Spread betting firm CMC Markets has posted a nine percent drop in pre-tax profits for its first full year of results, as lower market volatility presented less opportunities to gamble.
The company had warned that a regulatory crackdown towards the end of last year would have a negative impact on the FY performance, however the downturn came for an unforeseen reason.
The group reported £48.5m in pre-tax profits for the 12 months to April, down from £53.4m the year before. The reason it said, was an “unusual lack of market volatility”. Revenue also suffered, falling five percent to £160m.
The past year had been “challenging and disappointing”, said CMC chairman, Simon Waugh, but the results exceeded analysts’ expectations. The overstated impact of regulations had caused analysts to lower their projections for CMC.
While this hasn’t been the bane so far, the company expects 2018 to be difficult, but for fortunes to improve by 2019.
“Clearly regulatory change is likely to have some impact on the business, but we believe we are well positioned to benefit from market share gains in the medium to long term,” said Peter Cruddas, CMC chief executive.
CMC receives roughly a third of its revenue from continental Europe, while 40 percent comes from UK operations.
“I would think [Brexit] would generate a lot more volatility for us,” said Cruddas, who was, perhaps not coincidentally, a leading Brexiteer in last year’s EU referendum campaign.
“We are not concerned about what happens in Europe after Brexit,” he added, “We can position our business accordingly.”