Cascal N.V. Announces Nine Month and Third Quarter 2009 Results

LONDON, February 9 /PRNewswire/ --

- Nine-month revenue from continuing operations up 6.5% to $125.6 million (up 17.2% at constant exchange rates)

- Nine-month EBITDA from continuing operations down 3.9% to $45.7 million (up 5.8% at constant exchange rates)

- Nine-month EPS from continuing operations up 57% to $0.55

Cascal N.V. (NYSE: HOO) (the "Company"), a leading provider of water and wastewater services in seven countries, today announced unaudited financial results for the nine months and third quarter ended December 31, 2008. Cascal N.V. results are presented in U.S. dollars.

Year-to-date Fiscal 2009 Results

Revenue from continuing operations for the nine months ended December 31, 2008 increased by 6.5% to $125.6 million, compared to $118.0 million for the same period last year. The $7.6 million increase was the result of an approximate $10.5 million contribution by the historical portfolio (through a combination of rate increases, additional customers and higher volumes) and a $7.9 million contribution by the new acquisitions, offset by a $10.8 million effect of translation of revenues into USD.

- Revenue in China almost doubled, increasing by $7.2 million or 93%, compared to the same period last year, of which $6.2 million was the result of the acquisitions of the Yancheng joint venture on April 29, 2008 and the Zhumadian subsidiary on July 23, 2008, with the remainder due to a combination of rate and volume increases in our pre-existing operations in China and $0.7 million due to favorable exchange rate movements.

- Revenue in Chile increased by $1.9 million or 37%, compared to the same period last year, of which $1.1 million was contributed by the Servicomunal and Servilampa businesses acquired during the period, and $1.1 million was due to a combination of rate increases and higher volumes sold in our pre-existing operations in Chile, offset by $0.3 million due to exchange rate movements. The Servicomunal and Servilampa businesses, acquired on June 27, 2008, are consolidated into the Company's results with a three month lag due to non-coterminous year ends.

- Revenue in Indonesia increased by $1.5 million or 17%, compared to the same period last year, primarily a result of $2 million in additional revenue due to a 20% rate increase implemented in December 2007, together with higher demand for water caused by continued population growth, offset by $0.6 million due to exchange rate movements.

- Revenue in Panama increased by $1.5 million or 23%, compared to the same period last year, due to $1 million arising from rate increases that took effect on April 1, 2008 and September 1, 2008 together with $0.5 million of additional revenue recognized this year following the delayed approval of a rate increase applied for in May 2007.

- Revenue in South Africa decreased by $0.2 million or 1.4%, compared to the same period last year. At constant exchange rates, revenue in South Africa increased by $2.4 million or 18% as a result of a 10% rate increase implemented by the Company's Nelspruit subsidiary and increases of 6% and 9% for water and sewerage rates, respectively, implemented by Siza Water, which came into effect in July 2008, along with continued growth in the number of connections. This revenue increase was offset by $2.6 million due to exchange rate movements.

- Revenue in the UK decreased by $4.2 million or 5.9%, compared to the same period last year. At constant exchange rates, revenue in the UK increased by $3.8 million or 6.0% primarily due to the effect of a scheduled rate increase of 3.68%, together with a $2.3 million increase from the non-regulated business. This revenue increase was offset by $8.0 million due to exchange rate movements.

For the nine months ended December 31, 2008, EBITDA from continuing operations decreased by $1.9 million or 3.9% at current exchange rates, and increased by $2.5 million or 5.8% at constant exchange rates, compared to the same period last year. Of the $2.5 million increase at constant exchange rates, approximately $2.5 million was contributed by new projects and $1.9 million came from organic growth of the historical portfolio, offset by additional corporate overhead. The EBITDA increase was essentially contributed by the Company's operations in China (+$2.4 million), Indonesia (+$1.4 million), South Africa (+$1.0 million), Chile (+$0.6 million) and Panama (+$0.4 million), partially offset by increased overhead (-$1.9 million) and a reduction in the U.K. (-$1.5 million) due notably to higher electricity prices. The increased corporate overhead is mainly the result of higher costs due to tax and legal advisors, insurance and the board of independent directors. The EBITDA increase was offset by $4.4 million due to exchange rate movements. Please read "Use of Non-GAAP Financial Measures" for a description of EBITDA.

