QXT.L Share News (QXT)

(Sharecast News) - Gaming and broadcast technology company Quixant updated the market on its 2019 trading, as well as its current situation given the Covid-19 coronavirus pandemic on Tuesday, reporting a 20% fall in revenue for the year, to $92.3m.
The AIM-traded firm had announced on 27 March that its full audited results were being delayed until 6 April, though it said it did not expect any deviation from the figures once the audited results are announced.

It said revenue in its gaming division was down to $56.2m from $77.6m, of which gaming platforms revenue slipped to $46.6m from $62.5m, and gaming monitors revenue was $9.6m, falling from $15.1m.

Revenue in the Densitron division was $36.2m, down from $37.5m in 2018.

Quixant said adjusted pre-tax profit totalled $10.7m for 2019, compared to $18.2m, while net cash at period end stood at $16.1m, up from $9.7m at the end of the prior year.

On the operational front, Quixant said the revenue decline in Gaming was down to its major customers facing "stiff competition", which led to a reduction in demand for its products, though no major customers were lost during the year.

It said new products were launched by Densitron to target the broadcast market, which were expected to generate revenue in 2020, with an increased pipeline of new business to $12m.

The firm appointed a number of key senior management roles, including a Densitron managing director, a Densitron product director, a gaming product director, and a new gaming global sales director.

Quixant reported "enhanced" systems and sales discipline to improve its revenue visibility, and also acquired IDS during the year, to enhance the Densitron product offering in the broadcast sector.

For the year so far in 2020, the company said it had seen a "robust" performance in first quarter trading, despite supply chain challenges.

While it had so far managed the supply chain impact of Covid-19 with "minimal disruption" to customers after February, the shutdown of the gaming sector and many other industries for an indefinite period was presenting a material uncertainty to its operations.

The board said the pandemic would therefore have a material impact on its financial performance in 2020, but explained that it was too early to form a view on the expected outcome, with the company therefore withdrawing guidance for 2020 and thereafter.

Cash conservation, employee safety and the protection of the business to support normal operations once it saw demand returning was the immediate priority of the directors.

Quixant said it had a "strong" balance sheet with a "healthy" net cash position, and therefore severe downside scenarios suggested the business could operate for at least six months before additional measures would need to be taken.

Net cash stood at $17.7m on 29 February, with gross cash of $18.5m, whild undrawn bank facilities totalled $3.0m.

The board confirmed the suspension of the dividend until the impact of Covid-19 on the business becomes clearer.

It also announced changes to the board composition, saying that from 31 May, Nick Jarmany would become the non-executive deputy chairman, Gary Mullins would become a non-executive director, and C-T Lin would step down from board responsibilities but continue to support the Taiwanese operation as a consultant.

Gaye Hudson would also leave the board from 19 May.

"The events of the last couple of months are unprecedented and, of course, with no experience of a similar crisis it is difficult to accurately predict the extent of the impact the pandemic will have on our business," said chief executive officer Jon Jayal.

"We have taken early action to manage the business effectively, remain in close contact with our customers and continue to monitor the reopening of the global gaming markets.

"In addition, we have a broader, diversified revenue opportunity with a strong pipeline in the broadcast sector through our Densitron business."

Jayal said some sectors supplied by the Densitron business had seen continued demand for our products, adding that the company had prioritised those customers operating in the medical sector to ensure they were able to manufacture essential equipment.

"The group maintains a strong balance sheet and material net cash position which gives us confidence we can continue to operate until at least October 2020 even on severe downside scenario modelling before additional measures would need to be taken.

"The board remains confident in the long-term future of the Group and our ability to weather the current crisis."

At 1007 BST, shares in Quixant were down 22.08% at 60p.