Pre-Close Trading Update and Board Change

 

TIDMNTX 
 
RNS Number : 3045P 
NXT PLC 
14 July 2010 
 

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: [phone] 
 
Media contact: 
Peter Curtain 
Allerton Communications 
t: [phone] 
 
Singer Capital Markets: 
Shaun Dobson 
Claes Spang 
t: [phone] 
 
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. 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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