JWI
20/02/2015 16:21
HALFYR
PRICE SENSITIVE
REL: 1621 HRS Just Water International Limited
HALFYR: JWI: Just Water International Ltd - Half Year Results
Chairman's and Chief Executive's Review
First-half 2015 announcement
It has been an eventful first half, with most shareholder attention being
directed on the takeover offer by the Harvard Group Joint Venture.
Takeover Offer:
Apart from a personal attack on my integrity by one shareholder, the
unconditional takeover offer was considered a huge success. For those who had
purchased JWI shares in the last 4 years, they were thrilled with the gain of
up to 50% on their investment, while those shareholders who had purchased
prior were able to reduce their losses significantly. I was delighted that
shareholders holding about 20% of the shareholding in JWI took a long term
view on their investment, and were prepared to back the focus I outlined in
the takeover offer, as well as my leadership of the Company.
Cash Flow:
Although management has and continues to focus on reducing debt, the
acceptance by shareholders of debt reduction as the priority over
profitability was galvanised by the outcome of the Takeover Offer. This will
be regularly reported upon by the graph below which we will update in each
Half Year and Annual Report going forward:
[Refer graph in pdf document]
Dividends:
The long term view of shareholders who accepted the Takeover Offer is
acknowledged, and aligns the view of the major shareholder with all other
shareholders. As stated during the Takeover Offer period, until debt is
repaid using surplus funds generated from operations, there is no intent to
pay a dividend.
Results:
Consolidated result
Previous
Current Corresponding
half-year half-year
(unaudited)(unaudited) %
$'000 $'000 change
Operating Revenue 12,292 13,502 (9%)
EBITDA 2,752 3,652 (25%)
Depreciation & Amortisation (1,638) (1,860) 12%
EBIT 1,114 1,792 (38%)
Interest (422) (560) 25%
Net profit before tax 692 1,232 (44%)
Tax (122) (168) 27%
Net Profit After Tax 570 1,064 (46%)
The trend of reducing revenue continues, as is typical in mature markets. The
previous year's EBITDA results included an exchange gain of $249,000(2015:
$0) and a profit of $159,000 from Just Plants, a business that was sold in
June 2014. A restructure of the New Zealand Company in the first half
resulted in a one-time restructuring cost of $191,000.
New Zealand
Previous
Current Corresponding
half-year half-year
(unaudited)(unaudited) %
$'000 $'000 change
Operating Revenue 8,153 9,047 (10%)
EBITDA 1,838 2,650 (31%)
Depreciation & Amortisation (1,153) (1,368) 16%
EBIT 685 1,282 (47%)
Net Profit after tax 266 529 (50%)
As previously indicated, this is a mature market, and the trending of lower
revenues and margin continues. The Company continues to seek acquisition
opportunities where it can utilise its core competencies
Australia (NZ$'s)
Previous
Current Corresponding
half-year half-year
(unaudited) (unaudited) %
NZ$'000 NZ$'000 change
Operating Revenue 4,139 4,455 (7%)
EBITDA 914 1,002 (9%)
Depreciation & Amortisation (485) (492) 1%
EBIT 429 510 (16%)
Net Profit after tax 304 535 (43%)
The New Zealand dollar continues to strengthen against the Australian dollar
with a resulting adverse impact on the overall Group results. Australian
results in Australian dollars are shown below.
Australia (Australian Dollars)
Previous
Current Corresponding
half-year half-year
(unaudited)(unaudited) %
AUD$'000 AUD$'000 change
Operating Revenue 3,777 3,929 (4%)
EBITDA 834 884 (6%)
Depreciation & Amortisation (443) (434) (2%)
EBIT 391 450 (13%)
Net Profit after tax 277 472 (41%)
Australian results were less impacted by the maturity of the market, but
continued to decline. Operating revenue in Australian dollars was slightly
down on the same period the prior year which did include the revenue from the
Aquaman Australia acquisition half way through the period. EBITDA has
decreased as a result of a change in sales mix during the period. An internal
restructure of the Australian business in December resulted in the three
State Managers now reporting directly to myself.
Audit
The financial statements for the six months ended 31 December 2014 and 31
December 2013 are unaudited. The comparative information for the year ended
30 June 2014 is audited.
Bank facilities and Interest Bearing Debt
The Company complied with all bank covenants as at 31 December 2014.
Total interest bearing debt at 31 December 2014 was $12.638 million (31
December 2013: $16.003 million, 30 June 2014: $13.105 million) Total interest
bearing debt has decreased by $467,000 over the past six months.
The Company had an unutilised funding facility of $494,000 at 31 December
2014 (December 2013: $2.95 million). The Company made a voluntary reduction
of the facility by $2.5 million, to save on facility fees, on 1 August 2014.
The Board is comfortable that the Company has funding facility for
undertaking opportunities as they arise.
Expected Future Rental Income Streams
At 31 December 2014 there continued to be in excess of $80 million expected
future rental income stream which is not recognised in the financial
statements. Consistent with prior disclosures expected future rental income
streams have been calculated on the basis of the last month's rental income
multiplied by the average customer life, which is in excess of seven years.
This calculation of future receivables is used as part of the bank covenant
compliance monitoring by the BNZ.
Executive Team
The former Board appointed me as Chief Executive in early December, three
weeks prior to the closing date of the Takeover Offer. Eldon Roberts, the
Chief Financial Officer was appointed to the position of Chief Operating
Officer, while retaining his duties as CFO.
Directors
Immediately after the closing date of the Takeover Offer, the Chairman, and
the two independent directors resigned. I thank them for the additional work
they took on to ensure that all shareholders were treated fairly in respect
of the Takeover Offer.
My long term finance advisor and former director, Ian Malcolm, was
reappointed to the Board, together with Brendan Wood, who is an independent
director. He brings a sound commercial background to the company's Board as a
result of acting as the company's solicitor for several years.
With over 78% of the Company being under my control, and the remaining
shareholders having accepted that their objectives are the same as mine, I
was appointed Executive Chairman.
Summary
I personally am pleased that so many shareholders were prepared to back my
leadership and long term focus of the Company. This allows the board and
management to plan accordingly, without the short term focus of targeting
increased half yearly profits.
Tony Falkenstein
Chairman and Chief Executive
End CA:00260947 For:JWI Type:HALFYR Time:2015-02-20 16:21:53
