TIDMQXT
RNS Number : 8020T
Quixant PLC
25 March 2019
25 March 2019
Quixant plc
("Quixant" or the "Company")
Final Results
Quixant (AIM: QXT), a leading provider of specialised computing
platforms and monitors for gaming and slot machine applications, is
pleased to announce its Final Results for the year ended 31
December 2018.
Financial Highlights:
-- Revenue growth of 5% to $115.2 million (2017: $109.2
million)
o Quixant Gaming division revenue $77.6m (2017: $71.1m)
* Gaming Platforms revenue $62.5m (2017: $54.8m)
* Gaming Monitors revenue $15.1m (2017: $16.3m)
o Densitron division revenue of $37.5m (2017: $38.1m)
-- Adjusted(1) pre-tax profit up 3% to $18.2m (2017:
$17.7m)
-- Pre-tax profit down 5% to $14.3m (2017: $15.0m) including
$3.0m restructuring costs
-- Adjusted(2) diluted EPS up 14% to $0.260/share (2017:
$0.229/share)
-- Diluted EPS up 8% to $0.213/share (2017: $0.197/share)
-- Net cash from operating activities up 40% to $11.3m
(2017: $8.1m)
-- Net cash at period end of $9.7m (2017: $4.5m)
-- Proposed full year dividend of 3.1p per share (2017:
2.6p), an increase of 19%
1. Adjusted by adding back items included in the adjusted PBT
reconciliation in note 2 to the financial statements totalling
$3.9m (2017: $2.7m).
2. Adjusted by adding back the items included in note 1 above
and subtracting the associated tax effect as set out in note 3 to
the financial statements. In 2018 these amounted to $3.1m (2017:
$2.1m).
Operational highlights
-- Increased market share in the core Gaming Division
to 13%, supplying 61,000 platforms (2017: 11% and
52,000)*
-- Enhanced features added to the Gaming Ecosystem(R),
expanding Quixant's routes to market
-- New products launched by Densitron to target the
broadcast market
-- Enhanced Group structure to create more scalable
operations
-- Appointment of key senior management, including Guy
Millward as Chief Financial Officer and Andrew Miller
as Head of Corporate Operations
-- Significant long-term growth opportunities, including
opening of the market in Japan
*Source: G3 Global Gaming Market report 2018 - 475,000 annual
replacement cycle
Jon Jayal, Chief Executive Officer of Quixant, commented:
"2018 saw another year of record revenue and profits with
revenue for our core gaming platforms up 14%. This was achieved
despite softer than expected demand from several of our key
customers. Market conditions have normalised during 2019, although
some of our key customers have indicated to us that their demand
for our gaming platforms will be more second half weighted than
previous years, and we consequently anticipate our performance to
mirror this trend. In light of this, we are taking a modestly more
prudent view of our anticipated revenues for 2019, although our
flexible cost model will ensure that the consequential impact on
our anticipated profitability for 2019 is minimised. Following a
wealth of organisational enhancements we believe Quixant is
excellently positioned for robust long-term growth, with a
substantial new business gaming pipeline in excess of $30m for
delivery in 2020 and beyond. Our Densitron vertical market focused
strategy is delivering results with the order book in the broadcast
sector now reaching $4.5m."
For further information please contact:
Quixant plc Tel: +44 (0) 1223 892 696
Jon Jayal (Chief Executive Officer)
Guy Millward (Chief Financial 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 3405 0205
Alma PR
John Coles / Hilary Buchanan / Susie Hudson
About Quixant
Quixant, founded in 2005, designs and manufactures highly
optimised computing solutions and monitors principally for the
global gaming industry. The Company is headquartered in Cambridge
in the UK where the global sales function is based. North America
sales and sales support is run from their subsidiary in Las Vegas.
Quixant has its own manufacturing and engineering operation based
in Taiwan and software engineering and customer support team based
in Italy. All the specialised products software and manufacturing
are produced in-house and Quixant owns all its own IP some of which
is protected by patents and design rights.
In November 2015 Quixant acquired Densitron Technologies plc.
Densitron has a strong heritage in the sale of electronic display
solutions to global industrial markets. Through Densitron's
experienced sales team, Quixant has a robust platform to build its
business into wider industrial markets. In-depth information on the
Company's products, markets, activities and history can be found on
the corporate website at www.quixant.com.
The information contained in this announcement is inside
information for the purposes of article 7 of Regulation
596/2014.
