Half-year Results

H1 strategic progress despite market headwinds; FY outlook reiterated

Nexteq (AIM: NXQ), a leading technology solutions provider to customers in selected industrial markets, is pleased to announce its unaudited interim results for the six months ended 30 June 2026.

The Group delivered a resilient performance, in line with Board expectations, notwithstanding challenging market conditions and amidst the Board's ongoing organisational refocus to deliver on the Group's three-year objectives. The Group reports increased order intake, continued revenue diversification across products and customers, strong pipeline progression and operational enhancements, providing increased confidence in the Group's future growth.

FINANCIAL HIGHLIGHTS

2Balance as at 31 December 2025.

Duncan Faithfull, Chief Executive Officer of Nexteq, commented:

"H1 2026 was a challenging period for Nexteq, with the headwinds facing our end markets intensifying during the period. However, we continued to make progress against the areas that will build a stronger, more diversified business. As we enter our seasonally stronger second half, and with encouraging commercial progress against our strategy, our focus is on executing well: supporting our customers, converting our pipeline, developing the right products and ensuring we have the right operating model to deliver efficiently."

Investor Presentation

Nexteq is hosting an online presentation open to all investors on 9 September 2026, at 10.00am BST. Anyone wishing to connect should register here: https://www.investormeetcompany.com/nexteq-plc/register-investor.

Group overview

Despite significant market headwinds, we continued to make progress against the plan we have set for Nexteq. The market dynamics facing our two trading brands were as previously communicated, with lower volume in land-based Gaming weighing materially on Group performance, while Densitron delivered a resilient performance, in line with expectations.

The impact was more pronounced in Quixant, our land-based Gaming business. The volume of Gaming cabinets being sold by our customers has been significantly impacted by the c.30% increase in cost of their own products. This was driven by the combination of tariffs and higher critical component pricing, including the impact of AI-related demand on critical component markets. In addition, revenue and gross margin were affected by some Gaming customers purchasing memory directly, reducing the level of pass-through component revenue.

Despite these challenges, our ability to manage the component markets effectively has meant that customer service has remained strong and customer retention remains excellent. The Board believes that, as market conditions normalise, volumes with these customers will return.

While we continue to focus on delivering core products for our Gaming customers, we are also investing in the new product development that will support the future growth of the Group. Launchpad is making excellent progress, despite the official US launch not yet having taken place. Alongside Launchpad, we are creating new computer solutions designed to offer greater flexibility to customers, with new formats and graphics solutions targeting new markets. In Densitron, our focus on new HMI solutions and patented IP is supporting opportunities in advanced display solutions, where we continue to see significant growth potential.

This progress is already translating into tangible commercial activity. Highlights during H1 include:

The product roadmap for H2 2026 and 2027 is now in place, giving the Group a clear framework for execution across new product development, customer onboarding and operational efficiency. As we move through H2 2026, the Board expects to announce further major wins, which will drive our diversification strategy.

The progress we are making across Nexteq is underpinned by the talent, commitment and expertise of our people, who continue to deliver great innovation and service for our customers. I remain proud of the resilience and focus shown across the Group in challenging conditions, and excited by what we can achieve as we deliver the next phase of our plan.

Strategy

Our strategy is focused on building a stronger and more diversified Nexteq. We are doing this by continuing to support and retain our core Gaming customers, while developing new products and solutions that open up growth opportunities across both Quixant and in other sector verticals in Densitron. This includes broadening our product roadmap in Gaming, increasing our focus on software and IP-led revenue through Launchpad and IDS, and accelerating the growth opportunity in advanced display solutions.

At the same time, we are continuing to review the Group's operating model to ensure we have the right structure, cost base and capabilities to deliver the plan efficiently and support sustainable, profitable growth over the medium term.

Current Trading and Outlook

As previously communicated, trading in North American land-based gaming remains challenging, with customer demand continuing to be affected by tariff-related cost pressures and elevated component pricing. Against this backdrop, the Group continues to trade in line with revised expectations, with H2 revenue expected to significantly exceed H1, underpinned by the Group's usual second-half weighting, secured order coverage of 83% and the conversion of new customer wins into revenue. Cash generation is also expected to improve during H2 as the Taiwan mortgage position and strategic stock purchases unwind. The Board therefore reiterates the anticipated FY2026 outcome previously communicated.

Looking beyond FY2026, recent commercial activity is increasingly aligned with the Group's strategic objectives. New customer wins secured in H1 are expected to move through onboarding, regulatory approval and mass production during H2 2026 and 2027, supported by a product roadmap focused on advanced display solutions, core gaming computer platforms, Launchpad and IDS control software. While the material revenue benefit from these wins is expected to build over time, this activity supports confidence in a return to growth in FY2027 as Nexteq continues to build a more diversified and higher-quality revenue base.

