WTG.L Regulatory News (WTG)

For release 7am 14 January 2014

Quindell Plc

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

Pre-Close Statement and Trading Update

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 announce that, subject to audit, the Group expects to meet the upper end of market expectations(1) for all key performance measures of profitability including Adjusted EBITDA(2), Profit before tax(3) and EPS(4). The Group's year end cash balance of circa £200 million, and overall balance sheet is the strongest in the Group's history.

Highlights

· The Group expects to meet the upper end of market expectations(1) for all key performance measures of profitability being adjusted EBITDA(2), adjusted Profit before tax(3), and adjusted EPS(4) of £131 million, £128.8 million, and 2.4 pence respectively

· The Group also expects to meet the upper end of market expectations(1) on the key unadjusted measures of profitability being Profit before tax of £115 million and EPS of 2.17 pence

· The Group is also pleased to report that operating cash inflow for the final quarter for 2013 was ahead of market expectations(1) and it finished the year with cash on balance sheet of circa £200 million

· The Solutions Division contributed approximately one-third of the Group's profit in the year, with a particularly strong cash generation profile. The Board believes the scale of the opportunity of this Division is not fully reflected in current market expectations, particularly with regard to telematics contracts. The full scale of this opportunity, including profiling typical contracts, opportunity to increase our investment in Himex and the expansion of ingenie into North America, will be explored in today's Investor Teach-In

· Earnings enhancing infill acquisition completed to support organic growth within legal services operations issuing consideration shares representing only 2% of issued capital

Rob Terry, Founder and Executive Chairman of Quindell said: "Q4 has seen the Group deliver record revenue and profitability within its Services Division, with revenues exceeding £100 million in a quarter for the first time as well as a record performance by its Solutions Division in terms of revenue, profitability and cash generation. This level of performance in Q4 2013 along with business already contracted to begin in Q1 2014 and our record level pipelines, underpins the Board's confidence in its ability to meet and, subject to completion of ongoing contractual negotiations in Q1 2014, even exceed, market expectations for 2014.

Subject to agreeing the appropriate payment terms in new business contracts and continued roll out of its collaboration models, the success of which becomes even more likely post the recent announcements from the Competition Commission on its review of the private motor insurance market, the Group has funding available to comfortably exceed 4 pence of EPS in 2014 and we are entering the year with a run rate of gross sales approaching £600 million per annum and EBITDA approaching £200 million based on Q4." 

Pre-Close Statement

2013 was a year of significant progress for the Group in terms of delivering on its objectives for the year, including the achievement of significant organic growth and conclusion of a £200 million (net of expenses) fundraise which will underpin continued significant organic growth during 2014. The business made good progress in the final quarter of 2013 with trading continuing positively, building on the strong performance delivered by the Group in the first three quarters of the year.

The Group continues to be successful in driving down the cost of claims for the insurance industry through programs such as its collaboration protocol with at-fault insurers, which in turn drive down turnover for the Group whilst maintaining or improving the Group's margins. Revenue for the year was circa £410 million, and the Group expects to meet upper end of market expectations(1) on the key measures of profitability being adjusted EBITDA(2), adjusted Profit before tax(3), and adjusted EPS(4); the upper end of market expectations being £131 million, £128.8 million and 2.4 pence respectively. The Group also expects to meet the upper end of market expectations(1) on the key unadjusted measures of profitability of Profit before tax of £115 million, and EPS of 2.17 pence. Percentage margin levels in both the Solutions and Services Divisions continued to be in line with the upper end of market expectations(1).

Solutions Division Investor Day

The Group's Solutions Division delivered a strong performance, accounting for approximately one-third of Group's profits in the year, and with a particularly strong cash generation profile. The Board believes that the scale of the opportunity of this Division is not fully reflected in current market expectations, particularly with regard to telematics led contracts which represented approaching £40 million of high margin, cash generative revenue for the Group with more than half from North America. The Group will use the opportunity of today's Analyst and Institutional Investor Teach-In to try to correct this position, exploring the strong growth trends being experienced by the Group's Solutions Division, profiling typical telematics contracts and the expansion of ingenie into North America. The Teach-In will also highlight the medium to long term opportunity, led by telematics insurance and other Connected Car initiatives, to build a 10 million subscriber base each paying between $5 to $15 per month, equating to $600 million to $1.8 billion per annum in high margin recurring technology revenues and the opportunity that exists to further improve the margin on this revenue if the Group was to increase its shareholding in its Himex investment to a majority position and with the expansion of its distribution agreement with Himex from the UK and Canada onto a global basis.

