REG - Nexteq PLC - Trading Update and Appointment of CFO

NexteqAnnouncement

31/10/2024 07:00

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RNS Number : 3135K  Nexteq PLC  31 October 2024

31 October 2024

Nexteq plc

("Nexteq" or the "Group")

Trading Update and Appointment of CFO

 

Nexteq (AIM: NXQ), a leading technology solutions provider to customers in
selected industrial markets, today provides an update on trading for the year
ending 31 December 2024, and the appointment of a new Chief Financial Officer.

 

Ongoing Business Review

 

Duncan Faithfull, who was appointed as the new CEO of Nexteq in August 2024,
has been conducting an in-depth business review of the Group, looking at
trading patterns across both brands; the growth drivers for the medium term;
the investment required to drive that growth and the operational mechanisms to
deliver it. Whilst there are short-term trading headwinds, the investment in
new products and solutions gives significant optimism for the future.

 

Trading performance

 

Since the H1 2024 results announced on 10(th) September 2024, the Group has
continued to see ongoing, cross industry de-stocking, resulting in reduced
order intake levels. In addition, while customer retention remains
impressively high, we have seen certain customer product and project launches
being delayed into Q1 2025, from Q4 2024, with customers opting to delay
agreed new project expenditure into a new budget year.

 

As a result, FY24 Group revenue is expected to be 10-12% below previous market
expectations(1). Current gross margin performance is expected to continue
through 2024, and the Board and Senior Leadership Team is maintaining a strong
focus on cost management. The Board expects FY24 Group adjusted profit before
tax to be at least $6.0m, driven by the lower revenues.

 

The Group continues to generate healthy cash flow, with a net cash balance of
$33m on 30 September 2024. To date the Group has spent approximately £4.6m on
its share buyback programme, representing c.7% of the Group's issued share
capital, and intends to continue with this programme. The Board expects year
end net cash to be c$30m considering the impact of the anticipated share
buyback up to the 10% authority granted by shareholders at the 2024 AGM.

 

Directorate change

 

In line with the Board Transition announcement released on 24 July 2024, Johan
Olivier has today stepped down from the Board, and his role as Group Chief
Financial Officer.

 

Following an extensive external search process, the Board is pleased to
announce that Matt Staight, Group Financial Controller at Nexteq, will take
over as Group Chief Financial Officer, in an orderly handover from Johan.
 Matt will also be appointed to the Board, subject to the required AIM due
diligence process, as soon as possible.  A further announcement will be made
in due course in this regard.

 

Matt is a highly experienced finance professional, and having joined Nexteq in
2022, he has a comprehensive knowledge of the Group's finance functions and
markets, as well as already being significantly involved in the Group's growth
projects.  During the handover period, Johan will act as a consultant to
Nexteq, to support the orderly handover of duties to Matt.

 

Outlook

 

The second phase of the intensive business review by the new CEO, CFO, and the
Nexteq Senior Leadership Team, is focusing on 2025. The current order book
going into 2025 remains lower in value than previously anticipated, and there
is still uncertainty around the ongoing de-stocking levels as we progress
through the 1(st) half of 2025.  However, the pipeline of new product
launches and new customer projects remains encouraging, with several new
customer wins being integrated through 2025, with the full year revenue and
profit impact of these being seen in 2026.  Nexteq plans to continue to
invest in product and operational excellence, which will have a consequential
impact on the Group's 2025 performance whilst enabling growth in 2026 and
beyond.

 

Duncan, Matt and the Nexteq Senior Leadership Team intend to present their
Growth Strategy to investors in Q1 2025.

 

Duncan Faithfull, Group CEO of Nexteq, commented:

 

"Whilst it is disappointing to have customer projects extended beyond the
Company's financial period end, we remain laser focused on delivering to our
customers high quality, innovative new products together with outstanding
levels of service - the foundations of our market leading reputation. Whilst
we are engaged in a detailed review of the business, I am encouraged by the
pipeline from an increasingly diversified range of products and services,
supported by underlying market drivers and a robust balance sheet.  Growth
expectations in 2026 and 2027 will be fueled by the development work being
done now.

 

"On behalf of the Board, I would like to thank Johan for his contributions to
the business over the last three years, and wish him the very best for the
future, once his period of consultancy to Matt is completed. I would like to
welcome Matt to the Group CFO role, and I look forward to working with him
closely and benefiting from his deep knowledge of the business as we set out
our detailed execution plan."

 

 

1.     The range of forecasts for the year ended 31 December 2024 prior to
this announcement was revenue of between $93.9m and $96m with a consensus of
$95m with consensus adjusted profit before tax of $9.4m.  Consensus net cash
forecast as at 31 December 2024 was $33m.

 

 

 Nexteq plc                                        Tel: +44 (0)1223 892 696

 Duncan Faithfull, Group Chief Executive Officer

 Matt Staight, Group Chief Financial Officer

 Nick Jarmany, Interim, Chair

 Nominated Adviser and Broker:                     Tel: +44 (0)20 7220 0500

 Cavendish Capital Markets Ltd

 Matt Goode / Teddy Whiley (Corporate Finance)

 Tim Redfern / Harriet Ward (ECM)

 Joint Broker:                                     Tel: +44 (0)20 7523 8000

 Canaccord Genuity Limited

 Simon Bridges / Andrew Potts

 Financial PR:                                     Tel: +44 (0)20 3405 0205

 Alma Strategic Communications

 Hilary Buchanan / Kieran Breheny

 

 

About Nexteq

Nexteq (AIM: NXQ) is a strategic technology solutions provider to customers in
selected industrial markets. Its innovative technology enables the
manufacturers of global electronic equipment to outsource the design,
development and supply of non-core aspects of their product offering. By
outsourcing elements of their technology stack to Nexteq, customers can focus
their product development effort on the most critical drivers of their
business' success.

 

Our solutions are delivered through a global sales team and leverage the
Group's electronic hardware, software, display and mechanical engineering
expertise. Our Taiwan operation is at the heart of Asian supply networks and
facilitates cost effective manufacturing and strategic supply chain
management.

 

The Group operates in six countries and services over 500 customers across 47
countries.

 

Nexteq operates two distinct brands: Quixant, a specialised computer platforms
provider, and Densitron, leaders in human machine interface technology, each
with dedicated sales, account management and product innovation teams. Founded
in 2005, and later floating on the London Stock Exchange's AIM stock market as
Quixant plc, the Group rebranded to Nexteq in 2023.

 

Further information on Nexteq and its divisions can be found at
www.nexteqplc.com (http://www.nexteqplc.com) .

 

This announcement contains information for the purposes of Article 7 of the
Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed
in accordance with the Company's obligations under Article 17 of MAR.

 

 

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