TIDMQXT
RNS Number : 5237I
Quixant PLC
22 March 2018
22 March 2018
Quixant plc
("Quixant" or the "Company")
Final Results
Quixant (AIM: QXT), a leading provider of specialised computing
platforms and monitors for gaming and slot machine applications, is
pleased to announce its Final Results for the year ended 31
December 2017.
Financial Highlights:
-- Strong revenue growth of 21% to $109.2 million (2016: $90.4 million)
o Quixant Gaming Division revenue $71.1m (2016 $53.0m)
o Densitron division revenue of $38.1m (2016 $37.4m)
-- Adjusted pre-tax profit(1) up 28% to $17.7m (2016: $13.8m)
-- Pre-tax profit up 29% to $15.0m (2016: $11.7m)
-- Adjusted fully diluted EPS(2) of $0.229/share (2016: 0.166/share)
-- Fully diluted EPS of $0.197/share (2016: $0.139/share)
-- Net cash from operating activities of $8.1m (2016: $10.1m)
-- Net cash at period end of $4.5m (2016: $(0.1)m
-- Proposed full year dividend of 2.6p per share (2016: 2.0p)
1. Adjusted by adding back items included in the adjusted PBT
reconciliation in note 5 totalling $2.7m (2016: $2.2m)
2. Adjusted by adding back the items included in note 1 above
and subtracting the associated tax effect as set out in note 3. In
2017 these amounted to $2.1m (2016: $1.7m)
Operational Highlights:
-- 52,000 gaming platforms shipped during the year, up from 41,000 in 2016
-- Strong performance from Quixant's established customer base,
contribution to revenue from new customers and cultivation of new
long-term opportunities
-- Three patents applied for during the year and four granted
-- Quixant Gaming Ecosystem(R) recognised by customers as a key
differentiator and a key marketing message
-- Densitron division performed in line with management expectations
Post year end:
-- In March 2018, announced a strengthened Board with Executive
promotions and a new CFO joining in October 2018
-- Shipments to new major Japanese customer commenced in early 2018
-- First volume shipments commenced to Novomatic for a new product
Jon Jayal, Chief Executive Officer of Quixant, commented:
"I am delighted to be commenting on another very good year for
Quixant with strong revenue and profit growth. Our core gaming
platforms business continues to grow market share and this has been
supplemented by shipping over 31,000 gaming monitors last year.
Densitron performed in line with our expectations and we have
identified the broadcast industry as a market to target with
innovative new products and are exhibiting bespoke products
targeted at this market at several events in 2018.
We have started 2018 with robust trading performance and are
well positioned to deliver full year growth ahead of our previous
expectations. The new prospects we are working on give us with
confidence in our longer-term growth prospects."
For further information please contact:
Quixant plc Tel: +44 (0) 1223 892696
Jon Jayal (Chief Executive Officer)
Cresten Preddy (Chief Financial Officer)
Nominated Adviser and Broker:
finnCap Ltd Tel: +44 (0) 20 7220 0500
Matt Goode / Henrik Persson / Simon Hicks (Corporate Finance)
Simon Johnson / Alice Lane (Corporate Broking)
Financial PR: Tel: +44 (0) 7909 009173
Alma PR
John Coles
Susie Hudson
About Quixant
Quixant, founded in 2005, designs and manufactures highly
optimised computing solutions and monitors principally for the
global gaming industry. The Company is headquartered in Cambridge
in the UK where the global sales function is based. North America
sales and sales support is run from their subsidiary in Las Vegas.
Quixant has its own manufacturing and engineering operation based
in Taiwan and software engineering and customer support team based
in Italy. All the specialised products software and manufacturing
are produced in-house and Quixant owns all its own IP some of which
is protected by patents and design rights.
In November 2015 Quixant acquired Densitron Technologies plc.
Densitron has a strong heritage in the sale of electronic display
solutions to global industrial markets. Through Densitron's
experienced sales team, Quixant has a robust platform to build its
business into wider industrial markets. In-depth information on the
Company's products, markets, activities and history can be found on
the corporate website at www.quixant.com.
The information contained in this announcement is inside
information for the purposes of article 7 of Regulation
596/2014.
Chairman's Statement
I am delighted to report another very successful year for the
Group with excellent growth in both revenue and profits, whilst
continuing to strengthen our organisation to support continued
progress.
The organisation has evolved smoothly through several phases in
the last five years. We have moved from a small, entrepreneurial,
private company, to now being listed on the AIM public market. We
continue to branch out into new product areas in gaming and,
through the acquisition of Densitron, added a portfolio of products
targeted at non-gaming markets. Throughout these phases, the Group
has remained flexible and focused enabling it to thrive with the
new challenges each has presented to us. We are justifiably proud
of our outstanding record over these five years. Our revenues have
grown from $24.2m in 2013 to $109.2m in 2017 and adjusted profit
before tax from $6m to $17.7m.
We continue our planning to meet the future demands of the Group
and execution of our corporate strategy. It is therefore right that
we continue to evolve the management in the organisation.
On 1 March 2018, we announced some major changes to our Board.
Our current Chief Executive and founder Nick Jarmany was appointed
Executive Vice-Chairman while retaining executive responsibilities
for technology leadership and product innovation. This has always
been a particular strength and passion for Nick and his new
position enables him to focus on it.
