.........."please sir - we didn't know and they didn't tell us - it wasn't fair. That PwC was in on it and E&Y too. How could we be expected to know?"..............
...........the evidence might suggest Grech screwed up big time and he did he not say as much when he offered to resign end of last year (along with Skippen - seems a long time ago now - imo should have been a few others too; naive people don't make good custodians of people's hard earned)? How did AG show his remorse? He didn't take a bonus. Gee - that was decent of him (BH did though - for renegotiating the funding at a significant financial cost to shareholders; what was he paid to do? Not renegotiate it??). Does he tell us how much he paid for his shares that have taken such a battering along with shareholders who paid full whack for theirs? How come that FD got his marching orders (ok - he resigned) - did he mislead AG too?
Back then:
"
Up until this deal, S&G was forecasting its 2014/15 revenue across Australia and the UK to be around £260m. PSD’s unaudited 2014 accounts put its revenue at £645m, using its very different accounting policies to S&G, with gross profit of £328m and EBIDTA of £289m.
By adding 2,400 staff, it virtually doubles the headcount across S&G. PSD has two strands: legal services, made up of law firms Silverbeck Rymer, Pinto Potts and The Compensation Lawyers, and costs firm Compass Law; and ‘complementary’ marketing, health and motor services, made up of eight brands including Accident Advice Helpline and Mobile Doctors.
PSD will be relaunched with a “reinvigorated brand” with the aim of moving away from NIHL claims to become the leading fast-track personal injury practice in the UK. The S&G brand will be focused on “more complex situations”, both in personal injury and other areas of consumer law.
With 53,000 NIHL cases being handled by PSD at the moment, there will be a moratorium on new NIHL cases while the future profitability of that part of the business is reviewed, and the existing NIHL file portfolio “will be expedited to drive claims resolution and maximise cash generation”.
S&G had 70 lawyers review 8,000 cases over a period of six weeks, and concluded that an “aggressive approach to reporting performance [had resulted] in over-investment in NIHL”. It explained that the way Quindell accounted for NIHL cases – long a source of controversy – had boosted headline profits even though there was “minimal settlement experience and cash generation”.
Quindell told the London Stock Exchange today that, although not finalised, PwC’s review of its accounting policies considered the approach of recognising revenue and deferring case acquisition costs as “at the aggressive end of acceptable practice”.
“PwC has also identified that some policies are not appropriate, principally being the NIHL cases revenue and related balances which became significant during 2014. This was primarily due to the group’s lack of historical internal data relating to NIHL claims settlements, which is needed to support related revenue recognition and cost deferral.”
At the same time, S&G said there was “positive momentum” in the non-NIHL parts of the business, with the RTA caseload growing rapidly. For the 2015/16 financial year, with new NIHL cases halted, S&G predicted that PSD would generate £340m of revenue, with £95m EBITDA. S&G also expects to drive down PSD’s current average acquisition cost per case of £810.
In a statement to the Australian Stock Exchange – where it will become of the country’s 100 largest companies if the deal completes – S&G described the acquisition as a “transformational opportunity” in line with the firm’s growth strategy that would deliver “significant value” for S&G’s shareholders.
“PSD provides a comprehensive platform of businesses, processes and infrastructure that augments Slater and Gordon’s existing UK operation,” it added, saying it would be “difficult and expensive” to replicate the model organically.
S&G managing director Andrew Grech said the deal would allow the firm “to further penetrate the highly fragmented £2.5bn UK personal injury market. The combination of Slater and Gordon and PSD creates the number one personal injury law group in the UK. It further diversifies our sources of legal work, broadening access to claims management companies, insurers and insurance brokers.
“PSD’s health and motor services increase our touch points along the claims value chain and increase client delivery and capture opportunities.”
The cash offer will “de-risk” Quindell’s shareholders’ investments “after an extended period of uncertainty”, he added.
http://www.legalfutures.co.uk/latest-news/slater-gordon-strikes-677m-deal-to-buy-quindells-professional-services-division#
All I can say is that he'd better be very certain of his ground because he's taking on some big hitters and trying to trash their reputations to save what's left of his (nothing in my book). I'm not talking about the people who drove QPP off the track, I'm talking about the people brought in to sort out the QPP mess and do as much as they could to restore some kind of order to QPP in the latter part of 2014. As far as I can tell, basically these people are now being told: "You lied to us". My feeling is that they will ultimately be able to show they didn't - and that AG and his team of amateur growth specialists knew it all beforehand and didn't need any persuading; they'd made their minds up they wanted it whatever the risks.
So, who lied? I think the inference is supposed to be:
1 The Board brought in at QPP to clean up the mess (all with unblemished records before and since)
2 PwC
3 E&Y (they might just have been incompetent)
4 Anyone else with deep pockets AG & Co can drag into the action
No-one in SGH, least of all AG, was to blame.
Snakes and weasels come to mind. He really must be desperate to have taken this route for $50m or whatever he has miscalculated WTG will settle for to make him go away. It seems unlikely to me that WTG will settle - to do so would damage reputations and some people's are worth more than AG thinks they are. Depending on how angry WTG (which is still full of cash) are, we might even see a counterclaim for mismanagement of the NIHL book, with consequent loss to WTG under the profit sharing agreement. Anything is possible when allegations of the kind we might ultimately see here are made in support of frivolous action.
I intend to get out at the first sensible opportunity. I now see no real hope of timely recovery with the same driver at the wheel who crashed the car so badly last time. His driving doesn't seem to have improved any. People who's vanity prevents them from admitting they have made mistakes are dangerous. Particularly when they're supposed to be looking after your money.
This is unlikely to be pretty. Just at a time when shareholders here were looking for stability and a pragmatic approach to putting SGH firmly back on the rails - and for the eyes of the day-trading community and professional shorters to be diverted elsewhere, AG and whoever else is behind this move (which surely won't settle because of reputational damage implications) seem likely to me to have brought the company right back into focus for the wrong reasons. That's as I see things anyway. People are free to think what they want - I'm not going to fight about it. I know what my views are based on.
I have always tried to be realistic about SGH's prospects. I was alarmed about SGH's gearing even before it acquired the PSD from QPP but made a call about the wisdom of investing based on price vs likely value if things turned out ok in the end. I have been influenced all along by a lifetime's experience in the financial services sector (I'm a retired CA - I was a partner in a good firm) which has up to now made it impossible for me to imagine a big firm of lawyers can't be run profitably - particularly after the wake-up call here. By "profitably" I mean achieve a gross margin of the order >20% and manage overheads so as to produce a decent bottom line, generating enough cash to keep all the wheels turning. AG appears to have found a way (or ways) that are likely to prove me wrong.
AG and SGH have lost a supporter. I haven't changed my sentiment only because I don't know what the current price is. Has SGH been suspended or has the ASX crashed? If it's the latter I hope it's not as a result of the latest news here.
Tin hats on over at WTG. I doubt the price here will go up much but the reverse certainly won't be true in the UK. And all this after dropping a few hundred k on Xcite Energy effectively going bust following bewildering behaviour by the directors that has handed the co to bondholders (hedge funds). FFS what's going on? Is everyone incompetent? Or dishonest?
Or both?
all imho - dyor
(20min delay)