(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:10)(cid:11)(cid:12)(cid:13)(cid:7)(cid:14)(cid:15)(cid:16)(cid:9)(cid:17)(cid:12)(cid:18)
Annual Report
2014
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
Contents
Company information
Highlights
Chairman’s statement
Strategic report: operational review
Strategic report: financial review
Corporate governance report
Directors’ remuneration report
Directors’ report
Independent auditor's report to the members of Quartix Holdings plc
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Independent auditor's report – company
Company balance sheet as at 31 December 2014
Notes to the parent company financial statements
Notice of annual general meeting
Notes to the notice of annual general meeting
1
Page
2
3
4
6
10
13
16
18
21
23
24
25
26
27
49
51
52
57
60
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
2
Company Information
Company registration number:
06395159
Registered office:
Directors:
Wellington House
East Road
Cambridge
Cambridgeshire
CB1 1BH
Andrew Walters
David Bridge
Avril Palmer-Baunack
Paul Boughton
Jim Warwick
Company secretary:
David Bridge
Bankers:
Solicitors:
Auditors:
Nominated advisor and broker:
Financial public relations:
Barclays Bank PLC
PO Box 299
Birmingham
B1 3PF
Hewitsons LLP
Shakespeare House
42 Newmarket Road
Cambridge
CB5 8EP
Grant Thornton UK LLP
101 Cambridge Science Park
Milton Road
Cambridge
CB4 0FY
finnCap
60 New Broad Street
London
EC2M 1 JJ
MHP Communications
60 Great Portland Street
London
W1W 7RT
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
3
Highlights
Financial highlights
Group revenues increased by 16.3% to £15.3m (2013: £13.2m)
o Fleet revenues grew by 20% to £11.0m (2013: £9.2m)
o
Insurance revenues increased by 7.5% to £4.3m (2013: £4.0m)
Operating profit increased by 3.6% to £4.9m (2013: £4.7m)
Profit before tax increased by 9.5% to £5.0m (2013: £4.6m)
Adjusted1 profit before tax increased by 4.1% to £4.8m (2013: £4.6m)
Fully diluted earnings per share of 8.55p (2013: 8.27p)
Adjusted1 fully diluted earnings per share of 8.39p (2013: 8.27p)
Cash inflow before tax increased by 16.6% to £5.8m (2013: £5.0m)
Adjusted2 cash inflow before tax increased by 10.2% to £5.5m (2013: £5.0m)
Net debt reduced to £0.2m (2013: £2.2m)
Maiden final dividend of 3p per share proposed
1 Adjusted to exclude exceptional gain of £248,000 in the year ended 31 December 2014 (2013: nil)
2 Adjusted to exclude exceptional cash inflow before tax of £0.3m in the year ended 31 December 2014 (2013: nil)
Operational highlights
Strong progress in the main fleet business:
o 23.2% increase in subscription base to 59,765 units (2013: 48,501)
o 18.2% increase in customer base to 6,342 (2013: 5,367)
o Attrition fell to 9.4% (2013: 9.6%), significantly below the 14.0% industry average
o 12.5% growth in new fleet installations
o Strong growth in France, ending the year with 890 customers (2013: 601) and 5,218
vehicles under subscription (2013: 3,601)
o Product approvals achieved for the USA: 120 fleet customers secured primarily in the
latter part of the financial year
Insurance installations grew by 12.8% to 32,842 (2013: 29,108)
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
4
Chairman's Statement
Introduction
The past year has shown continued 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 20.2% to
£11.0m (2013: £9.2m). Sales to insurance based customers also increased, by 7.5% to £4.3m (2013: £4.0m).
Our success across both sectors was reflected in the installation of 49,197 new tracking systems (2013:
43,646) and the achievement of £9.8m of recurring revenue in the fleet sector (2013: £8.0m).
Sales in the UK grew by 15.5%, reaching £14.5m (2013: £12.6m). The Group made good progress in
France, where revenues increased by 36.8% to €956,000 (2013: €699,000). Additional investment in the
French sales and support teams during the year should allow this growth to continue in 2015.
The Group expanded its operations to the USA in the year, resulting in the opening of an office in Chicago
in April 2014. In preparation for this, the Group completed the necessary development of its operational,
accounting and marketing systems (which had been started in 2013), and achieved FCC and PTCRB listing
for its TCSV10 tracking system early in the year. We completed the year with 120 fleet customers in this
market, and the prospects for our business development are encouraging.
Results
Group revenues for the year increased by 16.3% to £15.3m (2013: £13.2m).
Operating profit for the year increased by 3.6% to £4.9m (2013: £4.7m), at the same time as the Group
made significant investments in launching in the USA.
Exceptional gains in the year amounted to £248,000 before taxation, comprising a settlement reached for
a mis-sold hedging product, less the Group’s professional costs in relation to its admission to AIM in
November 2014.
Adjusted profit before tax and exceptional gains increased by 4.1% to £4.8m (2013: £4.6m).
Cash conversion was exceptionally good, resulting in cash flow from operations after tax of £4.9m (2013:
£4.4m), after allowing for the effects of exceptional gains, and enabling the Group to reduce net debt from
£2.2m as at 31 December 2013 to £0.2m at 31 December 2014.
Earnings per share
Adjusted basic earnings per share rose by 2% to 8.52p (2013: 8.35p). Basic earnings per share rose by 4%
to 8.68p (2013: 8.35p). On a fully diluted basis, earnings per shares increased to 8.39p (2013: 8.27p).
Dividend
In the year ended 31 December 2014, the Board decided to pay an exceptional dividend of 600p per £0.10
share (the equivalent of 6p per £0.01 share). This totalled £2.8m and was paid on 30 June 2014 to
shareholders on the register as at 31 May 2014.
The Board is recommending a final dividend of 3p per share, amounting to £1.4m in aggregate. Subject to
the approval at the forthcoming AGM, the final dividend will be paid on 15 May 2015 to shareholders on
the register as at 17 April 2015.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
5
Governance and the Board
In anticipation of the Company’s flotation in the latter half of 2014, three Non-Executive Directors, myself
included, were appointed to join Andrew Walters and David Bridge on the Board. I joined in March 2014,
with Paul Boughton and Jim Warwick appointed in May 2014.
My international experience spans the Insurance, Automotive and Logistics sectors and I am currently
Chairman of Redde plc, Molins plc and Haversham Holdings plc. My previous roles include those of Chief
Executive Officer of Autologic Holdings plc and Universal Salvage plc.
Paul Boughton has over 25 years of experience in identifying, negotiating and completing acquisitions in
the USA and Europe. Having spent 13 years as Business Development Director for Spectris plc, Paul is
currently Head of Business Development at Brammer plc, leading its European acquisition programme. He
has also held senior positions at both Consort Medical plc and IMI plc, a FTSE100 company and is a
Chartered Accountant (FCA).
Jim Warwick is 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 the telecommunications consultancy group Analysys Limited.
In September 2014, Andrew Kirk, William Hibbert and Kenneth Giles resigned from their roles as
Executive Directors of Quartix Holdings plc in order to ensure the right balance between the Executive
and Non-Executive Directors on the Board, as expected of a public company. Andrew, William and
Kenneth remain completely committed to their operational roles, and both Andrew and William are on the
Board of Quartix Limited, the Group’s principal operating subsidiary. For further details regarding
Corporate Governance and
the “Investors” section of our website
(www.quartix.net/investors.php).
the Board, please see
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 the year and beyond.
AGM
The Group’s AGM will be held on 16 April 2015 at the Group’s registered office at Wellington House,
East Road, Cambridge CB1 1BH.
Avril Palmer-Baunack
Chairman
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
6
Strategic Report: Operational Review
Principal activities
Since 2001 Quartix has become one of the UK’s leading suppliers of vehicle tracking systems and services.
Whilst the origins of the Group’s business are in the tracking of commercial vehicles in the UK, it has
developed a business presence in the rapidly-growing insurance telematics market. It has set up a French
branch tracking commercial vehicles and in 2014 it expanded its operations into the USA.
Strategy and business model
The Group’s main strategic objective is to grow its fleet business and develop its recurring revenues. The
related insurance business provides economies of scale in product development, supply chain, production
and system installation.
Quartix sells its telematics services in two different markets: commercial fleet tracking and insurance
telematics. Whilst the same technology is used for both, these markets exhibit different characteristics and
the Group has established distinct business models for each of them.
Fleet customers typically use the Group’s services for many years, resulting in very low rates of attrition.
Accordingly, the Group focuses its business model on the development of subscription revenues based on
system rental, providing the best return to the Group over the long term.
Insurance telematics customers use the Group’s technology to monitor the driving style and habits of
higher-risk drivers, typically for a policy with a term of just 12 months. Quartix therefore treats this as an
equipment sale, with the tracking system being sold, at policy inception, together with 12 months service
and data usage included.
Operational performance
All business operations continued to perform at a high level in 2014. Gross margins were maintained at
65% despite pricing pressure in insurance sales, which had an adverse effect on the margin mix. Return on
sales exceeded 30% as in previous years. Cash conversion was strong with operating cash generated from
operations before exceptional items representing 113% of operating profit before exceptional items.
We continue to identify opportunities to save cost in manufacturing, mobile network usage and
communications, whilst consistently seeking to develop new products and to improve upon existing models
so as to provide a high quality product that meets and exceeds our clients’ expectations. This is reflected in
the availability of 3G functionality in the TCSV10 model, for which USA approvals were received in January
2015, as well as in the development of the TCSV11 tracking system, which is expected to be launched in
production in 2015.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
7
Fleet
Our fleet operation, which accounted for approximately 72% of Group revenue, has delivered considerable
progress in a year of investment. This performance has been driven by continued strong growth in the UK
combined with a broadening of our addressable markets: significant growth was achieved in France during
the year whilst the result of our launch in the USA began to be evident in the second half.
Fleet UK
Demand for fleet tracking systems in the UK continues to grow rapidly. We are well-placed to expand our
business, given the strengths of our product, systems and support capabilities. The economies of scale
derived from the size of our combined fleet and insurance business also give us a considerable competitive
advantage. UK fleet revenues were £10.2m (2013: £8.6m).
New business is won through both direct sales (telephone and field) and distribution. In addition to the
sales leads received through these channels and our own marketing initiatives, we are increasingly sourcing
sales leads through price-comparison websites.
Sales conversion percentages on enquiries received from our direct marketing remained above 30% during
the year, and we will continue to increase our investment in these initiatives. In order to help drive future
growth, we will also be increasing capacity in our telephone sales team, expanding our distribution network
and enhancing our efficiency in dealing with price-comparison enquiries. Much of this will be achieved
through our database systems and automated processes. Development and recruitment programmes for
each of these are underway, and we have managed to secure additional office space in Newtown to
accommodate expansion in the team from April 2015. We continue to work on search-engine optimisation
and have e-commerce and electronic payment options available to our customers, but it is clear that our
customers value the service we offer and that continued investment in telephone-based sales capacity must
remain the primary focus.
Fleet France
We made significant progress in the French market, increasing new installations by 36%, and we ended the
year with 5,218 vehicles (2013: 3,601) under subscription across 890 fleet customers (2013: 601). French
fleet revenues increased by 36.8% to €956,000 (2013: €699,000). We continued to strengthen our French
sales team and will continue to do so during 2015. In addition to the growth expected through our direct
sales and marketing channels we are also in the process of recruiting suitable distributors and resellers,
which we would expect to start making a contribution to the business by the end of the year.
