RNS-Historic 10 February 2020 Watchstone Group plc Pre-close update Watchstone Group plc (LON:WTG) today issues a pre-close update ahead of its results for the year ended 31 December 2019. During 2019, the Board continued its work to simplify the Group, resolve legacy issues, reduce costs and to commence the process for returning further capital to shareholders. As announced on 7 February 2020, our Healthcare Services division in Canada was sold for an initial cash consideration of Canadian $36.2m (£20.8m) on a cash and debt free basis with up to a further C$0.8m (£0.5m) conditional on the business generating target revenues in the first year after its acquisition. A number of commercial disputes were resolved in the year, the most significant of which was the High Court claim issued by Slater and Gordon (UK) 1 Limited (“S&G”). As announced on 21 October 2019, the settlement provided for £11m of the £50m held in escrow to be released to S&G with the balance of £39m and accrued interest being released to Watchstone. Cash and term deposits on 31 December 2019 (excluding cash within businesses classified as held for sale) totalled £71.6m. Total cash following completion of the sale of the Healthcare Services division, is approximately £90m representing approximately 195 pence per share. Capital return Watchstone will now proceed with plans for a further Court approved, capital repayment to shareholders and further details will be announced in due course. Subject to shareholder approval, completion of the necessary working capital and creditor analysis (including contingent creditors) and the Court timetable, the current plan is to return at least £50m (representing at least 110p per share) before the end of June 2020. The timetable is anticipated to be slightly longer than usual given the need to complete the audit in advance of the return. As further matters are resolved, the Company will seek to return additional cash to shareholders. ingenie Following the sale of the Healthcare Services division, Watchstone now retains one remaining operating business, ingenie. Consistent with our announcement at the half year, ingenie’s retail business continued to face difficult market conditions in 2019, but significant changes have been made to increase competitiveness which are now bearing fruit with daily new policy sales at their highest levels for a number of years. In November 2019, ingenie successfully launched its new self-fit proposition making its offering ever more competitive. Legacy matters The SFO investigation continues and we are cooperating fully. It remains the only regulatory inquiry to which the Group is subject. Whilst we understand that the previously threatened class action litigation first announced in September 2015 has been abandoned, a firm purporting to act for a group of twelve individuals (some of whom participated in the original threatened litigation) has recently written a “Notice of intended claim” to the Company (“Notice”). The Notice relates to potential pursuit of a claim arising under section 90A and Schedule 10A of the Financial Services and Markets Act 2000. However, it provides no information to support the validity or valuation of the individual prospective claimants’ claims, which they would be required to prove in due course in any litigation. The Company will vigorously defend all such claims if so brought. 2020 outlook The Group’s stated strategy remains to ultimately divest of its operating businesses, resolve all legacy issues and return as much capital as possible to shareholders. The Board hopes that 2020 will see significant further progress to the final resolution of the Group’s historic matters and a substantial return of capital to shareholders in at least one distribution (as referred to above).
RNS-Historic 07 February 2020 Watchstone Group plc Completion of the sale of Healthcare Services Further to its previous announcements, Watchstone Group plc (LON:WTG) announces that its Canadian subsidiary, Quindell Services Inc. has completed the sale of PT Healthcare Solutions Corp. and other subsidiaries forming its Canadian Healthcare services (“Healthcare Services”) business to 11628542 Canada Inc. a wholly owned subsidiary of LM Holdings Corp. (collectively, “LMH”) Stefan Borson, Group Chief Executive Officer said: “Firstly, I would like to thank the Healthcare Services team for their hard work during the Group’s ownership of the business. We believe this transaction will benefit the Healthcare Services business, LMH and most importantly, its patients and clients. As part of LMH, we expect Healthcare Services and its people to thrive. From a personal perspective, I would like to thank Heather Shantora, the Healthcare Services CEO, for her tireless work in improving the business, its operational performance and its service to patients. The Board will miss working with Heather and the team and wishes them great success in the future.”