I would personally like to both thank and congratulate Nick for
his vision and ambition in developing the Group since he co-founded
it in 2005 and building it up to the first-rate business it is
today. It is a huge asset for us to be able to be able to continue
to utilise his experience and skill set as he concentrates his
efforts on technology leadership and product innovation.
Nick had delegated many of his responsibilities to Jon Jayal,
Chief Operating Officer, in March 2017 while he undertook medical
treatment. It was therefore with confidence that Jon was promoted
to take over as Chief Executive Officer from 1 March 2018. Jon has
a long background with Quixant, commencing at inception of the
Group when, as an electronic engineer, he was a key member of the
design team for the first product. This grass roots appreciation
for Quixant's culture, combined with expertise working in the City
for several large blue chip financial institutions and a detailed
understanding of the technology underpinning our products makes him
ideally qualified to lead the Group and continue our outstanding
track record of growth.
In addition, current CFO Cresten Preddy informed the Board last
year of her desire to step back from full time employment. After an
exhaustive process we are delighted that Guy Millward has agreed to
join us as CFO with effect from 1 October 2018. Guy has vast
experience working in senior management positions of public
technology companies. Cresten will continue working for the Group,
both to ensure a smooth handover but also to operate certain
specific initiatives which are currently underway, including the
Global SAP system implementation project.
Gaye Hudson also joined the Board as a Non-Executive Director in
March 2017. Gaye's 19 years of at Oracle Corporation introduced a
strong skillset in HR and Communications to the Board.
The changes that have been made to the Board and a number of
other senior appointments positions us well to retain the
entrepreneurial style and company culture which has made the Group
so successful, while introducing new management skills and
resources to take the Group forward. I firmly believe that we have
the quality of people and systems to continue to thrive.
A dividend of 2.0p per share was paid in May 2017 representing a
growth of 33% on the prior period. The Board is pleased to propose
a 2018 full year dividend of 2.6p per share, representing an
increase of 30% over the previous year. This remains consistent
with our progressive dividend policy and demonstrates the continued
strength of the Company's balance sheet and financial
performance.
Michael Peagram,
Chairman
Chief Executive Officer's Report
It is my privilege to be writing my first report to you as Chief
Executive Officer of Quixant. I am very pleased that the Group has
continued to deliver outstanding financial and operational
performance during the year. Group revenue increased 21% to a
record $109.2m and adjusted profit before tax increased 28% to
$17.7m (statutory profit before tax also increased 29% to
$15.0m).
Gaming Division
Our core business continues to be focused around the global
gaming industry. When we launched Quixant in 2005, we focussed on
the design and manufacture of highly optimised computing solutions
for gaming which incorporate purpose-built computer hardware and a
rich software infrastructure. Our unique value-added proposition
rapidly gained traction and we earned a position as a key supplier
to many major electronic gaming machine manufacturers.
In 2015 we began developing gaming monitors which, whilst
operating on a structurally lower margin, present an excellent
opportunity to expand our revenue share in each machine. We have
also continued to evolve our monitor product portfolio to embed
Quixant's ethos of innovation. The table below shows the sales of
our gaming product lines for the last two years during which
margins have been maintained. In the last two years, the Gaming
Division has grown by 94%.
2016 2017
$m $m
Gaming platforms 43.7 54.8
Gaming monitors 9.3 16.3
----- -----
Total 53.0 71.1
----- -----
Since it was launched in 2015 our gaming monitor business has
grown rapidly and is now an integral part of the Group. While we
expect to see the rate of growth normalise in 2018, we continue to
see considerable opportunities for growth in this part of the
business.
Gaming Ecosystem(R)
The foundation of Quixant's value proposition in gaming is our
Gaming Ecosystem(R), which has been developed over the last 12
years. There are multiple facets to the Gaming Ecosystem(R) which
extend far beyond the physical computer hardware, including:
-- a comprehensive layer of software which sits alongside and underpins
our customers' games enabling connectivity with third party
peripheral devices and casino systems outside the machine;
-- gaming features which meet strict global gaming regulatory requirements;
-- support tools which enable customers to improve their game efficiency
and debug issues during development;
-- a technical support model which provides customers direct access
to our engineers;
-- cross-Quixant platform compatibility to enable easy game migration
across different geographic markets and different product price
points.
Once a customer selects Quixant and integrates their game around
our Gaming Ecosystem(R), they unlock all these benefits for
developing their games and machines. Previously, many of the
requirements which the Gaming Ecosystem(R) meets had to be catered
for by customers' in-house R&D teams and often solutions were
developed for specific markets or product categories which both
increased development cost and time-to-market and also reduced
flexibility to enter new markets.
Increasingly, even the largest customers in the gaming industry
recognise and embrace the value of Quixant's Gaming Ecosystem(R)
and as the gaming market becomes ever more competitive and fast
moving they are adapting their games to be compatible with our
products. Those that have adopted it have a more streamlined
development process and are able to respond more quickly to new
market openings and opportunities for growth in markets they had
previously never serviced.
Whilst the core of our Gaming Ecosystem(R) is well-established,
we have developed several exciting tools and features to add to it
over the last two years which we believe significantly strengthen
the value proposition.
