JNY.L Regulatory News (JNY)

29 Jun 2007 07:30

Watermark Group PLC29 June 2007 FINAL embargoed until Friday 29th June 2007 at 07:00 BST. WATERMARK GROUP PLC AGM Statement Watermark Group Plc, a leading provider of in-flight products, catering andcabin management services to the airline and travel industry, announces that atthe Annual General Meeting to be held at noon today, Stephen Yapp, ExecutiveChairman will make the following statement. New management team and structure Following shareholder approval for the issue of £8 million Convertible Bonds on4 June, I joined the Board as Executive Chairman. The refinancing has provided anecessary degree of stability to the business and we can now focus on restoringvalue for shareholders. Under my direction, the group's range of in-flightproducts and services will be managed through two discrete trading divisions,each led by a Managing Director. The clear structure will significantly improveaccountability within the group and enable us to implement more effectiveperformance management processes. Over time, I believe this will improve theoperational efficiency of the organisation. Nick Scott, previously the group's Commercial Director, was appointed MDServices on 8 May and the Board is actively seeking to fill the position of MDProducts. The Board's other executive director is Peter Fitzwilliam, who wasappointed as Chief Financial Officer on 8 May. Alongside the executive directors, we have two non-executive directors. DannyBernstein, who has extensive experience in the airline industry, is SeniorIndependent Non-Executive Director, and Graham Bird is representative of SVGInvestment Managers, the group's largest shareholder. To further strengthen theBoard, we intend to make an additional non-executive appointment and arecurrently undertaking a search for an individual with complementary skills andexperience. Key tasks The past year has seen change in senior management, a decline in profitability,a significant increase in debt and, recently, the resultant focus on refinancingthe group. After this difficult period, the initial task for the new managementteam is to stabilise the business by establishing clear organisationalstructures, setting short-term objectives and providing support forcustomer-facing and operational staff. Looking beyond this initial period, the Board will focus on the following keyobjectives for the business: •restoring underlying profitability •resuming growth •focusing on cash management Profitability Restoring profitability will be achieved through a number of steps. First, byimproving the organisational structure and accountability, we will be able toimprove performance through better monitoring and management using keyperformance indicators. Secondly, by giving ownership of processes to keyoperational staff, we will benefit from the motivation and entrepreneurialism ofour staff. Thirdly, by focusing on specific bottlenecks in our processes and onareas of high spend, we will be able to improve the way we operate. Initial areas of opportunity for improvements in profitability have beenidentified in both divisions. Within Services, these are through improvedoperational efficiency at our Heston facility close to Heathrow; withinProducts, they are in improved international logistics and purchasing. Reviewshave begun in both areas to establish the scale and timing of the opportunitiesavailable. The Board will provide an update of progress at the time of ourinterim results. Growth Whilst the immediate focus for the management team will be on stabilising thebusiness and restoring underlying profitability, the Board believes thatexcellent long-term growth prospects exist in both Divisions. By way of example,the changes brought about by the open skies agreements will create newopportunities which we believe will be positive for Watermark. The Encompasscontract with Air Canada has also established a platform which should providefurther options for the group in future. Over the coming six months, the Boardwill examine these prospects and report its findings at the full year results. Cash management The recent refinancing has established a stronger financial base for the group.Long term financing has been obtained through the issue of Convertible Bonds andthe group's bank debt has been reduced to a more comfortable level. The Boardwill remain focused on improving the cash-generation characteristics of thegroup so as to strengthen the balance sheet and provide the financial base tofund the group's profit improvement and expansion ambitions over the comingmonths and years. Trading outlook Watermark operates with a high level of contracted turnover, and this provides astable base from which to effect the proposed improvements. We have a base ofhigh quality customers, who have been supportive throughout our refinancing andwe look forward to working with them and offering continual improvements in theservices we offer. Under the new management, a comprehensive review of the group's financialperformance and position is currently being undertaken and the Board anticipatesbeing able to provide guidance for the year when the company announces itsinterim results in September. Enquiries: Stephen YappExecutive ChairmanWatermark Group plcTel: 020 8606 2000 Jeremy Carey/Andrew DunnTavistock CommunicationsTel: 020 7920 3150 This information is provided by RNS The company news service from the London Stock Exchange