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Quartix Holdings PLC  -  QTX   

Interim Results

Released 07:00 27-Jul-2016

RNS Number : 3150F
Quartix Holdings PLC
27 July 2016
 

27 July 2016

Quartix Holdings plc

("Quartix" or "the Group")

Interim Results

 

Quartix Holdings plc (AIM:QTX), a leading supplier of vehicle tracking systems and services to the fleet and insurance sectors, is pleased to announce its unaudited results for the half year ended 30 June 2016.

Financial highlights:

·     Group revenues increased by 26% to £11.6m (2015: £9.2m)

Fleet revenues grew by 16% to £7.2m (2015: £6.2m)

Insurance revenues increased by 47% to £4.4m (2015: £3.0m)

·     Adjusted EBITDA* increased by 22% to £3.4m (2015: £2.8m)

·     Operating profit increased by 22% to £3.3m (2015: £2.7m)

·     Profit before tax increased by 23% to £3.3m (2015: £2.7m)

·     Diluted earnings per share increased by 25% to 5.82p (2015: 4.67p)

·     Cash inflow before tax increased by 20% to £3.6m (2015: £3.0m)

·     Free cash flow increased by 29% to £3.1m (2015: £2.4m)

·     Net cash of £4.1m (31 December 2015: net cash of £3.0m)

·     Operating cash conversion** was 107% (2015: 109%)

·     Interim dividend of 2.2p per share proposed

 

 * EBITDA adjusted for share based payment expense

** Adjusted cash inflow before tax divided by operating profit

 

Operational highlights

Fleet

Good progress in the main fleet business

·     Fleet subscription base grew by 7% to 79,214 vehicles (31st December 2015: 73,744)

·     9,898 new fleet installations (2015: 10,733)

·     Customer base increased by 5% to 8,212 (31st December 2015: 7,849)

·     Attrition* on a rolling 12 month basis was 11.3%; significantly below the 14% industry average

·     Expansion of subscription base in all three fleet market territories, but new fleet sales constrained by management focus required in serving continued increase in insurance installations.

 

* Attrition is calculated as the difference between the number of new unit installations and the increase in active subscriptions between 1 July 2015 and 30 June 2016, expressed as a percentage of the mean subscription base between those two points in time: [(20,682-12,408)/73,010 = 11.3%]

 

 

UK & Ireland

§ 66,089 active vehicle subscriptions, up 6% (31 December 2015: 62,655)

§ 6,128 customers, up 3% (31 December 2015: 5,960)

France

§ 9,058 active vehicle subscriptions, up 14.5% (31 December 2015: 7,910)

§ 1,294 customers, up 8% (31 December 2015: 1,196)

USA

§ 4,067 active vehicle subscriptions, up 28% (31 December 2015: 3,179)

§ 790 customers, up 14% (31 December 2015: 693)

Insurance

Insurance installations grew by 46% to 37,060 (2015: 25,438).

 

Andy Walters, Managing Director of Quartix, commented:

"I am pleased to report that we have had a good first half. Revenues were £11.6 million, representing growth of 26% on last year with fleet revenues growing by 16% and insurance growth of 47%

We have increased our subscription base by 7% and have continued to invest in our US business. I am delighted to report that operating profit increased by 22% despite significantly increased expenditure on product development to support future growth. We remain on track to meet profit expectations for the year as a whole."

 

For further information, please contact:

Quartix (www.quartix.net)

Andy Walters, Managing Director

David Bridge, Finance Director                                                                                                                01686 806 663

finnCap (Nominated Adviser and Broker)

Matt Goode /Scott Mathieson (Corporate Finance)

Stephen Norcross (Corporate Broking)                                                                                                020 7200 0500

 

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

 

Interim Financial Results Report

The Group's Interim Financial Statements for the 6 months ended 30 June 2016 are available in the "Investors" section of our website at: www.quartix.net/investors.php

About Quartix

Founded in 2001, Quartix is a leading supplier of subscription-based vehicle tracking systems, software and services. The Group provides an integrated tracking and telematics data analysis solution for fleets of commercial vehicles and "pay as you drive" motor insurance providers that is designed to improve productivity and lower costs by capturing, analysing and reporting vehicle and driver data.

