RNS Number:5928P
Water Hall Group Plc
10 September 2003
CHAIRMAN'S INTERIM STATEMENT
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2003
In my statements for 2002 and at the Annual General Meeting held in July, I
advised shareholders that the Board and management were pursuing a policy of
driving the business for profit and cash generation through the acceleration of
the programme of converting the Group's depleting mineral and landfill reserves
to cash. At the same time, firm control on costs would be maintained and low
cost planning and other initiatives designed to provide longevity of existing
consented reserves would also be pursued.
In addition, the focus on the Group's recycling activities would be maintained
and investment in these activities, as appropriate, would be made.
I am pleased to report that for the first six months of the year, adherence to
these objectives has been maintained and benefits are showing through in the
quality of the business, its profitability and cash generation.
For the six months to 30 June 2003, turnover was #3,661,000 (2002 - #3,688,000).
Gross profit increased to #892,000 (2002 - #848,000 in respect of continuing
operations and before exceptional items of #1,237,000). Administrative expenses
were #659,000 (2002 - #597,000) relating to continuing operations including
#38,000 (2002 - #43,000) in respect of the administration of the Company's
shareholding in Tanzifco International SAE ("TI") which includes exchange losses
on the investment of #33,000, and #nil (2002 - #97,000) for discontinued
operations. The increase in administrative costs of continuing operations over
the corresponding period last year reflects a number of unavoidable items,
significantly insurance costs of #21,000, and the foreign exchange losses
mentioned earlier.
Profit before interest for the period for continuing operations was #233,000,
(2002 - #251,000 which after exceptional items and discontinued operations
resulted in a loss of #1,083,000). Interest charges for the period were reduced
to #100,000 (2002 - #131,000) reflecting the repayment of bank borrowings during
the period.
Pre-tax profit for the period from continuing operations increased to #133,000
(2002 - #120,000 before exceptional losses and discontinued operations of
#1,334,000 resulting in a pre-tax loss of #1,214,000).
No tax was payable in respect of either period.
Earnings per share (EPS) were 0.24p on an issued ordinary capital of 56,291,102
shares, (2002 - 0.28p pre exceptional items and a loss per share of 2.82p post
exceptional items on a weighted average number of shares of 43,024,857)
Net cash inflow from operations at #361,000 (2002 - #33,000) was strong
throughout the period and was achieved after a reduction in trade and other
creditors of #501,000 since 31 December 2002. In addition, during the period,
the bank loan was reduced by #175,000 and a further #200,000 has been repaid
since the end of the period. However, net debt increased to #2,647,000 from
#2,466,000 at the year end, primarily as a consequence of a significant
investment made in a new compactor, financed by a lease, designed to improve
compaction rates and maximise the remaining life of the landfill. At 30 June
2003 the Group had available borrowing headroom of #422,000. Shareholders' funds
at 30 June 2003 were #2,696,000 (31 December 2002 - #2,563,000) with total
gearing levels of 98.2% (31 December 2002 - 96.2%).
The shareholding in TI has been treated as a trade investment, as it was at 31
December 2002, and its results are not therefore consolidated with those of the
Company. The situation in Suez remains unchanged from my report in the year-end
accounts where some of the balances owed to TI by the Governorate are still
outstanding and further hearings at the Courts are scheduled for later this
year. The expectation is that payment, substantially in full, will be received.
There is no obligation for the Company to provide additional funds for the
business and the Directors' policy has been and remains that of allowing the
operating partner, Tanzifco WLL of Kuwait, to operate and fund the business by
way of loans as appropriate.
Further to my statement at the Annual General Meeting, it is still the Board's
belief that the second half of the year will see tougher trading conditions.
However, management's tight control of costs and the positive impact of the
recycling operation resulted in the Board's profit expectations being met for
the first half.
Subject to there being no material downturn in the construction industry, from
which the Company receives a significant proportion of its waste input, or
prolonged periods of adverse weather conditions, the Board believes that the
improvements achieved to date will be sustained through the second half of the
year.