Chairman's Statement
I am delighted to report on a successful year of record
financial performance combined with undertaking significant
enhancements in the fabric of the organisation as we become a
larger and more complex enterprise.
Our core gaming platforms business has experienced another year
of strong double-digit growth. Our share of the global market for
gaming platforms has grown to around 13% (2017: 11%), giving us
plenty of scope to continue our record of revenue growth. Despite
some softness in 2018 impacting gaming in the short term, the
outlook for the industry remains buoyant with significant long-term
opportunities, not least the opening of the market in Japan.
During the course of the year we restructured the business to
create a more scalable operation and also made several significant
hires to the senior management team. Guy Millward was appointed as
Chief Financial Officer in October 2018, taking over from Cresten
Preddy who retired after many dedicated years of service to the
company. I would like to personally thank her for her invaluable
contribution and wish her well in her retirement. We also appointed
Andrew Miller as Head of Corporate Operations with a remit to
maintain an effective organisational infrastructure to support our
ambitious growth trajectory. In early 2019 we also have made
exciting appointments to bolster the management of our Densitron
division.
Our business operations continue to generate healthy cash
balances despite the demands on working capital over the last few
years. Our confidence in the future growth of the business and cash
generation leads the Board to recommend an increase in the dividend
by 19% to 3.1p per share (2017: 2.6p per share).
Michael Peagram,
Chairman
Chief Executive's Report
Quixant has continued to deliver healthy year on year growth in
2018 driven by the core gaming platforms business posting 14%
growth in revenue over the year to $62.5m (2017: $54.8m) relative
to the previous year. As explained in the interim results, during
the year we made a strategic decision to reduce the amount of low
margin, commoditised gaming monitors business we were supplying due
to increasing competition and the low achievable return on
investment. As a result, gaming monitor revenue reduced to $15.1m
from $16.3m in 2017. Densitron revenue was stable as expected at
$37.5m (2017: $38.1m) and the business continues to be profitable
and provide interesting opportunities in markets outside
gaming.
2018 2017
$m $m
Gaming platforms 62.5 54.4
Gaming monitors 15.1 16.3
Densitron 37.5 38.1
------ ------
Total 115.2 109.2
------ ------
Gross margins across the group remained stable over the year
despite significant upward pressure on component prices.
Gaming division
Business model
Quixant's gaming platform solutions have been the core of our
business proposition since the Company started in 2005. The
founders of Quixant have a pedigree in industrial computer and
display systems and identified a niche opportunity to develop
bespoke computer solutions specifically for the casino gaming and
slot machine industry. These gaming platforms have always
incorporated both computer hardware and computer software elements
packaged in solutions which meet the stringent regulatory needs of
global gaming markets.
The game software is the most important factor in our customers'
commercial success - a game which attracts players and retains them
at machines for longer is the objective all customers seek.
However, many manufacturers allocate significant resources
developing the underlying computer platforms on which the games
operate, despite the fact that the player does not directly
experience these elements. Quixant brought to market a credible,
purpose built, outsourced option which enabled customers to focus
on the core element of game design and rely on Quixant for a
regulatory compliant gaming computer platform.
Our continued investment into the gaming specific hardware and
software features of our gaming computer platforms has earned us
the recognition for being the industry leaders in outsourcing for
these elements of the machines. Outsourcing computer platform
design also enables customers to bring products to market quicker.
Whilst typically there is a 12-18 month gestation period for new
gaming platform wins generating revenue, we have helped reduce this
to as little as 6 months on occasions, providing customers with a
short cut to bringing products to market.
Our Gaming Ecosystem(R) is the cornerstone of our gaming
proposition. Combining all elements of our hardware and software
solutions, third party device support as well as our partnership
and customer support model, the industry recognises Quixant's
Gaming Ecosystem(R) as the standard-bearer in regulatory compliant,
fit for purpose, gaming technology. The strength of the Gaming
Ecosystem(R) is that it empowers customers with a wealth of
compatible, supported hardware and software which accelerate game
design, enable faster new market penetration and save development
costs.
Some of the largest customers in the industry have started to
recognise the benefits of Quixant's Gaming Ecosystem, opening doors
to us in niche areas of these businesses. These types of engagement
provide an excellent platform for these major customers to test
Quixant's value proposition and lead to further outsourcing. We
have seen this already with one of our customers in this space who
first started working with us in 2016. We have since won another
project with them and they contributed several million dollars of
revenue in 2018.
