Final Results

RNS Number : 0586D

Quixant PLC

25 March 2014

 



25 March 2014

Quixant plc

("Quixant" or the "Company")

Final Results

Quixant (AIM: QXT), a leading provider of specialised computing platforms for casino gaming machine applications, is pleased to announce its audited Final Results for the year ended 31 December 2013.

Highlights

·      Revenue growth of 12% to $24.2 million (2012: $21.6 million)

·      Adjusted EBITDA increased 25% to $6.4 million (2012: $5.1 million)

·      Profit before tax increased 20% to $6.0 million (2012: $5.0 million¹)

·      Fully diluted EPS of $0.0762 per share (2012: $0.0687 per share)

·      Proposed full year dividend of 1.0p per share

·      Net cash from operating activities of $2.5 million (2012: $1.9 million)

·      Total cash of $7.0 million at period end (31 December 2012: $1.8 million)

¹ - includes a one-off profit on the disposal of a property of $0.198 million

Operational highlights

·      Successful admission to AIM with oversubscribed placing raising gross proceeds of $5.9 million

·      Heightened brand profile as a result of PLC status leading to strengthened pipeline of new business opportunities

·      Commencement of volume production for two new "Tier 2" customers at end of H1 2013

·      New design in projects commenced with one further new "Tier 2" customer in H2 2013

·      Launch of new product - QXi-300

·      Expansion of USA sales and customer support operations

Nick Jarmany, CEO of Quixant commented: "These results, which are in line with our expectations, clearly demonstrate the growth of Quixant. Our market leading computer gaming platforms are gaining global recognition demonstrated by the increase in large customers during the year. Despite shipping nearly 22,000 boards in 2013 we believe we only have around 5% of the market. Our listing on AIM has further enhanced our perception among large manufacturers and we are confident in achieving strong growth in 2014 and beyond."

For further information please contact:

Quixant plc	Tel: [phone]
Nick Jarmany, Chief Executive
Jon Jayal, General Manager
Nominated Adviser and Broker:	Tel: [phone]
finnCap
Matt Goode (Corporate Finance)
Charlotte Stranner (Corporate Finance)
Victoria Bates (Corporate Broking)
Financial PR:	Tel: [phone]
Newgate Threadneedle
John Coles, Fiona Conroy, Hilary Millar

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, 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.

Chairman's statement

2013 has been a transformational year for Quixant. We have made excellent progress financially, operationally and commercially and enjoyed strong support from the investment community following our entry to the AIM market in May 2013.  I would like to thank our new shareholders for their commitment to the Company. 

Quixant has the benefit of operating in a large and growing niche market and offers products which are highly engineered to meet the very specific demands of this market.  The company currently has a small share of the total market and we are excited at the opportunities which lie ahead to increase this share.  The AIM listing has given us an increased presence and status which is invaluable in attracting the business of multi-billion dollar game machine manufacturers to use our products as a key component in their machines.

The company has a team of remarkably knowledgeable and committed individuals and I would like to thank them for their efforts over the year.  The share incentive scheme, which was put in place at the time of the flotation, provides long term motivation of the broad employee base.

Our financial results reflect strong growth in both revenue and profits compared to 2012 and the capital raised as part of the admission to AIM further strengthened our healthy balance sheet.  The Board feels it is appropriate to propose a full year dividend of 1.0p per share to be paid to shareholders in May.  Going forward we intend to maintain a progressive dividend policy.

We continue to develop our systems and resources to support our planned growth and also we continue to add specialised technical skills to strengthen our product development functions to maintain our leading market position.  We are well positioned going into 2014 to meet market expectations for further growth with a very strong order book, several major active new business opportunities and increased brand awareness and presence in the market.

Chief Executive's Report

I am pleased to report on a very successful first year on the AIM market for Quixant.  I am delighted with the performance of the company, the progress we have made over the past year and our positioning going into 2014.  We have delivered growth in both revenue and profits through disciplined execution of our corporate strategy and have put in place the foundations for continued growth over future years as a public company.

