TIDMQXT
RNS Number : 2321H
Quixant PLC
05 April 2022
5 April 2022
Quixant plc
("Quixant" or the "Group")
Audited Final Results
Quixant (AIM: QXT), a leading provider of innovative, highly
engineered technology products principally for the global gaming
and broadcast industries, announces its audited full year results
for the 12 months ended 31 December 2021.
Year ended Year ended Change
31 December 31 December
2021 2020
($m) ($m)
Group Revenue 87.1 63.8 37%
Gaming Division Revenue 47.3 30.3 56%
Densitron Revenue 39.8 33.5 19%
Group gross profit 25.9 20.1 29%
Adjusted profit before tax(1) 5.4 1.3 315%
Group profit / (loss) before tax 4.9 (2.0) nm
Adjusted diluted earnings per share(1) $0.0595 ($0.004) nm
Net cash from operating activities 4.4 4.0 10%
Net cash 17.6 17.4 1%
(1) For details on adjusted measures refer to note 1 and note 2
of the condensed consolidated financial statements
OPERATIONAL HIGHLIGHTS
-- Strong order intake through 2021 and into 2022 giving us
excellent visibility of customer demand.
-- Double-digit growth in Group and divisional revenues and
Group gross profit driven by recovery in end-markets and
new business wins.
-- Strategic positioning of Densitron leading to highest revenue
for the business since acquisition including second consecutive
year of double-digit growth from Broadcast sector.
-- Supply chain disruption mitigated through robust management
and strategic stock purchase programme, ensuring customer
retention and reduced impact of price inflation.
-- Launch of range of turnkey cabinet solutions for Gaming
customers with first orders received and further new business
wins.
-- Healthy balance sheet and net cash position supportive of
future organic and acquisitive growth.
Jon Jayal, Chief Executive Officer of Quixant, commented :
"We are seeing increasing demand for our specialist technology
outsource solutions following the recovery in our end markets. This
has led to a strong improvement in trading in 2021, with revenues
reaching pre-pandemic levels in the second half of the year. Demand
in the first quarter of 2022 has remained strong, with order intake
ahead of current year revenues and prior year order book.
As with all technology businesses, supply chain issues have been
a challenge and have impacted margins, however we have demonstrated
resilience in 2021 through close customer and supplier management
and deployment of our cash to enable strategic stock purchases.
While we expect these challenges to persist, our financial strength
and global supply network positions us well to manage these through
2022. There are no structural reasons why our margins will be
compromised in the long-term.
Our strategic positioning, strength of order book and proven
operational effectiveness position us well for sustained growth in
2022 and beyond."
A video overview of the results featuring CEO Jon Jayal and CFO
Johan Olivier is available to view here:
https://bit.ly/QXT_FY21_overview_video
Investor Presentation
Jon Jayal, CEO, and Johan Olivier, CFO, will provide a live
presentation relating to the Group's results for the year ended 31
December 2021 via the Investor Meet Company platform on 6 April
2022 at 4:30pm. The presentation is open to all existing and
potential shareholders and registration can be completed via the
following link:
https://www.investormeetcompany.com/quixant-plc/register-investor
.
Quixant plc Tel: +44 (0)1223 892 696
Jon Jayal, Chief Executive Officer
Johan Olivier, Chief Financial Officer
Nominated Adviser and Broker: Tel: +44 (0) 20 7220 0500
finnCap Ltd
Matt Goode / Simon Hicks (Corporate
Finance)
Alice Lane (ECM)
Joint Broker: Tel: +44 (0) 20 7523 8000
Canaccord Genuity Limited
Simon Bridges / Andrew Potts
Financial PR: Tel: +44 (0)20 3405 0205
Alma PR
John Coles / Hilary Buchanan / Kieran
Breheny
About Quixant
Quixant, founded in 2005, designs and manufactures highly
optimised computing solutions and monitors principally for the
global gaming and broadcast industries. The Company is
headquartered in Cambridge in the UK, with offices throughout
Europe, North America and Asia. Quixant has its own manufacturing
and engineering operation based in Taiwan and software engineering
and customer support teams based in Italy and Slovenia. 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.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the company's obligations under Article 17 of MAR.
CHAIR'S STATEMENT
Double-digit growth across both business segments
In this, my first year as Chair of the Board, I am delighted to
report on a year of strong financial results and strategic
progress, despite the well-publicised global supply chain
challenges which the Group has also had to deal with. The Group
entered 2021 with a healthy balance sheet, fully resourced and with
strengthened customer relationships, despite the challenges
presented by the pandemic in 2020. This enabled us to fully
capitalise on the recovery in demand across our end-markets,
despite the wider backdrop of supply chain challenges that weighed
on technology markets throughout the year.
The Group as a whole, and both trading businesses - Gaming and
Densitron - posted double-digit revenue growth in the year,
continuing the upward trading momentum we have seen since the
second half of 2020. Strong demand from new and existing customers
was tempered somewhat by acute electronic component shortages and
freight disruption, which our global teams grappled with to
mitigate customer and financial impact. The Board took decisive
action in January 2021 to engage in a strategic stock purchase
programme to safeguard component supplies many months ahead of the
demand. This has enabled us to reduce delivery delays and mitigate
against component price inflation, further cementing our strong
customer relationships.
We empower our customers with specialist technology outsource
solutions, enabling them to innovate where it matters most.
Underpinned by a well-defined multi-year growth strategy, the
outlook is positive. We have confidence that the Gaming business
offers significant growth potential over and above the recovery in
our customer's end markets, and we continue to invest in new
product categories to support new growth opportunities. The Board
also places significant importance on strategically diversifying
the Group's revenue into other sectors. We have demonstrated the
Group's' competence in developing specialist hardware and software
solutions for the global Gaming industry. We believe this
capability is relevant in other markets that could also benefit
from a technology outsourcing model/partnership but have had little
specialist provider penetration.
Progress in our first targeted adjacent sector, Broadcast, has
continued with double digit year-on-year growth at enhanced
margins. The Board will continue to invest in the Broadcast market
opportunity with the aim of delivering sustainable profit
growth.
Supporting the financial and trading achievements is the Group's
sustainability agenda
Within the framework of its Corporate Responsibility Strategy,
the Board set realistic achievable goals in 2021 and will continue
to identify and set new targets as goals are completed. Key
initiatives during the year include:
- Supporting all staff to facilitate them getting fully
vaccinated against COVID-19 if they wish;
- Implementing our Supplier Code of Conduct based on the
principles set out by the Responsible Business Alliance
Code of Conduct in our supply chain. By the end of the
year 138 out of a total of 148 suppliers had signed up
to the code and in 2022 we are committed to auditing
at least 50% of these suppliers;
- Offering free electric charge points at UK offices and
a tax-efficient electric car scheme. We have also implemented
a cycle to work scheme as an employee benefit from 1
January 2022;
- Appointing a new external Company Secretary who has conducted
a full Governance review for the Board to consider; and
- Launching a dedicated corporate responsibility microsite
setting out our strategy and annual targets.
