Quindell’s house broker has hit back at claims that the outsourcing company is facing a cashflow crisis.
Canaccord Genuity issued a strong rebuttal yesterday against accusations of financial discrepancies at Quindell, saying that there was “no basis” for them. The broker said that it would be maintaining its “buy” recommendation on the AIM-listed company, which has been described in recent months as being a “country club built on sand”.
An article published last month by ShareProphets suggested that Quindell had a £56 million discrepancy between the amount of cash it claimed to be collecting and its expenses, which pointed to a crunch in the near future.
However, Canaccord said that its analysts disputed the ShareProphets analysis and could find “no basis for the conclusions reached by the column”.
Presenting its own report on Quindell’s first-half financial performance, Canaccord said that it was able to reconcile the £297.9 million cash spent by the company in the first six months of the year with its cash expenses for the period. Canaccord said that the discrepancy had arisen from “a number of items missing” from the analysis, which it claimed ShareProphets had excluded in its own report.
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Tom Winnifrith, the founder of ShareProphets, said yesterday that he had written to the Financial Reporting Council to ask it to formally review the company’s accounts, which he alleged “mislead investors and break accounting standards”.
Last night Quindell shares closed a penny lower at 169p.