TIDMQXT
RNS Number : 5990R
Quixant PLC
15 September 2014
15 September 2014
Quixant plc
("Quixant" or the "Company")
Interim Results
Quixant (AIM:QXT), a leading provider of specialised computing
platforms for casino gaming and slot machine applications, is
pleased to announce its interim results for the six months ended 30
June 2014.
H1 2014 Financial Highlights
-- Revenue of US$12.3 million (H1 2013: US$9.5 million), growth of 30%
-- Gross profit of US$5.6 million (H1 2013: US$4.5 million), growth of 25%
-- EBITDA of US$2.5 million (H1 2013: US$2.0 million), growth of 25%
-- Profit before tax of US$2.2 million (H1 2013: US$1.8 million), growth of 18%
-- Fully diluted EPS of US$0.028 (H1 2013: US$0.024), growth of 16%
-- Net cash from operating activities of US$2.3 million (H1
2013: US$1.4 million), growth of 62%
-- Trading over the half in line with management expectations
-- On target to achieve full year expectations
H1 2014 Operational Highlights
-- Continued diversification of customer base and reinforcement
of business with existing customers
-- Significant project secured with Tier 1 customer, Novomatic Group
-- New multi-year contract signed with Ainsworth
Nick Jarmany, Chief Executive of Quixant, commented: "We have as
expected delivered impressive growth over the first half of the
year and achieved some significant business wins. With a strong
order book and pipeline of new business, we are well positioned to
meet full year expectations."
Copies of the interim results of the Company for the six months
ended 30 June 2014 are being posted to shareholders today and are
available on the Company's website at www.quixant.com.
For further information please contact:
Quixant plc Tel: +44 (0) 1223 892696
Nick Jarmany, Chief Executive
Jon Jayal, General Manager
Nominated Adviser and Broker:
finnCap Tel: +44 (0) 20 7220 0500
Matt Goode (Corporate Finance)
Charlotte Stranner (Corporate Finance)
Victoria Bates (Corporate Broking)
Financial PR:
Newgate Threadneedle Tel: +44 (0) 207 653 9850
John Coles
Fiona Conroy
Hilary Buchanan
About Quixant
Quixant, founded in 2005, designs and manufactures complete
advanced hardware and software solutions (Gaming Platforms) for the
pay-for-play gaming and slot machine industry. The Company is
headquartered outside of Cambridge in the UK. Quixant UK Ltd is
responsible for the group's global (excluding North America) sales
function and its Las Vegas based subsidiary, Quixant USA Inc, is
responsible for sales and sales support to the North American
market. Quixant has its own manufacturing and engineering operation
in Taiwan, which has evolved with the rapid growth of the Company.
Quixant's Italian subsidiary, Quixant Italia Srl, houses the
Group's software engineering and customer support team.
Quixant's high quality, specialised products provide an
all-in-one solution, based on PC technology but with augmentative
hardware features and operating software developed specifically to
address the requirements of the gaming industry. Products feature
innovative mechanical designs which are optimised for operation in
the gaming and slot machine environment. Quixant's proprietary
hardware and embedded software is flexible in its design, enabling
Quixant to easily respond to changes in regulation, or customers
operating in different markets or jurisdictions.
In-depth information on the Company's products, markets,
activities and history can be found on the corporate website as
well as in the Admission Document, which is also available on the
website at www.quixant.com.
Chairman's Statement
I am pleased to report on the Company's performance for the six
months ended 30 June 2014. Over the half, pre-tax profits were
US$2.2 million (H1 2013: US$1.8 million) from turnover of US$12.3
million (H1 2013: US$9.5 million) and gross profit of US$5.6
million (H1 2013: US$4.5 million); which are in line with
management expectations.
The Company paid a maiden full year dividend of 1p per share for
FY2013 on 16 May 2014.
Since Quixant's admission to the market in May 2013, the Company
has enjoyed strong support from the investor community. It is
pleasing that in April 2014, market demand for the shares led to
the release of 17,857,143 existing ordinary shares by Directors and
other founding shareholders in an oversubscribed placing with new
and existing institutional investors. This has broadened Quixant's
investor base and materially increased the free float. The founding
Directors and their families maintain a substantial stake in the
business, holding 51% of the issued share capital.
The announcement in late July 2014 of winning a significant
piece of business from a new Tier 1 customer, Novomatic Group,
reinforces the Board's belief that the largest gaming machine
manufacturers in the industry are gradually adopting a strategy to
outsource the design and manufacture of the computer gaming
platform, which is a crucial component in their machines. This
significant business win is expected to underpin current growth
expectations for 2015.
There has been considerable consolidation taking place in the
gaming industry over recent months with several of the major
players undergoing M&A activity. We believe this consolidation
will have a positive impact on our business as manufacturers review
their strategy and seek cost efficiencies.
