TIDMQXT
RNS Number : 1873B
Quixant PLC
19 September 2018
19 September 2018
Quixant plc
("Quixant" or the "Group")
Interim Results
Quixant (AIM: QXT), a leading provider of specialised computing
platforms and monitors for gaming and slot machine applications, is
pleased to announce its Interim Results for the six months ended 30
June 2018.
Group revenue and profit for H1 2018 is in line with management
expectations and is on track to meet market consensus expectations
for strong full year revenue and profit growth. Quixant's revenue
has historically been second half-weighted, and management expect
this trend to be reflected in full year 2018 results.
Financial highlights:
-- Group revenue $50.3m (1H 2017: $56.9m)
o Quixant Gaming division revenue $31.4m (1H 2017: $37.8m)
- Gaming platforms revenue $29.0m (1H 2017: $30.2m)
- Gaming monitors revenue $2.4m (1H 2017: $7.6m)
o Densitron division revenue $18.9m (1H 2017: $19.1m)
-- Group pre-tax profit $6.1m (1H 2017: $8.7m)
-- Group adjusted pre-tax profit(1) $7.1m (1H 2017: $9.2m)
-- Fully diluted EPS of $0.0750/share (1H 2017: $0.1105/share)
-- Adjusted fully diluted EPS(2) of $0.0870/share (1H 2017: $0.1169/share)
-- Net cash from operating activities of $1.9m (1H 2017: $4.3m)
-- Net cash at 30 June 2018 of $2.5m (31 December 2017: $4.4m)
1. Adjusted by adding back items included in the adjusted PBT
reconciliation in note 1 totaling $0.976m (H1 2017: $0.513m).
2. Adjusted by adding back the items included in note 1 above
and subtracting the associated tax effect totaling $0.800m (H1
2017: $0.421m).
Operational highlights:
-- Robust growth in shipments of computer platforms in the first
half of 2018 to a previously announced major global
manufacturer
-- A significant project currently in the design phase which
will result in Quixant ultimately supplying the same customer with
all of its jackpot controller requirements.
-- Continued development of business infrastructure, including
key hires and establishment of divisional Boards for Gaming and
Densitron.
-- Three new patents applied for in gaming technology innovations
Jon Jayal, CEO of Quixant, commented:
"I am very pleased with the performance of the Group in the
first six months of the year. The business is performing in line
with management expectations and we are on track to achieve market
expectations for the full year.
"The first six months of 2017 were unusually strong and reversed
the second half weighting we have traditionally experienced. As
previously indicated, this year we expect a return to a second half
weighting. A robust Group performance in July and August, alongside
our record sales pipeline, supports our expectation of second half
sales in line with market expectations.
"Looking forward, over recent months we have seen positive
regulatory developments in a number of key gaming markets,
particularly Japan. We believe these will result in significant
market growth over the medium term that Quixant is well placed to
exploit.
"The market across all our customers in gaming remains buoyant,
and with a strengthened senior management team, the technical
expertise of our staff, and a strong balance sheet, Quixant is in
an excellent position to continue to develop new
opportunities."
For further information please contact:
Quixant plc Tel: +44 (0)1223 892
696
Jon Jayal, Chief Executive Officer
Nominated Adviser and Broker:
finnCap Ltd Tel: +44(0)20 7220
0500
Matt Goode / Simon Hicks (Corporate
Finance)
Alice Lane (ECM)
Financial PR: Tel: +44(0)20 8004
4217
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 communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
CHAIRMAN'S STATEMENT
Quixant has performed strongly over the period, and we are on
track to continue our record of double-digit year-on-year growth
for the full year in terms of both revenue and profit. Our strong
relationships with our customers are at the heart of our success
and we are pleased that we have maintained these relationships
whilst securing new projects from existing and new customers. With
a number of geographical regions progressing the introduction of
regulated gaming, the market for gaming platforms continues to
grow, and Quixant remains extremely well-placed technically and
commercially to capitalise on this opportunity.
The success of Quixant has been built on a proven ability to
provide innovative, IP-rich solutions which blend software and
hardware to satisfy a technology requirement for gaming customers.
These skills are transferable, and over the period we have taken
steps to develop greater value products in both our gaming monitors
business and in the Densitron division. Over time this will elevate
the value of those product lines and support longer term
sustainable growth.
We are pleased with the performance of our Densitron division,
where we have been reinvesting profits into the development of more
value-rich products which we expect to support increased margin
over time. One of the additional goals of the purchase of Densitron
was to acquire its expertise and contacts in other vertical
markets, to identify and explore further growth opportunities. We
see significant value from this expertise, and believe it continues
to support our long-term growth capability.
