Good morning, everybody, and thank you for attending our results presentation for the first six months of 2023. I'm Peter Cruddas, founder and CEO of CMC Markets, and it is my pleasure to talk you through the investor presentation that we published on the CMC Markets website this morning. With me today is Euan Marshall, CFO, David Fineberg, Deputy CEO, and Matt Lewis, our head of APAC and Canada. I'll run through some of the highlights from the period and then hand over to Euan to cover the financials. David will then cover trading, and Matt will talk about APAC business. I'll then finish on strategy before we open the lines for Q&A. You can also submit a written question at any point by clicking the Ask a Question button on the webcasting page. Let's get going and move on to slide three.
I'm delighted to report another period of strong performance from both a strategic and financial standpoint. The performance reflects the ongoing success of our diversification strategy, technology partnerships, and focus across our trading and investing businesses. The keen-eyed among you will also notice we've re-renamed our business divisions. Moving forward, our traditional leveraged CFD spread bet business will be captured under the headline of trading, and our non-leveraged businesses will now be under the investing banner. This aligns ourselves better to the CMC Invest brand we're marketing in the U.K., Australia, and Singapore, as well as our approach to offering a wider range of assets on our trading platforms. Looking at our results, our net operating income for the six months was GBP 153 million, up 21% versus the similar period last year.
Our core trading business generated net revenues of GBP 128 million, up 27% versus the same period last year. While our investing business generated net revenues of GBP 21 million, which is down 14% year-on-year, in line with the decline we've seen in the global equity markets. Our target to grow group net operating income by 30% over three years based on 2022 results remains on track. I'm very pleased to report we delivered a number of significant advancements over the first six months across all of our business lines. In trading, we've added new FX liquidity functionality, which significantly enhance our institutional capabilities. We've added new pricing functions, improved onboarding solutions, and new analytic features, all of which David will explain in his section.
Our APAC business continues to deliver significant enhancements with further product rollout expected before the end of this financial year. In the U.K., we've launched our U.K. Invest platform that over coming months will also see further product additions and expansion. We've got a lot to talk about in today's presentation. I'm excited about the progress we've made and what we have ahead of us. CMC is evolving quickly, all aimed at diversifying our client mix, driving growth and improving profitability to the benefit all of our stakeholders. I'd like now to hand over to Euan, who will take you through the financials for the first half.
Thank you, Peter, and good morning to everyone. Moving on to our KPIs on slide five. Starting with net operating income on the top left, we have set as growth, a target to grow our net operating income by 30% over the next three years, and the first half provided a solid start to that journey. Both from a product delivery perspective, which David, Peter and Matt will talk about later, but also with solid net operating income, which was 21% higher than H1 2022, and broadly flat on H2 2022. Moving on to the top right chart and the mix of our net revenue. Notice Peter mentioned leveraged business to trading and our non-leveraged business to investing, which we believe better represents the description of these businesses to our stakeholders. During H1, the proportion of revenue generated by our trading business grew.
This, however, does not fully illustrate the ongoing diversification of the business, whereby the trading business growth was driven by excellent growth in our institutional or B2B business, which we'll talk about later. It should be noted that the markets have been conducive to client activity in our trading business, and conversely, the market uncertainty brought down client appetite in our investing business. From a strategic perspective, we aim to grow the investing share of revenue over time, particularly as the offering grows in Australia and expands in the U.K., Singapore and beyond. PBT is broadly flat on H1 2022, with revenue and costs increasing in broad lockstep with ongoing investments across the business that we discussed as our full year results. EPS was GBP 0.102 for H1 2023. The increase was due to fewer shares in circulation as a result of the share buyback.
We have declared an interim dividend of GBP 0.035 per share and have a board commitment to pay a total dividend for the year of 50% of profit after tax. Moving on to the trading and investing KPIs on slide six. Let's look at the trading KPIs first along the top. As you can see, active clients on the top left have reduced steadily since their peak in H2 2021, when we saw heightened trading appetite, including the meme stock trading boom in Q4 of that financial year. This was somewhat expected due to the supernormal acquisition that took place during much of the pandemic through to the end of FY 2021, meaning that we have seen lower client acquisition and higher acquisition costs since then. We continue to acquire and retain high-value, sophisticated clients, as demonstrated through the strong RPC.
