Earnings Release • Mar 23, 2016
Earnings Release
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National Storage Mechanism | Additional information
RNS Number : 9662S
Quixant PLC
23 March 2016
23 March 2016
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 2015.
· Revenue growth of 31% to $41.8 million (2014: $31.9 million)
· Adjusted EBITDA1 increased 28% to $10.1 million (2014: $7.9 million)
· Adjusted profit before tax1 increased 28% to $9.2 million (2014: $7.2 million)
· Adjusted fully diluted EPS2 of $0.113 per share (2014: $0.0941 per share)
· Proposed full year dividend of 1.5p per share (2014: 1.2p)
· Net cash from operating activities of $6.3 million (2014: $2.1 million)
1. Adjusted by adding back $0.20 million in respect of share based payments (2014: $0.16 million) and $1.17 million in respect of acquisition costs (2014: $nil).
2. Adjusted by adding back $1.37 million in respect of share based payments and acquisition costs and subtracting the associated tax effect of $0.27 million (2014: $0.16 million adjustment less tax effect of $0.032 million).
· Achieved broad based growth in revenue with reduced customer concentration.
· Commenced volume shipments of gaming monitors.
· Completed the earnings enhancing acquisition of Densitron Technologies plc for £7.66m financed by cash and debt which provides strong sales force with experience selling into markets outside gaming.
Nick Jarmany, CEO of Quixant, commented: "I am delighted with the strong growth we achieved in 2015 with both revenue and profits at record levels. Our core business of computer gaming platforms grew market share with increased sales across a wide range of customers and our decision to move into the market for gaming monitors has proved very successful. Volume shipments started in the middle of the year and our pipeline of business is strong.
"We completed the acquisition of Densitron in November, our first acquisition in the ten years we have been operating. Densitron provides us with a geographically diverse sales team, broadening our global footprint, as well as a wide and loyal customer base providing the opportunity to sell Quixant products into other markets.
"We have had a strong start to 2016 in both our core business and also gaming monitors and with the potential opportunities Densitron provides in other markets, I am confident the Group is well placed to deliver strong growth in 2016 and beyond."
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 Ltd | Tel: +44 (0) 20 7220 0500 |
| Matt Goode (Corporate Finance) Grant Bergman (Corporate Finance) Simon Johnson (Corporate Broking) |
|
| Financial PR: | |
| Alma PR | |
| John Coles | Tel: +44 (0) 7836 273 660 |
| Hilary Buchanan | Tel: +44 (0) 7515 805 218 |
Chairman's Statement
I am pleased to report on another strong year of growth and business success for Quixant in 2015, delivering record results. Through continued execution of our corporate strategy, we have achieved significant growth in both revenue and profits and have also invested to ensure a robust foundation for growth into 2016 and beyond.
We have seen growth across a range of size of customer in 2015 and reduced customer concentration. We also have a healthy pipeline of "design-ins" which we believe sets us in good stead for future growth. The "design-in" step represents a lengthy period of collaboration between the engineering teams of Quixant and the customer in order to develop the customer's game and integrate Quixant's products into their machines.
As well as continuing to grow our market share in our core business of computer gaming platforms in 2015, we have also started to reap the benefits from our decision to establish a business in gaming monitors. We have the opportunity to sell typically two or more monitors for every one computer board we sell per gaming machine. We have grown our resources to build our gaming monitors business and have already seen further success in securing new business in early 2016 for monitors.
In September 2015 we announced an offer to purchase Densitron Technologies plc for £7.66m, financed through a combination of the Company's cash reserves and new banking facilities. We completed the acquisition on 10 November 2015. Densitron supplies standard and custom electronic display solutions to industrial markets globally and has around 60 staff located in North America, Europe and Asia. We believe there are significant opportunities for Quixant's products to be sold into other vertical markets outside gaming and have already seen some evidence of this. Densitron has an established and experienced global sales force which has long term trusted relationships with companies in a wide range of industrial markets. Through leveraging these relationships, Quixant has a significant opportunity to sell products into these other markets, as all display solutions require some type of computer or electronics to drive them. We expect the acquisition to be earnings enhancing in the first full year of ownership.
We paid a full year dividend of 1.2p per share in May 2015 and, aligned to our progressive dividend policy and continued strengthening in the balance sheet, the Board is pleased to propose a 2016 full year dividend of 1.5p per share, a growth of 25% on the prior period.
