Watchstone Group plc
(“Watchstone” or the “Group”)
Watchstone Group plc (LON:WTG) notes the announcement by Slater and Gordon Limited (ASX: SGH) that it has obtained an opinion from an independent barrister in respect of the warranty escrow relating to the sale of the Professional Services Division in May 2015 (“Opinion”).
Watchstone has received a copy of the Opinion, which states that a warranty claim presented by Slater and Gordon Limited and/or Slater and Gordon (UK) 1 Ltd (together “SGH”) has on balance a prospect of success and that, if successful, such claim would be likely to have a value of £53m. Accordingly, £50m is to be retained in the warranty escrow account until the warranty claim is resolved.
The Opinion is solely for the purpose of determining whether the warranty escrow Account may be released to Watchstone at this time. It does not pre-judge the outcome of any legal proceedings. Watchstone remains satisfied that the warranty claim has no merit and will defend it robustly if proceedings are brought.
During the process leading to the Opinion, Watchstone had no right to require disclosure of key evidence in the possession of SGH which would be relevant to the merits and quantum of the warranty claim. Watchstone believes this evidence will be available to it in the event that SGH issues proceedings and it intends to seek disclosure of such information at the earliest possible opportunity.
Watchstone will now not proceed with its further capital return to shareholders until the warranty claim detailed above is resolved.
Balance sheet update
As at 25 November 2016, Watchstone had cash of £83.1m (excluding the Warranty Escrow).
Watchstone will make further announcements in due course, as appropriate.