Armadale Capital Regulatory News (ACP)

1 Jun 2011 07:00

Watermark Global Plc Preliminary Results for the year ended 31 December 2010 Watermark Global Plc (AIM: WET) ("Watermark" or " the Company"), a water treatmentand management company listed on AIM with a focus on Acid Mine Drainage ("AMD") treatmentin South Africa, announces its unaudited preliminary results for the year ended 31December 2010 Results Summary The loss from ordinary activities for the year ended 31 December 2009 was £1,086,292(2009: loss £1,727,861), resulting in a loss of 0.1p (2009: loss 0.4p) per share.The Company has continued to generate an operating loss whilst awaiting the outcomeof the South African Government's decision on the clean up project for AMD. The Company has announced a conditional placing to raise up to £1.5 million to providesufficient working capital to allow the Company to continue to operate for the nexttwelve months and participate in any tender process for the long term AMD clean upproject as well undertake a role in the short term in conjunction with the Government. The financial information set out below does not constitute the Company's statutoryaccounts for the year ended 31 December 2010, but is derived from those accounts.Statutory accounts for 2010 will be delivered to the Registrar of Companies followingthe Company's Annual General Meeting. The auditors will be reporting on those accountson 3rd June 2011 and their report is anticipated to include an emphasis of matter,as for 2009, in respect of going concern and intangible assets. Annual General Meeting The Annual General Meeting of the Company will be held on 30 June 2011 at 09.00 am.at 42, Queen Anne's Gate, London SW1H 9AP. Notice of the meeting will be sent toshareholders as part of the report and accounts on 6 June 2011. A copy of the reportand accounts will be made available on the Company's website www.watermarkglobalplc.com Enquiries Watermark Global plc Peter Marks, Chairman Tel: + 44(0) 20 7233 1462 Jaco Schoeman, Chief Executive Officer Tel: + 44(0) 20 7233 1462 jschoeman@watermarkglobalplc.com Nominated Adviser: Cenkos Securities Ian Soanes/Elizabeth Bowman Tel: +44(0)20 7397 8928 Investor Relations Charles Zorab Tel: + 44(0) 20 7233 1462 czorab@watermarkglobalplc.com CHAIRMAN'S STATEMENT 2010 was another year of further progress but continuing frustration in relationto our Acid Mine Drainage clean up project. The environmental and political profileof the AMD problem has continued to increase as the water becomes closer to pollutingthe table water around Johannesburg. However, there is still no definitive decisionon the structure and process to be used to clean up the AMD nor a timeframe for thelong term infrastructure project that will be required to be developed to facilitatethe clean up. Due to the nature of the project and its dependence on South AfricanGovernment approval as well as further financing all timelines remain uncertain althoughthe release of a report by the Government in February 2011 regarding the problemnoted that the Company's technology was one of the only viable clean up options.This is discussed further below. At the date of this announcement and as previously announced our wholly owned subsidiary,Western Utilities Corporation (Pty) Ltd ("WUC") has completed 14 specialist studiesas part of the EIA process which form the basis of the Environmental Impact Report(EIR). WUC also completed a Definitive Feasibility Study (DFS) which has been signedoff by International Consultants, Golder & Associates and has remained ready to commencethe construction of the required infrastructure. WUC has provided the Governmentand the mining houses with a clear, well documented, detailed and practical solutionto the treatment of AMD and the Board believes that WUC remains several years aheadof the competition in terms of the work already completed and now awaits the Government'sdecision on how it intends to finance any project and how WUC would be involved. During 2010 the Department of Water Affairs and Environment (DWAE) announced thatit acknowledged its responsibility and liability associated with ownerless and abandonedmines within the project area and that a Public Private Partnership ("PPP") structurewould be the preferred structure to be entered into between the State and the minesin respect of a long term solution to clean up the AMD. The Government also announced that interim measures were being investigated withthe mines and Government to prevent the occurrence of an environmental disaster.Quoted below is part of a budget address given by the Minister of Water Affairs andEnvironment on 15 April 2010, over 12 months ago. "There is a big problem of Acid Mine Drainage in the Witwatersrand area which threatensour ground water resources and human survival. Even the famous Cradle of Humankindis under threat. We are currently involved with short term solutions to alleviatethe worst effects.... We also need a sustainable long term strategy to manage this.I hope you will be encouraged when I tell you that we are presently hard at workwith mining operators in search of a lasting solution." In simple