Half Yearly Report

RNS Number : 5990R
Quixant PLC
15 September 2014
 



15 September 2014

Quixant plc

("Quixant" or the "Company")

 

Interim Results

 

Quixant (AIM:QXT), a leading provider of specialised computing platforms for casino gaming and slot machine applications, is pleased to announce its interim results for the six months ended 30 June 2014.

 

H1 2014 Financial Highlights

 

·     Revenue of US$12.3 million (H1 2013: US$9.5 million), growth of 30%

·     Gross profit of US$5.6 million (H1 2013: US$4.5 million), growth of 25%

·     EBITDA of US$2.5 million (H1 2013: US$2.0 million), growth of 25%

·     Profit before tax of US$2.2 million (H1 2013: US$1.8 million), growth of 18%

·     Fully diluted EPS of US$0.028 (H1 2013: US$0.024), growth of 16%

·     Net cash from operating activities of US$2.3 million (H1 2013: US$1.4 million), growth of 62%

·     Trading over the half in line with management expectations

·     On target to achieve full year expectations

 

 

H1 2014 Operational Highlights

 

·     Continued diversification of customer base and reinforcement of business with existing customers

·     Significant project secured with Tier 1 customer, Novomatic Group

·     New multi-year contract signed with Ainsworth

 

Nick Jarmany, Chief Executive of Quixant, commented: "We have as expected delivered impressive growth over the first half of the year and achieved some significant business wins.  With a strong order book and pipeline of new business, we are well positioned to meet full year expectations." 

 

Copies of the interim results of the Company for the six months ended 30 June 2014 are being posted to shareholders today and are available on the Company's website at www.quixant.com.

 

For further information please contact:

 

Quixant plc

Tel: +44 (0) 1223 892696

Nick Jarmany, Chief Executive


Jon Jayal, General Manager




Nominated Adviser and Broker:


finnCap

Tel: +44 (0) 20 7220 0500

Matt Goode (Corporate Finance)


Charlotte Stranner (Corporate Finance)


Victoria Bates (Corporate Broking)




Financial PR:


Newgate Threadneedle

Tel: +44 (0) 207 653 9850

John Coles

Fiona Conroy

Hilary Buchanan




About Quixant

Quixant, founded in 2005, designs and manufactures complete advanced hardware and software solutions (Gaming Platforms) for the pay-for-play gaming and slot machine industry. The Company is headquartered outside of Cambridge in the UK.  Quixant UK Ltd is responsible for the group's global (excluding North America) sales function and its Las Vegas based subsidiary, Quixant USA Inc, is responsible for sales and sales support to the North American market. Quixant has its own manufacturing and engineering operation in Taiwan, which has evolved with the rapid growth of the Company. Quixant's Italian subsidiary, Quixant Italia Srl, houses the Group's software engineering and customer support team. 

 

Quixant's high quality, specialised products provide an all-in-one solution, based on PC technology but with augmentative hardware features and operating software developed specifically to address the requirements of the gaming industry. Products feature innovative mechanical designs which are optimised for operation in the gaming and slot machine environment. Quixant's proprietary hardware and embedded software is flexible in its design, enabling Quixant to easily respond to changes in regulation, or customers operating in different markets or jurisdictions.

 

In-depth information on the Company's products, markets, activities and history can be found on the corporate website as well as in the Admission Document, which is also available on the website at www.quixant.com.

 



 

Chairman's Statement

 

I am pleased to report on the Company's performance for the six months ended 30 June 2014. Over the half, pre-tax profits were US$2.2 million (H1 2013: US$1.8 million) from turnover of US$12.3 million (H1 2013: US$9.5 million) and gross profit of US$5.6 million (H1 2013: US$4.5 million); which are in line with management expectations.

 

The Company paid a maiden full year dividend of 1p per share for FY2013 on 16 May 2014.

 

Since Quixant's admission to the market in May 2013, the Company has enjoyed strong support from the investor community.  It is pleasing that in April 2014, market demand for the shares led to the release of 17,857,143 existing ordinary shares by Directors and other founding shareholders in an oversubscribed placing with new and existing institutional investors.  This has broadened Quixant's investor base and materially increased the free float.  The founding Directors and their families maintain a substantial stake in the business, holding 51% of the issued share capital.

 

The announcement in late July 2014 of winning a significant piece of business from a new Tier 1 customer, Novomatic Group, reinforces the Board's belief that the largest gaming machine manufacturers in the industry are gradually adopting a strategy to outsource the design and manufacture of the computer gaming platform, which is a crucial component in their machines.  This significant business win is expected to underpin current growth expectations for 2015. 

