REG-Watermark Global Final Results

LONDON--(Business Wire)--

Watermark Global Plc
Preliminary Results for the year ended 31 December 2008
And Notice of AGM

Watermark Global Plc (AIM: WET) ("Watermark" or " the Company"), a water
treatment and management company listed on the London AIM with a focus on Acid
Mine Drainage in South Africa, announces its preliminary results for the year
ended 31 December 2008.

Highlights

* Successful completion of pilot trials to select technology for commercial
plant. The Alkali, Barium, Calcium process from the Council for Scientific and
Industrial Research has been chosen.
* Successful completion of Pre-Feasibility Study, and commencement of Definitive
Feasibility Study ("DFS")
* The appointment of Bertie Steytler as Head of Operations and Adam Gunn as
non-executive Director.
* The conclusion of negotiations with mining houses to form Western Basin
Environmental Corporation, and commencement of negotiations for similar
agreements at the Eastern and Central Basins.
* Signing of a R10m loan from Development Bank of South Africa, and placing of
shares in the UK and Australia which raised approximately £2m to fund the DFS.
* Watermark has established itself as a key player in addressing Acid Mine
Drainage and other water management opportunities in the Witwatersrand area,
South Africa.

Results Summary

The loss from ordinary activities for the year ended 31 December 2008 was £
2.907m, including a loss on disposal of £0.277m relating to MicroFuze Americas
Inc. (which has been announced previously), resulting in a loss of 1.2p per
share. The net cash position of the group at 31 December 2008 was approximately
£0.65m.

The financial information set out below does not constitute the Company`s
statutory accounts for the year ended 31 December 2008, but is derived from
those accounts. Statutory accounts for 2008 will be delivered to the Registrar
of Companies following the Company`s Annual General Meeting. The auditors have
reported on those accounts and their report was not qualified.

Annual General Meeting

The Annual General Meeting of the Company will be held on 24 July 2009 at 10.00
am at 42, Queen Anne`s Gate, London SW1H 9AP. Notice of the meeting will be sent
to shareholders along with the report and accounts today. A copy of the report
and accounts will be made available on the Company`s website
www.watermarkglobalplc.com

Enquiries
Watermark Global plc
Peter Marks, Chairman Tel: + 44(0) 20 7233 1462
Dirk Kotze, Chief Financial Officer Tel: + 44(0) 20 7233 1462
dkotze@watermarkglobalplc.com
Nominated Adviser: Cenkos Securities
Ian Soanes/Elizabeth Bowman Tel: +44(0)20 7397 8928
Investor Relations
Charles Zorab Tel: + 44(0) 20 7233 1462
czorab@watermarkglobalplc.com

CHAIRMAN`S STATEMENT

Introduction

The 2008 year saw substantial progress in the continued development of the
Company`s core Acid Mine Drainage (AMD) water treatment project in South Africa.
Importantly, as the project has continued to advance and mature, the need to
find a sustainable solution to the growing AMD problem has become increasingly
urgent. There is also an increasing imbalance between rising demand and
declining supply of potable, as well as industrial water, in the region which
firmly underpins Watermark`s business plan and proposed rollout strategy.

In February 2008, construction of the first pilot water treatment plant was
completed, with the second one completed in March 2008. The purpose of these
plants was to prove the concept of treating AMD in such plants and to verify the
mass balances of by-products which would form part of the commercialisation
phase of the project.

In working towards the implementation of a sustainable solution to the problem
of AMD, Watermark is responding to the South African Government`s directive to
the mining houses to recover and treat contaminated water arising from the
flooding of underground voids left by over a hundred years of mining along the
Witwatersrand. In treating the water to an acceptable quality, Watermark`s
wholly owned subsidiary, Western Utilities Corporation (WUC) is expected to make
a significant contribution to alleviating the chronic water shortage in the
Gauteng region of South Africa, while at the same time delivering an attractive
commercial return to its shareholders.

By the middle of the 2008 year, the pilot plants were providing valuable
insights with respect to both quality and mass balance availability.

The Witwatersrand region can be divided, in hydro-geological terms, into the
Eastern, Western, Central and Far Western Basins. An initial Management
Agreement with the participants of the Western Basin, being Harmony, DRD Gold
and Mintails, was concluded. The Western Basin is the first and smallest
contributor of affected mine water to the Company`s proposed initial 75 million
litres (75ML) per day plant. Heads of Agreement are being negotiated with the
other two key contributors in the Central and Eastern Basins. Negotiations are
also progressing with mining houses in the Far Western Basin. The Company will
have a total available resource of approximately 200 ML per day provided all the
other agreements are concluded.

In October 2008, the Company announced that it had selected a technology process
known as "Alkali, Barium, and Calcium", from the Council for Scientific and
Industrial Research (CSIR) The choice was made on the basis of cost and
recoverability of the by-product materials to create a zero-effluent operation.

Towards the end of 2008 the Company completed a Pre-Feasibility Study (PFS)
which provided encouraging figures on capital and operating cost within a 30%
level of accuracy together with work covering engineering, primary legislation,
market evaluation and sensitivity analysis. Since the completion of the PFS, the
Company has commissioned and started work on a Definitive Feasibility Study
(DFS). The bulk of this work is being undertaken by Golder Associates Africa, a
highly regarded firm of engineering and environmental consultants. The detailed
work which they are engaged in is expected to provide an evenmore accurate
assessment of the parameters of the project in the araeas of legal,
environmental, financial, risk assessment and engineering.

