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Annual Report and Accounts
For the year ended 31 December 2019
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Agile. Pioneering.
we push technology boundaries with
deep insight into the sectors we support
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CONTENTS
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Quixant designs, develops and
manufactures gaming platforms and
display solutions for the gaming and slot
machine industry. Through its Densitron
division, Quixant is also a pioneer in
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human machine interaction and control
for a range of global industrial markets.
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strategic report
Highlights
Chairman’s Statement
Chief Executive’s Report
Financial Review
Business Model and Strategy
Key Performance Indicators
Principal Risks
Corporate Social Responsibility
goVernance
Board of Directors
Chairman’s Introduction to Governance
Governance Report
Remuneration Committee Report
Audit Committee Report
Directors’ Report
Statement of Directors’ Responsibilities
in respect of the annual report and the financial
statements
Financial stateMents
Independent Auditor’s Report
to the members of Quixant Plc
Consolidated Statement of Profit and Loss and
other Comprehensive Income
Consolidated and Company Balance Sheets
Consolidated and Company Statements
of Changes in Equity
Consolidated and Company Cash Flow Statements
Notes
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Annual Report and Accounts 2019plcplc
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Annual Report and Accounts 2019
Annual Report and Accounts 2019
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Strategic
Report
Quixant is regarded as an integral
component of the gaming sector, and
intrinsic to its evolution.
With game-changing technology, customer-centric capabilities and
in-depth knowledge of regulations in all global markets, Quixant
enables gaming pioneers to think outside the box.
Our global approach to innovation is always underpinned by
a thorough local knowledge and understanding of cultural
requirements. We are committed to delivering the products and
services that our customers need - to exacting standards - for each
market worldwide.
HIGHLIGHTS
Financial highlights
net cash at
period end
of $16.1m
(2018: $9.7m)
net cash
FroM operating
actiVities up
33% to
$14.9m
(2018: $11.3m)
diluted eps
of
$0.124/
share
(2018: $0.213/share)
Covid-19
presents
a Material
uncertainty
to the group’s
Future
operations
reVenue
decline
of 20%
to $92.3m
(2018:$115.2m)
adJusted2
diluted eps
of
$0.139/
share
(2018: $0.260/share)
pre-taX
proFit
of $9.4m
(2018: $14.3m)
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revenue split
between:
GAMING PLATFORMS
REVENUE $46.6m
(2018: $62.5m)
GAMING MONITORS
REVENUE $9.6m
(2018: $15.1m)
QuiXant
gaMing
diVision
reVenue
$56.2m
(2018: $77.6m)
densitron
diVision
reVenue
of $36.2m
(2018: $37.5m) 018:
$37.5m)
adJusted 1
pre-taX proFit
$10.7m
(2018: $18.2m)
1. Adjusted by adding back items included in the adjusted PBT
reconciliation in note 1 to the financial statements totalling
$1.3m (2018: $3.9m).
2. Adjusted by adding back the items included in note 1 above
and subtracting the associated tax effect as set out in note 10
to the financial statements. In 2019 these amounted to $1.0m
(2018: $3.1m).
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Annual Report and Accounts 2019
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OPERATIONAL HIGHLIGHTS
Revenue decline
in Gaming due to
major customers facing
stiff competition which
has led to a reduction
in demand for our
products.
Unpredictability
in 2020 and beyond
due to the impact of
Coronavirus/Covid-19
No major
customers
lost during
the year.
Acquisition of
IDS to enhance
Densitron
product offering
in Broadcast
sector
New products
launched by Densitron
to target the broadcast
market expected to
generate revenue in 2020
and increased pipeline
of new business
of $12m.
Enhanced systems
and sales discipline
to improve revenue
visibility.
Appointment of key
senior management,
including a Densitron
Managing Director,
Densitron Product Director,
Gaming Product Director
and a new Gaming Global
Sales Director.
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CHAIRMAN'S STATEMENT
Michael peagram chairMan
First year of reduced
revenue in the company’s
history masks strengthened
underlying business
Against the backdrop of a significant
softening in some of our largest gaming
customers’ businesses, unfortunately I am
reporting to you the first year in Quixant’s
history in which the business has seen a
fall in revenue and profit. While clearly
disappointing, we are confident in the
business’ ability to deliver growth and
have made significant steps in the year to
address areas of weakness.
Intense competition among the gaming machine
manufacturers has reduced demand for some of our
largest customers’ machines and consequentially impacted
demand for our gaming platforms and monitors.
The outlook for the industry, however, remains buoyant
with significant long-term opportunities and we continue
to see evidence of the outsource trend which has fuelled
our gaming division growth over the last 15 years.
We believe long-term this intense competition will lead
to more business opportunities as new customers seek to
streamline their businesses. We have taken steps during the
year to improve our revenue visibility to be more equipped
to predict such shocks in our customer demand.
Our Densitron Broadcast strategy remains very positive
as we start to see the first revenue being generated from
the new business pipeline which continues to grow.
We delivered strong cash generation in the year, despite
lower than anticipated profits and as a result we end the
year with an extremely strong balance sheet with a healthy
net cash position. Given the current Covid-19 situation,
the Board will review whether it is able to pay an interim
dividend later in the year.
Gaye Hudson has decided to step down from the Board
at the AGM in 2020. I would like to take this opportunity
to thank Gaye for her contribution to Quixant over the last
three years. The Board will begin a search for a new non-
executive immediately. At the end of May 2020, JJ (C-T) Lin
will also step down from the board and Nick Jarmany and
Gary Mullins will become non-executive directors.
JJ was the founder of Quixant’s operation in Taiwan, is
responsible for much of Quixant’s success over the years
and is still a large shareholder. I would like to thank him
for his massive contribution over many years.
our future outlook remains positive and we
believe that the business is well progressed in
moving towards a more diversified series of growth
drivers. a robust start to 2020 is tempered by the
unpredictability for the full year due to coronavirus’
impact across the gaming business and the industrial
sectors densitron supplies into. we are closely
monitoring the situation on our business from a
demand and supply side and have executed a number
of contingency plans to mitigate the risk to our
staff and our financial performance. despite these,
we expect continued challenges with the business
throughout 2020 as a result of the virus outbreak.
Michael peagram chairMan
8
CHIEF EXECUTIVE'S
REPORT
Jon Jayal chieF eXecutiVe oFFicer
It is clear
that the
COVID-19
pandemic
will have a
significant
impact on the
business and
consequently
we have taken
a number of
actions to
weather the
storm.
coVid-19 – iMpact assessMent
When the pandemic first appeared in China, the initial threat was
to our supply chain. It is now very clear that the risk to customer
demand is by far our greatest challenge and we are prepared for
a significant downturn in sales for the duration of the pandemic.
We have no experience of a similar crisis so it is difficult to
accurately predict the extent that the effect of COVID-19 will
have on our revenues. It is not yet clear how widespread the
virus will become, how long the pandemic will last and what
the medium to long term effect of this pandemic will be on
consumer and business behaviour.
The global technology industry relies almost entirely on Far Eastern manufacturing for
the electronic components used in its products. We manufacture our Gaming division
products in Taiwan which has skilfully handled the outbreak and therefore seen limited
impact from reduced manufacturing capacity. However, many of the components which
are used on the gaming manufacturing lines are sourced from China and we have
therefore suffered some delays in the delivery of such components in the first quarter.
Densitron saw a more direct and immediate supply side impact from the COVID-19
outbreak. Many of the products in the Densitron business are manufactured in China in
factories which were operating at a fraction of their normal capacity during February.
The Chinese government’s rapid and weighty response to the outbreak has meant
that capacity returned very quickly to most of our suppliers over the course of February
and into March and we have seen an ongoing improvement in the delivery dates we
can quote customers. Our strategic stock holding and the intelligent handling of the
outbreak by the Taiwanese authorities has meant our production impact has been
minimised. We are continuing to monitor the effects on our manufacturing capability.
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With a return to relative normality on the supply side, we
are now focused on customer demand. The impact of
Macau closing for two weeks immediately after the Chinese
New Year holiday was an 88% reduction in overall gaming
revenues in February in the territory (a fall of around
$2.8bn compared to prior year). As COVID-19 has spread
outside Asia, we have now started to see the impact on
the key Australian and American casino markets with MGM
Resorts and Wynn closing down their Las Vegas resorts for
an indeterminate period. On 17 March there was a state
directive for all gaming machines in Nevada to be switched
off for 30 days. We have since seen other markets such
as the US tribal gaming market and the Australian market
closing down their operations. Globally, we are seeing the
few gaming venues which haven’t closed applying severe
restrictions and “distancing measures” (turning off every
other machine to distance players from one another). This
loss in casino revenues is already weighing heavily on our
customers’ income and longer term will likely weigh on
demand for new machines and therefore our customers’
consumption of our products this year.
From a position where the focus was on our ability to meet
expected delivery dates, the Densitron business has seen the
first signs of customers looking to postpone/cancel orders
as their manufacturing facilities close and demand for
products across most industrial markets reduces. We have
nonetheless seen continued demand in certain sectors and
have been actively offering help to our medical customers
to source components where they have faced challenges.
We have been in constant dialogue with customers to
understand the direct impact on our Gaming Division at a
senior management level. Given the greater unpredictability
around lead-times, we have been seeking orders further out
into the year to solidify deliveries.
Gradually we are forming a clearer picture of their short
term (next few months’) demand which unsurprisingly
has been significantly reduced. The uncertainty principally
relates to the outlook for the second half which will be
heavily influenced by governments’ response to the crisis.
Some Densitron customers have signalled reduced demand
and requested postponed deliveries while others have
continued or even accelerated demand.
Our priority is to do all we can to keep our offices as safe
as possible for customers and staff. At the same time,
we must prepare the business for varying levels of sales
declines. To that end we have modelled the effects of
differing levels of sales declines along with all the measures
we can take to ensure that the Company remains within
its cash and bank facilities, and have prepared cash flow
forecasts for a period in excess of 12 months.
The Board’s central case scenario is based on the existing
debts being recovered, irrevocable sales orders already
received from customers and their related cost of sales
being fulfilled, and an assumption that we will only recover
50% of debts from these new fulfillments. Under this
scenario, the Group would have sufficient funding to pay
existing overheads without reducing them until the second
half of 2021. The analyses depend greatly on the amount
of orders assumed to be collectable in cash, major changes
to this could significantly change the result. In all scenarios
considered the Board assumed that the Group’s medical
sector revenues did not stop, including revenues from
displays sold as components for ventilators.
Annual Report and Accounts 2019plcplc
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We sold 16,981 gaming monitors and button decks
in 2019 compared with 30,800 in 2018.
The average selling price of our products increased slightly as
we saw an increase in demand for the mid-range platforms
with reductions in demand for the cost-effective range and
(mainly due to the major customer declines) a reduction in
high-end product sales. We also shipped several hundred of
the Ultimate platform range in the year as this new product
range starts to gather traction in the market.
Quantity of gaming platforms sold
split by product family
70,000
60,000
50,000
40,000
30,000
20,000
10,000
• Ultimate
• High-End
• Mid-Range
• Cost Effective
2019
2018
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The Board’s severe downside forecasts are based on a
scenario where customers stop paying entirely for new
orders delivered from April 2020 onwards and do not
begin buying any further goods until December 2020.
Orders delivered and invoiced up to the end of Q1 2020
are assumed to be paid for. Cost reductions can be made to
offset this reduction in cash receipts by a 25% reduction in
staff costs and a reasonable reduction in other controllable
costs. The Group has a $3.0m loan facility in Taiwan that
is currently undrawn and is part of the mortgage on the
Group’s property in Taiwan. In this scenario the Group have
sufficient cash until March 2021 without drawing on its
bank facilities.
The Board therefore consider that the Group’s strong
balance sheet and material net cash position means it
is well positioned to navigate through the impact of
COVID-19.
While the Directors’ have no reason to believe that
customer revenues and receipts will decline to the point
that the Group no longer has sufficient resources to fund
its operations, should this occur, the group may need
to seek additional funding beyond the facilities that are
currently available to it, as well as making significant
reductions in its fixed cost expenses. There would be an
opportunity to mortgage or sell certain property and
inventory assets to accelerate cash generation and/or
mitigate risk, but in the economic environment that would
see customer revenues and receipts decline severely, such
sales would be likely to be difficult to achieve. The potential
impact of changes in assumptions arising from matters
outside the Group’s control, or the unlikely event of a
culmination of events, may result in the group requiring
additional working capital beyond the group’s existing
facilities.
2019 reView
Looking back to last year, despite 2019
having been a challenging year financially
for the Group, we took significant
steps to improve the business and the
fundamentals which underpin our growth
opportunity remain intact. In the year,
Group revenues fell by 20% to $92.3m due
to an unexpected and pronounced decline
in expected consumption from some of
our bellwether gaming customers. Most of
this loss of revenue has been due to these
customers experiencing fierce competition,
reducing demand for their machines and
hence their production volumes with
the consequential effect on demand for
Quixant’s gaming products integrated into
their machines. While we have continued
to drive revenue from new customers it has
been insufficient to offset declines in our
established customer base.
Densitron performed in line with expectations in 2019,
delivering broadly flat year on year revenue despite us
closing the non-performing Nordic business. Our focus on
the broadcast vertical continues to progress, with a strong
pipeline forecasting further growth, which will not only
deliver in the near term but also into future years.
Despite the difficult year Quixant remains profitable and
cash generative, generating profit before tax of $9.4m
(2018: $14.3m), adjusted profit before tax of $10.7m in
2019 (2018: $18.2m) out of which we generated cashflow
from operations in excess of 140% of profits.
segmental revenue analysis
140
120
100
80
60
40
20
0
• Densitron
• Gaming Monitors
• Gaming Platforms
2019
2018
custoMer headwinds in the
land-based gaMing business
In the gaming division, our long standing major customer,
Ainsworth Game Technology, has been detrimentally
impacted by the exceptional success of one of its rivals:
Australian listed Aristocrat Leisure. The latter launched a
game called Lightning Link in 2015 which has become
the top performing slot game in Australia and North
America and in doing so has fuelled the company’s market
capitalisation growth from under AU$5bn to AU$24bn.
In the Australian market, Lightning Link holds more
than 60% of the “pokies” market according to Goldman
Sachs. The success of Lightning Link, and the derivative
games which have followed, has been unprecedented in
the last 20 years in gaming and propelled Aristocrat to
the dominance it has today. Aristocrat’s success has also
impacted, albeit to a lesser extent, revenue from several of
our other customers.
It is important to note that, during this period, Quixant has
not lost any customers. Improvements in the demand for
these customers products will immediately positively impact
our revenue. Nonetheless, the impact has weighed heavily
on our financial performance in 2019 across both the
gaming platforms and gaming monitors product lines.
We shipped just over 40,000 gaming platforms in 2019
compared to 61,000 in 2018, a reduction of 34%. Several
of our customers to which in previous years, we have
shipped in excess of 5,000 platforms a year reduced orders
to 1,000 and 5,000 in 2019 as shown in the chart.
sales by customer unit purchase quantity
70000
60000
50000
40000
30000
20000
10000
0
• >5k
• 1-5k
• <1k
2019
2018
Annual Report and Accounts 2019plcplc
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new business wins with long
terM growth prospects
during the year we secured a significant win for
gaming boards with a major Japanese manufacturer
who currently has extensive business in the north
american, australian and asian markets. this is
expected to develop into a multi-million dollar
annual revenue stream in the coming years.
We already supply this customer with electronic button
deck solutions, but from the fourth quarter of 2021 will
be supplying them with our highest performing gaming
computer product, the QMax-2. The business was won
on the technical depth of hardware and software features
of the product, as well as the expert, gaming-focused
support infrastructure Quixant has globally. This is an
exciting business win and while not due to contribute
significantly to revenue until next year, positions us well
to benefit from their existing international markets and
from the casino resorts opening in Japan in the middle of
the decade. We have already shipped samples to them for
their engineering teams to work on developing the new
machines.
In addition, we have converted around $3.5m of new
business pipeline to revenue in 2019 which we expect
to grow over coming years as the customers reach their
full year run rate. Our new business pipeline gives us
confidence in achieving healthy growth in 2021 and 2022,
subject to any extended impact of COVID-19.
The major game manufacturers, aside from Aristocrat,
have all had challenging periods in their land-based gaming
businesses. Their focus on content to reinvigorate their
competitiveness has led to opportunities for us to pitch
for strategic outsource arrangements which have been
supported by the sales and product team members we
brought in during Q3 2019 and Q1 2020.
As we look to build on the recent new business wins, we
are focusing on delivering market appropriate solutions
to our current and prospective customers, based upon
a segmentation and needs analysis. For our Strategic
Accounts, our value proposition is clear in that we can help
our customers deliver a higher quantity of better games
faster, with reduced costs and reduced time to market.
Our business enables a global standard for Strategic
Accounts (Tier 1) to build their next generation games
upon, and our market leading hardware, and embedded
Gaming Ecosystem® allows game developers to excel
creatively, whilst ensuring the hardware can deliver the
ultimate player experience. For our Key Accounts (Tier 2),
we are focusing on account retention and new account
penetration via a focused product range, at differing
price points, and SKU distribution maximisation across the
portfolio of current products. For our Core Accounts
(Tier 3) we are bringing to market turnkey outsource options,
enabling these customers to focus solely on game design
and distribution, with Quixant providing every element of
the solution. Our sales team structured around this market
segmentation, ranging from Strategic Account Directors for
the Strategic Accounts, to a Tele-Accounts function for our
Tier 3 customers, ensuring the appropriate level of contact
and focus to maximise the account experience.
"...we continue to be optimistic
of future business in the sector
and have a weighted new business
pipeline which builds up to
business worth several million
dollars annually over the next
5 years. "
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sports betting Market entry
in 2019, we launched Quixant’s entry to an adjacent
market to gaming: sports betting. the legalisation
of sports betting in the us has led to a major focus
on this market as a growth driver in the gambling
industry. There is already a well-established European
sports betting industry in which technology (online and
retail) plays a significant role. A number of the existing slot
machine manufacturers already have business in sports
betting but all are viewing the market as a revenue growth
driver alongside the limited growth available in global slots.
Many of our prospective customers in sports betting are
businesses new to Quixant, so this industry represents a
diversifier to our land-based gaming business.
At a high level, Quixant is offering two products to the
sports betting market: an optimised computer platform
designed to drive customers’ own sports betting terminals
onto which they integrate their sports book software
and a turnkey, full terminal solution which integrates our
computer platform into a regulatory compliant cabinet.
We have already received significant interest for both of
these solutions since their launch at the G2E trade show
in Las Vegas in October 2019 and will have first pre-
production samples shipping to customers in H1 2020.
While we had expected to generate revenue from the
sports betting opportunity in 2020, the suspension of
almost all sporting events and the consequential shutdown
of most sports betting operations means that we believe
there is uncertainty around this revenue being realised
during the year. Nonetheless, we continue to be optimistic
of future business in the sector and have a a weighted new
business pipeline which builds up to business worth several
million dollars annually over the next 5 years.
Annual Report and Accounts 2019plcplc
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acQuisition oF (ids) launching our
densitron 3.0 product set
in July 2019, we completed the acquisition of a
small uk-based technology business called ids.
this took our product strategy one step further by
adding market leading software to the base of our
expertise in control surfaces. We call this addition of
software to our control surface products Densitron 3.0.
The IDS technology is already in use extensively in the
most prestigious broadcasters including the BBC, CNN and
Channel 4. The product enables content distribution, such
as world time clocks or programme schedule data to be
displayed across a network of end-points driven by a GUI
based server. The real power of IDS however comes from its
support to automate and control a wide range of third-par-
ty hardware and software products. IDS can save broadcast
systems integrators and equipment manufacturers develop-
ment time through adoption of a scalable, flexible off the
shelf solution.
integrate with
any platform
critical time
synchron-
isatrion
easily
Manage
content
integrate,
autoMate,
control
dynamic
information
display
automate
workflows
Densitron
densitron 2.0 -
control surFace growth strategy
Within Densitron, we have continued to execute our
change plan across all areas of the business as we pivot
towards Densitron 2.0 (one product to many customers) to
generate growth through our range of Broadcast-centric
control surfaces, while protecting our traditional Densitron
1.0 display component core business (typically one product
for one customer). Densitron 2.0 control surface products
bring together our expertise in display, touch/tactile,
embedded computing and mechanical engineering to
help our customers modernise the human interaction with
their products while accelerating their time to market and
reducing their execution risk.
broadcast industry progress
with densitron 2.0 products
Our Densitron 2.0 control surface product sales efforts are
focussed in the broadcast vertical. Of the 100 blue-chip
broadcast equipment manufacturers in this space we chose
to focus on when we launched this strategy, we are now
actively engaged in sales conversations with the majority.
The pipeline of new business in this vertical stands at over
$12m and continues to grow, as we now move to focus on
the next 100 priority target customers. In 2020 we forecast
c. $0.5-1.0m of this pipeline will convert into in-year
revenue, the point in the range dependent on how quickly
our customers are able to move into mass production after
telling us we have won the deal – something we are unable
to control.
In addition, our One Densitron culture and operating
structure change plan is yielding tangible results because
we are now structured internally to allow us to deal globally
with large customers such as Panasonic and Grass Valley.
IDS is already contributing to revenue in the business and
we are investing in the technology which we purchased
to launch an enhanced solution which will additionally be
offered under as SaaS model.
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new senior gaMing business hires
we made two key hires to the business in 2019.
