Water Hall Group Plc
25 September 2007
Water hall Group plc
Interim results for the half year ended 30 June 2007.
Chairman's Statement
Overview
At the time of my year-end statement accompanying the 2006 Report & Accounts and
at the Annual General Meeting held in April, shareholders were advised that,
following the completion of the Southfield Wood landfill, until then the Group's
largest operating activity, both sales and operating performance would be much
reduced for 2007. The board has reviewed and restructured the ongoing business,
a process which included a significant number of redundancies and a reduction in
the cost base. Despite the cost of redundancies, the Group made a profit of
£110,000 for the half-year ended 30th June 2007, compared with £237,000 for the
corresponding period of 2006.
Following a review of the planning options available to the business, the board
reversed its earlier decision to close the waste container collections business
and has submitted a planning application which would enable it to continue to
operate its Collections business and Materials Recycling Facility (MRF) in
conjunction with the Bunkers landfill operations.
Bunkers landfill, the Group's principal remaining activity, was affected by both
the severe wet weather conditions that persisted during the period and also
delayed engineering works, resulting in an 18% reduction in the volume of waste
received compared to last year. Against this background, average prices
increased by almost 40% compared with the same period last year which, combined
with the introduction of soil recycling, resulted in an improved operating
profit for this activity. Engineering works have now been completed and the
Group anticipates receiving approval from the Environment Agency to commence
tipping in the new area during the fourth quarter. During these works,
additional seams of gravel were revealed enabling aggregate sales to continue
into September when this activity ceases.
Results
The Group has adopted International Financial Reporting Standards (IFRS) for the
first time in this interim statement, details of which are set out within the
notes. The adoption of IFRS has had no material impact on this period's income
statement or balance sheet, or on the comparative amounts.
Sales for the half-year were £1.927m (2006 - £4.253m). After cost of sales of
£1.236m (2006 - £3.247m) gross profit was £691,000 (2006 - £1.006m). Operating
expenses were £610,000 (2006 - £809,000) resulting in an operating profit for
the half-year of £81,000 (2006 - £197,000). After net interest receivable of
£29,000 (2006 - £40,000), profit before tax was £110,000 (2006 - £237,000). No
tax is payable in respect of either period. Basic earnings per share were 0.20p
(2006 - 0.42p) and fully diluted earnings per share were 0.18p (2006 - 0.41p).
Cash inflow from operating activities of £194,000 (2006 - £1.234m) was applied
to capital expenditure, including investments, totalling £254,000 (2006 -
£131,000), and an increase of £35,000 (2006 - £122,000) in the escrow deposit
accounts, all financed from the Group's resources. Capital expenditure included
£199,000 on the acquisition of a further 90,000 ordinary shares in Premier Asset
Management plc ('Premier') increasing the Group's holding to 4.52% of its issued
equity. The decrease in cash and cash equivalents during the half-year was
£95,000 (2006 - increase of £964,000).
Total equity at 30 June 2007 was £4.593m (December 2006 - £4.399m) equating to
basic net assets of 8.16p (December 2006 - 7.81p) per ordinary share. At 30 June
2007, the Group had cash balances of £2.646m (December 2006 - £2.741m) in
addition to cash held in escrow deposit accounts of £1.220m (December 2006 -
£1.185m). Cash balances and available-for-sale financial assets excluding escrow
deposits total £4.206m (December 2006 - £4.018m)
The Group has submitted an application to vary the existing planning consent
linking its MRF to Bunkers landfill in place of Southfield Wood. Approval by
Hertfordshire County Council would serve to extend the active life of the MRF to
2014 in line with the consented life of the Bunkers landfill. The directors are
advised that the application is expected to be determined by the Council on 6
November 2007.
The directors consider that, based on professional advice, the market value of
the Bunkers landfill at 30 June 2007 is significantly in excess of its
historical cost carrying value of £482,000.
The directors continue to keep under review the prospects for success of a
planning application to extract and process gravel reserves from Bunkers South
and Broad Green, presently held under various long-term option arrangements.
Premier Asset Management plc
On 16 July 2007, a cash offer was made for Premier at 285p per share by a
special purpose management led investment vehicle, Harvard Bidco Limited ('HB').