RNS-Historic 03 February 2020 Watchstone Group plc Update re the sale of Healthcare services business Further to its previous announcements, Watchstone Group plc (LON:WTG) announces that its Canadian subsidiary, Quindell Services Inc. has now received the final change of control consent in respect of its agreement to sell its wholly owned subsidiary PT Healthcare Solutions Corp. and other subsidiaries forming its Canadian Healthcare services business to 11628542 Canada Inc. a wholly owned subsidiary of LM Holdings Corp. Completion of the transaction is expected to take place on or about 7 February 2020 pursuant to the terms of the purchase agreement.
RNS-Historic 31 December 2019 Watchstone Group plc Update re the sale of Healthcare services business Further to its announcements on 17 September 2019 and 29 November 2019, Watchstone Group plc (LON:WTG) announces that its Canadian subsidiary, Quindell Services Inc. still awaits a final change of control consent in respect of its agreement to sell its wholly owned subsidiary PT Healthcare Solutions Corp. and other subsidiaries forming its Canadian Healthcare services business to 11628542 Canada Inc. a wholly owned subsidiary of LM Holdings Corp. The parties have, therefore, agreed to further extend the long stop completion date to 29 February 2020 as they await the final consent which is expected in January 2020.
RNS-Historic 29 November 2019 Watchstone Group plc Update re the sale of Healthcare services business Further to its announcement on 17 September 2019, Watchstone Group plc (LON:WTG) announces that its Canadian subsidiary, Quindell Services Inc. still awaits a final change of control consent in respect of its agreement to sell its wholly owned subsidiary PT Healthcare Solutions Corp. and other subsidiaries forming its Canadian Healthcare services business to 11628542 Canada Inc. a wholly owned subsidiary of LM Holdings Corp. The parties have, therefore, agreed to extend the long stop completion date to 31 December 2019 as they await the final consent. [link]
In court today Watchstone spins higher as it settles Slater & Gordon fraud claim Calum Muirhead Mon 21 Oct 2019 The settlement follows a suit and counter-suit battle between the two firms over the disastrous sale of Watchstone’s professional services business to S&G in 2015 Watchstone Group PLC (LON:WTG) shares surged on Monday after the company formerly known as Quindell settled a long-running fraud dispute with law firm Slater & Gordon (S&G). The insurance services firm had been due to face a High Court hearing as part of a lawsuit filed by the Anglo-Aussie lawers in June 2017 over the disastrous acquisition of the AIM-listed company’s professional services business in 2015. S&G had been seeking up to £637mln in damages on allegations of fraudulent misrepresentation and breach of warranty in the deal. The legal group paid £673mln to buy the business from Quindell shortly before the UK’s Serious Fraud Office kicked off an investigation into Quindell’s accounting practices. Watchstone then filed a counter-suit against S&G in August this year, alleging that the law firm’s corporate finance advisor, Greenhill & Co, had established a “back channel” with its restructuring consultant, accountancy firm PwC, to obtain confidential information during negotiations for the sale. However, on Monday the two firms said they had agreed to settle the dispute without either party admitting liability. Under the deal, Watchstone will release £11mln of £50mln being held in escrow to S&G while taking the remaining £39mln. “Whilst Watchstone remains firmly of the view that the legal action commenced by the other side was without merit, the board believes that a settlement at this level is in shareholders’ interests as it brings certainty”, said Watchstone’s chairman Richard Rose. He added that the deal would release a “substantial cash sum” that had been unavailable to the company as well as removing the spectre of costs relating to legal action. Last week Watchstone settled another, much smaller claim brought by former boss Rob Terry over a disputed share purchase agreement, with the terms confidential. In late-morning trading, Watchstone’s shares were 42% higher at 152p. [link]
RNS-Historic 21 October 2019 Watchstone Group plc Settlement with Slater & Gordon (UK) 1 Limited Watchstone Group plc (LON:WTG) announces that it has agreed terms for the settlement of the claims made by Slater & Gordon (UK) 1 Limited (“S&G”) in the High Court proceedings issued by S&G in June 2017 (the “Settlement”). Under the Settlement, which is made without admission of liability by either party, all of S&G’s claims or potential claims for alleged breaches of warranty, deceit and fraudulent misrepresentation against Watchstone its present and former directors officers and agents relating to the historic sale of the Group’s professional services division (“S&G Claims”) in May 2015 have been unconditionally withdrawn. Watchstone has also agreed not to pursue its counterclaim against S&G (details of which were announced on 29 August 2019). The Settlement provides for £11m of the £50m currently held in escrow to be released to S&G with the balance of £39m and accrued interest being released to Watchstone. No application for costs will be made by either party. Watchstone does not accept that there was a proper basis for the S&G Claims and S&G does not accept that there was a proper basis for the counterclaim. Richard Rose, Non-executive Chairman of Watchstone said: “We are pleased with the resolution of this matter. Whilst Watchstone remains firmly of the view that the legal action commenced by the other side was without merit, the board believes that a settlement at this level is in shareholders’ interests as it brings certainty. It also releases a significant cash sum that has been locked in escrow and unavailable to us for some considerable time. The decision was made with consideration of the costs of pursuing the Company’s defence and counterclaim at trial and to the inherent uncertainty of the outcome of any legal process.”