Quixant has significant headroom to grow its market share in the gaming industry and we are confident of our prospects for continued strong growth in this area. The acquisition of Densitron brings further opportunities for diversification into other markets and possible enhancement of this growth. We have had a strong start to 2016 and are well positioned to achieve our growth targets for the year.
Chief Executive's Report
I am delighted to report on another year of robust growth in 2015. Adjusted pre-tax profits for the year were $9.2 million, growth of 28% on the prior period, on the back of revenues of $41.8 million (2014: $31.9 million). We have achieved this strong growth alongside investment into the business to position us well for continued success in 2016 and beyond. During the year, which marked the tenth anniversary since foundation of the Company, we reached several important milestones in the development of Quixant business.
Broad based revenue growth
Our growth in 2015 was broad based. We saw increased sales to Tier 1 customers which was the primary engine to growth. Pleasingly, we also saw strong performance from several Tier 3 customers which we have been working with for several years. They have launched new products which have been well received by the market and as a result their rate of consumption of computer platforms has grown. This underlines the benefits Quixant brings in enabling customers' R&D teams to focus on game development.
We have continued to consolidate our position in several Tier 1 customer projects where we are designed in but have yet to deliver volume. We expect to see continued strengthened sales to Tier 1 customers in 2016.
Our customer concentration diminished in 2015, with Ainsworth falling to 43% of total revenue over the year (2014: 58%). In total, we shipped just under 34,000 units in 2015 (2014: 28,500). Based on a 2015 independent industry survey conducted by G3 Magazine, which suggests that the annual new/replacement cycle for machines is 475,000 per annum, this would imply Quixant occupied a 7% market share in new/replacement machines.
New product development
We launched QMax-1, a new flagship computer platform, and several new monitor products to the gaming market in 2015. QMax-1 represents a new tier of performance for all-in-one gaming platforms. By utilising an innovative design, we have harnessed the power of games console level graphics into a compact package which combines all of Quixant's benefits, including optimised gaming features, longevity of supply and high reliability. We had a product ready to demonstrate before AMD had publically announced the chipset on which it was based and formally launched QMax-1 on the same day as AMD's public announcement. So far reception from customers has been positive towards QMax-1 as a solution for their high end casino products.
In February 2016 at the ICE Exhibition in London, we launched the QXi-6000 as successor to the mid-range QXi-4000. The QXi-6000 is well suited to customers who need a compact, fan-less solution, high performance graphics and the capability to drive up to three screens. Both QMax-1 and the QXi-6000 are optimised for 4K Ultra HD graphics and video.
During the year, we were granted two new patents in the UK and US. The technology described by these patents is incorporated into the majority of Quixant's current product range and therefore the UK patent helpfully enables us to take advantage of the UK Patent Box regime.
Monitor products
Quixant was founded to design, manufacture and supply computer platforms to the manufacturers of electronic gaming machines. In doing so, we created a strong culture of innovation and exceptional engineering design capabilities which, combined with our Taiwanese manufacturing capabilities and understanding of the gaming market, enabled us to create computer products which lead the market. We have become a trusted technology partner with many customers who see us not only as a supplier of computer products but also as an innovative technology solutions provider. Some of these customers have publically communicated this message.
As a result, we have identified opportunities to supply our customers with other components which are connected with the computer platform. In particular we have developed our own range of gaming monitors which are also high value components in gaming machines. We developed our monitor products range with the underpinning principle that customers faced the same constraints in terms of regulation, reliability and quality for monitor products as for computer platforms. By moving into this area, Quixant has been able to extend its advantages to customers for another component in their machines and has been able to introduce combined technology benefits. We commenced volume shipments of monitors to our first customer around the middle of the year and have a strong order book into 2016.
Based on this earlier success, in 2015 we invested in an expert sales team based in Germany to lead our global gaming monitors business. We believe there are substantial opportunities for growth in this area, both into Quixant's existing customers and into new customers. We believe there are also opportunities for us to innovate in gaming monitors in conjunction with our computer products.
Acquisition of Densitron
Over the last few years we have been approached by a number of customers outside gaming who have identified the strengths Quixant can bring to their business in their markets. In the past, we have elected not to pursue these opportunities in order to focus on our core business. However, we have always believed that at the appropriate time we would seek to expand our business into other markets.
