Investors

 

The information in this section is set out in accordance with AIM rule 26.

For further information please contact:

Andy Walters – Managing Director

David Bridge - Finance Director & Company Secretary

Tel: 01686 806 663

Last updated: 11th October 2017

Contact investor relations

 

Board of Directors

Paul Boughton Paul Boughton
Chairman

Paul Boughton has 30 years' of executive experience in identifying, negotiating and completing acquisitions in the USA and Europe. Currently he is Business Development Director of Aventics GmbH, the German industrial pneumatics manufacturer. He spent thirteen years as Business Development Director for Spectris plc, and subsequently held similar positions at IMI plc, Consort Medical plc and Brammer plc. He was a Non Executive director of London Bridge Software plc and Raymarine plc earlier in his career. Paul has a BSc in Business and Managerial Economics from the University of Hull and is a Fellow of the Institute of Chartered Accountants.
 
Andy Walters Andy Walters
Managing director

Andy Walters founded Quartix in 2001 with three colleagues. Prior to that he was Managing Director of a subsidiary of Spectris plc for 6 years and had spent 15 years with Schlumberger in the UK and France, where he was marketing director of the payphones and smart cards division. Andy holds an MA in electrical sciences from the University of Cambridge.
 
 

Jim Warwick Jim Warwick
Non-executive director

Jim Warwick was until 31 December 2016 Chief Operating Officer at Abcam plc, a global leader in the supply of innovative protein research tools, having originally joined as Technical Director in 2001. Prior to that, he worked on IT, software and web development initiatives for telecommunications consultancy group Analysys Limited. Jim holds an MA in Computer Science from the University of Cambridge.
 
David Bridge David Bridge
Finance director

David Bridge joined Quartix in 2010. David is an experienced finance director and has been a fellow of the Institute of Chartered Accountants since 1995, having originally qualified with KPMG. Prior to Quartix David held senior positions at Rubatex Group and Platignum plc, where he was group finance director. David founded Cybercard Ltd, an Internet retailer, in 1996. David holds an MA in philosophy, politics and economics from the University of Oxford.
 
  Ed Ralph Ed Ralph
Chief Operating Officer

Ed has extensive experience and a proven track record in technology management, digital marketing and eCommerce. From 2001 to 2015 he built and led the technology team at Abcam plc, having joined the company as the seventh employee and at a time when its revenues were just £200k. In the last five years, Ed served in non-executive or consultancy roles related to technology and marketing at a range of Cambridge-based companies, including Red Gate Software, Axol Bioscience and Congenica. During this time he also conducted consulting projects for Quartix in 2016 before joining the Company full time in February 2017.
 
 

Company Information

The following information is provided in compliance with Rule 26 of the AIM (Alternative Investment Market) Rules for listed Companies.

Name: Quartix Holdings PLC

Registered Office: Wellington House, East Road, Cambridge, CB1 1BH, United Kingdom

Registration: Incorporated and registered in England and Wales company registration number 06395159

Main Country of Operation: United Kingdom

Principal Other Countries Of Operation: France, United States of America

VAT Number: GB 918 4938 83

Description of Business

Quartix Holdings PLC is a holding company for;

  • Quartix Ltd (UK Co No: 04159907),
  • Quartix Inc (registered in the State of Illinois, no 6903-987-1)

Founded in 2001, Quartix is a leading supplier of subscription-based vehicle tracking systems, software and services in the UK. 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’s vehicle tracking systems, which incorporate instrumentation to identify and transmit location, speed and acceleration data to the Group on a real-time basis, can be installed in a wide range of vehicles. The Group's proprietary vehicle tracking software system provides business critical reporting and analysis of vehicle and driver data including timesheets and other customer KPIs to customers via any internet-enabled device. Vehicle tracking systems can either be purchased by the customer outright or rented on a monthly basis with no up-front cost and pricing is based on the level of functionality required.

As tracking technology and telematic data analysis have advanced, the functionality of vehicle tracking systems has increased making them more attractive and cost effective for end use customers. Consequently, the addressable markets in both the commercial fleet and telematics-based insurance sectors are anticipated to grow substantially over the medium term. The Berg Insight Report anticipates that the number of fleet management systems in active use will grow at an annual rate of 16 per cent. between 2012 and 2017 in Europe. The Group operates an effective, low cost remote sales model, based on direct telephone marketing and indirect sales including the use of price comparison websites and distribution networks, making it well positioned to grow both in the UK and internationally.