The total cost of this study (which was announced in February 2009) is
approximately Rand 35million (£ 2.59m) this includes some provision for cost
overruns. Importantly, Rand 10million of this has been funded by the Development
Bank of South Africa on a non-recourse basis. The additional funds have been
raised via a placing to UK and Australian institutions in May 2009 which raised
£2.0m (Rand 27m). The DFS is expected to be completed by August of this year.

Directorate and Staff

Mr. Adam Gunn agreed to join the Board of the Company as a non-executive
director. Adam is a highly regarded environmental lawyer, with sound commercial
skills. His knowledge of environmental legislation has already proved an
invaluable asset to the Company.

During the year WUC appointed Mr. Bertie Steytler as Head of Operations. Bertie
plays a key role in overseeing the Company`s existing operations (and management
contracts), as well as assisting with all the preparatory work currently
underway in respect of the planned plant rollout.

It is also important to acknowledge the significant achievements of the small
yet highly dedicated team led by Jaco Schoeman as CEO and Dirk Kotze as CFO,
both Executive Directors. Their ongoing commitment to the project, as well as
their ability and determination in overcoming the various hurdles with the rest
of the team, should be acknowledged as a key element in the success achieved to
date.

Other Matters

At the beginning of 2008, we changed the name of the Company to Watermark Global
PLC to reflect the focus of the Company. During the first quarter in 2009 the
company disposed off its remain interest in MicroFuze (Pty) Ltd, effectively
disposing of any further interest in the Microfuze technology business.

Outlook

The work currently being undertaken by the Company has already attracted a great
deal of interest from various parties, including other mining houses as well as
key government departments and authorities, for example, The Department of Water
and Environmental Affairs (DWEA). Many of these parties now realise that the
problem of AMD pollution from the mines is now critical and that the `Watermark
solution` is one of the very few workable options available to both the
Government and the mines in South Africa as a viable solution which will address
the problem of AMD.

Several government departments agree that it is now time for action in
addressing this issue head on and they see Watermark as the company best
positioned to bring about and help implement a sustainable, long-term solution
to this major problem. The environmental impact assessment (EIA) for the project
is progressing well. The EIA will be submitted to government authorities in
September for approval. Approval for other authorisations such as the water use
licence will also be sought from government late in 2009.

Approval of these environmental authorizations and licences will confirm
government`s official support for the project.

Despite the additional pressures that have been caused by the global financial
crisis over recent months and the impact it has had on share prices, including
that of Watermark, the Company has continued to make significant progress and,
with the additional funding secured, will be able to move forward with the
completion of the DFS, regulatory approval and the commercial rollout plan.

I would like to take this opportunity to thank all our shareholders for their
continued interest in and support of the Company during these difficult times,
and also to all other key stakeholders who have been associated with the
development and achievements of the Company.

We look forward to bringing you further updates on the Company`s progress over
the coming months.

Peter Marks
Chairman

Consolidated Income Statement
For the year ended 31 December 2008

Note 2008 2007

£ £
Continuing operations
Revenue 2 158,158 7,268
Cost of sales (136,491) -
Gross profit 21,667 7,268
Investment Income 6 87,635 92,952
Expenses
Administrative expenses (1,278,032) (1,046,955)
Loss on disposal of subsidiary 7 (277,238)
Impairment of goodwill 14 - (1,566,632)
Share based compensation costs 20 (1,551,509) (715,583)
Loss from operations 8 (2,997,477) (3,228,950)
Finance costs 11 - (6)
Loss for the year (2,997,477) (3,228,956)
Taxation 12 99,626 23,629

Loss for the year from continuing operations (2,897,851) (3,205,327)

Loss for the year from discontinued operations 9 (9,867) (178,935)

Loss for the year (2,907,718) (3,384,262)
Minority interests - 26,840

Loss for the year attributable to equity holders 21 (2,907,718) (3,357,422)

Loss per share Pence Pence

Basic 13 (1.2) (2.0)

Fully diluted 13 (1.2) (2.0)

Consolidated Balance Sheet
As at 31 December 2008

Notes 2008 2007

£ £
Assets
Non Current assets 14 - -
Intangible assets
Property, plant & equipment 15 677,107 401,991
Deferred tax 12 99,626 23,629
776,733 425,620
Current assets
Trade and other receivables 17 555,272 85,589
Cash and cash equivalents 651,318 2,105,987
1,206,590 2,191,576

Total assets 1,983,323 2,617,196

Equity and liabilities
Equity attributable to equity holders of the parent
Share capital 19 379,304 336,554
Share premium account 21 8,053,737 6,670,787
Share option reserve 21 1,418,450 1,082,045
Exchange difference reserve 21 50,370 57,321
Profit and Loss Account 21 (8,491,140) (5,583,422)
Total equity pre minority interest 1,410,721 2,563,285

Minority interest - (147,796)
Total equity pre minority interest 1,410,721 2,415,489
Current liabilities
Trade and other payables 18 572,602 201,707
Total equity and liabilities 1,983,323 2,617,196

Approved by the Board on 29 June 2009
Signed on behalf of the Board of Directors
D Kotzé
Finance Director

