A PlAtform
for SucceSS
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Annual Report and Accounts
For the year ended 31 December 2020
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Annual Report and Accounts | 2020
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We are pioneering
technology outsource
partners delivering highly-
specialised products
focussed on the needs of
specific global industries
with particular focus on
the casino gaming and
slot machine market.
CONTENTS
StrAteGIc rePort
Highlights
Chairman’s Statement
Chief Executive’s Report
Financial Review
Business Model and Strategy
Key Performance Indicators
Principal Risks
GoVerNANce
Environment, Social & Governance Report
Board of Directors
Remuneration Committee Report
Audit Committee Report
Directors’ Report
Statement of Directors’ Responsibilities
in respect of the annual report and the financial
statements
fINANcIAl St AtemeNtS
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 to the Financial Statements
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Strategic
Report
Quixant is a critical supply chain and
technology partner for major global
industrial equipment manufacturers.
our QuIXANt GAmING BuSINeSS designs, develops and manufactures gaming
platforms and display solutions for the casino gaming and slot machine
industry. through Quixant, major gaming machine manufacturers have the
ability to outsource non-differentiating aspects of their machine, including
the computer platform and low-level software. this enables them to focus
their r&D resource on game design which is the most critical component to
improve player enjoyment.
our DeNSItroN BuSINeSS is a global specialist in Human machine Interaction
bringing innovative displays, control surfaces and control systems to a wide
range of global industrial markets with particular focus on the Broadcast sector.
Densitron enables manufacturers of industrial equipment to revolutionise the
control of their devices with tactile touchscreen displays and user-friendly
graphical user interfaces driven by flexible embedded computer options.
HIGHLIGHTS
fINANcIAl HIGHlIGHtS
Net cASH At
31 DecemBer 2020
$17.4m
(fY 2019: $16.1m)
Net cASH
from oPerAtING
ActIVItIeS of
$4.0m
(fY 2019: $14.9m)
fullY DIluteD
ePS of
($0.0445)/
share
(fY 2019: $0.1243/share)
DIVIDeND of
2.0p
Per SHAre
recommeNDeD
(2019: Nil)
GrouP
reVeNue of
$63.8m
(fY 2019: $92.3m)
ADJuSteD fullY
DIluteD ePS of
($0.0040)/
share
(fY 2019: $0.1396/share)2
GrouP rePorteD
Pre-tAX loSS of
$2.0m
(fY 2019: $9.4m profit)
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revenue Split
Between:
GAMING PLATFORMS
REVENUE of $27.5m
(FY 2019: $46.6m)
GAMING MONITORS
REVENUE of $2.8m
(FY 2019: $9.6m)
QuIXANt
GAmING
DIVISIoN
reVeNue of
$30.3m
(fY 2019: $56.2m)
DeNSItroN
DIVISIoN
reVeNue of
$33.5m
(fY 2019: $36.2m)
GrouP
ADJuSteD
Pre-tAX ProfIt of
$1.3m
(fY 2019: $10.7m profit)1
1. Adjusted by adding back
items included in the
adjusted PBT reconciliation
in note 1 to the financial
statements totalling $3.3m
(2019: $1.3m).
2. Adjusted by adding back
the items included in note 1
above and subtracting the
associated tax effect as set
out in note 9 to the financial
statements. In 2020 these
amounted to $2.7m (2019:
$1.0m).
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oPerAtIoNAl HIGHlIGHtS
Close customer engagement
through the crisis leading to
positive net cash generation
through the year. improved
relationships and increased
new business potential.
Return to profitability in the
second half of 2020 driven by
improved performance in
Gaming business and
continued resilient Densitron
trading.
New gaming business
models arising from market
disruption due to COVID-19
bringing about opportunities
with a pilot customer due to
commence a lease programme
of Quixant technology in the
second half of 2021.
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CHAIRMAN'S STATEMENT
michael Peagram cHAIrmAN
New gaming business wins
in 2020 expected to
contribute in excess of $5m
of revenue in 2021.
Densitron sales supported by
conversion of pipeline in
broadcast and medical
sectors which both showed
year-on year double digit
growth to, partially offset
declines in other sectors.
"
Jon Jayal,
cHIef eXecutIVe offIcer of QuIXANt,
commented:
Considering that our key global gaming
market was so materially impacted in
2020 due to the pandemic. I believe that
to report an adjusted profit before tax and
an improvement in our net cash position
from FY 2019 is a remarkable achievement.
It reflects the resilience in our Densitron
business, the strength of the relationship
we have with our customers and a robust
balance sheet entering the year.
2021 has started strongly, with healthy
order intake such that we now have 106%
coverage of internal budget for the first half
of the year. As the gaming industry evolves
106% order coverage of
Group internal budget for
first six months of the year.
out the crisis, we are bringing pioneering
new offerings to market which we believe
will support customers in their recovery.
It is also pleasing to see double digit growth
in our Densitron broadcast business despite
the headwinds caused by the pandemic.
The electronic component shortages
present us with short-term supply chain
risks, but we continue to utilise our strong
cash position to mitigate the impact of these
on 2021 trading.
The Board is confident in the future prospects
of the Group which is reflected in our decision
to recommend payment of a dividend.
"
Resilient trading through
unprecedented gaming
market disruption.
When we reported on our 2019 annual results, many of
the countries in which the Group operates had moved
into government mandated lockdown measures and we
were entering into a second quarter in which we saw an
unprecedented closure of almost all global land-based
gaming markets. This had a profound impact on our
gaming business, which saw an 87% year on year decline
in revenues in the second quarter of 2020. During this time
Densitron continued to trade resiliently, supported by its
highly diversified industrial sector exposure.
Thanks to our preceding years of strong profitability, we
entered this period of uncertainty with a healthy cash
balance. This allowed us to make a measured and creative
response during the tumultuous period that followed, as
well as positioning us strongly for expected future growth
as normal trading resumes.
We provided extraordinary support to our gaming
customers, who faced significant financial and operational
challenges, some of which continue today. These times
of crisis have confirmed our position as a close outsource
technology partner for them which in the long run
positions us well for new business. It has also provided us
with the opportunity to re-evaluate and refresh our gaming
market propositions and align them with the challenges the
market is facing in the recovery.
We undertook some streamlining of our overheads during
the year, but importantly avoiding cost reductions which
would inhibit our ability to take advantage of the re-
emergence of normal demand across our end markets.
We made progress in strengthening the senior
management team, executing our succession plan for the
business founders and implementing a new corporate
governance framework. Having successfully hired senior
management in the Gaming and Densitron businesses
over the last 18 months, we have established an Executive
Committee. As part of this transition, two of the founders,
Nick Jarmany and Gary Mullins, moved to non-executive
roles on the board in May 2020 and JJ (C-T) Lin stepped
down from the board.
In January 2021 we welcomed Francis Small to the board
as senior independent non-executive director. He has had
a distinguished business and professional career and I am
delighted with the contribution he has already made.
I believe the business is in a good position with high quality
leadership, a robust balance sheet and strong growth
opportunities.
I joined Quixant some months before the AIM flotation in
2013 and after nine years of service, now is an appropriate
time for me to retire. I shall therefore step down from the
Board at the AGM and I am delighted that Francis Small
will take over as Chairman.
While we remain necessarily cautious about the
outlook, we are confident in the resilience of our
business and its continued cash generation. We are
therefore recommending payment of a dividend of
2.0p per share for 2020 (2019: no dividend paid).
michael Peagram cHAIrmAN
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Profitable second half
and growth in net cash
balance
I am pleased to report that a return to profitable
trading during the second half of the year enabled
the Group to post an adjusted profit before tax
for the year ending 31 December 2020 of $1.3m
(2019: $10.7m) corresponding to a full year reported
pre-tax loss of $2.0m (2019: profit of $9.4m). full
year Group revenue of $63.8m was down 31% on
prior (2019: $92.3m) due to the impact of coVID-19
weighing heavily on demand in the gaming
business, which ended the year with revenue of
$30.3m (2019: $56.2m). Densitron traded resiliently
through the period and, despite supply chain
challenges and weak demand across certain sectors,
posted revenue of $33.5m (2019: $36.2m).
careful cash management, recovery in the gaming
business and stable Densitron trading enabled us to
grow our net cash position from $16.1m at the start
of the year to $17.4m by December 2020.
CHIEF EXECUTIVE'S
REPORT
Jon Jayal cHIef eXecutIVe offIcer
Gaming Business Review
After a strong first quarter in which revenue was up 54%
year-on-year, the gaming business experienced a sharp
decline in demand in the second quarter (down 87% on
prior year) as almost all global gaming venues closed their
doors due to the pandemic.
We shipped 22,000 gaming platforms during 2020
compared to just over 40,000 in 2019, with a higher
concentration of revenue from mid-range product than
in the previous year. This was driven by sustained demand
through the year from European customers for our QXi-
6000 and new business wins in the year using its successor
– the QXi-7000. Conversely high-end product sales from
the casino markets were down year-on-year due to
COVID-19 related weakness in customer demand.
Quantity platform sales (quantity)
by product family
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
• High-End
• Mid-Range
• Cost Effective
2020
2019
Despite having retained all our customers through the
year, gaming monitor shipments were weak due to the
pandemic and contributed $2.8m of revenue (2019:
$9.6m). We nonetheless continue to see opportunities
ahead for our monitor propositions and, in particular,
our more niche button deck products.
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cAreful mANAGemeNt tHrouGH
SecoND Qu Arter SHutDoWN
eVerI SHoWcASe
Our gaming customers saw an immediate cessation of
both machine sales and revenue share income in March
2020 which, put many under significant financial pressure.
During this extremely challenging period, our primary
objectives were to:
1. Maintain close dialogue with the senior management
of our customers to understand their position, evaluate
market sentiment and plan for the recovery;
2. Establish payment schemes to ensure outstanding debts
owed to us were settled while being sympathetic to
customers’ cashflow challenges; and
3. Protect our cashflow through working with our
suppliers to defer our orders with them where possible.
I am proud of the team’s performance through
this period. our customers faced difficult business
decisions in some cases in order to survive the
second quarter with the sharp decline in revenue
driving widespread salary cuts, furloughs and
redundancies, payment deferrals and debt raises
to supplement liquidity.
our largest customer, everi saw an 89% decline in its
share price through march, furloughed an undisclosed
number of employees and implemented salary cuts
across the executives and employees remaining. In
addition, everi raised a further $125m to supplement its
liquidity position. We remained in weekly contact with
senior leadership at everi, provided extended payment
terms for the outstanding debt and agreed deferral of
their order commitments.
"2020 was a challenging and uncertain
time for Everi and the entire gaming
community, as our end markets were
severely impacted by pandemic-related
restrictions. As a result, our revenues and
cash flow were severely limited in the
short-term, and Quixant was responsive
to our situation. Together, we were able
to collaboratively work to manage the
challenges, enabling us to maintain an eye
to the horizon and the growth prospects
beyond. Our partnership with Quixant is an
important relationship to us, and together
we look to a successful future.
"
Dean ehrlich
eXecutIVe VIce PreSIDeNt AND
GAmeS BuSINeSS leADer
everi
As North American gaming venues, led by the tribal
properties, started reopening from late may 2020,
everi saw a rapid increase in activity and have since
continued to show excellent game performance with
some of the highest performing games in the charts.
everi is well-poised to grow its market share over the
coming year.
The result of the actions by our team has been to secure
settlement of outstanding debts and demonstrate our
commitment and partnership to our customers, all of
whom we continue to supply. I believe this has significantly
strengthened customer relationships and led to new
business opportunities as the recovery continues.
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AINSWortH SHoWcASe
"Quixant has been a partner of Ainsworth
for many years, but 2020 showed the true
meaning, and value, of our partnership.
At a time when our customers’ venues
were closed and everyone was working to
manage cash flow through the pandemic,
Quixant presented us with a payment
solution which allowed us to concentrate
on running our business, and to focus on
growth post-pandemic, benefiting both
organizations through 2021 and beyond.
While undoubtedly a challenging year,
2020 further strengthened our relationship
with Quixant, as their forward thinking and
innovative attitude demonstrated the true
value of effective partnership.
"
ImProVemeNt IN SecoND HAlf AND
StroNG BuSINeSS PoteNtIAl GeNerA teD
The third quarter saw a significant improvement in business
activity with a recommencement of order intake and even
new business wins with a number of European customers,
including one which entered mass production during the
fourth quarter. This improvement in activity was such that
second half gaming revenues were 55% higher than first
half revenues. The gaming business has a strong order
book in 2021 with coverage of 105% of budget to June.
The pandemic has certainly provided a catalyst for change
in the gaming market. While gaming revenues continue
to build, the replacement market remains muted as
working capital challenges both the casinos and the game
manufacturers. In September, we announced our intention
to investigate new business models with our customers
including lease programs for our computer boards and
monitors and fully populated turnkey hardware cabinet
solutions. I am pleased to report that substantial progress
was made during the second half of 2020 with our first pilot
customer for a lease model which we expect to commence
shipments in the second half of 2021. These new business
models set a precedent for a new way of manufacturers
bringing their gaming offerings to market and increase
their ability to focus resources on game design.
ryan comstock
cHIef oPerAtING offIcer
Ainsworth Game technology
While new business generation was challenging
in a year when game manufacturers were mainly
concerned with survival, nonetheless we converted
new business during the second half which we expect
to deliver in excess of $5m of revenue in 2021.
SuPPlY cHAIN cHAlleNGeS PerSISt
The disruption to the gaming business in 2020 was not
isolated to customer demand – throughout the year we saw
volatile input stocks due to the lockdown and subsequent
reduced production capacity across mainland China and
Taiwan. Our strategic inventory holding through the year
enabled us to meet our delivery commitments to customers.
In December 2020, we started to see more acute shortages
in the semiconductor market impacting our supply chain
and took action to bolster our strategic inventory. Since
the start of 2021, the semiconductor shortages have
worsened as booming demand for electronic products
has outstripped semiconductor component production
capacity. We are experiencing manufacturers’ unexpectedly
issuing end-of-life notices on parts, more than a doubling
of their normal leadtimes and serving price increases on
the components. We are utilising our strategic inventory
holdings to enable uninterrupted customer deliveries
through Q1 but expect to see some impact from Q2.
In mid-January the Board took decisive action to allocate
up to a further $5m of our cash reserves towards further
strategic stock purchases to support anticipated demand
over the next 6-9 months of the year and mitigate the
short-term supply chain risks.
SPortS BettING ProGreSS DelAYeD
We demonstrated our QSBT-1000 sports betting terminal
at the ICE Show at ExCel in February 2020. With the
expectation of an explosion in sports betting around the
industry, this was well positioned for new business.
Unfortunately, the second quarter shutdown in most
retail sports betting outlets delayed sports betting
progress through 2020. We remain optimistic about the
opportunities in the market and have live prospects with
several vendors as part of our full cabinet offering.
ProDuct DeVeloPmeNt
We launched a new gaming platform at the low end of the
range in March 2021 – IQ-1. This is the first of our revised,
streamlined roadmap of products. During the second
quarter, we learned of a major change in strategy from one
of our key suppliers, AMD, who supply microprocessors and
graphics accelerators which are used in all our products.
AMD, despite being very popular in the gaming industry
because of their attractive pricing and high-performance
graphics processors, have decided to
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defocus on the casino gaming market, as well as several
other industrial sectors. Instead, their future strategy is to
focus on data centre and networking devices alongside
their client business.
We have therefore committed to a roadmap using Intel
processors with some of our higher end products using
NVIDIA graphics accelerators. We already have QMax-2i
which uses Intel technology but will gradually be rolling out
further gaming platforms using Intel, the first of which will
be sampled during May 2021.
While we do not expect to undertake any new product
designs using AMD, we expect to offer gaming platforms
already in production until the end of the decade.
The consequence of this one-off repositioning of our
product portfolio was a derecognition off of $1.5m of
capitalised R&D in the year.
" With a 55% improvement in second
half trading compared to the first half,
we enter 2021 with positive momentum
towards full year growth."
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Densitron Business Review
the Densitron business celebrated its 50th
anniversary in 2020, with the origins of the firm
tracing back to 1970 in Japan. there have been
countless economic and financial shocks during this
period which the business has weathered, and it is
therefore unsurprising that, through the pandemic
in 2020, Densitron continued to trade resiliently.
revenues in 2020 were $33.5m, down 7% on prior
year primarily due to a weak first quarter (2019:
$36.2m). While the Gaming business suffered more
critically from demand weakness, Densitron was
immediately affected by the chinese manufacturing
shutdown in february which caused delays to
shipments. consequentially the first quarter was
down 31% year on year, with the second and third
quarters up 7% and 8% respectively.
from a Group perspective, the resilience of the
Densitron business was essential in the maintenance
of our strong cash position and ability to take a
more measured approach to streamlining cost.
