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 expectations¹.  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 expectations¹ 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.

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.