RNS-Historic Sale of PT Healthcare Solutions Corp. and other subsidiaries forming its Healthcare services business Watchstone Group plc (LON:WTG) announces that its Canadian subsidiary, Quindell Services Inc. (“QSI”) has agreed to sell its wholly owned subsidiary PT Healthcare Solutions Corp. (“ptHealth”) and other subsidiaries forming its Canadian Healthcare services business (“Healthcare Services”) for an initial cash consideration of Canadian $36.2m (£22.3m ) on a cash and debt free basis to 11628542 Canada Inc. a wholly owned subsidiary of LM Holdings Corp. (collectively “LMH”) (“the Sale”). In addition, QSI will be due up to a further C$0.8m (£0.5m) conditional on the business generating target revenues in the first year after its acquisition by LMH. Typical commercial warranties have been given to LMH and the Group’s liability under those warranties is subject to customary limitations. The completion of the transaction is subject to limited conditions, including receipt of certain change of control consents. Subject to satisfaction of the conditions precedent, the Sale is scheduled to complete on 30 September 2019 with a long stop completion date of 29 November 2019. Watchstone is a guarantor to the agreement, guaranteeing performance of QSI’s obligations. Healthcare Services comprises ptHealth and Innocare. ptHealth is a national healthcare company that owns and operates physical rehabilitation clinics across Canada. From large cities to small communities, ptHealth delivers quality services in a compassionate and patient-centred atmosphere that is focused on providing recovery solutions for its patients. As announced in the interim results on 4 September 2019, the trading results of the Healthcare Services business have been largely flat year on year with a marginal increase in revenues to C$26.3m in H1 2019 compared to C$26.1m in H1 2018. As at 30 June 2019, the net assets of Healthcare Services totalled C$18.1m (£10.9m), including outstanding preference shares of C$5.2m (£3.1m). The preference shares will be settled in full on closing out of the gross proceeds of the Sale. EBITDA for the six months ended 30 June 2019 was C$2.5m (£1.4m). As at 31 December 2018, the net assets of Healthcare Services were C$17.1m (£9.9m), net of preference shares, and EBITDA for the year ended 31 December 2018 was C$1.5m (£0.9m). EBITDA for the year ended 31 December 2018 was stated prior to the adoption of IFRS 16 in respect of Leases. The Directors, who have been advised by National Bank Financial Inc. of Canada, consider the terms of the Sale to be fair and reasonable. The Directors consider the Sale to be in the best interests of the Group’s shareholders and other stakeholders and to be consistent with the Group’s previously stated objective to prepare our businesses for future disposal and to divest at the optimal time. The net cash proceeds of the Sale after settlement of costs and the remaining outstanding ptHealth Preference Shares (totalling approximately C$3.9m (£2.3m) as at 31 August 2019) will be kept on deposit and managed prudently until a distribution to shareholders can be effected. As previously announced, no distribution of capital will be made to shareholders of Watchstone until the Slater & Gordon litigation has been resolved.