On the second graph, you will see that client income has grown 22% in comparison to H1 2022. On a similar trend to active client numbers, client income has reduced against the pandemic period, but again, has shown good net growth above the pre-pandemic levels, where it stood at around GBP 105 million per half year. Client income retention was 83%, so in line with our guidance, yeah, and in excess of 80%. David will talk more about this later. Finally, on the trading KPIs, we have client money AUM, which has grown considerably since before the start of the pandemic and remains very healthy, although below historical highs. Moving on to the investing KPIs, which still solely relate to our CMC Invest Australia business.
On the bottom left graph, you will see active client figures, which have fallen 11% when comparing against H1 2022, but grown significantly since pre-pandemic. Net revenue is down 14% against H1 2022. The uncertainty in FX has resulted in clients trading less across the investment industry globally. The stock market falls have also led to a reduction in AUA, seen in the final graph on the right-hand side. The group are excited about expanding the investment offering, where Matt will talk through the potential in Australia and Peter will reiterate our geographical expansion plans. Moving on to the income statement, revenue performance against the prior year comparative, previously, and we'll run through the 28% increase in operating expenses on the next slide.
It is worth noting that interest income has increased significantly during the half year due to the global interest rate environment. The majority of this interest income is earned on client money balances in both our trading and investment business lines, and particularly CMC Invest Australia, and this will continue to increase through the remainder of FY 2023. Once this income stream is taken into account, net operating income for investing was down 9% at GBP 22.5 million. PBT margin has deteriorated in H1 2023 versus H1 2022, as indicated through our guidance in the full year results in June. It stood at 24% for H1.
Note that as well as being impacted by lower revenue, investing PBT was also impacted by rising costs associated with the project to migrate ANZ Bank clients to CMC, including increased marketing spend to replace the ANZ sales funnel, in addition to the inflationary rising costs we have experienced across the group. Finally, the effective tax rate was 21%, down from 23% in the same period last year. Moving on to operating expenses. Costs have increased by 23% to GBP 106 million from H1 last year to H1 2023. There have been a number of areas driving this increase, which we have detailed in this slide. The biggest increase is shown on the right-hand side of this slide, with the ongoing investment in headcount to deliver our strategic initiatives.
This has totaled nearly GBP 6.5 million, with some of this increase coming through the hiring required to serve these expanded or new business lines. Just over GBP 4 million related to the increased marketing spend across both the trading and investment businesses. We flagged the GBP 4 million increase in the FSCS levy at our June results, and the remainder of the increase was across various areas, which can be more easily analyzed if you look at our normal view of operating expenses, which is available in the appendix. It should be noted that sterling depreciation contributed around GBP 3 million to costs in H1. Let me now talk you through the liquidity and regulatory capital position as at the 30th of September. Firstly, looking at regulatory capital in the top table.
On the 1st of January, the group moved to a new regulatory regime, the IFPR. The group's balance sheet and overall regulatory capital remains strong, with a regulatory capital ratio of 610%, and our Common Equity Tier One capital increased by GBP 15 million against March 2022 as a result of our profit after tax and foreseeable dividends. Total available liquidity, which you can see in the bottom left, remains strong, but was a little lower due to profits not offsetting the full year dividend, which was paid in August, plus liquidity used for the share buyback program. Note that the GBP 30 million share buyback program completed in October.
Net available liquidity was broadly flat due to a decrease in blocked cash as a result of the progress made on the share buyback, and also the reduction in prime broker margin requirements. Overall, this leaves us in a strong liquidity position to continue to invest in our large and ongoing strategic projects. Let's then to look at the outlook for the remainder of 2023 on slide 10. Regarding net operating income, trading conditions at the start of H2 remained good for the trading business line and continue to be more subdued in the investing business line. We remain confident that we are on track to meet our target of 30% growth in net operating income by FY 2025 against our FY 2022 achievement of GBP 282 million. Regarding operating costs, excluding variable remuneration, we have guided GBP 215 million.
We also highlighted at the end of September that there is an upside risk to this from ongoing weakness in GBP and also inflationary pressures. In addition, we continue to recruit for strategic initiatives, and if this remains successful, this will push costs higher. Beyond FY 2023, we will continue to push hard, expanding into the institutional space alongside the geographic expansion of the investing business. This means continued investment in headcount and infrastructure, so you will see cost increases in FY 2024 when comparing against FY 2023. Our effective tax rate this year should be in the region of 21%, with the U.K. and Australia being the regions of our main profit-generating entities in the group. During FY 2024, this is likely to rise to around 26% should the U.K. government increase corporation tax to 25%.
