REG - Quartix Technologies - Konetik update

Quartix TechnologiesAnnouncement

11/12/2023 07:15

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RNS Number : 2500W  Quartix Technologies PLC  11 December 2023

Quartix Technologies plc

("Quartix", "the Group" or "the Company")

Konetik update.

The Company announced the acquisition of Konetik on 15 September 2023.  As
noted in the trading update of 6 October 2023, a detailed review of the
acquisition of Konetik Deutschland GmbH ("Konetik") and the potential for the
Company's Evolve product line, a tool that assists fleet managers with
planning their migration to electric vehicles, has now been completed.
Following his return to the Company and appointment to the Board as Chairman
on 26 September 2023, Andy Walters, major shareholder and founder of the
Company, led this review.

Launched in 2022, the Evolve product has been sold as an upgrade to a small
number of existing customers, principally in the UK public sector, and revenue
generated to date has been very limited. Whilst users are pleased with reports
provided by Evolve, repeat usage by most has been very low and renewal rates
for early adopters has been disappointing. Following the review, the board
considers that the ability to increase the customer base and scale the
business in the next two years will be substantially more challenging than had
been envisaged at the time of making the acquisition.  This is due to:

1.    demand for Evolve, particularly in the private sector, has been
adversely impacted by delays to EV transition deadlines with the UK
government's decision to postpone the ban on the sale of petrol and diesel
vehicles to 2035.

2.    the ability to generate substantial increases in the volume of
license sales is now expected to  require much higher investment in the
software infrastructure due to limitations in the scalability of the current
product

3.  the customer acquisition cost and implementation support are now expected
to be much higher than previously anticipated

4.    the customer lifetime is now expected to be significantly shorter
than previously anticipated

 

In addition, the Board considers that the Evolve product is not an effective
tool for the acquisition of new vehicle tracking customers. Finally, the
anticipated resource requirements for the development, sale, support and
maintenance of Evolve means that such investment is not anticipated to achieve
an appropriate return.

Following this review the Board is committed to reducing the impact of this
acquisition on the operating performance of the Company as soon as possible.
 However, a further consequence of the conclusion of the review is,
regrettably, that a substantial, one time, non-cash impairment in the goodwill
arising from the Konetik acquisition (£2.5 million) will need to be made in
the Company's 2023 financial statements.

Quartix generates strong recurring revenues and operational cashflows from its
subscription base and the Company will refocus its efforts on its primary
strategic objective of delivering profitable growth in this core business.

Andy Walters, Executive Chairman, commented:

"Quartix provides subscription-based telematics services to more than 26,000
customers, for more than a quarter of a million commercial vehicles. Over the
past 5 years Quartix has added new territories and developed additional
channels to market which offer exciting growth potential for the future.

Since my return to the Company at the end of September I have been very
grateful for the support of the executive management team in conducting this
review and am delighted that I have their full commitment to returning the
Company's focus to its core business."

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 as retained as part of UK law by virtue of
the European Union (Withdrawal) Act 2018 as amended.

 

For further information, please contact:

 Quartix (www.quartix.net)                                         01686 806 663

 Andy Walters, Executive Chairman

 Emily Rees, Chief Financial Officer
 Cavendish Capital Markets Limited (Nominated Adviser and Broker)     020 7220 0500

 Matt Goode / Seamus Fricker (Corporate Finance)

 Tim Redfern / Sunila de Silva (Corporate Broking)

 

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