REG - Water Intelligence - Final Results <Origin Href="QuoteRef">WATRI.L</Origin> - Part 2

Water IntelligenceAnnouncement

13/06/2016 07:05

- Part 2: For the preceding part double click  ID:nRSM9383Aa 

with PSS technology. 
 
PSS guarantees the bank debt of Water Intelligence as described below. On the
other hand, PSS owes an amount to ALD specified below. During the normal
course of operations, there are inter-company transactions among PSS, Water
Intelligence plc, ALDHC and ALD. The financial results of these related party
transactions are reviewed by an independent director of Water Intelligence
plc, the parent of ALDHC and ALD so that they are on arms-length terms. 
 
On June 17, 2014, the Group refinanced its term loan agreement with Liberty
Bank of Connecticut. The term of the loan was reset for 5 years to 2019.  The
principal amount outstanding at December 31, 2015 is $2,050,477. As of
December 31, 2015 interest on the loan was 5.75% annually, with monthly
instalments of principal and interest amounting to $52,959 per month. 
 
Liberty Bank has required that the refinanced term loan and commercial line of
credit be guaranteed by PSS and the Executive Chairman.  For the PSS
guarantee, ALD pays 0.75% per annum based on the outstanding balance of the
loan calculated at the end of each month. For the guarantee of the Executive
Chairman, the board has agreed to award the Executive Chairman options for
ordinary shares. 
 
For 2015, the Board awarded the Executive Chairman an option to acquire 50,000
ordinary shares at an exercise price of $0.92.  The expense charge for the
Executive Chairman's guarantee is 0.49%, which will be expensed in 2016 as the
options were granted subsequent to year end, bringing the total charge for
guarantees to 1.24% for 2015. The charge for the guarantees will be eliminated
should the guarantees no longer be required by Liberty Bank. 
 
In order to obtain PSS's consent to extend the duration of its current
guarantee, the boards of both PSS and Water Intelligence, reviewed by its
respective independent directors, have agreed to extend the time period for
repayment of amounts currently owed by PSS to ALD to match the term of the new
loan. Interest owed on the PSS receivable will match the interest rate charged
by the bank. The monthly charge for the PSS guarantee would be offset against
amounts owed by PSS. Interest income related to the PSS receivable amounted to
$6,239 and $7,060 for the years December 31, 2015 and 2014, respectively. The
guarantee fee expense for the PSS guarantee amounted to $16,922 and $16,500
for the years ended December 31, 2015 and December 31, 2014 respectively. 
 
During the normal course of operations there are inter-company transactions
among PSS, Water Intelligence plc, ALD and ALDHC. In previous years, PSS
charged administrative fees to the Company to cover activities taken on behalf
of company business. The related receivable/ prepaid balance remaining was
$111,307 and $114,315 at December 31, 2015 and 2014, respectively. 
 
During the year, the Group advanced $45,000 to Leeb Publishing in relation to
the potential acquisition of paid internet subscribers and social media
content focused on scarce natural resources, especially water, to be used for
Water Intelligence marketing. If the acquisition is not completed, the advance
will be returned to the Group. Leeb Publishing is a related party of the
Group, as Stephen Leeb is a director in common. 
 
During the year the Company had the following transactions with its subsidiary
companies: 
 
ALD International Limited 
 
                                                      $         
 Balance at 31 December 2014                          428,764   
 Net loans to subsidiary                              48,853    
 VAT transferred under group registration             43,406    
 Other expenses recharged and exchange differences    (24,035)  
 Balance at 31 December 2015                          496,988   
 
 
ALD Inc. 
 
                                                      $          
 Balance at 31 December 2014                          (216,115)  
                                                                 
 Loans to WI                                          (400,000)  
 Deferred tax adjustment                              873,271    
 Transfer of investment in Leeb Publishing            (45,000)   
 Other expenses recharged and exchange differences    (262,475)  
 Balance at 31 December 2015                          (50,319)   
 
 
ALDHC 
 
                $            
 Loans to WI    (1,000,000)  
 
 
11    Subsequent events 
 
Following a general meeting held on 29 March 2016 where shareholders voted to
approve the matter, a share capital reorganisation was undertaken on 30 March
2016 pursuant to which every 230 ordinary shares of 1p each were consolidated
into 1 ordinary share of £2.30 nominal value and then subdivided back into
ordinary shares of 1p each.   Undertaking this exercise enabled the Company to
significantly decrease the number of persons on its shareholder register and
reduce the associated costs and administrative burden of maintaining a large
shareholder base with no material interest in the Company.  The total number
of shares in issue following completion of the share capital reorganisation
was 10,617,720 ordinary shares of 1p each. 
 
On 20 April 2016, following approval by shareholders at the general meeting
held on 29 March 2016 and the High Court of Justice of England and Wales, the
Company undertook a capital reduction exercise pursuant to which: 
 
·      the share premium account of the Company was cancelled; 
 
·      the capital redemption account of the Company was cancelled; 
 
·      the issued share capital of the Company was reduced by cancelling all
the issued deferred shares; and 
 
·      the amount of US$7,500,000 standing to the credit of the merger reserve
was capitalised and applied in paying up bonus shares which were then
cancelled. 
 
Accordingly, for the purposes of the Company's balance sheet, on 20 April
2016, the share premium account and capital redemption account were reduced to
zero, the merger reserve was reduced by US$7,500,000 and the share capital of
the Company was reduced by £8,084,507.60 (US$12,679,741). 
 
In total, this exercise generated US$31,497,995 to be credited against the
negative distributable reserves of the Company (2014: US$24,671,150) thereby
creating positive distributable reserves.  Having positive distributable
reserves means that the Company will be able to pay dividends and buy back
shares in future should it be deemed desirable to do so. 
 
Current trading is referred to in the Chairman's Statement. 
 
12     Annual General Meeting 
 
The AGM of the Company will be held at the office of ONE Advisory Group
Limited, 201 Temple Chambers, 3-7 Temple Avenue, London, EC4Y 0DT at 11 a.m.
on 7 July 2016. 
 
13    Publication of announcement and the report and accounts 
 
A copy of this announcement will be available at the Company's registered
office (201 Temple Chambers, 3-7 Tempe Avenue, London, EC4Y 0DT) 14 days from
the date of this announcement and on its website -
www.waterintelligence.co.uk. This announcement is not being sent to
shareholders. The Annual Report will be posted to shareholders in the near
future and will be made available on the website. 
 
This information is provided by RNS
The company news service from the London Stock Exchange