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Watchstone Group PLC on Tuesday reported a widened half-year loss as administrative expenses climbed, and provided updates on three legal claims against other companies.
Pretax loss in the half-year to June 30 increased to £2.0 million from £1.8 million a year prior. Administrate expenses widened to £2.1 million from £1.8 million. Finance income grew to £90,000 from £16,000.
Watchstone is a cash shell with remaining assets comprising litigation assets, contingent liabilities and cash.
Regarding its outlook, the Hampshire-based firm said: ‘We remain focussed on realising the group's remaining litigation assets as efficiently as possible and are confident of returning further cash sums to shareholders in due course.’
It expects its trial regarding its claim against professional services firm PricewaterhouseCoopers LLP to begin in January 2023. Watchstone is asking for £63.0 million in damage compensation plus interests and costs.
Meanwhile, the trial regarding its claim against its former auditor KPMG International Ltd is not expected to begin before 2024. Its Canadian subsidiary's claim against Aviva Canada is expected to go on trial in January 2024.
In 2021, Watchstone filed a £13.7 million claim against KPMG for its audit. The claim relates to an unqualified audit report in respect of the 2013 audit made by KPMG and a subsequent £4.5 million fine made by the Financial Reporting Council after an investigation by the watchdog. Watchstone said it suffered a loss in the sum of £13.7 million which it claims in damages from KPMG for its alleged failings.
In 2020, Watchstone filed a £63 million claim against PwC for breach of contract and conspiracy. It said the claim arose from an unauthorised and illicit channel of communication between PwC - its former restructuring and technical accounting adviser - and Greenhill & Co, a corporate finance adviser to Slater & Gordon UK 1 Ltd. It is alleging that PwC unlawfully disclosed to Greenhill information pertaining to Watchstone which was confidential.
In 2017, Watchstone said its Hubio Solutions business filed a claim against Aviva Canada in respect of funds due from a contract signed in October 2014. Watchstone also said Aviva Canada has filed a claim against Hubio and Ingenie (Canada), another Watchstone subsidiary, regarding the agreement.
Watchstone shares were quoted at 28.5 pence each, untraded in London on Tuesday morning.
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