Quixant introduced gaming monitors to its product portfolio in
2015 to augment the revenue generated by the platforms business.
There is at least one but typically several gaming monitors per
machine, all of which are connected to the gaming platforms. Whilst
the extent of innovation in these products is more limited, we have
been gradually adding increased functionality which enables Quixant
to differentiate itself. This is particularly true in gaming button
decks which are the control device used for the latest machines to
replace mechanical buttons.
New Gaming Ecosystem(R) features
A new feature we started promoting in the Gaming Ecosystem(R) in
late 2017 was our LED driving solution called QxLED. Slot machines
are increasingly making use of LED illumination around the cabinet
to make them more vibrant and enticing. Driving these LEDs requires
both hardware and software elements which are time consuming to
develop. QxLED brings an off-the-shelf product to the industry
which manufacturers can use to drive the LEDs while minimising
development effort. With Quixant's tools, the LEDs can be
synchronised to content on the screen to enable ambient lighting
effects as part of game play.
This new feature is a blend of both hardware and software
elements and is available on our newer gaming platforms as well as
through an add-on product which can be retrospectively
purchased.
Gaming platforms
The success of the business strategy has resulted in Quixant
increasing its market share every year and in 2018 we supplied
61,000 platforms, an increase of 17% over the 52,000 we supplied in
2017. Based on an annual replacement cycle of around 475,000
machines this suggests a market share of around 13%.
During the year we also made the first volume shipments to
Novomatic, one of the largest gaming companies in Europe, after
several years of collaboration. We have undertaken several projects
with Novomatic and enjoy a privileged relationship with them as a
technology partner. We see scope for continued and expanded
collaboration with them over the coming years.
We also saw strong growth in 2018 from a major manufacturer who
we started supplying for the first time in 2017 with one of our
cost-effective computer platforms used in their jackpot
controllers. This exciting new business win has led to us
collaborating on several other projects which strengthen our
pipeline. Overall, we saw a migration of the mid-tier of customers
(by volume) growing into top tier customers as their consumption of
Quixant computer platforms grows. This is a typical scenario as new
business ramps.
We also saw healthy growth in our cost-effective platform range,
which is well suited to casino systems product and lower cost
markets where high levels of graphical intensity are not
critical.
Sales by customer unit purchase quantity
2018 2017
<1k pcs 8,869 8,557
1k - 5k pcs 5,579 11,726
>5k pcs 46,632 31,923
------- -------
Total 61,080 52,206
------- -------
Gaming monitors
In 2018, we shipped 13,150 button decks (2017: 12,950) and
17,650 (2017: 18,500) main screen monitors. We also shipped a
significant value of associated monitor product such as touch
sensors and controllers which are not reflected in the figures
above. Quixant's gaming monitors business has been broadly
separated into two product categories: main screen monitors and
electronic button decks.
The majority of the competitors for gaming monitors originate in
Asia (mainly Korea) and have typically been more focused on the
main screen monitors (which have widespread adoption in markets
outside gaming) rather than the gaming specific button decks.
Our decision to reduce exposure to some of the highly price
sensitive main screen gaming monitors business has released
resources to develop more bespoke button deck solutions, which we
believe represent an increase in our addressable market by around
$250m. Whilst this as expected resulted in our 2018 gaming monitors
business revenue falling to $15.1m from $16.3m in 2017, it has led
to profitability improvements and in the long term we believe a
more stable platform for sustainable growth.
During the year we commenced shipments of button deck solutions
to a major Japanese gaming manufacturer. Supported by our Tokyo
team who were brought on as part of the Densitron acquisition, this
exciting business win positions us well for further opportunities
in this significant market.
We will be launching a new modular design 27" floating monitor
in 2019 which offers the flexibility for cost-effective
customisation of the main screen monitors to fit customers'
specific requirements.
Sales by gaming monitor type
2018 2017
$m $m
Main Screens 8.7 10.4
Button Decks 6.4 5.9
Total 15.1 16.3
----- -----
Supply chain challenges
Shortages in the electronic components industry have presented a
significant challenge to electronics equipment manufacturers over
the last couple of years. The supply of several categories of
component, including memory components (DRAM) and sub $1 commodity
"passive" components (resistors, capacitors and inductors) has
failed to meet the demand in the market. The resulting shortages
have placed major upward pressure on prices and dramatically
extended lead times for these components. The table below
illustrates the spot memory price of DDR4 progression of a specific
type of DRAM memory components over the last 24 months.