The acquisition of Densitron brings a global sales team with strong business and a broad base of customers who operate in a range of industrial markets. The team has proven expertise in the sale of complex electronic display solutions to these markets and has built a significant and stable business in doing so. We believe the acquisition provides a strong platform from which to develop our business in industrial markets outside gaming.
Prior to the acquisition, Densitron was an AIM listed company with over 40 years' experience in the electronic technology sector. Densitron provides a range of solutions to its customers, many of which are bespoke comprising a range of complex technologies. We believe the sales team have the skills to consult and identify customer requirements and expertise in the solutions available in the market to guide the customer in making the correct choice, which has earned them the reputation of being a trusted partner.
Quixant's skills and strengths, particularly in its Taiwanese procurement, quality control and manufacturing management capabilities complements Densitron's strength in sales. We believe this has the potential to enhance profitability, product quality, engineering design capability and purchasing power.
Densitron's business in 2015 saw growth in revenue and operating profit in line with its budgets and following completion made a small positive contribution to Quixant's 2015 financial performance.
We have been working hard since completion of the acquisition to globally harmonise Densitron's systems and policies. In 2016 we will continue efforts in this area to create an enhanced global infrastructure on which to grow the business.
Investing for the future
Excluding Densitron, our headcount increased by 13% from 70 to 79 in 2015. 46% of our staff at 31 December 2015 were directly responsible for product development. 32% of our overheads were directly attributable to R&D activities, representing reinvestment of 6% of revenue and 14% of gross profit into R&D.
When combined with Densitron, total Group headcount at 31 December 2015 was 139.
In a business with operations which span 3 continents, good communication and collaboration tools are essential to success. Quixant invested in this area in 2015 by rolling out a global video conferencing system and a collaborative digital whiteboard solution. The latter enables participants in two or more locations to engage in a common shared electronic whiteboard space to brainstorm and collaborate on ideas. Users can also present, annotate and modify a range of content interactively which enhances the product development process across the Group by enabling remotely located colleagues to work as if they are in one location.
Outlook
Quixant's opportunity in its core gaming platforms business continues to strengthen as the trend for the largest of the gaming machine manufacturers to outsource gathers momentum. Combined with a buoyant start in the gaming monitors business and the potential growth that Densitron brings into other markets, the Group is well aligned to deliver strong growth in line with our expectations for 2016 and beyond.
Financial Review
Revenue
Quixant delivered record revenues of $41.8 million, up 31% from 2014 ($31.9 million). The acquisition of Densitron made a contribution of $5.2 million to revenue following completion.
Within Quixant's gaming business, revenue growth was driven by the continuing development of our commercial relationships, particularly in the Tier 1 and Tier 3 space, with Europe proving in aggregate to be a strong region for growth. In addition to our established range of computer platforms, we commenced volume shipments of our gaming monitors in 2015. We have broadened our customer base both in number to 126 (2014: 89) and across geographies.
As a supplier of key components in gaming machines which are subject to heavy regulation, we are required by customers to supply a consistent product over a period of several years. As a result, we typically hold multi-year supply contracts with our larger customers. This provides us with a degree of repeatability and security to our revenue stream.
Profit
Our gross profit for the year was $17.3 million (2014: $14.1 million), representing a gross margin of 41% (2014: 44%). This reduction reflects the lower margins which can be earned on gaming monitors and Densitron's display solutions.
Adjusted EBITDA increased 28% to $10.1 million (2014: $7.9 million). Adjusted profit before tax increased 28% to $9.2 million (2014: $7.2 million). Adjustments to EBITDA and profit before tax are to add back share based payments and acquisition costs of $1.4 million (2014: $0.16 million).
We continue to re-invest in the business to ensure our product offering remains a market leading proposition. Excluding Densitron, gross expenditure on R&D was $2.3 million, (2014: $2.1 million) or 14% of gross profit (2014: 15%). These costs relate to our development activities undertaken in Taiwan and Italy. $1.1 million of these development costs were capitalised (2014: $1.0 million), with amortisation for the year on total capitalised development costs $0.4 million (2014: $0.4 million).
