Nexteq PLC Trading Update and Notice of Results (5798G)
July 20 2023 - 2:00AM
UK Regulatory
TIDMNXQ
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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