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GOTHAM CITY RESEARCH LLC

Quindell PLC: A Country Club Built On Quicksand

“The Group [Quindell] is a Portfolio Of established Ethical, Industry Trusted, Expert Technology and
Business Process Service companies.” – Quindell CEO, Robert Terry
“Founder Rob Terry invested £12m personally“ – Quindell Investor Teach-in 2013
Question: Did he really?

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Page 2 of 74

Table of Contents
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
XI.
XII.
XIII.

Disclaimer
Summary
Introduction
Quindell’s Anomalous EBITDA Margins
CEO Robert Terry Spent £12 million to Build a Country Club
Quindell’s Largest 2009/2010 Customer is Itself (ClickUs4.com)
41% of 2011 Revenues Comes from an Undisclosed Customer
Quindell’s Phantom Acquisitions (2011-Present)
Telematics Accounting Issues & Related Party Transactions
The Dark Side of Quindell Legal Services
Additional Accounting and Oversight Issues
Valuation: Worth No More Than 3p per share
End Notes

Page 3 of 74

GOTHAM CITY RESEARCH LLC
a

SUMMARY













42%-80% of Quindell’s profits are suspect, as we are
unable to reconcile the whole with the sum of the parts.
Quindell was little more than a country club until
2008/2009, yet QPP somehow began reporting
Microsoft/Google-esque profit margins in 2010/2011.
26%-43% of Quindell’s 2009 and 2010 revenues came from
Clickus4.com, a subsidiary owned by CEO Robert Terry.
41% of Quindell’s 2011 revenues came from an
undisclosed related party (controlled by a QPP executive).
10+ acquisitions lack economic substance. Several of the
acquired companies are little more than paper companies.
QPP’s largest telematics customer is itself (via subsidiaries
Himex & Ingenie), accounting for 61% of 2013 revenue.
99% & 80% of Himex’s 2012 and 2013 balance sheets are
seriously deficient (Himex is QPP’s largest acquisition).
Former executives allege Himex/Navseeker lied to them
about its financial state and that in effect they were
operating a Ponzi-style scheme.
2011-2013 accounts receivable are between 86%-231% of
revenue, while deferred revenue only 1%-2% of revenue.
Nearly all of CEO Terry’s £11 mm personal investment into
Quiindell was used to build Quindell the country club.
No free cash flow and negative operating cash flow.
Quindell fails to explain how its personal injury business
complies with Lord Jackson’s reforms & referral fee ban.
The Chairman of the Transport Select Committee, Louise
Ellman recently initiated a probe to determine whether
ABSs are used to side-step the Jackson reforms.
3 auditors in 3 years, since 2011.
Quindell’s shares are worth no more than 3p/share.
QPP shares would qualify for a de-listing if the shares were
trading in US markets.
When asked, Quindell refuses to answer simple questions
about its business.

Company: Quindell PLC
CEO: Robert Terry
Ticker: QPP
Exchange: London’s AIM
Price Target: 3.00p/share
Share price: 39.00p/share
(as of the 18th of April)
Market cap: £2.41B
52-week high: 45.50p
52-week low: 5.40p
Shares outstanding: 6.19B
Avg. Daily Vol: 72.09M
2013 Revenue: £380M
2013 Net income: £83M
2013 OCF: -£9M
2013 FCF: -£65M
2013 Receivables: £328M
Tangible book: £376M
Price/Tangible Book: 6.4x
FYE: Dec. 31
Auditors: KPMG, RSM
Tenon

Page 4 of 74

INTRODUCTION
GOTHAM CITY RESEARCH first heard about Quindell when the company entered the UK public markets
via reverse merger in 2011. Many low quality companies and outright frauds have historically entered
the public markets via reverse merger. Quindell’s story and its accounting did not make much sense to
us at the time, but we did not examine it more carefully until recently. On the one hand, Quindell
appears to be an exceptionally good company, with Google/Microsoft-esque net profit margins1:
Google
Microsoft
Quindell

2010
29.0%
30.0%
32.1%

2011
25.7%
33.1%
30.3%

2012
21.4%
23.0%
23.2%

2013 AVERAGE
21.6%
24.4%
28.1%
28.6%
21.8%
26.9%

On the other hand, QPP appears to be an exceptionally poor company, bleeding cash and issuing shares2:
in millions of £s, or units
Revenue
Net Profits
Free Cash Flow
Receivables Growth
Shares Issued
Shares Outstanding

2010
£4.15
£1.33
£0.00
£1.00
0.0
108

2011
£13.71
£4.16
£1.34
£30.47
2.4
1,989

2012
2013
£137.56 £380.13
£31.90 £82.70
-£59.15 -£64.64
£170.67 £125.53
91.0
200.4
3,309
5,670

Gotham City Research has not seen such conflicting qualities in a company since Sino-Forest. We have
come to believe that Quindell is, indeed, an exceptional company – for all the wrong reasons. We were
unable to reconcile 42%-80% of Quindell’s EBITDA, and believe the following findings best explain why:



Quindell was little more than a country club (that CEO Robert Terry personally invested £12
million to build) until 2008-2009. The company started reporting exceptional margins and
magical revenue growth by 2010/2011, just in time for its public listing.
26%-43% of Quindell’s 2009-2011 revenues are of suspect quality as they are explained by sales
to related parties owned and operated by Terry himself or his former associates3.
80%-99% of Himex’s balance sheet – Quindell’s Telematics crown jewel, and its largest ever
acquisition – does not add up. Quindell claims that 61% of its 2013 telematics revenue came
from itself, via its Himex and Ingenie subsidiaries4.
10+ acquisitions appear to lack economic substance. For example, several acquisitions were
incorporated the same day they were purportedly acquired.5
Quindell’s New York office does not seem to exist. The receptionist told us he’s never heard of
Quindell, and that no technology company occupies the 9th floor. Also, Quindell New York’s
listed phone number is not a New York phone number (it’s a Florida phone number).
Quindell claims its legal services/personal injury business is booming due to increased volumes
and market share gains, yet Quindell also makes the competing claim that it successfully reduces
fraudulent claims (which would reduce volumes).6

Page 5 of 74

Quindell’s Anomalous EBITDA Margins
Quindell’s Anomalous EBITDA Margins: Abnormally High Relative to its Peers
Quindell’s CEO, Robert Terry imploded his last business (Innovation Group), and started Quindell Limited,
as a golf resort/country club. He personally invested £12 million into Quindell the country club (NOT into
a software/technology concern, which we discuss in the next section) and Terry (largely) remained in
obscurity, until 2011 when he re-entered the public share markets, via a reverse merger transaction on
London’s AIM exchange (the AIM exchange is similar to the US OTC/Pink Sheets).
Terry would have you believe Quindell’s 2013 net profit margins not only compete with the likes of
Google/Microsoft, its 2013 EBITDA margins also handily outperform its outsourcing company peers1:

Quindell vs. Peers'
2013 EBITDA Margins
Quindell
30.7%
Exlservice Holdings
19.3%
Genpact
18.1%
Accenture
17.3%
WNS Holdings
15.5%
Capita
13.3%
Innovation Group
12.9%
Computer Sciences
11.8%
Xchanging
11.3%
Guidewire Software
7.2%
Serco
5.8%
Guidewire mentions Innovation Group but doesn’t mention QPP in their 10K filings as a comparable
company.

Quindell’s Overall EBITDA Margins Do Not Reconcile with the Sum of its Parts
Although improbable, it’s conceivable that Quindell is actually an exceptionally great business, handily
outperforming its competitors and earning Google/Microsoft-like profit margins. It’s also improbable,
but conceivable, that Quindell magically transformed itself overnight from a country club into a highly
profitable software/consulting company.
These possibilities seem far less likely, once one compares Ai Claims Solution and Mobile Doctor’s razorthin EBITDA margins against Quindell’s overall reported 30+% EBITDA margins. After all, Ai Claims
Solution and Mobile Doctors represent nearly 40% of Quindell’s 2013 revenue2:

Page 6 of 74

Mobile Doctors and Ai Claims Margins are Razor Thin
Revenue
EBITDA Margin
in millions of £s, except for %s
Mobile Doctors
£27.9
£1.6
5.7%
Ai Claims
£117.6
£5.7
4.9%
Mobile Docs + Ai Claims
£145.5
£7.3
5.0%
Quindell Total
£380.1
£116.5
30.7%
Other Quindell
£234.63
£109.18
46.5%
Yet they have historically generated little more than 4%-6% EBITDA margins. This implies 60% of other
Quindell businesses must yield EBITDA margins that substantially exceed Microsoft/Google’s margins.

We Cannot Reconcile ~80% of Quindell’s 2012 EBITDA
We sought to reconcile Quindell’s reported results with the sum of its parts. We were unable to
reconcile/explain ~80% of Quindell’s reported 2012 EBITDA3:
Quindell 2012 Unexplained EBITDA
Acquisition EBITDA
Ai Claims
£3.8
Mobile Doctors
£1.6
Silverbeck Rymer
£0.6
IT Freedom
£1.8
Compensation Lawyers
£0.1
Business Advisory Service
£0.2
Metaskil Group Limited
-£0.0
Other acquisitions
£0.1
Calculated Total 2012 EBITDA
£8.1
Reported Total 2012 EBITDA
£39.6
Unexplained Variance
-£31.5
% Variance
(79.5%)
Sources: Annual Reports, DueDil, GCR Estimates
in millions of £s, except for %s

We are confident that Quindell’s “core” businesses, i.e. ‘Brand extensions’ and ‘Telecoms’ do not explain
this 80% variance. Quindell’s total reported 2011 revenue and EBITDA were ~ £14 million and ~£5
million respectively.
As we show later, 30%-40% of these revenues are of questionable quality as they originate from related
parties. Assuming this core £14 million in revenue were completely reliable, it would have had to grow
year over year by over 4x-8x in 2012 to explain this £32 million variance in EBITDA.
We highly doubt this is the case, especially given the patterns of questionable behavior we’ve found in
Quindell’s brand extensions & telecoms related business, as discussed later in this report.
Page 7 of 74

Similarly, we were unable to reconcile ~42% of Quindell’s 2013 EBITDA4:

Quindell 2013 Unexplained EBITDA
Acquisition
Compass Cost Consultants
React and Recover Medical Group Limited
Ai Claims
Telematics - Ingenie + Himex + Other
Silverbeck Rymer
Mobile Doctors
Abstract Legal Holdings
PT Health
Crusader Assistance Group
Compensation Lawyers
IT Freedom
Quintica Holdings Limited
Overland Limited
ITer8
360GlobalNet/Quindell Property Services
Other acquisitions
Calculated Total 2013 EBITDA
Reported Total 2013 EBITDA
Unexplained Variance
% Variance
Sources: Annual Reports, DueDil, GCR Estimates
in millions of £s, except for %s

EBITDA
£2.0
£2.0
£5.7
£20.0
£6.8
£1.6
£5.1
£5.0
£0.7
£0.7
£2.8
£0.7
£2.2
£4.5
£5.0
£3.0
£67.8
£116.5
-£48.7
(41.8%)

Note that our 2013 assumptions were rather generous to Quindell:




We assumed that Quindell’s acquired personal injury law firms and related companies
experienced no revenue or margin deterioration, despite the Jackson reforms, referral ban, etc.
We do believe Quindell’s personal injury related and legal services businesses were not immune
to the reforms’ effects, but again, we are being generous.
Quindell and CEO Terry refused to disclose how profitable the £40 million of telematics revenue
is; we assume 50% EBITDA margins. In the spirit of generosity, we also assume that revenue
quality is not an issue (despite the fact 61% of QPP’s telematics revenues originate from its
subsidiaries as customers!).
The other acquired companies are too small to explain the variance.
As described along with the 2012 EBITDA variance, Quindell’s “Core business” does not explain
these variances.
It would be unsurprising to us if the actual 2013 EBITDA variance was closer to 50%-60%.

