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Quindell: Very Serious Question for Rob Terry re shares given to his old mucker Paul Stanley

By Tom Winnifrith | Wednesday 28 May 2014

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

I have written before how I understand very fully how Quindell (QPP) CEO Rob Terry wants to hang out with those few people who stuck by him after he presided over the near collapse of The Innovation Group. But there are limits and this brings me to some statements issued by Quindell regarding Quindell Property Services (QPA) which just do not stack up. Rob now has very serious questions to answer.

On 3rd May 2013 Quindell announced the:

acquisition of Quindell Property Services Limited ("QPS"), a newly formed Group providing disruptive outsourcing and technology solutions to the property insurance market place.


  • Acquisition and controlling stake in innovative SaaS based claims outsourcer for shares at a premium
  • Fast tracks Quindell's expansion into global property insurance claims market
  • Earnings neutral in the current year and significantly earnings enhancing for 2014
  • Potential for £10 million profit before tax from property services in 2014


The terms of the acquisition have been satisfied by the immediate issue of 65,978,572 Quindell shares representing approximately 1.6% of the Group's issued share capital, and further issues of up to 21,111,111 shares issued contingent on the business achieving £2m of profit for 2013.“

I have underlined a couple of phrases for your benefit.

On 2nd September 2013 Quindell announced:

“the consideration for the acquisition, which was announced on 3rd May 2013, comprised an immediate issue of 65,978,572 new shares and provided for up to 190,000,000 further consideration shares to be issued related to performance during 2013 to 2015 inclusive. 

The terms of the acquisition were satisfied by the issue of 65,978,572 Quindell shares representing approximately 1.6% of the Group's issued share capital on the 3 of May, and are to be satisfied with further issues of up to 21,111,111 shares issued contingent on the business achieving £2m of profit for 2013. Subject to the property business achieving a minimum of £10 million profit before tax and operating cash flow in each of two respective warranted profit years to 30 September 2015 a further 84,444,444 and 84,444,445 shares are also contingently issuable. The acquisition is therefore expected to be significantly earnings enhancing as from 2014.

Having reviewed the performance to date of Quindell Property Services the Group is delighted to announce that it has concluded that an issue of 18,000,000 Quindell shares is due today with additional shares due to be issued in early 2014.  These Quindell shares will be subject to lock-in arrangements ranging from 12 to 36 months.

But the annual report shows that Quindell did not wait until early 2014 to issue the shares for 2013 performance instead it shows three issues of shares ( note 27)  as follows:

2 May 13.500 65,928,572
2 September  18,000,000

21 October      9,178,808

You will no doubt have noticed that the final issue of shares is not a) 3.111111 million as per the original RNS of May 3 2013 but 9.178808 million and that it they are handed over in October 2013 not early 2014 as per the RNS of 2 September 2013.

The lucky recipient of these shares was a team headed up by Paul Stanley who Rob Terry said that he worked with as “a client, an advisor and then as a colleague in my previous company.” 

I now turn to note 35 of the Quindell 2013 annual report  published in April 2014 which states:

Quindell Property Services: £5.3 million revenue (1.3% of total Gross sales) and £1.2 million loss before tax in the 8 months post its acquisition compared to a warranted performance of £2 million profit before tax for the whole of 2013. This was also in line with the Board’s expectations as the business was restructured to position itself to meets its growth plan and performance expectation for 2014 of £10 million profit before tax.

Hmmmmmm. So let me get this straight. Is Quindell saying that

a) The company which was “newly formed” as at May 3rd  2013 actually made a profit of £3.2 million in the first four months of 2013 in order to deliver the “warranted” £2 million PTP for the whole year?


b) That it made a loss which the board did not expect in September 2013 when issuing the further shares but did expect after a post September restructuring?

Perhaps Rob might tweet me an answer is it a) or b) and while he is about it perhaps he’d care to explain why more shares were issued to buy the “newly formed company”  during 2013 than Quindell said that it would issue back on May 3rd 2013?

Don’t shoot the messenger (no doubt many will try) I am only asking.



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More on QPP



  1. ADVFNPrep

    Good digging Tom! Shareprophets is definately very educational about AIM.

    The extra 6,067,697 shares sucks for investors (additional dilution), but isnt too worrying as it only is ~7% shares more than the ~87M for the acquisition.

    The second issue you dug up, however, is far more worrying. Actually, what about the rise in sp of issued shares?

    66M issued May 3rd would have risen from 13.6 to 17.5 late Dec.
    18M issued Sept 2nd would have risen from approx 16 to 17.5 late Dec.
    9M issued Oct 21st would have risen from approx 16.3 to 17.5 late Dec.
    Total 66M * 3.9p + 18M * 1.5p + 9M * 1.2p = approx £3 million. That roughly matches the £3.2M.

  2. ADVFNPrep

    Let me add that IF sp-value of consolidated shares would indeed have been included as “profit”, that would also explain the issue of additional shares. Without these additional shares the 2 Million “profit” would not have been made.

    IF all of these assumptions I am making are correct, then perhaps it was initially thought that 66M shares would have been sufficient to make £2M profit. The sp would only have to reach 13.6+(3.2/0.66)=18.45 by late December. Perhaps additional consolidated shares were issued when it was realised 18.45 by late Dec would not happen.

    Just a theory of course.

  3. Tom, I take it these are my bad brothers figures given to you to post, you have trouble with the four different types of cheese. Keep smiling.

  4. WTF are you talking about ADVFNPrep? Shares were issued to the owner, not the business! Increase in qpp share price generating profit for an acquired business – FFS I have never read such unmitigated rubbish.
    Original article raises a valid point, shareholders should have been informed of additional share issuance.

  5. wildrides

    Yeah ……….. but does it smell like a kangaroos arse ?

    some one must know ?

  6. ADVFNPrep

    You are right Rob, my comment was pretty dumb. I got too excited by the correlation between sp and that mystery profit.

    There is something going on though, on Stockopedia someone called “Heisenberg” recently noticed: “Why is there an apparent close linkage between the underlying valuation of 2 relatively small businesses (at least in terms of their likely financials) and Quindell’s share price?”

    And obviously we both know the bet QPP took out on its own share price last year, which resulted in a bear raid (followed by a bear trap I have to add).

  7. Robert Richards

    ADVFNPrep, agree something odd about it all.
    Was lucky to escape with near 100% profit after the fall. Stupidly punted a bit at 25p, even though I knew I dshould have left it alone, I will learn one of these days!

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