CMC Markets Plc · The CMC Markets Plc group (‘CMC Markets’) is a market maker in online retail...

A global leader in online trading

CMC Markets Plc

66 Prescot Street

London E1 8HG

United Kingdom

Freephone 0800 0933 633

T +44 (0) 20 7170 8200

F +44 (0) 20 7170 8499

E [email protected]

www.cmcmarkets.co.uk

Registered Number 5145017

CMC Markets PlcAnnual Report 2008

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arkets PlcA

nnual Report 2008A

globalleader inonline

trading

Contents

1 Highlights

2 Executive Chairman’s statement

6 History of CMC Markets

8 Business overview

14 Our strategy

Governance16 Directors’ report

19 Corporate governance report

Consolidated financial statements21 Independent auditors’ report

22 Consolidated income statement – for the year ended 31 March 2008


24 Consolidated balance sheet

25 Consolidated statement of changes in equity

26 Consolidated cash flow statement

27 Index to notes to the financial statements

28 Notes to consolidated financial statements

Parent company financial statements47 Parent company financial statements

48 Notes to parent company financial statements

51 Global offices

IBC Corporate information

The CMC Markets Plc group (‘CMC Markets’) is a market maker in online retail financial services and both a global leader in the provision of contracts for difference (CFDs) and one of the largest financial spread betting service providers in the UK.

With a ‘global footprint’ spanning four continents, CMC Markets’international network of 23 strategically positioned offices supportsclients from over 85 countries worldwide.

The CMC Markets trading experience allows clients access tointernational financial markets by offering over 3,000 individual tradinginstruments, distributed in over 30 markets, covering equities, indices,commodities and foreign exchange, all via the award-winningMarketmaker® trading platform.

Directors

Executive DirectorsPeter Cruddas

John Ersser

Roger Hynes

Geoffrey Langham

Jim Pettigrew

Doug Richards

David Trew

Non-executive DirectorsJan Boomaars

John Jackson

Simon Waugh

Company Secretary

Farzim Nazari

CMC Markets UK Plc

66 Prescot Street

London E1 8HG

United Kingdom

[email protected]

Auditors

Baker Tilly UK Audit LLP

Registered Auditors

Chartered Accountants

2 Bloomsbury Street

London WC1B 3ST

United Kingdom

Registered Office

CMC Markets UK Plc

66 Prescot Street

London E1 8HG

United Kingdom

Telephone: +44 (0) 20 7170 8200

Fax: +44 (0) 20 7170 8499

Web: www.cmcmarkets.co.uk

Email: [email protected]

Registered Number

Company No. 5145017

Bankers

The Royal Bank of Scotland Plc

280 Bishopsgate

London EC2M 4RB

United Kingdom

Corporate information

Designed and produced by fourthquarter

1Annual Report 31 March 2008

Financial highlights

+64% Revenue

+42% Profit before tax – adjusted(1)

+45% Earnings per share – basic adjusted(1)

+209% Profit after tax – statutory

+210% Earnings per share – basic

2008 £181.4m2007 £110.5m

2008 £66.4m2007 £46.8m

2008 18.1p2007 12.5p

2008 £39.8m2007 £12.9m

2008 15.5p2007 5.0p

Other highlights

(1) Before amortisation and impairment of intangibles arising on consolidation and exceptional items

For the year ended 31 March 2008

• Goldman Sachs becomes a strategic investor in CMC Markets Plc

by acquiring 10% of its share capital.

• Acquisition of Andrew West & Co. Limited – one of the last fully

independent stockbrokers in Australia.

• Acquisition of Digital Look Limited – a leading UK provider of

financial research information.

• CMC Markets opens six offices – Singapore, Tokyo (Japan), Stockholm (Sweden),

Vienna (Austria), Edinburgh (Scotland) and Dublin (Ireland).

• Annual value of client trades – USD 1.4 trillion (an increase of 47%).

• Annual number of client trades – 20.1 million (an increase of 49%).

2 Annual Report 31 March 2008

It was very good to win awards around the world. We won awards for our

technology and service in Hong Kong, Germany and Australia, as well as

many awards in the UK. A selection of these included:

• ∑‘Best CFD Provider’ – Investors Chronicle (UK).

• ∑‘Best Online Trading Platform’ – Shares Magazine (UK).

• ∑‘Best Spread Betting Broker’ and ‘Best CFD Broker’ awards –Trade2Win (UK).

• ∑‘Best CFD Provider’ award – Brokerwahl (Germany).

• ∑‘Best of the Best’ award and ‘Best CFD Provider of the Year 2008’award – Money Magazine (Australia).

• ∑‘Outstanding Business Leadership’ award – East Week (Hong Kong).

• ∑ ‘Best FX Company’ – Capital Weekly (Hong Kong).

The financial year ending 31 March 2008 proved to be another record year

with increases in business across the Group, including records being set by

individual offices and departments.

CMC Markets delivered record revenues of £181.4m representing a 64%

increase on the prior year. Adjusted profit before tax was £66.4m, a 42%

increase on the prior year. In addition we hit some very key milestones for

the business this year:

• ∑USD 1.4 trillion, the value of client trades (an annual increase of 47%).

• ∑20.1 million total number of client trades (an annual increase of 49%).

• ∑1,064 employees working for CMC Markets globally at 31 March 2008 (an annual increase of 47%).

The world’s markets were very volatile with record prices in most major

commodities, including oil and gold, and stock markets moving aggressively

up and down throughout the year.

Market volatility has had a strong effect on the business, generating lots of

trades because clients will seek out any major asset class that they can invest

in. If the stock markets are volatile, clients can trade commodities or

currencies, treasuries and indices - we offer these in the efficient trading

product structures of CFDs and financial spread bets.

The big advantage that CMC Markets offers its clients is a fully integrated

trading platform, allowing clients to trade over 3,000 different financial

instruments in one account, in one currency and in real-time via the

internet. The system takes care of front, middle and back office in real-time,

and clears all trades immediately. All clients have to do is click to trade on

any of the world’s major financial markets.

This is the bedrock of the growth of CMC Markets. In effect, by offering

CFDs and financial spread betting, our clients have a generic financial

product to trade the world’s markets. In addition, by continuing to open

overseas offices, we can further expand into new markets opening up more

potential business opportunities.

This business model has helped us to open 23 offices around the world to-

date and we are now seeing strong growth in most of our overseas offices.

During the year, we opened six new offices – Singapore, Tokyo ( Japan),

Stockholm (Sweden), Vienna (Austria), Edinburgh (Scotland) and Dublin

(Ireland). These offices are already starting to show signs of strong growth,

with half of them already being profitable. The other existing offices are

performing well and have all contributed to a year of record profits.

We expect to open several new offices this coming financial year.

We underpin our superior client service proposition with market leading

technology. We have understood technology and its value to the business

since we launched our first internet trading platform in 1996 and we

continue to invest in technology as the driver to further expand the business.

We are confident that this technology, which we have developed entirely in-

house, will continue to meet our strong growth plans and enable us to

continue to lead our chosen markets.

In addition to organic growth, we acquired two companies during the year.

Digital Look Limited, acquired in May 2007, is one of the UK’s leading

providers of financial information, market and company research, offering in-

depth analysis of a broad section of financial markets. In addition, Digital Look

has a strong technology team offering outstanding solutions to our clients.

We acquired Digital Look to enhance our Marketmaker® trading platform

through technology and content and to offer additional services to our

clients, particularly our partners. In effect we want to offer our clients market

research, analysis and execution, all from one platform. Digital Look was

acquired to bring new services to areas of the business where we did

not have existing coverage. Digital Look is a profitable business and

growing significantly.

In Australia, we acquired Andrew West & Co. Limited (AWS) in December

2007. AWS was one of the last remaining fully independent stockbrokers

in Australia, with all others being owned by major banks.

Executive Chairman’s statement

Lots to report in this year’s Executive Chairman’s Statement with so many exciting things happening across the business – from record profits, acquisitions,new office openings, more awards won and an investment in CMC Markets by Goldman Sachs.


The big advantage that CMC Marketsoffers its clients is a fully integrated

trading platform, allowing clients to tradeover 3,000 different financial instruments

in one account, in one currency and in real-time via the internet.”

“The big advantage that CMC Marketsoffers its clients is a fully integrated

trading platform, allowing clients to tradeover 3,000 different financial instruments

in one account, in one currency and in real-time via the internet.”

Peter Cruddas Executive Chairman


Executive Chairman’s statement continued

This acquisition has enabled our Australian business to offer clients a fully

integrated trading service that now encompasses CFDs, physical shares,

education, research and analysis. The Australian market is slightly different

to the UK market in that there are tax and pension planning incentives that

encourage physical share ownership. Although our business is strong in

Australia, some of our clients were trading CFDs with us and physical shares

with other brokers. We have now filled this gap and the physical share

business continues to grow.

There is also the significant opportunity to cross sell our products to Digital

Look and AWS existing client bases and jointly develop new products

and services.

The big news of the year for everybody was that the shareholders of CMC

Markets decided to sell ten percent of the business to Goldman Sachs. The

shares were sold by some members of staff but the bulk were sold by my

wife and I as the major shareholders in CMC Markets Plc. Even after the

share sale, we continue to hold around 86.8% of the shares in CMC Markets

Plc so I am still very much committed to the onward growth and expansion

of CMC Markets.

The logic behind the sale was simple. Goldman Sachs approached us

because they wanted access and exposure to the space in which we operate

in the retail market. They demanded the best of breed and, being the market

leader, they naturally came to CMC Markets.

Goldman Sachs coming into our market place is a strong endorsement of

our business model, our strategy and recognition of our excellent business,

as well as a shared vision for the future of financial services to retail clients

and the growth potential that exists.

Investors from around the world want to trade our products on our

Marketmaker® platform. Goldman Sachs have recognised this and have

invested in CMC Markets to help us develop our business and, at the same

time, offer our products and our platform to their clients and partners

around the world.

This is a fantastic business opportunity for CMC Markets. It means that we

have access to greater numbers of potential clients and the support and

assistance of the world’s leading investment bank. We have already begun

the process of working with Goldman Sachs on various global projects.

During the year, we also added two executive directors to our already strong

Board and two non-executive directors. Jim Pettigrew joined us as CEO from

Ashmore Group Plc ( Jim was previously CFO at ICAP Plc) and Doug Richards

became our new Global CFO (Doug was previously with Centrica Plc).

We also appointed Simon Waugh as a non-executive director to replace Jim

Pettigrew as a non-executive director on his appointment as CEO. Simon has

previously held a number of senior positions in major retail financial services

companies, including American Express. In addition, Jan Boomaars of

Goldman Sachs was also appointed as a non-executive director.

I felt that, being a global business with offices on four continents, we needed

to continue to strengthen our management team. Jim, already a non-

executive director, understood the business very well and I am pleased that

he came on board to help further expand the business.

All in all, this was another excellent year in the history of CMC Markets.

Every year I seem to say the same! However, if you look back on the year,

you have to say it has been our best yet for the following reasons:

• ∑We grew revenue at 64%, of which almost 60% was organic.

• ∑We acquired two companies.

• ∑We opened six new offices.

• ∑Goldman Sachs invested in CMC Markets.

• ∑We strengthened our Board of Directors.

• ∑Our robust technology continues to perform well in very volatilemarkets (which tend to generate increased trading volumes).

So many things to be proud of and happy about but the job is still not done.

There are still tremendous opportunities for CMC Markets around the world.

We are constantly looking for acquisitions, opening new offices and

expanding the business. It’s all very exciting but there is no time to sit back

and relax because everybody is motivated to push the business forward.

Finally, I would like to thank very much our talented staff for their

tremendous efforts in making this year such a great success.

I fully expect next year’s Executive Chairman’s Statement to be just as exciting.

Peter CruddasExecutive Chairman

3 June 2008


DublinEdinburgh

Stockholm

Vienna

Berlin

Singapore

Tokyo

New officesExisting offices

Vancouver

Toronto

BrisbaneSydney

Melbourne

New York

Perth

London

Hong Kong

Beijing

Auckland

MunichFrankfurt

“There are still tremendous opportunities forCMC Markets around the world. We are

constantly looking for acquisitions, openingnew offices and expanding the business.

It’s all very exciting but there is no time to sitback and relax because everybody is

motivated to push the business forward.”Peter Cruddas Executive Chairman

Dusseldorf


02

awards

99

01

00

89

96

92

CMC Markets is established as a foreign exchange market maker.

CMC Futures becomes authorised and regulated in the UK.

CMC Markets launches the world’s first online,commission free, real-time FX trading platform and sets the standard for the industry.

CMC Markets receives the ‘Millennium Product Award’ from the UK Government for innovation in the 1990s, honouring our trading technology.

CMC Marketslaunches CFDs,underlining its

commitmentto offering the most

competitive andinnovative tradingproducts available

in the globalmarket place.

03

CMC Markets’ Marketmaker®

trading software receives the top

award fromEuromoney

Magazine forthe ‘Best

Independent Non-bank FX

Platform’ globally.

CMC Markets launches its online

spread betting service and

introduces the revolutionary

‘Daily Rolling Cash®’ bet – it becomesa benchmark for

the industry.

CMC Markets’ first Australian office

opens in Sydney, regulated by the

Australian Securities and Investments

Commission.

CMC Markets’ Marketmaker®

trading softwarewins Shares

Magazine 2003 award for ‘Best

Trading Platform’ and ‘Best Spread Betting’ service.

CMC Markets opens in New York and

becomes a member of the National

Futures Association.

History of CMC Markets

04

06

05

awards

07

08

CMC Markets’ Marketmaker® trading software wins Shares Magazine award for‘Best Trading Platform’.

Investors Chronicle and Trade2Win award CMC Markets‘Best CFD Provider’ and ‘Best Spread Betting Provider’ awards.

Incisive Media announces CMC Markets the winner of their‘Best Spread BettingSite’ award.

CMC Markets’ Marketmaker® trading software wins Shares Magazine 2005 awards for ‘Best Online Trading Platform’ (for the third year in a row) and ‘Best Spread Betting Provider’.

‘Best CFD and Spread Betting Provider’ awards are presented toCMC Markets by Investors Chronicleand Trade2Win for the second year in a row.

CMC Markets Asia Pacific obtains a licence from Hong Kong’s Securities and Futures Commission and opens its Hong Kong office.

CMC Markets further expands its presence in the Americas with the establishment of an office in Toronto, Canada under the authority of the Ontario Securities Commission.

CMC Markets opens in Frankfurt under the authority of the Federal Financial Supervisory Authority (BaFIN).

In August 2005, the Group rebrands, simultaneously replacing all existing brands (including ‘deal4free’) with one global brand,CMC Markets.In addition, the Group opens branch officesin Melbourne and Brisbane in Australia.

CMC Markets Australia wins ‘Best Multilingual Technology’ award from the National Multicultural Marketing Awards.

CMC Markets launches ‘One-Click’ dealing and ‘Marketmaker:Mobile™’, further enhancing the quality of their trading platform.

CMC Markets opens its Beijing Representative Office. Approval to operate the new office was granted bythe China Banking and Regulatory Commission.

CMC Markets wins ‘Best Spread Betting Service’

from Shares Magazine and ‘Best Spread Betting Firm’ from Investors Chronicle,

for the third year in a row.

CMC Markets also wins ‘Best Spread Betting’ and ‘Best CFD Provider’ from Trade2Win for the third year in a row, as well as

‘Best FX Provider’.

CMC Markets opens New Zealand office in Auckland under the authority of the

New Zealand Securities Commission.

CMC Marketsannounces the

launch of itsJapanese subsidiary,

CMC Markets Japan KK, after obtaining a

licence to offer CFDs to retail clients.

Goldman Sachs becomes a

strategic investor inCMC Markets Plc by acquiring 10% of its

share capital.

CMC Markets successfully

completesnegotiations

to acquire leading Australian

non-advisorystockbroking group,

Andrew West &Co. Limited.

The nineteenth CMC Markets office opens in Singapore.

CMC Markets acquires Digital Look Limited, a leading UK

provider of online investment market

data and intelligence to the retail investor.

