Trading Update and Notice of Results

Nexteq (AIM: NXQ), a leading technology solutions provider to customers in selected industrial markets, today provides an update on trading for the financial year ended 31 December 2023 ("FY23").

Trading

The Group continues to make good strategic progress and the Board is pleased to announce that it expects to report full year adjusted profit before tax comfortably ahead of market expectations1. As expected, gross margins continued to improve in the second half of the year, with Densitron margins at record levels driven by higher margin Broadcast products and effective supply chain management. Quixant gross margins also continued their recovery and have now returned to historic, pre-Covid, levels. The improved gross margins coupled with effective management of operating expenses led to materially improved profit margins in both Densitron and Quixant.

As announced in September with the 2023 interim results, the Group's order book is normalising from the elevated levels of recent years as customers reduce inventory levels because of easing of supply chain pressures, together with wider economic uncertainty. This trend continued in the fourth quarter of 2023 and consequently the Board expects to report Group Revenues for the year ended 31 December 2023 of $114.8m, 4% down against a record prior year performance.

The Quixant business posted revenues of $69.4m, 6% down on the $74.1m recorded in 2022, with year-on-year growth in board volumes offset by lower monitor sales. The Densitron business delivered another robust performance with revenues of $45.4m, broadly in line with the 2022 results.

Financial position

Net cash at 31 December 2023 increased substantially to $27.9m from $18.5m at 30 June 2023, with the increased profitability enhanced by improved cash from operations and positive working capital movements as the Group reduced overall stock levels.

Outlook

The Group made good strategic and operational progress in 2023, with profit margins improving and cash generation returning to historic high levels. The Board expects this improved margin to continue, with FY24 revenues at this stage anticipated to be broadly in line with FY23 revenue levels, notwithstanding persistent macroeconomic conditions. The Group starts the new financial year with a good order book at c.5 months of revenues, which is consistent with historic levels and provides good visibility for FY24.

Notice of Results

The Group expects to report its full year results for 2023 on 13 March 2024.

Jon Jayal, Chief Executive Officer of Nexteq plc, commented: "The Group has delivered a resilient revenue performance for the year against a backdrop of macroeconomic uncertainty and fluctuating supply chain conditions. Through this, we have remained focused on our customer proposition and long-term growth strategy and delivered higher value products to the market, reflected in enhanced gross margins and the return towards historic levels of profitability and cash generation.

Whilst market conditions continue to lead to a more normalised purchasing environment following exceptional demand in 2022, the quality of the pipeline remains strong across the Group's focused industrial applications. The Group continues to expand its market opportunity through value-accretive product development and vertical diversification, underpinned by niche domain expertise. The Board believes that this provides a strong platform to deliver transformational earnings enhancement over the medium term, both organically and through select M&A opportunities, backed by a very robust financial position."

1 The current range of forecasts for the year ended 31 December 2023 is revenue of between $119.0m and $120.1m with a consensus of $119.6m and consensus adjusted profit before tax of $12.7m.