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Quartix Holdings plc
Wellington House
East Road
Cambridge
CB1 1BH
www.quartix.net
www.quartix.fr
www.quartix.com
Quartix Holdings plc
Annual Report 2017
Company No.06395159
Financial Statements
Quartix Holdings plc
For the year ended 31 December 2017
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
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
Parent Company Statement of Financial Position
Parent Company Statement of Changes in Equity
Notes to the Parent Company Financial Statements
Notice of Annual General Meeting
Notes to the Notice of Annual General Meeting
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Quartix Holdings plc
Financial statements for the year ended 31 December 2017
2
Company Information
Company registration number:
06395159
Registered office:
Directors:
Wellington House
East Road
Cambridge
CB1 1BH
Paul Boughton
Andrew Walters
Daniel Mendis
Edward Ralph
Jim Warwick
Company secretary:
Daniel Mendis
Bankers:
Solicitors:
Auditor:
Nominated advisor and joint broker:
Joint broker:
Barclays Bank PLC
Mortlock house,
Station Road,
Histon,
Cambridgeshire
CB24 9DE
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 1JJ
Cantor Fitzgerald
One Churchill Place, Level 20,
Canary Wharf,
London
E14 5RB
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
3
Highlights
Financial highlights
• Group revenue increased by 5% to £24.5m (2016: £23.3m)
o Fleet revenue grew by 14% to £17.0m (2016: £14.9m)
o
Insurance revenue declined by 12% to £7.5m (2016: £8.4m)
• Operating profit increased by 1% to £6.6m (2016: £6.5m)
• Earnings before interest, tax, depreciation, amortisation and share based payment expense
(Adjusted EBITDA) increased by 6% to £7.2m (2016: £6.8m)
• Profit before tax increased by 1% to £6.6m (2016: £6.5m)
• Diluted earnings per share fell by 4% to 12.21p (2016: 12.78p)
• Free cash flow increased by 5% to £6.3m (2016: £6.0m)
• Cash inflow before tax increased by 3% at £7.0m (2016: £6.8m)
• Net cash increased to £7.3m (2016 net cash: £6.2m)
• Final dividend payment of 11.1p per share proposed (2016: 9.0p) including 6.8p for supplementary
dividend (2016: 4.7p) giving a total dividend for the year of 13.5p per share
Operational highlights
• Strong progress in the main fleet business:
o 20% increase in subscription base to 105,314 units (2016: 87,889)
o 20% increase in customer base to 10,961 (2016: 9,105)
o Unit attrition was consistent at 10.1% (2016: 10.0%) and compares favourably with our
estimate of the industry average of around 14-15 per cent
o 23% growth in new fleet installations
o Strong growth in France, ending the year with 1,776 customers (2016: 1,428) and 13,131
vehicles under subscription (2016: 9,986), an increase of 24% and 32% respectively
o During its third full year of trading the USA grew its customer base to 1,460 (2016: 1,075),
with 8,973 vehicles under subscription (2016: 6,191).
• Anticipated decline in the lower margin insurance telematics business:
o 17% decline in insurance installations to 57,826 (2016: 69,300)
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
4
Chairman's Statement
Introduction
The past year has shown encouraging demand for the Group’s vehicle telematics services in both the fleet
and insurance sectors.
Sales in the Company’s core fleet operations in the UK and Ireland grew by 9%, reaching £14.0m (2016:
£12.8m). This growth more than compensated for the planned decline in UK insurance revenues, which
decreased by approximately £1m to £7.5m (2016: £8.4m).
The Group made good progress in France, where revenue increased by 24% to €2.2m (2016: €1.8m).
2017 was our third full year of operations in the USA, having launched our service and opened an office
there in 2014. We are pleased with progress and completed the year with 8,973 vehicles under subscription
(2016: 6,191) across 1,460 fleet customers (2016: 1,075). Revenue increased by 66% to $1.5m in 2017 (2016:
$0.9m) and the prospects for future business development remain encouraging.
Results
Group revenue for the year increased by 5% to £24.5m (2016: £23.3m).
Operating profit for the year increased by 1% to £6.6m (2016: £6.5m) and profit before tax was also £6.6m
(2016: £6.5m).
Cash conversion was strong, resulting in free cash flow from operations after tax and investing activities of
£6.3m (2016: £6.0m), enabling the Group to increase its net cash by £1.1m to £7.3m at 31 December 2017,
following the payment of £5.4m in dividends.
Earnings per share
Basic earnings per share fell by 5% to 12.27p (2016: 12.87p), largely due to a higher tax charge than in 2016,
which benefitted from prior year patent box claim refunds. Diluted earnings per share fell to 12.21p (2016:
12.78p) as a consequence.
Dividend policy
Our ordinary dividend policy is to pay a dividend set at approximately 50% of cash flow from operating
activities, which is calculated after taxation paid but before capital expenditure.
In addition to this the Board will distribute the excess of gross cash balances over £2m on an annual basis
by way of supplementary dividends, subject to a 2p per share de minimis level.
The surplus cash is calculated using the year end gross cash balance and after deduction of the proposed
ordinary dividend, and is intended to be paid at the same time as the final dividend. The policy will be
subject to periodic review.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
5
Dividend
In the year ended 31 December 2017, the Board decided to pay an interim dividend of 2.4p per ordinary
share. This totalled £1.14m and was paid on 14 September 2017 to shareholders on the register as at 18
August 2017.
The Board is recommending a final ordinary dividend of 4.3p per share, together with a supplementary
dividend of 6.8p per share, giving a final pay out of 11.1p per share and a total dividend for the year of
13.5p per share.
The final and supplementary dividend amounts to approximately £5.3m in aggregate. Subject to the
approval at the forthcoming AGM, this dividend will be paid on 4 May 2018 to shareholders on the register
as at 6 April 2018.
Governance and the Board
The Board is comprised of two Non-Executive Directors, myself included, and three Executive Directors,
Andrew Walters, Edward Ralph and Daniel Mendis. Andrew Walters was a co-founder of the main trading
entity, Quartix Limited, and has been one of its directors since 5 July 2001; Edward Ralph joined the
Company as Chief Operating Officer in January 2017 and was appointed to the Board in July; and Daniel
Mendis was appointed as Chief Financial Officer on 1st January 2018 having joined the Company in
December 2017. David Bridge retired from his position of Finance Director for the Company at the end
of 2017, and stepped down from the Board in January. David indicated his intention to do so last year, and
I would like to take the opportunity to thank him for the 10 years of outstanding service he has given to
the Company, and for his cooperation and assistance to Daniel in both the transition and the preparation
of these accounts.
I have over 30 years of experience in identifying, negotiating and completing acquisitions in the USA and
Europe. Currently, I am Business Development Director of Aventics GmbH, the German industrial
pneumatics manufacturer. I spent 13 years as Business Development Director for Spectris plc, and
subsequently held similar positions at IMI plc, Consort Medical plc and Brammer plc. I am a Chartered
Accountant (FCA).
Jim Warwick was Chief Operating Officer at Abcam plc until 31 December 2016, having originally joined
as Technical Director in 2001. Abcam is a global leader in the supply of innovative protein research tools.
Prior to that, he worked on IT, software and web development initiatives for the telecommunications
consultancy group Analysys Limited.
For further details regarding Corporate Governance and the Board, please see the “Investors” section of
our website (www.quartix.net/investors.php).
Outlook
The Group has made a good start to the year, in line with our expectations. The high levels of recurring
revenue, a focus on growth in the core fleet markets in UK, France and the USA and targeting only those
insurance opportunities which offer satisfactory margins, underpin our confidence for the rest of the year
and beyond.
AGM
The Group’s AGM will be held at 11.00 a.m. on 27 March 2018 at the Group’s registered office at
Wellington House, East Road, Cambridge CB1 1BH.
Paul Boughton
Chairman
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
6
Strategic Report: Operational Review
Principal activities
Since 2001 Quartix has become one of Europe’s leading suppliers of vehicle telematics services. Whilst the
origins of the Group’s business are in the tracking of commercial vehicles in the UK, it has developed a
significant market presence in the insurance telematics market. It set up a French branch in 2011 and in
2014 expanded its operations into the USA. The operations in both the USA and France are focused entirely
on the fleet sector.
Strategy and business model
The Group’s main strategic objective is to grow its fleet business and develop the associated recurring
revenue by increasing the number of vehicles under subscription. The related insurance business helps to
provide economies of scale in areas related to the provision of data services, including development, supply
chain, production and installation.
Whilst the same technology is used for both commercial fleet tracking and insurance telematics, these
markets exhibit different characteristics and the Group has established proven business models for each of
them.
Fleet customers typically use the Group’s vehicle telematics services for many years, resulting in low rates of
attrition. Accordingly, the Group focuses its business model on the development of subscription revenue
based on minimal initial commitment from the customer, providing the best return to the Group over the
long term.
The value of recurring subscription revenue is the key measure of our performance in the fleet sector
Insurance telematics customers use the Group’s technology to monitor the driving style and habits of higher-risk
drivers, normally for a policy with a term of just 12 months. 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. This is standard practice in the industry, as the level of attrition is relatively high.
Whilst the value of revenue has been the key measurement of our performance in the insurance sector, we restrict our operations
to those opportunities which provide an adequate return.
People
Our business performance was recognised by several independent organisations in 2017: Recognised for
the work we do to improve road and driver safety, we were finalists in two industry awards with What Van
Magazine, firstly the ‘Risk Management’ Award and secondly, ‘Safety’ Award. Quartix was also included in
the LSE Group ‘1000 Companies to Inspire’ Britain 2017. We won Megabuyte’s Accounting and Enterprise
Software Award 2017, and finally we were awarded the Investor In Customer Silver Award status for
providing an excellent customer experience.
Each of these awards and nominations is a reflection of the commitment, teamwork, creativity and
dedication of our people. Our financial performance derives from the customer service we deliver, backed
by the technology we develop. I would like to register my personal thanks to every one of our employees
who made 2017 another great year for Quartix.
We are delighted to have been able to provide our employees with the ability to participate in the equity of
the Company under our EMI share option scheme for the fifth year in a row. The newly appointed
Directors of Quartix Holdings plc have received share option grants in 2017, as disclosed in the
remuneration report.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
7
Operational performance
All of our business operations continued to perform at a high level in 2017. Gross margin increased slightly
to 60.6% (2016: 60.3%), despite increases in average unit costs following the devaluation of Sterling in 2016
and the funding of strong growth in new fleet installations in 2017. A slight increase in overheads led to
return on sales decreasing by 1 percentage point to 27% (2016: 28%). Cash conversion was very strong
with cash flow from operating activities after investing activities and tax (free cash flow) representing 95%
of operating profit (2016: 92%). We expense all research and development investment, tracking system and
installation costs as they are incurred unless development spend meets the criteria for capitalisation.
