Quindell PLC Q1 Trading Statement (9108E)

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RNS Number : 9108E

Quindell PLC

16 April 2014

Embargoed for release until 7.00 Wednesday 16 April 2014

Quindell Plc

("Quindell", the "Company" or the "Group")

Q1 Trading Statement

Quindell Plc (AIM: QPP.L), the provider of sector leading expertise in software, consultancy and technology enabled outsourcing in its key markets, being Insurance, Telecommunications and their related sectors is pleased to provide its trading statement for the first quarter ended 31 March 2014.

Highlights

   --     Gross sales of GBP162.9 million (H1:2013: GBP167.3 million) 
   --      Adjusted EPS(1) of 0.82 pence (H1:2013: 1.1 pence) 
   --      Previous market guidance for Q1 Adjusted EBITDA(2) GBP50+ million 
   --     Adjusted EBITDA(2) of GBP65.9m (H1:2013: GBP54.0 million) 
   --     Adjusted EBITDA(2) margin of 40.5% (H1:2013: 32%) 
   --      Continued positive trend of operating cash flow ahead of guidance 
   --     Momentum in Collaboration Model uptake continues expectation of 75% adoption 
   --      Full year cash generation market expectation now anticipated to be exceeded 
   --     Cash at 31 March 2014 of circa GBP150 million post acquisitions and investments 

Services Division

   --      Recent wins mean Group is now delivering significant organic growth 
   --      Quindell is active in some element now approaching 1 in 3 of claims handled by UK insurers 

Solutions Division

   --     Leading position in telematics based insurance technology confirmed 
   --     Continues to be industry pioneer with Video and Crowdsourcing contracts 

Rob Terry, Founder and Executive Chairman of Quindell said: "The Board is pleased to announce our twelfth successive quarter meeting or exceeding market expectations in all key performance indicators. Taking into consideration that volumes are subject to roll out, execution and industry claims frequencies, the Board is confident that the upper end of market expectations should be achieved for the full year for 2014 and that current expectations for cash generation shall be exceeded in 2014. It is now clear that in due course, the opportunity to deliver a multi billion pound business generating significant profits with associated positive cash flows is within our grasp, subject to leveraging the significant market lead available to Quindell."

Notes

1. Adjusted EPS is Profit after tax, excluding exceptional costs, share based payments and amortisation, divided by the weighted average number of shares in issue

2. Adjusted EBITDA is Profit before interest, tax, depreciation, share based payments, amortisation and exceptional costs

3. Adjusted operating cash flow is cash generated by the operation before exceptional costs, tax and interest

Q1 Trading Statement

The Group's first quarter of 2014 has continued to be a period of significant progress for Quindell with it being a record three months in terms of revenue, as well as the Group's key measures of profitability and EPS. The Group has also, importantly, continued its positive trend of exceeding guidance on operating cash flow generation during this period of significant growth and now expects to exceed current market expectations for cash generation during 2014.

Overall, gross sales for the Group totalled GBP162.9 million for the quarter and Adjusted EBITDA was GBP65.9 million, an EBITDA margin of approximately 40.5%. This Adjusted EBITDA result of GBP65.9 million compared to previous guidance for Q1 of Adjusted EBITDA of GBP50+ million. The Group has also continued its positive trend of exceeding guidance in relation to operating cash flow generation during Q1, with operating cash flow for the period of circa GBP7 million ahead of prior guidance. Cash at 31 March 2014 was circa GBP150 million after paying out a significant amount of cash in relation to acquisitions and investments completed in the period, in line with the stated strategy for use of proceeds from the GBP200 million fund raise completed in November 2013.

The Group's momentum in operating cash flow generation has increased beyond prior expectations with new models being adopted rapidly to improve the cash profile of the Group and with much of the Group's debt collection now being undertaken by its own specialist debt recovery team, "Compass Law". The management and collection of cash from trade debtors continues to be a specific area of focus during this period of significant growth for the business. As a result, cash collection across the business is ahead of plan by circa GBP7 million and full year guidance is increased accordingly. This strong cash collection led to average trade debtor days continuing to reduce slightly in Q1 compared to the significantly improvement already achieved at the end of 2013 and the Group expects to further significant reductions in trade debtor days during the remainder of 2014.

The Group's Collaboration Model (which enables Quindell and insurers to work together and to benefit in the reduction of car hire durations, and the offering of initiatives such as cash alternatives to car hire in certain cases) provides a fundamental change to the cash profile of a significant part of the Group's Services Division as insurer debt is settled within one month of presentation of an agreed invoice.