We will remain focused on our remote sales and support approach to the French market, and all of our
sales staff will remain based in our Newtown office. Despite having no physical presence in France it is
clear that our brand is now well known there and we are increasingly requested to bid on larger
opportunities. This sales approach enables us to be extremely cost-effective, and particularly allows us to
benefit from economies of scale in all of our back-office functions. We have a very high level of customer
satisfaction and retention in France, as we do in the UK.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
8
Fleet (continued)
Fleet USA
We opened a small office in Chicago in April of 2014, marking the culmination of a significant development
project in preparing our applications, operational and commercial platforms for the American market. This
also involved type-approval (both FCC and PTCRB) of our TCSV10 tracking system for use on American
networks. We have subsequently also gained approval for the 3G version of that system. Marketing and
other functions, including installations, logistics and accounting, are handled from our Newtown office,
once again allowing us to minimise overheads in this start-up phase.
Results from a pilot marketing programme in the second half were very encouraging: our product has been
well received by customers and the conversion rate on incoming enquiries has been good. We have
supplemented those enquiries by purchasing sales leads from price comparison sites and have also recruited
a small team of people to setup a distribution network for us. At year end we employed 6 people in the
Chicago office.
We finished 2014 with 120 fleet customers in the USA having a total of just under 500 vehicles under
subscription. 60% of this base was gained in the final quarter of the year. USA fleet revenues were £0.02m,
with the majority of these revenues falling in the final quarter.
We have significant potential for growth in the USA in the next five years, and will make further investments
in the achievement of this during 2015.
Insurance
As expected, volume growth in insurance at 12.8% was lower than the very high growth experienced in
2013. Revenue growth of 7.5% was lower than volume growth, as there was some pricing pressure from
potential new entrants in the market. We believe that the pricing environment has since begun to stabilise
and have, in any case, taken the decision not to pursue high volume growth at the expense of acceptable
margins, particularly given the opportunities available to us for long term growth at attractive margins in
the fleet sector.
We began installations for a new insurance supply relationship immediately before the end of the year, and
for another at the start of this year. Initial installation demand for these is encouraging and expected to
grow. Counterbalancing the growth from these new opportunities, however, the supply of Quartix systems
for an existing insurance relationship is now expected to terminate in the middle of the year. Whilst it is
still early days for these new opportunities, we believe that we have achieved a more balanced spread of
revenues and are well placed to make further progress in our insurance business this year.
Our strategic partnership with Wunelli Limited remains of key importance to us in developing our young-
driver insurance business. During 2015 we hope to explore the potential for developing our fleet business
through relationships with commercial vehicle insurers, by using the technology, knowledge and processes
that we have put in place for private vehicle insurance. We have developed some key competitive advantages
in each of these areas over the past four years.
Business review
Details of the Group's performance are given in the Consolidated Statement of Comprehensive Income on
page 23. The position of the Group and the Company at the end of the year is set out in the Consolidated
Statement of Financial Position on pages 24 and 51.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
9
People
Our people play a vital role in the achievement of the high levels of customer retention and financial
performance that we maintain. The experience, stability and commitment to customer service of our teams
create a substantial competitive advantage for us. We are delighted to have been able to provide our
employees with the ability to share the equity in the Company under the EMI option scheme, and those
having more than 12 months service will be eligible to take up the first of those options this year. The
Directors are not eligible for these grants, which are intended for employees.
Research and development
The Group is committed to research and development. During 2014 the Group improved the functionality
of the TCSV10 by adding 3G and worked on the development of the TCSV11. It continued researching
various methods and algorithms for determining the difference between the shock levels generated in a
vehicle during a crash, as compared with other events which occur normally in the course of journeys. The
Group also continued the enhancement of its software systems. The costs relating to this and other research
and development all of which has been written off in the year amounted to £1.0m (2013: £1.1m).
Strategic priorities
We are encouraged by the potential we see to accelerate the growth of our fleet business in each of the
three geographic markets we address and we have already identified a number of initiatives to position us
to deliver on that potential. In particular, in each market there is an opportunity to enhance the efficiency
of sales and marketing channels as we invest in additional capacity.
During 2015 our priority will be in developing our systems, processes and performance measures in parallel
with the expansion of our sales and marketing teams. Investments are already underway in increased
automation and automated support for the sales process, including the development of a broader range of
sales support resources, demonstration tools and payment systems on our websites, all tailored to the needs
of each sales and marketing channel and intended to support a higher level of specialisation in each telesales
role as we expand. These investments will be directly applicable to all three of our target markets.
By carefully coordinated management of this expansion in sales capacity we will strive to maintain the very
high levels of customer satisfaction and financial performance for which Quartix is known.
Within the insurance sector we have broadened the range of companies for which we supply telematics
technology through our strategic partner, Wunelli Limited. We will continue to pursue our goal of
diversifying our customer base with them in this way.
Future developments
The Group will continue to invest in the USA and the UK, whilst further developing its existing business
in France.
Andrew Walters
Managing Director
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
10
Strategic Report: Financial Review
Financial highlights
Year ended 31 December (audited)
Revenue
Gross profit
Gross profit
Operating profit before exceptional gains
Cash generated from operations before exceptional gains
Net profit for the year
2014
£’000
15,331
9,943
65%
4,8851
5,5231
4,032
2013
£’000
13,180
8,590
65%
4,713
5,014
3,863
% change
16.3
15.8
-
3.6
10.2
4.4
1 Exceptional gains of £248,000 and exceptional cash flow of £322,000 were recorded in the year and are excluded from these
figures
Key performance indicators (“KPIs”)
Year ended 31 December
Fleet revenues (£’000)
Fleet subscription base (units)
Fleet customer base
Fleet attrition (annualised) (%)1
Fleet installations
Insurance revenues (£’000)
Insurance installations
2014
11,038
59,765
6,342
9.4
16,355
4,293
32,842
2013
9,186
48,501
5,367
9.6
14,538
3,994
29,108
% change
20.2
23.2
18.2
-
12.5
7.5
12.8
1 Attrition in the year is the number of units installed (excluding upgrades), less the increase in subscription base, expressed as a
percentage of the mean subscription base
The fleet KPI’s above lead to the build-up of recurring revenues which is our primary strategic objective.
Over the past five years invoiced recurring revenues (before adjusting for deferred revenue) have risen at a
30% per annum compound annual growth rate to £9.8m. We achieved 22.5% growth in 2014 which is
good but below recent trends. We plan to address this by investing in additional capacity.
In terms of its unit base the Group had growth of 23.2%; average units per customer rose from 9.0 to 9.4.
Our target for attrition is to have a lower attrition rate than the estimated European mean for telematics
which is 14%. We easily exceeded this partly due to good customer care and partly due to a stronger
economy.
The revenue from insurance installations helps to fund our research and development and volume growth
of 12.8% was satisfactory and led to revenue growth of 7.5%.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
11
Revenue
Revenue increased by 16% to £15.3m (2013: £13.2m). In the core fleet sector sales grew by 20.2% to
£11.0m (2013: £9.2m). Sales to insurance based customers also increased, by 7.5% to £4.3m (2013: £4.0m).
Recurring revenue increased by 22.5% to £9.8m in the fleet sector (2013: £8.0m).
Profit
Operating profit for the year increased by 3.6% to £4.9m (2013: £4.7m), at the same time as the Group
made significant investments in launching in the USA.
Exceptional gains in the year amounted to £248,000 before taxation, comprising a settlement reached for
a mis-sold hedging product, less the Group’s professional costs in relation to its admission to AIM in
November 2014.
Adjusted profit before tax and exceptional gains increased by 4.1% to £4.8m (2013: £4.6m).
Results
Fleet units installed showed a 12.5% annual growth being 16,355 units before upgrades compared to 14,538
in 2013. Fleet sales were £11.0m, a rise of 20% compared with 2013 (£9.2m). The main driver of growth
was the recurring revenues from unit rentals.
France contributed £771,000 of sales, a 30% increase on 2013.
Insurance unit installations were up 12.8% at 32,842 units compared to 29,108 in 2013. This led to a rise in
insurance sales from £4.0m to £4.3m. The percentage rise in value being less than the rise in units as
insurance income per unit installed dropped.
Gross margin remained at 65% with a drop in insurance prices being offset by an increase in the proportion
of fleet sales. Profit before tax rose from £4.6m to £5.0m an increase of 9.5%.
Tax
The effective tax rate rose to 20% (2013: 16%) as a result of IPO costs and losses in the USA which were
not allowable against UK corporation tax.
Earnings per share
The resultant net profit of £4.0m is 4.4% ahead of 2013 (£3.9m) and is matched by a 4% rise in basic
earnings per share. £76,000 of this profit came from exceptional items so adjusted earnings per share were
8.52p which was 2% ahead of 2013. On a fully diluted basis, earnings per share increased to 8.39p (2013:
8.27p).
Statement of financial position
Cash at the year-end was £1.8m and bank debt in cash terms was £2.0m, resulting in net debt of only £0.2m
(2013: £2.2m).
Inventories increased towards the end of the year in anticipation of a new insurance project, which
commenced installations slightly later than had been expected.
Cash flow
Cash flow from operating items before tax and exceptional items was £5.5m (increased relative to operating
profit by a £493,000 increase in provision for deferred revenue and £83,000 of share based payments).
Exceptional items added £322,000 net to cash flow, giving operating cash flow before tax of £5.8m. Tax
paid was £930,000, so free cash flow before the impact of any financing cash flows was £4.9m.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
12
Dividend
The Board is recommending a final dividend of 3p per share, amounting to £1.4m. Subject to approval at
the forthcoming AGM, the final dividend will be paid on 15 May 2015 to shareholders on the register as at
17 April 2015.
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 management. The impact of not mitigating this risk is that the Group ceases
to be innovative and provide customers with the products and services they require. Considerable focus
has been given to good communication with employees and on providing opportunities for promotion.
Retaining a key customer
As disclosed in note 3 during 2014 revenues of £4.3m were derived from one insurance customer. Losing
this key contract could have a significant negative impact on cash flow. Considerable resources are devoted
to maintaining our relationship with this customer while at the same time the Group continues to build up
relationships with its indirect insurance customers.
Increased competition
The Group is exposed to the risk of new competition entering the market place. The impact of a new
entrant in the market place could put increased pressure on margins and limit the businesses ability to
generate cash. To combat this, the Group is continuously investing in research to improve its offering to
customers.
Technology
Technology risks are perceived to arise from possible substitutes for the current Quartix product. Risks
cited include everything from smart mobile phones to driverless cars.
The Group strategy is to review potential risks and embrace them if they will provide a better channel for
the information services which Quartix provides. At present we perceive security and other problems in
using smart phones.
Every major motor manufacturer is currently working on autonomous driving but while there is
competition in this field there should still be a need for telematics which works with different brands and
different models. We will continue to ensure that Quartix has an excellent product which works well with
all current vehicle types.
David Bridge
Finance Director
The Strategic Report is approved by the Board of Directors and signed on behalf of the Board on 2
March 2015.
Andrew Walters
Managing Director
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
13
Corporate Governance Report
Introduction
As the Company is listed on AIM, it is not required to, and does not, comply with the UK Corporate
Governance Code (the “Code”). However, we have reported on our corporate governance arrangements
by drawing upon best practice available, including those aspects of the Code we consider to be relevant to
the Company.
The Directors are committed to maintaining a high standard of corporate governance and the Directors
refer to the 2013 Quoted Companies Alliance Governance Guidelines for Smaller Quoted Companies
(“QCA Guidelines”) to establish policies and procedures appropriate for a group of its size and nature.