Balancing the investment requirements of the business to support future growth with careful management of increases resulted in an overhead spend of $9.5 million, including exceptional costs of $1.4m (2014: $7.0 million). Following completion, Densitron contributed $1.0 million to overheads. Our headcount increase to 79 people (2014: 70) was the biggest contributor to our increased spend.
Taxation
There is a tax charge for the year of $1.4 million (2014: $0.9 million). This constitutes a corporation tax charge, which includes prior period adjustments, of $0.121 million (2014: $0.271 million and a deferred tax charge of $0.175 million (2014: $0.044 million). The Group continues to benefit from enhanced tax reliefs available in respect of qualifying R&D expenditure.
Foreign Exchange
To minimise foreign currency exposure the Group transacts and reports in US Dollars as far as is practicable. With effect from 1 January 2016 Densitron have converted to accounting in US Dollars. Where significant non-US Dollar expenses can be forecast with respect to timing and value, the Board may take the decision to hedge against unfavourable exchange rate movements.
Earnings Per Share
Basic earnings per share increased 5% to $0.0993 (2014: $0.0946). Fully diluted earnings per share increased 5% to $0.0967 (2014: $0.0922). Adjusted fully diluted earnings per share increased 20% to $0.113 (2014: $0.0941)
The calculations of earnings per share are included at Note 10.
Balance Sheet
The Group maintains a strong balance sheet with net assets of $25.7 million (2014: $20.5 million).
Tangible non-current assets have grown primarily because of the acquisition of our new office in Italy and the inclusion of investment land owned by Densitron, which is valued at $0.7 million. Intangible non-current assets increased by $13.2 million to $15.4 million, mainly due to goodwill arising on the acquisition together with the recognition of intangibles acquired with Densitron.
Current assets mainly comprise inventory and trade receivables. Excluding the impact of the acquisition, we held inventory of $6.3 million (2014: $5.5 million). This is consistent with our inventory strategy, which is structured such as to hold buffer inventory of key product lines. This is a competitive advantage Quixant can offer over other suppliers. The trade receivables of $16.7 million (2014: $9.2 million) reflect the fact that our revenues are typically weighted towards the second half of the year.
Non-current liabilities now include the banking facilities of $7.4 million required to support the Densitron acquisition as well as the long-term borrowings acquired. All liabilities are within the Group's payment profile.
Cash Flow
The Group continued to generate high levels of operating cash over the year. The cash generated amounted to $6.3 million (2014: $2.1 million). Investment in our inventory strategy previously mentioned was first implemented in 2014 which is a key reason current period operating cash is significantly higher than that of the prior period.
To support our growth aspirations the Group spent $12.8 million (2014: $2.4 million) on investing activities. This is primarily accounted for by $10.6 million (2014: $nil) of costs relating to acquisitions.
New financing cash flows for the period under review principally relate to an inflow of $7.4 million in respect of new banking facilities and an outflow in respect of repayment of borrowings.
Our overall cash outflow during the period was $0.8 million (2014: $2.3 million) which gave a cash and cash equivalents balance at the year-end of $3.9 million (2014: $4.7 million). We are in the process of reviewing Group treasury strategy following the acquisition.
Dividend
The board intends to maintain a progressive dividend policy whilst continuing to invest in and to develop the Group's businesses. As such the board proposes a dividend in respect of the year of 1.5p per share (2014: 1.2p per share) payable on 19 May 2016 to all shareholders on the register at the close of business on 13 May 2016. The corresponding ex-dividend date is 12 May 2016.
Outlook
The 2016 financial year has started well and we are confident of another year of strong growth in line with our expectations.