In court today Michelle Jablko guest stars in Slater & Gordon lawsuit Myriam RobinColumnist Sep 4, 2019 Perhaps the mechanics of corporate dealmaking are, like sausage-making, best left unseen. For ANZ CFO Michelle Jablko, her days at corporate advisory Greenhill are far behind her. But not entirely out-of-mind, thanks to the ongoing and messy litigation between Slater & Gordon UK (which in 2017 seperated from the ASX-listed company) and what remains of its 2015 acquisition, Quindell (now called Watchstone). Back in 2015, Jablko was the managing director and co-head of Greenhill Australia. In this capacity, she was an adviser to Slater & Gordon, then an acquisitive and expanding law firm about to gobble up the tarnished Quindell, which was reeling from the aftershocks of an accounting scandal. To recover from the aforementioned troubles, Quindell had turned to PricewaterhouseCoopers — a relationship Slater & Gordon’s advisers at Greenhill allegedly sought to utilise for their own client’s “unfair advantage” in acquisition negotiations. At least, according to Watchstone, in court documents filed last week. To argue their case, Watchstone’s lawyers, who aren’t suing either PwC or Greenhill, rely on extensive quoting of Greenhill’s internal emails. For example, on January 15, then-Greenhill UK managing director Gareth Davies informed his colleagues David Wyles, Nicholas Bordignon and Jablko of his having scheduled a “quiet coffee” with “the head of PwC restructuring who I know very well … he claims to be advising the company!” To which, in response, Jablko suggested some potential areas of Quindell’s situation she’d like to know more about (cashflow estimates, potential capital-raisings etc.). When Davis reported back with notes of his discussion on Quindell with his source, Jablko responded that this was “extremely helpful”. A month later, on February 17, Jablko sent an email to the Greenhill team, asking Davis whether it was “worth you checking back in with your contact at PwC to see what intel you can gather”. Ten days later, Davis said that he had “an excuse to sit with PwC soon and will come on to the debate re: Q”. Through such intel-gathering, it’s alleged that Greenhill discovered Quindell would run out of cash halfway through the year. An allegation that, if true, would make even more baffling Slater & Gordon’s decision to nonetheless pay £637 million for the then-already-embattled firm. But we digress. The counterclaim also makes a mention of top UBS banker Aiden Allen, who was then at Citigroup. Though, unlike Jablko’s numerous appearances, his one cameo is mercifully brief and, to our eye, rather insignificant. Both cases — being Slater & Gordon’s originating claim and Watchstone Group’s countersuit — will be heard at a trial beginning in London on October 21. [link]
RNS-Historic Half-year Report 4th September 2019 070 Watchstone (AIM:WTG.L) today announces its results for the six months ended 30 June 2019. · Revenues of £18.6m (2018: £19.7m) · Underlying EBITDA loss of £1.6m* (2018: loss of £2.1m) · Total loss before tax of £7.3m (2018: loss of £3.5m) · Group net assets of £40.1m at 30 June 2019 (as at 31 December 2018: £46.8m) · Group cash and term deposits at 30 June 2019 of £41.1m, with a further £50.3m in escrow · Group cash and term deposits at 31 August 2019 of £37.9m *Includes the impact of the transition to IFRS 16 Outlook We remain focussed in developing the underlying quality of our businesses and their long term value whilst simultaneously resolving the Group’s legacy matters as efficiently as possible. We remain confident of a satisfactory ultimate outcome for our shareholders. Full announcement via link below: [link]
In court today Why on earth S@G purchased anything from Quindell when it was being accused very publicly of major accounting issues is one of the great mysteries of the world. Fools and their money…