While the offer was at a significant premium to the average purchase price of
the Group's 4.52% investment, the directors were firmly of the view that the
offer failed to reflect the significant achievements of Premier's management
over the past two years or the immediate prospects for the business. During the
offer period the board wrote to Premier's shareholders setting out their reasons
for not wishing to accept the offer and acquired further shares in Premier
taking the Group's undiluted holding to 7.73%.
Subsequently, HB declared its offer unconditional and confirmed its intention to
cancel Premier's AIM listing. Faced with the prospect of remaining a minority
shareholder in a private company, the directors reluctantly accepted the offer.
The proceeds of the sale of £3.385m have now been received and will result in a
gain in excess of £650,000, after costs of share purchases and related matters,
being recognised as income in the second half of the year. The Group's balance
sheet already reflects £363,000 of the total gain in reserves by reason of
inclusion of the investment at fair value at 30 June 2007. As a consequence of
prior years' tax losses, the directors do not anticipate any tax arising on this
gain.
Future
Given its strong asset base and cash position the directors consider the Group
remains well placed to pursue selective acquisition and investment
opportunities. The directors therefore wish to retain liquid funds within the
Group for future development; hence no dividend has been declared for the period
(2006 - nil).
Although the second half-year will benefit from the profit on disposal of the
Premier shares, it will not have the benefit of any Southfield Wood active waste
sales that arose in the first quarter of 2007, nor any aggregate sales beyond
September. Sales and operating performance in the second half are therefore not
expected to match that of the first half. While the directors and management are
unable to predict the outcome for the second half, they are continuing with an
ongoing programme of cost reductions and cash generation with the over-riding
objective being that of identifying one or more acquisitions for the longer term
development of the Group.
Raschid Abdullah
Chairman
24 September 2007
For further information, please contact:
Raschid Abdullah Chairman, Water Hall Group plc 07768 905004
John Wakefield Blue Oar Securities plc 0117 933 0020
Consolidated Income Statement
for the half year ended 30 June 2007
Unaudited Audited
Half year Half year Year to
to to
30 June 30 June 31 December
2007 2006 2006
Continuing operations Notes
£000 £000 £000
Revenue 4 1,927 4,253 8,769
Cost of sales (1,236) (3,247) (6,402)
Gross profit 691 1,006 2,367
Operating expenses (610) (809) (1,691)
Operating profit 4 81 197 676
Net finance income 29 40 95
Profit before taxation 4 110 237 771
Taxation 5 - - -
Profit on continuing operations attributable to 4 110 237 771
equity shareholders of the company
Earnings per ordinary share 6
From continuing operations
Basic 0.20p 0.42p 1.37p
Diluted 0.18p 0.41p 1.30p
Consolidated Statement of Changes in Equity
for the half year ended 30 June 2007
Share Fair value Retained
capital reserve earnings Total
£000 £000 £000 £000
At 1 January 2006 563 - 2,786 3,349
Profit for the half year - - 237 237
Balance at 30 June 2006 (Unaudited) 563 - 3,023 3,586
Profit for the half year - - 534 534
Gain on available for sale financial assets - 279 - 279
Balance at 31 December 2006 (Audited) 563 279 3,557 4,399
Profit for the half year - - 110 110
Gain on available for sale financial assets - 84 - 84
Balance at 30 June 2007 (Unaudited) 563 363 3,667 4,593
Consolidated Balance Sheet
as at 30 June 2007
Unaudited Audited
30 June 30 June 31 December
2007 2006 2006
Notes £000 £000 £000
Assets
Non-current assets
Intangible assets 7 26 35 26
Property, plant and equipment 8 1,141 1,526 1,150
Available-for-sale financial asset 13 1,560 - 1,277
Total non-current assets 2,727 1,561 2,453
Current assets
Inventory 62 60 56
Trade and other receivables 607 1,705 1,409
Cash and cash equivalents - escrow deposits 9 1,220 1,157 1,185
Cash and cash equivalents 9 2,646 2,020 2,741
Total current assets 4,535 4,942 5,391
Total assets 7,262 6,503 7,844
Equity & liabilities
Non-current liabilities
Provisions for other liabilities and charges 10 1,804 1,469 1,876
Total non-current liabilities 1,804 1,469 1,876
Current liabilities
Trade and other payables 603 1,009 1,230
Provisions for other liabilities and charges 10 262 439 339
