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As expected, following the pre-close update in July (see Quindell shows progress, but still hurdles to clear), buy and build insurance BPS player Quindell Portfolio delivered revenue of £45.6m for the six months to 30 June. However it was the 27% pre-tax margin, and strong cash generation (to £21.4m from £3.7m on 31 December), which really showed Quindell’s progress.
Profitability for instance, is far better than larger rival The Innovation Group (TIG), which saw its group pre-tax margin drop to 4.2% in H112 vs. 5% last time (see Innovation Group delivers 9% organic growth). Investors were pleased by the news, pushing Quindell’s shares up 4%.
Quindell provided comparative numbers for the 9 months to 30 June 2011, which showed revenue of £1.8m and pre-tax profits of £17k. However they don’t really add anything to the story since QP only came into being following the reverse takeover of insurance software and BPO provider Quindell by Mission Capital last May (see here), and during this period the new Quindell has made a series of major acquisitions (see here and work back).
Speaking to CE Rob Terry this morning, we got a sense of how the underlying business has performed i.e. the Quindell and Mission Capital businesses, minus the acquisitions. He said from Q211 to Q212, organic growth was 404% - so revenue reached £7.3m, driven by strong growth in software and consulting. That’s certainly an encouraging sign that the recent M&A is helping drive growth in the now much smaller underlying business.
The acquisition of solicitors Silverbeck Rymer meanwhile is clearly taking longer to reach regulatory close. Nonetheless, Terry is confident that this is no longer poses an issue since SR is now contributing revenue since 1 July, and Terry expects the deal to finally be approved by Q4.
In terms of headcount, Quindell now has 1,000 staff in the UK, based primarily in Blackpool, Liverpool and Fareham. Outside the UK it has a further circa 250 staff at operating centres in the US, South Africa, Malta and the Far East. Apparently Quindell won software and consultancy business across a range of geographies during the half. Terry points out there are significant opportunities for the software and consultancy business internationally, with 5 significant letters of intent, the largest of which is an international deal for c1,000 users.
Terry sees Quindell’s main competitors being insurance BPS player Parabis, automotive intermediaries Enterprise and Helphire and insurance software provider Guidewire. But where is TIG we wonder?
