Nex profit drops amid challenging market conditions, more cost savings identified

Financial technology company Nex Group posted a drop in first-half profit on Monday amid challenging market conditions.

In the half year ended 30 September, statutory pre-tax profit fell to £48m from £66m, with trading operating profit down 16% to £63m and statutory operating profit down 29% to £58m. This came despite a rise in revenue to £287m from £254m.

Earnings per share declined to 8.9p from 16.3p the year before and the interim dividend was cut to 3.5p per share from 11.5p.

The company said it has identified a further £15m of annualised cost savings in addition to the £25m previously announced, to be delivered over the next three years. These will be derived from the redesign of operating models in sales, product management, operation, technology and finance as well as the rationalisation of infrastructure across the group. The total cost to achieve these savings will be around £16m, which will not be treated as an exceptional item.

Chief executive officer Michael Spencer said: "Now more than ever before we're focused on execution and delivering growth in revenue and earnings. Nevertheless, when necessary, we'll invest to ensure that Nex is best positioned to take advantage of the significant opportunities ahead of us, as we recently did in Nex Optimisation. The combination of our agile organisation, market leading products, investment in innovation and our experienced management team, will lead us to further success.

"Despite market conditions remaining challenging, we see many opportunities ahead. We have a diverse global business, an expanding client base and a robust balance sheet. This is a transitional and transformational year for Nex and we are committed to our financial aspirations of achieving compound annual revenue growth of 7%-10% and operating margins for Nex Optimisation and Nex Markets of more than 40% by FY 2019/20."