Quindell is returning £414m to shareholders, perhaps some consolation for an 18-month period during which its shares have fallen more than 85 per cent. Quindell once had a stock market capitalisation of £2.7bn but attracted the attentions of Gotham City, the US short seller, which last year issued a damning report on its accounting practices. http://www.ft.com/cms/s/0/994e3f8e-86b9-11e5-90de-f44762bf9896.html#axzz3swklNN7m
Quindell stands accused of aggressive revenue recognition policies, as well as applying incorrect accounting treatments to related-party acquisitions, including Himex and Ingenie, which were purchased from associates of the company’s founder, Rob Terry.
Mr Grech said the first he had read in detail about Quindell was a report released by Gotham City Research, a New York hedge fund that made serious allegations about the company’s accounting practices.
“I agreed with it, that’s why I didn’t touch it, because I thought their work-in-progress recognition was just crazy land and so we stayed away from it for that reason,” Mr Grech said.
“When it became clear there was an opportunity just to take out the professional services and the legal services part of it, if you’re only buying that part of the business you don’t buy the listed entity pregnant with those accounting problems, you get the opportunity to apply your own accounting standards to it, so we saw that as quite an opportunity.”
SGH Price at posting:
92.5¢ Sentiment: Hold Disclosure: Held
