Last checked at 28 Sep 2012 07:00
28 September 2012
Watermark Global Plc
("Watermark" or the "Company")
Interim Results for the six months Ended 30 June 2012
Watermark Global ( WET:LSE), the AIM-quoted company with Investments in acid mine drainage and coal briquetting in South Africa announces its interim results today.
Highlights
Sale of subsidiary Western Utilities Corporation (Pty) Ltd ("WUC") to Mine Restoration Investments Ltd. ("MRI") for a total of £4.5m Re-categorised as an investment company on AIM MRI briquetting project making good progress with pilot plant about to commence and commercial scale start-up set for February 2013 Profit after tax to 30 June 2012 was £2,716,000 (2011 loss: £620,000), earnings per share of 0.17p (2011 loss: 0.076p per share) Stated net asset value at 30 June 2012 was 0.33p per shareResults Summary
Profit after tax for the six month period ended 30 June 2012 was £2,716,000 (2011: loss of £629,000), a profit of 0.17p per share (2011: loss of 0.076p per share). This profit is inclusive of the gain made in the sale of WUC to MRI of £2,751,000. The cash position of the Company at 30 June 2012 was approximately £796,000.
Additional Information:
Notes from a question and answer session held with Jaco Schoeman will be available on the Company's website www.watermarkglobalplc.com
Enquiries:
| Watermark Global Plc | ||
| Charles Zorab, Investor Relations | Tel: + 44(0) 20 7233 1462 | |
| czorab@watermarkglobalplc.com | ||
| Nominated Adviser: Cenkos Securities | ||
| Ian Soanes | Tel: +44(0)20 7397 8900 |
CHAIRMAN'S STATEMENT
During the period, Watermark entered a new phase with the agreement to sell its wholly-owned subsidiary Western Utilities Corporation (Pty) Ltd. ("WUC") to Mine Restoration Investments Limited ("MRI"). The reasons undertaking this transaction are worth repeating.
Despite the Inter Ministerial Committee of the South African government acknowledging, in a report in February 2011, that WUC's project for treating polluted water in the Witwatersrand basins was the cheapest and most appropriate technology, it had not been granted the rights to implement the project. Your Board considered that it could not wait for, nor rely upon, the award of a contract to treat Acid Mine Drainage ("AMD"). Although we remain convinced of our position, thanks to the large amount of work which we have already done, the tender for the long-term treatment of AMD has still not been held. Implementation of the project following the long-term tender would take a further 18 months and of course would have placed a further burden on our financial resources.
It was therefore decided to negotiate the acquisition, via WUC, of a coal briquetting project in Kwa Zulu Natal (South Africa) in order to diversify the Company's interests. At the same time, we were approached by MRI to sell our direct 100% ownership of WUC for a mixture of cash and shares which would de-risk Watermark's position further and provide the operating businesses with improved access to financing. In consideration for the disposal we received a 40% stake in MRI plus a cash payment of £1.8m valuing WUC at £4.5m.
Shares in MRI were re-listed in June 2012 on the AltX market of the Johannesburg Stock Exchange and a placing of its shares was undertaken at a price of R0.19 per share. This enabled MRI to complete the acquisition of WUC and meet its obligations. Subsequently it has been agreed that approximately £1.55m of the proceeds will be lent until January 2013 to an existing shareholder of MRI, secured against 105m MRI shares with a guaranteed minimum share price on disposal of R0.20 per share.
Watermark is now categorised by AIM as an investment company rather than an operating company. No doubt the current economic climate will create some interesting possibilities and we have commenced the process of reviewing a number of opportunities. Our main areas of interest and our expertise remain in natural resources but we are happy to review opportunities beyond South Africa. As an investment company, Watermark no longer needs a Chief Executive Officer and so Jaco Schoeman has stepped down to become a non-executive director. I would like to thank Jaco very much for the way in which he has led the Company in the past and am pleased that not only will he continue on as a director of your Company, but he is interim Chief Executive Officer of MRI and will remain as our representative on their board as well.
