Strong performance from its legal services arm boosted a trading update from Quindell plc, which it turn began to pull the alternative business structure out of the doldrums yesterday, with its share price shooting up 30% in the day.
However, despite closing at 235.5p, the price is still 60% below where it was in April, when a ‘shorting attack’ by little-known American analysts Gotham City Research sent it tumbling. Quindell is taking legal action against Gotham City.
Quindell told investors yesterday that its revenue for the first half of 2014 were up 117% on the same period last year, to £355m, most of which was due to “organic and synergistic growth”, rather than acquisitions made in that time.
Most of the revenue is in its services division, which handles personal injury claims on behalf of insurers. Growth was “particularly strong” in its legal services arm.
Quindell’s margin was up over 10% to a massive 43%, with profit before tax nearly trebled to £154m.
Cash collection has been one of the issues that observers have questioned, and the company said yesterday that its legal services arm was collecting around £500,000 per business day by the end of the last month, with the aim of rising to £750,000 and £1m per day by the third and fourth quarters of 2014 respectively.
It said these targets were viable because Quindell has around 110,000 cases in progress as at 30 June 2014.
Overall, Quindell said it was “confident of meeting all its key performance indicators for full year market expectations (cash conversion, adjusted EBITDA and adjusted EPS) on full year revenue guidance of £800-900m”.
Before yesterday’s rally, Quindell’s share price fell last week to about 175p, from a pre-Gotham high of nearly 600p, in the wake of Gotham attacking a stock in Spain and the doubts it expressed about that company being quickly proven correct.
Back in April, Quindell’s share price was less than 20p. The change in valuation came in June following a 15:1 consolidation of the shares.
The company yesterday also announced the appointment of David Scott Currie as a non-executive director. Mr Currie recently established Codex Capital Partners and before that headed Investec Bank plc’s investment banking division.
Though he holds no shares in the company, Codex Capital Partners “may provide consultancy services and investment advice to Quindell”, the company said.