Quartix is based in the UK and is listed on the AIM market of the London Stock Exchange (AIM:QTX).

Chairman's Statement

Summary

The past half year has shown continued strong demand for the Group's vehicle tracking systems, software and services in both the fleet and insurance sectors. Revenues in the core fleet sector grew by 16% to £7.2m (2015: £6.2m). Sales to UK based insurance customers increased by 47% to £4.4m (2015: £3.0m). Our success across both sectors was reflected in an increase in the installation of new tracking systems and the achievement of £6.5m of recurring revenue in the fleet sector (2015: £5.7m).

Sales in the UK grew by 24%, with growth from both the fleet and insurance sectors, reaching £10.7m (2015: £8.6m). The Group made good progress in France, where revenues increased by 26% in local currency to €0.8m (2015: €0.6m). The French sales team in Newtown was further strengthened, and a senior manager was appointed at the beginning of July with responsibility for French sales.

The Group continued to develop its operations successfully in the USA, taking its subscription base to 4,067 vehicles. This is more than double the level of 12 months ago. Revenues increased to $0.4m (2015: $0.1m). Legislation which was introduced at the end of 2015 concerning the monitoring of drivers' hours of service reduced demand for the Group's services until it could make a compliant solution available. This new product is nearing completion and will begin shipments early in the second half. The legislation comes into effect in December 2017 and is expected to increase market demand for the Group's services. The Federal Motor Carrier Safety Administration estimates that 3.1m vehicles are affected by the legislation.

The Chicago based sales and support team relocated to larger office premises in May, and in June the Group reached agreement with a nationwide firm of mobile installation technicians in order to offer an installed solution to American customers. Both of these measures are expected to support the future growth of the business.

The rapid growth in insurance installations, coupled with continued focus by insurers on lead-time reductions, led to an increase in management time committed to ensuring successful delivery of our product in this sector. In the light of the opportunities available to the Group in its core, high-margin fleet operations, the Board has taken steps to allow management to focus more of its time in growing and developing the fleet business. In line with this strategy, the Group will concentrate its business development activities in insurance on those opportunities which make best use of the significant technological and service advantages that the Group has, and which are more closely aligned to its fleet business.

Consequently, the Group has developed and launched an insurance platform which it believes will appeal to a range of specialist insurance brokers. The development for this has run in tandem with the new fleet capabilities on which it is based, namely the TCSV11 telematics system, the SafeSpeed Database and the display dashboards provided for fleet managers. The insurance capabilities of the system can be seen at www.quartix.net/insurance.

Results

Group revenues for the half year increased by 26% to £11.6m (2015: £9.2m), driven by a 16% increase in fleet revenues and a 47% increase in insurance revenues.

Operating profit for the half year increased by 22% to £3.3m (2015: £2.7m). This is particularly pleasing, given that the Group increased R&D expenditure by 47% to £0.8m in order to support its plans for future growth. These costs were fully expensed during the period.

Profit before tax increased by 23% to £3.3m (2015: £2.7m).

Cash conversion was excellent, resulting in post-tax cash flow from operations of £3.1m (2015: £2.5m). The Group had net cash of £4.1m as at 30 June 2016 (£3.0m at 31st December 2015), having paid a dividend of £1.9m in May.

Earnings per share

Basic earnings per share rose by 24% to 5.89p (2015: 4.74p). On a fully diluted basis earnings per share increased 25% to 5.82p (2015: 4.67p).

Dividend

The Board has recommended an interim dividend of 2.2p (2015 2.0p) per share, amounting to £1,040,445 in aggregate. This was approved by the Board on 26 July 2016. The interim dividend will be paid on 15 September 2016 to shareholders on the register as at 19 August 2016.

Dividend Policy

Following the publication of its final results for 2016, the Board plans to announce a final dividend for the year with the aggregate of the interim and final dividend set at approximately 50% of cash flow from operating activities, which is calculated after taxation paid but before capital expenditure. The Board will also look to distribute the excess of cash balances over £2m by way of supplementary dividends, subject to a 2p per share de minimis level. The surplus cash will be calculated by taking the year end cash balance and deducting the proposed regular dividend.