terms, and for the sake of re-inforcing a very significant point, WUC has: conducted pilot plant tests for the optimum method of treating AMD; completed 14 specialist studies as part of the EIA process and which will formthe basis of the Environmental Impact Report (EIR); completed a Definitive Feasibility Study (DFS) which has been signed off by anIndependent Third Party, Golder & Associates (a well established, international company); A Government task force was established in 2010 whose role was to collect information,investigate the scope and scale of the problem, determine possible solutions andreport back to a ministerial committee drawn from the Ministers of the various interestedsectors (e.g. water affairs, mining, finance, etc.). On 24 February 2011, the DWApublished this report entitled "Mine Water Management in the Witwatersrand Gold Fieldswith Special Emphasis on Acid Mine Drainage". (This can be viewed on line at: http://www.dwaf.gov.za/Documents/ACIDReport.pdf ) The report reviewed the technologies available for the treatment of the AMD withineach of the Witwatersrand basins (Western, Central and Eastern). The report indicatesthat the Alkali Barium Calcium "ABC") and Magnesium Barium Alkaline ("MBA") processes,both of which were developed by the Council for Scientific and Industrial Research("CSIR") and TUT ('Tshwane University of Technology") were economically viable.As WUC was involved in the technology developed it has retained rights to the ABCprocess and any additional improvements on the ABC process (which includes the MBAprocess) WUC would receive a fee if this chemical process is used anywhere in theworld to treat AMD. The Board believes that the appointment of the Tans-Caledon Tunnel Association (TCTA)in February 2011, a quasi state organisation tasked with the implementation of criticalinfrastructure projects with specific reference to bulk water supply, as the Government'simplementation agent was an encouraging move.. TCTA's role is to implement a shortterm solution to prevent AMD from causing further damage to the environment. WUChas been discussing with the TCTA, which understands the commercial environment,on how it can assist in the short term solution whilst at the same realising valuefor its shareholders. Whilst the Company expects these negotiations will lead toa positive outcome, which would augur well for the Company's long-term prospects,it will not result in a substantial contract in the short-term. Any agreement reachedwould not prevent WUC from participating in the operation and maintenance of theshort, medium or long term aspects of AMD treatment in respect of which WUC fullyintends to tender. Your Board understands that it has been a very frustrating time for all the stakeholdersin Watermark. At the same time, shareholders need to understand that management hasdone everything within its power to effect a solution. We are pleased with the recentagreement and of course we will remain very active in engaging all interested parties- especially Government and industry as well as Black Economic Empowerment Groups- to continue working towards a long term solution. Whilst the press in South Africaand various pressure groups continue to raise the issue and apply pressure for urgentactionit should be noted that at this stage the Company remains unable to providea definitive timeframe as to when further progress will be made or what WUC's rolein any solution will be. Accordingly, the Company will continue to manage its cashresources judiciously and reduce its costs in a manner that will enable it to continueto operate on a reduced basis until such time as its role becomes clear. Conditional Placing I am pleased to report that the Company has, today, announced a conditional placingof up to 430,000,000 new ordinary shares in the Company at a price of 0.35p raisinggross proceeds of £1,505,000 The Placing will ensure continuity of existing operations,without any interruption or loss of competitive advantage as we hope to move intoa period where we can actively assist in the Government's plan to clean up AMD aspart of the short term and long term projects. The Placing will be conducted in twotranches of £462,000 and £1,043,000 respectively with the second tranche subjectto shareholder approval at the Company's AGM which is to be held on 30 June 2011.Your Board is unanimously recommending that shareholders vote for the approval ofthe second tranche of the Placing. The Placing will allow the Company to continueto progress discussions with the TCTA on how it can be involved further with boththe short term and long term solutions. It will also provide sufficient working capitalto allow us to expand our technical team should we need to as the projects advance.Whilst there remains no clarity or certainty on how the Company will be able to participatein a long term solution for the treatment of AMD, your Board remains critically awareof the need to continue to assess how the Company can ensure that shareholder valueis created and maintained. For this reason, the Company is seeking to utilise itsextensive intellectual property into other business