The Company has continued to invest in building the resources
and infrastructure necessary to win and support business with large
customers and to deliver continued growth into 2015 and beyond.
Quixant continues to occupy a small but growing share of the
existing market. In addition, the market continues to develop, with
new territories approving or considering approving new or extended
regulated gaming markets.
I would like to congratulate our team for their efforts and to
thank shareholders for their continued support of the Company.
Michael Peagram
Chairman
Chief Executive's Review
Introduction
In the first half of 2014, we have continued to make strong
progress in securing new business, strengthening and developing
existing business relationships, building the Company's resources
and infrastructure, and further growing the strength of the Quixant
brand.
Broadened customer base
The Company has successfully leveraged the benefits of its AIM
listing to raise its profile amongst the major players in the
industry, most recently evidenced by the business relationship
formed with Novomatic Group. This was the culmination of over 18
months of intense cooperation between Quixant and Novomatic. They
are one of the most highly respected manufacturers in the industry
and the Board was delighted that Quixant was featured in an article
in Novomatic's own magazine in which they commented "In Quixant we
have found such a congenial and reliable technology partner who is
able to complement the in-house know-how and capacities - which can
make the difference in global competition." Shipments under this
project are scheduled to commence early next year, helping underpin
current growth expectations for 2015.
The Novomatic business win is further evidence of the transition
that Tier 1 customers are undergoing, with a trend towards
outsourcing aspects of machine design which do not give them a
competitive advantage, including the computer gaming platform.
During the first half of 2014 progress was made securing a
design-in on a project with another Tier 1 customer.
In February, Quixant signed a new contract out to 2019 to supply
Ainsworth Game Technology with a new series of gaming platforms to
power its machines. This new agreement underpins the robust
relationship with Ainsworth, which has been a Quixant customer
since 2007.
Building for the future
The Board has been active in continuing to strengthen the
Company's personnel, systems and infrastructure to support expected
future business opportunities and growth. With the commencement of
major business with a Tier 1 customer and several other large
prospects in the pipeline, vital investment has been made in the
first half of 2014 to ensure the correct people are recruited and
adequately trained to contribute significantly to the business.
Across the Company headcount has grown from 63 at the end of
December 2013 to 69 at June 2014, a majority of which was in the
R&D team responsible for designing and validating Quixant's
products.
The move into the new Quixant USA facilities was completed in
May 2014. The new office provides increased office space,
facilities for support and training of North American customers
and, importantly, warehousing space to hold stock for US customers;
a requirement in many cases to win business in this market.
New products
At the ICE exhibition in London in February 2014 Quixant
previewed its latest gaming platform, the QX-50, to a selected
group of customers behind closed doors. The QX-50 is based on AMD's
latest "Bald Eagle" APU technology and enables game developers to
deliver 4K "Ultra HD" game content, which offer four times the
detail of traditional "Full HD" games. Quixant's unique position as
an AMD Fusion Partner Elite Member provided us with advanced
information and samples of AMD's "Bald Eagle" APU technology
enabling us to have a completed product before AMD had formally
launched their products to market. This meant that Quixant was able
to formally launch the QX-50 at the G2E Asia exhibition in Macau on
the very same day as AMD launched its "Bald Eagle" APU. This
competitive advantage was evident at ICE where interest around the
4K gaming theme was prevalent.
During the first half of 2014, Quixant brought a new low cost
product to market: the QXi-307. Based on technology developed for
the Italian QXi-306 platform, the QXi-307 enables customers to
access Quixant's technology and a high level of performance at a
new low price point. Interest in the QXi-307 has already been high,
and we have already achieved design-ins with two customers adopting
this new platform.
Financial review
Pre-tax profits for the six months ended 30 June 2014 were
US$2.2 million (H1 2013: US$1.8 million) and turnover for the
period was US$12.3 million (H1 2013: US$9.5 million). Our operating
expenses for the six months ended 30 June 2014 were US$3.5 million
(H1 2013: US$2.7 million), higher than prior due to share based
payments, direct costs of functioning as a listed company and
investment in people to enable scalability of the business going
forward. EBITDA for the period to 30 June 2014 was US$2.5 million
(H1 2013: US$2.0 million). Fully diluted earnings per share for the
period was US$0.028 (H1 2013: US$0.024).
Operations generated cash in the six months to 30 June 2014 of
US$2.3 million (H1 2013: US$1.4 million). Investments were made
into repaying the mortgage on the business premises in Cambridge,
fit out of the new office in the US and increased stock holding of
products to satisfy customer demand leading into the second half,
leaving the Company with a healthy cash balance of US$6.5 million
at 30 June 2014 (31 December 2013: US$7.0 million) following the
payment of Quixant's maiden dividend for full year 2013 totalling
US$1.1 million in May 2014. Net cash was US$5.1 million at 30 June
2014 (31 December 2013: US$4.9 million).