Abhinay Bhagavatula joined us in September 2019 as
Gaming Product Director. With overall responsibility for our
gaming business product strategy and innovation, this is a
key role to ensure our products align well with the market
requirements and are driving technology change in the
gaming industry. Abhinay joins us from the leading gaming
manufacturer, Aristocrat where he was Director, Product &
Commercial Strategy. His deep knowledge from 10 years
working in game manufacturers positions him uniquely in
Quixant with a knowledge of computer technology, game
design and commercial value creation in our customers.
We also introduced Duncan Faithfull as the new Global
Sales Director in January 2020. Duncan is responsible for
leading our gaming sales team. His focus will firstly be
on retention and growth in our existing customer base,
ensuring predictability and reliability in our revenue, and
secondly, through redefining our proposition to the top tier
accounts, boosting our new business pipeline for revenue
delivery in 2021 and beyond. He comes from a background
as Sales & Marketing Director at Cardtronics and prior to
that G4S with experience in strategic outsource selling to
some of the largest global financial institutions.
Given the strengthened senior management team we have
in place, the founders of the business will also be changing
their roles as we look to streamline operations. Effective 31
May 2020, Nick Jarmany will become non-executive deputy
chairman and Gary Mullins will move to a non-executive
director role. C-T Lin will be stepping down from the board.
global sap and salesForce deployMent
we successfully completed the implementation
of our global sap business one erp system in
december 2019, with just one or two smaller
parts of the business to begin using it in 2020.
this two-year project has been undoubtedly the
most complex technology project the group has
undertaken but now gives us a strong, global
infrastructure to run the business. in 2020 we will
continue to build out the reporting functionality and
automation in the business to maximise its benefit.
During H2 2019 we brought Salesforce.com to the
gaming division, having already used the product in the
Densitron business. We continue to refine the usage and
integration of the system with SAP and other Quixant
technology systems, but already are running our sales
pipeline and activity tracking from it. We believe this,
alongside enhanced SAP reporting and improved sales
process and discipline will lead to improvements in our
revenue visibility going forward.
suMMary and outlook
While the challenges of 2019 in the Gaming division
have been painful to endure, the actions to enhance
our sales discipline to improve revenue visibility and
forecasting accuracy were already being addressed during
the year and are now complete.
We have an undiminished opportunity with the land-
based gaming business to grow, despite the short-term
headwinds from major customer slowdowns and an
uncertain negative impact across the global economy
from COVID-19. Allied with the new growth sources in
sports betting and Densitron this leads to the desired
diversification to de-risk this growth. We constantly monitor
the risks to the business as a result of the COVID-19
outbreak and while it will certainly have a profound impact
on our business in both Gaming and Densitron divisions in
2020, at this point the magnitude of this impact remains
uncertain and hence we believe it necessary to withdraw
our guidance for 2020 and thereafter. We are necessarily
cautious and tracking the situation daily but believe our
strong balance sheet provides a high degree of resilience.
Nonetheless, our severe downside modelling case indicates
scenarios in which there may be a requirement to access
additional funding in Q4 2020 and we continue to closely
monitor this position.
over the medium to long term we are confident in
our ability for Quixant to grow materially. we have
made many of the adjustments necessary to position
the business for this growth from a sales, product
and operational perspective as the challenges
presented by coVid-19 subside.
The Board remains confident in the long-
term future of the Group and our ability to
weather the current crisis.
Jon Jayal chieF eXecutiVe oFFicer
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earnings per share
Basic earnings per share decreased by 41% to $0.1252 per
share (2018: $0.2137 per share). Diluted earnings per share
decreased 41% to $0.1243 per share (2018: $0.2125 per
share). Adjusted fully diluted earnings per share as set out
in note 10 to the financial statements decreased by 47% to
$0.1396 per share (2018: $0.260 per share).
balance sheet and cash Flow
Non-current assets have increased in the year to $25.6
million (2018: $22.5 million) due to the acquisition of
IDS. Inventory has remained relatively flat at $20.2 million
(2018: $19.4 million), with the small increase due to
the acquired IDS inventory. Raw material inventory has
increased as we have made purchases to counter long
lead times and to ensure we have sufficient components
that are no longer sold by suppliers to continue to deliver
our product set. Finished goods have increased owing to
planned sales in the fourth quarter not coming through,
the reduced trading had corresponding impacts on trade
receivables.
The cash generated from operating activities in the
year amounted to $14.9 million (2018: $11.3 million).
The increase in cash generated is largely due to stronger
control of receivables in the year. The Group has continued
to invest in the business, spending $5.3 million (2018: $4.1
million) on investing activities including capitalised product
development.
diVidend
The Board will review whether an interim dividend can be
paid in 2020 when the Covid-19 situation becomes clearer.
guy Millward chieF Financial oFFicer
PBT decreased by 34% to $9.4 million (2018: $14.3
million). Adjusted PBT decreased 41% to $10.7 million
(2018: $18.2 million). Adjustments to profit before tax
amounted to $1.3 million in 2019 (2018: $3.9 million)
and comprise share-based payments and amortization
and impairment of acquired intangibles that are not cash
expenses ($0.9m in both 2019 and 2018) and a loss on the
disposal of the Densitron business in Finland, acquisition
costs for IDS and restructuring costs, which are not
comparable with the prior year, as we closed a warehouse
in the UK and sold the loss-making Finnish business –
see note 1. The Company profit for the year includes an
impairment charge on the investment in Densitron which
has arisen from the cash flow forecasts used for the Group
goodwill impairment testing.
eXpenses
During the year the Group expenditure on research and
development increased by 2% to $6.6 million (2018: $6.4
million) representing 19% of gross profit (2018: 16%).
These costs relate to investment activities principally
undertaken in Taiwan, Italy and Slovenia. $2.2 million
of these costs were capitalised (2018: $2.6 million) with
amortisation for the year on total capitalised development
costs of $1.4 million (2018: $1.3 million).
We have continued to strengthen the business across all
areas in the year, including increasing our headcount to
227 people (2018: 203 people). Staff costs, being the
largest contributor to overheads, remained flat in the year
at $16.3 million (2018: $16.3 million).
taXation
The tax charge for the year increased to $1.1 million (2018:
$0.2 million), representing a corporation tax charge of
11.7% on pre-tax profits (2018: 1.2%), due to higher
overseas profits as a proportion of total profits. The Group
continues to benefit from enhanced tax reliefs available in
respect of qualifying research and development expenditure
and has also benefited from patent box relief, tax relief
on the exercise of employee share options and the use of
brought forward losses in Densitron.
FINANCIAL REVIEW
guy Millward chieF Financial oFFicer
The Quixant Group achieved revenues
of $92.3 million in the year, a decrease
of 20% on 2018 ($115.2 million).
reVenue
Gaming division revenues were $56.2 million, a decrease of 28% on 2018 (2018: $77.6
million). This was split between Gaming platform revenue of $46.6 million, a 25% decrease
on 2018 (2018: $62.5 million), and Gaming monitor revenue of $9.6 million, a 36%
decrease on 2018 (2018: $15.1 million). Densitron division revenues, including the IDS
acquisition in 2019, were $36.2 million, a decrease of 3% on 2018 (2018: $37.5 million).
The decline in the Gaming division has largely been driven by reduction in demand from
larger customers who have in turn seen sales of their gaming machines go down in the
face of competition from other industry suppliers who currently have more popular games.
Densitron revenues declined marginally as sales of new products are yet to ramp up to
replace declining older product revenue.
gross proFit and gross proFit Margin
Our gross profit for the year was $34.3 million representing a gross margin of 37%.
This compares with a gross profit achieved in 2018 of $39.8 million and a gross margin
of 35%. The underlying gross margin for each part of the business has been improved
in the year with the improvement in Gaming coming from the move away from low
margin gaming monitor sales and in Densitron because of the move to sell higher margin
Broadcast products.
group
reVenue
decline
oF
20%
(on 2018)
gaMing
diVision
reVenues
down
28%
(on 2018)
densitron
reVenue
decline
oF
3%
(on 2018)
Annual Report and Accounts 2019plcplc
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KEY PERFORMANCE INDICATORS
operational
kpi and objective
revenues
procedure
comment
Revenues are reviewed to ensure that the
Group’s business continues to grow in
line with expectations.
The Board reviews revenues against
budget as part of its management
reporting review each month.
Revenues have declined as major Gaming
customers lost out to competitors with
more popular games. Densitron revenues
also declined as new broadcast revenues
lagged the drop in legacy business.
gross profit margin
To ensure that the Group maintains
appropriate returns for the products that
it is selling.
inventory levels and inventory days
The objective in monitoring inventory is:
• to ensure that working capital is not
unduly tied up;
• to guard against inventory obsolescence
leading to potential write offs; and
• to ensure sufficient inventory levels are
maintained to meet near-term demand
(usually 3 months revenues).
A report of the margin achieved in each
part of the business is included as part
of the management accounts pack and
reviewed by the Board.
Margins are being maintained in all areas
of the Group.
The Board monitors the number of days
held in stock at the end of each month
and is provided with a trend graph
plotted against budget during the year.
Additionally, it is provided with a monthly
manufacturing report detailing the
current inventory levels and the future
product requirement.
For the year ended 31 December 2019
the Board is satisfied that the level of
inventory obsolescence is being controlled
and that levels of raw material inventory
at year end were required to offset long
lead times (9 months or more) for key
components.
Financial
kpi and objective
procedure
comment
adjusted profit before tax and profit before tax (pbt)
To ensure that the Group is providing a
sufficient return to its shareholders and
that the Group’s profit is growing in line
with market expectations.
debtor days
The Board reviews PBT and adjusted
PBT monthly as part of its review of
management information.
The level of adjusted PBT and PBT
decreased year-on-year and was behind
expectations.
To ensure that customers settle debts in
an orderly fashion in line with agreed
terms and that the Group is not exposed
to bad debts.
The Board monitors the average number
of days customers take to pay each
month together with a trend graph
plotted against budget.
The Board is satisfied with the procedures
that are in place to qualify customers to
mitigate the Group’s exposure to credit
losses.
Additionally, it is provided with a monthly
analysis of the profile of aged debts for
each part of the business.
In both the current year and previous year
the Group has incurred minimal levels of
credit losses.
cash and borrowings balances
To ensure that the business has sufficient
headroom to meet its future obligations.
The Board is provided with a report
showing cash generated in the year and
the current level of cash balances within
the Group along with the current level of
borrowings and available facilities.
At 31 December 2019 the Group had net
cash (cash less borrowings) of $16.1m
compared with $9.7m at 31 December
2018.
The only remaining debt is a small
mortgage in Taiwan.
BUSINESS MODEL
AND STRATEGY
our business Model is diFFerent For each diVision.
in gaming, we invest in research and development to design
and produce computer platforms and electronic display solutions.
We then manage the outsourced manufacture of these products
and then sell them to customers in the gaming and slot machine
industry, holding stock of the raw materials, work-in-progress
and finished goods so we can control the whole process.
The customers take our products and use them to manufacture
gaming machines which are then sold to various outlets where
the games can be played, primarily in casinos. Our gaming
customers include many of the world’s leading manufacturers
of gaming machines.
in densitron, we design and develop electronic display products for various industrial
sectors as well as re-selling other display products. Once a design is agreed with a
customer we outsource the manufacture and deliver the finished products to the
customer.
Our strategy for the Group and each specific division is covered in the Chief Executive’s
report on pages 8 - 15.
Financially, the Group sets an annual budget detailing the revenues and expenses,
balance sheet and cash flows that it expects to achieve each month during the ensuing
year. This budget is approved by the Board and reviewed against the actual results
achieved each month with explanations of significant variances provided. A forecast of
expected results for the remainder of the year is also provided as part of the management
accounts pack to demonstrate that the Group remains on track to meet market
expectations.
to measure the success or otherwise of the strategy, the directors also review
the ongoing trend of several indicators that they consider are key to the
performance of the group and to assist them in their strategic decision-making
(opposite).
Annual Report and Accounts 2019plcplc
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PRINCIPAL RISKS RELATING TO
THE BUSINESS OF THE GROUP
The Group faces competitive and strategic risks that are
inherent in rapidly growing and changing markets.
The Board of the Company and its management review
future strategy and risks to the business regularly. Where
possible, processes are in place to monitor and mitigate
the identified risks.
Financial and trading risks are discussed in note 24 of the
consolidated financial statements.
The key business risks set out below are not an exhaustive
list of the risks faced by the Group and are not intended
to be presented in any order of priority.
risk
description
Mitigation
comment
commercial
The marketplace for the Group’s
display products is highly
competitive.
Gaming customers may decide to
design their computer platforms
and/ or monitors in-house or source
from another supplier.
geographical
and
environmental
The Group operates across a range
of countries, all of which carry a
degree of risk, whether it is political
risk or environmental issues.
The Group has identified certain
areas of the displays business where
it considers that it can develop
a competitive advantage and is
investing in these areas.
The Group works closely with its
customers to ensure its product
roadmap is robust, technologically
advanced and ahead of the
competition.
The majority of the Group’s
operations are in OECD countries
and the majority of revenue
is generated from customers
operating in OECD countries.
Despite not being an OECD
member, Taiwan has a highly
developed legal and political system.
regulation
Additional laws and regulations may
be enacted covering issues such as
law enforcement, pricing, taxation
and quality of products and services.
The Group monitors prospective
changes in local laws and
regulations which may impact its
business.
technological
The Group’s business is dependent
upon technology which could be
superseded by superior technology,
more competitively priced
technology or a shift in working
practices, which could affect both
potential profitability and saleability
of the Group’s products.
The Group works closely with its
technology partners to provide
products which incorporate the
most advanced technology available
to our market. The Group also
develops its own innovations to
incorporate into new products.
The Group has the capabilities and
skills to create highly engineered,
optimised products targeted at
specific markets.
The Group maintains an ongoing
dialogue with its customers to
maintain the relationships that it
has developed and foster new ones.
The Group will continue to focus its
operations in those countries that
provide the best opportunity for
growth and avoid those countries
that pose significant country risk.
The Group is a member of
professional bodies, where
applicable, in the regions in which
it operates to ensure that it stays
informed of any legal or regulatory
changes.
The Group recognises the
technology requirements of its
customers and works with them to
provide the products that they need
in their business.
key customer
dependency
The Group generates a significant
but declining portion of its revenue
from a key customer.
As the Group continues to grow,
the portion of revenue from key
customers has declined.
The Board expects the Group’s
continued organic growth to further
reduce the dependency on key
customers.
key persons
The Group recognises the
importance of its personnel but
also that graveyards are full of
indispensable people. The Board
recognises the importance of its key
employees and the risk of losing the
expertise and knowledge that they
possess.
The executive officers are subject to
long-term contracts.
Staff turnover of key personnel
continues to be low.
Key staff have contractual
arrangements designed to develop
and incentivise.
Everybody can be replaced.
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risk
description
Mitigation
comment
The Group may be unable to
successfully establish and protect its
intellectual property. The intellectual
property rights may or may not have
priority over other parties’ claims to
the same intellectual property.
Cyber risk causes disruption to the
business or loss of IP following
a cyber-attack. This could cause
interruption of internal or
external facing systems, including
interruption to the business caused
by a loss of data and reputational
damage from a loss of personal or
confidential data. The cost or effort
to reconstitute data that has been
stolen or corrupted and commercial
loss from the theft of commercially
sensitive data, including IP.
Outbreaks of diseases could cause
supply chain disruptions and
shortages of staff if they become
ill or die. Component production is
concentrated in certain countries
and the Group only currently
manufactures product in one
country.
The Group seeks to establish and
protect its intellectual property
rights by patents and other
protection mechanisms.
The Group works with professional
external patent attorneys to protect
its intellectual property rights.
Deploying the latest generation of
firewall protection.
No issues were reported in 2019
but we maintain on-going vigilance.
Ongoing improvement in the rigour
of authentication processes including
wider use of single sign on.
Improved protection of confidential
data on portable computers.
Improved process of system
patching to close security loopholes.
Use of third party audits.
Alternative sources of supply
are available for many goods, as
are alternative manufacturing
countries, albeit with increased
cost implications.
It is too early to measure the
impact of the 2020 outbreak
of Covid-19 but the Group is
monitoring the issue on a daily
basis and taking action to mitigate
issues that arise.
intellectual
property
protection
cyber risks
pandemic
breXit
In 2019 the Board decided that in the light of the on-
going uncertainty about how the UK would trade with
the EU after the end of 2020, the business of the Group
would best be served by removing the impact. The Group
has therefore re-arranged the logistics flow of goods to
customers to ensure that whatever the outcome of the
UK’s exit deal with the EU, the Group’s sales and delivery of
goods to customers will not be affected. The Board expects
that this will reduce overall costs – a warehouse in the UK
has already been closed – and goods are now shipped
direct to customers from their point of manufacture in Asia
avoiding some duplication of shipping costs. The Group no
longer ships goods from the UK to the EU or from the EU
to the UK. The Board notes that in the event of a no-deal
Brexit, WTO tariffs on the Group’s products are currently
zero for goods exported to the EU from a non-EU country.
This Strategic report has been prepared solely to provide
additional information to shareholders to assess the Group’s
strategies and the potential for those strategies to succeed.
The Directors, in preparing this Strategic report, have
complied with section 414c of the Companies Act 2006.
The Strategic report contains certain forward-looking
statements. These statements are made by the Directors
in good faith based on the information available to them
up to the time of their approval of this report and such
statements should be treated with caution due to the
inherent uncertainties, including both economic and
business risk factors, underlying any such forward looking
information. This Strategic report has been prepared for the
Group as a whole and therefore gives greater emphasis to
those matters which are significant to Quixant plc and its
subsidiary undertakings when viewed as a whole.
This report was approved by the Board of Directors on
6 April 2020 and signed on its behalf by:
guy Millward director
Annual Report and Accounts 2019plcplc
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Our staff are passionate about the environment
and we have already implemented several changes
to our offices to ensure that we are doing our bit
to care for the environment in a way in which our
staff want us to, including:
adding
recycling units
to all possible
locations;
CORPORATE SOCIAL
RESPONSIBILITY
Quixant has carried out csr activities on an informal basis for many years,
including supporting our local village fete in cambridgeshire, carrying out charity
days in taiwan and utilising solar powered energy in our italian office.
From 2020 Quixant will be implementing a formal CSR plan
encompassing our staff’s desire to do more for our local
communities and a wider commitment to the environment in
which we work and operate.
As a product manufacturer we recognise that our activities impact on the world around
us and we will be introducing goals for achievement in the longer term to address the
potential to reduce that impact. For the immediate to medium term Quixant has adopted
the United Nation’s Sustainable Development Goals as these mirror our desire to help
protect the environment, engage our employees and support our local communities.
To kick start our CSR programme we asked our staff to vote in a company-wide poll for
one of three global charities to be the company’s charity of the year. For 2020 the World
Wildlife Fund (WWF) was nominated. Our staff will be raising money for WWF throughout
the year in a series of events which are agreed by a committee of “CSR Ambassadors”
who are volunteers from each office location, overseen by a CSR Steering Committee
comprised of senior management. In addition, throughout the year we will be holding
an event in each of our global offices which is linked to one of our values and purpose:
we are pioneers,
we put customers First,
we play to win,
we do the right thing,
we are entrepreneurial.
Quixant actively
encourages and
supports our staff
to raise money for
charities which are
personal to them.
During 2019 staff
undertook a variety of
events with donations
from Quixant including
volunteering for the Ellen
Macarthur Cancer Trust
and sponsorship of the
Shelford & Stapleford
Strikers under 15s
football club’s annual
presentation day and kit.
reduced our
paper usage by
encouraging
digitalisation
wherever possible.
(including at our
trade shows where
we hand out memory
sticks with product
information instead
of paper data sheets).
" ...a committee
of “CSR
Ambassadors”
who are volunteers
from each office
location... "
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providing
reusable crockery,
glasses and
cutlery to reduce
disposable plastic
waste which we are
rolling out across
our offices;
replacing plastic
bottled water with
cans and reusable
filter water jugs;
encourage
reduced
business travel
by utilising web
and phone based
conferencing
systems;
Annual Report and Accounts 2019plcplc
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Governance
BOARD OF DIRECTORS
Michael peagram
non-eXecutiVe
chairMan
nicholas Jarmany
deputy
chairMan
appointed: 1 February 2013
appointed: 16 March 2005
committees:
skills and experience:
Nick is a founding Director of Quixant and has brought
extensive management experience and computer
engineering knowledge to the Company. Nick has a
background in the technology industry and he was
employed by Densitron Technologies PLC for 22 years.
In this time, he held numerous roles in design, engineering,
sales and, finally, as Group Technical Director. Nick had
overall responsibility for Densitron’s gaming business
strategy, led the design process and negotiated with key
suppliers and customers in the USA, Europe and Asia.
Nick will become a non-executive director on 31 May 2020.
Nick has an honours degree in Electronic Engineering from
the University of Sheffield.
Chairman of the remuneration and member of the audit
committees
skills and experience:
Michael has a background in the pharmaceutical and
chemical industry. As managing director of Holliday
Chemical Holdings PLC, he oversaw the international
expansion of the company, leading to a listing on the
Official List in 1993 and the subsequent sale to Yule Catto
PLC in 1998, following which he remained as deputy
chairman until 2007. Subsequently, Michael has held
various non-executive director positions, principally as
chairman, for growing AIM listed companies such as CRC
Group PLC (computer and mobile phone servicing) and
RMR plc (internet conferencing). The Board considers
Michael to be an independent director.