CMC Markets opens its first Nordic office

in Stockholm, Sweden and opens in Vienna, Austria.

Jim Pettigrew, formally of ICAP, appointed Chief

Executive Officer of CMC Markets.

CMC Markets Germany voted

‘CFD Provider ofthe Year’ in the

German Brokerwahl competition for the third year running.

CMC Markets continues its rapid

global expansion plan with new office

openings in Scotland and Ireland.

CMC Markets becomes the first CFD provider to

join the Investment Industry Regulatory

Organization of Canada (formerly the

Investment Dealers Association of Canada (IDA)),

the nationalself-regulatory

organisation forthe Canadian

securities industry.


Contracts for difference (CFDs)CMC Markets is the leading global provider of retail contracts for difference

(CFDs). Originally used by large institutions to cost effectively cover their

equity exposures, CFDs are now a common place trading tool used by retail

investors around the world and remain one of the fastest growing forms of

financial trading worldwide. The success and growing popularity of CFDs

is due to some of the powerful benefits that CFDs offer investors.

A contract for difference is the settling of a contract (between a buyer and

seller) for the difference between the purchase price and sale price of

a financial instrument. Without having to physically own the underlying

financial instrument, an owner of a CFD is allowed to participate in the

performance of that instrument. CFDs are offered on a wide range of

underlying asset classes such as equities, commodities and treasuries.

The major benefits of trading CFDs are that they offer the active investor

both leverage and short selling, benefits which are not easily available to

retail investors trading the underlying instrument through traditional brokers.

CMC Markets has been at the forefront of revolutionising the use of CFDs

across the globe, taking this institutional trading tool and making its

advantages widely available to a retail audience.

Financial spread bettingCMC Markets is one of the largest financial spread betting companies

operating in the UK. Primarily a UK focused product, financial spread betting

offers the UK private investor a fully tax free alternative to trading on the

world’s financial markets.

In addition to the favourable tax treatment surrounding financial spread

betting, the main strength and popularity of this product is its ability to

leverage the initial investment and to allow an investor to sell ‘short’ thereby

allowing opportunity to make profits in falling markets. A financial spread bet

allows an investor to bet on whether the price quoted for a given financial

instrument is likely to go up in value or go down in value. The client’s profit

or loss is the difference between the ‘price’ at which they bought and the

‘price’ at which they sold, less commissions paid.

Spread betting means that investors do not own the physical share or

underlying asset, but trade solely on price movements.

Foreign exchangeCMC Markets is one of the largest foreign exchange market makers globally

via its CFD and foreign exchange spread betting businesses. The foreign

exchange market is the world’s largest financial market. Traditionally an

institutional or inter-bank market, in 1996 CMC Markets launched the

world’s first online retail FX trading service. The retail FX investor is now

commonplace with access to the FX markets made easy through online

trading services such as the one launched by CMC Markets more than

a decade ago.

Foreign exchange trading is popular as it is a true 24 hour market and often

extremely liquid. This means clients have access to larger trading volumes,

tighter dealing spreads and lower margin rates than other financial markets.

It also means foreign exchange markets are less prone to severe market

movement than less liquid markets such as equities.

StockbrokingWith the acquisition of Andrew West & Co. Limited, CMC Markets was able

to offer, from the financial year ending 31 March 2008, physical share trading

in Australia to complement its wide-ranging CFD trading offering.

Financial information servicesThe acquisition of Digital Look Limited enables CMC Markets to offer its

existing clients enhanced financial research and analytical tools on its

Marketmaker® trading platform.

CMC Markets offers a wide range of financial products and services to a globalclient base. This section explains in further detail what these are and details the market growth drivers relevant to CMC Markets.

Business overviewProducts and services


CMC Markets’ vision is “to become a global leaderin retail financial services, leveraging off the generic

contract for difference (CFD) financial productstructure. CMC Markets will become the first

choice venue and liquidity provider in these globalmarkets through best-in-class product, execution,

pricing, technology and client service”.


Market growth and scaleCMC Markets is a growth business in a growing market. Many factors

continue to support this growth:

• Significant growth in adoption of CFDs and financial spreadbetting by retail clients, primarily via electronic means, as a farmore attractive alternative to more traditional trading, for instance via physical shares.

• Immediate accessibility and transparency to pricing and execution, clearing and settlement, including longer opening hours than traditional exchange products.

• The growth, trust and acceptance of non-exchange traded products.

• An integrated account offering access to a multiple range ofproducts and asset classes in a single underlying currency, givingclients accessibility and significantly greater trading opportunities.

• Increasing acceptance and understanding of, and subsequentregulatory provision for, CFD products in our core and emerging markets.

Market drivers and outlookCMC Markets is experiencing high growth in the take-up and use of CFDs

across the world. This expansion is dependent on:

• Global markets’ and regulators’ acceptance of CFDs as a core retail financial services offering.

• Client education and acceptance of new, non-exchange traded products.

• Competitive pricing and margin structures to attract retail business.

• Continued technology innovation giving retail investors a wider choice of products and services as well as very high quality service availability.

• Increasing economies of scale driven by electronic trading and straight through processing for increasing transaction and client volumes.

We believe that these factors will continue to drive the significant growth

rates that CMC Markets has experienced in recent years and that our

leadership in our chosen markets will secure our position and create

significant future value.

Business overview continued

Markets


Business overview continued

Technology

Maintaining a market leading position requires a strong alliance between

service, performance and technology. Since its launch in 1996 as the world’s

first real-time FX online trading platform, Marketmaker® has been the

catalyst for CMC Markets’ growth and success. The structure of the trading

software enables operational costs to be kept low, allowing clients to benefit

from our highly competitive and cost-focused trading service. Building on

this technical foundation, CMC Markets’ trading platform provides clients

with unparalleled and intuitive access to trade the world’s financial markets.

CMC Markets’ industry-leading position, achieved through this fusion of

service, performance and technology, means that, on average, someone

around the world places an order through Marketmaker® every 1.2 seconds.

It is this constant effort to perfect the mix of first-class service and

superior technology that will allow CMC Markets to maintain this position

in the future.

In addition, clients are also able to trade on Marketmaker® using the

Marketmaker:Mobile™ service. This enables trading and monitoring of

positions on the move, as well as enabling clients to view real-time

market prices 24 hours a day.


On average, someone around the worldplaces an order through Marketmaker®

every 1.2 seconds. It is this constant effortto perfect the mix of first-class service

and superior technology that will allowCMC Markets to maintain this market

leading position in the future.


Our strategy

CMC Markets’ success in the past has been due to its unique business

model, retaining ownership and control over product creation, distribution,

management, pricing, execution and risk management. This model will

underpin our continued success in the future for the following reasons:

• CMC Markets will be the liquidity provider, providing enhancedliquidity and pricing for clients.

• CMC Markets will continue to add products that are attractive and liquid, allowing clients to trade on global markets.

The key success factors to our strategy are:

• Continued successful opening of global offices, expanding CMC Markets’ distribution and leveraging economies of scale.

• Significant investment in further distribution of products and services.

• New and innovative product offerings using the CFD product structure.

• Highly targeted client offerings of relevant products and servicesto meet the needs of each key client segment.

• To become the retail centre for liquidity in these products.

• To grow and develop CMC Markets as a global brand in retailfinancial services.

• Continued development of our internally owned and developedMarketmaker® trading software, as well as continued investment in the development and retention of high-quality staff globally.

In the financial year ending 31 March 2008, the key achievementsin delivering our strategy were:

• Significant expansion of our distribution with the value of client trades reaching USD 1.4 trillion and 20.1 million client trades executed.

• Successful opening of six new offices, all of which are delivering to set targets of client growth and profitability.

• Acquisition of Digital Look Limited and Andrew West & Co.Limited to provide new content, expertise and products inexpanding our services.

• Continued significant investment in technology and core support areas.

• Purchase of a strategic interest in CMC Markets by Goldman Sachs.

• New investment in CMC Markets as a global brand.

• Strengthened management team in key areas including a newCEO, CFO and two non-executive directors.

The key strategic priorities for the financial year ending31 March 2009 are:

• Accelerating organic growth in our existing offices.

• Opening further new offices in Europe to take advantage of theEuropean Union’s ‘Markets in Financial Instruments Directive’(MiFID).

• Continued product evolution to further extend and diversify ourproduct offering.

• Successful global expansion of our CMC Markets’ partners business.

• Continued strategic investment in:

– Sales, marketing and client service capability.

– Brand awareness in core locations such as the UK, Germany and Australia.

– Development of client proposition and core selling pointsincluding pricing, technology and execution.

– Enhancement of global infrastructure by investment in IT, legal, compliance and finance global services and systems.

• To keep under review further acquisitions and developments to enhance CMC Markets’ global distribution capability.

CMC Markets’ vision is “to become a global leader in retail financial services,leveraging off the generic contract for difference (CFD) financial product structure.CMC Markets will become the first choice venue and liquidity provider in theseglobal markets through best-in-class product, execution, pricing, technology and client service”.


The next frontier for CMC Markets is tocontinue our overseas expansion; to continueadding products; to continue developing the

technology. I’m very, very excited about ourfuture – it means good things for our clients

in that they will be receiving great pricing andthe continuation of our world-class service.

Peter Cruddas Executive Chairman


The Directors present their report and the audited financial statements of the

Group for the year ended 31 March 2008. The Group Financial Statements

have been prepared in accordance with International Financial Reporting

Standards (IFRS) as adopted by the EU, and the Parent Company (“the

Company”) Financial Statements have been prepared in accordance with

UK Generally Accepted Accounting Practice (UK GAAP).

Principal activitiesThe Group is an online trading group and acts as principal and market maker

to its clients in foreign exchange, derivatives (including share and index CFD

trading and options) and financial spread betting. The Group also offers an

internet ‘white-label’ trading platform through its CMC Partners Program.

In addition, following the acquisition of Digital Look Limited and Andrew

West & Co. Limited in the financial year ending 31 March 2008, the Group

also provides financial information and stockbroking services.

The Directors regard these activities as three classes of business for the

financial year ended 31 March 2008 but do not designate financial

information and stockbroking services as reportable segments as they do

not currently account for more than 10 percent of the Group’s revenue.

Business review and future developmentsA detailed review of the business is contained in the Executive Chairman’s

Statement on pages 2 to 4, the History of CMC Markets on pages 6 and 7,

the Business Overview on pages 8 to 12 and Our Strategy on page 14.

Results and dividendsThe results for the year are shown in the Consolidated Income Statement on

page 22. An interim dividend of £10.0m was declared on 31 March 2008

(2007: £20.0m) and paid on 1 April 2008. No final dividend is payable for the

year ended 31 March 2008 (2007: nil).

Capital structureDetails of the authorised and issued share capital are disclosed in Note 26.

During the year, the CMC Markets 2007 Employee Benefit Trust purchased

100,082 shares from the CMC Employee Share Scheme Trust and also

purchased 1,393,062 shares from CMC Markets employees. 170,649 of these

shares were subsequently transferred to an employee of CMC Markets UK

Plc (see Note 26 Share Capital and Note 27 Share-based Payment).

The remaining 1,322,495 held by the CMC Markets 2007 Employee Benefit

Trust are treated as own shares held in trust and represent shares held to

satisfy options to be granted under future employee long-term incentive

schemes. In addition, on 31 March 2008, two employees were granted

shares totalling 49,994 in CMC Markets Plc (see Note 27).

DirectorsThe Directors, who served throughout the year, except as noted, were

as follows:

Date ofName Appointment Position

Peter Cruddas (7) Executive Chairman

Jim Pettigrew (3), (4), (6) Chief Executive Officer (CEO)

John Ersser (4) Chief Operating Officer

Roger Hynes (4) Managing Director – Western Region

Geoffrey Langham (3), (4) Director of Trading

Doug Richards (3), (4) 01.10.2007 Chief Financial Officer

David Trew (4) Managing Director – Eastern Region

Jan Boomaars 17.01.2008 Non-executive Director

John Jackson (1), (2), (5) Non-executive Director

Simon Waugh (1), (2), (5) 01.12.2007 Non-executive Director

Barry Bicknell Executive Director

(resigned 27.07.2007)

(1) Member of the Audit Committee(2) Member of the Remuneration Committee(3) Member of the Group Risk Committee(4) Member of the Executive Committee(5) Member of the Nominations Committee(6) Non-executive Director prior to appointment as CEO on 31.10.07(7) CEO until 30.10.07

During the year, one Director received shares under a long-term incentive

scheme (2007: nil).

Charitable and political donationsCharitable donations of £3.1m (2007: £1.4m) were made during the year to

the Peter Cruddas Foundation. The aim of the foundation is to help young

people from disadvantaged backgrounds. The Group made no political

donations during the year (2007: £nil).

Research and developmentThe Group maintains a development department to further develop its

Marketmaker® trading platform. This department has a staff of 175

(2007: 82). In the opinion of the Directors, continued investment in

Marketmaker® is essential for the maintenance of the Group’s market

position and for future growth.

Directors’ report


Disabled persons The Group will employ disabled persons where they appear to be suitable for

a particular vacancy and every effort is made to ensure that they are given full

and fair consideration when such vacancies arise. The number of disabled

persons employed by CMC Markets during the year was one (2007: nil).

Employee involvementThe Group encourages the involvement of its staff through regular meetings

between managers and employees for the dissemination of information

of particular concern to employees and receiving their views on important

matters of policy. The Group operates an employee share scheme

(see Note 27).

Key performance indicatorsThe Group uses a number of performance indicators to measure progress

towards achieving the Group’s strategies and objectives. These include the

number of active trading clients, average revenue per client, the number of

new client accounts opened and earnings before interest, tax, depreciation

and amortisation (EBITDA). The Directors receive key performance indicator

information at least monthly.

These performance indicators are also integral to the performance evaluation

process for Directors and other senior executives.

Risks and uncertaintiesa) Financial riskThe Group’s activities expose it to market, credit and liquidity risk from its

global operations. These are defined and reviewed in Note 24 Financial

Instruments.

b) RegulationThe Group’s products are regulated in a number of jurisdictions (see

Corporate Governance Report pages 19 and 20). The Group is also subject to

regulation and legislation relating to technology and the provision and use of

internet services. These regulatory frameworks place restrictions on certain

activities of the Group and require resources, which, in turn, place constraints

on the operations and development of the Group.

The regulatory environment changes regularly and the Group continuously

monitors it for these changes. As the Group continues to expand and become

more complex, regulatory demands are expected to increase. The Group plans

its recruitment, training and development to meet these demands.

c) Technology and other operational risksThe Group is highly dependent upon the availability of its technology and

information systems. The ability to provide clients with reliable, real-time

access to its systems is core to the success of the business. Interruption to

services or system failures therefore expose the Group to significant risk.

The Group has established business continuity and disaster recovery

procedures designed to allow it to continue trading activities and mitigate

this risk. Furthermore, the Group’s key systems are designed to mitigate the

failure of any single component of the system.

Where the Group is dependent upon providers of data, market information

and systems connectivity, it mitigates these risks by engaging multiple

providers and data routes where possible.

The performance, functionality, accessibility and other features of the

Marketmaker® trading platform and network are key to the competitive

advantage of the Group.

Policy on payment of creditorsIt is Group policy to agree and clearly communicate the terms of payment

as part of the commercial arrangements negotiated with suppliers and

then to pay according to those terms based on the timely receipt of an

accurate invoice.

Trade creditor days for the Group, based on creditors as at 31 March 2008,

were 45 days (2007: 37 days).

Statement of directors’ responsibilitiesThe Directors are responsible for preparing the Annual Report in accordance

with applicable law and regulations.

UK Company Law requires the Directors to prepare group and company

financial statements for each financial year. Under that law, the Directors have

elected to prepare the Group Financial Statements in accordance with

International Financial Reporting Standards (“IFRS”) as adopted by the EU and

have elected to prepare the Company Financial Statements in accordance

with United Kingdom Generally Accepted Accounting Practice (United

Kingdom Accounting Standards and applicable law).