Strong business model and diversified opportunities supporting
positive outlook
We enter 2022 with an experienced and fully resourced team. We
welcomed Johan Olivier to the Board in August 2021 as Chief
Financial Officer and are delighted with his input to the Board and
broader business already. I believe the management team has the
right blend of skills to drive the business through the next phase
of growth. I would like to take this opportunity to thank everyone
in the business for their commitment and hard work. Since joining
the Company I have been struck by the capability, enthusiasm and
healthy culture demonstrated by the team.
The Group's net cash position allows it flexibility when taking
capital allocation decisions. The Group has identified
opportunities to strongly grow its revenue base which, in the
short-term, requires continued investment in working capital in
what remains a volatile global supply chain environment. The Board
is confident that a progressive dividend policy remains appropriate
and recommends a 20 per cent increase in the dividend to 2.4p per
share for 2021 (2020: 2.0p per share).
Francis Small
Chair
CHIEF EXECUTIVE'S REPORT
Strong demand and robust supply chain management yields 37%
revenue growth
In 2021 we delivered Group revenue of $87.1m, 37% ahead of 2020
revenue of $63.8m and approaching 2019 revenue of $92.3m. Revenue
in the second half of the year reached pre-pandemic levels and was
the highest revenue performance since the second half of 2018. Both
Gaming and Densitron divisions performed well, delivering
double-digit year-over-year revenue growth with Densitron
delivering its highest revenue performance since acquisition. This
led to adjusted profit before tax growth of 315% to $5.4m (2020:
$1.3m) with a corresponding reported profit before tax of $4.9m
(2020: loss of $2.0m).
Supply chain pressures, which severely impacted the global
technology sector, were a major headwind for trading during the
year for both our Gaming and Densitron divisions. However, our
experienced Taiwanese procurement teams and significant investment
into strategic stock early in year supported trading and reduced
the impact of component price inflation, which continued throughout
the year. While the strategic stock investments weighed on working
capital, we nonetheless generated cashflow from operations of $4.4m
(2020: $4.0m) and grew our net cash balance to $17.6m (31 December
2020: $17.4m). We expect to make continued investment in strategic
stock to enable us to satisfy growing customer demand and new
business opportunities in 2022 despite ongoing component
shortages.
Business Overview
Quixant is an outsource technology and supply chain partner for
major global industrial electronic equipment manufacturers, with a
focus on specific vertical markets. The Group combines hardware,
software, display and mechanical engineering expertise, a global
sales network with in-depth industry knowledge and a Far Eastern
manufacturing base making it the ideal global strategic technology
provider.
The Group's heritage is in its highly respected Quixant brand of
specialised computer platforms, designed to power machines in the
global casino gaming and slot machine market. These computer
platforms, which are supplied to global gaming machine
manufacturers, combine optimised hardware and software elements to
address the specialist needs of this highly regulated market. By
outsourcing their computer platform to Quixant, manufacturers can
focus their R&D on the game design, which has the greatest
impact on their commercial success. They are also able to bring new
products to market quicker.
Complementing the Group's track record in bringing an outsource
model to the gaming market, the Group has diversified into other
vertical markets through its Densitron brand. Densitron supplies
display components to a wide range of industrial sectors, from
which the Board has selected sectors in which there is the
opportunity to develop tailor-made products, which are different to
those readily available from broad-based technology corporations.
We believe the Broadcast market represents such an opportunity, in
which we have developed unique solutions which revolutionise the
human machine interaction and control of Broadcast equipment. We
delivered our second consecutive year of double-digit revenue
growth in 2021.
The Group's organic growth strategy is centred around the
following axis of growth:
- New customer acquisition in its chosen target market
segments, further diversifying the Group's revenue base;
- Increase share of customer wallet by providing additional
outsource solutions to become a fully integrated technology
partner. An example of this is the Group's recently
launched range of turnkey cabinet solutions, which enable
customers to focus exclusively on game software development
and outsource their whole hardware offering to Quixant;
- Focused R&D to move up the value chain, including within
the software stack; and
- Identify and target adjacent verticals that do not currently
benefit from deep specialist solution outsource providers,
such as Broadcast.
From time to time, the Board may complement its organic growth
strategy with strategic acquisitions that enhance the Group's
technical capabilities and market reach.
Gaming Business Review
Gaming customer demand built strongly through 2021 after the
pandemic closed casinos around the world and heavily disrupted the
gaming industry in 2020. Gaming business revenue grew 56% in the
year to $47.3m (2020: $30.3m) driven by a combination of recovery
in existing customer demand and ten new business wins entering
production. Revenue in the first half of the year was tempered by
the unprecedented electronic component shortages, which delayed
some deliveries into the second half. The strategic stock purchase
programme mitigated the effects of these delays and enabled us to
deliver revenue well ahead of 2020; return to pre-pandemic levels
in the second half of 2021; as well as further cementing the strong
relationships we have with our customers. We expect this positive
upward trading momentum to continue in 2022.
The strong financial performance in the period was driven by
several factors:
Recovery in gaming market demand
Following a period of stasis in the gaming market in 2020 as a
result of government-imposed lockdowns, player attendance and spend
rebounded strongly in 2021 stimulating a return in placement of new
machines and therefore demand for our products. This trend was most
prominent in the US market, which represented 65% of gaming revenue
in the year.
US commercial casino land-based slot revenues in 2021 reached
$32.5bn, 10% higher than 2019 and 68% higher than 2020(1) . This
market has also seen revenue growth on top of land-based slot
revenues growth as a result of the legislation of sports betting
and online gaming. This growth is despite lagging business and
international travel and a reduction in the number of conventions
weighing on demand. Overall, the US commercial casino market
reached record revenues of $53bn in 2021, 21% higher than the
previous record year in 2019.
The tribal gaming market is the other major US casino gaming
segment. During 2020 US tribal revenue declined by 19.5% to $28bn
compared to 2019 due to the pandemic(2) . Initial reports suggest a
solid rebound in revenue in 2021, with official figures yet to be
published.
Across Europe, our second largest Gaming market, the recovery
has been more muted. European land-based Gaming revenue has been
lower than predicted in 2021 as the pandemic continued to restrict
land-based Gaming activities, however, the projections indicate
that revenues in 2022 are now expected to recover to 5% below
pre-pandemic before steadily climbing to their former levels in the
following years(3) .
We estimate, based on analysis of data provided by a sample of
the public gaming companies in their annual reports, that aggregate
annual machine replacements fell by 50% in 2020 compared to 2019
but recovered in 2021 to around 65% of the rate in 2019. Some of
Quixant's major customers within this appear to have grown market
share based on our estimates of their production volumes versus
their competition.
More diversified Gaming business
We saw growth across all gaming computer product families,
shipping 40,100 platforms during the year, 83% ahead of the 22,000
shipped in 2020 and in line with 2019 (40,700 platforms). Our three
families of gaming computer products are offered at different price
points (but broadly consistent sales margins) to cater for the
different end-markets and jurisdictions into which our customers'
machines are deployed. The mid-range IQON product range saw the
highest sales volume since its introduction. This is driven by the
greater diversification across our Gaming customer base through new
business wins, which meant that the Gaming revenue concentration to
the top ten customers reduced to 80% (2020: 86%; 2019: 85%).