During the year we grew our revenue by 12% from $21.6m to $24.2m, adjusted EBITDA by 25% from $5.1m to $6.4m and our profit before tax by 20% from $5.0m to $6.0m.  We have remained strongly cash generative, and during the year our operations generated cash of $2.5m which, combined with proceeds from the issuance of new share capital at IPO of $5.9m ($4.8m after expenses), left the company with a healthy net cash balance of $4.9m at the end of the year.  We have also made material investment into our business and grown our employee headcount from 50 to 63 over the year.

When we embarked on the process of listing Quixant on AIM one of the key drivers behind this decision was the Directors' view that the company would benefit from the heightened profile, credibility and security it would offer among major customers and prospects, many of whom are large public listed companies.    We have already seen evidence that the additional profile of the business following our AIM listing has reaped rewards in terms of the business opportunities which have evolved over 2013 and the recognition the company has received by major game machine manufacturers. 

Quixant's core products, highly optimised computer platforms which are designed to drive pay-to-play gaming machines, are a crucial and complex component within these machines and customers depend on us as a trusted supplier.  Once our product has been designed into their machines customers require a stable supply for many years.  They therefore place significant emphasis, as part of their due diligence process, on the long term stability of suppliers of these key components.  We believe our listing on AIM gives them considerable comfort.

Dynamic towards outsourcing

Due to the specialist requirements of the gaming market historically many of the larger game machine manufacturers had no choice other than to develop their own computer platform technology in-house, and in doing so this could give them a competitive edge.  However, Quixant's cutting edge computer platforms, which are specifically designed for gaming, enable game machine manufacturers to focus on developing the most popular games.  The vital ingredient to ensuring a successful machine is manufacturers having better game revenues than their competitors, which is the principal metric that site owners assess in deciding which machines to install on their floors.  It is therefore vitally important that manufacturers focus their resources on these key areas of game development and innovative cabinet design.   

An outsourcing model provides many additional benefits, the commoditisation of the computer platforms providing all manufacturers, big and small, access to the same hardware technology. Smaller manufacturers are already well progressed on the transition to outsourced computer platforms as they do not typically have the scale of R&D teams or the purchasing power to be able to develop or manufacture their own solutions.  

Quixant's design expertise and knowledge of the global gaming market combined with our Far Eastern manufacturing capability enables us to deliver platforms that provide optimised solutions using the latest technology which are cost competitive compared to the in-house alternative.  Quixant's market opportunity is therefore driving this trend for outsourcing with the larger, global game machine manufacturers.

Broadened customer base

During 2013, we made good progress in penetrating and securing new major customers.  An analysis of our customer revenue attribution reveals an increase in the number of customers contributing over $1 million revenue from one to four in the year.  We have also increased our total number of customers from 63 to 82 in the year, demonstrating the strength of the sales pipeline and the headroom we have to materially grow our market share.

Number of customers:

	2011	2012	2013
$10,000+	22	32	40
$100,000+	4	12	11
$1,000,000+	1	1	4

We classify our customers and prospects in terms of three tiers of manufacturer: "Tier 1" incorporates the largest gaming machine manufacturers, typically producing over 25,000 machines per annum.  "Tier 2" typically produce between 5,000 and 25,000 machines per annum, and "Tier 3" typically produce less than 5,000 machines per annum).  We completed the "design-in" of our products with two new "Tier 2" customers and commenced volume shipments during 2013.  We also formalised our arrangement with one of these Tier 2 customers in December 2013 with the signing of a three year supply agreement.

Towards the latter part of the year we commenced the design-in process with another Tier 2 customer in Europe and delivered first product samples in early 2014.  The design-in phase involves significant interaction between Quixant and customer engineering teams to evaluate our products' fit for their needs and aspects of our standard hardware and software are tailored to meet any unique requirements.  Typically this design-in process takes several months but is a key part of Quixant's value proposition in serving not simply as a supplier but also as a collaborative development partner for customers. 

Tier 3 and some Tier 2 manufacturers have already embraced the benefits of outsourcing the design and supply of their computer platforms to a third party, and we are now seeing this trend migrating into the Tier 1 manufacturers.  We believe our class-leading technology, reputation and industry contacts make Quixant well positioned to benefit from this trend, leading to exciting future growth opportunities.

