Quindell Portfolio has had to issue its second response to the market since Friday (see here) following questions raised by investors and the press about its accounting techniques and underlying business health. Shares have been in nosedive since publication of its full year results on 7th May (see Quindell’s full year raises more questions). But the latest explanation seems to have helped somewhat, with Quindell’s shares rising 18%.
Concerns had been raised explicitly about the way Quindell part paid for Accident Advice Helpline in December (see Quindell spins multiple plates) using a so-called ‘equity swap’, which it said was the least dilutive approach available at the time. Worth £13.3m, Quindell said the equity swap relates to only 6.6% of receivables at the year end, and is not a material contract.
Investors then turned their attention to the other receivables still owing. However Quindell said that of the £169.2m receivables on the balance sheet at the year end, some £127m were already added – made up of Ai Claims Solutions at £61.3m and Quindell Legal Services, which also added £61.3m. The outstanding £42.2m is apparently made up of receivables from the other claims outsourcing businesses. However Quindell said that it had collected approximately half of that since the year end up to 30 April 2013.
Quindell appears to have at least limited the damage from what management referred to as ‘misinformed speculation and shorting’. However it clearly now has a task on its hands to rectify some of the negative publicity. How this impacts future growth will be the real concern.