Watchstone Group PLC Disposal (2193L)
January 08 2016 - 2:00AM
UK Regulatory
TIDMWTG
RNS Number : 2193L
Watchstone Group PLC
08 January 2016
8 January 2016
Watchstone Group plc
("Watchstone" or the "Company" or the "Group"))
Disposal/Related Party Transaction
Watchstone (LON:WTG) announces that as part of a programme of
actions to strategically focus the Group on its key growth areas,
it has disposed of the Group's property and maintenance services
businesses. The Company's subsidiary Brand Extension (UK) Limited
("BEL") has entered into an agreement to dispose of the entire
issued share capital of B.E. Insulated (UK) Limited ("BEI") and
Carbon Reduction Company (UK) Limited ("CRC") for a nominal
consideration of GBP1 to The BE Smart Group Limited (a company
owned by Ben Williams, a statutory director of BEI and CRC)
("Agreement"). Following the completion of this Agreement, the
Group will cease to operate directly in the property and
maintenance services sector.
BEI is predominantly a property insulation supply and
installation business and CRC is a provider of property maintenance
services. Since acquisition, the performance of both BEI and CRC
has been below expectations due to recent unforeseeable changes to
the market and, as a result, have been loss making. The businesses
operate in markets where unexpected changes to government
legislation in the funding of green, solar and other initiatives
have substantially impacted trading and, in the view of the Board,
the likely ongoing performance and prospects of the businesses.
The terms of the Agreement reflect the on-going cash losses and
investment requirements of BEI and CRC. In deciding to dispose of
these businesses for nominal consideration over closing them, the
Directors were mindful, in particular, of BEI and CRC's 62
employees, its creditors and other liabilities.
The Board believes that the disposal will save the Company
between GBP1.5 million to GBP2.0 million on an annualised basis.
For BEI and CRC and their staff, it will allow the businesses to
operate under a more appropriate ownership structure.
Taking all these factors into account, the Directors have
concluded that the disposal is in the best interests of all
stakeholders.
The Agreement is a related party transaction pursuant to the AIM
Rules for Companies as Ben Williams is a director of BEI and
CRC.
For the period ended 30 September 2014, the profits of BEI and
CRC were approximately GBP1 million. BEL acquired the 50% of the
issued share capital it did not own in BEI and the entire issued
share capital of CRC from Ben Williams in March 2015.
The Directors consider, having consulted with the Company's
nominated adviser, Peel Hunt LLP, that the terms of the Agreement
are fair and reasonable insofar as the Company's shareholders are
concerned. The Agreement does not impact the historic warranties
and indemnities given by Ben Williams in March 2015 in respect of
the acquisition of 50% of BEI and the entire share capital of
CRC.
The Group is expected to recognise an overall loss on disposal
of approximately GBP4.2 million for the year ended 31 December
2015, some GBP4.3 million of this will comprise goodwill which has
already been impaired in the first half of 2015 with the balance of
approximately GBP0.1 million representing a small net profit on
disposal of the remaining net assets disposed of.
Indro Mukerjee, Group Chief Executive Officer, said: "The strong
focus on quickly addressing losses is central to our work and we've
been making good progress overall. We've acted with integrity and
speed to realise significant cost savings, while removing
liabilities and enabling us to continue with the further work on
the transformation of Watchstone"
For further information:
Watchstone Group plc Tel: 01489 864
200
Indro Mukerjee, Group Chief
Executive Officer
Stephen Joseph, Head of Investor
Relations
Tulchan Communications Tel: 020 7353 4200
Susanna Voyle
Charlotte Church
Peel Hunt LLP, Nominated Adviser Tel: 020 7418 8900
and broker
Dan Webster
George Sellar
This information is provided by RNS
The company news service from the London Stock Exchange
END
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