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Nex Group reports 10 per cent rise in revenue sending shares higher

City A.M. Wednesday, 12 July 2017
Nex Group reports 10 per cent rise in revenue sending shares higherElectronic trading firm Nex Group has reported a 10 per cent rise in revenue for the first quarter, citing financial markets shifting to more “normalised conditions” despite ongoing low volatility.

Shares rose on the update, and were up 3.26 per cent in early afternoon trading, to 650p.

*Read more*: Nex shares rise after delivering in a tough market

*The figures*

The FTSE 250 firm, which provides electronic trading platforms for banks and hedge funds, reported a 10 per cent rise in revenue for the three months to June, on a constant currency basis. It was a 20 per cent rise on a reported basis.

It noted that financial markets have started the “long and slow” journey to more normalised conditions, with further interest rate rises in the US, along with early signals of improved economic conditions in Europe.

The firm’s Nex markets branch, which provides foreign exchange and fixed income trading tech and services to help clients access liquidity, reported an 11 per cent rise in revenue on a constant currency basis compared to the first quarter last year.

The FTSE 250 company said that boost in revenue was predominantly down to its partnership with the China Foreign Exchange Trade System (CFETS). Nex has a $65m three-year deal with China’s inter-bank market trading platform to supply its technology.

*Why it's interesting*

Trading activity has still been held back by low volatility, though Nex said there were sparks of activity around macro events including the French election when centrist Emmanuel Macron triumphed over far-right candidate Marine Le Pen, and a US rate rise.

Average daily volumes on EBS, a platform for banks and other big institutions to trade the euro, yen and Swiss franc against the dollar, were down three per cent to $80bn (£62.1bn) since the start of the year.

Nex also said its transformation programme is on track, and the costs to achieve the savings involved will be approximately £10m, which won’t be treated as an exceptional item.

*What the company said*

Michael Spencer, the group chief executive of Nex, said:

We have made good progress towards our medium-term aspirations, which will deliver value for our clients and shareholders: a group revenue compound annual growth rate of 7-10 per cent, an increase in Nex’s subscription-based products, driver profitable growth, and create efficiencies to increase divisional operating margins to at least 40 per cent.

*Read more*: Nex Group chairman forks out £25,000 to repay donations targeting Lib Dems
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