TIDMWTG
RNS Number : 0409W
Watchstone Group PLC
13 April 2023
Watchstone Group plc
("Watchstone" or the "Company" or the "Group")
Preliminary results for the year ended 31 December 2022
Watchstone Group plc (WTG.L) today announces its results for the
year ended 31 December 2022.
-- Total profit after tax GBPnil (2021: Loss of GBP3.6m).
-- Group operating loss of GBP0.2m (2021: Loss of GBP3.7m).
-- Group net assets of GBP13.5m representing approximately 29
pence per share (2021: 29 pence per share).
-- Group cash and term deposits at 31 December 2022 of GBP13.8m (31 December 2021: GBP13.0m).
-- Group cash and term deposits at 31 March 2023 of GBP11.5m.
The Annual Report and Accounts for the year ended 31 December
2022 will be released in due course and posted (where applicable)
to registered shareholders. Once published, the Annual Report and
Accounts will be available at www.watchstonegroup.com/investors
.
The 2023 Annual General Meeting ("AGM") will be held on 30 May
2023 at 2.30 pm in London.
The Notice of the AGM will be published on the Company's website
at
https://www.watchstonegroup.com/investors/shareholder-information/
.
For further information:
Watchstone Group plc Tel: 03333 448048
investor.relations@watchstonegroup.com
WH Ireland Limited, Financial Tel: 020 7220 1666
Adviser and Broker
Chris Hardie / James Bavister
--------------------
Chairman and CEO's Report
During the year, the Group significantly progressed the
realisation of its litigation assets including the settlement of
its claim against its former auditors, KPMG LLP ("KPMG"). This is
in addition to the preparations for trial which took place in early
2023 against PricewaterhouseCoopers LLP ("PwC") and other claims
against Aviva Canada Inc. ("Aviva Canada") and HMRC.
Now all trading businesses have been disposed of, our plan
remains to achieve the optimum resolution of legacy matters and
then to return cash to shareholders. As part of the ongoing
rationalisation of costs, Lord Howard (Senior Non-executive
Director) and David Young (Non-executive Director) will step down
from the Board following the 2023 Annual General Meeting ("AGM")
and will not be replaced.
The Board thanks Lord Howard and Mr Young for their commitment
and assistance in dealing with an extraordinarily complex array of
operational, legal, regulatory and accounting matters over many
years.
Update on outstanding legacy matters
Our claim against PwC was heard in the High Court in January and
February 2023 with the judgement being awaited.
Our appeal in respect of the recovery of historic VAT paid in
the ingenie business was heard by the First Tier VAT Tribunal in
December 2021 and the appeal to the Upper Tribunal will take place
in November 2023. Finally, our Canadian subsidiary's claim against
Aviva Canada is ongoing and is expected to go to trial in January
2024.
2023 outlook
We will look to prosecute our remaining litigation assets for
the optimal return for shareholders. Central costs will continue to
be carefully managed at reduced levels consistent with the needs of
the organisation.
Once again, we would like to thank our shareholders for their
continuing patience whilst we work to realise maximum value from
our remaining assets.
Richard Rose Stefan Borson
Non-executive Chairman Chief Executive Officer
Consolidated Income Statement
for the year ended 31 December 2022
2022 2021
Total Total
GBP'000 GBP'000
Other income 4,950 -
Administrative expenses (5,101) (3,722)
Group operating loss (151) (3,722)
Finance income 111 -
Finance expense - (8)
Loss before taxation (40) (3,730)
Taxation - -
Loss after taxation for the year from
continuing operations (40) (3,730)
Net gain on disposal of discontinued operations - -
Profit for the year from discontinued
operations, net of taxation 77 135
Profit/(loss) after taxation for the
year 37 (3,595)
-------------------------------------------------- -------- --------
Attributable to:
Equity holders of the parent 37 (3,592)
Non-controlling interests - (3)
37 (3,595)
------------------------------------------------- -------- --------
Earnings/(loss) per share (pence):
Basic 0.1 (7.8)
Diluted 0.1 (7.8)
-------------------------------------------- ------ ------
Loss per share from continuing operations
(pence):
Basic (0.1) (8.1)
Diluted (0.1) (8.1)
-------------------------------------------- ------ ------
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
2022 2021
GBP'000 GBP'000
Profit/(loss) after taxation 37 (3,595)
Items that may be reclassified in the Consolidated
Income Statement
Exchange differences on translation of foreign
operations (15) (18)
Total comprehensive income/(loss) for the
year 22 (3,613)
---------------------------------------------------- -------- --------
Attributable to:
Equity holders of the parent 22 (3,610)
Non-controlling interest - (3)
22 (3,613)
------------------------------ --- --------
Consolidated Statement of Financial Position
as at 31 December 2022
2022 2021
GBP'000 GBP'000
Current assets
Trade and other receivables 1,711 1,910
Term deposits 12,000 -
Cash 1,768 12,996
Total current assets 15,479 14,906
Total assets 15,479 14,906
---------------------------------------- --------- ---------
Current liabilities
Trade and other payables (1,803) (1,251)
Provisions (129) (129)
Total current liabilities (1,932) (1,380)
---------------------------------------- --------- ---------
Non-current liabilities
Deferred tax liabilities - (1)
- (1)
--------------------------------------- --------- ---------
Total liabilities (1,923) (1,381)
---------------------------------------- --------- ---------
Net assets 13,547 13,525
---------------------------------------- --------- ---------
Equity
Share capital 4,604 4,604
Other reserves 69,719 69,734
Retained earnings (60,777) (60,814)
Equity attributable to equity holders
of the parent 13,546 13,524
Non-controlling interests 1 1
Total equity 13,547 13,525
---------------------------------------- --------- ---------
Consolidated Cash Flow Statement
for the year ended 31 December 2022
2022 2021
GBP'000 GBP'000
Cash flows from operating activities
Cash generated from/(used by) operations,
net finance expense and tax 683 (3,751)
Tax received - 81
Net cash generated from/(used by) operating
activities 683 (3,670)
---------------------------------------------- --------- --------
Cash flows from investing activities
Investment in term deposits (26,000) -
Maturity of term deposits 14,000 -
Interest income 86 -
Net cash used by investing activities (11,914) -
--------------------------------------------- --------- --------
Net decrease in cash and cash equivalents (11,231) (3,670)
Cash and cash equivalents at the beginning
of the year 12,996 16,656
Exchange gains on cash and cash equivalents 3 10
Cash and cash equivalents at the end of
the year 1,768 12,996
---------------------------------------------- --------- --------
The above Consolidated Cash Flow Statement includes cash flows
from both continuing and discontinued operations.
