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Market Cap
£2.83m
Change Today
Share Price
5.00p
Final Results
Water Hall Group Plc
25 April 2008
WATER HALL GROUP PLC
ANNOUNCEMENT OF PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007
• PRE-TAX PROFIT FROM CONTINUING OPERATIONS £0.915 MILLION (2006 - £0.462
MILLION)
• PRE-TAX PROFIT FROM ALL OPERATIONS £0.670 MILLION (2006 - £0.736 MILLION)
• BASIC EPS 1.19P PER SHARE (2006 - 1.31P PER SHARE)
• NET ASSETS PER SHARE UP 8.4% TO 8.47P
• VALUATION SURPLUS OF £1 MILLION, EQUIVALENT TO 1.76P PER SHARE, IN RESPECT
OF BUNKERS HILL INERT LANDFILL NOT REFLECTED IN ACCOUNTS
• INCREASE IN FREE CASH OF £1.191 MILLION FOR THE YEAR
• CASH BALANCES AND AVAILABLE-FOR-SALE FINANCIAL ASSETS TOTALLING £4.141
MILLION
• MANAGEMENT OBJECTIVES:
• MAXIMISE RETURNS FROM BUNKERS HILL LANDFILL
• MONITOR PROSPECTS FOR A PLANNING APPLICATION FOR BUNKERS SOUTH GRAVEL
EXTRACTION
• ESTABLISH ALTERNATIVE USES FOR THE WATER HALL SITE
• IDENTIFY A SUITABLE ACQUISITION
• GENERATE SUSTAINABLE EARNINGS AND GROWTH
CHAIRMAN'S STATEMENT AND REVIEW OF ACTIVITIES
Overview
I have previously reported that the cessation of activities at the Southfield
Wood part of the Water Hall Complex ('the Complex') in March 2007 would result
in a significant reduction in revenue in 2007. During the fourth quarter the
board reverted to its original decision to close the loss making collections
business which will impact the revenue in 2008; this business has now been
closed and the assets, along with other surplus plant and equipment, are being
sold and are expected to realise prices significantly in excess of book value.
Following the cessation and closure of these activities, the Group's only
operating activities are now the processing of inert waste for topsoil
production at the Materials Recovery Facility ("MRF") and its disposal, with the
unusable residue being tipped into the Bunkers Hill inert landfill ("Bunkers"),
part of the Complex.
The reduction in the Group's operating activities necessitated a substantial
reduction in employee numbers as the cost base for the continuing business was
aligned to meet its operational needs, a process which continued into the first
quarter of 2008.
During the second half of 2007, the Group experienced strong demand from
customers utilising the inert waste facility and average price increases of 40%
were achieved over the year, reflecting its excellent location in relation to
the customer base.
In December 2007, Hertfordshire County Council ("the Council") refused the
Company's planning application to vary the existing planning consent for the MRF
so that it would run contemporaneously with Bunkers, for which planning consent
runs until 2014. Given the rationale behind the planning application, the local
and national need for sustainable waste recycling and recovery facilities, and
having taken external professional advice on the reasons given by the Council
for refusal, the Company has appealed the Council's decision to the Secretary of
State. It is expected that the appeal will be heard by the Planning Inspectorate
in July 2008 with a decision announced within approximately three months of the
hearing.
If successful, it would enable the Company to develop a 'state of the art' MRF
on the site with attendant benefits for customers, the operation of Bunkers and
for the value of the Group's assets. In the event that the appeal is not
successful, the board is actively considering a number of alternative uses for
the land and buildings, which would be expected, subject to planning consent, to
enhance their present balance sheet values and business potential.
The board continues to monitor the status of the Hertfordshire Local Minerals
Plan Review and the prospects for the mining of the gravel reserves held under
option within Broad Green and Bunkers South which are adjacent to Bunkers. The
Company remains a consultee in respect of the Council's Waste Development Plan
("the Plan") where we are seeking the inclusion of these sites and the existing
MRF as waste management facilities. The Plan is currently expected to be
determined by the Planning Inspectorate in 2009.
During the year the board commissioned an independent professional valuation of
Bunkers. The valuation at December 2007 of £1.580m is based on its current
planning and licensing consents and represents a surplus of £1.0m over its
present book value. The valuation surplus has not been incorporated in the
Balance Sheet.
