Share price drops 43% following announcement
The UK Listing Authority (UKLA) has told Quindell that it is not eligible for a listing on the London Stock Exchange’s main market because it had undergone such significant change in its operations in recent years, meaning it was unable to satisfy a key ruling.
The stock market reacted negatively to the news, falling 43% to 10p 13 minutes after the announcement.
The share price has been swinging between 10p and 13p since the announcement.
The insurance outsourcer is listed on the exchange’s Alternative Investment Market and had applied for a transfer to the Premium List.
But the UKLA said the group’s recent growth meant it was unable to satisfy Listing Rule 6.1.3, which states that an applicant may not be eligible if it has undergone a significant change in scale or operations over the past three years.
Quindell said it and its advisers continue to believe that the Premium List is the best place for the company and will continue to seek a listing there as soon as practicable.
The news is a further blow to Quindell, which suffered a sharp fall in stock price in April following the publication of a research note by little-known research firm Gotham City, which criticised the company’s finances and management.
Quindell executive chairman Rob Terry said: “I would like to take this opportunity to apologise to shareholders, who will no doubt be as disappointed as the board are at hearing this news.
“This is in no way reflective of the success of fundamental performance of the business. Quindell’s relationships with customers and partners remain exceptionally positive, with a number of initiatives being undertaken in new territories and relationships in existing territories continuing to expand.”
He added: “Regrettably it is Quindell’s success and change of scale of its operations during the past three years that is a core reason for the group not being deemed to be eligible for a premium listing at this time.
“The board will continue to investigate all options while not being distracted from continuing to deliver a market-leading return on capital employed and EPS growth for our shareholders.”