Preliminary results for the year ended 31 December 2016
Watchstone Group plc
(“Watchstone” or the “Company” or the “Group”)
Watchstone (AIM:WTG.L) today announces its results for the year ended 31 December 2016.
Financial:
- Underlying* business revenues increase to £60.7m (2015: £54.9m)
- Total revenues rise to £63.8m (2015: £58.8m)
- Underlying EBITDA** loss of £9.8m (2015: loss of £15.1m)
- Group Operating Loss of £20.9m (2015: £177.6m)
- Total loss after tax of £69.1m (2015: profit of £274.9m) including £50.1m impairment of escrow receivable
- Group net assets (excluding contingent liabilities) of £68.5m (2015: £137.1m) representing approximately 147 pence per share. Group reported net assets no longer includes the escrow receivable following impairment
- Group cash and term deposits at 31 December 2016 of £81.2m (2015: £103.2m)
*Underlying includes Hubio, ingenie, Healthcare Services, BAS and Central
**EBITDA is Earnings Before Interest Tax Depreciation Amortisation and Impairments
Operational:
- Group complexity reduced with disposal or closure of a number of loss making, cash consumptive businesses
- Growth and profitability delivered in our largest businesses, ptHealth and ingenie
- Reshaping of Hubio completed including substantial reduction of cash requirements and the launch of our new UBI proposition based on ingenie’s leading IP
- Plan to prepare all remaining businesses for potential divestment and establish new way of working with the substantially reduced central team / Board by the end of 2017
Current trading (unaudited):
- Overall trading is in line with expectations with continued good momentum in ptHealth and ingenie
- Unaudited underlying group revenue for Q1 2017 is up 4% vs. Q1 2016
- Continued improvement in underlying EBITDA loss with expectation of significantly lower losses vs. 2016 reflecting the operating improvements made in 2016 and since
- Unaudited overall group operating loss is an improvement of approximately 40% for Q1 2017 vs. Q1 2016
- ptHealth has had a good start to the year
- continued emphasis on clinic optimisation and InnoCare sales
- unaudited revenue of £7.3m in Q1 2017 (an increase of approximately 11.5% vs. Q1 2016 (excluding exchange rate fluctuations)
- ingenie is performing well
- taking advantage of the continued market opportunities seen in UK insurance telematics
- unaudited revenue of £3.9m in Q1 2017 (an increase of approximately 11% vs. Q1 2016)
- Smaller and more focused Hubio footprint with a clear strategy as explained in the Group Chief Executive’s Update
- BAS revenue is broadly in line with Q1 2016 and budget expectations
- As at 21 April 2017, Group cash and term deposits was (unaudited) £71.8m
- Cash outflows since year end reflect both typical settlement of outstanding 2016 invoices, staff bonuses and settlement of non-underlying liabilities. This rate of spend is not expected to be reflective of the trend for the full year
- Group cash excludes escrow monies of £50.1m
Indro Mukerjee, Group Chief Executive Officer said: “After some 20 months with the Group, I can confidently say that, with the rather broad set of things to do, there has never been a dull moment. Our actions and improvements means the business has entered 2017 in a clearer and stronger position than in 2016. I believe that we will best serve our shareholders by realising the value of our operating businesses (through sale, merger/demerger or IPO) at the optimal time; by managing legacy matters in the most efficient manner; and then to return the maximum cash to shareholders at the earliest opportunity subject always to the need to ensure the interests of creditors are adequately safeguarded (including in respect of any contingent liabilities). As such, I have recommended, and the Board has agreed, a plan of action which will result in completing the phase I started back in September 2015 and which will move Watchstone into its next phase by the end of 2017. On a personal level, this will signify the end of my work with the Group. I have informed my colleagues of my intention to stand down as Group CEO and resign from the Board, both as of 31 December 2017.”
Richard Rose, Non-executive Chairman said: “2016 was another busy year for Watchstone as we continued to work through operational and organisational change while dealing with a multitude of legacy legal and taxation matters. The Board has decided that all remaining businesses will now be prepared for divestment. In readiness for possible disposal, the companies will be shaped to operate more autonomously, with Watchstone taking a more strategic role rather than seeking to operate the businesses. The timing for any potential divestment or any alternative strategic option will be determined with a view to maximising shareholder value. Under the leadership of Indro Mukerjee, we are now well placed to move to a much simpler and significantly reduced cost group structure by the end of 2017 at which point Indro’s work to provide a strong and stable platform for Watchstone and its businesses to generate value for shareholders will be complete.”
The Annual Report and Accounts for the year ended 31 December 2016 will be released by 5 May 2017 and posted to registered shareholders. Once published a full version will be available at www.watchstonegroup.com/investors.
The 2017 AGM will be held at 10.30am on 27 June 2017 at Vauxhall & Lambeth Suite – 2nd Floor, Park Plaza County Hall, 1 Addington St, Lambeth, London SE1 7RY. Notice of the Annual General Meeting (“AGM”) and a Form of Proxy will be posted to registered shareholders in due course.