REG - Quartix Technologies - Final Results
28/02/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220228:nRSb9332Ca&default-theme=true
RNS Number : 9332C Quartix Technologies PLC 28 February 2022
Quartix Technologies plc
("Quartix" or "the Group")
Final Results
Strong fleet subscription base growth in all regions and planned acceleration
of growth
Quartix Technologies plc (AIM:QTX), one of Europe's leading suppliers of
vehicle telematics services and driver analytics, is pleased to announce its
audited results for the year ended 31 December 2021.
Financial highlights:
· Group revenue decreased by 1.2% to £25.5m (2020: £25.8m)
o Fleet revenue(1) grew by 7.7% to £23.8m (2020: £22.0m)
o Fleet revenue represented 93.1% of total revenue (2020: 85.4%)
o Insurance revenue(2) decreased by 53.4% to £1.8m (2020: £3.8m)
· Adjusted EBITDA(3) decreased by 27.3% to £5.7m driven by planned
investment for growth (2020: £7.9m)
o Fleet telematics services profits(4) increased by 1.0% to £19.8m (2020:
£19.6m)
o Fleet customer acquisition investment(5) increased by 21.6% to £8.4m
(2020: £6.9m)
· Operating profit decreased by 6.5% to £5.3m (2020: £5.7m)
· Profit before tax decreased by 6.6% to £5.3m (2020: £5.7m)
· Adjusted diluted earnings per share(6) of 9.18p (2020: 13.16p),
diluted earnings per share of 10.07p (2020: 9.82p)
· Free cash flow(7) decreased by 41.0% to £3.3m (2020: £5.5m), partly
due to increased inventory holding as Quartix manages component levels due to
global microchip supply issues.
· Final dividend payment of 7.00p per share proposed (2020: 17.70p)
including 5.10p for supplementary dividend (2020: 15.30p) giving a total
dividend for the year of 8.50p per share
Outlook
· Strong start to 2022, with fleet new unit subscriptions growth of
25% for the first two months, leading to a £0.4m increase in annualised
recurring revenue.
· Acceleration of growth planned, targeting annualised recurring
revenue of at least £30.0m by the end of 2023.
(1) Total Fleet segmental revenue (see Strategic Report: Financial Review,
Financial Overview)
(2 )Insurance segmental revenue (see Strategic Report: Financial Review,
Financial Overview)
(3 )Earnings before interest, tax, depreciation, amortisation, share based
payments and the 3G swap out provision (see note 4)
(4 )Profit for the Fleet segment before customer acquisition costs and central
costs (see note 3)
(5 )Revenue, marketing, net equipment, net installation and carriage cost for
new fleet customers (see note 3)
(6)Diluted earnings per share before the 3G replacement provision (see
Strategic Report: Financial Review)
(7)Cash flow from operations after tax and investing activities
Principal activities and performance measures
The Group's main strategic objective is to grow its fleet subscription base
and develop the associated annualised recurring revenue.
Annualised recurring revenue (see definition in KPI table below), when
measured in constant currency year on year, is a forward-looking key
performance measure and it is pleasing that it grew by £2.0m to £23.9m at 31
December 2021.
The Key Performance Indicators and the Segmental Analysis used by the Board to
assess the performance of the business are listed below and discussed in the
Chairman's Statement and Strategic Report.
Key Performance Indicators ("KPIs")
Year ended 31 December 2021 2020 % change
Fleet subscriptions(1) (new units) 50,765 42,898 18.3
Fleet subscription base(2) (units) 202,734 173,793 16.7
Fleet customer base(3) 22,668 19,039 19.1
Fleet attrition (annualised) (4) (%) 11.6 12.2
Annualised recurring revenue(5) (£'000) 23,942 21,943 9.1
Fleet invoiced recurring revenue(6) (£'000) 22,506 20,801 8.2
Fleet revenue(7) (£'000) 23,752 22,059 7.7
Price erosion(8) (%) 6.0 6.7
( )
(1) New vehicle tracking unit subscriptions added to the subscription
base before any attrition
(2 )The number of vehicle tracing units subscribed to the
Group's fleet tracking services, including units waiting to be installed for
which subscription payments have started or are committed.
(3 )The number of customers associated with the fleet
subscription base
(4 )The number of new vehicle tracking unit subscriptions, less
the increase in subscription base, expressed as a percentage of the mean
subscription base
(5 )Annualised data services revenue for the subscription base at
the year end, before deferred revenue, including revenue for units waiting to
be installed for which subscription payments have started or are committed,
all measured in constant currency.
(6 )Invoiced subscription charges before provision for deferred
revenue
(7 )Total fleet revenue (see Strategic Report: Financial Review,
Financial Overview)
(8 )The annual decrease in average subscription price of the
base expressed as a percentage of the average subscription price at the start
of the year, all measured in constant currency
Since 2018, the financial statements have included segmental financial
information for the Group's insurance and fleet operations. Following the
managed reduction in the insurance sector revenue and contribution to adjusted
EBITDA, the Group will not provide this segmental analysis in future.
Instead, insurance will be included in the Fleet telematics services
sub-category (see below).
However, to increase transparency, the Group will continue to include an
additional voluntary disclosure, separating the fleet segment into two
sub-categories, see note 3, in order to highlight the different costs
structures within the business:
• Customer acquisition, for new customer contracts;
and
• Fleet telematics services for recurring revenue
and repeat contracts with existing customers.
Segmental analysis 2021 Customer Acquisition Fleet Telematics Services Total Business
£'000 £'000 £'000
Revenue 280 25,233 25,513
Segmental costs (8,692) (5,437) (14,129)
Sub-categories profit (8,412) 19,796 11,384
Central costs (5,659)
Adjusted EBITDA 5,725
Segmental analysis 2020 Customer Acquisition Fleet Telematics Services Total Business
£'000 £'000 £'000
Revenue 223 25,612 25,835
Segmental costs (7,138) (6,007) (13,145)
Sub-categories profit (6,915) 19,605 12,690
Central costs (4,819)
Adjusted EBITDA 7,871
The profit before central costs decreased by £1.3m compared to the prior
year, at £11.4m (2020: £12.7m), following targeted investment in growing the
subscription base. The profitability of the Group's fleet telematics services,
grew by £0.2m to £19.8m (2020: £19.6m), which comprised an increase of
£1.2m for the core part of the business associated with recurring revenues
offset by a £1.0m decline for insurance. The growth in the core fleet
element was then invested into organic growth by spending an additional £1.6m
on Customer Acquisition costs such as marketing and sales staff to acquire
additional fleet customers for the future.