Turnkey cabinet business opportunities progressing
In addition to a gaming market recovery driving a rebound in
demand along with new business orders, the Group was also
successful in expanding outsource offering to include cabinet
solutions. Amid the challenges in supply chains this is a natural
extension in hardware outsourcing for customers to adopt and
increases our addressable market. The Group's turnkey cabinet
range, which combines Quixant's proven computer platform and
monitor technology with integrated software solutions, is seeing
early interest. The Group's first sports betting terminal received
its first customer orders in 2021 which ship in 2022. The Group has
also expanded its cabinet range with the launch of a video lottery
terminal (VLT). Our turnkey cabinet offerings allow VLT game
manufacturers to focus development on game content and design
instead and to streamline their hardware design, procurement and
deployment.
Densitron Business Review
Densitron revenue grew to $39.8m in 2021, the highest revenue
performance from the division since acquisition. This represents
year-on-year revenue growth of 19% compared to 2020 and 10% growth
over 2019. Demand built through the second half of the year with
shipments 24% ahead of the H2 2020 and 22% ahead of H2 2019. Order
intake has been buoyant through 2021 and the business entered 2022
with a strong order book providing good revenue visibility.
Strong Broadcast sector progress
Densitron's broadcast sector revenue grew by 19%, reaching $5.3m
in the year (2020: $4.4m) at enhanced margins relative to the rest
of the Densitron business. This growth was driven by a combination
of new business pipeline conversion and ramp up of mass production
and strong customer retention.
While IDS continued to face challenging trading conditions
through the first half due to COVID-19 enforced lockdowns making
many customers reticent to undertake new equipment deployment and
upgrades, in the second half we saw a marked uptick in
activity.
Operational resilience driving broad based market growth
Densitron has continued its programme of operational
improvements, delivering a consistent global operating model to
customers. Centralising procurement and supply chain in Asia in
2020 was a critical enhancement in operating model, which resulted
in 95% of orders which were due to be shipped to customers in 2021
being delivered by year end. We have also centralised quality
control across all global operations in Taiwan which has delivered
a consistent quality management process, implementation of our
Supplier Code of Conduct and close scrutiny of suppliers
operational and ESG performance.
A consistent regional sales team, field application engineering
and operations structure has created a resilient and consistent
customer experience for our global customers. As we move towards an
increasing number of cross-geographic strategic accounts, this is
an essential progression in our operating model.
In an environment of intense pressure on customers to secure
stock from a trusted supplier who are easy to engage with and have
solid corporate responsibility credentials, this has proven a
successful formula in delivering broad based growth across many of
Densitron's market sectors.
Innovation and product development
During the year Densitron continued to invest in exciting
R&D to open up new ways for humans to interact with machines,
with a focus on the broadcast sector.
-- Tactila(R) - We released our first demonstration of this
technology which enables rotaries and buttons to be placed
on top of a touch screen. This is a unique technology
to Densitron, which we will be building upon in future
years
-- UReady 2U monitor - We expanded our range of broadcast
rack mount control surfaces to include new models including
1 and 3 row Tactila buttons and added the option of a
computer to make these control surfaces 'smart'
-- UReady 4U monitor - We launched our next size of control
surface in monitor form allowing broadcast operators to
reduce their reliance on large overhead monitors and to
use space more efficiently in outside and remote broadcasts
-- Mitsubishi drop-in replacements - With Mitsubishi exiting
the small display market to focus on bigger screens, Densitron's
range of drop-in replacements were launched to give ex-Mitsubishi
customers continuity of supply. We have 50 RFQs in train,
seven of which have been won already.
Supply chain management
Alongside all other technology companies, the greatest challenge
facing the Group during the year was electronic component
shortages, freight capacity issues and price inflation. With
buoyant demand from our customers after the challenges of 2020, we
took decisive action in January 2021 to protect our supply of
critical components by embarking on a sizeable strategic stock
purchase programme.
Early in the first quarter we initiated negotiations with
customers, warning them of radically extended lead times and
starting the process of price negotiations given the growing
component pricing pressures in the components market. Through the
year these issues continued to worsen, mitigated only by the
strategic stock purchases we undertook. Before 2021, typically
electronic component lead times were 4-6 weeks and during the
course of the year this extended out to 16-52 weeks.
In the second half of the year, the delivery of many strategic
stock lines, together with action taken by our engineering teams to
re-engineer several products to design out end-of-life components
or those with poor availability meant we were able to better align
our product supply with customer demand.
While several rounds of sale price increases have been
implemented, the timing of these as reflected in our results has
lagged the inflation in input stocks and consequentially, we have
seen a weaker gross margin performance in 2021 than historically.
Structurally, we are confident that our gross margin remains
consistent with previous years and once we see a levelling off in
component prices, this will lead to a recovery in gross margins
.
Investing in growth
The Group remains well placed to grow and deliver shareholder
value, backed by a strong financial position. Over the last two
years we have built a strong Executive Team, who have been
effective in managing the business through the challenges of 2020
and 2021. With the recovery in the global gaming market,
complemented by new business opportunities because of our
diversifying focus, we will continue to bolster our well-resourced
team to underpin core gaming computer business but importantly also
to fuel growth in the new gaming cabinet and Broadcast solutions
businesses.
Post year end, we opened a new office in Atlanta, Georgia, which
is managed by our joint Gaming Business Leader and Chief Technology
Officer (CTO), Abhinay Bhagavatula. Atlanta has several gaming
studios and software developers in the vicinity and provides an
important location for the delivery of our gaming cabinet business
opportunity.
Outlook
Revenue and demand across the Group was strong not only from
existing customers but also from a range of new business
opportunities. This has continued into 2022 and the current order
book is ahead of current year revenues and the prior year order
book, giving us confidence that we will deliver growth in line with
market expectations for the full year.
The supply chain challenges all technology businesses faced in
2021 have persisted through the first quarter of 2022 and we expect
will continue for the remainder of the year. Our deep relationships
with suppliers have been a significant benefit and alongside our
strategic stock purchases have enabled us to mitigate much of the
impact. During the first half of 2022 we plan to continue investing
in inventory to be well placed for future growth, which will, in
the short term, lead to an increase in working capital, facilitated
by the strength of our balance sheet.
Quixant is an increasingly diversified Group, respected for its
product innovation and domain expertise. This gives us confidence
in our ability to sustainably grow revenue and profits.
Jon Jayal
Chief Executive Officer
(1) Source: American Gaming Association Commercial Gaming
Revenue Tracker, Q4 2021
(2) Source: National Indian Gaming Commission Gross Gaming
Revenue Report
(3) Source: European Gaming and Betting Association
Financial Review
The Quixant Group achieved revenues of $87.1m in the year, up by
37% on 2020 revenues of $63.8m, driven by strong demand across both
Gaming and Densitron.
Statutory Results
Group Revenue was $87.1m (2020: $63.8m), representing
year-on-year growth of 37%. Gross profit was $25.9m (2020: $20.1m),
an increase of 29% over the prior year, with gross margins at 29.7%
(2020: 31.4%). Operating expenses were $21.4m (2020: $21.9m),
resulting in operating profit of $4.5m (2020: operating loss of
$1.9m). Net finance income was $0.4m (2020: Net finance cost of
$0.2m), resulting in profit before tax of $4.9m (2020: loss before
tax of $2.0m) and an income tax expense of $1.4m (2020: $1.0m),
equivalent to an effective tax rate of 27.6% (2020: 47.7%). Basic
earnings per share were $0.0536 (2020: ($0.0445)), an increase of
221%. Diluted earnings per share were $0.0533 (2020: ($0.0445)), an
increase of 220%.