QxVDR is a video decoding and rendering software infrastructure
which enables customers to playback videos on Quixant gaming
platforms which combine transparent text and graphic overlays
whilst making highly efficient use of the hardware. Pre-rendered
videos are commonplace in most electronic games and there are often
multiple videos playing at once, so reducing the performance impact
on the system during playback is critical.
We have also created a tool, QxATS, which provides real-time
debugging information to aid game authors during the development
process. They can "see" the flow of data into and out of the
Quixant platform and also within it and isolate issues which arise
during creation of their software which cause it to behave
unexpectedly. QxATS also provides real time monitoring information
with near zero performance impact on the Quixant gaming platform.
QxATS combines software and hardware elements.
Gaming Platforms
We shipped over 52,000 gaming platforms in 2017, up from 41,000
shipped in 2016, making Quixant, we believe, to be the highest
volume manufacturer of computer platforms for gaming. We estimate
our market share is a little over 10% of the estimated 475,000 unit
annual new/replacement machines deployed globally (source: G3
Magazine). Our growth has been driven by continued gains in market
share as manufacturers continue to outsource development of their
computer platforms and focus on their core competencies. Our
estimated market share has grown from 6% in 2013 to a little over
10% in 2017. We are confident that this trend remains buoyant and
that we have the ability to further increase our market share.
Our growth in the gaming platforms business has been seen across
all sizes of customer, but with particularly strong performance
from our mid-size (1,000 - 5,000 pcs per year volume) accounts,
which represented 22% of unit sales in 2017 compared to 10% in
2016.
Alongside strong performance from well-established customers, it
was pleasing to see commencement of volume shipments to
Novomatic.
We have continued to see our high-end products dominating our
sales both in revenue and quantity terms. These products tend to be
more aligned with casino market applications and many of our major
customers have adopted products from the High-End family, including
the QX-40, QX-50 and recently launched QX-60. In 2015 we launched a
new "Ultimate" family of products, the first generation of which
was called QMax-1.The Ultimate family of products represent the
highest performance variants in Quixant's portfolio and promise
graphics performance similar to consumer video games consoles. This
opens a new segment of the machines for Quixant to drive.
We have also continued to be successful in winning business in
casino "systems-type" product. These products sit alongside the
machines which the players enjoy in the venues and provide
infrastructure to facilitate things such as progressive jackpots.
The computer platform requirements are very similar in nature to
those for installation in the electronic gaming machines, but there
are subtle differences which Quixant has experience of catering
for. Whilst a lower volume market, we remain successful in growing
our sales volume in this area. We won a new customer in 2017 for a
jackpot controller which falls into this category.
During 2017 Quixant experienced an issue related to an
externally sourced component which was integrated into many of our
products. This component, a DRAM module, had been used for several
years, but due to a change made by the manufacturer, we were forced
to change to a replacement version which subsequently demonstrated
incompatibilities with the rest of Quixant's computer platform once
installed in gaming machines. We therefore took an immediate,
proactive response to swap the incompatible DRAM modules for an
alternative. Whilst our prompt response mitigated damage to our
brand and reputation, we spent around $1.6m to rectify the problem.
We have since undertaken an extensive review of our validation
procedures and, along with conducting more extensive testing over a
longer period, we have also started developing a more relevant
real-world test suite which more accurately replicates the
behaviour of a real game. We believe this serves to mitigate the
potential of such unidentified component issues affecting future
sales. Product quality and reliability has been and will continue
to be a major focus for management.
There continue to be potential new markets for our customers.
However, there are always considerable uncertainties as to when
these new markets may open most recently evidenced by the Brazilian
senate rejecting one of the gaming bills in motion. Whilst we adopt
a cautious stance to the timing and potential value of such market
openings, we believe there continue to be significant
opportunities. Japan is the most recent new market opportunities.
Through Densitron's office in Tokyo, Quixant has been able to
leverage the knowledge and experience of its personnel and
cultivate exciting new opportunities with major manufacturers
headquartered in Japan. We have won business with a major Japanese
manufacturer, to which we have commenced shipments in early
2018.
Gaming Monitors
The growth of our Gaming Monitors business continues to be
exceptional. We shipped over 31,000 gaming monitor products during
the year, up from around 25,000 shipped during 2016. We have
brought on both new customers as well as converted existing gaming
platform customers with monitor products during the year. It is
pleasing to see that customers view our product offering in
monitors is attractive on a standalone basis.
Whilst much of our business in gaming monitors to date has been
supplying a product which is very similar to others in the industry
we have generated several ideas during the year for higher value
products which offer tangible benefits to customers and
differentiate them from the competition. We are working hard on
developing these ideas in 2018 and bringing new monitor innovations
to the market during the year.
We have enjoyed phenomenal growth in the Gaming Monitors
business and as the business matures we expect the rate of growth
will normalise. There remain considerable opportunities and while
margins are lower than platforms the design-in period and research
and development spend is lower.
Densitron Division
During 2017 we progressed our business strategy to target
specific vertical markets. The broadcast industry has been
identified as the first of these markets and during the year we
exhibited at two major Broadcast trade shows: BVE in February at
the ExCel exhibition centre in London and IBC at RAI conference
centre in Amsterdam. These shows not only enabled us to meet and
explore our product ideas with several new and existing customers,
but crucially they also provided a clear insight into the broadcast
industry trends and where the Densitron Division can support
them.