Page 8 of 74

Quindell’s Balance Sheet Does Not Resemble a True Software/Saas Company’s Balance Sheet
We find that not only are Quindell’s 2012 & 2013 reported EBITDAs suspect, its balance sheets are
suspect as well. Specifically, we find the balance sheets do not resemble a true Software/Cloud/SaaS
company’s balance sheet.
On one hand, Quindell makes the following SaaSy claims5:

However, Quindell’s balance sheet does not support the above claims, as the company’s deferred
revenue are too low relative to total revenue, to resemble a true cloud/SaaS business6:
Deferred Income Too Low for a True SaaS/Cloud Company
2009
2010
2011
2012
in millio ns o f £s, except fo r %s
Revenue
£3.6
£4.1
£13.7
£137.6
Receivables
£0.2
£1.2
£31.7
£177.9
as % of revenue
5.7%
28.9%
231.1%
129.3%
Deferred income
£0.0
£0.0
£0.4
£2.2
as % of revenue
0.0%
0.0%
2.7%
1.6%

2013
£380.1
£327.9
86.3%
£5.0
1.3%

Moreover, Quindell’s cash flow from operating activities was quite negative in 2013, and its receivables
were anomalously high. These, too, are not consistent with true Cloud/SaaS companies, as they tend to
receive payment upfront (i.e. cash), and then earn their revenue over time. Autonomy plc’s balance
sheet shared similar qualities, as described by John Hempton of Bronte Capital7:
Autonomy’s Sales were $870 million. Receiveables were $330 million - which is four and a half
months of receiveables. Deferred revenue is $177 million - just over half of receiveables. This is
really perverse for a software company. Software companies sell stuff that is barely tangible they sell it up front and for cash. They have very few receiveables. They do however have an
obligation to service that software for a long time after they sell it - so the unearned income is
relatively large (usually a multiple of receiveables). Autonomy was booking as income lots of
cash it had not received (which is why the receiveables were large) and not booking any
obligation to provide future services for that income.
Page 9 of 74

CEO Robert Terry Spent £12 million to Build a Country Club
CEO Rob Terry and his supporters have been claiming (for years) that Terry personally invested £12
million into Quindell’s technology/software1:
“Innovation [Group] was a lossmaking business at the top of the dotcom boom. This time he’s
[Terry] invested £12m of his own money.”
“Rob Terry has invested £12m building the consultancy proposition and technology platform.”
"Rob Terry set up Quindell with £12 million of his own cash to build an eye-catching insurance
claims outsourcing business that could dominate the supply chain with its own IP-technology and
a swathe of industry contacts."

Gotham City Research finds that while Terry’s claims may be literally true, they are in substance false,
for the following reasons:


Terry invested £11.5 million into Quindell Limited between 2001-2005, and Quindell Limited
spent £11.5 million on building a golf and country club between 2001-2008.
Quindell Limited’s principal activity (between 2001-2007, and likely through 2009) was, “the
operation of corporate entertainment facilities at Quob Park and the operation and
development of facilities for Quindell Golf and Country Club”
There is no mention of software, technology, insurance, personal injury, or telematics in
Quindell Limited’s annual reports between 2001-2007.
Quindell Limited’s 2008 annual report vaguely starts claiming that its principal activities include
telecom/technology related activities, even though archived versions of its website do not
validate these claims.

It is evident that the financial media, brokerage analysts, and investors give their vote of confidence
to CEO Robert Terry, in part, because they trusted that he had personally invested £12 million to build
an insurance/software/technology concern. Their faith in Quindell and its CEO Terry is misplaced.
Page 10 of 74

Quindell Limited’s Annual Reports Clearly Show Terry Invested in Building a Country Club
Quindell Limited’s ‘Notes to the Accounts’ (specifically the ‘Tangible Fixed Assets’ section) from 20012008 clearly show that Quindell cumulatively invested £11.6 million in additions to Tangible Fixed Assets
(mostly ‘Freehold land and buildings’), not Research and Development, not Software, and nothing
Technology-related2:
CEO Robert Terry's ~12 million Investment into Building Quindell the Country Club
in millions of £s, except for %s
2001
2002
2003
2004
2005
Rob Terry Total Invested Capital
£3.6
£5.4
£6.7
£10.9
£11.5
Terry's Incremental Investment
£1.8
£1.3
£4.2
£0.6
Additions to Freehold land & buildings, etc.
£4.2
£1.5
£1.1
£1.9
£0.3
Cumulative Investment in land, etc.
£5.6
£6.7
£8.6
£8.9

2006
£11.5
£0.0
£0.7
£9.6

2007
£11.5
£0.0
£0.7
£10.3

2008
£11.5
£0.0
£1.3
£11.6

Quindell Began as a Country Club and Remained One Until Relatively Recently
Quindell Limited was a country club / golf course from its inception through 2008/2009, as evidenced
also by how the company describes itself in its annual reports under ‘Principal Activity’: 3
Year:
Principal Activity (as described in each respective Annual Report)
2001 The company's principal activity is the operation of corporate entertainment facilities.
2002 The company's principal activity is the operation of corporate entertainment facilities.
2003 The company's principal activity is the operation of corporate entertainment facilities and a golf course.
2004 The company's principal activity is the operation of corporate entertainment facilities at Quob Park
and the operation and development of facilities for Quindell Golf and Country Club.
2005 The company's principal activity is the operation and development of facilities for Quindell Golf and
Country Club and the operation of corporate entertainment services at Quob Park. In addition,
based from Quob Park, the Compoany has continued to leverage the experience and
investment strategy of its Board to generate other mgmt services income, with focus on the
leisure industry or technology companies with the potential for future public listings.
2006 The company's principal activity during 2006 has continued to be the operation and development
of freehold facilities owned by Quindell for the Leisure Industry.
2007 The company's principal activity during 2006 has continued to be the operation and development
of freehold facilities owned by Quindell for the Leisure Industry.
2008 The company's principal activity during 2008 have continued to be within both the leisure industry,
where activities relate to providing solutions to both consumers lifestyle solutions and businesses
business solutions, and within telecommunications and technology led industries.

Quindell Limited’s description of its principal activity noticeably changes in 2008 (recall that Quindell
conveniently discontinued filing its annual reports after 2005, & only submitted its 2006 and 2007 filings
in 2009 when it was threatened with discharge). It’s only in 2008’s annual report Quindell starts using
vague and superficial business-speak, such as “consumer lifestyle solutions” and “business solutions”.
The 2008 annual report was not signed off until March 2010. Coupled with Quindell’s bizarre related
party transactions with ClickUs2.com, SMI Telecoms, and others between 2009-2011 (as we describe in
the next two sections), we believe Rob Terry had plenty of means and motivation to exaggerate
Quindell’s business activities between 2008-2011 leading up to its public listing. We think there’s a good
chance Quindell remained little more than a country club through 2010/2011.
Page 11 of 74

Archived Records of Quindell’s Website Verify It was a Country Club
As they say, sometimes pictures are worth a thousand words:
Quindell.com on December 11, 20044

Quindell.com on January 31, 2008 and July 8th, 2008

Notice how the 2008 archived versions of Quindell’s website shown above are not consistent with
Quindell’s portrayal of the business in the 2008 Annual Report (filed in 2010; this is no coincidence).
Page 12 of 74

Quindell.com on March 12th, 2009

July 15, 2009

Page 13 of 74

December 16, 2009

By December 2009, Quindell’s website at least resembles the principle activities as described in the
company’s 2008 annual report. Notice how there is no mention of insurance, and that the ‘Quindell
Telecoms’ and ‘Technology Solutions’ as described (if you hover over them) sounds like nothing more
than the SMI Technologies / SMI Telecom’s business (which implies Quindell itself had little to no
telecoms operations; more on this later). The ‘Business Solutions’ sounds vague & low-tech:

`
Page 14 of 74

Quindell’s 2008 Annual Report Signed Off By Louise Terry (Robert Terry’s Spouse), “Finance Director”5

So CEO Robert Terry had his wife, Louise Tracey Terry, Quindell’s “Finance Director” sign off on
Quindell’s 2008 filings on 24 March 2010, just a year before filing to go public? It turns out, this is merely
a symptom of far more peculiar and funny activities that occurred between 2009-2011.
Page 15 of 74

Quindell’s Largest 2009/2010 Customer is Itself (ClickUs4.com)
Quindell’s Largest Customer in 2009 and 2010 was Itself (via ClickUs4.com)
In the 2 years preceding Robert Terry’s return to the public markets as CEO of Quindell, Quindell
recognized ClickUs4.com, an entity owned by Robert Terry (and his relatives), as its largest customer1:

ClickUs4.com was Quindell's Largest Customer in 2009 - 2010
in millions of £s, except for %s
2006
2007
2008
2009
Quindell Total Revenue
£1.09
£1.38
£1.71
£3.55
Revenue from ClickUs4
£1.53
as % of Quindell Revenue
43.2%
Clickus4.com Revenue
£0.27
£0.14
£0.00
£2.62

2010
£4.15
£1.07
25.9%
£1.76

We question the economic substance of these revenues for the following reasons:






Clickus4.com magically increased its sales from £0.0 million to £2.6 million, between 2008 and
2009, despite the fact that Clickus4.com revenue never exceeded £0.3 million prior to 2009.
26%-43% of Quindell’s 2009-2010 revenue come from ClickUs4.com. The economic merit of
these sales is questionable, as Robert Terry and family own and/or controls both entities.
ClickUs4.com (and Quindell’s) phenomenal revenue growth in 2009 coincides with the time
period in which Quindell and Clickus4 stopped filing annual reports. Quindell’s 2009 annual
report was filed on May 31, 2011, just in time for its public listing.
Quindell and its CEO Robert Terry purchase/sell Clickus4.com with each other, several times,
between 2008-2010. These transactions seem to lack economic substance, as Terry is the
ultimate owner of both entities.
Quindell’s average monthly number of employees actually declined from 46 employees to 34
employees between 2008 and 2009, even as Quindell’s revenue more than doubled.
In order to stave dissolution, Robert Terry filed Quindell’s 2006 and 2007’s filings in 2009. That
is, between 2006 and 2009 did not files its financial statements.
The Board of Quindell Limited found evidence of theft of stock and fraud in 2010.
Clickus4.com’s website re-directs to Quindell.com today.
ClickUs4.com’s auditor in 2008 differs from that in 2010 (Deloitte in 2008 and then CJ Goodhead
in 2010).

