The profit before central costs increased by £0.4m compared to the prior year, at £5.8m (2021: £5.4m). The contribution from the Group's Telematics Services category, grew by £1.1m to £10.5m (2021: £9.4m), which was partially invested in organic growth by spending an additional £0.7m on new unit installation costs, marketing and sales staff in the Customer Acquisition category. Quartix's long established policy of immediately expensing the cost of new units and their installation means that strong growth in new units causes a short term reduction in profitability. This is followed by increased profits due to the recurring nature of revenues.

Central costs have increased by £0.6m to £3.3m (2021: £2.7m) as a result of the new Executive Directors employment costs and the investment in operational processes and IT to support scalability in the business.

Richard Lilwall, Chief Executive Officer of Quartix, commented:

"I am delighted to report that we have shown a return to double-digit growth in the value of our subscription base, growing 11.3% year on year to £26.0m.  Whilst H1 Adjusted EBITDA decreased by 6% to £2.5m (2021 2.7m) the reasons for this are positive. Firstly, due to our accounting policy of immediately recognising hardware and installation costs our record 26% increase in new installations had a short term negative impact on Adjusted EBITDA. Secondly, we have made some investments in tools and resources targeted to drive growth in the future. Price erosion in our customer base continues to slow and the price at which we add new customers has remained stable since January 2019.

The exciting launch (in June) of our EVolve platform, which helps fleet operators transition from internal combustion engine to electric vehicles, adds upsell opportunity to existing customers and access to additional customer segments - particularly those with passenger car fleets.

Subscription base growth in the UK (11%), France (31%) and other European territories (88%) since June 2021 has been excellent. US growth (16%) has seen mixed results across channels with some performing significantly better than others. Some specific US initiatives are due in H2 and will combine with our global sales execution excellence program to fuel accelerated US growth in 2023. We have confidence moving into the second half and for 2023 and are confident in achieving market expectations."

¹ The Board believes that consensus market expectations for 2022 prior to this announcement, were as follows: Revenue: £27.4m; Adjusted EBITDA £5.7m; Free Cash Flow²: £4.1m.

² Underlying Free Cash Flow stated before expenditure on 3G swap out in the US - see 2021 Annual Report.

For further information, please contact:

Quartix (www.quartix.com/en-gb)                                                                           01686 806 663

Richard Lilwall, Chief Executive Officer

Emily Rees, Chief Financial Officer

finnCap (Nominated Adviser and Broker)                                                        020 7200 0500

Matt Goode / Kate Bannatyne / Milesh Hindocha (Corporate Finance)

Alice Lane (Corporate Broking)

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

Interim Financial Results Report

The Group's Interim Financial Statements for the 6 months ended 30 June 2022 are available in the "Investors" section of our website at: www.quartix.com/en-gb/company/investors

About Quartix

Founded in 2001, Quartix is a leading supplier of subscription-based vehicle tracking systems, software and services. The Group provides an integrated tracking and telematics data analysis solution for fleets of commercial vehicles and motor insurance providers which improves productivity and safety and which lowers costs by capturing, analysing and reporting vehicle and driver data.

Quartix is based in the UK and is listed on the AIM market of the London Stock Exchange (AIM:QTX).

Chairman's Statement

Introduction

Our key focus for the past 6 months has been the growth of the subscription base both in the UK and overseas to drive an increase in recurring revenues. As noted in the Highlights section, the annualised recurring revenue increased by £2.7m, at a constant currency rate, to £26.0m at 30 June 2022. This was achieved, with the Group experiencing strong growth in its subscription platform. Performance in the first half of the year was particularly encouraging; new subscriptions were 25.9% ahead of the prior year. Group revenue grew by 6.7% during the first half of 2022.

Group annualised attrition marginally improved to 11.6% (2021: 12.3%) and price erosion on a constant currency basis has reduced to 5.6% (2021: 6.5%).

