The embattled insurance outsourcer Quindell has moved to put six months of turmoil behind it, revealing a quadrupling of profits as its chairman blamed short-sellers for destroying the company’s value.
First-half pre-tax profits rocketed by 292 per cent to £153.7m, while revenue rose 119 per cent to £357.3m. The AIM-listed Quindell handles outsourced claims from insurers such as Aviva and Direct Line and also has legal processing and medical diagnostic businesses.
But while profits soared, its shares tumbled 71 per cent over the same period due to a string of setbacks that have led some investors to dub the company a “soap opera”.
The most damaging incident was a report from the little-known US analyst Gotham City Research, which said the company was “built on sand” and claimed the shares were worth only 3p. The allegations knocked almost £1bn off Quindell’s value, despite strong denials of all charges from the company.
Since then, Quindell has also failed in its effort to gain a main market listing, faced questions over its working relationship with its joint venture partner the RAC and was this week hit with allegations of fraud from a financial blogger, Tom Winnifrith, which the company refutes.
Despite yesterday’s strong results, the shares fell a further 12 per cent, closing the day down 26p at 184.25p. Its chairman and former chief executive, Rob Terry, blamed short sellers for that, saying the drop was “certainly not a reaction to the results. Clearly someone’s making money shorting the stock.”
He added: “Once I’m able to, if the price stays at this level I’ll be buying more [Quindell shares].”
The company has taken legal action against both Gotham and Mr Winnifrith, and Mr Terry said progress on the Gotham case was due “within days”. On its website, Gotham admits to taking short positions in the companies it covers.
Stefan Leon Borson was yesterday named as Quindell’s new chief legal and communications officer, though Mr Terry denied this was a defensive move. He said: “We employ about 1,500 legal professionals – adding one more is not a response to Gotham.”
Addressing suggestions that Quindell’s working relationship with the RAC has broken down, Mr Terry said: “All our core business relationships remain strong and that includes the RAC.”
In the joint venture with the RAC, Connected Car Solutions, black boxes are installed in cars to monitor driving, a field known as telematics. When the deal was first announced in early April, Quindell said it had the potential to become “the largest telematics rollout globally”, and estimated annual revenues from the venture of up to $2.2bn (£1.3bn).
But Mr Terry yesterday played down the significance of the deal, saying: “In telematics and connected cars, Quindell is in a strong position globally. We have about 600,000 customers... and so far in partnership with the RAC we have about 7,500. It’s hardly material to our numbers.”