Quindell Portfolio's (QPP) headline results for the first six months of the year appear eye-watering, but they are, in fact, skewed by a string of acquisitions made by the insurance and telecoms outsourcing consultant since the last half-year.
The company says comparing these results to the preceding six months offers a more meaningful comparison. On that basis, gross sales still grew an impressive 33 per cent to £167m and adjusted cash profit surged 45 per cent to £54m, driven by a combination of organic growth, savings and economies of scale. The group even generated adjusted operating cash inflow of £2.3m, compared with guidance for a £15m-£20m outflow.
We've previously said we want to see a steady stream of contract wins and organic cash flow to make us less cautious. That now seems to be happening. In the insurance services division, Quindell signed eight contracts, which are expected to increase run rate revenues by £100m a year. Working capital management has improved, too, as across the group debtor days improved from 6.5 to 4.8 months. Quindell has also persuaded most customers to adopt its 'collaboration model', which should help the cash profile. Meanwhile, acquisitions are being scaled back to focus on organic growth.
Canaccord Genuity expects full-year EPS of 2.4p, rising to 3.4p in 2014 (from 1.5p in 2012).
| QUINDELL PORTFOLIO (QPP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 12.5p | MARKET VALUE: | £517m | |
| TOUCH: | 12.25-12.75p | 12-MONTH HIGH: | 18.25p | LOW: 5.40p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 7 | |
| NET ASSET VALUE: | 8.5p* | NET DEBT: | 4% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 45.6 | 12.2 | 0.39 | nil |
| 2013 | 163 | 43.4 | 0.90 | nil |
| % change | +257 | +256 | +131 | - |
*Includes intangible assets of £270m, or 6.5p a share | ||||