 

There has been considerable consolidation taking place in the gaming industry over recent months with several of the major players undergoing M&A activity.  We believe this consolidation will have a positive impact on our business as manufacturers review their strategy and seek cost efficiencies.

 

The Company has continued to invest in building the resources and infrastructure necessary to win and support business with large customers and to deliver continued growth into 2015 and beyond.

 

Quixant continues to occupy a small but growing share of the existing market.  In addition, the market continues to develop, with new territories approving or considering approving new or extended regulated gaming markets. 

 

I would like to congratulate our team for their efforts and to thank shareholders for their continued support of the Company.

 

Michael Peagram

Chairman



 

Chief Executive's Review

 

Introduction

 

 

Broadened customer base

 

 

In February, Quixant signed a new contract out to 2019 to supply Ainsworth Game Technology with a new series of gaming platforms to power its machines.  This new agreement underpins the robust relationship with Ainsworth, which has been a Quixant customer since 2007.

 

Building for the future

 

New products

 

At the ICE exhibition in London in February 2014 Quixant previewed its latest gaming platform, the QX-50, to a selected group of customers behind closed doors.  The QX-50 is based on AMD's latest "Bald Eagle" APU technology and enables game developers to deliver 4K "Ultra HD" game content, which offer four times the detail of traditional "Full HD" games.  Quixant's unique position as an AMD Fusion Partner Elite Member provided us with advanced information and samples of AMD's "Bald Eagle" APU technology enabling us to have a completed product before AMD had formally launched their products to market.  This meant that Quixant was able to formally launch the QX-50 at the G2E Asia exhibition in Macau on the very same day as AMD launched its "Bald Eagle" APU.  This competitive advantage was evident at ICE where interest around the 4K gaming theme was prevalent. 

 

During the first half of 2014, Quixant brought a new low cost product to market: the QXi-307.  Based on technology developed for the Italian QXi-306 platform, the QXi-307 enables customers to access Quixant's technology and a high level of performance at a new low price point.  Interest in the QXi-307 has already been high, and we have already achieved design-ins with two customers adopting this new platform.

 

Financial review

 

Pre-tax profits for the six months ended 30 June 2014 were US$2.2 million (H1 2013: US$1.8 million) and turnover for the period was US$12.3 million (H1 2013: US$9.5 million).  Our operating expenses for the six months ended 30 June 2014 were US$3.5 million (H1 2013: US$2.7 million), higher than prior due to share based payments, direct costs of functioning as a listed company and investment in people to enable scalability of the business going forward.  EBITDA for the period to 30 June 2014 was US$2.5 million (H1 2013: US$2.0 million). Fully diluted earnings per share for the period was US$0.028 (H1 2013: US$0.024).

 

Operations generated cash in the six months to 30 June 2014 of US$2.3 million (H1 2013: US$1.4 million).  Investments were made into repaying the mortgage on the business premises in Cambridge, fit out of the new office in the US and increased stock holding of products to satisfy customer demand leading into the second half, leaving the Company with a healthy cash balance of US$6.5 million at 30 June 2014 (31 December 2013: US$7.0 million) following the payment of Quixant's maiden dividend for full year 2013 totalling US$1.1 million in May 2014.  Net cash was US$5.1 million at 30 June 2014 (31 December 2013: US$4.9 million).

 

Outlook

 

Nick Jarmany

Chief Executive



Condensed consolidated income statement

for the six months ended 30 June 2014 and 2013 and year ended 31 December 2013

 



Note


30 June 2014

Unaudited

30 June 2013

Unaudited

31 December 2013

Audited





$000

$000

$000








Revenue




12,346

9,508

24,235








Cost of sales




(6,705)

(4,996)

(13,042)








Gross profit




5,641

4,512

11,193















Operating expenses




(3,464)

(2,680)

(5,158)








Operating profit




2,177

1,832

6,035

Financial expenses




(18)

(32)

(61)

Other income




14

46

-





             

             

             

Profit before tax




2,173

1,846

5,974

Taxation


2


(289)

(433)

(1,224)





             

             

             

Profit for the period




1,884

1,413

4,750





             

             

             

Basic earnings per share


4


    $0.02915

    $0.02452

       $0.0777

Fully diluted earnings per share


4


    $0.02832

    $0.02435

       $0.0762

 

Condensed consolidated statement of comprehensive income

for the six months ended 30 June 2014 and 2013 and year ended 31 December 2013

 





$000

$000

$000








Profit for the period




1,884

1,413

4,750

Foreign currency translation differences




(44)

(22)

(29)





             

             

             

Total comprehensive income for the period




1,840

1,391

4,721

 



Condensed consolidated statement of financial position

as at 30 June 2014 and 2013 and at 31 December 2013

 