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FAQs

Quick links:
- Company, Market and Background
- Product and Technology
- Financial Questions

Company, Market and Background

What are the origins of the company, and where did the name Quartix come from?
Four founders started the company in 2001 to focus on the market for vehicle tracking systems, software and services used by the commercial fleet sector. Our target market was then, as it is now, small to medium-sized fleets of light commercial vehicles. The name “Quartix” was the suggestion of one of the founders, for which the URL www.quartix.net and www.quartix.co.uk were available. We purchased both www.quartix.com and www.quartix.fr and other Quartix domains more recently.

The key characteristics of the business/ market that we wanted to target when starting the company were as follows:

  • It would have a need for a technology-based service which offered a clear economic benefit for customers, and for which they would be happy to pay a recurring subscription fee which is far greater than the cost of delivering the service (see also the fourth point..).
  • The service could be based on the gathering of data from some kind of embedded device fixed in a customer’s asset – to enhance the “stickiness” of the proposition
  • The chosen market/ segment should be large enough in the UK alone to offer significant scope for expansion.
  • It should be possible to sell to the chosen market segment by telephone, backed by direct marketing: i.e. it would not be necessary to manage a large field sales force
  • The service should be entirely internet-based
  • The cost (and difficulty) of installing/ implementing this solution for customers should be very significantly less than the potential benefit to them. I.e. that margins could be defensible over the long term.

What do you estimate your market share to be?
It is difficult to get precise numbers for the fleet tracking system market, but we estimate that we have 15% of the UK fleet market, based on the following assumptions:

We believe that of the 3.6 million+ commercial vehicles in the UK, roughly 3million of these are light commercial vehicles (i.e. vans) and that approximately half of these are operated by fleets which would be a potential target for our technology. Of these 1.5 million vehicles, we estimate that around one third are already equipped with some form of fleet management or vehicle tracking system, and that therefore (with a subscription base of more than 77,000 units in the UK) we have 15% of the current market.

Who are your biggest competitors in the UK, France and USA? How do you compare with them?
Other companies which compete in this market include, inter alia: TomTom, Masternaut, Fleetmatics and Teletrac. We do not comment on their, or our, relative competitive strengths and weaknesses.

In July 2016 Quartix announced an intention to focus more on its fleet operation. How does this impact on insurance operations?
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. The insurance capabilities of the system can be seen at www.quartix.net/insurance.

The company appears to command higher margins than many of its competitors. Why is this?
Our typical service charges are shown on our website, and these charges reflect the value of the software and services that we provide for our customers. Ongoing marginal costs for these are accounted for by the SIM card and mapping costs. The fleet tracking business, once the equipment and installation costs are absorbed, is therefore inherently high margin, reflecting the investment that we make in our software systems. We write all equipment and installation costs down immediately following installation.

The company is especially associated with the building, maintenance and construction industries so would you call it a cyclical company?
To some degree, yes, but this did not affect us unduly in the last recession, and we now have a broader spread of customers, including many from the public sector.

Is the fact that you are spread over four locations not a problem for you? Do you have any future plans to consolidate them all in one place?
We operate common VPNs, database systems and CRM and other business applications across each of our 4 UK sites and our Chicago office. We have recently introduced a common VOIP phone system across our operations. Communication and collaboration across functions and locations is extremely good. In addition to this, each of our R&D locations has a specific area of responsibility, as follows:

  1. Telematics hardware, firmware and communications servers are developed in Cambridge.
  2. All our web-based user applications and reporting are developed in Leatherhead
  3. Systems, networking and database design are all conducted in Bishop’s Waltham.
Our sales, logistics, customer support, administration and insurance telematics teams are based at our main office centre in Newtown, Mid-Wales.

Each of these teams works effectively with the others and we have no plans to consolidate these operations.

How do you plan to prepare for the introduction of General Data Protection Regulation (GDPR) in May 2018?
Quartix is working with suppliers and partners to ensure that we continue to be compliant with all regulations including GDPR.

