Watchstone Group PLC Pre-close update
RNS Number : 4117C
Watchstone Group PLC
10 February 2020
Watchstone Group plc
("Watchstone" or the "Group")
Watchstone Group plc (LON:WTG) today issues a pre-close update
ahead of its results for the year ended 31 December 2019.
During 2019, the Board continued its work to simplify the Group,
resolve legacy issues, reduce costs and to commence the process for
returning further capital to shareholders.
As announced on 7 February 2020, our Healthcare Services
division in Canada was sold for an initial cash consideration of
Canadian $36.2m (GBP20.8m) on a cash and debt free basis with up to
a further C$0.8m (GBP0.5m) conditional on the business generating
target revenues in the first year after its acquisition.
A number of commercial disputes were resolved in the year, the
most significant of which was the High Court claim issued by Slater
and Gordon (UK) 1 Limited ("S&G"). As announced on 21 October
2019, the settlement provided for GBP11m of the GBP50m held in
escrow to be released to S&G with the balance of GBP39m and
accrued interest being released to Watchstone.
Cash and term deposits on 31 December 2019 (excluding cash
within businesses classified as held for sale) totalled GBP71.6m.
Total cash following completion of the sale of the Healthcare
Services division, is approximately GBP90m representing
approximately 195 pence per share.
Watchstone will now proceed with plans for a further Court
approved, capital repayment to shareholders and further details
will be announced in due course. Subject to shareholder approval,
completion of the necessary working capital and creditor analysis
(including contingent creditors) and the Court timetable, the
current plan is to return at least GBP50m (representing at least
110p per share) before the end of June 2020. The timetable is
anticipated to be slightly longer than usual given the need to
complete the audit in advance of the return.
As further matters are resolved, the Company will seek to return
additional cash to shareholders.
Following the sale of the Healthcare Services division,
Watchstone now retains one remaining operating business, ingenie.
Consistent with our announcement at the half year, ingenie's retail
business continued to face difficult market conditions in 2019, but
significant changes have been made to increase competitiveness
which are now bearing fruit with daily new policy sales at their
highest levels for a number of years.
In November 2019, ingenie successfully launched its new self-fit
proposition making its offering ever more competitive.
The SFO investigation continues and we are cooperating fully. It
remains the only regulatory inquiry to which the Group is
Whilst we understand that the previously threatened class action
litigation first announced in September 2015 has been abandoned, a
firm purporting to act for a group of twelve individuals (some of
whom participated in the original threatened litigation) has
recently written a "Notice of intended claim" to the Company
("Notice"). The Notice relates to potential pursuit of a claim
arising under section 90A and Schedule 10A of the Financial
Services and Markets Act 2000. However, it provides no information
to support the validity or valuation of the individual prospective
claimants' claims, which they would be required to prove in due
course in any litigation. The Company will vigorously defend all
such claims if so brought.
The Group's stated strategy remains to ultimately divest of its
operating businesses, resolve all legacy issues and return as much
capital as possible to shareholders.
The Board hopes that 2020 will see significant further progress
to the final resolution of the Group's historic matters and a
substantial return of capital to shareholders in at least one
distribution (as referred to above).
For further information:
Watchstone Group plc Tel: 03333 448048
WH Ireland Limited, Nominated Adviser Tel: 020 7220 1666
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(END) Dow Jones Newswires
February 10, 2020 02:00 ET (07:00 GMT)