Quindell Plc

("Quindell", the "Company" or the "Group")

Update on Connected Car Solutions

Quindell Plc (AIM: QPP.L), a market leading global provider of professional services and digital solutions, announces the restructuring of the terms of its joint investment with RAC in Connected Car Solutions ("CCS"). 

On 7 April 2014, Quindell announced a joint investment with RAC in a new company, CCS, to distribute Quindell and RAC's combined connected car capabilities. Due to market conditions beyond the control of either Quindell or RAC, the parties have concluded that it is not the best use of capital for either party to finance a free telematics roll out to consumers as initially planned. It is now in the best interests of both parties to restructure CCS and for Quindell to acquire RAC's interest in CCS and continue their strong working relationship both in respect of existing contracts and in the future.

·    Terms of the restructuring; Quindell to achieve 100% ownership of CCS

o   Quindell acquires all of RAC's shares in CCS so that Quindell now owns 100% of CCS

§ Net cost of the restructuring to Quindell is £3.5m (payable in cash over 18 months), gross £18.5m offset by RAC cash payments of £15m from RAC in consideration of the revised contract terms set out below

§ Quindell capex for RAC box roll-out eliminated with positive impact on Quindell's previously forecast cash flow in 2014 and 2015 of c. £10m and c. £20m respectively

§ Quindell now benefits from 100% of the profits from CCS ensuring this restructuring will not negatively effect Quindell's profit expectations, now to be delivered on lower turnover with an improved cash profile

§ Quindell retains over 600,000 connections (including c. 200,000 phone-based apps) of which c. 50% are in the territory covered by CCS

o   RAC buys back its brand licence, customers and sales pipeline in relation to telematics (c.7,500 connections plus sales pipeline primarily in fleet)

o   RAC acquires an independent license for certain device-based Quindell and CCS telematics technology with no future royalties or license fees to pay to Quindell or other CCS related parties for its use (excluding Himex Digital World technology)

o   Those warrants in Quindell issued to RAC (as part of the joint investment arrangements announced on 7 April 2014) over 16.67 million shares (post consolidation) are cancelled

o   Those warrants in Quindell issued to RAC (as part of outsourcing contract announced on 3 April 2013) over 16.67 million shares (post consolidation) remain and are subject to the initially agreed lock-in arrangements

·    RAC and Quindell continue to have strong and significant ongoing relationship with future opportunities for further collaboration

o   Quindell to continue executing on existing five year outsourcing contract with attractive cash profile

o   Contractual arrangements between Quindell and RAC in relation to achieving scale purchasing benefits for telematics including hardware and telecoms contracts

o   Quindell continues to be a core technology supplier to RAC

o   Intention for Quindell to process claims arising from RAC's telematics for breakdown members

o   Quindell and RAC are discussing the use of Quindell's ingenie insurance proposition for RAC members

·    Quindell Board confirms confidence in a target of 12 million paying subscriber connections 

o   Quindell currently has over 600,000 connections (including c.200,000 phone-based apps) in global connected car solutions, growing rapidly, through new and existing relationships

o   Net connections are expected to grow at a rate of c. 20,000 subscribers per month in 2015

·    The revised terms allow Quindell to offer a single connected car strategy across all global markets and brands including in primarily consumer brands: ingenie and Road Angel

·    Quindell Board re-affirms market guidance for 2014 and beyond

Rob Terry, Chairman of Quindell, said:  "The relationship between RAC and Quindell remains strong and we will continue to work closely together in key areas, including in relation to the servicing of claims arising from RAC's connected car offering and potentially through the ingenie brand.  These revised terms are in the best interests of both companies. 

Quindell has a number of exciting new contracts in the telematics and connected car space and is confident of achieving its targets in this area. The Board continues to have confidence in its previous guidance in respect of cash and profitability for 2014 and beyond."

Chris Woodhouse, Chief Executive Officer of RAC, said:  "We continue to have a strong relationship with Quindell as a key partner and intend to continue to work closely in the connected car space as well as through our on-going claims outsourcing and technology arrangements, which have been of significant benefit to both parties to date.

RAC has been looking after its members and their needs for more than 115 years and our on-going association with Quindell will enable us to continue improving their customer journey, whilst delivering market leading propositions into the future.  Quindell's technology and integrated outsourcing helps deliver to our members and commercial partners a best of breed solution that will enhance their driving experience."