DDR4 memory price relative to June 2016
Dec 2016 Jun 2017 Dec 2017 Jun 2018 Dec 2018
1.25x 1.65x 2.7x 2.0 x 1.6x
--------- ---------- --------- ---------
Passive components have historically been available with, in
some cases zero lead times but during 2018 were being quoted with
up to 8-month lead times.
Quixant recognised the potential dislocation early and in 2017
we gradually started to build strategic stock of critical component
lines. This continued throughout 2018 and the elevated stock
position has enabled us to maintain gross margins and, critically,
maintain committed customer lead times.
Whilst this environment has been challenging for us to navigate,
our expertise in component sourcing has enabled us to maintain our
historic core gaming platform business gross margin.
Gaming market outlook
The land-based gaming industry continues to present major
opportunities for market share expansion. With the opening of new
territories such as Japan, there is scope for a general growth in
regulated markets which Quixant is well-positioned to benefit from.
With a background of overall market growth, we continue to grow
market share of the annual replacement cycle as manufacturers
continue to look to outsource.
Densitron division
Business strategy
Densitron's business has traditionally been in the supply of
small display components which are used in industrial equipment in
a wide variety of vertical markets. The business has global reach
and an experienced sales and engineering team capable of
identifying and delivering suitable display solutions which meet
customers' specific requirements. An understanding of the
environmental characteristics, performance requirements and
available technologies has been a key strength of the business.
The commoditised nature of the display components market and the
strengthening capability for industrial equipment manufacturers to
source directly from Asia has increased competition in Densitron's
core business. When Quixant acquired Densitron in November 2015, we
embarked on a change in direction for the business to identify
opportunities for higher value, differentiated products.
To be successful in the crowded electronics marketplace, it is
essential to focus on specific verticals and offer compelling
products which are difficult for the bulge bracket component
suppliers to attack.
This change in business strategy has required a change in
management and mindset to enable us to identify suitable vertical
market opportunities and thereafter evolve new product offerings
which capitalise on them.
Broadcast market opportunity
Shortly after completion of the acquisition, we undertook a
detailed analysis of the vertical markets Densitron supplied and
evaluated the products supplied, market dynamics/size, technology
requirements and other participants in the markets with a view to
identifying opportunities for Densitron to execute its vertical
market focused strategy. We built a set of criteria which a
vertical market needed to meet to be suitable for
consideration.
Broadcast was identified as one of several sectors which
fulfilled many of the necessary criteria and as a result in early
2017 we exhibited at a London broadcast industry show, BVE 2017. We
have since exhibited twice at IBC in Amsterdam and once at NAB in
Las Vegas which address the EMEA and North American broadcast
markets.
We have also started launching market-centric products. Our
UReady TFT display range won a best of show award at NAB in 2018
and gives broadcast customers a unique, high quality display for
their rackmount equipment. Densitron's mission in broadcast is to
empower customers with a route to implementing the benefits of
touch screen technology whilst addressing the lack of tactile feel
which is essential for certain applications.
We are also introducing embedded computer products and software
to make driving these displays easier and have brought our first
solutions to market, which are now being marketed to customers.
Our broadcast pipeline has now grown to $4.5m and we have
confidence the industry represents a major opportunity for a
diversified source of revenue for Quixant Group. We believe the
business secured to date is a source of top line growth for
Densitron in the coming 12-24 months.
Investment case
Quixant has built a successful business focused on delivering
technically innovative products targeted at specific vertical
markets. The business has an ingrained culture of engineering
competence, innovative thinking and commerciality which has
delivered healthy growth in the gaming industry. The highly
regulated nature of the gaming industry, the size of the market and
strength of Quixant's brand and products provide the engine for
continued strong growth in the gaming sector.
Alongside this growth, Quixant's ability to generate vertical
market focused technology has wider applications in a variety of
other markets and Densitron has the ability to identify those
markets and augment the growth in gaming. The broadcast opportunity
is in its infancy but is starting to gather momentum.
The Company also generates significant cash, has a strong
balance sheet and low leverage.