Total current liabilities 865 1,448 1,569
Equity
Share capital 11 563 563 563
Fair value reserve 363 - 279
Retained earnings 3,667 3,023 3,557
Total equity 4,593 3,586 4,399
Total equity and liabilities 7,262 6,503 7,844
Consolidated Cash Flow Statement
for the half year ended 30 June 2007
Unaudited Audited
Half year Half year Year to
to to
30 June 30 June 31 December
2007 2006 2006
Notes £000 £000 £000
Net cash flow from operating activities 194 1,234 3,130
Investing activities
Purchase of property, plant and equipment (55) (142) (304)
Disposal of property, plant and equipment - 11 23
Purchase of available-for-sale financial assets (199) - (998)
Increase in Environment Agency escrow accounts (35) (122) (150)
Net cash flow from investing activities (289) (253) (1,429)
Financing activities
Interest element of hire purchase and finance lease - (1) -
contracts
Capital element of hire purchase and finance lease - (16) (16)
contracts
Net cash flow from financing activities - (17) (16)
Net (decrease) / increase in cash and cash (95) 964 1,685
equivalents in the period
Cash and cash equivalents at the beginning of the 9 2,741 1,056 1,056
period
Cash and cash equivalents at the end of the period 9 2,646 2,020 2,741
Notes to the Interim Statement
1. General Information
Water Hall Group plc is a public limited company ('Company') incorporated in the
United Kingdom under the Companies Act 1985 (registration number 438328). The
Company is domiciled in the United Kingdom and its registered address is
Parallel House, 32 London Road, Guildford, GU1 2AB. The Company's Ordinary
Shares are traded on the Alternative Investment Market ('AIM'). The Group's
principal activity is waste management.
The interim financial results for the six month period ended 30 June 2007 are
unaudited. The financial information contained in this interim statement does
not constitute statutory accounts as defined in section 240 of the Companies Act
1985. The financial information for the year ended 31 December 2006 has been
extracted from the statutory accounts for the Group for that year, now amended
to conform with the IFRS accounting policies expected to be applied in the
consolidated financial statements for the year ended 31 December 2007. Statutory
accounts for the year ended 31 December 2006, upon which the auditors have given
an unqualified audit report and made no statements under Sections 237(2) or (3)
of the Companies Act 1985, have been filed with the Registrar of Companies.
Further copies of the report are available from the Company Secretary at the
registered office, and on the Company's website at http://
www.waterhallgroupplc.com/ .
2. Basis of preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards ('IFRS') for the first time. The Group will apply
IFRS in its consolidated financial statements for the year ending 31 December
2007. Therefore, these interim statements for the six months to 30 June 2007 are
the Group's first financial statements prepared in accordance with IFRS and
International Financial Reporting Committee ('IFRIC') interpretations that are
expected to be applicable to the consolidated financial statements for the year
ending 31 December 2007. These standards remain subject to ongoing amendment and
/or interpretation and are therefore still subject to change. Accordingly,
information contained in these interim financial statements may need updating
for subsequent amendments to IFRS required for first time adoption or for new
standards issued post the balance sheet date.
The basis of presentation followed in this interim report differs from those set
out in the Annual Report and Accounts for the year ended 31 December 2006 which
were prepared in accordance with United Kingdom accounting standards (UK GAAP).
A detailed explanation of the impact of the transition from UK GAAP to IFRS is
contained in the appendix to this interim report but has resulted in no changes
to previously reported profits or shareholders' equity.
The interim financial statements have been prepared in accordance with all major
aspects of IAS34 Interim Financial Reporting, as adopted by the European Union.
They do not include all the information required for full annual financial
statements, and should be read in conjunction with the consolidated financial
statements for the year ended 31 December 2006. The interim financial statements
have been prepared under the historical cost convention and on a going concern
basis with the exception of the revaluation of investments which are carried at
fair value.
