Worth a repeat considering yesterday's events....

Worth a repeat considering yesterday's events.

http://www.watchstonegroup.com/wp-content/uploads/2017/04/Accounts-RNS-27-April-F.pdf

Update on legacy matters It is well recognised that we have continued to deal with a substantial number of legacy matters.

Whilst we successfully resolved a number of historic matters in the year (and since year end), in September 2016, Slater & Gordon (“S&G”) notified us of a purported claim in respect of its acquisition of our Professional Service Division (“PSD”) which completed in May 2015. In November 2016, S&G obtained an opinion from an independent barrister in respect of the warranty escrow that based solely on the information presented to him (and on the assumption that no further evidence would be provided) that the purported claim has on balance a prospect of success and that, if successful, such claim would be likely to have a value of £53.0m (“Opinion”). Accordingly, £50.1m (including interest) is retained in the warranty escrow account until the purported claim is resolved (“Warranty Escrow”). Whilst Watchstone’s view as to the lack of merits of the purported claim has not changed, on the basis of the Opinion, we consider it appropriate that a provision for impairment be established in respect of the Warranty Escrow and have determined that the appropriate amount should be to fully impair the Warranty Escrow. This reflects the inherent uncertainty in valuation of the purported claim and is in no way a reflection of the Group’s view on ultimate resolution, which is uncertain in both time and quantum (if any). As yet no proceedings have been brought and the Group will defend such claim robustly if commenced. We remain in active dialogue with S&G on a number of other matters including the performance of the noise induced hearing loss (“NIHL”) cases to which deferred consideration is due when, and if, such cases are profitable. To date, no deferred consideration has been paid.

The SFO investigation which was launched in August 2015 into historic matters remains on-going and we continue to co-operate fully with it. It remains the only regulatory enquiry to which the Company is subject. We will continue our efforts to resolve these matters and will do so with a priority and focus on protecting shareholder interests.

I think it is now clear that we were right that a number of other matters indeed involved alleged misrepresentation by Watchstone (sorry Walking Eagle you were wrong).

Yesterday's announcement could in my opinion be worth:
- 100mill Pound cash reserves from Watchstone
- 50mil Pound escrow
- 150mil Pound NIHL (ie we take it all).

The future looks quite interesting for us longs