Stock exchange: Quindell statement
Alternative business structure Quindell plc moved to reassure the stock exchange yesterday after a negative research note sent its share price plummeting.
Having started the day at around 40p, Quindell’s shares on AIM fell as low as 17p before recovering somewhat to 23.75p at the close, after it issued a response.
The 74-page research note from American company Gotham City Research made a series of allegations about Quindell that led it to claim the shares were overpriced.
It is not clear who is behind Gotham City Research and its website contains scarcely any detail about the business – but it admits it may have a financial interest in its reports. It says: “Gotham City Research LLC focuses on due diligence-based, special situation investing. As of the publication date of our articles, we may have long or short equity positions in the companies covered.”
A statement released by Quindell to the London Stock Exchange yesterday afternoon said: “The board rejects the assertions raised in this note and considers the note to be highly defamatory, deliberately misrepresentative and entirely rejects the conclusions that are made. A more detailed response shall be announced before the end of this week.
“In the meantime the company is also consulting its legal advisers on what immediate action can be taken against Gotham City Research LLC and is reporting coordinated shorting activity to the appropriate authorities.
“In the company’s annual results for the year to 31 December 2013, released on 31 March and prepared following the appointment of the company’s auditors, KPMG LLP, Quindell reported revenue of £380.1m and profit before tax of £107m. Since that time, the company has released a 2014 Q1 trading statement, which referred to gross sales for the group totalling £162.9m and the group having cash at 31 March of approximately £150m.
“The board remains confident of meeting or exceeding market expectations in all key performance indicators in 2014 and all other initiatives being pursued remain on track.”
Gotham City tweeted in response that Quindell’s response lacked detail and was “defamatory to the Gotham City Research brand”.
This is the second time in a year that Quindell has had to respond to a sudden fall in its share price – which in May 2013 was caused by concerns about a financial instrument used in the purchase of Accident Advice Helpline and as a result of “active shorting”. The share price dipped to 6p at one point, but has risen steadily since.
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