Richard Lilwall, Chief Executive Officer of Quartix, commented:
"I am pleased to report another year of strong growth in our Fleet division in
2021, despite the challenges presented by COVID-19 globally. Our fleet
subscription base grew by 17% and for the first time broke the 200,000 units
milestone. This led to an associated increase in annualised recurring revenue
of £2.0m, at a constant currency rate, to £23.9m at 31 December 2021. Our
increased marketing investments drove an increase in new subscription numbers
of 18% to break a further milestone of 50,000 new units. Fleet attrition was
also very encouraging, showing a reduction from 12.2% to 11.6% as our service
focused proposition and competitive price point continues to drive customer
loyalty.
We cemented our position as a UK leader with a regional base of 125,085
showing growth of 9%. Growth in our international markets continued with
particularly strong results in France expanding 29% to 40,343 vehicles. USA
increased by 19% to 27,912 units and other Europe territories grew 141% from
3,904 units to 9,394.
We have made a strong start to the year during the first two months, with
growth of 25% in new fleet unit subscriptions and an increase of £0.4m in
annualised recurring revenue, which supports our expectation that the
annualised subscription base will increase at a significantly faster rate than
was achieved in 2021. This gives us confidence for the coming financial period
and beyond, targeting annualised recurring revenue of at least £30.0m by the
end of 2023.
I am excited to work with the business to produce scalability and technology
improvements across the Group. Investment in the US market will be a focus
area over the short to medium term, therefore building a solid foundation for
future growth which we expect to accelerate in the coming years."
For further information, please contact:
Quartix (www.quartix.net) 01686 806 663
Richard Lilwall, Chief Executive Officer
Emily Rees, Chief Financial Officer
finnCap (Nominated Adviser and Broker) 020 7200 0500
Matt Goode / Kate Bannatyne (Corporate Finance)
Alice Lane (Equity Capital Markets)
Full Financial Results Report
The Group's Financial Statements and results presentations for the year ended
31 December 2021 are available in the "Investors" section of our website at:
www.quartix.com/investors (http://www.quartix.com/investors)
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
Introduction
Our key focus for the past year was investing in the growth of our core Fleet
operations, both in the UK and overseas to drive an increase in recurring
revenues. As noted in the Highlights section, the annualised recurring revenue
increased by £2.0m, at a constant currency rate, to £23.9m at 31 December
2021. This was achieved, with the Group experiencing strong growth in its
Fleet tracking subscription platform. Performance in the first half of the
year was particularly encouraging; new subscriptions were 31.0% ahead of the
prior year (which was adversely impacted globally by covid restrictions) but
also 8.7% above the 2nd half of 2020. Fleet revenue grew by 7.7% during the
year; in line with the growth in the value of the subscription base.
This performance brought new subscriptions for the year 15.8% ahead of those
for 2019, which was previously our strongest year for installations. It was
also pleasing to see that, despite the pandemic, Group attrition marginally
improved to 11.6% (2020: 12.2%) and price erosion reduced to 6.0% (2020:
6.7%). For the first time ever our installed base now exceeds 200,000 units,
and the customer base exceeded 20,000 customers.
Each geographical market registered increases in both new subscriptions and in
the subscription base for the year. In the UK, and the US, new unit
installations grew at a slower rate than in the newer regions, partly due to
recruitment challenges during the second half. The UK achieved new unit
installation growth of 5.7%. Sales in the UK fleet operations grew by 3.6%,
reaching £16.2m (2020: £15.6m) whilst UK insurance revenues decreased to
£1.8m (2020: £3.8m), due to availability of driving tests and the Company's
decision to terminate the supply of new installations for its main insurance
client (see Results section below for further information).
New unit installations growth was very impressive in France, driven by the
continuing expansion of the direct sales force. French revenue increased by
19.3% to €5.1m (2020: €4.3m), ending the year with 40,343 vehicles under
subscription (2020: 31,345) across 5,479 fleet customers (2020: 4,299).
2021 was the Group's seventh full year of operations in the USA, where growth
continued. It completed the year with 27,912 vehicles under subscription
(2020: 23,479) across 3,860 fleet customers (2020: 3,247), and revenue
increased by 16.8% to $3.6m in 2021 (2020: $3.1m). The prospects for future
business development remain encouraging with management creating a new
expansion strategy which will be a key focus for the Group for 2022.
The Group continued to make progress in its other European territories, with
Spain and Italy achieving excellent results, albeit from a much lower base,
ending the period with a subscription base of 9,394 vehicles (2020: 3,904)
across 1,997 fleet customers (2020: 920).
Results
Group revenue for the year decreased marginally to £25.5m (2020: £25.8m);
the Group continues to replace insurance revenue with higher quality fleet
revenue. Total fleet revenue increased by £1.7m and now represents 93.1% of
total revenue (2020: 85.4%). Insurance revenue decreased by £2.0m.
Both operating profit and profit before tax for the year decreased to £5.3m
(2020: £5.7m). However, the underlying decrease was £2.4m (33.1%) due to a
release of £0.4m and a charge of £1.6m, in 2021 and 2020 respectively, for
the swap out of 3G units in the USA (see below).
As illustrated in the segmental analysis under the Financial Highlights, there
was a £1.6m increase in customer acquisition segmental cost to £8.7m in 2021
(2020: £7.1m), due to the significant customer acquisition investment and the
impact of higher equipment cost (see below). The profitability of the
Group's fleet telematics services, which represents the core part of the
business associated with recurring revenues, grew by £0.2m to £19.8m (2020:
£19.6m). This is the net improvement, comprising an improvement of £1.2m
for the core fleet operations and a £1.0m decline for insurance, driven by
the £2.0m reduction in insurance revenue. The combined impact on total profit
before central costs, was a reduction of £1.3m to £11.4m (2020: £12.7m).
In 2021 Quartix was impacted by the global supply shortage in component parts
increasing the equipment costs. Given this shortage, the Company took the
decision to terminate the supply of new installations for its main insurance
client in order to prioritise its fleet operations. Under a new agreement
Quartix will only continue to provide tracking systems for the customer's
existing policy holders and will provide data and warranty services for a
contractually agreed monthly service fee until September 2022. It is
anticipated that the profits of the insurance segment will continue to
decline.
Cash conversion weakened due to higher equipment costs and stock holding
levels due to the component parts shortages, resulting in free cash flow, cash
flow from operations after tax and investing activities, of £3.3m (2020:
£5.5m). Net cash decreased to £5.4m at 31 December 2021 (2020: £10.6m),
following the payment of an interim dividend in 2021 and a final and
supplementary dividend for 2020 in 2021, totalling £9.3m. The 31 December
2020 cash balance benefitted from the cancellation of the final and
supplementary divided for 2019 as a result of the coronavirus pandemic.
