Interactive Investor

Relief as Quindell firms up cash return

2nd November 2015 14:15

Lee Wild from interactive investor

Quindell has confirmed it will return £415 million, or 90p per share, to shareholders by the end of the year, part of a promised 100p return of capital following the sale of its professional services division. It will certainly come as a relief to patient shareholders after a potential multi-million-pound law suit cast some doubt over the payout. However, they will have to wait until early 2017 before receiving the remaining 10p a share.

Currently under investigation by the Serious Fraud Office following a series of accounting scandals, Quindell sold its core division to Australian law firm Slater & Gordon for £637 million earlier this year. As part of the deal, £50 million was put in an escrow account until November 2016 to cover any warranty claims. That's why shareholders will have to wait for the final 10p.

Still, this outcome has been well-flagged by Quindell chiefs, and they repeated today that contingent consideration from the deal - linked to the number of noise-induced hearing loss cases which are settled - is currently put at £39.6 million. That's worth over 8p a share, which could also be handed back to shareholders further down the line.

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While the return of cash is a relief, Quindell still faces a potential multi-million pound law suit from a shareholder action group backed by Liverpool law firm Your Legal Friend. Arguing that Quindell's RNS announcements could be considered "untrue and/or misleading", lawyers are looking for up to £18 million before costs, although no official claim has yet been received.

And the remaining Quindell businesses have yet to prove themselves. The streamlined company, which is expected to be renamed within months, is focused on processing data from vehicle black boxes for insurance companies.

Results so far have been disappointing. Insurance-focused Himex, QSI, Ingenie and QETS generated £13 million of revenue in the six months to June, but sales fell 10% at PT Health to £12.9 million, while other technology and property services operations were down over a third at £8.7 million.

New boss Indro Mukerjee said Monday that trading assumptions of Quindell's businesses "remain in line with previously stated expectations". His eagerly-awaited strategic review will be published in the new year.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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