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By Tom Winnifrith, The Sheriff of AIM | Thursday 16 October 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.
The video of my presentation “Quindell, how it has committed accounting fraud, has not generated a cent of cash despite what it claims and why it is worth 0p” should now appear tomorrow. Pro tem here is part 2 of the Quindell Legal Services – More Red Flags Vicar series. QLS served up so many Red Flags it needs two articles. Part One can be found HERE. Now moving on.
Let’s start with a simply question. Why did Jim Rymer, the founder of Silverbeck Rymer the largest part of Quenron Legal Services resign from the QLS board on November 13 2013? Why was there no release at the time? Just wondering.
Now a question for KPMG which earned £60,000 for doing this audit. Now I know that the numbers are just made up when it comes to accruals but you think you might at least be consistent with your Jackanories. And so for the country bumpkins at KPG Southampton please explain what you think accrued income at QLS was during 2013. Was it:
a) Note 21, page 32 - £92.623 million
b) Balance sheet page 14, £126.149 million ( 2013 year end number) minus £31.775 million ( 2012 number) i.e. £94.374 million
Okay bumpkins, well done for getting the balance sheet to balance but which was it? I would suggest that well run regulated companies do not lose £1.8 million between page 14 and page 32 of their accounts.
Now to Note 26 (page 35). The company says that t may have a series of legal claims against it but the directors do not think that any need providing for. Just out of interest how big are the total number of claims against QLS?
Now I wish to draw your attention to some QLS Red Flags born out of investor presentations given by Mr 2+2 can = 5 Rob Terry himself.
Let us start with the actual number of claims that QLS dealt with in 2013. This can be seen in the March 2014 teach in which is still available on the Quenron website and can be summarised thus:
Q1 2013 - 18,000
Q2 2013 - 25,000
Q3 2013 - 23,500
Q4 2013 - 24,500
Total - 91,000
And so we can see that in 2013 QLS turned over £146,198,000 and took in 91,000 instructions so the average revenue per case was £1,606, not the £2000 that Quindell says in its August 2013 presentation on page 25 (see HERE).
The same page also tells us that number of new instructions will be 60,000 for H2 (the actual number came in at 48,000). And thus that H2 QLS turnover for H2 will be £120 million - it actually comes in at £77 million. When Rob Terry gave this presentation to the UK’s thickest fund manager Tom Dobell at M&G and the lapdog analysts at Cenkos, Canaccord, Killik, Daniel Stewart and Mr No-one from GECR, he knew that the turnover for H1 was £69 million, yet he was happy to bullshit away that the H2 turnover will be almost double that of H1. If I was an analyst that was suckered in with that I'd be pretty peeved to say the least.
But that's not even the most unbelievable part. The amazing thing to me is that Rob Terry does another presentation on 17 June 2014 – see HERE
This time page 19 has the lies, sorry I mean projections... We know that QLS turnover for 2013 was £146 million and that 86.3% is accrued so it's absolutely a 'hot-air' figure and is exaggerated in the extreme.
Yet he then tells the analysts, again with a straight face, that QLS's run rate is now £900 million by the end of 2014. Who on earth is believing this? Really. It's like something out of One flew over the cuckoo's nest - the man is clearly deluded.
Here we are less than four months later and we are told that the whole group (not just Quenron Legal Services) will do FY sales of £750 million -£800 million.
Since H1 sales (largely made up thanks to accruals and other accounting wheezes) were £357 million that implies H2 sales for the whole Quenron group of £500 -£550 million. Which seems to imply that QLS has gone horribly wrong.
Yet earnings forecasts are unchanged. Yeah Right.
I repeat that anyone owning this stock in light of the forests of red flags presented is absolutely insane. This is a fraud and it is going down. The target price for the shares is 0p.
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