The Company's assets now comprise largely listed investments and cash or cash equivalents. At 30 June 2012 they were more than £5.0 million or 0.33 pence per share. The Company's net asset value is significantly greater than the Company's share price even without adjusting for the current market price of MRI (which would make the net asset value nearer to 0.4 pence per share) and we are working to achieve a share price that more accurately reflects the value of the Company.
We thank all shareholders for their continued interest in Watermark and look forward to bringing you further updates on the progress of MRI as well as other opportunities in the coming months.
Peter Marks
Chairman
Condensed Consolidated Statement of Comprehensive Income
For the period ending 30 June 2012
| Six months ended | |||||||
| Note | 30/06/2012 | 30/06/2011 | |||||
| £'000 | £'000 | ||||||
| Continuing operations | |||||||
| Revenue | - | - | |||||
| Cost of sales | - | - | |||||
| Gross profit | - | - | |||||
| Interest income | 1 | 1 | |||||
| Depreciation | (1) | (1) | |||||
| Finance cost | - | (9) | |||||
| Consulting expenses | (16) | - | |||||
| Other expenses | (97) | (321) | |||||
| Loss before tax | (113) | (312) | |||||
| Taxation | - | - | |||||
| Loss for the period from continuing operations | 113 | (312) | |||||
| Discontinued Operations | |||||||
| Profit/(Loss) for the year from discontinued operations | 9 | 2,751 | (433) | ||||
| Profit/(Loss) for the period | 2,638 | (745) | |||||
| Other comprehensive income | |||||||
| Exchange differences on translating foreign operations | |||||||
| Exchange differences arising during the period | 78 | 116 | |||||
| Total comprehensive income/ (loss) for the period | 2,716 | (629) | |||||
| Total comprehensive income (loss) attributable to | |||||||
| Owners of Watermark Global Plc | 2,716 | (629) | |||||
| Profit/(Loss) per share | |||||||
| From continued operations | |||||||
| Basic | 6 | 0.17p | (0.076p) | ||||
| Fully diluted | 6 | 0.17p | (0.076p) | ||||
Condensed Consolidated Statement of Financial Position
As at 30 June 2012
| Notes | 30/06/2012 | 31/12/2011 | |||||
| £'000 | £'000 | ||||||
| Assets | |||||||
| Non Current assets | |||||||
| Other Financial Instruments | 10 | 2,701 | - | ||||
| Property, plant and equipment | 1 | - | |||||
| 2,702 | - | ||||||
| Current assets | |||||||
| Trade and other receivables | 1,579 | 32 | |||||
| Cash and cash equivalents | 796 | 764 | |||||
| 2,375 | 796 | ||||||
| Assets of disposal groups classified as held for sale | - | 3,664 | |||||
| Total assets | 5,077 | 4,460 | |||||
| Equity and liabilities | |||||||
| Ordinary shares | 2,247 | 2,247 | |||||
| Share premium account | 8 | 10,856 | 10,856 | ||||
| Share option reserve | 8 | 1,428 | 1,428 | ||||
| Foreign exchange reserves | 8 | - | 78 | ||||
| Retained earnings | 8 | (9,513) | (12,150) | ||||
| Equity attributable to owners of the Company | 5,018 | 2,459 | |||||
| Non-controlling interest | - | 74 | |||||
| Total equity | 5,018 | 2,533 | |||||
| Current liabilities | |||||||
| Trade and other payables | 59 | 189 | |||||
| Liabilities of disposal groups classified as held for sale | - | 1,738 | |||||
| Total liabilities | 59 | 1,927 | |||||
| Total equity and liabilities | 5,077 | 4,460 |
Condensed Consolidated Statement of Changes in Equity
For the period ended 30 June 2012
| Share Capital £'000 | Share Premium £'000 | Share Option Reserve £'000 | Retained Earnings £'000 | FX Reserves £'000 | Attributable to Owners £'000 | Total
£'000 | |||||||||
