Listed Australian firm Slater and Gordon today confirmed a key contract associated with its recent Quindell purchase will end later this year.
In a statement to the Australian Stock Exchange today, the firm said the claims management services agreement between insurance giant Swinton and Quindell’s professional services division (PSD) will end from 31 October.
The agreement has been in place since December 2012, with Quindell providing legal and complementary services to not-at-fault Swinton customers. Under the agreement, Quindell has exclusively handled all aspects of the motor-claims process for Swinton, including accident management, hire, repair services, legal services and rehabilitation.
As recently as December, Quindell had announced that Swinton, one of the UK’s largest insurance brokers with more than 1.2m motor policyholders, had singed a ‘multi-year’ contract renewal with the listed company.
Slater and Gordon acquired the Quindell PSD earlier this year for a total of £637m. In its statement, the firm said the end of the Swinton agreement was ‘not expected to be material to FY16 earnings’ but that it had elected ‘in the current circumstances’ to make the announcement.
The announcement caused more jitters among Slater and Gordon investors, with the share price falling 3.6% during the day to A$3.47 (£1.63). As recently as April shares were being sold for almost A$8.
Quindell shares continue to be suspended at its own request, having stopped trading on 24 June while it continued work preparing an audited report and accounts for 2014. These were due to be published on 30 June but are yet to appear.
Slater and Gordon’s share price crashed by more than 40% in five days of trading on the Australian Stock Exchange last month after the firm issued an update stating that two errors had been uncovered in the reporting of historical cashflow by its UK business, although the matter had no impact on the firm’s net cash position.