Trading Update and Notice of Results
20/07/2023 07:00
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RNS Number : 5798G Nexteq PLC 20 July 2023
The information contained within this announcement is deemed by the Company to
constitute inside information pursuant to Article 7 of EU Regulation 596/2014
as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 as amended.
20 July 2023
Nexteq plc
("Nexteq" or the "Group")
Trading Update and Notice of Results
Robust H1 trading and improving profitability
Nexteq (AIM:NXQ), a leading technology solutions provider to customers in
selected industrial markets, today provides an update on trading for the six
months ended 30 June 2023 and outlook for the remainder of 2023.
Trading
Trading in the first half of the year has been robust, with Group revenue
growth of 6% to $56.3m against strong comparatives and a more challenging
macroeconomic backdrop. Within the Group's brands, Quixant revenue grew 9% to
$34.3m and Densitron performed in line with prior year at $22.0m with 10%
growth in the strategic Broadcast sector tempered by softer demand from
certain customers.
The Group continued to see a recovery in gross margins through the first half
of the year due to a greater proportion of Densitron sales from higher margin
Broadcast products and the continued easing in global supply chains. The
higher gross margin coupled with good management of the Group's operating
expenses led to a materially enhanced operating margin over the comparable
prior period.
The Group's net cash position as at 30 June 2023 was $18.5m, up 43% from 31
December 2022 ($12.9m), as working capital levels reduced in line with easing
supply chains.
Outlook
The improved operating margins seen in the first half of the year are expected
to result in full year adjusted profit before tax in line with market
expectations(1). This is notwithstanding revenues which are now expected to
be broadly in line with the previous year, as customers unwind their stock
positions and management continues to focus on higher quality revenue. We
expect to continue to generate healthy operating cashflows in the second half
of the year.
Notice of Results
The Board expects to announce its results for the six months ended 30 June
2023 on 6 September 2023.
Jon Jayal, CEO of Nexteq, commented: "We continue to make excellent progress
against our strategic objectives in driving improved profitability, cash
generation and customer and sector revenue diversity.
The business has risen to the challenges presented by the electronic component
market shortages and the team has devoted significant effort to mitigate the
effects on our customers, underpinning our 2023 trading performance.
These efforts have enabled us to deliver improved operating margins in the
first half, giving us confidence in year-on-year growth in full year profit
before tax which we expect will be in line with market expectations(1) despite
lower than expected revenues due to reducing stock levels within our customer
base and a focus on revenue quality. Easing of supply lead times has
resulted in a normalisation of the order book.
Healthy operating cash generation has driven further improvements to the net
cash position, which combined with strong customer relationships provides
growth opportunities across our focus sectors."
(1) The current range of forecasts for the year ended 31 December 2023 is
revenue of between $128.0m and $129.1m with a consensus of $128.6m and
adjusted profit before tax of $12.4m.
Nexteq plc Tel: +44 (0)1223 892 696
Jon Jayal, Chief Executive Officer
Johan Olivier, Chief Financial Officer
Nominated Adviser and Broker: Tel: +44 (0) 20 7220 0500
finnCap Ltd
Matt Goode / Simon Hicks (Corporate Finance)
Alice Lane / Charlotte Sutcliffe (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 PR
Hilary Buchanan / Kieran Breheny / Will Ellis Hancock
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 Far Eastern supply
networks and facilitates cost effective manufacturing and strategic supply
chain management.
The Group operates in 8 countries and services over 500 customers across 50
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.
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