Breathless highs and agonising lows have become the norm of late at Quindell (QPP), which provides software, consultancy and tech-enabled outsourcing to insurers and telecom providers. Its shares jumped 14 per cent after it published a bullish trading update on Monday, only to fall 8 per cent on Tuesday, and further in early trading on Wednesday.
Quindell's latest release attempted to address concerns about its over-reliance on acquisitions to drive growth. It has tweaked its strategy to prioritise business execution, integration and cash generation, as well as strengthen management and corporate oversight to match its size.
It also provided plenty to chew on for growth-focused investors. First-half sales rose 117 per cent to £355m and are on track to hit £800-900m this year and less than 10 per cent of that increase stemmed from businesses acquired in the past year. Major contract wins helped Quindell more than double its services revenue to £293m, while its solutions revenue soared 176 per cent.
Quindell also widened its adjusted cash profit margin by over 10 percentage points to 43 per cent. And rising sales of legal services and a higher proportion of solutions revenue drove a 187 per cent leap in cash profits - excluding one-off costs - to £155m. The company also batted away questions surrounding its cash flows, saying it generated over £220m in the period and produces £1.8m in cash every business day.
Rapid growth and a more conservative approach could help improve investor sentiment, which has been depressed since short-seller Gotham City Research's attack in April. But issues outside its control continue to dog confidence; shares took a hit this month when another of Gotham's targets, Spain's Gowex, admitted to falsifying accounts. Quindell also endured embarrassment last month when regulators vetoed its proposed move to London's main market.
