Insurance firm Watchstone Group is to spin off its property maintenance and renewables businesses citing market uncertainty created by government cuts.
Watchstone subsidiary Brand Extension has disposed of its B.E. Insulated (BEI) and Carbon Reduction Company (CRC) businesses for a nominal fee of £1 to BE Smart Group, a new entity owned by current BEI and CRC director Ben Williams.
In a statement issued to the market this morning, Watchstone said the sale reflected “on-going cash losses and investment requirements” of the two businesses and added that the decision had been taken with the jobs of 62 employees in mind.
While BEI acts predominantly as an insulation supplier and installer, CRC offers property maintenance services including the installation of rooftop solar panels. Watchstone said the performance of the two businesses had been “below expectations” and specifically attributed this to “recent unforeseeable changes to the market”.
“The businesses operate in markets where unexpected changes to government legislation in the funding of green, solar and other initiatives have substantially impacted trading and, in the view of the board, the likely ongoing performance and prospects of the business,” the statement read.
The company said that both businesses would benefit from a more “appropriate ownership structure” and Watchstone expects to save between £1.5 million and £2 million per year in running costs.
“The strong focus on quickly addressing losses is central to our work and we've been making good progress overall. We've acted with integrity and speed to realise significant cost savings, while removing liabilities and enabling us to continue with further work on the transformation of Watchstone,” Indro Mukerjee, chief executive officer at Watchstone, said.
Following the announcement shares in Watchstone rose by more than 7% in early morning trading, arresting a slump that had begun at the start of the week.
Watchstone is not the first company to turn its back on the UK’s clean energy market in the wake of government cuts. After the government confirmed plans to trim the feed-in tariff last August, SunEdison sold its UK installer business Mark Group back to its former directors just months after originally purchasing it, prompting the redundancy of more than 1,000 employees.