In court today Former Quindell to counter-sue in High Court fight MICHAEL BOW 23 hours ago A High Court battle between Watchstone Group and Slater & Gordon took a fresh twist todayon Thursday after Watchstone was granted permission to counter-sue. AIM-listed Watchstone — formerly known as scandal-hit Quindell — was served with a £637 million claim from Australian law firm Slater & Gordon in 2017 over a doomed takeover of its professional services arm. A judge said Watchstone could bring a counter-claim for up to £63 million for breach of confidence and unlawful means of conspiracy. Watchstone claims that investment bank Greenhill, Slater & Gordon’s adviser, established an “illicit back channel” with Watchstone’s adviser PwC in order to obtain information on Watchstone’s negotiating tactics. That led to Slater & Gordon having an “unfair advantage” in the negotiations and paying less than it would have done otherwise, Watchstone claims. “Watchstone informed the court that it had not been told by S&G… or anyone else about the back-channel… and was therefore unaware that its confidential information had been provided to Greenhill and S&G,” the company said. Slater & Gordon, Greenhill and PwC did not comment. Both claims will be heard together in October. S&G purchased the professional services arm of insurance to tech group Watchstone, then known as Quindell, in 2015 for £673 million after shareholders helped to fund the deal. Slaters was later forced into a A$880 million impairment and blamed the takeover. Shares tanked. They are now worth less than A$2, down from a peak of A$785 before the takeover. The company is pursuing Watchstone for breach of warranty and fraudulent misrepresentation over the sale of the division. The Serious Fraud Office launched an investigation into Quindell in 2015 which is still ongoing. Last year KPMG was fined £3.2 million for a botched audit of Quindell. Quindell rose between 2013 and 2014 to become worth more than £1 billion but an attack from short seller Gotham City Research raised questions over its accounting practices. The FCA suspended shares and opened a probe in 2015 before the SFO took over. [link]
RNS-Historic 29 August 2019 Watchstone Group plc Counterclaim filed against Slater & Gordon (UK) 1 Limited Further to its previous announcements on 14 June 2017 and 12 October 2017, Watchstone Group plc (LON:WTG) (“Watchstone”) announces that, following permission being granted by the High Court, it is today serving and filing an Amended Defence and Counterclaim in the High Court proceedings issued by Slater & Gordon (UK) 1 Limited (“S&G”). The counterclaim against S&G is currently for damages of at least £63m plus exemplary damages, interest and costs for breach of confidence, inducing breach of contract, and unlawful means conspiracy (“Counterclaim”). The Counterclaim arises from the recent discovery via third party disclosure of an illicit back channel that Greenhill & Co (“Greenhill”), a corporate finance adviser to S&G, procured during the period of due diligence and negotiation with Watchstone’s then group restructuring and technical accounting adviser, PricewaterhouseCoopers (“PwC”). Watchstone claims that at S&G’s behest and/or on its behalf and/or with its knowledge and authorisation and/or ratification, its agent Greenhill established a ‘back-channel’ with PwC, Watchstone’s trusted adviser by a series of secret meetings between representatives of Greenhill and PwC, at which it unlawfully obtained information pertaining to Watchstone’s wider group which was, and which it knew to be, confidential. S&G (and Greenhill on its behalf) then factored that information into its tactics and strategy for the negotiations with Watchstone leading to the acquisition of the Professional Services Division (“PSD”) which is the subject of these proceedings, thereby gaining an unfair advantage in those negotiations, which it exploited in order to purchase the PSD at a lower price than it would otherwise have had to pay. S&G thereby planned to, and did cause, Watchstone to suffer significant loss. Watchstone informed the Court that it had not been told by S&G (including in its disclosure and witness statements in these proceedings) or anyone else about the back-channel referred to above, and was therefore unaware that its confidential information had been provided to Greenhill and S&G until it received third party disclosure from Greenhill in these proceedings on 19 July 2019 almost three years after S&G’s claim was first threatened. At a one-day hearing on 28 August 2019 in the Commercial Court in London, S&G submitted that Watchstone should not be permitted to amend its Defence or to bring the Counterclaim. Mr Justice Bryan rejected S&G’s submission and found that Watchstone has a real prospect of success in respect of the proposed Counterclaim and other amendments such that permission to bring such claims within the existing proceedings should be given. The Judge also rejected S&G’s request that, even if the Counterclaim was permitted, it should be stayed pending the