Ainsworth Game Technology ("Ainsworth") remains a key customer for Quixant.  The winning of Ainsworth's business back in 2007 was a major milestone in Quixant's history. Quixant supply the computer platforms used in all of Ainsworth's gaming machines.  Ainsworth has experienced rapid growth in the last few years, most recently evidenced by the strong financial performance in its interim results to December 2013.  It remains an excellent example of how working with Quixant can enable greater focus on core competencies that can then lead to increased success. Ainsworth has an outstanding record for producing games that perform significantly above the average.  Ainsworth continues to be a key customer to Quixant and we were delighted to be able to announce in February 2014 the signing of a new contract extending this relationship through to 2019.

Product Development

We continue to develop our underlying hardware and software technology.  Over 8% of our total sales revenue and over 17% of our gross profit is invested into R&D expenditure and over 40% of our employees are involved in R&D and product development.

Through our position as the only AMD Embedded Elite partner we benefit from early access to new up-coming CPU and GPU technology.  This enables Quixant to release complete new gaming platforms for sale on the very day a new chipset is formally announced by AMD and we are often previewing these platforms several months before.  This reinforces Quixant's "time to market" proposition to customers.

In 2013 we launched the QXi-300, a compatible update of the successful QXi-200, which leverages similar CPU architecture to that used by Sony and Microsoft in their Playstation 4 and Xbox One consoles. We have also completed development of early samples of the QXi-306 which has been designed to meet the needs of the upcoming Italian Comma 6a+ law change. A variant of the QXi-306 is anticipated to be popular in Spanish and South American markets.

At the ICE Totally Gaming show in London in early February we previewed the QX-50, our next generation high-end platform based on a new AMD CPU and GPU which is expected to be publically released in the first half of 2014. This product majors on the anticipated upcoming demand for games utilising 4K Ultra High Definition displays and we believe it is the first computer gaming platform in the market which is optimised to drive this display technology.  The preview of the QX-50 attracted significant interest and generated several opportunities with major potential customers.

As a technology company Quixant is constantly striving to innovate and develop new technologies to increase the performance, functionality and value of our products and we act to protect these.  During the year we were granted a patent in the US for the innovative enclosure design used on our QXi-200 product, submitted applications for a further four patents and were granted a design right for the enclosure design used in the new QXi-306.  The mechanical designs of our products are a key differentiator and we have dedicated mechanical engineers responsible for developing optimised enclosures that meet the regulatory requirements of global gaming jurisdictions. 

Global locations

When considering the geographic markets for Quixant the location of the slot manufacturers is not necessarily where the gaming takes place. The major manufacturers tend to be located in regions that have had long established regulated gaming, although in recent years there has been an increase in new locations, particularly Macau and Singapore. Quixant believes that its four locations in the UK, USA, Taiwan and Italy are well positioned to cover the global gaming machine manufacturing base.

The US has a long heritage in gaming and many of the global Tier 1 manufacturers have headquarters or major operations in Las Vegas.  We made the decision to establish Quixant USA in 2010 as a key strategic location and towards the end of 2013 we significantly expanded our US operation to reflect the importance of the market for Quixant.  We are the only computer platform manufacturer with their US Headquarters in Las Vegas.  Our US operation is responsible for sales, logistics as well as local technical support and training for North American customers. 

We established our Taiwan branch in 2007 and since then the operations there have expanded significantly to currently employing over 40 people.  All of Quixant's products are procured, manufactured and undergo rigorous testing under the management of our Taiwan operations.  A majority of the electronic hardware design work is also undertaken by the engineering team in Taiwan. Quixant procures all components directly from suppliers for cost and control reasons and we utilise sub-contract manufacturing for the assembly of the printed circuit boards.  This arrangement has a high degree of scalability and flexibility.

Quixant Italia is the Group's software development, gaming technology innovation and main customer support centre.  All our platforms are supplied with comprehensive software and drivers which accelerate the time taken for customers to adopt our platforms and integrate them into the rest of their machines.  The software developed by Quixant in Italy forms a key part of our product proposition and reduces the resources the customer has to expend developing software which does not contribute to game success.

Quixant UK Ltd is the Group's sales and marketing arm and is responsible for all sales outside North America.  All marketing efforts globally are coordinated from Quixant UK Ltd to ensure a consistent, strong brand image.