Organisation enhancements
Quixant's growth over the last 5 years has been strong with
revenues increasing close to 5 times. In addition, the acquisition
of Densitron and the trebling in the headcount creates a more
complex enterprise to manage. It is therefore right that we have
taken significant steps to ensure an effective management structure
to deliver the business today and the significant growth potential
for the future. We undertook the move to a Corporate/Divisional
operating structure to ensure both Gaming and Densitron business
are expertly managed and leverage Group resources in HR, finance,
IT and legal effectively.
Alongside the appointment of Guy Millward and Andrew Miller to
Quixant's corporate team, we have also brought two high calibre
executive directors to Densitron's Board in early 2019. Simon Jones
will be joining Densitron as Group Managing Director for the
Densitron Division. Simon has a distinguished career, initially as
a consultant at Mercer, Capgemini and KPMG and subsequently and
latterly as a director in B2B businesses such as Dyson, Jewson and
PHS. Martyn Gates was also appointed in January 2019 as Product
Director and brings 36 years' commercial, engineering and research
experience in the broadcast sector to Densitron.
We have also complemented these Board level hires with staff
across a spectrum of roles to enhance our commercial and technical
edge. For example, we have brought on former gaming industry
engineers which not only enables us to collaborate more effectively
with customers but also to be more innovative in our solutions.
We enter 2019 with a significantly strengthened management team
and an effective scalable organisation structure which positions us
well for the future.
Summary and outlook
Our core gaming platforms business continues to grow strongly
and as expected, the gaming monitors business saw reduced revenues
in 2018, but the focus on higher value product and our greater
technical expertise leads us to believe in strong, profitable
growth potential for this area of the business. During the year we
experienced softer than anticipated demand for our platforms from
some of our key customers. Overall market conditions have
normalised during 2019, although some of our key customers have
indicated to us that their demand for our gaming platforms will be
more second half weighted than previous years, and we consequently
anticipate our performance to mirror this trend. In light of this,
we are taking a modestly more prudent view of our anticipated
revenues for 2019, although our flexible cost model will ensure
that the consequential impact on our anticipated profitability for
2019 is minimised. Nonetheless, with a substantial gaming
opportunity pipeline, we remain confident in long term buoyant
growth and we believe a nuanced sales message, our strategy of
targeting a range of stakeholders in the customers and continued
investment into innovation in our product will lead to long term
success in converting the largest manufacturers to increasingly
adopt Quixant.
With a healthy pipeline, we will be delivering revenue in the
broadcast sector through the Densitron business in 2019. We have a
considerably strengthened team and combined with our streamlined
organisational structure, we believe Quixant is excellently
positioned to deliver sustainable, healthy growth in revenue and
profits.
Jon Jayal,
Chief Executive Officer
Financial review
Revenue
The Quixant Group achieved revenues of $115.2 million in the
year, an increase of 5% on 2017 ($109.2 million). Gaming division
revenues were $77.6 million, an increase of 9% on 2017 ($71.1
million). This was split between Gaming platform revenue of $62.5
million, a 14% increase on 2017 (2017: $54.8 million), and Gaming
monitor revenue of $15.1 million, a 7% decrease on 2017 (2017:
$16.3 million). Densitron division revenues were $37.5 million, a
decrease of 2% on 2017 (2017: $38.1 million).
The growth in the Gaming division has largely been driven by the
continuing development of existing customer relationships. Gaming
monitor revenue declined following the strategic decision to reduce
the amount of low margin, commoditised gaming monitors business we
were supplying. Densitron revenues declined marginally as sales of
new products are yet to ramp up to replace declining older product
revenue.
Gross profit and gross profit margin
Our gross profit for the year was $39.8 million representing a
gross margin of 35%. This compares with a gross profit achieved in
2017 of $37.0 million and a gross margin of 34%. The underlying
gross margin for each part of the business has been maintained in
the year with the improvement coming from the move away from low
margin gaming monitor sales. Component pricing and lead times have
proved challenging in 2018 with component shortages raising prices
and pushing some lead times out to 9 months, we have adapted our
buying to accommodate this and maintain our margins.
Profit before tax (PBT)
Adjusted PBT increased 3% to $18.2 million (2017: $17.7
million). PBT decreased by 5% to $14.3 million (2017: $15.0
million). Adjustments to profit before tax amounted to $3.9 million
in 2018 (2017: $2.7 million) and comprise share-based payments and
amortisation of acquired intangibles that are not cash expenses and
restructuring costs, which are not comparable with the prior year,
as we strengthened resources in the business - see note 2.
