E fund boss Richard Breeden was burned by a second support services company yesterday as a badly-timed PR move by Xchanging wiped 11 per cent from its market value.
Breeden European Partners saw £158m shaved from its stake in the outsourcing provider as nervy investors fled the stock. Just a fortnight ago, Breeden crystallised a £30m loss by selling out of troubled support services firm Connaught, which is battling for survival in the face of government spending cuts.
Shares in Xchanging fell 10.8 per cent to 110p after the market was spooked by an unexpected conference call in which chief executive David Andrews tried to dispel “baseless rumours” circulating about the company. Andrews insisted Xchanging’s accounting practices had been approved by its auditor, while finance director Richard Houghton said its profit and loss account had not been flattered by deferred income.
Although the announcements were designed to reassure investors following the high-profile problems suffered by Connaught and Rok, many analysts missed the call as it coincided with results from Serco.
Caroline de La Soujeole at Seymour Pierce said the board was right to fight back against gossip. “They just picked the wrong day to do it.”
Mike Allen at Panmure Gordon said: “If a company in this market has to defend its accounting policy, it’s a bit of a recipe for disaster.”