Quindell to buy personal injury claims law firm

Quindell is acquiring law firm Pinto Potts Solicitors, subject to approval from the Solicitors Regulation Authority and the Financial Services Authority.

Pinto Potts, which specialises in high-value personal injury claims involving the more complex trauma cases including head, spine and other serious injuries, will work alongside Silverbeck Rymer as part of Quindell Legal Services.

Quindell will pay £1.5m on completion, and a further £1.5m approximately 12 months from today, together with the issue on completion of 87.5 million Quindell shares, which will be subject to lock-in arrangements ranging from 12 to 36 months.

In return Pinto Potts has warranted a profit after tax of £2m and operating cash flow of £1.5m for the 12-and-a-half month period ending 31 August 2013.

Quindell chairman and group chief executive Rob Terry said: “We are delighted to have reached this agreement, which represents another key step in the building of our combined insurance outsourcing offering.

“I would like to welcome both David Pinto and David Potts to the group, where I am sure their industry expertise and experience in the sector will prove to be invaluable as we continue to grow our revenues in the personal injury space, and as we look ahead to 2013 and beyond, into other areas including wills and probate to support our broader service offering for the brands we partner.

“With the significant volume of business we already have in pilot, the board has no doubt that this acquisition will be significantly earnings-enhancing from completion, and will assist with our ability to scale the business to a level of growth beyond our previously stated plans.”

Trading update

Meanwhile, Quindell has reported that turnover for the nine months to 30 September 2012 was about £95.7m, with adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) of about £29m.

It said results were “significantly above market expectations” with adjusted earnings per share (EPS) of 0.86p. It has reported operating cash flow to EBITDA ratio in the region of 65%, and cash at the end of the period of £18.5m (30 June 2012: £21.4m), after £7m of acquisition costs.

The company has also appointed Steve Broughton to its strategy and integration advisory board. Broughton is chairman of Ingenie, the young drivers telematics digital brand, as well as alternate chairman of Tesco Underwriting and a non-executive director of Ageas UK.

Terry said: “As we continue to approach April next year and the banning of referral fees with respect to personal injury, our combined offerings are generating a great deal of interest in the insurance market, which continues to surpass even our own expectations.

“The team and I are looking forward with confidence to the remainder of 2012 and the opportunity of continuing to help our existing and prospective clients maintain or improve historic income levels while operating in a manner which is both ethical and drives down the cost of claims for the industry as a whole.

“As a result, the board is extremely confident of exceeding market expectations for the full year and beyond and believe the group’s ability to do so is clearly demonstrated by the 0.4p EPS achieved in Q3.”

“We plan to launch our company share option scheme in the final quarter of the year and in combination with other various targets, the exercise of options will be tied to achieving 2p EPS in 2013.”