A provision of £1.6m was recognised in the prior year in respect of the swap
out of 3G fleet units in the US, of which £0.3m has been utilised in the year
for replaced units and £0.4m has been released on re-estimate of the
provision at the current year end (see Strategic Report: Financial Review).
Earnings per share
Basic earnings per share increased by 2.9% to 10.14p (2020: 9.86p). Diluted
earnings per share increased to 10.07p (2020: 9.82p). The adjusted diluted
earnings per share, which is calculated by adding back the cost of the
replacement of 3G units was 9.18p (2020: 13.16p).
Dividend policy
Our ordinary dividend policy is to pay a dividend set at approximately 50% of
cash flow from operating activities, which is calculated after taxation paid
but before capital expenditure.
In addition to this the Board will distribute the excess of gross cash
balances over £2m on an annual basis by way of supplementary dividends,
subject to a 2p per share de minimis level.
The surplus cash is calculated using the year end gross cash balance and after
deduction of the proposed ordinary dividend and is intended to be paid at the
same time as the final dividend. The policy will be subject to periodic
review.
Dividend
In the year ended 31 December 2021, the Board decided to pay an interim
dividend of 1.50p per ordinary share. This totalled £0.7m and was paid on 10
September 2021 to shareholders on the register as at 13 August 2021.
The Board is recommending a final ordinary dividend of 1.90p per share,
together with a supplementary dividend of 5.10p per share, giving a final pay
out of 7.00p per share and a total dividend for the year of 8.50p per share.
The final and supplementary dividend amounts to approximately £3.4m in
aggregate. Subject to the approval at the forthcoming AGM, this aggregate
dividend of 7.00p per share will be paid on 29 April 2022 to shareholders on
the register as at 1 April 2022.
Outlook
The Group has made a strong start to the year, with fleet new unit
subscriptions growth of 25% for the first two months, in line with our
expectations. Given the success that Quartix has achieved in its core fleet
markets, and considering the broader market opportunity available to it, the
Group intends to continue to invest a proportion of its profits on sales and
marketing to capitalise further on the profitable subscription platform it has
created by accelerating growth in its fleet subscription base. The majority of
this investment is already underway with the recruitment of additional
comparison sales staff and substantial increases in UK and French field sales
capacity.
Quartix also plans further sales resource increases in France, as well as in
the other European countries where initial sales results have shown the most
promise for the future. For 2022 this will be focused on Spain, Italy and
Germany, where unit sales have been growing rapidly, albeit from a low base.
To further drive European growth, the Company is planning to establish a
small, serviced regional sales office in Southern France by the midpoint of
2022. This will both support the locally based French sales force and provide
back-office services for direct sales staff to be recruited in adjacent
countries.
Quartix will also be launching several incremental added value features that
it can upsell to the existing substantial customer base including fleet
migration to electric vehicle and vehicle condition monitoring.
These investments will enable Quartix to accelerate the growth of the
installed Fleet base and annual recurring revenue in this financial year and
beyond, targeting annualised recurring revenue of at least £30.0m by the end
of 2023, compared to £23.9m as at 31 December 2021.
AGM
The Group's AGM will be held at 12.30 p.m. on 23 March 2022 at the Group's
registered office at Sheraton House, Castle Park, Cambridge, England, CB3 0AX.
Paul Boughton
Chairman
Strategic Report: Operational Review
Strategy and business model
The Group's main strategic objective is to grow its fleet subscription
platform and develop the associated recurring revenue. This strategy is based
on 5 key elements, which were first highlighted in the 2018 annual report. We
are pleased to be able to report significant progress in each area, as
summarised below:
1. Market development: new fleet subscriptions increasing by 18.3%, with
particularly strong growth in France and the new European territories, notably
Spain and Italy. The subscription base increased by 16.7%.
2. Cost leadership: We continue to seek improvements in the efficiency
of the sales cycle and to review product and overhead costs in order to
identify further operational efficiencies.
3. Continuous enhancement of the Group's core software and telematics
services: further improvements have been made to the Group's software
platform, which have increased its functionality and ease of use, as well as
allowing the integration of camera systems. A new self-install fleet unit has
been launched for the UK and Europe.
4. Outstanding service: Quartix maintained its excellent reputation with
its fleet customers throughout the year, consistently being rated as
"excellent" by TrustPilot users. Changes to the support and service processes
during the year have realised benefits that have kept attrition at a steady
level in the midst of the global coronavirus pandemic.
5. Standardisation and centralisation: the expansion into European
markets has thus far been achieved entirely from the Group's principal
operational office in Newtown. However, with recruitment constraints following
Brexit, this structure is being reviewed (see Capacity for future growth
section below). The office in Chicago is now exclusively a sales office, with
US support and service functions being performed from the UK.
Our fleet customers typically use the Group's vehicle telematics services for
many years, resulting in low rates of attrition. Accordingly, the Group
focuses its business model on the development of subscription revenue based on
minimal initial commitment from the customer, providing the best return to the
Group over the long term.
The number of vehicles connected to our subscription platform and the value of
recurring subscription revenue derived from it are the key measures of our
performance in the fleet sector. As noted in the Highlights section, the
annualised recurring revenue increased by £2.0m, at a constant currency rate,
to £23.9m at 31 December 2021.
Quartix also provides telematics technology and services to insurers, who use
the Group's technology to monitor the driving style and habits of higher-risk
drivers, normally for a policy with a term of just 12 months. As noted above,
the Company has terminated its contract with its main insurance client.
Consequently, in terms of installed units, revenues and profits, the insurance
business is now insignificant for the Group and this expected to be the case
in the longer term and will no longer be reported as a separate segment.
The Group has focused over the past five years on growth in its fleet
operations evidenced in the year on year trend in the increasing proportion of
total revenues that is within the fleet segment:
2021 2020 2019 2018 2017 2016
Fleet revenue % 93.1 85.4 81.2 73.2 69.4 63.9
People
We take pride in the level of service we provide, and it is gratifying to see
that fleet customers consistently provide us with excellent reviews - both in
person and on third-party sites such as TrustPilot. The changes in support
and service processes which we have made during 2021 led to a marginal
improvement in attrition levels during the year and we are delighted to have
been able to support our customers throughout the coronavirus pandemic.
These service achievements are a reflection of the teamwork, creativity and
dedication of our people and a testament to how seriously we take our
commitment to providing the best experience for our customers. Our financial
performance derives from the customer service we deliver, backed by the
technology we develop. We would like to register our personal thanks to every
one of our employees who made 2021 another great year for Quartix.
We are pleased to have been able to provide our employees with the ability to
participate in the equity of the Company under our EMI share option scheme.
With the growth of the number of employees and staff turnover, the Board will
no longer routinely offer shares to all members of staff annually but intends
to adopt a more targeted approach to grant options to both attract new and
retain valued members of staff. During the year the two new plc Directors were
granted share options in the Company, refer to the Directors Remuneration
Report in the Annual Report for more detail.