Nexteq has faced prolonged challenging conditions, however, our relentless focus on delivering new product solutions will drive us to our objectives laid out in the three-year plan. Management remains focused on the areas within its control: rigorous cost management to mitigate the impact of market and component pricing pressures, the swift onboarding of new customer wins, and the development and execution of new products that support the Group's objective of delivering sustainable, profitable growth.

Group Financial Performance

Group revenues were 34% lower year on year at $26.7m (H1 2025: $40.7m), with Quixant revenue declining 53% to $12.8m (H1 2025: $26.9m) and Densitron increasing 1% to $13.9m (H1 2025: $13.8m). This reflects pressures on the Quixant Gaming business customers in North America impacting demand. Quixant board sales (volume) reduced to 9.7k in H1 2026, down 56% from the 21.9k shipped in H1 2025, with significant impact on High-end and Mid-range products sold to key customers.

Gross margin in H1 2026 was 30.3%, 280bps down from the 33.1% achieved in H1 2025. The decrease results from the DDR4 component pricing pressure and changes in Quixant customer mix. Densitron gross margin remained at the record level 38% delivered in 2025.

Adjusted operating expenses decreased by $0.8m to $12.2m (H1 2025: $13.0m), reflecting management's focus on cost control mitigating inflationary price increases.

Adjusted Group operating result in the first half was a loss of $4.1m, compared to the $0.5m profit reported in H1 2025. Statutory operating loss was $4.8m (H1 2025: $0.4m profit), reflecting the reduced revenue and gross margin in H1 2026.

Adjusted Loss before tax in the first half was $4.0m, compared to the $0.9m profit reported in H1 2025. Statutory loss before tax was $4.7m (H1 2025: $0.8m profit).

The adjustments to statutory loss before tax and statutory operating loss of $0.2m (H1 2025: $0.1m) comprised a share-based payments expense of $0.2m (H1 2025: $0.5m), restructuring costs of $0.5m (H1 2025: $nil), amortisation of acquired intangibles of $nil (H1 2025: $0.1m) and a revaluation gain on disposal of investment property of $nil (H1 2025: $0.2m).

The tax charge on adjusted loss before tax was $0.2m (H1 2025: $0.1m), an effective tax rate of 4.0% (H1 2025: 16.0%), driven by the mix of results across our regions in the first half. The tax charge on reported loss was $0.2m (H1 2025: $0.1m).

Adjusted diluted earnings per share was -7.60c, a reduction of 751% on H1 2025 (1.17c per share). Diluted earnings per share was -8.73c, a reduction of 942% on H1 2025 (1.04c per share).

Cash flow

Adjusted operating cash flow, which excludes tax payments, was -$0.4m (H1 2025: $3.9m), which resulted in adjusted operating cash conversion of 9% (H1 2025: 445%), reflecting the reduction in trading experienced in H1 2026.

The Group capitalised $1.4m of development costs (H1 2025: $0.9m), reflecting increased efforts on Launchpad, IQON-3 and Tactila in the build up to full launch of these new products.

Gross cash was $10.7m on 30 June 2026, compared with $25.3m on 31 December 2025. Net cash was -$1.4m on 30 June 2026, compared with $25.0m on 31 December 2025, reflecting the $12.0m mortgage on Taiwan property. The Taiwan property sale is expected to increase cash by over $3m and net cash by over $15m.

Share buyback

On 2 September 2025, the Group announced its intention to commence a further share buyback programme that was authorised by shareholders at a General Meeting on 18 September 2025. This buyback programme provided authority to purchase up to 10% of the Group's issued share capital, equating to 5,988,515 shares, principally with the intention of providing some short-term liquidity for the Group's shares. The buyback scheme returned $5.7m to shareholders in H1 2026.

The Board remains committed to allocating capital towards diversification of the Group's revenues into new market sectors, consistent with its growth strategy.

CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2026 AND 30 JUNE 2025

The above condensed consolidated statement of profit and loss and other comprehensive income should be read in conjunction with the accompanying notes.

CONDENSED CONSOLIDATED BALANCE SHEET

AS AT 30 JUNE 2026 AND AT 31 DECEMBER 2025

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2026, 31 DECEMBER 2025 AND 30 JUNE 2025

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2026 AND 30 JUNE 2025

The above condensed consolidated cash flow statement should be read in conjunction with the accompanying notes.