Following the capital investments made in the USA and France in 2016, there was little further need for
capex in 2017 as new sales and marketing automation systems implemented during the year have been
sourced externally on a subscription licence basis.
Our accounts and operations teams continued to manage working capital well: trade debtors at the year-
end were 33 days of sales, and inventory levels remained comparable despite the sales growth.
Fleet
Our core fleet business, which accounted for 70% of Group revenue (2016: 64%), delivered considerable
progress in a further year of investment. Continued growth in the UK was combined with excellent progress
in France, where our business again made a positive contribution to the Group’s results, and in the USA,
where our third full year of trading saw us reach an installed base of 8,973 (2016: 6,191) vehicles under
subscription.
During the course of the year we won 2,779 new fleet customers (2016: 2,336). Sales leads continued to be
generated through a broad range of media and channels. The efficiency improvements resulted largely from
investments made in technology, processes and training, adding automation wherever possible and
providing our sales and marketing teams with better information on the performance of each campaign.
This investment will continue in 2018, and the knowledge and experience gained will be used across each
of our three target markets.
Fleet UK (including Ireland)
Demand for vehicle telematics services in the UK continues to grow. We are well-placed to expand our
business, given the strengths of our data services 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.
Vehicles under subscription increased by 16% to 83,210 during the year, and our fleet customer base
reached 7,725. We won 1,700 new customers in 2017 (2016: 1,345), and the gains in customer and vehicle
base were broadly spread between the channels we use. UK fleet revenue was £14.0m (2016: £12.8m). We
added a number of new key accounts during the year and increased the number of fleet clients with 50
vehicles or more. The strength of our brand, service capability and reputation in the UK is leading to higher
levels of enquiries from larger fleet prospects.
Our UK website continued to perform well in terms of search engine placement and enquiries, and we
continued to add new content to it.
We will continue to focus on telephone based sales capacity to support our fleet marketing initiatives, and
will look to find additional channels and partners to help us develop the market.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
8
Fleet (continued)
Fleet France
The number of new installations in the French market was 30% higher than the previous year (3,819 versus
2,933), and there was a 32% increase in the unit base, ending the year with 13,131 vehicles (2016: 9,986)
under subscription across 1,776 fleet customers (2016: 1,428). French fleet revenue increased by 24% to
€2.2m (2016: €1.8m), making a profitable contribution to the Group. We saw strong growth in new
customer acquisition towards the end of the year, and this was broadly spread across each of our channels.
We will continue to invest in this market in 2018, as we now benefit from growing awareness of our brand
and product.
Fleet USA
Our third full year of trading in the USA showed good progress: we concluded 2017 with 1,460 fleet
customers (2016: 1,075) having a total of 8,973 vehicles under subscription (2016: 6,191). As in the UK and
France, our fleet revenue derives from subscription income, which builds over time. Nonetheless USA fleet
revenue increased by 66% to $1.5m (2016: $0.9m), and our subscription base value continues to increase
each month. Losses incurred in the USA reduced by £0.5m to £0.3m (2016: £0.8m).
We see significant potential for growth in the USA in the next five years, and during 2017 we invested in
further local recruitment, product development and a new sales and marketing automation platform. We
are now able to build on these foundations with an enhanced level of marketing expenditure in 2018. At
the end of the 2017 we had a total of 7 employees in our Chicago office.
Fleet revenues in France and the USA combined were £3.1m, representing 18% of total fleet revenue.
Insurance
We installed 57,826 new insurance tracking systems in 2017, a decrease of 17%. This trend was in keeping
with the decision announced at the time of the Company’s interim results in July 2016 to focus on its core
fleet market and on only those insurance opportunities which offer satisfactory margins and which are
closely aligned to its fleet business.
In line with this strategy, the Group developed and launched an insurance platform in 2016 which appeals
to specialist insurance brokers. By the end of 2017 this proposition had been adopted and used by three
insurance broker clients. These projects are relatively small in volume, but the development of this platform
has offered an opportunity for Quartix to demonstrate the breadth of its capabilities in terms of technology,
data analysis and management services. A key part of this is the SafeSpeed Database, which is the result of
a 6-year development programme.
The SafeSpeed Database is a contextual speed scoring system which provides young drivers, insurers and
fleet managers with risk assessment information and feedback based on a driver’s speed in the context of
the road being driven, rather than relying simply on the statutory speed limit as a risk indicator. More than
30 million vehicle data points are processed each day and mapped against over 2 million road segments.
The database already holds more than 1 million speed distributions which are used in assessing driving
behaviour and accident risk. A more detailed explanation of these capabilities is provided at
www.quartix.net/insurance.
In addition to the business won so far with brokers, the new insurance platform appears to have significant
appeal to some larger fleet customers in the UK, many of which underwrite their own vehicles for accident
damage. We have seen an increased level of interest in the use of telematics as part of health, safety, and
risk management policy. This also has a positive impact on the management of brand image for our
customers, given that examples of poor driving behaviour are often posted on social media.
We feel that this insurance platform therefore offers us a further competitive advantage in our core fleet
business in the UK.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
9
Research and development
The Group is committed to continued investment in research to ensure that the functionality of its vehicle
telematics services remain competitive across each of its three fleet markets as well as in the insurance
sector. The principal areas of development focus in 2017 included:
1. Further development of the TCSV12 tracking system, which is believed to be one of the most
compact on the market, allowing ease of user installation in approximately 90% of European
vehicles. The product is being trialled by several key fleet prospects.
2. Electronic logging of driver hours for the US market. This application, which involves a direct
connection to the vehicle’s own bus and the use of an Android tablet device by the driver, was
delivered in beta version to customers at the end of 2016. It was released in Q3 2017 and is now
being enhanced to meet the full requirements of the US ELD specification. Further investment on
this is expected in the first half of 2018.
3. Further development of the “powered by Quartix” insurance platform. This software platform
includes software tools for both insurers and brokers and allows driver scoring based on a range
of factors, but most significantly it makes use of our “SafeSpeed Database”. The platform has been
fully integrated with our fleet product offering and is now being promoted to larger fleet clients
who are taking a much keener interest in the use of telematics in risk management.
All of our investment in research was fully expensed in the year. The total cost amounted to£1.1m, which
represents a decrease of 24% compared to the prior year (2016: £1.4m).
Sales and marketing automation
The cost-effective acquisition and retention of fleet customers have always been of key strategic importance
to the Company; it is these capabilities that set it apart from many of its peers and which drive the
Company’s financial success. During the second half of 2017 we enhanced this by implementing industry-
leading proprietary sales and marketing automation platforms for our US operations. These are integrated
directly with our existing, SQL-based, in-house systems and will enable the Company to continue to develop
its competitive strength in these areas.
In December, we relaunched our US website (www.quartix.com) and integrated it fully with the marketing
platform, thereby improving the effectiveness of our sales and marketing resources. We continue to receive
significant numbers of new enquiries for our service in the USA, and the new platforms allow us to identify
quickly the prospects which need immediate attention from our sales people, whilst at the same time
providing a very effective automated response to all other enquiries. The marketing system tailors the
approach taken depending on the nature of the prospect’s fleet, in terms of size and sector, and over time
it develops the customer’s level of interest in Quartix to the point where the enquiry needs to be directed
to a sales person. Although most new business is concluded with personal contact, a small but growing
percentage of new orders are received directly via our website. These systems have had a positive impact
on customer acquisition at the start of 2018. Further enhancement of the platform will be carried out
throughout the year as we seek to maximise the benefit.
Strategic priorities
We believe that the Company has significant opportunity for growth in its fleet business, particularly in the
USA. We ended the year with good growth in new customer acquisition and have taken the decision to
make additional investments in marketing automation and business development in 2018.
Within the insurance sector, following the strategic decision to move away from low margin insurance sales,
we will seek to target those opportunities which allow us to demonstrate and deliver the levels of service
quality and value for which we have become known.
Andrew Walters
Chief Executive Officer
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
10
Strategic Report: Financial Review
Key Performance Indicators (“KPIs”)
Year ended 31 December
Fleet installations (units)
Fleet subscription base (units)
Fleet customer base
Fleet attrition (annualised) (%) 1
Fleet invoiced recurring revenue2 (£’000)
Fleet revenue (£’000)
Insurance installations (units)
Insurance revenue (£’000)
2017
27,227
105,314
10,961
10.1
15,605
17,030
57,826
7,458
2016
22,224
87,889
9,105
10.0
13,646
14,909
69,300
8,430
% change
22.5
19.8
20.4
-
14.4
14.2
(16.6)
(11.5)
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.
2 Invoiced subscription charges before provision for deferred revenue
2017 was a year of good progress in our primary strategic objective of building our fleet subscription base.
We achieved over 27,000 fleet installations, an increase of 22.5% compared to 2016, with growth in all three
of our geographical markets.
Our fleet installed base grew by 19.8% to 105,314 units.
Attrition during the period was consistent at 10.1%.
Group invoiced recurring revenue (before adjusting for deferred revenue) grew at 14.4% to £15.6m (2016:
£13.6m).
The growth in fleet revenue at 14.2% was in line with the growth of our recurring revenue as our primary
focus is on growing subscription revenue.
Insurance unit installations were down 16.6% at 57,826, in keeping with the decision announced in July
2016 to focus on only those insurance opportunities which offer satisfactory margins and which are aligned
to our core fleet business.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
11
Financial Overview
Year ended 31 December
£’000 (except where stated)
Revenue
Fleet
Insurance
Total
Gross profit
Gross margin
Operating profit
Operating margin
Adjusted EBITDA
Profit for the year
Earnings per share
Cash generated from operations
Operating profit to operating cash conversion
Free cash flow
2017
17,030
7,458
24,488
14,842
61%
6,593
27%
7,199
5,822
12.27
7,014
106%
6,285
2016
% change
14,909
8,430
23,339
14,063
60%
6,543
28%
6,808
6,087
12.87
6,812
104%
6,005
14.2
(11.5)
4.9
5.5
0.8
5.7
(4.4)
(4.7)
3.0
4.7
Revenue
Revenue increased by 4.9% to £24.5m (2016: £23.3m). Fleet revenue, benefitting from past investment,
was 14.2% up at £17.0m (2016: £14.9m). Sales to insurance customers decreased by 11.5% to £7.5m (2016:
£8.4m).
