JWI
03/09/2014 16:20
FLLYR
REL: 1620 HRS Just Water International Limited
FLLYR: JWI: Preliminary Full Year Report and Release for 30 June 2014
Chairman's and Chief Executive's review
Just Water International Limited
Results for year ended 30 June 2014
The Directors of Just Water International Limited and its subsidiaries (the
"Group") present the Group's full year results for the year ended 30 June
2014.
Consolidated result
2014 2013 %
$'000 $'000 change
Operating Revenue 26,748 27,892 (4%)
EBITDA 6,951 7,349 (5%)
Depreciation & Amortisation (3,577) (4,005) 11%
EBIT 3,374 3,344 1%
Interest (1,042) (1,235) 16%
Net profit before tax 2,332 2,109 11%
Tax (186) (391) 52%
NPAT 2,146 1,718 25%
Net of elimination entries)
Net profit before tax for the year ended 30 June 2014 was $2,332,000 up 11%
on the previous year. This was largely a result of close cost management,
productivity improvements and lower depreciation charges over the year. The
Group's overall result continued to be impacted by a strong NZ dollar which
reduced consolidated earnings from the Group's Australian operation. Whilst
consolidated operating revenue was slightly down on the previous year the
Directors believe that the Group is positioned to deliver future growth over
the coming years.
The Group's result includes a one-off realised exchange gain of $266,000 and
a one-off loss on sale of the disposal of Just Plants Ltd of $161,000.
The Group continued to deliver strong operating cash flow over the year
resulting in net cash generated from operating activities of $3,577,000.
Return on Sales, defined as EBIT (earnings before interest and tax) as a
percentage of operating revenue, was 12.6%, an increase over the prior year's
12.0%. The Directors are also pleased to note that the Equity Ratio, defined
as Equity divided by Total Assets, has improved from 24.6% last year to 31.1%
as at 30 June 2014.
In September 2013 the assets of Aquaman, a water cooler business based in
Brisbane, were acquired for NZ$360,000. The integration of this business into
the Group's Australian subsidiary has been successfully completed. The
acquisition has proven a good strategic fit for the Group's Australian
operations and has increased its rental unit base by approximately 500 units.
After a review in February 2014, the Directors determined that the Just
Plants business did not fit with the Group's future strategic direction. As a
result the Just Plants business was sold for $823,000 on 30 June 2014. This
resulted in a one-off loss on disposal to the Group of $161,000.
The Group's focus on debt reduction has continued and as a result total net
interest bearing borrowings have reduced by a further $2,890,000 over this
financial year.
The fundamental market issues remain with very competitive market places in
both New Zealand and Australia and continued price discounting from
competitors. Management has continued to work on measures to combat this and
improve the value proposition to its customers on both sides of the Tasman.
Management continues to focus on the core business with a particular emphasis
on improving the customer experience, the sale acquisition process and the
retention of customers. The Group is also in the throes of reviewing a range
of new products and management expect to launch a number of these in the new
financial year. In addition, management has spent considerable time reviewing
and improving the quality and focus of its marketing activity and the
positioning of the Just Water brand in the New Zealand market. The results of
this work will be seen in the new financial year.
A restructure of the senior management team has resulted in a more customer
focused and sales orientated structure. In addition, the senior management
team was strengthened with the creation of a New Zealand National Sales
Manager position. This will add significant weight to the Group's ongoing
sales efforts over the coming year.
New Zealand
2014 2013 %
$'000 $'000 change
Operating Revenue 17,923 18,491 (3%)
EBITDA 5,031 5,341 (6%)
Depreciation & Amortisation (2,601) (2,960) 12%
EBIT 2,430 2,381 2%
(Net of elimination entries)
The New Zealand operation's EBIT grew by 2% despite operating revenue
reducing by 3%. Operating revenue continues to reduce as a result of the
aggressive ongoing discounting of rental rates in the market place. The Board
and management continue to focus on improving the core business to enable
revenue growth for future years.
The Group continues to leverage off the public's heightened awareness of the
obesity epidemic in New Zealand and the role sugar based drinks play in this.
Just Water's "free" water cooler campaign and home delivery remains a focus
for the Group in New Zealand over the coming financial year.
Australia (New Zealand dollars)
2014 2013 %
NZD $'000 NZD $'000 change
Operating Revenue 8,825 9,401 (6%)
EBITDA 1,920 2,008 (4%)
Depreciation & Amortisation (976) (1,045) 7%
EBIT 944 963 (2%)
(Net of elimination entries)
As noted earlier the Australian result was negatively impacted by the
strengthening of the New Zealand dollar over the past year. The conversion
rate for 2013 was 0.8010 compared to 0.9050 for the current year. The result
for the Australian operation in Australian dollars is shown below.
Australia (Australian dollars)
2014 2013 %
AUD $'000 AUD $'000 change
Operating Revenue 7,987 7,530 6%
EBITDA 1,738 1,608 8%
Depreciation & Amortisation (883) (837) (5%)
EBIT 854 771 11%
(Net of elimination entries)
The Australian operation's operating revenue increased by 6% and EBIT
increased by 11% to AU$854,000, which was a pleasing result. We continue to
successfully target and convert bottled water delivery customers with a
compelling strategy centred on cost saving, environmental concerns and
convenience.
The Directors will continue to review opportunities for acquisitions of a
similar nature to Aquaman in the Australian market although management
considers price expectations of target companies to be significantly higher
than fair value.
Bank facilities
The Group has complied with all bank covenants during the year to 30 June
2014. Interest bearing debt at year end, net of cash and cash equivalents was
$12,988,000 (June 2013 $15,878,000). Net debt has decreased by $2,890,000
over the past year.
Dividend
There will be no dividend in the current year, as the Group focuses on debt
reduction, profitability and growing the business.
Audit
The Group's accounts have been audited and an unqualified audit opinion was
given.
Board
Simone Iles retires by rotation in accordance with Just Water International
Limited's constitution, and being eligible offers herself for re-election.
Summary
Overall trading conditions continue to remain challenging in both countries.
The Group continues to reduce debt as a prime objective, but has successfully
taken a far more aggressive approach to protecting its customer base.
The Directors are pleased with progress over the last year. The Group is in a
sound position both financially and people-wise, giving it the foundation on
which to expand.
Staff and Shareholders
The Directors wish to acknowledge the management team and all staff for their
efforts throughout the year.
Yours sincerely
Paul Connell Ian Ormiston
Chairman Chief Executive
End CA:00254819 For:JWI Type:FLLYR Time:2014-09-03 16:20:52
