CMC Markets boss and House of Lords member Peter Cruddas set for bumper dividend as trading platform’s profits and revenue slide
- CMC Markets saw profit and revenue fall over the past year, fresh results show
- Investment bank Peel Hunt also suffered amid ‘exceptionally low’ trading levels
The founder and boss of CMC Markets is set to trouser around £20million via the company’s dividend payments, even as the group’s profits and revenue fall.
Lord Peter Cruddas and his family are the group’s biggest shareholders, owning a stake of over 60 per cent in the business, according to the Financial Times.
The company saw revenues slide from £462million to £326.6million in the year to 31 March, it revealed on Thursday, sending its share price into free fall.
In charge: Lord Cruddas is the boss of CMC Markets
CMC Markets shares have fallen sharply, and were down 17.69 per cent or 53.50p to 249.00p in late morning trading.
The group said the previous year had seen higher levels of revenue come in amid surging trading levels seen during the pandemic.
Its pre-tax profit fell to £94.3million, after reaching £225.8miliion the year before.
CMC Market’s board recommended a final dividend of 8.88p a share, against 21.43p a year ago. The total dividend payment for the year will come in at 12.38p a share, against 30.63p a share the previous year.
Net operating income came in at £282million, which was at the top end of the company’s guidance range and a record performance outside of pandemic restrictions.
Leveraged net trading revenue slipped by about a third to £229.6million.
CMC Markets is targeting 30 per cent net operating income growth over the next three years as it embarks on a fresh phase of diversification.
The group said its new UK non-leveraged investment platform, CMC Invest, is being rolled out to the market over the coming year.
The company’s investment strategy is expected to increase operating costs in the current fiscal year to around £205million, excluding variable remuneration
Peter Cruddas, the group’s boss, said: ‘Excluding the exceptional COVID-19 impacted prior year, which due to market volatility saw unusually significant trading volumes, this is a record net operating income result for the group.
‘Over the last year, we have taken steps to define the strategic direction and diversification of the group, building on our existing technology to launch a new investment platform that will unlock significant shareholder value and challenge the existing client transaction fee cost structures.
‘There is significant opportunity and growth potential in the self‑directing investment platform space, especially in the UK, not just for improved technology but also transaction costs and fees.
‘We believe commissions, execution spreads and custodial fees are too high and too expensive for retail investors. We will utilise our platform technology, including pricing and execution, to drive down the transaction costs of investments for retail clients, just like we did in Australia, where we are the number two investment platform for retail investors.’
Peel Hunt suffers drop in profits amid ‘exceptionally low’ trading levels
Investment bank Peel Hunt saw its profits and revenue fall over the past year, as the trading boom seen during the height of the pandemic eased.
The group’s profit slumped from £120million to £41million, while revenue for the year to March fell from £197million to £131million.
Peel Hunt said there had been ‘exceptionally low levels of capital markets activity’ in the second half of its financial year.
Steven Fine, chief executive of Peel Hunt, said: ‘I’m grateful to our outstanding team for their dedication in a challenging year, which included our own IPO and navigating volatile market conditions in the period since, particularly in the last quarter of our financial year.
‘Against this backdrop, our performance was resilient, with all three divisions continuing to make progress, demonstrating the benefit of our diversified business model.’
He added: ‘We are continuing to invest in the business to drive long-term growth, having made good progress against our strategic priorities. This includes investing in our US distribution capability, progress towards establishing our expanded platform in the EU and ongoing investment in our digital strategy.
‘Our proprietary technology clearly differentiates us from our peers and we expect it to be a continuing source of value creation for our clients and shareholders.’
The company proposed a final dividend of 3.1p a share.
Peel Hunt shares were down nearly 4 per cent or 4.50p to 112.50p this morning.