Gross margin
Gross margin increased slightly to 60.6% (2016: 60.3%), despite increases in average unit costs following
the devaluation of Sterling in 2016 and the funding of strong growth in new fleet installations in 2017.
Operating profit and Adjusted EBITDA
We continued to invest in our product offering, in our sales structure and in marketing which led to an
increase in overheads of 9.7%. As a result, operating profit grew at 0.8% to £6.6m, a lower growth rate
than gross profit. Adding back depreciation and share-based payment expense gives £7.2m of adjusted
EBITDA (2016: £6.8m).
Part of this investment was in the USA where our customer base increased by 36% and revenue, as disclosed
in note 3, increased to £1.2m ($1.5m) (2016: £0.7m). Losses in the USA were around £0.3m ($0.4m) (2016:
losses of £0.8m).
Profit for the year
Our effective tax rate reflects the Group’s investment in research. It increased from 6.9% in 2016 to 11.9%
in 2017, the former benefitting from a corporation tax refund of £0.3m for patent box claims in respect of
prior periods.
As a result, profit for the year fell by 4.4% to £5.8m (2016 £6.1m).
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
12
Financial Overview (continued)
Earnings per share
Earnings per share also fell as a result of the comparatively low tax charge in 2016. Earnings per share in
2017 were 12.27p (2016: 12.87p). Diluted earnings per share fell to 12.21p (2016: 12.78p).
Statement of financial position
Cash at the year-end was £7.3m (2016: £6.2m).
Cash flow
Cash generated from operations before tax at £7.0m (2016: 6.8m) was 106% of operating profit.
Tax paid in 2017 was £0.7m (2016: £0.6m), so cash flow from operating activity after taxation but before
capital expenditure was £6.3m (2016: £6.2m including £0.3m refund for patent box claims in respect of
prior periods).
Free cash flow, after £0.1m of capital expenditure, was £6.3m, a 4.7% increase (2016: £6.0m including
patent box refunds).
The translation of cash flow into dividends is covered in the Chairman’s Statement.
Risk management policies
The principal risks and uncertainties of the Group are as follows:
Attracting and retaining the right number of good quality staff
The Group believes that in order to safeguard the future of the business it needs to recruit, develop and
retain the next generation of management. The impact of not mitigating this risk is that the Group ceases
to be innovative and provide customers with the vehicle telematics services they require. Considerable focus
has been given to recruitment, development and retention.
Particular attention has been given to the composition of the Operations Board over the last two years and
in early 2017, Ed Ralph was appointed as Chief Operating Officer of Quartix Limited and Lynne Austin
was appointed as a Director of Quartix Limited with responsibility for the company’s UK fleet operations.
In December, I joined as Chief Financial Officer.
The Group has a range of tailored incentive schemes which include the use of share options.
Reliance on M2M network
The Group’s service delivery is dependent on a functioning M2M network covering both the internet and
mobile data. The impact of not mitigating this risk is that the Group is exposed to an M2M outage. Quartix
has dual site redundancy to cover a localised internet problem and we are constantly working on improving
the reliability of our systems architecture.
Business disruption
Like any business the Group is subject to business disruption. This includes communications, physical
disruption to our sites and problems with our key suppliers. The impact of not mitigating this risk is that
the Group may not be able to service its customers. Quartix has a Business Continuity plan which is
frequently updated and reviewed.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
13
Financial Overview (continued)
Dependence on a key customer
As disclosed in note 3, during 2017 revenue of £7.0m was derived from one insurance customer, a specialist
reseller for the insurance industry. Losing this key contract could have a significant negative impact on cash
flow in the short term as the Group has a high level of fixed overheads. The Group has taken the strategic
decision to move away from low margin insurance sales and widen its insurance customer base.
Cyber security
The Group needs to make sure its data is kept safe and that there is security of supply. The reputational
and commercial impact of a security breach would be significant. To combat this, the Group has a security
policy and prepares a monthly security report which is reviewed by the Operations Board. This process
includes the use of outside consultants for penetration testing and security review.
Technology
Technology risks are perceived to arise from possible substitutes for the current Quartix product. Risks
cited include everything from smart mobile phones to driverless cars.
The Group strategy is to review all new technical developments with the aim of adopting any which will
provide a better channel for the information services which Quartix provides.
Daniel Mendis
Chief Financial Officer
The Strategic Report, comprising the Operational Review and Financial Review, was approved by the Board
of Directors and signed on behalf of the Board on 23 February 2018.
Andrew Walters
Chief Executive Officer
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
14
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”).
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 Director
Director
Paul Boughton
Andrew Walters
Daniel Mendis
Edward Ralph
David Bridge
Jim Warwick
Date of
resignation
11 January 2018
Date of
appointment
1 May 2014
29 January 2008
1 January 2018
25 July 2017
26 February 2008
1 May 2014
Board committees
There are three Board committees: Audit, Nominations, and Remuneration. Each Committee is comprised
of Non-Executive Directors.
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.
Position
Executive Directors
Non-Executive Directors
Director
Andrew Walters
Daniel Mendis (appointed 1 January 2018)
Edward Ralph (appointed 25 July 2017)
David Bridge
Paul Boughton
Jim Warwick
Board meeting
attendance (invitations)
11 (11)
n/a
5 (5)
11 (11)
11 (11)
11 (11)
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
15
Board committees (continued)
Audit Committee
Paul Boughton is Chairman of the Audit Committee which normally meets two 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. The Group’s Risk Register is reviewed at least twice
a year by the main board. A list of Matters Reserved for the Board was adopted in January 2016
including ensuring a sound system of internal control and risk management. All systems issues or
unexpected outcomes are brought to the attention of the board.
• 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 Paul Boughton. 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.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
16
Board committees (continued)
Remuneration Committee
Jim Warwick chairs the Remuneration Committee. It acts to ensure sound Corporate Governance with
respect to director and senior management remuneration 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.
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 21 working days before the
meeting.
Internal financial control
The key three controls are:
• Segregation of duties
• Monitoring and reporting
• Requiring a high level of integrity for key roles
The Board recognises the importance of robust and reliable financial reporting procedures and reviews the
procedures it operates on a regular basis.
There are Group wide minimum control standards for such issues as Health and Safety which are listed in
around 30 policy documents. In addition, an extensive range of accounting systems and procedures are
documented and maintained.
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.
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 calendar 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.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
17
Directors’ Remuneration Report
Introduction
The Remuneration Committee is chaired by Jim Warwick and also includes Paul Boughton. Its creation
was confirmed by the Board of Directors on 3 October 2016 in accordance with the Company’s Articles
of Association. The Committee’s fundamental purpose is to ensure sound Corporate Governance with
respect to director and senior management remuneration. In the year 2017 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 and the opportunity to enrol in the
Governments’ auto-enrolment pension scheme. At present the Remuneration Committee, at the Executive
Directors’ request, have concluded that no bonus, other benefits, with the exception of share option grants
noted below, nor compensation for loss of office will be paid. See below for a breakdown of the Directors’
remuneration packages.
Non-Executive Directors
A Non-Executive Director is typically expected to serve two three-year terms but may be invited by the
Board to serve for an additional period. Any term renewal is subject to Board review and AGM re-election.
Paul Boughton
Jim Warwick
Chairman
Date of contract Unexpired period
at date of report
26 months
26 months
1 May 2017
1 May 2017
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
Directors’ detailed emoluments and compensation (audited)
18
2016 (£)
Total
83,388
-
82,939
166,327
50,000
35,000
85,000
2017 (£)
Salary Pension
-
85,056
500
47,231
851
83,420
1,351
215,707
Total
85,056
47,731
84,271
217,058
50,000
38,333
88,333
-
-
-
50,000
38,333
88,333
Ordinary shares £0.01 each
2017
17,855,986
97,573
2,600,500
20,554,059
53,889
73,333
20,681,281
2016
17,855,986
-
2,663,000
20,518,986
40,000
40,000
20,598,986
Executive Directors
Andrew Walters1
Edward Ralph2
David Bridge
Non-Executive
Directors
Paul Boughton
Jim Warwick
1 Highest paid director in 2017
2 Salary paid from date of appointment on 25 July 2017
Directors and their interests in shares
Year ended 31 December
Executive Directors
Andrew Walters1
Edward Ralph
David Bridge2
Non-Executive Directors
Paul Boughton
Jim Warwick
1 Includes shares held as family interests or by virtue of position as beneficiary or potential beneficiary of certain trusts
2 On 16 January 2018, 1,200,000 shares were sold reducing the holding to 1,400,500
Edward Ralph was granted options over ordinary shares of 586,956 in the year ending 31 December 2017
(see note 19). None were granted to Directors for the year ending 31 December 2016.
Daniel Mendis, appointed Chief Financial Officer on 1 January 2018, was granted options over ordinary
shares of 280,000 on 1 December 2017.
Jim Warwick
Chairman, Remuneration Committee
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
19
Directors' Report
The Directors present their annual report and the financial statements of the Company for the year ended
31 December 2017.
Principal activity
The principal activity of the Group during the year was the design, development, marketing and delivery of
vehicle telematics 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 under Strategic
priorities on page 9.
Proposed dividend
In the year ending 31 December 2017, the Board decided to pay an interim dividend of 2.4p per ordinary
share. This totalled £1.14m and was paid on 14 September 2017 to shareholders on the register as at 18
August 2017.
The Board is recommending a final dividend of 4.3p per share, together with a supplementary dividend of
6.8p per share, giving a final payment of 11.1p per share, amounting to approximately £5.3m in aggregate
and giving a total dividend for the year equivalent to 13.5p per share. If this is approved at the forthcoming
AGM on 27 March 2018, the final dividend will be paid on 4 May 2018 to shareholders on the register as
at 6 April 2018.
Major interest in shares
On 23 February 2018, the Company had been notified that six parties had holdings of 3% or more in the
ordinary share capital of the Company. The number of ordinary shares and the percentage of the total
shares held by each party is outlined below.
