Quindell pledges "£1 per share" capital return after review finds "aggressive" accounting

An independent review into accounting practices at Quindell's disposed legal claims business found they were at "the aggressive end of acceptable practice", as the company finally completed the deal and said it expected to return more than £1 per share from the sale.

Shareholders and regulators of both the financial and legal sectors have all now given the go-ahead for the embattled outsourcer to offload the division to Australian law firm Slater & Gordon for $928m.

The disposed businesses have left the company with a sizable cash pile, most of which management have been promised to return to shareholders.

Quindell, which on Friday hired former Conservative party leader Michael Howard as a non-executive director, said a capital reduction was the most appropriate means of returning the proceeds, after £50m has been kept in escrow as a provision for warranties given to Slater & Gordon and other third party debt has been settled.

As a result, Quindell said the initial tranche of a cash return in aggregate "will be at least £1 per share and up to a maximum of £500m", though it stressed that the precise amount has not yet been fixed.

As well as Lord Howard, the AIM-listed company has also appointed as chairman Richard Rose, who also holds the same role at Booker and AO World.

But while the legal services sale has been signed off, the division's and hence the company's historical revenue and profits will be restated after a review by Pricewaterhousecoopers into accounting policies at the unit.

Accountants have examined the way the company recognised revenue and deferred case acquisition costs in a number of the now-disposed businesses, finding they were "largely acceptable but were at the aggressive end of acceptable practice".

PwC also identified that some policies were not appropriate, principally revenue for noise-induced-hearing-loss cases and related balances that became significant during 2014.

Quindell's new management, rejigged since founder Rob Terry stepped down in controversial circumstances in November, are in discussions with auditors as to the financial effect on its historical results, and said the conclusions of such discussions will be included in results for the year ended 31 December 2014, which are expected to be published prior to the end of June.