Watchstone Group PLC Disposal (1805R)

TIDMWTG

RNS Number : 1805R

Watchstone Group PLC

07 March 2016

7 March 2016

Watchstone Group plc

("Watchstone" or the "Company" or the "Group")

Disposal/Related Party Transaction

Watchstone (LON:WTG) announces that as part of its continuing programme of actions to strategically focus the Group on key growth areas, it has entered into an agreement to dispose of the entire issued share capital of Quintica Holdings Limited ("Quintica"), a reseller and integrator of software to the telecoms industries, to Quintica International Holdings Inc ("QIH") (a company owned by Charles Osburn, a statutory director of Quintica) for approximately GBP1.35 million (the "Agreement"). In addition, Watchstone will be entitled to additional consideration in the event that Quintica is disposed of (in whole or part) by QIH in the year following completion of the transaction.

For the year ended 31 December 2015, Quintica recorded an unaudited loss before tax of approximately GBP1.9 million (2014: GBP2.1 million loss).

Following a review of the business by the Board, it was concluded that Quintica was non core, as it does not fit with the Group's current strategy and focus and due to its historical performance and associated cash funding requirements. Against that backdrop, the Board believes a disposal is in the best interest of the Group.

Under the Agreement, the Group will receive GBP1 million cash (GBP500,000 payable immediately and GBP500,000 due by 1 January 2017), plus the repayment of intra-company debt of US$500,000 (approximately GBP350,000).

The Agreement is a related party transaction pursuant to the AIM Rules for Companies as Charles Osburn is a director of Quintica.

The Board considers, 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.

When Quintica was acquired in September 2012, the consideration was largely satisfied in Ordinary Shares in the Company, giving rise to goodwill of GBP5.9 million. The Group is expected to recognise an overall loss on the disposal of Quintica of approximately GBP5.7 million for the year ended 31 December 2015, due to goodwill impairment. This impairment would have been recognised irrespective of the disposal.

For further information:

 
 Watchstone Group plc                     Tel: 01489 
                                             864 200 
---------------------------------------  ----------- 
 Tulchan Communications                     Tel: 020 
  Susanna Voyle, Charlotte Church          7353 4200 
---------------------------------------  ----------- 
 Peel Hunt LLP, Nominated Adviser and       Tel: 020 
  broker                                   7418 8900 
  Dan Webster, Adrian Trimmings, George 
  Sellar 
---------------------------------------  -----------

This information is provided by RNS

The company news service from the London Stock Exchange

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March 07, 2016 02:00 ET (07:00 GMT)

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