Michael is also an active investor in numerous private
technology companies and is involved with a number of
community-based business and technology development
ventures.
Michael has a doctorate in Chemistry from Oxford
University and an MBA from Manchester Business School.
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Jon Jayal
chieF eXecutiVe
oFFicer
appointed: 20 June 2016
skills and experience:
c-t lin
ManuFacturing
director
appointed: 12 July 2007
skills and experience:
C-T is a founding Director of Quixant and has 23 years’
experience in computer hardware manufacturing.
C-T’s previous roles include leading the design teams at
GIT Technologies Ltd and TC-Tech, developing automotive
test systems and managing the hardware production
at Intimate Partner Co., a major EMS house, producing
motherboards and graphics cards for large Taiwanese
brands. C-T was the General Manager of Densitron
Computers Taiwan Ltd, a manufacturer of long-life custom
embedded PC products for the gaming market and became
the General Manager of Techware Technology Co. Ltd, a
Taiwanese Windows CE development house. C-T will leave
the Board on May 31 2020.
C-T has a degree in Electronic Engineering from the
National Taiwan University of Science and Technology.
Jon Jayal was one of the key members of the design team
which developed Quixant’s first product, the QX-10.
Jon left Quixant in 2006 to broaden his experience in the
financial sector, both as an investment consultant at Mercer
Limited and as account manager at BlackRock, Inc.
He re-joined Quixant in July 2012 as General Manager of
Quixant plc and latterly Chief Operating Officer (COO) and
is based at the Company’s UK headquarters in Cambridge.
Jon is a Chartered Financial Analyst and has a first class
honours degree in Electronic Engineering from the
University of Warwick.
gary Mullins
group strategic
sales director
appointed: 11 January 2006
skills and experience:
Gary is a founding Director of Quixant and has a proven
track record in technology sales and marketing. He was
employed by Densitron Technologies PLC for more than
10 years in sales and marketing. At Densitron, Gary was
responsible for securing contracts with numerous multi-
nationals. Gary has a proven track record of winning large
orders for technical products from major companies. Prior
to founding Quixant, he was sales director at NTera Limited,
a nanotech electronic paper displays developer. Gary will
become a non-executive director on 31 May 2020.
Gary has an honours degree in Electronic Systems from the
Royal Military College of Science.
Annual Report and Accounts 2019plcplc
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plc
plc
Annual Report and Accounts 2019
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guy van Zwanenberg
non-eXecutiVe
director
guy Millward
chieF Financial
oFFicer
appointed: 1 March 2013
appointed: 1 October 2018
committees:
skills and experience:
Guy qualified as a Chartered Accountant at Ernst and
Young in 1989. He has extensive experience as Finance
Director of several public and privately held companies in
the electronics, software and IT sectors. Prior to taking up
his role with Quixant, Guy was a director and the Chief
Financial Officer of Imagination Technologies Group plc,
which he joined as CFO in 2015. His previous roles include
that of CFO at Advanced Computer Software Group plc,
Metapack Limited and Bighand Limited, Group Finance
Director at Alterian plc, Morse plc and Kewill plc. Guy is
currently a non-executive director at Eckoh plc.
Guy has an honours degree in Economics from the
University of Sheffield and is a Fellow of the Institute of
Chartered Accountants in England and Wales.
Chairman of the audit and member of the remuneration
committees
skills and experience:
Guy has 40 years’ experience in industry and practice.
He qualified as a Chartered Accountant with Grant
Thornton and then spent three years working with James
Gulliver. Guy subsequently moved to become UK Finance
Director of an American computer accessory company
which was taken public in 1989. In 1991, he established his
own interim financial management business and has since
been involved in a number of SME businesses providing
strategic and financial help. He joined Gaming King PLC in
1998 on a part time basis as Finance Director and became
Company Secretary and non-executive director in 2006,
remaining as a non-executive director when the company
reversed its listing on AIM by acquiring Sceptre Leisure
PLC in 2008, whilst with them he sat on the Audit and
Remuneration committees. The company was sold in 2013.
In 2015 he joined Smartspace plc, an AIM listed software
business specialising in smart offices. He is a member of the
Audit committee and in July 2018 was made Chairman of
the company. In November 2019, he was asked to join the
board of Plant Health Care plc, a leading provider of novel
patent-protected biological products to global agriculture
markets, which it designs and develops to sell around the
world. He joined the board as both the Chairman of the
Audit Committee and the Senior Independent Director (SID).
Guy is both a Fellow of the Institute of Chartered
Accountants in England and Wales and a Chartered
Director. He attends regular courses and updates both with
professional bodies and industry organisations. The Board
considers Guy to be an independant director.
CHAIRMAN'S
INTRODUCTION TO
GOVERNANCE
Michael peagram chairMan 6 April 2020
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On 30 March 2018 the AIM Rules were amended to require all companies quoted
on AIM to implement a recognised corporate governance code and comply with that
code from 28 September 2018. Quixant plc (“Quixant”) chose to apply the corporate
governance code of the Quoted Companies Alliance (QCA).
The QCA Code follows 10 basic principles that requires companies to provide an
explanation of how they consider that they are meeting those principles through a set of
disclosures on their website and in their Annual Report.
As the Chairman of Quixant plc, I am ultimately responsible for the Corporate
Governance of the Group but the Board as a whole considers that good corporate
governance is a key driver in the success of the business and accountability to the
Company’s stakeholders, including shareholders, customers, suppliers and employees is a
vital element in that governance.
The Directors consider that the corporate governance framework that the Group operates
within is proportionate to the size, risk and complexity of its business. The Board
considers that it does not depart from any of the principles of the QCA Code except for
principle 7.
A board evaluation process has not been run in the past but will be run in 2020. All the
information required for remuneration reporting is included within this Annual Report.
In the statements within this section we outline the Company’s approach to corporate
governance. It is the intention that the information contained within the report will
be updated annually alongside the publication of the Group’s Annual Report or more
frequently for any fundamental changes.
Michael peagram chairMan 6 April 2020
28
GOVERNANCE REPORT
Quoted coMpanies alliance code
coMpliance
5. Maintain the board as a well-functioning,
balanced team led by the chair.
6. ensure that between them the directors have
8. promote a corporate culture that is based on
the necessary up-to-date experience, skills and
capabilities
ethical values and behaviours
the following paragraphs set out the 10 Qca code
principles and either how Quixant has complied with
those principles or where a more detailed discussion
can be found on the group’s website following
the disclosure guidance in the Qca corporate
governance code:
1. establish a strategy and business model which
promote long-term value for shareholders
The Quixant business is split into two divisions: the Gaming
division and the Densitron division. The business model
and strategy are discussed earlier in this report in the Chief
Executive’s report and subsequent sections.
2. seek to understand and meet shareholder
needs and expectations
The CEO and CFO meet regularly with major investors and
the Chairman also meets investors once a year.
3. take into account wider stakeholder and social
responsibilities and their implication for long-
term success
The Board, led by the Chairman, has a collective
responsibility and legal obligation to promote the interests
of the Group. The Chairman is ultimately responsible for
Corporate Governance. However, the Board is responsible
for defining the corporate governance policies.
The Board is made up of three non-executives and five
executives and has devolved responsibility for certain
matters to two committees. It does not operate a separate
nominations committee with all Board members being
responsible for the appointment of new directors.
Non-executive directors are expected to devote sufficient
time to the company to meet their responsibilities.
Generally, 11 Board meetings and an annual strategy
meeting are held each year and directors in principle attend
all meetings either in person or by video or telephone
conference arrangements and visit some of the major
locations.
Meetings held between January 2019 and December 2019
and the attendance of directors is summarised below:
Board
Meetings
Audit
Committee
Meetings
Remuneration
Committee
Meetings
Details of the Group’s compliance with these principles can
be found on the Group’s website at https://www.quixant.
com/investors/ corporate-governance.
number of meetings:
M J Peagram
G Van Zwanenberg
4. embed effective risk management, considering
both opportunities and threats, throughout the
organisation
The Board has in place a disaster recovery plan and risk
registers for the Group that identify the key areas of
risk within the Group particularly in respect of strategy,
customers, suppliers, industry, regulatory, financial, legal
and technology. The registers are formally reviewed by the
Board annually and updated as considered necessary.
G A Y Hudson
N C L Jarmany
G P Mullins
J F Jayal
C-T Lin
G L Millward
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9
11
The Board is provided with Board papers in advance of the
meetings and minutes of the meetings are provided to the
Board following the meeting. The Chairman is responsible
for ensuring that the directors receive the information that
they require for decision-making and each member of the
Board understands the information that they are expected
to provide. The Board meetings have an annual cycle of
matters that are reviewed annually, and these are spread
through the program of meetings in the year.
Our long-term growth is underpinned by our corporate
culture and core beliefs. As part of a new starter pack all
new employees are provided with a statement on culture in
which the Group operates.
Our Culture – Quixant has a culture of openness and
transparency, where team-work is key. We embrace ideas
and above all we respect one another.
The Group has policies in the following areas to help
promote ethical values and behaviour: whistleblowing, anti-
bribery, anti-slavery, fraud, equal opportunities, disciplinary
and grievance procedures, health and safety.
9. Maintain governance structures and processes
that are fit for purpose and support good
decision-making by the board
Details of the Group’s compliance with this principle
can be found on the Group’s website at:
https://www.quixant.com/investors/ corporate-governance.
10. communicate how the company is governed
and is performing by maintaining a dialogue
with shareholders and other relevant stake-
holders
See items 2, 3 and 9 on the Group’s website at:
https://www.quixant.com/investors/corporate-governance
and in this annual report.
All members bring different experiences and knowledge
to the Board and between them they provide a blend of
business understanding, technical knowhow, experience of
public markets and financial expertise. The Board consider
that this is appropriate to enable it to successfully execute
its long-term strategy.
All members of the Board attend seminars and regulatory
and trade events to ensure that their knowledge is up to
date and relevant. Where the Board considers that it does
not possess the necessary expertise or experience it will
engage the services of professional advisors. The board
considers that the three non-executive directors, including
the Chairman, are independent.
For biographies of each of the directors see pages 24-26.
7. evaluate board performance based on clear
and relevant objectives, seeking continuous
improvement
A Board evaluation process will be carried out annually
going forward as part of a wider strategy review and
future planning discussion. The process will be led by
the Chairman and every three years with the help of an
external facilitator, the Board will be challenged to review
its performance and effectiveness objectively. During this
process the Board will consider:
• Performance of the Board against the current strategy;
• Effectiveness of the Board in areas such as supervision,
leadership and management of personnel and risk
areas;
• Areas of weakness either at Board level or executive
management level for which recruitment may be
required; and
• Succession planning.
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section 172(1) statement –
board engagement with our stakeholders
Section 172 of the Companies Act 2006 requires a Director
of a company to act in the way he or she considers, in
good faith, would be most likely to promote the success of
the company for the benefit of its members as a whole.
In doing this, section 172 requires a Director to have
regard, among other matters, to: the likely consequences
of any decision in the long term; the interests of the
company’s employees; the need to foster the company’s
business relationships with suppliers, customers and others;
the impact of the Company’s operations on the community
and the environment; the desirability of the company
maintaining a reputation for high standards of business
conduct; and the need to act fairly with members of the
company. The Directors give careful consideration to
the factors set out above in discharging their duties under
section 172. The stakeholders we consider in this regard
are the people who work for us, buy from us, supply to
us, own us, regulate us, and live in the societies we serve
and the planet we all inhabit. The Board recognises that
building strong relationships with our stakeholders will
help us to deliver our strategy in line with our long-term
values, and operate the business in a sustainable way.
The Board is committed to effective engagement with all
of its stakeholders.
For further details of how the Board operates and the way
in which it makes decisions, including key activities during
2019 and Board governance, see pages 28 to 29 and the
Board committee reports thereafter. The Board regularly
receives reports from management on issues concerning
customers, the environment, communities, suppliers,
employees, regulators, governments and investors, which
it takes into account in its discussions and in its decision-
making process under section 172. In addition to this, the
Board seeks to understand the interests and views of the
Group’s stakeholders by engaging with them directly
as appropriate. The Board receiving updates from senior
management on various metrics and feedback tools in
relation to employees, including an annual employee
survey. Engagement with employees is two-way to ensure
that employees are kept well-informed about the business
and valuable feedback is received to ensure continuation of
being a trusted employer.
The Board regularly receives updates on feedback from
investors from senior management. In addition, various
members of the Board, including the Chairman, CEO and
CFO meet frequently with institutional investors to discuss
and provide updates about – and seek feedback on –
the business, strategy, long-term financial performance,
Directors’ remuneration policy and dividend policy to
the extent appropriate. Members of the Board also met
shareholders immediately prior to the 2019 AGM and at
the AGM itself. Considering the capital growth aims of
shareholders, the directors are focussed on growing the
revenue and product portfolio to ensure that the Group
continues to grow, whilst remaining profitable. This is done
by development of new products over the previous years
and by strategic acquisitions such as IDS, as mentioned
in the CEO’s review. Products are developed based on an
identified market demand.
Acquisitions are evaluated not only for their financial
merits, but on the basis that they fit within the strategy
and culture of the Group and that synergies and further
opportunities can be developed through integration.
Relationships with customers and key suppliers are fostered
through a collaborative approach through the use of
technical services, evaluation software and products and
customer-specific product development where appropriate.
It is the Group’s policy to manage and operate worldwide
business activities in conformity with applicable laws and
regulations as well as with the highest ethical standards.
Both the Group’s Board of Directors and executive
management are determined to comply fully with the
applicable law and regulations, and to maintain the
Company’s reputation for integrity and fairness in business
dealings with third parties.
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REMUNERATION
COMMITTEE REPORT
the remuneration committee is comprised of not
less than two non-executive directors, it meets at
least once a year and is responsible for setting the
remuneration policy for the executives and senior
management of the company. the remuneration
committee comprises Michael peagram (chairman),
guy van Zwanenberg and gaye hudson, it invites
executive directors to attend as it considers
necessary.
The Committee considers the remuneration packages of
executive directors and senior management and discusses
policy on annual reviews with the Board. It subsequently,
reviews and approves the Executive proposals for salary
reviews and annual-profit-linked bonus schemes and
awards. In doing so it ensures that individual packages
have been set in line with companies of a similar size and
operation. The committee is responsible for the overall
package offered to staff including employee incentive
schemes in each of the group’s operating territories.
Each package is designed to attract, motivate and retain
our staff and ensure executive directors’ remuneration is
aligned with the interests of shareholders and taking into
account available professional market data.
The committee met three times in 2019: in January to
approve 2018 bonuses, 2019 salary reviews, the targets for
the 2019 bonus schemes, proposed share option awards
and the set-up of an employee SAYE option scheme.
In March the committee met to approve some changes
to the January proposals and in July met to approve the
package for two new senior employees. Executive directors’
salaries were increased in 2019 as follows: Nick Jarmany
2.9%, Gary Mullins 3%, Jon Jayal 2.1%, Guy Millward 0%.
In addition, Jon Jayal had part of, and Guy Millward had
their whole, pension contributions included in base salary.
No directors’ bonuses were earned under the 2018 scheme.
The 2019 scheme target was set at $22.1m of adjusted
profit before tax but as this was not achieved no bonuses
will be paid for 2019. Non-executive directors’ salaries are
considered by the executive directors on the Board.
Executive directors are paid base salaries, annual bonuses,
share options and pension contributions. Nick Jarmany
and Gary Mullins are paid pension contributions of 10%
of base salary, Jon Jayal is paid £10,000 a year in pension
contributions with the rest of his pension contribution
included as base salary. Annual bonuses are paid in cash
up to 100% of base salary with targets based on adjusted
profit before tax as above. Directors‘ remuneration is
shown in note 7 to the financial statements.
An employee share option scheme was established in
2013 to provide a long-term performance and retention
incentive for the executive directors and employees and the
committee grants new options to employees and executive
directors. At 31 December 2019, options had been
granted over a total of 2,525,294 shares (only 3.8% of
the shares in issue) of which options over 429,068 shares
were outstanding. The options are exercisable subject to
the growth of the diluted earnings per Ordinary Share as
set out in each of the audited accounts for the three years
ending after the date of grant (for instance for options
granted during 2018, the years ending 31 December 2018,
2019 and 2020) being equal to or greater than 10 per cent
in each financial year. The Directors follow the guidance
set out by Rule 21 of the AIM Rules relating to dealings by
Directors in the Company’s securities and, to this end, the
Company has adopted an appropriate share dealing code.
Directors’ shareholdings are shown in the Directors’ Report
on pages 34 - 36. No options were issued to directors in
2019.
The directors’ service contracts incorporate notice periods
of not less than six months’ notice from the executive to
the company and not less than 12 months’ notice from
the company to the executive, except for C-T Lin where the
notice from the company to the executive is six months’.
Non-executive directors’ service contracts incorporate
notice periods of not less than three months’ notice from
the non-executive to the company and vice-versa.
Annual Report and Accounts 2019plcplc
32
AUDIT COMMITTEE REPORT
the audit committee is responsible for ensuring the
financial performance of the company is properly
reported on and monitored, including reviews of
the annual and interim reports, internal control
systems and procedures and accounting policies.
the audit committee comprises guy van Zwanenberg
(chairman) and Michael peagram. the board
considers that guy van Zwanenberg has recent and
relevant financial experience in accordance with the
Qca code.
The committee has met three times during the year inviting
the external auditors to two of these meetings and the Chief
financial Officer to each meeting (at the meetings where
the auditors were present, time was taken to meet with the
auditors without the Chief Financial Officer being present).
role oF the a udit coMMittee:
1. risk management - on behalf of the Board, review
and give supervision to the processes by which risks are
managed;
2. Financial reporting
• Oversee the reporting against various accounting
policies, including compliance with accounting
standards;
• Ensure that financial statements have integrity and
comply with all applicable UK legislation and regulation
as appropriate;
• Ensure that the Annual Report and Accounts is fair,
balanced and understandable, to be able to recommend
approval to the Board;
• Oversee financial results and trading announcements
with the market.
3. internal controls
• Monitor compliance with the UK Corporate Governance
Code and other applicable regulations;
• Test and monitor effectiveness and robustness of all
internal controls including internal financial controls
and processes and whether an internal audit function is
required.
4. external audit
• Make recommendations to the Board for the
appointment or reappointment of the external auditor;
• Lead the process of and make recommendations of any
successful party to an audit tender process;
• Manage the overall relationship with the external auditor;
• Review the independence and evaluate the effectiveness
of the external auditor;
• Monitor the policy on any non-audit services carried out
by the external auditor;
• Review and approve the external auditor’s fee, scope of
the audit and terms of their engagement.
5. Fraud and whistleblowing
• Oversee the processes in place to prevent and detect
fraud and which enable employees to raise concerns
without fear of recriminations;
• Digest reports of fraud, bribery or whistleblowing that
occur in the Group and to oversee any remedial action.
The following specific business was dealt with at each
meeting held in 2019:
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annual results for 31 december 2018, including:
• Accounting issues report from the CFO
• Full year report from the external auditor including
Auditor’s Report to be included in the 2018 Annual
Report
• Consolidated financial statements for the year ended
31 December 2018
• Principal risks and uncertainties
• Consideration of the going concern basis for
preparation of the financial statements
• Performance, effectiveness and independence of the
external auditor
• Fees for non-audit services and professional
fees – KPMG LLP
recommendations to the board on:
• Consolidated financial statements
• Going concern statement
• Independence and objectivity of KPMG
• Management’s representation letter to KPMG
Private meeting between the Committee and external
auditor without executive management present
half year results for 30 June 2019,
including reviews of:
• Accounting issues report from the CFO, including
IFRS 16
• Results for the half year ended 30 June 2019
Recommendations to the Board on the half year results
Reviewed scope for the external audit for 31 December
2019, agreed increased fees for the 2019 audit as part
of an increased scope of the audit.
Considered the outcome of 2019 objectives and agreed
2020 objectives
Reviewed committee terms of reference
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significant accounting issues considered by the
committee in relation to the 2019 financial statements,
and how they were addressed, were:
Goodwill and intangible assets impairment – the Group
has goodwill and intangible assets as a result of the
acquisitions of Densitron and Alpha Displays in 2015 and
of IDS in 2019 and as a result of capitalizing R&D carried
out in both Gaming and Densitron as part of its on-going
business. The Alpha Displays earn-out ended in 2018 and
was paid in 2019. The IDS acquisition was integrated
into the Group’s UK business immediately following
acquisition on 1 July 2019. On an annual basis, the
Group undertakes an impairment review of goodwill and
intangible assets for each cash generating unit (CGU) using
cash flow projections. IDS is measured as a standalone
CGU, Densitron is measured using CGUs for the individual
countries operated in and Alpha Displays is measured as
part of the Gaming CGU. The board noted in the 2016
annual report that the Alpha Displays acquisition brought
significant knowledge to the Group of the global gaming
monitors market, while the individuals who joined the
group as part of that acquisition have since left the group,
the Gaming monitors business established continues to
trade profitably. Densitron’s history of declining legacy
revenue has caused the board to consider impairing the
goodwill of the business it bought in 2015 but forecasts
of future revenue growth from Broadcast products
recently developed currently show that overall the revenue
will grow and that the goodwill is not impaired.
The impairment testing did indicate, however, that based
on the conservative assumptions made that the Densitron
investment in Quixant plc’s books was impaired.
Valuation of inventory – Group inventories have grown
along with the business and the Board review inventory on
a monthly basis along with the level of provisions against
the inventory value.
of practical expedients permitted by the standard, namely
the use of a single discount rate to a portfolio of leases
with reasonably similar characteristics and the accounting
for operating leases with a remaining lease term of less
than 12 months as at 1 January 2019 as short-term leases.
