Much of the pain suffered by Nex (NXG) during the first half had already been flagged in October. Despite a 5 per cent increase in constant-currency sales at its portfolio services business Nex Optimisation, further investment in Mifid II-related marketing and services left trading profit 22 per cent lower. A lack of volatility in euro-denominated interest rates also reduced demand for its basis risk mitigation service. Group trading operating profit declined marginally to £66m, even after excluding one-off items.
There was some good news. Management expects to make a further £15m in annual cost savings during the next three years, above the £25m initially identified. The capital markets business also grew its trading profits 12 per cent to £55m. Currency trading platform EBS enjoyed a 7 per cent constant-currency rise in sales, as average daily trading volumes increased by the same level to $84bn (£63.4bn). Work was also stepped up on the contract with China’s interbank trading platform and infrastructure provider CFETS, to provide technology for fixed income and currency trading services in mainland China.
It wasn’t all bad at Nex Optimisation. Sales at both the trade and portfolio management and data insights businesses were up 7 per cent and 14 per cent, respectively, at constant currencies.
Analysts at broker Numis expect adjusted pre-tax profit of £134m during the 12 months to March 2018, giving EPS of 26.3p (from £114m and 22.5p in FY2017).
| NEX GROUP (NXG) | ||||
| ORD PRICE: | 583.5p | MARKET VALUE: | £2.22bn | |
| TOUCH: | 583.5-585p | 12-MONTH HIGH: | 690p | LOW: 445p |
| DIVIDEND YIELD: | 5.2% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 220p* | NET DEBT: | 34% | |
| Half-year to 30 Sept | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 (restated) | 254 | 66 | 16.3 | 11.5 |
| 2017 | 287 | 48 | 8.9 | 3.5 |
| % change | +13 | -27 | -45 | -70 |
| Ex-div: | 21 Dec | |||
| Payment: | 2 Feb | |||
| *Includes intangible assets of £1.1bn, or 292p a share | ||||