During the gaming shutdown in the second quarter
of 2020, we redeployed some of the Group’s product
development and operational resource to Densitron
which enabled accelerated progress on development
of the new Densitron 2.0 and 3.0 product lines.
DouBle DIGIt BroADcASt BuSINeSS GroWtH
Our strategy of market focus and elevation of the value
proposition from pure display products towards integrated
Human Machine Interface (HMI) solutions is showing early
signs of success despite the headwinds caused by the
pandemic. Excluding IDS, our broadcast sector revenue grew
13% to $3.8m. Many of the pipeline opportunities due to
enter mass production during 2020 were delayed but we
expect these to contribute to Densitron revenue in 2021.
IDS, the broadcast hardware and software solution
which we acquired in 2019, had a difficult year because
the current revenue generation model relies on our field
technicians installing equipment into broadcast venues
which was generally prohibited during the year due to the
pandemic. The future release of the IDS software allows
for virtualised deployments on a licensed basis, and we are
starting to introduce this service to potential customers.
BrIDGe tecHNoloGIeS SPotlIGHt
Bridge technology are a customer and technology
partner with whom Densitron have been working
for two years. While 2020 saw significant challenges
for their business, we quietly continued to work and
innovate together through the external market turmoil
– this effort has resulted in the launch of the 4u product
and the multiviewer+ solution in early 2021 which
opens up a new market for IDS as a control system with
the added value of probe data on broadcast streams
provided by the Bridge technology hardware.
"2020 was a challenging and uncertain
time all of us in the Broadcast space –
some areas of sales were accelerating, as
broadcasters moved to remote production
– but other areas went backwards as
studios moved to skeleton staff and
the filming and release of new content
was delayed. We value the partnership
with Densitron during this time as their
business continued to operate on a largely
‘business as usual’ basis and therefore
progress was able to continue on our
products – firstly through the installation
of IDS at our headquarters and secondly
through the development of the joint
Multiviewer+ product which we are very
excited to be launching with them in
the first quarter of 2021. Our team love
using the IDS control system and our
sales team are very excited about the
sales opportunity the collaboration will
give them as we emerge from COVID-19
hopefully in the second half of 2021.
"
Simen frostad
ceo - Bridge technology
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mANAGemeNt teAm cHANGeS
Over the last two years, we have welcomed several leaders
to the business in key roles. After Simon Jones joined
in April 2019 to lead the Densitron business, Abhinay
Bhagavatula joined in September 2019 as Gaming CTO and
Duncan Faithfull joined in January 2020 as Gaming CCO.
We have since promoted them to the Executive Committee.
After Guy Millward, CFO, left the business in August 2020,
we brought Andrew Jarvis in as interim CFO. Andrew has
since made considerable improvements in our management
information and reporting, leveraging the benefits of our
global SAP system. We will be evaluating our options for
installing a permanent CFO in the second quarter.
As he retires from the board, I would like to thank Michael
Peagram for his nine years of service to the business. His
commitment, experience and professionalism have been
invaluable to the business. We are delighted to have Francis
Small onboard and I am looking forward to working closely
with him as he assumes his role as Chairman.
outlook
With a 55% improvement in second half trading compared
to the first half, we enter 2021 with positive momentum
towards full year growth. Trading during the first three
months of this year has been strong and ahead of last year
and our Group order coverage for the first half of 2021
is already 106% of internal budgets. In the context of the
supply chain issues previously flagged, importantly we
have secured sufficient parts to fulfil most of the orders.
With 95% of US casinos currently open and with positive
sentiment they will remain open, the signs for the gaming
market are positive.
We are crucially aware that the future remains uncertain
and any exponential spread of the pandemic in the US
could materially impact the gaming industry although
we believe the experience since the second quarter of
2020 puts a lower probability on that scenario. We are
working through the unprecedented electronic component
shortages and recognise the risk of delays to shipments and
inflation in prices over the coming months. We are working
through contingency plans with customers and suppliers to
mitigate this risk.
Our strong balance sheet and strengthened customer
relationships, combined with the new business propositions
targeted towards changes in our end markets give the
Board confidence in tremendous opportunities for the
Group ahead.
Jon Jayal
cHIef eXecutIVe offIcer
DouBle DIGIt meDIcAl Sector GroWtH
Densitron medical exposure, the single largest
sector exposure in the business, grew 17% in 2020
to $8.2m. We agreed a corporate policy to support
medical market customers over other business to
help with their rollout of solutions to tackle the
pressure being created by the pandemic. We were
involved in several high-profile projects including
supplying displays to manufacturers of coVID-19
test equipment and ventilators.
We believe there are long term opportunities to build on
our status as a trusted supplier of displays into medical
equipment. Many of the innovative HMI and control
solutions we have developed for broadcast can be applied
to the medical sector and we are starting to explore their
usage for a range of medical equipment, leveraging the
strong customer relationships already established.
One example of such an application is use of our IDS
technology to enable simple control of cameras used in
operating theatres to record surgical procedures. Beyond
this, there is scope for greater integration into, for example,
other non-life-critical operating theatre systems such as
those used for lighting and entertainment.
comPoNeNt SHort AGeS & PrIce INflA tIoN
Densitron has seen evidence of material future price
inflation from many of our Chinese display suppliers.
Combined with the US trade tariffs on goods imported
from China, this will put pressure on our gross margin.
We have engaged with our customers to pass on the
tariffs, enforce price increases across many of our product
lines and also extend customer order visibility to enable
us to increase our purchasing power. In aggregate these
initiatives have so far proven positive with no degradation
to gross margin experienced and no net loss of business
and have also led to us having 107% order coverage of the
revenue budget in the first half of this year.
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ProfIt Before tAX (PBt)
BAlANce SHeet AND cASH floW
Adjusted pre-tax profit decreased by 88% to $1.3m
(2019: $10.7m). Adjustments to pre-tax profit were
$3.3m in 2020 (2019: $1.3m) and comprise share-based
payments of $0.2m, the write off of $1.5m of capitalised
research and development expenditure due to unexpected
early end-of-life of certain third party components,
restructuring costs of $0.7m and an amortisation charge
of acquired intangibles of $0.9m. Reported pre-tax profit
declined to a loss of $2.0m
(2019: Profit before tax of $9.4m).
eXPeNSeS
During the year the Group expenditure on research and
development reduced to $4.3m (2019: $6.6m). These
costs relate to investment activities principally undertaken
in Taiwan, Italy, UK and Slovenia. $1.7m of these costs were
capitalised (2019: $2.2m) with amortisation for the year on
total capitalised development costs of $2.4m (2019: $1.4m).
To mitigate the effect of the decline in revenue on
profitability, we took action to streamline full year operating
costs by 34% to $21.9m (2019 restated: $22.5m) –
which includes $3.3m of adjustments to the reported PBT.
This Group has seen a reduction in headcount from an
average of 223 people in 2019 to 209 in 2020.
tAXAtIoN
The tax charge for the year was $1.0m (2019: $1.1m).
There has been limited reduction in the tax charge when
compared to 2019, as a result of taxable positions in
overseas entities.
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.
eArNINGS Per SHAre
Basic earnings per share decreased by 136% to -$0.0445
per share (2019: $0.1252 per share). Adjusted fully diluted
earnings per share as set out in note 9 to the financial
statements decreased by 103% to -$0.0040 per share
(2019: $0.1396 per share).
Non-current assets have decreased in the year to $24.7m
(2019: $25.6m) mainly due to the derecognition of R&D
discussed above. Inventory has increased to $21.6m
(2019: $20.2m). Raw material inventory has remained in
line with 2019, and work-in-progress and finished goods
have increased as we await to ship committed products to
customers who have requested later delivery dates.
The cash generated from operating activities in the
ear amounted to $4.0m (2019: $14.9m). The reduction
in cash generated is largely due to the losses incurred in
the year due to the pandemic. The Group has reduced its
investments in the business, spending $2.2m (2019: $5.3m)
on investing activities, in line with trading conditions.
GoVerNmeNt coVID-19 SuPPort
The Group has received government grants to support
payroll costs during the COVID-19 pandemic. This
includes $217k for Quixant Taiwan and $32k for Quixant
Italia. These grants and helped the business to maintain
employment during the pandemic. A government-backed,
revolving credit facility of £7.5m granted in the UK –
however, this has substantively not been used in 2020,
with only £25k drawn down to maintain the facility.
The business seeks to close this facility before the AGM.
In the year, we have also received cash from COVID-19
support loans in France and the USA, totaling $0.9m,
of which $0.3m has been forgiven in the USA. $0.5m in
France will be repaid in 2021, and we expect the other
$0.1m loan in the USA to also be forgiven in 2021.
DIVIDeND
While we suspended payment of a dividend in 2020 due
to the risks facing the business in relation to COVID-19,
we maintained a strong cash position through the year
and saw profitable trading in the second half of the year.
The Board therefore proposes reinstatement of a dividend
for the year ended 31 December 2020 of 2.0p per share
(2019: nil) payable on 14 May 2021 to all shareholders
on the register on 23 April 2021 The corresponding
ex-dividend date is 22 April 2021.
Andrew Jarvis INterIm cHIef fINANcIAl offIcer
FINANCIAL REVIEW
Andrew Jarvis INterIm cHIef fINANcIAl offIcer
The Quixant Group achieved revenues of
$63.8m in the year, down by 31% on
2019 revenues of $92.3m due to the
significant impact of COVID-19.
reVeNue
Gaming business revenues were $30.3m, a decrease of 46% on prior year (2019: $56.2m).
This was split between Gaming platform revenue of $27.5m, a 41% decrease on prior year
(2019: $46.6m), and Gaming monitor revenue of $2.8 million, a 71% decrease on prior
year (2019: $9.6m). Densitron division, which includes IDS, revenues were $33.5m,
a decrease of 7% on prior year (2019: $36.2m).
The decline in Gaming revenues was due to the closures across the gaming market caused
by government response to the COVID-19 pandemic negatively impacting demand for our
products. This resulted in very weak second quarter trading in the Gaming business, with
some recovery in demand seen during the second half of the year. Densitron, which has
sector exposure across a broad range of industrial markets, was less heavily impacted by
the pandemic and despite some delays due to supply chain challenges, continued to trade
well through the year..
GroSS ProfIt AND GroSS ProfIt mArGIN
We generated gross profit during the year of $20.1m (2019 restated: $32.1m) representing
a gross margin of 31% (2019 restated: 35%). The decline in margin is due to an increased
proportion of our Group revenue being generated by Densitron, which operates at lower
gross margin than Gaming. Underlying Gaming and Densitron gross margins were consistent
with previous years. We have seen price inflation in our supply chain since the second half
of 2020 primarily due to component shortages and the imposition of import tariffs for
Densitron goods entering the US from mainland China. We have acted to increase our prices
to customers to protect our gross margin from this price inflation.
GrouP
reVeNue
DoWN
BY
31%
(on 2019)
GAmING
DIVISIoN
reVeNueS
DoWN
BY
46%
(on 2019)
DeNSItroN
reVeNue
DoWN
BY
7%
(on 2019)
16
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plc
Annual Report and Accounts | 2020
17
BUSINESS MODEL AND STRATEGY
KEY PERFORMANCE INDICATORS
QuIXANt IS AN outSource ProVIDer of tecHNoloGY ProDuctS
AND SolutIoNS t ArGeteD A t SPecIfIc INDuStrIAl mArketS.
the Gaming business designs and manufactures
computer hardware, software and electronic display
solutions for the casino gaming and slot machine industry.
Our customers are the manufacturers of electronic gaming
machines which are located worldwide. By outsourcing
several aspects of underlying technology to Quixant, this
enables our gaming customers to focus their research and
development efforts on differentiating elements of their
electronic gaming machines and most critically in game
development. Our customers, which are generally subject
to heavy levels of regulatory scrutiny in most global gaming
jurisdictions, then hold the licenses and the distribution
channels to place their machines in casinos, bars, clubs,
public houses and other gaming venues. We supply many
of the world’s leading manufacturers of gaming machines.
"...developed bespoke tactile Human
Machine Interface solutions to enable
broadcast equipment manufacturers to
revolutionise the control of their products."
To ensure we supply products which have a consistent
bill of materials – something which is a prerequisite in
most regulated gaming markets – we procure our own
parts in Taiwan and outsource assembly of our products to
Tier 1 third-party electronic sub-contract manufacturers.
All the intellectual property associated with the design of
these products however remains Quixant’s property and is
developed in-house.
the Densitron business is an expert in human machine
interface and display solutions for a wide variety of
industrial sectors. Within Densitron we have developed a
specific focus business operating in the broadcast sector
which has developed bespoke tactile Human Machine
Interface solutions to enable broadcast equipment
manufacturers to revolutionise the control of their
products. Once a design is agreed with the customer, we
outsource the manufacture of the finished goods to third-
party manufacturers.
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 with a visual representation of
the risk associated with that forecast 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).
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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 declined in 2020 as a result of
the COVID-19 pandemic as major Gaming
customers reacted to the unprecedented
situation. Densitron revenues reduced,
but to a lesser extent, which supported
the Group overall.
Gross profit margin
To ensure that the Group maintains
appropriate returns for the products that
it is selling.
Inventory levels
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).
fINANcIAl
kPI and objective
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.
There was a one-off charge in 2020 for
Densitron USA for China import tariffs
not passed to customers.
The Board monitors the stock held at the
end of each month and is provided with a
trend graph 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 2020
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.
Procedure
comment
Profit before tax (PBt) and Adjusted Profit before tax
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.
The Board reviews PBT and adjusted
PBT monthly as part of its review of
management information.
The level of PBT and adjusted PBT
decreased year-on-year and was behind
Budget expectations, but ahead of
estimates at the beginning of the
COVID-19 pandemic.
Debtor days
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 little to no
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 2020, the Group had net
cash (cash less borrowings) of $17.4m com-
pared with $16.1m at 31 December 2019.
Group borrowings at 31 December 2020
was low and amounted to short-term
COVID-19 support loans in Quixant USA
and Densitron France, to be cleared in
2021, and a small mortgage in Taiwan.
The business also has access to a $7.5m
Coronavirus Large Business Interruption
Loan Scheme, revolving credit facility in
the UK where required. A small drawdown
was processed in December 2020 to keep
the facility open.
18
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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 and Executive Committee 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 23 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 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.
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 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 profes-
sional 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.
The Board expects the Group’s
continued organic growth to further
reduce the dependency on key
customers.
The Board expects this issue to
continue to be relevant in 2021 and
is regularly briefed.
component
supply & price
inflation
key persons
The Group relies on a steady
supply of components used in the
manufacture of its products. There
is currently a global shortage of
components, which may impact
production, or cause prices to rise.
The Board recognises the
importance of its key employees and
the risk of losing the expertise and
knowledge that they possess.
The Group is proactively sourcing
additional stocks to act as a safety
net. Order coverage of stock is
being monitored closely.
The executive officers are subject to
long-term contracts. Key staff have
contractual arrangements designed
to develop and incentivise. Key roles
can be replaced.
Key persons recruited and remain
with the business.
Annual Report and Accounts | 2020
19
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risk
Description
mitigation
comment
Intellectual
property
protection
cyber risks
Pandemic
Brexit
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 impact on the business of
the United Kingdom leaving the
European Union.
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 2020
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.
The Group continues to monitor
the latest updates on the
COVID-19 pandemic, and is
cautiously optimistic regarding the
vaccine progress.
In 2019 the Board decided that in
the light of the 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
by re-arranging the logistics flow
of goods direct to customers from
their point of manufacture in Asia.
A trade deal with the EU was
agreed in December 2020. As the
Group no longer ships goods from
the UK to the EU or from the EU
to the UK, there is little impact on
business operations.
Other areas of the EU trade deal
will be monitored and assessed for
its business implications.
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
and signed on its behalf by:
Jon Jayal DIrector
20
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Governance
ENVIRONMENTAL,
SOCIAL AND
GOVERNANCE REPORT
Quixant has always endeavoured to conduct business in a
considerate and responsible manner, placing our key stakeholders,
the environment and communities in which we operate and our
customers at the core of everything we do.
the Board have adopted an eSG strategy which is aligned with the business
objectives and aims to support and, in areas, accelerate our business growth.
Progress against this eSG strategy is assessed as a standing agenda item in our
monthly Board meetings.