Note

            30 June 
2014

            30 June 
2013

   31 December 
2013



Unaudited

Unaudited

Audited








$000

$000

$000

Non-current assets





Property, plant and equipment


4,966

3,734

4,554

Intangible assets - research and development


1,592

919

1,253



             

             

             

Total non-current assets


6,558

4,653

5,807



             

             

             






Current assets





Inventories


5,462

3,089

2,631

Trade and other receivables


5,209

3,962

5,939

Cash and cash equivalents


6,459

7,448

7,021



             

             

             

Total current assets


17,130

14,499

15,591



             

             

              






Total assets


23,688

19,152

21,398



             

             

             






Current liabilities





Other financial liabilities


(95)

(92)

(173)

Trade and other payables


(4,344)

(3,405)

(2,677)

Corporation tax payable


(1,277)

(1,249)

(805)



             

             

             

Total current liabilities


(5,716)

(4,746)

(3,655)



             

             

             

Non-current liabilities





Other financial liabilities


(1,314)

(2,112)

(1,986)

Deferred tax liability


(349)

(241)

(281)



             

             

             

Total non-current liabilities


(1,663)

(2,353)

(2,267)



             

             

             






Total liabilities


(7,379)

(7,099)

(5,922)



             

             

             

Net assets


16,309

12,053

15,476



             

             

             

Equity










Share capital

3

104

104

104

Share based payments reserve


195

20

113

Share premium


5,181

5,181

5,181

Retained earnings


10,830

6,698

10,035

Translation reserve


(1)

50

43



             

             

             

Total equity


16,309

12,053

15,476



             

             

             

 

Condensed consolidated statement of changes in equity

for the six months ended 30 June 2014, 31 December 2013 and 30 June 2013

 

 









 



Share

Share Based

Share

Retained

Translation

Total Equity



Capital

Payments

Premium

Earnings

Reserve


 



$000

$000

$000

$000

$000

$000

 









 

At 1 January 2013


27

-

505

5,285

72

5,889

 

Profit for the six months


-

-

-

1,413

-

1,413

 

Share bonus issue


63

-

(63)

-

-

-

 

Issue of new shares


14

-

5,873

-

-

5,887

 

Share issue expenses


-

-

(1,134)

-

-

(1,134)

 

Share based payments


-

20

-

-

-

20

 

Total other comprehensive income


-

-

-

-

(22)

(22)

 



             

             

             

             

             

             

 

At 30 June 2013


104

20

5,181

6,698

50

12,053

 



             

             

             

             

             

             

 

Profit for the six months


-

-

-

3,337

-

3,337

 

Share based payments


-

93

-

-

-

93

 

Total other comprehensive income


-

-

-

-

(7)

(7)

 



             

             

             

             

             

             

 

At 31 December 2013


104

113

5,181

10,035

43

15,476

 



             

             

             

             

             

             

 

Profit for the six months


-

-

-

1,884

-

1,884

 

Share based payments


-

82

-

-

-

82

 

Dividend paid


-

-

-

(1,089)

-

(1,089)

 

Total other comprehensive income


-

-

-

-

(44)

(44)

 



             

             

             

             

             

             

 

At 30 June 2014


104

195

5,181

10,830

(1)

16,309

 



             

             

             

             

             

             

 

 



 

Condensed consolidated cash flow statement

for the six months ended 30 June 2014 and 2013 and year ended 31 December 2013

 








30 June 2014


30 June 2013


31 December 2013

 


Unaudited


 Unaudited


Audited


$000


$000


$000

Cash flows from operating activities






Profit for the year

1,884


1,413


4,750

Adjustments for:






Depreciation

136


98


227

Amortisation

173


28


120

Financial expenses

18


32


61

Taxation

289


433


1,224

Share based payments expense

82


20


113


             


             


             


2,582


2,024


6,495

Decrease/(increase) in trade and other receivables

730


408


(1,568)

(Increase) in inventories

(2,831)


(670)


(212)

Increase/(decrease) in trade and other payables

1,623


(292)


(984)


             


             


             


2,104


1,470


3,731

Interest paid

(18)


(32)


(61)

Tax refunded/(paid)

251


6


(1,190)


             


             


             

Net cash from operating activities

2,337


1,444


2,480


             


             


             







Cash flows from investing activities






Acquisition of property, plant and equipment

(548)


(32)


(1,024)

Development expenditure

(512)


(445)


(871)


             


             


             

Net cash from investing activities

(1,060)


(477)


(1,895)


             


             



Cash flows from financing activities






Repayment of borrowings

(750)


(75)


(120)

Net cash received on issue of new shares

-


4,753


4,753

Dividends paid

(1,089)


-


-


             


             


             

Net cash from financing activities

(1,839)


4,678


4,633


             


             


             







