Quindell Extends its Technology Capability with IT-Freedom Acquisition
Released Thursday 24th May 2012
Quindell Portfolio Plc ("Quindell or the Group")
•Acquisition of IT-Freedom – scales delivery capability in line with significant Group pipeline
•Extended partnership with SMI Telecoms – now exclusive global distributor and will support the conversion of SMI’s considerable pipeline
•Cash and shares issued at a 114% premium
•Extension of the technology is a further significant step in Quindell establishing its technology solutions as an undisputed leading player in the global insurance market
Quindell Portfolio Plc (AIM: QPP.L), the provider of sector leading expertise in software, consultancy and technology enabled outsourcing in its key markets, being Insurance, Telecommunications and their Related Sectors, is pleased to announce that it has extended its technology delivery capability through the acquisition of IT-Freedom Limited (“IT-Freedom”) and extended its partnership with SMI Telecoms LLC (“SMI”) and is now the sole and exclusive distributor for SMI products on a global basis:
SMI agreement
The new agreement reached with SMI secures exclusive global distribution rights for the SMI products, in consideration for Quindell paying £1.25 million in cash and building its global implementation and service capabilities to support SMI in the conversion of its significant pipeline of licence opportunities, that have the potential to close in 2012 and beyond.
Acquisition of IT-Freedom
Quindell is also acquiring IT-Freedom, an award winning software solutions delivery company, with a demonstrable track record in the insurance sector, in order to scale up its delivery capacity to cope with the significant pipelines already established by the Group. This capacity will be required from the beginning of July when Quindell emerges from the first mover advantage restrictions granted to its insurance technology charter client Ingenie, a digital insurance brand which is supported by two of the UK largest insurers. These restrictions stopped Quindell from selling its Telematics related insurance technology solutions to other insurance companies until July 2012.
IT-Freedom, now ‘Quindell Enterprise Technology Solutions’ has been acquired by the Group at a valuation of £9,465,640.28p to be satisfied by the initial issue of 49,713,669 Quindell Shares ("New Shares") and £3.5 million in cash paid £0.5 million on completion and then £1 million on the 1 July 2013, 2014 and 2015. The New Shares have been issued at a price of 12 pence per share, representing a premium of 114% on yesterday’s closing price. The shares are subject to lock in of between 12 and 36 months from the date of issue. In the year to 30 September 2011, IT-Freedom had sales of £3.0 million and pre-tax profit of approximately £200,000, as well as gross assets of £2.0 million.
Background
IT-Freedom was founded, and is owned in the majority, by Mick Sargeant and Andrew Passfield, following their departure from the Innovation Group in 2002. Mick and Andrew previously headed up the European and Global Charter Client Software and Service delivery operations for the Innovation Group, managing major programmes of work with 9 of the top 10 general insurers. Following this acquisition, Quindell has now assembled its core technology delivery team for the Group going forward.
The acquisition of IT-Freedom is an important component of Quindell’s strategy as, following this acquisition Quindell is now a clear market leader in the telematics based insurance space with two of the top four leading telematics based insurance players; being ingenie our charter client and insurethebox. Recent market developments mean that nearly all the largest insurance players in the UK, following pressure on profitability and changes in regulation, are now rapidly looking to introduce schemes for telematics based motor insurance and therefore Quindell is in a strong position to capitalise on this. Our strategy is to leverage both this position in the fast growing telematics segment and our strength in technology enabled outsourcing.
IT-Freedom has developed a robust customer base for its technology solutions, being Insurance Component Environment (“ICE”) product suite: ICE Claims, ICE Policy and ICE Track (Insurance Analytics) and in the past two years alone has delivered circa 40 implementations into production, within an average go-live timescale of 14 weeks. Many of IT-Freedom’s customers have engaged on a “Software as a Service”(SaaS) basis, generating a significant recurring revenue stream and under the terms of their established maintenance programmes these customers will now have the opportunity to take advantage of Quindell’s investment in transformational digital solutions for the insurance marketplace.
The boards of Quindell and IT-Freedom believe that Quindell’s established technology platforms, organisational scale and existing business relationships with the top UK insurers, coupled with IT-Freedoms delivery capabilities, will significantly assist in securing both new technology and technology enabled business process outsourcing contracts for the Group.
Rob Terry, Chairman and Chief Executive of Quindell said: "We are delighted to be extending our technology delivery capability with the addition of IT-Freedom’s ICE product suite and proven expertise. This acquisition broadly completes our technology platform for the provision of insurance services. With pipelines for the sale of insurance solutions at record levels this acquisition allows us to scale up to meet demand. I am personally looking forward to working with Mick, Andrew and the team again, as we focus once more on bringing transformational technology solutions to the insurance marketplace.
“Both our Board, and that of IT-Freedom believe that Quindell’s established technology platforms, organisational scale and existing business relationships with the top UK insurers, coupled with IT-Freedom’s delivery capabilities, will significantly assist in securing both new technology and technology enabled business process outsourcing contracts for the Group.”
Mick and Andrew, the Founders of IT-Freedom, commented: "Having worked closely with Rob and many of the Quindell Executives in the past we are delighted once again to be part of the team which is focused on bringing disruptive change and delivering significant savings for the insurance industry. The share price premium demonstrates the confidence we have in the value of the combined Group and what it has to offer to the industry.
“At a time of so much change in the industry we are pleased that our team can be part of what promises to be an exciting and revolutionary programme of change."
Application has been made for the 49,713,669 New Shares to be admitted to trading on AIM. Admission of the shares is expected to occur on 31 May 2012. Following Admission Quindell will have 2,683,444,540 ordinary shares in issue. The Company has no ordinary shares held in treasury. The total of 2,683,444,540 ordinary shares may therefore be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FSA's Disclosure and Transparency Rules.
END