Consolidated Statement of Changes in Equity
For the year ended 31 December 2008

Share Capital Share Premium Share Option Reserve Retained Earnings Foreign Exchange Reserve Total Minority Interest Total
Balance 1/1/2007 223,682 4,026,259 728,862 (2,226,000) - 2,752,803 (120,956) 2,631,847
Changes in Equity 2007
Exchange Gains - - - - 57,321 57,321 - 57,321
Loss from Current Operations - - - (3,357,422) - (3,357,422) (26,840) (3,384,262)
Share Based Payments - - 353,183 - - 353,183 - 353,183
Issue of Share Capital 112,872 2,644,528 - - - 2,757,400 - 2,757,400
Balance 31/12/2007 336,554 6,670,787 1,082,045 (5,583,422) 57,321 2,563,285 (147,796) 2,415,489
Changes in Equity 2008
Exchange Gains - - - - (6,951) (6,951) - (6,951)
Loss from Current Operations - - - (2,907,718) - (2,907,718) - (2,907,718)
Share Based Payments 42,750 1,382,950 336,405 1,762,105 1,762,105
Disposal of Subsidiary - 147,796 147,796
Balance 31/12/2008 379,304 8,053,737 1,418,450 (8,491,140) 50,370 1,410,721 - 1,410,721

Notes to the financial statements
For the year ended 31 December 2008

1.Incorporation and principal activities

Country of incorporation

Watermark Global Plc was incorporated in the United Kingdom as a public limited
company on 19 August 2005. Its registered office is 42, Queen Anne`s Gate,
London SW1H 9AP. The company is domiciled in South Africa.

Principal activities

The principal activity of the Group during the period was that of
commercialising process technologies, namely the process technology for the
treatment of acid mine drainage. The principal activity of the Company was that
of a holding Company.

2.Accounting policies

The principal accounting policies adopted in the presentation of these financial
statements are set out below. These policies have been applied consistently
throughout the period presented in these financial statements unless otherwise
stated.

Basis of preparation and consolidation

The company and consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs) as adopted
by the European Union and have been prepared on the historic cost basis. They
comprise the accounts of Watermark Global Plc and all its subsidiaries made up
to 31 December 2008.

Going concern

The financial statements have been prepared on a going concern basis. The group
is in the process of finalising its Bankable Feasibility Study for its Acid Mine
Drainage project in South Africa and construction of the water treatment plant
is estimated to commence in December 2009, with commissioning to start in
December 2010. Full production is planned for March 2011, with the concomitant
cash flow. The Company`s forecast expenditure for the period to 30 June 2010
indicates that cash resources are sufficient for the Company and Group to meet
its liabilities as they fall due. Should the Group be unable to continue
trading, adjustments would have to be made to reduce the value of assets to
their reasonable amounts, to provide for further liabilities which might arise,
such as closure costs, and to classify fixed assets as current assets.

Functional and presentational currency

Items included in the Group`s financial statements are measured using the
currency of the primary economic environment in which the entity operates ("the
functional currency"). The financial statements are presented in British Pounds
(GBP), which is the Group`s functional and presentational currency.

Foreign currency translation

(1) Foreign currency translation

Foreign currency transactions are translated into the measurement currency using
the exchange rates prevailing at the date of the transactions. Gains and losses
resulting from the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currencies are recognised
in the income statement.

(2)Foreign operations

On consolidation, the assets and liabilities of the consolidated entity`s
overseas operations are translated at exchange rates prevailing at the reporting
date. Income and expense items are translated at the average exchange rates for
the period unless exchange rates fluctuate significantly. Exchange differences
arising, if any, are recognised in the foreign currency translation reserve, and
recognised in the profit or loss on disposal of foreign operations.

Revenue recognition

Revenue represents amounts receivable for water, plant, management, service and
Company administrative service done on behalf of Western Basin Environmental
Corporation (WBEC), net of VAT, trade discounts and other sales tax.

Tangible fixed assets and depreciation

Fixed assets are stated at cost less depreciation and impairment. Depreciation
is calculated to write down the cost of all tangible fixed assets by equal
annual instalments over their expected useful life, as follows:

Plant and Machinery Over 3 - 10 years
Motor Vehicles Over 3 years
Fixtures, Fittings and Equipment Over 4 years
Assets under construction Not depreciated

Acquisitions and goodwill

An acquisition of subsidiaries is accounted for using the purchase method. The
cost of the business combination is measured as the aggregate of the fair
values, at the date of exchange, of assets given, liabilities incurred or
assumed, and equity instruments issued by the Group in exchange for control of
the acquired, plus any costs directly attributable to the business combination.
The acquirer`s identifiable assets, liabilities and contingent liabilities are
recognised at their fair values at the acquisition date, except for non-current
assets (or disposal groups) that are classified as held for sale in accordance
with IFRS 5 `Non-Current Assets Held for Sale and Discontinued Operations`,
which are recognised and measured at fair value less costs to sell.

Goodwill, being the excess of the cost of the business combination over the
identifiable assets, liabilities and contingent liabilities acquired, is
capitalised and classified as an asset on the balance sheet. Goodwill arising on
acquisitions before the date of transition to IFRS has been retained at the
previous UK GAAP amounts subject to being tested for impairment.

Impairment of goodwill and other non-financial assets

Impairment tests on goodwill and assets under construction are undertaken
annually at the financial year end. Other non-financial assets are subject to
impairment tests whenever events or changes in circumstances indicate that their
carrying amount may not be recoverable. Where the carrying value of an asset
exceeds its recoverable amount (i.e. the higher of value in use less fair value
of costs to sell), the asset is written down accordingly.

Where it is not possible to estimate the recoverable amount of an individual
asset, the impairment test is carried out on the asset`s cash generating units
(i.e. the lowest group of assets to which the asset belongs for which there are
separately identifiable cash flows). Goodwill is allocated on initial
recognition to each of the Group`s cash generating units that are expected to
benefit from the synergies of the combination giving rise to the goodwill.

