13th Oct 2014 07:28
LONDON (Alliance News) - Quindell PLC Monday said it is confident of meeting the upper end of market expectations for the full year, as the company issued a third-quarter trading statement.
The AIM-listed company's shares have been under pressure since shortsellers Gotham City Research in April published a 74-page report accusing Quindell of being a "country club built on quicksand". In September, Quindell said it had received judgement in its favour in a libel action against Gotham City. Despite the victory, Quindell has since been forced to reassure the market amid weakness in its share price.
On Monday, the professional services company reported gross sales of about GBP200 million in the quarter ended September 30, incorporating revenue of about GBP198 million, increased from GBP92.1 million in the corresponding quarter last year. Quindell said the rise was due primarily to strong organic and synergistic growth, adding that businesses acquired in the last 12 months represented less than 10% of revenue.
Third-quarter earnings before interest, tax, depreciation and amortisation, adjusted for a number of items, including Quindell's share consolidation and gains on re-measurement of acquisitions/investments and exceptional costs, increased to GBP83 million from GBP34.5 million, due to increased amount of "high-margin digital solutions revenue and growth of legal services revenue".
According to Quindell, third-quarter adjusted operating cash flow is "significantly ahead" of expectations and guidance, with an inflow of about GBP9.4 million, as opposed to original guidance of breakeven. Quindell said this includes about GBP3 million of "business integration activities which were planned and included in prior guidance". Operating cash flow increased to about GBP9.2 million after GBP200,000 of exceptional costs, Quindell said.
The company reported GBP78.9 million of cash at the end of the third quarter, after paying down borrowings of about GBP6.5 million.
Quindell also said an internal review of its noise-induced hearing-loss business could have a positive impact on cash flows in the first half of its next financial year, with the results due to be announced on or prior to the year-end pre-close statement.
"The board is pleased to announce another successive quarter meeting or exceeding market expectations in all key performance indicators including over GBP9 million 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 GBP750 million to GBP800 million by repeating the same run-rate performance delivered by the business in the third quarter and taking into consideration seasonal fluctuations in the fourth quarter," Chairman Robert Terry said in a statement.
"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," Terry said.
Quindell said it is continuing to consider and pursue all available options in order to maximise shareholder value, including share buy backs, a North American listing, disposal or demerger of assets or divisions and strategic and/or financial investments by third parties.
In early trade Monday, Quindell shares were up 3.5% at 159.63 pence.
By Samuel Agini; [email protected]; @samuelagini
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