Andrew Walters1
Andrew Kirk
Cat Rock Capital Master Fund LP
Liontrust Investment Partners LLP
William Hibbert
BlackRock
Kenneth Giles
Number of £0.01 shares
17,855,986
4,009,853
3,431,509
2,956,117
2,663,000
2,158,192
1,871,800
% of total
37.5
8.4
7.2
6.2
5.6
4.5
3.9
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 2017
20
Directors
The Non-Executive Directors who held office during the year are listed below:
• Paul Boughton (Chairman)
•
Jim Warwick
The Executive Directors who held office during the year are listed below:
• Andrew Walters
• Edward Ralph
• 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 6
months for Edward Ralph. Daniel Mendis was appointed Chief Financial Officer on 1 January 2018 with
a notice period of 6 months.
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 27 March 2018.
Directors' responsibilities statements
The Directors are responsible for preparing the Strategic Report, Remuneration 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 including FRS 101 Reduced
Disclosure Framework). 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
• Prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Group will continue in business
• State whether applicable UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the Company financial statements
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 2017
21
Directors' responsibilities statements (continued)
The directors confirm that:
•
•
so far as each director is aware, there is no relevant audit information of which the company’s auditor
is unaware; and
the directors have taken all the steps that they ought to have taken as directors in order to make
themselves aware of any relevant audit information and to establish that the company’s auditor is
aware of that information.
The directors are responsible for the maintenance and integrity of the corporate and financial information
included on the company’s website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
Financial risk management policies and objectives
The Group manages its key financial risks as follows. Further details are provided in note 25.
Credit risk
The principal credit risk relates to trade receivables and is mitigated, where possible, by third party credit
clearance for new customers and collection by direct debit, or similar. The Group seeks to manage credit
risk associated with cash deposits by using banks with high credit ratings assigned by international credit
rating agencies.
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 23 February 2018.
Andrew Walters
Chief Executive Officer
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
22
Independent Auditor's Report to the Members of Quartix
Holdings plc
Opinion
Our opinion on the financial statements is unmodified
We have audited the financial statements of Quartix Holdings Plc (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 31 December 2017, 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, the Parent
Company Statement of Financial Position, the Parent Company Statement of Changes in Equity and
notes to the Consolidated and Parent Company financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied in the preparation of the
group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union. The financial reporting framework that has been applied in the
preparation of the parent company financial statements is applicable law and United Kingdom
Accounting Standards, including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’
(United Kingdom Generally Accepted Accounting Practice).
In our opinion:
•
the financial statements give a true and fair view of the state of the group’s and of the parent
company’s affairs as at 31 December 2017 and of the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted
by the European Union;
the parent company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
•
•
•
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
group and the parent company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and
we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Who we are reporting to
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.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require
us to report to you where:
•
the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
23
•
the directors have not disclosed in the financial statements any identified material uncertainties that
may cast significant doubt about the group’s or the parent company’s ability to continue to adopt
the going concern basis of accounting for a period of at least twelve months from the date when
the financial statements are authorised for issue.
Overview of our audit approach
• Overall group materiality: £264,000, which represents 4% of the
Group’s profit before taxation
• Key audit matters were identified as revenue occurrence and deferred
revenue
• We performed full scope audit procedures on the financial statements
of Quartix Holdings Plc and on the financial information of Quartix
Limited. We performed targeted audit procedures on the financial
information of Quartix Inc.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that we identified. These matters included those that
had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Key Audit Matter – Group
Revenue occurrence
How the matter was addressed in
the audit – Group
Under International Standard on Auditing
(UK) 240 ‘The Auditor’s Responsibilities
Relating to Fraud in an Audit of Financial
Statements’, there is a rebuttable presumed
risk that revenue may be misstated due to the
improper recognition of revenue.
The Group’s principal revenue stream
relates to the provision of telematics vehicle
tracking services to customers. Revenue is
recognised over the period that services are
provided and includes the provision of a
telematics unit and the provision of a data
service. The Group has two types of
customers, Fleet and Insurance, and has
adopted business models tailored to the
respective customer type. The Group has a
high volume of revenue transactions, which
exposes the Group to the risk of invalid
transactions within the revenue population if
telematics units in use are not accurately
captured and revenue recorded.
Revenue is a material figure in the financial
2016
statements
(2017 £24,488,000;
Our audit work on revenue separately
addressed the two types of customers, Fleet
and Insurance, because Quartix provide a
different business model to each type of
customer and therefore billing terms and the
revenue recognition process associated with
each customer type is different.
Our audit work included, but was not
restricted to:
• Evaluating the group’s stated accounting
of
revenue
policies
respect
in
these were
recognition, whether
consistent
International
Accounting Standard (IAS) 18 ‘Revenue’
and whether they were applied accurately
and consistently by the Group.
with
Fleet customer revenue
• Testing a sample of Fleet customer
revenue transactions to the Quartix
billing
database which
information and
corroborating the
occurrence of this revenue to cash
receipts;
captures
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
Key Audit Matter – Group
24
£23,339,000). Fleet customers account for
70% (2016 64%) of revenue and Insurance
customers account for 30% (2016 36%) of
revenue. We therefore identified revenue
occurrence as a significant risk, which was
one of the most significant assessed risks of
material misstatement.
Deferred revenue
As the company invoices in advance the
deferred revenue balance is material (2017
£2,708,000; 2016 £2,591,000). The balance
is driven by the contract terms and number
of units and at risk of material misstatement
if the data is not captured appropriately.
Together with our work on revenue
occurrence the deferred revenue element
requires significant auditor attention.
We therefore identified deferred revenue as
a significant risk, which was one of the most
significant assessed
risks of material
misstatement.
How the matter was addressed in
the audit – Group
• Testing a sample of Fleet customer
master file updates of the Quartix
database and agreeing customer and
billing
the agreed
contractual terms;
information
to
• Completing analytical review procedures
of revenue recognised in the year based
on numbers of units captured in the
database
review
including variance
compared to the prior year.
Insurance customer revenue
• Performing
substantive
analytical
procedures over
the revenue from
insurance customers, based on numbers
of units and pricing per unit;
• Testing a sample of recorded revenue
transactions with insurance customers
back to invoice and billing details.
The group's accounting policy on revenue,
including its recognition, is shown in note 1
to the financial statements and related
disclosures are included in note 3.
Key observations
Our audit work did not identify any material
misstatements in the occurrence of revenue
recognised in the year or any material
instances of revenue not being recognised in
accordance with the stated accounting
policy.
Our audit work on deferred revenue
separately addressed the two types of
customers, Fleet and Insurance, because
Quartix provide a different business model
to each type of customer and therefore
billing terms and the revenue recognition
process associated with each customer type
is different.
Our audit work included, but was not
restricted to:
• Testing a sample for Fleet customers
information and
revenue
the deferred
to contract
to
back
agreeing
calculation
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
Key Audit Matter – Group
How the matter was addressed in
the audit – Group
• Recalculating an estimate for the year
end deferred revenue balance based on
invoicing in the final quarter; and
25
• Undertaking
substantive
analytical
procedures on the total deferred revenue
from insurance customers based on the
date of installation of units invoiced to
insurance customers.
The group's accounting policy on revenue is
shown in note 1 to the financial statements.
Key observations
Our audit work did not identify any material
the deferred revenue
misstatement
balance at the year-end.
in
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable
that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We
use materiality in determining the nature, timing and extent of our audit work and in evaluating the results
of that work.
Materiality was determined as follows:
Materiality measure Group
Financial statements
as a whole
£264,000, which represents 4%
of the group’s profit before
is
taxation. This benchmark
considered the most appropriate
because
a
commercial organisation and
profit before taxation is a key
financial measure
the
directors and the shareholders.
group
the
for
is
Materiality for the current year is
higher than the level that we
determined for the year ended
31 December 2016 to reflect the
increase in the group’s profit
before taxation.
Parent
£198,000, which is 1% of the
parent company’s total assets.
This benchmark is considered
the most appropriate because
the entity
is a non-trading
holding company.
Materiality for the current year is
higher than the level that we
determined for the year ended
31 December 2016 to reflect the
increase in the company’s total
assets.
Performance
to
materiality used
drive the extent of our
testing
Specific materiality
75% of
materiality.
financial statement
75% of
materiality.
financial statement
We also determine a lower level
of specific materiality for certain
areas
directors'
remuneration and related party
transactions.
such
as
We also determine a lower level
of specific materiality for certain
areas
directors'
remuneration and related party
transactions.
such
as
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
of
Communication
misstatements to the
audit committee
and misstatements
£13,000
below that threshold that, in our
view, warrant
reporting on
qualitative grounds.
and misstatements
£10,000
below that threshold that, in our
view, warrant
reporting on
qualitative grounds.
26
The graph below illustrates how performance materiality interacts with our overall materiality and the
tolerance for potential uncorrected misstatements.
Overall materiality - group
Overall materiality - parent
25%
75%
Tolerance for
potential uncorrected
mistatements
Performance
materiality
25%
75%
An overview of the scope of our audit
Our audit approach was a risk-based approach founded on a thorough understanding of the group's
business, its environment and risk profile and in particular included:
• Assessing the risk of material misstatement to the Group financial statements. We considered the
transactions undertaken by each entity and therefore where the focus of our work was required.
• Full scope audit procedures were completed for the main trading subsidiary, Quartix Limited, which
provides services to customers based in the UK, France and the Republic of Ireland. Targeted audit
procedures were performed for Quartix Inc which provides services to US based customers. All
accounting is centralised and we completed our onsite audit work at the Group’s main operating
location with all audit work undertaken by the group audit team.
• The audit risks identified for each trading component are the same audit risks identified for the Group
as a whole.