Directors and the Board
Position
Chairman
Executive Directors
Non-Executive
Directors
Director
Avril Palmer-Baunack
Andrew Walters
Andrew Kirk
William Hibbert
Kenneth Giles
David Bridge
Paul Boughton
Jim Warwick
Date of
appointment
1 March 2014
1 May 2002
29 January 2008
1 July 2010
29 January 2008
25 February 2008
1 May 2014
1 May 2014
Date of
resignation
-
-
1 September 2014
1 September 2014
1 September 2014
-
-
-
Board committees
There are three Board committees: Audit, Nominations, and Remuneration. Each Committee is comprised
of three Non-Executive Directors, with a different Chairman for each.
The attendance of each Director to Board meetings is outlined below and can be compared with the number
of meetings they were invited to attend. The invitations are fewer for some Directors depending on their
date of appointment and their position as an Executive Director.
Position
Executive Directors
Non-Executive Directors
Director
Andrew Walters
Andrew Kirk
William Hibbert
Kenneth Giles
David Bridge
Avril Palmer-Baunack
Paul Boughton
Jim Warwick
Board meeting
attendance (invitations)
15 (15)
3 (6)
3 (6)
3 (6)
15 (15)
9 (10)
8 (8)
8 (8)
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
14
Board committees (continued)
Audit Committee
Paul Boughton is Chairman of the Audit Committee which normally meets three times a year. The
Committee exists to scrutinise and clarify any qualifications, recommendations and observations within the
audited accounts and report of the Company’s auditor. When satisfied, the Committee presents the audited
accounts and report to the Company’s Board and reviews the effectiveness of resultant corrective and
preventative measures.
In performing this function, the key duties of the Committee are to:
Monitor the integrity of the financial statements of the Group and any formal announcement
relating to its financial performance
With regards to financial reporting, review and challenge the consistency of accounting policies,
the use of accounting methods over alternatives, whether the Group has followed appropriate
accounting standards, the clarity of disclosure, and all material information relating to the audit and
risk management
Monitor the adequacy and effectiveness of the Group’s internal financial controls, including the
internal control and risk management systems
Ensure that the Group’s arrangements for its employees and contractors to confidentially raise
concerns about possible wrongdoing allow proportionate and independent investigation and
appropriate follow up action
Consider the need to implement an internal audit function
Make recommendations to the Board and the Company’s shareholders regarding the appointment,
re-appointment, and removal of the Company’s external auditor. It ensures that at least once every
ten years the audit services contract is put out to tender to enable the Committee to compare the
quality and effectiveness of the services provided by the incumbent auditor
Oversee the Company’s relationship with the external auditor
Nominations Committee
The Nominations Committee is chaired by Avril Palmer-Baunack. The Committee reviews the structure,
size and composition of the Board to ensure the leadership of the Group is the most proficient to facilitate
the Group’s ability to effectively compete in the marketplace. It makes recommendations to the Board
regarding the continued suitability of any Director, the re-election by shareholders of any Director under
the ‘retirement by rotation’ provisions in the Company’s Articles of Association, and succession planning
for Directors and other Senior Executives. If necessary, the Committee will identify and nominate
candidates they believe suitable to fill Board vacancies.
Remuneration Committee
Jim Warwick chairs the Remuneration Committee. It acts to ensure sound Corporate Governance and
meets at least twice a year. The Committee functions with the objective of attracting, retaining and
motivating the executive management of the Company and ensuring they are rewarded in a fair and
responsible manner for their contribution to the success of the Group.
The role of the Committee is to determine and agree with the Board the framework or broad policy for the
remuneration of the Company’s Chairman and Executive Directors, including pension rights and
compensation payments. It also recommends and monitors the level and structure of remuneration for
senior management. When setting the remuneration policy, the Committee reviews and considers the pay
and employment conditions across the Group, especially when determining salary increases.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
15
Relations with shareholders
The Group maintains regular dialogue with institutional investors who, along with City analysts, are invited
to presentations immediately after the announcement of the Group’s interim and full year results.
Shareholders have the opportunity to meet and question the Board and its Committees at the AGM. A
detailed explanation of each item of special business to be considered at the AGM is included with the
Notice of Annual General Meeting which is usually sent to shareholders at least 20 working days before the
meeting. All resolutions proposed at the AGM are taken on a poll vote. This follows best practice guidelines
and enables all votes to be counted, not just those of shareholders who attend the meeting.
Internal financial control
The key three controls are:
Segregation of duties
Good and reliable information
A high level of integrity among key employees
The Board recognises the importance of robust and reliable financial reporting procedures and will review
the procedures it operates on a regular basis.
Going concern
The Board takes all reasonable steps to review and consider any factors that may affect the ability of the
Group to continue as a going concern. These factors include the budget, liquidity and key business risks of
the Group. Following such contemplation, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable future. This enables them to
prepare the financial statements on a going concern basis.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
16
Directors’ Remuneration Report
Introduction
The Remuneration Committee is chaired by Jim Warwick and also comprises Avril Palmer-Baunack and
Paul Boughton. Its creation was confirmed by the Board of Directors on 3 October 2014 in accordance
with the Company’s Articles of Association. The Committee’s fundamental purpose is to ensure sound
Corporate Governance. In the year 2015 it will meet at least twice a year to ensure this is achieved.
Remuneration Committee
The Committee functions with the objective of attracting, retaining and motivating the executive
management of the Company and ensuring they are rewarded in a fair and responsible manner for their
contribution to the success of the Group. Their key duties are:
Agree a remuneration framework for the Chairman and Executive Directors and agree this with
the Board of Directors
Determine the total individual remuneration package of the Chairman, Executive Directors,
Company Secretary and other Senior Executives. This may include bonuses, incentive payments,
and share options
Recommend and monitor the level and structure of remuneration for senior management;
Oversee any major changes in employee benefits structures throughout the Group
Assess and submit the design of all share incentive plans for approval by the Board and
shareholders. This will comprise whether any awards will be made, if so how much, the individual
awards to Executive Directors, Company Secretary & other Senior Executives, and the
performance targets to be used
Establish a policy for authorising expenses claims from the Directors
Review the ongoing appropriateness and relevance of the remuneration policy
The Remuneration Committee may, in the course of its duties, obtain reliable, up-to-date information
regarding remuneration in other companies of comparable scale, and appoint remuneration consultants to
advise them if this is deemed necessary.
Remuneration of Executive Directors
The Directors’ remuneration packages are comprised of a salary. At present the Remuneration Committee
have concluded that no bonus, benefits, compensation for loss of office, nor pension contributions will be
paid. See below for a breakdown of the Directors’ remuneration packages.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
17
Directors’ detailed emoluments and compensation (audited)
Year ended 31 December
Executive Directors
Andrew Walters
Andrew Kirk1
William Hibbert1
Kenneth Giles1
David Bridge
Non-Executive Directors
Avril Palmer-Baunack2
Paul Boughton2
Jim Warwick2
2014 (£)
Salary Benefits
78,603
-
1,501
52,402
-
52,402
-
31,442
78,603
-
1,501
293,452
41,667
26,667
23,333
91,667
-
-
-
-
Total
78,603
53,903
52,402
31,442
78,603
294,953
41,667
26,667
23,333
91,667
2013 (£)
Total
75,945
77,461
75,945
60,756
61,548
351,655
-
-
-
-
1 Salary paid up to the date of resignation from the Board of Quartix Holdings plc (1 September 2014)
2 Salary paid from the date of appointment to the Board of Quartix Holdings plc (see page 13)
Directors and their interests in shares
Year ended 31 December
Executive Directors
Andrew Walters1
Andrew Kirk
William Hibbert
Kenneth Giles
David Bridge
Non-Executive Directors
Paul Boughton
Jim Warwick
Ordinary shares £0.01 each
2014
17,855,986
5,489,925
2,663,000
3,371,800
2,663,000
32,043,711
40,000
40,000
32,123,711
2013
20,904,011
7,821,800
2,663,000
7,821,800
2,663,000
41,873,611
-
-
41,873,611
1 Includes shares held as family interests or by virtue of position as beneficiary or potential beneficiary of certain trusts
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 restating the number of
ordinary shares for 2013.
The Directors received no options over ordinary shares in the year ending 31 December 2013 and the year
ending 31 December 2014.
Jim Warwick
Chairman, Remuneration Committee
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
18
Directors' Report
The Directors present their annual report and the financial statements of the Company for the year ended
31 December 2014.
Principal activity
The principal activity of the Group during the year was the design, development and marketing of vehicle
tracking devices and the provision of related data services. The Group has an overseas branch in France
and an overseas subsidiary in the USA. The Parent Company is incorporated and domiciled in the UK. The
registered office is Wellington House, East Road, Cambridge, CB1 1BH.
Research and development
Please see the Strategic Report on page 9 for further information about the Group’s approach to research
and development.
Future developments
The Company’s intentions regarding investment and business development can be found on page 9.
Proposed dividend
In the year ending 31 December 2014, the Board decided to pay an exceptional dividend of 600p per £0.10
share (the equivalent of 6p per £0.01 share). This totalled £2.8m and was paid on 30 June 2014 to
shareholders on the register as at 31 May 2014. The Board is recommending a final dividend of 3p per
£0.01 share amounting to about £1.4m and giving a total dividend for the year equivalent to 9p per £0.01
share. If this is approved at the forthcoming AGM on 16 April 2015, the final dividend will be paid on 15
May 2015 to shareholders on the register as at 17 April 2015.
Substantial shareholdings
On 27 February 2015, the Company had been notified that eight parties had holdings of 3% or more in the
ordinary share capital of the Company. The number of £0.01 shares and the percentage of the total shares
held by each party is outlined below.
Andrew Walters1
Andrew Kirk
Miton Asset Management ltd
Kenneth Giles
David Bridge
William Hibbert
Ennismore Fund Management ltd
BlackRock Investment Management (UK) ltd
Number of £0.01 shares
17,855,986
5,489,925
4,310,345
3,371,800
2,663,000
2,663,000
1,810,345
1,724,138
% of total
38.3
11.8
9.2
7.2
5.7
5.7
3.9
3.7
1 Includes shares held as family interests or by virtue of position as beneficiary or potential beneficiary of certain trusts
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
19
Directors
The Non-Executive Directors who held office during the year are listed below:
Avril Palmer-Baunack (Chairman)
Paul Boughton
Jim Warwick
The Executive Directors who held office during the year are listed below:
Andrew Walters
Andrew Kirk (resigned 1 September 2014)
William Hibbert (resigned 1 September 2014)
Kenneth Giles (resigned 1 September 2014)
David Bridge
All Executive Directors have service agreements with the Company terminable by either party upon the
minimum notice period being met. The minimum notice period is 12 months for Andrew Walters and
David Bridge, and 6 months for Andrew Kirk, William Hibbert and Kenneth Giles.
The Company’s Articles of Association require all Directors to stand for re-election each year at the AGM.
The next AGM will take place on 16 April 2015.
Directors' responsibilities for the financial statements
The Directors are responsible for preparing the Strategic Report, Directors’ Report and the financial
statements in accordance with applicable law and regulations.