Product and Technology

How big is the risk to your business of emerging disruptive technologies (i.e. using mobile phones for tracking)?
We constantly monitor the potential risks posed by both OEM –fitted technology and by the use of smart phones in vehicle tracking. Our current opinion on these matters are as follows:

  1. OEM-fitted technology: our customers typically choose a single software solution and reporting tool to cover their whole fleet, regardless of vehicle manufacturer, type or age. Although it is quite common for vehicle manufacturers to offer some form of telematics solution for its own products, these devices and software do not generally interface with those provided by other vehicle manufacturers.
  2. Mobile phone applications: whilst these undoubtedly have a place in segments of the market, most of our customers use the tracking system to regulate overtime and manage their mobile workforces. They expect the system to be tamper-proof, and for it to record every movement and journey that the vehicle makes. This is simply impractical with a mobile phone, as it could easily be left at home or switched off, or become discharged (the use of GPS increases battery drain).
Investors must, however, form their own opinions and conduct their own research in order to satisfy themselves regarding the level of risk associated with investing in Quartix.

Why can I not simply buy a tracker device from Amazon, or use another company’s software with your tracking system?
The link between our tracking systems and our communications servers is encoded using our own, proprietary, protocol. We registered a patent for this protocol soon after the foundation of the company. For security reasons it would not be possible for other applications to interpret and use this data without detailed technical information from us. Similarly it is not possible to purchase and use a GPS tracking system without an appropriate fleet management software application which is compatible with the tracking system.

Is there anything unique in the company’s database systems and other intellectual property. How important are these to the success of the company?
We use Microsoft SQL server in much of our operations and commercial systems. Whilst there is no one aspect of the design of our databases which is unique, we derive substantial competitive advantage from the use of our proprietary CRM database systems, and continue to invest in their development.

All intellectual property in the company’s telematics hardware, firmware, server software, database systems and application software is proprietary to Quartix, and is of great importance to the success and profitability of the company.

Can you monetise the Safe Speed Database ?
The Company's "Powered by Quartix" initiative for the insurance sector, which it launched at the middle of last year, offers insurance brokers an off-the-shelf telematics product allowing them to compete effectively in the young driver market. The SafeSpeed database is unique in comparing the behaviour of young drivers on particularly dangerous roads (such as single-carriageway rural roads) with that of more experienced fleet drivers on exactly the same road, helping to identify and coach those who are at risk of accident. Loss ratios on the first programme to use it have been very good so far.

Financial Questions

Executive salaries and benefits appear to be low in relation to other quoted companies. Why is this so and is it likely to change?
Executives on both the plc and operations board are paid the same amount, and have traditionally received the same annual pay review as all other employees. Each executive has either an equity stake in the business or share options. Salaries and benefits for any new executives will be a matter for the remuneration committee.

What is your option granting policy going forward in terms of the annual % of number of shares? Is there a maximum cap on total outstanding options?
Current options outstanding amount to less than 5% of the share capital. The company will continue to grant options to employees and managers in order to retain, motivate and incentivise them, but it is not envisaged that this would result in any significant dilution for existing shareholders.

What does the goodwill shown on the balance sheet relate to?
Please see the following link for more details: http://www.logisticsit.com/articles/2008/02/01/3355-quartix-takes-the-next-step-forward-with-bank-of

Can you provide historical numbers for sales, profits etc?

£m2011201220132014*20152016
Revenue6.78.313.215.319.723.3
Operating Profit1.82.94.74.96.06.5
PBT1.52.84.64.86.06.5

* Note: adjusted to exclude exceptional gain of £0.25m in 2014

What is your expected mid-term (five to ten years) growth rate?
Unfortunately we are unable to comment on or offer a prediction of our future growth rates.

We can say that we are seeking sustainably superior financial performance, in terms of:

  • Organic fleet revenue growth
  • Return on sales
  • Gross margin
  • Free cash flow conversion
  • Recurring revenues /sales
  • Revenue per head

Major Shareholdings

The following information is correct as of 30 September 2017.

The Company’s issued share capital comprises 47,568,354 ordinary shares, each with a nominal value of £0.01. Each share has equal voting rights.

The number of the Company’s securities not in public hands is: 27,479,134 ordinary shares representing 57.77% of the issued share capital.

The Company has been notified of the following significant shareholders. Significant shareholders are those holding 3% or more of the shares in issue.