The Group Financial Statements are required by law and IFRS adopted by the

EU to present fairly the financial position and performance of the Group; the

Companies Act 1985 provides in relation to such financial statements that

references in the relevant part of that Act to financial statements giving a true

and fair view, are references to their achieving a fair presentation.

The Company Financial Statements are required by law to give a true and

fair view of the state of affairs of the Company.

In preparing each of the Group and Company Financial Statements, the

Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state, for the Group Financial Statements, whether they have been prepared

in accordance with IFRS adopted by the EU; and for the Company

Financial Statements state whether applicable UK Accounting Standards

have been followed, subject to any material departures disclosed and

explained in the Company’s Financial Statements; and

• prepare the accounts on the going concern basis, unless it is inappropriate

to presume that the Group and the Company will continue in business.


The Directors are responsible for keeping proper accounting records which

disclose with reasonable accuracy at any time the financial position of the

Group and enable them to ensure that the financial statements comply with

the Companies Act 1985. They are also responsible for safeguarding the

assets of the Group and hence for taking reasonable steps for the prevention

and detection of fraud and other irregularities.

Qualifying indemnity insuranceThe Group has Directors and Officers’ Liability insurance coverage.

Directors’ statement on information provided to auditorsAt the time this report was approved, the Directors believe that all

relevant information has been provided to the Group’s auditors, and that

all necessary steps have been taken to make Directors aware of any

such relevant information.

AuditorsBaker Tilly UK Audit LLP have indicated their willingness to continue

in office.

On behalf of the Board of Directors,

Doug RichardsChief Financial Officer

3 June 2008

Registered Office:66 Prescot Street

London E1 8HG

United Kingdom

Directors’ report continued


CMC Markets’ status as an unlisted company means it is not required to

comply with the Combined Code on Corporate Governance. However, the

Directors support best practice in corporate governance and its practical

application as appropriate with regard to CMC Markets’ size and current

stage of development.

Board meetingsThe Board of Directors (“the Board”) meets at least ten times per annum with

several meetings devoted to strategic issues.

Board membershipThe Board consists of seven executive and three non-executive directors.

Currently, none of the Directors are required to retire by rotation. The roles of

the Executive Chairman, Peter Cruddas, and the Chief Executive, Jim

Pettigrew, are clearly defined in writing and approved by the Board. The

Executive Chairman is responsible for the working of the Board and the Chief

Executive for the implementation of Board strategy and policy.

The Board is responsible for:

• governing CMC Markets’ strategic direction and defining and monitoring

acceptable risk parameters for CMC Markets;

• ensuring that the necessary financial and human resources are in place for

CMC Markets to meet its objectives; and

• monitoring the operating and financial results against plans and budgets.

The Non-executive Directors participate fully with the Executive Directors in

Board meetings, with access to all information they need to perform their role.

The Board has an agreed set of delegated authorities granted to individuals

and committees while having a formal schedule of matters reserved for its

attention. All Directors have access to the advice and services of the

Company Secretary. The Company Secretary also assists the Executive

Chairman in facilitating the Directors’ training. The Directors are also able to

take independent professional advice at CMC Markets’ expense.

Principal Board committeesThe principal Board committees are the Audit, Remuneration, Nominations,

Group Risk and Executive Committees whose terms of reference, duties and

responsibilities have been agreed and adopted by the Board.

The Audit Committee examines the effectiveness of CMC Markets’ internal

controls and approves the appointment of external auditors and advisors, as

well as reviewing the internal audit scope for the year and monitoring its

progress. The Remuneration Committee reviews all remuneration issues

relating to directors and senior executives and the Nominations Committee

reviews all director and senior appointments. The Group Risk Committee

examines all issues relating to financial and other operational risks affecting

CMC Markets while the Executive Committee meets monthly to manage the

key operating issues affecting the Group.

Internal controlThe Group Risk Committee reports to the Board and comprises members

of the Executive Committee and various heads of department. It meets at

least ten times per annum and submits reports to each Board meeting.

Other committees include: the Group ICAAP Committee, which manages

the Internal Capital Adequacy Assessment Process (ICAAP) and reviews the

requirements of the Capital Requirements Directive; the Group Credit Risk

Committee, which examines all issues relating to credit risk; and the

Group Treasury Committee which reviews treasury operations, policies

and procedures.

The Group Risk Management Structure is illustrated in the following table:

On behalf of the Board, the Audit Committee confirms that it has reviewed

the effectiveness of internal controls for the year ended 31 March 2008 and

concluded that there exists a satisfactory process to identify and manage risks

affecting CMC Markets.

Corporate governance report

AuditCommitteeCMC Markets Plc Board

Group Risk CommitteeExecutive Committee

GlobalRisk

Team

BusinessRisk

Coordinators

The Business

Global Risk Management Structure

Inte

rnal

Aud

it

Exte

rnal

Aud

it

Group Credit Risk

Group ICAAP

Group Market Risk

Group Treasury

External Audit and Risk

Committees

NominationsCommittee

RemunerationCommittee

Corporate governance report continued

RegulationCMC Markets’ worldwide regulated entities and the relevant regulatory

authorities are listed in the following table:

CMC Markets Entity: Regulated by:

CMC Markets UK Plc Financial Services Authority (FSA), Ontario

Securities Commission (OSC).

– Austria Branch FSA, Finanzmarktaufsicht.

– Beijing Representative China Banking and Regulatory Commission.

Office

– Germany Branch FSA, Bundesanstalt für

Finanzdienstleistungsaufsicht.

– Ireland Branch FSA, Financial Regulator.

– Sweden Branch FSA, Finansinspektionen.

CMC Spreadbet Plc FSA.

– Ireland Branch FSA, Financial Regulator.

CMC Markets Investment Dealers Association

Canada Inc. of Canada, OSC,

British Columbia Securities Commission.

CMC Markets (US) LLC US Commodity Futures Trading Commission,

National Futures Association.

CMC Markets Asia Australian Securities and Investments

Pacific Pty Ltd Commission (ASIC), OSC.

CMC Markets Pty Ltd ASIC.

Andrew West & Co. Ltd ASIC, Australian Stock Exchange.

CMC Markets NZ Ltd New Zealand Securities Commission.

CMC Markets Asia Ltd Securities and Futures Commission (Hong Kong).

CMC Markets Monetary Authority of Singapore.

Singapore Pte Ltd

CMC Markets Japan KK Financial Services Agency,

Financial Futures Association of Japan,

Japanese Securities Dealers Association.

Annual Report 31 March 200820


We have audited the Group and Parent Company Financial Statements on

pages 22 to 50.

This report is made solely to the Company’s members, as a body, in

accordance with section 235 of the Companies Act 1985. Our audit work

has been undertaken so that we might state to the Company’s members

those matters we are required to state to them in an auditors’ report and

for no other purpose. To the fullest extent permitted by law, we do not

accept or assume responsibility to anyone other than the Company and

the Company’s members as a body, for our audit work, for this report,

or for the opinions we have formed.

Respective responsibilities of directors and auditorsThe Directors’ responsibilities for preparing the Annual Report and the

Group Financial Statements in accordance with applicable law and

International Financial Reporting Standards (IFRS) as adopted by the

European Union, and for preparing the Parent Company Financial Statements

in accordance with applicable law and United Kingdom Accounting

Standards (United Kingdom Generally Accepted Accounting Practice),

are set out in the Statement of Directors’ Responsibilities.

Our responsibility is to audit the financial statements in accordance with

relevant legal and regulatory requirements, and International Standards on

Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a

true and fair view and whether the financial statements have been properly

prepared in accordance with the Companies Act 1985. We also report to you

whether, in our opinion, the information given in the Directors’ Report is

consistent with the financial statements. The information given in the

Directors’ Report includes that specific information presented in the Executive

Chairman’s Statement that is cross referenced from the Business Review and

Future Developments section of the Directors’ Report.

In addition, we report to you if, in our opinion, the Company has not kept

proper accounting records, if we have not received all the information and

explanations we require for our audit or if information specified by law

regarding directors’ remuneration and other transactions is not disclosed.

We read other information contained in the Annual Report and consider

whether it is consistent with the audited financial statements. The other

information comprises only the Highlights, the Executive Chairman’s

Statement, the History of CMC Markets, the Business Overview, Our Strategy,

the Directors’ Report and the Corporate Governance Report. We consider

the implications for our report if we become aware of any apparent

misstatements or material inconsistencies with the financial statements.

Our responsibilities do not extend to any other information.

Basis of audit opinionWe conducted our audit in accordance with International Standards on

Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit

includes examination, on a test basis, of evidence relevant to the amounts

and disclosures in the financial statements. It also includes an assessment of

the significant estimates and judgements made by the Directors in the

preparation of the financial statements, and of whether the accounting

policies are appropriate to the Group’s and Company’s circumstances,

consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and

explanations which we considered necessary in order to provide us with

sufficient evidence to give reasonable assurance that the financial statements

are free from material misstatement, whether caused by fraud or other

irregularity or error. In forming our opinion we also evaluated the overall

adequacy of the presentation of information in the financial statements.

OpinionIn our opinion:

• the Group Financial Statements give a true and fair view, in accordance

with IFRS as adopted by the European Union, of the state of the Group’s

affairs as at 31 March 2008 and of its profit for the year then ended;

• the Parent Company Financial Statements give a true and fair view, in

accordance with United Kingdom Generally Accepted Accounting Practice,

of the state of the Parent Company’s affairs as at 31 March 2008;

• the financial statements have been properly prepared in accordance with

the Companies Act 1985; and

• the information given in the Directors’ Report is consistent with the

financial statements.

BAKER TILLY UK AUDIT LLPRegistered Auditors


2 Bloomsbury Street

London WC1B 3ST

United Kingdom

3 June 2008

Independent auditors’ reportto the shareholders of CMC Markets Plc


For the year ended

31 March 2008Before amortisation Amortisationand impairment of and impairment of intangibles arising intangibles arising

on consolidation and on consolidation Exceptional items exceptional items (Note 15) (Note 7) Total

Continuing operations Notes £m £m £m £m

Revenue 4 181.4 – – 181.4Operating expenses (116.7) (1.3) (7.9) (125.9)

Operating profit 6 64.7 (1.3) (7.9) 55.5

Finance income 9 2.3 – – 2.3Finance costs 10 (0.6) – – (0.6)

Profit before taxation 66.4 (1.3) (7.9) 57.2

Taxation 11 (20.1) 0.3 2.4 (17.4)

Profit for the year attributable to equity holdersof the parent company 46.3 (1.0) (5.5) 39.8

Earnings per shareBasic (p) 12 15.5pDiluted (p) 12 15.5p

Consolidated income statement


For the year ended

31 March 2007Before amortisation Amortisation

and impairment of and impairment of

intangibles arising intangibles arising

on consolidation and on consolidation Exceptional items

exceptional items (Note 15) (Note 7) Total

Continuing operations Notes £m £m £m £m

Revenue 4 110.5 – – 110.5

Operating expenses (64.8) – (25.8) (90.6)

Operating profit 6 45.7 – (25.8) 19.9

Finance income 9 1.1 – – 1.1

Finance costs 10 – – – –

Profit before taxation 46.8 – (25.8) 21.0

Taxation 11 (14.8) – 6.7 (8.1)

Profit for the year attributable to equity holdersof the parent company 32.0 – (19.1) 12.9

Earnings per shareBasic (p) 12 5.0p

Diluted (p) 12 5.0p

Consolidated income statement


As at

31 March 20082008 2007

Notes £m £m

ASSETSNon-current assetsGoodwill 14 18.8 0.7

Intangible assets 15 50.4 16.6

Property, plant and equipment 16 19.0 14.4

Deferred tax assets 23 1.7 1.7

Total non-current assets 89.9 33.4

Current assetsInvestments 18 24.2 61.5

Trade and other receivables 17 12.6 4.0

Cash and cash equivalents 32(b) 108.0 111.1

Total current assets 144.8 176.6

Total assets 234.7 210.0

LIABILITIESCurrent liabilitiesTrade and other payables 19 71.3 91.6

Deferred consideration 5 3.5 –

Trading liabilities 20 2.9 18.3

Borrowings 21 0.5 19.1

Current tax payable 5.6 1.4

Short-term provisions 22 3.8 0.7

Total current liabilities 87.6 131.1

Non-current liabilitiesDeferred consideration 5 8.4 –

Deferred tax liabilities 23 8.8 6.8

Borrowings 21 25.6 –

Total non-current liabilities 42.8 6.8

Total liabilities 130.4 137.9

EQUITYCapital and reserves attributable to shareholders of the parent companyShare capital 26 64.0 64.0

Own shares held in trust 26 (3.9) –

Translation reserve 28 1.5 –

Merger reserve 29 (47.8) (47.8)

Retained earnings 30 90.5 55.9

Total equity 104.3 72.1

Total equity and liabilities 234.7 210.0

Approved by the Board of Directors and authorised for issue on 3 June 2008.

Jim Pettigrew, Chief Executive Officer

Doug Richards, Chief Financial Officer

Consolidated balance sheet


For the year ended

31 March 2008Share Own shares Translation Merger Retained Total

capital held in trust reserve reserve earnings equityNotes £m £m £m £m £m £m

Balance at 1 April 2006 64.0 – 0.1 (47.8) 58.5 74.8

Currency translation differences 28 – – (0.1) – – (0.1)

Net income recognised directly in equity – – (0.1) – – (0.1)

Profit for the year 30 – – – – 12.9 12.9

Total recognised income and expense for the year – – (0.1) – 12.9 12.8

Dividends 13 – – – – (20.0) (20.0)

Share-based payment charge 27 – – – – 4.5 4.5

Balance at 31 March 2007 64.0 – – (47.8) 55.9 72.1

Currency translation differences 28 – – 1.5 – – 1.5

Net income recognised directly in equity – – 1.5 – – 1.5

Profit for the year 30 – – – – 39.8 39.8

Total recognised income and expense for the year – – 1.5 – 39.8 41.3

Dividends 13 – – – – (10.0) (10.0)

Share-based payment charge 27 – – – – 4.8 4.8

Acquisition of own shares 26 – (3.9) – – – (3.9)

Balance at 31 March 2008 64.0 (3.9) 1.5 (47.8) 90.5 104.3

Consolidated statementof changes in equity


For the year ended

31 March 20082008 2007

Notes £m £m

Cash movement on segregated funds 32(b) 46.5 13.2

Cash generated from operationsCash generated from operations (excluding broker financing) 32(a) 47.8 51.0

Cash utilised in broker financing 32(a) 3.3 (8.8)

Net cash generated from operations 32(a) 51.1 42.2

Cash flows from operating activitiesCash generated from operations 32(a) 51.1 42.2

Finance income 9 2.3 1.1

Tax paid (13.5) (2.5)

Net cash from operating activities 39.9 40.8

Cash flows from investing activitiesAcquisition of subsidiaries (net of cash acquired) 5 (26.6) –

Purchase of property, plant and equipment 16 (10.7) (9.8)

Development of software and purchase of software licences 15 (16.5) (9.1)

Acquisition of trading and broking licences 15 (1.4) (0.7)

Acquisition of other intangibles 15 (0.1) (0.3)

Net cash used in investment activities (55.3) (19.9)

Cash flows from financing activitiesIssuance of subordinated debt 21 25.0 –

Acquisition of own shares held in trust 26 (3.9) –

Dividends paid 13 (10.0) (20.0)

Net cash from/(used in) financing activities 11.1 (20.0)

Net (decrease)/increase in cash and cash equivalents (4.3) 0.9

Cash and cash equivalents at the beginning of the year 111.1 110.3

Effect of foreign exchange rate changes 1.2 (0.1)

Cash and cash equivalents at end of year 32(b) 108.0 111.1

Consolidated cash flow statement


Index to notes

CMC Markets Plc –Consolidated financialstatements1. General information

2. Adoption of new and revised standards

3. Summary of significant accounting policies

4. Segmental analysis of revenue, profit after taxation and net assets

5. Business combinations

6. Operating profit

7. Exceptional items

8. Employee information

9. Finance income

10. Finance costs

11. Taxation

12. Earnings per share

13. Dividends

14. Goodwill

15. Intangible assets

16. Property, plant and equipment

17. Trade and other receivables

18. Investments

19. Trade and other payables

20. Trading liabilities

21. Borrowings

22. Provisions

23. Deferred tax

24. Financial instruments

25. Capital management

26. Share capital

27. Share-based payment

28. Translation reserve

29. Merger reserve

30. Retained earnings

31. Operating lease commitments

32. Statement of cash flows

33. Retirement benefit plans

34. Related party transactions

35. Ultimate controlling party

36. Contingent liabilities

Index to notes

CMC Markets Plc –Parent companyfinancial statements37. Fixed asset investments

38. Called up equity share capital

39. Profit and loss account

40. Reconciliation of movements in shareholders’ funds

41. Debtors

42. Creditors: amounts falling due within one year

43. Creditors: amounts falling due in more than one year


Index to notes to the financial statements


1. General information

Corporate informationCMC Markets Plc is a company incorporated and domiciled in England

and Wales under the Companies Act 1985. The nature of the operations

and principal activities of the CMC Markets Plc group (the Group) are

set out in Note 4.