As reported in my interim statement, the board's decision to accept the offer
for the Group's investment in Premier Asset Management plc ("PAM"), when the
offer for the entire issued share capital became unconditional, resulted in a
profit after related costs of £669,000.
In November 2007, the Company acquired for investment purposes, through stock
market purchases, 7.30% of the issued share capital of Petards Group plc ("
Petards") at a cost of £238,000. Petards is an AIM listed support services
business whose activities are focused on high technology security and
surveillance solutions. Its stock market capitalisation at 31 December 2007 was
£2.865m. On 22 April 2008 the Petards board announced that it was in discussions
with a number of parties concerning the potential sale of the company and/or one
of its divisions or, alternatively, a refinancing of the business by a third
party. The board believes that the Petards business operates in interesting
areas and continues to keep the investment under review.
The board continues to seek a suitable acquisition for the Group and has
reviewed a number of opportunities. While it is believed that at least one of
the businesses reviewed would have provided the Group with a business in a
sector within which organic and acquisition growth could have been achieved, it
was not possible to meet the vendor's valuation expectations.
At the year end, the Group had cash and available-for-sale financial assets of
£5.396m of which £1.255m is held in escrow, jointly with the Environment Agency,
specifically for restoration and aftercare purposes and is therefore not
considered to be free cash resources available to the Group, although it will
fund some of the restoration and all of the presently forecast aftercare
liabilities of the Group.
Since the downturn in the economy during the autumn of 2007, the board is being
approached with more acquisition proposals than before and with what it regards
as more realism in respect of price expectations. The board continues to believe
that shareholders' interests are best served by the retention of cash and is not
proposing a dividend for the year (2006 - nil), in order to maximise available
resources towards funding an acquisition. It remains the board's intention to
make an acquisition to provide a sustainable and growing profit stream with
commensurate cash generation, such that the Company will be in a position to
return to the dividend list at an early opportunity.
Following the first time adoption of International Financial Reporting Standards
("IFRS") at the interim stage, these financial statements have also been
prepared under IFRS. The reporting format is different to that of previous
years; hence the reader might find it helpful to turn to note 1 - Segmental
Analysis to gain a more informed insight on the sales and profit and loss
contribution of the Group's continuing and discontinued activities during the
year. The adoption of IFRS has had no material impact on the Income Statement
and resulted in no changes to the Group's equity (shareholders' funds) in the
Balance Sheet.
Results for 2007
Profit before tax for the year from continuing operations was £915,000 (2006 -
£462,000). Discontinued operations lost £245,000 (2006 - £274,000 profit)
resulting in a total profit for the year of £670,000 (2006 - £736,000).
Utilisation of brought forward tax losses within the Group has meant that no
corporation tax was payable in respect of either year.
Basic earnings per share from continuing and discontinued operations were 1.19p
(2006 - 1.31p) per ordinary share with fully diluted earnings per share of 1.12p
(2006 - 1.27p). From continuing operations basic earnings per share were 1.62p
(2006 - 0.82p) and 1.52p (2006 - 0.81p) on a fully diluted basis.
These results were achieved from revenue on continuing operations of £1.839m
(2006 - £6.561m). Cost of sales was £473,000 (2006 - £4.556m) resulting in a
gross profit of £1.366m (2006 - £2.005m) representing 74.28% (2006 - 30.56%) of
sales. Sales in respect of discontinued activities, comprising Quarry Products
and activities within Waste Management, were £1.646m (2006 - £2.208m).
Administrative expenses were £1.215m (2006 - £1.638m) representing 66.07% of
continuing sales, (2006 - 24.97% of sales), the higher ratio reflecting the
change in the business model from a higher revenue lower gross margin business
to one based upon lower revenue, higher gross margins.
The profit for the year includes a gain of £669,000 on the disposal of the
investment in PAM and net interest income of £95,000, the same as the previous
year.
Total equity at 31 December 2007 was £4.800m (2006 - £4.399m) representing 8.47p
per ordinary share (2006 - 7.81p). Had the board incorporated the surplus of £1m
in respect of the professional valuation of Bunkers carried out in 2007, the
impact would have been to increase the total equity by that amount, equating to
an increase of 1.76p per ordinary share to 10.23p.