Finally, it is with considerable regret that effective from 30 September 2003, I
shall be leaving the Board of the Company. My departure, which is by mutual
consent, is the result of my recently having accepted a full time employment
with another UK company a condition of which is that I relinquish my other
external interests.
Over the past 21 months, I have enjoyed working with my colleagues on the Board
and the management of the Company, and during this period I believe that the
Company has emerged from the difficulties that existed when I joined and is well
positioned to develop further. Recognising the Company's needs to support this
development, the Board is considering potential candidates whom it considers
suitable for my replacement and intends to make an appointment once a suitable
candidate has been identified.
In the meantime, the Board will compromise of Raschid Abdullah and Roger Musson.
I believe that the improving trend in the Company's fortunes will continue and
would like to thank my colleagues within the Company and the shareholders for
their support during my tenure in office.
John Leach
Chairman
9 September 2003
GROUP PROFIT & LOSS ACCOUNT
for the half year ended 30 June 2003
Unaudited Audited
Half year Half year Half year Half year Year to
to 30 June to 30 June to 30 June to 30 June 31 Dec
2003 2002 2002 2002 2002
Notes (continuing (continuing (exceptional total
operations) operations items and
before discontinued
exceptional operations )
items and
discontinued
operations)
#000 #000 #000 #000 #000
Turnover 2 3,661 3,688 - 3,688 7,094
Cost of sales - normal (2,769) (2,840) - (2,840) (5,393)
Cost of sales - 3 - - (1,237) (1,237) (2,643)
exceptional
Cost of sales - total (2,769) (2,840) (1,237) (4,077) (8,036)
Gross profit / (loss) 892 848 (1,237) (389) (942)
Administrative expenses
Continuing operations (659) (597) - (597) (1,413)
Discontinued operations 3 - - (97) (97) (218)
Operating profit /(loss)
Continuing operations 2 233 251 (1,237) (986) (2,355)
Discontinued operations 2 - - (97) (97) (218)
Profit / (loss) on
ordinary activities
before interest 233 251 (1,334) (1,083) (2,573)
Net interest payable (100) (131) - (131) (231)
Profit / (loss) on
ordinary activities
before taxation 133 120 (1,334) (1,214) (2,804)
Taxation on ordinary - - - - -
activities
Profit / (loss) for the 133 120 (1,334) (1,214) (2,804)
period
Earnings / (loss) per 5
ordinary share 0.24p 0.28p (3.10)p (2.82)p (5.64)p
GROUP BALANCE SHEET
as at 30 June 2003
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2003 2002 2002
Notes #000 #000 #000
Fixed assets
Tangible assets 4,098 6,100 4,386
Investments 6 180 231 213
4,278 6,331 4,599
Current assets
Stocks 92 44 48
Debtors - due after more than one year 45 45 45
- due within one year 2,362 2,238 2,266
Cash at bank and in hand - escrow deposit 7 747 702 710
Cash at bank and in hand - - 118
3,246 3,029 3,187
Creditors: amounts falling due within one year
Bank and other loans (1,647) (1,138) (2,150)
Trade and other creditors (1,392) (1,532) (1,857)
(3,039) (2,670) (4,007)
Net current assets / (liabilities) 207 359 (820)
Total assets less current liabilities 4,485 6,690 3,779
Creditors: amounts falling due after more than
one year
Bank loan (445) (1,270) -
Other creditors (342) (221) (257)
(787) (1,491) (257)
Provisions for liabilities and charges (1,002) (1,046) (959)
Net assets 2,696 4,153 2,563
Capital and reserves
Called up share capital 3,613 3,613 3,613
Share premium account 3,757 3,757 3,757
Profit and loss account (4,674) (3,217) (4,807)
Shareholders' funds 2,696 4,153 2,563
Shareholders' funds are attributable to:
Equity shareholders' (deficit) / funds (354) 1,103 (487)
Non-equity shareholders' funds 3,050 3,050 3,050
2,696 4,153 2,563
RECONCILIATION OF MOVEMENT IN GROUP SHAREHOLDERS' FUNDS
for the half year to 30 June 2003
Unaudited Unaudited Audited
30 June 2003 30 June 2002 31 Dec 2002
#000 #000 #000
Total recognised gains and losses
Profit / (loss) for the period 133 (1,214) (2,804)
Proceeds of ordinary shares issued - 816 816
Total movements during the period 133 (398) (1,988)
Opening shareholders' funds 2,563 4,551 4,551
Closing shareholders' funds 2,696 4,153 2,563
GROUP CASH FLOW STATEMENT
