Vehicle tracking technology company Quartix Holdings plc (LON:QTX) held first half profits steady, despite a conscious decision to reduce exposure to the insurance market.
Group revenue in the first six months of 2017 was barely changed at £11.5mln from £11.6mln the year before, with an increase in fleet revenue offsetting the anticipated decline in insurance revenue.
Fleet revenue grew by 15% to £8.3mln from £7.2mln the year before, while insurance revenue declined to £3.2mln from £4.4mln. Sales to the insurance sector as a percentage of overall revenue reduced to 28% (2016: 38%).
WATCH: Quartix buoyed by increase in fleet installations after business rebalancing
The subscription base rose by 10% to 96,971 vehicles from 87,889 at the end of 2016.
Fleet installations rose by 45% to 14,324 while the customer base increased by 11% to 10,076 from 9,105 at the end of last year.
Fleet invoiced recurring revenue increased by 16% to £7.6mln (2016: £6.5mln).
Adjusted underlying earnings (EBITDA) edged up to £3.5mln from £3.4mln the previous year, while profit before tax dipped slightly to £3.2mln from £3.3mln.
Material costs per unit rose considerably as a consequence of the weakness of the pound against the dollar, but the company remains on track to meet market expectations for the full year.
The interim dividend has been hiked to 2.4p from 2.2p, while the board indicated it expects to announce a final dividend for the financial year that will bring the aggregate dividend for the year to around 50% of cash flow from operating activities.
The board will also look to distribute the excess of cash balances over £2mln (after paying out the final dividend) by way of a supplementary dividend.
Much stronger growth in Quartix's subscription base
"We have made good progress in the first half. As indicated a year ago, we have focused on our key fleet business, resulting in much stronger growth in the subscription base. This led to an anticipated decline in new insurance installations; however, fleet revenue growth largely compensated for this," observed Andy Walters, managing director of Quartix.
"Pleasingly, the strategic decision taken last year to focus on our fleet business has delivered strong subscription growth. Furthermore, the news that we are to resume supply in the second half for an insurance programme which had been switched to a low-cost supplier provides an excellent endorsement of our quality and service levels. This is expected to lead to a more acceptable balance in margin in future between the two parts of our business and a clearer understanding in the market of the value we deliver.
"Although the insurance business remains less predictable than our fleet business, we will use any additional income from it to invest in the future of our fleet operations as the business develops, and hence we remain on track to meet market profit expectations for the year as a whole," Walters said.
The company also announced that Ed Ralph, who joined as chief operating officer in February, now has a seat on the board, while financial director David Bridge has indicated he would like to retire from the business.