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEARS ENDED 31 DECEMBER 2015 AND 2014
| Note | 2015 | 2014 | |
| $000 | $000 | ||
| Revenue | 1,2 | 41,829 | 31,919 |
| Cost of sales | (24,503) | (17,857) | |
| Gross profit | 17,326 | 14,062 | |
| Administrative expenses | (3,995) | (2,351) | |
| Other operating expenses | (5,469) | (4,622) | |
| Operating profit | 7,862 | 7,089 | |
| Financial expenses | (74) | (30) | |
| Profit before tax | 7,788 | 7,059 | |
| Taxation | (1,368) | (943) | |
| Profit for the year | 6,420 | 6,116 | |
| Other comprehensive income for the year, net of income tax | |||
| Foreign currency translation differences | (268) | (183) | |
| Total comprehensive income for the year | 6,152 | 5,933 | |
| Basic earnings per share | 4 | $0.0993 | $0.0946 |
| Fully diluted earnings per share | 4 | $0.0967 | $0.0922 |
BALANCE SHEETS
AS AT 31 DECEMBER 2015
| Group | Company | |||||
|---|---|---|---|---|---|---|
| Note | 2015 | 2014 | 2015 | 2014 | 1 January 2014* | |
| --- | --- | --- | --- | --- | --- | --- |
| $000 | $000 | $000 | $000 | $000 | ||
| --- | --- | --- | --- | --- | --- | --- |
| Non-current assets | ||||||
| Property, plant and equipment | 5,996 | 5,218 | 3,580 | 3,684 | 3,582 | |
| Intangible assets | 15,395 | 2,231 | 2,905 | 2,231 | 1,375 | |
| Investment property | 740 | - | - | - | - | |
| Investments in group companies and associated undertakings | - | - | 11,875 | 196 | 109 | |
| Deferred tax assets | 620 | 63 | 70 | 47 | - | |
| 22,751 | 7,512 | 18,430 | 6,158 | 5,066 | ||
| Current assets | ||||||
| Inventories | 9,285 | 5,505 | 5,495 | 4,008 | 2,041 | |
| Tax receivable | - | - | 325 | 322 | - | |
| Trade and other receivables | 19,484 | 10,049 | 10,002 | 8,596 | 3,422 | |
| Cash and cash equivalents | 3,861 | 4,722 | 1,401 | 1,070 | 6,870 | |
| 32,630 | 20,276 | 17,223 | 13,996 | 12,333 | ||
| Total assets | 55,381 | 27,788 | 35,653 | 20,154 | 17,399 | |
| Current liabilities | ||||||
| Other interest-bearing loans and borrowings | (2,994) | (100) | (605) | (100) | (173) | |
| Trade and other payables | (15,274) | (5,410) | (10,881) | (4,614) | (2,177) | |
| Tax payable | (301) | (211) | (-) | (-) | (-) | |
| (18,569) | (5,721) | (11,486) | (4,714) | (2,350) | ||
| Non-current liabilities | ||||||
| Other interest-bearing loans and borrowings | (8,744) | (1,200) | (8,448) | (1,200) | (1,986) | |
| Provisions | (750) | (-) | (-) | (-) | (-) | |
| Deferred tax liabilities | (1,667) | (388) | (671) | (388) | (281) | |
| (11,161) | (1,588) | (9,119) | (1,588) | (2,267) | ||
| Total liabilities | (29,730) | (7,309) | (20,605) | (6,302) | (4,617) | |
| Net assets | 25,651 | 20,479 | 15,048 | 13,852 | 12,782 | |
| Equity attributable to equity holders of the parent | ||||||
| Share capital | 5 | 104 | 104 | 104 | 104 | 104 |
| Share premium | 5,181 | 5,181 | 5,181 | 5,181 | 5,181 | |
| Share based payments reserve | 470 | 273 | 470 | 273 | 113 | |
| Retained earnings | 20,299 | 15,061 | 9,613 | 8,431 | 7,339 | |
| Translation reserve | 5 | (408) | (140) | (320) | (137) | 45 |
| 25,646 | 20,479 | 15,048 | 13,852 | 12,782 | ||
| Non-controlling interest | 5 | - | - | - | - | |
| Total equity | 25,651 | 20,479 | 15,048 | 13,852 | 12,782 | |
*The Company balance sheet at 1 January 2014 has been presented in accordance with IFRS 1, as a result of the parent Company's transition to IFRS.
