TIDMH2O
RNS Number : 6190D
Aqua Resources Fund Limited
18 May 2012
18 May 2012
Aqua Resources Fund Limited - Interim Management Statement
Aqua Resources Fund Limited ("Aqua" or the "Company"), the
Authorised closed ended investment scheme managed by FourWinds
Capital Management ("FWCM" or the "Manager") investing in global
water opportunities, today issues its Interim Management Statement
for the period from 1 January 2012 to 18 May 2012 (the
"Period").
Financial position and performance
The Company manages a diversified portfolio of water-related
investments. The latest published audited net asset value ("NAV")
per ordinary share of the Company ("Ordinary Share") at 31 December
2011 was EUR0.95, corresponding to a NAV of EUR68.83 million for
the Company. At 31 March 2012, the Company held approximately
EUR4.5 million in cash including cash to fund working capital.
As at 31 March 2012, Aqua's estimated unaudited NAV per Ordinary
Share was EUR1.02, up by 747 basis points from the 31 December 2011
audited NAV per Ordinary Share.
This change in NAV resulted mainly from:
-- unrealised gains in the Company's assets, which impacted the
NAV by approximately 8.7%;
-- unrealised negative currency movements, which impacted the
NAV by approximately -1.1%; and
-- operating expenses.
The basis for valuing the Company's assets used in this Interim
Management Statement is the same as and consistent with the
methodology employed for calculating the NAV as at 31December 2011
as set out in the Annual Report and Audited Consolidated Financial
Statements of the Company announced on 27 April 2012. However, it
does differ from the methodology used for calculating the NAV as
reported in previous Interim Management Statements and previous
quarterly NAV calculations for which generally the only adjustments
made to the year-end valuation or to the immediately preceding
quarterly NAV calculation were to account for the movements in the
relevant foreign exchange rates and for the change in the value of
quoted securities.
At 16 May 2012, Aqua's share price closed at EUR0.34.
31 March 2012 31December 2011 % change
(EUR) (EUR)
------------------ -------------- ---------------- ---------
NAV per Ordinary
Share 1.02086 0.9499 +7.47%
(unaudited) (audited)
------------------ -------------- ---------------- ---------
Closing middle
market share
price (London
Stock Exchange) EUR0.345 EUR0.330 +4.55%
------------------ -------------- ---------------- ---------
At 31 March 2012, the Company had invested approximately 93.4%
of its net assets. The balance is held in cash. Aqua has no gearing
at the Company level and no uncalled commitments.
Ordinary share price
The Board is aware that the stubborn and deep discount of the
share price to the Company's NAV remains a source of concern to
shareholders. The Board has therefore continued to seek
alternatives which could include, inter alia, some form of
corporate action.
Material events during the Period
Update on the Company's listing
The Board noted in the recently published annual report and
audited financial statements for the year ended 31 December 2011
that, as a result of a transaction in the Company's shares on 23
April 2012, Aqua no longer complied with the free float requirement
of the UK Listing Rules. LR 6.1.19 stipulates that 25% of the
shares in a listed company should be held in public hands. The
Board, through the Company's brokers, has discussed this
development with the UK Listing Authority ("UKLA").
Shareholders should note that as a consequence of the Company
failing to meet LR 6.1.19, the UKLA is entitled to withdraw the
listing. In practice, however, the Board understands that the UKLA
will allow the Company sufficient time to rectify the position to
the satisfaction of both the UKLA and, the Board hopes, existing
shareholders. The Board is considering its options with its
advisers and with the UKLA and is consulting with its core
shareholders on these options, which could include a delisting
and/or migration to another stock exchange, and will make a further
announcement as soon as practicable.
Update on Bluewater Bio International ("BBI")
The Company announced on 26 March 2012, that BBI had raised
additional capital through a financing led by Ombu Group and Hermes
GPE Environmental Innovation Fund LP. The transaction includes the
recapitalisation of BBI by way of a subscription by the new
investors for a new class of A Preferred Shares in the capital of
BBI, and partial repayment of certain debt held by Aqua and other
debt holders in BBI. As part of the transaction, Aqua has received
a total cash amount of GBP912,147 in partial redemption/repayment
of its outstanding secured loans to BBI, the balance of which was
converted into two new classes of preferred shares.
Update on China Hydroelectric Corporation ("CHC")
CHC filed its audited consolidated earnings for the year ended
31 December 2011 ("CHC's 2011 financial results") on 27 April 2012.
Aqua owns 1,980,537 American Depositary Shares ("ADS") of CHC
(representing approximately 3.7% of CHC's share capital).