• Full scope audit procedures were performed for the parent Quartix Holdings Plc which is a non trading
holding company.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. Our
opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
27
Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors’ report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
•
Matters on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and the parent company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or
the directors’ report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which 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; or
the parent company financial statements are not in agreement with the accounting records and returns;
or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors for the financial statements
As explained more fully in the directors’ responsibilities statement set out on page 20, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and
fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the group or
the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
28
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Alison Seekings
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Cambridge
23 February 2018
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
29
Consolidated Statement of Comprehensive Income
Year ended 31 December
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Finance income receivable
Finance costs payable
Profit for the year before taxation
Tax expense
Profit for the year
Other Comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Exchange difference on translating foreign operations
Tax benefit (expense)
Other comprehensive income for the year, net of tax
Total comprehensive income attributable to the equity
shareholders of Quartix Holdings plc
Earnings per ordinary share (pence)
Basic
Diluted
Notes
3
7
8
4
9
10
2017
£’000
2016
£’000
24,488
(9,646)
23,339
(9,276)
14,842
14,063
(8,249)
(7,520)
6,593
6,543
17
-
21
(24)
6,610
6,540
(788)
(453)
5,822
6,087
201
-
201
(255)
-
(255)
6,023
5,832
12.27
12.21
12.87
12.78
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
30
Consolidated Statement of Financial Position
Company registration number: 06395159
Notes
2017
£'000
2016
£'000
Assets
Non-current assets
Goodwill
Property, plant and equipment
Deferred tax assets
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
Deferred revenue
Current tax liabilities
Total liabilities
Net assets
Equity
Called up share capital
Share premium account
Equity reserve
Capital redemption reserve
Translation reserve
Retained earnings
Total equity attributable to equity shareholders of Quartix
Holdings plc
11
12
17
13
14
15
16
18
18
19
14,029
234
149
14,412
703
3,009
7,312
11,024
14,029
360
141
14,530
680
2,591
6,249
9,520
25,436
24,050
2,853
2,708
423
5,984
2,892
2,591
238
5,721
5,984
5,721
19,452
18,329
476
4,869
529
4,663
(103)
9,018
474
4,702
281
4,663
(304)
8,513
27
19,452
18,329
Approved by the Board of Directors, authorised for issue and signed on behalf of the Board on 23 February
2018.
Andrew Walters
Chief Executive Officer
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
31
Consolidated Statement of Changes in Equity
Share
premiu
m
account
£,000
Share
capital
£’000
Capital
redemption
reserve
Equity
reserve
£’000 £’000
472
2
4,631
71
4,663
-
-
-
-
-
2
-
-
-
-
-
-
-
71
-
-
-
-
-
-
-
-
-
-
-
474
2
4,702
167
4,663
-
-
-
-
-
2
-
-
-
-
-
-
-
167
-
-
-
-
-
-
-
-
-
-
-
177
-
113
(56)
47
-
104
-
-
-
281
-
420
(104)
(68)
-
248
-
-
-
Translation
reserve
£’000
Retained
earnings
Total
equity
£’000 £’000
(49)
-
5,303
-
15,197
73
-
-
-
-
-
-
113
56
-
-
47
(2,933) (2,933)
(2,877) (2,700)
(255)
-
-
6,087
(255)
6,087
(255)
6,087
5,832
(304)
-
8,513
-
18,329
169
-
-
-
-
-
-
420
104
-
-
(68)
(5,421) (5,421)
(5,317) (4,900)
201
-
-
5,822
201
5,822
201
5,822
6,023
476
4,869
4,663
529
(103)
9,018
19,452
Balance at 31
December 2015
Shares issued
Increase in equity
reserve in relation to
options issued
Adjustment for
exercised options
Deferred tax on share
Options
Dividend paid
Transactions with
owners
Foreign currency
translation differences
Profit for the year
Total
comprehensive
income
Balance at 31
December 2016
Shares issued
Increase in equity
reserve in relation to
options issued
Adjustment for
exercised options
(note 19)
Deferred tax on share
Options
Dividend paid
Transactions with
owners
Foreign currency
translation differences
(note 25)
Profit for the year
Total
comprehensive
income
Balance at 31
December 2017
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
32
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 used in investing activities
Cash flow used in operating activities
after investing activities (free cash flow)
Financing activities
Repayment of long term borrowings
Interest paid
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
25
15
Notes
20
12
7
2017
£'000
7,014
(679)
6,335
(67)
17
(50)
2016
£'000
6,812
(639)
6,173
(189)
21
(168)
6,285
6,005
-
-
169
(5,421)
(5,252)
1,033
6,249
30
7,312
(1,000)
(29)
73
(2,933)
(3,889)
2,116
4,040
93
6,249
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
33
Notes to the Consolidated Financial Statements
1
Summary of significant accounting policies
Basis of accounting
These financial statements are consolidated financial statements for the Group consisting of Quartix
Holdings plc, a company registered in the UK, and all its subsidiaries. These consolidated financial
statements are for the year ended 31 December 2017 and are prepared in Sterling and are rounded to the
nearest thousand pounds (£’000). They have been prepared in accordance with IFRS as adopted by the
European Union (EU) (‘IFRS’) and in accordance with those parts of the Companies Act 2006 that are
relevant to companies which report under IFRS.
These financial statements have been prepared under the historical cost convention.
The Group has not adopted any new standards or amendments that have a significant impact on the
Group’s results or financial position. The standards and interpretations in issue but not effective for
accounting periods commencing on 1 January 2017 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
IFRS 16
Annual Improvements
Annual Improvements
Title
Financial instruments
Revenue from contracts with customers
Leases
2014-2016 Cycle
2015-2017 Cycle
Effective
1 January 2018
1 January 2018
1 January 2019
Not yet endorsed
Not yet endorsed
IFRS 15 ‘Revenue from Contracts with Customers’ replaces IAS18 ‘Revenue’ for accounting periods
beginning 1 January 2018.
Currently, revenue from hardware sales, including insurance telematics contracts, is recognised upon
installation of the unit or despatch of the unit if the customer does their own installation. Revenue from
installation is recognised upon installation and revenue from the provision of telematics-based fleet and
vehicle management solutions is recognised over the period in which the service is provided.
Under IFRS 15, the Group must evaluate the separability of the promised goods or services based on
whether they are ‘distinct’. A promised good or service is ‘distinct’ if both:
•
•
the customer benefits from the item either on its own or together with other readily available
resources; and
it is ‘separately’ identifiable (i.e. the Group does not provide a significant service integrating,
modifying or customising it).
The Group is completing a detailed assessment of its sources of revenue and has assessed whether the
components of hardware, installation and data services are distinct under the new definitions of IFRS 15.
The preliminary conclusion is that the Group’s activities of supplying telematics units and installing
telematics units are activities the Group undertakes to provide its telematics services and are supplied as
part of a contract with the customer.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
34
1
Summary of significant accounting policies (continued)
Outlook for adoptions of future standards (new and amended) (continued)
This means that the Group will consider these goods and services as one single performance obligation.
As a consequence, on adoption of IFRS 15, the Group will no longer recognise revenue separately for these
goods and services; rather, it will recognise this revenue together as the provision of vehicle telematics
services.
The principal impact of this change will relate to the timing of revenue for units purchased by insurance
customers, with the total contractual revenue sum being recognised over the contractual period for the
provision of data services, which is one year.
The preliminary conclusion in relation to costs is that the unit costs will be recognised when the Group
relinquishes control of the unit, since the unit and its installation forms part of the entire performance
obligation. It is anticipated that installation costs and distributor commissions will be expensed as incurred.
The financial impact of the adoption of IFRS 15 is very difficult to quantify since it is dependent on the
volume of contracts sold during the year and is therefore subject to estimation uncertainty; however, current
estimates indicate that the impact of this change on 2018 results will be a credit to profit or loss of £0.1m,
with no material impact on 2017 results. The change in recognising the timing of revenue will increase the
deferred revenue liability at 31 December 2018, driven by the deferral of insurance revenue, by an estimated
£3.1m.
IFRS 16 will require the operating leases held by the Group to be reflected within the Statement of Financial
Position. IFRS 9 is not expected to have a material impact on the Group’s consolidated financial
statements.
Basis of consolidation
The financial statements of subsidiaries are included in the consolidated financial statements from the date
that control commences until the date that control ceases. Control is achieved where the Company has
the power over an investee entity, currently obtained through ownership of the share capital, so as to
obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are
included in the consolidated income statement from the effective date of acquisition or up to the effective
date of disposal, as appropriate. Intra-group balances and any unrealised gains and losses or income and
expenses arising from intra-group transactions are eliminated in preparing the consolidated financial
statements. A list of subsidiaries is included note 28.
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 calendar 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 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.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
35
1
Summary of significant accounting policies (continued)
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 over
the period in which the service is provided. Amounts received in advance of the provision of services are
included within deferred income.
Revenue from hardware sales, including insurance telematics contracts, is recognised upon installation of
the unit or despatch of the unit if the customer does their own installation. Revenue from installation is
recognised upon installation.
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.
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.
Property, plant and equipment
Property, plant and equipment is stated at cost, net of depreciation and any provision for impairment.
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
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:
• Technical feasibility of completing the intangible asset
• The ability to use the asset.
• 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.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
36
1
Summary of significant accounting policies (continued)
Impairment testing of intangible assets and property, plant and equipment
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. The cash-generating units are the separate legal entities within the Group
as there is no segmentation in the subsidiaries.
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.
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.
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.
Inventories
Components held for manufacture of vehicle tracking units and units not yet deployed to customers are
classified as inventory. Inventories are stated at cost less provision for obsolete, slow moving or defective
items. Cost is based on the cost of purchase on a first in first out basis. Provision against inventories is
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 from future trading profits.
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,
other comprehensive income or equity as appropriate.
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 2017
37
1
Summary of significant accounting policies (continued)
Financial assets
Trade and other receivables are classified as loans and receivables, and are initially recognised at fair value.
Subsequently, loans and receivables are 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 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 when the obligation is extinguished.
Equity
Equity comprises the following:
•
•
"Called Up 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
• “Translation reserve” represents the exchange difference arising on the consolidation of foreign
operations.
"Retained earnings" represents retained profits
•
Foreign currencies
The Parent Company's functional currency is Sterling. The French branch’s is Euros, with its results
translated for inclusion in Quartix Limited’s Sterling accounts. Quartix Inc has a functional currency of US
Dollars.
The consolidated financial statements are presented in Sterling, which is the Group’s presentation currency.
Transactions in foreign currencies are translated into the respective currencies of Group companies 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. Foreign exchange
differences arising on translation of monetary assets and liabilities are recognised in the Consolidated
Statement of Comprehensive Income. Non-monetary assets and liabilities that are measured at historical
costs in a foreign currency are translated using the exchange rates at the dates for the transactions.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
38
1
Summary of significant accounting policies (continued)
Foreign currencies (continued)
Income and expenses for all the Group entities that have a functional currency other than Sterling are
translated at the average rate prevailing in the month of the transaction. The assets and liabilities are
retranslated at the closing exchange rate at the reporting date.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities
are recognised in the translation reserve, as a separate component of equity.
Employee benefits
The only pension provision is participation in the UK Government’s NEST pension scheme, which is a
defined contribution scheme. Contributions to defined contribution pension schemes are recognised as an
employee benefit expense within personnel expenses in the income statement, as incurred. Other employee
benefits including holiday pay, company sick pay and a range of tailored incentive schemes, some of which
include the grant of share options, are recognised in the period that related employee services are received.