Expenses
During the year the Group expenditure on research and
development increased by 21% to $6.4 million (2017: $5.3 million)
representing 16% of gross profit (2017: 14%). These costs relate to
investment activities principally undertaken in Taiwan, Italy and
Slovenia. $2.6 million of these costs were capitalised (2017: $1.6
million) with amortisation for the year on total capitalised
development costs of $1.3 million (2017: $1.0 million).
We have continued to strengthen the business across all areas in
the year, including increasing our headcount to 203 people (2017:
176 people). Staff costs, being the largest contributor to
overheads, increased by 27% in the year to $16.3 million (2017:
$12.8 million).
Taxation
The tax charge for the year decreased to $0.2 million (2017:
$1.9 million), representing a corporation tax charge of 1.2% on
pre-tax profits (2017: 12.6%), due to higher tax allowances and
lower taxable profits. The Group continues to benefit from enhanced
tax reliefs available in respect of qualifying research and
development expenditure and has also benefited from patent box
relief, tax relief on the exercise of employee share options (some
of which relates to prior years), prior year double tax relief not
previously claimed and the use of brought forward losses in
Densitron.
Earnings per share
Basic earnings per share increased by 7% to $0.214 per share
(2017: $0.200 per share). Diluted earnings per share increased 8%
to $0.213 per share (2017: $0.197 per share). Adjusted fully
diluted earnings per share as set out in note 10 to the financial
statements increased by 14% to $0.260 per share (2017: $0.229 per
share).
Balance Sheet and Cash Flow
Non-current assets have increased in the year to $22.5 million
(2017: $21.3 million) due to the increased R&D discussed above.
We have changed the methodology for assessing impairment of
intangibles this year, the Densitron group of CGUs has been used,
rather than the 4 subdivisions of Densitron used in prior years,
because the Board of Directors no longer monitor goodwill at the
lower level of sub-divisions for internal purposes. Reporting to
the Board has also changed in the same way. Inventory has decreased
to $19.4 million (2017: $21.2 million). Raw material inventory has
increased as we have made purchases to counter long lead times and
to ensure we have sufficient components that are no longer sold by
suppliers to continue to deliver our product set. Finished goods
have decreased owing to a strong trading month in December which
also caused the large increase in trade receivables. Trade payables
have increased as we continue to maintain stock levels for growing
sales.
The cash generated from operating activities in the year
amounted to $11.3 million (2017: $8.1 million). The increase in
cash generated is largely due to the movements in working capital
in the year which have been explained above. The Group has
continued to invest in the business, spending $4.1 million (2017:
$2.3 million) on investing activities including capitalised product
development.
In the year $5.4 million has been used to repay borrowings
(2017: $2.2 million). The only remaining debt at 31 December 2018
was a $0.9m mortgage on the Taiwan property and a factoring
facility in France of $0.3m which was repaid in February 2019.
Dividend
The Board intends to maintain its progressive dividend policy
while continuing to invest in the business. As such, the Board
proposes a dividend in respect of the year of 3.1p per share, an
increase of 19% on the previous year (2017: 2.60p per share)
payable on 10 May 2019 to all shareholders on the register on 23
April 2019. The corresponding ex-dividend date is 18 April
2019.
