Watchstone Group PLC - Disposal London Stock Exchange
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 £1.35 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 £1.9 million (2014: £2.1 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 £1 million cash (£500,000 payable immediately and £500,000 due by 1 January 2017), plus the repayment of intra-company debt of US$500,000 (approximately £350,000).

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 £5.9 million. The Group is expected to recognise an overall loss on the disposal of Quintica of approximately £5.7 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      

Susanna Voyle, Charlotte Church

 

Tel: 020 7353 4200

Peel Hunt LLP, Nominated Adviser and broker

Dan Webster, Adrian Trimmings, George Sellar

Tel: 020 7418 8900

 


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