Adjusted Results
Throughout this Annual Report, adjusted and other alternative
performance measures are used to describe the Group's performance.
These are not recognised under International Financial Reporting
Standards (IFRS) or other generally accepted accounting principles
(GAAP). When reviewing Quixant's performance, the Board and
Management team focus on adjusted results in addition to statutory
results. There are several items that are included in statutory
results but are considered to be one-off in nature or not
representative of the Group's performance and are excluded from
adjusted results. The tables in Note 1 show the full list of
adjustments between statutory profit before tax and adjusted profit
before tax and between statutory profit after tax and adjusted
profit after tax at Group level for both 2021 and 2020.
Revenue
Gaming division revenues were $47.3m, an increase of 56% on the
prior year (2020: $30.3m). Densitron division revenues were $39.8m,
an increase of 19% on the prior year (2020: $33.5m).
The increase in Gaming revenues was due to a combination of
market recovery and also commencement of revenue from new business.
Demand for our gaming products was strong, with shipment levels
returning to pre-pandemic levels in the second half of 2021. The
global shortage of electronic components impacted the Gaming supply
chain, but the strategic stock purchases made early in 2021 enabled
us to continue deliveries of product to customers.
Densitron, saw growing demand for its products, particularly in
the Broadcast sector, and achieved the highest annual revenue
performance since the Group acquired the business in 2015. This was
achieved despite the division facing similar supply chain
challenges to the Gaming division in the year.
Gross profit and gross profit margin
The Group generated gross profit during the year of $25.9m
(2020: $20.1m) representing a gross margin of 29.7% (2020: 31.4%).
Component price inflation was evident throughout 2021, driven by
acute component shortages across global technology markets. This
led to gross margin volatility, especially in the Gaming division,
and the lower gross margin compared to 2020. The Group has
continued to take action to mitigate the impact of this cost
inflation by passing on prices rises to customers but there is a
lag in the effect of these flowing through the income
statement.
Foreign exchange
The Group reports its results in US Dollars as this is the
principal currency in which it trades with customers.
The Group's reported results are impacted by US Dollar movements
against currencies in the territories it operates, principally
Pound Sterling, Euro and Taiwan Dollar. The average Pound Sterling
to US Dollar exchange rate in 2021 was 1.38, an 8% depreciation
against 2020 average of 1.28. The average Euro to US Dollar
exchange rate in 2021 was 1.18, a 4% depreciation against the 2020
average of 1.14. The average Taiwan Dollar to US Dollar exchange
rate in 2021 was 0.036, a 5% depreciation against the 2020 average
of 0.034.
Adjusted operating expenses
The Group invested in the business in 2021 to support increased
demand, which when combined with exchange rate movements, resulted
in adjusted operating expenses increasing by 12% to $20.9m (2020:
$18.6m). The largest increase was in salary costs, as $0.5m of
COVID-19 government grants to support payroll received in 2020 did
not recur in 2021. During the year, Group expenditure on research
and development increased to $4.7m (2020: $4.3m). These costs
relate to investment activities principally undertaken in Taiwan,
Italy, the UK and Slovenia. Of these costs, $1.7m were capitalised
(2020: $1.7m) as the Group continues to focus on developing new
products, with amortisation for the year on total capitalised
development costs of $0.9m (2020: $1.3m). A significant amount of
research and development time during the year was spent on
re-engineering products to substitute unavailable or long lead time
components.
Finance income
The Group received COVID-19 support loans from the USA
Government in 2020 and 2021. During 2021, these loans were all
forgiven by the USA Government, resulting in finance income of
$0.5m recognised in the income statement. The Group also incurred
finance expenses of $0.2m (2020: $0.2m), principally related to
leases.
Adjusted Profit Before Tax
Adjusted profit before tax increased by 315% to $5.4m (2020:
$1.3m). The adjustments to statutory profit before tax of $0.5m in
2021 (2020: addition of $3.3m) comprised a share-based payments
credit of $0.2m (2020: share-based payments charge of $0.2m),
restructuring credit of $0.2m (2020: restructuring charge of $0.7m)
and amortisation of acquired intangibles charge of $0.9m (2020:
$0.9m). The 2020 adjustments also included the write off of $1.5m
of capitalised research and development expenditure due to
unexpected early end-of-life of certain third-party components.
Taxation
The effective tax rate on statutory profit before tax decreased
to 27.6% (2020: 47.7%). The lower effective tax rate was due to
deductions for research and development tax credits and patent box
tax relief.
Earnings per share
Basic earnings per share increased by 221% to $0.0536 per share
(2020: ($0.0445) per share). Adjusted diluted earnings per share
increased to $0.0595 per share (2020: ($0.0040) per share).
Balance Sheet and Cash Flow
Non-current assets decreased to $24.3m as at 31 December 2021
(31 December 2020: $24.7m) mainly due to a decrease in deferred tax
assets, offset by an increase in right-of-use assets. Included in
non-current assets are goodwill of $7.7m (31 December 2020: $7.7m)
and acquisition related intangible assets of $1.8m (2020: $2.7m)
allocated to cash generating units (CGUs). The annual impairment
review indicated that no impairment of goodwill is necessary at 31
December 2021 or 31 December 2020. The IDS CGU is sensitive to a
reasonably possible change in key assumptions which could cause
impairment.
Inventory has increased to $29.1m (31 December 2020: $21.6m),
due to the increase in raw materials as the Group made strategic
stock purchases to mitigate the impact of the global component
shortages and secure product for customer demand.
The cash generated from operating activities in the year
amounted to $4.4m, a 10% increase from the prior year (2020:
$4.0m).
The Group capitalised $1.7m development costs (2020: $1.7m),
which reflects the continued development of new products as the
Group expands it product portfolio.
Capital Allocation
The Group will continue its disciplined approach to capital
allocation, prioritising the maintenance of a strong balance sheet,
and sufficient cash reserves, while continuing to focus on
investing in the business to drive organic growth.
The Board propose a dividend for the year ended 31 December 2021
of 2.4p per share (2020: 2.0p per share). This dividend will be
payable on 26 August 2022 to all shareholders on the register on 29
July 2022. The corresponding ex-dividend date is 28 July 2022.
