Quindell (LSE: QPP) will miss an important deadline to release its full-year results within six months from the end of the financial year.
In a statement yesterday Quindell said:
“The Company announces today that whilst the work in preparing its audited report and accounts for the year ended 31 December 2014 (“Accounts”) is in its final stages, due to the complexity of this process, they will now not be published by 30 June 2015”
Last week, the Financial Conduct Authority (FCA) announced that it is looking into public statements made regarding the company’s 2013 and 2014 financial accounts, causing Quindell to seek a temporary suspension in trading of its shares.
State of suspense
Shares in Quindell, which have been suspended since 24 June, are likely to remains suspended for another few weeks.
The issues relate to the now discontinued Professional Services Division (PSD), which Quindell sold to Slater & Gordon for £637 million back in March 2015. Thus, says Quindell, the process of restating its 2013 and 2014 financial accounts are “largely of historical interest only”. The company has also said that the matters are “largely non-cash items”.
Slater & Gordon, an Australian law firm, is finding itself under investigation from the Australian Securities and Investments Commission, Australia’s equivalent of the FCA, over issues relating to the way its cash flows have been reported.
Once the accounting issues are finally resolved, Quindell would look to return the proceeds of the sale of its PSD and focus on its remaining businesses. Before the announcement, Quindell had said that it was return up to £500 million to shareholders within the second half of 2015. It is uncertain whether Quindell will continue to do so, in the light of the prolonged process with legacy issues.
Sprawling assets
Quindell’s remaining assets sprawl across different sectors, but have a focus on insurance and legal markets. These include its black box car telematics business, healthcare and rehabilitation services and its electricity broking business.
The company is likely to hold onto to these businesses for a while, as it is difficult to put a value on them whilst its accounts are under review. But as these businesses seem to be focussed on fast growing areas they could have significant value in the longer term.
Shares in Quindell were last traded 124.75 pence, which gives the firm a market capitalisation of £555 million. This is less than the £637 million that it received from the sale of its PSD business, but Quindell could face calls for compensation from Slater and Gordon in respect of the customary warranties in the sale of PSD.
Although Quindell’s problems are not yet over, the company seems to be trading below the value of its assets. But, without greater confidence about its financial statements, the market will continue to be wary about Quindell’s true value.