areas. Accordingly, some of thePlacing proceeds will be set aside for the purpose of reviewing and carrying outdue diligence in relation to other investment opportunities which, if completed,would be expected to add to the Company's asset base and enhance shareholder value.There are at present two opportunities which we have identified as prospective. Oneis an AMD remediation project associated with anthracite coal mining and briquettingof the resulting waste fines. The other involves the separation of water and oilfrom an oil producing field to create industrial grade usable water. At this stage,any review or investigation of other opportunities should be considered preliminary.In the event that anything progresses to a more advanced stage, shareholders willbe fully informed via an update to the market. It should be stressed that neitherof these opportunities should in any way be seen as a diminution of our resolve orattitude towards the treatment of AMD in the gold fields of South Africa which remainsthe focus of Watermark's business. Outlook A year ago we stated that there were good reasons to believe that the Governmentand its agencies understood the pressing need to give the go ahead to the clean-upof AMD. . It seems that they now believe that WUC's solution and its extensive feasibilitywork can help them to achieve this. We believe it is favoured by many of the miningcompanies themselves and we believe that we remain well ahead of any competing technologiesin terms of getting our selected process, technology, and approvals to market. Itis now clearly incumbent upon the Government and its various key agencies to urgentlydemonstrate that it can be an agent of change for good. In closing, I would like to once again thank our dedicated staff in South Africawho have come through an incredibly difficult year. Not only have they pushed theproject forward as well as they have been allowed to but they have doggedly keptWatermark very much in the frame whilst maintaining good relations with all participantsin the project. In the face of the need to conserve cash, they have continued tomaintain a number of important cost cutting measures to keep the project afloat whilethe Government considers the issue. I would also like to thank our strong shareholderbase for their continued support and interest in the Company and for this very importantproject. Peter Marks 1st June 2011 Unaudited Consolidated Statement of Comprehensive Income For the year ended 31 December 2010 2010 2009 £ £ Continuing operations Revenue 130,458 11,975 Cost of sales - (11,191) Gross profit 130,458 784 Interest income 1,672 8,030 Other gains and losses (509) 40,826 Depreciation and amortisation expenses (9,704) (9,802) Employee benefit expenses - (83,861) Finance cost (270,733) (69,675) Consulting expenses (69,300) (136,196) Other expenses (682,340) (1,522,910) Loss before tax (900,456) (1,772,804) Taxation (185,836) 44,943 Loss for the year (1,086,292) (1,727,861) Other comprehensive income Exchange differences on translating foreign operations Exchange differences arising during the year 147,677 (50,370) Total comprehensive income for the year (938,615) (1,778,231) Loss per share from continued operations Pence Pence Basic (0.1) (0.4) Fully diluted (0.1) (0.4) Unaudited Consolidated Statement of Financial Position As at 31 December 2010 2010 2009 £ £ Assets Non Current assets Intangible assets 3,473,549 2,778,863 Property, plant and equipment 9,198 17,177 Deferred tax - 157,027 3,482,747 2,953,067 Current assets Trade and other receivables 6,241 85,692 Cash and cash equivalents 396,182 278,381 402,423 364,073 Total assets 3,885,170 3,317,140 Equity and liabilities Share capital 1,454,310 1,030,595 Share premium account 9,808,072 9,453,737 Share option reserve 1,420,361 1,420,361 Foreign exchange reserve 147,677 - Retained earnings (11,153,968) (10,067,676) Equity attributable to owners of the Company 1,676,452 1,837,017 Non current liabilities Borrowings 1,324,190 892,760 Current liabilities Trade and other payables 349,962 587,363 Borrowings 534,566 - 884,528 587,363 Total liabilities 2,208,718 1,480,123 Total equity and liabilities 3,885,170 3,317,140 Unaudited Company Statement of Financial Position As at 31 December 2010 Note 2010 2009 £ £ Assets Non Current assets Investments 14 7 7 Property, plant and equipment 14 351 491 358 498 Current assets Trade and other receivables 15 2,447 25,258 Cash and cash equivalents 347,833 216,303 350,280 241,561 Total assets 350,638 242,059 Equity and liabilities Equity Share capital 18 1,454,310 1,030,595 Share premium account 18 9,808,072 9,453,737 Share option reserve 20 1,420,361 1,420,361 Retained earnings 20 (12,451,366) (11,742,978) Total equity 231,377 161,715 Current liabilities Trade and other payables 16 119,261 80,344 Total equity and liabilities 350,638 242,059 Unaudited Consolidated Statement of Changes in Equity For the year ended 31 December 2010 Share Capital Share Premium Share Option Reserve FX reserves Retained Earnings Attributable To Owners Total £ £ £ £ £ £ £ Balance at 1 January 2009 379,304 8,053,737 1,418,450 50,370 (8,491,140)1,410,721 1,410,721 Loss for