Listed Australian firm Slater and Gordon today sought to distance itself from revelations about historical accounting practices at the legal business it acquired from Quindell earlier this year.
The firm, which acquired Quindell’s professional services division (PSD) for £637m, has suffered a dip in its share price value as Quindell’s financial past has been raked over.
Quindell yesterday confirmed that its previous management overstated the division’s profits by more than £300m in 2014 and admitted revenue was based on cases yet to settle or conclude. It also revealed that it had been contacted by the Serious Fraud Office which has begun a criminal investigation.
Executives said the mistakes that emerged from last year’s accounts were shown to Slater and Gordon in advance of the sale being concluded.
In a statement overnight to the Australian stock exchange, Slater and Gordon said Quindell’s issues were based on ’historical statutory accounts’ and that its accounting policies were not relied upon in its due diligence of the acquisition.
’The publication of these statutory accounts does not alter Slater and Gordon’s view of the PSD, nor the economic benefits Slater and Gordon expects the business to generate,’ the statement added.
Slater and Gordon said its new acquisition, which included more than 50,000 noise-induced hearing loss claims, will focus on the ’higher velocity, cash-generative fast-track road traffic accident segment rather than growth in cash-consumptive hearing loss claims’.
The firm said it noted the investigations by the Serious Fraud Office and Financial Conduct Authority into the accounting and business practices of Quindell. It added it remained confident it has ‘no liability’ in relation to those ongoing investigations.
Slater and Gordon's share price dipped by 3% overnight following the statement. Shares now trade at A$3.17. At their peak in April they were trading at A$7.85.