Net (decrease)/increase in cash and cash equivalents

(562)


5,645


5,218

Cash and cash equivalents at 1 January

7,021


1,803


1,803


             


             


             

Cash and cash equivalents at period end

6,459


7,448


7,021


             


             


             

General Information and Reporting entity

 

Quixant plc ("Quixant" or the "Company") is a public limited company incorporated and domiciled in England and Wales, whose shares are publically traded on the Alternative Investment Market (AIM) of the London Stock Exchange. The address of the company's registered office is Aisle Barn, 100 High Street, Balsham, Cambridge, CB21 4EP. Quixant develops and supplies specialist computer systems. This condensed consolidated interim financial information for The Quixant Group comprises the Company, its branch in Taiwan and its subsidiaries (the "Group").

 

The condensed consolidated interim financial information is neither audited nor reviewed and the results of operations for the six months ended 30 June 2014 are not necessarily indicative of the operating results for future operating periods.

 

The financial information shown for the year ended 31 December 2013 in the interim financial information does not constitute statutory financial statements as defined in Section 435 of the Companies Act 2006 and has been extracted from the Company's annual report and accounts. The auditor's report on the annual report and accounts was unqualified.

 

1.  Principal Accounting Policies

 

Statement of compliance

This condensed consolidated interim financial report has been prepared in accordance with IAS 34 Interim Financial Reporting. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the last annual consolidated financial statements as at and for the year ended 31 December 2013. This condensed interim financial report does not include all the information required for full annual financial statements prepared in accordance with International Financial Reporting Standards. The reporting currency adopted by the Quixant Group is US$ as this is the trading currency of the Group.

This condensed consolidated interim financial report was approved by the Board of Directors on 12 September 2014.

 

Judgements and estimates

Preparing the interim financial report requires Management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

In preparing this condensed consolidated interim financial report significant judgements made by Management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2013.

 

Segmental analysis

The Quixant Group has determined that it only has one operating and reportable segment. The Quixant Group assesses the performance of that segment based on a measure of revenue, and profit/(loss) before interest and taxation. All significant assets and liabilities are located within the UK, USA and Taiwan.

The segmental information is therefore presented in the income statement and statement of financial position and has not been reproduced here. A single customer accounted for 55 per cent, 67 per cent, and 72 per cent of reported revenues in the six month period to 30 June 2014, the six month period to 30 June 2013 and year to 31 December 2013 respectively.

 

Significant accounting policies

The accounting policies applied by the Group in this condensed consolidated interim financial report are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2013.

 

2.  Taxation










6 months ended
30 June 2014

6 months ended
30 June 2013

12 months ended
31 December 2013




Unaudited

Unaudited

Audited




$000

$000

$000







Analysis of charge in periods






Current tax






UK Corporation tax



367

330

1,061

Foreign Tax



(8)

-

20

Deferred tax



68

103

143







Prior periods






Corporation tax



(138)

-

-




             

             

             

Tax expense



289

433

1,224




             

             

             

 

The credit in respect of corporation tax relating to prior periods of $138,000 (2013: $nil) arises from a revised estimate of the recharge of expenses by Quixant USA Inc to Quixant UK Limited, primarily relating to 2012, with the effect of reducing previously unrelieved losses arising in the USA.

 

3.  Share capital










6 months ended
30 June 2014

6 months ended
30 June 2013

12 months ended
31 December 2013




Unaudited

Unaudited

Audited



Number

$000

$000

$000

Allocated, called up and fully paid












At end of period


64,634,782

104

104

104




             

             

             

 

The Company paid a full year dividend of 1p per share for the year ended 31 December 2013 on 16 May 2014.

 

4.   Earnings per ordinary share

 



6 months ended 30 June 2014

6 months ended 30 June 2013

12 months ended 31 December 2013



Unaudited

$000

Unaudited

$000

Audited

$000

Earnings





Earnings for the purposes of basic and diluted EPS being net profit attributable to equity shareholders


 

 

 

 

 

1,884

 

 

 

 

 

1,413

 

 

 

 

 

4,750

Number of shares





Weighted average number of ordinary shares for the purpose of basic EPS


 

 

64,634,782

 

 

57,616,526

 

 

61,154,496

Effect of dilutive potential ordinary shares:

-     Share options


1,895,200

418,829

1,163,082

Weighted number of ordinary shares for the purpose of diluted EPS


66,529,982

58,035,355

62,317,578

 

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares outstanding during the period.

 

 

5.   Related party transactions

There were no related party transactions other than transactions with Key Management Personnel, who are the directors. In addition the group has implemented a share based incentive scheme for the benefit of employees.

 

6.   Subsequent events

There are no significant events which have taken place after 30 June 2014.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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