Functional currencyThe financial statements are presented in pounds sterling since this is

the currency of the primary economic environment in which the Group

operates. Foreign operations are included in accordance with the policies

set out in Note 3.

2. Adoption of new and revised standards

In the current year, the Group has adopted IFRS 7 Financial Instruments:

Disclosures (IFRS 7), which is effective for annual reporting periods beginning

on or after 1 January 2007, and the related amendment to IAS 1 Presentation

of Financial Statements (IAS 1). The impact of the adoption of IFRS 7 and the

changes to IAS 1 has been to expand the disclosures provided in these

financial statements regarding the Group’s financial instruments and

management of capital (see Notes 24 and 25).

Four interpretations issued by the Financial Reporting Interpretations

Committee are effective for the current period. These are:

• IFRIC 7 Applying the Restatement Approach under IAS 29,

Financial Reporting in Hyperinflationary Economies;

• IFRIC 8 Scope of IFRS 2;

• IFRIC 9 Reassessment of Embedded Derivatives; and

• IFRIC 10 Interim Financial Reporting and Impairment.

The adoption of these Standards has not led to any changes in the Group’s

accounting policies.

At the date of authorisation of these financial statements, the following new

Interpretation and Standard relevant to the Group were in issue but not yet

effective and have not been applied to these financial statements:

• IFRIC 11 IFRS 2 – Group and Treasury Share Transactions;

• IFRS 8 Operating Segments.

3. Summary of significant accounting policies

Basis of accountingThe financial statements have been prepared in accordance with

International Financial Reporting Standards (IFRS) as adopted by the

European Union and the International Financial Reporting Interpretations

Committee (IFRIC) and with those parts of the Companies Act 1985

applicable to companies reporting under IFRS.

The financial information has been prepared on the historical cost basis,

except for the revaluation of certain financial instruments. The financial

information is rounded to the nearest hundred thousand (expressed as

millions to one decimal place – £m), except where otherwise indicated.

The principal accounting policies adopted are set out below.

Use of estimatesThe preparation of financial information in conformity with generally

accepted accounting principles requires the use of estimates and

assumptions that affect the reported amounts of assets and liabilities at the

date of the financial information and the reported amounts of revenues and

expenses during the reporting year. Although these estimates are based on

management’s best knowledge of the amount, events or actions, actual

results may ultimately differ from those estimates and are as follows:

AcquisitionsWhen acquiring a business, the Directors have to make judgements and

best estimates about the fair value allocation of the purchase price. The

Directors seek appropriate competent and professional advice before

making any such allocations and test the valuation of goodwill on an

annual basis and whenever events or changes in circumstances indicate

that the carrying amounts may not be recoverable. These tests require the

use of estimates (see Note 5).

Impairment reviewsThe Group tests annually whether goodwill has suffered any impairment.

The recoverable amounts of cash-generating units (CGUs) have been

determined based on value-in-use calculations. These calculations require

the use of estimates (see Note 14).

Income taxesThe Group is subject to income taxes in numerous jurisdictions. Significant

judgement is required in determining the worldwide provision for income

taxes. There are transactions and calculations for which the ultimate tax

determination is uncertain during the ordinary course of business. The Group

recognises liabilities for anticipated tax audit issues based on estimates of

whether additional taxes will be due. Where the final tax outcome of these

matters is different from the amounts that were recorded, such differences

will impact the income tax and deferred tax provisions in the period in which

such determination is made.

Basis of consolidationThe consolidated financial information incorporates the financial information

of the Company and its subsidiaries made up to 31 March each year. The

consolidated Group presented is comprised of the entities listed in Note 37,

as if the Group had always consisted of these entities.

Control is achieved where the Company has the power to govern the

financial and operating policies of an investee enterprise so as to obtain

benefits from its activities.

The pooling of interests (merger) method of accounting was adopted for the

group reorganisation in 2006 as it fell outside the scope of IFRS 3: Business

Combinations. The Directors adopted the pooling of interests as they believed

it best reflected the true nature of the Group. For all other business

combinations, purchase method accounting has been applied.

Notes to consolidated financial statements


Under purchase accounting, the identifiable assets, liabilities and contingent

liabilities of a subsidiary are measured at their fair values at the date of

acquisition. The results of subsidiaries acquired or disposed of during the year

are included in the Consolidated Income Statement from the effective date

of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial information of

subsidiaries to bring the accounting policies used into line with those used by

other members of the Group.

All intra-company transactions and balances between Group enterprises are

eliminated on consolidation.

GoodwillGoodwill arising on consolidation represents the excess of the cost of

acquisition over the Group’s interest in the fair value of the identifiable assets,

liabilities and contingent liabilities of a subsidiary, at the date of acquisition.

Goodwill is recognised as an asset and is reviewed for impairment at least

annually, or when changes in circumstances indicate that it might be

impaired. Any impairment is recognised immediately in the Consolidated

Income Statement and is not subsequently reversed. Goodwill arising on

acquisition is allocated to cash-generating units for purposes of impairment

testing. Goodwill arising on the acquisition of subsidiaries is presented

separately in the Consolidated Balance Sheet.

On disposal of a subsidiary, the attributed amount of unamortised goodwill,

which has not been subject to impairment, is included in the determination

of the profit or loss on disposal.

Intangible assetsSoftware and website development costPurchased software is recognised as an intangible asset at cost when acquired.

An internally generated intangible asset arising from the Group’s software

development is recognised only if all of the following conditions are met:

• an asset is created that can be identified;

• it is probable that the asset created will generate future economic benefits;

• the development costs of the asset can be measured reliably; and

• sufficient resources are available to complete the development.

Where the above conditions are not met, costs are expensed as incurred.

Acquired both separately and from business combinationIntangible assets acquired separately are capitalised at cost and those from

a business acquisition are capitalised at fair value at the date of acquisition.

Following initial recognition, the cost model is applied to the class of

intangible assets. The useful lives of these intangible assets are assessed to

be either finite or indefinite. Where amortisation is charged on finite assets,

this expense is taken to the Consolidated Income Statement. Intangible

assets with indefinite useful lives are not amortised.

Intangible assets, excluding software development costs, created within the

business are not capitalised and expenditure is charged against profits in the

year in which the expenditure is incurred. Intangible assets are tested for

impairment annually either individually or at the cash-generating unit level.

Useful lives are also examined on an annual basis and adjustments, where

applicable, are made on a prospective basis.

A summary of the amortisation policies applied to the Group’s intangible

assets is as follows:

Item Amortisation policy

Software (purchased or developed) 3 – 5 years

Software licences Over life of licence

Customer relationships 14 years

Website development 3 years

Trading and broker licences 10 – 20 years

Gains or losses arising from de-recognition of an intangible asset are

measured as the difference between the net disposal proceeds and the

carrying amount of the asset and are recognised in the Consolidated Income

Statement when the asset is derecognised.

Property, plant and equipmentProperty, plant and equipment is stated at cost less accumulated depreciation

and any recognised impairment loss. Depreciation is provided on all tangible

assets at rates calculated to write off the cost, less estimated residual value

based on prices prevailing at the balance sheet date, of each asset on a

straight line basis over its expected useful life as follows:

Item Amortisation policy

Aircraft 20 years

Furniture, fixtures and fittings 5 years

Office equipment 5 years

Assets held under finance leases are depreciated over their expected useful

lives on the same basis as owned assets or, where shorter, the term of the

relevant lease. The gain or loss arising on the disposal or retirement of an

asset is determined as the difference between the sales proceeds and the

carrying amount of the asset and is recognised in income.

ImpairmentAt each balance sheet date, the Group reviews the carrying amounts of its

tangible and intangible assets with finite lives to determine whether there is

any indication that those assets have suffered an impairment loss. If any such

indication exists, the recoverable amount of the asset is estimated in order to

determine the extent of the impairment loss (if any). Where the asset does

not generate cash flows that are independent from other assets, the Group

estimates the recoverable amount of the cash-generating unit to which the

asset belongs.


3. Summary of significant accounting policiescontinued

An intangible asset with an indefinite useful life is tested for impairment

annually and whenever there is an indication that the asset may be impaired.

The recoverable amount is the higher of fair value less any cost to sell and

value in use. In assessing value in use, the estimated future cash flows are

discounted to their present values using a pre-tax discount rate that reflects

current market assessments of the time value of money and the risks specific to

the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated

to be less than its carrying amount, the carrying amount of the asset (or

cash-generating unit) is reduced to its recoverable amount. Impairment

losses are recognised as an expense immediately. Where an impairment loss

subsequently reverses, the carrying amount of the asset (or cash-generating

unit) is increased to the revised estimate of its recoverable amount, but so

that the increased carrying amount does not exceed the carrying amount

that would have been determined had no impairment loss been recognised

for the asset (or cash-generating unit) in prior years. A reversal of an

impairment loss is recognised as income immediately, unless the relevant

asset is carried at a revalued amount, in which case the reversal of the

impairment loss is treated as a revaluation increase. However, impairment

losses relating to goodwill may not be reversed.

RevenueTrading revenue represents profits and losses on foreign currency trading,

derivatives and spread betting; all financial instruments are marked to market

and the resulting profit or loss is recognised.

Non-trading revenue represents commissions receivable from client trading

activities, interest receivable on clients’ money and broker trading deposits

net of interest payable to clients and brokers, and the provision of financial

and website development services provided to third parties. Interest revenue

is accrued on a time basis, by reference to the principal outstanding and at

the interest rate applicable.

Bank and other deposit interest received and interest paid is included in

financing income and financing costs respectively.

Dividend revenue is recognised when the shareholders’ right to receive the

payment is established.

Exceptional itemsExceptional items represent income or expenses, which based on their

materiality, frequency and non-operating nature, have been separately

disclosed to facilitate the assessment of the Group’s underlying operating

profitability.

Financial instrumentsFinancial assets and financial liabilities are recognised on the Group’s

consolidated balance sheet when the Group has become a party to the

contractual provisions of the instrument.

Financial assetsInvestments are recognised and derecognised on a trade date basis where

the purchase or sale of an investment is under a contract whose terms

require delivery of the investment within the timeframe established by the

market concerned, and are initially measured at fair value plus transaction

costs, except for those financial assets classified as at fair value through profit

or loss, which are initially measured at fair value.

Financial assets are classified into the following specified categories:

• ‘fair value through profit or loss’ (FVTPL);

• ‘held-to-maturity’ investments;

• ‘available-for-sale’; and

• loans and receivables.

The classification depends on the nature and purpose of the financial assets

and is determined at the time of initial recognition.

For the year ending 31 March 2008, the Group does not hold any financial

assets categorised as held-to-maturity investments or available-for-sale

(2007: £nil).

Financial assets at FVTPLFinancial assets are classified as at FVTPL where the financial asset is either

held for trading or is designated as at FVTPL.

A financial asset is classified as held for trading if:

• it has been acquired principally for the purpose of selling in the near future; or

• it is a part of an identified portfolio of financial instruments that the Group

manages together and has a recent actual pattern of short-term profit

taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading may be

designated as at FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or

recognition inconsistency that would otherwise arise; or

• the financial asset forms part of a group of financial assets or financial

liabilities, or both, which is managed and its performance is evaluated on a

fair value basis, in accordance with the Group’s documented risk

management or investment strategy, and information about the group is

provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives,

and IAS 39 Financial Instruments: Recognition and Measurement permits the

entire combined contract (asset or liability) to be designated as at FVTPL.

Financial assets as at FVTPL are stated at fair value, with any resultant gain or

loss recognised in profit or loss. The net gain or loss recognised in profit or

loss incorporates any dividend or interest earned on the financial asset.

Notes to consolidated financial statementscontinued


Loans and receivablesTrade receivables, loans, and other receivables that have fixed or

determinable payments that are not quoted in an active market are classified

as loans and receivables. Loans and receivables are measured at amortised

cost using the effective interest method, less any impairment. Interest income

is recognised by applying the effective interest rate, except for short-term

receivables when the recognition of interest would be immaterial.

Cash and cash equivalentsCash and cash equivalents comprise cash on hand and demand deposits,

and other short-term highly liquid investments that are readily convertible to

a known amount of cash, and are subject to an insignificant risk of changes

in value.

Financial liabilities and equityFinancial liabilities and equity instruments are classified according to the

substance of the contractual arrangements entered into.

Financial liabilitiesFinancial liabilities are classified as either financial liabilities ‘at FVTPL’ or

‘other financial liabilities’.

Financial liabilities at FVTPLFinancial liabilities are classified as at FVTPL where the financial liability is

either held for trading or it is designated as at FVTPL.

A financial liability is classified as held for trading if:

• it has been incurred principally for the purpose of disposal in the near

future; or

• it is a part of an identified portfolio of financial instruments that the

Group manages together and has a recent actual pattern of short-term

profit-taking; or

• it is a derivative that is not designated and effective as a hedging

instrument.

A financial liability, other than a financial liability held for trading, may be

designated as at FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or

recognition inconsistency that would otherwise arise; or

• the financial liability forms part of a group of financial assets or financial

liabilities, or both, which is managed and its performance is evaluated on a

fair value basis, in accordance with the Group’s documented risk

management or investment strategy, and information about the group is

provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives,

and IAS 39 Financial Instruments: Recognition and Measurement permits the

entire combined contract (asset or liability) to be designated as at FVTPL.

Financial liabilities as at FVTPL are stated at fair value, with any resultant gain

or loss recognised in profit of loss. The net gain or loss recognised in profit or

loss incorporates any interest paid on the financial liability.

Other financial liabilitiesOther financial liabilities, including borrowings, are initially measured at fair

value, net of transaction costs. Other financial liabilities are subsequently

measured at amortised cost using the effective interest method, with interest

expense recognised on an effective yield basis. The effective interest method

is a method of calculating the amortised cost of a financial liability and of

allocating interest expense over the relevant period. The effective interest rate

is the rate that exactly discounts estimated future cash payments through the

expected life of the financial liability, or, where appropriate, a shorter period.

Derivative financial instrumentsThe Group enters into a variety of derivative financial instruments to manage

its exposure to interest rate and foreign exchange rate risk, including foreign

exchange forward contracts, interest rate swaps and foreign currency options.

Derivatives are initially recognised at fair value at the date a derivative

contract is entered into and are subsequently remeasured to their fair value

at each balance sheet date. The resulting gain or loss is recognised in profit

or loss immediately unless the derivative is designated and effective as a

hedging instrument, in which event the timing of the recognition in profit or

loss depends on the nature of the hedge relationship. The Group designates

certain derivatives as either hedges of the fair value of recognised assets or

liabilities or firm commitments (fair value hedges), hedges of highly probable

forecast transactions or hedges of foreign currency risk of firm commitments

(cash flow hedges), or hedges of net investments in foreign operations.

A derivative is presented as a non-current asset or a non-current liability if

the remaining maturity of the instrument is more than 12 months and it is

not expected to be realised or settled within 12 months. Other derivatives are

presented as current assets or current liabilities.