At the year end, cash balances, excluding £1.255m (2006 - £1.185m) held in
escrow jointly with the Environment Agency, but including available-for-sale
financial assets of £209,000, were £4.141m (2006 - £4.018m), an increase of
£123,000 and representing 7.30p per ordinary share. Cashflow from operations for
the year was an outflow of £433,000 (2006 - inflow of £2.996m). The reduction
in the year reflected the reduced size of the remaining operations, expenditure
on the partial restoration of the Southfield Wood landfill and the costs of
restructuring the business.
Capital expenditure on plant and equipment during the year was £75,000 (2006 -
£304,000) and proceeds from disposals of plant were £100,000 (2006 - £23,000).
Purchases of available-for-sale financial assets were £1.959m (2006 - £998,000)
which comprised purchases of a further £1.721m of shares in PAM and £238,000 was
applied to the purchase of the investment in Petards, all of which was financed
from the Group's resources. Proceeds from disposal of the PAM holding amounted
to £3.388m (2006 - nil). Interest received during the year was £228,000 (2006 -
£134,000) reflecting both the increase in amounts held on deposit and the
increase in bank deposit interest rates, particularly during the second half of
the year. Amounts added to the escrow deposit accounts, held jointly with the
Environment Agency, amounted to £70,000 (2006 - £150,000) giving a total cash
inflow from investing activities of £1.612m (2006 - outflow of £1.295m).
Proceeds from the issue of equity shares amounted to £12,000 (2006 - nil)
following the exercise of 400,000 options that had been granted under the Water
Hall Group plc Executive Share Option Scheme 2004 at the exercise price of 3p.
Total cash inflow from all activities was £1.191m (2006 - £1.685m) increasing
the Group's free cash resources to £3.932m (2006 - £2.741m).
Future
The board's primary focus for 2008 is, through acquisition, to develop a
business capable of generating a sustainable and growing earnings stream, such
that the Group's investment value can be determined by the earnings stream, cash
flow and growth prospects rather than on the more restrictive basis of its
balance sheet and the cash within it, as at present.
Its strategy over the past few years has been to operate the business for cash
generation. This policy has been driven by the board's view that the life span
for certain of the Group's activities was relatively short and that the Balance
Sheet needed to be developed such that the board could contemplate an
acquisition of a size which would provide a defined direction for the Group
coupled with delivering shareholder value. Given the strength of the Group's
Balance Sheet and subject to the strength and nature of the target business, the
board believes that the Group could make a substantial acquisition relative to
its present size.
The board is confident that the opportunities arising from the UK's present
economic conditions will increase the likelihood of identifying a suitable
target and it being converted into an acquisition during 2008.
As mentioned earlier the Group's sole revenue and profit stream is now the
processing of inert waste at the MRF and the disposal of top soils arising from
the process with the unusable residue being tipped into Bunkers. At forecast
rates of input the operating life of the Bunkers void space is expected to be
approximately 5 years. Recognising the underlying value of these assets and
their potential, the board's objective is to maximise both the cash generation
and the return on capital employed from this business over its remaining
operational life with a view to reinvestment in an appropriate business capable
of generating enhanced shareholder value.
A single site operation carries with it risks associated with economic and
weather conditions. Trading in the first three months of the year has been in
line with operating budgets and the board hopes to be able to report further
progress at the interim stage.
Finally, 2007 was a difficult year, both operationally and for the employees of
the Group at all levels, a significant number of whom were made redundant as
part of the cost cutting associated with the realignment of the business to meet
its present needs. On behalf of the board, I would like to record its thanks to
them all for their efforts and contribution to the wellbeing of the Group and
wish those who have left the Group's employment every success with their future
employment.
The AGM will be held on Wednesday 4 June 2008 at noon at the County Club, 158
High Street, Guildford, Surrey, GU1 3HJ. There are a range of issues to be
discussed and determined at the meeting including resolutions designed to bring
the Company's Memorandum and Articles of Association up to date.
The board welcomes those shareholders who are able to attend.
