CMC Markets (CMCX) has warned that challenging market conditions during the fourth quarter and tighter leverage restrictions on spread-betting products would result in a worse than expected decline in contracts-for-difference (CFD) and spread-betting revenue for FY2019. Chief financial officer Grant Foley also announced his resignation "to pursue other opportunities", but will stay with the group for the next six months.
Management expects spread-betting revenue for the year to March 2019 to be 37 per cent lower than 2018, well adrift of the 25-35 per cent decline guided in February. It put the blame on lower volatility during the first three months of 2019 and the European Markets and Securities Authority’s clampdown on the sale and marketing of CFD products to retail investors. By contrast, the group said the impact of new margin rules, which resulted in clients having to deposit more cash to fund their margin requirements, was moderating to a degree.
Attention has turned to cost controls, with operating costs for FY2019 expected to come in marginally lower than the prior year. Management reiterated its confidence in meeting 2020 consensus expectations, which is guiding towards adjusted pre-tax profits of £30.1m and EPS of 8.9p, according to Bloomberg data. While management has a dividend policy of paying-out at least 50 per cent of earnings, analysts at Peel Hunt are forecasting no final dividend for 2019, resulting in a full-year payout of 1.4p, down from 8.9p in FY2018.