Finally, the group continues to maintain a strong liquidity profile, providing the group with the ability to invest in organically growing the business through opportunities such as the institutional business line, the U.K. and Singapore investment platforms, and integration of the ANZ Bank client base into CMC Invest Australia. As a result, the board remains confident and committed to paying a total dividend of 50% of profit after tax. This concludes the financial outlook, and I'll now hand over to David. Thank you.
Thank you, Euan, and good morning, everyone. I'd like to now start by running through the results from the trading or the leverage business to help provide some additional color around performance in the period. Looking at slide 12, the table and chart show client income and net revenue by half year. The top line of the table shows the gross client income, and as a reminder, this is the spreads, financing, commission clients pay to trade. The gross client income for the half was GBP 154.9 million, up 22% against H1 FY 2022. This increase is primarily driven by the increase in B2B client income. Although we also saw an increase in trading across our client base during periods of heightened market volatility. In comparison, market conditions in the prior year were relatively subdued.
Note that gross client income remains well above the levels we saw before the pandemic, which was typically around GBP 105 million per half year. The increase in B2B volume has resulted in higher than average hedging costs, given the nature of the flow, but worth comparing H2 FY 2022 rather than H1 FY 2021, as this is when we started to see a marked step up in institutional volumes. Trading net revenue was up 27% on the prior period to GBP 128.4 million. As a result of these higher levels of gross client income, along with slightly higher level of client income retention than we saw in H1 2022 at 83%. Overall, this represents a strong performance outside of the pandemic-related periods.
We can see from the table above that net revenue was in line with H2 2022. This was itself a record outside of the periods impacted by COVID-19, so we are pleased with the sustained strength in our trading business. Going forward, we expect client income retention to be in line with prior halves at 80%, with a continued shift in volumes towards higher contribution from our B2B. Moving to slide 13, focusing on an update on the developments within our trading business. It's been an exciting year for CMC and products to enhance client experience and engagement. These include full planning with regards to our mobile user experience and readiness for listing cash equities on our next gen platform. We are launching this in order to diversify our product range and expand the breadth of our products.
Evolving our Premium Alpha offering to be the best in class and rolling out across all key regions. This includes both preferential pricing and benefits for our clients across the target markets. Enhancing our MT4 offering to provide a wider product selection with lower latency and competitive pricing. In trading analytics, we have built a best-in-breed trading analytics tool to help our clients manage and hone their performance. We have achieved very positive NPS scores so far from the clients that we have tested the first version with. With further enhancements planned. We are developing further capability to build out a unique selling point, thus aiding switching.
This has been built in-house as opposed to purchasing off the shelf, again, showing the strengths that we have in the technology development. We believe that by building out the trading environment, we will bring further products and revenue diversification for the group. We should therefore enable CMC to grow its market share in the Premium target segment, along with growing our share of customer trading wallet. Thank you all for your time. I will now hand you over to Matt.
Thank you, David, and good morning, everyone. Today, I'm gonna walk you through the performance of our CMC Invest Australia business, starting with H1 results and finishing with the strategic initiatives and plans we have for H2 and beyond. If I can focus your attention to slide 15. H1 net operating income saw a modest decline, down 9% year-over-year, coming in at GBP 23 million. However, importantly, up 54% versus pre-pandemic FY 2020 levels. This was driven by a 14% reduction in net trading revenue due to macro headwinds relating to uncertainty around the global economy, inflation, and rising interest rates. While interest rates have impacted trading revenue, interest income is becoming a more meaningful revenue stream for the Invest business, up circa 280% versus prior year.
For clarity, this is predominantly the interest income CMC earns on client cash, and going forward, we see this contributing circa 10% to NOI. Looking at the graph on the bottom left, this demonstrates that the underlying health metrics of the business continue to perform strongly with 165,000 active clients. While this is slightly down from the record activity of last year, it remains significantly above pre-pandemic levels. Importantly, client engagement across our platforms is at an all-time high, with logins up 4% year-on-year, demonstrating that clients are ready to trade when the opportunity presents. As of the end of H1, client acquisition is at the highest level it has been in the last 18 months across our CMC retail offering. The continued strength and resilience of the business saw it contribute circa 14% of total group net trading revenue.
We believe our position as the second largest retail stockbroker and the largest white label provider in Australia, combined with the breadth of features, functionality, industry-leading pricing, and products we offer, sets us apart from our competitors. Moving on to slide 16. The graph on the top left provides a breakdown of the evolution in the client assets we manage. While we finished the period with a modest reduction in assets under administration, coming in at just over AUD 70 billion. As you can see in the chart, the driver for this reduction is market-related, with client portfolios impacted by the falling asset prices seen around the world. Encouragingly, clients have deposited a further AUD 1 billion in cash to ensure that they're ready to take advantage of future opportunities in the market as they present themselves.