Robert Terry Enjoys His Country Club Life, Stops Filing Financial Statements for Quindell
After Robert Terry fell from grace at Innovation Group (which incidentally was a roll-up as well) in 2003,
it seems he devoted most of his time to running a golf and country club (a.k.a. Quindell Limited), along
with a restaurant/wine bar, as explained in the prior section. For reasons unknown, Quindell Limited
ceased filing financial statements after 2005.
Page 16 of 74

Quindell Limited was to be dissolved in 2009, for failing to produce financial statements since 20052:

In order to prevent dissolution, Robert Terry filed Quindell’s 2006 and 2007’s filings in 2009. Said
differently, Quindell was not filing its financial statements between 2006 and 2009 3:
Quindell Limited - Late Filings
2006
2007
2008
2009
2010
Year End: 12/30/2006 12/30/2007 12/30/2008 12/30/2009 12/30/2010
Auditor Signed off: 4/30/2009 4/30/2009 3/24/2010 2/28/2011 3/11/2011
Days after Year End:
852
487
449
425
71

We are concerned that the accuracy and reliability of Quindell’s financial statements are (at best)
questionable during this time period, as they were signed off much later.
Quindell Limited’s 2009 annual report provides a reasonably long description of its activities, yet there is
no mention of ‘insurance’ or ‘insurance software’. In fact, the language is laughably vague4:

Page 17 of 74

Quindell, Robert Terry, and ClickUs.com History of Ownership: This is Quindell’s Largest Customer?
Seeing that Robert Terry (and/or his wife and family members) own/control ClickUs4.com, and Robert
Terry owns Quindell, it seems strange that ownership of Clickus4.com exchanged hands at least a few
times. These transactions seem to lack economic merit:

June 30th 2005 – Clickus4.com 100% owned by Quindell Limited5

February 28th, 2009 – Quindell Limited sold 100% of ClickUs4.com to Robert Terry


July 29th, 2009 – Quindell Limited purchased ~50% of ClickUs4.com shares from Terry
November 31st, 2009 – Quindell acquired the remaining shares of ClickUs4.com

According to Quindell’s 2009 Annual Report,



ClickUs4.com was acquired for £3.6 million.
Quindell paid for this by transferring assets to ClickUs4 and settling an intercompany loan.
On the 30th of December 2009, Quindell’s wrote off its ClickUs4.com investment and wrote off
an addition £0.32 million it contributed to ClickUs4.com.
On July 1st, 2010 Quindell sold ClickUs4.com to Robert Terry for £188,695.

Quindell Board Found Evidence of Theft of Stock and Fraud
Gotham City Research does not understand this claim in the Quindell prospectus6:

How can the Board of Quindell Limited (that is, Robert Terry and the Terry Clan) find evidence of theft of
stock and fraud in ClickUs4.com, which too is a Terry business?

Page 18 of 74

ClickUs4.com’s Auditor in 2008 differs from that in 2010
ClickUs4.com’s 2008 auditor7:

ClickUs4.com’s 2010 auditor (maybe Deloitte was having difficulty believing Quindell’s 2009 revenue,
and did not want to sign the 2010’s):

Page 19 of 74

Quindell’s average monthly number of employees materially declined in 2009, even though reported
revenue doubled8:

Clickus4.com’s “CEO” is Robert Terry’s Lackey
A young man name Rod Cameron was named CEO of ClickUs4.com on the 1st of April 2011,9

Rod Cameron is currently Robert Terry’s personal executive assistant.10

Page 20 of 74

Strangely, the archived version of Clickus4.com for November 5 th, 2007 (as does the December 2nd, 2008
version) shows Quindell11:

The archived version of Clickus4.com as of July 8th, 2009 shows the following (just time for Quindell to
“sell” goods and services to clickus4.com)12:

Page 21 of 74

41% of 2011 Revenues Comes from an Undisclosed Customer
Quindell’s 2011 Reported Figures Look Exceptionally Good – What was Quindell’s Secret Recipe?
Quindell was little more than a country club/golf club through 2008/2009, and a large percentage of its
2009/2010 sales came from itself (via Terry-controlled ClickUs4.com). Despite a huge reported loss in
2009, the company began magically generating Google/Microsoft-like margins along with triple digit
revenue growth in 2010 and 20111:
Google
Microsoft
Quindell

2010
29.0%
30.0%
32.1%

2011
25.7%
33.1%
30.3%

2012
21.4%
23.0%
23.2%

2013 AVERAGE
21.6%
24.4%
28.1%
28.6%
21.8%
26.9%

Gotham City Research does not see signs of excellence or competitive advantage in Quindell’s
2010/2011 business or service/product offerings. Rather, we see that Quindell’s relationship with SMI
Telecom (customer/distribution partner/subsidiary) in 2010-2012 eerily resembles its relationship with
ClickUs4.com in 2009/2010. 40%+ of Quindell’s 2011 revenues seem questionable, as:






Quindell’s largest 2011 customer/distribution partner = 41% of QPP’s total revenue.
This entity is unnamed (deliberately, we think), but the evidence points to SMI Telecoms.
Quindell owned SMI Telecoms in 2011; strangely Quindell owned it in 2010 as well, under a
different name (i.e. Quindell issued shares in 2010, sold its interests, and then bought again via
shares in 2011).
Phil Brooks was concurrently CEO of SMI Telecoms & a C-level executive of Quindell in 2011. Phil
Brooks reminds us of Fumitake Nishi of Tile Shop (for those familiar with our Tile Shop report).
Phil Brooks has deep-rooted ties to CEO Terry, Richard King, and the Innovation Group clan.
Phil Brooks’ Turing SMI liquidated in 2008; Turing was only marginally profitable in 2006 & 2007.
‘Quindell New York’ and ‘Quindell India’ contact information as of today (address, phone
number) are identical to SMI Telecom’s New York and India contact information from 2011.
Just as it did with ClickUs4.com in 2009-2010, questionable exchanges of ownership/acquisition
correspond with Quindell recognizing anomalous revenue growth derived from the
acquired/sold entity.

Why ClickUs4.com and SMI Telecoms Matter Today
Recall that Gotham City Research is unable to reconcile Quindell’s 2012 and 2013 EBITDA with the sum
of the subsidiary parts. We think the primary reason is that Quindell’s “core business” (before acquiring
all the personal injury/legal entities) was never quite what Terry and Quindell portrayed it to be.
Our ClickUs4.com and SMI Telecoms findings lead us to believe that Quindell’s 2009-2012 reported
revenues are highly questionable. In fact, we believe SMI Telecoms plays a critical role in
understanding why we are unable to reconcile ~80% of Quindell’s 2012 EBITDA.
Page 22 of 74

Quindell’s Largest Unnamed Customer/Distributor in 2011 is SMI Telecoms
Quindell cryptically mentions its largest customer and distribution partner in 2011 2:

Quindell does not name this entity, but all the evidence points to SMI Telecoms (which it owned) – It is
the only distribution entity mentioned in the entire 2011 annual report:

Quindell Briefly Owned SMI Telecoms in 2010 when it Was Known As SMI Technologies3

SMI Technologies operated briefly under the name Quindell Enterprise Solutions, while under the brief
ownership of Quindell. After it was sold, the company was renamed to SMI Telecoms on April 1st 20114:
SMI Technologies LLC and SMI Technologies Limited are no longer trading as Quindell Enterprise
Solutions, rather they have been rebranded and are now trading as SMI Telecoms. As part of
the rebranding these two legal entities are being renamed as SMI Telecoms LLC and SMI
Telecoms Limited respectively.
In Late 2011, Quindell Re-Acquired SMI Telecoms
After buying and then selling SMI in 2010, Quindell bought it back yet again in 2011. This pattern of
behavior bears an eerie resemblance to the ClickUs4.com behaviors we outlined a few pages ago5:

Page 23 of 74

Quindell and SMI Telecoms’ Concurrent India Claims
SMI Telecoms’ website (via the wayback machine archives of the site) lists an India office in 20116:

Quindell’s 2011 annual report states7:

The manner in which Quindell phrases its India presence further supports our belief that SMI Telecoms
is the largest customer/distribution partner.
Quindell Extends Ties with SMI Telecoms in 2012, Increasing its Stake
According to Quindell’s 2012 Annual Report (signed off on 7 May 2013), Quindell and SMI Telecom’s
relationship strengthen in May 20128:

Concurrently, Quindell’s largest 2012 customer/distribution partner continues to be the same unnamed
entity as in 2011:

No other distribution entities are named in the 2012 annual report.
Page 24 of 74

SMI Telecoms is Never Ever Mentioned Again
We are unable to find SMI-related press release, RNS, etc. after the news that Quinded extended ties
with SMI Telecoms. In fact, the SMI Telecoms website redirects to Quindell as of April 2013, a month
before Quindell’s 2012 Annual Report was signed off (the wayback machine has no record of the SMI
website between December 1, 2012 and April 10, 2013)9:

We find this highly strange for the following reasons:



Quindell does not explain whatever happened to SMI Telecoms. We are not told whether it was
disposed or whether the remaining shares were purchased.
SMI Telecoms’ website seems lacking in updates after this good news.
Quindell and SMI had a track record of updating the public on latest developments in their
relationships.
The last announcement regarding the extension of their partnership sounds very bullish.
Quindell and CEO Terry have a demonstrated track record of promoting and milking good
news (and even mediocre news). Why stay silent?
If SMI Telecoms and/or Quindell’s Telecom’s business revenue is growing 5x-10x, and its
EBITDA margins are 50%-100%, why does Quindell remain quiet about one of its best (if not its
best) businesses?

SMI Telecoms LLC Was Dissolved 3 Months After the Release of Quindell’s 2012 Annual Report
Quindell’s 2012 Annual Report was signed off on 7 May 2013, and publicly released on the 7th of
June 201310:

According to Florida records, SMI Telecoms LLC was dissolved on the 27 th of September, 201311:
Page 25 of 74

“Failure to file an annual report by the 3rd Friday of September will result in the administrative
dissolution or revocation of the business entity on our records at the close of business on the 4th
Friday of September.”12
SMI Telecoms LLC’s listed registered agent is listed as Phil Brooks, which is odd, because a registered
agent must be a Florida resident. It’s unclear how Brooks was a Florida resident while
simultaneously a Quindell executive in 2011.
SMI Telecoms Ltd Stops Filing Annual Reports, Will be Dissolved in 3 Months
SMI Telecoms LLC’s UK counterpart, SMI Telecoms Ltd (which is fully owned SMI Telecoms LLC) will be
dissolved in 3 months according to an April 8th 2014 filing13:

Page 26 of 74

The Strange Case of SMI Telecoms Distribution Ltd, Incorporated by Robert Terry
SMI Telecoms Distribution Limited was incorporated on 8th of March 2012 (just 2 months before the
announcement that SMI Telecoms and Quindell extended its partnership agreement):14

it’s unclear why SMI Telecoms Distribution Ltd was ever incorporated:


Robert Terry and Laurence Moorse are listed as directors.
As of incorporation, Quindell Limited is the sole shareholder. As of March 2014, Quindell
Technologies Limited is listed as the sole shareholder.
The company has never filed an annual report and looks like it will be dissolved soon per
Companies House.