The key pillars of the Board’s ESG strategy are to:
1.
Raise awareness of the environmental impact of the
Group’s activities across the business and encourage
employees to bring ideas for improvements.
2.
3.
Foster a collaborative, inspiring working environment
which allows employees to develop their careers.
Support charitable causes connected with the business
through donation of a proportion of profits.
4.
Continually review the Group’s governance framework
to improve organisational oversight.
A critical aspect to successful execution of our ESG strategy is employee engagement.
With this in mind, we established a CSR Committee at the end of 2019 which consists of
representatives from employees in several locations around the business.
Annual Report and Accounts | 2020
21
UK
2020
UK
2019
Change
energy use (kwh)
Electricity
Fuel Oil
Transport
44,960
46,836
41,598
49,890
32,727
55,642
Total energy use
119,285
152,368
GHG emissions (kg co2e)
Electricity
Fuel Oil
Transport
10,482
11,971
10,261
12,311
8,114
14,255
Total gross CO2e emissions
28,857
38,537
-4%
-17%
-41%
-22%
-12%
-17%
-43%
-25%
Intensity ratio
Average number of
employees
Total GHG emission per
employee (kg CO2e /
employee)
50
51
-2%
577
756
-24%
The methodology used in the UK energy usage and GHG
emissions uses actual usage calculations of electricity and
fuel oil use and mileage claimed for passenger vehicle
transportation with conversions as necessary taken from
the Government Conversion Factors for Company Reporting
of Greenhouse Gas Emissions 2019 and 2020.
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Environmental Matters
Quixant is committed to a programme to more
accurately assess and reduce its environmental
impact.
We manufacture electronics product in facilities which are
geographically adjacent to the manufacturing plants of
the raw materials to reduce energy footprint in our supply
chain. We also seek to utilise sea freight wherever possible
over air freight in shipping finished goods to customers.
Our global operations comply with the Waste Electrical and
Electronic Equipment (WEEE) Directive to ensure safe reuse
or disposal of depreciated product.
We drove several initiatives during the year towards
improving our environmental footprint, including:
• Implementation in mid-2020 of a Supplier Code
of Conduct which incorporates the Responsible
Business Alliance (RBA) (formerly the Electronic
Industry Citizenship Coalition (EICC)) Code of Conduct.
This requires our suppliers to conform to minimum
standards around pollution, hazardous substances,
waste, greenhouse gas emissions and use of certain
materials, amongst other things.
• Replaced both domestic and international travel with
usage of video conferencing using Microsoft Teams for
both internal and external meetings through COVID-19.
It is our intention to permanently reduce our travel
frequency through the use of video conferencing,
particularly for meetings requiring long-haul flights.
• Implemented a paper-free policy including implemen-
tation of a software solution to facilitate use of
electronic board papers and replacement of hardcopy
product datasheets with online versions at trade shows.
• Reduction in the number of company cars offered
in the group.
• Replacement of dated Sevenoaks office with a new
refurbished office in Crawley which holds a SKA Gold
environmental rating and provision for charging electric
vehicles.
The environmental footprint of the UK business over
the last two years is as follows. 2020 energy usage and
emissions saw a significant reduction, particularly in
transport due to COVID-19 limiting employee travel for
business.
22
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Annual Report and Accounts | 2020
23
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 of tHe BoArD
QuoteD comPANIeS AllIANce
coDe comPlIANce
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 the Chief Executive’s
report and subsequent sections. In August 2020 the Group
established an Executive Management Committee (“ExCo”)
consisting of the Chief Executive, Chief Financial Officer and
the senior leaders from both operating divisions. The ExCo
meetings take place monthly, prior to the Board meetings
and are attended by the Chairman on a quarterly basis.
The divisional leaders from the ExCo also attend the Board
meetings on a quarterly basis.
This governance model ensures the Board and ExCo are
well-appraised of operational and strategic matters to
enhance value creation from the business.
2. Seek to understand and meet shareholder
needs and expectations
The CEO and CFO meet at least bi-annually with major
investors or more often as required and the Chairman also
typically meets major institutional shareholders once a year.
Since February 2020 most of these meetings have been
conducted by conference call or video conference due to
the COVID-19 restrictions.
3. take into account wider stakeholder and
social responsibilities and their implication for
long-term success
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. The Board
has also adopted an ESG strategy which seeks to consider
our approach to continual improvement of our social
responsibilities.
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.
5. maintain the Board as a well-functioning,
balanced team led by the chair.
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 four non-executives and one executive and
has devolved responsibility for certain matters to two
committees. Andrew Jarvis is currently serving in an interim
role as Chief Financial Officer after Guy Millward’s departure
in August 2020. 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. During
the 2020 COVID-19 pandemic the Board held mid-
monthly meetings from June to September in addition to
the monthly main board meeting. In total, 14 meetings
were held during the year plus a strategy day. Meetings
held between January 2020 and December 2020 and the
attendance of directors is summarised overleaf:
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Social Matters
2020 has been an extremely challenging year for people
worldwide. We believe the Company had a role to play,
both as an employer and as a good corporate citizen to
help our stakeholders through the period.
We understand the challenge caused by lack of social
contact for many our employees and ensured frequent
contact with all staff via video conferencing, including
regular social events. Many also faced challenges with
childcare which we enabled flexibility with working hours
to accommodate. Some staff struggled with home working
and wished to attend offices once they were able to
under the local restrictions and we facilitated this through
maintaining a COVID-19 safe environment and continuing
a regular enhanced cleaning regime throughout the year.
We also operate an Employee Assistance Programme
through Health Assured to provide employees with access
to legal advice, financial advice and counselling services.
As noted in the Chief Executive’s report, our Gaming
customers in particularly faced significant challenges during
the year, and we offered financial support with extending
payment terms and deferral of order commitments.
Despite this, we honoured all supplier commitments in
accordance with agreed terms.
The Board has an approved charity budget intended to
support causes local to the business’ operations and/or
closely related to its employees. After surveying our staff,
our CSR Committee selected the World Wildlife Fund as
our corporate charity and while many events were unable
to proceed as planned during the year, we raised money
through the sale of old office furniture and equipment for
the charity. We also made donations to the Cambridge City
and the Crawley Town food banks and The Royal Marsden
Cancer Charity.
The Group does not discriminate on the grounds of age,
race, sex, sexual orientation or disability and operates a
transparent and open recruitment process in which we
aim to provide all interviewed candidates with feedback.
All staff throughout the business have annual performance
development reviews and a mid-year check up against their
written objectives.
Governance Matters
cHAIrmAN’S INtroDuctIoN
to GoVerNANce
The Group has adopted 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 which it was unable
to effectively fulfil in 2020 due to COVID-19.
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Board
Meetings
Audit
Committee
Meetings
Remuneration
Committee
Meetings
7. evaluate board performance based on clear
and relevant objectives, seeking continuous
improvement
Number of meetings
M J Peagram
G Van Zwanenberg
G A Y Hudson
(resigned 2020)
N C L Jarmany
C T Lin (resigned 2020)
G P Mullins
J F Jayal
G L Millward
(resigned 2020)
N Payne
(resigned 2020)
A Jarvis (by invitation,
joined 2020)
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3
12
4
14
14
10
3
5
2
2
2
1
1
5
5
4
2
1
5
1
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.
Typically, directors would visit the Group’s major
locations over the year but due to COVID-19 many of
these visits have not been possible in person and instead
local management challenge has been conducted via
frequent video conference calls.
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.
8. Promote a corporate culture that is based
on ethical values and behaviours
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. 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. These policies
form part of a globally applicable Group Policy Handbook
and Code of Conduct.
6. ensure that between them the directors have
the necessary up-to-date experience, skills and
capabilities
9. maintain governance structures and processes
that are fit for purpose and support good
decision-making by the Board
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 26 - 27.
Details of the Group’s compliance with this principle
can be found on the Group’s website at:
https://www.quixantplc.com/results-driven/#Governance
10. communicate how the company is governed
going forward as part of a wider strategy
review and future planning discussion
See items 2, 3 and 9 on the Group’s website at:
https://www.quixantplc.com/results-driven/#Governance
and in this annual report.
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
2020 and Board governance, see pages 20 to 23 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 receives 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 and 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. Considering the capital growth aims
of shareholders, the directors are focused 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 when appropriate. 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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BOARD OF DIRECTORS
michael Peagram
NoN-eXecutIVe
cHAIrmAN
Nicholas Jarmany
NoN-eXecutIVe
DePutY cHAIrmAN
Appointed: 1 February 2013
Appointed: 16 March 2005
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.
committees: 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.
Jon Jayal
cHIef eXecutIVe
offIcer
Appointed: 20 June 2016
Skills and experience:
Annual Report and Accounts | 2020
27
Gary mullins
NoN-eXecutIVe
DIrector
Appointed: 11 January 2006
Skills and experience:
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 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 become a non-executive director on 31 May 2020.
Gary has an honours degree in Electronic Systems from the
Royal Military College of Science.
Guy van Zwanenberg
NoN-eXecutIVe
DIrector
francis Small
SeNIor NoN-eXecutIVe
DIrector
Appointed: 1 March 2013
Appointed: 15 January 2021
committees: Chairman of
the audit and member of the
remuneration committees
Skills and experience:
committees: Member of
the audit and remuneration
committees
Skills and experience:
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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. Guy is Chairman of the Audit Committee
and a member of the Remuneration Committee. The Board
considers Guy to be an independent director.
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.
Before commencing his non-executive career in 2015,
Francis had a highly successful 36 year executive career at
Ernst & Young in which he undertook a variety of
international roles including serving on the E&Y Global
Board, leading the UK Corporate Finance business and
operating as Managing Partner of European Transaction
Advisory Services.
Francis currently serves as a non-executive director on the
board of AIM-listed software business 1Spatial plc, as Chair
of government-backed investment company British Business
Investments, and as Chair of the Board of Governors of
Kingston University.
Francis serves on the Audit and Remuneration Committees
and is the Senior Independent Director (SID). The Board
considers Francis to be an independent director.
Francis has a degree in Law from Cambridge University is a
Fellow of the Institute of Chartered Accountants in England
and Wales.
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Annual Report and Accounts | 2020
29
NoN-eXecutIVe DIrector remuNerA tIoN
keY remuNerA tIoN commIttee DecISIoNS
The committee met five times in 2020:
• January 2020 to review and discuss executive bonuses
for 2019 and executive compensation and bonus
targets for 2020. No bonuses were payable for 2019
performance as the profit before tax did not exceed the
zero point of $20.0m. It was further agreed there would
be no increment in directors’ salaries in 2020.
• February 2020 to approve compensation and bonus
schemes for 2020 and discuss share option grants.
• April 2020 to agree a 25% reduction in pay of Michael
Peagram, Guy van Zwanenberg, Jon Jayal and Guy
Millward. Guy Millward’s reduction was subsequently
reversed in his payment in lieu of notice.
• August 2020 to review the pay reduction implemented
in the context of business recovery and agree restoration
to normal levels.
• September 2020 to approve issuance of share
options to employees.
michael Peagram
cHAIrmAN of tHe remuNerAtIoN
commIttee
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The non-executive directors are payed a salary through
payroll and Guy van Zwanenberg, Nick Jarmany and Gary
Mullins also receive pension contributions. The level of
salary paid to the non-executive directors is determined by
the Board. The non-executive directors do not receive any
other forms of benefits.
Details of the individual non-executive directors’
remuneration is provided in note 6 to the financial
statements.
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.
SHAre INceNtIVe ScHeme
An employee share option scheme was established in 2013
to provide a long-term performance and retention incentive
for the executive directors and employees. At 31 December
2020, options had been granted over a total of 3,037,294
shares (4.6% of the shares in issue) of which options over
687,290 shares were outstanding (1.0% of the shares in
issue). 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 page
33. Jon Jayal was issued with 65,000 fair value share
options on 6 October 2020 at an exercise price of 112.5p
with a three-year vesting period subject to the performance
conditions detailed above.
the remuneration committee is comprised of not
less than two independent 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
francis Small, 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.
The Remuneration Committee considers a number of
factors in setting remuneration policy including:
• Salary and benefits packages awarded to executives of
comparable companies;
• Our ability to attract and retain executives with the
necessary skills and capabilities to enable the Group to
operate successfully;
• Encouraging executives to deliver long-term sustainable
growth through the use of share-based incentives.
REMUNERATION
COMMITTEE REPORT
michael Peagram
cHAIrmAN of tHe remuNerAtIoN commIttee
eXecutIVe DIrector remuNerA tIoN
Consistent with this policy, benefit packages awarded
to executive directors comprise a mixture of basic salary
and pension contributions combined with performance-
related bonus and share option based compensation.
We consider external market data on both the levels of and
trends in executive remuneration.
• Basic salaries: benchmarked against salaries of
executives in comparable companies with equivalent
skills and experience.
• Pension contributions: we contribute a maximum of
10% of employees base salary to a defined contribution
pension scheme.
• Performance-related bonus: the Committee defines
bonus targets which are principally linked to relevant
profitability measures and are aligned with corporate
growth targets. The maximum annual bonus for
executive directors is at 100% of basic salary.
• Share options: the Committee considers both fair
value and nominal value conditional share option
grants with multi-year vesting periods as a means of
both aligning executive compensation with shareholder
interests and retaining talent.
Details of the individual executive directors’ remuneration
is provided in note 6 to the financial statements.
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 who prior to
his departure from the Board on 31 May 2020 operated on
a six-month notice period.
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the following specific business was dealt
with at each meeting held in 2020:
Annual results for 31 December 2019, including:
• Accounting issues report from the CFO
• Full year report from the external auditor including
Auditor’s Report to be included in the 2019 Annual
Report
• Consolidated financial statements for the year ended
31 December 2019
• Principal risks and uncertainties
• Consideration of the going concern basis for
preparation of the financial statements, including
COVID-19 impact
recommendations to the Board on:
• Consolidated financial statements
• Going concern statement
Half year results for 30 June 2020,
including reviews of:
• Accounting issues report from the CFO
• Results for the half year ended 30 June 2020
Recommendations to the Board on the half year results
Reviewed scope for the external audit for 31 December
2020, agreed fees for the 2020 audit, including an
increased scope of the audit for Densitron Japan.
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3. Internal controls
• Monitor compliance with the QCA 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
AUDIT
COMMITTEE
REPORT
Guy van Zwanenberg
cHAIrmAN of tHe AuDIt commIttee
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 Quoted companies Alliance
(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 AuDIt 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 the processes in place to prevent and detect
fraud and which enable employees to raise concerns
without fear of recriminations;
• Oversee financial results and trading announcements
with the market.
• Digest reports of fraud, bribery or whistleblowing that
occur in the Group and to oversee any remedial action.
Significant accounting issues considered by the
committee in relation to the 2020 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 and Medical
products recently developed currently show that overall the
revenue will grow and that the goodwill is not impaired.
Valuation of inventory – in dealing with the effects of
COVID-19 throughout the supply chain, the business has
handled inventory and working capital well. The Group
policy on inventory was sufficiently robust to ensure that
the carrying values were suitable and inventory was not
over-valued, but flexible enough for management to make
appropriate decisions on the realisable value of stock based
on contractual commitments from customers. Inventory
levels are understandably higher as orders for customers
were pushed out, and whilst there are component
shortages in the global market, this leaves the Group in a
strong position going into 2021.
As at 31 December 2020, the total inventory in the Quixant
CGU is $19.1m (2019: $17.1m) and in the parent company
is $13.8m (2019: $13.7m).
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Going concern – the Directors have prepared cash flow
forecasts for a period of at least 12 months from the date
of signing the financial statements and are confident that
the Group will have sufficient funds to continue to meet
its liabilities beyond the 12-month period analysed, and
therefore have prepared the financial statements on a
going concern basis.
other area of focus
Management override of controls – despite the observations
raised by KPMG, 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.
eXterNAl A uDIt
The external audit is scoped following an assessment by
KPMG of the level of materiality and the specific audit
risks. In 2020 the most significant risks identified were
the recoverability of goodwill and acquired intangibles in
the Densitron Europe CGU, Densitron US CGU and IDS
CGU, revenue recognition, valuation of inventory in the
Quixant CGU and the parent company, and going concern
assessment. 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.
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 2020. In 2021
the audit committee will review whether KPMG is able to
continue to provide these services under the new auditor
independence rules.
INterNAl coNtrolS
The review of risks facing the group is shown on pages
18 and19. 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.
