Watermark Share Discussion Threads

[tsmith2] 06/10/2006 08:21

difficult to see how TW and he's crew will be able to stomach this further let down - even the most ardent of fans of the stock will have to concede that the management is fast loosing all credibility in the City - rerating errrrm to the downside

[stemis] 06/10/2006 08:10

Whilst I agree with your point about getting it right first time, why do you think it is more bad news?

[jaypea] 06/10/2006 07:45

For crying out loud..can't this board ever put out an announcement that's accurate & complete first time?
Bye bye another 20% of share price ....it's like 'death of a thousand cuts' or in this case..RNS's!

[stemis] 06/10/2006 07:41

6 October 2006

Watermark Group Plc

Clarification of Interim Statement

Further to the Company's interim results announcement of 28 September 2006 ('the
Interims'), the reference in the Chairman and Chief Executive's letter to the
guidance for the year to 31 December 2006 requires a definitional correction.
Pre exceptional, pre tax profit was stated as being 'likely to be in the range
of £2.0m - 2.5m'. Whilst these numbers remain correct, they should have been
defined as pre exceptional, pre tax profit, post provision for exceptional bad
debts. As stated in the Interims, provision for exceptional bad debts, as at 30
June 2006, was £1.074m.
------------------------------------------------------------------------------------

So underlying pre tax profit of £3.0 - £3.5m. Deducting a standard 30% tax charge gives earnings of £2.1 - 2.45m. Current market capitalisation of £19.4m represents 9.2 - 7.9 x earnings. So nothing in the price for any recovery.

[made1686] 04/10/2006 09:56

made did tell you did he not

[holgerl] 03/10/2006 20:44

What a dog this has become

[25babies] 03/10/2006 20:43

Sums up my stock picking skills

80/20 to be exact'ish

[vmjmurphy] 03/10/2006 12:00

Bloody clever move, seabird - selling 80% and keeping 25%. I wish I could do that ...

[seabird] 02/10/2006 16:26

Decided that enough is enough - sold 80% of my holding - bought at 90p some years ago - at least I got out with just under half my dosh - though at one stage could have doubled it!- the possible recovery just looks too long into the very uncertain aviation future and have lost faith with the Board. Keep 25% for a punt - into the kennel for dogs that just may come good - but frankly written it off.

Cbird

[blobby] 28/9/2006 16:13

Thanks Ste, I also thought 'kitchen sink' and 'third profit warning'. However they still made a profit in a bad year even with the kitchen sink thrown out so I am hoping for a full recovery over the next 18 months.

[made1686] 28/9/2006 15:29

do not like to say told you so but made did at 144p you all saved a pound if you had belived me made is neaver wrong right with cey at 8p now 26p sco will be 3p by xmass you will see cey 50p by xmass new year made is neaver wrong profit warnings all ways come in three ss one more to go AS THIS IS TWO IN SIX MOUNTH,,,,,,,,,,,S

[jaypea] 28/9/2006 14:06

SteMis - nice assessment & I agree that the core business will continue to prosper. As for the expansion plans....I believe these are now out of reach for the foreseeable future without a private equity bid. They were talking about £12/15m requirement which is now almost 50% of mkt cap.

Bottom draw for these & see what develops over the next year....or so!

Good luck all
jaypea

[stemis] 28/9/2006 11:42

For those who believe profit warnings come in three's, this was the third!

Clearly Watermark is going through a tough time and sentiment is very bad. If you believe Watermark is still a good business, now would be the time to buy (if you don't, then there is no time to buy!). I would be more concerned if Watermark was losing turnover or making a loss or had very high bank debt. Hopefully with a new MD we are seeing a kitchen sink job.

Based on forecast of £2-2.5M I calculate enterprise value at 44p to be about 10-12 x Taxed EBIT. Not an obvious bargain at these levels.

However if service can get to 8% margin levels and we can see some limited recovery in product margins, through the overhead reductions mentioned, then an EBIT of £5.0-4.5M should be possible in 2007, which would leave enterprise value at 7-8 x Taxed EBIT. That would be good value if the talk of expansion opportunities is real.