The policy will be subject to review.

Governance and the Board

The Board is comprised of two Non-Executive Directors: myself and Jim Warwick, and two Executive Directors: Andrew Walters and David Bridge.

For further details regarding Corporate Governance and the Board, please see the "Investors" section of our website (www.quartix.net/investors.php).

Outlook

The Group has made a good start to the second half, in line with management's expectations. The high levels of recurring revenues and opportunities to grow in the UK, France and the USA in fleet combined with more efficient management of the insurance business underpin our confidence for the rest of the year and beyond.

Paul Boughton

Chairman
 

Consolidated Statement of Comprehensive Income

 

 

30 June 2016

30 June 2015

    31 December 2015

Half year ended 30 June 2016

 

Unaudited

Unaudited

Audited

 

 

Notes

£'000

£'000

   £'000

 

Revenue

3

11,574

9,190

19,675

 

Cost of sales

 

(4,483)

(3,555)

(7,525)

 

Gross profit

 

7,091

5,635

12,150

 

Administrative expenses

 

(3,769)

(2,912)

(6,105)

 

Operating profit

 

3,322

2,723

6,045

 

Finance income receivable

 

8

7

13

 

Finance costs payable

 

(17)

(39)

(69)

 

Profit for the period before taxation

 

3,313

2,691

5,989

 

Tax expense

 

(531)

(475)

(975)

 

Profit for the period

 

2,782

2,216

5,014

 

Other Comprehensive income:

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss:

 

 

 

 

 

Exchange difference on translating foreign operations

 

(125)

13

(49)

 

Tax benefit/(expense)

 

-

-

-

 

Oher comprehensive income for the year, net of tax

 

(125)

13

(49)

 

Total comprehensive income attributable to the equity shareholders of Quartix Holdings plc

 

2,657

2,229

4,965

 

 

 

 

 

 

 

Adjusted EBITDA

 

3,445

2,828

6,248

 

Earnings per ordinary share (pence)

4

 

 

 

 

Basic

 

5.89

4.74

10.69

 

Diluted

 

5.82

4.67

10.53

 

               

 

All of the activities of the Group in the current period are classed as continuing and there is no other comprehensive income.

 

Consolidated Statement of Financial Position

Company registration number: 06395159

 

 

30 June 2016

30 June 2015

31 December  2015

 

 

Unaudited

Unaudited

Audited

Assets

Notes

£'000

£'000

£'000

Non-current assets

 

 

 

 

Goodwill

 

14,029

14,029

14,029

Property, plant and equipment

 

376

306

317

Deferred tax assets

 

68

-

77

Total non-current assets

 

14,473

14,335

14,423

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

618

268

638

Trade and other receivables

 

2,727

2,361

2,586

Cash and cash equivalents

 

4,598

2,311

4,040

Total current assets

 

7,943

4,940

7,264

 

 

 

 

 

Total assets

 

22,416

19,275

21,687

 

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

2,853

2,033

2,842

Borrowings

 

498

995

997

Deferred revenue

 

2,483

2,071

2,244

Current tax liabilities

 

535

535

407

 

 

6,369

5,634

6,490

Non-current liabilities

 

 

 

 

Borrowings

 

-

497

-

Deferred tax liabilities

 

-

47

-

 

 

-

544

-

Total liabilities

 

6,369

6,178

6,490

 

 

 

 

 

Net assets

 

16,047

13,097

15,197

 

 

 

 

 

Equity

 

 

 

 

Called up share capital

6

473

469

472

Share premium account

6

4,674

4,454

4,631

Equity reserve

 

175

126

177

Capital redemption reserve

 

4,663

4,663

4,663

Translation reserve

 

(174)

13

(49)

Retained earnings

 

6,236

3,372

5,303

Total equity attributable to equity shareholders of Quartix Holdings plc

 

16,047

13,097

15,197

 

Consolidated Statement of Changes in Equity

 

Share capital

Share premium account

Capital redemption reserve

Equity reserve

Translation reserve

Retained earnings

Total equity

 