As we grow we continue to strengthen the infrastructure of the
business and our capacity to manage effectively a larger, more
complex enterprise. Over the period we taken steps to underpin a
robust divisional structure, including expansion and strengthening
of our senior management team with some key hires. These hires will
be invaluable in enabling effective administration and continuing
growth of the business.
Under changes to the AIM Rules, Quixant is now required to
implement a recognised corporate governance code. The Company is a
member of the Quoted Companies Alliance and consequently we have
chosen to adopt their corporate governance code, which is designed
for small and mid-sized quoted companies. We will have implemented
the code by 28 September 2018.
We have continued to monitor the progress of the Brexit
discussions and their potential impact on the business, its
customers, suppliers and employees. We recognise the continuing
uncertainty surrounding Brexit but consider that the impact on the
Group from Brexit is likely to be largely mitigated by our
structure and operational footprint.
Quixant has delivered a good first half performance and the
Board is confident that we will achieve full year market
expectations and continue to grow into 2019 and beyond.
CHIEF EXECUTIVE'S REPORT
The first half of 2018 saw robust revenue and profit achieved
across the Group with both the Quixant Gaming and the Densitron
divisions performing well. The Group delivered revenues of $50.3m,
and adjusted pre-tax profit of $7.1m, in line with management
expectations.
The Group continues to focus on growing market share in its core
gaming platforms business, constantly improving our technology to
ensure we remain ahead of the curve with compelling solutions for
our customers. This includes significant enhancements to our gaming
monitors offering, which have historically lacked significant
differentiation. We have also made significant investment into new
product development within the Densitron division, to create
differentiated value in the competitive marketplace in which it
operates. Alongside the drive for increased sales and improved
technology, Quixant has made great progress over the period,
strengthening and restructuring the business, to ensure the Group
continues to have the capability to grow strongly.
Gaming Division
Sales of our gaming platforms have been strong over the period
and we have a record order book for the second half of the year.
Last year many of our key customers brought forward orders for our
gaming platforms into the first half of 2017 which resulted in them
increasing stock levels above normal levels and resulting in a
first half revenue weighting for Quixant. This year we have
returned to more normal patterns of demand which, traditionally,
have been second half weighted. Demand in July and August is
following the pattern of the past and we are confident that we will
continue our growth record for the full year. We continue to
maintain our historically high customer retention rate across the
gaming business.
We have deepened our relationships with the largest global
gaming machine manufacturers and are delighted to see strong growth
in sales to a major customer for a jackpot controller product, as
previously announced. We are also in the closing stages of
development of a second project with the same customer, which will
result in us supplying all of their jackpot controller requirements
globally. The customer saw the value in our flexible and harmonised
Gaming Ecosystem(R), which has enabled them to create more
effective end-customer solutions based on a consistent software
offering powered by Quixant. Our software-based value-add remains a
critical and highly differentiated part of our proposition, which
we will continue to focus on going forward. We have also applied
for three new patents in the first half of the year and continue to
invest in R&D to innovate and enhance our product range.
We launched our gaming monitors business in 2014, providing
customers with a gaming-optimised product that complements our
gaming computer platforms. Growth has been exceptional since the
launch of this product line, and in the full year 2017 we achieved
revenues of $16.3m, an increase of over 90% over 2016. We have
always been aware of the competitiveness of the gaming monitor
business and the margin pressures we knew we would face with a less
differentiated product offering. Consequently, during the first
half of 2018, we have rationalised some of the lower margin
business we were supplying to avoid margin pressure from aggressive
competitor pricing. In addition, we have replaced some of our
lowest differentiated products with more bespoke, value-rich
modular offerings. We believe this repositioning of the gaming
monitor business is an essential component to drive long term
sustainable growth at target margin levels. As a result of these
decisions we expect full year gaming monitor revenues to be
slightly below 2017 levels. Strong performance from gaming
platforms and button decks, and a higher margin on gaming monitor
products, have more than compensated for the lower revenues from
low margin monitor products. We remain confident on the long-term
potential for the gaming monitors business and our ability to
expand our share of revenue in each machine through linkage into
other components within our Gaming Ecosystem(R).
In July 2018, the Japanese government completed the Integrated
Resorts Act, clearing the way for the development of integrated
casino resorts. The industry consensus is that Japan will have
completed its first major casino development by 2021. Some
commentators have suggested that Japan could become the second
largest gaming market in Asia, behind Macau, and the scale of the
pachinko machines market in Japan suggests that the domestic
interest in gaming machines will be strong. The Group closely
monitors all potential new geographic opportunities, to ensure we
have the capacity and infrastructure in place to maintain our
service levels. Our established Tokyo based office is a key aspect
of our strategy to build business in this critical market.
Densitron Division
Densitron continued to perform in line with our expectations.