Commenting on the Company's results, Stephane Richer, Cascal Chief Executive Officer, stated, "In spite of the challenges of a global economic slowdown, I am very pleased with the continued progress being made by our Group, and remain positive about our ability to deliver continued growth. I am particularly satisfied with the underlying growth trends that the portfolio has once again delivered although these have been somewhat masked by unusually large exchange rate movements during the period. At constant exchange rates, we have achieved strong revenue growth and EBITDA growth in all our geographical segments other than in the UK where revenue has increased by 6% and EBITDA decreased by 4.6%. The EBITDA reduction in the UK is largely driven by increased costs of electricity which we expect will reduce significantly over the next few months. We are committed to working through the current economic turmoil by focusing on the strengths of our operations and are continuing to prove that we can grow in a difficult environment."

Overall, net financial income and expense from continuing operations improved by $16.2 million for the nine months ended December 31, 2008, compared to the same period last year. This result was comprised of an $11.9 million favorable movement in exchange rate results, combined with a $4.3 million decrease in net interest expense. The exchange rate results are principally the result of revaluing a British Pound-denominated current account balance outstanding at December 31, 2008 between the Company and its subsidiary, Cascal Services Limited. The decrease in net interest expense is mainly due to the repayment of borrowings in February 2008 out of the proceeds of the initial public offering, which have been partially and progressively replaced with cheaper borrowings from the Company's revolving loan facility.

For the nine months ended December 31, 2008, net profit from continuing operations was $16.9 million, or $0.55 per share, compared to net profit of $7.6 million, or $0.35 per share, for the same period in the prior year. Including discontinued operations, net profit was $17 million, or $0.56 per share, compared to $0.41 per share for the same period in 2007.

The effective tax rate incurred by continuing operations was 38.9% compared to 43.9% in the same period last year. The U.K. project company incurred a charge to deferred tax of $2.9 million, or two thirds of a total charge of $4.5 million for the year ending March 31, 2009, with respect to a change in U.K. tax legislation that was introduced on July 21, 2008. Without this one-time charge, the effective tax rate for the period falls to approximately 29.0%. In addition, a one-time adjustment in the form of a $0.3 million charge was made to the deferred tax position of the Company's Santiago based regulated operations in respect of its water rights portfolio. The other significant factor impacting the effective tax rate is the extent to which the parent company incurs costs in excess of its taxable income in The Netherlands. During the period ended December 31, 2008 the parent company recorded significant taxable income with respect to favorable movements in foreign exchange rates, which has been applied against tax losses brought forward. This, in turn, had a favorable impact on the overall effective tax rate for the period.

The Company's operating cash flow increased by $8.7 million to $41.6 million during the nine months ended December 31, 2008 relative to the prior year's comparable period.

As of December 31, 2008, the consolidated balance sheet shows cash and cash equivalents of $37.0 million.

Results for the Three Months Ended December 31, 2008

The results for the quarter, which are the difference between the nine months results and the six months results calculated at the respective average exchange rate, are affected by unusually large exchange rate movements experienced during the period.

For the three months ended December 31, 2008, revenue from continuing operations decreased by $1.7 million or 4.2% to $38.4 million, compared to $40.1 million for the same period last year. However, at constant exchange rates, revenue from continuing operations increased by $7.1 million or 23% mainly as result of increases in China (+$3.1 million), Chile (+$1.5 million), the UK (+$1.3 million) and Indonesia (+$0.5 million).

For the three months ended December 31, 2008, EBITDA from continuing operations decreased by $3.5 million or 22% to $12.3 million, compared to the same period last year. However, at constant exchange rates, EBITDA from continuing operations decreased by only $0.2 million or 1.3%. The EBITDA movement was mainly contributed by the Company's operations in China (+$1.0 million), Chile (+$0.5 million) and Indonesia (+$0.4 million), offset by increased overhead (-$1.0 million) and a reduction in the U.K. (-$0.7 million) due notably to higher electricity costs. The EBITDA was affected by $3.3 million due to exchange rate movements. Please read "Use of Non-GAAP Financial Measures" for a description of EBITDA.

For the three months ended December 31, 2008, the net profit from continuing operations was $6.0 million, or $0.20 per share, compared to a net profit of $4.5 million, or $0.20 per share, for the same period last year. Including discontinued operations, net profit for the comparable period in 2007 was $5.5 million, or $0.25 per share.

Guidance

Cascal currently anticipates annual revenue between $162 million and $166 million and EBITDA between $58 million and $60 million for fiscal year 2009.The previously stated guidance was for revenue between $179 million and $184 million and for EBITDA between $68 million and $71 million. The single most significant variance is the strengthening of the USD and notably the USD-GBP exchange rate which was anticipated at the time of the previous guidance last April at 1.94 and is now anticipated at 1.70 (average exchange rate for fiscal year 2009). Of the anticipated change in revenue and EBITDA, approximately $18 million and $6 million, respectively, arise from the movements in exchange rate assumptions used to convert from local currencies into USD.