Operational performance
All of our business operations continued to perform at a high level in 2021.
Gross margin increased to 73.0% (2020: 66.0%), mainly due to the deferred
revenue release in insurance coupled with the reduction in new insurance
units. Additional spend on customer acquisition of £1.6m and volume related
recruitment in other areas, including senior management, where the main
drivers for the 17.3% increase in administrative expenses.
Cash conversion weakened, due to higher equipment costs and the stock building
for component shortage, with cash flow from operations representing 74.6% of
profit for the year (2020: 117.9%). We expense all research and development
investment, tracking system and installation costs as they are incurred unless
development spend meets the criteria for capitalisation.
Working capital management has been more challenging under covid: trade
debtors at the year-end were equivalent to 34 days of sales (2020: 31).
Inventory levels increased significantly by 91.6% compared to prior year
levels, due to buffer stock holding to address component shortage and due to
the increasing number of models with the transition to 4G in both the US and
Europe.
Fleet
Our core fleet business delivered excellent progress in a further year of
investment. There was particularly strong growth in the subscription base for
France and the new European territories, so that for the first time ever our
installed base now exceeds 200,000 units.
During the course of the year, we won 5,868 new fleet customers (2020: 4,484).
Sales leads continued to be generated through a broad range of media and
channels and investments have been made in marketing, technology, processes
and training, adding automation wherever possible.
Total investment in fleet customer acquisition, net of revenue, increased by
£1.5m to £8.4m in 2021 (2020: £6.9m). This investment will continue in 2022
as we continue to develop our business across each of our markets, thereby
increasing recurring revenues.
Subscription Base New subscriptions Customers New Customers
United Kingdom (inc. Ireland)
2021 125,085 23,557 11,332 1,706
2020 115,065 22,294 10,573 1,801
Change 10,020 1,263 759 (95)
France
2021 40,343 12,054 5,479 1,661
2020 31,345 9,135 4,299 1,294
Change 8,998 2,919 1,180 367
Other European Territories
2021 9,394 6,163 1,997 1,252
2020 3,904 2,922 920 599
Change 5,490 3,241 1,077 653
USA
2021 27,912 8,991 3,860 1,249
2020 23,479 8,547 3,247 1,150
Change 4,433 444 613 99
Fleet UK
UK fleet revenue was £16.2m (2020: £15.6m). The strength of our brand,
service capability and reputation in the UK is leading to higher levels of
enquiries from larger fleet prospects.
Our UK website continued to perform well in terms of enquiries, and we
continued to add new content to it.
We will continue to focus on telephone sales staff and we have increased UK
field sales capacity, to support our fleet marketing initiatives; we will look
to find additional channels and partners to help us develop the market.
Fleet France
French fleet revenue increased by 19.3% to €5.1m (2020: €4.3m), making a
profitable contribution to the Group. We saw significant growth in new
installations driven by the continuing expansion of the direct sales force,
including the new French field sales to help facilitate growth with customers
who have larger fleets, with 50 or more vehicles.
New European territories
Spain and Italy achieved excellent results, albeit from a much lower base, and
the Company will increase investment in these.
Fleet USA
Trading in the USA showed further progress demonstrated by a 16.8% increase in
fleet revenue to $3.6m (2020: $3.1m). The USA reported a trading profit of
$2.0m (2020: loss $0.7m) but both results were impacted by movements in the
provision for the cost of replacing 3G units in the USA. The underlying
trading profit was $1.4m compared to $1.5m in 2020. We continue to see
potential for growth in the USA.
US 3G swap out
In 2020, the Group made a provision of £1.6m for the replacement cost of a
large proportion of the US installed base of tracking systems as a consequence
of the sunsetting of the 3G mobile network in the US, being replaced by 4G
networks. The Board made the decision to provide this service free of charge
to customers to minimise the chances of incremental attrition and to further
enhance the Company's reputation in the US market. The transition from 3G has
taken longer than expected and by the end of 2021, it had completed the
replacement of approximately one third of the 15,000 total units involved. The
spend in 2021 was approximately £0.3m, and the Group expects the swap out to
be completed in 2022, predominately in the first half, and the cash required
to finalise the transition will be approximately £0.9m.
Insurance
Reductions in the availability of driving tests and termination of a main
insurance client's contract (see above), resulted in the 69.5% decrease in
insurance installations to 5,204 units. The profitability of this segment
decreased by £1.0m, driven by a £2.0m reduction in revenue which was only
partially compensated by reductions in equipment and installation costs from
the declining volume.
Research and development
The Group is committed to the continuous enhancement of its core software and
telematics services, and we aim to offer a market-leading platform which
addresses the most common needs of SME customers in the service sector of each
of our target markets. We achieved some notable successes in 2021:
1. In 2020, we developed a new family of 4G (LTE) models for the US
market which went into production in Q3 2021, following a longer than expected
lead time due to availability of some key components. We have developed new
4G (LTE) models across the product range of tracker units for the UK and
European markets and anticipate that these will be available during Q2 2022.
These 4G models address the US 3G network sunset scheduled for 2022 and also
the European 2G network sunsets anticipated from 2025. These products are
also the basis for ongoing development to support electric vehicles.
2. We are undergoing an extensive modernisation program of our core
software and telematics code, both from a technology and user experience
perspective. In 2022, these combined elements will result in the launch of a
new user interface, introducing new functionality and including new self-serve
features- to provide our customers with more flexibility to configure their
trackers and associated reports. These enhancements help improve the customer
experience as well as increasing the efficiency of our support operation.
3. To address product upselling opportunities, Quartix has embarked on a
number of incremental added value features to its existing analytical software
offerings, including ones concerning fleet migration to electric vehicles
analysis and vehicle condition monitoring, which we anticipate will be
launched during the first half of 2022
All of our investment in research and development was fully expensed in the
year. The total cost of £0.8m was similar to the prior year (2020:
£0.8m).
Sustainability and Environmental, Social, and Governance ("ESG") matters
The Board is aware that investors are increasingly applying non-financial
factors, such as ESG matters, as part of their analysis process to identify
material risks and growth opportunities. Being part of an ethical, purpose
driven business increasingly matters more to our people, our shareholders and
our business partners.
Software companies such as Quartix have a central role in the transition to a
low carbon economy and a more sustainable future. We are essentially a
non-emitting and limited-consuming business and the Board believes our limited
use of carbon energy is largely offset by the savings that we achieve for our
customers in reduced fuel consumption and other efficiencies in vehicle fleet
management.
