Gotham City On The Short Case For Quindell PLC (QPP)

Gotham City On The Short Case For Quindell PLC (QPP)
Quindell Plc QPP
We are initiating coverage on Quindell PLC (LON:QPP) (OTCMKTS:QUPPF). The company’s reported profits are materially (42%-80%) incorrect, its operations are exaggerated, and QPP shares are worth no more than 3p/share (90+% downside) for the following reasons:
  • 42%-80% of Quindell’s profits are suspect, as we are unable to reconcile the whole with the sum of the parts.
  • Quindell was little more than a country club until 2008/2009, yet QPP somehow began reporting Microsoft Corporation (NASDAQ:MSFT)/Google Inc (NASDAQ:GOOG)-esque profit margins in 2010/2011.
  • 26%-43% of Quindell’s 2009 and 2010 revenues came from, a subsidiary owned by CEO Robert Terry.
  • 41% of Quindell PLC (LON:QPP) (OTCMKTS:QUPPF)’s 2011 revenues came from an undisclosed related party (controlled by a QPP executive).
  • 10+ acquisitions lack economic substance. Several of the acquired companies are little more than shell/paper companies.
  • QPP’s largest telematics customer is itself (via subsidiaries Himex & Ingenie), accounting for 61% of 2013 revenue.
  • 99% & 80% of Himex’s 2012 and 2013 balance sheets are seriously deficient (Himex is QPP’s largest acquisition).
  • Former executives allege Himex/Navseeker lied to them about its financial state and that in effect they were operating a Ponzi-style scheme.
  • 2011-2013 accounts receivable are between 86%-231% of revenue, while deferred revenue only 1%-2% of revenue.
  • Nearly all of CEO Terry’s £11 mm personal investment into Quiindell was used to build Quindell the country club.
  • No free cash flow and negative operating cash flow.
  • Quindell fails to explain how its personal injury business complies with Lord Jackson’s reforms & referral fee ban.
  • The Chairman of the Transport Select Committee, Louise Ellman recently initiated a probe to determine whether ABSs are used to side-step the Jackson reforms.
  • 3 auditors in 3 years, since 2011.
  • QPP shares would qualify for a de-listing if the shares were trading in US markets.
  • When asked, Quindell PLC (LON:QPP) (OTCMKTS:QUPPF) refuses to answer simple questions about its business.

Quindell PLC: A Country Club Built On Quicksand by gothamcityresearch

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