The Group has adopted all of the standards and interpretations issued by the
International Accounting Standards Board and the International Financial
Reporting Interpretations Committee that are relevant to its operations. As at
the date of approval of these consolidated financial statements, the following
interpretations were in issue but not yet effective:
• IFRS7, Financial Instruments: Disclosures;
• IFRS8, Operating Segments;
• IFRIC 8, Scope of IFRS 2;
• IFRIC 9, Reassessment of embedded derivatives;
• IFRIC 10, Interim Financial Reporting and Impairment;
• IFRIC 11, IFRS2: Group and Treasury share transactions; and
• IFRIC 12, Service concession arrangements.
The Directors do not anticipate that the adoption of these interpretations in
future reporting periods will have a material impact on the Group's results.
3. Accounting policies
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries). The
results of subsidiaries acquired or disposed of during the year are included in
the consolidated income statement from the effective date of acquisition or up
to the effective date of disposal, as appropriate. Where necessary, adjustments
are made to the financial statements of subsidiaries to bring their accounting
policies into line with those used by other members of the Group. All
intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Segmental reporting
A segment is a distinguishable component of the Group that is engaged either in
providing products or services (business segment), or in providing products or
services within a particular environment (geographic segment), which is subject
to risks and rewards that are different from those of other segments.
Inter-segment pricing is determined on an arm's length basis. Segment results
include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis.
Revenue
Revenue represents amounts charged to third parties, including Landfill tax, net
of VAT.
Property, plant and equipment
Property, plant and equipment are stated at cost or fair value on acquisition
less depreciation. Depreciation is provided on a straight-line basis, at rates
calculated to write off the cost less the estimated residual value of each asset
over its expected useful economic life. The residual value is the estimated
amount that would currently be obtained from disposal of the asset if the asset
were already of the age and in the condition expected at the end of its useful
life.
The annual rate of depreciation for each class of depreciable asset is:
Buildings 10% - 20%
Plant and equipment 10% - 100%
Landfill resources Over the life of each site in proportion
to the rate of landfilling
The carrying value of tangible fixed assets is assessed annually and any
impairment is charged to the income statement.
The operations of waste management and quarrying over an extended period will
result in an obligation to restore the site. Water Hall Group plc recognises the
cost of restoring the site as an addition to the cost of the asset and as a
liability in the period in which they are incurred or, if they cannot be
reliably measured at that time, in the earliest period in which they can be
reliably measured. The costs are discounted where the time value of money is
material.
Investments
Investments are initially recognised at fair value, being the consideration
given including, where appropriate, acquisition costs associated with the
investment. The Group's investments in the funds that it manages are designated
as 'available-for-sale' financial assets and are included in non-current assets.
Such investments are subsequently carried at fair value, with any gains or
losses arising from changes in fair value being recognised in equity. Financial
assets are derecognised when the rights to receive cash flows from the
investments have expired or have been transferred and the Group has transferred
substantially all risks and rewards of ownership.
The Group assesses at each reporting date whether there is objective evidence
that a financial asset or a group of financial assets is impaired. In the case
of a financial asset classified as available for sale, a significant or
prolonged decline in the fair value of the financial asset below its cost is
considered as an indicator that the financial asset is impaired. If any such
evidence exists for available-for-sale financial assets, the cumulative loss -
measured as the difference between the acquisition cost and the current fair
value, less any impairment loss on that financial asset previously recognised in
profit or loss - is removed from equity and recognised in the income statement.
Impairment losses recognised in the income statement on financial assets are not
reversed through the income statement.
Impairment
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any).
The recoverable amount of the assets is the greater of their value in use and
fair value less costs to sell. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the
risks specific to the asset.
Inventory
Inventories are stated at the lower of cost and net realisable value. Cost is
determined using the FIFO method. Net realisable value is the estimated selling
price in the ordinary course of business less applicable variable selling
expenses.
Landfill Engineering Costs
Landfill engineering costs, which are included in trade and other receivables,
are recognised as the expenditure is incurred in preparation for the removal of
aggregates and preparing a particular landfill cell prior to the commencement of
landfill operations. These costs are amortised over the life of each site in
proportion to the rate of extraction or landfill respectively.
Operating leases
Amounts payable under operating leases are charged to the income statement on a
straight-line basis over the lease term.
Borrowing costs
Borrowing costs are recognised in profit or loss in the period in which they are
incurred.