Raschid Abdullah
Chairman
Enquiries:
Raschid Abdullah Chairman Water Hall Group plc 07768 905004
John Wakefield Director, Corporate Finance BlueOar Securities Plc 0117 933 0020
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2007
2007 2006
Note £000 £000
Continuing operations
Revenue 1 1,839 6,561
Cost of sales (473) (4,556)
Gross profit 1,366 2,005
Administrative expenses 2 (1,215) (1,638)
Other gains 669 -
Operating profit 820 367
Finance income 95 95
Profit before income tax 1 915 462
Income tax expense - -
Profit for the year from continuing operations 915 462
Discontinued operations
(Loss) / profit for the year from discontinued operations 1 (245) 274
Profit for the year 1 670 736
Earnings per share 3
From continuing and discontinued operations
basic 1.19 p 1.31 p
diluted 1.12 p 1.27 p
From continuing operations
basic 1.62 p 0.82 p
diluted 1.52 p 0.81 p
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the year ended 31 December 2007
Note 2007 2006
Fair value (losses) / gains net of tax: £000 £000
on available-for-sale financial assets 5 (29) 279
reversal of previously recognised fair value gain following 5 (279) -
disposal of available-for-sale financial assets
Net (charge) / income recognised directly in equity (308) 279
Profit for the year 670 736
Total recognised income for the year 362 1,015
All attributable to equity shareholders of the company.
CONSOLIDATED BALANCE SHEET
As at 31 December 2007
2007 2006
Note £000 £000
Assets
Non-current assets
Property, plant & equipment 4 1,084 1,176
Available-for-sale financial assets 5 209 1,277
1,293 2,453
Current assets
Inventories - 56
Trade and other receivables 986 1,409
Cash - escrow deposits 1,255 1,185
Cash and cash equivalents 3,932 2,741
6,173 5,391
Non-current assets held-for-sale 6 63 -
6,236 5,391
Total assets 7,529 7,844
Equity and liabilities
Share capital 7 567 563
Share premium 7 8 -
Other reserves 8 77 358
Retained earnings 8 4,148 3,478
Total equity 4,800 4,399
Non-current liabilities
Provisions for liabilities and charges 1,749 1,876
1,749 1,876
Current liabilities
Trade and other payables 641 1,230
Provisions for liabilities and charges 339 339
980 1,569
Total liabilities 2,729 3,445
Total equity and liabilities 7,529 7,844
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2007
2007 2006
Notes £000 £000
Cash flows from operating activities
Profit from operations - Continuing operations 820 367
Loss from operations - Discontinued operations (245) 274
Profit from operations 575 641
Adjustments for:
Depreciation of property, plant & equipment 4 104 1,257
Impairment losses 4 - 9
Share based payment 9 27 35
Gain on disposal of property, plant & equipment (100) (19)
Gain on disposal of available-for-sale financial assets (669) -
(Decrease) / increase in provisions (260) 541
Operating cash (outflows)/inflows before movements in working capital (323) 2,464
Decrease in inventories 56 106
Decrease in receivables 423 121
(Decrease) / increase in payables (589) 305
Cash (used in) / generated from operations (433) 2,996
Cash flows from investing activities
Purchase of property, plant and equipment 4 (75) (304)
Proceeds from sale of property, plant and equipment 100 23
Purchase of available-for-sale financial assets 5 (1,959) (998)
Proceeds from sale of available-for-sale financial assets 5 3,388 -
Interest received 228 134
Amounts added to Environment Agency escrow accounts (70) (150)
Net cash from / (used in) investing activities 1,612 (1,295)
Cash flows from financing activities
Proceeds from issue of equity shares 7 12 -
Capital element of finance leases and hire purchase contracts - (16)
Net cash from / (used in) financing activities 12 (16)
Net increase in cash and cash equivalents 1,191 1,685
Cash and cash equivalents at beginning of year 2,741 1,056
Cash and cash equivalents at end of year 3,932 2,741
NOTES:
1. Turnover and segmental analysis
Water Hall Group has, until 2007, been engaged in two business segments, namely
waste management and quarrying. The primary reporting format is thus business
segments.
During the fourth quarter of 2007 the supply of consented aggregates from
Bunkers Hill was exhausted and quarry sales ceased and the plan to close the
skip collections business, initially made earlier in the year then reversed, was
finally confirmed. Accordingly, quarrying (a separate segment of the Group's
business) and skip collections (part of the waste management segment) have been
treated as discontinued activities. The Group now has one continuing activity
and business segment; this is waste management, comprising the receipt of waste
by the Materials Recycling Facility and the Bunkers Hill inert landfill site.