Company Law requires the Directors to prepare financial statements for each financial year. Under that law
the Directors have elected to prepare the consolidated financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union and have elected to prepare the
Parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable laws). Under Company Law the Directors
must not approve the financial statements unless they give a true and fair view of the state of affairs and
profit or loss of the Company and Group for that period. In preparing these financial statements, the
Directors are required to:
Select suitable accounting policies and apply them consistently
Make judgements and estimates that are reasonable and prudent
State whether applicable IFRSs have been followed, subject to any material departures disclosed
and explained in the consolidated financial statements
State whether applicable UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the Company financial statements
Prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Group will continue in business
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of
the Group and enable them to ensure that the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
20
Financial risk management policies and objectives
The Group manages its key financial risks as follows. Further details are provided in note 28.
Interest rate risk
The Group responds to interest rate risk by ensuring that it always has at least two times interest rate cover.
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable
needs. Credit checks are undertaken on all new customers and cash flow is forecast and monitored as are
working capital requirements.
Currency risk
This is managed by seeking to match currency inflows and outflows.
Directors' and officers' liability insurance
The Company maintains insurance cover for the Directors and key personnel against liabilities which may
be incurred by them while carrying out their duties.
Auditors
The Directors have individually pursued all steps that they ought to have taken in their roles as Directors
to ensure they are aware of any relevant audit information and that such information has been relayed to
the Company’s auditors. The Directors each confirm that there is no relevant information of which the
Company’s Auditors are unaware.
The Auditor, Grant Thornton UK LLP, will be proposed for reappointment in accordance with section
485 of the Companies Act 2006.
Approved by the Board of Directors and signed on behalf of the Board on 2 March 2015.
Andrew Walters
Managing Director
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
21
Independent Auditor's Report to the Members of Quartix
Holdings plc - Company number 06395159
We have audited the Group financial statements of Quartix Holdings plc for the year ended 31 December
2014 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement
of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of
Cash Flows, and the related notes. The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting Standards (IFRS) as adopted by the
European Union.
This Report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an Auditor’s Report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit work, for this Report, or for the opinions
we have formed.
Respective responsibilities of Directors and auditor
As explained more fully in the Directors’ Responsibilities Statement set out on page 19, the Directors are
responsible for the preparation of the Group financial statements and for being satisfied that they give a
true and fair view. Our responsibility is to audit and express an opinion on the Group financial statements
in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting
Council's website at www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion the Group financial statements:
Give a true and fair view of the state of the Group's affairs as at 31 December 2014 and of its
profit for the year then ended
Have been properly prepared in accordance with IFRSs as adopted by the European Union
Have been prepared in accordance with the requirements of the Companies Act 2006
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and Directors’ Report for the financial year
for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us
to report to you if, in our opinion:
Certain disclosures of Directors’ remuneration specified by law are not made
We have not received all the information and explanations we require for our audit
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
22
Independent Auditor's Report to the Members of Quartix
Holdings plc (continued) - Company number 06395159
Other matter
We have reported separately on the Parent Company financial statements of Quartix Holdings plc for the
year ended 31 December 2014.
Alison Seekings
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Cambridge
2 March 2015
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
23
Consolidated Statement of Comprehensive Income
Year ended 31 December
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Exceptional items
Finance income receivable
Finance costs payable
Profit for the year before taxation
Notes
3
4
8
9
5
2014
£’000
2013
£’000
15,331
(5,388)
13,180
(4,590)
9,943
8,590
(5,058)
(3,877)
4,885
4,713
248
14
(104)
-
12
(120)
5,043
4,605
Tax expense
10
(1,011)
(742)
Net profit for the year and total comprehensive income
attributable to the equity shareholders of Quartix Holdings
plc
Earnings per ordinary share (pence)
Basic
Diluted
Adjusted earnings per ordinary share (pence)
Basic
Diluted
11
11
4,032
3,863
8.68
8.55
8.52
8.39
8.35
8.27
8.35
8.27
All of the activities of the Group in the current year are classed as continuing and there is no other
comprehensive income.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
24
Consolidated Statement of Financial Position
Assets
Non-current assets
Goodwill
Property, plant and equipment
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Deferred revenue
Current tax liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Total liabilities
Net assets
Equity
Called up share capital
Share premium account
Equity reserve
Capital redemption reserve
Retained earnings
Total equity attributable to equity shareholders of Quartix
Holdings plc
Notes
2014
£'000
2013
£'000
12
13
14
15
16
17
18
19
20
21
21
22
14,029
187
14,216
14,029
188
14,217
436
1,933
1,812
4,181
220
1,789
779
2,788
18,397
17,005
2,008
993
1,704
541
5,246
1,693
993
1,211
441
4,338
993
4
997
1,983
24
2,007
6,243
6,345
12,154
10,660
467
4,379
151
4,664
2,493
46
4,296
6
5,079
1,233
30
12,154
10,660
Approved by the Board of Directors and signed on behalf of the Board on 2 March 2015.
Andrew Walters
Managing Director
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
25
Consolidated Statement of Changes in Equity
Balance at 31 December 2012
Shares issued
Redemption of preference
shares
Increase in equity reserve in
relation to options issued
Transactions with owners
Profit for the year and total
comprehensive income
Balance at 31 December 2013
Shares issued
Bonus shares issued
Redemption of preference
shares
Increase in equity reserve in
relation to options issued
Adjustment for exercised
options
Warrants issued
Dividend paid
Transactions with owners
Profit for the year and total
comprehensive income
Balance at 31 December 2014
Share
capital
£’000
4,426
-
(4,380)
-
(4,380)
-
46
6
420
(5)
-
-
-
-
421
-
467
Share
premium
account
£,000
4,296
-
Capital
redemption
reserve
£’000
699
-
Equity
reserve
£’000
-
-
Retained
earnings
Total
equity
£’000 £’000
11,171
1,750
-
-
-
-
-
-
4,296
83
-
-
-
-
-
-
83
-
4,379
4,380
-
4,380
-
5,079
-
(420)
5
-
-
-
-
(415)
-
4,664
-
6
6
-
6
-
-
-
83
(12)
74
-
145
-
151
(4,380)
(4,380)
-
(4,380)
6
(4,374)
3,863
1,233
-
-
3,863
10,660
89
-
(5)
-
(5)
83
12
-
(2,779)
(2,772)
-
74
(2,779)
(2,538)
4,032
2,493
4,032
12,154
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
26
Consolidated Statement of Cash Flows
Cash generated from operations
Taxes paid
Cash flow from operating activities
Investing activities
Additions to property, plant and equipment
Interest received
Cash flow from investing activities
Financing activities
Increase in long term borrowings
Repayment of long term borrowings
Interest paid
Redemption of preference shares
Proceeds from share issues
Dividend paid
Cash flow from financing activities
Net changes in cash and cash equivalents
Cash and cash equivalents, beginning of year
Exchange differences on cash and cash equivalents
Cash and cash equivalents, end of year
Notes
23
13
8
21
16
2014
£'000
5,845
(930)
4,915
(82)
14
(68)
-
(1,000)
(119)
(5)
89
(2,779)
(3,814)
1,033
779
-
1,812
2013
£'000
5,014
(619)
4,395
(108)
12
(96)
1,000
(1,000)
(131)
(4,380)
-
-
(4,511)
(212)
991
-
779
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
27
Notes to the Consolidated Financial Statements
1
Summary of significant accounting policies
Basis of accounting
These consolidated financial statements are for the year ended 31 December 2014. They have been
prepared in accordance with the accounting policies set out below which are based on the recognition and
measurement principles of IFRS as adopted by the European Union (EU) and are effective at
31 December 2014.
These financial statements have been prepared under the historical cost convention.
The standards and interpretations in issue but not effective for accounting periods commencing on 1
January 2014 that may impact on Quartix Holdings plc going forward are listed below. Quartix Holdings
plc has not adopted these early.
Outlook for adoptions of future standards (new and amended)
At the date of authorisation of the consolidated financial information, the following standards and
interpretations which have not yet been applied in the consolidated financial information were in issue but
not yet effective (and in some cases had not yet been adopted by the EU):
Number
IFRS 9
IFRS 15
Title
Financial instruments
Revenue from contracts with customers
Effective
1 January 2017
During the year, the following standards came into effect:
Number
IFRS 10
IFRS 11
IFRS 12
IAS 27 (revised)
IAS 28 (revised)
Title
Consolidated financial statements
Joint arrangements
Disclosure of interests in other entities
Separate financial statements
Investments in associates and joint ventures
Effective
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
IFRS 10, 11, 12
Amendments to transition guidance
The Directors do not expect that the adoption of the standards listed above will have a material impact on
the consolidated financial information of the Group in future periods.
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its subsidiary undertakings.
Subsidiaries are entities over which the Group has the power to govern the financial and operating policies
generally accompanying a shareholding of more than one-half of voting rights. The existence and effect of
potential voting rights that are currently exercisable or convertible are considered when assessing whether
the Group controls another entity. The Group obtains and exercises control through voting rights. Where
subsidiary companies are acquired during the year, the profit or loss attributable to shareholders includes
the profits or losses from the date of acquisition. Where subsidiary companies are disposed of during the
year, the profit or loss attributable to shareholders includes the profits or losses to the date of disposal.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
28
1
Summary of significant accounting policies (continued)
Going concern
The Group’s forecasts and projections, taking account of reasonably possible changes in trading
performance, show that the Group is able to generate sufficient liquidity.
The Group enjoys a strong income stream from its fleet subscription base while current liabilities include
a substantial provision for deferred revenue which is a non cash item.
After assessing the forecasts and liquidity of the business for the next two years and the longer term strategic
plans, the Directors have a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. The Group therefore continues to adopt the going concern
basis in preparing consolidated financial statements.
Segmental reporting
The Group has concluded that it operates only one business segment as defined by IFRS 8. The information
used by the Group’s chief operating decision makers, who are considered to be the Operations Board, to
make decisions about the allocation of resources and assessing performance is presented in a format
consistent with that repeated in the financial statements. Assets are not directly attributable to any separate
activity.
Revenue
Revenue is the amount receivable for goods and services, excluding VAT. It is measured at the fair value
of consideration received or receivable, excluding sales taxes, rebates, and trade discounts. Revenue
comprises the provision of telematics-based fleet and vehicle management solutions, and is recognised in
line with the provision and installation of hardware, and the maintenance of software and provision of
communications over the period of the customer contract. Amounts received in advance of the provision
of services are included within deferred income.
Revenue from a 12 month contract is spread on a straight line basis over the life of the contract. The
associated cost including installation of hardware is recognised as incurred and not spread over the life of
the contract: likewise distributors’ commissions are accounted for when incurred and not spread over the
life of the contract.
Revenue from hardware sales is recognised upon transfer of economic benefit which is normally upon
installation of the unit or despatch of the unit if customer does their own installation. Revenue from
installation is recognised upon installation.
Revenue from other services including communication charges are recognised over the period in which
services are provided on a straight line basis.
Intangible assets
Goodwill arising on consolidation represents the excess of the consideration transferred and the amount
of any non-controlling interest in the acquiree over the fair value of the identifiable assets and liabilities
(including intangible assets) of the acquired entity at the date of the acquisition. Goodwill is recognised as
an asset and assessed for impairment annually or as triggering events occur. Any impairment is recognised
immediately in profit or loss.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
29
1
Summary of significant accounting policies (continued)
Property, plant and equipment
Property, plant and equipment is stated at cost, net of depreciation and any provision for impairment.