Outlook
The Company is well positioned to meet the full year
expectations. The strong order book and healthy pipeline of
business also gives us confidence leading into 2015 and beyond.
Nick Jarmany
Chief Executive
Condensed consolidated income statement
for the six months ended 30 June 2014 and 2013 and year ended 31
December 2013
Note 30 June 2014 30 June 2013 31 December
Unaudited Unaudited 2013
Audited
$000 $000 $000
Revenue 12,346 9,508 24,235
Cost of sales (6,705) (4,996) (13,042)
Gross profit 5,641 4,512 11,193
Operating expenses (3,464) (2,680) (5,158)
Operating profit 2,177 1,832 6,035
Financial expenses (18) (32) (61)
Other income 14 46 -
Profit before tax 2,173 1,846 5,974
Taxation 2 (289) (433) (1,224)
Profit for the period 1,884 1,413 4,750
Basic earnings per share 4 $0.02915 $0.02452 $0.0777
Fully diluted earnings per
share 4 $0.02832 $0.02435 $0.0762
Condensed consolidated statement of comprehensive income
for the six months ended 30 June 2014 and 2013 and year ended 31
December 2013
$000 $000 $000
Profit for the period 1,884 1,413 4,750
Foreign currency translation
differences (44) (22) (29)
Total comprehensive income
for the period 1,840 1,391 4,721
Condensed consolidated statement of financial position
as at 30 June 2014 and 2013 and at 31 December 2013
Note 30 June 30 June 31 December
2014 2013 2013
Unaudited Unaudited Audited
$000 $000 $000
Non-current assets
Property, plant and equipment 4,966 3,734 4,554
Intangible assets - research
and development 1,592 919 1,253
Total non-current assets 6,558 4,653 5,807
Current assets
Inventories 5,462 3,089 2,631
Trade and other receivables 5,209 3,962 5,939
Cash and cash equivalents 6,459 7,448 7,021
Total current assets 17,130 14,499 15,591
Total assets 23,688 19,152 21,398
Current liabilities
Other financial liabilities (95) (92) (173)
Trade and other payables (4,344) (3,405) (2,677)
Corporation tax payable (1,277) (1,249) (805)
Total current liabilities (5,716) (4,746) (3,655)
Non-current liabilities
Other financial liabilities (1,314) (2,112) (1,986)
Deferred tax liability (349) (241) (281)
Total non-current liabilities (1,663) (2,353) (2,267)
Total liabilities (7,379) (7,099) (5,922)
Net assets 16,309 12,053 15,476
Equity
Share capital 3 104 104 104
Share based payments reserve 195 20 113
Share premium 5,181 5,181 5,181
Retained earnings 10,830 6,698 10,035
Translation reserve (1) 50 43
Total equity 16,309 12,053 15,476
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2014, 31 December 2013 and 30
June 2013
Share Share Share Retained Translation Total
Based Equity
Capital Payments Premium Earnings Reserve
$000 $000 $000 $000 $000 $000
At 1 January 2013 27 - 505 5,285 72 5,889
Profit for the six months - - - 1,413 - 1,413
Share bonus issue 63 - (63) - - -
Issue of new shares 14 - 5,873 - - 5,887
Share issue expenses - - (1,134) - - (1,134)
Share based payments - 20 - - - 20
Total other comprehensive
income - - - - (22) (22)
At 30 June 2013 104 20 5,181 6,698 50 12,053
Profit for the six months - - - 3,337 - 3,337
Share based payments - 93 - - - 93
Total other comprehensive
income - - - - (7) (7)
At 31 December 2013 104 113 5,181 10,035 43 15,476
Profit for the six months - - - 1,884 - 1,884
Share based payments - 82 - - - 82
Dividend paid - - - (1,089) - (1,089)
Total other comprehensive
income - - - - (44) (44)
At 30 June 2014 104 195 5,181 10,830 (1) 16,309
Condensed consolidated cash flow statement
for the six months ended 30 June 2014 and 2013 and year ended 31
December 2013
30 June 2014 30 June 2013 31 December
2013
Unaudited Unaudited Audited
$000 $000 $000
Cash flows from operating activities
Profit for the year 1,884 1,413 4,750
Adjustments for:
Depreciation 136 98 227
Amortisation 173 28 120
Financial expenses 18 32 61
Taxation 289 433 1,224
Share based payments expense 82 20 113
2,582 2,024 6,495
Decrease/(increase) in trade and
other receivables 730 408 (1,568)
(Increase) in inventories (2,831) (670) (212)
Increase/(decrease) in trade and
other payables 1,623 (292) (984)
2,104 1,470 3,731
Interest paid (18) (32) (61)
Tax refunded/(paid) 251 6 (1,190)
Net cash from operating activities 2,337 1,444 2,480
Cash flows from investing activities
Acquisition of property, plant and
equipment (548) (32) (1,024)
Development expenditure (512) (445) (871)
Net cash from investing activities (1,060) (477) (1,895)
Cash flows from financing activities
Repayment of borrowings (750) (75) (120)
Net cash received on issue of new
shares - 4,753 4,753
Dividends paid (1,089) - -
Net cash from financing activities (1,839) 4,678 4,633
Net (decrease)/increase in cash
and cash equivalents (562) 5,645 5,218
Cash and cash equivalents at 1 January 7,021 1,803 1,803
Cash and cash equivalents at period
end 6,459 7,448 7,021
General Information and Reporting entity
Quixant plc ("Quixant" or the "Company") is a public limited
company incorporated and domiciled in England and Wales, whose
shares are publically traded on the Alternative Investment Market
(AIM) of the London Stock Exchange. The address of the company's
registered office is Aisle Barn, 100 High Street, Balsham,
Cambridge, CB21 4EP. Quixant develops and supplies specialist
computer systems. This condensed consolidated interim financial
information for The Quixant Group comprises the Company, its branch
in Taiwan and its subsidiaries (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 2014 are not necessarily indicative of the
operating results for future operating periods.