Quartix has been awarded the "Green Economy Mark", of the London Stock
Exchange, which recognises London-listed companies and funds that derive more
than 50% of their revenues from products and services that are contributing
the environmental objectives such as climate change mitigation and adaptation,
waste and pollution reduction, and the circular economy. The Mark was
received due to analytics from an external consultancy firm and evidence from
our customers, that fleet vehicle tracking and analytics changes driver
behaviour and results in a reduction of between 10~25% in fuel consumption and
reduced Co2 emissions.
Following the appointment of Andrew Walters as a Non-Executive Director in
October 2021, the Board have appointed him as Chair of our newly formed ESG
Committee. The other members will be David Warwick, also a Non-Executive
Director, and Richard Lilwall, CEO. Andrew Walters will be leading our first
sustainability review in 2022, in order to better understand our environmental
impact and to prioritise areas for action. In addition, the ESG Committee will
be assessing our performance in Social and Governance matters, where we
believe that Quartix already conforms to current best practice in most areas.
Capacity for future growth
We believe that the Company has significant opportunity for growth in its
fleet business in both new and existing markets. We achieved excellent growth
in our subscription platform in 2021, despite the ongoing challenges with
COVID-19, and established encouraging positions in a range of new markets.
The Group has made a strong start to the year, with fleet new unit
subscriptions growth of 25% for the first two months, in line with our
expectations. Given the success that Quartix has achieved in its core fleet
markets, and considering the broader market opportunity available to it, the
Group intends to continue to invest a proportion of its profits on sales and
marketing to capitalise further on the profitable subscription platform it has
created.
Quartix intends to make further additional investments in sales channels
during 2022 and beyond. The Company has identified a large part of its core
markets still unpenetrated which it intends to pursue, alongside winning
potential customers from its competitors. In the UK, the Company plans to
implement data-driven optimisation across the sales and marketing funnel and
execute automation and simplification across business processes in order to
drive growth. This will be paired with new technology features for up-sell
opportunities, as described above. In the US, the Company intends to increase
marketing spend to grow its funnel of opportunities, look to sell its products
via e-commerce to better serve small customers and continue to provide product
developments.
Quartix also plans further sales resource increases in France, as well as in
the other European countries where initial sales results have shown the most
promise for the future. For 2022 this will be focused on Spain, Italy and
Germany, where unit sales have been growing rapidly, albeit from a low base.
To further drive European growth, the Company is planning to establish a
small, serviced regional sales office in Southern France by the midpoint of
2022. This will both support the locally based French sales force and provide
back-office services for direct sales staff to be recruited in adjacent
countries.
To address product upselling opportunities, Quartix will be launching several
incremental added value features to its existing analytical software
offerings, including ones concerning fleet migration to electric vehicles
analysis and vehicle condition monitoring.
The Company anticipates that these investments will enable both new fleet
units installed and the associated value of the annualised subscription base
to increase at a significantly faster rate than was achieved in 2021.
Richard Lilwall
Emily Rees
Chief Executive
Officer
Chief Financial Officer
Strategic Report: Financial Review
Financial Overview
Year ended 31 December
£'000 (except where stated) 2021 2020 % change
Revenue
Fleet 23,752 22,059 7.7
Insurance 1,761 3,776 (53.4)
Total 25,513 25,835 (1.2)
Gross profit before 3G swap out provision 18,207 18,657 (2.4)
Gross margin before 3G swap out provision 71.4% 72.2%
Gross profit 18,637 17,047 9.3
Gross margin 73.0% 66.0%
Operating profit 5,309 5,680 (6.5)
Operating margin 20.8% 22.0%
Adjusted EBITDA (note 4) 5,725 7,871 (27.3)
Profit for the year 4,896 4,728 3.6
Earnings per share 10.14 9.86 2.9
Adjusted diluted earnings per share 9.18 13.16 (30.2)
Cash generated from operations 3,963 6,698 (40.8)
Operating profit to operating cash flow conversion 74.6% 117.9%
Free cash flow 3,266 5,534 (41.0)
Adjusted Free cash flow 3,696 5,534 (33.2)
Revenue
Revenue decreased by 1.2% to £25.5m (2020: £25.8m); the Group continues to
replace insurance with higher quality fleet revenue. Fleet revenue,
benefitting from past investment and expansion into new European territories,
increased by £1.7m to £23.8m (2020: £22.1m). Sales to insurance customers
decreased by £2.0m to £1.8m (2020: £3.8m). Insurance revenue fell to 6.9%
(2020: 14.6%) of total revenue and is expected to fall further to between 3
and 4% in 2022.
Gross margin
Gross margin increased to 73.0% in the year (2020: 66.0%). The primary cost
saving was achieved through the reduction in equipment, installation and
carriage costs, partly due to the large reduction in insurance installations
and partly due to a higher proportion of self-install fleet units. The gross
margin also benefitted from a £0.4m release (2020: charge £1.6m) in the
provision, relating to the swap out of 3G units in the US, due to the
reduction in the number of replacement units forecast at 31 December 2021.
Management expect the sunsetting of the 3G mobile network in the US to be
finalised in 2022 and this necessitates the replacement of a large proportion
of the US installed base of tracking systems. In 2020, the Board decided to
provide replacement units free of charge to customers, to minimise any
incremental attrition, and originally anticipated that most units would be
replaced in 2021. However, the replacement programme was delayed, following
a longer than expected lead times and limited availability of some key
components due to covid disruption, and will now be completed in 2022.
Adjusted EBITDA
Adjusted EBITDA, which excludes the £0.4m provision release for the
replacement of the 3G units, decreased to £5.7m (2020: £7.9m), driven by the
increase in equipment costs, as a result of the global shortage in the supply
of component parts used in the manufacture of our product, and the reduction
in insurance revenue.
A summary of the Group's segmental analysis for the financial year ended 31
December 2021 is included under the Financial Highlights (also see note 3).
Overheads
We continued to invest in our product offering, in our sales structure and in
marketing, which led to an increase in overheads of 17.3%.
Taxation
Our effective tax rate benefits from the Group's investment in research and
patents in the UK business and loss relief for the US business. The
effective rate decreased from 16.4% in 2020 to 7.4% in 2021, due to loss
relief for US operations and EMI option relief, following the exercise of a
substantial number of options during 2021, compared to the prior year.
Statement of financial position
Property, plant and equipment, at £1.0m (2020: £1.3m), decreased by £0.3m
largely due to derecognition of the right of use leasehold property in
Cambridge, for which the lease was terminated. The latter property was
replaced by a 24-month lease agreement in a managed office building in
Cambridge, which has an insignificant impact on the financial statements.
Inventories increased to £1.3m (2020: £0.7m) due to buffer component stock
lines and the increase in the variation of models with the transition to 4G.