At the last presentation, I spoke about a number of initiatives and continuing our innovation. Pleasingly, I can say we've made significant progress. Last year, we launched our new mobile app to retail customers across both iOS and Android. As at the end of H1, this has become the top-rated investing app across both platforms. Over the course of H1, we rolled this out to a number of our white label partners and all intermediary clients. Our platform enhancements, which include a complete UX redesign aimed at simplifying common activities on the platform and enhancing the overall experience, is on track for release at the end of this financial year. Last year, we also announced the acquisition of over 500,000 share investing clients from ANZ Bank, with total assets in excess of AUD 43 billion.
I'm pleased to say we've commenced the migration of these clients to our retail ecosystem and are on track for completion in Q4. To date, we've seen just over 30% of AUA positively migrate. These clients have access to a greater suite of products and features than they previously did, including better pricing, our market-leading mobile app, trading strategies, education, and the opportunity to trade CFDs. We also announced that we're building out a crypto offering, further expanding the range of assets our clients can trade from the one platform. This is on track for release at the end of this financial year. Cryptos are an important product for our clients, with a total addressable market in Australia, where 30% of Australians hold or have held digital currencies, which is among the highest rates in the developed world.
This is especially prevalent across the millennial new wave traders, where circa 42% have or currently own digital currency products. Moving to our strategy of diversification through geographical expansion, I'm pleased to update that our Singapore Invest build is going well and is on track for release in Q4. We see this as a huge opportunity, with 52% of the population over 16 already having investment in equities, which equates to roughly 1.5 million people. Importantly, we see Singapore as a regional hub for wider Southeast Asia. Continuing with the theme of geographical expansion in the Invest space, we are currently exploring rolling our Invest platform into two new countries, Canada and New Zealand. Both countries present a huge opportunity in the retail investing space with a combined addressable market of 16.5 million investors.
We use the lessons learned from our Singapore Invest rollout to ensure a smooth and efficient launch in any new country, and we'll continue to explore further geographical options. All new countries will utilize the existing Australian feature-rich web platform, iOS and Android apps. Clients will have access to multi-assets and 16 global markets with over 40,000 instruments, and the client journey will be optimized with branding and enhancements aimed at fulfilling local investment needs. With our client base expanding and our innovative product offering continuously growing, we're excited about the value we can keep adding to our clients' financial future across different geographies. I'll now hand you back to Peter to provide a strategic update.
Thank you, Matt. So we're now on slide 18, but before we get started, I would like to remind you all about CMC's continued resilience and how, despite the economic turbulence we have seen over the past year, CMC continues to go from strength to strength, delivering on our strategy aimed at creating value for all of our stakeholders. As I mentioned earlier, this is a year of investment in our strategic initiatives to accelerate growth over the medium term. We've outlined our seven core strategic initiatives and our full year results, and I'd like to update you on our progress year to date. We've rebranded all our leveraged businesses under the trading banner. This better reflects what we're delivering in this business and the additional products we're going to be offering. We've also rebranded all non-leveraged businesses as Investing.
Within Trading, our plans to deliver upgrades to our product and technology offering has continued. Highlights include the launch of Price Plus and FX Active, as well as delivery of upgrades on the MT4 platform. Moving on to Investing. CMC Invest U.K. was successfully launched to the public in September 2022, and we'll talk more on this later. We also remain on track to complete the ANZ share investing client migration by the end of this financial year. We've also made significant progress towards offering physical cryptocurrencies in Australia, further enhancing our client experience in the region, along with delivery of significant platform upgrades year to date. Looking beyond this year, we expect investments to drive steady diversification and growth from the financial year 2024, particularly from our B2B institutional business and continued expansion of our Invest brand.
Not only are we on track to launch our CMC Invest Singapore offering by the end of this financial year, but we're also considering plans to launch a similar offering in Canada and New Zealand. I'd also reiterate what David mentioned earlier. We continue to invest in our traditional trading platforms with many upgrades in the pipeline, including a complete mobile user experience redesign in readiness for cash equities and new trading analytics features and onboarding enhancements. All of these enhancements are aimed at increasing our share of the wallet from the Premium client section that we target in our marketing strategy. Now on to slide 19. This slide highlights the continued growth we're seeing in our B2B institutional offering under our CMC Connect banner.