Hedges of net investments in foreign operationsHedges of net investments in foreign operations are accounted for similarly

to cash flow hedges. Any gain or loss on the hedging instrument relating to

the effective portion of the hedge is recognised in equity in the foreign

currency translation reserve. The gain or loss relating to the ineffective

portion is recognised immediately in profit or loss.

Gains and losses deferred in the foreign currency translation reserve are

recognised in profit or loss on disposal of the foreign operation.

BorrowingsAll loans and borrowings are initially recognised at cost, being the fair value

of the consideration received net of issue costs associated with the

borrowing. After initial recognition, interest-bearing loans and borrowings are

subsequently measured at amortised cost using the effective interest rate

method. Amortised cost is calculated by taking into account any issue costs,

and any discount or premium on settlement. Gains and losses are recognised

in profit or loss when the liabilities are derecognised or impaired, as well as

through the amortisation process.

Trade payablesTrade payables are not interest-bearing and are stated at fair value on initial

recognition and subsequently at amortised cost.


3. Summary of significant accounting policiescontinued

ProvisionsProvisions are recognised when the Group has a present obligation (legal

or constructive) as a result of a past event where it is probable that the

Group will be required to settle that obligation. Provisions are measured

at the Directors’ best estimate of the expenditure required to settle the

obligation at the balance sheet date and are discounted to present value

where the effect is material.

Foreign currenciesTransactions denominated in currencies other than pounds sterling are

recorded at the rates of exchange prevailing on the dates of the transactions.

At each balance sheet date, monetary assets and liabilities that are

denominated in foreign currencies are retranslated at the rates prevailing on

the balance sheet date. Non-monetary assets and liabilities carried at fair

value that are denominated in foreign currencies are translated at the rates

prevailing at the date when the fair value was determined. Gains and losses

arising on retranslation are included in profit or loss for the year, except for

exchange differences arising on non-monetary assets and liabilities where the

changes in fair value are recognised directly in equity.

On consolidation, the assets and liabilities of the Group’s overseas operations

are translated at exchange rates prevailing on the balance sheet date. Income

and expense items are translated at the average exchange rates for the year.

Exchange differences arising, if any, are classified as equity and transferred to

the Group’s translation reserve.

Such translation differences are recognised as income or expense in the year

in which the operation is disposed of.

Goodwill and fair value adjustments arising on the acquisition of a foreign

entity are treated as assets and liabilities of the foreign entity and translated at

the closing rate.

TaxationThe tax expense represents the sum of tax currently payable and movements

in deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable

profit differs from profit before tax as reported in the Consolidated Income

Statement because it excludes items of income or expense that are taxable or

deductible in other years and it further excludes items that are never taxable

or deductible. The Group’s liability for current tax is calculated using tax rates

that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in

respect of temporary differences arising from differences between the

carrying amount of assets and liabilities in the financial information and

the corresponding tax basis used in the computation of taxable profit. In

principle, deferred tax liabilities are recognised for all temporary differences

and deferred tax assets are recognised to the extent that it is probable that

taxable profits will be available against which deductible temporary

differences may be utilised.

Such assets and liabilities are not recognised if the temporary difference arises

from the goodwill (or negative goodwill) or from the initial recognition (other

than in a business combination) of other assets and liabilities in a transaction,

which affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising

on investments in subsidiaries, except where the Group is able to control the

reversal of the temporary difference and it is probable that the temporary

difference will not reverse in the foreseeable future.

The carrying amounts of deferred tax assets are reviewed at each balance

sheet date and reduced to the extent that it is no longer probable that

sufficient taxable profits will be available to allow all or part of the asset to be

recovered.

Deferred tax is calculated at the rates that are expected to apply when the

asset or liability is settled or when the asset is realised. Deferred tax is charged

or credited in the Consolidated Income Statement, except when it relates to

items credited or charged directly to equity, in which case the deferred tax is

also dealt with in equity. Deferred tax assets and liabilities are offset when

they relate to income taxes levied by the same taxation authority and the

Group intends to settle its current tax assets and liabilities on a net basis.

Leases and hire purchase commitmentsFinance leases, which transfer to the Group substantially all the risks and

benefits incidental to ownership of the leased item, are capitalised at the

inception of the lease at the fair value of the leased property or, if lower, at

the present value of the minimum lease payments. Lease payments are

apportioned between the finance charges and reduction of the lease liability

so as to achieve a constant rate of interest on the remaining balance of the

liability. Finance charges are charged directly against income.

Capitalised leased assets are depreciated over the shorter of the estimated

useful life of the asset or the lease term.

Leases where the lessor retains substantially all the risks and benefits of

ownership of the asset are classified as operating leases. Operating lease

payments are recognised as an expense in the Consolidated Income

Statement on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to enter into an operating

lease are also spread on a straight-line basis over the lease term.

Client moneyThe Group holds money on behalf of clients in accordance with the Client

Asset (CASS) rules of the Financial Services Authority and other financial

markets regulators in the countries in which the Group operates. Client

monies are classified as either segregated or non-segregated in accordance

with the relevant regulatory agency’s requirements.

The amounts held on behalf of clients at the balance sheet date are stated at

Note 19 and Note 32(b).



Employee benefit trustsAssets held in employee benefit trusts are recognised as assets of the

Company until these vest unconditionally in identified employees.

A full provision is made in respect of assets held by the trust as there is

an obligation to distribute these assets to the beneficiaries of the

employee benefit trust.

Own shares held in trustOwn shares held in trust are recognised at cost. Consideration received for

the sale of such shares is recognised in equity and any difference between

the sale proceeds and the original cost is taken to revenue reserves.

Retirement benefit costsDefined contributions made to employees’ personal pension plans are

charged to the consolidated income statement as and when incurred.

Share-based paymentsThe Group issues equity-settled share-based payments to certain employees.

Equity-settled share-based payments are measured at fair value (excluding

the effect of non-market-based vesting conditions) at date of grant. The fair

value determined at the grant date of the equity-settled share-based

payment is expensed on a straight-line basis over the vesting period, based

on the Group’s estimate of shares that will eventually vest, and adjusted for

the effect of non-market-based vesting conditions.

The expected life used in the model has been adjusted, based on

management’s best estimate, for the effects of non-transferability, exercise

restrictions and behavioural considerations.

4. Segmental analysis of revenue, profit after

taxation and net assets

Geographical segmentsFor management purposes, the Group is organised into five regional divisions:

• United Kingdom and Ireland;

• Germany, Austria and Nordic Region;

• North America;

• Australia and New Zealand;

• Other Asia.

These divisions are the basis on which the Group reports its primary segment

information.

Business segmentsThe Group operates as a market maker to its clients in foreign exchange,

equity, indices, commodity, and treasury instruments as well as in financial

spread betting. It also offers stockbroking and financial information services.

The Directors regard these activities as three classes of business for the

financial year ended 31 March 2008 but do not designate financial

information and stockbroking services as reportable segments as they do not

currently account for more than 10 percent of the Group’s revenue.

Revenues and costs are allocated to the regional divisions that originated the

transaction. Costs generated centrally are allocated to regional divisions on

an equitable basis, with the exception of unallocated administrative expenses.

Divisional assets and liabilities consist of operating assets and liabilities.

The table on the next page analyses revenue, profit after taxation and

assets and liabilities by region.


4. Segmental analysis of revenue, profit after taxation and net assets continued

United Germany,

Kingdom Austria and North Australia and

Group and Ireland Nordic Region America New Zealand Other Asia

2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007

£m £m £m £m £m £m £m £m £m £m £m £m

REVENUETotal revenue 181.4 110.5 74.3 41.6 30.4 17.4 6.8 5.9 63.6 42.1 6.3 3.5

PROFIT AFTER TAXSegment result 76.6 51.4 46.7 28.2 2.9 4.9 (3.1) (0.4) 33.5 21.0 (3.4) (2.3)

Unallocated corporate expenses:

Unallocated administrative expenses (1) (21.1) (31.5)

Unallocated finance revenue 2.3 1.1

Unallocated finance costs (0.6) 0.0

Profit before taxation 57.2 21.0

Income tax expense (17.4) (8.1)

Profit after tax 39.8 12.9

BALANCE SHEETAssetsSegment assets 211.9 199.9 109.4 80.2 2.9 1.5 15.1 15.9 78.4 96.5 6.1 5.8

Unallocated corporate assets 22.8 10.1

Consolidated total assets 234.7 210.0

LiabilitiesSegment liabilities 119.5 128.8 96.9 58.1 2.5 1.1 6.9 8.4 12.9 60.9 0.3 0.3

Unallocated corporate liabilities 10.9 9.1

Consolidated total liabilities 130.4 137.9

OTHER INFORMATIONCapital expenditure 11.1 9.8 8.0 6.5 0.9 0.5 0.1 1.1 1.5 0.9 0.6 0.8

Depreciation 4.8 2.5 3.1 1.8 0.3 0.1 0.3 0.1 0.9 0.3 0.2 0.2

(1) Unallocated administrative expenses include all exceptional items (see Note 7), other directors’ bonuses and amortisation of capitalised, internally developed software

and website development costs.



5. Business combinations

(i) Acquisition of Digital Look LimitedOn 14 May 2007, CMC Markets Plc acquired the entire share capital of

Digital Look Limited for cash consideration of £6.1m and contingent,

deferred consideration of up to £6.0m (discounted £5.3m).

Digital Look’s net assets at the acquisition date were as follows:

Recognised Fair value Carrying

values adjustments amounts

£m £m £m

Cash and cash equivalents 0.8 – 0.8

Software 0.3 – 0.3

Other current assets 1.3 – 1.3

Property, plant and equipment 0.3 – 0.3

Client relationships 5.6 5.6 –

Current liabilities (2.5) – (2.5)

Deferred tax liability (1.7) (1.7) –

Net identifiable assets acquired 4.1 3.9 0.2

Goodwill 7.3

Total of net assets acquired 11.4

The Consolidated Income Statement includes the results of Digital Look Limited

from 14 May 2007, the date of acquisition. If Digital Look Limited had been

acquired on 1 April 2007, total Group revenue would have been £182.0m,

and the adjusted consolidated profit before tax for the Group would have

been £66.5m.

The goodwill acquired relates to other intangible assets not identified under

IFRS 3 Business Combinations, including the contribution of the assembled

workforce and the ‘going concern’ element of the business.

(ii) Acquisition of Andrew West & Co. Limited (AWS)On 28 December 2007, CMC Markets Group Australia Pty Limited

acquired the entire share capital of AWS, an Australian stockbroker, for cash

consideration of £26.0m (AUD 56.5m) and contingent, deferred consideration

of up to £6.9m (AUD 15.0m) (discounted £6.6m (AUD 14.3m)).

AWS’ net assets at the acquisition date were as follows:

Recognised Fair value Carrying

values adjustments amounts

£m £m £m

Cash and cash equivalents 4.7 – 4.7

Software 15.1 14.8 0.3

Other current assets 6.1 0.1 6.0

Property, plant and equipment 0.1 – 0.1

Client relationships 4.6 4.6 –

Current liabilities (7.9) – (7.9)

Deferred tax liability (0.9) (0.9) –

Net identifiable assets acquired 21.8 18.6 3.2

Goodwill 10.8

Total of net assets acquired 32.6

The Consolidated Income Statement includes the results of AWS from

28 December 2007, the date of acquisition. If AWS had been acquired on

1 April 2007, total Group revenue would have been £187.0m, and the adjusted

consolidated profit before tax for the Group would have been £67.8m.

The goodwill acquired relates to other intangible assets not identified under

IFRS 3 Business Combinations, including the contribution of the assembled

workforce and the ‘going concern’ element of the business.

6. Operating profit2008 2007

£m £m

Operating profit is stated after charging/(crediting):

Depreciation 4.8 2.5

Amortisation of intangible assets 9.1 2.4

Net foreign exchange loss or (gain) (4.5) 0.2

Capital transaction costs 0.7 4.5

Operating leases – land and buildings 5.7 3.7

Share-based payment 4.8 4.5

Auditor’s remuneration for audit and other services 0.3 0.7

A more detailed analysis of auditor’s remuneration is provided below:

2008 2007

£m £m

Audit servicesStatutory audit of parent and consolidation 0.1 0.1

Statutory audit of subsidiaries 0.1 0.1

0.2 0.2

Other servicesFlotation related services – 0.5

Assurance services 0.1 –

0.3 0.7

7. Exceptional items2008 2007

£m £m

Chief Executive’s exceptional bonus – (15.4)

Capital transaction costs – (4.5)

Charitable donations (Note 34) (3.1) (1.4)

Share-based payment expense (Note 27) (4.8) (4.5)

Total (7.9) (25.8)


8. Employee information

The aggregate employment costs of staff and directors were:

2008 2007

£m £m

Wages, salaries, bonuses and incentive payments 47.2 31.5

Social security costs 3.9 2.2

Post-employment benefits 1.6 1.0

52.7 34.7

Chief Executive’s exceptional bonus – 15.4

52.7 50.1

Share-based payment (Note 27) 4.8 4.5

57.5 54.6

Key management compensation (1):

Wages, salaries, bonuses and incentive payments 7.8 19.9

Social security costs 1.4 1.4

Post-employment benefits 0.1 0.1

Benefits in kind 0.1 –

9.4 21.4

Share-based payment 0.8 0.6

10.2 22.0

Remuneration of highest paid director:

Wages, salaries, bonuses and incentive payments (2) 1.7 16.3

(1) Key management comprise the Directors and Non-executive Directors of

CMC Markets Plc only.(2) Remuneration of the highest paid Director (the Executive Chairman) is £1.7m

(2007: £16.3m). Pension contributions of £1,411 were paid on behalf of the

Executive Chairman in the year ended 31 March 2008 (2007: £1,411).

The average number of directors and employees of the Group during the

year is set out below:2008 2007

Key management 10 7

Client acquisition and maintenance 396 159

IT development and support 259 154

Global support functions 244 203

Average number of directors and employees 909 523

The total number of employees and directors as at 31 March 2008 was

1,064 (2007: 722).

9. Finance income2008 2007

£m £m

Bank interest receivable and similar income 2.3 1.1

2.3 1.1

10. Finance costs2008 2007

£m £m

Interest on Loan Note (0.6) –

Total (0.6) ≠–

11. Taxation2008 2007

£m £m

Analysis of charge for the yearUnited Kingdom taxCurrent tax 12.8 2.7

Deferred tax (Note 23) 0.2 5.4

Foreign taxCurrent tax 5.2 1.5

Deferred tax (Note 23) (0.8) (1.5)

Taxation 17.4 8.1

The tax for the year differs from the standard rate of UK Corporation Tax of

30% (2007: 30%). The differences are explained below:

2008 2007

£m £m

Profit before tax – continuing operations 57.2 21.0

Tax based on UK Corporation Tax rate of 30% 17.2 6.3

Irrecoverable foreign tax 0.1 0.1

Expenses that are not recognised for tax purposes 0.1 1.7

Tax expense 17.4 8.1

12. Earnings per share

CMC Markets is required to disclose only the basic and diluted EPS on the

face of the Consolidated Income Statement under IFRS. In addition, the

Group calculates an adjusted EPS measurement ratio, disclosed below, as it

believes that it is the most appropriate measurement since it better reflects

CMC Markets’ underlying cash earnings.



Basic earnings per share is calculated by dividing the profit for the year

attributable to the equity holders of the parent of £39.8m (2007: £12.9m) by

the weighted average number of ordinary shares in issue during the year of

256.1m shares (2007: 256.1m) as shown below.

2008 2007

£m £m

Earnings for the purposes of the basic and

diluted earnings per share 39.8 12.9

2008 2007

Number of shares No. (m) No. (m)

Weighted average number of ordinary

shares for basic earnings per share 256.1 256.1

Diluted earnings per share denominator 256.1 256.1

Adjusted earnings per share is based on earnings before amortisation and

impairment of intangibles arising on consolidation and exceptional items

(and their tax effects).