On adoption of IFRS 16, the group recognised lease liabilities
in relation to leases which had previously been classified
as ‘operating leases’ under the principles of IAS 17 Leases.
These liabilities were measured at the present value of the
remaining lease payments, discounted using the lessee’s
incremental borrowing rate as of 1 January 2019.
eXternal audit
The external audit is scoped following an assessment by
KPMG of the level of materiality and the specific audit
risks. In 2019 the most significant risks identified were the
recoverability of goodwill in the Densitron CGUs, revenue
recognition, valuation of inventory and management
override of controls. The audit committee reviewed
and challenged KPMG on these matters and reviewed
their reporting and feedback from management on the
effectiveness of the audit process. The quality of the
process was assessed to be good and no significant issues
were identified with the process for the 2019 year end.
non-audit serVices
The Committee approves all non-audit services provided
by the auditors before they are undertaken and reviews the
level of these services to ensure KPMG’s independence is
not compromised. KPMG provided tax advice to the group
in the UK but no other non-audit services in 2019. In 2020
the audit committee will review whether KPMG is able to
continue to provide these services under the new auditor
independence rules coming in.
other area of focus:
internal controls
Management override of controls – we are satisfied that
adequate controls are in place and use the monthly
management reporting and the results of the external audit
to assess this on an on-going basis.
Impact of IFRS 16: Leases – The group has adopted IFRS
16 using the modified retrospective approach from 1
January 2019 and has not restated comparatives for the
2018 reporting period, as permitted under the specific
transitional provisions in the standard. The reclassifications
and the adjustments arising from the new leasing rules
are therefore recognised in retained earnings at 1 January
2019. In adopting IFRS 16, the Group has taken advantage
The review of risks facing the group is shown on pages
20 and 21. The group has clearly defined lines of
accountability and delegation of authority which are closely
adhered to, policies and procedures that cover financial
planning and reporting, accounts preparation, information
security and operational management. The reporting and
review processes provide regular assurance to the board as
to the adequacy and effectiveness on internal controls.
The Committee has determined that an internal audit
function is not currently required by the Group and
that there are other monitoring processes applied to
provide assurance that internal controls are functioning
satisfactorily.
Annual Report and Accounts 2019plcplc
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DIRECTORS' REPORT
guy Millward director
the directors present their annual report and
accounts for the year ended 31 december 2019.
principal actiVities, results and
likely Future deVelopMents
The principal activities of the Group are:
• the design, development and manufacture
of gaming platforms and display solutions for
the gaming and slot machine industry; and
• the design, development and delivery
of electronic displays into the industrial
marketplace.
The profits for the year after taxation amounted to $8.3
million (2018: $14.2 million). Further comments on the
development of the business are included in the Chairman’s
Statement, Chief Executive’s Report and Financial Review
on pages 7 - 17.
statutory inForMation
Quixant plc (The Company) is a Public Limited Company
incorporated in the United Kingdom (Registration number:
04316977). The Company’s ordinary shares are traded on
the Alternative Investment Market of the London Stock
Exchange (AIM).
The Company has a branch, located in Taiwan, whose
operations and results are included in the standalone
financial statements of the Company.
Details of the share capital of the Company are set out in
note 23 of the consolidated financial statements.
annual general Meeting
The date and other details of the next Annual General
Meeting of the Company are contained within the notice of
this meeting. The Directors will review whether an interim
dividend can be paid later in the year when the Covid-19
situation is clearer. During the year the Company paid a
dividend of 3.10p per share amounting to $2.8m.
substantial shareholdings
On 6 April 2020 the Company had been notified of the
following significant interests in its share capital:
Shares held
Ordinary shares
of £0.001 each
% of issued
share capital
N C L Jarmany and his wife
11,201,163
16.86%
Liontrust Asset Management
Amati Global Investors
Mr J and Mrs S Mullins
M&G Investment Management
Jupiter Asset Management
Axa Framlington Investment
Managers
C-T Lin and his wife
Tellworth Investments
Schroders Plc
G P Mullins and his wife
Octopus Investments Nominees
Limited
6,044,824
4,234,889
3,858,920
3,735,073
3,657,378
3,493,736
3,484,059
3,346,799
3,152,110
2,215,653
2,122,975
9.10%
6.37%
5.81%
5.65%
5.50%
5.26%
5.24%
5.04%
4.74%
3.34%
3.20%
Alexander Taylor
2,058,958
3.10%
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The Directors who served during the year and their interests in the share capital of the Company were as follows:
G A Y Hudson (resigned 23 March 2020)
N C L Jarmany
J F Jayal
C-T Lin
G L Millward
G P Mullins
M J Peagram
G van Zwanenberg
shares held ordinary shares of
£0.001 each
2019
7,350
2018
2,350
11,201,163
10,870,763
375,200
3,484,059
—
360,200
3,446,559
—
2,215,653
2,199,395
253,674
27,837
227,174
26,087
options granted
£0.001 each
2019
—
—
—
—
—
—
—
—
exercise price
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£4.08
—
£4.30
—
—
—
2018
—
—
65,000
—
100,000
—
—
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There has been no change in the interests set out above between 31 December 2019 and 6 April 2020.
directors’ indeMnity arrangeMents
going concern
The Group has made qualifying third-party indemnity
provisions for the benefit of its Directors which were
made during the year and remain in force at the date of
this report. The Group has purchased and maintained
throughout the year Directors’ and Officers’ liability
insurance in respect of itself and its Directors.
research and deVelopMent (r&d)
The Group continues to invest in R&D, spending $6.5
million (2018: $6.4 million) in its R&D and customer
support programmes in the year, of which $2.2 million
(2018: $2.6 million) was capitalised. The Group undertakes
R&D to develop and enhance its products and the Group
will continue to commit a significant level of resource and
expenditure as appropriate to R&D.
use oF Financial instruMents
Information on both the Group’s financial risk management
objectives and the Group’s policies on exposure to relevant
risks in respect of financial instruments are set out in note
24 of the consolidated financial statements.
political contributions
Neither the Company nor any of its subsidiaries made any
political donations or incurred any political expenditure
during the year (2018: nil).
In determining the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Group can continue in operational existence for
the foreseeable future.
In the early months of 2020, a global pandemic has broken
out causing governments around the world to impose
various restrictions on economies and human populations.
The Board has carried out a going concern review and
concluded that apart from the uncertainties in the impact of
the pandemic noted below, the Group has adequate cash to
continue in operational existence for the foreseeable future.
The Directors have prepared cash flow forecasts for a period
in excess of 12 months from the date of signing the financial
statements. The main effects the pandemic could have
on the forecasts include delays in recovering debts from
customers who may be facing financial difficulties, drop in
customer demand in the coming months and the timing of
sales recovering to levels prior to the pandemic.
The Board’s severe downside forecasts are based on a
scenario where customers stop paying entirely for new
orders delivered from April 2020 onwards and do not
begin buying any further goods until December 2020.
Orders delivered and invoiced up to the end of Q1 2020
are assumed to be paid for. Cost reductions can be made to
offset this reduction in cash receipts by a 25% reduction in
staff costs and a reasonable reduction in other controllable
costs. The Group have a $3.0m loan facility in Taiwan that
is currently undrawn and is part of the mortgage on the
Group’s property in Taiwan. In this scenario, the Group have
sufficient cash until March 2021 without drawing on its
bank facilities.
Annual Report and Accounts 2019plcplc
STATEMENT OF
DIRECTORS’ RESPONSIBILITIES
in respect oF the annual report,
strategic report, the directors’ report
and the Financial stateMents
The directors are responsible for preparing
the Annual Report, Strategic Report,
the Directors' Report and the financial
statements in accordance with applicable
law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law they have
elected to prepare the financial statements in accordance
with International Financial Reporting Standards as adopted
by the European Union (IFRSs as adopted by the EU) and
applicable law.
Under company law the directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
parent Company and of their profit or loss for that period.
In preparing each of the Group and parent Company
financial statements, the directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are reasonable,
relevant and reliable;
• state whether they have been prepared in accordance
with IFRSs as adopted by the EU;
• assess the Group and parent Company’s ability to
continue as a going concern, disclosing, as applicable,
matters related to going concern; and
• use the going concern basis of accounting unless they
either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic
alternative but to do so.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that its financial statements
comply with the Companies Act 2006. They are responsible
for such internal control as they determine is necessary
to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or
error, and have general responsibility for taking such steps
as are reasonably open to them to safeguard the assets
of the Group and to prevent and detect fraud and other
irregularities.
Under applicable law and regulations, the directors are also
responsible for preparing a Strategic Report and a Directors’
Report that comply with that law and those regulations.
The directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the company’s website. Legislation in the
UK governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
37
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A less severe scenario was based on the existing debts being
recovered, irrevocable sales orders already received from
customers and their related costs of sales being fulfilled, and
an assumption that we will only recover 50% of debts from
these new fulfilments. This would provide us with enough
cash to pay existing overheads without reducing them until
the second half of 2021, well beyond the period the Board is
required to look at to assess going concern.
The analyses depend greatly on the amount of orders
assumed to be collectable in cash, and major changes to
this could significantly change the result. In all scenarios
considered, the Board assumed that the Group’s medical
sector revenues, including revenues from displays sold
as components for ventilators, continued at forecasted
levels prior to the pandemic. The analysis assumes that
there are no issues in recovering these debts, considering
the increasing demand in this sector as a result of the
pandemic and the nature of the customers.
While the Directors’ have no reason to believe that
customer revenues and receipts will decline to the point
that the Group no longer has sufficient resources to fund
its operations, should this occur, the group may need
to seek additional funding beyond the facilities that are
currently available to it, as well as making further significant
reductions in controllable costs. There would be an
opportunity to sell certain property and inventory assets to
accelerate cash generation and/or mitigate risk, but in the
economic environment that would see customer revenues
and receipts decline severely, such sales would be likely to
be difficult to achieve.
The potential impact of changes in assumptions arising
from matters outside the Group’s control, or the unlikely
event of a culmination of events, may result in the group
requiring additional working capital beyond the group’s
existing facilities.
Based on the above, these circumstances represent a
material uncertainty that may cast significant doubt about
the Group’s ability to continue as a going concern such
that the Group may be unable to realise its assets and
discharge its liabilities in the normal course of business.
Nevertheless, at the time of writing, the Directors’ believe
that the Group will continue to have acceptable financial
resources to meet obligations as they fall due and
accordingly have formed a judgement that it is appropriate
to prepare the financial statements on a going concern
basis. These financial statements do not include any
adjustments that would result if the going concern basis of
preparation is inappropriate.
subseQuent eVents
As discussed in the Going Concern notes in the Directors’
Report and in note 1 to the financial statements, the
Covid-19 pandemic may result in severe reductions in
future revenues, profits and cash flows. As described in
the Going Concern notes there are short-term actions, as
well as the Group’s existing cash reserves, that are already
being taken to ensure the Group survives over the next 12
months. At present levels of uncertainty it is not practical to
conclude on an appropriate valuation basis for all assets on
the balance sheet except cash but we continue to monitor
the situation closely.
disclosure oF inForMation
to the auditor
The Directors who held office at the date of approval of
this Directors’ Report confirm that, so far as they are each
aware, there is no relevant audit information of which the
Company’s auditor is unaware; and each Director has taken
all the steps that they ought to have taken as a Director to
make themselves aware of any relevant audit information
and to establish that the Company’s auditor is aware of
that information.
auditor
In accordance with Section 489 of the Companies Act
2006, a resolution for the re-appointment of KPMG
LLP as auditor of the Company is to be proposed at the
forthcoming Annual General Meeting.
By order of the Board on 6 April 2020.
guy Millward director
Aisle Barn, 100 High Street, Balsham CB21 4EP
Annual Report and Accounts 2019plcplc
38
INDEPENDENT
AUDITOR'S REPORT
to the Members of Quixant plc
Financial
Statements
1. our opinion is unModiFied
basis for opinion
We have audited the financial statements of Quixant plc
(“the Company”) for the year ended 31 December 2019
which comprise the Consolidated Statement of Profit and
Loss and Other Comprehensive Income, Consolidated and
Company Balance Sheets, Consolidated and Company
Statement of Changes in Equity, Consolidated and
Company Cash Flow Statements and the related notes,
including the accounting policies in note 1.
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable
law. Our responsibilities are described below. We have
fulfilled our ethical responsibilities under, and are
independent of the Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as applied
to listed entities. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our opinion.
in our opinion:
• the financial statements give a true and fair view of
the state of the Group’s and of the parent Company’s
affairs as at 31 December 2019 and of the Group’s
profit for the year then ended;
• the Group financial statements have been properly
prepared in accordance with International Financial
Reporting Standards as adopted by the European Union
(IFRSs as adopted by the EU);
• the parent Company financial statements have been
properly prepared in accordance with IFRSs as adopted
by the EU and as applied in accordance with the
provisions of the Companies Act 2006; and
• the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
overview
Materiality:
$450k (2018:$700k)
Group financial
statements as a
whole
coverage
key audit matters
recurring risks
4.8% (2018: 4.9%) of Group profit
before tax
100% (2018: 97%) of Group profit
before tax
vs 2018
Recoverability of Group
goodwill in the Densitron
CGU and recoverability
of parent Company’s
investment in Densitron
Technologies Limited
The Impact of uncertainties
consequent upon the
UK’s departure from the
European Union on our
audit
new risks
Going concern
Valuation of inventory
(Work in progress and
finished goods) in the
Quixant CGU and the
parent Company
Annual Report and Accounts 2019
39
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2. Material uncertainty related to going concern
going concern
disclosure quality
our procedures included:
the risk
our response
We draw attention to note 1 in the
financial statements which outlines the
uncertainties arising from the recent
COVID-19 outbreak. Trading for the
Group and Parent Company for at least
the next 12 months is expected to be
impacted and this is mainly due to the
restrictions on movement of people
imposed by the majority of international
governments and the closure of casinos
across the world. The Group and the
parent Company ability to continue
as a going concern is dependent on
the timing of the settlement and
recoverability of the Group’s current
debtors and the timing of future sales.
These events and conditions, along with
the other matters explained in note 1,
constitute a material uncertainty that may
cast significant doubt on the group’s and
the parent company’s ability to continue
as a going concern.
Our opinion is not modified in respect
of this matter.
There is little judgement involved in
the directors’ conclusion that risks and
circumstances described in note 1 to the
financial statements represent a material
uncertainty over the ability of the group
and company to continue as a going
concern for a period of at least a year
from the date of approval of the financial
statements.
However, clear and full disclosure of
the reasonable possible scenarios and
the directors’ rationale for the use of
the going concern basis of preparation,
including that there is a related material
uncertainty, is a key financial statement
disclosure. The focus of our audit was
that all of those reasonably possible
scenarios have been adequately disclosed.
Auditing standards require that to be
reported as a key audit matter.
• Our COVID-19 Understanding:
We considered the Directors’
assessment of the risks and impact of
COVID-19 and compared these to our
own understanding of the risks.
• Sensitivity analysis:
We considered the sensitivities relating
to the timing of settlement and
recoverability of current debtors, the
timing of future sales and sensitivities
relating to other key assumptions in the
prospective financial information taking
account of reasonably possible scenarios
(but not unrealistic) resulting from
COVID-19 uncertainty and evaluating
the underlying assumptions and the
reasonableness of these.
• Assessing transparency:
Assessing the completeness and
accuracy of the matters covered in the
going concern disclosure; by comparing
them to the outcome of our procedures
detailed above.
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3. other key audit Matters: our assessMent
oF risks oF Material MisstateMent
Key audit matters are those matters that, in our
professional judgment, were of most significance in the
audit of the financial statements and include the most
significant assessed risks of material misstatement (whether
or not due to fraud) identified by us, including those which
had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the
efforts of the engagement team. These other matters
were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these
matters. Going concern is a significant key audit matter and
is described in section 2 of our audit report. In arriving at
our audit opinion above, the other key audit matters were
as follows:
the impact of
uncertainties consequent
upon the uk’s departure
from the european union
on our audit
Refer to page 21
(principal risks)
the risk
our response
Forecast based valuation
The UK left the European Union (EU) on 31
January 2020 and entered an implementation
period which is due to operate until 31
December 2020. At that point current
trade agreements with the European Union
terminate. The UK is entering negotiations
over future trading relationships with the EU
and a number of other countries. Where new
trade agreements are not in place World Trade
Organisation (WTO) arrangements will be in
force, meaning among other things import and
export tariffs, quotas and border inspections,
which may cause delivery delays. Different
potential outcomes of these trade negotiations
could have wide ranging impacts on the
Group’s operations and the future economic
environment in the UK and EU.
All audits assess and challenge the
reasonableness of estimates, in particular,
the recoverability of Group goodwill in
the Densitron CGU and recoverability of
parent Company’s investment in Densitron
Technologies Limited, and the valuation of
inventory (Work in progress and finished goods)
in the Quixant CGU and the parent Company,
as described below, and related disclosures; and
the appropriateness of the going concern basis
of preparation of the financial statements. All
of these depend on assessments of the future
economic environment and the Group’s future
prospects and performance.
The uncertainty over the UK’s future trading
relationships with the rest of the world and
related economic effects give rise to extreme
levels of uncertainty, with the full range of
possible effects currently unknown.
We developed a standardised firm-wide
approach to the consideration of the
uncertainties arising from the UK’s departure
from the EU in planning and performing our
audits. Our procedures included:
• Our Brexit knowledge:
We considered the directors’ assessment of
risks to the trade negotiations for the Group’s
business and financial resources compared
with our own understanding of the risks. We
considered the directors’ plans to take action
to mitigate the risks.
• Sensitivity analysis:
When addressing recoverability of Group
goodwill in the Densitron CGU and the
recoverability of parent Company investment
in Densitron Technologies Limited and other
areas that depend on forecasts, we compared
the directors’ analysis to our assessment
and, where forecast cash flows are required
to be discounted, considered adjustments
to discount rates for the level of remaining
uncertainty.
• Assessing transparency:
As well as assessing individual disclosures as
part of our procedures on recoverability of
Group goodwill in the Densitron CGU and
recoverability of parent Company’s investment
in Densitron Technologies Limited we
considered all of the disclosures concerning
uncertainties related to the UK’s future
trading relationships together, including those
in the strategic report, comparing the overall
picture against our understanding of the risks.
However, no audit should be expected to
predict the unknowable factors or all possible
future implications for a company and this is
particularly the case in relation to the impact of
the UK’s departure from the EU.
Annual Report and Accounts 2019
41
plc
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recoverability of group
goodwill in the densitron
cgu and recoverability
of parent company’s
investment in densitron
technologies limited
goodwill in the
densitron cgus
$5,576k (2018: $5,576k)
parent company
investment in densitron
technologies limited
$8,955k (2018: $11,601k)
See page 53
(accounting policy)
and page 66
(financial disclosures)
Valuation of inventory
(work in progress and
finished goods) in the
Quixant cgu and the
parent company
See page 55
(accounting policy)
and page 74
(financial disclosures)
the risk
our response
Forecast based valuation
our procedures included:
The estimated recoverable amount of these
balances is subjective due to the inherent
uncertainty involved in forecasting and
discounting future cash flows.
The size of the balance, and in the case of
goodwill, the requirement to test for impairment
on an annual basis, makes this a core area on
which our audit focused.
The effect of these matters is that, we
determined that the value in use of the
Densitron CGUs has a high degree of estimation
uncertainty, with a potential range of reasonable
outcomes greater than our materiality for the
financial statements as a whole. The financial
statements (note 12) disclose the sensitivity
estimated by the Group.
• Benchmarking assumptions:
Comparing the Group’s assumptions to
externally derived data (for example competitor
discount rates and IMF growth forecast data)
in relation to key inputs such as projected
economic growth and discount rates;
• Historical comparisons:
We assessed the reasonableness of the
forecasts used by considering the historical
accuracy of previous budgets;
• Sensitivity analysis:
Performing our own breakeven analysis on the
assumptions noted above;
• Comparing valuations:
Comparing the sum of the discounted cash
flows to the Group’s market capitalisation to
assess the reasonableness of those cash flows;
and
• Assessing transparency:
Assessing whether the Group’s disclosures
about the sensitivity of the outcome of the
impairment assessment to changes in key
assumptions reflected the risks inherent
in the valuation of goodwill and the
parent company’s investment in Densitron
Technologies Limited.
Forecast based valuation
our procedures included:
The estimated recoverable amount of the inventory
balance in the Quixant CGU is subjective due to
the inherent uncertainty involved in forecasting
of future sales. The risk is higher for this year as
the Quixant plc share price has fallen after the
announcement of the half year results and the
sales forecasted in the Quixant CGU have been
downgraded. Also the Inventory days within the
Quixant CGU have increased from 120 days in
2018 to 186 days in 2019.
The Quixant CGU also holds significant customer
specific variants of products. If the orders from
these customers were to fall, these may be at
risk of impairment.
The effect of these matters is that, as part
of our risk assessment, we determined that
the valuation of inventory has a high degree of
estimation uncertainty, with a potential range of
reasonable outcomes greater than our materiality
for the financial statements as a whole.
• Review of policy:
We inspected the inventory provision recorded
by directors for consistency with the Group
policy and accounting standards.
• Test of detail:
We assessed the key assumptions
underlying the sales forecasts prepared by
the directors for reasonableness, and
compared the recorded inventory provisions
to the component usage in the year.
