Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • FEAnalytics.com
  • FEInvest.net
  • FETransmission.com
  • Investegate.co.uk
  • Trustnet.hk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email [email protected] in the first instance.

 Information  X 
Enter a valid email address

Quindell PLC (WTG)

  Print      Mail a friend

Monday 30 March, 2015

Quindell PLC

Proposed sale of Professional Services Division

RNS Number : 8060I
Quindell PLC
30 March 2015
 



30 MARCH 2015

 

 

Quindell Plc

 

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

 

 

 

Proposed sale of the Professional Services Division

 

Initial cash consideration and further contingent cash consideration

Substantial return of capital to Shareholders to follow

Following Disposal, the Group will focus on insurance related technology businesses

 

Quindell plc (AIM: QPP.L) announces that it has today entered into a conditional sale and purchase agreement to dispose of the Professional Services Division ("PSD") to Slater and Gordon Limited ("SGH") for an initial cash consideration of £637 million and further contingent cash consideration payable in respect of the future settlement of its clients' noise induced hearing loss ("NIHL") cases ("Disposal"). In addition, the Company will, as soon as practicable, post a Circular relating to the Disposal and a notice convening a General Meeting of the Company to be held on 17 April 2015 to approve the Disposal.

 

In view of the size of the PSD relative to the Group, the Disposal will result in a fundamental change in the business of the Company for the purpose of Rule 15 of the AIM Rules and it is therefore conditional upon the approval of Shareholders, amongst other matters.  

 

The Board also announces a clear strategy for the Group should the Disposal complete.  Quindell will be focused on its range of technology businesses with strong growth potential, disposing of non-core businesses and returning proceeds to Shareholders.

 

Highlights

 

·    £637 million to be paid in cash at completion;

·    Deferred cash consideration of 50 per cent share of net fees from the settlement of NIHL cases transferred on completion (as at 29 March 2015, the Company was acting for clients in respect of approximately 53,000 NIHL cases);

·    Majority of cash proceeds from the Disposal to fund substantial return of capital to Shareholders, expected in the second half of 2015 - precise amount of any distribution to Shareholders has not yet been determined but the Directors expect that, in aggregate, the initial tranche will be up to £500 million (representing in excess of £1 per share); further cash distributions dependent on the deferred cash consideration, business disposals of non-core businesses and underlying performance;

·    Following the Disposal (if completed), Quindell will comprise a range of insurance related technology businesses with strong growth potential; and

·    The Board will take appropriate action to deliver shareholder value from non-core assets.

 

David Currie, Interim Non-executive Chairman, said:

 

"We are pleased to announce the conditional disposal of the Professional Services Division. This is an important landmark for Quindell, delivering significant value for investors from part of our business. Should the Disposal complete, we are committed to a significant return of capital to our Shareholders and to return future cash proceeds over time as NIHL cases settle. We are confident that this transaction, our clear strategy and the actions we are taking will enable us to move forward with renewed purpose."

 

Robert Fielding, Group Chief Executive, said:

 

"We are pleased that Slater and Gordon has recognised the strength of our business and quality of our people and the team will continue to look after all our customers to the same high standards that we always have both before and after completion of the transaction. I would personally like to thank the team that has worked so hard to deliver such quality services to our customers and this deal for our Shareholders. Should the transaction complete, I will feel proud to leave behind an exciting technology business set for substantial growth and success in the coming years and I will miss the many friends and colleagues I have in the business."

 

Richard Rose, Non-executive Chairman Designate, said:

 

"Looking ahead, the Board of Quindell will work to deliver further value for investors from the technology businesses within the Group following the disposal of the Professional Services Division. The Group will be restructured to prudently incubate, develop and grow insurance related technology businesses based around telematics and software solutions. We will take appropriate action with the non-core businesses.  As we reshape the Board and executive structures, we are committed to ensuring Quindell works to the highest standards of corporate governance."

