WTL Waterlogic

RNS Number:3738P
Waterline Group plc
05 March 2008




                                                                    5 MARCH 2008

                              WATERLINE GROUP PLC
                                   (AIM: WTL)

                                 TRADING UPDATE
                         FOR THE YEAR TO 31 MARCH 2008


The Board of Waterline Group PLC ('Waterline' or the 'Group'), one of the larger
suppliers to the fitted kitchen industry in the UK, today announces a trading
update for the year to 31 March 2008.

Profit before tax for the Group is expected to be significantly lower than the
market expectations for the year ended 31 March 2008. This shortfall against
expectations that has occurred since the announcement of the interim results is
a consequence of a number of factors that are set out below:


*    Poor trading conditions in January and February 2008, especially with
     respect to kitchen furniture, which has led to a significant reduction in 
     the level of turnover forecast for the final quarter of the year;

*    Reduced levels of confidence in the sector among our customers, as a
     consequence of their turnover slowing, brought on by interest rate 
     uncertainty, increasing personal debt levels and a slow down in the house 
     moving and refurbishment sector;

*    Significant increases in fuel costs through January and February 2008;

*    Weakening of the Pound against the Euro in the final quarter of the year
     ending 31 March 2008; and

*    Increasing failure rate among internet based customers is resulting in
     increased bad debts.



The Board are constantly looking at ways to mitigate the effects of the factors
outlined above and have undertaken considerable work to improve the levels of
turnover by reviewing the entire customer database to refocus our efforts on low
and nil spending customers. In addition the Board is looking at the product
portfolio with a view to adding incremental products that may address some of
the requirements of our existing customer base.

The costs are under continuous review to minimise where possible the effects of
a reduction in trading levels, however, it is important that it is conducted in
such a manner as not to restrict future growth.

Savings to the property based costs are also being implemented following the
successful purchase of Interchange Point, Renny Park Road, Newport  Pagnell and
hopefully these will be realised in the second half of the financial year ending
31 March 2009.

The balance sheet remains strong with NAV of 59p per share at 30 September 2007,
the interim date.

The Board believes that the trading conditions will continue to be challenging
in the final quarter of the financial year to 31 March 2008 and are expected to
persist for the first half of the following year. Whilst there are signs of
improvement for the year ending 31 March 2009 and the management team remain
committed to its success, the Board remain cautious about trading in the early
part of next year.


Enquiries:

Waterline Group plc                                              01908 219777
Michael Lawrence, Chief Executive
www.waterlinegroup.plc.uk

City Financial Associates Limited                                020 7492 4777
Nominated Adviser to Waterline Group plc
Ross Andrews
www.cityfin.co.uk


St Helen's Capital plc                                           020 7628 5582
Broker to Waterline Group plc
Ruari McGirr
Sebastien Wykeham
www.sthelenscapital.com




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