Marketing

We believe we have developed a strong brand in Quixant.  It is our belief that the Quixant name can be developed to be synonymous with computer gaming platforms for driving pay-to-play gaming machines.  We have spent considerable time in developing the brand in terms of product styling and presentation, marketing collateral and high quality, high profile presence at exhibitions globally. 

In 2013, we made significant investments in our presence at the two major global trade events: ICE Totally Gaming in London and G2E in Las Vegas with very positive results. 

Current Trading Outlook

Quixant has grown strongly over the year but we still have a very small percentage of the total available market.  Our confidence in the business model, the strength of our products and our scope to grow has meant we have always taken a long-term approach to the business.  We believe by investing in being the leading supplier of computer platforms for gaming we will achieve much greater penetration in all tiers of customer on a global basis.  Whilst there are cycles in individual markets there is no doubting the strength of the demand for gaming globally and the need of governments to collect taxes on gaming revenues.  This combination ensures the long-term future of gaming.  We shipped around 21,800 boards in 2013, up from around 18,500 in 2012.  We believe there have typically been around 450,000-500,000 new or replacement machines installed in the market in recent years so we maintain less than a 5% market share.

The new financial year has started in line with expectations with volume sales commencing from one of our new Tier 2 customers.  Our current order book is strong and as of the end of March 2014 was over double that as at end of March last year.  We look forward to another year of strong growth.

Financial Review

Revenue

Revenues in 2013 grew to $24.2m (2012: $21.6m), with continued progress made in broadening our customer base.  The greatest contribution to this growth was the commencement of volume shipments to the two Tier 2 customers which each represented around 5% of total 2013 revenue.  Sales to Ainsworth remained strong in the year, but the revenues developed from the Tier 2 customers resulted in Ainsworth contribution to total revenue falling to 72%.  The year followed our typical trend of being second half revenue weighted.

Profit

Adjusted EBITDA increased 25% to $6.4 million (2012: $5.1 million) and profit before tax increased 20% to $6.0 million (2012: $5.0 million, including a one-off profit on the disposal of a property of $0.198 million) over 2013.

Whilst we invested in our people over 2013, increasing out headcount from 50 to 63, we successfully leveraged our resources to deliver profit growth in excess of revenues.  We remain committed to continued investment in the business, and over 17% of the gross profit developed by our sales was reinvested into product development expenses, which we believe is vital to ensure we maintain a market leading product portfolio.  Of the development costs, $871,000 (2012 $410,000) was capitalised.

There was a tax charge for the year of $1.22m (2012: $1.20m).  The Group takes advantage of tax reliefs available in respect of research and development expenditure.  Deferred tax has been provided at 20% which is the expected rate applicable when these liabilities will crystallise.

Cash flow

Our business is cash generative and in 2013 we netted $2.5m of cash from operating activities (2012: $1.9m).  Combined with the cash raised from new share issuance as part of the Company's flotation, we have a healthy cash balance of in excess of $7m with net cash of $4.9m.  Our borrowings are low and primarily comprise mortgages on properties which house our operations.

The Group spent $1.9m on investing activities (2012: $1.0m), which was composed largely of our investment into an expanded and improved facility in North America, and development expenditure ($0.9m), which the Group sees as a major driver to continued growth.

The Group continues to generate significant amounts of operating cash. This, coupled with a strong bank balance and low borrowings, provides the liquidity and opportunity to grow.

Balance Sheet

The Group's balance sheet has further strengthened over the year with net assets increasing to $15.5m (2012: $5.9m), assisted by the injection of cash as part of the flotation.

Non-current assets comprise the Group's investment in property, plant and equipment and internally generated research and development.  In the second half of 2013, the Group invested in expanded facilities in Las Vegas, including the purchase of a property.  We also own premises in Taiwan and the UK, out of which we operate.

The Group's current assets have increased to $15.6m (2012 $8.6m).  Inventory and debtor balances have increased as a result of increased trading.  As at end December, over 90% of the trade debtors were within agreed payment terms.

Principal liabilities were trade and other payables, short and long term debt and corporation tax payable.  All liabilities are within the Group's payment profile.  In 2012, creditors included the expected costs of the IPO which was concluded in May 2013.

