Trading profits fall as NEX prepares to be swallowed by CME

Financial technology company NEX Group posted its full-year results on Tuesday, reporting a 9% increase in revenue on both a reported basis and a constant currency basis to £591m.

The FTSE 250 firm said its trading operating profit fell 3% in the 12 months to 31 March to £147m, while trading operating profit excluding one-off items increased 9% to £160m.

Its statutory operating profit fell 4% to £147m.

An additional £10m of annualised cost savings were identified during the year, taking the total annualised savings to £50m with a cost to deliver of £19m.

Trading basic earnings per share were down 4% to 24.2p, while excluding one-off items they were up 11% to 26.8p.

Statutory basic earnings per share rose 11% to 29.9p.

The board recommended a final dividend of 7.65p per share, down from 27.0p per share, which would take the full-year dividend to 11.15p per share, falling from 38.5p per share year-on-year.

It said that was in line with its dividend policy of between 40-50% of trading basic earnings per share.

The dividend would be paid on 27 July to shareholders on the register at close of business on 6 July, with shares quoted ex-dividend from 5 July.

“Over the past year we have seen the continued growth of trading activity in emerging markets, increased demand for regulatory solutions and data analytics from the implementation of MiFID II, and the growing role of non-banks in our client base,” said group CEO Michael Spencer.

“In February, financial markets received a long awaited and much welcomed jolt of activity as volatility returned.

“Whilst it was short lived, the underlying level of market volatility is higher today than it was a year ago due to a sustained shift out of emerging market currencies into the US dollar and we have benefited from this.”

Spencer said the company had some “notable” and “very hard won” developments in the second half of the year.

“NEX Markets has delivered a 40% margin, NEX Optimisation recovered back to a 28% margin as promised, we saw a rebound in European repo trading and have been achieving continual record trading days in US repo.”

These are all important developments.”

Last week, NEX shareholders voted “overwhelmingly” in favour of the acquisition of NEX by CME Group, Spencer noted, adding that CME was “the best buyer” of NEX.

“Scale matters in this industry and bringing these companies together creates exciting revenue, technology and synergy opportunities.

“Once complete, this will be a truly industry-defining transaction and one which will bring huge benefits to our clients, the market, and to the City of London through CME's commitment to maintain London as its European headquarters.

“As Britain continues its path to leave the EU, commitments like this matter.”