£'000

£,000

£'000

£'000

£'000

£'000

£'000

Balance at 31 December 2014

467

4,379

4,664

151

-

2,493

12,154

Shares issued

2

75

(1)

-

-

-

76

Increase in equity reserve in relation to options issued

-

-

-

46

-

-

46

Adjustment for exercised options

-

-

-

(71)

-

71

-

Dividend paid

-

-

-

-

-

(1,408)

(1,408)

Transactions with owners

469

4,454

4,663

126

-

1,156

10,868

Foreign currency translation differences

-

-

-

-

13

-

13

Profit for the period

-

-

-

-

-

2,216

2,216

Total comprehensive income

-

-

-

-

13

2,216

2,229

Balance at 30 June 2015

4,454

4,663

126

13

3,372

13,097

Shares issued

3

177

1

-

-

-

181

Increase in equity reserve in relation to options issued

-

-

-

25

-

-

25

Adjustment for exercised options

-

-

(1)

(73)

-

73

(1)

Deferred tax on share options

-

-

-

99

-

-

99

Dividend paid

 

 

 

 

 

(940)

(940)

Transactions with owners

472

4,631

4,663

177

13

2,505

12,461

Foreign currency translation differences

-

-

-

-

(62)

-

(62)

Profit for the period

-

-

-

-

2,798

2,798

Total comprehensive income

-

-

-

-

(62)

2,798

2,736

Balance at 31 December 2015

472

4,631

4,663

177

(49)

5,303

15,197

Shares issued

1

43

-

-

-

-

44

Increase in equity reserve in relation to options issued

-

-

-

55

-

-

55

Adjustment for exercised options

-

-

-

(43)

-

43

-

Deferred tax on share options

-

-

-

(14)

-

-

(14)

Dividend paid

-

-

-

-

(1,892)

(1,892)

Transactions with owners

43

-

(2)

-

(1,849)

(1,807)

Foreign currency translation differences

-

-

-

-

(125)

-

(125)

Profit for the period

-

-

-

-

2,782

2,782

Total comprehensive income

-

-

-

(125)

2,782

2,657

Balance at 30 June 2016

4,674

4,663

175

(174)

6,236

16,047

 

 

Consolidated Statement of Cash Flows

 

 

30 June 2016

30 June 2015

    31 December 2015

 

 

Unaudited

Unaudited

Audited

 

Notes

£'000

£'000

   £'000

 

 

 

 

 

Cash generated from operations

5

3,570

2,970

6,781

Taxes paid

 

(408)

(439)

(1,092)

Cash flow from operating activities

 

3,162

2,531

5,689

 

 

 

 

 

Investing activities

 

 

 

 

Additions to property, plant and equipment

 

(120)

(178)

(262)

Interest received

 

8

7

13

Cash flow from investing activities

 

(112)

(171)

(249)

 

 

 

 

 

Cash flow from operating activities after investing activities (free cash flow)

 

3,050

2,360

5,440

 

 

 

 

 

Financing activities

 

 

 

 

Repayment of long term borrowings

 

(500)

(500)

(1,000)

Interest paid

 

(20)

(43)

(75)

Proceeds from share issues

6

44

77

257

Dividend paid

 

(1,892)

(1,408)

(2,348)

Cash flow from financing activities

 

(2,368)

(1,874)

(3,166)

 

 

 

 

 

Net changes in cash and cash equivalents

 

682

486

2,274

Cash and cash equivalents, beginning of period

 

4,040

1,812

1,812

Exchange differences on cash & cash equivalents

 

(124)

13

(46)

Cash and cash equivalents, end of period

 

4,598

2,311

4,040

 

Notes to the Financial Statements (unaudited)

 

1        Basis of preparation

The financial information has been prepared in accordance with recognition and measurement principles of International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations that had been published by 30 June 2016 as endorsed by the European Union ("EU"). The accounting policies adopted are consistent with those of the financial statements for the year ended 31 December 2015, as described in those financial statements. In preparing these interim financial statements, the Board has not sought to adopt IAS 34 "Interim financial reporting".

