Watchstone Group plc
("Watchstone" or the "Company" or the "Group")
Preliminary results for the
year ended 31 December 2023
Watchstone Group plc (WTG.L) today
announces its results for the year ended 31 December
2023.
·
Total loss after tax £7.1m (2022:
£nil).
·
Group operating loss of £7.4m (2022: Loss of
£0.2m).
·
Group net assets of £6.5m representing
approximately 14 pence per share (2022: 29 pence per
share).
·
Group cash and term deposits at 31 December 2023
of £7.3m (31 December 2022: £13.8m).
·
Group cash and term deposits at 31 March 2024 of
£6.5m.
The Annual Report and Accounts for
the year ended 31 December 2023 will be released in due course and
posted (where applicable) to registered shareholders. Once
published, the Annual Report and Accounts will be available
at www.watchstonegroup.com/investors.
The 2024 Annual General Meeting
("AGM") will be held on 29 May 2024 at 10.00am in London. At the
AGM the Company will propose a reduction of the share premium
account and a subsequent return of cash of approximately 8p per
share to shareholders.
The Notice of the AGM will be
published on the Company's website
at https://www.watchstonegroup.com/investors/shareholder-information/.
For further information:
|
Watchstone Group plc
investor.relations@watchstonegroup.com
|
Tel: 03333
448048
|
|
WH
Ireland Limited, Financial Adviser and Broker
Antonio Bossi / James
Bavister
|
Tel:
020 7220 1666
|
Chairman and CEO's Report
During 2023, the Group concluded
action in relation to two of the three litigation assets which were
outstanding at the start of the year.
The claim against
PricewaterhouseCoopers LLP ("PwC") was heard in the early part of
the year and disappointingly the court found in favour of the
defendant with leave to appeal refused.
In November 2023, the Upper Tier Tax
Tribunal ("UTT") heard our appeal against the decision of the First
Tier Tax Tribunal in respect of our claim against HMRC.
Subsequent to the year end, in March 2024, the Group was informed
of the decision of the UTT which found in favour of HMRC. The
Group has been granted permission to appeal the decision of the UTT
to the Court of Appeal.
Finally in December 2023, a
settlement in favour of the Group was reached with Aviva Canada Inc
("Aviva Canada"). Whilst the settlement was at a lower level than
previously hoped, given the litigation risk and the position of the
Group in respect of other matters, it was considered the best
commercial outcome available.
Following the conclusion of the PwC
trial, costs were further rationalised, with the Board being
reduced to a single executive and a single non-executive officer
with no other employees being retained.
2024 outlook
​We now look
to conclude the final litigation asset and return the assets of the
Group to shareholders in due course. We would like to thank our
shareholders for their support during 2023 and patience whilst we
work to realise maximum value from our remaining assets.