Johan Olivier
Chief Financial Officer
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
For the years ended 31 December 2021 and 2020
2021 2020
Total Total
Note $000 $000
---------------------------------------------------------------------- ---- -------- ----------
Revenue 3 87,128 63,794
Cost of sales (61,224) (43,742)
---------------------------------------------------------------------- ---- -------- ----------
Gross profit 25,904 20,052
Operating expenses (21,361) (21,904)
---------------------------------------------------------------------- ---- -------- ----------
Operating profit/(loss) 4,543 (1,852)
Finance income 534 -
Finance expense (157) (151)
---------------------------------------------------------------------- ---- -------- ----------
Profit/(Loss) before tax 4,920 (2,003)
Taxation 4 (1,356) (955)
---------------------------------------------------------------------- ---- -------- ----------
Profit/(Loss) for the year 3,564 (2,958)
---------------------------------------------------------------------- ---- -------- ----------
Other comprehensive (expense)/income for the year, net of income tax
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences (771) 788
---------------------------------------------------------------------- ---- -------- ----------
Total comprehensive income/(expense) for the year 2,793 (2,170)
---------------------------------------------------------------------- ---- -------- ----------
Basic earnings per share 5 $0.0536 ($ 0.0445)
---------------------------------------------------------------------- ---- -------- ----------
Diluted earnings per share 5 $0.0533 ($ 0.0445)
---------------------------------------------------------------------- ---- -------- ----------
The Italian subsidiary, Quixant Italia srl, is 99% owned by the
Group. The comprehensive income and equity attributable to the
non-controlling interests in this subsidiary are not material.
The consolidated statement of profit and loss and other
comprehensive income has been prepared on the basis that all
operations are continuing operations.
CONSOLIDATED AND COMPANY BALANCE SHEETS
As at 31 December 2021 and 2020
Group Company
------------------ ------------------
2021 2020 2021 2020
$000 $000 $000 $000
----------------------------------------------------------- --- -------- -------- -------- --------
Non-current assets
Property, plant and equipment 5,874 6,004 3,888 3,975
Intangible assets 16,027 16,189 949 1,280
Right-of-use assets 1,924 1,276 1,000 200
Investment property - - - -
Investments in group companies and associated undertakings - - 9,125 9,376
Deferred tax assets 116 1,267 238 314
Trade and other receivables 336 - 18,798 25,393
24,277 24,736 33,998 40,538
--------------------------------------------------------------- -------- -------- -------- --------
Current assets
Inventories 29,085 21,601 20,725 13,779
Trade and other receivables 22,960 16,517 8,933 6,282
Cash and cash equivalents 18,347 18,804 6,604 3,080
---------------------------------------------------------------- -------- -------- -------- --------
70,392 56,922 36,262 23,141
--------------------------------------------------------------- -------- -------- -------- --------
Total assets 94,669 81,658 70,260 63,679
---------------------------------------------------------------- -------- -------- -------- --------
Current liabilities
Loans and borrowings (99) (695) (99) (96)
Trade and other payables (25,510) (12,913) (22,325) (10,723)
Tax payable (1,756) (1,022) (470) (83)
Lease liabilities (609) (386) (351) (200)
---------------------------------------------------------------- -------- -------- -------- --------
(27,974) (15,016) (23,245) (11,102)
--------------------------------------------------------------- -------- -------- -------- --------
Non-current liabilities
Loans and borrowings (621) (712) (621) (712)
Provisions (335) (354) - -
Deferred tax liabilities (302) (1,322) (118) (76)
Lease liabilities (1,360) (901) (668) -
---------------------------------------------------------------- -------- -------- -------- --------
(2,618) (3,289) (1,407) (788)
--------------------------------------------------------------- -------- -------- -------- --------
Total liabilities (30,592) (18,305) (24,652) (11,890)
---------------------------------------------------------------- -------- -------- -------- --------
Net assets 64,077 63,353 45,608 51,789
---------------------------------------------------------------- -------- -------- -------- --------
Equity attributable to equity holders of the parent
Share capital 106 106 106 106
Share premium 6,708 6,708 6,708 6,708
Share-based payments reserve 212 1,571 212 1,571
Retained earnings 56,940 54,086 37,533 42,040
Translation reserve 111 882 1,049 1,364
---------------------------------------------------------------- -------- -------- -------- --------
Total equity 64,077 63,353 45,608 51,789
---------------------------------------------------------------- -------- -------- -------- --------
The Company's loss for the year was $3.7m (2020: $3.9m).
These financial statements were approved and authorised for
issue by the Board of Directors on 4 April 2022 and were signed on
behalf of the Board by:
Jon Jayal
Chief Executive Officer
Company registered number: 04316977
CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARSED 31 DECEMBER 2021 and 2020
GROUP
Share-Based Retained
Share Capital Share Premium Translation Reserve Payments Earnings Total Equity
$000 $000 $000 $000 $000 $000
----------------------------- ------------- ------------- ------------------- ----------- --------- ------------
Balance at 1 January 2020 106 6,698 94 1,345 57,044 65,287
Total comprehensive loss for
the year
Loss for the year - - - - (2,958) (2,958)
Other comprehensive income - - 788 - - 788
----------------------------- ------------- ------------- ------------------- ----------- --------- ------------
Total comprehensive
income/(expense) for the
year - - 788 - (2,958) (2,170)
----------------------------- ------------- ------------- ------------------- ----------- --------- ------------
Transactions with owners,
recorded directly in equity
Share-based payments - - - 226 - 226
Exercise of share options - 10 - - - 10
----------------------------- ------------- ------------- ------------------- ----------- --------- ------------
Total contributions by and
distributions to owners - 10 - 226 - 236
----------------------------- ------------- ------------- ------------------- ----------- --------- ------------
Balance at 31 December 2020 106 6,708 882 1,571 54,086 63,353
----------------------------- ------------- ------------- ------------------- ----------- --------- ------------
Share-Based Retained
Share Capital Share Premium Translation Reserve Payments Earnings Total Equity
$000 $000 $000 $000 $000 $000
----------------------------- ------------- ------------- ------------------- ----------- --------- ------------
Balance at 1 January 2021 106 6,708 882 1,571 54,086 63,353
Total comprehensive income
for the year
Profit for the year - - - - 3,564 3,564
Other comprehensive loss - - (771) - - (771)
----------------------------- ------------- ------------- ------------------- ----------- --------- ------------
Total comprehensive
income/(expense) for the
year - - (771) - 3,564 2,793
----------------------------- ------------- ------------- ------------------- ----------- --------- ------------
Transactions with owners,
recorded directly in equity
Share-based payments - - - (221) - (221)
Reserve transfer(1) - - - (1,138) 1,138 -
Dividend paid - - - - (1,848) (1,848)
Total contributions by and
distributions to owners - - - (1,359) (710) (2,069)
----------------------------- ------------- ------------- ------------------- ----------- --------- ------------
Balance at 31 December 2021 106 6,708 111 212 56,940 64,077
----------------------------- ------------- ------------- ------------------- ----------- --------- ------------
(1) Share -based payment charge is recognised against the
share-based payment reserve over the vesting period based on the
Group's estimate of equity instruments that will vest. In the year
the Group revised the estimated vesting for share awards downwards
based on expected achievement of performance conditions for
previous financial periods, which should have been revised in
previous periods. This resulted in a transfer of reserves to
retained earnings.
