Cuts to historic revenues, profits and net assets at troubled insurance technology group Quindell (QPP) spooked investors and sent the shares down 28 per cent on the day they resumed trading. The group sought to start over by announcing improved accounting policies, but its resurrection was marred by the launch of a Serious Fraud Office investigation into some of its past accounting practices, which the company said it would "cooperate" with. Moreover, the Financial Reporting Council is investigating members and two member firms involved in preparing and auditing Quindell's results for the three years to end-December 2013 and the six months to end-June 2014.
Quindell's figures were muddled by restatements, acquisitions and the completed £637m disposal of the group's professional services division, which processes personal injury claims for law firms. Management agreed to recognise revenue and profit later in the client service cycle, typically when an insurer admits liability and a case is settled. Moreover, the group will now expense marketing and other related costs immediately, rather than deferring them until cases generate revenue or profit.
The accounting revisions lowered revenue from discontinued activities by 37 per cent in 2013 and 56 per cent in 2014, which meant the segment swung from sizeable pre-tax profits to losses of £55m and £137m in those years. Quindell's total operating loss was £8.5m in 2013 - compared with a previously reported profit of £109m - and its operating loss in 2014, adjusted for the disposal, jumped from about £61m to £238m.
Quindell shone a light on its jumble of remaining businesses and their broad range of services. Those include supplying 'black boxes' that track drivers' performances and inform insurers' premiums, selling speed-camera detection and insurance-claims software, providing technology services to emerging markets carriers, installing solar panels and cavity wall insulation, helping UK businesses find cheap energy suppliers and consumers choose life assurance policies, and even running a physiotherapy and rehabilitation service in Canada.