|
Richard Rose
Non-executive
Chairman
|
Stefan
Borson
Chief Executive
Officer
|
Consolidated Income Statement
for the year ended 31 December
2023
|
|
|
2023
|
2022
|
|
|
|
Total
|
Total
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Other
income
|
|
178
|
4,950
|
|
Administrative expenses
|
|
(7,544)
|
(5,101)
|
|
|
|
|
|
|
Group operating
loss
|
|
(7,366)
|
(151)
|
|
|
|
|
|
|
Finance
income
|
|
305
|
111
|
|
Finance expense
|
|
(19)
|
-
|
|
|
|
|
|
|
Loss before
taxation
|
|
(7,080)
|
(40)
|
|
Taxation
|
|
-
|
-
|
|
|
|
|
|
|
Loss after taxation for the
year from continuing operations
|
|
(7,080)
|
(40)
|
|
(Loss)/profit for the year from
discontinued operations, net of taxation
|
|
(28)
|
77
|
|
|
|
|
|
|
(Loss)/profit after taxation
for the year
|
|
(7,108)
|
37
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity holders of the
parent
|
|
(7,108)
|
37
|
|
Non-controlling interests
|
|
-
|
-
|
|
|
|
|
|
|
|
|
(7,108)
|
37
|
|
(Loss)/earnings per share (pence):
|
|
|
|
|
Basic
|
|
(15.4)
|
0.1
|
|
Diluted
|
|
(15.4)
|
0.1
|
|
Loss per share from continuing
operations (pence):
|
|
|
|
|
Basic
|
|
(15.4)
|
(0.1)
|
|
Diluted
|
|
(15.4)
|
(0.1)
|
Consolidated Statement of Comprehensive
Income
for the year ended 31 December
2023
|
|
2023
|
2022
|
|
|
£'000
|
£'000
|
|
|
|
|
|
(Loss)/profit after taxation
|
(7,108)
|
37
|
|
|
|
|
|
Items that may be
reclassified in the Consolidated Income Statement
|
|
|
|
Exchange
differences on translation of foreign operations
|
16
|
(15)
|
|
|
|
|
|
Total comprehensive (loss)/income for the
year
|
(7,092)
|
22
|
|
Attributable to:
|
|
|
|
Equity holders of the
parent
|
(7,092)
|
22
|
|
Non-controlling interest
|
-
|
-
|
|
|
|
|
|
|
(7,092)
|
22
|
Consolidated Statement of Financial
Position
as at 31 December 2023
|
|
|
2023
|
2022
|
|
|
|
£'000
|
£'000
|
|
Current assets
|
|
|
|
|
Trade and other
receivables
|
|
119
|
1,711
|
|
Term deposits
|
|
6,000
|
12,000
|
|
Cash
|
|
1,343
|
1,768
|
|
|
|
|
|
|
Total current assets
|
|
7,462
|
15,479
|
|
|
|
|
|
|
Total assets
|
|
7,462
|
15,479
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
|
(807)
|
(1,803)
|
|
Provisions
|
|
(200)
|
(129)
|
|
|
|
|
|
|
Total current liabilities
|
|
(1,007)
|
(1,932)
|
|
|
|
|
|
|
Total liabilities
|
|
(1,007)
|
(1,923)
|
|
|
|
|
|
|
Net
assets
|
|
6,455
|
13,547
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Share capital
|
|
4,604
|
4,604
|
|
Other reserves
|
|
69,735
|
69,719
|
|
Retained earnings
|
|
(67,885)
|
(60,777)
|
|
|
|
|
|
|
Equity attributable to equity holders of the
parent
|
|
6,454
|
13,546
|
|
Non-controlling interests
|
|
1
|
1
|
|
|
|
|
|
|
Total equity
|
|
6,455
|
13,547
|
Consolidated Cash Flow
Statement
for the year ended 31 December
2023
|
|
|
2023
|
2022
|
|
|
|
£'000
|
£'000
|
|
Cash flows from operating activities
|
|
|
|
|
Cash generated from/(used by)
operations, net finance expense and tax
|
|
(6,657)
|
683
|
|
|
|
|
|
|
Net
cash generated from/(used by) operating
activities
|
|
(6,657)
|
683
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
Investment in term
deposits
|
|
(14,000)
|
(26,000)
|
|
Maturity of term deposits
|
|
20,000
|
14,000
|
|
Interest income
|
|
240
|
86
|
|
|
|
|
|
|
Net
cash generated from/(used by) investing
activities
|
|
6,240
|
(11,914)
|
|
|
|
|
|
|
|
|
|
|
|
Net
decrease in cash and cash equivalents
|
|
(417)
|
(11,231)
|
|
Cash and cash equivalents at the beginning of the
year
|
|
1,768
|
12,996
|
|
Exchange (losses)/gains on cash and cash
equivalents
|
|
(8)
|
3
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the
year
|
|
1,343
|
1,768
|
The above Consolidated Cash Flow
Statement includes cash flows from both continuing and discontinued
operations.