Trading Update

Trading in the last quarter of 2013 continued in an extremely positive manner, with over £100 million of new business confirmed since the Group's announcement of the successful £200 million fundraise (net of expenses) in mid November 2013. The pipelines for further organic wins within the Group's Services and Solutions Divisions remain at record levels and the Board remains confident, in line with its previous track record of pipeline conversion, of being able to continue to rapidly deploy the majority of the capital that has been raised to fund further profitable organic growth.

The Group is already at late stage negotiation for new contracts, and the extension or expansion of existing contracts for business across a combination of its Services Division for outsourcing and also its Solutions Division in relation to telematics contracts with major global brands which in combination represent over £300 million per annum. The Group would expect to make further announcements with regards to these contracts ahead of its forthcoming Full Listing and announcement of maiden dividend at the time of publishing its full year results. Subject to agreeing the appropriate payment terms in new business contracts and continued roll out of its collaboration models, the success of which becomes even more likely post the recent announcements from the Competition Commission on its review of the private motor insurance market, the Group has funding available to comfortably exceed 4 pence of EPS in 2014.

Cash Flow and Debtor Management

The Group's cash balance at 31 December 2013 was circa £200 million and borrowings, including bank borrowings and other trade finance was circa £54 million. The Group's balance sheet at the end of 2013 is the strongest in the Group's history. The Group's operating cash inflow for the final quarter for 2013 was ahead of market expectations despite some block settlements with at-fault insurers now being completed in Q1 2014. This over performance was due to strong cash management and debtor controls and in particular, performance ahead of plan regarding cash collection from the Solutions Division. The Group's momentum in operating cash flow generation increased in the second half of 2013 as anticipated with much of the collection now being undertaken by the Group's own specialist debt recovery team, "Compass Law" and 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.

Continued strong cash collection led to average trade debtor days at 31 December 2013 for the Group being maintained at approximately the same level as at 30 June 2013, which had improved to c.4.8 months. With continued focus on cash collection and further block settlements, the Board expects to demonstrate further improvement in the aging of trade debtors during the first half of 2014 as the Group's collaboration model for hire and repair moves towards 75% take up and initial contracts are reached for collaboration in legal services with insurers that represent a significant proportion of the market.

Infill Acquisition to Support Growth in Legal Services

As previously guided, it has been the intention of the Company to complete up to two small infill acquisitions in order to support the taking on of significant volume from further organic growth that is expected to commence in Q1 2014, subsequent to deals already announced in Q4 2013, specifically providing additional capacity in its legal services operation.

The larger of these two potential infill acquisitions, ACH Manchester and associated companies, has been completed. The terms of the acquisition were satisfied by the issue of 117,812,500 Quindell shares and the payment of £5,000,000 in cash, utilising part of the circa £50 million that was set aside from the £200 million raised in the Group's recent fundraise to allow for an element of cash to be used for future infill acquisitions. The shares, which only represent 2% of the Group's issued share capital, are subject to share lock in of between 12 and 36 months from the date of issue and orderly market restrictions. The companies acquired have warranted profit before tax of £3.5 million and generated cash flow of £3.5 million over an assessment period of 1 January 2014 to 31 December 2014. The acquisition is immediately earnings enhancing for the Group. The Group also confirms that, pursuant to its previous announcements on 24 April 2013 and 30 March 2012, it is issuing 54,785,714 shares, primarily in relation to its acquisitions of Crusader, now that FCA approval has been received, and Enzyme International Limited.

Application has been made for the 138,312,500 new shares to be admitted to trading on AIM, with Admission of the shares expected to occur on 20 January 2014. An application for the remaining 34,285,714 new shares to be admitted to trading on AIM will be made shortly, with admission of the shares expected to occur on 27 January 2014. Following both Admissions, Quindell will have 5,842,577,010 ordinary shares in issue. The Company has no ordinary shares held in treasury. The total of 5,842,577,010 ordinary shares may therefore be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

Notes:

1. Market expectations are in respect of those brokers that updated their forecasts to reflect the Group's fundraise announced in mid November 2013

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

3. Adjusted Profit before tax is Profit before tax, excluding exceptional costs and amortisation

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

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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 £600 million and approaching £200 million of EBITDA. 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