Phil Brooks Was a C-Level Executive of Both Quindell and SMI Telecoms in 2011
Quindell’s prospectus (dated April 2011) states Philip Brooks is Quindell’s Chief Revenue Officer (and
more) and a shareholder15:

Various press releases, archived versions of the SMI Telecoms website, and other documents prove Phil
Brooks was CEO of SMI Telecoms at the same time16:
"NetBoss monitors networks, and when they find something that's not working, they call us,"
Phil Brooks, chief executive officer of SMI, said Tuesday – $169K grant could help SMI Telecoms
add jobs in Indian River County dated July 5th, 2011
Page 27 of 74

Phil Brooks does not mention SMI Telecoms/SMI Technologies in his Linked profile 17

Phil Brooks Remains with Quindell Today, Though His Exact Role and SMI Telecoms’ Fate is Ambiguous
Phil Brooks, as evidenced by his Linkedin profile, as well as Quindell’s press releases/RNS, appears to
remain with Quindell. The problem is it is very unclear what he does exactly18:

“Phil Brooks, Chief Executive of Quindell Telecoms” – according to a Quindell press release
dated November 18th, 2013

Vs.

“Chief of Quindell Solutions” - according to a Quindell press release dated October 23rd, 2013
(see the next section for more on Quindell Solutions, as it is a phantom acquisition)

Phil Brooks and Ties That Blind – the Turing SMI Connection
Phil Brooks, Gary Brooks (Phil and Gary appear to be family members), Richard King (CEO of Quindell
subsidiary Ingenie, and former Innovation Group senior member), Quindell Limited (and therefore
Robert Terry), Laurence Moorse (Quindell’s CFO) were all directors of Turing SMI19:

Page 28 of 74

Gary Brooks signed off on some of the SMI financial statements, and he lists himself as CTO of SMI
Telecoms on linkedin currently:20

SMI Telecom’s Listed New York & India Offices are Quindell’s Listed New York & India Offices Today
Quindell’s current New York and India office information, as listed in the ‘contacts’ section of the
quindell website, are the exact same as SMI Telecom’s in 2011. We contacted and visited the New York
offices and the office receptionist told us he’s never heard of a Quindell (more on this later).

Page 29 of 74

Quindell’s Phantom Acquisitions (2011-Present)
We find Quindell engaging in further questionable, uneconomic behavior with the following subsidiaries:
SUBSIDIARY NAME
Brand Extension (UK) Limited
Quindell Brand Extension Services Limited
UK Sun Limited
Simon Hall Associates Limited
Quindell Enterprise Solutions Limited
Quintica Holdings Limited
Quindell Property Services
ACH Manchester and associated companies
Clickus4.com
SMI Telecoms Distribution LLC
Quindell Solutions Limited

QUINDELL'S PECULIAR ACQUISITIONS
DESCRIPTION
Incorporated same day Quindell claimed to acquire. 100% owned by Mark Ford 7 months later.
Quindell lists as subsidiary, but it is also 100% owned by Mark Ford.
Only had £100 in total assets, and was given notice it would be dissolved 2 months after Quindell acquired it.
Richard Oliver Incorporated 1 month before Quindell claimed to acquire. Only has £1 in total assets.
Incorporated same day Quindell claimed to acquire, with Matt Whiting as sole shareholder.
Quindell claimed to have acquired it, but already owned it.
Quindell already fully owned it from incorporation a few months before it claimed to have acquired it.
According to Companies House there is not, and has never been, a UK company called ACH Manchester.
QPP subsidiary (& owned by Terry) & 30-35% customer. Allegations of fraud. See ClickUs4.com section for more.
QPP subsidiary (& owned by a Quindell executive), simultaneously largest 2011 Quindell customer. See SMI section.
It seems like Terry used this vehicle to move cash from Quindell to himself (Quob Park, which he owns). An undisclosed related party transaction.

We saw the following pattern at work with ClickUs4.com and SMI Telecoms:

Acquiring companies & utilizing them as significant customers. Quindell’s recorded revenue
from these transactions appear to lack economic substance & a reasonable arm’s-length process

In this section, we cover companies that exhibit the following 2 behavioral patterns:

Purchasing of companies that lack economic substance from related parties. The companies do
not appear genuine (nominal assets, incorporated same day of acquisition, etc).
Acquiring companies Quindell already fully-owned.

Quindell’s “Brand Extension”, Quindell’s ‘Core’ Businesses Look Odd
We were informed that when an investor recently asked CEO Terry and management for a breakdown
of its revenue, the company refused1. They pointed instead to the split provided in a Cenkos note.
According to the Cenkos note, Quindell’s “Brand Extension” related businesses are highly profitable
(QPP apparently claimed this were utility-like services)2:
Quindell Brand Extension Economics, According to Cenkos
in millions of £s, except for %s
2011
2012
2013
Brand Extension / Broking
£6.8
£11.1
£12.9
QPP Brand Extension
£6.5
£18.5
£20.0
Total Brand Extension Revenue
£13.3
£29.6
£32.9
Brand Extension / Broking
£5.9
£8.5
£11.0
Total Brand Extension EBITDA
£2.2
£8.0
£8.6
Total Brand Extension EBITDA
£8.1
£16.5
£19.6
Brand Extension / Broking
86.8%
76.6%
85.3%
Total Brand Extension EBITDA
33.8%
43.2%
43.0%
Total Brand Extension EBITDA Margin
60.9%
55.7%
59.6%

It’s quite convenient that a company that was mostly a country club and golf club through 2008/2009,
and derived 25%-50% of revenues from its subsidiaries in 2009-2011, magically reports
Microsoft/Google-like profit margins just in time for its 2011 IPO. It’s equally convenient that some of
these profits are derived from a highly vague ‘brand extensions’ business, that Quindell never explains.
We think we know why.
Page 30 of 74

Quindell Brand Extension Services Limited
There is a company listed at Companies House, by the name of Quindell Brand Extension Services, listed
as a subsidiary of Quindell in its 2012 annual report3:

The problem is that Quindell Brand Extension Services is wholly owned by Mark Ford, not Quindell4.

Who is Mark Ford?
Mark Ford's business, TMC (Southern) Limited owned 7.4% of Quindell when it publicly listed on the AIM
exchange. Strangely, Mark Ford’s TMC (Southern) Limited disclosed a short position of 0.7% on
November 25th, 20115. In addition, TMC did business with Quindell. The following is a series of non-cash
and other transaction between the two entities as disclosed in Quindell’s Prospectus6:

Page 31 of 74

Brand Extension (UK) Limited
Not to be confused with Quindell Brand Extension Services Limited, there is also a company called Brand
Extension (UK) Limited that QPP claimed to acquire in 20127:

As a matter of fact, Quindell did not. Mark Ford incorporated the business that same day8

As of April 2013, Mark Ford remained the sole owner of Brand Extension (UK) Limited9:

Is This What Quindell Means When it Refers to “Brand Extension”?10

Page 32 of 74

The above image would additionally explain why the company is opaque when it comes to describing
‘brand extensions’ and why it refuses to provide meaningful disclosures of the different businesses it
owns and operates. The numbers simply do not add up.
Quindell Solutions Limited
Quindell claims to have acquired Quindell Solutions Limited (“QSL”) sometime in September 2011.
Quindell’s 2011 Annual Report and a QSL filing/Companies House disagree on the exact date11:

Here’s the thing: QSL was once a subsidiary of Quindell Limited, before Quindell Limited reverse merged
into Mission Capital.
QSL looks like it was nothing more than a shell company. Its filings show that QSL had negligible assets in
2009 and 2010 (actually a negative book value). In 2010, revenue, costs and cashflow were all zero. 12
Quindell sold QSL to CEO Rob Terry in 2009 for £1 (coincidentally, QSL’s book value).
In 2011 Quindell re-acquired QSL for £251,000 in cash. At the time QSL was fully owned by Quob Park
Limited, an entity wholly-owned by Rob Terry13:

Page 33 of 74

In short, Quindell appears to have made an undisclosed payment to CEO Rob Terry in the amount of
£251,000 for a shell company that Quindell had sold to the same Rob Terry 2.5 years prior for £1.
Despite all this, the transaction was not disclosed as a related party transaction.
Matt Whiting (who we discuss in greater detail shortly) is listed as a director of 2012 14:

Phil Brooks and Quindell Solutions
Note that a RNS/press release dated 23 October 2013 states15:
Phil Brooks, Chief Executive of Quindell Solutions said: "This contract reinforces Quindell's market
leading approaches and solution offerings to enhance service management capabilities across a range of
industries."
Page 34 of 74

Simon Hall Associates
Simon Hall Associates (“SHA”) appears to be yet another shell company. SHA was incorporated on April
26th 2012(~2 weeks before Quindell claimed to acquire it) with 1 share and £1 in capital. Quindell’s 2012
Annual Report shows QPP paid £1 million cash for SHA16:

Simon Hall Associates 2012 balance sheet shows only £1 in total assets, with no trace of the £1,000,000
invested in it (supposedly) on May 11:

The plot thickens further, as Quindell’s press release announcing the SHA acquisition on 14.5.12 claims a
“targeted profit after tax of £500,000”, despite the fact we find Simon Hall has no apparent operations
and was incorporated few weeks before it was acquired17:
The Group also announces today that Simon Hall Associates Limited has been acquired via a
newly incorporated entity, Quindell Motor Services Limited ("QMS") by the Group at a valuation
of up to £2.5 million to be satisfied by the initial issue of 10,000,000 Quindell Shares ("New
Shares"), and up to a further 15,000,000 Quindell Shares ("Further Shares"). This valuation has
been calculated on a multiple of five times QMS's targeted profit after tax of £500,000 ("Target
Page 35 of 74

Profit") within a continuous twelve month period ending prior to 31 December 2013 ("Target
Profit Period"). The New Shares will be issued prior to the start of the Target Profit Period and
the Further Shares may be issued over the next nine months and used to acquire the businesses
of other industry leading talent, not currently working with the Group, in order to assist in
meeting this Target Profit.
The New Shares will be issued at a price of 10 pence per share, representing a premium of circa
45% on yesterday's closing price. The shares are subject to lock in of between 12 and 36 months
from the date of issue. In the event that QMS misses its Target Profit, the Group will receive
compensation from the vendors in the form of cash equal to 5x the shortfall.
Who is Richard Oliver?
Richard Oliver’s ties to Quindell and CEO Robert Terry appear to be very long and deep (Innovation
Group, Lava Group), per Linkedin18:

It gets stranger. The ‘author’ of Quindell’s 2011 and 2012 Annual Reports is shown as Richard Oliver 19:

Page 36 of 74

UK Sun Limited
Quindell claimed to have acquired UK Sun Limited (and issued it shares) on December 2nd, 201120:

Yet the company was warned it would be dissolved just ~2 months later 21:

UK Sun Limited does not look like a genuine company, in substance, with only £100 in total assets (no
trace of proceeds from Quindell shares issued to it)22:

Page 37 of 74

Quindell Enterprise Solutions Limited
On 13 October 2011 Quindell claims it paid £750,000 in cash for Quindell Enterprise Solutions Limited
(“QESL”)23:

Companies House shows QESL was incorporated that same day (Matt Whiting as the sole shareholder) 24:

It gets stranger, as there’s no trace of the £750,000 in cash Quindell supposedly paid it25:

Page 38 of 74

About Matt Whiting and LearnED
Matt Whiting’s ties to Quindell run far deeper than the QESL acquisition detailed in the prior page26:

In February 1996, he joined SCS Consulting Limited as Chief Technology Officer (Rob Terry
founds Consulting in 1990).
In April 1999, he joined New Planet Solutions ("NPS") where his role involved delivering
insurance solutions to customers of The Innovation Group. NPS was apparently founded by
Hassan Sadiq, CEO of Himex (more on Sadiq later).
Matt joined Robert Terry’s The Innovation Group in November 1999 as Chief Technology Officer,
and was appointed to the Board in July 2000. Matt left The Innovation Group in 2002 at which
time he was one of four global technology officers reporting to Robert Terry the then Chairman
and Chief Executive.
In 2002, Matt founded LearnED Limited and was appointed Chief Executive. LearnEd was formed
to develop and resell Business Process Management technologies with an initial focus on the
insurance industry.

Quindell Fully Acquires LearnEd in July 2011, only to dispose of it a Few Months Later at a Profit
Quindell’s 2011 annual report claims the company fully acquired LearnED in July (Matt Whiting was
appointed Quindell’s Chief Technology Officer in April 2011), but it also discloses that LearnED was sold
three months later on 30th September 2011, for £500,000, “having acquired and transferred selected
assets and business activities from the company at an arms length value”27:

Page 39 of 74

The economic substance of the Quindell/LearnED transactions is unclear, as Quindell recognized a gain
on its disposal of LearnED according to Quindell’s 2011 Annual Report:

Other Strange Quindell/LearnED Activity

Quindell lent LearnED £972,000 which was covered by a fixed and floating charge over all
LearnED’s assets and Intellectual Property Rights. We were unable to verify that LearnED paid
Quindell back pre acquisition.28
“The Directors believe that the combination of Intellectual Property Rights held in the two
companies will allow for a significant increase in activity for Quindell in the Insurance sector in
2011 and beyond.”
Quindell recognized revenues from LearnED in 2011

Page 40 of 74

Quindell Property Services
The Company claims to have acquired Quindell Property Services on the 3rd of May 2013 but they had
already fully owned it at incorporation a few months earlier29:

Contrasted against Quindell’s claims in its 2013 press release and 2013 PRE:

The consideration for the acquisition, which was announced on 3rd May 2013, comprised an immediate
issue of 65,978,572 new shares and provided for up to 190,000,000 further consideration shares to be
issued related to performance during 2013-2015.

Page 41 of 74

Quintica Holdings Limited
Quindell claims to have acquired Quintica Holdings Limited on the 18th of September, 201230:

Quindell already owned Quintica Holdings Limited at incorporation (both 2012 and 2013pre filings make
clear that Quintica Holdings Limited is the entity acquired)31:

Page 42 of 74

ACH Manchester and associated companies
On 14th January 2014, Quindell announced it had acquired “ACH Manchester and associated companies”
for £5 million in cash and 117.8m Quindell shares. According to Companies House, there is no ACH
Manchester. There is also no record of any company that was ever named ACH Manchester 32. This
transaction looks strange for a few additional reasons:

Did Quindell mean that it acquired Accident Claims Helpline/ACH Group Management Limited?
It seems Quindell meant ACH Group Management Limited, a company that operates the
Accident Claims Helpline website, accidentclaimshelpline.org.
ACH Group Management’s filings show that it lost about £0.5 million in 2013 and had de
minimis net assets (a slightly negative net asset value), yet Quindell paid £5 million in cash and
117.8m Quindell shares.
The 2013 annual report for ACH was signed off on 6th February 2014.33 Although Quindell
reported the acquisition on the 14th of January the annual report does not mention any
change of ownership or control or any material, post balance sheet events.

Andrew O’Dua, Quayside, and ACH Group Management
ACH’s Annual Report shows that it is owned by Quayside (2801) Holdings. Quayside was incorporated in
June 2013 and wholly owned by Andrew O’Dua. ACH was incorporated in 2009 and was also wholly
owned by Andrew O’Dua. In July 2013 Andrew O’Dua sold 1 ACH share to Quayside in exchange for 6
million Quayside shares. The economic substance of this transaction is questionable for the following
reasons:


One ACH share appears to equal 100% ownership of ACH (there is only one share in issue
according to the 2013 annual report).
ACH’s full list of shareholders as of the 14th of July 2009 shows 100 shares in issue. ACH’s
incorporation filing also shows 100 shares.
Both ACH and Quayside seem to have been wholly owned by Andrew O’Dua the entire time.

ACH appears to have been an insurance claim lead generator company (via cold calls), and irritated quite
a few people as evidenced by the complaints listed here http://whocallsme.com/PhoneNumber.aspx/01457778260/2.
ACH’s use of an .org domain for its website seems misleading, as .org has historically only been available
for non-profits. In fairness, ACH does (economically speaking) look like a non-profit (though Quindell will
surely find some way to magically enhance its own profits through its acquisition of ACH).

Page 43 of 74

Telematics Accounting Issues & Related Party Transactions
Clear Pattern of Related Party Transactions, Accounting Irregularities, and More
Rather than finding evidence of great products, business acumen, or competitive advantage, we have so
far found a disturbing pattern of the following in Quindell’s business activities:





Transactions that lack apparent economic substance.
Recording revenue from transactions that lack a reasonable arm’s-length process.
Transactions/sales to subsidiary, related party, affiliated party, joint venture, etc.
Boomerang (two-way) transactions to nontraditional buyers.
Accounting irregularities, and unexplained errors.
Receivables (especially long-term and unbilled) growing much faster than sales.

Some may concede that our findings up to this point are concerning and valid, but that Quindell’s future
lies with telematics. Unfortunately, Quindell’s telematics crown jewels Himex and Ingenie, exhibit the
same symptoms described above. The following particularly concern us:









99% of Himex’s 2012 balance sheet does not mathematically reconcile.
Himex is Quindell’s largest acquisition (in its history).
Quindell’s 2013 filing claims Himex is a customer, yet it’s also a subsidiary.
Himex itself is a roll-up entity consisting of Himex, eeGeo, Navseeker, and Mileage Management.
Former executives allege Himex/Navseeker lied to them about its financial state and that in
effect they were operating a Ponzi-style scheme.
Hassan Sadiq – a former Innovation Group executive, under then Innovation CEO Robert Terry –
is the CEO and Chairman of Himex. Ingenie’s CEO Richard King is also tied to both Sadiq & Terry.
Hassan Sadiq does not mention Himex in his Linkedin profile. We find this puzzling given Himex’s
purported recent success.
Himex’s 2012 revenue is immaterial – £45,646 (administrative expenses is nearly identical,
£45,089) and a – £545,432 loss in 2013.
Ingenie’s CEO claims “annual revenues of £80 million”, but Ingenie’s actual revenues are likely
closer to 1/10th of that.
Quindell’s reported 2013 sales to Ingenie exceed our estimate of Ingenie’s total sales by over 2x

“If a seller and a customer are also affiliated in some other way, the seller’s quality of revenue on sales
may be suspect. For example, a sale to a vendor, a relative, a corporate director, a majority owner, or a
business partner raises doubt as to whether the terms of the transaction were negotiated at arm’s length.
That is, most related-party transactions that lack an arm’s-length exchange produce inflated, and
often phony, revenue.” – Financial Shenanigans, Howard Schilit

Page 44 of 74

Quindell’s Largest 2013 Telematics Customer is Itself
For 2013 Quindell reported telematics revenue of around £40.0 million. £24.5 million of this was sales to
its associates Ingenie and Himex1:

We find the quality of the £40.0 million revenue suspect, for the following reasons (in addition to the
concerns discussed in the remainder of this section):


Quindell makes no mention of any inter-company transactions, eliminations, or related party
transactions, despite the fact the purported sales to Ingenie and Himex fit the bill.
Quindell has a demonstrated history of recognizing subsidiaries as large customers, and
recording substantial revenue from them.
CEO Rob Terry, Himex’s CEO Hassan Sadiq, and Ingenie’s CEO King ties run deep, to the
Innovation Group days.

Himex’s Funny Balance Sheet
Himex’s 2012 financial statements appear materially incorrect, as the Himex statement of cash flows
claim a £12,000,000 capital expenditure (an outflow of cash), despite financing of only £9,250 and a net
cash inflow from operating activities of £19,1902:

There was no cash on the balance sheet to finance the above capital expenditure:

Page 45 of 74

And Himex 2012 revenues and profits were de minimis:

Himex’s 2013 financial statements are materially inaccurate as well, as a result of 2012 accounting
irregularities identified in the prior page3:

Page 46 of 74

Himex Discloses Less Information in its 2013 Annual Report vs. its 2012 Annual Report
In 2012, Himex disclosed an income statement, balance sheet, and statement of cash flows (despite
being a rather small company). Seeing that Himex grew in 2013 (as claimed by Quindell), it is strange
that Himex elected to disclose less information in 20134:

Himex’s 2013 annual report omits an income statement and statement of cash flows. It’s not obvious to
us that Himex is qualified to do so5:


Himex’s reported balance sheet total (whether it’s real or not) exceeds £2.8 million
According to Himex’s linkedin profile, the company has 51-200 employees6

It’s possible that Himex had less than 50 employees at the time. We still find their opacity suspicious,
given the company provided more information, greater transparency when it was smaller.