• Test of detail:
We tested a sample of items to purchase and
sales invoices to check that stock is held at the
lower of cost and net realisable value.
• Sensitivity analysis:
We performed sensitivity analysis over the
forecasts that support the valuation of
inventory, as part of our work over goodwill.
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Annual Report and Accounts 2019
43
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4. our application oF Materiality and
an oVerView oF the scope oF our audit
Materiality for the Group financial statements as a
whole was set at $450k, determined with reference to a
benchmark of Group profit before tax of $9,418k, of which
it represents 4.8% (2018: 4.9%).
Materiality for the parent Company financial statements as
a whole was set at $135k (2018: $177k), determined with
reference to a benchmark of Company revenue, of which it
represents 0.3% (2018: 5% of Company profit before tax).
We agreed to report to the Audit Committee any corrected
or uncorrected identified misstatements exceeding
$22.5k, in addition to other identified misstatements that
warranted reporting on qualitative grounds.
Of the Group’s 15 (2018: 15) reporting components,
we subjected 8 (2018: 8) to full scope audits for Group
purposes and 2 (2018: 1) to specified risk-focused audit
procedures. The latter were not individually financially
significant enough to require a full scope audit for
Group purposes, but did present specific individual risks
that needed to be addressed. We conducted reviews of
financial information (including enquiry) at a further 5
(2018: 6) non-significant components and we performed
analysis at an aggregated Group level to re-examine our
assessment that there were no significant risks of material
misstatement with these.
The remaining 4% of total Group assets is represented
by 5 reporting components, none of which individually
represented more than 5% of any of total Group revenue,
Group profit before tax or total Group assets. For these
residual components, we performed analysis at an
aggregated Group level to re-examine our assessment that
there were no significant risks of material misstatement
within these.
The Group team instructed component auditors as to the
significant areas to be covered, including the relevant risks
detailed above and the information to be reported back.
The Group team approved the component materialities,
which ranged from $70k to $330k, having regard to
the mix of size and risk profile of the Group across the
components.
The work on 2 of the 15 components (2018: 2 of the 15
components) was performed by component auditors and
the rest, including the audit of the parent Company, was
performed by the Group team.
In relation to these 2 components video and telephone
conference meetings were held with these component
auditors to assess audit risk and strategy. At these
meetings, the findings reported to the Group team were
discussed in more detail, and any further work required by
the Group team was then performed by the component
auditor.
The components within the scope of our work accounted for the percentages illustrated below.
profit before tax
$9,418k (2018: $14,333k)
Profit before tax
$9,418k (2018: $14,333k)
group Materiality
$450k (2018: $700k)
Group Materiality
$450k (2018: $700k)
13
$450k
Whole financial
statements materiality
(2018: $700k)
$337k
Range of materiality at
15 components $70k to
$330k (2018: $63k to
$560k)
Profit Before Tax
Profit Before Tax
Group materiality
Group materiality
$22.5k
Misstatements reported
to the audit committee
(2018: $35k)
Group revenue
Group revenue
Group profit before tax
Group profit before tax
group revenue
group profit before tax
5
5
13
100%
(2018 92%)
79
79
95
95
group total assets
key:
6
6
96%
(2018 90%)
84
90
0
2
0
2
100%
(2018 99%)
97
97
100
100
Full scope for Group audit
purposes 2019
Specified risk-focused
audit procedures 2019
Full scope for Group audit
purposes 2018
Specified risk-focused
audit procedures 2018
Residual components
5. we haVe nothing to report on
the other inForMation in the annual
report
6. we haVe nothing to report on the
other Matters on which we are
reQuired to report by eXception
The directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does
not cover the other information and, accordingly, we do
not express an audit opinion or, except as explicitly stated
below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and,
in doing so, consider whether, based on our financial
statements audit work, the information therein is materially
misstated or inconsistent with the financial statements
or our audit knowledge. Based solely on that work we
have not identified material misstatements in the other
information.
Strategic Report and Directors’ Report
Based solely on our work on the other information:
• we have not identified material misstatements in the
Strategic Report and the Directors’ Report;
• in our opinion the information given in those reports
for the financial year is consistent with the financial
statements; and
• in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Under the Companies Act 2006, we are required to report
to you if, in our opinion:
• adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent Company financial statements are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and
explanations we require for our audit.
We have nothing to report in these respects.
7. respectiVe responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on
page 37, the directors are responsible for: the preparation
of the financial statements including being satisfied that
they give a true and fair view; such internal control as
they determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error; assessing the
Group and parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going
concern; and using the going concern basis of accounting
unless they either intend to liquidate the Group or the
parent Company or to cease operations, or have no realistic
alternative but to do so.
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Annual Report and Accounts 2019
45
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial
statements.
8. the purpose oF our audit
work and to whoM we owe our
responsibilities
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members
those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the
Company’s members, as a body, for our audit work, for this
report, or for the opinions we have formed.
a fuller description of our responsibilities is provided on the Frc’s website at:
www.frc.org.uk/auditorsresponsibilities.
kelly dunn (senior statutory auditor)
for and on behalf of kpMg llp, statutory auditor
Chartered Accountants
Botanic House
100 Hills Road
Cambridge
CB2 1AR
6 April 2020
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e
n
t
A
u
d
i
t
o
r
s
'
R
e
p
o
r
t
46
Annual Report and Accounts 2019
47
plc
plc
consolidated stateMent oF proFit and loss and other coMprehensiVe incoMe
For the years ended 31 December 2019 and 2018
consolidated and coMpany balance sheets
As at 31 December 2019 and 2018
revenue
Cost of sales
gross profit
Operating expenses
operating profit
Financial expenses
profit before tax
Taxation
profit for the year
other comprehensive income for the year, net of income tax
Foreign currency translation differences
total comprehensive income for the year
Basic earnings per share
Diluted earnings per share
2019
total
$000
92,320
(58,033)
34,287
(24,733)
9,554
(136)
9,418
(1,102)
8,316
(144)
8,172
$0.1252
$0.1243
Note
3,4
5
8
9
10
10
2018
Total
$000
115,150
(75,392)
39,758
(25,174)
14,584
(251)
14,333
(177)
14,156
(176)
13,980
$ 0.2137
$ 0.2125
The consolidated statement of profit and loss and other
comprehensive income has been prepared on the basis that
all operations are continuing operations.
Notes on pages 51 - 82 form part of the financial statements.
non-current assets
Property, plant and equipment
Intangible assets
Right-of-use leased assets
Investment property
Investments in group companies and associated undertakings
Deferred tax assets
current assets
Inventories
Trade and other receivables
Cash and cash equivalents
total assets
current liabilities
Other interest-bearing loans and borrowings
Trade and other payables
Tax payable
Lease liabilities
non-current liabilities
Other interest-bearing loans and borrowings
Provisions
Deferred tax liabilities
Lease liabilities
total liabilities
net assets
equity attributable to equity holders of the parent
Share capital
Share premium
Share-based payments reserve
Retained earnings
Translation reserve
total equity
11
12
25
13
14
15
16
17
18
19
20
25
19
22
15
25
23
23
group
coMpany
Note
2019
$000
2018
$000
2019
$000
5,926
18,449
6,104
15,538
894
—
—
340
—-
631
—
236
25,609
22,509
20,180
23,902
16,954
61,036
86,645
19,439
31,087
11,082
61,608
84,117
3,695
1,888
252
—
9,346
44
15,225
13,735
37,535
1,219
52,489
67,714
2018
$000
3,751
2,085
—
—
11,992
101
17,929
13,763
9,955
2,456
26,174
44,103
(82)
(530)
(81)
(17,756)
(21,052)
(12,184)
—
(406)
(759)
—
(51)
(252)
(263)
(19,157)
(631)
—
(18,244)
(22,341)
(12,568)
(20,051)
(738)
(343)
(1,469)
(564)
(3,114)
(21,358)
65,287
106
6,698
1,345
57,044
94
65,287
(823)
(306)
(1,214)
—
(2,343)
(24,684)
59,433
106
6,499
1,102
51,488
238
59,433
(738)
—
—
—
(738)
(13,306)
54,408
106
6,698
1,345
45,915
344
54,408
(823)
—
(181)
—
(1,004)
(21,055)
23,048
106
6,499
1,102
15,364
(23)
23,048
F
F
I
I
N
N
A
A
N
N
C
C
A
A
L
L
I
I
S
S
T
T
A
A
T
T
E
E
M
M
E
E
N
N
T
T
S
S
These financial statements were approved and authorised
for issue by the Board of Directors on 6 April 2020 and
were signed on behalf of the Board by:
guy Millward director
Company registered number: 04316977
Notes on pages 51 - 82 form part of the financial statements.
48
Annual Report and Accounts 2019
49
plc
plc
consolidated and coMpany stateMent oF changes in eQuity
For the years ended December 2019 and 2018
consolidated and coMpany stateMent oF changes in eQuity
For the years ended December 2019 and 2018
group
share
capital
$000
share
premium
$000
translation
reserve
$000
share-
based
payments
$000
retained
earnings
$000
total
equity
$000
coMpany
share
capital
$000
share
premium
$000
translation
reserve
$000
share-
based
payments
$000
retained
earnings
$000
total
parent
equity
$000
balance at 1 January 2018
106
6,102
414
991
39,647
47,260
balance at 1 January 2018
106
6,102
253
991
13,752
21,204
total comprehensive income for the period
Profit
Other comprehensive loss
total comprehensive income for the period
transactions with owners, recorded directly in equity
Share-based payments
Dividend paid
Exercise of share options
total contributions by and distributions to owners
—
—
—
—
—
—
—
—
—
—
—
—
397
397
—
(176)
(176)
—
—
—
—
balance at 31 december 2018
106
6,499
238
—
—
—
14,156
14,156
—
(176)
14,156
13,980
111
—
—
111
1,102
—
111
(2,315)
(2,315)
—
397
(2,315)
(1,807)
51,488
59,433
total comprehensive income for the period
Profit
Other comprehensive loss
total comprehensive income for the period
transactions with owners, recorded directly in equity
Share-based payments
Dividend paid
Exercise of share options
total contributions by and distributions to owners
—
—
—
—
—
—
—
—
—
—
—
—
397
397
—
(276)
(276)
—
—
—
—
balance at 31 december 2018
106
6,499
(23)
—
—
—
111
—
—
111
1,102
3,927
—
3,927
3,927
(276)
3,651
—
111
(2,315)
(2,315)
—
397
(2,315)
(1,807)
15,364
23,048
balance at 1 January 2019
106
6,499
238
1,102
51,488
59,433
balance at 1 January 2019
106
6,499
(23)
1,102
15,364
23,048
total comprehensive income for the period
Profit
Other comprehensive loss
total comprehensive income for the period
transactions with owners, recorded directly in equity
Share-based payments
Dividend paid
Exercise of share options
total contributions by and distributions to owners
—
—
—
—
—
—
—
—
—
—
—
—
199
199
balance at 31 december 2019
106
6,698
—
(144)
(144)
—
—
—
—
94
—
—
—
243
—
—
8,316
—
8,316
8,316
{144)
8,172
—
243
(2,760)
(2,760)
—
199
243
(2,760)
(2,318)
1,345
57,044
65,287
total comprehensive income for the period
Profit
Other comprehensive loss
total comprehensive income for the period
transactions with owners, recorded directly in equity
Share-based payments
Dividend paid
Exercise of share options
total contributions by and distributions to owners
—
—
—
—
—
—
—
—
—
—
—
—
199
199
—
367
367
—
—
—
—
—
—
—
243
—
—
33,311
33,311
—
367
33,311
33,678
—
243
(2,760)
(2,760)
—
199
243
(2,760)
(2,318)
balance at 31 december 2019
106
6,698
344
1,345
45,915
54,408
Notes on pages 51 - 82 form part of the financial statements.
F
F
I
I
N
N
A
A
N
N
C
C
A
A
L
L
I
I
S
S
T
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A
A
T
T
E
E
M
M
E
E
N
N
T
T
S
S
50
consolidated and coMpany cash Flow stateMents
For the years ended December 2019 and 2018
cash flows from operating activities
profit for the year
Adjustments for:
Depreciation, amortisation and impairment
Depreciation of leased assets
Change in fair value of investment property
Movement in provisions
Taxation expense
Lease liability interest expense
Financial expense
Equity-settled share-based payment expenses
Decrease/(increase) in trade and other receivables
(Increase)/decrease in inventories
(Decrease)/increase in trade and other payables
Interest paid
Lease liability interest expense
Tax paid
net cash from operating activities
cash flows from investing activities
Acquisition of subsidiary, net of cash acquired
Acquisition of property, plant and equipment
Acquisition of intangible assets
net cash from investing activities
cash flows from financing activities
Repayment of borrowings
Payment of lease liabilities
Dividends paid
Proceeds from issue of shares
net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
cash and cash equivalents at 31 december
18
Notes on pages 51 - 82 form part of the financial statements.
group
coMpany
Note
2019
$000
2018
$000
2019
$000
2018
$000
8,316
14,156
33,311
3,927
2,853
2,745
680
631
36
1,102
120
16
243
13,997
7,491
(488)
(3,636)
17,364
(16)
(120)
(2,282)
14,946
(2,392)
(316)
(2,598)
(5,306)
(534)
(674)
(2,760)
200
(3,768)
5,872
11,082
16,954
—
—
—
177
—
251
111
17,440
(10,992)
1,807
3,751
12,006
(251)
—
(481)
11,274
—
(632)
(3,457)
(4,089)
(5,382)
—
(2,315)
397
(7,300)
(112)
11,194
11,082
3,562
402
—
—
266
52
13
243
37,849
(27,580)
496
(7,140)
3,625
(13)
(52)
(971)
2,589
—
(165)
(432)
(597)
(267)
(402)
(2,760)
200
(3,229)
(1,237)
2,456
1,219
1,167
—
—
—
483
—
221
111
5,909
444
161
3,718
10,232
(232)
—
(1,194)
8,806
—
(431)
(889)
(1,320)
(5,317)
—
(2,315)
397
(7,235)
251
2,205
2,456
11
12
Annual Report and Accounts 2019
51
plc
plc
NOTES TO THE FINANCIAL STATEMENTS
1. principal accounting policies
The accounting policies set out below have, unless
otherwise stated, been applied consistently to all periods
presented in these consolidated financial statements.
Quixant plc (the “Company”) develops and supplies
specialist computer systems. The Company is incorporated
and domiciled in the UK. The address of the Company’s
registered office is Aisle Barn, 100 High Street, Balsham,
Cambridge, CB21 4EP.
The Group financial statements consolidate those of the
Company, its branch in Taiwan and its subsidiaries (together
referred to as the “Group”). The parent Company financial
statements present information about the Company as a
separate entity and not about its Group.
basis of preparation
Both the parent Company financial statements and the
Group financial statements have been prepared and
approved by the Directors in accordance with International
Financial Reporting Standards as adopted by the EU
(“Adopted IFRSs”). On publishing the parent Company
financial statements here together with the Group
financial statements, the Company is taking advantage
of the exemption in s408 of the Companies Act 2006
not to present its individual Profit and Loss Account and
related notes that form a part of these approved financial
statements.
This financial information has been prepared under the
historical cost convention.
The presentation currency adopted by the Group is US
Dollars as the majority of the Group’s transactions are
undertaken in US dollars.
The preparation of financial information in conformity with
Adopted IFRSs requires the use of certain critical accounting
estimates. It also requires management to exercise its
judgement in the process of applying the Group accounting
policies. The areas involving a higher degree of judgement
and estimation relate to the recoverable amount of
goodwill, the valuation of inventory and the determination
of the point at which the criteria for development cost
capitalisation have been met.
The recoverable amounts of cash generating units and
individual assets have been determined based on the higher
of the value-in-use calculations and fair value less costs to
sell. These calculations require the use of estimates and
assumptions that have a significant estimation uncertainty
in the current year. See note 12 for further details.
Reasonably possible changes to the assumptions in the
future may lead to material adjustments to the carrying
value of intangible and tangible assets. Provisions against
slow-moving and obsolete inventory are reviewed on a
monthly basis and require the use of judgement to gauge
its value. The impact on the financial statements of a
change in judgement with respect to the development
cost criteria, such as the commercial viability of a product,
could affect the value capitalised in respect of intangible
assets and the corresponding profit and loss effect. If the
criteria had not been met in the current year, the impact
would have been to expense $2.2m (2018: $2.6m) of
development costs.
basis of consolidation
The consolidated financial statements comprise the
financial statements of the Company and its subsidiaries.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date
when such control ceases. The financial statements of the
subsidiaries are prepared for the same reporting period as
the parent Company, using consistent accounting policies.
All intra-group balances, transactions, unrealised gains and
losses resulting from intra-group transactions and dividends
are eliminated in full.
The Italian subsidiary, Quixant Italia srl, is 99% owned
by the Group. The comprehensive income and equity
attributable to the non-controlling interests in this
subsidiary are not material.
separate parent company financial statements
In the parent Company financial statements, all investments
in subsidiaries, joint ventures, and associates are carried at
cost less impairment.
going concern
In determining the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Group can continue in operational existence
for the foreseeable future.
In the early months of 2020, a global pandemic has broken
out causing governments around the world to impose
various restrictions on economies and human populations.
The Board has carried out a going concern review and
concluded that apart from the uncertainties in the
impact of the pandemic noted below, the Group has
adequate cash to continue in operational existence for the
foreseeable future.
F
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-
N
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t
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s
t
o
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52
Annual Report and Accounts 2019
53
plc
plc
The potential impact of changes in assumptions arising
from matters outside the Group’s control, or the unlikely
event of a culmination of events, may result in the group
requiring additional working capital beyond the group’s
existing facilities.
Based on the above, these circumstances represent a
material uncertainty that may cast significant doubt about
the Group’s ability to continue as a going concern such
that the Group may be unable to realise its assets and
discharge its liabilities in the normal course of business.
Nevertheless, at the time of writing, the Directors’ believe
that the Group will continue to have acceptable financial
resources to meet obligations as they fall due and
accordingly have formed a judgement that it is appropriate
to prepare the financial statements on a going concern
basis. These financial statements do not include any
adjustments that would result if the going concern basis of
preparation is inappropriate.
effective for the group and company in these
financial statements:
IFRS 16 changes the way in which operating leases are
treated within the financial statements. Right of use assets
and related liabilities are recognised for all material leases
from 1 January 2019. The effects of IFRS 16 are included in
note 25 to these financial statements.
The Group has considered the following amendments to
published standards that are effective for the Group for
the financial year beginning 1 January 2019 and concluded
that they are either not relevant to the Group or that they
do not have a significant impact on the Group’s financial
statements, other than in disclosure. These standards and
interpretations have been endorsed by the European Union.
• IFRIC 23 Uncertainty over income tax treatments
• Amendments to IAS 19 Plan Amendment, Curtailment
or Settlement
• Prepayment Features with Negative Compensation
(Amendments to IFRS 9)
• Long-term Interests in Associates and Joint Ventures
(Amendments to IAS 28)
• Annual Improvements to IFRS Standards 2015–2017
Cycle
The Directors have prepared cash flow forecasts for a
period in excess of 12 months from the date of signing the
financial statements. The main effects the pandemic could
have on the forecasts include delays in recovering debts
from customers who may be facing financial difficulties,
drop in customer demand in the coming months and the
timing of sales recovering to levels prior to the pandemic.
The Board’s severe downside forecasts are based on a
scenario where customers stop paying entirely for new
orders delivered from April 2020 onwards and do not
begin buying any further goods until December 2020.
Orders delivered and invoiced up to the end of Q1 2020
are assumed to be paid for. Cost reductions can be made to
offset this reduction in cash receipts by a 25% reduction in
staff costs and a reasonable reduction in other controllable
costs. The Group have a $3.0m loan facility in Taiwan that
is currently undrawn and is part of the mortgage on the
Group’s property in Taiwan. In this scenario, the Group
have sufficient cash until March 2021 without drawing on
its bank facilities.
A less severe scenario was based on the existing debts being
recovered, irrevocable sales orders already received from
customers and their related costs of sales being fulfilled,
and an assumption that we will only recover 50% of debts
from these new fulfilments. This would provide us with
enough cash to pay existing overheads without reducing
them until the second half of 2021, well beyond the period
the Board is required to look at to assess going concern.
The analyses depend greatly on the amount of orders
assumed to be collectable in cash, and major changes to
this could significantly change the result. In all scenarios
considered, the Board assumed that the Group’s medical
sector revenues, including revenues from displays sold
as components for ventilators, continued at forecasted
levels prior to the pandemic. The analysis assumes that
there are no issues in recovering these debts, considering
the increasing demand in this sector as a result of the
pandemic and the nature of the customers.
While the Directors’ have no reason to believe that
customer revenues and receipts will decline to the point
that the Group no longer has sufficient resources to fund
its operations, should this occur, the group may need
to seek additional funding beyond the facilities that are
currently available to it, as well as making further significant
reductions in controllable costs. There would be an
opportunity to sell certain property and inventory assets to
accelerate cash generation and/or mitigate risk, but in the
economic environment that would see customer revenues
and receipts decline severely, such sales would be likely to
be difficult to achieve.
changes in accounting policies: new standards,
interpretations and amendments not yet effective
The International Accounting Standards Board (IASB)
and the International Financial Reporting Interpretations
Committee (IFRIC) have issued the following standards
and interpretations with an effective date after the date of
these accounts which are not expected to have a significant
impact on the Group’s consolidated financial statements:
Adopted for use in the EU:
• Amendments to References to Conceptual Framework
in IFRS Standards
• Definition of a Business (Amendments to IFRS 3)
• Definition of Material (Amendments to IAS 1 and IAS 8)
• IFRS 17 Insurance Contracts
revenue recognition
The Group adopted IFRS 15 from 1 January 2018 which
had no material impact on revenue recognition. All
performance obligations under customer contracts, where
they exist, were reviewed and we concluded that this
did not change the way revenue had been recognised
in the past. Revenue is measured at the fair value of
the consideration received or receivable and represents
amounts receivable for goods and services provided in
the normal course of business by subsidiary companies
to external customers, net of discounts, Value Added Tax
(VAT) and other sales-related taxes. Revenue is reduced for
customer returns, rebates and other similar allowances.
