NXT plc
Pre-Close Trading Update and Board Change
NXT plc ("NXT" or the "Company"), a provider of unique sound solutions, best known for its flat panel loudspeaker and touch screen technologies, presents a brief statement of management and organisational changes, and a pre-close trading update for the year to 30 June 2010.
Board Change
NXT is pleased to announce today the appointment of James Lewis as Chief Executive Officer with effect from 1 August 2010. James is an electronics engineer and entrepreneur who has worked in Europe and the United States. He founded Oxford Semiconductor, a privately funded chip start-up which grew to a global business with 150 employees, before exiting via a sale to a NASDAQ listed business. He has worked with many of the world's leading computer peripheral and consumer electronics companies.
Upon James taking up his new position, outgoing CEO Peter Thoms will become Vice Chairman of NXT for a transitional period. He will continue to be based in the Hong Kong office with responsibility for maintaining and developing key relationships in Asia, as well as assisting James in the commencement of his new role.
James Lewis has been Non-executive Director of the Company since October 2009, and from March 2010 has been more actively involved. James said: "NXT has created some of the world's great audio and display technologies, and I am looking forward to leading the Company at this exciting stage."
Commenting on James Lewis' appointment, Peter said: "James has been hugely enthusiastic and passionate about the NXT technology since joining the Board. I am delighted that he has agreed to become NXT's new Chief Executive."
Following these changes NXT will, in due course, be seeking to appoint further non-executives to the Board to broaden the skill base available as the Company moves forward.
Trading Update
As stated in the last Interim Management Statement, the second half of the financial year was an improvement on the first half, however a lack of licensing commitments constrained growth.
The year to 30 June 2010 has been a mixed one for NXT. The combination of licensing, royalties, consulting and component sales across an array of sectors helped to mitigate the impact of the difficult economic environment.
The low-end audio product sector performed worse than anticipated, but a marked improvement in the automotive and television sectors meant that although royalties were down year-on-year, they were up over 20% on the previous half.
Following the dramatic impact of 2008/2009 economic conditions on consumer discretionary spending, consulting income was hit hard as our licensees re-assessed their product development strategies. In many cases, licensees slowed product developments and down-sized their engineering teams. As a result, the slight easing of economic conditions and their need to refresh product ranges has caused them to outsource more product development. This has driven an 84% increase in consulting revenue in the second half of the financial year.
Transducer component sales directly to customers have increased significantly, demonstrating that this revenue stream holds substantial value opportunity for NXT as it progresses, and prompting a thorough review of the business model in order to take full advantage of the potential.
The most disappointing area of the business was IP licensing. Following the exclusive licence sale to Nissha Printing Co. Ltd in December 2008 of $1.8 million, NXT has invested a significant amount of resource into the advancement of its haptic technology, with the intention of extending the licensed applications into non-display and larger display screens.
There has been building interest in NXT Bending Wave Haptics, with three companies showing haptic-enabled touch screens at Computex in Taiwan earlier this year. Many other significant touch screen manufacturers and users of touch screens are currently engaged with the Company. However, the technology is still at the early stage of adoption in large screen applications and demand creation is not yet at a level that encourages manufacturers to pay significant up-front licence fees. NXT has therefore signed several evaluation licences and development agreements to bring products to market.
Strategy Update
NXT has continued to review its licensing and royalty model over the past three years, and explored where opportunities for a profit margin generating approach could be adopted.
The resulting component sales business, though still small, has demonstrated encouraging progress over the past 12 months, enabling the executive team to establish that it should make a significant contribution to the Company's success in the future. In March 2010 NXT purchased intellectual property relating to an ultra-efficient, low-power amplifier chip, from the funders of the silicon chip start-up Audium Semiconductor Ltd. The technology is synergistic with NXT's BMR technology as every speaker needs an amplifier and both technologies are designed to offer the best in listening experience and value. In initiating the acquisition, the Board recognised the excellent strategic fit as well as the ability to leverage its BMR products into the customer base at several different value points, covering sale of components, fabricated modules and systems. This flexible end customer oriented approach will enable the Company to gain more control over its revenue stream, its forecasting and its cash flow.
Operational Update
As the business moves towards a more component sale model, the Company will make changes to ensure that the model is implemented and exploited to its full potential.
In addition to the appointment of James Lewis to Chief Executive Officer, there will also be internal change as the Company is re-arranged operationally into an Audio business unit and a Display business unit. The key objectives of the reorganisation are to inject focus, ownership and accountability across the Company, enabling execution of the strategic vision by clear management of the Company's resources.
Financial Update
Revenue in the second half of the financial year showed an improvement on the first half, but total revenue for the year is significantly down on last year, as the Company was unable to close a licensing deal of the magnitude seen in 2008/09 with the Nissha agreement. The slow licensing activity has impacted the financial position of NXT, flowing through to a loss after tax, and also creating some pressure on short-term cash flow.
The Group is focusing on expenditure prioritisation, ensuring that any delay or reduction in expenditure does not impact revenue generation, while ensuring costs are controlled.
The Board is confident that resources are efficiently deployed and that the short-term cash position is being properly managed.
Final results are expected to be released in September 2010.
ENDS
For further information, please contact:
Peter Thoms
Chief Executive Officer
NXT plc
t: +44 (0) 1223 598 490
Media contact:
Peter Curtain
Allerton Communications
t: +44 20 3137 2500
Singer Capital Markets:
Shaun Dobson
Claes Spang
t: +44 20 3205 7500
About NXT
NXT's commitment to ingenuity in sound and touch has enabled it to deliver new technologies already deployed in audio systems, TVs, PCs and laptops, mobile phones, PA systems, cars, aircraft and in public buildings and facilities around the world. With its unique portfolio of patented technologies and unparalleled expertise in the field of bending wave physics, NXT helps its partners invent, create and market innovative sound solutions that offer sustainable differentiation.
NXT is fully listed on the London Stock Exchange (symbol NTX) and has operations in Hong Kong, Japan and the USA as well as the UK. Further information is available from www.nxtsound.com.