Page 47 of 74

In February 2014, when Quindell increased its stake in Himex to 85%, it stated that it expected the
acquisition to enhance earnings in 2014. The acquisition valued Himex at £240 million – implying a
valuation close to 100x historic revenue, and 20x revenue if their monthly revenue run rate of £2 million
is correct.7
The 19% stake acquired 7 months earlier valued Himex at £46 million, 1/6th the 2014 valuation. Octo, a
telematics market leader, was sold for EUR 405 million the same month, at 4x revenue.
Himex’s Strange Acquisitions, and Allegations of Fraud
Himex appears stranger, the closer we look. It purchases a few companies for a £1 each, and former
executives accuse it of fraud:
Navseeker and Allegations of Fraud - Himex’s 2013 annual report shows that in April 2012 Himex
signed an agreement to acquire Navseeker Inc. Himex’s 2013 annual report discloses that 80% of
Navseeker was acquired for £18.
After Himex purchased Navseeker for £1, several former Navseeker executives sued the company in the
United States. They alleged:



Navseeker deceived them into investing hundreds of thousands of dollars into the company.9
Navseeker’s founders lied to them about the financial condition and future prospects of the
company.
The company’s telematics platform was incomplete and not functional contrary to claims
otherwise.
Navseeker’s founders were effectively operating a Ponzi-style operation to recover their own
initial investment in the business.

Evogi Group is Navseeker
Himex’s website claims it acquired The Evogi Group in 2012 (yet Himex’s filings do not mention Evogi),
and Himex’s website fails to mention Navseeker10:

Page 48 of 74

Evogi is Navseeker, per court filings11:

Evogi’s website does not appear fully functional, as links to its management team is dead12:

Evogi received a notice of pending revocation (oddly, it was issued well after Himex acquired them) 13:

Page 49 of 74

These are hardly signs of a successful and thriving operation.
Mileage Management Limited – Himex’s 2013 annual report shows that Himex acquired Mileage
Management Limited for £1 from Ingelby in February 2013. Mileage Management’s 2012 reported
revenue was £1.4 million, slightly up from £1.3 million in 2012, and operating at a small loss.14
Strangely, Himex also acquired Mileage’s former parent Ingelby on 9th July 2013. Ingelby’s 2012 annual
report clearly shows a highly unprofitable company whose going concern is in question, and it is
pursuing a sale of the company.
eeGeO – eeGeo is the only company that Himex seems to have acquired for more than £1. Himex
purchased eeGeo for £1.15 million. The income statement for eeGeO is not available, but its limited
accounts (available via UK filings) show losses increasing, cash decreasing, intangible and tangible assets
decreasing.15
In short, it’s unclear what’s so special about Himex (as the sum of Evogi, Mileage Management, Ingelby,
and eeGeo).
QPP CEO Rob Terry and Himex CEO Hassan Sadiq Cosy Ties Extend Back to Innovation Days
We find the peculiar business dealings between Rob Terry’s Quindell and Hassan Sadiq’s Himex to
resemble the dealings between Innovation Group and Cosy. It’s unclear why Mr. Sadiq does not list
Himex in his linked profile16:

Page 50 of 74

Ingenie’s Confusing and Inconsistent Claims
Ingenie’s Founder and CEO, Richard King (a co-founder of Innovation Group, i.e. one of Robert Terry’s
former business associates) claims Ingenie has established itself as one of the leaders in telematics
insurance for young drivers with annual revenues of £80 million17:

In a press release dated 19th September 2013, Quindell CEO Rob Terry said,18
"With ingenie significantly profitable already and approaching a run rate of £50 million of gross written
premium “
Unless Ingenie has magically increased its own revenue to £80 million since, we believe King’s claim in
his Linkedin profile is highly misleading for the following reasons:



Ingenie is not an insurer, it is an intermediary service provider (a middleman).
“Gross Written Premium” (“GWP”) is highly technical jargon insurers use.
Gross Written Premiums (in insurance parlance) sold through Ingenie as a broker are not
equivalent to Ingenie’s revenues.
Ingenie’s revenues are a fraction of GWP.

Ingenie’s principal activity according to Ingenie19:

Page 51 of 74

Ingenie’s 2012 revenue barely exceeded £1 million in revenue:

Quindell’s 2013 Sales to Ingenie Exceed Our Estimate of Ingenie’s Total Revenue
Recall Quindell reported sales to Ingenie of £9.4 million in 201320:

We estimate Ingenie’s 2013 total revenue to be no more than £5.0 million. An investor who spoke with
Quindell about Ingenie says, based on that conversation, he thinks Ingenie revenue may simply be 10%
of GWP of £50 million, or £5.0 million. Gotham City Research has reason to believe Ingenie’s 2013 total
revenue was closer to £2.5-3.0 million, but no matter; Ingenie’s 2013 total revenue is far less than the
£9.4 million it paid to Quindell, which looks very odd.

Page 52 of 74

Getting facts straight
This Quindell slide claims Quindell invested in Ingenie in Winter 201022:

The 2011 Quindell Annual Report claims otherwise23:

Page 53 of 74

The Dark Side of Quindell Legal Services
Judging by Quindell’s accounting, earnings quality, and related party transactions, would you trust that
the company’s personal injury-related businesses are scrupulously complying with the Legal Aid,
Sentencing and Punishment of Offenders Act (“LASPO” or the Jackson Reforms)?
Introduction to the UK’s Personal Injury Problem
"People who make false whiplash claims need to realise they are genuinely ripping off their neighbour." 1
Britain is referred to as the “whiplash capital of Europe” (whiplash, as in the neck injury) with 1,500
insurance claims a day, many of which are spurious, adding £90 to the cost of car cover. 2




Whiplash accounts for 78% of all personal injury claims in the UK, compared with just 3% in
France. Europe-wide research conducted in 2004 showed that the UK had twice the average
percentage of whiplash claims as a proportion of personal injury claims compared with the
European average. The Association of British Insurers says little has changed since then.
An estimated 30% of whiplash claims are exaggerated3
Personal injury claims over the past few years have remained steady but there’s been a
dramatic rise in insurance premiums – in spite of a fall in accident rates.
Many believe that a “compensation culture” emerged as a result of aggressive advertising/tv
commercials by claims management companies (such as the ones Quindell owns), referral fees
paid by claimant solicitors, and skewed incentives.
Insurance premiums are up ~80% since October 2008 with personal injury claims accounting for
the majority of this increase.
The proliferation of claims management companies and lawyers working on a “no-win, no-fee”
basis encouraged motorists to pursue spurious personal injury cases with little perceived
financial risk to themselves, not realising the impact such cases have had on insurance costs4.

Enter the LASPO/Jackson Reforms aimed at reducing spurious personal injury claims 5:


Referral fees are banned in personal injury cases. No win no fee CFAs remain available in civil
cases, but the additional costs involved (success fee and insurance premiums) are no longer
payable by the losing side.
No win no fee DBAs are available in civil litigation for the first time.
The lawyer's 'success fee' in CFAs, or 'payment' in DBAs - is capped at 25% of the damages
recovered, excluding damages for future care and loss

Unclear How Quindell Remains Untouched Post-Jackson
Before and after the Jackson reforms, Quindell went on an acquisition spree and bought many personal
injury law firms and claims companies – the very companies one would (correctly) expect to suffer post
Jackson. The companies Quindell purchased were profitable pre-acquisition (some barely, some
Page 54 of 74

decently) but the Jackson reforms made their business models redundant. On their own they would
probably still not exist, or at best be shells of their former selves.
Quindell set up an Alternative Business Structure (“ABS”) in order to survive post-Jackson. We question
the viability and propriety of this structure, and Quindell’s personal injury-related businesses for the
following reasons:







Quindell refuses to explain how its legal services/personal injury business complies with the
referral fee ban and overall Jackson reforms.
Legal Futures has repeatedly asked Quindell how it complies with the referral fee ban, but it has
not returned any calls.6
Unclear (at best) how exactly Quindell “ethically lowers the total cost of claims” when it claims
to currently pays £800 in “cost of acquisition” per case.7
Quindell refuses to disclose profit margins for its personal injury-related subsidiaries since it
acquired them (e.g. Silverbeck Rymer, Ai Claims, Mobile Doctors, Pinto Potts, etc).
20-25% EBITDA margins for its personal injury / legal services-related business seem a stretch. Ai
Claims and Mobile Doctors historically reported 4%-6% EBITDA margins. Silverbeck Rymer’s
2010 EBITDA margin was 23%, but that’s Pre-Jackson reforms.
Quindell’s claim that it seeks to “stamp down the total cost of claims” seems inconsistent with
its Microsoft/Google-like reported EBITDA margins.
Quindell’s claim that it reduces spurious/fraudulent personal injury claims seems inconsistent
with attributing its financial success to gaining volumes and favorable operating leverage.
The Chairman of the Transport Select Committee, Louise Ellman recently initiated a probe to
determine whether ABSs are used to side-step the referral fee ban8.
Accidents on downtrend, injury claims on the increase. This is a dynamic that is likely to pressure
the personal injury industry.

Quindell and the £800 per case referral fee
Quindell specifically states in its 2013 preliminary results that the company pays a £800 referral fee per
case. We find this highly noteworthy as:


Quindell does not bother to pretend it complies with the spirit of LASPO/Jackson
Unclear how such an explicit fee structure complies with the letter of the law
This is the same cost per lead as they claimed was standard Pre-Jackson, which means high
margins should be more difficult to achieve as a law firm’s revenue per claim decreases postJackson.

Quindell Claims to be Ethical, Yet is Noticeably Opaque
Judging by Quindell’s actions (rather than its or its CEO’s words), Quindell seems fearful of the
consequences that transparency will bring to its personal injury businesses. This would explain why
Page 55 of 74

Quindell remains opaque, refusing to provide basic personal injury/legal services financial information.
Quindell initiated an “investor teach-in” campaign last year (in order to calm nervous investors when its
stocks had plummeted). The company unsurprisingly answers few question in their presentations, as we
show:
Ai Claims Solutions, is a very large % of Quindell’s revenue yet Quindell refuses to provide current details
in its investor teach-in June 2013 (Quindell discloses stale 2011 figures in its 2013 teach-ins)9:

More of the same Opacity with Silverbeck Rymer, as it discloses 2010 figures in 2013:

Page 56 of 74

Mobile Doctors – More stale 2010 financial results

Despite its blatant refusal to provide very basic financial information, Quindell claims:

We largely trust Quindell’s Legal services business subsidiaries’ historical reported numbers (the long
documented history of margin data helps), but this is pre Jackson – and many of these subsidiaries were
low margin businesses pre Jackson – we don’t think they’re magically higher margin now.
Some Believe The ABS is Used to Circumvent the Referral Fee Ban
There are already lawmakers and others who have expressed concern that the ABS is being used to
circumvent the LASPO/Jackson reforms10:
Former DLG head of bodily injury Geoff Leeks, maintained that ABSs were being used to
circumvent the ban “fuelled in some instances by a desire to maximise profit”
Leeks added: “There are many ways in which you can circumvent the ban that avoid an exchange
of a referral fee. You can have all sorts of processes that mean both the insurer and the lawyer
make a profit from the arrangement.”
Leeks said he would welcome an investigation into these practices. “They are not sustainable
and suit only those looking for short‑term gain,” he added.

