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:
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Maintain a strong balance sheet with good
liquidity;
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Investment in acquisitions to progress the
Group's ongoing growth and diversification agenda;
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Maintain a progressive dividend payment,
growing in line with earnings growth; and
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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.
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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
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Tel: +44
(0)1223 892 696
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Nominated Adviser and Broker:
Cavendish Capital Markets
Ltd
Matt Goode / Teddy Whiley (Corporate
Finance)
Tim Redfern / Harriet Ward
(ECM)
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Tel: +44
(0)20 7220 0500
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Joint Broker:
Canaccord Genuity Limited
Simon Bridges / Andrew
Potts
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Tel: +44
(0)20 7523 8000
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Financial PR:
Alma Strategic
Communications
Hilary Buchanan / Kieran
Breheny
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Tel: +44
(0)20 3405 0205
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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.