Revenue from the sale of goods namely gaming boards or
platforms, gaming monitors and display products, which
represent the significant majority of the Group revenue, is
recognised in the income statement when:
• The performance obligation of transferring control
over a product to the buyer in accordance with the
contracted terms of sale has occurred. This usually
occurs when the delivery terms of the terms of sale
have been met,
• The Group does not retain effective control over the
goods.
Consideration is payable based on contractual payment
terms which are usually 30 days after the performance
obligation has been met. Transaction prices are set up
front for each contract. The group has not identified any
contracts which include either variable consideration or
significant financing components.
cost of sales
Cost of goods sold includes excess and obsolete inventory,
as well as any other costs associated with the direct
manufacturing and shipping of the Group’s products.
goodwill
Goodwill arising on consolidation represents the excess
of the cost of acquisition over the Group’s interest in
the fair value of the identifiable assets and liabilities of
the subsidiary or associated undertaking at the date of
acquisition. Goodwill is recognised as an asset and is
reviewed for impairment at least annually. Any impairment
is recognised immediately through the income statement
and is not subsequently reversed. Impairment losses
recognised are allocated first to reduce the carrying value of
the goodwill the business relates to, and then to reduce the
carrying value of the other assets of that business on a pro
rata basis.
impairment excluding inventories, investment
properties and deferred tax assets
non-financial assets
The carrying amounts of the Group’s non-financial assets,
other than inventories, investment property and deferred
tax assets, are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such
indication exists, then the asset’s recoverable amount is
estimated. For goodwill, and intangible assets that have
indefinite useful lives or that are not yet available for use, the
recoverable amount is estimated each year at the same time.
The recoverable amount of an asset or cash generating
unit is the greater of its value in use and its fair value
less costs to sell. In assessing value in use, the estimated
future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks
specific to the asset. For the purpose of impairment
testing, assets that cannot be tested individually are
grouped together into the smallest group of assets that
generate cash inflows from continuing use that are largely
independent of the cash inflows of other assets or groups
of assets (the “cash generating unit”). The goodwill
acquired in a business combination, for the purpose of
impairment testing, is allocated to cash generating units
(“CGU”). Subject to an operating segment ceiling test,
for the purposes of goodwill impairment testing, CGUs to
which goodwill has been allocated are aggregated so that
F
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54
Annual Report and Accounts 2019
55
plc
plc
the level at which impairment is tested reflects the lowest
level at which goodwill is monitored for internal reporting
purposes. Goodwill acquired in a business combination is
allocated to groups of CGUs that are expected to benefit
from the synergies of the combination.
An impairment loss is recognised if the carrying amount
of an asset or its CGU exceeds its estimated recoverable
amount. Impairment losses are recognised in profit or
loss. Impairment losses recognised in respect of CGUs
are allocated first to reduce the carrying amount of any
goodwill allocated to the units, and then to reduce the
carrying amounts of the other assets in the unit (group of
units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, impairment losses recognised
in prior periods are assessed at each reporting date for
any indications that the loss has decreased or no longer
exists. An impairment loss is reversed if there has been a
change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent
that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had
been recognised.
contingent consideration
Any contingent consideration to be transferred by the
Group is recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent
consideration that is deemed to be an asset or liability are
recognised in accordance with IFRS3, in profit and loss.
property, plant and equipment
Property, plant and equipment are stated at cost, net of
depreciation and any provision for impairment.
Depreciation is provided on all property, plant and
equipment at rates calculated to write off the cost less
estimated residual value of each asset on a straight-line
basis over its expected useful economic life, as follows:
Freehold buildings
20 – 50 years
plant and machinery
between 3 and 6 years
No depreciation is provided on freehold land.
The carrying value of property, plant and equipment
is reviewed for impairment if events or changes in
circumstances indicate the carrying value may not be
recoverable.
investment property
intangible assets – computer software
provisions
Investment properties are properties or land which are held
either to earn rental income or for capital appreciation or
for both. Investment properties are stated at fair value and
are reviewed on an annual basis with any revision to the
valuation taken to the profit and loss account.
intangible assets – customer relationships, order
backlog, technology.
In accordance with IFRS 3, on the acquisition of subsidiary
companies the Group assesses the identification of intangible
assets acquired which are either separate or arise from
contractual or other legal rights. These assets are recognised
as intangible assets and are amortised over the period of
future benefit to the Group. The estimated useful economic
lives of these assets from the date of acquisition are:
customer relationships between 4 and 10 years
order backlog
between 1 and 4 years
technology
5 years
intangible assets – development costs
The Quixant Group incurs significant expenditure on the
research and development of new computer products and
enhancements. The internally generated intangible asset
arising from the Company’s development is recognised
only if the Company can demonstrate all of the following
conditions:
• The technical feasibility of completing the intangible
asset so that it will be available for use or sale;
• The intention to complete the intangible asset and use
or sell it;
• The ability to use or sell the intangible asset;
• The probability that the asset created will generate
future economic benefits;
• The availability of adequate technical, financial and
other resources to complete the development; and
• The ability to measure reliably the expenditure
attributable to the intangible asset during its
development.
Development costs not meeting these criteria and all
research costs are expensed in the Consolidated Income
Statement as incurred. Capitalised development costs are
amortised on a straight-line basis over their expected useful
economic lives of five years once the related software
product or enhancement is available for use.
Computer software is stated at cost, net of amortisation
and any provision for impairment.
Amortisation is provided on all computer software at rates
calculated to write off the cost less estimated residual
value of each asset on a straight-line basis over its expected
useful economic life, as follows:
computer software
between 3 and 5 years
The carrying value of computer software is reviewed for
impairment if events or changes in circumstances indicate
the carrying value may not be recoverable.
inventories
Inventories, which comprise goods held for resale, are
stated at the lower of cost and net realisable value. Cost
includes all costs in acquiring the inventories and bringing
each product to its present location and condition. Net
realisable value represents the estimated selling price and
costs to be incurred in marketing, selling and distribution.
Inventory provisions are made where there is doubt as to
the recoverability of the value of specific stock items.
Foreign currencies
Transactions denominated in foreign currencies are
translated into the functional currency of the relevant
operation at the rates ruling at the dates of transactions.
Monetary assets and liabilities denominated in foreign
currencies at the Balance Sheet date are translated at the
rates ruling at that date. Non-monetary assets and liabilities
that are measured in terms of historical cost in a foreign
currency are translated using the exchange rate at the date
of the transaction.
On consolidation, results of overseas subsidiaries are
translated using the average exchange rate for the period,
unless exchange rates fluctuate significantly. The Balance
Sheets of overseas subsidiaries are translated to the Group’s
presentational currency, US Dollars, using the closing
period-end rate. Exchange differences arising, if any, are
taken to a translation reserve. Such translation differences
would be reclassified to profit and loss in the period in
which the operation is disposed of.
Provisions are recognised when there is a present legal or
constructive obligation as a result of past events, for which
it is probable that an outflow of economic benefit will be
required to settle the obligation, and where the amount
of the obligation can be reliably measured. Provisions are
determined by discounting the expected future cash flows at
a pre-tax rate that reflects the current market assessment of
the time value of money and the risks specific to the liability.
share capital and share premium
Share issue costs are incremental costs directly attributable
to the issue of new shares or options and are shown as a
deduction, net of tax, from the proceeds. Any excess of the
net proceeds over the nominal value of any shares issued is
credited to the share premium account. Where any Group
company purchases the Company’s equity share capital
(treasury shares), the consideration paid, including any
directly attributable incremental costs (net of income taxes),
is deducted from equity attributable to the Company’s
equity holders until the shares are cancelled or reissued.
Where such ordinary shares are subsequently reissued,
any consideration received, net of any directly attributable
incremental transaction costs and the related income tax
effects, is included in equity attributable to the Company’s
equity holders.
leased assets
In prior years, assets leased under operating leases are
not recorded in the statement of financial position. Rental
payments are charged directly to the income statement
in the period in which they are incurred. Lease incentives,
primarily up-front cash payments or rent-free periods, are
spread over the period of the lease term. Payments made
to acquire operating leases are treated as prepaid lease
expenses and amortised over the life of the lease. The land
and buildings element of property leases are considered
separately for the purposes of the lease classification.
The Group has adopted IFRS 16 using the modified
retrospective approach from 1 January 2019 and has not
restated comparatives for the 2018 reporting period, as
permitted under the specific transitional provisions in the
standard. The reclassifications and the adjustments arising
from the new leasing rules are therefore recognised in
retained earnings at 1 January 2019. In adopting IFRS 16,
the Group has taken advantage of practical expedients
permitted by the standard, namely the use of a single
discount rate to a portfolio of leases with reasonably similar
characteristics and the accounting for operating leases
with a remaining lease term of less than 12 months as at
1 January 2019 as short-term leases.
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57
plc
plc
On adoption of IFRS 16, the group recognised lease
liabilities in relation to leases which had previously been
classified as ‘operating leases’ under the principles of IAS
17 Leases. These liabilities were measured at the present
value of the remaining lease payments, discounted
using the lessee’s incremental borrowing rate as of 1
January 2019. The weighted average lessee’s incremental
borrowing rate applied to the lease liabilities on 1 January
2019 was 5%. The right-of-use assets are initially measured
at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before
the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove
the asset or to restore the site on which it is located less
any lease incentives received. The right-of-use asset is
subsequently depreciated using the straight-line method
from the commencement date to the end of the lease term.
The impact of adopting IFRS 16 at 1 January 2019 was to
recognize a right of use asset of $1.6 million and a lease
liability of $1.6 million.
income tax
The charge for current income tax is based on the results
for the year as adjusted for items which are not taxed or
disallowed. It is calculated using tax rates that have been
enacted or substantively enacted by the reporting date.
Research and Development Expenditure Credit (RDEC) and
Patent Box claims have been available to UK companies
on qualifying expenditure incurred since 2013 (RDEC) and
2016 (Patent Box). Where UK companies expect to elect for
RDEC or qualify for Patent Box relief, the amount receivable
reduces the tax payable and is credited to the tax charge in
profit and loss.
Deferred income tax is accounted for using the liability
method in respect of temporary differences arising from
differences between the tax bases of certain assets and
liabilities and their carrying amounts in the financial
statements.
In principle, deferred tax liabilities are recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable
profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference is due to
goodwill arising on a business combination or from an
asset or liability, the initial recognition of which does not
affect either taxable or accounting income.
Deferred tax is charged or credited in the Profit and
Loss account or in Other Comprehensive Income, except
when it relates to items credited or charged directly to
Shareholders’ Equity, in which case the deferred tax is also
dealt with in Shareholders’ Equity.
Financial assets
The Group considers a financial asset to be in default
when the debtor is unlikely to pay its credit obligations
to the Group in full, without recourse by the Group to
actions such as realising security (if any is held); or the
financial asset is more than 90 days past due. The Group’s
financial assets fall into the categories set out below, with
the allocation depending to an extent on the purpose for
which the asset was acquired. Unless otherwise indicated,
the carrying amounts of the Group’s financial assets are a
reasonable approximation of their fair values.
• Trade receivables: Trade receivables do not carry
interest and are stated at their fair value as reduced by
allowances for estimated irrecoverable amounts.
• Cash and cash equivalents: Cash and cash equivalents
in the Statement of Financial Position comprise cash at
bank and in hand, short-term deposits and other short-
term liquid investments.
In the Cash Flow Statement, cash and cash equivalents
comprise cash and cash equivalents as defined above, net
of bank overdrafts.
Financial liabilities
All of the Group’s financial liabilities are classified as
financial liabilities carried at amortised cost. The Group
does not use derivative financial instruments or hedge
account for any transactions.
Unless otherwise indicated, the carrying amounts of the
Group’s financial liabilities are a reasonable approximation of
their fair values. Financial liabilities include the following items:
• Trade payables and other short-term monetary liabilities,
which are recognised at their fair value, are subsequently
measured at amortised cost, using the effective interest
method. Trade payables and accrued liabilities with
a short duration are not discounted, as the carrying
amount is a reasonable approximation of fair value.
• Bank borrowings, which are initially, recognised at fair
value net of any transaction costs directly attributable
to the issue of the instrument. Such interest-bearing
liabilities are subsequently measured at amortised cost
using the effective interest rate method, which ensures
that any interest expense over the period to repayment
is at a constant rate on the balance of the liability
carried in the consolidated Statement of Financial
Position. Interest expense in this context includes initial
transaction costs and premiums payable on redemption,
as well as any interest or coupon payable while the
liability is outstanding.
pension
The Group operates a defined contribution scheme to the
benefit of its employees. Contributions payable are charged
to income in the year they are payable.
earnings per share
The Group presents basic and diluted earnings per share
("EPS") data for its ordinary shares. Basic EPS is calculated
by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted average
number of ordinary shares outstanding during the reporting
period. Diluted EPS is determined by adjusting the weighted
average number of ordinary shares outstanding for the
effects of all potential dilutive ordinary shares.
dividends
Dividends are recorded in the financial statements in the
period in which they are approved by the Company’s share-
holders. Interim dividends are recorded in the financial state-
ments in the period in which they are approved and paid.
determination and presentation of operating
segments
The Quixant Group determines and presents operating
segments based on the information that internally is
provided to the executive management team, the body
which is considered to be the Quixant Group’s Chief
Operating Decision Maker (“CODM”).
An operating segment is a component of the Quixant
Group that engages in business activities from which it may
earn revenues and incur expenses, including revenues and
expenses that relate to transactions with any of the Quixant
Group’s other components. The operating segment’s
operating results are reviewed regularly by the CODM to
make decisions about resources to be allocated to the
segment to assess its performance, and for which discrete
financial information is available.
share-based payments
The grant date fair value of share-based payments awards
granted to employees is recognised as an employee
expense, with a corresponding increase in equity, over
the period in which employees become unconditionally
entitled to the awards. The fair value of the awards granted
is measured using an option valuation model, taking into
account the terms and conditions upon which the awards
were granted. The amount recognised as an expense is
adjusted to reflect the actual number of awards for which
the related service and non-market vesting conditions are
expected to be met, such that the amount ultimately
recognised as an expense is based on the number of
awards that do meet the related service and non-market
performance conditions at the vesting date. For share-
based payment awards with non-vesting conditions, the
grant date for fair value of the share-based payment is
measured to reflect such conditions and there is no true-up
for differences between expected and actual outcomes.
alternative performance measures
The Directors consider that disclosing alternative
performance measures enhances shareholders’ ability to
evaluate and analyse the underlying financial performance
of the Group. They have identified adjusted profit
before tax (adjusted PBT) as a measure that enables the
assessment of the performance of the Group and assists
in financial, operational and commercial decision-making.
In adjusting for this measure the directors have sought
to eliminate those items of income and expenditure
that do not specifically relate to the normal operational
performance of the Group in a specific year. The table
below reconciles PBT to adjusted PBT identifying those
reconciling items of income and expense.
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pbt reconciliation
PBT capital and Adjusted PBT for the current and prior year have been derived as follows:
pbt
3. business and geographical segMents
profit for the year
Adding back:
Taxation expense
pbt
adjustments:
Amortisation of customer relationships and order backlog1
Share-based payments expense2
Loss on disposal of subsidiary3
IDS acquisition costs3
Restructuring cost3
adjusted pbt
1. The amortisation of customer relationships and order backlog
has been excluded as it is not a cash expense to the Group.
2. Share-based payments expense has been excluded as they are
not a cash-based expense.
2019
$000
8,316
1,102
9,418
663
243
124
63
169
10,680
2018
$000
14,156
177
14,333
757
111
—
—
3,036
18,237
3. Other items of income and expense – where other items
of income and expense occur in a particular year and their
inclusion in PBT means that a year on year comparison of year
on year results is not on a consistent basis the directors will
exclude them from the adjusted numbers. During the years
under review the directors have excluded the costs arising
from restructuring costs from the closure of the UK
warehouse, the loss on disposing of Densitron Nordic and the
acquisition costs of buying IDS due to their incomparability
with the previous year.
2. acQuisitions oF subsidiary
ids control solutions limited
The identifiable assets acquired and liabilities assumed were:
acquiree’s net assets at the acquisition date:
Property, Plant and Equipment
Inventories
Other receivables – prepayments
Other payables – deferred income
intangible assets acquired:
Customer relationships
Intellectual Property
Deferred tax on intangible assets acquired
Total net assets acquired
Consideration paid in cash
Goodwill on acquisition
$000
12
253
13
(202)
76
1,011
883
(332)
1,648
2,392
744
On 1 July 2019, the Group acquired the entire share
capital of IDS Control Solutions Limited for £2,392k in cash,
using funds from internal resources. IDS Control Solutions
Limited is a provider of products to the broadcast industry
and the products will be used to further Densitron’s
growth in the broadcast sector. The business is growing
and profitable. Acquisition costs, mainly legal expenses,
of $63,000 are shown in the profit and loss account for
2019. The intangible assets acquired have been valued by
an external valuer and the goodwill is attributable to the
skills of the workforce and the synergies with the existing
Densitron business. Assets acquired, consideration paid and
goodwill on acquisition are shown below.
For the six months ended 31 December 2019, IDS
contributed revenue of $885,000 and profit before tax and
amortisation of acquired intangibles of $242,000 to the
Group’s results. If the acquisition had occurred on
1 January 2019, management estimates that consolidated
revenue would have been $93.2m, and consolidated profit
before tax for the year would have been $9.5m, after
amortisation of acquired intangibles of $492,000.
In determining these amounts, management has assumed
that the fair value adjustments, determined provisionally,
that arose on the date of acquisition would have been the
same if the acquisition had occurred on 1 January 2019.
59
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The chief operating decision maker in the organisation is
an executive management committee comprising the Board
of Directors. The segmental information is presented in a
consistent format with management information.
The Group assesses the performance of the segments based
on a measure of revenue and PBT. The operating segments
applicable to the Group are as follows:
2019
Revenue from products
Profit before tax
balance sheet
Assets
Liabilities
net assets
capital expenditure
depreciation/amortisation
2018
Revenue from products
Profit before tax
balance sheet
Assets
Liabilities
net assets
capital expenditure
depreciation/amortisation
• Quixant - Two customers each accounted for over 10%
of revenues in 2019, one accounted for 18.2% (2018:
15.2%) and another accounted for 16.9% (2018: 20.3%).
• densitron - the acquisition of IDS has been assessed and
it has been determined that it should be included in the
Densitron segment because the nature of the business,
the products that are sold and the market that the
business operates in are all consistent with that segment.
Quixant
$000
densitron
$000
56,1691
7,980
72,424
11,560
60,864
5,147
2,627
77,6231
12,941
68,963
14,636
54,327
3,607
2,546
36,151
1,449
14,221
9,798
4,423
637
225
37,527
2,104
15,154
10,048
5,106
482
199
total
$000
92,320
9,429
86,645
21,358
65,287
5,784
2,852
115,150
15,045
84,117
24,684
59,433
4,089
2,745
1 2019 Quixant revenue from products splits into Gaming Platforms $46,568,000 (2018: $62,549,000)
and Gaming Monitors $9,601,000 (2018: $15,074,000). Gaming Monitors also splits into Buttondecks
$5,429,000 (2018: $6,404,000) and Monitors $4,172,000 (2018: $8,676,000).
4. analysis oF turnoVer
by primary geographical market
Asia
Australia
UK
Europe excl. UK
North America
Other
The above analysis includes sales to individual countries in excess of 10% of total turnover of:
USA
2019
$000
2018
$000
15,517
5,452
5,297
18,533
46,693
828
92,320
2019
$000
44,148
16,255
8,790
8,275
26,273
54,089
1,468
115,150
2018
$000
51,306
Annual Report and Accounts 2019plcplc
60
5. eXpenses and auditor's reMuneration
included in profit/loss are the following:
included in operating profit:
Restructuring cost
Gain on foreign exchange transactions
Research and development expenditure
Of which capitalised
Depreciation of owned assets
Amortisation of intangible assets
auditor's remuneration:
Audit of these financial statements
Amounts receivable by the Company’s auditor and its associates in respect of:
Audit of financial statements of subsidiaries of the company
Taxation and other services
Other services
6. staFF nuMbers and costs
The average number of persons employed by the Group (including
Directors) during the year, analysed by category, was as follows:
Production and manufacturing
Research and customer service
Sales and marketing
Administrative
The aggregate payroll costs of these persons was as follows:
Wages and salaries
Share-based payments (See note 21)
Social security costs
Contributions to defined contribution plans
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7. director's reMuneration
eXecutiVe directors
N C L Jarmany
G P Mullins
C-T Lin
J F Jayal
G L Millward
non-eXecutiVe directors
M J Peagram
G van Zwanenberg
G A Y Hudson
salary/Fee
2019
$000
share-based
payment
2019
$000
pension
contributions
2019
$000
138
132
218
387
305
1,180
114
59
53
1,406
—
—
—
32
21
53
—
—
—
53
14
13
4
13
—
44
—
1
1
46
total
2019
$000
152
145
222
432
326
1,277
114
60
54
1,505
Total
2018
$000
164
159
264
420
121
1,128
113
61
54
1,356
In 2018, A C Preddy exercised options over 39,000 shares
realising a theoretical gain of $199,000, she has not sold
the shares. J F Jayal was granted options over 65,000
shares in 2018 at an exercise price of 408.5p, G L Millward
was granted options over 100,000 shares in 2018 at an
exercise price of 430p. The options are exercisable subject
to the growth of the diluted earnings per Ordinary Share
(as set out in each of the audited accounts for the years
ending 31 December 2018, 2019 and 2020) being equal to
or greater than 10 per cent in each financial year.