Dividends
Dividends attributable to the equity holders of the Company approved for payment during the year are
recognised directly in equity.
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.
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 dependent on
management’s judgment of the probability and measurability of future economic benefits. No development
expenditure was capitalised in the year ended 31 December 2017. The research and development
expenditure primarily related to the on-going research work on the Group’s existing vehicle telematics
services to ensure that the functionality is maintained. The research work undertaken may successfully come
to fruition in the development of a marketable service or technology but this development work cannot be
identified or separated from the research work and therefore the entire expenditure has been expensed in
the year. See the Strategic Report on page 9 for further information about the Group’s approach to research
and development
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
39
2
Key judgements and estimates (continued)
Key judgement: timing of revenue and cost recognition
The Group has set out its preliminary conclusions in respect of IFRS 15 in note 1. Such conclusions are
the subject of key judgements impacting the timing of revenue and cost recognition resulting from the
assessment that the Group has one single performance obligation under its contracts with customers. The
preliminary conclusion is that the Group’s activities of supplying telematics units and installing telematics
units are activities the Group undertakes to provide its telematics services and are supplied as part of a
contract with the customer.
The Group will be recognising unit costs when the Group relinquishes control of the units, as part of the
satisfaction of the entire performance obligation. The Group does not view installation costs as assets
under IFRS 15 and will continue to expense these as incurred. The Group will also continue to expense
sales and distributor commissions as incurred. These assessments are judgements and, were these costs
to be capitalised, the impact on profit or loss could be material and would likely be determined by the
volume of contracts entered into in the year in question (with growth in the volume of contracts against
the prior year being associated with a credit to profit or loss and vice versa).
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 11.
3
Segmental analysis
The Group has concluded that it operates only one operating segment as defined by IFRS 8, being the
provision and marketing of vehicle telematics services. 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. All revenue, costs, assets and liabilities relate to the single activity; and
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
2017
£’000
17,030
7,458
24,488
2017
£’000
21,403
1,917
10
1,158
24,488
2016
£’000
14,909
8,430
23,339
2016
£’000
21,249
1,408
5
677
23,339
During 2017 revenue of £7.0m (2016: £8.4m) was derived from one insurance customer.
There are no material non-current assets based outside the UK.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
40
4
Profit for the year before taxation
The profit for the year for the Group is stated after charging:
Research and development expenses
Rentals under operating leases:
Other operating leases
Land and buildings
-
-
- Depreciation on property, plant and equipment, owned
Share-based payment expense
Foreign exchange losses/(gains)
Audit services:
-
Fees paid to Company auditor for the audit of the Company and
consolidated financial statements
The audit of the Company’s subsidiary pursuant to legislation
Other services
Earnings before interest, tax, depreciation and amortisation (EBITDA):
Operating profit
Depreciation
EBITDA
Share-based payment expense
Adjusted EBITDA
5
Employee remuneration
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
Contributions to defined contribution pension plan
Share-based payment
2017
£’000
1,099
14
175
186
420
200
21
24
3
2017
£’000
6,593
186
6,779
420
7,199
2017
£’000
4,060
413
28
420
4,921
The average number of employees, including all Directors, during the year was as follows:
Administration
Operations
Sales
Customer service
Research and development
2017
19
31
36
14
28
128
2016
£’000
1,442
14
150
152
113
(265)
15
18
3
2016
£’000
6,543
152
6,695
113
6,808
2016
£’000
3,889
366
26
113
4,394
2016
21
31
43
15
25
135
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
41
6
Key management remuneration and directors’ remuneration
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. For 2017, the Group identified 12 such individuals: three Executive Directors,
two Non-Executive Directors, and seven members of Senior Management, being managers on the
Operations Board of Quartix Limited. In 2016, the Group identified nine such individuals: two Executive
Directors, two Non-Executive Directors, and five members of Senior Management.
Wages and salaries
Social security costs
Contributions to defined contribution pension plan
Share-based payment
Total employee benefits
2017
£’000
765
91
4
279
1,139
2016
£’000
653
76
2
51
782
Key management had 1,179,311 share options outstanding at 31 December 2017 (2016: 402,662). Key
management held 23,469,281 shares at 31 December 2017 (2016: 28,349,839) on which dividends were paid
in the year.
Details of Directors’ remuneration and the highest paid director is disclosed on page 18.
The Group introduced the NEST pension arrangements in 2015 for all employees. Two directors joined
the scheme. No Director was a member of any other 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. At 31 December 2017 the directors held 586,956 share options
(2016: nil) and no share options were exercised in the year.
7
Finance income receivable
Bank interest
8
Finance costs payable
Interest on bank loans and overdrafts
2017
£’000
17
2017
£’000
-
2016
£’000
21
2016
£’000
24
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
42
9
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
Total corporation tax
Deferred tax
Origination and reversal of temporary differences
Adjustments in respect of prior periods
Total deferred tax
Tax on profit of ordinary activities
2017
£’000
823
41
864
(76)
-
(76)
788
2016
£’000
818
(348)
470
(17)
-
(17)
453
A tax credit was recognised in 2016 in respect of patent box claims submitted during 2016 relating to the
two years ended 31 December 2014 and 31 December 2015. The current tax charge for the two years to
31 December 2017 includes the benefit of a patent box claim. The impact of the prior year patent box claim
adjustments for the year ended 31 December 2016 was to reduce the effective rate of tax from 12.3% to
6.9%.
The relationship between the expected tax expense based on an effective tax rate of the Group of 19.25%
(2016: 20.00%), being the UK rate of corporation tax for the year, 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
Patent box credit
Remeasurement of deferred tax
Tax adjustment on exercise of options
Tax on profit on ordinary activities
2017
£’000
6,610
19.25
1,272
41
1
62
(255)
(227)
(59)
(47)
788
2016
£’000
6,540
20.00
1,308
(348)
1
166
(332)
(244)
(9)
(89)
453
Effective rate of tax
Effective rate of tax ignoring adjustments in respect of prior years’
11.9%
11.3%
6.9%
12.3%
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
43
10
Earnings per share and dividends
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. 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
Earnings per ordinary share
Year ended 31 December 2017
Year ended 31 December 2016
5,822 47,459,712
6,087 47,292,755
12.27
12.87
47,667,194
47,929,813
12.21
12.78
For diluted earnings per share, the weighted average number of ordinary shares is adjusted to assume the
conversion of all dilutive potential ordinary shares. Dilutive potential ordinary shares are those share
options where the exercise price is less than the average market price of the Company’s ordinary shares
during that year.
Dividends
During the year ended 31 December 2017, the Group paid interim dividends of £1.1m (2016: £1.0m),
equivalent to 2.4p per ordinary share (2016: 2.2p).
The Board is recommending total dividends of £5.3m (2016: £4.3m) comprising a final ordinary dividend
of 4.3p per share, together with a supplementary dividend of 6.8p per share, giving a final pay out of
11.1p per share and a total dividend for the year of 13.5p per share. As the distribution of dividends
required approval at the Annual General Meeting, no liability in this respect is recognised in the 2017
Group consolidated financial statements.
11
Goodwill and other intangible assets
Goodwill
Cost and net book value
At 1 January and 31 December 2016 and 2017
Goodwill on
consolidation
£’000
14,029
Goodwill arose on the consolidation of the Group following the acquisition of Quartix Limited in 2008.
Goodwill is recognised as an asset and assessed for impairment annually or where there is indication of
impairment. 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) for the
assessment of goodwill 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.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
44
11
Goodwill and other intangible assets (continued)
These budgets and strategic plans cover a four-year period. The growth rate in years one and two were
based on detailed management expectations. The growth rate used for the third and fourth year is 2% which
is in line with the long-term GDP forecasts. The discount rate used is 11.9% 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.
12
Property, plant and equipment
Leasehold
improvements
£’000
Tools and
equipment
£’000
Office
equipment
£’000
Total
£’000
Cost:
At 1 January 2016
Additions
Foreign exchange
At 31 December 2016
Additions
Foreign exchange
At 31 December 2017
Depreciation:
At 1 January 2016
Provided in the year
Foreign exchange
At 31 December 2016
Provided in the year
Foreign exchange
At 31 December 2017
Net book amount:
At 31 December 2017
At 31 December 2016
At 1 January 2016
17
-
-
17
-
-
17
3
3
-
6
3
-
9
8
11
14
12
-
-
12
-
-
12
12
-
-
12
-
-
12
-
-
-
658
189
10
857
67
(12)
912
355
149
4
508
183
(5)
686
226
349
303
687
189
10
886
67
(12)
941
370
152
4
526
186
(5)
707
234
360
317
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
45
13
Inventories
Components held for manufacture of vehicle tracking units and units not yet deployed to customers:
Raw materials
Work in progress
Finished goods and goods for resale
2017
£’000
406
60
237
703
2016
£’000
334
109
237
680
Included in the analysis above are impairment provisions against inventory amounting to £77,000 (2016:
£80,000). The cost of vehicle tracking units are recognised as an expense and included in “cost of sales”
amounted to £3.1m (2016: £2.4m).
14
Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
2017
£’000
2,647
27
335
3,009
2016
£,000
2,318
12
261
2,591
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, due to the age of the debt, and a provision for doubtful debts
has been recorded as follows.
Provision at 1 January
(Release of provision)/additional provision
Foreign exchange
Provision at 31 December
2017
£’000
47
42
(1)
88
2016
£’000
48
(3)
2
47
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
2017
£’000
188
54
-
242
2016
£’000
122
19
-
141
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
46
15
Cash and cash equivalents
Cash and cash equivalents include the following components:
Cash at bank and in hand
2017
£'000
7,312
2016
£’000
6,249
Quartix Limited uses Barclay’s Business Premium account to aggregate Sterling instant access balances and
earn interest, which is currently at 0.4%. Since September 2017, the Group has placed deposits with Investec
Bank plc on 95 day notices with interest currently at 0.6%. At 31 December 2017, Investec deposits were
£1.5m.