Adjusted EPS – year ended 31 March 2008Earnings

Earnings Shares per share

£m millions pence

Basic 39.8 256.1 15.5

Amortisation and impairment of

intangibles arising on consolidation 1.3 – 0.5

Exceptional items 7.9 – 3.2

Taxation on exceptional items and

intangibles arising on consolidation (2.7) – (1.1)

Adjusted 46.3 256.1 18.1

Adjusted EPS – year ended 31 March 2007Earnings

Earnings Shares per share

£m millions pence

Basic 12.9 256.1 5.0

Amortisation and impairment of

intangibles arising on consolidation – – –

Exceptional items 25.8 – 10.1

Taxation on exceptional items and

intangibles arising on consolidation (6.7) – (2.6)

Adjusted 32.0 256.1 12.5

There have been no other transactions involving ordinary shares or potential

ordinary shares since the reporting date and before the completion of these

financial statements.

13. Dividends

An interim dividend of £10.0m (3.9p per share) was declared and paid

during the year (2007: £20.0m (7.8p per share)). No final dividend is

proposed (2007: £nil).

14. Goodwill2008 2007

£m £m

CostOpening 0.7 0.7

Recognised on acquisition of subsidiaries (1) 18.1 –

Closing 18.8 0.7

Carrying amount 18.8 0.7

(1) see Note 5

During the year, the existing goodwill in respect of Shorcan Index Limited

and the acquired goodwill in respect of Digital Look Limited and Andrew

West & Co. Limited was tested for impairment in accordance with IAS 36

Impairment of Assets. No impairment was recognised in relation to these

cash-generating units (CGUs).

The recoverable amount of the CGUs has been determined based on a ‘value

in use’ calculation. The key assumptions for the value in use calculations are

those regarding the discount rates, growth rates and expected changes to

revenue and direct costs during the period.

Management estimates discount rates using pre-tax rates that reflect current

market assessments of the time value of money and the risks specific to the

CGUs. The discount rates applied to cash flows represent the Group’s

calculated ‘weighted-average cost of capital’ adjusted for an estimate of the

specific risk relevant to the operations of the CGU.

These discount rates are applied to cash flow projections based on operating

plans approved by the Board, extrapolated for a period not exceeding 10

years. These discount rates, together with the carrying value of the CGU on

acquisition, are shown in the table below.

Discount Goodwill

Carrying value of CGU on acquisition (£m) Rate (%) £m

Shorcan Index Limited (1) 11.7% 0.7

Digital Look Limited 11.7% 7.3

Andrew West & Co. Limited 11.2% 10.8

18.8

(1) Merged operations with CMC Markets Canada Inc.


15. Intangible assets2008 2007

£m £m

Software development and website developmentCost (opening) 18.1 9.7

Additions through internal development 13.9 8.4

Acquisition through business combination 15.4 –

Impairments (0.7) –

Cost (closing) 46.7 18.1

Aggregate amortisation (opening) (4.6) (2.4)

Reclassification 0.1 –

Charge for the year (6.9) (2.2)

Aggregate amortisation (closing) (11.4) (4.6)

Net carrying value at end of year 35.3 13.5

Net carrying value at beginning of year 13.5 7.3

Software licencesCost (opening) 0.8 0.4

Reclassification from trading and broker licences 1.6 –

Additions 2.6 0.7

Disposals – (0.3)



Reclassification (0.3) –





Trading and broker licencesCost (opening) 2.4 1.7

Reclassification to software licences (1.6) –

Additions 1.4 0.7








2008 2007

£m £m

Trademarks and other intangiblesCost (opening) 0.3 –

Additions 0.1 0.3


Aggregate amortisation (opening and closing) – –


Net carrying value at beginning of year 0.3 –

Customer lists and relationshipsAcquisition through business combination 10.2 –

Cost (closing) 10.2 –

Aggregate amortisation (opening) – –

Charge for the year (1.3) –

Aggregate amortisation (closing) (1.3) –

Net carrying value at year end 8.9 –

Net carrying value at beginning of year – –

Summary of movement in intangible assetsTotal opening cost 21.6 11.8

Total additions 18.0 10.1

Total acquisition through business combination (1) 25.6 –

Total disposals – (0.3)

Total impairments (0.7) –

Total opening accumulated amortisation (5.0) (2.6)

Total amortisation for the year (2) (9.1) (2.4)

Total net carrying value of intangibles at end of year 50.4 16.6

Total net carrying value of intangibles at beginning of year 16.6 9.2

(1) See Note 5.(2) Includes £1.3m of amortisation and impairment of intangibles arising on

consolidation (2007: £nil).

Additions to software development, software licences and website

development are predominantly on-going internal software development

projects to enhance existing software platforms and develop new trading

support and client solutions.



16. Property, plant and equipment2008 2007

£m £m

Office equipmentCost (opening) 14.5 7.6


Additions 7.5 7.4


Disposals and write-downs – (0.5)


Accumulated depreciation Opening (4.4) (2.8)



Eliminated on disposal or write-down – 0.3

Closing (7.8) (4.4)



Furniture, fixtures and fittingsCost (opening) 4.6 2.9

Reclassification (0.8) –

Additions 2.4 2.0


Disposals and write-downs (0.1) (0.3)


Accumulated depreciationOpening (1.3) (1.0)



Eliminated on disposal or write-down 0.1 0.2

Closing (1.9) (1.3)



AircraftCost (opening) 1.1 0.7

Additions 0.8 0.4

Disposals and write-downs (1.9) –

Cost (closing) – 1.1

Accumulated depreciation Opening (0.1) –


Eliminated on disposal or write-down 0.2 –

Closing – (0.1)

Net carrying value at end of year – 1.0


2008 2007

£m £m

Summary of movement in property, plant and equipmentTotal opening cost 20.2 11.2

Total additions 10.7 9.8

Acquisition through business combination (1) 0.4 –

Total disposals and write-downs (1.7) (0.3)

Total opening accumulated depreciation (5.8) (3.8)

Total depreciation for the year (4.8) (2.5)

Total net carrying value of property, plant and equipment at end of year 19.0 14.4

Total net carrying value of property, plant and equipment at beginning of year 14.4 7.4

(1) See Note 5.

At 31 March 2008, the Group had no material capital commitments in

respect of property, plant and equipment (2007: £nil).

17. Trade and other receivables2008 2007

£m £m

Trade and other receivables 8.2 1.4

Prepayments and accrued income 4.4 2.6

12.6 4.0

18. Investments2008 2007

£m £m

Long positions in listed trading investments

designated as at fair value through profit and loss 24.2 61.5

These investments are listed equities used to hedge positions opened by clients.

19. Trade and other payables2008 2007

£m £m

Trade creditors 188.6 181.8

Less: funds held on behalf of clients in

segregated bank accounts (151.8) (105.3)

36.8 76.5

Tax and social security 0.6 2.6

Accruals and deferred income 33.9 12.5

71.3 91.6


20. Trading liabilities2008 2007

£m £m

Short positions in listed trading investments

designated as at fair value through profit and loss 2.9 18.3

These investments are highly liquid short-dated financial instruments.

21. Borrowings2008 2007

£m £m

Unsecured borrowings at amortised costPrime broker facility 0.5 19.1

Loan Note – held at amortised cost 25.6 ≠–

26.1 19.1

Total borrowingsDue for settlement within 12 months 0.5 19.1

Due for settlement after 12 months 25.6 ≠–

26.1 19.1

Analysis by currency CurrencyPrime broker facility AUD 0.5 19.1

Loan Note – held at amortised cost GBP 25.6 –

26.1 19.1

The weighted average interest rates paidPrime broker facility 7.75% 6.80%

Loan Note – held at amortised cost 9.60% N/A

(i) Prime broker facilityThe effective interest rate on this Australian Dollar facility is the Reserve Bank

of Australia’s Base Rate plus a margin of 0.5% per annum.

This facility is repayable on demand.

This facility is held with Merrill Lynch. It is a revolving line of credit that

resets daily with no fixed maturity date and no pre-established limit.

Merrill Lynch holds a charge over the underlying stock held with them.

(ii) Loan NoteOn 21 December 2007, CMC Markets Plc issued a loan note to Peter

Cruddas. The Loan Note has a principal amount of £39.5m due

23 December 2012. The consideration paid by Mr Cruddas to CMC Markets

Plc on issue of this note on the 21 December 2007 was £25.0m.

The amount accrued under the terms of the Loan Note at 31 March 2008

was £25.6m (2007: £nil) and the charge to the 31 March 2008 was £0.6m

(2007: £nil).

The principal amount accrues at a fixed-rate of interest of 9.6% per annum and

the Loan Note is carried at amortised cost which approximates to fair value.

(iii) Undrawn borrowing facilitiesThe Group has an undrawn multi-currency overdraft facility with NatWest

Bank Plc of £10.0m, which is repayable on demand.

The facility is available in Sterling, Canadian Dollars, Euros, Yen, Swedish

Kronor, Swiss Francs, US Dollars, Australian Dollars and Hong Kong Dollars.

The interest rate for Sterling overdrafts is NatWest Bank’s Base Rate plus 1%

per annum and, for all other currencies, the relevant NatWest Bank Currency

Lending Rate.

22. Provisions2008 2007

£m £m

Provision for employee benefit trustsOpening provision 0.7 1.0

Additional provision 3.1 –

Utilisation of provision – (0.3)

3.8 0.7

The provision represents the obligation to distribute assets held in employee

benefit trusts to beneficiaries.

The provision is expected to be utilised within the next financial year.

23. Deferred tax

Analysis for financial reporting purposesDeferred income taxes are calculated on all temporary differences under the

liability method using an effective tax rate of 28% (2007: 30%).

2008 2007

£m £m

Opening 5.1 1.2

Charge/(credit) to income for the year (0.6) 3.9

Arising on acquisitions 2.6 –

Closing 7.1 5.1

The following table details the deferred tax assets and liabilities recognised by

the Group and movements thereon during the year:

2008 2007

£m £m

Deferred income tax assetsTax losses 1.6 1.1

Other timing differences 0.1 0.6

Gross deferred income tax assets 1.7 1.7

Deferred income tax liabilitiesLiability created on share-based payments 0.4 2.4

Accelerated capital allowances 8.4 4.4

Gross deferred income tax liabilities 8.8 6.8



The following table details unremitted earnings and related tax loss

information for the current and prior year:

2008 2007

£m £m

Unremitted earnings 0.9 0.1

Unused tax losses recognised as a deferred tax asset 5.8 3.8

Tax effect on unused tax losses 1.6 1.1

No liability has been recognised in respect of unremitted earnings of

subsidiaries where no deferred tax liability is recognised because the

Group is in a position to control the timing of the reversal of the temporary

differences and it is probable that such differences will not reverse in the

foreseeable future.

24. Financial instruments

Financial risk managementThe Group’s Internal Capital Adequacy Assessment Process (“ICAAP”),

prepared under the requirements of the UK’s Financial Services Authority and

the Capital Requirements Directive (effective from1 January 2008), is an on-

going assessment of CMC Markets’ risks and how CMC Markets mitigates

these risks, subject to the Group’s risk appetite.

The Board sets the strategy and policies for managing these risks and

delegates the monitoring and management of these risks to various

committees including the Group Treasury Committee, the Group Risk

Committee, the Group Credit Risk Committee and the Audit Committee.

Financial risks arising from financial instruments are categorised into market,

credit and liquidity risks which, together with how CMC Markets categorises

and manages these risks, are described below.

Management considers the carrying value of all financial assets and liabilities

to be the approximate equivalent of the fair value.

Market riskCMC Markets does not hold proprietary trading positions based on

expectations of future market movements. Market risk is analysed as market

price risk, interest rate risk and currency risk.

(a) Market price riskThis is the risk that the fair value of a financial instrument will fluctuate due to

changes in market prices other than due to currency or interest rate risk.

Market risk arises from CMC Markets’ clients spread betting and trading

contracts for difference (CFDs), which are based on underlying equities and

indices on world stock markets, foreign currencies, commodities and interest

rates and the derivative (OTC and exchange-traded) or physical positions

CMC Markets takes to hedge these client positions. All derivatives used to

hedge client positions are margin-traded so the profit or loss arising on the

position is settled on a daily basis. The use of derivative financial instruments

is governed by Group policies approved by the Board which provide written

principles on their use consistent with the Group’s risk management strategy.

CMC Markets monitors its market risk on these client positions against

internally approved limits and hedges these client positions based on a

number of internally agreed metrics to manage its net exposure. These

metrics include the size of the client position, CMC Markets’ view of overall

concentration of risk by asset class and the volatility and liquidity of the

underlying instrument in which its clients are spread betting or trading CFDs.

These positions are monitored on a global basis so all open positions held by

CMC Markets’ clients are combined to calculate CMC Markets’ total net

client exposure to ensure optimal hedging decisions are made.

The diversity of the product range and global distribution significantly reduces

CMC Markets’ revenue sensitivity to individual asset classes and instruments.

The direct result is consistent historical revenue performance throughout periods

of varying market movements and volatility levels. This can be quantified by

analysing the five-day moving daily average of daily trading profit and loss.

For the year ended 31 March 2008, there have been 195 occurrences

(2007: 78) of the five-day daily moving average of trading profit exceeding

£0.5m, compared to zero occurrences (2007:1) of the five-day trading loss

exceeding £0.5m. The largest five-day daily average trading profit over this

period was £2.4m (2007: £2.1m) and the largest five-day average trading

loss was £(0.2)m (2007: £(0.6)m).

(b) Interest rate riskThis consists of cash flow interest rate risk (the risk that future cash flows of a

financial instrument will vary due to changes in market interest rates) and fair

value interest rate risk (the risk that the value of a financial instrument will

vary due to changes in market interest rates).

Interest rate risk arises from unhedged client positions where the underlying

instrument is subject to cash flow or fair value interest rate risk. These

positions are managed in accordance with CMC Markets’ internally approved

limits subject to CMC Markets’ risk appetite.

Interest rate risk also arises from the mismatch between the repricing of

financial assets and liabilities. Financial assets and liabilities are predominantly

short-term. These short-term mismatches are managed according to

parameters determined by the Group Treasury Committee.

The Group’s interest-bearing financial assets mature in the short-term, with

maturities no longer than one year. As a result, the Group is subject to limited

exposure to fair value interest rate risk due to fluctuations in the prevailing levels

of market interest rates. Excess cash of the Group is invested in short-term cash

deposits with the term to maturity no longer than 3 months.

Exposures to financial liabilities greater than one year are specifically hedged

depending on the Group Treasury Committee’s view of medium to longer-

term interest rates.

(c) Currency riskThis is the risk that the value of assets and liabilities denominated in a foreign

currency will fluctuate due to adverse movements in exchange rates. Currency

risk arises from unhedged client positions in foreign currencies where the

value of the underlying currency fluctuates against Sterling. These positions

are managed in accordance with CMC Markets’ internally approved limits,

subject to CMC Markets’ risk appetite.


CMC Markets’ residual currency risk (excluding risk on client positions

denominated in foreign currencies above) relates to balance sheet

translation exposure and transactional currency flows arising from earnings

in foreign currencies.

These risks are managed by CMC Markets’ Group Treasury Committee which

regularly reviews these risks and makes recommendations to the Board

regarding their management. Balance sheet translation exposure is actively

managed to ensure negligible foreign currency net asset exposure on a

group basis.

Forecasted foreign currency earnings are hedged using various hedging

instruments including CFDs, currency forwards and options.

The percentage of these earnings hedged is determined by the Group

Treasury Committee based on guidelines set out in CMC Markets’ Global

Hedging Policy.

The tables below summarise CMC Markets’ exposure to currency translation

risk at 31 March 2008 and 31 March 2007, analysed by financial assets and

liabilities at carrying amounts.