Guy van Zwanenberg
cHAIrmAN of tHe AuDIt commIttee
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Annual Report and Accounts | 2020
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DIRECTORS' REPORT
Jon Jayal
DIrector
the Directors present their Annual report and
accounts for the year ended 31 December 2020.
StAtutorY INformA tIoN
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
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.
• the design, development and delivery of electronic
displays into the industrial marketplace.
Details of the share capital of the Company are set out in
note 22 of the consolidated financial statements.
The loss for the year after taxation amounted to $3.0m
(2019 profit for the year: $8.3m). Further comments
on the development of the business are included in
the Chairman’s Statement, Chief Executive’s Report and
Financial Review on pages 7-15.
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 Board proposes reinstatement of a
dividend for the year ended 31 December 2020 of 2.0p per
share. No dividend was paid during 2020.
the Group has adopted the corporate
governance code of the Quoted companies
Alliance (QcA). further comments are included
in the chairman’s Introduction to Governance on
page 22. engagement with suppliers, customers
and others in a business relationship with the
company are also disclosed in the Governance
report.
the Group have made disclosures in the
environmental, Social and Governance report
on pages 20-25 regarding Greenhouse gas
emissions, energy consumption and energy
efficiency of the business.
SuBStANtIAl SHAreHolDINGS
DIrectorS’ INDemNItY ArrANGemeNtS
On 14 April 2021 the Company had been notified of the
following significant interests in its share capital over 3%:
Shares held
Ordinary shares
of £0.001 each
% of issued
share capital
N C L Jarmany and his wife
11,506,163
Liontrust Asset Management
Mr J and Mrs S Mullins
Jupiter Asset Management
AXA Framlington Investment
Managers
C-T Lin and his wife
Amati Global Investors
Schroders Plc
Tellworth Investments
Chelverton Asset Management
G P Mullins and his wife
Octopus Investments Nominees
Limited
7,666,224
3,858,920
3,677,378
3,493,736
3,484,059
3,246,517
2,866,799
2,302,442
2,297,411
2,215,653
2,122,975
17.32%
11.54%
5.81%
5.54%
5.26%
5.24%
4.88%
4.32%
3.47%
3.46%
3.34%
3.20%
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
$4.3m (2019: $6.6m) in its R&D and customer support
programmes in the year, of which $1.7m (2019: $2.2m)
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. $1.5m of capitalised research
& development was derecognised in the year due to
extraordinary notifications by key suppliers to end-of-life
key components utilised in our gaming products; citing
changing market demands and supply chain issues brought
about by the COVID-19 pandemic.
Alexander Taylor
2,058,958
3.10%
uSe of fINANcIAl INStrumeNtS
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DIrectorS
The Directors who served during the year and their interests
in the share capital of the Company were as follows:
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
23 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 (2019: nil).
Shares held ordinary
shares of £0.001 each
options granted
£0.001 each
exercise
price
2020
2019
G A Y Hudson (resigned 23 March 2020)
N C L Jarmany
J F Jayal
C-T Lin (resigned 31 May 2020)
G L Millward (resigned 21 August 2020)
G P Mullins
N T Payne (appointed 1 July 2020, resigned 31 August 2020)
M J Peagram
G van Zwanenberg
2020
7,350
2019
7,350
11,506,163
11,201,163
—
—
383,547
375,200
65,000
3,484,059
3,484,059
—
—
2,215,653
2,215,653
14,000
263,674
27,837
—
253,674
27,837
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
£1.125
—
—
—
—
—
—
There have been no other change in the interests set out above between 31 December 2020 and 14 April 2021.
34
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GoING coNcerN
In determining the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Group and Company will have sufficient funds
to continue to meet its liabilities as they fall due for at least
12 months from the date of approval of these financial
statements.
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 would look to take
out additional funding facilities, as well as making reductions
in controllable costs. There would also be an opportunity to
sell certain property and inventory assets to accelerate cash
generation and/or mitigate risk.
Following the global pandemic in 2020, the world continues
to recover as economies begin to re-open following the
rollout of COVID-19 vaccines. Governments around the
world continue to impose various restrictions on economic
activity, the movement of people, and various other initiatives
to minimise the opportunity for the disease to spread.
Consequently, the directors are confident that the Group
and Company will have sufficient funds to continue to
meet its liabilities as they fall due for at least 12 months
from the date of approval of these financial statements and
therefore have prepared these financial statements on a
going concern basis.
The Directors have prepared cash flow forecasts for a period
of at least 12 months from the date of signing the financial
statements. Ongoing effects of the pandemic on the
forecasts include delays in recovering debts from customers
who may be facing financial difficulties, further drops
in customer demand in the coming months despite the
recovery seen in H2 2020, and the uncertain timing of sales
recovering to levels prior to the pandemic.
The Board considered their reasonably plausible but
severe downside scenario where 2021 reported revenues
were halved compared to forecast, and the performance
expected in the 2021 Budget being achieved in 2022
instead. The total revenues modelled in 2021 were lower
than the extrapolated annual revenue based on Q2 2020
performance, when the impact of COVID-19 was most
significant. In this scenario, the Group will have sufficient
cash reserves and working capital to continue operating as a
going concern beyond the 12-month period analysed.
The Board’s other reasonably plausible but severe downside
scenario can be viewed as similar to trading conditions that
were experienced in 2020. In Q2 2020, due to the global
pandemic and a significant lockdown in the USA, Gaming
revenues dropped off in Q2 2020, and but then recovered
through H2 2020. However, rather than the ongoing
trading conditions due to the pandemic, the challenge in
2021 might be related to stock and component availability.
Therefore, the Board has considered a scenario where orders
are not completed, and revenues are not received, in Q3
2021, and resume in Q4 2021. This situation would also
not cause the Group any difficulty with cashflow as per the
analysis.
SuBSeQueNt eVeNtS
The Group continues to monitor and assess the impact of
COVID-19 on the performance of the business in 2021.
The Directors are confident in the Group’s ability to react
to any further economic uncertainties that may occur
in 2021 and will continue to utilise its experiences from
2020. The net cash of the Group has improved since the
end of 2020, and the government-backed, revolving credit
facility remains available. The global component shortage
is likely to have an impact on procurement. The Board has
approved a plan to purchase additional buffer stock to
support the 2021 order book and protect the business from
ongoing global shortages, which will be managed within
our current working capital structure.
DIScloSure of INformA tIoN
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 14 April 2021.
Jon Jayal DIrector
Aisle Barn, 100 High Street, Balsham CB21 4EP
Annual Report and Accounts | 2020
35
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the parent Company’s transactions and disclose
with reasonable accuracy at any time the financial
position of the parent 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 complies 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.
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IN reSPect of tHe ANNuAl rePort
AND tHe fINANcIAl StAtemeNtS
The directors are responsible for
preparing the Annual Report and the
Group and parent Company financial
statements in accordance with applicable
law and regulations.
Company law requires the directors to prepare Group and
parent Company financial statements for each financial
year. Under the AIM Rules of the London Stock Exchange
they are required to prepare the Group financial statements
in accordance with international accounting standards in
conformity with the requirements of the Companies Act
2006 and applicable law and they have elected to prepare
the parent Company financial statements on the same basis.
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 the Group’s 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 international accounting standards in conformity
with the requirements of the Companies Act 2006;
• 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.
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Financial
Statements
INDEPENDENT
AUDITOR'S REPORT
to the members of Quixant Plc
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 2020
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 and Consolidated and
Company Cash Flow Statements, and the related notes,
including the accounting policies in note 1.
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 2020 and of the Group’s loss
for the year then ended;
• the Group financial statements have been properly
prepared in accordance with international accounting
standards in conformity with the requirements of the
Companies Act 2006;
• the parent Company financial statements have been
properly prepared in accordance with international
accounting standards in conformity with the
requirements of, 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.
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.
overview
materiality:
$370k (2019:$450k)
Group financial
statements as a
whole
coverage
3.8% of Group profit before tax
normalised by averaging over the
last four years (2019: 4.8% of Group
profit before tax)
99% (2019:100%) of total profits
and losses that made up group loss
before tax
key audit matters
vs 2019
recurring risks
Going concern
Recoverability of Group
goodwill and acquisition
related intangibles in the
Densitron Europe,
Densitron US and IDS CGUs
Valuation of inventory in
the Quixant CGU and the
parent Company
Annual Report and Accounts | 2020
37
2. keY A uDIt mAtterS:
our ASSeSSmeNt of rISkS of mA terIAl mISStAtemeNt
Key audit matters are those matters that, in our
professional judgement, 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
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. In arriving at our audit opinion above, the
key audit matters, in decreasing order of audit significance,
were as follows:
the risk
our response
Going concern
Disclosure quality
Refer to page 30
(Audit Committee
Report) and note
1 of the financial
statements.
The financial statements explain how the Board
has formed a judgement that it is appropriate to
adopt the going concern basis of preparation for
the Group and parent Company.
That judgement is based on an evaluation of
the inherent risks to the Group’s and Company’s
business model and how those risks might affect
the Group’s and Company’s financial resources
or ability to continue operations over a period of
at least a year from the date of approval of the
financial statements.
The risk most likely to adversely affect the
Group’s and Company’s available financial
resources over this period was the recovery in
customer demand in the Gaming CGU that
was predominantly impacted by the closures
of casinos around the world as a result of
COVID-19 and the resulting lockdowns. We also
considered less predictable but realistic second
order impacts, such as the issues in the supply
of raw materials which could result in a rapid
reduction of sales achievable.
The risk for our audit was whether or not those
risks were such that they amounted to a material
uncertainty that may have cast significant doubt
about the ability to continue as a going concern.
Had they been such, then that fact would have
been required to have been disclosed.
We considered whether these risks could plausibly
affect the liquidity in the going concern period by
assessing the directors’ sensitivities over the level of
available financial resources indicated by the Group’s
financial forecasts taking account of severe, but
plausible, adverse effects that could arise from these
risks individually and collectively.
our procedures also included:
• Our sector experience: Challenging the
Directors’ assessment of the risks and impact of
COVID-19 on the Group by benchmarking them to
our knowledge of the industry.
• Benchmarking assumptions: Assessing the
reasonableness of the group’s assumptions in
relation to key inputs such as projected growth
rates with our knowledge of the industry,
externally derived data and the actual performance
during the pandemic.
• Historical comparisons: Comparing the cash
flows forecasted for the year to date to actual
results.
• Sensitivity analysis: Considering sensitivities over
the level of available financial resources indicated
by the Group’s financial forecasts taking account
of plausible (but not unrealistic) adverse effects
that could arise from these risks individually and
collectively.
• Assessing transparency: Considering whether
the going concern disclosure in note 1 to the
financial statements gives a full and accurate
description of the Directors’ assessment of going
concern, including the related sensitivities.
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2. key audit matters: our assessment of risks of material misstatement (cont'd)
2. key audit matters: our assessment of risks of material misstatement (cont'd)
the risk
our response
the risk
our response
recoverability of
Group goodwill and
acquisition related
intangibles in the
Densitron europe,
Densitron uS and IDS
cGus
Goodwill:
Densitron Europe:
$2.9m (2019:$2.9m)
Densitron US:
$2.1m (2019:$2.1m)
IDS:
$0.7m (2019:$0.7m)
Acquisition related
intangibles:
Densitron Europe:
$0.5m (2019:$0.7m)
Densitron US:
$0.9m (2019:$1.1m)
IDS:
$1.1m (2019:$1.6m)
Refer to page 30
(Audit Committee
Report), note 1 and
note 11 of the financial
statements.
forecast based assessment:
our procedures also 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, as part of
our risk assessment, we determined that the
value in use of the above mentioned CGUs had
a high degree of estimation uncertainty due to
the uncertainty in the Group’s performance as
a result of COVID-19, with a potential range of
reasonable outcomes greater than our materiality
for the financial statements as a whole.
The financial statements (note 11) disclose the
sensitivity estimated by the Group for these CGUs.
• Benchmarking assumptions: Comparing the
Group’s assumptions to externally derived data
(for example competitor discount rates, inflation
and OECD growth forecast data) in relation to key
inputs such as projected economic growth and
discount rates.
• Historical comparisons: Assessing the
reasonableness of the forecasts used by considering
the historical accuracy of previous budgets.
• Sensitivity analysis: Performing our own
sensitivity analysis on assumptions such as revenue
growth rate, margins and discount rates, in
addition to those performed by the Directors, and
critically assessing the extent to which a change
in these assumptions, both individually or in
aggregate, would result in an impairment and
considered the likelihood of such events occurring.
• Comparing valuations: Comparing the sum of
the discounted cash flows to the Group’s market
capitalisation to assess the reasonableness of those
cash flows.
• 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 acquisition related
intangibles.
Valuation of
inventory in the
Quixant cGu and the
parent company
Parent company
inventory:
$13.8m (2019:$13.7m)
Quixant CGU inventory:
$19.1m (2019:
$17.1m)
Refer to page 30
(Audit Committee
Report), note 1 and
note 15 of the financial
statements.
Subjective estimate:
our procedures included:
The estimated recoverable amount of the
inventory balance in the Quixant CGU and
the parent Company is subjective due to the
inherent uncertainty involved in forecasting of
future sales.
• Review of policy: Inspecting the inventory
provision recorded by directors for consistency
with the Group’s policy and accounting standards
and recalculating the provision recognised by the
Group.
The risk is higher for this year as the Group
and parent company’s gaming revenue was
predominantly impacted by the closures
of casinos around the world as a result of
COVID-19 and the resulting lockdowns. Also,
the inventory days within the Quixant CGU have
increased from 186 days in 2019 to 278 days
in 2020. The inventory days within the parent
company have increased from 116 days in 2019
to 140 days in 2020.
The effect of these matters is that, as part of our
risk assessment for audit planning purposes, we
determined that the valuation of inventory in
the Quixant CGU and the parent company 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. In conducting our final audit
work, we reassessed the degree of estimation
uncertainty to be less than that materiality.
• Test of detail: Assessing the key assumptions
underlying the sales forecasts prepared by the
directors for reasonableness by inspecting the
committed orders in the pipeline.
• Test of detail: Comparing the levels of
inventory held at year end, in comparison to the
consumption during the year.
• Test of detail: Testing a sample of items to
purchase and sales invoices to ensure that stock is
held at the lower of cost and net realisable value.
• Test of detail: Performing our own calculation
of the expected provision and compared this with
the Group’s provision calculation and followed up
on differences.
• Assessing transparency: Assessing whether
the Group’s disclosures about the key estimates and
judgements gives a full and accurate description of
the risks in the estimation uncertainty.
Following a Group re-organization, Densitron Technologies
Limited is in liquidation and its trade and assets have
been transferred to other group companies. Accordingly,
the parent company no longer holds an investment in
Densitron Technologies Limited. We continue to perform
procedures over the recoverability of the parent company’s
investments in other subsidiaries. However, following a
review of the headroom in the client model to support the
investment carrying values, we have not assessed this as
one of the most significant risks in our current year audit
and, therefore, it is not separately identified in our report
this year.
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3. our APPlIcA tIoN of mA terIAlItY AND
AN oVerVIeW of tHe ScoPe of our A uDIt
The components within the scope of our work
accounted for the percentages illustrated below.
Materiality for the Group financial statements as a whole
was set at $370k (2019: $450k), determined with reference
to a benchmark of Group profit before tax, of which it
represents 3.8% (2019: 4.8%).
Normalised Group
profit before tax
$9,691k (2019: $14,333k)
In 2020, we normalised Group profit before tax by
averaging over the last four years due to the impact of the
COVID-19 pandemic on the Group’s financial results.
Materiality for the parent Company financial statements as
a whole was set at $180k (2019: $135k), determined with
reference to a benchmark of Company revenue, of which it
represents 0.4% (2019: 0.3%).
In line with our audit methodology, our procedures
on individual account balances and disclosures were
performed to a lower threshold, performance materiality,
so as to reduce to an acceptable level the risk that
individually immaterial misstatements in individual account
balances add up to a material amount across the financial
statements as a whole.
Performance materiality was set at 65% (2019: 75%) of
materiality for the financial statements as a whole, which
equates to $241k (2019: $337k) for the Group and $117k
(2019: $101k) for the parent Company. We applied this
percentage in our determination of performance materiality
based on the level of identified misstatements and control
deficiencies during the prior period.
We agreed to report to the Audit Committee any corrected
or uncorrected identified misstatements exceeding
$19k (2019: $22.5k), in addition to other identified
misstatements that warranted reporting on qualitative
grounds.
Of the Group’s 10 (2019: 15) reporting components,
we subjected 7 (2019: 8) to full scope audits for Group
purposes and 0 (2019: 2) to specified risk-focused audit
procedures.
