CMC Markets reports modest rise in H2 revenue as client numbers grow

Spreadbetting company CMC Markets reported a rise in its client numbers on Thursday, as it said it has seen a small increase in second-half revenue.

In a pre-close trading update, the group said revenue has been "modestly higher" during the second half of the year. In addition, it said that as guided at the first-half results, net operating income will be below full-year 2016’s level, while costs remain broadly in line with the first half.

“CMC is making further progress across its areas of strategic focus. In particular, CMC is delivering on its partnership with ANZ in-line with the projected timetable, including hiring key project staff and initiating IT development work. The partnership is expected to bring over 500,000 additional retail stockbroking clients to CMC's existing circa 50,000 active stockbroking client base in Australia.”

The company said it was looking forward to working the Financial Conduct Authority - whose consultation on contract for difference controls closed on 7 March - and receiving the outcome of the consultation during the summer.

Numis said that with no actual numbers given as regards total active clients, it assumes a slowdown from Q3 2017 (+13%) and H1 2017 (+8%).

“Revenue growth is stated to have been modest through the second half of the year. Without information on the returns generated from its prop trading activities during the period it is hard to know how the underlying revenue per client performance is developing but with client growth we assume it has declined.

“We remain comfortable with our sell recommendation which reflects our concerns about the rapidly changing regulatory environment and its notably higher revenue volatility.”

At 1000 BST, the shares were down 0.8% to 121.98p.