- Release Date: 24/02/12 14:31
- Summary: HALFYR: JWI: JWI - Just Water International Limited Half Year Results
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JWI 24/02/2012 12:31 HALFYR REL: 1231 HRS Just Water International Limited HALFYR: JWI: JWI - Just Water International Limited Half Year Results First-half 2012 announcement Just Water International Limited presents its half-year results for the six months to 31 December 2011. Consolidated Income Statement Current half-year NZ$'000; Up/(Down)%; Previous corresponding half-year NZ$'000 Total Revenue: 15,285; (4.5%); 15,999 EBITDA: 4,082; 6.9%; 3,818 EBIT: 1,735; 53.7%; 1,129 NPAT: 654; 697.6%; 82 Although revenue is down, the directors are satisfied with this profit result, as the Company develops new revenue lines for the future. EBITDA and EBIT includes a net non-cash exchange gain of $0.091 million (31 December 2010: loss of $0.594) reflecting the movement between the New Zealand and Australian dollars at balance date. The results include five months of the Company's new acquisition, Creative Images Hire Ltd (Creative Images), which added $0.274 million to revenue and $0.114 million to EBIT. As advised, it is expected that Creative Images will add more than $0.25 million to its EBIT in the year ending 30 June 2012. Last year the directors advised that a major key performance indicator was the reduction of net bank debt, and in this period, net bank debt has been reduced by $1.5 million. Had the Company not acquired Creative Images, net bank debt would have reduced by $2.4 million in this 6 month period. Net bank debt at 31 December 2011 was $20.5 million. Although this reduction remains a focus, the Company is now in a position to also explore acquisitions along with other growth strategies. New Zealand Current half-year NZ$'000 ; Up/(Down) %; Previous corresponding half-year NZ$'000 Total Revenue: 10,125; (4.0%); 10,552 EBITDA: 2,904; 21.9%; 2,382 EBIT: 1,185; 157.0%; 461 NPAT: 395; n/a; (221) The 4.0% decrease in revenue represents a pleasing slowing down in the trend from previous periods, due to the Creative Images acquisition and improved operations of the Company. However, continued reductions in revenue are not sustainable in the long term, and the Company is extending its product offering in order to turn around this trend. EBIT was increased by a non cash exchange gain of $0.091 million. The overall base of water-coolers and dispensers from which recurring income is received by way of rental, service or regular water delivery reduced to 38,666. This is a 3.6% reduction for the six month period, compared to 5.8% reduction for the previous period to 31 December 2010. The Company has recently introduced a customer service programme "Think Like a Customer" (TLC), which has identified a number of areas where the Company is able to enhance its service offering to its customers. Management believe that this programme will have an immediate effect in customer retention. As part of its social responsibility, the Company has undertaken a publicity campaign to highlight New Zealand's obesity epidemic. This has been extremely effective in raising public debate around this important issue. This expresses our mission of "enhancing lives". In the last 12 months, the Company launched a unique new Just Water Filter, which initially focussed solely on online sales (www.justwaterfilters.co.nz). Since then the Company has introduced three new channels through kitchen manufacturers, plumbers and home distributors. It has also embarked on an advertising campaign through national magazines to increase awareness of the product. The filter does away with the separate tap on the kitchen bench and all water through the kitchen tap is filtered through a long life filter. This product has not added significantly to the business in the six month period, and is not expected to add significantly in the current year. The directors see this product offering a long term ongoing income stream from filter cartridge replacement revenue. An offer for this filter will be made to all shareholders, providing a significant discount from the retail price. The directors are very pleased with the acquisition of Wellington-based Creative Images, the office plant hire business the Company acquired in August 2011. The Company expects to grow the business both organically and by considered acquisition in the future. In January 2012, the Company started a business, trading as Just Plants, which offers 'replica' flowers to businesses. Just Plants is able to offer significant discounts to live flowers supplied by florists, with the added benefit of no pollen or allergy problems. Early indications are good, and the Company will consider making this offering nationwide. The Company's three bottling plants achieved an average of 99.5% in the annual audit by the Australasian Bottled Water Institute (ABWI), assuring customers that water from these plants are operated under the strictest international quality standards. No other '15 litre bottle' bottling plants comply with these standards, which places their customers at risk of drinking contaminated water. Australia Current half-year NZ$'000 ; Up/(Down) %; Previous corresponding half-year NZ$'000 Total Revenue: 5,160; (5.3%); 5,447 EBITDA: 1,178; (18.0%); 1,436 EBIT: 550; (17.7%); 668 NPAT: 259; (14.5%); 303 The Company's Australian subsidiary, Clearwater, has had a reduction in revenue. As with New Zealand, this revenue trend is not sustainable in the long term. The directors believe the implementation of the TLC programme in Australia and continued focus on new customer acquisition will result in developing a platform for future revenue growth. The Company has also launched the Just Water filter in Australia as an online product: www.justwaterfilters.com.au. It is now researching other distribution channels. Clearwater has just launched an online water cooler company - www.thewatercoolercompany.com.au. The directors believe this sales channel will complement existing sales channels and provide opportunity for future revenue growth. The Company is also looking at other prospects in Australia, and may replicate some of the new opportunities taken in New Zealand. The base of water-coolers and dispensers, from which recurring income is received by way of rental or service, increased by 0.8% from 10,269 units in June 2011 to 10,351 in December 2011. Dividend: As previously advised, the directors have decided there will be no dividend in the current year. The Company will be abandoning its Dividend Reinvestment Programme (DRP). Once the Company resumes dividends, these will be paid out of cash flow, rather than increasing the number of shares on issue. Audit: In keeping with common practice, the half-year financial statements for the six months ended 31 December 2011 and 31 December 2010 are unaudited. The full-year financial statements are audited. Comparative information in this report for the year ended 30 June 2011 is therefore audited. Board: At the 2011 Annual Meeting Sir Don McKinnon and Phil Dash retired as Chairman and Non-Executive Director respectively. Paul Connell's appointment as a director was confirmed at that time. Subsequently Paul was appointed as Chairman in December 2011. The directors are considering appointing another director to the Board. Bank facilities: The Company has complied with all bank covenants at 31 December 2011. Net bank debt at 31 December 2011 was $20.465 million (December 2010: $23.619 million). Debt has decreased by $3.154 million over the past year, and is expected to continue to reduce in the current period. The Company had an unutilised funding facility of $5.735 million at 31 December 2011 (December 2010: $3.781 million). Subsequent to the reporting period the company voluntarily requested the bank to reduce the facility by a further $2.0 million in order to reduce on-going facility fees. The remaining facility of $3.735 million allows operation head room and funding capability for growth and exploring further acquisitions. Expected future rental income stream: At 31 December there continued to be in excess of $80 million of expected future rental income stream which is not recognised in the financial statements. Expected future rental income streams have been calculated on the basis of average customer life, which is in excess of 6.5 years. This calculation of future receivables is used as part of the monitoring of compliance for our bank covenants. Summary: A year ago, this report outlined its intention to pursue new profit opportunities to grow the business, whilst maintaining our focus on debt reduction. The directors are satisfied that management have made good progress on both these intentions. The directors wish to congratulate the management and staff for their performance, after the challenging times of past years. For further information, contact Tony Falkenstein, CEO 021 950 856 Eldon Roberts, CFO 09 583 2713 Ian Malcolm, Director 021 456 225 End CA:00219993 For:JWI Type:HALFYR Time:2012-02-24 12:31:03
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