Provisions
Full provision has been made for the net present value (NPV) of the Group's
estimated costs, in respect of restoration liabilities at the Group's landfill
sites, the unexpended portion of which has been capitalised in property, plant
and equipment. The Group continues to provide for all aftercare costs over the
life of its landfill sites, in proportion to the rate at which each site is
filled, since liabilities in relation to these costs increase as waste is
deposited. All long-term provisions for restoration and aftercare costs are
calculated based on the NPV of expected future costs, discounted at 5% per
annum. The effect of the unwinding of the discount element on existing
provisions is reflected as a financial item.
Provisions are classified as current when they are expected to be settled within
one year of the balance sheet date.
Related party transactions
IAS24, 'Related Party Disclosures', requires the disclosure of the details of
transactions between the reporting entity and related parties. In the
consolidated financial statements, all transactions between Group companies are
eliminated.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred
tax. The tax currently payable is based on taxable profit for the year. Taxable
profit differs from profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used
in the computation of taxable profit, and is accounted for using the balance
sheet liability method. Deferred tax liabilities are generally recognised for
all taxable temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. The carrying amount of
deferred tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset realised. Deferred tax is
charged or credited to the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current tax assets and liabilities on a net
basis.
Financial assets and liabilities
Financial assets and financial liabilities are recognised on the balance sheet
when the Group becomes a party to the contractual provisions of the instrument.
Trade receivables are measured at initial recognition at fair value. Appropriate
allowances for estimated irrecoverable amounts are recognised in profit or loss
when there is objective evidence that the asset is impaired.
Investments are recognised and derecognised on a trade date basis. An impairment
loss is recognised in profit or loss when there is objective evidence that the
asset is impaired, and is measured as the difference between the investment's
carrying amount and the present value of estimated future cash flows discounted
at the effective interest rate computed at initial recognition. Impairment
losses are reversed in subsequent periods when there is an increase in the
investment's recoverable amount based on an event occurring after the impairment
was recognised. The carrying amount of the investment at the date the impairment
is reversed shall not exceed what the amortised cost would have been had the
impairment not been recognised.
Cash and cash equivalents comprise cash on hand and demand, deposits and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
Financial liabilities and equity instruments issued by the Group are classified
according to the substance of the contractual arrangements entered into and the
definitions of a financial liability and an equity instrument. An equity
instrument is any contract that evidences a residual interest in the assets of
the Group after deducting all of its liabilities. Equity instruments issued by
the Company are recorded at the proceeds received, net of direct issue costs.
Trade payables are measured at fair value.
4. Segmental analysis
Water Hall Group is engaged in two business segments, namely waste management
and quarrying. The primary reporting format is thus business segments.
Six months ended 30 June 2007 (Unaudited) Waste Quarry Corporate Total
management products unallocated
expenses
£000 £000 £000 £000
Revenue 1,660 267 - 1,927
Operating profit / segment results 294 50 (263) 81
Finance cost - unwinding of discount on (78) - - (78)
provisions
Finance income 34 - 73 107
Profit / (loss) before taxation 250 50 (190) 110
Taxation - - - -
Profit / (loss) for the period 250 50 (190) 110
Six months ended 30 June 2006 (Unaudited) Waste Quarry Corporate Total
management products unallocated
expenses
£000 £000 £000 £000
Revenue 3,659 594 - 4,253
Operating profit / segment results 497 147 (447) 197
Finance cost - unwinding of discount on (20) - - (20)
provisions
Finance income 25 - 35 60
Profit / (loss) before taxation 502 147 (412) 237
Taxation - - - -
Profit / (loss) for the period 502 147 (412) 237
Year ended 31 December 2006 (Audited) Waste Quarry Corporate Total
management products unallocated
expenses
£000 £000 £000 £000
Revenue 7,804 965 - 8,769
Operating profit / segment results 1,374 171 (869) 676
Finance cost - unwinding of discount on (39) - - (39)
provisions
Finance income 49 - 85 134
Profit / (loss) before taxation 1,384 171 (784) 771
Taxation - - - -
Profit / (loss) for the year 1,384 171 (784) 771
5. Taxation
Taxation on ordinary activities is reduced to £nil by utilising tax losses
brought forward.