Basis of preparation and accounting policies

As is permitted by the AIM rules for Companies, the Directors have not adopted the requirements of IAS34 'Interim Financial Reporting' in preparing the interim financial statements. The financial information shown for the year ended 31 December 2025 in the interim financial information does not constitute full statutory financial statements as defined in Section 434 of the Companies Act 2006 and has been extracted from the Company's annual report and accounts. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2025 and any public announcements made by Nexteq Plc during the interim reporting period. The annual financial statements of the Group were prepared in accordance with UK adopted international accounting standards. Statutory accounts for the year ended 31 December 2025 have been filed with the Registrar of Companies and the auditor's report was unqualified, did not contain any statement under Section 498(2) or 498(3) of the Companies Act 2006 and did not contain any matters to which the auditors drew attention without qualifying their report.

The accounting policies applied by the Group in this condensed consolidated interim financial report are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2025. The reporting currency adopted by the Group is the US Dollar as this is the trading currency of the Group.

The condensed consolidated interim financial information is neither audited nor reviewed and the results of operations for the six months ended 30 June 2026 are not necessarily indicative of the operating results for future operating periods.

After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the condensed consolidated interim financial report.

This condensed consolidated interim financial report was approved by the Board of Directors on 9 September 2026.

Reconciliation of adjusted measures

The Group uses certain alternative performance measures to evaluate performance and as a method to provide Shareholders with clear and consistent reporting. The Directors consider that these represent a more consistent measure of performance by removing items of income or expense which are considered significant by virtue of their size, nature or incidence or which have a distortive effect on current period earnings and are relevant to an understanding of the Group's financial performance. These measures include Adjusted Profit before tax, Adjusted Profit after tax, Adjusted Operating expenses, Adjusted Operating cash flow and Net cash. The Group's definition of adjusted measures may not be comparable to other similarly titled measures reported by other companies. See below for analysis of the adjusting items in reaching adjusted performance measures.

Adjusted (Loss)/Profit before tax

2 Gain on disposal of investment property has been excluded as it is an exceptional, non-recurring item.

3 Share-based payments expense has been excluded as it is not a cash-based expense.

4 Restructuring costs have been excluded as it is an exceptional, non-recurring item.

Adjusted (Loss)/Profit after tax

1 Tax on adjusted items relating to amortisation of customer relationships, technology and order backlog of $nil (H1 2025: $0.1m), revaluation gain on disposal of property of $nil (H1 2025: $0.2m), share-based payments expense of $0.2m (H1 2025: $0.2m) and restructuring costs of $0.5m (H1 2025: $nil).

Adjusted Operating (loss)/profit

Business and geographical segments

The Chief Operating Decision Maker (CODM) in the organisation is an executive management committee comprising the Board of Directors. The segmental information is presented in a consistent format with management information. The Group assesses the performance of the segments based on a measure of revenue and profit before tax. The segmental split of the balance sheet is not reviewed by the CODM, and they do not look at assets/liabilities of each division separately but combined as a group. Therefore, this split for assets has not been included.

The operating segments applicable to the Group are as follows:

1Depreciation and amortisation of $493k (H1 2025: $635k) were not allocated to segments as these were reported to the CODM as corporate costs.

Analysis of turnover

1Densitron Revenue from products splits into Densitron $13.5m (H1 2025: $13.3m) and IDS $0.4m (H1 2025: $0.5m). IDS Revenue includes service revenue of $0.3m (H1 2025: $0.3m) recognised throughout the performance period.

The above analysis includes sales to individual countries in excess of 10% of total turnover of:

No revenues (H1 2025: $16.8m) are derived from any customers (H1 2025: three customers) who individually accounted for more than 10% of Group revenues in H1 2026.

Earnings per share

2 No dilution of ordinary shares for H1 2026 based on the net loss position. The number of share options with dilutive potential at 30 June 2026 is 1,896,878.

Related party transactions

During the period, the Group paid €13,866 (H1 2025: €15,600) for administrative services to Francesca Marzilli, the wife of Nicholas Jarmany. Francesca Marzilli resigned on 10 June 2026. There were no other related party transactions, other than transactions with key management personnel, who are the Directors of the Company and the Executive Committee.

Post balance sheet events

The Company, through its Taiwan branch, accepted an offer in August 2026 from a third party to purchase its new office in Taipei, Taiwan. This non-binding offer includes the receipt of a returnable guarantee deposit of $1.5m. The sale transaction is expected to complete in October 2026.

On 24th June 2026, the Company announced that Nicholas Jarmany, Non-Executive Deputy Chair, would retire from the Board with effect from 31 August 2026. Nick co-founded the business in 2025 and served as Chief Executive Officer until 2018, when he became Deputy Chair.