Slater and Gordon has been forced to once again defend its decision to buy Quindell’s professional services division (PSD) after the Serious Fraud Office announced that it was to investigate the claims company’s accounts.
The news came just hours after Quindell reported a £375.2m loss last year after making major alterations to its past results.
The impending investigation has come after the Financial Reporting Council said that it was closing its own probe into Quindell’s 2011 and 2012 report and accounts after the company had amended its accounting policies.
This alteration has resulted in Quindell producing a revised figure for its PSD. Having originally calculated a £175m pre-tax profit for its legal services, the claims outsourcer now says that the division posted a £137m loss.
Slater and Gordon bought Quindell’s PSD back in March for £637 million. At the time, Quindell had revealed that it had some 53,000 noise-induced hearing loss claims on its books.
However, in June, the Financial Conduct Authority began another investigation into Quindell’s account under the Financial Services and Markets Act 2000. The FCA was prompted to act following public statements made regarding the discrepancies found in the company’s financial accounts during 2013 and 2014.
Ever since then, Slater and Gordon’s share price has been under pressure.
In a statement to the Australian Stock Exchange the firm said: “It is critical to separate issues associated with Quindell’s historical statutory accounts from Slater and Gordon’s assessment of the PSD’s value and go forward performance.
“Quindell’s accounting policies were not relied on by Slater & Gordon in its due diligence of the PSD, which was undertaken with the assistance of Ernst & Young.
“Slater & Gordon’s assessment of the PSD, including its historical financial performance, was based on a fundamental, bottom-up analysis including the review of 8,000 case files by 70 lawyers.
“The PSD is now focused on higher velocity, cash generative fast track road traffic accident segment rather than growth in cash consumptive hearing loss claims.”
It also said that Quindell’s revised accounts did not alter the firm’s view of the PSD, which it still expected to generate business and financial benefits.