16
Trade and other payables
Amounts falling due within one year:
Trade payables
Social security and other taxes
Other payables
Accruals
2017
£'000
1,385
724
153
591
2,853
2016
£’000
1,572
626
222
472
2,892
17
Deferred tax
Deferred tax assets recognised by the Group at 31 December 2017 and 31 December 2016 are as follows:
Provision for deferred tax
Accelerated Capital Allowances
Short term temporary differences
Equity settled share options
(Credit)/charge to profit and loss
Accelerated Capital Allowances
Short term temporary differences
Equity settled share options
2017
£’000
(25)
7
167
149
(17)
-
(59)
(76)
2016
£’000
(42)
7
176
141
(5)
(1)
(11)
(17)
There are unprovided tax losses related to the USA business of $1,093,000 (2016: $946,000).
18
Equity
Allotted, called up and fully paid
At 1 January 2017
Shares issued
At 31 December 2017
Number of
ordinary
shares of
£0.01 each
47,345,954
222,400
47,568,354
Share
capital
£’000
Share
premium
£’000
474
2
476
4,702
167
4,869
With the exception of 1,000 shares issued to US employees on 15 March 2018, all the shares issued in
the year to 31 December 2017 related to the exercise of share options.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
47
19
Share-based payment
The Company has share option schemes for certain employees. Share options are exercisable at prices
determined at the date of grant. The vesting periods for the share options range between 12 and 63 months.
Options are forfeited if the employee leaves the Company before the options vest.
Movements in the number of share options outstanding and their related weighted average exercise prices
are as follows:
2017
2016
Weighted
average
exercise price
per share
in pence
170.2
308.6
199.5
76.4
269.3
Weighted
average
exercise price
per share
in pence
76.5
316.6
1.0
42.7
170.2
Options
number
916,812
1,024,251
(112,012)
(221,400)
1,607,651
Options
number
757,900
332,612
(3,450)
(170,250)
916,812
Outstanding at 1 January
Granted
Lapsed
Exercised
Outstanding at 31 December
Exercisable at 31 December
167.1
244,355
110.6
207,000
The weighted average fair value of options issued during the year ended 31 December 2017 was 71.70p
(2016: 78.73p). Included in the options granted in 2017 were 10,355 (2016: 3,662) granted to senior
managers with performance conditions relating to the Group for the year ended 31 December 2017 and
subsequent service conditions. The remaining options granted during the year have only service conditions.
The weighted average share price at the date of exercise of options during the year ended 31 December
2017 was 375.16p (2016: 371.84p).
At 31 December 2017 Quartix Holdings plc had the following outstanding options, warrants and exercise
prices:
2017
Expiry dates
Period when exercisable
Starting from November 2014 1 November 2019
28 October 2023
Starting from October 2017
06 December 2021
March 2018
31 December 2018
March 2018
31 March 2024
Starting from March 2018
13 April 2024
Starting from April 2018
27 July 2024
Starting from July 2018
31 March 2025
Starting from March 2019
06 December 2022
March 2019
Average
exercise price
per share
in pence
44.0
337.5
1.0
1.0
287.5
357.5
360.0
360.0
1.0
269.3
Weighted
average
remaining
contractual
life
in months
23
70
47
12
75
75
79
87
59
67
Options
number
260,000
312,000
11,400
10,355
586,956
100,000
30,000
280,000
16,940
1,607,651
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
48
19
Share based payments (continued)
2016
Expiry dates
Period when exercisable
Starting from November 2014 1 November 2019
Starting from July 2017
March 2017
January 2019
Starting from October 2017
March 2018
29 July 2021
16 December 2020
01 January 2019
28 October 2023
06 December 2021
Average
exercise price
per share
in pence
44.0
219.0
1.0
1.0
337.5
1.0
170.2
Weighted
average
remaining
contractual
life
in months
35
55
48
24
82
59
55
Options
number
420,000
147,000
17,200
3,662
312,000
16,950
916,812
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 the Group’s share price. 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 granted during the year ended 31 December
2017:
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 (%)
5,200 5,155
1 Jan 2 Feb
586,956
19 Jan
100,000 30,000
27 Jul
13 Apr
280,000
1 Dec
16,940
6 Dec
2017
340.0
293.0
287.5
357.5
360.0
360.0
360.0
1.0
1.0
287.5
357.5
360.0
360.0
1.0
329.3
283.1
65.9
67.7
64.2
61.0
343.6
1.0
1.0
5.17
3.0
3.0
5.25
1.25
34.3
34.3
34.5
34.8
34.3
28.5
28.5
0.19
2.9
0.19
2.9
0.67
2.9
0.19
2.9
0.31
3.5
0.70
3.5
0.44
3.5
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 (%)
3,662
1 Jan
252.5
1.0
230.5
3.0
49.4
0.87
2.9
2016
312,000
28 Oct
337.5
337.5
64.9
3.0
35.1
0.25
2.9
16,950
6 Dec
330.0
1.0
301.5
1.25
36.0
0.25
2.9
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
20
Notes to the cash flow statement
Cash flow adjustments and changes in working capital
Profit before tax
Foreign exchange
Depreciation
Interest income
Interest expense
Share based payment expense
Operating cash flow before movement in working capital
Decrease/(increase) in trade and other receivables
(Increase) in inventories
Increase in trade and other payables
Cash generated from operations
49
2016
£’000
6,540
(326)
152
(21)
24
113
6,482
5
(39)
364
6,812
Notes
12
7
8
4
2017
£’000
6,610
151
186
(17)
-
420
7,350
(424)
(24)
112
7,014
21
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
2017
£’000
154
154
-
308
2016
£’000
156
218
12
386
2017
£’000
12
12
-
24
2016
£’000
10
11
-
21
Lease payments recognised as an expense during the year amount to £189,000 (2016: £164,000).
22
23
Related party transactions and controlling related party
The Group’s related parties comprise its Board of Directors and its key management (see note 6). 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 18 and note 6.
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 commit the Group to purchase inventory to
the value of £455,000 (2016: £324,000). In August 2017, the Group entered into an agreement for the
provision of vehicle telematics services which included a contractual obligation to pay a minimum of
£40,000 per month, until 31 March 2019. There were no other financial commitments or contingent
liabilities as at 31 December 2017 or 31 December 2016.
24
Capital commitments
The Group had capital commitments of £42,000 at 31 December 2017 (2016: £nil).
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
50
25
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 credit risk and currency risk. The Board
reviews and agrees policies for managing each of these risks and they are summarised below.
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
2017
£’000
7,312
2,674
9,986
2016
£’000
6,249
2,330
8,579
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 14 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 relates to trade receivables and is mitigated, where possible, by third party credit
clearance for new customers and collection by direct debit, or similar. The Group has one large customer
whose debts have been as much as £1.2m and the credit risk on this balance is carefully monitored.
Currency risk
The Group is exposed to transaction foreign exchange risk as a consequence of procuring tracking unit
components in both euros and dollars. The risk with the Euro has been mitigated by trading in France
which generates marginally more Euros than the Group currently needs. Whilst the Group also trades in
the US, in 2017, the Group purchased about $3.5m, primarily to purchase components for the vehicle
tracking units (2016: $3.7m).
Transaction exposures, including those associated with forecast transactions, are managed through the use
of bank accounts held in foreign currencies.
It is estimated that a 5% strengthening of Pound Sterling to the US dollar would have reduced purchase
costs £126,000 and vice versa (2016: £140,000). (This is assuming that Dollar denominated prices do not
adjust for currency movements.)
It is estimated that a 5% strengthening of Pound Sterling to the Euro would have reduced net profit by
£54,000 and vice versa (2016: £34,000).
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
51
25
Risk management objectives and policies (continued)
Currency risk (continued)
The Group’s financial instruments dominated in currencies were:
Cash and cash equivalents
Trade receivables
Trade payables
2017
2016
£’000
US$
260
-
(189)
71
£’000
€
207
224
(141)
290
£’000
US$
279
-
(459)
(180)
£’000
€
172
166
(181)
157
As set out in the accounting policies (note 1), the assets and liabilities of Group entities that have a
functional currency other than Sterling are translated at the closing exchange rate at the reporting date. The
US dollar exchange rate rose by 9% from 31 December 2016 to 31 December 2017 (2016: fell by 16%).
The total translation reserve movement for the year reported in the Consolidated Statement of Changes in
Equity was £201,000. The majority of this movement related to the retranslation of Quartix Inc’s opening
net liabilities as at 1 January 2017.
Quartix Inc’s net liabilities mainly relate to amounts owed to other Group entities. The foreign exchange
differences arising on translation of these monetary liabilities are recognised in the Consolidated Income
Statement and was the main reason for the foreign exchange loss in 2017 (see note 4). The retranslation of
the amounts owed to Group entities by Quartix Inc at 31 December 2016 amounted to £175,000 (2016:
£(198,000)).
It is estimated that a 5% weakening of Pound Sterling to the US dollar would give an exchange gain of
around £122,000 from the retranslation of amounts owed by Quartix Inc and vice versa (2016: £115,000).
Interest rate risk
The Group has no debt so it is not exposed to fluctuations in interest rates.
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable
needs. Cash flow is forecast and monitored as are working capital requirements. The Group generates funds
from operational activities in excess of its operational requirements and has substantial cash balances
available for its current investment activities. Consequently, liquidity is not seen as a key risk.
26
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
Cash and cash equivalents
Financial liabilities measured at amortised cost
Trade and other payables
2017
£’000
2,674
7,312
9,986
2016
£’000
2,330
6,249
8,579
1,976
2,044
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
52
27
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
Capital-to-overall financing ratio (%)
2017
£’000
19,452
(7,312)
12,140
2016
£’000
18,329
(6,249)
12,080
19,452
18,329
62
66
28
Subsidiaries
As at the 31 December 2017 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 2017
53
Parent Company Statement of Financial Position
Company registration number 06395159
Fixed assets
Investments
Current assets
Debtors
Current tax asset
Cash at bank and in hand
Total current assets
Creditors – amounts falling due within one year
Net current assets
Total assets less current liabilities
Net assets
Capital and reserves
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
2017
£’000
2016
£'000
3
4
5
6
19,155
18,735
3,985
54
426
4,465
3,428
11
37
3,476
(38)
(35)
4,427
3,441
23,582
22,176
23,582
22,176
476
4,869
451
4,663
13,123
474
4,702
135
4,663
12,202
23,582
22,176
Profit for the year and total comprehensive income attributable to the equity shareholders of Quartix
Holdings plc was £6,238,000 (2016: £6,926,000)
Approved by the Board of Directors, authorised for issue and signed on behalf of the Board on 23 February
2018.