Recent Business Highlights and Updates - The Company is continuing to actively develop new project opportunities and is currently one of two remaining bidders on a project in St. Lucia. The potential acquisition of the St. Lucia project can be undertaken with current resources, and Cascal's underlying cash flows are sufficient to meet the needs of its existing operations. - Overdue receivables for rate increases from IDAAN, Panama's national water authority, have risen to approximately $7 million. Cascal has received written approval for the rate increases and has been given verbal assurances that the account will be settled in due course and that IDAAN's 2009 budget has been approved at the full contractual rate.

Conference Call

The Company will host a conference call at 9 a.m. Eastern Time / 2 p.m. GMT on February 10, 2009. On the call, Stephane Richer, CEO of Cascal, and Steve Hollinshead, CFO, will discuss the Company's results, and review operational highlights and other business developments. The Company invites you to participate on the call at the following telephone numbers: [phone] (local), [phone] (international), [phone] (UK Freephone). The access code for all callers is 82954225. The call will also be available via webcast at www.cascal.co.uk. Please allow extra time prior to the call to visit the site and to download any necessary software to listen to the Internet broadcast. An online archive of the webcast will be available on the Company's website for 30 days following the call. A replay of the call will be available from February 10, 2009 at 9:45 a.m. ET / 2:45 p.m. GMT through March 10, 2009 at 11:59 p.m. ET / March 11, 2009 at 4:59 a.m. GMT. To access the replay, please call [phone] (local) or [phone] (international) and enter the following code: 82954225.

About Cascal N.V.

Cascal provides water and wastewater services to its customers in seven countries: the United Kingdom, South Africa, Indonesia, China, Chile, Panama and The Philippines. Cascal's customers are predominantly homes and businesses representing a total population of approximately 4.1 million.

Forward-looking statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not guarantees of future performance. There are important factors, many of which are outside of our control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements including: general economic business conditions, unfavorable weather conditions, housing and population growth trends, changes in energy prices and taxes, fluctuations with currency exchange rates, changes in regulations or regulatory treatment, changes in environmental compliance and water quality requirements, availability and the cost of capital, the success of growth initiatives, acquisitions and our ability to successfully integrate acquired companies and other factors discussed in our filings with the Securities and Exchange Commission, including under Risk Factors in our Form 20-F for the fiscal year ended March 31, 2008, filed with the SEC on June 25, 2008. We do not undertake and have no obligation to publicly update or revise any forward-looking statement.

Use of Non-GAAP Financial Measures

In evaluating its business, the Company uses EBITDA as a supplemental measure of its operating performance. The Company defines EBITDA as earnings before interest, taxes, depreciation and amortization. The term EBITDA is not defined under generally accepted accounting principles, or GAAP, and is not a measure of operating income, operating performance or liquidity presented in accordance with GAAP. EBITDA has limitations as an analytical tool, and when assessing the Company's operating performance, investors should not consider EBITDA in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with GAAP.

Tables follow Consolidated Statements of Income Amounts, except shares and per share amounts, expressed in thousands of USD Nine months ended Nine months ended December 31, 2008 December 31, 2007 Dis- Dis- Continuing continued Continuing continued operations operations Total operations operations Total Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Revenue 125,630 - 125,630 117,980 2,168 120,148 Operating Expenses Raw and auxiliary materials and other external costs 30,931 - 30,931 25,207 533 25,740 Staff costs 27,212 - 27,212 25,501 612 26,113 Depreciation and amortization of intangible and tangible fixed assets and negative goodwill 17,932 - 17,932 17,028 39 17,067 Profit on disposal of intangible and tangible fixed assets (935) - (935) (74) - (74) Other operating charges 21,794 (3) 21,791 19,643 819 20,462 Incremental offering- related costs - - - 75 - 75 96,934 (3) 96,931 87,380 2,003 89,383 Operating Profit 28,696 3 28,699 30,600 165 30,765 Gain on disposal of subsidiary - 203 203 - 1,295 1,295 Net Financial Income and Expense Exchange rate results 10,021 - 10,021 (1,911) (13) (1,924) Interest income 2,456 8 2,464 1,357 74 1,431 Interest expense (12,234) (1) (12,235) (15,361) (24) (15,385) 243 7 250 (15,915) 37 (15,878) Profit before Taxation 28,939 213 29,152 14,685 1,497 16,182 Taxation (11,263) (69) (11,332) (6,440) (81) (6,521) Profit after taxation 17,676 144 17,820 8,245 1,416 9,661 Minority Interest (787) - (787) (681) - (681) Net Profit 16,889 144 17,033 7,564 1,416 8,980 Earnings per share - Basic and Diluted 0.55 0.01 0.56 0.35 0.06 0.41 Weighted average number of shares  -Basic and Diluted 30,566,007 30,566,007 30,566,007 21,849,343 21,849,343 21,849,343

