(“Quindell” or the “Company” or the “Group”)
Further to the announcement on 29 May 2015 in respect of the completion of the disposal of the Group’s Professional Services Division (“PSD”) and confirmation that PricewaterhouseCoopers LLP’s (“PwC”) review of, inter alia, certain Group accounting policies was complete, the Company has been progressing its own review and the audit of the Group’s 2014 financial statements. The Company also confirmed that it had identified that certain of the accounting policies historically adopted by the Company, in respect of recognising revenue and deferring case acquisition costs in a number of the Group’s disposed of businesses, were largely acceptable but were at the aggressive end of acceptable practice. PwC also identified that certain policies were not appropriate, principally those relating to the noise induced hearing loss cases revenue and related balances that became significant during 2014.
As the PSD will be treated as a “discontinued operation” in the 2014 financial statements (and subsequent periods), the changes to the Group’s accounting policies are largely of historical interest only. Nevertheless, the changes will be to adopt a more conservative and appropriate approach to the recognition of revenues and profits in the PSD. The impact of these changes will materially impact previously reported results for the year ended 31 December 2013 and the six months ended 30 June 2014.
The Board has also commenced a review, along with its auditors, of a number of the Company’s historic transactions and acquisitions. This work is on-going but the Company expects that it will shortly be in a position to announce additional information in relation to these transactions and acquisitions with a view to ensuring that more complete information is available in respect of the historical position; to ensure that any related party transactions are fully disclosed; and make associated corrections. These matters are largely non-cash items and the Board will make clear the outcome of this work and will provide further information in the Company’s report and accounts for FY 2014.
Pending finalisation of the audit of the Group’s 2014 financial statements and quantification of the adjustments to be made and the subsequent publication of the 2014 audited financial statements, the Company has requested the temporary suspension of trading in its shares from AIM and expects trading to resume as soon as practicable and no later than publication of the Group’s 2014 financial statements.
Separately, the Company also announces that on 23 June 2015, the Financial Conduct Authority informed the Company that it has commenced an investigation under the Financial Services and Markets Act 2000 in relation to public statements made regarding the financial accounts of the Company during 2013 and 2014. The Company will co-operate fully with the investigation.