis, I'm going to hand back to Peter. So you've been here four months. Enjoying it? Fantastic place to work. Yes. You like it, yes? Good. Thanks, Brendan. We're now on Slide 21, and we will have a quick look at our institutional B2B business. And this is an area where we are really seeing the investment in technology open up new opportunities. Again, we have invested in people, growing the B2B sales team, and that has helped us bring 15 new relationships on board in H1, a testament to our technology and its ability to keep winning new business. A key area where we have seen improvements in H1 is in terms of latency. Our recent investment in infrastructure has helped to drive this down, which both improves our ability to capture a higher percentage of client income and also enhances our already competitive B2B offering through low latency pricing. We will launch a new FX product, spot product in H2. This project was formed through the feedback we received from our clients. And they asked asked, we they ask, and we will provide. For CMC, this is expected to increase volume from existing clients and help attract new clients to the platform. The investments we are making in our institutional business are in line with our strategy of enhancing the user experience in order to acquire and retain high valued clients. Slide 22, please. Stop broking. So moving on to the next slide, and the chart here really highlights the growth in active stockbroking clients, which are up sixfold from the start of the 2019 financial year. A risk of repeating myself, it is again our technology platform that is the springboard for this growth. It shows its scalability through the ANZ partnership, which saw us seamlessly complete the largest client migration in Australian stock exchange history. It is becoming a business of real scale with over $50,000,000,000 in assets under management and contributed 11% to group net operating income. This growth is extremely pleasing and demonstrates CMC's ability to deliver significant technological and operational change that makes a material contribution to shareholder returns. As part of our continued investment to build the business, we have developed a new app that will be launched in Q4, and we continue to look at other ways to enhance the platform. So now we're on Slide 23. So one slide away from Q and A, think, aren't we? Yes. And so to wrap up the presentation with the outlook. The group has a clear vision to make financial markets truly accessible for investors, and this is at the heart of everything we do. The group continues to deliver on strategic initiatives and maintains a healthy pipeline of projects that will create new revenue streams through product, channel and geographical diversification. These initiatives are all supported by our ongoing focus on an investment in technology. Through a wider application of these initiatives, we can extend our offering and deliver further profitable growth. The strong performance in the first half that we are reporting today has continued at the start of the second half. As a group, we will continue to deliver underlying growth and considerable value to shareholders through our strong results, stable dividend policy, positive outlook and strong momentum. Whilst recent events have been difficult for all, I want to finish by paying tribute to the continued hard work of the team at CNC Markets. It is through their hard work and dedication that we continue to be well positioned to deliver long term value to shareholders. And on that note, I'd like to open the call up for Q and A. Ladies and gentlemen, we will now begin the Q and A session. Your first telephone question today is from the line of Ben Badhurst with RBC. Please go ahead. Yes. Good morning, everyone. I've got a couple of questions, if I may. Starting with one for Ewan, please, on guidance. You've upgraded the net operating income guidance today to more than £370,000,000 for 2021. I just wondered if you could perhaps give a bit more color on the assumptions for client retention in that in H2 to get you to that number and also whether or not that guidance also assumes a sort of a fairly rapid normalization of trading conditions? Second question would be on client income retention, probably for David. Clearly, you surpassed previous guidance to the upside in the first half with a positive risk management result. But I just wondered how can you make us feel comfortable that the retention won't fall below guidance to a similar extent in the future? And how should we think about the sort of the symmetry of client retention number looking forward? Is it that it's potentially more likely to be skewed to the upside than the downside? Thanks for those questions, Ben. So on the guidance of net operating income of GBP $370,000,000, so you've got two big drivers here, the client income retention that you talked about and also client income. On client income side, as we're saying, we're seeing encouraging signs from our active trading client base, and we see continued good levels of trading activity from them at the start of H2, so the first six, seven weeks. From the client income retention perspective, as we've said in the outlook, on the H2 assumptions we are making in that guidance, we're expecting it to exceed 80%. However, we are not expecting it to be anywhere near the levels we saw in H1. Okay. Thanks, Eun. In terms of your second question, Ben, so on the client income retention. So yes, obviously, 15% particularly strong, very pleasing. But we have, throughout this presentation, reiterated our stance being comfortable and confident of greater than 80%. The reason we have that comfort is through the sheer amount of data that we have recorded on a daily basis, all available and go back many years. And it's that robust back testing framework, which the trading team, so that's comprised of dealers, quants and data science. They're the ones that are constantly analyzing the data, so replaying events, overlaying what the market has done, client behavior, testing out different strategies. And like anything, the more data you have, the more you use it, the more you test it, you're able to have a degree of confidence going forward. So we sit there knowing what we knew historically. No one knows what the future is gonna hold, but what you can do is go forward with a degree of confidence based on the data you have available. Thank you. The next question is from the line of Portia Patel with Canaccord. Please go ahead. Thanks very much. Good morning, everyone. I've got two questions, please. The first is on the B2B CFD and spread back