Quindell share price falls as it finalises Slater & Gordon deal and Lord Howard joins board
Shares in troubled insurance claims outsourcer Quindell fell in late morning trading after the company announced it had completed a deal to sell its professional services division to legal giant Slater & Gordon.
The £637m sale of the division, which comprised 90 per cent of Quindell's business, will return £500m to shareholders.
The company took the opportunity to reiterate the findings of a review by PwC, which found some of its historical accounting policies were "at the aggressive end of acceptable practice".
Shares dropped as much as 4.6 per cent from last night's closing price to 123.7p, although later regained some of those losses, after the company said the findings of the review showed that while its accounting policies in respect of recognising revenue and deferring case acquisition costs were "largely acceptable", but also identified "that some policies were not appropriate, principally the noise induced hearing loss cases revenue and related balances that became significant during 2014".
The company hired PwC in December to carry out a review into its accounting practices, after a torrid year during which its shares lost more than 90 per cent of their value. In April last year, short seller Gotham City Research had said Quindell's shares were worth a fraction of their value, and accused it of having "magical… paper profits".
The accusations led to the resignation of founder and chairman Rob Terry, as well as non-exec director Steve Scott – and its broker, Canaccord Genuity. Fidelity, one of the world's largest investors, slashed its stake in the company.
But even the Slater & Gordon deal has been mired in controversy: in April it suspended shares, before admitting it had got its sums wrong on the deal.
The company also used this morning's statement to announce a series of non-executives to its board, including former Conservative leader Lord Howard, ex Telewest chief exectuive Tony Illsley and David Young, a qualified accountant and former chief executive of Bradstock Group.
As previously announced, Laurence Moorse, Robert Bright, Robert Burrow and Vice Admiral Robert Cooling will step down from the board.