Each geographical market registered increases in both new subscriptions and in the subscription base for the period (see table below). The UK achieved new unit installation growth of 23.0%, however total revenue remained at £8.9m, due to price erosion and falling insurance revenue.

New unit installations growth was very impressive in France at 45.2%, driven by a return on investment from the expansion of our direct sales force in 2021. French revenue increased by 22.0% to €3.0m (2021: €2.5m).

The USA increased its revenue by 10.6% to $2.0m (2021: $1.8m). The prospects for future business development remain encouraging and continue to be a core focus for the Group in the second half of 2022.

The Group continued to make progress in its other European territories.

** Comparatives are June 2021

++ The figures for the UK exclude Ireland, which have been included in Other European Territories for both the current and comparative KPIs.  Management consider this to be more appropriate given Ireland is part of the EU reporting in euros.

We have launched our Quartix EVolve (electric vehicle analysis) product and the pipeline is already building with new and existing customers. We will be launching our Quartix Check (walkaround) module in the second half of our financial year.

Results

Group revenue for the period increased by 6.7% to £13.3m (2021: £12.5m); total fleet revenue now represents 95.8% of total revenue (2021: 92.9%).

Both operating profit and profit before tax for the period increased to £2.4m (2021: £2.1m).

As illustrated in the segmental analysis under the Financial Highlights, the profitability of the Group's Telematics Services category, which represents the core part of the business associated with recurring revenues, grew by £1.1m to £10.5m (2021: £9.4m). There was a £0.7m increase in Customer Acquisition category's net cost to £4.7m in 2022 (2021: £4.0m), due to the significant customer acquisition investment (see above and note 3).  The combined impact on total profit before central costs, was an increase of £0.4m to £5.8m (2021: £5.4m).

Cash conversion strengthened, largely due to lower tax payments, resulting in free cash flow, cash flow from operations after tax and investing activities, of £1.9m (2021: £1.4m). Net cash decreased to £3.9m at 30 June 2022 (2021: £4.3m), following the payment of a final and supplementary dividend for 2021 paid in April 2022, totalling £3.4m but without the benefit of £1.0m share proceeds received in the prior year.

Earnings per share

Basic earnings per share were 4.20p (2021: 3.70p). On a diluted basis earnings per share were 4.17p (2021: 3.66p).

Dividend Policy

Subject to satisfactory performance and market conditions, the Board will consider a final dividend for the year with the aggregate of the interim and final dividend set at approximately 50% of cash flow from operating activities, which is calculated after taxation paid but before capital expenditure. The Board will also consider distributing the excess of cash balances over £2m by way of supplementary dividends. The surplus cash would be calculated by taking the year end cash balance and deducting the proposed regular dividend. The policy will be subject to review.

Dividend

The Board has recommended an interim dividend of 1.50p (2021: 1.50p) per share, £0.7m in aggregate. The amount is in line with the Group's stated policy on ordinary dividend payment. This was approved by the Board on 26 July 2022. The interim dividend will be paid on 9 September 2022 to shareholders on the register on 12 August 2022. The ex-dividend date is therefore 11 August 2022.

Governance and the Board

The Board is comprised of three Non-Executive Directors: myself, Andy Walters and Jim Warwick, and three Executive Directors: Richard Lilwall, Emily Rees and Laura Seffino.

For further details regarding Corporate Governance and the Board, please see the "Investors" section of our website (www.quartix.com/en-gb/company/investors).

Outlook

Our work on operational scalability has been successful, allowing our team to improve customer satisfaction on our growing subscription base without adding further resources. Sales execution excellence is well underway with the imminent introduction of new tools to drive best practice and insights at every stage of the sales funnel. Initial implementation is expected to be completed within the next quarter and further refinement and improvement will allow us to achieve further revenue improvements in 2023.

The Group has made a strong start to the second half, in line with management's expectations. The high levels of recurring revenue and opportunities to grow our operations in the UK, USA, France and the rest of Europe underpin our confidence for the rest of the year and beyond.

Paul Boughton

Chairman

Consolidated Statement of Comprehensive Income