Our initiatives in the Broadcast sector have been well received
and we remain confident in the opportunities in this sector. The
success of this realignment of the business to a specific vertical
has encouraged us to seek to develop dedicated product groupings
for other markets which will begin to be rolled out during
2018.
Densitron performed in line with management expectations during
the year. We have invested significantly in the development of the
Densitron Division principally to enable the business to be more
market focussed and to differentiate it from its competitors.
Our dedicated embedded board design and development facility
located in Slovenia is critical to the creation of more value rich
embedded solutions. In concert with our operations in Taiwan they
are launching a single board computer and a range of adaptor boards
in the first quarter of 2018 that, when bundled with our range of
displays enables Densitron to offer higher added value products to
the market. This is being reinforced by a strengthened approach to
marketing. Further hardware and software solutions are in
development.
We see a continued need to invest in the Densitron division in
2018 to realign the business to deliver long term revenue growth
and enhance profitability over the longer term.
Product Innovation and development
Innovation is key to the success of Quixant and our library of
intellectual property is, I believe, second to none in our market.
An indication of our continuing innovation is the number of patents
we apply for and the number granted each year. At the end of 2016,
we had seven patents under application and had been granted a
further three. At the end of 2017, we had seven patents under
application and had been granted a total of seven patents. During
the year three new filings were made.
Quixant has been working on QMax-2, an exciting new product
which builds on the design of QMax-1 in the Ultimate range of
gaming platforms. With a considerably enhanced cooling solution,
QMax-2 is designed to cater for the next generation of
microprocessors and GPUs to power the highest performance gaming
machines in the market. One of the patents granted during 2017
related to the thermal solution designed for QMax-2.
During the year, Quixant had been evaluating AMD's new Ryzen(TM)
Embedded processors which were launched in February 2018 publicly
at a press event in which we participated as a launch partner. On
the day of AMD's launch, Quixant had three new products based on
the Ryzen(TM) Embedded V1000 processor: Quixant X, QMax-2 and the
QXi-7000. The products leverage all the benefits of the Quixant
Gaming Ecosystem(R) and give gaming customers the quickest route to
embrace AMD's highly anticipated, cutting-edge new processor
technology. This is a key launch for Quixant and demonstrates not
only our innovation skills but also our strong partnership with
AMD.
Personnel and infrastructure
Alongside the changes to the Board, our programme of continuous
enhancement and investment in the organisation has been evident
during the year.
We continued to attract high-quality talent to Quixant which we
believe will bolster our expertise and enhance our sales and
product development efforts going forward. In November 2017, we
recruited Eric Walla to our Las Vegas office as Vice President of
Business Development. Eric has a respected career in the gaming
industry spanning over 17 years and has worked with several key
technology suppliers. We also recruited Martin Salter in early 2018
as Business Development Manager located in the UK. Martin has
extensive experience in the monitors business most recently in his
role in Zytronic Displays.
On the product side we have been fortunate to recruit Chris
Caress as a leader in our gaming monitor development team in
Taiwan. Chris' previous role was in Scientific Games where he was
heavily involved in their technology development, most recently in
monitor products. Chris brings to Quixant a wealth of real customer
technical expertise and we are excited at leveraging his knowledge
to enhance our product offerings.
During 2018 we will continue to invest in the business to ensure
that it is positioned to enable future growth. We shall be
introducing a common enterprise resource planning system, which has
been developed during 2017, enabling the Group to have a harmonised
accounting, reporting and procurement platform that may be scaled
as the business continues to grow in the future.
Outlook
2017 was another very successful year for the Group, with record
profits being delivered alongside structural investment in the
business. Whilst Densitron remains a business in a state of change,
with short term investment we continue to be optimistic that long
term revenue growth and margin expansion is achievable. In the
gaming business, the outsourcing trend for manufacturers remains
buoyant and we have several exciting opportunities which position
us well for continued excellent growth.
The 2018 financial year has started well, giving us confidence
that the year will continue to be one of strong growth and now we
anticipate delivering growth ahead of our previous
expectations.
Jon Jayal,
Chief Executive Officer
Financial review
Revenue
The Quixant Group achieved revenues of $109.2 million in the
year, an increase of 21% on 2016 ($90.4 million). Gaming division
revenues were $71.1 million, an increase of 34% on 2016 ($53.0
million). This was split between Gaming platform revenue of $58.8
million a 35% increase on 2016 (2016: $43.7 million) and Gaming
monitor revenue of $12.3 million a 32% increase on 2016 (2016: $9.3
million). Densitron division revenues were $38.1 million, an
increase of 2% on 2016 ($37.4 million).
The growth in the Gaming division has largely been driven by the
continuing development of existing customer relationships and the
broadening of the customer base. In 2017 the Gaming division
increased its number of customers to 218 compared with 180 in
2016.
Gross profit and gross profit margin
Our gross profit for the year was $37.0 million representing a
gross margin of 34%. This compares with a gross profit achieved in
2016 of $32.1 million and a gross margin of 36%. The underlying
gross margin for each part of the business has been maintained in
the year with the reduction being caused by the cost incurred
resolving the DRAM issue and the lower functional margin achieved
on the growth in Gaming monitors.