Disposal of assets
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between
the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Depreciation
Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using the
straight-line method, on the following bases:
Tools and equipment
Office equipment
Leasehold improvements The life of the lease if 5 years or less, otherwise 20% straight line
25% straight line
25% straight line
Research and development
Expenditure on research activities is recognised as an expense in the period in which it is incurred. In the
event that an internally generated intangible asset arises from the Group’s development activities then it
will be recognised only if all of the following conditions are met:
An asset is created that can be identified (such as software and new processes)
It is probable that the asset created will generate future economic benefits
The development cost of the asset can be measured reliably
Where no internally-generated intangible asset can be recognised, development expenditure is recognised
as an expense in the period in which it is incurred.
Impairment testing of intangible assets and property, plant and equipment
Goodwill is tested for impairment at least annually. An impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its recoverable amount, which is the higher of fair value less
costs of disposal and value-in-use. To determine the value-in-use, management estimates expected future
cash flows and determines a suitable interest rate in order to calculate the present value of those cash flows.
The data used for impairment testing procedures are directly linked to the Group’s latest approved budget.
Discount factors are determined individually for each cash-generating unit and reflect management’s
assessment of respective risk profiles, such as market and asset-specific risks factors.
Property, plant and equipment are tested for impairment if events or changes in circumstances (assessed at
each reporting date) indicate that the carrying amount may not be recoverable. When an impairment test is
conducted, the recoverable amount is assessed by reference to the higher of the value in use (net present
value of expected future cash flows of the relevant cash-generating unit), or the fair value less cost to sell.
If a cash-generating unit is impaired, provision is made to reduce the carrying amount of the related assets
to their estimated recoverable amount. Impairment losses are allocated firstly against goodwill, and secondly
on a pro rata basis against intangible and other assets.
Non-financial assets other than goodwill that suffer impairment are reviewed for possible reversal of the
impairment at each reporting date.
Operating lease agreements
Payments made under operating leases are charged to profit or loss on a straight line basis over the lease
term. Lease incentives are spread over the term of the lease.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
30
1
Summary of significant accounting policies (continued)
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is based on the cost of purchase on
a first in first out basis. Net realisable value is based on estimated selling price less additional cost to
completion or disposal. Provision is made for obsolete, slow moving or defective items where appropriate
and recognised as an expense in the period in which the write-down or loss occurs.
Taxation
Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have
been enacted or substantively enacted at the Statement of Financial Position date.
Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is
generally provided on the difference between the carrying amounts of assets and liabilities and their tax
bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial
recognition of an asset or liability unless the related transaction is a business combination or affects tax or
accounting profit. Tax losses available to be carried forward as well as other income tax credits to the Group
are assessed for recognition as deferred tax assets and are recognised to the extent that it is regarded as
more likely than not that they will be recovered.
Deferred tax liabilities are provided in full, with no discounting. Current and deferred tax assets and
liabilities are calculated at tax rates that are expected to apply to their respective period of realisation,
provided they are enacted or substantively enacted at the Statement of Financial Position date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in profit or loss
or equity as appropriate.
Financial assets
Cash and cash equivalents together with trade and other receivables are classified as loans and receivables,
these are initially recognised at fair value. Loans and receivables are subsequent measured at amortised cost
using the effective interest method, less provision for impairment. Any change in their value through
impairment or reversal of impairment is recognised in the profit and loss.
Provision against trade receivables is made when there is objective evidence that the Group will not be able
to collect all amounts due to it in accordance with the original terms of those receivables. The amount of
the write-down is determined as the difference between the asset's carrying amount and the present value
of estimated future cash flows, discounted using the original effective interest rate.
Financial liabilities
Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group
becomes a party to the contractual provisions of the instrument.
Financial liabilities are recorded initially at fair value and subsequently at amortised cost using the effective
interest method, with interest-related charges recognised as an expense in finance cost in the profit and
loss.
A financial liability is derecognised only when the obligation is extinguished.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term,
highly liquid investments that are readily convertible into known amounts of cash and which are subject to
an insignificant risk of changes in value.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
31
1
Summary of significant accounting policies (continued)
Equity
Equity comprises the following:
"Share capital" represents the nominal value of equity shares
"Share premium account" represents the excess over nominal value of the fair value of
consideration received for equity shares, net of expenses of the share issue
“Capital redemption reserve” represents the amount by which the Company's issued share capital
is diminished when shares are redeemed or purchased wholly out of the Company's profits
“Equity reserve” is used to reflect the expenses associated with granting share options to employees
and the issue of warrants
"Retained earnings" represents retained profits
Foreign currencies
Transactions in foreign currencies are translated into sterling at the exchange rate ruling at the date of the
transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling
at the Statement of Financial Position date.
Any exchange differences arising on the settlement of monetary items or on translating monetary items at
rates different from those at which they were initially recorded are recognised in profit or loss in the period
in which they arise.
The Parent Company's functional currency is Sterling. The French branch also has a functional currency of
Sterling. Quartix Inc has a functional currency of US Dollars.
Quartix Inc transactions in Dollars are translated at the average rate prevailing in the month of the
transaction. Quartix Inc monetary assets and liabilities denominated in Dollars are retranslated into the
respective functional currency of the entity at the rates of exchange prevailing on the reporting period date.
On consolidation, revenues, costs and cash flows of Quartix Inc are included in the Group Income
Statement at average rates of exchange for the period. Assets and liabilities denominated in foreign
currencies are translated into Sterling using rates of exchange ruling at Statement of Financial Position date
and any differences arising are recognised as a separate component of equity.
Exceptional items
Exceptional items are material items of income and expense which by virtue of their size and nature are
separately disclosed to assist in the better understanding of the Group’s performance. The following items
are considered to be exceptional in these financial statements:
Compensation for mis-sold hedging contracts
Professional fees relating to the IPO
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
32
1
Summary of significant accounting policies (continued)
Employee benefits: share based payments
The Group operates a number of employee share schemes under which it makes equity-settled share-based
payments to certain employees.
Where employees are rewarded using share-based payments, the fair values of employees' services are
determined indirectly by reference to the fair value of the instrument granted to the employee. This fair
value is assessed at the grant date, using the Black-Scholes method, and excludes the impact of non-market
vesting conditions.
The expense is allocated over the vesting period, based on the best available estimate of the number of
share options expected to vest. Estimates are subsequently revised if there is any indication that the number
of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to
vesting is recognised in the current period. No adjustment is made to any expense recognised in prior
periods if share options ultimately exercised are different to that estimated on vesting.
Warrants
The Group has issued warrants to its Nomad (finnCap) as part of the placing agreement. Each warrant
comprising the right to subscribe for one ordinary share at the placing price.
IFRS 2 is applied to the issue of warrants. The fair values of services received in exchange for the warrants
is determined indirectly by reference to the fair value of the instrument granted. This fair value is assessed
at the grant date, using the Black-Scholes method, and excludes the impact of non-market vesting
conditions.
The expense is allocated over the vesting period, based on the best available estimate of the number of
share options expected to vest. Estimates are subsequently revised if there is any indication that the number
of warrants expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is
recognised in the current period. No adjustment is made to any expense recognised in prior periods if
warrants ultimately exercised are different to that estimated on vesting.
2
Key judgements and estimates
The Group make estimates and assumptions regarding the future. Actual results may differ from these
estimates. The estimates and assumptions that have a significant risk of causing a material adjustment to
the carrying amount of assets and liabilities within the next financial year are addressed below.
Key judgement: capitalisation of development costs
The point at which development costs meet the criteria for capitalisation is critically dependant on the
management’s judgment of the probability and measurability of future economic benefits. No development
was completed in the year ended 31 December 2014 whose benefits could be reliably measured apart from
existing income streams. Hence, there is no capitalised development as at 31 December 2014.
Key estimate: impairment testing of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation
of the value in use of the cash-generating units to which the goodwill is allocated (Quartix Limited).
Estimating the value in use requires the Group to make an estimate of the expected future cash flows from
the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value
of those cash flows. Further details are given in note 12.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
33
3
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:
By customer base
Fleet
Insurance
Geographical analysis by destination
United Kingdom
France
Republic of Ireland
United States of America
2014
£’000
11,038
4,293
15,331
2014
£’000
14,534
771
3
23
15,331
During 2014 revenues of £4.3m (2013: £4.0m) derived from one insurance customer.
4
Exceptional items
Compensation for mis-sold hedging contracts
Professional fees relating to the IPO
Exceptional items before taxation
Taxation on the above
Exceptional items after taxation
Exceptional items before tax as above
Add back warrants issued
Net exceptional operating cash flow
2014
£’000
(763)
515
(248)
172
(76)
(248)
(74)
(322)
2013
£’000
9,186
3,994
13,180
2013
£’000
12,588
592
-
-
13,180
2013
£’000
-
-
-
-
-
-
-
-
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
34
5
Profit for the year before taxation
The profit for the year for the Group is stated after charging:
2014
£’000
993
2013
£’000
1,085
Research and development expenses
Rentals under operating leases:
- Other operating leases
- Land and buildings
Depreciation:
- Property, plant and equipment, owned
Share based payments expense
Warrants issued
Difference on foreign exchange
Audit services
- Fees paid to Company auditor for the audit of the Company and consolidated
financial statements
Other services
- The audit of the Company’s subsidiary pursuant to legislation
- Tax advice
- Other services
- Transaction services
6
Employee remuneration
Employee benefits expense
Expenses recognised for employee benefits is analysed below for the Group.
Staff costs, including Directors, during the year were as follows:
Wages and salaries
Social security costs
Share based payments
6
46
83
83
74
25
14
16
-
9
69
1,418
2014
£’000
2,599
255
83
2,937
There were no pension costs for the Group.
The average number of employees, including all Directors, during the year was as follows:
Administration
Operations
Sales
Customer service
Research and development
2014
10
21
27
9
19
86
6
43
59
6
-
3
7
15
-
-
36
1,260
2013
£’000
1,849
178
6
2,033
2013
7
16
19
5
14
61
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
35
7
Key management remuneration
International Accounting Standards 24.9 states that key management personnel are those persons having
authority and responsibility for planning, directing, and controlling the activities of the entity, directly or
indirectly, including any Directors (whether Executive or otherwise) of the entity. The Group has identified
12 such individuals: five Executive Directors, three Non-Executive Directors, and four members of Senior
Management.
Emoluments
Social security costs
Other benefits
Total short-term employee benefits
2014
£’000
686
80
2
768
2013
£’000
352
43
2
397
Key management had 573,000 share options outstanding at 31 December 2014 (2013: 652,500).
Details of Directors’ remuneration is disclosed on page 17.
Highest paid Director
Emoluments
Social security costs
Other benefits
Total short-term employee benefits
2014
£’000
79
10
-
89
2013
£’000
76
9
1
86
No Director was a member of a pension scheme or other post-employment benefit to which the Group
contributed in either the current or the prior years. There were no termination payments and no bonuses
for Directors. The number of Directors who exercised share options in the year was nil (2013: nil).
8
Finance income receivable
Bank interest
Loan settlement discount
9
Finance costs payable
Interest on bank loans and overdrafts
2014
£’000
11
3
14
2013
£’000
10
2
12
2014
£’000
104
2013
£’000
120
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
10
Tax expense
Analysis of tax charge in the year
Current tax
UK corporation tax charge on profit for the year
Adjustments in respect of prior periods
Deferred tax
Origination and reversal of temporary differences
Tax on profit of ordinary activities
36
2013
£’000
826
(96)
730
12
742
2014
£’000
1,033
(2)
1,031
(20)
1,011
The relationship between the expected tax expense based on the effective tax rate of the Group at
21.50% (2013: 23.25%) and the tax expense actually recognised in profit or loss can be reconciled as follows:
Result for the year before taxation
Tax rate (%)
Expected tax expense
Adjustments to tax charge in respect of prior periods
Expenses not deductible for tax purposes
Losses in the USA not provided
Research and development tax credit
Remeasurement of deferred tax
Tax adjustment on exercise of options
Tax on profit on ordinary activities
2014
£’000
5,043
2013
£’000
4,605
21.50
23.25
1,084
(2)
104
102
(237)
2
(42)
1,011
1,071
(96)
22
1
(253)
(3)
-
742
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
37
11
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 year. 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 4). All
earnings per share calculations relate to continuing operations of the Group.
