JNY.L Regulatory News (JNY)

21 Sep 2007 07:02

Watermark Group PLC21 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 thebusiness, being: • restoring underlying profitability • resuming growth; and • focusing on cash management. The immediate focus is on stabilising the business and restoring underlyingprofitability. The Board also announced that the new management team wouldundertake a comprehensive review of the group's financial performance andposition. Considerable progress has been made to stabilise the business by establishingclear organisational structures, setting short-term objectives and providingsupport for customer facing and operational staff. Focus is now on implementingnew processes, which the Board believes will lead to significant improvements inprofitability in future. These processes include improving the use of technologyin day to day operations, improving the efficiency of labour in theorganisation, creating more efficient and effective purchasing processes andimproving management information. The Board had expected the first half to be loss making, and the review of thefinancial performance and position has confirmed this. The initial focus of the new management team was on the Products business, giventhe significant changes that had taken place in that business throughrelocation, management changes and new IT implementation. At the half year, theProducts business was trading marginally ahead of expectations. Since then, theBoard has enhanced both structure and the business processes, and is pleasedwith the division's improving performance and outlook. The operational issues in the Services business have, however, been bigger thaninitially anticipated. It is evident that in the latter part of 2006 and earlypart of 2007 controls over costs were neglected and the profitability of thedivision has, as a result, been heavily impacted. As a result, the group's lossfor the half year will be significantly greater than the Board had initiallyexpected. However, the root cause of the cost increases have been identified, are alladdressable and, as mentioned above, the improved processes are expected tofully address the issues. The performance of the Services division has improvedsince the end of June and cash management within the group remains satisfactory.More importantly, the Board has not changed its view of the medium termpotential for the division, and remains confident of a successful turnaround. The company intends to announce its interim results at the end of September andthe findings and progress will be addressed in more detail at that time. The Board is also currently reviewing full year expectations, which are expectedto reflect the considerable progress made in stabilising the business againstthe backdrop of the H1 performance. -Ends- For further information contact: Stephen YappWatermark Group plcTel: 020 8606 2071 Jeremy Carey/Matt RidsdaleTavistock CommunicationsTel: 0207 920 3150 This information is provided by RNS The company news service from the London Stock Exchange