CMC Markets unveils £30 million stock buyback program
CMC Markets PLC (LSE:CMCX) today released a statement that it will soon be buying back an unspecified number of its issued ordinary shares, valued at nearly £30 million, or 4.2 percent of the company’s current outstanding shares.
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 £699 million. Following this news, CMC stock rose to 241 pence, up 5.7 percent on Wednesday.
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 a yet-to-be-named broker in accordance with the terms of the general authority to make market purchases of its own shares given to the company.
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.
Full-year guidance is unchanged
The London-listed trading platform will be embarking soon on the buy-back program, which will continue until purchasing the maximum amount.
“In light of the Company’s robust capital position and having considered the ongoing investment in the business, the Board has decided to return excess capital to shareholders via the repurchase of ordinary shares up to an aggregate purchase price of £30 million, subject to continuing regulatory approval. The Buyback Programme should be considered as part of a normal balanced approach to shareholder returns alongside the current dividend policy, which is unchanged. Previously stated full year guidance is also unchanged. A further announcement containing more detailed information regarding the share buyback will be released before the start of any dealing under the Buyback Programme,” the filing further reads.
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.