 

Andrew Grech, Managing Director of Slater and Gordon Limited, said:

 

"We are delighted to be acquiring Quindell's Professional Services Division. In getting to this point we undertook a very extensive due diligence process. The business we are buying is of high quality with robust infrastructure and systems and good people. This move will accelerate and consolidate our position in the UK market and bring benefits to the clients and staff of both businesses."

 

 

The Disposal consideration

In addition to the initial cash consideration of £637 million, Quindell will receive further contingent cash consideration payable in respect of the future settlement of its clients' NIHL cases.  As at 29 March 2015, the Company was acting for clients in respect of approximately 53,000 NIHL cases ("Deferred Consideration Cases") and Quindell will be entitled to a 50 per cent share of net fees (after the deduction of certain agreed costs) in respect of the settlement of such cases in the period until 30 June 2017 (although there can be no guarantee that such cases will settle successfully). There will also be a final payment based on the estimate of 50 per cent of the net present value of any unresolved Deferred Consideration Cases as at 30 June 2017.

The total cash amount payable to Quindell, excluding the contingent cash consideration; taking into account payments already made by the Purchaser under an agreement dated 31 December 2014 between Quindell and the Purchaser governing exclusivity arrangements and case transfers between the parties in respect of the potential sale of the Professional Services Division, as amended; and prior to any adjustment on completion, is approximately £649 million.

In view of the relatively small numbers of cases that the Company has successfully settled to date, the Directors are unable to assess with certainty the amount of net fees that might be generated by such NIHL cases. However, the Directors believe that, based on certain assumptions, the Deferred Consideration Cases could generate a significant amount of additional cash consideration. Therefore, the Directors believe that it was important to provide Shareholders with a mechanism to benefit further from the Deferred Consideration Cases.

Rationale for the Disposal

 

Whilst the Disposal was not actively pursued by the Company as part of its review, the Board recognises that the sale of the Professional Services Division represents an opportunity for the Company to realise substantial cash proceeds and for Shareholders to participate in that cash realisation. The Disposal is in line with the Board's broader objective of reducing financial indebtedness and generating value for Shareholders.  In addition, following completion, the Board believes that the resultant Group will benefit from the increased simplicity of having a more focused business with the requisite capital base to maximise returns for Shareholders from the Technology Division.

If the Disposal does not complete Shareholders will be deprived of the opportunity to participate in the cash proceeds.  The Board would continue to operate the Professional Services Division and the Technology Division in the best interests of Shareholders in line with the Board's strategy. In the short term, this would require the Group to operate from a more constrained capital base and the challenges inherent with operating a working capital intensive business such as the Professional Services Division would remain.  

Furthermore, were the Disposal not to proceed, the Group's financial and operational flexibility would be limited by matters such as the level of financial indebtedness which the Group would retain. In addition, the Group would need to manage the complexities of maintaining two separate business divisions and the risks inherent in the operation of those divisions, including the retention of key staff and customers. It is likely, therefore, that the Board would wish to strengthen the cash position of the Group and this might involve, inter alia, extension of existing debt facilities, refinancing, an issue of new equity or disposal of non-core assets.

Future strategy

 

On 12 January 2015, the Board announced the prospective appointments of Richard Rose and Jim Sutcliffe ("Consultants"). Both Richard Rose and Jim Sutcliffe have been providing services to the Company as employees and consultants to assist the Board, inter alia, in the formulation of the Group's future strategy.

 

Their key findings were that Quindell had strong core businesses and people, but that these were stressed by over aggressive growth, both organically and via acquisition. In the event that the Disposal completes, Quindell will adopt a strategy to prudently incubate, develop and grow its range of technology businesses with strong growth potential. These are focused on, and work in, the insurance sector. When these businesses mature, the Board will consider whether to retain, dispose of or seek separate listings for such businesses and, separately, the Board will continue to take appropriate action to deliver Shareholder value, where possible, from non-core assets.

