CMC Markets PLC (LSE:CMCX) today commences the £30 million share buyback program announced earlier this month and expects to complete the transaction before the end of June 2023.
The listed broker released a statement that it will be buying back 29,071,747 ordinary shares, or 4.2 percent of the company’s current outstanding shares. Maintaining a balanced approach between funding growth in key channels and returning excess liquidity to shareholders, CMC said the purpose of the program is to reduce its capital share by cancelling all or part of the stocks acquired through the program.
The FTSE 250 company said the move demonstrates the substantial opportunities that are available to drive future growth, as well as its high cash generation.
Recent estimates suggest that CMC Markets’ current market capitalisation is £702 million. Following this news, CMC stock fell to 249 pence, down 3.4 percent on Tuesday.
The board revealed that it aims to reduce the company’s share capital by means of purchasing its ordinary shares from time to time using existing cash resources. The buy-back program will be conducted by RBC Europe Limited in accordance with the terms of the general authority to make market purchases of its own shares given to the company.
Full-year guidance is unchanged
In a statement to London Stock Exchange, CMC Markets added that the Buyback Program has no impact on its current dividend policy. It only marks an opportunity to purchase shares at compelling valuations, as the company utilises a portion of its cash resources for the benefit of shareholders.
During Q4 2022, CMC highlighted solid performance across both leveraged and non-leveraged operations as the broker continues to invest in the development of the UK non-leveraged platform.
The brokerage firm also reiterated its previous guidance for annual net operating income through March 2022. As previously guided, the figure is expected to come in between £250 million and £280 million if current market conditions continue for the rest of the fiscal year.
London-based trading provider has set ambitious growth targets for their B2B arm of business which CMC expect to achieve by catering to a greater range of institutional client types and their respective trading strategies. This will be further boosted with the launch of their new UK investment platform, which will offer both B2C and B2B potential, the company added.