Group materiality
$370k (2019: $450k)
$370k
Whole financial statements
materiality (2019: $450k)
$241k
Whole financial statements
performance materiality
(2019: $337k)
$275k
Range of materiality at 7
components ($90k to $275k)
(2019: $70k to $330k)
$19k
Misstatements reported
to the audit committee
(2019: $22.5k)
Normalised PBT
Group materiality
Group revenue
total profits and losses that
made up group loss before tax
97%
(2019 100%)
99%
(2019 100%)
Group total assets
98%
(2019 96%)
key:
Full scope for Group audit purposes 2020
Specified risk-focused audit procedures 2020
Full scope for Group audit purposes 2019
Specified risk-focused audit procedures 2019
Residual components
The remaining 3% (2019: 0%) of total Group revenue, 1%
(2019: 0%) of total profits and losses that made up group
loss before tax and 2% (2019: 4%) of total Group assets is
represented by 3 (2019: 5) reporting components, none of
which individually represented more than 5% (2019: 5%)
of any of total Group revenue, total profits and losses that
made up group loss before tax or total Group assets. For
these 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 $90k to $275k (2019: $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
10 components (2019: 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 regards 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.
4. GoING coNcerN
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the
Group or the Company or to cease their operations, and
as they have concluded that the Group and the Company’s
financial position means that this is realistic. They have
also concluded that there are no material uncertainties
that could have cast significant doubt over their ability to
continue as a going concern for at least a year from the
date of approval of the financial statements (“the going
concern period”).
An explanation of how we evaluated management’s
assessment of going concern is set out in the related key
audit matter in section 2 of this report.
Our conclusions based on this work:
• we consider that the directors’ use of the going concern
basis of accounting in the preparation of the financial
statements is appropriate;
• we have not identified, and concur with the directors’
assessment that there is not, a material uncertainty
related to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s
or Company's ability to continue as a going concern for
the going concern period; and
• we found the going concern disclosure in note 1 of the
financial statements to be acceptable
• However, as we cannot predict all future events or
conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that
were reasonable at the time they were made, the above
conclusions are not a guarantee that the Group or the
Company will continue in operation.
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Annual Report and Accounts | 2020
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We also performed procedures including:
•
Identifying journal entries to test for all full scope
components based on risk criteria and comparing the
identified entries to supporting documentation. These
included those posted to unusual accounts.
• Assessing significant accounting estimates for bias.
Identifying and responding to risks of material misstatement
due to non-compliance with laws and regulations.
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on
the financial statements from our general commercial
and sector experience and through discussion with the
directors (as required by auditing standards), and discussed
with the directors and other management the policies
and procedures regarding compliance with laws and
regulations.
We communicated identified laws and regulations
throughout our team and remained alert to any indications
of non-compliance throughout the audit. This included
communication from the Group to component audit teams
of relevant laws and regulations identified at the Group
level, and a request for component auditors to report to
the Group team any instances of non-compliance with
laws and regulations that could give rise to a material
misstatement at the Group level.
The potential effect of these laws and regulations on the
financial statements varies considerably.
Firstly, the Group is subject to laws and regulations that
directly affect the financial statements including financial
reporting legislation (including related companies
legislation), distributable profits legislation and taxation
legislation and we assessed the extent of compliance with
these laws and regulations as part of our procedures on the
related financial statement items.
5. frAuD AND BreAcHeS of lAWS
AND reGulAtIoNS – ABIlItY to Detect
Identifying and responding to risks of material misstatement
due to fraud.
To identify risks of material misstatement due to fraud
(“fraud risks”) we assessed events or conditions that
could indicate an incentive or pressure to commit fraud or
provide an opportunity to commit fraud.
Our risk assessment procedures included:
• Enquiring of directors, the audit committee and
inspection of policy documentation as to the Group’s
high-level policies and procedures to prevent and detect
fraud, and the Group’s channel for “whistleblowing”,
as well as whether they have knowledge of any actual,
suspected or alleged fraud.
• Reading board and audit committee meeting minutes.
• Considering remuneration incentive schemes and
performance targets for management, directors and
sales staff.
• Using analytical procedures to identify any unusual or
unexpected relationships.
We communicated identified fraud risks throughout the
audit team and remained alert to any indications of fraud
throughout the audit. This included communication
from the Group to component audit teams of relevant
fraud risks identified at the Group level and request to
component audit teams to report to the Group audit team
any instances of fraud that could give rise to a material
misstatement at the Group level.
As required by auditing standards, and taking into account
possible pressures to meet profit targets, we perform
procedures to address the risk of management override of
controls and the risk of fraudulent revenue recognition, in
particular the risk that product sales revenue is recorded in
the wrong period and the risk that Group and component
management may be in a position to make inappropriate
accounting entries, and the risk of bias in accounting
estimates and judgements such as valuation of inventory.
Further detail in respect of valuation of inventory in the
Quixant CGU and the parent Company is set out in the key
audit matter disclosures in section 2 of this report.
We did not identify any additional fraud risks.
Secondly, the Group is subject to many other laws and
regulations where the consequences of non-compliance
could have a material effect on amounts or disclosures
in the financial statements, for instance through the
imposition of fines or litigation. We identified the following
areas as those most likely to have such an effect: GDPR,
health and safety, anti-bribery, employment law and
certain aspects of Company legislation recognising the
nature of the Group’s activities. Auditing standards limit
the required audit procedures to identify non-compliance
with these laws and regulations to enquiry of the directors
and inspection of regulatory and legal correspondence, if
any. Therefore if a breach of operational regulations is not
disclosed to us or evident from relevant correspondence, an
audit will not detect that breach.
Context of the ability of the audit to detect fraud
or breaches of law or regulation.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some
material misstatements in the financial statements, even
though we have properly planned and performed our audit
in accordance with auditing standards. For example, the
further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial
statements, the less likely the inherently limited procedures
required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk
of non-detection of fraud, as these may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal controls. Our audit procedures are
designed to detect material misstatement. We are not
responsible for preventing non-compliance or fraud and
cannot be expected to detect non-compliance with all laws
and regulations.
6. We HAVe NotHING to rePort oN
tHe otHer INformA tIoN IN tHe ANNu Al
rePort
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.
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Annual Report and Accounts | 2020
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7. We HAVe NotHING to rePort oN tHe
otHer mAtterS oN WHIcH We Are
reQuIreD to rePort BY eXcePtIoN
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.
8. reSPectIVe reSPoNSIBIlItIeS
Director’s responsibilities
As explained more fully in their statement set out on
page 35, 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.
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.
A fuller description of our responsibilities
is provided on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities
9. 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.
kelly Dunn (SeNIor StAtutorY AuDItor)
for and on behalf of kPmG llP, Statutory Auditor
Chartered Accountants
Botanic House
100 Hills Road
Cambridge
CB2 1AR
14 April 2021
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coNSolIDAteD StAtemeNt of ProfIt AND loSS AND otHer comPreHeNSIVe INcome
For the years ended 31 December 2020 and 2019
coNSolIDAteD AND comPANY BAlANce SHeetS
As at 31 December 2020 and 2019
revenue
Cost of sales
Gross profit
Operating expenses
operating (loss) / profit
Financial expenses
(loss) / Profit before tax
Taxation
(loss) / Profit for the year
other comprehensive income for the year, net of income tax
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences
total comprehensive (expense) / income for the year
Basic earnings per share
Diluted earnings per share
2020
total
$000
63,794
(43,742)
20,052
(21,904)
(1,852)
(151)
(2,003)
(955)
(2,958)
2019
Total
(Restated*)
$000
92,320
(60,259)
32,061
(22,507)
9,554
(136)
9,418
(1,102)
8,316
Note
2,3
4
7
8
788
(2,170)
9
9
($ 0.0445)
($ 0.0445)
(144)
8,172
$ 0.1252
$ 0.1243
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.
The consolidated statement of profit and loss and other
comprehensive income has been prepared on the basis that
all operations are continuing operations.
* See prior year adjustment note, (note 29).
Notes on pages 51 to 80 form part of the financial statements.
Non-current assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Investment property
Investments in group companies and associated undertakings
Deferred tax assets
Trade and other receivables
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
Annual Report and Accounts | 2020
47
Note
10
11
24
12
13
14
16
15
16
17
18
19
24
18
21
14
24
22
22
GrouP
comPANY
2020
$000
6,004
16,189
1,276
—
—
1,267
—
24,736
21,601
16,517
18,804
56,922
81,658
2019
$000
5,926
18,449
894
—
—
340
—
25,609
20,180
23,902
16,954
61,036
86,645
2020
$000
3,975
1,280
200
—
9,376
314
25,393
40,538
13,779
6,282
3,080
23,141
63,679
2019
$000
3,695
1,888
252
—
9,346
44
—
15,225
13,735
37,535
1,219
52,489
67,714
(695)
(82)
(96)
(81)
(12,913)
(17,756)
(10,723)
(12,184)
(1,022)
(386)
—
(406)
(83)
(200)
(51)
(252)
(15,016)
(18,244)
(11,102)
(12,568)
(712)
(354)
(1,322)
(901)
(3,289)
(18,305)
63,353
106
6,708
1,571
54,086
882
63,353
(738)
(343)
(1,469)
(564)
(3,114)
(21,358)
65,287
106
6,698
1,345
57,044
94
65,287
(712)
—
(76)
—
(788)
(11,890)
51,789
106
6,708
1,571
42,040
1,364
51,789
(738)
—
—
—
(738)
(13,306)
54,408
106
6,698
1,345
45,915
344
54,408
These financial statements were approved and authorised
for issue by the Board of Directors on 14 April 2021 and
were signed on behalf of the Board by:
Jon Jayal DIrector
Company registered number: 04316977
Notes on pages 51 to 80 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
T
A
A
T
T
E
E
M
M
E
E
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N
T
T
S
S
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Annual Report and Accounts | 2020
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coNSolIDAteD AND comPANY StAtemeNt of cHANGeS IN eQuItY
For the years ended 31 December 2020 and 2019
coNSolIDAteD AND comPANY StAtemeNt of cHANGeS IN eQuItY
For the years ended December 2020 and 2019
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 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 for the year
Other comprehensive loss
total comprehensive (expense) / 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
—
—
243
8,316
—
8,316
8,316
(144)
8,172
—
243
(2,760)
(2,760)
—
199
(2,760)
(2,318)
total comprehensive income for the period
Profit for the year
Other comprehensive income
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
—
—
243
33,311
33,311
—
367
33,311
33,678
—
243
(2,760)
(2,760)
—
199
(2,760)
(2,318)
1,345
57,044
65,287
Balance at 31 December 2019
106
6,698
344
1,345
45,915
54,408
Balance at 1 January 2020
106
6,698
94
1,345
57,044
65,287
Balance at 1 January 2020
106
6,698
344
1,345
45,915
54,408
total comprehensive income for the period
Loss for the year
Other comprehensive income
total comprehensive income / (expense) 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
—
—
—
—
—
—
—
—
—
—
—
—
10
10
—
788
788
—
—
—
—
—
(2,958)
(2,958)
—
—
788
—
(2,958)
(2,170)
226
—
—
226
—
—
—
—
226
—
10
236
total comprehensive income for the period
Loss for the year
Other comprehensive income
total comprehensive income / (expense) for the period
transactions with owners, recorded directly in equity
Share-based payments
Dividend paid
Exercise of share options
Balance at 31 December 2020
106
6,708
882
1,571
54,086
63,353
total contributions by and distributions to owners
—
—
—
—
—
—
—
—
—
—
—
—
10
10
—
1,020
1,020
—
—
—
—
—
—
—
226
—
—
226
(3,875)
(3,875)
—
1,020
(3,875)
(2,855)
—
—
—
—
226
—
10
236
Balance at 31 December 2020
106
6,708
1,364
1,571
42,040
51,789
Notes on pages 51 to 80 form part of the financial statements.
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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
50
plc
plc
coNSolIDAteD AND comPANY cASH floW St AtemeNtS
For the years ended 31 December 2020 and 2019
cash flows from operating activities
(loss) / Profit for the year
Adjustments for:
Depreciation, amortisation and impairment
Impairment losses on intangible assets
Depreciation of leased assets
Change in fair value of investment property
Movement in provisions
Taxation expense
Dividends received
Financial expense
Lease liability interest expense
Equity-settled share-based payment expenses
Decrease / (increase) in trade and other receivables
Decrease / (increase) in inventories
(Decrease) in trade and other payables
Interest paid
Lease liability interest paid
Tax paid
Net cash from operating activities
cash flows from investing activities
Acquisition of subsidiary, net of cash acquired
Capitalised development expenditure
Acquisition of property, plant and equipment
Acquisition of intangible assets
Dividends received
Net cash from investing activities
cash flows from financing activities
Reduction / repayment of borrowings
Proceeds from new government loans (net of waiver of $297k)
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
Foreign exchange rate movements
GrouP
comPANY
Note
2020
$000
2019
$000
2020
$000
2019
$000
(2,958)
8,316
(3,875)
33,311
3,084
1,503
473
—
(1,061)
955
—
96
55
226
2,373
7,026
14
(4,625)
4,788
(96)
(55)
(663)
3,974
—
(1,738)
(431)
(71)
—
(19)
606
(526)
—
10
71
1,805
16,954
45
2,853
—
680
631
36
1,102
—
16
120
243
13,997
7,459
(488)
(3,636)
17,332
(16)
(120)
(2,282)
970
—
230
—-
(194)
105
(391)
12
13
166
(2,964)
5,734
923
(1,523)
2,170
(12)
(13)
(73)
14,914
2,072
(2,392)
(2,165)
(316)
(433)
—
(534)
—
(674)
(2,760)
200
(3,768)
5,840
11,082
32
16,954
—
—
(383)
(71)
391
(63)
(11)
—
(191)
—
10
(192)
1,817
1,219
44
3,080
(2,240)
(5,306)
3,562
—
402
—
—
266
—
13
52
243
37,849
(27,600)
496
(7,140)
3,605
(13)
(52)
(971)
2,569
—
—
(165)
(432)
—
(597)
(267)
—
(402)
(2,760)
200
(3,229)
(1,257)
2,456
20
1,219
10
11
18
18
18
cash and cash equivalents at 31 December
17
18,804
Notes on pages 51 to 80 form part of the financial statements.
Annual Report and Accounts | 2020
51
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 a public
company that is incorporated and domiciled in the UK.
The registered number is 04316977. The address of the
Company’s registered office is Aisle Barn, 100 High Street,
Balsham, Cambridge, CB21 4EP.
sell. These calculations require the use of estimates and
assumptions that have a significant estimation uncertainty
in the current year. See note 11 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.
other estimates
Provisions against slow-moving and obsolete inventory
are reviewed on a monthly basis and require the use of
judgement to estimate its value.
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 inclusive of its branch in Taiwan, and not
about this group.
The estimated recoverable amount of the inventory balance
in the Quixant CGU and the parent Company is subjective
due to the inherent uncertainty involved in forecasting of
future sales. As at 31 December 2020, the total inventory
in the Quixant CGU is $19.1m (2019: $17.1m) and in the
parent company is $13.8m (2019: $13.7m).
Basis of preparation
Significant judgement
Both the parent Company financial statements and the
Group financial statements have been prepared and
approved by the Directors in accordance with inter-
national accounting standards in conformity with the
requirements of the Companies Act 2006 (“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 and the valuation of inventory.
Significant estimates
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
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 $1.7m (2019: $2.2m) 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.
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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. The functional and presentational
currency adopted by the parent Company is US Dollars, and
the functional currency of the branch is Taiwan Dollars.
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Going concern
In determining the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Group and Company will have sufficient funds
to continue to meet its liabilities as they fall due for at least
12 months from the date of approval of these financial
statements.
Following the global pandemic in 2020, the world continues
to recover as economies begin to re-open following the
rollout of COVID-19 vaccines. Governments around the
world continue to impose various restrictions on economic
activity, the movement of people, and various other initiatives
to minimise the opportunity for the disease to spread.
The Directors have prepared cash flow forecasts for a period
of at least 12 months from the date of signing the financial
statements. Ongoing effects of the pandemic on the
forecasts include delays in recovering debts from customers
who may be facing financial difficulties, further drops
in customer demand in the coming months despite the
recovery seen in the second half of 2020, and the uncertain
timing of sales recovering to levels prior to the pandemic.
