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Watchstone (LON:WTG) reported last Thursday. My initial attitude was to let this one go by. But there is clearly great interest and I therefore offer the following remarks:
NAV of £63 million should, I think, be reduced by £20 million for intangibles (some will disagree) and there are continuing losses at the operating subsidiaries. Where these lead to I have no idea, but it is probably worth allowing for a further write down of £10 million. This leaves TNAV of, say, £33 million. My bet is that all the money held in escrow – £50 million – will also be liberated since I cannot believe that WTG failed adequately to inform Slater and Gordon of all material points relating to the disposal of the Professional Services Division.
I may regret this, but the S&G action looks to be a lawyers’ confection.
If I am right on all this, fair value for WTG is c. £1.85.
What a load of mush! About 90 years ago it was ruled at the highest level that no man is under the slightest obligation to pay a penny more tax than he owes. Further, the tax avoidance industry in this country is a direct consequence of insane taxation measures – I remember the late ‘seventies when income tax was levied at the highest rate at 83% and, for those who could not be bothered, 98%. Taking avoidance advice was essential.
Moving swiftly along, I also recall Osborne condemning “aggressive” taxation avoidance. What on earth does this drivel mean? Osborne came up with this phrasing since he wanted to hint to the people that he was on their side whilst accepting that people just would go on taking advice.
Anyway, amongst business people the message is clear: do not use your brains and you get a knighthood. Use your brains and…..
(David Beckham does not assist his case by pondering aloud as to why he hasn’t got a knighthood. This is a different idea.)