Cash at the year-end was £5.4m (2020: £10.6m), since the final and
supplementary dividends for 2020, totalling £8.5m, was paid during the year,
where the 2020 cash balance benefitted from the cancellation of the final and
supplementary dividends for 2019. Trade and other receivables increased
slightly to £4.0m in the year (2020: £3.8m). Trade and other payables
increased to £3.2m (2020: £2.8m), and provisions decreased from £1.8m to
£1.0m due to utilisation and partial release on re-estimate of the US 3G swap
out provision.
Contract liabilities represent customer payments received in advance of
satisfying performance obligations, which are expected to be recognised as
revenue in future years (both fleet and insurance). These unwound to £3.2m
in 2021 (2020: £3.7m).
Cash flow
Cash generated from operations before tax at £4.0m was 74.6% of operating
profit (2020: £6.7m, 117.9% of operating profit). Tax paid in 2021 was £0.6m
(2020: £1.1m), so cash flow from operating activities after taxation but
before capital expenditure was £3.3m (2020: £5.6m).
Free cash flow, after capital expenditure and interest received, was £3.3m, a
decrease of 41.0% (2020: £5.5m). The translation of cash flow into dividends
is covered in the Chairman's Statement.
Risk Management policies
The principal risks and uncertainties of the Group are as follows:
Attracting and retaining the right number of good quality staff
The Group believes that in order to safeguard the future of the business it
needs to recruit, develop and retain the next generation of staff. The impact
of not mitigating this risk is that the Group ceases to be innovative and
provide customers with the vehicle telematics services they require.
Considerable focus has been given to recruitment, development and retention.
The Group has a range of tailored incentive schemes to help recruit, motivate
and retain top quality staff, which include the use of share options.
Reliance on Mobile To Mobile ("M2M") network
The Group's service delivery is dependent on a functioning M2M network
covering both the internet and mobile data. The impact of not mitigating this
risk is that the Group is exposed to an M2M outage. Quartix has dual site
redundancy to cover a localised internet problem and we are constantly working
on improving the reliability of our systems architecture.
Management believes that, at some point between 2025 and 2030, most UK and
European network operators will finalise the sunsetting of their 2G
networks. Depending on the actual timetable and the commercial climate,
there may be a cost at that time associated with the upgrading of customers'
technology, which the Group is seeking to minimise through various
technological and commercial means.
As described in the 2020 Financial Statements, Management expect the
sunsetting of the 3G mobile network in the US to be finalised in 2022. This
necessitated the replacement of a large proportion of the US installed base of
tracking systems planned for 2021, however because of the global shortage of
some of the components required in the manufacture of hardware, new unit sales
were prioritised. The carrier approvals and certifications have come through
on a new model to be rolled out to replace the 3G units in the US, and there
should be accelerated shipments of these new products over the coming months
to replace the remaining 3G units in the installed base in 2022. The Company
provided £1.6m in its 2020 accounts. In 2021, it has utilised £0.3m for 3G
units replaced and released £0.4m, because of attrition in the base.
Business disruption
Like any business the Group is subject to the risk of business disruption.
This includes communications, physical disruption to our sites and problems
with our key suppliers. The impact of not mitigating this risk is that the
Group may not be able to service its customers. Quartix has a Business
Continuity plan and business interruption insurance to cover certain events to
help mitigate these risks.
The full extent of the impact to the Group's business as a result of the UK
leaving the EU remains uncertain. The Group acquires, manages and supports its
customers in the EU centrally, from its offices in the UK. The resulting
trading and data adequacy arrangements has not made it necessary for a
relocation of some of its operations to within the EU. However, the existing
French branch is instrumental in the logistics of moving the goods between the
France and the customers in the EU territories and the Group is planning to
establish a small, serviced regional sales office in Southern France by the
midpoint of 2022.
There remains a risk that the coronavirus pandemic will further impact the
growth of the global economy and therefore the Group's subscription base and
its ability to collect cash from its customers. The rollout of the vaccination
programme appears to have mitigated this risk.
As with other industries, there is also a risk of some short-term disruption
to component supply as the global economy recovers and suppliers increase
production to meet demand. The Group is actively working with suppliers to
manage this and has increased its buffer stock holding.
Cyber security
The Group needs to make sure its data is kept safe and that there is security
of supply of data services to customers. The reputational and commercial
impact of a security breach would be significant. To combat this, the Group
has a security policy and prepares a security report which is reviewed by
members of the Operations Board. This process includes the use of outside
consultants for penetration testing and security review.
Technology
Technology risks are perceived to arise from possible substitutes for the
current Quartix product. Risks cited include everything from smart mobile
phones and their applications to driverless cars. The Group strategy is to
review all new technical developments with the aim of adopting any which will
provide a better channel for the information services which Quartix provides.