In the event that the Disposal completes, Quindell will comprise a range of technology businesses with strong growth potential, in particular:

·     connected car and telematics (Himex, iter8) - these businesses are relatively early stage with a number of contracts with major insurers in North America;

·     insurance claims management systems (Quindell Enterprise Technology Solutions) - this is an established business which provides high quality enterprise software and recently won the XCelent Award 2015 for Claims Administration; and

·     insurance brokerage utilising technology and telematics (Ingenie) - this is a fast growing, young driver specialist in the UK, which recently commenced operations in Canada and won the Insurance Times Award for Innovation in December 2014.

This strategy will require some prudent capital investment supplemented by the cash flow such businesses produce themselves.

 

Board and management

 

Should the Disposal complete, Robert Fielding, Group Chief Executive Officer, will resign from the Board and transfer with the Professional Services Division to the Purchaser. Each retained business has its own senior management team and plans have been put in place to seek a replacement Group Chief Executive Officer should the Disposal complete.

 

Should the Disposal complete, the Directors believe it is an appropriate time to make changes to the Board. Laurence Moorse, Robert Bright, Robert Burrow and Vice Admiral Robert Cooling will resign from the Board upon or shortly after completion.  David Currie will step down as Non-executive Interim Chairman and become a Non-executive Director.  Richard Rose will be appointed Non-executive Chairman.  Given the resulting change of scale and activities of the Group, Jim Sutcliffe will no longer join the Board and will terminate his employment on 30 June 2015 but remain as a consultant until at least the end of the year to support the management team. Richard Rose and Jim Sutcliffe have informed the Board that they intend to voluntarily allow all of their options over Ordinary Shares to lapse at Completion.

 

Additional directors will be recruited to supplement the retained senior management of the Group and announcements of further appointments to the Board will be made as soon as practicable. Quindell will ensure that the appropriate Board and management structures are in place for the Group, based on a commitment to high standards of corporate governance.

 

Professional Services Division

The Professional Services Division provides legal, claims management, health and medical reporting services.  During the financial year ended 31 December 2013, the profits before tax generated by the Professional Services Division contributed in aggregate £82,500,0001 to the Group.  During the six months ended 30 June 2014, the profits before tax generated by the Professional Services Division contributed in aggregate £113,400,0002.

Independent PwC report and accounting policies

 

On 8 December 2014, the Company announced that PricewaterhouseCoopers LLP ("PwC") was being engaged to carry out an independent review into, inter alia, certain Group accounting policies and expectations as to cash generation into 2015.

 

Although not finalised, PwC's review has identified that certain of the accounting policies historically adopted by the Company, in respect of recognising revenue and deferring case acquisition costs in a number of the Group's product areas, were largely acceptable but are at the aggressive end of acceptable practice. PwC has also identified that some policies are not appropriate, principally being the NIHL cases revenue and related balances which became significant during 2014. This was primarily due to the Group's lack of historical internal data relating to NIHL claims settlements, which is needed to support related revenue recognition and cost deferral.

 

Having undertaken its own review and considered the draft findings of PwC, the Board expects to conclude that it will adopt a more conservative approach to accounting for revenue and profit in the Professional Services Division which is the subject of the Disposal.  The Board has not yet finalised either the precise policies to be adopted or their financial impact and so it is not currently possible to provide a definitive view of the historical results on this basis although the changes will likely result in a reduction of revenue and profit.

 

Any change in accounting policies is likely to mean that financial statements for the year ended 31 December 2014 will be prepared using more conservative policies with the comparative figures for the year ended 31 December 2013 potentially being adjusted to reflect the change to the preferred accounting policies.  The Company will also adjust its reported interim results for the 6 month period to 30 June 2014 using the revised basis.

 

The audit by KPMG LLP of the Company's draft results for the year ended 31 December 2014 has commenced and the audited financial statements will be published prior to the end of June 2015.

 

Use of proceeds

 

The Disposal would generate significant cash proceeds for the Group.  The Company proposes to use a majority of the cash to fund a substantial return of capital to its Shareholders, with the remainder being used for the repayment of gross third party debt (which is approximately £45.6 million as at the date hereof) and general working capital and investment purposes within the retained businesses. The cash proceeds of the Disposal will be kept on deposit and managed prudently until a distribution is effected.