COMPANY
Share Share Translation Share-Based Retained Total Parent
Capital Premium Reserve Payments Earnings Equity
$000 $000 $000 $000 $000 $000
-------------------------------------------------- ------- ------- ----------- ----------- -------- ------------
Balance at 1 January 2020 106 6,698 344 1,345 45,915 54,408
Total comprehensive loss for the year
Loss for the year - - - - (3,875) (3,875)
Other comprehensive income - - 1,020 - - 1,020
-------------------------------------------------- ------- ------- ----------- ----------- -------- ------------
Total comprehensive income/(expense) for the year - - 1,020 - (3,875) (2,855)
-------------------------------------------------- ------- ------- ----------- ----------- -------- ------------
Transactions with owners, recorded directly in
equity
Share-based payments - - - 226 - 226
Exercise of share options - 10 - - - 10
-------------------------------------------------- ------- ------- ----------- ----------- -------- ------------
Total contributions by and distributions to owners - 10 - 226 - 236
-------------------------------------------------- ------- ------- ----------- ----------- -------- ------------
Balance at 31 December 2020 106 6,708 1,364 1,571 42,040 51,789
-------------------------------------------------- ------- ------- ----------- ----------- -------- ------------
Share Share Translation Share-Based Retained Total Parent
Capital Premium Reserve Payments Earnings Equity
$000 $000 $000 $000 $000 $000
-------------------------------------------------- ------- ------- ----------- ----------- -------- ------------
Balance at 1 January 2021 106 6,708 1,364 1,571 42,040 51,789
Total comprehensive loss for the year
Loss for the year - - - - (3,663) (3,663)
Other comprehensive loss - - (315) - - (315)
-------------------------------------------------- ------- ------- ----------- ----------- -------- ------------
Total comprehensive income/(expense) for the year - - (315) - (3,663) (3,978)
-------------------------------------------------- ------- ------- ----------- ----------- -------- ------------
Transactions with owners, recorded directly in
equity
Share-based payments - - - (355) - (355)
Reserve transfer(1) - - - (1,004) 1,004 -
Dividend paid - - - - (1,848) (1,848)
Total contributions by and distributions to owners - - - (1,359) (844) (2,203)
-------------------------------------------------- ------- ------- ----------- ----------- -------- ------------
Balance at 31 December 2021 106 6,708 1,049 212 37,533 45,608
-------------------------------------------------- ------- ------- ----------- ----------- -------- ------------
(1) Share -based payment charge is recognised against the
share-based payment reserve over the vesting period based on the
Group's estimate of equity instruments that will vest. In the year
the Group revised the estimated vesting for share awards downwards
based on expected achievement of performance conditions for
previous financial periods, which should have been revised in
previous periods.5This resulted in a transfer of reserves to
retained earnings.
CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
FOR THE YEARSED 31 DECEMBER 2021 and 2020
Group Company
---------------- ----------------
2021 2020 2021 2020
Note $000 $000 $000 $000
----------------------------------------------------------- ------- ------- ------- -------
Cash flows from operating activities
Profit/(Loss) for the year 3,564 (2,958) (3,663) (3,875)
Adjustments for:
Depreciation, amortisation and impairment 2,529 3,084 584 970
Impairment losses on intangible assets - 1,503 - -
Depreciation of leased assets 701 473 433 230
Movement in provisions (15) (1,061) - (194)
Taxation expense 1,356 955 588 105
Dividends received - - - (391)
Finance income (534) - - -
Finance expense 157 151 43 25
Share-based payment (credit)/expenses (221) 226 (355) 166
------------------------------------------------------------ ------- ------- ------- -------
7,537 2,373 (2,370) (2,964)
(Increase)/Decrease in trade and other receivables (6,737) 7,026 3,944 5,734
(Increase)/Decrease in inventories (7,735) 14 (6,932) 923
Increase/(Decrease) in trade and other payables 11,982 (4,625) 11,001 (1,523)
------------------------------------------------------------ ------- ------- ------- -------
5,047 4,788 5,643 2,170
Interest paid (63) (96) - (12)
Lease liability interest paid (94) (55) (40) (13)
Tax paid (492) (663) (83) (73)
------------------------------------------------------------ ------- ------- ------- -------
Net cash from operating activities 4,398 3,974 5,520 2,072
------------------------------------------------------------ ------- ------- ------- -------
Cash flows from investing activities
Capitalised development expenditure (1,676) (1,738) - -
Acquisition of property, plant and equipment (160) (431) (78) (383)
Acquisition of intangible assets (323) (71) (61) (71)
Proceeds from investments - - 258 -
Dividends received - - - 391
Net cash from investing activities (2,159) (2,240) 119 (63)
------------------------------------------------------------ ------- ------- ------- -------
Cash flows from financing activities
Reduction/repayment of borrowings (132) (19) (88) (11)
Repayment of government loans (476) - - -
Proceeds from government loans 415 606 - -
Payment of lease liabilities (666) (526) (188) (191)
Dividends paid (1,848) - (1,848) -
Proceeds from issue of shares - 10 - 10
------------------------------------------------------------ ------- ------- ------- -------
Net cash from financing activities (2,707) 71 (2,124) (192)
------------------------------------------------------------ ------- ------- ------- -------
Net (decrease)/increase in cash and cash equivalents (468) 1,805 3,515 1,817
Cash and cash equivalents at 1 January 18,804 16,954 3,080 1,219
Foreign exchange rate movements 11 45 9 44
------------------------------------------------------------ ------- ------- ------- -------
Cash and cash equivalents at 31 December 18,347 18,804 6,604 3,080
------------------------------------------------------------ ------- ------- ------- -------
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. General information
The financial information set out below, does not constitute the
company's statutory accounts for the years ended 31 December 2021
or 2020 but is derived from those accounts that was approved by
Directors on 4 April 2022. Statutory accounts for 2020 have been
delivered to the registrar of Companies, and those for 2021 will be
delivered in due course. The auditor has reported on those
accounts; their reports were (i) unqualified, (ii) did not include
a reference to any matters to which the auditor drew attention by
way of emphasis without qualifying their report, and (iii) did not
contain a statement under section 498 (2) or (3) of the Companies
Act 2006.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of UK-adopted international accounting
standards and as applied in accordance with the provisions of the
Companies Act 2006, this announcement does not itself contain
sufficient information to comply with UK-adopted international
accounting standards. The Company expects to publish full Financial
Statements that comply with UK-adopted international accounting
standards during April 2022.
Going concern
The possible continuing and future impact of COVID-19 on the
Group has been considered in the preparation of the financial
statements including within our evaluation of critical accounting
estimates and judgements. The Group's operational and financially
robust position is supported by:
-- Strong recovery in Gaming revenues from the impact of the
COVID-19 imposed lockdowns experienced in 2020; and continued good
performance from Densitron;
-- Resilient cash generation, despite investing in working
capital to support growth and good liquidity position; and
-- Strong balance sheet.
In undertaking a going concern review, the Directors have
reviewed financial projections for a period of at least twelve
months (the review period) and have additionally prepared
projections through to 31 December 2023. Management prepared a base
case scenario based on the approved budget for 2022 and forecasts
for 2023. Management also prepared a severe but plausible downside
scenario, using the following key assumptions:
-- A 31% reduction in 2022 and 2023 budgeted revenues to
replicate the impact that COVID-19 had on the Group's revenues in
2020; and
-- The Group remains committed to making last time buy purchases
of key components from AMD and these purchases continue and are in
addition to the regular supplier payments made in the normal course
of business.
The impact of these assumptions is mitigated by:
-- Reduction in operating expenses to reflect reduction in
bonuses, delay, or suspension of new headcount additions etc.,
consistent with the actions management took in response to the
COVID-19 pandemic in 2020 and 2021;
-- No dividend paid in 2023, although a dividend is still paid in 2022; and
-- Reduction of discretionary capital expenditure spend.