[pugugly] 28/9/2006 11:25

Price back to 2001 level - Chicken may still be proved right but a long long time since the call. do not like that bit about "bank facilities" in the accounts.

[chicken] 28/9/2006 10:51

Doesnt look good

Watermark cuts FY profit forecast again as H1 pretax pre-ex drops 67 pct
LONDON (AFX) - Watermark Group PLC, the in-flight catering company,
announced a further downward revision of its profit forecast for 2006 as it
revealed a sharp drop in earnings for the first half.
The group said it now expects full-year pretax profit before exceptionals of
between 2-2.5 mln stg, down from the previous forecast of 3.1 mln stg. The
company has previously cut its full-year guidance both in May and July this
year.
Today's revision was blamed on costs relating to the delayed integration of
International Catering and the roll-out of a new IT solution as well as costs
involved in pursuing growth opportunities.
Watermark's results for the six months to June showed a fall in pretax
profit before exceptionals to 780,000 stg from 2.35 mln. Including exceptional
items, there was a pretax loss of around 650,000 stg.
Sales rose by 17 pct to 41.21 mln stg in the first half.
Watermark said it is operating within its bank facilities for its current
level of business.
It said it is progressing new business opportunities overseas and is
therefore reviewing its funding requirements.
[e-mail]
ak

[spaceparallax] 28/9/2006 09:30

Hmmm! Not good - MMs appear to have marked down 10% accordingly. IMHO the news flow has been terribly handled by WMK - I seem to recall that very positive things were being said not that many months ago.

I'd be surprised if the share price doesn't hit 40p.

[rivaldo] 28/9/2006 08:50

What a shower this lot are. I still have some shares unfortunately. Though fortunately I didn't top up as I was thinking of doing at one point at 50p or so. Every time they say they've drawn a line in the sand, along comes another disaster they somehow failed to predict.

I'll hold my remaining shares as (probably stupidly) I can see WMK regaining the 140p glory days at some point if all these "one-offs" are thrown in the kitchen sink this year for a clean start - the company is after all a sector leader in an ever-expanding market. I can perfectly understand why the strategic equity funds were piling in.

Though we may never get to that point. Perhaps this is all part of management's fiendish plan for a cheap-rate MBO. I wouldn't put it past them.

[holgerl] 28/9/2006 08:23

What's the bank facilities mentioned for???? What!

[chicken] 28/9/2006 07:54

Looking at the re revised profit forecast today of 2-2.5m these look expensive still. Should be around c16m market cap imo.

C

[chicken] 21/8/2006 08:32

with the latest profit forecast at 3.1m they dontlook cheap and i cant see that the fall has been overdone? Valued at 25m with a p/e of 8?

[stemis] 21/8/2006 07:50

There has been some sizeable buying over the last week with Oryx International Growth Fund Limited (who are North Atlantic Value) and Aviva. I'd be surprised if they hadn't talked to management (obviously in general) before buying.

I think the fall has been overdone. The core business seems in fair shape, winning new business and maintaining profitability. Nearly all the profit warning came from peripheral activities - commissions and sale of containers.

I've doubled up (in value terms, although obviously not number of shares) on the basis that this is a stumble rather than fall. Time will tell.

[sarscars] 20/8/2006 23:24

could wmk be a long term winner in these troubled times ahead ' they supply certain things above the wing to the airlines already but this could grow fast to involve other items ' now the future of buying certain items before you board and taking them on the plane is more or less zero'

[spaceparallax] 11/8/2006 17:46

We will see. Have a good w/e.

[stemis] 11/8/2006 16:47

Indeed, although if the company can hit the revised numbers and look like they are going to move forward from there, then its amazing how quickly sentiment can change. I've done pretty well on a couple of occasions where companies stumble (Keller for one).

If WMK can squeeze ahead of the £3.2M forecast, with a reasonable outlook, then the shares should bounce to at least 60-70p. Whether they will manage that of course is a different matter.