TIDMWET
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
GBP4.5m
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 GBP2,716,000 (2011 loss: GBP620,000),
earnings per share of 0.17p (2011 loss: 0.076p per share)
-- Stated net asset value at 30 June 2012 was 0.33p per share
Results Summary
Profit after tax for the six month period ended 30 June 2012 was
GBP2,716,000 (2011: loss of GBP629,000), 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 GBP2,751,000. The cash
position of the Company at 30 June 2012 was approximately
GBP796,000.
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 GBP1.8m valuing WUC at
GBP4.5m.
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 GBP1.55m 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
GBP5.0 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
GBP'000 GBP'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 113 (312)
continuing operations
Discontinued Operations
Profit/(Loss) for the year from 9 2,751 (433)
discontinued operations
Profit/(Loss) for the period 2,638 (745)
Other comprehensive income
Exchange differences on translating
foreign operations
Exchange differences arising 78 116
during the period
Total comprehensive income/ 2,716 (629)
(loss) for the period
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
GBP'000 GBP'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 - 3,664
as held for sale
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 5,018 2,459
owners of the Company
Non-controlling interest - 74
Total equity 5,018 2,533
Current liabilities
Trade and other payables 59 189
Liabilities of disposal groups - 1,738
classified as held for sale
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 Share Premium Share Option Retained FX Reserves Attributable Total
GBP'000 GBP'000 Reserve Earnings GBP'000 to Owners
GBP'000 GBP'000 GBP'000 GBP'000
Balance 1,454 9,808 1,420 (11,154) 148 1,676 1,676
01/01/2011
Loss for - - - (745) - (745) (745)
the
period
Other - - - - 116 116 116
comprehensive
income
Total - - - (745) 264 (629) (629)
comprehensive
income
for the
period
Share 645 860 - - - 1,505 1,505
placement
Issue of 41 55 - - - 96 96
ordinary
shares
for
raising
fees
Balance 2,140 10,723 1,420 (11,899) 264 2,648 2,648
30/06/2011
Balance 2,247 10,856 1,428 (12,150) 78 2,458 2,458
01/01/2012
Loss for - - - 2,637 - 2,638 2,638
the
period
Other - - - - (78) (78) (78)
comprehensive
income
Total - - - 2,637 (78) 2,560 2,560
comprehensive
income
for the
period
Balance 2,247 10,856 1,428 (9,513) - 5,018 5,018
30/06/2012
The following describes the nature and purpose of each reserve
within owners' equity:
ReserveDescription 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
GBP'000 GBP'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 2,100 (143)
Decrease/(increase) in trade and other receivables
Decrease / (Increase) in trade (1,869) 18
creditors and other payables
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
2.1Statement 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 on13 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.
2.2Going 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 GBP1.8 million of which approximately GBP1.55m
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
3.1Segmental 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
GBP'000
Result
Segment result from continuing 441
operations
Interest 1
income
Loss before 442
tax
Discontinued activities - water 2,196
technology (South Africa)
2,638
Other segment items included in the income statement:
Corporate Water Technology
United Kingdom South Africa Total
(Discontinued)
GBP'000 GBP'000 GBP'000
Depreciation 1 1 2
Corporate Water Technology
Statement of United Kingdom South Africa Consolidation Total
Financial (Discontinued) Adjustments
Position
GBP'000 GBP'000 GBP'000 GBP'000
Segment assets 4,785 4,453 (4,162) 5,076
Segment (318) (6,069) 6,329 (58)
liabilities
Net 4,467 (1,616) 2,167 5,018
assets/(liabilities)
3.2Segmental information for the period ended 30 June 2011
Corporate
United Kingdom
GBP'000
Result
Segment result from continuing (313)
operations
Interest 1
income
Loss before (312)
tax
Discontinued activities - water (433)
technology (South Africa)
(745)
Other segment items included in the income statement:
Corporate Water
Technology Total
United Kingdom South Africa
(Discontinued)
GBP'000 GBP'000 GBP'000
Depreciation - 4 4
Share based payments 96 - 96
for capital raising
Corporate Water
Technology
Statement of United Kingdom South Africa Consolidation Total
Financial (Discontinued) Adjustments
Position
GBP'000 GBP'000 GBP'000 GBP'000
Segment assets 5,027 4,465 (2,390) 7,102
Segment (186) (5,600) 3,559 (2,227)
liabilities
Net 4,841 (1,135) 1,169 4,875
assets/(liabilities)
4.Other gains and losses
30 June 2012 30 June 2011
GBP GBP
Gains on disposal of disposal 555 -
groups held for sale
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 GBP 2,638,000 (2011: Loss GBP745,000). 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 Company and Company and Group profit
exchange Group Group and
reserve share share loss
option premium account
reserve account
GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 148 1,420 9,808 (11,153)
2011
Loss for - - - (997)
the year
Exchange (70) - - -
difference
Options granted - 8 - -
to Directors
New shares - - 860 -
issued
Share based - - 188 -
payments
At 31 December 78 1,428 10,856 (12,150)
2011
Loss for the - - - 2,637
period
Exchange (78) - - -
difference
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 GBP4.50
million comprising GBP1.81 million in cash and GBP2.69 million in
MRI shares.
Loss for the year from discontinued operations
30 June 2012 30 June 2011
GBP GBP
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 (180) (433)
after taxation
Profit on re-measurement to fair
value less cost to sell
Gain on disposal of operations 2,931 -
Profit/(loss) for the year from 2,751 (433)
discontinued operations
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
GBP GBP
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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