The scale of the continuing waste management activity had already reduced
substantially following completion of the infilling of the Southfield Wood
active waste landfill in March 2007. The segment results are as follows:
Revenue Segment
profit/(loss)
2007 2006 2007 2006
Continuing operations £000 £000 £000 £000
Waste Management 1,839 6,561 718 1,271
Other gains 669 -
Corporate expenses (567) (904)
Finance income 95 95
Profit before tax - continuing operations 915 462
Discontinued operations
Waste Management 1,134 1,243 (514) (24)
Quarry Products 512 965 169 279
1,646 2,208 (345) 255
Corporate expenses - -
Other gains 100 19
Finance income - -
(Loss) / profit before tax - discontinued operations (245) 274
Group revenue and profit for the year 3,485 8,769 670 736
All revenue, profits and losses arise from activities within the United Kingdom.
The Group has adopted IFRS8 Operating Segments in advance of its effective date.
IFRS8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief
operating decision maker in order to allocate resources to the segment and to
assess its performance. The Group's reportable segments are Quarry Products and
Waste Management, the continuing segment of which is Waste Management as
described above. The discontinued operations comprise the Bunkers Hill quarry
and the skip collections business.
Segment results represent the result of each segment without allocation of
corporate costs (central administration including directors salaries), other
gains and finance income
The segmental assets and liabilities at 31 December 2007 and capital expenditure
for the year then ended are as follows:
Segmental assets and liabilities 2007 2006
Continuing operations £000 £000
Waste Management assets 3,228 3,666
Waste Management liabilities and provisions (2,517) (3,106)
711 560
Corporate unallocated assets 4,238 4,059
Corporate unallocated liabilities (212) (339)
4,026 3,720
Discontinued operations
Waste Management assets 63 63
Waste Management liabilities and provisions - -
63 63
Quarry Products assets - 56
Quarry Products liabilities and provisions - -
- 56
Consolidated net assets 4,800 4,399
Depreciation and impairment Capital expenditure
losses
2007 2006 2007 2006
£000 £000 £000 £000
Continuing operations
Waste Management 59 621 35 460
Corporate 43 47 11 -
Discontinued operations
Waste Management 2 564 29 91
Quarry Products - 34 - -
104 1,266 75 551
All net assets are held in the United Kingdom. Corporate unallocated assets and
liabilities comprise those assets and liabilities not directly attributable to
the operating segments.
2. Expenses by nature
2007 2006
£000 £000
Administrative expenses include:
Depreciation of property, plant and equipment (note 4)
owned assets 104 1,234
leased assets - 23
Impairment of property, plant and equipment - 9
Operating lease payments :
plant and equipment 267 348
other 8 6
275 354
Services provided by the Group's auditors
Audit services
Fees payable to Company's auditor for the audit of parent company and 15 15
consolidated financial statements
Other services
Fees payable to Company's auditor for other services:
The audit of Group's subsidiaries pursuant to legislation 22 20
Tax services 10 14
47 49
3. Earnings per ordinary share
2007 2006
The calculation of earnings per ordinary share is based on:
The basic weighted average number of Ordinary shares in issue during the year 56,325,546 56,291,102
Dilutive effect of share options 4,877,793 2,800,000
The dilutive weighted average number of Ordinary shares in issue during the year 61,203,339 59,091,102
£000 £000
The profit for the year - Continuing operations 915 462
The (loss) / profit for the year - Discontinued operations (245) 274
The profit for the year 670 736
Interest on share option receipts - Continuing operations 14 14
Profit for the purpose of diluted earnings per share 684 750
4. Property, plant and equipment
Group Landfill Land and Plant and
Resources Buildings Equipment Total
Cost £000 £000 £000 £000
At 1 January 2006 10,488 564 4,191 15,243
Additions 247 - 304 551
Disposals - - (315) (315)
At 31 December 2006 10,735 564 4,180 15,479
Additions - 26 48 75
Reclassified as held for sale - - (1,206) (1,206)
Elimination on completion of landfill (4,819) - - (4,819)
Disposals - - (342) (342)
At 31 December 2007 5,916 590 2,680 9,186
Depreciation and impairment
At 1 January 2006 9,646 189 3,513 13,348
Depreciation charge 445 - 812 1,257
Disposals - - (311) (311)
Impairment charge - 9 - 9
At 31 December 2006 10,091 198 4,014 14,303
Depreciation charge 34 - 70 104
Reclassified as held for sale - - (1,143) (1,143)
Elimination on completion of landfill (4,819) - - (4,819)
Disposals - - (342) (342)
At 31 December 2007 5,306 198 2,598 8,103
Net book value 2007 610 392 82 1,084
Net book value 2006 644 366 166 1,176
Landfill resources includes costs of £1,438,000 (2006 - £1,438,000) and
accumulated depreciation of £1,245,000 (2006 - £1,236,000) arising from the
capitalisation of the IAS37 asset being the unexpended portions of the Group's
future restoration costs.