Any impairment is charged to the income statement immediately. Any impairment
loss recognised for goodwill is not reversed.

Finance costs

Interest expense and other borrowing costs are charged to the income statement
as incurred.

Deferred taxation

The tax payable is based on taxable profit for the period. Taxable profit
differs from net profit as reported in the income statement because it excludes
items of income and expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible.

Deferred tax is the tax expected to be payable or recoverable 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 differences and
deferred tax assets are

recognised to the extent that taxable profits will be available against which
deductible temporary differences can be utilised. 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 the deferred taxes
relate to the same fiscal authority. Deferred tax is calculated at the
prevailing corporate tax rate both at company level (28%) and subsidiary level
(29%).

Investment Income

Investment income is recognised on an accruals basis.

Investments

Investments in subsidiary companies are stated at cost less provision for any
impairment in value, which is recognised as an expense in the period in which
the impairment is identified.

Share-based compensation benefits

IFRS 2 `Share-based Payment` requires the recognition of equity-settled
share-based payments at fair value at the date of grant and the recognition of
liabilities for cash-settled share based payments at the current fair value at
each balance sheet date.

The Group provides benefits to employees and service providers (including senior
executives) of the Group in the form of share based payments, whereby employees
render services in exchange for shares or rights over shares (equity-settled
transactions).

The cost of these equity-settled transactions with employees is measured by
reference to the fair value of the equity instruments at the date at which they
are granted. The fair value is determined by using a Black-Scholes model. In
valuing equity-settled transactions, no account is taken of any performance
conditions, other than market conditions linked to the price of the share of
Watermark Global Plc if applicable.

The cost of equity-settled transactions is recognised, together with a
corresponding increase in equity, over the period in which the performance
and/or other service conditions are fulfilled, ending on the date on which the
relevant employees become fully entitled to the award (the vesting period).

The cumulative expense recognised for equity-settled transactions at each
reporting date until vesting date reflects (i) the extent to which the vesting
period has expired and (ii) the Group`s best estimate of the number of equity
instruments that will ultimately vest. No adjustment is made for the likelihood
of market performance conditions being met as the effect of these conditions is
included in the determination of fair value at grant date. The profit and loss
account charge or credit for a period represents the movements in cumulative
expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for
awards where vesting is only conditional upon a market condition.

If an equity-settled award is cancelled, it is treated as if it had vested on
the date of cancellation, and any expense not yet recognised for the award is
recognised immediately. However, if a new award is substituted for the cancelled
award and designated as a replacement award on the date that it is granted, the
cancelled and new award are treated as if they were a modification of the
original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional
share dilution in the computation of earnings per share.

Where shares have been granted to employees, these have only been granted to
Directors of the Holding company.

Use and revision of accounting estimates

The preparation of the financial report requires the making of estimations and
assumptions that affect the recognised amounts of assets, liabilities, revenues
and expenses and the disclosure of contingent liabilities, including impairment,
share-based payments and work under construction. These estimates and associated
assumptions are based on historical experience and various other factors that
are believed to be reasonable under the circumstances, the results of which form
the basis of making the judgement about carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
revision affects both current and future periods.

Financial Instruments

Financial assets and financial liabilities are recognised in the Group`s balance
sheet when the Group becomes a party to the contractual provisions of the
instrument.

Trade receivables

Trade receivables which are non-interest bearing, are measured on initial
recognition at fair value and subsequently at amortised cost. Appropriate
allowables for estimated recoverable amounts are recognised in the income
statement when there is objective evidence that the asset is impaired, measured
as the difference between the asset`s carrying value and the fair value of the
estimated recoverable amount, if any.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand.

Trade payables

Trade payables are initially measured at fair value and subsequently at
amortised cost. Trade payables are non-interest bearing.

3.Financial Risk Management

Financial risk factors

The Group is exposed to liquidity risk, market risk (interest rate risk and
currency risk), credit risk and capital risk management arising from the
financial instruments it holds. The risk management policies employed by the
Group to manage these risks are discussed below:

Liquidity Risk

The Group manages liquidity risk by maintaining adequate reserves and banking
facilities, by monitoring cash flows and managing the maturity profiles of
financial assets and liabilities within the bounds of contractual obligations.

Credit Risk

The Company manages credit risk through strict payment terms. Maximum payment
terms granted is 30 days from service delivery. Outstanding accounts are
monitored on a monthly basis.

Market Risk

Interest rate risk is the risk that the value of the financial instruments will
fluctuate due to changes in the market interest rates. The Group`s income and
operating cash flows are substantially independent of changes in market interest
rates. The Group is exposed to interest rate risk in relation to its bank
deposits.

The Group has no borrowings at the balance sheet date and does not anticipate
any borrowings in the forthcoming year.

The Group has monies on deposit which earn interest at rates from 4% to 10%
depending on location. Interest rates in South Africa are more volatile than in
the United Kingdom and hence a larger sensitive range has been used. The
sensitivity of interest rate increases and decreases is set out below:

2008 2007
Interest received reduction Interest received reduction

Interest rate decrease
1% (4,765) (11,388)
2% (9,531) (22,776)
3% (14,296) (34,164)

Interest received increase Interest received increase
Interest rate increase
1% 4,765 11,388
2% 9,531 22,776
3% 14,296 34,164

Currency Risk

Currency risk is the risk that the value of financial instruments will fluctuate
due to changes in foreign exchange rates. Currency risk arises when future
commercial transactions and recognised assets and liabilities are denominated in
a foreign currency that is not the Group`s measurement currency. The Group is
exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to the US Dollar and South African Rand. The Group`s
management monitors the exchange rate fluctuations on a continuous basis and
acts accordingly.