Dividend

The board proposes a full year dividend of 1.0p per share payable on 16 May 2014 to all shareholders on the register as at 2 May 2014.  The corresponding ex-dividend date is 30 April 2014.

Full Results Report

The Group's full annual report and accounts is available on the Company website.

Consolidated income statement

for the years ended 31 December 2013 and 2012

		Note		2013		2012
				$000		$000
Revenue		1,2		24,235		21,577
Operating expenses				(18,200)		(16,535)
Operating Profit				6,035		5,042
Financial expenses				(61)		(59)
Other income				-		7
Profit before tax				5,974		4,990
Taxation				(1,224)		(1,199)
Profit for the year				4,750		3,791
Basic earnings per share		3		$0.0777		$0.0687
Fully diluted earnings per share		3		$0.0762		$0.0687

Consolidated statement of comprehensive income

for the years ended 31 December 2013 and 2012

				2013	2012
				$000	$000
Profit for the year				4,750	3,791
Foreign currency translation differences				(29)	77
Total comprehensive income for the year				4,721	3,868

All items of other comprehensive income may be reclassified to profit and loss in future periods.

Consolidated statements of financial position

as at 31 December 2013 and 2012

		Note		2013	2012
				$000	$000
Non current assets
Property, plant and equipment				4,554	3,800
Intangible assets - research and development				1,253	502
Total non-current assets				5,807	4,302
Current assets
Inventories				2,631	2,419
Trade and other receivables				5,939	4,370
Cash and cash equivalents				7,021	1,803
Total current assets				15,591	8,592
Total assets				21,398	12,894
Current liabilities
Other financial liabilities				(173)	(92)
Trade and other payables				(2,677)	(3,675)
Corporation tax payable				(805)	(913)
Total current liabilities				(3,655)	(4,680)
Non-current liabilities
Other financial liabilities				(1,986)	(2,187)
Deferred tax liability				(281)	(138)
Total non-current liabilities				(2,267)	(2,325)
Total liabilities				(5,922)	(7,005)
Net assets				15,476	5,889
Equity
Share capital		4		104	27
Share based payments reserve		4		113	-
Share premium		4		5,181	505
Retained earnings		4		10,035	5,285
Translation reserve		4		43	72
Total equity				15,476	5,889

Consolidated statements of changes in equity

for the years ended 31 December  2013 and 2012

							Total
		Share	Share Based	Share	Retained	Translation	Shareholders
		Capital	Payments	Premium	Earnings	Reserve	Funds
		$000	$000	$000	$000	$000	$000
At 1 January 2012		27	-	505	1,494	(5)	2,021
Comprehensive income
Profit for the year		-		-	3,791	-	3,791
Other comprehensive income		-		-	-	77	77
At 31 December 2012 and 1 January 2013		27	-	505	5,285	72	5,889
Comprehensive income
Profit for the year		-	-	-	4,750	-	4,750
Other comprehensive income		-	-	-	-	(29)	(29)
		27	-	505	10,035	43	10,610
Transactions with equity holders
Share bonus issue		63	-	(63)	-	-	-
Issue of shares		14	-	5,873	-	-	5,887
Share issue expenses		-	-	(1,134)	-	-	(1,134)
Share based payments		-	113	-	-	-	113
At 31 December 2013		104	113	5,181	10,035	43	15,476

Consolidated cash flow statements

for the years ended 31 December 2013 and 2012

				2013	2012
				$000	$000
Cash flows from operating activities
Profit for the year				4,750	3,791
Adjustments for:
Depreciation				227	212
Amortisation				120	18
(Profits) on disposal				-	(198)
Financial expenses				61	59
Taxation expense				1,224	1,199
Share based payments expense				113	-
				6,495	5,081
(Increase) in trade and other receivables				(1,568)	(3,956)
(Increase) in inventories				(212)	(787)
Increase/(decrease) in trade and other payables				(984)	2,007
				3,731	2,345
Interest paid				(61)	(59)
Tax paid				(1,190)	(380)
Net cash from operating activities				2,480	1,906
Cash flows from investing activities
Acquisition of property, plant and equipment				(1,024)	(1,521)
Development expenditure				(871)	(410)
Proceeds from sale of property, plant and equipment				-	941
Net cash from investing activities				(1,895)	(990)
Cash flows from financing activities
Proceeds from borrowings				-	760
Repayment of borrowings				(120)	(824)
Proceeds on issue of shares				5,887	-
Share issue expenses				(1,134)	-
Net cash from financing activities				4,633	(64)
Net increase in cash and cash equivalents				5,218	852
Cash and cash equivalents at 1 January				1,803	951
Cash and cash equivalents at 31 December				7,021	1,803

