Interim Results

29 July 2015

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 interim results for the half year ended 30 June 2015.

Financial highlights:

· Group revenues increased by 24% to £9.2m (2014: £7.4m)

o Fleet revenues grew by 17% to £6.2m (2014: £5.3m)

o Insurance revenues increased by 43% to £3.0m (2014: £2.1m)

· Operating profit increased by 8% to £2.7m (2014: £2.5m)

· Adjusted1 profit before tax increased by 9% to £2.7m (2014: £2.5m)

· Adjusted2 fully diluted earnings per share of 4.67p (2014: 4.27p)

· Adjusted3 cash inflow before tax increased by 8% to £3.0m (2014: £2.8m)

· Net cash of £0.8m (31 December 2014: net debt of £0.2m)

· Operating cash conversion4 was 109% (2014: 110%)

· Interim dividend of 2p per share to be paid on 24 September 2015 to shareholders on the register as at 21 August 2015

1 Adjusted to exclude exceptional gain of £635,000 in the period ended 30 June 2014 (2015: £nil)

2 Adjusted to exclude exceptional gain of £471,000 in the period ended 30 June 2014 (2015: £nil)

3 Adjusted to exclude exceptional cash inflow before tax of £635,000 in the period ended 30 June 2014 (2015: £nil)

4 Adjusted cash inflow before tax divided by operating profit 

Operational highlights:

Fleet

Strong progress in the main fleet business:

· New fleet installations increased by 44% to 10,733 units (2014: 7,433)

· Fleet subscription base grew by 12% to 66,806 vehicles (31 December 2014: 59,765)

· Active customer base increased by 13% to 7,150 (31 December 2014: 6,342)

· Attrition1 on a rolling 12 month basis was 10%; significantly below the 14% industry average

· Strong growth in all three fleet market territories:

UK

§ 7,584 new installations, up 16% (30 June 2014: 6,563)

§ 58,058 active vehicle subscriptions, an 8% increase (31 December 2014: 54,024)

§ 5,583 active customers, up 5% (31st Dec 2014: 5,318)

France

§ 1,688 new installations, up 103% (30 June 2014: 830)

§ 6,854 active vehicle subscriptions, a 31% increase (31 December 2014: 5,218)

§ 1,079 active customers, up 21% (31 December 2014: 890)

USA

§ 1,461 new installations (30 June 2014: 17)

§ 1,858 active vehicle subscriptions, a 273% increase (31 December 2014: 498)

§ 478 active customers, up 282% (31 December 2014: 125)

Insurance

Insurance installations grew by 64% to 25,438 (2014: 15,500)

1Attrition is calculated as the difference between the number of new unit installations and the increase in active subscriptions between 1 July

 2014 and 30 June 2015, expressed as a percentage of the mean subscription base between those two points in time: [(19,626-13,601)/60,006

= 10.04%]

Andy Walters, Managing Director of Quartix, commented:

"I am pleased to report that we have had a great first half. Revenues for the first half came in at £9.2 million, representing growth of 24% on last year with fleet revenues growing by 17% and insurance growth particularly strong at 43%.

We have achieved a step change in new fleet installations and have continued to invest in our US business. These costs, which were all expensed in the period, will generate recurring revenues in the future. Add to those our first full six months of plc costs and we are delighted to have achieved growth in pre-tax profits of 9% to £2.7 million."

For further information, please contact:

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

The past half year has shown continued strong growth in 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 17% to £6.2m (2014: £5.3m). Sales to insurance based customers also increased, by 43% to £3.0m (2014: £2.1m). Our success across both sectors was reflected in the installation of 36,171 new tracking systems (2014: 22,910) and the achievement of £5.7m of recurring revenue in the fleet sector (2014: £4.7m).

Growth in new installations in the fleet business was broadly spread across the UK, French and US markets, with direct marketing, distribution and price comparison channels all contributing strongly.

Growth in insurance was driven mainly by two new projects. Whilst one project will come to an end in Q3, as mentioned in March, an additional project is expected to start before the end of the year.