NameNumber of sharesPercentage (%)
Andrew John Walters*17,855,98637.54%
Andrew Martin Kirk4,009,8538.43%
BlackRock Investment Management (U.K.)3,386,0907.12%
Liontrust Investment Partners LLP2,670,3995.61%
William Arthur Hibbert2,663,0005.60%
David Shaw Bridge2,600,5005.47%
Cat Rock Capital Management2,560,5925.38%
Kenneth Vincent Giles1,871,8003.93%

*Includes shares held as family interests or by virtue of position as beneficiary or potential beneficiary of certain trusts.

Professional Advisors

Nominated Advisor and Broker

finnCap
Address: 60 New Broad St, London, EC2M 1JJ
Website: www.finncap.com

Company Auditors

Grant Thornton LLP
Address: 101, Cambridge Science Park, Milton Rd, Cambridge CB4 0FY
Website: www.grant-thornton.co.uk

Legal Advisors

Hewitsons LLP
Address: Shakespeare House, 42 Newmarket Rd, Cambridge CB5 8EP.
Website: www.hewitsons.com

Registrars

Capita Registrars
Address: Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU
Website: www.capitaregistrars.com
Capita Asset Services - Shareholder Information

Corporate Governance

The Board of Directors is responsible for determining, implementing and reviewing the strategy, budgeting and corporate actions of the Company. The Directors recognise the importance of sound corporate governance and whilst the FRC Combined Code on Corporate Governance formally applies only to companies listed on the London Stock Exchange, the Company has developed procedures to ensure that, as far as is practicable, it complies with most of the main principles of the Combined Code in line with its size and stage of corporate development.

The Company is subject to the UK City Code on Takeovers & Mergers

The Board

The Board is chaired by Paul Boughton as non-executive chairman, with Paul Boughton and Jim Warwick as an independent non-executive directors. The Board currently consists of the non-executive chairman, one non-executive directors and two executive directors. The Board meets at least ten times each year.

Division of Responsibilities

The Chairman is responsible for leadership of the Board, setting its agenda and monitoring its effectiveness. He ensures effective communication with shareholders and that the Board is aware of the views of major shareholders. He ensures that the executive directors develop a strategy which is supported by the Board as a whole. The executive directors through the managing director are responsible for executing the strategy once agreed by the Board.

A memorandum on matters reserved for the Board can be downloaded here.

Independence of non-executive directors

The non-executive chairman and independent non-executive directors bring wide and varied commercial experience to the Board and Committee deliberations. They are appointed for an initial three-year term, subject to election by shareholders at the first AGM after their appointment, after which their appointment may be extended subject to mutual agreement and shareholder approval. The Company remains committed to a Board which has a balanced representation of executives and non-executives.

The Board has established the following committees with formally delegated rules and responsibilities.

Remuneration Committee

The function of this committee is to review and recommend compensation strategies in order to recruit and or retain executive board members of a sufficient calibre to deliver the Company business plan. It meets at least once each year.

Chair – Jim Warwick

Audit Committee

The function of this committee is as follows:

  1. To receive the audited accounts and report of the Company appointed auditors.
  2. To scrutinize and clarify any qualifications, recommendations and/or observations within the audited accounts and report.
  3. To present the above to the Company Board and subsequently review the effectiveness of resultant corrective and/or preventative measures.

The Audit Committee meets at least twice each year.

Chair – Paul Boughton

Nomination Committee

The function of this committee is to meet as necessary to consider appointments to the Board of Directors and to coordinate succession planning. The Company operates a share dealing code for Directors as required by the AIM rules.

The Nomination Committee meets as required to fill vacancies or appoint additional persons to the Board.

Chair – Paul Boughton

Communications with Shareholders and Investor Relations

The Company is committed to maintaining good communications with investors. Normal shareholder contact is the responsibility of the non-executive chairman together with the managing director and the finance director.

There is regular dialogue with institutional investors who, along with analysts, are invited to presentations immediately after the announcement of the Company's interim and full year results. Shareholders have the opportunity to meet and question the Board at the AGM. The Independent non-executive directors and chairmen of the Audit, Remuneration and Nomination Committees will be available to answer questions. A detailed explanation of each item of special business to be considered at the AGM is included with the Notice of Meeting which is usually sent to shareholders at least 20 working days before the meeting.

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