In this scenario, the Group continues to have sufficient cash
reserves and working capital to continue operating as a going
concern through the review period.
While the Directors' have no reason to believe that customer
revenues and receipts will decline to the point that the Group no
longer has sufficient resources to fund its operations, should this
occur, the Group would look to take out additional funding
facilities, as well as making further reductions in controllable
costs. There would also be an opportunity to sell certain property
and inventory assets to accelerate cash generation and/or mitigate
risk.
Consequently, the Directors are confident that the Group and
Company will have sufficient funds to continue to meet its
liabilities as they fall due for at least 12 months from the date
of approval of these financial statements and, therefore, have
prepared these financial statements on a going concern basis.
Use of judgements and estimates
The preparation of financial information in conformity with
UK-adopted international accounting standards requires the use of
certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Group
accounting policies. The areas involving a higher degree of
judgement and estimation relate to the recoverable amount of
goodwill in the IDS CGU, valuation of Quixant CGU inventory and
capitalisation of development costs.
Significant estimates
Recoverability of goodwill and acquisition related intangibles
in the IDS CGU
The estimated recoverable amount of the IDS CGU has been
determined based on the higher of the value-in-use calculations and
fair value less costs to sell. These calculations require the use
of estimates and assumptions that I subjective due to the inherent
uncertainty involved in forecasting and discounting future cash
flows. Reasonably possible changes to the assumptions in the future
may lead to material adjustments to the carrying value of the
CGU.
Inventory valuation in the Quixant CGU and parent company
Inventories, which comprise goods held for resale, are stated at
the lower of cost and net realisable value, on a weighted average
cost basis. The estimated recoverable amount of the inventory
balance in the Quixant CGU and the Parent Company is subjective,
due to the inherent uncertainty involved in forecasting of future
sales. Provisions are made to write down any slow-moving or
obsolete inventory to net realisable value.
As at 31 December 2021, the total inventory in the Quixant CGU
is $26.9m (2020: $19.1m) and in the Parent company is $20.7m (2020:
$13.8m). The provision against slow-moving and obsolete inventory
for the Quixant Group as at 31 December 2021 is $1.6m (2020: $1.3m)
and in the Parent company is $1m (2020: $0.6m). A difference of
0.2% in the provision as a percentage of gross inventory would give
rise to a difference of +/- $0.1m in gross margin. The choice of a
0.2% change for the determination of sensitivity represents the
change to the level of provisioning for the prior year.
Significant judgement
The impact on the financial statements of a change in judgement
with respect to the development cost criteria, such as the
commercial viability of a product, could affect the value
capitalised in respect of intangible assets and the corresponding
profit and loss effect. If the criteria had not been met in the
current year, the impact would have been to expense $1.7m (2020:
$1.7m) of development costs.
Reconciliation of adjusted measures
The Group presents adjusted profit before tax by making
adjustments for costs and profits, which management believes to be
significant by virtue of their size, nature or incidence or which
have a distortive effect on current year earnings. Such items may
include but are not limited to share-based payments expense,
restructuring charges, acquisition related costs and amortisation
of intangible assets arising from business combinations.
In addition, the Group presents an adjusted profit after tax
measure by making adjustments for certain tax charges and credits,
which management believes to be significant by virtue of their
size, nature or incidence or which have a distortive effect.
The Group uses these adjusted measures to evaluate performance
and as a method to provide Shareholders with clear and consistent
reporting. See below for a reconciliation of profit before tax to
adjusted profit before tax, a reconciliation of profit after tax to
adjusted profit after tax and a reconciliation of operating
expenses to adjusted operating expenses
2021 2020
$000 $000
------------------------------------------------------------------------ ----- -------
Profit/(Loss) before tax 4,920 (2,003)
------------------------------------------------------------------------ ----- -------
Adjustments:
Capitalised development costs derecognised(1) - 1,503
Amortisation of customer relationships, technology and order backlog(2) 920 920
Share-based payments (credit)/expense(3) (222) 226
Restructuring (credit)/charge(4) (189) 674
------------------------------------------------------------------------ ----- -------
Adjusted Profit before tax 5,429 1,320
------------------------------------------------------------------------ ----- -------
1. To derecognise capitalised development costs due to one-off
notifications by key suppliers to end-of-life key components
utilised in our Gaming products; citing changing market demands and
supply chain issues brought about by the COVID-19 pandemic.
2. The amortisation of customer relationships and order backlog
has been excluded as it is not a cash expense to the Group.
3. Share-based payments (credit)/expense has been excluded as
they are not a cash-based expense. The income is related to the
reversal of the options charge for the grants in prior periods,
triggered mainly by forfeiture of performance conditions and
exercise of options in the past.
4. Restructuring (credit)/charge - This related to the reversal
of provision, set aside in the past, which settled in the current
period for lower than estimated provision.
2021 2020
$000 $000
------------------------------------------------------------------------ ----- -------
Profit / (Loss) after tax 3,564 (2,958)
Adjustments:
Capitalised development costs derecognised(1) - 1,503
Amortisation of customer relationships, technology and order backlog(2) 920 920
Share-based payments (credit)/expense(3) (222) 226
Restructuring (credit)/charge(4) (189) 674
------------------------------------------------------------------------ ----- -------
Non-recurring tax benefits(5) (97) (631)
------------------------------------------------------------------------ ----- -------
Adjusted Profit/(Loss) after tax 3,976 (266)
------------------------------------------------------------------------ ----- -------
5. Tax on adjusted items relating to amortisation of customer
relationships and orders of $0.9m (2020: $0.9m), share based
payment (credit)/expense of $0.2m (2020: charge of $0.2m),
restructuring (credit)/charge of $0.2m (2020: charge of $0.7m).
2021 2020
$000 $000
------------------------------------------------------------------------ -------- --------
Operating expenses (21,361) (21,904)
Adjustments:
Capitalised development costs derecognised(1) - 1,503
Amortisation of customer relationships, technology and order backlog(2) 920 920
Share-based payments (credit)/expense(3) (222) 226
Restructuring (credit)/charge(4) (189) 674
------------------------------------------------------------------------ -------- --------
Adjusted Operating expenses (20,852) (18,581)
------------------------------------------------------------------------ -------- --------
2. Business and geographical segments
The Chief Operating Decision Maker (CODM) in the organisation is
an executive management committee comprising the Board of
Directors. The segmental information is presented in a consistent
format with management information. The Group assesses the
performance of the segments based on a measure of revenue and
profit before tax. The segmental split of the balance sheet is not
reviewed by the CODM and they do not look at assets/liabilities of
each division separately but combined as a group. Therefore, this
split for assets has not been included.
The operating segments applicable to the Group are as
follows:
-- Gaming - Design, development and manufacturing of Gaming
platforms and display solutions for the casino gaming and slot
machine industry.
-- Densitron - Sale of electronic display products to global
industrial markets. IDS is included in the Densitron reporting
segment, due to the nature of IDS business, the products that are
sold and the market that the business operates in are all
consistent with that segment.