STATEMENT OF CHANGES IN EQUITY
GROUP
| Share Capital |
Share Premium |
Translation Reserve | Share Based Payments | Retained Earnings |
Total Parent Equity | Non-controlling Interest | Total Equity |
|
| $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | |
| Balance at 1 January 2014 | 104 | 5,181 | 43 | 113 | 10,035 | 15,476 | - | 15,476 |
| Total comprehensive income for the period | ||||||||
| Profit | - | - | - | - | 6,116 | 6,116 | - | 6,116 |
| Other comprehensive loss | - | - | (183) | - | - | (183) | - | (183) |
| Total comprehensive income for the period | - | - | (183) | - | 6,116 | 5,933 | - | 5,933 |
| Transactions with owners, recorded directly in equity | ||||||||
| Share based payments | - | - | - | 160 | - | 160 | - | 160 |
| Dividend paid | - | - | - | - | (1,090) | (1,090) | - | (1,090) |
| Total transactions with owners | 160 | (1,090) | (930) | (930) | ||||
| Balance at 31 December 2014 | 104 | 5,181 | (140) | 273 | 15,061 | 20,479 | 20,479 | |
| Share Capital |
Share Premium |
Translation Reserve | Share Based Payments | Retained Earnings |
Total Parent Equity | Non-controlling Interest | Total Equity |
|
| $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | |
| Balance at 1 January 2015 | 104 | 5,181 | (140) | 273 | 15,061 | 20,479 | - | 20,479 |
| Total comprehensive income for the period | ||||||||
| Profit | - | - | - | - | 6,420 | 6,420 | - | 6,420 |
| Other comprehensive loss | - | - | (268) | - | - | (268) | - | (268) |
| Total comprehensive income for the period | - | - | (268) | - | 6,420 | 6,152 | - | 6,152 |
| Transactions with owners, recorded directly in equity | ||||||||
| Share based payments | - | - | - | 197 | - | 197 | - | 197 |
| Dividend paid | - | - | - | - | (1,182) | (1,182) | - | (1,182) |
| Total contributions by and distributions to owners | - | - | - | 197 | (1,182) | (985) | - | (985) |
| Transactions with owners | ||||||||
| Acquisition of subsidiary with a non-controlling interest | - | - | - | - | - | - | 5 | 5 |
| Total transactions with owners | - | - | - | - | - | - | 5 | 5 |
| Balance at 31 December 2015 | 104 | 5,181 | (408) | 470 | 20,299 | 25,646 | 5 | 25,651 |
COMPANY
| Share Capital |
Share Premium |
Translation Reserve | Share Based Payments | Retained Earnings |
Total Parent Equity | |
| $000 | $000 | $000 | $000 | $000 | $000 | |
| Balance at 1 January 2014 | 104 | 5,181 | 45 | 113 | 7,339 | 12,782 |
| Total comprehensive income for the period | ||||||
| Profit | - | - | - | - | 2,182 | 2,182 |
| Other comprehensive loss | - | - | (182) | - | - | (182) |
| Total comprehensive income for the period | - | - | (182) | - | 2,182 | 2,000 |
| Transactions with owners, recorded directly in equity | ||||||
| Share based payments | - | - | - | 160 | - | 160 |
| Dividend paid | - | - | - | - | (1,090) | (1,090) |
| Total contributions by and distributions to owners | - | - | - | 160 | (1,090) | (930) |
| Balance at 31 December 2014 | 104 | 5,181 | (137) | 273 | 8,431 | 13,852 |
| Share Capital |
Share Premium |
Translation Reserve | Share Based Payments | Retained Earnings |
Total Parent Equity | |
| $000 | $000 | $000 | $000 | $000 | $000 | |
| Balance at 1 January 2015 | 104 | 5,181 | (137) | 273 | 8,431 | 13,852 |
| Total comprehensive income for the period | ||||||
| Profit | - | - | - | - | 2,364 | 2,364 |
| Other comprehensive loss | - | - | (183) | - | - | (183) |
| Total comprehensive income for the period | - | - | (183) | - | 2,364 | 2,181 |
| Transactions with owners, recorded directly in equity | ||||||
| Share based payments | - | - | - | 197 | - | 197 |
| Dividends | - | - | - | - | (1,182) | (1,182) |
| Total contributions by and distributions to owners | - | - | - | 197 | (1,182) | (985) |
| Balance at 31 December 2015 | 104 | 5,181 | (320) | 470 | 9,613 | 15,048 |
CASH FLOW STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2015 and 2014
| Note | Group | Company | |||
|---|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | ||
| --- | --- | --- | --- | --- | --- |
| $000 | $000 | $000 | $000 | ||
| --- | --- | --- | --- | --- | --- |
| Cash flows from operating activities | |||||
| Profit for the year | 6,420 | 6,116 | 2,363 | 2,182 | |
| Adjustments for: | |||||
| Depreciation, amortisation and impairment | 871 | 645 | 684 | 609 | |
| Taxation expense | 1,368 | 943 | 412 | 265 | |
| Financial expense | 74 | 30 | 53 | 30 | |
| Equity settled share based payment expenses | 197 | 160 | 118 | 73 | |
