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Watermark Group PLC (IM31)


Friday 21 September, 2007

Watermark Group PLC

Trading Statement

Watermark Group PLC
21 September 2007

Embargoed for release: 7.00am, 21 September 2007

                              Watermark Group Plc
                         ('Watermark' or 'the Company')

                               Trading Statement

In its statement of 29 June, the Board set out its key objectives for the
business, being:

   • restoring underlying profitability
   • resuming growth; and
   • focusing on cash management.

The immediate focus is on stabilising the business and restoring underlying
profitability. The Board also announced that the new management team would
undertake a comprehensive review of the group's financial performance and

Considerable progress has been made to stabilise the business by establishing
clear organisational structures, setting short-term objectives and providing
support for customer facing and operational staff. Focus is now on implementing
new processes, which the Board believes will lead to significant improvements in
profitability in future. These processes include improving the use of technology
in day to day operations, improving the efficiency of labour in the
organisation, creating more efficient and effective purchasing processes and
improving management information.

The Board had expected the first half to be loss making, and the review of the
financial performance and position has confirmed this.

The initial focus of the new management team was on the Products business, given
the significant changes that had taken place in that business through
relocation, management changes and new IT implementation. At the half year, the
Products business was trading marginally ahead of expectations. Since then, the
Board has enhanced both structure and the business processes, and is pleased
with the division's improving performance and outlook.

The operational issues in the Services business have, however, been bigger than
initially anticipated. It is evident that in the latter part of 2006 and early
part of 2007 controls over costs were neglected and the profitability of the
division has, as a result, been heavily impacted. As a result, the group's loss
for the half year will be significantly greater than the Board had initially

However, the root cause of the cost increases have been identified, are all
addressable and, as mentioned above, the improved processes are expected to
fully address the issues. The performance of the Services division has improved
since the end of June and cash management within the group remains satisfactory.
More importantly, the Board has not changed its view of the medium term
potential for the division, and remains confident of a successful turnaround.

The company intends to announce its interim results at the end of September and
the findings and progress will be addressed in more detail at that time.

The Board is also currently reviewing full year expectations, which are expected
to reflect the considerable progress made in stabilising the business against
the backdrop of the H1 performance.


For further information contact:

Stephen Yapp
Watermark Group plc
Tel: 020 8606 2071

Jeremy Carey/Matt Ridsdale
Tavistock Communications
Tel: 0207 920 3150

                      This information is provided by RNS
            The company news service from the London Stock Exchange

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