First half 2023 institutional B2B volumes continue to grow rapidly, and we're expecting to deliver 20%+ compound annual growth in B2B volumes going forward. Our 2023 objectives are progressing as planned and include positioning CMC Connect as a full-service fintech solution and non-bank liquidity provider, new product developments and latency improvements, FX give-ups and ECN enhancements. We're also driving brand and product awareness across all distribution channels through our sales teams. Looking ahead to 2024, our objectives include unification of all asset classes on all platforms and APIs, development of partner stock broking options, new products such as cash equities, FX products, and cryptocurrencies. In particular, our focus is to accelerate our growth in the FX market with a marketing strategy focused to build client groups across increasing geographies.
As we highlight on this slide, the opportunity in spot FX is a significant structural opportunity for us, and remains one of the largest untapped markets for CMC to capture. Now we're on slide 20. I'd like to update you on where we are with our CMC Invest U.K. platform. I've actually been looking forward to this slide. Successfully launched to the public in September this year, we continue to add additional features to enhance the product offering. In addition to the general investing account, we've now added ESG screening as well as beta launch in both multi-currency accounts and ISAs. We're also on track to launch mutual funds, transfers, and a subscription offering by the end of this financial year.
Looking ahead to next year, we have committed to deliver SIPPs, enhanced market access for global equities, options, and physical crypto, as well as regular investment and direct debit functionality for our clients. This move into self-directed investing marks a significant milestone for us, representing a major platform for growth and diversification. Our mission is to constantly maintain a superior and unrivaled technology experience for our clients. Now slide 21, please. We're also very excited about the pending launch of CMC Invest in Singapore. Set for delivery at the end of this financial year, we will be launching with an offering that includes access to 16 global equity markets and over 40,000 instruments, including ETFs, a subscription pricing model, new ESG screening, and enhanced charting tools.
We continue to look at other regions to extend this offering, and Canada and New Zealand are areas for potential expansion. All of this forms part of our core strategy to diversify our client base and grow our Invest brand. On slide 22, we reiterate our commitment laid out during our full financial year 2022 results to grow net operating income by 30% over the next three years, based on the 2022 results. As I've explained, this is being driven through the addition of additional products and geographical expansion across our three core business functions. We've delivered significant enhancements over the past six months, and I'm very confident about our direction and diversification goals looking ahead. I'd like to thank you all for joining the call today.
This concludes the presentation, and I'd like to turn it over to Q&A now. Thank you.
You can submit questions in written format via the webcast page by clicking the Ask a Question button. If you are dialed into the call and would like to ask a question, please signal by pressing star one on your telephone keypad. We will pause for a moment to assemble the queue. We will take our first question from Kim Bergoe, Numis. Please go ahead.
Good morning, all, and thanks for the presentation. I had a couple of questions, if I may. One is about active clients and revenue per client, and it's just how we should be sort of thinking about that going forward. What are the current trends and what will that, you know. What are the sort of dynamics between those two that we should be thinking about when modeling? The second one is about CMC Invest. What are the early indicators in terms of. Obviously, it was launched in September. Any early indicators you can share with us in terms of take-up? You know, how many clients? What are you seeing there in terms of activity on the platform? Thanks.
Hi, Kim. Thanks very much for those questions. I'll take the one on active clients and RPC first. Yeah, we have seen that decreasing trend over recent half year periods. We do expect that to steady as we move forward. From an RPC perspective, there has been a good uplift in market activity this half year. However, some of that increase is also due to the increase in size of the institutional business, which has contributed well to the increase in RPC, because naturally those types of clients trade more with us. David, maybe you can take the CMC Invest question.
Yeah. Thanks.
Hi, Kim. Yeah, regarding CMC Invest, obviously was live in September, but it's still too early to be telling in terms of take-up. For us, obviously, it's making sure that it's completely feature rich. With the launch of ISAs, et cetera, then we'll be going more externally. The internal feedback, obviously, very positive. Our mission at the moment is collating that feedback and building it into the app for when we-
I think just also, just to add to what the guys have said, if you look at the Invest business now in our B2B business, it's contributing about 38% of income. If you think a year ago, 18 months ago, we were talking about building the Invest platform. We've launched it. It's not 100% yet 'cause we're beta testing ISAs, set to go on before the next tax year. Then we've got a lot of really sexy stuff to add to it. I think the key point here is that how quickly and how easily we've been able to adapt our technology, using the experiences and the support mechanisms we have in Australia to launch a brand new platform into a brand new market, you know, all built within. That's the real point here.
Nearly 40% of our business is coming out from outside of our traditional business, and we've got plans to expand that even more. We're excited about all of that.