Guy Millward
Chief Financial Officer
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEARSED 31 DECEMBER 2018 AND 2017
2018 2017
Total Total
$000 $000
Revenue 115,150 109,238
Cost of sales (75,392) (72,269)
------------------------------------------ ----------------- ------------------
Gross profit 39,758 36,969
Administrative expenses (8,100) (7,785)
Other operating expenses (17,074) (13,837)
------------------------------------------ ----------------- ------------------
Operating profit 14,584 15,347
Financial expenses (251) (302)
------------------------------------------ ----------------- ------------------
Profit before tax 14,333 15,045
Taxation (177) (1,899)
------------------------------------------ ----------------- ------------------
Profit for the year 14,156 13,146
------------------------------------------ ----------------- ------------------
Other comprehensive income for the year,
net of income tax
Foreign currency translation differences (176) 869
------------------------------------------ ----------------- ------------------
Total comprehensive income for the year
attributable to the parent 13,980 14,015
Minority interests - (6)
------------------------------------------ ----------------- ------------------
Total comprehensive income for the year 13,980 14,009
------------------------------------------ ----------------- ------------------
Basic earnings per share $ 0.2137 $ 0.1999
------------------------------------------ ----------------- ------------------
Diluted earnings per share $ 0.2125 $ 0.1972
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2018
2018 2017
$000 $000
Non-current assets
Property, plant and equipment 6,104 6,153
Intangible assets 15,538 14,278
Investment property 631 674
Deferred tax assets 236 195
22,509 21,300
--------------------------------------------- --------------- ------------------
Current assets
Inventories 19,439 21,246
Trade and other receivables 31,087 20,095
Cash and cash equivalents 11,082 11,194
61,608 52,535
--------------------------------------------- --------------- ------------------
Total assets 84,117 73,835
--------------------------------------------- --------------- ------------------
Current liabilities
Other interest-bearing loans and borrowings (530) (5,811)
Trade and other payables (21,052) (17,604)
Tax payable (759) (931)
(22,341) (24,346)
--------------------------------------------- --------------- ------------------
Non-current liabilities
Other interest-bearing loans and borrowings (823) (924)
Provisions (306) -
Deferred tax liabilities (1,214) (1,305)
(2,343) (2,229)
--------------------------------------------- --------------- ------------------
Total liabilities (24,684) (26,575)
--------------------------------------------- --------------- ------------------
Net assets 59,433 47,260
--------------------------------------------- --------------- ------------------
Equity attributable to equity holders
of the parent
Share capital 106 106
Share premium 6,499 6,102
Share-based payments reserve 1,102 991
Retained earnings 51,488 39,647
Translation reserve 238 414
--------------------------------------------- --------------- ------------------
Total equity 59,433 47,260
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Translation Share-based Retained Total
Capital Premium Reserve Payments Earnings Equity
$000 $000 $000 $000 $000 $000
Balance at 1
January 2017 105 5,676 (455) 782 28,192 34,300
Total
comprehensive
income
for the period
Profit - - - - 13,146 13,146
Other
comprehensive
loss - - 869 - - 869
---------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- -------------------------- -----------------------
Total
comprehensive
income
for the
period - - 869 - 13,146 14,015
---------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- -------------------------- -----------------------
Transactions
with owners,
recorded
directly in
equity
Share-based
payments - - - 209 - 209
Dividend paid - - - - (1,691) (1,691)
Exercise of
share options 1 426 - - - 427
---------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- -------------------------- -----------------------
Total
contributions
by and
distributions
to owners 1 426 - 209 (1,691) (1,055)
---------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- -------------------------- -----------------------
Balance at 31
December 2017 106 6,102 414 991 39,647 47,260
Share Share Translation Share-based Retained Total
Capital Premium Reserve Payments Earnings Equity
$000 $000 $000 $000 $000 $000
Balance at 1
January 2018 106 6,102 414 991 39,647 47,260
Total
comprehensive
income
for the period
Profit - - - - 14,156 14,156
Other
comprehensive
loss - - (176) - - (176)
---------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- --------------------------
Total
comprehensive
income
for the
period - - (176) - 14,156 13,980
---------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- -------------------------- -----------------------
Transactions
with owners,
recorded
directly in
equity
Share-based
payments 111 111
Dividend paid (2,315) (2,315)
Exercise of
share options 397 397
---------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- --------------------------
Total
contributions
by and
distributions
to owners - 397 - 111 (2,315) (1,807)
---------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- -------------------------- -----------------------
Balance at 31
December 2018 106 6,499 238 1,102 51,488 59,433
CASH FLOW STATEMENT
FOR THE YEARSED 31 DECEMBER 2018 and 2017
2018 2017
$000 $000
Cash flows from operating activities
Profit for the year 14,156 13,146
Adjustments for:
Depreciation, amortisation and impairment 2,745 2,422
Taxation expense 177 1,899
Financial expense 251 302
Equity-settled share-based payment expenses 111 209
---------------------------------------------------- --------------- ---------------
17,440 17,978
(Increase)/decrease in trade and other
receivables (10,992) 908
Decrease/(increase) in inventories 1,807 (8,346)
Increase/(decrease) in trade and other
payables 3,751 (100)
---------------------------------------------------- --------------- ---------------
12,006 10,440
Interest paid (251) (302)
Tax paid (481) (2,076)
Net cash from operating activities 11,274 8,062
---------------------------------------------------- --------------- ---------------
Cash flows from investing activities
Acquisition of property, plant and equipment (632) (409)
Acquisition of intangible assets (3,457) (1,861)
Net cash from investing activities (4,089) (2,270)
---------------------------------------------------- --------------- ---------------
Cash flows from financing activities
Repayment of borrowings (5,382) (2,187)
Dividends paid (2,315) (1,691)
Proceeds from issue of shares 397 427
Net cash from financing activities (7,300) (3,451)
---------------------------------------------------- --------------- ---------------
Net (decrease)/increase in cash and cash
equivalents (112) 2,341
Cash and cash equivalents at 1 January 11,194 8,853
Cash and cash equivalents at 31 December 11,082 11,194
NOTES
(forming part of the financial statements)
1. General Information
Whilst the information included in this preliminary announcement
has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
("IFRSs") as adopted by the European Union and as issued by the
International Accounting Standards Board, this announcement does
not itself contain sufficient information to comply with IFRSs. The
accounting policies adopted in this preliminary announcement are
consistent with the Annual Report for the year ended 31 December
2018.