When we acquired Densitron in November 2015 our aim was to ensure
it was earnings enhancing for the Group whilst enabling us to
investigate new market opportunities. By identifying the broadcast
industry and starting the process of developing innovative products
for that market, we are pleased to say that both aims have been
achieved.
Revenues were largely flat in comparison to H1 2017, a good
performance as we continue to focus our sales effort on the launch
of new, vertically-optimised products. Alongside Densitron's
existing display components business we have now developed and
exhibited new products specifically for the broadcast market and
have been encouraged by the reaction to our ideas. This includes
winning TV Technology's "2018 Best of Show" award at the NAB
exhibition in Las Vegas in April 2018 for our new UReady-16600
display. This is a long-term process and it will take time to fully
refine our product offerings and generate significant orders. In
line with the Quixant ethos, we are committed to developing truly
differentiated, high-quality solutions for the market in
partnership with our customers. We are excited by the opportunities
available to us in this market and will continue to develop new
products and build relationships with key customers.
Financial review
Revenue for the six months ended 30 June 2018 was $50.3m (1H
2017 $56.9m). Gaming Division revenue was $31.4m (H1 2017: $37.8m),
comprising Gaming Platform revenue of $29.0m (H1 2017: $30.2m) and
Gaming Monitors revenue of $2.4m (H1 2017: $7.6m). Densitron
division revenue was $18.9m (H1 2017: $19.1m). The Group gross
margin of 36% increased from 34% in H1 2017 as a result of the
sales mix and reduction in proportion of gaming monitors which
operate on a structurally lower margin.
Adjusted profit before tax for the six months was $7.1m (H1
2017: $9.2m). Adjusted EBITDA for the six months was $8.0m (H1:
2017 $10.1m). During 2018, we completed a group restructure which
gave us a corporate head office with Gaming and Densitron operating
divisions. This provides us with an excellent platform to more
effectively manage rapidly growing, entrepreneurial operating
divisions underpinned by a strong corporate function. Both measures
are adjusted for the costs of this restructuring, together with the
costs of share-based payments. Adjusted PBT is also adjusted for
amortisation of intangibles arising from acquisitions. Unadjusted
PBT was $6.1m (H1 2017: $8.7m) and unadjusted EBITDA was $7.4m (H1
2017: $10.1m).
The Group continues to maintain a strong balance sheet. Net
assets at 30 June 2018 were $50.3m compared with $47.2m at 31
December 2017 and $41.1m at 30 June 2017. The global shortage of
electronic components has persisted during 2018 and the Group have
continued to make strategic purchases to ensure we can satisfy
customer lead times and maintain our margins. As a result, the
Group stock levels continue to be elevated, at $21m. Our debtors
were also unusually high reflecting a strong billing month in June
and $3.9m of overdue customer debt which has been collected in July
and August. Consequently, the Group's cash generation was impacted,
and net cash also reduced to $2.5m at 30 June 2018 (31 December
2017: $4.5m).
The Group continued with its progressive dividend policy, making
a payment of 2.6p per share, totalling $2.3m in May 2018. This was
in respect of the full year 2017 and represented the fifth dividend
payment made by the Group.
Outlook
We are in line for 2018 to be another year of strong growth for
the Group. As the only specialist outsourced provider of gaming
platforms and monitors, we are well positioned to continue to grow
our market share. The global gaming market presents new
opportunities, not least the introduction of integrated casino
resorts in Japan, which has resulted in our customers vying to
capitalise on a potentially huge new market. We already have a
presence in Japan and are positive about the long-term
opportunities for the Group from this geography.
We are developing our gaming monitors business and Densitron, to
embed them with Quixant's ethos of innovative, value-rich products.
Where we have begun to introduce these products, we are encouraged
by the feedback we have received. The long-term opportunity to grow
revenues in both businesses, whilst maintaining or enhancing
margins, remains strong and we are excited to continue exploring
potential opportunities in new verticals.