Earnings, before interest tax, depreciation and amortisation
(EBITDA) and profit before tax (PBT)
Adjusted EBITDA increased 26% to $19.7 million (2016: $15.6
million) and adjusted PBT increased 28% to $17.7 million (2016:
$13.8 million). EBITDA increased 21% to $17.8 million (2016: $14.7
million) and PBT increased by 29% to $15.0 million (2016: $11.7
million). Adjustments to EBITDA are to add back the items set out
in note 1 to the financial statements. In 2017 these totalled $1.8
million (2016: $0.9 million). Adjustments to profit before tax
amounted to $2.7 million in 2017 (2016: $2.1 million).
As outlined in the Chief Executive's Report the Group
experienced a significant issue relating to a DRAM module. The
resulting cost to the Group in the year has been $1.6 million. The
situation has been carefully managed in the year ensuring that
there will be no additional future costs.
The share based payment charge has been added back since it is
not a cash expense to the Company. It is a benefit to our employees
which we are required to expense through the income statement in
accordance with IFRS2.
Expenses
In order to maintain our market leading position, it is
imperative that the business continues to invest in developing new
products. During the year the Group expenditure on research and
development increased by 51% to $5.3 million (2016: $3.5 million)
representing 14% of gross profit (2016: 11%). These costs relate to
investment activities principally undertaken in Taiwan, Italy and
Slovenia. $1.6 million of these costs were capitalised (2016: $0.7
million) with amortisation for the year on total capitalised
development costs of $1.0 million (2016: $0.9 million).
The management of overheads while ensuring that sufficient
investment continues to be made to support the business is key. We
have continued to strengthen the business across all areas in the
year, including increasing our headcount to 176 people (2016: 160
people). Staff costs, being the largest contributor to overheads,
increased by 13% in the year to $12.8 million (2016: $11.3
million).
Taxation
The tax charge for the year decreased to $1.9 million (2016:
$2.4 million) representing a corporation tax charge of 12.6% on
pre-tax profits (2016: 20.3%). The Group continues to benefit from
enhanced tax reliefs available in respect of qualifying research
and development expenditure and has also benefited from patent box
relief and tax relief on the exercise of employee share
options.
Earnings per share
Basic earnings per share increased by 40% to $0.1999 per share
(2016: $0.1430 per share). Fully diluted earnings per share
increased 41% to $0.1972 per share (2016: $0.1395 per share).
Adjusted fully diluted earnings per share as set out in note 10 to
the financial statements increased by 38% to $0.229 per share
(2016: $0.166 per share).
Balance Sheet
The Group continues to maintain a strong Balance Sheet with net
assets totalling $47.3 million (2016: $34.3 million).
Non-current assets have increased in the year to $21.3 million
(2016: $20.9 million). The overall increase in the year is not
significant but included within the total non-current asset balance
is an additional investment in intangibles of $1.9 million and an
amortisation of existing intangibles of $1.9 million (including
amortisation of intangible assets relating to customer
relationships and order backlog following the acquisition of
Densitron of $0.8 million).
Current assets principally comprise inventory, trade receivables
and cash. Inventory has increased to $21.2 million (2016: $12.9
million). While the level of inventory includes significant levels
of last time buy items and items on long lead times, a buffer stock
of key product lines and sufficient levels to ensure that near term
production is met we still consider that it is too high.
Consequently, tighter policies surrounding inventory purchasing
have been introduced. Trade and other receivables have reduced in
the year reflecting the reduction in the time taken to collect cash
from customers.
Current liabilities are principally made up of trade and other
payables. In the year trade payables reduced to $12.3 million
(2016: $13.0 million). During the year the Group has taken
advantage of the opportunity to secure better pricing from certain
suppliers by settling invoices earlier. This has resulted in a
reduction in the level of trade creditors despite the increase in
the level of business in the year.
Cash Flow
The cash generated from operating activities in the year
amounted to $8.1 million (2016: $10.1 million). The reduction in
cash generated is largely due to the movements in working capital
in the year which have been explained above.
The Group has continued to invest in the business, spending $2.3
million (2016: $1.4 million) on investing activities including $1.6
million (2016: $0.7 million on capitalised product development.
In the year $2.2 million has been used to repay borrowings
(2016: $2.8 million). We continue to review banking arrangement and
treasury arrangements around the Group to ensure that the level and
cost of financing arrangements are appropriate to the Group.
Dividend
The Board intends to maintain its progressive dividend policy
while continuing to invest in the business. As such, the Board
proposes a dividend in respect of the year of 2.6p per share, an
increase of 30% on the previous year (2016: 2.00p per share)
payable on 18 May 2018 to all shareholders on the register on 12
May 2018. The corresponding ex-dividend date is 11 May 2018.