Page 57 of 74

Changing Legal Services Sales Disclosures
As if it weren’t already difficult to obtain Quindell’s personal injury-related financial information,
Quindell recently dramatically reclassified/restated ‘legal services’ 2012 numbers in the 201311:
From the 2013 preliminary results

From the 2012 Annual Report:

So according to the 2013 preliminary results, Quindell’s 2012 legal services related sales is £7.1 million,
whereas the 2012 Annual Report stated it is £34.3 million!

Page 58 of 74

Additional Accounting and Oversight Issues
A Certified Fraud Examiner’s Dream Come True
What particularly amazes us is that the deeper we dig into Quindell, the more we find. It seems as if
there exists an infinite & growing supply of Quindell red flags. We are simply in awe of the fact that a
company this size (with a market value between $4-$5 billion recently) has so many qualities companies
1/100th of its size possess. For example:








We visited the address Quindell claims as its New York office. The receptionist told us he’s never
heard of a Quindell occupying the 9th floor. Quindell lists a Florida phone number as its New
York phone number.
We called Quindell’s India office on several different occasions, and no one picks up.
Quindell has had 3 auditors in 3 years as a publicly-traded company.
QPP went public via the backdoor reverse merger, just as many frauds in the past have.
Questionable corporate governance practices.
Use of bank overdraft as a source of financing.
Robert Terry’s credibility is questionable. Terry actively promoted QPP’s stock on Twitter; other
executives in the United States have been fired for lesser offenses.
Press releases and RNS that resemble penny stock pump and dump promotions.
Quindell’s recent news titled, “POTENTIAL FOR LARGEST TELEMATICS ROLLOUT GLOBALLY“ was
released Monday 07 April 2014, but it was created 12 March 2014, according to Quindell.com

Quindell New York Due Diligence Check
We visited 280 Madison Avenue, New York NY 100161:

The building is not exactly an A-grade office building (to put it kindly). It’s certainly not a building an upand-coming business would occupy. We asked the front desk receptionist that we wanted to visit
Page 59 of 74

Quindell on the 9th floor. The receptionist gave us a confused look, asking, “Who?” We asked again, and
he said he’s never heard of a Quindell. We then asked him if there were any technology/software
businesses on the 9th floor. He definitely said no.
We called Quindell’s listed phone number several times. No one ever picks up; the call goes to voice mail
after several rings. The funny thing is that the telephone number +1 772 245 7648 is a Florida phone
number.
Quindell New York is SMI Telecoms’ New York Office as Listed in 2011
The New York address is exactly the same address we found in a 2011 archived version of smi-t.com’s
website (although the phone number looks strange, as it too, is not a New York area code) 2:

Quindell India Due Diligence Check
An India location is mentioned in 2011 Quindell annual report, but no more mentions afterwards3:

But Quindell’s website mentions an India office:

Page 60 of 74

We called the listed India office few times, but no response. There’s not even a voice message. It turns
out, the Quindell India address and phone number information are identical to SMI Telecoms’ as of 2011
(per archived versions of its website, just like Quindell New York):

The company’s excessive use of info@quindell.com as its contact email raises questions as well.
3 auditors in 3 years
We understand that companies occasionally need to switch auditors for valid reasons. That said,
Quindell has had 3 auditors in 3 years. We’ve never seen valid reasons for such high turnover. When
QPP was a private company, its auditor was Deloitte4:

Page 61 of 74

Quindell changed auditors to a much lower-tier RSM Tenon (which filed for bankruptcy):

Then on 3, October 2013, Quindell announced it changed yet again, to KPMG:
Quindell Portfolio Plc (AIM: QPP.L), the provider of sector leading expertise in software,
consultancy and technology enabled outsourcing in its key markets, being Insurance,
Telecommunications and their related sectors is pleased to announce the appointment of KPMG
LLP (“KPMG”) as auditor of the Company as a further step in preparation for the Group’s
proposed full listing. Baker Tilly Audit Limited (formerly known as RSM Tenon Audit Limited) has
resigned as auditor of the Company with immediate effect and has confirmed to the Company
that there are no circumstances in connection with its resignation which it considers need to be
brought to the attention of the Company's shareholders or creditors.
Questionable Corporate Governance Practices
Quindell’s website has a section dedicated to ‘corporate governance’ but it provides very little
information (e.g. it does not provide the members of each committee on the website)5:

Page 62 of 74

Lawrence Moorse, who has deep ties to Terry since their Innovation Group days, and is the Company’s
CFO (“Group Finance Director”) is on the Board. We find it troubling that a man with such close ties to
CEO Terry, and who oversees the company’s financial statements, is on the Board.
Stephen Scott, who was with Terry at Innovation Group, is on the Board. He and Terry participated in an
unusual transaction back in the TiG days6:
However, the other event that cast a little doubt on TiG’s prospects here at Citywire, was a
somewhat unusual contract taken out by chief executive Rob Terry and finance Stephen Scott in
December.
The pair bought a contract from the broker UBS to hedge against the company’s share price
falling. They hedged 1.8 million and 535,714 shares respectively, representing 4.5% of Terry's
stake and 20% of Scott's. They didn't comment at the time and were unavailable today.
It’s concerning to see Scott, who was involved with IT-Freedom (a QPP subsidiary) on the Board and the
Audit Committee7:

Jason Cale was on the audit committee. We find this unusual given his Ubiquity Capital was a major
shareholder via shares earned by helping Quindell obtain a reverse merger shell8. Cale’s ties to Overland
and Mobile Doctors, both Quindell subsidiaries, are notable.
Anthony Bowers is the chair of the audit committee. While he was with Deloitte, he worked closely with
Robert Terry and Stephen Scott since the Innovation Group days. As a result we find his independence
questionable9:

Recall from earlier sections, that CEO Terry’s wife signed off on the 2008 filings. There’s a clear pattern
of questionable corporate governance practices.

Page 63 of 74

Bank Overdraft
Despite Terry’s promotional language and gusto, it seems Quindell would’ve run out of cash if it weren’t
for the £200 million it raised in Q4 last year10:

If you remove the £200 million raised, cash is zero, but bank overdraft and borrowings are up
considerably, year-over-year.
CEO Rob Terry’s Twitter Activities
CEO Robert Terry (evidently) used to tweet frequently about Quindell and its share price, under his
former account https://twitter.com/RobTQuindell . Unfortunately, his account no longer exists. We can
imagine, however, how promotional he might’ve been, by looking at Richard King’s account (CEO of
Ingenie and long-time friend/colleague of Terry’s since Innovation)11:

The above King tweet is particularly concerning given Quindell’s dire straits in 2013, but for its significant
£200 million capital raise.
Here is what those who used to observe Terry’s tweets (when he was active) had to say 12:
“In Terry's case, it extended to tweeting comments about share prices and trading - altogether
out of order, far too time-consuming for a serious manager, especially one faced with the
challenge of integrating an rush of acquisitions. And what about this business of treating all
shareholders equally when many of us never go near the twitter-sphere?”
“Known for his active use of Twitter to engage with investors, Terry is keen to transfer Quindell
to a full stock exchange listing by the autumn and is eyeing possible inclusion in the FTSE 250.”
Page 64 of 74

Robert Terry’s Overall Credibility
Longer term, serious concerns:



Terry aggressively grew a roll-up called Innovation Group, whose share price never recovered
since the 2000s. He was let go of Innovation Group in 2003.
Terry ran Quindell, a country club, through 2009.
CEO Terry and Quindell’s reported financial success between 2009-2011 derived largely from
sales to itself/subsidiaries.
Terry has gained the trust of many by claiming he personally invested £12 million into Quindell’s
technology platform

Recent examples of “over-promise, under-deliver”13:


Quindell missed targets. Quindell is some £80m short of previous analyst targets for revenue of
£460m for 2013.
The company has also missed Mr. Terry’s own 3p earnings-per-share target. Adjusted earnings
per share came in at 2.54p for 2013. And operating cash flow is very negative.
In Quindell’s stock market results statement, the words “proof” and “validated” are mentioned
on no fewer than six and four occasions respectively with regards to the strategy and results.

Promotional and Misleading RNS/Press Releases
“We delivered on our goal of significantly exceeding market expectations with 168% Growth in
technology solutions revenue, our highest margin and most cash generative segment.” – Rob Terry
claims in the 2013 pre annual report.
Actually, Quindell was very cash flow negative in 201314:

A few weeks ago, the company announced “ZURICH CANADA CHOOSES QUINDELL SOLUTIONS
TECHNOLOGY”, but Zurich has been a customer for some time (this is archived from 2010) 15:
Page 65 of 74

Zurich Insurance was also an Iter8 customer according to this older 2013 Quindell press release.16
Of course it’s possible they are taking on extra software....and that it is 'news'
Recent RAC Telematics Contract Press Release Was Created 3 Weeks Before its Release
On Monday the 7th of April, 2014 (few weeks ago), Quindell conveniently released an RNS (after its
shares exhibited some weakness post earnings) titled, “POTENTIAL FOR LARGEST TELEMATICS ROLLOUT
GLOBALLY “. Shares rose significantly (QPP shares closed the prior Friday at ~38 pence/share) and closed
that day at ~43 pence/share. The strange thing is, Quindell.com shows this press release was already
created several weeks before (we found this by accident, while searching for something else entirely) 17:

Page 66 of 74

CEO Bob Terry Has Been Talking About a Main Exchange Listing Since 2012
Quindell has been talking about listing on the main London Stock Exchange (and also dual-listing in
North America) for quite some time. We believe if QPP were to succeed, it would come to haunt them,
as all the company’s misdeeds would be exposed.
16th of October 2012:18 “Quindell also plans to move to the main list from Aim next year –
probably in the second half. This will make it a strong candidate for entry into the FTSE 250.”
21st of October 2013: “Quindell looks to full listing in March 2014 - Quindell Portfolio, an
insurance claims processor, has confirmed it is seeking a full listing on the London Stock
Exchange next March, with a potential dual listing in Canada.”
Mr. Terry now says the company will be moving to the main market in early June of this year.

Page 67 of 74

Valuation: Worth No More Than 3p per share
Is Quindell a Good Business?
What CEO Robert Terry will not reveal:

Quindell has not generated lasting free cash flow, and cash flow has worsened with time
Earnings quality is very low, as earnings and free cash flow tell very different stories 1
in millions of £s, or units
Revenue
Net Profits
Free Cash Flow
Receivables Growth
Shares Issued
Shares Outstanding

2010
£4.15
£1.33
£0.00
£1.00
0.0
108

2011
£13.71
£4.16
£1.34
£30.47
2.4
1,989

2012
2013
£137.56 £380.13
£31.90 £82.70
-£59.15 -£64.64
£170.67 £125.53
91.0
200.4
3,309
5,670

We estimate Quindell would’ve ran out of cash in 2013 but for its capital raise

Quindell’s equity is at risk of going to zero, if it is found to be in violation of the Jackson reforms.
If found to be compliant, the businesses still face serious risks that its underlying industry will
shrink. There are many ways for speculators to lose.
We find 40%-80% of Quindell’s EBITDA suspect.
Management credibility and track record are highly questionable.