With a wealth of growth opportunities available to the Group, a
strong, focused senior management team, expert staff covering a
breadth of engineering disciplines and a strong balance sheet, we
believe Quixant is well placed to deliver long term strong
sustainable growth.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS
FOR THE SIX MONTHSED 30 JUNE 2018 AND 2017 AND YEARED 31
DECEMBER 2017
30 June 2018 30 June 2017 31 December 2017
Note
$000 $000 $000
---------------------------------- ------- ------------- ------------- -----------------
Revenue 2 50,281 56,903 109,238
------- ------------- ------------- -----------------
Cost of sales (32,283) (37,405) (72,269)
------- ------------- ------------- -----------------
Gross profit 17,998 19,498 36,969
------- ------------- ------------- -----------------
Operating expenses (11,744) (10,609) (21,622)
------- ------------- ------------- -----------------
Operating profit 6,254 8,889 15,347
------- ------------- ------------- -----------------
Financial expenses (139) (156) (302)
------- ------------- ------------- -----------------
Profit before tax 2 6,115 8,733 15,045
------- ------------- ------------- -----------------
Taxation 3 (1,111) (1,359) (1,899)
------- ------------- ------------- -----------------
Profit for the period 5,004 7,374 13,146
------- ------------- ------------- -----------------
Attributable to
------------- ------------- -----------------
Equity shareholders 5,004 7,368 13,152
------- ------------- ------------- -----------------
Non-controlling interests - 6 (6)
------- ------------- ------------- -----------------
Profit for the period 5,004 7,374 13,146
------- ------------- ------------- -----------------
Basic earnings per share 5 $0.0757 $0.1124 $0.1999
------- ------------- ------------- -----------------
Fully diluted earnings per share 5 $0.0750 $0.1105 $0.1972
------- ------------- ------------- -----------------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2018 AND 2017 AND YEARED 31
DECEMBER 2017
30 June 2018 30 June 2017 31 December 2017
$000 $000 $000
------------------------------------------------------------ ------------- ------------- -----------------
Profit for the period 5,004 7,374 13,146
------------- ------------- -----------------
Other comprehensive income/(expense)
------------- ------------- -----------------
Items that are or may be reclassified subsequently to profit
and loss
------------- ------------- -----------------
Foreign currency translation differences (55) 775 869
------------- ------------- -----------------
Total comprehensive income for the period 4,949 8,149 14,015
------------- ------------- -----------------
Total comprehensive income attributable to:
------------- ------------- -----------------
Equity shareholders 4,949 8,143 14,021
------------- ------------- -----------------
Non-controlling interests - 6 (6)
------------- ------------- -----------------
Total comprehensive income for the period 4,949 8,149 14,015
------------- ------------- -----------------
BALANCE SHEET
AS AT 30 JUNE 2018 AND 2017 AND AT 31 DECEMBER 2017
30 June 2018 30 June 2017 31 December 2017
Note
$000 $000 $000
----------------------------------------------------- ------- ------------- ------------- -----------------
Non-current assets
------- ------------- ------------- -----------------
Property, plant and equipment 6,070 6,143 6,153
------- ------------- ------------- -----------------
Intangible assets 15,039 14,102 14,278
------- ------------- ------------- -----------------
Investment property 665 648 674
------- ------------- ------------- -----------------
Deferred tax assets 232 291 195
------- ------------- ------------- -----------------
Total non-current assets 22,006 21,184 20,896
------- ------------- ------------- -----------------
Current assets
------- ------------- ------------- -----------------
Inventories 21,080 19,041 21,246
------- ------------- ------------- -----------------
Trade and other receivables 23,772 23,342 20,095
------- ------------- ------------- -----------------
Cash and cash equivalents 9,504 10,079 11,194
------- ------------- ------------- -----------------
Total current assets 54,356 52,462 52,535
------- ------------- ------------- -----------------
Total assets 76,362 73,646 73,835
------- ------------- ------------- -----------------
Current liabilities
------- ------------- ------------- -----------------
Other interest-bearing loans and borrowings (6,092) (2,210) (5,811)
------- ------------- ------------- -----------------
Trade and other payables (16,152) (20,627) (16,854)
------- ------------- ------------- -----------------
Provisions (750) - (750)
------- ------------- ------------- -----------------
Tax payable (766) (1,335) (931)
------- ------------- ------------- -----------------
Total current liabilities (23,760) (24,172) (24,346)
------- ------------- ------------- -----------------
Non-current liabilities
------- ------------- ------------- -----------------
Other interest-bearing loans and borrowings (868) (6,153) (924)
------- ------------- ------------- -----------------
Provisions - (750) -
------- ------------- ------------- -----------------
Deferred tax liabilities (1,369) (1,385) (1,305)
------- ------------- ------------- -----------------
Total non-current liabilities (2,237) (8,288) (2,229)
------- ------------- ------------- -----------------
Total liabilities (25,997) (32,460) (26,575)
------- ------------- ------------- -----------------
Net assets 50,365 41,186 47,260
------- ------------- ------------- -----------------
Equity attributable to equity holders of the parent
------- ------------- ------------- -----------------
Share capital 4 106 106 106
------- ------------- ------------- -----------------
Share premium 6,482 6,034 6,102
------- ------------- ------------- -----------------
Share based payments reserve 1,082 851 991
------- ------------- ------------- -----------------
Retained earnings 42,336 33,875 39,647
------- ------------- ------------- -----------------
Translation reserve 359 320 414
------- ------------- ------------- -----------------
50,365 41,186 47,260
----------------------------------------------------- ------- ------------- ------------- -----------------
Non-controlling interest - - -
------- ------------- ------------- -----------------
Total equity 50,365 41,186 47,260
------- ------------- ------------- -----------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY
FOR THE SIX MONTHSED 30 JUNE 2018, 31 DECEMBER 2017 AND 30 JUNE
2017
Share Share Translation Share Retained Total Non-controlling Total
capital premium reserve based earnings parent interests equity
payments 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 - - - - 7,374 7,374 (6) 7,368
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Other
comprehensive
income - - 775 - - 775 - 775
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Total
comprehensive
income for