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
4,032 46,459,018
3,863 46,247,500
8.68
8.35
47,171,899
46,712,800
8.55
8.27
3,956 46,459,018
3,863 46,247,500
8.52
8.35
47,171,899
46,712,800
8.39
8.27
Earnings per ordinary share
Year ended 31 December 2014
Year ended 31 December 2013
Adjusted earnings per ordinary
share
Year ended 31 December 2014
Year ended 31 December 2013
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 2013 earnings per share is restated for this reorganisation.
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.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
38
12
Goodwill and other intangible assets
Goodwill
Cost and net book value
At 1 January and 31 December 2013 and 2014
Goodwill on consolidation
£’000
14,029
Goodwill arose on the consolidation of the Group following the acquisition of Quartix Limited in 2008.
Under UK GAAP it was being amortised over its useful economic life estimated at 20 years. The carrying
value of goodwill therefore represents the net book value at the date of transition to IFRS.
Goodwill is recognised as an asset and assessed for impairment annually or as triggering events occur. Any
impairment is recognised immediately in profit or loss (see note 2).
The Group considers its subsidiary Quartix Limited to be the sole cash-generating unit (CGU) and as such,
it is reviewed annually for impairment. The Group has determined its recoverable amount based on value
in use calculations. The value in use was derived from discounted management cash flow forecasts for the
business, using the budgets and strategic plans based on past performance and expectations for the market
development of the CGU, incorporating an appropriate business risk. The key assumptions for the value
in use calculations are those regarding the discount rates, growth rates and expected changes to selling
prices and direct costs during the period based on industry sector forecasts.
These budgets and strategic plans cover a four year period. The growth rate in years one to three were
based on detailed management expectations. The growth rate used for the fourth year is 2% which is in line
with the long-term GDP forecasts. The discount rate used is 14% based on the Group’s weighted average
cost of capital. Sensitivity analysis is carried out on all budgets, strategic plans and discount rates used in
the calculations.
Management’s key assumptions are based on past experience and the current trading performance of
Quartix Limited. These value in use calculations have not identified any requirement for impairment of the
Goodwill stated above. Management is not aware of any probable changes that would necessitate changes
in key estimates that indicate any impairment sensitivity.
Other intangible assets
The Group did not capitalise any other intangible assets.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
39
13
Property, plant and equipment
Leasehold
improvements
£’000
Tools and
equipment
£’000
Office
equipment
£’000
Total
£’000
Cost:
At 1 January 2013
Additions
Disposals
At 31 December 2013
Additions
Disposals
At 31 December 2014
Depreciation:
At 1 January 2013
Provided in the year
On disposals
At 31 December 2013
Provided in the year
On disposals
At 31 December 2014
Net book amount:
At 31 December 2014
At 31 December 2013
At 1 January 2013
14
Inventories
Raw materials
Work in progress
Finished goods and goods for resale
-
-
-
-
12
-
12
-
-
-
-
-
-
-
12
-
-
12
-
-
12
-
-
12
12
-
-
12
-
-
12
-
-
-
223
108
-
331
70
-
401
84
59
-
143
83
-
226
175
188
139
235
108
-
343
82
-
425
96
59
-
155
83
-
238
187
188
139
2014
£’000
163
142
131
436
2013
£’000
115
76
29
220
Included in the analysis above are impairment provisions against inventory amounting to £80,000 (2013:
£80,000). The cost of inventories recognised as an expense and included in “cost of sales” amounted to
£1.6m (2013: £1.5m).
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
40
15
Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
2014
£’000
1,793
6
134
1,933
2013
£,000
1,723
2
64
1,789
All the amounts are short term. The carrying value of trade receivables is considered a reasonable
approximation of fair value. All of the receivables have been reviewed for indicators of impairment. Certain
trade receivables were found to be impaired and a provision for doubtful debts has been recorded as
follows.
Provision at 1 January
Additional provision/(release of provision)
Provision at 31 December
2014
£’000
15
-
15
2013
£’000
20
(5)
15
In addition, some of the unimpaired trade receivables are past due as at the reporting date. The age of
financial assets past due but not impaired is as follows:
Not more than 1 month
More than one month but not more than 3 months
More than 3 months but not more than 6 months
16
Cash and cash equivalents
Cash and cash equivalents include the following components:
Cash at bank and in hand
2014
£’000
118
21
-
139
2013
£’000
148
16
-
164
2014
£'000
1,812
2013
£’000
779
Quartix Limited uses Barclay’s Money Transmission Plus to aggregate most sterling instant access balances
and earn interest, which is currently 0.75%.
17
Trade and other payables
Amounts falling due within one year:
Trade payables
Social security and other taxes
Other payables
Accruals
2014
£'000
1,093
600
101
214
2,008
2013
£’000
802
561
60
270
1,693
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
41
18
Borrowings: amounts falling due within one year
Bank loan
19
Borrowings: amounts falling due after more than one year
Bank loan
2014
£’000
993
2013
£’000
993
2014
£’000
993
2013
£’000
1,983
The Group bank loans are secured by way of a debenture. The loans consist of a £1.0m standard term loan
borrowed at an effective interest rate of 3.56% over LIBOR and repayable at a rate of £0.25m a quarter
until November 2015. In addition, the Group has further borrowings of £1.0m at an effective interest rate
of 3.88% over LIBOR. For this repayments of £0.25m a quarter start in February 2016.
20
Deferred tax
Deferred tax liabilities recognised by the Group at 31 December 2014 and 31 December 2013 are as follows:
Provision for deferred tax
Accelerated Capital Allowances
Short term temporary differences
Equity settled share options
Charge to profit and loss
Accelerated Capital Allowances
Short term temporary differences
Equity settled share options
2014
£’000
25
(3)
(18)
4
-
(2)
(18)
(20)
2013
£’000
25
(1)
24
12
-
-
12
There are unprovided tax losses related to the USA business of $262,000 and additional unprovided tax
regarding equity settled share options of £206,000.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
42
21
Equity
Number of
preference
shares of £1
each
Number of
ordinary
shares of
£0.10 each
Number of
ordinary
shares of
£0.01 each
Allotted, called up and fully paid
At 1 January 2014
Shares issued at £1 for cash
Shares redeemed at £1 for cash
Shares reorganised
Bonus shares issued
At 31 December 2014
-
5,000
(5,000)
-
-
-
462,475
3,900
-
(466,375)
-
54,500
-
4,663,750
- 41,973,750
- 46,692,000
Share
capital
£’000
Share
premium
£’000
46
6
(5)
-
420
467
4,296
83
-
-
-
4,379
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.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
43
22
Share based payments
All options have been restated to take account of a reorganisation of capital which took place on the 30
September 2014. This increased the number of shares one hundredfold and reduced prices likewise.
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 vesting on issue
and starting to vest after 14 months. Options are forfeited if the employee leaves the Company before the
options vest.
In consideration for the performance by finnCap of its obligations under the placing agreement the
Company issued 153,904 warrants to finnCap, on 6 November 2014 each warrant comprising the right to
subscribe for one ordinary share at the Placing Price (£1.16). The Warrant Instrument also contains
provisions relating to the cashless exercise of such warrants via surrender of warrants. The warrants may
be exercised at any point up to the date that is 36 months after the date of Admission (6 November 2014)
save that they are not exercisable before the date that is 12 months after the date of Admission except
pursuant to certain acceleration rights, for example upon a takeover of the Company.
Movements in the number of share options and warrants outstanding and their related weighted average
exercise prices are as follows:
2014
2013
Weighted
average
exercise price
per share
in pence
26.6
75.6
0.1
8.2
47.1
Weighted
average
exercise price
per share
in pence
1.0
38.9
-
-
26.6
Options
number
1,089,800
323,654
(12,000)
(324,500)
1,076,954
Options
number
353,800
736,000
-
-
1,089,800
Outstanding at 1 January
Granted
Lapsed
Exercised
Outstanding at 31 December
Exercisable at 31 December
44.0
75,500
1.0
180,000
The weighted average fair value of options and warrants issued during the year ended 31 December 2014
was £41.26.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
44
22
Share based payments (continued)
At 31 December 2014 Quartix Holdings plc had the following outstanding options, warrants and exercise
prices:
Expiry dates
Period when exercisable
25 June 2016
Starting from June 2011
From November 2014
6 November 2017
Starting from November 2014 1 November 2019
19 December 2018
March 2015
3 January 2020
Starting from March 2015
16 December 2019
March 2016
Period when exercisable
Starting from June 2011
Starting from November 2014 1 November 2019
19 December 2018
March 2015
Expiry dates
25 June 2016
2014
Options
number
83,800
153,904
595,500
74,000
150,000
19,750
1,076,954
2013
Options
number
353,800
650,000
86,000
1,089,800
Weighted
average
remaining
contractual
life
in months
18
35
59
48
61
48
52
Weighted
average
remaining
contractual
life
in months
18
59
48
45
Average
exercise price
per share
in pence
1.0
116.0
44.0
0.1
44.0
1.0
47.1
Average
exercise price
per share
in pence
1.0
44.0
0.1
26.6
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. This change is showed by an increase in the
number of options.
The fair value of share based payments have been calculated using the Black-Scholes option pricing model.
Expected volatility was determined based on the historic volatility of comparable companies. The expected
life is the expected period from grant to exercise based on management’s best estimate. The risk free return
is the rate offered for building society deposits at the time of the grant.
The following assumptions were used in the model for options and warrants granted during the year
ended 31 December 2014:
Number granted
Grant date
Share price at grant date
(pence)
Exercise price (pence)
Fair value per option (pence)
Expected life in years
Expected volatility (%)
Risk-free interest rate (%)
Dividend yield (%)
2014
153,904
16 December 6 November
19,750
2013
150,000
86,000
650,000
1 January 1 November 19 December
142.5
1.0
142.0
3
38.0
0.5
3.0
116.0
116.0
47.1
3
62.0
0.5
-
44.0
44.0
22.0
5
62.0
0.5
-
44.0
44.0
22.0
5
62.0
0.5
-
44.0
0.1
43.9
2
62.0
0.5
-
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
23 Notes to the cash flow statement
Cash flow adjustments and changes in working capital
Profit before tax
Depreciation
Share based payment expense
Warrants issued
Interest income
Interest expense
Operating cash flow before movement in working capital
Notes
13
5
5
8
9
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
Increase in trade and other payables
Cash generated from operations
2014
£’000
5,066
83
83
74
(14)
104
5,396
(144)
(216)
809
5,845
45
2013
£’000
4,605
59
6
-
(12)
120
4,778
(806)
128
914
5,014
24 Leases
The Group’s future aggregate minimum lease payments under non-cancellable operating leases are as
follows:
No later than one year
Later than one year and no later than four years
Later than five years
Land & buildings
Other
2014
£’000
50
30
-
80
2013
£’000
39
73
-
112
2014
£’000
12
13
-
25
2013
£’000
6
17
-
23
Lease payments recognised as an expense during the year amount to £52,000 (2013: £49,000).