The Board considered their reasonably plausible but
severe downside scenario where 2021 reported revenues
were halved compared to forecast, and the performance
expected in the 2021 Budget being achieved in 2022
instead. The total revenues modelled in 2021 were lower
than the extrapolated annual revenue based on Q2 2020
performance, when the impact of COVID-19 was most
significant. In this scenario, the Group will have sufficient
cash reserves and working capital to continue operating as a
going concern beyond the 12-month period analysed.
The Board’s other reasonably plausible but severe downside
scenario can be viewed as similar to trading conditions that
were experienced in 2020. In Q2 2020, due to the global
pandemic and a significant lockdown in the USA, Gaming
revenues dropped off in Q2 2020, and but then recovered
through H2 2020. However, rather than the ongoing
trading conditions due to the pandemic, the challenge in
2021 might be related to stock and component availability.
Therefore, the Board has considered a scenario where orders
are not completed, and revenues are not received, in Q3
2021, and resume in Q4 2021. This situation would also
not cause the Group any difficulty with cashflow as per the
analysis.
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 would look to take
out additional funding facilities, as well as making reductions
in controllable costs. There would also be an opportunity to
sell certain property and inventory assets to accelerate cash
generation and/or mitigate risk.
Consequently, the directors are confident that the Group
and Company will have sufficient funds to continue to
meet its liabilities as they fall due for at least 12 months
from the date of approval of these financial statements and
therefore have prepared these financial statements on a
going concern basis.
revenue recognition
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 and
other 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 at a point in time when the delivery terms of
the terms of sale have been met and there is minimal
judgement in regards to this;
• The Group no longer retains 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 based on standalone selling prices.
The group has not identified any contracts which include
either variable consideration or significant financing
components. Other revenue streams of the group are
immaterial.
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”).
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.
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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
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:
• 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.
Intangible assets – computer software
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.
customer relationships Between 4 and 10 years
order backlog
Between 1 and 4 years
Inventories
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:
Inventories, which comprise goods held for resale, are
stated at the lower of cost and net realisable value. Cost is
accounted for on an average basis, and includes all costs in
acquiring the inventories and bringing each product to its
present location and condition, as well as an appropriate
share of overheads based on normal operating capacity.
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
leases, right of use assets and lease liabilities
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
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.
Government grants
The Group has elected to present COVID-19 government
support grants as a reduction to the related expense line in
the Comprehensive Statement of Profit and Loss and Other
Comprehensive Income – in this case, Operating Expenses.
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.
All leases are accounted for by recognising a right-of-use
asset and a lease liability except for:
• Leases of low value assets; and
• Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease
term, with the discount rate determined by reference to
the rate inherent in the lease. If not available, the Group’s
incremental borrowing rate on commencement of the lease
is used.
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.
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 Consolidated
Statement of Profit and Loss and 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.
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financial assets
When determining whether the credit risk of a financial
asset has increased significantly since initial recognition
and when estimating ECL, the Group considers reasonable
and supportable information that is relevant and
available without undue cost or effort. This includes both
quantitative and qualitative information and analysis, based
on the Group’s historical experience and informed credit
assessment and including forward-looking information.
The gross carrying amount of a financial asset is written
off (either partially or in full) to the extent that there is no
realistic prospect of recovery. 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 are measured at
amortised cost.
• cash and cash equivalents: Cash and cash
equivalents in the Consolidated Balance Sheet comprise
cash at bank and in hand and short-term deposits. Cash
and cash equivalents are measured at amortised cost.
In the Consolidated Cash Flow Statement, cash and cash
equivalents comprise cash and cash equivalents as defined
above, net of bank overdrafts.
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 (unless there is no evidence of
unwillingness or of an inability to settle the debt).
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 Consolidated Balance
Sheet. 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.
financing income and expenses
Financing expenses include interest payable, finance
charges on shares classified as liabilities and finance
charges on lease liabilities recognised in profit or loss using
the effective interest method, unwinding of the discount
on provisions, and net foreign exchange losses that are
recognised in the income statement (see foreign currencies
accounting policy). Borrowing costs that are directly
attributable to the acquisition, construction or production
of an asset that takes a substantial time to be prepared for
use, are capitalised as part of the cost of that asset.
Financing income comprise interest receivable on funds
invested, dividend income, interest income on lease
receivables and net foreign exchange gains.
Interest income and interest payable is recognised in profit
or loss as it accrues, using the effective interest method.
Dividend income is recognised in the income statement
on the date the entity’s right to receive payments is
established. Foreign currency gains and losses are reported
on a net basis.
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
(loss) / Profit Before tax reconciliation
(Loss) / Profit Before Tax and adjusted PBT for the current
and prior year have been derived as follows:
(loss) / Profit for the year
Adding back:
Taxation expense
(loss) / profit before tax
Adjustments:
Research & development derecognised1
Amortisation of customer relationships and order backlog2
Share-based payments expense3
Loss on disposal of subsidiary
IDS acquisition costs
Restructuring cost4
Adjusted PBt
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 (loss) / profit before tax to adjusted PBT
identifying those reconciling items of income and expense.
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PBt
2020
$000
(2,958)
955
(2,003)
1,503
920
226
—
—
674
1,320
2019
$000
8,316
1,102
9,418
—
663
243
124
63
169
10,680
1. To derecognise capitalised research & development due
3. Share-based payments expense has been excluded as they are
to one-off notifications by key suppliers to end-of-life key
components utilised in our gaming products; citing changing
market demands and supply chain issues brought about by the
COVID-19 pandemic.
2. The amortisation of customer relationships and order backlog
has been excluded as it is not a cash expense to the Group.
not a cash-based expense.
4. 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 year
under review the directors have excluded restructuring costs in
respect of employee departures.
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2. BuSINeSS AND GeoGrAPHIcAl SeGmeNtS
The Chief Operating Decision Maker (CODM) 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 segmental split of the balance sheet is
not reviewed by the CODM and they do not look at assets/
liabilities of each division separately but combined as a
group. Therefore, this split for assets has not been included.
The operating segments applicable to the Group are as
follows:
• Quixant - Three customers each accounted for over 10%
of revenues in 2020. One accounted for 30.9%, another
customer 22.6% and the other accounted for 13.6%.
• 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.
2020
Revenue from products
Profit / (Loss) before tax
2019
Revenue from products
Profit before tax
1. 2020 Quixant revenue from products splits into Gaming Platforms $27.5m
(2019: $46.6m) and Gaming Monitors $2.8m (2019: $9.6m). Gaming Monitors also
splits into Button-decks $2.5m (2019: $5.4m) and Monitors $0.3m (2019: $4.2m).
2. 2020 Densitron revenue from products splits into Densitron $32.5m (2019: $35.3m)
and IDS $1.0m (H2 2019: $0.9m)
Quixant
$000
Densitron
$000
total
$000
30,3181
151
33,4762
(2,154)
63,794
(2,003)
56,169
7,980
36,151
1,438
92,320
9,418
3. 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
2020
$000
8,521
2,793
4,375
16,984
28,857
2,264
63,794
2020
$000
27,786
2019
$000
15,517
5,452
5,297
18,533
46,693
828
92,320
2019
$000
44,148
4. eXPeNSeS AND A uDItor'S remuNerA tIoN
Included in profit/loss are the following:
Included in operating (loss) / profit:
Restructuring cost
(Gain) / Loss on foreign exchange transactions
Research and development expenditure
Of which capitalised
Depreciation of owned assets
Amortisation of intangible assets
Research & development derecognised1
1. To derecognise capitalised research & development due to one-off notifications by key
suppliers to end-of-life key components utilised in our gaming products; citing changing
market demands and supply chain issues brought about by the COVID-19 pandemic.
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 parent company
Audit of financial statements of subsidiaries of the company
Taxation
5. 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 were as follows:
Wages and salaries
COVID-19 support1
Share-based payments (See note 20)
Social security costs
Contributions to defined contribution plans
1. The Group has received government grants to support payroll costs during the COVID-19
pandemic. This includes $297k for Densitron USA, $217k for Quixant Taiwan and $32k for
Quixant Italia.
2020
$000
674
(221)
4,344
(1,738)
477
2,607
1,503
2020
$000
271
83
66
2019
$000
169
4
6,568
(2,165)
527
2,325
—
2019
$000
224
69
107
2020
Number
2019
Number
37
89
30
53
209
2020
$000
13,753
(546)
226
1,076
625
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
-
N
o
t
e
s
t
o
t
h
e
fi
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
33
94
39
57
223
2019
$000
14,502
—
243
986
534
15,134
16,265
60
plc
plc
6. DIrector'S remuNerA tIoN
7. fINANce eXPeNSe
eXecutIVe DIrectorS
Jon Jayal
Guy Millward*
Nick Jarmany
Gary Mullins
JJ (C-T) Lin
Salary
$000
366
501
57
54
71
total executive Directors
1,049
NoN-eXecutIVe DIrectorS
Michael Peagram
Guy van Zwanenberg
Gaye Hudson
Nick Jarmany
Gary Mullins
Nigel Payne
106
56
24
38
38
8
Total Non-executive Directors
270
total Board
1,319
2020
Share-
based
payment
$000
Pension
cont.
$000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
13
—
6
5
—
24
—
2
1
4
4
—
11
35
total
$000
Salary
$000
379
501
63
59
71
387
305
138
132
218
1,073
1,180
106
114
58
25
42
42
8
59
53
—
—
—
281
226
1,354
1,406
2019
Share-
based
payment
$000
Pension
cont.
$000
total
$000
432
326
152
145
222
1,277
114
60
54
—
—
—
228
13
—
14
13
4
44
—
1
1
—
—
—
2
46
1,505
32
21
—
—
—
53
—
—
—
—
—
—
—
53
* Includes additional payment of $284,298 in lieu of notice
Jon Jayal, Michael Peagram and Guy van Zwanenberg
elected to take a 25% pay reduction for three months in
2020 while the business was experiencing weak demand
from its gaming customers due to COVID-19.
Nick Jarmany and Gary Mullins moved into non-executive
director roles and JJ (C-T) Lin retired from the Board on 31
May 2020. Nigel Payne was appointed to the Board on 1
July 2020 and retired from the Board on 31 August 2020.
Guy Millward retired from the Board on 21 August 2020
and was paid $284,298 in lieu of notice. Gaye Hudson
retired from the Board on 19 May 2020.
Pension contributions are paid at 10% to Nick Jarmany and
Gary Mullins and at 5% to Guy van Zwanenberg and Gaye
Hudson. Jon Jayal elected to be paid £10,000 a year as
pension contribution from the company with the remainder
of his 10% pension contribution to be added to his base
salary. Guy Millward 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.
Jon Jayal was issued with 65,000 fair value share options
on 6 October 2020 at an exercise price of 112.5p with
a three year vesting period subject to 10% per annum
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.
No share options have been exercised by the Directors in
2020, and no new Directors’ long-term incentive awards
vested in 2020.
No performance bonus targets were met in 2019 and
therefore no bonuses were paid in 2020 to the executive
directors. No bonuses are payable to the executive directors
in 2021 for 2020’s financial performance.
There were no cash or non-cash benefits received by the
directors in 2020. There were no director's advances, credits
or guarantees outstanding at 31 December 2020 or 2019.
Total interest expense on financial liabilities measured at amortised cost
total finance expense
8. tAXAtIoN
recognised in the profit and loss account
current tax expense
UK corporation tax
Foreign tax
Adjustments for prior years
current tax expense
Deferred tax1 (note 14)
Origination and reversal of temporary differences
Adjustments for prior years
Change in deferred tax rate to 19% (2019: 17%)
Deferred tax
total tax expense in the income statement
reconciliation of effective tax rate
(loss) / Profit for the year
Total taxation expense
(loss) / Profit excluding taxation
tax using the uk corporation tax rate of 19% (2019: 19%)
Non-deductible expenses
Enhanced research and development claim
Patent box tax relief
Change in deferred tax rate to 19% (2019: 17%)
Overseas tax in excess of standard UK rate
Exercise of share options
Unrelieved / (relieved) losses
Under / (over) provided in prior years
Other
total taxation expense in the income statement
Annual Report and Accounts | 2020
61
2020
$000
151
151
2020
$000
618
1,009
400
2,027
(1,074)
(80)
82
(1,072)
955
2020
$000
(2,958)
955
(2,003)
(381)
30
445
—
84
323
8
200
320
(74)
955
2019
$000
136
136
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)
(177)
(47)
1,102
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
-
N
o
t
e
s
t
o
t
h
e
fi
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
1.
In the prior year, deferred tax was calculated at 17%, but this year it is calculated at 19%.
factors that may affect future tax charges
A reduction in the UK corporation tax rate from 19%
to 17% (effective 1 April 2020) was substantively enacted
on 6 September 2016. This was reversed and the
reinstatement of the 19% rate was substantively enacted
on 17 March 2020.
In the 3 March 2021 Budget, it was announced that the UK
tax rate will increase to 25% from 1 April 2023. This will
have a consequential effect on the Group’s and Company’s
future tax charge. If this rate change had been substantively
enacted at the current balance sheet date, the deferred
tax liability would have increased by $0.4m. However, this
would have been substantially offset by the recognition of
tax losses as a deferred tax asset.
62
plc
plc
9. eArNINGS Per orDINArY SHAre (ePS)
10. ProPertY, PlANt AND eQuIPmeNt – GrouP
earnings
Earnings for the purposes of basic and diluted EPS being net (loss) / profit attributable to equity shareholders
(2,958)
8,316
2020
$000
2019
$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
66,437,683
66,404,468
154,375
499,053
66,592,058
66,903,521
($0.0445)
($0.0445)
$0.1252
$0.1243
calculation of adjusted diluted earnings per share:
$000
$000
earnings
Earnings for the purposes of basic and diluted EPS being net (loss) / profit attributable to equity shareholders
(2,958)
8,316
Adjustments
Research & development derecognised
Amortisation of customer relationships and order backlog
Share-based payments expense
Loss on disposal of subsidiary
IDS acquisition costs
Restructuring cost
Tax effect of adjustments
Adjusted earnings
Adjusted diluted earnings per share
1,503
920
226
—
—
674
365
(631)
(266)
—
663
243
124
63
169
9,578
(239)
9,339
$0.0040
$ 0.1396
cost
Balance at 1 January 2019
Additions
Disposals
Effect of movements in foreign exchange
Balance at 31 December 2019
Balance at 1 January 2020
Additions
Disposals
Effect of movements in foreign exchange
Balance at 31 December 2020
Depreciation
Balance at 1 January 2019
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
Balance at 31 December 2019
Balance at 1 January 2020
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
Balance at 31 December 2020
Net book value
At 1 January 2019
At 31 December 2019 and 1 January 2020
At 31 December 2020
Annual Report and Accounts | 2020
63
land and
Buildings
$000
Plant and
equipment
$000
5,571
58
—
(24)
5,605
5,605
179
—
186
3,071
258
(285)
55
3,099
3,099
252
(17)
21
total
$000
8,642
316
(285)
31
8,704
8,704
431
(17)
207
5,970
3,355
9,325
506
123
—
(2)
627
627
105
—
23
755
5,066
4,978
5,215
2,033
404
(280)
(6)
2,151
2,151
372
(16)
59
2,539
527
(280)
(8)
2,778
2,778
477
(16)
82
2,566
3,321
1,038
948
789
6,104
5,926
6,004
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
-
N
o
t
e
s
t
o
t
h
e
fi
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
64
plc
plc
Annual Report and Accounts | 2020
65
10. ProPertY, PlANt AND eQuIPmeNt – comPANY
11. INtANGIBle ASSetS – GrouP
cost
Balance at 1 January 2019
Additions
Effect of movements in foreign exchange
Balance at 31 December 2019
Balance at 1 January 2020
Additions
Disposals
Effect of movements in foreign exchange
Balance at 31 December 2020
Depreciation
Balance at 1 January 2019
Depreciation charge for the year
Balance at 31 December 2019
Balance at 1 January 2020
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
Balance at 31 December 2020
Net book value
At 1 January 2019
At 31 December 2019 and 1 January 2020
At 31 December 2020
land and
Buildings
$000
Plant and
equipment
$000
3,505
44
—
3,549
3,549
179
—
215
1,957
121
66
2,144
2,144
204
(17)
25
total
$000
5,462
165
66
5,693
5,693
383
(17)
240
cost
Balance at 1 January 2019
Additions – internally developed
Additions – externally purchased
Balance at 31 December 2019
Balance at 1 January 2020
Additions – internally developed
Additions – externally purchased
Disposals
3,943
2,356
6,299
Effect of movements in foreign exchange
333
78
411
411
58
—
27
496
3,172
3,138
3,447
1,378
209
1,587
1,587
196
(16)
61
1,711
287
1,998
1,998
254
(16)
88
1,828
2,324
579
557
528
3,751
3,695
3,975
Balance at 31 December 2020
Amortisation and impairment
Balance at 1 January 2019
Amortisation for the year
Balance at 31 December 2019
Balance at 1 January 2020
Amortisation for the year
Disposals1
Effect of movements in foreign exchange
Balance at 31 December 2020
Net book value
At 1 January 2019
At 31 December 2019 and 1 January 2020
At 31 December 2020
customer
relationships
technology
and order
Backlog
$000
Internally
Generated
capitalised
Development
costs
$000
computer
Software
$000
5,201
—
1,895
7,096
7,096
—
—
—
—
1,954
—
432
2,386
2,386
—
71
(23)
96
8,451
2,165
—
10,616
10,616
1,738
—
—
4
Goodwill
$000
6,939
—
744
7,683
7,683
—
—
—
—
total
$000
22,545
2,165
3,071
27,781
27,781
1,738
71
(23)
100
7,683
7,096
2,530
12,358
29,667
—
—
—
—
—
—
—
—
2,807
663
3,470
3,470
920
—
—
532
311
843
843
367
(23)
59
4,390
1,246
6,939
7,683
7,683
2,394
3,626
2,706
1,422
1,543
1,284
3,668
1,351
5,019
5,019
1,320
1,503
—
7,842
4,783
5,597
4,516
7,007
2,325
9,332
9,332
2,607
1,480
59
13,478
15,538
18,449
16,189
1. A number of in-progress and completed development projects
have been abandoned in full due to the supplier notifications
to end-of-life key components utilised in our gaming products;
citing changing market demands and supply chain issues
brought about by the COVID-19 pandemic. Therefore, these
intangible assets, which had a carrying value of $1.5m, were
derecognised as no future economic benefits were expected.
