LONDON (Alliance News) - Embattled insurance technology and outsourcing company Quindell PLC saw its shares slump as they were restored to trading on Thursday morning, following the publication of its 2014 results on Wednesday and the news that the Serious Fraud Office is conducting an investigation into its accounting woes.
On Wednesday, Quindell posted a huge pretax loss in its delayed 2014 results after it changed its accounting policies to book revenue later in the "client service cycle", saying revenue and profit will now be recognised, in the majority of cases, when liability is admitted by the at-fault insurer.
The financial impact of the change in accounting policy for the professional services division operation, treated as a discontinued operation in Quindell's report, is stark. Revenue using its old accounting policy for 2014 would have been GBP510.3 million, but under the new accounting policy this is reduced to GBP220.5 million. The impact on its profitability is yet more profound, with a GBP175.1 million pretax profit under the old policies swinging to a GBP137.2 million loss under the new ones.
In addition to the huge loss it booked for 2014, the Serious Fraud Office added itself to the list of authorities investigating Quindell's accounts, joining accounting watchdog the Financial Reporting Council and City regulator the Financial Conduct Authority in probing the company. Quindell said the SFO had informed it has opened an investigation into the company's past business and accounting practices.
Upon being restored to trading, Quindell shares dropped 29% to 88.125 pence, the worst performer in the AIM All-Share.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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