Watchstone Group PLC Pre-close trading update (9877C)
26 January 2018 - 6:00PM
UK Regulatory
TIDMWTG
RNS Number : 9877C
Watchstone Group PLC
26 January 2018
Watchstone Group plc
("Watchstone" or the "Group")
Pre-close trading update
Watchstone Group plc (LON:WTG) today issues a pre-close trading
update ahead of its results for the year ended 31 December 2017.
Overall trading results (unaudited) for the underlying businesses
(Healthcare services and ingenie) are expected to be broadly in
line with expectations.
Revenue (unaudited): 2017 2016 % Chg
(GBP'm)
---------------------- ----- ----- ------
Healthcare services 29.7 28.1 6
---------------------- ----- ----- ------
ingenie 14.4 13.9 4
---------------------- ----- ----- ------
Total Underlying* 44.1 42.0 5
---------------------- ----- ----- ------
Non-underlying - 1.0
---------------------- ----- ----- ------
Total Group 44.1 43.0
---------------------- ----- ----- ------
* BAS was sold and Hubio was reclassified to discontinued
operations in the year and therefore is not included above. 2016
amounts are presented on a consistent basis.
During 2017, we substantially completed the work to simplify and
rationalise the Group involving the closure or disposal of loss
making businesses and reducing the size and cost of the central
overhead. The central team now comprises just three full time staff
to assist Stefan Borson and Mark Williams, (the Executive
directors) and the Board has been reduced in size. The full benefit
of these changes will only be seen in 2018 but are expected to
reduce the central costs by approximately 50%.
Overall net losses and expenses of over GBP6m suffered in 2017
have been extinguished as a result of the sale or closure of
businesses and restructuring.
Cash and term deposits on 31 December 2017 totalled GBP62.8m
(GBP67.2m as at 30 June 2017) excluding the GBP50.1m in escrow
pending resolution or determination of the High Court claim issued
by Slater and Gordon (UK) 1 Limited ("Slater and Gordon
Claim").
Taking each of the remaining operating businesses in turn:
Healthcare services:
Healthcare services consists of our Canadian ptHealth clinics
business and InnoCare. This business is growing, with revenue of
approximately GBP29.7m for the year ended 31 December 2017 an
increase of 6% vs. 2016. Whilst profitability is anticipated to be
slightly ahead of 2016 in our core clinic business, overall
profitability will be below 2016 after taking account of the
continued investment we are making in the InnoCare software and
services platforms and in our clinics.
In December 2017, Alan Torrie, an experienced Canadian
executive, became Non-executive Chairman of ptHealth and will work
closely with its Chief Executive Officer, Heather Shantora, and the
Group in guiding its future path.
ingenie:
Whilst revenue for the year increased to GBP14.4m, ingenie had a
challenging end to the year as the impact of changes to the Ogden
discount rate created instability in young driver motor policy
pricing. Reflecting this and continued investment in its technology
platform, profitability will be marginally below 2016. The impact
of these factors will extend into the first half of 2018 but the
team has a detailed plan to address these challenges as well as
targeting more new B2B business as the ANWB programme continues to
perform well, endorsing our technology and market leading approach
to road safety and motor insurance pricing.
In December 2017, Selim Cavanagh joined ingenie as Chief
Executive Officer from LexisNexis Risk Solutions, where he held
various senior roles including VP Telematics, VP Motor Insurance
and MD of its Wunelli telematics business unit, after a background
in consumer insurance at AXA UK. ingenie will benefit from Selim's
20 years of experience in delivering data, IT and research-based
motor insurance solutions.
Discontinued - Hubio:
We have now completed the rationalisation, closure and sale of
the Hubio businesses. We have sold Hubio Exchange in Canada and
Hubio Fleet (subject to final contractual details) as well as Hubio
Enterprise in Camberley.
Legacy matters:
The Slater and Gordon Claim is ongoing and we filed our defence
in October 2017. Our position remains that Slater and Gordon's
allegations of deceit and the associated breach of warranty claim
are wholly without merit and should never have been advanced.
During the year, we also strengthened the provision for legal costs
in relation to this claim, reflecting our determination to robustly
defend the action to trial. We continue to pursue any deferred
consideration due from Slater and Gordon in respect of the disposal
of the PSD.
The SFO investigation continues and we are cooperating fully. It
remains the only regulatory inquiry to which the Group is
subject.
There have been no further developments at this stage on the
threatened (but not commenced) class action litigation first
announced in September 2015.
2018 outlook:
The Group enters 2018 a far simpler business and we expect this
year will be a period of re-focus and development for ptHealth and
ingenie. Both will be encouraged to invest ambitiously but
prudently without the distraction of potential corporate
activity.
Central costs will be carefully managed at greatly reduced
levels consistent with the unresolved legacy matters and the needs
of the organisation.
For further information:
Watchstone Group plc Tel: 03333 448048
Peel Hunt LLP, Nominated Adviser Tel: 020 7418
and Broker 8900
Dan Webster
This information is provided by RNS
The company news service from the London Stock Exchange
END
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