The Group previously reported that its guidance was for circa 75% of the insurance market to sign up to the Collaboration Model (mainly during the first half 2014) and this process is progressing ahead of plan. Momentum in the pace of adoption of the Model continues to grow with top tier insurers signing up on a regular basis. An equivalent Collaboration Model for the prepayment of legal costs is also continuing to be investigated by the Group, and the significant interest that had been expressed by some major insurers is being followed up with the expectation that this will result in the acceleration of payments (the total value of payments now being targeted is up to GBP175 million, resulting in the potential for further significant cash generation beyond current market expectations in 2014 - based upon current year end market expectations of accrued income in relation to Legal Services) with no significant loss of profitability, changing our industry model for all future Legal Services revenues.

Services Division

The Group's Services Division had another strong quarter in terms of its trading performance and development of new organic business underpinning future growth. The Group is now actively involved in some form in between 1 in 5 and now approaching 1 in 3 claims handled by UK insurers. This growth arose in a large part due to the inclusion at the start of the period of the previously announced new business, ensuring that the Group is now delivering very significant organic growth in the first half of 2014 and beyond. The Services Division has already announced further significant contract wins which continue to scale in Q2 2014 and therefore has no need to win any further new business to meet the upper end of current market expectations for 2014, subject as always to continued claims frequencies and other events beyond its control in the market.

Solutions Division

The Group's Solutions Division has similarly experienced a positive first quarter of the year, with particular traction in the area of telematics insurance solutions continuing to be achieved in the UK and in North America.

The Group also is pleased to announce that it has reached agreement in principle on two significant contracts via its subsidiary 360Globalnet for the implementation of Digital Video and Crowdsourcing Solutions to significantly improve the claims process initially for property claims but with applicability for all claim types.

The provision of services and technology to one of the UK largest direct insurers using 360Globalnet's live video streaming and Withyouin5 video-enabled crowdsourcing service, enable early claim resolution decisions to be made, thus significantly speeding up the claims process for customers whilst also supporting improvements in the management claims spend and the possible identification of fraud.

These contracts will see the direct insurer use key elements of 360Globalnet's "Digital Strategy for Insurers" in its Property Claims. It is anticipated that the two contracts over an initial five year term represent a value of circa GBP20 million, with additional contracts being discussed which could easily double these revenues. All of the contracts under discussion exceed current guidance for profitability within the Solutions Division. The conclusion of these initial agreements in principle follows a rigorous fifteen-month month proof of concept, delivering results way beyond initial expectations and is based around a supplier relationship, in its current form, since 2010.

Paul Stanley, Chief Executive Officer of 360Globalnet and Key Advisory Board member of Quindell, said: "We are excited to announce these contracts which represent the first major implementation of totally new digital technology, using our proprietary video over Internet platform 360Siteview and Crowdsourcing Services Withyouin5."

Rob Terry, Founder and Executive Chairman of Quindell said "This is a first in the Global Insurance Industry and we are pleased that it has been implemented by one of the UK's largest direct insurers. The agreements once again demonstrate Quindell and 360Globalnet's ability to develop and deliver new market-leading models with global application and we expect to be announcing a significant number of further contract of this type and scale during 2014 and beyond."

For further information:

 
Quindell Plc 
 Rob Terry, Founder and Executive Chairman   Tel: [phone] 
                                             [e-mail] 
 Laurence Moorse, Group Finance Director     Tel: [phone] 
                                             [e-mail] 
 Cenkos Securities plc 
  Joint Broker and Nominated Advisor          Tel: [phone] 
  Stephen Keys/Bobbie Hilliam 
 
  Canaccord Genuity Limited                   Tel: [phone] 
  Joint Broker and Financial Advisor 
  Simon Bridges 
  Bruce Garrow 
 
  Media Enquiries 
  Redleaf Polhill Limited                     Tel: [phone] 
  Rebecca Sanders-Hewett                      [e-mail] 
  Jenny Bahr 
 

Notes to Editors:

About Quindell Plc

Quindell Plc is a provider of sector leading expertise in software, consultancy and technology enabled outsourcing in its key markets being insurance, telecommunications and their related sectors. Quindell enters 2014 with a run rate of gross sales approaching GBP600 million and approaching GBP200 million of EBITDA, and has announced new contract wins since the start of 2014 that amount to a further GBP500+ million due to start during 2014. Our award winning business transformational, software, consultancy and outsourcing solutions are recognised as delivering significant savings and additional sales to our customers every year.

For further information, please visit www.quindell.com

This information is provided by RNS

The company news service from the London Stock Exchange

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