Reconciliation of segment results to profit after tax:
2021 2020
$000 $000
---------------------------- -------- ---------
Gaming 9,807 6,382
Densitron 4,597 3,459
-------- ---------
Segment results 14,404 9,841
Corporate cost (9,861) (11,693)
---------------------------- -------- ---------
Operating profit/(loss) 4,543 (1,852)
Finance income / (expense) 377 (151)
Profit/(loss) before tax 4,920 (2,003)
Taxation (1,356) (955)
---------------------------- -------- ---------
Profit/(loss) after tax 3,564 (2,958)
---------------------------- -------- ---------
Year to 31 December 2021 Year to 31 December 2020
$000 $000 $000 $000 $000 $000
---------------------------------- -------- ---------- ------ -------- ---------- ------
Gaming Densitron Total Gaming Densitron Total
---------------------------------- -------- ---------- ------ -------- ---------- ------
Other information
Depreciation of owned assets 97 4 101 - - -
Amortisation of intangible assets 670 213 883 678 122 800
767 217 984 678 122 800
---------------------------------- -------- ---------- ------ -------- ---------- ------
3 . Analysis of turnover
2021 2021 2021 2020 2020 2020
$000 $000 $000 $000 $000 $000
------------------------------- --------- ------------ ------ ------ --------- ------
Gaming(1) Densitron(2) Total Gaming Densitron Total
------------------------------- --------- ------------ ------ ------ --------- ------
By primary geographical market
Asia 1,822 8,264 10,086 1,464 7,347 8,811
Australia 4,597 47 4,644 2,695 98 2,793
UK 2,021 2,443 4,464 918 3,457 4,375
Europe excl. UK 7,865 13,722 21,587 6,391 11,142 17,533
North America 30,595 13,540 44,135 19,004 10,601 29,605
Other 399 1,813 2,212 (154) 831 677
-------------------------------- --------- ------------ ------ ------ --------- ------
47,299 39,829 87,128 30,318 33,476 63,794
------------------------------- --------- ------------ ------ ------ --------- ------
1. 2021 Gaming no longer report revenue by products, which was
split into Gaming Platforms (2020: $27.5m) and Gaming Monitors
(2020: $2.8m). Gaming Monitors were split into Button-decks (2020:
$2.5m) and Monitors (2020: $0.3m).
2. 2021 Densitron revenue from products splits into Densitron
$39.0m (2020: $32.5m) and IDS $0.8m (2020: $1.0m). IDS revenue
included revenue of $0.3m (2020: $0.3m) recognised throughout the
performance period.
The above analysis includes sales to individual countries in
excess of 10% of total turnover of:
2021 2020
$000 $000
---- ------ ------
USA 42,136 27,786
---- ------ ------
Revenues of $15.4m (2020: $16.2m) are derived from one customer
(2020: two customers) who individually accounted for more than 10%
of Group revenues in 2021. These revenues are attributable to the
Gaming segment.
4. Taxation
Recognised in the profit and loss account
2021 2020
$000 $000
-------------------------------------------------- ----- -------
Current tax expense
UK corporation tax - 618
Foreign tax 2,057 1,009
Adjustments for prior years (832) 400
-------------------------------------------------- ----- -------
Current tax expense 1,225 2,027
-------------------------------------------------- ----- -------
Deferred tax
Origination and reversal of temporary differences (303) (1,074)
Adjustments for prior years - (80)
Change in deferred tax rate to 25% (2020: 19%) 434 82
-------------------------------------------------- ----- -------
Deferred tax 131 (1,072)
-------------------------------------------------- ----- -------
Total tax expense in the income statement 1,356 955
-------------------------------------------------- ----- -------
Reconciliation of effective tax rate
2021 2020
$000 $000
--------------------------------------------------------- ----- -------
Profit/(Loss) for the year 3,564 (2,958)
Total taxation expense 1,356 955
--------------------------------------------------------- ----- -------
Profit/(Loss) excluding taxation 4,920 (2,003)
--------------------------------------------------------- ----- -------
Tax using the UK corporation tax rate of 19% (2020: 19%) 935 (381)
Non-deductible expenses 46 30
Enhanced research and development (relief)/reversal (363) 445
Patent box tax relief (382) -
Change in deferred tax rate to 25% (2020: 19%) 433 84
Overseas tax in excess of standard UK rate 501 323
Exercise of share options 6 8
Unrecognised losses 1,009 200
(Over)/under provided in prior years(1) (832) 320
Other 3 (74)
--------------------------------------------------------- ----- -------
Total taxation expense in the income statement 1,356 955
--------------------------------------------------------- ----- -------
1 The 2020 tax provision included a reversal of enhanced
research and development relief due to uncertainty over whether the
relief would be granted. In 2021 the Group completed the necessary
actions to ensure relief may be claimed and filed a tax return on
that basis, leading to the adjustment to the 2021 tax
provision.
Factors that may affect future tax charges
An increase in the UK corporation rate from 19% to 25%
(effective 1 April 2023) was substantively enacted on 24 May 2021.
This will increase the company's future current tax charge
accordingly. The deferred tax liability at 31 December 2021 has
been calculated based on these rates, reflecting the expected
timing of reversal of the related temporary differences (2020:
19%).
5 . Earnings per ordinary share (EPS)
2021 2020
$000 $000
------------------------------------------------------------------------------------------- ----- -------
Earnings
Earnings for the purposes of basic and diluted EPS being net profit/(loss) attributable to
equity shareholders 3,564 (2,958)
------------------------------------------------------------------------------------------- ----- -------
Number of shares Number Number
------------------------------------------------------------------------ ---------- ----------
Weighted average number of ordinary shares for the purpose of basic EPS 66,450,060 66,437,683
Effect of dilutive potential ordinary shares:
----------
Share options 425,500 154,375
------------------------------------------------------------------------ ---------- ------------
Weighted number of ordinary shares for the purpose of diluted EPS 66,875,560 66,592,058
------------------------------------------------------------------------ ---------- ------------
Basic earnings per share $0.0536 ($0.0445)
------------------------------------------------------------------------ ---------- ------------
Diluted earnings per share $0.0533 ($0.0445)
------------------------------------------------------------------------ ---------- ------------
Calculation of adjusted diluted earnings per share: $000 $000
------------------------------------------------------------------------------------------- ------- --------
Earnings
Earnings for the purposes of basic and diluted EPS being net profit/(loss) attributable to
equity shareholders 3,564 (2,958)
Adjustments
Research and development derecognised - 1,503
Amortisation of customer relationships, technology and order backlog 920 920
Share-based payments (credit)/expense (222) 226
Restructuring (credit)/charge (189) 674
------------------------------------------------------------------------------------------- ------- --------
4,073 365
Tax effect of adjustments (97) (631)
------------------------------------------------------------------------------------------- ------- --------
Adjusted earnings 3,976 (266)
------------------------------------------------------------------------------------------- ------- --------
Adjusted diluted earnings per share $0.0595 ($0.004)
------------------------------------------------------------------------------------------- ------- --------
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR FFFILSLISIIF
(END) Dow Jones Newswires
April 05, 2022 02:01 ET (06:01 GMT)
Quixant (LSE:QXT)
Historical Stock Chart
From May 2024 to Jun 2024
Quixant (LSE:QXT)
Historical Stock Chart
From Jun 2023 to Jun 2024