2nd May 2014 10:05
LONDON (Alliance News) - Quindell PLC said Friday that it had won a two-year contract extension with a UK insurance broker. The company noted that this was "the first of a number of potential contract extensions."
No financial details of the extension were disclosed, nor the name of the broker provided.
Shares in the software and services company have come under pressure after Gotham City Research LLC issued a 74-page report last week attacking its business practices. The report said it was unable to reconcile 42%-80% of Quindell's profits, stating that they are suspect as they are explained by sales to related parties owned and operated by Quindell Chairman Robert Terry.
Gotham's report also said that "Quindell's New York office does not seem to exist" and that, until 2008-2009, it was "little more than a country club run by Robert Terry" that started reporting "exceptional margins just in time for its public listing."
Quindell has since said it is taking legal action against Gotham, calling the report "a coordinated shorting attack" and noting that Gotham took short positions on Quindell's shares before publishing it.
Quindell issued a 22 page response last Friday responding to Gotham's claims, saying that the research's underlying assumptions are inaccurate, and that Gotham has ignored certain contract wins, including with major brands such as Direct Line, the RAC, and Swinton in 2012 and 2013.
In response to claims that Quindell is fearful of being transparent with investors over its personal injury business, the company management said that Gotham has been highly selective in the slides that it references from an investor show in 2013, highlighting just four out of eighty-one slides on the first day. The remainder of the slides "contained answers to every one of the Gotham allegations and provided complete transparency on volumes," the Quindell response said.
Directors of Quindell have bought up over 1 million shares this week following the report, with Terry buying 500,000 shares on Monday.
"The outstanding level of support we have received from our customers during the recent weeks is greatly appreciated," Terry said in the statement Friday. Terry noted that Quindell has received support from a number of existing institutional investors, who have upped their shareholding over the last few weeks.
Quindell is seeking a premium listing in the UK, but said it would be "fully" investigating a dual listing in the US as nearly 16% of its stock is now held by US investors.
"I would personally like to thank all of those institutional shareholders who have taken the step to publicly confirm their support for the company as well, as well as all the Quindell staff that have demonstrated their conviction by purchasing shares and reiterate that we will repay this support by continuing to deliver market leading rates of growth and profitability," Terry said.
Shares in Quindell were trading up 1.7% at 23.90 pence Friday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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