Loans between companies which are members of the Watermark Global PLC Group are
made in the functional currency of the lending company. In all other respects,
the policy for all Group companies is that they only trade in their principal
functional currency, except in exceptional circumstances from time to time.

As at 31 December 2008 the Group held no monetary assets or liabilities in
currencies other than the functional currency of the operating units involved.
These operating units refer to South Africa and the UK and assets are held in
both Sterling and Rand. Interest rate exposure has been included as part of the
sensitivity calculations.

Credit Risk

The company manages credit risk through strict payment terms. Maximum payment
terms granted is 30 days from service delivery. Outstanding accounts are
monitored on a monthly basis.

Capital Risk Management

The Group manages its capital to ensure that it will be able to continue as a
going concern while maximising the return to shareholders through the
optimisation of the debt and equity balance.

The capital structure of the Group consists of cash and cash equivalents and
equity attributable to equity holders of the parent, comprising issued capital,
reserves and accumulated losses as disclosed in notes 19 and 21. The Group does
not use derivative financial instruments and has no long term debt facilities.

4.Fair Value Estimation

The fair values of the Group`s financial assets and financial liabilities
approximate to their carrying amounts at the balance sheet date due to their
being no non-current assets or liabilities.

5.Segmental information

For management purposes the Group is organised into two operating divisions;
Corporate and Water technology. These divisions are the basis on which the Group
reports its primary segment information. This information also represents the
geographical segments being the United Kingdom and South Africa.

Corporate Water Total
technology

United Kingdom South Africa
£ £ £
Revenue
External - 158,158 158,158

Total revenue from continuing operations - 158,158 158,158

Result
Segment result from continuing operations (2,658,206) (426,907) (3,085,113)
Finance income 87,636
Loss before tax (2,997,477)
Income tax credit 99,626

Loss for the period (2,897,851)

Other segment items included in the income statement:

Depreciation 1,491 9,914 11,405
Share based Employee Payments 1,551,509 - 1 551,509
Loss on Disposal of Subsidiary 277,238 - 277,238

Balance sheet Consolidation Adjustments

Segment assets 1,799,244 1,843,583 (1,659,504) 1,983,323
Segment liabilities (134,697) (2,099,947) 1,662,042 (572,602)
Net assets/(liabilities) 1,664,547 (256,364) 2,538 1,410,721

Additions to property plant and equipment can be found in Note 15.

In 2007 for management purposes the Group was organised into three operating
divisions; Corporate Water technology and Microwave technology. These divisions
are the basis on which the Group reports its primary segment information. This
information also represents the geographical segments being the United Kingdom,
South Africa and the United States of America.

Period ended 31 December 2007

Corporate Water Microwave Total
Technology Technology

United Kingdom South Africa United States of America
£ £ £ £
Revenue
External - - 1,489 1,489

Total revenue from continuing operations - - 1,489 1,489

Result
Segment result from continuing operations (2,923,871) (80,946) (496,026) (3,500,843)
Finance income 92,952

Loss before tax (3,407,891)

Income tax credit 23,629

Loss for the period (3,384,262)

Other segment items included in the income statement:

Depreciation 209 833 18,874 - 19,916
Impairment of Goodwill - - 1,566,632 - 1,566,632
Share Based Employee Payments 715,583 - - - 715,583

Balance sheet Consolidation Adjustments

Segment assets 3,324,133 1,036,350 854,466 (2,597,753) 2,617,196
Segment liabilities (115,080) (1,070,388) (1,613,992) 2,597,753 (201,707)
Minority Interest 147,796 147,796
Net assets/(liabilities) 3,209,053 (34,038) (759,526) 147,796 2,563,285

Additions to property plant and equipment can be found in Note 15.

6.Investment income

Investment income comprises interest on bank and cash balances received:

2008 2007
£ £

UK 28,970 67,787
South Africa 58,173 24,817
Australia 492 348
87,635 92,952

7.Loss on Disposal of Subsidiary

On 14 January 2008, the Group effectively disposed of its 85% investment in
MicroFuze Americas Inc., following its deal with ATC, for no consideration. As
per IAS 28, the group effectively lost significant influence over the operation
of the company as:

* It has no Board representation
* It does not participate in the policy making of the company
* There are no more material transactions between the parties
* No managerial personnel are shared between the parties, and
* No essential technical information is provided

The net assets of MicroFuze Americas Inc. at the date of disposal were as
follows:

£ `000

Net Assets disposed of 128
Minority Share 149
277
Loss on disposal of Investment (277)
Total Consideration received -

The deal with ATC makes provision for payment for the shares through the
commercialisation of the technology, subsequent to the deal being concluded, ATC
has not been able to commercialise the technology and the Company decide to
write-down the investment in MicroFuze Americas Inc.

8.Operating loss

2008 2007

£ £
Operating loss is stated after charging:
Depreciation 11,405 19,916
Auditors` remuneration - audit 24,500 23,000
Directors` remuneration 161,238 353,655
Subsidiary auditor`s fees 10,000 10,000
Impairment of goodwill - 1,566,632
Exchange (gain)/loss (97,114) 17,382
Share based payments for services 210,596 -
Share based employee benefits 799,009 715,583
Corporate finance fees 752,500 -

9.Loss from Discontinued Operations

In accordance with IFRS 5, the Group classified its 85% investment in MicoFuze
Americas Inc. as assets held for sale since the investment was disposed off on
the 14th January 2008, and treated as a loss from continued operations. The
following losses were included in the Group Consolidated Incomes Statement.
Total loss on disposal has been recognised in the income statement (Note 7).