Notes:
1. Results
announcement
The Financial Statements for the year
ended 31 December 2023 have been prepared in accordance with UK
adopted international accounting standards in conformity with the
requirements of the Companies Act 2006. However, this
announcement does not contain sufficient information to comply with
adopted IFRS. The Group will publish its Annual Report and
Financial Statements in due course and these will appear on the
Group's website at www.watchstonegroup.com and
be posted to shareholders. The auditors have reported on those
accounts; their report was (i) unqualified; and (ii) did not
contain a statement under Section 498 (2) or (3) of the Companies
Act 2006. The financial information set out in this announcement
does not constitute the Group's statutory accounts for the year
ended 31 December 2023. Statutory accounts for the year ended 31
December 2022 have been delivered to the Registrar of Companies and
those for the year ended 31 December 2023 will be delivered by 30
June 2024. This preliminary announcement was approved by the Board
of Directors on 23 April 2024 and these preliminary results have
been extracted from the audited results for the year ended 31
December 2023.
2.
Administrative
expenses
|
Year ended 31 December
|
2023
|
2022
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Administrative expenses
include:
|
|
|
|
-
Legal expenses
|
2,610
|
2,139
|
|
-
Settlement of defendants' legal fees
|
2,677
|
-
|
|
-
Provisions in respect of legal fees
|
71
|
-
|
|
|
|
|
|
|
5,358
|
2,139
|
Legal fees incurred during 2023
primarily relate to the litigation undertaken by the Company
against PwC and Aviva Canada. Legal fees incurred during 2022
also included fees in relation to the litigation against KPMG, both
now concluded. During 2023, the court found in favour of
PwC.
Since the Group is (or was) the
Claimant, no provisions are made in respect of the costs of such
actions since the Group is (or was) not obliged to continue to
pursue them.
Following a hearing in November 2023,
in March 2024, Watchstone was informed of the decision of the Upper
Tax Tribunal which found in favour of HMRC. Accordingly, the
appeal was dismissed and the Group has provided for an estimate of
the costs incurred by HMRC. The Group has been granted
permission to appeal the decision of the UTT to the Court of
Appeal.
3.
Provisions
|
|
|
|
|
|
Legal
disputes
|
|
|
|
|
|
|
£'000
|
|
At 1 January 2022
|
|
|
|
|
129
|
|
|
|
|
|
|
|
|
At
1 January 2023
|
|
|
|
|
129
|
|
|
|
|
|
|
|
|
Additional provisions
|
|
|
|
|
71
|
|
At
31 December 2023
|
|
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Split:
|
Non-current
|
|
|
|
|
-
|
|
Current
|
|
|
|
|
200
|
|
|
|
|
|
|
|
Legal disputes and regulatory matters
Following a hearing held in December
2021, on 12 April 2022, Watchstone was informed of the decision of
the First Tier Tribunal which found in favour of HMRC and that the
Group had not made any supplies of telematics devices or related
services in the VAT periods 07/2014 to 07/2018. Accordingly, the
appeal was dismissed and the Group has provided for the costs
incurred by HMRC. An appeal with the Upper Tax Tribunal was heard
in November 2023. In March 2024, Watchstone was informed of the
decision of the Upper Tax Tribunal which found in favour of
HMRC. Accordingly, the appeal was dismissed and the Group has
additionally provided for an estimate of the costs incurred by HMRC
at the Upper Tax Tribunal. The Group has been granted
permission to appeal the decision of the UTT to the Court of
Appeal.
This represents the entirety of the
provisions held by the Group at 31 December 2022 and 31 December
2023.
4.
Contingent assets and liabilities
The Company routinely enters into a
range of contractual arrangements in the ordinary course of events
which can give rise to claims or potential litigation against Group
companies. It is the Company's policy to make specific
provisions at the Statement of Financial Position date for all
liabilities which, in the opinion of the Directors, are expected to
result in a significant loss.