6. Earnings per ordinary share
The calculation of earnings per ordinary share is based on: 30 June 2007 30 June 2006 31 December
2006
The basic weighted average number of Ordinary shares in issue 56,291,102 56,291,102 56,291,102
during the period.
Dilutive effect of share options 5,031,016 1,921,851 2,800,000
The dilutive weighted average number of Ordinary shares in 61,322,118 58,212,953 59,091,102
issue during the period
The profit for the period £110,000 £237,000 £771,000
7. Intangible Assets
Group
Options
£000
Cost
At 1 January 2006 65
Additions -
Disposals -
At 30 June 2006 (Unaudited) 65
Additions -
Disposals -
At 31 December 2006 (Audited) 65
Additions -
Disposals -
At 30 June 2007 (Unaudited) 65
Depreciation and impairment
At 1 January 2006 (30)
Amortisation charge -
Disposals -
Impairment losses -
At 30 June 2006 (Unaudited) (30)
Amortisation charge -
Disposals -
Impairment losses (9)
At 31 December 2006 (Audited) (39)
Amortisation charge -
Disposals -
Impairment losses -
At 30 June 2007 (Unaudited) (39)
Net book value 30 June 2007 26
Net book value 31 December 2006 26
Net book value 30 June 2006 35
The Group holds options to acquire or secure the 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.
8. Property, Plant & Equipment
Landfill Land and Plant and
Resources Buildings Equipment Total
£000 £000 £000 £000
Cost
At 1 January 2006 10,488 499 4,191 15,178
Additions - - 141 141
Disposals - - (204) (204)
At 30 June 2006 (Unaudited) 10,488 499 4,128 15,115
Additions 247 - 163 410
Disposals - - (111) (111)
At 31 December 2006 (Audited) 10,735 499 4,180 15,414
Additions - 26 28 54
Disposals - - - -
At 30 June 2007 (Unaudited) 10,735 525 4,208 15,468
Depreciation and impairment
At 1 January 2006 (9,646) (159) (3,513) (13,318)
Depreciation charge (110) - (362) (472)
Disposals - - 201 201
Impairment losses - - - -
At 30 June 2006 (Unaudited) (9,756) (159) (3,674) (13,589)
Depreciation charge (335) - (450) (785)
Disposals - - 110 110
Impairment losses - - - -
At 31 December 2006 (Audited) (10,091) (159) (4,014) (14,264)
Depreciation charge (23) - (40) (63)
Disposals - - - -
Impairment losses - - - -
At 30 June 2007 (Unaudited) (10,114) (159) (4,054) (14,327)
Net book value 30 June 2007 621 366 154 1,141
Net book value 31 December 2006 644 340 166 1,150
Net book value 30 June 2006 732 340 454 1,526
9. Cash and Cash Equivalents
Unaudited Audited
Half year to Half year to Year to
30 June 30 June 31 December
2007 2006 2006
£000 £000 £000
Escrow deposits 1,220 1,157 1,185
Short term bank deposit 2,475 1,900 2,539
Current account 171 120 202
2,646 2,020 2,741
Escrow deposits comprise £1,220k (December 2006 - £1,185k) deposited by Water
Hall (England) Limited in five bank accounts held jointly with the Environment
Agency in escrow. These escrow accounts are to be used specifically for
restoration and aftercare purposes and have been excluded from the Company's
cash resources in the cash flow statement. Further payments of £70k are due to
be paid into the escrow accounts in 2007.
The Group's cash and cash equivalents are all denominated in sterling and are
held at floating rates. The interest rate in respect of floating rate assets is
based on bank rates such as LIBOR.
10. Provisions for other liabilities and charges
Group Restoration
and
aftercare
£000
At 1 January 2006 1,388
Additional provisions 506
Unwinding of discount 19
Utilised during the period (5)
At 30 June 2006 (Unaudited) 1,908
Additional provisions 532
Unwinding of discount 19
Utilised during the period (244)
At 31 December 2006 (Audited) 2,215
Additional provisions 20
Unwinding of discount 64
Utilised during the period (233)
At 30 June 2007 (Unaudited) 2,066
The restoration and aftercare provisions relate to the costs of restoring and
reinstating land from which the mineral resources are extracted, addressing
environmental issues at quarry and landfill sites and planning and related
matters. These costs are expected to be incurred at varying times between 2007
and 2069.
