27 May 2016 Watchstone Group plc ("Watchstone" or the "Company"...

27 May 2016

Watchstone Group plc
("Watchstone" or the "Company" or the "Group")
Results for the year ended 31 December 2015
Watchstone (AIM:WTG.L) today announces its results for the year ended 31 December 2015, a period of radical change for the Group.

Financial summary:
· Underlying* business revenues steady at £58.3m (2014: £56.5m)
· Underlying EBITDA loss of £16.1m (2014: loss of £16.8m)
· Disposal of the Professional Services Division generated a profit of £494.3m
· Impairment of goodwill and other intangible and non-cash assets - total charge of £113.5m (2014: £129.1m). Further details of the impairments can be found in notes 6 and 7 to the financial information in this announcement
· Total profit after tax £274.9m (2014: loss of £374.5m)
· Group net assets (excluding contingent liabilities) of £137.1m representing approximately 297 pence per share following capital return of £411.9m
· Group cash at 31 December 2015 of £103.2m including £97.6m in the Company. Group cash of £93.1m (unaudited) as at 20 May 2016 including cash in the Company of £86.9m (unaudited) with a further £50.0m (unaudited) in escrow.
* Underlying includes ptHealth, Hubio, Ingenie, BAS, Maine Finance and Central

Operational highlights:

· Disposal of the Professional Services Division for £645m plus deferred contingent consideration completed in May 2015
· Court approved capital return of 90 pence per ordinary share completed in December 2015
· New Group CEO and Board in place which has brought stability and started to rebuild investor confidence
· Substantial work completed and on-going to simplify the Group, reduce the Group's losses and build the platform to deliver the best possible shareholder value from all the Group's operational and other assets
· Clear strategy and plan for all Group businesses - energetically pursuing opportunities and robustly dealing with challenges

Current trading (unaudited):

· Overall trading is in line with expectations with some good momentum in ptHealth, ingenie and BAS
· ptHealth has had a solid start to the year
o  Unaudited revenue of £6.6m in Q1 2016 (an increase of 4.4% vs. Q1 2015 (excluding exchange rate fluctuations) from a reduced number of clinics)
o  Average revenue per clinic up 12% in Q1 2016 compared to the same period in 2015
o  Assessment and treatment numbers have increased by 11% and 7% respectively during the same period
o  Launch of InnoCare as a spin out of ptHealth
· ingenie performing strongly in Q1 2016
o  Gross Written Premium up 23% to £20.7m in Q1 2016 (Q1 2015: £16.8m)
o  Policies written up 19% to 10,706 in Q1 2016 (Q1 2015: 8,985)
o  Approximately 39,700 policies in force at 31 March 2016 (31 March 2015: 34,515)
· Hubio stable but historic growth expectations proven to be unrealistic- business being reshaped in line with market opportunities
o  Unaudited Q1 2016 revenue of £4.3m (Q1 2015: £4.1m)
o  Active devices as at 30 April 2016 was 38,631, 77% more than at 30 April 2015 this was largely recovering from technical issues with a large customer in the US
· BAS is now cash generative whilst work continues to improve Maine Finance and quotesupermarket.com
o Unaudited BAS revenues for Q1 2016 of £0.8m, an increase of 21% on the same period in 2015 and the business is now cash generative
o  Unaudited Q1 2016 total revenue for Maine Finance and quotesupermarket.com was £0.4m (Q1 2015: £0.5m)

Indro Mukerjee, Group Chief Executive Officer said: "Even taking the legacy, non-operational matters to one side, the Group I joined in September 2015 was disproportionately complex and needed operational improvement. At the same time, I have found a number of good examples of advanced technology capabilities; capable people; and healthy market positions across our operating companies. I believe we have made strong progress towards our key objectives in the last three quarters and there is demonstrable momentum in our ptHealth/InnoCare, ingenie and BAS businesses with a strong determination to continue to set Hubio and Maine Finance/QSM on paths to maximise their potential."
Richard Rose, Non-executive Chairman said: "I am very pleased with the significant progress the Group has made over the course of the last twelve months. The new Board has successfully refocused the Group's strategic priorities while drawing a line under the past by working tirelessly to deliver the highest standards of corporate governance. The sale of our legal services business and the significant return of value to investors marked the start of rebuilding shareholder confidence and we are confident of continuing to deliver value. Watchstone now has solid foundations on which to build further and the Board and the management team are committed to maximising the potential of the remaining businesses."
The Annual Report and Accounts for the year ended 31 December 2015, Notice of the Annual General Meeting ("AGM") and a Form of Proxy will be posted to registered shareholders.
The AGM is to be held at 10.00am on 30 June 2016 at Plaza Suites 1 - 3, 200 Westminster Bridge Road, London SE1 7UT. Following the AGM, there will be a product demonstration and showcase from the Group's companies.
These results have been extracted from the Annual Report and Accounts for the year ended 31 December 2015, a full version of which is available at www.watchstonegroup.com/investors.

WTG - Interesting  article by H Mann.:-
But there was "radical" change in 2015, and the company was the target of a second failed bid last month. But with the shares range-bound, investors need something more concrete to back new management with fresh cash.
Watchstone says it has a "clear strategy and plan for all group businesses", and claims it is "energetically pursuing opportunities and robustly dealing with challenges". But it still made a pre-tax loss of £178 million in 2015, admittedly down from £205 million the year before, and took £113 million of impairments, including a big chunk of goodwill.
Fighting to stem the tide of losses, the new company has found annual cost savings of £7.6 million so far. It should be £13.5 million by the end of 2016, says Watchstone.
Revenue slipped 2% to £58.8 million in the 12 months to 31 December and underlying operating profit fell to £16.1 million. After tax, profit swung from a £375 million loss last year to a £275 million profit, flattered by a £494 million profit on the sale of its Professional Services Division (PSD).
Watchstone shares have traded sideways since February. Even a bid in April, believed to be the second by City financier Edi Truell, who owns insurance technology firm Tantalum, failed to make any lasting impression.
The shares are up over 4% Friday, however, and with the SFO still investigating Quindell's past accounting practices, this is a much clearer financial statement than long-term investors have been used to.

Ravaged by a series of accounting scandals, Quindell ousted its founder and boss Rob Terry in November 2014. Instead of quickly parachuting in a new boss to lead the group's recovery, Watchstone took 10 months to position new chief executive Indro Mukerjee at the helm. Decked with a new board, Mukerjee has overseen the businesses overhaul by streamlining the group, reducing losses and rebuilding its core offering.
The process started with its transformational sale of PSD to Australian law firm Slater & Gordon for £645 million. Shareholders received £412 million (90p per share) following the disposal, which leaves its net assets valued at £137 million, or 297p per share.
Watchstone now offers technology solutions to the insurance, automotive and healthcare industries. Hubio serves those in the insurance and automotive sectors, ptHealth and InnoCare work in the Healthcare industry. ingenie, Maine Finance and Business Advisory Service are brokers for the insurance and energy sectors.
"A great deal has been done in a relatively short space of time to turn the tide, and the board is confident in the company's future and the potential of our businesses," says chairman Richard Rose.
The new financial year has started well, with its ptHealth, ingenie and BAS businesses maintaining momentum. First-quarter revenue rose 4.4% to £6.6 million at ptHealth, which runs the third-largest physiotherapy and rehabilitation clinic network in Canada.
Ingenie's gross written premium is up 23% at £20.7 million and BAS is now cash generative, with a 21% increase in sales to £0.8 million.