Emily Rees
Chief Financial Officer
Consolidated Statement of Comprehensive Income
Year ended 31 December 2021 2021 2021 2020 2020 2020
Notes Before Provision Before Provision
Provision Total Provision Total
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 2,3 25,513 - 25,513 25,835 - 25,835
Cost of sales (7,306) 430 (6,876) (7,178) (1,610) (8,788)
Gross profit 18,207 430 18,637 18,657 (1,610) 17,047
Administrative expenses (13,328) - (13,328) (11,367) - (11,367)
Operating profit 4,879 430 5,309 7,290 (1,610) 5,680
Finance income receivable 0 - 0 19 - 19
Finance costs payable (23) - (23) (40) - (40)
Profit for the year before taxation 4,856 430 5,286 7,269 (1,610) 5,659
Tax expense (390) - (390) (931) - (931)
Profit for the year 4,466 430 4,896 6,338 (1,610) 4,728
Exchange difference on translating foreign operations (101) - (101) 99 - 99
Other comprehensive income for the year, net of tax (101) - (101) 99 - 99
Total comprehensive income attributable to the equity shareholders of Quartix 4,365 430 4,795 6,437 (1,610) 4,827
Technologies plc
Adjusted EBITDA 4 5,725 7,871
5
Earnings per ordinary share (pence)
Basic 10.14 9.86
Diluted 10.07 9.82
Consolidated Statement of Financial Position
31 Dec 2021 31 Dec 2020
Notes £'000 £'000
Assets
Non-current assets
Goodwill 14,029 14,029
Property, plant and equipment 956 1,278
Deferred tax assets 131 135
Contract cost assets 293 297
Total non-current assets 15,409 15,739
Current assets
Inventories 1,330 694
Trade and other receivables 3,986 3,811
Cash and cash equivalents 5,414 10,570
Total current assets 10,730 15,075
Total assets 26,139 30,814
Current liabilities
Trade and other payables 3,216 2,823
Provisions 953 1,785
Contract liabilities 3,160 3,650
Current tax liabilities 77 301
7,406 8,559
Non-current liabilities
Lease liabilities 650 822
650 822
Total liabilities 8,056 9,381
Net assets 18,083 21,433
Equity
Share capital 7 484 479
Share premium account 7 6,332 5,252
Equity reserve 380 792
Capital redemption reserve 4,663 4,663
Translation reserve (170) (69)
Retained earnings 6,394 10,316
Total equity attributable to equity shareholders of Quartix Technologies plc 18,083 21,433
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 2019 479 5,230 4,663 616 (168) 7,161 17,981
Shares issued - 22 - - - - 22
Increase in equity reserve in relation to options issued - - - 189 - - 189
Adjustment for exercised options - - - (43) - 43 -
Deferred tax on share Options - - - 30 - - 30
Dividend paid - - - - - (1,616) (1,616)
Transactions with owners - 22 - 176 - (1,573) (1,375)
Foreign currency translation differences - - - - 99 - 99
Profit for the year - - - - - 4,728 4,728
Total comprehensive income - - - - 99 4,728 4,827
Balance at 31 December 2020 479 5,252 4,663 792 (69) 10,316 21,433
Shares issued 5 1,080 - - - - 1,085
Increase in equity reserve in relation to options issued - - - 170 - - 170
Adjustment on settlement of options - - - (98) - - (98)
Recycle of equity reserve to P&L reserve - - - (456) - 456 -
Deferred tax on share Options - - - (28) - - (28)
Dividend paid - - - - - (9,274) (9,274)
Transactions with owners 5 1,080 - (412) - (8,818) (8,145)
Foreign currency translation differences - - - - (101) - (101)
Profit for the year - - - - - 4,896 4,896
Total comprehensive income - - - - (101) 4,896 4,795
Balance at 31 December 2021 484 6,332 4,663 380 (170) 6,394 18,083
Consolidated Statement of Cash Flows
Note 2021 2020
£'000 £'000
Cash generated from operations 6 3,963 6,698
Taxes paid (636) (1,106)
Cash flow from operating activities 3,327 5,592
Investing activities
Additions to property, plant and equipment (61) (72)
Interest received - 14
Cash flow utilised in investing activities (61) (58)
Cash flow from operating activities after investing activities 3,266 5,534
(Free cash flow)
Financing activities
Repayment of lease liabilities (166) (185)
Proceeds from share issues 1,085 22
Dividend paid (9,274) (1,616)
Cash flow used in financing activities (8,355) (1,779)
Net changes in cash and cash equivalents (5,089) 3,755
Cash and cash equivalents, beginning of year 10,570 6,789
Exchange differences on cash and cash equivalents (67) 26
Cash and cash equivalents, end of year 5,414 10,570
Notes to the Accounts
1 Basis of preparation
The results have been extracted from the audited financial statements of the
Group for the year ended 31 December 2021. The results do not constitute
statutory accounts within the meaning of Section 434 of the Companies Act
2006. Whilst the financial information included in this announcement has been
computed in accordance with the principles of international accounting
standards in conformity with the requirements of the Companies Act 2006 ('IFRS
(UK)'), IFRIC interpretations and Companies Act 2006 that applies to companies
reporting under IFRS (UK), this announcement does not of itself contain
sufficient information to comply with IFRS (UK). The Group will publish full
financial statements that comply with IFRS (UK). The audited financial
statements incorporate an unqualified audit report.
Statutory accounts for the year ended 31 December 2020, which incorporated an
unqualified auditor's report, have been filed with the Registrar of Companies.
The Auditor's report on these accounts did not draw attention to any matters
by way of emphasis and did not contain statements under S498(2) or (3)
Companies Act 2006. The accounting policies applied are consistent with those
described in the Annual Report & Accounts for the year ended 31 December
2020.
The basis of preparation and summary of significant accounting policies
applicable to the consolidated financial statements of Quartix Technologies
plc can be found in note 1 of the Annual Report and Financial Statements,
available from the Group's website.
2 Revenue
The Group's revenue disaggregated by primary geographical market is as
follows:
2021 2020
£'000 £'000
United Kingdom 17,953 19,409
France 4,425 3,826
New European Territories 507 202
United States of America 2,628 2,398
25,513 25,835
During 2021 UK revenue of £1.5m (2020: £3.4m) was derived from one insurance
customer, as a proportion of total revenue this one customer makes up 6.1% of
the Group's revenue (2020: 13.3%).
There are no material non-current assets based outside the UK.
The Group's revenue disaggregated by pattern of revenue recognition is as
follows:
2021 2020
£'000 £'000
Goods and services transferred over time 24,556 24,955
Revenue recognised at a point in time 957 880
25,513 25,835
Goods and services transferred over time represent 96.2% of total revenue
(2020: 96.6%).
For 2021, revenue includes £3.6m (2020: £4.8m) included in the contract
liability balance at the beginning of the period. Changes to the Group's
contract liabilities (i.e. deferred revenue) are attributable solely to the
satisfaction of performance obligations.
3 Segmental analysis
Since 2018, the financial statements have included segmental financial
information for the Group's insurance and fleet operations. Following the
managed reduction in the insurance sector revenue and contribution to adjusted
EBITDA, the Group will not provide this segmental analysis in future. Instead,
insurance will be included in the Fleet telematics services sub-category (see
below).
However, to increase transparency, the Group will continue to include an
additional voluntary disclosure, separating the fleet segment into two
sub-categories in order to highlight the different costs structures within the
business, in particular to give clarity as to the level of upfront investment
the Group is making in acquiring new customers, as well as the associated
impact on recurring revenue.
The two sub-categories are:
• Customer Acquisition: This is the sales and
marketing cost of acquiring new fleet customers and the cost associated with
units installed for those customers. Recurring subscription revenue is not
recognised in this sub-category, only equipment and installation income
attributed to new fleet customers.
• Fleet Telematics Services: This is the recurring
revenue associated with the Group's active subscription base and the cost of
servicing that subscription base. The costs in this sub-category include the
cost of installing additional units for existing customers, as well as the
associated marketing costs.
Estimated allocations of cost have been made between the sub-sections.
Segmental analysis 2021 Customer Acquisition Fleet Telematics Services Total Business
£'000 £'000 £'000
Recurring revenue - 22,506 22,506
Other sales 280 2,727 3,007
Revenue 280 25,233 25,513
Sales and marketing costs (6,538) (1,075) (7,613)
Equipment, installation, carriage (2,154) **(1,896) (4,050)
Cost of service - (2,466) (2,466)
Total Sub-category cost (8,692) (5,437) (14,129)
(Loss)/Profit before central costs (8,412) 19,796 11,384
Central costs (5,659)
Adjusted EBITDA (see note 4) 5,725
** The figures above do not include the £0.4m provision release for replacing
the 3G units in the US market. As the replacement units relate to existing
customers, the total cost would be allocated to the Fleet Telematics Services
sub-segment costs.