the period - - 775 - 7,374 8,149 (6) 8,143
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Transactions
with owners,
recorded
directly in
equity
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Share based
payments - - - 69 - 69 - 69
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Dividend paid - - - - (1,691) (1,691) - (1,691)
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Exercise of
options 1 358 - - - 359 - 359
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Total
contributions
by and
distributions
to owners 1 358 - 169 (1,691) (1,263) - (1,263)
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Balance at 30
June 2017 106 6,034 320 851 33,875 41,186 - 41,186
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Balance at 1
July 2017 106 6,034 320 851 33,875 41,186 - 41,186
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Total
comprehensive
income for the
period
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Profit - - - - 5,772 5,772 - 5,772
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Other
comprehensive
income - - 94 - - 94 - 94
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Total
comprehensive
income for
the period - - 94 - 5,772 5,866 - 5,866
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Transactions
with owners,
recorded
directly in
equity
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Share based
payments - - - 140 - 140 - 140
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Dividend paid - - - - - - - -
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Exercise of
options - 68 - - - 68 - 68
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Total
contributions
by and
distributions
to owners - 68 - 140 - 208 - 208
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Balance at 31
December 2017 106 6,102 414 991 39,647 47,260 - 47,260
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Balance at 1
January 2018 106 6,102 414 991 39,647 47,260 - 47,260
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Total
comprehensive
income for the
period
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Profit - - - - 5,004 5,004 - 5,004
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Other
comprehensive
income - - (55) - - (55) - (55)
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Total
comprehensive
income for
the period - - (55) - 5,004 4,949 - 4,949
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Transactions
with owners,
recorded
directly in
equity
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Share based
payments - - - 91 - 91 - 91
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Dividend paid - - - - (2,315) (2,315) - (2,315)
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Exercise of
options - 380 - - - 380 - 380
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Total
contributions
by and
distributions
to owners - 380 - 91 (2,315) (1,844) - (1,844)
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
Balance at 30
June 2018 106 6,482 359 1,082 42,336 50,365 - 50,365
---------- ---------- ------------ --------- ---------- ---------- ---------------- ----------
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHSED 30 JUNE 2018 AND 2017 AND YEARED 31
DECEMBER 2017
30 June 2018 30 June 2017 31 December 2017
$000 $000 $000
---------------------------------------------------- ------------- ------------- -----------------
Cash flows from operating activities
------------- ------------- -----------------
Profit for the period 5,004 7,374 13,146
------------- ------------- -----------------
Adjustments for:
------------- ------------- -----------------
Depreciation, amortisation and impairment 1,160 1,214 2,422
------------- ------------- -----------------
Taxation expense 1,111 1,359 1,899
------------- ------------- -----------------
Financial expense 139 156 302
------------- ------------- -----------------
Equity settled share-based payment expenses 91 69 209
------------- ------------- -----------------
7,505 10,172 17,978
---------------------------------------------------- ------------- ------------- -----------------
(Increase)/decrease in trade and other receivables (3,677) (2,339) 908
------------- ------------- -----------------
Decrease/(Increase) in inventories 166 (6,141) (8,346)
------------- ------------- -----------------
(Decrease)/Increase in trade and other payables (715) 3,981 (100)
------------- ------------- -----------------
3,279 5,673 10,440
---------------------------------------------------- ------------- ------------- -----------------
Interest paid (139) (156) (302)
------------- ------------- -----------------
Tax paid (1,249) (1,196) (2,076)
------------- ------------- -----------------
Net cash from operating activities 1,891 4,321 8,062
------------- ------------- -----------------
Cash flows from investing activities
------------- ------------- -----------------
Acquisition of property, plant and equipment (202) (253) (409)
------------- ------------- -----------------
Acquisition of intangible assets (1,669) (951) (1,861)
------------- ------------- -----------------
Net cash used in investing activities (1,871) (1,204) (2,270)
------------- ------------- -----------------
Cash flows from financing activities
------------- ------------- -----------------
Proceeds from new loan 225 - -
------------- ------------- -----------------
Repayment of borrowings - (559) (2,187)
------------- ------------- -----------------
Dividends paid (2,315) (1,691) (1,691)
------------- ------------- -----------------
Exercise of options 380 359 427
------------- ------------- -----------------
Net cash used in financing activities (1,710) (1,891) (3,451)
------------- ------------- -----------------
Net increase in cash and cash equivalents (1,690) 1,226 2,341
------------- ------------- -----------------
Cash and cash equivalents at 1 January 11,194 8,853 8,853
------------- ------------- -----------------
Cash and cash equivalents at period end 9,504 10,079 11,194
------------- ------------- -----------------
General information and reporting entity
Quixant Plc ("Quixant") is a Public Limited Company incorporated
and domiciled in England and Wales, whose shares are publicly
traded on the AIM Market of the London Stock Exchange. The address
of the Company's registered office is Aisle Barn, 100 High Street,
Balsham, Cambridge, CB21 4EP. Quixant is a leading provider of
innovative, highly engineered technology products principally for
the global gaming industry. The Group designs and manufactures
highly optimised computing solutions and monitors. In November 2015
Quixant acquired Densitron Technologies, which has a strong
heritage in the sale of electronic display solutions to global
industrial markets. 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 2018 are not necessarily indicative of the
operating results for future operating periods. The condensed
consolidated interim financial information has not been reviewed
under IRSE 2410.
