WTG.L Regulatory News (WTG)

RNS Release Embargoed until 7.00 am 13 October 2014

Quindell Plc

("Quindell" or the "Group")

Q3 TRADING STATEMENT

Quindell Plc (AIM: QPP.L), a market leading global provider of professional services and digital solutions, is pleased to provide its trading statement and financial highlights, subject to audit, for the third quarter ended 30 September 2014.

Highlights

· Gross sales of c.£200m incorporating Revenue of c.£198m which increased by 115% (Q3 2013: £92.1m) due primarily to strong organic and synergistic growth; businesses acquired in the last 12 months represented less than 10% of Revenue

o Professional Services sales of c.£177m increased by 124% (Q3 2013: £ 79.0m) driven by major organic contract wins announced during H2 2013 and H1 2014

o Digital Solutions sales of c.£23m increased by 20% (Q3 2013: £19.1m) with an increasing mix of transactional, subscriptions and other recurring revenue and less one-time license sales than in 2013

· Adjusted EBITDA1,3 of c.£83m increased by 141% (Q3 2013: £34.5m) due to Q3 2014 having an increased amount of high margin Digital Solutions revenue and growth of Legal Services revenue

· Adjusted EBITDA1,3 margin of 42% of Revenue (FY 2013: 36%) which is at the upper end of guidance

· Adjusted EBITDA split broadly as to 80% Professional Services and 20% Digital Solutions

· Adjusted EPS1,2 of c.15 pence increased by 54% (Q3 2013: 9.75 pence)

Cash flow and Debtor Management

· Adjusted operating cash flow1,4 for Q3 significantly ahead of expectations and guidance with c.£9.4m inflow compared to original guidance of breakeven (H1 2014: £51m outflow also £9m ahead of expectations) which includes c.£3m of business integration activities which were planned and included in prior guidance

· Operating cash flow also significantly ahead at c.£9.2m after £0.2m of exceptional costs

· Legal Services cash collection ahead of prior guidance at £0.76m per day by the end of Q3 (vs target of £0.75m) compared to c.£0.5m per business day recorded at the end of H1 2014

· Cash at 30 September 2014 ahead of plan at £78.9m after paying down borrowings of c.£6.5m during Q3 (H1 2014: £85.0m)

· Net funds maintained at H1 2014 level of c.£25m (excluding preference shares of c.£5.7m redeemable between 2018 and 2021)

Noise Induced Hearing Loss ("NIHL") Internal Business Review

· Internal Business Review of NIHL settlement timings being conducted in Q4 due to first few settlements already agreed in Q3 being ahead of plan and at amounts higher than existing accrued income policy

· The results of this review and the potential positive impact to H1 2015 cash flows will be announced on or prior to the year-end pre close statement

· NIHL cases in work-in-progress now total c.44,500 with accrued income recognised on these cases discounted by c.31% in value compared to ABI industry average settlement case values consistent with the Group's aim to drive down cost of claims. With now a further c.30% case number dilution provision being provided for this equates to an effective 61% dilution rate on stringently vetted cases

· Combining this effective dilution rate with a two stage vetting process which rejects 75% of cases (during the initial clinic and two separate hearing tests) leads to Quindell having an overall repudiation rate of c.91% of NIHL cases

Outlook: on track to meet 2014 targets

· Due to improved margins and Q3 cash performance, the Board remains confident of meeting all of its FY2014 KPIs (cash, adjusted EBITDA and adjusted EPS) with these now achievable on revenue of £750m to £800m. We continue to target to deliver on our strategy of:

o Driving down cost of insurance claims and maintaining or improving cash margins which reduces turnover without volume reduction but increasing EBITDA margin

o Controlling growth and optimising cash flow through being selective and limiting business volume

o EBITDA margin range guidance now increased to a range of 40% to 45% (from 35% to 45%)

· Consistent track record of cash collection continues: Over £220m of cash collected in H1 2014 equivalent to c.80% of trade related receivables5 (including accrued income, excluding NIHL cases) collected over each of the last three half year periods, combined with positive Q3 cash performance

o Underpins H2 operating cash flow guidance of c.£30m to £40m, and H1 2015 guidance of up to £100m inflow without significant reliance on NIHL cases, with NIHL offering potential upside in H1 2015

· A number of core business relationships are expected to expand in Q4 and our number of North American telematics prospects are increasing (subject to regulator approval) which would increase connection targets

· Strategic priorities remain: focus on integration, delivery and cash generation

· Reaffirmed commitment to strengthening management and further enhancing corporate governance with additional appointments expected in Q4

· The Board continues to consider and pursue, with advisors where relevant, all options available to it, including share buy backs, North American listing, disposal or demerger of assets or divisions and strategic and/or financial investments by third parties, in order to maximise shareholder value.

Robert Terry, Chairman of Quindell said: "The Board is pleased to announce another successive quarter meeting or exceeding market expectations in all key performance indicators including over £9m of operating cash inflow when the market expected breakeven. Taking in to consideration that volumes are subject to roll out, execution and industry claims frequencies, the Board is confident that the upper end of market expectations can be achieved for the full year for 2014 on Revenues of between £750 to £800 million by repeating the same run rate performance delivered by the business in Q3 and taking into consideration seasonal fluctuations in Q4.

It is clear that in due course, the opportunity to deliver a business with over a billion pounds of revenue, generating significant profits with associated positive cash flows, is within our grasp."

Notes

1. Comparative amounts have been restated to reflect 15:1 share consolidation and items in the 2013 Financial Results, note 2A, Notes to the Consolidated Financial Statements

2. Adjusted EPS is Profit after tax, excluding exceptional costs, share based payments, gain on re-measurement of acquisitions/investments and amortisation, divided by the weighted average number of shares in issue

3. Adjusted EBITDA is Profit before interest, tax, depreciation, amortisation, share based payments, gain on re-measurement of acquisitions/investments and exceptional costs

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

5. Trade related receivables includes VAT and disbursements included in both gross and net sales as applicable in prior periods

For further information:

For further information, please visit www.quindell.com