for the half year ended 30 June 2003
Unaudited Unaudited Audited
half year half year year to
to 30 June to 30 June 31 Dec
2003 2002 2002
Notes #000 #000 #000
Net cash inflow from operating activities 4 361 33 698
Returns on investments and servicing of finance
Interest received 8 8 16
Interest paid (74) (95) (193)
Interest element of finance leases and hire purchase
contracts (15) (26) (18)
(81) (113) (195)
Capital expenditure and financial investment
Purchase of own tangible fixed assets (213) (158) (282)
Disposals of tangible fixed assets - 7 48
Amounts transferred to Environment Agency escrow
account (37) (8) (16)
(250) (159) (250)
Net cash inflow / (outflow) before financing 30 (239) 253
Financing
Issue of share capital - 1,095 1,095
Expenses of share issue - (279) (279)
(Decrease) / increase in bank and other loans (385) 1,547 1,310
Capital element of hire purchase and finance lease
contracts (90) (106) (224)
(475) 2,257 1,902
(Decrease) / increase in cash (445) 2,018 2,155
Reconciliation of net cash flow to movement in net debt
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2003 2002 2002
#000 #000 #000
(Decrease) / increase in cash in the period (445) 2,018 2,155
Cash inflow / (outflow) from change in bank and other loans 385 (1,547) (1,310)
Repayments of capital elements of finance leases and hire
purchase contracts 90 106 224
Change in net debt resulting from cash flows 30 577 1,069
New finance leases (211) - (154)
Movement in net debt in the period (181) 577 915
Net debt at the beginning of the period (2,466) (3,381) (3,381)
Net debt at the end of the period (2,647) (2,804) (2,466)
Notes to the Interim Statement
1. Basis of preparation
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 2002 is an
abridged version of the Group's published financial statements for that year
which contain an unqualified audit report and have been filed with the Registrar
of Companies.
The interim financial statements have been prepared in a manner consistent with
the Group's accounting policies set out in the 2002 Report and Accounts.
2. Sales and results by activity
Half year to Half year to Year to
30 June 2003 30 June 2002 31 December 2002
Operating Operating Operating
profit / profit / profit /
(loss) (loss) (loss)
Sales Sales Sales
#000 #000 #000 #000 #000 #000
Continuing operations -
Normal:
Quarry products 554 (51) 793 73 1,530 126
Landfill 1,639 192 2,810 252 5,298 187
Recycling 1,468 130 85 (31) 266 64
SQ Environmental 3,661 271 3,688 294 7,094 377
Continuing operations -
Exceptional:
Quarry products - - - (737) - (1,467)
Landfill - - - (500) - (1,176)
Recycling - - - - - -
SQ Environmental - - - (1,237) - (2,643)
Continuing operations -
Total:
Quarry products 554 (51) 793 (664) 1,530 (1,341)
Landfill 1,639 192 2,810 (248) 5,298 (989)
Recycling 1,468 130 85 (31) 266 64
SQ Environmental 3,661 271 3,688 (943) 7,094 (2,266)
Water Hall International - (38) - (43) - (89)
Total continuing operations 3,661 233 3,688 (986) 7,094 (2,355)
Discontinued operations
Best Value Partnerships - - - (97) - (218)
Total operations 3,661 233 3,688 (1,083) 7,094 (2,573)
Notes to the interim statement (continued)
3. Exceptional cost of sales and discontinued operations
The exceptional cost of sales in 2002 arose mainly from writing off previously
capitalised planning and other costs relating to two unsuccessful planning
applications and providing in full for the impairment of the Group's remaining
unconsented reserves, following a change in the Company's planning strategy due
to the refusal of the two planning applications and the delay in the
announcement of national and regional guidelines on aggregates and landfill
development. As a result the Group's unconsented mineral reserves and landfill
resources were written down by #2,270,000 and its related engineering and other
costs, included in debtors, by #154,000. In addition a re-appraisal of the
volume of the Group's remaining consented landfill resources and related
engineering costs by the Group's advisors resulted in an exceptional charge of
#219,000. The discontinued operations were those of Best Value Partnerships Ltd
providing services to local authorities from which the Group withdrew in
September 2002.