Reconciliation of the total Segmental costs to the cost of sales on the income
statement is as below:
2021 2020
£'000 £'000
Total Segmental costs 14,129 13,145
Less elements included in administrative expenses:
Cost of service: employees (714) (657)
Selling and marketing costs (excluding direct commissions) (5,991) (4,967)
Bad Debts (118) (343)
3G replacement provision not included in Segmental costs (430) 1,610
Cost of sales 6,876 8,788
Segmental analysis 2020 Customer Acquisition Fleet Telematics Services Total Business
£'000 £'000 £'000
Recurring revenue - 20,801 20,801
Other sales 223 4,811 5,034
Revenue 223 25,612 25,835
Sales and marketing costs (5,546) (941) (6,487)
Equipment, installation, carriage (1,592) ***(2,523) (4,115)
Cost of service - (2,543) (2,543)
Total Sub-category cost (7,138) (6,007) (13,145)
(Loss)/Profit before central costs (6,915) 19,605 12,690
Central costs (4,819)
Adjusted EBITDA (see note 4) 7,871
*** The figures above do not include the £1.6m provision for replacing the 3G
units in the US market. As the replacement units relate to existing customers,
the total cost would be allocated to the Fleet Telematics Services sub-segment
costs.
Revenue note 2 discloses the geographical analysis by destination and revenue
generated from our major customer.
4 Adjusted earnings before interest, tax,
depreciation and amortisation (EBITDA)
2021 2020
£'000 £'000
Operating profit 5,309 5,680
Depreciation on property, plant and equipment, owned 180 175
Depreciation on property, plant and equipment, right of use 151 182
EBITDA 5,640 6,037
Share-based payment expense (incl. cash-settled) 515 224
Provision for replacement of 3G units (430) 1,610
Adjusted EBITDA 5,725 7,871
5 Earnings per share
The calculation of the basic earnings per share is based on the profits
attributable to the shareholders of Quartix Technologies plc divided by the
weighted average number of shares in issue during the year. All earnings per
share calculations relate to continuing operations of the Group.
Earnings per ordinary share Profits attributable to shareholders £'000 Weighted average number of shares Basic profit per share amount in pence Fully diluted weighted average number of shares Diluted profit per share amount in pence
Year ended 31 Dec 2021 4,896 48,269,166 10.14 48,661,104 10.07
Year ended 31 Dec 2020 4,728 47,953,023 9.86 48,170,860 9.82
Adjusted earnings per share
Year ended 31 Dec 2021 4,466 48,269,166 9.26 48,661,104 9.18
Year ended 31 Dec 2020 6,338 47,953,023 13.22 48,170,860 13.16
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 that year.
To illustrate the underlying earnings for the year, the table above includes
adjusted earnings per ordinary share, which for 2021 excludes the £0.4m
release of the exceptional 3G replacement unit provision and for 2020
excluding the charge for the original provision of £1.6m.
6 Notes to the cash flow statement
Cash flow adjustments and changes in working capital
2021 2020
£'000 £'000
Profit before tax 5,286 5,659
Foreign exchange 39 183
Depreciation 331 357
Loss on disposal of fixed asset - 3
Interest income - (19)
Lease interest expense 23 40
Share based payment expense 72 224
Operating cash flow before movement in working capital 5,751 6,447
Decrease/(increase) in trade and other receivables (231) 69
(Increase) in inventories (636) 181
(Decrease) in trade and other payables (427) 1,189
(Decrease)/increase in contract liabilities (494) (1,188)
Cash generated from operations 3,963 6,698
7 Equity
Number of ordinary shares of £0.01 each Share capital £'000 Share premium £'000
Allotted, called up and fully paid
At 1 January 2021 47,962,516 479 5,252
Shares issued 417,518 5 1,080
At 31 December 2021 47,380,034 484 6,332
All the shares issued in the year to 31 December 2021 related to the exercise
of share options.
8 Share based payments
The Company has share option schemes for certain employees. Share options are
exercisable at prices determined at the date of grant. The vesting periods for
the share options range between 12 and 63 months. Options are forfeited if the
employee leaves the Company before the options vest.
During 2021, there were cash-settled options schemes for two directors,
incentive programmes linked to the share price, to facilitate the exercise of
existing equity-settled share options. These cash-settled share options are
linked to both service and market performance conditions. During 2021, both
directors exercised options under the schemes and Laura Seffino's remaining
options were subsequently terminated. At 31 December 2021, the remaining
cash-settled options were revalued using a binomial option pricing model.at
that date.
Movements in the number of equity-settled share options outstanding and their
related weighted average exercise prices are as follows:
2021 2020
Weighted average exercise price per share Options Weighted average exercise price per share Options
in pence number in pence number
Outstanding at 1 January 279.3 1,232,068 276.9 1,193,469
Granted 453.0 110,369 255.2 167,700
Settled 360.0 (112,443) - -
Lapsed 251.2 (74,546) 257.4 (104,905)
Exercised 259.9 (417,518) 89.0 (24,196)
Outstanding at 31 December 306.8 737,930 279.3 1,232,068
Exercisable at 31 December 281.8 173,204 290.5 356,974
The weighted average fair value of equity-settled options issued during the
year ended 31 December 2021 was 74.91p (2020: 118.37p). Included in the
equity-settled options granted in 2021 none (2020: none) were granted to staff
with performance conditions.
The weighted average share price at the date of exercise of options during the
year ended 31 December 2021 was 467.22p (2020: 265.75p).
Movements in the number of cash-settled share options outstanding and their
related weighted average exercise prices are as follows:
2021 2020
Weighted average exercise price per share Options Weighted average exercise price per share Options
in pence number in pence number
Outstanding at 1 January 321.4 238,000 322.0 170,000
Granted - - 320.0 68,000
Re-estimated 322.0 40,000 - -
Cancelled 320.0 (44,000) - -
Exercised 321.7 (156,000)
Outstanding at 31 December 322.0 78,000 321.4 238,000
Exercisable at 31 December n/a n/a n/a n/a
Further details of share-based payments are given in the Group's audited
accounts, which are available at www.quartix.net/investors/
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR SEAFAIEESESERecent news on Quartix Technologies
See all newsREG - Quartix Technologies - Trading Statement
AnnouncementREG - Quartix Technologies - Director/PDMR Shareholding
AnnouncementREG - Quartix Technologies - Result of AGM
AnnouncementREG - Quartix Technologies - AGM Trading Statement
AnnouncementREG - Quartix Technologies - Final Results
Announcement