3362 days ago
Long, long chats yesterday with a Liverpool lawyer and a helpful reader email allow me, I think, to explain why the underlying cashflow miss at Quindell in H2 2014 was in fact UP TO £85 million ( not the £45-60 million I had demonstrated). And I think the key to the miss is accruals and when Quenron started its Industrial Deafness push and how it accrues for it. This is a bit geeky but I believe explains the mystery in full. It has clear implications for the Rob Terry insider dealing case, demonstrates clear market abuse and also if one reads through to 2015 shows why Quindell is insolvent. I also try to explain why I have never had the surname Cochrane (sorry Quindell Quislings). And I cover the importance of the Tosca news.
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3505 days ago
The Bulletin Board Morons do not seem to understand that if an Industrial Deafness case is lost Quindell (QPP) earns nothing it just incurs cost. So the mushrooming of bogus claims will not generate any cash for Quenron although it is happily accruing income on the basis that it takes on and wins 6,000 cases a month. Given that the number of claims settles has not risen above 20,000 across the while UK for many years, it is inevitable that at some stage it will have to write back all or nearly all of its accrued income from ID, prompting a profits warning. It will also mean that Quindell runs out of cash. The only question is when?
As such as a reminder of what is going on I bring you an article from The Times out today flagging up statements made by Insurance giant RSA. It reads:
3507 days ago
ShareProphets has obtained some secret footage of the finance team at the Quinnovation Group calculating how much to accrue for Industrial Deafness. We apologise for the fact that our video footage was shot in black and white but we hope this makes the process clearer.
3507 days ago
Quindell’s numbers for accrued revenue on Industrial Deafness will prove to be fantasy, in my opinion. That will mean massive writebacks of revenue and profits already booked, that all earnings forecasts are wrong and that a company threatening cash crisis is on the way by early 2015. Prompted by a former senior Quindell staffer to whom I have been speaking I went “undercover” today to show why.
3561 days ago
How much revenue will Quindell book for Industrial Deafness work this year? And how much cash will it earn. The answer according to its own house broker Canaccord is £228.4 million (well over 25% of group sales) and er….zippo. This begs incredibly serious questions about the revenue recognition policies of Quindell in this new, Quindell untested, area.
The Canaccord note – which you can view here until we give into Canaccord bullying and take it down – covers this issue on page 25. Its historic and forecast numbers are on a quarterly basis summarised below
3561 days ago
In 2014 Quindell (QPP) will book revenue of £228 million (28% of group sales) from Industrial Deafness claims where it will generate not a cent of cash. Those revenues are based on the estimates provided by Mr 2+2 Can =5 Rob Terry and his fellow directors and will ensure Quindell hits EPS forecasts. But anyone looking at this industry must recognise that Terry is bullshitting. Here’s why. Meet The Hearing Clinic.
The Quindell assumption is that as of June it will do 6,000 cases a month. It assumes it will them all. And that it will earn £9,000 per case. Assuming a 15 month average conclusion (the industry average is 20-36 months) it is booking £6500 of revenue for EVERY case taken on within 12 months.
Last year there were less than 20,000 successful cases in the whole of the UK. That number has been static (actually falling a bit) for a while. There were however 60,000 failed cases as ambulance chasers moved into this area from whiplash.
That should tell you that Quindell has not got a hope in hell of generating 72,000 winning cases a year.
So where are the new claims coming from?
3583 days ago
I am sorry to go on but I could not resist this gem. If you ever wondered how Rob Terry and Quindell (QPP) managed to capture between 75% and 150% (depending on which stats you use) of the UK Industrial Deafness market from a standing start just ask Rod Cameron, “Executive Assistant to the Founder and Chairman of Quindell PLC.” Ooooh er missus.
3590 days ago
I am urged by various bulls to reconsider my questions on Quindell with reference to data provided by the Institute of Actuaries on Industrial deafness. I have referenced that data and it bears out my thesis 100% in that it shows that there is not a cat in hell’s chance of Quindell hitting its target of 72,000 cases a year settling at £9,000 + on average.
A bull posted on the comments thread:
I suggest you read this. Very interesting and numbers are rising and well above the 20,000 you quote. If you look back as well they were peaking at 85,000. Could we be returning to those days. Most likely given this is probably the new whiplash.
Okay Mr Bull lets go to the paper from the actuaries which you can find here – pages 44 and 45 are what to look at.
3590 days ago
Quindell (QPP) announced just before its AGM a mammoth and instantaneous change of business in its largest division (Quindell Legal Services, QLS) a – shift into industrial deafness. I find its numbers startling and would like to know the assumptions that it makes to justify its claims.
Quindell has claimed that as of June it will be generating 75% of divisional profits ( and QLS is 75% of group profits) by processing 6,000 deafness claims a month on which it will earn an average fee of £9,000 with most cases settling in 9-12 months. It says that it will source business from clinics who do an initial pre-screen. Okay. That sounds great. Until you start talking to folks who have been operating in this sector for years. Which I have been doing all day.
