Quindell’s Pretax Profit Triples as It Fights Off Gotham CityJessica Morris
Quindell Plc shares fell as much as 13 percent today even after the claims-handling-software company targeted by short seller Gotham City Research LLC said earnings more than tripled in the first half.
Pretax profit rose to 153.7 million pounds ($255 million) from 39.2 million pounds a year earlier, as sales climbed to
357.3 million pounds from 163.3 million pounds, the London-based company said in a statement today. Cash collections for the first half of 2014 were more than 220 million pounds, compared to 270 million pounds for the whole of 2013.
“The business is performing extremely well,” Chief Executive Officer Robert Fielding said in a telephone interview. “We’re confident of meeting all key performance indicators for the remainder of this year.”
Quindell’s shares have fallen more than 60 percent since April 17 after short-seller Gotham published a report saying some of its profits may be “suspect.” The company has started legal action against Gotham, with papers being served in the U.S.
“We’ve filed action against them for quite a significant period now,” Fielding said. “If they don’t file a defense soon we’ll get judgment in default.”
Quindell’s shares fell 10 percent to 189 pence at 3:30 p.m. in London, giving the company a market value of about 825 million pounds.
Today’s share fall could be because the release contained “no information in regards to clarifying” a contract with U.K. auto-breakdown company the RAC, said Sophie Blandford, an analyst at Daniel Steward & Co.
Earlier this month the Financial Times said the company’s joint venture with the RAC had stalled, citing people familiar with the matter.
The RAC contracts are “not material to our numbers,” Fielding said. “The relationship is strong and the long-term potential still exists.”
Selling short is the practice of borrowing stocks and selling them in the hope that their price will decrease. A short seller buys back the shares and returns them to their owners, pocketing the difference.