25 Related party transactions and controlling related party
The Group’s related parties comprise its Board of Directors and its key management (see note 7). There
were no related party transactions with Directors to disclose other than dividends received based on
shareholdings disclosed in the Directors’ Remuneration Report on page 17.
26
27
The Directors consider the Board and shareholding structure to mean there is no directly identifiable
controlling party.
Purchase commitments
Quartix Limited has signed agreements with suppliers which commits the Group to purchase inventory to
the value of £154,000 (2013: £209,000). There were no other contingent liabilities as at 31 December 2014
or 31 December 2013.
Capital commitments
The Group had a short term capital commitment of £39,000 at 31 December 2014 (2013: nil). This
commitment was for the installation of telephonic equipment during the next financial year.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
46
28
Risk management objectives and policies
Financial instruments
The Group uses various financial instruments; these include cash deposits and bank loans and various items
such as trade receivables and trade payables that arise directly from its operations. The main purpose of
these financial instruments is to raise finance for the Group's operations and manage working capital.
The main risks arising from the Group's financial instruments are interest rate risk, liquidity risk, credit risk
and currency risk. The Board reviews and agrees policies for managing each of these risks and they are
summarised below.
Interest rate risk
The Group's exposure to market risk for the changes in interest rates relates primarily to the Group's bank
loans. The exposure to interest rate fluctuations on its loans has been managed by past loan repayments
which mean that these loans are now low relative to the Group's cash flow. As at the 31 December 2014
each 1% increase in interest rates would add £20,000 to interest charges on an annual basis.
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable
needs. The Group maintains cash to meet its liquidity most of which earn interest via Barclay’s Money
Transmission Plus. Liquidity needs are monitored on a weekly and monthly basis. The Group has no un-
drawn committed overdraft facilities. Trade and other payables of £3.7m at 31 December 2014 will be
settled through cash generated by the Group in its normal course of business, both through the collection
of receivables and from cash generated from post year-end sales.
As at 31 December the Group's financial liabilities have contractual maturities as summarised below:
Trade and other payables
Within six months
Bank loans
Within six months
Six to twelve months
One to five years
2014
£’000
2013
£’000
1,306
1,293
543
531
1,028
2,102
566
554
2,102
3,222
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
47
28
Risk management objectives and policies (continued)
Credit risk
The Group's exposure to credit risk is limited to the carrying amount of financial assets recognised at
the Statement of Financial Position date, as summarised below:
Loans and receivables
Cash and cash equivalents
Trade and other receivables
2014
£’000
1,812
1,799
3,611
2013
£’000
779
1,725
2,504
The Group’s management considers that all the above financial assets that are not impaired for each of the
Statement of Financial Position dates under review are of good credit quality, including those that are past
due. See note 15 for additional information on trade receivables that are past due.
The Group's principal financial assets are cash deposits and trade receivables. Risks associated with cash
deposits are limited as the banks used have high credit ratings assigned by international credit rating
agencies.
The principal credit risk lies with trade receivables. In order to manage credit risk, the Directors require
third party credit clearance from all customers and most customers (over 90%) pay by direct debit. The
Group has one large customer whose debts can at times exceed £0.5m and the credit risk on this balance
is carefully monitored.
Currency risk
The Group is exposed to transaction foreign exchange risk. The risk with the Euro has been mitigated by
trading in France which generates marginally more Euros than the Group currently need. The Group plans
to adopt a similar solution to the US Dollar by trading in the USA. Currently it purchases about $2.0m a
year.
Transaction exposures, including those associated with forecast transactions, are managed through the use
of bank accounts held in foreign currencies. The Group's trade receivables as at 31 December 2014, include
an amount of £109,000 (2013: £73,000) denominated in Euros and an amount of £3,000 (2013: nil)
denominated in US Dollars. As at 31 December 2014, cash at bank and in hand included £184,000 (2013:
£44,000) denominated in US Dollars, and £28,000 (2013: £30,000) denominated in Euros.
The Group's trade payables as at 31 December 2014 include an amount of £77,000 (2013: £33,000)
denominated in Euros and an amount of £302,000 (2013: £77,000) denominated in US Dollars.
It is estimated that a 5% strengthening of Pound Sterling to the US dollar would have increased net profit
by £50,000 and vice versa. (This is assuming that Dollar denominated prices do not adjust for currency
movements.)
It is estimated that a 5% strengthening of Pound Sterling to the Euro would have reduced net profit by
£38,000 and vice versa.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
48
29
Summary of financial assets and liabilities by category
The carrying amounts of the assets and liabilities as recognised at the Statement of Financial Position date
of the years under review may also be categorised as follows:
Loans and receivables
Trade and other receivables, loans and receivables
Cash and cash equivalents
Financial liabilities measured at amortised cost
Trade and other payables
Bank borrowings
2014
£’000
2013
£’000
1,799 1,725
1,812
779
3,611 2,504
1,306 1,293
2,976
1,986
4,269
3,292
30
Capital management policies and procedures
The Group's capital management objectives are to ensure the Group's ability to continue as a going concern
and to provide an adequate return to shareholders, by balancing its trading performance with continuing
investment in research and development.
The Group monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as
presented on the face of the Statement of Financial Position.
The Group makes adjustments to its capital in the light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may
adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell
assets. Capital for the reporting years under review is summarised as follows:
Capital
Total equity
Less cash and cash equivalents
Overall financing
Total equity
Plus borrowings
2014
£’000
12,154
(1,812)
10,342
12,154
1,986
14,140
2013
£’000
10,660
(779)
9,881
10,660
2,976
13,636
Capital-to-overall financing ratio (%)
73
72
31
Subsidiaries
As at the 31 December 2014 the subsidiaries of the Group were:
Subsidiary
Quartix Limited
Quartix Inc
Country of
registration
England & Wales Ordinary shares
Common shares
USA
Class of share
capital held
Proportion held
by the Company
100%
100%
Nature of
business
Vehicle Tracking
Vehicle Tracking
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
49
Independent Auditor's Report to the Members of Quartix
Holdings plc - Company number 06395159
We have audited the Parent Company financial statements of Quartix Holdings plc for the year ended 31
December 2014 which comprise the Parent Company Balance Sheet and the related notes. The financial
reporting framework that has been applied in their preparation is applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This Report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an Auditor’s Report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit work, for this Report, or for the opinions
we have formed.
Respective responsibilities of Directors and auditor
As explained more fully in the Directors’ Report on page 19, the Directors are responsible for the
preparation of the Parent Company financial statements and for being satisfied that they give a true and
fair view. Our responsibility is to audit and express an opinion on the Parent Company financial statements
in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting
Council's website at www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion the Parent Company financial statements:
Give a true and fair view of the state of the Company's affairs as at 31 December 2014
Have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice
Have been prepared in accordance with the requirements of the Companies Act 2006
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report and Strategic Report for the financial year
for which the financial statements are prepared is consistent with the Parent Company financial statements.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
50
Independent Auditor's Report to the Members of Quartix
Holdings plc (continued) - Company number 06395159
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us
to report to you if, in our opinion:
Adequate accounting records have not been kept by the Parent Company, or returns adequate for
our audit have not been received from branches not visited by us
The Parent Company financial statements are not in agreement with the accounting records and
returns
Certain disclosures of Directors’ remuneration specified by law are not made
We have not received all the information and explanations we require for our audit
Other matter
We have reported separately on the Group financial statements of Quartix Holdings plc for the year ended
31 December 2014.
Alison Seekings
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Cambridge
2 March 2015
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
51
Company Balance Sheet
Fixed assets
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors: amount falling due within one year
Net current liabilities
Total assets less current liabilities
Creditors: amount falling due after more than one year
Net assets
Capital and reserves
Called up share capital
Share premium account
Equity reserve
Capital redemption reserve
Profit and loss account
Shareholders' funds
Notes
2014
£’000
2013
£'000
3
4
5
6
7
8
8
8
8
18,551
18,468
245
44
289
19
45
64
(4,684)
(4,395)
(6,802)
(6,738)
14,156
11,730
(993)
(1,983)
13,163
9,747
467
4,379
151
4,664
3,502
13,163
46
4,296
6
5,079
320
9,747
Approved by the Board of Directors and signed on behalf of the Board on 2 March 2015.
Andrew Walters
Managing Director
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
52
Notes to the Parent Company Financial Statements
1
Summary of significant accounting policies
Accounting policies
The financial statements are prepared in accordance with applicable United Kingdom accounting standards.
The particular accounting policies adopted are described below.
Accounting convention
The financial statements are prepared under the historical cost convention.
Investments
Investments are stated at cost less provision for any impairment.
Taxation
Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have
been enacted or substantively enacted by the Balance Sheet date. Deferred tax is provided in full on timing
differences, which result in an obligation at the Balance Sheet date to pay more tax, or a right to pay less
tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law.
Timing differences arise from the inclusion of items of income and expenditure in taxation computations
in periods different from those in which they are included in financial statements. Deferred tax assets are
recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred tax
assets and liabilities are not discounted.
Foreign currencies
Transactions denominated in foreign currencies are translated into sterling at the rates ruling at the dates
of the transactions. Monetary assets and liabilities denominated in foreign currencies at the Balance Sheet
date are translated at the rates ruling at that date. Translation differences arising are dealt with in the Profit
and Loss Account.
Financial instruments
The Company does not enter into derivative contracts for hedging or speculative purposes.
Share-based compensation
The Company issues share options to employees of its trading subsidiary. The fair value of such options
granted is calculated using the Black-Scholes option pricing model. The fair value is spread over the period
from the date of grant to the date the options vest and are exercisable, based on the best estimate of the
number of shares that will eventually vest and recognised as an additional cost of investment in the
subsidiary.
Upon exercise of the share options the proceeds received are allocated to share capital and share premium.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
53
2
Profit and loss account
No Profit and Loss Account is presented for Quartix Holdings plc as provided by section 408 of the
Companies Act 2006. The Company’s profit for the financial year was £5.95m (2013: £3.42m).
Auditors' remuneration attributable to the Company is as follows:
Audit fees – statutory audit
Other services
Details of Directors’ emoluments are set out on page 17.
3
Investments
The amounts recognised in the Company’s Balance Sheet relate to the following:
Cost:
At 1 January 2014
Increase due to granting of share options to subsidiary employees:
New investments
Net book amount at 31 December 2014
During the year the Group set up a new subsidiary in the USA.
2014
£’000
9
81
90
2013
£’000
7
36
43
Subsidiary
undertakings
£’000
18,468
83
18,551
Subsidiary
Quartix Limited
Quartix Inc
Country of
registration
England & Wales Ordinary shares
Common shares
USA
Class of share
capital held
Proportion held
by the Company
100%
100%
Nature of
business
Vehicle Tracking
Vehicle Tracking
4
Debtors: amounts falling due within one year
VAT
Prepayments
Amounts owed by subsidiary undertakings
All debtors fall due within one year of the Balance Sheet date.
