Share Buy Back

Nexteq PLC

29 July 2024

 

29 July 2024

Nexteq plc

("Nexteq" or the "Group")

Share Buy Back

Nexteq (AIM: NXQ), a leading technology solutions provider to customers in selected industrial markets, today announces that it intends to extend its current share buyback programme (the "Extended Buy Back"), pursuant to the authority approved by shareholders at the General Meeting on 16 April 2024 (the "Authority").  Under the resolutions passed, the Directors have authority to purchase up to 10% of the Group's Issued Share Capital ("Ordinary Shares"). 

While the Board had already commenced a limited buyback programme of up to £1.0m with the principal intent being for short-term liquidity in the Group's shares, the Board has reconsidered the extent of this programme following recent engagement with investors and in consideration of near-term acquisition opportunities. 

While the Board remains committed to allocating capital towards diversification of the Group's revenue into new market sectors, consistent with the growth strategy, in light of the recently announced management transition the Board recognises that completion of any acquisition is likely to be delayed. Alongside this the Board recognises that current trading performance reduces the scale of potential opportunities being targeted. 

We therefore believe it is appropriate to return a proportion of the company's significant net cash balance, which stood at $36.9m at 30 June 2024, to shareholders. The Director's also expect continued operating cash generation to support an ongoing healthy balance sheet despite any market purchases of Ordinary Shares. 

The Board therefore intends to utilise up to its full authority to purchase up to 10% of the Group's Issued Share Capital, equating to the purchase of up to a further 6,475,634 ordinary shares of 0.1 pence each in the capital of the Group, taking into account the 178,272 Ordinary Shares purchased to date.  The Extended Buy Back will return up to £6.5 million to shareholders (the "Maximum Amount").

The Directors therefore believe that the Extended Buy Back will be a productive use of the Company's cash reserves and provides the opportunity to repurchase Ordinary Shares at attractive levels to hold in treasury for the purpose of satisfying future obligations in relation to its employees' or other share schemes whilst at the same time enhancing earnings per share. The Directors also believe that the Extended Buyback will provide shareholders with the flexibility, but without any compulsion, to realise value in respect of all or some of their shareholdings and is a tax efficient method of returning surplus cash to certain shareholders. 

The Group's capital allocation policy remains unchanged, with a cash generative business model and strong balance sheet with good liquidity allowing it to invest in the business to drive organic growth and take advantage of acquisition opportunities. Priorities for capital allocation are:

-	Maintain a strong balance sheet with good liquidity;
-	Investment in acquisitions to progress the Group's ongoing growth and diversification agenda;
-	Maintain a progressive dividend payment, growing in line with earnings growth; and
-	Any excess cash not required for investment in the medium-term growth of the business will be available for distribution to shareholders, including by means of share buybacks.

The Directors have confirmed that none of them (or any persons connected with them) will, nor do they have any current intention to, sell any of the Ordinary Shares which they beneficially own to the Company via the Extended Buy Back.

The Extended Buy Back is in accordance with the terms of the Authority, including that the maximum price paid per Ordinary Share is to be no more than 105 percent. of the average middle market closing price of an Ordinary Share for the five business days preceding the date of any purchase.

The Extended Buy Back commences today and will end on the conclusion of the next annual general meeting of the Group, save that the Group may, before such expiry, enter into a contract or contracts to purchase Ordinary Shares which would or might be executed wholly or partly after such expiry and make purchases of Ordinary Shares in pursuance of such contract or contracts as if the authority conferred by Resolution 1 at the General Meeting had not expired.

The Group has instructed its brokers, Cavendish Capital Markets Limited ("Cavendish") and Canaccord Genuity Limited ("Canaccord") (together the "Brokers") to execute and manage the Extended Buy Back on its behalf and has given new irrevocable instructions to the Brokers to make market purchases of Ordinary Shares on its behalf, independently of the Group and on an irrevocable and non-discretionary basis. The Brokers will make trading decisions in relation to the Ordinary Shares independently of and uninfluenced by the Group with such trading decisions being in line with the terms of the Extended Buy Back. The Company has agreed the Extended Buy Back will commence immediately and run to the earlier of its completion or the Company's 2025 AGM.

So long as the Company is not in a closed period to which it is subject nor in possession of inside information (an "Open Period") the Company may elect to terminate the non-discretionary nature of the mandate. The Company may subsequently choose to reinstate the non-discretionary mandate of the Extended Buy Back provided that the Company is in an Open Period at that time.

Shareholders should be aware that the Extended Buy Back will, insofar as is possible, be conducted in accordance with the safe harbour parameters of MAR (as defined below); however, the Extended Buy Back may on any given trading day represent a significant proportion of the daily trading volume in the Ordinary Shares on the London Stock Exchange and could exceed 25 per cent of the average daily trading volume. Accordingly, the Group may not benefit from the exemption contained in Article 5(1) in the UK version of the Market Abuse Regulations (Regulation (EU) No 596/2014) as incorporated into UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").

Any market purchase of Ordinary Shares pursuant to the Extended Buy Back will be announced no later than 7.30am on the business day following the day on which the purchase occurred.

Nexteq plc Jon Jayal, Chief Executive Officer Johan Olivier, Chief Financial Officer Nick Jarmany, Deputy Chair	Tel: [phone]
Nominated Adviser and Broker: Cavendish Capital Markets Ltd Matt Goode / Teddy Whiley (Corporate Finance) Tim Redfern / Harriet Ward (ECM)	Tel: [phone]
Joint Broker: Canaccord Genuity Limited Simon Bridges / Andrew Potts	Tel: [phone]
Financial PR: Alma Strategic Communications Hilary Buchanan / Kieran Breheny	Tel: [phone]

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 Asian supply networks and facilitates cost effective manufacturing and strategic supply chain management.

The Group operates in six countries and services over 500 customers across 47 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.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

 

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