It's hard to let go, but..........., page-102

Alex my take on Roberts Terry, former chairman of Quindell, is slightly different.

1. He was caught overtrading when he took on 52000, HL cases with double the Motor claims case time cycle. He only had $100m borrowing and a large slice of that was discounting invoices at his bankers.
Low debt. He was very stupid.

2. It seems likely that QPP treated WIP for HL cases using the same WIP accruals percentages as were used for Motor Claims ( which had well established stats for cycle time/failure rates ie 5%). NIHL cases were a small element of WIP at 31 Dec 2013 ( so bad but not really bad) . The year to 31 dec 2014 an report was not published until July 2015 ( where WTG reverted to near cash accounting/wrtiting off WIP.....and recording its loss on sale to SGH as a profit )
I assume one management acc treatment of WIP allowed for adjustments to HL claims WIP during the audit when as much actual experience as possible could be used , with auditor help, in making the the HL case WIP adjustments. The point is , only at 31 Dec 2013 can there have been any overstatement of WIP ( for HL cases) and any error /overstatement would have been afor a small % of total WIP.

KPMG quite rightly refused to sign off QPP P/L account for 12 months to 31 dec 2014 - because WIP was written down to zero.

All baffling - but absolutely no possibility of fraud in audited accounts in year to 31 dec 14 .

My suspicion is that if it had been 100% clear how prudent SGH had been in using their own WIP valuation policies, then more than me (and the 2 % who voted against the sale ) would have been against the sale.

3. It seems RT sold his shares to his wife /son and a family trust as he was being shoved out.
I think I would have done the same if I was being pushed out. I don't see fraud.

4. fraud there may have been in Terry's reign if there were overpayments to buddies in the purchase of
of companies. ( some were a bit odd) I stress may!.

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So Alex, I have a shrewd suspicion that the SFO investigation outcome will be no fraud....but minor transgressions.

Since 31 dec 2013 the analyst has had to dot join to get at real value in WIP. SGH on the other hand has carried out due dilligence and does know what is going on. SGH claims to have paid 6.3 times Earnings. It isnt a high multiple.

I have to agree with you on one point only. It would be good to have 100% clarity on SGH actual accruals policy . nevertheless my dot joining points to $200M EBITDA in 12 months to June 17.

Mel