| 8,930 | 7,894 | 3,630 | 3,159 | ||
| (Increase) in trade and other receivables | (2,140) | (4,110) | (1,406) | (5,174) | |
| (Increase) in inventories | (1,490) | (2,874) | (1,487) | (1,967) | |
| Increase in trade and other payables | 2,166 | 2,682 | 6,202 | 2,385 | |
| 7,466 | 3,592 | 6,939 | (1,597) | ||
| Interest paid | (74) | (30) | (53) | (30) | |
| Tax paid | (1,112) | (1,493) | (155) | (527) | |
| Net cash from operating activities | 6,280 | 2,069 | 6,731 | (2,154) | |
| Cash flows from investing activities | |||||
| Acquisition of subsidiary, net of cash acquired | 3 | (10,593) | - | (11,600) | - |
| Acquisition of property, plant and equipment | (1,101) | (938) | (230) | (407) | |
| Acquisition of intangible assets | (1,151) | (1,481) | (1,142) | (1,290) | |
| Net cash from investing activities | (12,845) | (2,419) | (12,972) | (1,697) | |
| Cash flows from financing activities | |||||
| Proceeds from new loan | 7,754 | - | 7,754 | - | |
| Repayment of borrowings | (868) | (859) | - | (859) | |
| Dividends paid | (1,182) | (1,090) | (1,182) | (1,090) | |
| Net cash from financing activities | 5,704 | (1,949) | 6,572 | (1,949) | |
| Net (decrease)/increase in cash and cash equivalents | (861) | (2,299) | 331 | (5,800) | |
| Cash and cash equivalents at 1 January | 4,722 | 7,021 | 1,070 | 6,870 | |
| Cash and cash equivalents at 31 December | 3,861 | 4,722 | 1,401 | 1,070 | |
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 2015.
The financial information set out in this document, which was approved by the Board on 22 March 2016, is derived from the full Group accounts for the year ended 31 December 2015 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 2015, will be delivered to the Registrar of Companies in due course.
The Board of Quixant PLC approved the release of this preliminary announcement on 22 March 2016.
The Annual Report for the year ended 31 December 2015 will be posted to shareholders in due course and will be delivered to the Registrar of Companies following the Annual General Meeting of the Company. The report will also be available on the investor relations page of the Group's website.
Further copies will be available on request and free of charge from the Company Secretary.
| 2015 | 2014 | |
| $000 | $000 | |
| By geographical market | ||
| Asia | 3,958 | 1,387 |
| Australia | 14,479 | 13,252 |
| Europe | 7,274 | 2,965 |
| North America | 15,976 | 14,243 |
| Other | 142 | 72 |
| 41,829 | 31,919 |
Acquisitions in the current period
On 10 November 2015, the Company acquired all of the ordinary shares in Densitron Technologies plc for GBP7,663,601.66 ($11,600,971) being 11p per share, satisfied in cash. Densitron Technologies plc was a UK based AIM quoted company whose primary business is the design, development and supply of electronic displays into the industrial market place. The acquisition provides the Group with the global infrastructure and sales capability to sell Quixant's computer products into wider industrial markets. The acquisition will complement Quixant's move into the provision of displays to its gaming customers, alongside the specialised computer systems it currently supplies. In the 6 weeks to 31 December 2015 the subsidiary contributed net profit of $117,000 to the consolidated net profit after tax for the year. If the acquisition had occurred on 1 January 2015, Group revenue would have been an estimated $72,667,000 and net profit after tax would have been an estimated $5,441,000. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition occurred on 1 January 2015.
On 9 December 2015, the Company acquired all of the ordinary shares in Alpha Display Europe GmbH (subsequently renamed Quixant Deutschland GmbH) for $750,000 and contingent consideration estimated as $750,000 to be satisfied in cash. Alpha Display Europe GmbH was a private company incorporated in Germany whose primary business is the sale of electronic displays into the industrial market place. The acquisition provides the Group with additional products which complement the current range of Quixant products and customer requirements. The acquisition will assist Quixant's move into the provision of displays to its gaming customers, alongside the specialised computer systems it currently supplies. As this company was acquired in December 2015, no profit has been included for this period to the consolidated net profit for the year.