revenue, which I noticed only seems to have increased by GBP 1,300,000,000.0 during the half year on year. And on first inspection, seemed to me kind of a surprisingly low increase given the market backdrop and also the investments being made there. So I was just wondering if you could explain a bit more why that has been the case and what we can expect in terms of growth revenue growth on the B2B side of CFD and spread back going forward? And my second question was on the €47,100,000 of risk management gains. I was wondering, David, if you could split this out for us by net hedging gains and the net client losses, please. Yes, sure. Thanks for those questions, Portia. On the first one, so yes, the B2B CFC business had a smaller revenue increase period on period. But what we've been seeing is that in our liquidity services area, we're seeing a lot of our clients. So internalizing more of their trading activities. And as a result, that means that the value of our existing business has not expanded as much as you may expect on the pure retail side of the business that comes directly to us. There's a lot of promise on that in the future, and that's why we continue to invest in this area because it will expand both the product offering for our existing clients, but also open us up to a much bigger portfolio of potential clients going forward as well. Yes. And I think it's fair to you, it's important to also about the quality of that revenue stream. So we've often said before about we provide liquidity services and hedging capability to a variety of firms. And for us, during the both the onboarding and throughout the journey, we're constantly analyzing the flow that we inherit. So whilst you could go out there and materially grow the number of providers you're providing liquidity to, if that starts eroding the quality of returns, then it's a false economy. So we're pleased with the overall quality mentioned in that line. Also, yeah, I found out last night also we won the best DSD provider and the best white label as well in the inside. So it's good. From there? Finance maintenance. Okay. To answer your second question on the risk management side, so the split is 9,000,000 on the client side and 39,000,000 on the hedge side. That's the split behind the 47,000,000 number that you see on the slide. Great. Thank you very much. The next question comes from line of Vivek Raja with Shore Capital. Please go ahead. Hi, good morning, gents. Can you hear me okay? Yes. Hi, Vivek. Hi, hi. The sort of main thing that I want to explore is around gross client income on a sort of normalized basis. And just trying to get a flavor of that with the higher and, let's say, stickier cohort of new clients you've added. So the way to sort of ask that maybe would be how has that trended on a monthly basis? So obviously, Q1 was higher than Q2. I wonder what was Q2 exiting on a monthly basis in terms of gross client income? So that would be my first question. The second question is around the growing pile of excess capital. So you mentioned, obviously, the large strategic projects that you're looking at. I just wonder how much excess capital is enough. And I appreciate you want to maintain a bit of liquidity for a spike in broker margin requirements as well. But how much would you look to hold? And how much are you looking to invest in these projects? And with respect to the stuff towards the latter end of the slide deck, these new projects, I appreciate around institutions. When can we expect to get some color from you about what revenue contributions of that might look like? Thanks. Sure. So on the client income on a normalized basis, what we've seen is that we are as you said, Vivek, we're holding on to those additional clients that we've acquired during the period. So Dave's got an interesting slide from earlier, which shows that client activity during Q2 post the height anyway of COVID activity was around fifty percent of what we would well, 50%, should I say, of what we were seeing prior to the COVID period. So that's driven in part by the existing client base, but also helped by the new client base. So in a normalized market conditions, you'd expect it to be well above, you know, the the level we were seeing pre COVID. So it'd be somewhere between that 50% of of pre COVID levels. So I think from a client income on a on a monthly or quarterly basis, you can probably extrapolate from from the numbers in the graph anyway, but the numbers would be in the high 20 millions during each month of Q2. So that's the gross client income side of things. From the excess capital, as you're talking about there, there's a number of drivers as to why we like to retain capital in business. But the fundamental driver here is that we always want enough capital and liquidity in order to fund the opportunities we see to grow the business going forward. And we do not want to be hampered by any potential issues going forward. So from a precise number, it obviously depends at any point in time. But as well as investing in the business, we also have to keep in mind that we have to be able to facilitate the demand in our business, which means that as you know pretty well, Vivek, our initial margin at broker can be quite volatile at times as well. So we need to make sure that we have sufficient liquidity in order to hedge when we have those big bouts of market volatility as well. Sorry, I'm not giving you a precise number. He's just jumping at the bits as well. Yes, I'll jump to Thomas. So funny enough, Vivek, the last conversation we had with the bulk of our investors, people that have been holding stock for quite a long time, their market's changed. They're saying things along the lines of, well, you've got a 30% return on cash last year. No need to pay a special, just keep investing the cash. And if you know, so that's great because we don't get the question about special anymore. But if we had paid a special two years ago, one year ago, would we be recruiting 68 IT staff? Would we be recruiting Brendan on an astronomical salary? We're sure, like, Yeah. Yeah. And also, we we can't say too much, but we got big three big releases next year. One in Australia, One in The UK, and another one in The UK. The three big new platforms. And, they're not an upgrade of existing platforms. They're actually a massive expansion of product and tools and appeal to different different market segments. And that's one of the major reasons that Brendan has brought in apart from all the other stuff around cloud and speed to market and so on. So we've invested we continue to invest. And I mean it makes no sense