11. Share Capital
2007 2007
Number £000
Authorised:
Ordinary shares of 1p each 155,001,961 1,550
Allotted, called up and fully paid
Ordinary shares of 1p each 56,291,102 563
Share option schemes
Options were issued in 2004 over the Ordinary shares of the Company. The options
vest on 11 October 2007 and are exercisable from that date until 10 October
2014.
Number Exercise Date of
price expiry
Directors 4,100,000 3p 31-Oct-2014
Employees 4,300,000 3p 31-Oct-2014
8,400,000
12. Financial instruments
The Group's principal financial instruments comprise trade receivables, trade
payables, available-for-sale financial instruments as well as short term bank
deposits.
The Group holds short term bank deposits as a liquid resource to fund the
projects of the Group. The Group's strategy for managing cash is to maximise
interest income whilst ensuring its availability to match the profile of the
Group's expenditure.
The main risk arising from the Group's financial instruments is interest rate
risk.
Fair value
Fair value is the amount at which a financial instrument could be exchanged in
an arm's length transaction between informed and willing parties, other than a
forced or liquidation sale and excludes accrued interest. Where available,
market values have been used to determine fair values. Where market values are
not available, fair values have been calculated by discounting expected cash
flows at prevailing interest rates.
The fair values of short term deposits, loans and overdrafts with a maturity of
less than one year are assumed to approximate their book values. In the case of
financial liabilities due in more than one year the fair value of financial
liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate available to the
Group for similar financial instruments.
13. Post Balance Sheet Events
At 30 June 2007 the Group owned 690,000 ordinary shares in Premier Asset
Management plc ('Premier') representing 4.52% of its then issued ordinary share
capital and which is shown on the face of the Balance Sheet at 30 June 2007 as
available-for-sale financial assets with a carrying value of £1.56m.
On 16 July 2007 Premier received an offer to purchase the entire issued ordinary
share capital of the company at 285p per share valuing the Group's investment in
Premier at £1.97m. The Board considered that the offer undervalued Premier and
did not accept the offer.
Subsequently the Group acquired a further 497,836 shares in Premier at a cost of
£1.43m increasing its total holding to 1,187,836 shares or 7.73% of its
undiluted ordinary share capital when the offer was declared unconditional, the
Board reluctantly accepted the offer and the Group has since received £3.38m in
respect of its holding which, after related legal and other costs, represents a
profit in excess of £650,000 on its ten month investment in Premier.
The balance sheet already reflects £363,000 of the total gain as an unrealised
gain within reserves by reason of the inclusion of the investment at fair value
at 30 June 2007. As a consequence of prior years' tax losses no tax is expected
to arise on this gain.
Statement of Directors' Responsibilities
The directors confirm that the condensed set of financial statements has been
prepared in accordance with all major aspects of IAS 34;
The directors of Water Hall Group plc are listed in the annual report for 31
December 2006. The list of current directors is maintained on the Water Hall
Group plc website: http://www.waterhallgroupplc.com/ .
By order of the board
Raschid Abdullah
Chairman
24 September 2007
Independent Review Report to Water Hall Group plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2007 which comprises the income statement, the
balance sheet, the cash flow statement, the statement of changes in equity and
related notes 1 to 13. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
This report is made solely to the company, in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. 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 interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are also responsible for ensuring that the accounting policies and presentation
applied to the interim figures are consistent with those applied in preparing
the preceding annual accounts except where any changes, and the reasons for
them, are disclosed.
First-time adoption of International Financial Reporting Standards
As disclosed in note 2, the next annual financial statements of the Group will
be prepared in accordance with International Financial Reporting Standards as
adopted for use in the EU. Accordingly, the interim report has been prepared in
accordance with International Accounting Standard 34, 'Interim Financial
Reporting' and the requirements of International Financial Reporting Standard 1,
'First Time Adoption of International Financial Reporting Standards' relevant to
interim reports.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with International Standards on Auditing (UK and
Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2007.
Deloitte & Touche LLP
Chartered Accountants
Reading
24 September 2007
Notes: A review does not provide assurance on the maintenance and integrity of
the website, including controls used to achieve this, and in particular on
whether any changes may have occurred to the financial information since first
published. These matters are the responsibility of the directors but no control
procedures can provide absolute assurance in this area.
