Increased investment spend will impact first-half profits, although they are expected to normalise in H2.
Companies: NEX Group
NEX Group (LON: NXG) has released a trading update for the six months to 30 September today ahead of its investor teach-in this morning, which details the Group's decision to increase spending.
The financial services provider says it will increase investment spending in its Nex Optimisation division as part of its ongoing transformation towards "a more client-centric structure, based around solution pillars."
It also said investment would be ramped up in its sales activities and marketing campaigns surrounding the Group's MiFIID II services, to "maximise the significant short-term market share opportunity" ahead of MiFIID II's implementation in January 2018.
Management went on to say that the increased investment spend in both operations would impact profits, saying:
"The combined effect of these investments, together with the ongoing low volatility impacting the Reset business, will have a temporary impact on NEX Optimisations operating profit margin in the first half, which is now expected to be approximately 20%. The divisions operating profit margin is expected to normalise in the second half of the year."
The statement also noted the transformation programme remains "on track" and additional cost savings above the previously announced £25 million have been identified. The additional cost saving figure will be announced as part of the Group's half-year report due out on November 20.
The short-term profit warning sent shares in NXG down 8% to 608p in thus morning's trading.
NXG trades at a PE ratio of 20x versus the industry median of 15x and has a market cap of c. £2.5bn.