The precise amount of any distribution to Shareholders has not yet been determined but the Directors expect that, in aggregate, the initial tranche will be up to £500 million (representing in excess of £1 per share, based upon 440,946,623 Ordinary Shares in issue as at 30 March 2015 (excluding any options over Ordinary Shares)).

Any gain on the sale proceeds on the Disposal received by the Company at completion is not expected to be chargeable to tax as the Company is advised that it is likely to receive a substantial shareholding exemption pursuant to Schedule 7AC to the Taxation of Chargeable Gains Act 1992.

Recommendation and irrevocable undertakings

 

The Directors consider the Disposal to be in the best interests of Shareholders as a whole.  The Directors have received advice from Rothschild in connection with the Disposal.  In providing advice to the Directors, Rothschild has relied upon the Directors' commercial assessment of the Disposal.  Accordingly, the Directors intend to recommend unanimously that Shareholders vote in favour of the Resolution relating to the Disposal to be proposed at the General Meeting, as they have irrevocably undertaken to do themselves in respect of their entire beneficial holdings of Ordinary Shares (representing approximately 0.91 per cent of the current issued share capital of the Company).

 

In addition, the Consultants have confirmed that they also consider the Disposal to be in the best interests of Shareholders as a whole.

 

In aggregate, irrevocable undertakings and letters of intent to vote in favour of the Resolution have been received in respect of 76,057,582 Ordinary Shares (representing approximately 17.25 per cent of the current issued share capital of the Company).

Proposed timetable and corporate calendar

 

The Disposal is conditional upon the following matters, amongst others, being satisfied or, in certain cases, waived:

(a)        the approval of the Resolution by Shareholders at the General Meeting;

(b)        the approval of the Solicitors Regulation Authority; and

(c)        the approval of the Financial Conduct Authority.

 

The Company's results for the year ended 31 December 2014 will be published prior to the end of June 2015 and the Company's Annual General Meeting will occur within that timescale.

 

Notes

1. Profit in respect of the financial year ended 31 December 2013 represents an aggregation (after eliminating intercompany balances) of the figures derived from the unaudited management information used for the preparation of the audited accounts for that year and applies the accounting policies as detailed in the published annual accounts for that year.  To the extent that Quindell Legal Services Limited, Mobile Doctors Limited and Quindell Business Process Services Limited (formerly Ai Claims Solutions Limited) are included in these figures, the information used in respect of those companies has been audited.  The profits attributable to companies and businesses acquired by the Group during the course of the year ended 31 December 2013 are taken into account from the effective date of acquisition. As per the section headed "Independent PwC report and accounting policies" of this announcement, the accounting policies adopted in preparing these numbers are now likely to change.

 

2. Profit in respect of the six months ended 30 June 2014 represents an aggregation (after eliminating intercompany balances) of the figures derived from the unaudited management information used for the preparation of the unaudited financial statements for that period and apply the accounting policies as detailed in the published annual accounts for the year ended 31 December 2013. As per the section headed "Independent PwC report and accounting policies" of this announcement, the accounting policies adopted in preparing these numbers are now likely to change.

 

 

For further information:

 

Quindell Plc                                                   

Tel: 01489 864 200

David Currie, Non-executive Interim Chairman  

                       

Robert Fielding, Group Chief Executive


Stephen Joseph, Head of Investor Relations




Tulchan Communications      

Tel: 020 7353 4200

Susanna Voyle 

                                                           

Victoria Huxster

                                                                       



Cenkos Securities plc, Nominated Adviser and broker

Tel: 020 7397 8900

Stephen Keys


Mark Connelly




Rothschild, Financial Adviser    

Tel: 020 7280 5000

Majid Ishaq


John Byrne


 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
DISEAKDEDEDSEEF

a d v e r t i s e m e n t