really to pay a special dividend, but we can continue to get higher returns. So, you know, there's a lot going on around here. We're actually very excited about next year. We've got all sorts of people working on things for us, and hopefully, Brendan will deliver on 10% of these profits, getting stuff done delivered in a couple of weeks rather than a couple of years. Peter, thanks for your answer there. So just moving off the special return, because I it's been loud and clear from you for some time that you see plenty of opportunities for growth and you're investing to achieve those. I guess really what the focus of my question was, is I can see plenty of strategic opportunities out there for you that you're investing in. When do we get a sense of what the revenue contributions of those might be? So just partly referencing what Portia asked about earlier on, when the B2B and I with your platform and focus on low latency, I guess there is a move towards the institutional side of the business and where there could be opportunities there. But as Portia references, revenues year on year didn't move as much as the retail business did. So I appreciate why that might be. So the question was really when do you think you'll be in a position to start talking about the revenue contributions of these new opportunities? In terms of the B2B line, cost, obviously, that incurred this year was also on the infrastructure side. This is building out the the actual product itself. So it's not just about, obviously, what you put onto the platform and then the audience you engage with. It's also the value you can extract from the behind the scenes costs. So on the infrastructure side and the drive for lower latency, that in itself will benefit the existing business and the existing flow that we have today. So we've often talked about the analytics that we have, the quality of flow. If you can extract more from what you have today, whilst obviously going out and winning new business, that's when you'll see the benefit. With infrastructure now done and the product being released imminently, I think we'll be able to provide more of an update specifically to those lines for the year. Okay. Thank you very much. The next question comes from the line of Martin Price with Jefferies. Please go ahead. Good morning and thanks for taking my questions. I've got two actually. The first is just a follow-up on the outlook statement. Clearly, you flagged a strong start to the second half. I was just wondering if you could provide some more detail on how trading activity has really shaped up in the last six weeks or so and particularly product categories where client engagement and volumes have been more notable. And secondly, on stock breaking, I appreciate there's still plenty of runway for growth in Australia. So I presume that remains very much the focus, but I was just wondering if you could provide an update on how you think about the longer term development of that business and thoughts on international growth? Yes. Sure. Thanks for those questions, Martin. On the outlook and the trading activity for the first six, seven weeks of the second half, We've as we've said in the statement, we've had a strong start to H2. So again, at what Q2 trading activity looks like, you could probably assume fairly similar to the first six weeks of the second half. From perspective of the products that our clients are trading, it's pretty similar to what we've seen during the first half of the year because with the presidential election and the oncoming hopeful vaccine findings, we're seeing that there's a lot of we're seeing there's a lot more equity trading than we've seen previously. But at the same time, our clients are still well diversified in the market. We're seeing a significant amount of index trading that continues to be our biggest revenue driver. And similarly, as we've seen bigger equity trading, we still see good strong revenue streams from our stockbroking business in Australia. More importantly as well, the client cash has grown quite significantly. So we're expecting lots of activity in the second half of the year. Is Matt going to talk about stockbroking Yes. Thanks, Ben. I'll cover the stockbroking piece. So yes, I mean, look, you called it out that there is still plenty more runway, and I guess, on a number of angles. First and foremost, we think there's still more value to extract from the existing client base. We're showing that in the increased RPC that we're seeing steadily quarter on quarter. We articulated some of the new products that we're dropping over the course of H2, which again allows us to tap into a greater percentage of that investment wallet. And also, the retail market in Australia itself has been booming and will continue to take a share of that. Outside of that, though, our B2B business is also thriving, there are a number of small, medium and large deals that are a longer term play. But given that we have the pedigree and have done the biggest chess migration or client migration in history, we certainly have the runs on the board for any future ones. In terms of the comment on what does that look like potentially outside of Australia from a global footprint in stockbroking. It is something that we are and continue to evaluate and look at markets where we could have good penetration and add good value to a client base. So it is still something that we are exploring. Remarks. Well, just to thank you all for your interest and hope to catch up with you all soon in person. And it's been a fantastic six months for us. A lot going on around here. Really enjoying having Brendan and the guys. Brendan brought in some fantastic people. He's helping us to elevate technology to a much higher level. I'm very, very excited about new opportunities next year. We've been doing a lot of work on this. And so all to play for, fantastic set of results for us built on our strategy of targeting the high end of the market. We have been vindicated by regulators. We've been vindicated on our strategy. And we believe that our culture of continually investing in technology as opposed to marketing, onboarding has really got us where we are today. And I think that was perfectly highlighted during the Pfizer announcement when we had a % uptime during that period, 99.97% uptime for the six month period. But we did a lot of business that day. So excited about the future. I'm still committed. I'm going to work here for another ten years And not selling any shares, I'd be a buyer of CMC stock at these levels. Thanks a lot. Ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect. Goodbye.