CHC's revenues from continuing operations for the year ended 31
December 2011 were US$57.5 million, a decrease of 9% from US$63.3
million for the year ended 31 December 2010. This decrease was due
in part to a lower than average hydrology level in the first nine
months of 2011 compared to better than average hydrology level in
the same period in 2010 and, to a lesser extent, the result of a
lower effective tariff rate due to project contribution mix. These
factors were partially offset by incremental revenue contributed in
the current year by a project acquired in 2011. As a result of the
weaker hydrology level, the consolidated effective utilisation rate
in the year ended 31 December 2011 was 28.0%, a decrease from 38.6%
in the same period of 2010.
CHC's EBITDA was US$31.5 million (53% EBITDA margin) for the
year ended 31 December 2011 compared to US$42.8 million (64% EBITDA
margin) for the same period of 2010.
CHC's share price traded in a range from US$0.99 (19 January
2012) to US$2.04 (29 March 2012) during the Period. CHC's share
price closed at US$1.20 on 15 May 2012.
CHC's CEO, Mr. John Kuhns commented, "2011 unfortunately proved
to be a particularly difficult year due to a number of factors the
company could not control: the weather, the bank lending
environment in China, off shore debt markets and the equity
markets. We are, however, pleased to report that weather conditions
thus far in 2012 have been very favorable, and that the Chinese
government has taken steps to revitalize lending. The single most
important factor affecting our operating results is the amount of
electric power we are able to generate, and this of course is
dependent on two principal factors: our facilities and equipment
operating properly, which we can control, and hydrological
conditions, which we cannot control. As anticipated, our assets
presented no problems, attributable to both our plant level
operating expertise and our policy of following best practices for
plant and equipment maintenance. Unfortunately, overall
precipitation was especially unfavorable in 2011, and by our own
estimate the probability of such levels occurring in any given year
is extremely low. Accordingly, the drop-off in our 2011 revenue,
operating income and adjusted EBITDA appears quite unfavorable in
comparison to 2010."
Business Outlook for CHC's first quarter ending 31 March
2012
As at 27 April 2012, CHC reported that rainfall in the first
quarter of 2012 was well above that of the same period in 2011 and
more in line with 2010's level, particularly in Fujian and
Zhejiang, where electricity tariffs are higher.
Investment update
Aqua invests in the supply, use and treatment of an increasingly
scarce yet still essential resource, water. It actively manages a
portfolio of investee companies, which at 31 March 2011 accounted
for 93.4% of its net assets.
Aqua provides these companies with capital for projects in water
and wastewater as well as hydroelectricity, and equipment and
innovation supply. Its investee companies seek to ensure that the
broader water industry increases its efficiency and provides
end-users, whether individuals or industrials, with cleaner and
better quality water without dramatic increases in cost. By
investing along the value chain, and across industries and
geographies, Aqua has been able to diversify risk whilst
maintaining its core strategic focus.
As at 18 May 2012, the Company held investments in five
companies with operating divisions in the United Kingdom,
Continental Europe, China, Thailand, South Korea, Malaysia, North
Africa, South Africa and the Middle East, as well as in the United
States and Mexico, providing an attractive underlying geographic
diversification. The investee companies were as follows:
Ranhill Water Technology (Cayman) Limited ("RWT")
RWT is an international joint venture established in March 2009
by the Company and the Ranhill Group to invest in water and
wastewater operations in China and Thailand. RWT owns and operates
five water and wastewater concessions in China. Amongst them are
the Yichun potable water treatment plant and the Xiao Lan
wastewater treatment plant, both located in the fast growing
Jiangxi Province. Furthermore, RWT currently owns and operates two
plants on a long-term contract basis in Thailand. RWT's audited
fiscal year 2011 revenues were approximately US$26.1 million with a
24.5% EBITDA and 19.2% net profit margins respectively. RWT has a
June fiscal year end. For the first six months (to 31 December
2011) of fiscal year ending 30 June 2012, RWT registered unaudited
revenues of approximately US$12.3 million with a 27.6% EBITDA and
21.1% net profit margins respectively. The Company owns 45.2% of
RWT. At 31 March 2012, RWT represented 39.8% of NAV.
China Hydroelectric Corporation
CHC is an owner, operator and consolidator of small
hydroelectric power projects in China and is one of the few
independent small electric power producers. As at 31 December 2011,
CHC owned twenty six operating hydropower projects in China with
total installed capacity of 547.8 MW, of which it acquired twenty
two operating projects and constructed four. These hydroelectric
power projects are located in four provinces: Zhejiang, Fujian,
Yunnan and Sichuan. Hydropower is an important contributor to
China's electric power needs, accounting for approximately 22% of
nationwide capacity. CHC was founded in 2006, its headquarters are
in Beijing and it is listed on the New York Stock Exchange. The
Company owns approximately 3.7% of CHC's ordinary shares (through
its holding of ADSs). At 31 March 2012, CHC represented 4.0% of
NAV.