Cresten Preddy,
Group Finance Director
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEARSED 31 DECEMBER 2017 AND 2016
2017 2016
Total Total
$000 $000
Revenue 109,238 90,365
Cost of sales (72,269) (58,267)
_________ _________
Gross profit 36,969 32,098
Administrative expenses (7,785) (6,853)
Other operating expenses (13,837) (13,211)
_________ _________
Operating profit 15,347 12,034
Financial expenses (302) (371)
_________ _________
Profit before tax 15,045 11,663
Taxation (1,899) (2,370)
_________ _________
Profit for the year 13,146 9,293
_________ _________
Other comprehensive income
for the year, net of income
tax
Foreign currency translation
differences 869 (47)
_________ _________
Total comprehensive income
for the year attributable to
the owners of the parent 14,015 9,246
Minority interests (6) 1
_________ _________
Total comprehensive income
for the year 14,009 9,247
_________ _________
Basic earnings per share $0.1999 $0.1430
_________ _________
Fully diluted earnings per
share $0.1972 $0.1395
_________ _________
BALANCE SHEETS
AS AT 31 DECEMBER 2017
Group Company
2017 2016 2017 2016
$000 $000 $000 $000
Non-current assets
Property, plant
and equipment 6,153 5,977 3,699 3,570
Intangible assets 14,278 14,045 2,059 2,383
Investment property 674 617 - -
Investments in group
companies and associated
undertakings - - 11,982 11,948
Deferred tax assets 195 257 91 100
_________ _________ _________ _________
21,300 20,896 17,831 18,001
_________ _________ _________ _________
Current assets
Inventories 21,246 12,900 13,924 7,455
Trade and other
receivables 20,095 21,003 10,398 12,034
Cash and cash equivalents 11,194 8,853 2,205 1,375
_________ _________ _________ _________
52,535 42,756 26,527 20,864
_________ _________ _________ _________
Total assets 73,835 63,652 44,358 38,865
_________ _________ _________ _________
Current liabilities
Other interest-bearing
loans and borrowings (5,811) (2,774) (5,479) (911)
Trade and other
payables (16,854) (17,199) (15,238) (13,190)
Provisions (750) - -- -
Tax payable (931) (1,033) (1,114) (794)
_________ _________ _________ _________
(24,346) (21,006) (21,831) (14,895)
_________ _________ _________ _________
Non-current liabilities
Other interest-bearing
loans and borrowings (924) (6,148) (924) (6,251)
Provisions - (750) - -
Deferred tax liabilities (1,305) (1,442) (399) (450)
_________ _________ _________ _________
(2,229) (8,340) (1,323) (6,701)
_________ _________ _________ _________
Total liabilities (26,575) (29,346) (23,154) (21,596)
_________ _________ _________ _________
Net assets 47,260 34,306 21,204 17,269
_________ _________ _________ _________
Equity attributable
to equity holders
of the parent
Share capital 106 105 106 105
Share premium 6,102 5,676 6,102 5,676
Share based payments
reserve 991 782 991 782
Retained earnings 39,647 28,192 13,752 10,893
Translation reserve 414 (455) 253 (187)
_________ _________ _________ _________
47,260 34,300 21,204 17,269
Non-controlling
interest - 6 - -
_________ _________ _________ _________
Total equity 47,260 34,306 21,204 17,269
_________ _________ _________ _________
STATEMENT OF CHANGES IN EQUITY
GROUP
Share
Share Share Translation Based Retained Total Non-controlling Total
Capital Premium Reserve Payments Earnings Equity Interest Equity
$000 $000 $000 $000 $000 $000 $000 $000
Balance at
1 January
2016 104 5,181 (408) 470 20,299 25,646 5 25,651
Total comprehensive
income for
the period
Profit - - - - 9,293 9,293 1 9,294
Other comprehensive
loss - - (47) - - (47) - (47)
________ _________ _________ _________ _________ _________ _________ _________
Total comprehensive
income for
the period - - (47) - 9,293 9,246 1 9,247
________ _________ _________ _________ _________ _________ _________ _________
Transactions
with owners,
recorded directly
in equity
Share based
payments - - - 312 - 312 - 312
Dividend paid - - - - (1,400) (1,400) - (1,400)
Exercise of
share options 1 495 - - - 496 - 496
________ _________ _________ _________ _________ _________ _________ _________
Total contributions
by and distributions
to owners 1 495 - 312 (1,400) (592) - (592)
________ _________ _________ _________ _________ _________ _________ _________
Balance at
31 December
2016 105 5,676 (455) 782 28,192 34,300 6 34,306
________ _________ _________ _________ _________ _________ _________ _________
Share
Share Share Translation Based Retained Total Non-controlling Total
Capital Premium Reserve Payments Earnings Equity Interest Equity
$000 $000 $000 $000 $000 $000 $000 $000
Balance at
1 January
2017 105 5,676 (455) 782 28,192 34,300 6 34,306
Total
comprehensive
income for
the period
Profit - - - 13,146 13,146 - 13,146
Other
comprehensive
profit - - 869 - - 869 (6) 863
_________ ________ _________ _________ _________ _________ _________ _________
Total
comprehensive
income for
the period - - 869 - 13,146 14,015 (6) 14,009
_________ _________ _________ _________ _________ _________ _________ _________
Transactions
with owners,
recorded
directly
in equity
Share based
payments - - - 209 - 209 - 209
Dividend paid - - - - (1,691) (1,691) - (1,691)
Exercise of
options 1 426 - - - 427 - 427
_________ ________ _________ _________ _________ _________ _________ _________
Total
contributions
by and
distributions
to owners 1 426 - 209 (1,691) (1,055) - (1,055)
_________ ________ _________ _________ _________ _________ _________ _________
Balance at
31 December
2017 106 6,102 414 991 39,647 47,260 - 47,260