The Group's landfill resources and land and buildings are all freehold and
include the net book value of options amounting to £26,000 (2006 - £26,000) to
acquire, or to secure mineral and / or operating rights over land adjacent to
the Water Hall Complex subject, where applicable, to planning permission being
granted for the extraction of minerals. These options expire between 2012 and
2019.
Plant and equipment of the Group includes assets held under finance leases and
hire purchase contracts with a net book value of £nil (2006 - £nil). Annual
depreciation on these assets of £nil (2006 - £8,000) has been charged in the
income statement.
5. Investments
2007 2006
£000 £000
At 1 January 2007 1,277 -
Additions 1,959 998
Disposals (3,388) -
Net (loss)/gain transferred to equity (29) 279
Realised gain credited to income statement 390 -
At 31 December 2007 209 1,277
Available-for-sale financial assets include the following :
Listed equity securities - UK 209 1,277
Trade investment and long term loans - Egypt - -
209 1,277
Listed equity securities - UK
The fair value of available-for-sale financial assets traded in an active market
is based on quoted market prices at the balance sheet date.
At the beginning of the year the Group held 600,000 ordinary shares in Premier
Asset Management plc ('PAM'), an AIM listed company. Additional purchases were
made during the year increasing the Group's holding to 1,187,836 shares,
equivalent to 7.73% of its undiluted ordinary share capital, and the entire
holding was sold for £3.39m in September 2007 when an unconditional offer for
the entire issued ordinary share capital of PAM was accepted. A gain on
disposal, net of related expenses, of £669,000 is included in the income for the
year ended 31 December 2007 of which £279,000 had been recognised as an
unrealised gain within reserves at 31 December 2006.
At 31 December 2007 the available-for-sale investment represents the Group's
holding of 46,500,000 ordinary shares in Petards Group plc ('Petards') an AIM
listed company. Petards principal activities are the development, supply and
maintenance of technologies used in security and surveillance systems. The
shares represent 7.3 % of Petards issued ordinary share capital and were
acquired at an average cost per share of 0.51p. At the year end the mid-market
price was 0.45p per share.
Trade investment and long term loans - Egypt
The investment is a 19.5% (2006 - 19.5%) holding in the ordinary shares of
Tanzifco International SAE ("Tanzifco") incorporated in Egypt together with
certain related long term loans. Tanzifco holds a 15 year contract for the
provision of city cleaning services to the Governorate of Suez ("the Governorate
") which commenced on 1 March 2002. The Group is not actively involved in the
direction of the operating and financial policies of Tanzifco and, therefore,
the investment is treated as a trade investment.
Since activities commenced in Suez in March 2002 the main customer, the
Governorate, has withheld substantial payments due under the terms of the
contract to Tanzifco without proper explanation. Despite attempts to resolve
this dispute through the Egyptian courts no resolution has been achieved. In
2004 the Board considered the investment and related long term loans the Company
holds in Tanzifco and decided that it should terminate its involvement and
dispose of its interest in Tanzifco. Full provision was then made to reduce the
carrying value of the investment and related long term loans to nil.
The audited Financial Statements of Tanzifco for 2006 (the latest figures
available) show an aggregate capital and reserves of £299,000 (2005 - £315,000)
and a loss for the year of £14,000 (2005 - profit £85,000) translated at
prevailing exchange rates. The auditors' report of Tanzifco for 2006 is
qualified in respect of amounts due but not paid by the Governorate.