Pension contributions are paid to executive directors at
10% of salary, except for Jon Jayal who has elected to
only be paid £10,000 a year as pension contribution from
the company and the rest of the pension contribution to
be added to his base salary, and Guy Millward who has
elected to have all his company pension contribution added
to his salary. In both cases the pension contribution has
been reduced by the employers’ national insurance that
is payable by the company for the amount added to base
salary for each individual. Pension contributions are paid
to non-executive directors, except M J Peagram, at 5%.
No other benefits are paid. Bonuses are paid when profit
targets have been met, no performance bonuses were paid
in 2019 for 2018 performance and none are payable for
2019’s financial performance.
There were no directors’ advances, credits or guarantees
outstanding at 31 December 2019 or 2018.
8. Finance eXpense
Total interest expense on financial liabilities measured at amortised cost
total finance expense
2019
$000
136
136
2018
$000
251
251
2019
$000
169
4
6,568
(2,165)
527
2,325
2019
$000
293
107
—
2018
$000
3,036
196
6,432
(2,558)
548
2,190
2018
$000
191
64
26
2019
number
2018
Number
33
94
39
57
223
2019
$000
14,502
243
986
534
16,265
36
84
37
46
203
2018
$000
13,922
111
1,582
689
16,304
Annual Report and Accounts 2019plcplc
62
9. taXation
recognised in the profit and loss account
current tax expense
UK corporation tax
Foreign tax
Adjustments for prior years
current tax expense
deferred tax (credit)
Origination and reversal of temporary differences
Adjustments for prior years
deferred tax (credit)
total tax expense
reconciliation of effective tax rate
profit for the year
Total taxation expense
profit excluding taxation
tax using the uk corporation tax rate of 19% (2018: 19%)
Non-deductible expenses
Enhanced research and development claim
Patent box tax relief
Change in deferred tax rate to 17% (2018: 18%)
Overseas tax in excess of standard UK rate
Exercise of share options
Unrelieved losses
Other
Over provided in prior years
total taxation expense
Adjustments for prior years mainly reflect the deductions
allowed for share option exercises by Taiwan branch
employees and double taxation relief for Taiwan taxes
which had not been previously claimed.
Factors that may affect future tax charges
A reduction in the UK corporation tax rate from 21%
to 20% (effective from 1 April 2015) was substantively
enacted on 2 July 2013. Further reductions to 19%
(effective from 1 April 2017) and to 18% (effective 1 April
2020) were substantively enacted on 26 October 2015,
and an additional reduction to 17% (effective 1 April 2020)
was enacted on 15 September 2016. This reduction was
then reversed and a rate of 19% maintained from 1 April
2020, this was substantively enacted on 17 March 2020.
2019
$000
211
1,160
(142)
1,229
(92)
(35)
(127)
1,102
2019
$000
8,316
1,102
9,418
1,789
18
(496)
(340)
(4)
419
(2)
(58)
(47)
(177)
1,102
2018
$000
187
1,158
(1,037)
308
(131)
—
(131)
177
2018
$000
14,156
177
14,333
2,723
69
(944)
(372)
(53)
56
(135)
(61)
(69)
(1,037)
177
This does not result in any significant change to these
figures. The deferred tax liability at 31 December 2019 has
been calculated based on these rates.
The Group has tax losses carried forward in certain UK
Companies of $2.9m. The tax effect of these losses has not
been included as an asset in the group financial statements
because their recovery is uncertain as other tax allowances
can be used before losses.
10. earnings per ordinary share (eps)
earnings
Earnings for the purposes of basic and diluted EPS being net profit attributable to equity shareholders
8,316
14,156
2019
$000
2018
$000
number of shares
Weighted average number of ordinary shares for the purpose of basic EPS
Effect of dilutive potential ordinary shares:
Share options
weighted number of ordinary shares for the purpose of diluted eps
Basic earnings per share
Diluted earnings per share
number
Number
66,404,468
66,239,967
499,053
380,383
66,903,521
66,620,350
$0.1252
$0.1243
$0.2137
$0.2125
calculation of adjusted diluted earnings per share:
$000
$000
earnings
Earnings for the purposes of basic and diluted EPS being net profit attributable to equity shareholders
8,316
14,156
adjustments
Share-based payment expense
Amortisation of customer relationships and order backlog
Loss on disposal of Densitron Nordic
IDS acquisition costs
Restructuring costs
Tax effect of adjustments
Adjusted earnings
adjusted diluted earnings per share
243
663
124
63
169
9,578
(239)
9,339
111
757
—
—
3,036
18,060
(764)
17,296
$ 0.1396
$ 0.2596
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11. property, plant and eQuipMent – group
11. property, plant and eQuipMent – coMpany
Land and
Buildings
$000
Plant and
Equipment
$000
cost
balance at 1 January 2018
Additions
Disposals
Effect of movements in foreign exchange
balance at 31 december 2018
balance at 1 January 2019
Additions
Disposals
Effect of movements in foreign exchange
balance at 31 december 2019
depreciation
balance at 1 January 2018
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
balance at 31 december 2018
balance at 1 January 2019
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
balance at 31 december 2019
net book value
At 1 January 2018
At 31 December 2018 and 1 January 2019
at 31 december 2019
5,628
90
(35)
(112)
5,571
5,571
58
—
(24)
5,605
424
125
(35)
(8)
506
506
123
—
(2)
627
5,204
5,066
4,978
Total
$000
8,236
632
(77)
(149)
8,642
8,642
316
(285)
31
8,704
2,608
542
(42)
(37)
3,071
3,071
258
(285)
55
3,099
1,659
2,083
423
(37)
(12)
2,033
2,033
404
(280)
(6)
2,151
949
1,038
948
548
(72)
(21)
2,538
2,538
527
(280)
(8)
2,778
6,153
6,104
5,926
cost
balance at 1 January 2018
Additions
Disposals
Effect of movements in foreign exchange
balance at 31 december 2018
balance at 1 January 2019
Additions
Effect of movements in foreign exchange
balance at 31 december 2019
depreciation
balance at 1 January 2018
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
balance at 31 december 2018
balance at 1 January 2019
Depreciation charge for the year
balance at 31 december 2019
net book value
At 1 January 2018
At 31 December 2018 and 1 January 2019
at 31 december 2019
Land and
Buildings
$000
Plant and
Equipment
$000
Total
$000
3,530
1,653
5,183
74
(35)
(64)
3,505
3,505
44
—
357
(34)
(19)
1,957
1,957
121
66
3,549
2,144
431
(69)
(83)
5,462
5,462
165
66
5,693
293
81
(35)
(6)
333
333
78
411
3,237
3,172
3,138
1,191
1,484
230
(33)
(10)
1,378
1,378
209
1,587
462
579
557
311
(68)
(16)
1,711
1,711
287
1,988
3,699
3,751
3,695
65
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I
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A
N
C
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I
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A
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S
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12. intangible assets – group
impairment testing
key assumptions
cost
balance at 1 January 2018
Additions – internally developed
Additions – externally purchased
Disposals
Effect of movements in foreign exchange
balance at 31 december 2018
balance at 1 January 2019
Additions – internally developed
Additions – externally purchased
balance at 31 december 2019
amortisation and impairment
balance at 1 January 2018
Amortisation for the year
Disposals
Effect of movements in foreign exchange
balance at 31 december 2018
balance at 1 January 2019
Amortisation for the year
balance at 31 december 2019
net book value
At 1 January 2018
At 31 December 2018 and 1 January 2019
at 31 december 2019
customer
relationships
technology
and order
backlog
$000
internally
generated
capitalised
development
costs
$000
computer
software
$000
goodwill
$000
6,950
5,201
1,072
—
—
—
(11)
6,939
6,939
—
744
7,683
—
—
—
—
—
—
—
—
6,950
6,939
7,683
—
—
—
—
5,201
5,201
—
1,895
7,096
2,050
757
—
—
2,807
2,807
663
3,470
3,151
2,394
3,626
—
899
—
(17)
1,954
1,954
—
432
2,386
429
112
—
(9)
532
532
311
843
643
1,422
1,543
6,059
2,558
—
(166)
—
8,451
8,451
2,165
—
10,616
2,525
1,321
(166)
(12)
3,668
3,668
1,351
5,019
3,534
4,783
5,597
total
$000
19,282
2,558
899
(166)
(28)
22,545
22,545
2,165
3,071
27,781
5,004
2,190
(166)
(21)
7,007
7,007
2,325
9,332
14,278
15,538
18,449
Goodwill has been allocated to Cash Generating Units
(CGUs) as follows:
The following key assumptions have been adopted in the
calculations:
Quixant Gaming
IDS
Densitron Europe
Densitron US
Densitron France
Densitron Japan
goodwill
2019
$000
1,363
744
2,873
2,076
485
142
7,683
2018
$000
1,363
-
2,873
2,076
485
142
6,939
The Group tests goodwill annually for impairment or more
frequently if there are indications that goodwill might
be impaired. The recoverable amounts of the CGUs are
determined from the higher or the fair value less costs to
sell and the calculations of value in use.
Value-in-use calculations have been prepared for each
CGU by discounting the cash flow projections included
in the financial budgets prepared by management and
approved by the Board for 2020, together with a four-year
forecast to 2024. The budgets were put together taking
into account the planned roadmaps for the business and
any specific market condition in which the cash generating
unit operates. The growth rates used do not exceed the
long-term average growth rates for the regions in which
the CGUs operate. The cash flows have been discounted
using discount rates appropriate for each CGU, and these
are reviewed annually.
We have changed the methodology for assessing
impairment this year for the CGUs in the Densitron division.
We have assessed the individual CGUs (the individual sub-
divisions of Densitron) separately, rather than assessing
them as a Group of CGUs because for certain CGUs, we
have noted that any reasonably possible changes in key
assumptions could result in an impairment.
The annual impairment review indicated that no
impairment of goodwill is necessary at 31 December 2019
or 31 December 2018.
Quixant gaming cgu
• The revenue growth rates and increase in operating
costs adopted for the years 2020-2024 were 0% (2018:
1%) and 2% (2018: 1%) respectively in order to take a
conservative valuation approach;
• The terminal growth rate was estimated to be 0%
(2018: 0%) for the same reason;
• The estimated pre-tax market participant weighted
average cost of capital of the cash generating unit was
calculated with reference to its risk profile and calculated
to be 13.22% (2018: 7.44%). This is the discount rate
that has been applied in determining the value in use.
ids cgu
• The revenue growth rate adopted for the years 2020-24
were 10% reflecting higher recent growth and expected
future growth from using Densitron’s global sales
capability. The increase in operating costs for the years
2020-24 have been estimated to be 2% to allow for
inflation;
• The terminal growth rate was estimated to be 0%,
to take a conservative approach;
• The estimated pre-tax market participant weighted
average cost of capital of the cash generating unit
was calculated with reference to its risk profile and
calculated to be 15%. This is the discount rate that has
been applied in determining the value in use.
densitron europe cgu
• The revenue growth rate adopted for the years 2020-24
were 1% (2018: 1%), with broadcast revenue growth
expected to offset legacy revenue decline. The increase
in operating costs for the years 2020-24 have been
estimated to be 2% (2018: 2%) to allow for inflation;
• The terminal growth rate was estimated to be 1% in
order to take a conservative valuation approach;
• Trading gross margins were assumed to be in line with
2019 operating performance, disclosure of the actual
margin is commercially sensitive so is omitted here;
• The estimated pre-tax market participant weighted
average cost of capital of the cash generating unit
was calculated with reference to its risk profile and
calculated to be 12.86%. This is the discount rate that
has been applied in determining the value in use.
67
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densitron us cgu
sensitiVity to changes in assuMptions
densitron France cgu
densitron Japan cgu
The headroom on the Densitron France CGU on the
assumptions above was $71,000. A sensitivity analysis has
been performed assuming a 1% reduction in growth rate
and long-term growth rate, a 1% increase in the discount
rate and a 1% reduction in margins, in order to assess the
impact of reasonable possible changes to the assumptions
used in the impairment review. A 1% reduction in growth
rate and long-term growth rate would result in an
impairment of $83,000, a 1% increase in the discount rate
would not result in an impairment, and a 1% reduction in
margins would result in an impairment of $120,000.
If the forecast assumed for 2020 and future periods did not
materialise then an impairment could result.
The headroom on the Densitron Japan CGU on the
assumptions above was $385,000. A sensitivity analysis has
been performed assuming a 1% reduction in growth rate
and long-term growth rate, a 1% increase in the discount
rate and a 1% reduction in margins, in order to assess the
impact of reasonable possible changes to the assumptions
used in the impairment review. A 1% reduction in growth
rate and long-term growth rate would not result in an
impairment, a 1% increase in the discount rate would not
result in an impairment, and a 1% reduction in margins
would not result in an impairment. If the forecast assumed
for 2020 and future periods did not materialise then an
impairment could result.
Quixant gaming and ids cgus
Sensitivity analysis was carried out for Quixant Gaming and
IDS CGUs. The anticipated growth rates for each CGU were
reduced, terminal values were halved and the discount rate
for each cash generating unit was increased. In all cases,
the value in use exceeded the carrying value. Following
the sensitivity analysis that has been carried out for these
CGUs, there were no areas that were identified as being
particularly sensitive for either 2019 or 2018.
densitron europe cgu
The headroom on the Densitron Europe CGU on the
assumptions above was $0. A sensitivity analysis has been
performed assuming a 1% reduction in growth rate and
long-term growth rate, a 1% increase in the discount rate
and a 1% reduction in margins, in order to assess the
impact of reasonable possible changes to the assumptions
used in the impairment review. A 1% reduction in growth
rate and long-term growth rate would result in an
impairment of $500,000, a 1% increase in the discount
rate would result in an impairment of $348,000, and a
1% reduction in margins would result in an impairment
of $794,000. If the forecast assumed for 2020 and future
periods did not materialise then an impairment could
result.
densitron us cgu
The headroom on the Densitron US CGU on the
assumptions above was $697,000. A sensitivity analysis has
been performed assuming a 1% reduction in growth rate
and long-term growth rate, a 1% increase in the discount
rate and a 1% reduction in margins, in order to assess the
impact of reasonable possible changes to the assumptions
used in the impairment review. A 1% reduction in growth
rate and long-term growth rate would not result in an
impairment, a 1% increase in the discount rate would not
result in an impairment, and a 1% reduction in margins
would result in an impairment of $137,000. If the forecast
assumed for 2020 and future periods did not materialise
then an impairment could result.
• The revenue growth rate adopted for the years 2020-24
were 1% (2018: 1%), with broadcast revenue growth
expected to offset legacy revenue decline. The increase
in operating costs for the years 2020-24 have been
estimated to be 2% (2018: 2%) to allow for inflation;
• The terminal growth rate was estimated to be 1% in
order to take a conservative valuation approach;
• Trading gross margins were assumed to be in line with
2019 operating performance, disclosure of the actual
margin is commercially sensitive so is omitted here;
• The estimated pre-tax market participant weighted
average cost of capital of the cash generating unit
was calculated with reference to its risk profile and
calculated to be 12.76%. This is the discount rate that
has been applied in determining the value in use.
densitron France cgu
• The revenue growth rate adopted for the years 2020-
24 were 0% (2018: 1%), with broadcast revenue
growth equalling legacy revenue decline. The increase
in operating costs for the years 2020-24 have been
estimated to be 2% (2018: 2%) to allow for inflation;
• The terminal growth rate was estimated to be 0% in
order to take a conservative valuation approach;
• Trading gross margins were assumed to be in line with
2019 operating performance, disclosure of the actual
margin is commercially sensitive so is omitted here;
• The estimated pre-tax market participant weighted
average cost of capital of the cash generating unit
was calculated with reference to its risk profile and
calculated to be 12.88%. This is the discount rate that
has been applied in determining the value in use.
densitron Japan cgu
• The revenue growth rate adopted for the years 2020-24
were 1% (2018: 1%), with broadcast revenue growth
expected to offset legacy revenue decline. The increase
in operating costs for the years 2020-24 have been
estimated to be 1% (2018: 2%) to allow for inflation;
• The terminal growth rate was estimated to be 1% in
order to take a conservative valuation approach;
• Trading gross margins were assumed to be in line with
2019 operating performance, disclosure of the actual
margin is commercially sensitive so is omitted here;
• The estimated pre-tax market participant weighted
average cost of capital of the cash generating unit
was calculated with reference to its risk profile and
calculated to be 12.85%. This is the discount rate that
has been applied in determining the value in use.
69
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A
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E
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S
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t
o
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71
12. intangible assets – coMpany
cost
balance at 1 January 2018
Additions– externally purchased
Effect of movements in foreign exchange
balance at 31 december 2018
balance at 1 January 2019
Additions– externally purchased
balance at 31 december 2019
amortisation
balance at 1 January 2018
Amortisation for the year
Effect of movements in foreign exchange
balance at 31 december 2018
balance at 1 January 2019
Amortisation for the year
balance at 31 december 2019
net book value
At 1 January 2018
At 31 December 2018 and 1 January 2019
at 31 december 2019
13. inVestMent property
Balance at 1 January
Impairment
Effect of movements in foreign exchange
Balance at 31 December
internally
generated
capitalised
development
costs
$000
computer
software
$000
1,060
889
(17)
1,932
1,932
432
2,364
426
107
(9)
524
524
306
830
634
1,409
1,534
3,763
—
—
3,763
3,763
—
3,763
2,338
748
—
3,086
3,086
323
3,409
1,425
677
354
group
coMpany
2019
$000
631
(631)
—
—
2018
$000
674
(43)
631
2019
$000
—
—
—
total
$000
4,823
889
(17)
5,695
5,695
432
6,127
2,764
855
(9)
3,610
3,610
629
4,239
2,059
2,085
1,888
2018
$000
—
—
—
Investment property relates to an area of land owned by
the Group at Blackheath in London. The Group has written
off the previously-booked value of the land as it has failed
to sell the land and failed more than once to get planning
permission to build on the land. Previous valuations were
based on the ability to build on the land which is subject to
a Metropolitan Land Order which restricts this. The land has
on-going costs attached to it which, as it cannot currently
be sold or built on, make it a liability rather than an asset.
The fair value of the investment property was previously
determined by external, independent property valuers,
having appropriate professional qualifications and recent
experience in the location and category of the property
being valued. The previous carrying value is based on
a valuation carried out on 10 May 2013 – an updated
valuation was carried out in 2017 but not used as it relied
on residential planning permission that had failed to be
achieved. In years where an external valuation wasn’t
undertaken directors performed a desktop review to
ascertain the fair value of the investment property.
14. inVestMents in group coMpanies and associated undertakings
The principal subsidiary undertakings in which the Company had an interest in the year were:
company name
Quixant USA Inc
Quixant Gaming Limited
Quixant Italia srl
Densitron Technologies Limited
Quixant UK Limited*
Densitron Corporation of Japan*
Densitron Corporation*
Densitron France**
Densitron Deutschland GmbH**
Densitron Land Ltd*
IDS Control Solutions Limited***
Densitron Nordic Oy**
Quixant Deutschland GmbH
Densitron Embedded D.O.O.*
registered
office of
business
1
2
3
2
2
4
5
6
7
2
2
10
8
9
principal activities
Distribution company
Sales of specialist computer systems
Software development
Holding company
Sales of electronic displays products
Sales of electronic displays products
Sales of electronic display products
Sales of electronic display products
Sales of electronic display products
Property development
Dormant
Sales of electronic displays products
Sales of electronic displays products
Design of electronic displays
class of
shares
held
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
ownership
2019 and
2018
100%
100%
99%
100%
100%
100%
100%
100%
100%
100%
100%/0%
0%/80%
100%
100%
* Subsidiary of Densitron Technologies Limited
5. 2330 Pomona Rincon Road, Corona, CA 92880
** Subsidiary of Densitron UK Limited
*** Subsidiary of Quixant Gaming Limited
6. 3 Rue de Tasmanie, 441115, Basse-Goulaine
7. Airport Business Centre, AM Solnermoos 17, Halbergmoos,
1. 2147 Pama Lane Bldg 6 Las Vegas NV 89119 USA
85399, Germany
2. Aisle Barn, 100 High Street, Balsham, Cambridge CB21 4EP
3. Contrada Case Bruciate, 1, Torrita Tiberina (RM), 00060, Italy
8. Römerstraße 7, D-85661 Forstinning, Germany
ˇ ˇ ˇ ˇ
9. Brnciceva ulica 13, 1231 Ljubljana-Crnuce, Slovenia
4. Aichiya Building 2F, 1-26-2 Omorikita, Ota-ku, Tokyo
10. FMyllypuronitie 1, 00920 Helsinki, Finland
Fixed asset investments
balance at 1 January
Impairment
Acquisitions – Group-settled share-based payments
balance at 31 december
coMpany
2019
$000
11,992
(2,646)
—
9,346
2018
$000
11,982
—
10
11,992
F
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Following the impairment loss recognized, the recoverable amount was equal to the carrying
amount. Therefore any adverse movement in a key assumption would lead to a further impairment.