_________ ________ _________ _________ _________ _______ _________ _________
COMPANY
Share Total
Share Share Translation based Retained Parent
Capital Premium Reserve Payments Earnings Equity
$000 $000 $000 $000 $000 $000
Balance at 1 January
2016 104 5,181 (320) 470 9,613 15,048
Total comprehensive
income for the period
Profit - - - - 2,680 2,680
Other comprehensive
loss - - 133 - - 133
_________ _________ _________ _________ _________ _________
Total comprehensive
income for the period - - 133 - 2,680 2,813
_________ _________ _________ _________ _________ _________
Transactions with owners,
recorded directly in
equity
Share based payments - - - 312 - 312
Dividend paid - - - - (1,400) (1,400)
Exercise of share options 1 495 - - - 496
_________ _________ _________ _________ _________ _________
Total contributions
by and distributions
to owners 1 495 - 312 (1,400) (592)
_________ _________ _________ _________ _________ _________
Balance at 31 December
2016 105 5,676 (187) 782 10,893 17,269
_________ _________ _________ _________ _________ _________
Share Total
Share Share Translation based Retained Parent
Capital Premium Reserve Payments Earnings Equity
$000 $000 $000 $000 $000 $000
Balance at 1 January
2017 105 5,676 (187) 782 10,893 17,269
Total comprehensive
income for the period
Profit - - - - 4,550 4,550
Other comprehensive
profit - - 440 - - 440
_________ _________ _________ _________ _________ _________
Total comprehensive
income for the period - - 440 - 4,550 4,990
_________ _________ _________ _________ _________ _________
Transactions with owners,
recorded directly in
equity
Share based payments - - - 209 - 209
Dividend paid - - - - (1,691) (1,691)
Exercise of share options 1 426 - - - 427
_________ _________ _________ _________ _________ _________
Total contributions
by and distributions
to owners 1 426 - 209 (1,691) (1,055)
_________ _________ _________ _________ _________ _________
Balance at 31 December
2017 106 6,102 253 991 13,752 21,204
_________ _________ _________ _________ _________ _________
CASH FLOW STATEMENTS
FOR THE YEARSED 31 DECEMBER 2017 and 2016
Group Company
2017 2016 2017 2016
$000 $000 $000 $000
Cash flows from operating
activities
Profit for the year 13,146 9,293 4,550 2,680
Adjustments for:
Depreciation, amortisation
and impairment 2,422 2,694 1,064 1,107
Taxation expense 1,899 2,370 781 454
Financial expense 302 371 270 276
Equity settled share
based payment expenses 209 312 175 239
_________ _________ _________ _________
17,978 15,040 6,840 4,756
Decrease/(increase)
in trade and other
receivables 908 (1,292) 1,636 (2,032)
(Increase) in inventories (8,346) (3,436) (6,469) (1,960)
(Decrease)/increase
in trade and other
payables (100) 1,644 2,326 2,373
_________ _________ _________ _________
10,440 11,956 4,333 3,137
Interest paid (302) (371) (270) (276)
Tax (paid)/received (2,076) (1,489) (503) 414
_________ _________ _________ _________
Net cash from operating
activities 8,062 10,096 3,560 3,275
_________ _________ _________ _________
Cash flows from investing
activities
Acquisition of subsidiary,
net of cash acquired - 58 - -
Acquisition of property,
plant and equipment (409) (425) (252) (185)
Acquisition of intangible
assets (1,861) (1,017) (455) (321)
_________ _________ _________ _________
Net cash from investing
activities (2,270) (1,384) (707) (506)
_________ _________ _________ _________
Cash flows from financing
activities
Repayment of borrowings (2,187) (2,816) (759) (1,891)
Dividends paid (1,691) (1,400) (1,691) (1,400)
Proceeds from issue
of shares 427 496 427 496
_________ _________ _________ _________
Net cash from financing
activities (3,451) (3,720) (2,023) (2,795)
_________ _________ _________ _________
Net (decrease)/increase
in cash and cash equivalents 2,341 4,992 830 (26)
Cash and cash equivalents
at 1 January 8,853 3,861 1,375 1,401
_________ _________ _________ _________
Cash and cash equivalents
at 31 December 11,194 8,853 2,205 1,375
_________ _________ _________ _________
NOTES
(forming part of the financial statements)
1. General information
Whilst the information included in this preliminary announcement
has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
("IFRSs") as adopted by the European Union and as issued by the
International Accounting Standards Board, this announcement does
not itself contain sufficient information to comply with IFRSs. The
accounting policies adopted in this preliminary announcement are
consistent with the Annual Report for the year ended 31 December
2017.
The financial information set out in this document, which was
approved by the Board on 21 March 2018, is derived from the full
Group accounts for the year ended 31 December 2017 and does not
constitute the statutory accounts within the meaning of section 434
of the Companies Act 2006. The Group accounts on which the auditors
have given an unqualified report, which does not contain a
statement under section 498(2) or (3) of the Companies Act 2006 in
respect of the accounts for 2017, will be delivered to the
Registrar of Companies in due course.
The Board of Quixant plc approved the release of this
preliminary announcement on 21 March 2018.
The Annual Report for the year ended 31 December 2017 will be
posted to shareholders in due course and will be delivered to the
Registrar of Companies following the Annual General Meeting of the
Company.
Further copies will be available on request and free of charge
from the Company Secretary.
