News Column

Quindell Shares Slide Despite Half-Year Profit Rise, Bullish Forecast

August 21, 2014

Hana Stewart-Smith

LONDON (Alliance News) - Quindell PLC on Thursday reiterated confidence in meeting all of its key performance indicators for the full year, on revenue guidance of GBP800 million to GBP900 million, as it saw profit rise in the half year to end-June.

The software and outsourcing services company also appointed Stefan Borson as its chief legal and communications officer.

Quindell posted a pretax profit of GBP153.7 million, up from GBP39.2 million in the previous year, as revenue rose to GBP357.3 million from GBP163.3 million. Profit also was boosted by a GBP14.5 exceptional gain on the re-measurement of acquisitions.

Quindell said it had seen "significant growth" during the period, with 90% of its revenue being organic, and only 10% coming from acquisitions. In its Professional Services Division, revenue rose to GBP293.3 million from GBP140.8 million as a result of contract wins.

It said it plans to restructure certain contracts to "ensure the optimum return on cash resource" but noted that its profit and cash guidance is not dependant on any upside from these initiatives.

Quindell's cash balance at June 30 was GBP85.0 million, up from GBP35.4 million in the previous year. The company said that cash collections during the first half were over GBP220 million.

Quindell said it was confident in meeting market expectations of an operating cash inflow, ahead of exceptional costs, capital expenses, tax and interest, of around GBP30 million to GBP40 million in the second half. Further ahead, it said that based on this guidance, it would expect an operating cash inflow of up to GBP100 million in the first half of 2015.

The company raised its guidance for its full-year earnings before interest, tax, depreciation and amortisation margin to 35% to 45% from its previous range of 35% to 40%.

Although Quindell did not propose an interim dividend, it proposed its maiden dividend at the time of its full year results in March. Quindell said it intends to adopt a progressive dividend policy at its full year results.

The company reaffirmed its commitment to strengthening its management and further enhancing its corporate governance, including the appointment of Borson, who was previously chief executive of Redbus Media Group and board director of Clerkenwell Ventures PLC.

The strong results may bolster Quindell's case against Gotham City Research LLC, which published a 74 page report in April attacking Quindell and depressing Quindell's share price. Quindell said it has taken legal action against the research firm, calling the report ""highly defamatory" and "deliberately misrepresentative".

Gotham's report had said that it was unable to reconcile 42%-80% of Quindell's profits, stating that they are suspect as they are explained by sales to related parties owned and operated by Quindell Chief Executive Officer Robert Terry.

Shares in Quindell were trading down 11% at 186.77 pence Thursday morning, the fifth biggest faller on AIM.

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Source: Alliance News

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