Pre 8 a.m. comments

Another clarification statement has been issued by Quindell Portfolio (LON:QPP) this morning. As usual, one has to pick through it to try to untangle the truth. They still haven't properly explained what the "equity swap" arrangements late last year actually were, but reassure that they won't result in any further equity being issued, or cash leaving the business. What they fail to state of course, is that if the share price remains depressed then there might well be a significant write-down of the £13.3m receivable related to this Placing.

I also note that the RNS about the Placing from 3 Dec 2012 gave no information whatsoever about the equity swap, and mis-represented it as a straightforward £17.0m  fund-raising at 17.5p, when it clearly was actually some kind of equity drawdown facility where the final amounts received by the company will be dependent on the future share price - which explains why management have been more interested in talking up the share price, rather than talking about the business.

The company also tries to reassure on debtors, saying that in four months they have collected in half the year-end debtors. So looking at it simplistically, if debtors are running at 8 months then applying that onto £443m forecast turnover for this year, it suggests that debtors will have risen by another £91m to £295m by 31 Dec 2013.

Thinking back to Accident Exchange, the problem with debtors was that they had a large & very long tail. So whilst they collected in some of the debtors fine, there was an ever growing rump of claims that they couldn't collect in, which just built & built until it brought the business down.

So they were forced into block settlements at a discount. Quindell also refer to block settlements, but state they are collected with no "net discount". What does "net" mean in this context? You cannot increase some claims to net off againt discounts given on others, can you? So you either give a discount, or you don't.

They also state that (as you would expect) management intend buying shares in the company when they can, I presume they must be in a closed period at the moment.

This statement may well give bulls some breathing space today, so I would expect to see the shares rally.…

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