Andrew Walters
Chief Executive Officer
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
54
Parent Company Statement of Changes in Equity
Balance at 31 December 2015
Shares issued
Increase in equity reserve in
relation to options issued
Adjustment for exercised options
Dividend paid
Transactions with owners
Profit for the year and total
comprehensive income
Balance at 31 December 2016
Shares issued
Increase in equity reserve in
relation to options issued
Adjustment for exercised options
(see note 19 of Group accounts)
Dividend paid
Transactions with owners
Profit for the year and total
comprehensive income
Balance at 31 December 2017
Share
capital
£’000
472
2
Share
premium
account
£,000
4,631
71
Capital
redemption
reserve
Equity
reserve
£’000 £’000
78
4,663
-
-
Retained
earnings
Total
equity
£’000 £’000
17,997
8,153
73
-
-
-
-
2
-
474
2
-
-
-
2
-
-
-
71
-
4,702
167
-
-
-
167
-
-
-
-
-
4,663
-
-
-
-
-
113
(56)
-
57
-
135
-
420
-
56
113
-
(2,933) (2,933)
(2,877) (2,747)
6,926
6,926
12,202 22,176
169
-
-
420
(104)
-
316
104
-
(5,421) (5,421)
(5,317) (4,832)
-
476
-
4,869
-
4,663
-
451
6,238
6,238
13,123 23,582
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
55
Notes to the Parent Company Financial Statements
1
Summary of significant accounting policies
Accounting convention
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework (FRS 101). The financial statements are prepared under the historical cost
convention.
No profit and loss account is presented by the Company as permitted by Section 408 of the Companies
Act 2006.
The financial statements are prepared in Sterling and are rounded to the nearest thousand pounds (£000).
Basis of preparation
The Company transitioned to FRS 101 in 2016. The accounting policies which follow were those applied
in preparing the financial statements for the year ended 31 December 2017 and the year ended 31 December
2016. The Company has taken advantage of the following disclosure exemptions under FRS 101:
a) Share-based Payment disclosure, as Quartix Holdings plc is the ultimate parent, the share-based
payment arrangement concerns its own equity instruments and its separate financial statements are
presented alongside the consolidated financial statements of the Group.
b) Financial Instruments disclosures, given that equivalent disclosures are included in the consolidated
financial statements of the Group in which the entity is consolidated.
c) Fair Value Measurement disclosures.
d) Certain disclosures required by IAS 1 Presentation of Financial Statements, including certain
comparative information in respect of share capital movements.
e) Statement of Cash Flows and related notes.
f) Related Party Disclosures relating to key management personnel compensation.
g) Disclosure of related party transactions entered into between two or more members of a group,
given that any subsidiary which is a party to the transaction is wholly owned by such a member.
h) Capital management disclosures.
Going concern
As a holding company, its main source of income is dividends receivable from its trading subsidiaries and
in particular Quartix Limited. After assessing the forecasts and liquidity of the Group for the next two
calendar years and the longer term strategic plans, the Directors have a reasonable expectation that the
Company will continue to receive dividends for the foreseeable further. The Company therefore continues
to adopt the going concern basis in preparing its individual entity accounts.
Investment in subsidiaries
The Company’s interests in investments presently comprise only interest in wholly owned subsidiary
undertakings. Investments are recognised initially at cost. Subsequent to initial recognition the financial
statements include the adjustments in respect of Share Based Payments or provision for impairment.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
56
1
Summary of significant accounting policies (continued)
Impairment of assets
The Company assesses at each reporting date whether there is any indication that an asset may be impaired.
If any such indication exists, the Company estimates the recoverable amount of the asset, being the higher
of an asset’s or cash generating unit’s fair value less costs to sell and its 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.
A reversal of an impairment loss for an asset shall be recognised immediately in profit or loss, unless the
asset is carried at revalued amount. Any reversal of an impairment loss of a revalued asset shall be treated
as a revaluation increase.
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 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 from future trading profits.
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,
other comprehensive income or equity as appropriate.
Dividends
Dividends attributable to the equity holders of the Company approved for payment during the year are
recognised directly in equity.
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.
Financial assets
Trade and other receivables are classified as loans and receivables, these are initially recognised at fair value.
Loans and receivables are subsequently 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 receivables is made when there is objective evidence that the Company 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.
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
57
1
Summary of significant accounting policies (continued)
Financial liabilities
Financial liabilities are obligations to pay cash or other financial assets and are recognised when the
Company 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. The Company does not enter
into derivative contracts for hedging or speculative purposes.
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.
Employee benefits: Share-based payments
The Company operates a number of employee share schemes under which it makes equity-settled share
based payments to employees of its UK trading subsidiary. The fair value of the employee services received
in exchange for the grant of the options is recognised as an increase in the investment in the subsidiary,
with a corresponding increase in equity, over the period that the employees unconditionally become entitled
to the awards.
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.
Upon exercise of the share options the proceeds received are allocated to share capital and share premium.
Share capital and reserves
Share capital and reserves comprises the following:
•
•
"Called up 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
•
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
58
2
Profit and loss account
No Statement of profit and loss 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 £6.24m (2016: £6.93m).
Auditors' remuneration attributable to the Company is as follows:
Audit fees – statutory audit
Other services
2017
£’000
21
1
22
2016
£’000
15
1
16
Details of Directors’ emoluments are set out on page 18.
3
Investments – non current
The amounts recognised in the Company’s Statement of Financial Position relate to the following:
Cost:
At 1 January 2016
Increase due to granting of share options to subsidiary employees:
New investments
At 1 January 2017
Increase due to granting of share options to subsidiary employees:
New investments
Net book amount at 31 December 2017
There is no provision for impairment for the investment in subsidiaries.
Subsidiary
undertakings
£’000
18,622
113
18,735
420
19,155
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
Social security and other taxes
Prepayments
Amounts owed by subsidiary undertakings
2017
£’000
4
6
3,975
3,985
2016
£’000
6
5
3,417
3,428
All receivables fall due within one year of the Statement of Financial Position date.
The amount owed by subsidiary undertakings includes a US dollar loan to Quartix Inc of £1.2m (2016:
£1.2m) which is repayable on or before 31 December 2018 but can be extended by mutual agreement.
Interest is charge quarterly at 1% per quarter on the quarter end balance. The remainder relates to a
current account to Quartix Limited
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
59
5
Creditors: amounts falling due within one year
Social security and other taxes
Accruals and deferred income
6
Called up share capital
Allotted, called up and fully paid
47,568,354 (2016: 47,345,954) ordinary shares of £0.01 each
2017
£’000
4
34
38
2016
£’000
4
31
35
2017
£’000
2016
£’000
476
474
Details of movements in share options and those outstanding at 31 December 2017 are disclosed in note
19 of the Group accounts.
Related party transactions and ultimate controlling party
The Company has taken advantage of the exemption not to disclose transactions with wholly owned
subsidiaries. Details of Directors’ remuneration and interests in shares are disclosed in the Directors’
Remuneration Report (see page 18) and key management remuneration in note 6 of the Group accounts.
Contingent liabilities
There are no material contingent liabilities subsisting at 31 December 2017 or 31 December 2016.
Financial commitments
The Company had no financial commitments at 31 December 2017 or 31 December 2016.
7
8
9
10
Risk management objectives and policies
Financial Instruments
The Company uses various financial instruments; these include cash deposits and bank loans and various
items such as group receivables and group payables that arise directly from its operations. The main purpose
of these financial instruments is to manage working capital.
The main risks arising from the Company’s financial instruments are credit risk and currency risk. The
Board reviews and agrees policies for managing each of these risks and they are summarised below.
Credit risk
The Company’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
Amounts owed by subsidiary undertakings
2017
£’000
426
3,975
4,401
2016
£’000
37
3,417
3,454
Risks associated with cash deposits are limited as the banks used have high credit ratings assigned by
international credit rating agencies. The amount owed by subsidiary undertakings includes a US dollar loan
to Quartix Inc of £1.2m (2016: £1.2m) which is repayable on or before 31 December 2018 but can be
extended by mutual agreement. Interest is charge quarterly at 1% per quarter on the quarter end balance.
The remainder relates to a current account to Quartix Limited. (see below and note 4).
Quartix Holdings plc
Financial statements for the year ended 31 December 2017
60
Currency risk
The Company is exposed to transaction foreign exchange risk. The Group mitigates its risk to the US Dollar
by trading in the USA; however the Company is exposed to exchange movements on its US Dollar loan to
Quartix Inc to fund its start-up losses and working capital requirements.
The Company’s financial assets denominated in currencies (all US dollars) were:
Loan and receivables
Cash at bank
Amounts owed by subsidiary undertakings
2017
£’000
38
1,233
1,271
2016
£’000
1
1,215
1,216
The Company’s net profit would not be materially impacted by 5% strengthening of Pound Sterling to the
US dollar or Euro.
61
Notice of Annual General Meeting
Notice is hereby given that the third Annual General Meeting (the “Meeting”) of Quartix Holdings plc will
be held at Wellington House, East Road, Cambridge CB1 1BH on Tuesday 27 March 2018 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 2017.
To approve and declare a final dividend for the year ended 31 December 2017 of 4.3p per ordinary
share and supplementary dividend of 6.8p per ordinary share, a total of 11.1p per share. This will
be paid on 4 May 2018 to shareholders on the register as at the close of business on 6 April 2018.
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 Daniel Mendis 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 Edward Ralph 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 £158,561 (representing approximately 33% of the issued share
capital of the Company as at 23 February 2018) 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 2019, 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 570 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:
a.
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
62
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 £23,784, representing
approximately 5% of the ordinary share capital in issue as at 23 February 2018.
b.
This power shall expire at the conclusion of the next Annual General Meeting of the Company or
30 June 2019, 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 2,379,000
(representing approximately 5% of the ordinary share capital in issue as at 23 February
2018);
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 2019, 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 23 February 2018.
Daniel Mendis
Company Secretary
1
2
3
4
5
6
63
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 close of business on 23 March 2018, or, in the event that the meeting is
adjourned, at close of business on the date which is two days prior to the date 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, Link Asset Services, at PXS 1, 34
Beckenham Road, Beckenham, Kent BR3 4ZF not later than 11.00 am on Friday 23 March 2018.
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,1
Link Asset Services, at 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 23 February 2018 the Company’s issued share capital comprised 47,568,354
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
47,568,354.
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 dan.mendis@quartix.net
64
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Quartix Holdings plc
Wellington House
East Road
Cambridge
CB1 1BH
www.quartix.net
www.quartix.fr
www.quartix.com
Quartix Holdings plc
Annual Report 2017