2008 2007
£ £
Operating Revenue
- 1,489
Profit/(Loss) on disposal of Assets 50 (7,268)
50 (5,779)
Administrative Expenses (9,917) (173,156)
Loss from operations (9,867) (178,935)
Minority Interest - 26,840
Loss attributable to Equity Holders (9,867) (152,095)

10.Employees

2008 2007
£ £
The average monthly number of persons (including directors)
employed by the Group during the period was:

Group 5 5
Company 3 3

Employment costs
Wages and salaries 64,766 382,686

Key management Remuneration
Aggregate emoluments (including benefits in kind) 193,103 68,965
Directors` remuneration
Aggregate emoluments (including benefits in kind) 161,238 353,655

Emoluments of the Highest Paid Director 111,071 155,616

Details of share based payments for directors are disclosed in note 20.

11.Finance costs

2008 2007
£ £

Bank overdraft interest payable - 6

12.Taxation

2008 2007
£ £

UK Corporation tax - -
Factors affecting the tax charge for the period
Loss on ordinary activities before taxation (3,007,344) (3,407,891)
Loss on ordinary activities before taxation multiplied by standard rate of UK corporation tax of 30% (902,203) (1,022,366)
Effects of :
Depreciation 3,421 5,975
Impairment of goodwill - 469,990
Loss on disposal of subsidiary 83,171 -
Share based employee compensation costs 465,453 214,674
Deferred tax (Western Utilities Corporation) 99,626 23,629
Losses carried forward 250,532 308,098
UK Corporation tax - -

A deferred tax asset of £802,577 (2007: £1,105,756) has not been recognised due
to the uncertainty over the timing of future recoverability. A deferred tax
asset of £99,626 (2007: £23,629) has been recognised relating to losses incurred
in Western Utilities Corporation (Pty) Limited which are expected to be utilised
in the foreseeable future.

13.Loss per share

Loss for the year attributable to shareholders is £2,907,718 (2007: £3,357,422).
This is divided by the weighted average number of shares outstanding calculated
to be 235,163,631 (2007: 184,008,321) to give basic loss per share of 1.2p
(2007: 2.0p loss).

The calculation of diluted loss per share would be based on the weighted average
number of shares outstanding adjusted by the dilutive share options. The
weighted average number of shares outstanding is 258,082,877 (2007:
200,469,483). On the assumption that the share options, which would give rise to
the dilution, may not be exercised due to current losses, the diluted loss per
share has been stated at the same figure as the basic loss per share.

14.Intangible assets

Goodwill
£
Cost
At 1 January 2007 and at 31 December 2007 1,556,632
Disposals (1,556,632)
At 31 December 2008 -
Provision for impairment
At 1 January 2007 -
Impairment 1,556,632
At 31 December 2007 1,556,632
Disposals (1,556,632)
At 31 December 2008 -
Net Book Value -

At 31 December 2008
At 31 December 2007 -
At 31 December 2006 1,556,632

Goodwill relates to the purchase of subsidiary undertakings. The carrying value
of goodwill has been compared to its recoverable amount based on the value in
use of the cash generating units to which the goodwill has been allocated. Each
subsidiary has been assessed as a separate cash generating unit.

Following the annual impairment review undertaken at 31st December 2007, the
Directors concluded that goodwill arising on the acquisition of MicroFuze
Americas Inc. had been impaired. Goodwill in respect of this cash generating
unit was written down to £nil in the consolidated balance sheet.

The carrying value of the company`s investment in MicroFuze Americas Inc. was
also impaired and was written down to £Nil as at 31 December 2007.

As at 31 December 2008 goodwill has been eliminated due to the effective
disposal of MicroFuze Americas Inc. (Note 7).

15.Property, plant and equipment - Group

Plant & Machinery Fixtures, Fittings & Equipment Assets under construction Total
£ £ £ £
Cost
At 1 January 2007 81,024 10,570 - 91,594
Additions 90,759 23,314 231,747 345,820
Disposals (7,039) (1,720) - (8,759)
Foreign exchange movement 2,777 (1,428) - 1,349
At 31 December 2007 167,521 30,736 231,747 430,004
Additions - 12,705 549,112 561,817
Disposals (167,521) (5,298) (129,630) (302,449)
Foreign exchange movement - 818 - 818
At 31 December 2008 - 38,961 651,229 690,190

Accumulated depreciation
At 1 January 2007 8,656 1,150 - 9,806
Charge for the year 18,874 1,042 - 19,916
Disposals (1,536) - - (1,536)
Foreign exchange movement - (173) - (173)
At 31 December 2007 25,994 2,019 - 28,013
Charge for the year - 11,381 - 11,381
Disposals (25,994) (476) - (26,470)
Foreign exchange movement - 159 - 159
At 31 December 2008 - 13,083 - 13,083

Net Book Value

At 31 December 2008 - 25,878 651,229 677,107
At 31 December 2007 141,527 28,717 231,747 401,991
At 31 December 2006 72,368 9,420 - 81,788

Assets under construction relate to costs incurred by Western Utilities
Corporation (Pty) Limited (WUC) which was established to develop and
commercialise a process technology which will facilitate the treatment of acid
water, which is an industrial by-product of the mining process, and to sell the
treated water to industrial customers. WUC constructed a pilot plant close to
the water decant point in the West Rand region in South Africa. The total
construction costs (including the SAVMIN pilot plant campaign) amounted to
£651,229. During November 2008 a portion of the pilot plant, to the value of
£129,630 was sold to the Tshwane University of Technology to use in continued
research to improve on the selected technology; the Company will continue to
benefit from the research as co-owner of the technology.