2014
£’000
24
6
215
245
2013
£’000
12
-
7
19
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
5
Creditors: amounts falling due within one year
Bank loans and overdrafts
Amounts owed to subsidiary undertakings
Trade creditors
Corporation tax
Accruals and deferred income
6
Creditors: amounts falling after more than one year
Bank loans
Included within the above are amounts falling due as follows:
Between one and two years
Bank loans
Between two and five years
Bank loans
54
2013
£’000
993
5,657
69
-
83
6,802
2014
£’000
993
3,540
-
102
49
4,684
2014
£’000
993
2013
£’000
1,983
2014
£’000
2013
£’000
993
993
-
990
The Group bank loans are secured by way of a debenture. The loans consist of a £2.0m standard term loan
borrowed at an effective interest rate of 3.56% over LIBOR. This is repayable at a rate of £0.25m a quarter
until November 2015. In addition, the Group has access to further borrowings of £1.0m at an effective
interest rate of 3.88% over LIBOR. For this repayments of £0.25m a quarter start in February 2016.
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
55
7
Called up share capital
Allotted, called up and fully paid
Nil (2013: 462,475) ordinary shares of £0.10 each
46,692,000 (2013: nil) ordinary shares of £0.01 each
2014
£’000
2013
£’000
-
467
467
46
-
46
In 2014 there were no ordinary shares with a value of £0.10 as all figures have been adjusted to
accommodate the change in the nominal value of ordinary shares to £0.01 per share on 30 September
2014.
Share options and warrants outstanding at 31 December 2014 were:
Expiry dates
Period when exercisable
25 June 2016
Starting from June 2011
From November 2014
6 November 2017
Starting from November 2014 1 November 2019
19 December 2018
March 2015
3 January 2020
Starting from March 2015
16 December 2019
March 2016
Average
exercise price
per share
in pence
1.0
116.0
44.0
0.1
44.0
0.1
47.1
Weighted
average
remaining
contractual
life
in months
18
35
59
48
61
48
52
Options
number
83,800
153,904
595,500
74,000
150,000
19,750
1,076,954
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. This change is showed by an increase in the
number of shares under option.
8
Reserves
At 1 January 2014
Profit for the year
Redemption of shares
Dividend paid
Bonus issue
Shares issued
Adjustment for options uptake
FRS 20 employee share schemes
Warrants issued
At 31 December 2014
Share
premium
account
£’000
4,296
Employee
share schemes
reserves
£’000
6
Capital
redemption
reserve
£’000
5,079
5
(420)
83
4,379
(12)
83
74
151
Profit and loss
account
£’000
320
5,954
(5)
(2,779)
12
4,664
3,502
9
10
11
12
Quartix Holdings plc
Financial statements for the year ended 31 December 2014
56
Related party transactions and ultimate controlling party
The Company has taken advantage of the exemption not to disclose transactions with wholly owned
subsidiaries.
The Directors are the Company's controlling and ultimate controlling related parties by virtue of their
shareholding and directorships.
Contingent liabilities
There are no material contingent liabilities subsisting at 31 December 2014 or 31 December 2013.
Financial commitments
The Company had no financial commitments at 31 December 2014 or 31 December 2013.
Profit for the financial year
The Parent Company has taken advantage of section 408 of the Companies Act 2006 and has not included
its own Comprehensive Income Statement in these financial statements. The profit for the financial year
was £5.95m (2013: £3.42m)
57
Notice of Annual General Meeting
Notice is hereby given that the second Annual General Meeting (the “Meeting”) of Quartix Holdings plc
will be held at Wellington House, East Road, Cambridge CB1 1BH on Thursday 16 April 2015 at
11.00 am for the following purposes:
To consider, and if deemed fit, to pass the following as ordinary resolutions:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
To receive and adopt the audited annual accounts for the year ended 31 December 2014.
To approve and declare a final dividend for the year ended 31 December 2014 of 3p per ordinary
share. This will be paid on 15 May 2015 to shareholders on the register as at 17 April 2015.
To re-elect Andrew Walters as a Director who, in accordance with the Company’s Articles of
Association, retires as a Director and is eligible for re-election.
To re-elect David Bridge as a Director who, in accordance with the Company’s Articles of
Association, retires as a Director and is eligible for re-election.
To re-elect Avril Palmer-Baunack as a Director who, in accordance with the Company’s Articles
of Association, retires as a Director and is eligible for re-election.
To re-elect Paul Boughton as a Director who, in accordance with the Company’s Articles of
Association, retires as a Director and is eligible for re-election.
To re-elect Jim Warwick as a Director who, in accordance with the Company’s Articles of
Association, retires as a Director and is eligible for re-election.
To re-appoint Grant Thornton UK LLP as the auditors of the Company until the end of the next
Annual General Meeting.
To authorise the Directors to determine the remuneration of the auditors.
To give the Directors general and unconditional authorisation for the purposes of section 551 of
the Companies Act 2006 (the “Act”) to exercise all powers of the Company to allot shares in the
Company or to grant rights to subscribe for or to convert any security into shares in the Company
up to a maximum nominal value of £155,000 (representing approximately 33% of the issued share
capital of the Company as at 2 March 2015) to such persons at such times and on such terms they
deem proper provided that this authority shall expire at the conclusion of the next Annual General
Meeting of the Company or 30 June 2016, whichever is earlier, save that the Company may, before
such expiry, make an offer or agreement which would or might require equity securities (as defined
in section 560 of the Act) to be allotted after such expiry and the Directors may allot such securities
in pursuance of such offer or agreement as if the authority conferred hereby had not expired; and
all prior authorities to allot securities (to the extent unutilised) be revoked, but without prejudice
to the allotment of any shares or securities already made or to be made pursuant to such prior
authorisation.
To consider, and if deemed fit, to pass the following as special resolutions:
11.
That the Directors be and are empowered, pursuant to section 571 of the Companies Act 2006
(the “Act”), to allot equity securities (as defined in section 560 of the Act) for cash pursuant to the
authority conferred upon them by resolution 10 above and to allot equity securities (as defined in
section 560(3) of the Act (sale of treasury shares)) for cash in each case as if section 561 of the Act did
not apply to any such allotment provided, however, that the power conferred by this resolution
shall be limited to:
58
a.
b.
The allotment of equity securities in connection with a rights issue, open offer or any other
offer of, or invitation to apply for, equity securities in favour of holders of ordinary shares
in the Company on the register of members at such record dates as the Directors may
determine and other persons entitled to participate therein where the equity securities
respectively attributable to the interests of the ordinary shareholders are proportionate (as
nearly as may be) to the respective number of ordinary shares in the Company held or
deemed to be held by them on any such record dates, subject to such exclusions or other
arrangements as the Directors may consider necessary or expedient to deal with fractional
entitlements, treasury shares, record dates, or legal or practical problems arising or
resulting from the application of the laws of any overseas territory or the requirements of
any other recognised regulatory body or stock exchange in any territory or by virtue of
shares being represented by depository receipts or any other matter whatever; and
The allotment, other than pursuant to sub-paragraph ‘a’ above, to any person or persons
of equity securities up to an aggregate nominal value not exceeding £23,500, representing
approximately 5% of the ordinary share capital in issue as at 2 March 2015.
This power shall expire at the conclusion of the next Annual General Meeting of the Company or
30 June 2016, whichever is the earlier, unless previously varied, revoked or renewed by the
Company in general meeting provided that the Company may, before such expiry, make any offer
or agreement which would or might require securities to be allotted, or treasury shares sold, after
such expiry and the Directors may allot securities or sell treasury shares pursuant to any such offer
or agreement as if the power conferred had not expired; and all prior powers granted under section
570 of the Act shall be revoked provided that such revocation shall not have retrospective effect.
12.
That the Directors be generally and unconditionally authorised, for the purposes of section 701 of
the Companies Act 2006 (the “Act”), to make market purchases, as defined in section 693(4) of
the Act, of ordinary shares of £0.01 each in the Company on such terms and in such manner as
the Directors shall determine, provided that:
a.
b.
c.
d.
The maximum aggregate number of ordinary shares which may be purchased is 2,350,000
(representing approximately 5% of the ordinary share capital in issue as at 2 March 2015);
The minimum price that may be paid for an ordinary share is its nominal value (£0.01);
The maximum price that may be paid for an ordinary share shall be an amount equal to
105% of the average middle market quotations for the ordinary shares of the Company as
derived from the AIM appendix to the London Stock Exchange Daily Official List for the
five business days immediately preceding the day on which the ordinary share is purchased;
and
This authority shall expire, unless previously renewed, revoked or varied, on the date of
the next Annual General Meeting or 30 June 2016, whichever is earlier, save that the
Company may enter into a contract for the purchase of ordinary shares under this
authority which would or might be completed, wholly or partly, after this authority expires.
By order of the Board on 2 March 2015.
David Bridge
Company Secretary
1
2
3
4
5
6
59
Notes to the Notice of Annual General Meeting
Entitlement to attend and vote
Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that in
order to have the right to attend and vote at the meeting (and also for the purpose of calculating how many
votes a person entitled to attend and vote may cast), a person must be entered on the register of members
of the Company by no later than 6.00 pm on 14 April 2015, or, in the event that the meeting is adjourned,
at 6.00 pm on the day which is prior to the day immediately preceding the day of any such adjourned
meeting. Changes to entries on the register after this time shall be disregarded in determining the rights of
any person to attend or vote at the meeting.
Information regarding the meeting
A copy of this Notice of Annual General Meeting and other information required by section 311A of the
Companies Act 2006 is available online at www.quartix.net.
Appointment of proxy
Members of the Company are entitled to appoint one or more proxies to exercise all or any of their rights
to attend, speak and vote at the Meeting instead of him or her. The person appointed does not need to be
a member of the Company but they must attend the Meeting to represent the member. If you wish your
proxy to speak on your behalf at the Meeting you will need to appoint your own choice of proxy (not the
Chairman) and give your instructions directly to your appointee.
If you appoint more than one proxy, each proxy must only be appointed to exercise the rights attaching to
different shares.
A proxy can be appointed using the form accompanying this Notice. Instructions for use are shown on the
form. Please complete and return this form to the Company's registrars, Capita Asset Services, PXS 1, 34
Beckenham Road, Beckenham, Kent BR3 4ZF not later than 11.00 am on 14 April 2015.
You can only appoint a proxy using the procedures set out in these notes and the notes to the proxy form.
The notes to the proxy form give details of how to appoint a proxy via the CREST system.
Changing appointment of proxy
A member may change the person they have appointed as proxy using the same process as outlined above.
The appointment received last before the latest time for receipt of proxies will take precedence over any
previous appointments (see note 3). Any amended proxy appointments received after the relevant cut-off
time will be disregarded.
Revoking proxy appointment
A member may revoke the appointment of a proxy by sending a signed note to the Company’s registrars,
Capita Asset Services, PXS 1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF. If the member is a
company, such a note must be executed under common seal or signed on the company’s behalf by an
officer of the company or an attorney for the company. Any power of attorney or other authority under
which the proxy form is signed must be included with the proxy form. If a revocation is received after the
specified time (see note 3), the proxy appointment will remain valid. Alternatively, if a member appoints a
proxy but attends the Meeting in person, the proxy appointment will be automatically terminated.
Issued shares and total voting rights
At close of business on 2 March 2015 the Company’s issued share capital comprised 46,692,000 ordinary
shares of £0.01 each. Each ordinary share entitles the holder to one vote at a general meeting of the
Company. Consequently, the aggregate number of voting rights in the Company at that time was
46,692,000.
7
8
Documents on display
Copies of the Directors’ service contracts with the Company will be available for inspection at the registered
office of the Company at least 15 minutes prior to and until the termination of the Annual General Meeting.
Communication
Any general queries by members about the Annual General Meeting should be addressed to the Company
Secretary by letter or email at Quartix Holdings plc, Wellington House, East Road, Cambridge CB1 1BH
or david.bridge@quartix.net.
60
www.quartix.net