| Balance 01/01/2011 | 1,454 | 9,808 | 1,420 | (11,154) | 148 | 1,676 | 1,676 | ||||||||
| Loss for the period | - | - | - | (745) | - | (745) | (745) | ||||||||
| Other comprehensive income | - | - | - | - | 116 | 116 | 116 | ||||||||
| Total comprehensive income for the period | - | - | - | (745) | 264 | (629) | (629) | ||||||||
| Share placement | 645 | 860 | - | - | - | 1,505 | 1,505 | ||||||||
| Issue of ordinary shares for raising fees | 41 | 55 | - | - | - | 96 | 96 | ||||||||
| Balance 30/06/2011 | 2,140 | 10,723 | 1,420 | (11,899) | 264 | 2,648 | 2,648 | ||||||||
| Balance 01/01/2012 | 2,247 | 10,856 | 1,428 | (12,150) | 78 | 2,458 | 2,458 | ||||||||
| Loss for the period | - | - | - | 2,637 | - | 2,638 | 2,638 | ||||||||
| Other comprehensive income | - | - | - | - | (78) | (78) | (78) | ||||||||
| Total comprehensive income for the period | - | - | - | 2,637 | (78) | 2,560 | 2,560 | ||||||||
| Balance 30/06/2012 | 2,247 | 10,856 | 1,428 | (9,513) | - | 5,018 | 5,018 |
The following describes the nature and purpose of each reserve within owners' equity:
Reserve Description and purpose
Share capital Amount subscribed for share capital at nominal value
Share premium Amount subscribed for share capital in excess of nominal value, net of allowable expenses
Share option reserve Reserve for share options granted but not exercised
Retained earnings Cumulative net gains and losses recognised in the statement of comprehensive income
Foreign exchange reserves Cumulative net gains and losses recognised on consolidation
Condensed Consolidated Statement of Cash Flows
For the period ended 30 June 2012
| Six Months ended | ||||
| 30/06/2012 | 30/06/2011 | |||
| £'000 | £'000 | |||
| Cash flows from operating activities | ||||
| Profit/(Loss) before taxation | 2,638 | (745) | ||
| Depreciation | 1 | 4 | ||
| Foreign exchange differences | (171) | 370 | ||
| Re-measurement of Subsidiary on disposal | (2,931) | - | ||
| Expenses for equity settled commissions | - | 96 | ||
| Interest paid | - | 139 | ||
| Interest received | (1) | (1) | ||
| (464) | (137) | |||
| Changes in working capital Decrease/(increase) in trade and other receivables | 2,100 | (143) | ||
| Decrease / (Increase) in trade creditors and other payables | (1,869) | 18 | ||
| Net cash used in operating activities | (233) | (262) | ||
| Cash flows from investing activities | ||||
| Payments for Equity Investment | (2,685) | - | ||
| Proceeds from disposal of Subsidiary | 2,949 | - | ||
| Interest received | 1 | - | ||
| Net cash used in investing activities | 265 | - | ||
| Cash flows from financing activities | ||||
| Proceeds from share placement | - | 1,505 | ||
| Interest paid | - | (139) | ||
| Net cash from financing activities | - | 1,366 | ||
| Net increase in cash and cash equivalents | 32 | 1,104 | ||
| Cash and cash equivalents brought forward | 764 | 396 | ||
| Cash and cash equivalents carried forward | 796 | 1,500 | ||
Notes to the condensed consolidated financial statements
For the period ended 30 June 2012
1. Incorporation and principal activities
Country of incorporation
Watermark Global Plc was incorporated in the United Kingdom as a public limited company on 19 August 2005. Its registered office is 42, Queen Anne's Gate, London SW1H 9AP. The Company is domiciled in South Africa.
Principal activities
The principal activity of the Group during the period was that of commercialising process technologies, namely the process technology for the treatment of acid mine drainage and briquetting of coal fines. The principal activity of the Company was that of a holding Company.