The financial information shown for the year ended 31 December
2017 in the interim financial information does not constitute full
statutory financial statements as defined in Section 434 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 2017. This condensed consolidated 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 the US dollar as this is the
trading currency of the Group.
This condensed consolidated interim financial report was
approved by the Board of Directors on 19 September 2018.
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.
The preparation of financial information requires the use of
certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Quixant
Group accounting policies. The areas involving a higher degree of
judgement and estimation continue to relate to determining the
point at which the criteria for development cost capitalisation
have been met and inventory and bad debt provisions respectively.
In addition, management considers the recoverable amount of
goodwill and the assessment of the contingent consideration payable
to be judgemental areas. Goodwill is reviewed for impairment at
each reporting date or when indicators of impairment arise.
Segmental analysis
The Quixant Group determines and presents operating segments
based on the information that internally is provided to the
executive management team, the body which is considered to be the
Quixant Group's Chief Operating Decision Maker ("CODM"). An
operating segment is a component of the Quixant Group that engages
in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with any of the Quixant Group's other components. The
operating segments' operating results are reviewed regularly by the
CODM to make decisions about resources to be allocated to the
segment, to assess its performance and for which discrete financial
information is available. The financial information of the
operating segments is set out in Note 2.
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 2017 except for the following changes
adopted from 1 January 2018.
IFRS 15 Revenue from Contracts with Customers - this new
accounting standard changes requires a change in the Group's
accounting policy for revenue recognition. However, due to the
nature of the revenues within the business the application of this
standard has not resulted in a change in the amount of revenue
recognised in the current or comparative periods.
IFRS 9 Financial Instruments - the application of this standard
requires the adoption of an "expected credit loss" (ECL) model for
the impairment of receivables. The adoption of this standard has
not had an impact on the level of impairment of receivables in the
current or previous periods. No other impacts have resulted on
transition to IFRS 9 as this currently only focuses on one element
of the standard.
Full details of the changes to the accounting policies will be
disclosed in the Annual Report for the year to 31 December
2018.
Standards issued not yet effective
IFRS 16 Leases - this standard comes into effect for periods
beginning on or after 1 January 2019. It introduces a single, on
balance sheet model for accounting for leases. A lessee is required
to recognise a lease as a right of use asset representing its right
to use the underlying asset and a lease liability representing its
obligation to make lease payments. The annual lease payment which
is currently recognised through the profit and loss account as
incurred is replaced by depreciation of the right of use asset and
an interest charge on the lease liability.
The Group has completed an initial assessment of the potential
impact on its financial statements but has not yet completed a
detailed assessment. The initial conclusion is that the change in
standard will not have a material impact on annual profit before
tax. However, with future minimum payments under non-cancellable
operating leases in excess of $1.1 million on an undiscounted basis
the impact on assets and liabilities will be material.