Property, plant and equipment - Company

Company : Fixtures, Fittings & Equipment Total
£ £
Cost
At 1 January 2007, at 31 December 2007 1,401 1,401
and at 31 December 2008
Accumulated Depreciation
At 1 January 2007 281 281
Charge for the year 209 209
At 31 December 2007 490 490
Charge for the year 280 280
At 31 December 2008 770 770
Net book value
At 31 December 2008 631 631
At 31 December 2007 911 911
At 31 December 2006 1,120 1,120

16.Fixed asset investments

£
Cost
At 1 January 2007 1,600,000
Additions 7
At 31 December 2007 and at 31 December 2008 1,600,007
Provision for impairment
At 1 January 2007 -
Impairment 1,600,000
At 31 December 2007 and at 31 December 2008 1,600,000
Net book value
At 31 December 2008 7
At 31 December 2007 7
At 31 December 2006 1,600,000

Investments in subsidiaries comprise the following, all of which are fully
consolidated:

Name and nature of business Country of Registration Class of shares % held

Water Utilities Limited BVI Ordinary 100
(dormant holding company)

Western Utilities Corporation (Pty) Limited South Africa Ordinary 100
(acid mine drainage process development)

-held indirectly

*MicroFuze International Pty Limited Australia Ordinary 100
(holding company)

*Microfuze International Pty Limited was subsequently disposed of on 20 March
2009 (Note 24).

The investment was written down in 2007. Balances due from the company have been
written off as at 31 December 2008 (Note 17).

17.Trade and other receivables

Group: 2008 2007
£ £

Other debtors and prepayments 555,272 85,589
555,272 85,589
Company :
Amounts owed by group undertakings 1,659,504 986,727
Other debtors and prepayments 20,093 33,156
1,679,597 1,019,883

As at 31 December 2008 the amounts owed by the Group of companies represents a
balance due from Western Utilities Corporation (Pty) Limited of £1,659,504.
Interest is payable at LIBOR. The balance due from Western Utilities Corporation
(Pty) Limited will be only be repaid when the resources of the company permit.
The balance due from MicroFuze International Pty Limited has been written off
due to the sale of this subsidiary post year end (Note 24).

18.Trade and other payables

Group 2008 2007
£ £
Trade payables 528,629 121,115
Other payables 9,741 -
Accruals and deferred income 28,999 63,953
Taxation and social security 5,233 16,639
572,602 201,707
Company

Trade payables 69,071 38,755
Accruals and deferred income 27,000 59,686
Taxation and social security - 16,639
96,071 115,080

19.Share capital

2008 2007
£ £
Authorised
1,000,000,000 ordinary shares of 0.15p each 1,500,000 1,500,000
Allotted, issued and fully paid
252,869,333 (2007: 224,369,110) ordinary shares of 0.15p each. 379,304 336,554

The Company has allotted shares for non cash consideration during the year as
follows in lieu of remuneration:

Number of Shares Nominal Value
£
June 2008 non cash in lieu of services 5,000,000 7,500
June 2008 non cash in lieu of services 2,000,000 3,000
June 2008 non cash in lieu of services 4,000,000 6,000
September 2008 non cash in lieu of fees and services 17,500,000 26,250
28,500,000 42,750

20.Share based payment arrangements

Details of the share options outstanding as at 31 December 2008

Name Date granted Number Exercise price Expiry date Fair value at grant date
Pence Pence
Duncan Clegg 2006/02/13 1,500,000 10 2011/02/13 6.23
Peter Marks 2006/02/13 1,500,000 10 2011/02/13 6.23
Doug Parrish 2006/02/13 4,000,000 10 2011/02/13 6.23
Timothy Wall 2006/02/13 2,000,000 10 2011/02/13 6.23
Nabarro Wells 2006/02/13 2,700,000 10 2011/02/13 6.23
Sandy Barblett 2007/06/06 3,000,000 10 2012/06/06 2.39
Art Greenberg 2007/06/06 1,000,000 10 2012/06/06 2.39
Harley Grant 2007/06/06 2,000,000 10 2012/06/06 2.39
Jeff Henry 2007/06/06 2,000,000 10 2012/06/06 2.39
Mike Dureau 2007/06/06 110,000 10 2012/06/06 2.39
Steven Ribich 2007/12/10 1,947,000 10 2012/12/10 3.87
Rockbury 2008/04/23 3,330,000 7.5 2013/04/22 6.32
Dirk Kotzé 2008/02/01 2,000,000 10 2013/02/28 6.29
At 31 December 2008 27 087 000

No options expired and none were forfeited or exercised during the year. In
addition to the 3,330,000 options granted 6,670,000 of additional share options
granted to Rockbury are conditional on certain performance criteria.
Consequently these options have not been accounted for.

The fair value of the options vested in the period was £336,405 (2007:
£353,183). The assessed fair value at grant date is determined using the Black
Scholes Model that takes into account the exercise price, the term of the
option, the share price at grant date, the expected price volatility of the
underlying share, the expected dividend yield and the risk-free interest rate
for the term of the option.

The options granted to D Kotze were revalued to 3p subsequent to the year end,
after which they were cancelled on 19th March 2009 and replaced with 2,000,000
fully paid-up shares in lieu of services rendered.