2. Accounting policies
2.1 Statement of compliance
These financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. The financial information contained in this condensed set of financial statements in respect of the year ended 31 December 2011 has been extracted from the Annual Report and Accounts, which were approved by the Board of Directors on 13 June 2012 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain any statement under Section 498 of the Companies Act 2006.
The half-yearly results for the current and comparative periods are unaudited. The auditors have carried out a review of this condensed set of financial statements for the six months ended 30 June 2012 and their report is set out at the end of these financial statements.
This condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. This condensed set of financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2011 which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2011 as described in those annual financial statements.
2.2 Going Concern
The directors of the company are of the opinion that the Company and Group will continue to trade as a going concern for the next twelve months. The disposal of Western Utilities Corporation (Pty) Ltd to MRI, including the listing of the shares on the Johannesburg Stock Exchange, was completed on the 25 June 2012. The company received payment of £1.8 million of which approximately £1.55m have been lent to a MRI Shareholder, repayment is expected by 12 January 2013. This funding together the current cash reserves will be sufficient to enable the continuing group to continue trade for the next twelve months.
2.3. Investment
Investments are stated at cost less impairment in value, which is recognised as an expense in the period the impairment is identified.
3. Segmental Information
3.1 Segmental information for the period ended 30 June 2012
For management purposes, the Group is organised into two operating divisions; Corporate and Water Technology. These divisions are the basis on which the Group reports its primary segment information. This information also represents the geographical segments of the United Kingdom and South Africa. Due to the sale of the water technology division (Note 9) the water technology segment has been classified as discontinued
| Corporate | ||||
| United Kingdom | ||||
| £'000 | ||||
| Result | ||||
| Segment result from continuing operations | 441 | |||
| Interest income | 1 | |||
| Loss before tax | 442 | |||
| Discontinued activities - water technology (South Africa) | 2,196 | |||
| 2,638 | ||||
Other segment items included in the income statement:
| Corporate | Water Technology | ||||||
| United Kingdom | South Africa (Discontinued) | Total | |||||
| £'000 | £'000 | £'000 | |||||
| Depreciation | 1 | 1 | 2 |
| Corporate | Water Technology | ||||||||
| Statement of Financial Position | United Kingdom | South Africa (Discontinued) | Consolidation Adjustments | Total | |||||
| £'000 | £'000 | £'000 | £'000 | ||||||
| Segment assets | 4,785 | 4,453 | (4,162) | 5,076 | |||||
| Segment liabilities | (318) | (6,069) | 6,329 | (58) | |||||
| Net assets/(liabilities) | 4,467 | (1,616) | 2,167 | 5,018 |
3.2 Segmental information for the period ended 30 June 2011
| Corporate | |||||
| United Kingdom | |||||
| £'000 | |||||
| Result | |||||
| Segment result from continuing operations | (313) | ||||
| Interest income | 1 | ||||
| Loss before tax | (312) | ||||
| Discontinued activities - water technology (South Africa) | (433) | ||||
| (745) | |||||
Other segment items included in the income statement:
| Corporate | Water | ||
| Technology | Total | ||
| United Kingdom | South Africa (Discontinued) | ||
| £'000 | £'000 | £'000 | |
| Depreciation | - | 4 | 4 |
| Share based payments for capital raising | 96 | - | 96 |
| Corporate | Water | ||||||||
| Technology | |||||||||
| Statement of Financial Position | United Kingdom | South Africa (Discontinued) | Consolidation Adjustments | Total | |||||
| £'000 | £'000 | £'000 | £'000 | ||||||
| Segment assets | 5,027 | 4,465 | (2,390) | 7,102 | |||||
| Segment liabilities | (186) | (5,600) | 3,559 | (2,227) | |||||
| Net assets/(liabilities) | 4,841 | (1,135) | 1,169 | 4,875 |
4. Other gains and losses
| 30 June 2012 | 30 June 2011 | ||||
| £ | £ | ||||
| Gains on disposal of disposal groups held for sale | 555 | - |
Western Utilities Corporation (Pty) ltd was classified and accounted for at 31 December 2011 as a disposal group held for sale. The value of the investment was re-measured to fair value based on the outstanding loan owned to the group. The gain arises from the disposal of the group being the difference of the re-measured net asset value and the purchase price.
