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Water Hall Group plc

('Water Hall' or the 'Company')

Results of Annual General Meeting ('AGM') and AGM Statement

Water Hall announces that at its 2009 AGM, which was held at 12.00 noon today, all resolutions put to shareholders were duly passed.

At today's AGM, Raschid Abdullah, Executive Chairman of Water Hall, made the following statement:

'My statement in the Annual Report expressed the board's disappointment that the good progress of the past few years had not continued through into 2008. As also reported, the decision to make an investment in Lloyds Banking Group plc ('Lloyds') was, with the benefit of hindsight, poorly timed, particularly in light of Lloyd's subsequent acquisition of HBOS plc.

In regard to the trading results for 2008, the 'credit crunch' materially impacted the business which, as I have explained in previous years, is restricted to a relatively small geographical area and very much driven by price, in particular, in times of recession.

While the first two months of 2009 started well since then trade has not been as brisk as your board would have liked. A progressive slackening of demand was experienced from March onwards with May proving to be one of the worst months on record.

Trading in June has shown signs of an improvement in volumes with the benefit being partially offset by the need to further reduce prices to attract business.

Irrespective of the prevailing economic conditions, as has been the policy over previous years, it remains your board's intention to focus on cash generation whether through the conversion of the landfill asset to cash through trading or through the sale of the business and its assets.

During April, GVA Grimley, a specialist firm in the quarry and waste management sector, was instructed to commence the marketing process.

Your board considered that the varied nature of the activities which can be carried out at the Water Hall Complex, the Company's sole operational asset, within the planning consents and waste management licences, its location and its further potential, subject to obtaining the relevant planning consents, to develop the business and the component parts of the site would engender interest from a range of experienced operators from within the sector.

I am pleased to report that considerable interest has been expressed and that a deadline for expressions of interest along with indicative offers and their financing has been set for the end of this month.

Clearly, expressions of interest and indicative offers do not constitute a contract. However, given that the board is committed to this course of action and the level of interest that has so far been shown, a sale at a price acceptable to the board appears likely to be achieved. It is difficult to predict the timing of any sale, possibly the biggest impediment to an early sale being reaching agreement with Hertfordshire County Council ('County Council') on revised restoration contours for Southfield Wood.

However, the revised scheme has been discussed with the County Council and it will shortly become the subject of a planning application. The County Council has a statutory obligation to determine within 13 weeks of registration of the application. Failing this, subject to the reasons put forward for either a refusal or non-determination, it would become the subject of an appeal to the Secretary of State. It is to be hoped that this will not prove necessary.

Your board also has to consider the alternatives to a sale and continues to seek to add value to the asset through additional planning consents and waste management licences.

The main areas actively under review are :

• linking with a specialist firm to utilise the gas arising from the Old Water Hall and Southfield Wood landfill sites for power generation. A number of parties are presently reviewing the potential with proposals expected in the next couple of months

• continuation of discussions with the County Council over the case for the early mining of the gravel from the extension areas of Broad Green and Bunkers South where your Company has rights over minerals through a combination of outright ownership or lease together with the right to purchase the surface area subject to planning consent being obtained. It is the intention that restoration of such workings would be by infilling with inert waste such that the land can be returned to agriculture

• development of the recycling potential under the recently awarded planning consent to extend the life of the previous planning consent until 2014 

• the continuation of the exploration of the Energy from Waste ('EfW') potential for the site. Subject to its confidence in the potential being able to be commercially exploited, your board's intention would be to seek to work with a larger partner with specialist knowledge in the area

• further consideration of uses for those parts of the site which might be better suited to alternative development. Pursuit of this agenda has started through submissions to East Herts District Council, the relevant planning authority

In addition, your board is actively considering a number of potential acquisition targets which could be made either out of the Group's existing cash resources and available debt or in a couple of cases might require the raising of additional equity to ensure that the ongoing balance sheet retains sufficient strength to enable post acquisition development of the acquired business.

It is worth mentioning at this juncture the two investments held by the Group.

Dealing first with Petards Group plc ('Petards') where the Group owns 7.3% of the issued ordinary equity. While Petards has improved its financial position following some difficult times, your board believes that further evidence of its progress is necessary before it could be considered as an acquisition target and, accordingly, will continue to monitor developments.

While the reason for the investment in Lloyds is dealt with in my statement in the Annual Report, it remains your board's intention to retain the investment for the foreseeable future given that your Group has no immediate need for the capital and the board believes that the potential for capital appreciation appears good. 

At the beginning of this month your board determined to purchase more Lloyds shares under the terms of the recent placing under the Shareholder Compensatory Scheme at 38.43p per new ordinary share on the basis of one for every 0.6213 Lloyds ordinary share held, including those received in May in lieu of a cash dividend. The new ordinary share subscription price of 38.43p compared with the middle market price at the time of 66.20p per share. As also mentioned in my statement in the Annual Report, since the year end the Lloyds share price has fallen, although there has been some recovery from its low point. The fall in the market value in the current year is £150,000, based on the closing middle market share price of 69.3p as at 16 June. The investment continues to be held as a current asset and will be kept under review by your board.

 

Reverting to acquisitions, your board is of the opinion that any acquisition should preferably be material in relation to the size of the Group and have a corresponding impact on shareholder value.

Your board believes that some good acquisition opportunities are now emerging and hopes to report further on this at the time of the interim statement expected to be during September 2009, or earlier if appropriate. A sale of the present business and assets of the Group would require shareholders approval before completion.

To assist with the development of the Group, on behalf of the board I am pleased to welcome Blomfield Corporate Finance Limited and Religare, Hichens Harrison plc as nominated adviser and broker respectively.  The board looks forward to forming long and productive relationships with them.'

For further information please contact:

Raschid Abdullah, Executive Chairman Water Hall Group Plc	01483 452 333 07768 905 004
Emily Morgan, Blomfield Corporate Finance Limited	0207 489 4500
Daniel Briggs, Religare Hichens, Harrison	0207 3827 776

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