Consolidated Statements of Income Amounts, except shares and per share amounts, expressed in thousands of USD Three months ended Three months ended December 31, 2008 December 31, 2007 Dis- Dis- Continuing continued Continuing continued operations operations Total operations operations Total Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Revenue 38,374 - 38,374 40,077 657 40,734 Operating Expenses Raw and auxiliary materials and other external costs 10,400 - 10,400 8,570 177 8,747 Staff costs 8,811 - 8,811 8,960 246 9,206 Depreciation and amortization of intangible and tangible fixed assets and negative goodwill 5,566 - 5,566 5,851 13 5,864 Profit on disposal of intangible and tangible fixed assets (131) - (131) (86) - (86) Other operating charges 6,839 - 6,839 6,733 178 6,911 31,485 - 31,485 30,028 614 30,642 Operating Profit 6,889 - 6,889 10,049 43 10,092 (Loss)/Gain on disposal of subsidiary - (45) (45) - 1,047 1,047 Net Financial Income and Expense Exchange rate results 6,759 - 6,759 2,145 (11) 2,134 Interest income 360 - 360 316 38 354 Interest expense (4,691) - (4,691) (5,605) (12) (5,617) 2,428 - 2,428 (3,144) 15 (3,129) Profit before Taxation 9,317 (45) 9,272 6,905 1,105 8,010 Taxation (3,101) - (3,101) (2,255) (15) (2,270) Profit after taxation 6,216 (45) 6,171 4,650 1,090 5,740 Minority Interest (177) - (177) (199) - (199) Net Profit 6,039 (45) 5,994 4,451 1,090 5,541 Earnings per share  - Basic and Diluted 0.20 0.00 0.20 0.20 0.05 0.25 Weighted average number of shares  - Basic and Diluted 30,566,007 30,566,007 30,566,007 21,849,343 21,849,343 21,849,343 Revenue by segment Amounts expressed Three months Three months Nine months Nine months in thousands of USD ended ended ended ended December December December December 31, 2008 31, 2007 31, 2008 31, 2007 United Kingdom $19,018 $23,887 $66,916 $71,087 South Africa 4,314 5,813 15,962 16,188 Indonesia 2,878 2,903 9,928 8,467 China 6,198 2,862 14,868 7,710 Chile 2,534 1,555 7,241 5,292 Panama 2,574 2,207 8,136 6,597 The Philippines 671 718 2,141 2,105 Holding companies 187 132 438 534 Total continuing Operations $38,374 $40,077 $125,630 $117,980 Discontinued operations - Mexico - 657 - 2,168 Total $38,374 $40,734 $125,630 $120,148 Revenue Dutch GAAP (Dollars in thousands) Nine Nine Nine Change Percentage months months months 2007- change ended ended ended 2008 at 2007-2008 December 31, December 31, December 31, constant at constant 2008 2007 as 2007 at exchange exchange as reported reported constant rates rates exchange rates United Kingdom $66,916 $71,087 $63,123 $3,793 6.0% South Africa 15,962 16,188 13,534 2,428 17.9% Indonesia 9,928 8,467 7,887 2,041 25.9% China 14,868 7,710 8,445 6,423 76.1% Chile 7,241 5,292 5,029 2,212 44.0% Panama 8,136 6,597 6,597 1,539 23.3% The Philippines 2,141 2,105 2,090 51 2.4% Holding companies 438 534 465 (27) (5.7)% Total continuing operations $125,630 $117,980 $107,170 $18,460 17.2% Discontinued operations - Mexico - 2,168 2,086 (2,086) n/a Exchange rate effect 10,892 Total after exchange rate effect $125,630 $120,148 $120,148 Revenue Dutch GAAP (Dollars in thousands) Three Three Three Change Percentage months months months 2007- change ended ended ended 2008 at 2007-2008 December 31, December 31, December 31, constant at constant 2008 2007 as 2007 at exchange exchange as reported reported constant rates rates exchange rates United Kingdom $19,018 $23,887 $17,741 $1,277 7.2% South Africa 4,314 5,813 4,061 253 6.2% Indonesia 2,878 2,903 2,391 487 20.4% China 6,198 2,862 3,093 3,105 100.4% Chile 2,534 1,555 1,072 1,462 136.4% Panama 2,574 2,207 2,207 367 16.6% The Philippines 671 718 638 33 5.2% Holding companies 187 132 82 105 129.3% Total continuing operations $38,374 $40,077 $31,285 $7,089 22.7% Discontinued operations - Mexico - 657 513 (513) n/a Exchange rate effect 8,936 Total after exchange rate effect $38,374 $40,734 $40,734