Waterleau Group N.V. ("Waterleau")
Waterleau is a privately held global environmental technology
solutions and services company. It provides a wide range of water,
wastewater and solid waste and air treatment solutions for both
industrial and municipal clients. Waterleau applies these
technologies to purify wastewater and produce renewable energy from
wastewater and bio-waste. Incorporated in 2000, Waterleau had a
turnover in excess of EUR75 million in the financial year ended 31
December 2011, with a 10% EBITDA margin. It has been profitable for
more than five consecutive years and has been growing at double
digit rates since inception. It currently employs approximately 270
people across offices and/or operating divisions in Belgium,
France, Morocco, Egypt, India, China, Turkey and Brazil. At 31
March 2012, Waterleau represented 36.7% of NAV.
Bluewater Bio International
BBI is a privately held technology provider which has a
proprietary technology called HYBACS (Hybrid Bacillus Activated
Sludge) process. BBI provides a cost effective, advanced biological
solution for the treatment of wastewater. The Company owns
preferred shares in BBI as well as ordinary equity representing
approximately12.12% of the issued voting capital of BBI (reduced
from approximately 17% immediately prior to BBI's latest
refinancing in March 2012 - see Material events, above). The
Company also holds warrants in BBI giving it the right to subscribe
for additional ordinary shares. At 31 March 2012, BBI represented
6.4% of NAV.
In-Pipe Technology, Inc. ("In-Pipe")
In-Pipe is a privately held technology provider which has a
patented biological process that treats wastewater upstream within
the underground sewer system. It presents an innovative alternative
to traditional solutions which treat wastewater upon arrival at the
treatment plant, leading to substantial cost savings by means of
reduction of aeration energy required, sludge output and
infrastructure corrosion. In-Pipe operates in the United States,
Mexico, Canada and Spain. The Company owns 26% of In-Pipe on a
fully diluted basis. At 31 March 2012, In-Pipe represented 6.4% of
NAV.
Further enquiries
FourWinds Capital Management, Investment Manager
Kimberly Tara, Chief Executive Officer
Valerie Daoud Henderson, Head of Europe Environment Group
Jui Kian Lim, Head of Asia Environment Group
info@fourwindscm.com
Cenkos Securities plc, Corporate Broker
Will Rogers +44 (0)20 7397 1920
Dion Di Miceli +44 (0)20 7397 1921
HSBC Securities Services (Guernsey) Limited, Administrator
Tel: +44 (0) 1481 707 000
CitigateDeweRogerson, PR Advisor
Kevin Smith / Lindsay Noton +44 207 638 9571
Important information
This Interim Management Statement has been produced solely to
provide additional information to shareholders as a whole to meet
the relevant requirements of the UK Listing Authority's Disclosure
and Transparency Rules. It should not be relied upon by any other
party for any other purpose. The information in this statement has
not been audited except as indicated.
The information related to the Company included in this
statement is provided for information purposes only and does not
constitute an invitation or offer to subscribe for or purchase
shares in the Company. This material is not intended to provide a
sufficient basis on which to make an investment decision. All
investments are subject to risk. An investment in the Company
should be regarded as long term in nature and is suitable only for
sophisticated investors, investment professionals, high net worth
individuals, unincorporated associations and partnerships and
trustees of high value trusts, in each case, who can bear the
economic risk of a substantial or entire loss of their investment.
Prospective investors are advised to seek expert legal, financial,
taxand other professional advice before making any investment
decisions.
The Company is a Guernsey domiciled Authorised Closed-ended
investment scheme pursuant to section 8 of the Protection of
Investors (Bailiwick of Guernsey) Law 1987, as amended and rule
6.02 of the Authorised closed-ended Investment Schemes Rules
2008.
Fundamentals
Listing date: 24 July 2008
Ordinary shares outstanding: 72,464,340
Latest audited NAV per Ordinary Share (31 December 2011):
EUR0.9499
Latest estimated unaudited NAV per Ordinary Share (31 March
2012): EUR1.02086
Number of investments/continents: 5/3
Total invested (31 March 2012): 93.4% of net assets
Investment objective
The Company's investment objective is to provide long term
capital appreciation through exposure to a diversified portfolio of
water-related investments.
The Company invests principally in businesses that are involved
in: (i) water treatment and recycling (i.e. wastewater and
recycling, water treatment and purification); (ii) water
infrastructure (i.e. water distribution); and (iii) water
application and conversion (water-to-energy and desalination) with
the objective of capturing the growth opportunities emerging from
the attractive long-term trends and fundamentals driving the water
industry.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IMSDMGMKVNVGZZM
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