Currency exposures – year ended 31 March 2008

Currency

£m (equivalent) GBP EUR USD AUD Other Total

(i) Financial assetsCash 32.5 18.0 15.6 11.4 30.5 108.0Investments – – – 24.2 – 24.2Trade & other receivables 8.0 2.1 0.2 0.9 1.4 12.6Financial assets 40.5 20.1 15.8 36.5 31.9 144.8

(ii) Financial liabilitiesTrade and other payables 71.0 1.8 (7.9) 9.3 (2.9) 71.3Trading liabilities – – – 2.9 – 2.9Borrowings 25.6 – – 0.5 – 26.1Financial liabilities 96.6 1.8 (7.9) 12.7 (2.9) 100.3

(iii) Non-financial assets and liabilitiesNon-financial assets 53.9 1.1 0.3 31.1 3.5 89.9Non-financial liabilities (16.2) (0.1) (0.2) (15.8) 2.2 (30.1)

Net non-financial assets 37.7 1.0 0.1 15.3 5.7 59.8

Net on-balance sheet

position (18.4) 19.3 23.8 39.1 40.5 104.3

Forward rate exchange

contracts 112.8 (15.3) (38.1) (29.7) (29.7) –

Net position after hedging 94.4 4.0 (14.3) 9.4 10.8 104.3

Currency exposures – year ended 31 March 2007

Currency

£m (equivalent) GBP EUR USD AUD Other Total

(i) Financial assetsCash 1.6 31.7 16.9 45.1 15.8 111.1

Investments – – – 61.5 – 61.5

Trade & other receivables 2.0 0.6 0.1 1.1 0.2 4.0

Financial assets 3.6 32.3 17.0 107.7 16.0 176.6

(ii) Financial liabilitiesTrade and other payables 20.3 27.5 4.3 26.6 12.9 91.6

Trading liabilities – – – 18.3 – 18.3

Borrowings – – – 19.1 – 19.1

Financial liabilities 20.3 27.5 4.3 64.0 12.9 129.0

(iii) Non-financial assets and liabilitiesNon-financial assets 26.0 0.8 1.2 2.7 2.7 33.4

Non-financial liabilities (6.8) (0.1) – (3.2) 1.2 (8.9)

Net non-financial assets 19.2 0.7 1.2 (0.5) 3.9 24.5

Net on-balance sheet

position 2.5 5.5 13.9 43.2 7.0 72.1

Forward rate exchange

contracts 74.4 (5.3) (21.2) (35.0) (12.9) –

Net position after hedging 76.9 0.2 (7.3) 8.2 (5.9) 72.1

Exposures to USD at 31 March 2008 are offset by a position in United Arab

Emirates Dirhams of £8.5m equivalent included under ‘Other’ (2007: £0.9m

equivalent). CMC Markets considers that these currencies are correlated.

The effect on profit and other equity of fluctuations in short-term FX rates

for the years ended 31 March 2008 and 31 March 2007 is illustrated below.

The FX rate movements, which are based on CMC Markets’ view of

reasonably possible price variations, are as follows:

Foreign exchange Increase Decrease

Major currencies (1) 3% (3%)

Others 10% (10%)

(1) Major currencies are GBP, USD, EUR, AUD, CHF and CAD.

A positive value in the following tables represents an increase in profit or

other equity where the relevant currency strengthens against Sterling.

A negative value represents a decrease in profit or other equity where the

relevant currency weakens against Sterling.

Effect on profit and loss and other equity of short-term fluctuations inFX rates – year ended 31 March 2008

Movement

Profit and loss Other equity

Depreciation Appreciation Depreciation Appreciation£m against GBP against GBP against GBP against GBP

Impact after tax

charge of 30% (2.5) 2.5 (1.5) 1.5



Effect on profit and loss and other equity of short-term fluctuations inFX rates – year ended 31 March 2007

Movement

Profit and loss Other equity

Depreciation Appreciation Depreciation Appreciation

£m against GBP against GBP against GBP against GBP

Impact after tax

charge of 30% (1.6) 1.6 (0.7) 0.7

Credit riskThe Group’s principal financial assets are deposits and other cash balances

held with banks and other financial institutions, trade and other receivables

and investments.

The maximum credit risk is considered to be the carrying value at the

balance sheet date.

(a) Deposits and other balances held with banks and other financial institutionsIt is CMC Markets’ policy to manage credit risk by only placing funds with

financial institutions that meet certain short-term and long-term external

credit ratings provided by Moody’s Investors Service and Fitch Ratings

Limited. These exposures are monitored on a daily basis.

Limits are regularly reviewed and CMC Markets does not consider that it has

any significant concentration of credit risk with exposure spread over a range

of counterparties as limits are in place to monitor exposure to individual

counterparties or connected groups of counterparties.

Credit risk also arises from deposits and excess funds placed with brokers

that CMC Markets uses to hedge its net client positions.

(b) Client credit riskCMC Markets does not offer credit facilities to clients and funds must be

deposited in order to open a position. CMC Markets operates a real-time

marked-to-market trading platform with client profits and losses being

credited and debited automatically to their account.

Credit risk occurs where a client’s funds held by CMC Markets (trading

margin and free equity (the unencumbered funds deposited by a client with

CMC Markets for future trading purposes)) are insufficient to cover losses

incurred by the client upon liquidation.

Client credit risk is therefore monitored daily with reference to the market

price movement of the underlying instrument in which the client holds a

position and the equity the client holds in relation to the margining

requirement calculated for their position.

Liquidity riskLiquidity risk is the risk that CMC Markets will encounter difficulty in meeting

its obligations from its financial liabilities. CMC Markets’ policy is to ensure

that, as far as possible, it will always have sufficient liquidity to meet its

financial liabilities when due, under both normal and stressed conditions,

without incurring unacceptable losses or risking damage to its reputation.

CMC Markets maintains a portfolio of short-term deposits to ensure that

sufficient liquidity is maintained within the Group as a whole. The liquidity

position is monitored on a daily basis and management information

provided monthly to the Group Treasury Committee and the Board.

All treasury policies and procedures are approved by the Board.

The tables below present cash flows receivable and payable by the Group by

remaining contractual maturities at the balance sheet date.

The amounts disclosed are the contractual, undiscounted cash flows.

Maturity analysis – year ended 31 March 2008Maturity

After 3monthsbut less

Carrying Less than than 1 After£m Amount 3 months year 1 year

(i) Financial assetsCash 108.0 108.0 – –Financial assets at fair value 24.2 24.2 – –Trade and other receivables 12.6 12.6 – –

Impact after tax 144.8 144.8 – –

(ii) Financial liabilitiesTrade and other payables 71.3 71.3 – –Financial liabilities at fair value 2.9 2.9 – –Borrowings 26.1 0.5 – 25.6

Impact after tax 100.3 74.7 – 25.6

Net liquidity gap 44.5 70.1 – (25.6)

Maturity analysis – year ended 31 March 2007Maturity

After 3

months

but less

Carrying Less than than 1 After

£m Amount 3 months year 1 year

(i) Financial assetsCash 111.1 111.1 – –

Financial assets at fair value 61.5 61.5 – –

Trade and other receivables 4.0 4.0 – –


(ii) Financial liabilitiesTrade and other payables 91.6 91.6 – –

Financial liabilities at fair value 18.3 18.3 – –

Borrowings 19.1 19.1 – –


Net liquidity gap 47.6 47.6 – –


25. Capital management

CMC Markets is supervised on a consolidated basis by the UK’s Financial

Services Authority (FSA). The Group had significant surplus capital over the

regulatory requirement throughout the year. Total capital at 31 March 2008

was £104.3m (2007: £72.1m).

With the introduction of the Capital Requirements Directive with effect

from 1 January 2008, CMC Markets was required to calculate capital for

operational risks and this increased the Group’s regulatory requirement.

The Group’s objectives for managing capital are as follows:

• to comply with the capital requirements set by the FSA and all other

financial markets regulators to which the Group is subject (see pages 19

and 20 – Corporate Governance Report);

• to ensure that all group entities are able to operate as going concerns

and satisfy any minimum externally imposed capital requirements; and

• to ensure that the Group maintains a strong capital base to support the

development of its business.

26. Share capital2008 2007

£m £m

AuthorisedOrdinary shares of 25p 100.0 100.0

Allotted, issued and fully paidOrdinary shares of 25p 63.9 63.9

Deferred shares of 25p 0.1 0.1

64.0 64.0

2008 2007

No. No.

AuthorisedOrdinary shares of 25p 400,000,000 400,000,000

Allotted, issued and fully paidOrdinary shares of 25p 255,525,502 255,525,502

Deferred shares of 25p 559,574 559,574

256,085,076 256,085,076

The Company has two classes of ordinary shares, Ordinary and Deferred,

neither of which carries a right to fixed income. Deferred Shares have no

voting rights.

Movements in share capital during the yearThere were no Ordinary or Deferred Shares issued during the current and

prior year.

Ordinary share buybackAt the Extraordinary General Meeting of 28 March 2007, the Company

obtained approval to make share buybacks. On the 25 May 2007, the CMC

Markets 2007 Employee Benefit Trust purchased 100,082 shares from the

CMC Employee Share Scheme Trust for £2.93 per share and also purchased

1,393,062 shares from CMC Markets employees for £2.93 per share.

On 31 October 2007, 170,649 of these shares were transferred to an

employee of CMC Markets UK Plc (see Note 27 Share-based payment).

The remaining 1,322,495 are own shares held in trust by the CMC Markets

2007 Employee Benefit Trust to satisfy share options to be granted under

future long-term employee incentive schemes and equal 0.52% of ordinary

share capital.

Own shares held in trust are recognised at a cost of £3.9m (2007: £nil) and

shown as a deduction from share capital.

27. Share-based payment

The total charge for the year relating to employee share-based payment plans

was £4.8m (2007: £4.5m). After tax, the total charge was £3.4m (2007: £3.1m).

For the purpose of share-based payments, a total of 18,279,896 shares

granted relate to employee service. All shares vest by the end of the financial

year ending 31 March 2009.

On 31 October 2007, 170,649 shares in CMC Markets Plc were granted to an

employee of CMC Markets UK Plc, subject to three-year vesting conditions,

at the fair value of £2.93 per share. This grant of shares represents 0.07% of

ordinary share capital. On 31 March 2008, two employees were granted

shares totalling 49,994 in CMC Markets Plc at the fair value of £4.5005 per

share. These shares vested unconditionally on that date. This grant of shares

represents 0.02% of ordinary share capital.

28. Translation reserve2008 2007

£m £m

Opening – 0.1

Foreign currency translation 1.5 (0.1)

Closing 1.5 –



29. Merger reserve2008 2007

£m £m

Opening (47.8) (47.8)

Closing (47.8) (47.8)

30. Retained earnings2008 2007

£m £m

Opening 55.9 58.5

Cost of share-based payments 4.8 4.5

Retained profit for the year 39.8 12.9

Dividend paid (10.0) (20.0)

Closing 90.5 55.9

31. Operating lease commitments2008 2007

£m £m

Minimum lease payments under operating

leases recognised in income for the year 5.7 3.7

Operating lease payments represent rentals payable by the Group for some

of its office properties. Leases are negotiated for an average term of 6.0 years

and rentals are fixed for an average of 3.0 years.

At each year-end the Group had outstanding commitments under non-

cancellable operating leases, which fall due as follows:

2008 2007

£m £m

BuildingsWithin one year 6.3 4.4

Within two to five years 16.7 14.3

Over five years 4.0 2.0

27.0 20.7

OtherWithin one year 0.4 0.2

Within two to five years – 0.7

Over five years – 0.1

0.4 1.0

32. Statement of cash flows

(a) Reconciliation of operating profit to net cash inflow from operating activities:

2008 2007

Note £m £m

Cash flows from operating activitiesProfit after tax 39.8 12.9

Adjustments for:

Interest income 9 (2.3) (1.1)

Tax 11 17.4 8.1

Depreciation 6 4.8 2.5

Amortisation of intangibles 6 9.1 2.4

Share-based payments 27 4.8 4.5

Changes in working capital:(Increase)/decrease in trade and

other receivables (8.6) 1.5

(Increase)/decrease in trading investments 37.3 (2.7)

Increase/(decrease) in trade and

other payables (20.3) 20.5

Increase/(decrease) in trading liabilities (15.4) 16.0

(Decrease) in broker credit facilities (18.6) (22.1)

Increase/(decrease) in provisions 3.1 (0.3)

Cash generated from operations 51.1 42.2

(b) Cash and cash equivalentsCash and cash equivalents comprise cash at bank and other short-term

highly liquid investments with maturity of three months or less. Cash at bank

and in hand earns interest at floating rates based on daily bank deposit rates.

Short-term deposits are made for varying periods of between one day and

one week, depending on the immediate cash requirements of the Group,

and earn interest at the respective short-term deposit rates.

For the purposes of the Consolidated Cash Flow Statement, cash and cash

equivalents comprise the following at each year-end:

2008 2007

£m £m

Group cash equivalents and segregated client funds 280.6 240.5

LessNet value of broker facility (20.8) (24.1)

Segregated client funds (151.8) (105.3)

Cash and cash equivalents 108.0 111.1

Segregated client funds are held on trust in client accounts in accordance

with rules of local financial markets regulators. Segregated client funds

increased by £46.5m (2007: £13.2m) in the year ended 31 March 2008 to

£151.8m (2007: £105.3m).

(c) Non-cash financing and investing activitiesThere were no non-cash financing and investing activities during the year or

the prior year.


33. Retirement benefit plans

The Group operates a number of pension schemes throughout the world

that are all defined contribution schemes. The Group operates defined

contribution retirement benefit plans for all qualifying employees.

The assets of the schemes are held separately from those of the Group in

funds under the control of trustees. Where there are employees who leave the

scheme prior to vesting fully in the contributions, the contributions payable by

the Group are reduced by the amount of the forfeited contributions.

2008 2007

£m £m

Total costs charged to income 1.8 1.0


Transactions between the Company and its subsidiaries, which are related

parties, have been eliminated on consolidation and are not disclosed in this

note. Transactions between the Group and its associates and other related

parties are disclosed below.

Directors’ transactionsDuring the year, the Company donated £3.1m (2007: £1.4m) to the Peter

Cruddas Foundation, a charitable foundation founded by Peter Cruddas for

the purpose of helping young people from disadvantaged backgrounds by

providing scholarships and charitable donations.

During the year £78,540 (2007: £80,328) was paid to Astre Consultants

Limited and £38,377 (2007: £33,332) paid to Pettigrew Associates. These

entities are controlled by John Jackson and Jim Pettigrew respectively. The

balances outstanding to these entities at year-end were £7,014 (2007: nil)

and £nil (2007: £12,500) respectively.

During the year £109,559 (2007: £69,771) was paid to Shoosmiths, a

legal firm in which John Jackson is a partner. Services provided relate to

employment, commercial advice and secondment of a legal practitioner.

The balance outstanding at year-end was £nil (2007: £21,614).

On 21 December 2007, CMC Markets Plc issued a loan note to Peter

Cruddas. The Loan Note has a principal amount of £39,536,005 due

23 December 2012 (see Note 21 Borrowings). The amount accrued under

the terms of the Loan Note at 31 March 2008 was £25,644,384 (2007: £nil).

The Group also sold to Peter Cruddas its interest in shares of three aircraft for

£1,723,247. The Directors consider that these transactions were undertaken

at arm’s length values.

These transactions, including expenses paid to Non-executive Directors in the

discharge of their duties, are summarised in the following table:

2008 2007

Related party Related party £000 £000

Peter Cruddas Foundation P Cruddas 3,064 1,400

Peter Cruddas P Cruddas 27,368 –

Astre Consultants Limited J Jackson 79 80

Pettigrew Associates J Pettigrew 38 33

P&L Spencer Partnership P Spencer – 106

Shoosmiths J Jackson 110 70

Key management compensation is disclosed in Note 8.

35. Ultimate controlling party

The Group’s ultimate controlling party is Peter Cruddas by virtue of his

majority shareholding in the Company.

36. Contingent liabilities

At 31 March 2008, there were no contingent liabilities applicable to the Group.



The following parent entity financial statements are prepared under UK GAAP and relate to the Company and not to the Group. The accounting policies,

which have been applied to these financial statements, can be found on page 48. The Independent Auditor’s Report on page 21 incorporates an opinion

on the Parent Company financial statements.