the year - - - - (1,727,861) (1,727,861) (1,727,861) Other comprehensive income - - - (50,370) - (50,370) (50,370) Total comprehensive income for the year - - - (50,370) 1,727,861 (1,778,231) (1,778,231) Share placement 600,000 1,400,000 - - - 2,000,000 2,000,000 Shares issued to staff and directors 15,291 - (10,381) - 67,325 72,23572,235 Options issued to staff - - 12,292 - - 12,292 12,292 Issue of ordinary shares in lieu of fees 36,000 - - - 84,000 120,000120,000 Balance at 31 December 2009 1,030,595 9,453,737 1,420,361 - (10,067,676)1,837,017 1,837,017 Loss for the year - - - - (1,086,292) (1,086,292) (1,086,292) Other comprehensive income - - - 147,677 - 147,677 147,677 Total comprehensive income for the year - - - 147,677 (11,153,968) (938,615) (938,615) Share placement 368,181 306,819 - - - 675,000 675,000 Issue of Ordinary shares to staff 1,125 975 - - - 2,100 2,100 Issue of ordinary shares for services rendered 36,000 31,200 - - - 67,20067,200 Issue of ordinary shares in lieu of fees 18,409 15,341 - - - 33,750 33,750 Balance at 31 December 2010 1,454,310 9,808,072 1,420,361 147,677 (11,153,968) 1,676,452 1,676,452 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 shares granted but not exercised Retained Earnings cumulative net gains and losses recognised in the statementof comprehensive income Foreign exchange reserves cumulative net gains and losses recognised on consolidation Unaudited Company Statement of Changes in Equity For the year ended 31 December 2010 Share Capital Share Premium Share Option Reserve Retained Earnings £ £ £ £ Balance at 1 January 2009 379,304 8,053,737 1,418,450 (8,187,822) Loss for the year - - - (3,706,481) Total comprehensive income for the year - - - (3,706,481) Share placement 600,000 1,400,000 - - Shares issued to staff and directors 15,291 - (10,381) 67,325 72,235 Options issued to staff - - 12,292 - 12,292 Issue of ordinary shares in lieu of fees 36,000 - - 84,000 Balance at 31 December 2009 1,030,595 9,453,737 1,420,361 (11,742,978) Loss for the year - - - (708,388) Total comprehensive income for the year - - - (708,388) Share placement 368,181 306,819 - - 75,000 Issue of Ordinary shares to staff 1,125 975 - - 2,100 Issue of ordinary shares for services rendered 36,000 31,200 - - 67,200 Issue of ordinary shares in lieu of fees 18,409 15,341 - - 33,750 Balance at 31 December 2010 1,454,310 9,808,072 1,420,361 (12,451,366) 61,377 Unaudited Consolidated Statement of Cash Flows For the year ended 31 December 2010 2010 2009 £ £ Cash flows from operating activities Loss before taxation (900,456) (1,772,804) Depreciation 9,704 9,802 Foreign exchange differences 135,611 (68,017) Finance cost 270,733 69,675 Loss/(gain) on disposal of assets 509 (3,030) Impairment of assets under construction - 651,229 Interest income (1,672) (8,030) Expenses for equity settled share based payments 69,300 204,527 Expenses for equity settled commissions 33,750 - (382,521) (916,648) Changes in working capital Decrease in trade and other receivables 79,451 469,982 (Decrease)/increase in trade creditors and other payables (237,401) 14,761 Net cash used in operating activities (540,471) (431,905) Cash flows from investing activities Payments for property, plant and equipment and development costs (281,218) (2,784,014) Proceeds from disposal of fixed assets 776 11,466 Interest income 1,672 8,030 Net cash used in investing activities (278,770) (2,764,518) Cash flows from financing activities Proceeds from share placement 675,000 2,000,000 Proceeds from loans 532,775 893,161 Finance cost (270,733) (69,675) Net cash from financing activities 937,042 2,823,486 Net increase/(decrease) in cash and cash equivalents 117,801 (372,937) Cash and cash equivalents brought forward 278,381 651,318 Cash and cash equivalents carried forward 396,182 278,381 Unaudited Company Statement of Cash Flows For the year ended 31 December 2010 2010 2009 £ £ Cash flows from operating activities Loss before taxation (708,388) (3,706,481) Adjustment for: Depreciation 140 140 Interest income (16,011) (13,252) Expenses for equity settled share based payments 69,300 204,527 Expenses for equity settled commissions 33,750 - Provision for balance due from subsidiary 345,678 2,966,379 (275,531) (548,687) Changes in working capital Increase in receivables (322,867) (1,312,040) Decrease in payables 38,917 (15,727) Net cash used in operating activities (559,481) (1,876,453) Cash flows from investing activities Interest income 16,011 13,252 Net cash from investing activities 16,011 13,252 Cash flows from financing activities Proceeds from share placement 675,000 2,000,000 Net cash from financing activities 675,000 2,000,000 Net increase in cash and cash equivalents 131,530 136,798 Cash and cash equivalents brought forward 216,303 79,505 Cash and cash equivalents carried forward 347,833 216,303 Enquiries: Watermark Global Plc Jaco Schoeman, Chief Executive Officer Tel: + 44(0) 20 7233 1462 jschoeman@watermarkglobalplc.com Charles Zorab, Investor Relations Tel: + 44(0) 20 7233 1462 czorab@watermarkglobalplc.com Nominated Adviser: Cenkos Securities Ian Soanes/Elizabeth Bowman Tel: +44(0)20 7397 8928