6. Non-current assets held for sale
2007 2006
£000 £000
Plant and equipment attributable to discontinued 63 -
activities
Non-current assets are classified as held-for-sale if their carrying amount will
be recovered principally through a sale transaction rather than through
continuing use. This condition is regarded as met only when the sale is highly
probable and the asset is available for sale in its present condition. The
anticipated disposal should be expected to qualify for recognition as a
completed sale within one year from the date of classification.
Non-current assets classified as held-for-sale are measured at the lower of
their previous carrying amount and fair value less costs to sell.
7. Share capital
Number of Ordinary Share premium Total
shares shares
(thousands) £000 £000 £000
At 31 December 2005 & 2006 56,291 563 - 563
Executive share option scheme:
Proceeds from shares issued 400 4 8 12
At 31 December 2007 56,691 567 8 575
8. Other reserves and retained earnings
Fair value Employee share Total - Retained
reserve based payment Other earnings
reserve reserves
£000 £000 £000 £000
At 1 January 2006 - 44 44 2,742
Gain in year 279 - 279 -
Profit for year - - - 736
Recognition of share based payment - 35 35 -
At 31 December 2006 279 79 358 3,478
Reversal of previously recognised fair
value gain following disposal of available-
for-sale financial assets (279) - (279) -
Profit for year - 670
Loss in year (29) - (29) -
Recognition of share based payment - 27 27 -
At 31 December 2007 (29) 106 77 4,148
9. Share based payments
The Group operates a share based (equity settled) remuneration scheme for
directors and senior management, the Water Hall Group plc Executive Share Option
Scheme 2004. Details of the share option changes during the year are as follows:
2007 2006
Share options Number of Exercise Number of Exercise price
shares price (p) shares (p)
Outstanding at the beginning of the 8,400,000 3.00 8,400,000 3.00
period
Exercised during the period (400,000) 3.00 -
As at 31 December 8,000,000 3.00 8,400,000 3.00
The share price at the date of exercise was 7p. All options were exercisable at
31 December 2007 (2006 - Nil). Share options outstanding at 31 December 2007 had
a weighted average exercise price of 3p and a weighted average remaining
contractual life of six years 10 months. The charge to the income statement for
share based payments for the year ended 31 December 2007 was £27,000 (2006 -
£35,000)
The Group has used the Black-Scholes model for the purposes of valuing options
to arrive at the share-based payment charge. The Black-Scholes model arrives at
a fair value per option that takes into account the effect of financial
assumptions, including the future share price volatility, dividend yield and
risk-free interest rates. The expected volatility was determined based on both
the volatility of the Group's share price during the last 5 years and the
volatility of other similar quoted groups. Employee exit rates and the expected
period from vesting to exercise are also considered, based on historical
experience. The principal assumptions are:
Share price at grant date 3.00p
Exercise price 3.00p
Expected volatility 55%
Expected life 3 years
Risk free rate 5.75%
Fair value per option 1.26p
10. The financial information set out above does not constitute the Company's
financial statements for the years ended 31 December 2007 or 2006. The
financial information for 2006 is derived from the financial statements for 2006
which have been delivered to the Registrar of Companies. The auditors have
reported on the 2006 statements; their report was unqualified and did not
contain a statement under section 237(2) or (3) of the Companies Act 1985. The
financial statements for 2007 have been audited and will be delivered to the
Registrar of Companies following the Company's Annual General Meeting on 4 June
2008. The auditors have reported on the 2007 statements; their report was
unqualified and did not contain a statement under section 237(2) or (3) of the
Companies Act 1985.
The preliminary announcement has been prepared on the basis of the accounting
policies as stated in the financial statements for the year ended 31 December
2007.
Whilst the financial information included in this preliminary announcement has
been computed in accordance with International Financial Reporting Standards
(IFRSs), this announcement does not itself contain sufficient information to
comply with IFRSs. The company expects to publish full financial statements that
comply with IFRSs in April 2008.
11. A copy of the Company's annual report and accounts for 2007 will be mailed
to shareholders shortly and will also be available for collection from the
Company's registered office.
24 April 2008
This information is provided by RNS
The company news service from the London Stock Exchange