The new directors of Watchstone (WTG) have the unenviable task of dismantling and rebuilding the jumble of businesses formerly known as Quindell. They regained some goodwill by returning £412m to investors after selling its professional services division. But lingering reputational issues and mixed trading saw an underlying cash loss of £16.1m.
Watchstone's main businesses are ptHealth, which owns and operates the third largest network of physical rehabilitation clinics in Canada; ingenie, an insurance telematics business targeting young drivers; and Hubio, which helps automotive and insurance groups to run more efficiently and engage with customers. It also owns UK energy brokerage BAS and Maine Finance, a life insurance broker. Losses widened in the healthcare and Hubio divisions, but ingenie swung to an underlying cash profit of about £0.5m.
These efforts could be paying off: underlying sales rose at least 4 per cent at both ptHealth and Hubio in the first quarter of 2016, and soared by more than a third at ingenie. Watchstone intends to strip out £13.5m in annualised losses from the business by the end of 2016, and hopes to return a further 100p a share to investors if £50m held in escrow is released in November.
Management's restructuring resulted in an impairment charge of £114m. Broker Peel Hunt expects an adjusted pre-tax loss of £16.7m in 2016, giving a loss per share of 36.8p (from losses of £22.5m and 40.4p in 2015).
| WATCHSTONE (WTG.L) | ||||
|---|---|---|---|---|
| ORD PRICE: | 235p | MARKET VALUE: | £108m | |
| TOUCH: | 235-238p | 12-MONTH HIGH: | 354p | LOW: 54p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 298p* | NET CASH: | £103m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 61.0 | -9 | -2 | 0.1 |
| 2014 (restated) | 60.1 | -205 | -879 | nil |
| 2015 | 58.8 | -178 | 609 | nil |
| % change | -2 | - | - | - |
Ex-div:- Payment:- *Includes intangible assets of £35.9m, or 78p a share | ||||