Notes

1.   Basis of preparation

The basis of preparation and summary of significant accounting policies applicable to the consolidated financial statements of Quixant Plc can be found in Note 1 of the Annual Report and Financial Statements, available from the Company's website. The consolidated financial statements of Quixant Plc have been prepared in accordance with International Financial Reporting Standards ('IFRSs') as issued by the International Accounting Standards Board ('IASB') and as endorsed by the EU.

The information in this news release does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 ('the Act'). The statutory accounts for the year ended 31 December 2013 will be delivered to the Registrar of Companies in England and Wales in accordance with Section 441 of the Act. The auditor has reported on those accounts. Its report was unqualified and did not contain a statement under Section 498(2) or (3) of the Act.

2.     Analysis of turnover

				2013	2012
				$000	$000
By geographical market
Asia				293	405
Australia				12,161	10,516
Europe				3,406	2,254
North America				8,307	8,384
Other				68	18
				24,235	21,577

3.     Earnings per ordinary share EPS

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.  The weighted average number of fully paid ordinary shares as at 31 December 2012 has been restated for the bonus issue and share subdivision described in note 4.

				Year ended 31 December 2013	Year ended 31 December 2012
				$000	$000
Earnings Earnings for the purposes of basic and diluted EPS being net profit attributable to equity shareholders				4,750	3,791
Number of shares Weighted average number of ordinary shares for the purpose of basic EPS
Number of shares				61,154,496	55,200,000
Effect of dilutive potential ordinary shares:
Share options				1,163,082	-
Weighted number of ordinary shares for the purpose of diluted EPS				62,317,578	55,200,000
Basic earnings per share				$0.0777	$0.0687
Fully diluted earnings per share				$0.0762	$0.0687

4.   Share capital

	2013						2012
		No.			$000			No.			$000
At beginning of the year
Ordinary shares of 5p each		276,000			27			276,000			27
Bonus issue of 828,000 shares of 5p each		828,000			63			-			-
20,000 shares of 5p each issued		20,000			1			-			-
		1,124,000
Share sub-division into 56,200,000 shares of 0.1p each		56,200,000
8,434,782 ordinary shares of 0.1p issued		8,434,782			13			-			-
At 31 December		64,634,782			104			276,000			27

On 4 February 2013 a bonus issue of three shares for every one share held was awarded to the shareholders by a transfer from the share premium account to the share capital of £41,400.  In March 2013, a further issue of 20,000 ordinary shares was subscribed.

On 25 April 2013, the Company subdivided the existing 5p ordinary shares into 56,200,000 ordinary shares of £0.001 each.

On 21 May 2013 the Company was listed on the AIM market and issued an additional 8,434,782 ordinary shares of 0.1p for an aggregate consideration of £3,880,000 ($5,887,000).  Share issue expenses totalling $1,134,000 were deducted from the share premium account.

Share based payments

During the year the Company issued share options to employees.  To be able to exercise these options, employees are required to be employed by the Company for a period of three years from the grant date.  In addition exercise is conditional on the Company achieving a minimum level of EPS growth over the vesting period.

Options have been issued over 1,895,200 shares, with an exercise price of £0.49.  Options issued under the scheme expire 10 years from grant date.

The fair value of employee share options is measured using a Black Scholes model.  Measurement inputs and assumptions are as follows:

				31 December 2013		31 December 2012
Fair value at grant date					£0.19	-
Share price					0.46p	-
Exercise price					0.49p	-
Expected volatility					50%	-
Expected option life					5 years	-
Risk-free interest rate					0.9%	-

The fair value at grant date of £0.19 was converted at the exchange rate on the grant date to give a fair value of $0.29 per option.  The total expense recognised in the period in respect of share options is $113,000.

 

END

 

 

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