Sales in the UK grew by 23%, reaching £8.6m (2014: £7.0m). The Group made good progress in France, where new fleet installations in the period doubled and revenues increased by 44% in local currency to €0.7m (2014: €0.5m). Additional investment in the French sales and support teams during the year should allow this growth to continue throughout the remainder of 2015. France made a positive contribution to Group overheads.

The Group continued to develop its operations successfully in the USA, almost quadrupling its customer base to reach 478 fleet clients in 6 months. The subscription base has also risen rapidly, to 1,858 vehicles. Market and customer reaction to the Group's services has been very encouraging, and we will continue to invest in the development of this huge potential market.

Results

Group revenues for the half year increased by 24% to £9.2m (2014: £7.4m).

Operating profit for the half year increased by 8% to £2.7m (2014: £2.5m). This is a particularly pleasing, given that we invested much more in the development of the US market and installed significantly more fleet tracking units than during the previous year. These investments will generate recurring revenue streams for the future.

Very strong growth in insurance sales adversely affected the gross margin mix and the Company also carried its first full 6 months of the costs of being publically quoted.

Adjusted profit before tax and exceptional gains increased by 8% to £2.7m (2014: £2.5m).

Cash conversion was excellent, resulting in post tax cash flow from operations of £2.5m (2014: £2.3m), after allowing for the effects of exceptional gains. The Group had net cash of £0.8m as at 30 June 2015 (net debt of £0.2m at 31 December 2014), having paid a maiden dividend of £1.4m in May.

Adjusted basic earnings per share rose by 8% to 4.74p (2014: 4.38p). On a fully diluted basis, adjusted earnings per shares increased to 4.67p (2014: 4.27p).

Dividends

The Board recommended an interim dividend of 2p per share, amounting to £940,436 in aggregate. This was approved by the board on 28 July 2015. The interim dividend will be paid on 24 September 2015 to shareholders on the register as at 21 August 2015.

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.

On 16 April 2015, Avril Palmer-Baunack reluctantly decided not to seek re-election as a Director at the Company's AGM. This was in light of the required time commitment of her new role as Executive Chairman of BCA Marketplace plc. The Board thanks Avril for her significant contribution to and support for the Company.

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 strong start to the year, in line with our expectations. The high levels of recurring revenues and opportunities to grow in the UK, France and the USA in fleet combined with continued progress in our insurance business underpin our confidence for the rest of year and beyond.

Paul Boughton

Chairman

Consolidated Statement of Comprehensive Income

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

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

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 2015 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 2014, 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 2015 and 30 June 2014 have not been audited. The figures for the year ended 31 December 2014 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. Segmental analysis

The Group has concluded that it operates only one operating segment as defined by IFRS 8. 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. Accordingly no segmental analysis is presented.

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

3. Exceptional items (previous year)

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 calculation of the adjusted earnings per share is the same as that for the basic earnings per share, except for the subtraction of exceptional items from the profits attributable to the shareholders (see note 3). All earnings per share calculations relate to continuing operations of the Group. 

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 and warrants where the exercise price is less than the average market price of the Company's ordinary shares during that year.

A reorganisation of share capital on 30 September 2014 changed the value of ordinary shares from £0.10 to £0.01 and increased their number one hundredfold. This change is showed by an increase in the weighted average number of shares. The period ended 30 June 2014 earnings per share and adjusted earnings per share are restated for this reorganisation.

5. Notes to the cash flow statement

Cash flow adjustments and changes in working capital

6. Equity

The preference shares carried no preferential right to dividend but could be redeemed at par at the discretion of the Company. All preference shares have been redeemed by the Company out of distributable reserves as at 31 December 2014.

A reorganisation of share capital on 30 September 2014 changed the nominal value of ordinary shares from £0.10 to £0.01 and increased their number one hundredfold due to a bonus issue. This change is showed by an increase in the number of ordinary shares.

7. Post balance sheet share allotment

Quartix Holdings plc issued and allotted 83,800 new ordinary shares of 1p each in the Company on 9 July 2015 ("Ordinary Shares"). Following the allotment, the Company's issued share capital consisted of 47,021,800 Ordinary Shares.

8. Availability of interim results

The Group's unaudited interim results for the half year ended 30 June 2015 are available at the bottom of the '"Investors" section of the Company's website www.quartix.net/investors.php