Legislation in the United Kingdom governing the preparation and dissemination of
financial information differs from legislation in other jurisdictions.
Appendix to Interim statement - Transition to IFRS
Water Hall Group plc reported under UK GAAP in its previous published financial
statements for the year ended 31 December 2006. The analysis below shows a
reconciliation of net assets as reported under UK GAAP as at 31 December 2006 to
the revised net assets under International Financial Reporting Standards (IFRS)
as reported in the financial statements.
The transition from UK GAAP to IFRS does not affect the cash flows generated by
the Group or its income for the periods shown. The IFRS income statement and
IFRS cash flow statement are presented in a different format than that required
under UK GAAP. The reconciling items between the UK GAAP format and the IFRS
format have no net impact on the income for the year or cash flows generated and
are purely presentational, accordingly reconciliations have not been presented.
Reconciliation of Group Balance Sheet at 31 December 2006 from UK GAAP to IFRS
(Unaudited)
UK GAAP Effect of IFRS
as at 31 transition Note as at 31
Dec 2006 to IFRS Dec 2006
£'000 £'000 £'000
Non-current assets
Intangible assets - 26 1 26
Tangible fixed assets 1,176 (26) 1 1,150
Investments 1,277 - 1,277
2,453 - 2,453
Current assets
Inventory 56 - 56
Trade and other receivables 1,409 - 1,409
Cash and cash equivalents - escrow deposit 1,185 - 1,185
Cash and cash equivalents 2,741 - 2,741
5,391 - 5,391
Total assets 7,844 - 7,844
Non-current liabilities
Provisions for other liabilities and charges 2,215 (339) 2 1,876
2,215 (339) 1,876
Current liabilities
Trade and other creditors 1,230 - 1,230
Provisions for other liabilities and charges - 339 2 339
1,230 339 1,569
Total liabilities 3,445 -
Net assets 4,399 -
Equity
Share capital 563 - 563
Other reserves 279 - 279
Retained earnings 2,786 771 3 3,557
Profit & loss for the period 771 (771) 3 -
Shareholders' equity 4,399 - 4,399
Total equity and liabilities 4,399 - 7,844
Notes - Explanation of reconciling items between UK GAAP and IFRS.
1. Options do not meet the definition of property, plant and equipment as
defined in IAS 16 and have been reclassified to intangible assets
2. Reclassification in the balance sheet of provisions for other liabilities
and charges required under IAS1 between current and non-current liabilities.
3. Under IAS1 the profit and loss account is renamed retained earnings.
Reconciliation of Group Balance Sheet at 30 June 2006 from UK GAAP to IFRS
(Unaudited)
UK GAAP Effect of IFRS
as at 30 Transition Note as at 30
Jun 2006 to IFRS Jun 2006
£'000 £'000 £'000
Non-current assets
Intangible assets - 35 1 35
Tangible fixed assets 1,561 (35) 1 1,526
Investments - - -
1,561 - 1,561
Current assets
Inventory 60 - 60
Trade and other receivables 1,705 - 1,705
Cash and cash equivalents - escrow deposit 1,157 - 1,157
Cash and cash equivalents 2,020 - 2,020
4,942 - 4,942
Total assets 6,503 - 6,503
Non-current liabilities
Provisions for other liabilities and charges 1,908 (439) 2 1,469
1,908 (439) 1,469
Current liabilities
Trade and other creditors 1,009 - 1,009
Provisions for other liabilities and charges - 439 2 439
1,009 439 1,448
Total liabilities 2,917 -
Net assets 3,586 -
Equity
Share capital 563 - 563
Other reserves - - -
Retained earnings 2,786 237 3 3,023
Profit & loss for the period 237 (237) 3 -
Shareholders' equity 3,586 - 3,586
Total equity and liabilities 3,586 - 6,503
Notes - Explanation of reconciling items between UK GAAP and IFRS.
1. Options do not meet the definition of property, plant and equipment as
defined in IAS 16 and have been reclassified to intangible assets
2. Reclassification in the balance sheet of provisions for other liabilities and
charges required under IAS1 between current and non-current liabilities.
3. Under IAS1 the profit and loss account is renamed retained earnings.
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