determination of the trial. The Judge ordered that Watchstone’s claims in relation to the back channel, including its Counterclaim, are to be heard at the same time as the trial of S&G’s claims starting on 21 October 2019. The Amended Defence and Counterclaim will be served and filed today. Once filed it will be available on written application to the Commercial Court, alternatively online at the HM Courts & Tribunals e-filing Service: HMCTS e-filing service at [link] subject to the payment of the prescribed fee. The claim number is CL-2017-000348, High Court of Justice, Queens Bench Division, Commercial Court. Watchstone will make further announcements in due course, as appropriate. [link]
RNS-Historic 31 July 2019 Watchstone Group Plc Appointment of Nominated Adviser and Broker Watchstone Group Plc (LON:WTG) announces that WH Ireland Limited has been appointed as Nominated Adviser and Broker to the Company with immediate effect. [link]
RNS-Historic 13 June 2019 Watchstone Group plc Proposed counterclaim by former Executive Chairman, Mr Robert Terry and others In the ongoing High Court proceedings brought by Watchstone against its former Executive Chairman, Mr Robert Terry and others, for breach of the share purchase agreement entered into by the Company with Mr Terry and others on 28 April 2011 in respect of the sale and purchase of shares in Watchstone Limited (“WL”) (the “SPA” and the “SPA Proceedings”), the Company has received an application by Mr Terry and the other defendants, seeking permission to bring a counterclaim for approximately £14.7m. The Company has obtained legal advice on the proposed counterclaim, and considers it to be without merit and lacking in credibility. Although the proposed counterclaim is materially lacking in detail, in essence it appears to be a claim in negligent misrepresentation arising out of a tax indemnity that Mr Terry says the Company’s subsidiary WL granted to him orally in 2011 (the “Oral Indemnity”). Mr Terry alleges that, in 2013, at and around the time when WL paid approximately £3.1m to Mr Terry (the then Chairman and Group Chief Executive) in respect of personal tax liabilities arising as a result of the disposal of shares in WL in 2011 pursuant to the Oral Indemnity, the Company expressly (and by conduct) made false representations that it would not challenge the validity of the Oral Indemnity and would not seek to recover any amount paid under the Oral Indemnity, including under the SPA. Mr Terry now says that, in reliance on these alleged representations, he did not seek to sell some 22.59% of his then shareholding in the Company between January and March 2013 (which, he says, would have yielded some £20m), and thereby suffered a loss of approximately £14.7m relative to the price for which he eventually sold his shares in the Company between November 2014 and January 2015 shortly after he left the Company. The Company’s solicitors have written to the defendants’ solicitors to identify deficiencies in the proposed counterclaim. If it is maintained (in its current form or otherwise) the Company intends to defend it vigorously and to continue with the SPA Proceedings. The release of this announcement has been authorised by Stefan Borson, Group Chief Executive Officer and Company Secretary of the Company. By way of background, on 16 November 2018, in separate proceedings, Mr Terry, and other connected parties including Mrs Terry, successfully established the existence of the Oral Indemnity and claimed £1.0m (plus the award of costs and interest) from WL in respect of further capital gains tax liabilities arising as a result of the disposal of shares in WL in 2011, and associated fees, pursuant to the Oral Indemnity. One issue in those proceedings was whether the Oral Indemnity was voidable as a substantial property transaction entered into without shareholder approval, contrary to section 190 of the Companies Act 2006. The High Court found that it was not susceptible to challenge on that ground, and on 18 February 2019, the Court of Appeal granted WL permission to appeal on that issue. The appeal is listed to be heard in November 2019. If the appeal is allowed, WL would be entitled to repayment of the sums paid under the Oral Indemnity (exceeding £4m in total). The Company's claim in the SPA Proceedings is a claim to recover amounts paid by WL under the Oral Indemnity, and is therefore contingent on the outcome of the appeal in the Oral Indemnity proceedings. [link]