Reconciliation of earnings before interest, tax, depreciation
and amortisation (EBITDA) and profit before tax (PBT)
EBITDA, adjusted EBITDA, PBT and adjusted PBT for the current
and prior periods has been derived as follows:
EBITDA PBT
6 months ended 6 months ended 12 months 6 months ended 6 months ended 12 months
30 June 2018 30 June 2017 ended 31 30 June 2018 30 June 2017 ended 31
December 2017 December 2017
--------------- --------------- --------------- --------------- --------------- ---------------
$000 $000 $000 $000 $000 $000
--------------- --------------- --------------- --------------- --------------- ---------------
Profit for the
period 5,004 7,374 13,146 5,004 7,374 13,146
--------------- --------------- --------------- --------------- --------------- ---------------
Adding back:
--------------- --------------- --------------- --------------- --------------- ---------------
Taxation
expense 1,111 1,359 1,899 1,111 1,359 1,899
--------------- --------------- --------------- --------------- --------------- ---------------
Financial
expenses 139 156 302 - - -
--------------- --------------- --------------- --------------- --------------- ---------------
Depreciation 254 293 512 - - -
--------------- --------------- --------------- --------------- --------------- ---------------
Amortisation of
intangible
assets 527 477 1,088 - - -
--------------- --------------- --------------- --------------- --------------- ---------------
Amortisation of
customer
relationships
and order
backlog 379 444 822 - - -
--------------- --------------- --------------- --------------- --------------- ---------------
EBITDA/PBT 7,414 10,103 17,769 6,115 8,733 15,045
--------------- --------------- --------------- --------------- --------------- ---------------
Amortisation of
customer
relationships
and order
backlog(1) - - - 379 444 822
--------------- --------------- --------------- --------------- --------------- ---------------
Share based
payments
expense(2) 91 69 209 91 69 209
--------------- --------------- --------------- --------------- --------------- ---------------
Costs arising
on the
replacement of
faulty DRAM
component(3) - - 1,633 - - 1,633
--------------- --------------- --------------- --------------- --------------- ---------------
Restructuring
costs(3) 506 - - 506 - -
--------------- --------------- --------------- --------------- --------------- ---------------
Adjusted
EBITDA/PBT 8,011 10,172 19,611 7,091 9,246 17,709
--------------- --------------- --------------- --------------- --------------- ---------------
1. The amortisation of customer relationships and order backlog
has been excluded as it is not a cash expense of 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 period and their inclusion
in PBT and EBITDA meant that a period on period comparison of
operational results is not a consistent basis the directors will
exclude them from the adjusted numbers. During the periods under
review the directors have excluded restructuring costs and the
costs arising from the replacement of faulty DRAM component due to
their exceptional size and incomparability with comparative
periods.
2. Business and geographical segments
The Chief Operating Decision Maker in the organisation is an
executive management committee comprising the Board of Directors.
They have determined the operating segments detailed within this
report on which the business is managed. The Group assesses the
performance of the segments based on a measure of revenue and PBT.
The principal divisions are the Quixant division, which is the core
gaming business, and the Densitron division, which comprises the
Densitron operating segments in Europe, America, France and Japan.
The operating segments applicable to the Group are as follows:
-- Quixant - A single customer accounted for 25% of the reported
revenues for the 6 months to 30 June 2018 (25.1% for the year to 31
December 2017).
-- Densitron Europe
-- Densitron America
-- Densitron France
-- Densitron Japan
Quixant Densitron Europe Densitron Densitron France Densitron Japan Total
America
$000 $000 $000 $000 $000 $000
--------- ----------------- ---------------- ----------------- ---------------- ---------
6 months to 30 June
2018
--------- ----------------- ---------------- ----------------- ---------------- ---------
Revenue 31,339 6,372 7,053 2,915 2,602 50,281
--------- ----------------- ---------------- ----------------- ---------------- ---------
Profit/(loss) before
tax 5,024 (20) 470 362 279 6,115
--------- ----------------- ---------------- ----------------- ---------------- ---------
As at 30 June 2018
--------- ----------------- ---------------- ----------------- ---------------- ---------
Assets 61,130 5,125 4,292 3,154 2,661 76,362
--------- ----------------- ---------------- ----------------- ---------------- ---------
Liabilities (16,625) (5,654) (1,584) (1,417) (717) (25,997)
--------- ----------------- ---------------- ----------------- ---------------- ---------
Net
assets/(liabilities) 44,505 (529) 2,708 1,737 1,944 50,365
--------- ----------------- ---------------- ----------------- ---------------- ---------
6 months to 30 June
2017
--------- ----------------- ---------------- ----------------- ---------------- ---------
Revenue 37,811 5,652 7,390 3,302 2,748 56,903
--------- ----------------- ---------------- ----------------- ---------------- ---------
Profit/(loss) before
tax 7,584 (333) 806 449 227 8,733
--------- ----------------- ---------------- ----------------- ---------------- ---------
As at 30 June 2017
--------- ----------------- ---------------- ----------------- ---------------- ---------
Assets 58,900 5,343 4,310 2,772 2,321 73,646
--------- ----------------- ---------------- ----------------- ---------------- ---------