5. Taxation
No provision has been made for income tax for the period under review.
6. Profit per share
Profit per share for the period under review attributable to shareholders is £ 2,638,000 (2011: Loss £745,000). This is divided by the weighted average number of shares outstanding for the period calculated to be 1,531,374,350 (2011: 969,540,827) to give basic profit per share of 0.17p (2011: (0.076p loss)
The calculation of dilutive loss per share is based on the weighted average number of shares outstanding adjusted by dilutive share options. The group's share options are non-dilutive as the market price of the shares is below the exercise price. Consequently the diluted loss per share has been stated at the same figure as the loss per share.
7. Share capital
No changes in share capital for the period under review.
8. Reserves
| Group foreign exchange reserve | Company and Group share option reserve | Company and Group share premium account | Group profit and loss account | ||||||
| £'000 | £'000 | £'000 | £'000 | ||||||
| At 1 January 2011 | 148 | 1,420 | 9,808 | (11,153) | |||||
| Loss for the year | - | - | - | (997) | |||||
| Exchange difference | (70) | - | - | - | |||||
| Options granted to Directors | - | 8 | - | - | |||||
| New shares issued | - | - | 860 | - | |||||
| Share based payments | - | - | 188 | - | |||||
| At 31 December 2011 | 78 | 1,428 | 10,856 | (12,150) | |||||
| Loss for the period | - | - | - | 2,637 | |||||
| Exchange difference | (78) | - | - | - | |||||
| At 30 June 2012 | - | 1,428 | 10,856 | (9,513) |
9. Discontinued Operations
Discontinued operation
A discontinued operation is a component of the Group's activities that is distinguishable by reference to geographical area or line of business that is held for sale, has been disposed of or discontinued, or is a subsidiary acquired exclusively for resale. When an operation is classified as discontinued, the comparative income statement is represented as if the operation had been discontinued from the start of the comparative period.
Disposal of an operation
On 25 June 2012, Watermark sold its wholly-owned operating subsidiary, Western Utilities Corporation (Pty) Limited to Mine Restoration Investments Limited for a consideration of £4.50 million comprising £1.81 million in cash and £2.69 million in MRI shares.
Loss for the year from discontinued operations
| 30 June 2012 | 30 June 2011 | ||||
| £ | £ | ||||
| Revenue | 2 | 120 | |||
| Operating costs | (299) | (406) | |||
| Interest income | 1 | 1 | |||
| Finance costs | 116 | (148) | |||
| Loss before tax | (180) | (432) | |||
| Taxation | - | - | |||
| Loss from discontinued activities after taxation | (180) | (433) | |||
| Profit on re-measurement to fair value less cost to sell | |||||
| Gain on disposal of operations | 2,931 | - | |||
| Profit/(loss) for the year from discontinued operations | 2,751 | (433) |
The Western Utilities Corporations (Pty) ltd has been classified and accounted for at 31 December 2011 as a disposal group held for sale.
10. Other Financial Assets
| 30 June 2012 | 31 December 2011 | ||||
| £ | £ | ||||
| Available-for-sale investments carried at fair value | |||||
| Shares(i) | 2,685 | - | |||
| Loans to related parties(ii) | 16 | - | |||
| 2,701 | - |
(i) The Group holds 40 % of the ordinary share capital of in Mine Restoration Investments Limited, company involved in providing solutions to the waste that occurs from coal mining (coal fines), as well as Acid Mine Drainage (AMD). The Group does not have any direct control over the company.
Independent Auditors' Report on Review of Consolidated Half-Yearly Financial Information
We have been engaged by the company to review the condensed set of financial statements in the half-yearly report for the six months ended 30 June 2012 which comprises the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and the comparative figures and associated notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.
As disclosed in Note 2 the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed consolidated set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union.
MOORE STEPHENS LLP
150 Aldersgate Street
LONDON
EC1A 4AB
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