Alternative business structure (ABS) Quindell plc sought to halt yet another run on its shares yesterday by issuing its second trading update in little over three weeks.
Its already struggling share price took another beating this week in the wake of a report in the Financial Times suggesting that Quindell’s lucrative contract to provide the RAC with telematics devices had stalled.
Having been around 205p at the end of last week, the shares fell to 170p by yesterday morning, and spiralled down to 138p during trading before recovering back to 170p by the close.
Quindell issued a trading update on 14 July – which sent the share price to 235p – and yesterday’s announcement said the group had met all of its key performance indicators for July – which its services division, providing a claims service, “particularly strong” – and “all core business relationships [remaining] strong”.
The statement added that “operating cash flow has turned positive in July”, while “certain contracts” are being restructured “to ensure the optimum return on cash resources”.
The update came just a fortnight before Quindell announces its interim results for the first six months of 2014.
Back in April, Quindell announced “the world’s largest telematics contract to date”, with the ABS and the RAC each putting £15m into a new company, Connected Car Solutions (CCS), to distribute the two businesses’ “ connected car capabilities”. It said the roll-out of telematics to 2.1m RAC customers would start in July 2014.
As part of the deal and to recognise the value it gave to Quindell, the ABS agreed to issue to the RAC share warrants over 250m Quindell shares, exercisable at 50p per share. That figure was quoted before Quindell underwent a 15:1 share consolidation, meaning the share price would now need to hit 750p before the warrants were exercisable.
However, in a statement, Quindell said: “To confirm, Quindell has not fallen out with the RAC and continues to have a positive relationship, with a number of joint contracts in place including the CCS JV. With regards to the timing of the roll out, we shall update the market when appropriate with the RAC.”