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Quindell Whistleblower Part 1 – The wages Scam, market abuse & Christmas payday laid out

By Tom Winnifrith, The Sheriff of AIM | Friday 5 December 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 was contacted yesterday by a senior management figure with the Quenron (QPP) group. We spoke at length and in part two of this series I will serve up a series of bombshells for you. But let’s start with a minor bombshell – the issue of when Quenron staff have and will get paid and of market abuse by Quindell.

Staff across the group were told in August that going forward payroll dates would be standardised. Prior to that staff in different units were paid on different days but all in the last week of the months. In September that changed with all staff being paid on the 6th of the following month. Of the 6th was a weekend staff were to be paid not beforehand as in most companies but the Monday after. Thus staff at Quindell will be paid for November this coming Monday.

The implication of this is that between £7 million and £10 million of cash which should have flowed out in the last week of September 2014 actually flowed out in the first week of October. There were only two payrolls in Q3.  This of course means that when Quindell told investors that its net cash position as at September 30th was c£19.5 million and was broadly unchanged on the June 30th position it was misleading investors since it did not ‘fess up to the payroll switch. 

Let us be explicitly clear that this is market abuse. The company had stated publicly that it would be cash neutral in Q3. On October 13 it claimed to have been cash generative operationally and to have maintained its net cash position but was able to make those claims ONLY  because it bumped its September payroll into Q4 and it thus gave a misleading impression of how well it was doing. That Messrs Terry, Scott and Moorse sold shares after that with investors having been misled as to the rate of cashburn makes it all the worse.

There is another imponderable here. As at June 30th Quindell stated that it held £14 million shares as if in Treasury. Those were the shares it issued to itself when buying PT Healthcare. It holds additional shares in itself within Himex and Ingenie (which it issued to itself to buy those companies) but neglected to mention them. It was stated again on Friday that Quindell owns NO SHARES in Treasury. So one might ask the question: “during Q3 how much cash was realised by Quindell from dumping shares it owned in itself onto the market and did any of these trades occur in the closed period up to August 28?”

Quindell should make a clear statement on that latter point as a matter of urgency but what is now abundantly clear is that its Q3 trading statement did, by omission, mislead investors as to the rate of cashburn. That is market abuse and an open letter to the FCA and AIM regulation will follow.

My whistleblower has also confirmed that staff at Quindell have all been told that they will be paid for December on January 6th. Quindell must be about the only company in Britain that pays its staff after Christmas and this is a massive sign that it faces a cash crisis. It will of course also serve to inflate the year end net cash position, or rather hide the lack of it.

The far more damaging allegations from the whistleblower will follow later but first I must raise this case of market abuse with the regulators and leave you to ponder its implications.


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  1. Scott Sanderson

    Tom, what did Bellinger say when you asked for comment? You did ask them for comment right?

  2. Tom,

    The interims say that the PT shares were accounted for as if they were held in Treasury. This is not the same as them being in Treasury. This can clearly be seen from the 23 June RNS where after issuing these shares it states that there are NO shares in Treasury. Hence it is impossible at this time to conclude that they have subsequently sold the shares.

    Your analysis heavily implies that because there are now no shares in Treasury then the shares have been sold. You talk about Quindell misleading the shareholders, but are you not guilty of misleading your loyal readers?

  3. Hi Tom
    It looks like that while QPP treats the 6,666,667 PT Healthcare shares “as if” held in Treasury (and presumably also the 2,676,479 Himex and 12,632,557 Ingenie shares issued on 14 July), it includes them within its statements of ordinary shares in issue.
    Thus: Voting Rights RNS 20 June pre these share issues “As at 20 June 2014 Quindell’s issued share capital consists of 412,464,961 ordinary shares with a nominal value of 15 pence each (“Ordinary Shares”). The Company does not hold any Ordinary Shares in treasury.”
    Then: A screenshot I have of the QPP website major shareholders page states “Current Total Shares in issue 436,345,424 as at 23rd July 2014 with none being held as treasury …”
    The difference between the 20 June and 23 July stated shares in issue could be accounted for by the PT, Himex and Ingenie shares (+ 1,904,760 others issued which I can’t find mentioned anywhere).
    Of course, by including the “as if” treasury shares in its statements of total shares in issue any sale of PT, Himex and Ingenie shares (c. 22m shares) is hidden from view … well, until the FY results.

  4. If I had a daughter who worked for Quindell (or one of its many subs) who didn’t get paid in time for Christmas (which I generally can’t abide) and – worse – New Year I’d track down Rob Terry and beat seven colours of shite out of the muthafooker. I mean that.

