Improved first-half trading at Watchstone (WTG) was overshadowed by news of yet another headache for the rebranded Quindell. Slater & Gordon, which purchased its professional services division for around £645m in 2015, has notified the company that it intends to bring claims arising from the deal. This could affect £50m of the purchase price, currently held in escrow and which Watchstone expected to receive at the end of November.
Higher revenues across Watchstone's three main businesses, combined with the closure and sale of several unprofitable businesses, reduced the group's underlying operating loss by 41 per cent to £8.1m. Strong demand for physiotherapy in its Canadian clinics meant ptHealth swung to an underlying cash profit of £0.4m. Management also spun off Innocare, which provides cloud-based clinic management and outsourcing software to the North American healthcare market. Meanwhile, cost reductions at insurance and automotive software arm Hubio cut its underlying cash loss by more than 45 per cent to £3.6m. And Ingenie's gross written premiums leapt a quarter, helping the insurance telematics specialist rally to an underlying cash profit of £0.8m.
Broker Peel Hunt expects an adjusted pre-tax loss of £16.6m this calendar year, giving a loss per share of 36.2p, compared with losses of £22.6m and 40.4p in 2015.
| WATCHSTONE (WTG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 185p | MARKET VALUE: | £85m | |
| TOUCH: | 180-185p | 12-MONTH HIGH: | 354p | LOW: 67p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 284p* | NET CASH: | £93.8m** | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 29.1 | -32.3 | -66.9 | nil |
| 2016 | 31.9 | -8.2 | -17.3 | nil |
| % change | +10 | - | - | - |
*Includes intangible assets of £36.5m, or 80p a share **Excludes cash of £50m held in escrow | ||||
