Watchstone sees 'no grounds' for Slater & Gordon legal claim

Watchstone Group said it will "robustly" contest a claim brought against it by Slater & Gordon (SGH) over the purchase of its professional services business last year from what was then known as Quindell.

With the Australian lawfirm's claim pending, part or all of a £50m staged payment for the acquisition that is being held in escrow will be withheld from Watchstone if the claim cannot be resolved before 29 November.

An independent barrister's assessment will be made to determine the value of a potentially successful SHG claim against Watchstone, and this amount would then be retained in the escrow account until the claim is resolved.

Having received notice from SGH of a purported claim on Monday, Watchstone said it "does not believe that there are grounds for a claim to be brought and will defend it robustly".

The company added that as it had "conducted a professional and transparent disposal process of the Professional Services Division assisted and advised by leading specialists" and adding that it "allowed SGH the opportunity to complete an extensive and detailed due diligence process with the assistance and advice of a similarly specialist team".

Since completing the deal, Quindell was investigated by the UK’s Serious Fraud Office over its accounting practices, before it changed its name and celebrated the timing of the deal as the UK government revealed plans to clamp down on personal injury claims.

Sydney-listed SGH recorded impairments of almost $880m in the year to end-June that was mostly booked against the Quindell acquisition.

Watchstone, which has since looked to focus on providing technology outsourcing services to the insurance, automotive and healthcare industries, announced that it underlying interim loss per share was only around half that reported on Friday: 15.9p on a basic and diluted basis rather than the 31.9p loss reported.

The loss per share from continuing activities was 17.3p on a basic and diluted basis rather than 34.9p, and that the equivalent figure for the previous year was 66.9p rather than 133.1p.

For the previous year, total earnings per share were 921.9p on a basic and diluted basis rather than 1,832.5p.