6th Feb 2007 07:02
Watermark Group PLC06 February 2007 Embargoed for release at 7.00 a.m. on 6 February 6 February 2007 Watermark Group Plc ("Watermark" or "the Company") 2006 Restructuring Exceptionals and Trading Update Further to the Company's announcement of 24 November 2006, the board ofWatermark (the "Board") is now in a position to be able to provide furtherguidance as to the quantum of the restructuring and other exceptional items thathave been recognised in the year to 31 December 2006, principally as a result ofthe implementation of the Company's comprehensive restructuring plans. For the year to 31 December 2006, the pre-tax, pre-exceptional profit for theCompany is expected to be between £2.0m and £2.5m, dependent on the accountingtreatment of certain restructuring and reorganisation items as summarised below: £m Profit before tax and Exceptional Indicative loss exceptional items items before tax-------------------- ----------- ----------- -----------Underlying profit / 1.4 - 1.9 (5.4 - 5.9) (4.0)(loss) before tax -------------------- ----------- ----------- -----------Write back of provision 0.6 1.2 1.8for loss making contract -------------------- ----------- ----------- -----------Profit / (loss) before 2.0 - 2.5 (4.2 - 4.7) (2.2)tax -------------------- ----------- ----------- ----------- The underlying range of profitability is lower than the equivalent range of£3.1m - £3.6m (i.e. £2.0m - £2.5m, plus the £1.074m provision for exceptionalbad debts) as set out in the Company's announcement of 6 October 2006 mainly asa result of costs incurred in respect of the restructuring and reorganisation,which have not been treated as exceptional costs and have therefore beenexpensed within operating profit. There has also been a reduction in operatingmargins in the second half of the year. As part of the Company's normal year end audit process, the Board is currentlyconfirming with the Company's auditors the classification of certainrestructuring and reorganisation charges as to whether they are recognised asexceptional items or as expenditure incurred in the ordinary course of business.The Board would note that the Company's accounting policy for recognising anddisclosing exceptional items remains unchanged from that set out in its lastAnnual Report and Accounts. Exceptional costs/charges for the year to 31 December 2006 are expected to bebetween £5.4m and £5.9m, dependent on the classification, as referred to above,of certain restructuring items. These restructuring and other exceptional items include, inter alia, chargesrelating to: - the integration of International Catering Limited ("ICL") into the Services division, including its re-location to improved facilities; - the write-off of exceptional bad debts; - the restructuring of the Products division and associated redundancies; - abortive transaction and other project costs; and - stock write-offs. These restructuring and other exceptional charges as set out in the table above,will be partially offset by the immediate write back of a provision for a lossmaking contract within ICL, of approximately £1.2m. In addition there will be acredit to operating profit of approximately £0.6m in respect of this contract. The Company has received notice from Thai Airways that it wishes to terminateits contract on 28 February 2007. There are a number of other ICL contractswhich are currently under review to ensure that they provide an appropriatecommercial return. The great majority of the cash costs associated with the restructuring andreorganisation have been incurred to date and the Company was utilising lessthan £8m of its £11m of banking facilities at the year end. The Companycontinues to review its funding requirements in relation to the development ofboth its existing business and potential future expansion opportunities. In a separate RNS announcement, the Company has also announced today the awardof a significant three year contract with Air Canada utilising Watermark'sEncompass Asset Management Programme. For further information contact: Maurice Ostro/Crispin QuailWatermark Group plcTel: 0208 606 1300 Jeremy Carey/ Matt RidsdaleTavistock CommunicationsTel: 0207 920 3150 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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