In January 2016, Alpha Display Europe GmbH was legally registered as Quixant Deutschland GmbH. The accounts of Quixant Deutschland GmbH as at 31 December 2015 have been estimated for the purpose of acquisition accounting because the financial statements have not been completed. The effect of the acquisition on all items will be adjusted in the 2016 financial statements.
Effect of acquisitions
The acquisitions had the following effect on the Group's assets and liabilities.
| Recognised values on acquisition | |||
| $000 | $000 | ||
| Densitron | Quixant Deutschland (formerly Alpha Display Europe)- ESTIMATED | ||
| Acquiree's net assets at the acquisition date: | |||
| Property, plant and equipment | 968 | - | |
| Intangible assets - internally developed | 225 | - | |
| Intangible assets - customer relationships and order back log | 5,201 | - | |
| Inventories | 2,290 | - | |
| Trade and other receivables | 7,367 | 55 | |
| Cash and cash equivalents | 1,674 | - | |
| Interest-bearing loans and borrowings | (3,552) | - | |
| Trade and other payables | (7,715) | (28) | |
| Net deferred tax liabilities | (547) | - | |
| Net identifiable assets and liabilities | 5,911 | 27 | |
| Consideration paid: | |||
| Initial cash price paid | 11,600 | 750 | |
| Less proceeds received in respect of Densitron treasury shares | (83) | - | |
| Contingent consideration at fair value | - | 750 | |
| Total consideration | 11,517 | 1,500 | |
| Goodwill on acquisition | 5,606 | 1,473 | |
Goodwill has arisen on the acquisition because the consideration paid is in excess of the net identifiable assets and liabilities. This represents the value of the underlying business including its workforce.
Contingent consideration
The Group has agreed to pay the Quixant Deutschland GmbH vendors additional consideration based on the profit earned over the three years following acquisition. The range of the additional consideration payment is between $nil and $3,375,000. The Group has included $750,000 as contingent consideration related to the additional consideration, which represents its fair value at the acquisition date. The key assumptions in assessing the fair value are the growth rate and gross profit margin as applied to future profits of Quixant Deutschland GmbH.
Acquisition related costs
The group incurred acquisition costs of $1,168,000 relating to professional fees in respect of due diligence and advice. These costs have been included as a cost in administrative expenses in the group's consolidated profit and loss account.
| Year ended 31 December 2015 |
Year ended 31 December 2014 |
|
| $000 | $000 | |
| Earnings | ||
| Earnings for the purposes of basic and diluted EPS being | ||
| net profit attributable to equity shareholders | 6,420 | 6,116 |
| Number of shares Weighted average number of ordinary shares for the purpose of basic EPS |
Number | Number |
| Number of shares | 64,634,782 | 64,634,782 |
| Effect of dilutive potential ordinary shares: | ||
| Share options | 1,810,578 | 1,710,200 |
| Weighted number of ordinary shares for the purpose of diluted EPS |
66,445,360 | 66,344,982 |
| Basic earnings per share | $0.0993 | $0.0946 |
| Fully diluted earnings per share | $0.0967 | $0.0922 |
Share capital
| 2015 | 2014 | ||
| Shares | Shares | ||
| On issue at 1 January and 31 December 2015 | 64,634,782 | 64,634,782 | |
| 2015 | 2014 | ||
| $000 | $000 | ||
| Allotted, called up and fully paid | |||
| Ordinary shares of 0.1p | 104 | 104 | |
| 104 | 104 | ||
| Shares classified in shareholders' funds | 104 | 104 | |
| 104 | 104 | ||
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations.
Dividends
The following dividends were recognised during the period:
| 2015 | 2014 | |
| $000 | $000 | |
| 1.2p (2014: 1.0p) per qualifying ordinary share | 1,182 | 1,090 |
| 1,182 | 1,090 | |
After the Balance Sheet date dividends of 1.5p per qualifying ordinary share (2014: 1.2p) were proposed by the Directors. This dividend has not been provided for.
This information is provided by RNS
The company news service from the London Stock Exchange
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