Quindell Portfolio Plc Major Contract Win and Acquisition
Quindell Portfolio 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 a major contract win in South Africa and the acquisition of Quintica SA (Pty) Limited and Quintica International Limited (collectively "Quintica") a specialist systems integrator and outsource service provider to the telecommunications marketplace throughout the Middle East and Africa.
Quintica has offices in South Africa, Ghana, Nigeria, Kenya, Uganda, Dubai and Abu Dhabi, delivering a combination of technology solutions and supply chain management services to a number of the major national carriers and multinational telecom groups. Quintica, a business that Quindell has recently taken a circa 7.7% ownership in, has been working closely with Quindell over the past 12 months on a number of strategic implementations of Quindell's Challenger OSS technology. As well as currently being engaged in a number of key joint bid opportunities, Quintica, in combination with Quindell has recently won a major contract with a leading multinational telecoms group for their South African operation.
The acquisition of Quintica allows Quindell to further strengthen its systems integration capability for its technology solutions and provides a platform for further expansion into a geography where the demand for software and services continues to expand at a rapid rate.
The terms of the acquisition have been satisfied by the issue today of 38,461,538 Quindell shares and circa £37,000 in cash and the settlement of shareholder loans totalling circa £592,000 by a payment of circa £271,000 in cash at completion and the issue of a further 3,025,128 shares on the first anniversary of completion. In return Quintica has warranted profit after tax of circa £710,000 for the twelve month period ending 30 June 2013 (the "Target Profit") and cash generated during the period to be no less than £530,000 (the "Cash Target"). The shares will be subject to lock in of between 12 and 36 months from the date of issue. In the event that Quintica misses its Target Profit or Cash Target, the Group will receive compensation from the vendors in the form of cash equal to circa 6.5x or 8.7x the profit or cash shortfall respectively. In the year ended 30 June 2012, the last full year for which management accounts are available, Quintica recorded revenues of circa £5.0 million.
As previously announced by the Company in its Acquisition and Strategy Update on 15 August 2012, this approach to acquiring companies using warranted targets has proven to be a successful method of acquiring companies, consistently delivering an achievement of over 150% of their respective targets.
Whereas the acquisition of Quintica is only expected to be slightly Earnings Per Share ("EPS") enhancing in the remaining period to December 2012, the Company expects it to be significantly EPS enhancing during 2013.
Rob Terry, Chairman and Group Chief Executive of Quindell said: "I am delighted to announce the tighter integration of the Quintica team within Quindell through this acquisition. Their knowledge and expertise with our Challenger OSS platform has already helped us in a number of international opportunities and now as part of the Group we look to expand our reach within the Middle East and African territories and beyond. The combination of technology expertise and demonstrable track record in outsource service provision is an ideal match for the Quindell business model and philosophy.
The rationale for this acquisition is clearly demonstrated by the recent major contract win with a leading multinational telecoms group for their South African operation. This contract, in combination with other wins underpins the significant growth in Quintica's business plan as part of Quindell in 2012 and beyond. The board of Quindell remains extremely confident of meeting current and future market expectations and is focused on delivering strong organic growth and earnings enhancing acquisitions beyond these levels to underpin its own 2p EPS target for options and bonuses in 2013."
The Group has also issued today a further 10,000,000 shares in relation to its previous announcement regarding Quindell Motor Services Limited dated 14 May 2012 to acquire consulting companies in order to assist in meeting its target profit. Application has been made for the 48,461,538 new shares to be admitted to trading on AIM. Admission of the shares is expected to occur on 21 September 2012. Following Admission Quindell will have 2,765,126,976 ordinary shares in issue. The Company has no ordinary shares held in treasury. The total of 2,765,126,976 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 FSA's Disclosure and Transparency Rules.