The figures for the six month periods ended 30 June 2016 and 30 June 2015 have not been audited. The figures for the year ended 31 December 2015 have been extracted from, but do not constitute, the consolidated financial statements of Quartix Holdings plc for that year. Those financial statements have been delivered to the Registrar of Companies and included an Auditors' Report, which was unqualified and did not contain a statement under section 498(2) or section 498(3) of the Companies Act 2006.

2        Going concern

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group is able to generate sufficient liquidity.

The Group enjoys a strong income stream from its fleet subscription base while current liabilities include a substantial provision for deferred revenue which is a non cash item.

After assessing the forecasts and liquidity of the business to the end of the following calendar year and the longer term strategic plans, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the interim results.

3        Segmental analysis

The Group has concluded that it operates only one operating segment as defined by IFRS 8, being the design, development and marketing of vehicle tracking devices and the provision of related data services. The information used by the Group's chief operating decision makers to make decisions about the allocation of resources and assessing performance is presented on a consolidated Group basis. All revenues, costs, assets and liabilities relate to the single activity; and accordingly no segmental analysis is presented.

An analysis of turnover by type of customer and geography is stated below:

 

30 June 2016

30 June 2015

31 December 2015

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

By customer base

 

 

 

Fleet

7,196

6,208

12,957

Insurance

4,378

2,982

6,718

 

11,574

9,190

19,675

 

   30 June 2016

30 June 2015

31 December 2015

 

Unaudited

Unaudited

Audited

 

 £'000

£'000

£'000

Geographical analysis by destination

 

 

 

United Kingdom

10,678

8,634

18,390

France

619

481

1,025

Republic of Ireland

2

2

4

United States of America

275

73

256

 

11,574

9,190

19,675

 

4        Earnings per share

The calculation of the basic earnings per share is based on the profits attributable to the shareholders of Quartix Holdings plc divided by the weighted average number of shares in issue during the period. The earnings per share calculation relates to continuing operations of the Group. 

 

Profits attributable to shareholders

Weighted average number of shares

Basic profit per share amount

Fully diluted

weighted average number of shares

 Fully diluted profit per share amount

 

£'000

 

in pence

 

in pence

Earnings per ordinary share

 

 

 

 

 

Period ended 30 June 2016

2,782

47,251,723

5.89

47,761,493

5.82

Period ended 30 June 2015

2,216

46,798,011

4.74

47,635,491

4.67

Year ended 31 December 2015

5,014

46,912,132

10.69

47,595,383

10.53

 

 

 

 

 

 

For diluted earnings per share, the weighted average number of ordinary shares is adjusted to assume the conversion of all dilutive potential ordinary shares. Dilutive potential ordinary shares are those share options where the exercise price is less than the average market price of the Company's ordinary shares during the period.

 

 

5        Notes to the cash flow statement

Cash flow adjustments and changes in working capital

 

30 June 2016

30 June 2015

31 December 2015

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

Profit before tax

3,313

2,691

5,989

 

 

 

 

Depreciation

68

59

132

Interest income

(8)

(7)

(13)

Interest expense

17

39

69

Share based payment expense

55

46

71

Operating cash flow before movement in working capital (Adjusted EBITDA)

3,445

2,828

6,248

 

 

 

 

(Increase)/decrease in trade and other receivables

(135)

(428)

(650)

Decrease/(increase) in inventories

21

168

(201)

Increase in trade and other payables

239

402

1,384

Cash generated from operations

3,570

2,970

6,781

 

6        Equity

 

Number of ordinary shares of £0.01 each

Share capital £'000

Share premium £'000

Allotted, called up and fully paid

 

 

 

At 1 January 2015

46,692,000

467

4,379

Shares issued

246,000

2

75

At 30 June 2015

46,938,000

469

4,454

Shares issued

237,704

3

177

At 31 December 2015

47,175,704

472

4,631

Shares issued

117,250

1

43

At 30 June 2016

47,292,954

473

4,674

 

All shares issued in the period to 30 June 2016 relate to the exercise of share options.

 


This information is provided by RNS
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Interim Results - RNS