Thank you very much. That's very clear. I mean, I had one additional question. I'm sure it will be asked by others as well, but it's just about how we should be thinking about the cost. I mean, obviously, you came in about halfway through what you set in terms of the cost guidance for the full year. You are sort of saying it could go higher than that. Also in terms of sort of CapEx going forward. I'm sure somebody else will be asking, but just sort of keeping that in mind in terms of how should we be thinking about that going forward, i.e., how is our cost estimate, how should they develop? Thanks.
Yes. Kim, just to be clear, on costs for this year, yeah, we have talked about the uncertainties out there. We do have GBP weakness, which is weighing on that operating cost guidance that we've given. There is also, on the upside, we are having good success in recruiting for our strategic initiatives as well. Obviously that would put a bit more of an upside on those costs as well. We're not talking about a material amount for the full year numbers if they both do continue to transpire. Looking forward into the future just for clarity as well, we are obviously working in a global inflationary environment at the moment, so you will see cost uptick because of that.
There's also that increase as well because we continue to invest in those strategic initiatives. As you can see from the numbers in the institutional business particularly, we're seeing great opportunities there and we continue to see areas that we can invest. That, of course, comes with additional personnel and infrastructure costs.
I get the question about costs, but it always feels like it's a negative connotation. If you look at our costs, they're going up from a very high base, not from a low base. Imagine if we hadn't invested in this business over the last three or four years. There's plenty of companies out there that haven't invested in technology. What we've done is, we're launching new platforms around the world based on the technology that we already own. If there's one word to describe CMC's USP, that one word would be scale. The fact that we can launch a U.K. invest platform, and we can launch one in Singapore and other jurisdictions for really minimal costs. We're coming from a high base.
I think our cost increase should be a positive connotation, not a negative connotation, because nearly 40% of our business is coming through businesses that are very much connected to technology, our B2B business and our Invest business. I think people should be positive about that, not the overall when costs go up because I guess people view us as a dividend income stock. They think if costs are going up, our dividends will be less. We're building for the future. If you look at. Go back and look at our slides in 2016 when we were a public company, and look at our slides today. We are a completely different company. We're punching into different areas of business, non-leverage. The fact that we've got. We haven't published this, but I better not say it, but.
Well, I can say it. You know, we've got 1.4 million accounts in the infrastructure or will have at the end of the migration of the ANZ. They're not all from ANZ, by the way. We did a technology deal with ANZ, and we've acquired AUD 70 billion worth of share assets there, assets under administration. Just go back, look at 2016, look at our five pillars for growth then, and look at our seven pillars for growth now. 40% of our income is derived through technology type transactions. Costs going up are just delivering scale for us.
I think.
I'm very excited.
I think just to finish off on what Peter's saying as well, those cost increases do come with associated revenue increases as well. As we tried to say in the results, the profit margins should start increasing next year, even if, even as those costs increase as well.
That's very helpful. Thank you. Thanks very much. Just for my sort of clarification, the GBP 215 million sort of cost target for... That's still for what we know at this point, that's still our best sort of guess for where costs are gonna land this year. Is that fair?
Yeah. With five months left in the year, that seems reasonable. Yeah. We've raised the uncertainties as well, but that seems reasonable for this year.
Great. Thank you very much.
Thank you. Our next question is coming from the line of Ben Bathurst, RBCCM. Please proceed.
Morning, everyone. I've got three questions, if I may. Starting with one on timings for CMC Invest U.K. You've confirmed this morning that you will deliver a full B2B offering. How long do you think it will be before you're in a position to roll that out? Is it months here rather than years? Secondly, on sort of recent trading, looking back at the pre-close statement in October, you mentioned that there was an improvement in underlying market activity in August and September. Could you just elaborate a little bit on what those improvements were, and perhaps comment on whether those conditions have continued into October, November, into the sort of second half? Finally, on FX, you mentioned a GBP 3 million headwind to costs year on year in the presentation.
I wondered if you could provide the offsetting tailwind, that you got from sterling depreciation, in terms of higher NOI. Thank you.
For each one of us. Sure, I'll start off, if you like. CMC Invest U.K., and then Euan can do the, you know, GBP 3 million, and Dave will do the activity question. Let's be clear, we've already launched our U.K. Invest platform. All we're beta testing is the ISAs part of it and multi-currency accounts. Over the next two, three weeks, we'll be going live to the public on ISAs. We've added a dollar account, so you can hold U.S. dollars, but we'll be launching other currency accounts as well. For example, if you wanna hold U.S. dollars, you can convert your base currency into U.S. dollars. Eventually, you can have your base currency as U.S. dollars. You can pay in U.S. dollars. There'll be euros, other Aussie dollars as well. Mustn't leave Matt out of this.
