The Financial Times apparently has concerns regarding the method the Quindell PLC (LON:QPP) (OTCMKTS:QUPPF)’s utilized for accruing for income.
Gotham first to question Quindell’s accounting quality
First came the onslaught from Gotham Research, as reported in ValueWalk, that essentially questioned transactions between the firm’s CEO and related beneficial parties as well as the “quality” of Quindell PLC (LON:QPP) (OTCMKTS:QUPPF)’s accounting. The analysis from rogue upstart Gotham Research, whose identity was known to but a few Wall Street insiders.
Quindell defines itself as a professional services and digital solutions firm. A large portion of its revenues, however, derive from personal injury law.
To its credit, Quindell PLC (LON:QPP) (OTCMKTS:QUPPF) is said to have automated and streamlined the injury claim decision making process, which is no doubt interesting. It uses a score card system to streamline case management and the computer monitors time limits on cases. They have automated claim process.
It is the reconciliation that is being reviewed by Dan McCrum in FT Alphaville and is being addressed by a research piece from Canaccord | Genuity that attempted to explain the situation.
Discrepancy in Quindell’s accounting
At issue with Quindell PLC (LON:QPP) (OTCMKTS:QUPPF)’s is reconciliation of £56m cash in the firm’s recent financial reports. The core of the issue with the Financial Times is the cash Quindell purports to have accounted. As McCrum wrote “cash collected did not mean what we understood it to mean.”
For its part, Cannacord reiterated that 362p price target, maintained their buy recommendation. The research report noted they used “VAT/Sales tax as a balancing item. Quindell’s VAT/sales tax rate will be blended rate across geographies and will not be applicable to all receipts. The implied VAT/Sales tax is c.16% which lends support to our analysis.”
To read the full FT Alphaville article, click here.