Cash rich Quixant gambles on riding out double trouble
Quixant, the quoted Cambridge business that provides highly engineered technology products principally for the global gaming and broadcast industries, reports a robust performance in Q1 2020 trading despite supply chain challenges.
The AIM-quoted company is having to cope with the twin threat of increased competition within the gaming industry globally and slipping demand triggered by the coronavirus pandemic.
It has shown major falls in revenue and profit for the full year to December 31 but, as previously advised, the group’s auditors KPMG has decided not to sign any audit opinions or consents until April 5.
Quixant says that while it has 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 clearly presents a material uncertainty to operations.
The company says it is conserving cash from a solid base of a strong balance sheet with a health net cash position and does not feel it would not to change its current strategy until October at the earliest – assuming current tough trading conditions prevail until then.
Quixant has net cash of $17.7 million with undrawn bank facilities of $3m; the dividend has been suspended until the impact of COVID-19 on the business becomes clearer.
2019 revenue fell 20 per cent to $92.3m; gaming division revenue was down from $77.6m to $56.2m, Revenues for the Densitron division held firmest, only slipping from $37.5m to $36.2m. Adjusted pre-tax profit was massively down to $10.7m from $18.2m in 2017.
The revenue decline in Gaming was due to major customers facing stiff competition which has led to a reduction in demand for Quixant products but it says no major customers were lost during the year.
New products launched by Densitron to target the broadcast market are expected to generate revenue in 2020, increasing the pipeline of new business to $12m.
Chief executive Jon Jayal said: “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.
“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. Some sectors supplied by the Densitron business have seen continued demand for our products and we have prioritised those customers operating in the medical sector to ensure they are 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.”