The ISAs is going live in the next month with the dollar account, and then SIPPs will go live before the next tax year. The actual U.K. Invest platform is up and running as we speak. Market activity, Dave?
Yeah. From our perspective, the first six months, we've actually seen good interest and market conditions across a number of asset classes. You'll know historically, the group derives around sort of 50% from indices. Obviously, what we're seeing this year is a pickup in FX market conditions, and also on the commodities front with some of the gold moves. You know, the market conditions have been akin to what we expect in the first six months, and there's been no material changes after sort of September. No, all good on this side.
I mean, it's always market volatility. Every year we talk about the same thing. You know, I guess the innuendo of it, the connotation is that a lot of our money's profit income is dependent upon market volatility. We get market volatility every year, and 40% of our income is coming from outside of our traditional business, our D2C business. You know, it's 24% is B2B, and 14% is Invest. We're gonna keep investing in those areas. Those are the areas that are not directly being looked at by regulators, churn and burn type clients. We've also got a very mature client base now. Our Project Tuna's been going now for five or six years. That's maturing. We're broadening the product range. We've got lots of stuff in the pipeline.
Won't announce it now, but you know, at year-end, we'll be talking about a big new product that we're bringing in. Heads down here. Heads down working hard. Euan, FX.
On the sterling depreciation then, if you compare this half year versus the last half year, that increased our cost base by around GBP 3 million. Just to keep it really simple, an easy way to look at this is from a profit margin perspective on what's the benefit from revenue. We have profit margins in the region of the 20s percentage points. The revenue benefit would've been probably around GBP 4 million. There are some complexities around our hedging activity as well and how we make and lose money on that and how clients gain and lose money, but let's keep it simple at around GBP 4 million.
Just going back to your initial question as well on the B2B business, CMC Invest in the U.K. It's good to ask the question because that is where we see a massive opportunity in the future for us, as has been proven with CMC Invest in Australia, where we've acquired some very large clients and the majority of our business actually does come from B2B. We want to get a good product suite together first for our D2C offering in the U.K., and then absolutely, we want to get that rolled out as a B2B offering as well.
Thanks for your answers.
The next question is coming from the line of Vivek Raja, Shore Capital. Please go ahead.
Hi. Good morning, gents. Thanks for your presentation. I had a few questions. The first one was around crypto generally, because, I mean, you haven't talked much about it, but you know the word is all over your slide deck, in terms of expansion in both parts of the business. I just wondered following FTX's collapse, I know it's early days, but what have you seen in terms of opportunity and particularly.
Yeah, if you could just comment on that. The second question was on MetaQuotes. Have you seen any impact to you? Now, I understand that, you know, you should be able to swap out anyone using MetaQuotes onto your own sort of solutions. But I just mean sort of more widely, given how well used MetaQuotes is around the world, whether that is an opportunity. On the share buybacks, I mean, I heard your comment about, obviously, you know, I think it's a liquidity constraint of growing significant institutional business, but just wondered, having completed your buyback, whether you might consider extending that. Then just a final question on Australia.
I take the point that client numbers reduced, you know, broader reflection of market, the sort of wider market. I just wondered if you could comment on whether the transition of clients has possibly led to some attrition. Thanks. That's it.
Thanks, Vivek. I'll take three of those four questions. I'll start with the crypto piece. It's something obviously we've been discussing for the past nine months. We're still very bullish in terms of the opportunity, particularly in the Australian and APAC markets for a physical crypto offering. There's certainly appetite there. Our offering is much more conservative than what a Binance or an FTX is. That's always been important to us, that it's compliance-led in terms of our choice of custodian and choice of exchange. We've, you know, done enormous amounts of DD to select the right vendor that has the appropriate SOC type one, type two licensing.
It's conservative in the form that we're only offering a closed loop system with no lending, no rehypothecation. You know, we're obviously, if you're following the FTX piece, that has been a source of its demise. And only eight coins, so not a wider universe. And our opportunity for us is we see it as offering crypto on the one app or platform that our existing offering, you know, that clients can trade crypto or international or domestic or options or warrants from that same platform. We see our existing clients that want a safer, secure offering, you know, to trade where they trade all the rest of their instruments.
