Vehicle tracking systems provider Quartix's (LON:QTX) full-year results came in slightly ahead of market expectations.
Profit before tax increased by 19% to £6.0mln from £5.0mln the year before, slightly ahead of the consensus forecast of £5.9mln.
Revenue jumped 28% to £19.7mln from £15.3mln, ahead of the market forecast of £19.4mln.
Fleet revenues were up 17% to £13.0mln from £11.0mln the year before, while the Insurance business had an outstanding year, growing revenues by 56% to £6.7mln from £4.3mln, with 74% growth in insurance installations to 57,024 from 32,842 the year before.
The Fleet business saw a 23% increase in its subscription base and a 23% increase in the customer base. Unit attrition rose to 11.3% from 9.4% the year before, but Quartix said it still compares favourably with its estimate of what the industry average rate for attrition is, which it puts at around 14-15%.
The unit saw particularly strong growth in France, with the number of customers up to 1,195, out of a worldwide total of 7,849, from 890 (2014 global total: 6,342) the previous year.
During its first full year of trading the USA grew its customer base to 693 (2014: 120), with 3,179 vehicles under subscription (2014: 498).
Adjusted cash inflow before tax increased by 23% to £6.8mln from £5.5mln in 2014, while net cash soared to £3.0mln from a net debt position of £0.2mln at the end of 2014.
A final dividend of 4p has been proposed, making the full-year pay-out 6p, comfortably ahead of market expectations of a 5p pay-out.
The board said that, while it is sticking with its policy of recommending dividends equivalent to around half of free cash flow (after tax but before capital expenditure) from operating activities, this is leading to a cash pile building up, so in future the board will look to distribute the excess of gross cash balances over £2mln on an annual basis by way of supplementary dividends, unless the supplementary pay-out would be less than 2p per share.
"All of our business operations continued to perform at a high level in 2015. Our core fleet business, which accounted for 66% of group revenue, delivered considerable progress in a further year of investment,” said Andy Walters, managing director of Quartix.
“Continued growth in the UK was combined with excellent progress in France and in the USA, where our first full year of trading saw us reach an installed base of 3,179 vehicles under subscription,” he added.
“Insurance sector installations grew by 74%. Significant investment was made in product development for both parts of the business, as well as in developing our geographic presence in the fleet sector,” Walters revealed.
The group has made a strong start to the current year, in line with its expectations.
“The high levels of recurring revenues and opportunities to grow in the UK, France and the USA in fleet combined with continued progress in our insurance business underpin our confidence for the rest of the year and beyond,” Walter said .
House broker finnCap said the full-year numbers beat even the raised expectations that followed January's positive year-end trading update.
“Success is powered by continuing strong demand for ever-improving telematics services across Europe and the US – with notable success in the Insurance market in H2,” the broker noted, as it lifted its target price to 375p.
The broker said that the current fiscal year (FY 2016) will see some significant investment in new products and regions, so although it has raised its revenue forecast from £19.8mln to £22.6mln, the adjusted underlying earnings (EBITDA) forecast only nudges up to £6.8mln from £6.7mln previously.
“However, given the extremely strong cash flow, under the new policy the forecast dividend jumps from 5.4p to 10.2p, currently an attractive yield of 3.2%,” finnCap noted.
Quartix's share rose 5.6% to 330p on the day the full-year results were released.
Cash is for shareholders, not acquisitions, MD Andy Walters tells Proactive Investors.