Liabilities (22,168) (6,350) (1,920) (1,438) (584) (32,460)
--------- ----------------- ---------------- ----------------- ---------------- ---------
Net
assets/(liabilities) 36,732 (1,007) 2,390 1,334 1,737 41,186
--------- ----------------- ---------------- ----------------- ---------------- ---------
12 months to 31
December 2017
--------- ----------------- ---------------- ----------------- ---------------- ---------
Revenue 71,132 11,034 15,595 6,083 5,394 109,238
--------- ----------------- ---------------- ----------------- ---------------- ---------
Profit/(loss) before
tax 12,941 (637) 1,759 497 485 15,045
--------- ----------------- ---------------- ----------------- ---------------- ---------
As at 31 December
2017
--------- ----------------- ---------------- ----------------- ---------------- ---------
Assets 58,545 5,494 4,935 2,493 2,368 73,835
--------- ----------------- ---------------- ----------------- ---------------- ---------
Liabilities (16,236) (6,724) (2,155) (1,028) (432) (26,575)
--------- ----------------- ---------------- ----------------- ---------------- ---------
Net
assets/(liabilities) 42,309 (1,230) 2,780 1,465 1,936 47,260
--------- ----------------- ---------------- ----------------- ---------------- ---------
3. Taxation
6 months ended 30 June 2018 6 months ended 30 June 2017 Year ended
31 December 2017
$000 $000 $000
----------------------------- ---------------------------- ---------------------------- ------------------
Analysis of charge in
periods
---------------------------- ---------------------------- ------------------
Current tax
---------------------------- ---------------------------- ------------------
UK corporation tax 767 708 780
---------------------------- ---------------------------- ------------------
Foreign tax 317 749 1,498
---------------------------- ---------------------------- ------------------
Adjustments for prior periods - - (296)
---------------------------- ---------------------------- ------------------
Current tax 1,084 1,457 1,982
---------------------------- ---------------------------- ------------------
Deferred tax charge/(credit)
---------------------------- ---------------------------- ------------------
Origination and reversal of
temporary differences 27 (98) (83)
---------------------------- ---------------------------- ------------------
Deferred tax charge/(credit) 27 (98) (83)
---------------------------- ---------------------------- ------------------
Total tax expense 1,111 1,359 1,899
---------------------------- ---------------------------- ------------------
4. Share capital
6 months ended 30 June 2018 6 months ended 30 June 2017 Year ended
31 December 2017
Number $000 Number $000 Number $000
-------------------- -------- -------------------- -------- ------------- -----
Allocated, called up and fully
paid
-------------------- -------- -------------------- -------- ------------- -----
Balance at 1 January 2018 66,034,982 106 65,364,782 105 65,364,782 105
-------------------- -------- -------------------- -------- ------------- -----
Issue of new shares as a result
of exercise of employee share
options 313,100 - 565,200 1 670,200 1
-------------------- -------- -------------------- -------- ------------- -----
Balance at 30 June 2018 66,348,082 106 65,929,982 106 66,034,982 106
-------------------- -------- -------------------- -------- ------------- -----
The Company paid a dividend of 2.6p per share for the year ended 31 December 2017 on 18 May
2018.
5. Earnings per share
6 months ended 30 June 2018 6 months ended 30 June 2017 Year ended
31 December 2017
$000 $000 $000
----------------------------- ---------------------------- ---------------------------- ------------------
Earnings
---------------------------- ---------------------------- ------------------
Earnings for the purposes of
basic and diluted EPS being
net profit attributable to
equity
shareholders 5,004 7,368 13,146
---------------------------- ---------------------------- ------------------
Number of shares
---------------------------- ---------------------------- ------------------
Weighted average number of
ordinary shares for the
purposes of basic EPS 66,123,336 65,542,773 65,756,667
---------------------------- ---------------------------- ------------------
Effect of dilutive potential
ordinary shares:
---------------------------- ---------------------------- ------------------
Share options 569,314 1,123,407 909,513
---------------------------- ---------------------------- ------------------
Weighted number of ordinary
shares for the purposes of
diluted EPS 66,692,650 66,666,180 66,666,180
---------------------------- ---------------------------- ------------------
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.
6. Related party transactions
In June 2016, two directors entered into a related party
transaction. The wife of G P Mullins rented a house to a subsidiary
company at a rent of GBP2,500 per calendar month. The rent payable
is determined on an arm's length basis. The subsidiary company
provides the house rent free for the use of J F Jayal. It was
agreed between Mrs. Mullins and Mr Jayal to terminate the agreement
in March 2018.
During the period the Group paid EUR15,600 (2017: EUR31,200) for
administrative services to Francesca Marzilli, the wife of Nicholas
Jarmany. In addition, the Group paid GBPnil (2017: GBP3,976) to
Ruth Jayal for administrative services, the wife of Jon Jayal.
There were no other related party transactions, other than
transactions with key management personnel, who are the Directors
of the Company.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FMGMLZRGGRZZ
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September 19, 2018 02:01 ET (06:01 GMT)
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