We still see it very much as an opportunity, in fact, a potentially bigger opportunity where there's a bit of a flight to safety, like a listed CMC Markets. On the MT4 piece, we also see this as a big opportunity as well. I mean, you'd estimate the market size globally of around 3.5 million traders that are on the MT4, MT5 platform. But we're very uniquely placed where we offer, you know, not just the MT4 platform, but we offer obviously our award-winning proprietary next gen platform. We see that pitch, you know, again, as a flight to safety, that clients have the opportunity to trade MT4, but also they can easily transition their positions from MT4 to our next gen platform.
We're one of the few providers in the market that can offer that functionality and that safety, which we see as a unique pitch going forward and very interested in that market globally, but particularly in APAC. Finally, on the Aussie Invest numbers in terms of reduced client numbers. No, we're actually seeing really positive transition data. We started the client migration at the back end of October. We've seen over 10% of those clients positively migrate. Importantly, around 43% of the assets under administration have come across. Our immediate focus is on the higher value active clients.
We're seeing that as a very, very positive experience and exceeding our expectations early on in that first month of transition. You know, we broadly think the reduction in actives year-on-year is a result of the market. It's a result of the macro headwinds. Again, important to highlight that, you know, we are seeing record logins, so people are still you know, logging into the platform and apps at a record number. They're just not seeing those market opportunities in the long-only equity market. And again, I guess the last point to highlight there, our acquisition on the Aussie Invest business is at the highest level it's been in the last 18 months. Really, really strong health metrics looking forward.
Vivek, I'll just take the question on share buyback. Just for clarity, our GBP 30 million buyback completed in the middle of October. As we stated when the buyback began in March, we consider dividends, payments, and buybacks as a good balanced approach to returning shareholder value. It remains on the board discussions on a regular basis. As you can see today, though, no plans for a future share buyback at present.
Thank you very much, chaps.
Thanks, Vivek. It's James here. Just wanna turn to a couple of questions we've just got written in from the web. Firstly, gents, from Portia Patel at Canaccord Genuity. We've touched on this a little bit, but how should we consider the impact of the recent crypto volatility on H2 revenues? Dave, do you wanna say something on that?
Well, crypto is not a key area of focus for us. If anything, you know, the exposures generally have gone down, so, you know, with the increase in volatility, it's not really gonna be impactful or material on the numbers.
We have no exposure to FTX.
No
Binance.
Good. Yeah, that's very clear. Happy to chat after the call, Portia, if you need more on that. Another question just in off the web from Stuart Duncan from Peel' s. First question: "Can you give us an update on the customer take-up of Invest in the U.K. since launch?" I think our answer to that, Stuart, we haven't disclosed numbers yet. It's something we will do in due course, but you know, we wanna really start to deliver on the product offering, pick up the marketing before we start to disclose those numbers. But as Peter and the team have said, we're really impressed with the rate of delivery from a product perspective there. Second question: "What proportion of the cost base for CMC is non-GBP?" I'll leave that to Euan.
The third question is, we've just touched on this from a buyback already. "Given balance sheet position, at what point would you consider further returns such as another buyback?" I think Euan's just covered that one. Really, I think we just gotta cover the cost base and what is non-GBP. Over to you, Euan.
I think from a cost base perspective, Stuart, the majority of our costs still remain in the UK. However, we do have a growing overseas business, particularly in Australia. I don't have the absolute numbers on me this morning, but well over half the costs are GBP denominated.
Great. I think that concludes the questions in from the web and from the phone call. I'd like to just turn over to Peter for perhaps just a 30-second wrap up, with final remarks.
Yeah. I mean, first of all, I don't like the recorded thing. I prefer to do it live.
We'll do it live next time.
It's very hard to read from a script, when it's scrolling up and stuff, so I think we'll quash that next time. The one thing I looked at these results is how much the business is changing, how successful we are at delivering platforms. If you look at our Singapore platform release, and New Zealand and Canada and a couple of other jurisdictions, that's technology coming out of Australia. That's not technology coming out of the U.K. It's not all roads leading to Rome anymore. CMC is changing.
You know, we've been telling you guys what we've been doing over the last couple of years. We are delivering on that. We are delivering technology. We are gonna drive the B2B and the Invest business through technology, through competitive pricing. We're gonna disrupt the investing space quite radically. Keep an eye on that. The overwhelming thing for me is how much this business has changed since we listed in 2016 and how we're gonna continue to change. We'll have more updates for you at the financial year end. We've got some really interesting products that we're gonna develop on the Invest side. All systems go.
Thanks very much, Peter. That concludes today's session. Thank you very much, all, for joining.