Use of Non-GAAP Financial Measures -- EBITDA

EBITDA from continuing operations represents net profit from continuing operations before interest expense/(income) and exchange rate results, taxation, depreciation and amortization of intangible and tangible fixed assets and negative goodwill, loss/(profit) on disposal of intangible and tangible fixed assets and minority interest. EBITDA is a non-GAAP measure and does not represent and should not be considered as an alternative to net profit or cash flow as determined under generally accepted accounting principles. We believe EBITDA facilitates operating performance comparisons from period to period. We believe EBITDA may facilitate company to company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation and the age and book depreciation of facilities and equipment (affecting relative depreciation expense), which may vary for different companies for reasons unrelated to operating performance, and other non-recurring one-time items. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results.

EBITDA has limitations as an analytical tool, and you should not consider it either in isolation or as a substitute for analyzing our results as reported under Dutch GAAP. Some of these limitations are:

- EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; - EBITDA does not reflect changes in, or cash requirements for, our working capital needs; - EBITDA does not reflect our interest expense, or the cash requirements necessary to service interest or principal payments on our debt; - EBITDA does not reflect our tax expense or the cash requirements to pay our taxes; - although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements of those replacements; and - other companies in our industry may calculate EBITDA differently, limiting its usefulness as a comparative measure.

Because of these limitations, EBITDA from continuing operations should not be considered as the primary measure of our operating performance or as a measure of discretionary cash available to us to invest in the growth of our business. The following is a reconciliation of net profit from continuing operations, the most directly comparable Dutch GAAP performance measure, to EBITDA from continuing operations.

(Dollars in thousands) Nine months ended Nine months ended December 31, 2008 December 31, 2007 Net profit from continuing operations $16,889 $7,564 Add: Interest (income)/expense and exchange rate results (243) 15,915 Taxation 11,263 6,440 Depreciation and amortization of intangible and tangible fixed assets and negative goodwill 17,932 17,028 (Profit)/loss on disposal of intangible and tangible fixed assets (935) (74) Minority interest 787 681 EBITDA from continuing operations $45,693 $47,554 Revenue from continuing operations 125,630 117,980 EBITDA as a percentage of revenue from continuing operations 36.4% 40.3% (Dollars in thousands) Three months ended Three months ended December 31, 2008 December 31, 2007 Net profit from continuing operations $6,039 $4,451 Add: Interest (income)/expense and exchange rate results (2,428) 3,144 Taxation 3,101 2,255 Depreciation and amortization of intangible and tangible fixed assets and negative goodwill 5,566 5,851 (Profit)/loss on disposal of intangible and tangible fixed assets (131) (86) Minority interest 177 199 EBITDA from continuing operations $12,324 $15,814 Revenue from continuing operations 38,374 40,077 EBITDA as a percentage of revenue from continuing operations 32.1% 39.5% Cascal Consolidated Balance Sheets December 31, 2008 March 31, Amounts expressed in thousands of USD Unaudited 2008 Assets Fixed Assets Intangible fixed assets 31,565 18,424 Tangible fixed assets 400,821 366,357 Financial fixed assets 19,634 26,685 452,020 411,466 Current Assets Stocks and work in progress 3,572 2,083 Debtors 47,959 54,474 Cash at bank and in hand 36,969 54,380 88,500 110,937 Total Assets 540,520 522,403 Shareholders' Equity & Liabilities Shareholders' equity 113,872 136,726 Minority shareholders' interest 36,055 16,101 Group Equity 149,927 152,827 Negative goodwill 1,223 1,232 Provisions & deferred revenue 107,630 126,341 Long term liabilities 217,093 190,190 Current liabilities 64,647 51,813 Total Liabilities 390,593 369,576 Total Shareholders' Equity and Liabilities 540,520 522,403 Investor Contacts: KCSA Strategic Communications Jeffrey Goldberger / Yemi Rose [phone] / [phone] [e-mail] / [e-mail]