This gave rise to a loss on derecognition of $1.5m.
Impairment testing
Goodwill and acquisition related intangibles have been
allocated to Cash Generating Units (CGUs) as follows:
Goodwill
Acquisition related
intangibles
2020
$000
1,363
744
2,873
2,076
485
142
2019
$000
1,363
744
2,873
2,076
485
142
2020
$000
—
1,124
543
911
128
—
2019
$000
—
1,637
724
1,094
171
—
7,683
7,683
2,706
3,626
Quixant Gaming
IDS
Densitron Europe
Densitron US
Densitron France
Densitron Japan
The Group tests goodwill annually for impairment or more
frequently if there are indications that goodwill might
be impaired at the individual CGU level. 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 2021, together with a four-year
forecast to 2025. 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 terminal 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 assessed the individual CGUs separately.
The annual impairment review indicated that no
impairment of goodwill is necessary at 31 December 2020
or 31 December 2019.
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
-
N
o
t
e
s
t
o
t
h
e
fi
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
66
plc
plc
Annual Report and Accounts | 2020
67
key assumptions
Densitron europe cGu
The following key assumptions have been adopted in the
calculations:
Quixant Gaming cGu
• The revenue growth rate adopted for year 1 was 15%
(2019: 7%) and for year 2 was 29% (2019: 0%), based
on an expectation of recovery in revenues following the
COVID-19 pandemic. The increase in operating costs
adopted in the same period was 2% (2019: 0%). The
revenue growth rates and increase in operating costs
adopted for the years 2023-2025 were 5% (2019:
0%) and 2% (2019: 2%) respectively in order to take a
realistic valuation approach;
• The terminal growth rate was estimated to be 1%
(2019: 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 13.72% (2019: 13.22%). This is the
discount rate that has been applied in determining
the value in use.
• Trading gross margins were assumed to be slightly ahead
of 2020 operating performance, disclosure of the actual
margin is commercially sensitive so is omitted here.
IDS cGu
• The revenue growth rate adopted for year 1 was 19%
(2019: 29%) and for the years 2022-25 was 15% (2019:
10%) reflecting higher expected future growth from
using Densitron’s global sales capability. The increase
in operating costs for the years 2021-25 have been
estimated to be 2% (2019: 2%) to allow for inflation;
• The terminal growth rate was estimated to be 1%
(2019: 0%) to take a conservative valuation 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 15.60% (2019: 15%). This is the
discount rate that has been applied in determining the
value in use.
• Trading gross margins were assumed to be slightly ahead
of 2020 operating performance, disclosure of the actual
margin is commercially sensitive so is omitted here.
• The revenue growth rate adopted for year 1 was 16%
(2019: 5%) and for the years 2022-25 were 4% (2019:
1%), with broadcast, medical and revenues from more
sophisticated technology to support growth and offset
legacy stagnant revenues. The increase in operating
costs for the years 2021-25 have been estimated to be
2% (2019: 2%) to allow for inflation;
• The terminal growth rate was estimated to be 1%
(2019: 1%) in order to take a conservative valuation
approach;
• Trading gross margins were assumed to be slightly ahead
of 2020 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 13.43% (2019: 12.86%). This is the
discount rate that has been applied in determining the
value in use.
Densitron uS cGu
• The revenue growth rate adopted for year 1 was 5%
(2019: 3%) and for the years 2022-25 were 4% (2019:
1%), with broadcast, medical and revenues from more
sophisticated technology to support growth and offset
legacy stagnant revenues. The increase in operating
costs for the years 2021-25 have been estimated to be
2% (2019: 2%) to allow for inflation;
• The terminal growth rate was estimated to be 1%
(2019: 1%) in order to take a conservative valuation
approach;
• Trading gross margins were assumed to be in line with
2020 underlying 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 16.32% (2019: 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 year 1 was -11%
(2019: -29%) and for the years 2022-25 were 4%
(2019: 1%), with broadcast, medical and revenues
from more sophisticated technology to support growth
and offset legacy stagnant revenues. The increase
in operating costs for the years 2021-25 have been
estimated to be 2% (2019: 2%) to allow for inflation;
• The terminal growth rate was estimated to be 1% (2019:
0%) in order to take a conservative valuation approach;
• Trading gross margins were assumed to be in line with
2020 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 14.75% (2019: 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 year 1 was 1%
(2019: 4%) and for the years 2022-25 were 4% (2019:
1%), with broadcast, medical and revenues from more
sophisticated technology to support growth and offset
legacy stagnant revenues. The increase in operating
costs for the years 2021-25 have been estimated to be
2% (2019: 2%) to allow for inflation;
• The terminal growth rate was estimated to be 1% (2019:
1%) in order to take a conservative valuation approach;
• Trading gross margins were assumed to be ahead of
2020 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 15.54% (2019: 12.85%).. This is the
discount rate that has been applied in determining the
value in use.
change required for carrying amount
to equal recoverable amount
2020
-2.80%
2019
-0.01%
-2.28%
-0.01%
In percent
Revenue growth rate
for the period 2022
to 2025
Gross profit margin
Densitron uS cGu
The estimated recoverable amount of the CGU exceeded its
carrying amount by approximately $1.7m (2019: $0.7m).
Management has identified that a reasonably possible
change in two key assumptions could cause the carrying
amount to exceed the recoverable amount. The following
table shows the amount by which these two assumptions
would need to change individually for the estimated
recoverable amount to be equal to the carrying amount.
The Directors believe there were no reasonably possible
changes in the other key assumptions that could cause
impairment.
In percent
Revenue growth rate
for the period 2022
to 2025
Gross profit margin
change required for carrying amount
to equal recoverable amount
2020
-2.35%
2019
-1.30%
-1.70%
-0.78%
A combined 1.5% decrease in gross profit margin and a
1.5% decrease in revenue growth rate would result in an
impairment of $801k.
SeNSItIVItY to cHANGeS IN ASSumPtIoNS
IDS cGu
for Densitron Japan cGu, Densitron france cGu and
Quixant Gaming cGu, the Directors believe there are
no reasonably possible changes in key assumptions
that could cause impairment. for the remaining
cGus, below is the sensitivity analysis.
Densitron europe cGu
The estimated recoverable amount of the CGU exceeded
its carrying amount by approximately $2.4m (2019: $0).
Management has identified that a reasonably possible
change in two key assumptions could cause the carrying
amount to exceed the recoverable amount. The following
table shows the amount by which these two assumptions
would need to change individually for the estimated
recoverable amount to be equal to the carrying amount.
The Directors believe there were no reasonably possible
changes in the other key assumptions that could cause
impairment.
The estimated recoverable amount of the CGU exceeded its
carrying amount by approximately $0.8m (2019: $1.2m).
Management has identified that a reasonably possible
change in one key assumption could cause the carrying
amount to exceed the recoverable amount. The following
table shows the amount by which this assumption would
need to change individually for the estimated recoverable
amount to be equal to the carrying amount. The Directors
believe there were no reasonably possible changes in the
other key assumptions that could cause impairment.
change required for carrying amount
to equal recoverable amount
2020
-4.08%
2019
-4.10%
In percent
Revenue growth rate
for the period 2022
to 2025
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
-
N
o
t
e
s
t
o
t
h
e
fi
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
68
plc
plc
11. INtANGIBle ASSetS – comPANY
cost
Balance at 1 January 2019
Additions– externally purchased
Balance at 31 December 2019
Balance at 1 January 2020
Additions– externally purchased
Disposals
Effect of movements in foreign exchange
Balance at 31 December 2020
Amortisation
Balance at 1 January 2019
Amortisation for the year
Balance at 31 December 2019
Balance at 1 January 2020
Amortisation for the year
Disposals
Effect of movements in foreign exchange
Balance at 31 December 2020
Net book value
At 1 January 2019
At 31 December 2019 and 1 January 2020
At 31 December 2020
12. INVeStmeNt ProPertY
Balance at 1 January
Impairment
Balance at 31 December
Internally
Generated
capitalised
Development
costs
$000
computer
Software
$000
1,932
432
2,364
2,364
71
(23)
96
2,508
524
306
830
830
362
(23)
59
1,228
1,409
1,534
1,280
3,763
—
3,763
3,763
—
—
—
3,763
3,086
323
3,409
3,409
354
—
—
3,763
677
354
—
GrouP
comPANY
2020
$000
—
—
—
2019
$000
631
(631)
—
2020
$000
—
—
—
total
$000
5,695
432
6,127
6,127
71
(23)
96
6,271
3,610
629
4,239
4,239
716
(23)
59
4,991
2,085
1,888
1,280
2019
$000
—
—
—
Investment property relates to an area of land owned
by the Group at Blackheath in London. In the prior year,
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 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 the years
where an external valuation was not undertaken (including
as at 31 December 2020), the directors performed a
desktop review to ascertain the fair value of the investment
property.
Annual Report and Accounts | 2020
69
13. INVeStmeNtS IN GrouP comPANIeS AND ASSocIA teD uNDertAkINGS
The principal subsidiary undertakings in which the Company had an interest in the year were:
Principal activities
Distribution company
In liquidation
Software development
In liquidation
company name
Quixant USA Inc
Quixant Gaming Limiteda
Quixant Italia S.r.l.
Densitron Technologies Limited
Quixant UK Limitedb
Densitron Corporation of Japan
Densitron Corporation of America
Densitron France SAS*
Densitron Deutschland GmbH*
Densitron Land Limited
IDS Control Solutions Limited*
Quixant Deutschland GmbH
Densitron Embedded D.O.O
registered
office of
business
1
2
3
2
2
4
5
6
7
2
2
8
9
Sales of specialist computer systems and electronic display products
Ordinary
Sales of electronic display products
Sales of electronic display products
Sales of electronic display products
In liquidation
In liquidation
In liquidation
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Sales of specialist computer systems and electronic display products Ordinary
Design of electronic displays
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
class of
Shares
Held
Ordinary
ownership
2020 and
2019
100%
Ordinary
100%
Ordinary
99%
Ordinary
Singularity Games, LLC**
10
Development and distribution of gaming technology solutions
Ordinary
100% / 0%
* Subsidiary of Quixant UK Limited
** Subsidiary of Densitron Corporation of America
1. 2147 Pama Lane, Bldg 6, Las Vegas, NV 89119, USA
2. Aisle Barn, 100 High Street, Balsham, Cambridge, CB21 4EP, UK
3. Contrada Case Bruciate, 1, Torrita Tiberina (RM), 00060, Italy
4. Aichiya Building 2F, 1-26-2, Omori-kita, Ota-ku, Tokyo 143-
0016, Japan
5. 2330 Pomona Road, Corona, CA 92880, USA
6. 3 Rue de Tasmanie, 44115 Basse-Goulaine
7. Airport Business Centre, Am Soldnermoos 17, Hallbergmoos
85399, Germany
8. Prinzregentenstrabe 20, 83022 Rosenheim, Germany
9. Brnciceva ulica 13, 1231 Ljubljana-Crnuce, Slovenia
ˇ ˇ ˇ ˇ
10. 1209 Orange Street, Wilmington, DE 9801, USA
a) Previously named Quixant UK Limited
b) Previously named Densitron UK Limited
Investments in subsidiaries
Balance at 1 January
Impairment
Acquisitions – Group-settled share-based payments
Balance at 31 December
A restructuring exercise has been undertaken to optimise
the number of legal entities in the group and simplify the
ownership structure. This process will include the liquidation
of five companies, as outlined in the table above.
The Group does not intend to proceed with the liquidation
of Quixant Gaming Limited, and will take the necessary
steps to reverse this in 2021.
Singularity Games, LLC is a newly formed US company,
registered in Delaware in 2020, with a focus on
development and distribution of gaming technology
solutions. It is incorporated into the Group for the first time
in this annual report.
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
-
N
o
t
e
s
t
o
t
h
e
fi
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
comPANY
2020
$000
9,346
—
30
9,376
2019
$000
11,992
(2,646)
—
9,346
70
plc
plc
Annual Report and Accounts | 2020
71
14. 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:
ASSetS
lIABIlItIeS
Property, plant and equipment
Intangible assets – capitalised development costs
Intangible assets – acquired in business combinations
Share-based payments
Receivables
Inventory provisions
Losses
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
Losses
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
2020
$000
—
—
—
(163)
(7)
(164)
(841)
(92)
(1,267)
2019
$000
—
—
—
(121)
(7)
(67)
—
(145)
(340)
2020
$000
31
831
460
—
—
—
—
—
2019
$000
77
762
630
—
—
—
—
—
Property, plant and equipment
Intangible assets – capitalised development costs
Inventories
Share-based payments
Foreign exchange
Deferred tax (assets) / liabilities
1,322
1,469
movement in deferred tax during the year
1 January
2020
$000
recognised in
Profit & loss
$000
31 December
2020
$000
77
762
630
(121)
(7)
(67)
—
(145)
1,129
(46)
69
(170)
(42)
—
(97)
(841)
53
(1,704)
31
831
460
(163)
(7)
(164)
(841)
(92)
55
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
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
2020
$000
—
—
(130)
(183)
(1)
(314)
2019
$000
—
—
(12)
(118)
(27)
(157)
2020
$000
76
—
—
—
—
76
2019
$000
59
54
—
—
—
113
1 January
2020
$000
recognised in
Profit & loss
$000
31 December
2020
$000
59
54
(118)
(12)
(27)
(44)
17
(54)
(65)
(118)
26
(194)
76
—
(183)
(130)
(1)
(238)
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)
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
-
N
o
t
e
s
t
o
t
h
e
fi
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
72
plc
plc
15. INVeNtorIeS
Raw materials and consumables
Work in progress
Finished goods
GrouP
comPANY
2020
$000
10,954
2,614
8,033
21,601
2019
$000
10,793
63
9,324
20,180
2020
$000
10,585
445
2,749
13,779
2019
$000
10,715
63
2,957
13,735
Raw materials, consumables and changes in finished goods
and work in progress recognised as cost of sales in the year
amounted to $41,179,000 (2019: $57,759,000).
The cost of inventories recognised as an expense includes
$615,000 (2019: $340,000) in respect of write downs of
inventory to net realisable value.
16. trADe AND otHer receIVABleS
GrouP
comPANY
Non-current
Amounts receivable from subsidiary undertakings1
current
Trade receivables
Amounts receivable from subsidiary undertakings
Other receivables
2020
$000
—
14,269
—
2,248
16,517
16,517
2019
$000
—
19,994
—
3,908
23,902
23,902
2020
$000
25,393
26
5,164
1,092
6,282
31,675
2019
$000
—
—
36,281
1,254
37,535
37,535
1. The non-current amounts receivable from subsidiary undertakings are repayable on demand.
All trade and other receivables are receivable within one
year and are included as current assets.