The financial information set out in this document, which was
approved by the Board on 25 March 2019, is derived from the full
Group accounts for the year ended 31 December 2018 and does not
constitute the statutory accounts within the meaning of section 434
of the Companies Act 2006. The Group accounts on which the auditors
have given an unqualified report, which does not contain a
statement under section 498(2) or (3) of the Companies Act 2006 in
respect of the accounts for 2018, will be delivered to the
Registrar of Companies in due course.
The Board of Quixant plc approved the release of this
preliminary announcement on 25 March 2019.
Pursuant to AIM Rule 20, the Annual Report and Accounts for the
financial year ended 31 December 2018 ("Annual Report") is
available to view on the Group's website: www.quixant.com and will
be posted to shareholders who have requested a paper copy shortly.
Quixant will hold its AGM on 16 April 2019.
2. PBT reconciliation
PBT and adjusted PBT for the current and prior year have been
derived as follows:
PBT
2018 2017
$000 $000
Profit for the year 14,156 13,146
Adding back:
Taxation expense 177 1,899
-------------------------------------------- ------------------ -------
PBT 14,333 15,045
Adjustments:
Amortisation of customer relationships
and order backlog(1) 757 822
Share-based payments expense(2) 111 209
Costs arising on the replacement of faulty
DRAM component (note 5)(3) - 1,633
Restructuring cost(3) 3,036 -
Adjusted PBT 18,237 17,709
1. The amortisation of customer relationships and order backlog
has been excluded as it is not a cash expense to the Group.
2. Share-based payments expense has been excluded as they are not a cash-based expense.
3. Other items of income and expense - where other items of
income and expense occur in a particular year and their inclusion
in PBT means that a year-on-year comparison of year-on-year results
is not on a consistent basis the directors will exclude them from
the adjusted numbers. During the years under review the directors
have excluded the costs arising from the replacement of faulty DRAM
component and restructuring costs due to their incomparability with
the previous year.
3. Earnings per ordinary share (EPS)
2018 2017
$000 $000
Earnings
Earnings for the purposes of basic and diluted
EPS being
net profit attributable to equity shareholders 14,156 13,146
------------------------------------------------ ----------------- -----------------
Number of shares Number Number
Weighted average number of ordinary shares
for the purpose of basic EPS 66,239,967 65,756,667
Effect of dilutive potential ordinary shares:
Share options 380,383 909,513
Weighted number of ordinary shares for the
purpose of diluted EPS 66,620,350 66,666,180
------------------------------------------------ ----------------- -----------------
Basic earnings per share $ 0.2137 $0.1999
------------------------------------------------ ----------------- -----------------
Diluted earnings per share $ 0.2125 $0.1972
Calculation of adjusted fully diluted earnings
per share: $000 $000
------------------------------------------------ ----------------- -----------------
Earnings
Earnings for the purposes of basic and diluted
EPS being
net profit attributable to equity shareholders 14,156 13,146
Adjustments
Costs arising on the replacement of faulty
DRAM component 1,633
Share-based payment expense 111 209
Amortisation of customer relationships and
order backlog 757 822
Restructuring cost 3,036 -
18,060 15,810
Tax effect of adjustments (764) (516)
------------------------------------------------ ----------------- -----------------
Adjusted earnings 17,296 15,294
------------------------------------------------ ----------------- -----------------
Adjusted diluted earnings per share $ 0.2596 $ 0.2294
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
FR LFFFFVAIVFIA
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