  5. Scott Sanderson

    Calm down spaghetti, your imaginery daughter will get paid on 8th Dec, along with all QPP staff (for clarity that’s before Xmas)

  6. Re. the 1,904,760 other shares issued which I can’t find mentioned anywhere referred to in my previous post. Pre-close RNS 14 July states: “The Company also today announces the issue of 1,904,761 new ordinary shares, being approximately one-third of the deferred equity consideration payable to the sellers and issuable over a three year period, in respect of the acquisition of iter8 Inc., …” That’s the same sellers to whom QPP issued a further 101,586 shares last week

  7. I doubt QPP employees will get paid in January ………… it will have gone down by then . They will get paid from the
    Official receiver or administrator eventually . When these things go it can be real quick ……….. you just go in one day and get told to clear your desk and the receiver will be in touch with you . Been there , done it and worn the T shirt in the 1980 recession .

  8. Hi Chester,

    I can’t see anywhere where it says that the Himex and Ingenie shares are treated the same way as the PT shares. As such I can only assume that they have been paid to the vendors (Quindell, as they were obliged to do, informed us how the PT shares were treated).

    You say that you presume the Himex and Ingenie shares were treated in the same way. Would it be possible to show me how you arrived at this conclusion, just so that everyone is clear and isn’t being mislead.

    Many thanks.

  9. JP Spaghetti, I’m sure he’s got it coming, what goes round comes round.

  10. Mark

    are you thick or what? On Dec 8 they get paid for Nov. Al other cmpanies in the UK (nearly all) pay Dec wages ahead of xmas. QPP is paying Dec wages on Jan 6. Geddit moron?


  11. Hi GA
    QPP increased its stake in Ingenie to 49% on 4 February 2014, and per QPP’s response to Gotham ( ) QPP “gained an option to acquire the rest in a share for share exchange at any time until January 2015” – so the Ingenie post balance sheet event on 14 July recorded in QPPs interims is presumably a share for share exchange on the same lines as PT Healthcare … and I’ve assumed the same for Himex. QPP talks about PT Healthcare shares being treated as if they are treasury shares because the PT event was within the reporting period of 6 months ending 30 June and appears in the accounts. Ingenie and Himex events occurring after the accounting period, so there’s no NEED for QPP to mention the status of those shares, although they could have CHOSEN to do so. Still, we know from QPP’s Gotham response that the Ingenie deal was a share for share exchange on the same lines as the PT Healthcare deal – so I think my suggestion that the shares QPP issued to Ingenie and Himex are “as if” treasury shares is not unreasonable.

  12. Tom

    So, whilst good old Mr Terry paid himself a nice little bonus of £720K in May, we may safely assume his poor ordinary foot soldiers won’t even be getting a small Xmas thank you bonus!

    I bet, Mr Terry, won’t be worrying too much about buying presents or putting on a decent Christmas spread, this year, unlike some of his employees!

    I guess, all most honest folk can hope for is Mr Terry, gets his just deserts sometime in the New Year!

    Sometimes, the good guy’s do get to win, so fingers crossed!

  13. Mark ……… well you are a bit thick to be honest so I guess you had it coming . 8th Dec payment is for Nov work . For example my wife gets paid on the 22nd Dec for Dec ( ie in advance for some work not yet complete ) Ged it ?

  14. Why is everyone referring to a “Mark” when clearly it’s a “Scott Sanderson” who came out with the stupid comment. Makes me feel kinda defensive lol

  15. Chester, yes they were share for share exchanges i.e. Shares in Ingenie and Himex in exchange for shares in Quindell. Its the same as the Aviva and Friends Life deal. It’s clear from the interims that the shares are not going to Quindell and the deal is NOT as per the PT deal. For example, the shares are subject to lock-ins. On this occasion I think you are confused and your assumptions are incorrect.


  16. I work for a FTSE100 company and will be paid on the last working day of December, same as any other month. I don’t think not being paid before Christmas is significant at all. Waiting over a week for your pay, however, is! As is juggling the payment dates to flatter the cash position.
    You’d do better if you didn’t make reference to non-issues like December payroll not being paid in time for Christmas.

  17. Hi GA
    There’s nothing explicit in the interims as to whether the Ingenie and Himex share issues are the same as for PT Healthcare (QPP issuing shares to itself) or not. The only thing you suggest is that Ingenie and Himex being subject to lock-ins makes the deals different to PT Healthcare. In fact, the PT Healthcare shares are also subject to a lock-in, so that doesn’t wash.

  18. Hmmm all companies that don’t pay wages before xmas are a fraud??? Well that’s the MOD involved in fraud then and most of the people I’ve ever worked for, in fact who I work for now which is local government, is the first time I’ve ever been paid before Xmas!

  19. Chris

    Are you being deliberately thick?

    QPP is a fraud. The wage deferral suggests it is hard up for cash. Pushing paydate back a month in Sept mislead investors. But nowhere did anyone ( other than you) say all companies that pay on their normal date ( ie post xmas) are frauds


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