2. Analysis of turnover
2017 2016
$000 $000
By geographical market
Asia 15,126 12,719
Australia 12,447 11,400
Europe 28,987 27,536
North America 51,356 37,581
Other 1,322 1,129
_________ _________
109,238 90,365
_________ _________
The above analysis includes sales to individual countries in
excess of 10% of total turnover of:
2017 2016
$000 $000
Australia 12,447 11,400
USA 51,292 36,453
3. Earnings per ordinary share (EPS)
2017 2016
$000 $000
Earnings
Earnings for the purposes of basic
and diluted EPS being
net profit attributable to equity
shareholders 13,146 9,293
_________ _________
Number of shares
Number Number
Weighted average number of ordinary
shares
for the purpose of basic EPS 65,756,667 65,004,414
Effect of dilutive potential ordinary
shares:
Share options 909,513 1,614,766
_________ _________
Weighted number of ordinary shares
for the purpose of diluted EPS 66,666,180 66,619,180
_________ _________
Basic earnings per share $0.1999 $0.1430
_________ _________
Fully diluted earnings per share $0.1972 $0.1395
_________ _________
Calculation of adjusted fully diluted
earnings per share:
$000 $000
Earnings
Earnings for the purposes of basic
and diluted EPS being
net profit attributable to equity
shareholders 13,146 9,293
Adjustments:
Costs arising on the replacement
of faulty DRAM component 1,633 -
Share based payment expense 209 312
Amortisation of customer relationships
and order backlog 822 1,228
Termination payment and discontinued
products - 987
Settlement of claim - (377)
_________ _________
15,810 11,443
Tax effect of adjustments (516) (405)
_________ _________
Adjusted earnings 15,294 11,038
_________ _________
Adjusted fully diluted earnings
per share $0.2294 $0.1657
4. Capital and reserves
Share capital
Fully paid ordinary shares of 0.1p per share
Ordinary Share Share
shares Capital premium
Number $000 $000
Balance at 1 January 2017 65,364,782 105 5,676
Issued for cash - - -
Exercise of share options
(see note 21) 670,200 1 426
_________ _________ _________
Balance at 31 December 2017 66,034,982 106 6,102
_________ _________ _________
Balance at 1 January 2016 64,634,782 104 5,181
Issued for cash - - -
Exercise of share options
(see note 21) 730,000 1 495
_________ _________ _________
Balance at 31 December 2016 65,364,782 105 5,676
_________ _________ _________
The holders of fully paid ordinary shares are entitled to
receive dividends as declared from time to time and are entitled to
one vote per share at meetings of the Company.
670,200 ordinary shares were issued following the exercise of
vested options arising from issue 1 in 2013 (2016: 730,000) (see
note 21). Options were exercised at an average price of GBP0.49 per
share.
Translation reserve
The translation reserve comprises all foreign exchange
differences arising from the translation of the financial
statements of foreign operations.
Dividends
The following dividends were recognised during the period:
2017 2016
$000 $000
2.0p (2016: 1.5p) per qualifying
ordinary share 1,691 1,400
_________ _________
Total dividends recognised in the
year 1,691 1,400
_________ _________
After the Balance Sheet date dividends of 2.6p per qualifying
ordinary share (2016: 2.0p) were proposed by the Directors. This
dividend has not been provided for.
5. EBITDA and PBT reconciliation
EBITDA, adjusted EBITDA, PBT and adjusted PBT for the current
and prior year have been derived as follows:
EBITDA PBT
2017 2016 2017 2016
$000 $000 $000 $000
Profit for the year 13,146 9,293 13,146 9,293
Adding back:
Taxation expense 1,899 2,370 1,899 2,370
Financial expenses 302 371 -
Depreciation 512 465 -
Amortisation of intangible
assets 1,088 1,001 -
Amortisation of customer
relationships and order
backlog 822 1,228 -
_________ _________ _________ _________
EBITDA/PBT 17,769 14,728 15,045 11,663
Adjustments
Amortisation of customer
relationships and order
backlog(1) - - 822 1,228
Share based payments
expense(2) 209 312 209 312
Costs arising on the
replacement of faulty
DRAM component (note
5)(3) 1,633 - 1,633 -
Settlement of claim (note
5)(3) - (377) - (377)
Termination payment and
discontinued products
(note 5)(3) - 987 - 987
_________ _________ _________ _________
Adjusted EBITDA/PBT 19,611 15,650 17,709 13,813
_________ _________ _________ _________
1. The amortisation of customer relationships and order backlog
has been excluded as it is not a cash expense to the Group.
2. Share based payments expense has been excluded as they are not a cash based expense.
3. Other items of income and expense - where other items of
income and expense occur in a particular year and their inclusion
in PBT and EBITDA means that a year on year comparison of
operational results is not on a consistent basis the directors will
exclude them from the adjusted numbers. During the years under
review the directors have excluded the costs arising from the
replacement of faulty DRAM component due to its exceptional size
and incomparability with the previous year. The adjustments to 2016
relate to non-operational events, specifically the costs in
discontinuing a product line and associated termination
payments.
6. AGM / Annual Report
Pursuant to AIM Rule 20, the Annual Report and Accounts for the
financial year ended 31 December 2017 ("Annual Report") is
available to view on the Group's website: www.quixant.com and will
be posted to shareholders shortly. Quixant will hold its AGM on 24
April 2018.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLFSTVVILFIT
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