Balance sheet as at 31 March 2008

Prepared using UK Generally Accepted Accounting Practice (“UK GAAP”)2008 2007

Notes £m £m

ASSETSFixed assetsInvestments 37 498.9 487.5

498.9 487.5

Current assetsDebtors due in more than one year 41 4.0 –

Debtors due within one year 41 13.2 8.5

Cash at bank and in hand 0.1 –

17.3 8.5

Creditors: amounts falling due within one year 42 (33.1) (24.5)

Net current liabilities (15.8) (16.0)

Total assets less current liabilities 483.1 471.5

Creditors: amounts falling due in more than one year 43 (30.9) –

Net assets 452.2 471.5

CAPITAL AND RESERVESCalled up equity share capital 38 64.0 64.0

Own shares held in trust 38 (3.9) –

Profit and loss account 39 392.1 407.5

Shareholders’ funds 40 452.2 471.5

Approved by the Board of Directors and authorised for issue on 3 June 2008.

Jim Pettigrew, Chief Executive Officer

Doug Richards, Chief Financial Officer

Parent company financial statements


Significant accounting policies

and basis of preparation

The separate financial statements of the Company are presented as

required by the Companies Act 1985. They have been prepared under

the historical cost convention and in accordance with applicable UK

Accounting Standards and law.

The principal accounting policies are summarised below. They have been

applied consistently throughout the year and the preceding year.

InvestmentsFixed asset investments in subsidiaries are shown at cost less diminution

in value.

Share-based paymentsThe Company issues equity-settled share-based payments that are measured

at fair value (excluding the effect of non-market-based vesting conditions) at

the grant date. The fair value determined at the grant date of the equity-

settled share-based payments is expensed over the vesting period, based on

the Company’s estimate of the shares that will eventually vest.

Fair value for shares issued has been determined based on an estimated

market price at the date of grant. The share-based payment expense has

been adjusted based on management’s best estimate of the effects of exercise

restrictions and behavioural considerations.

Parent company profit and loss accountAs permitted by section 230 of the Companies Act 1985, the Company has

not presented its own profit and loss account. The result for the year ended

31 March 2008 dealt with in the accounts of the Company was £5.6m loss

(2007: £4.5m loss). Auditor’s remuneration for audit services to the Company

was borne by CMC Markets UK Plc.

Deferred taxDeferred tax is accounted for under FRS 19 Deferred Tax (FRS 19), which

requires a form of full provision for accounting for deferred tax, called the

incremental liability approach. Deferred tax is provided on timing differences

where the Company has an obligation to pay more tax in the future as a result

of those timing differences. Deferred tax assets are only recognised if it is

considered more likely than not that there will be suitable profits from which

the future reversal of the underlying timing differences can be deducted.

As permitted by FRS 19, the Company has adopted a policy of not

discounting deferred tax assets and liabilities.

Cash flow statementThe Company’s results for the year ended 31 March 2008 are included in the

consolidated financial statements of CMC Markets Plc, which are publicly

available. Consequently, the Company has taken advantage of the exemption

from preparing a cash flow statement under the terms of FRS 1 (Revised

1996) Cash Flow Statements.

37. Fixed asset investments

2008 2007

£m £m

CostAt 1 April 487.5 487.5

Additions 11.4 –

At 31 March 498.9 487.5

At 31 March 2008, the following companies were CMC Markets Plc’s

principal trading subsidiary undertakings and principal intermediate holding

companies:

Country of Principal

Name of subsidiary incorporation activities Held

CMC Markets UK

Holdings Limited England Holding company Directly

CMC Markets UK Plc England Online trading Indirectly

Information Internet Limited England IT Development Indirectly

CMC Spreadbet Plc England Financial Indirectly

spreadbetting

CMC Markets Overseas England Holding company Directly

Holdings Limited

Digital Look Limited England Provision of Directly

financial information

CMC Markets Asia Australia Online trading Indirectly

Pacific Pty Limited

CMC Markets Pty Australia Trading and Indirectly

Limited education

CMC Markets Group Australia Holding company Indirectly

Australia Pty Limited

Andrew West & Co. Limited Australia Stockbroking Indirectly

CMC Markets Canada Inc. Canada Client introducing Indirectly

office

CMC International China Trading and Indirectly

Financial Consulting education

(Beijing) Co. Limited

CMC Markets Asia Limited Hong Kong Client introducing Indirectly

office

CMC Markets Japan KK Japan Online trading Indirectly

CMC Markets NZ Ltd. New Zealand Online trading Indirectly

CMC Markets Singapore Online trading Indirectly

Singapore Pte Ltd.

CMC Markets (US) LLC United States Online trading Indirectly

All subsidiaries are 100% owned.

Notes to parent companyfinancial statements


38. Called up equity share capital

2008 2007

£m £m

AuthorisedOrdinary shares of 25p 100.0 100.0

Allotted, issued and fully paidOrdinary shares of 25p 63.9 63.9

Deferred shares of 25p 0.1 0.1

64.0 64.0

2008 2007

No. No.

AuthorisedOrdinary shares of 25p 400,000,000 400,000,000

Allotted, issued and fully paidOrdinary shares of 25p 255,525,502 255,525,502

Deferred shares of 25p 559,574 559,574

256,085,076 256,085,076

There has been no movement in share capital during the year.

Ordinary share buybackAt the Extraordinary General Meeting of 28 March 2007, the Company

obtained approval to make share buybacks. On 25 May 2007, the CMC

Markets 2007 Employee Benefit Trust purchased 100,082 shares from the

CMC Employee Share Scheme Trust for £2.93 per share and also purchased

1,393,062 shares from CMC Markets employees for £2.93 per share.

On 31 October 2007, 170,649 of these shares were transferred to an

employee of CMC Markets UK Plc (see Note 27 Share-based payment).

The remaining 1,322,495 are own shares held in trust by the CMC Markets

2007 Employee Benefit Trust to satisfy share options to be granted

under future long-term employee incentive schemes and equal 0.52%

of ordinary share capital.

Own shares held in trust are recognised at cost, £3.9m (2007: £nil), and

shown as a deduction from share capital.

39. Profit and loss account2008 2007

£m £m

At 1 April 407.5 432.0

Loss for the year (5.6) (4.5)

Share-based payment reserve 0.2 0.0


At 31 March 392.1 407.5

40. Reconciliation of movements in

shareholders’ funds2008 2007

£m £m

At 1 April 471.5 496.0

Purchase of own shares (3.9) –

Loss for the year (5.6) (4.5)

Share-based payment reserve 0.2 –


At 31 March 452.2 471.5

41. Debtors2008 2007

£m £m

Debtors due in more than one year Amounts due from Group undertakings 4.0 –

4.0 –

Debtors due within one yearAmounts due from Group undertakings 13.0 8.5

Other receivables 0.2 –

13.2 8.5

On 28 December 2007, CMC Markets Plc entered into a uniform

subordinated loan agreement with CMC Markets Canada Inc. and the

Investment Dealers Association of Canada. The loan agreement has a

principal amount of £4.0m (CAD 8.2m) with no maturity date.

On 16 May 2008, £2.9m (CAD 6.0m) of this loan was repaid. Any further

repayments require the prior approval of the Investment Industry

Regulatory Organization of Canada (formerly the Investment Dealers

Association of Canada).

The principal amount accrues Canadian LIBOR +1% interest per annum.

42. Creditors: amounts falling due within

one year2008 2007

£m £m

Creditors due within one yearAmounts due to Group undertakings 26.8 24.3

Accruals 6.3 0.2

33.1 24.5


43. Creditors: amounts falling due in more

than one year2008 2007

£m £m

Deferred consideration 5.3 –

Loan note – held at amortised cost (1) 25.6 –

30.9 –

2008 2007

£m £m

Total borrowingsDue for settlement after one year 25.6 –

Analysis by currency CurrencyLoan note – held at amortised cost GBP 25.6 –

25.6 –

The weighted average interest rates paidLoan note – held at amortised cost 9.60% 0.0%

(1) Loan NoteOn 21 December 2007, CMC Markets Plc issued a loan note to Peter Cruddas.

The Loan Note has a principal amount of £39.5m due 23 December 2012.

The consideration paid by Mr Cruddas to CMC Markets Plc on issue

of this note on the 21 December 2007 was £25.0m. The amount accrued

under the terms of the Loan Note at 31 March 2008 was £25.6m (2007: £nil)

and the charge to 31 March 2008 was £0.6m (2007: £nil).

The principal amount accrues at a fixed-rate of 9.60% per annum.


The Company has taken advantage of the exemption available under FRS 8

Related Party Disclosures, that transactions with Group companies, 90% or

more of whose voting rights are controlled within the Group, do not need to

be disclosed.

Notes to parent companyfinancial statements continued


United Kingdom and Ireland

London (Head Office)CMC Markets UK Plc

66 Prescot Street

London E1 8HG, United Kingdom

Telephone: +44 (0) 20 7170 8200



LondonDigital Look Ltd

4th Floor

Bankside House

107 Leadenhall Street

London EC3A 4AF, United Kingdom

Telephone: +44 (0) 20 7743 0050

Web: www.digitallook.com

EdinburghCMC Markets UK Plc

40 Princes Street

Edinburgh EH2 2BY, United Kingdom

Telephone: +44 (0) 13 1301 4000



DublinCMC Markets UK Plc

1 Upper Hatch Street

Dublin 2, Ireland

Telephone: +353 (0)1 256 3000


Web: www.cmcmarkets.ie

Other Europe

AustriaViennaCMC Markets UK Plc

Zweigniederlassung Wien

Wipplingstraße 34

1010 Wien, Austria

Telephone: +43 (0) 1 532 13 49 0


Web: www.cmcmarkets.at

GermanyFrankfurtCMC Markets UK Plc

Niederlassung Frankfurt am Main

Taunusanlage 1

60329 Frankfurt, Germany

Telephone: +49 (0) 69 710 414 0


Web: www.cmcmarkets.de

MunichCMC Markets UK Plc

Niederlassung München

Prannerstrasse 6

80333 München, Germany

Telephone: +49 (0) 89 179 59 57 0



BerlinCMC Markets UK Plc

Niederlassung Berlin

Neues Kranzlereck, Kurfürstendamm 22

10719 Berlin, Germany

Telephone: +49 (0) 30 887 163 7 0



DüsseldorfCMC Markets UK Plc

Niederlassung Düsseldorf

Broadway Office, Breite Strasse 29

40213 Düsseldorf, Germany

Telephone: +49 (0) 211 862 985 0



SwedenStockholmCMC Markets UK Plc Filial Stockholm

Jakobsbergsgatan 22

111 44 Stockholm, Sweden

Telephone: +46 (0) 8 5069 3200

Web: www.cmcmarkets.se

Asia Pacific

AustraliaSydneyCMC Markets Asia Pacific Pty Ltd /

Andrew West & Co. Ltd

Level 44 Governor Phillip Tower

1 Farrer Place

Sydney, NSW 2000, Australia

Telephone: +61 2 8221 2100


Web: www.cmcmarkets.com.au

PerthCMC Markets Asia Pacific Pty Ltd

Level 29 Allendale Square

77 St Georges Terrace

Perth, WA 6000, Australia

Telephone: 1300 139 616 (Australia only)



MelbourneCMC Markets Asia Pacific Pty Ltd

37th floor, 530 Collins St

Melbourne, VIC 3000, Australia




BrisbaneCMC Markets Asia Pacific Pty Ltd

Level 27, 123 Eagle Street

Brisbane, QLD 4000, Australia




ChinaBeijingCMC Markets UK Plc

Beijing Representative Office

304 – 306 C2 Tower, Oriental Plaza

1 Dong Chang An Street, Dong Cheng District

Beijing, 100738 PR, China

Telephone: +86 10 5816 3100


Web: www.cmcmarkets.com.cn

Global offices


CMC Markets International FinancialConsulting (Beijing) Co. Ltd1201-1206 C1 Tower, Oriental Plaza

1 Dong Chang An Street

Dong Cheng District

Beijing, 100738 PR, China

Telephone: +86 10 5816 3600

Web: www.cmcmarkets.com.cn

Hong KongCMC Markets Asia Ltd

Level 36, Suites 3612-3613

2 International Finance Centre

No. 8 Finance Street

Central, Hong Kong

Telephone: +852 3518 2100


Web: www.cmcmarkets.com.hk

JapanTokyoCMC Markets Japan KK

4F, Akasaka Garden City

4-15-1 Akasaka

Minato-ku Tokyo

Japan 107-0052

Telephone: +81 3 5544 5300

Web: www.cmcmarkets.co.jp

SingaporeCMC Markets Singapore Pte Ltd

50 Raffles Place #14-06

Singapore Land Tower

Singapore 048623

Telephone: 1800 559 6000 (in Singapore)

Telephone: +65 6559 6000 (outside Singapore)


Web: www.cmcmarkets.com.sg

New ZealandAucklandCMC Markets NZ Ltd

Level 10, PricewaterhouseCoopers Tower

188 Quay Street

Auckland

New Zealand

Telephone: +64 9 359 1230


Web: www.cmcmarkets.co.nz

North America

CanadaTorontoCMC Markets Canada Inc.

130 Adelaide Street West, Suite 1800

Toronto, Ontario M5H 3P5

Canada

Telephone: +1 416 682 5000


Web: www.cmcmarkets.ca

VancouverCMC Markets Canada Inc.

Park Place 1

666 Burrard Street, Suite 150

Vancouver, BC V6C 2X8

Canada

Telephone: +1 778 327 4400


Web: www.cmcmarkets.ca

U.S.A.New YorkCMC Markets (US) LLC

140 Broadway, 30th Floor

New York, NY 10005

U.S.A.

Telephone: +1 212 644 4220


Web: www.cmcmarkets.com/usfx

Global offices continued

Contents

1 Highlights

2 Executive Chairman’s statement

6 History of CMC Markets

8 Business overview

14 Our strategy

Governance16 Directors’ report

19 Corporate governance report

Consolidated financial statements21 Independent auditors’ report



24 Consolidated balance sheet

25 Consolidated statement of changes in equity

26 Consolidated cash flow statement

27 Index to notes to the financial statements

28 Notes to consolidated financial statements

Parent company financial statements47 Parent company financial statements

48 Notes to parent company financial statements

51 Global offices

IBC Corporate information

The CMC Markets Plc group (‘CMC Markets’) is a market maker in online retail financial services and both a global leader in the provision of contracts for difference (CFDs) and one of the largest financial spread betting service providers in the UK.

With a ‘global footprint’ spanning four continents, CMC Markets’international network of 23 strategically positioned offices supportsclients from over 85 countries worldwide.

The CMC Markets trading experience allows clients access tointernational financial markets by offering over 3,000 individual tradinginstruments, distributed in over 30 markets, covering equities, indices,commodities and foreign exchange, all via the award-winningMarketmaker® trading platform.

Directors

Executive DirectorsPeter Cruddas

John Ersser

Roger Hynes

Geoffrey Langham

Jim Pettigrew

Doug Richards

David Trew

Non-executive DirectorsJan Boomaars

John Jackson

Simon Waugh

Company Secretary

Farzim Nazari

CMC Markets UK Plc

66 Prescot Street

London E1 8HG

United Kingdom

[email protected]

Auditors

Baker Tilly UK Audit LLP

Registered Auditors


2 Bloomsbury Street

London WC1B 3ST

United Kingdom

Registered Office

CMC Markets UK Plc

66 Prescot Street

London E1 8HG

United Kingdom

Telephone: +44 (0) 20 7170 8200

Fax: +44 (0) 20 7170 8499



Registered Number

Company No. 5145017

Bankers

The Royal Bank of Scotland Plc

280 Bishopsgate

London EC2M 4RB

United Kingdom

Corporate information

Designed and produced by fourthquarter

A global leader in online trading

CMC Markets Plc

66 Prescot Street

London E1 8HG

United Kingdom

Freephone 0800 0933 633

T +44 (0) 20 7170 8200

F +44 (0) 20 7170 8499

E [email protected]

www.cmcmarkets.co.uk

Registered Number 5145017

CMC Markets PlcAnnual Report 2008

CM

CM

arkets PlcA

nnual Report 2008A

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