Watchstone Group PLC Pre-close trading update (6093O)
31 January 2019 - 6:01PM
UK Regulatory
TIDMWTG
RNS Number : 6093O
Watchstone Group PLC
31 January 2019
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
2018.
Revenue (unaudited): 2018 2017
year ended 31 December
Healthcare services GBP30.0m (C$51.8m) GBP30.5m (C$51.1m)
------------------- -------------------
ingenie GBP7.7m GBP14.4m
------------------- -------------------
Total GBP37.7m GBP44.9m
------------------- -------------------
Cash and term deposits on 31 December 2018 totalled GBP50.1m
(GBP58.4m as at 30 June 2018) excluding the GBP50.2m in escrow
pending resolution or determination of the claim issued by Slater
& Gordon (UK) 1 Limited ("Slater & Gordon Claim").
Healthcare services:
Healthcare services consists of our Canadian ptHealth clinics
business and InnoCare, our clinic software, referral network and
managed services business. In the year, the Healthcare services
division grew revenues in local currency despite the sale and
conversion to a managed service offering of one of its
underperforming clinics. However, adverse movements in the Canadian
Dollar relative to Sterling has resulted in lower revenues being
recorded overall in Sterling.
During the second half of 2018, ptHealth was appointed as the
Canadian Arthritis Society's national physiotherapy provider and
also became the first physiotherapy provider officially certified
as a Great Place to Work(R) by the Great Place to Work(R) Institute
Canada.
As anticipated, a significant proportion (39%, C$4.23m
(approximately GBP2.5m)) of the preference shares in the business
have been redeemed in the year. Profitability is expected to be
broadly flat relative to 2017 however a significant restructuring
of the clinic business has been completed in the year which more
closely aligns costs to revenues and should create more optimal
conditions for profitable growth.
ingenie:
As previously described, challenging trading conditions have
continued to further impact retail volumes. A number of initiatives
have been undertaken to address these issues including the recent
broadening of underwriting partnerships and this has seen positive,
albeit early, trends. Further structural changes to the business
continue which are anticipated to revive the retail competitiveness
of the offering during H1 2019.
The ANWB programme is performing well and underlines the
credibility and relevance of ingenie's business to business
offering. ingenie's B2B pipeline is strong with a variety of
opportunities being pursued with vigour.
Central costs and overall results:
Central costs were rationalised at the end of 2017 and this is
reflected in materially lower expenditure during 2018.
Legacy matters:
The Slater & Gordon Claim is ongoing and the disclosure
process commenced in December 2018. Our position remains that
Slater & 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, significant costs have been
incurred in defence of this claim and we continue to bolster the
provision for legal costs in anticipation of a trial commencing in
October 2019. In parallel, we continue to pursue any deferred
consideration due from Slater & 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.
2019 outlook:
2019 will be an important year for the Group both in terms of
growing its operating businesses and dealing with the Group's
legacy issues as efficiently as possible.
For further information:
Watchstone Group plc Tel: 03333 448048
Peel Hunt LLP, Nominated Adviser and Broker Tel: 020 7418 8900
Dan Webster
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END
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