4. Reconciliation of operating profit / (loss) to net cash flow from
operating activities
Unaudited Unaudited Audited
Half year to Half year to Year ended
30 June 2003 30 June 2002 31 Dec 2002
#000 #000 #000
Continuing Operations
Operating profit / (loss) 233 (986) (2,355)
Profit on disposal of fixed assets - (7) (3)
Depreciation charges - normal 712 615 1,522
Depreciation charges - exceptional - 1,150 2,270
Exchange losses on Investments 33 - 18
Other charges - exceptional - 87 -
Provisions - net movement 24 21 (297)
Increase in stocks (44) (4) (8)
Increase in debtors (96) (302) (110)
Decrease in trade and other creditors (501) (444) (121)
Net cash inflow from continuing operations 361 130 916
Discontinued Operations - Operating Loss - (97) (218)
Total 361 33 698
5. Earnings / (loss) per ordinary share
Earnings / (loss) per ordinary share have been calculated on the number of
shares in issue during the half year (2002 - weighted average) and on a profit
of #133,000 (2002 - loss of #1,214,000). There is no difference between the
basic and diluted earnings per share.
Notes to the interim statement (continued)
6. Investments
Investments represent the Group's trade investment in equity and long-term loans
in Tanzifco International WLL, an Egyptian registered company. At 30 June 2002
this was classified as an associate but reclassified as a trade investment at 31
December 2002 as during the year Water Hall Group ceased to exercise significant
financial and operational influence over the activities of the investment.
Because the Egyptian contract only commenced in March 2002, no share of TI's
results was recognised in Water Hall Group's 2002 Interim Statement and
therefore the reclassification of the investment in TI would have had no effect
on the reported consolidated results and net assets of Water Hall Group if it
had been adopted for the half-year ended 30 June 2002.
7. Cash at bank and in hand - escrow deposit
Cash at bank and in hand - escrow deposit comprises #747,000 (2002 - #702,000)
deposited by Water Hall (England) Ltd in three bank accounts held jointly with
the Environment Agency in escrow. These accounts are to be used specifically
for restoration and aftercare purposes and have been excluded from the Company's
cash resources when calculating net debt.
8. Interim Statement
Copies of this interim statement are available from the Company Secretary, Water
Hall Group plc, 8 - 10 Leapale Road, Guildford, Surrey GU1 4JX. Copies can also
be provided electronically and requests should be made to
companysecretary@waterhallgroupplc.com
Independent Review Report to Water Hall Group plc
Deloitte & Touche LLP
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2003, which comprises the group profit and loss
account, the group balance sheet, the reconciliation of movement in group
shareholders' funds, the group cash flow statement, the reconciliation of net
cashflow to movement in net debt and related notes 1 to 8. 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 responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
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 United Kingdom auditing standards 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 2003.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
Reading
9 September 2003
This information is provided by RNS
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