Quindell signs extension with "leading insurance broker"
Software business Quindell (QPP) today sought to confront its critics, announcing it has secured a two-year contract extension with one of its key customers and promising that the win was "the first of a number of potential contract extensions".Shares in AIM-listed Quindell rose almost 2% on the announcement, to 23.9p at lunchtime on Friday, but remain well below the 40p to 45p range in which they were trading until the release last month of a damaging report by the US firm Gotham City Research, which accused the British business of a range of suspect practices.
Quindell has reacted furiously to Gotham City's attack, with chairman Robert Terry, who was singled out personally for criticism, understood to be considering legal action.
Quindell pointed to Gotham's declaration, made alongside the report, that it held a short position in the company's stock.
However, while Quindell last week published a lengthy rebuttal of the Gotham City report, its share price has not recovered.
The company, which provides software and outsourcing services to sectors including insurance and telecoms, said the Gotham City report was inaccurate and had overlooked key contract wins with companies such as Direct Line (DLG), the RAC and Swinton.
Today, Quindell did not identify the company that has extended its contract, but described the client as "one of the UK’s leading insurance brokers, which is owned by one of the world’s largest global insurance companies".
Quindell's chairman said the extension underlined the support it had received from customers in the wake of Gotham City controversy. He said many had offered to act as referees to the company, which has been talking to both existing and potential new investors in the US in recent months.
Terry added: "This level of support has also contributed to a number of our existing institutional investors, including key US investors, significantly increasing their shareholding over the last two weeks."
While Quindell chose not to refer to the Gotham City attack directly today, he did take something a sideswipe at the company's critics, thanking supporters of the business for their commitment. Directors of the business have bought more than a million Quindell shares in recent days, with Terry himself buying 500,000 shares on Monday.
"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 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.
The contract extension and Terry's upbeat statement will buoy shareholders in Quindell, which has a wide following among retail investors.
The company also counts some prominent institutional investors amongst its shareholders. For example, the company is the largest single holding of CF Miton UK Smaller Companies Fund, run by the highly-rated Gervais Williams, representing 3% of the portfolio.
Nevertheless, investors will look for further good news from the company in the weeks and months ahead - and hope for a share price recovery. Several investors have also referred the Gotham City report to City regulators and a Financial Conduct Authority investigation into the episode is possible.
|