The key assumptions are the same as those shown in the Densitron CGUs in note 12.
Annual Report and Accounts 2019plcplc
72
73
15. deFerred taX assets and liabilities – group
deFerred taX assets and liabilities – coMpany
recognised deferred tax assets and liabilities
recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Deferred tax assets and liabilities are attributable to the following:
Property, plant and equipment
Intangible assets – capitalised development costs
Intangible assets – acquired in business combinations
Share-based payments
Receivables
Inventory provisions
Other
Net deferred tax (assets)/liabilities
Movement in deferred tax during the year
Property, plant and equipment
Intangible assets – capitalised development costs
Intangible assets – acquired in business combinations
Share-based payments
Receivables
Inventory provisions
Other
Movement in deferred tax during the prior year
Property, plant and equipment
Intangible assets – capitalised development costs
Intangible assets – acquired in business combinations
Share-based payments
Receivables
Inventory provisions
Other
assets
liabilities
2019
$000
—
—
—
(121)
(7)
(67)
(145)
(340)
2018
$000
—
—
—
(93)
(18)
(25)
(100)
(236)
2019
$000
77
762
630
—
—
—
—
2018
$000
100
686
431
—
—
—
(3)
1,469
1,214
1 January
2019
$000
recognised in
profit & loss
$000
31 december
2019
$000
100
686
431
(93)
(18)
(25)
(103)
978
(23)
76
199
(28)
11
(42)
(42)
151
77
762
630
(121)
(7)
(67)
(145)
1,129
1 January
2018
$000
recognised in
profit & loss
$000
31 december
2018
$000
158
582
565
(84)
(18)
(25)
(68)
1,110
(58)
104
(134)
(9)
—
—
(35)
(132)
100
686
431
(93)
(18)
(25)
(103)
978
Property, plant and equipment
Intangible assets – capitalised development costs
Inventories
Share-based payments
Foreign exchange
Deferred tax (assets)/liabilities
Movement in deferred tax during the year
Property, plant and equipment
Intangible assets – capitalised development costs
Share-based payments
Inventories
Foreign exchange
Movement in deferred tax during the prior year
Property, plant and equipment
Intangible assets – capitalised development costs
Share-based payments
Inventories
Foreign exchange
assets
liabilities
2019
$000
—
—
(12)
(118)
(27)
(157)
2018
$000
—
—
(12)
(89)
—
2019
$000
59
54
—
—
—
2018
$000
72
97
—
—
12
(101)
113
181
1 January
2019
$000
recognised in
profit & loss
$000
31 december
2019
$000
72
97
(89)
(12)
12
80
(13)
(43)
(29)
—
(39)
(124)
59
54
(118)
(12)
(27)
(44)
1 January
2018
$000
recognised in
profit & loss
$000
31 december
2018
$000
131
255
(79)
(12)
13
308
(59)
(158)
(10)
—
(1)
(228)
72
97
(89)
(12)
12
80
F
I
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A
N
C
A
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I
S
T
A
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M
E
N
T
S
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N
o
t
e
s
t
o
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16. inVentories
19. other interest-bearing loans and borrowings
Raw materials and consumables
Work in progress
Finished goods
group
coMpany
2019
$000
10,793
63
9,324
20,180
2018
$000
9,792
2,425
7,222
19,439
2019
$000
10,715
63
2,957
13,735
2018
$000
10,715
2,158
1,814
13,735
Raw materials, consumables and changes in finished goods
and work in progress recognised as cost of sales in the year
amounted to $57,759,000 (2018: $77,200,000).
The cost of inventories recognised as an expense includes
$340,000 (2018: $750,000) in respect of write downs of
inventory to net realisable value.
17. trade and other receiV ables
Trade receivables
Amounts receivable from subsidiary undertakings
Other receivables
group
coMpany
2019
$000
2018
$000
19,994
25,912
—
3,908
23,902
—
5,175
31,087
2019
$000
—
36,281
1,254
37,535
2018
$000
—
8,023
1,932
9,955
All trade and other receivables are receivable within
one year and are included as current assets.
A provision of $300,861 has been provided in respect
of potential doubtful debts (expected credit losses) as
at 31 December 2019 (31 December 2018: $234,437).
The directors have considered the nature of the customers,
the historic levels of bad debts and the payment profile of
customer contracts in reaching the value of the expected
credit losses above. See note 24 for further disclosure
regarding the credit quality of the Group's trade debtors.
Management have also considered the expected credit
losses in relation to amounts owed from subsidiary
undertakings and has considered it to be immaterial.
As at 31 December 2019 the following sets out the
trade receivables that were past due but not impaired.
These relate to customers where there is no evidence of
unwillingness or of an inability to settle the debt.
The ageing of these receivables is as follows:
30 – 60 days
61 – 90 days
Over 90 days
18. cash and cash eQuiV alents/ bank oVerdraF ts
Cash and cash equivalents per balance sheet
Cash and cash equivalents per cash flow statements
group
coMpany
2019
$000
5,455
1,180
154
6,790
2018
$000
1,331
422
110
1,864
2019
$000
—
—
—
—
group
coMpany
2019
$000
16,954
16,954
2018
$000
11,082
11,082
2019
$000
1,219
1,219
2018
$000
—
—
—
—
2018
$000
2,456
2,456
This note provides information about the contractual
terms of the Group and Company’s interest-bearing loans
and borrowings, which are measured at cost. For more
information about the Group and Company’s exposure to
interest rate and foreign currency risk, see note 24.
group
coMpany
2019
$000
2018
$000
2019
$000
non-current liabilities
Secured bank loans
current liabilities
Current portion of secured bank loans
terms and debt repayment schedule
currency
nominal
interest rate
year of
Maturity
Loan secured on the Group’s
freehold property in Taiwan
Letters of credit
Factoring
NTD
NTD
Euro
1.45%
2.6% to 2.68%
1.3% over Euribor
2028
2019
2018
738
738
82
82
823
823
530
530
Face
Value
2019
$000
carrying
amount
2019
$000
820
—
—
820
820
—
—
820
738
738
81
81
Face
Value
2018
$000
908
178
267
1,353
2018
$000
823
823
263
263
carrying
amount
2018
$000
908
178
267
1,353
reconciliation of liabilities arising from financing activities
cash Flows
reclassiFication
non-current liabilities
Current liabilities
Non-current liabilities
Current liabilities
2018
$000
823
530
1,353
2017
$000
924
5,811
6,735
$000
(3)
(530)
(533)
(16)
(5,366)
(5,382)
$000
(82)
82
—
(85)
85
—
2019
$000
738
82
820
2018
$000
823
530
1,353
75
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20. trade and other payables
current
Trade payables
Other tax and social security payables
Other payables and accrued expenses
Amounts payable to subsidiary undertakings
21. eMployee beneFits
group
coMpany
2019
$000
2018
$000
2019
$000
2018
$000
12,678
16,744
10,426
11,883
209
4,869
—
421
3,887
—
—
1,729
29
17,756
21,052
12,184
5
1,752
5,517
19,157
22. proVisions
group
balance at 1 January
Provisions made during the year
balance at 31 december
2019
$000
306
37
343
2018
$000
—
306
306
The provision is in respect of long-term employment liabilities in Italy and Japan and is non-current.
The Company has no provisions.
defined contribution plans
share-based payments – group and company
23. capital and reserVes
The Group operates a number of defined contribution
pension plans.
The total expense relating to these plans in the current year
was $534,000 (2018: $689,000).
In 2013 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.
Exercise prices are set out below. 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:
issue 7a
issue 7
issue 6b
issue 6
issue 5
issue 4
issue 3
issue 2
issue 1
Fair value at grant date
£0.885
£1.016
Weighted average share price
Exercise price
Expected volatility
Option life
£2.58
£2.58
40%
£2.96
£2.96
40%
£1.48
£4.30
£4.30
40%
£1.402
£4.085
£4.085
40%
£1.51
£3.90
£3.90
44%
£2.09
£2.09
£2.09
44%
£1.63
£1.63
£1.63
44%
£0.61
£1.37
£1.40
50%
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
Risk-free interest rate
0.90%
0.90%
0.90%
0.90%
0.90%
0.90%
0.90%
0.90%
£0.19
£0.46
£0.49
50%
5 years
0.90%
The fair values at grant date were converted at the
exchange rate on the grant date to give fair values of
$1.15, $1.32, $2.07, $1.96, $5.01, $2.93, $2.43, $0.98
and $0.29 per option. The total expense recognised in
the period in respect of share options is $243,000 (2018:
$111,000).
The number and weighted average exercise prices of share
options are as follows:
Outstanding at the beginning of the year
Granted during the year
Lapsed during the year
Exercised during the year
Outstanding at the end of the year
weighted
average
exercise price
2019
number of
options
2019
Weighted
Average
Exercise Price
2018
£2.63
£2.89
£3.57
£1.97
£2.78
429,068
144,500
(22,000)
(78,778)
472,790
£1.31
£4.22
£2.76
£0.91
£2.63
Number Of
Options
2018
631,198
165,000
(45,830)
(321,300)
429,068
share capital
Fully paid ordinary shares of 0.1p per share
balance at 1 January 2019
Exercise of share options (see note 21)
balance at 31 december 2019
balance at 1 January 2018
Exercise of share options (see note 21)
balance at 31 december 2018
ordinary shares
number
share capital
$000
share premium
$000
66,356,282
78,778
66,435,060
66,034,982
321,300
66,356,282
106
—
106
106
—
106
6,499
199
6,698
6,102
397
6,499
The holders of fully paid 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:
3.1p (2018: 2.6p) per qualifying ordinary share
Total dividends recognised in the year
2019
$000
2,760
2,760
2018
$000
2,315
2,315
77
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24. Financial instruMents – group and coMpany
This note presents information about the Group’s
objectives, policies and processes for measuring and
managing risk, and the Group’s management of capital.
Further quantitative disclosures are included throughout
these consolidated financial statements.
The Board of Directors has overall responsibility for
the establishment and oversight of the Group’s risk
management framework.
The Group’s risk management policies are established to
identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks
and adherence to limits. Risk management policies and
systems are reviewed regularly to reflect changes in market
conditions and the Group’s activities. The Group, through
its training and management standards and procedures,
aims to develop a disciplined and constructive control
environment in which all employees understand their roles
and obligations.
Financial risks
The Group’s activities expose it to a number of financial risks
including credit risk, cash flow risk and exchange rate risk:
credit risk
The Group’s principal financial assets are bank balances and
cash, trade and other receivables. The Group’s credit risk is
primarily attributable to its trade receivables, which were
concentrated in a small number of high-value customer
accounts, but following the acquisition of the Densitron
Group of companies this risk has been reduced. In addition,
operations in emerging or new markets may have a higher
than average risk of political or economic instability and
may carry increased credit risk. In each case the risk to the
Group is the recoverability of the cash flows.
Credit risk on liquid funds is limited because the
counterparties are banks with high credit ratings assigned by
international credit rating agencies. The credit risk on trade
and other receivables is managed by agreeing appropriate
payment terms with customers, obtaining credit agency
ratings of all potential customers, by requiring wherever
possible payment for goods in advance or upon delivery,
and by closely monitoring customers balances due, to
ensure they do not become overdue. In addition careful
consideration is given to operations in emerging or new
markets before the Group enters that market.
The aging of trade receivables at the Balance Sheet date
is set out in note 17.
cash flow risk
Group cash balances and expected cash flow are
monitored on a daily basis to ensure the Group has
sufficient available funds to meet its needs.
exchange rate risk
Group exposure to exchange rate risk includes the
measurement of overseas operations at the relevant
exchange rate and changes in trade payables and
receivables as a result of exchange rate movements.
Daily exchange rate movements are monitored and any
losses or gains incurred are taken to the Profit and Loss
account and reported in the Group’s internal management
information. Before agreeing any overseas transactions
consideration is given to utilising financial instruments such
as hedging and forward purchase contracts.
liquidity risk
Group policy is to maintain a strong capital base so as to
enhance investor, creditor and market confidence. Surplus
funds are placed on deposits with cash balances available
for immediate withdrawal if required.
capital ManageMent
group and company
The capital management policy is to maintain a strong
capital base so as to enhance investor, creditor and market
confidence. The Board’s objective is to safeguard the
Group’s ability to continue as a going concern, to sustain
the future development of the business and to provide
returns for shareholders, whilst controlling the cost of
capital.
The Group monitors capital on the basis of the carrying
amount of equity, less cash and cash equivalents as
presented on the face of the Balance Sheet.
In order to maintain or adjust the capital structure the
Group may adjust the amount of dividends paid to
shareholders, issue new shares or sell assets.
There were no changes in the Group’s approach to capital
management during the period. Neither the Company nor
any of its subsidiaries are subject to externally imposed
capital requirements.
Total equity
Cash and cash equivalents
Capital
Total equity
Other financial liabilities
Total financing
Financial assets and liabilities
group
coMpany
2019
$000
65,288
(16,954)
48,334
2018
$000
59,433
(11,082)
48,351
2019
$000
54,408
(1,219)
53,189
group
coMpany
2019
$000
65,288
820
66,108
2018
$000
59,433
1,353
60,786
2019
$000
54,408
819
55,227
2018
$000
23,048
(2,456)
20,592
2018
$000
23,048
1,086
24,134
The Group’s activities are financed by cash at bank and bank borrowings.
credit risk
exposure to credit
The carrying amount of financial assets represents the maximum
credit exposure. The maximum exposure to credit risk at the reporting date was:
Cash and cash equivalents
Trade and other receivables excluding prepayments
group
coMpany
2019
$000
16,954
19,994
36,948
2018
$000
11,082
25,912
36,994
2019
$000
1,219
36,287
37,506
2018
$000
2,456
8,065
10,521
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
Australia
USA
Europe
Asia
group
coMpany
2019
$000
2,200
8,254
8,119
1,421
19,994
2018
$000
856
9,450
14,193
1,413
25,912
2019
$000
—
—
—
—
—
2018
$000
—
—
—
—
—
79
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liquidity risk
The following are the contractual maturities of financial
liabilities, including interest payments and excluding the
impact of netting agreements.
group
31 december 2019
Carrying amount
Contractual cash flows
6 months or less
6 to 12 months
More than 12 months
group
31 december 2018
Carrying amount
Contractual cash flows
6 months or less
6 to 12 months
More than 12 months
company
31 december 2019
Carrying amount
Contractual cash flows
6 months or less
6 to 12 months
More than 12 months
company
31 december 2018
Carrying amount
Contractual cash flows
6 months or less
6 to 12 months
More than 12 months
trade and
other
payables
$000
other
Financial
liabilities
$000
17,754
17,754
—
—
17,754
$000
21,052
21,052
—
—
21,052
$000
12,184
12,184
—
—
12,184
$000
19,157
19,157
—
—
19,157
820
41
41
738
820
$000
1,353
537
7
940
1,484
$000
819
41
41
737
819
$000
1,086
270
7
940
1,217
total
$000
18,574
17,795
41
738
18,574
$000
22,405
21,589
7
940
22,536
$000
13,003
12,225
41
737
13,003
$000
20,243
19,427
7
940
20,374
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The carrying amounts of the Group’s financial assets and
liabilities may also be categorised as follows:
current assets
Cash and cash equivalents
Trade and other receivables excluding prepayments
All of the above relate to the IFRS9 category ‘loans and
receivables’ and are measured at amortised cost.
current liabilities
Trade and other payables
Other financial liabilities
non-current liabilities
Other financial liabilities
group
coMpany
2019
$000
16,954
19,994
36,948
2018
$000
11,082
25,912
36,994
2019
$000
1,219
36,287
37,506
2018
$000
2,456
8,065
10,521
group
coMpany
2019
$000
2018
$000
2019
$000
2018
$000
(17,754)
(21,052)
(12,184)
(82)
(530)
(81)
(17,836)
(21,582)
(12,265)
(738)
(823)
(738)
(18,574)
(22,405)
(13,003)
(19,157)
(263)
(19,420)
(823)
(20,243)
All of the above relate to the IFRS9 category ‘other financial
liabilities’ and are measured at amortised cost.
Liquidity needs are managed by regular review of the
timing of expected receivables and the maintenance of cash
on deposit.
interest rate and currency profile
The Group’s financial assets comprise trade and other
receivables and cash at bank. At 31 December 2019 the
average interest rates earned on the daily closing balances
were 1.69% and 1.64% (2018: 1.69% and 1.64%).
currency risk
sensitivity analysis
Whilst the Group experiences some revenue, cost of sales
and overheads in other currencies, the majority of revenue
and cost of sales is denominated in US Dollars which is the
Group’s reporting currency and therefore foreign currency
risk is considered to be limited.
For the above reasons, the Group’s sensitivity to interest
rates and currency exchange rates are considered
immaterial.
Fair values versus carrying amounts
The Directors consider that there is no material difference
between fair values and carrying amounts of financial
assets and liabilities.
25. leases
The Group and Company do not have material operating
leases that have not been capitalised under IFRS 16 in 2019.
The 2018 operating leases disclosures are as follows:
Less than one year
Between one and five years
More than five years
group
coMpany
2018
$000
452
608
167
1,227
2018
$000
199
191
—
390
Annual Report and Accounts 2019plcplc
82
Annual Report and Accounts 2019
83
plc
plc
group
27. contingencies
In 2018 $471,000 was recognised as an expense in the
Profit and Loss Account in respect of operating leases.
Neither the Group nor Company had any contingencies
existing at 31 December 2019 (2018: none).
company
In 2018 $203,000 was recognised as an expense in the
Profit and Loss Account in respect of operating leases.
28. related parties
iFrs 16
group
The Group and Company leases office and the Group
a small number of cars of immaterial value where
employment practice demands company cars be available.
Office leases typically run from 5 to 10 years with options
to renew. Lease payments are negotiated every five years
to reflect market rentals. Sub-leasing arrangements are not
always available. Car leases are typically three years long.
Group expenses of $32,000 were incurred in 2019 on
leases excluded because they are short-term (less than one
year) or low value (asset is less than $5,000). Group interest
expense on IFRS 16 lease liabilities in 2019 was $120,000.
Group right of use assets total $894,000 at 31 December
2019, $1,574,000 at 1 January 2019 and depreciation was
$680,000 in the year. For the Company, interest expense on
IFRS 16 lease liabilities in 2019 was $52,000. The Company
right of use assets total $252,000 at 31 December 2019,
$653,000 at 1 January 2019 and depreciation was
$402,000 in the year. Expenses of $24,000 were incurred
in 2019 on leases excluded because they are short-term
(less than one year) or low value (asset is less than $5,000).
26. coMMitMents
The Group and Company were committed to the
implementation of a group accounting system which was
in progress at 31 December 2018. The amount committed,
not spent, at that date was $320,000. The system has been
fully paid for in 2019 and no further commitments are
outstanding at 31 December 2019.
In June 2016 two Directors entered into a related party
transaction. The wife of G P Mullins rented a house to
a subsidiary company at a rent of £2,500 per calendar
month. The rent payable is determined on an arm’s length
basis. The subsidiary company provided the house rent-
free to J F Jayal. It was agreed between Mrs Mullins and
Mr Jayal to terminate the agreement in March 2018.
Two months of rent of £5,000 was paid by the subsidiary
company to Mrs Mullins in 2018, so are disclosed here as
they relate to the prior period.
During the year the Group paid 31,200 (2018: 31,200)
for administration services to Francesca Marzilli, the wife of
Nick Jarmany, and NTD 644,397 (2018: NTD 424,853) for
HR services to Jenny Lin, the daughter of C-T Lin.
There were no other related party transactions other than
transactions with Key Management Personnel, who are the
Directors disclosed in Note 7 above.
Other related party transactions
There are no other transactions and balances with
key management not included within the Directors’
remuneration.
29. subseQuent eVents
As discussed in the Going Concern notes in the Directors’
Report and in note 1 to the financial statements, the
Covid-19 pandemic may result in severe reductions in
future revenues, profits and cash flows. As described in
the Going Concern notes there are short-term actions, as
well as the Group’s existing cash reserves, that are already
being taken to ensure the Group survives over the next 12
months. At present levels of uncertainty it is not practical to
conclude on an appropriate valuation basis for all assets on
the balance sheet except cash but we continue to monitor
the situation closely.
COMPANY INFORMATION
directors
M J Peagram
N C L Jarmany
C-T Lin
G P Mullins
J F Jayal
G L Millward
G van Zwanenberg
company secretary
L E Park
registered office
auditor
Aisle Barn
100 High Street
Balsham
Cambridge
CB21 4EP
KPMG LLP
Botanic House
100 Hills Road
Cambridge
CB2 1AR
nominated advisor and broker finnCap
Financial pr
registrars and crest
settlement agents
60 New Broad Street
London
EC2M 1JJ
Alma PR
71-73 Carter Lane
London
EC4V 5EQ
Neville Registrars
Neville House
Steelpark Road
Halesowen
B62 8HD
registered number
04316977
website
ticker:
www.quixant.com
London: QXT
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plc
plc
aisle barn
100 high street
balsham
cambridge
cb21 4ep uk
t: +44 (0)1223 892696
e: info@quixant.com
registered number: 04316977
registered in england and wales
5
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