The financial information shown for the year ended 31 December
2013 in the interim financial information does not constitute
statutory financial statements as defined in Section 435 of the
Companies Act 2006 and has been extracted from the Company's annual
report and accounts. The auditor's report on the annual report and
accounts was unqualified.
1. Principal Accounting Policies
Statement of compliance
This condensed consolidated interim financial report has been
prepared in accordance with IAS 34 Interim Financial Reporting.
Selected explanatory notes are included to explain events and
transactions that are significant to an understanding of the
changes in financial position and performance of the Group since
the last annual consolidated financial statements as at and for the
year ended 31 December 2013. This condensed interim financial
report does not include all the information required for full
annual financial statements prepared in accordance with
International Financial Reporting Standards. The reporting currency
adopted by the Quixant Group is US$ as this is the trading currency
of the Group.
This condensed consolidated interim financial report was
approved by the Board of Directors on 12 September 2014.
Judgements and estimates
Preparing the interim financial report requires Management to
make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets and liabilities, income and expenses. Actual results may
differ from these estimates.
In preparing this condensed consolidated interim financial
report significant judgements made by Management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the consolidated
financial statements as at and for the year ended 31 December
2013.
Segmental analysis
The Quixant Group has determined that it only has one operating
and reportable segment. The Quixant Group assesses the performance
of that segment based on a measure of revenue, and profit/(loss)
before interest and taxation. All significant assets and
liabilities are located within the UK, USA and Taiwan.
The segmental information is therefore presented in the income
statement and statement of financial position and has not been
reproduced here. A single customer accounted for 55 per cent, 67
per cent, and 72 per cent of reported revenues in the six month
period to 30 June 2014, the six month period to 30 June 2013 and
year to 31 December 2013 respectively.
Significant accounting policies
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 2013.
2. Taxation
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2014 2013 2013
Unaudited Unaudited Audited
$000 $000 $000
Analysis of charge in periods
Current tax
UK Corporation tax 367 330 1,061
Foreign Tax (8) - 20
Deferred tax 68 103 143
Prior periods
Corporation tax (138) - -
Tax expense 289 433 1,224
The credit in respect of corporation tax relating to prior
periods of $138,000 (2013: $nil) arises from a revised estimate of
the recharge of expenses by Quixant USA Inc to Quixant UK Limited,
primarily relating to 2012, with the effect of reducing previously
unrelieved losses arising in the USA.
3. Share capital
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2014 2013 2013
Unaudited Unaudited Audited
Number $000 $000 $000
Allocated, called up and fully
paid
At end of period 64,634,782 104 104 104
The Company paid a full year dividend of 1p per share for the
year ended 31 December 2013 on 16 May 2014.
4. Earnings per ordinary share
6 months 6 months 12 months
ended 30 ended 30 ended 31
June 2014 June 2013 December
2013
Unaudited Unaudited Audited
$000 $000 $000
Earnings
Earnings for the purposes of
basic and diluted EPS being
net profit attributable to equity
shareholders 1,884 1,413 4,750
Number of shares
Weighted average number of ordinary
shares for the purpose of basic
EPS 64,634,782 57,616,526 61,154,496
Effect of dilutive potential
ordinary shares:
* Share options 1,895,200 418,829 1,163,082
Weighted number of ordinary
shares for the purpose of diluted
EPS 66,529,982 58,035,355 62,317,578
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of shares outstanding during the period.
5. Related party transactions
There were no related party transactions other than transactions
with Key Management Personnel, who are the directors. In addition
the group has implemented a share based incentive scheme for the
benefit of employees.
6. Subsequent events
There are no significant events which have taken place after 30
June 2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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