The following table lists the inputs to the model used for the year ended 31
December 2008:

23/04/2008 01/02/2008

Dividend yield (%) - -
Expected volatility (%) 116 126
Risk-free interest rate (%) 5 5.2
Share Price at grant date (pence) 7.62 7.50
No. of options 3,330,000 2,000,000

The expected volatility reflects the assumption that the historical volatility
is indicative of future trends, which may not necessarily be the actual outcome.
The exercise period is 5 years from the date of grant being 23 April 2008 and 1
February 2008 respectively (2007: 6 June 2007 and 12 December 2007
respectively).

Shares issued in lieu of remuneration

During the year shares were issued to the directors of the company, to the value
of £673,200, namely Doug Parrish £244,800 in lieu of directors fees, Jaco
Schoeman £306,000 in lieu of meeting performance criteria, D Kotzè £122,400 in
lieu of sign on fee. In addition, J Schoeman will be entitled to an additional
5,000,000 shares as per his employment contract.

The following table summarises the total share based payments effected for the
year 31 December 2008:

Shares and Options issued Shares Options Value £

Directors 673,200 125,809 799,009
In lieu of commission on capital raised 752,500 - 752,500
Total 1,551,509
Service providers - 210,596 210,596
Total charge to income statement 1,425,700 336,405 1,762,105

21.Reserves

Group Exchange difference reserve Company and Group Share option reserve Company and Group share premium account Group Profit and loss account Company Profit and loss account
£ £ £ £ £
At 1 January 2007 - 728,862 4,026,259 (2,226,000) (1,264,541)
Loss for the year - - - (3,357,422) (4,531,276)
Exchange difference 57,321 - - - -
Share based payments - 353,183 - - -
Premium on shares issued - - 3,124,528 - -
Cost of share issue - - (480,000) - -
At 31 December 2007 57,321 1,082,045 6,670,787 (5,583,422) (5,795,817)
Loss for the year - - - (2,907,718) (2,392,005)
Exchange difference (6,951) - - - -
New shares issued - - 1,382,950 - -
Share based payments - 336,405 - - -
At 31 December 2008 50,370 1,418,450 8,053,737 (8,491,140) (8,187,822)

The company has taken advantage of the exemption conferred by section 230 of
Companies Act 1985 from presenting its own income statement. Loss after taxation
of £2,392,005 (2007: £4,531,276) has been included in the financial statements
of the holding company.

22.Related party transactions

Other than transactions with Group companies and directors as disclosed in the
Notes, there were no transactions with other related parties.

23.Ultimate controlling party

There was no ultimate controlling party during the year.

24.Subsequent events

On 20 March 2009, the Board decided to sell its intermediate holding company,
MicroFuze International Pty Limited for $1. The sale of the subsidiary results
in a loss of approximately £219,152 which represents the total outstanding loans
to MicroFuze International Pty Limited. Consequently the balance due from the
company has been fully written down as at 31 December 2008 (Note 17).

In May 2009 the Company completed a placing of shares to UK and Australian
institutions raising £2.0m (424,000,000 ordinary shares at 0.5 pence). The issue
of the shares was approved at an Extraordinary General Meeting of shareholders
held on 15th of June 2009.

25.Standards issued but not in force

At the date of approval of these financial statements the following accounting
standards were issued by the International Accounting Standards Board but were
not yet effective:

Standard / Interpretation Effective for annual periods beginning on or after
(i) Adopted by the European Union
Improvements to IFRSs - 2008 1 January 2009
Amendments to IFRS 1 and International Accounting Standard (IAS) 27 "Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate" 1 July 2009
Amendment to IFRS 2 "Share Based Payment: Vesting Conditions and Cancellations" 1 January 2009
IFRS 8 "Operating Segments" 1 January 2009
IAS 1 (Revised) "Presentation of Financial Statements" 1 January 2009
IAS 23 (Revised) "Borrowing Costs" 1 January 2009
Amendments to IAS 32 and IAS 1 "Puttable Financial Instruments and Obligations arising on Liquidation" 1 January 2009
International Financial Reporting Interpretation Committee (IFRIC) 13 "Customer Loyalty Programmes" 1 July 2008

Standard / Interpretation Effective for annual periods

beginning on or after

(ii) Not adopted by the European Union
IFRS 1 (Revised) "First Time Adoption of International Financial Reporting Standards" 1 January 2009
IFRS 3 (Revised) "Business Combinations" 1 July 2009
IAS 27 (Revised) "Consolidated and Separate Financial Statements" 1 July 2009
Amendment to IAS 39 "Eligible Hedged Items" 1 July 2009
Amendment to IAS 39 "Reclassification of Financial Assets: Effective date and Transition" 1 July 2008
IFRIC 15 "Agreements for the Construction of Real Estate" 1 January 2009
IFRIC 16 "Hedges of a Net Investment in a Foreign Operation" 1 October 2008
IFRIC 17 "Distributions of Non cash Assets to Owners" 1 July 2009
IFRIC 18 "Transfers of Assets from Customers" 1 July 2009

The Board of Directors expects that the adoption of these accounting standards
in future periods will not have a material effect on the financial statements of
the Group except from the application of IAS 1 (Revised) "Presentation of
Financial Statements" which will have a material effect on the presentation of
the financial statements.

26.Statutory information

The financial information set out above does not constitute the Company`s
statutory accounts for the year ended 31 December 2008, but is derived from
those accounts. Statutory accounts for 2008 will be delivered to the Registrar
of Companies following the Company`s Annual General Meeting. The auditors have
reported on those accounts and their report was not qualified.

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