QPP shares worth no more than 3p per share
We believe QPP shares worth 3p per share (though we think they are uninvest-able until the
concerns identified in this report are fully addressed):



We find 2013’s economic earnings lie somewhere between its reported net profits and free cash
flow. We take the average, and arrive at 2013 economic earnings of £9 million. We apply a 10x20x earnings multiple, and arrive at a valuation of only 1.5-3.0 pence per share, implying more
than 92% downside.
Tangible book value is 6.1 pence per share, but that is before discounting suspect receivables.
Quindell’s dividend is negligible and meaningless because the amount of capital raised vastly
exceeds the declared dividends.
We arrive at a 3p per share valuation by combining the above approaches.
Page 68 of 74

Quindell’s Q1 2014 Results Compared Against Nationwide Accident Repair Services’ Results
Quindell claimed adjusted EBITDA margin (which means EBITDA as they see fit) of over 40% in Q1 20142:

Yet a company it acquired last year (22% stake), NARS reported razor thin (and declining) margins3:

Page 69 of 74

End Notes
Introduction
1.
2.
3.
4.
5.
6.

Google, Microsoft 10Ks, Quindell Annual Reports
Quindell Annual Reports
Companies House, DueDil, Various Quindell and subsidiary filings
Himex Annual Reports, Quindell 2013 Preliminary
Companies House; see the Phantom Acquisitions section for more details.
Quindell presentations.

Quindell’s Anomalous EBITDA Margins
1.
2.
3.
4.
5.
6.
7.

Various company filings
Mobile Doctors, Ai Claims, and Quindell Annual Reports; Duedil
Quindell and its subsidiaries’ annual reports, Duedil, Companies House
“”
Quindell Investor Teach-In Presentation
Quindell Annual Reports
http://brontecapital.blogspot.com/2012/11/hewlett-packard-and-autonomy-notes-from.html

CEO Robert Terry Spent £12 million to Build a Country Club
1. Various articles and presentations
a. http://www.ft.com/intl/cms/s/0/a4fb0432-b800-11e2-9f1a-00144feabdc0.html ,
b. http://www.postonline.co.uk/post/interview/2189103/interview-rob-terry-tacklingthe-problems
c. http://www.sharesmagazine.co.uk/articles/quindell-sets-sights-high#.U1SqxPldUrU
d. Quindell Annual Report 2011
e. Quindell Investor Teach-in
2. Quindell Limited Annual Reports 2001-2008
3. “”
4. http://archive.org/web/ archive of quindell.com for each respective date
5. Quindell Limited 2008, and
http://www.investegate.co.uk/article.aspx?id=201110191056444561Q

Page 70 of 74

Quindell’s Largest 2009/2010 Customer is Itself (ClickUs4.com)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.

Quindell Limited and ClickUs4.com Annual Reports
Companies House, Quindell Limited filings
“”
Quindell Limited Annual Report 2009
Quindell Limited and ClickUs4.com filings
Quindell Prospectus
ClickUs4.com 2009 and 2010 Annual Reports
Quindell Limited Annual Report 2009
ClickUs4.com 2009, 2010 Annual Reports
Rod Cameron https://www.linkedin.com/pub/rod-cameron/21/5b9/86a
http://web.archive.org/web/20081202060803/http://www.ekmpowershop4.com/ekmps/shops
/quindell/index.asp
12. http://web.archive.org/web/20090708013157/http://www.ekmpowershop4.com/ekmps/shops
/quindell/index.asp
41% of 2011 Revenues Comes from an Undisclosed Customer
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.

Google, Microsoft 10Ks, Quindell Annual Reports
Quindell Annual Report 2011
Quindell Limited 2010
http://archive.org/web/ archive of smi-t.com for 2011, click ‘news’
Quindell Annual Report 2011
http://archive.org/web/ archive of smi-t.com for 2011
Quindell Annual Report 2011
Quindell Annual Report 2012
http://archive.org/web/ archive of smi-t.com as of April 2013
Quindell Annual Report 2012
http://search.sunbiz.org/Inquiry/CorporationSearch/SearchResultDetail/EntityName/flall11000050314-4191aab4-58a2-4626-97d8-b1d802ec0480/smi%20telecoms/Page1
https://efile.sunbiz.org/sbs_ar_instr.html
SMI Telecoms Ltd gazette filing, Companies House
SMI Telecoms Distribution Limited incorporation filing, Companies House
Quindell Prospectus
http://www.floridarc.com/index.php?src=news&srctype=detail&category=Floridas%20Research
%20Coast%20News&refno=200
https://www.linkedin.com/pub/phil-brooks/17/5b9/65b
Quindell RNS dated November 18 and October 23, 2013
Turing SMI Shareholder Agreement, Revised
http://uk.linkedin.com/pub/gary-brooks/5/490/abb
Page 71 of 74

Quindell’s Phantom Acquisitions (2011-Present)
1.
2.
3.
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5.

6.
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9.
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27.
28.
29.
30.
31.
32.
33.

Investor meeting with Quindell management
Cenkos note on Quindell dated 31.3.14
Quindell Annual Report 2012
Quindell Brand Extension Services Ar01 as of 09.02.2014
Mark ford short position http://www.lse.co.uk/share-regulatorynews.asp?shareprice=QPP&ArticleCode=uw5l3hoh&ArticleHeadline=TMC_Southern_Ltd__Form
_83__Quindell
TMC Significant non cash transactions from Quindell Prospectus
Quindell Annual Report 2012
Companies House, Brand Extension (UK) Limited incorporation filing
Brand Extension (UK) Limited Ar01
http://archive.org/web/ archive of ClickUs4.com
Quindell Annual Report 2011, Companies House Ar01 filing for Quindell Solutions Limited
Quindell Solutions Limited Annual Report and other filings
Quindell Solutions Limited Ar01 filings

Quindell RNS/Press release dated October 23 2013
Simon Hall Associates Annual Report 2012, Ar01, and Quindell 2011 Annual Report
http://www.quindell.com/images/uploads/irdownloads2012/20120514-appointment-of-simonhall-as-chief-executive-officer-of-quindell-motor-services-and-acquisition-of-simon-hallassociates-limited.pdf
Richard oliver linkedin profile https://www.linkedin.com/pub/richard-oliver/18/409/2b3
View ‘Properties’ for the Quindell 2011 and 2012 Report PDFs
Quindell Annual Report 2011
UK Sun Limited Gaz filing
UK Sun Limited Annual Report 2012
Quindell Annual Report 2011
Quindell Enterprise Solutions Limited incorporation filing
Quindell Enterprise Solutions Limited Annual Report 2012
http://www.quindell.com/images/uploads/irdownloads2011/20110421-198-quindell-appointnew-chief-technology-officer.pdf
Quindell Annual Report 2011
Quindell Prospectus, LearnED Annual Report 2009, Quindell Annual Report 2011
Quindell Property Services incorporation filing vs. http://www.quindell.com/Press-ReleasesRNS/expansion-into-property-claims-with-major-uk-listed-insurer
Quindell Annual Report 2012
Quintica Holdings Limited incorporation filing.
Companies House
ACH Group Management Limited Annual Report 2013, Quayside (2801) Holdings filings

Page 72 of 74

Telematics Accounting Issues & Related Party Transactions
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Quindell 2013 PRE
Himex Annual Report 2012
Himex Annual Report 2013
“”
Companies Act
https://www.linkedin.com/company/himex
Quindell RNS February 2014
Himex Annual Report 2013
Holleran vs Navseeker, Williamson vs Navseeker, Weber vs. Evogi
Himex.com
Weber vs. Evogi
Evogi.com
http://starpas.azcc.gov/scripts/cgiip.exe/WService=wsbroker1/names-detail.p?nameid=F16679834&type=CORPORATION
Himex, Mileage Management, and Ingleby Annual Reports
eeGeO limited annual reports
Hassan Sadiq https://www.linkedin.com/pub/hassan-sadiq/28/5b2/977
https://www.linkedin.com/pub/richard-king/2a/542/89a
http://www.quindell.com/Press-Releases-RNS/further-investment-into-ingenie-for-rapidexpansion
Ingenie Limited Annual Report 2012
Quindell Annual Report 2012
Quindell Annual Report 2011, Quindell September 2013 and February 2014 Ingenie press
release
Quindell Investor Teach-in
Quindell Annual Report 2011

The Dark Side of Quindell Legal Services
1. http://www.telegraph.co.uk/finance/personalfinance/insurance/10185382/Why-Britain-is-thewhiplash-capital-of-Europe.html
2. “”
3. Claims Standards Council
4. Canaccord Genuity Initation Report, July 25 2013
5. https://www.justice.gov.uk/civil-justice-reforms
6. http://www.legalfutures.co.uk/latest-news/quindell-spending-150m-year-upfront-caseacquisition
7. Quindell 2013 PRE

Page 73 of 74

8. http://www.postonline.co.uk/post/news/2338828/firms-deny-dodging-referral-fee-ban-asselect-committee-prepares-abs-report
9. Quindell Investor Teach-in
10. http://www.postonline.co.uk/post/news/2338828/firms-deny-dodging-referral-fee-ban-asselect-committee-prepares-abs-report
11. 2013 Quindell Pre vs. 2012 Annual Report

Additional Accounting and Oversight Issues
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http://www.quindell.com/Contact/north-america
http://archive.org/web/ archive of smi-t.com for each respective date
Quindell Annual Reports, http://www.quindell.com/asia-pacific
Quindell 2010, Quindell 2012, and Quindell October 2013 press release
http://www.quindell.com/Corporate-Governance/corporate-governance
http://citywire.co.uk/money/innovation-group-has-strong-start-to-year/a235004
Quindell 2012 Annual Report
Quindell Prospectus
Quindell Annual Report 2009
Quindell 2013 PRE
@ingenie_Richard on twitter.com
Terry twitter activity quotes
a. http://www.michaelwalters.com/stories/news.phtml?num=4028
b. http://www.cityam.com/article/quindell-shares-crash-following-analyst-scrutiny
http://www.telegraph.co.uk/finance/markets/questor/10735291/Questor-share-tip-Quindellshigh-octane-growth.html
Quindell 2013 pre
http://www.quindell.com/Press-Releases-RNS/entry-to-north-american-insurance-market
http://archive.org/web/ archive of iter8.com website from 2010
http://www.quindell.com/Search?searchphrase=all&searchword=potential%20for%20larges
Quindell listing quotes
a. http://www.telegraph.co.uk/finance/markets/questor/9610020/Questor-share-tipTime-for-investors-to-grab-a-slice-of-Quindells-cost-cutting-expertise.html
b. Quindell looks to full listing in March 2014 http://www.ft.com/intl/cms/s/0/ca0659de3a5a-11e3-b234-00144feab7de.html#axzz2xf4vGpvN

Valuation: Worth No More Than 3p per share
1. Quindell Annual Reports
2. Quindell Q1 Trading Statement
3. Nationwide Accident Repair Services 2013 PRE
Page 74 of 74

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