A provision of $146,963 has been provided in respect
of expected credit losses as at 31 December 2020 (31
December 2019: $300,861). 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 23
for further disclosure regarding the credit quality of the
Group's trade debtors. Management have also considered
30 – 60 days
61 – 90 days
Over 90 days
the expected credit losses in relation to amounts owed
from subsidiary undertakings and has considered it to be
immaterial.
As at 31 December 2020 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:
GrouP
comPANY
2020
$000
954
1,045
1,207
3,206
2019
$000
5,455
1,180
154
6,790
2020
$000
—
22
—
22
2019
$000
—
—
—
—
The trade receivables over 90 days are mainly comprised of long-standing customers
who are on fixed payment plans to clear the balances owed during the first half of 2021.
Annual Report and Accounts | 2020
73
18. otHer INtereSt-BeArING loANS AND BorroWINGS
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 23.
Non-current liabilities
Secured bank loans
current liabilities
Current portion of secured bank loans
terms and debt repayment schedule
GrouP
comPANY
2020
$000
712
712
695
695
2019
$000
738
738
82
82
2020
$000
712
712
96
96
2019
$000
738
738
81
81
Loan secured on the Group’s
freehold property in Taiwan
Revolving Credit Facility1
USA COVID-19 support loan2
France COVID-19 support loan3
currency
Nominal
Interest rate
Year of
maturity
face
Value
2020
$000
carrying
Amount
2020
$000
face
Value
2019
$000
carrying
Amount
2019
$000
NTD
GBP
USD
EUR
1.45%
1.66% to 3.00%
1.00%
0%
2028
2021
2021
2021
808
33
117
449
808
33
117
449
1,407
1,407
820
—
—
—
820
820
—
—
—
820
1. The existing security for the revolving £7.5m credit facility is
a debenture granted by Quixant PLC, a debenture granted by
Quixant UK Limited, and a legal charge over 11,000 shares in
the name of Quixant USA Inc granted by Quixant PLC – all in
favour of Barclays Bank PLC.
2. Payroll Protection Program loan for Quixant USA. Application
submitted and under consideration for loan forgiveness.
3. Short term credit guaranteed by the state for COVID-19
support for Densitron France business . Repayment after 12
months in June 2021 will ensure 0% interest applied to loan.
reconciliation of liabilities arising from financing activities
GrouP
current liabilities
Other interest-bearing loans and borrowings
Lease liabilities
Non-current liabilities
Other interest-bearing loans and borrowings
2019
$000
82
406
488
$000
738
564
1,302
2020
Additions
$000
903
1,245
2,148
repay-
ments
$000
(89)
(568)
(657)
Interest
foreign
exchange
release
reclass-
ification
$000
$000
—
55
55
70
55
125
$000
(297)
(83)
(380)
$000
$000
26
(724)
(698)
695
386
1,081
$000
$000
$000
$000
$000
$000
$000
—
—
—
—
—
—
—
—
—
—
—
—
—
(387)
(387)
(26)
724
698
712
901
1,613
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
-
N
o
t
e
s
t
o
t
h
e
fi
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
17. cASH AND cASH eQuIVAleNtS/
BANk oVerDrAftS
Cash and cash equivalents per balance sheet
Cash and cash equivalents per cash flow statements
GrouP
comPANY
Lease liabilities
2020
$000
18,804
18,804
2019
$000
16,954
16,954
2020
$000
3,080
3,080
2019
$000
1,219
1,219
74
plc
plc
reconciliation of liabilities arising from financing activities
comPANY
2019
Additions
current liabilities
$000
$000
Other interest-bearing loans and borrowings
Lease liabilities
Non-current liabilities
Other interest-bearing loans and borrowings
81
252
333
$000
738
—
126
126
$000
—
repay-
ments
$000
(89)
(186)
(275)
Interest
foreign
exchange
release
reclass-
ification
2020
$000
$000
$000
$000
$000
Outstanding at the beginning of the year
—
13
13
78
(5)
73
—
—
—
26
—
26
96
200
296
Granted during the year
Lapsed during the year
Exercised during the year
Outstanding at the end of the year
$000
$000
$000
$000
—
—
—
—
$000
(26)
$000
712
The number and weighted average exercise prices of share
options are as follows:
Annual Report and Accounts | 2020
75
Weighted
Average
exercise
Price
2020
Number of
options
2020
Weighted
Average
Exercise Price
2019
£2.78
£1.13
£3.98
£0.49
£1.73
472,790
361,500
(132,000)
(15,000)
687,290
£2.63
£2.89
£3.57
£1.97
£2.78
Number Of
Options
2019
429,068
144,500
(22,000)
(78,778)
472,790
Lease release relates to one lease the Group and the landlord agreed to end at the break clause date.
19. trADe AND otHer PAYABleS
GrouP
comPANY
current
Trade payables
Other tax and social security payables
Other payables and accrued expenses
Amounts payable to subsidiary undertakings1
2020
$000
9,768
276
2,869
—
12,913
2019
$000
12,678
209
4,869
—
17,756
2020
$000
8,899
5
1,605
214
10,723
2019
$000
10,426
—
1,729
29
12,184
1. The amounts payable to subsidiary undertakings are repayable on demand.
20. emPloYee BeNefItS
Share-based payments – Group and company
Defined contribution plans
The Group operates a number of defined contribution
pension plans.
The total expense relating to these plans in the current year
was $624,623 (2019: $534,000).
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.
Issue 8
15 october 2020
Issue 7a
25 April 2019
Issue 7
2 April 2019
The fair value of employee
share options is measured
using a Black Scholes model.
Measurement inputs and
assumptions for issues in 2019
and 2020 are as follows:
Fair value at grant date
Weighted average share price
Exercise price
Expected volatility
Option life
Risk-free interest rate
£0.56
£1.25
£1.13
47%
10 yrs
0.90%
£0.89
£2.58
£2.58
40%
10 yrs
0.90%
£1.02
£2.96
£2.96
40%
10 yrs
0.90%
The fair values at grant date were converted at the
exchange rate on the grant date to give fair values of
$0.73, $1.15 and $1.32 per option. The total expense
recognised in the period in respect of share options is
$226,000 (2019: $243,000).
The expected volatility is based on the historic
volatility (calculated based on the weighted average
remaining life of the share options), adjusted for any
expected changes to future volatility due to publicly
available information.
The share options exercisable as at the 31 December 2020 were 148,290.
A further 65,000 became exercisable in March 2021.
21. ProVISIoNS
Group
Balance at 1 January
Provisions made during the year
Balance at 31 December
2020
$000
343
11
354
2019
$000
306
37
343
The provision is in respect of long-term employment
liabilities in Italy, Japan and the UK and is non-current.
The Company has no provisions.
22. cAPItAl AND reSerVeS
Share capital
Fully paid ordinary shares of 0.1p per share
Balance at 1 January 2020
Exercise of share options (see note 20)
Balance at 31 December 2020
Balance at 1 January 2019
Exercise of share options (see note 20)
Balance at 31 December 2019
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.
ordinary shares
Number
Share capital
$000
Share Premium
$000
66,435,060
15,000
66,450,060
66,356,282
78,778
66,435,060
Dividends
106
—
106
106
—
106
6,698
10
6,708
6,499
199
6,698
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
-
N
o
t
e
s
t
o
t
h
e
fi
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
The Board proposed a dividend for the year ended
December 2020 of 2.0p per share which is not recognised
as a distribution to equity holders during the period.
The following dividends were recognised during the period:
Nil per qualifying ordinary share
Total dividends recognised
in the year
2020
$000
—
—
2019
$000
2,760
2,760
76
plc
plc
23. 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.
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. A provision of $146,963 has been
provided in respect of expected credit losses as at 31
December 2020 (31 December 2019: $300,861).
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. Management have also considered
the expected credit losses in relation to amounts owed
from subsidiary undertakings and has considered it to be
immaterial.
The aging of trade receivables at the Balance Sheet date is
set out in note 16.
The Group is exposed to credit-related loses in the event of
non-performance by counterparties to financial instruments
but does not currently expect any counterparties to fail
to meet their obligations. Credit risk on liquid funds is
mitigated because the counterparties are banks with
high credit ratings assigned by international credit rating
agencies.
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.
Annual Report and Accounts | 2020
77
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.
Total equity
Cash and cash equivalents
Capital
Total equity
Other financial liabilities
Total financing
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.
GrouP
comPANY
2020
$000
63,353
(18,804)
44,549
2019
$000
65,287
(16,954)
48,333
2020
$000
51,789
(3,080)
48,709
GrouP
comPANY
2020
$000
63,353
1,407
64,760
2019
$000
65,287
820
66,107
2020
$000
51,789
808
52,597
2019
$000
54,408
(1,219)
53,189
2019
$000
54,408
819
55,227
financial assets and liabilities
creDIt rISk
The Group’s activities are financed by cash at bank and
bank borrowings.
Cash and cash equivalents
Trade and other receivables excluding prepayments – non-current
Trade and other receivables excluding prepayments – current
The maximum exposure to credit risk for trade receivables
at the reporting date by geographic region was:
Australia
USA
Asia
Europe
Rest of World
F
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s
t
a
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e
m
e
n
t
s
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:
GrouP
comPANY
2020
$000
18,804
—
14,269
33,073
2019
$000
16,954
—
19,994
36,948
2020
$000
3,080
25,393
5,190
33,663
GrouP
comPANY
2020
$000
1,424
6,337
1,538
4,632
338
2019
$000
2,200
8,254
1,421
8,119
—
14,269
19,994
2020
$000
—
—
26
—
—
26
2019
$000
1,219
—
36,287
37,506
2019
$000
—
—
—
—
—
78
plc
plc
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.
Liquidity needs are managed by regular review of the
timing of expected receivables and the maintenance of cash
on deposit. This review ensures the Group has sufficient
cash balances to meet the contractual financial liabilities
and interest payments.
The following show the contractual undiscounted cash
flows and the contractual maturities of financial liabilities,
including interest payments and excluding the impact of
netting agreements.
Group
31 December 2020
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
total
$000
12,913
1,407
14,320
12,913
—
—
165
530
712
13,078
530
712
12,913
1,407
14,320
Group
$000
$000
$000
31 December 2019
Carrying amount
Contractual cash flows
6 months or less
6 to 12 months
More than 12 months
17,756
17,756
—
—
17,756
820
41
41
738
820
18,576
17,797
41
738
18,576
company
$000
$000
$000
31 December 2020
Carrying amount
Contractual cash flows
6 months or less
6 to 12 months
More than 12 months
10,723
808
11,531
10,723
—
—
10,723
48
48
712
808
10,771
48
712
11,531
company
$000
$000
$000
31 December 2019
Carrying amount
Contractual cash flows
6 months or less
6 to 12 months
More than 12 months
12,184
12,184
—
—
12,184
819
41
40
738
819
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 – non-current
Trade and other receivables excluding prepayments – current
GrouP
comPANY
2020
$000
18,804
—
14,269
33,073
2019
$000
16,954
—
19,994
36,948
2020
$000
3,080
25,393
5,190
33,663
All of the above relate to the IFRS 9 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
(12,913)
(17,756)
(10,723)
(695)
(82)
(96)
(13,608)
(17,838)
(10,819)
(712)
(14,320)
(738)
(18,576)
(712)
(11,531)
All of the above relate to the IFRS 9 category ‘other financial liabilities’ and are measured at amortised cost.
13,003
12,225
40
738
13,003
2019
$000
1,219
—
36,287
37,506
(12,184)
(81)
(12,265)
(738)
(13,003)
Annual Report and Accounts | 2020
79
currency risk
fair values versus carrying amounts
transactional currency risk
The Group is exposed to foreign currency risks arising from
sales or purchases in currencies other than their functional
currencies. Before agreeing any overseas transactions
consideration is given to utilising financial instruments such
as hedging and forward purchase contracts.
This risk is mitigated by the majority of revenue and cost of
sales being denominated in US Dollars which is the Group’s
reporting currency.
Fair value is calculated based on the present value of future
principal and interest cash flows, discounted at the market
rate of interest at the balance sheet date. The Directors
consider that there is no material difference between fair
values and carrying amounts of financial assets and liabilities.
24. leASeS
The Group and Company do not have material operating
leases that have not been capitalised under IFRS 16 (2019: Nil).
translational currency risk
IfrS 16
The Group has significant investments in overseas operations.
As a result, the US Dollar value of the Group’s balance
sheet can be affected by movements in exchange rates.
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.
Interest rate and currency profile
The Group’s financial assets comprise trade and other
receivables and cash at bank. At 31 December 2020 the
average interest rates earned on the daily closing balances
were 1.10% and 1.05% (2019: 1.69% and 1.64%).
Sensitivity analysis
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 $179,000 were incurred in 2020 (2019:
$32,000) on leases excluded because they are short-term
(less than one year) or low value (asset is less than $5,000).
The Group’s does not prepare sensitivity analysis for
fluctuations in interest rates and currency exchange rates.
The following table summarises the IFRS 16 disclosures for
the Group and Company:
Balance Sheet
Assets
Right of use assets
lease liabilities
current liabilities
Non-current liabilities
Profit & loss Account
Depreciation
Lease interest expenses
Expenses on excluded leases (short-term or low value)
GrouP
comPANY
2020
$000
2019
$000
2020
$000
1,276
894
200
386
901
1,287
473
55
179
406
564
970
680
120
32
200
—
200
230
13
171
F
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fi
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a
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i
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s
t
a
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e
m
e
n
t
s
2019
$000
252
252
—
252
402
52
24
80
plc
plc
Annual Report and Accounts | 2020
81
25. commItmeNtS
28. SuBSeQueNt eVeNtS
At 31 December 2020, the Group was in discussion with
a key supplier, AMD, regarding a last-time-buy commercial
agreement, which was concluded and signed in January
2021. This relates to the purchase of components affected
by an end-of-life notice from AMD and will ensure that
Quixant can satisfy future Gaming customer orders across
several products. Payment terms for the last-time-buy
are six quarterly instalments, commencing Q4 2021, and
totalling $5.7m.
26. coNtINGeNcIeS
The Group continues to monitor and assess the impact
of COVID-19 on the performance of the business in 2021.
The Directors are confident in the Group’s ability to react to
any further economic uncertainties that may occur in 2021
and will continue to utilise its experiences from 2020. The
global component shortage is likely to have an impact on
procurement. The Board has approved a plan to purchase
additional buffer stock to support the 2021 order book
and protect the business from ongoing global shortages,
which will be managed within our current working capital
structure.
Neither the Group nor Company had any contingencies
existing at 31 December 2020 (2019: none).
29. PrIor YeAr ADJuStmeNt
27. relAteD PArtIeS
Group
During the year the Group paid € 31,200 (2019: € 31,200)
for administration services to Francesca Marzilli, the wife of
Nick Jarmany, and NTD 719,644 (2019: NTD 644,397) 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 6 above.
other related party transactions
There are no other transactions and balances with
key management not included within the Directors’
remuneration.
company
Directors and key management compensation disclosed
in Note 6 to the consolidated financial statements.
During the year, the Company entered into transactions in
the ordinary course of business with related companies.
These related party transactions with other group
companies and the balance outstanding are as follows:
Income
Sales to other Group Companies
Dividend income from other Group companies
Dividend income in respect of legal restructure from other Group companies
Loan interest receivable from Group companies
Audit fees recharged to Group companies
other loan balance due from Group companies
The Company has loan balances due from Group companies essentially
related to funding to the establishment of overseas offices
expenses
Salary recharges from Group companies
During the year, Quixant plc identified that a consolidation
journal between operating expenses and cost of sales in
respect of overheads absorbed in the production of finished
goods, was omitted in the prior year.
As a result, the cost of sales previously recognised in
2019 of $58.0m has now increased by $2.2m whilst the
operating expenses recognised in 2019 of $24.7m has now
decreased by $2.2m. This adjustment has no effect on the
profit before tax and profit for the year for 2019.
Profit & loss Account
Balance outstanding
included in trade & other
receivables
2020
$000
42,085
391
—
—
61
—
88
2019
$000
40,583
—
39,750
62
3
—
81
2020
$000
5,103
—
21,604
—
61
2019
$000
6,587
—
26,697
62
3
3,575
2,903
—
—
COMPANY INFORMATION
Directors
M J Peagram
N C L Jarmany
G P Mullins
J F Jayal
G C van Zwanenberg
F D Small
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
Joint Broker
financial Pr
registrars and creSt
settlement agents
60 New Broad Street
London
EC2M 1JJ
Canaccord Genuity
88 Wood Street
London
EC2V 7QR
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
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
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