29th Jun 2015 09:10
LONDON (Alliance News) - Insurance technology and outsourcing company Quindell PLC on Monday said its results for the year to the end of December will not be published before the end of June due to the "complexity of the process".
Quindell said it is "working through the outstanding points" and said the accounts will be published as soon as possible and said its shares will continue to be suspended until that time.
Back in May, upon completing the GBP637 million sale of its professional services business to Australian law firm Slater & Gordon, Quindell outlined the findings of a review conducted by accountancy PricewaterhouseCoopers into its accounting policies.
PwC found that Quindell's accounting practices had been at the "aggressive end of acceptable" and Quindell said it would adopt "more conservative" policies in future, though it warned this would mean its profit and revenue in 2014 would be lower and said the changes will hit its 2013 results, which will be restated.
Last week, the issues facing the company deepened further after the Financial Conduct Authority, the City regulator, said it has started an investigation of the company under the Financial Services and Markets Act.
Quindell said it will co-operate "fully" with the investigation, which has been initiated in relation to "public statements made regarding the financial accounts of the company" in 2013 and 2014.
The FCA said it would "liaise with other agencies...as appropriate" as it investigates. "Given the existence of an investigation, we will not be providing further comment," the FCA said in a statement.
Quindell's statement on its accounts was accompanied by another statement from Slater & Gordon in Australia, which said the Australian Securities and Investment Commission has raised some queries about the reporting of its own financial results for the 2012 and 2013 financial years.
Slater & Gordon and its auditor, Pitcher Partners, said that following an initial analysis of its results, a consolidation error was identified in the reporting of cashflows from its UK business. Ernst & Young has been hired by Slater & Gordon to conduct an independent review of the auditing of the company's accounts, and Slater & Gordon has outlined a draft of the disclosure it will put in its 2015 results explaining the issues found.
Slater & Gordon said that since it acquired Russell Jones and Walker LLP, a UK law firm, in 2012, the UK business reported receipts from customers in its cashflow statements on a gross rather than net basis. This error was made in reports covering the period from June 30, 2012 to December 31, 2013. The law firm said this was offset by the same amount being added to total payments made to suppliers and employees and therefore its net cash for the years in question is the same.
In addition, the company said that UK value-added tax was included twice in receipts from customers in statements covering the period between June 30, 2013 and December 31, 2014. Again, the company said its net cash is not affected by the error.
But the restatement does mean that the company's receipts from customers is lower for the entire period covered by the errors.
The amount of cash received from customers also is understood to be at the centre of the concerns about Quindell's accounts, though any explanation and clarity on the problems has yet to be revealed by the company. Slater & Gordon has said it is confident it has no liability arising from the FCA's probe of Quindell.
The law firm did, however, reiterate that the evaluation of the fair value of the professional services division it acquired from Quindell was undertaken with the assistance of Ernst & Young and under its own accounting policies.
Slater & Gordon shares dropped 25% in Sydney on the news of the accounting issues in Australia.
By Sam Unsted; [email protected]; @SamUAtAlliance
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