Notes:
1. Results announcement
The Financial Statements for the year ended 31 December 2022
have been prepared in accordance with UK adopted international
accounting standards in conformity with the requirements of the
Companies Act 2006. However, this announcement does not contain
sufficient information to comply with adopted IFRS. The Group will
publish its Annual Report and Financial Statements in due course
and these will appear on the Group's website at
www.watchstonegroup.com and be posted to shareholders. The auditors
have reported on those accounts; their report was (i) unqualified;
and (ii) did not contain a statement under Section 498 (2) or (3)
of the Companies Act 2006. The financial information set out in
this announcement does not constitute the Group's statutory
accounts for the year ended 31 December 2022. Statutory accounts
for the year ended 31 December 2021 have been delivered to the
Registrar of Companies and those for the year ended 31 December
2022 will be delivered by 30 June 2023. This preliminary
announcement was approved by the Board of Directors on 12 April
2023 and these preliminary results have been extracted from the
audited results for the year ended 31 December 2022.
2. Administrative expenses
Year ended 31 December 2022 2021
GBP'000 GBP'000
Administrative expenses include:
* Legal expenses 2,139 1,059
* Net releases of provisions for legal expenses and tax
related matters - (105)
2,139 954
-------------------------------------------------------------- -------- --------
Legal fees incurred during 2022 primarily relate to the
litigation undertaken by the Company against PwC and KPMG.
Since the Group is the Claimant, no provisions are made in
respect of the costs of such actions since the Group is not obliged
to continue to pursue them.
The net release of provisions for legal fees in 2021 relates to
the discontinued SFO investigation into former management of the
Company. This is partially offset by additional provisions in
respect of the First Tier VAT Tribunal hearing.
3. Provisions
Legal Onerous
disputes contracts Other Total
GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2021 200 58 - 258
Unused amounts
released (187) (47) - (234)
Used during the
year (13) (11) - (24)
Additional provisions 129 - - 129
At 1 January
2022 129 - - 129
-------------------------- ------------ ------------ ------------- ----------- ---------
At 31 December
2022 129 - - 129
-------------------------- ------------ ------------ ------------- ----------- ---------
Split:
Non-current - - - -
Current 129 - - 129
Legal disputes and regulatory matters
It is the policy of the Group to provide for legal costs in
cases where the Group is (or would be) the defendant, defence costs
are provided as the Group is committed to defending the actions.
There are no such actions outstanding against the Group at 31
December 2022.
In legal cases where the Group is the claimant (or counter
claimant), costs are not provided as there is no obligation to
proceed and the Group is not contractually committed to incur
costs. Similarly, in such legal cases where the Group is the
claimant and has indemnified a third party, potential future costs
associated with the indemnification are not provided for.
Following a hearing held in December 2021, on 12 April 2022,
Watchstone was informed of the decision of the First Tier Tribunal
which found in favour of HMRC and that the Group had not made any
supplies of telematics devices or related services in the VAT
periods 07/2014 to 07/2018. Accordingly, the appeal was dismissed
and the Group has provided for the costs incurred by HMRC. This
represents the entirety of the provisions held by the Group at 31
December 2021 and 31 December 2022. The Group has appealed to the
Upper Tax Tribunal and a hearing is scheduled for the second half
of 2023.
4. Contingent assets and liabilities
Litigation in relation to the historic activities of the Group
is being pursued including claims against PwC and Aviva Canada.
These give rise to contingent assets, which are not recognised
within the Financial Statements due to lack of certainty as to the
outcome, despite an inflow of economic benefit being considered
probable.
The Group routinely enters into a range of contractual
arrangements in the ordinary course of business which can give rise
to claims or potential litigation against Group companies. It is
the Group's policy to make specific provisions at the Statement of
Financial Position date for all liabilities which, in the opinion
of the Directors, are expected to result in a loss.
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END
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